Your guide to using off base military housing to your benefit... and theirs.
I want to dedicate this week’s article to the men and women proudly serving in our armed forces in light of Memorial Day. Regardless of one’s feelings on the political side of war, these heroes deserve the greatest respect. Memorial Day is a day to honor those who made the ultimate sacrifice for our freedom. While we should take a moment to think of them and thank their families we should also look at those who stand ready and prepared to do the same each day.
I have many close friends who have served in every branch of the military. While they all have different stories, different backgrounds, and different paths that lead them to where they are now, they all share a common love of country, honor, duty, and humility. My brother in law is retired special forces in the Army and my good friend is the equivalent in the Air Force (TACP). Let me tell you the training they underwent leaves me without question as to why our armed forces are the best in the world. These two exhibit the utmost humility and don’t let on to being a major badass. #DontMessWithTom&John
<<<<That is a pic I took of my friend and his grandma at his TACP graduation. #BadassesLoveGma
I look at the glory of a professional athlete and compare it to the work and dedication of the men and women in the elite tactical teams of our military with absolutely no recognition. It saddens me to know that on any given night over 50,000 veterans do not have a place to call home, no bed which to sleep. Each day we walk past the same people who willingly and graciously took arms and stood between us and any enemy who faced our way of life; blind to their struggle of homelessness.
As I was writing this article, Moe, a friend, Marine veteran, and fellow investor called me. He was not asking about my blog but telling me about the charity for which he has become recently involved, Veterans Path Up. This charity, located out of Charlotte NC, is expanding to a national level offering a path to affordable homeownership to veterans with emphasis on the homeless, working, and disabled.
If you find it your heart to give a few hours or dollars to those who were willing to give everything for you, I encourage you to check out this group, Veterans Path Up. I personally plan to become involved as an investor as well as an American.
So, to all who have served and are serving, you have my deepest gratitude.
But now, on to our lesson…
A few years ago, 2008ish, Fort Lee, an army base in central Virginia, was in the process of a huge expansion. The base sits in Prince George County, a super rural area, but is only a few moments from the city of Petersburg. Petersburg is a place full of history, rich with antebellum architecture. A good portion of the city was burned during the Civil War destroying many of the records, making isolating the actual build date difficult to determine but the historic architectural review board tries their damnedest.
The other thing Petersburg is rich with is vagrancy, homelessness, abandoned homes, and a corrupt city government. The primary import and export are illegal guns and drugs. One in four residents do not graduate high school from their non-accredited school system. There were no real industries in the city that one would pay taxes on, if you know what I mean.
Once we hear of the Ft. Lee expansion, all investors flocked to the city to try to make homes ready to accommodate the new influx of soldiers. Why would we do this in a shitastic city? BAH and the code of honor that goes along with being in the military. We know that if we provide a quality home we can count on getting a steady payment.
This is the actual building. Can you believe we fit 5 huge units in there?
I bought a multi-unit building with an out of state investor. This thing was a raging POS. There was a hole going straight from the unsecured basement right into the kitchen of the largest unit.
Across the street was an actual crack house. The yard was scattered people who had stumbled out of the crack house and decided to take a nap in the tall grass of the front yard.
Ya’ll know me back in the day. IDGAF!! I’m going to make this place AMAZING!!
I hired contractors through an open addition more or less and we are ready to roll.
Remember the hole? Well as it turned out that was being used as the front door for the vagrants who frequented the street pharmaceutical facility across the street, affectionately known as “yellow house” to the patrons and as “that f#$%ing crack house” to the rest of the block.
I’ll be brief today and not go into how I harassed the police department about the trespassers so much that the chief assigned his own son to lead the “Downtown Initiative Campaign,” aka kick the panhandlers, vagrants, and drug users out of the areas with investor focus.
Anyway, about a year and a lot of headache later, the building was complete. The estate we transformed was named Collingwood, so we named it The Collingwood Apartments. (Should have used lofts, its trendier.)
In the weeks prior to getting the CO I was networking with Housing at Ft. Lee. I let them know that we were military friendly and wanted to provide the best housing experience for those who serve. We set our prices right at BAH for officers (O1) but agreed to honor the lesser amount for enlisted (E1) if we had units available after offering preference to officers. We allowed pro ratta for deployment. Meaning if you get deployed on the 3rd we will give you back 27 days of rent. We had a furnished unit for soldiers on TDA (temporary duty assignment). They loved us at Ft. Lee. We were generally almost 100% military occupied. So, besides an occasional complaint from the neighbors in the house next door about a party when some guys came in on leave that got rowdy with their battle buddies, we were golden.
The market rents for the area equaled about $550 per unit but we were happily taking in about $900. We created our own community for military.
Unfortunately, due to the continued corruption in the city government, soldiers are now strongly advised to not reside there. The property is a thorn in my side that loses money now.
My friends, I want to tell you about how to utilize being near a military base to your advantage in REI.
What is BAH? BAH stands for Basic Allowance for Housing. This is the stipend that is given to anyone in the military living off base on active orders.
How am I paid? You are paid directly from the tenant.
How much am I paid? The amount you are paid will depend on several factors. 1. Location- BAH is calculated based on fair market housing cost for the area. 2. Rank- The BAH is dependent upon if the soldier is enlisted, commissioned, or noncommissioned and the rank therein. For example the BAH in central Virginia for an E1 starts at $996 but for an O7 it can be as high as $2298 per month. 3. Familial Status- A service member with dependents, husband or wife and/or children, will have a higher payment as it is assumed they will have higher expenses.
How is BAH different than Section 8? Section 8 is actually part of the Affordable Housing Act and is simply the 8th section of said act. Initially, the government created “housing projects” where one qualified for free or very inexpensive rent by having low or no income. This program morphed into private owned project based section 8 communities and then to the Housing Choice Voucher Program. This is the Section 8 most SFR investors are familiar. The tenant brings you a HCV packet from the housing authority of issue, you fill it out, the issuing authority inspects the building and either passes or fails you. Should the unit pass, you are then the government issues a check to you each month for 12 months. The tenant may or may not have to pay a portion. Your rents are limited.
When dealing with BAH, you are paid the agreed upon amount by your tenant. There is no middle man. The soldier has the right to spend as much or as little of his BAH as he chooses. The soldier makes her own decision as to the home for which she wants to live.
If you have a multi-unit property and you want to cater to military, the housing office will probably want to check out your property in order to ensure quality before sending anyone to you. This is especially true if you plan to have a furnished unit or two for TDA (Temporary Duty Assignment). These units are paid by the base, not the soldier, for occupied days. If you are near a training facility, you should stay full if you make sure that you keep a good rapport.
Can I use this for lease purchases and owner financing? Yes. BAH is paid to active soldiers who do not live on base as well as reservist or military personnel on TDA that have an off base living expense.
How do I market to military? There are sites for military to post to military. If you are active or a veteran, you can use those resources. Otherwise, for us civilians, there are a few sites that cater to military sales and rentals that we can use. Google it.
Use verbiage to indicate that you are looking for military such as “We honor BAH rent max” or “Waived security deposit for active military.”
Get in good with the housing office on base. Some cookies and charm go a long way. (Make an appointment. Be sure to have ID and proof of auto insurance if going on base as a civilian.)
What if they don’t pay? Since we are not collecting directly from the government we are left to collect from the tenant or buyer, just like every other non-section 8 tenant/buyer. Screen the applicant just as you would. You have all of the same legal remedies as you would any other time.
Oh wait! One more thing…. A call to the commanding officer doesn’t hurt. Not like a tattletale asshole…like this….
“Major Davis, I am sorry to bother you but I rent to Bob Jones and I am concerned and would like to know if he has been deployed or anything. I have not received his payment this month and I cannot seem to get him on the phone. If he is away I can have the manager keep an extra eye out for his place to make sure it is secure.”
You will probably have a check and an apology by the end of the day.
My apologies for the not so funny vibe of the article this week. Next week I gotcha. Don't worry about that. I will tell you how my friend Eliot and I sold his dad's marketing material for candy and how that turned out.
Happy Investing My Real Estate Junkies!!!
I was born an entrepreneur. I am pretty certain that I was peddling passies in the hospital when the nurses left the room.All of the other kids in the neighborhood were riding bikes and playing with dolls I was selling jewelry out of a catalogue and creating a back yard consignment shop. At 21 I became a real estate investor and fell in love. This was/is/ and always will be my passion. I have been madly in love with flipping, holding, and writing offers on real estate that seem crazy for 18 years. Ladies and gents I am willing to share the love of my life with you. Maybe its polyamory maybe its jut because I can’t shut up about it. Either way I will be sharing every mistake I ever made and the lesson that came from it. I love questions. Please ask away!!!