You may invest in real estate as a military member in many ways. As a result, to identify which strategy is the most beneficial for your current situation in life, you may need to familiarize yourself with a few of them. The following are some tips to get you going in the right direction.
1. Owner-occupied Investing
You’ve probably heard about VA loans. VA loans are government subsidies (actually, technically loan insurance for the banks) that may help you secure a home mortgage with no deposit required. Yes, 0% down! You may even convince the seller to cover most of the closing expenses, leaving you with essentially little cash outlay.
But how does owning a home for yourself relate to investing? After all, a home isn’t a significant investment. Well, at least not in the traditional sense. Yes, the home may appreciate in value, but that is speculation. But there are two instances when a homeowner may become an investor:
Home-to-Rental: Many US Military service members naturally move constantly. You may get orders to serve overseas or you may be stationed at several locations in the United States. So many service members become real estate investors almost by mistake, just by renting out their old house when they relocate.
Small Multifamily: A fourplex, triplex, or even duplex are great options for service members. Most lenders, including VA loans, treat these residences as single-family homes. That is, you may reside in one unit and rent out the others to fund the mortgage.
2. Turnkey Investing
One of the most common ways to invest in real estate while constantly moving, is via a “turnkey” firm. While each firm functions differently, they all seek to offer a “one-stop-shop” for purchasing and leasing residential real estate. They can discover the property, assist with financing, manage the renters, and handle much of the accounting.
Turnkey firms tend to negotiate better terms since they are used to recurring customers and successful investments.
If you want to ease things, go with a turnkey supplier, but do your research! You should still examine and run the numbers to verify that the ROI/cash-flow the turnkey firm is providing matches the numbers you have calculated for the property they are advertising in their inventory. Never take the turnkey company’s word as gospel. Listen, but verify.
Also, interview as many turnkey providers to find the best match with what you are wanting in an investment. Ask for recommendations and set a meeting to call them. Treat this turnkey corporation like any business and perform your due diligence.
However, you need carefully assess your alternatives and study each property that comes across your desk to ensure you receive a solid investment deal.
3. DIY Rentals
If turnkey rentals aren’t your cup of tea, you may invest in a property from afar. With this strategy, you choose a market you would like to invest in, perform your research online, consult with multiple management companies over the phone, employ an inspector to evaluate the property, organize finances, and sign the documents, all without ever having to leave your state (or your overseas location).
The most significant disadvantage of this strategy, is potentially not knowing the communities surrounding the property you want to place an offer on. You have heard the adage, “location, location, location” in particular with rental property investing.
Most houses seem fantastic online because the seller’s agent has a contractual obligation to portray the home in the best possible light. Or that the building is situated between two residences with similarly loud neighbors. Don’t worry if you don’t know how to do it yourself:
Travel to the location to see what you’re getting into. Arrange as many contacts and property tours as you want to get a sense of the neighborhood.
Have a reliable team: You can avoid being fully present if you establish a solid ground team. Such a team should include a quality local realtor (investor-friendly one), a property manager, and a contractor to give you bids for major renovations.
Use the internet: This is a very powerful tool when it comes to real estate investing. Google Street View allows you to practically “drive” along every major road in the United States in only a few minutes. Use internet tools to research the area.
If you intend to do it yourself, you should educate yourself beforehand. Many experienced investors would not use this method due to the enormous risk—so make sure you comprehend what you are doing. Investing in rental homes may be profitable if you do your due diligence and invest wisely.
4. Team Up
If you want to invest heavily but do not have the skills, experience, capability, and time to do it alone, try teaming up with other experienced investors to leverage their abilities.
You see, being in the military gives you a crucial asset: W2 income. That is, you can easily qualify for a mortgage, and due to TDYs/deployments, you can also have money saved up for reserves. Your difficulty finding the best location may be matched by another investor’s insufficient funds, credit, or employment history.
Great collaborations bring investors together with diverse abilities to achieve objectives they couldn’t achieve alone. Examine your abilities. What can you bring to the table?
5. Crowdfunding
This is a new trend in real estate investments. Crowdfunding is the practice of pooling several investors to buy real estate. Several websites have gained momentum as lucrative yet passive real estate investment options.
Summary
Military real estate investing can be a great way to achieve financial independence through passive income strategies. They have the potential to be a force multiplier if utilized correctly!
A VA loan is a fantastic alternative to the traditional owner occupied conventional loan or FHA loan. Combining the VA loan 0% down payment benefit with the house hacking strategy can put you in a position to start generating cash flow. By renting out by the room in a single family home, or units in 2-4 multifamily property, will give you the credibility and title of real estate investor. By the nature of being in the military, through a PCS, it will allow you to utilize the VA loan more than once and explore new markets. Distance real estate investing is fun and contributes to developing solid systems and networks in the business. Start trying out one or some of these strategies and you will soon see that it is not hard to become a successful military real estate investor.
