As a former Active Duty Army Officer, I've been investing in properties across the Southeast since 2008. Over that time, my properties have only experienced one month of vacancy. I know that may sound surprising, especially when people hear that many of my investments are in places like Columbus, Georgia. But investing in military towns offers several key advantages: low acquisition costs, exceptional cash flow due to above-market rents, Class A tenants (Active Duty Soldiers), and—perhaps most importantly—resilience in economic downturns.
One of my strengths in real estate investing is the ability to identify and prepare properties for Active Duty Soldiers. As a veteran who understands the lifestyle of frequent moves and deployments, I also have insight into the background finances and processes these Soldiers navigate, which is all open-source information. Now, as a veteran investor, I’m purchasing properties that offer cash-on-cash returns ranging from 8% to 14% in military markets.
Here’s why Active Duty service members make ideal Class A tenants:
1. Basic Housing Allowance (BAH) Provides Stable Rent Income
The U.S. government provides Soldiers with a Basic Housing Allowance (BAH) to help cover housing costs. This allowance is added to their monthly paycheck and is based on zip codes, which Congress typically adjusts annually. Soldiers ranked E-5 (sergeants) or above, or those who are married with dependents, qualify for BAH. You can find the current BAH rates for local zip codes here.
For investors, BAH offers a reliable anchor point for setting rent prices. If you can keep the rent below the local BAH rate while still charging above-market rates, you’re providing Soldiers with a property they can enjoy while allowing them to pocket some of their allowance. This dynamic creates an attractive situation for both the Soldier and the landlord.
2. Low Vacancy Rates
One of the unique aspects of military life is the constant need to relocate. Soldiers typically move every 2-3 years, which means over a 20-year career, they’ll likely move their families six times or more. This transient nature encourages military members to rent rather than buy. As a result, military towns often experience lower vacancy rates compared to other markets, making them prime locations for real estate investors.
3. Low-Risk Rent Collection
Military members cannot carry bad debt, which means rent collection is rarely an issue. According to Article 134 of the Uniform Code of Military Justice:
“Any person who borrows a specific sum of money from an alleged person/persons at the alleged time and dishonorably fails to pay even after the alleged due date, is in violation of the general Article 134 and shall be punished as deemed fit by the military court.”
In simpler terms, if a Soldier’s rent is delinquent, you can contact their Commander or First Sergeant. They have the authority to hold the Soldier accountable, ensuring you’ll receive your rent. This legal protection makes rent collection much more secure than in traditional markets.
4. Built-In Background Checks
Many Soldiers, especially those ranked E-6 and above, hold active Security Clearances. To obtain these, they undergo rigorous background checks that include credit reports, lifestyle reviews, and interviews with friends, family, and employers. This level of scrutiny far exceeds the standard $40 background check you might conduct on a platform like Zillow. Although obtaining proof of clearance is complex, you can request a redacted version of the Soldier’s Officer/Enlisted Record Brief, showing their clearance type and expiration date.
5. Accountability and Property Care
Military training instills responsibility from day one. Because Soldiers often move frequently, they take care of their possessions—and by extension, their rental properties. In my experience, I’ve never had to withhold a deposit for property damage. Additionally, military renters are typically self-sufficient. They’re less likely to call about minor maintenance issues, reducing the time and effort required to manage properties.
Final Thoughts
There’s a growing interest in tapping into military town real estate, and I’m passionate about helping to solve the military housing shortage. By investing in these markets, not only can you achieve strong returns, but you can also play a role in providing housing solutions for those who serve our country. Let’s work together to make a difference in these communities.
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