Why Rent to a Military Family - Character, Pay and Supervision - Camp Pendleton, San Diego, 29 Palms and Beyond
A military family may get orders to leave in months, short of a year, and will get orders to leave in one, two or three years, and then my rental home will be vacant. That is the main concern with renting to a military family. This is my experience with many investors' properties as well as our own; it is not scientific, it is anectdotal, and I hope it is helpful in doing your homework as an investor.
FEWER MILITARY FAMILIES RENTING in March 2010
Right now in the Camp Pendleton area, the Basic Housing Allowance (BAH) is actually higher than market rents in certain neighborhoods of Temecula, Murrieta and surrounding areas. That means a military family can afford to buy for less monthly than it costs to rent, and if rents hold steady, when they leave they can rent that home out for enough to cover their mortgage, taxes and insurance. With 100% VA loan financing letting them buy (if the purchase is structured correctly and they qualify) with $2000 or less down. This makes the military tenant perhaps more rare in the current market: if they focus on it, they see they could buy for less and have an investment building equity while they serve their country. This leaves fewer military families in the rental market.
"LESS THAN A YEAR"
Our experience has been that the "less than a year" move is quite rare. It seems about as rare as a non-military renter breaking the lease.
MOST STAY TWO OR THREE YEARS
The typical military family will move in two or three years, fewer at the one year mark. Still, even a family that buys a home tends to move every three to seven years, so having a tenant for two or three solid years seems to me a plus.
SOME STAY LONGER
Some military families are allowed to "homestead" - that is the term I've heard, not sure if it is official in the military. This means that they get to skip the coast to coast moves that are typical of the military population and stay in one area for six or more years. This can be a great tenant.
SCREENING
What about the concern of "will they pay the rent." Any tenant should be screened with a credit check as well as phone calls to their references. Anectdotally, it seems that credit scores below the mid-600's make for a tenant who is not timely with the rent.
ABILITY TO PAY
The military tenant receives a Basic Housing Allowance (BAH) that is supposed to be enough to rent housing off base if the on-base housing is not available. It is a pay on top of the basic pay. It changes over time with the changes of the costs of housing in the area, so it can lag and be a little less than market rents, but it usually is not far off. This means the military family get steady pay with an additional portion for market rents, and lends to the military family being very able to pay rent to the landlord.
ABLE TO PAY, BUT NOT PAYING
With BAH and able to pay the rent with proper budgeting, if a military renter has hiccups in paying, the landlord can - unlike in the civilian world - contact his/her command and explain the situation. The command can put pressure on (and even order, I believe) to compel the rent payment and hopefully on time.
These are my findings and perspectives on renting to military families. I hope you find them helpful.
San Onofre is operated by Southern California Edison, has about 2,000 employees, and provides electricity to the Los Angeles metropolitan area, as well as Riverside County and San Diego County. Reactor Unit 1 was built in 1968, with Unit 2 coming online in August 1983 and Unit 3 coming online in April 1984. Unit 1 one was decommissioned in 1992.
