Owning Rental Property in a Military Market: Pros and Cons
WHAT YOU'LL LEARN
Why rental demand near military installations tends to hold steady
How PCS (permanent change of station) moves and lease protections for servicemembers affect landlords
What to look for before buying a rental in a military town
WHAT YOU'LL LEARN
Why rental demand near military installations tends to hold steady
How PCS (permanent change of station) moves and lease protections for servicemembers affect landlords
What to look for before buying a rental in a military town
Owning rental property in a military market can offer steady tenant demand, renters whose housing allowance is tied to local rents, and a built-in stream of new arrivals every year. The tradeoffs are frequent turnover, seasonal vacancy around PCS moves, and federal lease protections that allow servicemembers to end a lease early with orders. Military markets tend to reward investors who plan for turnover rather than hope to avoid it.
Atlantic Bay is headquartered in Virginia Beach, in the heart of Hampton Roads, a region with one of the largest concentrations of armed forces in the country. Many of the investors our Mortgage Bankers work with here started out the same way: they bought near a base, got orders, and decided to keep the house as a rental. Others buy in military towns on purpose. Either way, the market works differently than a typical rental market.
Why Military Markets Attract Rental Investors
Every military installation brings a steady flow of servicemembers and families who need housing, and many of them rent rather than buy because they expect to move again in a few years. On-base housing can't always absorb that demand, so a large share of military families live off base in the surrounding community.
Servicemembers who live off base generally receive a Basic Allowance for Housing (BAH), which the Department of Defense sets based on duty location, pay grade, and dependency status, with the goal of reflecting local civilian housing costs. For a landlord, local BAH rates offer a useful reference point for what military tenants in that area are budgeting for rent.
The Pros and Cons Side by Side
Pros of a Military Market Rental | Cons of a Military Market Rental |
Steady demand from new arrivals every year | Frequent turnover as tenants PCS |
Tenants' housing allowance is tied to local housing costs | Servicemembers can end a lease early with PCS or deployment orders |
A predictable tenant base with verifiable income | Vacancy and turnover costs tend to cluster in PCS season |
Demand that doesn't depend on one private employer | Local demand is tied to the installation's mission and size |
Many tenants are used to moving and keeping homes move-in ready | More frequent cleaning, repairs, and re-leasing between tenants |
What Landlords Should Know About Military Leases
The Servicemembers Civil Relief Act (SCRA) allows a servicemember to terminate a residential lease after receiving permanent change of station (PCS) orders or deployment orders for 90 days or more. The servicemember must give written notice along with a copy of the orders, and for a lease paid monthly, termination takes effect 30 days after the next rent payment is due. Landlords can't charge an early termination penalty, and according to the U.S. Department of Justice, that includes requiring repayment of rent concessions.
What that means for you: a 12-month lease with a military tenant isn't a guaranteed 12 months of rent. Build at least one turnover per year into your budget, and work with a property manager who knows the SCRA and the local military community. For a broader look at the responsibilities that come with a rental, see what it's really like to be a landlord.
Before You Buy in a Military Market
A military town can be a strong rental market, but not every property near a base performs the same way. Before you buy, look at four things:
Distance and commute to the installation. Homes with an easy commute to base gates tend to rent faster. A long drive through traffic can shrink your tenant pool.
BAH for the ranks you expect to rent to. Compare your expected rent against local BAH for junior enlisted, senior enlisted, and officer households to see who the property fits.
The installation's long-term outlook. A base that's growing or adding missions supports future demand. Military markets can shift when units relocate or missions change.
Your plan for PCS season. Many moves happen in the summer months, so a lease that ends in winter may take longer to fill than one timed to PCS season.
Financing a Rental in a Military Market
If you're buying a property purely as a rental, you'll typically need an investment property loan, which may require a larger down payment and cash reserves compared to a loan on your primary residence. Atlantic Bay's guide to buying a house as an investment property covers other ways investors fund a purchase.
Servicemembers and veterans have another path. A VA loan can't be used to buy a pure investment property, but it can finance a home you'll live in, including a two- to four-unit property where you occupy one unit and rent the others. Once you've met the VA occupancy requirement, renting out the home after you PCS could be an option worth investigating. Atlantic Bay's 12 things you need to know about a VA loan covers occupancy and eligibility in more detail.
The Bottom Line on Owning Rental Property in a Military Market
A rental in a military market can deliver steady demand and dependable tenants, as long as you plan for the turnover that comes with them. Investors who budget for annual vacancy, price against local BAH, and choose properties with an easy commute to base tend to see the most consistent results. Whether you're buying your first rental near a base or keeping your current home after PCS orders, an Atlantic Bay Mortgage Banker can walk you through investment property and VA loan options side by side.
Frequently Asked Questions
Chances are, if you're wondering about it, someone else has too. Here are answers to some of the questions we hear most often.
A rental property near a military base can be a solid investment because demand from incoming servicemembers and families tends to be steady year after year. The main tradeoff is turnover: military tenants move often, and the SCRA allows them to end a lease early with qualifying orders. Investors who budget for regular turnover and choose properties with an easy commute to the installation are best positioned to benefit.
Yes, under the Servicemembers Civil Relief Act, a servicemember can terminate a residential lease after receiving PCS orders or deployment orders for 90 days or more. The tenant must provide written notice and a copy of the orders. For leases paid monthly, termination takes effect 30 days after the next rent payment is due, and landlords can't charge an early termination fee.
Start with comparable rentals in the area, then check current BAH rates for the installation's duty location. BAH varies by pay grade and dependency status, so comparing your rent to the rates for different ranks can show which households your property is likely to attract. A local property manager who works with military tenants can help you fine-tune pricing.
Many servicemembers keep their home as a rental when they receive PCS orders, and it's a common way military families start investing. If you bought with a VA loan, review your occupancy requirements and talk with your loan servicer before renting it out. A Mortgage Banker can also help you understand how keeping the home could affect qualifying for your next one.