Posted by Judd on July 25, 2002 at 01:15:27:
You are thinking ahead, concerning DS part II. I own a rental in Killeen which went down over $20K in value during Desert Shield/Storm. I was fortunate that my tenant was not deployed, and did stay in the house. Killeen was a ghost town, and judges will not enforce payment on a lease during conditions like this. Whether the possible upcoming missions will hit Ft Hood with the same impact or not is hard to tell, but you are at least considering the impact. have your friend analyze his financial situation to see how long he could make payments if 3 of the apartments went empty for 5-6 months. Then determine his comfort level with that.
Killeen is a great area to buy rental properties, but the resale market is very tough. As you probably know, constant overbuilding keeps values from moving up very fast, and new properties can be aquired for the same as older ones.
Looking at the numbers you listed, $650/month, these must be real nice apartments, and located well, as this is at the upper market level in my opinion (of course I could be wrong on this, I’m currently in Afghanistan).
My last comment is on the cash flow/your friend living there. If your friend has the intent of living there, the military will pay more than the $650 lost rent for his housing. In effect he will not be losing the rent. He could even possibly get a roomate and split the $650. I would not tell VA that I was going to move into a property, unless I actually planned to do so. while it may not come up as an issue with VA, it IS a character issue called integrity. Do people do this and get away with it, yes. But it is dishonest.
You also have a ? by the insurance. The only way to know is to get a quote from an agent. Get this in writing. According to my property manager in Killeen, the insurance rates recently got jacked up concerning rental. Increases of up to 50% with no claims on the policy.
We are not supposed to list businesses, but if you email me I can highly recommend a property manager in Killeen. I have used the same one since 1989 and been very pleased with their service.
Good luck on your friend’s investing.