The Pros and Cons of Renting to Military Tenants
July 14, 2023
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Should You Rent To Military Tenants?
Are you considering renting to military tenants?
Not sure if it’s wise?
You’ve come to the right place.
In this article, we’re going to cover the advantages and disadvantages that come with renting to military tenants.
Let’s start with the pros. Some of these are more obvious than others, but they’re all important.
Pro #1: Typically have Reliable Income
The first advantage of renting to military tenants is consistent income. Most military renters use their Basic Allowance for Housing (BAH) to cover rent costs. The military typically provides this stipend for personnel living off-base.
The BAH is built into the service member’s paychecks, which makes it a reliable source of income for covering rent payments. The amount depends on the location they’re based in, their rank in the military, and if they have dependents relying on them.
As a landlord, it’s easy to verify a service member’s BAH amount. Request a Leave and Earning Statement (LES). This statement shows details on income, including their housing allowance and leave status
Pro #2: Often Possess a Strong Work Ethic
Most military tenants are good renters because they have a strong work ethic and live extremely organized lives. Thus, they typically take care of property and respect their living quarters. They’re also usually very clean, which is great for landlords.
Pro #3: Make Renting in Rural Areas Easier
Rentals in rural areas aren’t always easy to fill. Finding reliable tenants can be a challenge. Military renters can make this much easier. Military bases are often located in rural areas, so this may be a great solution to your struggles if you cannot find great tenants.
Pro #4: Allow Renting Through the Military Housing Program
If you rent to military tenants and families, be ready to familiarize yourself with the Rental Partnership Program (RPP). This Housing Service Center (HSC) program connects local landlords with available housing to service members looking for reasonably priced, off base accommodations. And, if you take part in the program, you can still rent to non-military people as well.
Here are some benefits this program affords landlords:
- The ability to market your rental on applicable RPP websites, so that service members looking for housing can easily find your offering
- The knowledge that any active-duty tenant must have permanent orders to stay in your area throughout the applicable lease period of the RPP property
- The assurance that rent can be paid using applicable funds given to service members for off-base housing.
It’s important to briefly mention that this program does require these eligibility requirements for landlords:
- A clean record with the HSC
- A property that meets inspection standards laid out by the HSC
- A signed memorandum of agreement that certifies you agree to RPP terms and guidelines as a rental partner
- A willingness to offer a 5% to 15% discount on your advertised rate (or supply a discount through other means like waiving application fees, the security deposit, or move-in fees).
- An acceptance that the RPP doesn’t guarantee your unit will always be filled
- An acceptance that the RPP won’t cover damages to the property or late/missed rental payments
Now that we’ve looked at the pros, let’s talk about the cons of renting to military tenants.
Con #1: Often move with Limited Notice
Military renters are duty-bound to their job before everything else. Thus, if they receive orders deploying them to a different location or have a change in station orders, they must move. The law protects them from repercussions that are typically common with breaking leases early through the Servicemembers Civil Relief Act (SCRA).
Naturally, this can be a deterrent for landlords to offer military tenants and families housing. No landlord seeks out that kind of uncertainty. However, programs like the RPP try to address this issue as effectively as possible. The RPP requires service members to be permanently stationed at the rental location for at least the lease length. Additionally, most service members find themselves stationed in one location for two to three years.
Con #2: May Struggle to Pay Rent on Time
It’s not unheard of for military tenants to get behind on rent, even though they have the BAH. If this becomes a problem, the SCRA protects them from evictions due to late payments and allows them to postpone paying. This, of course, can put you in a difficult spot with little ability for recourse.
Con #3: May Lead to High Tenant Turnover Costs
As a landlord, you need to make money off your properties. Thus, a group of people that move frequently present multiple concerns surrounding turnover costs:
- Marketing and Advertising Expenses: When a military tenant moves out, you’ll need to attract new tenants to fill the vacancy. This may require advertising the property, creating listings, or hiring a real estate agent, which can add up.
- Screening and Application Fees: To ensure you find reliable tenants, you’ll want to conduct background checks, credit checks, and verify references for potential renters. These screening processes often involve fees covered by you.
- Property Maintenance and Repairs: Before new tenants move in, you may need to take care of any necessary repairs or maintenance tasks. This can include fixing damage, repainting, cleaning, or replacing any dilapidated items. These costs may be expensive depending on the condition of the property.
- Vacancy Period: Finding new tenants takes time, and during this period, your property may remain vacant. The longer the property sits empty, the more income you lose. It’s crucial to minimize the loss of revenue.
- Administrative Costs: The process of screening new tenants, preparing lease agreements, and handling paperwork can involve administrative costs such as legal fees, application processing, or hiring property management services can add up as well.
- Potential Loss of Rental Income: If a military tenant terminates the lease early under the SCRA due to military orders, you may experience a sudden loss of rental income. While there are protections in place for both landlords and tenants under the SCRA, it can still disrupt your cash flow.
Can You Refuse to Rent to Service Members?
You’ve weighed the pros and cons. You’ve considered if you want to rent to military tenants. But now you wonder, can you refuse to rent to them legally?
It all depends on state and local laws. Military status isn’t a protected class per the Fair Housing Act, which means there aren’t federal laws forcing your hand. That said, you should always review state and local laws to ensure your decision (whatever it may be) is lawful.
It’s important to consider the pros and cons before you decide to rent to military members. It’s also critical to review state and local laws. You want to make a decision that supports your business well and follows the letter of the law.