Exploring the Potential Obstacles of Owning Military Housing Apartments as an Investment

I'm pro military. It's just that military tenants can break their lease without any penalty in the event they get relocated. Unit turns can often range from $1,500-$4,000+ each to get them ready for the next tenant.

If a military tenant gets relocated early in the lease agreement, the unit turn costs make it unprofitable.

On the lending standpoint, anything with 20% or more of tenants employed by the military is considered "Specialized Housing."

With specialized housing comes different loan terms to account for a perceived greater risk on the lender's standpoint.

One of their main concerns is that a large relocation or deployment occurs and around 20% of the tenants immediately vacate with no penalty. In that case, the NOI would likely fall below the debt service amount and the lender's would struggle to get paid.