DSCR Loans Near Military Bases: Stable Tenant Demand Investment Guide

Military bases are rental property goldmines hiding in plain sight. The U.S. Department of Defense employs over 2.8 million active-duty and civilian personnel across hundreds of installations nationwide. These service members need housing — and the government literally pays them a monthly housing allowance (BAH) to rent it.

For DSCR loan investors, military markets offer something rare: government-backed rental demand with predictable income. BAH rates are published annually, tenant turnover follows a regular PCS (Permanent Change of Station) cycle, and demand is tied to federal defense spending — not local economic cycles.

This guide shows you how to leverage DSCR loans to build a portfolio of military-adjacent rental properties.

The BAH Advantage: Government-Backed Rent

Basic Allowance for Housing (BAH) is a non-taxable monthly payment given to service members to cover housing costs. BAH rates are calculated based on:

• Duty station location: Rates vary by ZIP code
• Pay grade: Higher-ranking service members receive more BAH
• Dependency status: Members with dependents receive higher rates

Why BAH matters for investors:

BAH effectively sets the rental market near military bases. Service members receive a specific dollar amount for housing, and they spend up to that amount on rent. This creates a transparent, predictable rental market where you know exactly what tenants can afford.

Example BAH rates (2026, with dependents):

Rates are illustrative and based on recent BAH tables. Verify current rates at the DoD BAH calculator.

The key insight: price your rental at or just below the BAH rate for the most common pay grades (E-5 through E-7). This maximizes your income while ensuring service members can afford the rent without out-of-pocket costs.

Best Military Markets for DSCR Loan Investors

1. Fayetteville, North Carolina (Fort Liberty)

Fort Liberty (formerly Fort Bragg) is the largest military installation in the world by population, with over 50,000 active-duty soldiers and their families. Fayetteville's economy is built around the base, creating massive and consistent rental demand.

Market numbers:

• Typical 3BR home: $200,000–$260,000
• Target rent (E-5/E-6 BAH): $1,350–$1,500/month
• Rent-to-price ratio: 0.65–0.70%

Sample DSCR Calculation:

At metro median, the DSCR is tight. The strategy in Fayetteville is to target properties in the $180,000–$210,000 range in areas like Hope Mills, Spring Lake, and the Cliffdale corridor. These neighborhoods are popular with military families and offer properties that rent for $1,300–$1,450, producing DSCRs of 1.05–1.20.

Pro tip: 4BR homes have an edge in military markets. Families with dependents (who receive higher BAH) typically need more space. A $210,000 4BR renting at $1,500 produces a meaningfully better DSCR than a $200,000 3BR at $1,350.

2. Killeen/Harker Heights, Texas (Fort Cavazos)

Fort Cavazos (formerly Fort Hood) is one of the Army's largest installations, supporting two armored divisions and over 45,000 soldiers. Killeen and neighboring Harker Heights exist almost entirely to serve the base.

Market numbers:

• Typical 3BR home: $190,000–$250,000
• Target rent (E-5/E-6 BAH): $1,250–$1,400/month
• No state income tax

Sample DSCR Calculation:

Texas property taxes are the challenge here — rates of 2.0–2.5% eat into cashflow. Target newer construction (2010+) in Harker Heights where maintenance costs are lower and rents are slightly higher. Properties in the $185,000–$200,000 range renting at $1,300+ can produce DSCRs at or above 1.0.

Strategy: Look for properties eligible for Texas property tax protest. Successfully protesting your assessed value by $15,000–$25,000 can save $300–$500/year in taxes, directly improving your DSCR.

3. Clarksville, Tennessee (Fort Campbell)

Fort Campbell straddles the Tennessee-Kentucky border, but most off-base housing demand flows to Clarksville, TN. This is one of the fastest-growing cities in Tennessee, with both military and non-military population growth.

Market numbers:

• Typical 3BR home: $225,000–$280,000
• Target rent (E-5/E-6 BAH): $1,300–$1,450/month
• No state income tax (Tennessee)

Sample DSCR Calculation:

Clarksville's challenge is that home prices have risen faster than BAH rates in recent years. Target older neighborhoods in the $200,000–$220,000 range or look at smaller 3BR homes in outlying areas like Oak Grove (KY side) where prices are $175,000–$210,000.

The Clarksville advantage: Unlike pure military towns, Clarksville has diversified its economy with manufacturing (LG, Hankook, Google data center) and proximity to Nashville. This means your tenant pool extends beyond military, reducing single-source risk.

4. Virginia Beach / Norfolk, Virginia (Naval Station Norfolk)

Naval Station Norfolk is the world's largest naval base, and the Hampton Roads region supports multiple installations including Langley Air Force Base, Fort Eustis, and Joint Expeditionary Base Little Creek. The combined military presence creates enormous, diversified rental demand.

Market numbers:

• Typical 3BR home: $300,000–$380,000
• Target rent (E-5/E-6 BAH): $1,550–$1,750/month
• Higher BAH rates reflect higher cost of living

Sample DSCR Calculation:

Norfolk/Virginia Beach is a tougher DSCR market at face value. The strategy here is to target the Chesapeake or Suffolk areas where $260,000–$290,000 homes rent for $1,550+, or to pursue small multifamily properties (duplexes) where combined rents clear the DSCR threshold.

The fleet factor: Navy deployments create a unique dynamic. Sailors on deployment still receive BAH and maintain their leases. This means virtually zero vacancy during deployment cycles — your tenant is paying rent while literally not occupying the property.

5. Colorado Springs, Colorado (Fort Carson / USAFA / Peterson/Schriever SFB)

Colorado Springs hosts four major military installations plus the United States Space Command. The combined military employment is massive, and the city has a thriving non-military economy (tech, aerospace, tourism) as well.

Market numbers:

• Typical 3BR home: $380,000–$450,000
• Target rent (E-5/E-6 BAH): $1,800–$2,050/month
• Higher BAH reflects Colorado's cost of living

Sample DSCR Calculation:

Colorado Springs is an appreciation-plus-military-stability play. The DSCR at median prices is below 1.0, but areas like Security-Widefield, Fountain, and the southeast side offer $320,000–$360,000 properties renting at $1,800+, improving the DSCR to the 0.95–1.05 range.

Long-term value: Colorado Springs is growing rapidly beyond its military roots. Properties purchased today may appreciate significantly while providing stable military-driven occupancy.

Military Market Investing: Essential Strategies

1. Price to BAH

Research current BAH rates for your target installation. Price your rental at or slightly below the BAH rate for E-5/E-6 with dependents (the most common renter profile). This ensures maximum occupancy — service members prefer spending exactly their BAH on housing, no more.

2. Understand the PCS Cycle

Military families move on a 2–3 year PCS cycle, creating predictable turnover. The peak moving season is May–August. Plan your property acquisitions to be rent-ready before summer PCS season.

Turnover isn't bad: Military tenants leave on a schedule, and new ones arrive on the same schedule. If your property is priced at BAH and in good condition, it will rent quickly during PCS season.

3. Accept Military Clauses

The Servicemembers Civil Relief Act (SCRA) requires landlords to allow lease termination with 30 days' notice when a service member receives PCS orders. Don't fight this — it's the law, and it's the cost of doing business in military markets. The high demand more than compensates for occasional early terminations.

4. Build Relationships with Housing Offices

Every military installation has a Housing Services Office (HSO) that maintains lists of available off-base rentals. Getting your properties listed with the HSO provides free marketing to incoming service members actively searching for housing.

5. Maintain Properties to Military Standards

Military families inspect properties with a critical eye — they're used to on-base housing standards. Keep your properties well-maintained, and you'll enjoy higher retention, fewer complaints, and faster re-leasing between tenants.

6. Consider Military-Adjacent Employers

Defense contractors (Lockheed Martin, Raytheon, Northrop Grumman, BAE Systems) cluster near military installations. These employees are a bonus tenant pool — they earn private-sector salaries, stay longer than active-duty members, and don't trigger SCRA lease breaks.

Why DSCR Loans Fit Military Market Investing

• Predictable income: BAH-driven rents are transparent and verifiable, making it easy for lenders to underwrite
• No personal income scrutiny: Scale your military market portfolio without hitting conventional loan limits
• LLC ownership: Protect yourself with entity structures — DSCR loans close in LLC names
• Cross-market scaling: Buy near Fort Liberty in NC AND Fort Cavazos in TX with the same loan program

The Bottom Line

Military base markets won't make you an Instagram real estate celebrity. They're not flashy, the properties aren't stunning, and the towns themselves are often unremarkable. But they offer something more valuable: reliable, government-backed rental demand in affordable markets.

The DSCR math in military towns can be challenging at median prices, especially in higher-cost markets like Colorado Springs and Virginia Beach. The key is targeting specific neighborhoods and property types that align BAH rates with achievable purchase prices.

For investors who value stability and predictability over speculation, military markets are hard to beat.

Build Your Military Market Portfolio with HonestCasa

HonestCasa offers DSCR loans designed for real estate investors. We understand military markets, BAH-driven income, and the unique dynamics of base-adjacent investing.

No tax returns. No W-2s. Just properties that service their debt.

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