US Navy sailor recounts how he leveraged military benefits for “house-hacking” his way to passive income

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  • An American naval petty officer in Japan by the name of Mike Damazo.
  • He’s been investing in real estate for the last seven years with the help of military perks.
  • For his down payment, Damazo used the rent he received from tenants and his military housing allowance to “house hack” a property he purchased outside of Fresno, California.

San Diego home acquired for 0% down using Veterans Affairs loan, which he wants to sell for profit. He also owns an apartment in New York City.

At the age of 18, Mike Damazo enlisted in the Navy, but he had already set his sights on being a real estate investor.

Aside from the fact that his relatives were flipping houses to make money, Damazo’s family had a strong desire to acquire their own home. However, a member of the family was sent to the Philippines for deportation, so they returned there as well.

Petty Officer Damazo, who is now stationed in Japan, told Business Insider that “I just remember that family home being sort of ripped away from me.” As a result of seeing the home in Jersey, “I was like, ‘OK. I am going to buy property, and I am going to take care of my mother,'” he explains.

The cost of a home has become unaffordable due to years of overspending.

Damazo recognized it wasn’t a simple task. After being sent to Naval Base San Diego, he said that he was “spending lavishly to keep up with the Joneses.”. To pay off all of his credit card and vehicle loans, he took out personal loans totaling several hundred thousand dollars.

Damazo estimates that he lived paycheck to paycheck for almost ten years before finally realizing that he didn’t have enough money.

Damazo’s life took a turn for the better when he was deployed and enrolled in a military-sponsored financial course. An official he looked up to told him that they were in even worse financial straits than him. That was a driving force behind his decision to pay off his debts.

While driving under the influence is a misdemeanor in San Diego, Damazo was arrested soon after being pulled over. He was relocated to Lamoore, California, a small hamlet just outside Fresno, in 2013. He admitted that it was a setback but that it had the opposite effect of slowing him down in pursuing his real estate goals.

Because of the lower cost of living in Fresno as compared to San Diego, Damazo accepted a significant wage reduction when he relocated there. It was time for me to “buckle down and get down to the nitty-gritty.”

Understanding the differences between home equity loans and bankruptcy

Bankruptcy, a legal process for those who are unable to make their payments on their loans, permits individuals to pay off the debt or modify it in order to allow repayment. In filing for bankruptcy, you have the chance to reorganize and gain new beginnings with your financial situation.

A bankruptcy will affect your credit history as well as your credit score and this will affect the speed at which you can obtain a credit line following bankruptcy. The bankruptcy process is a bit different. Chapter 7 bankruptcy will stay on your credit report for as long as 10 years, and the Chapter 13 bankruptcy will stay on your credit report for up to seven years. The effect of bankruptcy on credit score is contingent on a variety of variables, including the score you had before filing bankruptcy. If, for instance, you had a very high credit score before bankruptcy, you could expect to experience a larger decrease than those with lower scores with adverse marks in the credit report.

If you’ve been in a position to maintain your residence following a Mississippi Bankruptcy noted and still have an equity stake in your property, then you might be able to tap into this equity to boost your financial situation. There are generally three options to access your home equity following bankruptcy: refinancing cash out home equity loan , and credit for home equity lines of credit.

Using leverage to break into a house

After moving to Lamoore, Damazo had to get a second job as a sushi chef to help pay off his debts. He purchased his first property within a year.

He was looking at the property market when he saw 1,300-square-foot properties that were less expensive than those in San Diego. There had been years of longing to purchase a home in Lemoore’s more costly seaside market, but no money could be found.

The foreclosed home cost $165,000 to buy. He acquired the three-bedroom house using a USDA loan with no money down. This kind of financing is only accessible to those who live in rural regions.

Damazo had a strategy to pay off the mortgage and make a profit simultaneously. At $900 a month, he leased out the two most spacious rooms to other military members and stayed in the tiniest one.

For those in the real estate investing field, it’s known as “house-hacking,” when the owner of a single-family home or multi-unit structure lives in the least expensive apartment while collecting rent from the rest.

Besides the civilian population, Damazo was also raking in cash from the armed forces. He supplemented his salary with around $900 a month in basic housing allowance or BAH. Rank, marital status, and compensation are all taken into account when determining how much a person should be charged, and the amount charged is based on current rental market pricing.

It only cost Damazo $400 to buy a house, $200 to pay off his mortgage, and another $200 for emergency home repairs. What was left, he could have.

Increasing your San Diego home’s equity

Damazo was sent back to San Diego by the Navy two years later. He hired a property manager and turned the Lemoore property into a rental. His monthly payment to them is 8 percent of the total rental revenue, or $1,450. A month’s worth of Damazo’s earnings comes to about $200.

After returning to San Diego six months earlier, he was already acquiring additional property. A Veterans Affairs loan, which enables qualified active-duty military members to purchase without a down payment and mortgage insurance and to lock in a cheaper interest rate, was employed this time. In La Jolla, a posh seaside resort, Damazo paid $350,000 for a home and put nothing down.

Instead of renting the one-bedroom apartment, he and his wife Grace chose to reside there, although his monthly housing allowance had been increased to $3,000 upon their return to San Diego. Once his mortgage and homeowners’ association fees were paid, he was left with an additional excess of $2,050 in his bank account.

When Damazo moved to Japan this summer, he placed the townhouse on the market. He added that his next investment property might be in Texas, where real estate is cheaper, expecting to reap the benefits of his profits.

Until that time comes, he’s holding on to the Lemoore rental property to sell it if his expenses surpass the revenue he receives from renters.

After all, this is just the beginning!

Damazo’s ambition to have eight homes, passive income, and the ability to keep it going on his YouTube channel, “Fitness Wealth,” where he recounts his own wealth-building experiences, offers personal financial advice, and interviews experts.

Service personnel may take advantage of the military’s monthly housing allowance and invest in real estate by living below their means.

Be patient if you want to invest in real estate but don’t have military benefits.

As Damazo put it, “patience is the most important thing for someone who is just beginning out.” “Just remember that this is your narrative and you’re in your own lane, so don’t compare yourself to others who have achieved great success in real estate. Take your time and browse around for the best bargain. Always have a plan B in place, no matter what happens.”

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