- Mike Damazo is a petty officer within the US Navy stationed in Japan.
- Over the previous seven years, he is used navy advantages to spend money on actual property.
- Damazo “house-hacked” a house he purchased outdoors Fresno, California, utilizing revenue from renters and his personal navy housing allowance to cowl the mortgage.
- He additionally owns a townhouse in San Diego, which he bought for 0% down utilizing a Veterans Affairs mortgage and hopes to promote for a revenue.
- This text is a part of a collection targeted on millennial monetary empowerment known as Master your Money.
Mike Damazo joined the Navy at 18, however he knew he needed to personal actual property even earlier.
Rising up in New Jersey, Damazo remembers watching his uncles flip properties for a revenue and his mom’s and stepfather’s need to purchase a home of their very own. However when a member of the family was deported to the Philippines, they moved again there too.
“I simply keep in mind that household residence being form of taken away from me,” Damazo, a 35-year-old petty officer stationed in Japan, informed Enterprise Insider. “It was so good the home in Jersey, and that was the motivation for me to be like, ‘OK, I’m going to personal property, and I am going to have the ability to care for my mother.'”
Years of overspending pushed actual property out of attain
It wasn’t simple, Damazo realized. Stationed in San Diego for the Navy, he discovered himself “spending lavishly to maintain up with the Joneses,” he stated. He racked up tens of hundreds of {dollars} in credit card, auto, and personal-loan debt.
“I really feel prefer it was a complete of 10 years of my life, simply pondering I had sufficient cash, however actually it was simply residing paycheck to paycheck,” Damazo stated.
A turning level got here when Damazo was on deployment and attended a finance class supplied by the navy. A high-ranking official he seemed as much as stated they had been in so much worse form than he was financially. That motivated him to develop into debt-free.
However shortly after Damazo was pulled over for driving below the affect, a misdemeanor in San Diego. In 2013 he was despatched to a brand new obligation station, in Lamoore, California, a rural city outdoors Fresno. It was a setback, he stated, however coincidentally it helped him fast-track his real-estate goals.
“After I acquired there, I did not lose any rank, however I took a deep pay minimize simply because the price of residing in Fresno was method cheaper than San Diego,” Damazo stated. “I needed to actually buckle down and get into the nitty-gritty of my funds.”
Home-hacking, with leverage
In Lamoore, Damazo rented a single room for $500, took on a second job as a sushi chef, and labored onerous to repay extra of his debt. Inside a yr he purchased his first property.
“I used to be trying on the housing market and I seen homes that had been 1,300 sq. ft and cheaper than in San Diego,” he stated. After years of craving to purchase a property within the dearer coastal market however unable to afford it, the time was lastly proper in Lemoore.
Mike Damazo
The home, a foreclosures, price $165,000. He took out a USDA loan, obtainable to eligible homebuyers in principally rural areas, and acquired the three-bedroom home with nothing down.
The mortgage was $1,100 a month, however Damazo had a plan to cowl it, and switch a revenue. He rented out the 2 greatest rooms to fellow service members, for a complete of $900 a month, and lived within the smallest room himself.
Within the real-estate funding world it is known as house-hacking, whereby the proprietor of a single-family residence or multi-unit constructing lives within the smallest and often most cost-effective room or unit, and collects lease from the others.
Damazo was additionally amassing from the navy. He was getting a primary allowance for housing, often called BAH, of about $900 a month added to his paycheck. The quantity is tied to an individual’s rank, marriage and dependency standing, and pay, and relies on native rental market costs.
Damazo wanted to place solely $400 towards housing prices, $200 to cowl the remaining stability on the mortgage, and $200 right into a money reserve for residence upkeep. The remainder was his to maintain.
Constructing residence fairness in San Diego
Two years later, Damazo acquired orders from the Navy to return to San Diego. He transitioned the Lemoore property right into a full rental and employed a property supervisor. He pays them 8% of the entire rental revenue — now $1,450 a month — to deal with landlording duties and maintain a watch out for different real-estate funding offers within the space. Damazo stated he pockets about $200 a month after bills.
Inside six months of shifting again to San Diego, he was snatching up extra actual property. This time he used a Veterans Affairs mortgage, which permits eligible active-duty service members to purchase with no down cost and no mortgage insurance, and lock in a decrease rate of interest. Damazo bought a $350,000 townhouse with nothing down in La Jolla, a tony seaside group.
He and his spouse, Grace, lived within the one-bedroom residence as a substitute of renting it out, however his housing allowance had been bumped as much as $3,000 a month after returning to San Diego. That left him with one more surplus after paying his month-to-month mortgage and householders’ affiliation totaling $2,050.
Damazo put the townhouse up on the market this summer season, when he relocated to Japan. He is hoping to make a revenue so he can parlay his earnings into a brand new funding property, he stated, presumably in Texas, the place actual property is cheaper.
For now he is hanging on to the rental property in Lemoore, armed with an exit plan to promote if his prices exceed revenue generated from tenants.
It is only the start
“The purpose is eight properties, passive revenue, and simply having the ability to stick with it,” stated Damazo, who runs a YouTube channel known as “Fitness Wealth,” the place he talks about his personal journey to constructing wealth, shares personal-finance recommendation, and interviews consultants.
His recommendation to fellow service members seeking to get into real-estate funding is to reap the benefits of the month-to-month housing allowance from the navy by residing under their means.
For many who haven’t got navy perks obtainable however are excited by real-estate investing, be affected person, he stated.
“Persistence is the largest factor for somebody simply beginning off,” Damazo stated. “It is easy to form of watch and skim different folks’s tales of being a lot extra of successful in actual property, however simply keep in mind that that is your story and also you’re in your lane. Simply take it gradual and search for the correct deal. And all the time have an exit technique, it doesn’t matter what.”
