• Mike Damazo is a US Navy NCO stationed in Japan.
  • For the past seven years, he has used military benefits to invest in real estate.
  • Damazo “hacked” a house he bought outside of Fresno, Calif., using renters’ income and his own military housing allowance to cover the mortgage.
  • He also owns a townhouse in San Diego, which he bought with a 0% down payment on a loan from Veterans Affairs and hopes to sell for a profit.
  • This article is part of a series focused on financial empowerment for millennials called Master Your Money.

Mike Damazo joined the Navy at 18, but he knew he wanted to own real estate even earlier.

Growing up in New Jersey, Damazo remembers seeing his uncles flipping houses for profit and his mother and stepfather’s desire to buy their own home. But when a family member was deported to the Philippines, he also returned there.

“I just remember that family home was kind of taken away from me,” Damazo, a 35-year-old noncommissioned officer stationed in Japan, told Business Insider. “It was so nice home in Jersey, and that was the motivation for me to be like, ‘OK, I’m going to be a landlord and I’m going to be able to take care of my mum.'”

Years of overspending have made real estate out of reach

It wasn’t easy, Damazo realized. Stationed in San Diego for the Navy, he found himself “spending lavishly to keep up with the Joneses,” he said. He racked up tens of thousands of dollars in credit card, car and personal loan debt.

“I feel like it was a total of 10 years of my life, just thinking I had enough money, but really it was just living paycheck to paycheck. another,” Damazo said.

A turning point came when Damazo was on deployment and took a finance course offered by the military. A senior official he admired said they were in much worse financial shape than him. This motivated him to free himself from his debts.

But soon after, Damazo was arrested for driving under the influence, a misdemeanor in San Diego. In 2013, he was sent to a new duty station in Lamoore, California, a rural town outside of Fresno. It was a setback, he says, but coincidentally it helped accelerate his real estate dreams.

“When I got there, I didn’t lose any rank, but I took a big pay cut just because the cost of living in Fresno was so much cheaper than in San Diego,” said Damazo. “I had to really buckle down and get into the nitty-gritty of my finances.”

House-hacking, with leverage

In Lamoore, Damazo rented a single room for $500, took a second job as a sushi chef, and worked hard to pay off more of his debt. In less than a year, he bought his first property.

“I was looking at the housing market and I noticed houses that were 1,300 square feet and cheaper than in San Diego,” he said. After years of wanting to buy property on the more expensive coastal market but unable to afford it, the time had finally come in Lemoore.

Mike Damazo Fresno

Mike Damazo at his rental property in Lemoore, California.

Mike Damazo

The house, a foreclosure, cost $165,000. He took out a USDA Loanavailable to eligible homebuyers in most rural areas, and purchased the three-bedroom home without any down payment.

The mortgage was $1,100 a month, but Damazo had a plan to cover it and make a profit. He rented the two larger bedrooms to other service members, for a total of $900 a month, and lived in the smaller bedroom himself.

In the world of real estate investing, it’s called house-hacking, whereby the owner of a single-family home or multi-unit building lives in the smallest and usually least expensive room or unit. dear, and collects rent from others.

Damazo also collected from the army. He received a basic housing allowance, known as BAH, of about $900 a month added to his salary. The amount is linked to rank, marriage and dependent status, as well as the person’s salary, and is based on local rental market prices.

Damazo only needed to put $400 to cover housing costs, $200 to cover the remaining mortgage balance, and $200 in a cash reserve for home maintenance. The rest was up to him.

Building Home Equity in San Diego

Two years later, Damazo received orders from the Navy to return to San Diego. He turned the Lemoore property into a full rental and hired a property manager. He pays them 8% of total rental income — now $1,450 a month — to take care of landlord duties and keep tabs on other real estate investment deals in the area. Damazo said he makes about $200 a month after expenses.

Within six months of returning to San Diego, he was grabbing more real estate. This time, he used a loan from Veterans Affairs, which allows eligible active duty members to buy without a down payment and without mortgage insurance, and enjoy a lower interest rate. Damazo bought a $350,000 townhouse with nothing in La Jolla, a tony beach community.

He and his wife, Grace, lived in the one-bedroom house instead of renting it, but his housing allowance was increased to $3,000 a month after he returned to San Diego. This left him with another surplus after paying his monthly mortgage and homeowners association totaling $2,050.

Damazo put the townhouse up for sale this summer when he moved to Japan. He hopes to make a profit so he can invest his earnings in a new investment property, he said, possibly in Texas, where real estate is cheaper.

For now, he clings to Lemoore rental property, armed with an exit plan to sell if his costs exceed the revenue generated by tenants.

It’s just the beginning

“The goal is eight properties, passive income and being able to sustain it,” said Damazo, who runs a YouTube channel called “fitness wealth‘, where he talks about his own journey to building wealth, shares personal finance advice and interviews experts.

His advice to other service members looking to get into real estate investing is to take advantage of the army’s monthly housing allowance by living below their means.

For those who don’t have military benefits available but are interested in real estate investing, be patient, he said.

“Patience is the most important thing for someone starting out,” Damazo said. “It’s easy to watch and read the stories of other people who are so much more successful in real estate, but just remember that this is your story and you’re on your way. Take it easy and look for the right deal. And always have an exit strategy, no matter what.”