'Military House Hacking' Wants to Reshape Your Definition of Retirement

Michael Foster of Active Duty Passive Income

The military trains new recruits to be financially responsible -- but not necessarily financially successful. And while keeping young troops from buying cars off base at a 24% interest rate is still a good move, it's just not the only move.

That's why a handful of military veterans are out to teach military members, veterans and their families just how much financial potential they have with their military benefits in today's economy. 

Like with all financial decisions and endeavors, all users should practice caution, gather advice from multiple sources and make sure they are doing what is right for their own situation. But there are some companies that say they want to help.

Markian Sich is a graduate of the U.S. Naval Academy who became a Naval Aviator in the Marine Corps in 2013. He, along with fellow veterans Tim Kelly, Michael Foster, Eric Upchurch and Adam La Barr, started Active Duty Passive Income in 2017.

(Active Duty Passive Income)

The company offers free guides, courses and how-tos to military members who want to tap into the idea of passive income -- bringing in money outside the traditional business owner level of effort -- but need help getting started.  

Focused on helping military members establish successful real estate side hustles, the company’s Military House Hacking wants to function as a definitive how-to guide on real estate investing while still in the military.

Available as a free download, Sich says the guide isn’t a get-rich-quick scheme. Instead it details a three-step process of rental property investment that is actually very attainable for the thoughtful and patient investor who is willing to wait, save money and follow a plan.

"Passive income takes a lot of work to set up," says Sich, the founder and CEO of Active Duty Passive Income. "But the process and the outcome is something that we enjoy and we view as a service to our country. When you become a landlord, you create jobs, provide affordable and safe housing, you become smarter with money and ultimately you make America better."

It all starts with what the company calls the "Military Financial Freedom Number,” a specific, measurable number is how much money you will need to feel comfortable enough to pay your bills, take vacations and buy the occasional luxury item you've always wanted. It also tells you how many rental properties you'd need to own and how much cash you'd need to get from those investments.

To find that number, first add up your last three months of expenses, only leaving out the unusually large items you purchased, such as cars or expensive televisions. Everything else should be added including rent, utilities, restaurant checks and groceries.

Then, divide that number by three to get an average monthly spending number. Multiply that number by 1.5 and round up to the nearest thousand. The answer to this equation is the amount of money you'd need every month to live comfortably in the lifestyle to which you're accustomed.

The goal is to cover those expenses with the passive income made through owning rental properties. When you actually start buying investment properties and collecting rent, you'll find out how much you make from each property once all expenses are paid for. That income is what Sich’s team calls “cash flow.” Once you know your cash flow, you can determine how many of those rental properties you'll need to make your Financial Freedom Number every month.

(Active Duty Passive Income)

It’s taken the veterans over at Active Duty Passive Income about 20 years of careful research and planning to get to that point, but they think others can get there, too, and hope their guide functions as a primer to help.

"There are so many success stories in our community and it is truly inspiring," Sich says. "Many were doing it almost on accident, while others started after reading our book, taking our courses, or simply by learning through our community."

Active Duty Passive Income does have a real estate investment academy where you can pay to take classes. But the bulk of their informational materials are free on their website.

For more information on Active Duty Passive Income or Military House Hacking, check out the group's podcast, or its free VA Loan Mastery Course. And, as always, check with multiple financial advisers, do your homework and make sure you are doing what's right for your situation before taking any risks. 

-- Blake Stilwell can be reached at blake.stilwell@military.com.

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