0:00 there's a term for it called house hacking and so i tried a bunch of different things i tried multi-level marketing i tried selling life insurance right it didn't work for me was it the expression closed mouths don't get fed who are you and where are you going [Music] what do you want together we'll find the ideal path on the way to wow show with your host kevin bemel welcome to the way to wow show my guest this week is mike foster a graduate of the u.s
0:37 naval academy real estate investor best-selling author and the co-founder and host of the number one podcast for military and veteran people investing in real estate the active duty passive income podcast since 2017 mike has interviewed some of the world's most successful entrepreneurs including robert kiyosaki grant cordon and jocko willink mike is also on the board of directors for the strategic alliance for veteran
1:12 integration a non-profit organization that helps military people transition to civilian life in a fantastic way mike is with us today to help get you started on your path to financial independence but first we're gonna go make a cocktail [Music] so here on the way to wow show we are very excited that bc hoffman is back chef bc from dc
1:47 and also former general manager for the edison and and now you're working with um um tell me the other proof medium x proof media mix right doing a lot of their programming and such so bc is going to mix up a drink for me to have with uh my friend mike foster yeah i'm excited flowing in from hawaii well do i need to tell you his arms are tired i mean i'm sure or i mean whether swimming or flying either way that's that's an extended trip well he's a navy guy so he wouldn't swim okay is that a thing maybe okay yeah you'd be surprised how many people in the navy don't know how to swim sink but not swim
2:23 i think i'd be in that category too okay um no i'm excited actually i i knew he was coming from hawaii which is what prompted me to decide to make this cocktail yeah what is this contraption well i mean looks like a robot from the jetsons it is a shaved ice maker so you know what's hawaii known for if you look at like their top 20 foods shaved ice is one of them and uh you know i wanted to have the fruits that are from hawaii in there so we've got pineapple we've got coconut we've got papaya and then uh
2:58 wow you know just to make it boozy because what's a snow cone without alcohol worth eating yeah exactly we want alcohol in there so i've got a little uh rum agricole in here oh nice okay so i'm excited because also rum agricole a lot of people don't know i know you do but they they have this misconception that rum agriculture is the same thing as rum it is in the sense uh but the french translation is literally uh sugar cane juice rum versus from a molasses product i mean it's more like cachaca i think i would say it's it's definitely
3:33 more in that line yeah um it's really just location right west indies is going to be rum agricole and casas specifically from brazil right um so yeah you have regular ice in here and then it's gonna get loud okay fair warning okay now is the time to cover your ears i'm just gonna throw this down and then give that a base and we'll just do the same thing with the other one as well yeah all right yeah so lovely and then
4:08 we're just gonna take a little bit of our syrup which has the rum agricole already in it the pineapple the coconut and then we'll do the same thing with this one and of course we gotta add a little bit more ice and a little bit more of the syrup and booze just to make it even sexier okay so we'll just kind of do this number catch that there you go oh yeah that's it's interesting it's
4:44 it's actually uh melting the ice a little bit there we go just tap that down add a little bit more on top and then the garnish [Music] a layered snow cone see no kids don't get the layered kind no this is the adult this is strictly for adults we you know i i don't have snow cones when i'm a kid i only had snow cones with booze as an adult once i hit the 21 mark i think that's honestly that's right sure you really missed anything as a kid just sugar highs i guess i suppose yeah i mean you know slurpees are kind of the
5:20 same thing and i will say slurpees were pretty amazing you know but now i'll have a slurpee with booze yeah cause why not it's a slurpee worth having yeah so we're just gonna garnish that i've got pineapple wedge i'm always a big fan of representing everything ingredient-wise that's in the cocktail okay that's why i also like keeping it even though this isn't simple it's still fairly simple and then just a little bit of shaved coconut on top beautiful wow and that's it and there you have it get you a towel ah thank you okay so if you want to you can always make it
5:56 a little bit boozier uh-huh and that is the cocktail okay well i gotta be coherent for the interview so i think i'm gonna leave you you're just gonna eat both of them right it is an eating process you dimed me out too bad mike thanks so much of course thank you for having me back enjoy aloha so bc mixed this up in your honor having come all the way from hawaii oh man this is uh well you can see it's it's pineapple
6:32 it's it's papaya it's i love this kind of fall right out of my glass this is great cheers um cheers wow oh that's really yeah and there's like no snow cone i ever had before it's incredible you know i gotta eat the pineapple sorry wow
7:08 mike thanks for coming all the way from hawaii and that just blows my mind thanks for having me are they going to let you back in i have no idea i took my covet test yesterday and uh i got a negative result thank god okay good right so we're safe but my nostrils are definitely still you know flaring from just i'm jamming that thing up my nose so we'll see well and all the crazy weather changes here yeah right so you know it's it i always love speaking to someone who's been in the military who's made a successful transition to
7:44 civilian life i i i personally know how difficult that is and i've worked with a lot of people who did so your your podcast the active duty passive income podcast right that's it yeah so i thought we i'd start out by asking you because i i don't think a lot of people know when we talk about what is passive income right so just why don't you kind of define that for us first as a starting off point and we'll we'll kind of move from there absolutely so passive income is not truly passive right i mean it's it's kind of a play on words because
8:19 it gets you to think that money is coming in month after month without having to worry about it which in a sense it kind of is right it's security right and but it's really it's the ability to invest in something and get a constant return right month after month uh that requires very little of your time or effort right and that is the the true definition of why i believe is the true definition of passive income right so i guess that's as opposed to what we might call active income which would be the income from your job where you've got to go work every day at it and right make to generate the money so
8:54 you you work with primarily military people veterans um gen helping them learn to generate passive income through real estate right correct so kind of talk to us about how how does that work how do you generate passive income from real estate in a way that you know you can you can you can be in the military you know which is more than a full-time job right military work week 50 60 hours a week although that may not be that different in in civilian life but yeah how do you do that so you can you can do it in many different ways because real estate is very diverse as i'm sure you know with your background right
9:31 but it can start as simple as turning that home that you purchase with your va loan in your previous duty station you turn that into a rental property you have a property management company manage it for you right and as long as your cash flowing on your expenses your mortgage right your your maintenance maybe every once a month you have to replace something but that management fee as well once you're cash flowing on that money then you have that return coming and it becomes an extra paycheck for you right so that's that's your money working for you right that passive income there but it can also be as complex as you
10:06 know uh say you come back from deployment and you have a bonus check that's you know sitting in instead of going and buying that you know challenger right or that jeep you know you can invest that into something that will give you more return maybe you want to invest it in a multi-family um you know property and it's a project with a bunch of investors maybe you want to invest that in i've seen people buy into gas investments right like crude oil right type investments where they're cultivating the land and they're putting a return on that i mean that's not as necessarily real estate but you know
10:41 it's it's a little bit right related right so there are many different things that you can do you know with that but specifically being able to turn that home into a rental property right that's that's what i help teach and educate veterans on doing because it's not as complicated as they'll think and and we're speaking right now specific specifically about veterans so they have the va loan eligibility if they turn that house into a rental property do they lose that eligibility or no they don't they don't so then they can go and buy another house to live in
11:17 yes you can use that va loan again and again until you die now the the fallacy with the va loan is that you have to use it for that one home that dream home that you've always been looking to do whether you want to build it or buy it and renovate it up right but that's not the case right the va guarantees the bank money on um you know from that they lend to you right a certain percentage of it and you can continue to use that va loan over and over again now you can have it out twice at any given time so if i buy a property at one duty station and i pcs to another
11:52 right and i have another va loan that i take out on that property then those are the two and i have to either sell out of one or refinance out of a va loan into something that's conventional or commercial right as an investment in order to reuse it for the third time but as long as you're you know operating within the guidelines of the va you can use the va loan until you die and you never lose that benefit it's an incredible benefit so um hopefully i'm not throwing you a curveball here are there are there similar programs where you could do the same thing you know without the va for for people
12:27 who have never been in the military there are similar programs right you have your usda loans which also is another government type loan that you can get with zero money down but those are for very specific areas for specific conditions um you've got your fha loan which you can put three and a half percent down so it's not you know zero percent but it is a little bit of something but it's great because even the fha loan has a renovation component to it right if if that's something that you're looking to use right they called the 203k and you can add that in conjunction with
13:02 your fha loan and sometimes that's actually a great option for veterans to use if they already have their va benefit you know fully entitled entitlement fully used where they can't go zero percent that's actually what my wife and i did in hawaii right we bought with our second home with an fha loan out there right but um but yeah there are plenty of programs out there you just have to ask the right questions right and and you you don't what is it the expression closed mouths don't get fed all right that's it i never heard that's true um so so yeah the fha option where you're
13:39 paying maybe three percent down that sounds great here you know in in my neighborhood you know the idea of you know renting out a house uh that was bought for you know with with no money down and and then go again in another house i mean the the the prices are just they're too crazy the rent could never right come close to to covering it so how do you deal with you know being in a market where the property prices are they're just too high to make that
14:14 scenario practical that's a great question and i'll be honest if you had asked me this a year and a half ago i wouldn't have had an answer for you that made it to a place where you can cash flow but about a year and a half ago i listened to a podcast it was on bigger pockets actually and there was an investor in dc who had bought these a class properties very nice high-end you know homes and he would turn them from two bedrooms or three bedrooms into four bedrooms and five bedrooms and he would you know make them really nice throw in the nice appliances countertops you name it right and he
14:50 would rent them on section eight and the reason is because section eight right especially when you're in high income areas right there's usually demand for affordable housing right but you have a plethora of people coming in that have either a good job right they're honest working people they want a nice place to live and they're looking for something that is nice and so he has had zero problems renting out any of his property said he was talking about 35 properties at that point that he'd done this with so he would buy these homes force the appreciation by adding a couple bedrooms and roll them into the section 8 program
15:25 which the city pays per bedroom they don't necessarily pay per market value so there is a cap in which the city will go up to you know to be able to pay towards and usually it's a percentage of the income that the government will give the tenant right but it's guaranteed to you as the investor so the government pays you directly every single month and the tenant comes up with their difference of the rent or whatever that would be so it actually can cash flow on your mortgage even in the high cost area wow right wow that's interesting so for someone who has
16:01 you know really little or no money and no experience in in real estate or in you know this kind of investing you know how do they get started i mean it would i mean i'm thinking back i mean i i think they would find it pretty scary yeah you definitely would find it scary and i get it the the best place to start is always through education education is critical um because you have to understand what it is that you're getting into before you take that plunge right but but if you're going to look for a property to buy
16:36 i would always absolutely start with the home that you're going to live in especially if you're someone who you know is you know let's say you know more junior junior enlisted right just kind of getting started thinking about things financially if you have the ability to buy home even if it's a single family with multiple beds bring in some of your friends right see if they can rent from you rent out some of the extra bedrooms so that way at least you break even or cash flow on your mortgage pocket some of your bah save that up and then continue to build your education to move on to the next one right or you can buy a multi-family if you can afford it but usually that is
17:11 a little bit you know higher right so the best place to start is in the home that you have and we have there's a term for it called house hacking um so you can house factory house hacking yup that's it you can house hack through renting out extra bedrooms um if you find a place that you want to add value to by you know maybe changing up the flooring yourself the paint carpets right some cosmetics adding some square footage is typically the best way to force appreciation into a home but that could be a little advanced you know when i started out i had bought it to a
17:46 duplex in virginia beach and it was a two-story home so i ran out the bottom and i did short-term rentals on the top while i was on deployment right and that was how i got my start and i started in debt i started with i'll never forget i started with 35 000 in debt a personal loan that i that i owed back to the naval academy oh okay but but you know i i was able to get this va loan with my debt to income ratio it still worked out and and that home ended up helping me pay off that debt and invest into further properties later so you can figure it out yeah so so you
18:23 mentioned the naval academy this may be my misperception but i don't think most people look at you know mil us military people and go yeah these these are these are the savvy investors around right no not at all like they're looking at the typical marine and they're thinking if i absolutely have to have someone killed overnight you know call the marines or call the seals but otherwise so what what do you think was in your um military background or even you know going to the naval academy
19:00 that led you to this place or was there nothing and this is something you learned completely separate from it yeah that's a great question and i honestly think it was separate i don't think that there was anything that you know besides the critical thinking skills right that i've picked up along the way um that really led me towards real estate specifically my grandfather um you know he died when i was in high school but you know while i was a kid he would always drive me around looking at properties and say oh hey mike look at this look at this and i'm just in the back playing with my game with game boy right trying to catch pokemon you know so i wasn't paying any attention to it
19:36 and i never thought i would get into real estate but really i i think it was me coming back from my first tour in japan and realizing that i didn't actually want to make the navy a career i kind of just wanted to use it as a stepping stone in life to get to my next point but not really knowing what that point was and so i tried a bunch of different things i tried multi-level marketing i tried selling life insurance right it didn't work for me i saw it worked for some but it just wasn't my cup of tea but i read rich dad poor dad written by robert kiyosaki oh okay and it just completely opened my mind to the world of real estate and
20:11 being able to buy a home with my va loan get started and build that passive income right that i could use and so my goal was to build that passive income to transition that was my goal yeah so um if if if somebody wants to take some kind of action on what you're recommending they really want to get out start on this so you mentioned well get educated so where can they do that i mean there's you know see everything you want is on the internet
20:47 right including everything that's you know wrong misleading will take your money from you right it's it's every scam you can imagine right you know it's now it used to be scammers could only get you if you know they were in person right now you know they're just a click away from you so where where can people go or what can people do to take that first step toward building a passive income for for the future for their future and their families futures that's a great question and and you set the stage because there is a lot of misinformation out there
21:23 um now i could sit here and i can do a shameless plug yeah come active duty passive income right come listen to our podcast all that stuff but you know that's out there i would say the best advice that i could give to anyone getting started is to find a credible mentor find a credible mentor and follow them because really at the end of the day right success is how you define it it's not how anyone else defines it and if there is a mentor out there that's doing what you want to do and they're doing it well find that person find a way to add value to that person and follow them right shadow them do whatever it is that
22:00 they do repetitively for free right be an apprentice it's one of the oldest ways that you know people became masters of any trade right but if you find a solid mentor that is the fastest and most efficient way to be successful at anything and i didn't realize that until i hit my transition right because i had a mentor take me you know aside and say mike you are falling into a spiral what are you doing pull up pull up right and and that's that's what that's what happened and so every month i would sit down with this mentor and she really took me on her wing she
22:36 provided me all these different resources to you know help me with my business help me with my life help me with my my faith and my personal growth it was great and um and even though i felt like i had hit some level of success i would have never been able to hit that next threshold of success without having that mentor by my side so you get the education you get that networking all in one and you get someone there to guide you as you take action so you don't take as many missteps as you would by yourself gotcha gotcha well you may not want to give a shameless plug but but i will give you a shameless plug
23:12 and and you you know you you don't have to be a member of the military to listen to active duty passive the active duty passive income blog uh listen to me the active duty passive income podcast you you can you can definitely learn a tremendous amount from it um i i've actually um i heard about your podcast from from somebody else even though we met we didn't meet through that person or anything i've heard about it you know moving around in in real estate circles uh
23:47 for a while so so it really is a tremendous resource i i recommend it to you highly and and and i think too you know the idea of finding a mentor excellent excellent advice i've given it many many times myself again no matter where you're at not just for military people whether you're a civilian and making a career transition looking to become an investor or whatever exactly right um last i want to kind of give you the last word anything else that that you would like the viewers to know about the message that you bring to them
24:22 today um you know i i don't really think there is anything you know just you kind of said it you know or you reinforce it right having that mentor it doesn't matter whether you're military or not um you know having someone to guide you and and guide you through that transition in your life whatever that transition is um really can take you to that next level right it gives you that sense of clarity it gives you that sense of purpose um it makes you feel confident in yourself in your mission and whatever it is that you want to you know do and serve to with other people right and make
24:59 money whatever whatever it is you want to do in life it'll it'll really help you get that next step so excellent so we've we've got your thing uh you got it right here this is this tell us tell us about your oh this is what you're talking about uh house hacking right yeah so house hacking is like the concept we threw a military house hacking it on there because of who we serve right but yeah this was um our book that um the five of us put together five of us founders and um none of us had ever written a book before it was just you know something we put together most of it you know is all unoriginal thought you know it's almost stuff that you find
25:34 in other places but we tried to craft it in a way that you know anybody who has been in the service can understand um the baby steps to building that financial base and knowledge and so giving them an epiphany moment and saying hey maybe real estate is something i can use to to build my success on right so it's excellent so once you put it up on the uh all right in there awesome right here uh yeah that's good okay cool a nice place of prominence oh there it is all right excellent mike thanks so much for coming
26:09 on the way to wow thanks so much for having me this was my honor and absolutely honored and please religious to be here so i appreciate it that's our show for this week folks special thanks to bc hoffman who made that fantastic shaved ice tropical drink everybody on the set loved it bc thank you thank you thank you and let's remember what my guest mike foster suggested about how to get started on that path to generating passive income find yourself a mentor someone who's doing what you want to do who's doing it well who
26:44 you can follow learn from meet people through find yourself a mentor if you like the show please subscribe to our youtube channel follow us on social media courage at all times my friends marie you're still my belle [Music]
27:22 [Music] you