The Landlord Lens - VA Loan Hacks with Markian Sich

Episode Date: January 24, 2025

Markian Sich is the CEO and founder of Active Duty Passive Income and sat down with the TurboTeam to discuss buying rental properties with VA loans. Learn more about how VA loans can boost your portfolio and get you passive cash flow.

I'm Krista and this is Markion and we're here to help you be a better landlord. Markion, you have a fascinating background. I don't want to give your story away. Could you tell us a little bit about how you got into rental investing and just your general summary of self up to this point? Oh boy. First of all, thank you so much for having us. I'm so excited about our partnership and helping the military community use such an incredible piece of software that Harrison just like guided me through everything. and it just blows my mind.

This is really going to help the military community with their rental properties. And so, yeah, I'll dive into my background. It's kind of a gnarly one. So brace yourself. I actually, I'm a third generation Ukrainian immigrant to the United States. But oddly enough, I actually am kind of a first generation. I was born and grew up in the former Soviet Union right before it fell apart. It's because my parents were in Ukraine.

My dad was a nuclear engineer studying Chernobyl, and he wrote the first dissertation on that. So they had to go to Ukraine. So my mom was like waiting in line for milk for two hours and like all this kind of stuff because the Soviet Union was crumbling and it was terrible. So that's where I grew up. And then I lived there most of my life. There was a brief stint of two years in London, a year and a half or something in Sterling, Virginia. But for the most part, I grew up a Ukrainian kid, lived in Ukraine until I was like 15 and a half. And then I moved to the States and I had this massive culture shock.

You know, I got thrown right into 10th grade in high school, you know, hearing mom jokes and weird humor that I'd never understood. And I was like, what's going on? And it was a big shock. But I ended up kind of going to the Naval Academy on a dare because my dad was like, you know, you can try to get in. He probably won't. And he knew how to get under my skin. He knew that I would then be like, all right, I'm getting in.

And I didn't know anything about the military, but it was great. It was the best thing that ever did. I got into the military, did the Naval Academy thing, commissioned as a Marine, was a pilot for a while in the public affairs officer after that. Now, in the middle of all that, when I was in flight school, I started dating my now wife. and it was very expensive to do that because it was a long distance. She was in France. So she's also Ukrainian, but she was studying winemaking in France.

Wow. And all I wanted to do was go see her as much as possible. And, I mean, I was making decent money, but it wasn't enough to, like, go fly to France and stay in a nice hotel and go to, like, nice French restaurants and, you know, have fun because we didn't get to see each other that often. And I got into, like, all these added card hacks and all this kind of stuff. And it just wasn't cutting it. And I was like, I need to learn how to make more money. And I was like, I was a little scared to say,

that out loud in the military community because I was afraid I was going to get judged like why the military's not good enough for you and I was trying to battle that mentally but I discovered real estate and I also it made me realize how quite frankly I don't think my I realized my parents were not prepared to retire they had no plan nothing that was going to set them up I mean they had a fantastic nest egg that they've been saving for decades but there was no like pension or retirement plan or something that was going to continue giving them a stream of income they were just They had seven kids. They were probably going to have a lot of grandchildren.

And so it's like, I know that they like adventure. They were going to want to visit all of us and all this kind of stuff. That nest egg was just going to get chipped away at and deplete itself, right? And so I knew that that was going to serve them. And so I convinced them to get it going on real estate with me. And now they're making more money from monthly cash flow from real estate than my dad does from his professor salary. Wow. So we're getting to a point where I'm able to like help them actually retire,

comfortably. It's been a wild ride, but I mean, I wouldn't give it up for anything. So that's, that's kind of my backstory. I mean, it was gnarly. I read every piece of it. That's really fantastic. And now you are the founder of the active duty, passive income group. Investor. Wait, I always get this wrong. No, no, no, so we're an investment community, right? Here, we are, first and foremost, an education community. Okay, so we believe that education becomes more actionable when you're doing it in a community of other people because you see to your left and your right like they're doing it. I can do it too. All of our education is structured around confidence building, not like what's the right next step or this or that. It's not based off

of the logical next step. It's based off of do the thing that would make you more confident to then take the next step. It's like all about momentum building. So when I was getting into this, I realized that a lot of military members don't have, pretty well, just it's not talked about that much. I was convinced not to buy my first house with the VA loan actually initially and I regret that day forever and I'm like so now I was surprised that it wasn't talked about enough and so I was just like hey I guess I need a document my story because I'm about to make a lot of mistakes I know I can feel it and I did but I know that this is going to be life changing for me and it was and so I wanted to document my story and I'm people person I like to talk obviously like we love that so I was

like I need to do this with other people I need to like have people around me that are also in the military that might be excited by this and lo and behold how did the woodwork the military start coming out like hey, we're kind of interested in this too. And I was like, okay, well, let's not make it a secret. Let's talk about this. Let's do this. And so that's, you know, started with a Facebook group and a website and a course of all the mistakes I was making and how I thought about it, how I thought it would fit in the military lifestyle and mold and how to leverage the VA loan and everything else.

And then, you know, the rest is history. I mean, and what a great history. I'm really glad to have you here today. We share very similar views on the importance of education. Right, right. So I've got some questions for you. Sure. Sure. First and foremost, could you tell me about some of the benefits of being in the military and investing in real estate?

Yeah, so I think one of the big elephants in the room with the military is that twofold. One is that it basically consumes your life in a good way. Like you really build your identity around the military. But there's also the second part to this is that it's going to end someday. You're going to take the uniform off someday. And sometimes if it's your only big identity, when that time comes, it's a rough. moment. I've seen it go very poorly. I've seen it go very well. And so having a plan for retirement more so than just like what's my next job, but like what is the thing I'm passionate

about? What is something I can weave in to be a part of my own fabric, my identity? And a lot of times it's something that you can use for your for you and your family. And I think that, I mean, a lot of times people like shy away from talking about money. But to me, like money is just a way to have more time freedom with the people I love, right? I don't want to play a zero-sum game where I'm trying to optimize my time all the time. There's a finite amount of time. I wanted to focus on how to make more money consistently so that I can buy my future time back

and spend it how I want to. And so I think the benefit for the military is that you can create a soft landing for yourself, whether you spend four years in the military or 20 years in the military. If you think ahead and you start investing in real estate, you know that Jill Campbell on our team board of director, she always talks about the Chinese proverb,

the best time to plant the tree was 20 years ago. Same thing with real estate. You can always worry about what's going to happen in the future with the market to start. And that gives military members not only another stream of income if you do it right, which is what our education is all about, not focusing on appreciation, but is it going to make you money consistently every single month? That changes your lifestyle. It makes your lifestyle better.

It doesn't diminish your lifestyle. I mean, I'm not saying anything about the TSP 401Ks and so on and so forth. But if you compare apples to apples, those take money away from you every single month for like when you're 65. Real estate makes you money every single month, right? And so that's fundamentally a shift in mindset where you realize life is a cash flow game. You can afford anything if you have enough money coming in every single month. You don't need to have a billion dollars in the bank account if you have, you know, five, ten thousand dollars coming every single month.

So that's what ADPI is all about. And that's why I think it's unique for militaries that you can create another stream of income. It's like a pension. It's like your VA disability coming every single month. It's consistent. And realizing that you can build that with real estate just changes the game. Yes. So it's a long game.

And with that, that means you have a lot. to look forward to a lot to learn. And I think that can be really rewarding. You know, my family members who have been in the military have also struggled through that transition. Right, right. Having something like real estate to get excited about. Yeah. Would have probably lifted them out of that hole. So thank you for sharing. Of course, you know, we've talked about some of the benefits. I'm curious, what drawbacks or difficulties have you seen popping up for military investors? So I don't think there's a drawback to real estate, to be very frank. I know that sounds like a tall order or bold statement, I don't think there's a drawback as long as you do it in a confident way and in an educated way.

And that's why I was saying I could go back to confidence building. But there is, there are difficulties. And one of the biggest, like, mental hurdles is, there's two big ones that come to mind. One is, holy cow, that's a lot of debt. Like hundreds of thousands. In my case, multiple millions of dollars of debt. Isn't that, like, a bad idea? Isn't that, you know, bad thing to do?

And so Robert Kiyosaki always says, like, there's good debt and there's bad debt. We've had him on our podcast and he just hammered that home. Like, good debt is the kind of debt where somebody else pays off for you. My tenants pay off for me. I don't pay it off. And it makes me money every single month instead of costing me interest. Yes, it costs interest, but it costs the business, the rental property interest, not me. Yeah.

So I don't pay for the debt and somebody else is paying it off. It's like a reverse savings account. And that is just incredible. But that is a difficulty for a lot of people to get over that. the military is very risk averse because we take on so much more risk elsewhere in our military occupation. And so the military has an agenda. They want you to be the best warfighter to protect this country. And so it's not in their focus to make you a millionaire.

It's not. And so they know that sometimes mistakes happen with like you get in over your head on a car payment or a credit card. And so the education is kind of like, hey, just put your money away. And like this we have TESBs is basically like a 401K with matching. put your money away there. You don't have the time. It's almost patronizing sometimes. I was like,

you're not, you don't have the time you're not smart enough. Just don't figure, like just put it away. Just put it away. Just put it away. Let some,

let the smart people figure it out. And I, ah, it just drove me up a wall. And so I was like, that is, again, so that is one of the drawbacks. It's like,

it's just, it's not a part of the military model, business model to like, make you successful outside of the military. They want you to be focused on being a warfighter and being the best at that, which I don't fault the military. I get it.

But my premise behind this is that if you do learn how to be really good with your money and making a lot of money and being proud about that, make no bones about it, that you're actually going to be a better military member. You're going to be able to inspire others in the military to make smarter money decisions. You're going to inspire your family, your legacy, everything that you have going on. And you're also just going to have less stressors. I often say that I don't have any stats behind this, but I'm like literally it seems like half of the Marines that had problems because I'm not. That was a Marine, like half of the Marines that had problems, it was either like relationship problems or money problems. But then when you really dig into the relationship problems, half of those seem to be really rooted in financial problems. So it always seemed like money was a sticking point.

And I'm like, if the military could just really help people learn how to make more money instead of like, oh, you know, do you really need that avocado on your guac on the Chipotle? it just seems like that that's a smarter, more proactive, more educated way to do it. And so, yeah, I think that is the biggest difficulty. It's not a part of the military agenda. And a lot of debt is scary. Those are the two things. Yeah. That's definitely overcomable.

It sounds like it. And I'm glad that your group exists to help military members build up their confidence to really jump in with both feet. Something that you mentioned earlier is that you didn't use your VA loan to purchase a property, unless I'm putting words in your mouth in which, case you say stop that. No, no. Actually, you're absolutely right. So the third property I purchased was my VA. Okay. Okay. So not your first one. Yeah. But with that in mind, on the topic of using your VA loan to purchase property, how can people do that? What should they do? Yeah. So the biggest thing about the VA loan is you need to have a good loan officer. Okay. There's a lot of, and I'm not trying to like dog on anybody or poo-poo, any organizations out there. You can name names. We can, we can, we can

say, hey, this person stinks. Okay. Yeah. So, okay. All right. Well, Veterans United USA, anyway. There's a lot of fees that can be built into it that a novice beginning investor might not recognize. They may like, oh, the interest rate looks so good, but in reality

it's really not. But also, it goes beyond that. That loan officer or a real estate agent that are investment-minded, like we have ones that are in our community that are bought into our education style, and they're in your corner and they can help you find a good property that's actually going to be a good investment. And here's the key. They don't

think about just that property. They think, how does that set you up for your next one and your next one and your next one? You've got to think long term, right? You got to think, okay, I'm going to get a VA loan here. Maybe I'm going to house hack it. And then I'm going to restore my entitlement. Maybe get one more. And then I'm going to plan on doing a conventional loan and maybe this, that and the other. And you got to do it in the right way to be able to maximize the amount of properties you can get and have a return on investment. Now, with the VA loan ultimately, right, outside of having the right people in your corner to make sure you maximize how the returns are is it's zero down. It's truly zero down. And in fact, sometimes you can close on properties and make money at the closing table because

the sellers can actually kick some money back to you. And so if you have a loan officer and a real estate agent that can look at a deal, they might be able to massage the paperwork to make it come back to you. And so that's huge. It doesn't happen all the time. But that happens with a lot of our members because, you know, I always say, like, the lens through which you're looking at, like, you'll be able to find it. Like, if your intent is to find one of those deals, you'll be able to find it. If your intent is to find a fourplex, meaning four homes packaged into a single deal, you can do that with the VA loan. And you're like, well, I don't make enough money to qualify for a loan like that. Maybe not on your own, but what the VA will do is they'll say, okay,

those other three units and a fourplex. I mean, you can buy like a $2 million property in Diego actually and still qualify for it because the other three, the VA will say, okay, well, we're going to count 75% of the income from those to count towards your income. So your income is much higher right now and so that you'll actually be able to qualify for that if you have a professional manager taking care of it and that kind of stuff. So it is very, very doable to get a very sizable property, have renters almost day one living in the other units and then have those renters cover your mortgage completely. So we call this military house hacking, VA loan house hacking, whatever you want to call it.

And even if you have a family, you can still do it because you don't have to share bedrooms. You'll have to share a wall potentially if it's a fourplex, but holy cow. It's a game changer financially to have you just starting your family and you have other people paying off this multimillion dollar loan on your behalf and you're capturing appreciation. When you move out, you rent out that other fourth unit that you were living in. Now you're cash flowing. So now you're making money. and it's almost like it's cash flowing when you're living in it because you're not spending money on rent because somebody else is paying up the mortgage for you.

So now you're banking all that money, thousands of dollars every month. And you can roll that into the next investment. I mean, the VA loan is literally the best foot in the door to real estate. So because of that, because of the zero down, because you can house hacker because you can get four units in a single home purchase. Wow. Yeah. Yeah. I mean, just incredible.

Thank you for sharing that. I really appreciate hearing about the benefits of the VA loan. I'm curious, and this might be a big question. What are some of the drawbacks or limitations that you find with the VA loan? Yeah, so with the VA loan, I think there's a lot of debate of how many times you can use it. You know, if you don't have the right loan officer in your corner who can, like, fight on your behalf, especially if, like, a lot of people are afraid that, like, their appraisals aren't going to come in right. The VA loan is the only loan where you can actually fight the appraisal.

Oh, I didn't know. Two different ways. And so if you're a good loan officer, you shouldn't be worried about the appraisal. And after you fight for the appraisal to come in and what you believe, what all the professionals believe the right value is, if it really doesn't come in, then it probably is true that the property isn't as valuable as you might think it is. So the VA loan does have those protections, but the difficulty is you can't just daisy chain a bunch of VA loans for zero down and build your entire rental portfolio. It's not meant to make you a real estate mogul. It's meant to get your foot in the door.

So you can get your first home. And yes, you do have to live in. it. But you can turn that home into a rental. That is 100% allowed. And a lot of people get tripped up on the one-year rule. They think that, oh, no, you have to live in there for a whole year. No, you have to have the intent to occupy and it has to be reasonable expectation you're going to live in there for a year. Don't quote me on any of this stuff. I'm not a loan officer. This is basically the strategy that I'm describing. But if you get orders to move, nobody's going to be mad at you. It's okay. And then if you do get orders to move in the middle of that when you're like after maybe even a month,

I mean, heck, we have a member that they fully intended to occupy, but something drastic happened with their military orders. And they actually never got to occupy. Wow. Yeah, and actually this happened to Tim Kelly. He was in the middle of doing a VA loan with a renovation wrapped into it, and the contractors took forever. And then he never got to move into his house because he had to move again. The VA is not going to get you in trouble, but they also don't intend this to be, you know, the tool to make you a real estate mogul. And you can restore your entitlement.

So you might have a couple of homes thanks to the VA loan. But after that, you kind of have to either start using other loans or you have to dispose of the property. And, you know, I used to wonder when I got into this, I was like, well, can I just refinance it? Like, does that now dispose of the VA loan? But no, the actual physical property has to be disposed of. But even that, you can sell that property and get another rental. So you can keep the momentum and the benefit still rolling. And you can even save on taxes because you can do what's called a 1031 exchange.

I'm sure you guys have talked about that in the past where you can kind of roll it and defer the taxes for later. So you can still keep the momentum going on the amount of units you have in your rental portfolio and restore your entitlement again if you absolutely need to. But really, once you have a couple of homes, that's a good problem to have. Now you can get creative. Now you can start using the conventional loan, maybe the FHA loan, creative financing, all sorts of other things. At that point, you'll have enough excitement built around it to actually figure out the next step. Yeah, keep it moving forward. Yeah, yeah, yeah.

Love to hear that. Okay, I know that there's so much more about VA loans. Off camera, we were talking about the fact that there are two kinds of them. So if you want to learn more, please go check out the active duty passive income channel. We will link it down below. And we will remind you at the end of this episode. But for now, I'm curious, you know, what advice would you give someone who's an active duty military member? They're thinking about getting started and they're feeling unsure.

I will say that feeling unsure is probably because maybe you were brought up a certain way. We are a product of our environment and what we grow up around and the people we surround ourselves by. And I'm actually, I was just mentioning this here. I'm reading a book by Adam Grant called Think Again. And a lot of times it's beneficial. And actually, all the greatest entrepreneurs say that when things really started going for them is when they were okay with changing. They're okay with thinking again. They were questioning their own methods.

They were very confident in themselves, right? But the way they balance humility and finding new and innovative creative ways to do things, they would always question their methods. And so have the outcome be very disciplined on where you're headed, but be flexible in the details. And so I would say, you know, question, like if you're worried about taking on debt because you think it's a bad idea because somebody told you that debt is evil, or you're like, I'm not going to be able to manage properties remotely because I'm in the military and I'm too busy. I would say think again. Look at the examples of 80,000 members in ADPI that are like doing this and they are successful. Or some of the hundreds of members,

that are like extremely prolific with this and have actually been able to replace their incomes or build their own career and be their own boss. Because getting a rental at every due station is great, but like what if this becomes your thing? What if this becomes your next career after military that you own? I can't remember the exact quote, but Elon Musk says something about like ordinary people can do extraordinary things. And I think a lot of people also say that the real estate is the common person's way to wealth. You know, and like Carnegie said that 95% of people become millioners because of real estate. And so it really is your ability to change your life. And so just ask yourself, like, if you have big goals, this is probably the best way to change your

thinking, rethink, or at least look into it and gain that confidence. You know, as educators, we always think about like, we don't want people to just consume education. We want them to actually act on it. And that takes a little bit of courage and confidence. And so, you know, take that leap of faith. Love that. Yes, exactly. Be confident. Rethink how you are pursuing these different activities and get out of your own way.

Yeah, get out of your own way. I think that's a really important part of it. So my final question for you is, are there any tools or tricks that you have used that has made it easier to be an active duty military investor? Tools or tricks. So I'll call this a tool, even though it's not like a software tool, although, you know, hey, we're on the TurboTenant podcast. I want to mention this first.

I truly, and I'm not just saying that, I've truly blown away by how effective this tool is specifically, and I know you all are building it for all real estate investors, but just how helpful it is for military real estate investors who are often remote. And so this is becoming my new favorite tool because our team members have already started using it for whether they're house hacking, they're renting out one of the units or Lorna Neely. she has like a portfolio, I think, of close to 20 units. And this is a big deal for her because that's a lot to manage. And having software, basically leveraging that software to amplify her ability to acquire more efficiently is a game changer for her.

So I would say using tools that allow you to do this no matter where you move in the military, even if you're overseas, is critical. And so I think using TurboTenet is absolutely one of the biggest things right now for us. because of who our community is and they need this kind of technology. I also love that you all are thinking ahead with AI because there's a lot of ways to use AI that sounds flashy but doesn't actually do anything. Right.

And using AI the right way is huge. I mean, I completely changed my life with AI now and I knew this was going to happen. So I sunk my teeth into it. And me and my wife, we literally, we share a chat GPT and everything we do now, we kind of use it as our assistant. And so integrating that into your software in a meaningful way to where you can be completely mobile on your phone is huge.

So anyway, now tricks, I think it's important to have quick ways to make assessments and kind of funnel it down. I think a lot of things as funnels, like I want to capture a lot, but then I want to be able to filter down before actually make big decisions. So that's the same thing with deals, with rental properties. I want to capture a lot of potential deals and then I want to be able to filter them down. And so one of the things we teach, and this is like the very quick back of the napkin, this isn't a full analysis. It's PITI, PMMV, and you can rattle that off fast at a party if you want to sound cool. But it's principal interest, taxes, insurance, property management, maintenance, and vacancies, and sometimes reserves. So when you know that, you can do a quick back of the napkin analysis.

First, you can do the 1% rule, which is like, hey, how much rent is it making compared to how much it costs, right? If the rent is 1% monthly of the property, it's at least worth doing the PIT. at PMMV. Then you go into it. Now you have to factor in the insurance of property taxes. Like that might skew it and it might not be a good deal. But at least that gives you like, okay, I'm going to invest a little bit more time and I'm going to write down these quick figures and see if it's going to cash flow. Then if that checks out, then you can put it into a spreadsheet, like we teach at ADPI and how to really dig into it and that kind of stuff. So I think having tools that helps you, even if sometimes, you know, you're like, oh, it doesn't meet the 1%

rule and you toss it out. And it could have. still been a good deal. I think the ability to just analyze more, even if you slip, it's okay because it's a numbers game. And you being able to guard your time and filter down until you find a good deal. I think those are some of the tricks we teach. It's like just, we call it our deal filtration system. And it includes also, there's multiple steps. There's then like if you're even more certain about it, you have one of our agents or loan officers that are nearby, local, we call them local mentors to go check it out. Make sure that the renovations are, you know, this, that, or the other thing or they doesn't need renovation, whatever. Because when you're PCSing, sometimes you

already want to know what home you're going to buy before you even get there. And if you have the right people that you can trust, boots on the ground. So, well, heck, I mean, that's another trick. Having the right people in the right area, that's a big part of ADPI. We are all around the country. We have local mentors all around the country that understand how we teach and it can help you with that. I mean, what a beautiful thing. Having that kind of network of people who can help out, especially if someone is overseas, is truly a game changer. Yeah. Well, Markian, you have been just an absolute delight. Thank you for being here. No, thank you for having me. This is awesome. And I'm really excited about helping all of our

military community with TurboTenant. Cannotent. If you'd like to check out more of ADPI's excellent education, please go over to their YouTube channel. Y'all have a podcast as well. We will have all of the links down in the description below. And don't forget to like and subscribe. TurboTenant is the all-in-one platform for landlords to manage their rental properties. From vacancy to tenancy, we have you covered with industry-leading tools and expert advice. Landlord Better from anywhere for free at turbotenant.com.