David got started in real estate investing in 2015 when house-hacked a duplex until getting married and receiving orders to Hawaii. In 5 years, he purchased 100+ rental units and transitioned off active duty to work for himself. David devotes his free time to helping service members and veterans learn how to build wealth through real estate investing, entrepreneurship, and personal finance.
See full episode transcriptTranscript is autogenerated by AI
Welcome to the Real Estate Game Changer Show. I'm your host, Mike McKay, based in the Jacksonville, Florida market. And each and every week we do this show with people who are changing the game of real estate all over the country. If anyone is in the Jacksonville market or looking to get into the market and needs help on anything, feel free to reach out to us. We are still a very active buyer in the Jacksonville market, so deals as well. Feel free to send'em our way. Our guest is David Pere. David. Welcome to the show.
David: 0:27Well, thanks for having me. And I'm gonna just derail everything right off the bat. Before we started chatting, I don't think I asked you what market do you hang out with Gonzalo Corzo, dude. His brother Diego. He's my favorite person. Every time I'm in Austin, I hang out with Diego. And Gonzalo and Diego are awesome.
Mike: 0:42For sure. Well let's just kick it off with something easy here. Tell us a little bit about how you got into real estate investing coming from a military background.
David: 0:51yeah. It was basically the same story as everyone else. I read that purple book, rich Dad, poor Dad. I was like, wow, this sounds cool. And then I was dumb enough to think that it was easy, so I was like, I'm gonna do it. And I bought a house. I was like, I read a couple of other books in the middle of that process. Some other Rich Dad, poor dad, purple Library books and some other, stumbled across some bigger pockets books, decided house hacking was the way to go. Bought a duplex at the FHA loan. Because I was told you could only use the f h a loan once or the VA loan once which is totally wrong. But and that kind of leads into why I'm so passionate about helping people understand the VA loan now. But at the time, I didn't know, and I bought this like$81,000 duplex for four grand, including LVP in the unit I was living in. And moved in, went from paying 150 a month to live in a two one apartment to paying like 1 25 a month out of pocket, including utilities. To own a two, one duplex on each side. And then six months later I got stationed in Hawaii and when I moved out at cash flow and I was like, wow, this works. And then I kind of went a little bit more all in and just slowly over time, more and more.
Mike: 1:50Yeah. And I was reading on your website, over the course of about, was it five or so years, you've picked up over a hundred rental units?
David: 1:57Yeah, so that was December of 2015, when I exited the military in October of 2021, I had like 110, 112 doors. It included a 40 unit hotel, a 23, a 15, and a 10 unit apartment, and then a whole bunch of one to four unit properties. And then I'd probably done 40 or 50 wholesale deals or flips. And then I'd also. Invested as a GP or raised capital as a co-sponsor GP for another 900 doors on two syndications. But the ownership on those is so small that it's not really even worth talking about. I hate when people are like, I have this many doors. If you boil it down, it's three and a half doors worth of those syndications. Maybe two and a half doors, but it's 916 doors, but I might own two or two and a half of them. And it's like the bottom half inch of each door maybe. It's negligible. I've sold a bunch of stuff kind of this year, moving outta some of the crappier neighborhood stuff and into we've got a part of a 28 pad RV park. We just fell out a contract buying a mobile home park, trying to consolidate into some of that more. Larger, less operational headache stuff. I say less operational headache, not because the asset's less operational headache, but because I can have someone else deal with the operational headache on those bigger ones than me
Mike: 3:04cool. And let's talk a little bit about, cuz one of the first things you brought up is even though you were in the military, you had some misconceptions about what you can and can't do with the VA loan. What are those misconceptions that you see with people and what's some advice for people who might potentially be interested in using their VA loan or loans? Cuz it's not just one. If you can.
David: 3:24Yeah, the number one piece of advice is just always refer back to the guidelines. If a lender tells you it can't be done ask'em to show you where that says it in the guidelines, the VA guidelines from the Department of Veteran Affairs, because most of the time it's an overlay from that specific bank or lender and not an actual guideline. The VA itself has very loose guidelines. Prime example, there's no minimum credit score or maximum debt to income ratio for the va. I've seen a 78% backend debt to income ratio approved on a VA loan. Can't get that on any other product out there. I've seen as low as a five 20 credit score approved. But a lot of lenders will tell you like, oh no, you can't go below six 40 or, oh, you have to have a 49% debt to income. That's simply not true. It's just that bank specifically has that. But no bank is gonna say, oh, these are our requirements. You should try that bank. They're gonna say, Nope, sorry, can't, you should improve this and come back cuz they want your business. And so you just need to ask where it says that in the guidelines. That's probably the easiest way to cover your butt. Some of the most common ones though, or things that have changed recently to just rattle through. You can use it more than once. It's gonna depend on your remaining entitlement,
Mike: 4:29What does remaining entitlement mean?
David: 4:30Yeah, that's where it gets all confusing. So I try not to explain this in detail because it's really gonna depend on every single situation becomes different after that first purchase, but basically it means, And this is one of the other misconceptions. There's no longer a limit on your first purchase. It's not capped. I've seen as high as two and a half million purchased zero down on first home. But when you go to buy your second house, that's when the cap for the county loan limit comes in. And so at that point, whatever that cap is your remaining entitlement and whatever your first home purchase was, is you subtract that from the whatever. So if you have even two mortgages or three mortgages and they're less than that remaining that limit, then you can still use your entitlement. But if you have one mortgage and it's above the entitlement, so it just becomes a big, weird, complex math problem. And so my answer to basically everyone is when you go to buy your second house, just call a lender and say, here's my certificate of eligibility. Please tell me how much house I can buy. Because it just becomes a math problem. And I really can't sit here all day and do the math problem for you when I'm not gonna be getting paid the commission for doing the loan and the lender will. I've got an article on it, on my website, but it's really not that complex. It's just a understanding the equation in your loan limit per your county. But yeah, your first purchase, there's no limit. I've seen someone have up to four VA loans out at the same time. They're all like 150,$200,000 houses. Let's see. You can use 75% of your gross rents for other units as long as you have either two years property management experience or hire a professional property manager. A lot of lenders will tell you, Nope, sorry, you don't have the experience. And then they'll even tell you, you can't count a property manager. Go find a different lender cuz you can hell you can build a barndominium with the VA loan. There's a weird one. You can buy a farm as long as the house and 20 acres is at least 50% of the value of the land. There's all kinds of weird things that the VA is the most diverse and best primary residence mortgage out there. And unfortunately people think all these misconceptions about it not being that. And the reason for that is simply because agents and lenders who don't understand it will say things about it to push you to use a product they do understand rather than lose your business to somebody who's savvy with it. But it's the best product out there by far.
Mike: 6:41yeah. You started out with that duplex house hack and scaled. So over a hundred units in five years and wholesale 30 to 40 deals and raised some money. How did you manage to do all that while working a full-time military schedule?
David: 6:55Oh, ooh. I'm gonna backtrack because you do a lot of off market stuff. You wanna hear another crazy one. That's awesome with the Ava, actually, it's twofold, I suppose. Have you ever tried to sell a wholesale deal or a recent flip to an FHA buyer
Mike: 7:07yeah.
David: 7:07What happens
Mike: 7:08Well, you can't,
David: 7:09exactly? You can with the va? As long as the wholesale fee is in the original contract, you can wholesale a deal to a VA buyer as long as it passes the inspection. So, like, if it's a turnkey house, you can wholesale to a VA buyer and they can pay you an assignment fee and you can flip a house to a VA buyer and they don't have the 90 day window. So yeah, both of those things are awesome.
Mike: 7:28That is cool. I didn't know about the assignment
David: 7:30Yeah. There's some pretty cool things like that too. Man I woke up at 4:00 AM and I worked for an hour or two before I went to work, and then I sat in my car and ate my lunch. I used Ryan Dossey's call Porter to handle all my inbound calls. And then I had them schedule my appointments for motivated sellers during my lunch break, and I would call them back while I was sitting in the car on my lunch. I negotiated that deal will probably touch on later with, I had mentioned with the direct mail and all the crazy whatever was like six different phone calls sitting in my car on my lunch break. And then I'd do some work at night and I'd work weekends. It's not exactly glamorous, but I journal and I'd time block and I would try to remove distractions. But the reality is that I just put in the hours. It's probably the main hub for it. There's a lot of like tips and tricks, but that's what it really boiled down to.
Mike: 8:15Yeah, I think that's a good point though. Especially like using a service like Call Porter. So that someone's available to answer the phone and then they book at the appointment for when you're available. For anyone working a full-time job, whether it's military or something else.
David: 8:27Yeah. Yeah, absolutely.
Mike: 8:29and were you primarily acquiring properties direct to seller during that time or you were using other sources?
David: 8:35I bought a couple, I suppose off the MLS during that time, but most of what I've bought's been fairly direct to seller. My 10 unit was a handwritten letter, my second deal ever. It was mail-in duplexes and the guy called me and said he had a 10 unit he wanted to sell. It was, technically, it was on the mls, but it was from a direct letter to him. And I negotiated with him. I never talked to his agent. There were agents involved in the transaction, but as basically as a formality cuz he had it listed. And then most of my other deals, yeah, have been either direct mail or cold call, majority direct mail. I landed one, a couple here and there via text blast, but I'd say probably 60 or 70% direct mail, 20, 20, 30% cold call and whatever else maybe 10% text. I almost landed one door knock when I was in Hawaii, CL to driving for dollars and door knocking. It didn't go through but. Yeah. And most of it, yeah, direct to seller. I didn't really get into like really trying to do that acquisition stuff until I joined ccf Dossey's coaching program in mid to end of 2020. I was just kind of putzing around here and there. I wish I'd started something like that sooner. There's a lot of good programs out there. I'm not just advocating for his. There's some definite good coaching programs out there that teach you about how to do this stuff, and man, just learning somebody else's system was the way to go. I was trying to putz around and do it myself, and I was just at such a smaller scale, and it was like, once I just sat down, it was like, oh, I should just do this and then this. And then like, having someone who would just willing to be like nudge, nudge, try again, like, oh, I landed a deal. What do I do now? Do it again. Oh, I landed another deal. And then we got up to three or four deals a month. I was doing, two to three a month on average when I was still active duty. And then we got up to like three or four a month. I didn't really ever wanna be bigger than that, maybe five at the most. And then I had some issues with my team and I ended up selling my wholesaling company to John. So I was like, my team, I had my project manager slash acquisition specialist, he thought he could do it better himself. And so he was like, I'm gonna go do this. And he took my lead manager slash TC and tried to take one of my contractors with him and no big deal, whatever, like, not the end of the world. But I just wasn't really enjoying it on my own. And I kind of liked what I was doing on the online platform. And so at that time I was like, well, do I either rehire and keep pushing or I admit that wholesaling takes a lot of feeding the beast and I slow down on this and shut it down. And John was like, I'll buy your company. And I'm like, it sounds like a win. And we're out.
Mike: 10:55I didn't know John while your company, I had no
David: 10:58yeah, it was a super cool, weird transaction. They bought it for nothing. and so what they did was 15% year one. I get 15% of their gross, or 15% of their net year, one 10% year, two 5%, year three. And I get first write of refusal on one deal a month up to one deal a month for that three year period. And I just pay whatever their internal fee is, which I think is 5,500 like their marketing, whatever they base their marketing fee is. And so if they lock a deal up, they have to call me and I go, Ooh, I like this one. I pay'em the 5,500 to their team and I get it pre wholesaling fee up to once a month in town. So I don't have to run the deal, and I still get to feed my beast. And I still get a small share of the profits for three years and I didn't take a price at purchase, but it'll work out in the long run.
Mike: 11:43Yeah. It's hard to sell a wholesaling company too, for any large sum, so that seems like a great deal. You could pick up a lot of equity over those three years with little effort, so, especially Johns of beast sales, so that helps.
David: 11:54I was gonna say, I just have to bank on John being able to do his job.
Mike: 11:56For people who don't know, or he is talking about John Leland, who is on the show about a month or two ago, so you guys can catch that episode. I guess you went through and you built that whole, portfolio. You built that business. What made you decide that it was time to leave your career in the military and focus on this full-time?
David: 12:12Honestly, it had nothing to do. It's funny. It wasn't really a financial decision or a real estate decision, it just came down to like fulfillment. The Marine Corps wasn't as fulfilling. As it used to be, and the platform was, I was having fun when I was working on things for myself and in charge of what I was doing and enjoying all of those things. And I was not having as much fun going to work anymore. We weren't doing the trainings and the deployments and all the stuff that I had loved about the Marine Corps. And so when it came time to reenlist, I was just like, it's not as fun as it once was. And so, we're gonna go with what's fun. We're gonna go with what's enjoyable, right?
Mike: 12:48yeah, for sure. And then, there are obviously some things that if people are in the military investing, there's different ways to think about it. I was reading some stuff on your website. I actually didn't even know what some of these things are, but you mentioned something called a thrift savings plan and a blend of retirement system. Could you just share with people who might not know about those things and what they are?
David: 13:08It's basically our 401k, so it's just the military, the federal 401k is the T S P Thrift Savings Plan. And then the reason that's still on there is blended retirement system, is, that's a, like a fairly new, I think 2020 was the first year for the new version where they had like a matching contribution. And it goes into it automatically starts in a different version of the TSP funds as opposed to used to like start off in your bond fund instead of like actual lifecycle funds that allocate differently based on how old you are. And it has a matching contribution and it's a retirement system changed a little bit. As much as I love real estate, I'm definitely still an index fund guy. I love 401ks and tax advantaged accounts and dollar cost averaging and all that. Let's be real. It's all your audience out there. If you think an index fund is not more passive than real estate, then you're lying to yourself there is not a more passive investment, really not much more passive than an index fund or a 401k. Real estate and passive income is a really funny sentence. Cuz anyone who's owned real estate long enough is like, damn it, when am I gonna make money? When am I gonna stop getting phone calls? Like I have a amazing property manager, but when someone dies in your property it doesn't matter how great your property manager is. Still not very passive. Even if you're an LP investor and you're like as passive as humanly possible on a syndication, you still get your money back every five to seven years and have to figure out where to put it next. And you still have to either 10 30 want it or pay taxes and it still involves some level of work or thought. To either deal with the tax implications or just the research of what the next fund is. None of that being a bad thing. But I love being a 17, 18 year old person joining the military and being able to say, Hey, put 10% in this fund and just never worry about it again. And then every time you get promoted up it by one or 2% and then the government's gonna give you a 5% match and that's free money and it's all tax exempt on the front end or on the back end, depending on which way you choose it. And ta-da. It's just a nice little bump and I think there's something to be said for some diversification.
Mike: 15:11absolutely. Cool.
David: 15:12you can roll it into a self-directed IRA and invest it to. Bump it to a real estate investor later as a lp or private lender.
Mike: 15:18Gotcha. Didn't know that. Cool. And we were talking a little bit offline about how you do a good amount of creative finance deals, and that's obviously been a hotter topic recently with changing interest rates and things like that. Can you give an example of a couple of creative finance deals that you've structured recently?
David: 15:35Yeah. Actually at one point I was trying to do like a high ticket course. I say high ticket. It was still pretty affordable, but on like I called it creative real estate strategies for the buy and hold investor. Cuz I don't, I think creative finance is a buzz phrase. Everybody thinks seller financing sub two and assignments. But I think the real money is in creative strategies, creative investing, not creative finance. Anyone can sit down and people get so wrapped around like interest rate amortization and balloon payment and they don't. Realize that the real powers in the structuring and the solving of problems and the creativity outside of the financing. The financing is like the last piece of the puzzle. One of the things I get told all the time when I start talking about creative finance deals is I keep hearing about all these 0% interest things and they don't exist. I never hear about'em. I've never had one. I talk to people at seller financing all the time, and all I get is these guys who agree, but they're like, yeah, but I want 6% interest for 10 years with a five year balloon. And I'm like, okay, walk me through your process. And they're like, well, you know, everyone says you don't get it if you don't ask. So every property I see on the mls, I ask like, are you open to sell or financing? I'm like, okay, that's not a bad move. But if you back that out, the people who say yes to that. Know what seller financing is. They're an investor and they're gonna give you a term sheet that makes sense to them for why they would be willing to take seller financing over just cashing out. The people who have no idea what seller financing is aren't gonna take the time to research it. They're just gonna be like, that sounds complicated. I'd rather just take my check. And the agents who don't know it aren't even gonna pitch it to their investors. And so you're barking up a difficult tree. Where seller financing really shines is when you really understand like the needs and motivators and you can come in and you can talk to someone and you can be like, one of the easiest examples to explain this is like, you go into a home and you sit down and you do the conversation and you're sitting there and you're like oh shit. Grandma just ended up in hospice in Florida. You want to be there before she dies and you want to move and you need$10,000 to move to Florida, and you need to be there by the end of this week. Your house is, we agree at$70,000. I'll give you 10,000 down. That gets you to Florida and I'll buy your house at the end of this week. So$10,000 down by Friday next week. Exactly like you want the remaining 60. What if I make you payments of$500 a month for the next 120 months? Well, what people don't think through is like, what did that just do? I just gave that lady a term sheet that is, Hey, exactly what you needed and I'm covering your cost After that. That was your mortgage, that was your debt, that was your expenses, whatever. Everything's good. You're gonna make your 500 bucks a month, maybe a little bit extra in there, whatever. She wasn't looking for cash flow, but whatever. She got her 10 grand. She gets to move to Florida, she's happy. But I just locked in a zero interest, 10 year note. And the problem is that people will come in and say, well, what if I gave you a 10 year 0% interest loan for$60,000? That's a turnoff. But if it's, Hey, I'll give you 10 grand like you need, and then I'll make you payments of 500 bucks a month for the next 10 years, and I'll pay your house off. And if I can, I'll pay it off sooner. But will that work for you? And they say yes. And you just locked it in with no financing, no interest. There's so many ways to do stuff like that now. I haven't pulled that off. Now I have pulled off, I got it under contract on something very similar to that once, and then the son ended up. Buying it. Actually I think they ended up crazy. Story didn't end up going through because the son wanted to buy it and then someone die. Anyway. So the craziest one that I've actually landed or my favorite one that I've actually landed where this was total proof of concept. We were sticking point on five grand. This guy wanted 50. We basically were like 28 and it was a house that had a grease fire had been sitting for like two years. They'd just finished remodeling at grandma's house after she died and the sun moved in and he was cooking something like a week and a half after moving in. And he lit the kitchen on fire. And then it sat there for two and a half years. And they wanted 50. We were at 28 and then we went back and forth. We came up to 32 and they were at 38. And then we came up to like 33. They were still at 38. And I was like, dude, There's no way I can come up above 33. And he is like, well, I'm stuck at 38, so it's either this or nothing. And I was thinking about it. I was like, you know, I just looked at the guy and I was like, okay. I was like, what if I could do 38, but the only way I could do it was if you let me pay you when the house sold. And he is like, well, what does that look like? And I was like, it, I was like, dude, you're asking me to pay you an extra 5,000 that I'm telling you I don't have in the budget. The only way I can justify doing that is if I'm not having to pay an investor on it and I'm not having it outta my bank account. And I can use that money towards the rehab to speed the process up. So I'm willing to do that. Cause I know this house is important to you and I want you to see that I'm serious. But what if I did it and we agreed that I would just pay you that? When the house sells, when I'm done renovating it, or in 12 months, whichever sooner. And he agreed. And so I bought this house for$38,000 zero down, no interest and no payments for 12 months. The only cost at closing was they forgot property taxes. And he asked if I could cover it. And so I paid$643 in property taxes at closing and the title, so I think it was like 6 43 total property taxes plus title closing stuff. And so it was 6 43 when we bought it. And I didn't have a single cost except for the 90 k Reno budget debt. And then we went and torpedoed that entire project and went massively over budget and ended up taking 13 months. So I had to pay'em back. While we were under contract to sell it, it's so wild. I had to refinance. I was under contract to sell the house and had to refinance it three weeks prior to the sale closing. So like we went under contract and six days later I refied to pull enough out to pay him off just so that I didn't have to deal with him. And the title company was like, you're under contract to sell this. I was like, yeah. He's like, you sure you wanna refi? I was like, yeah. It's like such a weird, I paid him and my private lender off in a refi and two and a half weeks later sold it. Which was only like an extra like 700 bucks in like loan fees. Not a big deal, but it's a pretty funny story of just like, Basically everything going wrong in a project. And the only person who made any money on that deal other than my GC and my contractors is my private lender. I lost like 10, 15 grand. But it's also the prettiest, like before and after photos I ever got. And it makes a great proof source for like, Hey, look at the work we can do. And even when I lose money, my private lenders make money. And it's a really cool story for creative financing. That house was like, we got in there and it was oh, we have to rewire the whole house. I thought it was only this part of the house. You talk about thinking you need to get half the house that had a grease fire and needing to get the entire house because we were under the impression when they renovated the thing four years ago when grandma, that whole thing that they had updated, that's what they told us. It was Novin Tube through the whole house, so it was good times.
Mike: 22:10Yeah. I think you said something really important there though throughout the examples you gave is that creative finance or I think you called it like. Creative strategies, you gotta use it to solve a problem. I think a lot of times people come in and it's like the first thing they pitch, but it has nothing to do with what the seller situation is, doesn't solve a problem. And then they're surprised when the people come back and say, I want these crazy terms. Cuz they don't really want the seller finance cuz it doesn't solve their issue. So they're like, well, I'll do it if you pay up. As opposed to solving the problem first then making it dissolution
David: 22:43And the funny thing is it probably does solve their problem. You just don't understand how to make it solve their problem. You don't understand seller financing well enough. I had a conversation with a guy yesterday, well, this person's 75, so seller financing wouldn't work. Why? They're not gonna want, they're gonna want their money, are they? Because that means they're gonna take a massive capital gains hit. Well, they could 10 31. Are you sure at 75 that they wanna roll into another property? Okay, that's a good point. But what if they still want cash flow? Ding ding. Seller financing. Yeah. But if they're 75, then you know they're gonna say, well, 30 years I'm gonna be dead. Okay. Do they have kids? Yeah. So irrevocable trust for the note. And now when they die, they just guaranteed that their kids are gonna get 20 years of 15 years of payments from your seller finance note. Rather than a savings account of like, figure it out kids. Hope you're not idiots. Like most parents would prefer that.
Mike: 23:36Talk about what irrevocable trust is for a note in that scenario.
David: 23:40Let me just preference on this, that not an attorney, and I don't really know what I'm talking about when it comes to actual trusts. Basically just saying like, look, you just have to basically with a trust, you can put an asset, in this case, the note for a property into this entity, like an llc, a trust. And in that you can have, the person in the trust, the trustee or whatever who's in charge of that be responsible for what happens with the money. And so when you're alive, all that money goes to you. The trust pays you, and then you just have it set up to where instead of probate it bypasses that. That's the beauty of trust. And so when you die, the trust will just, now it gets paid out to your kids or to whoever, or to what charity or wherever you want that money to go. The trust will bypass the probate process and pay to where you want it to pay via the trustee doing what they're supposed to do as the person in charge of the trust. And so you can set this thing up essentially to where, yeah, you're right, you're 75. If we put 25,000 down, You get 25 grand, much smaller tax bill, 30% of 25 grand, and then you still get the cash flow for the next 30 years. And if you die at you're 17 and we still have the note, then for the next 13 years, whoever you designate that trustee to pay will get that cash flow. And if we pay off the note, they'll get a lump sum. Does that not sound better than you having a lump sum that you may or may not blow and you're gonna get taxed? Way heftier. Because here's the other perk to that people don't always think through, right? Is if you, let's say it's a million dollar house, you pay that 30% you pay, now it's 700 grand and you live off that for that 17 years or whatever, and you give your kids the 200,000, two 50 that's left, whatever. Cool story, it's still not bad. Nobody's upset. Cool. But if you only took 50 as the down payment, And now you have that nine 50 that you're paying out on the seller carry and 17 years down the road, let's, I'm just doing like random math in public. Let's say it's 400 that's left in there instead of two 50. Well, and they've been paying interest, so you know, there's still interest left on it, whatever. Who knows. So maybe it's amortized. So it's probably more like 500 still left on it, but maybe it's 400, I don't know. Somewhere in there. 400 to 500 still left on this note. Well, you died. So the beautiful thing about this is that your heirs inherited at base. So they're not gonna pay taxes on the, that capital gains just got wiped. So whatever the is left on that note is not gonna be passed through tax wise to them. So you're eliminating half the taxes that would've been paid on that as it gets passed forward to them inheritance. So when you think through the excuse of like, well they're so old, they're not gonna want. Honestly, if they know enough about this and you know how to talk through it, that might be exactly who wants this?
Mike: 26:18Yeah. Right. Except that person approached it. Would you sell or finance the property? Instead of saying, what are you looking to accomplish here?
David: 26:25And grandma goes that sounds scary. My agent said I could get a big check. That sounds cool. And has no clue. They don't know what you're talking about. People go for convenience. Yeah. So why would they do all the research on all this crazy complex shit when they could take a check. That's the traditional way everyone understands.
Mike: 26:42I guess you're not marketing for deals directly yourself anymore cuz you sold the wholesale company to John. Are you still marketing?
David: 26:47Nah, not really. I would do some PPL every now and then, but that's about it.
Mike: 26:51yeah. And were you trying to market specifically to any properties that you felt would be a good opportunity for creative finance or you were just kind of taking it as it came along and the scenario made sense to pitch it to the seller?
David: 27:03Yeah, we always tried to if the need arose in the conversation, we would try to squeeze in seller caries and you'd be amazed. I've never paid more than 15% down on a property. And I don't think in most cases it's probably less than 10. And there's a lot of those. My 10 unit, I paid 4.9% down and it was a 10% seller carry with an 85% bank note on. I've done two of those, zero down, zero interest, no payments for 12 months. I've done 100% seller finance. These aren't necessarily technically creative finance, but I've done 11 or 12, private lended. A hundred percent Reno and purchase where I didn't put a dollar in and I either bird out or flipped them. I still consider that creative. No bank involved, no money out of pocket. I've done a lease. Option two, lease options. And I have been under contract on two sub two s, but they both fell out cuz my title company hates them and doesn't really know how to deal with them. And on one of them called the bank and tipped them off trying to, he thought it was an assignment, so he is like, oh yeah, we need your signature. And the bank was like red flags all over the place, called the seller and talked him out of it. I'm like, you guys are the worst. And then what else? I've been trying to get a wrap. I've been trying to do a wraparound, but I haven't been able to pull it off yet. And then, oh, I've done here's a fun one. I did one last July we closed on this RV park. Buddy called me, I got this badass deal. I need a hundred grand. I was like, sweet. I want 5%. And then, I found him a hundred grand and the guy, I found, the a hundred grand who, friend of mine who wanted to buy a deal and I put'em together and then I basically brought the two of them together, introduced him to my lender and my LLC creation guy. So I got the LLC created. The only other thing I've done in that deal is I run the Google business page and that's it. And they actually gave me 10% equity. I didn't bring any money in, and I might have spent four hours on that property since July, maybe five. And that's including three Zoom calls. And we have just about doubled gross revenue on that thing. And it's a half a million dollars when we bought it. So probably a seven 50,$800,000 RV park right now that would probably appraise for 1.2 by the end of a full year at this current revenue. So, pretty sweet to have 10% share for basically making intros. That same person sent me a deal yesterday and said, I'll give you 5% of this if you can raise this much for the Reno or this much for the total deal. And I was like, okay, see what happens.
Mike: 29:19yeah. And you said you're looking at kind of more of those larger deals now, like RV parks and mobile home parks.
David: 29:26Yeah. Especially when I can get in with not having to be the opposite. If I can partner with somebody who's a good friend, especially if this guy, cuz he crushes it on the opposite, if I can get in with someone like him or I trust the op side and if I can get in with no capital but if I can get in with capital, great. Either way and I'm not having to run ops then. Yeah. I think RV Parks, mobile home parks and self storage are absolutely trash and everyone listening to this should stay away. Especially in my state. I'm not even gonna mention my state. If you're in the Midwest, just go away and then buy all the Texas ones cuz Texas is way better than where I live. I don't really think real estate's gonna be the lead domino for this recession if it does end up turning into a full-blown recession. But I do think that it'll still take a hit. And if it does, especially with like apartment syndicator world take a hit on all the guys who did IO debt or floating rates if they can't figure it out. And if all that stuff takes a hit, I feel like I. Mobile home parks and sell storage for sure are a fairly safe bet. When people downsize, that's where they end up. And I think RV parks too. I think. 2020, 2021,2022 a lot of people downsize to RV parks and van life and I don't think that trend's going anywhere, but what do I know, right? I'm just some knucklehead who likes crayons. So,
Mike: 30:34and I don't really know much about RV parks. How long are people typically staying when they dock their RV at one of these places?
David: 30:42This is what's crazy about this thing. This is what has me excited about this thing. So this is at lake Texoma. I'm making up a name. It's definitely a Texas lake. That's where this RV park is. So Stockton Lake in Missouri and super small Podunk nowhere. We actually got this thing for a steel because the agent was a knucklehead and posted it as a single family house, a three one double wide trailer, single family house on an acre and a half for 400 and something thousand dollars. And my buddy was like, alarm bells ding. What the crap? There's no way there's a single family house for that much in this market. Pulls it up, starts flipping through photos, and he is like, what are all these RVs doing back here? Why are, this is an RV park? With hookups. 28 pads. With a shop that we've since turned into a two one apartment and a laundry room with coin laundry with two washers, two dryers. And so we've added a two, one apartment that's rented for seven 50 and rented the three, two out for 8 75 or nine 50, I think the new tenant's nine 50. We just swapped it out last month. And we've added two washer dryer coin laundry, which is probably nothing in reality. Probably brings in 200 bucks a month, maybe three. And this week we just added actual, like tent camping, 10, 12 spots. We no idea if that's really gonna work, but it cost us all of like two grand, I think to put it in. So we'll see. But to put in perspective, this guy only ran it nine months a year and we went through the winter last year and we did have a couple stays, which means that hey, even just. Being open during the winter. We netted more those months than he did. So that's great. But it was averaging between four and 4,500 a month gross when he owned it, we're the last four months, we've averaged about 85 to 95 and one of those, was it last month, we had a guy pay 4,400 to stay for 12 months. So he pulled in to book for the full year. And I was like, I looked at Marty and I was like, holy crap, we just had one stall of our 28. Pay us what this thing used to make. Gross month over month. And we still have the house and the two, one, and the laundry room. I'm excited about the next year. So, to answer your question though, most people, there's the weekenders for sure. But a lot of the people who message us on Google are asking about two, three weeks, month, two month, three month. We get multiple long-term stays and we charge 500 a month. And it's not uncommon for them to book for the full month or multiple months. Not uncommon at all.
Mike: 33:07Yeah. And how does that work? Do they pay utilities or you include that in the 500 a month
David: 33:12it's included. Yeah.
Mike: 33:14Got it. Interesting. Are you're kind of focused on more of those type deals now as opposed to single family stuff. And then when you were building your portfolio, while you were still in the military, I'm assuming you were doing this remotely cuz you were stationed in Hawaii. How did you manage all of that, including construction?
David: 33:33Yeah. I didn't do as many renovations. And then I had a property manager. I did try to do one long distance flip and I got burned on it. I actually had my wife going by to hand off the checks, but I didn't have her going in the house, and I still got burned even with her going by to deliver the checks. Not pretty. I definitely am not a fan of the long distance flip or bird game. I didn't really start getting into renovations until I moved back here.
Mike: 33:54Okay. So you were buying, the houses were mostly turnkey. The ones you were handing off to your property manager, or were they handling some reno for you?
David: 34:01Yeah, they would do like lipstick stuff. And then I would focus mainly on the wholesale. wholetale. Basically, I would wholesale probably two or three to one, and the one would be like a light lipstick or almost turnkey and I would hold it.
Mike: 34:15Got it. So keep the best wholesale to rest type model.
David: 34:18pretty much. That's it. Yep.
Mike: 34:20Cool.
David: 34:20Pay for my marketing.
Mike: 34:22And that's actually a good topic that comes up right a lot of times and you kind of said to yourself, the wholesaling business can end up just being a feed the beast. They have a business, I think is the phrasing you use. So how did you make sure that didn't happen in your case? Because sometimes you talk to guys who've been wholesaling and they're like, oh, I've been wholesaling for a few years. I've wholesaled 300 houses. And you're like, how many rentals you got? And they're like, ah, two. And you're like, what happened? Like, that's what a lot of times people, why they got into the business and then. The wholesaling business can turn into feeding the beast. So how did you prevent that from happening in your case?
David: 34:54It's not that I hated wholesaling, I enjoyed wholesaling. I hated how much wholesaling pulled me away from other things I enjoyed. So I have the online community and the brand and content and like all that stuff. And I really enjoy like this, like podcasting and talking to people and networking and hanging out and doing all this stuff online and educating service members and vets. And I felt more and more, like the wholesaling game was just pulling all the time. Oh, you gotta run to talk to this seller. Oh, you gotta deal with this problem. Oh, here's this issue. Oh, this contractor needs, just everything. It was always something. And it was just stressful. And it just got to a point where I was like, good lord. We gotta make sure that we're not doing this thing long term. I did not enjoy it enough to get sucked into the trap of wholesaling all the time. The quick cash is nice, but man, no thanks.
Mike: 35:40Well that's one way. If you really don't like it that much. That's one way. I think some guys love chasing the deals a little too much, so they kind of get sucked in their own trap. That makes sense. Let's talk a little bit about building a mastermind. We haven't really talked with anyone about that on the show, and you've built a pretty successful mastermind that I know quite a few people who are in there. So can you talk a little bit about why you decided to do that and how you went about doing that once you decided to.
David: 36:04I should probably think about that answer at some point. I know at one point I was sitting there and I was like, oh, this sounds fun. I was in a bunch of masterminds, is really what it boiled down to. I'd been in quite a few, they'd all been really impactful to me and I figured this was the next step within my community. I didn't have any monetization really at all. And I was trying to find a way to monetize, and that's not the reason I started the Mastermind, but, this seems like the most aligned way to monetize because I like community, I like networking, and I get a ton out of these masterminds. But the thing that I've noticed is that the free ones always fall apart and the paid ones actually do well. So I was like, okay, we'll do one with the little skin of the game. And I thought about it for a while and it wasn't until a friend was like, dude, have you thought about doing this? You should. And I was like, oh, okay. Someone believes me. Let's do it. And so I launched and it was really affordable. It still is really affordable and it's just been really cool to see because, the community's so much tighter than I ever thought it would be. The military community itself is always really tight anyway. And the mastermind communities I was in were always really tight and it's like combining those two things. It's just been crazy to see some of the deals that are getting done, some of the conversations being had. It's really cool. There are some just absolute killers in there, and they get so much stuff done and they, a lot of'em are still active duty and they still have full-time jobs and they're always willing to help. Everybody in the community is willing to reach down and help somebody else and lend a hand and all these other things. And it's been really fulfilling to be a part of it's probably my favorite part of the community. As far as like building it itself, it's as easy as finding your tribe and creating a recurring membership and saying, come on, on, in. But you gotta really dial in the value. And for us it's Saturday group calls with guest speakers, and Thursday night, office hour ask me any, anything calls that I run. And Monday, right now I'm running a creative strategies call, and then we've got small group accountability squads and masterclass and tons of resources and discounts and just Constantly trying to add value.
Mike: 38:02Yeah. And you mentioned networking being something that you're passionate about, how do you think that networking has impacted your real estate journey or maybe just your journey overall?
David: 38:12Oh, you mean aside from landing deals with no capital?
Mike: 38:15Yeah. Besides that?
David: 38:16Relationships are huge. I think real relationships are everything. I don't think there's much right now that I couldn't ask and receive in way of like introductions or knowledge. A prime example is on Wednesday night. I mentioned to a friend casually, I was like, oh man, I love the book Prophet first. It'd be awesome if I could get like Mike Malowitz to come speak to my mastermind someday. And guess what? I just got an email intro too from that guy today, just randomly. Apparently his bookkeeper is in one of Mike Macca's books as a testimonial to our Testament to Profit First bookkeeping system. And so he emailed his bookkeeper and his bookkeeper emailed Mike directly and CC'd me and was like, Hey, this guy would love to have you speak. I think he'd be awesome. And I'm like, oh, cool. That was a really casual drinking homemade wine at my buddy's house, smoking a cigar conversation. It's super cool. But just networking, just knowing the right people, being in the right circles and asking the right questions and that's just kind of luck of the draw. That one, but got more examples of luck of the draw, stuff like that than I know what to do with.
Mike: 39:18Yeah. And I think sometimes people who are, whether it's newer to real estate or newer to anything, they're kind of a little hesitant to go out there and go to these networking events cuz they feel like they don't know anything. What's your ad advice or actionable step for someone to do? Besides saying just go. Maybe something that they a piece of advice, like when they're there, what should they try to do? there's a lot of different approaches?
David: 39:38Not act like they know everything, not puff their chest. Just tell people where you're really at. Be authentic. Ask questions. Be genuinely interested in other people and their success. Not be an asshole, give value. Add to people and be there. Be willing to learn. There's a way to approach and ask questions and learn and that will show people you're genuinely interested without coming off. Like your just wanting to be an energy drain. The people who, I say asshole, but like the energy drains, the time sucks. The pick your brain people if you get to a point where like when the phone rings and your name shows up and I go, Ugh, like, not good. Don't be that guy. Be a constant value add, ask the occasional question and then just show interest and just hang out and don't just question drag drag. Be fun to be around. Focus on building the genuine relationship. I don't consider myself to have a mentor. I just have a whole bunch of people that I've built enough of a relationship with that I can reach out and say what's up? And if I have a question, I can ask.
Mike: 40:37And for people who are trying to accomplish what you've accomplished, they're maybe in the military full-time and they're looking to build a portfolio. What's your advice to someone who's maybe not just brand new, but maybe they got a couple rentals and they're trying to really grow it. What is your advice to them in order to be able to get to where you've been able to get to?
David: 40:55Take your action. Surround yourself with the right people. Learn how to filter the advice you receive from other people through the lens of whether or not that person has achieved what you are looking to achieve and lives the life that you want to live. So would you swap places with them in regards to that question? Probably the best example to drive this point home is that I use all the time, is if you wanna become a professional UFC fighter, your mom has your best interest at heart and loves you. But unless your mom is Chris Weidman she's probably not who you need to go to learn about becoming a UFC fighter. You probably would wanna hire Chris Weidman's, striking coach Ray Longo. You want a professional coach, you want somebody who's actually in that world as a UFC coach, your mom has your best interest at heart. She loves you. She doesn't want you to get die in the ring, but that doesn't mean that she knows how to coach you. So you tune her out and you hire a professional coach. And yet, for some damn reason, when we get into real estate, we're like, I wanna buy a bunch of rental properties and achieve massive well through real estate. And then your mom, who may never have owned a property in her life, who still loves you and still has your best interest at heart, starts trying to talk you out of it. And you're like, oh, but it's my mom. I should listen to her. And this guy who is worth$200 million through real estate is like, Hey, you should do this. And you're like, yeah, but my mom said, Okay, ignore her. Who do you want to be in this realm? She still loves you. That's great. Tune her out. Listen to the person who's been there, done that. It's okay to acknowledge that the people who love you are not good at everything. And that while their advice may be based on what they believe to be best for you, if they're not an expert in that realm, you should take it as such and surround yourself with the right people.
Mike: 42:36Yeah, I like that a lot. That's great advice. Really good advice. So we're getting close to the end here, but there's always two questions I like to ask. The first one's kind of a funny one. First one is, what is the craziest or most uncomfortable situation that you've ever experienced in a real estate deal?
David: 42:51Yeah, the craziest would be that single family mailer I sent out that landed me. The guy was like, I wanna move to Florida, so if you buy my single family, you gotta buy everything. I was like, what's everything? And it ended up being the single family, a 40 unit hotel, a 23 unit apartment, and a 15 unit apartment. So it was 79 doors. That's probably the craziest. And I negotiated almost all of that sitting in my car, on lunch breaks from California. The most uncomfortable dude, I mean, let's be real. I live in Missouri. If I'm going to a house and I don't have to bring this with me, flashlight, handgun, and knife. I'm ready. It takes a lot for me to get uncomfortable. I'm a combat vet with 13 years under my belt. And I'm carrying a firearm and a knife, and so it's not super common for me to get like uncomfortable in the way that I think You mean that question? The ways that I get uncomfortable are like, dear God, needles or freaking climbing over like homeless things and dead animals. And like the one time I went into a crawlspace and it was like seven inches of water that I stumbled into. But as far as like fearing for anything, it's like whatever. No one's gonna mess with me.
Mike: 43:57Gotcha If you could go back in time give yourself one piece of advice when you were looking for your first real estate deal. Knowing what you know now, what would you tell yourself?
David: 44:07Honestly, consistency, man. I mentioned earlier that I was like, how many people answer marketing? And that's what led you to saying that. The most common answer is like, just do it or go for it or take action. Which honestly is a good answer. It's probably most common because you're right, like all the talk in the world doesn't matter if you don't start taking action, but taking an action doesn't matter either. And when I mentioned the marketing thing, what I was getting at is like dumping$500 worth mailers. You might land a deal if you're lucky, but that'll be it. And if you only dump. Even two or$3,000 worth of mailers and you only do it once, that still might land you a deal, but you need to land, you need to jump two or$3,000 worth of mailers month over month. And then when you start landing deals, you need to crank that to 5,000 and then to 10,000. The guys who are making seven figures a year, they have a five or$10,000 a month burn rate, or a$25,000 a month burn rate, or a$50,000 a month burn rate. They are crushing it with consistent marketing. And it doesn't just have to be marketing. It's just consistency. The whole point of this is like I laid off the gas pedal when I moved outta the Marine Corps, that two, three months I let off. And when I got back into it and I started rolling back into marketing, it took three and a half months before I landed my ex deal again. And I was like, what the crap? This was working, what is going on? And I was about ready to just like throw in the towel, I guess we're done, whatever. And then we landed six deals in 48 hours. And yeah, I was like, oh my gosh. And we wholesaled three of'em and bird, two of'em and or flipped one of them. And then we landed 10 more over the next two months and I was like, ah, this is great. So like in that three months we landed 16 deals. I was like, cool. Four months prior to that, we, three and a half months prior to that, we landed nothing. But we made a hundred grand in wholesale fees, not including all the flips. Probably made two, 300 grand. Don't give up on yourself too early, give yourself enough runway to start is really the trick there.
Mike: 45:49Yeah, no, that makes sense. If you're not consistent with your actions every day or you just give yourself, you're like, I'm consistent and I was consistent for three weeks, what's three weeks? The grand scheme of thinks nothing. So, cool. Well, if people want to connect with you after the show or they wanna learn more about your community or your mastermind, can they go about doing that?
David: 46:07Oh yeah. So I got this book called The No BS Guide to Military Life, which it's basically everything I wish I'd known about real estate and finances when I joined the military or about being in the military. And I have a link that will give you option to download the PDF version for free so people can go there and download it or download a copy for them or for their family. If they've got a family member that's in the military, they can send it to'em. And then it has right below that all of my social medias. And I found that is way more effective than what I used to do, is like just tell people, Hey, go follow me on Instagram here, that no one would Because the link is so easy to remember. Check this out. I'm so proud of, I'm still so happy about this. It, I can't believe this domain was open. The best podcast guest.com,
Mike: 46:46Stop that was available for 10
David: 46:48it was available. It is amazing, isn't it? It is the most memorable domain ever. So if you go to the best podcast guest.com, you can download my PDF for free for yourself or for a family member. But you can also jump with the Facebook group or follow any of the other socials.
Mike: 47:03That's awesome.
David: 47:04yeah no, I saw it and I was like, oh, so, it links back to my actual website. It just redirects. But it's, I was like, this is awesome.
Mike: 47:10Yeah. That's cool.
David: 47:11Yeah,
Mike: 47:11Cool man. Well, thanks a lot for being on show today. This was awesome. Shared a lot of great things. I appreciate you being on.
David: 47:17no, thanks for having me. This was a good time, brother. I'm glad we got connected.
Mike: 47:20Likewise.
