451: From Military to Millionaire Through Real Estate Investing

September 21, 2020bmanasseroUncategorized2 comments

SHOW NOTES FOR EPISODE 451: FROM MILITARY TO MILLIONAIRE THROUGH REAL ESTATE INVESTING

Here’s a little secret: military personnel and vets have an advantage over all other real estate investors! In today’s podcast, you will learn how U.S. Marine, real estate investor, and podcaster David Pere, with a limited salary, a job that requires constant relocation and a growing family, amassed an impressive real estate portfolio and still has time to teach other soldiers how to do the same.

What You Will Learn

How you can invest in real estate even if you change addresses every couple of years
The powerful benefits of the VA loan
How to build a rental portfolio by leveraging your VA loan
Why House Hacking is a great strategy for military personnel
Where you can find great deals through direct mail
Unique negotiating strategies to get the best deal
Why Vets have an advantage over other real estate investors
Why you should reduce risk with age
How critical a team is to your success

About Our Guest

David Pere

David Pere joined the Marine Corps in August of 2008. Since that time, he has lived in or traveled to many unique places around the world, including a combat tour in Afghanistan.

David got started in real estate investing in 2015. He house-hacked a duplex with an FHA loan and lived in it for a little while until getting married to his beautiful wife, Kimberly, and receiving orders to Hawaii. While stationed in Hawaii, David bought a 10-unit apartment in Missouri and has had continued success with real estate investing!

Through these experiences, From Military to Millionaire was born, with the goal of teaching service members and veterans how to build wealth through real estate investing, entrepreneurship, and personal finance.

More About David

Born near Santa Rosa, California
At 6 years old, moved to Little Rock, Arkansas
He was a bit of a rebellious kid so growing out in the open spaces where he could have bon fires and light off fireworks was good for him
By the time he became a senior in high school he didn’t know what he wanted to do or study in college, didn’t want to go to school but also didn’t want to stay in Arkansas, so he joined the Marine Corp (he has been in the Corp 12 years)
Was stationed in Japan, Afghanistan, and in the States (San Diego, Missouri, Hawaii)
He does logistics for the Marines – drives trucks, move people around
In 2015, a friend handed him a copy of Rich Dad Poor Dad by Robert Kiyosaki
His friend sold Amway and was trying to get him into multilevel marketing
He told his friend he didn’t read much (“Marines don’t read!”)
His friend then pulled out a CD and said, “No problem. I have the audio version of the book. You can listen to it while you drive!”
He listened to the CD just to shut his friend up
Within 3 months on listening to the book, he ended up buying a house

Becoming a Real Estate Investor

He also discovered BiggerPockets and read 2-3 of their books
The lease on his apartment was coming up so he figured he could invest in a property and found a duplex (he was stationed in the Midwest)
He saw that he could buy a duplex for $65 dollars a month more than his apartment rent out (a $615 a month mortgage), plus $4,000 out of pocket down payment
The renter on the other side of duplex was paying $475, so all he would have to pay was $140
His wife owned a single family home, so they took a HELOC out on that home, purchased a 5 acre plot next to that house (giving them a total of 10 acres)
That had cows on the property so they bought more and the cows were paying the mortgage on that property (cattle financing)
Next, he bought a 10-unit for $212,500, out-of-state in Missouri, with less than 6% down, got 10% seller financing at 4%, 84% financing from the bank
Partnered on a few flips in Hawaii
Did a flip that did not go well in Missouri
Bought a 40-unit property on a lease, which he did not end up executing the lease on
He got a list from Listsource of absentee homeowners and mailed looking for 2-4 units and started sending mailings
Bought another duplex, listed under-market, when Covid hit
He’s also a GP in a 146-unit apartment syndication in South Carolina
He currently has 15 occupied rental units solo
He’s also done AirBNB out of the current house he lives in
He’s currently doing mailings to about 220 apartment owners ranging from 25 to 100 doors in his market – he tries to mail every 6 months
- He was hoping to get a better response because of Covid but he hasn’t
He is doing all this while being full-time military and trying to grow his “Military to Millionaire” platform

The Benefits of VA Loans

David has the advantage of access to 0% down VA loans to house hack
You can buy up to a fourplex, live in one unit, rent out the rest and later move out and rent your unit out
He has a friend who bought a $730,000 duplex, with a non-conforming third unit, in San Diego on a VA loan
- Got a 1% concession from the seller so, walked away with cash on the deal
- He lives in one unit and rents out the rest
- He get $600 a month and lives rent free
- When he moves out, he can rent it out and get another $1,500
An E-5 Sargent in the military, earning $50-60,000 can qualify to buy a $750,000 home, zero dollars down and live free by renting out other rooms/units
However, it’s 100% LTV property so you have to be careful, especially if there’s a recession and property values go down

Flipping Mistake

When he was in Hawaii a friend was flipping so David became an equity partner and learned a lot from the process
He found a property to flip but made the big mistake of finding a dirt cheap house that needed major renovation when he should have found a decent priced house that required small renovation
He got a contractor who came highly recommended from house flippers and wholesalers
Unfortunately he overextended his business and imploded
David wasn’t managing as he should have and gave him one or two more draws than he should have
The contractor stopped working and was sending David misleading pictures
His wife was delivering the checks but not really checking the work that well
What he should have done was to have his property manager walk the property and deliver the checks
The contractor went out of business and took David’s two draws with him
David ended up selling at a $30,000 loss

Helping Other Military Personnel Through Real Estate Investing

When he was deployed in Afghanistan he kept a journal and “mission log”
He was thinking of writing a book
There’s been lots of books written by Navy Seals and other’s front line exploits but he thought it would be interesting to write about some of the normal guys – Lance Corporal guys and some of the tom foolery that goes on
Then, he had an epiphany – “I’m a nobody, who would read my book”
So, he thought he write a blog instead but, he found out, he had nothing to write about his thoughts to get better at writing
One of his friends suggested that he write about real estate and document what you’re doing. If nothing else, he could learn more as he researched to write about topics
He came up with 5-10 names for the blog but no one liked any of the names
A friend suggested Military Millionaire and he put it on Facebook to see what people thought and he ended up with From Military to Millionaire
The blog took off and lots of people were reading it
He went from blog to Instagram to YouTube channel to his own podcast
He’s now looking at moving to the reserves next year so he can work full-time at helping people in real estate investing
He’s already seen a number of success stories, especially with military guys who have been able to house hack with their VA loans
He’s helped guys with their numbers and just overall coaching
He started a mastermind group for service members and that group is doing great

Biggest Mistake

Aside from doubting himself and thinking that he had to go slow to launch his real estate business, he thinks his biggest mistake was trusting people too much
Things like negotiating terms over the phone but the terms didn’t make it into the deal because he didn’t get an email confirmation
Also, the contractor that took his money without doing the work (as described above) is an example of trusting too much
In the military, they use the term “trust but verify” and he didn’t follow that strategy early on and he should have
Make sure, no matter how great the person is, to treat it every real estate transaction like a business and manage them appropriately

Biggest Success

He would say the 10-unit has been his biggest success
He also thinks his ability to take risks – “jump out of the plane and build a parachute on the way down”- has given him an advantage
He’s taken risks that have cost him money but he’s also taken risks that have paid off
The ability to jump-in and go for it

Advice for Old Dawgs Looking at Real Estate Investing to Help Them in Their Retirement Years

Abide by Warren Buffet’s first rule: Never lose money!
Don’t take a risk that you can’t afford to take
It might be enticing to “go big and go home” but it would be more prudent to reduce your risk
Find a real really good team
If you can find the right team and right people, it reduces your risk
You can be a limited partner to do passive investing in big deals (syndications) or be the main manager member of your own deal or flip or whatever
The key is a really good team
If you want to build wealth quickly, you might want to focus on a more active strategy like the BRRRR (Buy, Rehab, Refinance, Rent, Repeat) strategy or house flipping
If you do the active strategy with the right experienced team, it will reduce your risk
The best long-term strategy tax-wise is probate, with a tax basis that gets leveled up once you pass away – that
The marshmallow study done with a bunch of kids, tested to see if they could delay gratification and not eat the marshmallow until the study was completed. Most kids could not wait. They tracked the kids that did wait over their life and found that they were more successful
The same applies to real estate. You may not make $1 million dollars with a rental property today but if, for example, you get a 15 year loan, leverage it to buy other properties, pay the properties off quickly, your initial investment could be worth $1 million if you are patient
David plays the long term strategy
- If he buys a property today and the market declines and he still holds on to it, it will come back and eventually be worth more
- He plans to hold all his properties for the long term

Moving Into Syndication

David has a strong network of other investors
He was approached by some of his network members to be part of a syndication team
At first, he wasn’t ready but they continued to come back with different deals
He was approached a third time with a deal and asked if he could help with investor relations, due diligence and some underwriting
The deal looked good, so they brought him in as a co-sponsor
He sees it as an educational opportunity
It has done well so far but it is still early
He doesn’t think he will ever do his own syndication – too much paperwork – he likes the quick hit – but he will likely invest as a co-sponsor again

Current Business

Ultimately, when he leaves the military in the next year and joins the reserves, his goal is to focus 100% of his time on building his community and investing more
He is not generating enough yet, to build a capital fund
He loves finding new properties, negotiating
He also just wants to help more service members and vets find financial freedom

Rap-It-Up

Favorite real estate book: The Hands Off Investor by Brian Burke and How to Invest in Real Estate by Brandon Turner
Favorite business book: The 4-Hour Work Week by Tim Ferris
Most valuable web site for success (other than your own): BiggerPockets.com, Google and YouTube
Favorite app: ICBA (community bank locator)
Favorite quote: “Burn the ships!” by Hernán Cortés
If you had to start all over, knowing what you know, and you only had $1,000, what would you do to launch your real estate investing business? I would use $800 on marketing (direct mail, text blasting, bandit signs, etc.) and I would use $200 to take specific people to coffee to find private lenders.

How to Reach David

Instagram: https://www.instagram.com/frommilitarytomillionaire/
Other platforms as well: Just look up Military Millionaire or From Military to Millionaire
Website: FromMilitaryToMillionaire.com

DISCLAIMER: Many of the above strategies take knowledge and have a higher degree of risk. You need to do your research and/or work with someone who is experienced to reduce your risk.

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