Episode 165 | Doug Spence | Military Millionaire

00:00 - 05:00

David:

What's up Military Millionaires! I'm your host, David Pere. And I decided to take the intro back because Alex has been mean to me the last couple of episodes if you've listened or he just runs with it and says it's his show and doesn't share very well.

So nonetheless here with Doug Spence who has actually been a guest on the show before, but in a group setting, right, I want to make sure I know, okay, I'm losing my mind. So nevermind, Doug has never been a guest on the show.

Alex:

This is why I don't let you do the intro.

David:

We suck.

Okay, so Doug is a friend, Doug and I both lived in the San Diego area. We used to hang out a lot while I was there. He hacked VA loans, and I spent some time at his house. Two months ago, I guess when I was doing my first reserve drill. He's also a go bro and go abundance with myself and so hung out in Park City with him. He's also a member of the War Room. He's a naval officer on active duty. His spouse is a naval officer as well. And they're crushing it investing long distance in Oklahoma doing off market deals as well as stepping up into some bigger stuff. But more importantly, just a friend that we know is not going to come on the show and pitch a whole bunch of bullshit.

Intro:

So welcome to the Military Millionaire podcast where we teach service members, veterans and their families how to build wealth through personal finance, entrepreneurship and real estate investing.

I'm your host, David Pere and together with my co host, Alex Felice. We're here to be your no BS Guides along the most important mission, you'll ever embark on your finances.

Sponsor:

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David:

Hey, Doug, welcome aboard, buddy!

Doug:

Hey, thanks, guys. Happy to be here.

Alex:

I've known about Doug for a long time. And I don't think we've ever really crossed paths in any kind of meaningful way. So I'm pumped too because there's a lot of people in the War Room that I don't know, that I wanna get to know better. So I'm happy you're here.

Doug:

Likewise. Yeah, happy to be here.

Your hair is intimidating, Alex. That's why I don't think, that's why I haven't reached out yet. You know?

Alex:

I do know. Yep.

Doug:

Not just that. But this too. I mean, it's like..

Alex:

I know what I'm doing.

Yeah, I'm very intimidating, right?

David:

Yeah. Alex grows his hair so when no one wants to know him. You can be like, Ah, it's the hair. It's too intimidating. It's not.

Doug:

When people ask you about the pink do you say it's the plumage of the alpha male? Is that how you respond to that?

Alex:

No, I just laugh because if you're talking about my hair, or my shirt, my pink t-shirt or my pink shoes, then the game has already won.

Doug:

Exactly.

Alex:

You are talking about my thing, I won. What you say doesn't matter.

David:

It's a good point.

Doug:

Oh nice! Pink shoes too beautiful.

David:

Doug, why don't you tell us a little bit about yourself?

Doug:

Yeah, so I'm originally from Houston, born and raised in Texas, went to Baylor University for undergrad in Central Texas and then joined the Navy back in 2009.

Did flight school for a couple of years. Did some more school in California, Central Valley of California for a year then lived in Japan for three years, did three carrier deployments out there, moved back to America, lived in Pensacola for three years and did a flight instructor tour there. And then I've been in San Diego since December of 2018.

And 2018 is also when I bought my first dedicated investment property which was with you know, Steven David, who you guys know pretty well and Stu especially helped me get into real estate so but yeah, I've been living in San Diego for the last three years with my wife and she's in the Navy as well. And we have one kid on the way. Our first due in about two months.

David:

Congrats.

Alex:

Congrats!

Doug:

Thanks man! Appreciate it.

05:00 - 10:00

David:

And they have a cool bird.

Doug:

Yes, we do, Ruby. She's a little parrot.

I had to put her away cuz she gets loud and distracting. She's very active as you saw.

David:

A little clingy too.

Yes. Very clingy.

San Diego, they just announced San Diego is gonna be the location of the bigger pockets conference in October this year.

Doug:

Really?

Alex:

Yeah, I will be there. I am the photographer for the event again. So I will see you there, right.

Doug:

As long as I'm not deployed, yes. Which is a possibility. But we'll see.

Alex:

You got to choose your priorities, my friends.

Doug:

Just tell them I can't do it.

David:

It's just a Pogue. It's way easier.

Doug:

Yeah.

Alex:

So what do you get going on now in real estate?

Doug:

So what we're actively working on the most right now is our deal funnel to source off market leads for more Brrrr in Oklahoma, for ourselves, and for our own company. And then we're also looking at using that deal funnel to help other investors get their own off market leads. And kind of generating revenue in that way, as well. So that's, that's really what we're focusing on now. We've done we're about to finish our second Brrrr in Oklahoma, we've done a flip there. And just looking, we love the Brrrr model. So looking to do more of that as we get into bigger stuff.

Alex:

How has team building in a long distance market gone? So I've done this, I've done quite a bit of long distance Brrrr. I've been fortunate that my property manager and my contractor have been, you know, my buddy, Roger, like my lifeline, right? Not everybody's so fortunate, and it's hard to manage contractors recently, he's kind of pulled back away from rehab. And so my rehab started to suffer. Because, you know, I was so lucky to have him.

So how have you been able to deal with managing? Have you gotten lucky? Or has it been a struggle? You know, finding the right, both managers and contractors?

Doug:

Yeah, it's all about finding the right people.

So I identified the market, you know, first Oklahoma City, and then I got on the BiggerPockets forums and started aggressively looking to build the team. And I got connected with a guy named Eli in Oklahoma City. He's a commercial broker, his wife's a residential agent, and he owns a property management company, and had a conversation with him, I told him my goals, and he's an Army vet. So also, we had that military connection. And he told me that I would be able to use his network of contractors in Oklahoma City to Brrrr at no additional cost. And he has full time maintenance personnel that worked for his management company that would basically help, you know, with the bids and making sure everything is done correctly, and then help with payment. So that was huge, that was tremendously successful and helpful for me, because now I don't have to go out and find my own roofer or my own drywall guy, all that stuff, I could just leverage his connections.

Alex:

That is the way to do it. The downside is you have a single point of failure.

Doug:

That's true.

Alex:

Yeah.

Doug:

That's true. But he's managing, like, so many properties there. That is, at least from my perspective, like he has more to lose by not having contractors than I do. So it is in his best interest to you know, replace the drywall guy if the drywall guy sucks. So because he's, you know, that's his whole business. So, but yeah, but you're right, it is, it is a single point of failure.

David:

Freakin plumbers, man, I got projects held up left and right right now because of freaking plumbers.

Doug:

It's all about people, though. I think for someone looking to build their own team, I think bigger pockets is the best place to source it. Because you're gonna be, you know, there's always property managers looking for new clients, there's always agents looking for new clients. I haven't seen a ton of contractors there. But if you meet the right agents and the right property managers, they know the right contractors, so it's just meeting the right rockstars in your respective market and providing value to them first and treating them well. And they'll take care of you.

David:

Man, I'll take it a step further and say instead of meeting agents and property managers on bigger pockets, you just meet other investors in that area.

Doug:

Yeah.

David:

They're gonna know you know, anybody who not to say like, Oh, me, hit me up, but like if you were in my market, you saw me in bigger pockets, you reach out to me. I've got all the connections, right? Yeah. It might not be the best person in town but the one who I've used the last four years so as long as you're not a jerk, I'll give everyone but my contractor do you?

Doug:

Yeah, exactly. It's all about people.

David:

You ain't getting that contractors info.

10:00 - 15:00

Alex:

Yeah, you do run into a little bit of resistance from people giving them good contractors, especially these days when there's so many new investors.

What I would like to see is a day where the Military to Millionaire is the resource that people go to first and bigger pockets second, where people can go, Hey, I'm gonna invest in Oklahoma who's got the agent and the contractor and the people in Oklahoma City. And if the Military to Millionaire group can't deliver, then I'll go to bigger pockets. That's my goal.

David:

It's actually a really cool idea.

I can't imagine that would be super hard to build out. It'd be like, how you build that out, you go to a website and build an interactive map, where it's like, people from Facebook, click a link that answers a couple questions and says, This is the market I'm investing in. And then you would have like a map built out where you go, you click on Missouri, and there's everyone who has mentioned there in the community in Missouri, and it's got, you know, whatever contact info.

Alex:

If somebody builds this for David, I can get some money out of him for it.

David:

I would pay.

Yeah, I would definitely pay for the right build out on that. It's worth it. Yeah, it's a cool idea. I'm gonna write it up.

Doug:

I would participate. It's a good idea.

Alex:

Yeah, I'm really good at ideas and really bad at executing any of them.

Doug:

You're the visionary.

Alex:

Yeah.

Yeah, it's not very profitable. Sounds good, though.

Doug:

Yeah.

Alex:

I give all my good ideas to David. That's why he's flourishing.

Doug:

Yeah. Although your setup looks better than his. I'll give you that.

David:

To be fair, my setups off. But he still works better.

Alex:

Yeah. But even still, I helped him build that set up.

So that's just that. So that's where you're at right now. We're doing wholesale in Oklahoma City getting Brrrs and just kind of scaling that up? What's the team look like?

David:

What is your funnel?

Doug:

Yeah. I mean, I wouldn't say we're in the wholesaling business necessarily like it really, we just want to source our own stuff. And it's just gotten to the point where there's, I've met so many people that are like, Hey, can you help me? You know, can you help me with some cold calling, or SMS or whatever, and they're happy to contribute. So it's kind of really just helping, I'm not taking deals and putting them in Facebook groups like, Hey, everyone, here's a fixer upper. But yeah, the team right now, we're focusing on Tulsa right now, we buy in Oklahoma City as well. But Tulsa is kind of our focus. But we have great boots on the ground agents. Her name is Kara. And then our property manager. It's the same company as Oklahoma City. So I actually convinced the owner to expand out to Tulsa so I could use him for property management there. And I guess there was enough business or, you know, he felt there was enough business. So he found a leasing agent there in Tulsa. And so we're basically doing the same system, just in Tulsa, which is about an hour and a half northeast of Oklahoma City.

And then for lending. So I use private money to buy these deals, which is my sister in law, who's also my business partner. And the toughest part now, I mean, aside from finding deals is the lending is getting tight, you know, the DSCR lending on the cash out refi is getting challenging, the rates are going up, points are going up. So I do have a guy that's gonna give us 5.3% on a cash out refi. But that's the best that I've found. So always looking for lenders, for sure. Especially as rates are going up.

Alex:

Yep.

The cycling you know, people say, Oh, I can't wait for the market to crash, they think it's gonna crash and they go like this prices are gonna come down and go scoop everything up. And I'm like, in 2009, a bank would give you like a 50% LTV loan for a house. And there were no hard money lenders.

So you know, the cycles kind of go hand in hand. So now we're in an interesting moment where deals are kind of getting harder to find and lending is gonna get harder to find, but, you know, at the same time, 5% is ridiculously low.

Doug:

Yeah.

I'm happy.

Alex:

Yeah.

Now, the problem is definitely that the home prices have come up so much over the last, you know, especially the last three years. So now even the lending cheap prices have not overall have gotten tight, but that's just, that's just economics, right? Things equilibrate. People are rushing and getting cheap debt, they drive prices up and then now, you know, I think it's gonna be a little bit tighter going forward. But that 5% missed a lot of game play.

Doug:

Yeah, I mean, the first two properties I bought from storehouse, I mean, I use conventional mortgages on those and those are five and a quarter, you know, and that was back in 2018 and 2019 when I did those, and I was pretty, you know, I was like, okay, you know, whatever, I'm still liberal close on it, and now it's a mortgage to my LLC that's at that same amount, you know, it's, you know, it's it's swinging back up, but I'm still happy with that. It's still overtaking.

15:00 - 20:00

David:

If you're sourcing your own deals off market, unless you're buying the ones you shouldn't, you're getting enough of a discount.

Doug:

Exactly. I mean, we're going to be coming up for this deal, we bought it for 20, we put 56 into it, it should appraise for at least 110 and we'll leave, we might have to leave like two grand in the deal.

Alex:

The other side of that, because I have a deal. I have one mortgage, I think that's 5.65 and got it in 2017, right. And I wasn't happy it was 5.65. But I didn't want to pay any points. But I remember too, I financed like 65 grand. And I'm like, Dude, the difference. I mean, if I had gotten it for 5%, the difference in the amount of money actually doesn't matter. You're talking about 20 bucks a month or some like that. It's so minimal. So and then now that property that I bought for 60, and was worth 90 is now worth like 160, right? So I think definitely people get caught up in the rate. Now, obviously, profit margins, you know, I want to know what your P&L says. That's what I don't want to know. But that's what really matters is you want to know what the P&L is. I don't care if the rates are high as long as we're still profitable, really. And if the opposite is true, right? Like, Hey, I got a 3% rate like yeah, losing money, who cares?

So yeah, I love that you're buying a house for 50 grand. I mean, I don't care. 5.55, 5.7%? You're doing really good.

Doug:

I still do it.

Yeah, the house was actually 20 grand, and we put 56k into it. So yeah, it was a disgusting, absolutely disgusting house, but I love it, you know. So that's what we're looking for.

David:

Yeah, I definitely prefer the, like a 56 purchase and a 20 renovation over the alternative. But you know, the numbers pencil out the same, but the risk is not equal.

Doug:

True.

Alex:

No, but you get more buyers, you get more competition at the 20, at the 50 and 20 deal than you do for the 20 and 50.

David:

Absolutely.

Alex:

I bought a deal a couple years ago that was at a big kitchen fire and it looked bad. And it was mostly cosmetic. We had to replace some drywall. It was like no big deal. The Fire Department came out to check things up. I think that whole rehab cost like 20 grand, right. But people ran for the hills from it because it looked awful. And so I lucked out in that one. But a lot of times, yeah, I mean, the bigger lift, there's a lot fewer, fewer buyers means you can just get a lot more access to the deal itself.

Doug:

Yeah, especially, you know someone as an investor can find a niche like maybe your niches like you're the guy that buys fire damaged homes, or you're the person in Florida that buys sinkhole houses, then you have this great contractor that can mitigate that risk. So if you can, you know, make it your niche to buy stuff that people are afraid of, and you're good at it, then you can, you know, you can really profit from them.

David:

I'm doing a kitchen fire property right now. My biggest renovation to date.

Alex:

In a market cycle where things are, we're at the mature part of the market cycle. It's been going on for a long time. Real estate is really popular. I read the other day that real estate agent is like the number one search job on all Google, right. It's super popular, like the easy deals that were like a $50,000 house that's a lipstick flip like those deals are. I'm not saying they don't exist, but man, it's like you and everybody else, right?

So right now the time to go find something that everybody else is afraid of or is unwilling to pivot to is the way to go. That's kind of, you know, that's why we pivoted, we're pivoting now at climb capital instead of trying to do the same old C Class multifamily apartment buildings which had been done to death. And, you know, a lot of the margins are squeezed out of them. We're trying to pivot because for the same reason, it's like yeah, that's what I prefer to do. I prefer to buy a multifamily property, you know, five years ago, that I could get for an eight cap and sell it for a six cap and two years, but that just doesn't exist anymore.

So, you know, I love what Doug says.

David:

Yeah! You bought two cap and tried to turn them into a zero cap. It's the same math.

Alex:

I underwrote a deal that, I underwrote the walk on cap rate and a 96% occupancy on a C Class building built in 1960. Walk on cap rate was 3.4%. I was like dude, I mean this is not a nice area. Not a super nice area. And then they went to the market, they came back to market and they raised the price. What is going on? Yeah, we're at peak mania. It's a good time.

Doug:

Yeah.

Congrats on Climb Capital, by the way. We were hanging out with Jeremy in Park City. It's good

Alex:

Dude, should I join Go Abundance?

Doug:

I think it's great. There's some really solid dudes in it.

Alex:

Yeah, I hung out with Steve Jimenez on the show.

Doug:

Oh, yeah. The Bee guy.

Alex:

I texted him. We're friends now, we're becoming friends now. He doesn't know it but I want to join go abundance but I don't know I'm being a little bit a little sissy about it.

David:

It's definitely an expensive investment. And it's one of those where it's, but I mean, you know, $10,000 a month to join a coaching program where you're getting a curriculum and all this other stuff is probably an easier sell for yourself than $10,000 for something where it's like, I'm gonna be around cool people. And it's

20:00 - 25:00

Alex:

$10,000 a year right not $10,000 a month?

David:

Yeah.

Yeah, but like, you know, like, psychologically, like, it's an easier sell for yourself. I think what it's like is tangible, like, I'm gonna get exactly this with Go Abundance. It's like any mastermind, right? Like you get out what you put in.

Doug:

100%.

David:

So you don't know what you're getting. But I can tell you, for me, it's been worth it. And I've been in it for like three months, and it's already paid for itself. Well, I'll put it in perspective, I paid the $3,000 down. Because I was gonna do the month to month just because I didn't have 10 grand in my bank account the day I signed up, so I was gonna have to, I was like, I'll do the 3000 and pay the rest later.

Anyway, that week, they introduced me to a couple guys that were in my town. And I went to lunch with a guy Nigel Geisinger, and we went to lunch, then like, no joke, over lunch, we're talking and he casually was like, Man, I got this buddy who is stuck 1031 has like three days left, identify something if you know anything like this price range. And I was about to list my 10 units for 10,000. More than that, you want to run it by him. And like, two days later, under contract, we closed on Monday. Like I sold it, I made 80 grand selling at a 10 unit over lunch. And then that same guy brought me a buyer for a wholesale deal that I assigned and made. He's basically made me 100 grand over two or three things that happened after lunch. And so it's like, wow, all right, yep, I can justify one, like that was one meeting. And I've had many like that. So it's kind of crazy.

Alex:

Yeah, actually, my biggest gripe with Go Abundance is like David's in it. And I have a lot of David time already. I don't need any more David time.

David:

There's a whole lot of other people you don't have to spend time with me.

Alex:

And you know what, it's kind of like, do I really want to be a part of a group that they let David into? You know, it can't be that good.

Doug:

Are you talking to David Green or David Osborne?

Alex:

I’m talking about David Pere.

David:

He's just mad that I was first to market and he's got to deal with the fact that he either comes to join my team, or he doesn't get to play.

Doug:

Enjoy the Go Abundance chance, so no worries.

David:

It's good.

Doug didn't take me snowboarding though. So I'm still sad.

Doug:

We were up there every day. I was on the mountain all four days.

David:

I know.

Doug:

It was great.

David:

But you were on double blacks.

Doug:

That's true.

I did get to ski with Andrew Cushman. That was cool.

David:

If I had gotten you really drunk, I might have been able to hang really, like really drunk. Not like a couple beers. But like, wear my boots. I'm drunk.

Doug:

Yeah, that's tough. I don't drink very much these days. So yeah, that'd be a challenge.

Alex:

How old are you Doug?

Doug:

36.

Alex:

Oh, yeah.

You do kind of grow out of it? Isn't that a weird thing?

Doug:

Once I hit 30 the hangovers just aren't worth it anymore.

Alex:

Oh, yeah. I had to learn my lesson quite hard.

David:

Yeah. And only once, right?

Doug:

Yeah.

David:

Doug, tell us about your house hack.

So I want to preface this. Because, well, because every single time I make a video about House hacking, the excuse I hear from everybody is, well, if only I could find a $100,000 house in my market. And wow, it's so easy in a cheap market. And like everybody seems to make all these excuses for why it's not possible in an expensive market. So I'm gonna preface with the fact that you live in quite possibly the hottest market in the world, right now, San Diego, and you bought in the middle of hype during the pandemic. And it's working for you. So I’d like to throw that out there and hear you talk about it.

Doug:

Yeah, so a little backstory.

So my wife had orders to Virginia last January. And so we thought we were going to Virginia. And then we had put four offers on homes in Virginia Beach. And then the Navy was like, just kidding. You're staying in San Diego. So thankfully, none of those offers in Virginia were accepted. But then we started aggressively pursuing properties in San Diego, while we were actually on vacation, visiting family in Hawaii, so we got connected with John Land who was a key component of the whole thing. And then our agent, Herb Knox, he's also a Navy guy. But John's a marine but Herbs a Navy guy, and I think one of the most important factors where we were able to make it happen was John's 17 Day close in his field on which you don't see on normal mortgages. You know, you won't see that on a conventional or an FHA and the fact that or VA’s. To be honest, you don't see that as a VA loan.

25:00 - 30:00

Doug:

So having that verbiage in our offers, I think, was a huge contributing factor and being able to get this house. But we found this house on Zillow and our agent took a video and sent it to us and I knew pretty much right away that that was the house because it has a bottom floor. The bottom floor had been converted into a one bed one bath adu or accessory dwelling unit. It's how they classify them here in California. And I knew that that would be the best way to do it. If we're having to buy a ridiculously expensive house in San Diego. You know what, why not just get someone to help pay the rent, or help pay the mortgage.

So that's what we did, and got 2.25 fixed for 30. And then we rent out the bottom floor for 1950 a month. So and that's actually below market rent for that bottom floor here. And yeah, and we put down 9500 bucks to close I think.

Alex:

Jesus dude, that right there is gonna set you up in a way that other people just.. That's a dream.

Doug:

Yeah.

Alex:

Congratulations.

David:

It’s quite cool too.

And it's adulation. It's cool, too.

Doug:

It's good, so it's definitely not a finished product. I wouldn't call it a fixer upper. But it definitely had not been kept up as well as it should have been. So before we moved in, you know, we painted the interior, we sanded and refinished the hardwood floors, we totally redid the kitchen once we moved in, we added the pantry. We've done a lot of work on it. And thankfully, because of the market, it's appreciated significantly just since we moved in, not taking into account the work that we've done.

So yeah, the plan is to just hold it until it's stupid not to hold it. And yeah, and then we'll probably settle in Tampa so whenever we buy our forever house down in Tampa or to Florida somewhere then that's probably when we'll sell it but the other cool thing about being doing Mils we use my wife's VA entitlement I still have my VA entitlement that we haven't used yet. So we'll use that at some point. But we're happy to stay here in San Diego in this house as long as the Navy will allow us to.

David:

That 17 Day close, so it's kind of a bummer. John actually left the mortgage industry.

Doug:

I know.

Alex:

What happened?

David:

It just wasn't his thing.

Alex:

That's the only thing he's good at.

Doug:

Refer them to a bunch of people. And then he's like, Yeah, I'm not doing that anymore. I was like, oh..

David:

I've actually got for anyone listening who's like, Oh my God, I need like I've got a connection with the same company. So you know, happy to introduce you guys. But he, Allen, Fred we're building, they’re wholesaling and flipping company. And they just, I mean, basically it boiled down to one of them needing to go full time. And so Al was actually Fred's or John's boss like Allen was not boss, but like the team lead for the team John was on. So I'll make seven figures. What Al’s brother Fred is like, on the Ben Kinney like he's a partner on the Ben Kinney team, which is like the biggest Keller Williams brokerage and like the world. So both of them are seven figure earners w two. And so it was like, well, if somebody's got to go full time, and John just hated being at like the beck and call of like, just phone calls in the middle of the night and Saturdays and Sundays and whatever that comes with, dealing with like, underwriter issues with residential mortgage, it just wasn't his thing. So he was like, I'll do it. And so they're paying him a salary out of the flipping company to go full time. And it's a pretty good salary, too. It's not like he's hurt. And so it's a sweet setup for him and things seem to be going well, but.

Alex:

Well, I would love to talk junk about John. But we went to go see tools together and so now we are brothers for life and I cannot do such a thing.

David:

I'm so glad that worked out.

Alex:

Yeah.

Doug:

Yeah, he’s a good dude.

Alex:

Yeah.

Doug:

Although he didn't come over when you were in town. We invited him over and he didn't come. He was doing jujitsu. Probably.

David:

Yeah, you said he was rolling around with dudes instead.

Alex:

He's unbelievably flaky. He's the flakiest guy. He will not text you back. Nothing but I'm like yeah, we're going to this concert. I flew out to LA for 20. I was in town for 18 hours. I flew in and went to a concert together. We rocked it and then I left in the morning, it was amazing. But you cannot get that dude to text you back.

David:

He means well.

Alex:

Yeah.

David:

I lived with that dude for like a fucking year and a half a year whatever. It was honestly probably the best thing that's happened to me as far as roommates go like had he not moved in. When I was struggling with things with my wife like my wife and family being out of town and like I was I was not in a good place like he he definitely helped me out a lot moving in. So good dude.

The mortgage industry lost a good guy, but there's some other people that will figure it out in his wake. His team is still awesome.

30:00 - 35:00

Doug:

Is he gonna stay in San Diego for a while you think?

David:

Yeah, I don't see him leaving. He's in San Clemente. I don't see him leaving. He loves it. I don't know.

Doug:

Yeah.

David:

Well as I used to call him in the house, damn liberal, because he hates that. But I was like, Why do you like California so much? He likes the weather, I guess. I don't know. He's got some good connections out there. And anyway, just ramble on about John, this whole podcast would be like us talking about this guy's life while he's not on it.

Alex:

Yeah, John sucks. Let's talk about something else.

So you got the wholesaling business, you got the house hack. What's like five years?

Doug:

So five years, I've got another seven years until I can retire from the Navy. So the plan is to continue to stay in the Navy and do 20 while doing real estate on the side. And, you know, I started on equity about a year and a half ago, almost two years ago. And so, you know, the goal would be to grow that business and that platform into doing bigger deals.

So whether it's JV syndication, we have a few ideas for where we want to go long term, big picture, you know, we don't want to stay in single family homes, you know, renovating $20,000 houses in Tulsa forever. That's what we're doing now. And I think it's good to build a foundation with fundamentals real estate investing. But, you know, the natural progression of the real estate investor is to get into bigger stuff. So whether that's syndications or JV, we definitely want to get to bigger things as the years go on.

Alex:

We're looking for partners to GPU with all the time equity partners.

Doug:

That's one of the things we want to get into is you know, co GP on syndications, whether it be capital raise or asset management, you know, because we are the skill set that we have doing this, the out of state brrrrs and flips, I think, could lend to doing asset management, you know, comfortable working with property managers and all that. But I think what we're where we can provide the most value right now is leveraging our deal funnel to help source off market leads for you know, not just other folks looking for single family homes, but also multifamily short term rentals, other things like that.

So I think that's how we could best provide value to a syndication right now by bringing the deal. So that's something we're going to start pursuing more aggressively now.

Alex:

So tell me what the platform though, I've seen it, I've seen the website, I think, pretty sure I've seen your Instagram posts, see, I see it around. Well, tell me what you got going on.

Doug:

So Honor Equity is a real estate investing resource for military members, veterans and their families. So it's really two pillars, you know, I like to help out military members as much as I can, that's why I'm in bigger pockets a lot. Connecting with folks in the War Room. Just just trying to help people realize the benefits of real estate investing, and help them get started. So that's one thing I've started doing this year is, you know, one of my goals, as part of my give back and Go Abundance is to mentor at least one hour per week, ideally, with a fellow military member that's looking to grow their portfolio. So I've been able to mentor two individuals now in the War Room, just help them get started or not necessarily get started, but like grow their portfolio. So that's one of the pillars of Honor Equity is just the education side, you know, documenting our journey, helping others, inspire them, helping them out, however we can. And then the other side is just the business side. So, you know, I have an LLC in Oklahoma, you know, it's Honor Equity OKC, LLC, and we use that to buy and sell real estate there in Oklahoma. So that's kind of where we're, that's where we're at now. And you know, it's really just a foundation and helping military folks and their families learn more about real estate.

Alex:

So is it blogging? Podcasting video, what is it?

Doug:

Currently, it's just blogs, and then the Instagram page. So there is Twitter. I tweet, one or two times a week, but primarily, it's Instagram and then the blog where we document the journey. So the most recent posts are lessons learned on our recent flip. So we just talked about, I wrote that article about things that we learned.

And so it's really just documenting the journey. We haven't looked into podcasts or YouTube yet I'm sure that is in our future. But I have a full time, you know, still w two full time. And then my business partner is full time as well. So we're trying to see how we can work that in the future, but I'm sure it's coming down the road. So we'll see.

35:00 - 40:00

Alex:

I love blogging. I haven’t been doing as much blogging last year. So I've been trying to do podcasting and YouTube, but let me tell you what, man, it's so much effing work. The production time is 10x for YouTube, but I don't know that the payoff actually is, I don't know if the payoff is actually any higher. Also, I think I prefer writing. So I love it, keep doing it. It works like podcasting or blogging. I mean, you can do it, you know, at home, you can do at the coffee shop, you can do it in between stuff, like it works, put that stuff up there acts as a digital resume, like I raised, basically, I've raised all the money I've raised from my website, which is mostly just blogs.

Doug:

Yeah. And the cool thing about it is if we do go to YouTube in the future, it's content, I can repurpose the blogs into YouTube videos. So I mean, it's evergreen, you know, most of it is evergreen material. So that's another thing I like about it.

David:

Yeah, that's great. I agree, Alex, though, I haven't written an article for the blog in probably three months, just, I actually have some other people writing some articles. So I've, I've been just kind of letting them do their thing. So I can focus on other stuff. And I sat down this weekend for like an hour and a half and bumped out an article about the TSP loan, because I just get asked about it all the time. And I forgot how much I enjoyed just sitting down and writing out a post. Like it's super therapeutic. Even if it's not like some deep, conversational piece. It's like, I got done. It was like, Yeah, that was, I need to do more of that.

Alex:

Dude I write so much. And then most of the stuff I don't post, I have a really weird one, I have a book written for sure of stuff on my Google Drive, probably probably two or three books worth of stuff that if I could coalesce it, it's, it's already done. I just for some reason, I get like mental blocks. I'm like, do people really care about you know, I've read about, I write about non real estate stuff a lot, you know, culture and, and weird stuff.

But yeah, it's very therapeutic. So I love that you do that. Because a lot of people are like, well, I want to get clicks, I want to get clicks. But blogging works. It's under, I don't say it's under done. But I definitely think it's not a shiny object nowadays. Nowadays, it's like people are like, I want to make Tik Tok or I want to make YouTube videos or want to do a podcast and they're useful. And, but they all have this linear, very linear format, where you can't get to the end unless you, you have to watch it in order. Whereas blogging, you can kind of skip around like visually, you can kind of bump around, you can write punchy headlines, and you can get people in, and it makes it for a much more, I think, I don't know, it's a much more engaging format for a guy like me with a short attention span, I can kind of like riff it. Okay, yeah, I do want to read this, and then I can kind of get into the meat. So I think, and then as far as like, actually creating blogging is much more therapeutic.

Doug:

Yeah, and I think anyone that's on the fence about, you know, creating stuff, you know, the reason I created this is from the War Room, I think it was opposed to made where he just challenged people to create a thought leadership platform. And so anyone out there that's on the fence, just do it, whatever you're comfortable doing. If it's YouTube, if it's Instagram, writing, whatever, just do it. I mean, your first articles, your first videos, they're gonna suck, and no one's gonna watch it except for your mom. But it's worth doing and you'll get better at it. And it doesn't matter if no one reads it. It's even just documenting the journey. It's useful for someone if it if just one person reads the article, and they get some value from it, then it's worth it.

David:

Yeah, so I definitely recommend that people have a website, regardless if that's if blogging is the medium they choose. Because, well, for many reasons, but if for nothing else, then Google will recognize that a website has existed for X number of years and give it more credibility. And ultimately, having a website no matter what you decide to do down the road, raise money, publish a book, whatever, like that is a hub where you can funnel people and direct people and contact me here and fill this out. Whereas like YouTube, you can put links, but like, maybe someone clicks on it, like, the website is the only thing that you have, like complete creative control and complete ownership over. So it's even if blogging is your medium, and you're going to do YouTube, mainly, like build the friggin, buy the domain for like $10 and frickin pay for what 150 bucks for like three years of hosting. It's like two or 300 bucks to start a website. Do it. Thank me later, whatever. Yeah, and then what was the last piece you said there? I had another thought but whatever.

40:00 - 45:00

Alex:

Could not agree more. I started the website in 2017. And I was like, I'm just gonna blog my mom's gonna read it. It turned out to be four or five blogs, and I ended up paying somebody to design and make it look cool. And now like, Dude, it's the only place in the inner that's Alex's. And when you get there, you're like, Okay, this is Alex. It's Alex’s stupid face. It's Alex's colors, right? It's what Alex wants to write. There's no like YouTube, and then you got to find out who I am. It's like you hit that page and like, that’s me, and it's a digital resume that's hyper, hyper, individualized. And David's right, like you started off. I love what you're doing, Honor Equity, right? It's like you started now. It's like, dude you know what's gonna happen in five years, I started a blog five years ago as just like a thing. I don't even hardly like the name now. I certainly use it more than others. But now, raised me a couple million bucks. Because I can say, I'm real. Like, there's no way that I can fake that. It's too much. There's too many. There's too many 3000 word articles on the Creature from Jekyll Island sitting like, in a corner somewhere. But it's like all my blog posts. It's a picture. It’s my life. And so if anybody ever wants to do due diligence, find out if Alex is the real deal, it is undeniable. And it's my place. And so I love that, because that's going to stick with you for years. And it's a credibility machine. That's the term that I coined.

Doug:

Right.

Alex:

It’s a credibility machine that just no other platform can touch. They can't cancel you. They algorithm you.

Doug:

They are not at the mercy of YouTube or Instagram or Twitter and their rules.

David:

They can't steal your emails that you've collected, like it's all yours.

Oh, that actually reminds me what I was going to say, is actually something Alex says, and Alex, I've talked about this before. So a lot of people don't start a blog. And they've got all kinds of reasons. But one of the common reasons that I hear and that seems to be a recurring thing for people when they write their first few blog posts is the imposter syndrome of like, Oh, who's you know, who am I to write this article?

Doug:

Yeah.

David:

Well, Alex pointed out something that I thought was brilliant. And he's 100% right. Like the arrogance that you have to have to think that the first article you put on the internet, somebody's gonna fucking read. Like, nobody's gonna see that shit. Unless you show it to them like nobody like, my first few articles. They were terrible, but nobody read them.

Doug:

Yeah, it doesn't matter.

David:

Yeah. And you can always pull them down later if you want. I leave them up because they're hilarious. But yeah, man like what Alex said, four years. This month. Well, I actually don't know if it was this month or last month, but four years ago, I christen buy a domain. And I made six figures from that website last year.
Doug:

It's the same concept is real estate, like, no one got rich from buying their first house. But no one got rich without buying their first house either. So you go to take action.

David:

Yeah, I like that.

Alex:

Yeah. Most people's first deals or their worst deal, why? Because you're awful at it. You don't know how bad you are at it. Yeah, you're gonna get better. And so you write an article. People put this pedestal like on my first article, people proofread my articles. I'm like, Is this any good? And then I get there. And like, the other person who read it was the one who proofread it. This is such a, but then you'd be surprised you start putting stuff out there. And then people do check it out. And then you get to help somebody and then next, you know, you're like, Dude, I actually don't need a lot of clicks, I need a couple of people to like, make this thing meaningful for me. And then you're putting out something that's useful and valuable to people and, and then, and then you get better at skills that are valuable, like creating content. I don't know if you know, this internet fad is not going away, right? It's here to stay. So like being able to create content is going to become more and more valuable over time, this military to millionaire thing, you know, David and I, he started it. It was nothing. It was dead, right? There were no views.

David:

Thank God there is Alex.

Alex:

Then he had a brilliant idea. Bring me on, right. It’s skyrocketed, obviously, right? Something like that. But it was I think in 20, I looked at the numbers in like 2020 or 2019. It had like 2000 views. There were not that many downloads. I think it's about when I started in early 2020, does that sound right?

David:

Around episode 50 whenever that was.

Alex:

Yeah, now we're at 150. So now we're at 8000 downloads. And so I guess in probably two years, it'll be like 15,000 downloads, maybe more because the faster you grow the faster like now the platform state, they start sending you more because they're like, oh.
David:

We'll be at 20,000 by the end of the year.

Alex:

It'd be what?

David

We'll be at 20,000 by the end of the year.

Alex:

20,000 by the end of the year?

We're amazing.

David:

Probably before that.

Alex:

You can't get the 20,000 unless you get to two so if you don't put anything out you can't get to two.

Doug:

Yeah.

David:

Yeah.

Yeah! like, it's fun.

Doug:

Yeah.

45:00 - 50:00

David:

I don't know if it's therapeutic to write. It's cool to put it out there. And then all of a sudden one day some Google article picks something up and you'll be like, holy crap, and then you're stuck figuring out like, I had an article get picked up. I don't know why picked up. I don't know, I think like a 500 or 600 viewer spike last week on an article that's never ranked on Google. I spent like five minutes yesterday trying to figure out how the hell did people like it's not showing his ranking like, but it's like a direct link, like somebody posted the link, somewhere that got a lot of traction, because it's not all organic. So it's like, man, someone, someone's pointing people towards this article and not knowing where it's coming from. I can't find the source. But it's like, I got like 400 or 500 views in a day. One of the articles that I just assumed was dead from like, two years ago.

Doug:

Yeah, you never know.

David:

Alright, cool! Thanks!

So it's weird.

Okay, so we've covered the platform and multifamily, and all these other big lofty five year goals. What's the 2022 goal?

Doug:

So 2022 one of our big goals is to co GP in a syndication of some kind, and we kind of combine you know, if it's a JV, you know, what kind of count that as well, so, but we want to start teaming up with folks on bigger things is really the takeaway, and whether that's using our deal funnel or raising money or whatever, but we want to, and it doesn't have to be Oklahoma either. You know, it's more about finding the right people. Like everything else in real estate, it's finding the right people where you have goals that are aligned, and you know, they're, they're good, good people. And so that's our, that's our 2022 goal, along with acquiring more brrrrs in Tulsa. So as we're trying to, the goal is to really systematize that so that we can focus on the bigger stuff. And we recently hired my mom, who's awesome. And so we hired her to help with a lot of the admin day to day stuff. And so if we can systematize it to where she and my stepdad are handling a lot of that stuff, then that will allow us to focus more on the bigger stuff. So that's what we're thinking now.

David:

That's awesome, have you been on the raising money side? So you mentioned co GP, you know, looking at maybe helped with a bunch of different things, but potentially one of those being raising money, as anyone like, I know, you've read the book, or a couple of books on it. But does anyone like to sit you down and talk with you about some of the things that you're going to just like, not realize it gets hit in your face? When you start trying to raise? Like, have you started the idea of documenting substantial relationships and stuff like that?

Doug:

So we have started collecting emails, and emails, and then just kind of like, I guess, starting the conversations of like, how much would you want to commit? And we've heard that, you know, whatever, whatever people say, you know, whatever, you haven't soft commits, you can cut that in half as far as what their, what the total is actually going to be.

Alex:

Atleast.

Doug:

Yeah. So we're keeping that in mind. And also making sure that the opportunities that we may have in the future align with that particular investor and what they want. Because if we take their money and put it into something, but it doesn't align with their goals, then we're not really helping them out. So being clear on their goals, you know, they're there, how long? What kind of return are they expecting? How long? They're okay with their capital being tied up, and all that, and so having those conversations, but yeah, but any advice is welcome.

David:

Are you using MailChimp?

Doug:

Yes.

David:

So the hardest lesson I learned, when I, the first time I ever helped somebody raise, was, and this is a super simple fix, I just had no idea. The first raise I ever did was 506B. So for non accredited investors, right, which means you can't market it. So I signed up to help this guy. And I was like, Heck, yeah, I got this massive audience, this will be easy. And then I realized, like, I can't email anybody, and I can't post anywhere and my audience doesn't matter at all, because I can only reach out to people I'm like personal friends with. So I would say, while you're documenting, or while you're having those phone calls, create a tag and MailChimp or whatever, that literally just is like substantial relationships so that every time you like, have a phone call with someone and you talk to them for like 10 or 15 minutes, you can just tag them that way. So that if and when you do a raise, it's not accredited, you have a list in your email that's subjected where you like, I can physically point to where I had a phone call with this person. So it's like not that the DSCC is ever going to call you and be like, we need proof that you knew them. But like then you still have a list that you can blast with emails that you're like, Yeah, I can totally market to these people. Because I have a relationship with them. So add friends in there and whatever. And just tag them separately for when you do a non accredited raise.

Doug:

That's a good pro tip there just documenting it, you know? Yeah, that's great.

David:

Yeah. And it's weird too, because I've got like 11 or 1200 people on my investor list and only 120 have the substantial tags. So it's like very small reach when you start doing the non accredited stuff.

50:00 - 55:00

Alex:

I have like 300 people on my email list, but I think I think I've had conversations with all of them. So very, very targeted people who don't like me like, I don't know you guys both, well, David knows me. I don't know how I don't know how I come across to people who don't have never had a conversation. I don't know how I have a feeling center that I come across generally comes to you. They're like, Oh, yeah, that was guy, he seems cool or I fucking hate that guy. And so people who stick around my email list like, Dude, you're not sticking around, and then not having a conversation with you. Usually, it's like, you know, I want to meet you.

Doug:

Right.

David:

I felt that way. And then it went crazy. And now it's not remotely possible.

The Military Millionaire fucking email group has 12,000 people in and out and it grows by like, 1000 a month. That is like, there's no way that I could. But for a while I was that way. And now it's just, like, totally unmanageable. I'm like, I hope you guys don't hate me.

Doug:

Yeah, and that's what we have on our website. Honorenequity.com we thought about having the call to action button being invested now. But we changed to connect now just for that reason.

David:

Smart!

David:

Yeah. I mean, well, that actually benefits you in a lot of ways. Because every, like, major GP like syndicator, investor guy who wants people to invest with them. The thing that's being parroted these days is essentially, like, it's not the deal. It's the sponsor, which is very true. I think the operator actually does make way more of a difference than anything else. But I think the connection now speaks to investors that way.

Alex:

The operator is the most important part of the deal, always.

David:

Yep. Yeah. So it's like, connect now is better than invest now.

Alex:

Yeah.

David:

Because you want to play towards the like, look at us. We're awesome. Get to know us.

Doug:

Yeah, another thing we thought about is, you know, before we ask people, for their money to raise something we want to have at least started a deal with with those folks as well, whether it's LP so we can, you know, make sure that they're running things correctly, make sure they're communicating well, and all that. And then we can go to our investors and say, Hey, we've, we've worked with him before. Now, you know, if you'd like to invest, you can't rather than just someone that we've never invested with or don't know very well. So that's another thing that we're considering as well.

Alex:

Nice! It's a process, bro.

Doug:

Yeah.

David:

Raising money is a whole weird beast.

Doug:

Yeah, not trying to go too fast, either.

David:

It's, like, super uncomfortable, and you feel like you're out of your comfort zone the whole time. And you never think it's it never goes as well as you think it's gonna go and like, it's weird, but at the same time, you look back and you're like, like, holy shit, I've probably raised, I don't know, probably around a million dollars in the last year, on random things here and there for not not like for deals, always private money, whatever. And like, the whole time, I'm like, Oh, my God, this is so hard that I look back. And I'm like, it's actually pretty, pretty cool what's happened over the last year.

Doug:

Yeah, and that's something we're thinking about doing for sure. Which is why we're collecting emails and all that. But you know, what we have most established right now is the deal funnel. And so using that, you know, whether it's pulling lists from reonomy, or costar, and then using that to source off market leads for folks as the deal finder, we see that as potentially a faster way to get into deals as GP’s.

David:

I like it.

Alright, so we've talked about honor and equity. Is that, like, what's the best place for people to get a hold of you?

Doug:

Yeah, so honorandequity.com is the website. And then we're very active on our Instagram as well, which is @honorandequity.

David:

And will be tagged in this podcast episode when it comes out.

Doug:

Appreciate it.

Doug:

Yeah, I'm pretty active on BiggerPockets forums as well. So just Doug Spence on the BP forums.

David:

Yeah, thanks for that, by the way, was that yesterday, you tagged me in what I was?

Doug:

Yeah, I love chatting war room and house hacks and VA loans and all that kind of stuff on the forums. I tried to do one forum post a day.

David:

Smart.

I need to get more active in bigger pockets. Again, I used to be like my day to day like I was just in there all the time. Mainly because the government computer would let me use bigger pockets. Yeah, I would sit in my office on bigger pockets.

Doug:

Yeah, I do that almost every day.

David:

Now that I'm working for myself. I find that less productive than it used to be.

Oh, Doug, thanks for joining us. I am so glad that we finally got to do this. It's always a pleasure talking to you and hanging out with you and going to events with you. And you know, I get to sleep in peace knowing that Alex won't be there because he doesn't want to join and great.

Doug:

Alex, you gotta find another better one to join and not invite David.

Alex:

I get to sleep in peace when I don't hang out with David because he snore because we usually share rooms and he snores. I literally had to buy earplugs last time. And the reason I'm bringing this up is he started talking first so he's getting returned. That's what's happening.

55:00 - 56:37

David:

Alex is probably the only person who can attest other than my wife that I wasn't used to. Because we roomed together three or four times, and we were totally fine. And then whatever the fuck happened this last year.

Alex:

Yeah, Austin, he had some, it was in Austin he had some allergies or something?

David:

Yeah.

Alex:

But I'll never room with you again.

David:

Honestly, it forced me to get my own room. And I actually realized I'm not an introvert. But I need time to recharge at those events. And having my own room is awesome.

Alex:

Dude, people don't understand extroverts and introverts. Like everybody has both.

David:

Yeah.

Alex:

It's just yeah, nobody's, all although I'm pretty close to all extroverts all the time. But even I'm like, Okay, enough new people.

David:

Yeah, definitely like having a room where I'm like, okay, I can go take 20 minutes to just do nothing.

Alex, you got anything else? You wanna do the outro?

Alex will do the outro, everybody standby.

Alex:

Doug, you're the man.

Oh, am I doing an outro now?

This has been the from military to Millionaire podcast, our guest Doug Spence, you can find him at honorandequity.com.

Thank you so much for listening! Rate us on iTunes. We will see you for the next one!

End:

Thank you for listening to another episode about my journey from military to millionaire. If you liked it, be sure to visit frommilitarytomillionaire.com/podcast to subscribe to future podcasts. While you're there. We'd love for you to rate the show. Give us a review on iTunes. Now get out there and take action.