Episode 163 | Dustin Baldwin | Military Millionaire

00:00 - 05:00

David:

What's up military millionaires! I'm your host David Pere, and I'm here with my co host, Alex Felice. And today we are talking to my buddy Dustin Baldwin, who I met. Also, our last guest, I met in Park City and I met Dustin in Park City as well, at a governance retreat. And what stuck out to me, amongst other things, was Dustin's on several different entrepreneurial ventures, but he is still in the Marine Corps Reserve. And so for me, like I talked, we talked to a lot of veterans, we've talked a lot active duty, there haven't been a whole lot of people that we've had on the show that started and finished and have been in the reserves, where he's at 17, and some change years in the Marine Corps Reserve. In that time, has started several different entrepreneurial ventures and built a prison transport company. He's a real estate agent, he has a website to help Airbnb, you know, buying and selling homes. I'm missing oh, of course, I'm not. I can't miss one. I got to show the box. He runs a smoked fashion cocktails, which well, he's telling a story. I'm going to create one while we're doing this. And so he's done a whole lot of different entrepreneurial ventures. And I think that's really cool. Because, I mean, when I was a recruiter, we used to tell people like, Hey, if you want to join the reserves, like if you want to start a business or go to school or be successful here in your home area, like the Marine Corps Reserve is a great opportunity. And it's just really cool and refreshing to see somebody who actually took that opportunity and ran with it and has had a ton of success.

Intro:

Welcome to the Military Millionaire podcast where we teach servicemembers, 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:

Welcome to the show, Dustin!

Dustin:

Thanks, guys appreciate having here.

David:

Yeah, absolutely!

Why don't you give a five minute overview of like, what got you to this point? I mean, you've done several different companies. So what is Dustin's story in a nutshell, and we're gonna dig into some different pieces as we go along?

Dustin:

Yeah, 100%.

So Dustin Baldwin, I live here in St. Petersburg, Florida with my wife, Jenny and our German Shepherd. It's been kind of a crazy ride. Let's go back all the way to growing up. You know, I was born in Connecticut, a small town. Torrington moved when I was young to Florida over Melbourne. Got a lot of stuff. Surfing, diving, fishing, like adrenaline junkies stuff. So when I was in high school, you know, the Marine Corps recruiter showed up in his fancy blues and started talking about being a pilot and I wanted to be a fighter jet pilot. So I was like, Dude, this sounds cool.

So I signed up. Marine Corps PLC program, and David you’re recruiter. So you're going to love this story. The PLC program I just learned shortly after I joined the Marine Corps, you don't need to be in the SMCR Marine Corps Reserves to be in it. So it's you're going OCS, your junior and senior year of college. So my recruiter somehow convinced me that I should join the reserves as a Motor T operator 3533. In the meantime, while I wait to go to college to become a fighter jet pilot.

05:00 - 10:00

David:

More competitive.

Dustin:

Yes, that's exactly what he said.

Well, anyways, he hooked me. So off to Fort or off to Parris Island and then off to you know. I know you've been here David Fort Lost in the Woods, Missouri. I mean, Fort Leonard Wood, Missouri.

David:

About an hour from where I live now. Where I live is much nicer. I don't hang out there.

Dustin:

Nice!

I'm sure it's great weather up there right now.

So fast forward a little bit. So get through a MOS training, come back and check into the Orlando reserve unit in Orlando, Florida. And CO’s like Hey, guys, we're going to rack some like, at first young PFC. I'm like, Oh, shit. Okay, let's do this.

So he gave us an opportunity to get out of it, who didn't want to because all the reservists were wanting to go and I was like, You know what, I signed up for the Marine Corps for a reasonable scale. So good. Iraq, didn't even start college yet. That was the plan, come back, start moving back to Melbourne after Iraq. And the great thing about the reserve is that you don't have to stay on active orders. So it was back to civilian life.

Started college at Brevard Community College. It's actually Eastern State University now I think. And then I transferred over to the University of Florida Gainesville, and its prime, Tim Tebow, Aaron Hernandez, and the FCC championship that went on that year. So I was living a great life man, Gainesville, Florida in the swamp. I won't go into too much detail. But we had a good time.

And after my junior year, all the guys that deployed to Iraq were like, Hey, there's an opportunity for us to go to Afghanistan. Let's roll. So we all just talked to me like, alright, let's volunteer for this thing. So we all rolled over to Afghanistan. So I split up my college again, went over to Helmand Province, did some QRS stuff, was TASH 235 over there, had a blast, no pun intended, came home in one piece and struggled a little bit. And they had us in Orlando, the reserves don't do a great job when you come back from deployment as far as the transition back to being a civilian.

So basically, I was in Orlando for six months, and it was on medical hold where they make sure that you're all good and they give you your active duty TRICARE.

So a lot of craziness. So they put us up in an extended stay hotel with 50 Marines, we all had our deployment money, and we didn't have to show up two hours a day. So put all those pieces together and think about what that was gonna do. 50 Marines in Orlando? Money, alcohol.

David:

That was like a great time.

Dustin:

Yeah, it was a great time, but it was going down the wrong path. So I quickly recognized that I signed the waiver. I wasn't physically good with injuries, but I was like, mentally I gotta get the hell out of here, because I'm gonna pay the price for now.

So I went back up to Gainesville, finished out senior year, had it in my mind at this point, like, I don't really want to be active duty Marine Corps. I gave up on being a pilot after getting kind of beat up in Afghanistan. It sucked. But I came to the realization that I liked business. I like real estate and finance. So I actually majored in real estate and finance.

So another bad ackwards idea I had in my mind was that I was going to take this fancy degree and go get a corporate job. And I applied to a couple of defense agencies and got a job with Lockheed Martin, out of Manassas, Virginia. And that's just outside of Northern Virginia for anybody who doesn't know it's in the middle of nowhere, and it's actually read by Quantico. Come to find out. So I showed up on my first day. And if we need to speed this up, I have a long story David, Alex so if we need to speed this up, just cut me off and say get to the point. But go there, show up in a suit and tie. Meet Joel, my boss. Cool dude. Guys like hey man, welcome and tell me everything I'm doing, basically my job as a financial analyst for top secret submarine programs for Brazil and Spain. A fancy term to say I told engineers to stop spending so much damn money.

10:00 - 15:00

Dustin:

So I would show up every day at 6am early clock in, spend my day with V lookups and Excel spreadsheet paranoia, and clock out, went to lunch with my co-workers, heard the drama, heard the complaints and came back to my office at 6pm. And it was just this recurring cycle of just gosh, it just was miserable really was every day, same shit.
Alex:

Dustin isn't the bureaucracy of corporate life similar to the bureaucracy of military life, but without the guns?

Dustin:

Yeah, which made it significantly less cool.

Alex:

Yeah, right.

Oh, I mean, I'm saying the same thing. We're like, Okay, I'll take the, you know, the inefficient, annoying bureaucracy as long as I get to go travel to cool places and blow stuff up, but without the explosions like I'm so out of here.

Dustin:

Yeah, yeah, not to mention, I was making I think $55,000 and I was living outside of DC, which was not even enough to pay my rent. So I was not having fun. I was broke. And it was freezing because it’s the first time I ever lived in snow. Actually a buddy of mine, I served in the Marine Corps and he was a financial advisor with Edward Jones. He's like, Hey, man, have you ever heard about the forces program? I'm like, No, tell me more. So he's like, Yeah, they'll come, they'll hire veterans, and they'll bring you on. And they'll pay for you to get your series 766. And then you get your own office, you have an assistant, it's frickin cool. I'm like, Okay, that sounds way out there and what I'm doing now.

So I applied, went through it, and picked St. Pete because I had some friends here and moved the hell out of Manassas, or Fairfax, at the time, into sunny St. Petersburg, and started that, and that was a financial advisor with Edward Jones. This is kind of where I got into real estate. So the VA loan hadn't been used yet. I decided on a great place to buy a house and I executed my VA loan on a three bedroom, two bath and got paid $300 to do it. Didn't have to come to the table with any closing money. They paid me a $300 Home Depot gift card at the end of the day. I just had to sign a shift on documents to do that. But I own the house. And you know, living in I rented a room when I was up in Virginia and I rented a room when I was in Gainesville. So it's like it'd be great to be on the other side of these room rentals and be the owner and collecting the rents. So I house hacked. And I rented the other two rooms out. And I live for free basically. So one of the guys I've rented the room too was another fellow Marine of mine, a buddy. And he came to me one day and he's like, Hey, man, I see your work ethic. I see you working late. You know, you're helping all these people with their finances and their retirement plans. You have great sales, you're going door to door, you're shaking hands with strangers, and we want you to come and do prisoner transport. I'm like, what? Prisoner Transport? I'm not transporting inmates. He's like, no, no, I want you to be business development. Like you're gonna come sell for us and talk to law enforcement agencies and get them to use our services.

Alright, tell me more. We sat for lunch with his brother. So it's him. His brother and his mom were running this company in Orlando. I jumped ship over Jones making great money.

Alex:

How much are you making at Edward Jones?

Dustin:

I was making a salary starting at 85. And then you get bonuses on top of that.

Alex:

And in Pete that money goes a lot farther.

Dustin:

Oh, yeah. Definitely.

Alex:

Okay.

Dustin:

And that's just for the first year when they train you, they're paying you $85,000 to essentially get your licenses. And then after that it was commissioned based on how many clients you bring on. And I was doing really well. And I had a great time doing it. It's just something that was telling me that I didn't have a wife, I didn't have kids. I didn't have anything. I may as well take the risk and jump into this entrepreneurial thing. And on this startup. They had acquired a company, this prisoner transport company. I think they were doing 300,000 in revenue, maybe a little less. When I came on board. There was no, there were barely any employees. So I came on board. And I quickly regretted my decision. It got really tough. Like I was going from making a nice salary to now living in Orlando, which I'm not a huge fan of. And making $500 a week was supposed to be getting paid commissions. And I wasn't just because the company was just so tight on cash. They're bootstrapping everything. So nothing against the guys I was partnered with. It was just they were trying to pay their employees. So it got tight. Things got hard.

Alex:

This is a risky one, though, right?
David:

This is the good stuff because this is what people don't understand about oh hey, he made all this all success, they forget this part.

15:00 - 20:00

Alex:

Yeah, the hockey stick is flattened and you're broke for the first three years or whatever the case.

Dustin:

Yeah, 100%.

And this is where I always tell people, don't ever forget the journey, like the journey is the most important part because you're going to get to the top if you're driven and you're motivated to get there. But the journey is the part that matters, right? Because that's what makes you.

So that was part of my journey. And we made it work. I mean, there were some tough times, I bumped some major hazards on the partners there. There was yelling, there was crazy shit to happen. But at the end of the day, I was super grateful that I ended up getting, they gave me ownership in the company based on equity, they didn't need to do that. Maybe an equal owner. So those four of us, the older brother, he put me in the executive president role or the executive director role, I think is what it was, fancy term for President.

So I ran all the BS in the office, which in Prisoner Transport. It's the bad news office, you're getting lawsuits, you're getting notices that your insurance has lapsed because they found out you transport inmates and they don't want to insure you. It's a truck hit a deer and 12 inmates are in the back. They're all going to hospital with neck pain. It just wasn't a great day, it was much less enjoyable than Hey, Sheriff, Tom, let's go grab a beer down the street. So we can talk to you about your services, which is business development, which I love.

So long story into a shorter, long prisoner transport. It worked out great. We ended up merging with a larger company up out of Nashville, I moved up to Nashville briefly. Move back, I now run VP of Business Development for that company. And we have a team and we're a much larger conglomerate now. Definitely not bootstrapping anymore. We ended up selling that company in an ESOP transaction, employee stock option plan. And we all ended up with a note payable to us and the employees of the company are still getting ESOP shares. So it was great because it was a little bit of a double dip. And from there, I got to move back to St. Pete, I run the VP does development for that company here. And then I freed up some of my time because I wasn't going to go into the office every day. So I got my real estate license, started working with investors and more so for myself, bought more properties townhouse in Orlando, where I rented out by the room, a townhouse in Brandon, which is just east of Tampa, or I rent that out by the room, ended up building, acquiring a piece of land and getting a CTP loan to build my wife and I's house. And we quickly found out that the neighborhood was better for short term rentals than it was for trying to start a family so we moved out of that short term rental and it killed it with that 130 gross in that house alone. And we're like, wow, this short term rental thing. This is amazing. Like we need to transition, buy more houses and transition our other properties to SDRs.

So that's what we're in the process of doing now. And somewhere in there, I ended up with my being a gator trader with an FSU MBA. Did a couple other serial entrepreneur stuff. Started the smoke fashion company that will watch David enjoy his drink.

David:

As you're talking about it all. I'll do my thing.

Dustin:

But yeah, man. So that's kind of in a nutshell, building out a real estate team here or doing development actually, I'll back up a little bit when I did that CTP loan cheers brother. Wish I had mine.

David:

Cool.

Dustin:

Mines empty.

One of the things actually that got me into development was watching how easy that, buying the land and doing the build on your lot program with a builder was so I was like, Man, I could just go find a builder that works at cost. And I can handle the development part of it and just create equity from the ground up. So that's what I did. So I have a townhouse project under wrap right now in permitting. And then I have another single family house, ADU. And we're looking at larger multifamily builds, maybe go to a 10 unit next. And then we help manage in-source surfing rentals for people so we stay busy for sure.

Alex:

Two things, I love how willing you are to move around. That's something that's really going to knock a lot of people out and not to say that moving is. It's not super hard. It's hard, but it's not. It's not easy. It's not like you know, it's easier to stay where you are certainly. So I love that you're willing to move four or five times in search of, you know, unknowns, not just like Hey, I'm gonna definitely go get this job. It's gonna work out. You're like, I'm gonna go there. It's gonna, it didn't work out, move back move here. I love that because that's a barrier to entry that just knocks a lot of people out. And the second thing is we definitely have to work on your elevator pitch.

20:00 - 25:00

Dustin:

Yeah, it's all over the place. I know. I was trying to work on that last night. I was like, man, there's just so much stuff.

Alex:

Just messing with you. But, okay, whiskey. What some of those whiskey things, you know, all that. I know. I love your success. But let's talk about alcohol.

Dustin:

I love it.

Yeah, man. So last Christmas, my wife got me this thing called a fog hat. And I like old fashions. So with old fashions. If you do, right, you want to, you know, the bigger ice cube, the circle or the cube. The fog doesn't do that because it goes into the glass. So like I could take this right. So big ice cube fog hat is actually like, it goes like this, where it's like a T shaped so you can't fit it in because the ice cubes in there. I decided that I was going to reinvent this thing. And flip it upside down in a different shape, and make it a veteran owned company and use the profits to then donate towards disabled veteran organizations. And that's kind of what we did. It was meant to be just a fun side project I decided to do after getting the Christmas gift and reading 12 months to 1 million. That book, which is all about e-commerce stores, by the way, it’s a great book.

And at the same time, Chief Warrant Officer that I knew, he had just become a warrant officer here in St. Pete, he came to me wanting to do live edge tables. And we were taught he's an MBA, I am an MBA, we're like do we should, we should go and do business together. He wanted to do live edge, which live edge tables are cool if you don't know what they are, they're oak, they epoxy them and they are beautiful designs. But for me, I just did not have the time to do something that intricate that I couldn't scale.

So I said, I love your idea. I think you should do that. But let's do this. So I said hey, you handle all the logistics, fulfillment, COO, I'll handle everything else sales, marketing, social media, all that stuff. And we partner and we've been in business about a year and we're doing really great and it actually has turned into a fairly decent sized company.

Alex:

Nice!

That's awesome.

Also, I see David's drinking one of your things and I don't have one. So you know, pretty salty about that.

Dustin:

We'll fix that.

Alex:

Yeah.

I love the short term rental conversion. Two years ago, two years ago now I wrote an article for bigger pockets like hey, Airbnb is super overrated because I saw people underestimating the risk and the margins were so big. And within the last two years, I've dramatically changed my position. I think. I think long term rentals are gonna end up going on Airbnb. I think Airbnb will be the platform that everybody uses kind of no matter what.

So I love that you have been, you know, converting those because I'm doing the same thing. So I think it's a good play.

Dustin:

Yeah.

Alex:

You got a lot of irons in the fire.

Dustin:

Yeah, yep, a lot.

And honestly, because of the Marine Corps kind of helped me with that with the discipline and the time management. Back to your point with the STR stuff, man, I think long term rentals, it's hard to make decent cash flow anymore with them because there's so many opportunities for not only short term rentals, but empty ours as well monthly term rentals. Because here in Tampa, people are coming in, they're wanting to buy a house, but they don't want to just buy a house sight unseen, they want to come here and stay for one month, two months, and or travel nursing, travel nursing has blown up with COVID. And websites like furnish finder are enabling people to throw their house up there furnished for three, four or $5,000 a month and these travel nurses are getting stipend to pay for it. So they're getting it so the long term rental is starting to phase out. I mean, it's not phasing out, it will never phase out. But it's just less desirable than an STR and MTR, even a travel nursing contract.

Alex:

Yeah, 10 years ago, if you wanted a three month contract for houses like pulling teeth, because, you know, as a property owner, I don't want to have a three month contract from us from nobody and then I have to take a month to turn it. It's just not profitable for me.

But with the internet platforms, a lot of the vetting is done. I don't have to worry so much about finding a place because they're gonna come to me now as long as I have my property up there. And I can have a furnace and I don't have to worry about somebody coming in and you know, having to move stuff and move stuff out. And because you know, I think it makes the transactions much easier so it the platform's definitely gonna allow a diverse, more diverse steady usage for property than previously where it's either like, you know, you know, it's long term rentals or and that's basically that's basically what house is worth your property owners long term rentals. And you know, some people started house hacking and doing other things, but I think the platforms and the digital transactions really allow for a lot of diversity and how you can use these properties.

25:00 - 30:00

Dustin:

Yeah, definitely

I agree.

Dustin:

How’s your drink?

David:

Oh, it's great. I'm a fan. Yeah, so for those of you who can't see, I'm not gonna try to do it again. I was apparently muted while I was talking about it earlier. You literally just like this on fire, and it smokes the drink for you. And then it tastes awesome. So I made a Sazerac which is like half cognac, half absinthe wash and some bitters and some sugar water simple syrup. And, but you traditionally make it with an orange slice. So I did the orange peel, smoked, or chips. It tastes great. It's awesome. Yeah, I love it.

Dustin:

Awesome.

David:

It's simple. I think it's I think part of it's a novelty to like, if I'm going to sit around with friends and like, like, you pull this thing out. You're like, let me see like, that's cool. That's way cooler than like, here's two fingers of Jack. Enjoy.

Alex:

David's all about that ego. He's got to look, he's got to impress people.

Well, let me ask a question.

David:

I mean, I'm drinking in my own podcast, so I'm good.

Alex:

Can you explain it to me exactly? Are you selling alcohol? What exactly are you selling?

Dustin:

We're selling smoked cocktail kits. So it's the top, it's the smoke fashion top and we have various flavors. So we have orange peel, vanilla bourbon, maple, apple cinnamon, and we have smoked coffee so you can smoke like coffee porters. You can smoke red wines, you can smoke bourbons, there's restaurants here that smoke desserts. It's just a great way to infuse a little bit of flavor and change the flavor flavor profile and enhance some different alcoholic beverages.

Now we recommend getting a nice bottle of wine and smoking that but if you have a cheap, jerky bottle of red wine, you want to spice it up a bit. Take the apple cinnamon, throw it on smoke the wine, it totally changes the flavor profile. And it's really cool to watch.

David:

It looks cool. Which is really all that matters.

Dustin:

Yeah, it makes a great gift too, people who have bought them up for mostly gifts like groomsmen and stuff.

David:

Yeah.

I mean, it's perfectly fitting. If you're doing a cigar, like you're gonna have a lighter like this anyway.

Alex:

You're a realtor, do you give them? Do you? I don't know if you do transactions for other people, but seems like it'd be a good maybe a housewarming gift, closing gift?

Dustin:

Yeah. 100%.

So we always have to be careful about things like, I don't know if somebody drinks or they don't drink because we do work with a lot of clients, mostly out of state clients. So when they come here looking for their short term rental or second house, I always take them to lunch and be like, Hey, you want a beverage? And they say no, probably not going to get them on.

But yeah, it's a great housewarming gift. We customize them too like this whiskey and war stories is actually a horse soldier bourbon, they have the urban stillhouse up the road, and they put their logo on the front, and they sell them in a retail shop. So people can customize the front. We engrave them. And it's cool for influencers. It's cool for restaurants, breweries, and bourbon distilleries. So, you know, Basil Hayden actually bought a significant amount from us. And they did promotion for some of their bourbon. But yeah, it's just kind of a cool thing. We're talking about white labeling it and maybe just allow people to put whatever they want on the front of it.

David:

I'm sure that is a good idea.

As long as you can set the infrastructure up to be like almost print on demand. So you don't have to worry about it. I think that's a brilliant idea to let people like, not that I have a whiskey company, but if I did, if I had a distillery or whatever, and I was like, selling bottles, or like the local brewery, and it's like, Hey, here's this awesome thing that you could buy or they use it in the, you know, in the establishment rather than, you know, the one place that I've had, because getting like a smoked cocktail is not the most like common thing like it's kind of more of a high class place and like the one or two places I've ever had it they like they smoke the glass like upside down on something. And then they flip it over and then they like to pour the drink into the glass. So like doing it where it's like the drink is made and now you just watched the smoke in a feud like that's cool.

So like, I think that's a lot cooler than like, I don't know, an empty glass with smoking.

30:00 - 35:00

Dustin:

Yeah, definitely.

Yeah, it's a fun company for sure.

David:

I mean, if you're involved in the alcohol world as a business, like, I'm okay, getting paid to do anything with alcohol, so, you know.

Alex:

Oh yeah, 100%.

You're in the best part of the alcohol business where you don't have to have all the licensing, I'm guessing.

Dustin:

Nope, no licensing.

We do need to have some liability insurance though, with these torches. Because these things are like, these things are no joke.

David:

And then you've got to ship one of these things too. I'm sure shipping the butane is fun.

Dustin:

Yeah.

But to your point, it's great to have industry. I mean, this weekend, we're going to the beer bourbon and barbecue festival over in Tampa. And we're just setting up a table and we're just gonna smoke cocktails and drink all day and have a good time and write it off.

David:

I kind of did business right there.

Alex, why don't we start that next? Actually, Matt just bought a brewery. So you know.

Alex:

I don't drink beer.

Dustin:

What do you drink?

Alex:

Everything else.

David:

He's a seltzer guy.

Dustin:

I can see that.

Alex:

I like bourbon!

David:

Yeah.

Alex:

You know what? I'm not going to pay Matt, anything. So I'll drink whatever I'm going to steal from his brewery so that it'll be fine.

David:

Yeah.

Okay, so I'm curious. I want to change it back to the real estate world. I know we love talking about other stuff as well. But I don't think we've ever had anyone on the show who does rent by room. And you're the second person in two days that I've talked to who does rent by room as an and does not like living in the place renting out bedrooms, which I know a few people who've done that. But I think you're the second person now that I've talked to. Yeah, literally I talked to someone yesterday who does, has multiple where the strategy is to buy a place and rent to buy the room and I'm curious like what kind of like how you set that up with management? What differs with screening and like managing that but also kind of what numbers you're seeing because the numbers he was telling me or nuts and I'm curious if you're seeing the same thing and I'm missing something that I need to go jump on.

Dustin:

Yeah, so I'll clarify about the room I rent because there's I call it room by rent because other people call it co living so the co living thing is starting to take over and I don't know if you were talking to Sam Weaver but he's kind of the guy that runs it with with Gabonensis but yeah, man he's doing much larger scale than me. For me I have a two bedroom house. I rent the master let's say 850 a month I rent the other two rooms 750 a month. So the cash flow on that before this crazy increase in Tampa just saw in the last two years. It was significantly outperforming what I could get for that house on a monthly basis, like renting the entire house.

That gap closed in the last few years. So now I can rent the entire house and the three bedroom two bath for about the same price is what I would do for a room by rent. And I'll tell you right now the way I was doing my rent which is not the way that a lot of these guys and other guys out there are doing it was a pain in the ass because I'm self managing. I'm screening these guys but then you're putting them in a house and they're calling you and saying I'll do Johnny, Johnny use my seasoning or he left a refrigerator dirty and I'm just like, dude, I'm not a house dad like figure that shit out yourself.

David:

They can call you daddy.

Dustin:

Yeah, all right.

No, but some of these other guys that have been doing it or buying houses to have bigger square feet. They have one common area. They're turning the living room into a bedroom and they're building like 567 rooms in the house and they are crushing it with cashflow like to the tune of 55 to $6,000 a month and cashflow. Whereas I'm doing about 3000. I have one in Orlando that does relatively well. It's on the other side of Valencia Community College by UCF. I have two master bedrooms in that and then two rooms that do really well. That gap has not closed. I cannot rent that townhome anywhere close to what I get a room by rent. And I also can't STR it because it's in a HOA community. So I'm stuck either keeping it for room by rent or taking a slice on my cash flow by converting it to a family.

You know the cool thing about the room by rent and I asked about management. Once you have a good group of guys in there, they become friends and they take care of your property. And there's so low there's a level of like I'm not going to mess up the kitchen because everyone else is liable and on the lease. It says like if the common areas are liable and nobody fesses up you're all liable. So they kind of please each other. If somebody doesn't stop paying rent, it's like, well, what the hell, I'm not paying your utility bill. So you're gonna pay rent, you're gonna get out. So it's a lot of self pleasing, once you get but the thing is you have to find good tenants. I've had some crazy situations where it's just, it just seems like it's just child's play man, like people complaining over the stupidest things. But for the most part, it's been a great experience, I only have three of them. The way I do it is not scalable for me. Some of the other guys have created property management groups just to run, they're co living. And they're doing great with it. Sam's a good example of that.

35:00 - 40:00

Dustin:

But for me, I'm transitioning those rooms, except for the Orlando one and in the Brandon one, HOA communities. But all the other properties, the one in St. Pete, we're transitioning to short term rental. As option number one, option two, if the city or the neighbors get pissed off at us, we're going to transition that into a furnish finder renting to nurses. So that's another thing with short term rentals. Laws are always changing. And just because it's a short term rental today, and it's legal doesn't mean it will be tomorrow. So always have a plan B. Because if you don't, that's where and you're buying in this market at the top, you're gonna get yourself in trouble. So, hopefully that answered your question about my rents.

Alex:

Yeah, I think definitely. Because of the ways that housing is going I think these laws are going to start opening up more rather than closing down. I think they tried to slow it down and realize that they can't do that when Vegas went no Airbnb, and then they switched back, they did the same thing with Uber. They're like, no more Uber and then like, okay, fine, we can Uber.

So I think that the trend is inevitable now, but rent my room is illegal, and a lot of cities for, like, say five people who aren't related living together, they box that out. And there's some good reasons for that. But I think that's gonna change. So even the people in cities where you're like, Hey, I'm kind of technically breaking the rules. I think with the housing, the shortage, I think those things are gonna open up.

So I was really skeptical. I have a friend in Vegas, who does rent by the room. And he had a real lot of trouble with his first house, a lot of trouble.

The police are here again. Yeah, he had, he was like trying to collect rent from guys in jail.

Dustin:

Oh my gosh.

Alex:

And so you know, part of it is you get better things, right. And then part of it is he started buying bigger properties. So instead of buying, like, I mean, it's in Vegas, and he was buying properties that like, you know, you just don't want to hang out at, and now he's buying places that are really, really nice. And that's part of the short term rentals of the same way where you know, it's not that all short term rentals crush, you have to get a desirable property in a desirable area. But yeah, I was really hesitant on both of those things. And now, I was wrong. They're both coming. They both look like they're coming around and going to be really lucrative opportunities.

Dustin:

Yeah, definitely. I mean, think about the rents, I don't know about where you guys are here in Tampa, the rents have just grown so much. And we have a housing problem here. And we have an affordable housing problem. And the way around that is now people are, they're renting the room, they're trying to get on ferns fire, they're just trying anything that they can to stay here because it's a desirable place to be and not get priced out of it.

So you know, two years ago, I went to the city of St. Pete and I said, Hey, I want to develop a co living. It was a three story co living place that I was gonna develop plans for. It was gonna be nine bedrooms total. One, was two kitchens, and they totally shut it down. They're like, Nope, we don't allow co living. But recently, they've started to loosen up a little bit. And they're like, Okay, well, people are saying that there's a major problem here. They can't afford to live here. The workforce is getting pushed out. Because the people that work in the bars and restaurants can afford to live here. You see the same thing in the West, the towns too. But now the city is like, Okay, we need to change our tune. So they're getting a little bit more willing to hear about this CO living thing. And the same thing with SDRs. I mean, they're making their money, they get the hotel tax. I mean, there are hundreds of SDRs operating here in the Tampa Bay area. Technically, probably 80 of them are illegal in different areas, but they're also turning a blind eye to it because you're making money and their neighbors aren't reporting them, but they're starting to relax. And to your point, Alex, I think you're right. It's getting into a direction where you have to allow people to, to be able to afford to live here. Otherwise, you're going to continue to bring in no offense to Californians and New Yorkers, but that's who's coming here and they're buying properties cash, because it's a fifth of what they paid up there or over out west and they can come here and pay $800,000 cash for a three bedroom, two bath house where nobody else is going to be able to touch it.

So this is definitely interesting. There's going to be some massive changes long term with this stuff. And there's already been significant change.

40:00 - 45:00

Alex:

Yeah, it's a risk until you know, it's a risk. And then now it looks like those risks are going to pay off the people who are early adopters and on short term rentals. You know, everything is obvious in hindsight, they're like, see, we always knew I'm like, yeah, you didn't know he's new. He didn't know he's, no, but now that the temperature is definitely changing in favor of these types of like I said, it's an affordable housing problem. And then people are moving away from those condemned cities and moving on to all these other areas, and they're scooping these houses up, and they're driving the prices up. And then renters are like, where am I gonna live? It's like, you're gonna live with roommates. That's where you're gonna live.

Dustin:

Yep, exactly.

Alex:

You're gonna live with roommates. And so we need to make it we can't be, you know, we can't be making it to the city. It seems like I can't make it illegal. Because I have no words. I'm gonna kick this guy out, and he's gonna commit a crime. If you give somebody nowhere to live. I mean, they're gonna they're not gonna. They're not gonna go away. They got to do something.

Dustin:

Yeah, 100%.

Yeah. And I mean, the STR bandwagon is real. Everybody's jumping on that bandwagon. And I noticed that it was a need, because I'm trying to buy more short term rental properties. But where do you find them? Is there anywhere to go right now where you can buy a turnkey furnished operating Airbnb property. There's a couple of websites they're not great. So that's one of the things b&b buy sell companies I'm developing to help buyers and sellers connect and sell a piece of real estate as a business just like biz buy sells a thing. Well, b & b buysells kind of the same principle, because after it's furnished, and it's cash flowing, and somebody wants to sell it, there's someone on this and that wants to buy it, well, you connect them together, and you sell it as a business. And it makes a lot of sense. So that's one of the things I'm trying to do. Very early stages but we're building out.

David:

How do you do valuations on that? Is it gonna be like an income based appraisal, more like a multifamily? Because I mean, obviously, a well oiled Airbnb, theoretically, on an income model is worth more than a single family house, but it wouldn't appraise as more than a single family house through traditional selling.

So I'm curious, like if you guys are trying to do something different?

Dustin:

So there's companies out there that get into the valuation of these products, these properties. For right now, I'm not saying that we won't do this. But for right now, my goal is to connect buyers with subject matter experts in their market. So I don't know what the zoning is in San Diego, California. But I'm going to connect somebody with a realtor in San Diego, California who intricately knows those laws, and knows what the going rate is and knows exactly what their ROI should be based on what they're paying for the property.

So right now, it's more of a referral company, we're going to connect people together. But eventually, we may get into the valuation of properties. But you know, Zillow didn't work out great for them. So I and this is a business just like this buy and sell, they just connect businesses with business brokers. This buysell doesn't value the company. So we have the kind of same business model where we're just going to connect people together. And right now I'm in the process of building out contacts all over the US and eventually internationally that have these hot markets like destin or Gatlinburg or the Poconos or anywhere, and they're going to be the go to guy or girl that gets these buyers or listings that come up in these areas. And we'll work together and they'll know that market inside now. And they'll be able to help the buyers instead of the buyers that are now on Zillow trying to figure out what can be the STR and what can they'll know the answers because there'll be an MLS search that gives them properties that are only zoned legal STR. So that's the idea.

Alex:

I think when lending catches up to STR, then you'll see home valuations really start changing because then the appraisals, the appraisers are gonna lag latest, but when more things are on short term rentals, and there's a there's a more robust lending, you know, product in the market and they're like, Okay, we know what that thing's worth, because we know it's going to make X. And I don't think that's gonna take too long but banks, you know, I was a banker for a long time, they're gonna move a little slow because they're like, You know what, we're making money. We don't need to, we're gonna, we're gonna, we're gonna make sure.

45:00 - 50:00

David:

It's an interesting, like pitfall for Airbnb, that like, prime example the upstairs unit is currently got a guest here right now I'm Airbnb the top of this house. And that makes it more, I think I could rent it long term like 1800. And short term, it's 25 to 3000 a month right now. And it's only like, I had it listed for like, two, three months. So hopefully that picks up.

But you know, so it's making more money. But when I go to refinance this house, I can't use that income because I don't have two years of tax returns proving that I'm making that income. So it's weird, like, once it all catches up, I think it's gonna be a game changer once somebody is willing to appraise differently and lend on it. And right now, it's kind of strange because like, you've got this amazing, it's almost like nobody will ever sell an Airbnb right now. Because it has cash flow so well and selling it you won't benefit from how much it's generating.

Dustin:

You think that but there's people that do need to sell. My wife and I just sold one of our turnkey Airbnb properties, we kind of regret it because the market is still kind of going up. But it was the right decision because we sold it to this awesome family out of Chicago, who were actually a guest. They're like, hey, we would love to announce here we will buy an Airbnb property turnkey, so we sold it to them for $100,000, about $100,000 more than what it appraised what it would have appraised that. I mean, now it's worth way more. But yeah, it's certainly an interesting model. And there are lenders right now that lend on this. It's called DSCR Lenders, that service coverage ratio. And one of the things is we're going to try to partner with those guys. So someone wouldn't necessarily need to have income to buy a house like this, they could just say, hey, here's my property. This is what the cash flow does give me a loan, they wouldn't need a down payment. It's not like a VA loan, it would be great if you could do a VA loan on DSCR. Okay, maybe we'll get to that one day.

Alex:

The downside with a DSCR loan is, you know, it's not a 30 year fixed, backed by, essentially the government. So the banks have to take that risk. Now you're into real commercial lending, essentially, which is perfectly fine. But at higher rates, and, you know, five or 10 year balloons, and these are all very standard things. And that's, that's perfectly fine. You're gonna knock out a lot of the below margin operators, maybe in a place like Orlando, and if you're an early adopter, that's great. But as the market becomes more saturated, and the margins, I think, you know, become more equilibrium. You know, we know how this is going to go, if you're making 30 or 40%, return on investment, there's gonna be more people that come in and compete, because they're, they'll be happy with 20 or 15, or 8. And so as those margins come out, then I think the worry is, if a bank is going to hold these funds, and they're going to lend, they're going to hold this, this accounts receivable, and they're going to hold this debt service for five years. And it's a tight it's a, it's a tight margin property on a field that's becoming more saturated and coming to equilibrium. Will it cash flow after those five years? And so I think that's probably the risk of the bank looking at where they're like, look, this thing's blowing up, and it obviously has money in it. But where's it going? If I hold this debt service for 10 years? Where's that money going to be? Is this thing gonna really cashflow? When the Airbnb saturation is, you know, whatever big market triples or quadruples over the next 10 years? Or is this going to start going negative because here's the deal, not everybody's gonna run these to a high degree, I'm already seeing it in a little fable, people who just like, you know, did the bare minimum for them up, and we're making money. Now it's like, now you're competing against people who are actually trying and they're designing these places really nicely. And they're providing a high level service. And like you're just competing against, you're competing for that front page. And the front page is only whatever it is 10 properties.

So again, this is just my, I'm not trying to be negative. This is just my banker talk where I'm like, here's all the risks. So I just definitely have some, it's definitely a problem that somebody is gonna solve. It's but the, the, the obstacle is, it's easier to play, it's easier for bank to just say, hey, look, let's wait another five years before we develop something super robust that we can roll out to everybody. But in the meantime, all that said, in the meantime, the asset base, income lenders are a great option, especially for an area that appreciates it's not the areas that appreciate that I'm super worried about theories that don't appreciate where you're kind of maxed out, maybe not maxed out, but close and you're running a tight margin and it's like now if you don't provide a high end service, you might get out competed and now you can't make that service.

Dustin:

Yeah, I agree with all that and there's such a bandwagon on Airbnb isn't like Gatlinburg, Pigeon Forge, they're just totally saturating that market and, and investor A is now you know, he was making 850 a night now he's getting competed with investor B that just bought a house and is new, and they're gonna listed it for 50. So now all of a sudden, it's just bringing these prices down. And now the returns are going down, and now it's totally saturated. So I agree with you 100%.

And the DSCR loans aren't for everybody for sure. But the thing that is interesting thing is larger houses like that that house more people are going to be a lot more resilient to this than the small like two bedroom one bath a three bedroom two bath. If you can house like 10, 12, 15 people, you can get a nice nightly rate and, and not a lot of people can afford that nice of Airbnb. But yeah, Alex, I agree with you. It's certainly it. That wave is gonna come. It's gonna settle down eventually.

50:00 - 55:00

Alex:

It's interesting to hear you say that because everybody I know, I don't use that term. I don't want to say everybody. It seems very common that people are going and this matters for the area my Carolina Beach friends are all buying like the smallest houses they can get. Because they're like, look, we the people come for the beach, they don't come to the place. So they'll pay a high rate for a roof. Even if the roof is only 600 square foot. It doesn't make any sense for us to buy an 1800 square foot house and especially on the beach, it costs us nine times it's you know, it's well over a million bucks. I can't make my money. But if I buy a little shack, I literally stay on a pot of land that somebody took a 10 by 20 Lowe's shack, and made it and plumbed it and made it an airbnb. And they charged me $500 a night.

Dustin:

Oh my gosh.

Alex:

It was fine! Fuck that.

David:

The Airbnb upstairs is a 10 to 12, right, it's a four bed, two and a half bath upstairs with a couch and a pullout. And it's interesting because when I set it up, really it was just like, well, it's a big house, I guess we'll do this. But it's cool. Because like what I'm getting right now like the guys who are upstairs, it's a crew, it's for construction dudes, who would have had to get four separate hotel rooms. And so while upstairs is, you know, it's almost 200 bucks a night or 179 a night or whatever is expensive for this area. It's way cheaper than for hotel rooms, right? And they don't want to live, they don't want to have their own room. So I'm getting a lot of like, work, or like friends coming into town or like the one that I've gotten next week is like a family from Kansas City who's meeting their son that's coming in from Oklahoma who was like multiple families. And it really makes sense in that space. And I think that kind of, I feel like that makes it a little bit more recession resistant for me because it's like, it's literally a quarter a third of the price for them to stay in my house. And it is for them to go to a hotel, so they don't have any other option.

Whereas, but then again, I'm not a tourist market. So I'm not like there's not like a huge attraction here. So I wouldn't do well with some high end, whatever, because they're just coming in for work or to see people they're not. Nobody's coming into Springfield, Missouri for the beach.

Alex:

Yeah, I wonder how hotels are going to compete because if they start to really drown, then everything I said could be completely wrong. And the market share might be way, way, way bigger, because hotels might go the way of the taxicab.

Dustin:

Yeah, that's true.

Or they'll just have to significantly cut their margins, we just have a heck of a lot more operating costs than somebody running the single family house.

Alex:

Yeah, they might not be able to, especially in smaller towns and big towns, Orlando where they can, they're near amenities that might, that might be fine. But I do wonder, I don't know what's gonna happen. It's a really interesting time. It's really good. What Sunsoo says in the midst of chaos, there also lies opportunity. A lot of chaos right now.

David:

And we got Mr. Dustin over there building the shovel to sell the gold miners.

Dustin:

Yeah, I think there's a lot of room to run still for SDRs, there's way more demand for people traveling than there is actually housing available. So that's why we still have these high rental rates, like nightly rates in these areas. However, like to your point, Alex, as more people get into it, that's gonna there's gonna be equilibrium, and it will settle down for sure. But that's why I tell our investors and our buyers of these, I say, listen, make sure that you have a backup plan, you have a plan B and Plan C for this house. Because if you get into this, and something happens with the RS or you're not making that sexy rate anymore, you need to be able to pivot and do nursing, you need to be able to pivot to room by rent or rent by room. Or it needs to make sense as a long term rental worst case scenario, because otherwise, you don't want to be losing money on this property. And you definitely don't want to miss your mortgage payment. So make sure that you stretch the heck out of it, and make sure that I do and most of our people, they certainly do a great job with that. So that's one of the things I'd say with anybody listening is just make sure that you have a plan B and C just because you know the last three years the economy has been really great, right? So the music's gonna stop one day, I'm not going to say it's going to be another 2008 but it will certainly slow down. So we just need to make sure that we're all prepared for it and we're ready to weather that because it's not always going to be 35% growth year over year, is what we're seeing in rents here.

55:00 - 1:00:00

David:

Well, unless inflation keeps going crazy, and then it will be, but it won’t be. Whoa another 35% return and my money's worth a third of what it was. This is awesome.
Dustin:

Yeah. Raised net worth just goes down.

Alex:

People are very competent right now. And it's interesting because now I have talked to so many people that are younger. And they've only seen this, you know, this 12 year, 14 year gangbusters bull market.

But yeah, it'd be interesting to see, I do think there's a lot of runway left, I think the risk, the unknown, unknown, inherently is risk. You don't know what's gonna look like, I think what people make of the mistake that some people are making with these short term rentals is they're loading up on debt. And so I love debt. I love debt on long term rentals, because you're like, look, it's fixed. And then the income is basically fixed. We know how this is gonna go with the short term rentals, you got a business now and you have, you have variable costs, and you have an unknown and ever changing, you know, new market. And so to load that up with a bunch of debt is I think it's an unnecessary risk.

You know, it might work out but that's what risk is right? Doesn't mean you're gonna, it doesn't mean it's not gonna work out. It's just one of those things where it's like, do you really want to go off leveraged to the hilt on a property that might not, you know, be in an area that grows like you hope or think, and then you have a market, an industry that, you know, obviously comes with some unknowns.

Other than that, I do agree there's a long runway for short term rentals. And you know, a lot of people are going to succeed. But there's some unknowns. There are definitely some unknowns.

David:

Yeah, I feel like short term rentals for the most part, I mean, obviously, it's gonna depend on what niche what what size property, what type of property, what location, but I don't feel like they're as recession resistant, as long term rentals in, in a lot of ways, right? Like in my market, where it's super, super, super affordable, my tenants are going to be able to pay their rent. Like, there's not an issue. But if my entire business model is built on, like a beach vacation home. Like, if the thing comes tumbling down, I would be more worried about the beach vacation home than I would be like, the long term tenant.

Dustin:

Yes, 100% that's where that plan B comes in. And one of the things that COVID did for us too is is it created a lot of traveling work that workforce, where people just are tired of their houses and they want to go work from Tampa, they wanted to work from San Diego, they wanted to work from wherever you name it for a couple of days just to get to or for a couple months just to go experience something different. And I've seen massive demand with the monthly term stuff too.

But I think the important thing is to underwrite the house as a long term rental first, make sure that it makes sense as a long term rental, then check it out as a rent by room if you have the mental capacity to do that not a lot of people do. And then look at it nurse trout traveling nurses and monthly term furnished rental and then look at it as a short term rental, like you're going backwards, right? So worst case scenario, does this make sense as a long term rental, if it does, all the rest of the stuff is just cherry on top, it's just icing on the cake. So that's what we tell the investors we work with. And it just gives you peace of mind because it protects you in case the economy slows down, people are gonna stop traveling. I don't think that people will stop traveling to get out of their cities and just you know, the digital. We call them digital nomads. There's so many of them now. So they're just always traveling. But yeah, I certainly risk just needing to protect yourself and hedge against it.

Alex:

Yeah, also, I think there's going to be a giant economic demographic shift. So you know, the number of people who are going to continue to travel, travel and digital nomads are going to increase but I think it's going to be towards, you know, more affluent clients. And so if you have nicer properties, you're gonna actually do better whereas if you have lower end properties, you're probably gonna feel a little bit more that risk, which is interesting.

Dustin:

Yeah.

David:

Yeah.

Dustin, what are we missing? What did we not cover?

Dustin:

I think that's about everything, man. I mean, I obviously have a lot of irons in the fire.

David:

I like it. That’s my style.

Dustin:

Yeah.

You know, we're just building out a real estate mentorship program. I would just say that anybody is interested in and working or having a mentor in the real estate realm as far as realtor without think about getting a real estate license, feel free to reach out but yeah, man, I think that's about everything other than meaning to work on my elevator pitch because it is all over the place. So sorry about that.

1:00:00 - 1:02:58

Alex:

Oh, I love that he brought that up. That means that was stewing in the back of his head for the last 50 minutes.

That's the real estate that I invest in. I invest in neuroticism. Let you dwell on my little comments, a little digs.

David:

Oh, my goodness.

Well, Dustin, thanks for joining us today. It's been fun. So it's always cool to me to bring on different people and hear their stories. But it's fun for me, when it's like, oh, I'm doing this and this and this and this. And we can like, just talk about different facets of different organizations or ventures, because real estate is great. But there's only so much you can talk about with just real estate. So it's been cool. I mean, we did definitely talk about short term and rent by room a lot. But you know, I also enjoy the excuse to drink whiskey on a podcast. So yeah, there's that.

So where can people get a hold of you if they want to reach out?

Dustin:

Yeah, definitely.

So [email protected] is for pretty much anything real estate related. It's pretty self explanatory. And then if you just want to connect on Instagram, it's Dustin_Joseph, or you just type in Dustin Baldwin.

And then if people are interested in investing, or selling, or even partnering, if they're an agent or not, or want to be an agent, and then their local market, they think they're subject matter expert, they can go to b&bbuysell.com and sign up as either a buyer or a seller or a partner. And I'll get back to somebody pretty quick on that.

But yeah, again, one of the most satisfying things in life is helping other people grow. I've always looked up to people and I've always remembered to look down and put that handout. So if anybody wants to reach out or just jump on a call. I'm an open book. I love helping the military. I love helping anybody. So yeah, we'd love to connect.

David:

Absolutely.

Alex:

Dude, it was great to meet you.

Dustin:

Yeah, I was craving you guys. What a pleasure to be on the show. I mean, I was thinking about how I can gear this towards all military guys, but obviously, I think it went well. And obviously it wouldn't be a military podcast without some bourbon.

David:

That's true. I see yours in the back there.

Dustin:

Yeah. My porcelain after this.

Yeah, guys. Pleasure. Thank you so much for the opportunity to be on the show. It was a great talk.

David:

Absolutely brother.

Anytime at all.

Alex:

Yep.

David:

Cool.

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.