Episode 29 | Jeremy Porto | Military Millionaire Podcast

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00:00 - 05:00

David:

What's up military millionaires. I'm your host, David Pere. Today we have an exciting, exciting episode about flipping meth houses and multifamily real estate with Jeremy Porto.

If this is your first time listening. Thanks for joining the community. This podcast is produced every Friday for your enjoyment, and the show notes are found at Frommilitarytomillionaire.com/podcast.

Now relax and enjoy the show.

Intro:

You're listening to the military millionaire podcast, a show about real estate investing for the working class. Stay tuned as we explore ways to help you improve your finances, build wealth through real estate, and become a person that is worth knowing.

David:

Hey, what's up everybody? It's Dave here. And I'm here with Jeremy Porto, who is in the air force for nine years and has since gotten out and got into real estate. And he was doing a video the other day with a buddy of ours. And I saw a guy I know named Phil Capra, who you may have noticed has been on the podcast before tagging me it was like he talked to this guy.

So we talked on the phone for a little bit and almost immediately I was like, yep, gotta get this guy the podcast, he got a cool story. So I'm not gonna steal his thunder. Jeremy, welcome. Tell us a little bit about yourself.

Jeremy:

Hey, man, thanks for having me on.

Yeah, I did nine years in the Air Force flying 28 towards the end of that I started getting into, you know, single family stuff, some rentals, a little bit of flipping, and one time I was deployed hurt my back pretty bad. You know, years later that played out into getting out. And I was kind of forced to take, you know, what I learned early on, and, you know, use it to live off a full time.

And honestly, I, I absolutely love it. I was already passionate about real estate. And when I got out, it just gave me the opportunity to spend full time in it so continued to do you know, more flipping more single family rentals started getting a little bit bigger, saying hey, I think you know, maybe maybe multifamily is the way to go. But instead of taking that big step, I took a tiny stab wound up in, you know, fourplexes and which I absolutely love. I still got several of those now and absolutely love the cash flow from them. You know, buying rights is important, and I was definitely able to do that there. My wife is still active duty. So she is now kind of driving the ship. And I just kind of follow her around and learn the market that we're in.

We spent two and a half years in Colorado Springs, which beautiful area out there love that flipped a couple meth houses out there because that's what was there.

David:

Nice.

Jeremy:

It was right as right as that market was on its way up. And I was having trouble finding deals, mostly because I just didn't know the market well and wasn't really marketing myself and in for deals in a good way.

So wound up getting into flipping meth houses kind of became a semi meth expert. Or maybe for a mediation expert, not a meth expert. Never did it. Never did it.

David:

Just find some way around like Oh, man, I see.

Jeremy:

Yeah, not at all.

David:

Stale meth is the best meth.

Jeremy:

Well, it's crazy. You don't even know it's there. But that's something we could dive into , that's some fun stuff to talk about.

And then finally, I've been making like the bigger step into multifamily. But 13 unit apartment last year, working on an a, an LOI on 36 units, I've got a verbal commitment on the yelloweye I just need to get it signed.

So I feel like I'm taking steps in the right direction. And ultimately, one day, you know, I'll be doing you know, my goals 100 Plus, and syndicating those deals. Because, honestly, with these 36 units, I'll probably be out of my own money for a little while in syndication will kind of become a necessity.

So that's where I'm at, you know, pushing forward into bigger stuff in syndication.

David:

That's exciting.

Yeah, I kind of the same boat like I bought a 10 unit. And I actually did. I bought 40 things and something went wrong. Basically, it was a lease option, the guy didn't, the guy decided that the contract didn't exist. And so he didn't need to listen to anything that he had put on it and signed on it.

So there was a lot of stuff that came up anyway. So I ended up terminating the contract. And we're at a big legal battle right now where I'm like, No, no, no, no, no, here's what the contract said. You're giving me my money back.

That being said, I'm at a point now where I'm like, yep, I either need to save for a long time or go into the syndication realm because kind of maxed out on what I can do out of my own pocket without just being like, you know, here I bought something and now build the reserves before something bad happens.

05:00 - 10:00

Jeremy:

Yes, yeah. And I know that you are like me and that you couldn't wait. You couldn't just sit back and wait for it to build up before you do the next step. Like you got to be doing something otherwise it's gonna kill you.

So syndication is a great part, any kind of partnering is great, I think so I and I honestly learned about syndication not that long ago. And so I was of the mindset until not that long ago that shoot man, I gotta buy something that and wait for the money to build back up, I was taking money from my wife, I'm like, Look, we're in this together. So give me all your money. I, you know, our finances are everywhere. Every marriage runs their finances differently. But it's funny because we run ours fairly like a split. And so I literally have a spreadsheet of what I owe her. What I've taken from her, what I heard back.

David:

I don't ever want to do that, because I have spending habits and my wife has saving habits. And it'll eventually come out in the wash that, like, I talked about finances, but I'm the one buying the you know, it's all they're all business related things, but I'm very quick to be like, okay, we have 600 bucks here, oh, I need a $400 microphone. And she's like, well, we don't need to buy shoes this month, you know..

Jeremy:

Nice. teach their own, I'm lucky, my wife is pretty similar in my mindset. So honestly, we don't. I actually just convinced her to stop contributing to her tsp, which I'm very happy about. And so you know, she'll start banking that money a little bit faster. So not only are we you know, syndication and partnering to keep going, but also hoping that, you know, the money that she's been putting into tsp, and I would say, that's maybe somewhat varsity level, you know, the young guys that are listening or that, you know, consider all your options, you know, don't just say, you know, somebody said not to contribute to your tsp, you know, talk to somebody first before you just do that.

David:

Yeah, I have, like a set number in my head that I'm like, Okay, once I hit this number, then I'm done contributing.

So I like, I'm at like, 22% right now, because I'm like, I just gotta hit that number. And then I'm pulling it, you know, I'm done. And that's really less of a need for the money in the TSP and more of a, I can't believe I did so bad with this thing, the first eight years. So yeah, I get something decent for all my time. Which I should hit that number in the next by the end of this year.

And then I'll do the same for the last year I'm in it'll just all go into real estate.

Jeremy:

Yeah, the the, you know, they just did $1 matching, was it the last couple of years or so. And, obviously, that's great. I mean, that's 100% return day one.

So any dollar match, you got to take advantage of. But beyond that, I don't know, you know, it's in the stock market. And it's, you know, you don't have control over it, you don't have all the advantages of real estate. I just, I don't want to be in the stock market, you know, any more than I have to.

David:

Yeah, exactly. I definitely prefer that. And I had, and I say this, it's saying that I had stopped my tsp allotment for two years to dump it all into real estate, I just recently was like, Man, I'm gonna try to hit this number. Before I get out just so I have something to show for.

What I'm trying to do is I'm trying to get stuff on tsp. And this is probably the wrong way to play the game. But enough in the TSP, that I can effectively use that as my reserves.

So if I can, I can feel comfortable dumping whatever, because I know, if something ever hits the fan, I can pull 20 grand out of this, and pay it back that way. So like in my head, I'm like, okay, for one, they can use tsp and counted towards your reserves when you're purchasing.

Jeremy:

Yeah.

David:

But for two, I can take a loan out of it at an interest rate that I would never be able to get in the civilian world. So I'm like, Okay, if I hit the thing, it's like 50 grand, like, if I hit 50 grand, then I can pull 25,000 out, and I'll be able to, you know, keep it and it'll count as 50 grand as my reserves for purchasing, which in my market is enough for basically anything up to a 25 unit property.

So I'm like, okay, that'll be my plan there. And then I'll save everything else. And so that's the only reason I'm building it up is like, Okay, I know that I'm not gonna blow this money. So it'll still be a constant reserve.

Jeremy:

Yeah, yeah, it also I do have to say, my wife and I have built up our tsps and Roth IRAs to the point where they are sizable, so that us stopping contributing is not like, you know, stopping contributing to an account that has zero in it, we've got a chunk there.

So like you said, it could be used for reserves, you know, just net worth when it comes time for, you know, bigger loans that start looking at that kind of stuff. So, yeah, very different situation. I hate to throw out a blanket statement, like stop contributing to tsp and then see somebody use that in a wrong way.

David:

Yeah, yeah. It's a pros and cons to everything, right. And there are I mean, I, there are people out there who like to liquidate the TSP completely to go into real estate and I'm like, you know, good on you. I hope you don't buy something when the market crashes.

Jeremy:

Yeah, yeah.

David:

But it's not a bad play. I agree with it.

Anyway, I digress. So let's hear about some Meth houses.

10:00 - 15:00

Jeremy:

Yeah. The good stories?.

David:

Yeah man, no one talks about meth houses.
Jeremy:

I fell into this. Like I said, we moved to Colorado Springs, we had, I mean, it, just to put it in context, we'd spent eight years in the panhandle in Fort Walton Beach. Or at least I did, my wife kind of bounced around and back, bounced back and forth with me. And then that was when I got out. So I knew that market inside out and backwards was doing just fine there. That's right when I got out. And then shortly after that, she had a program that moved us to the east coast of Florida, a completely new market, Melbourne Cocoa Beach area, about an hour east of Orlando.

And, man, I was just stuck in my way of Oh, I know that market, but I don't know, this market. And I'm only going to be here a year and I made all these excuses. So I wound up actually still flipping in the panhandle. From Cocoa Beach, I got a little experience of the long distance thing, which is difficult. And I would never say don't do it but you know, if you can teach them to work in your own backyard, it's a lot easier.

David:

Yep.

Jeremy:

So so then from there, we moved to Colorado Springs, I had the same, you know, limiting mindset and, and saying, Oh, I don't know, this market and, and I just happened to see on one of the auction sites pop up, it was a house that's like, Man, that's really cheap, what's going on, and I dug into it, it's a meth house. And I was like, Oh, I, you know, this is not my personality to dig into something like that I have no clue about, but I just started calling around, you know, got in touch with a guy that does meth remediation in like, I don't know, 40 or 41 of the 50 states. And we talked for like three hours on how to do it. I swear after that three hours, I felt like I knew quite a bit about it.

But ultimately, you know, what I saw in the end from a, like a strategic strategic view was, man houses are scary, like to the guy that doesn't know it was to me when I first saw it, and, you know, it's just go stir this thing that can't be you know, figured out. But it's, it's, it's a science issue. It's a physical chemical that's on the wall. And when you clean it, it is no longer a safety hazard, right.

And so if you if, you know, you follow all the rules, you get the right guys to do the work. Then after that, it just becomes, you know, another flip like anything else, it's just, you know, your budgets a lot bigger for renovation, so you got to have a lot more space. And, and that's how I got into it. Then I started doing so I did that one. Then I saw another one. I grabbed that one. And I think because I knew you know what the numbers were in, and I wasn't scared of it. That second one that I got. I made my offer to the next guy bill, homie, I wish I would have known this ahead of time was $50,000 below my offer.

Yeah, so obviously, they were scared, they didn't know. And they were like looking for a lowball out there, see if it sticks. But since I had, you know, I had the knowledge, I was able to come in with good, I still make great money on that deal. I made, I think 60k on that one. Flipping that one. So.

And that was a lot of fun. I don't know if you want to know, like all the details or some of the details literally like, you know, how it, how you test it, how you how you clean it and all that.

David:

I'm curious if you've got a short debrief, that would be really cool to hear. I don't think I've talked about that on a podcast. So it'd be something new.

Jeremy:

Yeah.

David:

The title of this episode is like, Buy meth houses or I don’t know...

Jeremy:

Jeremy Porto does meth. Does meth house flipping.

But anyways. I mean, the short story, like I say it's a physical chemical. So whether you smoke it, or I don't, you know, or do you smoke it or whether you manufacture it, the chemical gets on any surface, wall, ceiling, fans, in the desert to work on the flooring, you know, wherever it is, it settles there to build up, it's a residue.

And they talk about it in micrograms per square 100 centimeters. That's the kind of the basis for knowing how much or how little there is. And so you know, the guys will come in there and test it by taking an alcohol swab of that 100 square centimeters, putting it in a, you know, a container, and they send it off to the lab to test it. And, you know, the safe limit depends on what state you're in. I was in Colorado, the safe limit is point five micrograms of meth per 100 square centimeters.

So if it's below that it's considered safe. And I know that seems a little scary that like, Oh, so some amount of meth in my house is okay. But if you think about it, I mean, there's you can do this, I haven't, but there's arsenic in our bodies, right? There's all kinds of bad things in our bodies, but at the appropriate level, it's not an issue. Same here.

So you know, I've seen numbers as high as 20-40 micrograms per square 100 centimeters. So what does that like 80 times the legal limit, right. And, and so depending on what room and you know, the numbers that you see is to how much it's literal elbow grease, and this part I don't know exactly, but they do use some kind of solvents and other chemicals to kind of get that stuff off and have vacuums and all that stuff to eventually clean it to the point where they say, okay, we think this is good, bringing the tester guy again, he retest the same way he did the first time. If it's under half a microgram per 100 square centimeters, you're good. And if not, you go back and you clean it again.

15:00 - 20:00

Jeremy:

There's a lot more nuanced and, you know, did they paint over it? Did they? What kind of paint did they use over it? You know, all that kind of stuff. And there's things you won't bother cleaning, like, you're not going to bother cleaning any fans, you know, any bathroom fans, that's where a lot of it gets accumulated. Because, you know, as the fans are blowing air that you know that all the air gets concentrated into that one area. There's more nuance in that, but that's honestly, in a nutshell, that's how it works.

David:

That doesn't sound too bad. Is it? Is it some special kind of cleaner? You got to bring in like, I would imagine your normal house cleaners probably not gonna mess with that.

Jeremy:

Yeah, I imagine the answer is yes. I don't know the answer. I brought in guys that were certified by Colorado. They're called industrial hygienists. They do their thing. And I stayed out of that piece of it.

I'll tell you one very interesting thing, though, it is run on a state level remediation of meth. And so the EPA puts out a guideline on how to remediate them, you know, meth effect at home, but there is no like federal law as to how it's done. There are states I couldn't give you a name right off the bat, but there are states that don't have any guidelines on how to do this. And, to me, that's kind of scary.

David:

Sounds like an Arkansas thing. They're like, everybody does a little meth.

Jeremy:

Yeah, okay. There you go. Good. I didn't want to, I didn't want to hate on any one state. But yeah.

David:

We're like the meth capital of the whole world apparently, or at least we were when I was in high school.

Jeremy:

It's funny you say that because this is coming from I want to say it was like a New York Times article. But they had some heat maps in El Paso County, which is Colorado Springs was the number one county in America for meth affected homes. And I forget what year that was, I want to say that was the early 2000s.

David:

I mean, it’s not terribly surprising, because boulders like you know, not very far away. And that's like the hot spot for everyone who got strung out to go move to apparently it's a big hipster place now. And it's like, they've got the boulder IronMan. And it's turned around, but I remember.

So my parents work for Campus Crusade for Christ. And they work for this organization called family life. And every other year, they go to Colorado Springs, and they stay at CSU and they do a conference. And so all through, you know, Junior High, High School, we went up there every other year. Never ever do it. We went to Boulder is like an outreach thing like to go talk to people and whatnot. And I just remember like, that was the trickiest place I'd ever been to that point in time. And I remember like this guy sitting out there playing Creedence Clearwater Revival. And he's stoned out of his mind. And he's like, got his dog trying to try to use his Bong. And it's like in public, like he's just sitting there smoking out of a bomb on the street. And I'm like, well, this is not what I grew up around. That's my impression of Boulder. But I hear it's a safe place now. But ah...

Jeremy:

Yeah, you know, it's hard to say i think i think the incidences of meth are on the decline. I spent a lot of time talking to the Colorado Springs Police Department and the remedy it was at the Department of I never remember it now. But the Denver State Department that deals with this stuff, it's in Denver, or sorry, the Colorado State Department. And then it's in Denver, I spent a lot of time talking to those guys. And they had for a long time in the early 2000s. spreadsheets that showed, you know, all the houses that they had, you know, that were meth affected, and it trails off into the early teens, and then they just don't even well, it actually the law changed. And they're not allowed to keep a track of it now, but it seems like it has been on the decline, which I guess is good news.

I think so I 25 runs or South right through their Pueblo, you know, from Mexico all the way up to like, you know, Pueblo, Colorado Springs Denver, and I think that's just a perfect you know, highway for trafficking and whatnot. So I don't know that that might play into it. Why is that area so bad?

David:

That actually I just thought of an interesting question.

So you got your first one off an auction site?

Jeremy:

Yeah.

David:

You were kind of comfortable with meth houses. Was this something? Did you stick with auction sites? Or were you able to like talk to the Colorado PD and find like, an in for like, Hey, here's a meth house that might be coming to market or might be worth marketing to a casino.

Jeremy:

Phenomenal question. I love it because my thought was okay, I have expert knowledge now on something that probably not a lot of people do. Right? And so if they're if these houses are out there, I'm like the perfect person to sell this to.

20:00 - 25:00

Jeremy:

And this was all right at the time when I was actually starting to get out of flipping. So I never took this to, you know, the full completion but yes, I was calling Colorado Springs Police Department I was calling, you know, up in Denver, and in trying very hard to generate leads that way I wound up not getting very far. But again, this is what I was kind of getting out of the flipping. So, I didn't put a whole lot of effort into it, just because I think it would be cool. Like if I had more time, I would love to go back and do that and play that out.

But yeah, I mean, I started. So the method mediators were the method mediators and the industrial hygienists, the guys that were testing it. I tried making contact with all those guys in the state and saying, hey, look, I live in El Paso County, you know, if you guys come across, because really like one of the first people that find out are these guys, you know, you know, it's if you're the owner, and you know, it's affected, who do you call you call the industrial hygienists? He comes out there and test it and tells you, yes, you're met, the fact that you need to do something about this, if I thought was, hey, if I can get to these guys, as soon as they get, you know, tabs on a house that they just tested the initial assessment, they can send me the info and ask the owner, Hey, can I put you in contact with a guy that that does, you know, that remediate these homes.

And I actually, I got a lot of leads that way. It's funny. This could be a whole nother story. But, you know, to bring this to a personal level, I talked to a lot of people that had this problem, and it ranged from I'm the one that did the meth in the house. And now I got to clean it because I'm selling it goes from there all the way to, you know, my, my husband is the one that did it. And you know, I'm divorcing him and we're having to sell the house and, and then I go talk to the husband. No, my wife was the one that did it. You know, and then the wife's like, actually wasn't the husband. It was our son, our 18 year old. So like, the stories are, I mean, they're crazy. And honestly, like, they're sad. They're really sad.

And then there's the ones that you know, I didn't even know it was meth affected. Like I bought this, you know, 10 years ago and I raised my family here and you know, I just found out now and I'm trying to sell it that it's meant to be effective. Well, it turns out it was his son that did it. You know, I mean, like, it's, it's...

David:

Nobody wants to admit it.

Jeremy:

Yeah, So I definitely was, you know, where can I pull these leads from, I love that question. Because, you know, digging deep into something you're good at. I think that that is definitely if I had stayed with flipping that is definitely something I would have gotten farther into.

David:

Trouble with my cold calling. Like, does your house have mest? Just like, Hey, I heard your house was a, you know, a fire hazard. You want to sell it dirt cheap, because you're going to jail. What? Yeah, that's funny though.

Jeremy:

That's funny.

David:

Yeah, I mean, that's, I wouldn't have thought about that.

So the industrial hygienist is funny because which is really funny because now as I'm looking at my notes here, I really butchered the word hygienist, hygienics. I don't, anyway.

Jeremy:

No, spell it, spell it so everyone knows.

David:

Oh, no. No, no, no, no. But so I'm a safety rep out here for my unit and those are the same guys we use to bring in to do all our safety inspections and stuff so I should have known that that was those guys do like every job that you could think like wow, wonder who does that it's always them.

They have a really strange skill set but they're great like they're the guys who come out and tell us like huh you're gonna need a respirator for this we're gonna test all this now we're going to test all your people and make sure they're qualified to wear a respirator and like..

Jeremy:

Oh wow.

David:

They do all kinds of crazy things that you know I've you would never know. I get to read the report sometimes and it's like they come up with hazards that you wouldn't have ever thought about and they're the guys who do all the stoves and lead treatments and testing.

Jeremy:

Yes.

David:

Yeah, they're like those you imagine like the guys who come in and movies that are like in full suits and come in and just like a bomb went off and we're gonna clean everything, it’s probably what they do.

Jeremy:

Well, it did. That's exactly right. I mean that I wanted to get myself my name out there is the guy that did meth houses so I called the local news station.

David:

Real estate people never stay.

Jeremy:

I called the new station said hey, I mean this house that I was doing was actually one of the very nice neighborhoods so it's you know shock value a meth house in in that area and so they they jumped on it and I said, Look, the guys are gonna be in respirators and white suits like this is great background, you know, footage while you're doing an interview come out at this time on this date. And sure enough, they did interview me on the news.

And I actually I know I only know of one true lead that came from that. I don't know how many more came that were not from that. But that was pretty cool. I thought that and that honestly that worked for anybody doing anything. If you've got a cool story that's newsworthy, that's free advertising, you know, maybe an article in a newspaper is less, less advertising or not as great. But getting a new story that'll really get out there. You know, my name, my face was out there. And that was pretty cool. But it was just fun to be on the news.

25:00 - 30:00

David:

And that's what I need to do in my lawsuits over just go and say, Here, the stories are nuts. Have fun.

Jeremy:

Yeah.

David:

Yeah. It's a crazy story. But it's a good story. When I finally get to tell all the details, it'll be. It'll be great material.

Jeremy:

You'll write a book?

David:

Yeah. I don't want to write a book on that. But I totally could. There's me, I can just if I just copied all the emails into a book. It's probably about as big of a book, it took me like four days to go through and sort them out to mail them to my lawyer. But anyway, but so you went from meth houses, which is we could probably talk about that for a while. It's really exciting.

But what would you say? So you've done a little bit of flipping a decent amount of flipping, you've done single family, you've done four Plex, you've done, got into the multifamily. So you've kind of done everything. It sounds like the exception of maybe the BRRRR strategy. But that probably didn't exist when you first started flipping. So maybe you did it and just didn't call it the BRRRR strategy.

What, like, man I'm trying to think of the best way to ask the question, I guess, what would you like going back? Would you keep doing everything in the same order? Or do you like, do you think it's safe to try to jump into something bigger? I don't really know where I'm going with that.

Jeremy:

That's a great question. You know, when I was thinking about this podcast, and kind of just reflecting back on what I've done, kind of the word that comes to mind is unfocused. Like you’re right, I did a little bit of everything. I was buying county foreclosures, too. You know what I mean, so is this kind of all over the place. And, and I will say, from the fun perspective, it's awesome. I have a little bit of experience in a lot of different things. So, you know, those will play out later, I'm sure and have liked things that never would have related, you know, relate later. So I had a great time doing a bunch of different things, but I feel like it was unfocused. And so my future is to be focused in multifamily.

So can you jump straight into multifamily that I mean, the answers most 100%, yes, is it and I'm a full proponent of it. And yet I'm also one that started with a single family home, bought a bunch of them, then could only make the jump to fourplexes. I couldn't, I couldn't get beyond that for a while.

So I recognize there is some fear there. There's some, you know, unknown. You know, my advice would be, go the biggest that you feel comfortable going and maybe not comfortable, but go the biggest that you feel slightly uncomfortable going. Because, because I'll be honest, you know, if just from a pure financial perspective, if I had started in multifamily, I think I'd be much farther than I am now.

And so, if you can, if you can get your mind around only a single family, then do it. Like just take that first step so that you can get started. Because once you become very familiar with a single family, then you know what a duplex is, doesn't seem so big anymore. And then once you do duplexes fourplexes, it seems so big and on and on.

When I first started thinking about the bigger stuff, the 100 units, I would talk about 100 units, and I would go oh my god, I can't even say that I just can't even fathom, you know, me buying a 100 unit complex. That feels very comfortable. What feels uncomfortable now, just because I've talked about it so much. It's 200 units, right? I couldn't see myself doing 200 100 seems doable, but not 200.

David:

I was just gonna say that's like the not unfortunate, but the blessing in disguise for living in Hawaii, is this sticker shock has like, disappeared, which might get me in trouble someday.

But when I lived in Missouri, and I was recruited there, and I first started buying houses, like my duplex was $81,000 you know, and so buying a $200,000 property would have seemed like, whoo, you know, and I remember buying my 10 unit and I got it. I mean, when you compare it to other areas, like I got this thing for, steal, right, it was under a quarter mil for 10 years. Um, and that seemed kind of like a big jump because it was 10 units, and it was still a decent chunk of change.

Jeremy:

Yeah.

David:

Then I moved to Hawaii. Well, I bought that wasn't why but I moved to Hawaii. And you know, a three bed one and a half bath, 1100 square foot hasn't been renovated in a 40 years house on an eighth of an acre is 750,000. The median home price right now is like 825-850 like you just can't touch it unless you're living in a bad area of town with a VA loan.

30:00 - 35:00

David:

So going back now, like I'm looking at San Diego prices, I'm like, Oh, that's actually pretty affordable. So like a 450,000, yeah, I'm like, Oh, that's gonna get me in trouble. So okay, but like when I look at Missouri, like, it's, it's funny now because I look, and I'm like, I can buy a house for how much like, Is it even worth buying at that price? You know, the mind change, which is good as I start getting into bigger properties because you know, $40,000 a unit $35,000 a unit is whatever, that's great compared to $200,000 a unit out here, so, I don’t know.

Jeremy:

I can understand why but you're the first person I've ever heard say San Diego real estate prices are reasonable.

David:

Yeah. Mind you. I'm not buying there. So I know. But it's just the sticker shock is gone, which is nice. So that here can get in the way.

Jeremy:

Is that pricing in Hawaii? Just because it's an island. And you know, there's just you know, it's hard to expand. Why is it that way?

David:

So there's a lot of variables.

Yeah, one is, there's a lot of money that comes in here. I mean, China, Japan, everybody who wants to retire on the mainland is like, oh, Hawaii. Oahu. But because Oahu is so overpopulated they're starting to run into. I mean, there is not much land left. So yeah, people are having to build up and people are having to build, you know, in law Suites on their property for their family to live in.

There's a lot of other reasons. I mean, the the, what do they call it the salary for to be considered? Like, not poor, but I can remember the...

Jeremy:

Poverty line.

David:

Yeah, it's like $90,000 here. It's like 80 something 90 something. I can't remember the exact number. But it's, it's up there, where I'm like, that's poverty? That's living like a king in the Midwest. And so and it's just, I mean, that won't you won't get a house, like my housing allowance out here. I think the only county that's more expensive is San Francisco right now. And my housing allowance is like $3200. And, and that won't buy a house. There's a few markets. I mean, it's possible, there's some places it'll work. But if I was to try to buy right out the gate in Kailua, which is kind of turned into like, you know, kind of turned over to hipster world where it's getting pretty cool now. Yeah, I won't touch it. I mean, my mortgage will be four grand. And it's just, that's just the way it is because people are throwing money in and the price is going up.

And the other thing is it's an O9 hit, wait, oh nine and the market crashed the Hawaii market was like this is like, flip. People feel like, Oh, it's never gonna go down because land is. And that's what it is. It's really weird. Because like them, you'll look at tax stuff here. And it'll be like, home value $110,000. You know, land value $700,000. And you're at an eighth of an acre, you know, or a quarter of an acre. And that's where it's at. It's they're running out of land, there's a lot of protected land. And there's a lot of, like Hawaiian homelands where you have to be true, but Hawaiian to it's like on a lease option.

Jeremy:

Wow.

David:

We got a 100 year lease where, you know, you can buy the place, that's great, but you're not getting the land. And so buying actual land out here is it's, it's a mess. But some of the other islands aren't so bad. So Maui is the same size as Oahu with a third of the population. And so it's still expensive, but it's, you know, like San Diego expensive not like, holy crap. I can't believe that it's so expensive.

Jeremy:

Yeah, yeah.

My sister is an NCIS agent, and she was out there for I think, like two two and a half years, went out as a visitor and I saw our apartment, you know, nice apartment, but she told me how much he was paying rent and I was blown away. I could not understand it. Like okay. Can somebody invest in Hawaii? I mean, the answer's yes. I'm sure. But like, I mean, does it make sense? They're like, what kind of investing in Hawaii makes sense?

David:

Flipping.

Jeremy:

Flipping, yeah.

David:

So the market kind of slowed a little bit. But I mean, the spread out here is huge. I mean, guys will buy, you know, a house for 400 grand, put 100 into it and be able to sell it for nin.

I have a buddy out here. Did over 25 flips last year and won't touch a flip if he's not going to make six figures in profit.

Jeremy:

Wow.

David:

And so on that side, I mean, that game is big. There's a lot of room for forced appreciation out here. If you find I mean, if you found a meth house out here, you could get it for three or 400 grand, it's in the right neighborhood. You can flip it for 1.2 and it'll sell and that's the real crazy thing is it's kind of slowed a little bit right now. Almost to like the normal market as far as sales. But when I got out here, if a house was not under contract two days after the first open house, they were debating like moving the price down. Because I remember like they'd have a broker's open on Thursday. Sometimes it wouldn't make it to Sunday, but then they'd have the open on Sunday. And they would literally have like four or five offers on the table the next day, and I was off the market. It was very rare to see a house. But I think the median home sale price was less than two weeks. I mean, it's just insane. And so you can just flip a house and be done. And so it's just a strange market.

35:00 - 40:00

David:

So that's a good play. I have a buddy who I need to drive to try to get on the podcast, he's not super big into video and whatnot, he kind of prefers to be anonymous, I think. I'm working on it. Good friend, he's probably gonna listen to this and be like, I know who you're talking about me. Why did you say that? But I'm not gonna say his name. So it's all good.

This is the only person I've met who has found a way to legitimately like cash flow. Now you can cash flow, right? You can always cash flow. But I mean, people will call it cash flow, because it's making money. And I'm like, you bought an $800,000 property and you're making 200 bucks a month, like, yeah, that's cash flow, but my bank account, my savings account is making me a better return.

Jeremy:

Yeah.

David:

But he bought, he found a way to like he got the VA loan to approve. They jokingly call it the monster house. But it's like a six unit property. I mean, it's like the way he bought it. It was you know, they were kitchenettes and not kitchens, and this, that and the other and he basically, he's like, basically running a hotel, like an Airbnb hotel out of his place. And he's making great money.

And he's like, the only person I think I've found that I would legitimately say, Yep, he made it work. And he made it work very well. Most people. I mean, if you bought three years ago, you'd have some appreciation, but that's about it.

Jeremy:

Yeah, yeah, man. Airbnb was kind of my neck spot. I don't know what the market is for that out there. I don't know how often you get people kind of coming in. I mean, it's a great vacation spot, right? But I don't, I just don't know. But Airbnb, like, maybe the way?

David:

Yeah, well, it's too good. They are very heavily regulated.

Jeremy:

Okay.

David:

So depending on your zoning, it might be approved. But if you get caught in the wrong zone the first time it's like $16,000 fine. So they're really trying to crack down on people just Airbnb being all over the place. So if you get on the right zoning, I mean, I know people who made a lot of money last year on it, because you're right. I mean, they are always full, there's never vacancies. Just finding the right zoning to do it and then be able to purchase so.

Jeremy:

Yeah, okay.

David:

Yeah.

Anyway, um, so let's roll into some of these questions that I never get to.

Alright, so first, what I like to ask is if an E one, e two or 18-19, whatever, walked up to you asking for advice. You only had a few minutes to give them? What would be your best tip?

Jeremy:

Yeah, definitely just get started because taking action does something because so many people I talked to that desperately want to be in real estate or doing something other than what they're doing. And they are just too scared to take that first step. I don't and there's excuses. And I've been there, I did it myself. You know what I mean? But no, money is not an excuse. No experience is not an excuse. If your first step is to just go educate yourself. That's an action step, right? Go read a book, it wasn't a podcast.

And, you know, if no money is the issue, then get into the creative stuff. You know, I mean, get into the off market deals through direct mail, which, I mean, it does cost but it's small. And if you can find lease options and subject twos great ways to get into places with very little money.

And if you don't literally have if you literally have zero, you know, find somebody that's got some money and then execute these creative deals, but just do something to get started and everyday take a step forward. I don't mean to deviate too much, but I was chatting with this one woman at a multifamily conference. And that conference was preaching like, you know, you don't have to start with a single family, you can jump right into multifamily. You know, and here's how and I was talking to this girl and she was just like, I can't do it. It's too big. I'm like, why are you here then? Like, you know, then, you know, do something like and I kept telling her I was like, This is not what they're gonna preach to you. But if you can't see yourself going big, just go get in a single family, get a condo, something small, whatever. Do something. Do something.

David:

I agree.

Jeremy:

Call me, call me. I'll talk to you. I'll kick your butt.

David:

Yeah, I want to, I need to learn more the ins and outs of syndication because I want to eventually get into that although I also want to BRRRR some houses because that just seems like fun.

Buying a multi-family. Man I don't want to say it's boring. But like, like my 10 unit was like the lamest purchase ever. It was like okay, purchases place evict this guy. And now it's like this steady stream of income that doesn't knock on wood doesn't have any issues which, which is great. And that's how it's supposed to be. But my duplex was more fun because it's like okay, first I live in it now I don't I got these trashy tenants. I got to do this and I gotta fix this I got to rehab this I got to renovate this let me get the floor and let me do it. You know, it's like I got all these cool pictures out of it. And the house flip I partnered on was the same way but I'm like Man multi families not as like it's thrilling in its own way but like the actual like process unless you get like a trashed multifamily. It's kind of boring compared to flipping houses.

40:00 - 45:00

Jeremy:

I was thinking about that this morning. And I was like, You know what, when I'm big in multifamily and things are going smooth. I'm actually gonna go backwards and go do some wholesaling just because it's fun because I enjoy getting those phone calls. You know, from people calling me off my direct mail. I have fun with that, right.

David:

Yeah.

Jeremy:

That is funny. It's a funny thing.

David:

Yeah.

All right. So what is and I asked this and this question backfired on me. So let me preface by saying, I'm not telling I'm not expecting the military to teach me finances. But what is one thing you wish the military taught you about real estate or finances earlier in your career?

Jeremy:

If I had learned about house hacking with a VA loan earlier, before I had a wife that didn't want to, that is what I would have liked to have seen. I mean, the VA loan is an opportunity that only military people have. And, and they put it out there quite a bit, but they don't put it out there in a way that's really usable. They, you know, probably what you see a lot of guys doing is Oh, I know about this VA loan, I'm going to go buy this giant home for me and my wife, and that's it. And then and then really like we got into a home, maybe we shouldn't have had zero in it. So it's kind of a little bit, you know, risky. Why? Why doesn't the military take that same VA loan, and tell people how to house hack, go buy a duplex, a triplex or quad and make money on this phenomenal tool that we have? I wish I'd have known that I was very close to house hacking a duplex, ironically, that one had Chinese drywall in it. But ultimately, I never moved in. But I really wanted to and the decision came down to just family and I because I was just too far along in, you know, my family life. It was just me and my wife. We had dogs, but it just didn't make sense at the time. But you know, had I had I known that earlier. 100%, I would have done that.

David:

I think that's a good one. Because I agree the VA loan is not widely understood. And it's not discussed enough because so many people just like I got talked out of the VA loan, when I bought my duplex, I ended up using an FHA because the VA specialist realtor lender guy just didn't know enough about it and knew more about the FHA and like kind of talked me out of it tried to you know, apparently I was under the impression I can only use a VA loan once and he's like, Don't waste it on this. And now I'm stuck paying 80 bucks a month and private mortgage insurance that I would not be paying. I use the VA loan and I'm like, I can't ever go back and relive in the house again, or I'm not going to, you know what's even crazier. And this is something that just came about recently. So a lot of people don't know this out there. But you know, the FHA the 203 k loan, so yeah, they came out with a renovation loan. And the first year they did it, they had like a $30,000 cap on renovation. And they have since approved it. And it is like nuts. I mean, you can buy a bed down there now. Yeah, and you can buy a property with a 1.5 million ARV and buy it for I think it's like 1.5 million is the cap for purchase. If you put you know, I mean, obviously you got to put a lot of your own money in because you can only go past the local cap rate before you to put percentages down but like they'll renovate anything, I you could you could buy a you know, tear down quality FourPlex and have it renovated by professionals before you moved in and do i mean that's the one downside is you can't do the renovations yourself.

It's still essentially like a live in flip because you just move in then and when you're done, you sell it. And if you can do that and find the equity spread, you're basically flipping a house to move in yourself and enjoy and then you leave. That's and I can't wait like I'm waiting. When I go back to Missouri. I'm like I'm gonna find a four Plex that caught on fire. Because I had one, two years ago when I bought the 10 unit. Someone called me off the direct mail, they had a fourPlex that was like a unit had burned. And they were just trying to offload it and I ended up getting the 10 Plex off the direct mail so I went with that. But I'm like man, if I can find that again, like move right in I'll move into the burned out unit you know, whatever and just renovate it with the loan, move in and have it for a year and move out and be cash flowing like a king.

Jeremy:

That's great. I didn't know that existed. Is there a special name for this? I'll Google this later.

David:

It's literally just like the VA renovation loan. I can. If you can't find anything on Google. I'll hook you up with my guy out here in Hawaii who's been doing it I mean, and that's how you know it's a solid deal as people have been using it out here.

Buy a house out here and get it renovated with the loan like it'll cover a decent chunk of change. But I have a video on it. So I'll send you an email.

45:00 - 50:00

Jeremy:

Definitely, definitely.

David:

Cool formation because he knows a lot more about it than I do. But yeah, super awesome deal.

So what makes the Jeremy Porto method of investing unique or successful?

Jeremy:

Okay, I don't know, cuz I'm crazy. I'll do anything.

I mean, that's my answer. Actually, I'll just like to make it a little more well said, but honestly, just, you know, not letting something scare me. You know, being willing to learn. That's not my strength, I'll be honest. But since I've been willing to do that, that's how I got into meth houses. I didn't. We didn't talk about it. But the very first flip I did was a tiny Chinese drywall house duplex.

And so you know, it got, you know, I did county foreclosures for the first time after never, you know, didn't learn about it, learn about it as I was doing it. I don't recommend that. But you know, just being willing to try anything and learn anything. If you don't know it, go find it, go find out. You know, don't let your lack of knowledge be an excuse to not do something.

David:

I am going to ask because we've now mentioned it twice. So could you sit down for a while because I'm sure some of them don't know.

Jeremy:

You know, so I think this is kind of going away. People don't understand anymore, because it was kind of a one time thing.

My understanding is back when Katrina hit the southeast. And there were several other hurricanes that hit in that same time period, there was just a massive need for drywall, I'm sure a lot of building material, right, to rebuild. So we started importing Chinese drywall to fill that need. And this part, I don't know. But you know, something with the manufacturing technique, maybe something to do with the humidity in the southeast. But the drywall that was imported from China was leaching sulfurous compounds. I'm not exactly sure what it was, but it was just leeching some kind of, you know, chemical that was making people sick, they were getting nosebleeds and headaches. And the good news is, it wasn't as far as I know, it wasn't anything that was like long term, if you left it, if you left the house, you know, you know, the stuff went away, and it was done. But you can't live there, right. And so the only remedy is to literally tear out all the drywall and start over again.

Same thing is kind of scary at first, but when you realize just remove the drywall, there's not even a clean it's not like you have to like clean tile when you're done right. It's literally just removing it, it'll stop bleaching the compounds and that's that there was a little bit more to it like it would it would corrode copper more so you had to be careful with plumbing in the copper coils in the AC’s. But for the most part, it was just removing the stuff and it was done.

And so that's what I'm saying. I don't think it's around anymore because you know, that need that massive need for drywall is gone. And we're not importing from China anymore, at least that I know of. So I think it kind of ran its course and I think people don't really know about it anymore. That was 2000 like 5,6,7 ish. I think.

David:

China was probably like mixing arsenic into their wood. Like, look at this. They'll never suspect this kind of terrorism.

Jeremy:

Yeah, this was probably planned. Yes. And there were microchips in the drywall.

David:

CS gas or something people are just getting like gas.

Jeremy:

Yeah.

David:

That's um, yeah, I hadn't. I had actually never heard that. I was assuming that that was like some code word for like us bestest or lead. But it sounds like it is actually way less miserable. Because you all know about lead poisoning, like 30 years later.

Jeremy:

Yeah. Oh, yeah. Take Wikipedia for what it is. But if you go on Wikipedia, there's a decent article about Chinese drywall there that at least gives you the basics.

David:

Sounds good.

Alright. So the last question I was asked is, what's one resource, book, website, course whatever that you would recommend anyone getting started in real estate investing?

Jeremy:

I hate I hate I started in real estate I hate I hate saying what everybody else has said. And I'll be honest, I'm not creative. I can't come up with any new ones. So I will. I will change your question a little bit if I can.

David:

Absolutely.

Jeremy:

Creative license here.

There's a it's called Nudge by Richard Taylor. And the reason has nothing to do with real estate directly. The reason I like it is it's about human biases. And the words he uses choose architecture, you know, and I think from a sales perspective, it doesn't draw the exact, you know, lines from the book to how to use it in sales. There's no direct application that he goes through.

But he talks about human biases in the ways we think. And when you frame things a certain way, the outcomes, you know, the things the way you think about it is very different. We could use that in sales, you know, anybody in real estate, marketing and sales, and we could use this stuff to our advantage.

So I don't think you'll see anything in there about real estate. It's more a behavioral economics type book. But all that stuff. I mean, how humans work how humans think that I mean, that's crucial to negotiating a deal right getting something under contract. So I love that book Nudge by Richard Taylor.

50:00 - 54:54

David:

I'm gonna check that out. That sounds good. I like that kind of stuff. And I have a buddy who may like that I'm on this mission to give him a book recommendation that he likes, because he's such a prick when it comes to books.

Jeremy:

Nice.

Yeah, I could give you the real estate books, but you've probably heard them already. They're all you know, everybody, the Rich Dad, Poor Dad as the obvious. Yeah, you know, you hear the normal slew of other books. So I can't be like everybody else. I gotta be a little different.

David:

No, I would. I like that. I like asking the question, because I hope you know, I like to hear something new. And, you know, when you read as much as an audiobook as much as some of us do, it becomes like, okay, yeah, that's a good one. Oh, yeah. That's a good one. Oh, yeah. That's a good one. And it's, like, increasingly rare to hear. Oh, that's about, tell me about that. So I appreciate that.

Before we wrap things up, is there any, like parting words of wisdom or advice that you'd like to chat about?

Jeremy:

Insert smart thing here. Not really, maybe just say that you got to be passionate about what you do. I love this stuff. You know, I'm happy to talk with anybody, any of my buddies. I mean, I've got friends that I didn't know before. But we started talking about real estate. And that's how we developed our friendship.

You know, develop that, that passion. And if it's not about real estate, then, you know, maybe real estate is not the thing for you, but go find out what is, you know, why do we do this stuff, we do it to be happy, right to enjoy our lives. Some of that's through, you know, wealth creation so that we could do the things that we want to do. But would it be great if you know, getting to that wealth was enjoyable.

For me? It is. for you? It is. I'm sure. But you know, find that passion. Find anything that you love, do that. Find a way to monetize that.

David:

Yeah, right on, right on. I like it. Let's see, that was smart. Okay, maybe we could throw this out there to make us seem cool. You could tell everyone what your headsets are from?

Jeremy:

I do not play any video games at all. Never ever. But my 13 year old nephew plays a lot of fortnight. And my brother, my brother plays a lot of fortnight well. And I was like, you know, alright, I'll play fortnight and so I literally bought a ps4 to be able to play the game. But I didn't, you didn't have to buy it. And then I bought this headset for fortnight, because my one year old at the time was too loud. And I couldn't hear what I was saying. So yeah, this is a headset I use for fortnight. Yeah. That makes me cool. Well with the 13 year olds and all those 13 year olds out there listening to this.

David:

Maybe ninja rules my podcast now.

Jeremy:

Yes, yes.

David:

Devil, he's playing like 14 hours a day of whatever.

Jeremy:

My nephew claims that he killed him by the way once in a game, so I don't know if it's true, but he says he did.

David:

I mean, if you play that much, I'm sure somebody's gonna kill you eventually, right?

Jeremy:

Ninja, you got to come on this podcast and defend your honor right now.

David:

I saw something really funny, this is totally not I guess it's not off topic anymore. Because we went there a funny picture yesterday, and showed up on my Instagram and it was Chip and Joanna Gaines with ninja in the middle. And it was like, you know, and chip has like 4.4 million followers and, and Ninja has 3 million something. They're both huge on Instagram.

But Chip posted the picture. And the caption was something like, you know, so great to meet you. Tell your grandma who I am because it'll earn you massive cool points if you don't. I just thought that was funny because it was like, a very generational, like, he could have legitimately grown up and had no idea who they were. But they're rock stars that everybody knows. But..

Jeremy:

That's funny.

David:

Anyway. Alright, so where can people get a hold of you if they have questions and they want to reach out?

Jeremy:

Yeah, my website is Blueridgeinvestmentpartners.com long but it's the company name so easy to remember. BlueRidgeinvestmentpartners.com. And now you can just go on there and kind of peruse what I'm doing in multifamily. And there's my contact information on there. You can reach out to me there.

David:

Awesome. That's perfect. I will make sure that I plug that in the show.

Jeremy, thank you so much for coming. This has been awesome.

Jeremy:

Yeah, thank you, man. I really enjoyed it.

End:

Hey, 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 you to rate the show. Give us a review on iTunes. Now get out there and take some action.

Jeremy Porto on The Military Millionaire Podcast

Episode 30:

Jeremy Porto

Jeremy Porto is retired from the United States Air Force!

Jeremy has been investing in real estate for quite a few years. He has bought and sold several single-family homes, fourplexes, and even flipped a couple of former meth homes. Jeremy now owns a 13 unit, and is about to have a 36 unit apartment complex under contract!

His advice to an E-1/E-2 (18/20-year-old) is:

Just get started! Take a step forward every day. Jeremy wishes that he had utilized the VA loan for a house hack much earlier in his career, and recommends you research that now!

the resource he recommends is:

Nudge by Richard Thaler and Cass Sunstein
Get the book here: https://amzn.to/2DzkJFo

SUBSCRIBE: https://bit.ly/2Q3EvfE

Blog: https://www.frommilitarytomillionaire.com/start-here/
Instagram: https://www.instagram.com/frommilitarytomillionaire/
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Audible: https://amzn.to/2K0wzxL

Join me in the BiggerPockets Pro community! https://www.frommilitarytomillionaire.com/we-recommend-BP-Pro/

Books I recommend
First read: https://amzn.to/2KcTEww
Real Estate Investing: https://amzn.to/2ltPRNm
Real Estate Investing: https://amzn.to/2yxFBNf
Real Estate Investing: https://amzn.to/2IhQ1QI
Building Wealth: https://amzn.to/2ttiwpf
Efficiency: https://amzn.to/2K1eRdy
Efficiency: https://amzn.to/2yvuu7K
Negotiating: https://amzn.to/2tmCyT7

 

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David Pere

David Pere

David is an active duty Marine, who devotes his free time to helping service members, veterans, and their families learn how to build wealth through real estate investing, entrepreneurship, and personal finance!

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