Episode 15 | Phil Capron | Military Millionaire Podcast

00:00 - 05:00

David:

What's up military millionaires. I'm your host, David Pere.

Today we have an exciting episode with Phil Capron.

Now Phil has been a poker player, a punk rock drummer, a SWCCC sailor. And also now he's gotten out, done a lot of fix and flip properties, and he owns over 200 units in apartment complexes. Check it out to see how he did it.

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, good morning, everyone. It's Dave with the military millionaire podcast. I'm here with Phil Capron, and Phil and I got connected on Instagram, but he is a Swick, which I'm sure he can talk a little bit about because that's cool. But uh, I don't want to try to mess up the description. And he got out of the military. And now he has done some, some house hacking, some flipping and some big apartment complex deals. And so we wanted to kind of touch on that and really just hear a little bit about a story.

So Phil, welcome to the show, brother.

Phil:

Hey, what's up, Dave? Thanks for having me, man. Glad to be here.

David:

Tell us a little bit about yourself.

Phil:

Yeah, sure.

So, you know, everyone gets into the military a little bit of a different way. I got into the military because I lost a bet.

David:

I like it.

Phil:

Like, you know, I got out of high school, went into college and was playing water polo and swimming at a small d3 school and doing really well and then decided to transfer to someplace that was a little warmer and more fun.

And so, you know, at that school, I went from, like, great GPA, two sport athlete to serve all the time, and touring around the country with a punk rock band playing drums. And the only way I was able to support that lifestyle in the mid 2000s was there was a boom on like ESPN and different channels with poker was like all the rage in the mid 2000s.

So, you know, I got into playing poker and actually became pretty good at it. And, you know, before long, I was funding my bands tours, by us routing stops around casinos. So it could last for a little while to get us enough gas money, or, you know, maybe if we're lucky, even enough, not enough money for a hotel.

So after a couple years of that my parents were like, hey, you know, what are we doing here? Are we going back to school and finishing up? Because you're a senior technically? Where are you getting some kind of a job? What's going on? I said, well, you know, if I don't make 100,000 this year, keep 100,000 from playing poker. I'm going to join the military. And everyone just got a great laugh out of that.

So at the end of 2007, I'd made 85. I came back with the papers, you know, first or second week of January, mom's cry. And it was kind of a mess. I was like wait a second, what did I do? You know, but if I knew that if I was going to be in the military, going from sort of one extreme to the other the the life of leisure, you know, living in casinos traveling around with a band, I wanted to go to the complete opposite extreme and do something pretty cool.

So you know, I went out for SWCCC, which is Special Warfare Combatant Craft Crewmen in the Navy. And our job basically, is to take seals and other special ops guys to and from their missions and conduct maritime special operations on our own without any of those other guys.

So you know, it was pretty rad training. I didn't get to do anything operationally. But you know, they taught me how to skydive, we got to shoot a lot of big guns. You know, we went fast. And you know, there are some good times, good friendships and important life lessons, that's for sure.

So when I found out I was getting out of the Navy in 2012. You know, I didn't really know, I didn't really know what to do. I didn't want to, I didn't want to retreat home. Because I didn't have much to show for myself. As far as monetarily. I was 28 years old. And I'd always thought I'd be a millionaire by 30. So I'm just gonna have to figure out something pretty quickly.

05:00 - 10:00

Phil:

While in the military, I took a real estate agent course on one training trip when we were kind of like, in the middle of nowhere and for like a month and you know, nothing to do. I bought a home using the VA loan and had three of my buddies move in that paid my mortgage. You know, while I was in my duty station, and I said, you know what, I think there's something to this real estate thing. So went ahead and took the course, but didn't really do anything with it for a couple years. And then when it came time to separate, so you know what, why don't we go ahead and activate this license and see what happens in very short order became one of the top agents in my office, you know, had it like a buyer's agent admin was trying to do the typical, you know, build up a team and create passive it that way. And, to be real honest, it wasn't, I wasn't really good at it. As far as the, the business structure is like a real estate empire.

Around the same time, I started flipping houses, and between 2014-18 flipped about 40 houses, and, you know, had a lot of them that we made a ton of money on. And you know, a handful of them that I learned some really important and expensive lessons.

So, you know, I sound like a broken record here, you hear it everywhere, but flipping is just a job. If you're getting started, and you want to, you know, build a little sweat equity, do some stuff with your hands, you know, I think flipping is great, you could comfortably flip 234 houses a year, as a single operator, be real hands on and make some good money, so long as you're judicious with what you're selecting to flip. However, when you start to scale, and you're talking about doing multiple projects at one time, you need to be very careful. As things can go off the rails with various contractors, funds going here, there everywhere between Home Depot and Lowe's. And, you know, it's just it, it ends up being problems that I don't want if I have the choice, and I think we all do.

So, you know, I, I learned a lot from flipping and very grateful for each and every one of them. But where I've really found a home is in the multifamily space. And a lot of people are looking at that saying, oh, I could never buy, you know, an apartment building that's too big, it's too much, it's too risky. And, you know, I'm here to tell you, it's kind of the opposite. You know, everyone in their brother is getting into flipping and wholesaling these days, I think that space is very, very crowded. And I guess to a smaller extent people are getting into multifamily, as well. But there's, there's barriers to entry in multifamily. There's like a moat surrounding the castle. But if you can overcome a handful of obstacles, and cross that moat, what's on the other side is just immensely valuable.

So last year, I bought my first building, a 14 Plex, and had some pretty creative terms, I bought that on my own. And then very quickly, the next project we did was 109 units. And the moat that I'm referring to here is, you know, there's a lot of guys that can take down a deal for like a million dollars, you know, you're coming up with a couple hundred thousand, either from you or you and your buddies, and having a little bit of experience, and there's a lot of bank sets that are going to work with you, you know, kind of in that price point. But if you're getting up in the land of 235 million dollars, you need somebody who's a legitimate badass financially to back that, you know, the bank's gonna require that your you or your team's net worth is at least equal to the loan amount.

So that's, that's a moat, you're going to have to find someone if that's not you to be that financial backing. And then more than that, it's sort of like the economies of scale, like when you're going to flip a property, you're moving all your resources, this one property, then you got another one across town, so you got to race your guys over to that one. And then if you're doing five or six at a time, becomes a mess between multiple project managers, multiple crews, multiple guys, multiple stores, if you're doing an apartment building, you know, say my 14 unit, and we've got three or four units that need to be renovated, guess what, they're all in the same spot. So my painter can go from one to the next to the next to the next, the electrician, the flooring, guys, so on and so forth.

So what people perceive as a weakness is actually a strength. So I've been rambling for a little bit, so I'm going to shut up Dave and let you let you take the reins and just kind of see where you want to go with this.

David:

Sounds good. I'm over here I'd like right and all kinds of notes down and I'm having fun with like, I'm trying to figure out like okay, how do I title like, poker, poker, rock, punk rocker, you know, that's, that's fun. And I love playing hold'em. And I always thought I was decent at it, but I never liked getting out there and played so that's pretty cool.

Phil:

It was, it was, it was a wild lifestyle. So sorry, quick chat tangent.

So my, you know, my best friend from high school. We, you know, we're captains of the two sports together and he took a different path he went to the Naval Academy was, you know, commissioned And then went to buds and became a seal officer.

10:00 - 15:00

Phil:

So we hadn't seen each other in like a couple of years. And you know, we got together at home over one thanksgiving. He's like, so what do you do man? Like, well, yeah, I live in casinos, wake up around noon, go to the spa, or like, Mr. C, what's it going to be today? 90 minutes with Shannon. How's it? Yeah, that sounds good. And also give me one of those juices that I like in the slippers in a robe. Thanks.

And then, you know, roll out of there around three or four, go play cards till midnight, Grab it, grab dinner at Bobby Flays with a couple buddies. And then you know, maybe go to the club, maybe play a little bit more whatever. You know, it's kind of a free form.

So what do you do? music? Well, I jump out of planes and blow things up. You know? I'm like, what? Could I do that he's like, can you get in the gym and Prosecco? True. But then he's like, yeah, yeah, you could. You need to worry about it a little bit first.

So yeah, it was kind of like the tale of two tailed two brothers there that meeting and I decided to get my ass in gear and get back to it.

David:

That's fun.

Yeah, that I wrote down, I need financial badass on your team. Because I think that's fun.

Anyway, so I took some notes up. So I'd like to just ask real quickly, was there anything that you would that when you use the VA loans or anything like that you took away from using that that you think would be beneficial, and a lot of people don't seem to understand how the VA loan works, which maybe we don't need to get into details, but it's just funny to me that nobody knows how to use it. But...

Phil:

It's, it's insane. And more than the people not knowing how to use it, people are misusing it, I heard one of your guests, whose name was Alex, was talking about the downsides of the VA loan. And I thought that was really interesting, because as a, you know, a former real estate agent, you know, my bread and butter was all of my buddies. You know, from the old command from, you know, the East Coast, and SW commands, those were my clients primarily.

And, you know, I worked really, really hard to get them into good deals, and explain to them the pros and the cons of the VA loan. And I hadn't spent that much time thinking about the cons. The way I look at it is you can get an asset that's, you know, a couple hundred thousand dollars mine I bought for 250 for zero money. And, you know, let's say that average appreciation is 3% a year, but because the markets have been funky, let's just call it two. Right? So oh, geez, now I have to do math. That was so stupid of me. No, no, that's easy. It's $5,000 a year at 250 2%. Right? If I hold it for 10 years, then that's 50 grand allegedly, I'll be able to get out of that property.

And you know, I house hacked it. So my buddies were paying my entire mortgage at the time that I was there and the time that I was in the Navy. So I did the right thing. And I invested that money. No, I didn't, I went to the bar, of course to the bar, let's be serious.

So if I could tell something to the younger guys, even if you do the right thing, and you get something within your means, and you have your buddies paying it off, and you bought it right, you actually have to save the money. Like it's not just something else in your piggy bank to spend guys, like, stop, think about what this represents.

So my particular property, I've gained about 80,000 equity since 2010. So a little bit above that 2% metric that I quoted, you know, but Alex brought up some decent points, there are people getting into VA loans or paying top dollar for the properties because they have to be in good shape. And they're using their bottom dollar as an earnest money deposit.

Guys, if you don't have at least a little bit of money, I'd say six months of your mortgage payments in the bank, kind of business buying a house, and it makes it I mean, it's so stressful back when I was an agent to look at these people like they're struggling to come up with a $500 to put down their deposit that they're going to get back and then some and they're buying a freakin house.

That's insane.

That's how we got into the problem that in 2007 buy a bunch of crap like that in 2007. Yeah, you have to, you have to be a good steward of what you have. And I think the VA loan is a fantastic vehicle. I disagreed with a little bit of the doom and gloom, but it has to be used, right.

So you know, if I was back at E4,E5 and buying my first one, I wouldn't buy towards the top of what I could afford. I would buy towards the bottom of what barely qualifies in your neighborhood. Something that's within a couple miles of base, something that has a you know, preferable floor plans and maybe like a three bedroom two and a half bath townhouse. So you've got you in the master and then you got two buddies on different deployments. Schedule sharing the guestrooms, right? And ideally, only one of them's around at any given time.

15:00 - 20:00

Phil:

So you do well while you're there. But then when you leave, when I would buy it, when I'd help you buy it, I would want to make sure there was at least a couple hundred dollars, I do like $300 spread between the mortgage payment and the rent payment. Because if there's not, when you do ultimately transfer, that's when you have problems. And I think that's what that gentleman was talking to. And I see that happen all too often. Even smart guys like NSW guys, you know, getting out and having to go into foreclosure and bankruptcy over a house, they got a raw deal on when they went in. And that really grinds my gears. So if we can avoid a couple people from doing that, then you know, our time here will have been well spent.

David:

Yeah, Alex likes to he's a polarizing guy. He likes to play what I always joke with him is the Donald Trump method of publicity, which is just get everybody as fired up as humanly possible about things.

And so he writes, you know, articles where it's like, I'm gonna just say this and see what happens. But yeah, I mean, and he hits on a valid point, I tell people that all the time is service members. There are a lot of people who do well, but there's like an entire Facebook group with like, 1000 people in it called reluctant landlords.

Phil:

And yeah, I'm a member of that one.

David:

Yeah. And as you scroll, you see time and time and time again, the mantra of buy a house at every duty station, which could be a great strategy. But the problem is that people buy a house, they don't buy an investment. And I tell people all the time is like don't buy a primary residence. If you're telling yourself it's going to be an investment, if you want it to be your forever home, great. But it's not going to be your forever home. And the market is not like at 2009 levels where you know, it's not going any lower than just stay away from it. And unless you're buying off the numbers, and you know, it's going to cash flow.

So like I'm getting ready to move to Pendleton. I've already started looking around in different areas trying to figure out like, okay, where do I find a duplex? Where do I find a triplex? How do I make it, you know, and I'll be honest, the prices are still higher than I would like them to be.

But there's some stuff out there where I could, whether I have to use the VA, or I can actually use it, I might have to use a two or three and wrapover you have into it. But there's some stuff out there where I can buy affordably enough that even my BAH will pay the whole mortgage. And then if I rent the other side out, I'm making a couple thousand dollars.

But we'll see. Because if the numbers don't work, and I can't find a property that makes sense, I'll live on base no big deal. And that's what I did out here in Hawaii, there was no way to make the buy and hold game. Well, cash flow. So and it wasn't...

Phil:

Not, not in the short term. That's an appreciation play. And that's, um, you know, that's that's super interesting. Sorry, my door keeps, my office keeps opening.

David:

No worries, Casper, the friendly ghost.

Phil:

I guess. So.

Yeah, you have to understand where you are in your market. And, you know, I put a lot of blame on bad real estate agents that are just being bad, bad fiduciaries to their clients. And, you know, so I love that they're starting to be some content out there from different outlets like yours, you know, bigger pockets, obviously, all the big ones that, you know, are telling people most, let's face it, most people aren't, they're not going to educate themselves. It boggles my mind, because the biggest financial decision that they're going to make, and, you know, they don't want to read one book or browse a couple of blogs or, you know, run analysis or do anything. They're just like, okay, the realtor and the loan officer said, it's good. I'm sure this is the best loan, I'm sure this is the best I can do on my house. And that, to me, is madness. But maybe we're just you and I are wired differently. But I'd like to help as many people as I can, you know, come over to our side, and, you know, be setting themselves and their families up for success rather than yeah, tragedy.

David:

Yeah, I like to learn the hard way. But I like to do my research before I learn the hard way.

So when I learn. So for example, I'm learning a difficult lesson right now that eventually I'll get to go and tell all the fun details about because it's just crazy. But uh, at least I like I know that I did all my due diligence and looking back on it, I'm like, okay, I still wouldn't change anything. I did everything right. It's just, you can't, I'm learning all the fun things about people and how people affect business sometimes in ways that you can't see. And then you're like, Holy smokes, how did this happen? And how do people exist?

But you know, it is what it is, but it's an education. But I didn't if it's nice to know looking back that I did my homework and I you know, everything looked good because if I went back now and it was like, oh man, I missed all these details. What was I thinking? Well, then you can only point the finger at yourself.

Phil:

Right.

David:

Yeah, I don't know. Yep, doing your homework. But...

20:00 - 25:00

Phil:

One of my one of my big 2018 lessons was when someone shows you who they are, believe them.

David:

I like that quote, I'm gonna, I'm gonna write that down.

So, uh, I'd be interested to hear your, your big deal. So if you mean, that's you. So I haven't had anyone on here who's done. I mean, not yet had anyone as a guest who's done syndications or deals of that level where you have to bring other people in. And I think that's fun. I personally, like if I can get out of this other deal. It's going crazy. It's going right into another apartment, because my template is my favorite asset right now. And I can only see upside as I grow. Although I know there's obviously downsides. But I'd love to hear about that deal. Because that's, that's killer.

Phil:

Yeah. And, you know, I kind of went on like a little bit of a weird, weird tangent with it to start. So I'm glad we're doubling, doubling back.

Big is not bad. So long as you've checked all the boxes required, as far as your people and your resources to go big. You know, to be completely honest, I had no business doing this deal. I was calling the broker for practice, talking to brokers. I wish I could say that I just, you know, called and was like, Yeah, let's do this. I'm freaking awesome. Let's make it happen. That was not what happened at all.

I was calling to practice talking to brokers about, you know, different questions, using, you know, the terminology and just kind of trying to develop a baseline relationship. But, uh, you know, I called on this property. And, you know, we started to dive into it a little bit. And I got to the pricing question. And, you know, the roofers like, yeah, we've got, we've got some room, we've had a contractor to fall through. So you know, would you like to come out for a tour? And I kind of liked it at the list price. I was like, yeah, I'll come out for a tour. She said, Okay. Great. Just bring, you know, proof of funds for a million dollars. And, you know, we'll set this tour. I don't, I don't have a million dollars. Despite the title of this podcast. I'm not quite there yet. And we're at the gates, but we're not quite there.

David:

It's a journey.

Phil:

It's a journey, right? We're talking about this before we start rolling.

But um, yeah, so through my flipping company, we actually technically did have a million dollars. So I got the bank to write a letter saying that the company had a million dollars. And so I showed up to, you know, this tour with a property manager, and with my class, a contractor. And we toured the units, and I liked the deal even more. So I dug into the broker a little bit more about pricing, and, and uncovered, you know, some elements about the deal that made it made it unique. I alluded to earlier, there's a lot of people that can do a deal for like a million dollars, or $2 million. They're everywhere, right? Because it's really not that big. And there's a ton of people that can do a deal 4,5 to 10 million or more. But those aren't people, those are big entities, usually, I believe there's a soft spot in between like 2 million and 5 million, it's a little bit too big for the regular folks. And it's a little bit too small or too dirty, too messy, too complicated for the big funds that are just gobbling up things for yield. And this property had a lot of deferred maintenance, some management inefficiencies, it had been owned by the same folks since like the 70s. You know what, they're just tired. They've made a lot of money over the years, and they just want to be done.

So I positioned myself and my team, as the people that would solve their problems, said, look, I'm a flipper, I've toured the properties, not all the units, but I know what I'm looking at. So unless, unless one of the buildings is falling into a sinkhole that I couldn't have known about, we're good. And this is the price that I can do. And we're not going to renegotiate with you, because the previous offers had come in closer to the list and then tried to renegotiate after their inspection.

So the seller thinks that property sold is not fair to them. The buyer had no intention of paying that price. They came back and asked for something that was more reflective of the market. The seller gets upset and blows up.

25:00 - 30:00

Phil:

So you know, I got the broker on my side and showed them why my team was the right group to take on this challenge and assured them that we were going to do what we said we're going to do, and we did and that's why we got the deal ended up appraising for $1.55 million higher than a purchase price in this market that is absolutely ludicrous. You don't get, you don't get appraisals like that, appraisers got in a lot of trouble during the last crash. So they usually come in right above, purchase price, but there was so much value there. I went out with the appraiser and I showed her the market rents, I showed her rents from 10 other buildings that were the same within our sub market. And, you know, she didn't have any choice. But to appraise it so much higher.

So, you know, my partners and I walked into, you know, one and a half million dollars in equity. They said that, once we complete our renovation plan, it'll be worth two and a half million dollars more than our purchase and our rental.

So, you know, again, I get long winded, so I apologize. But what I'm saying is, deals are just deals, bigger deals are not necessarily harder deals, in some ways, they can actually become easier due to the economies of scale. But in order to do something like that, you have to have a lot of prerequisite knowledge. If I hadn't flipped 40 houses, there's no way I would think that I could reposition, you know, 100 apartments, and we're not going to be renovating 100 units, we'll probably renovate 40 you know, 50, maybe over two years.

A lot of the value is created through management efficiency. But um, you know, if I'd never swung a hammer or done a demo, or hauled shingles up to the roof or managed contractors, there's no way some, I'm not suggesting that. What I'm suggesting is, you know, if you're listening to this podcast, perhaps you're in the military, you're first responder, you're just a regular, regular Joe, like us, right? Surround yourself with people who are strong in areas in which you are weak, and work together.

So my strength is putting together fantastic teams, and finding value where others miss it. Because a lot of people looked at this deal and was like, oh, too much? Well, guess what, that's not the price I paid. And, you know, we're able to find value. There's a lot of really lazy underwriting going on these days, I see a lot of the Guru's are talking about you, you've got to underwrite 100 deals to get one, you know, that kind of stuff. And I'm all about conservative underwriting. But you have to go through more as a detective and figure out what's wrong. The back to the knowledge thing, you have to have enough knowledge about what should be to understand when something doesn't add up, to understand when you can dig deeper into an expense or into a management fee. Or, you know, for instance, a deal that I'm closing on in about a month. So it's another 82 units.

The water bill historically was 45-$50,000. Last year, it was 70. So I took it to the broker, I said, what, what changed? Like, we don't know, it's $20,000 like, you should know, they send the water company out. And they're like, oh, the meters broken. It's just been spinning, spinning, spinning. So they've corrected it in r&d in a couple months, since we've seen the bill reset back to normal levels.

So 20 grand at 10 caps, because I'm simple. That's $200,000 I just air courts found, yeah, maybe other people that were analyzing this deal missed. And in reality, the deals trading lower than that. So it's more, it's probably like a quarter million.

So if you want to do bigger things, you have to be doing things like listening to Dave's podcasts, you have to be reading the blogs, you have to be reading the books, you have to be getting dirty by going out and visiting deals and analyzing deals and going to the networking events, and up leveling your peer group and being around people that are doing deals. And once you do that, it's very likely that you can also do it. So..

David:

Yeah, and I think I like that you said that in regards to the water bill, because something I tell people, whether it's, I mean, it's the same mantra I use in finance, and I'm terrible about this.

In personal finance, my biggest downfall has been as we joked about earlier, you know, I made extra money so I'm going to the bar or I'm buying a Harley or I'm you know, all the you know, the tattoos and all the cool stuff that everybody in the military does. And then realizing like, oh, wait, I went on a deployment and I had money, where I don't know.

30:00 - 35:00

Phil:

Where to go.

David:

Yeah. So as I've finally started to get somewhat more intelligent about all of this, I have been telling people and it's kind of like my favorite thing to say when we talk about the $15 minimum wage, everybody's freaking out about like, your income is not your problem. It's your expenses.

So when you tell me that you don't have enough money to live on, and I see you with an iPhone XR and Jordans, you probably do have enough money to live on, but you're not spending it wisely. You can't, you can't try to look rich and be rich at the same time, really. I mean, until you get to a certain level.

And so people get into multi families and flips and stuff like that, and buying holds. And they think about how do I raise the rent? How do I raise the rent? How do I bring in extra cash here? And that's all well and good. But my favorite thing to do when I'm analyzing a deal is say, okay, let me call the trash company.

How can I negotiate from these 10 single trash cans down to one dumpster? I'm sorry? $80 less a month? How can I, you know, cut my water bill if a toilet breaks replacing it with an efficient toilet? How do I know, all those little things? LED lighting, I mean, whatever. And because every dollar you cut an expense is a like, you know, you can. And I think the way I try to spend it on people is you know, $50 raised income is great. $50 last expenses is better. And they're like, well, why it's you know, it's the same valuation. Yeah, but the $50 expenses still stays $50 safe when somebody vacates that unit.

And so I don't know, people get so wrapped around the dollar signs coming in that they fail to realize that's not what kills the deal. That's not what makes the money. It's how do I save money going out?

Phil:

Right.

And if, you know, forgive me if I'm out of bounds here plugging something else. But uh, if you want to dive deeper into that exact, that exact subject, listen to the BiggerPockets podcast with my friend Bryce Stuwart, I can't remember what episode it is. But if you search Bryce Stuwart, on bigger pockets, you should be able to find it. And I don't know that he's coined. He coined the term but I think he might have a concept he calls hidden ROI.

So on his deals, he would rather go and figure out where to save money on his existing portfolio, then add another unit. And I know the sexy cool thing to do is units units units, I want to go buy a million, right? where he's, he's approaching it from another, another direction.

He's in Pennsylvania so I think one of his buildings had, like, the old oil, heat or whatever. And I don't remember the numbers, but let's say it cost, you know, $1,000 to convert from oil to baseboard, but he saves $50 a month on the utilities for doing so then, what is that $600 he made in year one. So he's paid for that expense in less than two years. And then it just, it's an infinite return from there.

So he calls it hidden ROI. And, you know, I'm guilty as guilty as anyone of this, I like to be the higher level kind of 10,000 foot guy. And, you know, then in the trenches, I don't really like it there. As far as, you know, digging really deep into the operations.

So, you know, I'll go back to the point that you need to insulate yourself with people who are really good at the things that you're not. And you know, the core ones would be a great contractor, my contractor, he's a West Point guy, former Army company commander and just, you know, one of the finest teams ever I've ever met.

You know, so we're a great team, because he loves everything Ops, he loves being in there, I call him he's like, film under house, what's up, okay, do for you. I'm trying to get you out from under the house. But he just loves being under the house. And it's great. Because he's reliable, I can count on them. He's honest.

So I mean, that if you're doing kind of the heavier repositions, like I'm talking here, you've got to find a contractor, that's a partner, somebody that you're hiring is eventually going to leave you for greener pastures, you know, investors, we're not paying homeowner type rates, you know, find someone that you can build a long term relationship with. And then obviously, the money guy is is important piece, the property management is an important piece, if they're content to let your unit sit, to overcharge you on, you know, repair and maintenance calls to not advertise for you to show tenants your units and then actually take them to another unit because that that owners yell at them. That thing's been, you know, on rent for too long.

You know, these are all things that can make or break your business. So if one of the things I just said it's If you are one of those people, go find someone like Dave, go find someone like me, and see how you can work together. If you're more on our side of the coin, just understand who you need to have to make your business work because without them, you're sunk.

35:00 - 40:00

David:

Yeah, having a team is huge.

Especially, I mean, you know, I live 6000 miles from all my properties right now. So I can't really say I don't have the luxury and actually, I've been talking about this with people because people you know, the long distance thing still raises red flags for people, but I love it. Because I am, I house hack two duplexes on my first purchase, and I would find myself being like, ooh, that's an ugly plant they put out on the patio, or ooh, man, why did they park their car there? Or ooh, why are they doing that with my property? Oh, they should. They need to mow their grass, like things that don't matter at all. bug you because you own the property. You want it to look like this pristine thing. And you live next door to him. Well, now I live 6000 miles away. And the only thing I hear about that property at all is my property manager says, Here's your rent. And here's how much we paid and repairs. And I say, okay, right, it was like an hour a month.

Phil:

You're going from worrying about it, you know, several minutes of every day, every time you pull up in the driveway, to work in, you know, working in air quotes a couple hours a month to review your mailbox money statement.

David:

Yeah.

Phil:

Like, you know, that's that's kind of, that's where I want to be. But at the same time, I want to do a little bit of good along the way, if helping other people get into this business, that's, that's a method and also just doing the right thing. You know, ethically, as an owner manager, because there's a lot of people out there that aren't doing the right thing. And it's sad, you know, we live in America, we're, you know, the top 1% of humans that have ever lived monetarily.

So do you really need to be making your money by stealing from someone else? Or you know, cheating them out of what their what what they bargained for? I don't? I don't think so.

David:

agree.

Oh, and I meant to, I pulled it up while we were talking. The Bryce Stewart episode is 276 on bigger pockets.

Phil:

Sweet, it’s a good one!

David:

I’ll make sure to plug that down in the show notes.

Phil:

Sweet.

Yeah, it's a good one. Figure out how to run your properties more efficiently before you go and you buy something new, and I need to take my own advice. But..

David:

We all do.

Alright, so let's, I mean, I could talk about apartments and value add all day. It's fun. It's so much fun. But we can probably circle back to that here in a little bit. But I guess my first question I'd like to ask you is if 18 to 20 year old walked up to you and asked you for advice, you know, the things that I guess this is the point where you say the things you wish you'd known or you wish you'd done.

But you only had a few minutes to talk to them. What would you tell them?

Phil:

Yeah, I would, I would give the same advice that I was given by this ridiculous mountain of a man navy seal right when I graduated from SWCCC school. We were all out, you know, partying as the graduating class. And I said, you know, how do you? How do you succeed? What, what do I need to do? You know, bright eyed, bushy tailed new guy, right? Fng.

He said, Whatever they ask you to do, whatever your job is, learn the shit out of it. And know everything about that stupid radio. Every function every you know, every sequence, if you're the nav guy, know your charts backwards, or maps, I guess you when landlubbers would say backwards and forwards, you know, know all of your all of your, your secondary and tertiary routes, like in the back of your head, know your weapon system, whatever your job is, like know it better than, than anyone.

The military, it's tough to, it's tough to stand out. By that, I mean, you can do what I'm describing here and you're still getting the same paycheck. You're probably not making any for any faster. There's timelines you have to wait for, you're still getting your emails and you know what your NCO does or doesn't do for you on those. You can't really control.

But by building that muscle memory when you do get out, and you're in more of a meritocracy in entrepreneurship, or, you know, a slightly less meritocracy within a corporate job, your regular job, you're going to excel so much faster than folks without that mentality without that mindset.

So I'm not going to tell you to go into not spending your enlistment bonus on your car, though maybe you shouldn't. I'm not going to tell you to do anything tactically. I'm telling you mindset wise to learn how to learn to learn how to serve, and how to bring value to others on your team, and be the best teammate you can be, because by doing so, you're going to succeed in whatever you ultimately decide to do military or otherwise.

40:00 - 45:00

Yeah, yeah, I agree. I think people get wrapped around the word education and I think college but the reality is, you know, in college is great. Don't get me wrong. I don't know, I, I hate it. But.

But the reality is that that's not what made a lot of people successful. It's the ability to learn on their own. And so like, I'll, there's all kinds of strategies to this. But, you know, like, you're supposed to watch TV in bed, and I like to watch TV in bed. So what I do is I will watch like, YouTube videos on things that I want to learn in bed. So I'm like, okay, I have now justified this somewhat, because I'm like, okay, I didn't learn how to, I don't know how to analyze such and such. Let me type it into YouTube and pull it up on the TV, and I'll watch videos on that, which is kind of a terrible crap, crappy compromise, because I'm still watching TV.

But you know, it's somewhat enjoyable to me. My poor wife has to watch, you know, Grant Cardone as she's trying to go to sleep, but, or whatever. But you know, I mean, whatever works for you, but people don't. It is so easy in this era to learn. And it's funny, like, just the other day, I've got all these Marines in my office, and one of them asked me, or they were going to go play basketball at the gym. And they ended up not going and I'm like, what, why didn't you go? Oh, we didn't know which gym it was. And they texted me that night and asked if it was this gym, and I just didn't even see it. Because you know, I'm up at four. So I'm in bed before they go to bed. So I never saw it. And my thought was, okay, so that stopped you. And you know, it's like, watch this. And I like to pull my phone out, touch the button. And I was like, hey, Google, where is x, Jim? And it was like, dude, like, you're not gonna make anywhere in life. If you can't figure out how to answer your own questions. It's easy now. Oh, Holy smokes..

Phil:

Oh, my God.

David:

Google is talking to me now.

Phil:

You just gave me the most beautiful segue into something that we were discussing before we started rolling is the Miracle Morning by Hal Elrod, riight? So I was just at a conference with him called best year ever blueprint as a San Diego on my way to Honolulu. But we weren't friends yet. That’s why I didn’t see you. But anyway, one of the absolute bombs that he dropped in the conference was in the past. You were compensated, and I'm paraphrasing here.

You were compensated based on your ability to find an answer to a question, right? Does that make sense?

David:

Yeah.

In the future, you are going to be compensated on your ability to ask the right question. Because in all of our hands, lies every answer known to man at a push of a button. And the request of Hey Siri, getting the answer isn't the problem asking the right questions is the problem.

David:

Exactly

Phil:

So if you can figure out how to ask the right questions and solve the right problems, it doesn't matter what arena you're in, you're going to be successful.

David:

That's cool. How was that conference?

Phil:

Oh, it was unbelievable.

Definitely going back next year.

David:

I don't think I'm allowed to say that I'm, I don't know if my order should hit Monday. In theory, as I was told, I'm going to go on a penalty to June and so my first thought was like, oh, vid summits there. Now this guy, I'm like, I'm gonna milk the fact that between San Diego and LA is like, man, any convention I could ever want to go to from Comic Con to whatever, you know, but I'm like, whoo, hey, there's a YouTube convention, hey, there's this convention. I was like, oh, man, I'm saving some flights, we're gonna be taking leave.

So yeah, I might, I might have to see you out there. Next year, I wrote that down. So I'm gonna just like eat up any conference I can go to in that area while I'm there and just live it up.

Phil:

So back to the advice to the, you know, the E1, e2 or whatever. I wasn't ready to receive it at that age, and a lot of people aren't going to be ready to receive it. But you have to be really careful with who you're surrounding yourself with, and what kind of content you're absorbing. You know, when you're young like that, you can do just about anything. But if you're even slightly deliberate about the people that are in your true inner circle, mentor, mine, his big thing is your network is your net worth, you know, right.

So if you're hanging around a bunch of broke jokers that are spending all their money at the bar, and living extremely paycheck to paycheck, the credit cards are maxed out. You're going to be doing the same because you're keeping up with the chances.

If you're hanging out with guys that are more forward thinking that have a plan, that are reading that are attending conferences that are in mastermind groups that are engaging on forums or listening to podcasts. Those are the folks that you want to surround yourself with the younger you can do that the better. But I get it. I mean, I, you heard my story in the intro. Like, I was, like pants on fire, you know, running around doing all sorts of ridiculousness that, you know, I don't regret any of it.

45:00 - 50:00

David:

It was fun. Yeah, it was fun.

Phil:

And when the teacher, when I was ready, the mentors, the teachers, they arrived in my life. So, you know, I’m not saying to miss out, you know, YOLO, whatever. Just be cognizant of the fact of who you're surrounding yourself with, and what kind of content you're voluntarily absorbing. Because the quicker you can up level those things. If that's where you want to go, it will up level you as well. So just be aware of it.

David:

Yeah, I agree with the whole network thing.

I started, there's a lot of good real estate like meetups and networking events and a wahoo. But the majority of them are in Honolulu, which is fine, except that that's like, depending on traffic, that can be a 40 minute to an hour drive. And they're at like six on a Tuesday. And I'm like I don't get to work early enough to justify driving straight there.

So I started wanting Kailua because Brandon Turner basically was like, your, you should do this. I was like, oh, okay, yeah, I should do that. And then all of a sudden, I've got like, 20-25 people that come most of the time, except nobody came last week because I did it on the first and was like, serious investors will show up. And then it was just me with like, two ladies sitting there, you might like three pizzas. But it was fun. You know, I mean, they were great to talk to you. So it worked out.

But uh, normally, it's a pretty good showing. And I tell people that all the time is like, look, if you don't have a group of people, or a network, or a meetup, or Ria, or whatever, go to like, post something in the BiggerPockets event form. You don't need to be a paid member to post in the events forum, post it on there, post it on Facebook and say, I'm gonna be here, come on out. And then ping a couple buddies in the area or a couple investors in the area. They'll show up, you'll meet new people every week. And all of a sudden, like, you might be Nick the new guy. But because you're the host, even though your Nick the new guy, people will talk to you. And all of a sudden you're meeting people, you're networking, you're being intentional about it and you're having fun. I mean, I pay like 40 bucks a month and bring two pizzas. Other people bring beer. It's wahoo so we're able to do this we meet on the beach, under a pavilion and we you know, some people drink beers people eat pizza, we talk real estate till the, you know, it gets dark enough that people are like, okay, I should probably leave but there's a good time. And so yeah, surrounding yourself with people that just open so many doors.

It's huge.

Phil:

I love it. That's great you did that. I hopefully at some point can apologize to Brandon personally, but I am committed like the cardinal sin. You know, like, I'm going to Owahoo. So I like to get in bigger pockets and like to send him messages like this message. Like, hey, man, I'm gonna be in Hawaii like we should meet. And I'm like, wait a minute. Hawaii is not actually that that small. It looks small on the map. But it's like it's not. It's like, you know, I think it's hilarious. So people on the West Coast don't understand East Coast geography.
People go where you're from. I'm from Baltimore. Oh, I've got a friend in Boston. Cool. Story, bro. And I did the same thing to him. It naturally didn't hear back.

David:

He's actually not even on the Awahoo he's on.

Phil:

I know. Exactly.

I realized after I'd said it, and he likes it on the show about..

David:

Sorry. My, I don't know why I have that alarm on my phone.

Phil:

Time just tells Phil to shut up because freakin tangent every time.

David:

Yeah, I was actually set yesterday, just in case.

Phil:

Really?

David:

No. I need to just turn it off.

But anyway, um, I'm afraid that like, the one time I turn it off is the one time I won't wake up at four and then I'll sleep through the six and I'll wake up at seven. It'll be a really terrible story. But anyway, um, let's see here.

So I think I get, I like to ask, what makes the Phil Capron and method of investing in real estate unique or successful?

I think that's a fun one.

Phil:

Unique or successful.

David:

And successful. And, or.

Phil:

Oh, okay. So it can be both.

David:

Yeah, yeah.

I mean, if you want to go unique, and it's just like a diary, you know, I mean, hey, it might be a good story, but...

50:00 - 55:00

Phil:

So everything changed for me when I joined this mastermind group called M1 before that, I’d read I heard your story I know you read Rich Dad Poor Dad way before you did anything Same here. And I read, flip and hold by Keller Inc. and I read MRI and MRA, like all the Killerr books on agency and investing.

Yet all I had was, you know, my primary residence that I bought in 2010. Then in 2013 I bought a buddy's place subject 2 who was getting out of the Navy and actually crossed over the army and became a greenbrae. So, you know, I did that. So there were two. But I'd read the books, I understood the concepts, but I hadn't really done anything Miko. Yeah, as soon as I hit X will do it.

Then I started flipping. And, you know, I would love to say I learned my lessons in the military. And I used all that money to reinvest No, just one more trip to Vegas, and surfing and skydiving a lot, you know. So I still hadn't really learned then in 2017, I joined this mastermind group M1, which stands for March to a million and the goal is to be a whole life millionaire. So that's net worth, because that's easy to quantify. But numbers are also striving to have authentic relationships with their family, friends, significant others, genuine contribution, almost everyone's involved in some kind of charity. Age defying health, it's no good to have all these things, if you're going to keel over at 45 from a heart attack.

Horizontal income. So that's, you know, our rental property stuff, or stocks or bonds or paper, whatever you're investing in, that's paying you while you're asleep. And I feel like I'm forgetting one. But that's okay. Oh, yeah. How did I forget this one bucket list adventure.

David:

Oh yeah.

Phil:

So, you know, like, I have the bucket list item to go skydiving on every continent. So at some point, I'll make that a reality.

You know, and we support one another in our endeavors. So by being surrounded by these couple hundred people that are living at a higher level, in the various gardens than I am, because everyone's got their strengths and weaknesses. It challenged me to really become serious about what I've been saying that I wanted for a decade, or for my whole life. Like I said, I was going to be a millionaire by 30, right. And I tried a bunch of entrepreneurial stuff and started companies and, you know, with varying levels of success in the poker thing, made some money there too much for a 22 year old.

But anyway, what I wasn't there for, but now with this new peer group, I saw people in the roadmaps that they've laid out in the various, the various gardens, as we call them. So when the opportunity presented itself, I took a friend to the 14 unit that I ended up buying. And, you know, they ended up not doing the deal, because they couldn't get the price that they wanted on it, right. And so the seller wanted, like 920, or something. And I bought, my guy wanted to pay like 850, so they couldn't make a deal.

So, I was telling the story within one of my little groups that talks every week within this organization. And they're like, well, why don't why don't you go buy it, the guy's willing to do seller financing. So I called the agent back. I said, hey, what do you sell to me? Yeah, bring $100,000 she'll sell it to you. I'll have $100,000 but let me see how I can figure this out. Because previously, I would have just said, I don't have 100 grand gameover instead, I went and I found the majority of that hundred grand, and ended up buying a $900,000 piece of property for $5,074 and one cent of my own money and negotiated the first six months no interest on the seller financing. So I brought in $45,000 in cash flow the first seven months, and I'm into it for five grand. I never would have done those things if I wasn't surrounded by people that are more how oriented. The important question is how can I do this straight out of Rich Dad Poor Dad, you know not not can I afford this? How can I afford this?

So from there, you know when to the 109 and then to another 82. So in like little over a year's time gone from two units to over 200. And if my math is correct, we're leaving a lot of the cash flow in both those deals. Until we refi. But my passive cash flow will cross $100,000 in 2019, because of the work that I've done in one year.

David:

That's awesome.

55:00 - 1:00:00

Phil:

If I can do that a couple more years, you know, on that scale, you know what I don't, we talked about this earlier, I don't need the helicopter and the Lamborghini, I just want to be able to be, where I want to be with who I want to be with doing what I want to do, and ideally giving back a little bit, and helping others to get whatever that is for them.

So, so that that, to me, was the key to my method of investing. And in learning that it's not a one man band, it's about the team. Kind of like the military, you know, we don't all do the same job, you have to work together. And it's much better to be a small part of something really big and special, you know, because the deals that I referenced, only on like 20, not only but 20-25% of those deals, so 25% of 200, like 50 units plus the 15 out on my own. But I tell you what, it was a lot easier to go that route than it would be to get 65 on my own.

David:

That's one of those. In fact, I just posted it on my Instagram, one of those Brandon Turner quotes that I always hear is he says, you know, a fraction of a good deal is better than zero, or a fraction of a deal is better than zero percent of no deal.

Phil:

Absolutely, absolutely.

And there's a million different ways to slice that. Another friend says it's better to have a, you know, slice of watermelon than a whole grape is a good one. You know.

David:

I like that. I like that one. I'm gonna write that one down.

All right, so what is one I mean, we've talked about a bunch but what is one resource or book or whatever that you'd recommend anybody who's getting into real estate?

Phil:

I love the millionaire real estate investor by Gary Keller.

So it's, you know, it's very simply written. But you know, the way that it kind of lays out your options, it gives a novice a few tools that they can get to work on and kind of like a few different samplings to see what resonates for you.

We know that a lot of people get in with low money you know, low capital invest right into wholesaling and flipping. That's fine. It's it really is you can make a lot of money that way. But it's not gonna it's not going to get you to retirement. It's what she does with that money. That's going to get you there.

So I guess I'm trying to think of something that's like a better, better hold book. I mean, Keller and Scott Hold, which is another good one. I like the whole series really. So yeah, start there. Start with those couple of books and the Keller ank millionaire real estate investor, hold flip, if that's for you. And then this book is beaten to death almost to the extent of Rich Dad, Poor Dad, but the one thing is, figure out what position you play on your team and be the best at that position.

David:

Yeah, I like that. I'm gonna have to check out hold. I've actually never read that one.

Phil:

Good. They're, they're all really good. I know that you're, you're a KW agent. I think it's the best company in the world. You know? So, like, I dropped my real estate license to just be just be the buyer, but I mean, Keller Williams is awesome. You know, educationally resource wise. Network wise.

David:

Yeah, I am a fan so far. Although I'm the new guy. But you know, and I joined I went with Keller Williams, because I've, I've been really a big part of there a lot of reasons, but a big part was because of all his books. I like his books. Why wouldn't I like his company?

Phil:

Yeah, yeah. Yeah. Awesome.

David:

Yeah. Oh, sorry.

Phil:

It's none of that. I mean, it's just it doesn't, it doesn't matter where you start. It matters that you start. So I like those ones. If you like something else, just pick up something and start going because if you're not, if you're not going anywhere, you know, the first step is going to lead you toward a new direction. And if it's not where you want to go, you start reading about flipping. You decide that sucks. That sounds too hard. That's, you know, way too hands on for me. Then you get the course correct. And go towards more of a you know, a buy and hold traditional model, a turnkey model, a passively investing in large multifamily model, but you'll know, but if you're just sitting there, I don't know what I want to do. You're not going to do anything.

David:

I agree. That's awesome.

So before we wrap this up, Anything else you'd like to add any parting advice or big ideas?

1:00:00 - 1:05:00

Phil:

Oh man parting advice.

I guess just double tap the big be really conscious who you're surrounding yourself with. To me, that's what made the difference. I'd known all along that this is kind of what I was supposed to be in life. And, you know, truth be told, my time in the military was really hard. Do you know, you know what it's like to be the guy in the unit. That's the good idea fairy. Sure the nail and everyone else is the freakin hammer. You know, I did not well like my command, you know, wasn't for lack of trying. But, you know, I was not, I was not a good, not a good SWCCC. And, you know, I gave it everything I had. But that wasn't what I was supposed to be doing in life. I love my brothers. You know, I love the other guys in NSW. And I was honored to work with them and with, you know, with others. And so now I see my mission as being able to give back as an educator to as many of those folks as I can.

You know, because that's what I'm supposed to do. My dog is making a cameo here. He wanted to come see what's up. Yeah.

So yeah, I mean, I guess that's it, if you do one thing, it's take action, whether it's podcasts on your way to and from work, that's a really easy, you know, low investment way to start down your path. It's picking up a book. It's reading blog posts, networking, and finding out where you fit in on a team, do something, set a quantifiable goal, find some people to hold you accountable, and you're a lot more likely to make it happen.

David:

I like it. I agree. Yeah, absolutely.

And you're right about the good idea for what's funny.

Phil:

That was me.

David:

As I become more efficient, I'm starting to be that guy. And I can tell that everybody loves it. Like, why are we doing it this way?

Phil:

They don't like they don't like it when you're low rank. Yeah. Like this, this get the skipper and my, like, exit interviews. Like, he's like, why don't people like you? I was like, I don't know, sir. It's like, I think I think I do. Like, what's that? Like, I think you're too smart for your own good. I'm like, thanks, I think. I don't know. You know, and that's, again, the difference between military and getting out and doing stuff where it is a team, but now you get to choose where you are on the team. It's not predetermined, so..

David:

Yeah, exactly. I like that. And that's, that's kind of my, one of my many hinge points on decision in the future.

Alright, So where can people get a hold of you?

Phil:

Yeah, so I've got like a little little landing page I'm working on, you know, making it a little bit more, you know, value when you land there, but Philcapron.com. Or, truth be told the best way to get a hold of me is Facebook, PhilCapron. Bigger pockets, I'm not on quite as much as I'd like to be, you know, made it a point to start, you know, chiming in to posts that I know something about because it's you know, it's an unbelievable resource. You'll see me around at various conferences. You know, like, think Jim Rohn said your level of success will rarely exceed your level of personal development or self development.

So you'll see me out of things Tony Robbins events you know, my mastermind group and one Elrod's real estate things multifamily Rod Cleef, Michael blonk. Yeah, I just like to be out and about and expose myself to new things. But, you know, if you want to, if you want to talk directly, I'm, uh, you know, I'm an open book. I'm happy to help anyone that's trying to get started down the road. So hit me up on Facebook. And, you know, if you listen this far through my rambling, so you're great. And you're already on your way.

David:

I know we could talk all day,

Phil:

We were really good. Like, I'm enjoying this so much. I know we've. I know we've run a long so thanks man.

David:

Unfortunately, I think I'm gonna probably cut this because my computer's not going to be able to handle the download size but no, no, no, it's been good.

Phil, I really appreciate having you on the show. Thank you for joining.

Phil:

Thanks, Dave. Appreciate it, brother. We'll talk soon.

David:

Absolutely