Cold open

SPEAKER_00 0:00

Welcome to Live Let Thrive, a podcast about the Airbnb life, the share economy, and everything in between. Here are your hosts, Micah and Steve.

SPEAKER_02 0:11

Hello, hello, hello, and welcome back to another exciting episode of Live Let Thrive. I am Stevie Stacks, your host, coming at you from Fort Worth, Texas. And this is your favorite short-term, mid-term, long-term rental podcast in the world. And we have a great show today. We have a special guest today, Mr. David Perry. Is it Perry? Hooray. Hooray. Oh, very fancy. David Peray, Mr. Military to Millionaire himself. And we're going to talk a lot of things about, you know, financial freedom, financial independence, especially for people in the military, but it's for you know advice for everybody. So I'm excited to get him on board. This is like our third or fourth military person. We've had a few. And um, military is good at breeding success. It should be. And we're gonna have a great show. Welcome to the show, David.

Joined the Marines in 2008 to escape Arkansas with no plan

SPEAKER_02 1:02

And uh thank you for your service. And yeah, let's talk some shop.

SPEAKER_01 1:06

Thanks for having me, Stevie.

SPEAKER_02 1:09

All right, man. So so how'd you get your start? Well, yeah, how did you go from the military to investing in real estate?

SPEAKER_01 1:17

Yeah, I actually so I I joined in 2008 because I, you know, typical reasons, right? No idea what I wanted to do for school, no money for school, wanted to get the hell out of Arkansas. And uh the military's pretty does a pretty good job of allowing you a time to leave, you know, uh uh wherever you're from. So I I wanted some adventures and uh the military was just a good option for me. But the first few years I was in, I didn't do diddly when it comes to finances, right? I spent I did all the typical Marine Corps shit. I I spent all my money on booze, tattoos, uh, you know, women, protein powder, supplements, gym, you know, Harley's cars, whatever you want to call it, right? Not intelligently. Uh booze is probably the main culprit there. Uh and um I was seven years in and someone handed me Rich

Rich Dad Poor Dad on CD four months before first rental purchase

SPEAKER_01 2:05

Dad Poor Dad, and I was like, huh, I don't really read much. And they handed me a CD and said, Well, you know, you drive a lot on your current job, why don't you just listen to it? And I was like, all right, fine, why not? Let's see what happens. And uh yeah, sure enough, I listened to the book and was hooked. And like four months later, I bought my first property, and then that kind of reinforced that this works, and so I did it again, and then I did it again, and then um yeah, life uh life was good. So, you know, by the time uh five and a half years later, I was coming up on a reenlistment, and I'm like, you know, I'm I'm doing okay outside of the military. I I think I'm gonna go uh see what I can do on my own. And and really everyone thinks that was like a financial decision. It was really just that the more I got promoted, the more of an office job I had, and I just wasn't fulfilled anymore in the military. It just wasn't the thing. Um probably because deployment stopped and it was like, okay, desk desk job, office job. Um I don't know, just wasn't just wasn't as fun as it was when I first joined.

SPEAKER_02 3:06

So you know you know that's the thing. I mean you were able to do something to to provide you with like a financial independence in a way, if not totally, but you're on your way to it if if you didn't have it already. But when when stuff comes up in someone's career, and most most of the time, most people, most 90 whatever percent of people out there, they okay. Um I used to like this job, it turned to this, or even if you like your job now, it could always change. You could always get, you know, an A-ho boss, or you can get, you know, something could go a different way. Oh, we're gonna change everything up. Um you most people don't have a choice to leave because they haven't done they haven't done a side hustle or anything else besides that job. So, oh well, I gonna it sucks now, but I gotta stay here because now I got a giant house to pay for and I got two um big, big ass car bills to pay for. So it's just to me, it it's people are like, well, you know, I just trust the job, it's gonna take care of you. And like, no, well, maybe so, but the job could always start sucking. And and I'm not doing the side hustle because I love it and it's fun all the time, it's hard work, um, but it puts me in the position that if something push comes a show at my job, I I could always, I could always say, hey, no, I'm I'm not going anymore. See you later.

SPEAKER_01 4:24

Yeah, I I always try to tell people like, you I'm not, I I wasn't, and and most people shouldn't be investing just so they can tap out immediately, right? Because you'll realize quickly that you have financial freedom, but uh most people aren't gonna just sit and do nothing all day. And if they are, that's gonna get old real quick, right? So you're gonna fill that time with more work or something. So you're always gonna be doing something. You gotta do something you love. But I'm like, dude, it's not about you know teaching service members how to achieve financial freedom and be good with their finances so that they quit the military. It's about teaching service members that so that you're not keeping people who you know, the only reason they stayed is they they're stuck financially. Like you don't want service members or or vets or any employee who's only staying because of the paycheck. You want people who are bought into the mission, bought into the culture, bought into whatever. And so, like, you know, I I just I saw a ton of people who hated what they did, whether military or W-2, and and they stay because of you know a lack of being set up, and it's like, well, hey, we're giving you the freedom to do it as long as you love it, then move on.

SPEAKER_02 5:33

Yeah, and there's cool perks. I I I glanced at your video a little bit. You're talking about the VA loan. I mean, that's that's a huge deal. Most of us gotta put, you know, anywhere from five

VA loan myths: one lender said you can only use it once

SPEAKER_02 5:43

percent to twenty percent down to get into a house, but you guys can put zero percent if you want.

SPEAKER_01 5:47

Yeah, it is the best primary residence mortgage in the world. It's amazing, and uh still completely and grossly underutilized.

SPEAKER_02 5:57

And how did you utilize it?

SPEAKER_01 5:59

Ironically, um, I haven't, and I'm a product of exactly what I'm teaching, right? Um, I got talked out of using it by a lender who didn't understand it and told me you could only use it one time. And then I got talked out of using it in Hawaii by a lender who was like, Oh nope, the limit's 725, you can't offer on that $740,000 house, instead of, you know, hey, you just have to put 25% down on that $15,000 difference, um, which would have been nothing for buying a house in Hawaii. Um, and so I just, you know, I kept running into like weird things. And then by the time I like, you know, I was like, okay, I'm gonna dig into all this myself, and I figured out what I need to do. I built this platform. I had been buying real estate through other means, more costly means. Um, and then I got out of the military and then I found out what it's like to be unbankable. And so now I'm like this year, I am intentionally paying myself a salary and not writing all of things off so that I can show income so that I can actually use the VA loan next year, hopefully. Because right now I'm like, dude, I don't qualify for, you know, like two years ago I tried to buy a house and I had to gift my then wife $17,000 for the down payment so that she could buy it and not have me on the, you know, because I was dragging it down. It's like anytime they brought my finances in, they're like, oh, but you lost $150,000 last year. Like, no, I didn't. That's a cost segregation. They're like, oh, it shows it right here. And so yeah, I'm learning all these lessons about the income tax W-2 game, the hard way. Um, because it is hilarious that you can buy millions of dollars in real estate and then not qualify for a $300,000 house for yourself.

SPEAKER_02 7:40

That's crazy. Now, um we've had we had a guest on this show called named uh Adam Johnson, and he he's uh military guy out of Tennessee, and he buys houses subject two. You you know you know anything you know about subject two?

SPEAKER_01 7:55

Yeah.

SPEAKER_02 7:55

All right. So what what he what he says, one of the because I know you're saying about you know qualifying and then showing income and all this stuff, but he said he hadn't gone through a bank in years because he buys it directly. And and what he what gives him an in is because he's a military guy, and a lot of people going through, you know, military people, they'll buy a house somewhere and then they'll have to leave. And they doesn't have any equity, they just bought it, you know, and then they got to go off to somewhere else, and they they don't want to keep, they don't want to turn into a rental, they don't they're just stuck in this position. So he's going in and buying it. A lot of these is zero down, you know. He just he's kind of taking this problem off of their hands and then doing the subject to the loan stays in their name, the more, but the mortgage stays in their name, and then the deed goes to his name. So that's that's what I'm trying to get into. He's inspired me in that front. I don't want to jack with banks anymore. I want to just go to an individual owner and say, you know, I know you want this full price for your house, I can give you this down payment, and I can, you know, take over payments from you, and you'll and I'll give you a little bit of interest on top. So you'll make money from your money. It's kind of better than a rental. So so yeah, I don't know if you've thought about doing something like that, but I think it'd be a great fit.

SPEAKER_01 9:03

Yeah, no, I've done a ton of creative deals. Um, I've actually never paid more than 15% down on a property. So whether it's bringing in investors or raising capital or seller financing, lease options, uh assumptions,

Sub-two deals and the entitlement trap veterans don't hear about

SPEAKER_01 9:17

you know, all the things. I will say the the sub two, I have a love hate. Like it's a great strategy. Um, I think some people over some people abuse it, I think. And and so I will say that just from the seller's point of view, right? They hold the bag when you do a sub two. And and these guys, like I had a phone call on Friday night with a guy who, good friend of mine, thinking about selling his house to somebody via sub two, and it's a VA loan at like two and a half percent. And I'm like, Well, did he tell you that you can't recoup your entitlement? He's like, Well, no, he said I could. No, that's a lie. Like, you don't get to recoup your entitlement as long as your name's still on that mortgage. So, unless he legitimately assumes the mortgage and has he's a vet and he replaces your entitlement, um, then you're stuck. You know, you're on the hook until that house is paid off. And so there's like some weird nuance stuff like that. Like, if you're a veteran, you won't recoup your entitlement on that property, you won't be able to buy a home with the VA in the same way, uh, as long as that house is being paid down on the sub two. And then the other thing I don't like about it from a seller's perspective is you know, no matter what the buyer tells you, push comes to shove, right? If the market tanks and that guy can't hold on to the mortgage and he defaults, the seller's the one getting screwed. It's their credit, it's them on the mortgage, right? And so it's it's great from the investor's side because it's super low risk and it's low leverage and it's a really savvy strategy. Um, and there's a lot of perks, but from the seller side, the downside, right, is that like they still hold all the risk. And I'm not a huge fan of I'm not a huge fan of it when people don't like they try to hide that, right? And I see that unfortunately sometimes in the sub two community. So it's like as long as you're up front with people and you're like, yo, here's the deal, but like I'm never, you know, the numbers are great, like I'm this is amazing, you know. Um, I've just I've lately I've seen a few people who are uh a little bit less than up front about some of that stuff, and I'm like, all right, in that case, you know, I don't know. So I got I go back and forth. I I actually have tried to do a sub two like three different times, and my title company has botched it, like not their fault, but something has come up every time that like totally wrecked the deal and ended up having to you know get creative in another way. So uh maybe I'm just salty because of that. I'm like, why does this not work for me?

SPEAKER_02 11:27

But so so what are the rules with the VA? You said you the that one bank told you you can't you can only do it one time, but you can actually do it multiple times.

SPEAKER_01 11:36

Oh, dude, there's like no rules with the VA loan. That's what's so funny about all these misconceptions. Like, I mean, there are rules, but like there's no minimum credit score. If a bank tells you there is, then that's the bank saying that, not the VA. There's no, and so I've seen people down to like 520 buy a house. There's no debt to income requirement. So, like with an FHA loan, you can only go up to 45% debt to income, and then you're you're hosed, you're done. That's it. I've seen people close 70 plus percent DTI properties with the VA loan, and like as long as your lender's cool, you can play that game. I think it was like 78% or something like that on a $2 million duplex. Um, there's I mean, there's just a ton of like random nuanced things, but I mean the long short is the loan that loan is better than basically anything. Um, and it has all these rumors attached to it. Like, you know, people are like, oh, sellers won't take it because it's zeroed down. That has fucking nothing to do with the seller. Like, who gives a shit? If you get $100,000 put in your bank, do you care how much money the buyer put down? No. Well, if you do, that's you're an idiot. Like, if I put zero percent down and buy a hundred thousand dollar house, there's no more risk to the seller. You got a hundred thousand dollar check. You want me to put twenty percent down just so I'm safer? Mind your own business, you know. Um, and honestly, as a buyer, I would rather have twenty thousand dollars in my pocket in case an HVAC goes out and put zero down than have twenty percent in equity in a home that I can't tap into and no money in my pocket. Um, so it, you know, and then you can you can back out the math on what twenty thousand dollars in an index fund versus twenty thousand dollars down on a property does over the life of that mortgage, and you come out light years ahead if you just invest the 20 grand. Um, so there's just like there's all these like rumors, and I and what I've really found is that over the years is like almost all these rumors or or stipulations or misnomers about the VA loan stem from a lender or an agent who didn't understand the product and wasn't willing to say, I'm not your guy, go talk to this person. They would say, Oh, instead of I don't understand that loan, you should do the FHA because I do understand that, which is what they're really saying. They're like, Oh, the VA loan is not good. You should use this loan, and I'm great with this loan. Like, and that's what it really boils down to is like they don't understand, and rather than lose a client by being honest, they would rather screw the vet by not knowing what they're talking about and doing the deal anyway. So that's what happened in my situation. The bank was literally marketing to VA buyers, and the guy was like, This is an $80,000 duplex. You can only use the VA loan once, you don't want to waste it here. And I'm like, Oh, yeah, you're right. That makes sense. Come to find out, uh, no, you can use the VA loan an infinite amount of times depending on how you do it. And that duplex I paid in the like six years I owned it. I think that cost me like $15,000 between down payment, PMI, MIP, whatever. And my monthly payment on it was $81 a month more than it would have been with the VA loan, assuming the exact same interest rate. And so, you know, just from the primary uh private mortgage insurance. And so it's like little things like that, you know, just eat at you. I mean, what would I have been able to do with an extra $81 bucks a month for six years? I don't know. That's not life-changing money, but if you do that on multiple properties, it becomes, you know, quickly, it just eats at you. Like, why am I paying PMI when I shouldn't have been? Um, so there's just a lot of weird uh things. I mean, the long short is the VA loan can do almost anything. Renovation loans, construction loans, you know, you name it. And if a lender tells you no on something or you can't do that on something, any veteran listening, just say, Can you show me where that's in the guidelines? Or is that a lender overlay? And force them to either produce the guideline or admit that it's just their bank doesn't want to do it, which is a totally different thing than the VA loan can't do it. It's them as an institution don't want to do it. Um, because most of the time it's that.

unknown 15:32

Wow.

SPEAKER_02 15:32

Wow. And so so why do you think the government does give the this special type of loan to veterans just to be nice? Or what's the deal with that?

SPEAKER_01 15:41

Yeah, it basically stemmed from, and I'm gonna mess up the year. I want to say it was 1945, but it stemmed from coming back from World War II, they realized they'd sent off a huge chunk of the population, and all the guys who'd stayed home and families

Post-WWII VA guarantee: government backs 25% if you default

SPEAKER_01 15:54

who'd stayed home now have a leg up because they've been able to buy houses and real estate and do this thing and live their life while you know Joe Schmoe is in Iwo Jima for three years or on the midway or doing whatever, right? And so they were like, how do we help these guys get into houses now in a way that like they might not have saved a ton of money, or maybe they did, or who knows? But like, um, so really all it is is it's the VA or the government guaranteeing the 25% that would normally come out of pocket on some of these loans. So it's it's interesting that it's got all these like stipulations because the reason it's such a great product is um it's literally the government backing that 25% down. So it's like you you imagine you know you're you're a lender and you're like, well, I want to see 20% down, and the and then the president of the United States or the VA calls and says, It's okay. If he defaults, we'll pay you. Like that's the best guarantor you could possibly have on a loan. Like, oh, the federal government will pay me out of the treasury or out of you know, whatever, if this guy defaults, like, okay. Um, and so it's I mean, that's kind of the way the program's set up is essentially the VA is guaranteeing 25% of the purchase, and then the bank is really only guaranteeing 75. So it's actually from the bank's perspective, that's why there's no PMI. From the bank's perspective, instead of being like, Oh, you put 15 down, we're on the hook for 85% of this, and we're up shit creek on 85% if you don't pay. They're like, Oh, it's only 75%. The government's got the other 25. That's a pretty safe bet.

SPEAKER_02 17:25

So nice, nice. So, knowing what you know now, if you if you're fresh in the military, how would you start setting up your life? You know, what would you advise you give to like young, young soldiers?

SPEAKER_01 17:37

Yeah, the first thing I do is the moment I join the military, I would start contributing to my thrift savings plan, our 401k. I sell everyone at least 5% so you get the matching contribution, but I would set it at 10% because you know, as with anything, right? If you take a full paycheck and then you're like, wow, I'm getting $2,000 a month. Oh, hey, what if I invest 10%? Now I'm only getting $1,800. You miss that money. Um, but if you just from the very first paycheck, you're putting 10% in and you never knew that, like you don't even notice the other 200 bucks because it never hit your account in the first place, mentally that's a whole lot easier. So I would do it day one, 10%. They ask you about setting that up at boot camp, 10%, maybe even 20%, you know, depending on how aggressive you want to be. And every single time I got a pay raise, I would increase it. So if I get a 3% raise because the Fed said so, then I'd put 1% or 2% my TSP. If I got a promotion because I hit my two year, you get a promotion your first four years and on year, you know, year two, year three, year four. And then after that, it's every other, like every even year. So four, six, eight, ten, twelve. Um, or if you get promoted. So, like, oh, hey, I get a pay raise on year two, also I got promoted. Then I had one pay year three, then I got promoted again. You know, like there's probably eight, seven to eight pay raises in that first four years you're serving. And if you every single time you put one percent or or you know, two or three percent, depending on how big the raise is of your paycheck into that. So let's say you started out at $1,800 a month, hit your bank account, and that's slowly creeping up because you're taking an extra percent or two in your pocket every time you get a pay raise, but so is you're going from 10% to 12, 13, 14, 15 in your account. By the end of four years, you're putting 25, 30% in your thrift savings plan. You don't even notice it missing. And that money in that first like four years compounding for the next, you know, you're talking by the time you're 22 to 25, compounding for the next 40 years, that alone is enough for you to have a pretty solid retirement on if everything else goes wrong. So I always tell people, like, look, that first four years, do as much damage as you can with your TSP. And if you stay in longer, just keep riding at least some of it, because then you can afford to take some risks. Like you've got a guaranteed job as long as you're in. You've got your retirement covered on the 401k side. In case you mess everything else up, you can, it won't be a lavish lifestyle, but you can survive. So, like now you're 22, you're like, I've got my retirement set, I've got a solid job, I have the VA loan. I can afford to be a little risky. And by risky, I mean like, let's go buy a much more expensive four-plex than I probably would have otherwise in house hack. And so I love the house

House hack a fourplex, pocket the $2K you'd spend on rent

SPEAKER_01 20:11

hack. Like, you buy a duplex, you buy a four-plex, you live in one unit, you rent the others, or you buy like a big single family, rent bedrooms out to other service members. And in either of those scenarios, they're basically paying your mortgage down, paying your, you know, for you to live, and then whatever you would have been paying to live in the house, you're pocketing. So not only are they paying your principal down and you're learning how to be a landlord and get all those benefits, but you're saving the $1,500, $2,000 a month that you would have been spending to live somewhere. You got to pay to live somewhere regardless. So why not pay to like not, you know, if you have other people pay that, then now you're just saving that money. So now you're saving $2,000 a month that you wouldn't have been saving anyway, and you start investing that elsewhere. I mean, it compounds real fast. It's not hard. It's basic like spend less than you eat or spend less than you make, invest in your 401k, buy some real estate that doesn't cost you really to own it. And then the biggest piece of this whole puzzle and where everyone messes up is they make a little extra money and they go and like, ooh, I can afford to go to the club or I can avoid that afford that Corvette. No, no, no, no, not yet. Not yet. Not until you make enough money that you don't ever have to work again, and then that money buys you the toy. Like, I'm getting ready to buy a Porsche this year. Um, you know, really will depend on what I find, but a fairly nice Porsche, whichever one of the three I end up buying will be very nice. And uh, you know, I sold my sports car when I bought my second house, I sold my truck, I sold my Harley, I, you know, and I've trulled my all of that money into the next property, the next property, the next property, the next property. And now that I'm making you know, enough money, it's like, okay, it's it's time to go buy the toy again and actually live life and enjoy myself because I've always been a car guy. Um, but I'm gonna be paying off that purely off revenue that's coming in from either passive. streams or the business. And I'm actually not allowed to buy it until I pay off every remaining dollar in like credit card debt, line of credit debt, you know, whatever. So it's like the only debt on my name will be the mortgage. And then maybe the car, depending on what I end up buying or how I buy it. But I'm also bringing in uh I'm not allowed to do it until I make 100K in a month in revenue and I'm getting close. So it's like, okay. At that point, like, what does it matter if you buy a stupid car, right? But but I'm able to do that because for the last decade I have not done any of that. And and man, if I had known that like seven years, the first seven years I was serving and I'd actually maxed out my TSP and and been smart with my money or or here's one for you. Maybe if when I was stationing in San Diego County in 2011, 12 and 13 when the market was at the bottom, I had been like, hey, maybe I should house hack. That right there would be a million dollars in equity. Damn.

SPEAKER_02 22:57

So shoulda woulda coulda right yeah yeah that's that's so great great advice right there for not just just for military people for anybody. You know as soon as you get that first job start stashing away 401k Roth IRA whatever just start stashing away and living frugal living within your means at least but but one thing you mentioned is a fourplex now is that the the max you can go on a VA is buying a fourplex there's a the guidelines say otherwise but I've never seen it happen.

SPEAKER_01 23:25

So the guidelines say like if if we're both veterans and we partnered then we could buy a sixplex and if we brought a third guy in we could buy buy a seven um never seen it done never met a lender who was willing to do it because anything over that four units is now a commercial lender right and I don't know a single commercial lender who does VA loans um and so I've I've played it's something to do with the guarantee on it and so the guideline says it's possible I've I've had a couple lenders tell me they've done it or that they can do it and I'm like awesome can you introduce me to the person you did it with so that I can have them on my podcast and immediately that same lender is like oh you know client privilege I'm like dude quit quit stroking like nobody nobody over here believes anything you're saying the moment you're hiding if you have if you're the only lender in the nation who's figured out how to do this and you're gatekeeping it you're full of shit because if you knew how to do it you would know there's a market and my group is the market so you should probably come and make that introduction so we can show you off. Yeah right for business right client privilege a lawyer yeah like yeah it did like bro if I had done that loan like if I found someone to do that alone I would be screaming it all over the place like it can be done look but no so like a soldier you know they get they get moved around right and the the whole army brat thing that's a whole thing oh yeah but but but move so so I mean it seems like a good idea

Buy an investment at every duty station, not just a house

SPEAKER_01 25:00

everywhere you get moved to buy a house and then when you get moved to the next spot buy a house there I mean it seems simple enough right yeah I I I have a love hate with that advice but yeah you know everyone says like oh buy a house at every duty station and I would just change it to buy an investment at every duty station because I think that's really the only thing that I have wrong with that is if you buy a house implying it's something you're gonna live in and you didn't run any numbers on it, then who knows if it's gonna be something you can hold on to so like what happens is some of these knuckleheads they take the advice and then they like try to hold on to this thing forever and it may or may not cash flow. And in that situation where you don't know what you're buying and you just buy a house because that's what you heard you should do. Um everyone right now who's saying that seems like a wizard because they have if they've served 20 years and they started doing that in say their second duty station 2008 2009 wow imagine anyone who bought a house in 2009 2012 2015 2018 2021 yeah they all look like geniuses for buying a house at every duty station back that up 20 years and let's say you bought those houses in 90 93 96 99 you did really well as long as you sold right before 2008 but if you EAS'd or retired in 2008 you don't look like a genius. Now if you held them all through that great most of you didn't so it's like that's a great strategy if you can hold on to all of them ride it out and enjoy appreciation and and and you know principal pay down the reality is most knuckleheads have no business buying house and and thinking it's going to be a very profitable thing because they're just buying you know if you if you if you think through like when you think through like the normal home buyer right your married couple maybe a kid on the way like that is an emotional purchase there is a spouse involved there's you know you want a nice place and a gated community with a pool and the best school district chances are that thing ain't cash flowing when you move out. So now you're out 300 bucks a month when you go to your next duty station. Hope it goes up in value because either you lose the house or you lose 300 bucks a month until it pays itself off which is why I like the house hack because it's like if you're buying a fourplex most of the time those aren't luxury properties. So they're a little bit more reasonably priced per square footage they also have a much higher chance of cash flowing when you move out. So at least it's paying you to hold on to it for the long term. If I'm getting an extra thousand bucks a month or an extra three hundred bucks a month from every house I've purchased over 10 years it makes it a lot easier to hold on to than if I'm paying an extra 300 bucks a month. So I love the advice as long as you treat it as an investment when you're buying it and you analyze it as what's this going to look like three years from now when I'm not living here anymore. Now do you do you um I just spell out of my head um do you do you mess with short-term rentals at all or anything else or corporate or like that you mean you mean the the kids running around in my Airbnb above oh there you go yeah you did mention that yeah that's the only one I have right now but it's the second or third one that I've run so um yeah I I I tried to turn it into an MTR. Um I actually had a 60 month booking and then they canceled on me like the day of check-in and then Airbnb punished the hell out of me because I didn't refund them and so I'm a little jaded on that right now. I've thought about going corporate rentals with it. I've thought about uh I actually thought about like finding like four like single entrepreneur dudes and just renting out rooms to them and being like yo this is going to be the house that all the you know real estate guys in town come to every Friday night and smoke cigars and hang out network because I've got a badass porch for that. Kind of playing with that idea still really what it is is I'm trying to get my buddy Dean so if he listens to this Dean I'm trying to you're like my one stopping point trying to get him to move to Springfield and I'm like yo if he moves here then he'll get the master I'll get three other guys no problem and it'll be a cool ass place. We'll see what happens with that. But right now it's still a short term so it pays makes between three and thirty five hundred a month my all in expenses are 2600 and it's a four bed two and a half bath upstairs but it also has my two one basement and my ADU that I'm living in downstairs. And so um it, you know, I'm getting paid not a ton, a couple hundred bucks a month, but to have an office and a living space. So uh yeah can't complain. House hacking it's the best right dude this is my third time and I love it.

SPEAKER_02 29:40

It's the best way fastest way to build wealth.

SPEAKER_01 29:42

That's how I did it too hopped around houses hopped around houses accumulated four houses and then I started you know having to buy them after that like um you know as investment properties no yeah I get it you run into the the the the rules of lending often favor you until they decide that's enough. Yeah that's enough but um until that point up until that point I was able to put three and a half percent down which is good and that it's not zero I love zero but uh still great yeah yeah exactly if you're moving into a house but I that it's all the that's the advice I give to youngsters you know of course

Cookie-cutter 1500-square-foot houses rent in every recession

SPEAKER_01 30:15

save your money and start buying a house right away and don't go buy a McMansion because then you're screwed like you said you know it ain't gonna cash flow my my no yeah the cookie cutter three twos 1500 square foot 2000 square foot they're they're always gonna be in demand even in recessions people want those houses they're gonna need a starter home right yep absolutely and so a six bedroom monstrosity yeah good luck in a recession got a very unique buyer the reason I got this one for such a good price is because of that exact reason it's uh 4800 square foot if you count the top and bottom it's not technically a duplex right and so it's uh six three and a half forty eight hundred square feet which is the upstairs is laid out very nicely for like entertaining and the downstairs is like hey grandma was gonna die let's move her in um and that's exactly what happened uh and so uh like it even has like the sliding chair that like goes up the stairs or whatever that I definitely definitely get drunk and ride or put my dogs on um and so like this house sat on the market for five months in 2021 when you know things were flying off the shelves and I was like dude what the heck oh well that's why and so I was able to come in and I didn't negotiate hard but I was like yo this is what I want also I want your gun safe and you know and and they were like done thank you for making us an offer we want out and it's just because it's like a an odd shaped house it's a very unique buyer for this house right um which I'm now slowly turning into an even more unique buyer because there's a shop out back that I turned into an ADU so now it's like an ADU a downstairs an upstairs all not permitted as triplex so it's like you couldn't buy it as a triplex but you can rent it out as three places.

SPEAKER_02 31:55

It's very weird yeah yeah there was uh close to me there was a a dome home you know in the middle of just a regular neighborhood all of a sudden for some reason in the 80s they decided to build a couple dome homes on this street and that that guy had the hardest time to sell this this thing you know and I that's why I went to go look at it one day I was just curious because it's been on it was in the market forever it went on went off went on went off like you know the people kept dropping it and and I think it was like the you know wives are walking in there like no there's no way we're buying this thing and it had a nice pool it was just the funkiest design man had like four levels but it was just this weird dome shape I was gonna try to subject to that thing and and it didn't work out but you know I'm kind of happy I didn't buy it because it had some foundation how do you how do you make the foundation right in the dome you know I don't know yeah I don't no idea but yeah so I I love I love looking at um see we see opportunities where people like yeah I'm not gonna get that house we see opportunities why has it been sitting there so long I'm gonna go talk to this guy you know absolutely agreed yeah so so that's cool man and so um so I I saw some

Roth TSP beats traditional if you'll retire in a higher bracket

SPEAKER_02 33:09

other thing you mentioned Tsp.

SPEAKER_01 33:10

What is a Tsp exactly oh it's our 401k oh that's a three thrift savings plan okay and you mentioned Roth you're into the Roth too yeah I mean you know I think it it's a situation by situation but I would say 90% of people are going to be in a lower or are probably going to be in a higher tax bracket when they well I mean it's a hitty hit or miss but like when you join the military you're making so little money those first few years there's not there's a pretty good chance you'll be in a higher tax bracket when you retire. So that's basically what I told like if you think that you're gonna be in a higher bracket when you retire Roth if you think you'll be in a lower tax bracket when you retire if you plan on making less money in retirement traditional um personally I think most service members will if they do anything if they do their finances right they will absolutely be in a higher tax bracket at retirement than they are right you know especially when they first join so might as well enjoy the Roth.

SPEAKER_02 34:03

And life insurance you did mention that what why are you big on life insurance?

SPEAKER_01 34:07

Oh I'm not I mean I like term life insurance I'm not a whole life IUL guy at all and I'll fight that till I die. I think it makes sense for it's you know the problem is it's just like what we were talking about before it's like um it's all in how it's sold right like sub two is a great strategy as long as you're honest about it. Same with whole life the problem is they're not um that is a unregulated very unregulated industry right and so a lot of people can just like go get their little license and they go work for their little MLM and they have no idea what they're really selling. They don't even have their own policies and they're like oh yeah this is the best investment ever. Is it though because um it's a cash preservation strategy and it's a great one. Like if you have capital and you can like say you overfund a you have 600 or you have you have 100K you dump it into an insurance policy you overfund the policy so you don't have to wait seven years to where you break even on it and can have a cash value. So you overfund the policy you set up the policy correctly so it's actually a cash value and it's it's actually a you know a non-direct recognition policy and all these things and then you use it as a cash preservation strategy and you lend to yourself periodically like that's a great vessel. I mean it would have saved me a bunch of money in divorce it it's it's you know there's a lot of benefits there. Problem is they pitch it as like this end all be all investment vehicle and the reality is any index fund will beat that over time all day. And 90% of these insurance policies aren't set up to do what they're pitching you. So they're like you know oh you got to have you know it'll pay you even when the money's lent out only on a non-direct recognition not a direct recognition. And most of them are written as direct and they don't know the difference because they're not they don't even own one or oh you know you got to have this incredible cash value life is you know so valuable and then they bride it with a massive death benefit and a minimal cash value benefit because the death benefits what they get commission on. And so it's it's just an industry that I I have issues with just because people either either they are snake oil salesmen or they don't know what they're selling or how to set it up. And so there's a few guys that I trust that I'm gonna go to and set my own up right now I have a term policy. I do plan on setting up a whole life it's a convertible term so I can I can do it to whole but I plan on setting up an IUL or a a cash value uh plan this year but that it'll be done very specifically with with one of those friends.

SPEAKER_02 36:36

So you know it's so funny because like I've I've you know I listen to bigger pockets and all these other podcasts real estate podcasts and every now and then you get one of those um infinite banking life insurance guys sounds fascinating it sounds you know it while he's explaining it to it I guess it sounds simple enough I don't know to me it sounds still complicated still even if they try to break it down for you but it's not they can't make it simple that's how you know it's bullshit and that's and it's like to me you know I mean I you know it's it's it's easy to get that uh chase the the the red ball syndrome chase that red ball whatever the next the next thing that that that takes your focus off but to me I'm I always fall back to I just I just want simple and and you mentioned index funds you know I got money going into index funds I got my 40 okay uh okay I got some uh throw a hundred bucks a month at Bitcoin whatever yeah you know I just it's simple to me I'm not gonna go I have coin friends that are coin heads that oh you got to buy this one you gotta buy this this all these and then you gotta sell it over here it's gonna gain interest like dude that's just and they all got wiped they all got wiped out the last time it freaking crashed but it's it's hilarious because all these things you know and you said if you do the insurance thing wrong you lose your ass there um but like what it the easiest way I just I'm just gonna buy a house every year and then I'm just gonna you know invest my money here and keep it simple. Yes I might be losing a few bucks doing this or doing that you know these fancy things but in my mind my my head can't handle all that man I just I can handle simple.

SPEAKER_01 38:05

Yeah it's like the uh oh I'm thinking I can't think of what they call it right now um I forget the fancy word for it but um when people use a home equity line of credit to pay their mortgage down faster and they try to accelerate it and I'm like mathematically it works nobody's that orient

Index funds beat day traders without the time ROI nightmare

SPEAKER_01 38:27

that detail oriented or that disciplined to actually do it intentionally. Maybe somebody is I'm sure there are people who do it but for me I'm like I'd rather just not and have a simple life like I try to as chaotic as my life is I try to I try to simplify like you know if I'm doing something in my business and there's an easy communication tool I'm like it's tempting to just be like ooh let's jump on that it's way better to be like oh no we've already got slack that will communicate with Slack let's still just use Slack like you know and it's and so I'm very much the like can I scale through simplicity like an index fund is smarter than I am. It'll beat day trading 90% of the time and it doesn't take time. Are there day traders that can smoke my index fund? Yes. Do they have anywhere near what I would consider a time ROI like the amount of time they spend doing it to get that extra 4% that they're bragging about like dude I could have made way more than that 4% by just working at Taco Bell let alone like you know it's it's just it's like the amount of time you're spending over there like oh I made an extra 100 bucks this month this week by day trading well that's great dude at uh at what $2.5 dollars I would have made a hundred bucks working a full time job like you know news flash you're not getting paid two and a half dollars an hour so I'm winning like the argument is well I did it while I was at work so there you go. There you go. Yeah yeah yeah well so does my index fund right I haven't looked at that thing in I check it once a month oh man yeah yeah I do X all day I do my best investments when I don't touch that shit. Bingo man bingo time time fix that's why real estate's so great like as long as you I talked about the guys who buy like a big mansion and then they can't hold on but like the name of real estate is if you can hold on you win as long as you hold long enough like that there are not many mistakes that you can't buffer on real estate if you can just afford to hold on for the long term anybody you know all these guys you talk about like I bought in 2006 2007 and the market crash I lost my ass on that house only because you sold. If you'd been able to hold on you'd be more than made up by now. Would it be the best return in the world? Probably not but still better than selling in 2009 at a loss. Now obviously you can't not everybody could have held on I'm not blaming them or or pointing fingers but that's just the name of the game is like yes you lost your shirt because you couldn't hold on.

SPEAKER_02 40:56

You bought it in a way and you weren't set up in a way to hold on if you could have held on you'd be fine like over time heals almost all wounds in index funds and real estate all these other fancy shiny things like if if you make a mistake options trading holding it longer doesn't save you you're fucked so like you know you know it it it's in every in every industry because I you know we're big on short term rentals we're big on midterm rentals here and on the show and and I guess you know if if you follow the the industry and the gurus and this and that it's all it's all gone towards like uh okay you know everybody started doing let's just say arbitrages out of apartments or you know apartments or single family homes turned them into Airbnbs and this and that but then it got it got to a point where like okay now you got to do this now you got to get this big home now you got to now you got to install a pool now you gotta install a hot tub you can install a golf course you guys it's like it's like it's gotta be this ultra uber luxury home for you ain't doing a golf course you're probably right yeah I just like you're like I didn't buy a house on the golf course I bought a house and built built a golf course like oh shit all right you're winning perhaps a mini golf course I'm not just thinking but no no no this is I get it but it if you look at at at the gurus and online you got to just put more and more and more I'm like yeah but you gotta maintain all that shit and you gotta

Cool with being Walmart, not Neiman Marcus: $500/month beats complexity

SPEAKER_02 42:19

you know you gotta make you got to deal with guests that are paying a thousand bucks a night two thousand and that's a different that's a different thing I like to you know for me personally like I said I I'm more of a simple guy lazy if I get a how if I get a Airbnb and it's making me 500 to a thousand bucks a month I don't got to do very much or if it's a midterm rental getting the insurance checks and I don't got to do very much I like the not ver having to do very much part where it just kind of works for me. You know that's because like I said my brain can't handle all that and and uh there's nothing wrong with it and and you could kind of scale a little bit I'm I'm cool with being Walmart I don't have to be Neiman Marcus I don't want to be Neiman Marcus I'm cool with being Walmart my version of scaling the SDR game is is buying uh hotels you know they don't have the regulation issues so there's a lot you can do there without as much headache and now the hotel game is definitely more complicated.

SPEAKER_01 43:06

It's the same argument for like buying a residential rental property vice buying an apartment complex because of economies of scale like at the hotel we bought a 130 unit hotel in uh Tennessee and we've got you know full staff I've got I'm not the operating partners I'm not operating it and uh you know but there's a lot of the same benefits that you get with an Airbnb but none of the regulation headaches because it's zoned as a hotel. So you can do stuff that you wouldn't be able to do otherwise and that thing came with you know three pools and three hot tubs and a wedding venue so we already got all the fancy crap so um but that's a whole different ball game and I'm still learning it so it's uh it's a mess.

SPEAKER_02 43:47

And I bet it's a bit easier than having 130 Airbnbs spread out throughout the country.

SPEAKER_01 43:55

The only way you could do that in in my opinion I'm sure there's people out there who could do it. The only way I Could fathom doing that is if you hired an off-site, you know, third-party property manager because I'd go nuts if I had to manage that. Managing one's easy. I'm great with people, I like it, I live here, it's whatever. Um, managing 130, like, kill me now. I and the problem is you go and hire an outside property manager, you're paying them 20, 30 percent. Now, where's your profit? Gone. Make you make five percent. Well, you might as well go back to a long-term rental then.

SPEAKER_02 44:23

Exactly, exactly. And um, so so what else do you mean to you mentioned you mentioned you like uh exotic cars, not exotic cars, but just um fancy cars, just a car guy in general, yeah.

SPEAKER_01 44:36

Yeah, I love me some cars. I uh hiking outdoors, travel, you know, hanging out with my son. Okay, that's that's good. That's good.

SPEAKER_02 44:47

And and so um I was getting into the exotic cars. I've seen online two people can make money on those things. They get to drive a cool car for a while and then they they go sell it, right? And they go make some money off of it.

SPEAKER_01 44:58

Yeah, yeah, there's a whole thing there. Um, what do they call it? Um yeah, exotic car hacks or something like that. And uh I'm I'm in I haven't watched the course, but I've paid for it. I I was like, I'll learn about this. And then I just decided it wasn't worth my time, as far as like like I I might what I might what may end up happening is that I just tell my assistant to watch it and I'm like, give me this cliff notes. So I'm like, it's it's just you know, I don't ever I've got it open on my desktop, and it has been for like four months, and I just haven't taken the time to sit and just watch a course.

SPEAKER_02 45:29

Just tell AI to break it down for you. There you go. Yeah, that's what I should do. So yeah, see a theme here. You like simple yeah, man. Yeah, that's the way to go. Oh man. So it's been a great show. Uh it's awesome having you on, and you give advice not just to military people, but to everybody, I reckon.

SPEAKER_01 45:49

Yeah, yeah, I'd say 90% of what we talk about applies to everyone, right? If I talk about a TSP strategy, the only difference is the civilian 401k is called something different, like they're pretty much the same thing, different funds, but same idea.

SPEAKER_02 46:03

Cool, man. And um, all right, what what advice you got for people out there that's trying to get started in real estate?

Filter advice: your mom loves you but hasn't owned a rental

SPEAKER_01 46:10

Man, my favorite advice, at least as of late, is uh to really filter who you take advice from. So if the person you're listening to hasn't done what you want to do or hasn't achieved what you want to in the area that they are giving you advice, probably worth finding someone else, right? If you're fighting for your marriage and you want to stay married, probably don't listen to all your divorced buddies. And so I the example I always give is like if you want to be the best MMA fighter in the world, your mom loves you. She's got your best interest at heart. She's probably not who you're gonna hire to teach you MMA. You're probably gonna go find an MMA coach. But for some reason, when people get into fucking real estate, they're like, Oh, I'm gonna be a real estate investor. And then your mom or your dad or your brother, your cousin, or whoever it is that has never invested in real estate, but also has heard horror stories, who still has your best interest at heart, is gonna come up and be like, Oh man, you don't want to do that. Tenants and toilets, and you're gonna be like, Oh, yeah, they my mom told me I shouldn't invest in real estate. Cool. Well, who should you listen to? The your mom who's never owned a rental property, or the guy over here with a hundred of them who's living the life you want. Like, okay, and then same thing. If that guy's fat and out of shape, you don't listen to him about health advice. If he's divorced, you don't listen to him about marriage. You listen to him about real estate, and you can filter that. It's okay to have a mentor in an industry and be like, yo, I don't want this guy's social life, but he's great at this thing. Like, that's fine. You don't have to listen to everything they do.

SPEAKER_02 47:40

Pick and choose your mentors.

SPEAKER_01 47:41

Absolutely.

SPEAKER_02 47:43

Cool, brother. Well, thank you so much for hopping on. Where could people find you?

SPEAKER_01 47:47

Oh, the easiest spot is if you go to the best podcastguest.com. It'll drop a place where you can download a free link to my uh free free PDF copy of my book, but more importantly, it's got all my socials there.

SPEAKER_02 47:59

Yeah, you got a book on you to show it on the camera right there.

SPEAKER_01 48:02

Hang on. We got the clearly just so drunk right now. Um the no BS guide to military life. So it's everything I wish I'd known when I joined the service. That's pretty cool.

SPEAKER_02 48:18

Well, thank you. Thank you again for hopping on. Thank you for your service, and uh hopefully we'll connect again in the future.

SPEAKER_01 48:25

Yeah, brother. Thanks for having me. This was fun.

SPEAKER_02 48:27

Uh take care.

SPEAKER_00 48:29

Thank you for tuning in to this week's episode of Live Let Thrive. Be sure to tune in next week for all the latest in the world of Airbnb and all that entails. Bye-bye.