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Buying Property While Stationed Overseas (and a $40k Rookie Mistake!)

Buying Property While Stationed Overseas (and a $40k Rookie Mistake!)

44 min read
Real Estate Rookie Podcast

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Military members in the real estate community love to preach about how great the VA loans are for financing primary residences. They also love the fact that these primary residences can be turned into rentals, quite easily, when the military decides to station you elsewhere. This is exactly how Angel Garcia got his start; accidentally investing in real estate, all while stationed overseas.

Angel bought his first house as a way to ensure financial security for his wife and daughter, but when he was re-stationed, he decided to give landlording a go. He bought another primary residence, but once again, was forced to move, leaving him with two rental properties. He started to notice the cash flow coming in, and with some help from David Green’s Book Long-Distance Real Estate Investing, he made the jump to invest out-of-state.

He made an offer on the perfect property, a $55,000 duplex, but when his inspector wouldn’t even enter the house, he knew he may have made a mistake. This home had $40,000 in foundation damage that needed to be repaired, turning his small investment into a cash-heavy burden. Through perseverance and the ability to learn from past mistakes, Angel was able to make this rental cash flow a respectable amount and it allowed him to get even further along the path to financial freedom.

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Ashley:
All right, you guys. Rookies, before we get to today’s show, we have a quick favor to ask.

Tony:
Yeah, guys. So here is the deal. We want to make this show better than ever, heading into 2022, and we need your help to do that. So if you’re a super fan who listens to almost every episode, maybe you’re amused by the way, Ashley changes the number nine to niner, or maybe you’ve DM’d me on Instagram about my house in Shreveport I can’t sell.

Ashley:
Or you come from a walkie-talkie, then we want you guys to join our rookie circle group. We are going to give you guys access to some of the episodes before they actually go live, plus the chance to personally appear on live shows with us. And this is just all free. We just want to include you guys and have you a part of the rookie community. All we ask is that you’re willing to keep listening to the show and provide us with regular feedback through email surveys.

Tony:
So, does that sound fair to you? If so, sign up at biggerpockets.com/circle. That’s biggerpockets.com/circle. And we’ll put a link in the show notes for today’s episode too. One more time, head over to biggerpockets.com/circle for access to exclusive content and the chance to make your feedback heard. Now, enjoy the show guys.

Ashley:
This is Real Estate Rookie Episode 127.

Angel:
Worrying does nothing. Obviously, it’s important to have some concern, but if I were to sit here in my worry all day long, imagine how much time I’m wasting taking action on something. If you even know what it is that you want to do, plan, prepare, execute, and assess.

Ashley:
My name is Ashley Kehr, and I’m here with Tony Robinson. So today, I am wearing a Fleetwood Mac shirt, and we all remember the Tommy boy incident when Tony first came onto the show. Well, we had another incident today, because he did not know who Fleetwood Mac was. So we had to start off right before our recording with our guests. We all got hyped up on Dream by Fleetwood Mac. And he goes, “Oh, I know that song. That’s the guy on the skateboard with the cranberry juice on TikTok.” You guys, it was the best. I wish we were recording that.

Tony:
To my defense, in my household, there was a little bit more Luther Vandross, Teena Marie. That style of music. So there wasn’t a whole lot of Fleetwood Mac playing in my neighborhood, but yes, Dogg Face from TikTok introduced me to Fleetwood Mac, and I’m forever grateful.

Ashley:
Yeah. And now it’s going to be the theme song. Any of that we go to now, that’s going to be your intro.

Tony:
We got to come out to … So BPCON2022, we got to come out to some Fleetwood Mac today.

Ashley:
Oh, awesome. So it’s a late at night, and we just recorded two guests. And our most recent, guys, you guys are going to be just on fire. You’re going to be ramped up. You’re going to be pumped up. This is an awesome, awesome episode.

Tony:
He’s fantastic. So his name’s Angel Garcia and I had actually interviewed him on my old podcast before coming over to BP and same thing. He’s just full of energy, full of insight. And he did not disappoint in today’s episode. Obviously, you guys are going to get the real estate information, but his approach and just the way that he articulates how he overcame some of the challenges in his business … His first real estate deal, he lost tens of thousands of dollars on that deal, but still found a way to turn that into a win for him. And he’s getting, I think it’s a 12% return on his money still. So, so many really good golden nuggets, both tactical things, but also from a mindset perspective.

Ashley:
Yeah. And I wrote this down, so that I remembered to say it during the intro. But one thing that we talk about is helping other people get started in real estate. And where do you draw the line where you’re nagging a person? And how do you know how to approach them and all these things? And so if you are learning how to be an investor, or if you only have one deal, you are still such a beneficial tool to somebody who is just starting out. That hasn’t consumed anything yet on real estate. You are a resource. So listen to this episode and listen to Angel give me advice on how to navigate that, how to approach people, because you want to help them.
Or to be approachable, so people come and ask you for advice. Just everything Angel said, it was really great and just motivational. And then when he talks about his deal and the huge dollar amount that he found out about that he had to put into this property after closing, you guys, you want to hear that. And plus we dive into how he actually paid for that huge, huge expense too.

Tony:
So many good things throughout this entire episode. Literally one of my most favorite conversations as of late.

Ashley:
So before we dive into the show, today is September 2nd. So just in case this is our last ever episode, the reason is, Tony is taking me to Vegas this weekend with his wife, and I will be going to my first ever Vegas pool party. So if we don’t come out of it, you guys, thank you. This has been fun.

Tony:
Episode 127 might be the last one. So, I’m glad it was a good one.

Ashley:
Okay. Let’s get into the show. Angel, thank you so much for joining us today. Can you start off just telling everyone a little bit about yourself and how you got started in real estate?

Angel:
Absolutely, Ashley. First off, thank you so much for having me on the show. It truly is an honor and a blessing to be here. And I’ve been with you from the beginning and now full circle to be here. So thank you so much, honestly. A little bit about myself. So born and raised in Miami, Florida, blue collar family, right? My dad worked construction, and my mom was a admin assistance. And growing up in Miami, it was always the theme of, work hard, study hard, and somehow you’ll be successful. Right? And if anyone knows Miami, it’s very expensive there.
It’s a very fast-paced life. So you work to survive. You work to pay the bills and to move on to another day. And so growing up in that mindset, never was I much into investing or savings. It was just work hard to get the money to move forward. So I followed my passion. I became an educator and I focused on industrial organizational psychology and leadership studies. I worked in higher education, worked in several universities throughout Florida, traveled as a leadership consultant and developed leadership curriculum. And as life so happens, because we never know what’s going to happen tomorrow, ironically enough, I joined the army.
I don’t know how that happened. I don’t know where it came from, but there was in a recruiter’s office. And parallel to this other life that I was living, all of a sudden now, I’m in the army reserves. And so I’m wearing the uniform one weekend a month, two weeks during the summer. I’m an educator during the weekdays. And here I am, 20 years later, after … They gave me an opportunity to go full time, and now here I am, 20 years later, active. I am a signal officer that now turned into a space operations officer. I’m in Colorado Springs with my beautiful wife and daughter, and we’re loving every day of it out here. So that’s my life now. It’s full-time army.

Ashley:
Okay. Well, thank you very much for your service. We definitely appreciate it. So Angel, what was that aha moment for you as to, “I’m going to be a real estate investor, and this is why?” Was there one specific thing or just, it accumulated over time? What was that light bulb moment for you?

Angel:
Yeah, absolutely. In fact, it was a catalyst approach here that occurred. And what it was is when I got married with my wife, we had our daughter. And then right after that, immediately … Again, you just never know what’s going to happen tomorrow, I received notice that I was going to deploy. And so here I am, starting my family. We just got married. We have our daughter. Life is great, and then all of a sudden, “Hey, you’re going overseas.” And so all of a sudden, in a few months time, here I am across the pond in theater, in the desert, working operations with my signal unit.
And I had an epiphany moment out there. You really put things in perspective on what’s important to you when you’re out there in the desert. And I started thinking. I’m like, “I’m a husband. I’m a father. What am I going to do to now support my family? What am I going to do to build that foundation for not only my wife, but that generational wealth that you always hear about for my daughter?” Because it’s no longer about me now, right? I need to take care of my family. I need to be there for my wife and daughters. So we hadn’t purchased a house at all. We were renting. And it was in that moment that I said, “You know what? It’s time. It’s time to buy a house. I don’t know what this looks like. I have no clue about this.”
So I went on YouTube. I looked up, “How to buy a home.” And lo and behold, there was Brandon Turner and Josh Dworkin. And Brandon was talking about purchasing his first property or one of his first properties and how that property was going to be a college fund that was going to be set up for his daughter. And I said, “What a genius idea. What a genius idea. I’ll buy a house. And in 20 years time, it’ll be a college fund for my daughter.” And so I utilized the VA loan. When I got back from deployment, we bought a home in Grovetown, Georgia, because I went to Captains Career Course out there in Fort Gordon. And it was scary. I’m buying this a hundred something thousand dollar home, but I learned BiggerPockets was there for me.
And I watched all these YouTube videos and I learned about the VA loan. And everything was really … I’m going to a sound like an infomercial here, but BP really set me up for success, and I did it. And I did it. And so what happened here? I bought that first property, army takes me to another location, that first property now becomes a rental property. So now my mind was just buying a home to establish a foundation for my family. Now, somehow I’m forced into this investing world. And I’m seeing, I need to find a tenant for my property. So now that home becomes a rental property. I have to buy another home with the remaining entitlement that I have for VA.
And then all of a sudden, again, notification of deployment, notification that, “After deployment, you’re going to go to the Command and General Staff College school.” So it’s like, “Here we go. This house is now going to be another rental property. I am completely out of VA loan entitlement, but I’m liking what’s happening here.” I’m seeing a little bit of cash flow. It’s not a lot. 100 bucks from that first property. Now this house that I purchased in Arizona, it’s cash flowing again. A hundred, $200 a month, which isn’t bad for not even going into it with that mindset. But now I caught the bug. Now I caught the bug. Now I like what’s going on. And then to answer your question finally here is, here I am in the desert again.
And now I have nothing to rely on. I have no VA loan, nothing. So all of this investing strategy, creative financing and everything, I’m like, “I got to come up with something, if I’m going to keep this thing going.” I can’t buy in Miami, because you kick a bucket over and you got $600,000 homes that are coming out. I can’t buy that. I can’t buy houses over here in Phoenix. Again, 500, $600,000. So then I’m sitting there and I’m like … Of course, we impose all these negative things on us. And it’s like, “There’s no way that I can move into this, because the two places that I could go to with my family in Miami or where I’m at, at Phoenix, I can’t.”
And then, whereas Brandon Turner secure me the first time, in comes David Greene. And David Greene comes out with this whole core for long distance real estate investing. And again, I’m like, “It sounds good, but it’s scary.” But then I had a moment out there. I’m like, “Hey man, listen up.” Now I’m talking to myself. I’m like, “Dude, if you could come out here in the desert with 300 soldiers and ship millions of dollars of equipment out here in this desert and manage all these soldiers across seven different countries, you mean to tell me you cannot buy a $70,000 property three states away?” And I’m having this discussion with myself.
And I’m like, “You know what? Sometimes I think in life, we don’t realize the talents that we have. We think that, ‘Well, I needed to be part of a mastermind group or I need to be a part of something.’ But little do we do to look inside of ourselves and say, ‘Hey, we’ve got the tools that we need to move forward.'” And so I said, “You know what? If I’m good at operations with the army, if I’m a lead planner for my organization, surely I could do this.” So came back, bought my first out-of-state property. According to David Greene’s in a long distance, I got my Core 4. I followed it to the T, and I did it. And so, got my first out-of-state property.
Learned a lot through that process. It’s not always pretty. It’s not always the way that it’s written in books and there’s challenges, but we worked through those challenges. And so that’s where I’m at now. So four doors, three properties, took a tactical timeout, because of all the moving around with the army. But here I am now, ready to go into the next one now that we’re here in Colorado Springs.

Ashley:
I have so many questions and so many things-

Tony:
It’s okay.

Ashley:
… I want to dive in to unpack here. So I actually started to make a list. So the first thing I think we should talk about is the VA loan. Can you just describe for everyone what exactly that is? And then we’ll dive into how somebody can get one. What’s the best way to use it? And then you also talked about how you were tapped out. You used your max on the VA loan. Let’s talk about that too. So go ahead. Let’s hear it all, VA loan.

Angel:
Yeah, yeah. So, as we say in the military, bottom line up front. It’s an entitlement that’s provided to the soldiers, all those that are serving and also veterans. And what it does is it offers you a no down payment option into purchasing a home. The VA, in short, acts as the guarantor on your loan. And so what you do is you find a lender that knows how to work very well with the VA. And that’s all over the place. So many lenders out there are VA loan-friendly. And so what it does, it’s a zero down low interest fee loan, 30 years. And there’s a fee that’s associated with it. It’s a service fee that they have, but it all gets rolled up into the loan. So you don’t pay anything.
You come to the closing table with nothing. And sometimes based on the incentives of the lender, they pay you, like they did for me from that first house. I’m sitting there with my wife. I’m like, “The incentive of using this lender, we are getting paid to buy this house.” And that’s why the cash flow isn’t a lot at first. You don’t use the VA for investment purposes. You buy it as your primary residence. But listen, as we know in the military, we’re moving all the time. So you go in the right way, you utilize it as your primary residence, but then if the army moves you somewhere else or the military moves you somewhere else, it turns into an investment property.
And again, the cash flow is not a lot at first, but with patience and other systems that I’ve utilized, such as refinancing, it is a whole nother different world. So that’s how it is. That’s how the VA works. Now, you asked about the cap. Back in the day … And I say back in the day. Maybe three years ago. Back in the day, there used to be a cap on there. So, don’t quote me on this, but it was 400 something thousand dollar total that you could use. So if you buy one house for whatever that cap was in the region that you’re in for 400 and something thousand dollars, that’s it. You’ve cashed in all of your entitlement. But if you buy a $100,000 property, now you still have entitlement left.
So if the army moves you or the military moves you with orders somewhere else, now you’ve got that $300,000 that you carry somewhere else and you could use up to that amount. So I was very fortunate that the house in Grovetown at the time was $174,000 when I bought it. And the market’s increased since then. So appreciation, but 174 back then. And so I took the remaining entitlement and I bought a 200 something thousand dollar home over in Arizona, which led to maybe a few thousand in entitlement, but that’s all I was able to purchase those two.

Ashley:
Angel, you said that if you had orders to move. So if you were maybe a vet and you didn’t have orders to move, would you still be able to get those two loans up to the amount of the entitlement? Or is that just for active duty?

Angel:
Yeah. So at the end of the day, the intent is that it’s your primary residence. So there’s other factors that are in there. I’m not sure where it’s at now, because I haven’t kept up with the policies ever since the entitlement went off. But there’s certain criterias that obviously if things happen in life and situations happen in life, you could adjust accordingly. But I know for those that are active, for sure, those with orders, as you move on, they continue using those entitlements. But those that are veterans, again, I’m not up to date with what those criterias are that allow you to move out of that home and then into another one and still use remaining entitlement. So I don’t want to mislead anyone.

Ashley:
Yeah. Sorry, Tony, that I’m taking all the questions, but I have a friend that wants to get started in real estate investing and he is a vet. And I know that he used a VA loan on his first property. So I’m just trying to gather all this information for him.

Angel:
And actually, I’ll tell you this, the best thing … Because people in life really like to say no all the time. You would pose a question somewhere and like, “Oh no, you can’t do that.” It’s like, “Listen, I’m going to ask the question. I’m going to go to the lender. I’m going to say, ‘This is where I’m at. This is what I want to do. How does this work through the process?'” And I’ll ask those questions instead of just taking that first no. So I definitely recommend, talk to a VA lender and say, “This is where I’m at. This is the situation. How do the guidelines help me in this?” And take it from there.
Because if I would have followed everyone that told me no, I would have been in a whole different place today. So ask the pros.

Ashley:
That is such a good point. And that is so true that listening … Especially people who haven’t done it, people who haven’t even gone out and tried to get their second property. And they’re probably the ones telling you, “No, you can’t do it.” Yeah, that’s good advice. Tony, did you have any questions? I’m sorry that I took off all the VA questions.

Tony:
She’s definitely … Just like Ashley, Angel as you were talking, I was furiously scribbling notes here. A couple of things I want to point out that you said that I think the rookies really need to make sure that they understand. The first thing you said is that we self-impose so many negative thoughts. We self-impose so many negative thoughts, and this isn’t just real estate. This is just life. We too ourselves sometimes have this self-talk that is so detrimental, but it’s with no basis, no foundation whatsoever. And you were self-aware enough to talk to yourself and say, “Wait a minute, I’m doing all these other much more difficult things. I can definitely buy a duplex in whatever state that’s not the one that I live in.”
And it’s being self-aware enough to realize that that I think is super important. So for all of you that are listening, check your self-talk. I tell this to my son all the time. I say, “The most important conversation you have throughout the day is the conversations that you have with yourself, period. The way that you communicate with yourself as more important than the way you communicate with anybody else, because it’s that conversation with the person in the mirror that’s going to dictate what you believe you can achieve. So you’ve got to check that conversation today.” So man, love that point. That’s a big part of my framework for life is that self-talk thing.

Ashley:
Tony, that was so great.

Angel:
Oh, he fired me up. Listen, I’m going to fire people. I’m going to take these glasses off real quick. Hey, listen, I’ll say this. I’ll say this. And I don’t know if it’s all these deployments that have gone on, but life is short. Life is short. By the time you blink … Here I am in my forties. I feel like I’m 20 something, but I’m in my 40s now. My daughter’s growing up, and you look at them, they keep growing. It’s like, “Oh my goodness.” White hairs are coming in. I’m like, “Life, the hands of time are marching on.” And so I can either sit here and waste my time worrying … Because no one in life ever says, “Hey, you’re going to add years to your life if you worry.”
Worrying does nothing. Now, obviously it’s important to have some concern. But if I were to sit here in my worry all day long, imagine how much time I’m wasting taking action on something. And so do something. If you even know what it is that you want to do, plan, prepare, execute and assess. Have the plan, prepare yourself with the right tools, have faith and trust in yourself … And it’s going to be scary. Listen, it’s going to be scary. But once you go through it and you look back … Now, I’m the one that’s providing advice to my family on how to buy a home when I was the one in the desert listening to Brandon teaching me how to buy my first property.
Now I’m over here giving advice to my family on how to do it. It’s easy. The scariness is not there. I’ll buy another property somewhere else in some other state, and I won’t even blink. Because once you go through those motions, those reps, it becomes easier. You build your system, you build your templates, your infrastructure, and now you’re going through it. And you’re looking back and there’s a team of people that you’re empowering, that you’re helping. And you’re like, “My gosh, if I would have spent all this time worrying, where would I have been today?” Sorry, man. You fired me up. Let me put my glasses back on. Let me get back … Fired me up.

Ashley:
Angel, I have something to ask you about that. So helping your family, you’re helping them get started in real estate investing or even just purchasing a house. Where do you draw the line as to, you’re trying to get them to do this, and how do you differentiate between who really wants to do this and who you’re really just nagging and they’re not going to do that? I think that’s something that I struggle with is, I want everybody. And I honestly feel like sometimes it comes off to some people that I’m trying to brag to them that I know how to do this and I’m doing that.
But in all honesty, it’s like, “I want you to be able to have this life too. I want you to be able to do that. So I’m telling you,” but then I just come off as bragging and I’m nagging them to do something and they don’t want to do. But I still want to try and help. So how do you handle that?

Angel:
I’ll tell you this, Ashley, and in fact last night, I was thinking the very same thing. We just finished our last big, big presentation here in this space operations course that I’m in. So me and a bunch of the other guys went out to just celebrate and just talk about what’s next. And so I was telling them about my passion for real estate, and you’re talking to these other people. And you’re like, “Listen, it’s not hard to do. You could so better your life with this.” But some of them looked at me with blank stares, like “Yeah man, we’re not really interested.”
But I think at the end of the day, Ashley, whether it be your family, your friends, as long as you’ve got that genuine care for their betterment, you can’t put a price tag on that. You can’t put a price tag on genuinely caring for the welfare of others. And if they choose not to take you up on that offer, hey, the offer is always there. “The day that you really want to jump into real estate, I’m here and I’ll always be here for you.” And that’s what I told them. I said, “Hey team, if you guys ever want to know anything about real estate, let me know. No strings attached. I’ve got nothing, but just to make you better investors for it.”
So I think at the end of the day, that’s how I keep myself consent that, “Hey, I’m trying with my family.” I’ll tell my family, “Hey, this is what you could do. Hey friends, this is what you could do,” and then you just leave it at that. If they choose not to, everyone will be ready at their own time. But when they are, they’ll know that they could call you and you’ll be right there where you left off.

Ashley:
Yeah. That’s such great advice as to leaving it open-ended and not pressuring them to like, “Okay, well, come on, just start now. Do it now.”

Angel:
Yeah. And never be ashamed for your successes. You’ve worked hard for where you’re at. You’ve gone through the struggles and the behind the scenes emotions we go through. But you are at the place that you need to be right now in life. And so I’ll never hold that back. I’m very proud of saying, “Hey, I’ve got my four doors and that’s what it is. And the day that you’re interested, I’m here to support,” but celebrate those victories and where you’re going.

Tony:
Ashley, that makes me think a little bit. You and I have people that reach out to us all the time, asking for real estate advice. And when I think about my close friends and family, many of them have not reached out to ask that question. And this isn’t me saying that you and I are these real estate gurus and know everything under the sun, but we’ve obviously found a certain level of success that the people who we care about would probably be impacted in a positive way financially if they did some of the things that you and I have done.
So it’s just a really weird dichotomy that these people who have the relationship with us, the people that have the access to us are the ones that aren’t really leveraging that. And it’s the people that we don’t know that are the ones that value the knowledge and experience that we can offer to them. So I don’t really know where I’m going with that, but it just made me think what an interesting like phenomenon that is.

Ashley:
Well, I think part of it too is we’ve gone through the struggles of getting started and we know how to do them. We could very easily help them do it, I guess, in a way. And it’s like, “You don’t even have to go and read books. I will hold your hand and take you through the steps of doing it. Just let me hold your hand.”

Tony:
Like, “I would love to do that. Come with me.” We’re begging them. We’re begging them.

Angel:
But that shows that your heart’s in the right place, when you have that … You can’t explain. It’s a gut feeling that you have of like, “Why don’t you want to do this? I want to help you.” That’s where I was last night. I’m like, “Guys, I will help you.” And it’s this energy that you’ve got, but if they don’t want to take it, maybe it’s not their time that they’re ready to go with it.

Tony:
What’s the saying, “You can take a horse to the water, but you can’t make it drink,” or something lie that?

Angel:
Yeah, you’re right. You can lead a horse to water, but you can’t make it drink.

Ashley:
Yeah. You can lead a horse to water … Yeah.

Tony:
Yeah. I don’t have any horses, so I don’t really know how that saying goes, but hopefully I was close enough.

Angel:
I’m from Miami, man. So …

Ashley:
I’m going to get people in my DM starting to be like, “I’ll hold your hand, Ashley. Take me through it.”

Tony:
One more comment from me, Angel, before we keep rolling on some of the things that you said. You said sometimes in life, we don’t realize the talents that we have. And I’ll never forget, I was talking to a friend that reached out to me and they were like, “Hey, Tony, I’m thinking about getting started in real estate investing, but I’m just really worried. I feel like I don’t have the experience. I feel like I don’t have the team. I feel like I don’t have the right people around me.” And through the conversation, she mentioned that her dad is a commercial, general contractor, has been her whole life, and builds a bunch of houses or commercial buildings in Southern California.
And I was like, “What do you mean you don’t have the team? What do mean you don’t have the resources? Your dad who you’ve been in the same house with for half of your life has everything that you need.” So I think that sometimes we’re so close to the work. Our nose is so close to the ground as we’re going through some of these things that we forget to look up and assess and realize, what are the actual resources, skills, abilities that we currently have that might translate well to becoming an entrepreneur. I knew before I got my first deal that maybe I had never bought a real estate investment property before, but I knew that I had led a team of hundreds of people in my W2 job spread out across the nation.
I know how to property-manage. I know how to read financial statements. I know how to delegate. There’s all these different things that weren’t necessarily real estate, but I knew that they would translate well to becoming a real estate investor.

Ashley:
Tony, I want to touch on something you just said real quick there as to how that girl had all the resources, because of her dad. I think it can go both ways. We were just talking about how we’re trying to help people and we’re tying to reach them. I bet there are people close to all of us that want our help, but are waiting for us to ask or waiting for us to say something before even asking us. I heard a story recently from one of my investor friends where his daughter just didn’t know what she was going to do with her life. She decided college wasn’t for her or anything like that.
And so she sat down with her dad and he’s telling her all these different things. And then he finally was like, “Well, maybe what about real estate investing?” She’s like, “Oh, I thought you’d never ask. Really, you would help me and stuff?” He’s a pretty large investor and he’s just like, “I never wanted to force it on anybody. I didn’t want to force it on my kids, but my daughter didn’t think that I was open to helping her in it, because I never said anything.” And he was like, “It was just such a weird moment for me, because I always thought the opposite when really she wanted to learn and wanted me to teach her.”

Angel:
And one thing I’ll add to that too, Ashley, and I’m telling you, I am textbook rookie in how I went through everything. So, when I first started getting to BP and learning, I knew that I had the energy and the passion to do something. I didn’t know what that was. So what happens? You go into the forum. You start listening to the podcast, the different themes and all of a sudden it’s like, “Wholesale, wholesale. Thousands of dollars in wholesale.” So you’re like, “Okay, I’m going to do wholesale, wholesale.” And then all of a sudden someone was like, “Dude, I flipped, and I made 50,000.”
You’re like, “Oh, then that’s what I’m going to do, flip.” And then you hear the success story of how it went zero to a hundred in a day. And you’re like, “Oh, I need it.” So it’s like, you’re chasing all these things, because that you want to be successful. But then as a rookie, you get overwhelmed, because it’s like, “Where do I begin? I want to be successful for,” whatever your why is and whatever your reason is. Because there’s a lot of power in that. If you know you’re doing this for your wife and daughter and for your family, you’re going to want to do something.
And so I think at the end of the day, it’s, don’t compare yourself to the successes of others. Tony, you’re a man that works out. Listen, you put years into workout, right? People that go to the gym for the first time, I’m not going to get bumped in a day. But if I stay consistent, over time I will get to that goal. And it’s the same thing with real estate. You think I’m over here, writing a book on the $100 that I’m making on that first VA property that turned into … That’s a hundred dollars, which is great, but that’s not the end goal. But the second property comes. Now I’ve got the multi-family property comes.
Then I want to share this with you, because this is something that is probably one of the most powerful lessons I’ve ever learned in life. And it was from the movers that moved me from Georgia to Arizona. I’m sitting in the kitchen. There I was talking to one of the movers, and the guys were coming in, moving all the boxes out. And all of a sudden, we’re talking about just his moving team and whatnot. And he stops and he literally starts yelling at the other guy. He goes, “Hey, Chuck, Chuck, where are you going?” And the other guy comes in, he goes, “Well, what do you mean?”
He goes, “Where are you going?” And he goes, “I was just going out to the truck.” He goes, “What are you doing, going to the truck with your hands empty? Grab a box, go out there and take a box with you. You owe me a beer.” And I said, “Whoa, what was that all about?” He goes, “Hey, efficiency. Efficiency. We’ve got to be effective here. Time is valuable. So if he’s walking out to the truck without a box, that’s more time that we’re on the job.” So what was the lesson? Even if I can’t buy a house now, even if I can’t do what I want to do in real estate now, do something. And so what did I do after that? I kid you not. I realized, “Hey, I’m not buying any properties, but the rates are really good right now.”
So I started refinancing. I refinanced both homes and that $100 turned into $300 for one and $400 for the other, because I got tenants in, I upped the rent. But again, the moral of the story is, just because he can’t buy a house now, just because I can’t jump, you could still do something. Educate yourself. Build some systems. Go to Lowe’. Go to Home Depot. See what flooring you want to put in your property when that time comes, what paints. So that way when it happens, I’m ready to go. I know what color scheme I want. I know what kitchen cabinets I want. I’m ready. There’s always something to do.
So don’t feel that just because you can’t start now that there’s not something you can’t do to make yourself better towards your goal. So anyways, thank you. You motivated me, Ashley.

Tony:
Man, I’m loving this conversation, brother. So glad that you’re on here today. I want to take it back, because you started out with saying that sometimes there’s so much advice that it can be paralyzing. I remember when I first became a parent, someone told me, they were like, “If you read enough parenting books, you’ll give up and let your kids parent themselves.” Because literally, all the books at one point in time will conflict with one another, right?

Ashley:
Tony, this was one of the things I wrote on my list was, “How to navigate the consumption,” and I wanted to ask Angel. And so I’m glad we’re on the same page.

Tony:
Yeah. We’re on the same page, right? But it’s true, because even as a real estate investor, if you listen to the wholesalers, they’ll say they’ll never flip a house. Flipping houses is stupid. And if you listen to the flippers, they’ll say, “Oh man, I can’t believe people wholesale. Talking to sellers, I would hate to do that.” And you listen to the buy and hold guys and girls are like, “I would never sell a house. I’m going to own this house until I die.” And it’s like everybody’s got this different, very hard line that they draw in the sand. And at times it can be difficult to find the one that works for you.
So for the rookies, my advice is, pick the one that resonates with you the most and just try it out. And if it doesn’t work for you and you don’t like it, try something else, but find the one that speaks to who you are. Find the one that most naturally leverages the skills, the abilities, the resources that you have today. Find the path to the least resistance for you. If you have a lot of capital, you don’t have much time, you don’t care to manage, then maybe you’re passively investing in someone else’s deal. If you have no capital, but a ton of time, you love talking to people, then maybe you’re cold-calling people and you’re trying to be a wholesaler.
You’ve got to find the one that fits you, that fits your vibe. So I guess my question after all that, Angel, is after hearing all of the different pieces of advice, how did you find the path for yourself to say, “Okay, I think this is what I want to do?”

Angel:
So based on this situation that I was in, knowing that Phoenix is too expensive for me, Miami is way too expensive for me, California is too crazy for me as far as prices, I’m going to go ahead and give this multifamily buy and holds, I’m just going to give it a go. Because at the end of the day, it doesn’t mean that I can’t pivot later on. It doesn’t mean that later on, I can’t go from where I’m at to short-term rentals or something else. It doesn’t mean that. So it was just one of those where it was like, “Okay, I’ve done the research. I’m feeling what David Greene is putting out here. He’s putting out a very concise plan, like, ‘Hey, this is how you do it. Get your Core 4 ready to go.'”
So my wife had extended family that’s over in Illinois, outside of the Moline area, and the entry price was pretty cheap for a multifamily home. They were asking $70,000 for a duplex property. So I said, “I could do this. I could do this and at least understand what this looks like.” And I did. And I said, “You know what? This is where I’m going to go. This is what I’m going to focus my efforts on.” And I enjoyed it. I enjoyed the process. I enjoyed the investments. I learned a lot from it. Definitely, there’s an emotional side to this. And then there’s what’s planned. And then it’s how you react to those plans.
And that’s where I really saw, even though I’m a military man and I could plan like no one else in the military, once I let my emotions get involved, it all went downhill. But yeah, you could always pivot later on, Tony, but you got to stick to something and try it out first. Because if not, you’re just going to be all over the place. I was ready to do a letter-writing campaign, and I didn’t even know what campaign I want her to get into, but I’m like, I needed to start sending letters. So …

Tony:
It takes time to find that rhythm, find that piece of real estate that you resonate with. But like you said, once you find it, you’ve got to go all in. So on that note, let’s talk about how you maybe got one of your deals. Do you have a specific deal that we can focus on for this rookie deal review?

Angel:
Absolutely. So let’s talk about when I left the safe harbor and now I’m on my own, and it was a duplex property out-of-state investment that I really learned a lot with. And that was going through the traditional process with lender, no VA.

Tony:
Okay. Well, let me ask you a quick rapid fire set of questions, so we can set the table for the listeners. And then we’ll go into a deeper review of the deal. So what market was this property in?

Angel:
Yep. So right outside of Moline, Illinois.

Tony:
Moline, Illinois. I’d never heard of that before. It must be a good place. So, what was the property type? I think you said a duplex?

Angel:
Yeah, it was a duplex property built in 1899.

Tony:
1899. Geez, Louise. That is …

Angel:
Well, that’s what I said. That’s what I said. Just you wait.

Tony:
Yeah. So Moline, duplex. What did you purchase this one for?

Angel:
So the asking price on that one was 70,000, and I went in lowball offer of 50, because I was all fired up about the lowball offer. And then I got it for 55.

Tony:
55. Wow. That is amazing. We’ll have to go back to the negotiation piece on that to go from 70 to 55. Was there any rehab budget included in the purchase of this?

Angel:
So let me just give you the snippet, since we’re on a little rapid fire. Let me just tell you this-

Tony:
Well, let’s dive into it. Let’s dive into it, because I think we set the foundation for guests enough. So talk us through … Before we get into the rehab, first just talk about the negotiation piece, then we’ll get into the rehab. So it was listed at 70. How did you get them down, 15 grand off of their asking price?

Angel:
So just working with the realtor. Found a really good realtor that was there and shared with her my goals. And I told her, I said, “Hey Linda, listen, there’s a reason why I’m providing you a lowball offer here. I know that you’re looking at me crazy, but just know that the way that my numbers work, this is where I’m starting.” Because I need her to know that I’m not wasting her time. She’s got things to do. So there’s a Orion to this. So working with her, I said, “Hey look, 50 is where I’m at. See where they’re at.” And then at first, they were like, “No, absolutely not. We’re not going to go that low.”
And so I could have just stopped there, but I said, “Okay, look, how’s 55? Let’s go with 55. Let’s see where they’re at. I want to see what they’re biting at.” And so they actually went for 55. They said, “Yeah, we’ll go for it.” But it was on the market for quite a bit too. And I’ll tell you why, but it was on the market for quite a bit. And so we got it for 55 and were able to close it at that.

Tony:
So I want to talk about the analysis piece, Angel. This being your first true out-of-state investment, what did you see in this property to make you think, “Okay, this is worth $55,000?”

Angel:
So again, there’s a plan and there’s emotions. Emotions are, “That’s a wonderful price. That’s not Miami. That’s not Phoenix. There’s not a lot of zeros after that price.” It was $70,000. And when you’re looking at a-

Tony:
That’s what I would have thought if it was in California. I was like, “There’s a zero missing here somewhere.”

Angel:
Right. So it was one of those where it’s like, you put 25% down on that. The numbers were there. And so now I’ve got a target. Now I’ve got something to work towards. And so I started getting way excited about this, but again, that 70,000 was probably the key catalyst that brought me into it. And then again, you got to know your market. So I went on Zillow and I went on Realtor and I saw what the comparisons were. And I knew that multifamily properties there were ranging between 70, 79, and then those odd ones that were in the 60s.

Tony:
That’s awesome, brother. The analysis part is I think where a lot of rookie investors get stuck at, it’s just the analysis paralysis. And they run all the numbers, but they never feel confident enough to pull the trigger. So I’m glad you were able to push past.

Angel:
Well, let me take it a step further, since we’re talking about the analysis. There’s more to it. So I was really … So the criteria. What was my criteria going into this? Because you have to have that criteria, to remove the emotion. So going into this, I knew that whatever property I was looking at, it had to meet that 1% rule. Or in this case here, I was being a little bit more aggressive. And it’s the 1.5%. For those who don’t know what it is, let’s say a property is a hundred thousand dollars. 1%, some a hundred thousand dollars. That’s what you’re looking at for the monthly collected rent. And then you start working other things behind that.
So for this property, I knew that for the 400 on each side, which is what those tenants were paying, I knew that I was doing more than okay on that one. I knew that I didn’t want to pay for utilities. I wanted to have a separate gas, water and electricity meters. Some people are okay with water. Again, I want to be very selective on this. So I don’t want to pay any utilities on this. And it met that criteria. And so part of the criteria was no major CapEx repairs up front. But again, this is where emotions crept in and knocked that one out of the way. But that’s where I was at starting off.
So like we see in the military, it briefed very well. It briefed well going into this, but that all changed.

Tony:
And then reality came in and it changed. Let’s talk about where things changed, Angel. How did this deal go off of the plan?

Ashley:
How did it pivot?

Tony:
Yeah.

Angel:
Ashley and Tony, I’ll tell you this. The day that you hire an inspector to go out there and inspect the property, typically what do you expect from the inspector? They inspect it, and then you get a printout. You get one of those print out reports with colored photos and all that stuff. “Okay, cool.” So the inspector goes out there, does their thing. I’m over here, high-fiving the family. I’m like, “Hey, the inspector is out there. This is going to happen. The plan is set.” Inspector doesn’t call me that day. Inspector doesn’t call me the next day. And thinking, “My man’s really doing his due diligence. He’s really looking at this property deep.”
Yeah, right. He went out there for 25 minutes and he left, and then two days later he calls me and he says, “Hey Angel, you’re going to have to talk to your realtor, man. Don’t worry about paying me. You don’t have to pay me for going out there. Just talk to your realtor.” I say, “But what happened?” He goes, “Just talk to your realtor.” I said, “All right.” So I talked to my realtor, and she pretty much said, “Yeah, he was not … The floors are a little bit uneven. In certain places, there’s some soft spots that are there, but the carpet covers it up. So, he thinks we need to have a professional come out here and see it.”
I’m like, “Hey, we’ll make this thing happen. Keep pushing through this deal. We’re going to make this thing happen. We’re going to make this thing happen.” Long story short, closing comes. A week later, tenant reaches out to the property manager and says that her foot went through the floor of one of the units. That her foot went through the floor in the back part where the bathroom was at. When I got a contractor out there, he was like, “Dude, we’re going to have to redo this whole foundation, man.” I said, “What are we talking about? A thousand bucks? Where are we at? Where are we at with the foundation on an 1899 home, that was a general store back then, horse and carriages going through there?” But I’m like, “That’s just a few bricks, right?” Long story short, $40,000 later, all right?

Ashley:
Oh my God.

Angel:
$40,000 later after several bottles of wine and a lot of analysis, assessing this with my wife, it was one of those where you have a plan, but you let your emotions take over and cloud your judgment, because you want to get that deal. And so thank goodness, after it’s all said and done, always having faith through it and working through these challenges, one of the tenants left. I said, “If I’m putting in all this money into it, let’s renovate that one side of the property.” And so what was $400, now it’s $650 on that side with nice floor. It’s practically brand new. And then on the other side, the tenant, I raised his rent, $25. We’re starting to increment it.
So all in, all right now with where I’m at on that property, it cash-flows $521 clean. But again, those numbers at 521 is going back into the pay-me-back fund for repairs. But once we get that aggressively paid off, then we’re set to go, because that tenant that’s on the $425 side, there’s a lot more opportunity that’s there. And then again, all the cash flow that we received from that property, the incentives, put back in, build it up, fix it up, raise that rent on the other side and then continue moving forward. So it was a learning lesson, but it was one that I’m glad that we went through. one that I’m glad that we overcame. And it really is a lesson that, hey, not everything is going to be the way that you read in books or on YouTube videos.
There’s going to be challenges, but I think that’s the true test. How do you work through that? And we’re still here.

Ashley:
Angel, I want to know, how did you overcome that obstacle? Most people don’t get a $40,000 bill and have $40,000 cash under their mattress to hand it out. Did you have to pull from your life savings or how did you come up with that money to take care of that problem? Because we all know a lot of times money can solve a problem.

Angel:
Yeah. And so one of the important things is that you always have to understand what levers you have to pull. So remember, I was an educator back in the day. That was the life that I lived. So while I was there, we had a … I didn’t know much about this, but I would put money into this retirement fund that we had in the State of Florida. And so at the time, it was just growing and growing. We just forgot about it. It was growing and growing. And here I am in the army full-time, and that fund was always accumulating. And so it was one of those where it’s like, “Hey, either I could pull from my savings or I could pull from this fund. Yes, I’ll get hit with taxes. Yes, I’ll get hit with all of that.”
But at the end of the day, return on investment of what I’m taking from this fund and putting it into this property, once it’s all said and done, I’m going to have a property that’s not only there for me, my wife and the cash flow that we’ll receive … Because we’ve been paying it off now pretty aggressively. And we probably have maybe 10% more left to pay it until we really start seeing that true cash flow coming in. But it’s that long term goal. My daughter will have this portfolio that will benefit her for that generational wealth. And so, yes, we pulled it from that fund. We put it into the property, but the long term goal is that it’ll continue providing passive income for us.

Ashley:
One follow for me, Angel. So that’s how you did it from a technical side, that’s how you came up with the money. But I want to talk a little bit more about the mental aspect of that. This was your first real attempt at being an intentional real estate investor, and you get slapped with a $40,000 learning lesson. I think some people, put in the same situation, might wave the white flag and say, “Real estate investing worst idea ever. Whoever came up with this is wrong. Monopoly is a lie. It doesn’t really work that way in the real world.” How did you bounce back from that? Why did that lesson not stop you from continuing to pursue more real estate investments?

Angel:
Absolutely. So at the end of the day … So again, I’m going to sound like an infomercial here, but the BiggerPockets calculators are what I used to do. A lot of my assessments on properties. And I look at all the numbers, run all the numbers very specifically there. And so when I’m looking at the numbers, the numbers work. The numbers are there. I’m seeing the checks coming into my hand, and then they’re going out to repay the debt, but I see them. The way that it was planned is the way that it’s happening. It’s flowing. Because of a mistake that I did and letting emotions take over and … Come on. The day that an inspector says, “Hey, I’m not even charging you. I’m not even giving you a report. It’s that bad.”
Come on. Now it’s like, “Are you kidding me? Move on to the next one.” But here I am in this situation. You got to stick to the plan. You got to work through and you got to continue fighting through it and have faith in yourself, faith in the process, learn from it like we did. Hey, this was a mistake that we made, but we’ve learned from it, but the numbers are still there. All the analysis that we put in in the beginning is still true to today. And there’s still more potential. I haven’t even raised the rent fully on the other unit to bring that to $625, to $650.
So if I’m at 521 now, imagine what it’s going to look like with that increase. And again, the plan is there. So yeah, it was tough because every day I’d come out of a class and the contractor’s like, “Oh man, if you just don’t know. It’s bad out here.” I said, “Yeah, I know it’s bad. No kidding. So maybe you find some buried treasure down there from the 1899s or something like the constitution or … I don’t know. Yeah, I know it’s bad.”

Ashley:
One of the treasures that I found at property was this old, huge poster. And it was even on like vintage paper. Some damage to it, but real thick paper. And it was this huge … I Googled it, and it was from the 1960s. It was retired Dallas Cowboys Cheerleaders, topless with their pompoms. That was my treasure that I found, because I was also hoping for a brick of gold or something like that. But all I got was a topless poster.

Angel:
Let me think Ben Franklin’s glasses or something here.

Ashley:
Okay. Angel, can you just recap for us real quick? So the final conclusion on that property, what is your cash flow on it now? And when do you expect to finish raising the rent on that other unit?

Angel:
Yeah, absolutely. So we’re 10% left on paying ourselves back from that loan that we took out for ourselves. Pretty much the money that I had in this fund, putting it towards the property. But paying ourselves back from that and saying, “Hey, even though it’s out of that system, we’re still going to pay it back to ourselves.” I call it the war chest funds. That contingency fund for all of these properties that we have. So where are we at right now? So right now, to-date is $521. And that’s putting probably around 10% on maintenance and fees, and then another 5% for CapEx. I’ve already invested so much into it. Still keeping a CapEx fund, because we’re going to have to redo or replace like the HVAC system on the other unit.
And then again, it’s an 1899 home. So eventually, there’s going to come time that we’re going to have to take care of all of these minor details on it or whatnot. But right now, as of today, 521 clean on that property after we save for these contingency funds.

Ashley:
That’s awesome.

Angel:
So cash on cash return. Knowing the numbers when it was … Before the $40,000, it was a cash on cash of 18.46%. With the 40,000, it’s 11.5%. And that’s 40,000 throwing into this property with 10% left to pay ourselves off.

Ashley:
But I also think that shows that you can’t rely on just one metric to show if a property is a good investment or not. That’s a perfect example of it. Oh, that’s awesome. I’ll take $521 any day.

Tony:
[crosstalk 00:50:20].

Angel:
I wish I could see it. I’m still pay myself back, but right, eventually. Eventually.

Ashley:
Okay. So I’m going to take us to our Rookie Request Line, and this is where anybody can call in and reach out to us at 1-888-5-ROOKIE and leave us a voicemail. And we may play your question on our show.

McKenzie:
Hi. My name is McKenzie, and I’m calling some Brooklyn, New York. I invest Upstate New York. I am currently purchasing my third investment property, my fourth property total. And my question is, when you are purchasing properties on a regular basis, let’s say once a year through conventional loans, how do you keep your credit up as your loan to debt ratio increases and as they continue to check your credit checks? How do you do that, so that you ensure you’re paying all your bills, so that your credit score does not drop, so that you lose the opportunity to buy the best interest rates? Thank you. Bye.

Angel:
All right. So the way that I’ll answer that is, when you’re in this journey of real estate investing, knowing that you’re working … So first off, obviously having a good lender that you establish a relationship with. And that’s the important thing, a relationship. “Hey, this is what my goals are. This is what I’m trying to achieve.” And knowing that I’m starting to cross that threshold of four to now five conventional loans and moving into that sixth one and into that territory. When you talk about that debt to income ratio, it’s like if you have credit cards and things like that, you definitely want to try to minimize as much as you can.
To really have that best profile moving forward and giving that lender confidence in your ability to manage all of these large lump-sum conventional loans that you have. So paying things on time, keeping that credit limit low, that utilization percent low on your credit cards and really just being a solid customer to them, as far as your profile. Where you don’t give them any inclination or any worry that you may not be able to pay these things back, I think goes a long way. So definitely keeping those credit balances in check, your utilization of your credit, paying things on time, and then establishing that relationship with the lender. So they know that you’re good for what you’re trying to achieve.

Tony:
Awesome advice, Angel. Awesome, awesome advice, man. I’m going to take us into our Rookie Rockstar. So for all of the rookies that are listening, if you would like to be featured on the podcast one day, make sure you guys join the Real Estate Rookie Facebook Group. We are tens of thousands of people strong in there, and it is one of the most active, most engaging Facebook groups out there. And actually, I think Angel, you and I met for the first time in the Real Estate Rookie Facebook Group before I was even a host here. So you never know what could happen. If you joined the Real Estate Rookie Facebook Group, you might end up on the podcast. But-

Ashley:
Or become the host.

Tony:
Or become the host. Or you become the host, hopefully for a different podcast, because I like my job.

Ashley:
Me too. I was thinking, me being gone before you, Tony.

Tony:
All right. So today’s Rookie Rockstar is Marcus. And Marcus just closed on his first investment property, which was his goal for 2021. So he said he found exactly what he was looking for, which was a house hack that requires a little bit of work, so he can add some value, but not so much that it is a full-time job. And it even came with a hot tub. So Marcus, congratulations. Big shout out to you for getting that first deal done.

Ashley:
Well, Angel, thank you so much for joining us today. Can you let everybody know where they can reach out to you and find some more information about you?

Angel:
Yeah, absolutely. So I’m on the forums. I’m active again. I was out of it a little bit, because of a military training. But I’m back, so they could catch me on the forums. In the Rookie Facebook Group, I’m in there as well, or they could email me at [email protected] That’s my email. And again, I’m going through this journey just as everyone else. So any questions or anything, I’m here to serve.

Ashley:
Angel, this has been a great episode. Thank you so much for coming on. And even before we started recording, we were joking around how when Tony first started on the podcast, he’d have to get up at 6:00 AM and record with me, because I wanted to stay on my same schedule of 9:00 AM East Coast time. Well, now we’re recording and it’s almost 8:00 PM, super late for me in my time zone, but I am so wired from this episode. I’m all pumped up that I’m going to be up for at least another four hours now. So thanks guys. But really, in all honesty, Angel, this was awesome. And I take this energy anytime. So thank you.
Thank you guys for listening. I’m Ashley @wealthfromrentals and he’s Tony @tonyjrobinson. And we’ll be back on Saturday with a Rookie Reply.

 

 

Watch the Podcast Here

In This Episode We Cover

  • Opening yourself up to investing, even if you were raised without an investor’s mentality
  • Using rental property investing as a way to secure generational wealth for your family
  • Utilizing VA loans to get 0% down financing on your primary residence
  • Why you need to be careful you don’t talk yourself out of a deal
  • Why you should always “do something” even if you can’t buy a property yet
  • Recovering from a $40,000 surprise when rehabbing a property 
  • How to help those around you even if they don’t seem interested in learning
  • And So Much More!

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