Do you want to be a connector and influential in multifamily real estate?
You can learn how from Eric Upchurch, a successful business owner and real estate investor. He and his team built an education platform with over 30,000 members and over 90% engagement. Eric learned early in life that he was gifted with the power of being a connector and being influential to others. Listening and meeting member needs are the group's primary focus.
Listen to learn how Eric and his team help meet the financial freedom needs of its military members.
Table of Contents:
- Where To Listen To The Podcast
- Be a Connector to Enlisted Military Members
- Influence People to Be a Connector
- Four Things You Need to Be a Connector
- Be a Connector With a Deep-Rooted “Why”
- Be a Connector Within the Multifamily Space
- What Success Looks Like
- Be a Connector That Gets to the Finish Line
- How to Reach Eric Upchurch
Be a Connector to Enlisted Military Members
Darin: Eric Upchurch served in the military and spent six years in the Night Stalkers special ops unit. He has since teamed up with several partners to help enlisted military members achieve financial freedom. I love his and his team's focus on listening to the needs of its members and then developing solutions to meet those needs. He listens first, then develops a solution.
So, just a little bit on how I know Eric. Actually, this is the first time we're going to talk, but I know one of his business partners. I went on a mastermind that David Toupin put on, and I met Tim Kelly there. Tim is one of Eric's business partners, and they do a podcast together. I also see Eric all over on social media. So, I’m interested to hear his story, and hear what he's got going on. With that, how many properties and how many units are you currently invested in?
Eric: As of this month, 1,052 doors as a general partner and over 500 as a limited partner.
Darin: That is awesome. So, you guys have a podcast called Active Duty Passive Income. You also have an education platform. Can you talk a little bit about what you guys focus on and how you benefit that community?
Eric: Yes. Clear and simple, financial freedom for those who serve. There was a gap between financial literacy and education for military members. It's not the military's job to teach that, so we made it our duty. Military is very good at protecting and defending, and mission-focused. But oftentimes in the military, any kind of financial education that you would receive is wrapped into a four-day weekend safety brief, and just chunked together in a PowerPoint.
Lack of Financial Literacy
Eric: No one's really paying attention. They tell you to invest in this TSP and this basically a 401(k) and set it and forget it, and we got you covered, type of thing. Then they move on to the safety brief. That's generalizing, of course, but they don't teach general principles. Obviously, in high schools in America, we're not teaching this stuff adequately. Colleges, unless you focus on it, they're not teaching it.
In general, there's a lack of financial literacy and education. We know as military members there was that gap. So, we created in 2017 the idea of military members in real estate investing, and created that niche of military real estate investors. Now we have, as of recording this podcast, 30,000 members in our community and growing at 10% per month for the last couple of years. Pretty amazing. We have a 93% engagement rate in the community, which is astronomical.
Darin: What does that mean, engagement rate?
Eric: People who are not just in a group, but actively participating, commenting, liking, sharing, adding to the community, and things like that. So, that's actually a metric.
Darin: 93%, that's huge.
Eric: Now, what we did was in 2017, we started with just adding. Started with 100 people in the group or 50 people in the group when I started out. We're just like, "Well, let's add some content to the group."
Then as you scheduled out, this is great for anyone who wants to create a community or build a podcast or whatever it is. Start out just by adding five pieces of content. Write a blog. Do a Facebook live challenge with you and your buddies. Post every day something that will engage people because everyone likes to talk about themselves.
Whole Life Insurance as an Investment Policy
Eric: Ask people about themselves and what they're struggling with. As this community started to be built, we started hearing our community say, "Well, we could use lending services. We could use whole life insurance policy information, we could use asset protection, we could use a CPA. And we could use all these real estate agents." So, now, we have a mortgage company. We have an insurance company that focuses on whole life as an investment policy, we have real estate brokerage. All of that is to serve and, of course, the education company, which has single and multifamily investing academies and masterminds.
All of that came from us listening to our community, them, responding and saying, "This was great. We want more," and then we just built a team around the idea that it's our duty to make sure that military members have the resources at hand to do what they want to do while they serve. You don't have to spend 20 years in and then come out with a $2,800 pension at the end of 20 years serving your country. That could be four cash flowing properties instead making up that difference.
So, it just depends on what people's goals are, and that's always the first question, "What are your goals?" We don't want to force somebody into choosing a path that doesn't agree with them. But it's been amazing to watch the community grow. Now, it's just off to the races with all kinds of different things that we're able to do now that the company has more resources to grow as well.
Be a Connector With a Focus Group
Darin: That's great. What I loved about what you said was because you hear the opposite a lot. You hear, build it and they will come, but you guys did come together and started with a small group. But then you went to that group and said, "What do you want more of?" Then you built it based on the feedback that you got, which is fantastic.
Eric: Well, we're still doing that. That will never stop for us. We need to serve our brothers and sisters in arms before ourselves, before our company. That's something that we're going to always focus on. So, we have to listen. We have to ask those questions. If we veer off in the wrong direction with something, our community will let us know, and that's just an amazing thing.
Imagine this, imagine creating a niche where there's inherent trust. If you start a Facebook group or a community of your own and you are on the internet, they don't trust you until they know you. Because we speak the language, the military language, we've deployed together. We've lost brothers and sisters together.
There's a little bit of, "These guys speak my language. They understand what I've been through. They've done the things that they're teaching and use the resources they're providing. These are my brothers. There's nothing that they're going to do that's going to harm me." So, really neat to have created this niche and to watch it and foster it, so it grows.
Be a Connector with Other People
Darin: Yes, that's huge, forming connections with other people and forming a bond. A lot of times, what makes that bond secure is having gone through a similar struggle together or similar experience. So, you've done that. What branch of the services were you in? First of all, thank you for your service.
Eric: Absolutely, I appreciate the support. I served in the Special Operations Aviation Regiment known as 160th, the Night Stalkers. We inserted the SEALs that got Bin Laden. The big black helicopters with the refueling probes on the front of them that are in all the movies, the black helicopters and stuff.
Darin: Really? You were in that group?
Eric: Yes. I served my entire enlistment, which was six years, I served in that unit. When I enlisted, I graduated from UC Santa Barbara, met my wife there, and ended up enlisting. So, when you graduate from college, you typically would go and become an officer and your pay is higher. You have a degree. So, you go become an officer. I chose to be enlisted because of two things. One, it paid off all of my college debt. It was just the Army Loan Repayment Program.
So, I had $50,000 in college debt and it just wiped it clean. I was like, "Well, that's awesome." Then also, from an early age from the time I was 12 years old, I knew I was an influencer. I knew I was a manager of people, a leader. To some extent, I wouldn't call it manager or something or a leader, necessarily. But I knew that I always wanted to be the guy in charge. Even walking through the cornfields in Iowa at 12 years old.
Influence People to Be a Connector
Eric: I became a team leader watching the other detasselers picking the rows and making sure that they did it right and things. Then every job I ever had since then, even till now, this is just a character trait. I didn't choose it, it chose me type of thing, and I just recognized it and fostered it. But I always wanted to influence people. Being enlisted in the military meant that I was then going to be able to take any knowledge and experience I had as a 25-year-old and go and mentor guys who are 18. So, I go to basic training.
I go to advanced individual training to learn my trade. My only focus, this is the funny part of the story, was to make it to my wedding. So, I had enlisted in January. My wedding was in Ventura, California at the end of July. I had this six-month window, where, if I would have made the wrong drill sergeant mad, if I would have had any kind of disciplinary action, sprained an ankle, flunked a test, a physical test or a written test or anything. I would have been recycled back to the class behind me and I would have missed my wedding.
Because I was trying so hard, I ended up as the distinguished honor graduate for basic training and for advanced training. I didn't realize it then, but special operations come and pick the top tier guys from each class to come into the unit. I ended up in special operations not even knowing it was a thing because I was trying to make it to my wedding, and I'm glad. It was an amazing career.
The Military Real Estate Investing Academy
Darin: I'm sure that that's definitely part of the story, but you're being a little humble. You're probably a high achiever in any event, anyways. So, how did you and Tim and I believe Mike Foster is part of your group? How did the three of you guys come together?
Eric: Yes. So, at the very beginning, it was Markian and Mike who started. They basically had created the Military Real Estate Investing Academy, which is now revamped. It's 85 lessons all taught by us of just stuff that anyone would need to know from taxes to legal, to how to get started, to military house hacking, which is the title of our book. All that stuff is wrapped in there.
Darin: You say 85 lessons. Is that 85 videos that members can watch?
Eric: Yes. It's basically a slide show, and our faces are in there talking stuff, too, just going through all the stuff. Calculators and, yes, the whole thing. It's very comprehensive, and we make it very accessible, very low barrier to entry for military members, of course, as well.
I found ADPI when it was a Facebook group of 100 people. The three of us co-founded the company. I found Tim after, I remember where I was, I was near Sacramento, California listening to the Bigger Pockets Podcast. Tim was on there. He and his buddy had just closed a deal, I think that 42 unit. Like he does every time, he leaves his phone number at the end of the podcast.
I pulled over and I called this guy. I'm like, "Tim, my name is Eric. We've got this company, Active Duty Passive Income. Let's talk." We just aligned, and now he's our VP of Education. It's been fantastic working with Tim.
Be a Connector and Start the Great Ride
Darin: What a great ride. I'm trying to get back into how old you are. You went in at 25, six years of service, that's 31. You started the company in 2017. So, I think maybe 35?
Darin: He looks like a baby. Check him out on YouTube. He looks like a young guy. I'm 51.
Eric: I keep telling my kids, I'm like, "Do I have any gray hair on my chin yet?"
Darin: Not yet.
Eric: That's probably where it's going to come in first, boys. So, keep looking.
Darin: Yes, my kids tell me my hair is white. When you get started in investing, I think there's a couple of scary parts. One is the first deal. I'd like you to talk about your first deal. Was it a single family home or a multifamily or what? Then two, for people that really become successful, there's a launching period point where all of a sudden they figure out really how to scale. Talk about those two things, the first one and scaling, and what that moment was like.
Eric: I love this because the reason that our company exists is because, I've said this before, it's our duty to just light a spark. We all experienced some spark. An epiphany moment of like, "Holy cow! That guy did that? Okay." So, how that dovetails into military members the best way is most military members end up as landlords inadvertently. I bought a single family property in 2006 while I was in Iraq. My wife signed the documents. It was 100% loan-to-value with the VA loan. No PMI, which is something we write about in our book and all over the place.
Permanent Change of Station
Eric: Actually, it was a new construction. The builder paid the closing cost. I literally came to the closing table with no money out of pocket. Now, 100% leveraged in 2006, not exactly the best scenario. I, like hundreds or thousands of other veterans or military active duty service members at the time, were, "Now, you move in two to four, six years," whatever it is. You have to move to a new duty station, which is called PCS, Permanent Change of Station. Now, you end up with a house that's 100% leveraged. Maybe it has equity to refinance, maybe it doesn't.
But in our case, we lived in it for four years. Moved back to California where my wife's from, and realized we could not sell it for a profit. We decided not to take a loss but just to rent it out. It could barely cash flow, and I say 80 bucks a month it was cash flowing. Anytime the air conditioner broke, that's six months' worth of cash flow, "cash flow".
Then years later, I realized that, when we're building this company, if we can teach people to evaluate their single family ,duplex, triplex or fourplex or residential. If we can get them as they move from one duty station to the next to analyze that as a potential future investment property to run the numbers that way, then we're going to save military members a lot of the same headache that we went through and that people are still doing. Then Rich Dad Poor Dad, I found that. I also paid 30 grand for a coaching program to flip houses in the San Francisco Bay Area. This is back in 2014 or something.
Honing the Craft to Be a Connector
Eric: I was in learning mode at that point. Then it was just honing my craft, figuring out horizontally what I like to do. This is part of the scaling. It was really trying a bunch of different things. I did tax liens, I did a few flips. And I did some BRRRR strategy stuff, some private lending, some self-directed IRA investing. Live and flipping was what we did in the Bay Area a few times. I was doing a lot of learning at the beginning. Then as you're going through that, you start to build more relationships.
You start honing in on what you're good at, which is usually what you're also successful at. Or you could flip it around the other way. You're successful at whatever you're good at, usually, or whatever your passion becomes. I hate tax liens. You couldn't pay me to buy a tax lien now, and that's fine. Talked to a guy last year who all he does is tax liens. He's really good at it and loves it. To me, it's just I don't have control. It's too slow. I want something different.
Through horizontal movement and learning and just constantly taking action, always learning, growing, failing, stumbling back, moving forward, my network grew. I started learning who and how, and then scaling became a little easier because I had more resources at hand. That may be obvious to some people, but the networking aspect, we say learn, network, take action.
Four Things You Need to Be a Connector
Eric: Well, I say four things: learn all you can, network your butt off, add value to others, which some people wrap into the networking piece, but I have it separately, and then take action. If you do those four things with the intention to be 1% better daily, success will hunt you down. Whether you're getting started or you're scaling up, learn, network, add value to others, and take action.
The adding value piece is critical because it's super networking. If I know that you have a deal and I'm talking to you and I'm talking to someone else who has no deal and lots of money. If I'm listening to you and to them intently, I can put you together and become really valuable to two parties. That's how you expand, that's how you grow. That is how you get from deal zero to one even. A lot of people say that's the hardest deal.
Darin: That’s an important point that you just brought up, that you listen. We already talked about listening to all your members, but then when you're networking, you're listening. Sometimes, that word adding value, you may add value where you are involved in the transaction. The example that you just gave was not that. It was, you're talking to this person over in this corner of the room. They're looking for somebody and you're like, "You know what? I just talked to somebody that fits that criteria. Let me put them together."
Something amazing happens when you do that. Both of those parties, they are very thankful and grateful that you did that, and they want to reciprocate somehow. It's just human nature. That's a very important lesson that you just shared.
Be a Connector and Excel in It
Eric: I want people to walk away with, "You know who's a really good connector of people? Eric Upchurch. You should go talk to him." So, even if I am not doing a deal with them, I'm definitely not even considering. It's completely, it's got to be, it's funny, it's got to be selfless I would say. But I also say I do it for selfish reasons because I like it. So, it's what makes me feel good when I can go, "Oh, I've got a solution for you."
So, if you're somebody who's listening to this right now and going like, "Oh, yes. I love solving people's problems," that's how you make money in this business. Be known, network. You have to tell people who you are and what you need and what you can provide, and then connect people, and just be involved. Always talk.
I had an arthroscopic knee surgery, 41 years old, that's what happened this year. I was talking to my surgeon about ways to save on taxes through multifamily investing. My wife's a little embarrassed about it when I do it and things like that. But it's important that the people around you know that you're a multifamily investor and that you're listening to them. You know as well as I do when someone's talking to you and they're looking right through your head. They're not paying attention to what you're saying. They might ask about your family. Then they're trying to figure out what the next conversation is going to be looking around the room and not paying attention. That's not super networking. That is superficial.
Treat People With Genuine Value
Eric: You want to really get in and if you don't think the person is particularly interesting, pretend. You'll be surprised at what you can uncover when you really treat people with genuine value.
Darin: I’d say, don't make the decision for them. In that example, "I'm going to introduce them." It may work out for them, it may not, but you're giving it a shot. I had one guy, I went and met with him locally here. He was going after his first deal, he actually had it on contract, and he wanted me to partner with him. It was just in a market that I wasn't in and didn't really want to be in.
I said, "You know what? I thought about it, but I'm going to pass." Then I thought of another guy who I had talked to that was in that market, boots on the ground. I was like, "Why don't I put those two guys in touch with each other?" So, I did and it didn't take me much time. I just shared a contact, I said, "Hey, you guys may want to talk. You're looking for deals in the same market."
They got together and bought that deal together. Now they're about to sell it and they're going to make great money. I didn't get anything out of that deal, but I felt good by helping those people. Both of them, it was their first multifamily deal. That's interesting because I'm sure you hear it a lot from the military side. I hear it a lot, especially the younger guys that reach out to me on Instagram. They're like, "What value can I provide?" They've already sold themselves out that they don't have value to provide.
Be a Connector by Looking at Your Inventory
Eric: How do you answer that?
Darin: For me, I tell them, "You have to look at your inventory of what you have and then find somebody else that is complementary." I'm just going to be a little bit in terms of young people, a lot of times they don't have a ton of money. They're just starting their career so they're like, "I don't know how I'm going to do this." I'm like, "Look, there's a lot of syndicators that don't want to chase every deal. They don't want to underwrite every deal, don't want to go out on property tours. You can do a lot of the legwork, but you have to build those relationships."
Secondly, I tell them, "Look, when you're talking to your aunt, your uncle, your parents, your neighbors, yes, they're older than you. You don't have the experience. So, they're like, 'I like you, I trust you, but I don't know if I want to give you all my money,' but you sell the team. 'Hey, my partner, he's been doing it for 10 years. He's got over 1,000 units. We're using a property management company that has 20,000 units.'" You sell your team, and then eventually you end up having that experience.
Eric: What are your goals? What are your passions, and what's your why? I'll do the same, dig right in and you got to ask questions. Do a question in that, "How do I get started? What do I have to offer?" Well, start by figuring out who you are. What do you like to do? Chances are, that's what you're going to be good at because you have a passion for it.
When Your “Why” Is Not Enough
Eric: One of the most important things is having a deep-rooted why. When I ask somebody, "What's your why?" and they just say, "Well, my why is my family," that's not good enough for me. That's great that they have that concept, but you need to dig in a little further and say, "Okay. What do you mean about your family? And why is it important that you support your family? What do they do for you?" Each answer, you just dig in a little further until you can get tears out of them, that's the best answer you're going to get.
It's not just having a why, it's having a deep-rooted why. Because there are going to be days where you're like, " I've been working at this for a year and I don't have a deal yet." "Well, what if you quit now and if you could fast forward five years, you'd be a raving success? You would regret it if you knew that, and that you're quitting right now."
You've got to have a deep enough rooted why on the hard days, on the doubtful days. On the days where you're sitting there with impostor syndrome, you've got to be able to kick your butt right out of that.
I'll tell you one thing that I do. With my why, we're obviously serving a military community. But I serve them with the memory and pride of those who've gone before me for they loved to fight. Fought to win and would rather die than quit. In the special operations community, you would rather die than quit. Many of my brothers and sisters did, and I had to put them in the ground myself with my burial detail.
Be a Connector With a Deep-Rooted “Why”
Eric: While you are living, you have purpose. As long as you are breathing, you need to find that purpose and put it to good use. You are not here to waste space. You're here to be productive, whether that's in society or for your family or for whatever it is. So, get out there. Figure out what your passion is, what your deep-rooted why is and go execute.
Darin: I love that. You talk about the longer term. I think that some of those people, when they're just trying to figure it out, they're thinking about, "How do I get my first deal? How do I start this?" But that deep-rooted why is like, "Look, after you figure it out, you're going to end up helping all these other people that don't even know it yet, that are in your circle." That is huge. It's not only you and your family. But once you figure it out, all of your network that doesn't have exposure to anybody else but you is going to come to you and say, "How did you do it?"
Eric: This is a silly little correlation, but it's really a ripple effect, especially let's use the multifamily space for an example. Had I not chosen to take action when I saw an opportunity, I went to a conference and there was coaching available in the multifamily space. And I was just like, "Well, I'm going to give that a shot. I'm capable at this point, and I have my why figured out. I'm a little bit more mature now. I know that once I invested money in it, I'm going to make it a little high.
Darin: A little bit?
Be a Connector That Builds Relationships
Eric: Yes. This was my second go around. The single family fix and flip coaching program, I made 10 times the money I put into it. It’s because of the relationships that I was paying attention to that were in the room with me at that event. Then the second go around I was like, " I'm going to get into multifamily." Now, had I not done that, I wouldn't have had the experience recently where we're out at our 80-unit asset in Indiana and we had just installed a playground. There's no playground at this. It's right across the street from the school.
I experienced a father brought his four-year-old daughter out. He was so excited that there's a playground for his daughter to go play on. So, you're not just improving the lives of your investors or improving the lives of your partners. You have the ability. There's a ripple of, you can actually change the trajectory or the life of someone living in one of your units. That has been just hoping that some owner would come through and do something great with this property that they love. There's a lot of cool things that can go on with this.
Darin: When we're talking about scaling, you tried a bunch of different things. Then you found out what you liked and what you're passionate about. We didn't talk about multifamily that much. How did you get into actual large scale multifamily and then how did you scale that piece?
How to Be a Connector Through Persistence
Eric: It was through persistence. So, I did get coaching. I went through a training program. First off, when you see people wearing board shorts and T-shirts who have 1,000 units or a hoodie and cutoff jean shorts or something, you're like, "They don't look the part, but how did they do it? If they did it, I'm certainly disciplined and capable of figuring this thing out, I just didn't know. I thought Wall Street was the one buying these, I thought REITs were only the ones buying these multifamily assets."
Until I had that exposure, that a person like me or you or anybody could go out there and buy an apartment complex, I didn't know. Then I bought the coaching, I committed to it, I burned the boats. I said, "This is obviously a well-traveled path. There's all these podcasts about it and stuff. I can learn this."
So, I followed the path, I networked and I was consistent. I was always showing up to meetings, I was always showing up to conferences. And I was always telling people, "Hey, I'm new and I'm looking for my first deal. Here's what I can offer."
When an opportunity came, "Eric, we know you're hungry. We know you're eager. Can you help us out on this deal with asset management, investor relations, capital raising, and a couple of other pieces?"
My answer was first, "Yes," and then it was like, "Now, I got to figure out how I'm going to do all of that stuff." Go, hone whatever I can and learn along the way. But I built enough rapport to then work towards trust with many people in the industry, and got into my first deal, somebody else's deal.
How to Be a Connector With Confidence and Credibility
Eric: Then after you do that one or two times, you've got enough confidence and credibility. You go and build your own team and do your own deals. It's really just those action steps that we talked about earlier. Learn, network, add value, and take action. That's the answer. It's the success formula that a lot of people will say, "I've heard it a million times." Well, go apply it.
Darin: Go do it.
Eric: Just don't stop doing those four things until you find success. Then once one deal is done, that's always the hardest deal, then you've got all of those things lined up. You've got the network, the resources, you've got your credibility. The whole thing is built up, and then deals two through 100 or whatever are way easier, are way simpler at least.
Darin: You have a big focus on networking. That's huge in the large-scale multifamily space. You did coaching a couple of times. What was the biggest value to you on the coaching side?
Eric: 100% it was the ecosystem.
Darin: My experience is the same.
Eric: You think about it as an ecosystem because you've got everything you need in one bubble. That's what we're doing for the military community now. It's like if you need asset protection, we've got legal consult, if you need tax help, we've got a tax guy. If you need education, we clearly have that, if you need in-house lending, we have that. And if you need a whole life strategy, we have that. If you need a real estate agent who understands how to house hack a fourplex with a VA loan, we provide that. That's an ecosystem and we speak the same language.
Be a Connector of People Who Speak the Same Language
Eric: I wanted to find a group of multifamily people who spoke the same language as me. Who understood that I am capable, and that I could just network with. To me, it's the ecosystem, but more specifically, definitely the network of people. Without the network, especially in the multifamily space, it's really hard to do this. I only know of one guy who's bought thousands of doors on his own and he's now syndicating. It really takes a team, and in order to build a team, you've got to expand your network constantly.
Darin: Say, within a coaching group, the network, the ecosystem, it does a couple of things. One is it essentially opens you up to partners that you could get involved with deals with, and also it does what you just talked about before. You see the guy in the board shorts and you're like, "If he can do it, I could do it."
Darin: You start seeing all these different people, they're doing 100 units, they're doing 200 units, they're doing 500 units. Then all of a sudden you're like, "You know what, I'm full tilt. I'm going after this. If they could do it, I can do it." That's important because a lot of people come into real estate investing and maybe their circle of friends and family aren't in that space. There's a lot of naysayers that will talk you out of it. It's not that they're trying to hurt you, but they don't know how to do it.
Gaining the Momentum
Darin: They are cautioning you on something that they don't know and they don't want you to get hurt. So, they advise you not to try. But when you start seeing all the other people that are successful, it starts to give you that momentum and that juice.
Eric: Yes, and when you're getting started, when I said yes the first time, I called everyone on my phone. I was like, "I think they might have money." Not tons of money, but they're a little older, they might have some savings. They might, whatever. I just started calling people and telling them. But before you do that, you need to understand the process. Because your potential investors are going to have a lot of questions. You need to be able to effectively educate them as well, including my mother.
She invested in a deal when I was first getting started. My uncle who I rarely talk to, I cold-called him. I was like, "I know you might need a place to park some money and make a great return. Are you interested? Here's the thing." He had seen that I was talking on Facebook, that I was talking on social media, in general. I was talking about multifamily, and he saw some of the things I was doing. He knew I was in the space, in general. There was a little bit of credibility there at least, and then just having that conversation. It can be cold and it can feel odd, but you got to warm up that audience. You got to know what you're talking about first.
Be a Connector Within the Multifamily Space
Darin: You bring up a good point there. You're talking about the capital raise side. My wife was nervous. She's like, "You shouldn't go to your personal network." I'm like, "Why?" "Well, what if it doesn't work out?" I'm like, "We're investing good money. I'm excited about the deal. I believe we're going to make a lot of money. Why would I only offer that opportunity to people within the multifamily space and not in our personal network? If they're not interested, no worries. We're just going to move to the next person."
What was surprising, and I don't know if you've had the same experience, was there were some people that I thought were no-brainers that would invest. There were others that I thought no way would they ever invest. There were some people that I was like, "Should I even reach out to this person?" and then I did, and they're like, "Can we go to coffee? Oh, my gosh! I'm so thankful that you brought this opportunity to me." You get some surprises when you start making those phone calls.
Eric: You never know who you're talking to. One example of that is I was talking two New Year's Eves ago, about two blocks from my house. I was just at a friend's house. There's probably 12 adults in this entire house and a bunch of kids running around. I was talking to this guy and he's like, "What do you do?" I was like, "Oh, I'm a multifamily investor." At this point, I had just closed one deal, maybe not even closed my first deal yet. Come to find out, my neighbor, he's five blocks down the road, owned 6,000 units.
How to Fit In This Asset
Eric: Now, we're friends and we've had Scotch on the driveway during COVID and stuff hanging out. But you never know until you tell people. Networking to me, for sure, is a highlight. It's what I love. That even translates into the asset management and acquisitions part of the job. I love going to our assets. One of the first things that we do is I'll schedule a meeting with the mayor and the economic developer. Anyone in the city that I can get a hold of. We'll have a sit down and I'll say, "We're a group of military real estate investors. We're coming in with good intentions. We'd like to see how we could add value in this portion of town to help you with your goals."
Remember adding value to people, that's very catchy to someone's ears. Their ears perk up and say, "What are your plans for this town, for this city. I want to know how we, in this asset, can fit into that." When you do that, you'd be surprised. We've had no issues. We've met with three mayors now in three different cities. That's a great resource to have.
Whenever you have an issue or the economic developer comes and says, "There's this property on the other side of town that I'd love for you to take a look at." Bringing you deals just because we give them our book and a challenge coin, a military challenge coin and just get to know them a little bit. We're just asking for 30 minutes of their time.
Darin: That's huge.
Eric: We love doing that.
Darin: Just thinking outside of the box, too, because not everybody is doing that.
We Lost Track of How Connected Humans Are
Eric: Everybody should be doing that. It's a very small thing. But we lose track of how connected humans really are and need to be because social media and email is so available and phone calls. People, even if they wouldn't agree with it, innately want human connection, especially people who are in the political arena, city officials, and stuff. They rely on relationships to get to the next election or whatever. It can be very impactful.
Darin: You're an action guy. How do you coach people in your world or otherwise how to step through the fear of that, doing that first deal or raising money for the first time or whatever the case may be? How do you coach people on that?
Eric: Well, a really good, amazing part of our community is that, not everyone's been through a deployment, but everyone's certainly been through basic training. In basic training, there is one point where there's live ammunition being shot over your head while you're doing a low crawl. The first time you do that or throw a live grenade, even if you only do it one time, that is a real thing. You pulled a pin on that thing and there's a whole arm motion that you got to do.
You’ve got your drill sergeant in the pit with you, watching. You got to make sure that you're doing that thing right, and it's terrifying. What I say is, there is nothing harder or scarier about real estate investing than anything you've done in the military already. It's a well-traveled path as I've said before. Part of the system and the ecosystem, really, is that's the security blanket.
The Safety Net
Eric: That's the safety net of we're teaching you things that we’re actively doing, have done in the past, have tried and failed on and improved upon. We're military, we're very good at following a standard operating procedure, a checklist, and no one's getting hurt here. So, take that action step. In our specific example, it's really neat to correlate it back to the military and be like, "You're fine. You'll be just fine doing this. Just move forward."
Darin: Your example, definitely, there's nothing about real estate investing that's as scary as crawling and having live ammunition shot above you. I don't know that many service members, but I believe that the people, there's some things that they're comfortable with that piece. They're trained for it, and yet financial, put money aside, they don't know what to do with that. There's still fear like, "Yes, I know what I'm doing in the military. I'm trained for that, but, I'm going to trust you guys, but it's hard."
Eric: What the military does is, "We got you. Here's how. Go do this." What we do is, "We got you. Here's how. Go do this. We've done it before." The drill sergeant who's helping you throw your first grenade, he's done it before. He's an infantry man, he's probably done it in combat. There's that experience level. Helps the trainee, the person who just needs that spark getting from deal zero or getting over the fear or whatever their objection might be. It’s just going like, "We've done it. I understand, but you're moving forward." Being direct in saying, "You are," and making them say, "I am," you can overcome fear pretty easily if you're persistent.
Darin: Let's talk about your childhood. Where did you grow up? Brothers, sisters? Rich, poor?
Eric: I grew up, I’d say middle class, in Iowa. Detasseled corn starting when I was 12 years old. Always had a job after that. If I wanted a new pair of soccer cleats, I would go mow lawns for them. Not comfortable by any means, but loved my childhood, and obviously grew up in the '80s. It was fantastic. Graduated a semester early from high school because we had an opportunity.
Darin: That's different. Somebody does that today, but back when you were going through high school, not too many people graduate early.
Eric: We didn't graduate early on purpose. We didn't say, "We're really smart, we're getting out of here." In fact, if I look back, I have no idea how they let us graduate early. The last semester must have been jampacked if I had to guess. Anyway, we had an opportunity to move to California, my buddy and I. We went to culinary school out here. We're living with a friend of the family who we treated like family or was basically family. She was a Pulitzer prize-winning author.
We lived in her guesthouse, watched her horses in Carmel Valley. She was gracious enough to put us both to culinary school. I was a chef for a while in Carmel, and then went to junior college. My girlfriend at the time's mother made me go to college, and then transferred to UC Santa Barbara after that for my bachelor's degree.
Darin: You mentioned when you were young that you just had it in you that you're going to be an influencer. Talk about when you were young what was in your mind.
What Success Looks Like
Darin: What did success look like? How did you have the confidence that you were going to get there?
Eric: Success when I was kid looked like a job well done. It was part of an Iowa kid's upbringing or a lot of Midwestern states, I think. Your upbringing is very middle class. You're going to work hard for those soccer cleats. Mom doesn't have enough money to buy them. If you want Air Jordans, the new 1989 Air Jordan is coming out or whatever, you're going to go work for those. Or in my case when I was 12, it was saving up for a moped. My buddies and I all worked really hard over the summer.
Looking back, and I use the word influencer a little differently. I'm influencing people, not an influencer like Instagram type influencer. I love to influence people, I love the idea that I could, and still to this day, here's a corollary example. I’ll take a book like Dave Ramsey, Total Money Makeover, or Money Master The Game by Tony Robbins, which is a total game-changer. I will dissect it and break it down into a one-pager. And I’ll share that with as many people as I can in my work, in my family, and whoever asks about why not to invest in the stock market.
I'll be like, "Check this out. I read the whole book. It was super long, it was 20 chapters and a couple of hundred pages, a few hundred pages. Here's all the information in one sheet." I'm just like, "Here's the system." I got gratification of showing people how to dissect something and to apply something that I've learned and applied myself.
How to Be a Connector With a Personality
Eric: Now, looking at that, that's what I do all the time. We go learn something, we break it down into something that's simpler to understand. Then we apply it, try it, fail, hone it, and then make it great. And then share it with as many people as we can. I just have always had, and I didn't choose that. It was a personality trait, a character trait that I'm now recognizing as something in me.
Darin: I got to ask that question because some people know at an early age that they don't know exactly what they're going to do, but they know they're going to have success. That definition may change over time, but that's one of the steps. People have to decide that they want something, that they want a goal, that they want to achieve something, and then go full tilt after it.
Eric: You know what's interesting now? My wife and I have this conversation occasionally because I don't want to force my kids into real estate investing.
Darin: How old are your kids?
Eric: They're 11 and nine, two boys. My 11-year-old has now just finished Rich Dad Poor Dad. I had to bribe him to get him to read that book. He's going to write a little report and we're going to have several discussions about it, lessons learned. Again, it's just that spark. If he wants to choose to be at a nine-to-five, then that's the discussion. That's fine, but he's going through the differences with financial literacy or financial illiteracy in the US. My kids are going to understand finances.
The Investor Mindset Versus the Saver Mindset
Eric: They're going to understand the investor mindset versus the saver mindset, how that applies to different classes. Then they can choose what they want to do with their life. They want to be an engineer or a doctor or a carpenter or whatever it is, that's their choice. But they're going to understand how money works, and that's not something that is generally taught to most of America.
Darin: I completely agree. I do the same thing, and I would recommend listeners. Pick your one or two favorite books that motivated you and have your kids read it. Over summer, I would pick one book and Rich Dad Poor Dad was the first book I picked for the kids. They had to read the book over the summer, and they didn't want to. But my son then ended up going and starting his own little business reselling limited edition sneakers while he was in high school.
He made great money for high school and into college, but the more important thing is the lessons learned. He learned gross margin, he learned distribution cost, he learned how to market, all those things. I'm like, "You're in class. Most of the kids in that class, it's all theoretical, but you can apply it to this little business that you have."
I had another guest that at one point she said to her oldest, 16-year-old daughter, "We'll either buy you a car or you can use ours and I'll help you get the first investment property." The daughter chose the investment property, and now the younger ones are saying, "Will you do that for me, too?" What a change in their life learning that at that age. It's huge.
The Old Car With Torn Seats
Eric: Would you rather have 200 bucks a month in cash flow or use my old car with torn seats?
Darin: Most kids just want that instant gratification. Most parents just provide that. That's fantastic that you're doing that. It may be a funny question because freedom with the armed services, but what does freedom mean to you?
Eric: It's time freedom. To know that when I go to sleep I'm making money. When I wake up I'm making money, when I'm traveling I'm making money. Freedom is not when I'm making money, working. That's okay because I'm a workhorse. That's never going to go away with all the companies that we have. I still have a W-2 full-time on top of everything else.
Darin: What do you do for W-2?
Eric: I'm a sales manager. I've had the job since I left the military. I work from home, and it's very comfortable. Having a full-time W-2 in California with five companies at Active Duty Passive Income and all of our investments. It's very busy, and so you have to keep track of it all. Time freedom to me right now might look a little different than it did in five years, but right now, I work from home and can go.
I’ve spent a month in Hawaii this year doing my job, doing my entrepreneurial jobs. I can certainly asset manage our apartments and storage facilities from wherever in the world. I've set up a life at least right now where even though I'm still working a W-2, I don't have to be at my home base. I don't have to be home. It's very flexible, very comfortable. Because it's comfortable, I push myself outside of that comfort zone.
Darin: To get uncomfortable again.
Eric: You can believe that.
Darin: That's a challenge in itself. It's like you go through and there's all these uncomfortable steps. Then once you do it a few times, now you're like, "Oh, those steps are easy now." If somebody else challenges you like, "Have you done this?" and then all of a sudden you have a new challenge to go after.
Eric: Yes. We just closed a 480-unit storage facility, and that was my first storage deal, and it was my first JV. I'm not an expert in that field, but I'm working with some people who are amazing at what they do. And I'm having a lot of fun learning a new asset class. It's not stressful anymore. I know where I fit in on the team. It's pretty cool to push into a new industry, a new asset class.
Darin: I don't know if one thing comes to mind, but one deal that you had a particular issue on and how you ended up solving it.
Eric: Yes, a couple. The first two deals that we did on our own, one of them we were ill-prepared to raise capital for, believe it or not. Our first deal we ever did by ourselves, we had to raise a million and a quarter. We're like, "We could probably do that in a network, but it probably doesn't matter when you're trying to close a deal."
Darin: You need to do it.
Eric: Thankfully, we're smart enough in the LOI and the PSA to build in two extensions. Each extension, half of our earnest money went hard, no initial money hard, and we had to exercise both of those extensions.
Be a Connector That Gets to the Finish Line
Eric: I was freaking out a bit, but that freak out, that stress really got us across the finish line. Our whole team was stressed out, and reached out to my mentors. Reached out to my friends, reached out to more people than I probably even needed to, and we got the money raised.
That was one. Another, the first mobile home park we purchased together, 71 units, and we're having a hard time finding debt. We purchased it for just under a million bucks, it's worth 2.5 million now. Thankfully we got it done, but we ended up finding a family office that funded debt and equity on that deal. Those are some challenges.
It all came down to just reaching, getting uncomfortable, pushing yourself. Yes, your back is up against the wall. What are you going to do? You've got to close this deal. We needed credibility at that time, we needed to prove to ourselves and to our community that we can do this. So, we just applied the pressure and figured it out.
Darin: I don't know if you've reached out to any. But with your networking skills, just learning that other people went through that hardship, that challenge on their first deal. Raising the first 65%-70% can come quick and can end up being a little bit dicey to bring in that last 30%. You guys hustled and made it happen.
Eric: I know people who have not raised enough money to close, took out a loan, and then raised the rest after closing. They just needed a one-month buffer, they ended up getting an actual loan, just a private loan to get it done. It's really like get creative, figure it out, get it done.
The Next Big Stretch
Darin: What's your next big stretch goal?
Eric: Right now, we're focusing quite a bit on our community. Less multifamily and storage, more what does our community need, how can we grow it. We’re the first and biggest military real estate investing education platform and community. We were recently named Subject Matter Expert by the National Association of Realtors, which is pretty big. We're going to help them revamp some of their education for military relocation professionals, which is a designation you can basically purchase.
Go through a little training course and then it looks like you're great helping military members even if you weren't military. We looked at it and we're like, "This is insufficient. This doesn't make sense. Everything is not right." Anyway, that's great.
So, focusing on the community, growing it. The next five years are going to be exponential for our company. Ultimately, the big goal, we donated two houses to the Veterans Community Project last year for housing homeless veterans. We plan to raise between 500,000 and a million this year. The midterm goal is to raise a million dollars a year for Veterans Community Project, long term. Then within this decade, we will end veteran homelessness in the US. It's a solvable problem. We just need funds and to left foot, right foot.
Darin: I love people with huge goals.
Eric: Why not?
Darin: That huge goal is serving other people. It's not all self-focused.
Eric: Here's a cool thing about stretching goals, too, for those of you listening out there, getting started. I bought a turnkey property. Next year, I was going to buy two properties somehow. The next year after that, four, then eight, then 16, then 32.
A Long Time in Between
Eric: Just for six years I was going to double the amount of properties I was going to purchase. I was like, "That's got to be doable because you've got a long time in between buying one to buying 16 or something. You can figure this out."
By the time I bought one, then I bought two, I was like, "I need to buy four this year." I was working with a partner in another city to do some flips and stuff, I was like, "Maybe I'll just go right to eight." Then I attended a conference. I was like, "I'm going to make it 800 and see what happens." Because I set a goal of 800 instead of eight, I ended up with over 400 that year.
It's really stretching your goals and watching your mind work. If you're committed, it's amazing. I was laying there at night figuring out ways to solve problems I never thought I would have the luxury of having.
Darin: I'm glad you shared that story. Think big, it’s an easy thing to say, create big goals. That’s a perfect example. You were thinking, eight properties, and you would have been happy if you did that. All of a sudden you moved it to 800, you ended up with 400 instead of eight. What do you like to do outside of work?
Eric: My family and I love being outside. We just got an RV. We've been traveling all over the place, in that thing. Maiden voyage. It was Yellowstone this year. I live in Northern California, so we've got all year round. We can go to amazing places, Yosemite, the Coast, we love the Central Coast in California. Anything outdoors.
The RV Life
Eric: We love to get out there on our paddle boards. Any water feature anywhere we will seek out. Hot springs, we love going, too.
Darin: What's the longest you've gone in the RV?
Eric: Nine days. We've only had it for three months. At least once or twice a month, we've been going out.
Darin: My son is a junior at Texas A&M, my daughter we're bringing to University of Arkansas this week. My wife and I are going to be empty nesters. I'm like, "Let's do the RV thing." She's a little nervous of doing it. We're going to rent for a couple of three days, just to make sure that we're both on the same page. I'm looking forward to seeing the country a little bit. That can scare a lot of people, a lot of women, especially.
Eric: Just like when you told your spouse that you're interested in real estate investing, it is a sales process. You need to take it slow. Slowly educate them. Honestly, with COVID it was, "How can we be outdoors and still be able to do the things we love and not stay in hotels at the time and stuff?" Our assets pay for our liabilities and we figured, "Why not? Let's do it."
Darin: If somebody wants to reach out to you or get to know more about your company, what's the best way for them to do that?
Darin: I really appreciate you coming on. Listeners, I hope you enjoyed that one. Until next week, signing off.