94. From Turnkey, to BRRRR, to Passive Investing with Doug Spence

Join Mike Cavaggioni with Doug Spence on the 94th episode of the Average Joe Finances Podcast to talk about turnkey, BRRR, and his transition to passive investing. Doug is the founder of Honor and Equity, a real estate investing resource for the military community. He shares how he invested out of state and more.

In this episode, you’ll learn:

• Inflection point: Doug’s first dedicated investment property
• What sparked Doug’s interest in turnkey properties
• How to overcome challenges of investments outside the state
• Off-market deals and where to find them
• Other asset classes to invest in besides real estate
• And much more!

About Doug Spence:
Doug Spence is the founder of Honor and Equity, a real estate investing resource for the military community. He was born and raised in Houston, Texas, and currently lives in San Diego with his wife, Cait, and parrot, Ruby. Doug attended Baylor University as an undergrad and obtained MBA from the University of Florida. He is also an active-duty Navy officer since 2009. His first purchase of a property was in 2016. 

Find Doug Spence on:
Website: www.honorandequity.com
Instagram: www.instagram.com/honorandequity
Twitter: www.twitter.com/honorandequity

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Transcript

Average Joe Finances: 0:00

Hey, how's it going everybody. Welcome back to the average Joe finances podcast. I'm your host, Mike, Cavaggioni, and today's guest is Doug Spence. Doug is active duty in the Navy, just like me. And he's been doing this for over 12 years. He has a background in Naval aviation, and he's been stationed in San Diego for the last three years. Why does that matter? We're going to get into that as we talk a little further into this. So Doug owned single family rentals in four other states, outside of California, where he stationed he's a limited partner on a mobile home park in Colorado as well. And just for context here. So you guys know Doug is originally from Houston, Texas, so this all kind of correlates into wait a second. He's in San Diego, California, but he's invested in. In all these other states outside of California, how does that work? And that's what we're going to get into today. Doug, I appreciate you taking the time to talk with me and welcome to the show.

Doug Spence: 0:51

Hey, thanks Mike. Happy to be here.

Average Joe Finances: 0:53

Absolutely. Hey, I gave like a small wave top of who you are and what you're doing. And I'm really excited to talk about this, especially because I've done the investing. Out of state thing as well, especially being in Hawaii. It is very expensive here. So if you could share a little bit more about yourself and your story, how did this get started? Why real estate? What made you get into this?

Doug Spence: 1:16

Yeah, originally from Houston, Texas, born and raised there and graduated high school, went to Baylor university in Waco, Texas, and got my undergraduate degree there. And then. Went to Navy officer candidate school in Newport, Rhode Island back in 2009, went from there to flight school down at Pensacola, Florida. And, also in 2009 spent two years living there, lived in, then moved to California in Lemoore for about a year. And then from there went to my, fleet squad. And in Japan, I lived in Japan from 2012 to 2015 and then moved back to Pensacola to be a flight instructor at the same squadron that I winged from. And it was on that tour that I bought my first. Property. So that was a primary residence, single family home there in Pensacola, lived in it for two years. And then when I moved from Pensacola to San Diego, I rented that out to some flight school tenants, that same year, in December of 2018, I bought my first dedicated investment property. So a property that I didn't live in prior to renting out and I purchased that through, an awesome. Turnkey company, it happened to go into, turnkey and what that means and all that. But, this company is started by two Naval officers. They were roommates at the Naval academy, awesome dudes named and David Gutierrez, and bought that first property, that for that first dedicated investment property from them. And then over the next year, I bought two more from them. Then. Gradually I kinda realized I really had this real estate bug and I wanted to ultimately replace my income and my wife's W2 income with passive. Income from real estate. And I knew that I wouldn't be able to do that if I was just buying a turnkey property, once a year, once every two years. So that's why I got more motivated to really put my own team together, identify a market, and start doing burgers out of state. And so that's what got me into Oklahoma. Where I did my first birth there in Oklahoma city on a duplex. And I've been focusing on the Oklahoma market, both Oklahoma city and Tulsa, for the last year and a half now. So that's a overview of my real estate background and how I got to where I am today. And then I'm also, just three or four months ago. My wife and I closed on a primary residence here in San Diego. And we used our VA loan and it's a house act. So we rent out the bottom floor of this house and that helps pay for our mortgage. So I'm happy to go and go into that as well. I think the VA loan house SAC is a great way for military folks to build wealth in real estate.

Average Joe Finances: 3:58

Yeah, absolutely. So there's a lot of things to unpack here. And I really liked that cause you're touching on a bunch of different pieces of the real estate investing industry. And it all started off. It's funny because you became like an accidental landlord, right? You bought that property in Pensacola, Florida, and then PCS, to Lemoore, barf. And and then. You had to do something with it, you had to run it out or sell it. So you decided to rent it out and got that taste of being a landlord. And I don't know if it's that, what, is that the bug that initially made you want to get into real estate or do you know, like before then that, you know, Hey, you know what, I'm going to turn this into a rental property because I want to start, becoming a real estate investor. What was that moment where the switch flipped for you? And you said, this is what I'm going to do.

Doug Spence: 4:40

Yeah. So I, a buddy of mine from high school, he and I were both, I would consider personal finance nerd. So we read rich dad, poor dad back in the day. And, we were really into all that kind of stuff. And so he's the one who told me about the bigger pockets podcast. And so I started listening to that, like many people there, their origin story starts with. Rich dad, poor dad and bigger pockets. So boring, because that's exactly how I started. That's how everyone starts. But, but yeah, so he got me into the podcast and that's, that was a real light bulb moment for me. Oh my gosh, you don't have to be, super rich like Donald Trump to get into real estate. Just normal folks, average Joe's if you will, can get into real estate. You started learning more about it. And then I realized that the house I was renting there in Pensacola, I could own a house that was newer, bigger and nicer, and my mortgage payment will be $400 less a month than what I was renting for us. That was my basic deal analysis for my first deal. And it wasn't, even though it was very rudimentary, it wasn't wrong. I was right about it and I ended up renting it out for even more than I thought I could. And I just lucked into that and that property has appreciated, not quite a hundred percent, but pretty close just since I bought it back in 2016. That's how I got into, and then really with that first property, it really seeing the benefits of real estate and not just cashflow, but also, depreciation and all the tax advantages and debt pay down and how it really wasn't that much more work than I thought it would be. And it was pretty simple as long as you have good tenants in there. That was a big learning moment for me was just that first property getting over that first hump and renting that out.

Average Joe Finances: 6:15

Yeah, that's one of the biggest things is getting that first one done. And, speaking of bigger pockets, it's pretty funny because that was one of the things they were talking about. One of their most recent episodes is that zero to one is always harder, harder than like the one to a thousand. And it really is. It's getting that first one and just, really making that decision and committing yourself to getting into real estate. And by making that decision and by getting into that first investment property, you you started something even bigger than you knew it was going to be. Now you said your very next property that you bought, it was a turnkey property, right? So you go from the kind of, accidental landlord. Property into a turnkey. So what made you look at going into a turnkey next instead of. Okay. Cause I know you went from there to BRRRRs. So why didn't you get into BRRRRs right away? What made you want to get a turnkey?

Doug Spence: 7:05

So I was reading a book, one of my favorite real estate books called long distance real estate investing by David Green. And while I was reading that book was a big light bulb moment. And then while I was reading the book, I also listened to a podcast. Where Stu greasier was the guests that he was talking about, his experience with turnkey and why he started his own turnkey company and he was a Navy pilot. And so I reached out to him and, they had just started as turnkey company that the basics of turnkey is you're buying. You're buying a home that needs some work. You're putting some work into it. You're finding a tenant once the work is complete and you're selling that property to an investor and it's cash flowing from day one. So you're getting a fully rehabbed property with a tenant in place that cashflow is from day one. So turnkey is a great way to get into real estate because you're still buying and owning the property, but you're not doing all the work required to do it. That's. I think that was like a way for me to dip my toe in the water of I don't, I'm not living here first, but I'm buying an investment. I had never been to Milwaukee before buying the first two properties. And that's a whole other mental hurdle for people to overcome. But, for me that was another big. Not leap of faith, but it was another obstacle once I overcame that, thanks to books and podcasts and talking to people, then that made me more comfortable to, to, to put a team together and do BRRRRs out of state, do my own deals. So it's all these like building blocks know.

Average Joe Finances: 8:27

Yeah. Let's talk about that transition, right? Cause you, you got that first turned key and then you went and got two more and said, okay, this is great. A great start. But it's slow because the way that you had to do it and you have to build up that money for that down payment to get that next one.

Doug Spence: 8:41

Exactly.

Average Joe Finances: 8:42

So you said, Hey, what can I do to get into something, to get more properties faster? And that's when you started looking at the burn method exactly. Started doing out of state bursts. So what was that transition like going from the turnkey to the birds? Was it something that was difficult for you or did you find it easier? And when did you build your team?

Doug Spence: 9:01

Yeah, so I think a big part of this was joining a mastermind group because I was getting, joining the group. I was surrounding myself with people that were doing similar things as me and also people that were a few years ahead of me, people that were doing flips and BRRRRs out of state and, doing apartment complexes and, being surrounded by those folks and seeing what they're doing inspired me like, oh, I, I can also do this, cause I have a buddy who he was starting to do BRRRRs while living, while active duty living in England. And I'm like, if this guy can do burgers from a different continent than I can do it from a different state, and seeing

Average Joe Finances: 9:37

are you talking about Michael Barnhart.

Doug Spence: 9:38

Oh yeah. Oh yeah. Nice. See, seeing that, seeing talking to him about that, I was like, man, if this guy can do this, like, why can't I, why can't I do. Bern, Oklahoma, or, so it, and if I hadn't joined a mastermind group, I probably would've gotten there eventually, but not nearly as fast cause it, it inspired me. And then also, telling them my goals and say, Hey, how do I do this? And in the realization that buying turnkey, wasn't going to get me there because. Th that company that I bought from there. They're so awesome that now they have a two year waiting list to buy properties from them. I can't just buy one property every two years and it hit my goals. That's what inspired me to start doing my own BRRRRs and put a team together and all that.

Average Joe Finances: 10:16

Yeah, that's fantastic. And you see how funny that is though, like right away you started describing somebody, and I'm just able to say, oh, is it and that's just how, yeah. That's just how awesome the community is. It's small, but it's not like there's a lot of investors out there, but one of the things that's awesome is the people that stick out to me that always stick out in the back of my head are people like Michael and Susie who. Who are actively trying to help other people get started and start investing in real estate. And I've, I have found that like 96, 90 7% of the people that I've met in this particular community are always willing to help and give advice and help people get started like it. And it's not like they're doing any handouts or anything like that, but they're giving you that knowledge. So you can go and make that educated decision. On your next steps on your journey, right? Getting into this. So as we're talking about a journey, cause that's what this all is for all of us, right? It's our journey and financial freedom. And you started off here. So you went from being the accidental landlord to the turnkey, to now doing these BRRRRs. And then from there. You went and became a limited partner on a mobile home park in Colorado. So how did you, again, another transitional period here, how did you go from doing burgers to getting into being a limited partner on, on a syndication?

Doug Spence: 12:11

Yeah great question. So I had just gotten back from deployment and like many people get back from deployment. They have a lot of capital in their bank accounts, especially doing deployments where you get tax-free and all that. I got back and Stu, Graziers same guy who started that company was a GP in this mobile home park deal. And he said that. We have this opportunity, it's 50 K minimum investment. And I was like, I've saved up a lot of money. Like this seems like a good, seems like a good opportunity. And the key there was, it was with people that I trusted, if it was just with some random person, I wouldn't have done it, but I trusted Stu. I said, Hey Stu, you are you putting your own money into this deal? And he said, yep. And I said, all right, good enough for me, let's do it. And I didn't know much about syndications and, but I trusted Stu and David and those two guys and. That's what, that's a whole other conversation. It's like this, the speed of trust and the power of trust and how that can, can accelerate relationships and accelerate people's investing careers. But yeah, that's how I got into that syndication.

Average Joe Finances: 13:07

Yeah, that's fantastic. And actually, that's something I want to touch on a little bit too, because I just recently did my first syndicaion, not too long ago, it was a limited partner. And one of the biggest things, that drove me into doing it is trusting the GPS, right? Trusting the people that are putting together the deal. And it's some folks that I've been talking to and working with for quite some time and really built up a good relationship. And when I see what they're doing, and I saw some other deals that they did, I'm like, okay, you know what? This is the real deal I'm going to get in. And on this next one, and I did. And, I don't think I would ever invest, excuse me, with a team that. Is not putting their own money into it. They're not, they have no stake right. When they're doing it that way. That's, another key point then I think that's super important. So thank you for pointing that out, that that he was putting his own money into it as well. Now you're touching on these three different aspects of real estate. So I want to ask you which one so far is your favorite investment.

Doug Spence: 14:03

Man for me personally, I really like the BRRRR method, but the thing with the BRRRR is it's not for everyone. Cause some people love real estate they've they understand the value of real estate, but they want it to be passive. And if someone wants passive investments, I'd say syndications would probably be number one after that. Maybe turnkey because you full turnkey, you have a property manager, you have a lot of people doing a lot of the work for you. Exactly. Yeah. But then you're still getting a property and you're, yeah. You're having to deal with the property management company occasionally when there's issues. But for the most part, it's passive. But if you're doing a BRRRR, man, you've got to put the team together. You gotta figure out how much work you want to do. You gotta find the deal. You gotta, find your lender. You gotta figure out how you're going to do the cash out. Refi. You gotta figure out your private lending or your heart money. How are you going to pay for. So there's a lot more involved, but I love that stuff. I love the challenge of it and how it's a much, I love how you could own a cash flowing property with zero of your own money in the deal. I think that is like such an amazing that's what makes it such an amazing strategy.

Average Joe Finances: 15:07

Yeah. And by doing so you're a lot more active in it. So you definitely like to have you like to be a hands-on type person. I can see that. And that's why the BRRRR methods, perfect for someone like you. Yeah.

Doug Spence: 15:18

I liked that pocket. I liked that, but I also, it also plays into real estate. We've touched on this so far, but how it's such a team sport. And I think the reason that the folks that are successful in real estate, th there are people that help others because someone helped them along the way. And so we all know that we, no one got here by themselves. And so we have to pay it forward. And that's why I'm, in a master I'm in two mastermind groups. So one of them is, I love just being able to. Help military members that are at the beginning. I still feel like I'm at the beginning of my journey, real estate, or military members that maybe just have one property or zero, they're trying to get that portfolio going. I love helping them out and passing my knowledge down to them. So that's one of my favorite parts about it.

Average Joe Finances: 16:02

That's what, that's, what it's all about, is giving back. That's why I love doing what I do with the podcast here is just this. It's an opportunity for me to share, I bring on experts like you, that are doing these awesome things, and you can share that with the audience and they can understand that, hey I can do this too. And that's why it's called average Joe finances, right? Because you can be a regular middle-class type person and decide that, Hey, it's time to take it to the next level, take it to the next step. How am I going to get there? What am I going to do? Come listen to this podcast and see what. Some of these other folks are doing, you can get a good idea, right? So it's all about giving back and that's, one of the things that I love about this community, not just real estate, but the personal finance community as well, there's a lot of people that are really awesome. There's some bad eggs. Yeah. You see a couple of them out there. And some people that take advantage, which is not cool. There's not a lot of that. We're not all about that. Get rich quick thing. You really can't do that in this, but you, what you can do is start building wealth quickly and by building wealth, I always say that there's a difference between. Rich and wealth being rich and being wealthy. And, one of the things about being wealthy is, you don't have to, or I guess, there's differences in the way that people live their lives being rich versus being wealthy. And one of the big things is, you can live a humble life, but being wealthy is where you get to the point where you're financially free and you can go do the things that you want to do. Whereas being rich, you're constantly struggling to keep up with, the expenses that you keep creating for yourself because you have all this money and you'd like to spend it where being wealthy is, you can actually sit back and relax and enjoy life. And, that's why, I love the fire movement, but at the same time, I always remove that R E from the end, because like I'm reaching financial independence this year, too. Right now I'm getting ready to retire from the Navy and I'm going to be at the point where all my expenses are covered by my pension and my investments. And I'm good.

Doug Spence: 17:52

That's fantastic.

Average Joe Finances: 17:52

Yeah. It's awesome. It's a great feeling. But at the same time, like I'm not stopping. So I'm going to continue, doing my thing as a realtor. I'm going to continue doing the podcast. I'm going to continue trying to help people as much as I can and building my businesses. And, but the thing is I can do it at my pace. I don't have to worry about. Anything else. And I could spend more time with my family. And for me, that's the most important thing is that, that independence, that freedom, that financial independence. So the, the F I is what's huge to me. And I think one of the best ways to get there as real estate man. And that's why we're talking about it. It's really exciting stuff. I'm right now for me, like I'm more of a passive guy. Like I love syndications and that's why, that's why that's what I'm doing. But at the same time, when I retire, I'm thinking about getting into being a little bit more active and doing things like that now to get into the whole active piece about it, especially talking about the BRRRRs, I want to bring it back to your piece here with being active. And you're doing out of state BRRRRs. So I want to ask you, because I have, had some single family properties out of state and I've run into issues, especially during COVID where I couldn't travel to get out there, to do work on the property myself. So I'm doing everything sight unseen, hiring contractors and all that good stuff. How do you get around all that? As you're funding, these deals purchasing them while living in California, are you actually going out there and finding these properties or you find them online and then you go take a look at. How are you piecing all of this together from so far away?

Doug Spence: 19:21

Great question. It's challenging. So I have been to the markets that I invest in. I have been to both Oklahoma city and Tulsa and Milwaukee, even though I'm not focusing on Milwaukee right now, but I still have those properties, but, I decided on Oklahoma city first and just. Putting the network together via BiggerPockets forums. You can find a lot of information on there. For example, if you're looking to invest in Yuma, Arizona, you can go to BiggerPockets, start a thread. And say, Hey, what's the best property management company at Yuma Arizona, and everyone who's investing in Yuma has keyword alerts set for Yuma, in their bigger pockets and it'll pop up for them. And then you're going to get a lot of information. It didn't you just pick up. There's going to be a few companies that pop up more often than others. And then you just call those companies and ask to talk to the owner or the manager, and just pick their brains in books, like long distance, real estate investing and the bird book, and a lot of other great real estate books. They tell you the questions to ask. So you can just sit there with the book open and ask them those questions and you'll get a, you'll get a vibe. You'll get a gut feeling from people. And then. Asked to talk to their references and you can do this with not just property management, but with real estate agents, with lenders, with contractors and all that. And really they'll all you need to find is that one rockstar agent or property manager or contractor usually. And then they're going to know everyone else that you need to know because a great property manager in a town they're going to know who all the great contractors are. And so by tapping into one rock star, Team member you're tapping into everything else. And when you find that person, you take care of that person and you provide value to that person and you give them referrals so that you can, you don't want to be a taker. You always, my thought is I would just want to be giving more than I'm receiving but once you find that piece of that team, Usually that will expand it out and the rest of the pieces will fall into place. And then it's just about, there's something we do in the military every day is clearly communicating expectations and then communicating well thereafter. If someone, if an agent or a lender asked me, a question, about a property, like I don't wait three or four days to answer. Like I answered as soon as I can, for the most part, as long as it's something time sensitive and you got to stay on top of stuff, especially when it comes to finding deals, you can't just, oh, let me, I'll get back to you a week from now. Cause if it's a deal it's gone. So yeah. But that's another thing we can get into is deal funnel. I put together my own deal funnel to source off-market leads for these Oklahoma properties. And so that's how, I bought a property in September there for $20,000. We're putting 55 into it and it's going to be worth a little over 110,000 and we should be able to rent it out for 1100 a month. And the reason we're able to make that work is because we're able to get the property so cheap because we're able to market directly to those sellers. So I think that's another key part, especially in this hot sellers market, because if you're buying stuff off the MLS, you're going to be painful retail, and you're not going to be able to add in that equity. What, like you need to, if you do a BRRRR.

Average Joe Finances: 22:24

Yeah. You're finding those off market pocket listings that everybody's looking for. Let's get into that a little bit. How do you have that setup? How are you finding these off market deals?

Doug Spence: 22:32

Yeah, a lot of trial and error, a lot of hours, a lot of money spent not getting any deals before it really started to pay off. But, I started with, so I put the team together in Oklahoma city and very quickly I realized that none of the deals that I was seeing from wholesalers are on the MLS. None of them made sense for my BRRRR criteria. So I realized pretty quickly that I needed to find my own deal. So how do I do that? I first start. I hired a VA to do cold calling, did that for a couple of months. It didn't work. Didn't really get any good leads. Then I tried SMS. I was starting to get more leads in and starting to gain some traction there. But then I realized that, having a W2 job, like I can't just sit at my computer all day and, respond to text messages and call these people back and all that. So I thought I needed. Who not how, so I need to find someone that can do this. Not only do it, but do it better than me. So I hired a team of virtual assistants to do it for me and. It's not cheap, but neither is buying full retail off the MLS. Neither is buying off a wholesaler because they have a 10, 15, 20 K markup on a lot of their deals. So my thought is, you're going to, you're going to pay it somewhere, might as well, pay it for your own deal funnel and get your own leads. So that's the system I have going now and I have a great, Real estate agent there in Tulsa, that's investor friendly and he's on board with doing all this and go into gross houses and getting one or contract. So it just got to find the right members of the team, because most real estate agents, they're not going to be doing this kind of stuff. Most real estate agents want to be selling families or dream homes for top dollar, not go into dilapidated hoarder houses and getting them under contract. So it's about finding the right people.

Average Joe Finances: 24:07

Yeah, absolutely. And I can tell you as an agent too, like I am, I'm all about, helping investors out too, man. That's what it's all about because it's, people are going to buy the house regardless, right? Why not be the one to help them get it? And, especially if you know what they're doing and what their plan is, I'm not comfortable helping somebody get into a house that I know that they can't handle for me. It's just like a, it's a whole. It's the whole principle behind it. But if it's somebody who's an investor that I know they can come in here and turn this place around and fix it up, then, Hey, let's do a bit. I try to take my fiduciary responsibility to my clients. Very seriously. And if somebody is trying to get into something that they're not ready for, I'll tell them, Hey, look, this might not be the best thing for you. Let's maybe look at something else, but it's your choice in the end, it's their choice, and if they decide they want to go with it, I'll help them go with it.

Doug Spence: 24:54

Yeah, I got a question for you then, being in Hawaii is from the investor perspective, what's the toughest part about investing Hawaii? Is it finding deals? Is it finding the good contractors? Cause I know that's a tough part with Hawaii is getting, getting the supplies for a reasonable price and finding those contractors that, that are willing to work. Even when. You got 10 foot surf out there. So what's the tough part about investing in Hawaii.

Average Joe Finances: 25:16

There's people out here that, that are successful with flips, right? But I'm telling you this so far, Hawaii is not a rental market. You're not going to come out here and buy real estate to, to rent it out for cashflow because you won't get cashflow. Unless you put a large enough down payment down to where your mortgage isn't going to be as high. And at the same time, Depending on the amount that you put down versus what you're getting in return. It's going to be very low cash on cash return on investment. Now, what Hawaii is really good for is buy and hold because of appreciation. So if you are going to buy an asset out here and you can break even, and you could hold onto it for a couple of years, you'll be able to turn around and sell it and make a pretty decent profit. The property values out here generally over. Every 10 years, just about maybe a little over 10 years, they double, let me go up to like between 80 to a hundred percent over a 10 year period. It's really amazing. And of course, even, recently it's really skyrocketed because just like the rest of the country, everywhere else has jumping up. Of course, it jumped up here as well. So definitely got that accelerated appreciation going on out here, but yeah, supplies are definitely a lot more expensive here because of shipping costs and everything. So you can find it there's some diamonds in the rough, but you're normally not going to find it on the MLS. I'll tell you that straight up, if you're out here, you need to be sending letters to homeowners and you need to be driving for dollars and finding those dilapidated homes that have these kinds of, Issues that somebody that, that has the right head on their shoulders, they can come in here and rehab it, turn it around and flip it. But you're not going to see anybody really coming out here to BRRRR It's not really something out here. If there's somebody out here that does it, Hey, shoot me an email and tell me what you're doing, because that's amazing. But I do know that there's some really awesome flippers out here, if you're gonna be out here, that's gonna be the route you're going to go is flipping. And at the same time to get started, you have to have a lot of capital because. The average median household price in Hawaii today is $1,050,000. That is the average cost of a single family home.

Doug Spence: 27:13

Yeah, I think it's important to note that, for someone just getting started in real estate is that the real estate strategy that works in Cleveland, Ohio is not the same one that works in Honolulu. There are ways to make money in real estate, in every single market in the country, but it's different. And there's, just like you touched on capital, the amount of capital you need to get it and start get started in Hawaii is going to be totally different from the capital you need to get started at Fort Wayne, Indiana. It's just totally different markets, different goals, different strategies. So that's why individuals need to figure out what their goals are and then find the strategy and the market that, that fits. Their goals.

Average Joe Finances: 27:52

Absolutely. In some of those markets too, as you're talking about that, you know that the Cali has a cashflow out here in Hawaii. He's not going to be great. You're going to you, where are you going to make your money as the appreciation, but there's other areas like what you just mentioned in Indiana that are most likely not going to appreciate as well, but will cash flow way better. You could have way better return on your initial investment. Versus what you would get out here.

Doug Spence: 28:15

If someone is looking to add cashflow to replace. They're W2 that they're trying to leave in the next few years, buying a Hawaii house. Isn't the answer you gotta buy those cashflow properties. But what if you're someone that's further along in your investing journey and you want to get out of those higher risk C class properties in Indiana. You want to put in something more stable for appreciation Hawaii is a p lay for that. And you're like David Green, he's buying, he's selling a lot of his properties in the continental United States and buying stuff out in Maui and Hawaii.

Average Joe Finances: 28:45

I think he recently said he was looking at buying some, Some places in Waikiki for some short-term rentals. So that's one of the few places there. There's some places that are zone where you can do that. Hawaii has some funny rules when it comes to short-term rentals. And if I wanted to, I can't use my property that I live in here. I can't use that as a short-term rental it's they have specific laws. Like you have to be in a, hotels, zoned area or resort zoned area. Where you can actually do that. And there's not many places, outside of Waikiki and maybe a couple of places on the north shore where you can actually do this.

Doug Spence: 29:16

Yeah. Yeah. So knowing the local laws.

Average Joe Finances: 29:19

Yeah. Know the local laws and rules and, especially, I, another thing too, I want to touch on too for out here, for people listening is know the landlord tenant laws as well, because it is very tenant friendly out here. Just where you're living at in California, you can get stuck with squatters for a long time and have a very difficult time getting them out depending on what the landlord tenant laws are in the state that you're investing in. So make sure before you go into any of that stuff, you really educate yourself on the different laws and rules, for where you're at

Doug Spence: 29:49

and have cash reserves. So you can keep paying your mortgage

Average Joe Finances: 29:52

and any type of a repair or anything that comes up as well. Yeah, that's for sure, man. That's good stuff. Okay. So I want to ask you, so besides real estate, Is there any other asset classes that you invest in?

Doug Spence: 30:04

So I do invest in the stock market. Primarily index funds. So I have, your standard boring, TSP Roth TSP. Most of my TSP is normal because they just switched it to Roth recently or a few years ago. So I have my TSP and then I have my Roth IRA and I would say about a third of my net worth is those two. And it's just your. It's boring, but it works. So I think people have said, and I think mine is about the same, but the T the TSP return over the last year has been like 40% or something like that. I think it's important that if you're in the military and you're not contributing to your TSP, you need to go in and fix that because I think that the TSP and the VA loan. Are the two of the most powerful tools that we have unique to us now, I guess technically federal employees can use the TSP as well, but TSP and the VA loan, super powerful wealth builders for military folks.

Average Joe Finances: 31:01

Yeah, absolutely. And a lot of people don't know too. You can borrow from it if you need to. I actually borrowed from my TSP to help with a down payment on a property that I was buying back in Virginia, which was pretty awesome. I had to get a little creative. I, so I borrowed a little bit from there. And I had to do a cash advance on a credit card, which was a pretty interesting, and I paid that back right away. But man, cause I needed like an extra seven K I'm like, oh, where'd this come from? So I was like, I'll just do a cash advance real quick. And I was able to secure it. It w it was, but I was able to secure the property, but, sometimes man that stuff could really be a pain. So knowing what options you have as well as super important. Okay. So speaking of that, cause we've talked a lot about the different things that you've done, especially since you've gotten started. What is something that you've learned that you wish you knew when you first started investing in real estate?

Doug Spence: 31:44

I wish I knew that you didn't have to do everything by yourself. It's and the more experienced I get in real estate, it's reinforced even more that it is a team. It's, especially once you get into the more challenging stuff, like your apartment complexes and mobile home parks and all that stuff. There's no one out there. That's one person that's taken down this stuff. I each can't, you can't do it by herself, you need it. And even if you can do it, you're not leveraging people the way you should be. You want to have an underwriter. Yeah, exactly. Yeah. There's probably someone out there that is great at underwriting deals and that's what they love to do. So bring that person on your team. There's probably someone out there that's great at finding these off market, apartment complexes or whatever. They have a great relationship with brokers in that area. Get that person on your team and then get the person on your team that can, that knows a lot of people that are accredited and that can raise money. So why do it yourself, get all these people on your team and you can go so much further as a team than you can just by yourself. And that's something that's, it's a mental block for a lot of entrepreneurs is they're so used to doing everything by themselves that they miss out on a lot of opportunities.

Average Joe Finances: 32:54

Yeah, I, and it's funny, cause like I just said this in my head, as you were talking that, for this episode, like th the theme is team, right? Yeah. You need to have that team built. And that's definitely something that it looks like, before you even started getting into your BRRRR, you built that team first. You made sure you had all the right players involved before you started the game and that's something that's super important. So that's definitely really awesome, exceptional advice for someone who's just getting started to understand that you don't have to do this by yourself. So I definitely appreciate that. Now I want to ask you this, and this is the question that I was talking about before we, before we pushed the record button that came up in one of my more recent interviews that I want to start asking people now in every episode, because it's an important question. And I don't know why I wasn't asking this before, but what is the biggest mistake you've ever made?

Doug Spence: 33:43

Biggest mistake I've ever made, I think was not buying real estate sooner. So I actually lived in Pensacola as a flight student from 2009 to 2011, which was rock bottom of the real estate market for the last, what, 20 plus years. And I, I didn't know anything about real estate. But even if I didn't know anything, if I had just bought literally any property with the VA loan, it would have been a fantastic financial and just held onto it. That would have been a fantastic financial decision, any property. So I, I wish that I had. Real estate sooner. And I think that's, to, to distill that down into a sentence, it's, don't wait to buy real estate and wait, I, I think it's, I think that's really important for people to understand.

Average Joe Finances: 34:25

I bet I've heard that term so many times. It's. Impactful because it carries a lot of weight because it's true. Yes, it is. Don't wait to buy real estate and wait. Absolutely love that. Okay. I've already asked you the question about, you already answered it. If you had any tips or tricks for somebody. That would, that's just starting out. You answered that with, the lessons that you've learned since you first started. So I think we're going to skip that one and I want to ask you about, and you've already mentioned one of these or a few of these actually, but I want to ask you if you have a favorite. Business investing or real estate related book or podcast or both.

Doug Spence: 35:02

So I, in the last year, I've read a business book that I knew just 50 pages into. It was to my favorite business book of all time. And it's called traction by Gino Wickman. I imagine you've read it, but if your readers haven't or readers or listeners, haven't read it a highly recommended because. It is very much a tactical book about how to start and improve a business. Even if you're not someone with a business right now, if you own real estate, then you are a business owner. So this book is every single page is packed full of useful information. One of my pet peeves is. There's a lot of business and personal development books out there that is 1, 2, 3 simple concepts spread out over 250 pages and they sell it for 20 bucks on Amazon. Traction is not one of those books. It is an excellent business book. And I think that's been the single most impactful book I've read of the life.

Average Joe Finances: 35:57

Fantastic . No, I have not read that book, but I wrote down and it is going on my list for sure.

Doug Spence: 36:01

Put it at the top. Yeah.

Average Joe Finances: 36:03

Okay. I will. It will be the next book I read then. So definitely appreciate that. Most important question, Doug, because. We've talked about a couple of different items here and, I just think your story is just so neat because of you're touching so many different aspects of real estate and you did it all within the last couple years. It's not like you've been doing this for a long time. You jumped from this to that, to this, to that over time, it was like, Hey, boom. Let's get into the next thing. Boom, boom. Let's get into the next thing. And I love that. Cause your focus was like, Hey, I, the turnkey thing is awesome, but it's taking me too long to get to my goal. What's another way that I could do this. And you started thinking outside of the box, and then after that, you were like, okay, what's another thing I can get into. Cause I have all this extra capital sitting here and you got into a syndication. So your mindset is just absolutely amazing. Especially when it comes to growth and you building up your portfolio. So people are probably going to want to know a little bit more about you. Maybe want to get in touch with you and pick your brain a little bit. So where can people find more about you? Do you have a website you could share with us or social media or anything like that?

Doug Spence: 37:06

Yeah, absolutely. About a year and a half ago, I created a thought leadership platform called honor and equity. So the purpose of honor and equity is really educating. Military members, veterans and their families about real estate in the value of real estate. So we have a website it's honorandequity.com. Then we also have an Instagram and a Twitter handle it's @honorandequity we're most active on Instagram. So definitely check us out there. I read all the messages myself. Definitely reach out to us. I love chatting with people about real estate and if you're someone that's trying to get started or you have questions, please don't hesitate to reach out to us because, and when I say us it's myself and my business partner, who's my sister law who actually lives out in Hawaii as well.

Average Joe Finances: 37:49

Fantastic. And, definitely go check out Doug's stuff. I'm going to, I'm going to put all the links in the show notes so you can find it. So that's honor and equity and, Doug's actually written a guest blog post for average show finances, and it was really awesome. And I actually got some decent traffic. So he puts out some really good information and, his blog and his website is pretty awesome. Definitely recommend going to check it out and following him on social media. Doug, it's a Saturday, I know it's getting a little late overall. It's not really too late. You're only two hours ahead, but, I appreciate you taking the time out to chat with me today on a Saturday. You probably want to go grab some dinner, and I've got to go take down some Christmas decorations, but I greatly appreciate you taking some time to chat with me today.

Doug Spence: 38:29

Yeah, sure thing, Mike, I really appreciate the opportunity to come and talk to you and talk to your listeners. So thank you very much.

Average Joe Finances: 38:36

Awesome. All right, man. Aloha from Hawaii

Doug Spence: 38:38

Yeah.