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Today’s guest, Bo, went from flying Black Hawk helicopters in the army to achieving financial independence in his thirties through a diversified investment strategy. He’s built wealth through real estate, mobile home parks, and savvy use of military benefits while still crushing it in traditional markets. If you’re ready to learn investment strategies that go far beyond basic index funds, this episode will open your eyes to what’s possible.
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Hello, hello, hello and welcome to the BiggerPockets Money Podcast. My name is Mindy Jensen and with me as always is my real estate savvy co-host, Scott Trench.
Scott: Thanks, Mindy, great to be here. Always great to talk about the tenets of financial independence.
Scott: All right, we are so excited to be joined by Bo Webb today. We recently did an episode on using military benefits, uh, to help soldiers achieve financial independence and we are now excited to hear about Bo’s FI journey today because whether or not you have military benefits to tap into, there are aspects of his portfolio and his journey that I think anybody can learn from. Bo, welcome to BiggerPockets Money.
Bo: Thank you Scott. Thank you Mindy. Super happy to be here. I’m a long time follower of BiggerPockets Money and BiggerPockets in general. So pumped to be talking to you guys.
Scott: Awesome. Us too. We are so excited to hear about this story. Can you tell us a little bit about where it begins and and what you were doing in the military?
Bo: Sure. Yeah, it was about six years ago. I was a Black Hawk pilot in the army. Um, before that I had graduated from West Point, US Military Academy. I was from a small town in Texas and I had been raised to spend less than I make, to work hard and and save when you can. But around six years ago as a young officer in the army, that was kind of the extent of my my financial literacy. Um I I didn’t know much about investing, didn’t really have any any interest in investing up to that point. But around that time I I was exposed to things like the FIRE community and and BiggerPockets and real estate and a lot of things changed for me then.
Scott: Awesome. Can you remind us a little bit about the start that West Point graduates get. So let’s let’s talk about the day after you graduate the academy. What does a financial situation look like for a typical graduate there?
Bo: For all the service academies, West Point or Air Force Academy or or the Naval Academy, uh you’re not paying for school. It’s totally free from a financial perspective, but you do incur a commitment to that respective branch of service. So for West Point, when when I graduated, though I didn’t have student loan debts, I did owe the the U.S. Army five years of my life and then for me, um I went to flight school and incurred an additional uh service commitment uh for my time at flight school. So it added a couple years to that. Um but in terms of our pay, we commissioned as as second lieutenants, uh which is the first kind of officer grade um in the army and you’re making, you know, it’s it’s around $70 or $80,000 a year right off the bat.
Scott: And on top of that $70,000-$80,000 a year, you also get allowances for housing and food. Is that correct?
Bo: Yeah, you get a a basic housing allowance. That’s tax-free. And then there’s, uh, BAS. It’s a different type of tax-free allowance that you get. And then that’s just kind of a a different breakdown in your pay.
Mindy: Were you spending your entire salary and your entire BAH and your entire BAS or were you saving some of that? And for those who aren’t in the military like me, do you have to spend your entire BAH and BAS or can you look for deals?
Bo: Initially I I couldn’t have even answered that question other than I I I could tell you that I was not spending all of it, but I wasn’t totally tracking my expenses and and or my savings rate. But I definitely was spending less than I had coming in. That changed over time. But when it comes to the housing allowance, if you live on post or on base, sometimes you’re gonna have a a spot by yourself or you may split that with a roommate or if you’re if you’re married, but they will take your whole housing allowance for you to live on post or on base. If you choose not to live on post or on base, then you can receive that housing allowance and then go and spend it as as you wish. So if you find something that’s much cheaper than that, pocket the difference and vice versa, if you’re looking a bit a high roller.
Scott: This is actually a much higher effective starting pay grade than than most people get coming out of college because you can effectively consider all of that allowance for housing and subsistence as tax-free. So it would be the equivalent of maybe $100,000 or $110,000 base salary for peers coming out. So it’s a very, it’s a very actually pretty, pretty good income. It sounds like you were saving some of it but not very intentional at the very beginning of your journey. Can you give us a glimpse into what your peers, fellow graduates, what you thought they were doing? Were they saving or investing by and large?
Bo: Let me introduce one other pretty cool opportunity we had, it’s called the Career Starter Loan. And coming out for me as a junior and senior at West Point, I had the opportunity through USAA to take a $36,000 loan. You pay it back over your commitment so six years or I’m sorry, five years and the interest rate was 0.75%. So less than 1%. It’s a way for them to kind of generate your business and they know you have a stable income coming out of the service academies. Back to Scott’s question, I did see a lot of my peers use that loan to buy trucks or to to go on big trips in Europe, things like that. I did go on a trip in Europe, but I used the rest of it to save and and ultimately a few years later to to invest. Same thing for kind of the monthly pay. I think a lot of us are just in this this we were in this position where we we knew we had more coming in than we were spending, especially kind of the the single lieutenants at the time. And we knew that that wasn’t really gonna change. It’s a pretty stable source of income short of of something bad happening to you or or you doing something very illegal and getting kicked out of the military. So the mindset was as long as I’m saving a little bit, I’m I’m all right. And that’s kind of where I was at initially. But then I saw some big uh opportunities for improvement as I as I learned more and more.
Scott: Tell me about the career progression over the five years of your service. How, how did, how did your career progress and at what point did you discover financial independence?
Bo: Right when I graduated, I went to Fort Rucker, Alabama, which is the Army’s home of of aviation to learn how to fly. So I spent about a year and a half there, getting paid just to learn how to to wiggle sticks and and fly helicopters. So a little bit unique for me for the first couple of years, but then I I went to Fort Bragg, North Carolina, as my first duty station after flight school. Even though you’re, you’re an official pilot, you’re still learning in the field and you’re learning from very experienced pilots and you’re leading in certain ways. I call it my first big boy job and I was I was learning a lot of lessons about what I was good at, what I wasn’t good at. One of those lessons was that I really valued my autonomy, being able to choose how I spend my time and and what I spend my time on, which was kind of the impetus for me looking into things outside of that. And that led ultimately to coming across things like BiggerPockets and and books that that taught me about real estate and and investing and showed me that there was a different way for me to set myself up for hopefully future options and the ability to to leave the military in the future. But I still had a a five or six year commitment. So that was kind of the timeline that I was working with to to see if I could try to replace my income.
Scott: Bo, you started out at, uh, Fort Rucker. That, I think that’s like a six month usually training.
Bo: Uh, no, it’s like a year and a half.
Scott: Okay. So we’re there for a year and a half, and then you go to Fort Bragg. Are you promoted around that time?
Bo: Yeah, around that time is when I was promoted from second lieutenant to first lieutenant, kind of right when I arrived to my, to my first duty location after flight school.
Scott: Is that a meaningful jump from second lieutenant to first lieutenant?
Bo: It’s a pretty meaningful jump in how people look at your expected expertise when they they see the rank on your chest compared to second lieutenant. As far as pay, honestly, I don’t exactly remember what the jump was. It was probably $500 or or $1,000 a month, so meaningful for me at the time for sure.
Scott: It sounds like you discovered the the FIRE community and BiggerPockets and all some of these resources around this time a year and a half to two year mark. What what changes around the way that you’re handling your money and you’re also discovering that you value freedom. What changes around how you handle yourself and and your finances at that point?
Bo: One of the early books that I read called Set for Life…
Scott: Never heard of it.
Bo: Most people haven’t. But, Set for Life helped me understand that if you’re trying to make a meaningful impact on on your savings, there are a few categories that you should really focus on. It’s not skipping Starbucks. I mean that that has an impact, but it’s like you would say Scott, it’s your housing, it’s your transportation, it’s your food. And for me, especially since we talked about kind of that housing allowance situation earlier, I saw that what I was paying for housing is the lowest hanging fruit for me to to affect my my situation. So as I learned more and more about real estate, house hacking became the extremely obvious kind of first step for me to have a meaningful impact on on moving the arrow as far as how much I could save.
Scott: And this is in Fort Bragg, which is in North Carolina. Is that where you purchased your first house hack? Can you tell us about that deal?
Bo: Before that, I was I was living with roommates in a in a rental and so it was still somewhat, you know, I was I was probably spending $600 or $700 a month for my part of that house, but I I realized that I could I could do better than that if I house hacked. So…
Scott: What was your BAH?
Bo: BAH, I think it was probably $1,200 or $1,300.
Scott: A reminder for for those who can’t keep up with the acronym, that that’s basic allowance for housing. There’s a lot of acronyms in the military, which I found out the hard way over the years as I’ve talked to people in the space. So…
Bo: Yeah, and and don’t quote me on these exact numbers ’cause this is kind of going off off memory of five or six years ago.
Mindy: They don’t have to be the exact numbers. That that shows that there’s a huge difference. You were essentially spending half. There are other people in your position that were spending the entire amount or even more of their BAH on their housing. And you chose to spend half. What were you doing with the other half of that BAH?
Bo: At that point, I was I was just kind of saving and I didn’t really know what what for, but I was I was just kind of socking it away and saving.
Mindy: Do you mean like in a savings account that was paying, you know, a nominal savings? You weren’t investing it in like the stock market.
Bo: This is prior to me kind of diving into becoming more financially savvy. But yeah, I was I was socking it away. What it ended up becoming was the down payment on an FHA loan duplex and a little bit after that, an engagement ring for my girlfriend. So I found a use for all of that savings.
Scott: Love it. Cashflow positive property, cashflow positive spouse. This, this things are starting to really go well for this guy, right?
Bo: It’s called wife hacking, Scott.
Scott: There you go.
Mindy: Oh that’s a new one.
Narrator: How did Bo go from a Black Hawk pilot to financially independent in six years? We can’t wait to jump back into his FIRE story right after this.
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Scott: All right, let’s jump back in with Bo.
Scott: Tell us about this duplex, and for those who are, you know, interested, who’ve gone down the rabbit hole, uh, you use the term FHA loan, which is a low down payment owner-occupied loan, but people people will be curious who are advanced in this area about why you didn’t use a VA loan to buy this, this house hack. Can you tell us a little bit about that purchase and everything that went into it?
Bo: It was a duplex that a buddy of mine who was in real estate that I had kind of taken out for for coffee and pizza and stuff. He came across it and he said, “Hey man, this, this might be what you’re looking for,” because I had told people, like, “Hey, have you guys heard of house hacking? This is what I’m gonna do. This is how I’m gonna save money.” He pushed me this, this duplex that had just come on the market. I went and viewed it with the real estate agent that Zillow connected me with when I said I’m interested in this property, right? Did everything wrong initially, but it worked out. I I put an offer in on the duplex using a VA loan for the the asking price which is $108,000 at the time in Fayetteville, North Carolina.
Scott: What year is this?
Bo: It was late 2018. Yep. So, yeah, different, different price point and that’s that’s been a big part of my journey. I was in markets where, yeah, the price point was a lot different than than other parts of the country. So that was helpful. And this, this duplex, really nice, big, updated, fancy living arrangement for you?
Bo: Wouldn’t say that. It’s two-bedroom, one-bath each unit. One of the units was was pretty crappy, and a the other unit was really crappy. So I lived in the really crappy unit and then fixed up the the pretty crappy unit. As far as the FHA loan, so I I I made an offer using a VA loan, found out that the sellers had been under contract with a VA loan, maybe it was even a different property prior, and they just didn’t really like the experience. So they had this idea in their head, which I think is not accurate, that VA loans are, are harder to work with than FHA loans. So they, I said, okay, I’ll, I’ll put three and a half percent down instead of 0% down. And they, they said they were okay with that. So that’s just how, how it worked out for me. At that point, I had intended in the future to use my VA loan. I was okay just kind of biting the bullet on that three and a half percent down payment, knowing that I could use the VA loan later.
Mindy: Okay, I’m a real estate agent and I live in an area where the VA loan is not that popular. We get veterans who are using it, but we don’t have a military base close to where I service so there’s really not a lot of opportunity for real estate agents here to understand the VA loan and there’s a lot of pushback on VA loans and let me tell you, the worst deal I ever did was an FHA loan, not a VA loan. So the VA loan is super easy to use, so long as the house isn’t falling down. Like you can’t have peeling paint, it has to have an oven, and I, I think that’s kind of it with the appliances. It has to have an oven and you can’t have peeling paint or like ricketty handles on the stairs. Yeah, the handrails on stairs seem to be kind of the biggest thing. Yes. Meanwhile, the FHA loan, I could go on forever and won’t, but they find a lot more reasons to make that more difficult. Totally agree.
Scott: I wanna call out a couple of things about your overall situation that I observed here. First, if we were sitting here and you were asking me about this, uh, this purchase, I would say use the FHA loan or a low down payment conventional loan instead of the VA loan because in your situation, you never know if you’re gonna get stationed to a much more expensive market at some point, reassigned to a much more expensive market. And that would be one where you’d be leveraging as much as possible of that VA loan available to you. The cash, I imagine, I imagine $3500 bucks or $5000 bucks, whatever the whatever the down payment was, was not a material amount of money for you relative to your overall earnings or financial position at that point in time, although it probably felt like a big deal. But it you could definitely bring that cash to the table for a purchase like this. Is that kind of how you see it in hindsight or would you have rather used the VA loan?
Bo: You know what, that’s exactly how I see it in hindsight, but at the time, I didn’t see it that way. I just saw it as a, a necessary adjustment for me to make to, to give the, the sellers what they wanted. But, yeah, I definitely see it as, as a benefit to kind of maintain your VA loan for as meaningful of a purchase as you can make.
Scott: Well, tell us about the, the payment and the rent that you received on this property. How did it impact you financially from there?
Bo: $108,000 on the purchase price. I put three and a half percent down. I put in, I think ten or so thousand into kind of just doing a light renovation on, on one of the units. My monthly payment, when you, principle, interest, taxes and insurance plus the the PMI, uh that comes along with the life of any FHA loans, it was $790 was my monthly payment. I rented out side one that I was not living in for $800. I rented out the room in the side I was living in to a roommate, a buddy of mine that I went to West Point with for $300. So for that I was pocketing about $310 plus that $1,200 or $1,300 for, for BAH that I didn’t have to put into housing. And it instantly had a huge impact on my savings rate at that time.
Scott: What was your happiness level like living in this property for this time and how long did you, did you live in this property? Like what, what I wanna understand is this a home run financially. We don’t have to get into that. This is, this is an absolutely absurd return on a $3,800 down payment. Was it misery?
Bo: No, I had a great neighbor across the street named Gloria who I got, I got tight with and I lived with a good buddy of mine. I was pumped about what that meant in my bank account on a monthly basis. And I was a single guy at the time. I was at work most of the time anyway.
Scott: What’s this property like today? Is it, you still own it?
Bo: I still own it.
Scott: Did you, uh, end up refinancing out of that FHA loan at some point?
Bo: I’m on that same loan in place. It was a very low interest rate. The same tenants have been there on both sides for for about four years now and they’re paying $900 per month each side.
Scott: You’re clearing $700 bucks, $800 bucks easily on this thing, you know, outside of the odd CapEx one off for all your expenses.
Bo: Yeah, and we’ve definitely had some CapEx. It’s it’s on septic, and there’s been a couple of weeks I’ve had to deal with. But, but overall, yeah, it’s, it’s had very good returns and and good cash flow.
Mindy: Well, and the Fayetteville market has gone up dramatically since you purchased it. Do you have any idea what it’s worth now? You paid 108.
Bo: Yeah, I think it’s worth probably a little bit more than than $200,000 or so right now.
Mindy: That’s a nice doubling of your property in just a few short years. Do you think you’re gonna keep this property for a while or do you have any plans to sell it?
Bo: I don’t have any current plans to sell it. Probably to keep it until, until something changes.
Scott: How does the journey progress from here? Obviously, it sounds like we’re able to really stack a lot of cash at this point. Where do you take that and how does your career and the the next phase of your journey unfold?
Bo: I, at that point, understood that that using a primary residence purchase to turn into an eventual rental was an awesome strategy, but you can only do that so often. And so I I certainly planned to continue doing that as often as I could. And I went on over the next few years to buy two more four-plexes using my VA loans in Fayetteville. So those three kind of primary residence purchases there. But at that time, as you can only do that so often, I was desperate to find other ways to buy real estate with no and low money down to quote an old BiggerPockets book and one of the strategies that I didn’t know anything about until that point was seller financing. Because seller financing kind of has infinite leverage you can pull as it can be very negotiable with the right buyer and seller. If you find a situation that works and one of those opportunities is to to convince a seller to let you buy a property for for a small down payment. So that became, like the number one thing I was looking for. I was looking for paid off homes where the owner was probably a landlord and hopefully a tired landlord and might consider seller financing and then I was looking for ways to kind of build trust to them and show them that I was gonna take care of the property and and do well by them and and convince them to let me put small down payments down and that ended up working out for me. I got pretty lucky finding some good properties looking for that.
Scott: And you’re living very frugally during this time, especially at Fort Bragg, in these house hacks essentially the whole way through. So it seems like you’re able to accumulate a lot. I would imagine you’re able to accumulate a lot of cash, like maybe 40 to $50,000 a year starting after that first house hack at least. Is that a fair ballpark?
Scott: That’s probably true, but I was dumping it into properties. I made some other purchases and pretty much d-dumped any excess cash I had in into those properties in those earlier years.
Scott: I consider that accumulation personally. That’s, that’s going into an an investment.
Bo: I wish that I tracked it more at that time, but I I didn’t. I just was kind of bank account balance finance. You know, I have some more cash. Let’s let’s look for another property and that’s that’s how I did it back then.
Scott: One more question before we get to real estate. Were you doing anything else with any of this cash? Any stock investments at all?
Bo: I was blindly maxing out my Roth IRA and I would just, I had all of that in VTSAX because someone had recommended The Simple Path to Wealth to me and and that was my key takeaway. So I was blindly doing that. And then my, uh, TSP, which is the the military or government equivalent of of a 401k, they will match you, or the government would match me up to 5%, so I was putting in 5% into my TSP and investing that all in the C fund, which is just like the large cap stocks, S&P 500 equivalent.
Mindy: You said you were blindly doing this. Do you regret doing that?
Bo: No, I don’t. I don’t. In fact, I I still do it, but I just didn’t really have a a great understanding of what I was doing. I was just kind of doing it because it sounded like the right thing to do and and I still think it it was the right thing to do. Specifically, what I came to appreciate with Roth IRA contributions is that you can withdraw your contributions from a Roth IRA at any time, penalty-free and and tax-free, which became valuable to me when I started to care about reserves and and access to liquidity as my real estate portfolio grew. So I think it was the right decision. I just didn’t really know it was the right decision at the time.
Mindy: And is that where your investments lie, in real estate and the stock market through the TSP and the Roth IRA? Do you have anything else that you’re invested in?
Bo: At this point, yeah, my investment portfolio looks a little bit different than it did at that point. But as I was kind of in growth mode, it was, it was mostly real estate and then I was putting in kind of those, those minimum amounts into, or maxing out my, my Roth IRA and then putting in the minimum 5% of my pay into into the TSP. At this point, and I don’t know if it’s time to talk about this, but I’m in Bitcoin, I’m in, I’m in private credit funds and I do private lending myself. So it’s changed a little bit because, because my personal finance situation is is different than it than it once was, but, but yeah, it’s, it it looks a lot different now.
Scott: How did Bo scale his real estate portfolio to $10,000 a month in cash flow? We’ll be breaking it down when we’re back from this short commercial break. Hint, hint, it’s commercial real estate.
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Scott: Let’s hear a quick overview of the real estate journey now. We have the three house hacks, the duplex, the two quadplexes. Can you tell us about the first deal outside of those house hacks, how you got that done, and then give us an overview of the rest of the portfolio as it escalated from there.
Bo: So, like I said, I was in search of seller financing opportunities. So I, I became pretty smart on, on being able to explain all the implications of seller financing and understanding how to look for it and the type of person that may consider it and just how to speak to that if I encounter that person. So I just started cold calling like crazy. I, I had a list from another investor of high equity properties and a lot of those properties had out of state owners and small multi-family also was what I was interested in. So I just started cold calling and the first one, I I came in contact with with a woman who who lived out of state. She lived in Texas and she was a a retired military officer as well and she owned a five-unit property in Fayetteville. and she wanted to make sure I wasn’t just one of those other investors that’s gonna waste your time and and throw her a lowball offer. And initially it was kind of tough to to keep her on the phone, but over time I was able to build build some trust with her and just kind of explain my situation, explain what I was trying to do. And I kind of bought some of her time and it just so happened that I was, uh, I was heading back to Texas. That’s where I’m from, for Christmas. So I said, hey, you know, I’ll be in Austin area. She was in San Antonio. I said, I’ll, I’ll drive a couple hours and and come, come meet you. So I did and and throughout that conversation I explained seller financing and it worked out well that she didn’t need the money from a sale, uh, right up front. She kind of was just looking to make a wise decision. And we were able to work out a a situation where she financed 100% of the, of the purchase price over 30 years at a at a fixed interest rate, an appealing interest rate. I don’t remember what, what it exactly was and it’s actually changed because she did a refinance with me a few years later, which I can, I can get into. But I bought that five-unit property, uh 100% seller financed, was just over the moon about it. And she was happy about it because she was getting a much better purchase price or sell price than than what she had bought the property for and it was turning into a source of income that was secured by a property that that she’d owned for years. And her gut feeling about me was that I was a a safe bet in terms of another military member and and someone that was not gonna run the property into the ground. In fact, I was gonna improve it and improve the value of her collateral. So it it turned into kind of a unicorn situation that was and still is one of my best properties.
Mindy: So over the years that I was the community manager for BiggerPockets, I was in the forums all day every day and I would see people talking about, oh, I can’t find a seller financed property. I love that you had a list. You don’t just start calling people or calling listings from the MLS and say, hey, would you sell or finance? As I’m a real estate agent right now, I’ve got calls from people saying, oh, uh, would they sell or finance? I’m like, no, it’s on the market to be sold. They wanna be done with it. But having a list of properties that aren’t on the market, I wonder if she was even thinking about putting the house on the market. And you said, oh, she didn’t want me to be wasting her time like all these other people. There are so many people out there who want to, oh, it’s worth $100,000, I’ll give you 40. Well, great, I would make that deal all day too, but that’s never gonna happen. You have to make it attractive to them. And getting it for a low price is not nearly as important as getting it for 100% financing. It’s not like you paid double what it was worth just so you could get 100% financing. I mean, how much do you think it was worth when you bought it and what did you pay for it?
Bo: So I did get a good price on it, but I gave her a higher price than she was asking. So I think I bought it for around $150,000, which is a crazy price for a five-plex. So listen, this is a a monster home, right? So this is an old home that had been converted into five one-bedroom or studio style apartments. So it was a unique property and she was having issues with the tenants she was renting it out to. I don’t know, it just, it was attracting tenants that that that were not working out well for her. So she gave me a price and I said essentially, if you can finance it at these terms, you know, I’ll I’ll give you even more than that price because I think that’s what’s fair. And she was she was happy to do that. I saw it as an opportunity to to get into the Airbnb market, which was that was kind of a new strategy at the time. But I I thought that there was an opportunity to to turn those all into pretty inexpensive short-term rentals. They were very profitable when when I did do that. So I kind of changed the situation in terms of of who it was being rented to and it became a very, very valuable property to me. And I think a lot of people kind of started doing that in that area because it was an desirable area and the property values drastically increased over the next two or three years.
Scott: When I think about the 100% seller financing stuff, I think that for a lot of people, this concept is a pipe dream, frankly, and it’s not really realistic. And I think that that changes in a situation like yours because if someone says, hey, I wanna buy your property with 100% seller financing or whatever, I’ll laugh them off most of the time. But I’ll listen if a captain in the army from West Point gives a call and that person is living in a crappy half duplex to save a bunch of money on there. Clearly saving everything they’ve got and has two or three years of real estate experience under their belt is not way over-levered relative to their situation and is making 70, 80k a year plus those two things. I don’t know if this person, this seller knew or understood all of those things about the, the underlying bet that she was making around there. But to me, those scream really good odds compared to this person has no job, no source of income, no other things in motion, and now I’m gonna be collateralizing my, my loan against just the property. Did that play at all into, into this dynamic with the seller or how did you perceive your ability to convince people to give you seller financing of this sort?
Bo: I think you’re exactly right. I’m not pushy when it comes to kind of negotiating with real estate, but I do try to be mindful of the picture that I’m sending to to the seller and the different things they may value in what a potential buyer may have, especially with seller financing because you need to understand and trust in the a person you’re selling your property too because you’re not just walking away from it completely. They are now your borrower. They should look at you kind of the same way that the bank looks at a lender.
Scott: Give me one more item on this. Could you have paid, could you have put down a substantial down payment on this property if required?
Bo: Well, I could have put down definitely more than I did, more than that 0%, but at that time I I probably didn’t have a ton to put down also. Um, I I probably had maybe $10,000 or $20,000 that I could have, could have put down. And I explained to her, and I told her that, I said, there’s some some issues that I wanna get after in this property if I buy it. There was kind of some some water intrusion issues in the basement. I said, you wanna make sure that I have money to to fix this property up. And and that made sense to her and one of the reasons she was okay doing a 0% down financing.
Scott: Got it. Okay. So there was cash that you put into the deal, it just wasn’t in the form of a down payment.
Bo: That’s correct.
Mindy: Were you going to be living in this property? Did you have any plans to move into it?
Bo: Not this property, no.
Mindy: I’m wondering how you would have financed this if you didn’t do seller financing because it’s a commercial deal. But if you’re not gonna live in it then… ’cause you can’t live in your commercial property, can you? For a commercial mortgage?
Bo: I’m not sure about that. And I call it five units, but it’s just an interesting property where it’s probably looked at as a, as a a four-plex. In fact, it says like on the tax records, duplex, non-conforming. So it’s it’s kind of an interesting property. I don’t think that it would be looked at as a five-unit apartment building and if it were, there’s probably some changes I could make to take down a wall and and turn it back into four. But in my journey at that point, four or five years ago, that’s probably a wise question to ask and I was not asking those questions yet. I was just excited to get what I was pretty sure would be a good cash flowing asset, putting very little of my own money into it at at a good price.
Scott: So after your house hack and your illegal cash flowing five-plex…
Mindy: Non-conforming Scott. Not illegal, non-conforming.
Scott: Where does the rest of your journey go?
Bo: The journey went a lot faster than than I had expected it to. I kind of set my sights on if I can work towards getting $10,000 a month in real estate income by the time, you know, five years from now, that will give me, I think the confidence I need to to leave the military if I still feel like that’s the right thing for me to do and have income to to support my my lifestyle. So that was the goal. All I was thinking about in terms of investing was how do I build up my cash flow to work towards this goal? And I told you seller financing specifically is what I was looking for. So there was a another home that that came available in my neighborhood. When I say available, it was a a for sale by owner, a Sharpie sign in the yard, which I was immediately attracted to. I called it. It was a gentleman, I’m gonna make this a long story short, but a gentleman that I I got to know. He had he had military ties as well. Also his son, just so happened to have gone to to West Point. Um so we had some great connections and turns out that he had nine other properties, 10 total properties. He was in his 80s, he was looking to to get out of the rental business. They were all debt-free. He didn’t have any loans against the properties and they were well-off financially. It was kind of a side hobby for him. So this was another unicorn situation I had kind of stumbled across where I I was able to build trust with this gentleman and give him the purchase price as he would need to be willing to sell me all 10 properties. I put $500 down on each property as skin in the game. So he knew I was really invested. He understood I I was not putting much down, but it was similar to what you talk about earlier Scott, where I believe that that this gentleman, his name is Mr. Taylor, felt like he was making a good bet and who he was selling the property to. And he was ready to be done with it. And I told him I will make it easier for you than anyone else will. There’s no renegotiation, there’s no, you know, I’ll come to your house and and we’ll sign all these contracts. And that’s what happened. Long story short, I bought these 10 properties for pretty much 0% down. and I did have to put in a lot of money into those properties once I bought them, but that that was a huge kind of leap and bound in, in, in my journey growing towards that, that cash flow goal.
Scott: What year is this?
Bo: 2020. It was great timing.
Scott: Great. And you have one or two more years left at Fort Bragg after you purchased this?
Bo: We had about a year and a half left after, after I purchased those.
Scott: And by the way, my wife and all my friends that kind of knew I was dipping my toes into real estate thought that I had just totally lost it when I bought 10 properties in one fell swoop because it kind of looked like I’d potentially was putting myself in a position to to be over my skis, but I went for it and and it worked out.
Scott: And what was the total purchase price of this 10-unit portfolio?
Bo: Yeah, I don’t have the exact numbers, but it was around half a million dollars that I bought all 10 properties for. Again, this is a different price point market and values haven’t really started increasing like crazy kind of when when COVID hit and and after that. It was around $500,000 total purchase price on these properties. He financed them for 30 years at 3% interest. It was another kind of home run deal for me, but even with those terms initially they weren’t, they weren’t cash flowing because they weren’t, they weren’t getting market rent. They had some deferred maintenance. So I went in and and cleaned them up and invested a lot into them. But by the time they were getting market rent, they were, they were cash flowing very well. And then similar to that duplex that I explained, how how it went from around $100,000 value to around $200,000 today, that’s kind of the same story I’ve seen for any other properties that I owned in Fayetteville that I bought around 2020. There was almost a doubling in the price from from then to to the height of the market a year or two ago.
Scott: So let’s also put that in perspective, right? I think people here, oh you got 10 properties for 100% seller financing. At this point. But if you look at like a market like Denver, right, like my context in this. One duplex is $500,000, right? And you’re an army first lieutenant at this point when you’re purchasing this. You could have bought a house for 500 grand and probably qualified at that point with with your income. So this is not an insane overreach in this particular situation and and you weren’t going in over your skis on it.
Mindy: And now you have how many properties and how many units?
Bo: So today, um looking at my notes, I have 52 residential units. I also got involved in a mobile home park, uh a partnership. So I I own a third of a mobile home park. So about 46 units in it, 46 lots. I have an assisted living building that we rent to operators. Uh so we just own own the building, my father and I. And then we have five small commercial spaces, two small self-storage buildings in in Alabama. So I’ve I’ve kind of branched out in terms of the different asset types and asset classes within real estate, but it was all in search of cash flow and and there’s a lot of seller financing mixed in with with with a lot of those purchases.
Scott: What is your real estate income from this portfolio? What’s an approximation of the cash flow that you you generate?
Bo: Cash flow-wise today, my direct real estate ownership is is spitting off about $9200 a month just from real estate. I’m also doing uh private lending with with money that ultimately I’ve kind of extracted from real estate through some refinances and things like that. and that private lending is is probably bringing in $4000 or so on average per month. So, so very meaningful uh monthly income for me just just from that real estate investment.
Scott: That’s awesome. That 9200 include all the commercial and the mobile home park as well or is that just the residential portfolio?
Bo: It includes the mobile home park and and all the commercial as well. So when I moved back to to Alabama, around that time, and this was a big, a big shift for me. My father, who who’s always, he was a business owner and and he’s financially savvy, he became interested in kind of what I was doing in real estate specifically. So we worked out kind of a partnership where from that point forward, kind of any deals that I found, I I pitched to him and I found a way to kind of work backwards on the numbers so where he’s still gonna get a 12 or 13% return. And then I’d I’d have him put in as as much money as as he could to still get returns at at that kind of threshold. and then I’d I’d put in the rest, which was usually a lot less than 50% of the total cash needed. So maybe some unnecessary details, but it worked out well and helped me to scale because I had my dad that that wanted to scale with me and could bring some money to the equation.
Scott: Bo, if if you paid off all your properties, all the debt on all the properties and kept all the partnerships in place and those kinds of things, but could pay off all the debt, what would the cash flow be at that point for this portfolio?
Bo: Off the top of my head, I I don’t know that. It would be substantially more because to grow, you know, in in my growth phase, I I took on a lot of leverage. So there, there’s still a lot of debt involved in the real estate side of the, the portfolio and I I pay a lot to to debt service. But what I can tell you is that with that debt pay down, right now there’s about $65,000 in principal pay down per year on that debt, just just from making those minimum payments. So the tenants are ultimately funding.
Scott: Is this your full-time job now?
Bo: It is. Yeah. For the past year or so, my full-time job has been kind of managing the real estate portfolio and also spreading myself into other kind of asset types and kind of rebalancing the portfolio, if you will, into a little bit less real estate exposure. That’s kind of the goal.
Scott: What year did you leave the military?
Bo: I left the military in 2024. So yeah, last year.
Scott: Okay. So you went directly from the military to full-time investor, essentially.
Bo: Correct.
Scott: Is that immediately after your five or six year commit or did you stay at any length of time over that?
Bo: I stayed in about six months extra, um because we were expecting a child and and it just kind of made made sense to to stay put for for a little bit longer.
Scott: What do you do for healthcare benefits?
Bo: So I do, it is not insurance, it’s called health sharing, but I use CrowdHealth specifically for our health sharing needs. It’s a lot more affordable. There’s some different kind of risks associated with it or just some some different considerations. But for our family and the way we we value health and how affordable it is, it it made made sense for us.
Scott: What is your wife do for work?
Bo: She’s mostly a stay-at-home mom. She she does a little bit of social media management and marketing for a couple of businesses. One is her her father’s restaurant and then there’s another business. So she makes about $1,200 a month doing kind of those, I I would call them sort of side hustle kind of social media type things. but mostly she’s a she’s a stay at home mom and we have a two year old and a nine month old, so she stays busy. Yes, she does.
Scott: That’s very busy, on there. So, congratulations. I got, uh, two kiddos around the same age here as well. We have this this, uh, full-time job as a real estate investor. We have 1200 bucks coming in from your wife. You are a real estate professional, I take it. Does the depreciation on your portfolio give you very low AGI in this situation?
Bo: It helps a lot. Um this is the first year that I’ll be, or 2024 will be the first year that I’m a real estate professional because I wasn’t able to be one while I was full-time in in the military, and my wife also previously worked. So this is the first time that we’ll be able to qualify for real estate professional and yeah, it it’ll be able to offset almost all of the income I hope. You know, that’s, that’s more of a question for for my CPA, but that’s the goal.
Scott: I’ll be really interested to see how that goes for you in the next year, especially if you keep buying lots of real estate and how you handle things like accelerating depreciation on properties you’ve owned for a while. Maybe that option exists and some of them that’ll be fascinating and really interesting. Yep. What does Tuesday look for you in this quasi-FIRE world that you live in as a full-time investor?
Bo: Well, today’s Tuesday. So this morning, uh I woke up early and I went and played pickleball. And then I actually stopped at the Boise River on the drive back home and I I jumped in the river. And I came back and I sat in in this here sauna for a little bit, had breakfast with with the family and then my my wife and kids left to to go to the gym. And I spent a few hours kind of working on real estate stuff and today preparing for this podcast. But, you know, I I look at what’s going on in in my world uh in in real estate and investing and I I spend some meaningful hours there and then I, I usually wrap it up around three or four or so when the kids are done, done napping and we’ll go on walks or go to the park or or things like that. Cook a healthy dinner and then usually chill on the couch, do an episode of TV and and go to sleep early.
Scott: Pretty good Tuesday. Well, that’s what’s possible for folks. Uh, there’s a lot of work that went into that. A heck of a lot of sacrifice, some, some luck, and a lot of really good decisions and really smart investments that you made there. So congratulations on that. I’m jealous. I’m sure a lot of folks are about that. That sounds like a pretty good Tuesday.
Bo: Thank you. I’d say, I’d say a lot of luck, a little bit of sacrifice.
Mindy: Yeah, that sounds like a great Tuesday. I like the go-to-bed early part the best.
Scott: Thank you for sharing this incredible story. I think it’s an inspiration to really any officer in the armed services that that wants to go and and repeat. Maybe there’s some timing factors here, maybe there’s some really good deals that you got here, but somewhere along this continuum from having very little following your five-year service commitment to having something along the lines of what you’ve produced should be possible for many, many more officers and that should be a goal of ours. All righty. Well, should we get out of here, Mindy?
Mindy: That sounds like a good idea, Scott. Bo, thank you so much for your time today. Is there any place people could find you online?
Bo: Probably the best way is on Instagram. I’m @realestatewebb, w-e-b-b, it’s my last name, @realestatewebb. I’ve posted kind of my journey there and I wouldn’t say I’m super active today, but, but I’m always happy to to respond to messages if you have any any thoughts or or comments on on things we’ve talked about or or wanna connect, I I’d love to connect as well.
Mindy: Awesome. All right. Thank you, Bo. And we will talk to you soon. Thanks for your time today. All right, Scott, that was Bo and that was so interesting. I love the fact that he has strategically purchased his real estate, not looking to squeeze every single dime out of the profit. And I can’t stress how good that is as a seller when somebody calls up, hey, are you willing to do seller financing? Uh, sure. Okay, I want the rock bottom price too. Well, that’s an instant turn off. So he’s using these ideas of, like he’s thinking outside the box and he’s, what’s it called? 4D thinking? He’s thinking or 3D thinking? Uh, I can’t remember what the phrase is, but he’s thinking about all the possibilities, all the benefits, not just, I gotta get it for the lowest price. And I think far too often real estate investors kind of focus right on that.
Scott: I just think the outcome that he’s created is absolutely phenomenal. I mean, this guy is is a multi-millionaire with a $10,000 plus a month in passive cash flow number easily, plus any amortization, plus any returns from the rest of his portfolio outside of real estate. This kind of situation, this kind of option is exactly why we do what we do here at BiggerPockets Money is every single person who has this, there’s something good that’s gonna come from this. Some some contribution to the world, happier kids, happier family, healthier life. It’s just fantastic to see. And I think that like the lesson is that this is worth it that the risks you take or the the all-out approach that you take early in life can improve or go well in ways that you don’t expect whether that’s in stocks, whether that’s in real estate, and in these other areas, as long as you don’t get in over your skis, as long as you’re doing the fundamentals correctly of living way below your means and really investing yourself in whatever side business or rental property portfolio or work stream that can expand is gonna look like and I I just love it. I think it’s a I think it’s a fantastic money journey.
Mindy: I do too. I love that he’s taking advantage of all the opportunities that he has. and I think everybody has different opportunities that they can take advantage of. And I don’t wanna say exploit, but I almost wanna say exploit and, you know, your opportunities, Scott, are gonna be different than mine. Mine are gonna be different than Bo’s, but you take advantage of what you can take advantage of and, you know, you can get so much farther by just tweaking these little, like he’s not doing anything illegal. He’s taking a loan. Uh, what is it? A career starter loan? And he did take a trip, but then he also used it as his cash reserves and as to invest. I think that’s awesome ’cause he’s got this opportunity to have a 0.75% interest rate and, you know, anybody in the military who wants to get ahead needs to go back and, uh, listen to this episode again.
Scott: I think a two-part open-ended question that I look forward to exploring with you in the next year or two, which is the FIRE community or at least the BiggerPockets Money community is clear. They like the Golden Ratio portfolio. They like low-cost index funds for their purposes. But what they really want is they wanna keep growing post-FIRE. And they want a portfolio that allows them to do that in a way that that they’ll feel great about, that they’ll create both about sustaining a baseline level of spending, a baseline level of FIRE, and they’ll be able to see their net worth grow. And I think that’s the question that we now need to answer is what does that look like for a traditional or passive portfolio in the stock, bond, gold, whatever world out there and what does that look like once we think about layering in real estate into that that equation? And I think those are the two questions that emerge for me from this that’ll be really worthy of exploring over the next year or two.
Mindy: Yeah, that’ll be fun to brainstorm with you, Scott.
Scott: I think this is more closely aligned with my goal as well. I I do want to spend more of my portfolio and I have and will continue to to build out this golden ratio portfolio. But I’m not sure if spending the maximum amount for the rest of my life is actually my goal for my net, my personal net worth. I’m not sure it’s yours either, Mindy.
Mindy: It is not my goal. It is my goal to be able to afford all the things that I want.
Scott: So let’s help Bo figure out his goal and then, uh, in the meantime, let’s, let’s let’s let’s post that question and see what folks come back with. We’ll be reviewing the YouTube comments or you can send emails to scott@biggerpocketsmoney.com and mindy@biggerpocketsmoney.com if you’ve got ideas on how to answer this question.
Mindy: Awesome, Scott, should we get out of here?
Scott: Let’s do it.
Mindy: That wraps up this episode of the BiggerPockets Money Podcast. He is Scott Trench, I am Mindy.
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Mindy: Jensen saying take care, polar bear.
