Doug Spence is an active-duty Naval Officer and founder of Honor and Equity, a real estate resource for military members, veterans, and their families. In this episode, he discusses sharing real estate investing with the military community, his tips for balancing time, and why connecting people is his superpower.
Doug Spence | Real Estate Background
- Active-duty Naval Officer and founder of Honor and Equity, a real estate resource for military members, veterans, and their families.
- Current real estate portfolio:
- Single-family and small multifamily buy-and-holds
- LP in three syndications
- Co-GP in RV park fund syndication
- Based in: San Diego, CA
- Say hi to him at:
- Greatest Lesson: Success in real estate is all about people and relationships.
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TRANSCRIPT
Slocomb Reed: Best Ever listeners, welcome to the best real estate investing advice ever show. I'm Slocomb Reed, and I'm here with Doug Spence. Doug is joining us from San Diego. He is the founder of Honor and Equity, a real estate thought leadership platform for military members veterans and their families, and an active duty naval officer. His current portfolio includes single family and small multifamily buy and holds. He's an LP in three syndications, and he's a co-GP in an RV park fund syndication. Doug, can you start us off with a little bit more about your background and what you're currently focused on?
Doug Spence: Yeah, absolutely. Thanks, Slocomb, for having me on. Originally from Houston, Texas, and I went to Baylor University for undergrad, and soon after graduating I joined the military, so I commissioned as a naval officer in 2009. Did flight school for three years, and spent about three years in Japan, did three deployments on an aircraft carrier as a backseater in the F18 Super Hornet. Then moved to Pensacola, Florida to do a flight instructor tour there, which is also where I bought my first property. So I dipped my toe in the water for real estate there in Pensacola. Then moved to San Diego, California in 2018, after completing my MBA there in Pensacola, as well through University of Florida. And I've been in San Diego ever since. And really, since 2018, kind of accelerated my real estate journey along the way.
Slocomb Reed: Awesome. So you've been stationed in San Diego for about four years now.
Doug Spence: Yes.
Slocomb Reed: Gotcha, cool. Your rental portfolio, the stuff that you own and manage actively - where is it?
Doug Spence: So I have one single family home in Pensacola, Florida, I have three turnkey single family homes in Milwaukee, Wisconsin, and then through an entity that I have my business partner, my sister in law, we have a duplex in Oklahoma City, Oklahoma. That was my first BRRRR, first out of state BRRRR... And then we also have a single family home in Tulsa, Oklahoma, which was a second BRRRRR. And then we also house-hack here in San Diego. So we purchased a home here with my wife's VA loan, and we rent out the bottom floor.
Slocomb Reed: Doug, within the real estate investing world, I know within the active duty military community getting into this much real estate investing, this is not a normal story, but among real estate investors it is; it makes a lot of sense. What made you want to transition to, or at least take interest in investing passively in syndications, and then getting involved in an RV park fund?
Doug Spence: So I think a lot of it was getting surrounded with a different group of people. So I joined my first mastermind back in 2020, and really starting to see what other people were doing, people that were more experienced real estate investors than me. It definitely helped that I've always been a strong saver. I've had probably a 40%, 50% savings rate since I've been in the Navy, which is almost 14 years now... So I've always been good about saving money, and putting it into assets, and so getting around other real estate investors just gave me more avenues to put that capital into.
Slocomb Reed: You joined a mastermind, it helped you gain exposure to what other investors in the real estate space were doing, and it sounds like you have a focus now on being a similar resource, and exposing other active-duty military families and veterans to real estate investing. Within that niche, let's say, of sharing real estate investing with the military community, where is it that you find your focus, Doug?
Doug Spence: So within the niche, I really just like sharing my journey with folks and connecting with military members and veterans that are either just trying to get started in real estate, or they have one or two properties, and they want to grow; they want to start a business and really get the ball rolling on their real estate. And that's really what I've done just in the last few years. So I just like connecting with them, telling my story, helping them out and really connecting; that's one of my superpowers, is connecting people. So if I can't help them out personally, then I really want to connect them with other people that I know, that can help them out.
Slocomb Reed: That's awesome. Doug, this is not military-specific, but I know a lot of people who start out building a buy and hold portfolio that they self manage, of properties, single families and duplexes, four-families, typically within their own market where they live, but they self-manage, until they get to a point where the strain of self-managing on the side of whatever they're doing full-time becomes too great, and their portfolio isn't large enough to justify delegating, hiring an employee, hiring a manager to work for them, as opposed to just going and getting a third party. Is that part of what got you into looking at syndications?
Doug Spence: So I think part of it yeah; really from the beginning I've been totally on board with using property management, because that is, I think, a big advantage that I have, in that since I do a lot of out of state investing, because San Diego is pretty expensive to invest in, it has forced me to have the right people in place in those other markets. So it's kind of forced me to run it as a business, like it should be, as opposed to me going over and fixing toilets and doing all of that. So I like that part of it a lot. And then to your point about syndications, and back to my point before about being surrounded with other people and seeing everyone go from starting single family homes, getting duplexes and then getting into bigger stuff, seeing those economies of scale, seeing how much more powerful you can be working together as a team, rather than just doing everything yourself... So that just really appealed to me. And also, I'm very comfortable working in teams, being a military guy. So it just appeals to me in a lot of different ways, the syndication route.
Slocomb Reed: I'd like to draw a more direct point of comparison here, Doug... These are investing strategies that you have experienced with, both of them; and you've done some other things... But I want to focus on these two, because I know a lot of people who struggle with this decision, military and non-military. You have a self-owned portfolio of smaller residential properties that you didn't raise capital to buy. You didn't raise capital to buy them, did you?
Doug Spence: Well, the ones in Oklahoma that I did --
Slocomb Reed: In partnership, yeah.
Doug Spence: The ones that I did BRRRRs, I did use private money to fund those. But the majority of the portfolio is just personally owned homes, yeah.
Slocomb Reed: Gotcha. Personally-owned homes that you may be found with a partner, who was local there, and then you had some responsibility for executing on your business plan, even if your responsibility was managing the people executing on the business plan from a distance. They're in Oklahoma, you're in California... Being that level of removed from the day to day operations of your rental portfolio, tell us how that compares in your experience to being a limited partner in a syndication? I'd like to start answering the question for you, really just to move the conversation along... Please correct my mistakes, but I imagine there is less of your time and effort involved when you're a passive investor in a syndication. You also have little to no control over the returns available to you. You have no decision-making power. So in your experience, how have the returns compared, and how has your experience as an investor compared when you're investing at a distance, hiring the people who are running the day to day operations, and when you are deploying capital passively into a syndication where someone else is hiring the people who are running the day to day operations?
Doug Spence: That's a good question, and I want to caveat it with I have yet to go full-cycle on an LP investment that I've been in... So assuming they all work out well. I think investing in syndications as an LP is an awesome avenue for someone that either doesn't have the time or doesn't have the interest to talk to property managers, to talk to agents, talk to lenders, do all of that stuff. So it really depends on the goals of the person as well, what they want out of an investment. I know plenty people that just want to be hands-off, but I know plenty people that like figuring out what the rehab is going to be, talking to the property manager, shopping around finding different interest rates from lenders, and all that. So I think it just depends on the individual, their goals, their strengths and weaknesses as an individual as well, and then shaping all of those together into a strategy that works best for them and their family.
Slocomb Reed: Doug, that makes a lot of sense. I'm asking about you though.
Doug Spence: For me, I think the single family homes, and the smaller BRRRRs, and the turnkey were a great way for me to get my foot in the door with real estate. But moving forward, I definitely like the idea of doing syndications and JVs, just going bigger. So for me, going bigger on the JVs and syndication is, I think, where I see myself in the future.
Slocomb Reed: And you see yourself as an active member of those investments, as a general partner or a joint venture partner, as opposed to a passive investor?
Doug Spence: Yes, I will likely always invest passively in different deals, with people that I know, where I like the person and like the asset class... But I just love doing real estate. I love having discussions about it... I just enjoy it. So I would never want to just be an LP, because those monthly or quarterly updates via email - I need more than that. I want to know more about what's going on; I get curious, and all that... So yeah, for me, I definitely like being actively involved in it. Now, the returns on the LP side generally are good, I enjoy that too, but I just enjoy real estate, I enjoy talking to people about real estate.
Slocomb Reed: I get that, for sure.
Break: [00:11:14.23] to [00:12:19.27]
Slocomb Reed: 2018 you first got really serious about real estate investing; that's a very different investing landscape than now. We're recording in the fourth quarter of 2022. What opportunities are you currently pursuing for future investments?
Doug Spence: So right now, what we're working on is I'm a co-GP on an RV fund and syndications. One of my big goals for 2022 was to be a co-GP in a syndication, so I was fortunate enough to be able to work with some people I know on a syndication right now. So we are just focusing on that. And it's just RV parks in the Sunbelt.
Slocomb Reed: Why RV parks in the Sunbelt?
Doug Spence: So I got connected with this fund because I know some of the people on it personally. My belief is - I think there's money to be made in any asset class, but it's really about the people. It's really about the connection you have these people, vetting the operators, and one of the lead sponsors is someone that I've known for a couple of years now. He and I got along really well, and I guess he just saw me as someone that he knows, likes and trusts... So I'm drawn to the operators more than to the asset class. And that's the case for me as an LP investor as well. It was more the people. I knew the people personally on the operating side; it didn't matter as much what the deal was or what they were doing. The numbers have to make sense, but I care more about the people than the asset class and the deal itself.
Slocomb Reed: Gotcha. So you're following the people, and the people are doing RV parks in the Sunbelt.
Doug Spence: Right, and we're just helping them out with the acquisition and the raise, and just investor relations in general.
Slocomb Reed: Nice. Doug, thus far in your real estate investing, both in the residential stuff that you started with and transitioning into more active general partnership, joint venture investing, what's the biggest struggle that you've faced?
Doug Spence: I think it's time. I think me still being a W-2 guy, and my wife and I just had our first child six months ago - he's almost six months...
Slocomb Reed: Congratulations!
Doug Spence: Yeah, thank you. He's awesome. He's happy and healthy, and it's awesome. But it's really time. It's prioritizing time, and making sure -- one thing I learned early on in our son's life was fitting work in business around family and not the other way around, which I saw myself and my wife saw me starting to do, and she thankfully called me out on it, and I adjusted accordingly. I want to make sure that I'm prioritizing the right things. And waking up early, being able to get stuff done before I go into work, or after work - I think that's the toughest part to your question is just fitting everything in.
Slocomb Reed: I know a lot of listeners resonate with that, Doug. I have a three and a half year old at home, and a one-month-old. In fact, I just took the last month off from recording podcast interviews. Thank you to our Best Ever editing team for slipping in some of the stuff I recorded beforehand... But I took a big step away from work the last month as well. I can't just leave businesses that I own and operate, but I definitely moved myself down to part-time hours for that first month of my new daughter's life. I resonate. What have been your solutions or your life hacks for balancing that time - that full-time W-2, the family with a newborn, an infant at home, and doing real estate on the side? What can you share about the way that you succeeded in balancing all of that?
Doug Spence: I've done a lot of thought about that - I've had to, over the last few years - and I think it's really distilling your time down to what is light and what is heavy. So what are the activities that you enjoy doing, what are you good at, and what are you not so good at, what should you outsource? And those things that feel heavy to you or take up a lot of your time, but don't really have a lot of weight to them - outsource that stuff.
One of the first things I outsourced was bookkeeping, then hiring a CPA, and then within the business, within [unintelligible 00:16:16.08] we've hired an assistant as well to help out with stuff. And I think people wait too long to outsource a lot of that stuff. They wait until they're underwater before they do that... So that's been a really important way, is just knowing when to delegate. That's one way that I've been able to maximize my time. And then just focusing on those -- what are the $500 an hour tasks that only I can do, that align with my strengths, and focusing on those. And anything that's not that, working to either remove it or delegate it to someone else.
Slocomb Reed: Last question here before we transition the episode... Doug, what are those $500 tasks that only you can do?
Doug Spence: So for me, I really love chatting with people. I'm a connector, I get great joy out of connecting people I know with other people I know in order to help them out, without asking anything for myself. So for me, it's having conversations with people, it's meeting new operators that we could potentially work with... It's just really a lot of conversations with people. I think I'm pretty good at vetting people, in a way... So I've had to fire a property manager before, I've had to hire property managers... So in that sense, I think I'm pretty good at getting a good sense for people and their character. So those, I would say, are my strengths.
Slocomb Reed: Awesome. Well, Doug, are you ready for the Best Ever lightning round?
Doug Spence: Yes.
Slocomb Reed: Excellent. What is the best ever book that you recently read?
Doug Spence: So I recently read a book called "The comfort crisis" by Michael Easter, and it's about embracing discomfort to make yourself and make your life happier and healthier.
Slocomb Reed: What is your best ever way to give back?
Doug Spence: So to give back, I do that through Honor and Equity. So I really enjoy having conversations and mentoring other military service members and veterans, to help them to create and achieve their personal real estate goals.
Slocomb Reed: Thus far in your real estate investing career, Doug, what is the biggest mistake you've made, and the best ever lesson that resulted from it?
Doug Spence: That's a good question... I've definitely made some mistakes... I've gitta think of the biggest one.
Slocomb Reed: Maybe think of a good lesson, and then a mistake that led you to it.
Doug Spence: Okay. I think the biggest mistake I made and lesson I've learned from it is not buying more real estate earlier in my life. What you hear from lots of the salty older folks doing real estate is they always wish they had bought more, they wish they had never sold properties... So I think the best time to buy real estate is yesterday, and the next best time is today.
Slocomb Reed: To add to that answer, Doug, a lot of people give that answer... And I think we should bear in mind as well that I think a lot of people are giving that answer because it's Q4 2022, and yesterday was a better time to buy real estate... And there have been a lot of people, and all of us, I believe, are guilty of this at some point in our lives... We were waiting for the grass to be greener before we got in, and then the grass died. And we all realized the grass was green enough back when it was green, and I wanted it to be greener. A lot of people have been looking at a lot of dead grass recently, wishing they had invested earlier on. So a lot of people give that answer, but I think where we are in the market cycle has something to do with that, for sure. On that note, Doug, what is your best ever advice?
Doug Spence: I think people need to surround themselves with people that are doing what they want to do, and find a way to provide value to those people without expecting anything in return.
Slocomb Reed: Find ways to add value to people without expecting anything in return. That may be the best, if not one of the best answers I've gotten, Doug. Thank you. Where can people get in touch with you?
Doug Spence: We're very active on Instagram, @honorandequity, and we also have a website, honorandequity.com. Definitely check out the Instagram. My business partner, Tess, she does a great job with our social media. And then you can reach out to me directly via email, Doug [at] honorandequity.com.
Slocomb Reed: Awesome. And those links are in the show notes. Best Ever listeners, thank you for tuning in. I hope you do reach out to Doug. If you've gain value from this episode, please do subscribe to our show. Leave us a five star review and share this with a friend who you know we can add value to through this conversation about real estate investing. Thank you, and have a best ever day.
Doug Spence: Thanks, Slocomb.
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