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Posted at 05:30 AM ET, 07/11/2012

Former Marine turns real estate investor

I always envisioned myself as a man of action and adventure. When I graduated from high school, I enlisted in the U.S. Marine Corps, became a military policeman and was selected to guard the presidential helicopters. 

I was on the right track, but I knew I needed to think about my future financial security. Before the age of 20, I was reading articles on investment and finance and was looking for ways to make money. I remember one night sitting in the guard shack listening to one of my fellow Marines talk about his father who owned four rental properties. It became clear to me that real estate was a great addition to an investment portfolio. 

In my early 20s, I bought my first home, a small duplex outside of Camp Lejeune Marine Corps Base that I purchased for about $42,000.  I secured FHA financing, made a down payment of a couple thousand dollars and just like that I was a homeowner.  I lived in that home for more than a year until I got out of the Marine Corps. When I moved to Northern Virginia, I retained the home as a rental. 

That home gave me the bug.  I made a small amount of monthly income on the rent, about enough to take my wife out to a modest dinner each month. Better still, I watched the value of the home creep up as the balance of the mortgage (now paid by the tenants) went down.  I could see my net worth growing.

I decided I wanted to do more real estate investing. I purchased a real estate investment home study program, devouring it in days.

Real estate is a relatively simple business model with few barriers to entry. All you need to secure financing is a small down payment. You can sometimes buy property without a down payment, but I rarely recommend doing so.

Within a couple years, I had accumulated six rental homes that all were producing income. They created plenty of headaches such as non-paying tenants, maintenance issues and damage created by tenants, but they were tangible assets. There was no complicated prospectus to read, no oversized balance sheet to sift through and no stockbroker to rely on. I wanted more properties, but I hit a ceiling. I had trouble securing conventional financing with that many homes.

Rather than buying more properties, I decided to bolster my credentials and education. I got my Virginia real estate sales license and completed a masters in business administration at Strayer University. I also networked, finding sources of cash and other investors with whom to trade insights and make deals.

By 2004, I moved from being a landlord to operating a custom home construction firm. I started a company called Snow Goose Homes and took on a partner. We purchased a vacant lot, bought plans and hired a crew. 

I loved construction, especially the sense of accomplishment. I loved seeing a project go from a vacant lot to a beautiful home. However, I suddenly found myself running a full-fledged construction company.  As much as I enjoyed it, I was away from my roots.

By 2008, the housing bubble had burst, which provided me with a great opportunity. The market was flooded with thousands of neglected homes needing just the kind of love that I specialize in giving.  I went back down to a one-man show.  Instead of hiring construction workers, I made strategic relationships with good tradesmen and contractors who had the same passion for their trade as I had for mine.  I was able to focus on finding homes, negotiating deals, raising capital, arranging financing, creating project plans and providing project oversight.

These days, I do residential and small commercial property rehabbing and selling. You may know it as flipping; I don’t like that term.  I don’t look for projects that just need a coat of paint and new carpet.  I find homes that need significant construction.  I want the homes no one else wants.  I want to take the ugliest home on the block and make it the best. 

In addition to my rehab projects, I still hold a handful of rental properties. If I come across a good deal that I’m too busy to handle, I might wholesale the deal to another investor.  I put my real estate license to use by working with a couple of clients each year and selling most of my own properties.  There are many facets to investing, and as the market changes, an investor must adapt.

Real estate investing is not for everyone.  I’m not trying to sell anyone on this field.  It’s not easy money.  It’s not a get rich quick industry. I’ve faced a junk lawsuit, personally dug up and replaced sewer lines, evicted tenants and on many occasions have been left with completely trashed properties. Several times I’ve vowed to stop investing, but then the next deal comes along and I can’t resist. 

There’s a lot of action in this business, and the problem solving is exhilarating, but there’s also a lot of paper pushing. I’m happy sitting in my office poring over spreadsheets and property listings.  I’ve jumped out of airplanes, stood in the Oval Office, visited war-ravaged countries, and nothing gives me the thrill of bringing a deal together.  My days are far more action packed now than they were when I was walking a post.

I now find myself looking at vacant lots or old buildings and imagining what they could be.  I stand and marvel at large construction projects.  I think of the vision of the entrepreneur who brought together all the resources and the skill and the hard work of the men and women who labor to make that building grow out of the ground.  And, of course, I’m like a child on Christmas morning when I receive a final check at the end of a project.  To me that check is confirmation of a job well done.

Justin Pierce is a real estate investor in Northern Virginia. In his occasional column, he will write about investing in real estate.

By Justin Pierce  |  05:30 AM ET, 07/11/2012

Tags:  investor

 
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