Feb 16, 2022
Are there any opportunities for military members and veterans to invest in real estate? Absolutely!
Here to open up real estate opportunities for our brothers and sisters in uniform is Navy veteran, Phil Capron. Phil founded Mission First Capital to give an option for military members–both active and retired–to participate in real estate investments for as little as $5,000 at a time.
Having been investing since he was on active duty, Phil knows the exact problems that military members face and offers solutions that fit whatever lifestyle they want to live.
[00:01 - 02:29] Opening Segment
- Phil Capron tells us how to utilize the Veteran’s Administration (VA) Loan
- He recapped how he jumped from the Navy to the real estate space
[02:30 - 15:42] Crash Course on Reg A+ Funds
- The problem with using your own capital in real estate deals
- What motivated him to start a Reg A+ fund
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- When should you do a Reg A+ fund?
- A Reg A+’ fund’s advantage over crowdfunding
- Phil talks about the kind of investors who can join a Reg A+ fund
- Should you be a military member first in this type of deal?
[15:43 - 19:22] Closing Segment
- A tool or resource you can’t live without
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- His personal relationships
- Slack
- A real estate mistake you can help other investors avoid
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- Don’t procrastinate by telling other people your goals and finding a way to make them happen
- Your way to make the world a better place
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- Helping his fellow military members and veterans to invest in real estate
- Reach out to Phil
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- See links below
- Final words
Tweetable Quotes
“Just know that if you're committed to an outcome, and you're creative, and you lean into your network and create win-win relationships, almost anything can happen.” - Phil Capron
“[Real estate] is a team business. What I found out pretty early is you can only go so far alone, you can only go so far with like a small partnership.” - Phil Capron
“What we like to say is investing with us today will not change your lifestyle, but it could change your life.” - Phil Capron
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Email phil@missionfirstcapital.co to connect with Phil or follow him on LinkedIn. Start your real estate journey together with your fellow military members and veterans by visiting Mission First Capital.
- GRAB A FREE COPY of Phil’s book about VA loans here.
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I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.
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Email me → sam@brickeninvestmentgroup.com
Want to read the full show notes of today's episode? Check it out below:
Phil Capron 00:00
You can go invest on a platform and pick your deal, pick your jockey and go for it. What we are offering and the story we're telling admission first is you're investing in a suite of properties across a few different asset classes across multiple proven veteran real estate operators, so 100% that are known and operated real estate opportunities.
Intro 00:24
Welcome to the How to Scale Commercial Real Estate Show. Whether you are an active or passive investor, we will teach you how to scale your real estate investing business into something big.
Sam Wilson 00:32
Phil Capron has 10 years in the business and as of today, over 500 apartment units. His focus is expanding the real estate opportunities for military members and veterans, and he's also the founder of the Reg A fund, Mission First Capital. Phil, welcome to the show.
Phil Capron 00:47
Hey, glad to be here. Thanks so much for having me.
Sam Wilson 00:49
Hey, man, the pleasure is mine. Same three questions I ask every guest who comes on the show. In 90 seconds or less, can you tell us where did you start, where are you now, and how did you get there?
Phil Capron 00:56
Rapid-fire. So I started as a special operations guy in the Navy. My job was called Special Warfare Combatant Craft Crewmen. Basically, we drive the small fast boats and crew them to take Navy SEALs, Green Berets, and other special operators to their maritime missions. I bought my first house using what's called the Veteran’s Administration Loan, which enabled me to buy it with zero money down, moved all my buddies in, live for free, thought that was pretty cool. When I got out, I got my real estate license, because I knew there was something to this whole real estate thing. And, you know, through dozens of transactions with buyers and sellers started flipping houses and buying single-family rentals. And after, you know, a few dozen of those, again, just banging my head against the wall, I thought there's got to be a better way. I'd read all the books, Rich Dad Poor Dad, investing in duplexes, triplexes, and quads, you name it, you know, I understood it academically. But I actually took action, you know, eight or 10 years later, bought a 13-unit complex. And you know, that was 2017. And from there, racked up a little over 500 units between now and then. And that brings us to present day with Mission First Capital, which is yeah, we're the first Regulation A+ fund backed by real estate in existence that we know of specifically designed to help active duty service members and veterans push over the first domino to start a chain reaction of improvement to their financial landscape and their future.
Sam Wilson 02:16
Man, that's fantastic. I love that. So yeah, just a few short years, you've gone from zero apartments to 500. That's awesome. Have you done that using your own capital? Have you done that through raising funds before you started the Reg A fund? Or what did that look like?
Phil Capron 02:31
So here's the problem with your own capital. It will eventually run out. And for me, it was a pretty quick process because it didn't have a whole lot. So I actually acquired the 13-unit with $5,074.01 of my money, the purchase price was 910,000. So we could take the whole show talking about that. But just know that if you're committed to an outcome, and you're creative, and you lean into your network and create win-win relationships, almost anything can happen. So that one brought in a couple of debt partners, so they weren't attached to the property, just promissory notes against me, for you know, about $40,000, the seller held a second for $60,000, the seller had held a first for $810,000. Over the first year, I use the cash flow to pay off the second and I paid off my buddies pay them a nice interest rate. And I actually just sold that property this year for a profit of about $215,000. That's pretty cool to see that for a cycle. And so then yeah, I was out of money, and I had to go and raise money. So what that look like for me was joint ventures, I'd find the deals, I was a master evaluation within my little corner of the world. So my next deal was 108 units. And it was a screaming deal. We got it for just under 4 million, it appraised for 5.5. And today, it's worth just under nine. So brought in a few partners and that deal, killed it there, then yeah, a few more joint ventures, a few more syndications, a little bit of my own money here and there, but primarily other people's because they're much larger projects. And if you're gonna scale, I think it's important to grow that muscle but where you start is using your own, making the mistakes, skinning your own knees, because in this game, you do not want to be losing other people's money or your days will be numbered.
Sam Wilson 04:11
Right, man. That's absolutely so true. I love that the Reg A fun, that's a fun conversation, just from a sense that it's expensive, time-consuming. A lot of people steer away from it just from those two standpoints. So tell me why did you decide to do it? Well, first of all, if just in case our listeners don't know what it even is, tell us what it is, then tell us why you did it. And then you know what it cost you give us all the breakdown on that.
Phil Capron 04:35
And why you shouldn't. Yeah. So Regulation A+ under Securities and Exchange Commission is you're able to accept non-accredited investors. So that's somebody who's not a millionaire and doesn't make 200 grand a year. Most private equity offerings for folks that are quote, accredited investors. it bugged me that doing all these apartment deals I wasn't able to include many of my military friends and colleagues. So Regulation A+ the strength of it is that you can take non-accredited. The downsides is it's very regulation-intensive, a lot of red tape, very expensive, and probably a quarter million into the thing at this point, a lot of different entities, government entities that are looking into you and verifying you and auditing you and three different sets of accountants. So it's kind of a mess. And unless you're planning on building something really, really big and you're really well-capitalized, don't do a Regulation A+. Do a 506(b). And again, do that friends and family kind of thing. And once you build a brand for yourself 506(c), it's accredited only. But you know, that's a great path. And that's why most people go that angle.
Sam Wilson 05:40
Yeah, I understand. So do you, is it something you regret doing at this point?
Phil Capron 05:45
No, because in addition to continuing to scale my real estate portfolio and making money for my family and things that are important to me, the mission, pun intended, Mission First Capital, is to enable 10s of 1,000s of active duty service members and veterans to start their financial journey with us. Because most people just don't know that opportunities like this exist. And maybe investing a small amount of money with us, relatively small, will sort of like to spark and encourage somebody to go and do their own real estate deal, their own small joint venture or syndication, and that's the power. But if they're just working, you know, regular job, a military job, and you set a little bit of money aside every year invest with us. You know, that's a great thing, too. It can really change futures, what we like to say is investing with us today will not change your lifestyle, but it could change your life. And I really believe that. So there's a contribution point as to why I'm willing to endure all this regulatory nightmare.
Sam Wilson 06:45
Right, yeah. I mean, I can only imagine that just compliance alone is going to eat the better part of someone's job in a year. So that's really interesting. I guess, with that in mind, knowing the burden that running a Reg A fund places on especially a smaller operator, how are you offsetting the cost of administration, and also knowing that, hey, we're gonna have ample deal flow to were doing this make sense.
Phil Capron 07:10
So not offsetting, and, you know, I racked up over 500 apartment units, but I'm in selling mode right now. And everything that I have is going into Mission First Capital because you know, it's a machine and the purpose of it is to enable opportunities for those passive investors that get involved with their first investment with us. But also, for guys like me, who find their first 13-unit deal, their second 100-unit deal, I didn't know which way was up, you know, with either one of those deals, really compared to where I am now. If I had somebody that was willing to come alongside me with the equity, the net worth guarantor ship, the senior debt origination, and negotiation, you know, the legal aspect, the investor relations, all of that stuff, it would have been a godsend. And if you're doing a JV or syndication, you have to have people who fill those roles, you're losing, quote, unquote, a lot of your deal to have people fill them. And if they're not professionals, then what's to stop them from taking their football and going home, because that happens, right, life circumstance happened to people. So by building this machine, I'm able to partner with veteran real estate operators who've proven that they know something about their little corner of the world, and they're great at multifamily. They're great at Airbnb, the greatest self-storage, and I can pour rocket fuel on their growth and enable them to keep more of a deal than they would have if they did the standard syndication route, and for a lot less hassle. So that's what we're about here.
Sam Wilson 08:37
Gotcha. So this fund will not necessarily service deals that you are the general partner on, it will simply service what you intend on going in as maybe a fund of funds and other people's opportunities.
Phil Capron 08:48
So yeah, I get the fund to fund idea. But really, for us, it would be like a joint venture between Mission First Capital and yeah, Sam, the veteran in Memphis, you know what I mean? And we would just drop a JV. And, you know, obviously, we protect the investors first, but we want a sponsor that's bringing us great deals and creating massive value to make great money. Yeah, grow to grow together.
Sam Wilson 09:15
What's, I mean, when you talk to the potential investors, what's their minimum investment? I mean, a lot of these are Reg A+ could be in, you know, a crowdfunded deal. And you could have a minimum investment, you know, 10 bucks, whatever it is. So what's that look like?
Phil Capron 09:30
Exactly, yeah. And it's so funny learning about all the different money personalities and how people approach this type of opportunity. Crowdfunding is nothing new, right? So you can go invest on a platform and pick your deal, pick your jockey and go for it. What we are offering and the story we're telling admission first is you're investing in a suite of properties across a few different asset classes across multiple proven veteran real estate operators. So 100% veteran-owned and operated real estate opportunities. So that's, you know, sort of our stick. And if one goes bad, which, even if you do everything right, sometimes the deal goes bad at one. But we lost 12-unit to a fire last year that, you know, the insurance company still hasn't paid us out. And we can't get any new Department of Veterans Affairs or section eight residents, which is sort of our bread and butter until the building's rebuilt. So it's like a total Murphy's Law situation. So that individual project, it's really tough on us, right. But if you look at my whole portfolio, if it was blended, it would be just like kind of an aside, like, Okay, well, it's still like the values there, like the business plan is solid, you just need to be able to rebuild and everything is cool. So by investing in a suite of properties, diverse locations, asset classes, and operators, I believe that's a little bit of a hedge, rather than your typical crowdfunding, just one deal with just one operator.
Sam Wilson 10:52
Sure. Yeah. What did you maybe I missed that? Did you answer the dollar amount?
Phil Capron 10:56
Oh, I'm sorry. Our minimum was 5,000. Okay, so there's other out there, that might be cheaper. But, you know, like I said, I'm looking for a domino that can be pushed over that starts a chain reaction for these folks. And if it's much less no offense to folks that are working on getting their first investment together, but it has to be somewhat meaningful, it has to be able to snowball into something, right. And at 500 bucks, I just Okay, yeah, 20 years from now. Cool. But we're trying to accelerate growth.
Sam Wilson 11:23
Yeah. I mean, who really cares? If you double your money in 16 months, if all you put in was $1? Like, that's not a meaningful challenge now, or not a meaningful, yeah, just not meaningful in any capacity. When it comes to a Reg A fund, can you guys have accredited and non-accredited is that, did you answer that already? Maybe…
Phil Capron 11:42
Sure, yeah, we sure we can accept just about anyone, our criteria is you cannot invest more than 10% of your annual income, or 10% of your net worth, whichever is higher. So let's say you make $50,000 a year as a whatever military member, cashier labor 5,000 would be as much as you can do unless say, you own a stock portfolio, you know, retirement account, some rental properties of your own, and maybe your net worth is a quarter-million will then pay your minimum that we are allowed to accept just went from 5,000 to 25,000. So, you know, there's some different, on our website, there's some different, like questionnaires with the investor screening that helps you figure all that out if it's not clear.
Sam Wilson 12:25
And is that an obligatory minimum or maximum, I guess? Or is that something that is just what you guys advise your clients, and…
Phil Capron 12:34
It's part of the Regulation 80+ law. So yeah, we have to abide by that. So you come in, and basically, you certify what you make what you're worth, based on, you know, the calculations that are laid out in the forum. And, you know, that's just sort of is what it is, and, and also, we want people to be responsible, you know, it's, we're not anticipating being 100% of anyone's portfolio, I think that's reckless, I think you should have your, you know, 401k, if you're a W2 earner, you should buy your first home, you know, if you're in a position to do it, house hack it by duplex, things like that, those are all things I'm definitely in favor of, but to seek information and to seek opportunities. And we're creating an opportunity where there was none before where it wasn't well known. So we're trying to bridge that gap.
Sam Wilson 13:20
Right. What's it cost annually to keep the maintenance up on that, aside from the compliance you have to do in-house, like just filing fees with the SEC keeping that thing alive? And, you know, legal, what's that number?
Phil Capron 13:33
So it's gonna change the more investors that we get in because it makes the audit more complex and more properties that we buy. We've got a few under contract right now. So all, I'm not trying to be evasive. But it sort of depends on all of that in what is property of the individual entity, controlling 123 Main Street. And what's the purview Mission First Capital, to just throw a dart at? I'd say maybe 50,000. So it's tremendously expensive. So if you're not going to be raising 10, 25, 50, 75 million, it just, it's going to eat into your bottom line. So…
Sam Wilson 14:06
Oh, gosh, yeah, you can't support that on a, you know, two or $5 million raise annually just doesn't make any sense. I really, intriguing now, and again, you said you guys have a few properties under contract right now. But yet, is that through the joint venture structure that you have with other operators? Or is that stuff that you…
Phil Capron 14:24
A couple of them are mine, and a couple of them are with JV operators, so we would be looking to be the single check writer to come in and say, hey, you need, you know, half a million bucks. Let's do a JV, make it happen. It meets all of our criteria
Sam Wilson 14:39
Right, and one of the criteria you'd mentioned there was a veteran-owned real estate investing company, that's really niche, especially as you're going into, you know, potentially very large acquisitions. So how are you identifying those people?
Phil Capron 14:52
Okay, so let me make a caveat. So 100% veteran-owned and operated. Let's say that you have a buddy in Memphis, who's an Army veteran, and says, Sam, we're gonna do this deal. And then you guys both bring mission force capital, this deal. You guys are partners. That's great. We're partnering with you. But it's, there's a veteran at the top. What I mean is, there's plenty of money out there. And I just need to make sure that it's going towards helping a veteran build their real estate portfolio. And, you know, their new career after serving the military. It doesn't mean that necessarily they couldn't have a couple of people on their team that weren't, there has to be somebody that's in a meaningful role that brings us quote, the deal.
Sam Wilson 15:36
Right. Gotcha. Very, very cool. You're listening to that. And that rings a bell with you. Now you need to schedule a call with Phil. Phil, let's jump here into our final four questions. What is one tool, think digital, like a software, one tool or resource that you find you can't live without
Phil Capron 15:51
Dying? Because when I was reading the preliminaries, I had a different thought on this. Yeah. Well, I say what I was gonna say…
Sam Wilson 15:57
I've changed the question a little bit. So what was your…
Phil Capron 16:00
You know, to define as a resource might sound strange, but to me, it's my relationships. I mean, my girlfriend, like she, you know, empowers me to do everything that I want to do every day, she inspires me. You know, my friends, my team, my employees, like, this is a team business. What I found out pretty early is you can only go so far alone, you can only go so far with like a small partnership because everyone brings something a little bit unique by pouring into those closest to you and like, you know, the court relationships to me is my greatest asset, my greatest resource, right, from a tech perspective, Slack, I guess, just trying to declutter all the emails and everything and just sort of have a metric of where everything's going on an hour-by-hour basis across a lot of departments a lot of deals, then that's nothing new. So sorry.
Sam Wilson 16:49
No, no, that's good. It's interesting when you start hearing different things, you know, I've heard Slack a couple of times, but it's surprising the number of times you don't hear it, or yet, there's a lot of other things out there. But no, that's one that you know, email is the bane of a lot of people's existence. So finding a way to get that organized in a meaningful way. Absolutely. Question number two for you is this. If you can help our listeners avoid just one mistake in real estate, what would it be and how would you avoid it?
Phil Capron 17:14
Procrastination. You set a goal, you tell a bunch of people, and you find a way to make it happen. Because for me, you know, it was eight years, 10 years from when I'd first read the books. And when I first understood real estate, there's something to this, I like was making these steps I thought was taking action, like working as a real estate agent. Okay, I'm in real estate, now. I had a job, flipping houses still had a job, right? You need to find a way to start buying real estate now. So the best way in my experience to do that is to tell people what you're up to, allow them, your network to sort of conspire for you with resources, that could be capital, that could be specializations, that could be, you know, a lot of things that would be useful to building your team. And then just sort of that peer pressure of I said, I was going to buy a rental property in 2022. And it's December 30. You have to face your family and friends and say, Yeah, I shouldn't, I failed, right? So I lied to you, or I'm a failure, one of the two peer pressure.
Sam Wilson 18:12
I love it. Don't procrastinate. Question number three, when it comes to investing in the world, what's one thing you're doing right now to make the world a better place?
Phil Capron 18:18
So just sort of the charter of Mission First Capital, it's to turn the light bulb on for these military members and veterans to start investing in themselves and their financial future. And for those who really want to go hard into real estate to pour rocket fuel onto them and enable them to build their business, their family, and their community.
Sam Wilson 18:36
Yeah, I love that. That's great. Phil, if our listeners want to get in touch with you or learn more about you what is the best way to do that?
Phil Capron 18:43
Probably through the website MissionFirstCapital.com, spelled just like it sounds.
Sam Wilson 18:48
MissionFirstCapital.com. Okay, great. We'll be sure to make sure we include that in the show notes. Phil, thanks so much for your time and coming on today. This was great.
Phil Capron 18:56
Thank you, sir. This is awesome.
Sam Wilson 18:58
Hey, thanks for listening to the How to Scale Commercial Real Estate Podcast. If you can do me a favor and subscribe and leave us a review on Apple Podcasts, Spotify, Google Podcasts, whatever platform it is you use to listen, if you can do that for us, that would be a fantastic help to the show. It helps us both attract new listeners, as well as rank higher on those directories. So I appreciate you listening. Thanks so much and hope to catch you on the next episode.