Are you always on the lookout for real estate investment opportunities? Where other people don’t see value, you need to see potential value and income. Today, Clint Coons of Anderson Business Advisors talks to Solomon Floyd about military members getting paid to buy homes. Solomon took it a step further by starting Reunion Investments LLC.
Highlights/Topics:
- Dumbest decision? Buying a $78,000 house for no money down and practical payments
- Military Deployment: In exchange for rent, tenants fix up Solomon’s place
- Return from Mission: Interested investor offers $200,000 to buy Solomon’s house
- Pretty Good Profit: Solomon settles VA home loan and starts working with the government to do it again
- Painful Process: Solomon got paperwork completed, submitted, and approved for a government housing contract to rent to military members
- Deployment Deters Investors: Military members rent what’s left and less desirable—not what they deserve
- Basic Allowance for Housing (BAH): Uncle Sam writes the check to pay the rent
- Development Off Base: Military housing is standard; Solomon’s program provides perks
- Hassle-free Properties: Government takes care of everything; investors receive military rents every month as landlords
- Fulfilling Flint’s Water Filtration: Would you rather live in a home where brown or crystal-clear and clean water flows from faucets?
- Successful Strategies for Finding Opportunities: Depressed economic or environmental conditions drive prices down; put in a bit of effort to bring prices back up
- Section 8 Housing: Purchase properties and establish public-private partnerships to provide affordable housing to those who need it
Resources
Solomon Floyd’s Phone: 214-438-4809, Ext. 0
U.S. Department of Veterans Affairs (VA) Home Loan
Basic Allowance for Housing (BAH)
Anderson Advisors Tax and Asset Protection Event
Anderson Executive Retreat 2019
Full Episode Transcript
Clint: Welcome, everyone. Hi, it’s Clint Coons here with Anderson Business Advisors and this is another weekly podcast that we’re bringing to you. In this podcast, I want to talk about investing in real estate. We’re all real estate investors. Many of you who have been listening to that are real estate investors and you sign-in every week to learn about real estate investing, asset protection, tax planning.
One of the things that I’m always looking for are different opportunities when it comes to real estate investing. Meaning, what is the different approach? There are a lot of gurus out there that talk about the fix and flips, and you can make money at that. There are people who will teach you about mobile homes or there are individuals that will teach you about buying single families and getting that mailbox money coming in.
Everyone has their niche, but what I always find interesting is when you meet that one special person when I’m at an event or I’m out somewhere speaking, and they come up to me and they say, “Clint, have you thought of this?” and all of a sudden you switch from—as I say many times this week—beta mode because you’ve given a presentation so much and then you automatically move right into alpha mode. I’m sure many of you that are listening and know what I’m talking about. Somebody will say something, and it will just trigger your brain just automatically goes into overdrive. I want to learn more about that.
I was recently in Austin and I was teaching in an event to a group of real estate investors and an individual came up to me. He started talking to me about his way of investing, and I tell you what, my brain just shifted right into alpha that point in time. I thought, “This is awesome. This is a different approach to real estate investing.” Something I want to bring to the podcast. I want to get out there for our listeners so they understand that you can look at real estate from a different perspective, and there are ways to make money when ordinarily, all the other investors are driving by and bypassing the properties. You’re going to be walking or going by those properties and you’re going to see opportunities.
When I was growing up, this was something that I experienced first hand, when my father took an old run-down hospital that just sat there. Nobody thought as income potential. Who wants to buy a hospital? But my father saw it as an opportunity to turn it into an apartment building and that’s what he did. He remodeled it and turned it into an apartment building. He made a ton of money doing it. It’s understanding that where other people don’t see the value, you need to see value.
The person I have with me today is Solomon Floyd from Reunion Investments. I met him in Austin and he is one of those people that sees value where other individuals do not. Solomon, thank you for being on today.
Solomon: Awesome. Thanks for having me today, Clint.
Clint: When we were talking in Austin, you were telling me about a property you didn’t flint and we can get into that in a little bit. What really intrigued me is—you know the story—how did you get started in real estate? What brought you into investing?
Solomon: It’s kind of a crazy story, but when I was in the military I did the dumbest, stupid thing of buying a house as soon as I got to my first base because why not? It was essentially no money down, payments fit really well, and it was going to be a good idea. I deployed a couple of months after that, and I rented my house out to some guys who, in exchange for rent, fixed up the property and it was looking good.
I get back and this investor calls me up and he’s like, “Hey, I want to buy your house,” and I’m like, “What? No way. Get out of here. You don’t want to buy my house.” So he’s like, “How much is the rent for? How much did you buy that? Yada, yada, yada,” and I tell him, “You know I bought the property for $78,000.” He’s like, “How much did you put in the fixing?” and I was like, “Well, I let the guys live there for free and they fixed it up.” He’s like, “Woah. You […] to this thing for $78,000?” and I was like, “Yeah. […].” Then he decides, “Well, you know what? Because you’re renting it at $2000 a month and it looks good, it’s worth about $200,000,” and I was like, “No way. Get out of here. There’s no way. That’s not possible.” Lo and behold, he offers me $200,000 for my house, and I said yes. Not doing […] noticing that it was worth $250,000, but it was a pretty good profit.
I paid up my VA loan and decided to try it again, and again, and again, and again, until my friends ask me and they said, “Hey, can you do the same thing for me?” and I said, “Sure.” Then their friends, their families, everybody started coming to me and asking, “Hey, I want a property in this kind of market that I can flip.” You’ll know there’s something about military members is that we just pay the rent, we also get paid to buy homes, so selling them is easy. Then I got out and I decided, “Why don’t I just rent primarily to military?” That’s how Reunion Investment is started.
Clint: All right. When you talk about renting to military, I think the people that are listening here are thinking, “What’s so special about just renting to military members?” You took it a little different way. You just didn’t start renting to military members. You went actually out there and started working with the government, as what you told me.
Solomon: Exactly. It took awhile, but I ended up being in the right place at the right time, met somebody who could help me get a government housing contract to house military members. We got all United States-based military installation. It did one thing that has really helped to keep us alive and keep my investors strong. As some of you […] know, there is a clause that they can just break the lease when they get deployed or ordered to leave. That deters a lot of investors from renting to military. A lot of military members have to settle on what’s left and it’s really not good housing so that’s what we focus on.
Clint: So when you’re renting to military members, who is actually paying it? Is it the serviceman, or is it the military that’s paying the rent?
Solomon: That is good old Uncle Sam that is taking that money from others known as BAH—basic allowance for housing—and that money gets allocated per base. A lot of people don’t know this either, but military base gets about, on average, $1.6 billion just for housing military members. That is allocated towards the BAH of each military member on that installation, along with the civilians as well.
Clint: So that money comes in, then who’s paying the rent payment every month? Is it Uncle Sam who is writing you the check?
Solomon. Exactly. It is the federal government that is writing the check every time.
Clint: Wow. You see, that’s the best thing about one aspect of what you do with this military contract that you have. You no longer have to worry about whether or not that service member is going to be paying you money. The money is coming every month right to your mailbox from the federal government. You’re not chasing anyone for the money, so if they want to go out, they spend more money on beer, and they have less for rent, you’re paid. You’re good to go. That’s the great thing about it. As I understand it, though, you did a development program where people have property in your bases. They can tie into what you have.
Solomon: That’s exactly right, except the difference is, my contract doesn’t make me an on-base housing contractor. An on-base housing contractor is going to have a limitation on the size of the base, which is usually a couple of hundred homes, which living on your own is a very big deal. If you look outside the base, you’re going to see a couple of thousand homes, and that’s where your real money is going to be made.
Military members are going to do the same thing that regular civilians do. They’re going to live in a nicer home. They’re going to want a pool. They’re going to want a big backyard. Military housing is standard. Our housing is actually bought by investors and put into our program, where they can receive military rents every single month as landlord.
Clint: There’s something key there. Again, this is what I thought was just amazing. If I had a property, let’s say, in McLean Texas next to an airforce base, I can put that property into your program, start receiving guaranteed rental income from the federal government to put a service member into that property, and I just sit back and cash-in the checks. I don’t have to worry about all the other hassles that go into trying to rent the properties because now, the government is paying to house personnel, right?
Solomon: That’s exactly how it works. Some other perks that will come with that are, for example, they’ll take care of any damage caused to the property, should it be deemed to be caused by a military member. You’ll have about a three month renter insight to know when your next renter is showing up to the property, so you are always aware of who, and when you’ll be renting to all the time.
Clint: It’s like an Airbnb which in you don’t have to do anything. They’re all taking care of it all for you. That’s amazing. You were able to get this agreement and put it all together, right? You said you we’re at the right place at the right time?
Solomon: Yes, indeed. It was a couple of months of getting all of this together. The paperwork was unfortunately very painful, but at the end of the day, I think we came out on top.
Clint: Yeah. That’s what attracted me to your idea of investing. It’s the way you look at things. You saw an opportunity and you say, “Hey, there’s a need here.” Everybody’s going about it the wrong way, but I guess that’s what I look at from what you’re telling me. You’re just listing your property in your base, hoping a service member will come and rent it for you. You’re like, “Hey, let’s just go right to Uncle Sam himself and have him rent the properties from me and put the people in.”
I think that is what people miss many times with investing. It’s understanding there are other ways to do things. You just got to get creative. Which brings me to my next point. We were talking, if you recall, about Michigan. You were investing in Michigan and that water crisis and everything that went on there, how you saw opportunities. I’m sure listeners will love to hear about this. Why don’t you tell them that story?
Clint: Absolutely. As many of you know, Flint, Michigan has had issues and currently is still having issues of its water both being drinkable and just totally impotable water; not even an option for some people right now. The thing that I noticed was, our President was saying that there is a problem going around the United States and diverting money to a wall even though he promised to divert some money to Flint, Michigan to help them out. It blew my mind that, that’s where my tax money went, to the border of Texas, where I already live, to keep people who are relying on the work out.
What I decided to do was a few of my friends, about 15 of us, we got together and we started purchasing property at tax auctions, and encouraging our other friends and everybody else to support this property in Flint, Michigan. We fixed them up, we made them look better, and we put water filters in there, we changed all the piping, all the way to the street as best as we possibly could, and rented the homes out again. We provided them drinkable water, we provided them with hot water, everything that they can possibly need to survive, and we rented out homes.
Now we’re at the point where we are starting to owner-finance homes back to people, who are already living there, now that they can afford to pay their mortgage, now that they care about paying their mortgage. We just saw the opportunity where there was a promise made, nothing came, and we just fulfilled that promise with our own wallets.
Clint: Wow. I guess to me, that would elevate you in that rental market because they’re still going to be people living there, they are in need of housing, and I’ve got the opportunity to live in a house where the water comes out, it’s brown but I’m told it’s still drinkable, versus I could go to your property, and you have all the latest in filtration equipment. I know how much it cost to put that stuff in. I put it in my own house myself. It’s not that expensive but there’s a perceived value there. That probably elevated you. Imagine, you rented those houses out, as soon as they hit the market they’re probably rented.
Solomon: Exactly. As soon as they came on, we have people coming in. Our first ad was clean water here. That […] a lot of people and that really helped us understand that the rental need there was much larger than I anticipated. It seemed to work out to all of our clients and pretty much allowed them to get in on the, I want to say the ground floor, but get in on some of this opportunity and provide cleaner water to some of these people who truly needed it, while also listing their portfolios.
Clint: What intrigues me about that again, is most investors would look at Flint, and they would say, “No way am I going there. There are too many problems with the water. Those properties aren’t going to be worth anything.” You came in, and you said, “All right. That’s a prime buying opportunity.” So buy when it’s depressed because there’s certain economic conditions, or environmental conditions that are going to drive prices down, and with a little bit of TLC, you bring those prices in those, that income back up. That’s great, it’s our whole mindset.
It’s that investing mindset that you have that I think is unique. I want to talk about how you find opportunities out there and how you come across this, but we need to take a short break. When we come back, let’s go into how you find your opportunities and what you look for.
Solomon: Sounds good to me.
Clint: Hey, welcome back everyone. It’s Clint Coons here with Anderson Business Advisors and right before the break on our podcast, we were talking with Solomon Floyd from Reunion Investments about how he finds opportunities where other investors will probably just walk on by and that’s a unique perspective. Solomon was sharing with us some of the different strategies he has used to maximize his investing and those of his investors because he also works with investors who come to him because they just don’t want to do the legwork themselves.
As you know, I own quite a few properties across the United States and the vast majority of my portfolio has not been built through my own efforts. I worked through individuals like Solomon to find properties for me, to find me opportunities because I’m too busy to go out there and do it all on my own.
When we ended up right at the break there, I asked you, how do you find these opportunities? Did you throw a dart at the board? Or are you going through the Wall Street Journal every day? Are you watching CNN, Fox News, MSNBC, finding the stuff out? What drives you to find these things?
Solomon: I don’t know. It’s not that I don’t know. I definitely do. The idea that Reunion users is to find new properties is primarily focused on what’s not being provided somewhere out there. When it comes to the way that we find affordable housing, we look at the market. For example, Dallas, Austin, Houston.
For the housing market, it skyrocketed, but the more people getting these properties from, they are buying them from somewhere, they are buying them from the landlords who can’t afford to fix the properties up, who can’t afford to raise the rent because they can’t fix the properties up, and they need to sell, thus, creating a market where there’s no affordable housing for the people who work at the McDonald’s, the Walgreens, the Walmarts. They may have to go further and further away from the city until there’s no more.
So our solution, that we come up with is to purchase the affordable housing, and through our ideas of public-private partnership, we partner with cities, we partner with companies, and to perform the easiest way to make sure that there is always going to be affordable housing for members who need it. Of course in ourselves, we make the Section 8 money, we make the […] money, we make the money that comes from providing this service to people who truly need it.
Our goal when it comes down to it is, these people eventually will find new jobs, they may go to college, they will seek other opportunity, and from there, they will be able to move out. Those homes that we got now, investors are still going to be looking for places to buy and flip homes, and split up trillion dollar apartment complexes. We’ll have the land and are very able to flip that to those investors if we need to.
Clint: You know, I was thinking on something when you said that. When it comes to affordable housing, Section 8, a lot of people have negative connotations about getting into affordable housing, and having Section 8 tenants in there. I want to know your experience because in my experience, there are different types of renters when it comes to Section 8.
I found personally and it’s just from my own observations, that in a multifamily context, a Section 8 renter tends to be a lot different than in a single family context. What I found in the single family context, those renters that I rent to, he takes care of the properties. They have a sense of pride in ownership and having a house, and they do a lot to maintain that, more so than I’ve seen on the multifamily side because they don’t get that same pride of ownership […] apartment going up a small apartment. Do you see that a lot in what you’re doing right now as well?
Solomon: That’s a great question. We have not really experience it with the multifamily space when it comes to our Section 8 in […] rentals. The reason being that exactly. How am I going to ensure that I build a quality product that encourages safety and well-being if everybody’s going to trash it?
We focus primarily on the single family housing space for the reason that it also provides a better exit strategy for us. On top of that, yes, our renters […] longer anything to get a better job, in order to afford their own home, or to rent a better one themselves. Being in a home, psychologically, feels better than being in an apartment. You can feel as though there is some aspect of ownership even when there’s not. First, being in an apartment, only the things that are really there are yours. How many memories are surely made in an amazing apartment versus first steps at a home versus that day that there’s a hellstorm and you had a party?
Clint: Yeah. I mean that’s just been my experience. I think you know what you’re doing from that standpoint is really great and people can learn from that. There are opportunities in providing affordable housing and you shouldn’t shy away from those opportunities if you know where to look in the right cities, in the right markets. Again, here’s another opportunity for you to make money.
How are you operating in today’s market? Are you seeing anything going on out there that causes you concern with your investment? Have you changed your model of what you’re doing with your investors and where you are finding opportunities?
Solomon: Absolutely. Our reach has grown within the five years that my company has been alive. We can now target cities that are much further away in our home base, which is here in Texas. We’re starting to get into Oklahoma, we’re starting to get into California, we’re starting to get into places where we are seeing a decline of living. Whether it’s affordable housing, whether it’s just housing at all.
In Oklahoma, the problem is there’s just not enough housing and not enough people out there to build it because not enough people there can afford it. How do we combat things like that? Other big push for us is primarily been adapting, providing opportunities, and investment strategy through commercial and small businesses.
By providing that and giving, again, these people a sense of ownership because Joe from down the block started his own barber shop. That’s going to allow people to take care of this city, they’re going to pick up the trash in front of the store front. They’re going to show up every day and say hi to Joe or whoever and actually take ownership of what they really care about. Providing that to towns, cities, and just individuals allow us to, once more, again, make those returns for ourselves and our investors.
Clint: Yes. You know it’s because of this approach, the way you model, the stuff you’ve done on the military side. As you have explained, there’s so much more to this. We can’t even touch on it today what you’ve already explained to me. This is why I’m pleased to have you coming out to our executive retreat this year in Maui, in October because you’re going to bring a whole new perspective. You’re young, you’re energetic, you’re going out there, you’re actually putting deals together, you’re doing it in a conscious way to help people out. You get into the building, the communities that you’ve done as far as making jobs available, as well as finding out how to put together plan developments that will do more. I think it’s great.
If anybody who is listening right now may want to find out more, maybe they have a house near a military base, they want to be part of that program, maybe they want to keep with you on looking for these tertiary markets where there are opportunities, how would they best go about getting a hold on you?
Solomon: You can go to our website reunioninvestmentllc.com or you can give us a call at 214-438-4809 extension 0. Give us a call, let us know what your style of investing is, what you’re looking for, where your properties are, and we’ll see it if we’re a good fit for each other in helping develop communities, and creating some passive income while sitting at home and watching your favorite TV show.
Clint: All right, Solomon. Thank you for coming on. Guys, be sure to reach out to him. I also have the information on the show notes where you can click on there and it will take you right on his website. Thank you for listening and Solomon, thank you for being on. It was a great 30 minutes. I know that you gave us a lot of great information. There is so much more out there. I look forward to seeing you in Hawaii.
Solomon: Absolutely. Thanks for having me and I’ll see you in October.
Clint: All right. Take care, partner.
Solomon: Thank you very much.
As always, take advantage of our free educational content and every other Tuesday we have Toby’s Tax Tuesday, another great educational series. Our Structure Implementation Series answers your questions about how to structure your business entities to protect you and your assets. One of my favorites as well is our Infinity Investing Workshop.
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