407: 8 Rentals in 8 Years and Unlocking MASSIVE Tax Breaks with One Career Move

0:00Welcome to the BiggerPockets Money Podcast, where we interview Evan Miller and talk about his journey from being in the Air Force to becoming a CFPay to landing on real estate full time. Hello, hello, hello. My name is Mindy Jensen. And with me as always is my co-pilot, co-host, Scott Trench. Thanks, Mindy. Great to be here and always delighted to be your wingman. Scott and I are here to make financial independence less scary, less just for somebody else. To introduce you to every money story because we truly believe financial freedom is attainable for everyone, no matter when or where you're starting.

0:30That's right. Whether you want to retire early and travel the world, go on to make big time investments in assets like real estate, or go full time as a real estate investor, we'll help you reach your financial goals and get money out of the way so you can launch yourself towards those dreams. Scott, I am very excited to bring on Evan Miller today to talk about real estate and the Air Force and CFP stuff. This was a fun conversation. Absolutely. Evan has picked up a cash flow positive asset, including houses and a cash flow positive spouse every year for the last eight years in a row. And it's really enabled him to build a solid portfolio and go full time into real estate investing.

1:07All right, Mindy, we have a new segment of the show called Money Moments, where we share a money hack, tip, or trick to help you on your financial journey. And today's Money Moment is, this may seem like an obvious way to save some money, but a reusable water bottle versus buying one. This goes for plastic bags, too. Just bring your own. This not only helps the planet, but also helps your pocketbook. I've got three of them. These little Nalgene water bottles cost me$20. Never go anywhere without them. All right, before we bring in Evan, let's take a quick break. Need fast, reliable funding for your next investment property?

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2:19AutoTrader's tools sync with your exact budget and preferences to tailor the online car shopping experience totally to you. Budgeting lets you input your info to see listings in your price range. Search and inventory helps zero in on your dream car. You can choose from new or pre-owned, the style of the car, and features like engine size, color, all the way down to whether you want a trailer hitch. Go ahead and get picky. Don't worry about scrolling endlessly. AutoTrader, powered by Auto Intelligence, only shows you vehicles based on what you can afford and what you want. And pricing shows you which listings are the best deals, so you can feel like you're winning the negotiation without negotiating.

2:55You can even choose how to close the deal, online, at the dealership, or a little bit of both. Auto Trader, powered by auto intelligence, makes the process of buying a car less of a process. Try it today. Visit autotrader.com to buy your perfect ride. My husband and I have multiple investment accounts across several different companies. Throw in vehicles, investment properties, and private equity holdings, and it can be difficult to get a good idea of our actual net worth. And frankly, between the kids, work, and just life in general, I don't have time to be logging into 47 different places. So I just didn't.

3:28Scott walked me through setting up my Monarch account and suddenly everything was easy. It's all in one spot so I can check in quickly. Just like everything else on Monarch, the dashboard is customizable so I can see at a glance what's most important to me and dive deeper when I need to. Feel organized and confident in your finances with Monarch, an all-in-one personal finance tool that brings your entire financial life together in one clean interface on your laptop or your phone. And right now, just for our listeners, Monarch is offering 50 % off your first year with code pockets at monarch.com.

4:02Don't let financial opportunities slip through the cracks. Use code pockets at monarch.com in your browser for half off your first year. That's 50 % off your first year at monarch.com with the code pockets. And we're back. Evan Miller is a financial planner turned real estate investor who can be heard on episode 217 of our sister show, The Real Estate Rookie Podcast. He's also the husband of our general manager of publishing at BiggerPockets, Katie Miller. Evan, welcome to the BiggerPockets Money Podcast. I'm so excited to talk to you today. Thanks, Mindy. Hi, Scott. Hi, Mindy. So great to be on the show.

4:36I'm a huge fan. I try not to fanboy too much, but it's really cool to actually get to be on the show and to talk to you guys in this context. Well, Evan, let's jump into your money story. Let's look at the history of your experiences and journey with money. Yeah. So I grew up in a big family, have five siblings, so six of us total. And my parents raised us on a one income household and they didn't have a ton of income, but they put us through. I did the math. It was 54 years of private school total. All of us attended the same school for nine years. they remodeled their house while we were growing up just really made the most out of a relatively modest income and I think the reason they were able to do a lot of that was through Dave Ramsey they did the total money makeover all of that stuff that Dave Ramsey puts out and we learned about the envelopes and like literally taking your spending money out of the bank account into cash putting it in envelopes and I grew up on that and it um I loved it I was always kind of a finance nerd before I even realized it and would like have like probably 10 different envelopes and um that would dictate how I would spend and um you know through high that started when I was like before high school and then when I got into high school I started being able to make my own money um did a little lawn mowing business in the summer um or some other jobs in the summer to to make some extra money and all that money was going into my envelope so I was watching everything I was spending down to the last detail down to how many half pieces of gum I could chew throughout each day in my classes it was pretty OCD so that's kind of how I approached it until I got into college but I think it was a really powerful start and an awesome foundation that set me up to kind of parlay into the entrepreneurial journey that I've started since then.

6:36I believe you decided to go into the Air Force after high school. Can you walk us through that journey and where college comes in and where the Air Force begins? Yeah, so it had always been my dream to be a pilot. So come junior year and stuff, I started looking into the service academies and I ended up going to the Air Force Academy. Something that's really cool about the Air Force Academy is that they pay for your whole school. So graduated from the Air Force Academy debt-free of sorts. I did have the debt of time. You have a commitment. You have to serve for five years. But a benefit of that commitment is you have an awesome job when you graduate and a very clear career progression, really for as long as you want, but certainly for the first five years.

7:24You graduate with about a$50 ,000 salary if you're living in Denver. And then throughout the five years, you get automatic raises all the way up to you're making about $100 ,000 by the time you make captain and you're in your fifth year. And Evan, that base salary is also buffered by allowances for food and housing. Is that correct? What would you estimate the total comp for a new Air Force graduate is in O2? So that is the total comp. And it's about 60 % salary and 40 % basically allows for housing. And a cool thing about that, the BAH doesn't get taxed. So the$100 ,000 once you're a captain, so four years in, is like 40 % of that isn't taxed.

8:12Um, it did, it complicates it a little bit when you're trying to go buy it, buy your first houses. Um, but ultimately if you get the right lender, it's better because you're not having to pay tax on that. So they can round up a little bit. Awesome. And while you were at the Air Force Academy and getting started in your career, um, can you tell us a little bit about your financial habits and were they the same as your peers? Did you spend like a sailor? Other than that's Navy, but, uh, how did that go? I certainly didn't spend like a sailor. I tried to do nothing like a sailor. but there's quite the quite the um spread of spending habits at the air force academy for sure um i continued my envelope strategy i didn't actually have envelopes i switched it to an excel sheet but i would look at that excel sheet you know now that we're in excel we're not limited by paper so i had 20 plus categories of spending and then i would every time you get a paycheck every two weeks just like a normal w-2 um that paycheck already had every dollar spent and i would put it into my spreadsheet um it would re you know replenish what i had been spending over the last couple weeks and i would look at that i mean like every day sometimes um and at least every few days um and that that was pretty different than the rest of the year for the rest of the cadets there were some people that um had a pretty good financial background but a lot of us this was the first money we were making and it was fun to go spend it um and you know each year we started making more we had some debts that we technically had to pay back to buy our uniforms and stuff in the first year um but i managed to buy my first car that i bought um was a 1995 honda civic uh one of my favorite cars ever and it was it cost i think about two thousand dollars maybe $2 ,500 and drove that thing until I was almost done with my Air Force career.

10:04And then I switched to a much fancier 2001 Forester. My understanding is that the smart thing to do for folks who are attending service academies is to use, I think you have a career starter loan that gives you $30 ,000 to$35 ,000 in very low interest debt to buy a bright red, shiny, jacked up F-250 pickup truck. Why did you choose not to do that? And was that common amongst your peers? Either that or Corvettes. There was a lot of Corvettes in the parking lot once you got to junior year, a lot of really fancy cars. A lot of these cadets had college funds that their parents had as well. So some of them, their parents were able to just use that and buy them cars.

10:44But that wasn't my life. My parents put a lot of money into my first 12 years of education. And after that it was it was up to us and but also there's i mean people were buying parachutes people were buying um guns people all sorts of things that were not um all hobby related and they spent through that 35 000 real quick and i saw some people you know when you graduate you're paying that off in five years you get it's a really low it's an awesome loan really low interest less than 1%. And it's because USAA knows we're obligated to work for five years at least and we have a good salary. But that's a it's like a car payment.

11:24It's like five to six hundred dollars a month. Not a small payment that takes a good chunk out of your spending. I luckily didn't consider that at all and took the loan and just invested it. I ended up having to pay it off early so I could afford my first house, but I made like a couple thousand dollars, had a free money in the process. Okay. I've never been in the military, but I have driven past the Air Force Academy on my way to other things in Colorado Springs. Do you have a lot of free time? I had no free time. Yeah. No, not a lot of free time. So there's just Corvettes and big trucks sitting in the parking lot doing nothing, getting flat spots on their tires.

12:07If you're in the military, if you're thinking about joining the military, you don't have this luxurious free lifestyle. Don't go watch Top Gun and think that you're just going to play sweaty volleyball all the time. You're doing stuff all the time. You don't have time to go drive these cars. So why are you making payments on these cars you can't ever drive. Have a crappy car that you never drive or have no car. I mean, can you just, if you're at the Air Force Academy, could you just theoretically spend all of your time on campus base? Is it a campus or a base or? It's both. Yep. It's both. In the cadet area, we called it on the hill.

12:49Yeah. Like you could just spend all your time there. Yeah, you could and save a bunch of money. Yeah. you could really be set up really well um the that is a good point there's a lot of corvettes in the parking lot there's not a lot of empty parking lot space it's a lot of a lot of the a lot of time in the parking lot that was also a good point because that's part kind of what got me into wanting to be a financial advisor talking to people about personal finance um was talking to airmen once i was an officer and they would get their first big paychecks right out of high school they were making like probably 40 000 45 000 which is awesome um you know right after you graduate and they'd go buy a 50 000 truck put a 15 000 lift on it start paying you know five miles to the gallon um when gas isn't cheap and i would those were the the airmen that i would really sit down and want to talk to and connect with try to change change their perspective a little bit on that.

13:47But I mean, we were no different. Well, most of the cadets and my peers were no different. They wanted to have that fancy car. I actually had one of my friends tell me, Evan, there's no reason that you shouldn't be driving a nice car by the time you're an officer. And I just looked at him and I was like, I'm never going to be driving a car that cost me more than 2015's version of$2 ,500. Just not a thing. Okay. Life hack. If you are in the military, point to any car in the parking lot and say, that's my car. The chances of you pointing to the person you're talking to, their actual car is very, very low.

14:29So you can have a nice car, have in air quotes, a nice car without having the payments. There you go. Cause it's just going to sit in the parking lot anyway. We have very similar opinions on cars, Mindy, I think. What do you think that the average airman ends that five-year commitment with in terms of net worth? Yeah. Graduated negative net worth, which is surprising because none of us have, you know, we have like a$250 ,000 education that we didn't have to pay for. And we're still managing that a lot of them are still managing to graduate with no savings. And then I didn't spend a lot of time socializing with other officers, but there was plenty of spending, a lot of drinking, a lot of going out to bars, and those bar tabs can go up.

15:14And just, yeah, I don't think, small savings, if any, in a lot of people go negative. And after the five years of service, that's still negative? Yeah, I would say so. Yeah, I had I actually because I by the time I was getting out, I had a few properties and just was starting to talk to people about real estate investing and people were asking me about it and people that I had graduated with, you know, just were getting started. It's all the way from that to like some people do end up being super busy and manage to just let that keep them from spending. And so there are some people that once they get into the captain and hire, they can start accumulating some net worth.

15:54But most of them have no idea what to do with their money. So I, again, I was like, listen to these podcasts. You know, I have a whole bunch of ideas. And let's spoil the surprise. What was your net worth approximately at the time that you exited the Air Force or after the five-year commitment more specifically? Yeah, it was probably like$100 ,000,$150 ,000. Awesome. I was more towards the beginning of my investing career when the gains are frustrating because you're, you know, you, especially if you're like me, I invested with VA loans. And so I started with zero equity, negative equity, actually, by a couple thousand dollars.

16:34And so that was like the difficult part in the beginning was just being frustrated with how slowly it was accumulating. But now looking back, I mean, it just keeps growing. And time is really on your side once you get going. So how did you begin approaching investing and wealth building with an intentional focus? When did that begin at the academy in the first few years of service? Walk us through the journey and the aha moment. Yeah, it really started with my first house purchase. I don't think I was really into budgeting, really into being like money conscious. And it was bugging me that I had a limited spending ability because I was never going to spend more than my income, certainly, but more accurately, like 70 % of my income.

17:24And so that was always frustrating to me, but I didn't really see a way to be building a net worth. And then I bought my first condo. My uncle, who was a retired pilot in the Air Force, told me, whatever you do, first thing you do when you get to your first duty station is buy a house. I did that. I was fortunate for that to be in Denver, where I'm from. Really familiar with the area anyway. I bought my first condo. I really loved the process. I loved getting to know the city, as we would call it now, getting to know the market. and just going in and touring houses and learning about the various pockets of Denver.

18:01Loved the process. And so I was like, how can I make this a thing? I didn't want to be a real estate agent, probably because of my job and probably just because that wasn't what was exciting me. So I Googled investing in real estate and Brandon's book, the book on investing in real estate with low or no money down came up. So I listened to that book. Brandon was still the narrator on that at the time. So I listened to Brandon for about eight and a half hours. And that got me hooked on the podcast. So I really am a product of BiggerPockets real estate content. I've listened to hundreds of episodes of BiggerPockets content, including hundreds of BiggerPockets money.

18:45So that and then just read read book after book after book. So I think, yeah, you guys can take a victory lap. It's definitely a huge contribution to my learning. We're hearing that more and more, right, on all these episodes that a lot of these people are becoming, getting a lot of what they know from BiggerPockets. Yeah. Awesome. I don't want to toot our own horn. I'm tooting it. I'm tooting your horn. There's a lot of information here. And we're not selling anything. We're just sharing this information because we want you to have it. I mean, school is so lacking in financial education. And then you graduate at 18.

19:31You're supposed to know what you want to do for the rest of your life. I mean, you wanted to be a pilot. But I didn't end up becoming a pilot. Oh, what did you do in the Air Force? I was in intelligence. So I didn't end up becoming a pilot. We can go down that path if you want. You could tell us, but then you have to kill us. Exactly. Okay, then I don't want to know. I think that it's really unfortunate that we expect kids to literal kids to know what they want to do for the rest of their lives at age 18. So that's why we do this show to help people learn their money, learn how to handle their money so that they can be better with it.

20:11Evan, it sounds like you had an instinctive or a kind of ingrained instinct to go and buy a property from your uncle. And you also had time in some capacity to immerse yourself in the world of self-education around real estate and investing. Is that a theme in military service that there's a good amount of time, if you want to use it that way, to put in some earbuds and just absorb a tremendous amount of educational material? It depends on It depends on the job, but yes. One of the reasons I didn't become a pilot was because I was getting a fun ride with a pilot in an intelligence plane that just basically circles over a combat zone.

20:57And he was bragging to me that he had over 300 combat hours, and he said 280 of those hours were spent watching Netflix. And I was like, I do not want to be doing that. But the amount of times that you have, no matter what you're doing, even if you're flying in a combat zone, supporting live combat, there's other things you can be doing. And for me, I was sitting on the watch floor out in Aurora, Buckley, or First Base. And I spent, to keep myself awake, which this is a little bit embarrassing to admit, but keep myself awake, I would be building spreadsheets and that could help me underwrite properties.

21:39that made the 12-hour shift go by quick. Biggerpockets.com has a calculator. And this is why you missed the Chinese balloon that was spying over us, right, last month? Well. He was out by then. That's not his fault. No, no. By that one, you're right. But no, I do hope my commanders at the time are not listening right now. I mean, it kept me awake so that I was available when something did happen. So got to find some way. But there is. you can use your time for multiple, multiple different ways in the Air Force. And that was something that drove me nuts. I had a really secure path that I could stick with for the rest of my career if I wanted to.

22:21It just felt like I wasn't maximizing the potential of that. And I wanted to make sure once I got to the end of the five years that I had kind of used that security to set myself up for something else, even if I ended up staying in, but certainly if I was leaving. So when did you first start thinking real estate is the way to go? it was a slow it was a slow process i think i knew i wanted to be investing in real estate one way or the other but i always thought it was i'm going to be a side thing um until i maybe even like a couple years ago after i got out of the military i was pursuing my career in financial planning getting my um cfp and um just understanding the world outside of the military because it's a very unique bubble that you're in when you're in the military.

23:11And I barely knew like what modern technology looked like in the workplace because the Air Force is pretty behind on that. So once I got a feel for what businesses were like, I realized having your own business or trying to build a business was really complicated and really hard. So you should probably focus on your strengths when it comes to what type of business you want to build. at one point I started a suits like an e-commerce suits website and found out that you really got to know everything about suits if you're gonna start a company in it so that's when I was like I need to focus on something that I'm passionate about I just the longer I was investing in real estate the more I became passionate about it and like maybe in the last year or two I was started to really think I want to make real estate a full-time thing and that it was just last year that I told Katie, I was like, I think I want to do this full time.

24:05And I was really happy with her response. She was pretty open to it. Going back a little bit, let's walk through the timeline of deals that you did while in the Air Force. Can you walk us through those one by one? Yeah. So I graduated in 2015. I had 10 months of intelligence training. Then I got to my first duty station, which was Buckley, my only duty station, in the summer of 2016. And that's here in Colorado near Denver. Right. East of Denver in Aurora. Yeah. And so I was living in southern Denver looking for a house. And we closed on my first house, which is downtown, a condo downtown in November of 2016.

24:52So that one's still my only one that doesn't actually cash flow. It basically breaks even. I didn't buy it with investment in mind, and so it was pretty expensive. I mean, it was an awesome place. I loved living there. So I bought that one in 2016, lived there for about a year, bought the next one. I closed on the next one at the very end of December in 2017. And did you use a VA loan for either of these purchases? VA loan for the Pearl Street one. It was too quick. The first one. Right. Yeah, sorry, for the first one. so i used my va loan on the first one and that purchase price was 375 000 and my loan on that was 383 000 so the va loan and i've heard this come up on your on the up money a few times but the va loan actually covers 100 of the purchase price and closing costs up to five percent of the purchase price which usually that covers all of it so i actually got a check at the closing at closing because my earnest money came back to me.

25:56Evan, quick tangent on this. VA loans are assumable, right? So if you live in a military area, even if you're not military, I could say, Evan, I'd like to purchase your property from you and I'd like to assume your VA loan on that property and you'd be able to allow me to do that, right? And because VA loans are often purchased with 0 % financing, even after the big run-up in equity values for the last two years, folks might only have 15%, 20 % equity. So this would be a great place to go fishing for deals in military markets if there are officers, for example, who have bought property using this type of loan product, probably don't have a lot of equity and would be willing to sell to get out of that mortgage.

26:41Is that a fair tangent and statement? Yeah, it's a fair point. There's a few a few nuances in there though um so with the va loan the conditions of that is you're only allowed to hold one va loan in your name per market it's not just one va loan it's per market so as long as you're moving i think it's like outside of a 50 mile radius you can buy another house with a va loan so that applies well it is it's you need to make sure that the seller knows that because the the loan is still going to be on their name but if they're i mean most military if they're leaving and selling they're moving to a completely new state maybe a completely new country and if they're they can buy again using a va loan like if i went from buckley in denver to um colorado springs peterson now space for space in in um colorado springs that's a new market i could still use my loan down there.

27:38But if they were moving just to upgrade in town, which is what I was doing, well, not upgrade, but I was moving in town, I couldn't have another VA loan. But it is, the equity issue is a big thing for people moving. And you must own or occupy as well, correct, right? Right. Need fast, reliable funding for your next investment property? Join over 17 ,000 real estate investors nationwide who trust Kiavi for quick, flexible financing. Whether you're flipping houses or growing your rental portfolio, Kiavi offers high leverage loans and closings in as few as seven days, including fix and flip, new construction, and DSCR rental, all through an easy online platform that you can access 24-7.

28:19Get pre-qualified in minutes at kiavi.com slash biggerpockets and turn your next deal into reality. Terms and conditions apply. Visit kiavi.com for details, NMLS ID number 112-5207. AutoTrader is powered by auto intelligence. the hyper-personalized way to buy a car. AutoTrader's tools sync with your exact budget and preferences to tailor the online car shopping experience totally to you. Budgeting lets you input your info to see listings in your price range. Search and inventory helps zero in on your dream car. You can choose from new or pre-owned, the style of the car, and features like engine size, color, all the way down to whether you want a trailer hitch.

28:58Go ahead and get picky. Don't worry about scrolling endlessly. AutoTrader, powered by auto intelligence, only shows you vehicles based on what you can afford and what you want. And pricing shows you which listings are the best deals. So you can feel like you're winning the negotiation without negotiating. You can even choose how to close the deal, online, at the dealership, or a little bit of both. AutoTrader, powered by Auto Intelligence, makes the process of buying a car less of a process. Try it today. Visit autotrader.com to buy your perfect ride. My husband and I have multiple investment accounts across several different companies.

29:31Throw in vehicles, investment properties, and private equity holdings, and it can be difficult to get a good idea of our actual net worth. And frankly, between the kids, work, and just life in general, I don't have time to be logging into 47 different places. So I just didn't. Scott walked me through setting up my Monarch account and suddenly everything was easy. It's all in one spot, so I can check in quickly. Just like everything else on Monarch, the dashboard is customizable, so I can see at a glance what's most important to me and dive deeper when I need to. Feel organized and confident in your finances with Monarch, an all-in-one personal finance tool that brings your entire financial life together in one clean interface on your laptop or your phone.

30:12And right now, just for our listeners, Monarch is offering 50 % off your first year with code pockets at monarch.com. Don't let financial opportunities slip through the cracks. Use code pockets at monarch.com in your browser for half off your first year. That's 50 % off your first year at monarch.com with the code pockets. When I think back on past holidays, the gift I remember most wasn't expensive at all. It was this lumberjack-looking plaid winter coat my grandmother gave me when I was little. It smelled like her house, mothballs. It was a little too big, and it made me feel safe in a way I didn't understand yet.