How to Go from Military to Millionaire in 5 Years with David Pere: An EOFire Classic from 2022

0:02John Lee Dumas:Who's ready to rock today, Fire Nation? JLD here, and welcome to Entrepreneurs on Fire, brought to you by High Level, the all-in-one sales and marketing platform. And on today's classic episode, we'll be breaking down how to go from military to millionaire in five years. And to drop these vibe bombs, I brought David Pere in the EO Fire Studios. David is a financially free Marine Corps veteran who teaches service members and veterans how to build wealth through real estate, entrepreneurship, and personal finance. And today we'll talk about how real estate feels scary when it's not your home. House hacking combines living and investing to reduce that fear.

0:33John Lee Dumas:And a dollar invested at 18 is far more valuable than one invested at 22. So get started, Fire Nation, and oh, so much more. And a big thank you for sponsoring today's episode goes to David and our sponsors. Fire Nation, is your business stuck? Join Eric Trump and Clay Clark's life changing business conference, November 5th and 6th in Tulsa, Oklahoma. Learn the specific proven systems Clay Clark has used to create thousands of success stories today at thrivetimeshow.com slash EO fire. Again, request tickets today at thrivetimeshow.com slash EO fire. Stop duct taping your business together. High Level runs your website, your funnels, email, automation, scheduling, payments, and memberships all in one place.

1:13John Lee Dumas:And when you sign up at highlevelfire.com, you get a 30 day free trial plus my exclusive bonus stack that includes weekly office hours with me and much more. Visit highlevelfire.com. Highlevelfire.com. David, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with. What's up, everybody? And John, thanks for having me on the show, brother. I think the answer to that is that the key is delayed gratification. And I know there's the study people have heard about with the marshmallows where you give kids a marshmallow and say, if you eat it, good.

1:53And if you were going to come back in 10 minutes, if you don't eat it, we'll give you a second one. And they followed up with those children for a long time and said, and they realized the ones who had been able to wait for the second marshmallow and showed the ability to have delayed gratification or appreciate delayed gratification were much more successful later in life. And, you know, but that part's probably believable, but I think it kind of transpires into your views of, of money and currency, right? So people will say delayed gratification. But similarly, I kind of believe that the more money you throw at something, the more you'll receive back.

2:26The more you give away, the more it comes back. And the more you let currency flow, the more it will flow back to you, kind of like waves, right? It goes out, it comes back in. And so I've found that interestingly and ironically enough, the people I know who are most driven by dollar signs seem to have the hardest problem achieving wealth.

2:46John Lee Dumas:I love that attitude. I'm a big guy when it comes to abundance versus scarcity. And money is meant to be a utility. Like it's not meant to be like a, you know, Dr. Scrooge who has the gold coins, you know, locked away that he just goes and swims in every now and then and like it never does anything else. It's like money's meant to be a utility that's used to better this world, whether through philanthropy, whether through investing in businesses, whether through using it to pay people for good services, et cetera. I mean, that's where the world goes round. And I want to start off by saying thank you, brother, for your service.

3:20John Lee Dumas:I always admire people who have served our country like yourself. And I love seeing fellow vets make it. And as the title of the episode is how to go from military to millionaire in five years, I'd have to say at least at this point in your life, you have made it. So let's talk about you're going from literally a negative net worth to a millionaire in those five years while, and this is the crazy part, while you're on active duty in the Marine Corps? Well, first off, I appreciate the support and so does everyone else. It was a fun gig for a long time. And yeah, I mean, I guess the long and short start to that is that I joined the Marine Corps in 2008.

4:02And I made all of the normal, typical, like the mistakes that I made financially are like running jokes amongst Marines, right? The, the motorcycles, the vehicles, the alcohol, the tattoos, the women, the, I mean, you, you know, you could name it and it, not that any of it's regrettable. It was a great life. I, you know, I had fun. I, um, it was good time, but I remember coming back from Afghanistan with more money than I'd ever had in my bank account. It was $17 ,000,$18 ,000 saved. And I bought a truck, a Harley, a rifle, a bunch of beer and two tattoos, and then went, wait a minute, didn't I have money?

4:37What happened here? And in 2015, somebody handed me the book, Rich Dad, Poor Dad. I didn't like to read, but he gave me the CD version. And he was like, well, you're driving around as a recruiter. Why don't you just listen to this while you drive? drive. And so I thought, okay, well, I'll listen to that while I drive. The way I interpreted that was basically like, oh, you got me. Okay, I told you I don't read and you handed it to me in audio. Fine, I'll listen to it. And darn if that didn't change my life, right? I mean, I listened to that in August, September, and on December 28th of that year, I bought my first property.

5:18and it was a little$81 ,000 duplex. I lived in one half, rented the other half, and then eventually I moved out and it cash flowed and I was hooked. I mean, we got stationed in Hawaii and I had this little thing that was paying me like 200 bucks a month and I wasn't managing it. And I just realized like, okay, wow, there's something to this. And then I kind of went all in. And five years later, well, I guess five and a half, six years later was when I actually exited active duty. But by then I had a 100-unit rental portfolio personally and then another couple hundred doors that I had invested in as a general partner on some syndications with larger apartments.

5:57And I built a platform talking about documenting my journey that was also paying me. And I just realized I was making more money than the Marine Corps was paying me. And I was financially free, quote unquote, and was like, well, this one's really passion-driven. I'm going to go pursue this and see what happens. And that kind of brings this up to date. It's been 10 months since I officially left active duty and a year since I moved back to Missouri. And so far, I haven't had to get a job. So I guess we made it.

6:25John Lee Dumas:So far, so good. But only time will tell because the world is a crazy place. And Fire Nation, we'll be talking about a lot of things today that are military focused. But I mean, what my hope is, is that a lot of you either know people that are in the military or can take a lot of the advice that's being given today and apply this to your situation because a lot of these things maybe not be quite as appealing, but you'll get it when we talk about it. And I want to start off with the TSP contribution. So first off, what are those and how do people in the military or just people in general maximize them immediately?

7:02Yeah, and I should definitely clarify 80, 85 % of what I talk about is applicable to everybody. There are just like nuanced things that are specific to service members. So this is a prime example, right? The TSP, the thrift savings plan is literally just the military's 401k. So the exact same strategy can be used for anybody with an employer matched 401k. And it really doesn't change other than your fund allocation options and your matching contributions. So I just – I always like to mention to people, you know, when I joined the military, the thrift savings plan started out in what we call the G fund.

7:40So when you originally started contributing, that was the fund your money went to, and it's basically government-backed securities, right? So I was doing the right thing. I was contributing 8 % to 10 % of my paycheck. It was doing its thing. I just had no idea what I was doing as far as fund allocations. And so from 2008 to 2015, this money was in the G fund. And if you think about the securities market from 2008 to 2015, I averaged about a 2 to 2.25 % return, and the rest of the world averaged between 10 and 30%. And so it's little things like that. If you just take a few moments to understand what fund your money is going into, change the allocation and do the exact same thing, I would have almost three times as much money in there right now as I do.

8:26And so when I talk to young service members, I always just say, hey, look, real estate's sexy. I love it. There's a lot of really fun ways to build businesses that will make you super wealthy and they're super fun and they'll pay you cash flow and passively. But at 18, 19, 20 years old, when you're trying to focus on your new career, I don't think there's a better way to get started on a wealth building journey than to just contribute at least enough to get the matching contribution, which is free money, and put it in the right fund and let it grow. And if you do that for two, three, four years and you really focus on that, then now you're 22, 23 years old and you have this nest egg that you could just leave alone and it'll grow to a point where by the time you're 60, 65, you could retire on that.

9:13it may not be a super lavish lifestyle, but it's a cushion, which I think is important, not because I'm one of these like, oh, you got to hit this number so you can have this withdrawal so you can be financially independent. Like that's all great. But for me, it's more of if you do that for four or five years and you know in your head that your retirement is going to be taken care of as long as you just don't touch that money. Now you can take some bigger risks with business and real estate because you know that your future is taken care of. Because let's be real, at 25, 30, 35, 40 years old, if you lose everything, you can get a job and you can come back.

9:49At 70 years old, if you lose everything, it's a whole different ballgame. And so if you can just make sure that those years that you should be retired are already at least there's a security net, then you can really focus on some of the things that actually have that exponential potential.

10:02John Lee Dumas:It's such an important point, Fire Nation. I mean, so many people think that failure means that like now you're going to be living under a bridge, like cooking rats at night, in a little fire can that you have burning, but that's just not the reality. I mean, you can always go and get a job. You can always go and find ways to earn revenue, drive an Uber, do any million number of things that you need to do just until you get up enough bread, enough money, enough dollars to try something different, to have that next idea. And when you're 20, 25, 30, 35, you're able to do these things multiple times because that's when you can really be in that risk profile high part of your life.

10:42John Lee Dumas:Now, this next part seems like it's kind of military focus, the VA loan, and you were able to use the VA loan to your advantage. Why do you believe it's simply the best mortgage product out there? Well, it is. And, you know, I've gone back and forth with people about this. The reality is there's so many different reasons that I could articulate. What's more important, I think, is just that I like to get out there that if you're a veteran or a service member and you're listening to this, there's a stigma that some agents will tell you, oh, well, the inspection is such a pain or the appraisals are bad or you can't use it in a hot market.

11:21And I just want to throw to the world that if an agent or a lender tells you that, then you need a new agent or lender because they just don't understand the VA loan. Because we've seen over the last two years, which is arguably the hottest real estate market the country's seen in goodness knows how long. Members in our community have been buying properties left and right with the VA loan in San Diego and DC and some of the hottest markets in the country. And if you have the right agent and lender on your team, and they actually understand it, then you're going to be taken care of. So my roommate was a VA lender and people tell me, oh, well, the VA loan doesn't close on time.

11:58Well, I saw my roommate close a$1.2 million fourplex VA loan in 14 days with zero down. And so is it the product or is it the professional that you're working with? And you could go back and forth. So some of the actual tangible reasons that I think it's the best, well, for one, it's 0 % down. And on your first use as of January 1st, 2020, there's absolutely no limit to what you can buy with it as long as your debt to income and personal finances allow. So I've seen an active duty service member purchase a duplex for$1.93 million on Venice Beach. Literally, he could throw a baseball at Muscle Beach.

12:38And he has lived in it with a tenant paying 80 % of his mortgage cost, and he's saving some of the money that he gets paid for housing allowance. And that thing's gone up a half a million dollars in value over the last few years. And so we actually ran the math on that. And at 0 % down with the two and a quarter rate that he locked in for 30 years, his monthly payment is less than if a conventional came in, a conventional investor came in and dropped a 25 % down and had a four and a half, 5%, you know, normal investor loan interest rate at 20, 25 years amortization, his payments less. And that's just mind-blowing to me that you could, at scale, you could buy something like that and have a lower payment with no capital expenditures.

13:24So yeah, you've got the 0 % down. You also have no private mortgage insurance or mortgage insurance premiums, which anytime you use a conventional loan with less than 20 % down, those are going to be required. There is a funding fee on the VA loan, but compared to PMI, it's nothing. I think it comes out to like$11 for every$100 ,000 you borrow,$11 a month. So it's nothing. But then the one thing that, and this will probably be the last like unique thing that I target on because I could go all day about the VA loan, but lender loan level of pricing adjustments. So with a normal loan, you know, there's credit score adjustments to your interest rate.

14:05So if you have an 800 credit score, you're going to have, let's say, 3 % is your interest rate. Then if you have a under 740 now you'd be at maybe three and a quarter and then once you get to 680 or below Now you're maybe at three and a half, right? I'm just making these numbers up, but there's an adjustment at 740 680 and 640. I believe are the three Well, the va loan doesn't adjust until 640 so With say an fha or a five percent down conventional loan If you have a 800 credit score Your rate will be one thing and if you have a 640 credit score 641 credit score your rate will be, you know, almost, I mean, maybe even a whole point more, right?

14:44It'll be much less, much higher interest rate. With the VA loan, a service member with a 641 credit score will have the exact same interest rate as somebody with an 800 credit score because it doesn't adjust until you get below 640. And then there's not even a credit score requirement. So I've seen lenders who will go as low as 500, which, you know, and then debt to income. I mean, there's just a whole bunch of different things. So it makes it much easier for you to get qualified for the loan because it's just an easier product to get. I mean, lenders feel secure because the government is backing the loan.

15:14So it's easier to get qualified. It's got lower interest rates. It's got better terms. And it allows you to get into a house, which if you buy properly, like a house hack or something like that, you can get into a house for nothing out of pocket, which not to go way down the rabbit hole, but when you talk risk, right? People think if I put 20 % down on this house, my risk is mitigated. Yes, to an extent. But if you were to compare 20 % down on a house and no money in the bank account as cash reserves, vice$0 down on a house and that 20 % in reserves in a bank account, well, that's actually way lower risk.

15:49Because if you have tenants move out, now you've got that 20 % to pay the payment. If you have a water heater blow up the month after you move in, you've got that 20 % down to cover your emergencies. And so I think it sets service members up and I just, as you can tell, I could talk about it all day long, but I just like to highlight that when I come on a show because a lot of service members and vets seem to have either a misconception or they just don't understand the value behind that benefit. And I want to help as many of them as possible realize that they can build wealth with it.

16:23John Lee Dumas:Fire Nation, I hope you are able to take everything that our man David is sharing with us right now and apply it to your own personal situation and say, how can I start now? How can I start small? And how can I start smart, which is the key thing here. And we have a lot to talk about when we get back from thanking our sponsors. Fire Nation, is your business stuck? Join Eric Trump and Clay Clark's life-changing business conference, November 5th and 6th in Tulsa, Oklahoma. Learn the specific proven systems Clay Clark has used to create thousands of millionaire success stories. See thousands of success stories and testimonials from real people just like you who Clay Clark has mentored and coached into prosperity at thrivetimeshow.com slash EOFire.

17:03John Lee Dumas:Clay's proven business coaching program is month-to-month and it costs less money than hiring a minimum wage employee. Yes, it's month-to-month and costs less money than hiring a minimum wage employee. Schedule your free personal 13-point assessment with Clay Clark himself today at thrivetimeshow.com slash eofire. Because Clay only takes on 160 clients and only allows 300 attendees to each business conference, you will interact with Clay directly. See thousands of real success stories and learn about attending the Thrive Time Show two-day in-person workshops featuring football star and entrepreneur Tim Tebow and President Trump's son, Eric Trump, today at thrivetimeshow.com slash eofire.

17:38John Lee Dumas:become the next success story. Schedule a free consultation and request tickets to join football star and entrepreneur Tim Tebow and President Trump's son, Eric Trump, at Clay Clark's next business conference today at thrivetimeshow.com slash EOFire. Fire Nation, ideas are exciting, but systems will allow you to create freedom. That is where High Level comes in. High Level allows you to build and run your entire business from one platform. Website builder and hosting, funnel and landing pages, email marketing, automation and workflows, calendar booking, payments and subscriptions, even course and membership hosting.

18:10John Lee Dumas:Everything works together seamlessly. Plus award-winning 24-7 support so you are never stuck. And when you go through my link at highlevelfire.com, you unlock my full bonus stack, a 30-day free trial of High Level with full access, a private 50-minute coaching call with me, weekly live office hours with me, a digital copy of my book, The Common Path to Uncommon Success, my 50 Days to Something execution roadmap and more. Stop piecing tools together. Start building momentum. Visit highlevelfire.com and start building your something today. David, we're back and a lot of vets poo-poo their time in the military.

18:51John Lee Dumas:They look back on it and say, you know, it could have been a waste of time. It may be just, it wasn't a fit for them or they didn't like this. They didn't like that. but you and I believe the military sets you up for success in so many ways. What do you mean by that? I don't actually know that there is a better job that you could get out of high school. And I know that there's always an argument back and forth. But if you think about it from like the big picture aspect, right? A lot of people, they go to college because that's what they were told to do. And nothing wrong with that. I'm not here to discuss whether or not college is worthwhile because the answer is that depends on if you use it and what you studied.

19:32But, you know, let's say you take somebody who goes to school and they go$100 ,000 into student loan debt. And by the time they're done with school, they're 22 and now they're starting their career and they have$100 ,000 worth of student loan debt and they get a career. I would argue that that person is less set up for success than the service member who could spend that four years learning a skill set and feeling out what kind of jobs they like and gaining the real world experience, right? Being on your own, being independent, being in leadership positions, potentially traveling the world, right?

20:07Maybe ending up in combat zones or stressful situations. You're getting tested and run through the ringer. And then at the end of that four years that you've been making money and potentially investing in that 401k, right, which a dollar invested at 18 is infinitely more and more valuable than a dollar invested at 22. So getting that early jump is beneficial. You come out and now the military pays for your schooling or, and I know several members who did this. I mean, I earned my associate's degree for free while I was in. And I know a lot of people who earned their bachelor's degree in that first four years.

20:42So I have friends who joined the military, left the military at 22, 23 years old with a bachelor's degree in hand, life experience, money and savings to start. And then the military paid for their master's degree. And so I think it just sets you up real well.

20:57John Lee Dumas:There's so many things that we could talk about here, you know, even to the discipline, to the focus, to the responsibility, to all the different things that come into play when it comes to something like the military. And I mean, just the benefit of not going into crushing debt. I mean, I went to college first on an ROTC scholarship, so I had no debt myself, but man, I've literally had friends and I just went to my 20 year college reunion. So that tells you how long I've been out. And I have friends that have just paid off their college loans now, or are still paying off law school and other masters that they've gotten.

21:32John Lee Dumas:So it's absolutely insane. So David, you shared a lot with the TSP contributions, VA loans, the hacks, all this jazz. what do you really want to make sure our listeners walk away from with this interview? Oh, there's so much. But my favorite strategy for anyone getting started in anything is house hacking. And so I don't know that I could leave an interview without discussing it and feel okay with myself. And that could be, I think the VA loan obviously is great, but it could be with any product. And so the idea essentially is when people think about getting into real estate investing, it's scary because they are thinking about buying a house that they're not going to live in and they have tenants and their tenants are going to trash their house.

22:16And there's always a horror story about all those things. I mean, shoot, I've got horror stories of, uh, what tenants can do. Um, but if you, if you, but at the same time, people are, I don't want to say, you know, conditioned, but kind of conditioned with this American dream of like owning a house with a white picket fence and having a family and a dog. So buying a house is not scary per se, but buying an investment is. And so if you could combine those two, then you have this thing called house hacking. And so house hacking is like you buy a duplex, a triplex, a fourplex. You live in one of the units.

22:54You rent all the other ones. And in a perfect world, you do this. Let's say you buy a fourplex. I'll use a real world example. A buddy of mine bought a fourplex,$1.23 million in San Diego. He rented three of the units and then he had a roommate in his unit. He's a single guy. And he was getting paid$600 a month to own a$1.2 million fourplex. He was also getting paid a housing allowance because you have to pay to live somewhere. So instead of paying rent or paying a mortgage payment, he was saving the money that he would have been paying in rent while somebody else is essentially paying him to own this property and they're paying down his mortgage.

23:31and then he was able to take the money that he would have been paying on rent and just reinvest it into an index fund or wherever else. And that allowed him to learn how to be a landlord. It allowed him to have an extra$2 ,000,$3 ,000 a month that he could invest that he wouldn't have had otherwise. When he moved out, it allowed him to cash flow and have a property that paid him while he could go on to do it again. And then it allowed him to really get his feet wet and decide if he wanted to do this without it being nearly as scary as just going out and buying an investment and hoping it works.