5 Key Lessons from a Military Veteran Turned Real Estate Investor

Dylan Silver (00:01.314)
Hey, folks, welcome back to the show. I’m your host, Dylan Silver. And today on the show, I have a retiring lieutenant colonel in the US Air Force, real estate investor, founder of the Financial Freedom Network, Johnny Lynum. Johnny, welcome to the show.

Johnny Lynum (00:20.166)
Thank you, thank you, it great to be here today.

Dylan Silver (00:22.816)
It’s a pleasure to have you on the show here. I always like to start off at the top by asking folks how they got into real estate.

Johnny Lynum (00:31.77)
Yeah, so for me, Humble Beginnings grew up in LA, not on the West Coast, but lower Alabama, small rural town. And for me, it all started with using my VA loan, had just got to my first duty station in 2005. And, you know, for me, the wide wake up for me was, you know, being able to have to get a loved one to sign on my lease for my first apartment complex to get my first.

you know, home. And for me going through college, you know, had a electrical engineering degree, but didn’t realize I should have been paying those credit cards they gave me in college on time. And so for me, that was a wake up call, kind of a kick in the pants. And about 11 months later, I got the opportunity to buy one side of a duplex using my VA loan benefit. And I actually got a check back at closing because the seller covered the closing costs. And you know, that just opened up my eyes to the power of real estate.

and I became immediately infatuated with it and started consuming as much as I can. Of course, re-enrich that poor dad that completely just changed my mindset.

Dylan Silver (01:30.988)
Now, at that point in time and maybe before that had you thought about real estate as, you know, a potential career path?

Johnny Lynum (01:39.45)
Never, never thought about it, potential career path, but I can remember in college, you know, we stayed in University Commons and I think they had all the way A through in for the number of the letters that represented units and they had 12 units per building. And so we would just count and look at, they charged us by the room. so for you, have four individuals in one apartment, each paying $600 for the individual room. And so just one day we just sitting around.

hanging out and we just kind of did the math on what they were making each month for the rent. was like, wow, you know, wouldn’t it be great to be the owner, you know, with all the money that they’re banking, having no clue, you know, circle almost 20 years later, you know, we’d be able to, uh, to have over a hundred units, you know, with department complexes and just doing multifamily deals now that it’s been an amazing journey.

Dylan Silver (02:29.942)
It’s funny that you mentioned that Johnny I had a guest on the show here recently who was a professional basketball player in the 80s played against Jordan had gone to BYU and his career now and I want to say his kids are involved in the business too if I’m not mistaken is student housing out at BYU I believe it’s either BYU or another college but the student housing is

tremendous and a huge opportunity. And I mean, you think about it, they need housing, like it’s not it’s it’s not an optional thing. It’s like you’re going to school, unless all the schools become remote, which is not going to happen anytime soon. They need housing. And so it’s like a guarantee that it’s going to be that the only time where that wasn’t the case was basically during COVID. And we’re since beyond that. So it’s funny that you mentioned that because so many people, it’s either rolled into the student loan or

You know, they’re just paying it. It’s not even a question asked. It’s like, hey, we need housing.

Johnny Lynum (03:32.998)
Yeah, no, facts. know, kids aren’t going to school and living out their car for four years. So you have to find some type of housing. And I think that’s the opportunity now, especially when you start looking at like the 1 % rule and some of the metrics that have been around for forever on just how to underwrite and analyze deals. But now with just the run up in appreciation of housing over the last four or five years, then now that you have to become more creative with some of the strategies that I think.

being able to rent a house out by the room to students, that it just allows you to increase that cash flow in a way where it makes sense with being able to afford to pay the prices for housing today. So, yeah, no great opportunity.

Dylan Silver (04:15.022)
I want to pivot a bit here, Johnny, and ask you about scaling a real estate portfolio or a business within real estate when you also have an intensive job. mean, military, really, you can imagine any job that can be challenging, even one job where you might be in the same area, but let’s say you’re an accountant, you work a nine to five and you feel maybe a little beat up at the end of the day. How do people find maybe the bandwidth to do this and how did you find the bandwidth to do it?

Johnny Lynum (04:46.267)
Yeah, no, you’re 100 % right. I get that one a lot. And for me, it was, you know, having that entrepreneurial spirit. You know, I had a lawn care company when I was 16, you know, had a car wash business kind of the summer after my freshman year in college and always really been driven to, you know, create a business and to be able to be self-sufficient where my dad was an entrepreneur. And so, you know, waking up Sunday mornings, not being able to watch Saturday morning cartoons and have to be forced to, to go with him to his repair business.

You know, initially as a child, it wasn’t fun, you know, looking back on it, it gave me a strong foundation and work ethic. And I think really that it comes down to once you get to the point that your why or the reason why you’re doing these things or investing in real estate, you’re looking to build more passive income. Once that why becomes more powerful than excuses of I can’t do it, I’m tired, or I got to make the sacrifice. Like that’s when I had the internal transformation that

hey, I’m gonna do this come hell or high water. And it was some sacrifices. I joke and say that I’ve been working two jobs for the last 10 years with leading my real estate investing business and while still serving active duty Air Force. But looking back at it now that I’m stepping into retirement from the Air Force, that it was 100 % worth the sacrifices. And now I get a lot more freedom to spend time with the family.

Dylan Silver (05:52.302)
Yeah.

Johnny Lynum (06:08.62)
and going through it, there were some moments, man, where you have to gut check and say, was it really worth it? Am I doing the right thing? And you sometimes second guess yourself. But at the end of the day, there have been plenty of people that have found success in real estate, and so why not me? And I think that gives me the wherewithal to keep moving forward.

Dylan Silver (06:26.678)
It’s amazing. Real estate is a great equalizer when it comes to building a business, building wealth. And, you know, one of the things that I think about is as far as like goal setting and, you know, people talk about, well, graduating from school or getting a promotion with real estate, it’s so tangible that I think once you see that proof of concept in a way, you start to feel the momentum because it’s like before you close the first deal or I’m a wholesaler and a real estate agent before you

get that first wholesale deal from the cradle to the grave. It kind of seems impossible. It’s like, well, I’m going to make money, but I never actually closed on the home. And then someone else comes like, why would that work? You know, and then you do it one time and you’re like, whoa, and then you do it three times and you’re like, I see how this is working. And so for me, that was kind of my aha moment. So it when I was realizing like, hey, I’m seeing how other people are doing this. I feel like I can go do it.

and then went out and did it and I said, okay, this is kind of the niche, the field that I want to play in. Before we hopped on the podcast here, Johnny, you mentioned that you had moved into purchasing, you know, 20 to 40 unit complexes. Was that always the goal after that first VA loan or were you doing fix and flips before then how did it scale to that point?

Johnny Lynum (07:49.285)
Yeah, that’s a really good one because it wasn’t. And you know, I tell people that you grow into the person that you’re going to become that none of us really set out, you know, on the destination with that end point in mind. And for me, it just, it started using my VA loan. That’s the first property I purchased, you know, the next time I moved with the military, that became a rental. And then I started looking for foreclosures to purchase using my VA loan. So I did that two more times with the move. But after that second move, I started looking for no, no kidding, true rental property.

properties. Our first property we bought was a $25,000 house in Birmingham, Alabama, where my wife was from. Getting the cash flow and getting it rented out on Section 8, and we kind of saw the proof of concept. From there, a couple years later, we had our first son that we decided for my wife to come out of the workforce, stay at home, and that was more beneficial than just in the D.C. metro area with the commuting and the child care watch. We had to pay for that.

which was a mortgage in itself. Yes, it is. And so we made the decision. so, you know, subsequently we did our first fix and flip house. And so, and after that, you know, it was just one house at a time. And eventually we got multiple deals simultaneously, had to start raising money. But for that transition, the multifamily was 2019. you know, I had toured my ACL May of that year, went to a Jake and Gino event in Orlando, Florida in October of 19.

Dylan Silver (08:48.856)
DC is very expensive, yeah.

Johnny Lynum (09:15.674)
And my mind was blown on just like ordinary people, less experienced than me. that point, we had probably flipped a couple dozen homes and just to see the process to buy an apartment where, you know, me, I had this limiting belief that you had to have a million dollars in the bank, you know, a huge sum of money in order to qualify for a loan and do those types of deals. And so my mind just was blown from that experience. And about 45 days later, I put an LOI in on our first apartment.

18 unit in Panama City, Florida that I found just preparing for a appraisal looking for the vacant lot behind me that was a commercial lot for sale. And I stumbled across this 18 unit that had been on the market for over 90 days that had still had some hurricane damage and put an offer in, you know, and over the next 60, 90 days, we eventually we got it under contract and kind of worked the price and everything. And yeah, and we were blessed to be able to get the deal closed.

Dylan Silver (10:10.786)
Did your wife at any point in time facilitate with any of real estate activities or has she that’s not that’s not something she’s interested in?

Johnny Lynum (10:19.418)
Yeah, so over the years she has grown into it, especially when we found, this probably was about 2017, we found out about the real estate professional designation from the IRS that allowed us to bring our passive losses over into, you know, to offset my military active income. But she, with me, with the nature of my job, the majority of my career, I couldn’t, I worked in a secure location so I couldn’t take my cell phone with me during the day into work. And so, you know, while I’m out of pocket that she was the one, you know,

being paying, making payments to Home Depot for the materials for the guys, you know, working with the municipalities with turn on utilities and things like that. So she was kind of the linchpin that was working behind the scenes with kind of orchestrating everything throughout the, throughout the middle of the day.

Dylan Silver (11:04.856)
Yeah, I mean, she’s running the business. She’s making the payments. She’s doing a lot of things. She’s holding it down. That’s no small task. mean, people, would say maybe 20 to 50 % of people talk about their biggest concern or biggest hurdle is materials and contractors. And so she’s dealing with that. That’s, you know, tremendous. I do want to pivot and ask you about, mentioned the deal in Panama City when you kind of happened to come across it and then

Johnny Lynum (11:07.641)
Yeah.

Dylan Silver (11:34.306)
you go from fix and flip to a larger deal like that. How did you decide to take down that deal to put in that LOI? Did you have people who were doing something similar or was this more of a figure out on the fly type of situation?

Johnny Lynum (11:48.73)
was definitely the latter. It was a figure it out on the fly. I can remember to the exact place, I was in the backseat of the truck and I put in a million dollar offer on the building. They had it listed originally for 1.35 million. I made the offer over the phone to the broker for a million. My wife, she looked back at me, she’s like, you just made a million dollar offer on that property? I was like, yeah. I got a spreadsheet from one of the guys I met networking at the multifamily event.

It’s like it’s no way they’re getting 850 a month with the two ones for the rent right now. I like, it’s no way that I can mess this up at paying a million dollars for it just based off the existing cash flow with the only what they have in four units down. And we ended up splitting the difference. They wanted one one. We ended up splitting the difference and ended up at a million fifty thousand. But it was a leap of faith. One hundred percent. We have been doing really well in our fix and flip business. So we had some cash set aside and

Dylan Silver (12:25.708)
Yeah.

Johnny Lynum (12:45.047)
took the leap of faith. You know, we’re looking at the numbers and just the project itself that I felt really comfortable with going in and making it happen, especially, you know, with the banking relationship that I had built as well too with a local credit union that ended up doing the loan for us as well. And so, you know, but it was going through and leaning on my network and on my experience to that date to get there and reading some new books about how to put

debt together and promissory notes versus equity for those type of apartment transactions that really helped us structure them in a way where we can own long term.

Dylan Silver (13:22.542)
And now it sounds like there was a multifamily event or a group that are people that you were in contact with, connecting with, who may have been some influence on this deal, who may have been the inspiration or just a shoulder to lean on on this deal.

Johnny Lynum (13:38.554)
100%. Going to that event completely changed my mindset. And the thing is like, you don’t know what you don’t know. And getting in the right rooms, getting access to the right information, that it completely opened up a new world to me in regards to multifamily. So that inspired me because without that event, I don’t think I would have took that leap or even looked at that apartment in a way where I would be interested in knowing how to put an offer together, to offer to knowing how to put the deal together.

without that information, without attending that event. And the networking with just everyday people who were doing commercial deals to exchange your phone numbers, having lunch to where now once I get back home and I find this deal, less than two months later where I can pick up the phone and have a phone call and kind of get some insight for them to help me kind of walk through and making sure that I’m doing things the right way.

Dylan Silver (14:28.184)
Yeah, mean, no question having other people who’ve been there is, I would say, the fastest way to leapfrog time, to kind of figuratively time travel, because otherwise you’re going to be stuck in figuring it out yourself. in many cases, you’re, I’ve seen this, trying to get so book smart that you don’t have to do a lot of the work that, you know, could potentially be high risk, high liability, but it’s all risky. As you know, it’s all risky. So even if you do all that things,

tend to not go perfectly straight. so having those people to lean on is so crucial. I can say from my experience, when I didn’t know what I didn’t know, I just couldn’t understand how people could just go dive in with no kind of support network. I envied those people. was like, man, these people who don’t have the connections and

They don’t really have the knowledge and they’re just going out here making offers and like getting properties in the contract. Don’t have a buyer lined up and then just figuring out on the fly. Like that takes guts. I don’t I can’t do that. So I wasn’t that extreme. But I nonetheless saw it saw the value in all sides. But networking to me has been kind of the thing that I would say more so than anything else has has been pivotal, more so than the book smarts getting in front of as many real estate entrepreneurs.

who are doing what I want to be doing was the motivation and kind of the North Star for

Johnny Lynum (15:56.41)
Yeah, no, that’s great that your network is your network and you know, it works kind of, I would say that John Wayne using a Western analogy, just kind of getting out there and figuring it out guns are blazing, you know, but it’s risky and you know, you can put yourself at risk, your family, your well being. And so the thing is, it’s like, find the wisdom to be able to learn from other people’s mistakes. There’s no need for you to be out here making the same mistakes that tons of other people have already made. And so I think, you know, being around experienced people that already are doing.

What you’re doing is extremely smart and well worth the investment of your time and money.

Dylan Silver (16:32.526)
Johnny, I wanna ask you about fix and flipping versus purchasing these smaller complexes, 20 to 40 units. Two different realms, right? Do you like one better than the other? Are you feeling like you’re gonna continue to do a little bit of both or are you thinking I’m gonna move completely to purchasing these types of smaller complexes?

Johnny Lynum (16:56.759)
Yeah, think that’s one that, you know, initially I kind of went back and forth on and I kind of ended up now with just the 20 to 40 units, whereas that the ability to scale the cash flow that you can bring in on those types of deals. I know right now the Senate is debating on making the 100 % bonus depreciation and permanent, you know, and the benefits that come with that from a tax perspective, as well as just the economy of scale with having everything co-located in one area.

that it’s a grind. We’re doing the flips and finding your next deal and going through the project. Each home is different. That for me, it makes sense where I’m at the point now, it’s like if I do one multifamily deal a year, we’re good, that’s great. That’s a great cadence to go with, still very profitable and you’re not chasing where you’re trying to do five to 10 flips during the year. So for me, it’s just easier and I’m at the point now in my investment journey where I’m in

Some of the conservation mode and my risk tolerance isn’t there and the headaches that I’m willing to take on is I’m not willing to take on a lot of those.

Dylan Silver (17:56.707)
Right.

Let’s.

Yeah, flipping is an interesting game, because especially with like the HGTV proliferation of flippers and all these people, it seems like, this is so great. But I know a lot of flippers who are losing money, and it’s difficult, and it’s challenging. And it’s definitely a way to quickly put yourself in a hole if you don’t know what you’re doing, I think. And oftentimes, I think it might not be as I would say.

you know, doing a long term rental or burring in and out of properties might not be as in vogue as flipping. But if you’re talking about conservation and kind of making the what’s the saying the fastest money is slow money, right? So not being worried about that quick flip. And honestly, when I talk with investors, one of the biggest regress that people have is selling their, their fix and flips.

Johnny Lynum (18:56.152)
Yep, yep, 100 % that you look back and a lot of times, you you have to do it for liquidity and things like that to keep the business going. you know, you look at some of those, hey, if I had figured out and kind of kept 10 or 15 of those, it’s like, okay, I can just go sit back and kick my heels up and with the appreciation and you know, cashflow and everything. It’s like,

Dylan Silver (19:17.442)
Well, Johnny, are coming up on time here. Where can folks go to learn more about your business or get in contact with you?

Johnny Lynum (19:25.184)
No, great. My website is a great, great resource. Johnnylinum.com. You can find me there as well as on LinkedIn and Facebook. I’m out there as well too. And yeah, and just love to connect with other real estate investors and those that are looking to try to get off the roller coaster of the stock market and find opportunities to build more passive income through syndications as well as other opportunities to do private lending.

Dylan Silver (19:53.592)
Johnny, thank you so much for coming on the show here today.

Johnny Lynum (19:57.91)
Yeah, thank you for having me.