Through dedication, planning, and integrity, multi-family homes in the worst conditions can still be turned around and become profitable. This is exactly what Colby Bowers of Veteran Pride Investment Group did when he closed a handsome deal for a condominium complex floundered for around 14 years. He sits down with Sam Wilson to present his strategies for this transaction and find the best JV partners to help write bigger checks despite his short track record. Colby also talks about his admirable mission to end the stigma on people suffering from brain trauma through his organization, The Paper Crane Foundation.
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Listen to the podcast here:
Making It Big In Multi-Family Homes And Giving Back To Community With Colby Bowers
Colby Bowers is a full-time real estate investor and Co-Founder of Veteran Pride Investment Group. He’s been investing in real estate since 2001 and has acquired over 600 rental units and expanded his company into three markets. As a wounded warrior, he has a passion for giving back to his community by helping homeless and struggling veterans and supporting first responders.
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Colby, welcome to the show.
Sam, I’m glad to be here. Thanks for having me on.
The pleasure is all mine. Where are you based out of?
I currently live in Steamboat Springs, Colorado.
The same questions I ask everybody who comes on this show, Colby, can you quickly tell us where did you start. Where are you now? How did you get there?
I started back in 2001 with single-family homes like everyone else. We didn’t have a lot of the internet back then social media. There wasn’t a lot of information for commercial real estate. It wasn’t as readily available as it is now. I bought my first single-family home, which I lived in, my primary residence while I was still active duty military and caught the bug. In 2001, we were attacked and during Iraqi Freedom, all that kicked off for the last few years, I was deploying quite a bit and saving money.
Instead of going out and buying new vehicles, I started, “I want to buy property.” I bought other single-family homes and then realized, “That’s a lot of work.” I was trying to manage them while working and deploying because my first set of bad advice I ever received was, “You need to manage them yourself because you’re losing 10%.” I’m losing maybe 10% of gross profit but I’m losing about 90% of my freedom at that point. I was like, “Third property management. Way to go. No regrets.”
Real estate deals are not always about the money but also the likelihood of closing then.
Fast forward to when I retired, I knew I wanted to not work in the corporate world, even though I tried that for about a year or so when I got out. I wanted to get into commercial real estate but I just like, “How do I do this?” I started educating myself. I retired back in 2016. My tipping point was I bit the bullet. I was listening to all these podcasts and stuff and I was like, “I’m going to go to one of these bootcamps or these conferences.” I went and the light bulb went off.
I was like, “I can do this. I don’t have to have a lot of money, high net worth or an uncle that has all that. It’s helpful. Don’t get me wrong. I wish I did. I realized I can put in the work. It’s not rocket science. It’s a process. Coming from that military background, we’re all about processes. It sunk or came together. I bought into a coaching program and mentorship. I retired in ‘16. I didn’t take the plunge until August of 2018. February of 2019 is when I invested in my first multifamily.
Since February of 2019, we just closed on our fourth property a couple of months back and sitting around 642 doors. I’ve sold off all my single-family homes. I strictly own all multifamily. The first deal I ever did solo and going first full circle on was a fifteen-unit condo complex. I did a bunch of upgrades to it. It wasn’t the best. We’ve separated them out. We’re selling them off individually as single-family homes. We have been under contract for nine. I’m excited about that. We’ll probably gross about $1 million. I bought that property in December of 2019 so less than two years.
That’s a lot of moving pieces there. In the condo complex, you bought sixteen units. Were they all vacant? What was the story?
It was fifteen units and it was built in 2007 or it’s when they broke ground. The developer went out of business. Somebody went in and bought it. They rented it out as an apartment building as individual units. They went out of business, lost on it and then another investor I bought it from picked it up. He didn’t do anything with it.
I bought it and we turned around because they were set up to be sold off individually but never worked. From the beginning, I was always looking at that as my secondary plan. My primary is to hold onto it long-term. I want to buy and hold on to things for years. When we hit the million-dollar equity mark on it, it was a no-brainer to go ahead, try to sell it and reutilize that capital into bigger and in other deals.
They are already individually deeded. When you bought it, you had fifteen.
They had not quite gotten to that part. They all had their own 911. They were set up. All we did is in 2020, we went and it costs quite a bit of money but we had to go through the architectural plans, big horizontal regime change is what they call it which deeded them out. We created an HOA or POA is where Property Owners Association is in this state and this is in Arkansas. You got all that in place. When we marketed it, we marked it as a whole package and as an individual.
The whole package is we were going to sell it for a bit less than what we knew we could get it from the market but if we didn’t hit our numbers if we’re just like, “This is what we’re doing. You give us this offer or we’re going to sell them off individually.” We had a lot of low-ball offers and folks coming in. We had some get close but we’re just like, “Here’s our number.”
Once we got the first one on our contract, we’re like, “Sorry. Last chance. Here’s the number. You hit it or we’re pulling it off the market as a package.” We had one group hit it but they were, “It was our first time buying a property.” No track record and we didn’t feel confident closing with them and making it to closing because they didn’t have a sponsor or anything. We said, “Thank you. We’re selling them off individually and I’m excited about that.”
There are a lot of questions I have in that process like why do you think no one has done that up to this point? It sounds like an asset that floundered for 13 or 14 years. Why has no one gone to the efforts that you have to turn this into what you’ve done with it?
I’ve asked myself that same question because when I was looking at this, I had a lot of naysayers. As an apartment building, fifteen units. It was not the best deal. The numbers were good. My plan was to hold onto it long-term and I knew where I could get it to and it would work for a long-term hold. I also looked at it as a backup. I’m like, “The market’s going up.” It’s 1 mile away from the University of Arkansas. It’s one block from the free bus line. It’s on a core trail for biking and walking. It’s on a creek. It’s all these pluses.
Here’s the other thing, I found this deal on LoopNet where the deals go to die but that is not the case. I think people were looking at it at face value. When I talked to the broker and started looking at and dove into this deal, I realized like, “I’ve got multiple exit strategies.” There are three buildings. I’m like, “I could sell one building off and keep two.” There are so many different ways to go with student housing. I said, “There isn’t a lose, lose.” Even with all these naysayers and stuff, I went ahead and took the plunge. It’s worked out.
You’re making a gross profit of roughly $60,000 a unit. It sounds like. There’s nothing wrong with that at all. It’s interesting that your goal is to buy and hold but of course, looking through it with a different lens and saying, “Maybe there are some other things we can do with this to turn a profit out of this.” I’ve got some questions for you about the offer that you turned down. They met your number. What are some things that buyer could have done to have had you, have more confidence in them as a buyer?
If they would have brought in a partner that had a resume that had done it before that could give us confidence that they could get to closing. Even I got into this is when you’re making an offer, whether you’re buying or selling something to remember and I’ve seen this all the time. I’ve won out a number of deals and I didn’t have the best offer. What it goes back to is it’s not always about the money. It’s about the package. Can you get to closing?
The reason being is let’s say they hit my number but then it’s 60 to 90 days. I pull this off-market, I got all these holding costs and they don’t qualify for a loan. Whereas if I could have taken maybe $100,000 less with somebody else that has that nice proven track record, we go to close, they may still come out ahead because I don’t have 90 days worth of holding costs, headaches or whatever the case may be starting all over again. It’s a time loss. Keeping that in mind is when you’re going forward.
When you’re starting out in real estate, don’t listen to friends and family. They’re probably the biggest naysayers.
It’s always important as partners, especially starting out as a partner with somebody with some experience with that track record. We passed on the deal and we didn’t have the best offer. They came back. They didn’t accept or they countered and they’re like, “You guys didn’t have close to the best offer but we had a track record. We were already in this market.” They knew us.
Everybody on my team was known by the sellers and the broker representing the sellers. We’re like, “These guys are great. Let’s go back and try to work with these.” We couldn’t come to an agreement because yes, the number is still important when you’re buying. You got to look at is, “What is their pain point in having that track or can you close or not?”
How did you guys fund this condo opportunity? I want to ask that same question as it pertains to your multifamily holdings.
We have a private money investor. These are hard money loans through a private investor and we went to a bank. It’s a non-recourse loan that we received and got a private investor and we were able to close. That was good and it was also bad. This deal was the first deal that my partner and I did by ourselves. We were KP sponsors. We qualified for the loan. Everything. It was our first deal that we did solo. I went from a limited partner and JV-ing a couple of smaller deals to this deal.
Looking back, I’m glad I did it because also go back as I made a lot of mistakes and I made them early and I’m learning from them. Yes, I’m going to make money on this deal but there’s a lot of stress that has gone in with this deal. Going back, I would go back and be like, “I want to bring on a JV partner with that money lender. I think we could probably, instead of selling it, we may have held on to this property and we might’ve been able to increase the value even more.” It’s that inexperience of wanting to take down a deal, which was good. It was a great confidence booster but we left money on the table. I think I have more gray hairs and stuff than I did.
That’s the name of the game. I don’t know how many of us have done deals where like, “I left a lot of money on the table there.” There is no trade-off for the experience. You got to do what you got to do. It’s good for you. You came out still making money. That’s a win-win. Talk to me about your multifamily holdings. This is your first deal. You’ve taken down as the key principle with you and your partner. How have you taken down your other assets?
We do a combination. I look at it as I’m an opportunistic investor. I look at the way I fund my deals, there are different tools. I’ve syndicated a few deals, utilized that tool and joint venture deals. Again, hard money investor. I’ve done the gamut and I don’t want to say anyone is better than another. Each deal we look at, we run through all the processes, “Which tool is going to be the best for this deal?” What I will say is because I am a long-term investor, I’m not a huge fan of syndications. They’re a necessary tool but typically you’re going to be locked into your business plan and your investors are expecting you to sell within a certain timeframe.
That’s not my goal. I don’t want to sell. I want to hold, I want to cashflow. I’m in this for the cashflow. That’s why I like joint venture deals. A $20 million purchase price, I haven’t built up my friends, if you will, that I can JV with 5 or 6 folks that we can cover the down payment on a $20 million deal. We’re going to syndicate those deals. I’ve got a whole mix in the portfolio.
With a shorter track record, what’s it been like finding JV partners that can help write those bigger checks?
It’s been easier than I thought. A lot of that comes by is because we have a process in place. I’ve aligned myself with some great partners, basically general partners on a deal. Having a track record, coming recommended and I mentor folks. Just getting out there, being educated, helpful and honest. The biggest takeaway we were in breed in the military is integrity. That’s doing what’s right even when somebody is not looking. Integrity in the business world is lacking in a lot of instances.
I’ve turned down investors that have come to me like, “I’ve got $100,000. This is my first deal. I want to do it.” I’m like, “If you want to invest, I’m not going to take your $100,000. I’m going to start you at a smaller amount because we haven’t worked together before. You don’t know me, I don’t know you. I don’t want to take your only $100,000 because if I screw this up, I’ve screwed this up for life. You’re never going to invest with me again.” That’s come out in a positive way. We don’t sugar coat. I had an investor meeting and they’re like, “We’re going to hit our target.”
Ventured into my first two mobile home parks. We’re probably going to miss our target for the first year. The supply chain hasn’t panned out. Even though we thought we were very conservative. It’s not but I’m like, “I’m not going to sugarcoat it. We’re going to miss it. We know we’re going to make it up and we’ll catch you up in year two.” They appreciate that. They’re like, “I can deal with that.” Now I’m going to expect is I’m not going to get me a nice check for Christmas. I’ll fund Christmas a different way. Even though they weren’t unhappy, they’re a little disappointed. I’m disappointed as well but they appreciate the honesty and the straightforwardness.
I think that’s anybody in the business. Keeping that honesty and straightforwardness with people. You should be taking money from people that are aware of what they’re getting into. This is business. I haven’t personally invested in multiple businesses myself and not all of them have launched out and it’s my own money in the deal and you go, “Things didn’t work out for the first twelve months like we thought they would.” That’s part of what we do. I think that gets overlooked.
It does get sugarcoated at least on the front end with a lot of projections and things. There’s a real risk we are taking here. Just making that known upfront is cool. Let’s shift gears a bit and maybe talk a little bit about your nonprofit. Maybe talk a bit about a small hill you just climbed. Tell us about some of those things and why it is that you do what you do.
I got into real estate. To tell you the whole story of how I went from the military to real estate to starting and running a nonprofit. They’re in line with each other. Being in the military, you definitely don’t join the military for the paycheck. You leave out of the military, you’re not a high net worth individual. There are some people great investors and stuff but they didn’t get it off their military paycheck for the most part. It’s that service before the self-type deal. I enjoyed being part of something bigger than myself. That’s what I miss a lot about the military.
One of the things I wanted to do on the real estate side and I do with Veteran Pride Investment Group, my company, is I donate 20% of my profits to veteran and first responder communities. Our goal is 10% and we’re sitting right around 4% or 5%. We’re also trying within our portfolio is setting aside up to 10% of our units for HUD-VASH. HUD-VASH is basically section eight but it’s specifically for veterans. It’s for veterans that are potentially at risk of becoming homeless.
Integrity is lacking in a lot of instances in the business world.
There’s a lot of parameters but it pays out the same as section eight, same requirements and stuff. It’s a bit more segmented. The participants, the veterans themselves have to jump through some hoops to qualify. That’s being part of something bigger than oneself. I want to still give back to the community because I am a wounded warrior. I was injured a couple of times in Iraq and Afghanistan, roadside bombs and different explosions. There are more healthy ways to grow up through your 20s and 30s than in a war zone.
All that being said is the money from my profits wasn’t fast enough and growing quick enough for what I wanted. My wife and I started a nonprofit. We call it The Paper Crane Foundation because the start of a global pandemic isn’t challenging enough for life. We’re like, “We’re going to launch this at the beginning of a pandemic.” We did. In January of 2019, we went live. We’re a 501(c)(3). We went through all those hoops and we were supposed to do it in 2020 but with COVID everything got pushed off. Our first expedition, if you will, for The Paper Crane was to go to Mount Everest Base Camp.
We had to switch gears due to the requirements, restrictions and logistics of getting into Nepal. Instead in 2021, we flew out to Tanzania. I and three other wounded warriors, a local first responder here from Steamboat firefighter paramedic and an inactive duty guy, flew to Tanzania and hiked Mount Kilimanjaro. We left on the 26th of August 2021 and we got back on the 8th or 9th of September 2021. We got back still recovering. It’s to raise awareness.
What we do is we’re not a destination nonprofit, we’re a nonprofit that raises money to raise awareness for traumatic brain injury from which we suffer. Also, to raise awareness that “There are other veterans and first responders folks out there that have had concussions that have become counsel locked whether due to balance issues, memory issues or what have you. We want to show that you can overcome those.” I walked with a cane. I couldn’t carry my son up and downstairs. I didn’t bond with my son for the first two years of his life because I couldn’t hold him for fear of falling.
They were going to get me a service dog and were able to find the right help and stuff. I summited Mount Kilimanjaro months ago. We are moving forward as this has kicked off a 5 to 7-year research study. We are trying to make earlier diagnoses of traumatic brain injury more available. It’s very subjective. You go in and follow my finger type deal, make an MRI or something but it’s very subjective. We’re partnering with a few companies that have some devices.
What we want to do is get those devices out to urgent cares emergency rooms to collect data because what we’re seeing and a lot of that out there is it took them six years to diagnose my traumatic brain injury. That seems to be 4 to 6 years. That’s a lot of time that it could have been rehabilitating and healing. That’s lost time with my son that I’m not going to get back. That’s The Paper Crane. We’re starting off with veterans and first responders but we’re going to open it up. We want to do research for kids because there are over eight million concussions in the US alone each year.
That’s a big overarching why to what it is that you do. That’s super cool.
Being in real estate allowed me to take three weeks off working from home to go and do that. I didn’t have to take vacation time. I didn’t have to coordinate my schedule with a boss other than my wife but she was fully on board.
Colby, I love what you’re doing. I love how you’re doing it. To get it done attitude and especially overcoming traumatic brain injuries. Also turning that on turning it on its head but literally, to go out and help others as well that suffered as you have. That’s fantastic. Thanks for doing that. Is there anything else here before we jump into the final four questions that you’d love to share with our readers?
There is nothing that I can think of. I could sit here and talk real estate all day but we only have a bit of time left so I’ll let you take it over.
If I gave you $20,000 to invest in real estate and you had no previous real estate investing experience, what would you do with it? Why?
Depending on what you’re looking for, that’s a good question. I think you touched on this a bit earlier. If it’s only $20,000, do you want to be a hands-on learner and learn from the sidelines? If you want to be a hands-on learner and you want to get into this business, I’d say, “Let’s look at a small joint venture deal where you can be having an active role and be a part of it but still have the support and staff of experienced operators such as myself.” Another one is maybe you want to get into a bigger deal, maybe help build up a resume then look at a syndication type deal.
If you could help our readers with one mistake in real estate, what would it be? How would you avoid it?
Don’t listen to the naysayers. I didn’t turn it over to third-party professional property management. I tried doing it myself. That was a huge mistake. I don’t want the calls at midnight. That’s why I have property management. I call him and go, “Give me a status update. How are things going? You had a leaky toilet. Was it fixed? Yes or no?” That’s all I cared about. Was the tenant taken care of? I would say that’s the biggest one, especially when you’re starting out, don’t listen to friends and family. They’re probably the biggest naysayers.
I believe you’re right. I’ve asked this question already. We’ve hit on it. The third question is when it comes to investing in the world, what’s one thing you’re doing to make the world a better place? I would assume that’s going to be your nonprofit.
Our goal is we know what this research and stuff that we’re going to be able to touch the lives of people worldwide. That’s research. It’s not just for one segment. It’s going to have big impact once we get it to where we wanted to go.
Colby, if our readers want to get in touch with you, what is the best way to do that?
Not that I’m anti-social media but I’m an older guy and tech isn’t my strength. I’m working on that. Just email me. That’s the best way. It’s Colby.Bowers@VeteranPride.org, shoot me an email. I have a website www.VeteranPride.org. There is a way to submit a sheet and stuff if you have some questions. If you want to reach out and you want to get ahold of me and I’m very responsive is shoot me an email.
Colby, thank you so much for your time. I do appreciate it.
Thanks, Sam. Thanks for having me. This has been fun.
Important Links:
- https://www.VeteranPride.org/
- https://www.LinkedIn.com/in/colby-bowers/
- The Paper Crane Foundation
- Colby.Bowers@VeteranPride.org
About Colby Bowers
Colby is a full-time real estate investor and co-founder of Veteran Pride Investment Group LLC. He has been investing in real estate since 2001 and has managed numerous fix and flips, a portfolio of single-family rentals as well as been a private note lender. Colby and realized that for scalability and long-term wealth that multi-family real estate acquisitions are where he needed to be. He has acquired over 600 rental units and expanded his company into three markets. Colby has a passion for helping people to safely invest in real estate. He loves real estate because of the controllability of your inputs and outputs, risk aversion, and tax incentives. He also served 23 years of distinguished military service as senior executive managing facilities and projects in multiple states, multi-million-dollar budgets, and hundreds of enlisted Air Force Members. As a wounded warrior, he has a passion for giving back to his community by helping homeless and struggling veterans and supporting first responders. His Company Veteran Pride Investment Group donates 20% of its profits to veteran and first responder charities.
