Today’s guest is David Sepulveda.
David is a U.S. Air Force retired Master Sergeant with a strong track record in leadership & discipline. Transitioned into real estate investor & commercial broker.
Show summary:
In this podcast episode, retired US Air Force Master Sergeant David Sepulveda shares his journey in real estate and discusses his expertise in commercial real estate. He emphasizes the importance of considering factors like inflation and the cost of living when investing in real estate. David also talks about the challenges he faced in the industry and how he overcame them by obtaining his license as a commercial broker. He specializes in retail and multifamily properties and discusses the current market trends in Southwest Florida. The episode also touches on David’s military background and the leadership skills he learned in the military. Overall, it highlights David’s commitment to integrity and client satisfaction in his real estate career.
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Starting Real Estate Journey [00:01:02]
Breaking into Commercial Real Estate [00:02:03]
Southwest Florida Real Estate Market [00:05:02]
The military rank structure [00:10:13]
Leadership skills developed in the military [00:12:19]
Impact of insurance market changes in Florida [00:15:35]
David’s journey in real estate [00:20:48]
Becoming a commercial real estate broker [00:21:22]
Contacting David [00:21:30]
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Connect with David:
Linkedin: https://www.linkedin.com/in/commercialrealestatedave/
Connect with Sam:
I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.
Facebook: https://www.facebook.com/HowtoscaleCRE/
LinkedIn: https://www.linkedin.com/in/samwilsonhowtoscalecre/
Email me → sam@brickeninvestmentgroup.com
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Want to read the full show notes of the episode? Check it out below:
DAvid Sepulveda ([00:00:00]) – I tried to explain to them, Well, you’re not taking into account, number one, inflation. You’re not taking into account, you know, increase in cost of goods. You’re not taking into account just increase in cost of living, you know. So all of those things, I think, are important factors that a lot of people kind of. Bypass. They don’t they don’t take it into consideration as much as I think they should.
Intro ([00:00:25]) – Welcome to the how to scale commercial real estate show. Whether you are an active or passive investor, we’ll teach you how to scale your real estate investing business into something big.
Sam Wilson ([00:00:38]) – David Sepulveda is a US Air Force retired master sergeant with a strong track record in leadership and discipline. He is a real estate investor and also now a commercial broker. David, welcome to the show.
DAvid Sepulveda ([00:00:49]) – Thank you for having me, Sam. Absolutely.
Sam Wilson ([00:00:51]) – The pleasure is mine. David There are three questions I ask every guest who comes on the show in 90s or less. Can you tell me where did you start? Where are you now and how did you get there?
DAvid Sepulveda ([00:01:00]) – 90s All right.
DAvid Sepulveda ([00:01:02]) – Well, I honestly started back in 2013. That’s where I started my real estate journey. I started out as an investor. It was really my focus to just try to grow my wealth, take care of my family, try to figure out how to get a piece of that American dream, if you will. Um, so got into tax lien investing. From there. I graduated to tax deed investing from tax deed investing scaled up to the single family. Did a very light flip. Then I scaled it up to a major flip. And then I said, Well, you know, the natural progression is to get into commercial real estate. What I noticed when I got into commercial real estate is that it’s a little bit more difficult to kind of that entry to barrier, if you will. Um, you have a lot of people that if you don’t already have a proven track record, they don’t want to play with you, you know, they don’t want to allow you to, to come to their sandbox.
DAvid Sepulveda ([00:02:03]) – So I had to do is I had to figure out, well, hey, if this is a space that I really want to be and how do I break into that? And that’s what led me to get my license as a commercial broker, because I still wanted to be an investor. But since nobody else wanted me to play, I was going to play the way That’s awesome.
Sam Wilson ([00:02:21]) – So did you skip the residential brokerage side altogether?
DAvid Sepulveda ([00:02:27]) – I did. And that’s that’s not something that normally happens, right? I will say that most brokers and to be honest with you, when I got my license, they didn’t even want to talk to me. Right. I actually had to go in person into the different brokerages and say, Hey, here I am, this is who I am. Because commercial real estate is a completely different language than residential real estate. But once I went into the office and I started speaking the language, they were like, Oh, he does know what he’s talking about. We can allow him to play with us.
DAvid Sepulveda ([00:03:01]) – So that’s really what it took, was the persistence and that just resilience, you know, that that that thing that we get taught in the military being resilient be resilient.
Sam Wilson ([00:03:10]) – Absolutely when you so yeah one of the things that sound like you did right was to understand who it was you were talking to when you went to these brokerages and say, hey, look, I’ve already done my homework. I know. I know this industry. I mean, a lot of times, like you said, you got to have some sort of experience or something to kind of break in or allow get your foot in the door. What what did you do once you got into the commercial real estate world to really solidify your position?
DAvid Sepulveda ([00:03:39]) – I really had to market myself as an expert. I had to make sure that I conveyed not only the confidence, but the knowledge. You know, because you can have all the confidence in the world. But if you don’t have the knowledge to back it, you’re still going to look like a fool.
DAvid Sepulveda ([00:03:54]) – You know, So it was nice to come back home to southwest Florida because I know the area I grew up here. So it was very easy for me to already have a good working knowledge of the area. So then all I had to do was really express to all of the different business owners and the different landlords and whatnot that I do understand the market as well as the market product itself.
Sam Wilson ([00:04:20]) – Got it. Got it. Very, very cool. So what year was it then that you got your or you became a commercial real estate broker?
DAvid Sepulveda ([00:04:28]) – I actually got my license back in 21, 2021.
Sam Wilson ([00:04:33]) – Okay. License in 2021. And you specialize. We talked about this off air, so I’ll ask a little bit of leading question. But you specialize in retail and multifamily. Things have changed incredibly in both of those asset classes from 2020, especially in the retail side. And multifamily has gone hot and heavy. And then, you know, we’ve seen quite a bit of slowdown on the transaction side on that.
Sam Wilson ([00:04:56]) – Is that something you’re also seeing in your market or are things still just running wide open where you are?
DAvid Sepulveda ([00:05:02]) – Southwest Florida is a very hot market. We’re actually seeing growth in a lot of different sectors. So unfortunately, don’t get to capitalize on the the downturn as everybody else may be able to in other areas of the of the continent. But southwest Florida is just the growth. Has been phenomenal. We’re talking, last I checked, a thousand people moving to Florida daily. And out of that thousand we were capturing here in southwest Florida, I believe it was maybe, you know, 10 to 15% of that.
Sam Wilson ([00:05:39]) – Wow. That’s a lot. That’s a lot. That’s really interesting. So you haven’t seen the transaction volume slow down at all on the multifamily side?
DAvid Sepulveda ([00:05:48]) – No, we saw a little bit of a pause because of Hurricane Ian. So a lot of people were, you know, kind of holding on to their money, both on the buyer side and seller side. The buyers were trying to see what the sellers were going to do with the properties, if they were going to fix it up with the insurance money, they were going to take the insurance money and run.
DAvid Sepulveda ([00:06:06]) – So we saw a bit of a pause there. But man, southwest Florida is so strong and so resilient. Man. They just came back and, you know, a year later and it’s as if, you know, obviously we have areas where you can see the the damage. But, I mean, everybody’s going strong, man.
Sam Wilson ([00:06:23]) – That’s great. I think it’s one of those things that, you know, we hear it, but you don’t if you listen to the national conversation, it’s going to say, man, you know, transaction volume in multifamily is down, what, 75% year over year on a national level. But real estate is indeed local. So I think that’s the other part of it is, you know, for you guys, it’s almost as if interest rates it sounds like interest rates have risen, but you guys haven’t taken notice.
DAvid Sepulveda ([00:06:49]) – No, not as bad as that. Other parts mean. There might have been a bit of a slowdown, but not enough for me to be like, Hey, there’s just an abundance of multifamily come shopping here, you know.
Sam Wilson ([00:07:01]) – Come shopping and say, Well, let’s talk about then what are people buying right now that makes sense for you guys?
DAvid Sepulveda ([00:07:09]) – Man, Let me tell you, we can’t keep multifamily on the shelf. We can’t keep industrial on the shelf. Um, even retail now is starting to pick it back up. You know, now that Covid has slowed down and we’re getting the tourism back into Florida. So a lot of different sectors, especially like I said, here in southwest Florida, we’re seeing a good increase.
Sam Wilson ([00:07:30]) – Wow, That’s awesome. That’s awesome. Let’s talk about what you invest in personally. Now, you’ve been you talked about this early on. You know, in 2013, you were buying tax liens and tax deeds, which I think is kind of an advanced strategy, to be honest with you, for your kind of intro into real estate. Most people don’t start with deals with that much hair on them. We won’t go down that rabbit hole, but that’s someday maybe we’ll have you back on and we can talk about that journey because I think that’s a very interesting one.
Sam Wilson ([00:07:57]) – But what are you personally investing in now?
DAvid Sepulveda ([00:08:02]) – Now I am still investing in multifamily. I’m investing in small retail as well as small businesses.
Sam Wilson ([00:08:11]) – Interesting. Okay. How do you as a broker tell me this from a not from an ethical standpoint, but just from a working with your client standpoint to know that you’re putting their interests first? I’m sure that’s something that you have to think about when you see deals come across your desk, you say, Hey, man, that’s a great opportunity. But should you know, you don’t want to eat the best and leave the leftovers for your clients. So how does that work with you both as an investor and as a broker?
DAvid Sepulveda ([00:08:41]) – It’s all about just open and honest communication, right? One of the things that we’ve learned in the military is integrity first. And I always try to make sure that I’m open and honest with my clients. Let them know, listen, I. Understand that you’re trying to sell this property and I may have an interest in this property.
DAvid Sepulveda ([00:08:59]) – Here’s what I could offer you. And to be fair, I will also let you know that if we were to take this to market, you would get X amount. And there’s quite a delta between my offer and X amount, but I can close quickly. You know, it’ll be a smooth transaction as opposed to us being on the market and allowing the market to tell us when it will close.
Sam Wilson ([00:09:23]) – Right, right. Yeah, that’s that’s really, really interesting. Yeah. But that would be and that’s, I mean, that’s, that’s the beauty of doing what you do is that you can offer, offer people deals that make sense for them in order to avoid a lot of those pains of taking deals there to market. Well tell me this, David, as a master sergeant in the military and I will openly say I knew nothing about the military. I was not in the military. I’m often accused of it just because I was raised by a marine. And so I know what it’s like to grow up in one of those houses where it’s, you know, be seated by X number of times and out the door by this very, very regimented.
Sam Wilson ([00:10:00]) – But what does a master sergeant do and what are some of the things from a leadership and leadership development perspective, I think that you learned inside of the military that still guide what you do today.
DAvid Sepulveda ([00:10:13]) – Well. So when you’re looking at the military, it’s really broken down into two different sectors. You have your enlisted sector and you have your officer sector. Being a master sergeant, which is equivalent to E7, is an enlisted sector rank. E7, Master Sergeant is one of the higher ranks. It is part of what they call the top three, the highest rank you can achieve as an enlisted members and E9, which is a chief master sergeant in the Air Force. And then you have below that the senior master sergeant, and then you have the master sergeant. Now depending on your in the Air Force, we call it AFS in the different branches, they call it by a different name. For example, in the army is Mos. But basically what it is, it’s your job in the military. So depending on your job in the military can really determine what your responsibilities and your roles are.
DAvid Sepulveda ([00:11:08]) – You could be in charge of a whole section of airmen and it could be include 20 or 30 people as well as a certain number of civilians. Or you could be in a very small shop and only be responsible for 2 or 3 people. A lot of my time as a master sergeant, I spent it in what they call the commander support staff. So the general has an admin staff and that admin staff is responsible for making sure that the airmen are taken care of. Whether we’re talking about their vacation time, which we call leave, we’re talking about any pay issues that they may have, um, making sure that they’re, I don’t know what you call them on the civilian side, but we call them enlisted performance reports, so their PRs. So that’s really where I spent a lot of my time as a master sergeant is making sure that the airmen were taken care of.
Sam Wilson ([00:12:08]) – Wow, that’s really, really awesome. What are some of the things I guess that you felt like were developed in you as a leader in that role?
DAvid Sepulveda ([00:12:19]) – Well, um, there’s really a lot of things that you learn being in the military, right? You learned teamwork, you learned, um, the discipline and the core values, which is the the integrity, first excellence and everything we do, you know, and I think a lot of that has carried over into civilian sector for me now is making sure that, you know, like I stated before, I’m open and honest with my communication.
DAvid Sepulveda ([00:12:47]) – I’m letting you know, letting my clients know, like, listen. I can purchase this, but it’s going to be significantly lower than if you were to take it to market. However, it’s a lot quicker. So that integrity, just being that, you know, that honest dealings with people and you know, the discipline because real estate is really a disciplined game, you have to continuously do the cold calling. You have to continuously do the door knocking. You have to continuously look at the market, the market trends, see what’s going on, see what changes are coming into place, whether we’re talking about, you know, new policies, new laws, you know, different, you know, companies coming in that may affect other sectors of your businesses. So it’s just the discipline of doing the thing over and over again, no matter how much you might dread it.
Sam Wilson ([00:13:43]) – And man, there is plenty of that to go around, I think for all of us, there’s there’s plenty of those things where you go, yep, I don’t really want to do that today, but it’s something you just got to put your head down and go.
Sam Wilson ([00:13:55]) – It’s probably easier in the military when there’s somebody, you know, yelling at you if you don’t get it done than it is when you just can, you know, hide it under your own to do list. You’re like, you know, maybe tomorrow we’ll get that done. But either way, I like both things that you said there was the adaptability is the way I would summarize that when you said, you know, being open to changes and looking at what changes are coming and then the open and honest communication side of things, I think I was speaking with somebody yesterday and they said, man, you know, I just I’m just not very I’m pretty non-confrontational. I’m like, man, like, just one stop saying that. I said, Because that’s negative self-talk. And two, we can rephrase this into something where that open and honest communication like you’re talking about can become part of who, who that person is. And they’re significantly younger than me. But I think it was it was it was just a great conversation, a reminder that we can constantly be improving the way that we communicate.
Sam Wilson ([00:14:50]) – Let’s go back, I guess one of the things I thought about when you were saying looking at changes and we’re going to take a real left turn here in conversation, so I apologize, but I wrote it down here as a note. The the Florida market, you’re on the brink of, I think what’s the name of the next hurricane potentially heading your way right now. They named that.
Sam Wilson ([00:15:07]) – Yet Adelia.
Sam Wilson ([00:15:09]) – Amelia okay so that’s that’s and we’re recording this at the end of August here in 2023 hopefully hopefully that passes by without much to talk about. But the insurance market’s for what you guys deal with in Florida. I mean, that’s a hot topic. Like what are you advising from the brokerage side? Like how are you advising your clients and your own portfolio right now? What are you doing on the insurance side of stuff?
DAvid Sepulveda ([00:15:35]) – I mean, that has been a thorn in everyone’s side because so many insurance companies have pulled out of Florida altogether, which, you know, by the law of supply and demand, the ones that have stayed are able to jack up their prices and have I mean, you’re talking about people used to pay, you know, let’s just say 100 grand annually.
DAvid Sepulveda ([00:16:00]) – Now they’re looking at almost half a million annually, you know, So the increase is definitely hurting a lot of people’s pockets. Unfortunately, it’s a necessary evil. You know, because being here in Florida, you can’t just go without flood insurance. You can’t just go without, you know, any insurances to cover your assets. So, unfortunately, you know, I try to make sure that I have surrounded myself with the best team so that my clients can win. So I do work with a good insurance broker who goes out there and finds my clients the best insurance coverage that they can.
Sam Wilson ([00:16:43]) – What are people doing to offset some of those just astronomical rate increases?
Sam Wilson ([00:16:50]) – Well.
DAvid Sepulveda ([00:16:51]) – I mean, you’re seeing a lot of. A lot of adjustments, whether we’re talking scaling back on their inventory in the retail sector, whether they’re talking. Increasing the rents in the multifamily sector. So you’re seeing a lot of. Passed as being passed, you know, passed down, which it’s understandable, but unfortunately when you’re in a market.
DAvid Sepulveda ([00:17:20]) – That you have a mix of fixed income and disposable income. Those with the fixed income really feel the pain of those, you know, costs being passed down.
Sam Wilson ([00:17:34]) – And there’s really nothing. There’s nothing you could do about it. I mean, it’s just it is. I mean, you can’t you can’t continue to absorb those astronomical rate increases without then eventually, you know, passing that on down to the to the end user. And that’s I just I don’t see a way any other way around that. Especially, again, as you said, you know, the the insurers are leaving the market, leaving just a few there to choose from. And I guess that’s just something probably to think through as you look at investing in Florida or markets like Florida that have some of these associated natural disaster risk where it’s like, okay. Do you see people underwriting a continued increase in insurance costs where they say, okay, you know, it was 100, now we are 500. But you know what? We’re going to go ahead and budget for a million.
Sam Wilson ([00:18:26]) – I mean, is that part of people’s equation now?
DAvid Sepulveda ([00:18:31]) – I think it’s always smart to make sure that when you’re underwriting any asset class that you always increase cost. I think, you know, whether we’re talking about a increase of 3% or whether we’re talking an increase based on prime rate or even the CPI. I think it’s it’s wise to I don’t see it a lot. I think I’m seeing it more now. You know, now that has skyrocketed. But prior to Hurricane Ian, when I would talk to my clients and I would, you know, see where their mindset was and try to pick their brains as to how they’re coming to the numbers that they’re coming. I tried to explain to them, Well, you’re not taking into account, number one, inflation. You’re not taking into account, you know, increase in cost of goods. You’re not taking into account just increase in cost of living, you know. So all of those things, I think, are important factors that a lot of people kind of.
DAvid Sepulveda ([00:19:29]) – Bypass. They don’t they don’t take it into consideration as much as I think they should.
Sam Wilson ([00:19:34]) – Interesting. Interesting. Well, there’s there’s the nugget for the day. If this is something you haven’t been considering in your underwriting, David just laid it out for you. Make sure you’re including those things and really probably padding those stats, especially in higher risk markets such as Florida on some of those variable costs that you have. I mean, that’s the bummer about it. It’s like you have no absolutely no control over it. It’s like, oh, by the way, your insurance went up 400 grand and you did nothing wrong. It’s not like it’s not like half of your property burned down. You rebuilt it and they’re like, okay, well, you’re a terrible manager. It’s like, by the way, you’re just we’re going to quintuple the cost of your insurance and you’re just kind of stuck. So that’s, you know, preparing for some of those things can be a difficult thing to do and put in your underwriting because it might might kill more deals than than you would like.
Sam Wilson ([00:20:26]) – But then again, yeah.
DAvid Sepulveda ([00:20:28]) – And I think that’s what a lot of people think. That’s the deterrent for a lot of people. I think they’re so caught up in the momentum of trying to get a deal that they don’t look at the fact like, well, what are the factors that will make this a good deal? Because in the long run, if you don’t take those things into consideration, even a good deal today may not be a good deal tomorrow.
Sam Wilson ([00:20:48]) – Right. Right. Absolutely. Well said. David, thank you for taking the time here to come on the show today. Certainly enjoyed learning about what a master sergeant is in the military, what your leadership skills there that you had in the military and how you translate those over into what you’ve done. I love the go get them attitude in 2013, just jumping right into tax liens and tax deeds. I think that’s that’s that’s really, really cool. And then and then, like you said, positioning yourself as an expert, jumping out there and saying, hey, look, I’m going to be a commercial real estate broker becoming an expert there in your market and in your space.
Sam Wilson ([00:21:22]) – You’ve shared a lot of great things with us today. Certainly appreciate that. If our listeners want to get in touch with you and learn more about you, what is the best way to do that?
DAvid Sepulveda ([00:21:30]) – Honestly, you can find me on most social media under commercial real estate. Dave Or you can look up David Sepulveda with con consultants in Fort Myers, and that’d be the best way to get hold of me.
Sam Wilson ([00:21:41]) – Fantastic. David, thank you again for your time today. I certainly appreciate it.
DAvid Sepulveda ([00:21:46]) – Absolutely. Thank you for having me.
Sam Wilson ([00:21:47]) – Hey, thanks for listening to the How to Scale Commercial Real Estate podcast. If you can do me a favor and subscribe and leave us a review on Apple Podcasts, Spotify, Google Podcasts, whatever platform it is you use to listen. If you can do that for us, that would be a fantastic help to the show. It helps us both attract new listeners as well as rank higher on those directories. So appreciate you listening. Thanks so much and hope to catch you on the next episode.
