ADPI_045: How To Fix And Flip With Dan Krupa

Apr 19, 2019

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In this episode, we get a chance to deep dive fix and flips with Dan Krupa, former Army Infantry Officer, and CEO of Revile Homes. Dan gives us insight into some of the good practices while getting into the Flipping game. This is one you don't want to miss!

Dan's Books:
The One Thing by Gary Keller
The Cashflow Quadrant by Robert Kiyosaki

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***EPISODE TRANSCRIPTION***

 

Mike:

Hey, what's going on guys? Welcome to the active duty passive income podcast. First of all, I want to say Happy Thanksgiving to all you guys out there. Hope you guys had a great weekend. Good time to spend with family and friends, and also want to ask your special support for the NCHV the National Coalition for Homeless Veterans in this time of giving.

 

We think about the 38,000 homeless veterans that we have out there. We know that folks are struggling with PTSD and addiction problems. And, you know, so many services out there that help provide and take care of our heroes that have come back from, you know, serving different various wars and are still struggling out there on the streets. So we ask that you please just think about them in the special time of need. We have a link where we support our team, the National Coalition for homeless veterans they've been they've been combating the warfront here at home on this homeless veteran issue for well over 20 years now.

They were founded in 1990 by six veterans and they have been doing a phenomenal job and we ADPI we have teamed up with them and we hope that you choose them for support again that link is in the show notes page if you'd like to donate if not please keep them in your prayers in this season of giving and yeah alright alright so outside of that let's get ready to kick off this podcast Dan Krupa. He is the CEO of Reveley homes he's a flipper and which is actually something we don't really have too much here on our show. We normally teach, buy and hold so we had a special opportunity here to pick the brain of someone who's been very successful in the business and yeah, hope you enjoy.

Hey, freedom fighters. Welcome to the active duty passive income podcast. The only place where military members, veterans and their families learn how to build wealth through real estate investing. I'm your host, Mike Foster, and I'm here to show you how to stop wasting your benefits. Now, get off your ass. Step up to the firing line and make ready for today's lesson. Shooters Standby...

 

Hey, what's going on guys? Welcome to the activity passive income Podcast. I am so excited today. I've got Dan Krupa here on with me what's going on? Dan?

 

Dan:

Hey, my man doing good been great been great.

 

Mike:

Really appreciate your time here on the podcast. Thanks so much for coming in. Guys. I'm telling you. This dude is amazing, right. He's a former Army infantry officer did a little Spec Ops, and then you know, and he's now the CEO of Reveley homes, he's a husband

 

Has two beautiful children and he's here to share his story with us and how he has been real estate investing so please make Can you introduce him I'm sorry to Introduce yourself a little tongue-tied here right introduce yourself and tell us a little bit about your military background.

 

Dan:

Sure, absolutely I'm sorry I'm Dan Krupa owner of Reveille Homes. I joined the army in 2004 and commission as an infantry officer and 2005 I was stationed at my first duty station Joint Base Lewis McChord. Now, so for those of you who aren't familiar, that's just south of Seattle, from Washington. So I was there for 2005 to 2010 I did my

time there as a platoon leader company commander and then did two tours in Iraq during that time so after that, I left and join the old guard which that's the unit Arlington National Cemetery. I love my time there was phenomenal great people.

And then after that transition went over to his special operations for just a little bit of time. And then I kind of ended my time in the army with a with a unit called the asymmetric warfare group. That was phenomenal, really enjoyed being that awesome, awesome, man.

 

Mike:

Really appreciate it and appreciate your service. I know veterans weekend was just this past weekend, and thank you for what you did. And your sacrifice. Can you tell us a little bit about how you got started in real estate investing?

 

Dan:

Yeah, absolutely. So I grew up I didn't know anything about real estate investing. And so when I was in ROTC, I had a mentor and he told me he's like, Hey, if you're smart and you buy a house at every duty station over 20 years and retire you're upset so I was like All right, where there's something to this so I read Rich Dad Poor Dad You know, I knew just enough to be dangerous so when I get to my first duty station at my house, right so I did that I yeah. 2005. And then after I came back from my first deployment, I took that money and I bought a second house was a short sale as a fixture of her now so I fix that all up and then I went back off to Iraq and then honestly didn't buy another purchase another house until 2013. And that was when I came out here. Yeah, yeah. to Kansas City. So, so bought that house and so kind of the way so our business where we're homes we're, we're primarily a company that just run a nice house, right? We flip houses. So the way that came to be 2015 ish, right? I was traveling I'm on an airplane a lot having the Sears back pain and I go in. I see a military doctor. It's Hey, you're back. It's is really messed up. You can't do this anymore. I was like, Oh, man. Okay. So we got to figure something else out here. Yeah, yeah.

 

So the first house Yeah, exactly. So the first asset I had gone all the way back in 2005 it was kind of in disrepair. My wife and mine just have one son at the time throughout their spec 10 days, 90 days and fix this house up and put it on the market. So that we made we made $20,000 and I was like, wow, maybe there is something to this. Yeah. And there's some who is a whole game of fixing up houses and whatnot. So I kind of took the next year my life kind of going through the medical out processing and i and I just devoted myself any free time I had night and day I just devoted myself to learning everything I could about real estate and so when, you know, I transitioned out of the military moved out here in Kansas City just started to started flipping houses full back.

 

Mike:

Wow, man, that's incredible, dude. Wow. So I mean, I'd love to kind of take it back a little bit, you know, to that military transition point, right. So you said that you got separated medically, right. So you had you know, stuff going on your back and you To spend like every extra amount of time that you could be investing in real estate, can you walk us through some of the stuff that you did? Like, was it books or podcasts? Or was it education program at all?

 

Dan:

Yeah, absolutely. So everything if you if you can name it, I pretty much did it. Right? I must have read during that time. Yeah, probably about seven or eight books. I listened to podcasts. I read forums you know, I started trying to find a network with other people who were flipping and just asking them questions and just trying to understand the very basic stuff. No, not only just the numbers but, What do you need to do and what does the process look like to flip a house from start to finish.

 

Mike:

Right exactly Okay cool. But so you saw flipping as your best opportunity right I guess that was because of the sale and you decided to go that route so that's what's investing. You know that that's honestly that's not something that we've had much of, you know, through ADPI most time we focus on buy and hold. But we don't have many folks in the community that are, you know, flippers. So it's very unique to have that experience. We appreciate you appreciate you're you're contributing to this. So can I ask, so as you moved into that transition point, what were some of your biggest challenges in that transition? Was it just the mindset of now having to find something new or were you pretty motivated the whole way through, you know, with the real estate investing?

 

Dan:

Yeah, sure. I know. Great question. So I think there's a lot of things that are difficult when we transition out of the military and we start to run our own business. So of course, that's just a component of it right now. being your own business owner and all the administrative things that go with that but then yeah, I'll do you know, as you said, I have never done this full time I was kind of comfortable buying a house with you know, The 30-year mortgage, you know, some light repairs, putting tenants in it, managing it, like that was fine. But, you know, just coming in, and Matt coming from a construction background myself, so having to try to figure all that out on top of that, you know, there was just, yeah, there's a lot to work through and to learn.

 

Mike:

That's crazy.

 

Dan:

Yeah, man. I definitely bet I know that you know, some of those rehab things get it gets a little bit, you know, complicated Me too. So it's almost like one of those things where you have to make sure that your team is very crucial, very critical, sorry, you know, to an understanding of what because if you don't understand it, you want to make sure you trust someone that does

 

Mike:

That is awesome, man. Good stuff. So can you walk us through then your first I guess flip, right? I mean, so you had that house that you bought in 2005 and you sold made money but then when you were committed to going flipping homes and what was that first deal like?

 

Dan:

Yeah, so I was able to walk with my wife and our sewing and actually we had just had our second son and we see this house is just a couple blocks over and it's got, you know all the letters on it like a damn when asked we walk around just to take a look at it and entire backside of the foundation was 3237 feet had completely collapsed of this the house would start the sinking. Yes and it was freezing and I was like yes so I had just got my real estate license as an agent and but I don't I'm not I don't use my license. I only use it for our business I've done a couple transaction for other investors but that's not what I do is how to make her money. And so I looked at this house I was like, I have no clue what I'm doing Let's buy this house. And so that's that's what we did. And so I mean it was it we will way in over at the start.

 

Mike:

Wow. But you mean you did it though? I mean you You went in You got it? Or is it just?

 

Dan:

Yeah, we did it. We made a bunch of money. We learned a ton. I mean, it was, it was a painful process, though. It took a really long time. As I said, I had to figure out all the codes, structural issues, engineers, all that. But again, it's just a process. And so I think the biggest thing for people remembers, just don't don't be intimidated. You know, it seems so scary and daunting at the time. And now I would look at it and I would laugh and say yeah, we get this thing back that couple months Ops, you know, I would know exactly who to call what to do. You know, it's nothing but you know, it's like anything starting out you don't know. Yes, it's always more difficult. Just got to get started.  

 

Mike:

Okay, that's fair. You know, school Hard Knocks can definitely be definitely good. Okay. So I want to ask then, what is a realistic timeline, I guess, right. Or maybe it varies. I don't know. Maybe this is a hard question answer, but what's the realistic timeline if you've got a house that you know needs a major upgrade you know Kitchen Bathroom you know flooring roof all that stuff right. Is there like a rule of thumb at all to that?

 

Dan:

Yeah so if it's under 1500 square feet typically four weeks is about when should take to do everything that you said right roof have back pain into your ex tear everything you could think about families countertops just basically redo the entire house about four weeks from start to finish. Yeah, if you schedule everyone correctly

 

Mike:

Ah ok got it. Okay. And I mean so I'm actually really glad you said that too because I think that scheduling issue is probably where people have their most hiccups right now and trying to get contractors, yes to keep to a timeline and whatnot and you guys have your own contractors that you work with or do you hire outside of your company, or do you use your own organic contractors?

 

Dan:

So when we started we had our own crew and honestly, it just became it was more difficult that way. So now we have general contractors that we use, we have a couple that we really like. And we've done enough houses with them, you know, give them a good scope of work. And at this point, you know, I'll have to check on the house two, three times a week that's it, you know that just to get it down to do it, right. If there's an issue something comes up, you know, they call us but I will tell this is the thing I see for most investors is they don't check enough and they have way too much trust or contact and contractors. And so especially during that and you don't have a relationship and it's somebody you know, that you're, you're either an area and you're trying to fix something, you need to be there and you need to make sure that you know, there's this system worked out for, hey, something comes up how do we fix that right and what's the cost going to be or

 

This change the name so yeah,

 

that that's tough that's a tough thing to do for anybody to work through that process right now I believe that you mentioned something that I kind of wants to dig into a little bit too. So you mentioned the scope of work. Can you can you walk us through what that is and what that looks like? Yeah, absolutely. I don't, I don't see this enough. I don't understand how people even on a minor or you have can do this, let's let's go up or you can make it whatever you want it to be. But, you know, just summed up is the easiest ways you just type out our Word document, hey, these are the paint colors on the interior and you know, in the kitchen we want to remove all the old cabinets and instill new cabinets and put this kind of cameras up on your identifying what is exactly being done and who's going to do it. And then a decent global war two will have, you know, like a Gantt chart or some kind of timeline on there so that the different

 

contractors understand bouquet when the electricians going to be there when the farmer is going to be there when the roofer will be there, because, you know, a lot of times they have to work with you, or conjunction with each other, or kind of around each other. So,

 

Okay, got it? And does it also lists the price of the work on the scope of work as well? Or is that something that separates maybe through contract or whatnot? Yeah, most contractors will give you their own right, and your contractor will give you an itemized list of what every single thing is going to cost. And so I'm cautious. I would caution people if you get a contractor and they just send you that an estimate. It just says, hey, it's going to be $10,000 and it doesn't line out exactly what insurance costs I would not be doing business with that contractor. That's just me personally, you know, we like a very detailed itemized list. So we know you know, hey, if we remove this or change this or, you know,

 

15 of these things.

 

Things were done this week, we know exactly what needs to be paid.

 

Wow, that is awesome. Okay,

 

so definitely good advice. Guys. Make sure that you get a scope of work if you're working with a contractor. And, and this is something that can be done, correct me if I'm wrong, right, with any repairs if it's something minor, or even something major, right. There's not definitely be a flip maybe just rehab or some sort. Yeah, absolutely. You know, if you're just bringing in someone to do some minor things, even if it's changed out some bosses and Assange and maybe do a little painting you know, replace carpet in one room I would still like that out because that's your agreement between the both of you and then you know it's going to take away any and you there so they know exactly what they're doing and what kind of product they're going to install as awesome Okay, valuable information guys. Make sure you're taking notes. This is great. This has been really good.

 

Awesome. And so so we

 

You now with, you know, your investment career. I mean, how many you have? Do you guys flip?

 

So we did. We did five our first year 15 this year. Wow. Today Yeah. So it's going well on the agent side of the house you know I decided to move into getting my brokerage license and then yeah and then we've also started wholesaling company with another guy that we're working on, right. Wow, man. All right. So things are picking up That's good stuff. Yeah,

 

you know, you mentioned to that you got your realtors license, not so you can become a realtor. Right. But so you can, you know, maintain some of the capital that was still on the table at closing. So maybe can maybe you can talk to some of the pros and cons of doing that versus going out and becoming a realtor. Yeah, absolutely. And I would tell anyone

 

You don't need to be a realtor to be an investor. You don't.

 

Yeah, it's so the reason I got it is partially it's a control thing. I want to know, you know, what was being said, you know,

 

when that when the contract was going back and forth, and then also, there's a lot of cash to the left on the table if you don't have your license. So for us, if, you know, we knew looking down the road, hey, this is something that we should really get. This is a big key. So, you know, flipping if we're going to do that many transactions.

 

But again, I'll tell you this a good realtor that's been around for a long time, 1520 years and really knows the market in those neighborhoods and whatnot, especially when you're moving around the country is being valued and you just cannot even if you move to a state and teacher license, it takes time and experience to just understand all the different neighborhoods values, rent prices, and so in that case, you

 

Using an hour realtor, it's definitely it's going to be beneficial to you. Absolutely. Yeah, no, I agree. I definitely agree. And you hit on something so that's very, very, that's a very good point. You know, you do not have to be a realtor guy, you really don't know. And I think that's one of the common misconceptions in real estate is that in order to get into it, you have to have your license, you really don't, you know, I mean, having a license, there are many facets of real estate that will allow you to get licensed and to be able to do certain things, but investing in real estate is not one of them. You can you can buy and sell properties here without even going to the bank which is another big thing too. So that's interesting is awesome. So so your business is, you know, hitting is very successful, right? I mean, it sounds to me like you're on a very very positive trend what other passions has real estate investing kind of opened up in your life

 

well, so you know, we started this and I

 

Never had this huge desire to, to flip but it was to get freedom, right? And so are flipping gives us income, which is a lot of stuff purchased for rentals just this year right? And so I would say the biggest thing

 

that has given me his time with my family, which is, you know, was my number one goal and then the freedom to dictate, you know, what we earn what we do if we want to travel where we travel, when we travel, and all those things that I didn't have, or I would say didn't have but you know, it's difficult when you're in the military to be able to set your own schedule

 

stuff yourself. Okay, awesome. And so you mentioned that flipping isn't something that you want to continue for a long, long term is that is there something that you want to move into maybe buy and hold or do you want to just, you know, run an open businesses or what's what's the long term plan, you know,

 

I mean, right now, we're loving what we do.

 

I really do enjoy taking you know distress house and making it you know one of the next house on the street and have neighbors come over and thank us you know for raising their property value bringing in a nice family you know so i do I do love it right now kind of looking at it or three to five year goal it's it's two yes grow this and i would i don't know about exponentially but like definitely grow on flipping business but then also kind of branch off and create more streams of income through some of the other things she talks about like a brokerage wholesaling company and yes, you know, we'd love to get into some bigger my hold investments and small apartment units you know, pay off some of the single-family house we hold because really that's why we all do this right is to get that to get that cash flow to give you the freedom to do what you want with your life. That is it.

 

That's exactly then that is amazing. Dan, this is awesome. And thank you so much.

 

I gotta say like, I mean, it just had

 

That flipper

 

side of the piece you know there's so many different pieces of real estate investing, right and you can slice this pie however you want but you know flipping is definitely one of those that I think like everyone kind of wants to do and you know some people can either get burned by it or they know they can really be successful you know like yourself so so I think that's very valuable and we appreciate your time I got three questions that I want to ask you is going to be our little bonus around if you ready for it.

 

Let's do it. All right. Awesome. So what is your favorite book?

 

Okay, I'm gonna I'm gonna give you two have to alright that's cool. So kind of the book that started it all for me as I had read Rich Dad Poor Dad but back in the I was like 2015, 2016

 

I read cashflow quadrant and that completely shifted my mindset from that Employee Self Employed business owner invest

 

And so when you look at it that way you know I kind of understand what the rich do and how they make money with not even working in their sleep yeah that's what kind of transform and then that like you know transformational work mindset shift for me like okay like I need to stop just working every day and start you know acquiring properties that will produce income for us right man that is so crazy how that one book right our I mean that one series right the Rich Dad Poor Dad

 

influenced and shaped like hundreds of thousands of mines not even at this at this point it's it's ridiculous

 

yeah go first that I talk to us just you know Rich Dad Poor Dad was the one that kind of got them started so yes yes and then the other one

 

that was pivotal was the one thing by Gary Keller and another good one yeah Jay Pappas on and when I read that, wow you know because there is this

 

Only distractors and so whatever you are whatever stage you're at in your life and whether it's your job or you know whether your basket or whatever you're doing I mean I think a lot of us we really missed the boat on that I know I was in kind of what really shifted the course of our business and kind of drive around banks are implementing those things and just really focusing on what I'm good at and what you know the whole 8020 rule you know what produces the most amount me to not ever focusing on that every single day right absolutely man your hundred and 10% correct great but man that's a both of them are great books but the one thing is definitely one that I actually just recently read him and it it kind of hits home too because I'm in that transition point myself now and now it's you know I gotta focus Am I you know going to be in all these different places or am I just going to focus everything hit hard with real estate that's like that's where my heart is too. So hopefully

 

We follow in your footsteps.

You followed him soon. Okay, so my next question Who is your biggest hero and why?

 

I don't I don't know if I would say I have a hero for say there are so many people I admire,

 

to me people that selflessly sacrifice right? Military members, first responders, but even parents who will do anything that they have to, to feed their kids, keep them safe and keep them keep them healthy. I just think that there are so many people out there striving, working so hard, you know, we don't give enough people in our society credit for that. So I would say if I had to classify a huge group of people, that's who I would say, as people were just giving of themselves, you know, to better our communities and better or country or better our children, you know, and build up that next generation. Amen. Amen. That's awesome, man. Good stuff. Okay, so last question. If you had three nuggets.

 

gets right to offer folks who are just getting started

 

you know in whatever facet of real estate right what would be your nuggets of wisdom

 

first and foremost get educated just you know everything you can do to learn to talk to other investors listen to podcasts you know watch webinars read books take courses and I'm not saying you know spend $50,000 on a course but there are there are free courses there's low cost courses because you have to learn this because you know this is not taught to us but it's not a hard game it's not complex the principles are very basic but you have to learn so yeah get educated and if you can find someone who's doing whatever niche Asian right rentals Airbnb flipping wholesaling, whatever and try to learn from that person because you'll save yourself a lot of time Carnegie

 

you know, like find someone who's two or three years ahead

 

You do what you wanted to be there you go that is it. And and I definitely want to stress that get educated portion of it to man because you're absolutely right. And I think that that's another mistake that people don't really make or that people make all the time and don't really realize, you know, it's how much education Did you really have before you got started you know, and school of hard knocks will always be the best educator there for you. You know, I mean, it's like you said before earlier you got to take action some point

 

but you know, when you don't have that education on something you messed up on and, you know, now it's like, all right, well, you had that Turning Point do I quit or do I continue and I mean, that's that education part is key.

 

Yeah, it gives you that confidence when you make that mistake, you know, like okay, yeah, I can recover from this you know, I can fix this so right. Exactly. And having someone to reach out to the right who has been doing it is key and And on that note, Dan, how can folks

 

our listeners get in touch with you

 

sure so you can go to our website which is reverie homes are vi Ll calm forever homes. com or you can email me Dan at reverie home stack

 

awesome. Alright guys, you definitely want to go and pick dance brain he's an amazing guy wealth of knowledge and and again an area that we don't even you know cover as much in the in the real estate game which is flipping man I'm telling you this is this is valuable knowledge to have and Dan we may have you on the podcast again you know just to kind of like cover up some questions because I'm sure we're going to get tons of them. No,

 

but yeah, absolutely. Well thanks, Mike. I mean, it's awesome what you guys are doing and that's really been pleasant. So thanks so much. Yeah. Likewise, thank you so much for sharing your wisdom and And is there anything else that you want to say you guess before we roll out? No. Just you know, just be committed, I guess.

 

be committed. Don't be scared. take some action. All right. Who? Yeah, take care of it. You too

 

long, right? Oh, right. That was awesome wisdom given. Thank you so much, Dan for your help shedding light on an area that we don't necessarily cover that much here in the API realm. So you are interested in learning more about flipping, please make sure that you reach out to him. And also feel free to post some questions out on our Facebook page. I 'm sure we've got some folks there that are also interested in learning and Dan will connect with you guys there as well. Also, we can reach out to him and asked him more of those questions to get you the answers that you need, right. If you guys are ready to get started in real estate investing, you need some help, please reach out to us www. activity. Passive Income calm. You can check out our course and check out our mentorship. Start the spark program and yeah, and please reach out to us on Instagram. Check out our YouTube page. We want to connect with you so let us know what it is.

 

You guys are struggling out there and we will help you out. All right. Thanks so much for your time. catch you guys later.


 

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