Johnson Built Generational Wealth Through Multifamily

Steven Weinstock: 0:02 Hi everyone and welcome back to the Wealth Clock podcast with Steven Weinstock. I've been investing in real estate for over 20 years. Started off with single family homes, multi-family properties, and recently launching my own real estate investment fund. This podcast is brought to you by We Capital, which is my company and the We Capital Mortgage Fund. We invest in first lien positions secured by real estate. Our goal with this fund is to protect investor capital by staying at 60 or 65 loan to value on these properties with monthly distributions. It's a simple model that helps keep working capital safe, and I'm really enjoying the non-property management aspect of this real estate investment. This show is not about me, it's about operators, founders, and closers who are building real results in real time. Today we have Caleb Johnson, founder of Red C Capital, and the host of his own podcast from Trial to Triumph. Caleb has built real ownership in multifamily at a young age. He looks pretty young over here. If you're watching on video by focusing on creative deals, relationships, and discipline operations, we're going to get into it with Caleb. Caleb, thank you so much for coming on. Caleb Johnson: 1:24 Hi, Steven. Thank you so much for having me. All right. Where are you zooming from? I am out of Phoenix, Arizona. Got it. Was born in Lubbock, Texas, but been in Phoenix most of my life. Steven Weinstock: 1:34 Got it. Okay. I know Phoenix is always sometimes a hot market, but sometimes not so hot. The weather is I guess always hot over there. How'd you get into real estate? Caleb Johnson: 1:43 I got into real estate. I'll start with a story. My, I. Coming outta college, I was a CC student or outta high school C student. Didn't know what I wanted to do. I had two, three jobs, so I could work, but there was a moment. My parents are blue collar and nine years ago, my mother she grew up with mentality of go to work, get a safe job, work until you're 65, and then retire the happily ever after. But nine years ago, had a surgery. She did. Which required her to take a sabbatical to recover. Being a single parent, having no support, no investments, no active income, lived off savings until she ran outta money. So it was forced to go back to work just to pay the bills. And I remember that was after three months and Steve, and I remember seeing her come home every day for that first week of going back to work, having tears in her eyes. From the pain and seeing that I was 18 seeing that made me realize if I don't do something different from her, that's gonna be me. And then got into multilevel marketing, but then learned that 90% of millionaires got their millions through real estate investing. And that was a moment I decided, okay, let's do this. Got introduced to BiggerPockets, learned that way for about six months. Just, listening and learning that way. Then found a local mentor, helped me buy a fourplex that was a house hacked. And then did that a couple times and then after three years of residential scaled into commercial. Steven Weinstock: 3:15 Got it. And when you say commercial, you mean multifamily, right? Caleb Johnson: 3:19 Yeah. My first commercial was retail 18, 19,000 square feet of retail, but then seven multifamily acquisitions. Since then. Steven Weinstock: 3:30 Got it. Got it. So your first deal was a fourplex Correct. And you said you house hacked. So just tell everybody here what house hacked means. Caleb Johnson: 3:37 What house hacking is when, let's say you buy, it could be a single family house or usually it's a small multi-family, so 2, 3, 4 unit. You live in one unit, you rent out the other three. Since it's residential, it's deemed com it's less than five units, so it's deemed residential, meaning you can live in one of the units, but since there are, let's say a fourplex, there's three other tenants paying rent, that means you can use that rent as qualifying income. Plus, since it's owner occupied, meaning you're gonna live in one of those units. It's, you can go FHA three and a half percent down payment, so it's a very low barrier to entry. You can get a lot of real estate for a little amount of money, and it's a great way to start. Steven Weinstock: 4:19 When you're buying a piece of real estate and you're living in it. It's owner occupied, and therefore, interest rates are gonna be a little better. The loan to values will be a little higher. They'll give you typically it's 80% but you mentioned FHA, it could be 5% or 3%. And when it comes to an investment property, you're typically not gonna get more than, let's say, 75 from a regular lender. Obviously there's, other kinds of loans that will give you higher and, you're able to live in one of these for a year or two, and then you could, move out and do it all over again. And you keep the loan in place because these are typically good 30 year loans. Is that what you did? Did you buy another one and move out? Caleb Johnson: 5:00 Correct. Yeah. You had to, you have to stay there for a year. And then I sold that, I believe it was after 18 months rolled. I did a 10 31 exchange, rolled those proceeds into that, that retail facility house hacked again with a duplex that was about a mile, or excuse me an hour from the main phoenix, MSA. So I was in the boonies in Arizona. And so I did that house hack strategy twice. Steven Weinstock: 5:24 I know on BiggerPockets there's a lot of house hack talk. And it's a tremendous strategy where you actually have a lot of people who get into real estate what I call accidental landlords. So they're house hacking without realizing it. And then once they're living in that situation, once they're doing numbers every single month, now they're really figuring it wow. These other guys are paying my rent or paying my mortgage paying down the debt, the value's going up. And it's just, it really helps people grow. But when you're in it you really learn. It's there's a lot of theory and all that, but when you're in it, there's nothing like that. Steven Weinstock: 33:12 Got it. Caleb, I had a great time talking to you. Tell my listeners where they could reach you how they can get in touch with you. You tell us you tell us. We'll put it in the show notes, but go ahead. Caleb Johnson: 33:23 Yeah, if you find us at Red Sea capital group.com you'll see us there and we have a free due diligence checklist. There's me introducing the due diligence checklist. And if you think I look young here, man, I look like I'm 15 years old in that video, so we're currently fixing that. But find us there. You can find us on LinkedIn, Caleb Johnson, and happy to answer any questions that you have. But thank you for listening. And Steven, thank you for having me on the show. Steven Weinstock: 33:48 Oh, it was my pleasure. It was my pleasure. You said Red Sea Capital. Where'd you get that name from? Caleb Johnson: 33:53 Red Sea capital group.com. And that comes from Moses parting the Red Sea. We want to be the reason we created that was we want to in a sense, part the Red Sea for investors to get solid, sustainable returns. Steven Weinstock: 34:10 Okay. I'm definitely a fan of of Moses over there. And I love the name and Caleb, I I just wanna thank you very much for coming on. It was a fun conversation. Check him out on LinkedIn. He writes some good stuff and I've been following you for a while and I'm just happy you finally got on the show. People could connect with you on LinkedIn. Are you on the other social medias? Instagram TikTok Facebook, MySpace YouTube. MySpace? Caleb Johnson: 34:36 Yeah. YouTube. You can find our podcast on YouTube. Instagram, red Sea Capital Group. Facebook, Caleb Johnson. But all of our stuff, our podcast, the podcast that I've as a guest speaker that I've been on is all at Red Sea capital group.com. So you can find us there. Steven Weinstock: 34:52 Okay, Caleb, it was great having you. Thank you very much for tuning in to the Wealth Clock with Steven Weinstock. If you enjoyed this conversation, please follow the show on YouTube, on Apple Podcast, on Spotify. Share with your friends. Put it on your Instagram reels. Whatever it takes to get more people to watch. I really enjoy it and I enjoy hosting the podcast and it's a lot of fun and I get to speak to I get to speak to a lot of people who I might not otherwise speak to. And I learn a lot from this podcast. I'm having conversations with excellent people and it's really like one-on-one, even though people are listening. The phones are off or they're supposed to be off, and you're fully tuned in and fully engaged. It's been extremely valuable to me and I hope everybody else enjoys it. Thank you very much guys. I appreciate it. Thank you.