Could you imagine being a millionaire by the age of 26?
Our guest, Caleb Johnson, joins us on the “Inspired to Invest” podcast to share how he turned that dream into a reality by amassing a staggering $12 million in assets through real estate investing.
Caleb begins by sharing the story of his humble beginnings – his journey was driven by his mother’s struggles with job dependency and a startling statistic that revealed 90% of millionaires built their wealth via real estate. Caleb takes us through his initial foray into real estate, recounting invaluable experiences from his first investment, a fourplex that he house hacked, to scaling up through networking and partnerships.
As he transitioned from single-family homes, challenges arose with acquiring multi-million dollar apartment buildings. Through a mix of networking, mentorship and audacious moves, Caleb provides insights on how to navigate these hurdles successfully. Buckle up as we delve into the wild journey that is real estate investing, highlighted by Caleb sharing the craziest thing that has happened to him in this unpredictable industry.
The episode also shines a light on a former teacher who became a successful real estate investor in just 18 months. Emphasizing the importance of networking, mentorship, and due diligence, they share the techniques that propelled their success.
So, whether you’re a seasoned real estate investor or just starting your journey, this episode is packed with inspiring stories and practical advice.
Don’t miss out on the chance to learn how to make your real estate dreams come true!
To connect with Caleb, go to @redseacapitalgroup on social.
Thank you to TruCapital Real Estate, Strategic Success Consulting & Infinite Real Estate Results for bringing us this month’s episodes of “Inspired To Invest”. To learn more about TruCapital , go to @investorcarleen on social and https://trucapitalrealestate.com online. For Strategic Success Consulting, go to @danielle.chiasson on social and for Infinite Real Estate Results, go to @korymackinnon on social or https://linktr.ee/korymackinnon.
In addition, we are thrilled to announce a new giving component. “Inspired To Invest” is proud to support the Beyond Success program, a not-for-profit financial literacy program for students, launched by More To Give & @makinvestments. To learn more about the project and how you can contribute, go to https://more2give.ca/beyond. Join us again Jan. 3 for Ep29 with the owner of a real estate brokerage that has transacted in billions of real estate over the past few decades.
To connect with Serena: https://linktr.ee/serenaholmesrealtor.
To buy a copy of The Accidental Entrepreneur: https://www.linktr.ee/serenaholmesauthor.
And, for everything related to real estate and real estate investing, please make sure you’ve subscribed to @serenaholmesrealtor on YouTube & other platforms. We also have a page dedicated to this podcast on Instagram and Facebook @inspiredtoinvestpodcast where we preview guests each week, highlight their episodes, top takeaways, tips, quotes and more.
Are you a full-time real estate investor with an inspiring story to share? https://docs.google.com/forms/d/1p6SfS8dePhLl6wMmSgdPpQ7xsJuEsBUbPDTJ0vgy9h8/
Thank you for tuning into “Inspired To Invest”, hosted by @serenaholmesrealtor & remember, “when you invest in yourself, the sky’s the limit!”
Real Estate Podcast Transcript
Speaker 1
00:01
Welcome to the Inspired to Invest podcast, where we’re sharing stories from real estate investors and how investing has changed their lives. This episode of the Inspire to Invest podcast has been brought to you by TruCapital Real Estate, Strategic Success Consulting and Infinite Real Estate Results. Hey everybody, welcome to the Inspire to Invest podcast. I have Caleb Johnson here with me today, and he got into real estate at quite the young age and he’s been very impressive, acquiring $12 million in assets by the age of 26. So I’d say that’s pretty amazing. His company, Red Sea Capital Group, acquires large value out of apartment buildings in the southeast and Midwest areas of the United States, and he is also offering a real estate due diligence checklist for active and passive investors, which you can retrieve from the show notes below after tuning in. So thanks for being here today, Caleb. I’m so glad that you’re with us today.
Speaker 2
00:57
Thank you for having me, Serena. I’m excited to be here.
Speaker 1
00:59
So obviously you got started very young. I think a lot of us listening and watching will be like why didn’t I do that? So what was it that got you into real estate so young?
Speaker 2
01:10
You know, I’d say I was more of a BC student in high school, and I started investing when I was 19 years old. The real motivating factor was me. For me was my parents they weren’t wealthy by any means and especially my mom. I saw what having a job did for her. Long story short, she had bilateral knee replacements, and so she was around 60 years old, so she was going to stay home for three months, heal up and recover. At the end of three months, though, serena, she wasn’t healed all the way, so she and she had no income coming in right, no passive investments. So she either could stay home and recover, but prolonged retirement because she’s dipping into her savings account to survive, or she can go back to work and make money and retire on time. So she decided to go back to work, but it was such a toll on her physically she would literally come home in tears because of so much physical and stress and emotional pain.
02:09
And so I saw what and I want to first say that you know we do need jobs, right, just, some people love having a job, and that’s great. However, for me, I saw what having a job could do. You know, seeing where I could be 60 years old, something unforeseen happening and now I’m forced to stay at that job. So that’s what got me started to start my own business. And then, on top of that, learning, 90% of millionaires got their millions through real estate investing. That was crazy and pretty good odds if I wanted success.
Speaker 1
02:43
Yeah, no, I think that makes sense and, to your point, there’s nothing wrong with having a job or a career path. It’s not like everyone wants to necessarily be out there, you know, maybe being an active real estate investor, but I think to your point, it’s just making sure that you also have a cushion, you have other streams of income so that you’re not 100% dependent on it in the situation that your health fails or there’s some other life changing incident, right? So just to add that perspective. So obviously you did some research, you saw, you know what your mother was going through. So how then did you jump into real estate investing and how did you get your first building kind of under contract?
Speaker 2
03:19
So I started with free content. Being 19 years old, I did not have a lot of money Probably had like $15,000 to $20,000. And so I listened to a ton of free content Bigger pockets was great YouTube videos and I learned about house hacking, where you live in one unit of, let’s say, a four unit apartment complex or a duplex single family home and you rent out the rooms or the other units but you’re able to buy it for 3.5% down payment because it’s owner occupied. So I bought this for Plex and my market in Arizona Phoenix bought it for 300. So I needed around 12 grand to buy it and shortly after that you know, after renovating some of the units it started cash flowing and printing $1,200 a month and my eyes really open and thought oh wow, I can. I mean this actually works and so that was my first deal.
Speaker 1
04:13
Yeah, and then where did you take it from that point, like, did you start getting mentorship or developing partnerships, or did you just try to scale on your own in the beginning?
Speaker 2
04:22
I did try to scale. I tried to do both. I saw the power of OPM other people’s money, yeah and so I networked a ton trying to find partners and I wanted to flip. At the time I always thought commercial was like in the forward looking, it was going to happen eventually. Yeah, I just thought I needed more experience and residential which is a complete myth, which we can talk about more. So I started more house hacks. I did a duplex, I bought a. I sold the fourplex Through a 1031 exchange, bought a retail facility, did a flip with a partner. That did not go well. We lost money on it. I learned I’m more of a cash flow guy. It’s got to be making money, yeah. And then from that point, after about three years, scaled to apartments.
Speaker 1
05:08
Yeah, and then when you move towards apartments, I think you know a lot of the investors that I’ve spoken to, and myself included, are like why didn’t I just go bigger sooner, at least here in Canada it’s a lot easier to qualify for anything with five doors and up than it is for single family, so maybe you can shed some light on what that process is like in the United States.
Speaker 2
05:26
Yeah, so to qualify for a commercial real estate? I can’t, I don’t remember. I think it’s the same thing for a five unit apartment complex, but we focus on 75 plus units.
05:36
So, larger, larger dollar amounts, larger assets, and there’s two things you need to qualify for those loans, of course, on top of many other things, but two main things that people get stuck on or don’t know.
05:48
One is that you need someone that’s going to sign the note that has the net worth equal to the loan amount. So if you’re buying an asset and the loan amount is 10 million bucks, someone needs to sign on the note that is worth 10 million dollars and their assets and their cash IRAs, 401ks, whatever. And the second piece is that someone on your team that signs a note they need to have 10% of the loan amount liquid. So that’s a million bucks liquid stocks, cash. Of course, if you have five people on the team and they all like, bring 20% of that amount and they can make up and equal to that, that works, but usually it’s one person that they just sign their name on the note and they have that liquid, and so those are a couple of things that you need to know before actually going out and trying to buy one of these properties.
Speaker 1
06:42
Yeah, so did you do that with joint venture partners or just from different like money partners, in terms of providing the capital?
Speaker 2
06:50
Both. So some joint venture partners and they bring up whatever the loan requirements are. So they did that. And then also in syndications, partnering with others. Starting off, that was something really big. For me is you have to. It’s partnerships. You know you have to partner and that’s something that commercial real estate forces people to do. But I will say what’s good about that is that it makes everyone very humble and wanting to help other people because they know they are. We all started from the same place and you could be the person that’s coming to me and wanting advice could be a potential partner in the future. Yeah, and so you always want to help people and kind of help the little guy.
Speaker 1
07:35
Yeah, Now I guess, how did you bridge that? Like when you went from the single family smaller properties into the larger scale? Like, did you take a certain coaching program? Did you have a mentor that was guiding you through that process? Like, what did you do to really make sure that you were equipped and ready to take on something of that size?
Speaker 2
07:52
Yeah, so every stage in my business even from my first rental to raising capital to starting buying apartments I always had a mentor, but I had no money Right.
08:04
So you think a lot of people they pay for coaching, which is great, I’ve done that and I offer that, but for me I didn’t have any money. So I added value to people that I could be it through finding deals, like my first apartment partner, I. How I showed that I was credible was I brought him limited partners. So I knew people from church that has them capital. They wanted to invest and I said, hey, my partner is Mike, he’s buying this property I’ll connect you to and maybe it’s a good fit, maybe you invest with each other. And that happened, you know, maybe for half a million dollars that I gave that first partner. And so that showed him hey, caleb’s, I’m going to invest some time into Caleb, because, serena, I mean, you probably know this but so many people want to start in commercial real estate, so I get calls all day long five to 10 calls a week people wanting to do what I do, and so you need to actually differentiate yourself and be willing to work and stand out.
09:07
Yeah now I’m not saying you need to bend over backwards or really, you know, hurt yourself and maybe get into a bad partnership, but still be willing to give away something to in return for something.
Speaker 1
09:20
Yeah, no, that makes sense. I think you have to give in order to receive. Now, when you look at your portfolio at this point in time, what would you say you’re most proud of or you look at is your biggest success so far?
Speaker 2
09:32
Wow, that is a great question. I would say that it is a failure. Actually, when I was first creating my own business, starting pursuing properties on my own, and I kind of broke away from my first partner, I was buying a $10 million asset in Oklahoma. I was using a spreadsheet that was gifted to me from my first partner and we were negotiating the PSA. We were awarded the deal. So we were negotiating a PSA for a month and my sponsor, the guy who was going to sign the note with the large network or net worth he said, hey, let my underwriting partner verify the numbers. And I said, great.
10:17
So we talked about it and, long story short, this underwriter actually found an error in my spreadsheet that required me to go back to the seller and ask for a million-dollar haircut. So that was and the reason I’m saying that’s a success. It definitely didn’t feel like a success in the moment. It still doesn’t, it still hurts, but of course that seller said no, but it showed me that you need to have partnerships are so key and to have someone verify your numbers Right, and it had like one number tweet and it was the perfect number. That killed the deal completely. So having someone verifying your numbers and partnering with others that are maybe more experienced or more smarter than you in certain areas, and that’s what makes a good partnership.
Speaker 1
11:08
Yeah, yeah, that makes sense and I think, even in my experience, just going back and double checking and even if you can double check, it’s like when you’re proofreading something, you’ve written it or looked at it so many times it’s going to be very easy to miss something. So having those other set of eyes are so important. Now, when you talk about just again, building up your business and acquiring these assets, what do you think is one of the biggest challenges that you’ve had to face over the last few years?
Speaker 2
11:36
I’d say starting off. It’s just that, starting off Like I was a residential investor, and so when you’re first starting in apartments, I was talking to someone yesterday who said I invest in residential real estate and it feels like to jump into apartments. It’s some like exclusive club that I need entrance into, and so it feels like it’s so distant. And partnering with others again, I always I keep on talking about this today. I don’t know what it is, but that’s what helped me. And so, though, like that first hurdle of not knowing where to start, just listening to podcasts, reading books and finding someone who could kind of hold my hand and who had 18 months of experience ahead of me I don’t want to work with Grant Cardone If I’m just starting off. He has 25 plus years of experience and he has problems I might never even think of or know about. Right, he’s so far up there. Finding someone just ahead of me is really valuable. So that was probably one of the biggest challenges just knowing, knowing where to start.
Speaker 1
12:40
Yeah, I mean I would say I had that similar experience, that I’ve had different mentors and coaches. I had my own business for 18 years and one of the best mentors, you know, is a marketing consultant, so he would go into businesses and deconstruct them. So that’s what he did with me and was like stop doing this, do more of this. And you know, we ended up actually growing significantly. But then I went through the same program and was mentored with someone that was like a president of a multinational public relations company and she just couldn’t even understand the challenges that I had, because she deals with such top level things, just like what Crotona would be, like they can understand, like the little issues I’m having with the 10 people in my office, you know, or like how to give them a growth trajectory when we’re so small.
13:22
So it was just hard to learn from her because it was just we’re in two very, very different sized companies in different places. So I think you need to, like you said, just connect with someone. That’s just a little bit ahead. So they’ve had some of those learnings, but they’re going to give you the valuable insights that you need. To be where you are at the moment, would you say that there’s anything that stands out to you as one of the biggest lessons that you’ve learned, that you’d want to pass along with someone that could be starting out.
Speaker 2
13:49
I’d say network, network, network. I would say the whole underwriting thing where I had to go back to the seller and ask for a million bucks, but I’d say networking has one found me general partners that I can meet with. So you know, listening to podcasts and then reaching out to those people right that are doing deals, that are on that podcast, connecting with people like that, connecting with people on social media LinkedIn, instagram, bigger pockets wherever I can network with people, you’ll really learn and get a feel for who’s a tire kicker and who just talks, who’s a newbie and who’s actually doing deals. And then when you find people that are doing the deals, adding value to them and bringing something to them either a deal or capital, or maybe it’s another thing that you know maybe they need a marketing specialist and you have experience in marketing yeah, great. So whenever you network, you find those passive investors that you might not otherwise find. If you just spend 10, 15 minutes a day networking, I mean I can’t tell you how much fruit I’ve had just by doing that.
Speaker 1
14:52
Yeah, no, that’s smart and, on that note, we’re just going to take a really brief break forward from our sponsors and we’ll be right back.
Speaker 3
14:58
Hi, my name is Carleen Sue and I’m the CEO of True Capital Real Estate. Our mission is to help busy professionals build lasting wealth. We focus on multifamily purpose-built rentals as a strategic and accessible investment strategy. Our goal is to demystify real estate investing and be your trusted partner to handle all aspects from beginning to end, because, after all, it’s not actually about real estate. It’s about having a robust and secure financial future so you can focus on the people and things that you care about the most.
Speaker 1
15:31
Thanks again for following along with this episode of Inspired to Invest. In addition to real estate investing and running my own brand experience agency for 18 years, I also published a book called the Accidental Entrepreneur in October of 2021. This is my story and it chronicles how I turned tragedy into triumph to embrace my destiny in entrepreneurship. If you’re interested in picking up a copy, you can find the link at SerenaHomesRealtorcom and you can also find my link tree with all of the retailers in the details below. Thanks again for your support.
Speaker 4
16:05
I hope you’re enjoying the podcast and we’ll get you right back to it. But I have some exciting news to share. Myself from Strategic Success and Corey McKinnon from Infinite Results have banded together so we can bring to you an amazing platform where you can learn and grow and have support on your real estate journey. We’re building a community, we’re building the help and the support, we’ve got the coaching for you. We’ve got the content. So if you want more information and see how it can help you on your journey, click the link below in the show notes or click the link in my bio for more information.
Speaker 1
16:39
Hi everybody, welcome back to the Inspired to Invest podcast. I have Caleb Johnson here with me today. He has a company called Red Sea Capital Group and he’s talking about how he went from investing in single-family homes and house hacking to literally acquiring multi-million figures in apartment buildings. So we’re talking about your successes, challenges and lessons. What, would you say, is the craziest thing that’s ever happened to you as a real estate investor so far?
Speaker 2
17:10
Man, you got some really good questions. I want to go back to that underwriting one, but I’ll say a different one is probably networking. Again, it goes back to networking. I met this guy at an ultimate partnering meetup so hosted by David Lindahl. There’s over 1,000, 2,000 investors there and I met him there and then six months later, I found him in the same mastermind that I was in. We paid a significant amount of money to be there, but we were just talking catching up and he said, hey, I’ve got this deal I need capital users for. Do you want to partner? And I said, yeah, so not something entirely crazy, but just goes to show, just networking and staying in touch of people, you can get deals from that. And so also being a decent human being and not being a complete downer or just being someone that people want to work with, that’s been a big learning lesson.
Speaker 1
18:06
Now, in an instance like that, where you’re capital raising for someone else and it’s not necessarily your own deal, what would you do to look at what they are doing, just to make sure that you’re not referring people into investing in something that may not be an actual good opportunity?
Speaker 2
18:20
Yes, great question. Even if someone wants to capital raise, only like exclusively capital raise, learn how to underwrite, at least the basics. Because I, the way I added value to my first mentor, was acquisitions, so he taught me underwriting and I brought deals to him. So that’s where I got my underwriting experience from. And if I didn’t and before that I had no experience with Excel, yeah, none. And so, learning how to underwrite, I’m able to vet this guy’s deal that he wants me to raise capital for, and if it checks the box and it’s green on my end, then okay, I feel comfortable and confident that I can bring my investors into the deal.
19:06
I will say there is some Risk if you just meet someone and they ask you to raise capital. I really recommend building relationships over time because I’ve had partnerships where I just wish I didn’t partner with him honestly. But I’ve also had times where I’ve partnered with somebody like this list gentleman and I could not be happier with the result, with his professionalism. So it is a risk, you know. I’d say get to know someone before you jump in bed with them and and go from there.
Speaker 1
19:37
Yeah, no, I think that’s smart. At the end of the day, it’s your brand and your reputation on the line, right? So I think you want to make sure that you’re Protecting the relationships that you’ve built, especially if it’s something new Now, with all the mentorship and coaching that you have done over the last few years. What would you say is the best advice that you’ve ever been given?
Speaker 2
19:57
I would say coaching, coaching, coaching, coaching because, again, if I can find someone that’s been investing for 18 months and they can condense what they’ve learned in 18 months so I can learn it in three months or six months, that will progress me so much farther, even if it cost me, let’s say, 10 grand. If it cost me 10 grand to learn something and they can save me 18 months. The most valuable asset I have, serena, is time. Yeah, period, if I can, if I can invest $10,000 in save a year. I mean, that is one of the biggest ROI Maybe out there. Of course that you need to provide value and it needs to actually be a good course, good information, but if you can, if you know it is, then I’d say all day investing, coaching.
Speaker 1
20:50
Yeah, yeah, and I think it also, you know, if you look at it from the standpoint that you know, I think, a better mindset. If you start looking at something different, it may actually look different. So sometimes you just don’t know, you don’t know. So it’s just having that perspective sometimes that a coach can lend to you, that you wouldn’t have necessarily thought of a certain question To ask or to look at something in a certain way, that can help push you that much further ahead. So obviously you’ve done a lot in a short window of time. So what would be next for you and what would you say, is your financial freedom number?
Speaker 2
21:18
mmm, my financial freedom number right now is pretty low. I’d say shoot 60 grand, 100 grand. You know, I 60 is a good benchmark which is very low. I know that.
Speaker 3
21:31
I don’t have many expenses.
Speaker 2
21:34
So $60,000 annually and that’s what I need to to pay the bills and to save and all that. And so ultimate success for me it’s it’s changed over time, you know. So many people say how many units do you want? How big of a business do you want? I love, I’m a teacher at heart, and what brings me fulfillment is ministry, and so I Would love to be in full-time ministry, be able to have passive investments or, additionally, coach people how to invest in real estate, maybe do a deal here and there, and that would be the life. Of course, I don’t know. I’d rather be in full-time ministry than anything. So we’ll, we’ll see what God does, but that’s, that’s what that looks like for me.
Speaker 1
22:17
I’m in a real estate investing mastermind and one of the organizers for that has A project called go big to give big and it’s basically talking about how you can bed a given component into everything that you do. They had a speaker, for example, that came and for whatever percentage of business like went towards feeding children that were in, you know, lower-income neighborhoods and stuff like that. But it’s kind of embedded from the forefront. So you know, like say, from every door of rent you put $10 towards whatever it is. So maybe that’s something that, even if you’re not in ministry full-time at the moment, you can also kind of incorporate some of those opportunities to give back and, and you know, just do the good work. Now what would you say is next? So you have 12 million in assets, like would you say that you have a goal of a certain number of doors or would it be a certain value of a portfolio? Like, have you kind of put something on a vision board that you’re working towards?
Speaker 2
23:11
I would say the end goal for me is, you know, serena, I could have. The end goal for me is the monetary amount, so $100,000 income annually and it could be. I could have 10 single family homes and it gets me that. Or I could have 2,000 units of apartment buildings because, you know, maybe you just have a little sliver of a bigger, of a bigger pie, so, but I am focused on apartments and so if I could have, you know, 500 units, maybe 500 to 1,000 units, I think that would gain me that amount. Plus, I really do enjoy coaching people. So if I could increase the amount of people that I coach, help them buy their first apartment complex in 12 months or less, then that would be probably another goal. So the coaching people and then 500 to 1,000 units would would be that goal.
Speaker 1
24:06
Great Now in terms of inspiration and motivation. Are there any particular quotes that you want to leave with anyone that’s watching right now, watching or listening?
Speaker 2
24:16
Yeah, I would say if I quit it will last forever and so, no matter what you do, if you just don’t quit, you literally cannot lose. It can feel like you’re losing in the moment, you might not know where to go from there, but if you just don’t quit, then you can’t lose.
Speaker 1
24:35
Yeah, and I think that makes sense and sometimes people look at it like they don’t realize how close that they are to something when they do give up. So I think just to your point about networking and persistence and stuff like that. It all comes together and I think it’ll be worth it in the end. You make some of those buys moves Now, in terms of where people can find with you to connect about opportunities or what you have going on with your coaching. What would be the best and easiest way for them to get a hold of you?
Speaker 2
25:00
It’s the best way to check me out on Instagram, so it’s Red Sea Capital Group and if you aren’t on Instagram, you can visit us at redseacapitalgroupcom.
Speaker 1
25:10
Great, so include that below in the show notes, along with your due diligence checklist. Thanks, of course, for being here today. For anyone that is watching or listening, please make sure you like, comment and subscribe. You can also follow along on Instagram at Inspire2Invest podcast. And, of course, to the audience. Thank you so much for tuning in and remember, when you invest in yourself, the sky’s the limit. This again to our sponsors, true Capital Real Estate, strategic Success Consulting and Infinite Real Estate Results, for bringing you this episode of Inspire2Invest. The views represented on this podcast are for general information only and does not constitute investment or other professional advice or an offering of securities. The hosting guests featured on Inspire2Invest make no representations as to the performance of any particular investment. Did you decide to make an investment? You are responsible for conducting your own review and analysis. It is recommended that you obtain independent legal accounting and tax advice from licensed professionals.