HI 142 - From First Responder to Nationwide Multi-Family Real Estate Firm with Brian Burke

Welcome to the Heroic Investing Show. As first responders, we risk our lives every day. Our financial security is under attack, our pensions are in a state of emergency. A single on duty incident can alter or erase our earning potential instantly and forever. We are the heroes of society. We are self reliant and we need to take care of our own financial future. The Heroic Investing show is our toolkit of business and investing tactics on our mission to financial freedom.

Hello and welcome to episode 142 of the Heroic Investing Show. This show is a podcast for first responders, members of the military, veterans and.

Anyone looking to improve their financial future.

And gain some freedom with their time. We teach America's heroes how to build passive income, build their startup business and safely grow wealth by through real estate and other alternatives.

And today we're gonna focus in on.

That startup business and growing it really big. I think you're gonna really enjoy this interview. We help current and prior first responders put protections and systems in place to enable them to build a life where they can focus on their passion, that.

Service or product that they are uniquely.

Gifted to share with the world, which.

Enables them to open up time for.

Family and their passions. Our guest today is Brian Burke and he's president and CEO of, of Praxis Capital. And one of his passions is aviation and he's a licensed instrument rated airplane and helicopter pilot. We talk a little bit about that on the episode. And you know, it's just an example of how you're able to chase your passions that maybe aren't that business, but the passive income from the business, from the large company or from the real estate that you put in place are the things that springboard you into being able to get back time and finances and resources to be able to focus on those other things that you truly do enjoy. So Brian was a first responder in all aspects of the word. He worked in California as a firefighter, as a police officer and emt and has spent a lot of time giving back to his community. In fact, when he left the force, he was looking to raise some capital to purchase some properties after he bought a couple of them on his own small ones. And the people he started talking to about introducing to the concept of investing in real estate were his fellow firefighters and police officers. He would just run little get togethers and, you know, raise money from them. And he's still predominantly now he's grown beyond that, his company's grown beyond it. But still a large portion of his investors are first responders, veterans. It's just A really a great story. And he's a perfect fit for this because he's taken a company that he started from scratch and grown it to be pretty tremendously large. So Praxis Capital is a company that has, you know, 100 years of experience with all of its members, $6 billion worth of multifamily sector management and 125,000 apartment units under their combined experience level. He's put this company together since 2001, and they are now managing $150 million of assets. They take multifamily properties across the country that are underperforming, improve them, add value, and try to transform and through renovation and repositioning of the asset. So they're doing a tremendous amount of stuff that gets to helping the tenants, helping the community, and helping the investors. So I think you're really going to appreciate and enjoy, Brian. And this one, you know, is a fastball right down the pike. That right over the plate, I guess, is the right phrase.

What I mean by that is that.

This is from a veteran, excuse me, from a first responder who is doing what I'm running this show to promote, which is when you're ready to transition from your day job, how do you build something small, grow it big? By providing quality, exceptional service. He's provided quality service to his investors, to his tenants, and to his team that work with him there every day at Praxis. I think you're going to really like this conversation with an awesome gentleman, Mr. Brian Burke.

Hey, everyone, thanks so much for joining us. I try to bring to you relevant speakers or relevant guests. And what I mean by that is I'm bringing people who have walked in your shoes that you can actually see yourself become Right. So it's a first responder, meaning an EMT or a firefighter, a law enforcement officer, an active duty person, or maybe a veteran. Well, how about if I bring you three of those four this time? So I am proud, as I mentioned in the, in the beginning, to bring to you Brian, who has been. Has done 14 years as firefighter, police officer and ambulance EMT type stuff. So we could not be more happy, Brian, to have you join us.

Well, thanks for having me. I appreciate being here.

Absolutely. So, as I mentioned before, I think the audience, or at least Gary, as a listener to his own stuff, gets most value from hearing, how did you do it? Because all of us back when we're still taking the W2 income, where we're working two days straight or we're deployed for six months at a time, we Constantly think, man, this inspires me. I really want to do this, but I don't have time to do this. How did these people do it? So, Brian, how did you do it?

Well, I did it by basically working 16 hours a day. As if it isn't enough when you're on the job and you're working overtime, you're getting held over, you get a call at the end of your shift, you know, and you're there for a lot longer than you thought, you know, that's not bad enough. But then when you finish all that, then you got to go home and start thinking about real estate and how to incorporate that into your day. And it really was just a matter of focusing every waking minute. If I wasn't at work, if I was awake, I was working on my real estate business.

But probably because it inspired you, right? I mean, it was something that you wanted to make happen. It was something that you'd rather do than watch television, or at least that's where I am with my personal financial management company that I'm running.

That's exactly how it was. And it was to further a goal. I knew that one day I would probably be able to do this full time. Not everybody has to do that. This is a great business to be in as kind of a side gig, so to speak. But I knew one day this would probably be where I'd focus all of my time. And now I don't have to do the every waking minute thing anymore.

Yeah.

So take us back there to your first exposure to real estate even before you started Praxis.

You know, my first exposure to real estate actually came before I was even exposed to being a first responder. I was working in a grocery store. I was 20 years old. I was trying to figure out how I could invest in real estate. And of course, I had no money. I had no education in real estate. I had no connections in the business, and, you know, I had no real estate knowledge. So I figured I was fully equipped to take a hard run at it.

Yeah, go full out, right?

Just go full out. You know, I just figured it out and went for it. I bought the first property I ever bought was one. It was a rental house, a little, little rental house that I got with finance company I convinced to give me a loan and a seller that I convinced to lend me the down payment. And I got it with no money down. And that was my first experience with real estate. And from that point forward, I was hooked.

Yeah, that's awesome. So you figured it out.

You.

You Convinced people to answer the question, how can I do this? Right? And that's like one of the best lessons I've ever learned from Robert Kiyosak. And I think it's in Rich dad, poor dad, but it might have come up in multiple personal events that I've been to with him. But, you know, it's the, you know, anytime you hear yourself saying, I can't do that, or that can't be done here, right? Instead of saying, I can't do that, stop yourself. Like, you know, like, it should feel like an electric shock when you hear yourself saying that or somebody else saying it that you care about. And turn it around to, how can I do that? Right? I mean, that just. You're just turning that one sentence around from can't meaning close your mind. Not gonna happen to how can I?

Huh?

That's an interesting question. I don't know. Let me ask someone else, right? Let me find somebody who is doing it, which is kind of the point of this show. So hopefully you can help us with that. So how many properties do you have? As you're, you know, at the 10, 12 year point as a first responder and you're thinking, I'm going full time, how many did you have then?

Not many. I was. I never really was a buy and hold guy. I was more onto the buy and flip side of it. So after I did that first rental, that was the last rental I had for probably about 10 or 12 years. After that, I was everything I bought, I bought to fix up and resell. And that was my entire model was buy, fix, resell, get out, take those profits, and hopefully one day I would be able to have enough profits to start rolling into homes that I could keep. But at that point, it was all about getting in and getting out. So by the time I decided to go full time, I'd probably done a couple dozen buy, fix, resell transactions. Maybe 25, 30 of them. Somewhere in that range. I had built up enough of a track record to be able to convince other people to take the ride with me on one hand, but also to give myself the certainty to know, hey, this model works. I figured it out and it's kind of like, well, my real job is getting in the way of me making more money on my investment job. So I had to make the switch.

How long was that that you were doing?

That was 14 years. I started investing in real estate before I even got hired on. And throughout that entire time, you know, that's the great thing about being a first responder Right. The hours are weird. And so, you know, I was working swing shift with Monday, Tuesday, Wednesday off. So if you think about the business week, Monday through Friday, 8 to 5, when you're swing shift with Monday, Tuesday, Wednesday off, you have almost the entire business week off. So it allowed me to focus on my real estate during the daytime and, you know, go protect and serve at night.

Yeah, perfect. Okay.

So you decided, hey, I want to hold on to some stuff a little bit longer, scale this thing up. Did you first, and I know your company, you started with doing single families and I guess syndicating single families, raising funds. So were they investors or were they partners initially?

Well, you know, initially, it's kind of a funny story. When I put in my two weeks notice at the department, I said, guys, I'm throwing in the towel. I put in my two weeks notice. I'm doing this real estate thing full time. And by the way, I reserved the room over at the community center. Next week, I want all you guys to come, I'm going to tell you everything I'm doing in real estate. So I filled that room with a whole room full of cops and dispatchers and command staff. I mean, everybody was there, firemen. And I just gave this presentation about real estate. So this is what I'm doing, you know, gosh, I'm going to go raise some money and I'm going to make this business even bigger. And by the time I finished that presentation, I'd raised $500,000 from this group of cops, and I now had 28 investors with guns.

You might have. Might have missed your calling. Raising funds, is it? Which I think that's probably. I mean, you're president and CEO of Praxis, but I'm assuming it's still a pretty big role of yours.

Raising funds is really all we do in this business. We've bought hundreds of millions of dollars in real estate. Now we've done about 735 proper. We've got about 2,000 units, and it's all been funded by money that we've raised from other investors.

Okay, so you start with single families. How long is it before you got 500,000? So that's hard to put to work in single families. But how long is it before. I mean, now for perspective, you're at 700 properties or have done 700 properties over time, and you're at a couple thousand units now. So how long before the big scale up? Or was it gradual?

It was pretty gradual. You know, we, you know, when I first started with the Department. I was hired as a community services officer. I had to put myself through the police academy. So I spent a lot of time, you know, in the early 90s, focusing on, you know, career, getting promoted, going through the academy and doing all that stuff. And then when real estate started to become back in the forefront in the mid-1990s to late 1990s, you know, I was doing a couple dozen houses a year. And then I left the department to go full time in 2003, I think it was, or 2002 or 2003. Stayed on as a reserve officer. But by that point, when I'd raised that money, that 500 grand, it was like 2002 or so. It went a little further then than it does now. With that, I was able to buy a couple dozen houses a year at the foreclosure auction at the courthouse steps. We bought them, fixed them up, resold them, did that all the way until about 2004. Then our market got really squirrely here. Started to back off some. The real estate market completely collapsed in 0607 08. And that's when the light switch got flipped. All of a sudden there was this mountain of opportunity. We started raising money heavily to take advantage of the deal flow. We immediately jumped from about a dozen houses a year to over 100 houses a year. Started to buy rental houses at the very bottom of the market. Bought about 120 rental houses in the San Francisco Bay Area in 2011. It was all focused on raising money and buying real estate. And that's when we started on the multifamily side. Really going after Multifamily was about 2008 and beyond. So we're doing this for 30 years now. The first 10 years was kind of like trying to get my footing, and then the next 10 years was kind of riding it. And then this last 10 years has just been an absolute whirlwind. But I would say that for people that are working a job and they're saying, like, okay, I want to do this real estate thing, but I don't want to do it full time. You don't have to. When I first started, my goal was just to buy one rental house a year. And I thought if I could just buy one rental house a year, I'll be so far ahead of all the other folks that I work with when it comes retirement time. And even if CalPERS collapses and we don't have our retirement anymore, I still have mine. And that was originally the way this whole thing got started. And so you don't have to say it's all or nothing. There's a lot of in between. And you can go at your own pace, right?

And that process of buying one rental home a year, everyone can do the Math. You're at 20 or 30 properties, right? If you started early in your career and the early ones on that probably have quite a bit of equity, which means that your mortgage payment, if it's even there anymore, is pretty low. And so you're certainly replacing your earned income with something that's an appreciating asset.

So.

Yeah, absolutely. Plus the other thing is that it kind of. It's a forced savings plan, right? I mean, if you have in your head, I got to come up with $20,000 a year to put as a down payment or $40,000 a year or something like that. I mean, you're squirreling away money left and right, right. You're not passing up on the new, the new Escalade that the neighbors are getting just because you're like, that doesn't fit the goal. I have these other requirements that are coming. So it is certainly a forced savings plan. And gaining the experience. I mean, you don't want to wait till you're at retirement to gain the experience, right?

No, you don't. You know, a lot of, A lot of the people that I worked with, you know, you get a lot of overtime in this business, right? You know, a lot of people take their overtime checks. They were buying motorcycles and boats and other stuff like that, you know, and I was stocking away everything I could just for real estate. And so it really is a. It's a commitment.

Recognizing what resources you have in your life, I think is something that a lot of people just don't. Don't do. They don't take stock in, you know, for example, a lot of kind of the core stuff that in what I do is cash value, life insurance and storing wealth in something that grows tax free. And so one of your assets there is good health. Like, if somebody comes to me loving the idea, but has poor health and no other options in their family, they're out. But if you have good health, right, you can, you can grow money faster and make a lot more. And in real estate, if you have a really good solid income from a government like I did in the military and like you and your counterparts did in the public service in California, then that's something looks really good to the lender, right? So, you know, that's another resource for you. I have a good friend here who's on the Police force, A workout buddy of mine, just a tremendous gentleman, but. But he does a lot of overtime, and you reminded me of that when you said it. And he's using his overtime to pay off his primary mortgage. It's his goal to, like, pay off.

His house in 10 years.

And I'm like, gosh, please, just go put that into a rental property and actually leverage it. Like, bring on the leverage you don't have to be scared about in the state of New Jersey. I mean, you shouldn't be that scared about not having a pension or being 45 and having to start over. It's not that scary.

Right.

And so. But, you know, the average dogma out there is, you know, push your money to a guy on Wall street, but also pay off your mortgage.

Right.

And I mean, sometimes that works, but I think with building a real estate portfolio in a reasonable time, you ought to consider some prudent debt mortgage service. So, anyway, a little bit of a bandstand on my part there, but let me ask, do you still have the single families you bought in large numbers in California? You still own those?

We still have about 30 or 40 of them. We started selling about a year ago. You know, those houses cost us about $15 million, and by the time we've sold through, we'll have sold them for about 45 million.

Yeah.

Amazing.

I've met so many people who the previous cycle, for whatever reason, were smarter than me. And they were in real estate in California, and they wrote it up to where it made absolutely no sense. And then for some reason, they just listened to their gut and got out. And most people didn't. Most people were kind of addicted to the rise and thought the music wasn't going to stop.

Absolutely.

But those people who did, I've met them since then. And I asked, how did you do this? And they're like, well, I wrote it up and sold before it crashed. And I said, how did you do that? And a lot of times they didn't know why they did it. Now, sometimes they were educating themselves. They were listening to podcasts and they reading books and just talking to people who'd been in the industry for a couple of cycles. You know, like, like yourself, you're a great mentor for people who've been through this. Like, I haven't even been through a cycle yet. I was paying attention before the last one, but I haven't personally been through one. But talking to you or talking to my good friend Craig Horton, who's been.

Through three or four cycles is pretty valuable for People who are new, I think.

But those people changed their lives forever. They took their money out of California, sold like you're doing right now on this peak that I think is at a peak. And they reinvested in somewhere in the Midwest, you know, Texas was a famous place in the, at the time, and change their lives. They moved the equity into 5 times as many properties with 5 or 10 times the amount of cash flow and never looked back.

Yeah, and we're, you know, we're selling single family homes here in California and we're buying 200 unit apartment complexes in Florida where the cycle is younger than it is in California. And you know, I'm certainly not calling a top to the California market. I mean, part of our strategy here is forced upon us. You know, when we set out to acquire these homes, we, we raised money from investors. We told those investors prices are probably going to double in five years and we're going to sell. That's the business plan. And of course, most of them said that's crazy talk. Prices aren't going to double in five years. That's just not going to happen. But okay, we'll give this a shot. So they make the investment, we buy the houses and then fast forward five years. And we were wrong. The houses did not double in five years like we thought. They tripled, they doubled in a half.

Now we're selling out and keeping our promise to the investors. You will be in and out of this thing in five years. And of course they have a big smile on their face, but now they're reinvesting their proceeds in our multifamily offerings in newer cycles and properties where we could go and improve the value and there's still room to do that. So there's always a smart investment somewhere. You just have to figure out where it is. That's part of the difficulty with real estate, is that every market is local and there is no such thing as the real estate market. So if you think that where you live is reaching a top, invest somewhere else where it's not at a top.

Absolutely. And that's what I love about this thing. One of the things that my partner in this podcast says all the time that the listeners will be familiar with is embracing the fragmentation of real estate. If this was easy to do, like pulling stocks together into a mutual fund, everyone would be doing it. Like the hedge funds have tried it. Private equity bigger than less real estate focused than your company have tried it. And it's just hard to put that.

Much money to work in such a.

Crazy fragmented thing, like you got to know the laws of all the locations where you are and, and you got to track the markets in all those places. Warren Buffett's famous comment that if I could figure out how to buy a few hundred houses, I'd do it because they're a good buy. Right. And so then all the hedge funds went off and tried to do it and found out that he was right. It's not easy.

It's not. Yeah.

But companies like yourself, like your company, who are focused on it and do it 100% of the time, obviously are successful doing that. So you're moving to different markets. And again, I think that's an amazing aspect of real estate investing. And also if the investor has the flexibility and I guess the experience and intelligence to recognize when it's time to be a chameleon in real estate and.

Just what you're doing.

I know a lot of people that move from leasehold to flipping over to, you know, long term buy and hold, and it's because the market is demanding they, they do that change. Or you can do the same thing in different markets, which is what you guys chose and makes a lot of sense, right. To buy the same product, re execute the same plan, moving across the country in different markets where it makes more sense, like you said an earlier cycle. So you mean they're not approaching the valuation that they are in California?

Well, you know, my thesis on real estate is that, you know, real estate is kind of like a meandering stream, right, Going through a meadow. It curves left and it curves right. If you're rowing down this stream and you row in a straight line, I guarantee you you will run aground. And that's exactly how real estate works. You know, what you have to be able to do is you have to be able to alter your course to the left and to the right as this stream is navigating so that you don't run aground and you can keep the current pushing you all the way to your destination. That's how this works. And if you get so focused on one particular market, one particular strategy, and you never deviate from that, there are times when those markets or those strategies are broken and you'll be implementing those at the wrong time and in the wrong place and you'll run aground. So my advice is don't do that.

Nicely put. Absolutely. So do you run any kind of an education program for investors for. Basically, what I'm asking is if the audience is inspired by what you do, is there a way, following your website Education program, anything like that.

I don't. Probably should. Everybody tells me that I should. And, you know, my wife has been telling me for at least a decade I should write a book. And, you know, I've done none of that because I'm so focused on running and growing a $200 million real estate business. And, you know, for a guy that came from the humble beginnings of writing parking tickets and working his way up to making arrests and fighting fires and all that sort of thing, that's a big responsibility, and it really takes a lot of my focus. So I haven't yet taken the move to branch out into doing any type of education. I probably make more money doing that than you can in real estate, but the answer is no. But one thing I do is I participate on an online forum called biggerpockets.com and it's a great resource for real estate investors to get advice and network with other real estate investors online. And I answer a lot of questions on that forum, and I do spend quite a bit of time trying to give back.

That's awesome.

Yeah. So I've had two. I've had one of the co hosts for BiggerPockets on the show recently and then another gentleman who's very involved both in members of the military. Well, actually, the co host, David Green, was a police officer out there in California, actually.

Yep, I know David.

You know David.

Okay.

And then a young Marine who's just killing it out in Hawaii. I guess I paused there because I was thinking of a Marine and killing it. Probably not the best analogy, but, you know, you'll.

His.

He has not aired yet, but will very soon. And both of them were amazing. But, yeah, bigger pockets just keep circling around to my clients and to my listeners about being a really good place to find information. That's a great, great point. And so you're not. Not exactly officially running a thread there, but you provide a lot of feedback.

A lot of input.

Yeah, I just give answers to questions as I feel that I can add value. I've written some articles for their blog. I've been on their podcast three times. I'm one of only two or three people that have been on three times. So it's been. It's been a pretty fun experience, and it's just a great resource for people, and I try to do my part to keep it that way.

That's awesome. If any of the listeners want to reach out as a potential investor or would like to get some advice, what's the best way to contact?

Best way is through our website, which is praxcap.com, it's P R A X C-A P dot com.

Great.

Well, Brian, if this doesn't inspire the listeners to jump out there and try it, I'm not sure what will. But we will keep bringing others to find them. If this isn't it, I hope it's okay if I reach out personally because I'm pretty fascinated with your story and what you've done and look forward to keeping contact much longer.

Likewise. I think that's great and thanks for having me on your show. I really appreciate it.

Awesome. Thanks so much, sir.

Take care.

You got it. Thank you.

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