This Army Veteran Started Buying Rental Properties While on Duty and Is Now a Full-Time Real Estate Investor. Here Are His Top Tips for Success.
Andrew Davis always knew he wanted to get into business for himself, and real estate investment proved to be the perfect fit.
"I always knew I wanted to get into business for myself since I was very little," Army veteran and real estate investor Andrew Davis says. "I think a lot of kids like doing a lemonade stand — I got a real thrill out of that when I was younger. So it was already in the back of my mind."
Before he went into business for himself, Davis graduated as a signal officer from the United States Military Academy at West Point. He served eight years in the Army after that, five of which were active duty. But Davis knew he didn't want to spend his entire career in the military.
So he began to explore other options. Davis had family members involved in the real estate business already, and after speaking with them and doing more research, he decided to give it a go. In 2014, he launched his new career with New Western, a private marketplace for fix-and-flip residential investment properties.
Davis started to buy rental properties slowly, working at his new venture part-time while he was still in the Army. Then, when his time on active duty was coming to an end, he got his real estate license.
"I wanted to learn a little bit more about the industry and be closer to the front lines of where the action was happening," Davis explains. "I graduated from just trying to buy and hold rental properties to fix and flipping properties, using the proceeds to buy more properties."
Entrepreneur sat down with Davis ahead of Veterans Day to discuss how his time in the Army helped him prepare for a successful career in real estate investment and what would-be investors should always keep in mind — no matter what the market's doing.
"When you're studying the art of warfare, you're breaking wars down to a strategic, operational and tactical level. And you can do the same thing in business."
By the time Davis left the military, he felt confident in his ability to move forward with a full-time career in real estate investment. A lot of what he learned at West Point and beyond was applicable to his new business, he says.
One particularly helpful course at the Academy was called "The Art of Military Warfare."
"That's the best business class I've ever had," Davis says, "because the funny thing is when you're studying the art of warfare, you're breaking wars down to a strategic, operational and tactical level. And you can do the same thing in business — how you operate your business strategically, operationally."
Additionally, Davis's time in the Army taught him how to lead and run an organization effectively.
"It helped me wire my engine in an efficient way," Davis explains, "and I attribute a lot of success [to that]."
Another critical skill Davis honed in the military? The ability to adapt and plan accordingly.
Real estate is always fluid, Davis notes, which means you have to assess a situation or hurdle as it comes — and react in due course.
Covid's impact on real estate serves as a perfect example. Although the market quickly heated up, it's since cooled, rewarding those investors who continued to rely on solid business principles.
"It's important to learn the fundamentals of the business early on so that no matter what the market does, you have a business plan that you can change and mold to [suit] what's happening now," Davis explains. "Sticking to the fundamentals of real estate investing goes a long way, though there's a lot of talk about interest rates going up."
"The principles stay the same no matter what's happening."
What does holding onto those business fundamentals look like in practice?
"The principles stay the same no matter what's happening," Davis says, "buying properties that are quality, buying with a profit margin built in. Stuff like that keeps my business running no matter what. And then a lot of hard work too — being persistent and working hard go a long way, especially during the harder times."
As he began his real estate investment career, Davis prioritized buying and holding rental properties. He says owning rentals comes with some stability, as you're basically guaranteed a monthly residual income. Generally, those properties will rent, he explains — it's just a matter of how much for and what makes sense on the back end.
For those early in their real estate investment career, Davis recommends "cutting their teeth" on easy projects, like a cosmetic renovation to rent, before exploring what can be more complex and risky fix-and-flip properties.
Once you've purchased a property to flip and attached that "value-add component," you're banking on it being worth more when it's finished. But that assumes that the market will remain consistent, doing what it's done in 2021 in 2022, for example. Of course, that's not always the case.
"There's room for things to go sideways when you peel back the onion on a property," Davis says. "Maybe you uncover things that you didn't originally anticipate. Maybe the project takes longer. Maybe the supply chains are messed up. So while [fix-and-flip] can be a profitable business, there is more risk associated with that business model, in my opinion."
"There's a steep learning curve, and a lot of people have a negative experience early on."
Regardless of if you're interested in buying to rent or buying to flip, Davis suggests keeping a few important things in mind.
For those younger investors who are just getting started, Davis recommends easing into the process.
"I see a lot of people who get aggressive early on," he says, "and maybe they're not as well-established with the process of real estate or real estate investment. And in real estate, there are always walls, and it's up to that individual [if they're going] to run into a wall at a million miles an hour or ease [into it], bump into a wall and be able to bounce back."
Davis also cautions against believing what you see on a lot of TV shows that make fix-and-flipping "look like a cakewalk."
"There's a steep learning curve, and a lot of people have a negative experience early on because most flippers cut their teeth on a bad project," he explains. "A lot of the seasoned investors that I know are people who just stuck with the process and were persistent: When there was a lesson to be learned, they learned it and then applied it to the next project."
Additionally, Davis suggests having several things going on. That way, if one area slows down, another component can help make up for it.
"So, for example, I started a property management company in 2020," Davis says. "It's been really hard to find the same amount of fix-and-flip opportunities, although not impossible. The property management business took focus while some of my investments slowed down. As the real estate market slows down, it might be a good buying opportunity. So things are definitely being changed in and out."
Those who are willing to ease their way into real estate, applying what they learn along the way and eventually spearheading multiple projects at once, stand to build a lucrative business.
"As far as actual investments, I only own real estate properties," Davis says. "It's a timeless venture. If you dissect a lot of investments, it just comes down to supply, demand and ability to pay. I'm a big fan of consumer staples, things like grocery stores and real estate. There's always demand for shelter or usable space. And a lot of these structures are going to last for generations — so it's a great place to park money."