You may have already figured out that I’m a real estate investor at heart having grown up in a real estate investing family. But you may be wondering how I managed to become a partner in 3400+ multifamily apartment units during the past couple of years. To give you insight into that, let me take you back to my childhood and bring you up to speed with what I’m involved in now. You will see a pattern of entrepreneurship and visioning. Forces I didn’t even realize were at work in my life until I started looking back at my journey.
The Seeds of Real Estate Investing Were Planted Early
My father retired from the Army when I was a young lad. Since he was a self-starter, he chose to learn the construction trade and work for himself building houses as his second career. Through this my parents were able to build up a small portfolio of rental houses that they received passive income from.
As a teenager, I worked for my parents on their construction projects along with my seven siblings. It was hard work that I didn’t always appreciate or enjoy and the days were long given the hot, humid North Carolina Summers.
I performed a variety of builder activities including digging and pouring foundations, mixing mortar for block walls, framing, and installing insulation, sheetrock, and roofing. My teenage construction apprentice years culminated in helping my parents build a 4-plex multifamily property which my mom still owns and receives passive income from today. My parents’ real estate ventures got me thinking of passive income at a very early age. However, I had other career thoughts and certainly was not interested in going into construction nor in joining the military.
Military Service Enhanced My Passion
After I completed my Materials Engineering degree at N.C. State University, I had a very hard time finding a job in my chosen field. After exhausting other avenues of employment, I joined the US Navy Civil Engineer Corps where I planned to only serve for 4 years – enough time gain some work experience. In the Navy I was a construction project manager where I built and maintained facilities for military bases. Much to my surprise, I quickly found out that not only did I love military life but that I also loved working as a construction manager!!! Two things that I thought that I would never do actually formed the foundation of my 30+ career and provided good insight into real estate investing.
About 10 years into my military career, the Navy sent me to the University of Texas to get a Master’s degree in Construction Engineering where I took a commercial real estate course as an elective. My professor encouraged me to invest in real estate on the side to help create passive income to supplement my income and to have multiple sources of income during retirement. His passion for real estate brought back memories of what my Dad had taught me. It all started to click – I realized that not only could I easily invest in real estate but that I wanted to do it as well. The challenge was figuring out how to start investing.
Acquiring Our First Rental Properties
My wife, Cindy, and I started putting a plan in place to invest in single family rentals. In particular, we wanted to create multiple sources of passive income that would help provide freedom and financial security during our retirement years. Since I had a strong family network in real estate development, we reached out to my brother and sister who were builders to help us with our investment plan. Over the next 10 years, we were able to build up a small portfolio of single family rentals.
We partnered with my siblings to build rental houses and partnered with another of my sisters to manage the properties. This process helped me improve my communication skills, refine my wealth strategy, and build trust in partnerships – skills critically important that would help propel our rapid success in multifamily acquisitions.
Thinking Even Bigger
Even though I had helped my parents build a multifamily property as a teenager, the value of having one property produce multiple streams of income didn’t fully click with me until I was in charge of a massive $5 Billion construction buildup at Marine Corps Base Camp Pendleton in Southern California.
$2 Billion of the portfolio was for 8000+ new apartment units of barracks infrastructure. Barracks are essentially multifamily properties but each apartment unit is smaller, somewhat like an efficiency apartment without a kitchen. The amenities and how barracks are operated are quite similar to apartment complexes.
With $2 Billion of incoming capital for these barracks, my 2-Star General charged me with making major improvements to their design and functionality. We set out to build them with the right criteria and to make them feel like home to the Marines and Sailors who would live in them. To accomplish this, I led a design and operational team in strategically planning and developing the gold standard “Best of Breed” barracks. We made major improvements to the living quarters and recreational amenities as well as improved the community feel.
Overseeing the planning and construction of these barracks and developing a strong community where people enjoyed living helped shape my passion and interest in multifamily properties. It also gave me thought to buying apartments for my budding real estate portfolio. However, the timing wasn’t right as I wasn’t familiar enough with commercial real estate acquisitions and I didn’t have a mentor to walk me through it. I also thought that individuals couldn’t buy multifamily properties themselves, that only large corporations could do so. I left it as a passing thought as I still had a young family who I valued spending my free time with, and I also had a few years to go in my very demanding Naval career.
After 24 years of service, I retired as a Navy Captain and then began working in project management on very large and complex international projects for ExxonMobil. In 2015, my family and I were moved to Dubai on an overseas expat assignment. During our time there, I started evaluating our long-term strategy for single-family rentals and concluded that the return on investment was not as high as I had hoped for given due to lower rent growth than planned. We would need to supplement those with other investments in order to scale faster and increase our passive income. So, I began to contemplate investing in alternative real estate ventures.
That’s the end of Part 1. When you’re ready, check out Part 2.
Marshall Sykes
Co-Founder, Managing Partner
Capitano Investing Group
