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Marshall Sykes: Construction Executive, Real Estate Investor, & Navy Veteran
17 Plays1 year ago
Marshall Sykes is a seasoned investor and owner of Capitano Investing Group, LLC. Raised in a family deeply rooted in real estate development, he learned the significance of diversified income streams and passive investments from a young age. As a testament to his expertise, he is a General Partner on over 3500 multifamily apartment units spanning 10 states and boasts a single-family rental portfolio for the past 25 years.
Marshall's illustrious career spans two major sectors – Energy and Defense. He worked for ExxonMobil Global Projects Company for over 8 years in project management. His highlights included overseeing and developing the contracting and construction strategy for a $560 Million renewable diesel project in Canada, contract management of a $12 Billion gas processing and pipeline venture in Papua New Guinea, directing $100MM annually in new oil pipelines and well drilling pads in Iraq, and overseeing a $1.7 Billion infrastructure and pipeline project in Canada.
Before joining ExxonMobil, Marshall ascended to the rank of Captain in the U.S. Navy Civil Engineer Corps, retiring after 24 years of military service. Notable achievements from his naval tenure include spearheading a $5 Billion construction initiative at Marine Corps Base Camp Pendleton, which encompassed a $1 Billion venture for new multifamily housing communities and a $800MM build to rent community of single-family homes. He also held the esteemed position of Chief Operating Officer for two engineering commands, managing a staggering $1 Billion annual budget, and leading a team of 800 engineers and logisticians.
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Transcript
Marshall's Diverse Career Journey
00:00:00
Speaker
BAM!
00:00:27
Speaker
Marshall Sykes has traveled all over the world thanks to his long-time career as a project manager and construction executive in the US Navy, followed by time with ExxonMobil. He holds a bachelor's degree in materials engineering from North Carolina State University, as well as a whopping three master's degrees from various institutions in civil engineering, materials engineering, and national security. Today, Marshall is a full-time real estate investor,
00:00:55
Speaker
helping to raise money for and manage apartment complexes around the country via his company, Capitano Investing Group.
College and Military Decision
00:01:02
Speaker
In this episode, Marshall walks us through his time in college and decision to join the military. He describes the various types of projects he's worked on throughout the years, comparing and contrasting the life of an engineer in the military with civilian positions in the same sector.
00:01:18
Speaker
He talks about his transition from his 20 plus year military career into the corporate world, which despite having offered a similar draw of travel, had its own challenges. He also touches on the ways in which real estate investing has acted as a real common thread throughout all of his endeavors, eventually allowing him to step away from his W2 job and to enjoy the fruits of his hard and smart work. Enjoy the episode.
00:01:46
Speaker
Yeah, so I, my mom and dad, my dad actually retired from the army. And he was, he wanted to learn the building trade so he could run his own business and not have to work for somebody else. So that's what he did when he got out at 40 years old. Yeah. And I, during the summers, I was a young teenager and I would work with them on building houses. And it was fun as a teenager doing that in the hot
00:02:14
Speaker
work there on the summers, but I guess I grew up in an appreciation of construction and once we got an engineering degree, and it was hard to find a good job in tech at that point, I decided to go in the Navy in civil engineering, which is
00:02:32
Speaker
project management construction. So we oversaw all the facilities on a base. And so you do the design and construction of all the buildings. And you also did the maintenance and learned a lot from that one. So yeah, I went in just for four years to learn a little bit, but no, I loved it. And I loved the adventure, the challenge,
00:02:58
Speaker
kind of lottery, I guess.
Influences and Early Career Choices
00:03:00
Speaker
So I understand almost 25 years, yeah. Did you have somebody in college, like a professor or recruiter, who suggested that you consider this option? Or did the idea just kind of come to you on its own? You know, that's interesting because in seventh grade, I actually did have a mentor on one of my teachers who was just a substitute teacher for like six weeks to maybe two, couple months. Yeah.
00:03:28
Speaker
Um, but he suggested he had gone to West Point and had a full military career. And he suggested that I look into it. And, um, so I started to apply to West Point when I was in high school and decided, I don't know, it just got too complicated and I decided not to do that route. But so that maybe that was in the back of my mind and my dad, since my dad was in the military and a couple of brothers had gone in.
Engineering in Military vs Civilian Sectors
00:03:56
Speaker
It was kind of, I knew that was always an option, but I didn't understand what, you know, if you don't know that the military has all these different types of career fields, you just don't understand it. You know, you think everybody that goes in the army is an infantry or whatever, right? And it's just not the case. There's just so many career fields in the military. And I learned about this engineering one and
00:04:21
Speaker
decided it was, I turned it down originally and then I decided no, it was the right thing for me to do. Yeah. What is RS, how is better phrased being a military engineer different than maybe starting a career outside of it? Like if you had to kind of summarize what your life was like? Yeah, I think that's a great question. Um, maybe 75% of the work is similar. Yeah. Is a lot of people I work with, we're doing the planning for a new building.
00:04:48
Speaker
we're doing the engineering for it and we're doing the instruction. You did that same thing in a job outside of the military.
00:04:57
Speaker
We also had civilian employees that worked with us to do all that work. So maybe we're only 5% of the workforce, 95% of them were civilian employees. So it is similar to that. But I think the difference would be you're always, when you're going as an officer, you're on the career trajectory to be a leader at some point and in charge of all of it at some point.
Support Networks in Military Engineering
00:05:26
Speaker
And maybe in the other sector, you don't even need to worry about doing that. You can't just decide, no, I don't want to do that. So it's more about the leadership side, I think. That's the big difference. They expect more out of you for leadership. They want you to be proactive and think ahead. And maybe on the outside of the military is not as much of that. Sure.
00:05:50
Speaker
Are you surrounded then by a lot of people who are giving guidance about how to do jobs? Like would you, from what you're describing, it sounds like if you're a little confused about how to do a job or there's like many options about how to approach it, you can just ask a whole bunch of quote unquote superiors what their insights would be. But is that the case or are you just as on your own job wise as you would be outside? It's definitely, you're definitely tied in much more versus this civilian sector.
00:06:17
Speaker
on knowing your job or having your mentors or your bosses help you out. When you go in the military, no matter what career fields you're in, a lot of it's about training. Training for your job and also training for a contingency situation like a war or a natural disaster or something like that. We can always get caught up for a natural disaster or a war situation.
00:06:46
Speaker
That's another big difference. What kind of projects like on that note, were you working on? Like if you had to give people some examples of the kinds of things that they might face if they join? I think when I was first joined, I was doing mostly airfield construction for the Marines. I built an air traffic control tower, built a runway.
00:07:10
Speaker
those type of things. So they were kind of in air traffic control or airplane simulator for the jets. And those were kind of interesting roles. But also later in my career, I was involved in some of the work in building prisons at Gitmo, for example, at the autonomous bay. So that was kind of interesting. Also,
00:07:36
Speaker
When I was in California, I was in charge of a $5 billion build up out there for, we did a billion and a half in barracks, which is basically multifamily units.
Education vs Real-World Experience
00:07:49
Speaker
So we've got a lot of experience in multifamily there. And so it was really interesting work at Camp Pendleton. Gotcha. When you reflect on your college experience, because you studied material science and engineering, if I'm not mistaken,
00:08:05
Speaker
That's correct. Was that education more just as or less valuable than the engineering experience you got while in the military? I think the engineering itself gives you the building blocks of, hey, you can solve problems. Now, you don't always understand how that works when you're in college, going through that. A lot of times, especially when I was there, they didn't
00:08:34
Speaker
They didn't give you real world examples, I think. So it kind of gives you some kind of basis of what you're learning. You understand, you can apply it better. But once you get out, it's, you know, you're, you're really focused on what you do in your job. And sometimes the engineering, like I did project management, construction management is a lot less engineering involved than doing design work, for example.
00:09:04
Speaker
Do you have a preference for management or actually kind of getting down and helping to design plans just as an engineer yourself? Definitely management. I was definitely in the project management and doing solving problems because that's really what we, we
Preference for Management Over Design
00:09:21
Speaker
would solve problems from an engineering perspective. So we did the design itself, you know? Okay. I think I remember when I was getting out of college, I was like, I really don't want to be a design engineer. So
00:09:34
Speaker
I even had that inkling when I was a senior in college. Is there a reason for that? What about the design engineering were you not a fan of? Well, I think a lot of it is your crunchy numbers a lot and you're maybe creating something out of thin air and that's probably not as appealing to me as solving problems.
00:09:58
Speaker
So if you're working with people 24 seven, was the military, I mean, like, I almost feel like you've answered this question already, but were you given extensive people management training that was kind of military flavored or was it kind of more of a business school type environment that they were educating you for? Well, in my role, since I've dealt with military and civilian employees, it was,
Transitioning from Military to ExxonMobil
00:10:21
Speaker
it was definitely both. You have to, there are certain things that you only do with military and there's other things that you would do.
00:10:28
Speaker
as a with civilian employees from human resources perspective. Yeah. And how did you transition from doing work for the military for the Navy to working for ExxonMobil? Was that a super smooth transition? And what was your decision making process like there? I think it was, you know, I think going from the military and the camaraderie to any corporate America job is probably is probably a big transition, bigger transition than
00:10:57
Speaker
I even thought there would be. Part of it was, you know, you're, when you come out of the military, you're in charge of a lot of things. And no matter what rank you are, and I was a captain at the time, so I was at 06. But going into Exxon, you're one of many, right? And so you're kind of an individual contributor at a lot of times of those places. You know, at different times, I was not an individual contributor. But the first couple of years I was, and it was,
00:11:26
Speaker
It was a bigger change mentally than anything else, I think. Do you regret having left? I don't know if that's almost too personal, but just camaraderie-wise, is that something that you miss to this day that you could see yourself having done for decades longer? Well, I did 25 years.
Global Experiences with ExxonMobil
00:11:45
Speaker
I think our max is around 30 for most people. So I will pretty close to that one. Retirement eligibility is at 20. Yeah. It's kind of midway there.
00:11:55
Speaker
I don't regret it. It was time for me. It was the right timing for me to transition at that point. And I enjoyed my corporate role as well and working for Exxon. And it was, I made the most of it. I just, you know, I think there's always something you can improve on. But I certainly made the most of it. I had some great experiences and learned a lot of great things and had some fun colleagues from Exxon of mobile as well.
00:12:22
Speaker
Well, and it seems to that Exxon moved you around a lot or you were working on projects all over the US, which is kind of what I at least personally associate with working for the military. So was that accurate? Like what's your, a lot of work travel involved with what you did during that period? Yeah, I definitely moved around quite a bit in the military, but also just as much as at Exxon mobile. So we started out in Houston and after about a year, year and a half, we moved up to Canada.
00:12:49
Speaker
project up there that we were doing. And that lasted a couple of years. And then we moved to Dubai and in the Middle East. Wow. Worked in Iraq. That's where I worked. And so, yeah, we did big oil projects there. Then moved back to Houston. But when I was in Houston, I was still, you know, I did four months work assignment in Nigeria.
00:13:15
Speaker
I did a lot of work with folks, a big project in Papua New Guinea that we had to go to Australia a lot for. So yeah, there was a lot of travel, a lot of international projects and a lot going on there. Yeah. Were things like largely infrastructure projects or what were you guys working on from country to country? Yeah, it was a variety. I mostly did focus on infrastructure piece of a big production plant. That was more in mind.
00:13:44
Speaker
Some of it was bringing electrical or the roads or utilities. And then other parts were trying to plan the contracting pieces of it with the construction companies. So it was a variety. I did learn a lot about strategy and long-term strategy. That was quite interesting. Yeah, gotcha. Did you view the US any differently after having spent so much time outside of it?
00:14:14
Speaker
You know, I can't, you do because once you have been overseas, no matter where you're at, I was stationed in Scotland and Italy when I was in the Navy. No matter where you are, you cannot be the convenience, convenience that we have in the United States. It's just, it's just something that, you know, you can go to the grocery store at 10 o'clock on Sunday morning or at 10 o'clock on Sunday night. I mean, a lot of times you can't do stuff like that.
00:14:44
Speaker
Yeah. You have to be much more regimented in your daily work, daily living, and playing ahead a lot more than we do now.
Introduction to Real Estate Investing
00:14:56
Speaker
But also just the people. I think the people, international, just they're fun. They're very similar. Everybody wants to do their best, I think. And I enjoyed all the different cultures I was in.
00:15:09
Speaker
When did you first get exposure to real estate investing? Was that kind of because of peers that you'd met at Exxon or in the military or were you kind of the first within your cohort to really dip a foot into this? I probably was one of the first, but my, so cause my, I grew up working with my mom and dad, they would build two houses at a time and they would sell one to live off of and they keep one as a rental. So I learned that kind of that model.
00:15:39
Speaker
And when I was in the military, I decided to start investing. I probably started investing around maybe I was 33, 34. Started a little earlier in that, maybe 35, I don't know. But we started investing and my wife and I, and we ended up with a small portfolio of single family homes of maybe of 10 or so. And then kind of getting the snowball from there, I guess. Yeah.
00:16:07
Speaker
When you started buying properties, was that with the intention to eventually become financially independent through those, or was it just kind of like an income supplementation thing, something that you learned from your parents? I think for me, it was less about financial independence and maybe more about controlling my, maybe you can say the same thing, controlling my destiny, controlling what, what I could do with my life, the rest of my life. I guess that once I stopped working,
00:16:37
Speaker
I would have more, I would still have an income coming in. That's what my main goal was. I like the idea of having more than one source of income. And I really think everybody should have five or six or more sources of income because one or two of those can get cut off at different times in your life. And I found that out with ExxonMobil. We went through the COVID era and oil prices all dropped.
00:17:06
Speaker
and oil production was, I guess, slowed down. And so a lot of the oil companies weren't making as much
From Passive to Active Real Estate Investor
00:17:14
Speaker
money. Exxon ended up laying off almost 50, well, they either had early retirement or retirement or laying off people up to 50% of our staff in projects, and I was one of those. So at that point, I had eight years with the company. It was a good eight years, but I had the option of,
00:17:34
Speaker
Hey, not going back to work if I didn't want to, because I had some real estate holdings, you know? Absolutely. And how did you transition from that to multifamily? Like, I know that's the context in which I initially met you, but what was with that mindset change? Yeah. I mean, so I was always kind of interested in multifamily. When I was a teenager, my mom and dad built a fourplex with that. So I kind of got a little bit of exposure there.
00:18:02
Speaker
but I never really thought too much about it, I guess. And then when I was building all the barracks at Camp Pendleton, there was also a lot of multifamily going up in Southern California at the time. And I always thought, wouldn't it be nice to own some apartments, you know, to be a real estate and those. But I always thought, you know, you had to have a big company to do that. And then I was overseas a lot with Exxon. And then when I,
00:18:28
Speaker
came back about five years ago to the United States. I'd heard, that's the first time I heard about syndications and multifamily syndications.
Military Contracts and Entrepreneurial Paths
00:18:36
Speaker
So at that point I got very interested in it and started investing. And then eventually as a limited partner, passive investor, eventually I decided I wanted to be a general partner and make, be able to kind of influence a little bit more, get involved in it.
00:18:54
Speaker
And the opportunity was really good for me because when I got laid off of Exxon, I was able to transition right over to multifamily as a partner, general partner. Sure. So you mentioned barracks, and I'm super interested in this too. My brother is trying to become a combat engineer, and he's kind of thrown around in his head this idea of winning contracts to construct just a whole bunch of barracks throughout the US. I'm wondering, is that, or I guess, is it commonplace for the military to hire people that are directly
00:19:24
Speaker
associated, I guess, with their organization? Or do they kind of seek out just whichever construction company is able to most economically build this for them? Yeah, we normally what I was in charge of the contracts as well to, you know, to get construction contractors to come in and design and build the facilities. So there's always there's a lot of criteria to meet, you had to have past performance and experience and
00:19:53
Speaker
But you also have to have a, we went kind of went away from the best, the lowest value, the lowest cost value, because sometimes the lowest cost isn't the best value in the long run. So we look at the whole picture. Um, and that's what, that's how we determine which contractors are getting charged, charged with the construction. Now, if your brother wants to.
00:20:16
Speaker
So he starts out small. He does a small business and does a small project. And that's how you develop. And they have a program called the Small Business Administration to help small businesses get started with that. So they actually have an opportunity like that in contracting in the federal contracts world. How are barracks different from multifamily, if this was your kind of initial exposure to the idea of owning something like that?
Pursuing Lifelong Learning in the Military
00:20:43
Speaker
in barracks, everybody in there, everybody that's in the barracks is we usually will build like 200 rooms. So we had two people per room. So basically 400 people, everybody was single. So that's one difference. Um, the other one is the units themselves. So the units would be ours would be one, the bedroom and, and it would be, you'd have a desk each and then you'd have a closet each and a
00:21:09
Speaker
in a bathroom, but that's about all you have in the unit. So in apartment buildings, you're going to have a lot bigger units than that normally. But amenities, I would say, are very similar. So we had big laundry rooms, nice laundry rooms. We had a recreation area. We had outside rec areas and picnic tables and barbecue areas, things like that.
00:21:36
Speaker
We usually use the base swimming pool, so we didn't build swimming pools at the barracks, but they had those available as well. Sure. I wanted to go back to you talking about always having this impulse to kind of follow that construction direction that your parents had laid out for you. Did you consider just skipping college entirely and going into the trades or was getting educated at that level something that was very much encouraged by your family and something that you wanted to do personally?
00:22:05
Speaker
I think I was one of eight kids. So some of us actually went straight to college and some people, some of us didn't. Um, I always knew in my mind that I wanted to go to college learning. I'm a lifelong learner and I'm always enjoy learning. So I knew that that was going to be the right road for me. Um, I didn't think that military was going to be part of that. I had to kind of put that off the back of my mind when I didn't, um,
00:22:33
Speaker
didn't finish my application for West Point, I guess. I kind of put that out of the picture, but you know, it was God's plan for me to go in and I'm very happy I did. I think it's just something I wanted to do. I knew I wanted to go to college. In fact, I went beyond college. I mean, I ended up getting three different master's degrees. So I've had a play of education. Rich subjects.
00:23:00
Speaker
One again was in material science and engineering. The second one was in civil engineering, really construction engineering and project management, a focus. And the third one was in military strategy. Wow. Wow. So when you pursued each of those degrees, was that thinking in the moment that you'd be able to use them to rise in corporate executive wise, or were you taking advantage of GI bills in the military?
00:23:28
Speaker
It was more, the first one was I wanted just to stay in materials engineering and kind of learn more about it and position myself for a better corporate job. The second two though were, I got those master's degrees while I was in the military. So the military wanted me to have those and kind of get that education to help more when I was a senior kind of officer, it would help me be more well-rounded. Leadership decisions, I guess.
00:23:58
Speaker
And would you say that the actual schooling program that the degrees offered were, I don't want to say worth it, but were they everything that was promised when you went into them? Yeah, I think they were worth it. Yeah, definitely. My first one, you know, at North Carolina State University in materials engineering. Very, very good school, very good program there. And then the Navy sent me back for my civil engineering degree at University of Texas in Austin.
00:24:26
Speaker
And that's a very hard program, very demanding. So yeah, I've definitely learned a lot there. And then the master's in military strategy. That was, that was a good program as well. And you learn a lot about how the State Department works with the military to kind of influence other countries on, you know, you can probably see that now and the kind of the wars we got going on right now. They're very in the State Department working hand in hand on kind of
00:24:56
Speaker
trying to help influence what happens in the regions. Sure. Something huge that I think a lot of people in high school or even who are kind of just starting off in college don't think about when it comes to this notion of potentially joining the military is that there really is a lot of opportunity for them to be able to get further educated, right? On the military's dime, which can be very, very appealing considering the cost of education these days.
00:25:24
Speaker
How exactly does that work? So if you enter the military like you did with a college degree, which is, I'm assuming what you did, right? You didn't join the military and then finish your college degree while enlisted. Yeah, I went ahead and got my, I had my degree before I went out. Okay. My first masters before I went out. Got it. Got it. Then do you have for like a certain amount of years before you qualify to get another masters or how does that work?
00:25:49
Speaker
Yeah, normally that's if you're going to stay in for 10 years, I'll send you back at the six year mark or something and get you get another one. Then you have a two year, two to three year payback normal. Yeah, that's kind of how that works. And what 10 years and it's like, okay, you got to make a decision. You're going to stay in for 20 or not. And most people do, but at that point, most people do.
00:26:14
Speaker
But you seem to have loved it. I mean, it seems to have worked out wonderfully for you. Yeah,
Career Paths and Educational Pursuits in Military
00:26:18
Speaker
I did love it. It's good. I mean, no matter what job you have, it's never 100% the fun. But if you could make it 80%, 90% fun, you're doing pretty good. On that same note, when you were an engineer in the military and you looked around at your cohort and peers, was everybody in the same boat as you, where you were always opting to gain more education? Or did they have college degrees?
00:26:44
Speaker
what were the demographics kind of like? I think a lot of people do take extra classes at night. Sometimes they want to get something different. Like if you want to get an MBA, you might do that at night or whatever. And there's more options now than there were when I was first starting out. And a lot of times the enlisted aren't, they come in without degrees and they, they're always working towards a degree. I mean, most of them do work towards a degree.
00:27:12
Speaker
Um, they get, they get a lot of education when they first go in, uh, in their trade and they get, they count some of that as a, as part of their degree anyway. So they usually have a year or two before they even go to a online course at night or something. But a lot of them end up getting their bachelor's degrees when they're in the military.
00:27:35
Speaker
Got it. Is there an advantage to joining as an officer having a college degree already or does it really not matter promotion wise? There's different promotions. You're in your own like peer group or promotions, but that's different. I think it depends on the individual really. I mean, if you're geared towards hands-on and learning trades and doing a trade, it's going to go in as enlisted.
00:28:05
Speaker
That's how my dad did. That's how one of my brothers did. It's great to do that. If you really want to be an engineer or some kind of advanced degree, then that's the way to go as well. I mean, so I think an individual preference on that.
00:28:22
Speaker
Okay, I have a question in a different context. Before you chose to join the military, did it ever interest you, I guess, like the notion of starting your own construction company or do something kind of similar to what your parents did, but on a larger scale? Or like, what was it specifically that called to you about taking the path that you did as opposed to jumping into entrepreneurship as soon as you had your degree? Yeah, I think it's, you know,
00:28:52
Speaker
You know, I think it's, being an entrepreneur is a, you got to step out. I mean, you're in the military, you got to step out too, but you know, I think that I didn't have those thoughts about being an entrepreneur when I was going out of college. My brother ended up, he went in the military, got a little bit of college in Amen, and then he decided
00:29:18
Speaker
he was going to be an entrepreneur. So he, he did build houses. Um, so I have seen it on both sides. It's, uh, you gotta have, you gotta be all in whichever one you end up choosing, you know? So it's, it helps to be all in either way.
Current Role in Investment Management
00:29:35
Speaker
Absolutely. And can you shed a little bit of light, a bit of light for us on what you do for Capitano these days? Yeah. For multifamily deals, if I'm not mistaken.
00:29:47
Speaker
Yeah, my company is called the Capitano Investing Group and I've partnered with other multifamily operators to raise capital and provide earnest money and stuff like that to buy and operate multifamily properties. That's mostly my focus, but I'm also, I raised for an oil and gas deal right now. I'm going to raise for other type of alternative investments, something outside of the stock market.
00:30:15
Speaker
that people don't know about. And I like educating them on that and know that there's other investments out there that they can put their money in and besides stock market. I know very little about that. So if you're interested in sharing at all about these oil and gas deals and what the structure of those looks like, I'd love to hear about it. Like we've never had anybody on the show who's touched on this. It's a little different on oil and gas. It's many different ones, as you probably can imagine, but for mine in particular,
00:30:45
Speaker
I'm working with a company that has been formed with a long time oil and gas seasoned operator along with other capital raisers. So I'm raising capital under my entity basically.
Exploring Oil and Gas Investments
00:31:05
Speaker
and partnering with them on part of a lease, we're buying a part of a lease is really what we're doing. So we're buying into a lease that's already operating. It has 130 wells that are cash flowing today. And so we're buying into that lease and then we're gonna be in, this is a long-term business, if you will, of 10 years or eight to 10 years or so. And I guess we could sell it anytime when the market's right, we'll sell.
00:31:35
Speaker
We're going to buy into that lease. We already have bought into it and we're going to, and we'll also, we'll drill some different wells when the timing's right for us to drill new wells. Because every so often you have to drill a new well because well, all wells kind of start producing less and less over time. So you're going to have to drill a new one to get production back up. What's the lifespan of a well? Is it a few years or way shorter than that?
00:32:03
Speaker
Um, it's usually, yeah, it could be a long time, but usually 10 years or something like that. Okay. Gotcha. What kind of expenses do you have to consider if you're going to buy wells or take over a lease where you've got like a whole bunch of them included? Well, the drilling costs are the biggest thing right up front. And so you want to, you want to do a lot of money into analyzing the ground and the oil reservoir before you even start drilling.
00:32:34
Speaker
Because the drilling costs can be, I don't know, millions of dollars. So you want to, maybe not for the smaller wells, but for the larger ones you would. They say you want to do that up front. So you're going to have a reservoir. You're going to have geological. The geologists are going to have to do a lot of research and make sure that it's a good place to drill. And then the drilling costs. And then you have to have the infrastructure in place, which ours already have infrastructure in place because we're
00:33:04
Speaker
buying an existing, producing oil. So that's the other piece of it. Yeah. And are you buying this using like a syndication structure or some other vehicle? It's similar to a syndication, I would say, yes. Okay. It's where we are getting individual to provide cash or capital to buy into the deal.
00:33:34
Speaker
Why would somebody look into investing in gas and oil as opposed to real estate? Like, how has this field piqued your interest? Obviously, you worked for a very relevant company for many years, but I mean, if the average person were to think about it, what's the draw? I think the draw for oil and gas is it's, you know, it gets you if you can look at it as if you have a lot of real estate holdings, this is a different type of alternative investment. So
00:34:00
Speaker
you have a little bit more diversity. I think when you're talking about alternative investments, you want to buy into business, they're all businesses. So you want to buy into a business that is going to have the opportunity to have an increase in revenue and that's going to give you a return on your investment. And the oil and gas business is so intriguing right now to me is because usually
00:34:30
Speaker
They, these operators that are running the, actually running the fields, because we're not, we're just, we're buying into the lease, but we're not running. We have operators that you see down the, at some of the gas stations that might, might be running them. But they, they have traditionally got all their money for the capital to buy the properties from big hedge funds or big,
00:34:59
Speaker
institutional funds, but a lot of those are trying, they're trying to get away from oil and gas because they're going to more into the renewable energy sustainability funding. What that is that oil and gas is going to be around for the next 40, 50 years, still very, before renewable is ready to catch up at point. I think it's going to, it's a long haul. So it's a great opportunity for individuals to come in and invest now at this point.
00:35:28
Speaker
there's a lot of upside. That's what's intriguing to me. If there's not a lot of upside potential, then it's probably not the right investment, but this one in particular is a lot of upside.
00:35:40
Speaker
In what respect, and again, like we don't have to go into specific details, but I guess I'm just trying to compare and contrast this from what I know of multifamily. Like can investors claim any sort of a tax depreciation or what are they looking for if they're interested in this kind of vehicle? Yeah, I think when you invest in oil and gas, you can come in as, you can come in as a general partner or as a limited partner, believe it or not. Whereas in multifamily, you're not necessarily doing that as an individual investor.
00:36:10
Speaker
Um, but you can pick the box that IRS or allows you to check the box for a general partner. And that, that gives you all a lot of tax depreciation benefits. So there's a lot of people come in for that reason. So the drilling cost will be, uh, depreciated and you can take that off of your taxes. If there's a loss, of course, you can use your passive, that's a passive income that you can use against your active income or your passive income.
00:36:40
Speaker
However, there's some drawbacks with that as well. You are also kind of exposing yourself to some liability risk in case there's a viral disaster or something like that. That's mitigated a lot with onshore drilling because we're drilling in an area that we already know and there's a lot of controls already in place.
00:37:07
Speaker
where you wouldn't have those type, the risk of having that is very low.
Advice for Aspiring Military Engineers
00:37:13
Speaker
But yeah, it's any kind of business like this is you're going to have depreciation and losses that can go against your taxes. So that's one of the main reasons people do invest. The other one is just the upside of a potential increase in your investment. The returns are much higher than they are from multifamily. They're projecting much higher.
00:37:36
Speaker
multifamily is probably less risky overall, especially, you know, normal and normal times. Right now we're not in normal times for multifamily though. Right. Right. And I'm assuming that this, uh, like when it comes to choosing locations for where to drill or what leases to buy, it's probably even more, um, volatile, I guess a choice than it would be for an apartment building, right? Cause it's not like you're just buying into a city where yeah, people live and people are going to look to rent, but you are,
00:38:05
Speaker
digging into the earth to find a supply of resources that may or may not be there to some extent. Right. That's typical. That's typical of a lot of oil and gas investments. You are kind of going out, especially if you don't already have an existing production.
00:38:22
Speaker
if you are going out there and you're trying to figure out where you think it's going to be. But you're doing a lot of, they're doing a lot of geological research to make sure they understand the subsurface to be able to do that. But in our case, we're buying into, these wells are already in place. They're already producing. They got the cash flow coming. So we know what we're getting into. How interesting. I need to look into this some more.
00:38:49
Speaker
To wrap things up, do you have any advice for young people who are considering going the military engineer route? What are some things that they should keep in mind, consider before joining while they're actually in? Any insights that come to mind? For those who are considering joining, I would say that, are you interested in adventure and like to learn new things and travel?
00:39:17
Speaker
Those are some of the things I think you can get with that. But also you're getting, you're always learning, you're always getting into something new. And the one thing you do as a young engineer is you get a way more responsibilities in the military than you're going to get out in a regular job. Because that's the expectation when you go in and they put that on you. So you will get,
00:39:46
Speaker
a lot more responsibility. So it's a lot more fun. It's a lot more challenging. You're a lot more, but it can, it, you know, it's, it's definitely some hard work as well. Right. I think for those that are already in, I think they probably kind of see that a little bit, but also if you're in a, if you're in a place where you don't really like the job or you don't like this, the location that you're in.
00:40:09
Speaker
There's always, you know, you, you wait a year or two and you can, there's always another opportunity to move and go to a more exciting place without necessarily having to risk job security the way you would outside of the
Final Reflections and Podcast Conclusion
00:40:22
Speaker
service. Right. Where you have to completely jump companies and roles and all of that. That's right. Right. I mean, you stay within because the Navy's worldwide as well as, you know, the rest of the military branches are pretty worldwide. Yeah.
00:40:34
Speaker
how cool I don't know how this isn't a more common option for people like when I think back on my time in college was a little bit shorter than the average period but I don't remember having gotten like any sort of presentation rhetoric on our options when it comes to joining the military for really anything like whether it be healthcare engineering or whatever business right there I mean a lot of times they do reach out I know the recruiters do reach out and stuff like that but
00:41:03
Speaker
and do presentations, but a lot of times they're targeted to certain types of degrees they're going for. I never attended one in college either, but I just always knew about the military and talked to the recruiters afterwards. You had that personal background. Yeah. Yeah, that makes sense.
00:41:24
Speaker
Marshall, this was fantastic. Thank you. I don't have any more questions, but this was great. Well, Julia, thank you so much for having me. It's been a pleasure. I'm gonna take a few days to edit this, and like I said, get it back to you. You can watch over it whenever you have the time or information, and I can make any changes that you want me to. Okay, perfect. Thank you so much. All right, thank you. Take care. Bye-bye.