[00:00:38] Schedule a call with me at www.CallwithVee.com
[00:01:04] Check out my interview with Erik Smith from Fitness and Finance Podcast at www.FitnessNFinance.com
[00:02:12] Tickets for BEC20 available here: http://bit.ly/31D16Ho – Use code “GOALS20” to save 20% at checkout
[00:03:59] Travis started his investing journey with the book Rich Dad Poor Dad – https://amzn.to/31M360c
[00:07:04] Travis shared info on his first passive transaction. He put too much emphasis on a Pro-forma.
Pro forma is financial statement produce based on certain assumptions and projections.
[00:07:31] You are not investing so much in the deal but the team.
[00:08:28] Travis talks about his investing process. He starts with vetting the sponsor/ operator. Then looks at the market and the deal itself.
[00:09:36] Travis dives into how to vet a sponsor.
[00:12:19] What questions should you ask the operator? You can also download a guide of all the questions to ask at www.ashcroftcapital.com/passiveinvestor.
[00:14:33] Travis shares the red flags to look for when vetting someone
[00:18:28] How Travis work on his deal flow
[00:21:48] How to find what conference to attend to find good operators.
[00:28:14] Travis shares a day in his life
[00:34:46] Travis shares his last thoughts on what investors should pay attention to before going in a deal
Travis Watts 0:03
I mean, you really can’t be good at everything. You might kill it on one of those projects and you might fail another one. And I’ve seen that unfold firsthand with numerous groups. So I look for groups that have that consistency.
Welcome to the show. You are listening to The Real Estate Lab Podcast. In this lab. we decode the stories, secrets and skills of the most brilliant minds in real estate investing and turn their wisdom into practical advice and knowledge that we can use to boost our income. And now let’s turn it over to our host Vee.
It’s an amazing day to be alive and to invest in real estate. My name is Vee Khuu and you’re now listening to my show The Real Estate Lab Podcast. Hey I cannot wait to share with you about today’s guests. But first, if you haven’t done this already, let’s schedule a quick chat with me. Just a quick 10 minute phone call. You can head on over to the www.call withvee.com to set that up.
Also, I was recently interviewed by my good friends, Erik Smith of Fitness and Finance podcast. Eric is an awesome financial advisor. Be sure to check out his podcast at www.fitnessnfinance.com.
Let’s get back to today’s guests. Our guests started investing in 2009 and is currently the Director of Investor Relations of Ashcroft capital. He’s a full time passive investor having invested in over 27 syndications between 14 firms. Ladies and gentlemen, our guest today is Mr. Travis Watts. Travis now dedicate his time to educating others in the world of investing and has made it his mission to share passive investment strategies in order to help others achieve and maintain wealth in real estate, and he also love traveling the world with his wife. On a side note, Travis and the rest of his peers at Ashcroft Capital will be at the best ever conference in Keystone, Colorado.
Check out the show notes for ticketing links and discount code. And now here’s my conversation with Travis Watts.
Hey, welcome back to another episode of The Real Estate Lab Podcast. I have Travis Watts from Ashcroft Capital here with me. It’s great to have you on the show here, Travis.
Travis Watts 2:36
Hey Vee. Thanks so much for having me today. I appreciate it.
No, with the best ever conference around the corner. I know you’re super super busy. So really appreciate your time here. Let me just, I typically want to ask the guests about something that they have done recently. And so what’s your most favorite food that you ate in Thailand?
Travis Watts 2:58
Yeah, my wife and I love Travel. So we were in Thailand about not a year ago and man, we ate Pad Thai almost every single day across that entire trip. So there’s not a tremendous amount of food options per se over there. And at the time we were vegan, so that made it really difficult. So a lot of pad thai.
Okay, you know, I start with that questions because you for work now even you travel a lot this to some cool places and your, your schedule was really, really hectic. So what was it like before you start this whole journey? Was life is this life, the life that you always wanted when you went down this path?
Travis Watts 3:39
Well, it’s kind of a funny story, really. I you know, back in 2007, 8, 9, I knew I wanted to get involved with real estate. I ended up starting in 2009. And all I really knew was I was fascinated by this concept of passive income and cash flow. Right.
Travis Watts 3:59
I’d start with like a lot of folks, probably the Robert Kiyosaki’s books and Rich Dad Poor Dad and all that kind of stuff. And I was just so intrigued by the by the concept, but I ended up going about achieving that in the completely wrong way. In the beginning. That’s the way that I see it.
Travis Watts 4:17
So later in my process around 2015 I shifted over to investing in real estate syndications where I could be a limited partner in a deal, where a bunch of folks are pooling money together to buy bigger assets for those that aren’t aware of syndications. And I could literally and finally be completely passive in my investing approach. That is what allowed me number one to leave that oil field job and have a better quality of life and pursue work more meaningful to me. And number two, for my wife and I to travel a whole lot more, and it freed up a lot of my time, actually, so quite the opposite of what it was.
Travis Watts 4:17
Anyway, I did a lot of active single family stuff. I was doing some flips and vacation rentals. And really what was happening is I was building myself a job on top of the oil field job that I had at that time, which was really just kind of a paycheck play at I worked you know, hundred hour work weeks away from home. Out in the weather. I worked overseas in Saudi Arabia for a while There’s a lot of crazy stuff. But long story short, I had no time to be dedicating to real estate, but I loved real estate and I feel like it’s the best way to build passive income and cash flow.
Now, were you always in the oil industry?
Travis Watts 5:40
No, I wasn’t I did a handful of jobs. But you know, just miscellaneous stuff before the oil field. And then after I did a handful of things just that I wanted to pursue for just self education and self development. So instead of just going to work for the paycheck, which, you know, yeah, I paid quite well as the six figure job. But you also had to sacrifice literally your entire life to do it. I was never home and overworked and you know, 14 hour days, all that kind of stuff. And so, you know, it could only go on so long, right? I couldn’t see myself staying in an industry like that for 30 plus years.
Definitely. So you invested in your first syndication in 2015. You said?
Travis Watts 6:22
Right. Yeah, I started basically selling off all of my single family portfolio I had and transitioning just one by one as I would have that liquidity event upon sale to syndications. So just selling one house and putting that and maybe two or three different syndications where your properties your single-family home properties, were they in the Denver area and different part? They were all up and down the front range of Colorado for those familiar Fort Collins through Commerce city, Henderson Brighton Denver all over, but yeah, just Denver ish.
Okay, so can you tell me some more details about your first syndication that you invested in?
Travis Watts 7:04
Yeah. So you know, one thing that I kind of look back on. And I think, in hindsight, I would have done this a whole lot differently. But the first couple of deals that I did, I put way too much emphasis on a pro forma, which is just kind of the the expectations for the project, the projected returns, all this kind of stuff. And I was taking that information face value, thinking, well, hey, you know, these are some pretty sweet numbers.
Travis Watts 7:31
But what I fail to realize is, you’re not so much investing in the deal. As much as that is important, you’re investing in the team that is actually going to be executing the deal. And so what ended up happening in those first couple is they were they were newer operators, and they ran into a handful of things that popped up they didn’t know how to handle and the easiest path out for them was just to put the property up for sale and exit. So thankfully, we ended up with exiting at a profit, so I can’t complain too much. But you know, you go in with the expectation, it’s going to be a five to seven year play, and you’re going to have this cash flow rolling in year after year. And then, you know, 18 months later, it’s all over. And you’re starting over scratch, which probably was a good thing. But that was my lesson learned.
So what was something that you did in that deal? And you now no longer do besides, you know, looking at the performer for its face value?
Travis Watts 8:28
Yeah. So now kind of what my process is, is I start with vetting the sponsor and the operator, I feel like that’s most important at the end of the day. The second thing that I’m looking at, and it’s almost a tie between is between the market that it’s in and the deal itself, both are hugely important. I would almost go as far as to say that the operator sponsor then the market then the deal last, and that’s the process that I take.
Travis Watts 8:57
The theory behind that is if you’re working with an experienced operator with a track record that’s done this over and over again, has the proof and the numbers to show you, they specialized in that niche market, all these kinds of things, they’re going to be doing a good deal. I mean that that’s the assumption. I’m not saying I would just, you know, do a deal because of that, you still have to vet everything out. But in general, that tends to be kind of the play, and the approach that I take.
So then, can you share? So you said, You vet the sponsor? Then you vet the operator? vet the market? And then the deal? Can you share what you do when you vet a sponsor?
Travis Watts 9:36
Yeah, exactly. So there’s a number of things. And I think even I mean, I left a couple elements here out I should probably just in transparency probably mentioned this first before you even get to that point, I would sit down this is this is what I failed to do in the beginning of my investing career in real estate that I wish I would have done sooner. But literally sit down, get to know yourself, reflect inward a little bit. Get To know your goals and your why, you know, if you want passive income, why do you want passive income? How much passive income okay? If you have that much passive income, what would you do with your time, you need to be asking yourself these questions and they’re not going to come easy, it’s probably not going to come in one sitting. But these are conversations to be had with a partner, spouse, or just by yourself.
Travis Watts 10:23
And then defining your investing criteria, right? So like, if now you’ve got your goals outline and why you want to do it, but what’s your criteria? Are you going to take an approach of I want to go invest in self storage, I want to go invest in multifamily. I want to go fix and flip houses I want to you know, so then it’s kind of defining the model that you want to chase after, for me it’s mostly multifamily. I do invest in other spaces like self storage and ATM machines and notes and other things, but it’s like 80% multifamily focused, then we’re getting to basically the team.
Travis Watts 11:00
So the things that I loosely mentioned, there are track record experience and then looking for consistency of business plan, it is a maybe more of a personal preference. This is something I look for. And my theory is, there’s a better likelihood of execution and a lower risk associated with a group that does nothing but the same thing over and over and over and over again, they found what works, they get real good at it. They build a connections and their network around it. And they just keep trucking along versus a group that says, well, we’re going to do a multifamily deal here, then we’re going to do a ground up construction over there, and then some self storage on the side.
Travis Watts 11:44
And, and the theory there is that, I mean, you really can’t be good at everything. You might kill it on one of those projects and you might fail another one. And I’ve seen that unfold firsthand with numerous groups. So I look for groups that have that consistency. Then it’s meeting with them right writing down your questions. When you’re presented a deal, it’s going to have a lot of information about the markets projections and rent growth and hold period and all this stuff. So most your questions should be answered from that. But still write down additional questions that are important to you.
Travis Watts 12:19
Such as what if we go into a recession? What does that mean for this project? Or what do you guys suspect you’ll do if that were to happen? Or, you know, I noticed some vacant land around this unit. What if somebody builds another apartment complex next door? how might that affect this business plan? Things like that. So you’re just trying to get genuine answers that make sense to you from the sponsor. Nobody has a crystal ball. No one can tell you exactly. But just to feel comfortable with those responses, I think would be a very important thing to do.
Travis Watts 12:52
And the last thing I’ll say about the sponsors, just simply getting a gut check. If you can meet face to face, that’s always the best. If you can’t make be doing a zoom call or you know, an online webcam type thing. If you can’t do that, at least do a phone call or two. And maybe they have some exposure out there. Maybe you can YouTube them and there’s some videos and speaking events they’ve done and you’re just trying to overall feel out the person make sure they seem trustworthy, genuine, forthright, honest, all that kind of stuff, and that they’re being conservative. I guess I left that out look for, you know, conservative approaches in the business plan, not very high, aggressive, quick turnaround, stuff like that.
Do you have a list of questions that someone should be asking an operator?
Travis Watts 13:36
I actually do so it’s in a free passive investor guide that any of your listeners can download. And you can find that at ashcroftcapital.com/passiveinvestor. There’s a whole bunch of them and there’s some visuals to go along with it. It’s just much better presented in that form. And you can kind of scroll through like common QA and how to vet sponsors and things like that. So again, that URL is ashcroftcapital.com/passiveinvestor.
That’s good. And if you want to send Travis an email also, I just want to mention, his email is email@example.com . Now, let’s go back to the topic of vetting the sponsor, you have done a lot of passive deals up to now, what are some of the red flags that you have seen from people you have vetted so far?
Travis Watts 14:33
Yeah, the first one would be lack of experience. But there’s a caveat to this. I mean, everybody’s got to start somewhere, right? Everyone’s got to do their first deal and I’m all for it. And but here’s the thing I look for, if that’s going to be the scenario, that they’ve got somebody on their team, or maybe a mentor or somebody looking over their shoulder to help with the underwriting and the numbers and you know, that does have the track record and/or the experience and guys this is just from personal experience. The newest operators I invested with the business plans myself, the more experienced operators have been fantastic. That’s not always going to be the case. That’s no form of guarantee. But that’s one thing to definitely consider track record and everything else that we discussed. So red flags would be, we’ve done one or two deals, we haven’t taken any full cycle we’re only six months into that kind of stuff I like to see a little bit more ideally, a deal that’s gone all the way through they bought it they did their value add plan and then they had a disposition or sale and now they can share with you those numbers and say, you know, we whatever we needed our investors, you know, 25% annually or something like that for a few years. The other things are I like confidence in an answer. That’s to a difficult question. So so when you when you ask a sponsor Hey, what if we go into another 2008 2009? recession? What affects next year? What does that mean? What a big red flag would be? Well, you know, I mean, that’s not going to happen. Well, you know that that kind of thing.
Let me ask you this like, because I asked that exact same question. And the sponsor answer was that well, I cannot go into underwrite a deal thinking about a recession, because it may or may not happen, you know, if I kept on thinking like that, then I may not be able to take down the deal. pretty confident answer, but then to me, like, what am I What are you saying to me now?
Travis Watts 16:42
Yeah, I don’t I don’t like that answer. I don’t like that response. It’s got to be thought through. Obviously, like I said before, nobody has a crystal ball. No one can answer that, you know, in a very defined definite exact way. But just to have a plan, say, well, we put you know, a 10 year debt structure on a Five Year business plan, we’re hoping to actually sell it and three, you know, we’re already buying at this margin, we’ve got a 20 year track record of rents being, you know, whatever in this range or the occupancy being stabilized, you know, I just like a little bit more depth to it than just all I haven’t thought about it or Oh, we didn’t underwrite to that, or it may or may not happen, or I don’t think it’s going to happen. Those aren’t good answers to me. It’s whatever you’re comfortable with. Maybe that’s a good answer for somebody else.
So no, no, definitely not. I mean, it rubbed me the wrong way when I heard them like, you sounds a little reckless.
Travis Watts 17:38
Yeah, well, and you gotta think too, since I started investing in the space in 2015. There are so many people that have jumped on this bandwagon. I would say most of the sponsors out there at this point are new, not brand new, maybe but you know, within the last couple years or something like that. So I mean, I’m on everybody’s deal list. I get deals daily. And it’s like I said, you got to know your criteria, know why you wrote that criteria, know what your focuses, and then you know, I’m deleting 90% of those because they just don’t match what I’m looking for. So that’s why that’s kind of the first step is getting to know yourself.
So then when you, you know, when you have that many deals come to your desk, what do you do when you underwrite a deal for yourself so that you know whether or not you want to get in?
Travis Watts 18:28
Yeah, I mean, it’s kind of just just a checklist, really. So it’s my already know, myself and my goals and my why I already know the my criteria. And by the way, let me let me just expand on criteria because I just keep throwing that out there. But what does that mean? So here’s an example of what your criteria might be. I look for value add B class multifamily assets from 200 to 600 units in the Dallas Fort Worth markets with a five year hold period and monthly distributions. That’s pretty specific. That’s pretty defined. You don’t have to go that defined. You could be, you know, that’s how defined I go with it and each face. But that’s an example of knowing your criteria.
Travis Watts 19:18
`So now when I get an email tomorrow, and it’s, hey, we have this new exciting opportunity in Phoenix and its ground up construction pass, right? Simple as that. I don’t even have to look at it. So that helps a lot, because you can really get caught up in analysis paralysis. I did this a lot in the beginning, because I was so new, and I got all these deals sent to me. I didn’t know which one to choose. And so I’m looking at the pro formas. And I’m just picking off the numbers. I’m saying, you know, this deal is 10%. This deal is 8%. I’m just doing the 10. Right, that’s a higher number. And that was a big mistake.
So let’s say a deal pass your checklist. Do you actually sit down and underwrite the deal with the T12 And all the financials documents,
Travis Watts 20:03
what I usually do is I’ll ask for if they’re not already included, which usually they are in a very detailed prospectus or summary. But always ask for those, and just kind of it kind of gets back to that general concept of trust, but verified. So I’m not going to be able to verify everything but you know, when they’re saying we’re projecting, you know, 5% rent increase, you know, annually in the sub market, right? I’m just getting on Google and I’m going to CBRE and all these different websites and just kind of double checking their their stats and kind of what that submarket specifically is doing, looking at comps, not just taking what they put in a prospectus at face value. But again, this is the last stage of the process. It’s already met my criteria. It’s already in a market that I like it’s already with a group that I know I’ve already had the conversations and so now we’re just kind of getting to the final details before sending in funds.
And for the listener, you know who’s new into space and wanting to get in, where is a conference that people can find experienced operators at?
Travis Watts 21:15
Yeah, there’s man every year, there’s just more and more conferences. I’m blown away. I can’t even keep up. I’m a big conference guy. always have been. I’m just a huge advocate for self education and expanding your network and all that kind of stuff.
Travis Watts 21:29
So, so Ashcroft Capital and Joe Fairless. That’s the best ever conference that’s actually coming up February 20th, to the 22nd 2020 here this year. After that, there’s just a handful a lot of them happen out in Dallas, but just get on Google and just search for multifamily conferences.
Travis Watts 21:48
And I mean, there’s got to be 15 – 20 of them a year. It’s just outrageous. So most of those are good. I usually look for attendance count, and if they’re not putting that on the side, I’ll usually call someone that’s like organizing that event, just kind of get an estimate. And the reason is sometimes you go to these really small events and it’s not worth your time if you’re going to go travel and get a hotel and rental car and the whole mix. You know if there’s 50 people that show up, it’s more like a real estate meetup. But yeah, so 500 plus attendees is ideal. And that just gives you more exposure, right? You’re going to meet more people, you’re going to have more presenters usually, and get a lot more out of that event.
I’m glad you brought that up. Because my first conference that I went to, was in Cleveland, Ohio in 2011. Just at that time, I was trying to expand the market in Denver, and at that time I went to it was about 15 to 18.
Travis Watts 22:47
Now you got those and like every city is just look up a real estate Meetup group, right? There’s like 1000 of them. But yeah, these bigger conferences are are getting bigger and bigger every year as more people kind of jump on this bandwagon, both on the passive side like I do, and both on the active side trying to do their own deals. So that’s usually kind of a mix of, you know, 50-50 depending on the conference.
Can you talk about why you pick passive, over active in this space?
Travis Watts 23:14
Yeah, I think there’s a lot of advantages to active but for me, it was just a time constraint. I just didn’t have the time to dedicate to it. I set out to do 50 or 100 single family homes. That was my goal. And I quickly realized after 6,7,8 homes, whatever it was, that all of a sudden, it’s a part time job and it’s about to turn into a full time job. And so that was not very scalable. And yes, I put it you know, property management on site and all that, but it’s still not scalable. In my opinion, I still had to keep track of all the receipts, I still had the same issues that would that would come up and then HVAC unit blows up and there goes your cash flow for the whole year. And so you’re making no money out of it and I just got so fed up and frustrated with with that process and and not to mention, I definitely have to point this out. I wasn’t good at it. Like I had to look inward and be like, hey, there’s people around me doing this like three times better than I am. You know, here I am flipping a house for 25 K and someone over there is making 150 K. It just wasn’t my thing. I’m not a handyman. I don’t like dealing with tenants, you know, so I had to contract everything out. It got very expensive and it was just a headache. So for me and for a lot of working professionals, Doctor, dentist, lawyer, Attorney, engineer, software sales there. These are the types of folks typically that are doing syndications like I do as a limited partner, I’ve just been very grateful that I was able to eventually get to the point where I could do that full time. So now I consider myself just full time limited partner, investor. So that’s that’s a whole different world that you can break into overtime.
So now you you work for Ashcroft Capital as Investor Relation person?
Travis Watts 25:02
Yeah, exactly. So earlier when we were talking about loosely on just financial independence and whatnot. So what the whole deal was was I got the benefit of leaving the oilfield job a job I despised and hated and wasn’t good at in the whole deal to pursue more meaningful work.
Travis Watts 25:18
One of the first things I did is I went to go work for a large brokerage firm will say, I don’t know if I should put their name on the podcast, but anyway, and so I you know, I got a series 7, series 63 I got license and, you know, it’s like stocks, bonds and mutual funds. I was thinking, Man, if I could learn the paper asset world and then I could learn or I already kind of knew real estate and I could combine the two, I would just be this you know, financial guru, so to speak, that was kind of my mindset.
Travis Watts 25:46
It really didn’t resonate well with me. I didn’t like that industry at all. So you know, I left like a year later. And then I went to go work for syndication firms just to learn kind of from the inside out how this whole process works and all that kind of stuff. And then so so my affiliation here with Ashcroft, I do a lot of live events for Ashcroft. And so yeah, it’s investor relations in the sense that, you know, I’ll be a panelist or speaker, I’ll have, you know, you’ll find me behind the Ashcroft Capital booth at an event. And I’m just helping share, I mean, I’ve done nine deals with them personally. And so a big part of my portfolio. And so I just share kind of, you know, personal experiences being an investor and kind of just spread the word that way. So, to me, that’s very impactful, it’s very meaningful to be able to, you know, connect people to the right resources and but, you know, I help real estate investors on all levels and on bigger pockets and, you know, I do a blog and it’s a lot about the fire movement or financial independence. And, you know, if someone wants to know how to house hack or or how I did it, you know, I can just share that experience, and that’s very rewarding to me.
That’s awesome. And so, you don’t actually let’s say you don’t work for Ashcroft actively because you just you know doing event sharing your knowledge and talking to people. So you don’t necessarily work with Joe on a day to day basis. But for the investor who is listening to the show if you want to meet the kinds of the likes of Joe Fairless, then the guy that I know works for Joe, John Casmon really good operator, you should definitely go check out best ever conference. And that’s besteverconference.com
Travis Watts 27:27
Yeah, I think they shorten it to bec20.com. Yeah. Okay. So I’d be both but
bec20.com. Now, go back to your job now. Actually, can you tell me what’s a day in your life like now?
Travis Watts 27:45
Yeah, so I like I said previously, I’ve always loved attending conferences, attending network groups, just expanding my network just mingling with folks and just listening to panelists and speakers. I love that stuff. Even if we’re not talking real estate, if Like we’re, my wife and I are going to a Tony Robbins event, you know in March and I just love it. It’s lovely there.
The one in San Jose?
Travis Watts 28:06
Yeah, exactly. Are you going?
No, I’m not. I’m going to another mastermind of someone who was in. Okay, Tony Robbins mastermind.
Travis Watts 28:14
Okay, cool. But so so a day in the life of me it’s chaotic. It’s a I just fly around. I travel a ton. My wife works for an airline. So naturally we travel a lot. Hence where that came from. And so yeah, like I said, you might run into me at an event or be like an Ashcroft booth. You’ll see me there. Just come say, hey, just mingle network, and I do some speaking stuff. I do a few, you know, podcast things. I attend some local real estate meetups, but, you know, it’s just kind of where’s my time best spent and, you know, it’s kind of just a flexible schedule. I don’t have a defined schedule. I’m not a W2 worker or a nine to five or whatever. It’s just sort of, I’m just always on the go. It’s a fluid process.
So then What’s your goal with with all of those events that you go to? What’s your end goal? Looking for more deals more connections?
Travis Watts 29:08
Yeah, good question I intend on always being a passive, limited partner investor, I found it just to be a great risk reward type of investment. And I just don’t want to go back to being active again. I don’t want to go flip a house, I don’t want to go do my own deal and be a general partner. I just don’t. And so yeah, I don’t know. I’ve done what 27 deals that hopefully in the next 10 years, I’ve done, you know, 100 deals, and I just want to stay on that path and have the flexibility and the freedom to travel. And, you know, we’ll see kind of where where my wife’s career goes, and when she wants to kind of pull the plug on that and then who knows.
So now you’re waiting on her.
Travis Watts 29:52
Well, she loves her job, and it’s great. And I mean, she works with a tremendous team and it just it doesn’t feel right to quit. I mean, she could if she wanted to, but so yeah, we’re kind of in this hybrid space where we’re both kind of doing our highest and best and helping people. And you know, we’re surrounded by a great team. And so it’s just a good place to be. So it’s hard to say, I really don’t know. But I know I’ll stay passive as an investor. I know that.
That’s great. What are you most excited about right now?
Travis Watts 30:23
Oh, you mean besides of the best ever conference? Shameless plug.
Travis Watts 30:30
I am most so we’re about to go to Costa Rica, just after the Tony Robbins and then we’re looking at going to Bali, Indonesia, maybe later in the year. So I just I love travel both of us we just were fanatic about travel and just love experiencing different cultures and different food and just getting that kind of experience. So other than you know, of course, I mean, truly and wholeheartedly. I love helping people on a daily basis. That’s so true. That’s above all in any form or fashion. And that’s just how my day unfolds. People set up calls with me and we talk about whatever they want to talk about. Usually it’s real estate. And then sometimes we get sidetracked on the travel. But yeah, that’s what I’m excited about helping more people expanding a reach connecting people with the right folks in the industry, and experiences.
So let’s say in 10 years, when we’re when you’re done with all this investing, you’re having massive amount of cash flow coming in from your passive investing. What do you want to do at that point, then, say your 10 year plan? What do you see yourself going?
Travis Watts 31:40
Well, you know, we’re right at the point my wife and I, where we don’t have kids, but it’s coming and so we’re not going to wait too late, too late. And so it’s so hard to predict that stuff, you know, or I mean, are we gonna have one kid 234 I don’t know where we gonna live don’t know. You know, are we going to live here domestically or internationally in 10 years, I don’t know. So it’s just literally impossible to say. But I can say that we’re loving kind of what we’re doing now. And so no crazy changes in the immediate future.
Don’t I mean, it’s an awesome, awesome lifestyle what you guys have right now, I mean, it should be the goal that everyone should aim for, is to be like you and be able to just go to conferences or do whatever you want just travel, do anything you want in the free times, and then still have that cash flow coming in. And that’s the beauty of being a passive investor.
Travis Watts 32:37
Exactly. And I’m a big advocate for financial independence, whether we’re talking the fire movement, financial independence, retire early, or whether we’re just talking financial independence. I mean, I’d love for everybody in the US to reach that point sooner than later. And you can go you can build that through a multitude of different models out there. The best one that I found for us has been the syndication model. But the whole thing behind it is, when your passive income exceeds your living expenses, you now have freedom to quit your job if you want to quit, or take more risks and your job in a good way, and kind of be a little more outspoken and make a difference there, you could switch to part-time work, you could travel more, you could spend more time with family, you could be more creative and get more into art, you could be more charitable, you could launch a charity, that all these kinds of things. I mean, you look at like, just to use a public example, like a Bill and Melinda Gates, they’re running the Gates Foundation, you know, that’s what that’s their life purpose. That’s what they still work full time. But they’re choosing to spend it on something impactful and meaningful instead of just logging in to the office of the cubicle and doing the grind and then you know unwinding over the weekend.
So then I see a future in the Travis and Angelica foundation.
Travis Watts 34:04
There you go. There you go. Yeah, absolutely, man. I mean, what like, you know, there’s different thresholds, right. There’s like when you barely pass financial independence, then there’s like when you have a little bit of margin past financial independence, then that’s like when you really hit the wealth and impact stages of financial independence. That’s often where that comes from. And, yeah, for anyone pursuing this path, I think that’s very possible.
Is there any things that they should pay attention to right now, before they go into a deal, besides the things that we talked about so far? There, and what did I leave out? What’s the most important thing that you think I left out?
Travis Watts 34:46
I think what’s on a lot of people’s minds right now is where we’re at in this economic cycle, right? You hear so much about the stock market and how we’re at all time highs and how we’re in the longest Bull Run and all this kind of stuff and What does this mean? For real estate? What does it mean for stocks? What does it mean for bonds? So you know, this stuff, it takes some research and there’s, you’ll hear 1000 different opinions out there whether you know, what’s what’s about to happen next, nobody knows.
Travis Watts 35:15
But the reason I like value add B class multifamily, sometimes C class and the reason I like self storage and the reason I like ATM investing, it’s I don’t want to say it’s uncorrelated to the market, because that’s not true, but it is a lot less volatile, a lot more predictable. And a lot of these deals that we’re buying, we can look back if the sellers got the financials, we can see how the property performed in 2008 2009. And you will see in multifamily specifically, there’s usually just a slight downturn in occupancy, but I mean slight I mean it like let’s say it was 95% in 2006, and then it was 88%. In the Great Recession, ultimately, you know, your breakeven occupancy might be 60 or 65, or something. So it’s a fairly conservative play at the end of the day. It’s workforce housing, it’s affordable housing, its middle income housing. And I mean, I think we all agree that’s highly in demand, you can’t afford to build new product, and then go charge 800 900 bucks a month and rent, you just can’t make the numbers work. So this inventory is limited. And so yeah, I don’t know. I mean, you can’t change that, you know, until cap rates are 1%. I mean, there comes a level where there’s too much risk involved. But I still see opportunity today, even if we’re heading into recession. So something to be aware of think about risk, obviously, that’s very important. But to me, it’s like, you know, I could go buy an index fund and it could lose 50% in the next downturn. And in my opinion, that’s less Likely, you know, in an asset, like affordable housing or self storage.
Yeah, the end of the day, you still have to live somewhere.
Travis Watts 37:06
Yeah, I mean people do and the thing is, you know you so there’s different classes of multifamily, A, B, C, D. A is like luxury, new build high end amenities, highest rents, best neighborhoods, lot of those folks in a recession, lose their jobs, take pay cuts, whatever. They’ve got to move somewhere else. So they’re moving down to a B class product. And in some of Bs are going into Cs, but at the end of the day, yeah, there’s always a demand for mobile home parks, cell storage and affordable housing.
Awesome, Travis. Now, before I let you go, I have just one last questions. I know we’re short on time here. Just one last question before I let you go.
Travis Watts 37:49
What’s something that you’ve said no to and your life is now better because because of it?
Travis Watts 37:56
Wow. I have said no to Investing and things I don’t understand or know, an example of that I had a buddy who was investing in the crypto space. And I don’t know, it’s like when I didn’t follow it too closely, but it was like he wanted me to start investing in it when the Bitcoin was like it. I don’t know, 16 or 18,000. And then like a week later, it was at 10 or something. And so, and I had a lot of liquidity at that time, and I’m so glad I didn’t take that advice, because it would have been an immediate 40 50% drop. So invest in what you’re comfortable with and what you know what makes sense.
Oh, my God, you dodged that bullet, huh?
Travis Watts 38:39
I did, man. It was tempting, because I’m like, you know, nobody knows. Right? It’s so new and but, man, yeah, I did dodge that one.
Good job, man. Well, thank you so much for your time. Travis. I really appreciate you coming on and share your knowledge with the audience today.
Travis Watts 38:56
Alright Vee, Thank you. Appreciate it, man.
That’s the end of the show. Don’t forget to subscribe leave a five star rating in the review on iTunes for The Real Estate Lab Podcast. Until next time, have a prolific week.
Be sure to check out other episodes from the Real Estate Lab Podcast.