Aileen: [00:00:00] thank you, everyone for joining today’s episode of the, How Did They Do It? Real Estate podcast. We are your hosts, Seyla and Aileen and today’s guest we have Travis Watts. Travis is a full time passive investor, and he has been investing in real estate since 2009 and multifamily single family and vacation rentals.

He’s also the director of investor relations at Ashcroft capital and dedicates a lot of his time to educating others who are looking to be more hands off in real estate. Please welcome Travis Watts. How are you doing today? Travis?

Travis: [00:00:28] Awesome. Seyla And Aileen, thank you guys so much for having me seriously. I know I already said that, but thrilled to be here. Really.

Aileen: [00:00:34] Thank you so much. We’re really excited to have you on our show today, too. And thanks for making the time for us.

Travis: [00:00:39] You bet. You bet. 

Aileen: [00:00:40] could you also please tell the listeners a little bit more about your background and your real estate journey?

Travis: [00:00:44] Sure. Yeah. Happy to, when I usually go into a background it’s pretty logistical and as a timeframe, but I want to take that kind of at a different angle if you’re okay with that and talk a little bit about the freedom of time and the freedom to give back. Those are the two things that I was really lacking and missing in the beginning of my journey. So just a couple of quick bullet points, just to paint the picture. I started investing in single family homes while working in oil field jobs.

So 98 hours per week at a w two job that’s. 14 hour days, seven days a week. So you can imagine trying to be a real estate yeah. Investor under days off. and, you’re weekends, which I didn’t really have, in addition to holding down a job like that. So after doing that for about five years, I completely burned out and I had to find a way.

To become passive with real estate to get the same benefits in terms of, appreciation cashflow, tax advantages, the things that we all love about real estate without being in the business of real estate and tying up more of my time. So that was my pursuit was this freedom to free up my time.

 In addition, we all give back in different ways. And one of my favorite ways to give back to others is by actually giving my time. So by actually helping them people, whether that’s like physically helping somebody or just hopping on a call with somebody or friends and family and stuff like that.

 Another thing I severely lacked in my journey of single family. I had, I didn’t have the ability to do that. I was always at work. I worked in the middle East and overseas and I’m away from home and it was just all too much. that was the other thing that I was pursuing. And after figuring out how to free up my time through passive income and passive investing allows me now today.

 To give back my time to others, to help others along their own path of, in pursuit of passive investing. So, uh, kind of a chunky, you know, reiteration. I didn’t really prepare that, but that’s my journey in a nutshell, I guess.

Seyla: [00:02:38] thank you for sharing that information. when you first started investing in real estate, at the beginning, what were the first steps that you took? And how did you prepare yourself to make that move?

Travis: [00:02:48] Yeah, I had some money saved up, that was actually supposed to go to college, but I was just so against spending money on college and going into debt over college. So, uh, thankfully I ended up with a scholarship slash I cut it short because I knew it wasn’t right for me in the get go.

So I did a couple of years there and I thought, okay, I gotta do just gotta do my own thing. Just got to get out there and try some stuff. so I had a little nest egg. A lot of fear, not a lot of mentors, not a lot of education,  nobody around me was really doing this stuff, but this was in 2009.

 So as many of your listeners, know and you guys are well aware. I mean, 2009, I mean, the economy had crumbled real estate. It was crashed and it was a crazy time. And we didn’t actually know that we were at the bottom.  Uh, you know, in hindsight, a lot of people tell me, well, you gotta start at the perfect times.

ah, yeah. You to let yourself in my shoes back then it wasn’t the optimal time. Most people would have said, you’re crazy. Don’t buy real estate. What are you nuts? And, I’m looking, I had to run the numbers for myself, I just wrote a longer, more detailed blog on this the other day, but I felt ready personally to get started in real estate because.

I’m sitting here looking at a project or a house, I should say, a two bed, one bath previously installed for 165,000. Today. It’s on the market for 95 in 2009. The government’s giving out an $8,000 tax credit for first time home buyers, and I’m just adding all this stuff up and thinking if I don’t get started now, when do I get started?

just wait for the perfect  opportunity to unfold. So I just took the first step that way. Did some house hacking running, the spare bedroom out. And that’s where the concept of passive. Yeah, because I’m really started to create itself was, someone’s handing me a check, which is basically paying for my mortgage and I’m like, Wow.

I got to scale that up and do a hundred of those. So that’s what inspired me to keep going, I guess.

Seyla: [00:04:32] so at the time, did you, actually educate yourselves and read any books or how did you come up with that aha moment. It’s Oh, this is a good time, so I’m going to just start investing in real estate.

Travis: [00:04:42] Yeah, good question. The only book I had read before, all of that was Rich Dad Prophecy. So not Rich Dad, Poor Dad. A lot of people attribute that as their like gateway a book into real estate. But Rich Dad Prophecy was a silly book, but it’s just, all it really taught me was don’t be in the stock market.

That’s it. So I thought, okay. Okay. It’s about the only advice. Yes, I took, so I got into real estate and then I kept reading that series for a while. I attributed some of the things out of there to, the crash and me staying out of the markets and, props to Robert Kiyosaki.

Maybe it was dumb luck. But, and then to answer your question, I have always been a reader, but not. A big reader until about 2015, a lot changed in my life. in terms of self-education and mentors and groups and leveraging others, people. I was probably reading one or two books a year, real estate related or otherwise, but, But yeah, like I said, I didn’t have a big circle or network.

My dad. Yeah. And my step mom had a couple single family rentals, nearby, but, but that was about it. Very small scale stuff. I don’t really think that’s what inspired me to get started at all, but, certainly helps I guess, to see it. firsthand. yeah, that was the humble beginnings of that. leading up to my complete burnout in 2015 and the big pivot that happened.

Seyla: [00:05:56] That’s great. So in 2009,  how many, single family homes did you purchase at a time?

Travis: [00:06:01] Yeah, I started with just the one, ended up making that a full time rental and I moved out of it. I tried numerous things from, short term rental stuff to having to, roommates, sharing the place and a lot of trial and error.

And then I got into, I did some,  flips, so those are always turning over. And then what I was doing is purchasing owner occupied homes that I would live in. And then I would house hack them, rent the spare bedrooms, fix them up. As fast as I could. Cause they were usually a little bit, distressed if you will.

And a lot of them were bank owned and stuff like that. Yeah. And so it was just crazy active with like, think of it that way. I guess if nothing else, I was like, I went from being the most active I could possibly be at the time and real estate to as much passive as I can possibly be now. And so it’s I guess I’m an extremist in that case.

I try not to be an extremist, but I guess I so.

Seyla: [00:06:53] So do you invest any other asset class, besides of single family home?

Travis: [00:06:57] Yeah. yeah, and even today I’ve got 80% of my investing portfolio in value, add multifamily apartments, but I still, that 20% is invested in all kinds of crazy stuff that produces a passive income ATM machines, first lien notes, self storage, distress debt, all kinds of different asset classes.

So to me, it’s really about the concept of being a passive investor, the ability to actually, make money while you sleep, be hands off, leverage other people’s expertise and to build up enough passive income to where you’re exceeding your lifestyle expenses. And that’s a beautiful thing, and it’s really not about money.

And I talk about that quite a bit. And a lot of my content it’s. Really freedom of choice, right? when you have more passive income than you, of living expenses, it gives you the freedom of choice to go part time with your job or pivot and switch careers or retire early, or travel, or spend more time with family.

Everybody has their why and their reasons, the classic question. What would you do with unlimited money or someone puts a billion dollars in your bank account. What do you do now? it doesn’t have to be a billion dollars. it’s much more achievable than that, but it’s just the idea of, of that pursuit of what would you do with your time and with your life otherwise.

So that’s what it’s all about for me. That’s the concept of passive investing.

Seyla: [00:08:15] And, you mentioned that 80% of your portfolio right now is in multifamily. why multifamily investment?

Travis: [00:08:22] Yeah, good question. A few different reasons. I’m big advocate for just investing primarily in what you understand and  what resonates with you as a person.

So it’s not to say that multifamily real estate is the only way to go and it’s the best option in the world. It’s just what I know and understand. Stan and have come to research and read a ton of books on and have a lot of people in my network doing that. And it just makes sense. I did so much research in 2014, 2015, 2016 on kind of the why multifamily.

And it just made a lot of sense to me, but yeah, for anyone else out there that’s an expert in day trading stocks or any other kind of asset class, go for it. If that’s your thing and your, and you. Fully get it. Cause I don’t get it and I’ve dabbled in that stuff. I’ve just always lost money in it and it just.

I, it doesn’t make sense to me. that’s why, just research mentors, back-testing through recessions in the past. Obviously we know what happened to single family in Oh eight Oh nine, 2010. But what happened in multifamily? A lot less of a default rate, a lot more diversification, less properties losses.

And so I’m always looking for that recession resistant asset class. There is no recession proof, uh, asset class or COVID proof, but you know, you can be a little more conservative, I think, in your investing approach.

Seyla: [00:09:41] so as a passive investor.  if someone tried to invest, to get into multifamily investing, can you walk, our listeners?  how’s that gonna work?

Travis: [00:09:50] Yeah, sure. and again, to me, like really wholeheartedly, if we zoom out, it’s just really about passive income.

To me, there’s many asset classes, there’s many approaches to doing this. And even for the folks that do like the stock market, there’s publicly traded REITs real estate investment trusts, there’s high dividend paying stocks. there’s ways to get. Passive income. And in other ways, but specifically multifamily private placements, which is what I invest in a lot.

These are not publicly traded. These are private offerings, right there is going to be an LLC or maybe a limited partnership. You’re buying shares. Privately where there’s no publicly traded market there. So it starts with establishing relationships.  no matter how you go about doing it, bigger pockets, forums, email, just calling up different syndicate groups you found on Google, joining, conferences or real estate, meetup groups.

there’s all kinds of ways to do it, but at the end of the day, It’s a people business. It’s a relationship business. You got to hop on calls or emails with folks to establish that, to get on people’s lists, to understand what these offerings look like. So it’s a networking type of thing.

Then,  then you start being sent deals. Now it’s really important to know what you’re doing. And in terms of your criteria, what do you want to invest in and why? And so now you’re trying to align your interest and your goals with folks doing those kinds of, offerings. And then from there, you’re having to vet three things really you’re having to that the sponsorship team and the individuals who are actually putting the deals together, the market that they’re investing in, you want to at least know the macro level of that and why you like or dislike markets.

and then also the, obviously the deal. The deal itself, but that’s kinda my hierarchy in terms of what’s most important, in my opinion, is the sponsorship team. Then the market, then the deal. And I completely have that backwards when I first got started and putting way too much emphasis on the deals and just knew enough to be dangerous, but.

Didn’t realize, I guess that the importance of the execution of the business plan, when you’re looking at projected potential returns, the only way you’re going to get there is if somebody can properly execute a business plan, according to what they say, they’re going to do. And if they can’t, those returns don’t exist.

And that was a tough lesson to learn. yeah. Food for thought, anybody listening, that’s the hierarchy. 

Aileen: [00:12:13] you can have a great opportunity, but if you have a not so experienced syndicator, that opportunity can just go South just as quickly and you can have a not so good deal, but an incredible syndicator.

And that could just be like an amazing deal. So totally agree.

Travis: [00:12:27] Exactly. Yeah, there’s always, sponsors are always, ones that have a substantial portfolio are always looking to sell some properties early and it’s because unforeseen events, they’ve got the track record and experience, but they didn’t quite. know, what was about to happen with that property and as it starts unfolding, it’s wow. This is a ton of work and money and cost, and let’s just get rid of it. Let’s just get it off the book. So they’re all very important. But at the end of the day, if I had to pick one it’s the experience of the sponsorship team and their ability to execute the business plan.

 Seyla: [00:13:01] what about the deal itself? Is there any specific criteria that, you have to meet in order for you to, invest in that deal?

Travis: [00:13:08] Sure. Yeah. And a lot of, so a lot of this stuff is easily learned through, books or seminar mentor or what have you, but just to break down a few, the ones that I’m looking most heavily at nowadays, especially in COVID or potential. Recession, whatever you want to say about our economy, our, reversion cap rates, meaning that, we’re going to buy at a particular cap rate going in.

And what I’m looking to see is a higher projected cap rate upon exit, which is just a way of being conservative. The more the margin, the more conservative the underwriting is. The other thing that’s really important is debt leverage. I don’t like to see 80% plus debt on a project to see 75, 70, 65, sometimes even as low as 50, I’m seeing deals being underwritten.

And of course your potential returns go right down because of it. But you’re also. It is preservation of capital, right? At the end of the day, we just don’t like Warren buffet always said, rule number one, don’t lose money. that’s true, right? Forget about returns. If you’re losing your capital, breakeven, occupancies, and another one, that’s very important, those listening, you know.  If you had simple example, a hundred unit property, 70%, break, even you can lose 30 tenants, given any bad situation is still be profitable or at least breakeven. So that’s important to know. Don’t like to see these high breakeven points of, 85% occupancy, things like that. It’s easy to get in trouble with things like that. Yeah, conservative, underwriting at the end of the day, like I said, there’s, there’s, there’s, great ways to learn that stuff.

And I’m happy to be a resource for anybody who’s listening. If you want to reach out, I point you in the right direction or send you books or PDFs or something, it can be, it can literally be like a two or conversation. So I’ll just cut it short with that. And there’s a few tidbits.

Seyla: [00:14:51] Do you have any tips or tricks where you can share with our listeners, how to get started, how to, manage your finance and get ready to invest in real estate. ?

Travis: [00:14:59] Sure.  Yeah. So talking about molds, the family and syndications and private placements.

There’s two approaches. You can be active, so you can put your own deals together. Be a general partner. You can get out there and raise capital, obviously a lot more money potential to be had in that. But of course sacrificing your time and your effort and your ability and your network and all those kinds of stuff, building up teams to make it happen,  to be a passive like myself, it does take some capital.

there’s really no way around it. A lot of the minimum investments for these offerings are 50,000. We’ll call it the industry norm. So you can kind of do the math there of how many 50 K’s it’s going to take, given a conservative cashflow to where you want to be. That being said, my nephew is 18 and just graduated and he’s fascinated, to an extent, not as much as me, but he’s fascinated with it, with the idea of passive income.  For him given the amount of capital that he has to work with, we open up a brokerage account and I was introducing them to the concept of like I talked about earlier, a REITs.

And things that buy real estate and, there’s pros and cons here, obviously to the ebbs and flows of the markets and the fee structures and the alignment of interests. At the end of the day, he can literally get stuck for $10. you find a REIT with a $10 per share price, and at least he’s in the game to the point that he can experiment and learn.

whether you’re just doing one deal at a minute investment, 25 K or 50 K or whether you’re doing other things that produce passive income.  I just think it’s a great journey to be on. It’s a great conveyor belt to where you want to go. The faster you can get on this, this passive income generating train the better, no matter how when you approach it, if you don’t have capital there’s options.

And if you do, there’s even more options.

 Seyla: [00:16:42] what is one piece of advice that has helped you to succeed in the real estate investing?

Travis: [00:16:47] Oh boy. yeah, so I network a ton and I’ve got all kinds of people in my network. and one thing that’s common that I hear all the time is that old saying of when’s the best time to get started.

20 years ago. When’s the next best time now. Yeah, everybody wishes. They had started earlier. Everybody. It doesn’t matter myself. I got started young. I was what like 20. but yeah, I wish I could have got started even at 18, which is when my nephew is getting started at 18, and for anybody, older, it’s always the same.

So I guess that’s probably the best advice is,  educate yourself and figure out a way. To get started with passive investing as soon as you can. And, Tony Robbins has a great quote too, that most people overestimate what they can achieve in one year, but they severely underestimate what they can achieve in a decade.

And it couldn’t be more true. Yeah. I’ve been at this 11 years or something like that and it’s just, yeah, it comes faster than you think.

Aileen: [00:17:44] So you mentioned networking. Do you have any advice for, being in this pandemic situation where we can’t really go to all these networking events?

Do you have any advice or suggestions for how we can network efficiently during this time?

Travis: [00:17:57] one thing to recognize all these folks that you would otherwise network. With at a conference, they still exist. They’re still out there. So reach out to them, whether through LinkedIn or Facebook or Instagram or whatever, as far as conferences go, they’re getting better.

The digital conferences are getting better or at the networking component. I think the first thing everybody did is take a pause. Say we can’t do this event. Let’s just put the speakers on a zoom call and we’ll just give the education content. that’s. Half of the reason people go to a conference and the other half is I want to talk to people.

So they’re getting there or there’s better technology coming out. Speaking of Tony Robbins, my wife and I just did a, unleashed the power within event digitally. It was the first one he’s ever done. It was really cool. There’s there was like 23,000 people attending. Partially for the education, but they have these cool things they could do, or they send you into breakout rooms and all of a sudden there’s six people on your screen and you get to network with people all around the world.

It was incredible. It was the coolest thing. So I want that technology everywhere for everybody. And I’m all about these digital conferences in that respect. So bigger pockets and forums like it, where you can network with other people that way. reaching out to folks like myself, it doesn’t have to be me, but just people out in the industry, that maybe are doing what you want to do.

Reach out. A lot of people are willing to give their time to use, especially right now. And, um, I love having those conversations with folks and anybody from the 18 year old to the 75 year old, let’s talk real estate. And I just, I love it. I try to add value wherever I can.

 Seyla: [00:19:29] what has been the highlight of your real estate career?

Travis: [00:19:31] The highlights, it like in a cheesy, but serious way. It’s right now because. I’ve never been big on like social media and putting out videos or blogs or content, but since COVID, I’ve really just gone full force with it, you know, as much as I can possibly produce and push out. And it’s really cool because it, it was totally just.

Fell on my face is what it felt like after about three weeks, I thought, God, this is a ton of work and nobody’s responding to this stuff. Maybe it’s just not resonating, but after so much content gets out there. Now I’ve got folks reaching out left and right. Oh, I heard you on this podcast. I saw that video.

You did. Oh, I love that blog you wrote. And it’s really cool. And now the networking’s coming back. So as I said earlier in our call, how I like to give back is giving my time back and helping others along their own path. And. Finally able to do given this crazy pandemic and then hopefully this all passes and I’m back to, conferences and speaking events and in-person gatherings.

And hopefully leveraging both. I don’t want to just be an extreme on one side or the other. So I guess that’s my long winded answer.

 Seyla: [00:20:35] what tools or techniques have you used to improve the efficiency of your business or your personal life?

Travis: [00:20:41] Yeah, one thing I do. So what’s really cut the learning curve.

The most is having a mentor or a coach. And if you there’s two ways to look at this, if you have money to hire them, you can of course do that and that’s effective and that works. That’s great. But if you don’t. You can add value in some way to the person in exchange for some mentorship, or you can find mentors through books and through reading and through YouTube videos and podcasting obviously, and something I learned, I don’t even know where I learned this, but around 2015 was.

being such an advocate for self-education, I will take what I will study. Let’s say five or six, quote, unquote gurus or people that are just active in any particular area. And I will listen to their philosophy and their takeaways and their best advice. I will try to link together the commonalities.

And try to kind of form that into my own philosophy, right? Cause everyone’s going to have an opinion on everything. And a lot of people differ on this, that and the other, but the things that are common, are the things I really tune into,  part of what led me to multifamily real estate or passive investing and things like that.

And for those that are listed, like, uh, what’s his name? Tim Ferris. He just wrote a book, a tribe of mentors. And this whole book though, the concept is so simple. he took 11 questions, what’s your best advice for boom. And he sends it out to the most influential people in his network, CEOs, business owners, gurus, whatever.

And so then you listened to this book and it’s that concept. You start hearing people’s responses and answers to all these and you start hearing commonalities. you’ll hear a book mentioned 10 times. I got to buy that book. Obviously it’s a good book,  but if you just listen to one person. They might lead you down the wrong path.

Maybe it’s not a good book. So that’s just my personal take on it. So that’s a technique, I guess we could say that’s really helped out.

Aileen: [00:22:32] Oh, that’s a great, thank you for sharing

 So if our listeners wanted to find out more about you, where can they go to find out.

Travis: [00:22:38]  Yeah, sure. There’s a just disclaimer here.

I don’t sell anything. I don’t raise capital, but I do have a landing page, which seems like I would, but you can get a, a 20 page PDF download it’s called Understanding Real Estate, Private Placements. It’s not a sales pitch to a book or a program or anything. It’s just. Free download.  It’s what we’re talking about, but in way more detailed industry terminology, how does that market sponsors teams all that?

 You can get that and, or you can set up a free 15 minute Q and a call with me, which is how I’m networking right now. And what I love to do, it’s my passion. And if you want to set up that free 15 minute call. And or get the guide at Ashcroftcapital.com/connectwithTravis. So Ashcroftcapital.com/connectwithTravis.

They’re both on there. Do either one or neither, but that’s probably the best way to reach out to me. I’m all over the internet at this point. So you can, Instagram and Facebook are, at passive investor tips. So I try to put out a lot of blog, content and video stuff there. If you just want to passively follow, the philosophy and things I share, feel free to reach out that way too.

Aileen: [00:23:46] Awesome. Thank you so much. I’ll definitely put that in the show notes.

Travis: [00:23:49] Awesome. Thank you.

Aileen: [00:23:50] All right. Thank you so much, Travis. We appreciate your time.

 Travis: [00:23:53] All right. You guys as well.