Anniversary Episode: Perspective of a Passive Investor
On this episode of Next Level American Dream, Abigail and Sean are joined by Travis Watts. He has been investing in real estate since 2009 and is now the Director of Investor Relations at Ashcroft Capital. In his interview, Travis talks about how he approaches investor relations and passive investing in multifamily.
Key Topics
What was the inspiration behind wanting to educate on passively investing in real estate?
Have you considered actively investing in real estate?
What are some things you've learned?
What are some things that you look for when investing in syndications?
Connect with Travis Watts:
-
SUMMARY KEYWORDS
investing, work, people, money, Real Estate, partner, finding, Multifamily, investments, deal, educate, buying, business, Travis, American Dream, understand, limited, podcast, point, book
SPEAKERS
Sean Thomson, Abigail Thomson, Travis Watts
Abigail Thomson 00:01
Welcome to The Next Level American Dream Podcast brought to you by Thomson Multifamily Group. Your hosts, Abigail and Sean, will discuss how you can take your American Dream to the next level, through real estate investing, business practices, and personal development. Join us as we share our experiences as a father daughter duo who are trying to accomplish our goal of financial freedom. We hope you learn more about how to define and achieve your American Dream. Here's another episode of Next Level American Dream. Welcome to The Next Level American Dream Podcast. We have a great episode for you today, but before I introduce our guest for the day, I want to take some time to ask you to subscribe if you haven't already. Also, please like, comment, and rate and review on your favorite platform. Today, Sean sat down with Travis Watts, a full-time passive investor. He has been investing in real estate since 2009 and is now the Director of Investor Relations for Ashcroft Capital. In his interview, Travis talks about how he approaches Investor Relations and passive investing in multifamily. If you learn something from our episode today, please recommend it to a friend and help us grow. For more information on our sponsor, Thomson Multifamily Group, visit thomsonmultifamilygroup.com, to start taking your American Dream to the next level through passive investing.
Sean Thomson 01:28
Hi, Travis, thanks for coming on next level marketing podcast with us How you doing?
Travis Watts 01:32
Sean, I'm doing great. We had a lengthy conversation before this, feel like I already know you, and I'm excited to get started!
Sean Thomson 01:39
We did that just let everybody know, we did a full a full podcast and I forgot to hit the record button. So, we're going to we're going to do this again, we're going to probably make it a little quicker. Travis is busy man. He's got a lot going on. So, we're going to go through this a little bit faster, but we'll still cover the same information. Well, thanks again for us. I really appreciate you doing this the second time today. And tell us a little bit about I know you're the investor relations director for Ashcroft capital. Now, what is it? What was the path you sort of took to get to this place now?
Travis Watts 02:08
Yeah, great question. So, I'll give you a kind of a different take on I'll come from the real estate background of it. So, I was a guy that got started in 2009. And single-family homes and did a lot of different active strategies did house hacking and renting spare bedrooms that led into fixing flipping properties that led into vacation rentals and single family. And, you know, buying owner occupied homes, fixing them up and selling them two years later, and all these kinds of things. And meanwhile, I had a W two gig in the oil industry where I worked 14-hour days, 98-hour work weeks, you know, out of state overseas, it was a lot a lot going on. Thankfully, at that time, I you know, I didn't have kids or family or any other people in my life to report to, so it was just me trading time for money. And from 2009 to 2015. That's kind of where I hit a hard stop, because I realized this wasn't going to be scalable in the way that I had hoped it would be meaning I naively just thought I would get to maybe 100 single family homes, that would be my ultimate goal, I would just retire off that. And that's the end of the story. But not even 20% of the way there and I was completely burned out on the time commitment. And the oil industry, quite frankly, had a lot to do with me burning out just being in an industry I'd probably shouldn't have been in and didn't enjoy, didn't like. And it was really just the hustle and the grind. So, what did I do, I ended up selling off my single-family homes, I ended up going completely liquid, I ended up finding out that I could actually be more passive in real estate by being a limited partner and apartments syndications where I could partner with groups that were experts in what they do, and genuinely had an interest in what they love? And I could just be the limited partner aspect of that kind of the silent partner, the money guy. So, I started diversifying that way and just, you know, putting all my money in small increments over a lot of different deals. And that cash flow that I received in return from those investments allowed me to leave the oilfield job. And when I did that, I didn't really know what I wanted to do. But what I ended up doing first is going to work for a brokerage house where I learned stocks, bonds, mutual funds, and the paper asset world because I thought, I don't want to just be, you know, a black and white kind of guy. You know, one solution is the only solution. And I wanted to really stack up the whole spectrum of investing to see what really made the most sense. And as it turned out, to me anyway, real estate made the most sense. And so, I didn't last very long in that career. So, I went to go work for a small syndication group. just getting started kind of built out their Investor Relations team. That's all I really could bring to the table at that time, it was a limited partner. And that was my only credential in the space that later led to investing with Ashcroft capital and Joe Fairless. That led to me, coming on board in 2019, as their director of investor relations, as you pointed out, where now I can help educate, and speak with investors all across the nation, about apartment investing and about private placements. And since that is my, my true passion, at least right now, or one of them, I should say, you know, I'm fulfilled in that I'm very happy and honored and grateful that I have the ability to reach people on that kind of level and speak to things that I love doing and being on a podcast like this. So that's kind of my story on the real estate side. In a nutshell.
Sean Thomson 05:53
Yeah, great. Well unpack all that as we go through the questions here. But I want to start with, since you are the director of investor relations, you deal with a lot of different investors with a lot of different interests, a lot of different goals in mind. Talk to a little bit about what, when people come and talk to you, what are they looking for, in terms of the investments that they're going to do? What are some of the things that you find that they feel most critical in doing their investments with, with their real estate business?
Travis Watts 06:22
Yeah, that's a great question. So, Ashcroft capital specifically works with accredited investors only. And that's because of the type of offering they do called a 506. c offering. So, it's just an SEC regulation, that we can only accept accredited ambassadors. Why I point that out, is because I'm mostly working with high net worth and high-income individuals sophisticated already in real estate. And again, just I'll caveat this to that's just the Ashcroft capital side as director of investor relations, though, those are the conversations I have in in that bubble. Now I also educate I do most of my educating actually, on an individual side. So just coming from the perspective of I'm a limited partner myself with a bunch of different groups and a bunch of different deals, and just helping paint the picture of what this industry is all about to non-accredited and accredited investors from that perspective. So, to answer your question, a lot of people understand real estate fundamentally, we understand that you know, what leverage is and putting debt and a mortgage on a property and having a tenant move in and pay rent. And, you know, we can all see that. When we do a value-add project, and we renovate the units and landscaping and the branding and all of this, that we increase the value, we increase the rent, and therefore the property hopefully is worth more years later than it is upon the day that we bought it. So very simple business model. What I try to help educate on, though, are just the few missing pieces that some folks may not, you know, be familiar with, you know, what is a ppm private placement, memorandum? subscription agreement and operating agreement? What about this scenario? What about that scenario? What about COVID? What about, you know, so I'm trying to kind of fill in those small missing pieces, to paint the picture of, you know, a private placement and what that is and how to invest in those. And so yeah, it's mostly real estate, people with a real estate mindset, just maybe looking to switch over from single family to multifamily, or perhaps a doctor, dentist, Lawyer Attorney that's very career focused, and just is looking to park some capital outside of their 401k or their IRA in a in an alternative investment besides Wall Street in the stock market.
Sean Thomson 08:45
So most everyone you're dealing with already has sort of a fundamental understanding of the real estate space. And they're just like you said, they're looking to diversify their investment capital from stocks, bonds, mutual funds, or whatever they're invested in. Now it does support nontraditional investments, and syndications is one of the ways they do that. And so, you're not finding that there that you have to educate them a great deal on the basis of real estate, but their concerns are sort of market concerns at the moment to COVID, things like that. The rent moratoriums or eviction moratorium. So those are those are kind of some of the concerns that people have at the moment.
Travis Watts 09:22
Yeah, exactly. Especially the COVID. Of course, a lot of concern there. But additionally, you know, it's election year, some people are on pause because of that civil unrest, things happening, and there's a lot of factors and so how does that pertain to multifamily or, more specifically, you may understand apartments or single family or real estate, but what you may not understand is why breakeven occupancy is important why having a higher exit cap rate may be important in the underwriting of a deal, things like this. So, there's a lot of you know off the wall questions like that, and it really comes down to the individual their risk tolerance. They're goals and whether or not this type of investment is even appropriate for that person. And I would say in a great deal of cases, it may not be just because they are illiquid. And, you know, if you really don't understand this sector or real estate, it, you may be taking on risk that that's unnecessary, perhaps. And, you know, the last thing you want to do is invest in things that you're uncomfortable with that you don't understand where your money's locked up for five to seven years, that's probably not going to be a great thing for you. So that's what I help educate on. So, people have a better understanding, and a fuller, broader understanding of what this stuff is and how it works.
Sean Thomson 10:38
Yeah, sort of a soup to nuts, sort of education on just the basics of how the syndications work. So, people make sure they're in the doing the right thing. Right. So, let's talk about let's talk about the difference, or I guess the relationship between someone that's coming in and investing in a limited partnership. And the general partnership, I guess, fundamentally, you have an operating group and an investing group. And a syndication, if you if you don't mind sort of run through how those two are different and how they work together to achieve a common goal.
Travis Watts 11:09
Yeah, exactly. And, you know, one of the fundamental reasons that that I chose private placements and multifamily in the syndication is because in my days working on Wall Street, so to speak, there really was no alignment of interests. And what I mean is that that co investment model, you know, where I can call, you have Shawn directly and as you are being a general partner, and ask you questions about the underwriting, or why you're making a decision this way, or why the business plan says that or what this means, or, you know, get it get a better idea on my monthly update of what's going on. I like that, that partnership, I like that relationship aspect. And when you work on Wall Street, it's like, you know, here's a bunch of mutual funds and go push those out to the world, whether or not I myself, believe in them, whether or not I invest in them. That's just kind of how the model works, you're not really taught a lot on investing from an individual standpoint, why you would do it and the ins and outs, you're really taught about how things are structured, what fees they have, and then, you know, go get people to buy them. So, I really fell out of love with that model very quickly. And I really to answer your question more specifically, this of the general partners or the folks going out there, finding a deal, underwriting it, walking the units, putting together the business plan, putting together the legal docs, assembling a property management team, or perhaps they do that in house and they're vertically integrated it and then attracting the capital to the project to close the deal and have a renovation budget and all these things depending on what type of business model you're doing. And that that funding primarily is coming from the limited partners like myself, usually there's a co investment where the GPUs are also putting their own money in the deal. But most of that money is coming from the limited partners who, you know, like I said, in my experience, when I was doing the active stuff, I just didn't have the time to go dedicate, you know, to doing all this active real estate and or being a general partner. And there's so many folks, as I pointed out the doctor, dentist, lawyer, Attorney, pro athlete, business owner, a lot of people are career focused or focused on whatever it is they do, maybe it's even, you know, charity work or being retired and they just don't necessarily want to get their eye off the ball, so to speak. So, they're willing to go partner with a team, who's going to do kind of the legwork, so to speak. And then they as a limited partner can participate, and the cash flow and the potential equity upside and those types of things. So, it really is a business partnership, as a limited partner, what you're really doing is making a bet on the sponsorship team in their ability to execute a business plan, you know, I'm being presented this plan that these are our projected numbers, we think we can get this kind of cash flow, we think we can get this kind of equity, we think we're going to hold it about five years, we think we're going to renovate 100 units. I'm weighing that up, weighing it against the track record experience, the ability of that team to actually be able to do that. And if I feel like that's got a good chance of happening, then I'm likely to invest in a deal like that. If they're brand new, never done this before, and they're buying some 1000-unit property that's a super heavy value add, it gets a little scarier, and the risk goes up and I may not participate in a deal like that. So, it's really about aligning a business plan with a general partnership. And it's a great ying and yang between LPs and GPS.
Sean Thomson 14:52
Yeah, I had a couple thoughts just while you're while you were talking there. I it struck me that the way you would invest in apartment business these days, is how you used to buy stocks, you know, 30 years ago, 30 years ago, you would buy a Coca Cola, and you would hang on to it until it just continually grows. You're right. So, you’re buying Coca Cola, because it was a solid business run by solid people doing solid things, right. And it's not like that anymore, the stock market doesn't operate that way anymore, you still have to invest in solid businesses and, and you're still looking for those things. But the market has fluctuations and volatility that have almost nothing to do with how successful the business is anymore. You know, on a micro level, I guess. So, it's almost like investing in apartment operations or syndications. Like this is like buying stock from 30 years ago, that's just a thought I had, as you were talking, explaining that. And then the second thing was, being a limited partner is it does take some work on your, on your behalf, right? It's not completely passive, it we call it passive, but it's not completely passive, you do have to educate yourself about the fundamentals of real estate. And you definitely want to educate yourself about the fundamentals of the deal you're investing in. The beauty of that, I think is that you have a very close relationship or close contact with the people that are going to operate that business that are putting that business together. So, it's again, it's like, it's like the old days where you're buying stocks from a company, you can actually get involved with the team and say, Hey, why are you? Why are you kind of making this decision? What are you thinking about this? You know, have you had you considered these things down the road? What's going to happen with that, and you can have those conversations. So, it gives you a different comfort level, I think in placing your money with those general partners and those operators of the business. And I think that's it, you know, it gives you, I don't know what you would call that exactly. But it's almost like you have better you have more control over how you're going to invest your money. And you have different options with different groups, different types of investments, different property sizes. So, there's a lot of things you can control there. And what you're going to decide to invest in, right?
Travis Watts 16:59
Yeah, and we were talking before the podcast, it's, you know, for the folks that enjoy having that personal relationship, we were talking about why people generally like real estate, because it's a tangible asset, it makes logical sense, we can all understand renting an apartment and what that means and how that works. We can understand buying a single-family house and or renting one, you know, but to understand all the ins and outs of investing in a Google or Facebook or Tesla, we were a little less clear on how that works. And to your point, it's so nice, in my opinion to me to be able to reach out to you, the general partner, and to ask those questions and to have that relationship and to be learning and almost involved to a point I may not be calling the shots as a limited partner. But you know, some groups allow for voting from the limited partners. Do you guys want to refinance? Do you guys want to sell Do you guys want to continue holding I mean, that that can be a possibility. But for anyone looking to have more of that hands on, in a sense involvement with you're investing and not just buying some mutual fund that some financial person said to buy, and then trying to hope and pray that, you know, the stock market just goes up forever, you know, different horses for different horses, right? Some people I'm sure like that, and but for me, to your point, the volatility, let's relate it like this. And so, if we're buying a 400-unit apartment complex privately and then attracting limited partners to invest in that and execute this business plan? Well, let's take that same scenario, but put that into a real a real estate investment trust. And let's say that that's publicly traded on the stock market, Well, two things might happen and are likely to happen. Either that rate gets overvalued. So, if you and I go invest in it, we might be paying a ridiculous amount of money per door or per unit to invest in that property where the numbers really don't make sense. And it's really difficult to understand how that would be and why that would be. And number two would be, let's say, we're holding that read. And then some guru comes on CNBC and says, the sky is falling, we're going into a depression, and then boom, we lose 20% of our money on real estate that fundamentally didn't change. We still had great collections. We still had tenants; we still had all these things. Nothing changed on the ground level, yet you and I just lost 20% of our investment and I just can't stomach that stuff. Everybody's different, but I just can't put a large sum of money into that type of model.
Sean Thomson 19:43
Right, exactly. Yeah, volatility is scary. With Wall Street, you have no zero control, really. In real estate, you don't. There's a limited part and you have limited control, other than the decision you make to invest, but at least you have sort of a more I would think it's more of a comfort level of what the business operations are. So, you come from both sides. So, you've actually operated your own business as fixin flipper and sort of on the general, I guess more of a general active partner side, and you've done a limited partner side. Talk to about what it is that makes it more attractive for you to kind of be on the limited partner side as opposed to be a more active putting together deals and things.
Travis Watts 20:23
Yeah, and good point. And just to clarify, so I wasn't a general partner on a syndication, but I did do Vacation Rentals that I independently owned and fix and flips and things. And so, when I speak to a lot, and when I blog about it just recently wrote a blog about self-awareness and the power of just knowing your strengths and your weaknesses. And if this isn't to say that one side is right, and one side is wrong, obviously what it's about is knowing yourself, and then knowing should you be pursuing this avenue or that avenue. So, for me being an LP came from a couple different things. One was me being burned out on the active side. But if we if we dig in a little deeper to why that was, you know, a couple examples where I was doing a fixin flip out in Colorado, it was probably my second one that I was doing. I didn't have a good network of contractors and people to help me I was actually this particular day, this moment I'm thinking of right now. I had my mom come over and help me with whatever she was doing and fixing a window or something. And she yells down the stairs, she says, Travis, can you give me the electric drill? And I thought, I don't own an electric drill. That was like the light bulb. It's like, Wait a second, I'm flipping a house. And I don't own an electric drill. Should I even be flipping a house? Am I even qualified to do this? And one, I didn't enjoy the process, which is why I'm trying to bring people in to help me with it. And two, it just wasn't my strength, that I'm not a handyman, you know, I'm just really not a Hey, I can paint that's about it. And so it was it was that self awareness where I thought, you know, what, people around me are doing this better people around me have wider profit margins, people around me have, they're finding better deals, you know, and I can't really compete with that. I mean, I could I could work and work and work and work and work at it. But again, I didn't like it. So I didn't want to work at it. So it was just that realization that maybe I should find the people who are passionate about this, who are experts in this field? And why don't I just, you know, piggyback off their success, so to speak, right? I'll contribute some money will share in the profits. And that's the yin and the yang. And that was the model. And the reason why I went to the limited partner side. The other reason aside from my own story, that a reason a lot of folks will choose an LP route, is what I described earlier, there's a lot of working professionals that, quite frankly, I mean, you think about a doctor working Monday through Friday, is it reasonable, then to take Saturday and Sunday to go fix and flip houses and then go back to your practice on Monday, like it? Probably not. And so this would be a great opportunity for a doctor or a dentist to invest passively with a team who's actually doing the legwork on their behalf. Equally. So on the general partnership side, if you love helping people in that way, and you love structuring these deals, and you're good at it, and you've got a network and connections, and this is just something of interest that you genuinely enjoy, maybe look into being a general partner then and structuring these things yourself, that's just not a good fit for me personally, but we're all different. And so it's understanding yourself, your strengths and weaknesses.
Sean Thomson 23:51
And I'm the opposite of what you like, I like getting in there and getting and getting involved anywhere from finding the deal to you know, what are we going to do to fix it up? Or where are we going to capture you know, rent increases, where are we going to get all this you know, taken care of. So all that sort of building the deal is kind of the things I'm most passionate about. I love creating a property that that people are proud to live in and probably you know, that enjoy being there. And the other part that I really love too, is working with my investors to make them money really, you know, that's that's kind of a huge rush for me is to take someone's investment capital, and they give them back more money. You know, it's always a lot of fun to do that. And so that's a that's a huge part of my business and I love that control. Right so for me, it's about controlling the destiny of that project. And I like to really take that whole thing on for me to sit back and be a limited partner would be torturous, I think you know, because I I want to hold on to it and and work that project.
Travis Watts 24:54
Yep. And that's a great plan for bringing that up because absolutely 100% when you're limited partner, you are relinquishing control to someone else in exchange for being able to diversify and invest maybe in multiple markets, multiple deals. And you have to be comfortable with that you have to understand and respect that, you know that, you know, your money might be tied up for five years out of your control. And you're, you're betting on the team to execute the business plan, like we talked about. And a lot of people struggle with that. And so that's why these conversations I have with investors are a lot about this stuff. It's a lot about Have you done this before, do you realize that, you know, if you need your money in a year, you can just get it back, you know, that these are not publicly traded shares, like a receipt, you know, and so I was painting that picture and making sure that the folks who are investing with us are sophisticated at a level that they can understand these investments inside and out to the point that they feel comfortable and that they can make that decision for themselves.
Sean Thomson 26:00
Yeah, I think a lot of it is, you know, the, you don't get this sort of information in school you have to come with, you have to commit to learning it yourself and going out and finding information, listening to podcasts like yours, and getting those that education. And I think that's the critical first step. And, and a lot of people don't realize, you know, when you have your corporate job, or your or your job, you have your 401k and your investments, and you sort of hand your money over to the advisors, or whatever, and they take it and put it into mutual funds, or whatever they're going to do with it. And you're kind of hands off, it's not really something you have to continually learn about. Whereas these non traditional investments, like we're discussing the syndications and even fix and flip, investing, or lending or whatever, it takes a little bit more active participation, to get to where you're comfortable and educated enough to do that successfully. And so that's some what you're doing. You're educating people all the time on, on how to kind of be that passive investor.
Travis Watts 27:01
Yeah, yeah, the show that Theo Hicks and I launched the podcast, it's just him and I kind of once a week, you know, different topics, but we called it the actively passive show. And it's kind of the irony of, yeah, I'm a passive investor. But there's an active component to that. And that's kind of what we cover. And it's things like self awareness, knowing yourself doing some macro level research where people are moving out of where people moving to or businesses relocating. What is the eviction moratorium mean? What are the policies, what's the the Biden versus the Trump tax plan, like, it's just, it's some high level stuff, you don't have to dedicate like, I do hours and hours and hours per week for the last decade. But again, my goal would be to get everyone participating in these offerings to that sophisticated level, where you can just understand the fundamentals of real estate and apartment investing, and also the macro level of just the economy and what's happening. And if you can just grasp those, you know, in the in the ins and outs of what you're investing in, that's the minimum level that you probably should be at as a passive investor anyway.
Sean Thomson 28:13
Yeah, it does take a little more, it does take a little more learning and participation. But a lot of times it's worth it because you get a different a different level of comfort with your investing for sure.
Travis Watts 28:23
Yeah, yeah.
Sean Thomson 28:25
So Travis, let's talk about you know, the the podcast is called next little American dream. And I think the American Dream is alive and well. But I think it's up to all of us to sort of take more control over that we've talked about educating yourself as as limited, passive investor. So Travis, let's talk a little bit about the today's American dream, and how that kind of looks for most people, other than taking responsibility for their own finances and how that works into multifamily syndication.
Travis Watts 28:49
Yeah, 100%. And I love that that's kind of your message here to the podcast. That's the title of the podcast, because we are, in my opinion, at a huge transition point from the old school way of investing. And just the models that may or may not even exist in 2030 years, especially for millennials and folks of my age. And so I'll explain it through my viewpoint. And that is, you know, typically, we get a lot of financial education from our parents. My dad was kind of the old school, he worked for really one company for 30 plus years, he had a pension, he had a 401k later in that process, you know, and living on Social Security, all these things? Well, first of all, I don't believe for myself that Social Security is even going to be a thing. I certainly don't have a pension. I've been self employed a lot of my life. So there's not much, you know, there to contribute to I used to have like a Roth and a pre tax IRA and 401k. I got rid of all that stuff. And the reason is, I really wanted to take the hands on approach the actively passive approach and I want To create my own account, you know, my own social security, so to speak, I didn't want to rely on the government. And so what I did is I started investing in real tangible assets that I felt were essential and needed and necessary, where I could capture cash flow. To me, that's the name of the game. It's passive income, and it's cash flow. And I thought, if I could build up enough passive income streams through, you know, let's say you're working and saving, and then investing, instead of just putting your money in the bank or under the mattress, you're actually putting it into something that has a yield to it. I could, one, live off that cash flow now, which gives me you know, flexibility over lifestyle, it gives me options, if I want to work full time or part time or switch careers, try new things or retire early, perhaps, if that's what I wanted to do. It's about that freedom and flexibility to would be, you know, your average, you know, Social Security's probably between what 1002 1000 a month will say, for the average American in their retirement, well, you know, if you're a study of real estate, and you understand the fundamentals behind that, you could probably get to that level, and, you know, five or 10 years, sometimes in one or two years, it just really depends on the model you're using and what you're doing. And so I thought, well, why not just have the option to have that retirement account, you know, now instead of later, and so that's really what my messages to the world is, we all have to get to retirement. Eventually, Warren Buffett's famous quote, if you don't learn how to make money in your sleep, then you'll work till the day you die really resonates with me. And so it's this whole idea that how do you make money in your sleep? How do you make money passively, and why not create those income streams and your 30s 40s 50s and not in your 60s 70s 80s? You know, and have that knowledge and background and experience now, so to me, that's kind of the big picture of why I do what I do. And you know why I pursue the LP route, which again, is just everybody's different. And it's not to say that you shouldn't do a combination of both. I know a lot of GPS that are also LPs. So it's all in being able to pursue your dreams and aspirations and things that you're passionate about, that you enjoy that you're best at.
Sean Thomson 32:24
Yeah, and it's not necessarily about retirement, it's about having, like you said, having options right in your life, and creating a life that you can kind of live and lead that makes you satisfied, or happier content or whatever you want to call it. And having those additional passive flows of income, take some of that weight off of you. You know, I know, in our life we've had, you know, my wife has had a corporate job, most of her pretty much up until recently. And you always you're always having that question is, well, can I change jobs? Or can I can I move this job? Can I do something different? You know, and if you don't have those sort of safety nets, I guess, of Smart Investing and passive flows, those decisions become, you know, you just can't You can't leave your job because you're stuck, you can't, you just can't do the things that you want to do. So you find yourself 1020 years down the road, and you're still kind of just grinding through a corporate job. But a lot of people think of this stuff is the goal is retirement. Well, it's not really retirement necessarily, it's options while you're living, right, it's options, while you're, while you're young, if you can, if you can make that happen. And the sooner you kind of get those things started, the quicker you can get to that place where your passive income takes care of your lifestyle. And then those decisions of what career to have, or what jobs to have a work to do. becomes your you know, just becomes your choice, right. It's not something you're stuck doing, or, you know, you do this, because it's what you've always done kind of thing. So, yeah, I think that's important.
Travis Watts 33:47
Yeah, absolutely. And if we look at the facts behind the traditional system, just to paint that picture, you know, a little more broadly, it's, you know, you take like an IRA account, Roth, pre tax, whatever, well, you can't realistically pull money out till 59 and a half. So the the idea is, don't think about it, just put money in it. And then later in life, you can check that out Social Security, you can't pull till What 62? I think it is, so so the whole system is set up to where it's like put all your spare cash into a vehicle that you can't even look at really till you're 16, or at least not use it. And so when you reverse engineer that system, and say, Well, what if I have an account that I can touch today, if I so choose without a penalty involved? You know, it's there's a great book, by the way, this changed my whole perspective on what I'm talking about. It's called 401k chaos. It was written by Andy Tanner. And it really describes why 401 K's were ever invented, why they're structured, the way they're structured, what the real goals and incentives were, and then to understand the taxes behind it to understand that a lot of things you hold in a 401k like stocks long term, meaning more than one year You know, when you pull that money out your taxes, ordinary income, you know, at the end of the day, but if you were to do the same thing, same investments in a brokerage account, it'd be long term capital gains that could be taxed at zero 15%, you know, a lot lower brackets for a lot of folks. So it's just, again, it's like you don't have to be a master study are of all of this. But just having that awareness, just reading a few books, finding a few mentors, to help paint this picture can really, really help. And that's really I know, we talked before our call about mentors and the importance there, but it's life changing to find someone who can help you, in your own situation, figure this stuff out.
Sean Thomson 35:38
Well, like you were saying, the the traditional system of just hiring or giving your money to a wall street, and having them invest in for one case for you, that's a very hands off approach. But there's not a lot of benefits to you, there's there's a lot of ways to game is a somewhat, I want to I don't want to say rigged against you. But you know, it seems as though your interest and their interest aren't in alignment, right. And what they're trying to accomplish. And what they're what you're trying to accomplish, don't necessarily aren't necessarily the same thing at the end of the day, but Wall Street funds are making money with you make money or lose money. And in fact, they're making money on both sides, which is counter to what you're trying to accomplish, you're trying to invest your money and have it make more money, right. And it's not always, that's not always the case, a lot of times, you're you're just you're not, they're not looking out for your interest. And so educating yourself on some of these other investment vehicles and some of these other investment types, that does take a little more personal interaction or engagement. But ultimately, you're going to be better off down the road, and you're going to have more benefits. Like, you know, like investing in real estate, you have a couple of ways you make money, you make money through cash flow, you make money on the you know, when you sell the property, capital gains and things like that. So I think it's just taking that personal responsibility can be a huge benefit to you down the road.
Travis Watts 36:59
Absolutely. And as you were speaking about that, I really want to drive this point home for anyone that may not be familiar. But yes, you're 100% correct. The the Wall Street model having worked in this industry firsthand, and holding these these licenses, but is it's not about educating the employees about investing per se, like we're having a conversation about and how these things work. It's about assets under management, it's about attracting as much capital as humanly possible, and then tagging a like a 2% fee on that. And when the markets up 10%, they get a 2% fee. And when the markets down 20% they get a 2% fee. And you know, just does that sit well, with you? anybody listening. And here's the real example. In my grandma's case, my grandma passed away last year, and we didn't know her financial situation, unfortunately, because we really could have helped her a lot earlier in life. But I guess we just assumed she knew what she was doing or her advisors were helping or something I don't know. And so we got to digging into these, these statements of her IRAs and brokerage account and what she had astonished me and infuriated me that she they had put her in some kind of managed account that pulled a 2% annual fee of everything in that account. And then she had some advisor who also charged a 2% fee on top of that, so she was paying 4% annually and fees. And and what did they have her and being you know, she was in her 80s. They had her in conservative bonds, which paid approximately 4% in over the last decade of the stock market, which has primarily been a bull run straight up. I mean, if you look at a long term chart, she made a 0% return over that decade or a castle she got killed by inflation. And it just an inferior debate. So again, you don't have to be an expert in all this stuff. But just to understand that system and how those things work, just please take at least that much of an interest in your own future, your own retirement to make a decision for yourself if that's right for you or not.
Sean Thomson 39:13
Yeah, yeah. take the steps necessary to at least get to the place where you're not stuck in something like that. For sure. That's that's a terrible story. I feel horrible about that. But they you know, if you take this a couple steps to learn a few things about these investments that you're in or that you want to be in. It can go a long way. Let's talk about you know, the name of the podcast is next level American dream we always ask everybody kind of what what is the the American dream for you? And you know, for us, the traditional American dream of go to college, get a pension retire is kind of I don't think that exists anymore, really. But I think the American Dream itself is still alive and well and it comes in a lot of forms. So what is it what is the American dream for you, Travis?
Travis Watts 39:55
That's a great question. And as I alluded to earlier, a lot of us yet are financial advice from our parents? Well, again to take my dad as the example, you know, what would he describe about, you know how I should retire? Well, he's got a pension? Well, I have that. No, he's got Social Security. Well, I have that, perhaps not, I don't know, you know, he had a 401k, I don't have that he was an employee, I'm self employed. Like, there's really not a lot you can do to help someone when, when that situation to your point doesn't really exist anymore. So my parents did a great job at teaching me personal finance. So like budgeting and you know, living below your means using coupons, buying the off brand, don't buying crap you don't need. I'm so grateful and thankful for that. But the investing side had to come from me taking ownership in in my own success, so to speak, and finding mentors. So to answer your question, to me, what the American Dream is about is freedom, as we all know, is kind of the core fundamental to living in America, it's the freedom of choice to pursue what it is you want to pursue, and having that ability. So how do you how do you do that? That sounds nice. But what are the practical steps? Well, for me, it's about creating multiple passive income streams that can help support your lifestyle expenses, ideally, covering all of them, and then some, but even if it's covering half of them, that gives you more freedom, and less stress. If you want to retire, if you want to switch from full time work to part time work, if you want to pivot careers and do something new, if you want to spend more time with your kids and your family. I mean, everybody's got their, their why and their what. But to me, it's building the you know, it's the art of creating a lifestyle. We were talking a little bit about stoicism before the podcast and you know, 2000 years ago, they're talking about this stuff. It's the art of creating, you know, a life that you want to live that's fulfilling, that brings happiness to you. that's still true today. And it's just the process that's changed from 2000 years ago through today. And we have a tremendous amount of options that we can pull from when it comes to investing and taking ownership in our financial future. It just takes a little bit of stepping outside the box, the traditional box, and educating yourself finding a mentor, a coach, a book a podcast, and just opening your mind a little bit to what those things are.
Sean Thomson 42:24
Yeah, that's, that's a great advice. My next question you've already answered, I guess a little bit of it. But what are a couple things that have taken you from the net from where you were to the next level in your American Dream that you mentioned mentors? And that's, that's probably something that's been helpful.
Travis Watts 42:38
So here's how I define a mentor or a coach, I don't necessarily have to define or I don't define that as having to be a human being that's face to face telling you what to do. A mentor could come from a book, it could come from a podcast, it could be a YouTuber, it could be a lot of things. But that being said, the most effective mentors in my life, the single handed one thing that's helped me the most has been finding a person who is successfully doing what it is I want to do, and then being able to have conversations with them. Sometimes that could be on a paid consulting basis. Sometimes that could be on a free basis. And I try to be a free mentor for people where I do these free 15 minute q&a calls with people all across the spectrum investors to just add value if I can, or point them in the right direction, have some resources, because that's what I was really lacking early on in my investing career. And and again, just to reiterate, that's made the biggest impact, because a book is nice. But what I what I find most often is I get to that last chapter and I close it and I go, Hmm, that's cool. Except What about COVID? What about if interest rates go to 6%? What about, you know, the election coming up? And so it's nice to have an actual mentor, where you can ask those questions or say, Hey, why don't you put yourself in my shoes? And what would you do in this scenario? And kind of work through that with someone who's experienced and knowledgeable? that's fundamentally just a great thing to do.
Sean Thomson 44:10
Yeah, that's, that's great advice. And I think you touched upon it a moment ago, too. And I was we talked about this earlier. But I think, you know, all of us have a dream of what we want to accomplish this freedom that we're trying to achieve. And I think the second step in that is believing that it's possible, right? All of us believe that things, certain things are possible. You know, because we see it happening. So I know people can buy apartment buildings. I know people can invest in apartment buildings, but believing that it's possible for me, is really, I think, the biggest first hurdle that most of us go through and trying these new things. And having someone that is an example, like you said, that that sort of makes that connection that if this guy can do it, if this person can do it, then I should be able to do it too. And having that belief in yourself is becomes becomes more realistic. When you have someone there that says hey, you I've done it, you can do it. So I think that's great advice, and finding someone that that is an example of what you want to do. Because it gets you past that, really, that really hard for a total of saying, this is I believe that I could do it, you know?
Travis Watts 45:13
Absolutely what we're talking about, there's limiting beliefs. And there's a lot of ways, you know, limiting beliefs. And again, we were talking earlier about Tony Robbins, from a high level. For those not familiar, he wrote an excellent book in the 90s, called unleash the power within, I think it's one of his best books still today. And it's all about human psychology, it's about your limiting beliefs. And it's about expanding your mind and your contacts, to, to your point, believing that you can achieve what it is you want to achieve. So that might be if you find yourself in that situation where you think, oh, apartments and real estate that takes a lot of money, I don't have the skills, I don't have that, you know, what if you if you've got these limiting beliefs, that might be a good first step is check out a book like that one, or any other coaching program or training program or mentorship to help you overcome those limiting beliefs. And then two would be finding someone you know, my point earlier that's actually doing it, and I'll share with you this really quick is, there's a few people in my network that I've met through conferences and real estate meetup groups and masterminds that are in their 60s and 70s. They've done over 100 lp deals, and I'm genuinely inspired by this, this is the path I'm on, it's what I'm passionate about. It's where I want to be in my 60s and 70s. And to be able to reach out to these folks. And, and for them to say, hey, look, here's my portfolio. You know, this is what I invest in, this is how it works. These are my returns, these are my yields, really paints the picture, you know, seeing is believing, right? And it's one thing to read a book or a Harvard Business study, it's another to find a real person that you really know face to face that's willing to share with you that information. And yeah, so mentors are great, and limiting beliefs should cut them off.
Sean Thomson 47:01
Yeah, it's hard. You know, I'm a little bit older, myself and I was raised my parents were, they actually grew up in a depression. So I was ready to raise with some pretty limiting beliefs myself. So it's, it's a daily battle you have to go through, so it's good. And that mentor comment, I think, I've never really thought of it that way. I have mentors in my life, I have people that around me that I try to surround myself with people that are trying to achieve the same thing I am. And I didn't really think about the connection until you and I talked, how that kind of helps me at least get beyond those limiting beliefs and some of those fears that I have in myself and really kind of believe in what I can do, because you're seeing them do it. You know, I think it's I think that's really powerful. And it's great advice on your part to put that out there. Well, Travis, I really appreciate you doing this. We had to do it twice a day. I apologize for that. But it was it was great to get to talk to you. Both times, actually. And I, I appreciate you coming on the show. And we talked a lot about educating yourself about getting into these and doing unconventional investing. And I'll do traditional investing as well. And you do a lot of that on podcasts and those sorts of things. Do you mind sharing with some of the people sharing with the people some of the places they can find you and reach out to you?
Travis Watts 48:13
Sure, yeah, first and foremost, the call I keep alluding to that I do with people the free 15 minute q&a call, you can find that at Ashcroft capital. com forward slash connect with Travis. It's just simply a link, you select the time that works for you. And we'll connect and I talked to 18 year olds buying their first house and 70 year olds that heard the word syndication yesterday and want to know what that means. Everybody in between. I'm happy to be a resource. Like I said, if I can, I'm not the expert in most things, but I can point you in the direction of resources and programs and books and educational pieces to the point of this conversation. Additionally, yeah, Theo and I we run the actively passive show that's a YouTube based video show. It's it's under the best ever umbrella Joe fairless his company. Check that out. For more on being a passive investor and what active elements play into that. I blog on bigger pockets and LinkedIn. You can search me, Travis Watts, my last name is Watts find me there. Send me a direct message and we can connect. And I'm just happy to help if I can. And so reach out. And thanks so much, Sean, for having me.
Sean Thomson 49:20
Well, I really appreciate it that you don't know what it means having to do this again. And hopefully we'll have more reason to get you on the show in the future. Okay. Sounds good. Appreciate it. Thanks so much. Talk to you soon.
Abigail Thomson 49:32
Thanks for joining us for another episode of Next Level American Dream. If you would like to learn more about what we talked about today, want to contact the team directly, or are interested in passively investing and being a part of our deal room, head over to our website at www.thomsonmultifamilygroup.com. Before you go, please leave a review! Your comments help us create more episodes for you to enjoy.