Oilfield to Financially Independent through Real Estate with Travis Watts

Full Transcript

Taylor   0:02  

What's going on guys? This is the passive wealth strategies podcast. Thank you for tuning in. Today our guest is Travis watts. Travis is a full time passive investor.

But he wasn't always a full time passive investor. He used to be an active investor and today we're going to talk about his story to becoming a full time passive investor through the fire movement, through working hard through pursuing higher income and really going through the wringer this guy put in the work and he still puts in the work we were we recorded this at 7am my time Eastern and he lives in Denver. it was 5am his time he's a full time passive investor still getting up at 5am. That's incredible.

He has also taken audio new gigs in the real estate syndication industry. even though he's a full time passive investor, he's still working hard and and just hustling, putting In a time, so today we're gonna go through lessons that he learned through the fire movement, what the work that he did to become a full time passive investor, what he's doing moving forward, through all of these economic tough times, and just so many great lessons, this guy's really sharp at a great time talking with them and you're going to have a great time listening, you're gonna learn so much today. Thanks for tuning in.

For those of you who do not know I'm your host Taylor load, I'm a real estate investor real estate syndicator. I buy real estate with passive investors and share the return. Happy to be talking with you today. I hope you're doing well throughout these economic and pandemic. Tough times. Thank you for tuning in once again, without any further delay, here is our interview with our guest Travis watts from Ashcroft capital. Travis, thank you for joining us today.

Travis Watts  1:58  

Oh, sorry. Hey, we're going Thanks for

Taylor   2:02  

having me. I know you're here. We've been talking for a little while. that's, that's great. for the folks out there who don't know about your story can you tell us about Travis before we get into talking about what we're gonna talk about,

Travis Watts  2:16  

oh man, crazy background, but went to school for audio production, live show production wanted to basically be a sound mixer and travel with bands and things like that I was a drummer in a band, I was a singer in a band. started out kind of on the music path ended up working for Walt Disney World, which was a crazy transition.

you know, wasn't getting paid enough there wanted to get involved with real estate, so I ended up taking on an oilfield job where I worked 98 hour work weeks in the states for many years away from home mostly, as I kind of got into single family homes and I did some fix and flips and buy and hold some vacation rentals. I did house hacking, I did the bur strategy.

I did a lot of stuff actively on the side of working, you know those 98 Hour Workweek. it quickly became an unscalable model. It quickly started closing in on me to where I didn't see a future in doing that particular model. I had to go back to the drawing board, get educated again, and find a passive path to real estate which led me to apartment syndications.

as I started selling off my single family portfolio, getting more into the passive multifamily. I shifted gears and I left the oilfield career to pursue work that was more meaningful to me things that I actually was interested in and wanted to learn. Went to work for a large brokerage firm, got a series seven and 63 license and thought I wanted to create Do stocks, bonds mutual funds? And I guess my thinking with that was if I had real estate down and then I had that down, I would be some kind of financial guru. Yeah.

didn't really pan out quite that way. went to go work for a small syndication group to kind of learn how multifamily works from the inside out. That kind of led me to working with Ashcroft Capital, which I had been investing with for many years. Now I kind of work in an investor relations capacity, where I do a lot of live events and speaking engagements, and I just helped people understand passive income. I'm a huge advocate for self education, and just kind of spreading the word on what syndication is all about, and you know who that might be right for. that kind of takes us up through today.

Nice, nice and you're still you're in you're in Denver, we're talking at 5am Denver. Full Time passive investors still get up early on, Good Friday, so good for you. You're a hard worker. you know, I recognize you for that.

Taylor   5:09  

Yeah, making the transition from active to passive investing is really what a lot of people have in mind . They want to build that passive income. That's what we're all about here. you know, what was that? Like? I mean, it's kind of the Holy Land, right? It's what you're there for. But it almost sounds like you didn't when you were in the process of making that transition, you might not even realize that that was pretty immediately ahead of you. Is that right?

Travis Watts  5:43  

Yeah, it's kind of funny, right? Because I read a lot of the books that most people probably read when they get into real estate. I read Rich Dad, Poor Dad and you know, cashflow quadrant all this kind of stuff. I started realizing the power of being an investor and being passive, but I didn't exactly know how to get there.

didn't have a mentor, I didn't have a lot of great resources, to be honest with you to go by, I just kind of was trying to figure it out on my own. In hindsight, looking back, it's like, I was doing fix and flips and I was doing vacation rental, like the stuff wasn't passive and I did have a goal of being passive.

it just took that extra push of education, to kind of open the light, so to speak so that I could get involved with that stuff. My big pivotal year was 2015. I set out this is where I was kind of having this this early a breakdown. But I realized that a single family wasn't gonna wasn't going to be my thing, and I didn't know what to do. I made a goal that year, I've always been a reader. I love books. I made a goal to read 52 books in 2015.

That's one book per week, and I did it. so most of those were like reading nonfiction stuff self help and self education. a lot of that stuff was real estate and, and things like that. That's where my mind started opening to the possibilities of passive income. I made a complete leap over the next year and a half into multifamily.

Taylor   7:18  

Awesome. I think to really flesh that out, we need to know what your life was like in 2015. we need everybody out there to know. yeah, what were you doing in 2015 with the rest of your time?

Travis Watts  7:33  

2015 so the year prior, so I guess we got to start in 2014 . I made a big shift from working domestically in the US in the oil industry to working overseas in Saudi Arabia, completely away from home and without a cell phone.

I did have email communication, but you know, when you have when you self manage your portfolio and you've got a handful of tenants, obviously things come up, issues happen, and I'm just clearly not there to address them. I didn't want all my money sucked up through a property manager. I'm still trying to make it happen.

I'm dragging in my family and my dad and my mom, my girlfriend at the time, who's now my wife, my friends can you run over and collect this check for me? Can you go deposit this? Can you go fix a sprinkler head and you know, give you 100 bucks. it was ridiculous.

Of course, none of them appreciated that time period. that's kind of where I felt like it was closing in and I thought, Oh my God, if I only have this many properties today, how am I going to double that? How am I going to triple that or even and so my first step was to put a property manager over these and all but one, I think, and I did that, and it still wasn't passive.

Because you know, I still had to address issues right? Just you know, when a roof needs a replacement, right? I can't ignore that. I mean, I still get notified of it or whatever it is the H fat goes And what do you want to do fix it, repair it, replace it. I mean, it cost money, I got to make decisions. it was making it even worse.

It was like having one more layer of communication on top of my tenants on top of the issues. That's where I started getting all this pressure and the stress of what the hell am I gonna do? And I just wanted to honestly get rid of all of it. I just wanted to eliminate that from my life since I don't want to deal with real estate. That's what prompted me to start self educating. That's why I set the goal in 2015 to basically figure it out.

I said, you gotta figure it out. There's a way people are passive. I don't know how they do it. But people do it. I know. I know. People do it. Robert Kiyosaki does it. How's he passive so that's where I learned that even people like Kiyosaki do syndications. so it started really opening my eyes as I started self educating.

Taylor   9:53  

Nice. how did the fire movement for those out there who don't know Financial Independence retire early. How did that factor into your education process? And was that a part of your life when you were an active real estate investor or you because it's pretty big people might be aware of it how did that impact your life in your investments?

Travis Watts  10:17  

Yeah, the fire movement is a huge foundation to everything I've ever done now. Now, here's what I want to say about that. I didn't know a decade ago with the fire movement was I'm not sure it even existed. It did in some capacity, but it wasn't probably called the fire movement. But here's how to paint that picture.

I guess as I was brought up by two very frugal parents, coupons on everything, buying off brands, if you don't need it, don't buy it. Let's go to five grocery stores and buy what's on sale at each one. You know, I learned a lot of different ways to get good with budgeting, living below your means making the best of what you have all these kinds of concepts, and I'm very thankful for that.

Now I didn't realize what impact that would have you know throughout my life but the fire movement for anyone not familiar is is basically this this idea that you make as much income as you can possibly make for a period of time doing your highest and best work for some people that's doctor dentist, whatever they went to school for, for other people like myself, I ended up getting involved with the oil industry strictly for the pay.

It's not that I was destined to do that, I hated that work. It's terrible work. Anyone who's worked in the oil field knows it's just crappy work. But I did it because it was a six figure opportunity. Meanwhile, I was house hacking. I was living below my means. I mean, I had hardly any home overhead still eating ramen noodles. I made the money I just wasn't spending.

I was taking that difference between what I earned minus taxes, how I lived that margin in between. I was putting that all in Under real estate, so it's one property then two, then three, then four, then five and six, as I kept earning that income, and then you know I built up a nest of equity so around 2015 when I sat down to calculate in theorize What if I sold everything? What if I took all my single family homes and I sold them and the house I live in and I sold it and I paid all the taxes and the realtor fees and commissions, what do I have to work with? What's my net worth?

That's basically what I was calculating: what's my net worth? When I figured out I could take that amount invested passively in syndications and or some alternative types of investments that produce cash flow. What would that amount to? Well, what it amounted to, for me was the ability to leave the oilfield job, that whole lifestyle, I didn't like being away from home, something I didn't see that was sustainable or long term.

That's what I did and the point behind fire movement is when you have financial independence or financial freedom, whatever you want to call it, time freedoms, what I like to call it. It gave me time back. Now I can choose what I want to do with my time. you know, hence the brokerage thing and working for a syndication firm and all these things, it was just self interest.

I just wanted to learn that stuff. I had the ability to just walk away from a job and not worry about how am I going to pay rent, how am I going to pay my mortgage? I didn't have those worries. so that's that's how fire played in and still does to an extent. I'm not nearly as extreme as what I was back then. But, but yeah, that's how I did it.

Taylor   13:40  

Nice. That's, that's great. I'm glad it worked out for you. I'm curious though my knowledge of the fire movement is more modest. I don't know all that much about it. all the details. I know it's very it's a broad world, even when you get into a relatively small movement as you know that As the world is considered the fire movements, not a not a huge thing, right there.

My knowledge of it is people go after you know, buy the s&p 500 live below your means, like you said, Yeah, make the money that you can but max out your 401k It's a lot of a fairly vanilla yes. Financial guidance. from my perspective, it seems like you went your own way with it in a certain way and yeah, obviously to your benefit. that's great. But any deficiencies of the fire movement that you see,

Travis Watts  14:40  

the biggest is what you just pointed out right there in this The biggest thing I disagree with and here's the trouble with it is a lot of people are not real estate folks that are in this movement, okay? They're not professional investors, nor do they necessarily want to even learn investing.

Okay, and so That's a huge drawback, because now you're left in the stocks, bonds and mutual fund land. you don't really know what you're doing, per se, not to be too insulting, but it's just that there's better assets to produce passive income and cash flow than buying a bond.

That'll give you one and a half percent. I mean, there's just better places to put capital. To your point most people in the fire movement will get like a, like a Vanguard s&p 500 index fund with like a 2%, dividend yield, and what the, what the idea is, is that they'll park the majority of their money in something like that.

it's seamless and it's automatic, right? You don't think about it, you don't need to time the markets, you don't need to even watch the market. so what happens is that the idea is, I'll give you the formula that a lot of people use the 4% rule. I'm sure a lot of your listeners have heard of the 4% rules, the traditional financial advice that if you do a 4% withdrawal rate on your paper asset accounts that you can theoretically retire now.

you take an amount of money, and then you times it by 25. Okay, so here let's run a number. Let's say I'm pulling out my calculator. Let's say you want 50,000 a year to retire on. you take 50,000 times 25, it's always 25. That means you need $1.25 million invested. if you pulled out 4% a year, theoretically, you can retire then for the rest of your life on 50,000 per year.

That's the formula that they use. But in real estate, you could argue that Why 4%? Why not? What if you got 8% cash flow and that's conservative or 10%. Depends on what you're doing in real estate. But in other words, you can get there a lot quicker, a lot faster, depending on your risk tolerance and method. So

Taylor   16:58  

interesting. Yeah, I think I don't mean to talk too much smack about the fire movement. I mean, I own the s&p 500. you know, I don't think it's a, I don't think it's a bad thing. I think it's, yeah, there are a lot of good things in there in terms of automating your investments and psychology. I hate the word hacks, but techniques that we can use to limit our spending and things like that. There's a lot of great stuff in there, but I think it's it for a lot of folks. It's also not gonna really produce the return that we need to become financially independent, financially independent when we really want to.

Travis Watts  17:40  

Yeah, yeah, right. it's kind of that I couldn't agree more in the fact is, like I alluded to earlier, most people aren't gonna go pro per se with the investing world, right? Take all the self education that they need and attend to kind of seminars and webinars and read a ton of books and trial and error. get mentors.

I mean it, that's a lot. That's a lot. most people won't do that. that's completely fine. Just know that an index funds just one tool in the shed maybe maybe like you said, maybe do that, but then maybe have some single family rentals or some syndications or something else to kind of supplement cash flow, because you're not really going to get a lot of cash flow or something like that.

Taylor   18:25  

Especially if, at least as we talk, the s&p was just down like 35%, two weeks ago, and then all Jay Powell turned on the printers and it's back up, but we'll see how long that lasts. Now. You know, we're, we're being a little bit a few, if everybody will pardon the nerdy reference, but we're being kind of tricksy hobbitses in that you're a passive investor full time, but you're not retired and you're a young guy.

you know, what are you gonna do for the rest of your life? You're right, working with a syndicator now and tell us about that. That experience and what that's been like why you decided to do that rather than going and sitting on the beach, like I said, at the top of the interview is your time you're crazy, who's gonna retire and get up at 5am? So tell us about what you're doing and what gets you up so early.

Travis Watts  19:16  

You gotta love what you do, man. That's what it comes down to. as you just pointed out I feel too young to retire, what am I supposed to do? I'm not going to go live in a retirement home, I'm not going to go play golf for the rest of my life. Like, it's just the traditional retirement stuff that doesn't apply to me.

instead of being lazy and just sitting around and doing nothing, which I could do, I just, I want to stay active. I want to be proactively giving back. I want to be doing what I can do. it's not about the money though. It's just about helping others. What I found most impactful right now in my life is to take something that's benefited me, my family, my wife, okay, and to share that model, that strategy, that formula with other people.

I do it a lot at Real Estate meetups and real estate groups and real estate conferences and speaking events and podcasts like this I just try to share what I know what I've seen happen first hand in my life that's made the biggest impact and so that's what led me to Ashcroft capital, I was already an investor with Ashcroft capital, they're a great group to work with, in my opinion, there's a lot of things I really enjoy about their, their business model and their transparency and being conservative and cash flow, emphasis and all these things.

That's why I'm with their team right now. But life evolves. You know, we'll see 10 2030 years down the road. I don't know, my wife and I love to travel. You know, we could very well end up living in Bali or doing something crazy like that a few years down the road, so I don't know, but this is where I want to be right now. I know that and so For anybody listening to me again, just to reiterate the point of financial freedom, the point of cash flow, the point of passive income is to have choices.

It's to be able to pursue things you love for some people. That is travel or time with their family, time with their friends, opening a charity, launching a business you could never do before, because you didn't have the time. That's what it's about. It's about time freedom. 

Taylor   21:24  

yeah, I mean, that's an awesome goal. I mean, a lot of people I think many of us want to be able to say my wife and I could move to Bali if we are when we want to and we will but you know, right now, we don't want to . That's fantastic. What's your your title your role with Ashcroft just so we know Yeah,

Travis Watts  21:41  

I'm the director of investor relations. mostly what I do is I work with investors you know, face to face that at live events. We have Evans, our other Investor Relations rep, but he's more like home based. more based and things like that. I'm the traveling guy. My wife works for an airline, by the way, so that's why we travel so much.

Taylor   22:08  

Awesome. Well, I mean that my understanding is the perks of working at the airline are really good despite their current situation. Yeah. economic troubles.

Travis Watts  22:16  

Yep, exactly. Yeah. No, they are, they are. even internationally we get to travel pretty inexpensively. That's why we love to travel anyway. it's a win win. Yeah,

Taylor   22:28  

yeah, that's great. you know, I think one of the things that's important to point out is we've had over the last 1012 years, one of the best bull markets in real estate, and investment opportunities, period yeah. it's because we had an enormous crash. you know, moving forward, we've nobody can ever predict the future. Right. I don't want to ask you to do that.

But how do we find the opportunity in the real estate market moving forward, do we expect it to continue to be as great as it has been particularly considering that when we're talking right now, I mean, there are over 10 million people unemployed, what how can we really project to the future and make the best investments? Right now? It's a very loaded question. I'm not asking you to predict the future necessarily, but give us your thoughts on the best position to be in for the next decade.

Travis Watts  23:30  

Yeah. Well, we're in interesting times, no doubt and you know, I think a lot of us knew a recession was coming we didn't Of course know is going to be COVID or anything like that.

But you know, I've been writing blogs now, not a long time, maybe nine months or something like that. it's funny because last fall, I wrote a blog titled investing through the next recession right? Before we were any official size, that was the least amount of readers I've had on any blog, unpopular topic, I guess, but I think that we saw it coming.

But this is kind of my focus for the last four years has been recession resistant investments, not recession proof, nobody's immune to this kind of stuff. But I didn't want to be in for example, maybe some speculative stuff or some new development or some whatever I wanted to be in, like affordable housing, some self storage, ATM machine investing things that are a little bit uncorrelated per se to a recession. Right. I still believe in those sectors. I still think those are going to do well, long term. We're in this we're right in the middle like so.

What is April mid April? This is the first impacted month. These asset classes to see how rent collections are really unfolding and coming in and even April's not a true telling sign we're gonna have to get through June. Look at what happens with the government stimulus, there's a lot of factors going on and how many rounds of that are going to happen? Are we going to be in a deep recession or depression?

Unknown Speaker  25:21  

So,

Travis Watts  25:22  

I would say you know, just be patient, don't what I keep hearing all the time on all these webinars. I'm not catching the falling knife, we don't really know where we're headed right now. Is it time to jump in today? Probably not so give it give it a quarter or something at least we'll see where we stand then. You know, and how things are unfolding but you know, look for recession resistant asset classes always right there. They perform well in good markets, they perform better than other sectors and bad markets. So

Travis Watts  25:57  

yeah, it does that address your question that was a bunch of random

Taylor   26:00  

Yeah, no, I think so. I mean, really, people throughout this market cycle as well, I've been saying XYZ is recession proof or recession resistant. I think it's Warren Buffett or somebody has a saying that when the tide goes out, you see who's swimming naked? And yeah these things are these things are going to be tested.

I mean, I own a lot of C class, investment, real estate. you know, one of the big questions we have is whether or not our tenants are going to be able to continue to pay rent even with unemployment and things like that. you know, it's a big, big concern. It should be for all of us. Yep. But we need to be clear headed about that.

Travis Watts  26:40  

Yeah, the other saying is that history doesn't repeat itself, but it rhymes. yeah we knew we were going into recession, but who knew we were going to be locked in our homes that was unforeseen and who knew unemployment was going to spike to these levels I mean, that's pretty unprecedented since what the great recession or depression So, yeah, we're in uncharted territory for sure everybody's going to be tested and just to clearly paint that picture.

It's not solely about the asset class I mean, you can have a great asset like a buy at the right price and have a great tenant base. But what if that asset was parked right next to an airport right now? That's gonna be suffering a lot more than, say, a C class next to a hospital right now. You know, there's big differences in that stuff.

there's a lot of factors between the market and the sponsor group and the cash reserves on hand and the debt structure that's been put on it. There's so much so yeah, some folks are going to be shaken out from this. you know, those deals will resurface and others are going to survive. too early to tell, but we're all kind of holding our breath.

Taylor   27:54  

Yeah, absolutely. right now we're gonna take a quick break, a quick break, for our sponsor. All right, Travis. I've got three questions I asked every guest on the show. Are you ready?

Unknown Speaker  28:07  

I'm ready. Let's Let's do this. All right, first one.

Taylor   28:09  

What is the best investment you ever made? Other than your education?

Travis Watts  28:15  

Okay, yeah, I bought a single family home out in Colorado when I was doing that back in the day and it was a condo that was bank owned. I got a heck of a deal. I think I paid 97,000 for it and two years later sold it for 215,000 and didn't do anything to it except rented out for cash flow.

Taylor   28:36  

Geez, talk about the best investment that's great. On the other side of that, we had the best investment now we have the worst investment. What is the worst investment that you've ever made?

Travis Watts  28:47  

Yeah, I've got about 80% of my portfolio and like apartments and value add stuff and then 20% kind of experimental. I did this investment. This investment group that I'm in, it was a distressed debt fund. You know, I guess the key takeaway is don't invest in things you don't understand because I understood it to an extent, but there were a lot of moving parts and a lot of moving players. I put about 100 feet into this investment between two funds.

Part of that fund ended up being a Ponzi scheme. it wasn't the people I invested with it wasn't the people that I vetted. It was just a partner of a partner in a different state, blah, blah, blah. So I don't know I ended up so far I've lost 50, maybe 60 grand, probably gonna amount to more now that we're in this unemployment recession, but anyway, that was that. Ouch. Yeah, definitely.

Taylor   29:50  

Yeah, I've been in a situation where one of the partners not by the guy I've added you know, all that. One of the partners was committing fraud and like, well I mean, we still made money but it, it hurts to learn that my favorite question you're at the end of the show is what is the most important lesson that you've learned in business and investing.

Travis Watts  30:13  

Uh, being an advocate for self education, just continuously learning, I don't know how to really phrase it. But for everybody that's different. It can be podcasts, it can be YouTube videos that are teaching you something, it could be reading books finding a mentor, you just gotta keep learning things evolve, things change markets change, you got to just stay on top of this stuff to an extent and I think Above all, especially in 2015 man, if anybody listening go read 52 books in one year and I promise Your life will change. But do not be so extreme read three books a year that's, that's more than I think the average person so

Taylor   30:56  

absolutely. It's more than the average person. Now one of the things follow up questions, areas. Are you reading the physical book? Are you listening to the audio book? Where do you draw the line there?

Travis Watts  31:04  

Yeah, I do both just because of the time commitment, right? I understand that sitting down to read a physical book takes physical time. But I listen to audible when I'm on flights and when I'm traveling, and when I'm in the car, and all that kind of stuff. you get two things done at once.

Taylor   31:23  

Nice. Nice. Well, Travis, thanks for joining us today. You've had a great run so far. I'm sure it's going to continue to be an upward trajectory, sharing those lessons and things you learned from the fire movement, becoming a full time passive investor now, working with an ash crop that's fantastic for folks who want to get in touch with you later. Where can they find you and get in touch?

Travis Watts  31:44  

Yeah, the best place is probably email. [email protected] . I'm also in bigger pockets and LinkedIn and Facebook and Instagram and all that kind of stuff. reach out.

Taylor   31:56  

Nice, fantastic. Well, thanks again for joining us, everybody out there. Thank you for tuning in. If you're enjoying the show, please leave us a rating and review on Apple podcasts. It's very much appreciated Hope it helps other people learn about the show.

If you know anyone who could use a little bit more passive wealth in their lives, please share the show with them and bring them into the tribe. Thanks for tuning in. Once again, I hope you're doing well out there throughout this pandemic craziness. We'll talk to you in the next episode.