Discover the transformative journey of transitioning from active to passive real estate investing in this episode with Tyler Smith. Learn how to maximize your investment returns while minimizing personal time investment as we share invaluable insights into strategies for a better work-life balance. Don't miss out on this opportunity to reshape your financial future!

Key takeaways to listen for

• [02:40] How and why you should shift from active to passive real estate investing
• [04:10] Operational challenges in managing Airbnb properties and short-term rentals
• [09:59] Long-term financial strategies and how to further diversify and secure your investment portfolio
• [19:58] Why you need to have the right network to succeed in real estate investing
• [23:07] The importance of aligning your investment strategies with your lifestyle goals

Resources mentioned in this episode

• [22:18] Outlive by Peter Attia MD and Bill Gifford | Kindle, Hardcover, and Paperback

About Tyler Smith

Tyler is a real estate professional with a solid background in sales and management. He leverages his insight into community dynamics and market trends to offer clients honest guidance for making profitable property investments.

He was a top producer in corporate medical sales before transitioning to real estate. He is committed to providing excellent customer service and building lasting relationships. Tyler also coaches strength conditioning and is actively involved in philanthropic causes. He lives in Carolina Beach with his family and enjoys contributing to community upliftment.

Connect with Tyler

• Phone Number: (610) 573-0706

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YouTube: Truly Passive Income

TikTok: @trulypassiveincome

Instagram: @truly_passive_income

Facebook: Truly Passive

Twitter: @trulypassive

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Mentioned in this episode:

Sponsored by Nomad Capital

Looking to invest in self-storage? Nomad Capital converts vacant big-box retail spaces across the Southeast into climate-controlled storage, with a target of 20% annual returns. Our fund combines low leverage and high depreciation for strong growth and valuable tax benefits. By buying properties at deep discounts, we often achieve break-even at just 40% occupancy. Join a proven model in a resilient asset class that continues to deliver, even in today’s market. Learn more at nomadcapital.us/tpi. Accredited investors only.

Tyler Smith: 00:00:42

You already have some two different things in the works now. Those start to cash out every three, five, seven years. Those are just going to get reinvested. That's money that I don't have.

It's the same deal as if you can invest in your 401k or a Roth IRA when you're younger, doing it through real estate syndication. Those returns are double, triple, quadruple what the market will be.

Neil Henderson: 00:00:59

Welcome to truly passive income. I'm Neil Henderson.

Clint Harris: 00:01:01

And I'm Clint Harris.

Neil Henderson: 00:01:03

We are here today with our good friend In Person. This is our first ever fully in person interview. We're here with our good friend Tyler Smith, who's a Carolina beach local. Go cb.

Tyler Smith: 00:01:13

That's right.

Neil Henderson: 00:01:13

Welcome.

Tyler Smith: 00:01:14

Thank you. Thank you guys for having.

Neil Henderson: 00:01:16

We wanted to have Tyler on because he had this great journey from active real estate investor to passive investor.

So before we get into that, why don't you give us sort of a high level overview of your background and how you sort of found your way into investing in real estate.

Tyler Smith: 00:01:33

Yeah, I guess we just start back to my athletic days where I was playing football. I got hurt playing football, ended up coaching. I was in that world for a long time and realized, what am I doing? This isn't what I want to do.

I want to spend all my time doing this, making no money, you know. So I eventually got into dental sales, I think med device for dental.

And that was really where I kind of grew and learned about finances, Investing, what a 401k was, what benefits were, what taxes were. Right. Because I was a guy that was in gym shorts and a T shirt all day, you know, so I didn't know anything about anything.

So my first major step was getting a high level sales job, which I think is key for anybody who wants to get ahead. Where you have the ability to earn a commission based on your efforts, where you're not just in a salary position.

You have the ability to make large sums of money. So I did well there. And then that's when we moved from Raleigh down to the coast here in Wilmington to Carolina beach specifically.

And we like accidentally bought our first condo. I didn't even know what a mortgage was, right. So we moved down to the beach and we looked at this place. We're like, this is awesome.

And we bought it that day and we had a lot of help and from there we bought the house that we live in now. That's a whole nother story. But we got lucky with that and then we turned that condo into a rental.

So that's when we were like, hey, there's something to this. This is awesome. So this is easy, this is easy, you know.

So then the next year is when we bought an Airbnb and then from there we bought two more houses. So we bought a house every year for five years.

With real estate going insane, the prices going insane, interest rates going insane, it was hard for us to find a property with enough meat on the bone based on the amount of time, energy and effort that we had to put into that property to make work. Right. The first four or five houses that we got were fantastic.

They cash flow, I mean, at least a thousand bucks a door, short term and long term, where it's worth it. But now that we're starting to get a couple, it's like a lot, you know, and it's not our full time job managing our rentals, right?

And we do manage our all our own rentals. So my wife runs her own business, works at the hospital. I do real estate, mortgages. We're opening a restaurant next.

I mean, we have a lot of stuff going on. We got two little kids, one on the way.

So that's when we kind of shifted into, okay, we need to find a place to put money where we're not actively working.

Clint Harris: 00:03:59

So I have short term rentals as well, wildly active investment Strategy. I've got 14 of them, actually going to be selling four of them before long, a quadplex.

But my question is about what was your destination in mind when you started picking up real estate? Because for me, my journey has changed a couple of times. We had nine single family homes before I figured out it's a very slow way to scale.

Then we got 14 Airbnbs before I figured out. Hard to scale, very labor intensive, can create financial independence, does not create time or location independence.

So my destination has changed a couple times and now I'm all in. I'm a gp, but I'm a GP with ambitions of being a professional LP at some point. Right. And just continue to invest capital.

So for me, when I was buying Airbnbs, my destination was, oh man, I'm gonna have 30 of these. Life's gonna be great.

So like, what was your destination with that mentality at the time and has that shifted and if so, to what, what does it look like now?

Tyler Smith: 00:04:49

Yeah, totally. And like I said, I didn't know anything about anything when we got into this.

We just kind of got into it and dove all in and had some great mentors and help along the way. So at the time it's like we're gonna get this Airbnb. I'm like, I can retire a couple more of these. This is it, we're done. I'll just do this.

Like, this is easy. Quickly found out that that wasn't the case. There's expenses, crazy expenses. The management, the time, the energy and effort.

I mean, it's a lot, right? Oh, yeah. And what people also don't know about Airbnb is it's an algorithm game. Right.

So if you're just trying to get an Airbnb now and start fresh and compete with all these other Airbnbs in the market, it's really hard to get to a super host status to get your property at the top of the list when people are searching.

Clint Harris: 00:05:31

Yep.

Tyler Smith: 00:05:32

So because we've been in it for a couple years, our property does really well. It does better than other, like, properties that are even nicer than ours. Right. Just because of the algorithm.

So that's another reason why we're shifting away from the short term stuff because of it's so oversaturated.

So, yes, once I got into it and we got a couple seasons under our belt, the mindset definitely shifted of, you know, we can't do work and have 30 Airbnbs and live the life that we want to live. So it's definitely shifted to where can I go make the most amount of money with my money without doing anything?

Clint Harris: 00:06:06

Right, right.

Tyler Smith: 00:06:07

And that's when I found you guys with Nomad. Right. And the traditional way is, you know, put it in the market and that's great. Maybe you get 7 to 12%.

But when you're going to take it and put it into real assets, real real estate through syndication with having no responsibilities, like you said, shifting to the mindset of being a full time LP now limited partner. Right. Right now my goal is to create the most cash flow that I can, the most truly passive, truly passive investments that I can along the way.

Neil Henderson: 00:06:35

Did you have an income, like a monthly income in mind that you were trying to hit when you started off.

Tyler Smith: 00:06:42

As far as through investments you're talking about?

Neil Henderson: 00:06:44

Yeah. I mean, most people are trying to replace their W2 income in some way.

Tyler Smith: 00:06:48

Yeah, I think that was it. If I could replace a W2 income. Right.

But then without having a job like we talked about, a high level sales job, or owning your own business where you can make an uncapped amount of money without having a ceiling that's irreplaceable, to replace that through real estate investing is going to be hard. It's going to turn into a full time job. So, yes, I think at first it was like, I don't want to have a job.

I'm just going to have a bunch of rental properties and that's going to be my money. But then how do you get more from there? Right. You can only go so far.

Neil Henderson: 00:07:22

Yeah.

Tyler Smith: 00:07:22

So I think you do need to have those big income moments, those big commission moments if your business takes off and does well so that you can go throw another X amount of dollars into storage or buy a restaurant or get another rental, whatever it may be.

Neil Henderson: 00:07:39

Yeah. Clint often talks about you have to play offense, and now he's usually talking about you have to play offense with your passive investments.

You can't just put the money into the stock market and just hope it's going to be okay. Not in this day and age. But you also need to play offense with your active income, especially if you're young.

And a lot of people, they sort of get their 60, $75,000 a year job and they just kind of kick back and like, okay, well, if I just save 10% of whatever I'm, you know, earn for the next 50 years and stick it in the stock market, I'm gonna be okay when it's all said and done. Now you might. That's true, But I think we travel in circles where our ambition is a little bit more.

Tyler Smith: 00:08:16

Sure.

Neil Henderson: 00:08:17

And, you know, you had a sales job, you left a job as a college football assistant coach, you know, on the staff. Not a lot of money there unless you start getting up into really high level and you got a sales job, which is, you know, what Clint's background was.

And then that outsize income now allows you to then take money and buy those extra rentals. It's really hard.

I gotta be honest with you, for somebody making $75,000 a year, it's gonna be really hard for you to just be saving enough money, putting it away to buy one rental a year.

Tyler Smith: 00:08:49

Yep, exactly. It's very hard, especially based on the cost of living and to be able to do it year after year after year. Right.

One rental house is not going to make you rich. 1 Airbnb is not going to make you rich. My wife and I, we're on the same team. We're on the same page, which is huge.

So every year we try to do something big. And it was a house every year for five years. And then it was like, oh, I can't find anything to make it work. That's when we went to Nomad.

We invested in Nomad on Two different deals this year. It's a restaurant.

Clint Harris: 00:09:17

I love that. Let me ask you this. So you've been doing Airbnb for a handful of years now, successful at it, doing a good job.

You got the algorithm beat because you got the years of experience you needed. When I bought my first Airbnb, same market, by the way, on the same island, first time I ever pulled up the data, I'll never forget the number.

ings. The next year there was: 1250

So the value of those reviews is wildly important everywhere, but specifically on our island. And it's not really that they're developing that much more. It's an island. They can't go anywhere.

But a lot of people have joined the platform that we're doing at the traditional mom and pop way. When interest rates were super low, a ton of people were buying properties, putting them on Airbnb.

Because you're one of the early adapters, you got those good reviews totally.

And as long as you keep operating, you're always going to have better income and better tenants, typically, and better occupancy than the identical property next door if they started a year later. Right. So you got that jump on it. So that's important.

But my question is this, like, are those properties always going to be part of your portfolio and something that you keep, or do you think that it's a strategy that you might eventually grow out of? And I think the question really is, in the long term outlook on what you're trying to accomplish, what does your diversification look like?

Tyler Smith: 00:10:35

Yeah, sure. I go back and forth on this quite a bit. Right. Because if you look at like a cash on cash return from an Airbnb perspective, it's really, really good.

It's a cash cow. You know, every summer we can count on a huge influx of money that we can then recycle into another investment. Right.

So for that reason, it's like a love hate relationship with that place. So it's work, but the reward is worth the work.

So with that being said, even though it's a great cash on cash return, there's also return on equity, and there's a ton of equity sitting in this property that it's just sitting there.

It's a significant amount of equity where if I sold it and did an exchange or something else, like, could I possibly create a better situation and be less hands on?

Maybe but again, based on the time that I bought, based on the interest rate that I have, based on what my monthly payment is versus what that house makes just in three months, that's what makes it hard for me to break off right now. Because all that cash flow after every summer just goes into another Nomad deal. It's just another class B sheriff every summer. So that's hard.

But that return on equity is also a thing that keeps me up at night sometimes. Right. So it's like careful what you wish for.

But it is kind of peace of mind knowing that if I had a big development project that I could be a part of or something of that nature where there was a significant amount of capital called for, then, you know, maybe it would be worth selling that and moving it over into something like that.

Neil Henderson: 00:12:03

You know, one of the mantras of real estate is never sell. I mean, always just don't wait to buy real estate. Buy real estate and wait. And a lot of the old school guys like never sell. You never sell.

You just do a cash out refi. Have you ever considered that in today's market? Why wouldn't you consider.

Tyler Smith: 00:12:20

So I'm not doing any cash out refis right now just because all my rates are in the twos versus eights or sevens or something ridiculous. It would take that payment to a whole different situation. So that wouldn't be worth it. And then you look at HELOCs and I've done a HELOC.

I've done a HELOC to purchase a property and then I did a HELOC to pay off a HELOC to purchase another property. But I think the HELOC is the way to go. Even HELOC rates, it's harder to get on an investment property and that rate is a lot higher. Right.

But it is an option. But if you're going to borrow money at 10%, you better have somewhere to put it that's going to make a lot more than 10%, right?

Clint Harris: 00:12:58

Yeah, absolutely.

So there's billions of dollars locked up in the market right now because people are out there with sub 3% interest rates, sub 3 and a half percent interest rates that we're never going to see again in our lifetime. And so your options are like, if it's cash flowing, you can't really recapitalize there.

You can't refinance without completely cannibalizing your cash flow. Whatever you're making right now is immediately just going to go towards mortgage payments.

So the amount that you pull out, you're basically Losing all that cash flow, you're going to have to do something else with that to try to make up for it. And basically you're cutting your return in half on whatever you're going into with that money.

Tyler Smith: 00:13:31

Exactly.

Clint Harris: 00:13:32

So, like, there's billions of dollars stuck and your options are sell now. But if you do, you're not going to be able to buy anything else.

Even though your property's appreciated a ton, the whole market's appreciated, Try to go buy something else, it's going to cost a lot more and the debt is going to eat you alive.

Tyler Smith: 00:13:48

Yep.

Clint Harris: 00:13:49

Right. So you can't reposition. So you've got a property here. Great cash on cash return, not great return on equity because it's appreciated.

You're making, you know, just as an example, if somebody's making 50 grand on a year on a property that cost them 500, that's fantastic. That's a 10% return. What about when that $500,000 property is now worth a million and you're still making the same 50 grand a year? Guess what?

That's a 5% return on equity. Right. So even though it's the same 50 grand, your cash on cash return is the same. Your return on equity just got cut in half.

So then the question is, well, how do you reposition and can you. Right.

So, like, if you're in a situation where you should never sell because of the low interest rate that you've got, or if you're going to sell, it has to go into something. This is a word problem. Right. We got to look at, okay, you're getting 50 grand a year out of this property.

If you reinvest that every year for the next 20 years, what does that look like versus sell it now, take 4 or 500 in equity immediately and put it into those same types of deals. What does that turn into over time? Right. And I think you'd be surprised to see that it's a much bigger number that way.

But you have a lot of options for diversification. Now, if you buy in one different LP share per year, it's different deals, different locations.

Tyler Smith: 00:15:04

Yeah.

Clint Harris: 00:15:04

Right. And you still own the property. Right. And the property is still going up in value.

So, like, the HELOC is tough because again, you're cannibalizing your cash, especially on an investment property.

Tyler Smith: 00:15:13

Yeah, it's a little bit easier. If it's primary on your primary, it's harder on that.

And the other thing about that I get a little weird about when I think about selling it is it's A cool property on the north end of Carolina beach. And it's a property that I'm probably never going to be able to buy again.

Neil Henderson: 00:15:28

Right.

Tyler Smith: 00:15:28

Or I wouldn't be able to buy it again. Right. So when I look at unloading properties and I think about it and moving into different things, that's what's held me back a lot as well.

The good cash flow, the low monthly payments that I have, I would never be able to buy them for what I got them for. And they're all performing well.

Clint Harris: 00:15:47

It's tough, especially when that emotional side starts coming in because you know that like I'll never be able to have this again. Like I'm selling a quadplex right now. I bought it, I'll just throw some numbers out there. I bought it three years ago with a partner.

If we paid 550 for it and we're under contract right now at 1.2 now it kicks out cash flow. It's a multifamily. So it's got one set of fixed overhead but for rental units. And I own a property management company.

But still, like over time I'm trying to get to a completely passive lp. I don't want to operate the property, my company does.

But as I am going eventually getting to the point where I don't really want to operate the company.

I don't want my name on anything that I'm not in and operating because then my integrity could come into question with some situation that may come up. So it's like, how do you reposition over time? So that was the same question for me. It's like, I love this place, super cool.

Like we were hung out there this weekend, but it's like, do the math. What's the word?

Problem that says if I take that, you know, half a million in equity out after expenses and that gets repositioned, that property is worth, you know, 1.2 million right now, wait five years, maybe it's worth 1.7, so $100,000 a year.

But by taking the equity in that property and investing it, I'm going to make the same hundred thousand dollars a year over the next five years and then I get a return of capital as well that can be reinvested again. So over a 30 year period, it really makes a big difference in the long run.

Tyler Smith: 00:17:09

Yeah, I think that end number is a lot bigger. The main sacrifice is that upfront cash flow now. That's right, right. If it's cash flowing really good.

So if you can survive and then it goes, that's where it goes back to having other sources of income, where, you know, a job, a business, whatever it may be, versus just being a full time investor. Right. So you got great cash flow and you got equity in your places and you start moving it around and you hit a stopping point. Eventually.

Eventually you're going to hit a wall.

Clint Harris: 00:17:35

Yep. So, you know, one of the reasons I want to interview you is like, you're really young compared to our average investor.

Traditionally, what we see is like, first of all, you've got a high earning job.

Even the younger people that we have that are like physicians, they're coming out of med school and then it takes them a couple of years to really take a chunk of their med school debt out before they get to the point of middle of their career, they start investing and stuff like that.

But our average Investor is probably mid-50s because they've done a bunch of other different active investments, sold a business or whatever, and gotten to the point where their time is worth more to them than anything else. So even if you can go be an active investor and you can make 30, 40% on a deal, then you should go do that eventually.

For most of those investors, they get to the point where their time is worth more than that return. They're willing to take a little bit less to not have to do anything.

So the older investors have just gotten to the point where their time is worth more than anything else. But the ironic part is the biggest thing about syndication is that it takes time to get started.

So like, if this is part of your journey, like you really need to start three to five years before it starts kicking out in a meaningful way. So it's really important, in my opinion, that young people do get started because the most important thing that you have is Runway, right?

You need a long Runway for this to pick up steam and velocity. And it's really hard to do that when you're cashing in another rental property where maybe you're living off part of that cash flow, right?

And it's tricky and you get equity tied up in the property or you got a house hack and you're used to not having a mortgage payment. Like it's hard to get started once people get started. Then you got to realize like, you're not the only one getting up and going to work.

Your money is getting up and going to work even when you don't feel like it. And over time, your money salary is going to be more than your salary and it continues to grow.

But that's hard, you know, if you're Starting this at 60 years old, you have such a short Runway to get to the point where it affects your life in a very meaningful way in terms of how it affects your time, that getting started young, very important to me. So in terms of your age and what you look like over time, what's your portfolio going to look like? Are you going to shift more in that direction?

When, how are you going to keep the active investments? You know, what does that look like?

If you're saying there's now is not the right time to unload it for whatever reason, are you going to have an Airbnb that you're operating when you're 65 and if not, then on that timeline, where does it drop off and when do you reposition?

Tyler Smith: 00:20:00

Yeah, great question. And I mean right now, I think our portfolio of our rental houses will stay where it's at.

I have no desire to go find another rental house, no desire to go find another Airbnb, like you said, because we have that time and we already have some two different things in the works now. Those start to cash out every, you know, three, five, seven years, whatever it may be.

And then those are just going to get reinvested because that's like money that I don't have. Right. It's the same deal as if you can invest in your 401k when you're younger or a Roth IRA when you're younger. Right.

But doing it through real estate, syndication, those returns are double, triple, quadruple what the market will be. I just feel lucky that I was able to find you guys and know about it and be educated about it. Right.

Because I wouldn't have known or I wouldn't even know where to start looking for a syndication company that I know like and trust and understand what they're doing. Right. So just having the people, the network that got me into this, educated on it, that's been the biggest deal.

Clint Harris: 00:21:01

That's a two way street. People don't know this.

Tyler's, besides being an amazing athlete, he's a fantastic strength and conditioning coach and he's responsible for me losing 30 pounds and the last year, year and a half, I guess, at this point. So it's going all in with Nomad, so appreciate that too. It's a two way street.

I think that the reason I bring that up is because it reminds me of there's a very famous CEO who's a multi, multi billionaire.

He took this small tech company called Amazon and when it went huge, you watched Jeff Bezos go from this Scrawny little skinny fat guy to absolutely jacked Lex Luthor. Yeah. Incredible physique, incredible strength. He's ripped.

And it's like, okay, he had an interview one time and he's like, I just realized my life was about to get really crazy and I had the opportunity to basically unlimited resources. I can do whatever I want. I can live a life unlike anyone ever has lived before.

And I need to be healthy and be able to enjoy it and not just have lifespan, but health span. And this is going to come as a shock, but I don't think I'm Jeff Bezos or going to hit that level of success.

I know, but the idea is, if we are going to reach places in our life where we have time, financial and location independence that gives you an independence of purpose. And life gets cool, right? Life gets cool. You're not trading time for money. We live at the beach. We live on an island.

That in and of itself is an unbelievable blessing. But outside of that, we have potential to travel and spend a lot of different time with our kids.

And like, our responsibility is to make sure that we're around for it. Yeah, right.

If you're living the same year over and over for 60 years in a row and you're going to the same job and doing the same thing, like, it is what it is. Right?

But I think when you have a glimpse of financial independence and then the time and location independence that comes with that through truly passive investments, then it's like, oh, man, I want to do a lot of cool things and I need to be healthy enough to do it. And I love the example that you use about, okay, you know, there's a book called outlive by Dr. Peter Attia.

And he's like, okay, if you say that you want to be able to pick up your grandkid when you're 80, okay, that's a 40 pound goblet squat. Like, that's what that is. Right.

Which means you need to be able to do that with 60 pounds 10 years before that or 15 years before that, and kind of working backwards to what kind of life do we need to live now?

If we can look at what's going to happen with our lives financially and work backwards based upon the returns that we know and about repositioning capital now and have that Runway, what do we want our life to look like from a physical standpoint at that point as well, and how do we work backwards to that? And for me, it meant reallocating some capital.

And by that I mean cutting 30 pounds off of my waistline with another 15 to go probably to get a different outcome. It's the same thing. It's kind of working backwards on that.

Tyler Smith: 00:23:47

So yeah, totally.

It's like, well, why are we even doing all this investing stuff and education and going all these seminars and learning all these things of how to make passive money and investments. It's to have time, it's to be free and not have to answer to a boss, right? So when you have that time, what are you going to do with that time?

You're not just going to sit around and do anything. I like to do cool stuff, right. I like to surf, fish, motorcycle, workout, paddle board, all the fun stuff.

And if you're really like not in shape and you're not healthy, it's just you're not going to live as fulfilled of a life. Like even now I have a fairly flexible schedule. So I say three things.

If I can focus on my health, my family and my business, if as long as I focus on at least one of those three things every day, then I'll have no regrets, right? If I can just put my energy on those three things, then we work out every single morning. So I can't have a bad day no matter what happens, right?

And I have the time with my kids and the flexibility to work on business dealings and situations and things like that. But you know, you don't want to be the rich fat guy, but you don't want to also don't want to be the ripped broke guy.

And a lot of times that's what you see, right? You see the ripped guy in the gym that is driving a busted down car and lives in a one room apartment or you see the super fat guy on a yacht.

And I don't want to be either of those, right?

And it's like I'm not going to wait after working 30 years at a company to try to retire and get to that ideal situation, which there is no ideal by the way. You never get there. And you know, just trying to stay in shape along the way and focusing on health and your health span versus your lifespan.

Clint Harris: 00:25:25

Yeah, I think so. I mean we unpacked a lot here. I don't think I have anything else I want to talk about.

I mean, I think your pathways, it's very similar to mine in a lot of ways. Like medical sales background. I think medical sales is great because by definition like you're talking to really intelligent people all the time.

You have to learn how to navigate those questions. So for me, I think it's translated really well to raising capital. It's certainly a sales side of thing.

I look at it from the standpoint of my job is not to sell what we do to anybody. My job is just education. And that's basically the same thing I was doing in cardiology about new technology and new devices.

And you're pitching it out there, I think so. That in and of itself is good. And the tough thing for me is like, okay, well, that job has a pretty high ceiling. You. Yeah, right.

So it's got a high ceiling. It still has a ceiling, and you can still calculate it. You can look at what your sales are going to be.

Tyler Smith: 00:26:11

You still got to report to your boss. You still got to enter that funnel, report. You still have to perform.

Clint Harris: 00:26:17

Yeah, right.

Tyler Smith: 00:26:17

You're still under the gun. And with sales, it's like, okay, what did you do for me? What are you going to do for me next?

Clint Harris: 00:26:22

Yep.

Tyler Smith: 00:26:23

I just hit this goal, this crazy big goal. I got the big commission. Okay, great. Now your goal is a little bit higher. If you don't hit that, you don't get as much commission.

You're just on the hamster wheel.

Clint Harris: 00:26:31

And every month you start over at zero. Right.

So the good news is, like, it's got a really high ceiling, but if you just start living off of that money, you can never afford to do something else. And it's also, like, it has a really high ceiling, but it still has a ceiling.

So if you look at it, you're like, that ceiling, if it's enough for what you want out of your life, then do it.

Tyler Smith: 00:26:52

If you enjoy it enough to do for 30 years, then great, it's $300,000 a year, and this is great. And I can live really good, but it's not $3 million a year.

Clint Harris: 00:27:00

Yeah. If that ceiling is not enough for you, the only real risk you have is not doing something different. And repositioning.

It's really hard to go find anything else that can replace that income, though. That's the hard part about having a high ceiling.

Tyler Smith: 00:27:13

That's where you got to have the cojones that jump off and take a risk and kind of bet on yourself.

Clint Harris: 00:27:17

Yeah. Easy to walk away. It's not easy. Right. But, like, it's one thing to walk away from a job making 50 grand a year versus 350 a year. It's a difference.

So that makes it tough.

But the key for either of those people is just making sure you live below your means and get that capital to go out and go to work for you in something that's going to beat the market because the market over the last hundred years is like just under 10% return. But what it can't compete with is the cost of goods and services in America. And the inflation.

Tyler Smith: 00:27:44

No doubt.

Clint Harris: 00:27:44

Right. When the inflation goes up, all the prices go up. Well, guess what happens when inflation goes back down? Those prices don't go down.

They know you're willing to pay for.

Tyler Smith: 00:27:51

It now with contractors. Right. All the contractor costs in Covid was crazy. Well, houses price per square foot is more now than it was then. Yeah.

And the building costs have gone down. Right. Of course. I also think there's like a threshold with there's like a range. Right.

So once you get past a certain level of income, your lifestyle doesn't change drastically until you hit like a way different level. Right. So getting to $100,000 year income is one thing. Right. Going from 100 to 150 is probably a pretty big jump. Right. To get that, what's that?

12,5amonth. And then, you know, if you can get to like 20amonth, from 12, 5 to 20, that's a jump.

But after 20, unless you're hitting well over 50, 60, 70 grand a month, you know, your lifestyle isn't going to change that much. What are you going to do with that extra money? Right.

And if you're not enjoying what you're doing and you can go just get into that general range where meet that meets your lifestyle and you can still have enough to make a move each year to invest in something each year that you don't have to work on. Eventually that snowball is going to get big enough where you know each year you're going to have a significant payout.

And oh, by the way, this is usually in the way of a refinance. So now when I get paid 100 grand, I get 100 grand versus working for 100 grand, I made 65 grand.

Neil Henderson: 00:29:10

After taxes.

Tyler Smith: 00:29:11

Ex. After taxes. Yes, exactly.

Neil Henderson: 00:29:13

I want to wrap this up, but I want to revisit something because I think it's important to kind of bookend this conversation is that you mentioned that one of the things you're doing right now is a restaurant, which sounds even more wildly active than short term rentals.

Tyler Smith: 00:29:26

For the guy managing it.

Neil Henderson: 00:29:27

Yeah, you're not managing it.

Tyler Smith: 00:29:29

Correct.

Neil Henderson: 00:29:29

Yeah. You're doing the real estate.

Tyler Smith: 00:29:31

I brought capital, so I'm a capital partner. This was a relationship thing. If you would have told me six months ago that I was going to be opening a restaurant, I tell you, you're crazy.

There's the guy that I've partnered with. The guys that I've partnered with are unbelievable. They run the whole show. And I was just a capital call as a, you know, equal partner in the group.

I'm a managing partner, but, you know, I'm not staffing people. I'm not. The restaurant's literally right at the end of my street. And it's going to be a huge fun place.

And it's going to be my responsibility is showing up, making sure everything's good, saying hi. I don't have a crazy responsibility for that.

Neil Henderson: 00:30:06

So it's not quite an LP position, but definitely not like it's more of.

Tyler Smith: 00:30:10

An LP position than managerial position of any sorts.

Clint Harris: 00:30:14

Yeah, it's at the end of your street. We live on an island. It's a small community, but still has a lot of visitors. And you're a super connector.

Tyler Smith: 00:30:21

Yeah, it's a lifestyle.

Clint Harris: 00:30:22

Anybody else out there thinking about opening up a restaurant, don't do it. And I would have told you that except I know the restaurant and I know the people and kind of the situation. So it's going to be great.

I think it's going to be a lot of fun.

Tyler Smith: 00:30:32

It's going to be a lot of fun. It's going to be a lifestyle.

Neil Henderson: 00:30:34

Well, Tyler Smith, thank you so much for sitting here and sharing with us today.

If we have any aspiring passive investors out there that want to reach out to you and maybe pick your brain on doing that path, what would be the best way for them to reach out to you?

Tyler Smith: 00:30:47

Just call me so we can share my cell phone number. Call me, text me, whatever.

Neil Henderson: 00:30:51

What is it?

Tyler Smith: 00:30:52

-: 0706

Clint Harris: 00:31:01

Yeah, you know what?

Tyler Smith: 00:31:03

Now I get it a lot. And I love talking about Nomad and being a Nomad cheerleader. I'm obsessed with everything you guys are doing.

I mean, I've not only done it once, but twice on two separate deals, so.

Clint Harris: 00:31:13

And you've sent us a lot of other investors. And also Tyler's a fantastic mortgage broker, too. My wife is a full time real estate agent. We sent him out. Somebody this week does a great job.

So if you're looking for a mortgage in North Carolina, there's your hookup there as well.

Tyler Smith: 00:31:25

Or anywhere in the country.

Clint Harris: 00:31:28

All right, well, thanks, Tyler. We really appreciate it, man. Thanks for your time.

Tyler Smith: 00:31:31

Thanks, guys.

Neil Henderson: 00:31:31

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