BIO: Travis Watts is a full-time passive investor. He has been investing in real estate since 2009 in multi-family, single-family, and vacation rentals. Travis is also the Director of Investor Relations at Ashcroft Capital.
STORY: Travis was lured into an investment that had a 20% cash flow return. The investment, however, turned out to be fraudulent, and he lost his money.
LEARNING: Always do your due diligence, keep things simple and invest in what you know and what makes sense.
“In investing, find a philosophy, you subscribe to that resonates well. Find an asset class or type of investing that is simple to you.”
Travis Watts
Guest profile
Travis Watts is a full-time passive investor. He has been investing in real estate since 2009 in multi-family, single-family, and vacation rentals. Travis is also the Director of Investor Relations at Ashcroft Capital. He dedicates his time to educating others who are looking to be more “hand’s off” in real estate.
Worst investment ever
From 2009 to 2015, Travis would rent out spare rooms in his house for extra cash flow and passive income. Then he got into flipping properties. He would buy properties low and sell high. Travis did this for a little while to build some equity.
Getting obsessed with the concept of passive income
At this point, Travis was a little obsessed with this concept of passive income. He loved the ability to participate in all these different things passively and have income rolling in.
In 2016, Travis started to segue into some experimental investments that were not real estate-related. He joined general investing groups, startup capital groups, and all other kinds of groups.
One heck of a deal
In one of his groups, a deal was presented as having over a 20% per year cash flow component. Travis thought that the 20% cash flow component would average his entire portfolio into a two-digit cash flow return portfolio. So he dove into the deal.
Skipping the due diligence step
Travis knew a couple of people who had made investments with this group, and so he didn’t do a lot of due diligence on the group. He simply met the people face to face and looked through their operating agreements.
Travis believed in this deal, and he put about three to four times as much into this deal as he would have any other real estate deal.
A great start
Travis invested in February. The investment was a quarterly distribution frequency investment, so in June, he got his first distribution, and it was as promised.
Here comes the shocker
In September, Travis got an email from the group. The email said that the owners had found out that 35% of their portfolio had been deemed a Ponzi scheme. To pave the way for investigations, the distributions were stopped moving forward.
The situation got worse. The fund moved into receivership. Then everything in the group was liquidated, and investors would never see any return on investment. And just like that, this became Travis’s worst investment ever and caused him to lose almost all the money he had invested in the fund.
Lessons learned
Always do your due diligence
Always do thorough due diligence. Do not be skimpy, be very thorough in making sure that you invest in something legitimate that will bring you returns.
Invest in what you know and what makes sense
When it comes to investing, find a philosophy you subscribe to, and that resonates with you. You are safer investing in an asset class or type of investing that you understand.
Andrew’s takeaways
Keep things simple
Some things are worth trying to understand, but it’s better to stick with something you know. If you want to try something complex, then you must commit yourself to learn it.
Actionable advice
Have mentors, self-educate yourself, and have a wide array of perspectives.
No. 1 goal for the next 12 months.
Travis’s number one goal for the next 12 months is to continue being a mentor for folks that just want to bounce an idea off or get a second opinion or perspective on investing passively.
Parting words
“Find a risk-adjusted return that helps you meet your needs and your goals. While taking on some risk is important, don’t take an unnecessary risk.”
Travis Watts
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