Truly Passive Income

In this eye-opening episode of the Truly Passive Income Podcast, we dive deep into the world of self-storage conversions with Erik Hemingway, the Co-Founder of Nomad Capital. Erik shares his incredible journey from a three-year sailing adventure around the Mediterranean to building a successful self-storage empire with his son, Levi.

Discover how Erik and his team at Nomad Capital add tremendous value to their projects through strategic conversions of old retail spaces, like Kmarts and grocery stores, into thriving self-storage facilities. Learn about the built-in safety margin that comes with forced appreciation and how you can increase your net operating income and property value by implementing energy-efficient solutions.

Erik also shares his insights on the future of self-storage, the impact of technological advancements on the industry, and his favorite way to give back through his family's involvement in a nonprofit theater company.

• Self-storage conversions offer a unique opportunity in real estate investing, particularly when transforming underutilized retail spaces like Kmart or grocery stores into thriving self-storage facilities.
• This strategy allows investors to capitalize on the growing demand for self-storage units, driven by societal trends such as downsizing, death, divorce, displacement, and changing nature of retail.
• Conversions can be more cost-effective compared to building new facilities, as they repurpose existing structures and reduce construction waste.
• These projects often have shorter timelines and fewer zoning restrictions, which can lead to a quicker return on investment.
• Self-storage conversions offer tax benefits, such as depreciation and bonus depreciation, which can significantly impact an investor's bottom line.
• Leveraging syndication for self-storage conversions can provide passive investors with the opportunity to participate in this growing market without the need for hands-on management.
• Self-storage facilities can provide consistent cash flow, making them an appealing addition to a well-rounded investment portfolio.
• The success stories shared by Erik, such as students gaining confidence through his wife's nonprofit theater company, emphasize the importance of giving back and using one's passive income to create a positive impact in the community.
• For those interested in exploring self-storage conversions as an investment strategy, connecting with experienced professionals like Erik Hemingway can provide valuable insights and guidance to help navigate this unique market.

[00:00] Intro

[01:55] Erik Hemingway's background and journey into self-storage investing

[03:37] The advantages of self-storage conversions from empty retail spaces

[09:28] The role of syndication in self-storage investing for passive investors

[14:47] Importance of location and demographic research in self-storage conversions

[21:02] How Erik and his son, Levi, work together in the self-storage business

[25:53] The potential returns and growth opportunities in self-storage investing

[28:34] Erik's favorite self-storage conversion project

[36:26] Erik's favorite way to give back: a nonprofit theater company

[37:31] How to get in touch with Erik for more information on self-storage investing

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Are you ready to discover the life-changing benefits of house hacking? In this eye-opening episode, Neil Henderson and Clint Harris reveal insider tips and strategies to help you master house hacking and unlock your financial freedom. Whether you're a seasoned investor or just starting, you won't want to miss this informative deep dive into the world of house hacking.

• House hacking is a powerful strategy for building wealth and achieving financial freedom by living in one part of a property while renting out the rest, effectively reducing or eliminating your mortgage payment.
• To get started, identify the right property for house hacking by considering its location, amenities, and proximity to hospitals, universities, or event venues, which can attract both short-term and long-term renters.
• Networking with local real estate investor groups, realtors, and mortgage brokers can help you find the best properties and resources for successful house hacking.
• Evaluate potential properties by running the numbers for both long-term and short-term rentals, using websites like Rentometer and Airdna to determine rental projections and compare the highest and best use of the property.
• House hacking is not limited to vacation destinations; it can also be successful near airports, hospitals, military bases, and other areas with a consistent demand for accommodations.
• Successfully implementing house hacking can not only cover your mortgage payment but also generate extra income, which can be invested in truly passive income streams, further growing your wealth.
• House hacking involves some lifestyle adjustments, but the financial benefits can be significant, making it a powerful lever to pull for those seeking financial freedom through real estate investing.

Time Stamps

[00:00] Intro

[01:12] Definition of house hacking

[02:45] How house hacking works at a high level

[04:02] Benefits of house hacking

[05:15] Various house hacking ideas

[08:30] Risks and challenges of house hacking

[11:17] How to get started with house hacking

[14:25] Using websites like Rentometer and Airdna for rental projections

[18:05] Local networking for finding properties and resources

[21:42] Evaluating properties for long-term and short-term rentals

[25:52] Growing wealth through investing extra income from house hacking

[30:07] House hacking as a lifestyle choice

[37:38] Conclusion and importance of house hacking in achieving financial freedom

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Discover the world of commercial real estate investing, how it differs from residential real estate, and how it accelerates your journey to financial freedom! Clint Harris and Neil Henderson break down the key differences between residential and commercial real estate and reveal why the latter can be a game-changer for savvy investors.

You'll learn about the unique valuation methods for commercial properties and how understanding cap rates can unlock incredible potential for wealth creation. Clint and Neil also discuss the role of business plans, operator trust, and your ability to analyze opportunities when evaluating commercial real estate investments.

Don't miss this episode packed with valuable insights that can help you make informed decisions in the commercial real estate market.

• Commercial real estate is focused on business properties, while residential real estate is primarily for living spaces. The latter includes single-family homes and smaller multi-family properties, while commercial real estate encompasses residential properties with five or more units, retail spaces, office buildings, self-storage, and other business-related properties.
• The valuation methods for commercial and residential real estate differ significantly. Residential real estate is valued based on comparable sales, while commercial properties are valued according to their potential income generation, utilizing cap rates and net operating income.
• Forced appreciation is a critical concept in commercial real estate, allowing investors to increase property value through strategic improvements and management. This level of control is not as prevalent in residential real estate, making commercial properties more attractive for those seeking passive income.
• Cap rates, or capitalization rates, are used to measure the potential return on investment in commercial properties. They are calculated by dividing a property's net income by its value, providing insight into the expected annual return.
• Net operating income (NOI) is the gross income a property generates minus its expenses (excluding mortgage payments). The NOI is a crucial metric in commercial real estate valuation, as it directly impacts the cap rate calculation and property value.
• Understanding how commercial properties are valued and the factors that can increase their net operating income is vital for evaluating potential investment opportunities. This knowledge allows investors to analyze business plans and determine the likelihood of successful value-add strategies.
• Partnering with experienced operators is essential for success in commercial real estate investing. These experts can help identify opportunities, execute value-add strategies, and manage properties, allowing investors to reap the benefits of passive income without the need for hands-on involvement.

[00:00] Intro

[01:29] Introducing Clint Harris and Neil Henderson

[02:15] The key differences between commercial and residential real estate

[04:12] Explaining valuation methods for residential properties

[05:45] Discussing the forced appreciation concept in commercial real estate

[07:21] The importance of understanding cap rates in commercial property valuation

[10:10] The role of net operating income in commercial real estate

[12:22] Evaluating opportunities and sponsors in real estate syndications

[15:03] The potential for massive value swings in commercial properties

[17:37] Why understanding commercial real estate is crucial for passive income investors

[21:54] Summary of key differences between commercial and residential real estate

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In this episode, real estate investor Neil Henderson shares his journey from being a defense contractor to becoming a full-time real estate investor. He discusses the challenges he faced along the way, including distractions, analysis paralysis, and the struggle to find a niche. Despite these obstacles, he was able to find his focus in self-storage syndication and partnering with an experienced investor. He also shares how he was able to create enough runway to take a leap of faith and leave his job to pursue his passion for real estate investing. With over $40 million in commercial real estate deals, Neil's story is inspiring and informative for anyone looking to take control of their financial future. Tune in to learn how he did it and get motivated to take the first step towards your own financial independence.

Key Take Aways

• Overcoming a lack of time, money, and experience: Neil Henderson shares his journey of utilizing creative strategies such as house hacking, partnering with experienced investors, and starting a podcast to overcome limitations in real estate investing.
• House hacking as a stepping stone: Neil discusses the power of house hacking and how it helped him build a financial runway, allowing him to take the leap from his W-2 job to a full-time self-storage syndicator.
• Avoiding shiny object syndrome: Neil emphasizes the importance of staying focused on core investment strategies and not getting distracted by various investment opportunities.
• Pursuing self-storage syndication: Neil shares his decision to focus on self-storage syndication and highlights the potential benefits of this asset class, particularly during an economic downturn.
• Quote: "You can get 25, 35% of the way there, and then that allows you to just take a leap and take a bet on yourself." – Neil Henderson, discussing the power of building a financial runway and taking calculated risks.
• Partnering for success: Neil highlights the value of partnering with experienced self-storage investors, allowing him to overcome his lack of experience and access lucrative deals.
• Building a financial runway: Neil shares his strategy of using short-term rental house hacks and long-term rentals to reduce his living expenses, enabling him to pursue his real estate investing goals.
• Quote: "the real risk is not making a move. When you knew what the outcome was gonna be." – Clint Harris, emphasizing the importance of taking calculated risks in real estate investing.
• Networking and education: Neil's podcast played a crucial role in expanding his knowledge, connecting him with industry experts, and building valuable relationships with experienced investors.
• Embracing change and taking risks: Neil's journey serves as an inspiration for aspiring investors, demonstrating that success in real estate investing can be achieved by adapting, learning, and taking calculated risks.

Time Stamps

[00:00] Intro

[02:23] Neil's background and real estate journey

[04:38] House hacking a townhome across from the beach

[08:15] Overcoming lack of focus and shiny object syndrome

[11:30] Partnering with Erik Hemingway in the self-storage syndication space

[15:47] Neil's decision to leave his job and move to a new location

[21:30] The importance of networking and learning through the podcast

[25:04] Overcoming a lack of money, time, and experience to invest in real estate

[28:34] Taking calculated risks for greater rewards

[31:22] Clint's encouragement and highlighting of Neil's achievements

[33:02] Neil's excitement for the future and embracing financial insecurity

[34:45] Clint expresses gratitude for Neil's openness and for sharing his story

[35:52] Outro

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What are the four wealth generators in real estate? Welcome to the Truly Passive Income podcast, where we dive deep into the world of passive real estate investing and explore the strategies that can help you build wealth and achieve financial freedom without being a landlord. In this episode, we take a closer look at the four key wealth generators of real estate— leverage, appreciation, tax benefits, and cash flow—and how they can work together to create a truly passive income stream. We also discuss some common misconceptions about real estate investing and share tips for getting started in the industry. So, whether you're an experienced investor or just getting started, join Clint and me as we explore the powerful world of real estate investing and show you how you too can create truly passive income that can help you achieve your financial goals.

Time Stamps

[00:00] Intro

[03:14] The concept of leverage in real estate investing

[07:12] Appreciation: natural and forced appreciation

[13:45] Tax benefits: depreciation, 1031 exchanges, and Opportunity Zones

[20:32] Cash flow and the importance of multi-unit properties

[26:07] The three immutable laws of real estate investing

[31:12] The challenges of generating cash flow with single-unit properties

[34:10] Applying the four wealth generators to various types of real estate investments

[36:20] The importance of having multiple exit strategies and cash reserves

Key Take Aways

• The Four Wealth Generators of Real Estate: Leverage, appreciation, tax benefits, and cash flow are essential elements for building generational wealth in real estate investing.
• The Power of Leverage: Clint Harris discusses how leveraging allows investors to control more assets with less money and increase their financial velocity.
• Forced and Natural Appreciation: Clint and Neil explain the difference between forced and natural appreciation and how they can increase the value of real estate assets over time.
• Tax Benefits of Real Estate: The podcast highlights the importance of understanding and utilizing tax benefits to maximize overall returns on investments.
• Cash Flow Reserves: Neil emphasizes the need to have cash reserves for surviving market fluctuations and avoiding forced sales of real estate assets.
• Quote: "You never wanna be forced to sell your real estate asset. It's much better to be in a position where you can wait for when the market is advantageous." - Neil Henderson
• The Synergy of Wealth Generators: Clint Harris summarizes how combining leverage, appreciation, cash flow, and tax benefits can create generational wealth and opportunities for real estate investors.
• Adapting to Market Conditions: The podcast showcases the importance of adapting investment strategies to changing market conditions, like the COVID-19 pandemic.

Support Our Show

• Follow us on Twitter @trulypassive
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• Sign up for our FREE Passive Investor Course

On this episode of the Truly Passive Income Podcast, host Neil Henderson talks to his co-host Clint Harris about his experience as a real estate investor. Clint discusses his South Carolina roots, medical sales experience, and path to real estate investing. He and his wife began by building a portfolio of single-family rentals before moving on to short-term rentals and self-storage. Clint also discusses the distinction between being a salesperson and an employee as well as his attraction to the concept of passive income.

Time Stamps

[00:00] Intro

[01:29] Clint Harris' background

[02:30] How sales differs from other hourly jobs as far as the income it produces

[03:42] Were there any other side hustles you tried along the way?

[04:55] How Clint's vision of where his single-family rental investing strategy was going to go versus how it actually went

[11:26] Making the move from South Carolina to Wilmington, North Carolina

[12:47] The decision to pursue the short-term rental strategy

[15:11] Building the systems to manage a short-term rental portfolio

[16:18] Solving the lack of money problem with short-term rental arbitrage

[20:39] Building a short-term rental management team

[23:50] The challenge of building a business that would then produce "passive income"

[28:42] Realizing the need to diversify into another asset class and location

[34:24] Why not continue to expand his short-term rental business? Why diversify into self-storage?

[37:43] The first self-storage conversion project

[39:02] Outro

Key Take Aways

• The need to become knowledgeable about real estate investment tactics before taking action.
• How data analysis can help investors make smarter selections about their real estate purchases.
• The advantages of having a real estate investment portfolio that is vertically integrated with specialized service providers.
• Investing in self-storage as a more diversified, inflation- and pandemic-resistant asset class than single-family rentals or short-term rentals.
• The importance of diversifying your real estate investments across asset class, geography, and operator.
• And much more...

Links Mentioned

• BiggerPockets.com

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Coming up on the Truly Passive Income Podcast

• Neil Henderson's investing journey

There are many different ways to make money. Which ones are best for generating truly passive income, and which ones promise Passive income but aren't? That's what we're going to discuss in today's episode of Truly Passive Income.

Time Stamps

• [00:00] Intro
• [00:50] Understanding the difference between Passive Income and Residual Income
• [03:16] The different ways people generate income, from W-2 employee, to self-employed, to business owner, to passive investor
• [06:10] Explaining what we mean by "residual income" and why it's not passive
• [10:16] Even successful business owners (active investors) will eventually need to invest passively
• [13:50] The era of the pension is gone! You need to build your own pension by investing in assets that produce truly passive income
• [15:14] Thoughts on increasing your income if you are a W-2 employee
• [17:51] Reducing your annual expenses with House Hacking
• [20:36] Who should start a business? Who should invest passively?
• [27:23] Wrap up

Key Take Aways

• Defining Passive Income: Passive income is money earned with little to no ongoing effort on the part of the recipient. Understanding the difference between passive income and residual income from side hustles or businesses is crucial for making informed decisions about where to invest time and money.
• Time and Effort Considerations: It is important to consider the time and effort required to generate income, especially for high-income earners. Pursuing truly passive income, such as real estate investments, can be more beneficial than starting a side hustle or business, which may require significant time and energy.
• Evaluating Investment Strategies: Knowing the end goal of an investment strategy is essential. If the goal is to generate ongoing passive income, investing in assets like apartment buildings may be more advantageous than one-time deals, such as flipping a house.
• The Value of Time: For high-income earners, it is crucial to understand the highest and best use of their time. Often, continuing to excel in their current career and investing the difference with professionals who can manage passive investments may be more profitable than dedicating time to side hustles or businesses.
• Ambiguity and Education: If you're unsure about the best path to take in generating passive income or side hustles, remember that ambiguity can be overcome through education. Accessing free resources and learning from others who have successfully navigated these paths can help you make more informed decisions.
• Balancing Income and Expenses: To successfully generate passive income, it is essential to identify ways to reduce expenses or increase income and invest the difference in truly passive income-generating assets. This will help you achieve financial freedom without trading your time for money.

Links Mentioned

• Grow with Google

Support Our Show

• Follow us on Twitter @trulypassive
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Coming up on the Truly Passive Income Podcast

• Passive vs. Active Income: Understanding the Differences - There are many different ways to make money. Which ones are best for generating truly passive income, and which ones promise Passive income but aren't? That's what we're going to discuss on the next episode of Truly Passive Income.

Links referenced in this episode:

• growwithgoogle.com

Is passive income, a myth?

The short answer is no, absolutely not. But the term "passive income" has been co-opted as a marketing phrase by an entire online industry, usually selling courses for producing passive income that in reality are far from passive. On this week's episode of the Truly Passive Income podcast. That's what we're going to talk about.

Timestamps

[00:00] Intro

[00:47] Neil Henderson's Background and Journey in real estate investing

[02:20] Clint Harris' background and experience in real estate

[04:30] The Myth of passive income and the reality behind it

[07:05] Wholesaler progression and the need for truly passive income sources

[09:08] A brief overview of various truly passive income strategies

[11:15] Real estate syndications as a passive income option

[13:48] The benefits of investing in real estate syndications

[15:43] Limited partners in syndications and passive investment opportunities

[18:25] The rising number of syndication opportunities in the current market

[21:32] The importance of calculated risk and networking in real estate investing

[22:13] Wrap-up and plans for future episodes

Key Take Aways

• The myth of passive income: The hosts discuss the misconceptions around "passive income" and explain that many so-called passive strategies still require time, effort, and expertise.
• Wholesaler progression: The typical journey of a wholesaler, from hustling for deals to realizing the need for passive income, and eventually exploring multi-family properties and syndications.
• Truly passive income strategies: The hosts list various truly passive strategies such as savings accounts, bonds, stocks, mutual funds, REITs, and real estate syndications.
• Real estate syndications explained: A brief overview of real estate syndications, where a group of investors joins together to invest in larger assets they couldn't afford individually, like apartment buildings or self-storage facilities.
• Inflation protection with real estate: The hosts highlight the benefits of investing in real estate syndications, which can offer some protection against inflation due to long-term fixed-rate debt.
• Quote: "Eventually every young person with hustle has to get to the point where the time is worth more than the money and they're looking for passive investments." – Clint Harris, explaining the need for truly passive income sources.
• Syndication opportunities on the rise: Clint mentions the growing number of syndication opportunities in the current market, with more access to networking, deal identification, and market demands than ever before.
• Limited partners in syndications: The concept of limited partners, who contribute capital to syndications and are passive investors, expecting returns from the project's success.
• The importance of calculated risk: The hosts emphasize the difference between taking on risk and taking calculated risks, especially when investing in businesses or syndications.
• Quote: "The day you stop working is the day you stop getting paid." – Clint Harris, highlighting the importance of creating passive income sources for long-term financial stability.

Support Our Show

• Follow us on Twitter @trulypassive
• Follow us on Facebook at TrulyPassiveInc
• Follow us on TikTok @TrulyPassiveIncome
• Sign up for our FREE Passive Investor Course

Welcome to the Truly Passive Income Podcast, the weekly show that brings you a deep dive into what is, and isn’t TRULY passive income. 

We are your hosts, Clint Harris and Neil Henderson, full-time real estate investors who have been a part of over $40 million dollars of commercial and residential real estate transactions, from self-storage to large apartments, to short-term rentals.

The show typically runs from 30-45 minutes and is released every Monday morning just in time for your morning commute.

Sometimes it’s just Clint and Neil, but we will often bring on real estate, financial, and passive investing industry experts to talk about creative investing strategies, identify emerging opportunities, and dispel myths about passive income. 

Truly successful investing often comes from a combination of time, experience, and money. You’re here because perhaps you lack one or all three of those requirements. 

We can’t wait for you to join us on the Truly Passive Income Podcast where we do the heavy lifting for you, to educate you with our experience and the experience of other rockstar investors to identify investment strategies that have been proven to generate truly passive income, and don’t forget to tell your investing friends and family it is available for free in any app that supports podcasts. 

Now, go dive into the episodes and remember, with truly passive income comes freedom of time, place, and purpose.