[00:00:01] Speaker A: You're listening to PTC point of view brought to you by preferred trust company, the preferred custodian for all alternative investments. We're here to provide retirement savers like you with the tools you need to succeed. Need a confidence boost when it comes to investing outside of the stock market? Do you want the power to build a tax sheltered Nasdaq that will blast through your golden years? You've come to the right place. Turn up your speakers and turn off cruise control because we're taking you on the alternate route to investing with your IRA.
[00:00:40] Speaker B: All right. So welcome, Tate. So glad that you are joining us from Turbine. Why don't you just really quickly give us an idea of how you got started in this, who you are and what investments your company offers.
[00:00:56] Speaker C: Thank you so much, Gary, thanks for having me on. I'm honored to be here. I appreciate you having me. Yeah. So a little bit of background on myself. I am an airline pilot by trade. That was sort of my first passion. I'm very fortunate to have grown up in an aviation family, and I actually learned how to fly when I was eleven years old. That brought me down a path of aviation and eventually to the career of airline pilot. My grandfather actually was an airline pilot, flew for Hawaiian Airlines from the 1940s through the 1970s. So very strong background in that. But I always had a passion for real estate. I read rich dad, poor dad when I was in my early teens, and that sort of changed my outlook on money and finance and financial freedom.
Had I not gone into aviation, I most certainly would have gone into real estate, specifically real estate, entrepreneurship and investing. And I don't know where that path would have led me. But the good news is that I've been able to find success in both. I got hired by my major airline at 23 years old and shortly thereafter started buying rental property and started building my own portfolio of passive income and learning the real estate business, which is, as anybody who has found success as a real estate investor knows, it's a very long, and I wouldn't say steep, but long learning curve. It takes a long time because it's a team sport. You have to spend a lot of years in the business to build a network. And in any case, I grew my own personal portfolio to a respectable size and I wanted to continue growing it. So I started attending some real estate conferences, and that's when I discovered syndication investing, passive investing, about six, seven years ago, started heavily investing in syndications. And that really changed my strategy because as a high income w two professional who really loves my job and I'm not trying to invest my way out of my day job. I really enjoy flying.
But the strategy of being able to invest with other people and leverage their knowledge and their time and their resources in order to be alongside them, particularly in a diverse, a more diverse set of asset classes, rather than myself investing in duplexes, triplexes, small, multifamily, which is all multifamily residential, I could diversify into self storage and industrial and all these different things. And so I took a hard left. That's sort of the first part of my story, and I suppose we could talk about the genesis of turbine capital from there.
[00:03:45] Speaker B: Well, the reason you're on today is because you have clients that work with preferred trust. I saw an email last week from one of your clients who now is a mutual client of both of ours, and they're moving more funds into their IRA because they're waiting for your next syndication. They want to be ready when they get the email or however you correspond with your clients so that they can jump on it. So it sounds like your investor base has grown to the point where your current investors that you're working with are definitely ready and have an appetite for more that you have to offer. So that is the best compliment that anybody can give as an investor. And I saw it for my own eyes. I saw the email, and I thought, now there's a smart person right there.
Get yourself in position so that you can take action. But why did you decide to offer the opportunity for your clients to invest through a self directed IRA?
[00:04:45] Speaker C: I personally invest in real estate through a self directed IRA. I think it's a fantastic vehicle, and I think most syndicators today accept funds from self directed iras. And I think it would be silly not to. I mean, you would know the number. Carrie, how many dollars are there in the United States in self directed retirement accounts?
[00:05:09] Speaker B: Well, there's 12 trillion at last census.
And that's self directed. That's just self directed iras. That's not all iras or all retirement plans. That's 35 trillion. But a good chunk of that people are looking to take control of and choose their own destiny, if you will.
[00:05:28] Speaker C: Absolutely. Yeah. So I think it would be foolish to ignore that number. And so I think that most syndicators accommodate them. I can say that working with PTC has been fantastic. We work with a great number of self directed retirement custodians, and I can tell you the only consistency is that there is no consistency in processes. But working with you has always been very seamless. It's been fantastic.
[00:05:55] Speaker B: Well, we appreciate that because you have a lot of high net worth individuals that are investing with you. Do you find that many of them are using a traditional IRA or a Roth IRA? Have they gone to the conversion of the backdoor roth, or what do you see out there?
[00:06:14] Speaker C: Most are investing through traditional iras because our client base is high income w two, and so they can use the write off even though it's only $6,000 a year that you can put into it. But really, because the conversion hurts. The conversion is a very high tax bracket. So unless we have clients who are very sophisticated and they can get their w two down by using real estate, professional status and depreciation, we don't see many clients doing IRA rollovers.
[00:06:48] Speaker B: Yeah. Or unless there's losses event that happens between the two parties where one loses their job, et cetera. There's typically some sort of event that's occurring before they're doing that. So I would definitely agree with you there. And the vast majority of us have traditional iras because Roth IRAs weren't available when we started, and a lot of us haven't ventured into it, but it definitely is something that is available. So let's talk about turbine. So, obviously, you've kind of come into this as you have your career, which also happens to be, I'm going to go as far as, say, as a hobby as well. You thoroughly enjoy what you do for a living, which is phenomenal, and you don't want to walk away from that. It obviously is a good career. You have a lot of fun doing it. We're glad the friendly skies has you in it.
But your real estate career is really kind of taking shape beyond just maybe you and your immediate family, and you've expanded beyond that into syndication. So give me an idea. Turbine capital. How long has turbine capital been around? What are you guys currently doing and what have you done in the past? Let's kind of delve into this investment opportunity that I know our clients would be interested in learning more about.
[00:08:16] Speaker C: Yeah. Thanks. So, Turbine Capital, I founded the company coming up on four years ago now.
It really was modeled after physicians. I was attending a lot of these conferences and meeting an incredible network of people, and I kept rubbing shoulders with these doctor groups who had not only education networks for physicians that, that educated physicians on how to actively, but mostly passively invest in real estate. And then they also had private equity groups where they would pool physician capital and they wouldn't would invest as a group. And I thought that was a really great concept and something that should exist in the aviation community, and it didn't at that time, and it still really doesn't.
We are the only private equity group that specifically caters to airline pilots. So I started my company four years ago. We launched in the spring of 2020, and since then we've done 17 real estate projects. We've raised about 27 million from private investors. We're invested across a billion in assets across the Sunbelt, and we have an incredible advisory board and investment review committee. What's wonderful about having a group like this is that we have a very deep ability to perform due diligence. So let me give you an example. If it was just me going out and saying, hey, I want to invest $50,000 with sponsor a, and I said, okay, hey, before I put this $50,000, is it the property, the subject property that we're looking at investing in? I'd like all the source documents for your feasibility study. I'd like to run background checks on all of you. That would be a pretty heavy lift and very unlikely that that sponsor would make the time for you. But as a group, we have the economies of scale and we have power in numbers, right? So when we're writing multiple million dollar checks, we have the cooperation of the sponsor. In fact, they're enthusiastic to host us on a site visit. So it changes the dynamic with those relationships and allows us to build more meaningful relationships with top tier sponsors.
[00:10:29] Speaker B: Absolutely. Would you say that all of your investment pool are pilots?
[00:10:38] Speaker C: That's a great question. No. In fact, it's skewing that way because that as we grow, we are catering to the aviation, the professional aviator. However, we have every walk of life. I mean, we have business owners, doctors, attorneys, real estate agents.
We're certainly not limited to airline pilots, but that's sort of our key demographic and who we cater to. But anyone who is making between two and $600,000 a year is really our demographic, right in their w two. And they have the same financial concerns as we do, which is high taxes and diversification outside of a stock heavy portfolio.
[00:11:30] Speaker B: Yeah. Let's talk about your most recent syndication that you closed out. Totally funded.
Tell me about it. Where is it? What does it look like?
[00:11:39] Speaker C: This was an exciting one. So I was one of eight general partners on a 1285 acre land deal in Colorado. So we bought 1285 acres 40 minutes southwest of Colorado Springs in a little town called Canyon City. The town is growing, there's a lot of resurgence. It's really cool, it's got a great historical downtown. There's a beautiful hotel that's being renovated down there, and they've got a big housing problem. And housing in Canyon City is much, much cheaper than it is in Colorado Springs and in Pueblo, but they have a lack of it. So we were able to buy from a canadian hedge fund, a mostly entitled 1285 acre parcel for $4 million. And our team is in the process.
We're expecting about a four to seven year hold on this thing, finishing horizontal infrastructure and selling parcels off to shovel ready parcels off to developers. And it came with an award winning golf course, came with the operation and the land and the course. It's a beautiful course. It's been top rated by a bunch of magazines. And it's kind of interesting, a fan favorite in the area.
[00:12:53] Speaker B: So you said four to seven year.
[00:12:56] Speaker C: That one's a four to seven year hold. Yeah, that's an interesting one because for people who are familiar with, say, multifamily investing, where you're buying an in place asset and there might be 4% to 7% cash flow clip during the hold period from rents, and then at the end you get a big pop where you sell the asset, you get your initial principal back, plus the return on sale, that's kind of what we're all familiar with. Right. This works much differently. Right. Because there is no rent, there is no cash flow, typically.
Exactly. So we'll be seeing pops of cash flow come through throughout that four to seven year hold as pieces are sold off.
[00:13:39] Speaker B: And are you going to develop the entire acreage, excluding the golf course? Of course.
[00:13:47] Speaker C: Of course. So there is about 600 of those acres are natural recreational open space, so unfoldable hills, valleys, a lot of that land. We're actually looking at gifting back to the Department of Parks and Rec to build some mountain biking trails and things like that. Beautification.
We're not doing any vertical infrastructure, so there may be some follow on opportunities that we may run separate offerings for to raise money for, say, a storage development or a multifamily development, or maybe some build to rent single family homes. We'd like to do some golf cottages, but that has nothing to do with the current offering. The current offering is just buying the land, finishing off the entitlement, and selling that off to developers. And normally we would stay away from a land entitlement deal.
If anybody's listening to this and knows land entitlement, it can be very sticky and very risky. But we had some insider knowledge we've got.
[00:14:49] Speaker B: That's great.
[00:14:50] Speaker C: The mayor and the director of economic development all on board. It's already in an approved plan development district, so a lot of things were already done on the project that made us feel comfortable with it.
[00:15:03] Speaker B: Now, lead me down the path of what your next endeavor might look like. And if you can't go there yet, because confidentiality, whatever's going on, I completely understand. If you can't take me forward, I'm going to ask you to take me one step back from the 1200 acres.
[00:15:21] Speaker C: No, that's fine. I mean, I can do both. So last year we did five or six opportunities. We did an industrial ground up, industrial warehouse, manufacturing facility, we did a mobile home park deal. We did a multifamily deal. So we're quite diversified, I think going forward while we're still in due diligence on about a half a dozen offerings that we're looking at placing capital for.
[00:15:48] Speaker B: Yeah.
[00:15:49] Speaker C: To me, I think that the risk reward profile in multifamily today is one of the most attractive multifamily and mobile home parks. And I'll start with multifamily. As I'm sure you're aware, we've seen valuations decrease by about 30% across the board, while fundamentals remain really strong. There's a lot of supply coming online in the next year or two, but because of interest rates, it's just impossible to get construction financing right now. So around the time that the deals we buy this year are maturing, the construction pipeline is going to be very thin. So we think that there is just an outsized risk reward profile in multifamily right now. Okay, mobile home parks. The case is obvious.
We're in a dire situation of affordable housing in this country. Every politician is trying to figure out how to create more affordable housing, yet we're bulldozing mobile home parks left and right.
The park that we bought last year was owned by a developer who was planning on bulldozing it and putting in multifamily. And we only acquired that park because with the rise in interest rates, his multifamily build fell apart. And so he decided to just sell the park.
So they're disappearing.
It's a wonderful asset class, if you're not familiar with it. It's a wonderful asset class that allows people who otherwise wouldn't be able to afford a starter home to own their own home, create equity. It's really a win win for everyone. It's just that nobody wants it in their backyard and so they're disappointing.
[00:17:29] Speaker B: What are you doing with the parks? Are you kind of doing a revitalization with them. How are you making them work for your portfolio?
[00:17:41] Speaker C: So, to be clear, we are a capital partner. We're a fund, and so we create win win situations between our sponsors, our operating partners that we work with, our investors, and ourselves, because we're able to leverage our economies of scale to get our investors better economics than they would be going direct to sponsors. So I preface that by saying that because we're not the ones who are boots on the ground making those improvements.
[00:18:10] Speaker B: Okay.
[00:18:11] Speaker C: And we would be spread very thin.
[00:18:14] Speaker B: If you were doing that.
[00:18:15] Speaker C: So we partner with people who specialize in that asset class, and this is all they do. It's all they've done for decades. And we're a capital partner to those individuals. But most of the stuff that we go after is value add. So we're doing infill. A lot of the stuff that we buy is from mom and pop operators who might be operating at 40% to 50% capacity of parks. They've got pads that just aren't. They don't have homes on them.
[00:18:43] Speaker B: They need infusion.
[00:18:45] Speaker C: Right.
[00:18:45] Speaker B: Okay.
[00:18:46] Speaker C: And it's kind of wild to think, okay, why wouldn't they want to put more homes on this park to generate more income? And really, it comes down to just lack of desire. A lot of these are older baby boomer generation. They're retired. They're making $20,000 a month. And if they don't need $25,000 a month, that would just be additional 25% of headaches that they would have to deal with on month to month basis. So it's just enough for them. So we find that in these value add opportunities in mobile home parks, there's an extraordinary amount of value that can be added in a lot of these.
[00:19:28] Speaker B: Absolutely. Yeah. So, capital partners. So, if I understand correctly, make sure our listeners understand exactly what turbine does as well. And I'm shortening turbine capital. I probably shouldn't do that.
It's not my company to shorten up. That's fine. But turbine capital is providing the capital resources in value add opportunities, whether that be industrial, multifamily, land acquisition, mobile home parks. Sounds like you are not a one stop shop. You're looking for the value add opportunities in specific areas of the country, or are you value add wherever the value add is? Give me an idea of location for turbine.
[00:20:12] Speaker C: We're fairly location agnostic. We follow population and job trends.
You got to have people. It doesn't matter whether it's industrial, mobile home parks, multifamily self storage. You have to have people, if you invest in it in a market that is losing population, I don't care how good your asset is, it's going to be really hard to keep it full.
So we follow demographic shifts, as I'm sure you're very familiar with and a lot of the listeners are familiar with.
Beautiful thing about syndication is that you can diversify across many different asset classes and many different geographies and sort of spread your risk across.
[00:20:53] Speaker B: Clearly, your diversification is there for your syndications. Is each syndication separate to each asset that you are raising capital for?
[00:21:04] Speaker C: That's a great question. Yes, it is. So that's a question that we get a lot from Newer investors is, okay, so if I put 50 grand in, am I diversified across all these deals? And the answer is no. We have an investor club. If you jump onto it, you'll get a notification via email when we have a new opportunity that we've greenlit, and it's your prerogative whether you'd like to jump into it or not. We are not a registered investment advisor. We don't give tax, legal or investment advice. It's your prerogative if you'd like to join us on that opportunity or not. And each deal is siloed.
[00:21:38] Speaker B: How do investors get a hold of you? I mean, are you looking for investors? And I know that sounds like a crazy question, but when you have investor bases, are you looking for more?
Are you not? Are you a closed syndication? Are you an open syndication? How much are you looking to invest in the next year? In other words, would preferred trust clients have any opportunity to invest with you in 2024?
[00:22:03] Speaker C: Thank you for asking. Yes, they absolutely would. We are growing at a really fast clip, and we are expanding our investor base. Anyone is more than welcome to join our investor club. As we expand, we are continually getting smarter, we're getting better people on our team, what we do. You asked earlier about when our next syndication will be. And we take diligence very seriously. So we have a very thorough investment review process. Grant Cardone's ex CEO does our financial stress testing and underwriting of all of our deals. And so we take our time to make sure that we're finding really good stuff. That being said, as mentioned before, we don't provide financial advice. We don't say we're not going to say that our deal doesn't have any risk or that we're not going to make any claims as to any of that stuff. Right. But if it makes it on our platform, it's been thoroughly vetted by a team. So I think a lot of people appreciate that. But yes, you're more than welcome to join our investor club. You can go to Turbinecap.com, click invest with us. You can also reach out to me directly if you'd like to. My email is Tate
[email protected] we actually launched a podcast last year, myself and Ryan Gibson, who is the CIO of Spartan Investment Group, they're one of our storage partners. He has been in the aviation industry as long as me, and we teamed up and started a podcast called Passive Income pilots sharing financial literacy with the aviation community.
[00:23:40] Speaker B: All right. Well, I appreciate you joining us today. It's been fun chatting with you, get to know you, getting to know your business, understanding the syndications that you're doing and why. We truly appreciate you spending the time with us and look forward to a long, prosperous relationship with Turbine Capital and hope that your 2024 is as prosperous as we hope ours is.
[00:24:03] Speaker C: Thank you.
[00:24:03] Speaker B: Karen, thank you so much for joining us.
[00:24:05] Speaker C: It's a pleasure working with you. And thank you for taking such good care of our clients.
[00:24:09] Speaker B: We appreciate it. Thank you.
[00:24:12] Speaker A: Thanks for joining us. For another episode of PTC Point of View, where retirement savers meet alternative investments. Know someone who's struggling with a retirement strategy? Tell them about our show. Can't wait for the next episode. To learn more, visit our
[email protected], or give us a call at 88899. I know 78 92.
