Breaking Down How To Earn And Learn With K. Trevor Thompson

 

How to earn from the best investments? Lisa Hylton presents K. Trevor Thompson, a multifamily real estate investor and obsessed learner. K. Trevor gives valuable advice, explaining that you need to learn about your investors. Understand the market and figure out what happened in prior transactions. Ask a lot of questions. Why? Because to invest means you want to develop it for yourself and take other people’s money. Both are huge responsibilities! Do you want to know how to find out which investors are worth investing with? Join in the conversation.

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Breaking Down How To Earn And Learn With K. Trevor Thompson

I’m super excited to have on my show, Trevor Thompson. He is a successful Vice President with many years in the attractions and entertainment industry. He is highly observant, detail-oriented and has a highly developed work ethic. He spent the past years working for iFLY Indoor Skydiving and grew it from 1 location to 80 locations worldwide. To date, he has invested as a Limited Partner in 14 syndication deals that consists of multifamily apartments, 1,000 plus doors, retail strip mall, townhouse to condo conversion, 28 units, 1 single-family rental portfolio fund 250 homes, ground-up multifamily fund 100 doors, medical office building and land development near a new Tesla factory in Austin. Trevor, welcome to the show.

I’m so excited to be here.

I’m glad to have you. I’ve always seen you in the social media space. I saw you presenting and sharing your story at a meetup. I was like, “I had no idea with all these amazing things that you’ve done.” I want you to jump into sharing your story. Hopefully, it impacts other people who have been thinking about investing in commercial real estate, given all your experience in the space. My show is broken into three parts. The first is a little bit of background about who you are. We’re going to jump into the meat of the episode and wrap things up with the level of questions. For my audience, can you share with them where in the United States you live?

I live in Austin, Texas.

How long have you been in Austin?

Several years, I came here a while ago.

What do you do for work at this point? Are you full-time real estate syndication?

I’m a full-time investor and apartment syndicator.

What do you and your family like to do for fun?

Go to eat. That’s probably why I’m a little bit overweight. We always enjoyed going out to eat dinner. It was the only thing that everybody agreed on. It became a regular family event. Kids got to pick where they wanted to go. They’re growing so I get to pick.

For anyone out there who’s making a trip to Austin, can you recommend a good spot to eat?

In the domain area, there’s a restaurant called North, an Italian restaurant. The food is always good. It never disappoints. Especially if you want to know the great Austin weather, they’ve got a fantastic patio. You get to people-watch while you’re sitting there eating dinner. I’m going to go with that one.

I know that good Austin weather because I was there for FinCon and you came by. There was a cold front moving in. I was like, “I didn’t bring anything.” You didn’t need anything. It was such nice out there. I can’t complain. We’re going to go ahead and pivot, moving right into the show. First of all, can you share with us how you got started in real estate investing?

I’ve always had an interest in real estate investing. When I first started at iFLY, oddly enough at our first team meeting the owner gave us all Rich Dad Poor Dad books. I read that book. It touched me but I didn’t do anything. You get busy doing your life. I had a great career with iFLY and was traveling all over the United States and the world. I got busy doing what everybody else does, which is their job and life and what they’re doing. I didn’t think about it. If I had to start earlier, it would be a lot better than starting later in life but at least I started.

I rattled off some of the fourteen syndication deals that you have been involved in. Can you talk about the very first one? How did you even find it?

I joined a local mentoring program. I didn’t join separate programs but was I looking for a mentor or somebody to teach me about real estate. The reason I picked the one I did was they only focused on Central Texas. They did have a single-family but I wasn’t interested in that. I was always interested in commercial. I started out wanting to do more like strip retail centers or offices but soon discovered the amazing asset of multifamily. I’m super glad that I did because it is a sweet spot in the commercial real estate world.

Invest in something that you could earn and understand the market. Share on X

There are a couple of things you brought up there. 1) Mentorship, 2) You started with the strip centers and then ultimately pivoted into multifamily. Someone reading is probably thinking, “I want to invest in some of these commercial real estate projects.” Given your experience in this space, what would be some of your advice that you’d give them in terms of getting up to speed to make that investment?

I always tell everybody starting and I didn’t get this until a little bit later, James Kandasamy has a great book called Passive Investing. I told him he needs to give me a code so at least I get a nickel every time I recommend his book. That book is fabulous because it gives a broad overview of a passive investor. It’s a good book for that.

I’ve read that book. It’s a good book. Moving on, you talked about that pivot from strip malls into multifamilies.

The strip mall was in my head. I didn’t do a strip mall investment until later. Originally, I liked that because I’ve opened the IFLY and I always like malls. I thought that was a space I wanted to do. It was funny when I closed my eyes and envisioned myself standing in the mall, talking to people that are going to open their first new business and that was what got me excited about it. I have only done one passive investment. Clearly, with the economy, it’s a little bit sketchy may be to think of but it’s still a space that will always be around.

Diving further into some of your experience, you did multifamily apartments, condo conversions and funds. Can we talk about how you got comfortable each time a deal was presented to you, for someone who’s reading and they’re like, “How do I get comfortable that this is a good deal?”

I’ll be honest, in my first few investments, I did not know what I was doing even when I got mentoring. I didn’t understand it all. I was learning as I go. The first time, which was about a year later, I walked my first investment and went, “I bought a piece of this.” It was rough property. I had no idea what I bought. It was very eye-opening. All along, I learned a lot and made sure at least I visit Google Earth if I can’t visit in person and get a better idea of what I’m investing in.

That’s not as important. It’s who you’re investing with that’s very important. I learned a lot about the who. I know you asked about how I got other asset classes and things. I am an obsessive learner. I’m a crazy man, 100 audiobooks a year and that includes listening to the ones I like four times over. Part of that is because I kept driving and looking at apartments. I had time and energy but I’ve been an obsessive learner. I always set my motto as earn and learn. I wanted to do invest in something that I could earn but I wanted to learn. I wanted to understand the market and what happened.

I asked a lot of questions and studied them. I’m much more involved. I go look at something before I invest in it. Earn and learn was super important to me because I wanted to understand something better before I went and tried to develop it for myself and took other people’s money. I wanted to use my money to learn and hoped I would earn to get me ready to get to the level I’m at where I’m trying to do my deals. It was very important for me beyond the passive investor side so I understand all of the thoughts, emotions and things that go through in making a passive investment.

 

The earn and learn probably stands out to a lot of people reading. They’re probably thinking, “There are opportunities to earn and learn.” Can you talk about how you went about maybe creating those kinds of opportunities or finding those opportunities to earn and learn?

The most important thing to do is to be an LP, which is a Limited Partner and investor in a deal. Let the deal sponsor likes. Don’t be a pain in the neck with the questions. Be the curious person that wants to learn. Once I got a relationship with people, I would ask, “How could I help? What could I do?” I’ve been very fortunate that several people have allowed me to help. It’s always been, “What can I do for you? What is there something I can do?”

I was an asset manager for one of the properties for eight months that I’m an LPN, which is unheard of. We self that after I got in it, which was also unheard of. I learned the time, making sure that I understand more talking to the investors. I want almost to say becoming their friend, even though I think of myself as a partner.

I looked at different asset classes. I had that experience with a deep value add. I pivoted immediately to an A+ property. The GP there let me research smart apartments because they bought one that hadn’t been turned smart. I did it all on my time. I reached out to 10 vendors, narrowed it down to 3, drove up in Texas, which is a 3-hour drive for me and met the vendors on the property all at my time and expense but I was learning while I was earning.

I’ve got a great relationship with the people that have that property. We talk more regularly. I feel like a partner. I’m a passive investor who doesn’t make decisions or do things but I tried to add value. My obsessive learning characteristics made this exciting. Most people are just researching companies but with my obsessive learning desire, I was fascinated and learned stuff that I’d never heard of it. I keep thinking about how can I apply it to different asset classes? You bring that energy to a group.

A lot of people can bring a lot of energy to a group and it’s not good energy. That guy that always asks us the questions, even though they say there are no dumb questions, there are especially if they’re self-serving versus educational and want to understand something. The beautiful thing about this business is that people are very patient and want you to understand. They are very helpful and giving. I’ve connected with people that I’ve not invested with and they’ve put tons of time talking to me and I try to give back. I’ll try to help them with something else and offer. It creates a great situation for me. I would recommend it for others to come at it with that energy if you have the bandwidth and time.

The people that earned and learned stood out to them and they’re like, “How do I make that happen?” You’ve laid out the plan in terms of how you made it happen for yourself. That I envisioned has opened doors for you to later be more active in the space.

It has. It’s interesting. Some people are surprised I’m just doing my first deal because I’m so active. First of all, everybody thinks I’m part of their mentor program because I show up all over the place. I’m obsessive with connecting with people and doing things but everyone has a secret weapon or thing and that’s mine, getting out there, trying to connect and add value anywhere I can.

Find investor partners who are patient and want you to understand. Share on X

Many people were kind to me. I reciprocate this kindness over and over again. When somebody took the time to tell me something at the beginning, I feel karma or morally obligated to find that person at a meetup who’s brand new and lost, spend half an hour with them and recommend this book. It’s good to be able to do that.

Another question on the different projects that you’ve invested in because you have some land development there and medical offices. I would envision and I don’t know for sure but maybe when you were looking at some of these different deals, you probably had different reasons for why you decided to invest in some of them. Can you talk about maybe some of the drivers that you considered when deploying capital?

For example, all the first investments that I’m going to refer to are deep value add. I switched my focus and thought, “They bought an A+ property. It was bill finished, lease-up so I could learn about that particular space.” I’m always interested in the retail strip center. They bought their first one and didn’t invest but I asked if I could come to the investor calls anyways and listen in even though I didn’t invest. I invested in the second one. Our timing was excellent. We closed two weeks before COVID shut the whole center down but the liquor store. That is investing. Things happen and I’m confident it will be okay.

The land one happened by accident. I was supposed to get a deal. I sold a whole bunch of stocks and my deal fell through. I was scratching my head like, “What am I going to do?” I got an email about a land development deal. They needed it. It was more of a hard money loan backed by a corporate guarantee but I drove to where it was going to be. I learned a lesson and make sure I look at where it was going to be. I already knew the people because I had a non-real estate investment with them already. I’ve got this capital. It’s going to take a year to eighteen months and will come back to me. It was a guaranteed rate of percentage return. I wanted to understand it a little better.

That nicely ties us back to what you were touching on about the importance of knowing who you’re investing in and location. For someone reading and they’re like, “These two things are heavy on their heart.” What advice do you give them in terms of getting comfortable with the deal sponsors that are running the show?

It’s important to get to know them. In the webinar that we first met at or at least that you heard me do, I talked about betting on the jockey. The jockey is very important and getting to know them. For example, I’m fascinated with the asset management side of the business as well. I signed up for APT Capital, Gary and Kyle. They did a session. It was a three-week-long thing, which was exhausting. Everybody that presented on there, I reached out to them afterward to have an additional conversation because of my obsessive nature. I started talking to them. Probably they thought, “This crazy guy kept calling us.” Now they liked me.

They probably thought there was this crazy guy at first. Once I got to know them, I invested because I got to know them and understand what they delivered. I wanted to see them talk the talk. As an investor, do they walk the talk? Would they do what they’re going to do? A couple of my investments that are more local here in Central Texas, they’ve been people that I’ve watched do a couple of deals and want to be partners with at some time.

At this time, there were only investments with them. I decided to invest passively but also say, “If you need anything, I’m here to help you. How about this?” One of them started a local meetup. I promoted meetup more than he promoted his meetup. Trying to be that person that connects and helps is an important way to get to know what I’m going to call the jockey beaters. That’s the lead sponsor that you know.

 

They are not following what you see on the internet because nobody posts their bets. I spoke about this other guy. They talked about some stuff that went wrong on their call with some of their deals. I thought, “That’s who I want to invest with. Nobody’s going to have it all perfect all the time.” I want to invest with somebody that says, “We had this happen and this is how we fixed it. We’re going to talk to you in your training class about how you can fix things that happen.” To me, that was very important.

Transparency is critical in good communication. In terms of location, are most of your investments all based in the Texas area?

They are. I understand that markets. There were three things, the jockey and the horse, which is the type of asset. I’m a little bit variety there and wanted to try some different things out so that I’m not all multifamily-focused. Then the track, which is where you’re going to do it. I understand Texas because I live here. It’s easy for me to go see the investments and do it. I have one in Tucson, Arizona but the rest are here. It still bothers me that I haven’t flown to Tucson to go see it.

I’ve spoken to them and said, “On one of your visits, maybe I could come and visit. Even if I’ve got to sweep the parking lot when I get there, to be able to come and learn will be interesting and to understand a little more about that market.” Knowing what your investment market is, you’re never going to know who your sponsor is. I’m trying to sponsor deals in Texas because I’ve learned so much about it and that’s an important thing. You hear people that live over here, investing over there and nobody lives over there. I’m not interested. I want somebody to know their market.

All of these different investments, did you all do them after you moved to Austin?

That’s correct. They’ve all been done in the last few years. I got busy and did a lot of investments.

For Arizona, it wasn’t in your backyard. What were some of the key things you did in terms of getting comfortable with the location?

It was the sponsor and then understanding the location. Luckily, I’d joined a case study of the previous property they bought. They did a webinar case study so I signed up for that. What impressed me was they didn’t only tell me how great they were. They told me some stuff that took a little bit longer to get done, some challenges they met and how they overcame them.

Invest with somebody who says, “We had this happen, and this is how we fixed it.” Share on X

They even said, “We’ve still got a couple of challenges we’re trying to overcome.” I thought, “That’s so important that a sponsor is transparent.” It fits my model of earn and learn. I want to learn what went right and wrong. How did you fix it and make it right? Hopefully, I’m going to experience that. I haven’t experienced that I’m wrong but everybody does. I’ll then know how to fix it.

Moving on to the way you’re seeking to play. You’re at a point in your journey where you are sponsoring deals. Can you share what role you like to play on your teams?

I’m very interested in being an Asset Manager. I took a lot of classes in it. I’ve studied it a lot. I talked to the sponsors that talked about asset management and liked asset management. Those are the people I seek out and say, “Could I talk to you about how you’re running your property and all the different lessons that were learned?”

It’s interesting because my whole life I’ve opened small businesses. Out of the 80 iFLYs, I opened 46 of them. I used to run them for years before that. I’m a peculiar guy that enjoys what I call incremental improvement. That’s all multifamily. If it’s a big project, sometimes I’m an EDD guy so I get lost. I like little fixes, wake up every day and say, “How could today be a little bit better than yesterday?”

That’s all the multifamily value add. This property, how do you have a plan to incrementally make it better? There are lots of ways to make it better. Everybody talks about rent bumps but it’s way more than that. The biggest thing that’s still people don’t talk enough about is making somebody’s apartment feel like their home. Most people that live in apartments don’t feel like it’s their home. They feel like it’s somebody else’s house and they live there.

If you can create an environment where people think it’s their home, they’ve come home, “Welcome home. Thank you for being home. We’re here to help you. We’ll make sure that your home is well maintained and taken care of,” that, to me is the start of what I’m going to call a beautiful relationship. The next level is a team that enjoys their job because they’re making people have a nice place to live versus, “Why did you increase the rent? Why is this and that,” all the negatives.

You still have to get stuff fixed but focus on the positives. If you create a home, a great place to live, a great environment to work in, how could that not be a great place to invest your money? People will pay more, take care of more, everything more, at a place they like to live and work. People that want to work produce way more volume of excellent work than people who are just driven by KPIs.

I meet people all the time who say to me that asset management is the role that they want to play. They have moved from maybe passive investors and then they want to play in the syndication space actively. Listening to your story, I feel like some of the key things that have helped you to transition into this role are earn and learn. Investing in properties and then also seeking to add value, helping out when you could.

 

One other thing that I almost forgot to mention or circle back to is that deal that you ended up being a large part of the asset management for eight months. Can you talk a little bit about some of the lessons you learned that helped you? Maybe you already knew before that that you wanted to be in the asset management part of the role but all the lessons that you learned from that experience.

I learned a lot of lessons. Some of the lessons weren’t good. The biggest lesson I learned is that you need a good plan. “Everyone who has a plan forgets their plan when they get punched in the face.” This is what Mike Tyson said. I’ll be honest. Going into COVID with a deep value add property, I was punched in the face every single day. I was relentless, not letting it knock me down and trying to turn a place that was struggling into a nice place to live. We had a lot of big issues and it was very challenging.

I learned a lot about I don’t want to get too much into it. I still have some investments with that group but they won’t get me and I won’t do again. I learned a lot about the quality of a management team. When things go wrong, how do you turn it around for your investors? How do you put them first? Don’t get me wrong. They did those things. Hopefully, we’ll never live through a COVID era again. When you were down on your knees, COVID kicked you over. If you weren’t on your knees, sometimes it knocked you to your knees. It was a real struggle.

Our residents lost their jobs. That sounds terrible. They were mostly service industry. Their restaurants got shut down. They were living paycheck to paycheck as it was. Social assistance came along and that helped but it was very difficult. I learned a lot. To be honest, I’m not quite looking to do that deep value add. I want to see how the world recovers a little bit. It’s a sweet spot but it’s a little dangerous still.

Outside of not looking to do that deep of a value add, any other things you learned that you could share with other people when it came to asset management. Maybe even misconceptions that you thought about the process.

The one thing I learned is how hard those poor property managers work that are on site. If there are any in a negative spiraling environment, it’s challenging. When you run out of money to fix things, do things or it’s hard to fix them because they’re super old, it’s a very challenging environment. You need to find ways to support your team and the people there. To be honest, I always wanted to make people happy at work but I didn’t think about it too much. That’s why that became the next level. What’s important to me was creating an environment in which they felt supported by the ownership group to deliver that resident experience.

That’s critical in terms of being able to run a successful investment. It’s the people. You’re essentially working with them to deliver investor returns but also to provide a good place for your residents, which they then, in turn, want to stay and pay more rent.

I learned so much. I was sweeping the parking lot there because it needed to be done. I couldn’t fix the AC unit but the maintenance guy could fix the AC unit. I would say, “I’ll go sweep the parking lot. You fixed the AC unit.” That’s not what I hope most people end up doing with their asset management but doing what it takes to get it done is huge.

You need a good plan, especially when you’re punched in the face. Share on X

You want to be investing with people who will be willing to do what it takes to be done. That’s also a critical aspect of this process.

I don’t believe some of the programs out there. They teach you to buy an apartment complex, get a drink, sit on the beach, phone your property manager once a month and the checks roll in. I’m here to tell you that that’s not true. You want to have an ownership group that you’re investing with that wants to put time and energy into their place. They have solid boots on the ground and the market. They understand the market. Once you get a well-oiled machine, it will self-sustain itself. It takes involvement from the people that are putting the deal together and them to want to be able to do it. That’s why I talked about that. You don’t invest the horse but who you connect with and decide to give your money to, you want to make sure that’s important to them.

I was making sure that I covered all of the points that I had for you and I think I have. This has been so awesome. I’m so glad that you’ve been able to come on and share your journey. I feel that a lot of times, people don’t always know. Going back to that critical question, which is for people out there that are thinking that asset management is the role for them in the syndication space, earn as you learn, invest in some of these deals and ask if you can get more involved. It probably also helped you living in the market that you were also investing in those particular deals in.

I’ve run hands-on businesses my whole life. I’ve always been involved in a customer-facing hands-on business. I’ve run businesses all my life. I understand that. A lot of people have an office job. These multifamilies are full of people from the IT world. Don’t get me wrong. It’s a great place to come from but it’s a whole different thing to run a day-to-day commercial business than it is to run an office team. It’s a different skillset. It doesn’t mean they can’t learn it and be unsuccessful. You have to make sure you surround yourself with all of the pieces that can make you successful. You want somebody passionate about it. You can see I’m a little bit passionate.

You want to find somebody passionate about what they’re doing. It was interesting because when I made the switch, I was very concerned I wouldn’t be passionate about it. I was super passionate about iFLY and delivering the dream. I was like, “I won culture champion every year.” I was worried that I wouldn’t find something that I could be passionate about. I’m super happy that I did. You should look for people that you’re going to passively invest with that are passionate about what they’re doing and enjoying what they’re doing. It’s not easy an asset manager or does a deal. If you love it and you have the right good place to live, work with a good return for investors. What more can you ask for?

The last thing here is even though you’ve passively invested, you’ve diversified across different asset classes. On the active side, you are primarily focused on multifamily. Can you talk about the decision to make that focus?

I thought I had to pick one. The one that I enjoyed and have learned the most about was that one. It doesn’t mean in the future I won’t do others. I planned to do others but it’s important to focus on one thing and do it well. Even though it’s super competitive in this market, I made the decision that I’m going to focus on one thing and do it well. I can expand from there within that marketplace that I already understand as opportunities present themselves.

This leads me right into the level-up questions that I ask all my guests. The first one is what are you grateful for in your life?

 

I am grateful for all the connections I’ve made in this space. It’s amazing how many awesome people, including you, by the way, that I’ve met and got to know. It’s incredible. I got a lot of new friends since I’ve started this journey.

What has attributed to your success and continuous growth?

It’s my relentlessness. I consider myself a crazy obsessive person and sometimes detrimental but it’s okay. It’s that drive.

What do you know that you wish you knew at the beginning of your journey?

I wish I knew more about how to analyze the deal, sponsor, location, property and plan. Education can help get you that but I wished I knew more at the beginning. Sadly, that investment got closed and I made nothing. Months of my life, years of my money and tons of education. I got the learn but I missed the earn. I hope not to do that again because it’s much better to combine them.

If you could summarize the key things that you feel that you are putting in place so that way that doesn’t happen again, which our readers could learn from. What would you say those are?

It is to educate yourself. In the beginning, I was eager to invest and didn’t educate myself on the who, what, when and all of those things that we talked about. Make sure that you understand who you’re doing business with and what acts you are doing. There are a lot of sources that I didn’t find until later that would have helped me including the two books.

Before I have you share how people can get in touch with you is there anything else I didn’t ask that you think would be beneficial to share?

Surround yourself with all of the pieces that can make you successful. Share on X

We got it all, which is pretty good. Usually, I’ve got something but we covered a lot. It’s learning.

If my readers want to learn more about you, where’s the best place they can go to learn more?

I’m very active on LinkedIn and Facebook. I do have a new website that I’m building Niagara-Investments.com. I’m still got to get it finished but it’s there. I’m friends with you and sharing this stuff like crazy.

Go and connect with Trevor on Facebook. Tell him that you learned about his story here on my show. I appreciate you coming, Trevor.

It’s an honor.

You gave so many gems. It will be awesome for everyone who’s reading.

Thank you so much.

You’re welcome.

 

Important Links

• Trevor Thompson
• Rich Dad Poor Dad
• Passive Investing
• LinkedIn – K Trevor Thompson
• Facebook – K Trevor Thompson

 

About K Trevor Thompson

Real Estate Investor / Passionate Entrepreneur / Obsessed Learner

Successful Vice President with 47+ years in the attractions and entertainment industry. Now taking these skills into my new passion, Commercial Real Estate Investing.

Over the past few years, I have become deeply passionate about Real Estate Investing. I am an avid learner, continually connecting with as many like-minded people.

I am an accredited investor participating as LP in 17 (15 active) syndicated deals and am GP on my 1st deal 240 doors in San Antonio.

I have been actively looking for a multifamily property as GP/Asset Manager/Boots on Ground in TX, always looking for new deals and partners interested in TX and wanting to be GP / Asset Manager.

I am highly observant, detail oriented with a highly developed work ethic. Values culture and strives to maintain a harmonious environment offering service to others. Comfortable developing businesses, leading teams and providing high level results.

JANUARY 2000 – 2020 > VICE PRESIDENT OF OPERATIONS / NEW TUNNEL OPENINGS, IFLY HOLDINGS
iFLY Is the World Leader in Indoor Skydiving and has over 90 locations worldwide. Since the Indoor Skydiving business was new with this type of technology, it was my responsibility to not only make the one operating location successful, but it was also my responsibility to make a business plan with standard operating procedures that would be sustainable for future growth. In my 20 years with iFLY we went from 20 employees to 1,000 employees and an EBITA of over 50% companywide.

MARCH 1995 – DECEMBER 2000 > PRESIDENT, THOMPSON ADVISORY GROUP, LTD
A solely owned company that provided consultation services to new and existing attractions around the world utilizing my then 25 years of knowledge in the industry.

SEPTEMBER 1978 – FEBRUARY 1997 > VP AND EXECUTIVE CONSULTANT, GUINNESS WORLD OF RECORDS MUSEUM NIAGARA FALLS, ON CANADA

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