LUR 105 | Group Investing

 

Don’t have enough money to start out on your own in real estate? Did you know you can pool money with your friends and use that money to invest? This is what group investing is and Travis Smith joins Lisa Hylton in this episode to share how it works. Travis is the CEO of TribeVest, a collaborative, group investment platform that enables you, your friends, and your family to organize as an investor group, pool money, and manage joint investments. It all started when he and his brothers wanted to break into real estate in the dreams of wanting generational wealth. Not having sufficient capital to afford deals, they decided to come together and made an investor group. You can do the same by learning from Travis’s experience. Tune in!

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TribeVest Group Investing: Pool Your Money With Friends To Invest In Real Estate With Travis Smith

I’m super excited to have another amazing guest. I have on the show Tribevest CEO, Travis Smith. He founded the company in 2018 with a mission to close the wealth gap in the United States. When he and his brothers decided they wanted to pool their money and invest together as a group, they found the process to be almost insurmountable. Believing that there must be a better way, Travis started Tribevest as the first collaborative group investing platform that enables friends and family to easily organize as an investor group pool money and manage joint investments. I’m super excited to have you on the show. Thank you so much for coming on.

Lisa, I’ve been looking forward to this. Thanks for having me. I’m glad to be here.

I appreciate it. A lot of people I’ve been speaking with leading up to this show have also been looking forward to this show as well because they’re very interested in investing in real estate, but they don’t necessarily have the big $50,000, $100,000 or $250,000 to invest in a deal. I was like, “I’ve heard about this company called Tribevest. I’m going to be interviewing the guy. Let’s get your questions answered.” My readers know how my show is broken down. We have a little bit of background. We get into the meat of the episode and then we close things down with the level-up questions. Where in the United States do you and your family live?

We live in Columbus, Ohio, with my wife Mandy and my two boys.

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

We’re big sports fans. We’re close to Ohio State, so we’re big Ohio State fans, but we love to travel. One of my tribes is with my brothers. We own some vacation real estate and love to get together with the family whenever we can and when we can find the time.

Jumping right into Tribevest, first of all, how does it work? For people who are reading, they’re like, “What is it?”

A great place to start is who is it for and how has it helped? My brothers and I are middle-class families. We realized that we were worth more than our incomes. We always dreamed of generational wealth and we’ve realized that in order to do that, you need to invest in the private markets and take ownership. What we realized was that when you have ownership, you have options. When you have options, you have freedom. We always saw real estate as a way to hack wealth without having to give up our day jobs. We didn’t have awesome resources like this show and the Level Up community, but we had each other. We were going to figure out how to do this and how to invest.

An investor group empowers people to pull capital, manage the whole investing process, and participate in things they wouldn’t otherwise be able to on their own. Click To Tweet

One of our big urgent of what we thought was unsurmountable was how we break into real estate. Anytime you’re talking about real estate, there’s a capital threshold to get over. That’s when we said, “Let’s stop talking about deals we can’t afford, pull our capital together and form an investor group.” That’s what we did. We realized that by forming and funding that investor group, we unlocked and achieved more than we ever could on our own. That’s what Tribevest does. It empowers people. It gives people access to easily and safely coming together with people you know and trust, pull capital, manage that whole process and then be able to participate in things you wouldn’t on your own.

A couple of things coming out of that. The first one is the people who are reading are thinking, “He’s talking about real estate. Could this be done for other investments other than real estate?”

It can. Our platform is very focused on the investor group and, therefore, being a neutral and transparent platform where everybody can come in, see the account balances and documents. We manage the ownership table for you. You can see all the transactions. Your business bank account is there. We make it easy to put capital in and easy for you to transact as an entity.

Wire your ACH or funds. Have it to full service but having everybody access to the single dashboard all in one place. When you think about that, you can use it for anything and we do. We have tribes using it for everything, but real estate and passive investing in real estate is a sweet spot for us for obvious reasons.

I want to come back to passive investing. A couple of other things here is the bank account. There’s that ACH and bank account. How does it work when someone comes to Tribevest? Are they introduced to a bank or do they have to choose their bank separately and connect it to the Tribevest platform?

There’s always this initiator, the founder as we call them. They’re the ones that have organized the group or said, “I’ll go and start the tribe with Tribevest.” They log in, name their tribe, create a mission and go through a little configuration of how they want to set up their tribe. Shortly after buying a subscription, they’re filing their LLC in whatever state they want to file it. This is all online. Depending on the state, we can give back the articles of the organization in a couple of hours. We get an EIN from the federal government and then that’s all we need to open up a business bank account. We’ve streamlined that. This is all on the platform.

If everything lines up and we’ve done this, our world record from sign up to opening up a group’s business bank account is in three hours. You could open up that business bank account and add your members. You all agree on how much capital needs to come in and by which date. You’re ready to transact.

You have that fully functioning FDIC-insured bank account. The reason why using our bank account is important is because we’ve streamlined all of these things, compliance, making it easy to put capital in and the ability to wire or ACH that out. Do groups come with their own bank accounts? Absolutely and we make it easy to link that other bank account to your dashboard.

LUR 105 | Group Investing

Group Investing: Real estate is a way to hack wealth without having to give up your day job.

 

You have your Tribevest bank account, Chase bank account and any other financial institutions you can link all into this. We’re not saying cancel your other business bank account. Not at all. Keep using it. Use our bank account for all the streamlining and tracking all the capital coming in. That’s how we track it and keep a good record of that.

One other thing came up for me moving a little bit onto the passive investing side. When you invest in passive investment, you are going to have your PPM and subscription document. That tribe is going to get one PPM for their entity, which they have internally agreed that they want to invest in this deal. A representative from the tribe would then sign it, subscribe to that deal and send the money.

I’m glad you’re breaking it down to this level because it’s important to understand. You’re right. What have we done by forming this investor group? That capital that everybody’s putting into that investor group, it’s their capital contributions and ownership of this LLC business. As a result, everybody’s a member of the board. Everybody’s an owner and therefore, everybody has a vote, depending on how you set it up.

These passive investing ones are clean because most likely you’re coming together. You’ve already said you want to do this syndicate and work with this sponsor. It’s a matter of coming together in doing all this, but essentially, all that ownership group of the investment group on Tribevest votes and says, “We want to deploy our capital into this syndicate.” That’s done.

You’ve also nominated a couple of different roles. You have your president. We usually have the founder. They have access to banking tools. All are transparent. Everybody can see, but they can do the functions on behalf of the tribe. You have someone in charge of tax matters as the two big designations. You get this subscription that everybody’s agreed on. That president, on behalf of the group that has agreed to this, signs that as the president of ABC LLC or whatever it is. That LLC is an owner or investor into that syndicate.

For the K-1s, when those syndications kickoff a K-1 to the tribe in Tribevest, that LLC that people are in, how does that then trickle down to the members in the LLC?

You’re getting a K-1 from the syndicate to the tribe, the LLC entity. Remember, it is a business. We’ve made it so simple and demystified everything that comes with a business. When people think of LLCs, they think you’re hanging a sign on the door and they’re running a big complex business. We’ve demystified it and made it simple, but it still is a business.

Therefore you get the K-1 from the syndicate and that investment group does have the responsibility of distributing their own K-1s to each one of those members. It’s not a hard process, but it’s an important part of this. Tribevest makes it easy to download all the transactions, including that K-1 to hand to your accountant. In the not too distant future, this is a service that Tribevest will be helping with. All of this fits together.

How do you find the guts to level up in real estate? Being part of a community like TribeVest certainly helps. Click To Tweet

If we take a step back, people are able to come to Tribevest and set up their accounts. Through the system, they follow the prompts and process to get their LLC set up and get their EIN. They can also set up the bank account right there in Tribevest because you are offering bank account services. They fund their bank account. They get the people that they want to go and build this tribe with, which I want to come back regarding strangers and syndications.

They come with their friends and family, people that they know, like and trust that they’re creating this tribe with. They fund it and in the case of a real estate syndication, they’ve chosen the syndication that they want syndication or syndications because it could be multiple that they want to invest in and then ultimately deploy capital into those deals. When they get that distribution, it comes into their bank account and then they then pay their members accordingly.

One other thing that I need to touch on with you is fees. Also, for folks reading, the K-1s, note that all the data is going to be there for the people who are running that tribe. They can pull down the data and then give it to their accountant to put together the K-1s for each of the people there. We cover that. Can we talk a little bit about the fees and the Tribevest fees, what they typically look like on average?

Depending on how many members, they scale a little bit, but for simple purposes, it starts at $5 per person. That’s our startup price. That does not include a registered agent or address services. That’s one of the big differences between the next tier and the next tier is business. That’s $10 per member per month. All these are per member per month and that does include registered agent services.

If you wanted to file your LLC in Delaware, we could be your registered agent, be your address and manage any information that needs to be funneled to your tribe on your behalf. We have the top tier, which is $15 per member per month. It comes with additional services and resources to our tribe experts. We can help you network to other tribes that are looking to be networked to and other vetted services.

I want to circle to the strangers, syndications and Tribevest. Someone reading might be in a different situation where maybe they’re raising capital or someone who wants to pull investors together to flip properties, buy turnkey properties, or that kind of stuff. They’re thinking to themselves, “Should I go set up syndication for these people that I’m trying to take this money from? Should I do Tribevest?” What would you say to them or some of the things they need to consider in making that decision?

Real quick distinction, being a passive investor into a real estate syndication, is a simple asset. The syndication itself is not simple. We don’t help with the big complex syndication. They’re working with attorneys and spending a lot of money to put that together but as an investor participating in that as a passive investor, it’s a very simple asset. Meaning, you’re getting a piece of paper back and not a lot of moving parts.

Simple application for Tribevest. Do we do more complex asset classes? If it’s a building or an apartment, no. What if it was a single-family rental, flip or something like that, where it still is a complex asset but doesn’t have many moving parts? Those are still good assets for tribes to come together. We have a lot of tribes coming together to do rentals, flips, vacation homes and everything else.

LUR 105 | Group Investing

Group Investing: The best fit for TribeVest is people who all know each other already.

 

To answer your question, the best fit for Tribevest is when they all know each other already and they might not consider themselves a professional. They’re leveling up together. Anytime you’re leveling up together, Tribevest is a great fit because there’s more than just transaction. You’re all leaning in, want to learn and participate in this. With capital in, you want to come out of the experience, having found a closer and more in tune White wealth mindset. That’s an important piece of this.

Anytime you’re going out recruiting for investors, Tribevest isn’t that good of a fit because you are starting to cross that line and where you probably should go ahead and pay the $8,000 or $15,000 to set up a syndicate. You’re going to be taking people’s money that you don’t know and they’re passively investing in you. You’re technically forming a syndicate. It’s a little different when I’m like, “There’s a single-family rental across the street. We should all come together, buy it, do a short-term rental, flip it or whatever else.”

With Tribevest, those people coming into the tribe have the ability to have control and vote, whereas coming into a real estate syndication, by and large, there isn’t a whole lot of day-to-day control. You do have control if people are not doing their duties to then be able to take the reins of going through the judicial system against them to make sure that they are doing what they’re supposed to be doing.

That’s why your work is so important, vetting the sponsor and making sure you’re getting into the deal. That’s the hard work of being a passive investor. Why people are part of the communities that you’re doing is because there’s that power, knowledge and sharing like, “Is this a good investment?” You’re making the decision and you feel comfortable because you’ve done your homework to hand this over to somebody that maybe you’ve never met. They’d have a good enough track record or enough people you know and trust to vouch for them. It’s a different thing where it’s like, “We’re coming together, buy a single-family unit and see how it goes.”

There are strangers that are investing together but ironically or coincidentally, it usually is passive investors that have met through forms, groups online and are having conversations. They might’ve even done a Zoom together. They liked the same syndicate and sponsor. Maybe the threshold is $100,000 or $50,000. They’re not necessarily strangers anymore but they might have never met each other. Tribevest is a great fit for those people that found that each other in that way, be a great way to get over a threshold and do investments maybe that you wouldn’t have done on your own.

I see big deals out there like $50,000, $100,000 or $200,000 minimum, and there are people out there who want to invest. They can then partner with their friends and other people they know who are also interested in that operator to make that happen. This was so awesome. Is there anything that I didn’t touch on that I should have asked you or that you would like to share?

You’ve covered it. In a lot of cases, it’s about leveling up. The fact that you’re leveling up means you’re doing something new. You’re getting into a new asset class and taking something to the next level. You think about it. How do we find the guts and confidence to do that? Following and being part of communities like this certainly help but when it comes to getting over that hump, forming a tribe, building that confidence and doing it together. That’s why I was so excited to be on this with you. I appreciate everything you’re doing out there.

I’m so happy you could come on. I appreciate it. This leads me right into my Level Up questions that I ask all my guests. The first one is, what are you grateful for in your life?

I do a routine in the morning where I count three of my blessings every morning. It’s been a life-changing thing that I’ve started to do. I’m so grateful to have the people that support me. One of our values is never to underestimate somebody with a loving and supportive tribe because with that, anything is possible and I’m proof of that. I’m so blessed and grateful for my family, friends and the greater Tribevest community.

Never underestimate somebody with a supportive tribe. Anything is possible when you have it. Click To Tweet

What has attributed to your success and continuous growth?

Firsthand, experiencing the power of investing in real estate, what an amazing asset class it is, what true ownership means and realizing that I probably wouldn’t have gotten over that threshold without my tribe. That drives me. It’s something that a passion that burns inside of me that I won’t stop until everybody else has access to the power of tribe investing and the economies of scale. Pulling capital, spreading risk and expanding your network. It’s an unfair advantage that most of us don’t have and we’re trying to bring that to everybody.

Last but not least, what do you know that you wish you knew at the beginning of your journey?

I wish I would’ve understood ownership and what that means. We all have our W-2 jobs. What we’ve been told growing up is you’re worth as much as your income. It couldn’t be further from the truth. It was the one way of measuring. We have all these different ways to find wealth. Maybe you have your W-2, but you’re also investing in real estate. Maybe you also have a short-term rental, doing freelance and a creator in different ways. It took me a while to figure that out and once I did, it changed my life. That’s probably the biggest thing I wish I would’ve known earlier.

Here’s my one last bonus question. I love to listen to a podcast called How I Built This and this is like a How I Built This type of question. Was there a point in building Tribevest where you weren’t sure this was going to be something that people would want?

There were points. The biggest points for me were when my brothers and I were so committed to building it and there were about 6 or 7 times along the way where we’re like, “Is this worth it? Should we do this?” What we ended up learning along the way are all those times that we almost quit. Those were things that we wanted to solve. There were lots of times where we weren’t sure if this was going to work. We weren’t sure if the market was ready for this.

LUR 105 | Group Investing

Group Investing: Do something amazing with people you care about most.

 

The pandemic sets a lot of things in perspective for many of us. This is another way to connect with people. Do something amazing with people you care about most. That’s been accelerated so much. Before the pandemic, we were like, “Are we maybe five years early to the market?” It’s pretty clear that the market is ready for Trivebest. The pandemic had a lot to do with that.

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

Go to Tribevest.com. Explore the website and start a tribe. You can also find us on Facebook and Twitter. Fill out the Contact Us form and you can even say you read the show. I can follow up with you directly. We’d love to talk and answer any questions that people have.

Thank you so much for coming on. I appreciate it.

Thank you, Lisa. I enjoyed it.

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About Travis Smith

LUR 105 | Group InvestingTribeVest was born around a kitchen table with a group of brothers who dreamed of owning a vacation home. They wanted a place where their kids would grow, learn, and play together.

They couldn’t quite figure out how to get past the initial conversation that was full of excitement and big dreams. The next step meant actually saving money, but how? Capital was sorely needed and they realized they needed to start saving now to be able to buy that vacation home before all their kids grew up and moved out.

Each brother set up monthly contributions of $500 each and before they knew it they had jumped over the biggest hurdle to dream investing- beginning to save and realizing that their dream was actually reachable. In no time at all, with all their powers combined, they were able to make that dream purchase of a vacation home.

Over the past decade, their tribe has made over a million dollars in investments together- from real estate to private lending to even a top-earning racehorse. This was all without putting their money into a potentially volatile stock market. They could rest assured that the money they put in would still be there in the morning.

Travis, one of the brothers, wanted to offer a platform that gave roadmaps for other tribes to achieve their dream investment, just like him and his brothers. He experienced first hand the power of an investment tribe.

They could choose whatever they wanted to invest in (even that racehorse) and could finally break out of the thinking that investment was only for retirement or for people who had a bit more extra cash to spend.

Today, the mission is simple: To leverage the brothers’ experience and education gained over the last 10 years, package best practices, and bring forward the next generation of investors.

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