REIA 190 Tyler Goble: Fighting Human Trafficking Through REI

Welcome to Real Estate Investing Abundance, the show for busy, fulfilled professionals like you to learn how to develop financial independence built on solid passive real estate investments. Now here is your host, Dr. Allen Lomax.

Hello, enlightened investors. I'm your host, Dr. Allen Lomax, and what a pleasure to be with you. We are going to take a look at One Investor's Efforts to Fight Human Trafficking with the Power of Real Estate Investing, is infantry officer in the United States Marine Corps with a master's degree in operations research with an emphasis in artificial intelligence and machine learning from the Naval Postgraduate School in Monterey, California. Tyler is the manager and founder of LTG Investments, A real estate investing company that sets itself apart from others with its in-house data analysis of markets, enabling real-time analysis of any market in the United States down to individual zip codes. So Tyler, share with us a memorable experience that helped you to be who you are today.

Yeah, I guess thinking about that, I think I've always been kind of an entrepreneurial kind of guy growing up in Plymouth, Michigan. That's where I, where I grew up and Actually, in first grade, I had my own business back then. It was Tyler's Scary Pumpkins. And so we actually were selling pumpkins. And as a first grader, I didn't know how old you are at that age, like 5, maybe 6.

5, 6. Yeah.

So I thought I was running everything. Might've been just my grandparents and my parents that were helping me with a lot of it, but we were clearing like $300 or $400 a fall selling pumpkins. And so who knows how much how much money that really was in profit and how much it was my parents just eating all the costs for what we were doing. But those were some good memories as formative years, kind of starting me along the path of, you know what, you don't necessarily have to have a W-2 job in order to be successful. You could go out on your own and do some stuff. Although I am in the Marine Corps right now, which is about as W-2 as it gets. And so I'm sure we'll get into that more throughout the podcast here, but Yeah. Tyler's Scary Pumpkins. That was a good time of my life. Ran it all the way through 5th grade, but then it actually got too big. And I played sports growing up, so I actually had played football at the Naval Academy. And so that was my kind of my childhood was a lot of sports. And so once I got to 6th grade, it was like, all right, are we going to keep selling pumpkins? Are we going to really be able to continue playing sports at the level I was trying to? So that's when we made the cut there.

Yeah. Get serious about the sports. You had to Had to cut some things out there. What a wonderful experience. What a, you know, what a positive way to get started in the world of business. Great for your grandparents to get you into that. Did you grow the pumpkins?

So we, the first year we actually did the classic grow them in your backyard, didn't grow enough and went down the street and bought low, sold high. And so the first year was a complete farce, but after that, I actually have family who has a farm. out in Saline, Michigan, and they gave us a little quarter-acre plot and then we grew them all. So we grew quite a few pumpkins. We filled up a 3-car garage with pumpkins and sold out every year. So it was a lot of fun. It really was a great memory. And I think I still have like the t-shirts that might fit on one of my arms at this point, but they were, it was a really fun memory. Me and my grandma reminisce on it a lot.

Yeah.

Wow.

Terrific way to get started in life there. Well, talk to us about, certainly we're going to get into the human trafficking aspect of this, but let's start off with how to structure single-family real estate fix and flip financing. Yeah.

So, um, kind of what we do is we really went deep with local banks in our market. We're invested in Waco, Texas. And so there's a lot of fix and flippers, the terms hard money. So what hard money lending typically is, is you'll get somebody that's going to charge you a million points, be able to close fast. They don't do a huge underwriting process. So If you're going to buy a deal, you could do it really quickly. But what we've found is we haven't used any hard money at this point. It's all been local banks. And those local banks have been faster than hard money just because of the relationships. You're able to send the banker a text message and be like, hey, we've got this deal under contract. Do you think we could close in 2 weeks? And usually it's a yes, or you might want to buy this in all cash and then we'll refinance you later. But so all of our deals are structured typically We've got bank financing from a local bank and they'll do 85% loan to value. And then we have an investor come in that partners with us for the remainder 15%, and then we manage the whole process and pay them a fixed return off their investment. So that's kind of how we structure things on the single-family side. It's much more down and dirty and clean, easy to understand than apartment syndications, JVs, all those different kinds of things. It's very simple. Very clean, which we like.

So you're doing this in Waco, Texas, while you're living in Monterey, California. So that brings up some big questions as to how you manage to do fix and flips halfway across the country. And how did you establish these meaningful relationships with the bankers?

Yeah. So it's, it's one of those things where in Texas, it's like a spit in your hand handshake kind of world, kind of world. Even though I'm not from California, having a California address for all of our signings and all of our closings. and whatnot will raise eyebrows for people in Texas. They'll be like, all right, who's this guy from California coming in with all this money? Not that we're loaded, but we're buying houses in cash and it makes people skeptical. But we kind of have an X factor in that my wife grew up in Waco. And so that's where she was born and raised. And we're actually business partners with my father-in-law. And so he's our boots on the ground project manager, construction manager, and we do everything 50/50 with him in Waco. And so Having someone who has roots in a place like that, going back to the structure, we wouldn't get anywhere with these local banks if we didn't have someone either directly related to us or in equity on these deals to be able to help sign for those loans. And once you do one or two and you become a known quantity, those banks trust you a lot more and they understand that you're not going to run away with the money or bail out if the deal starts going sour. So, but yeah, we built a team that way and just delegating those roles. So I do all the stuff that doesn't require a card, like You need to be here at X, Y, or Z time to go see this. I pretty much handle all the front end and back end stuff for the business. So when it comes to investor relations, underwriting, deal finding, those types of things at the very beginning, that's what I do. And then as soon as we get properties under contract, that's when my wife, who's an interior architect, and my father-in-law take on the reins and they see the project all the way through to the end. I keep them accountable on the budget and they keep us kind of updated on what's going on with the rehabs. And then at the end, I'm the one who lists the property and then sells it and negotiates all that backend stuff. And so yeah, that's kind of how we're rocking and rolling. We've got about 9 or 10 rehabs active right now with Wayjo at the same time in various stages of rehab.

Well, excellent. Well, understanding data is extraordinarily important and in particular, looking at that data in conjunction with markets. So Walk us through that. What are you doing? How are you doing that? And what are the important data points to look for?

Yeah. So I think you mentioned in the intro, I've got a master's degree in data science with some machine learning and artificial intelligence kind of blended into that. And all that really means is that I kind of had a skillset at this point where you can take data that would break your computer if you just opened it up in Microsoft Excel. Like some of these Excel files are Millions upon millions of rows, hundreds of columns, but it's all open-source data. And so it's all free for you to use, but unless you have some programming understanding, you can't really get at it. I think there's a lot of, like, on the commercial side, like Yardi, like CBRN, all those kinds of folks, CBRE, those kinds of folks are taking the same data I'm using, but they're just making really, really pretty graphs and putting 'em in a pamphlet for folks. And so I take those data points and I've written some code and done some things to where it synthesizes down exactly what I want to look for inside of our own markets. And what we really look for on the single-family side is we keep a good eye on unemployment. We want to see that the job market isn't going to plummet. People are going to be able to afford to buy those median price point homes. We take a look at what that median price point is in those specific neighborhoods and zip codes that we're buying houses. And so as most people know, a house in this zip code in a city might be vastly different than a zip code in the other part of the city. And so it kind of shapes our buying criteria as far as we try to stay right at that median price point when it comes to resale value. So we don't want to be the prettiest girl on the street. Once we buy it, we try to make the thing look as good as it can. But when we're underwriting and doing that kind of thing, we always want to be selling right around that median price point because that's where the most buyers in that specific area are going to be. And so we've had some success doing that and we've gotten bailed out by the market in a huge way, in a lot of ways, because we don't underwrite future appreciation in anything we're doing. It's always the past. We don't use pending comps, we don't use for-sale comps as our stuff. And so that's been really nice during this boom. But I think when people start hearing about data and they start talking about real estate, they want to know, are we going to get into a huge crash? Is the whole world going to explode? And my personal opinion is I don't think it's going to explode. I just think it's going to stop going up like a rocket. We're seeing some super— we also keep an eye on new build construction, so like new starts, permits, and that kind of thing. And we still just have not built enough homes in America to where I think something interesting that could happen with this data is we'll see that the houses are going to be in a similar position as far as resale value, but people are just not going to be able to afford to buy them. Like they're going to still be worth that much, and that's going to be the downward pressure, not as much supply and demand, but I just don't see a 2008-style complete explosion happening anytime soon just because people still just need a place to live and there's just not enough homes being built. And so I could be dead wrong, but by looking at the data and keeping an eye on that kind of stuff, we just really are being very strict on our underwriting and buying at that median price point and below on the resale side. Those are the things I think if you're in single-family homes, you should be trying to get into the biggest buyer pool you can. And the biggest buyer pool is that median price point.

Yeah. It's like Yogi Berra once said, prediction is very difficult, particularly when it's about the future.

That's right. That's true.

Yeah. Yeah. It's very risky building an investment portfolio on what you hope for. So you're doing the right thing looking at the past rather than looking to the future. You know, it's surprising. Well, and you say that money is never enough. What do you mean by that?

Well, what we found is, and this will probably get us into the anti-trafficking stuff, is, man, it's, it's cool making money. Like, there's nothing wrong with doing that, but it's a bottomless pit. I mean, we had a goal of getting to X amount of dollars in our operating account, and we sprinted through that goal. And at the end of the day, it was like, it's just a number on a spreadsheet. In reality, it doesn't really bring you much fulfillment. And what we found is Right now, I think yesterday actually, my wife is actually in Texas right now. And the nonprofit we support with the anti-human trafficking stuff had a big gala. And so they had a bunch of people in and they're trying to raise $500,000 from this gala to help fight trafficking around the world. And that kind of stuff is just 50 times more fun and more fulfilling than making 80 grand on a flip or making 60 grand on a flip and just kind of padding your accounts. And so I guess kind of going back to the beginning, my wife and I are Christians. And so that kind of drives a lot of our decision-making is kind of a biblical understanding of the world. And part of being a Christian is we're called to tithe our money, which what the tithe is, is it's 10% of your income you're supposed to give to the church or a worthy cause. And I think you're married, right, Allen? I thought I saw a wedding ring.

Nope.

Okay.

No, I'm not.

My bad. But I've been married for a while now, in about 3 years. And so tons of wisdom, tons of experience, right? Just being married for 3 years. And 2 years ago, me and my wife had been married for like 9 months and we had flipped a couple homes in North Carolina where I was previously stationed with Marine Corps. And we were trying to figure out where did we want to give our money for real estate? Because the Marine Corps paycheck, a normal W-2 paycheck comes every 2 weeks. You can just set up your auto donations off of that. And it's really easy to just do that. But real estate, especially single-family real estate, ebbs and flows, goes up and down, and there's not as much of a timing to it. And so my wife suggested that we give our money to Unbound. And in my mind I was like, sure, Unbound. Like I've heard a little bit about it. I knew her mother, my mother-in-law ran the nonprofit itself, but I didn't know she was sitting in her garage typing away on a computer and posting in Facebook groups or something. Like I had no idea the scale at which they were operating.

Mm-hmm.

But wanted to be a good husband, good supportive husband, trying to figure out a way that my wife would be on board with giving as well. And it was like, sure, we can donate to them. And so we were able to give about like $2,500. Which in our mind was a drop in the bucket. I think a lot of folks think that you've got to be like Bill Gates or like Elon Musk and donate billions of dollars to make any sort of difference in the world. That $2,500, my mother-in-law called us and said, Tyler, for $5,000, we're able to fund the full-time salary for somebody in a country like Mongolia, Indonesia, Philippines, those types of places that are just wracked with human trafficking. And Those kinds of folks, $5,000 for them is a great living wage, which is crazy, but it's the truth. The US dollar just goes so much further abroad and they sit on the borders between countries like China and Mongolia and those places, and they're just snatching people that are being sold into slavery off these buses, train stations, truck stops. They actually have teams right now that are rotating over to Ukraine and helping at that border between Ukraine and Poland. They're getting ready to stand up a permanent office in Poland to help deal with the displacement from Ukraine. And so when she said that, my mind was just like, what the heck? For $2,500? If you saved one person's life for $2,500, that's worth it. But being in the Marine Corps and kind of having a little bit of an understanding about the foreign world, I just know that there's no way they're only saving one. They're probably saving bunches of folks that are potentially being sold into slavery. And so when she said that, my mind was like, you know what? Why don't we flip another house this year and we could donate some money off that one? It's like, maybe we'd be be able to donate $5,000 and pay for a full salary. But I don't know if you've read that Give a Mouse a Cookie book, but it's like you flip one house, you might as well flip 2 houses. And if you flip 2 houses, you might as well flip 3 houses. It's like, okay, if we're going to flip 3 houses, we might as well just turn this thing into a full-fledged business. And so while I was out here in Monterey, I was getting ready to leave and go to a different job within the Marine Corps, but I had a lot more downtime than my previous job. And so we just devoted the last 2 years out here to getting up real early, figuring out systems and processes. And really over the last 12 months, we've bought, I think it's about 16 or 17 single-family homes in Waco. And it's just kind of taken off at this point. And so we went all in on that and we've got employees at this point that are helping us manage stuff. And that's kind of the big why. And then money's just not enough. Like, We've tried to raise money for charity. It's so much harder than raising $400,000 to buy a house. Like we could go raise like $300,000 or $400,000 to buy a single-family home in a couple days, but try raising that for charity. And so what we decided to do is like, you know what? Like if it's that hard to raise money for charity, we might as well just make a boatload of money. That way we can direct it however we need to. And so that's kind of our thesis is like folks will donate Our folks will invest about 30% of their income, give or take. And if you're only tithing 10%, then that 20% gap exists. And so what we like to do is partner with folks that we know if we make them money, they're going to go ahead and turn around and maybe it's not going to be to Unbound, but they're going to be good stewards of that money. And so we've had some of our investors donate some of their proceeds to Unbound, which has been really cool. But we've been able to, by just making more money ourselves, guide where that money goes. And so the big vision and the big dream for LTG is that we'll build a business that is capable of giving away a million a year from just active stuff, churning on flips. Eventually we'll get into more commercial stuff, but we wanted to, for a couple reasons, stay in the single-family space initially. So a million a year in active donations and then $100,000 a year in almost like an endowment-type fund, or just having rental properties that are able to kick off that much in donations. So that's the dream. We're hoping to get there in the next 10 years. What a wonderful endeavor.

And I know Unbound really appreciates what you're doing and certainly every person who is affected by that organization, what a difference it's making in those people's lives. Well, talk to us about the Marine Corps infantry and how that translates into real estate and tell us also how college football has played into that.

Yeah, I think it just comes down to having an understanding of how to work on a team. The Marine Corps and college football, you can really be super blunt. And so I think I've had to dial it back a little bit. As far as getting on contractors, getting on bankers and that kind of thing. You got to finesse it a little bit more in the real world. But what it really was able to teach me was going after a goal and not being afraid to actually go after it. When I was 7 years old is when I started playing football, and that was my dream, was always to play college football. For some reason, I didn't have any interest in the pros. It was just for some, I just wanted to play college ball somewhere. And so by the time I was like 15 or 16, That's when you start getting recruited for college football, or at least I did back in 2010 or whatever. I think I graduated in 2012 from high school or something like that. But at that point, I called everybody. So I got my cold calling experience at the age of 14 or 15. It was just for college football, not for real estate. And so I called every single Division I school. I sent every single Division I school my highlight tape. Me and my dad would go to camps to basically The way college football recruiting works out is they have a 1-day camp, but in reality it's a tryout. And so we would go driving across the Midwest because I was from Michigan and hit just as many 1-day camps as we could. I can remember going to Penn State's football camp and then driving overnight, sleeping in the back of the car, and then doing Ohio State's the next day. And so really instilled in me a, you know what, like you might not get recruited by these folks, but You're not going to get recruited if you don't try. And I think that translates really well into the world of business of, you know what, you might not be able to purchase that resort property you're looking at or whatever it is, but if you don't try, you're never going to get any better. And if you don't get any better, then you're really not going to be able to do it. And so that mentality kind of bled over into college sports. And I think there's something that happens when you have something you actually really care about, but there's a really real possibility that you're going to fail doing it. And you're not going to actually succeed in doing it. And so that's what football for me really did was set my waterline pretty high, I think, of understanding that these high-pressure situations about something that you really, really care about, it really would come down to a couple seconds in a practice where, you know what, you're not traveling this week to the game, or you know what, you're not going to make this start, or you're going to be on special teams for this year because one decision you made in a split second. And so my whole college football career, I was just scrapping to get on the bus and get to go to the games and play special teams, play some linebacker and whatnot. And so those experiences were invaluable when it came to just understanding what you could do under pressure and that kind of a thing. Transitioning into the Marine Corps, it was the closest thing I could do to football again, where you're in a locker room, especially the Marine Corps infantry. And that was more, I understood the pressure side. Now it was the leadership side of I've got 45, 50 guys underneath me at 22 years old. And how do you take care of those guys and how do you make sure that they're going to be successful? And all these different things. Ironically, I think starting our own business and running that would make me an infinitely better infantry officer, just understanding the different dynamics and more soft skills that, that you need as a, as a business owner that you don't quite develop as much as you'd like to in the, just the infantry straight up. So hopefully that answers the question.

Yeah. Fascinating trajectory there. And You know, I mean, I think it's just a great lesson for all of us that, that the circumstances in our lives, no matter what they are, we can take them to learn from them and we can develop from whatever trajectory we're on. There's always something to learn there. So Tyler, in conversation, wonderful things that you have going on there. Tell our viewers and listeners how it is that they can get in touch with you, what it is that you have to offer them and to share with them, how it is that they can contribute to Unbound.

Yeah. Well, first things first, unboundnow.org, that's their website, and you could donate directly to them. From our perspective, it's the whole goal is to get more funds their way, more awareness their way. And so it's just as good for us to have an investor come alongside us as it is someone just come alongside Unbound and donate to them directly. And so we have a donor-advised fund. I think it's probably a little bit late in the conversation to go through what one of those is, but essentially it's like your own nonprofit and you can donate directly to that. And all the money that gets donated to that donor-advised fund goes to Unbound. And then If you want to get ahold of me, just on LinkedIn. I'm typically pretty responsive on LinkedIn. I'm getting ready to move cross-country though, and then we're going on a little vacation, my wife and I. And so I'm going to be out of pocket. I think this is getting recorded in early June, but by August I'll be settled in Washington, DC, where we're going to end up living for the next 4 years. And so LinkedIn or just my email at tyler@ltginvestments.com. And so those are great ways to get ahold of me.

Well, Tyler, it has been wonderful having you today. Thanks for being with us.

Thanks, Alan. Appreciate the opportunity.

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