Creating a passive portfolio from the air with Pilot Tait Duryea

Hey, if you're a listener of the Invest Like a Billionaire podcast, I already know that you're interested in alt passive income, creating wealth outside of the public markets. So let me tell you about another podcast you might really enjoy, Wealth Without Wall Street. This is hosted by my good friends, Russ Morgan and Joey Murray. These guys are doing incredible work helping people break free from the traditional financial models and actually replace their income with cash flowing assets. They go deep on strategies like infinite banking, short-term rentals, passive syndications, and more. And I've had the privilege of being on their show a few times. In episode 421, we talked about recession resilient investing. In episode 555, we dove into oil and gas and why we're so bullish on energy right now. So if you want to get a feel for what they're all about, start there. Check out Wealth Without Wall Street wherever you listen to podcasts. I think you'll be glad you did.

You can jump in a Cessna and you can fly from LA to New York on your own, but it's gonna take a heck of a long time and it's gonna be a whole lot of work. Or you could just buy a ticket on Delta and just sleep in the back. And that's what you are as a limited partner. You are sleeping in the back of that flight. Pilots are the GPs.

Hello, future billionaires. Prepare for liftoff. Today on the show, I am joined by Tate Duryea, a commercial pilot who has had a really interesting journey in investing in alternatives. He's built out a niche within investing, even started his own firm, his own podcast to help other pilots get into alternative investments and have the same success that he's enjoyed. So I knew we had to have him on the show so he can share his story with you all. Check it out. Tate, thanks for coming on, man.

Thanks for having me, Ben. I appreciate the intro, and I have so much respect for what you guys do over at Aspen Funds. Uh, we've built an amazing friendship over the last few years, so thanks for having me on.

Yeah, well, let's dive right in. So share a little bit of your background. Obviously you're a commercial pilot. Tell us a little bit about that, what got you into that, and then really what the journey of the pilot and story— how did that happen to start doing other things?

Great question. So I grew up in an aviation family. My mom's side of the family is all pilots. My mom's dad, my grandfather on that side, was an airline pilot from the '40s into the '70s. He had two sons, my two uncles, who were both airline pilots. So aviation through and through, and got introduced to aviation at a really young age. Started flying airplanes when I was 11 years old.

Oh, wow.

My uncle, he was based in Miami for American at the time, and I spent two weeks. My first flight was in a Piper J-3 Cub, which if you don't know what that is, it's an old tail dragger. Super, super old. I mean, no electronics whatsoever.

Wow.

You had to hand prop it. It didn't have a starter. So you literally start the engine by throwing the propeller down. And that's super dangerous. If somebody's not holding the brakes right, you get chopped in half. And so I'm 11 years old, he's like, "You sure you got those brakes right?" And I'm like, "Yeah, I got 'em." Oh my gosh. Super cool. So, loved the aviation side, but You know, middle school, high school came around and actually that same uncle passed on some books about flipping houses and investing in real estate. And that really got my mind going on real estate and financial freedom, passive income. And I was really attracted to that. And one of the funny things is that uncle as well was very stock market focused, still is to this day, not much in the alternative investment space. And he also made a ton of money and it didn't really compute to me even as a kid, that I'm reading these books about how real estate can build financial freedom. And yet I'm looking at someone who has an absolute massive stream of income and doesn't necessarily have that financial freedom piece, still trading time for money.

Interesting.

And at the end of his career, he ended up really despising the job. And that was something for me where I'm like, I love to fly, but I never want to be beholden to it. I never want to have to fly. So for me, I've been since high school on this journey of financial education and seeking ways to generate passive income. I actually wanted to go to business school straight out of high school. I didn't get into USC, unfortunately, even with a 4.0. And that's why I went down the flying track. And I'm really glad I did because it's just been an absolute incredible journey. Been a professional pilot now for 20 years, starting when I was 18 years old as a flight instructor. And it's just, it's an incredible world.

Wow, so fascinating. So your uncle had books on real estate investing, but he wasn't doing it himself.

I don't know if he read them. He just gave them to me.

He just like, "Ah, someone said these books are good. Should figure it out." Yeah. But that kind of caused a realization that, hey, this great income stream as a pilot and standard stock money away into your 401 doesn't really solve what I ultimately want, which is time freedom is what you're saying, right? I want to do what I want to do and not have to do it because I need the income to pay my bills.

Exactly.

So you already had that mindset pretty early on, which is interesting.

Pilots have one of the most unique financial packages in the high-paid W-2 professional world. First of all, we have super flexible schedules. And the airline, after pensions went away in the bankruptcies post-9/11, the industry transitioned to 401s. And pilots actually receive at major airlines anywhere between 15% and 18% of your gross pay that dumps into your 401 whether you like it or not. It's not a match. Wow.

Just a givey.

You don't have to put a dollar in. If you make $300,000, they're going to take an additional $45,000 and throw it into your 401 for you, and that's it. So, you know, that makes pilots very lazy because if they do absolutely nothing, they're going to be completely fine. There's mandatory retirement at 65 years old.

Right.

At 65, after 20, 30 years of the company dumping that kind of money into your 401, you're going to have this multimillion-dollar 401. But the problem is most pilots also just don't know that there's anything else. They're like, I can't fit any more cash into this vehicle, but it's all I've ever been told to do.

Right.

And that's where the disconnect happens. And of course, you can't live on your 401 during your career. You can't touch it until you're 59 and a half.

Well, it probably becomes a trap too because you start making this great income, you know, high 6 figures, maybe even low 7s.

Yep.

And you have this great 401 building up, but then you get to close retirement age. And the standard model is, you know, pulling 3% out a year of your principal, that might not be the same lifestyle. So you need a much bigger nut even though you have a couple million bucks, maybe, maybe more than that, but it might not even be enough on the standard system of financial retirement to have the same lifestyle. So it sounds like golden handcuffs in a way.

Absolutely. And this is really the point that I always make is it's the cash flow versus accumulation model. It's the, the old model is the accumulation where you create a large enough stack of gold that then you can draw it down, you hope you don't run out before you die, versus the cash flow model where you buy cash-producing assets throughout your professional life that kick off cash flow, that supplement your income, that either increase your means or allow you to pull back on flying so that you can spend more time with your family or doing things that you love during your career. And then those are golden geese that just continue laying eggs for the next generation. It's a completely different mindset, and that's what alternatives give you.

So what was that turning point for you? So you become a pilot, and I mean, looking back, it was pretty good timing, right? Because there's a big shortage of pilots over the past several years.

Yeah, I got on in 2010 to a major airline, so my timing was good. But I tell you what, you know, pilots who are going through the ranks right now are much better paid when they're trying to get to the majors than we were. A regional airline pilot, first year back in 2007, '08, '09, was making about $26,000 a year. So I mean, you were on food stamps.

Oh, okay.

So you were super poor for a really long time, and then it was like making it to the NFL.

Right. You know?

So you finally get on, it's like, oh my God, now I finally have money. And that's when my investing career could finally start because I actually had the means to start buying properties.

What was that process then? What was your first investment? Investment? Tell us some of these early learnings that you had as you started investing in real estate and alternatives.

Well, I knew that real estate was a good idea because at the time it was, you know, 2011, 2012. I bought my first house in 2012. I was 25 years old and scrounged together as much cash as I possibly could, and I bought a 3-bedroom, 3-bath house in Summerlin, Las Vegas. I knew it was a good deal because it was below replacement value, and I'm like, okay, I don't know much, but I know that if you can't build this thing for what it's costing me to buy it, it has to be a good deal. Rented it out and used a property manager because I didn't want anybody to know how young I was. And that ended up being a great investment. That was my launchpad into some more physical real estate. And then I lost some money in, I guess you could call it a syndication deal, but it was really more like a just a couple of investors who had come together to invest in this development project. Anyway, I lost all my money in that.

Hmm.

And this led me to start attending some real estate conferences, and that's where I found syndications. It's where I found limited partner investing and all these GP groups. And I was like, wait a minute, so you mean to tell me that you'll do all the work, you'll find the deal, you'll do everything, and I still keep 70 or 80% of all the profits, and you're getting better deals than I can, and you're getting better debt terms than I can, I'm like, this is wonderful. So meeting all of these groups who are sort of like the airline pilots of the real estate world was very refreshing where people actually knew what they were doing and you could align yourself with those people.

So talk about the development deal. That's interesting. So you'd done a single family, done a couple single families. Mm-hmm. Then did a multifamily on your own development deal, and that was kind of your first deal. Maybe you weren't the primary guy running it, or what was your position in that deal?

Correct. I got introduced to someone who had this 3-story, I don't know, 80-unit development deal and thought everything looked good on paper. And the lesson here is context. Like, I didn't have context. Some of the red flags on that development deal were the underwriting model was very basic. I mean, for an 80-unit development deal, and I look back on that and it was like, this is kindergarten stuff, but I didn't have that context back then.

What ultimately ended up happening? You said you lost money on it. Was it just they couldn't get through entitlements? They got halfway through construction and cost ballooned? I mean, these are kind of interesting things.

So this is super interesting. We hit bones.

Like real bones?

Yep, real bones.

Okay.

It ended up being a burial site.

No!

And so I don't know how this didn't come up in the phase one, how it didn't come up in diligence, but when the excavators got out there and started moving dirt for concrete to be poured, hit some bones, that stopped everything. Associations that be had to come in and figure out how we're gonna deal with this cultural heritage site, whatever. So that just pushed the project out. The timeline just rolled to the right. Meanwhile, debt costs shot up, carrying costs ate the project alive, and the whole thing just fell apart.

Wow, that's something you normally hear as the deal killer, but it's fascinating. So then from there, you had some experience, you saw something go bad, you had kind of a couple lumps, and then learned about syndications, learned about this way to get access into bigger deals without having to have the network or have the net worth or being able to manage it yourself.

Right.

And so talk about that a little bit, 'cause you've been doing that now for what, 5 years plus investing in deals, also raising capital for deals.

Yeah. So one of the big takeaways from the first few real estate conferences I attended, other than just loving the limited partner world, was meeting all these doctor groups. Physicians have these incredible networks. I could rattle off a dozen, White Coat Capital, Passive Income MD, there's Ascent Equity Group, there's Viking, there's all of these physician groups help to not only educate other physicians, but also aggregate capital from them and help physicians diversify into alternatives. And so I was looking around and going, this is a cool concept. I'm sure there's some sort of pilot community out there. And I, I actually went to go and join some pilot-centric group and it didn't exist. And so I started my firm 5 years ago. It's called Turbine Capital. It's a play on jet engines. And, uh, we help pilots do exactly that, which is diversify into alternatives. We educate through our podcast, Passive Income Pilots, And we have about 30 deals under management now, and we've partnered with Aspen on a great number of them, and we've seen a lot of success.

That's awesome. So before we get into the kind of meat of the portfolio, what you've done, types of deals you're looking at, what's your ultimate goal? Like, what are you shooting for, and where are you at in relation to that goal right now?

Personally?

Personally, yeah.

I would love to have $100,000 a month in passive income. I think that's a really comfy number where I could have a really nice airplane that I get to fly around and plenty of money to buy business class tickets when we want to go on vacation. That being said, even with that $100,000 a month passive income stream, I wouldn't quit my flying job. I absolutely love flying.

Mm. So it just gives you the freedom to make your own schedule though.

Exactly. I love the people I work with. I love getting to fly a big jet. I love traveling. I'm going to Tokyo on Friday, there for 24 hours and then fly back. And now if you're doing that 5 times a month, that gets real old. But if you do it once a month, that's pretty fun. Anyway, that's the goal.

And then what's your path to get there? Is it we'll figure it out as we keep going down this road?

A little bit of a figure it out as you go. I really love Aspen Funds has the private credit fund, right? And it's very realistic to be receiving somewhere in that 10% cash flow range via private debt, private credit. So I think as the net worth grows, start shifting more from equity investments that have higher upside potential into lower risk, more steady-eddy cash flow. And that also helps to snowball, right? Because the more passive income you have, the more you can invest, and it accelerates on itself. The snowball gets bigger and faster as it's rolling down the hill. And so while it may seem like that's a pretty far-out goal, It's actually closer than you think because as long as you're careful and you don't lose money, right? Warren Buffett says, "First rule, don't lose money. Second rule, don't forget rule number one." Yeah. But as long as you're careful, you can shorten those intervals and you can hit that goal a lot faster.

100%. I think it's such a refreshing perspective of like building the life that you want versus just doing what the airline says you got to do and how many hours you're going to take and wait till you're 65 and then hope you got enough. And that's how a lot of people are living. And they don't realize there is another path that you can go create.

Exactly.

And the cool thing about your path that I just love is you're not taking this massive risk, right? You're not going and doing this big venture-backed startup that you either hit a 100x or you hit zero and you lose it all.

That's actually something I was going to say is I'm on the get rich slow but get rich for sure path, which I think is what real estate provides.

Yeah.

There's a reason why real estate has created more millionaires than any other asset class. And it's because if you just buy a rental property and you stick a tenant in it, you wait for 30 years, you own it free and clear. It's really hard to screw up if you extend your time horizon out long enough. And I think that's what people get wrong with real estate is they're trying to make a quick buck and they mistime the cycle or they get overleveraged. If you just steady Eddie, if you were to buy a rental property every couple of years and you do nothing else, I mean, you're going to retire exceptionally wealthy, but it takes time.

100%. I love that. Get rich slow, but get rich for sure.

Exactly.

Let's shift a little bit to the portfolio. So give us an idea of your range of net worth right now and what your portfolio is mostly comprised of today.

Yeah, so I'm low to mid-seven figures. Obviously have a big 401k. I'm also invested in about 30, 35 syndication deals, and I have some personal real estate assets as well. I have, in the last half decade, become very uninterested in owning my own personal physical real estate. And this kind of comes from the scars of trying to deal with ownership of a multifamily on the East Coast while I'm out West, and just the headaches, you know, toilets, tenants, trash, right? We've all heard about it. And I'm a big proponent of going out, getting your hands dirty. If you have the wherewithal and you have the drive, go buy some physical property. But the only kind of property that I want to own now is property that I want to spend time in. We own a place in Nevada, we own a place in Hawaii. These are things that are in the investment portfolio, but you get to use.

Yeah, I love that idea.

So that's what it looks like.

One of the things that's interesting, we started talking probably 5 years ago now. And at that point, multifamily was the penultimate real estate asset class. Everyone was raising for multifamily.

Right.

And you weren't doing that. You were going a different path and you're like, we're kind of everything but, which I think is interesting because it was kind of swimming against the tide a little bit. And I'm curious, just one, what gave you that perspective to go against the crowd and Hey, now you look like a genius and you are a genius. What was some of those things that made you want to go a different direction?

Good question. So I do want to set the record straight that we did not completely dodge the multifamily bullet of 2022. We do have some multifamily, but I'm very much like Aspen Funds in the fact that my firm, Turbine Capital, is not vertically integrated. Right. We don't want to be vertically integrated. And I, you know, that's what Bob says all the time is we want to invest where it makes sense at the time that it makes sense to invest in it. So like you, we're very macro driven. We follow the tides, the demographics, and we form an investment thesis on that. I think that we started out heavy in self-storage. That made sense for quite a while. I think there are still some good deals in self-storage, but we're very diversified. We're in industrial, we're in mobile home parks, which we absolutely love. We're in some multifamily, we're in oil and gas. We're in all these different verticals, which I think have a time and a place. And that's the wonderful thing about being an LP is if you want to roll up your sleeves and buy all these things yourself, it's very difficult to become an expert in all of these things and be geographically diversified and own some industrial and own some storage and own some apartments. You're kind of a jack of all trades at that point, right? You kind of have to be riding someone's coattails or hitching your wagon to someone's horse in order to be in all of those different verticals effectively.

Totally. And I think one of the things that you have to build the muscle of with that mindset and model is you actually have to be pretty good at due diligence, right? And being able to sniff out who are the real operators and who are the ones that are good at promoting, right? But don't have much substance. And I think, right, I'd love to hear your perspective as you've now been invested in, you said, 30 deals. That's amazing. And you've seen some things go a little sideways. You've seen some things work really well. and you've seen a lot of asset classes, you see a lot of operators. What are your top things you're looking for in an operator, in an investment when you're doing due diligence?

So when I think about a syndication deal, I actually think of it like a commercial flight. So you can jump in a Cessna and you can fly it from L.A. to New York on your own, but it's going to take a heck of a long time and it's going to be a whole lot of work. or you could just buy a ticket on Delta and just sleep in the back. And that's what you are as a limited partner. You are sleeping in the back of that flight. The pilots are the GPs. They're the ones who are at the helm, and the weather is like the market conditions. You can't control that. You can forecast it, and that's up to the pilots to now navigate around that change in the forecast. So I think you can use that analogy even if you're not involved in aviation. When you approach diligence, you want to make sure that flight crew Everybody says they want to fly with the pilot with gray hair, right? So it's a little bit of the same, but there are pilots with gray hair that maybe don't have the best experience, and there's pilots who are fairly young that have incredible experience. They have really diverse range of experience. So I think that's what you want to see. And it depends on the deal, because if you're taking a small airplane from point A to point B, and it's a beautiful day and nothing's going wrong. This is what we saw in 2018 to 2021, right? Everybody looked like geniuses because nothing was going wrong.

Right.

If it's a beautiful day and the weather's nice, you don't know whether your pilots are really experienced or not. But when you've got an engine failure and you're in a thunderstorm and you've got all these external factors, that's where the skill of a really well-trained, well-experienced crew comes into play. So I would look for quality of experience. So when people say, I want to see your track record, it's what's the backdrop of that track record? Were they flying in blue sky days or were they actually flying through the soup and really getting through some stuff? I don't care if a GP team has some scars on their track record. It means that they've actually been through some bad weather and they've had to deal with things. They've had to add to their team. They've had to grow. Grow. They've had to learn. If every deal that a sponsor has done has resulted in a 30% IRR to investors, it's like, okay, fine, but let's understand the backdrop. What kind of weather were you flying in?

I love that. Yeah. The other thing I think about too, as a pilot, you think maybe differently than a lot of people where you have to limit the downside, right? You have to limit the downside risk because the cost is so great.

Right.

And how do you think about risk mitigation and investing when you're looking at deals? Like, how do you get comfortable with that mindset of things don't go according to plan? How do I get comfortable that we're still going to be able to land the plane in the field versus blow out an engine?

Great question. So, the first one is that you don't have to take off. And I think that's the thing that a lot of investors miss. They see an opportunity and they get FOMO and they think, "I got to jump on this." It's like, well, keep in mind, once you take off, you got to land this thing. So, What are the things that could go wrong over the next 2, 3, 5 years that could derail this project? So we're always looking at, do we really want to take off? And then once we do, we're always looking at the downside. We're always looking at what could go wrong and of course what could go right as well. But we want to see these asymmetric risk-return profiles where the downside isn't all that bad. And we don't think that these things will occur, but if they do, How will we mitigate whether it's interest rate caps or if it's various things that we can see in the deal that limits the downside risk? And then we want to see that there's a very clear path to the upside and that there are multiple exit strategies. Like you said, you can land it in a field if you need to, right? But you want to have multiple exit strategies. You want to have diversion airports along the way. It's like, how does this turn out if it doesn't turn out the way we think it's going to? And we try to think through those eventualities as best we can.

Love it.

At the end of the day though, anytime you take off, you know, you're introducing risk. You can mitigate as much as you can. You gotta understand that investing involves risk.

Yeah, no, that's a good point. You can't, can't underscore that enough. 'Cause I think a lot of people assume you can find the magic silver bullet and you find that one perfect investment. It doesn't exist, right? I love what you said too, is don't necessarily be afraid of scars because it can actually tell a bigger story. And if you are in the game long enough, you're likely gonna have some scars because the market cycle is the great equalizer of all.

Find a pilot that's never had an engine failure.

Yeah.

I guarantee you can't find an experienced pilot that's like, "Nope, never lost an engine." If you've flown airplanes for long enough, you'll have an engine failure.

Wow, interesting.

I have. So it's like, how did you deal with it?

How do you deal with it? Yeah, I love that. I'd be curious to hear at this point what you would say to your younger self to maybe do a little bit differently or what are some things that you wish you would've done more of earlier that, you know, hindsight has shown is clear?

I'd get networked faster. That was the biggest differentiator as to where I am today versus where I was, let's say, 10 years ago, really 15 years ago, I was wandering around in the dark and I didn't know what I didn't know. And that really comes down to finding other people who are doing the thing. You go down to the airport, there's other people flying airplanes. You can hang out there, you can talk shop, you can understand the industry. There's gonna be some old guy that'll come around and say, "Oh, this is how this works. This is how this works." The same thing happens in investing in real estate. When you look at high net worth circles, masterminds, mentorships, that sort of thing, there's a lot of information, a lot of context, a lot of, the way things work and strategies, tactics, even just little threads of macroeconomics that you can learn by being well networked. And I think that today the benefit that everybody has listening to this podcast is the fact that it exists. The podcasting space, at least in the investing world, wasn't very mature 10, 15 years ago.

Mm-hmm.

There weren't as many books written, there weren't as many groups, It was harder to find back then. So I think the people starting today have a better advantage, which is wonderful. That's what we're doing on our podcast. We're trying to democratize this information and get it out, shorten people's learning cycles. So that, that's the biggest thing is go network, find people who are where you eventually want to be, or that, that hold the keys to that knowledge and that know people that know people.

Love that. So good. Tate, so fun, man. What a great conversation. What's the best way for some of our listeners to check out what you're doing over at Turbine?

Yeah, Turbine Capital, the website's TurbineCap.com. As mentioned, we're a non-vertically integrated investment firm. Lots of fun stuff there. We also have the Passive Income Pilots podcast. You can check it out on Spotify or Apple. It's just Passive Income Pilots.

Awesome. Thanks so much for coming on, Tate.

Thanks for having me. Appreciate it, Ben.

So glad we got Tate on the show. Be sure to check out the show notes in this episode to find a link to his group and his podcast. I got a lot from that conversation. I think Tate's last lesson is really key: get networked up, get educated, do it early. It's a lot easier to do these days with books and podcasts, conferences and masterminds that are available. And that's certainly what we're trying to do with this podcast and with our upcoming book, trying to help people learn more so they can skip some of those awkward, challenging years early on and get into better deals sooner. Hey, speaking of books, a reminder that the Invest Like a Billionaire book that I wrote with Bob Fraser is available for pre-order now. Check it out at thebillionairebook.org.