Turbine Capital: A Real Estate Private Equity Firm For Pilots With Tait Duryea

 

When it comes to real estate in the airline pilot community, it’s almost non-existent. There’s such a huge demographic that isn’t exposed to real estate. This was why the private equity investment firm Turbine Capital was created. Its founder, Tait Duryea, wanted to enable pilots to create passive income and multigenerational wealth.

Join Ava Benesocky & August Biniaz as they talk to Tait about Turbine Capital and their mission. Find out how they vet sponsors and invest with them. Discover what kind of asset classes they focus on. Learn how Tait is raising exposure about real estate to a widely overlooked demographic. Pull the trigger and get into the game today!

 

Get in touch with Tait Duryea:

LinkedIn: https://www.linkedin.com/in/taitduryea/

Website: https://www.turbinecap.com/

 

If you are interested in learning more about passively investing in multifamily and Build-to-Rent properties, click here to schedule a call with the CPI Capital Team or contact us at info@cpicapital.ca. If you like to Co-Syndicate and close on larger deal as a General Partner click here. You can read more about CPI Capital at https://www.cpicapital.ca. #avabenesocky #augustbiniaz #cpicapital

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Watch the episode here

 

Listen to the podcast here

 

Important Links

• Turbine Capital
• PassiveIncomeMD.com
• Ascent Equity Group
• The Hands-Off Investor
• Bold
• Abundance: The Future is Better Than You Think
• Tait@TurbineCap.com

 

About Tait Duryea

As a 12,000-hour Airline Pilot, Tait Duryea understands the lifestyle, needs and wants of the professional aviator.

On a personal crusade to replace his income with cash-flowing real estate, Tait Duryea founded Turbine Capital to provide his colleagues and others the same direct access to professionally managed real estate opportunities he worked so hard to find.

With over a decade of residential and commercial investing experience, Tait began passively investing in self-storage, multifamily and development syndications in 2017, and has since accrued significant experience in the analysis and due diligence of these offerings.

Tait is a captain and check airman on the Airbus A321 for a U.S. major airline.

 

Turbine Capital: A Real Estate Private Equity Firm For Pilots With Tait Duryea

I am very excited to have our guests on the show again. Over the summer, we had a few cancellations and a few other things. We never got to see each other so we were excited to have Tait on our show and learn about his journey and his experience. He lives a pretty exciting life. I love to hear about that as well.

This show is a long time in the making so we’re excited to dive into things. Tait is living the dream. I wanted to say that.

He’s a dream living the dream and it’s all a dream.

He is in Hawaii, in Honolulu. Let’s dive into Tait’s background. We’re excited to have him on our show. You’re going to learn lots from him. He’s a captain of the Airbus A321 for a major US airline. With over a decade of residential and commercial investing experience, he began passively investing in self-storage, multifamily and development syndications in 2017 and has since acquired significant experience in the analysis and due diligence of these offerings.

Tait founded Turbine Capital to provide his colleagues and others the direct access to professionally managed real estate opportunities. For everybody reading, we believe this interview with Tait will bring great value to passive investors as we will discuss how to find and vet real estate private equity firms, also known as syndicators or sponsors. Welcome to our show, Tait.

 

 

Thank you so much for having me on. What an intro. It was well-deserved. Thank you so much.

We’re excited to have a conversation with you in this episode. If you could start by telling us about your background and then your start in real estate.

I grew up mostly here in Hawaii and my mom’s side of the family is all here. I was born in New York City. I grew up as a small kid in Bozeman, Montana for a little while but most of my life has been here and college in Southern Cal. I wanted to be in real estate from the time I was about twelve but I’ve got family who is pilots and I also love that.

Long story short, I wanted to go to USC. I wanted to study business and entrepreneurship, specifically, real estate and I didn’t get in. My backup plan was a community college down the road that my uncles had gone to and learned to fly there. I started flying. I fell in love with that and the rest is history. Now, I get to do both. It’s pretty cool and I have no intention of quitting my day job of flying. I love flying someone.

I consider myself so lucky. Another pilot was talking about how they loved their job as well and he was hanging out with a group of friends that were saying, “We all love our jobs but if you had 28 days to live, would you spend even one of them going to work?” He was like, “Yeah, 100%.” I feel the same way. At least 2 or 3 days of those 28 would be going to work. It’s a blast. I love my job but I wanted to create financial freedom for myself and get to that next level of wealth-building that I knew existed within real estate.

I started buying single-family homes when I was about 25 along my journey and traded up into some nicely appreciating condos and then 1031 that into some small multifamily. That’s about the time that I found passive investing and realized that I loved the process of acquisitions, analyzing deals, flying out and touring them. Once I had them in my possession, I didn’t love the management, the day-to-day, the renovating, chasing contractors around and property managers.

I started investing passively in syndications after meeting some operators at a few real estate investing conferences. That changed the way I look at real estate. It’s like, “I have a great W-2 job.” I love my W-2 job. I’m not trying to leave it so it makes more sense for me to focus on finding and vetting sponsors, investing with them and then I get to spend more time doing what I love, which is flying airplanes.

Let’s focus on that. Let’s talk about vetting sponsors. It was great that you went over your journey. You answered many of the questions that we had. It was great for an entrepreneur at heart who want to be involved in business, went into the flying gig and ended up falling in love with that as well but the entrepreneurial bug, the investor bug in you got you to start investing in single-family and multifamily. As you were growing, you realized that you rather play more of a passive role and invest in a real estate private equity firm.

Talk to us about that moment of realizing the option even existed and this dynamic between LPs and GPs, passive investors and sponsors. What was your first step? Was it passive? Were you investing as an LP? Were you looking to partner with others and be a co-GP? If you were looking to invest as an LP, talk to us about those first steps. Was it a connection you had with an elite sponsor that wanted you to invest with them? Was it their track record? What was it that intrigued you to invest with someone?

The whole genesis was I went to a real estate investing in Denver. The goal in my mind was to expand my network because I wanted to trade up into 20, 30, 50 or 100-unit apartment complexes. My goal was to have a multiple 100-unit personal real estate portfolio. To do that, I needed a team and a network of friends that were also doing big things in real estate.

 

I went to this conference to network, build relationships and pursue that active path. Instead, I sat through a mock debate between Jeremy Roll, whom a lot of people know, Hunter Thompson and a few active operators. The mock debate was, “What is better, passive or active investing?” Before this, I didn’t know that passive investing even existed.

I knew that you could be the money partner and lend money but I didn’t realize the equity piece existed in such a prolific way and you could make an entire real estate career out of being a simple LP, just investing in other people’s deals for equity and a large piece of the upside. In the hallway, one of the first people that I was introduced to was Ryan Gibson of Spartan Investment Group. He’s the CIO there and also an airline pilot. Someone was like, “You got to meet Ryan.

We immediately hit it off. We had a flying background between the two of us. They had their booth there and they were talking about self-storage. I jumped into a deal with them and that snowballed from there. I got to meet several other operators and started investing passively. This was all before the genesis of my company, Turbine. I had some great successes and a lot of fun just being on the LP side because I could focus on the acquisitions and not necessarily the management.

For me to touch on a couple of names you brought up, Jeremy Roll and Hunter Thompson are involved in this space. They’re more than capable to be involved on the operational side and asset management deals and having a fully operational real estate investment firm but the decision they both have made is they want to be more on the equity side of the deals and the passive side.

Hunter Thompson has written a book about raising capital and he does raise tens of millions of dollars but he’s partnering on a co-GP basis with sponsors who have more focus on operations, asset management and deal sourcing. The beauty of this business, real estate private equity, is with your experience and strengths, you can focus on a certain part of the business. It’s on invested relations or the equity side of the business, acquisitions, deal sourcing, underwriting, physical due diligence of the business, asset management, overseeing property managers, overseeing contractors and making sure that a business plan is executed.

Relative to what you’re good at, you can focus on those things and contribute to a general partnership or a partnership. In this episode, we’re discussing contributing as capital partners and playing some other active rules as well. You see the option that exists. You come in and invest as an LP. Talk to us about Turbine Capital.

We would love to dive into Turbine Capital and learn more about it. Would you say that Turbine Capital is a conduit, which vets the best investment options and provide it to a certain demographic of investor? If you could please tell us more.

The idea came to me because there are a ton of doctor groups that do this. At these conferences, you meet a ton of amazing people that are doing big things. One of the gentlemen that I met was a guy by the name of Dr. Peter Kim, with whom you also might be familiar. He started PassiveIncomeMD.com many years ago, which teaches other physicians how to invest in real estate. While that was all well and good, it also is a hugely circulated blog website, besides the fact that it’s specifically tailored for physicians.

It’s one of the largest and most circulated blog websites on real estate investing in the world. However, more of his colleagues were coming to him and saying, “This is great. Thank you for teaching me how to go and buy rental properties but I’ve got three kids. I’ve got a full-time practice. I don’t have the time or the desire to go and do this. Can you take $100,000 and invest it for me?”

He was reticent for a long time and shared this story with me. He finally started Ascent Equity Group, where they’re capital partners and they pool capital from other doctors. They’ve got sponsors and they go and invest that money as a group. I was also aware of a couple of other doctor groups who do this like White Coat Capital, Viking and so on but there was no one talking to the airline pilot crowd. No one was doing this and airline pilots are a lot like doctors. We make great money, we’re terrible with it and we’re lazy, at least financially.

Airline pilots are a lot like doctors. They make great money but are terrible with it. Click To Tweet

It’s a demographic that needs more real estate exposure. We have great retirement packages but they’re very stock market heavy. Our portfolios tend to be very heavy in publicly traded securities. In my opinion, most people need a lot more real estate exposure than they currently have. Yet as we all know, the process of going out there and learning how to buy rental properties effectively, manage them and do it profitably is not an easy task.

It’s a multi-year journey. It’s a lot of books, podcasts, networking and time. Most people that have a great W-2 and who worked for a long time to get there don’t necessarily want to dedicate multiple years of their life to pursuing that activity. If you can provide a conduit in which they have a place that’s known, liked and trusted that can bring them real estate deals and they can participate in the space without dedicating years to learning it, it would be a pretty cool thing to bring to the pilot community. The name hit me like a lightning bolt. It was like, “We’re making money while we’re sitting up there spinning these turbine engines. Let’s put that money to work in some real estate.” We can go in further on how we built it and all that stuff but that’s how the idea came.

 

 

I’d love to hear that and I’m looking forward to hearing more about how you built that and time management because you’re very busy with your career as a pilot. Can we discuss what asset classes that Turbine Capital is focused on and why you’re focused on those asset classes?

I can touch on both of those points. When I started the company, it was purely by chance and by luck. I started in a paid mentorship program with another capital raiser so that I could leapfrog into this. It happened to start on April 1st, 2020. If you remember how many airplanes were parked on runways back then, it was a perfect time because we weren’t flying. I had the better part of the first 2 or 3 months where I was starting to build this thing out where I was able to focus on this and not have any distractions from the W-2, which was incredible.

In terms of asset class, I had already invested in some storage deals. At that time we weren’t sure what was happening and we wanted to focus on recession-resistant asset classes so we went into storage. At this time, we’ve done self-storage, value-add, self-storage development and multi-family value-add. We’re courting some mobile home park operators but that’s our focus.

Storage is the most recession-resistant asset class. Click To Tweet

What regions are you focused on?

We own assets in Arizona, Texas, Florida, Tennessee and Georgia. It’s the Sunbelt. It’s where everybody’s focusing and where people are moving. You need people.

We touched on this a bit more. Your business model is to partner with other groups as a co-GP and you come in there and you’re involved in the whole project from the beginning to the end but maybe we can touch on as far as expanding as an investment firm, as a real estate private equity firm, utilizing the fund to fund model, what is that process?

Are you continuously looking to expand? The way I describe it, groups that do partner with lead sponsors is that it’s a funnel. The lead sponsors are out there looking at hundreds of deals and finally, put certain deals under contract. You have these private equity firms like yourself looking at all these different sponsors and they can cherry-pick the best deals amongst the different sponsors and asset classes and then bring it to their group of investors. By the time that deal gets to your investor’s inbox, look how much capital has been spent to source those deals by the time it gets to you. They’re getting the cream of the crop, your investors are.

At the operator or sponsor level, that was one of the reasons why I started going passive. It was because I saw the writing on the wall. I can’t compete with these people. They’ve got teams. With all the broker relationships, they’ve got all lender relationships. They can get debt at better rates and terms than I can, which means they can pay more for the same property and squeeze more juice out of it because they’ve got a better contracting team and property management firm.

If you can’t beat them, join them. At the sponsor level, they’re finding maybe not the cream of the crop but they’re finding great deals because they’re seeing all the good stuff that comes to market before me or anyone else who’s a retail investor trying to go buy a 3,000-unit apartment complex. At the fund level, what’s fun about having a capital group like this, a private equity fund, is I’ve got several people on my team that has been in real estate for a long time.

I’m extremely fortunate to have Grant Cardone as our CFO. He does all of our financial due diligence and stress testing in our underwriting. We’ll take these sponsors’ files. We’ll pop open the hood because it’s easy to say, “This deal has a 17% IRR. It’s got this and that. It’s going to be a 2X equity multiple.” It’s like, “So what?” Anybody can give you those numbers. It’s what’s under the hood that counts. You got to get into the engine and the transmission and see what assumptions are driving those projections.

We’ll dive into the underwriting and rip it apart. Stress test it. See what the doomsday profile looks like and see if we agree with how rosy or how conservative a sponsor’s being in their assumptions. We use aviation decision-making and threat error management to try, trap and mitigate external threats and internal errors to make sure that something hasn’t fallen through the cracks. It starts with the sponsor. It starts with a good operator and a good track record. From there, we’ll look at the market and then the deal but when we look at the deal, we go deep into the nuts and bolts.

How do you vet sponsors? Do you have a checklist as most pilots do?

We do have a checklist. It’s at about 150 items and it’s growing. That’s not only on the sponsor side. That’s all the way through. For the sponsors, there’s a lot of subjective, not just quantitative. When you’re vetting a sponsor, it’s hard to put a lot of KPIs and numbers. Quantitatively for sure, we’ll ask them for all of their past executive summaries on deals that they’ve done in the past and we want their track record on them.

 

We’ll look at, “What did you assume? What did your original underwriting look like? What did you perform?” We will poke holes in it and ask, “How come this ended?” It’s both ways. Why did this not go so great or why did this go so great? Why did you have the underwriting? Why did you go so conservative with these assumptions that you outperformed by 5X or something like that?

We want to see consistency and a track record. Operationally, we like to fly out and meet the team. We want to see how different departments are talking with one another. For example, is your property management team talking to your acquisitions team? If your acquisitions team is thinking that they’re going to get 10% rent growth this year, is your property management team feeding real-time data to those assumptions or is the left hand not talking to the right hand? It’s things like that. When you’re vetting a sponsor, it’s a track record and operational acumen.

When vetting a sponsor, it's all about track record and operational acumen. Click To Tweet

A couple of other questions before getting to the next segment of our show. Your company, the name is on it, Turbine Capital. You’re servicing a need that pilots have to be able to make passive investments and that’s great. That’s tremendous. You compare it to physicians. There are over 1.1 million physicians across the US and 90,000 across Canada. They’re high-income earners so you made a comparison but as your company grows and as you perform, is the plan to also venture to other demographics and talk to us internally? Have you guys talked about that? What the plan is there?

This is an experience we had. Our company initially was Canadian Passive Investing. Our marketing was only for Canadians. We were looking to raise equity from Canadian investors to buy US real estate. That was the business plan but then, we had a lot of US investors reaching out to us. When we realized that and realized there are 30 million accredited investors in the US compared to between 1 and 2 million of how you see an accreditation in Canada, we’re like, “That’s a market that we want to break into.”

We change our name to CPI Capital and then we do some in the US as well. Have you spoken internally that, “We’ve built this great company? We’re servicing. We are hitting targets. We are performing here for our investors but how are you going to expand? What the plans are?” This is out of curiosity. This wasn’t a planned question.

I’ll speak to that in two segments. Number one, when I started the company originally, the idea was I’m going to focus on airline pilots. We have a bunch of military pilots as well. I went through the same thing when I was in my initial growth phase and I decided to go a little bit wider. I found that all the systems broke down. The compass was spinning and I didn’t know like, “How to write copy?” Once I recommitted to, “This is our audience,” all the stars aligned. Everything made sense and got easier.

I’m lucky in the fact that we have a great demographic to serve. We’ve got a very deep well there. There are over 100,000 airline pilots in the US and no one is servicing that demographic. We have a long way to go in terms of establishing our name as the go-to source for real estate exposure, passive real estate exposure and due diligence that you can trust and a team that you can trust. If we will go wider, I’m not sure.

 

I find that if there’s that phrase if you’re talking to everyone, you’re talking to no one. It makes sense for us to focus on airline pilots. With that being said, about 40% of our current investors are non-pilots. “Can you invest with us if you’re a non-pilot?” Absolutely. We’ve got tons of friends and family and 1 or 2 degrees of separation from there. We have plenty of non-pilot investors but in terms of our niche demographic, whom we are trying to cater directly to, it would be the airline pilot crowd.

That’s incredible that you do that because they always say to focus on your avatar and put your marketing around that. The way you speak around that emotionally connects with those people. One last question before we get onto the next segment of our show. What advice do you have for a passive investor looking to start investing in real estate private equity?

I’d read some books. A great one is The Hands-Off Investor by Brian Burke of Praxis Capital. He wrote a BiggerPockets book. That one is dense. It talks a lot about how to look at deals. I know you guys raise capital. By going through a third party like us, technically we’re a middle man but I’m very proud of the fact that our investors aren’t losing any economics by investing through us.

The reason we can do that is that we’re investing multiple millions at a time with these sponsors. We’re getting favorable terms based on buying in bulk. Instead of getting a 2X equity multiple, we’ll be getting a 2.2 if the deal performs the same by investing more money and that’s where we take our cut. Leverage the due diligence of a private equity fund. A sponsor is doing their DD because they want to make money as well but they also have a lot of employees.

The operators are very employee-heavy because it’s a big lift to go out, find these properties, put them under contract, get the renovations done, manage them and dispose of them versus a company like ours. We have three people. We’re very light on our feet and we can perform razor-sharp due diligence and also pivot asset classes.

Whereas a multifamily operator, if the economic outlook shifts and at some time in the future doesn’t look all that great for multifamily, it would take them the better part of a decade to get into a different asset class and build the relationships in that asset class. Whereas, we can pivot within six months and become an expert on a specific asset class, find the best operator out there, perform our deep levels of due diligence on them and then offer that asset class to our investor group. Settling up with a private equity fund that you trust and like and get along with is a good avenue.

 

 

You talk about this concept of the fund-to-fund structure and how a general partnership of the private equity fund, having that structure in place, does not dilute investor returns because the GP of the fund that’s investing and the lead sponsors fund is getting a portion of the GP profits. Also, in some cases, it’s getting better returns for investors because they’re bringing one big check and they’re involved in other management as well.

 

 

A great point that you touched on is that all of these groups that we partnered with might have a certain focus. They might be focusing on a core plus business model, multifamily. They might be great at it and that’s why we’re partnering with them but if the market changes or there’s another performing asset class, for example, BTRSFR, the Built To Rent Single Family Rental asset class is horizontal. Multifamily, which is single-family rental communities, that’s the asset class that we’re focusing on doing our first deal as a lead sponsor. It allows that to be dynamic. If you don’t move with the market, you go extinct. It’s what they say. Those are great points that you mentioned. I appreciate it. Thanks for all the information.

We’re onto the next segment of the show. It’s the Ten Championship Rounds to Financial Freedom. It’s whatever comes top of mind. I’m going to ask you some questions. We’re looking forward to learning more about you. The first question is who was the most influential person in your life?

That’s easy. It’s my Uncle Wally. He started flying when I was eleven. He played guitars and drums, rode motorcycles and all sorts of fun stuff. I spent a lot of time with him when I was young.

You already mentioned The Hands-Off Investor but what is the number one book you’d recommend?

I might go non-real estate here but it’s a book that a lot of people probably haven’t heard of but it’s by Peter Diamandis. It’s called Bold. I couldn’t put that book down. I read it years ago and it’s the sequel to a book by his called Abundance: The Future is Better Than You Think. The whole premise of Abundance is we are inundated all the time with headlines and things that make us think that the world is getting worse. If you look at the data, things are getting much better every decade and every year. The quality of life, even for people below the poverty line is wildly better than 100 years ago.

Bold is an incredible book that talks about the world’s biggest issues being the world’s biggest business opportunities. It’s things like creating clean water and being able to provide that to people that are living in extreme poverty. Those are some of the biggest business opportunities on the planet and will make hundreds of millions or billions of dollars for people that can solve those problems. It’s not necessarily that I’m going to go out and do those things but it’s a nice mindset shift and it’s exciting. It’s a great call to action in terms of doing good in the world and the fact that it’s good and profitable to go and do those things.

What they say is and I’m talking on the same point is energy. They call it the world’s first trillionaire. It is going to be the person who is going to figure out the next fuel we’re going to be using as energy.

That’s a great thing for the planet and humanity, as they should be.

Providing to people in extreme poverty is some of the biggest business opportunities on the planet. Click To Tweet

Tait, if you had the opportunity to travel back in time, what advice would you give your younger self?

Buy more real estate. Don’t be afraid to pull that trigger.

Buy more real estate. Don't be afraid to pull that trigger. Click To Tweet

What’s the best investment you’ve ever made?

Education.

What’s the worst investment you’ve ever made? What lessons did you learn from it?

Probably crypto. I have some friends that have done well in it but the lesson is don’t invest in emotion. Invest in data.

Only buy Bitcoin and Ethereum. Don’t buy the crap coins.

That’s not to say I don’t own some cryptocurrency but I probably bought it at the wrong time.

How much did you need in the bank to retire now? What’s your number?

$20 million but I don’t want to retire. I love this stuff. I love working on the business and flying.

This is a good one. If you could have dinner with someone dead or alive, who would it be?

Nikki Sixx comes to mind. I saw Motley Crue in San Diego. They’ve had some wild times. That’d be pretty fun. Peter Diamandis would be pretty incredible. That’d be a much different dinner. I’ll pick a dead one too, Einstein.

The next question is if you weren’t doing what you’re doing now, what would you be doing now? That’s going to be hard to answer.

He is doing a lot. He’s a pilot. He’s a globe trotter.

I’d be surfing. I’ve not gotten the water nearly enough in the last couple of years I’ve been building this thing.

Are you pretty good at surfing?

I’ve been doing it for a long time. I used to be better. I used to be more in shape for it but that’s okay.

It’s muscle memory. It’ll pick up. This is my favorite question. Book smarts or street smarts?

Street smarts.

The last question, Tait. If you had $1 million cash and you had to make one investment now, what would it be?

I’m very risk-averse. I wouldn’t be able to put $1 million into that. It would be in a real estate syndication without question. I’m trying to figure out if I can give you an asset class. I can’t give you an asset class. I’d probably look at the four deals that we have in the pipeline and I’d throw a dart.

I came up with an answer to that question for myself.

What is it?

There are always changes. It would be a pref equity position on syndication. I want some of the backend profits aside from my preferred returns that are ahead of others in the capital stack. That’s what I would do. It’s a no-brainer.

Tait, if you could let everybody know the best way that they can reach you?

Our website is TurbineCap.com. You can shoot me an email at Tait@TurbineCap.com. We’re on social. Drop us a line anywhere. I’d be happy to talk.

We’re so grateful that we finally got to chat with you and get to learn more about you. Thank you so much for being on our show.

Thank you. We appreciate it.

It’s been a pleasure. Thank you so much for having me on.