Trevor Thomspon is an industry veteran of the syndication world. The Canadian native and Austin transplant, who for many years has been an active passive investor has recently made the pivot to the GP side. Trevor spent more than 20 years with iFLY Indoor Skydiving where he scouted for new locations. After losing his job during the pandemic, Trevor saw an opportunity to combine his learnings from assessing new locations and being an LP to syndicating his first deal, a 75-unit, Class C apartment complex in San Antonio, Texas.
Loop Crossing, a 58-unit property in Houston, Texas – LP 2019 – 2020 (full cycle
Where it all began
But let’s trace back a few years to where it all began – weekend seminars with a local Texas network. Thompson was attracted to the local group whose motto was “Texans investing in Texas” compared to other networks that had a more national footprint. He was allured by the people and frequently joined their weekly in-person events.
While it is common and almost the norm for GPs to join mentorship programs to learn to underwrite, capital raise, and orchestrate a deal, Trevor stresses that even as an LP, you still need to get educated so that you can check and analyze deals. He made his first investment after more than a year of “stalking his GP and spending a lot of energy learning about the GP to ensure that goals were aligned.”
Trevor with other students at a Jake and Gino event in Orlando, Florida, October 2021
Trust but verify
Trevor provides some key points to assess the merit of the deal by asking questions like “is it realistic and practical?” Sponsors can use lofty numbers to paint a rosy picture of the deal so it’s vital that LPs do their due diligence by looking at rent comparisons within a 3 to 5-mile radius. He advises it is best to drive and see the property – Trevor remembers seeing one of his properties and realizing that it was in a worse condition than what was conveyed to him.
While there are many components of the deal to consider, one thing is certain, Trevor is truly passionate about real estate, “Real estate is a true way to grow your worth. If you have $100K and in 5 years, you double it, now you have $200K. You reinvest it all, and in 5 more years, you have $400K. You reinvest it all and after 5 years, you have $800K. You invest it for another 5 years and it doubles to $1.6 million dollars. You invest that again and you now have $3.2 million dollars. That’s the compound effect on your money.”
Trevor uses an analogy to explain real estate syndication where the GP is the airline and the LP is the passenger. The airline takes care of the passengers to ensure that they arrive safely at their destination. All the LP needs to do is buy a ticket and during the flight, they can do anything they wish within the guidelines (e.g. read, watch movies, sleep, etc.). The GP takes care of the logistics, meals, etc so that LPs have a pleasant experience upon arrival. All LPs need to worry about is which airline to trust similarly to which sponsor to invest their money with.
Wellesley Place, 66 unit property in Columbus, South Carolina, first deal as a GP in 2022
Learnings as an LP
Trevor is highly invested in the business operations as an LP on his previous and current deals. If unit turns were slower than planned, he wants to know why so that he can be a more informed investor and ask intelligent questions. Now that he is actively syndicating, he can provide more context and updates to his investors.
Trevor advises others to get started in real estate early – “Don’t wait to invest in real estate, invest in real estate and wait,” reciting wise words from Will Rogers. While Trevor has done well for himself, he regrets not investing for 20 years after reading “Rich Dad, Poor Dad.” Luckily, it is never too early or late to get started.
Trevor with friends at the Old Capital Conference in Arlington, Texas, September 2022
Lighting round questions
Syndications work because: “you make money while you sleep and you’re buying a real asset. You are providing something people need.”
The biggest bs I’ve heard about syndications is: “A lot of people talk about you’re going to save money on cost segregation. That’s fine right – so that $100K we’ve talked about that you’ll double, if you use cost segregation, you’re not going to pay taxes on your passive earnings because of the cost segregation. But they tell a lot of people that it’ll be like just the active side where you can use it on all of your income but it’s not, it’s only on your passive income.”
If I had to change anything about my LP investments it would be: “I guess it would be to get educated earlier since my few first deals did not do all that well. In my more recent investments, they are much better because I’ve learned to do the check.”
The best book for passive investors to read is: Passive Investing in Commercial Real Estate Insider Secrets to Achieving Financial Independence by James Kandasmy
Sponsors that do x are ones that I can trust: “That tells the truth, that is honest and genuine. Everyone looks great on the internet, but I want people to talk about their struggles.”
Watch this video to learn more about Trevor’s journey
Kristina Xie is a real estate syndication enthusiast. She invests in properties in NYC, however became interested in large scale multifamily units after attending her first real estate conference in November 2021. When she is not actively interviewing people or writing articles, she enjoys the outdoors and traveling around the world!
