Mistakes, Multifamily and Raising Capital with Tyler Sheff
52:34 · 2018
Scott: I’m extremely jacked up to have Tyler Sheff, from The Cash Flow Guys Podcast join us as a special guest. Thank you for joining us here. For those who don’t know Tyler, he is a very successful real estate investor. He also runs an amazing podcast called The Cash Flow Guys Podcast. He focuses a lot on notes and multifamily. I thought we’d have him come on here to talk a little bit about the multifamily market because that’s where a lot of people see some interest. That’s where we see a lot of note investors coming from. He’ll talk about some of the tips that you use to raise private capital. Tyler, why don’t you share a little bit about your background? How you got started and what you’re doing now?
Tyler: I’ve done this twice, what I call my second rodeo so to speak or my second act. One of my audience said, “This is your second act.” The first act, I was a house flipper. I was the guy that bought houses, fixed them up, and flipped them. I got good at it, I got real cocky, and then got what they call a seminar. I got an education as I didn’t have to necessarily write a check to an educator for it. I wrote a check to a lot of different people because I made a few mistakes, paid a lot of taxes and did all that good stuff. I got out of the real estate business, luckily before the market crashed, not because I saw it coming. I got out because basically we had a couple of flips go wildly wrong. I lost a bunch of money, and I’ve decided that I wanted to cash out.
I rented up all my flips, put tenants in them, and held them for a year. The property value went up 25%, I cashed out. The problem is, it didn’t allow for the taxes on that. Apparently, there’s no room on the 1040EZ form to sell a couple of dozen houses. That was a problem. My charm does not work with the IRS, they’re not very happy people. “You got the checks in the mail guys. I’ve already mailed my check for this year.” I get it. I know it’s not a big one. I’ll try harder next year. I’ve done the best I can. Long story short, I got out of flipping. I went to work for the government mainly because my wife said I needed to go get a job. The problem there, I made a lot of money because I started at $30,000 a year.
When you worked for the federal government as an employee, if you show up on time and basically even try, they’ll keep promoting you. I went from $30,000 a year into the six figures inside of two, three years, which created another tax problem. I’m getting paid by the government but giving the other side all my money. I had to come up with a way to reduce my taxes. I started researching how to do that legally since Tyler’s charm does not work on that anyway. The only thing I came back with was buy real estate and hang onto it. That’s what I started doing.