Nomad Capital: Repurposing Retail for Premier Storage

Today’s guest is Clint Harris.

Clint spent 16 years in medical sales, built a STR portfolio to replace that income, and a property management company. He made the jump to self storage conversion projects, and then syndication, and is now a General Partner with Nomad Capital, $120 million AUM.

Show summary:
In this episode, Clint Harris, a partner at Nomad Capital, shares his transition from medical sales to real estate investing, focusing on short-term rentals and self-storage conversions. He emphasizes financial independence and the value of time and location freedom. Clint discusses the slow but rewarding process of real estate investing, the balance between active and passive roles, and the importance of aligning strategies with personal goals. He also speaks on the power of partnerships and leveraging others' strengths.
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Intro (00:00:00)

Clint's journey in real estate (00:01:05)

Lessons from early real estate investing (00:03:16)

Transition to self-storage projects (00:09:39)

Balancing financial and time independence (00:13:07)

Challenges of managing multiple ventures (00:18:52)

Operating Partner and Manager Selection (00:19:09)

Nomad Capital Partnership (00:20:05)

Contact Information (00:21:02)

Podcast Wrap-up and Call to Action (00:21:19)
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Connect with Clint:
Linkedin: www.linkedin.com/in/clint-harris-543265139

FB: https://www.facebook.com/clint.harris.3150?mibextid=LQQJ4d

IG: https://www.instagram.com/clintstagram_nc/?utm_source=qr

Web: https://nomadcapital.us/

Connect with Sam:
I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.  

Facebook: https://www.facebook.com/HowtoscaleCRE/
LinkedIn: https://www.linkedin.com/in/samwilsonhowtoscalecre/
Email me → [email protected]

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Want to read the full show notes of the episode? Check it out below:
Clint Harris (00:00:00) - Traditionally, we'll buy a building for a couple million bucks, put a couple million into it, and then stabilize. Value is usually between 13 to $17 million, which means we're sitting at around 30 to 35% loan to value when we are stabilized. So we can refi to 5,560%, pay our investors and ourselves when we do that, and we're paying people out by way of a refinance, it's a nontaxable event because it's not a capital gain. We didn't sell anything, so they're getting a nice return. We keep some money, keep the lights on here at Nomad, and then that gives us the ability to continue the scale.

Intro (00:00:32) - Welcome to the how to Scale commercial real Estate show. Whether you are an active or passive investor. We'll teach you how to scale your real estate investing business into something big.

Sam Wilson (00:00:45) - Glenn Harris has 16 years in medical sales. He has built a short term rental portfolio to replace his income. He has a property management company and now he's doing self-storage conversion projects and syndications. He's also a general partner now with Nomad Capital and has over $120 million in assets under management.

Sam Wilson (00:01:04) - Clint, welcome to the show.

Clint Harris (00:01:05) - Thank you. Sam, great to be here. Great to see you again.

Sam Wilson (00:01:08) - Absolutely. Always good to see you, Clint. There are three questions I ask every guest who comes on the show in 90s or less. Can you tell me where did you start? Where are you now and how did you get there?

Clint Harris (00:01:18) - I started building in a career in medical sales. That is a short. It's a young man's game that will grind you up in terms of nights, calls, uh, working weekends, heart problems. I was implanting pacemakers and defibrillators. That is not a Monday through Friday, 9 to 5 kind of job. So that's where I started. Because of that, I actively focused on looking to build an off ramp from that lifestyle to stop trading time for money. Uh, and that got me into single family rentals, where I discovered that it's a very slow way to get ahead. That got me into, uh, buying small multifamily properties and converting them to short term rentals.

Clint Harris (00:01:59) - And that taught me the value of multifamily and the value of asset class conversion that drastically increases the value of an asset, because you change the formula by which the asset is valued. And that led me to, again, a very active profile. It replaced my income. It gave me a level of financial freedom, but it did not give me time or location independence. So in the pursuit of time, location and financial independence, that led me to self-storage, which is where I am now, and general partner with Nomad Capital. We specifically focus on buying big box retail buildings like Kmart's, grocery stores and warehouses, and we convert them from one single big box into 6 or 700 class A climate controlled self-storage units. And it's taking those same lessons. It's it's one property that can be converted to a different asset, where you change the formula by which the value is created, and you create multiple tenants and putting them in place, you're buying for less than the replacement cost. Use vertical integration to leave as much value as you possibly can.

Clint Harris (00:02:55) - And that's what changed my life in a meaningful way. And I left Cardiology behind in in 2022 and, uh, full time nomad and real estate investor.

Sam Wilson (00:03:04) - Man, that's really cool. I love that you you've gone through several iterations of the business, and I guess in what and what year did you start investing in real estate? How long has that been?

Clint Harris (00:03:16) - I started investing in real estate. Let's say I bought my first property as a duplex when I was in my early 20s. I'm okay. I'm 41 now. I would tell you this. I started investing in real estate when I was probably 2324. It was the post 2008 crash era. So between 2010 and 2013, I think my wife and I bought nine single family properties, I believe, um, the reality was there's a big difference between investing in real estate and doing it correctly. I'll tell you, I did it wrong for at least ten years. It wasn't until, uh, I relocated to Wilmington, North Carolina. My wife and I took a promotion.

Clint Harris (00:03:56) - We moved to the beach, and I used a lot of road time to start listening to podcasts aggressively and educating. So I said, I've been doing real estate a long time. I've been doing real estate correctly, uh, since 2018. That was when we first got it right. And we started we unloaded some single family properties. We did some 1030 ones, and we started buying multifamily properties with bad long term tenants, converting them to Airbnbs. And that's really where it kind of took off. And the lesson I learned is, you know, you could have four condos at the beach with four mortgages, four sets of HOAs and four sets, utilities and break even. Or I could buy one quad plex, have one mortgage, one set of taxes and utilities, and net 80 grand a year. So the unit density in that lesson. So I think there's a big difference in investing and investing correctly. And I certainly was not doing it the right way for the first ten years or so.

Sam Wilson (00:04:46) - Well, yeah.

Sam Wilson (00:04:48) - And that I mean, that's kind of the thrust of the show is how to scale. Like it's it's one of those things where and you've made the, the, the progression. I think that so many investors make along the way, myself included, where it's like, oh, wait, like this, just this doesn't work at the single family level. Uh, what were some of the things, I guess, I mean, you because you developed a model, you said, okay, this model didn't work or isn't working the way we want it to. Like getting through those transitions is oftentimes tough. And or people can be accused of shiny object syndrome going, well, here's the next greatest and best thing. Like, how did you work your way through that without feeling like you're just chasing your own tail, trying to find the next iteration of what might work?

Clint Harris (00:05:27) - Well, I did, I think that's a really, really good question. If I'm trying to give you the most condensed life experience that I can that's going to offer the most value to you and your listeners, I would say this with single family rentals.

Clint Harris (00:05:38) - The lesson that I learned there is that if one property is 1 or 2 headaches a year, and then you multiply that by nine, it's it's a very slow way to get ahead. It does not scale very well. And ultimately like it's just not worth your time. The mistake that I made from there, not a mistake. As part of our journey moving into small multifamily properties. And we still own and we have 14 Airbnb properties and a property management company that manages another 80 listings. Which is why I keep talking to you about laundromats, because we got £40,000 of linens a month during the summer to deal with, um, the the issue when I made the jump from that first portfolio that we built and ultimately we took it apart and rebuilt it into something else, here's the important thing I think I was really focused on. The finances. And single families would just way too slow. So the financial independence and the goal that I had to reach in terms of financial independence and cash flow was there by jumping to a short term rental strategy, specifically with multifamily properties.

Clint Harris (00:06:38) - However, when we built that portfolio out to the point where it replaced my income from surgical sales, we tried to turn it over to some property management companies. And the reality was, nobody's going to manage my business the way that I manage my business. Right. So our options were to either unpack that and go in another direction or do what we did, which is build a property management company around it. And it took us two years to do that. And now people look at it and they think that it's passive income. We've got checks rolling in and my properties are being managed at cost and it's passive income. The reality is it's residual income. We just frontloaded the work several years ago, and you don't see all the work that went involved. And now it just looks like mailbox money. And here's the issue that I ran into. Then the goalpost moved my goals for what I wanted to accomplish changed. And I suspect that throughout my life they're probably going to change again. So I'm trying to get ahead of that by talking to people farther down the road and learn.

Clint Harris (00:07:38) - I was focusing on financial independence when I hit that level of financial independence. It did not come with time or location independence. We're all after financial independence, right? And everybody says that they love investing. The reality is, I don't think they love investing. I think they love what investing represents to them in terms of freedom of choice and freedom of purpose. But the way that you build out your portfolio, you could be painting yourself into a corner and pitching, pigeonholing yourself. I have properties, multifamily properties at the beach that cash flow like crazy. But instead of one tenant in each property, I have 8 to 10 tenants per month in each listing. They're paying a lot of money to be there, and they have high expectations and there's a lot of turnover and the messaging and communication and issues that pop up, even with just managing the people that are managing our property management company. It's on the weekends and it's during the summer, and it does not get you time or location independence because you have to stay on top of that.

Clint Harris (00:08:43) - And it takes extra work to create the extra value from the multifamily properties there. And so for me, the goalpost moved because it wasn't really just financial freedom that I was after. It was time and location independence. So if you take a step back and you look at things in terms of scale, the same lessons from value add that were there with single family and leveraging and BR and using the money again is there with multifamily, the importance of residential density and more rental units than you have sets of fixed overhead. And the lesson of an asset class conversion that changes the value of the property? All those lessons are there. But then you factor in, okay, what's going to give me the time independence, the location independence and the financial freedom to get where I want to be. And ultimately, when I talk to the older guys that were farther down the road, for me, it was one of three things. But traditionally hard money lending and lending, uh, cell storage and mobile home parks.

Clint Harris (00:09:39) - And I didn't have $1 million to lend anybody. I didn't have any interest in mobile home parks. I wasn't that thrilled with tenants at the moment because of who we'd been dealing with through our short term rentals and the 85 properties that our company managed. So that led to self storage. Then when I met my partners, Eric and Levi Hemingway, through local networking, they're doing asset class conversion. We went in and did a joint venture in 2021. We bought an old Kmart for 1.5 million. The replacement cost on the big box retail building was 6.5. We put 2.5 million into it. We're into it for 4 million. We converted it to 600 climate controlled self-storage units, and it's worth three times what we have into it, depending. Different projects vary, right. But that was the one that as a joint venture was like, okay, if we wanted to build this cinder block shell, it's going to cost us $6.5 million. But we can buy it because there's very little appetite for big box retail.

Clint Harris (00:10:30) - But it's got the residential density and A1357 mile radius. It's got the vehicle count that created the value for us to be able to move on. And when you talk about scalability, if you buy an asset, no matter what it is, you fix it up and you make it nicer. You increase the rents. The value goes up by 30%. In order for you to a pay day, you either have to wait and get your cash on cash return through the cash flow, or you probably have to liquidate the asset for you and your investors to get a payday. The good thing about asset class conversion is that it can be such a swing in value that it leaves you sitting at a really low loan to value. Like traditionally, we'll buy a building for a couple million bucks, put a couple million into it, and the stabilized value is usually between 13 to $17 million, which means we're sitting at around 30 to 35% loan to value when we are stabilized. So we can refi to 55. 60% pay our investors and ourselves when we do that, and we're paying people out by way of a refinance.

Clint Harris (00:11:30) - It's a nontaxable event because it's not a capital gain. We didn't sell anything, so they're getting a nice return. We keep some money, keep the lights on here at Nomad, and then that gives us the ability to continue the scale. So the lessons from everything I was doing earlier, it's the same thing. I think that's why the importance of people going through the steps of whatever it takes to get them, uh, through their career and learning, just understanding that it's significantly more likely that whatever you're doing right now is probably a stepping stone to where you want to be later versus the destination. And if you feel that way, I think it's easier to always be learning and networking, and that's typically how you're going to get ahead.

Sam Wilson (00:12:09) - I love it, I love it, Clint. That's very, very insightful. I would say there's two thoughts that come to mind when you were talking. One is that real estate is a get rich, slow game. And I think that people oftentimes, myself included, probably, you know, in yester years they've thought, oh my gosh, we're going to do this and we're going to do that, and we're going to do one deal.

Sam Wilson (00:12:26) - Like, you know, Clint is talking about right now, man, we're set. But it's like that's like you said, it's a stepping stone. I think it's a get rich slow game. And the second thought I had behind that was holding with three fingers when I'm already counting the two. The second thought I had behind it is that you were talking about, um, financial independence, then time and location independence. And I think one precedes the other. Like for a lot of people, you do have to initially find the financial independence so that you can then begin thinking about what time and location independence might look like. Talk to me about how you're doing, what you're doing right now, and how that plays into your set desire to be time and location independent.

Clint Harris (00:13:07) - Yeah, that's a great point. I think it's not. You can't scale all of those things at once. You just traditionally you're going to reach a level of financial independence. And then what you do with that money determines whether or not you're going to be able to afford to get your time back and get your, your location independence.

Clint Harris (00:13:22) - So what we're doing now in terms of scalability is last year we did six individual deals. We did two kmart's, three warehouses and a grocery store. This year we've converted to a fund model. So we've got a $10 million fund open right now for the purchase of $30 million worth of buildings that are going to be converted to $80 million worth of storage. So we get a scalability bump there. In terms of working with a portfolio. We just closed the first two properties. We got three more to go, and we can order the materials and get them a lot cheaper. We have different crews that are working at the same time, basically overlapping on different projects. So the overall fixed cost of the properties continues to get lower and lower, which just helps us with that loan to value with the stabilization and be able to refinance and move on. So in terms of that, like that, just we're just continuing to make those small tweaks and move forward. I think I heard something really recently that just impacted me.

Clint Harris (00:14:14) - It was a statement somebody made in passing, and it just it gave me pause. And coming from someone that has an active real estate investment portfolio, small, but I mean, it does well for us. It's one of those things where I have to look on at the return of the property from the initial purchase price we were buying at the beach in 2018 and 2020. We've had massive appreciation, so I've got my return on the property, return on the initial investment, then I've got my return on the equity as to how much equity has grown in the property, and it might be lackluster there, but then there's also, you know, those are fairly active. And then I look at the returns that Nomad is paying out or that you can find across the alternative investing landscape, like if I invested in your, your, your laundromat funds or whatever it may be, you can choose your asset, your operator or anything else. But somebody said recently, you know, I've done a lot of active investing in the past, and I used to look at my return on investment now where I am in my life, I look at the return per hour that I have to spend worrying about it every year, and I can make 50% return on investment.

Clint Harris (00:15:19) - But if I'm an active investor working on something, that's one thing. But if I'm making an 18 or a 20% return with a passive investment strategy and I spend two hours a year thinking about it, or reading the reports or reading the monthly updates or whatever it's like, for me, that is a significantly higher return based upon the amount of hours of my year that I spend thinking about it. And the dude that told me what this was in Colorado for two months, ice climbing up waterfalls and I was like, probably somebody I should listen to. So I thought that was a unique perspective of, at the end of the day, like, it's just it's a testament that goes to show that the older we get. I think our time becomes more and more valuable to us. And it's one thing that you're willing to sacrifice some of that to get your time back. And that can be a slippery slope, because if you built a portfolio of properties with the intention of managing them yourself, and that makes it a good deal, and then you haven't factored in the cost of management or for somebody else to handle those assets for you.

Clint Harris (00:16:22) - When you do decide it's time for you to get your time back and you're trying to put management in place, there's a cost to that, and that's a line item. You have to pay for that management, and that can sometimes take a deal that was a good deal and turn it into not a great deal. And that means it can take an entire portfolio that you've built and turned it into something that it's not a great deal unless you're the one managing it. And now you've just got a job, right? And that's another scenario where maybe you get the financial independence, but you don't get the timer location independence. And without those three things together, you have to have all three to have any kind of independence of purpose where you choose what you want to do. Hopefully it's family or giving or building or whatever is important to you, and fishing or hiking or ministry or whatever it may be. But the ability to make that choice on your own has to have those three components, and sometimes you can scale out in a way that it's at the detriment you're giving one of those up to accomplish the other, and they can be mutually exclusive.

Clint Harris (00:17:23) - And you don't know that until you get farther down the path of building out a portfolio. And then you have to either just lie in the bed that you've made or learn how to unpack it and shift.

Sam Wilson (00:17:32) - That's absolutely right. And it's and I think there's no right answer here is the other other side of this where it's like, you got to figure out what works for you. I will I'm, I got a front row seat to, um, having made some investments personally, passive investments in some deals that just simply aren't working out. And it's, it's a painful like, oh, man. Like, hey, I was looking for passive investing. And instead I put in my, my money into some things that performed well for years. And suddenly they've gone poof. And it's like, oh my gosh, what happened there? So I think, you know, there's a lot of things we don't have time to unpack here, but it is figuring out what strategy I think works for you, which one you want to trade your time for, do you want to actively manage it? You know what? And knowing your operator to I mean, that's one we again, I'm going down a rabbit hole.

Sam Wilson (00:18:17) - We probably don't want to or don't have time to really unpack, but it's something that, uh, you know, figuring out what the right path for you is. And do you want to be that active operator? And if so, just be going into it with your eyes wide open or it's like, hey, man, you know what? This is going to cost you? Time and location dependence is is a price you're going to pay. You have to stay here in order to make this work. So how let me ask you this one quick question. I know we're at the end of the end of the call time here, but you've built out a property management company and now you're working full time with Nomad Capital, you know, running the self-storage fund and everything else that you guys have going on. How do you manage all that?

Clint Harris (00:18:52) - So it's similar to the smartest thing I did, honestly, there was was get out of the way. I'm a visionary and a big picture guy, and I have one of the strengths that I have is I can get people excited about a common goal and help people kind of see the vision of of what we're building.

Clint Harris (00:19:09) - And I can tend to be a little bit heavy handed in terms of wanting to have control of that. The smartest thing I did with our company was, you know, build it out from scratch. The first 18, 24 months, I had an operating partner who's kind of, um, we're doing it together, but he's following my lead with some of the suggestions and softwares and directions that we went. And then we brought on another manager, and it didn't take me too long. It took me longer than it should, but it didn't take me too long to realize, you know what? These people are better operators than I am. So the one thing I will give myself credit for is having good judgment and character and abilities when choosing those partners. Uh, besides that, getting out of their way and let them do what they do, which is better than than what I do. Right? And so again, there's a cost to that. I get owners distribution, but I'm giving up income there to bring in a manager, but I'm bringing in a manager who's better at her job than I am at her job and letting her do what she does.

Clint Harris (00:20:05) - And within Nomad Capital, same thing. I partnered with guys that have significantly better skill set than I do. They're GCS with 35 years of commercial construction experience like I do investor relations, capital raising, education, that kind of stuff. And that's my wheelhouse. That's my background because I was in medical sales for 16 years, and I can have that conversation. And a lot of our investors are white coat physicians that I used to work with. Right. So that's kind of my wheelhouse. But the best thing that I know how to do is identify people that I know, like, trust and respect, and then let them do what they do and try to look for any way that I can to provide value and help. So, um, I know that's not the answer that you're really looking for, but the reality is, like, I've just got other people that are better than I am, and they're people that I, I can trust and and I do. And I'll let them do what they do.

Sam Wilson (00:20:53) - That's fantastic. Clint Harris, thank you for coming on the show today. I certainly appreciate it. If our listeners want to get in touch with you and learn more about you, what is the best way to do that?

Clint Harris (00:21:02) - Best way to do that is you can go to our website, Nomad Capital US, and schedule a call with me or email me directly Clint at Nomad Capital US. Or you can find me on LinkedIn or Facebook.

Sam Wilson (00:21:13) - Fantastic. We'll make sure to include that there in the show notes. Clint. Thank you again for coming on the show today. I certainly appreciate it and have a great rest of your day.

Clint Harris (00:21:19) - Thanks, Sam.

Sam Wilson (00:21:19) - Appreciate it. Hey, thanks for listening to the How to Scale Commercial Real Estate podcast. If you can, do me a.

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