How To Go From House Hack To $75M In Self-Storage With Neil Henderson

🎙️ Welcome back to another impactful episode of The Physicians and Properties Podcast with host, Dr. Alex Schloe.

💡 What if your first house hack could snowball into $75M+ of commercial real estate—and a life built on freedom, not a paycheck?

In this episode, Dr. Schloe sits down with Neil Henderson—real estate investor, co-host of the Truly Passive Income podcast, and General Partner at Nomad Capital, a self-storage syndication firm in Wilmington, NC. Neil went from an Airbnb casita in Las Vegas to raising $17M in equity and operating 311,000+ rentable sq ft of storage by mastering partnerships, conversions, and capital allocation.

They unpack how house hacking led to FIRE thinking, why he chose self-storage conversions over ground-up builds, and how physicians can leverage time, experience, or money to create truly passive (not pretend) income.

💥 What you’ll learn:

 ✔️ How a simple house hack funded big moves (and why “reduce housing/car costs” beats skipping lattes)
 ✔️ From FIRE to freedom: translating the 4% rule into cash-flow goals
✔️ Self-storage 101: why conversions (Kmart, grocery boxes, warehouses) can beat ground-up builds
✔️ The math that matters: NOI, cap rates, and buying below replacement cost
✔️ Partnerships that work: bring complementary skills, date before you “marry”
✔️ Passive vs. residual income—and when busy physicians should stay clinical and invest passively

🔥 Key Takeaways:
 ✔️ House hacking is the fastest on-ramp to real estate (especially for residents/fellows)
 ✔️ In storage, buy cheap boxes + convert fast > build slow and expensive
✔️ Guardrails win: keep the main thing the main thing, invest with experts
✔️ Consolidation is coming—position deals for institutional exits
✔️ Experiences > things: build wealth to buy time with people you love

If you’re a physician ready to turn active income into durable, passive streams—and want a clear playbook from house hack to commercial—this episode is for you.

Connect with Neil Henderson:

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Podcast

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If you want to learn how investing in real estate can give you the freedom to practice medicine and live life how you want then check out the links below:

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Transcript

Neil Henderson:  When we did eventually sell that house in the summer of 2020, we had paid down our mortgage to almost nothing. We owed $90,000 on that house, and it had also appreciated a lot in the. Five, seven years that we'd owned it.

So suddenly we had a huge amount of equity that we were able to then redeploy into our home where we live here now in North Carolina.

 Dr. Alex Schloe: Welcome to the Physicians and Properties Podcast, the show where we teach you how investing in real estate can give you the freedom to practice medicine and live life how you want. Doctor, doctor, doctor, doctor, doctor. Now here's your host, Dr. Alex Schloe.

 Hello everyone. Welcome to another episode of the Physicians and Properties podcast. Today's guest knows what it takes to go from house hacking your first property  to managing millions in commercial real estate. Neil Henderson is here on the podcast. He is an incredible real estate investor, co-host of the Truly Passive Income Podcast, of which I was just recently a guest on.

It was a great conversation.  A general partner at Nomad Capital, which is a self-storage syndication firm based in the beautiful Wilmington, North Carolina  over his career. Neil has. Been part of more than 75 million in commercial transactions.  He's raised over 17 million in investor equity.  He's built a portfolio of more than 311,000 rentable square feet of self storage space.  What makes Neil's journey unique is his perspective from house hacking is a pathway in  to real estate and fire to transitioning out of a nearly two decade career as a defense contractor and now teaching others how to leverage what they already have.  Time, experience, or money  to build lasting wealth.

I'm excited to dive in. Neil, thanks for coming on the podcast. How are you?

Neil Henderson: Absolutely. Alex, it's a pleasure to be here. Thanks for having me.

Dr. Alex Schloe: Yeah, absolutely. I had such a great time with you and Clint on your Truly Passive Income podcast. I  knew I had to get you on, so I really appreciate you making the time.  Let's start kind of from the beginning. You know, Neil, can you walk us through your story, what life looked like before real estate, how you stumbled into house hacking in Las Vegas, and what that has led to for you going forward?

Neil Henderson: I'll try to keep this brief so I don't meander, and then, you know, we can, you can stop and ask me questions. I was a failed landlord, an ac, a failed accidental landlord. I bought my first piece of real estate in 2000. Thousand five in Las Vegas. It was a a three bedroom, two bath condo that had doubled in value in a year and should have been my first warning sign.

 Bought it with the intent to live in it.  It was my first house  first time I'd had really much disposable income in my thirties, and so  figured, hey, it was time to get into the, into the housing market.  I did that. You know, things were looking good, got married bought, decided we needed to upgrade.

Bought another house in Las Vegas in 2013, kind of at the bottom of the market.  After watching the value of that condo, I think I bought it for 2 0 5,  I think when I sold it.  Finally sold it when it was worth about $60,000 during the Great Recession.  Short sold it.  Got out of that.  And, and you can ask more, more questions about that, how I got out of it.

 But we, my wife and I were in this in a house that had a guest house at the front of it.  And, for about  30 seconds, it was gonna be my ultimate man cave  before my wife said, absolutely not. That's gonna be  the place where our guests come to visit, specifically my in-laws.  And so we decorated that little guest house, like a nice little hotel room.

We put in a little coffee bar, a small refrigerator, a microwave, things like that.  No intention of doing anything other than that. That was the probably summer of 2013, right when we had bought that house.  And I remember on Christmas day of 2013, my mom hands me this article about this company called Airbnb.

 And she said, Hey, I think this would be a great thing for you to do with that little guest house at the front of the house.  And I was like, yeah, whatever mom. Like I had done  too many times in my adult life when my mom had come to me with business ideas, smart business ideas, mostly. But I went away and I thought about it for about a month, and then I finally was like, all right, well, what's the harm?

So I went out, I took some photos, I'm a photographer, took photos of the property of the, of the space listed on Airbnb when with, and within 48 hours we had our first booking and we had 65% occupancy for the next. Until March of 2020, and we were one of the highest rated short-term listings in Las Vegas until we got shut down by COVID.

But that was kind of my in, that was kind of my intro into real estate. That was the what do you call it? The, the the taster?

Dr. Alex Schloe: The taster. Yeah.

All the above. The snowball started right there. That, that is awesome. Ultimately, you know, it's,  it's hard to hear about the condo. I was gonna, I was thinking about when you said 2005 of what a great time to buy real estate. That was with 2008 coming.

 Of course I don't have any experience with that, but I'm sure that was really difficult.  One thing I wanted to pull from that though is like, given that.  That difficult time that you had in 2005 you know, to 2008 in the, in the crash, was there ever any thought like, Hey, real estate just doesn't make sense? I, I'm staying away from this, I, I'm not getting close to  investing in real estate? Or were you kind of under the understanding of like, Hey,  here's a risk.

Let me just keep going and start building after you saw the success with the house hack.

Neil Henderson: It took me a while. It took that house hack for me to kind of. Break out of that mindset of like, yeah, real estate, this is not for me. My dad had been a frustrated landlord back in the eighties. We, he bought a single family home, a couple of condos back when you could shelter your W2 income with real estate.

My mom at the time was making a lot of money as a  television sales executive, and they got talked into buying a bunch of rental properties in order to shelter your income when you could do that.  He hated it. Was not very good at it, and so I, I kind of watched him struggle with it had never intended.

To be a real estate investor, even when I bought that condo.  And it wasn't until I started getting that mailbox money from the short term rental house hack that I was like, oh man, this is really good. This is not. All that hard. You know, it was hard in the beginning when we were kind of running things ourselves and we were cleaning the space ourselves.

But once we kind of got our systems up and running and kind of figured it all out,  it was really easy money  and I started looking for ways to scale that.  Alright, how can I scale my short-term rental portfolio? 'cause this is really working really well. And I started researching ways to do that.  Came across a website called Afford Anything by a woman named Paula Pant.

Dr. Alex Schloe: I know Paula.

Neil Henderson: Yep. And she had written an article about some long-term rentals that she had,  and she had converted one of them to a short-term rental. And she was just comparing the ROI and the RO time return on time  of a long-term rental versus a short-term rental. I don't remember anything about that article  other than she didn't really like doing the rental.

But I remember over on the side, on her website was a link for a website called BiggerPockets. And I clicked on that link and I went down the rabbit hole for the next six months. As anybody who's discovered BiggerPockets probably has as well. And that kind of expanded what I was looking at as far as real estate and looking at it beyond short-term rentals.

Dr. Alex Schloe: Yeah, absolutely. I, I went down that rabbit hole for a couple years. BiggerPockets has  completely changed my life and a lot of other folks' lives as well, just with all the information that they offer and the podcasts and everything. So  I'm definitely grateful for that. And yeah, I used to listen to the Afford Anything podcast, Paula Pants Podcast way back in the day  when that first started.

I think it was like in 11th. Atlanta, she had her

properties, or maybe Savannah, but somewhere in Georgia.  And that's awesome.  Yeah. I think, you know, one thing that's really important for folks that are listening is is that just the power of, of house hacking?  You know, I still house hack my basement here in Colorado Springs, and we pretty much.  If you average it out over the year, we pretty much live for free  here in Colorado Springs. And  people ask like, oh, what's your easiest property? You have it.  Our basement is one of the easiest properties we have.  'Cause we just have a cleaner. She comes in and cleans it. It's got, we have automated door locks.

Everything's automated in terms of the. Booking and the messaging and all those sorts of things. And  so if you put those systems in, it can really be a game changer. And it's been cool to kind of share that with folks like, Hey, here's the space you don't really use. How can you potentially generate some income from that?  And then I think for residents, you know  doctors who are in their  residency, it's an awesome opportunity to.  You know, house hack, either that's renting by the room to your,  your residency mates or renting out, you know, a basement or something like that just to generate some extra income, especially while  you're working 80 plus hours, you're not really there anyways.

You might as well just kind of utilize that and, and kind of set yourself  up for success from that perspective. So, house hacking is such an amazing way to get started in the real estate space.

Neil Henderson: Is your basement apartment, a short-term rental, medium term rental?

Dr. Alex Schloe: Yeah, we have it, it's listed as a short term rental. We've kind of pivoted more towards a midterm rental for a few reasons. One, we just like having it booked for those longer stays. It's just a little bit easier.  It's set up really well for a midterm rental. My wife. Is an amazing designer, photographer, et cetera, and she just did such an awesome job thinking through all the little things,  and we've had some other Airbnbs prior to this that helped us out from that perspective.  But yeah, midterm rental is nice. It's a, it's a little bit less income, but it's nice to know like, Hey, this is rented out for the next 60 days or 45 days, or whatever that may be. So we still get some short term bookings here and there, but mostly we've kind of pivoted to midterms.

Neil Henderson: I, I'm a, I am, listen. I'm an evangelist when it comes to house hacking. I think so many people focus on reducing. The wrong expenses. You know, everyone's focused on, well, you know, just spend less on lattes, spend less on eating out, you know, have fewer streaming services. Hey, listen, yes, absolutely be intentional about your spending, but if you can focus on reducing some of the largest expenses that most people have, which is housing and cars I think you're gonna end up way ahead of most people.

I mean, I lived. In Las Vegas, when we were doing that short-term rental house hack, we, we lived for more than just free. We actually put money away. We were paying off our mortgage that accelerated rate. Now knowing what I know now, I wouldn't have done that. I would've probably found someplace else to put that money just because I understand that sort of opportunity cost of, of paying down, you know, a low interest mortgage as opposed to reinvesting it, but.

I'm grateful for what I did because what happened is we, we had kind of a double whammy. When we did eventually sell that house in the summer of 2020, we had paid down our mortgage to almost nothing. We owed $90,000 on that house, and it had also appreciated a lot in the. Five, seven years that we'd owned it.

So suddenly we had a huge amount of equity that we were able to then redeploy into our home where we live here now in North Carolina.

Dr. Alex Schloe: That's awesome. Yeah, it is just such a, such a powerful tool and incredible. So yeah, I think house hacking is such a great way, such a great way to get on the right step towards financial independence. And I, I know you, the fire mindset kind of helped shape some of your decisions. What was,  what was that like for you?

How'd you initially get into that fire mindset? So financial independence retire early for folks that are listening. And how did that shape your decisions when you first learned about it? And what's that look like now for you?

Neil Henderson: I, I would say probably the first taste I had of it was probably Tim Ferriss's book, the Four Hour Work Week and just kind of a, that was probably 2005, I wanna say. It was shortly after that book came out and just the whole idea of, you know, what are we doing? Like we're, we're. You spend so much time working towards a retirement that when you hit 65 that a lot of times you've sort of burned away your best years.

And that was the first kind of time where I was thinking, all right, well how do I do that sooner? And I, and Tim's book is great. I think it's, you know, it's kind of a. Oxymoron, four hour work week. You know, it's just good marketing. I think the first time that I got exposed to someone who was really like doing the math on it was Mr.

Money mustache. He's, he's got a website. And it was the first time I'd ever got exposure to the 4% rule, which if anybody, you know, doesn't know what it is, it's basically, you know, or the 25. 25 x rule, which is all right, to figure out what you need in order to be financially independent or to retire early.

You need to figure out what it is you need to live and you need to multiply that time by 25 times, or you need to take whatever your nest egg is that you plan to have in retirement. And divide multiply that times 4% and that will be essentially what you're allowed to spend in retirement. And that was the first time I'd ever.

Had someone sort of explain that math to me before, I had always thought of myself as, alright, well you know, if I have a million dollars then I can live off 10% of that. You know, 'cause that's what the stock market earns. Well, you know, the stock market goes up and down. I didn't know anything about the Trinity study but it was the first time that I'd sort of had that thought about putting a number to.

What it would take for me to be financial independent. And I think then that sort of as I became exposed to real estate, I also started sort of thinking about that as not just a nest egg approach, which is that big number, all right, I need, you know, I need $2 million saved in my nest egg before I can call myself financially independent.

And that means I can live on about $80,000 a year.  Whereas the real estate approach is, alright, how can I generate $80,000 a year in cash flow that's going to go in on in perpetuity that I can then declare myself financially independent.

Dr. Alex Schloe: Yeah, I think that's a great way to look at it. Kind of more active and passive income streams that then lead to fire which is, which is awesome. I, I was thinking about as you were kind of talking through some of those principles and points, have you read the book? Die With Zero by Bill Perkins.

Neil Henderson: I haven't actually, no.

Dr. Alex Schloe: It's a really, really good one. I I I, I feel like  you're a hundred percent right, the four hour work. We kind of  introduce that idea. One thing I think about though is a lot of us listening to this podcast, and I'm sure you as well we're never the type of people that are gonna just go like, sip on the beach you know, sit my ties on the beach forever.

We'd be really bored with that. So  I think the Four Hour Work Week does sound sexy, as you mentioned.  But Die was Zero by Bill Perkin's. Really great book. Basically, he kind of.  Some key points for that that may be helpful for folks who are listening to this is he talks about kind of  priori prioritizing your spending on experiences, relationships that are gonna provide lasting value rather than accumulating large amounts of wealth.

And then like basically rethinking retirement where instead of delaying all your enjoyment till retirement, which we all know is flawed, 'cause you might. Hopefully you live to be 65 and then hopefully you're healthy enough to enjoy being 65. Why not instead, aim to spread those experiences and spending kind of across your life and throughout your life.  Maybe that does look like when your kids are younger, you work part-time, you don't make as much money, but at least you're able to spend that time with your kids. And just kind of thinking more in the realm of like, Hey, how can I  take what I'm earning, take what I'm doing, take what I'm investing in, and then really enjoy my life.

Now I have the health. To do it and go from there. So  it's a really great book. I highly recommend it. I just recently finished it and it's definitely made me think a lot about that and a lot about giving while you're still alive. Instead of  that idea of like, Hey, I wanna leave this massive inheritance to my kids and you know, hopefully I die when I'm. In my nineties and my kids are in their sixties, are they really gonna need like a big lump sum inheritance when they're 60? Probably not.  But maybe they need help with a down payment on their first house when they're 20, 25, and those sorts of things. So kind of thinking through  how can you give throughout your life in ways that will be a really positive impact.

So anyways, it's a really great book.

Neil Henderson: I'll add it to my list. I am a big believer. My wife and I are both big believers in experiences over things. I cannot tell you a single gift I got. When I was 11 years old, but I remember our first family trip to Europe and there's like specific things I remember and all I have to do is look at a photograph from that trip and I can go right back into that moment.

And, and those memories are things that I treasure. My dad's gone now. My mom's still alive and there's moments you know, my dad and I. For 18 straight years, we went fishing together in Alaska every summer.  And, and I still look at photographs of that and I treasure those more than any toy gift thing, piece of clothing that I ever got as a gift from my parents.

And the other thing is the idea of giving with a warm hand. I think obviously you need to be careful. To not spoil your kids, to not reduce their drive and, and make them so comfortable that they can't get that drive themselves. But I also believe that, like you said, you know, okay, well what's the point of me dying at 90 with this huge inheritance that I now give to my 60-year-old kids?

And I don't, I never get to see them enjoy it. I, I, I think those are two concepts that, a real driving force for me.

Dr. Alex Schloe: I love that. Yeah. I was reading something the other day and it was  kind of the first memories that kids can really recall.  Are those family trips, they're, they're those experiences that you had as you mentioned. And, and I feel the same way. I, would much prefer to do an awesome experience with my family and value that way, way more.

We just,  were super fortunate you know, during my time getting out of the Air Force and, and starting, I had about three and a half months off and we did a month long trip to Yellowstone, the Tetons and Glacier, and our camper had a blast. And then we went to Europe for a month and we're super fortunate that we were able to do that.

And I was just thinking, man, like I hope that.  My four and a half year old remembers something from that trip, and even if he doesn't, at least we have the pictures to, to look back on. And  like we have all my refrigerator. I can see it from here. There's a, we got a Polaroid camera and we try and take like one or two pictures per place wherever we go.

And we just recently went to Rocky Mountain National Park, which is one of our favorites. And  there's a picture of Jack, my four and a half year old holding Owen. 1-year-old in his lap and there's a moose behind them. And I'm like, that's so cool. I'm gonna keep that forever and it'll be so cool to look back on.

And  you know, they may not remember that. Owen certainly won't remember that. But it's just cool to have those experiences. And, and the coolest thing about that was that was on a Monday and I didn't have to work and I wasn't at work. And so like putting the time in and having that financial. Freedom and flexibility can be awesome to be able to be like, Hey, this is a Monday. I'm in Rocky Mountain National Park. And  you know, it's just, it's just awesome. So I love to hear that.  Do you have any other tips or tricks, Neil, you mentioned, you know with kids and, and trying not to  spoil them and  give them that silver spoon.

Do you have any other tips or tricks or insights that you've learned along the way that can be helpful to kind of  help kids appreciate and understand the value of money and, and the hard work it takes to make money?

Neil Henderson: Well, I think you, you need to have, start having a conversation early and just explain to them the. The idea of paying yourself first and getting them to conceptually it's, and it's so hard because I think I even had my parents explain this to me when I was young and, and it take it, I think it took until I was 40 to really start to grasp it.

But the whole idea of the power of time over. Money and, and what I mean by that is sitting down and visually trying to explain to them the difference between somebody who starts saving a hundred dollars a month at age 18, and what that will turn into at age 60 versus somebody who's even saving $300 a month at age 30.

And, and I don't, and I don't, I haven't done the math on that, but I know that like the sooner you start, you know, I can't remember. I think it's Warren Buffet that says, or I don't know who it was that said that compounding interest is one of the, is the eighth wonder of the world. And it's absolutely true.

And when you start earning 10% on money, we start putting that money away. Early is when that money starts to really take off and getting your kids to understand that that money, and it's hard because it's, especially when my it's, and I still have not gotten through to my 11-year-old right now, is that saving money is not about saving to buy for something, something you want.

Yes, you do need to do that, but like, really saving money is putting money away for either retirement, buying a house, or starting a business that like the money when you're, when I talk about paying yourself, that's what I mean. It, and it's, it's hard. I don't have, honestly, you know, you asked me if I have any advice or tips.

Yet, I'm, I've got an 11-year-old, and I'll tell you, it is a struggle. That kid has money coming to his pocket and he's immediately thinking on ways, on ways to spend it. And he's just, now we're starting to have pretty in-depth conversations about him, like generally having an interest in what it is I do and why that is and, and why it's important to save money.

And it's hard because we've got. Generous grandparents who when you tell 'em, Hey, you need to save that money you know, to, if you want that thing, you need to save your money, well, I'll just ask Grand Mommy and pop it for it, you know, they'll get it for me and have then having to, you know, have that conversation with them.

Good luck on that, by the way. To not spoil the kids. I don't know that, that was a ramble, a long, rambling question to say, I really don't have, I don't have a whole lot of advice.

Dr. Alex Schloe: No, that's totally fine. It, it is, it is tough. I completely agree. And  it's definitely something we're working on here in the slow house. I heard Scott Donald on the better Life Podcast with Brandon Turner and he was on Action Academy podcast as well.  And he, he's got some really awesome insights and we just started.  Doing this with our four and a half year old, we, we have three different jars and they're labeled on the jars. There's a save jar, there's a spin jar, there's a shared jar, and we've used that and, and he's got some tasks that he can do.  Scott O'Donnell calls him gigs that he can do and he can earn money.  And it's like, Hey, you know, if you feed the feed the dog without us having asking you to do it, we'll give you a quarter and everything's a quarter. And if he puts the, and then he can pick of those three jars, what he wants to put it in the save jar, the spin jar.  Or the share jar. And if he puts it in a save jar, we'll double it.

We'll put another quarter in. If he  puts it in the spend or the share, we don't. But it's been really, really helpful for him as a four and a half year old to start kind of understanding money. I think everything for the most part still goes in the spend jar and then he goes and buys like a Sonic Nerf gun or whatever.  But that money is for him to, to spend and he's gotta learn that like, hey, once that  spin jar is empty.  It's time to get back to work. And so that's been really, really helpful for us. But  I love asking folks that question. 'cause I, I just wanna learn, you know,  how, how to do that and  you know, it just, it's such an awesome experience being a dad.

But  some things are challenging and a lot of things are challenging.  And money is is a challenging discussion too,

Neil Henderson: And it changes every. Year.

Dr. Alex Schloe: Yeah, yeah, exactly.

Neil Henderson: as soon as you think you've got a handle on, on you've read the instruction manual on your 8-year-old, suddenly they're a 9-year-old and things change.

Dr. Alex Schloe: Yeah. I couldn't believe that. You know Jack, like he, everyone says the terrible twos two was fine.  The minute he turned three, it was  Wow. I'm like, who is this kid? You know? And then  now he's four and it's completely different. You're exactly right. It just it is such a joy and it's, it's super fun.  Well that I feel like that was a really great conversation that a lot of folks need to have and, and think about.  I do want to pivot a little bit, kind of more into commercial real estate with you. So  I know you guys are largely invested in the self storage space, and so I was wondering, Neil, what attracted you to self storage specifically versus multifamily or some of these other commercial asset classes?

Neil Henderson: Well, the first thing that a attracted me to commercial real estate, period, you know, I, when I was sitting there. When I spent a good year, year and a half digesting BiggerPockets and all the different strategies and lease options sandwiches and small multifamily and large multifamily and you know, short-term rentals and all that was the idea of, of how predictable it is.

You know, with residential real estate, you're often, you're buying on a comp. You know, you're buying, you know, in an area where houses sell for, you know, $200 a square foot or whatever. And when you're gonna value that property, it's gonna be based on the other properties that are like it in that market.

And it's really, the value is gonna be very based on. You know, just how people, you know, what people think about the area, whether or not they like the yard or, or the color of the paint and things like that. Whereas commercial real estate, it's a simple formula. You've got the gross revenue minus the expenses equals the NOI, the net operating income and net operating income is, is, you know how much income the property's producing, not including the, the the debt service and, and then you just divide that by the cap rate and that gives you the value.  And so you very quickly, you can very predictably turn these dials to increase the cash flow on a property. Increase the value of the property even more based on the cap rate.

And so that was the first thing that drew me to it. I started raising some capital for some multifamily deals. It was multi-family syndication back in the sort of early days when the Koji P model wasn't quite as frowned upon. But I, I wanted to. I saw a guy, I saw a guy named Scott Myers get up and speak about self-storage investing about, about the same time I heard about commercial real estate investing, and it just clicked with me.

It's like, all right, well this is basically, it's multi-family. It's multi-tenant real estate, except it's a lot simpler. You're essentially renting people a box of air. There's no long-term leases, there's no plumbing, there's no toilets, there's no trash. Well, there is trash, but it's not, you know it's not like a dumpster that is constantly getting filled up by the residents.

And the same metrics supply as multifamily. If you can find a way to increase the net operating income, you can create enormous value. So I started digging into. I started looking for a way to buy a self storage facility on my own. I got educated. I, I paid too much money to learn about it and absolutely beat my head against the wall trying to buy my first self storage facility.

And the problem I was running into was I lived in Las Vegas and Las Vegas is a primary market. It's, there's not a lot of starter facilities in Las Vegas, and there's no little secondary and tertiary markets on the outskirts of Las Vegas where a new self storage investor could maybe get in and buy a a 10,000 or 15,000 square foot facility for $500,000 and then learn and grow that way.

Las Vegas is on kind of a little island. I had met my now business partner in. 2017, and he was a self storage investor.  Had three or four facilities on his own that he had, he had built from the ground, you know, done all himself without investors. And I had raised some money for multifamily syndications.

I knew a little bit about podcasting and multi, you know, multimedia. I knew some stuff about education and I started looking for ways that I could add. Value to, to him. And I started encouraging him to syndicate and he wasn't ready. He was like, Nope, nope, I'm not ready. I'm not ready. You know, we're still building up our own portfolio and proving the concept with our own money.

And he was smart. I'm glad, I'm glad he did it that way. And then in. February of 2020, we were at the best ever conference and I took he, him and his son aside, Levi, who are the two principals at Nomad  before there was a nomad. And I said, Hey listen, I want to help you guys get to a hundred million dollars in assets under management.

And they said, let's go. Yes. It was the first time they finally were like, alright, let's do it. So we all went back our separate ways. They were in North Carolina at the time. I was still in Las Vegas and then COVID hit and my world absolutely came apart. My, my dad died essentially the day that COVID became a thing, all got shut down.

Our Airbnb got shut down both by the pandemic and the city. 'cause the city of Las Vegas had steadily become more and more hostile to short-term rentals. And so that delayed us about. A year I sort of pulled back, you know, we all kind of pulled back, tried to figure out what was going on with COVID.

I sold my house moved in with my mom 'cause she was, you know, newly a widow. We were sort of became our own little pod. But I stayed in touch with Eric and they, you know, sort of as COVID sort of came out they started looking for their first syndicated deal they did that, they syndicated that first deal in.

October, November of 21, right about the time I was literally driving across the country to, to move to Wilmington. And that was our first syndicated deal and we syndicated, I think four properties in 24 or five in 2022, and we were off to the races.

Dr. Alex Schloe: That's awesome. I think one, one key thing I wanted to pull out from that was, your, your willingness to add value and you your understanding to add value to the Nomad Capital team before it existed. And, and, and that is why they're willing to partner with you.  You didn't, you didn't come probably be like, Hey, can I  pick your brain or take you to a cup of coffee or whatever.

You came in and you said, Hey, I want to help you grow to a hundred million dollar in assets. Here's how I can do it. Here's my experience.  How can I add value? And that's  how that partnership came to be. And so what, what do you think.  You know, makes a good partnership. If, if you had to tell someone who's like, Hey, I,  I want to partner with someone, what do you think makes a good partnership?

Or, or what do you look for in terms of partnering with someone?

Neil Henderson: I'd say two things. One is just compatibility. I mean, it is, you are, when you're going into a partnership, it's like a marriage. And, and I think you need to treat it like a marriage. You need to date, you need to be, you need to spend time with this person for a long time.  And I, you know, I, I'd known Eric since February of 2017 and we didn't partner up until.

October of 21. So that was, I mean, that was more than four years, four and a half years almost. And we danced around each other for a long time. So I would say we dated for a long period of time. And even then, it took another year before I would say that our partnership was really solidified and there was a, it was really touch and go there for a while.

And the other thing is. What do you bring to the partnership that the other person doesn't have? Eric was a general contractor. He had, you know, Eric has one of the most well developed risk muscles of any person I've ever known. And he didn't get that by reading books. He did it by getting out there and taking action.

And he took his lumps. I didn't have a lot of experience. What I did know how to do. Was educate investors on commercial real estate and self storage. I knew how, I knew multimedia, I knew how to raise a little bit of capital. Not a lot. I didn't, I wasn't like a master capital raiser when I came to Eric and said, let's do this, but.

He didn't really want to go out there raising capital, didn't wanna really be talking to investors. He could do it, but it was not really his, it's not something he really enjoyed. I enjoy it. And, and it's not, and it's not the sales side of it. Clint is the salesman. You know, my partner Clint, Clint's a sales guy.

He, he thrives on it. I thrive on having interesting conversations with investors and educating them about who we are. What it is we do, what our strategy is, and then learning whether or not their goals and their experience lines up with what we're doing. And if it does, hey great. You wanna invest with us?

Perfect. If not, no hard feelings. Listen, there's just lots of opportunities out there and there's lots of opportunities that are gonna fit better with what it is that they're trying to do. And that was really, that was it. I just came in and was like, alright. And it wasn't even like a defined, well, you're gonna do this and you're gonna do this.

It took us a while to kind of figure it out, but once we did figure it out, and even with my partnership with Clint he's much more of the sales guy and I'm much more of the systems, processes and funnels and figuring all that and customer service and, and education side of it. So you really need to figure it out.

What it is that you are really good at and what you enjoy doing. And I think that if you're good at it and you enjoy it, you know, that's probably the value that you're gonna bring to a partnership.

Dr. Alex Schloe: Yeah, that's really well said. We're, we're working through that, you know, con consistently in our business as well of,  Hey, what's the thing that really lights us up? What do we really enjoy doing? And  what are the things that we don't as a business and as a, as a partnership? And then let's figure out, hey, how can we you know, offload those to people who do enjoy doing it because it's not really work.

If you really love what. You're doing and you're gonna grow so much faster with partners that are gonna build you up and strengthen you and help the business grow doing things that they're passionate about. So I think that is, that is really great advice.  Let's pivot a little bit to Nomad Capital and talk about strategy, as you mentioned.

So what is Nomad Capital's strategy? What is the strategy within the self-storage space?

Neil Henderson: Yeah, we do self-storage, but we do it with a little bit of a twist. There are, I would say there are five primary strategies when it comes to self-storage investing. You can build from the ground up. You can buy an existing facility that needs an operational turnaround. You can build a facility that has some room to expand or you can do a conversion.

I said there was a fifth or, and the fifth is literally you can just buy it for cash flow. And we've done, I would say. Four of those, we, Eric built his first facility from the ground up. He bought a, he did a conversion was his second one. He bought an old print shop and converted it into a, a self storage facility.

And then he bought an existing conversion that needed an operational turnaround, and then he bought an existing facility that had room to expand. And the reason we love the conversion model is because we can buy buildings for pennies on the dollar. These are mostly buildings that have been vacant for a long time.

You know, we've bought everything from a vacant Kmart to a an old bottling facility, an old an old grocery store. And a lot of times we're buying them for less than their replacement cost. And if any, if anyone who's ever read any, Sam Zell, who's a very famous commercial real estate investor, like that was his big thing was like, just buy if you just buy below replacement cost.

You're gonna like, it's hard not to make money. So we're buying, we're usually targeting to buy something for less than replacement costs around $25 a square foot that's gone up a little bit recently, sometimes 25 to 35. And then it takes us about 40 to 45 thou, 40, 40 to $45 a square foot to convert it.

Which means we're all in our last like five projects, we were all in at $65 a square foot. That includes the price of the land, the conversion, everything, the parking lot, all the entitlement, everything. And Alex, if you and I were to go out and build a self storage facility from the ground up, it's normally gonna cost us about $120 a square foot, not including the price of the land and the entitlement and all that.

So we're already in for almost. We're, we're in for 50% of the cost. We're also, typically it's only gonna take us about 12 months from the time on average, from the time that we've bought it to the time we're opening our doors and leasing up. Whereas if you take a vacant piece of land and you now need to entitle it for storage, make sure it's zoned correctly you know, get through all the permitting process on with the city get, get it graded.

Put it in the infrastructure and all that. You can be talking anywhere from 12 to 36 months before you seriously start going vertical. And so we're just, we love it because we're in it for half the cost typically, and in about half the time.

Dr. Alex Schloe: That's amazing. Yeah. I mean, and that's just  true fundamentals right there. That, that are gonna work time and time and time again and  what an awesome way to do it. Neil, where do you see the self-storage industry growing, especially as Americans continue to buy more and more stuff?

Neil Henderson: Yeah, it, you know, we keep waiting for it to, you know, you'll listen to an average consumer and you tell 'em, well, you know we're gonna build to sell storage, so they're gonna roll their eyes. Oh, great. Another still storage facility. And the reality is, is that storage is very localized market and it's a commodity.

 So you're talking anywhere from a one to three to five mile radius, sometimes even a 10 mile radius depending how dense the population is. That's the market for a self storage facility. And it can be even less than a mile if you're talking a really, really like a dense population like New York City.

And so that's really what you're, what you're looking for are these little pockets of demand for storage and. As much as you know, and I would say the, the argument, you know, you had a lot of people over the last 20, 30 years who describe self storage as recession proof. I would've never described as recession proof.

I was always describe it as recession resilient because it's a trauma and transition business. People when. When people have a lot of money, they tend to, you know, buy a lot of stuff. They're moving, they're buying new houses, they're refurbishing their house, and they need someplace to store their stuff.

When times are bad, they're downsizing. And they're, they're moving, you know, they, they're loathed to get rid of their stuff. They're moving around. Storage over the last three years has actually really been. In a what are call a bear market. We have,  we had this post COVID boom up to about 2021 where, you know, everyone was you know, they, there were a ton of people moving around.

There were people converting home bedrooms into home offices 'cause they're working remote turning 'em into homeschool rooms. 'cause now they're homeschooling their kids. And so storage had this huge boom and and then all of a sudden interest rates shot up. 22, 23 home prices shot up and it froze the housing market, and all of a sudden you had one of the primary drivers of storage demand, which is people moving around drop off a cliff.

Now even with all that. I can tell you we have most of our, our projects have been in lease up since that time, and it's been a struggle. It's been a dog fight leasing those facilities up. You know, you'll normally lease up a storage facility historically at about 3% per month, which means it's gonna take you about 28 to 30 months to lease from empty to a stabilized facility.

What we saw.  That demand dropped down to about 1.2 to 1.5% per month, which now you're talking a lease ups gonna take 48 months, 62 months, and that, you know, and, and that starts, you start burning through your reserve in a hurry. So a lot of, and this is a long, a long-winded way of getting to, where do I see storage going?

What we've seen, over the last three years is there was this big peak of storage construction that happened right around COVID. And then as those interest rates housing, the demand started dropping off. The cost of construction went up. You know, all these groups that were, you know, building self storage, building new self storage.

They've slowly been pulling back and they're dropping, and the, the number of facilities getting built has been dropping like a rock, and we anticipate it's gonna continue to drop through like 20 27, 20 28. Now, in the meantime. We anticipate and we are starting to see it, is the demand is starting to come back.

As those interest rates start to ease up, as people finally just, you know, get tired of, you know, they get used to the, the where the housing costs are, people are starting to move again. So we're starting to see demand starting to coming back to just would be normal. And at the same time, there's all these groups that are putting together billion dollar funds to purchase.

Self-storage. So for us, what we're looking to be is we wanna ride that wave as that, as the supply of new self-storage facilities dries up, we want to have product available out there for those groups that are looking to, to. Place that billions of dollars. We want to, we, we wanna be that place where they put that money.

'cause essentially what's happening in self storage, it's been happening for 10 years, is a consolidation. You've got all these mom and pop facilities baby boomer owners that are retiring, they're selling their single facility to groups that are, you know, operating either. 3, 5, 20 facilities. They're professional management.

They've got online, they're doing you know, they're going completely automated and things like that. So that's my very, very long-winded way of getting to, kind of explaining where I see self storage going over the next five years.

Dr.  Alex Schloe: Yeah, that was great. Thank you for that. Yeah, I think it's definitely a good private equity play going forward in that consolidation and, you know, we're kind of thinking long term about that. Similarly, in the assisted living space, as you know right now, a lot of. Big private equity firms and money, they're going after these, these really large facilities, think like your Brookdale, et cetera.

And then that's gonna start trickling down to these smaller and smaller facilities. And so if you're  there and you're, you're ready and your, your goal is to potentially sell to private equity and, and go from there. There's, there's a great opportunity there as well. And it's interesting you mentioned that the, you know, kind of silver tsunami or the mom and pop operators, it's.

It's always interesting to me to see how many different real estate asset classes this aging generation is impacting. And so there's a lot of opportunity in that space as well. Neil, you, you host a truly passive income podcast which is awesome. In your mind, what does truly passive  income look like and what are some insights or thoughts or even key takeaways that continue to come up during your podcast?

Neil Henderson: Well, you know, you, you search the, for the term passive income on Google, and the joke is most of what you see is not passive income.  Everyone, there's a lot of people out there selling passive income and it's, it's kind of. The joke with our podcast, truly passive income is there's not really any truly passive income.

Really, the only truly passive income is maybe putting your money into a savings account and sitting back and doing nothing. Even a even a strictly stock portfolio where you're just buying, you know, index funds requires a little bit of management, a little bit of balance  mostly what people consider to be.

Passive income is usually residual income. It you're either you front load the work you build systems, you build a business, and you sit back and you collect it. So for me it's passive income is about taking my capital that I have traded my life energy for doing things that I don't necessarily.

Want to do, I'd, let's put it this way. I'd rather be doing those things with my family, taking the capital that I've earned, and then placing it with someone who has the time and experience to put it to work and give me a good return. And that's the same whether I'm investing in an index fund or a syndication, private equity venture, capital, whatever.

I'm, I've taken. The money, the life energy that I've spent over years and years and put getting it into the hands of someone who has the time and experience to put it to work and earn me that truly passive income.

Dr. Alex Schloe: Yeah. I love that. It's, it's kind of, you know how to live. Leverage your time.  And I think that, you know, kind of a, a good segue into that is for folks who are listening to this, for physicians who may be listening to this, that want to, you know figure out how they can leverage time, experience money,  what, what are some good ways to do that?

Neil Henderson: Well, you, here's the challenge is that we all, when I was learning about real estate I didn't have a lot of time. I didn't have any experience and I didn't have a lot of money. And what I did have was enough time to start a podcast on my own, which then gave me an opportunity to talk to people who had more experience than I did without just like calling them up and taking them to coffee.

And so that allowed me to sort of build up and network and get some experience. But the, the dirty secret is that most people who have a lot of money or, or they're a high earner, really, they should probably keep the main thing. The main thing. You're, if you're a doctor, if you're a lawyer, if you are, you know, if you're a business owner who's already earning a high income.

You know, are you really going to, is it really gonna benefit you to go out and buy a short-term rental and, and run it like maybe it, maybe it will. Or is it like I, or a self storage facility even worse? 'cause everyone thinks like they'll get sold on the fact that, well, self storage, you know, it's, it's kind of a hands off business.

Excuse my French, bullshit. Absolutely. You know, anybody who tells you that it's a hands-off business is selling you a course. Sorry. But what you should really be doing is getting yourself as educated as you can on these various asset classes, whether it be  assisted living facilities, self storage, multifamily mobile home parks, whatever, and then find someone.

 Who has the time and experience to put your money to work? And I'm, and I'm saying that as, and I know this sounds like I'm, I'm selling you on something. But I, I think so many people get it in their head that, well, I could do that. If you're a doctor or, or a, a business owner who's working a lot, I'm telling you.

No, you probably can't, and you're probably better served by using your money and placing that with someone who has the time and experience to put that money to work and give you a great a, a better return than you would get in the stock market.

Dr. Alex Schloe: Yeah, I agree. It's, it's certainly situational and, and know, certainly funneling, you know, high income earners, working a little bit more in funnel.  More of that money into more passive investments can certainly make more sense.  And I think that is really helpful. And, and it's, as we've kind of mentioned all along, it just takes getting started.

Like for you, it was that house hack in Las Vegas and then  it just kept snowballing, kept snowballing to now this incredible company with Nomad Capital. For me, it was a  a a, a small house in Florida that I bought $58 outta my pocket using a physician loan. And it just. Being willing to take action and just see where that leads is, is really, really helpful. Ne as we kind of wrap things up here  I want to ask how folks can find your podcast and is there anything else that you want folks to know or anything else you want to hit on?  And then please feel free to, to share how folks can reach out to you. Learn more about Nomad Capital, your podcast, connect with you, et cetera.

Neil Henderson: Yeah, if you search for truly passive income, anywhere that you listen to podcasts, it will come up. And then as far as how to contact me, nomad Capital US is our website. And feel free to email me Neil NEIL, at Nomad Capital us.

Dr. Alex Schloe: Awesome. We'll be sure to include all the links in the show notes there. Neil, thank you so much for sharing your journey on the podcast today. I really appreciate it.

Neil Henderson: It's been a pleasure, Alex. Thanks for having me. I.

Dr. Alex Schloe: Awesome. Well, with that, it's been Neil Henderson and Dr. Alex Schloe with another episode of The Physicians and Properties Podcast signing off.

 Hey, real quick, if you're still listening to this, I'm assuming you got value from it, so I need your help. Specifically, my two year vision with this podcast is to help 100,000 physicians learn how investing in real estate can give you the freedom to practice medicine and live life how you want. There are two main ways that a podcast grows.

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