In this conversation, Clint Harris, a general partner at Nomad Capital, shares his journey from a successful career in medical sales to becoming a prominent figure in real estate investing, particularly in self-storage. He discusses the importance of trust and transparency with investors, the challenges of navigating market fluctuations, and the significance of aligning investor expectations with long-term goals.  Clint emphasizes the need for effective communication, especially during tough times, and reflects on the lessons learned from passive investing. He concludes by encouraging potential investors to seek operators who demonstrate resilience and integrity in challenging market conditions.

Creating Value with Big Box Store Conversions and Clear Communication with Clint Harris

Joe Guidi (00:00.974)

Thanks for joining me.

Clint Harris (00:03.077)

Thanks, Joe. Appreciate being here. Thanks for making the time.

Joe Guidi (00:06.028)

Yeah, we've known each other for some time, but before we get started, I want to give you an opportunity to introduce yourself to our audience who might not be familiar with Nomad or you and your journey.

Clint Harris (00:16.027)

Sure. My name is Clint Harris. I live in Carolina Beach, North Carolina. I'm one of the general partners with Nomad Capital. I'm 42 years old, married for 13 years, and I’ve got two little boys, five years old and two years old. I had a 16-year career in medical sales, implanting pacemakers and defibrillators. I liberated myself from that through investing in real estate—first single family, then multifamily, then converting to Airbnb, then building property management, and then eventually I got into self-storage with my partners.

We started leaning into that in a big way in 2021. We started buying old Kmart buildings and converting those into climate-controlled self-storage facilities. I left medical sales in 2022. There are four general partners in Nomad Capital; we've got a little over 150 million in assets under management.

Joe Guidi (00:59.306)

Awesome, thanks. So what motivated that shift, before we go deeper? What motivated that shift in your career? Obviously you'd started just investing, but why did it become a full-time thing?

Clint Harris (01:12.091)

Medical sales is a young man's game. I worked in cardiology, and heart problems are not Monday through Friday, nine to five. I would put a device in someone and then that was my patient for the rest of their life. That means being on call, getting called up to two to three hours away in different directions at two or three in the morning, two to three nights a week. It wears on you. The idea is that the job has a very high ceiling in terms of income, and it's like, "Okay, well then my job is to save enough money that I can eventually retire."

I believe the ability to save our way to retirement has largely been taken away from this generation, and because of that, I think you can't play defense; you’ve got to play offense. That put me into creating an off-ramp from that lifestyle. I chose real estate as the avenue by which I wanted to do that. I got to the point through Airbnb properties that I replaced my income while I was still working at the hospital. I realized I had done it wrong because I was just focused on the financial component. I should have been focused on the financial, time, and location independence components together, because those three things create an independence of purpose, which is what my wife and I are looking for.

If I want to meaningfully change the amount of time I spend with my kids and my future grandkids, I chose real estate as the avenue by which I was going to do that. I rebuilt our portfolio from the ground up and got away from a very active strategy, which is Airbnb, into a more passive strategy: renting people boxes of air, which is self-storage. The scale that comes with that is syndication, and the next step was self-storage conversion—buying old vacant big-box retail and converting it to storage. It was to get to the point of breaking the cycle of trading time for money.

Joe Guidi (02:55.81)

Got it. Does that shape your approach today? Because obviously you're in a more active role in storage today.

Clint Harris (03:05.051)

Correct. That's a great point. Our group is called Nomad Capital, and a Nomad is somebody that goes where they want, when they want, and does what they want. But the reality is I can't turn it off. I'm a student of the game and I love it. We still encourage everybody in the company to travel and work remotely whenever they can. I'm doing this because it's the love of the game, but I still live on an island at the beach. I go offshore a lot, I go spearfishing, I shoot a lot of grouper and catch lobsters, and I live the life that I want. I don't know that I would ever not do this. I do this because I love the people I do it with and I love what I'm doing. But I find that when you are working on something, it's a lot more fun when it's a choice to be working than when you have to get up every morning, put on your scrubs, and be at the hospital by 6 a.m.

Joe Guidi (04:04.686)

Got it. You hear "work optional" a lot. You're talking about location independence—it's optionality for you. You get choice.

Clint Harris (04:14.383)

Yeah, choice. Freedom of choice, freedom of purpose. If you have time, financial, and location independence together, that creates an independence of purpose that is going to look different for everyone. Hopefully it's something that's good for your family and community, but it could be, "I want to go sit on a beach and be lazy," or "I want to go ski and go fishing." Maybe it means I want to build something or be involved with community service. Money is not that important to me. What is important to me is dying with a giant stack of pictures of cool things I did in beautiful places with people that I love. What money, time, and location independence creates is the option to do that.

Joe Guidi (04:57.132)

Yeah. I think that's one of the biggest misconceptions in the financial freedom world—that it's all about sitting on a beach. The reality is a lot of people would actually do the thing that they're currently doing just optionally. Working really hard optionally versus disengaging. That's a subject for another podcast.

Clint Harris (05:19.075)

I agree. Listen, I live at the beach and I sit on the beach a lot, and I would still rather be here today doing this. This is more fun.

Joe Guidi (05:28.94)

Yeah, without a doubt. I get it. In your role at Nomad, talk to me a little bit about how you establish and maintain trust with your investors.

Clint Harris (05:48.561)

A lot of our early investors are physicians that I worked with. They are electrophysiologists, cardiologists, surgeons, pulmonologists, or ER doctors. You're not meeting somebody new and going into heart surgery with them. There's a lot that comes with that from a technical acumen side to earn the trust required to go into procedures where the patients are actively trying to pass away. You're fighting hard to keep these people alive. It takes a lot to earn the trust to do that.

That trust transferred well when I started investing in real estate. Eventually, when it got to the point of inviting other people into our deals, it was a no-brainer because of what we were doing together. From there, that trust transfers to the people that they know, like, and trust, but eventually you go outside of that. The way you maintain that moving forward is, first of all, you have people in the company that have integrity. You have to set a standard of what normal communication looks like during the good, the bad, and the ugly. Sometimes the right way to deal with things is to stick your face in the fan and be like, "We got this wrong. This is what happened. This is what the market did, and this is what we're going to do about it."

Going radio silent is the worst thing you can possibly do. The way you earn trust is not when things are going great; you earn trust when things are not going great and you try your hardest to do the right thing. My partners Eric and Levi Hemingway, a father and son team, did a great job of building a culture of honesty and transparency. That's paramount.

Joe Guidi (08:14.05)

Yeah, without a doubt. I think the emphasis on transparency when things are not going to plan is really important. That is when trust is built. I've had this conversation with a lot of GPs where there's a hesitancy sometimes to communicate when things are going poorly, because everybody gets into this game because they're good at winning. But that is the most important time to be communicating. When your LPs find out something is going sideways, the last thing you want is them figuring it out before you tell them. Now for Nomad, you guys are doing conversions, which is not always straightforward. How do you think about transparency on complex projects like that?

Clint Harris (09:22.033)

For me, I like to be upfront about it. Part of our plan is knowing that nothing is going to turn out exactly the way that we expect it to. Ground-up development is significantly easier than conversion projects. Ground-up is easy compared to buying an old textile mill, grocery store, carpet factory, or Kmart and converting that to climate-controlled storage. We have structural engineering challenges and environmental responsibilities if there was battery acid from 80 years ago.

We control that through vertical integration: finding the deals, raising the capital, doing the construction, and the property management. If you're relying on third parties, any change order can add three to six months. The best thing to do is over-communicate upfront. At this point, there's not much that we haven't seen. I try to be the first person to tell people: establish goals for yourself and for your family. If those goals do not line up with what we are offering, then you shouldn't do it.

I will try to be the first one to tell you that you should not invest with us and point you elsewhere, because three years from now, if you're disgruntled, I'm the one that has to take that phone call. I would rather you find the right investment. There's plenty of deals and money; the trick is getting the right investors with the right business plan. If we put a square peg into a round hole, there's going to be friction. It's worth it to keep the wrong money out and let the right money in. It's more like the 97-3 rule: if you get the wrong investors in, those three investors could be 97% of your problems.

Joe Guidi (12:25.646)

Yeah, that's where the headaches come in. We're working with a lot of GPs on making sure that alignment is part of the process. Qualifying people out is perfectly fine. It puts you back in the situation you were in before with medical sales—you don't want to create misaligned investors. Back to the investments, how are you balancing risk and opportunity to ensure long-term value?

Clint Harris (13:19.089)

The basis helps upfront. For example, we bought an 87,000-square-foot Kmart in Reidsville, North Carolina for 1.5 million. We put 2.5 million into converting it. We're into the project for 4 million, and the stabilized valuation is 9 million. If we wanted to build that cinder-block shell from scratch, it would have cost 6 million then, and probably 8 million now.

Conversions create wiggle room because we can do it for less than half the cost of new development in about a third of the time. That value delta has allowed us to continue cranking out projects during what has been considered the hardest three years of commercial real estate in the last 35. A lot of times we do the refinance-forever-hold because we want the cashflow that creates "real estate nomads," but sometimes we know it's a project we're going to sell in five or seven years. We try to be upfront about that. Let me add one more thing for your LPs.

Clint Harris (15:32.869)

This is a good time to be an LP. A lot of people feel differently because with multifamily over the last couple of years, we've seen capital calls, paused distributions, and people disappearing. But the reality is spring is coming. Warren Buffett says you can't tell who is skinny dipping until the tide rolls out. Right now, people and deals have been exposed. We've had hardships too—all of our projects stopped leasing up as fast because the housing market froze.

It's a good time to look at operators and ask tactful questions about how they navigated these challenging times, what the communication looked like, and how they handled a poor situation. If you can pull it off during the last couple of years, that's a foxhole guy I want to go to war with. Coming through a tough time is a much better time to be an LP choosing partners than right before you go through a tough time.

Joe Guidi (17:10.754)

Yeah, I think that's totally fair. We're seeing that in the reviews—people saying that even when distributions have stopped, there's been great communication. People have been investing at the height of the market, and there’s about to be an opportunity to invest at a discount. Now, your perspective on nomad capitalism—does that impact the way you think about purchasing deals and underwriting risk?

Clint Harris (18:26.403)

Right. Self-storage genetics lend well to long-term holds because it’s inflation and recession-resistant. Everybody's on a month-to-month lease. House sizes are getting smaller, and young people are renting. Renters use more storage than homeowners because they don't have basements or attics. The millennial population is now 34% of the population, but they use 38% of storage.

Storage isn't just baby boomers putting Christmas decorations away twice a year anymore. It’s a consumer with lifestyle items—snowboards, mountain bikes, kayaks—in there an average of more than two and a half times per month. It needs to be safe, secure, well-lit, and centrally located. Fundamentals are actually making it more attractive.

People worry about oversaturation, but in the secondary or tertiary markets where we buy an old Kmart, it’s hard for a competitor to find five to seven acres to build a competing store nearby. We have speed and half the cost basis. We are actually selling one of our first Kmart conversions seven days from now for just over nine and a half million. The reality is most of them we want to hold long-term, and if an investor doesn't want that, I'm not your guy. It’s a bad play for your goals.

Joe Guidi (22:02.456)

So because you're creating alignment, theoretically your deals aren't hitting pro forma all the time due to the marketplace.

Clint Harris (22:26.959)

Yeah, we've been behind on quite a few in terms of lease-up. Self-storage leased up at about 3% occupancy per month for 35 years. When interest rates spiked, we were protected because we use fixed-rate debt, but we still took it on the chin because nobody is moving. 56% of the population has an interest rate below 4%. If you downsize, your monthly payment actually goes up. Death, divorce, downsizing, and displacement are the drivers for storage, but moving has screeched to a halt.

The last two quarters we've set records for leasing up, but we wrote pro formas on 3% lease-up and suddenly we were at 1.2 or 1.4. The good news is we have so much equity because of the conversion strategy that we can exit and still beat original projections. We back our track record because we had that escape hatch. Luckily we're trending upwards, and we never stopped doing new deals because 2027 and 2028 are looking nice.

Joe Guidi (24:47.534)

How were you communicating that slowdown in lease-up to investors?

Clint Harris (24:59.653)

Probably not as soon as we should have. It's a lagging indicator. As soon as we saw it, we talked about it. The tendency among GPs is to make excuses—justifying it by a factory closing or market shifts. You have to be careful about over-explaining. We use a monthly newsletter and monthly updates with video on projects under construction. Once they reach certificate of occupancy, we switch to quarterly reports with financials and video of us walking through everything.

If you're coming to investors with a problem, you better be coming with a solution. "Hey, this is what we're seeing with occupancy. This is how we've tripled the marketing budget, brought in a systems consultant, and started a guerrilla marketing campaign." You better be doing something, because that's your side of the partnership.

Joe Guidi (27:13.762)

Does the fact that you're aligning for long-term gains give you some flexibility? Do you still get concerned communications?

Clint Harris (28:04.401)

That goes back to alignment. If somebody is 30 or 40 years old with money in a retirement account, they aren't checking the ticker tape every day. But if someone is retiring next year, they are watching it. Candor is the best thing. Three years of a tough cycle is a blip on the radar for self-storage if it's a forever hold. We want those 10-year investors.

We have grace because we have a ton of equity upfront and a long-term vision. Where we don't have grace is with some earlier investors. It's been a long road for them with a lot of mini-freak-outs along the way because they aren't doing this professionally. I should have done a better job upfront quantifying those people. If we get in and it's not a good fit and they're upset, ultimately that's my fault for not classifying them upfront.

Joe Guidi (31:27.69)

GPs need to hear that setting expectations is their job. One more question: What part of passive investing needs to die?

Clint Harris (31:45.109)

Pat comes in hot! What needs to die? I love the value of community and having different eyes on things. I think what needs to die is the short vision people have when looking at an operator. There was a period where you could not miss and everyone looked like a genius. I think that should die.

You should ask: "Tell me about your operation from 2022 to 2025. How many deals did you do? How many went full cycle? What happened to the deals in variable rates?" One of our investors told me about two multifamily operators he was with. Both deals went sideways. One stopped communicating and said the new plan is to hold for seven extra years. The other said, "This is what went wrong, this is how we got caught, this is what we missed. This is what we're going to do to make up for this on the next offering."

Both deals went bad, but the investor said he would invest with the second group until the day he dies because he knows how they handle a bad situation. What needs to die is reviewing people based upon the success of a project versus reviewing them based upon how they handled a tough cycle.

Joe Guidi (34:22.242)

Spot on. That's why we created the platform—to share those qualitative stories. Where can people find more information about Nomad Capital?

Clint Harris (34:51.759)

Our website is nomadcapital.us. If anybody's curious, you can email me at clint@nomadcapital.us. I’ll tell you who that operator was, but I’m not going to air dirty laundry on the podcast! I’m happy to talk to anyone in the network.

Joe Guidi (35:09.87)

Thanks Clint, really appreciate your time.

Clint Harris (35:11.941)

Thank you, Joe. Appreciate you having me.