JF2029 : Rental Automation With Cliff Hayden

Cliff Hayden created a system called ShowMeTheRental.com. It is a system he created out of the necessity of reducing the amount of work he was having to do when running his own properties. The system helps with advertising, prescreens leads, phone call follow-ups and schedules showings for your rentals. Cliff also shares how he separates renting his homes from the competition in the area by providing the same quality he would if he was selling the house.

Cliff Hayden Real Estate Background:

 

Best Ever Tweet:

“Takes you years to build up your reputation and seconds to lose it.” – Cliff Hayden


TRANSCRIPTION

Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast, where we only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, Cliff Hayden. How are you doing, Cliff?

Cliff Hayden: I’m great, Joe. How are you?

Joe Fairless: I am doing great, and I’m glad to hear that.  A little bit about Cliff – he’s a real estate investor, he’s the broker-owner of Altec Properties and founder of ShowMeTheRental.com. He helps investors automate the tenant screening process. Based in Louisville, Kentucky. With that being said, do you wanna give the Best Ever listeners a  little bit more about your background and your current focus?

Cliff Hayden: Yeah, it’s a great question, Joe. My background – I’m very similar to you; I’ve read your bio.  You used to work a full-time job at AT&T… I was an outside plant technician, which is a fancy word for construction worker. So I did that for ten years. While I was working there I got into real estate and started buying houses. Then I found out I did not like the corporate world, I did not like being  a paper on a string… So I worked my way out of that job, started doing real estate full-time  around 11 years ago now; since 2008-2009, right in that area…

So I started getting into — I first started out as a buyer’s agent in foreclosures, which was a great time, in 2008-2009. Then I started a general contracting company, and started buying rental houses. I’ve accumulated quite a few, and sold off quite a few, for a new lifestyle I’ve been shooting after for the last six years. As of right now, I just do single-family residential, I do CESA accounts or my kids, and I do a lot of Roth IRA tax-free investments.

Joe Fairless: What accounts for your kids?

Cliff Hayden: CESA accounts – Coverdell educational saving accounts. I’m big on doing deals in those, because college is expensive, and it’s getting to be where only the elite can afford it… A CESA account – any real estate deal you do normally, you can put in a CESA account. It’s tax-free, and you can use it 100% for education and several other things along the way.

Joe Fairless: Well, let’s talk about your current focus – what I believe is your current focus – which is ShowMeTheRental.com. Is that the main focus of yours?

Cliff Hayden: Correct, yes.

Joe Fairless: Alright, so let’s talk about it. So what is it?

Cliff Hayden: ShowMeTheRental is basically a system we created because I couldn’t find one that I could use from somebody else… So we had a big problem back in the day when we had 8,000 houses, and just pre-screening leads, and following up with emails, and phone calls… It was just overwhelming. And it was just me and one other guy in the office.

So we developed a system that not only screens – it advertises, generates leads, pre-screens the leads, and then it sets up showings automatically through the system. So in my mind, it took all the crap out of the management part of the business, because anybody who does real estate – the biggest headache is when you’ve got empty houses and rentals, and you just get bombarded.

So this kind of automates that whole process, so you don’t take any phone calls or emails. It’s set up very simply and very inexpensive. We built it out of necessity. Not to get too deep and heavy, but it saved my marriage, because I was having trouble at home, because we were just — it’s business; it can control you, it can consume you. It’s a 24-hour/day job if you let it be.

Joe Fairless: So it advertises your posting for the home, and then it prescreens leads… And then what else does it do?

Cliff Hayden: It sets up the showings. There’s five different ways to show your property. Most people do lockboxes. You can do open houses, you can sign a key, and you can set up showings, dates and times, depending on how your business is ran. You can also — what we’d like to do now, because we kind of upgraded our portfolio the last several years, is we actually show the house with the tenant in there now. So the actual tenant shows the house for us, and then from there you get a link for your application, and they fill it out, and ShowMeTheRental is done. We take it up to the point to where you screen your application and take it from there.

Joe Fairless: So the tenant shows the house for you, so you just talk to the tenant…? How does that work?

Cliff Hayden: So the system is set up — we use calendars, so the system will send the tenant a link to a calendar, and they can pick the dates and times they’re available to show the property. Then when the end user or the new tenant wants to show it, it actually sends them the same link that shows what’s available, and they click one of those tabs, and it schedules it for you.

Joe Fairless: Huh. Okay.

Cliff Hayden: Very simple.

Joe Fairless: Any concerns about the tenant who’s deciding to move out talking bad about the property?

Cliff Hayden: That’s a great question, and that’s such a grey area. So our houses in particular, for our business – we have higher-end houses now, with nice tenants, nice customers that usually are in the process of buying a home, so they talk great about is… But I’m partial to our business. I think we do a great job as managers.

Our customers – we’re on a first-name basis with most of them now, they’ve been with us for years… We’ve kind of set ourselves apart from a lot of our competition by making our houses a lot nicer than most of everything else out there on the market… So we kind of pre-screen a little different now, which was a lot more strenuous, to get a better, higher-end customer in there. But we don’t have too many problems, Joe, to be honest with you. We’re lucky to get a phone call — maybe one a month, or every other months, it’s high for us.

Joe Fairless: Well, let’s talk about what you said there… You set yourself apart from the competition by making the homes much nicer… Will you elaborate on how you’ve done that?

Cliff Hayden: Okay, so what we do is high-end stuff. We do higher-end light fixtures, we do nice, white shaker cabinets now, with granite countertops, tile backsplash, we tile the floors, the bathrooms… Nice vanities, with the little vessel bowl sinks, and the nice, just higher-end quality stuff. Actually, the same stuff we do on our houses we’re gonna sell.

We kind of buy now in nice school districts, nice neighborhoods, and put those nice qualities in the house…  So when somebody is looking in that area, we kind of stand out above the competition. We screen very hard now, but it allows us to get nicer quality people in the properties.

Joe Fairless: And is this local in Louisville?

Cliff Hayden: Yeah, it’s all in Louisville. I’m a small-time — I stay where I know, and I’m just comfortable with my neighborhoods.

Joe Fairless: Okay. What are the price points we’re talking about, first?

Cliff Hayden: The average price in our area is 100k to 150k. When you get in that range, with the price point vs. rent, it’s very good. I’ll just do simple math – a 100k house will rent for around $1,000 to $1,100 a month. A 150k house will rent for around $1,300-$1,400/month. So that’s kind of where we stick to. Usually, 150k or less is all we do. Nice little brick ranches, 3-bedroom/2-bath, with a basement and a garage. That’s kind of our cookie-cutter house.

Joe Fairless: And in the example of a 100k house, $1,100 rent – is that post-renovation? You’re all-in with 100k?

Cliff Hayden: Correct. Or cheaper. It depends. The market today is a little different. Foreclosures in our time are pretty much gone. I do a lot of subject-to’s or seller finance deals now… A little creative financing on most of my deals, so it all varies what I’m all-in for. Usually not that much. I try to get into deals where I’m taking over payments. They’ve got high equity and I’ll give them a little bit of equity for their time, and then the houses don’t need very much, maybe some paint and carpet.

Joe Fairless: How are you getting those leads?

Cliff Hayden: More word of mouth. I’ve been doing this for a while, and I tell all the new people, especially in real estate, it takes you years to build up your reputation and seconds to lose it. So I do a really good job at taking care of people, and it’s common sense to me – integrity, honesty, do what  you say you’re gonna do, and I get a lot of deals.

My parents are older, and they’re the baby boomers, so they’re in their ’70s, and they’ve got a  lot of friends that have paid-for houses and moving to Florida, and I’ll finance the house from them. I’ve done it several times with them. That’s one avenue.

Joe Fairless: The subject-to – if you can think of a specific example with numbers, and just tell us a   story of the deal, that’d be great.

Cliff Hayden: Okay… So the one I just did, right down the street from my house – the guy went through a divorce; sad situation, he just couldn’t afford the house, didn’t wanna deal with it, and he just wanted some money to move.

Joe Fairless: And how did you hear about it?

Cliff Hayden: Actually a friend of mine called me, that we do deals together with.

Joe Fairless: Okay. Why didn’t your friend act on it?

Cliff Hayden: It’s a great question. So we do VRBO. You know what that is, I’m assuming…

Joe Fairless: Yeah.

Cliff Hayden: Vacation rental houses… So we actually rent out our house through the summer and we travel all summer. My wife works for the local high school… So we travel all summer, and when we come back, we’ve got a lake house that’s a far-away drive, and my wife is getting mad about it, that we had to drive so far when we came home… So my buddy came across this house that’s literally five minutes from my house. And he knew that it would be the perfect setup for us to stay there while we’re renting our house out.

We’ve done deals together for probably over a decade now, and he just said “You know what – just take it. You can have it. It’s for your family”, and he just gave it to me. So that was a very cool little deal. Basically, we took it over subject-to. The house was worth 200k, we took it over for 91k… Payments are $744/month, and that’s everything – PITI. We did have to put some money in this, a little bit more than normal, because my wife wanted it a little bit nicer than most.

Joe Fairless: [laughs]

Cliff Hayden: That’s the best way to say it. So we’ll probably have around 30k into it when it’s all said and done, and then payments will be $744/month. The kicker to this was she is gonna let me put our house on the market for VRBO all year round; not that it will rent all year round, but we’ll make it available… With the goal being to pay it off in two years. Then that way we have little debt. That’s kind of what  my business plan is now, is to get out of debt.

Joe Fairless: With the VRBO – is that the best website that you’ve found to get the short-term tenants?

Cliff Hayden: For vacation rental houses — it’s two different ones. We have VRBO; to me it’s more like long-term rentals, so you’re renting from three days to a week, or longer… So it’s more family vacation rental houses… And then Airbnb is more short-term. So if somebody’s coming to town for a night, or two nights, and they’re kind of in and out. We do both.

So for our personal home, we only do VRBO, because I screen everybody and talk to them personally, just to make sure they’re okay… And knock on wood, we’ve never had a problem so far – all great people, all great families.

Then we have a lake house that we VRBO, and I do instant booking on that, and that’s mainly — I get most of my bookings through Airbnb on that. It’s if they’re there for just a couple of nights. That’s my understanding of how I use those websites.

Joe Fairless: Okay… Let’s circle back to  ShowMeTheRental.com. Is that an app?

Cliff Hayden: It’s not an app yet. You can use it on your mobile, but it’s not an app. It is basically just a website.

Joe Fairless: So what’s the user experience? If I’m just listening to this interview and I’m like “Oh man, Cliff’s got something that I need. I’d love to have my home advertised, and then those people screened, and set up  to showings automatically…”, what’s the user experience from that point forward for me?

Cliff Hayden: Great question, Joe. We made this as simple as we can. We developed ShowMeTheRental from Kayak.com, if you’ve ever heard of that. Basically — I’m not that smart; most real estate guys are hard workers, so we developed it so it’s very simple to navigate through, very easy.

You go to ShowMeTheRental.com, you sign up, it kind of walks you through how to put your property into the system, there’s about six different sections based on pictures, descriptions, audio recording, showing instructions, and then pre-screening questions. The first, they’re pretty self-explanatory; the pre-screening questions are where everything ties together, and it’s pretty neat. We have around 30 questions, and then we recommend you pick around 3-5.

For us personally, the biggest questions we go over before we let anybody view our house is “How long have you been on your job? How much money do you have in the bank? Are you on Section-8?” With those questions — and we have a couple more… Another one we use is “Do you have small tools, and can you use small tools?” [laughter] I know it’s funny; we expect our tenants — we’re not a Holiday Inn. So we screen them very heavily and we make them understand. If you change your furnace, a smoke detector,  a snake in the drain… There’s certain things in these types of houses we expect you to take care of.

So you’ll pick your questions, and then from there the next tab is “Go live and get leads.” From there we have all the websites available to market your property on, the main ones being Zillow and Facebook Marketplace. That’s our two hot spots right now for websites.

Joe Fairless: What happened to Craigslist?

Cliff Hayden: Craigslist is kind of difficult, because you don’t have syndication with Craigslist. The problem with that is it is in the process, but the problem is you have to actually take a link and copy that and paste it into Craigslist… Because with Zillow — I’m not good with all the terminology, I’ve got a partner that does that, but… Basically, they syndicate. So when you put something on there, Zillow syndicates with it and it automatically posts to Zillow, it automatically posts to Trulia, it automatically posts to Facebook Live. Craigslist is not that way, you have to manually input the information. So it’s a little bit more difficult.

Joe Fairless: Okay. So that’s the management experience. It’s very easy to put your house on the market. We made this as cheap as possible to do all this. So it advertises, it generates leads, pre-screens the leads, and it sets up the showings, and send out an application. We tell everybody “If you have your own application, you copy the link and put it in the system.” There’s a little spot for it. And if you don’t have an online application, we have a generic one you can use. So from there, it’s $49. It does all that for $49, which I think is insanely cheap.

Our goal is to get people to get their life back. Because I know when I was in real estate – and Joe, it sounds like you’ve got a lot going on also – you can get overwhelmed if you don’t have the right systems or staff in place. You get overwhelmed with some of this stuff, and it kind of takes away from what you’re really wanting to do. So that’s the property management side of it.

From a tenant side of it, what we do for tenants is we actually advertise on Facebook, and get tenants to kind of sign up through ShowMeTheRental,  and fill out what we call a tenant profile. So what they’ll do is they’ll fill out a tenant profile – that’s one way – or they’ll just go on Zillow or on Trulia or on Facebook and they’ll see the property, they click on it, it’ll send them a link to fill out the pre-screening questions you selected… Once they will those questions out and they answer them correctly, it’ll send them showing instructions that you authorize to show the property with. That’s the simplest way.

But the big way we’re working on, which I really like, that I kind of jumped around with (I apologize) is we do tenant profiles now. So we advertise on Facebook through different regions, and get tenants to fill out all the pre-screening questions beforehand, and then we actually cross-reference that with the houses that are on the system, and then we just send them all the houses available.

The big goal is if you don’t have a house on there, we have a list of different people in different zip codes that are looking for  a house, so you’ll kind of know “Hey, you’ve got 50 people here”, and a big zip code in our town is 40258… “You’re got 50 people in 40258 looking for a house”, so you know as soon as you put your house on there all 50 of them, if they qualify, will get to see that house. So it kind of automates that whole process and sets it up very clean, so it matches up pretty fast… Which is the goal – to get people in these properties, to get them qualified and rented as fast as possible.

Joe Fairless: So it’s twofold – one is you’re building a database of people who are wanting a place, and then second is if that database doesn’t match up with the house, then they can respond directly via an ad that’s placed on Zillow or Facebook Marketplace.

What’s been a challenge of your as you’ve built this out?

Cliff Hayden: The honest answer is it takes a long time to develop software. I had no idea. The biggest challenge I had is just the time it takes to do this, and getting bugs worked out, and different little headaches along the way. The other biggest challenge is — I don’t know how to say it right without sounding terrible… But this is kind of built for the younger generation, so people 40 and below. We’ve had trouble with older senior landlords that are just not computer-savvy. So it’s very simple, but we’ve had trouble trying to get them to understand what to do, because they just don’t — for me and you probably it’s very simple to drag pictures, and put the data in, and copy and paste. For them it’s a little more difficult, because they’re not used to it.

A lot of guys in our town, the senior guys – they still use phones. They have a website, but they still call, and talk, and that’s just their way. So trying to transition the older investors into the system has been a little challenging.

Joe Fairless: I believe you mentioned earlier that you weren’t the tech person; you have a partner. Did you meet that partner because you had this idea, so you wanted help executing it, or did you already know this partner?

Cliff Hayden: I did not know him. I met him from a friend of mine that I grew up with. So I’ve had this idea for actually years. I spent several months researching and trying to find a company that did this already, and I could not find anybody. The whole part of it. So then I just decided to develop it and started asking around to people that I know if anybody was interested… I got turned down several times from different companies, and then I met some entrepreneurs in our town that have actually built up several businesses and sold them off, and they’re in this world of codes, and developing websites, and all this stuff… They’re doing a lot of stuff with Ameritrade and some bigger companies… So I kind of had lunch with them, drinks one night, and we kind of talked and told them what my idea was and what the problem in the market was, and how I wanna develop this. They were on board, and we partnered up from there.

Joe Fairless: As a real estate investor who – you were buying foreclosures, and now you’ve had to shift the process for how you’re acquiring properties, what’s some skills that you use now, even though you’re not buying the foreclosures, that helped you buy those foreclosures then?

Cliff Hayden: That’s a great question, Joe. So what I did was I developed relationships with all the top foreclosure agents in the town. Actually, I shouldn’t say all of them. Out of the top five foreclosure agents in our town, I was good friends with three of them. So one of the big things I would do–

Joe Fairless: How did you know who were the top ones?

Cliff Hayden: You can just look on the MLS, and look at the stats, and see who’s got the most listings and the most sales and the most assets.

Joe Fairless: Okay.

Cliff Hayden: So I was actually working with one of them… So what I did was I would take him out to lunch, I would talk to him, figure out how all this stuff works. And then one of them was a HUD agent, and I would actually call her every Sunday night, because that was the deadline for HUD houses. So I’d call, and she would tell me what offers were in. She couldn’t see the prices of course, but she’d tell me “Hey, we have offers on this one, or this one… I think you can get this for this price.” Or “Hey, this one just fell through, but we can put an offer in for this tonight.”

So that’s one of the ways – every Sunday night we’d sit and talk, and it’d be [unintelligible [00:18:34].20] about two or three houses, sitting there, talking. So we put in offers with that.

Another one would be just know the agents… And back then, in 2009, you had a lot of pocket listings, so you could actually put it under contract [unintelligible [00:18:46].05] They don’t do that anymore. So times have changed, but I would do a lot of pocket listings back in the day… And I would get those because the agents knew I try to just make their lives easy. They knew I’d pay cash, they knew I’d do what I say, just like earlier… I would always go to them to do all the paperwork, I would always make their life as easy as possible. So if I had to drive across town to give them earnest money, it’s on the contracts, if that was easier for them, I would do whatever it took to make sure they were happy, because I wanted them to call me on the next deal.

Joe Fairless: Taking a step back, what’s your best real estate investing advice ever?

Cliff Hayden: I don’t know about ever… That’s a good question. I don’t know if there’s an “ever” in that. My best advice for me personally – I tell everybody, get educated. This isn’t a hard game to play if you know the rules and you get educated on thinking outside the box. I think that’s a big deal in this business, especially in today’s market. Creative financing, creative deals are a big deal if you wanna get ahead of the competition.

So my advice would be get educated, get a mentor… I think getting a local mentor, or even trying somebody nationwide… But it’s hard for them to know your market and know your areas of town that’s gonna work best for you… But I’d say get a mentor.

And what really worked for me is figure out why you’re doing this business. My big thing is lifestyle. That’s all I focus on these days. I want a certain lifestyle. So I’d put the end game first, and then kind of work your way backwards on how much it’s gonna cost you to do that endgame, to get to where you wanna be.

So that would be my advice to new people, or even people who have been doing it for a few years. The money is great, but the big problem I had – and I’ve said this several times before – I used to think money was the goal; I come from a lower-middle-class family, so I thought once you made the money you’d be happy. I realized probably 5-6 years ago that money is basically a tool, it should never be the goal. So get your lifestyle in place. I think that’s the key. I guess that’s my advice. Figure out what kind of lifestyle you want, figure out how much it costs to have that lifestyle, and then work  your way to get to there.

Joe Fairless: I love that – money is a tool, it should never be the goal. That’s very powerful, especially — the more I think about it, the more powerful that is. We’re gonna do  a lightning round. Are you ready for the Best Ever Lightning Round?

Cliff Hayden: We’ll see. Let’s do it, I’m ready.

Joe Fairless: You’re ready, I know you’re ready. Alright, first though, a quick word from our Best Ever partners.

Break: [00:20:55].23] to [00:21:45].11]

Joe Fairless: Okay, best ever resource that you use to stay up to date with industry trends, or just stay sharp with your business?

Cliff Hayden: I’m a real estate broker, so the MLS is my best way to track stats, and hot properties, and what’s selling fast.

Joe Fairless: What is the best ever deal you’ve done?

Cliff Hayden: That’s a good one. I did a package deal when I first started, and the reason it was the best ever is because I had a mentor involved and I had no damn idea what I was doing… I bought seven houses for over half a million dollars, and I had $3,000 in the bank. I had no idea if that was gonna work out. The great advice I got from a real estate mentor – a guy named Mike butler, local in our town – changed my life. He said “If you have a deal, you’ll find the money.” It took me years to understand that. If you have a good deal, the money is out there. It’s easy to find if you have a deal for it.

So I ended up paying cash for all these houses. I had a local bank fund the purchase price. All of them had tenants in them. So I bought seven houses, it didn’t cost me any money… I got a $28,000 commission on this deal; I had tenants in all of them. I ended up wholesaling two of them to my son’s doctor… Because we got the flu, and I went to the doctor’s office, and we started BS-ing, and long story short, he’s like “Yeah, I’m doing real estate”, and I said “Hey man, I’ve got two houses in your area if you wanna buy them.”

So I wholesaled two of them, kept five, still have them today. The local bank refinanced them — it’s been years ago, but I wanna say within a month or two we refinanced all of those on 30-year fixed loans.

Joe Fairless: Oh, wonderful.

Cliff Hayden: So that was a great deal. That was when I caught the bug, like “This stuff really works!” Because I thought for a while it was just for a certain type of people. Then I came across that big deal, and it was a game-changer for me.

Joe Fairless: And real quick, how did you come across it?

Cliff Hayden: Great question. I asked one simple question. They had a house for sale on the market in a neighborhood that I liked, and I simply asked “Do you have any other houses you wanna unload?” And an agent actually said “As a matter of fact, this is an estate”, and they have six other houses, seven total, and they’re looking to get rid of them all at once if they can… And I was like “Okay, let’s see what we can do.” So that one simple question put that deal together.

Joe Fairless: On the flipside, what deal have you lost the most amount of money on?

Cliff Hayden: I’m laughing out loud, because I was just talking about this yesterday. I did a deal recently which is stupid, because I know better… I went out of my comfort zone and bought a big, nice condo, in a really nice area of town. The numbers on paper look great, and it was an area where I thought I was gonna sell… So for new people, just to give you hope, we still screw up too, and I’ve been doing this for a while. It’s about a $400,000 condo, and I’ve been sitting on this thing now for around seven months. So that was the worst deal I’ve done lately, and it looks like I’m gonna have to end up probably lease-optioning it out, or trying to do some kind of trader exchange with another investor to get out from under. So I hate to say it, because I know better, but that was the worst deal I’ve done in years.

Joe Fairless: What is the best ever way you like to give back?

Cliff Hayden: That’s a great question. We’re actually doing this now. My sister works for a non-profit called Home of the Innocence. They take in troubled kids, abandoned kids, and kids with all kinds of problems. A big problem they’re having is when kids get 18, they’re out of the system. They don’t have any of that help from the government anymore, they’re kind of on their own, a lot of times they’re falling back into the same grounds they were in before, because they have to survive…

So what way we’re giving back now is we’re helping them buy houses, and showing these kids how to fix them up, kind of mentoring them… I’m actually starting a big brother program; I actually met the kid on the 18th of December. So that’s how I give back – helping others. And I like teaching people what I know. I think that’s very cool, and I think for under-privileged kids, they wanna work hard and really wanna do it; I think there’s an opportunity there for them to help them out a lot.

Joe Fairless: How can the best ever listeners learn more about what you’re doing?

Cliff Hayden: Well, from ShowMeTheRental side, just visit ShowMeTheRental.com. If you’ve got any questions, you can call me on my cell phone any time. I tell everybody I answer calls from 12 to 1 and 4 to 5. I have an answering service and it’ll leave me a message, but you can reach me at 502-641-8781, if I can help you with anything. And then visit our website, and hopefully you give us a try. It’s changed my life and got me time back to hang out with my wife and five children… So that takes up a lot of my time also.

Joe Fairless: Money is a tool, it should never be a goal. I also like what you said earlier about reputation – it takes years to build a reputation and seconds to lose it. We’ve gotta stay sharp, we’ve gotta continue to be who we’ve been, but perhaps even a better version of that as go through life. I love the case studies and your approach to setting yourself apart from the competition and still making the numbers work.

Thanks for being on the show. I hope you have a best ever day, and we’ll talk to you again soon.

Cliff Hayden: Joe, I really appreciate your time. Thanks for the opportunity.

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