JF2352: Playing A Real Estate Version Of Moneyball With Kevin Clayson
A divorce moved Kevin to change his career path. After working in retail, he decided to try himself in the financial sector working with mortgages. In 2007, he started a Done For You Real Estate company together with his three friends. They make investing in real estate easy by educating their clients about the market and guiding them through the closing process. Their mission is to help people replace their income and secure their future by making a conservative investment that will hold no matter what the economy’s like.
Kevin Clayson Real Estate Background:
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“Leave people better off” – Kevin Clayson.
Theo Hicks: Hello Best Ever listeners and welcome to the best real estate investing advice ever show. I’m Theo Hicks, and today we’ll be speaking with Kevin Clayson. Kevin, how are you doing today?
Kevin Clayson: Good, Theo. Thanks for having me, man. How are you?
Theo Hicks: I’m doing well, and thank you for joining us. I’m looking forward to diving into what you do. So Kevin is the owner of a Done For You Real Estate, a multi-million dollar real estate investment company. He has 15 years of experience and his company has transacted around 4,000 single-family homes. He’s based out of Utah, and the website is dfy-realestate.com. So Kevin, do you mind telling us some more about your background and what you’re focused on today?
Kevin Clayson: Yeah, sure man. I’ll be honest, I never thought I’d be here. I was not one of those kids growing up that was repackaging pixie stick powder and selling it to my friends at school, right? Like I was not entrepreneurial at all. I grew up in California, just right outside of Oakland, and I just grew up like a normal kid. My dad, he was always working sales jobs. I just thought, “No, I’m going to go to school. I don’t know what I’m going to do. I’m going to go get a good job somewhere”, right?
Well, I ended up graduating high school, went and lived overseas for a couple of years, came home, got married shortly after I came home. I was in my early 20s. And dude, three and a half years after getting married, I find out my wife is leaving me. It totally rocked my world… So I had this crazy thought. The thought was, “Oh my goodness. Maybe if I stop working retail and I go get a real job with my real college degree, maybe she’ll come back to me.” It didn’t work out, which was a good thing. But what I ended up doing is I ended up getting a job with Wells Fargo, doing mortgages, unsecured lines of credit, and doing auto loans. And the reason why that was such a crazy piece of the story is I had never even thought about setting foot in the financial realm whatsoever… And I found myself kind of liking the mortgage product. I’m like, “This is kind of cool.” I was kind of digging this idea of these amortization schedules, which I had never heard of before. And I was living in Utah at the time, I came back here to Utah to go to school, and here I am starting to do loans.
And so one day, I was prospecting. And I called up a buddy of mine who I knew was doing a bunch of real estate investing, and I’m like, “Hey, who does your mortgages?” And he’s like, “Well, I kind of have somebody… But dude, it’s been a long time. We should go to dinner.” Well, we go to dinner, and there were about four of us that decided to start a company to help people invest in real estate. So at the time – this was like 2007 or so when we started the company – the whole idea was we wanted to help people transact real estate instead of just pay for education. Because there’s awesome education out there, there’s awesome mentorship and programs. But we saw so many people that would spend tens of thousands of dollars to learn how to do real estate, but then would never go transact real estate. So we’re like, “Well, let’s fix that.” So we just started to help people do real estate. One of us would put a plan together, I’d do the mortgage, one of us would find the home, and then the other would help the person rent it out. And frankly, that’s what we’ve now been doing for 13 years. Now we’ve got clients from all over the country and we’ve done, as you mentioned, a good number of properties. So now, that’s what we focus on, helping hardworking Americans stay focused on what they’re best at, and then we help them by investing in simple and conservative single-family, residential real estate in some of the best markets in the country by doing all the work for them, so they can gain all the benefits from real estate without having to be an expert in without having to do all the work themselves.
Theo Hicks: Wow. It’s always interesting when I hear people’s conception stories starting business, and it always just seems to be, “Oh, I just met some dude I hadn’t talked to in years, and then we started a company together.”
Kevin Clayson: That’s the power of networking. Right?
Theo Hicks: Exactly. Yeah. I can’t tell you how many times I hear that… So it definitely reaffirmed the power of networking. Okay, we’ve got the four people, we’ve got the planner, the mortgage person, the home finder, and the person who rents it out. So Done For You Real Estate, obviously by the title, is a turnkey company.
Kevin Clayson: Yes, it is. It’s turnkey, but with a kind of like a little bit of a difference, right? So a lot of turnkey companies, if you go to the website, it’s “Hey, here’s properties, and it’s ready for you. Buy it.” That is not what we do. Everything we do is purely custom. We always specialize in a certain type of real estate, right? It’s got to check the boxes.
We have teams on the ground in multiple markets throughout the country. We get clients that come to us from all over the country that just wants to buy real estate. So we can help people buy real estate in states they don’t live in, assuming that the real estate is a good fit for them. So we take our clients to different states, into different teams, and look at different price points of properties, at different cash flow targets, based on what they’re trying to accomplish. Because for us, we try to help our clients replace their income, one property at a time.
So it’s very much like they’ve got money in a 401k or an IRA, or maybe they’ve got home equity, and they’re looking at it and they’re going “Oh my gosh, the math isn’t going to add up.” So then based on wherever they are and whatever assets they have available, we can create a custom income replacement plan, and then begin to transact real estate with them in an order that gets them to total income replacement, hopefully within the next 10 to 15 years. So it’s simply conservative long term real estate, but there’s a plan to it, so that you will organically grow the portfolio over time.
Theo Hicks: So when you say there’s a difference between what you guys do and what the traditional turnkey company does, it’s that you kind of enter into the process a step earlier, and rather than just presenting a bunch of properties, you start at what’s a good fit for them based on what they’re trying to accomplish and what they are capable of. So from my perspective, if I want to do this, how does that work? Am I paying you money to do the plan? Or is that something that kind of comes with assuming I’m going to buy a property? How do you know who to do this plan for? Is it anyone who comes to you, or do you need to see something first?
Kevin Clayson: No, what we do is we always do kind of an introductory call. So we’ll just talk to people and we’ll make sure that they’ve got assets and ability. And if they have assets and ability, and they think that they want to move forward with our company — we actually own a mortgage brokerage. We’ll do a full pre-approval in-house. We effectively underwrite the file in-house before we ever shop a lender, so we know how many pieces of real estate they can buy, which markets we ought to target for them, and what their cash flow projections, what they need to look like. Then we assign them an individual to work with them and introduce them to our teams in the market, help them evaluate properties, they get properties under contract, we go through and do the loan for them… And then where we make money is we charge a flat, per-property fee. It’s a separate buyer-paid commission, only charged at closing, of $4,995, on the closing documents. And we include that in all the calculations; we’re trying to determine whether or not ROIs are going to fit. We’re saying what’s our total out of pocket expenses, we’re going to take everything into consideration from the downpayment to what our fee is, to potential rehab expenses, and then we’re going to look at projected rents on the property, and projected appreciation, and then we’re going to just do the calculation and say, “Does this give us the kind of projected rate of returns that our clients are looking for?” Once we know that that’s the case and they put the property under contract, go through that process, we get them closed… We also own a little insurance company, so a lot of times we can do the policy for them. Then we’ve got our property managers that work with our teams in the market, that then find the tenants and rent them out.
Now, the other place where we differ, it’s not only the customization on the front end of putting a plan together, we don’t charge anything until someone closes on a home with us. We’re $0 until you close on the home; that means we’ve got to perform. And that, I think, is why our clients come back again, and again, and again. Because they’re not paying us an upfront fee. We just go to work and do the work.
So that kind of customization of showing them properties that are custom fit for what they’re trying to accomplish, that’s one aspect that’s unique. Another, the fact that they can work with our teams in multiple markets simultaneously, as opposed to just look at a list of homes and kind of pick the one they want best, combine that with the hand-holding we do throughout… And then where we really are quite different is most turnkey companies, once you close on the deal, it’s kind of like “Cool, good luck. I hope it rents well.” We continue to work with our clients, year after year. In fact, annually, we put together annual property and market reviews on their property. We pull the numbers, we see how it’s performing, we see what the market is looking like, so that they know when it’s time to refi, when it’s time to sell, when it’s time to just kind of hang back and hold tight.
So we continue to work with our clients year after year, because the way we’re successful as a company is when our clients do multiple transactions over a number of years. When they sell one, and 1031 exchange it into a couple more. So that’s kind of the way that we approach it.
Theo Hicks: So it sounds like it’s pretty customizable, and I’m sure the answer is it depends, but what type of single-family homes are you targeting? Are they already fixed up and turnkey? Or are you finding distressed properties and then fixing them up? Or is it a combination of both?
Kevin Clayson: Good question. It does depend by market. The acquisition strategy depends on the market. But generally speaking, we’ve got some new construction products that we do in Orlando, because we work with builders out there. Indianapolis is another one of our markets. We’re largely looking at recently published MLS deals. Sometimes in Memphis – we do a lot there – we can get pre-MLS deals because we have a reputation and people kind of know. And then we’ve got a couple of other markets we’re opening later this year. So it totally does depend, but they’re always in the same box. Here’s the box – three or four-bed, two-bath, middle-class type neighborhoods, two-car garages, ranging in purchase price from $160,000 to $230,000. They’re going to cash flow anywhere from $300 to $600 net cash flow a month after you pay everything out. So it’s kind of like blue-chip real estate. Slightly higher quality. We’re not doing really low-end stuff, we’re not doing really high-end stuff. We’re frankly doing the kind of single-family residential real estate that is in the highest demand across the board.
And the reason that we do slightly nicer properties and slightly nicer neighborhoods – and these are neighborhoods that are primarily owner-occupied, neighborhoods with a handful of rentals, the reason that we do that is usually the tenants, they’re in a position where maybe after they rent from you for a few years, they may be the ones that buy your property; now you have a chance to sell that property, do the 1031 exchange to potentially grow your portfolio. So the quality of tenant that we attract by targeting these types of homes in these neighborhoods is a higher quality tenant, which means your rent is far more dependable, and usually, your properties are taken care of much better. So usually any of these properties across the board – we don’t do massively distressed properties. We’re not doing stuff where we got to go and throw 100 grand or 50 grand at it. It’s like a few thousand dollars, lipstick and paint, get it ready. Because usually by going and finding deals with our teams on the MLS – and our key is we just we are super zoned in on our neighborhoods in our zip codes and our criteria, so we can take action on deals quicker than a lot of people can, just because we have the buyer pre-approved ready to go. So we know we have everything in front of us to be able to go.
But what’s cool about that is if we get homes off the MLS, which we do a lot of the times, those are homes that were listed by a primary residential owner, so they usually try to get it pretty nice. They try to get it looking good. So that means we can go in and just do the most essential critical things that mean it’s going to rent as quickly as possible, for as much as possible.
Theo Hicks: And again, I know it depends, but what’s the range of rents on these types of homes? Just to make sure I’m understanding…
Kevin Clayson: So you’re probably between a thousand and 1,500.
Theo Hicks: Okay.
Kevin Clayson: That’s probably the range for the vast majority of them.
Theo Hicks: And then you mentioned the MLS and then developers. What else are you doing to find deals? Is it just MLS and developers, or are you doing other things as well?
Kevin Clayson: We used to do a ton of auctions, but auctions just aren’t quite what they were during the great recession. There’s a lot of institutional capital, it’s really hard to kind of compete at the auctions… And to get the stuff that we want to get, it’s just not always as available at the auction like it used to be. So it’s primarily MLS, new construction, and sometimes pre-MLS stuff. But we don’t do foreclosures, we don’t really do short sales or anything like that. It’s really just super-boring, straightforward real estate, that works, and works, and works.
Theo Hicks: Do you ever have an issue with the deal flow? Are you able to keep up with the demand of your clients pretty well just through those?
Kevin Clayson: Yeah, it’s awesome. We’re totally able to keep up. And the main reason is because we just have awesome teams. And we’ve got multiple people in our teams, on the ground, in those markets. So having developers and stuff that you can work with from a new construction standpoint – that can ease some of that. Because look, nobody else is looking at those deals, right? Those are things that we’re able to do because there’s effectively a portion of that subdivision earmarked for Done For You Real Estate clients, because we want it to be primarily owner-occupied in that neighborhood. But that gives us a little bit more flexibility, so we don’t necessarily have that supply problem, even if demand is high. And that’s been really awesome, for our clients, especially.
Theo Hicks: How many deals do you guys do on average per year?
Kevin Clayson: We’re not a huge company. We probably do between three and 500 deals a year. And those are purchase transactions. We’ll probably help our clients sell another 200 or so deals a year. It fluctuates, but that’s pretty common. And in fact, one kind of cool thing that we do is on our website – you can go to dfy-realestate.com – there’s a tab that says see the results. I don’t know anybody else that does this… We post our annual transaction reports. So you’ll be able to see every transaction we did. So we give these partial addresses; it’s not full addresses, but you can see what the purchase price was, how long it took to get the property rented out, what the cash flow was on the property… When our clients are listing and selling the property you can see how much equity they were able to capture when they sold the property. We put it out there by market, so that that way, we could just be super upfront and honest and stand on our track record and say, “Look, this is who we are, this is what we do.” And we like that, because we don’t know a lot of other people that do that. But we’re happy to, because we keep track of that anyway, so we might as well share it with the world.
Theo Hicks: Alright, Kevin, what is your best real estate investing advice ever?
Kevin Clayson: Oh, dude, that’s one of my favorite questions. Okay… Do you remember the movie called Moneyball? With Brad Pitt and Jonah Hill.
Theo Hicks: Yup.
Kevin Clayson: Okay, so I grew up just outside of Oakland. So I grew up an Oakland Athletics fan. And I didn’t know Moneyball was going on until the movie came out. And if you haven’t read the book, you should do that as well. But if you remember, what happened was the Oakland Athletics were trying to compete with the New York Yankees. The New York Yankees had like one of the largest payrolls in all of Major League. The book and movie specifically chronicle the 2001 season. And the A’s didn’t have that much money, but they had to compete with the big boys. So what they did is, instead of spending a ton of money on flashy, expensive players that maybe would fizzle out, maybe they go and get you a whole bunch of home runs, there’s a little bit of a gamble, a little bit of a risk, what they did is they bought dudes that could get on base; good at taking walks, good at bunting, good at hitting singles. And they called it Moneyball. It was the idea that they were paying for on-base percentage more than they were flashy, big-name players. The best advice I can give anybody when it comes to real estate, especially when you’re starting out, is don’t go try to hit home runs. Go play real-life Moneyball with real simple real estate. Hit real estate singles.
So so many of us want the big deal, right? We want to get up there, we’ve heard about how much money you can make in real estate, and we just get up there, we swing for the fence. And then you’ve got gurus out there that’ll say “Oh, whatever — you miss 100% of the shots you don’t take.” Or “Babe Ruth, he struck out more than anybody. But he had more home runs than anybody.” And we use this thing that we kind of use as psychology to make somebody feel guilty if they don’t swing for the fences. But here’s the difference between you and me, maybe, and I don’t know about you, Theo, but me and Babe Ruth… The difference is this is – when Babe Ruth got up and he swung for the fence every time, if he struck out, he had another at-bat coming in an inning or two later.
For most folks that have worked really hard to get money saved up for their future, if they get to the plate and they swing and miss, they may not get another at-bat. So what we say is just go hit real estate singles. And that’s that simple and conservative real estate, right? Maybe you’re getting a 30-year fixed loan; you’re going to own it for three, or four, or five years before you sell it. It’s not going to be a traditional BRRRR property where you’re going to try to turn it over really quickly. You’re not going to try to target massive cap rates and massive cash flow. You’re not going to try to go and do a massive rehab. It’s like simple and conservative, super-boring, predictable, but it works. You hit enough singles with enough velocity over enough of a period of time, you win every single game you play. And that’s the way we approach real estate, and it’s what served us well, so that no matter what the world is doing and no matter how many financial crises we have to go through, our clients succeed, the company succeeds and we change people’s lives one property at a time.
Theo Hicks: That’s solid, solid advice. Alright, Kevin, are you ready for the Best Ever lightning round?
Kevin Clayson: Let’s go!
Theo Hicks: Alright. First, a quick word from our sponsor.
Theo Hicks: Okay, Kevin, what is the Best Ever book you’ve recently read? Besides Moneyball.
Kevin Clayson: I’ve got to give you two. One is the Go Giver by Bob Burgh and John David Mann. It’s a little business parable that’s game-changing. The other is a little bit more kind of a business book. It’s called Give and Take, by Adam Grant. Those books changed my perspective on everything.
Theo Hicks: If your business were to collapse today, what would you do next?
Kevin Clayson: It’s funny, I’m actually an author, and I do motivational speaking, and I go and I speak at middle schools and high schools and help kids know how to be happy in the middle of really tough circumstances… And I’ve got a book that’s sold in 26 countries throughout the world… So I would just double down and write more books and go speak at more schools and go try to serve more people that way if I wasn’t doing real estate,
Theo Hicks: What’s the book called?
Kevin Clayson: The books called Flip The Gratitude Switch.
Theo Hicks: Congrats on that success.
Kevin Clayson: Thanks.
Theo Hicks: Let’s see… What’s the best deal you’ve done with a client?
Kevin Clayson: It’s hard to say that there’s a single best deal that we’ve done with the client, because they all kill it. But here’s what I’ll tell you. I look at a deal that we did with a kid who had saved up money to get one little investment property before he went and served a church mission. This was back in 2009. The dude put 25 grand down, which was a 20% down payment on a property in Phoenix. He went and served God for two years, he came back he built 60 or $70,000 of equity, was able to refinance it out and go get a second property.
Then he was able to use the equity from those properties, and go buy another property or two, which funded his law school education at Harvard… And now he’s graduated from Harvard, and he’s got this real estate portfolio that could pay off all his student loans if he wanted to, but he just wants it to keep growing. So one simple deal with 20 grand down 10 years ago has transformed this kid’s life. That one I think about it a lot.
Theo Hicks: That’s a good Best Ever deal. What’s the Best Ever way you like to give back?
Kevin Clayson: It’s kind of a philosophy that I try to live by, and it’s not some sort of grand gesture, it’s this – it’s only four words long, it’s “Leave people better off.” And all I mean by that is you think of what this world would look like if every one of us walked into it every single day realizing that all we got to do is leave people better off than we find them. How much better would our marriages be? What would it be like in our relationships with our kids if inside of every small, tiny interaction, we tried to leave them better off? And then what about our clients? And what about the stranger that we meet at the store? What would this world look like if we didn’t try to compete and shout louder than one another, but we just had to leave people better off? So my little contribution is every day, in every way I possibly can, inside of every single interaction I have, I try to leave people better off than I found them.
Theo Hicks: And then lastly, what is the Best Ever place to reach you, and anything else you want to mention before we wrap up?
Kevin Clayson: I want to mention that you’re awesome. Thank you for having me on the show. The show was awesome. If you’re listening, you’re awesome. And the best place to find us is dfy-realestate.com. And also – listen, if you’re listening to this and you’re a podcast fan, we actually have a podcast called Replace Your Income, where we go through our strategy, and go through deals, and talk about what we do with our clients. It’s not nearly as good as this show, but if you’ve got extra time on your run or walking your dog and you don’t have anything better to listen to, give Replace Your Income and listen. And otherwise, social media is always a good place to find us, too. Done For You Real Estate USA.
Theo Hicks: Perfect, Kevin. Well, thank you for joining us today. I can definitely tell you do those kinds of talks, you’re a very good speaker and very animated.
Kevin Clayson: My hands, man. I know we’re like on a zoom call and you’re probably getting motion sick. My wife always makes fun of me. She’s like, “What would you do if you had to keep your hands in your pocket?” I’m like, “I don’t think I can speak if I can’t move my hands. I don’t think it’s possible.”
Theo Hicks: But I can see the passion for sure.
Kevin Clayson: Thanks, man.
Theo Hicks: Thanks for joining us today. I enjoyed this conversation a lot. And really what it kind of comes down to, your Best Ever advice really summarizes everything we talked about, which is you don’t need to hit the grand slam, do the crazy deal that makes you a million dollars or $100,000. It’s just consistent, simple deals over a long period of time. As you mentioned, you work with people to reach your financial goals in 10 to 15 years, not in a week, or a year, or two years even. So in order to do this, you talked about doing the single-family rentals, you were very specific on the type of property that you target…
We talked about how your company is unique, in that it essentially starts earlier on in the process, and doesn’t just give them a menu of roles to choose from and then say “Alright, good luck.” You work with them from the beginning to figure out what their goals are, and then you will match the correct property type and market for their goals. And then you’ll help them through the entire transaction process. And on the back end, you have the property management in place, you do the annual market property reports to help them sell it as well… So it truly is a full service done for you real estate business.
Something else interesting you said that I liked was you focus on following the simplicity, focus on the MLS, as well as new builds. And you focus on new builds because you want to focus on the owner-occupied areas. Because you’ll be able to not only get renters faster, but you might also have the possibility of selling it to that renter on the back end, since most people own the homes that live there. So it kind of increases the chances of you selling the property, or at the very least increase the chance of you selling it faster, once you decide to go time. Plus, you don’t won’t worry about getting the tenant out of there and all that other stuff that delays the sales process.
Kevin Clayson: It makes real estate more liquid when you do that, at the end of the day.
Theo Hicks: Exactly. And then I loved all of your lightning round responses as well. So Kevin, thanks again so much for joining us today. Best Ever listeners, as always, thank you for listening. Have a Best Ever day and we’ll talk to you tomorrow.
Kevin Clayson: See you, guys.
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