Best Real Estate Investing Advice Ever Show Podcast

JF1178: From $600k In Debt To Successful Agent And Investor with Clayton Gits

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Clayton and his wife were in severe debt, and rather than sit around let it get worse, they took action. Fast forward to today, and they are both successful separately and together. Clayton is an agent as well as a real estate investor. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

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Clayton Gits Real Estate Background:

  • Owner/agent with EXP Realty and established The Gits Group in ’07
  • Licensed Real Estate Agent, Certified High Performance Coach, VISION CASTER, AND DREAM BUILDER.
  • Started in Real Estate in 2005 with 10K in the bank and a dream
  • In 2005 he changed careers, married the love of his life, and found out he had cancer

 


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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. We only talk about the best advice ever, we don’t get into any of that fluff.

With us today, Clayton Gits. How are you doing, Clayton?

Clayton Gits: I’m doing awesome, Joe. Thank you.

Joe Fairless: My pleasure, nice to have you on the show. A little bit about Clayton – he is the owner and agent with Keller Williams, and established The Gits Group in 2007. What a time to start the group, right?

Clayton Gits: Yeah… [laughter]

Joe Fairless: In 2005 he changed careers, and he is based in Richmond, Virginia. He started real estate in 2005 with $10,000 in the bank and a dream. Well, it looks like you’ve got the dream fulfilled, at least accomplished a lot in between now and then. So Clayton, with that being said, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Clayton Gits: Absolutely. Like you said, Joe, I got into real estate in 2005, and like many realtors, I got into this business — I had a bad experience with my realtor. He was a very close friend of mine, when I bought my first house. I walked away from that experience and I said “You know what, if he can do as well as I know he does and treats people the way that he just did my wife and I, I know I can do better.”

I was looking for a career change, Joe. I was selling pharmaceuticals at the time — legally! I always wanna make that disclaimer. So I just jumped ship; I wasn’t fulfilled selling pharmaceuticals, so I jumped ship. I took my real estate course, and in 2005 I got into real estate. I’ve gotta tell you, I started with a larger local company called Long and Foster, and when I moved over to Keller Williams Realty, I was introduced to the concept of the mastermind, the concept of personal development. I just started following people like Jim Rohn and Zig Ziglar and Les Brown, and now today Brendon Burchard, and all of these guys and gals. That introduced me to concepts like “For things to change, you have to change. If you want more, you must become more. Don’t wish things were easier, wish you were better”, and I’d never it before.

Fast forward a little bit, the real estate market crashes in 2008, and I had the blessing to be introduced to a guy by the name of Dave Ramsey, and at the time in 2009, my wife and I were $600,000 in debt, including our mortgages, which we didn’t realize was debt… So I met Dave Ramsey at a real estate conference and I walked out of that conference, I purchased the book The Total Money Makeover back when there were bookstores – I think I went to a Barnes & Noble – and read it cover to cover. I gave the book my wife, she read it cover to cover…

Fortunately, we both got on the same page and just went nuts paying off debt. In 2013 we walked into a Wells Fargo and paid off our last remaining balance on our mortgage, and that was our last debt. So it took us four years to pay off, to wipe out that 600k, and then we started investing.

We started buying residential real estate with a goal to purchase 50 by 50 residential real estate properties that are paid for. We’re not paying cash for those properties, Joe. Stop me anytime if I’m…

Joe Fairless: Keep rolling. I love it.

Clayton Gits: So we read a book called HOLD that was written by Linda Mckissack, I believe. So we were purchasing homes on a 15-year note, putting of course 25% down. They have to cash-flow at least $200/month after property management expenses. I own a property management company as well, so I don’t charge myself to manage my own properties, so that’s very helpful.

We just bought our third, and we are about to buy our fourth, and what I’ve realized is that to come up with the cash to buy 50 properties at age 50 — we’re still gonna do it, but I’ve had to figure out some additional revenue streams… Mainly, for us, I actually left Keller Williams, Joe, in January of this year, and joined a company called EXP Realty.

I was with Keller Williams, frankly, because as an entrepreneur I’m always looking for residual revenue streams. I read a book a while back called Cashflow Quadrant…

One of the things that I think is relevant, Joe – when I got into real estate in 2005, I had not only changed careers, I married the woman of my dreams, but I also found out that I had cancer, all in that same year, in 2005. And I share that because I kind of had to shift in my perspective of… I’ll speak for myself — I was walking through every day as if I was gonna live forever. Then all of a sudden you get a diagnosis or life happens and you’re like “You know what, I need to start thinking about the future a little more, and breathing a little deeper each day, and living a little more each day, and loving a little more each day”, as it can be taken away from us at a moment’s notice.

Fast forward to 2015, I’m just smashing it, having a good time, selling a lot of real estate, no debt, two daughters, married to an amazing, amazing woman, and I found out that the cancer came back. It was at that time — and everything’s fine, by the way, I’m in great shape, but at that time I took a year off from selling real estate. I did a lot of reading, I read a book called Cashflow Quadrant, and that book just changed the way that my wife and I think about wealth building, and I realized that I was on the wrong side of the quadrant.

Now everything that we do is really focused on right-side quadrant, wealth building and building passive residual income streams. So EXP, unlike any other model out there — I mean, ridiculous revenue sharing, passive income earning opportunities which I was looking for, and it kind of fell into my lap.

In addition to that, my wife owns a multi-level marketing company in the health and nutrition space and she’s just crushing it and she’s a rockstar. And then of course we have the residential real estate as another pillar that we’re gonna expedite that purchasing process by using the income from these other passive income streams as well.

So that was a lot, but that’s kind of my story.

Joe Fairless: Thank you for that. Lots of things to dive into. First off, I’m glad to hear that things are going well with your health, first and foremost. Secondly, it sounds like books have been an incredible influence on the direction you take your life; you mentioned the Cashflow Quadrant, you took a different approach, you mentioned the book called HOLD; you had an approach and you acted on it. You are not only reading these books, but you are taking massive action and completely shifting or optimizing the approach that you had previously. Not a lot of people take it to that extreme… How come you do?

Clayton Gits: The question I would ask is why not? Anyone can do it, but not everyone will. That’s a famous Gary Keller quote. I was raised by a single parent on $18,000-$19,000 a year. One of the most vivid recollections I have with my childhood is we had this massive roach infestation that my poor mom could not get a grip on, so much so that we would wear these little nasty [unintelligible [00:08:19].11]

Growing up, again, I just started spending time, Joe, with men and women that thought bigger. I surrounded myself — I stopped hanging out with the people that were keeping me right where I was, and believe me, I’ve not always been the person that I am today… I think the coolest thing about this journey that we’re all on together called life is that it’s this massive opportunity to learn from one another. I just believe anybody can do this thing, but not everyone will. But yes, it absolutely starts with education; I think books are such an under-appreciated asset… Someone’s willing to pour their heart and soul out; massively successful people give us their success in detail, in writing, and we don’t tap into it often enough. So if you wanna start somewhere, I would start with Jim Rohn’s Challenge To Succeed, which is an audio, but then I would just start reading and spending time with people that just think bigger.

You can’t help but grow if you’re spending time with people that just will not let you [unintelligible [00:09:19].21] and that are constantly saying “You can do this, you’ve got this. No, failure is not an option.” Again, anyone can do this, but for whatever reason, not everyone will.

Joe Fairless: I love that quote. Many questions come up, and I’ll get to all of them. One that I thought of immediately when you said that you had $600,000 in debt in 2009, and in 2013 you paid off the balance on your mortgage to wipe away that $600,000 – congratulations, that’s huge! I suspect that as soon as you wiped away the debt and you no longer had any mortgages – is that correct?

Clayton Gits: That is correct.

Joe Fairless: Then you immediately thought – if not prior to that – asset protection. Because you now own a bunch of stuff, or — did you have any investment properties, or it was just your primary that you wiped the mortgage away from?

Clayton Gits: Yeah, and forgive me, I have to correct myself here – we had bought one investment property prior to paying off our house, so the only debt we had left was that investment property, which we still have, which we bought on a 15-year note for 25% down. It’s a lot of equity, so…

Joe Fairless: Got it.

Clayton Gits: Yeah, that’s debt that we have. I don’t have any “personal debt.” Our investment properties that other people are paying off, that’s where we deviate from Dave Ramsey’s plan.

Joe Fairless: Right. So basically, if it was a liability, meaning it wasn’t making you money, then you paid off any debt you had on it. If it was an asset, meaning the investment property, then you did not pay off the debt.

Clayton Gits: Correct. Including our mortgage, which I don’t consider an asset, personally.

Joe Fairless: Agreed, because it wasn’t making you money… Your primary residence. So what type of asset protection did you put in place in terms of maybe insurance, or anything at all?

Clayton Gits: Just insurance. Every property is ensured, of course. That’s it.

Joe Fairless: I was wondering if you were doing any sort of trusts, or…

Clayton Gits: LLC’s, and [unintelligible [00:11:15].10]

Joe Fairless: Got it. Okay, we’ll move on to the next question that came up. The 15-year mortgage with 25% down – that was similar to my initial plan when I got started, and then I was like, oh my gosh, in order to get 25% down on, I think I had to go around 50 houses, I can’t remember. This would be $10,000 a month cashflow, and I was assuming that I’d get $250/month, so I guess 40 houses. My goal was 40. You’re much more ambitious than I was at the time; yours is 50. And I realized the same thing you realized – I’m gonna need a lot of money to start plunking down 25%. Are you sticking with that model? And if so, how is that going for you?

Clayton Gits: Where we are, and with the additional revenue streams that we’re building, we’re most likely just gonna start paying cash; that’s the opportunity that I fell into with EXP Realty… I mean, I didn’t fall into it; you know what I’m saying – I saw it and I believed in it. So I think in the next 12 months we’re just gonna be in a position where we’re gonna start buying these properties with cash, so that we can have immediate cashflow… Frankly, because I personally don’t know of a better place to put all that cash yet, and as we get more experience in the residential space, we’ll probably move over into the commercial space right now. So that’s where we are right now.

Joe Fairless: With all cash versus leverage, what’s your reasoning for doing all cash instead of taking advantage of a relatively historically low interest rate on a 15-year note?

Clayton Gits: That’s a great question. Again, the kind of revenue that we are going to be generating in the next 12 months – at this point; I mean, we can talk about this now when we’re offline, because I’d love to learn more from you too, Joe… It will be just trying to figure out where to put that money to make sure that it’s invested in something that I control. That’s the reasoning behind that. And also, because we only own three (soon to be four) properties at this point, I have not run across at what point do lenders stop lending you money for investment properties, so I don’t know where that threshold is for that. So that’s kind of our reasoning so far.

Joe Fairless: Got it, okay. Sounds good.

Clayton Gits: I still have a lot to learn as well.

Joe Fairless: Yeah, well don’t we all? [laughs] That’s why I do this, so I can learn from you and other guests who I interview. So lets’ talk about one other question I had as a result of what you mentioned earlier, and then I’m gonna ask you the question I ask everyone, and that is your best real estate investing advice ever… But before I ask you that, when the cancer reoccurred in 2013 – was it 2013?

Clayton Gits: 2015.

Joe Fairless: 2015. How did you deal with that mentally?

Clayton Gits: That’s an interesting question. I know what motivates me. One of my mentors, a guy by the name of Brendon Burchard, came up with this concept years back, and it changed his life and it changed the way that I think about things as well; we know that power plants don’t have energy, they generate energy. So he believes – and so do I – that as these power plants that we have, all this nanotechnology that was built into this – we don’t have energy per se, but we can generate energy. So I just was very in tune with what I needed to do to stay positive.

There is a body of research around having a positive attitude when you are sick, statistically speaking; I mean, there are some cases where it just is what it is. But I knew that a positive attitude would help me, and of course it would help my family; I didn’t want my wife to ever worry. And to be fair, I was not diagnosed either time with the type of cancer that you really worry about. It’s just very treatable, very slow growing. It was a blessing for me, Joe, because it made me appreciate life more, and I continue to this day to just try to focus on things…

I don’t wanna be remembered as how good of a real estate investor I was, or how good of a realtor, businessperson… I wanna be remembered by how good of a father, how good was I as a husband, a friend, a son, what kind of impact that I have on the community. So all that other stuff is just stuff. That’s what cancer was for me, and I just did the things that I knew would keep me in good spirits.

Joe Fairless: Based on your experience in investing and as a business professional, what is your best real estate investing advice ever?

Clayton Gits: I’ve gotta go back to Jim Rohn on that one – just work harder on yourself than you do anything else. I think if we just focus on ourselves a little bit more – and I’m just really big into personal development, and what I found is the more that I grow, I just seem to attract opportunities into our world. My wife is the same way, because we’re just both so focused on personal development and becoming more so that we have more… And serving other people.

Just finding opportunities where we can help people — kind of like what you’ve done with this podcast; you find enough people and give them access to information and give them everything that they want, then you in turn will have everything that you want. I’m sorry I don’t have anything more direct to real estate investing, but I think that’s just the key for us.

Joe Fairless: Yeah, I agree. I’m with you. It starts with psychology, it starts with knowing how to approach things, and then the tactics will fall into place. I did not believe that or realize that when I didn’t have any money. I was starting out, I was like “Whatever…!”, because I had heard that quote from Tony Robbins that said something like 80% is psychology, 20% mechanics, but I was like “Whatever, shut up! Give me the tactics, give me the blueprint.” But it’s true, it’s just how it is. The reason why is because there is no blueprint that lays out every if-then scenario along the way; there’s all sorts of grey area and you have to have a strong psychology to navigate the grey.

Are you ready for the Best Ever Lightning Round?

Clayton Gits: Yeah.

Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.

Break: [[00:17:23].19] to [[00:18:26].09]

Joe Fairless: Best ever book you’ve read? You’ve mentioned a bunch of them, which one are you gonna pick?

Clayton Gits: Oh, my gosh… Well, it’s gotta be one that I’m reading right now called Traction. I’m trying to get out of my business, so that’s up there right now.

Joe Fairless: Best ever deal you’ve done?

Clayton Gits: Deal?

Joe Fairless: Yup.

Clayton Gits: Marrying my wife.

Joe Fairless: What’s a mistake you’ve made on a transaction?

Clayton Gits: As a real estate agent I missed a home inspection deadline and was responsible because of that, and I was representing a dear friend of mine, so I had to pay for a chimney and a furnace flue reline, so I didn’t make any money on that deal… But nothing too crazy. That’s probably it.

Joe Fairless: What did you do after that to ensure that that doesn’t happen again?

Clayton Gits: It was a painful financial experience, so I didn’t wanna have that again, so I [unintelligible [00:19:12].25]

Joe Fairless: Got it. No calendar reminders moving forward, or…?

Clayton Gits: Absolutely, yes. We have systems in place, yeah. Definitely calendar reminders. And hiring people that were just better at that stuff than I am.

Joe Fairless: Best ever way you like to give back?

Clayton Gits: To my church.

Joe Fairless: And how can the Best Ever listeners get in touch with you and learn more about your company?

Clayton Gits: MissionRealty.com, my website, or you can certainly reach out to me on Facebook.

Joe Fairless: Well, thank you for being on the show and sharing your story, your lessons learned along the way, how books have been a tremendous influence on your life, and how you are actually taking action, major, massive action once you read a book. I like to think I have a similar approach; I don’t know I do, but I certainly don’t have the stories to back up this major shift that these books had in your life. When I read a book, I usually put something into action from that book immediately, but holy cow, the books that you’ve read – HOLD, The Cashflow Quadrant, Dave Ramsey’s book… They had major influence on your life, and in a positive way, so it’s great to hear that. I’m sure they are being purchased in mass quantities right now as the Best Ever listeners are listening to this if they don’t have them already.

Clayton, thanks so much for being on the show. I hope you have a best ever day. I’m glad that your health is good, and I enjoyed getting to know you… And we’ll talk to you soon.

Clayton Gits: Thank you.

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