Jason Hartman talks about Meet the Masters. He plays an old clip about the principle of I.D.E.A.L. After, he brings on guest Cliff Hayden, creator of Show Me the Rental. The discuss how Cliff started his business and how it helps real estate investors.
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it. And now here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 0:52
Welcome to Episode 1155 1155. This is Jason Hartman, thank you so much for joining me today and I want to first off apologize if there’s a little bit of background noise, it won’t be long. I’m actually in the car, headed to the airport for meet the masters of income property. We got a very exciting weekend ahead. Just super excited. One of the things I have to say I’m most excited about is Drew’s presentation on self management. I think that’s just going to be phenomenal. I went through with him two nights ago. And it is really, really interesting. You know, we’re all about the empowered investor here. And my goal is to empower millions of investors to take control of their financial future and that’s what we’re doing. Do you hear the rain in the background? It is, it is really raining in Florida. Anyway, before we get to our guest today, and I think you’re going to enjoy this guest interview, I want to play for you one of my blog cast that I think will be very interesting to you. So let’s, let’s hear that real quick. And then we will Be back for a moment with me. And then our guest today,
Guest Interview Clip 2:05
all ROI is not created equal. The term ROI or return on investment is a common benchmark for evaluating different investment alternatives. For people used to the stock market, it is generally assumed to be the appreciation in price of a security from the time it is bought to the time it is sold. Many people who are familiar with income property investment have come to know the ID EA l or ideal framework for evaluating investment returns. I income cash flow from your investment. For income property This typically takes the form of rent revenue. For stocks it takes the form of dividends for a business venture. It comes from your sales to customers, and for bonds it comes from interest payments. income is one of the most important investment characteristics because it provides Consistent cash flow that does not depend on a future sale or increase in equity value. D is for depreciation. investment strategies that involve the purchase of physical property, such as real estate or equipment can benefit from depreciation. depreciation is a non cash expense that recognizes the reduction in usable value for a piece of property over time. Its power in driving investment returns is that it shields your income from taxation so that it can be reinvested to produce greater gains and ease for equity. Some investment strategies such as income property or business ventures make use of a self liquidating loan to finance the purchase of physical property. As the loan payments are made, it systematically results in an increase in wealth for the investor, since part of the payment goes toward an increased equity stake in the property in this aspect of investing. is most powerful if the loan payments are financed by revenue from a customer or tenant a appreciation, the most typical investment strategy for generating value is appreciation. This is when the value of a stock or the value of a property increases over time. It has the potential to generate fantastic rates of return if values adjust upward very quickly, but can also bring dangerous values collapse. Furthermore, appreciation is only realized when the investment asset is sold. This can lead many investors to think they have made money when the value of an asset increases but they do not sell only they see the value of their asset punch when market sentiment shifts. L is for leverage the use of other people’s time and money constitutes leverage. Leverage allows an investor to amplify the impact of their money. It can produce tremendous gains and tremendous losses. For income property investors, leverage typically comes from a loan used to purchase their property. for business owners leverage comes from the people that are employed to run their company. In both cases, it results in amplified profits during expansionary times and amplified losses during times of contraction. One of the great traps that many investors fall into is the assumption that all ROI is the same and that $1 of returns is just $1 of returns. This viewpoint fails to comprehend the impact of volatility on investment returns. Many people with 401k investment accounts have seen multiple charts showing the long term rate of return for the US stock market and assume that those returns will continue to compound out into infinity. Many other people so large amounts of money being made by home flippers, who purchased property quickly renovated it and then sold it for a considerable profit in both cases people see a big payout that can be highly volatile, but fail to see the volatility. On the other end of the spectrum comes from people who dislike the perception of volatility and choose to invest in fixed income securities with guaranteed principal value. These financial instruments are certainly less volatile, but frequently failed to keep pace with inflation. Some people do find debt instruments that exceed the rate of inflation, but that return comes with an increased risk of default that is not always comprehended by the investor. astute investors understand that ROI really separates into both stable and volatile categories. returns from income, depreciation and equity are typically stable, whereas returns from appreciation and leverage are more volatile. It is important to understand that all five elements are important parts of a holistic investment strategy, but excessive emphasis In anyone to the exclusion of others can spell disaster. Income property investors have benefited from the five drivers of ROI for quite some time. By prudently investing in assets that produce significant income, generate tax deductions, build equity through a self liquidating mortgage, and still generate potential gains from appreciation through leverage. It creates a holistic strategy for building wealth that is very difficult to replicate in the financial markets. A typical example of this is an investment property that is purchased at a discount from a distressed seller in a region with strong rents. Once the property is purchased and rehabilitated, it will generate income from rent paid by the tenant. If the property is prudently purchased in a strong area. This rent revenue should exceed the mortgage payment and expenses by comfortable margin. This will also generate regular net cash flows that can be reinvested into future projects. It will also result in the systematic building of equity from the self liquidating loan, even if no appreciation occurs. In addition to this, the investor may qualify for depreciation benefits that will reduce their tax liability. If the property is purchased with leverage, it will also amplify the impact of any future price appreciation, but will not cripple the investor if the price declines since the rent revenue is sufficient to cover the mortgage payment. by constructing your investments in this fashion, it effectively blends all five ROI factors to create a balanced portfolio of stable value with upside value potential and limited downside risk. Ultimately, it becomes quite clear that not all ROI is created equal. There is no one form of value that is inherently better or worse than another is Rather, it is about a creation of a blended value portfolio that balances the value drivers effectively to generate wealth and prosperity. And this kind of holistic value cannot be found in the financial markets. Only investors who are astute enough to recognize the opportunity and assertive enough to act will be able to build this type of wealth portfolio.
Jason Hartman 9:27
Alright, I hope you enjoyed that we are going to be adding some more clips to the shows the episodes ahead. I interviewed Frank gallon le, who is an expert in real estate investing metrics. And we will probably publish that interview next week. He was on the show before he was kind enough to provide some of his materials, some interesting little lessons that I think you’ll enjoy. And we’ll be playing those on future episodes. So look for more interesting little clips like this like blog cast like Frank’s material, some of Garrett Sutton’s material, maybe Tom wheelwright, as well. He’s, of course speaking and meet the Masters this weekend, talking about tax free wealth, and so a lot of good stuff coming up. Anyway, without further ado, let’s get to our guest today, Cliff Hayden. And let’s talk more about investor empowerment. Here we go.
Jason Hartman 10:29
It’s my pleasure. Welcome, Cliff. Hayden, he is the founder of show me the rental and this is a self management tool. It is such a great time to have all of this technology that can help us become empowered investors. And that’s what we’re all about on this show empowering millions of investors to take control of their income properties to take control of their financial future. And this is another one of many potential tools out there. Cliff, welcome. How are you?
Cliff Hayden 10:57
I’m great, Jason. I’m very excited to be here. Yeah. Very much.
Jason Hartman 11:00
Yeah. Good to have you on. You are a real estate investor. I guess you were probably frustrated with the process of leasing properties. So you created a tool to help make that easier, right? Correct. Okay, fantastic. Well, what happened? What was just you know, very quickly what was kind of the seminal moment that brought this about?
Cliff Hayden 11:19
My wife, actually, I was so busy in real estate had so many things going on, that didn’t have a lot of free time. So I would actually come home for dinner with I actually got five kids. So I would come home for dinner at night. If I had empty rental houses, I would be on the phone, email, texting back and forth, not really being present. So my wife, I tell everybody, if you remember Superman, when he looked at you in his eyes, got real red and can shoot lasers out of his eyes. That’s kind of what my wife felt like because I was having a bad home life. So I was just so busy working so busy trying to do what I thought was a good father, which was put food on the table, but I was kind of missing the big picture. So I just knew I had to do something different and put some systems in place. So I went out trying to find systems that did this automatic screening and pre screening and I couldn’t find anything. And so then we just decided to create one.
Jason Hartman 12:08
Okay, I think it’s important first to define tenant screening, what is Tenant Screening? Now most people think it’s okay, the tenant fills out an application, and you run their credit report, hopefully you run a criminal background check too. And that would be like a sort of a complete screening in terms of the, you know, a specific task, but it might include checking job references, could even verify bank accounts, you know, of course, interviewing the potential tenant and so forth. There’s a issue of defining screening, because your system does part of it, but not all of it yet. But what’s kind of good about that is it allows people to use other tools with your system. It’s complimentary, right? So, for example, you know, we’ve had cozy on the show a few times, you know, some of our clients use that some of our clients use other tools. There are many of them out there nowadays, to do screening to do rent collection, you can do the screening yourself. And when I say screening, I’m talking about like running a credit report and criminal. What does your system do? And how does it save investors time.
Cliff Hayden 13:14
So what our system does is it kind of a picture like a big funnel. So if you had empty rental houses before you get in our area, you get a just a truckload of emails or phone calls and inquiries about the house. And a lot of them are qualified to even view your house. So my thought of screen attendant is it’s in line with my lifestyle of what I want out of a customer, what type of houses that are, particularly by which we’re going to go into that. So this system is built to kind of, I want to say, screen these tenants so you’re not wasting your time with people that aren’t qualified to go view your house. And it just cuts out so much time cuz you have to talk to them not to deal with them. You don’t have to even associate with them until you get a paid application, which our system automates that whole process and the showing process and then once you get a paid up a Then we go in there and then because everybody’s management’s different on how they screen people, like you just said, What background checks, criminal checks, bank statements, W two paycheck stub, so everybody’s different on how they scream, section eight, not section eight. So this system just kind of weeds all those people out and get you those 10 or 12 qualified leads and applications and then you kind of go from there. Okay.
Jason Hartman 14:22
So tell us about, you know, mechanically exactly how it works. The owner landlord would set up an account on your site, and they pay what $49 and that’s a one time fee, right? Until the property is rented. Is that correct?
Cliff Hayden 14:37
Correct. So basically, what we did is we created an online system that advertises for you to all the major websites, generates leads and so when a tenant will go on to Zillow, and find your house to them contacting you, it’s going to contact our system.
Jason Hartman 14:50
Tell me what contact your system means. It means what they click on a link. I mean, doesn’t require that there be phone numbers in there or something.
Cliff Hayden 14:59
That that’s a great thing. Question. And so every city we have has a show me the rental phone number. Okay, put your phone number in there. So nowadays, you know there are still people use phones, Yeah, a little bit. But our system tries to gear them towards their cell phone, which would be through text messages or through our email. And then from there, they’ll ask your pre screening questions that I’m sorry, they’ll answer pre screening questions that you selected from our system and then once they pass those qualifying questions, will then set them up to set up a showing which is done automatically through our system also.
Jason Hartman 15:33
Okay, so so let’s review what the system does then. It fields inquiries from Zillow from all of the websites that you aggregate the content to write, do you include Craigslist in there we have not
Cliff Hayden 15:45
yet because Craigslist, you can’t post it, you have to manually do it. So we’re not
Jason Hartman 15:50
feeling you’d say that okay, but they could use Craigslist or some other non participating site, I assume, and put the link in You supply you supply each investor a link for a specific property right? Yes, sir. Okay. Okay. And then the applicant prospective tenant can go and click on that link. And that’s where it asked them the screening questions, right? Yes. Okay,
Cliff Hayden 16:15
give us you’ll gather up with another cool thing about it. It’s a database, you actually have a huge database of everybody that inquired about your system. And we also have
Jason Hartman 16:23
women, your property, your property, your property, I’m
Cliff Hayden 16:25
sorry, your property and we also have a cross reference database system built. Once they fill out a profile, we can go ahead and automatically match them up with properties in our system already, which is a very cool feature. So if so, say for instance, if I want to look at one of our heavy zip codes is for all 207. So we might have right now potential 40 tenants that are already looking forward to have seven once you put your property on there, it’ll reference that against the questions you have versus what they answered in a profile and send them the house automatically. Okay,
Jason Hartman 16:53
so it might provide some leads to but let’s just assume that that’s a perk and it may may or may may not happen, I’m not gonna let’s just use it as a as a tool. Okay, so give us an example of some of these screening questions that would ask how many questions are there? What kind of questions would you want to ask you can make your own or use your, your suggested questions, right?
Cliff Hayden 17:13
You cannot make your own as of yet. So basically, we have around 30 questions, and they’re based on lifestyle, your income levels, pets, you know, different things that you’re going to want to know. Okay. And so basically, a simple question is How long have you been on your current job? That would be one question. A big one we have is are you on section eight? Another question would be, you know, one of my favorites is do you have tools and can you complete small jobs like unclogging toilets?
Jason Hartman 17:38
I’m concerned that you might run afoul of fair housing laws if you’re careful. This you gotta be it’s. It’s a really touchy subject nowadays. Yeah. That’s good. Okay. All right. Go ahead. Go ahead. We definitely all like handy people in our properties. There’s no question.
Cliff Hayden 17:56
Yeah, well, they’re not disqualified. It’s just a question. Yeah, right. Okay. Do you have a cosigner? How much money do you have in all your bank accounts? Do you ever sublet? How long do you anticipate staying in the home? When you plan on moving in? Are you a smoker? How many people will be living with you? you’ll provide credit references from your employer or former landlord, are you convicted of a felony or currently awaiting trial for a felony? So this question is like that these
Jason Hartman 18:22
are these are all the questions that this takes the repetitive nature out of it, right? You let the technology do this repetitive work, which makes it a lot easier. And it’s sort of easy on the fly for an investor to forget to ask one of these questions. So do you require that the prospective tenant answer or the question Will it not let them go to the next page or complete the application without answering
Cliff Hayden 18:46
So basically, what will happen is we have some investors that use it. They don’t even ask questions. They just want to get the lead information. They will get the name phone number email. You don’t have to ask questions, but if they answer the questions incorrectly, it’ll say sorry, you do not qualify.
Jason Hartman 19:00
These are yes or no questions or was right, right. Okay. And so you put the criteria in there as well. That’s interesting. That’s like another layer. So it’s not just you’ll get the answers to the questions, you will get the actual screening and you’ll only get the tenants that answer the way you want. Correct.
Cliff Hayden 19:18
Okay, interesting period, such a big funnel. So you’re not good, because that’s what we found out. It’s a great question is we were asking the same questions over and over and over again. And you might go through 8090 people before you find those few that are qualified. And it just we so we just automate that whole process.
Jason Hartman 19:33
Okay. And then what’s next? They answer the questions, and everything worked out on the answers. So everything was good there. Then what is there a link that is provided to the prospective tenant that says, you know, go here to apply and then it’s the application and that’ll run their credit and background check. Is that the next step? Right. So
Cliff Hayden 19:53
the next step is once they pass, it’ll send them showing instructions based on how you show your properties. Via Santa. The kids are office and appointment and open house a lockbox however you
Jason Hartman 20:03
Yeah, it could be an electronic lock and you know,
Cliff Hayden 20:06
you show you’ll give them that information Okay. And then from there after they view the house, it’ll send them a link for an application or you we have an online application like a generic one or if you have your own, like we use billiam. So we have our own applications. So we put our link in the system. So it sends a link to build our application. And then from there, they fill it out. Once they fill it out, we get notification and we start screening.
Jason Hartman 20:28
That’s fantastic. Okay, good. Anything else? Are there any other features you want people to know about?
Cliff Hayden 20:33
Now that’s basically it. I’m really impressed with. It’s such a time saver. That’s all I can say. We actually can sit home at dinner at night with my kids now and I don’t have 50 things going on. I’m kind of slowing down with it. And this system does it all. Well, I can do. I’m doing everything else I need to do.
Jason Hartman 20:47
Yeah, that’s fantastic in terms of the cross referencing of the tenants, where basically it can take tenants and send those tenant leads to other properties, right? Right, if they don’t match with this one, anything else you want people to know about that? Or, you know, how many leads can they get? Is it an unlimited number? Or, you know, how does that work? And then maybe anything else on the way, you know, you fill out your properties profile, I assume you upload photos, description, and address and then it aggregates to all these other websites that it’s, you know, how many websites which websites I know Zillow, of course, we mentioned anything else on those two components of it.
Cliff Hayden 21:30
Yeah, there’s all the all the major ones, Zillow, Trulia, hot pads, basically all on like Craigslist. Yeah, I think we’re on I want to say 20, something almost 30 something websites, okay.
Jason Hartman 21:42
And then when the property is leased, it takes them off of those sites, I hope right?
Cliff Hayden 21:47
Well, once you lease the property, you will go into the system, just turn it off. Okay. And then
Jason Hartman 21:51
it’ll, it’ll shut it off. That’s so convenient. And there are other products that do that, that part. I know. Other products do that, but I don’t know if they have the same kind of screening questionnaire that you have, which is interesting. You know, it aggregates the pictures syndicates those on all these websites as well, right? Yes. Okay, fantastic. Anything else you want people to know?
Cliff Hayden 22:13
No, not really just I hope it helps people as a huge time saver for us and kind of give me some time back in my life. Yeah. And for $49 we made it as cheap as we possibly could to get people some help and kind of get some time back.
Jason Hartman 22:26
And it’s a pretty new product. Right? How long When did you launch we just launched literally a little less than a year ago.
Cliff Hayden 22:31
Okay, we’re working on it for a while and tweaking it and now. Yeah, we just launched less little less than a year ago, like how many investors are using it so far? Right now we’re about I want to say between 40 and 50 active is about we have right now.
Jason Hartman 22:44
Okay? Any tips beyond your system that you just want to share just anything that you want to share in terms of general property management tips that you can share with our listeners before you go Cliff?
Cliff Hayden 22:56
You know, I kind of give you my life experience when I got into this box. hot and heavy for a lot of years and built up a lot of rentals and was just miserable. I just had too much stuff going on. So my thought on management is figure out what kind of lifestyle you want to have, and then build your portfolio based on that. So we’ve kind of spent the last six, seven years upgrading our portfolio to A and B properties. So I can travel with my kids all summer. Now, I don’t have to worry about a lot of headaches going on. Our customers are really nice, good people have good relationships. And so that works for us. I’m not saying that works for everybody. But I would just say build your system and your management company on your kind of principles and what you like doing Thank you become for me anyway became a lot easier. And I enjoy my life and my kids a lot more which is very nice. My wife’s a lot happier, which is also very nice.
Jason Hartman 23:43
Yeah, good. Good. That’s, that’s good advice. What do you love about real estate?
Cliff Hayden 23:47
I like doing deals. So right now we’re big on tax free investing. So I’m doing a lot of option deals and stuff Am I right and just learn a new techniques and new strategies to help people out whether you’re working on cash flow growth, investing Management whatever part you’re working on, I like doing the deals and talking to people and and seeing the situation and figure out how to help them out. I get a lot of fulfillment from that
Jason Hartman 24:09
good stuff. Cliff Hayden, thanks for joining us. The website is show me the rental.com think of Jerry Maguire but instead of money rental which equals money either way, right show me the rental com. Thanks.
Cliff Hayden 24:21
We got the bank. That’s pretty good. Good stuff. Thanks again, Cliff. I did Jason.
Jason Hartman 24:27
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