First, a quick note: today’s show is sponsored by the National Property Management Network, which provides insurance products and services to property managers.

Today, I’m joined by one of my clients, Mark Clayton. He’s a successful long-term single-family home investor who will teach us about investing and working with property management. Best of all, he’s a landlord with a heart. That is, he isn’t in the real estate game just to make money, but also to make his tenants happy.

Before he got into property investing, Mark was the CEO of several hospitals. As a hospital administrator, he had to move from town to town relatively often. This led indirectly to his involvement in property management, as he bought various homes during this process. Once Mark got up to three homes, he started looking into property management and we began working together.

In this conversation, Mark talks about why he got into the single-family home game, explaining that these homes diversify him from a risk standpoint. If you own multi-family properties instead, a single issue or problem (such as a fire) could impact much more of your overall investment.

We’ll also talk about Mark’s financing techniques, why depreciation is a good thing, what Mark looks for when deciding on whether to invest in a particular property, a valuable tool Mark uses for establishing metrics, and finally, his end game and ultimate goal for his business.

Show Notes

[02:09] - Mark starts us off by talking about his background, and how this background led him into property management.

[03:50] - We learn more about how Mark got into single-family home ownership.

[08:55] - Why did Mark choose to go into single-family homes? In his answer, he explains that he asks himself whether he can see his mother living there as part of what he looks for.

[10:48] - Mark elaborates on how important it is to him to make sure his tenants are happy. He then gives an example of doing a repair right the first time around.

[13:48] - Mark talks us through financing, especially for his early properties.

[15:05] - We hear more about the nuts and bolts of Mark’s process, including his views on repairs and renovations.

[17:58] - The first three homes Mark bought, before meeting Brad, weren’t bought at a discount. He then talks more about these properties.

[21:19] - Brad points out that some homes may cash flow well, while others don’t, creating an averaging effect. Mark elaborates on this, and touches on his portfolio pruning process. He also describes the experience of working with A+ Federal Credit Union.

[24:58] - Mark talks more about the benefits of working with the credit union. He and Brad then talk about the challenges of moving beyond 10 single-family homes. Mark then recommends not giving up your steady full-time job before you transition toward a commercial lender.

[29:52] - Having professional property management in place was a big part of getting commercial loans, Mark explains.

[30:53] - Brad talks about the necessity of renting a home quickly, even if that means you have to drop the price. Mark then moves on to talking about why he finds Texas a good place to invest, and suggests being “regionally agnostic” to those in less ideal locations.

[34:53] - We hear about some methods that allow people to view homes from a distance.

[35:22] - Brad talks about a story of a home Mark bought in Georgetown. Mark doesn’t remember this particular home offhand, but talks about learning from his mistakes.

[38:15] - Mark talks about the tool he uses for metrics: Property Tracker. He talks in depth about how he uses this program, and also explains what he looks for when considering a new property.

[41:46] - Mark explains why depreciation can be a great thing.

[44:07] - What is Mark’s end game? That is, does he want to build up the business and sell it, or nurse the cash flow with no end in sight?

[45:58] - Mark ends the episode by expressing appreciation for Brad and his company, going into detail about what makes Brad and his team stand out.

Links and Resources:

National Property Management Network

A+ Federal Credit Union

NOI (Net Operating Income)

Property Tracker