The Crucial Aspect of Passive Real Estate Investing Most Overlook

The Crucial Aspect of Passive Real Estate Investing Most Overlook

3 min read
Chris Clothier

Chris Clothier began building his rental portfolio in 2003 as a successful entrepreneur looking to diversify his investments. He quickly gravitated toward passive investing, establishing a portfolio of over 50 single family homes in Memphis, Tenn. As an original client of his family’s firm Memphis Invest (now REI Nation), Chris experienced firsthand what a passive investor endures when purchasing out of state. In 2007, Chris moved his company and family back to Tennessee, wound down his brokering company, and joined REI Nation as a partner and director of sales and marketing.

Experience
Since joining REI Nation, the business has grown into the premier turnkey investment company in the country and a standard bearer for best practices in the industry, managing over 6,000 investment properties for 2,000 passive clients. In addition to managing the development and implementation of sales and marketing processes, Chris serves as an ambassador for the company, working with the team to help potential investors define their purpose for investing in real estate and educating peer companies on best practices.

REI Nation clients’ portfolios hold a value of close to $800 million in single family assets in seven cities. The company has been featured as a six-straight year honoree in Inc. magazine’s list of the 500/5,000 “Fastest Growing Companies in America.”

In 2019, Chris’ team assisted 600 investors with purchasing just under 1,000 fully-renovated and occupied turnkey homes. Chris led the re-brand of his family’s company on January 1, 2020, from Memphis Invest to REI Nation.

Chris is also an experienced real estate speaker and addresses small and large audiences of real estate investors and business professionals nationwide several times each year, including IMN single family conferences, the PM Grow property management conference, and the Ignite conference in Las Vegas each December.

Chris continues to hold a sizable single-family rental portfolio in both Tennessee and Texas. Along with his family, he owns several commercial buildings in the greater Memphis area.

When not working with the team at REI Nation, Chris is busy raising five kids, operating a racing company in Memphis, and serving as CEO for The Cancer Kickers Soccer Club, a Memphis-based 501c3 providing comfort and care for kids battling childhood cancers.

Founded in 2017 by Chris and Michelle Clothier, the non-profit organization focuses on providing a team environment for kids to find encouragement and strength in their battle. The company worked with over 500 children from six countries in 2019.

Press
Chris has been featured in stories published in Money Magazine, The New York Times, The Wall Street Journal, and DN News, as well as the Memphis Business Journal. In 2018, McGraw-Hill Publishing purchased Chris’ manuscript, The Turnkey Revolution, and worked with Chris to publish his first book in May 2018.

Chris also publishes two weekly blogs at ChrisClothier.com and REINation.com. Chris has also published articles on the BiggerPockets Blog since 2009.

Follow
REINation.com
ChrisClothier.com

Read More

Join BiggerPockets (for free!) and get access to real estate investing tips, market updates, and exclusive email content.

Sign in Already a member?

People start investing in real estate for a lot of different reasons. They usually boil down to one primary goal: financial freedom. Maybe that freedom is for retirement and said investor is building up a fund to serve their twilight years. Other investors may be looking to secure independence in the now, to free themselves from a 9 to 5 and discover the freedom to travel, live, and be.

The dream of financial freedom is a great one, and we know it’s possible to achieve it through real estate investment. It’s something we’ve seen time and time again firsthand.

That said, real estate investors, in their pursuit of their financial goals, often overlook what we believe is the absolute most crucial part of investing in real estate.

We’re talking about customer service.

Customer service? In real estate investment?

You bet.

For the real estate investor, customer service usually means property management. You see, the problem is that real estate investors, in their quest to achieve financial freedom, tend to look strictly at the bottom line. And because of that, they don’t always place the value on customer service that it deserves.

These real estate investors think that by cutting corners where they can, by maximizing profits and minimizing costs, they’re following a solid investment strategy.

But trust us. They’re not.

Buying cheap houses is not a good investment. Relying on cheap property management is not a good investment. It’s something we’ve learned from experience and something we’ve seen over and over again in the industry. It might seem good. Sometimes the numbers make sense. But it really never adds up in the long run.

landlord-policies

Related: Yes, Customer Service DOES Matter in Real Estate: Here’s How to Make Yours Top-Notch

Why do investors settle for less in property management?

If it doesn’t make sense not to choose premium property management, why don’t more investors do it? Why do so many settle for less?

They’re only looking at the bottom line.

It’s logical to look at the numbers — but numbers don’t always tell the whole story. It makes sense to say, “I can save money by going with a middle-of-the-road property management company,” and so that’s what a lot of investors do. While there’s not necessarily anything wrong with that, they are missing out on the advantages of truly great property management.

They don’t realize the difference it makes.

When you’ve never experienced a premium or luxury product, imagining how much better it can really be is hard to imagine. If an investor has only ever come to expect average service and that’s been the pinnacle of their experience, their point of reference is skewed. Until they take a chance on something better, that’s all they’ll ever know!

Why is premium property management worth it?

It increased tenant satisfaction and retention.

When you invest in premium property management, owners know that their managers are taking care of their tenants. They offer attentive, quality services that ensure tenants feel well cared for, listened to, and comfortable while they rent. Instead of begrudgingly paying rent each month, they feel that their home and the treatment they’ve received makes the cost worth that much and more.

When tenants feel respected and well-treated by the management, they’re more likely to stay longer, which reduces turnover and the length of vacancies as word spreads about their good experience.

It increases value for owners.

For owners, premium property management means never worrying about their investments. It means having clear, constant access to information and reports, consistent, thorough updates, and never having to worry about being out-of-the-loop. It means your investments can truly be as passive as humanly possible. You can let go of the day-to-day details because you’re working with true professionals at the very top of their industry.

cap-rates-calculate

Related: 3 Tips to Transform Your Tenants From Apathetic Residents to Raving Customers

It improves reputation and desirability.

Your property managers are, in many cases, your face to the public. These are the people your tenants see. Much of your reputation (and that of your properties) hinges on the reputation of your managers. If your management is subpar, it will impact both your reputation in the community and your ability to fill vacancies when the word gets out.

On the other hand, when you have truly standout property management — the kind that goes above and beyond — you know that your managers will curate the best of the best tenants who know that you have a reputation for excellence. Not only will you have the advantage of your passive income, but the immeasurable value of a good reputation.

While settling for passable property management is fine, real estate investors owe it to themselves to place real value on excellent customer service if they truly want to accelerate their real estate investment business.

How do you handle customer service in your real estate business? Have you found a top-notch property management company?

Leave your comments below!