Talking Reverse Wholesaling and Entrepreneurship with the Founder of Real Estate Worldwide, Kent Clothier
Guest Speaker: Kent Clothier
Kent Clothier is the founder and CEO of Real Estate Worldwide (REWW), a multi-faceted real estate investment education and training company with headquarters in La Jolla, CA and additional offices in Scottsdale, Arizona. REWW offers customers a cutting-edge advantage with a curriculum steeped in award-winning and proven real estate systems and technology. The company offers lead generation services through its web-based platform, SMART. Kent leads an amazing team of individuals that are focused on building disruptive systems that push the entrepreneur dream and the real estate industry forward.
The son of an entrepreneur and an entrepreneur by nature, he’s dedicated his business life and ventures towards awaking the human spirit in all of us and inspiring thousands of entrepreneurs to escape the “rat race” and create the dream lives that they’ve always wanted. He stands for integrity, ideas, companies and products that allow entrepreneurs to not only “learn” what it takes to live a successful live on every level, but the tools and strategies to create real change on a daily level.
What you’ll learn in this episode:
- Kent did his first real estate deal in 2003. Prior to that he was literally “flipping truckloads of groceries,” running his father’s $2 billion plus arbitrage business. He started in real estate with traditional wholesaling and then realized he could get much better results applying his previous business’ concept of “reverse wholesaling” to his new investment ventures. “Before I knew it,” he says, “we were flipping or wholesaling hundreds of houses each year. Which then led me down a path of my family where we turned it into a turnkey business before anyone knew what turnkey was.”
- He now leads an organization, Real Estate Worldwide, that flips roughly 900 houses a year as performing assets to investors all over the country and ultimately manages those assets for them. He and his team do this through their large property management company that manages about 6,000 houses in seven cities. These are all properties his company has sold that have been rehabbed. As an offshoot of that, he was led to create automated systems and processes. He created Real Estate Worldwide to show people how to do what he does and use the tools he and his team had developed. Over 50,000 people have bought his software or training, and thousands use his software every month.
- His company evolved organically. As much as he preaches about starting with the end in mind, that end has always been about a very specific business. Each of his businesses were a product of a need or demand that was coming at him. While the recession was hurting so many, his business grew in leaps and bounds during that period. He attributes this to his success doing reverse wholesaling. While dealing with cash buyers, “our big vision was going to the people that had the money and bypassing some of the headaches of the banks and institutional lenders.” He was using systems and processes nobody had ever thought to use. Soon, realizing a need, he took his first step into the education business. People wanted to know how he and his team were raising all their money. “We were just smart enough to recognize and get in front of it and quickly help a lot of people. By virtue of helping a lot of people, we ultimately helped ourselves,” he says.
- He defines “reverse wholesaling” as starting with the end in mind. It’s grounded in the idea of cultivating relationships with customers that are actively buying a product and finding out what they want to pay, where they want to pay it and how much they can buy. That makes it easier to create opportunities, as opposed to “crossing our fingers and hoping we’ve created something somebody wants.”
- Kent then illuminates the typical wholesaling process which is much less effective. Using a colorful example related to Peter Pan peanut butter, Clorox and Hellmann’s mayonnaise, he explains how the concept of reverse wholesaling helped his father’s distribution business grow from $50 million to $1.8 billion in only seven years. He worked for his dad throughout his 20’s. “Instead of selling, we were shopping,” is how he summarizes the process. He started finding success in real estate when he applied the reverse wholesaling methodology to his new endeavors.
- The first step in that process is that you have to have avid buyers. In real estate, these are investors who are typically all cash buyers. He would ask them, “If I can go out and create anything for you, and I know you want to buy a lot, what do you want to buy?” That immediately directed all his seller marketing and the properties he and his team were creating. He found it was much more efficient than what people are generally taught to do marketing wise. “We clearly knew what our buyers would buy if we could create it,” he says.
- There are three definitive ways to scale a business. You do more transactions. You do bigger transactions. And finally, you understand clearly, all the transactions that are happening before or after the current one, are effectively giving you what’s called “vertically integrating.”
- Kent describes how different needs in the real estate process led to new branches of his business – including property management, rehabbing, titles, managing contractors and refi. Expanding his range of services was a way to make everything easier for his investors and inspire them to return to engage in the process again. Before he knew it, his company was providing an entire ecosystem, a turnkey solution which allowed everyone in the country to do business with him. Clients didn’t have to be local. The company now manages nearly 6,000 properties, each one of which were sold by the company initially.
- Kent discussed the value of offering a turnkey operation, where every part of the process for his clients is managed. “We own it end to end,” he says. “It’s not an outside company.”
- Kent talks about the phases of evolving from one’s first wholesale deal to launching a legitimate business in real estate. The first phase is what he calls “they hobbyist” – the 9 to 5er trying to make enough to walk away from a day job. It’s a product of revenue generating activities, which involves continuous marketing, talking to buyers and sellers and doing deals. To move to the next phase, all that has to go away. The person in the trenches flipping houses will not naturally turn into an entrepreneur. He mentions the book The E-Myth by Michael Gerber as a good illustration. He says, “Just by virtue of starting a business and hustling up and down the streets and doing deals, you do not own a business. The easiest way to figure out if you have made the transition from owning a business or owning a job is to just leave. Go on a vacation for a month and don’t tell anybody. If you come back and there’s more money in your bank account than when you left, you probably own a business.”
- Kent adds that making the transition involves understanding that the “hustler side of you is the enemy. You have to get very comfortable with the idea of using leverage in your business now.”
- The biggest leverage point is going to be leveraging people and processes and automation. One of the first steps is learning how to hire people and investing time, effort and energy into training them. Unless you train them, you’ll be stuck flipping houses and owning a job. “A huge leverage point,” he says, “is to understand that automating your marketing, getting sound processes in place and getting good people to work that automation is key.” He also stresses the value of key performance indicators (KPIs) to give you bird’s eye view of the business’ strengths and weaknesses.
- The last phase is where your freedom comes in, ultimately putting yourself in a position to where you let go completely – because you now have that option. You don’t get there overnight. But once you’re there and you’re getting the outcome in a predictable way, that’s the “good stuff.”
- Kent says that by growing up with a father who was very hard on his kids and who showed him the ropes of being an entrepreneur, he was never stuck in the follower/employee mindset. The reason so many who try to get into that world tap out so quickly is that “they don’t have a good level, set expectations. The world has not prepared them for what it really is.”
- Kent mentions a metaphor he used regarding being an MMA fighter at a recent mastermind group. “You have to actually love the process,” he says. “You have to love the struggle. You have to embrace it. You have to position the struggle and all the ups and downs and the getting hit in the face. You have to get as much insight and knowledge and understanding as you can, step into the ring and actually start getting hit. That’s where your education begins. And you just have to keep moving through the failures because that’s where the successes come from.”
- Kent suggests connecting with him on Facebook and Instagram under his name. He encourages listeners to take a deeper dive into what he does at www.KentClothier.com. He also offers a free ebook that explains the reverse wholesaling process, which he calls the lowest barrier of entry into real estate. You can get this at: www.FreeBookFromKent.com.
- Kent’s mantra for the past few years has been “the time is now.” He says one of the healthiest things you can do as an entrepreneur is have really good respect for time. “There is no better time than right now to start fighting for your dreams,” he says. “There is no better time to start putting yourself in a position to make things you never dreamed were possible.”
Resources:
Grab a FREE Copy of Lance’s Best Selling Book, How to Make Big Money in Small Apartments here.
Get Access to Lance’s Best-selling Small Apartment Wholesaling Course here.