What do you want to be when you grow up? Do you dream about making millions of dollars and driving luxury vehicles? That’s a great goal; unless you “major in” student loan debt. Today, Toby Mathis of Anderson Business Advisors talks to Clay and Evan Manship. They’re the owners and founders of Mainstay Property Group, which exclusively sells Indianapolis real estate and offers to consult, coaching, and advising through the process. They’re also familiar with figuring out life and a way to deal with their six-figure student loan debt.
WATCH The Full Podcast On Video
Highlights/Topics:
- Mainstay’s mantra is to provide value via equity through wholesale transactions: Clay and Evan have completed about 1,200 property transactions
- Rich Dad Poor Dad transformed how they looked at life; instead of working 100 hours a week as investment bankers, they could own buy and sell houses
- Bought first house in 2013 for $2,400, put $1,000 down to make monthly mortgage payment $94, leased it for $650 a month, and selling it now for $120,000
- Graduating from negative net worth, going door-to-door to raise private capital, living in their parents’ home to owning several homes and a successful real estate business
- 270 rejections for 23 year olds who didn’t know what they were doing; then, along comes Jeb (#271) on BiggerPockets.com with $30 grand
- Lesson Learned: Build a portfolio and niche by identifying a service to procure investment opportunities to help build other people’s portfolios
- Cafeteria Service: Evan and Clay’s “secret sauce” is procuring properties
- Wholesaling isn’t about waiting for deals, but going out and finding them; keep business model moving by starting the process
- First Faceplant on First House Flipped: Bought house for $125 and put $125 into it, but made newbie mistake of over-leveraging money and lost $36,000
- Tuition and Textbook Mismanagement: Paid a lot of money for a college degree, but paid a lot less for one year to flip property degree
- Evan and Clay’s communication process with people who buy properties from them: What are you looking for? How can we customize a solution that achieves those goals?
- Advice for getting into real estate: Know the game you’re playing before you can get good at it, get to First Base, don’t be afraid to swing the bat, and build the best team
- Why do you need a degree? What’s the return? Millennials are renting, not buying houses because of so much student debt
- Passionate about non-profit organization to implement financial education into high schools and lead students down the path of financial independence or wealth generation
Resources
Rich Dad Poor Dad by Guy Kiyosaki
Anderson Advisors Tax and Asset Protection Event
Full Episode Transcript
Toby: Hey, guys! Welcome to the Anderson Business Advisors podcast. This is Toby Mathis. I’m joined by Clay and Evan Manship from Indianapolis. Welcome, guys.
Clay: Appreciate it. Thanks for having us.
Toby: Yeah, we’re going to have a little bit of fun today. What I always love is talking to people that have had success in real estate or any business for that matter. I just like talking to people that have had success. But these guys come from Indianapolis. I’m not going to steal your thunder, what do you guys do?
Evan: Our group, the Mainstay Property Group, essentially serves as a financial advisor of sorts. We are much like a Raymond James or Edward Jones or Northwestern Mutual. However, we don’t sell securities, bonds, and life insurance. We are exclusive to selling Indianapolis real estate and consulting, coaching, advising to the process, so that folks can achieve sexy returns in Midwest.
Toby: Do you guys stick with just Indianapolis or do you guys go outside and do anything else?
Clay: For the time being, yeah. Well, certainly, […] Indianapolis is where we’re born and bred in Indianapolis. We go to school in Cincinnati, about two hours east of Indi and moved right back. We’re Indi born and raised, it’s what we know, it’s what we’re good.
Toby: So, you know the market?
Clay: Mildly, yes.
Toby: How many property transactions have you been involved? I just want to give these folks some […].
Clay: We’ve been in business since 2014 and last we looked; it was just north of 1200.
Toby: 1200 homes that you’ve been involved in the purchase.
Clay: All purchase or sale, correct.
Toby: Do you buy, and you sell and then you guys fix them up and sell them off? What do you do?
Evan: By definition, what we do, they’re wholesale transactions. We’re buying for A and we’re selling for B. However, our mantra is to make sure that we’re providing value via the equity that we do in a deal to make sure that people can utilize our services from construction standpoint, deal procurement standpoint, essentially have that product […] dollar, 65 cents, 75 cents a dollar, take your money back out and do it again.
Toby: Alright. This is a question that everyone else wants to know. You probably did just one day wake-up and say, “I’m going to be in real estate.” What brought you into real estate?
Clay: What brought us in real estate is kind of funny. I wanted to be an investment banker when I grew up. I always remember wanting to wear the suspenders and drive the Ferrari and make millions of dollars a year.
Toby: Who doesn’t?
Clay: Right. It’s still a good goal to have, I suppose. But we read a book called Rich Dad, Poor Dad. It’s almost a cliché to say it at this point. Reading Rich Dad, Poor Dad is a must. For whoever who hasn’t read it, I’d offer it to the members of this podcast. We purchased 255 copies of that book for people who haven’t read it.
Toby: […].
Clay: We bought it and gave it out to people.
Evan: Well, five for our staff and a box of 250.
Clay: To fast forward the story, we got into real estate because I read Rich Dad, Poor Dad when I was 17 in high school. We read it in high school Rich Dad, Poor Dad which kind of transformed the way that we looked at life. I don’t want to go work 100 hours a week being an investment banker when I could own this series of houses. Again, went off to school. Graduated with six figures in student loan debt.
Toby: That’s a big one. You went to school on the good old-fashioned student loan which—
Clay: My mother is a teacher and my father works for me. I don’t come from money. I made the astute decision to attend a private university which just racked up my student loans to nowhere.
Toby: Catholic?
Clay: Catholic, oh yeah. That’s exactly right.
Evan: Catholic. Expensive.
Clay: $103,914 of student loan debt later, I had to figure out my life. What we decided to do was look into this real estate thing. I was a 22-year-old kid with $10,000 to my checking account, that was in 2013 when we bought our first house. We bought a $2400 house in Indianapolis. You heard that correctly, you can still buy houses for the price of a VCR in some Midwestern cities and used car. We bought this house and put $1000 down on my traditional mortgage and that was our first deal. That house was leased for $650 a month. We closed on it—I’ll never forget it—the day before Halloween on 2013.
Toby: You still have it?
Clay: We still to today. In fact, we’re in the process of selling it for $120,000.
Toby: How many times has it paid for […]?
Clay: Six or seven, I couldn’t tell. A lot. You can make the […] debate. We certainly had a good stroke of that on the first one, but we got that first rent check on November 1st. From there, I was addicted. It’s not just some phraseology or some black wizardry that goes on. It’s fun to know wealth. We saw it happen once and we had to replicate and recreate that process over and over again.
Evan: We started with the first deal, save, save, save, it could eventually finance the $2400 house. Yes, that’s possible.
Toby: How do you finance a $2400 house?
Evan: It was goofy.
Clay: Looking back on it, it’s amazing.
Evan: It was the goofiest thing. The mortgage payment was $94 or something, leased it for $650. It’s easy, right. It’s was like fishing in a barrel. It was the easiest thing. It was 2013 and nobody was buying. It was easy. But realized, very quickly, how much we’d have to work to save up to start buying and can eventually finance these other homes. At the time, we were still living at mom and dad’s house.
Clay: Oh, yeah.
Evan: We were landlords living at our parent’s house.
Clay: We own real estate. Owned houses.
Evan: We’re millennials. We can get away with it. We live with mom and dad, bought the first house, we actually bought another house we can eventually finance, and we were…
Toby: Do you still live with them?
Clay: I’m glad to say we graduated from that.
Evan: Bought house number one, bought house number two, and we’re out of money. We lived with mom and dad and two pennies rubbed together, started knocking down doors, looking for private capital. After 270—I know this exact number too just like the books—270 people told us no. They wanted nothing to do with us, capital market was so scarce, 23-year-old kids who didn’t know what they were doing.
Clay: We’ve got negative net worth, mind you.
Evan: Right.
Toby: Some good old student debt.
Evan: Right. Some good old student debt. Our 271st guy, I’ll never forget his name Jeb—Jeb will likely watch this podcast at some point—I hope he gets…
Toby: Hey, Jeb.
Evan: …shout out to Jeb here. Jeb Brilliant was some dude I met online on biggerpockets.com. He said, “Yeah, you seem like you know what you’re doing. I’ll lend you $30 grand.” We took that $30 grand, bought a house, I racked up $4, $5 grand on the credit card buying materials, doing the work myself. We financed the thing out for $85,000 the next month or appraised for $85,000.
We learned very quickly, once we had a track record, it was like, “Okay, this guy doesn’t want to lend us money anymore. He wanted to build a portfolio like we were building.” We identified essentially a niche for that service to identify procure, investment opportunity, and help build people’s portfolios. One Jeb turned to 10, turned 20, and now we service everywhere—investors from Stockholm, Sydney, Miami and Seattle.
Toby: So, you’re finding them the houses. Do you guys do all the rehab and everything else?
Clay: Everything is in-house. What I joke about with Evan is that I’m in real estate because I’m a control freak and so I want to know every single process of what’s going on. I call us a cafeteria service. You can go in and use us for what you want and leave what you don’t. What we do is we come in, and our secret sauce is procuring properties. We start there and if you want us to rehab it for you, if you want to kick your feet up on the beach.
Toby: When you’re doing wholesale, because I know you’re fantastic with wholesale, but you guys are not going to endorse, throwing out tons of advertising, looking for people that might want to be selling their house. You’re not waiting for dealers; you’re going out and finding them.
Clay: Again, going back to that first deal we had to raise money for because we’re in the transition period in the market, at least in Indianapolis, where we could‘ve just logged in Zillow and press yes and buy houses anymore, it was getting competitive. If we’re going to keep our business model moving, we’re forced to start that process. What started it off is Evan and I kind of walking, buying houses, and knocking on doors ourselves and to today…
Evan: Which worked in 2014 by the way.
Clay: Yeah. To today, we’re spending well an excess of $50,000, sometimes $60,000 a month to procure the inventory that we need to make our machine move.
Toby: Let’s make sure that people actually heard that right, $50,000-$60,000 a month just in the advertising.
Clay: Just in the advertising, correct. That’s marketing overhead for our company.
Toby: That’s why you use wholesalers?
Clay: Yeah, absolutely.
Toby: Because wholesalers go out and do all that stuff, so you don’t have to.
Evan: Yeah, we’re value […]. That’s kind of where it starts and stops. If you’re going to buy the property right, I mean, no matter what you’re buying, you got to buy the thing right. We’re identifying the value. We’re trying to take the heavy lifting out of it. Service folks whether you live 20 miles away or 2000 miles away in San Jose, that’s really where our group comes in.
Toby: That’s really cool. Now, I have to ask you because everybody has had their share of […] face plans, where you do the […]. What’s your worse?
Clay: I’m going to look at you. I know I can tell a story.
Evan: Yeah. This is fun, this is a good one, and a really important one that really had us earned our stripes early. First house I ever flipped, I lost $36,000. It didn’t help with that hundred and some odd thousand dollars in student debt that we were still in, but I’ll never forget the address, look it up, 1145 Linden Street, Indianapolis, Indiana 46203.
Toby: You said, […].
Clay: Not to be particular at all.
Evan: No, not at all. Bought the thing for $125 when we were putting $125 into it, we made the newbie mistake of completely being over leveraged of hard money, add a couple of contractors walk, and so on and so forth. We realized that why you’re working a 9-5 job and you’re trying to do a full-on redevelopment of a historically protected property, there are a million things that could go wrong.
Clay: If I could interject, it was just textbook mismanagement. I think you can look at any investment you make and if you’re mismanaging it…
Toby: Everybody’s done what you guys just described. Everybody that’s been in real estate for a while, has done it.
Clay: Sometimes, I think, as investors, we get guilty of this—at least we do—but it’s not the first time and I’m sure it won’t be the last.
Toby: I always say, I better want to have that house if in case I have to keep it. […] even in Vegas in 2008, we had this great marketplace, we did it. We had a roof cave in and destroyed everything we just did on the house. Nobody could have predicted it, it was just a […] down, boom, the rain hits and it never hits in Vegas right, and it ended up caving the roof and destroying all the hardwood we just put in and everything else. It’s not as bad. It’s one of those things. I still have the house to this day and I’m glad I have it.
Evan: It’s tuition. Again, we knew that this was something—it wasn’t a hobby, it wasn’t a short-term thing, we know it’s an investment. There are inherent risks in every investment, we just understood that. We went out for a margarita after we lost some $30,000 bucks.
Toby: You probably had one that offset that too, right?
Evan: Oh, ten times over. That’s really the name of the game.
Toby: But you dumped the property. You didn’t just want to keep it, save it?
Clay: N. I think tuition’s a great way word. I always relate stuff back to the student loan thing—taught me a lot. I paid a lot of money for that degree and this degree took me one year to flip that property and cost me only $36,000. It was a year to get down with it. I had contractors walk, I had hard money guys up down my back. It was an interesting situation, but it was textbook mismanagement.
Toby: Where was your hard money at?
Evan: 12%, I can give you the numbers, 12%, two points, we borrowed $60 grand. It was at 360 […] note and we closed on day three, 54 or something like that.
Toby: You had an after-repair value. Were you just estimating higher or were you just…?
Clay: No. If you take it on paper and you just say 125-125 and I think we sold it for three-and-a-quarter…
Evan: Yeah.
Clay: We would’ve made plenty of money. But we had budget swell up, 360 days at 12% interest is a lot of money and it just got out of control. But again, going back to it now, what we’ve been able to do is take that tuition, if you don’t apply it, it’s meaningless. You’ve got to find a way to fix it for us. The way we took that is, “Okay. If we’re flipping houses now or managing construction projects for the people, how do we fix that?” We have a full-on staff now who’s managing day to day, within our CRM, daily operations on the constructions.
Evan: I mean, it goes exclusively to the point where we have our project manager on staff. His job is to drive the company truck around and make sure that when someone says, “Cabinets are going in on Monday morning at 8:00 AM.” Cabinets will be there at Monday morning at 8:00 AM. Applying that tuition was clutch because granted we were in the city but we were working 9-5 jobs. The amount of clients that we serve lives thousand of miles away, you’re four-hour flight away, it’s a whole lot different, makes them feel infinitely better about the ability to invest into […].
Toby: What’s your communication like with somebody who buys the property from you? Are you guys keeping them appraised every step of the way or you just giving them once a month? What do you guys do?
Evan: I think the better way to answer this is what we don’t do. The amount of times where we’ve sold a property and kind of washed our hands are, I can count on one hand, the amount of times we’ve done that. Really, Aaron as our project manager is a tremendous resource for our group and particularly for our investors but he gives, every other day, certainly weekly updates. Kind of how we like to focus things because we don’t have a buyers list, we don’t have listings online. We have deep, intimate conversations in a setting just like this with our investors, “What are you looking for? How can we hand-tailor a solution that achieves both goals?” Whether it’s a new construction home, apartment building, you name it. A lot of what we do is residential but it’s a constant element of being kept surprise.
Toby: You just find out the things no matter what. Once you’re known as a buyer, everybody’s going to […].
Evan: We like investors that let the deal speak to us. We don’t buy a rental and shove a rental down somebody’s throat. We find value, we procure value, and then we add value, and we really let the deal speak to what we do.
Clay: What we tell people, Toby, is we tell people we want people to be as hands on or hands off as you want. If you want to come in and pick the color of the grout in the guest shower, by all means.
Toby: Don’t do that.
Clay: Do not do that. After we earn your business and earn your trust and you want us to handle it for you and you want to flip houses while sitting on a beach, that’s our goal—is to be able to provide it for you.
Toby: The worst thing I’ve ever done is [14:33] of the house is […]. Just don’t do it. Let somebody else pick it for you that’s actually like, “Yeah, don’t put that in there.”
Clay: And that goes with what we tell people whether it’s us or in a different market or whatever it may be, build yourself a team that you can rely on. I think that speaks to that. If you can’t trust your team to pick out the tile color and you trust them with $200,000 of your money, then we’re all on different way of the things already. That’d be my two cents.
Toby: What’s the market like in Indi right now? It seems like a lot of folks are going there. They try to buy, and you hear good stories, bad stories, you have bad areas of town, good areas of town, which are your favorite?
Evan: I like to eliminate the stereotypes of many of our, I guess, what Indi gets. It’s super-hot, investment-wise. There’s no way around it. It’s traditionally cheap market. You can do a lot of damage with $75,000-$100,000. You’d be stunned what $100,000 would get you in Indianapolis. For the most part, population is continuing to grow, jobs are continuing to come in, but the market is super attractive certainly for folks that have IRA money or just idle funds sitting in securities or something.
Toby: Do you get an appreciation or is it mostly just cash flow?
Clay: It’s steady. What I always tell people, if you go back historically and look at the crash when it occurred, the worst month in Indianapolis was on a zip code 46220. The dip on the downturn equity-wise was 17%.
Toby: […].
Clay: I’m a numbers guy. I’m a big data guy.
Toby: […] freak. I like these guys.
Clay: It’s funny to me but historically, the worst month in Indianapolis history maybe, since the Great Depression, went down 17% in value. We’re never going to be a Vegas, we’re never going to be a Phoenix, but we’re trying a slow, predictable growth, we call it the Boring Method. We want to be boring and that’s what Indianapolis is.
Evan: We’re both recovering, as Cincinnati Reds fans, we would tell everybody that—we use baseball analogy for everything—we’re not trying to hit home runs, not in Indi. We’d get a standup double or something every now and again, but we don’t care if we get plugged by a pitch, flare on the right field or hit a sharp line […], we’re just trying to get everybody on base. Try a good first base, that’s what we’re constantly pushing.
Toby: Alright. Since you guys throw baseball out there, across the street we have the Aviator…
Evan: I saw that, yeah.
Toby: […].
Clay: Is opening night tonight?
Toby: This is opening night.
Clay: Alright.
Toby: Wait, I think tomorrow’s the second game so tonight’s the first game.
Clay: There you go.
Toby: They just built that thing like a year.
Evan: No kidding.
Toby: If you’re going to talk to somebody who’s just getting into baseball or just getting into real estate, what would you tell them?
Evan: I think it’s important to know the game. When you’re getting into real estate, I think it’s important to turn on the TV, watch the Reds. No, don’t watch the Reds. Watch the Aviators. You got to know the game you’re playing before you can get good at it. Crunching numbers, understanding deals, understanding the markets. The amount of investors who have had success with us are oftentimes folks who may have faltered with their first deal, they’re people that now they really know what they’re getting themselves into, and they understand this is an appropriate measure to take to be effective. Turn on the TV, I guess that’s the best.
Clay: Maybe continuing down that metaphor is don’t be afraid to swing the bat. There’s so many people that come up and they’ve got all the money and they’ve done all the research and…
Toby: […].
Clay: Right. They see the pitch and they just kind of freeze. At some point, you have to swing, and you just got to go for it. Our successful investors injected that people who are intelligent, they’re looking for the right team to build themselves around, and we provide the rest.
Toby: Would you guys be considered millennials?
Clay: Yes.
Evan: Absolutely.
Toby: Alright. Here’s the rub on the millennials is they’re not buying houses, they’re renting. Rents can go on up, homeownership […], what would you tell somebody who’s in high school? We’ll take it into high school. Let’s say you’re in high school and you go on up and you’re talking about their future, my personal belief that the millennials can’t buy houses because they have so much student debt, it’s more than credit card debt now, it’s at $1.5 trillion .
Evan: It’s crazy.
Evan: I don’t think it’s just your own belief, Toby. I think we’re all on the same page.
Toby: Well, alright, so what would you tell that high school then?
Evan: You know it’s tough. I’m guilty of it. We both have financing economic degrees that, by all definitions, were overpriced. I wouldn’t take my time back at college forever but it’s an over priced four years of […]. I would tell people to understand the society you’re in and ask questions. Our corporate motto, we’ve got a big wall in our office, it says, “Ask Why.” We encourage every investor, every client, every employee to always have that question mark in the back of your head not just to be rebellious but to better understand what’s that going to look like. My advice to an 18-year-old or 17-year-old getting ready to head that direction is, “Why do you need a degree? If you’re going to take it on, what’s the return?” Things like that. Very, very rudimentary ways of looking at it. Don’t just blindly follow.
Toby: Economics degree is not bad. English degree? “I majored in Spanish.” I’m like, “Alright.”
Evan: Finance or interpretative dance. I went with Financing.
Toby: I always look at, “Thank God for those degrees because they subsidize all the […].
Clay: Toby, if I can add something else maybe on a more tangible level, something we’re really passionate about. We actually have a non-profit that we’re working for right now that is all about implementing financial education in high schools.
Toby: Good.
Clay: Yeah. It’s what we’re passionate about. It’s what I wake up thinking about and quite frankly go to be thinking about. The fact that we can graduate high school now and not know what a credit score is, but we know darn well what chlorophyll is, why? It’s always troubled me.
Toby: I think I failed that.
Clay: Anyway, that’s what we’re passionate about. I guess, on a more tangible level, even if you are graduating with debt, or you aren’t planning on going to college, understand that there’s several methodology that’s in this fine place that we occupy called earth, that can lead you down the path of either financial independence or just wealth generation.
Toby: So, you guy set up a non-profit that you do education for high school?
Clay: Correct.
Toby: You’re speaking like you’re talking to the choir here. What you always say is, “Rich folks always end up with a non-profit if you follow some of the…” My philosophy, the thing with Andrew Carnegie when he wrote Gospel of Love, “Your job is to be able to provide.”
Clay: Yes. Fantastic book.
Evan: That’s really what it is. We just got done speaking at the University of Indianapolis, ironically, last week to these potential college students. We went up there and I just said, “How many folks in here can tell me what this element of the periodic table is?” Everybody’s hands is up. And then, “How many people here can effectively balance a checkbook?” A bunch of blank stares.
Clay: It’s just shocking. Yeah.
Evan: That’s startling. Again, my advice to a 16-year-old will be exactly that. Just ask why.
Toby: Ask why. That’s actually a good one and you guys have had super success.
Evan: We’re trying, thank you.
Toby: Kudos to you both.
Clay: Appreciate it.
Evan: Thank you.
Clay: Thank you. Thank you very much.
Toby: If you guys couldn’t tell, they’re twins. Thanks for your time.
Clay: Appreciate it guys.
Toby: I’m going to put your information up the site if you guys are okay with that.
Clay: Please do.
Toby: Alright. Fantastic.
As always, take advantage of our free educational content and every other Tuesday we have Toby’s Tax Tuesday, another great educational series. Our Structure Implementation Series answers your questions about how to structure your business entities to protect you and your assets. One of my favorites as well is our Infinity Investing Workshop.
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