rei nation
Chasing Perfection – Going the Extra Mile for Turnkey Investors
By Carole VanSickle Ellis
When REI Nation founders Kent Clothier, Sr., and his wife, Sherry, started building their real estate portfolio in the early 2000s, the real estate investing landscape was very different than it is today. Ultimately, the company born of those initial portfolio-building efforts, then called Memphis Invest and today operating as REI Nation, would play an integral role in the evolution and growth of the space thanks to particular emphasis on providing a personal touch for both clients and residents and delivering gold-standard service to both clients and property residents.
Today, REI Nation operates in a dozen primary markets, manages nearly 8,000 properties, and has home bases in Memphis, Tennessee, and Dallas, Texas.
“We really started looking to grow in 2009, 2010, and 2011,” recalled Chris Clothier, one of Kent’s sons and a partner in REI Nation along with his father and brother, Brett. That growth led to the renaming of Memphis Invest as REI Nation, a necessary shift since the company is headquartered in Memphis and has a second hub in Dallas, Texas, and roughly 120 teams operating in Houston, San Antonio, Oklahoma City, Tulsa, Little Rock, St. Louis, Huntsville, Birmingham, and Tuscaloosa.
“We operate in markets that are just a short drive from one of our main hubs,” explained Clothier, noting it is a priority for REI Nation representatives to be able to get to any active markets “really, really quickly.” He explained, “We always want to be able to utilize a team and our resources quickly as well as operating mainly in mid-size and large markets with population centers at or below the median price point for homes.”
REI Nation acquires, renovates, leases, and operates single-family rental properties for its investor clients, making efficient, effective systems a must for successful company growth.
“Today, we manage a $2 billion portfolio for our clients,” Clothier said, noting that 100% of REI Nation clients elect to have the company manage their assets after acquisition. Although roughly 3% of the company’s clients annually elect to go with a new management company or sell off a property, Clothier proudly points out that this is far, far less than the 20% industry standard.
“We do not do things like your traditional property management companies,” said Nate Gray, a vice president with REI Nation who oversees property management and customer service across the company’s markets. “Our investors hire us to handle the headaches that come with investing in single-family real estate. Property management is a tough, tough business, and we handle it so well because we are willing to do the things that no one else is doing.” Gray cited company practices including sending out surveys to both investors and property residents to elicit responses and feedback on nearly every interaction with REI Nation and an ongoing tradition of reading Google reviews “every single day” in a productive, group setting in order to adjust and refine how the company handles asset management and other facets of SFR investing.
“We read those reviews aloud in front of the entire leadership team every day,” Gray said. “We talk about them, discuss them, and, when necessary, fix problems. 98% of the time, we get everything right, but we care about the 2% of the time we do not get it. We are chasing perfection.”
A Tradition of Transparency & Dedicated Communication
The REI Nation team does not just share reviews and survey responses internally; they prioritize transparency about company performance across the board. Nowhere is this more evident, said Jessica Stooksbury, the company’s chief financial officer, than in the financial, legal, and human resources aspects of the group.
When she interviewed with the Clothiers, she was intrigued by “a family business that seems small but is so large of a family enterprise.” She joined the team about five years ago, citing the group’s “transparency about business” as one of the main attractions and recalling how she had been excited to work with a business operating on the scale of REI Nation.
“It is a lot easier to account for things if you do it consistently,” Stooksbury said. “This is especially true when you are dealing with a lot of investors. You have a lot of money coming in and going out, and it is easier to manage when things are consistent across the board.”
Stooksbury said she also admires the way REI Nation has a policy of always trying to do the right thing. “A lot of companies will say that they are always thinking about what is best for owners, residents, vendors, and associates,” she explained, adding, “but walking the walk is very different from talking the talk. If the right thing to do is to help a client or resident out, that is what they are going to do even if they could do something else that would be financially better for them. As a CFO, that way of thinking makes being fiscally responsible for what is going on in an organization a whole lot easier.”
Communication is not just about making information available, however. Heather Harris, vice president of marketing for REI Nation, explained education holds a top position both in terms of providing information to REI Nation investors and serving the real estate industry at large. Harris manages production and distribution of the company’s weekly “REI Nation Market Insights,” the “REI Nation Investor Blueprint,” videos and original content, company-focused updates, Clothier’s “Total Turnkey Series,” and weekly showcases of featured properties, employees, company events, and investor visits.
“We have really taken time [during the COVID-19 pandemic] to hone our skills: improving our teams, providing better education for our team and for investors, and becoming the ‘go-to voice’ in the industry,” Clothier said proudly. “There are no secrets in this industry. We share so much of our information, data, and knowledge with other companies, other entrepreneurs, other management companies, and other investors. That will never stop for us because we have an abundance mindset.”
Harris added, “Our education builds confidence. It is a really great vessel to help a first-time investor know they are investing in the right company and that real estate is the right asset for them. Because we do everything from start to finish for our investors, it is important for them to also understand a truly total turnkey process. Our education helps them understand how and why we know a property is going to perform for them.”
Refining & Right-Sizing for Perfection
With thousands of properties under management and tens of thousands of residents in those properties, REI Nation is constantly refining processes and techniques to make tenants happier and more satisfied, thus extending length of stay for those living in the homes and improving reliability and returns for the investors who own them. Of course, REI Nation does not ever refer to tenants as tenants or renters because the company considers those individuals to be far more than just a monthly check in the mail and wants to be sure the residents know they are important.
“We removed that word [tenants] from our vocabulary completely,” Clothier said. “To most people, the word ‘tenant’ means short-term. When you use the word ‘resident,’ it promotes long-term stays.” After making the change, REI Nation extended their lease terms from one to two years. Today, the average length of stay for an REI Nation property resident is more than seven years. Naturally, the company did not just implement the change haphazardly. They conducted careful surveys to determine how the change was affecting residents.
“We instituted a survey system where each resident gets a survey, and if the survey does not come back perfect, my dad [Kent Clothier, Sr.] would send the project manager and the highest-ranking management person in the city over to meet with the resident,” Clothier recalled. “They would bring cookies and flowers and apologize for not being perfect. It is not always easy, but it shows without a doubt that you mean business.”
That practice continues in REI Nation branches to this day, and with good reason: It keeps residents happy and in REI Nation homes. “If you can eliminate [the source] of a resident’s desire to leave your home because you are taking care of the property and treating them well, then they will stay,” Clothier concluded. “Adopting that stance has meant everything.”
“None of this works if it is not for the resident paying the rent,” Gray said proudly. “They are the most important thing. We buy into that and our investors buy into that. That is why this whole thing works.”
SIDEBAR 1
By the Numbers
7,800 — Properties under management
7 — Average length, in years, of resident stays
2 — Number of years on the minimum REI Nation lease term
78 — Percentage of residents who renew their first lease
22 — Average days to rent
3,100 — Number of turnkey investors working with REI Nation
7 — Number of years in the Inc. 5000 “Fastest Growing Companies” list
2 — REI Nation boasts average vacancy rates of less than 2%
2 — REI Nation has an eviction rate of less than 2%
SIDEBAR 2
The “Awesome Responsibility” of Turnkey Property Management
Chris Clothier often tells investors considering buying turnkey properties from REI Nation, “We are probably more expensive than most other companies providing turnkey properties, but judge the investment. What you get in return with REI Nation far outweighs the price.” Clothier is referring to the extended average length of stay REI Nation investors get from their residents (7 years), the extremely low vacancy and eviction rates (less than 2%), and average annual maintenance costs of less than 5%. At time of publication, more than 3,100 investors seem to agree with him that these benefits are well worth the price tag as 65% of monthly sales are bought by existing investors and the company boasts an unheard of investor retention rate of around 97%.
The key, says vice president of property management and customer service Nate Gray, is understanding what residents need from property management and how important a role they play. “Turnkey real estate investing only works if you have a resident paying rent,” Gray explained. “We do all sorts of things on the front end — acquiring the property, renovating the property, selling the property to an investor, and finally managing the property for that investor — but success boils down to taking care of the resident.”
Gray, who manages the teams of people who work with residents to deal with issues and improve the living experience while in REI Nation-managed properties, noted that it can be tempting for property managers to prioritize the needs of clients over the needs of tenants. This, he says, may be a natural tendency, but it does not work in the long run. “The resident is the most important thing. Hard stop,” he said. “You take care of the resident, within reason, to the best of your ability. It is a big, big deal, because if you take care of the resident, they will take care of you and, by extension, the property owner’s best interests as well so the machine can keep on churning.”
Gray concluded, “It is an awesome responsibility. These properties are our clients’ retirement plans, their investments, and we understand that. These properties are also our residents’ homes. They are raising their families there. We protect them, and we protect our clients’ assets at the same time.”
SIDEBAR 3
The 3 Reasons Residents Leave (and How to Stop Them)
Chris Clothier may chuckle when he talks about his father, REI Nation founder Kent Clothier, and his response to negative tenant surveys by showing up on-site with flowers and cookies, but the business of dealing with dissatisfied residents is a serious one at the company. According to Chris, there are only three categories of reasons that someone renting will leave a rental property. Those reasons are:
1. The property is not taken care of
2. They can afford to rent or buy something better
3. They believe the owner/manager of the property does not care about them
“When they leave because they can afford a place of their own, that is when you tip your hat to them and say, ‘Best of luck’” said Chris. “That is great for them and you’re happy. If they feel the property is not taken care of or that they are not taken care of, however, then you get in there and work with them until the problem is resolved.”
That determination to do “the right thing” pervades company culture, CFO Jessica Stooksbury added. “I’ve worked at a lot of companies that did a lot of good things, but REI Nation beats the rest when it comes to focusing on truly, truly getting better at what they do from every angle,” she said. “That mindset pervades the entire company so every one of us is in it to deliver the best experience for our clients, residents, associates, and vendors.”
Learn more about REI Nation at REINation.com.
