Why NFL Players Are Buying Real Estate During the Recession

Dave:
Hey everyone. Welcome to On The Market. I’m your host, Dave Meyer, joined by Seahawks super fan James Dainard. What’s going on James?

James:
I’m just, I woke up so early and I was excited for the day. This is a good day.

Dave:
You’re just a kid in the candy store today. Could you tell everyone why you’re so excited?

James:
Well, we have two awesome people coming on. We got Devon Kennard, and then we have Cliff Avril, which I’m a huge fan of. I actually think Cliff’s one of the most underrated pass rushers that played during that era. He was dominating before he went out of the league, and I’m just a massive Seahawk fan. The only thing we got to get on, we have to get Kam Chancellor on. That’s, I did reach out, so you never know.

Dave:
Maybe now, at once we’ve done this, we can send him a link to the episode and be like, “This could be you.” I don’t know if that would inspire him, but maybe we can show him that other people and his former teammates are doing it too.

James:
Yeah. Big hits, that Kam is known for big hits, but yeah, I’m stoked. This is it. It was a fun, great show and I’m just, anytime we bring on athletes, I sign up, put me in. Put me in coach.

Dave:
Yeah. It’s awesome. I mean, the conversation is so good. They really have some applicable lessons and they’re obviously athletes that come from the world of professional sports, but everything they say really applies to general investing and people, a lot about being a member of a team that I really thought was really interesting about how knowing your role on the team and building a team around, what you’re good at and augmenting and supplementing your skills.
So I think it’s super interesting. They’re really great investors and it seems like they’re doing some incredible stuff right now. So we talk about all sorts of stuff, everything, how to get started, how to vet syndicators, what they’re doing in today’s current market. So I think you’re going to really enjoy the show. Was there anything in particular you think people should listen out for?

James:
No, I agree. Just building that team and then sticking to what you know, and I did also like how they’re going over their performance and how they know that they’re responsible to evaluate that asset and to punch as many holes in as possible in it. So just saying it doesn’t matter who you are, we’re all following the same rules and the same basics.

Dave:
Absolutely. All right, well let’s get into it. But first we’re going to take a quick break.
Cliff Avril and Devon Kennard, welcome to On The Market. Thank you both so much for being here.

Cliff:
Thanks for having us. Thanks for having us, and I’m looking forward to this conversation.

Devon:
Absolutely. It’s a pleasure man. Thank you for having us.

Dave:
All right, well for those of our listeners who don’t know you, could each just introduce yourself and give us a little background with both with football and with real estate. Cliff, let’s start with you.

Cliff:
Oh wow. 10 year NFL vet, pro bowler, Super Bowl champ, beat some of the y’all Broncos and I’ve been retired for five years now and I’m living the dream through real estate and some of the things that I’ve learned through the NFL and in applying it to the real estate game.

Dave:
Awesome. Well thanks for being here. What about you, Devon?

Devon:
My name is Devon Kennard. This is my 9th year in the NFL going into 10 next year. I’ve been investing in real estate since my first year in the NFL. I own 22 properties and I’m also a limited partner in a number of syndications. So I love real estate, I love playing football and I’ve had my fair share of dubs in the 12 land too. So I see James with Kam Chancellor jersey. I remember those days. I got some dubs that way.

James:
Well, you going to get dubs on us there, did you?

Devon:
No. When I was in New York they got us there, but-

James:
Oh, I was there for that game.

Devon:
Yeah. It was one of my first years in the league. Actually, a funny story, I remember Marshawn Lynch ran over our bit of linebackers and I was right outside with my fam running smooth over.

Cliff:
Welcome to the NFL.

Devon:
[inaudible 00:04:16] over my first, it was my rookie season and I’m like, “Oh my goodness. Yeah, I’m here now.”

Cliff:
Was that Super Bowl year? Was that Super Bowl year? I think that was Super Bowl year. Huh?

Devon:
I think it was, bro. I’m turning the playback with my right shoulder in the middle linebacker having clean in the hole, Marshawn runs them smooth over. I just remember Quinn did, that was one of my first big memories. I was like, “Yeah, you got to lower your pants on Marshawn.

Dave:
All right. So I’d love to just start with learning about how you both got started in real estate. It sounds like you both have built impressive portfolios. Cliff, I’m curious, were you investing while you were still in the NFL or has this sort of been since you retired?

Cliff:
No. Yeah, so I was an investor in real estate throughout my career while I was in the league through different syndications and funds and different things like that. And that was my first taste of getting into the real estate game from an investor standpoint.
I had purchased some homes, actually one of my best investments was my very first home that I purchased from my mom. That’s pretty much doubled in price that we still own. But yeah, I was an investor while I played and then I decided once I retired, to dive deeper into it and start building my own portfolio, because once you read in between the lines of those syndications and docs, you start seeing all the fees that are associated with it and kind of change your mind a little bit and say, “Hey, let me see what I can do myself and see how I can keep some of those returns for myself.”

Dave:
And what about you, Devon? You’re still in the NFL. What inspired you to get started when you obviously have a full-time job?

Devon:
Yeah. I think for me, it started actually when I was in college, coming into college I was a top five-star recruit, top defensive end, outside linebacker in the country, and I had a lot of injuries while I was in college and it made reality set in. So where I was like, “What am I going to do if football didn’t work out for me?” So I started to have mentors and connect with different people and real estate stood out for me.
So after my rookie season in the NFL, I started to get into syndications. I got into my first syndication, but I always wanted to balance the two. I thought syndications were a good way to build passive income, but I also wanted to build my own personal portfolio.
So I started going to different meet ups in the off-season after my first year and I bought a single family property in Indianapolis from a turnkey provider. And that was kind of the first property that got me rolling and I’ve just kind of kept stacking from there.

James:
How did you, because real estates, I mean it is definitely what I invest only in, I’m kind of a one-dimensional investor. But as where a lot of athletes go to the NFL, they get these bigger contracts or contracts and then they sit down with these financial planners and there’s so many different investment platforms out there.
I mean, we’ve seen just investing across with a financial planner or crypto’s been really big the last two years. We’ve seen a lot of in athletes kind of endorse that.
How did you guys select? Why real estate with all the different platforms out there? What made you zone in on real estate? I know for me, it was about why I wanted to own, what I was investing in and that’s what got me into my first deal at 19. But why did you guys zone in on it?

Cliff:
For me, being out here in Seattle, I’ve been fortunate and blessed to meet quite a few individuals that are very successful. Whether you’re talking about the CEO of obviously, CEO of Zillow and all these different individuals and you meet them all. And one thing was common, they all own real estate. They might have not been in the business of real estate, but they all owned a lot of real estate.
And I would always ask questions and obviously the tax benefits, the cash flow, all these different things. I’m like, “Man, if the wealthy people are doing that…” Because out here I joke around all the time and say, “It’s athletes, if you’re in some of these smaller markets, you might be the top earner in those cities, but here in Seattle you might not come top 3000, 4000.” You know what I mean?
So being around all those folks that are doing better than you, it exposed me to the real estate game and just understanding that how valuable it can be. As you know, taxes are always going to be probably some of our biggest expense. So if you can mitigate them through different ways of investing and making money, why not? So that was my approach and how I got into it.

Devon:
Yeah. I would say I definitely agree with that for myself as well. But when I first got into the league, I had a financial advisor and it was mostly a traditional guide who was trying to get me into stocks and all that and do what everybody else was doing. And I was looking at it and I came into the NFL with a vision of like, “I wanted to create enough income to where when I’m done playing, I can sustain my life off of the income that I have generated.”
And all the investments I was recommended and getting me into the stock market seemed was speculative. It was going up, it was going down. I wasn’t pocketing anything. And I was like, “This isn’t helping solve the problem.” That I feel like we have as professional athletes, you played for a certain amount of time, you get out of the NFL, what income do you have coming in? And the stock market didn’t seem to solve that problem for me.
So that’s where I started to look outside of my financial advisor, listen to other mentors, listen to BiggerPockets and read books and I’m like, “Real estate was kind of the solution.” And I kind of had to teach myself because I didn’t know a lot of people in my position who was really building out primarily real estate portfolios to build their portfolio and create their wealth. So it was kind of trial and error to be honest.

Cliff:
Trial and error works in this business as long as you take steps. That’s huge though, I would agree. Trial and error, it just taking the steps, going back to what Devon was just saying, as far as for all of us athletes when we first get into the NFL, NBA, everyone’s pushing the financial advisors, and I have one and I’ve been with him for 15 years now.
And what I appreciate about my financial advisor, which I’ve come to realize is very different from a lot of other ones, are one, he teaches you what you’re investing in. Two, he’s not like… Most financial advisors don’t want you investing outside of them because obviously they don’t get paid with the capital that you deploy in other assets, but my guy is very much behind that.
He’s very much behind helping me understand from a tax perspective being a CPA as well, helping me understand the value of investing in real estate, how to capitalize and making sure that you’re being efficient in how your business is running. So for me, my experience has been a little bit different from a financial advisor standpoint, but I do hear a lot of stories of financial advisors kind of pushing you away from real estate and diversifying your portfolio.

Dave:
It’s so funny you say that. I have been looking for a financial advisor myself and spent honestly months just looking for anyone who could have this kind of conversation with me about real estate. Just like a casual, you know what I’m talking about, the difference between a syndication and a house flip. And I found five of them in the entire country, they just don’t exist.

Cliff:
It’s hard man.

Dave:
And it’s so weird, right? Because honestly stocks and bonds, it doesn’t vary that much and there’s this whole industry that help you customize your portfolio, and what are you really customizing? You’re buying index funds, whereas real estate is actually hard and you need to customize it a lot, but there’s not a lot of people out there to teach you how to do it. But I guess that keeps James and I on a job, so that’s pretty good.

Cliff:
But it goes back to what I was saying though, right? They’re not compensated for things outside of what they present to you. So most won’t do that. That’s not a great business plan for them if you think about it. You know what I mean? Most of them won’t even try to learn that aspect of it because it’s kind of taking money out of their pockets.

Devon:
I think that’s very key because as I had gone through different financial advisors earlier in my career trying to find a good fit. That became a rule of thumb for me, is if I bring some of the deals that I’m doing and I’ve evaluated them and I know they’re pretty sound deals and all of this and I’ve presented to them and they’re telling me I shouldn’t do that or I should only do what they have, that is automatic red flag because you’re not giving me unbiased advice anymore.
You’re slowing me towards everything that you have, and if it’s not from you and your group and your fund, whatever, then you’re kind of telling me it’s no good. And that’s just not the case many, many other times. So finding somebody who’s going to be open and transparent, and I think that’s the long game.
So my financial advisor now, his mind says more so like, “I’ll help you evaluate things you’re doing outside of me because if it’s successful, it’s going to increase your revenue, increase your net worth, which is then going to have more money to that I can potentially invest for you down the line.”
So having someone who has that long horizon in mind and isn’t just trying to get the immediate win with just do what I tell you type of deal, I think that’s really important.

James:
Yeah. The overall big picture of the client, right? Because we work in the client side of the business for real estate. It’s, well I mean what people should be doing is diversifying and investing in all different asset classes. That’s the safest way to do it. I don’t do that because I seem to lose money every time I put it in anything but real estate. But I think that’s called the sell away, right? In a lot of these big firms, when you sign up as a broker, you’re not allowed, you’ve signed a sell away agreement, you’re not allowed to offer other investments from what I understand, maybe I’m wrong there.
And so as you guys started getting into real estate and you’re talking to financial planners and then you chose real estate, it sounded like both of you invested in a syndication deal first or so you’re investing in someone else’s processes, which is kind of a scary thing for a lot of investors when they’re making that first step. I know even for me, I did some passive investing the last couple years, where I invested in other operators, which I’ve never done before and it was kind of nervous.
So as with you guys getting new into real estate and you were just learning, how did you make that first selection of which operator you were going to put the money into? How did you vet that person? Because there is a lot of, you hear stories, I think there was one out a couple months ago where it was an athlete suing an operator, an investment advisor because they gave him bad advice and there’s a lot of bad advice and there can be bad deals out there and you got to be kind of cautious. How did you guys take those steps and vet through that?

Cliff:
For me, I’ve kind of just over time created criterias of why or who I’m going to invest with, because at the end of the day you’re investing in the jockey. I do some private equity investing as well and different things like that. You’re investing in the jockey, you’re investing in the operator, but in knowing that, now you got to do your due diligence of what their resume is. And I’m going to always be able to go back to football as analogy and it’s no different.
You get this first round draft pick that you just, you’re going to look at his film from previous years to see why you’re going to draft this guy. So it’s no different with individuals that I work with. I need to see your resume just like I assume and I hope that you’re going to do the same with me as far as for what I know in the real estate game if you’re going to invest with me.
And so for me as I was going it was referrals, it was references from different individuals. Okay. Do you work with solely athletes or do you work with other individuals? That plays a big role for me too. If you only work with athletes, I don’t want to work with you. You know what I mean? Because there must be a niche there and there must be some kind of ignorance or something. I don’t know what it might be. So I need to know all the different individuals that you’re working with as well.
So for me, it’s just I have a criteria of different things that I look for. Also, again, my financial advisor are very involved with that as well. They’ll go to meetings with me and poke holes through some of the pitch decks and different things that people might have for us and we kind of come collectively as a team and figure out if this makes sense to invest or not.

Devon:
Very similar for me as well. I always say all stars hanging around all stars and it’s relevant in football and I think it’s relevant in business. So when I meet someone and I have a mentor or someone that I have some type of business relationship, “Who are you dealing or doing deals with?” They usually have the best recommendations.
The guys who they’ve made the most money with, the guys, they’ve had the track record. So I typically start there and then I start to evaluate and ask questions, “What are you looking for in this deal? Why is this a good deal?” And then I start to get various deals with myself and I bring it to one of my mentors, my financial advisor, and I usually have two or three people, especially early on when I didn’t know what I was doing and I send them the decks and I’m like, “What do you see? Is this a deal that’s similar to the deals that you’re doing? What’s different?”
So when it comes to syndications, I started to get an understanding of what… People always talking about high fees, what’s a high fee? What’s a fair fee? What’s over speculative? Are they factoring in repairing maintenance? Are they hiking up REITs way higher than is realistic?
I start to gauge these things based on conversations you have and what other people are looking at. And then you build that and it’s like, “Okay, now you kind of have an idea of what to look for and you have people who can come to help you vet it.” And that doing that meticulously over and over again, you start to get in a good rhythm and can really see there’s trends on good deals and there’s trends on bad deals and you can decide pretty quickly the good from the bad.

Dave:
That’s super good advice. I think that a lot of people when they start investing in syndications, I was like this, “Err.” A little, I was overwhelmed and I sort of just took people at their word at first because I was like, “Man, they know so much more than me.” And I was a little bit afraid to ask questions or to try and poke holes in their business plan, but you should do that.
And James, you’re an operator. I assume as an operator you want investors who understand what they’re getting into and want to ask those types of questions and make sure that they’re a hundred percent on board with your business plan and know what they’re getting themselves into.

James:
Oh yeah. That’s a big red flag for me. If someone just comes and says, “Hey, I want to give you money.” Because they have heard stories about us or seen us grow. We slow everyone down, because not only do you have to punch holes, I mean every investment has holes in it, no matter what it is. It could be the greatest deal in the world, but there’s holes there and you have to look for those, and then not only that, when I’m talking to operators or when we’re as operators, we know what those holes are already and we try to address those immediately.
Because as operators it’s really important to explain the risk, because you know what? How it’s put to me is you want people when… Everyone’s happy when things are going great, right? When 2020 to 2022 is going on, everybody’s happy. The problem is with investing their cycles, they lay go up and down and when you have to get in a foxhole because you’re in a bad cycle, you want those like-minded people in that foxhole with you, because the worst thing you can do is jump out of that foxhole and then the whole thing collapses, and the whole ship goes down. And so you want to make sure that you have like-minded people in these investments.
So as operators, we’re also interviewing our investors. If all of a sudden they freak out, then that’s not good for the whole ship and we can’t have that thing sink. So you have to be like-minded because also other operators offer different things. Some are short-term high yield investment guys and that’s great for what maybe an investor’s trying to do because they don’t want to be in a deal for five to 10 years.
There’s guys that are only in deals for five and 10 years. The syndication deal I invested in, they said they plan on never selling it. It’s like, “Hey, just be under the pretense. We’re never selling this one.” And I was okay with that because we’re still going to be able to get our money back out after we refi. So just making sure everyone’s on a like-mind is really important.

Dave:
So one question I get a lot about syndications and then we’ll move on to some other stuff, but it’s how to get deal flow? Especially when you first started, how do you find syndications? So I know you both are probably higher profile than the average On The Market listener, but I’m just curious, how did you start getting deal flow in syndicators and finding people that you ultimately did trust and decide to invest with?

Devon:
Well, I’ll start. I mean I’ll say on that you would think, guys are getting tons of syndication opportunities, but there’s not too many guys I know who invest in a ton of real estate syndications to be honest. They get a lot of exposure to REITs and different things like that from their financial advisors, but pride meets syndication, they’re not a ton of guys in the locker room that I’ve been who are in the kind of deals that I am in. So that’s one to start.
So for me, when I first started getting into them, I was looking around like am I doing something wrong because I’m asking people and talking to guys in the locker room and not a lot of people are in these kind of deals. So that that’s my experience. And how I started to finally deal was again, goes to all stars, no, all stars.
Who’s investing in these kind of deals? And who are the syndicators that you’re working with? What kind of deals? And then you start to create trees of different people you’re networking with, that are investing in syndications. What deals are they getting into? Who are the main people running these deals? And you build relationships with these different syndicators and it grows from there.
So I feel like there’s a really organic way that you should go about it and asking people who are doing it, what deals are you doing, what syndicators are you working with, how successful have they been for you? And then going from there.

Cliff:
I would agree as far as for the locker room most times and not guys aren’t thinking about investing or guys aren’t thinking about real estate syndications and different things like that. One, guys are young, they’re not processing it like that. But I was fortunate enough to, when I got to Seattle in particular, I was fortunate enough to be around guys like Marshawn, Michael Bennett, Richard Sherman, all these different guys that were like-minded when it came to investing in what we’re going to do with our money.
Marshawn say, “Man, you got to count your chickens.” That was a thing in the NFL. In our locker room as the veteran player, for me, when I used to walk into the locker room, we had 6:00 AM workouts and stuff. Myself and Michael Bennett, we controlled the speakers in the locker room and the first thing we’re doing, we’re playing Rich Dad, Poor Dad. We’re playing different books and audio books or whatever, making sure that guys understand, like “This is extremely important too because this ride can end immediately.”
So as far as for being exposed to different syndications, it’s all about just having the conversations with one another. “Oh man, Marshawn, you’re in real estate man. Who’s, how are you doing it? What are you doing? Who’s bringing you these deals?” “Oh man, I’ll put you in contact with such and such.” “Oh man, Richard, what you got going on?” “Cliff, man, I know you’re into real estate. What you got going on?” And then, “Okay, you meet this individual.” Next thing you know, you’re meeting other people that are doing it and then you start hearing more and more deals start coming your way.
Now, it’s on you to vet through those deals to make sure that you’re not getting guy or it’s the right situation for you. So it just boils down to having a conversation. But networking, money and investing is like religion and everything else at the dinner table. No one really wants to talk about it in the locker room, you know what I mean? And for us, it was completely different.
We wanted to talk about it because we wanted all of us to be a part of being able to obviously capitalize off the money we’ve been able to earn on the field. And honestly, I think that’s why we were so good, is because we were truly a brotherhood. We were truly friends that wanted to talk about all the different things that we had going on and no envy or anything like that came about. And so that allowed us to grow in whatever avenue we decided we want to go in.

James:
Yeah. And I think that’s a good, do you think you guys were so passionate about that? Because that’s what it’s about, right? That networking and vetting people through referrals and those, I mean that the best deals I’ve ever done or best people I’ve ever met is usually through a personal referral.
Do you think that your locker room was so into investing? Because of how many players when they leave the NFL or leave any kind of professional sport, there was some stat that came out or it was that Sports Illustrated said 78% of NFL players go broke after the first two years of their retirement. And that’s it, that’s a scary stat. That’s not a high test rate.

Cliff:
No doubt. But now, I also want to talk about that stat too, just in general, right? Because you got to think about it, the average is less than three years in the NFL, right? So in that three-year span, have you accumulated enough money to actually be good for the rest of your life? 99% of the time, no you haven’t.
Now, have you made some decent money? Yes. But you’re also 22, 23, 24 years old, haven’t bought a house. You know what I mean? You’re still training and different things like that. So I can understand how some guys may be broke, but also guys haven’t really earned that much money to be financially set for the rest of their lives. Usually that’s your second contract, usually that’s when you’re 27, 28 years old.
But knowing that stat, for me in particular, I started thinking about that. I started thinking about, “Okay, well if the average is less than this, all right, I need to start putting money away, I need to start putting money away in the 401(k) plan that they have in the NFL.” Which is pretty solid. I know some people don’t necessarily believe in it, but again, I’m all about diversifying and putting money in different places.
But the conversations of just talking about what we’re investing in, you’re starting to see athletes are thinking more about investing in where to put their money, because you see Kevin Durant, Steph Curry, all these guys are making big boy moves. And if you’re not where they’re at financially, but you’re thinking that way, you’re getting that right mindset and it’s all about just not wanting to be part of the statistics as well. So you start to have these conversations with one another and guys tend to be on the same page.

Dave:
Cliff, that’s an awesome statistical analysis. I love that being a data nerd. But it’s also true if you compare that to how many 24-year-olds just go broke, just in general probably, I think most of us were there at some point being broke. But I love what you’re saying about just normalizing the conversation about money and investing.
I feel like that’s just so important and people don’t want to talk about it. It doesn’t make any sense. It’s exciting. And personally I think it’s kind of fun. I guess itself and I have a podcast about it, but I mean I think it’s just so important if you’re of that mindset to try and teach other people that it’s okay to talk about it and it’s fun to talk about and it’s actually going to really benefit you.

Devon:
One thing I’m passionate about within that is I’ve been in a lot of locker rooms and guys have the assumption that it has to be the star player. And it’s that guy who’s doing, who’s making all the moves, who’s doing all of that, and then all the other guys, it’s this kind of unsaid thing where you got to football, better be your life, you got to be locked in if you want to keep making it, if you want to do this, and being a person who, I feel like I’ve been kind of in the middle, I’m never been a pro bowler. I’m not going to be a Hall of Famer one day, I haven’t won a Super Bowl, but I’ve been blessed enough to have a very long and successful career.
So I can relate to some of these guys who’ve in the years, 3, 4, 5, 6 years, but maybe didn’t sign a mega deal. No, it’s even, it’s just as important if not more for you to start to build out in investments to look at things differently. But a lot of those guys, which is majority of the locker room, are so locked in on just trying to survive as long as they can in the NFL, that they don’t revert any of their attention to what they need to be doing outside of football.
So in the locker rooms I’m in, I have a lot of conversations with those guys because, I was just with Arizona and it’s like, it is not just Kyler Murray and J.J Watt and AJ Green and those guys who need to be making moves in our locker room. It’s the guy who’s in year three who is hoping to get another deal.
Like, “What are you doing with the money you’ve accumulated? And even if you don’t have enough to sustain you the rest of your life, how can you use the money you’ve made to propel you into the next thing?” And helping guys think that way I think is really important and the difference in the locker room.

Cliff:
But the goal also, to add onto that as well, I think it’s a confidence thing. And I’m not just even talking about athletes, we’re talking about money in general. It’s not something that’s taught in school. Financial literacy is not something that’s taught across America. So people aren’t confident talking about something they don’t really know much about.
Now, when you bring the athlete’s perspective into it as well, it’s the same thing. “Now, I got a couple of dollars, I still don’t know what to do with it.” “TV tells me I should go buy this Rolls-Royce.” And that’s probably the dumbest thing to go do. So it’s the confidence thing in understanding financial literacy.
So as we know better, as athlete people, as we understand money and we got to give the game back to the youth so they can do a little bit better as they come through the ranks as well. But I think it’s more of a confidence thing and just know you’re not confident because you don’t know understand it or you don’t know it.

Dave:
That’s such a good point. I mean, you wouldn’t want to go talk to someone about something you don’t feel comfortable with. It always feels like you kind of want to go home and learn a little bit by yourself so that you’re at least literate enough in financial terms to be able to have those conversations, but which is great. Why I guess, why you’re putting Robert Kiyosaki and Rich Dad, Poor Dad on the workout playlist.
I mean, I thought I learned, listened to some pretty nerdy things while I work out, but that’s another level right there. But it’s helpful, I think to just give people that background knowledge so that you can start having those conversations.

James:
And Devon’s going to have to start bumping the OTM. On The Market. Devon, I want everybody here [inaudible 00:31:18].

Devon:
Everyone here On The Market.

James:
Every what podcast. So you guys have both been actually fairly active investors, passively actively for the last five to eight years and it’s been a little bit of a different market. We’ve seen the ramp up, 2012 it’s kind of when the market started really turning a corner again, at least in the Seattle market it did, I’d say 11, 12. And then we saw the craziest market I’ve ever seen in 2020, 2022 where there were some really massive gains going on.
And how was you guys, in going through… Because this is going to be your guys’ kind of first SAR cycle. I know when I was really young, I was in real estate and how I got started was in door knocking and wholesaling. And then 2008 happened and I learned a lot of major lessons at that point.
And we’re not going into the same thing as that, but we’re going through a different dip in the cycle and I know, what have you guys been doing to change with the market or as passive investors, what are you guys looking for or as projects that you’re getting involved in, have you guys gotten more cautious, go on the deals you’re looking at, or are you guys in the middle of deals right now that you’re having some issues in? Because that’s always that learning curve.
The markets are good and then they’re not good and then they can level back out and it’s just those constant waves that you got to ride as an investor. What kind of lessons have you guys learned, or what has been happening with your projects in the last nine months?

Cliff:
For me, I think it’s all about being creative. Getting creative. I just closed on apartment building about two months ago and we did seller financing. The terms made sense, the interest rates and everything else made sense so we pulled the trigger on it. So I think it’s just all about being creative and how you’re financing because money’s getting more expensive.
The rents have been at was crazy for the longest. Now they’re kind of starting to soften up a little bit. So you just adjust and your performance. For me in particular, I’m very, very conservative in my approach with performance and different things like that. So I never want to be in a situation where I’m upside down because I was thinking REITs were going to be $2,400 and right now they’re freaking 1500 bucks. Let’s just put it at 16 or 1700 bucks or whatever the case may be. So I’m extremely conservative when it comes down to that type of stuff, but I’m still looking for deals.
The one quote that sticks with me is Warren Buffett’s quote, “Be fearful when everybody’s greedy and be greedy when everybody’s fearful.” I feel like we’re about to be in that process right now. We’re about to be in a space where everybody’s kind of being fearful. So I think opportunities will present themselves and now it’s all about just getting creative on how to acquire these assets. And I’ve been fortunate enough to find different ways of doing so.

James:
The apartments have gotten better in Seattle, the deals are there, that I mean, because it was hard to lock down anything decent sized the last 24 months. Now it’s, they’re actually, there’s really good opportunities out there right now.

Cliff:
No. Seattle’s a different beast, man. I don’t buy any of my multi-family stuff in Seattle just because it’s, one, too expensive, a lot of money chasing a lot of the same deals and so I kind of stay away from that.
But in Seattle in particular, we build spec homes and I’m on the east side in Bellevue, so you being from this area, you understand it’s a different ballgame as far as for what homes are going for and it has softened up a little bit. But we built some spec homes here and then I take those proceeds and I go buy stuff in the Midwest. I go buy stuff in the southeast region for cash flow and some appreciation as well.

James:
Yeah. Good news is this, actually Bellevue’s picking up. The last two weeks right out the gate, the transactions are moving again. It was in stall mode for three to four months and I think it might have just been a lot of seasonal change too. It’s the momentums picking back up. We sold seven, eight homes in the first two weeks of the year.

Cliff:
Yeah. I just closed on a property. We pre-sold it. And it’s funny because we pre-sold it early part of, or the end of 2021 and everyone’s like, “What are you doing? You’re crazy. Why would you pre-sell that? You’re leaving so much money on the table.” And just like my football days, I’m all about guaranteed money. I don’t care how big your contract is, how much money’s guaranteed because if I blow my knee out, I know that’s all I’m leaving with.
So it’s the same exact thing. The same exact approach with some of our spec homes is, if somebody brings us something that makes sense, we sold it, we pre-sold it and then at the end of the day, we just closed on it about a week and a half ago and people were like, “Oh my gosh, you’re a genius for pre-selling stuff.” You know what I mean? I’m like, “Yeah, because I’m going with that for sure thing.” You know what I mean? I’m not chasing the extra couple hundred thousand just to lose a few hundred on the back, dude.

Devon:
I would say on my end a big shift I’ve made is because I’ve been playing in the NFL when I first started investing, I was doing a lot of turnkey properties or close to because I didn’t have the time and I didn’t feel comfortable enough overseeing rehab jobs, big projects essentially. And now, I’m kind of to the point where I transitioned and I’ve identified certain markets where I can get things off market for way below market value and add more value to them through renovation and then refinanced the whole birth strategy essentially.
And I’ve had a lot of success in the last couple of months and even right now I’m, going to be closing on a 6 plex in Tampa, Florida and I’m essentially borrowed off market from a wholesaling team that I’ve built a good relationship with and I’m buying it cash. So been able to get a really great deal on it, going to put a little more cash in it to do it up, do it really nice.
And once again like Avril said, my assumptions are very conservative. I think I’m going to be able to get 2K plus in rents. I’m assuming I’m going to be able to get 1600 and I feel like I’m leaving a lot of room to be successful in planning for worst case or rents not to go up.
I’ve also started to say, in a lot of markets I’ve seen rents either stay the same or go down. So I’m keeping my projections as the same for the next couple of years where it’s, I don’t think that’s actually going to happen, but I don’t want to be like, “Oh, in two years I’m going to be able to get 2200 on this.” I don’t want to make those assumptions right now. I’m keeping it conservative and if that happens I’m going to be even happier.
So those are the kind of things and how I’ve transitioned because of my understanding of real estate, the relationships I have and the deals that I’m able to get by using capital and getting it back out once I refinance as opposed to what I did when I first started getting into real estate and buying turnkey or closer to turnkey style properties.

Dave:
I love that advice about being really conservative, especially right now given the economic climate with rent increases. The last couple years, it was safe to assume that rent was going to go up and now it’s really flat and you’re seeing a decline.
And when people ask me about how to underwrite deals, like you said Devon, I love putting myself in a position where it’s great if I’m wrong, I like to believe that I’m right and like, “Yeah, it’ll be flat, but if I’m wrong, that’s even better.” So it’s just a win-win situation. So I think that’s great advice for this type of market.
If you’re going to underwrite a deal, assume the worst because it is really uncertain right now, and if it still works and things aren’t as bad as they could be, then you’ll probably benefit.
One thing you both seem to do is invest in multiple locations and markets across the country. So I’m just curious, Cliff, we’ll start with you. How did you pick those markets? What type of analysis and research do you do?

Cliff:
Oh man. So in the Midwest in particular, I went to Purdue. So I invest in Chicago in particular because one, my best friend, he was in my wedding and everything I met at Purdue, he’s a GC. So as you all know, real estate is the ultimate team sport and football is the ultimate team sport. So I understand that you have to have the right pieces in place to be able to have some success. So I picked Chicago because I had a GC, I had a property manager that I’ve known for years that is crushing it out there. So that’s why I picked the Chicago market.
Now, obviously there’s tenant laws and different things that you have to deal with a little bit out there, but that was okay because of the cash flow that I knew I was going to be able to get. And come to find out, the Midwest actually has been one of the more stable markets in the country during this little downturn.
But a couple, about a year and a half ago, people would’ve been saying, “Why would you even invest in the Midwest?” And then I’m in the southeast region as well. I’m in Huntsville, Alabama, growing market, great market, a lot going on out there. And my business partner actually put me into that market.
She owned a lot of real estate out there. There was a property that presented itself that was actually right next door to her property and they couldn’t take the deal down by themselves. And she brought it to me and she already had the infrastructure, she had a property managed, she had the GC, she had contractors and different things like that already in place. So it was really just buying into her infrastructure and we were able to stabilize and we actually just cash-out refinance a few months ago on that deal in particular, but I’m a big team player.
I understand that you need teammates and how I judge all these things is, “Hey, I’m the general manager, my asset managers, the doggone quarterback and our contractors and everybody else is the old line.” That’s how we move. That’s how we’re going to make this thing happen. And again, there’s a lot of football analogies, but that’s definitely how I’m moving and things have been working out so far.

James:
So as a GM, have you made any bad picks? Is there any of that?

Cliff:
There’s always bad picks. There’s always bad picks, right? There’s always going to be a few bad picks, but I’ve been, knock on a wood, I’ve been fortunate enough that it hasn’t been any bad picks to the point where we’ve lost money.
The deal might not have worked. I might had to sell it early and get out of it, but we didn’t necessarily lose any money. We lost a little bit of time on that property, but we didn’t lose anything. So I’m very appreciative of that so far and hopefully we keep that trend going.

James:
Definitely the trend you want to stay on.

Devon:
For sure. And to answer your question for me, I would agree, I just say it a little differently. I look at the markets where I can find my core four. Here, people talk about the core four a lot, and where can I find a real estate agent? Where can I find the proper lending contracting team and property management? And then what I look at outside of that, is it a growing, is in an area that’s growing? It just scale there.
I don’t want to go somewhere where I’m only going to buy one property because a lot of the stuff I look at is single family and smaller multi right now. So where’s a market that I have the core four and there’s opportunity to scale and when I identify those markets, then I’m willing to invest there. So those are the main things that I kind of consider. And it’s usually through referrals.
Maybe someone knows great real estate agent or broker in, that’s how it happened for me in Tampa, actually through Kathy. Met a great real estate agent and team Kathy, Peggy, shout out. That’s my girl. But I met through her and then I built a team out in Tampa through networking and that’s why I’m investing in Tampa right now. So if you can get your core four and you believe you can scale, then I invest in that market.

Cliff:
And I agree exactly. I mean you have to have those that core four for sure, and any and every market that you go into and of course you got your market analysis. You got to see population growth, you got to see job growth, you got to see all these different things as well in these markets.
And these are all things that I know I’m privy to and that I look at before I go into any market, but having some individuals that you can trust, I think goes a little bit further than just even some of the market analysis. Just having teammates that you can trust that they’re not going to screw you over as well, right?

Devon:
Absolutely.

Dave:
It’s such good advice. And so many people I think obsessed, especially if you’re investing passively or out of state, they obsessed about what market to invest in. And I recognize that some of that is my fault because I regularly published lists of best markets to invest in.
But so much of it is about just developing the right team and like you said, it’s a team sport. The difference between investing in Tampa and Jacksonville, just picking two random cities, it’s probably not that much on average. And if you have a good team, I think you could either one could be better depending on how good your team is, it’s not really about the city. There’s so much more to it. So I think that’s really good advice

Devon:
Yeah. To add to that for instance, in Ohio, I love the Midwest too and I know Cliff was mentioning the Midwest, but I don’t really like my team in Ohio right now. So I’m probably getting out of some of the stuff I have in Ohio.
It’s cash flow great for me but my property management, I add a lot of issues. The city of Cleveland’s giving me a lot of issues. I’m just kind of over it. As opposed to another market, I’m doing a lot of stuff in Tampa right now. My team seems to be clicking and it’s great.
So it’s like I know people making a ton of money in Cleveland and in Ohio in general, but it’s been a bad experience. I don’t really like the team I have and I’ve been trying to fix it and it’s just, I’m kind of over it at this point. So I think that’s a good testament right there.

Cliff:
Well sometimes you got to fire the coach. You got to fire the coach.

Devon:
That just happen in Denver, is it Dave?

Dave:
I’m not really a Broncos fan. Actually, Devon I’m a Giants fan, so I remember when you went in Seattle. I just lived in Denver so I sort of like the Broncos.

Devon:
Don’t be surprised when the Giants beat Philly, I’m calling it right now. Ain’t got nothing to lose. And Philly ain’t hot right now.

Dave:
Dude, this is what the Giants do. They sneak into the playoffs and every five to seven years they somehow take that miraculous run through the playoffs and win despite all odds and other teams being better than them. So we have a track record of being successful like this. I think it’s our year.

Cliff:
But y’all have Manning back there.

Dave:
I know, I know.

Cliff:
They got some Hart.

Dave:
Anyway, well the last question I wanted to ask you guys before we get out of here is Cliff, you made a comment about this at the beginning that you’ve, there’s some things you’ve learned in the NFL and as an athlete that you applied to your real estate investing career and I was curious what those lessons are.

Cliff:
Yeah. No, I mean I feel like this is any space as far as for any profession, I feel like there’s just a few different things that honestly separates people from having, quote, unquote, “success” in their profession, and it honestly, it’s going to be the hard work, it’s going to be consistency and you got to be all in, right? You got to be all in with the NFL in particular.
Part of the problem we talked about guys going broke and not investing and different things like that is because they’re all in, they’re not even worried about their money right now. They’re all into this particular space right now because they just want to get playing time. They want to get to the new deal, but they’re not thinking about, “Okay, what’s going on with their money?” Now, I’m not giving them an excuse or anything, I just know firsthand, you know what I mean? And so it’s no different with the real estate game. I truly like this.
Before I got on call with you guys, I’m running through Buildium and I’m looking through making the who’s delinquent? Who hasn’t paid? Man, we got three vacancies. Every single day that’s my life right now and I really like it, so applying those things.
And then I talked about earlier being the GM, having the quarterback as the property manager, having your contractors as the old line, really putting that, those analogies but that’s really how I construct my business and how I’m moving in this space. So that’s kind of how and what I’ve learned and I’m trying to apply those same things in the real estate game and also my business.

Dave:
What about you Devon? Is there anything you’ve learned that from being an athlete that translates to your investing career?

Devon:
I would kind of relate in, it’s about building the team around me that fits what I need. Being on a football team my whole life, I play a certain role on my team. I have a certain skillset and making sure I surround myself with the individuals I need that’s going to get the best out of me and it’s going to allow me to focus on what I’m best at. And I think that’s no different in real estate.
So on football I’m an edge setter. I’ve always played the run really well. I’m going to make sure that I’m in a position where that’s, I’m able to always do my strong, what I’m best at. What helps me do that, film study, recognizing formations, all of these different things. What’s something that I’ve never been known for necessarily? I haven’t had a double digit sack season in my career. So I need to work on pass rushing. What do I do in the off-season? How dare a pass rush coach? I really put emphasis on my pass rushing. So I approach real estate the same way.
What I’m naturally good at? I think one of my strong suits is networking, building relationships, kind of big picture seeing it. But I need people to help me with the specifics. I’ve never put hammer to nail. I need a good contractor and good property management so I can understand it, but also who’s going to be overseeing those kind of things. And that’s really pivotal.
So understanding my strong suits and knowing where I need really strong teammates and players, that’s going to help me get to where I’m trying to go. So I think we can relate football to real estate in those ways, it’s allowed me to scale faster and build the people around me that I really need.

James:
Devon, I really like that. It’s sticking to what you know and you do. We do really well as investors in Seattle because we stick to what we know. We’re not like we go after heavy value add where we can structure the deal. We have that construction background and it’s the best way as you’re going through a transition in market to mitigate risks too.
If you know what you’re like right now, my buy-backs is sticking to what I’m really good at. Whatever my teams are ready to go with, that’s what I’m buying. It’s not, has nothing to do with liquidity. It’s how well can we execute that plan. And I think that’s really important for today’s market.
And then as you’re learning things, like he was saying, he’s on the off-season, he’s working on his pass rush and he’s working on his edge setting. Those are things that you can take the step into but as we’re in that transitionary market right now, stick to what you’re really good at.
And if you’re really good at it, there’s less people competing with you too. So that buy opportunities are better in addition to how to maximize that deal, and that’s where the spreads are. When people are a little bit freaked out right now, if you stick to what you’re good at, you’re going to get the best possible deal at what you’re really good at.

Cliff:
To elaborate on that too, I also think with real estate in particular, there’s so many different ways of making money in real estate. You can be a wholesaler, you can buy a whole development, all these different things. So the hard part about real estate is the shiny object syndrome and trying to spread yourself thin, but correlating that with sports in general, it’s only been a few players that can play two sports and be a pro at them. There’s not that many guys that can do that.
So, know what you’re good at, stick to it, focus, be all in on that and be great at that. Be great at pass rushing. That was my thing. I was a pass rusher. I set the edge with nothing I need to, but I’m getting after your quarterback. That was my, so I know who I am and that’s the lane I’m going to stay in.
And it is the same thing with real estate. I want to buy multi-family properties. I want to buy value add multi-family properties, and I’m going to hold onto them. I’m going to cash flow the mess out of them. And then, like I said, I do spec homes here on the east side of Seattle and that’s what I know what goes into that and I use those funds to go buy those assets that I’m talking about. But that’s my niche, that’s my lane and I want to grow in that space and get better at it and hopefully become a pro bowler and a Super Bowl champion.

Dave:
That was a great way to exit. That was a quick walk off line. So now we got to end the podcast.
Well, we are out of time, so I just wanted, thank you both for being here, but just wanted to ask you, Devon, where can people connect with you if they want to learn more about what you’re doing or follow your progress?

Devon:
You can find me on all social media @devonkennard, and then also my website www.devonkennard. I also have a book coming out in April, so it’s all about financial literacy in real estate investing. So check that out. You’re going to be able to pre-order here soon, so make sure you follow me on social media and stay tune in there.

Dave:
Awesome. That’s great. Well, congratulations on the book.

Devon:
Thank you.

Dave:
What about you, Cliff? Where can people connect with you?

Cliff:
Yes, all my real estate stuff is on TikTok @cliffavril, A-V-R-I-L. All my real estate stuff is on TikTok, but I’m also on Instagram as well. So you can follow me there and get snippets of some of the stuff that I post on TikTok.
And before we leave as well, I want to let you guys know I’m a big fan of the show On The Market. I kid you not, I listen to every single episode whenever they drop. Like this morning, I kid you not like, all I listen to is real estate podcast in general, but On The Market with you guys when you guys do the panel and everything else. I love it, man. Keep up the good work.

Dave:
That’s awesome. Thank you so much. We appreciate that.
All right, well, Devon Kennard and Cliff Avril, thank you guys so much for joining us. We really appreciate your time.

James:
Thanks guys.

Devon:
Thanks for having us, Meyer.

Cliff:
Thanks for having us. Appreciate you guys.

Dave:
Was that just a dream come true for you?

James:
It really was. Just anytime that we can bring on a Seahawk player or any athletes, I’m all in on that show. I’m just permanently requesting a panel spot for those shows.

Dave:
Oh yeah. Well, so after we finished recording the interview, we were just saying goodbye to Devon and Cliff and before, right before we were recording this and Cliff revealed that he is actually a fan of On The Market and listens to this show. And wait, was that actually, was that when we were recording?

James:
I don’t know if it was when we were recording, but I just had an idea we should get him a Seahawk jersey that says On The Market on the back. I’m totally getting this.

Dave:
For either way, we should do that, but either way, I just wanted to know what it felt like for you as a diehard Seahawk fan to have a Seahawk legend tell you that he was a fan of what you’re doing.

James:
I’m not going to lie, I was having flashbacks of when they won the Super Bowl against the Broncos, it was like I felt almost that good.

Dave:
Oh my God. Yeah. I can imagine that. That’s pretty cool experience. Well, that was super fun. Fanboying and all, that was really insightful. I think that they both have really good perspectives and it’s really just interesting to hear a little bit about how different people get involved in real estate even while they’re in their career.
Because obviously being a real estate, excuse me, being an NFL player, this high profile thing, but I think what they were saying really applies to anyone, regardless of what career you have, it’s about talking to your friends and your colleagues, normalizing discussions about money and investment and trying to help each other, building out your team. These aren’t things that are necessarily just restricted to NFL athletes. It’s for anyone who’s trying to build a portfolio while they’re in a full-time job.

James:
Yeah. It’s all the basics, and their stories matched up with how we all got started. Cliff was saying he bought properties because he had a general contractor in that market that he knew really well and trusted. I mean, I did the same thing when I first bought my first big project, I hired a friend of mine because I trusted them and it says the same beginning steps and it was really cool to see that, because a lot of times too, sometimes it’s like, “Oh, these athletes, they have a lot of money. They just put the money to work with these managers.”
But they’re doing the day-to-day stuff that we all do, making sure rents are collected. Going through the, they’re going through their own performance and maybe checking them out. They’re not just going off of people’s words, but it’s that same day repetitive stuff that we do as investors and they’re doing it and doing well.

Dave:
Yeah, absolutely. I thought it was great and learned a lot. We were joking about making a show where James goes knocks on doors with NFL players and maybe we’ll, that will be our OTM spinoff sometimes too.

James:
You know, I’ll feel pretty safe if I’m at a bad house with a big 300 pound lineman behind me.

Dave:
Yeah. Yeah, absolutely. Oh dude, the other thing I forgot about that I thought was so funny was Cliff said something. He was like, “Yeah, all those financial advisors tell you to buy a Rolls-Royce. That’s the stupidest thing you could do.” Jamil just bought a Rolls-Royce.

James:
Oh my God. I was dying. Whatever it was, the coconut or whatever. I was absolutely dying.

Dave:
It’s so funny. I don’t think Jamil would argue that it’s a good financial decision though, but it’s probably fun.

James:
No. I don’t understand that. Yeah, you can buy a truck too. That’s also a write off and cost a third as much.

Dave:
Yeah. Yeah, for sure. All right, well that was a lot of fun. Appreciate you being here, James. Just know everyone who knows who you are, but if they haven’t connected with you in a while, where should they reach out to you?

James:
Good place to find us is on Instagram’s an easy place, jdainflips or at jamesdainard.com. You can get more information from us and more tips on investing.

Dave:
Awesome. Great. And I am @thedatadeli on Instagram where you can find me. If you have any feedback about these shows, have any questions, hit up either James or I.
And if you like this show, please make sure to give us a five-star review on either Apple or Spotify. We really appreciate those reviews. If you’ve been listening to the show, haven’t done it yet, please go do it now. It will be a great help to us. Thanks again for everyone who’s listening out there. We’ll see you next time for On The Market.

James:
On The Market is created by me, Dave Meyer and Kailyn Bennett. Produced by Kailyn Bennett, editing by Joel Esparza and Onyx Media, researched by Puja Gendal and a big thanks to the entire BiggerPockets team.

Dave:
The content on the show On The Market are opinions only. All listeners should independently verify data points, opinions, and investment strategies.