Charles:
Welcome to another episode of the Global Investors Podcast; I’m your host, Charles Carillo. Today, we have Clive Davis. He began his professional career as a corporate lawyer with a Wall Street law firm, Clive, then spent six years as in-house counsel with the then-biggest pharmaceutical company in the world and then became a chief compliance officer. After twenty years of corporate life, Clive made an entrepreneurial pivot full-time into the world of commercial real estate, where he is currently focused primarily on the acquisition, ownership, and operation of large-scale multifamily communities and is a general partner with over $135M of assets under management. Clive has been investing in and self-managing his real estate investments since 1999 and is currently invested in over 2,000 multifamily doors and 317 hotel rooms. So thank you so much for being on the show, Clive.
Clive:
Thanks for having me, Charles. Great to be here.
Charles:
So please I give you a little background on yourself, but if you can go into a little bit more depth about your yourself, both personally and professionally prior to getting involved with real estate investing and becoming an entrepreneur.
Clive:
Yeah. So personally, I am a father of four children ranging in age from 13 to 24. My oldest is a college graduate and is currently resided in London where she’s doing some postgraduate work at the London School of Economics. London happens to be my hometown. So that’s where I was born. I grew up in the uk and we relocated to the US in the mid eighties. I was 13 going on 14 at the time that we relocated. So most of my school in New Jersey is the closest thing to a home state for me. That’s where we relocated to. So I did high school college grad school, law school between New Jersey and New York. In the last 18 years is when I relocated to Atlanta, which is home now, and has been home for the last 18 years.
Clive:
You touched on kind of the professional background. So I won’t spend much time there, but started out corporate transactional lawyer, wall Street Firm. So kind of cut my teeth there before transitioning into farmer. And like you said, after 20 years, I asked myself if not now when, and the question I was trying to answer is, Hey, you’ve always had this interest in real estate. You’ve kind of dabbled in it, kind of done it in somewhat of a small way, kinda a two unit here five unit there. But why don’t you give it a try and see if you can do that full-time and, and kind of make a go of it. And so I took a leap of faith at the end of 2016 transitioning into 17 and just you know, really kind of charted a course for how do I get into this stuff.
Clive:
Firstly, I started with invest in my retirement related funds, which I had moved into a self-directed IRA I’d learned about despite my 20 years in corporate America. I’d never heard about self-directed IRAs before. I kind of parted ways. There’s good reason for that. You know, wall Street doesn’t necessarily make money if you are self-managing or self-directing your own investments, your retirement related investments. So there’s no surprise that they don’t really publicize that. So I invested in probably a dozen deals in 2017 into 18. I was just steadily invested in commercial real estate deals, primarily multifamily, which is what I ultimately aspired to get into as a sponsor. And I threw in some hotels there in the mix just to diversify things. The, the three hotels each of them are within a 25, 30 minute radius of me here in Atlanta.
Clive:
So that’s that connection. I tell people I was by no means an overnight success. I didn’t just decide, Hey, I wanna buy large scale multifamily and something landed in my lap in a month or two. It really took the better part of two years of me underwriting, touring deals, establishing relationships with brokers, property management companies, all of the players that you need to be familiar with and have them become familiar with you. And from the very first offer I submitted on a 92 unit back in 2019, it took me the better part of two years before I landed our first deal. And that first deal we got in the summer of twenty one, two hundred and forty four unit that we acquired for just about 30 million. We raised eight and a quarter million in equity on that deal. And the same week that we closed on that, I got a call from Cushman in Wakefield saying, congratulations, Clive you’ve been awarded a 200 unit $40 million deal.
Clive:
And that we closed literally three months right after we closed the first one. So the law of the first deal that you’ve probably heard about, and, and I know Michael Blanc is a big proponent of the law of the first deal, which basically says the first deal will be the toughest to land. But each subsequent deal will, will come quicker and more easily. Well, I lived that reality after two years of knocking on the door and not having anyone let me in. You know, I started to have some momentum once I got that first deal.
Charles:
Yeah, that’s great. The how was it, were you raising funds for two deals at once in that summer of 21?
Clive:
No. So we actually, we closed the first one in late 21. We, we got awarded it in the summer, didn’t close it until I think it was October or November. And we, so we closed that one, raises was already done, and then the next one we closed in early 2022. And so we weren’t kind of simultaneously raising for two deals. So we had that, that comfort going for us.
Charles:
Yeah, that can be a little tricky when extra deals are coming out before one deal has been finalized, because then you’ll have people that are interested in deal one asking questions about deal two <laugh>.
Clive:
Yeah.
Charles:
Yeah. And
Clive:
You, you don’t wanna cannibalize your, your, your own deals. Yeah, yeah,
Charles:
Exactly. So what was the mindset change that you need to make from transitioning from a corporate attorney to an entrepreneur? I mean, especially with how you were viewing risk and investing during that time in your previous career and in your current career?
Clive:
Well, I always kind of segregated what I did for a living as whether I was a corporate transactional lawyer. Obviously, your your role is in part to, to mitigate and manage risk. And then when I transitioned to become a chief compliance officer, your, your, the entirety of your role is about managing risk and ensuring that the business is, is taking the least amount of risk possible. In my personal life, I, I was always more willing to take risk than I was in my professional life when I’m advising others and, and, you know, have a responsibility there. So that wasn’t so much of a shift. What was a shift was really weaning myself away from the comfort zone that is a well paid, well compensated corporate job where by and large your paycheck is gonna hit, your direct deposit’s gonna hit every two weeks, barring some catastrophe.
Clive:
Going from that, I went from that comfort zone to, okay, I have no, I shouldn’t say no, I have nominal income coming in at this point. I still had some small rentals that were generated some, some positive cash flow, but, but, you know, fractional of what I was getting from my corporate job. And so you know, for the first time since I was an adult, I now had more money leaving my household on a monthly basis than was coming in. And so that took, you know, I had to wrap my head around that reality. So that was some of it. And then just realizing, I just got to the point where I said, you know what, why don’t I make corporate my backup plan? You know, if this leap of faith for whatever reason doesn’t work out, maybe I’m not suited for this, I can always go find a job that’s going to, you know, keep the lights on, you know, pay the mortgage and the bills and all of that.
Clive:
May not be a job that, you know, I’m writing home about or bragging about, but we’re gonna be okay. So once I adopted that mindset and said, you know, give this leap of faith everything that you’ve got, and let’s see where the chips fall you know, it, it, it got a lot easier for me to kind of just keep pursuing this. And you know, once I got that initial breakthrough that was, that served to be validation of all of the efforts that I had been engaged in over the, the two or three years prior leading up to that. So then the other thing is, is just recognizing that the deals that we’re talking about, these are big deals for sure, but you’re not a loan operator, <laugh> you’re, you’re, you’re in it you’re doing these deals as part of a team.
Clive:
And so you know, it’s not just your success doesn’t depend on your own abilities exclusively and you can draw on the resources that others have to get these deals done. So, you know, once, once you start understanding these things, it, it becomes less daunting proposition than if you just look at it theoretically from a distance and, and say, you know, could I go buy a 30 million, 40 million, $77 million deal? You know, in the comfort of corporate life, it’s very easy to just say that’s uncertain. This is what I know, and what I know is that, you know, this, there’s some degree of certainty. And I say some degree because I tell people you know, you could go in tomorrow to the job and they could say, Charles you know, we really appreciate your service over the last several years.
Clive:
You’ve been an invaluable team member, but we’re going in another direction. We’re eliminating your department, or we no longer have a need for your role, or whatever the case may be. And that comfort zone that you thought was a comfort zone can be very quickly pulled out from under you. So the other thing I say is you can’t pass on to your heirs a high W2 compensation. And so I’m a big proponent of, even if you’re blessed to, to be well compensated in, in some corporate role, you know, what are you doing to translate or transfer that high compensation into something that is an a, you know, assets that are appreciated and value over the time that you can pass on to your heirs. Because as soon as you don’t punch in <laugh>, you know, that paycheck stops. And if you leave that employer obviously that income stream comes to an end. So you know, those, those are, you know, some of my thoughts about making that transition in the mindset.
Charles:
Yeah, the high paid W2 and not being able to transfer that to your era. I think, I imagine when you speak to people that are high paid w twos, they sit back and think about that because it’s usually not a mindset you’re thinking about or like a, a view of their job. You know what I mean? Yeah. It’s like providing from the now and here and not really looking too much into the future. So that’s a lot of great insight.
Charles:
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Charles:
One thing you mentioned, which is really interesting, and I I I read it in your bio, it was about you with your first real estate investments and you, you touched on it just recently here, is that you self-managed some of them. Can you tell us about a little bit about how self-managing, ’cause it’s something that I don’t think many people do, especially getting into syndications, they haven’t self-managed before, and it’s something I did for six years decades back in my portfolio. How has that made you a better investor with what you’re doing now by being a, a, a self you know, a property owner, a landlord, and a self-managing properties yourself?
Clive:
Yeah, so interestingly enough, this month actually marks the 25th year since I made that first real estate investment. And that was a duplex down in Cape Coral, Florida. My parents had retired there three years earlier from New Jersey down to Cape Coral in 1999. I was a junior corporate lawyer in New York City, and I picked up that duplex again back in 1999. Back then, I, I didn’t even know that there were options to do anything but self-manage. And, and maybe to the extent that I did, I was probably cheap and said, I can do this myself. Why pay someone 10% or whatever they may have wanted out of, you know, my rental income. So I just took the approach of you know, I’ve got family in the area, you know, they, you know, if I need an electrician or a plumber, you know, I can call dad and say, who do you use for plumbing?
Clive:
Who do you, who do you use for electrical? You know, I’ll make it work. And so I did it long distance and I did that for the entirety of my ownership, and I held that by all definitions, long term, sold that in 2018. Interestingly, that duplex that I acquired, I set up a checking account, I added my parents’ names to that account. I had the rents going into that checking, checking account. And that wa that turned out to be my way of kind of supplementing or subsidizing them in their retirement. So, you know, if the hot water tank went or the pool pump went or something and they needed some money, you know, I just kind of trained them to, to go get it from your account. You don’t need to ask me. And that, you know, that was a godsend. And so you know, the self-management piece, I would say it definitely you know, what I learned from self-managing the interactions with tenants, the interactions with contractors although with the deals that I’m involved with today, you know, we hire a third party professional property management company that deals with the day-to-day issues.
Clive:
I’m not getting calls about toilets and, and flood in or any other of those things that people cringe about when they think about being a landlord. So my role now is more so as an asset manager overseeing our third party property manager and ensuring they’re effectively implementing our business plan. But, but when they bring questions to me about a tenant who is delinquent on their rent or, you know, just day-to-day issues, most of the time, although we’re talking about a bigger scale, I’ve seen or dealt with that issue in a smaller, at a smaller scale. So a tenant being late, I’ve dealt with that. I’ve dealt with a hoarder <laugh> that I ultimately had to evict. You know, I’ve dealt with promises to pay that kind of don’t come to fruition. So a lot of the issues that I deal with or that my, my third party property manager brings to me today, I’ve dealt with those issues many times, albeit on a smaller scale.
Charles:
Yeah, no, and I think that’s a great, a lot of great insight and of to just working with tenants and contractors and knowing the ins and outs because when you’re on those asset management calls with your third party management company, now you’re able to know exactly what it is and you can relay that information detailed and clearly back to your investors. And I think that’s very important, you know what I mean? And so I just, I just feel it’s a very important thing and really rounding out your, your property management experience is, is going through that. So
Clive:
Yeah, for sure. So
Charles:
You went from having smaller rentals up to over 2000 units. Now, I mean, when you, what do you really attribute that to? Obviously you’ve utilized syndications was, I mean, you spent two years reviewing deals, making sure one checked and penciled before you went forward with it. What are some of the main things that I guess you can contribute to growing that fast in such a short period of time,
Clive:
Being intentional and pur and purpose driven? So when I the last small multifamily that I had was a five unit, also happens to be down there in southwest Florida. I sold that two weeks into covid. So this is March 31st, 2020. So as you’ll recall, I think Covid was declared a global pandemic on, on March 11th, 2020. I remember it well. And I sold the five unit a a few weeks later and I said, no more small multifamily, I’m going to do big deals. So once I made that decision, you kind of gotta reverse engineer. Well, if that’s what you’re gonna do, how are you gonna accomplish that? So I created what I jokingly refer to as a self-directed real estate MBA. And so for me, what that looked like was what I mentioned earlier. So it was in large part investing in institutional quality commercial real estate deals beyond kind of the ROII was expecting from any one of those investments, I was also getting a ton of education about large deals, what these business plans look like, what the capital stack looks like, what does investor relations look and feel like from this side of the table.
Clive:
All of the things that I was going to need to do eventually as a sponsor, I was getting kind of a firsthand view of it, albeit as a limited partner, investing passively in someone else’s deal. So that was one part of kind of my education, my self-directed MBA the other part was attending, you know, multifamily conferences, listening to podcasts. I, in 2016 and earlier, I don’t think I even listened to podcasts come 2017, I was listening to podcasts on a daily basis. And most of them were multifamily specific. ’cause That’s the area that I decided I want to get into. So, so attending conferences, being around other people who you know, were like-minded, all of that was important. Then the last piece for me was seeking out doing my due diligence and securing personal mentoring in the A to Z of how do you acquire these deals?
Clive:
And so I sought out and and, and decided on a mentor that put me in a position where I was exposed to prospective partners with whom I could potentially do deals with. I mentioned earlier it’s a team sport, so I knew very early, look, you’re not gonna be doing big deals by yourself, so where do you go to find prospective partners who have experience and the mindset and all of that that you’re gonna need? And then also you’re gonna need people to invest in these deals. So that mentoring program also gave me the opportunity to kind of parachute in and immerse myself and surround myself with people who were believers like me in, in commercial real estate and specifically multifamily. So all of those things were kind of what I did in preparation to really get prepared to, to make this a viable path.
Charles:
So you mentioned there about raising capital as that is obviously a very important thing. You raised over $8 million for your first deal in 2021. What I imagine since you are an attorney, you’ve raised money from many attorneys before and you speak their language. How does, how do you effectively raise capital from attorneys who might have a, that are still in that job, so they have a different thought on risk versus what you have now? How is, how, how do you have that conversation? Yeah,
Clive:
So I will tell you this, Charles attorneys lawyers are probably the most challenging of investors to raise money from. And that’s even with me, you know, being a lawyer, I, I say I’m a recovering lawyer, but yeah, so, so I know kind of the mindset. I, I speak the same language. I’ve kind of walked that path. And so you know, I know those circles, but what I I I’ll tell you is that, that risk aversion is real. That suspicion or skepticism is real <laugh> because lawyers wanna pick apart everything. And so, you know, when you are doing these syndicated deals, there is no negotiating the terms, the boilerplate language of the offering memorandum, the operating agreement, the subscription agreement. You know, if you’ve got a hundred or 200 investors, they don’t each get to negotiate language. But I found myself where lawyers are saying, you know, in paragraph three, line 27 on page one 12, it says this, I’d really prefer it to say this, and can we make, can we red line?
Clive:
And, and I’m like, no, you, you’re not getting this. So you run into that challenge ’cause they’re still trying to be a lawyer even in their private investments and, and I get it. So I wouldn’t say I have many. I certainly have a handful, maybe a couple handfuls within my investor community who are lawyers. The actively practicing lawyers, like I said, they, they can prove to be a little bit challenging, a little slower to pull the trigger. And some of them kind of kind of shift into decision paralysis analysis paralysis because they’re used to kind of that kind of rigor and analysis and well, what about this and what about that and what, and sometimes they, they end up talking themselves out of doing what is, you know, in my view, a a really solid opportunity. So it is real. It is a real thing.
Charles:
<Laugh>. That’s a great answer. So as we’re wrapping up here, what are some common mistakes that you see a real estate investors make in your, in your career of investing for 25 years?
Clive:
Yeah, so one mistake has fallen in love with the deal and, and not having a strong relationship with the sponsor of the deal. So I’m a big proponent of there, there, for the most part. There are always good deals out there. It’s harder to find good solid operators. And I’m at a point now where I only when I do invest passively, and I still do, I only invest in deals with sponsors with whom I have a pre-existing relationship that I can text them, pick up the phone. I kind of, I know where they live. I know kind of the family dynamic. I, I no longer kind of do the blind. Well, it’s a great deal. I don’t really know who these folks are, <laugh>, but the deal looks really good, let me move forward with it. And so that’s a big mistake that I think people make is they fall in love with the deal and they don’t necessarily do their due diligence on the sponsor of the opportunity. So that, that’s a big one.
Charles:
Yeah, no, that’s a, that’s a great way of doing it. When I, as you were saying that, I was looking back on deals that I passively invested with and yeah, the ones that have worked best for me have been the ones where, yeah, I have their phone number in my phone, I give ’em a text, I send ’em an email type of thing like that. And yeah, it’s, it’s a long-term relationship. I mean, once you get involved with it, this isn’t a, you know, this, you’re not flipping a property here, a single family house. I mean, we are, you’re doing something that could last five or seven years, you know what I mean? Yeah. So it’s just, I think people really have to understand that, that it’s very important who you choose to actually be the the, the operator of the deal
Clive:
And, and the beauty Charles of these private investments is that you actually have an opportunity to establish a relationship, hopefully before but also during with the sponsors in a way that you just can’t, when you buy Apple stocks, so you buy Apple stock, you try getting Tim Cook on the phone, anyone on his c in his c-suite, you’re, you are probably going to, the furthest you’re gonna get is a, a call center <laugh> where someone says, you know, how can I help you and, and redirect you? But you’re not getting to any decision maker that can actually affect the price of, of a Apple stock or share. So the beauty of these deals that we’re involved in is you can develop that level of intimacy and personal relationship and it can become a long-term relationship that can grow into multiple deals, multiple transactions over many years.
Charles:
One last thing before we, we close up here, ’cause we’ve gotten onto interesting interesting stray here is that when, when you are, say you’re interested in passively investing with a group, let’s just say how would you, how do you usually find them? Is it through an event and a face-to-face event usually? And then how do you kind of nurture that relationship before you’re ready to review deals that they’re sending out?
Clive:
Yeah, so it’s a combination. I’ve, I’ve invested with people that I’ve partnered with. And so I have kind of a core set of people that I’ve kind of partnered with on several deals that I’ve done. So there are times where they will independently do deals, and I’m not a a general partner on that deal, but I choose, I like the deal, I obviously know them well, and so I choose to invest in that opportunity. Other passive opportunities, I generally have met you somewhere. We’ve run into each other multiple times, likely whether it’s a multifamily conference or event. Again, it’s gonna be more than superficial. It, it’s, you know, you’re not just gonna get on a zoom with me and then three months later I’m investing in your deal. It, there’s gotta be multiple touch points where I’ve, you know, I I, I liken it to dating, right?
Clive:
So you go out on a first date, the chances of you <laugh> deciding you’re gonna marry that person after one date should be very slim <laugh>. You know, you want to, you want to go on the second date, the third date you wanna see them in a different context and see is, you know, the the person who showed up on the first date, do they resemble the person on the third date? And so you’ve gotta put in that time to make that and do that analysis. And it’s the same way with investing. Everyone looks good on the first date. If you can’t hold it together long enough on the first date to, to command a second one, then you know, you, you’ve got other issues. There’s some red flags there. So it’s a, it’s a good analogy for who you choose to partner with when you are a passive investor looking to place money.
Charles:
Yeah, that’s it. Take your time, build that relationship, understand you know, their track record a little bit more and about exactly what they do. So a lot of great information. Thank you so much for coming on. How can our listeners learn more about you and your business, Clive?
Clive:
Yeah, so I’m active on social media, LinkedIn, Facebook, Instagram. But the best way to get ahold of me is to go directly to my website, which is park royal capital.com. If they go there they can see other resources that I have giveaways that I have. And if they’re so inclined, they can also book time with me. And I love talking about real estate and would love to talk to others who are interested similar to me.
Charles:
Well, fantastic. Thank you so much for coming on today. We’ll put your link to your website into the show notes and looking forward to connecting you with you here in the near future.
Clive:
Appreciate it, Charles. Thanks again for having me.
Charles:
Hi guys! It’s Charles from the Global Investors Podcast. I hope you enjoyed the show. If you’re interested in get involved with real estate, but you don’t know where to begin, set up a free 30 minute strategy call with me at schedulecharles.com. That’s schedulecharles.com. Thank you.
Announcer:
Nothing in this episode should be considered specific, personal or professional advice. Any investment opportunities mentioned on this podcast are limited to accredited investors. Any investments will only be made with proper disclosure, subscription documentation, and are subject to all applicable laws. Please consult an appropriate tax legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of Syndication Superstar, LLC, exclusively.
