Real Estate Investing School Podcast – Episode 201: Unlocking Passive Income with CASTR

Release Date: October 14, 2024
Host: Joe Jensen
Guest: Lame Kenny Kinney, Owner of Elkridge Management and Holdings

1. Introduction to Lame Kenny Kinney

In Episode 201 of the Real Estate Investing School Podcast, host Joe Jensen welcomes Lame Kenny Kinney, a seasoned real estate investor and entrepreneur. Lame is the owner of Elkridge Management and Holdings, overseeing over 100 rental units and a thriving short-term rental investment firm. Balancing his professional life, he is also a devoted husband and father of three. Lame's journey began in the door-to-door sales industry, which laid the foundation for his success in real estate.

2. The Genesis of Lame’s Real Estate Journey

Lame shares his initial foray into real estate, highlighting his first investment property in 2018. Using a traditional FHA loan as his primary residence, he transitioned the property into a short-term rental out of convenience—“out of laziness” (00:37). This experiment proved profitable, netting him approximately $2,000 in the first month (02:39). Motivated by this success, Lame delved deeper into real estate education, particularly focusing on short-term rentals, which eventually led to the establishment of Elkridge Management.

3. Scaling Up with Creative Finance (CASTR)

A pivotal moment in Lame’s journey was his discovery of creative finance strategies in 2021, under the mentorship of Pace Morby. He coined the term CASTR, standing for Creative Acquisitions into Short-Term Rentals, which became the cornerstone of his rapid scaling. By leveraging seller financing, lease-to-own arrangements, and other non-traditional acquisition methods, Lame and his team were able to purchase properties efficiently and expand their portfolio to over 100 units within three years (10:39).

Lame Kenny Kinney (05:23): "Over the course of the last three years, really we've purchased over 100 doors. Our portfolio has kind of switched to where now we own most of what we manage..."

4. Diversifying Beyond Airbnb

Lame emphasizes the importance of not being solely reliant on platforms like Airbnb. Instead, Elkridge Management utilizes various contracts including insurance, government, and corporate agreements to fill their properties. This diversification ensures stability and reduces vulnerability to market fluctuations or policy changes by any single platform.

Lame Kenny Kinney (22:24): "We're not relying on Airbnb for our business. We have other ways tapping into it, the insurance contracts..."

5. Strategic Acquisition in a Challenging Market

In today’s competitive real estate market, buying properties at advantageous terms is crucial. Lame discusses strategies such as buying down the interest rate or taking over existing loans with favorable rates from previous years. This approach allows Elkridge to maintain strong cash flows even amidst rising interest rates.

Lame Kenny Kinney (31:50): "In today's market, you're not going to pencil any deal at 7, 8%, especially if it's a single door. You won't even 6%."

6. Navigating Challenges: The Cost of Renovations

Lame candidly shares one of his early mistakes—underestimating renovation costs on a duplex in Salt Lake City. The initial budget was $40,000, but unforeseen plumbing and structural issues escalated costs to $250,000. Despite the setback, the property has become one of his top-performing short-term rentals, illustrating the long-term value of perseverance and strategic management.

Lame Kenny Kinney (47:17): "We ended up spending about $250 grand on renovations. It was a waiting game in real estate, and I haven't lost yet."

7. Advice for Aspiring Investors

Lame advises new investors to focus on specific niches rather than spreading themselves thin across multiple strategies. For those managing fewer properties, enhancing guest experiences on platforms like Airbnb can be highly effective. He underscores the importance of operational excellence and market understanding to maximize returns.

Lame Kenny Kinney (30:51): "There's a lot of benefit to the everyday operator simply because of the time and attention that they can give it."

8. Personal Philosophy: Authenticity and Relationships

Beyond real estate, Lame values authentic relationships and personal growth. He stresses that the greatest asset is the knowledge and skills gained through his experiences. Building genuine connections and focusing on personal development are central to his approach, both professionally and personally.

Lame Kenny Kinney (52:36): "The greatest asset, the most valuable asset that we own is the asset between our ears. It's what you learn and what you become."

9. Future Aspirations and Dream Deals

When asked about his dream deal, Lame expresses a desire to invest in commercial real estate in Tonga. Despite economic challenges, he envisions owning hotels that provide housing solutions for travelers and locals alike, blending his passion for real estate with his love for authentic connections.

Lame Kenny Kinney (44:39): "My dream deal is being able to purchase some commercial real estate out in the motherland, the island of Tonga."

10. Resources and Recommendations

Lame highlights the value of continuous learning through platforms like BiggerPockets and influential books such as Pace Morby’s works and The Science of Selling. These resources have been instrumental in shaping his strategic approach and enhancing his sales skills.

Lame Kenny Kinney (45:38): "Bigger Pockets does a great thing with that. It's led me to a few books that I'll mention."

11. Closing Thoughts: Embracing the Journey

Wrapping up the conversation, both Joe and Lame emphasize that real estate investing is a journey where each step, whether scaling up or managing a few properties, contributes to personal and financial growth. The key is to remain focused, adaptable, and committed to continuous improvement.

Joe Jensen (53:18): "Every step of scale matters too. Going from one to five is scale... every step is a big deal and opens a lot of doors."

Notable Quotes with Timestamps

• Lame Kenny Kinney (00:37): "I love sharing my story because I think it's, I want people to know that like I'm not special. I'm like you."

• Lame Kenny Kinney (05:23): "Over the course of the last three years, really we've purchased over 100 doors."

• Lame Kenny Kinney (22:24): "We're not relying on Airbnb for our business. We have other ways tapping into it, the insurance contracts..."

• Lame Kenny Kinney (31:50): "In today's market, you're not going to pencil any deal at 7, 8%, especially if it's a single door."

• Lame Kenny Kinney (47:17): "We ended up spending about $250 grand on renovations. It was a waiting game in real estate, and I haven't lost yet."

• Lame Kenny Kinney (52:36): "The greatest asset, the most valuable asset that we own is the asset between our ears."

Conclusion

Episode 201 of the Real Estate Investing School Podcast offers a deep dive into strategic real estate investing with Lame Kenny Kinney. From leveraging creative finance to diversifying income streams beyond traditional platforms, Lame provides invaluable insights for both novice and seasoned investors. His emphasis on authenticity, continuous learning, and strategic scaling serves as a guiding light for those looking to build sustainable wealth through real estate.

For more information or to connect with Lame Kenny Kinney, follow him on Instagram @H_A_I_L_E_K.