Podcast Summary: Real Estate Investing School Podcast - Episode 247: How to Start in Multifamily Real Estate with Ken Gee

Introduction

In episode 247 of the Real Estate Investing School Podcast, host Joe Jensen welcomes Ken Guy, the founder and managing member of KRI Partners, to discuss the intricacies of starting in multifamily real estate. With over 26 years of experience spanning real estate banking, private equity, and investing, Ken offers invaluable insights for both novice and seasoned investors.

Ken Guy's Background

Ken Guy's journey into real estate is both unique and inspiring. Before immersing himself in the real estate sector, Ken owned and operated several certified Cessna pilot centers in Northeast Ohio, training pilots for the Delta Connection program. His diverse career path laid a robust foundation for his later success in real estate.

"I'm different, that's for sure." [00:35]

Transition to Real Estate

Ken's pivot to real estate was fueled by his experiences as a commercial lender and later as a CPA at Deloitte. Witnessing the financial success of his real estate clients sparked his interest in the field. Balancing a demanding career with family life, Ken realized the importance of creating a business that offered both financial rewards and personal flexibility.

"I was worried that they were going to grow up without me. And that's what really got me started." [02:13]

Ken's initial foray into real estate involved purchasing three multifamily properties in Cleveland, which he successfully sold three years later, earning half a million dollars. This early success affirmed his decision to leave Deloitte and fully commit to real estate investing.

Key Lessons and Philosophies

Ken emphasizes the importance of viewing real estate as a business rather than just property ownership. He learned early on that treating multifamily investments as businesses allowed him to strategically manage and grow his portfolio despite limited initial resources.

"You're buying a business and I think of like a business, you know, merger or takeover." [19:55]

A pivotal lesson Ken shares is the necessity of patience and thoroughness post-purchase. He advises investors to "chill" and take the first 30 to 60 days to fully understand the property, its challenges, and opportunities before jumping into renovations or management changes.

"No one wants to follow... sit on your hands for 30 or 60 days. Just chill, man." [00:00]

Starting in Multifamily Real Estate

For those looking to dive into multifamily real estate, Ken outlines a clear, step-by-step approach:

1. Learn to Underwrite: Understanding how to evaluate a property's financials is crucial. Multifamily underwriting differs significantly from single-family or fix-and-flip evaluations, as it involves assessing the property's potential as a revenue-generating business.

   "You gotta learn to underwrite. It's totally different than underwriting a single family or a fix and flip." [10:25]

2. Find a Mentor and Network: Connecting with experienced investors and attending apartment association meetings can provide invaluable guidance and validation.

   "Find a mentor, Experienced person, a mentor that actually knows what they're doing." [12:49]

3. Build a Reliable Team: Establishing relationships with property managers, real estate attorneys, CPAs, and other professionals is essential for seamless operations and compliance.

   "You got to have a whole bunch of people on your team, right? A CPA, a property manager, a real estate attorney." [33:22]

4. Develop a Business Plan: Conduct a personal SWOT analysis to understand your strengths, weaknesses, opportunities, and threats. This self-awareness will help tailor your investment strategy to your unique circumstances.

   "You got to develop a business plan... Teach how to talk to the brokers." [31:00]

Building a Team and Mentorship

Ken underscores the significance of mentorship in the real estate investment journey. He recounts hiring an experienced attorney early on, who validated his first deal and provided crucial guidance, ultimately leading to substantial profits.

"I hired this attorney, paid him 3,000 bucks, and I said, look, you own 4,000 units. I think this is a good deal, but you got to help me." [12:49]

Having a seasoned team mitigates risks and accelerates the learning curve, enabling investors to navigate complex transactions with confidence.

Navigating the Modern Market

Ken acknowledges that today's real estate market presents both opportunities and challenges. While technology has streamlined processes like rent collection and background checks, lenders have become more stringent, often requiring experience or partnerships with seasoned investors. However, Ken remains optimistic, stating that with the right mentorship and strategies, entering the multifamily market is more accessible than ever.

"It's a lot easier to do today than it was back then. And in some respects, it's harder, right." [25:10]

KRI Partners: Investing and Education

KRI Partners serves as both a real estate private equity firm and an educational platform. Ken and his team help investors create wealth through real estate, whether they prefer active involvement or passive investment. Their ecosystem is designed to support investors at every stage, providing the tools and knowledge necessary to succeed.

"We're a real estate private equity firm... we help you create wealth in real estate. It doesn't matter how you want to do it." [38:04]

Personal Insights and Recommendations

Ken shares his personal recommendations for aspiring investors:

1. Books:

   • "The 7 Habits of Highly Effective People" by Stephen Covey
   • "The 10X Rule" by Grant Cardone

   "Stephen Covey's 7 Habits of Highly Effective People... Grant Cardone's 10x rule." [42:16]

2. Philosophies:

   • Get Out of Your Own Way: Overcoming self-imposed limitations is crucial for success.
   • Focus on Growing Income: Prioritize strategies that increase revenue, such as raising rents, to enhance profitability without proportional increases in expenses.

   "Get out of your own way... If you can, get out of your own way, you'll be okay." [41:40]

Ken also candidly discusses mistakes, such as over-committing financially to renovations without adequate budgeting. He emphasizes the importance of flexibility and learning from early missteps to refine investment strategies.

"The number one lesson I learned is when you buy these value add deals, sit on your hands for 30 or 60 days... you're going to learn things about that property in the first 60 days that you did not know." [46:30]

Conclusion

Ken Guy's extensive experience and strategic approach to multifamily real estate offer a roadmap for aspiring investors. From mastering the underwriting process to building a supportive team and embracing a disciplined, business-oriented mindset, Ken's insights are invaluable for anyone looking to thrive in the multifamily market. His emphasis on education, mentorship, and personal growth underscores the transformative power of real estate investing.

Notable Quotes

• "No one wants to follow... sit on your hands for 30 or 60 days. Just chill, man." [00:00]
• "Get out of your own way. If you can, get out of your own way, you'll be okay." [41:40]
• "You do talented people without their limitations." [general thematic content]

Resources

For those interested in learning more or partnering with Ken Guy, visit kripartners.com or contact KRI Partners directly at 216-290-1710.

Final Thoughts

Ken Guy's journey underscores that with the right mindset, education, and support, multifamily real estate investing is an attainable and life-changing endeavor. His blend of practical advice and personal philosophy provides a comprehensive guide for those ready to embark on their own real estate investment path.