Ken Gee 0:00
I was getting everybody that applied for the apartment, didn’t have good credit. And I thought, oh boy, here we go, this isn’t going to be good because I need someone to pay the rent. And then I met this wonderful woman from the city of Shaker Heights. Her name’s Karen, I won’t say her last name. But she taught me that can if you will make your property nicer. If you will invest in your unit and make it really nice. You’ll be able to collect more rent and guess what the good people will come. And I asked her I remember vividly this conversation. I said, Well, Karen, how much do I need to spend on this unit? She said only about $5,000. Well, the lump came back in my throat. I said, Are you kidding me? five grand, where am I going to get five grand, I just spent all my money to buy the property. So I took the leap of faith, I did spend the five grand and sure enough that rent that I was at 479. I went to 599 because now I had a much nicer unit. And all of a sudden the applications came from really good people. And I thought oh my goodness, this is unbelievable. You know, that was a huge deal for me. And the introduction of the value add concept to me iO iO. Really a good chunk of my career to that that wonderful woman who, who told me to build it, and they will come because she was right.
Welcome to CRE PN Radio for influential commercial real estate professionals who work with investors, buyers and sellers of commercial real estate coast to coast whether you’re an investor, broker, lender, property manager, attorney or accountant We are here to learn from experts.
J Darrin Gross 1:35
Welcome to Commercial Real Estate Pro Networks, CRE PN Radio. Thanks for joining us. My name is J. Darrin Gross. This is the podcast focused on commercial real estate investment and risk management strategies. Weekly we have conversations with commercial real estate investors and professionals who provide their experience and insight to help you grow your real estate portfolio.
Today, my guest is Ken Gee. Ken is a CPA and real estate broker. He’s also the founder and president of the KRI group of companies, which he started in 1997 with a purchase of a 28 unit apartment building in Cleveland, Ohio. Since the beginning KRI has evolved into a full service real estate company that specializes in multifamily apartment investment, syndication and property management services. KRI has owned more than 55 million worth of multifamily properties and managed over 15,000 apartment units, collectively worth more than $1 billion.
And in just a minute, we’re going to speak with Ken about how to consistently make money in real estate. But first a quick reminder, if you like our show, CRE PN Radio, there are a couple things you can do to help us out. You can like, share and subscribe. And as always, we encourage you to leave a comment, we’d love to hear from our listeners. Also, if you’d like to see how handsome our guests arm, be sure to check out our YouTube channel. And you can find us on youtube at Commercial Real Estate Pro Network. And while you’re there, please subscribe.
With that I want to welcome my guest, Ken, welcome to CRE PN Radio.
Ken Gee 3:17
Thanks so much for having me.
J Darrin Gross 3:19
I’m really looking forward to our conversation today. But before we get started, if you could take just a minute and share with the listeners a little bit about your background.
Ken Gee 3:28
Sure I grew up in Toledo, Ohio, came to Cleveland in the early 90s. where I started, I came to claiming to be a commercial lender spent five years there, transition my life then to be a CPA, went to work for Deloitte for seven years. And then decided that was working way, way way too hard for everybody else and decided that I needed to I needed to get into real estate. When I was at the bank, all I heard was my customers making tons of money in real estate. Then when I went to Deloitte, all I saw was a massive real estate tax practice in our local office. And I said you know what, I’ve got to get into this. So that really was what started this whole process. And I like you said I bought my first property 28 unit building and shaker square, which is in Cleveland, Ohio, and then been going ever since. Well, it’s awesome.
J Darrin Gross 4:26
But and I’m guessing you’ve seen just a few things since that first property that you you. You bought. I’m kind of curious. What do you remember most about that first deal?
Ken Gee 4:39
Yeah, what I remember the most about that first deal was the golf ball that was stuck in my throat when I was doing the deal because it was a huge mortgage. At the time it was $460,000 that was massive. At the time I couldn’t have paid that mortgage off of fighting to save my life. So what I was doing was risking really everything to get started in this business. And it was stressful, even though I’d worked really hard to try to understand the business tried to make sure I knew what I was doing at the time I was a CPA and I had some lending background. So, you know, I felt fairly well informed, but it doesn’t change the fact that you’re not ready for that stress that you get when you sign on that loan. So, you know, I’m happy to say that, you know, it went away very quickly, right after that deal closed, and every new deal that you do, you know, there’s stresses associated with every deal. But you know, it’s been far easier since then. And that’s why I always tell everybody get over that first deal, because that first deal is a big one. And then you’re going to deal with emotions that you’re you didn’t expect and once that’s over, it becomes a lot easier.
J Darrin Gross 5:47
Now that’s, that’s well put the first deal Did you do it solo? Or did you syndicate or have investors in the
Ken Gee 5:54
piano? Great question. So I actually borrowed half the downpayment on my home equity line of credit, and I invited family member in to do the other half. So we kept it in the family, because at the time, you know, I couldn’t with a conscience ask someone that I didn’t know to invest money with me, because I really hadn’t proven myself yet. So my family was, uh, you know, willing to take a risk on me. And I’m thankful that they did, because that’s how we got started.
J Darrin Gross 6:23
And how long did you keep the property?
Ken Gee 6:27
Actually? Three years? Three years? Three years? Yep.
J Darrin Gross 6:30
And in three years, how did the property returns on that first deal?
Ken Gee 6:37
Yeah, interesting. little story, about a couple months in to that deal. I was getting everybody that applied for the apartment, didn’t have good credit. And I thought, Oh, boy, here we go, this isn’t going to be good because I need someone to pay the rent. And then I met this wonderful woman from the city of Shaker Heights. Her name’s Karen, I won’t say her last name. But she taught me that can if you will make your property nicer. If you will invest in your unit and make it really nice. You’ll be able to collect more rent, and guess what the good people will come? And I asked her I remember vividly this conversation. I said, Well, Karen, how much do I need to spend on this unit? She said only about $5,000? Well, the lump came back in my throat, I said, Are you kidding me five grand, where am I gonna get five grand, I just spent all my money to buy the property. So I took the leap of faith, I did spend the five grand, and sure enough that rent that I was at 479, I went to 599. Because now I had a much nicer unit. And all of a sudden the applications came from really good people. And I thought, Oh, my goodness, this is unbelievable. You know, that was a huge deal for me. And the introduction of the value add concept to me, I Oh, I Oh, really a good chunk of my career to that, that wonderful woman who, who told me to build it and they will come because she was right.
J Darrin Gross 8:02
Now I love that, you know, the kind of the experience of you just spent all your money and and I mean, did you have any kind of a plan as far as renovation or it’s more about just Lisa keep the place leased up. So
Ken Gee 8:15
I was pretty, I was pretty naive back then I thought I was just going to buy it, hold it for a while rent would slowly go up. But I would make money. And I actually paid an attorney to sort of advise me and he thought, you know, what, can in three or five years, you’re probably gonna make 100 grand on this. And I thought, Oh, my goodness, that’s, that’s unbelievable. Did I have the same level of business plan that I would have now? No, absolutely not. I didn’t because I didn’t even understand. You know, there was a lot I didn’t understand. So she actually helped me create the business plan on the fly. And we’ve been really implementing that value at concept ever since. And so three years later, you know, I’m happy to say that we sold it. We each put in 35,000 we each got back 100. So you know, in, in, in my life at that time, making that kind of money was just obscene. This was just unbelievable that you could do that in three years. So that’s why that’s why I’m here. That’s why I continued on with with with the process.
J Darrin Gross 9:15
Not I mean, those returns are impressive. anytime they can if you can triple your money and you know, three years that’s that’s just about right. 30 3030 was Yeah, so I think those are respectable I think they today they’d be rolled glass. That’s That’s great. So So your first deal goes, Well, did you do any additional deals during that first three years? Or was that kind of your primary focus, get that one? up and running? You sell what When did you do your next deal?
Ken Gee 9:48
Yeah, that’s that’s a good question. The second deal, it took me a little bit of time. So I did. I did three deals a total of three deals during that three year period. The second one came shortly after I Got my education from Karen. And I did have a plan the second time, and I had the I had my value add plan, I was gonna go in and prove the units, the lender would advance some funds to help me do that. As long as I showed them that I did the work, got the lease rents that I promised that I promised them that I would get, they would then pay for the renovations. So that was deal number two. And then deal number three was just a great, wonderful building in that same area, all these properties were in the same area that I bought, and we all ended up selling them all at the same time. So yeah, I just I kept trudging forward then and just doing deal after deal after deal, because once in this business, once you feel that success, you want it again, I mean, who wouldn’t want to make that kind of money, right? So so you’re going to try to do it again and again and again. So
J Darrin Gross 10:51
got it. So your your first deal you did with family? The second? And third, were those also family? Or did you reach out beyond your,
Ken Gee 10:59
The second and third deal actually was able to do it myself by myself. Okay, I found creative ways to finance it. If you look back at our track record, our track record is actually out on veribest.com. They verified our track record. But it’s so it’s there for everybody to see, those early deals that we did were very highly leveraged. So the returns were just crazy. We don’t use that level of leverage now because we use other people’s money. And you know, there’s lots of reasons why we would do that. But you know, when you’re getting started, you do whatever you have to do to get started. That’s what’s important.
J Darrin Gross 11:33
Right, right. So well, that’s impressive. So the first deal, you did have a partner, the second and third, you were able to do on your own. At what point did you become more of a syndicator? You know, start raising capital?
Ken Gee 11:49
Yeah, good. Good question. So probably in I think we bought our which indicated our first deal in the mid 2000s, early to mid 2000s. And, and, you know, grew slowly during that time. And most of our syndication work has been done, really in central and northern Florida. So the company originally grew up in Ohio, we did a bunch of deals in Ohio, and then about 10 or 15 years ago, I wanted to go to a growth market. So we started investing, or investigating Florida, central and northern Florida. And that was where I think we’ve syndicated out three or four deals there. I can’t recall now. And we currently have a fund that we just finished raising for about $13 million. And we’re out now trying to deploy that that capital. So we did for a period of time between 2000 and mid actually, it must have been Yeah, 2004 we did some deals on our own with with one other partner. And then we really went full boat into the syndication world. Because what we learned was, once we felt like we know what we were doing, we felt comfortable inviting other people into our deal. And then that allowed us to grow even quicker, and allowed us to give them you know, pretty good returns as well. So that’s why we made that transition. And it just made sense. And it’s been going well ever since
J Darrin Gross 13:15
contra. So you mentioned you know, having confidence, or I guess, a proven track record, something that you felt that, you know, you could then I guess provide a story or proof of concept to potential investors and stuff. What were some of the, the keys in that story? I mean, you know, the first one sounds like you’re flying blind, but you you’ve learned the value add concept in some other, you know, keys to create a financing for the next couple of deals. What were some of the key takeaways that you learned that were, you know, purposeful or or helped with relaying your story to to investors?
Ken Gee 14:03
Sure. So what happens as you gain more and more experience in this business, you start to understand exactly what makes real estate investors successful over the long term. Right? So a lot of people can do this, maybe once, maybe twice. But if you’re going to do this over and over and over again, you really need to understand why each deal is successful. So you know, I generally there’s four things that you really got to understand. One is just supply and demand, right? We’re in the apartment world. So the supply of inventory is important, right? If they’re building like crazy in the area that you’re trying to invest in, you need to be careful. You have to make sure there’s enough demand to absorb that. So what we’re looking for is a pat is a is a favorable demand and supply equation. We want demand to exceed supply. That’s what drove us to Florida because that that setup has been in Florida for years and years. decades now. And it’s only been exaggerated by the pandemic, then the second thing we understood is how do we create value in every deal, because every deal is going to be a little different. Sometimes most of the value you create is going to be management related, sometimes it’s going to be physical improvement related. But or most of the time, it’s a combination of the two. But what we learned over the years, so she got to understand exactly how you’re going to create value, and then just get better at executing on that strategy. So that was the second thing that that is the second thing that I think sets long term, successful investors apart from shorter term ones. Now the third thing, and this was really learned the most through Oh, 7080 910. Think back to that financial recession. I mean, that was horrible. And the number one thing you learned through that process is to manage your debt manager maturities make sure that you have planned for the as much as possible, right? apartments generally did well, during that time period. The only reason apartments didn’t do well, is when the loan matured at the wrong time. And then it didn’t matter if the property was a wonderful property, it didn’t matter if it was cash flowing like crazy, the bank had to get it off their books. And at the time, no one was doing no new loans. So people lost their buildings, because their debt just happen to have matured at the wrong time is terrible, there was no reason for that to happen. But again, what that does is that teaches us to manage your maturities make sure you have an out make sure you have a way to continue that debt should you need to just because of a bad timing issue, you don’t want to have have a problem. And then the last thing we learned, we have learned over the years is just watch cap rates, you got to understand cap rates. And, you know, cap rates are fairly predictable, they’re dependent on two things. One is the interest rates on the debt that you’re gonna get. So we always watch that and have a pretty good feel for where we think they’re gonna go. And then the other piece of that cap rate is what investors require for their return. And so that right now, cap rates are compressed, because there’s so much money chasing deals right now that investors are willing to accept smaller and smaller returns. So when we have low interest rates, low investor return requirements, we have relatively low cap rates. So when we do our modeling, this is the long term successful investor concept, you need to make sure that you’re planning your exit at a higher cap rate, because that means the value might go down, if interest rates go up, or not, as many investors are chasing the same deals, they may not be willing to pay as much for that cash flow that that property creates. So you’re gonna want to make sure that you model it in your in your formula, so that you’re prepared for that. And you know, what’s going to happen if cap rates were to move against you? That makes sense?
J Darrin Gross 17:55
Yeah, no, all of that makes sense. It is, you know, especially looking back here and just last 10 years, you can kind of tell, you know, the, or the story, if you look back, you can see how it all, you know, connects I mean from, like you said, Oh, 708 when, when the market was melting down, and and nobody was willing to lend and if you if you did get caught and had to refinance, and there was nobody willing to, to lend. That’s kind of what a great a lot of the opportunity for, you know, newer investors are, I mean, clearly it was it was a it was a problem if you had a property you needed to refinance was an opportunity if you had cash and and had an opportunity to pick up a property cheap from a lender that are you know, not necessarily a lender if you weren’t foreclose, but just somebody that had to let go the property. Yeah, exactly. But But even even having said that, though, I you know, what’s interesting to me is, I’ve been doing this podcast here for, I guess, almost six years now. And in all the time that I’ve been doing this, that the theme has been that, hey, you know, it’s been a good run, we’re probably in the late ending late innings. You know, we expect this thing to have a correction kind of thing. But I, you know, I’d say that, you know, by all accounts were were well into a doubleheader, or, you know, with extra innings, I mean, just based on the run in, in its, I think the other thing is that all of these economic factors that maybe were the cause or had something to do with the last cycle. Everything we’re looking at right now, pandemic, plots of government cash being pumped into the system. You know, investors looking for a return, low interest rates, all kinds of change, anything that people thought might be the case and now it’s it’s kind of Like really it really requires you to be sharp and kind of assess you know like like you were talking about you know supply and demand you know how to manage your debt you know make sure you have some terms that can that can last a while and kind of keep an eye on those those cap rates I mean that’s pretty well that right there I mean I think sums up you know, a good advice for any investor looking at an opportunity and certainly in the last six or seven years
Ken Gee 20:32
Yeah, no, I agree. 100% Absolutely. And when we look you know, I have this conversation with a lot of people all the time and that is are you afraid we’re at the top or are you afraid you’re at the top and I have it with a lot of very smart people because I’m looking for some disagreement. And you know, we’re in we’re in central and northern Florida, the demand supply setup in central and northern Florida has been favorable for a very very, very long time. And I I’m looking one of those two things has to break in order for me to be any really concerned about Florida, we have to have builders somehow figure out how to buy bc class asset because that’s what we buy, right we don’t buy the brand new a stuff because then I’m fighting with supply from New builders right so they’re not building bc stuff they’re just not so I don’t see that changing I don’t see what can happen that can make that affordable for builders to come in and add tons of supply the PC market so now when I look at the demand side what can happen that can erode that demand and you know when I think about why people are moving to Florida, I mean they move there because it’s beautiful whether they move there because it’s a low tax state they move there now because they can live there and still do their jobs because so many more people can work remotely so there’s I’m looking for something to break that demand in order for me to be terribly concerned about investing in central and northern Florida there’s still a plenty of places that are very affordable in central northern Florida and that they’re going to people are going to continue to move to those areas the the coasts will continue to get better up I think and the growth has been between Tampa and Orlando and Daytona it’s been going across that I four corridor for years and it will just continue to do that. And when it gets to unaffordable in one area, say Orlando for example, you just get farther away from Orlando and you can find more affordable housing, more people come in, you see a cycle and I don’t see it breaking so that there are probably some markets that demand supplies setup is different. And if there is an economic slowdown or something changes that might affect them more, but I’m looking for those two things to change in Florida and I just I just don’t see it happening but I have my eyes definitely open looking for any cracks in the dam here to see if see if that is gonna happen and I just don’t see it yet. And everybody I talked to they’re looking for the same thing and they don’t see it either. So that’s why we’re comfortable buying at this point as long as we have the upside and rents which we do because of the demand supply situation.
J Darrin Gross 23:09
Right right now and even you know the kind of lesson you learn from Karen about value add I mean if you can find that opportunity that either the seller hasn’t exercised or hasn’t you know, doesn’t see that you can see there’s always the opportunity to increase the value you know, and I think one of the things I’ve learned is it’s all you can do through the you know, a remodel or renovation or something like that it’s the if it’s only just a management issue where you can raise rents or something like that I mean that’s that’s a pretty sweet little value add opportunity there do you in that marketplace I mean it’s clearly no secret you know, Florida is kind of a boom market I mean, I saw the meme out there that Andrew Cuomo was realtor of the Year for a Florida that was kind of a joke there from all the you know people moving exiting New York moving to Florida right and but but a lot of truth to that just based on like what you were saying just demand and so is you as you look in that market clearly there’s lots of demand for housing. There’s lots of investors seeking the same opportunities you know, one of the things you didn’t say but but you know, I always feel it kind of is part of that cap rate is is you know, if there’s if there’s a lot of investors seeking the same thing that’s gonna you know, push the rate cap rate down as well. do you how do you go about are you just plugged in with the market do You go direct to the sellers? Do you have broker relationships? How are you situated where you find your properties?
Ken Gee 25:07
Yeah, that’s a really good question. So we play in generally the plus or minus 100 unit range. And most people that play in that in that market in that space are syndicators. So that means they’re going to go out and try to get the deal locked up. And then they’re going to spend the next 45 or 60 days trying to raise the money to close the deal. So the seller kind of takes a leap of faith with that buyer. So there’s tons and tons of indicators in that space. Now, we are a fund where a private equity fund so now in the syndication world, the deal comes and then the equity comes in the fund world, the money comes first, then the then we have the money to go get the deal. So now when I compete against a syndicator, in that 100, say, 100 unit property, there’s when we compete this probably 95 90% of the bidders are syndicators. And here we come, we’re a fund we already have the equity raised, the seller knows that we that that equity raise risk is off the table. They know. So they also know that we’re very experienced, they also know that we have a very quick and easy due diligence process that it because we’ve been doing it for 25 years, right, we’re not going to drive him nuts, or her nuts with a retrade or, you know, little silly ass on due diligence questions and things like that, because sellers do like easy deals. So we’re a much more experienced much stronger buyer. in that market. Most fund managers, they don’t attack the 100 unit space, they’re up into three 400 units basis, because they’re trying to deploy more capital. So we become that big fish in the smaller pan, so to speak, which gives us the ability to win these deals. And then Remember, we talked about the fact that we’re a third party manager, so we’re third party managers in that same market. So that gives us another opportunity to integrate with these brokers, because they refer their clients to us. So we have a very unique relationship with the broker community in that not only do we buy and sell through them, but we also help them get deals done because we take their clients run their properties, make them more successful, and then what happens, they’re able to sell that client another property. So we have this really intertwined network that we’ve been able to develop in the central northern Florida market. So that’s how we get our deals. Because the reality of it is in a competitive market like this, the broker really controls who gets the deal. Because when a seller sells that property, he looks to the broker and ask them who is this guy? Who is this guy? Who is this guy? What do you know with him, Have you close with him before, he is using that broker to try to figure out who has the highest certainty a close and who’s going to really get the deal done, so that that seller has an easy sale and that’s critical and that’s why we spend so much time working on those relationships. Really, really super important in a competitive market like this.
J Darrin Gross 27:58
No, I was gonna say I think having the property management company for yourself and others makes a ton of sense. I mean, just in that because the operations of a complex really you know, having the efficiencies in the operations can really you know, make yourself quite a bit more more money I would think as opposed to on you know, unaccounted for or you know, expenses that that aren’t always easy to keep up with or whatever just but just having that that I guess inside track on the management I think it makes a lot of sense. Have you had any opportunities come from the properties you’ve managed were selling her the you know, the owner said hey, you know, Ken, we’re ready to get out of this one you know, is that ever come up?
Ken Gee 28:54
Yeah, you know, we’ve we have those discussions our clients come to us occasionally with those discussions and you know, if you’re a seller what I tell our clients because remember when when you become our client, we have this fiduciary relationship with you, right? I’m I’m your I’m your guy, right. So if you come to me for advice, I’m going to tell you what you really should do. And the reality of selling in a competitive market is you should market the property. If you do a side deal with me, that’s great for me, but I get very very concerned that my client is going to have in the back of his or her mind, you know, he kind of worked me for a sweet deal here and I you know, they kind of get at some point they run the risk that they’re going to be uncomfortable with the advice that I gave them and that was to sell your tell to sell to your friend Ken. Right. I get concerned with that. So our reputation and in all the markets are so important to us that I don’t I don’t even want to take that risk that something could later develop even though you know we’re getting deal done for them, but we get a deal done for us. But I don’t want them to think that I you know, I get it better. deal because because I was able to get to them early.
J Darrin Gross 30:03
Gotcha, gotcha. Well, I think especially if you want to maintain that relationship with the brokers, I would think that would be biased to, you know, not by the end of each week kind of thing.
Ken Gee 30:14
That’s true, too. Yeah, I didn’t, I didn’t talk about that. But you’re, you’re correct. But the real driving force here, when my clients and I have these discussions is I always want to tell them what’s right for them. Right, irrespective of my allegiance to brokers, or to anyone else, my first allegiance is to them. And I want to make sure that no matter what I mean, we go to our clients and say, you know, what, you have worked this thing, we have done a great job, you need to sell this thing, we’ll we’ll go to our clients and tell them that because you know, we know the market, we understand, right? We know what’s, what’s going on. So you know that that’s the real driving force. It’s not protecting the broker relationship, although that’s important. It’s more important that we treat our clients properly.
J Darrin Gross 30:57
Well, makes sense. So how many deals Have you syndicated over the course of your investing career?
Ken Gee 31:06
Yeah, that’s a good question I have to do. Let me do the math in my mind, price service, 678, something like that. We have a deal in process right now. With our fund that we just raised, we accept them get three deals out of that fund. That’s That’s the goal.
J Darrin Gross 31:21
katraj? And of the those funds have all of those gone fullcycle, or not the funds but the syndications have
Ken Gee 31:28
All but one, about one. Yeah, so we have not historically been a unit, some people get in this business to buy unit count, right to get as many units as you can, because that I guess it’s your bragging rights, then right? So we don’t do that we, because of our investors, we want to add our value, we want to leave some for the next guy, and then we want to go ahead and sell that asset. Because then it’s gone full cycle, there’s no way to argue with any valuation. I mean, investor went in, investor got paid investors done the whole deals done, and you know exactly how much you made on it. So we’re down to one soon to have two and, you know, two more after that. I’m sure we’re working on a number of deals right now.
J Darrin Gross 32:10
Gotcha. Well, it’s impressive, the number of of, you know, deals you’ve done and lessons you’ve learned and and the fact that you’ve now got a fund. That’s it. And for the reasons that you did, as far as you know, the opportunities that are going to, or just how you’ll be viewed, you know, in the market, as opposed to syndicators got to go out and raise raise a capital there, I think that’s, that’s a pretty unique and good way to, to put yourself in a competitive market is the capital’s over, already been raised. Right. So that’s good. Hey, Ken, if we could, I’d like to shift gears here for a second. As I mentioned, before we started recording. By day, I’m an insurance broker. And I work with my clients to assess risk and determine what to do with the risk. And there’s three strategies we typically look at, we first look to see if we can avoid the risk. If that’s not possible, we look to see what we can do to minimize the risk. And when neither of those are an option, then we look to see if we could transfer the risk. And that’s what an insurance policy is, it’s a risk transfer vehicle. And as such, I like to ask my guests, if they can look at their own situation, could be their clients, the market, capital raising, you know, however, you would like to frame the question and the answer, but looking to see if you can identify what the biggest risk is. And for clarification, while I am an insurance broker, I’m not necessarily looking for an insurance related answer. So if you’re willing, I’d like to ask you Ken Gee, what is the BIGGEST RISK?
Ken Gee 33:57
Sure, the biggest risk right now as I see it in the market, is it’s very difficult to find deals, that will work. And the reason I call that a risk, is, if we’re not able to make the deal work, and someone else does the deal, it probably won’t work for them either. So the risk here is that people will do deals that they really shouldn’t do, just to get the deal, right. If you’ve ever heard of FOMO fear of missing out, there is a lot of that going on. And if we you know, if we do lose a deal, it’s probably because someone else was concerned about missing out, they’re willing to pay more to make deals that didn’t make sense. A because maybe they’re inexperienced, or B, they just want to get in the game because they’re dying to get in the game. So that’s the biggest risk. I don’t that’s a risk to me, but I think that’s a risk to the entire industry. Because when people do things that they shouldn’t do, you you need to hope you’re in a growth market. That’s going to go fast enough to allow you to grow out of your mistakes. And if you’re not, then you’re going to get stuck with them, and it’s going to impact the market. So that’s the biggest risk. Now having said that, the number one reason we do multifamily is because I can’t find a better risk adjusted return profile. Everybody needs a place to live, they just, they just do, I can’t figure out a way to make that go away, I can figure out how to not need an office, I can figure out how to not need storage, I can figure out how to maybe not need medical, right, think about all the different assets, real estate asset classes, retail strip centers, I can figure out a way for that demand to really significantly decline. But what I can’t figure out is a way for you to not need a place to live. So as long as I have that, I view that as a relatively low risk asset. And then if we’re able to take that asset improves 1525 35% plus annual returns for our investors, I see that I look at risk very similar to the way the way you do, I shouldn’t be able to get those returns with this level of risk. But because we’re good at what we do, and because it’s real estate, and it’s leveraged appropriately, it we really are able to get a significant return. So the number one risk back to your question, is people doing deals that they shouldn’t do, because it’s it’s going to hurt the entire industry as a whole eventually.
J Darrin Gross 36:28
No, I think that’s something we’ve there’s been certainly waited breath, wait, you know, waiting to see, you know, where the correction is coming. So I, I think it’s inevitable. You know, but as long as there’s, you know, lots of cheap money, and, you know, willing willing investors are willing buyers, I guess, sellers are gonna take advantage of that. So we’ll see what happens. But, Ken, where can listeners go if they would like to learn more or connect with you?
Ken Gee 37:00
Sure. So one of the things I wrote I wrote a list a little while ago. Now it’s a it’s a small ebook. It’s called multifamily Real Estate’s a total game changer. If you go to our website, k Ri partners.com. Slash ebook, you can download this ebook. I’ll tell you why I wrote it. I wrote it for two reasons. It basically has two parts. The first part addresses the number one question that everybody has to ask themselves before they get into real estate. And that is, how did they know people are making a ton of money in real estate? They’re just trying to figure out how they get their piece. Right? Should they buy a single family a double? Should they buy an apartment building? Should? Should they go into Self Storage? Should they even do it at all? Should they invest passively with somebody like us? Right? So I helped them through that process? Because it is the question that absolutely everyone gets into this business faces. And I’ve seen it for 25 years, I’ve seen people wrestle with this. They just don’t know how it fits into their life. And so hopefully, the first part of the book helps the reader through that process. The second part, addresses what now now so when I go through that analysis, most people really should be passive investors because they have wonderful full time jobs. They you know, they make a lot of money, they do their thing, and they should truly just invest passively in real estate. Well, now the question becomes, how do you vet the real estate people out there that you can invest with? How can you how do you vet a fund sponsor? How do you give that a syndicator? How do you know that their fund or there’s the investment objectives match up with yours, and the risk tolerance that you’re comfortable with? So I take you through that process, I give you some insight into how our business really works? You know, what makes a syndicator tick, wait, why do they do what they do? And all of that stuff, help you understand the way the business works? Because then, and I also give you some questions to ask, right? So just how do you vet those sponsors, because I feel very compelled to help you, the investor, make a good decision about who you invest with. Because if you do, you’re going to be successful, and you’re going to keep coming back. And that’s what we really want for this whole process is for everybody to be successful because there’s no reason for anybody to fail in this business that we have so that the book is kr I partners.com. Slash ebook and download. It’s free. And you know, hopefully it is beneficial to whoever reads it. So that’s how you can reach us.
J Darrin Gross 39:21
Awesome. I can’t I can’t say thanks enough for taking the time today. I’ve enjoyed our talk, learned a lot, and I look forward to doing it again soon.
Ken Gee 39:31
Well, thank you for having me. You bet. For our listeners.
J Darrin Gross 39:35
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