Journey to Multifamily Millions

How 26 years in the real estate game has shaped Ken Gee's investing strategy with Ken Gee, Ep 116

• Tim • Season 1 • Episode 116

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Welcome to the Journey to Multifamily Millions podcast, where we speak with professionals on financial topics!

Ken Gee, the founder of KRI Partners and a real estate private equity specialist with more than 26 years of experience, is our guest for this episode. 

Ken takes us back to his early days, describing the difficulties he faced when managing his first 28-unit complex and how he developed into a multifamily investment manager. He dissects important tactics including utilizing financial expertise, innovative funding, and the strength of solid connections in the real estate industry. 

From managing market fluctuations to reaching financial independence through real estate, this episode is jam-packed with helpful guidance for prospective investors. 

Don't pass this up!

Episode Topics

[001:15] Meet our guest, Ken Gee
[05:23]  First Real Estate Deal Challenges
[12:36] Scaling the Business
[18:33] Evaluating Your Role in GP Investments
[23:02]  Transitioning to Raising Money
[26:04] The KRI 360 Investment System
[30:38] What is one red flag every investor should look out for?
[31:41] What is a myth about the real estate business?
[35:24] Connecting with Ken


Notable Quotes

  • "In any business, probably in life, the people that actually help you are not the people you would expect." – Ken Gee
  • "You caught the bug right after you saw that value-add strategy... you get better tenants willing to pay more money." – Tim Little
  • "The value that you get from being a general partner on a deal, even if it's a small slice, gives you instant credibility with brokers, lenders, etc." – Tim Little
  • "If you close a deal, the brokers call you. 'Hey, I saw you close that deal.' Now you're somebody, not just a tire kicker." – Ken Gee
  • "You are selling the value that you bring to the community, to the deal... so that you can protect the investors that you have in that deal." – Tim Little
  • "If we reduce our leverage because we have the funds to close, debt doesn’t become the problem... If there’s a problem in real estate, it’s always debt related." – Ken Gee


👉Connect with  Ken Gee




👉 Connect with Tim

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https://podcasts.apple.com/us/podcast/journey-to-multifamily-millions/id1634643497

[00:00:00] Ken Gee: Whatever you think is fair is totally fine with me. I am totally on board and I will make sure that it works. millions of dollars later, guess what? That was the right call. And I see so many people mess that up because they're worried. They're there. I need what's in it for me now. what's in it for you now is you actually got a deal. And let that partner decide what they're willing to give up for you because the reality of it is if they say No, you're working for free then at least, and then you can make that decision eyes wide open. 

[00:01:05] Tim Little: Hello everyone and welcome to the journey to multifamily millions. I'm your host, founder and CEO of ZANA Investments, Tim Little. And on today's show we have with us Ken Gee. Ken is the founder and managing member of KRI Partners, a real estate private equity and investor education firm. He comes to us with more than 26 years of real estate experience in various aspects of the business. Ken, welcome to the show.

[00:01:30] Ken Gee: Thank you so much for having me. Yeah.

[00:01:34] Tim Little: you here. First, I want to thank you for your flexibility. We've had to reschedule a few times now because hurricanes keep blowing through Tampa and forcing me to evacuate. So sorry about that. Hopefully that won't happen anymore, at least this hurricane season. but I'm glad we were able to make it happen. I'm excited to learn more about what you're doing at KRI, but first, please tell us about how you got started in real estate and where you are today.

[00:01:58] Ken Gee: So I'll be brief, but I grew up in Toledo, Ohio, got my undergrad at the University of Toledo. I then moved to Cleveland, became a commercial lender for five years. And, while I was a lender, all I kept hearing my clients say is, man, that's a good idea, Ken, but I want to talk to my CPA. I want to talk to my CPA. And I thought, man, I want to be that guy. Come on. As I was pursuing my master's degree at night, that was part of my deciding factor to go get my master's degree and become an accountant. So I did just that. In Cleveland, when, as soon as I became CPA, I worked for Deloitte for seven years. On the tax side, I did a lot of, I guess fun stuff, but it was fun if you're gonna be a CPA. It was a lot of merger and acquisition work, a lot of tax planning, a lot of due diligence, all this stuff that Fast forward, as it turns out, was really a helpful thing for me to do. But what happened, it was while I was there that I thought everything was cool and it was right. I did everything my parents told me to do. I went to school, got good grades, and got a good job. I thought I was set. And then I found myself at three in the morning feeding my daughter, who obviously was an infant at the time. And it was awesome at first, right? Cause father, daughter, I don't know if you're, you have a daughter, but if you do father daughter time is just awesome. Like you, you cannot replace that. The bond is unbelievable. And then I started to realize, wait a minute. Ken, it's three o'clock in the morning, you dummy. This is the best you could do for your daughter and your family. Cause I was working so much and I thought, you know what? I said, I started to get frustrated. I say, I, this isn't going to work. I didn't plan to have my family grow up without me. I didn't want to miss their stuff. I just didn't, it was too important to me. So I went on this mission, 18 months. figured out the real estate thing. I wanted to do real estate because I had a lot of real estate clients that when I was at the bank, the practice, the delight, tax practice in Cleveland had a massive real estate tax practice. So I was around everywhere. I was around people that did really well in real estate. I said, man, I gotta figure this out. So I went out and bought a, My first building was a 28 unit building, then a 24 unit building and a 22 unit building and sold them three years later and made half a million dollars. And I thought, Whoa, wait a minute. What just happened to me? Like I just made half a million dollars on the side. that was just, I didn't even comprehend it. I thought this was nuts. I did that on the side. What if I now kept. Doing that. What if I transitioned and just did that full time? And over time I did, I wound down Deloitte and wound up the real estate stuff. And, that's how I got into real estate. I know it was a little long winded, everything in my life seems to happen for a reason with a purpose and that's why it happened.

[00:04:38] Tim Little: No, that's awesome. Like you said, it's all hindsight, right? going up in the tax business, all of those skills, especially when it comes to underwriting and, educating investors to,what to do with the tax benefits, as well as, how the numbers crunch. I can see how that would really be a benefit for you. And Definitely understand that the daddy daughter thing, I'm a girl, dad, myself, a six year old and a nine year old, so they're still young, not looking forward to about five years from now when things get a little messy. But when I got two teenagers in the house, for right now, I'm loving it. all right, let me,

[00:05:13] Ken Gee: they still like you.

[00:05:14] Tim Little: yeah, I'm still cool right now. so we'll see how long that

[00:05:18] Ken Gee: Don't worry. They'll go away, but they'll come back. They'll go away, but they'll come back. Trust

[00:05:22] Tim Little: Okay, that's encouraging. So I wanted to ask you, cause you talked about how you saw real estate all around you, people being successful in it in different aspects, right? Whether they were within Deloitte or elsewhere. And so you decided to dive in, how did you go about doing your first deal? Because when most people do their first deal, when they get enamored with real estate, I'm going to buy a single family property. And maybe they've listened to a couple of podcasts or read a couple of books, but they can handle that level on their own because they've owned a house before. and so they think they understand how it works, but it sounds like you jumped right into the deep end and bought yourself a 28 unit property, which. As we know it is a little different in a variety of ways. you're no longer talking about single family. This is commercial multifamily, different considerations, lending, every underwriting valuation, everything. So talk to me about how that was your first deal and who, if anyone, did you lean on,to work your way through that first deal?

[00:06:28] Ken Gee: Oh yeah. So there's so many answers to that question. So first of all, how did I learn about real estate? Remember, we're talking 26, 27, 20 years ago, there were no podcasts. There was no education, none of this. My education came from a Carlton sheets cassette program, no money down, right? You probably don't even know what I'm talking about cause you might not be that old. And I got to go to apartment association meetings. Sit through people lecturing and then try to network with the people that did the lecturing, right? Because they were obviously the experts. And I'll tell you in a minute, there's a reason that was really important as it turned out. So now I want you to imagine where I was at Deloitte, right? CPAs working like dogs. I would go to work in the dark, come home in the dark all the time. And so I knew that I had to buy something that didn't require much of my time. First of all, I don't know how to fix anything. nothing I'm only clueless and, but I did understand finance and I thought, wait a minute, if I buy a single family house, who's gonna, who's going to fix it up, who's going to fix the toilet. Who's going to do it? I knew it couldn't be me. And I couldn't see enough room in the budget to be able to afford that. And I thought that it wouldn't, and I was scared. What if I got a hundred bucks a month right now, single family people will probably take me to task on that, but that's how I viewed it. It was a hundred bucks a month or maybe 150. There goes the roof. There goes all my profits forever. And I was never going to make money. So I said, all right, I need to find a way to do this and actually have the opportunity to run it like a business. That's what I was thinking. Those are literally, that's what I was thinking at the time. And I thought, okay, I found this 28 unit building. And I thought, wait a minute, this might be perfect because I could find someone to work part time and be there and show the apartments, change the light bulbs, help coordinate maintenance and all that stuff. And there were 28 units there. Like in my, that was like 14, 15, 000 a month of income back then. That was good. I thought I could make that work. So that's why I chose multifamily. I, it just made sense. Now there were so many things that I didn't know back then that I just didn't know. I had no clue. I didn't understand what it meant to add value. how properties were really valued. I did the P and L and I said, okay, I have to have enough money left over to pay my mortgage. but that's the extent of my sophistication when it came to real estate. And so what happened was after I bought this property, this is the scary part. This is a scary story. So I knew the member, I'd been at the bank, so I knew credit. I knew, understood that stuff. Joyce was the lady's name to work there. She would get applications shortly after buying the property, horrible credit evictions. I was like, and we were charging 415 a month in rent. And that included heat. Remember this is in Cleveland. And I thought, Oh my, what did I just do? I am a toast man. Because I can't get good people to live here. So I met this lady named Karen. She was from Shaker Heights. one of their agencies. And she said, Ken, let me meet with you. She did. And she said, Ken, listen, you need to fix this place up. This building was built in the thirties and you have kitchens from the thirties. She's no, nobody wants that. She said, you got to go spend some money and make these nice. And I thought. Karen, you're crazy. Cause I just spent every penny I didn't have to buy this place. If you want me to spend more, she goes, look, I'm just telling you, she goes, you got to spend five grand and fix this unit up. And five grand to me then was like. That's just ridiculous. No way. Not going to happen. She's okay, I'm just telling you what you got to do. I did it, spent five grand, fixed up a unit. This is the ridiculous part of the story. Rented the first unit, good credit, Case Western Reserve grad student, 599. And she said, see, I told you that was how I fell into a value ad plan very scarily. But, you said, who do you lean on,in this, in any business, probably in life, the people that actually help you are not the people you would expect to be the ones to help you. She worked for the city. She, who's the, who thinks the city employee is going to help you see the light? And, she did. Yeah, I have to admit the city employees are probably the last people that I expect to be helping me necessarily. But no, that's really interesting. Because you just worked your way through it, worked your way through understanding it. But,Yeah. A hard way.

[00:11:00] Tim Little: And in terms of acquisition, how were you able to acquire it? Did you have to put a 25 percent down payment down or did you do something creative there?

[00:11:10] Ken Gee: Yeah, I did a little something creative. the seller, as it turns out, the guy that I bought my first building from is now somebody in the Cleveland area that owns like 10, 000 units, right? Super nice. Just a standup guy. And it was his first big building. He had bought it seven years prior and he said, Hey Ken, I'm going to do it. I'll tell you what, I'll take back a note for 10%. I said, okay, that would be awesome. So I only had to come up with 10 percent of the cost and then I didn't have any money. This is, this please, if you're listening to this, don't mean, don't take this to mean that you should do this, but I borrowed half of the down payment on my home equity line and talked my in-laws into being my partner and doing the other half. And, that's how I did it.

[00:11:54] Tim Little: Wow. Yeah, that's a

[00:11:55] Ken Gee: how we, that's how we. On payment together.

[00:11:57] Tim Little: That's a lot of trust that you were able to gather up there for your first investment. So kudos to you on however you sold that to them. That's it. That's impressive.

[00:12:08] Ken Gee: Oh, they're good people. Yeah, they're good people and they figured look we know where he lives

[00:12:12] Tim Little: No,

[00:12:14] Ken Gee: Will come again

[00:12:15] Tim Little: That's good. And I imagine you caught the bug right after you saw, especially that, that value add strategy, how, yes, you have to invest some money into it in order to fix it up, but in return, you get those better tenants who are willing to pay more money, and then you went on to the next one, I think you said 24 unit, and then so on and so on. and how did you, Tell me about the phases that your business started to grow in. Cause you're a little further along than probably most people listening to this podcast, right? Who may have done their first deal, maybe haven't done a deal at all. And so they're curious, let alone after that first deal, what does it look like after that when you start to scale your business?

[00:12:56] Ken Gee: yeah, that's a good question. So back then I didn't think of it as scale, but I just started calling everybody on the street like guys. I want to buy your building. I want to buy your building. I finally got a guy to sell his 24 unit building. Although it was a little smarter about how I financed it because then I said, okay. Wait a minute. Mr. Banker if I Do these improvements. I think I can get more rent and here's why. And so they helped me find the improvement. So if I was to renovate the unit, get the new person moved in, had them sign the lease, they would come and inspect to make sure I did the work. And then I would show them the signed lease. They would reimburse me for what I spent. I thought, man, this is I'm a genius, right? That's the way I thought back then. But I figured out how to finance those improvements because I learned so much from the time before. And this is what happens in this business. Every. Every deal, everything that I've been doing for 27 years now, it's been a long journey. And I could just talk to you for hours about all this. Every deal has got a story and you're just like, wow, everybody is like that. I'm not unique in that respect. so that's how I financed the second deal. The third deal, it actually fell in my lap. It was a 22 unit deal, but by far the nicest property we had, the development corp,It was almost a condemned building. The development corps job was to take the property, get grants and fix it all up and make it nice. And they did, they made it beautiful. It was beautiful. It was featured in Cleveland magazine and so on. And they said, okay,we're not in the business of holding real estate. We want to sell it. We want to sell it to somebody who we know is going to take care of it. They literally picked five people in the neighborhood, said you five are the only ones allowed to bid on it. And it can't be below this number. And they said, it can't be below 700. I thought, Oh, okay. All right. I got an appraisal. It was worth a million. I couldn't believe that. I said, all So I, as it turned out, the first guy punted on the deal. I think he bid 720 or something. I only bid 715, right? The mistake of the development court makers, they told us they gave us a number. And nobody's going to stray from that number very much. And they didn't, I was at 715. I'm pretty sure that's right. You can look on our website. It's on our website. And, so my, here's where you talk about people helping. I had made a relationship with one of the guys lecturing at the apartment association meetings. Name's Gary. I won't give you his last name. He had done evictions. And, he said, Ken, I know a guy. that I think can help you finance this deal. I said, okay. And he put in a good word for me. I met with the guy and he said, you got an appraisal for a million. All we care about is that we're covered. 71. 5 percent loan to value. We'll do the whole thing. I literally put no money in the deal. And how did that happen? Because of a relationship that I made. Who that guy ended up being my partner on 10 more deals, right? But, that's how I did the third deal. So what you're seeing here, are you seeing a pattern here? Every deal takes a little creativity, and has a weird story. And those three deals I sold, that's how I made half a million dollars. See that's all you have to do. If you're in the beginning stages, you just have to figure out how to get that first deal. Because as soon as you do, you become real,you believe now you're real. Cause you actually have done it. Just everything changes. And that's why, when we're working with people, I'm just trying to get them their first deal. I want them to make a million bucks on their first deal. That's what I want. I made half a million, but that was 27 years ago. I, that probably wouldn't be a million now. So I don't know if those are the first three. And I could keep telling you stories on every single one, because every single deal has a story. And believe it or not, you remember these stories, even after 27 years.

[00:16:29] Tim Little: Yeah. And I think you bring up a really important point about, you become real, right? so that's something that I try to emphasize to folks who are looking to do their first deal, right? One thing I say is, don't get greedy. If you're looking at partnering, for example, because the value that you get from being able to say that you were on that deal is probably a little more valuable in the long run. Everybody likes to make money upfront, but the value that you get from it. being a general partner on a deal, even if it's a small slice and being able to say Hey, this was my role. I was a GP on a deal this big, whatever, that is going to give you instant credibility, with brokers, lenders, et cetera. And you may still need to lean on other people, for their experience and that's okay. But, getting that, that foot in the door, is huge. So I just caution folks to not get too greedy on that, that first deal because you know that they want to make money. Of course, everybody does, but you have to think about the intangible value of just even getting on that first deal as well.

[00:17:37] Ken Gee: No, you're exactly right. And I do, if you don't mind, I do want to comment on that. Because a lot of people are trying to get into GP teams, they call them teams. And when they start to get six, seven, eight, nine, 10 people on a team, I just want you to, I just want you to ask yourself how much of a real meaningful role you'll play in that. And I would rather see people. Do a smaller deal. Be a meaningful part of that, right? Because part of what you need to do is learn. And I would submit to you that if it meant doing your first deal and, basically for free, if you got all that experience, it's, it's, you have no idea what it's worth because as soon as you close a deal, What happens is the broker's call you, Hey, I saw you close that deal. Now you're somebody that's not just a tire kicker. You got it done. I just, I would just encourage people, make sure the quality of the relationship that you have is there. Just be careful with that, right? Cause just checking a GP box can. maybe not be the right solution for you. I'm not going to say that it's not. I just want you to evaluate it and make sure that at the end of the day, you're coming away from that way. I'm actually proud that I'm a part of this, right? Whatever size team it is. And I have a meaningful role and I feel good about inviting my friends and family into the deal because I'm part of it, right? I'm not just a fly on the wall somewhere. That's really important to me. And whatever you have to give up to get that meaningful role, do it. Cause I'm telling you it's, it'll be, I

[00:19:06] Tim Little: yeah, I agree 100 percent with the whole meaningful role piece because I have seen plenty of GPs who basically are ghost, ghost partners. I don't know what else to call them and they do not have a

[00:19:18] Ken Gee: hadn't heard that, but

 

[00:19:55] Tim Little: where, whereas, if you go in there and you are selling the value that you bring to the community, To the deal and say, Hey, my thing is asset management and I'm boots on the ground. So these are all the things that I can do for you. if you bring me in on this, then you're already negotiating, one, your position, but two, the value that you're going to bring. and hopefully you have a decision making,you're able to be a decision maker at that table. Cause that's hugely important too, so that you can protect. The investors that you have in that deal. If you're one of those silent ghost investors, then how much say do you think you're going to have when it comes to decisions that are made on that property? Pretty much next to nothing. So that's really important.

[00:20:37] Ken Gee: That's right. Yeah. I will tell you, remember the guy named Gary, that's his real name, by the way, that I ended up partnering with now think about this 27 years ago. I didn't have any net worth. I didn't have any liquidity. I barely knew what I was doing. Really, I didn't, but I had developed a relationship with this guy, and he thought I was a reasonably smart guy. He was definitely a smart guy. He was an attorney, and he said at one point, he said, Ken, we just kept developing that relationship, and we finally agreed. Hey, Gary said, Ken, I know you don't have a lot of money. I'll do most of the money. You can't get off scot free. You gotta put some of your own and I won't let you do this without any skin in the game. But if you do all the work, I'll put in most of the money. He doesn't, he just wanted to be, kept abreast and be, have decision making authority. And he knew all the people in the business. He said, if we do that, we'll split 50-50. Now, here's what I didn't say to him. Hey, Gary, if we do this is what I want. See, that is not what I did. I see a lot of people doing this all the time. And. In my mind, I thought I'm not in a position to demand anything. Gary, whatever you think is fair is totally fine with me. I am totally on board and I will make sure that it works. millions of dollars later, guess what? That was the right call. And I see so many people mess that up because they're worried. They're there. I need what's in it for me now. what's in it for you now is you actually got a deal. And let that partner decide what they're willing to give up for you because the reality of it is if they say No, you're working for free then at least, and then you can make that decision eyes wide open. I've never seen anybody do that to somebody else. I'm sure it's been done, but I've never seen it. Usually they're on the side of being generous because they want you to get started. They want to help people get started, right?

[00:22:26] Tim Little: Yep. Absolutely. And so with some of those, first few deals, in the early days, how long did you hold those properties? Are those things you still own? Or was that like a five to seven year hold? What did that look like?

[00:22:36] Ken Gee: Three to five, but here's why. So remember, I don't know if I said this, but they're in Cleveland. All the properties are in Cleveland. Most of the inventory in Cleveland and where I was buying was very old. We're talking mid thirties build. And so you don't want to hold something that's 80, 90 years old, very long. Because it's never a good idea. So we went in, added our value, left some for the next guy and then sold.

[00:22:58] Tim Little: Okay.

[00:22:59] Ken Gee: That's what we did. And it worked out very well.

[00:23:01] Tim Little: That all makes sense. And is your business model still the same or are used, syndicating now with passive investors? What does that look like?

[00:23:09] Ken Gee: Yeah. Good question. So what happens? Every investor does a couple of things. Usually if they want to grow their business, they go from using the first 10 deals we did without raising money. And then we started to raise money. Gary is only in a couple of those deals. He and I are in one deal. He's retired now. He's enjoying Fort Lauderdale. So what happened is we started to raise money. First couple of deals. Remember I have done a number of deals now on my own with him. We knew what we were doing. We felt like we did. Now we started to raise money because that's a careful thing, right? You're going to use somebody else's money. We started off, maybe we would raise a million, million, 2 million, 5 on a deal. And that was hard. That was really hard fast forward to today. So what happened? I don't buy 90 year old buildings anymore. our last deal was a brand new construction, 2023, 102 units in St. Pete, beautiful property. And so you can see what happens. Here's what happens to you over time. And I know your listeners want in this business, just be patient. This thing is a long game to give you an idea. We've now, at this point, first of all, we don't do syndications anymore, although we could remember syndications, or you go find the deal, then raise the money. That's really stressful because you have this really short window to raise the money. We've now flipped that around and we raised the money first and then went to find the deal. That's much less trustful and it gives you a much better buyer, right? You just are, everybody wants to sell to a guy with money. So we've now raised about 46 million, right? We've been doing this for a minute. We've distributed about 27 million to our investors and our current fund. We have about 15, 16 million ready to deploy. We're just looking for deals, just trying to find the right deal. And so you can see that we've evolved. And understood now how to raise money, do it the right way, treat investors responsibly while also upgrading our asset quality. And that's the typical path of somebody in this business. And that's why if you stick it out, I always tell people, this is not a get rich quick scheme. And I can't say it to get rich for sure, but man, if you just stick it out and stay disciplined, there's a pretty good chance you're going to have a pretty good life if you just stick to it. And, so far I haven't been wrong.

[00:25:20] Tim Little: Yeah. And like you said, you build up that track record, people have seen, can see what you've done. And that's where you get the trust required to build a successful fund. Cause people,

[00:25:31] Ken Gee: That's right.

[00:25:32] Tim Little: it's harder to ask for money. Something if people can't see it. and so there's the, okay, we have this property, we want to buy it, you can invest this much, whatever the case may be. it's a different argument when you're saying, Hey, trust us. We're going to find properties that fit this criteria, and so it's a different argument when you start that fund. I don't know that I'm there yet, but I know it is. Commonly a progression right within this business. I was checking out your website and I saw that you have the KRI 360 investment system. And I really like how you lay it out there. People can go and see the graphic, right? 360 like a circle. and that consists of planning, acquiring, executing and exit. pretty logical flow. and I was wondering if things have changed, especially in the past year or two, if your planning and acquisition criteria have changed in response to some of those changes that we've seen.

[00:26:35] Ken Gee: Yeah. So that's a really good question. people,and if any of our investors are listening, they will tell you that we, I'm probably ridiculously disciplined, right? I've got this little saying that our guys make fun of me. Don't negotiate discipline, just full stop. Don't do it. And so that has served me well in all kinds of markets. Remember, do the math I've lived through. Oh, eight, Oh nine. We never lost a dollar, a dime of investor money. It's because of this discipline. Our discipline has always been, we're looking for at least, close to even leverage. That means our cap rate is at least, pretty darn close to our debt interest rate or higher. And we're looking for two to 300 a month in upside. If we follow that, and when I say upside down, I don't mean, okay, let's hope and pray that we are able to move rents in five years. We do a rent survey that as of the day, we're going to close. It is my goal to rent the next apartment at what I think Is two to $300 higher, right? I'm that certain of the upside. That's the important part because like I learned, Karen taught me this, in 1997 or whatever, that you have to add value. You add value by raising rents, and you raise rents by making your property nicer, right? So that's what we do and we gotta know that upside is there. We are certain it's there. It's not okay. Over 10, 15 years, it'll get there. That's not what we're doing. We're trying to force it right away. And so that's been our business plan. That hasn't changed. The only thing that's changing right now because of debt markets. So there's a, I don't want to get into the long dissertation about why. A lot of people are struggling with their debt right now, but their rates went up, right? And they need to sell and all of that, right? credit is tight. Just as we spoke today, I don't know what day this will air, but the seven years went up 10 basis points in one day. I don't understand it. Why does it happen so quickly? But here's the point. If we reduce our leverage because we have the funds to close, debt doesn't become the problem. in real estate debt, if there's a problem in real estate, it's always debt related. It was back in 08 and 09. And it has been over the last few years. If that is the problem, we're going to raise the money first and be prepared to even go down to 50 percent loan to value, maybe lower, because I don't want debt to be the reason we can't close. So what happens? We have raised the money. We don't need to max out our debt. We're the strongest buyer in the market. you can't get any stronger than that. And so now we have people that need to sell and we can perform for them. So many times people can't perform for them. And so that's what's happening right now. We just have reduced the amount of leverage that we're willing to do. Usually you wouldn't, you wouldn't do a deal for 50 percent leverage. It's not that we, that's all we can afford. We're just going in at that level because then we can add a supplement onto it later. Or do whatever it is that we need to do to get our investors, their money back. So we're just, all we're doing is making ourselves a really strong buyer, right? We just solve the problem of the day right now. That problem is that it's hard to get credit,

[00:29:33] Tim Little: Yeah. and I haven't heard folks talk about it, but it just makes so much sense. What is preventing deals from getting done or deals from working? And you're absolutely right. Right now it's debt, rates, availability, whatever the case may be, it still goes back to debt. And so you're saying, Hey, but with that cash on hand that you have through the fund, you're able To go in with less debt,it, everything has its downsides. Maybe that prevents you from doing as many deals, but I think your investors are probably okay with that. If they know that, the risk associated is that much lower with the deals that you're doing. That is getting invested in so that makes a lot of sense. All right.

[00:30:16] Ken Gee: Yes, I agree with you. We're always conservative and we're never going to change that. And that's why we're still around, I think.

[00:30:22] Tim Little: Yeah. No, it makes a lot of sense I could talk about this all day too, but we do need to move on to the turbo round So i'm gonna ask

[00:30:30] Ken Gee: All right.

[00:30:31] Tim Little: three questions. I ask every guest on the show. I just ask for a quick honest answer. Are you ready?

[00:30:36] Ken Gee: Okay.

[00:30:37] Tim Little: All right. First one. What is one red flag? should look out for.

[00:30:42] Ken Gee: let's assume that you're talking about being a passive investor and the red flag is when you ask the sponsor questions. They can't give you detailed answers. That includes why that is the number one thing that I see people making a mistake after they make the investment. It doesn't go well. They always tell me later, my gut told me that he didn't know, or she didn't know, and I just didn't listen to it. So that's a red flag.

[00:31:10] Tim Little: Yeah, absolutely. And as you probably know, there have been a lot of uncomfortable conversations just because, rates rose so rapidly and how that affected deals and, cashflow being tightened up or turned to zero or negative, in this environment. So if. They are not willing to answer those questions honestly and openly, then that is a huge red flag. All right.

[00:31:33] Ken Gee: Yeah, but they got to know why they got to know why that's the key because then you know, they understand

[00:31:38] Tim Little: Yeah, no, that's totally fair. All right. Second question. What is a myth about this business that you would like to set straight?

[00:31:44] Ken Gee: Yeah, the myth that we fight every single day There are a lot of people that don't think you really need to dive into the details and I'm telling you that's the death trap. Don't do that. Don't buy that. Don't drink that Kool Aid. It is gonna hurt you. I will tell you Every single deal we do, it's always in the details. And if you don't take the time to do the work, to roll up your sleeves, to underwrite at a detailed level, to do a real rent survey, if you don't pay attention to the details, I want you to think about this as a business. This is a business where people that are successful in business are successful because they know their business in and out. This is just because it's a building and you want to feel like it's passive or, don't treat it like a duplex or single family. It is a business that's living and breathing and you got to know all the details, dive in. If you do that, you're going to be really successful. If you don't do that, you might as well go to the casino because there's, it's just going to be really hard for you to do really well over the long run. And I don't want to see anybody lose money. That's why I keep focusing on this message. Get into the details. You will not be sorry.

[00:32:48] Tim Little: Yeah, no, that's absolutely right. Because all it takes for you is to miss one aspect. Oh, okay. the property you're looking at has 90 percent occupancy. That's great. How long have they been in there? did they just fill units right before they went to go, post it for sale, how, how long have those tenants been in there? Do they pay on time? all of that stuff, all it takes is missing one of those details to find out that you got a lot of hurt on the other side. As soon as it's your baby.

[00:33:17] Ken Gee: That's right. And I get the details are a lot of work, but that's why we're successful. I'm with you. I am a hundred percent, nobody likes to do a lot of work, but those who do it are massively rewarded, I'm just telling you.

[00:33:29] Tim Little: It's just like when it comes to,when you do that, the walk of the property, right? If it's a hundred unit property, yeah, you can check the six units they want to show you, or you can demand to see all 100 units. And you absolutely should, because all it takes is that one, two or three units that are an absolute disaster. And all of a sudden, your expenses went up two or three times what you thought they'd be.

[00:33:52] Ken Gee: that's right.

[00:33:53] Tim Little: All right. Final question. What does success look like to you?

[00:33:57] Ken Gee: Yeah. That's a really good question. 25 years ago, success meant I was making money, right? Because it was about me back then. I had a family, all that stuff. And I get my time back now. I measure it completely differently because now I don't need my next dollar to figure out how I'm going to make my mortgage payment or anything like that. Now success for me is about helping other people do what I've done. I know that sounds, Oh, sure. Can that sound dramatic? But it's really true. it's why our entire company exists. In our world, we're just trying to help you make money through real estate, whether you want to do your own deals or whether you want to invest passively, we got you covered. And, nothing makes me happier to take someone from really not knowing what they're doing to getting a deal done and making money. It is about that, right? Because now I can impact other people. And like my buddy, Gary, He has impacted my life in a big way and I want to have that impact on a whole lot of people. That's my definition of success now.

[00:34:53] Tim Little: Yeah, that's awesome. And I know you dropped a ton of value on the show. just hearing your journey and having people who are just thinking about this, understand what that potential journey can look like, the different steps because everyone's journey is different, whether it starts at a single family or a 28 unit, how you got there and how you did it makes people be able to see what's possible. What's possible for them, if they just do it the right way. So Ken, please tell our listeners how they can get ahold of you. And if there's anything else that you'd like to share with them.

[00:35:24] Ken Gee: Yeah. So the easiest way to get a hold of us, we've got a ton of free stuff on our website. I would encourage people starting out to go there. KRIpartners.com. When you go into our biz, our business, you either turn left to do your own deals and learn all the stuff we know. Or you turn right and be a passive investor, or most people actually go both ways, right? But just go to our website, KRIpartners. com, dive in. We've got a free underwriting course for you to go do a bunch of book downloads. Just avail yourself of all the free stuff that we do. So that's what I want people to do. Again, KRI prop or excuse me, KRIpartners.com 

[00:36:00] Tim Little: Awesome. we'll have all that information in the show notes. Ken, thank you again for coming on. I appreciate you, sharing your vast knowledge here on the show and continuing to look forward to seeing you do good things on your journey to multifamily millions.

[00:36:16] Ken Gee: and you as well. Thank you, sir.

[00:36:17] Tim Little: All right, take care.

 


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TIM LITTLE (FOUNDER/ CEO)

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