- Weird intro to who Ken Gee is, and what made him switch from being an Accountant to real estate investing.
- How did KRI Partners start, how it worked, and how has it evolved up to today?
- How to vet a Real Estate Investment Firm
- The same business plan has survived for the last 25 years.
- Does real estate make passive income through investing in rental properties?
- Passive vs Active Investing, what are you involved in?
- Why is real estate not a get-rich-quick scheme? What should people really be paying attention to?
- What is the difference between an aggressive mindset vs. a conservative mindset in investing?
- Using the resources effectively, teaching your kids to invest early, pass on a legacy, and create generational wealth.
- The steps to acquiring your first real estate asset. Essential things needed for successful real estate investing.
- Contact Number: 843-619-3005
- Instagram: https://www.instagram.com/exitstrategiesradioshow/
- FB Page: https://www.facebook.com/exitstrategiessc/
- Youtube: https://www.youtube.com/channel/UCxoSuynJd5c4qQ_eDXLJaZA
- Website: https://www.exitstrategiesradioshow.com
- Linkedin: https://www.linkedin.com/in/cmelette/
- Email @: corwyn@corwynmelette.com
- Website: kripartners.com/invest
- Instagram: https://www.instagram.com/kripartners/
Episode 67: From CPA to Multifamily Real Estate Investing
CORWYN:
Good morning. Good morning and good morning. Welcome to another fabulous episode of EXIT Strategies Radio Show. Hey, I’m your host, yeah y’all know, Corwyn J. Melette, Broker/Owner of EXIT Realty Lowcountry Group in beautiful North Charleston, South Carolina. Hey, if this is your first time listening to the show. We say what we do. But I need y’all to say it with me. Our mission is to empower our community through financial literacy and real estate education, we’re legacy-building. So when you’re doing those things, y’all know it, put the hashtag on it. So today, we have a phenomenal guest. I mean, look, now look, a lot of people move down south from Ohio. But we gotta keep going back. All right, so we have with us Ken Gee with KRI Partners. And look, this is the show, I mean, look, grab your notepad, get your pencil, pad, whatever it is, and start taking down these jewels and nuggets that Ken is going to bring us today. So Ken, good morning, how are you doing?
KEN:
I’m doing great. How about you, Corwyn?
CORWYN:
I am phenomenal. Thank you for taking time out of your busy schedule to be with us here today. You know, so I’m gonna get into it and just kind of start with, if you don’t mind, give our listeners a brief introduction as to who you are.
KEN:
Yeah, so I grew up in Toledo, Ohio, if you don’t know where that is, it’s Northwest Ohio, got my undergrad at the University of Toledo, then moved to Cleveland, Ohio, a whopping 100 and so miles, got started working for a bank. I spent five years as a commercial lender while I went to school at night at Case Western Reserve, where I got my degree in accounting. Then I went to work for Deloitte for seven years as an Accountant. And it was there that I just got tired of working like a dog. If you know anything about CPAs, we get beat up pretty, pretty bad as the year. And so it wasn’t until I was feeding my daughter in the middle of the night when she was obviously very young. And I was doing the middle of the night feeding because it was the only time I ever got to spend with her. And I love that time. But at one point, I realized, wait a minute, I’m feeding you in the middle of the night. This is the best time I get to spend with you. Because it’s the only time because we’re working so much. You need to make some changes here, right? So I was working like a dog, doing everything I thought I was supposed to do. But I couldn’t figure out how that was going to lead me to a place where I could put my kids through school without taking out a ton of debt. I couldn’t figure out how that was gonna give me an opportunity to spend more time with my family. In fact, being a CPA, I probably realized that it’s probably gonna go the other way. Yeah. So I said, You know what, I gotta change this. And the next day I woke up and I did everything I could to go figure out the real estate game. Okay, bought three properties total years later, here’s the legacy part, man, you want to talk about legacy. I sold them three years later for a profit of half a million bucks. Here I was working at Deloitte, working like a dog, and couldn’t put more than some money in the bank. Nothing like half a million. Here, I did this thing on the side, but half a million dollars in the bank. So before I had that realization, that epiphany, I couldn’t figure out how I’m gonna put my kids through school. I couldn’t figure out how I was going to do all these things that I want to do with my family and network so much. Now I knew and I not only knew I knew, but I knew it actually worked. So I made that switch. I said, you know what, I need to keep doing this. How can you not do this? When it’s not profitable. So there you go. That’s how I got started. Kind of a weird story. But it’s the truth. It is exactly what happened to me.
CORWYN:
So Ken, look here, so that whole thing right there is like where I’m pretty sure some of our listeners if anybody was in the kitchen this morning, in the midst of that section right there, they probably just kind of stopped flabbergasted. They were flipping a Flapjack. It probably got all messed up. So now they gotta make me some more pancakes this morning. My fault, my fault. But the reality is that there is a fundamental like something has to shock you to change. So you are shocked as you look down at your daughter, and realize, wait a minute, this ain’t how I wanted, it can be better, it can be different. Let me figure out a different way. So here you go. And you bought three properties. So you bought them? Like, how was it? I mean?
KEN:
No, they were separate. Three separate transactions. It took me a year and a half to buy them all. Okay. It took me a long time to figure out how the business worked. But it turned out, it got me going.
CORWYN:
So let’s get into, so let’s talk a moment about KRI, but then let’s get around into, and kind of touch on some of the things like that. I know, our listeners are probably asking like, wait a minute, you did what? How did you do that? I know that’s the question. Like, okay, I want to do that. So tell us first, if you don’t mind. How about KRI Partners?
KEN:
Yeah, so KRI Partners is what ended up forming back in 1997. So I’ve been at this for a while. Okay. You know, you heard at the beginning, then over the, for about 10 years, we were buying properties in Cleveland. It’s tough, it’s a tough way to make a living. We did. We did quite well in Cleveland. But Cleveland is not exactly an area that people are dying to move to, right? They’re just not. So about 15 years ago, I said, you know, what, if I can do this in Cleveland, what would happen if I actually went to a market where people wanted to be? Where people were moving, like, there’s no tomorrow. And that’s when I decided to, I need to start focusing on Florida. And we did that. So I got on a plane, literally got on a plane, flew to Tampa, got off the plane, and just started figuring out how it was that I was going to make myself relevant to, in a market where there are lots of people with lots of money in Florida. And it took me 15 years, but fast forward to today, and we’ve helped hundreds of investors do exactly what I’ve done. We have bought and sold hundreds and hundreds of units, probably raised $30 million in equity, to put in all these deals that we’ve done. And our investors have done incredibly well, with 20, 30% annual returns. So that’s where we are today, we’re raising money now for our current Fund, which is where we go out, we raise money, we use that money, put it next door, and then we go buy properties. That’s what we do now. That’s not what we started out doing in 1997. But that’s what we’ve evolved to now.
CORWYN:
Okay, so essentially, what I heard is you create a syndicate or a broader group put together and take down a property over the years, you’ve accumulated gains for your company. You know, obviously, the investors made money in the wake of that debt investing. And now, your structure is a little bit different, you still bring investors in, but the investors are not the bulk, they are only a portion of the entire project now, right?
KEN:
Yes, yep. It’s still real estate, though, right? No matter what structure it is, what we did on our very first property is still what we do today, at the property level. We bought a property, we made it nicer, we figured out how to make it nicer, and we were able to increase rents because of that. And then because we had more cash flow than when we started, we were able to sell it for a profit. That same business plan has survived the last 25 years. And we do it over and over and over again, it’s just, depending on how you finance it, and how many investors all that stuff, it’s kind of turned into noise. I mean, it’s a part of the business. But you would ask earlier, how do you do this, it’s the basic blocking and tackling that has not changed. We’ve just gotten a lot better at it over the last 25 years.
CORWYN:
That’s fair, effective, and efficient because all of it is B R R R, so buy, rehab, refinance, and repeat.
KEN:
Yeah, yeah, yeah. Yeah. So rinse and repeat. I call it to rinse and repeat. Yep.
CORWYN:
Exactly, exactly. Look here. So you know, and sometimes we make it a lot. I was talking to someone at some point in time, recently, Ken might have been even earlier today it’s echoing in my head, but about the whole adage of, you’ll have to rebuild the wheel. It’s basically like you say, you just do the same thing over and over and over. And you have the momentum. So one of the things Ken and this is something to kind of get to a particular point that I want you to kind of start to nail with is, oftentimes people believe real estate can make you passive income. But it requires action. Correct? Yes. Okay. So elaborate on that, because I, oftentimes people just think, well, I’ll have to do anything or invest? Let me say it that way because rental properties, that’s one thing, but in true investing is an activity, correct?
KEN:
Yeah, yeah. Yeah, here’s yours, it’s funny, I’ve written about this many times and talked about it a lot. People when to think of real estate, just think it’s passive. I’m here to tell you, my business is not passive. The people that invest with us, are passive, and we do all the work. So I want you to think about real estate, whether it’s a single, double, triple, 10 units, or 100 units, I want you to think of it as a business. Somebody’s gonna do all of the things that you would do in any business. It just happens to be an apartment building, a single-family or double whatever it is, right? So if you approach it that way, you make good decisions about whether or not you want to be the active person, that guy or gal doing, showing the units and cleaning the apartments and renovating and all that, or do you really want to be the person that just opens their mailbox and gets the check, right? Or not? Now, that’s a little dated, right? We don’t even send checks out anymore, we are just in their bank account, and they just load up our minds. So people have to make that decision as to what they want to do. Most people probably shouldn’t be passive investors in investment firms like ours. But you know, there’s nothing to say that you can’t do exactly what I did 25 years ago, I will admit to you, it’s probably easier now, because of shows like this. They didn’t exist when I started, right? They just didn’t. I went to The Apartment Association and sat through some of probably some of the most boring seminars on the planet. But it was the only thing out there that helped me figure out how to do this thing. And I was pretty focused on learning the business. So you make a really good point here, because people, your listeners have to figure out, what they want. What fits in their life? It’s a really important decision to make, and it’s the one decision that everybody in this business has to make.
CORWYN:
Yeah, and it’s the first thing. One of the first things. It may not be that very rare, because I mean, you know, there’s so many different strategies and so many different things Ken but you gotta figure out who you want to be, and everybody wants to have control, but then they also don’t want to do the work. So you can’t quote-unquote, have both of those. I mean, you can have a majority stake. But if you’re not doing the majority of work, then technically you’re past, you’re at that point in time you’re the person who is getting the mailbox, so in this age or text message, that’s a huge deposit. You know, and okay, but and as so many, so many, so many people, excuse me that want it but they’re not putting in that work. So.
KEN:
It’s a lot of work Corwyn that’s why, I mean, they don’t realize how much work it is until they really start diving in and realize, Oh, my God, this is hard.
CORWYN:
Yeah. And so you’re doing this with multifamily. Right. So, basically, apartment complexes and things of that nature. Am I correct? So larger we ever done? Yes, sir. Are you? And I’m assuming, and this is an assumption, Ken but I’m assuming that you’re talking probably 500 units and up as far as your development, so maybe 250 units and up?
KEN:
Yeah, no, we actually stay smaller than that. We’re like 80 to 250. Okay, the reason we like that space, is the really big guys play in that bigger market. And they have completely different capital structures than we do. It’s harder for us to compete if the properties are 75 or 100 million dollars each. And that’s just, it’s just not what we do. We, I really like being able to talk to our investors, they have every one of them as my cell phone number. We have real people that invest in our deals, and we do real things for real people. So we stayed in that space, I stayed below that institutional radar, and I tried to be the bigger fish in the small pond. And it served us extremely well over the years.
CORWYN:
I liked that, Ken. Because I really liked that. Because you make a very, very, very valid point. One, so one thing, I think that’s probably to your advantage and for our listeners, we’re talking, just so you guys kind of get caught up and understand what we’re talking about. We’re talking about pulling groups of people with similar interests, which is to make some money passively. Investing with someone who is actively investing or actively working in the industry, and then, in turn, you’re receiving your share of that and acquiring and it does Lloyd is still a lot of them, but acquiring properties, apartment complexes, multi-family, large, larger projects that may require some rehab, some restructuring, you raise rents and all that stuff, get it stabilized. So now it’s a profit center. And then everybody can either sell it off to a different group. Exactly sell it out to a different group, and then you move on to the next thing. And there is, again, there’s a lot of that going on. We’re actually working with someone now who is starting that with a project that we’re working on. So, Ken, that is interesting. So interesting. So, for someone who might let’s back up and have this conversation. What should people be looking for? Everybody, there are so many get-rich-quick schemes and all that kind of stuff, man. And, so what should people really be paying attention to?
KEN:
Not to get-rich-quick schemes. See, yeah, I told you earlier, I’m a CPA. I spent five years as a commercial lender. There was a time in my life when I would pursue these get-rich-quick things, and make a lot of money in a short amount of time. I don’t know if there’s a black cloud over my head, or it’s just kind of what happens, but I never seem to work out. It just never seems to work out. So that’s one of the things that led me to real estate. There’s nothing guaranteed. But I chose real estate because I felt like it was a get-rich, and I can’t say guaranteed, but a get rich with much more of certainty plan. And if I had some discipline and I stuck to it, I would have wealth beyond what I could ever imagine that I have. And that’s the thing, people need to have patience, you’re not going to get rich doing what we do. You make a lot of money. But it takes time. And it takes discipline. And that’s what we do. And that’s why I chose that. Because I’m a pretty conservative guy. I don’t like losing money. And so you think about multifamily. Everybody needs a place to live, like how do you make that go away? If it does go away? Nobody cares about money at that point, right? Because we’ve got bigger problems than that. So I pick an asset that everybody needs, it doesn’t feel like it’s going to go away. Then I pick apartments because there’s severe, there’s a high degree of predictability between if I’m able to take that property, make it nicer, make it for the people who will want to pay more. I don’t gouge people, right? People move naturally. We renovate the apartment, then new people come in, and they’re like, sure I paid more because you made it really nice. Now we’ve improved the cash flow of the property. But here’s the kicker. Here’s why it’s getting rich with much more certainty. Because I’m able to improve the cash flow of that property. People are always willing to pay for cash flow, it was much more predictable when I added value. And it turns out in our business, if you add $1 of the bottom line cash flow, you add about $20 to value 18 to $20 in value. That’s huge, right? I like that predictability. So now, imagine that we just have a property in our last fund, where we were up so far in the income of $25,000 a month. Do the maths on that. That’s millions and millions of dollars in a new value that our investors are going to get the benefit of and that’s why I love this business. So you can see everything that we do. It’s kind of all sourced on mitigation of risk and being conservative, and just the discipline to keep doing it. And guess what, before you know it, you’ll be wealthy. And that’s why I do what I do.
CORWYN:
So you just touched on something that kind of brings me something to a thought process and a mindset for people because I’m gonna think that when you’re looking at investing in certain things, then there’s a more aggressive mindset versus a conservative mindset. You know, as an Accountant, I know you probably operate more on the conservative side. Yeah, and but, some people operate from their own edge. They own the edge of the limb, like over here, just trying to balance to hold tight. Right. But approaching it with your strategy Ken and I’m gonna say almost, it’s really almost, it’s never a short thing, but you minimize the risk. Yes. As so greatly that it seems and feels almost like okay we’re surely gonna make some money with this project.
KEN:
Yeah, that’s exactly it. You summed it up. That’s exactly what we do. So now we do it over a multi-year period years and years. It compounds, right? I did a little maths equation for a recent show that we were at. And I looked at if we just returned 17% annually to our investors, which is high. You look at our track record, I’m very vast, it’s fully verified, you’ll see that we’ve done more than that we’ve done a couple of laughs, but clearly, 17% is not absurd. And when you look at this model, when you invest $100,000, and you fast forward 20 years, that 100 grand turns into, like a million, 2 million, 3. I mean, it’s not, it’s not so think about this, right? We think, Oh, 10, 20 years, man, that’s like forever. Yeah. I had kids, my kids are grown now that went so fast. I barely even remember parts of their or their life. So again, this is if you’re trying the right people, I do live on that edge, and they love that huge hit, maybe they don’t mind it if they go to zero. I don’t like going to zero and anything my friend. Nothing. I don’t like that number one rule, don’t lose money. I really do. I really try to stick to that. So those guys are living on the edge, though, they don’t mind going to zero. And maybe they’re comfortable. I’m just not comfortable with that risk profile.
CORWYN:
That’s fair. And you know what, something else that you said, kind of buried in there that I think some people miss. We talked about legacy, right? So legacy, building a legacy. You think about it, so you said, 10, 15, 20 years. So, a couple gets married. Let’s say a couple gets married. Yep. They got money, and instead of taking the $100,000 and blowing it on the wedding, they take and I’m sorry, let me rephrase that Ken I’m sorry. Because sometimes our listeners are sensitive as you ain’t blowing it. Okay, I’m sorry. But spending $100,000 on a wedding. That’s fair. Take that money, and buy into investments such as this. And by the time your first kid is ready to go to college, you got a million plus dollars potentially depending upon the investment. Yeah, if you can send my kid to college and help them start their life. Yeah, that’s right there. That right there is legacy. That is an effective use of the resources and moreover and moreover, at that point in time, that child now has positioned themselves to start themselves all better in life, so they can in turn repeat that for their children.
KEN:
And look at what you just started. Yes, sir.
CORWYN:
Exactly. And that ladies and gentlemen, boys and girls, dudes and dudettes, that right there. That’s legacy. Yeah, an inheritance. Because you’re teaching them early.
KEN:
Generational wealth. You want them to think completely differently. And look, man, now that I’m older, it makes me feel so good, that I now understand how I can change other people’s lives by talking about these things. I was nobody special growing up, man. My house was 1000 square feet in Toledo, Ohio, a single-family ranch. It was nothing special. Nothing at all. And anybody can get there, anybody can get there. Do you know what snaps him? Right? Yeah. Oh, the guy in their mindset? Yes, sir.
CORWYN:
Yeah. So, Ken, I was just, I was having a similar conversation not too long ago, a few days ago, and I’m having this conversation with a friend. Shout out to Rob Wilson. Rob used to be a co-host here on the show some years ago. And Rob is now up in the Maryland area. And long story short, we’re just kind of talking and the things we didn’t know. So like you say, at the age you are now man look here, I’m graying out here in the beard, rubbing all the hair out my head, all that kind of stuff, with the business and all that. But what I’m getting is, is this. What I’m getting is that, okay, we weren’t taught this. We didn’t. So we had to learn. We had to figure it out. From the modest humble beginnings to now you Okay, wait a minute. Well, if I hadn’t known this back then if somebody would have known it to teach me then, then where could we be now? But we know now. So what are we going to do now? To make sure that we move that needle exponentially forward? For the next generation and so forth and so on. As you said, that’s generational wealth. That’s the conversation that we’re not having, Ken and it’s really interesting that you should bring that up.
KEN:
Yeah. Remember earlier on, we talked about how, what frustrated me the most when I looked at my daughter that night, was that I felt like I did everything I was supposed to do. I went to school, got good grades, and did everything here. I was, wait a minute, all I’ve done is just become a workhorse, right? I’m working 24, not 24/7 but you know, 80 hours a week as a CPA and I didn’t get to spend time with my family and I thought because that’s what our parents told us. That’s what they told me. That’s what they told us. And now my message to anybody now is, wait a minute. Yeah, you gotta get educated, you do, you need to know stuff, right? You need to understand the way the world works. But change your mindset, right? You can do things a lot different than what I did earlier on. And I started with a ‘97, I must have been 30-some years old, right? The early 30s. Imagine if I would have started that in my 20s. And that’s what I’ve taught my kids. And that’s what I want, hopefully, your listeners to do. And the thing is, everybody wants, they’re trying to figure out if that’s fine that I want to do that, what do I do first, and my message is, go learn, go do what I did. When I knew I wanted to do real estate. I go. I went and figured it out and developed relationships. That’s what they need to do right now. Listen to shows just like this. Make as much as you can. Wait, and then go learn. Go, invest in yourself, learn the business, and then tackle it. Yeah, before you know it, you’ll be there, it’ll be shot, and you’ll be shocked at what you can accomplish.
CORWYN:
It’s all about the application. So, going back to what you were talking about, our application was okay, and you went and got a job. But at some point in time, to be frank about at some point in time Ken, and I’m sure it was that moment. I’m sure it was that moment, you battled and all this stuff and just kind of went on and stuff. And the app in your mind said, “Wait a minute, I can apply this that I know differently. I can apply this differently and have a different result.” And that, but it’s in the mindset because if the mindset isn’t growth-oriented or isn’t spurred, isn’t motivated, I guess, is maybe a term I might want to assign to it, then you stay stagnant. And you do the same thing over and over and over. And it’s a monotonous dreary existence?
KEN:
Yeah, yeah, it’s not on purpose. It’s just because people haven’t figured out how to change that mindset, and what I want your listeners to do is just surround themselves with people who have made that decision. Right, I’ve always kind of felt like you are kind of the people that are around you. So you surround yourself with people that are doing exactly what you do, it’s going to be hard to change. If instead, you said, “You know what, I’m gonna go out and meet these business owners or whatever, these guys that own real estate, and I’m gonna hang out with them for a while,” all of a sudden, you’re gonna be like, wait a minute, I can do it. They’re nothing special about those guys. I can do what they’re doing. And then you start to believe, and because you should, and then you start taking baby steps. See, I think that’s the thing that gets people to change who they associate with. Because people, group things into like-minded people tend to stick together. And so it’s that person that says, you know, what, I’m gonna go try out another group for a minute and see how I like that group. And all of a sudden, it makes a change. And that’s kind of what happened to me.
CORWYN:
And you’re exactly right about that. You’re exactly right about that. Because Ken, I remember I interviewed a guest, it’s been some months ago, and she explained how she got started in real estate, and in real estate investing, and I mean, now she’s in the process actually of, she’s in the process of redeveloping a small town, like, the whole town went too far or something. And she acquired all the real estate. And now she is really essentially rehabbing and rebuilding an entire town. And she started by walking onto an investor’s flip. Yeah, yeah. And she hung around, kept coming around, and worked with them to stay close to them. And he taught her what he did, and showed him what he did. And we, oftentimes act as if the knowledge is and those things are out of reach. That opportunity isn’t there, but it really, really, really, and truly is. Yeah. So Ken, our listeners, please give your contact information. How can people reach you? They’re interested in maybe investing with your group.
KEN:
Yeah, the easiest way it’s kripartners.com/invest. It’s literally that simple. All we need is your name, and your email address because we’re gonna stay in touch and you can get out anytime you want. But that’ll get you into our system. You’ll get to see what some of our deals look like. You get to hear from people who have invested with us. And I think I put in our full entire vetted track record as they’re vetted by Veribest, a third-party company. So you know that numbers are real. And I put, there’s a couple of YouTube videos out of which we talk about. How do we turn this apartment complex around? What do we do? Why did we buy it, all that kind of stuff Corwyn? You know what, my goal is to have it be very educational, so you can understand what we do. And then if it makes sense for you to do something you want to pursue investment with us, and you can get on my calendar, but kripartners.com/invest. That’s simple.
CORWYN:
Perfect, perfect. Well, Ken, look, we’ve had an amazing show. I really appreciate you taking the time to be with us today. For our listeners, hopefully, y’all got a snippet, a nugget, or something in there. Please make sure you reach out to Ken. Please make sure, one, you take a look at the video. So you know, when you call him or talk to him, what you’re getting, when and where the conversation is going to go. You know, because this is for the serious investor, you’re serious about, making a difference. You’re serious about creating and building a legacy. You know, that alas your family for generations to come. Guys, that’s what this show is about. That’s what Ken is doing. And he can help you structure and help you to get to that next level. So Ken, thank you so much for taking some time out of your busy schedule to be here on the show with us today.
KEN:
Corwyn thanks for having me, man. I really enjoyed it.
CORWYN:
Awesome! So listeners guys, you know, we say you know how we do, but we gotta do it one more time for you any doggone way. And that is to tell you, we love you. We love you. We love you. And we’re gonna see you guys out there in the streets.