Speaker 0 00:00:00 Hey everyone. It's Adrian. Penoza here with the motor life real estate investing podcast, where we help you and teach you how you can get more to life through the power of real estate investing guys. We're on episode 31 here and wow, how town flies. But before we get into this super, super exciting guest, I wanna share with you the numbers of one of our most recent refinances that we've taken part in, in partnership. And, um, I wanna show you that whoever's in the past told you, you can't get a hundred percent bur and get all your money out on the exit of a bur strategy. You're not partnering and you're not listening to the right people. This is why I'm gonna explain these numbers to you. And these are real life numbers. This is why people partner with our company. This is why we have so many referrals.
Speaker 0 00:00:50 This is why we have so many JB partners, so on and so forth because of the results, the infinite return, we provide our partners through the power of the birth strategy. That we've pretty much perfected. So let me run these numbers through you, write them down, record them, whatever you want, but these are real life numbers. Let's go through them together. Um, and I'm gonna explain to you and show you how we got this particular JD partner, infinite return on their money. So the purchase price was 650, 2080% loan to value. We have the first mortgage of $521,600.
Speaker 0 00:01:33 We spent a total of $250,000 on this property in renovations, top to bottom four unit property, top to bottom renovations completed 250,000 so important numbers to remember, obviously our purchase price, our first mortgage of 5 21, 600. We have the rental cost of two 50. We have our original down payment of 130,400 closing costs, 14,000 holding costs, $20,000. Uh, so all in all with our down payment, our renovations caring costs, closing costs. So on and so forth. We're into this for out of pocket, 414,408 months later. This property, once renovations were completed refinanced for 1 million, $275,000. So we had an equity increase essentially of $623,000, two 50 in, in res. But we forced appreciation by $623,000, which just means the new mortgage or the sorry, the, the new appraised value of the home at the completion. The exit was 1 million, 275,000. What does that all mean? We have a new mortgage of 1 million, 20,000 and we paid back.
Speaker 0 00:03:10 We paid out our first mortgage, our renovations, our caring costs, our closing costs, our original down payment. All those numbers are shared with you. What does it mean? We had a surplus, so every single nickel out, and we had a surplus of $84,000 that we shared with our joint venture partner. Absolutely incredible. And again, infinite return on investment cuz we have no money left in the deal above and beyond that guys, this particular property tented with four units, activate active tenants living in there. We are cash flowing $784 a month with not a penny. So let's go over it. The bank paid us at the end of the day, $84,000 paid us $84,000 to buy this property, renovate it, refinance it and hold it and above and beyond that we have $784 a month cash flow with no money left in the deal. Infinite return on your money obviously.
Speaker 0 00:04:23 And again, I can't stress enough if you are interested and you wanna learn and you wanna dive into this real estate investing, incorporating the birth strategy, we are the best in town. Reach out to me, send me an email, uh, www.investwithepc.com is our email address. Um, Adrian invest with epc.com is my email address. Shoot me an email. Let's let's jump on a call and chat about these numbers, chat about how we can help you achieve these numbers and potentially do some business together. So let's get right into our show now, super excited to, uh, introduce our guest. Hey everyone, it's Adrian. Penoza here with the more to life real estate investing podcast, where we try to help you get more to life through the power of real estate investing, super excited for our guests today. Believe it or not guys, we're on episode 31. How time flies when you're having fun, but, uh, exceptional guests today, Kenneth Ken G is the founder and managing partner of K R I partners and the K R I group of companies. He has more get this one ton of experience. He has more than 24 years of significant real estate banking, private equity transactions and principle investing experience. So obviously no stranger with 24 years under his belt throughout his career. Ken has been involved in transactions valued than more than get this one, 2 billion outstanding, much of which has included the acquisition management and financing of various multi-family real estate projects. Ken, welcome to the more to delight real estate investing podcast. How are you?
Speaker 1 00:06:29 I am doing great. Thanks so much for having me.
Speaker 0 00:06:32 Yeah. Awesome. No, thanks for sharing. Uh, and being with us, obviously you're coming to the table with, you know, I've been in the game 11 years, you've been in the game 24. So there's probably nothing you haven't seen or done that obviously I haven't either, but uh, congratulations on that. Why don't we start out with, um, you know, we typically start off tell us your journey, tell us your story. How did this all kind of evolve in your world 24 years ago?
Speaker 1 00:07:01 Yeah, that's a good question. So I grew up in Toledo, Ohio and uh, got my undergrad from university of Toledo. When I, then I moved to Cleveland, uh, got, uh, I went to work then at the time for, uh, a bank where I did five years of commercial lending. And while I was at the bank, I got my, uh, went to school at night, got my degree, my graduate degree, my master's from a small school called case Western reserve university. And when I was done with that, I went to, uh, I, I studied to be an accountant. So I went to work for Deloitte for seven years now, Deloitte CPA. That's where I got a lot of my private equity experience. Uh, and I was in their tax group then, and as I was working there, this is kind of a interesting story. Um, you know, my kids were very young.
Speaker 1 00:07:46 My daughter was, uh, still, uh, extremely young. She would, uh, in fact I would do the nighttime feeding with her every night. My wife would take a break. My son would be in his room sleeping. And so what I, you know, I used that time, uh, really is a great father-daughter time. Uh, cuz I was at Deloitte at the time we were working a ton. So I didn't get to spend as much time with the kids so way. I really love that time sitting in a room, the whole house is quiet, three o'clock in the morning and we're doing the, doing the feeding. And I really got to bond with her. The problem was as time went on and as these nights went on, they started to become frustrating for me because my mind would start thinking about our life, our family's life, her life and what I wanted it to be.
Speaker 1 00:08:32 And as I thought through this, I, I was getting more frustrated. I could just feel the stress building every time. Uh, I would, I would have these thoughts and you know, I knew that I wanted her to be able to, uh, to go to school without massive student debt. Right. I knew that there were a lot of things that I wanted our family to be able to do, but here was the problem. I did everything I was supposed to do. I went to school, I got a good job. I got my degrees, I did everything. Right, right. Mm-hmm <affirmative> and I was working really hard, but I couldn't, although I was saving a little bit, there was no way I could see a future that really put me in a position that I wanted to be in. And that was really frustrating because this, all of these thoughts was really destroying this time that I really, really, really enjoyed to have with her in, in a room.
Speaker 1 00:09:17 So I finally said, you know, I've had enough, I gotta figure this out. And you probably had some similar experience cuz I know you changed careers. But I decided I, I, when I was at the bank, all my customers were in real estate when I was at Deloitte. So many of our clients were making massive money in real estate and I was just working like a dog. Right. Mm-hmm <affirmative> so I said, all right, I gotta figure this real estate thing out, cuz this is obviously where it needs to be. So I spent a couple years and thousands of dollars back then there wasn't podcasts like this and all sorts of other ways to learn about real estate. So I went to the local apartment association meetings and you know, really became buddies with the people that would present at these meetings. And I started learning about real estate.
Speaker 1 00:10:00 So in 1997 I bought my first deal. It was a small 28 unit property in Cleveland. Um, then I bought my second deal and my third deal and what happened to me, this is a life changing part of this story. And that was, I sold those three deals and made over half a million dollars in profit while I was still working at Deloitte for like 60, 70, 80 hours a week. And it was then the first time in my life. I had real money in my bank account. Right. I I not. So before I couldn't figure out how I was gonna reach all my goals. Now it was crystal clear, obvious what I needed to do to reach all my goals, you know, before I couldn't figure out how I was gonna put her through school and my son through school without tons of student debt, I, I got it now I, I have the solution.
Speaker 1 00:10:50 So I continues down that that's how I got into real estate. And it's a pretty interesting story because you know, I have always argued that your kids really impact you more than you realize they do, right? Your life becomes less about you and more about them. But you know, that time of my daughter really, really did drive me to getting into real estate because I needed to find a way to reach the goals that I set for myself. There was no way I was gonna do it working, uh, for somebody else. So that, that's how I got started in real estate. And you know, now we've done, I don't know, 17, 18, 19 deals. And uh, we're well on our way to, uh, uh, you know, to continue to grow our firm.
Speaker 0 00:11:28 Amazing, amazing. So you touched on a couple things there that I can resonate with and, and probably a lot of people listening can resonate with. And what you've touched upon there that really really hits home is, is <affirmative> is essentially you're sitting there three o'clock in the morning, feeding your daughter out of a bottle. Um,
Speaker 1 00:11:48 Mm-hmm <affirmative> yeah. In
Speaker 0 00:11:49 The middle of the night and whatnot and um, you know, the light bulb goes off and you're thinking you want more and how are you gonna get more? And, and I've been there, you know, way when I was a police officer sitting in the middle of the night at three o'clock in the morning and my cruiser, you know, behind a building trying to, uh, drink a coffee and stay awake. I'm thinking I want more. And your, your story is exactly the same way. Obviously thinking, how am I going to get more, to get outta the rat race and obviously provide a different kind of lifestyle for my family, my children. So yeah, that that's that's awesome. And then obviously that mindset you had, you did something with it. You bought, you said you bought three buildings
Speaker 1 00:12:35 Mm-hmm <affirmative>
Speaker 0 00:12:36 And
Speaker 1 00:12:37 One after the other. Yep, yep,
Speaker 0 00:12:38 Yep. Bang, bang, bang. And then that, well,
Speaker 1 00:12:40 It took me some time. I mean, I did it over a year too, but the point was that I bought the first, the second and then I, after I bought the third, I actually sold all three and back then think, think back to the, I think I sold them in the year, 2000 think back 22 years, 23 years ago. That was a long time ago.
Speaker 0 00:12:59 Oh
Speaker 1 00:12:59 Yeah. Half a million was a lot of money. I missed half a half a million's a lot of money now. Oh boy. It was life changing for me back then
Speaker 0 00:13:08 A hundred percent. So when you started then those three buildings that you originally purchased mm-hmm <affirmative> did you do those on your own and what made you, I guess you mentioned you did a bunch of research, right? You, you, you did a bunch of research before you pulled the trigger. Um, so you pulled the trigger. Did you do it on your own or how did that kind of evolve?
Speaker 1 00:13:33 Yeah, that's a really good question. So each deal, always, every deal always has a little story. So my first deal, I always tell everybody it is truly the hardest deal you'll ever do because it you're, everything you're doing is brand new to you. So, uh, then I borrowed, uh, the half of the down payment that I needed fr on my home equity line of credit. I wouldn't encourage everybody to do this. It's just what I did. And my in-laws were kind enough to trust me for the other half. So they invested, I went in with my in-laws and they said, look, and you know, we know you don't know anything about real estate yet really. Um, but we trust that you're gonna work hard and you're a CPA and you're probably gonna figure this out. So yeah, we'll, we'll, you know, that's what parents do.
Speaker 1 00:14:14 Right? And, and, and, uh, in-laws, we'll take a chance on you. And so that was how I got the first deal done. The second deal. Interestingly, I started learning more and understanding about how to finance improvements when you're doing a value add deal. And I learned that you can do the deal. I was able to negotiate with a seller with very little money down, right. I, I borrowed that down payment as well, but I did it by myself this time and I didn't have anyone else in the deal, but I was able to figure out how to improve the property and have the bank fund the improvements right back then it was even harder than it is now, uh, because they would come out and inspect and you'd have to prove that you got the new rent and they'd have to see the real tenant living there and all that stuff.
Speaker 1 00:14:56 And then the third deal, uh, is different. Uh, I bought the, the third deal I bought from a, uh, development corporation that they had taken the property from basically almost being condemned. They had resurrected it and it was a beautiful property. They wanted to sell it to a few people in the neighborhood that they knew would take care of it and you know, not let it, let it go downhill. So we were one of the selected buyers. So we were able to buy that, that third property that way. But as you can see, every property has its own little story and it's always every deal. If I went through every deal we've ever done, there's a story behind each and every one of 'em about how we got it done. But what's most important is that, you know, as you're going through this process, you're gonna have these obstacles. You just have to figure out how you're gonna deal with them and how to get around them. Just know they're gonna be there. And it actually becomes a challenge. It actually becomes fun when people throw things in your way, right. To just see how many things you can throw in my way. And I can still figure out how to get around them. It actually becomes fun after a while. Not on the first deal though, the first deal was stressful.
Speaker 0 00:15:56 <laugh> oh yeah. Oh yeah. I remember my first deal. It was a little, it was a little duplex, you know, few minutes from my house. Cause I had to buy something close to my house. Right. You know that, you know, novice mindset, it's gotta be close cuz I gotta drive there every day and make sure, you know, the tenants aren't lighting this place on fire or whatnot. And it was a little duplex, two units, uh, few minutes from my house and I was stressed and I started the same way. We have a lot in common on our journey. I started with a home equity line of credit as well. And uh, I think it was a couple hundred thousand to 250,000 is what we started with. And we used that we didn't have money in the bank and whatnot. So yeah, I can definitely relate to all that. Amazing. So three properties, you got 500 grand and again, years and years ago, that was a ton of money, obviously. Mm-hmm <affirmative> so yeah. And that just kind of kickstarted everything. I, I, I guess from there and you haven't looked back
Speaker 1 00:16:58 That that's exactly right. Yep. Yep. At one point I did take on a partner who has since, uh, uh, he has retired, so he, oh, there you go. He since retired. Uh, so there was a, um, at one point I brought on a partner, he and I did some deals together. He had a bigger balance sheet than I did, right. Because one of the challenges as you're growing, it's a very capital intensive business and you've gotta have some net worth and liquidity. So, you know, I always tell people when you're trying to figure out how to do these deals, you gotta figure out exactly what you need and go find the right partner to, to partner with you. So he was super helpful early on to help me grow as fast as I did. And uh, he's, he's retired. He's no longer, um, you know, doing anything with us, but actually I do still have one deal with them.
Speaker 1 00:17:40 But now, you know, we've gone out on our own. We syndicate our own deals. We actually have now, um, graduated from the syndication world and we now do blind pool funds be for lots and lots of reasons there. It just makes a lot more sense. We operate primarily in Florida, which is a hypercompetitive market, as you know, and you've gotta do everything you can in that market to set yourself apart. So now we do blind pool funds and uh, we go out, raise the money and then go find the deals just makes us a much, much stronger buyer. And so, you know, it, it's interesting to see the evolution of our firm over time. And uh, you know, we'll, we'll always be a blind pull fund, uh, a buyer because it's
Speaker 0 00:18:17 Yeah. When you say blindfold fund, that just means you're raising the capital first and then finding the acquisition. That's
Speaker 1 00:18:26 All. Yeah. So if you compare this to a syndicator, most people are familiar with syndications. So if you're the sponsor, you'll go find the deal. You'll lock it up. You'll put some of your own money in it. And then you're gonna work like crazy to try to raise that money within a very short period of time. And if you've done it, you know, that's a super stressful situation, puts a lot of gray hair on your head because your money's at risk and you've gotta raise, raise the money in time. So a couple of things happen when you're buying in that environment. First of all, lots of syndicators are standing next to you wanting to buy the same mess that you do. The seller knows you haven't raised the money yet. So it's a, it gets harder, right? So you've gotta find a reason to have the seller pick me, pick me, right?
Speaker 1 00:19:04 Usually you pay up for that. Well, flip the model. Now it's called a blind pool fund, but it's also just a fund for short. We now go raise the funds. We get to commitments from our partners and then we then 10, 15, 20 million, whatever it is, that's in the fund. We go to the market and say, look, Mr. Broker, Mrs. Broker, Mr. Seller, Mrs. Seller, we're a fund. We've 20 million a commitment. You don't have to worry about us raising the money it's already done. It's already raised. So that whole equity raise risk is off the table and seller. So sellers really do appreciate that cuz they want closing. They want to close. So they, they don't want to take that risk that you're not gonna be able to raise the money. So we take that off the table. The other thing that we didn't really probably fully appreciate when we first started doing funds was that sellers know that people that do funds are generally more experienced.
Speaker 1 00:19:56 So they, that means implicitly that you'll be quicker and more efficient with your due diligence. You probably know what you're looking at on day one. So you're left far less likely to retrade them as you get down the road with that deal. And they know that your op you know, your chances of getting it financed are considerably higher, especially in the market that we're in now where interest rates are kind of going wacky and you know, inflation's there and everything else, right? We can get deals done that a syndicator might have a lot harder time doing. So it's those massive buying advantages. And there's also lots of, uh, um, benefits for a fund investor to do it as well because they get diversification with inside a fund and all sorts of other benefits, but lots and lots of reasons to do the fund model. And that's why we'll stick with that because it is truly the best way to, to, to operate in this business. Once you get enough experience that you're able to, to do that.
Speaker 0 00:20:48 Absolutely great advice there. Great advice. So you're raising money before the acquisition and correct me if I'm wrong, you're still concentrating on the multi-family buildings or you've kind of in a different space. Like what are you guys focusing on buying now?
Speaker 1 00:21:05 Yeah. Great question. So we, I believe very strongly in not letting don't ever let somebody learn on your dime, right? So we do multifamily. It's what we've always done. We're really, really good at it. I have no reason to get outta that lane. Right. I, I already know how to do it. If I'm gonna go out in an experiment with, with development or something like that, I'm gonna do that with my own money. I'm not gonna do it with somebody else's right. I just don't think it's fair. So as a company, our business model has generally been the same. We buy, uh, BC class assets in good neighborhoods. That's really important ones of which we know that it's their value. It's a value add business model. If we can add physical, we can make physical improvements. We can make management improvements and by doing so, we'll be able to increase the cash flow of the property. And hence then the value because that, you know, that value connection to cash flow, uh, we're able to be fairly predictable when, uh, when we know how we're gonna exit the deal. So that's what we do value add good neighborhoods, BC class, we hold usually three to five years and that's kind of always been the way we've operated. And it is, you know, thus far been able, we've been able to generate really, really good returns for our investors with that model.
Speaker 0 00:22:15 Yeah. We do the same thing, uh, in a joint venture partnership structure, as opposed to the, uh, raising the funds, which is something we've actually been, uh, working towards. And like you say, you know, once you, you are starting to build your experience, build your experience, and you're ready for that next step of, you know, raising funds and, and whatnot, which is around the corner for us, the more of our acquisitions to date, our partnerships have been in the joint venture structure. Right. Partnership. Mm-hmm <affirmative> uh, but yeah, I definitely definitely like your model for sure. And, and I like the fact, and I can't agree more. We've lost out on buildings that we've tried to buy in partnership with some investors, but like you say, you're coming in and these sellers know you've already, you know, you're a fund, you've raised your money. You have the money, you know, there's no, uh, there's no gray area there. Right.
Speaker 1 00:23:16 It's I call it equity, raise risk. It's gone.
Speaker 0 00:23:19 Yeah. Mm-hmm <affirmative> and you need to deploy that money obviously now that you've raised it and these sellers know it and you're coming in in a much better position, right. To get that over, for example, a person like myself, because you already, you, you have the money and you could potentially pay a little bit more than me, for example. So, uh, with your fund that you have in your hand, which is very powerful, very powerful, even with negotiations, like you said, and whatnot. So yeah, it's definitely, it's definitely, you know, maybe not for beginners obviously, but people that have been in the game like yourself for a long time sure. Can definitely offer their investors, uh, an upper advantage
Speaker 1 00:24:07 For sure. Yeah. And, and, and to be clear, there's nothing wrong with this syndication model. It's just, it's just a little harder way to get a deal. I mean, people grow up in this business first, usually doing it with their own money. Then they go out and start to raise money with and do it with others. There's nothing wrong with that. It's just the normal life cycle of an investment firm. And, uh, you know, I would encourage people to just, you know, EV some people never stop Sy indicating they never go to the fund model and that's fine, too. Right? Whatever works for them. We happen to operate in really competitive markets. So I'm trying to stack everything I can in our favor to get these deals without paying up for them. Because you know, you don't always wanna be the highest bidder when you're trying to buy.
Speaker 1 00:24:47 Right. Their certainty of clothes is really important for most sellers, right? Most sellers are not trying to eek every last little penny out of that property. They want, they want a good deal, a deal that weighs. They know they can lock in their returns and they know it's gonna happen. Because what happens is if that syndicator falls outta contract, now that property comes back to the market and it's just tainted. It's just the way it is. You, you, the brokers will try to explain away why did it fall outta contract, but it's just, it's viewed differently. Now. It's not as competitive for the seller. It hurts the seller, right? So they care a lot about that certainty a closed thing. And that's what we really bring to the table.
Speaker 0 00:25:28 Amazing. Amazing. Um, there's many different methods of investing in real estate, obviously in the market. Uh, obviously your knowledge is second to none. I think obviously with 24 plus years, um, you mentioned real estate is not a passive activity. Investing is tell us more about this point in your mindset around that.
Speaker 1 00:25:53 Yeah. What I find a lot of people, and by the way, just to, to be clear, you know, we've been doing this 24, 25 years, but we're learning every day. Right? I mean, I don't want anyone less anyone think, uh, that's listening to this that, you know, we're beyond learning. I mean, I learn every single day. That's what I love about waking up every day is, you know, what am I gonna learn today? So it's really fun to learn. Um, in terms of this, uh, passive thing, that concept really starts off when, when, think about when you were ready to get started, right? Everybody says, oh, passively invest in real estate. So they go out and they buy a duplex, just what you did when you started out mm-hmm <affirmative> cause you think it's a passive investment. It is not a passive investment. Cuz what did you do?
Speaker 1 00:26:32 You drove by that building every day. You had to make sure that everything was going right. You had to make sure the long got Mo sees that that's active. That's not passive. Right? And so many people mischaracterize this investment real estate thing as being passive when the only real way to make it a passive investment is if you give your money to someone else like us and you get money back and you have nothing else to do, right. That's a true passive investment. And a lot of people don't realize when they, they just don't equate apartment buildings as businesses. Right. If I were to say to you, Hey, do you wanna, um, do you wanna open, um, I don't know, a restaurant, you would never think of that as passive, right? Right. It's a business. Just like an apartment community is it's a business. But when you think of an apartment building, you could say, oh, I would say to you, it's a passive investment, right?
Speaker 1 00:27:25 The IRS classified as a passive, maybe so on and so forth. It's truly not what I want people to be prepared for as to really evaluate your life. And I'll talk about it. Why this is so passionate for me, everybody knows you can make a ton of money in this business, but what most people are trying to figure out right. Outta the gate is okay, how does this fit into my life? And that's when this packed, passive active thing really comes into play. You've gotta make the decision about how, you know, are you a physician? Are you an attorney? Do you have a great, you know, you were a police officer, right, right. At the very beginning, do you really have the time to be active, to drive that business, to be the one, to make sure that everything happens or should you start out with the passive investment until maybe you get to the point where your passive income exceeds what you're making in your day job.
Speaker 1 00:28:14 And now you can kind of make that jump. So I want people, um, it, it's in a book that we give away. We'll talk about that in a minute, but it's, it's I try to help people figure that out. Most people, if they truly look at their lives, realize that they should be passively investing in real estate. They should give them money to an experienced indicator or a fund manager or something like that. That's where most people end up landing. It's it's just that they don't, they don't really think of real estate or apartments as a business, which, which it is, trust me. I mean it, every day it is a business. There's no question about it. So that's the distinction I like people to make so that they don't get misled. They kind, it's almost like a bait and switch on 'em. They think it's passive. And all of a sudden they get the call on Saturday night that the toilet's leak in and this is happening and that it's not so passive anymore.
Speaker 0 00:29:05 Um, right, right. No, I couldn't agree more. And obviously whether they're giving you their money or partnering with our company mm-hmm <affirmative> and providing capital for us, you're delivering a hands free product, right? Yeah. Completely. You're doing nothing other than collecting the paycheck, sort of speak completely hands free. And um, that's very, very attractive when you are obviously getting started or don't have the time so busy with a young family, you're busy with your career. Why not give the professionals the money and let them invest that and you can completely be passive and literally do zero. So I, I can't agree more. That model is very attractive. Obviously people just have to get by the mindset that obviously they gotta do their due diligence. They gotta feel comfortable. Whether it's your company, our company, whatever company, you know, they gotta feel comfortable. They've, they've done their research. You know, they've seen statistics, they've seen your product, they've seen your results. Okay. What what's more to do other than, you know, real estate is a very, very viable place to put your money long term. You know, I always say this long term, you can't lose if right. You know, you're investing in real estate, long term, long generational wealth mindset. Is that not right?
Speaker 1 00:30:38 It, it is. Yeah. Yeah. Yeah. I, uh, yeah, I don't, I don't know that you can use the word guarantee. Uh, cuz I always think that's a dangerous world in the dangerous word in the investment world, but, but you're right. Uh, time is generally your friend in the real estate world. If even you had a small hiccup, um, in pricing, you just got the nice thing about real estate is it's gonna still generate cash flow. So you're getting paid to wait, which is remarkable, right? When you, for example, our fund, the preferred return is 6% and you're getting paid to wait. I mean, I don't know too many dividend stocks that are paying 6% and by the way, you don't have to pay tax on that 6% when you get it because it reduces your capital. It's not, it's not taxable income to you, uh, just because you received that money.
Speaker 1 00:31:24 So there's so many benefits. The other thing I share with investors is if you, if you've vet your sponsors correctly, you can find people in our business very easily. I mean, we underwrite to a minimum of 15% annual returns to our investors. Well, I mean, think about that. How much more money do you need to make as a passive investor? If we can, if we can beat 15%, right? There's no guarantees could be 2% right in our world. You don't, we don't get any of the upside bonus until you get your 6%. Right? So it's, it's not that the six is guaranteed, but you're getting six first and then we split, uh, over and above that. But what's important is if we can find a way to get investors 15, 20, 30% plus annual returns, which we oftentimes do. I mean, that's not a bad passive investment, at least I don't think it is.
Speaker 0 00:32:13 Absolutely. Absolutely. For
Speaker 1 00:32:16 Sure. So the key for them, and we'll talk about this is vetting the inspo, the sponsors, uh, and uh, I know you didn't ask me this question, but it is the biggest challenge right now that people thinking, okay, I want to passively invest. How do I do that? How do I know? Can that you're the real deal that your, your track record is what you say it is. And, uh, I would, I would say I don't have a financial interest in this company, but if you
[email protected], we, we paid them a ton of money to go and vet our entire track record. Think about that for a minute, right? You're not probably gonna ask me for all my tax returns and settlement statements and bank statements for all the deals I've done, right. To make sure I didn't lie to you. They did. And they made us, uh, they vetted us, right? So I think this whole vetting process is super critical to the long term success of this industry. Because at some point there'll be some bad actors out there doing things they shouldn't do. Yeah. But these guys, they vetted everything. They do annual background checks on us to make sure we're, we're doing all the right things and so on and so forth. So I would encourage your investors to take a look at that site. We're on there, proudly on there. It's very expensive for us to go that
Speaker 1 00:33:21 What's that their vest.com V E R I V E S t.com. Uh, and then slash KRI dash partners that that's our page, uh, on their site. But the point is, again, I don't have any financial interest in that company. I just think it is such a useful service so that when you're out there trying to figure out where to invest, I mean, somebody that has not been vetted or somebody that has been vetted seems like that's a valuable thing. At least I think so
Speaker 0 00:33:48 Million percent, a million percent and agree more. All right. Well, one of our last questions as we approach a 30 minute mark here, Ken, you're very successful. Now when we say that relative to how the world views success. But do you think Ken, there's still more to life for you when you picture more to life? Question number two, what do you see?
Speaker 1 00:34:16 Yeah. That's so we do what we do for a lot of reasons. Um, I do what I do. I, I take it back to the story that I told you earlier about how I get into this. Right? I really did this because I wanted to be able to put my kids through school without being saddled with tons of student debt. I wanted to be able to create a business and create passive income so that I could spend more time with my family and do the things that I want to do. Right. It's all about it actually all leads to a better quality of life, not just for us and me as the owner of the company, but for our investors as well, because we're, we're, you know, we're, we're throwing off 15, 20, 20 5% plus annual returns. Well, that is helping them to reach the same exact goals that I have.
Speaker 1 00:35:05 And that is to, to do all the things that I, they want a better quality of life, right? There's once you are able to replace your active income with passive income, it it's a, it, it just happens. Now, the flywheel is moving and it requires really no further input on your part. And now you, you have that money. That's automatically, we call it mailbox money, right? You have that mailbox money that's coming in that replaced your active income. And now guess what, when your grandkids come or your kids come and they wanna, you want to go to their football game, their basketball game, their baseball game, their dance, uh, recital, whatever it is you now can do that, right? Because you don't have to worry about, um, having to work full time. So it is all actually about that for, for ourselves and for our employees and for our investors actually.
Speaker 0 00:35:53 Awesome. Awesome. Last question. If you could give one parting word of advice to people out there listening to this episode, one, one word of advice or one piece of advice, what would that be?
Speaker 1 00:36:09 Yeah. So whether, uh, specific to real estate, if it's specific to real estate, it would be, um, learn as much as you can. And so whether you're going to gonna do what I did and create a company and, and do it in an active way or whether you're gonna passively invest what I tell people. I, I have this saying, I, I don't remember if I stole it from somebody. If I made it up myself, but knowledge builds confidence. And what I've seen over time is the number one thing that stops people from making that next step from do, from making that investment from doing whatever it is. It's because they don't fully understand it. They're not confident that they know it and understand it. And so that's why I say my number one piece of advice is dig in, learn as much as you can about whatever it is that's going on.
Speaker 1 00:37:00 And it will give you the confidence to move forward. That is what's always happened to me. You know, everything we do, I dive all the way down into the deepest little detail to fully understand whatever it is that I'm trying to figure out. And then once I understand, I'm always confident in, in what we come up with. Right. That just makes sense. So knowledge builds confidence. That is the number one thing I love to see, you know, just constantly learn back when I was in school. I didn't appreciate it as much. Right. You couldn't wait to get outta school right now that I'm older. Boy, I, life is just nothing but ongoing school and I really enjoy it. So that's my advice.
Speaker 0 00:37:35 Knowledge is power. Couldn't agree more, Ken couldn't agree more. And especially in this game, you, you know, it is intimidating. It is stressful that first or second, you know, acquisition. But like you say, if you, if you, if you have the knowledge behind you and you've done as much homework as you can and learned, you know, you you've put in the time, then you gotta take action, right? I mean, you gotta, you gotta take action. You can sit on the fence forever and just keep reading books and be the smartest guy in the room. But if you don't take action, you're not never gonna reap the rewards that real estate investing can obviously produce. So, yeah. Awesome advice. Well, listen, Ken, thanks for an awesome episode. Um, how do people get a hold of you? They want to invest with you in your company? How do they reach you?
Speaker 1 00:38:24 Sure. So, uh, let me go. I, I alluded to this earlier, this book that I wrote, KRI partners.com/ebook. It's free. It's, it's an easy download. It's only about 40 pages long. It talks about what I said earlier. Talks helps you figure out how real estate's gonna fit in your life. But then once you conclude probably like most do that, passive investing is where you need to be. The next challenge you have. And I talked about this before is vetting your sponsor. The second half of the book is devoted to, I share a lot of inside stuff about how does this business really work? What makes people like me think, why do we do what we do? Why do some people do what they do? Why, what, you know, knowledge builds confidence, right? Mm-hmm <affirmative>. So I want you to understand how business works, because when you understand how the business works, when you talk to potential sponsors, you'll be able to tell if they're the real deal. If they have the track record the experience behind them, that you feel confident giving 'em their money. So it's KRI partners.com/ebook, and then it gets you in your system. And, uh, then of course you'll know about all the different opportunities that we have, uh, for investing with us.
Speaker 0 00:39:30 Amazing. Yeah. Get a free book out of it and then obviously get on the mailing list and whatnot, and maybe take part in some of the opportunities that your company's bringing forward. So, yeah. Amazing. Amazing. Well, Ken, it's been a pleasure. Uh, we're just at our 35 minute mark and I try to keep it there for that ride to work or ride home after work or whatnot. So awesome advice, Ken, ton of knowledge, um, definitely opened up some of the, some ideas even for myself and whatnot. So I appreciate it. And, uh, thanks again.
Speaker 1 00:40:05 Well, thanks so much for having me. I really enjoyed it.
