The Slow, Steady Way to Make $50K Per MONTH with Rental Properties

Andrew:
This is the BiggerPockets Podcast show, 8:45 every week. It is our goal to bring you the stories, the how-tos, the information so that you can make smart decisions in today’s current real estate market. We hope that by listening to BiggerPockets, you can grow your knowledge base faster than Taylor Swift’s bank account. Now, if you’re wondering, where are David and where is Rob? Well, today is substitute teacher day. If you grew up and went to high school or middle school or elementary school in the eighties and nineties, today is the day where the bell rings, your teacher’s not in class, the door swings open and that big boxy TV rolls through on the cart with a VCR. So we’ve got myself, Andrew Cushman, as your host here, and of course, Matt Faircloth. How you doing, Matt?

Matt:
I’m great, Andrew. It’s great to be with you today. And you totally dated yourself six times in that intro, by the way, because there are people out there listening right now wondering what a VCR is.

Andrew:
I’m just going to own it. I can’t hide the gray anymore, so I’m just going with it.

Matt:
You probably still do own A VCR, don’t you? I bet there’s one in your basement somewhere. No?

Andrew:
I do not.

Matt:
No. Okay.

Andrew:
No, I do not, thankfully. No. And I don’t even know what VCR stands for anymore.

Matt:
Video cassette recorder, but moving on. Andrew, it’s great to be with you today. I’m so grateful that David and Rob left the microphones on for us today so you and I could jump in and be co-hosts here to ask you, Andrew, how are you today?

Andrew:
The surf has been good lately, the snow is starting to fall in the mountains, and I’m starting to see some pretty exciting deals come across my desk, so if I want to feel much better, I might have to take something recently legalized.

Matt:
There you go. I’m totes jelly across the board. Jealous of the waves, jealous of the snow, jealous of all that, the deals and everything, man, that sounds awesome.

Andrew:
Wow. Well, no one’s here to listen to us today. We’ve got an amazing guest, KC Massie from Lexington, Kentucky. Matt, what are we going to hear from KC today?

Matt:
I’m super excited for today’s conversation, Andrew, because you and I have debated for many, many years on which is better to get in a multifamily, to do the organic growth method, as I did, which is to buy a two unit than to buy a four unit, to buy an eight unit, air quote, double your portfolio every time you do a deal. You can do it that way or you can just hop directly into the deep end where the sharks are as well, which is what Andrew did because Andrew’s extremely smart. Not everybody’s as smart as Andrew and not everybody’s daring as Andrew is, and Andrew’s been able to build a phenomenal career for himself by getting directly into the deep end of multifamily first jump.
Our guest today did what I did, which is to slowly scale, learn landlording, learn the game as you grow, and take a few strategic moments in his career that we talked about and we’ve all had those strategic moments. He’s been able to really, really double down and triple down and quadruple down in his portfolio through a few strategic moments he’s had in his past, and I’m super excited to hear about that and to hear about growing and scaling and I think a lot of people are going to be able to relate to today’s story.

Andrew:
All right, thanks Matt. So KC, welcome to the show, my friend. How are you?

KC:
Doing great. Thanks for having me on the show, guys.

Andrew:
All right, glad to have you here. So some background for listeners. KC, you’ve been investing in real estate, I believe, for 11 years. You live and invest in Lexington, Kentucky, so you’re one of the ones who has the advantage of investing in your own backyard. Currently own 121 units across 20 properties. We’re going to dive into that a little bit more. Mostly multifamily. You got the four units, the eight plexes, the 10 plexes, 28 plex, 33 plex. I’m not sure when you stopped using the word plex, but they just keep getting bigger. You also have some long and short-term rentals, single family homes. Your portfolio currently valued at 12 million, and the most important piece of that is it’s about a $6 million equity position. It’s not just about the value of the assets, it’s how much equity you have in them. And you are a proud father of three kids and you manage the real estate portfolio with your wife, who’s also named Kaisey, but spelled differently. So that’s quite the background and lots of good info to extract from that.

KC:
Yeah. We should have her. She’s the one that should be on here. She’s the brains. She’s the brains. I’m the phony.

Matt:
Yeah, for the next episode. I think most successful men can say that they’ve got a very, very good, phenomenal woman standing behind them that is the wind in their sails, I can say that too of myself, so super big shout out to the other KC Massie. Give her a hello from us from the audience at BiggerPockets. Quick, just, note, you’ve chosen a phenomenal market. Lexington, Kentucky, is one of my favorite markets in the US as well. DeRosa, my company, is heavily invested in Lexington as well. Can’t wait to delve into why you picked Lexington, Kentucky, as your target. So KC, we all have these major turning points in our careers and you had a major turning point back in 2016 where you’d already been real estate investing for a bit, but you had a moment and it’s a phenomenal story. I’d like for you to tell it here for the audience of that first turning point you had in your real estate investing career.

KC:
So I started back in 2012, but was just doing the onesies and twosies and almost limiting beliefs were kind of controlling what I thought was possible. Any of the bigger deals, I kind of just wrote myself off, but my wife and I decided to do something bold and went crazy and decided to plan a trip around the world, which has always been a goal of mine, I just always talked myself out of it. Just not financially smart, you want to invest your money, not blow it on one big trip, but we ended up… I was doing summer sales at the time and it was really draining on me, so every night I’d come home, I’d just plan another portion of this trip and kind of seeing it all come together. And then ending our trip… We went all around the world.
We went to London, Dubai, Maldives, Singapore, Bali, Fiji, Australia, and then ended in Hawaii, and it’s one of those moments where at the very end of the trip, my wife and I were sitting on the edge of the big island of Hawaii, we were looking over the volcanic rock and it hit me that limiting beliefs control so much of what we do and we always talk ourselves out of some big stuff that we’re able to do. And as I was sitting there looking over the ocean, I just was brought to tears, having that feeling of accomplishing something that most don’t get to do, but then sitting there and seeing it come to fruition just changed my whole outlook on how I approach business, how I approach real estate, even my own family life, but sitting there with my partner in life and checking off this bucket list that I thought might not ever be possible, just really set the tone for the next few years of my investing career.

Andrew:
Yeah, it sounds like we should do a separate podcast episode on your travels because you named off about 18 places I still want to get to. So to recap that, you took the leap and actually went and did the epic bucket list trip that many people either can’t do, or even when they can, they still don’t do it, so kudos to you for doing that. And it sounds like taking that trip actually led to a huge turning point in your life and in your real estate investing career, so we are going to get back to that in just a moment. First, we’re going to take a quick break for our sponsors.
All right, so we are here with KC Massie and he just told us about a life-changing trip that not only changed his life but also was a huge turning point in his career. However, we are going to take some time to travel back a few years to the beginning of his 12 million dollar portfolio because it didn’t start right at 12 million. So KC, tell us about the first deal. How did you find it? How did you buy it? What got you started on this now 12 million dollar investing journey?

KC:
Well, it was back in 2012 and I was actually trying to figure out how to show my girlfriend at the time that I was serious and I was like, what a better way to show her I’m serious other than buy a condo right down the street from her parents’ house? I figured if things didn’t work out with her, then it was still going to be a good investment. So I did the 20% down just because that’s what somebody had told me, said, “Hey, when you buy a house, you got to put 20% down, it’ll save you money.” So I did that. It was actually a bank owned property at the time and fortunately, it did work out with my wife and I think it was a very good decision to buy that condo, just a town home.

Matt:
Now, was that the house hack, you rented out a couple of bedrooms, big shout out to Craig Curelop’s book on house hacking, on living in a property and having tenants help you pay your own overhead, your living expenses, so that was great. The 20% that you had to lay down on the property because somebody else told you you should, right? Where’d you get that from?

KC:
So I was in a commission-based job. It was a hundred percent commission and the pay structure was actually fortunate for investing because we’d get half of our pay throughout the summer and then half of the pay would come at the end of the year. So you get this check, substantial check if you do well, and you don’t want to just blow it on dumb stuff, so I said, well, let’s get a lot of this back out of my bank account so I don’t spend it in the wrong places and put it into a house. And so it was a $200,000 condo. I put 45% or 45,000 down.

Andrew:
And KC, I’m sorry if you mentioned this and I missed it, how did you find that deal? Was it just sitting on the MLS?

KC:
Yeah, it was just on the MLS. Yeah.

Andrew:
So you can start a large and successful real estate investing career by buying something off the MLS.

Matt:
There are deals on the MLS sometimes, Andrew, to find. Yeah.

Andrew:
Yeah. Well, and that’s also a good point is a lot of us, I know I saw it this way when I was getting started, is we feel like, oh, I have to get the most amazing deal ever just to get started in real estate. And while you do want to be careful and not just go buy anything, it doesn’t have to be a home run to get started, it just has to be something that works. And KC, you did a great job of just doing something and buying something. I’m guessing you probably didn’t have a vision of, I’m going to buy this condo and then be talking to Matt and Andrew years later about my 12 million dollar portfolio, but you took the first step and then the next step showed up and all that.
So from there, you went on to buy mostly small multifamily, right? Like one or two a year, you continue to fund them through sales earnings from your job, and then, I guess, sounds like buying towards the end of the year when you got your bonus. So let’s go back to the 2016 turning point. We understand Kaisey played a big role in that change. Could you elaborate a little more on that?

Matt:
Just to elaborate, Kaisey’s your wife, so you married someone with your same name for goodness, I can’t believe what that must be like in your world when people say, “Hey, can I talk to KC?” “Which KC?”

KC:
Right.

Matt:
There’s two KCs in your household pronounced exactly the same, I know spelled differently, correct?

KC:
Yeah. I mean, initials are KC and then the other one’s Kaisey so you can pronounce it differently, but it is hard. It takes a trained ear.

Matt:
I get it. You guys must have a lot of fun with that. So take us back to the cliffs of Hawaii looking at the volcanic rock and the ocean and the big epiphany that you had about… I just want to tell you how moving that was, by the way, about you realizing that you wanted to tour the world, so you did it. And so now it’s like, well, I want to scale up and build a real estate portfolio, and so, aha, epiphany. So what was the decision that you made in your next action there on the cliffs of Hawaii, 2016?

KC:
So sitting on the cliffs of Hawaii, it hit me deep where… Because I think I only had 10, 15 units at the time, I didn’t have a whole lot. All my growth really came from that point on 2016 through 2021 is where I made a big push. It’s one of those feelings you can’t really put into words, but it was the sense of accomplishment on, it wasn’t like a challenging thing, it was just overcoming the fear, I guess, is the best way to put it. Like overcoming the fear of doing something that I could easily talk myself out of. You can do it with investing, you can do it with taking a new job, you can take it with a big trip that you probably should save the money on instead. I can’t put a quantitative value on that experience.
It was moving for me at the time, and oftentimes when I tell a story, I can’t even get through it because it’s a feeling that I’ll never forget. And just looking at my wife and being like, “Wow, we did this.” One, I was exhausted. 31 days on the go, every three to four days we’re getting on another flight and how many different issues we ran into, and my wife, we’d just found out she was pregnant right before we left and so it was a whole lot of feelings, a whole lot of emotions, but it really helps you find a new gear, and so that gear kicked in after that.

Matt:
What’s your next move? So you’re back from Hawaii, you’ve got a big context shift, you’re thinking bigger, you’ve conquered the world, conquered the mountains of Hawaii, you get back, what’s next?

KC:
I got to get better at selling. I got to get better at sales. So I really started studying and focusing. It wasn’t like, “Hey, I want to buy more houses.” It was like, “I want to get better at whatever I’m doing and anything that scares me, I want to figure out how to do it.”

Andrew:
That makes sense. Before we get too much further down the path, I want to circle back and wrap up the story of sitting in Hawaii. After that moment in Hawaii, on that trip, how did Kaisey influence your real estate growth after that once you got back? You mentioned limiting beliefs many times, and I’m glad you’re doing that because that’s something all of us struggle with in different degrees. What, maybe, limiting belief did she help you get past so that it made that such a turning point in your investing career?

KC:
She took the reins and just ran with it. She read a book, the book on property management, I think Brandon Turner’s book on…

Andrew:
Brandon and Heather.

KC:
Property management. So she read that. Yeah, yeah. Yeah, that one. I’ve never read it but she read it because she saw how bad I was doing. That’s honestly what happened. I was working my job and I just would get calls about people not being able to pay or, “Hey, I want to pay late,” Or this maintenance problem, and so I started just sending them to her. I was like, “Hey, I can’t call this person back right now. I’m in the middle of work, can you call them?” And so she started doing it and she was like, “Wait, this person hasn’t paid for 45 days?” And I’m like, “Yeah, I guess not. They’ll get to it. They’re always good for it. I’m just trying to help them.” And she’s like, “You’re handicapping them. You’re setting them up for failure. They’re going to think that’s normal and you’re allowed to do that.”
She had the mom mentality where you have to kind of have some discipline. And so I said, “Well, if you can do better, I’m all ears. I’m not doing very good.” I think I had 12 or 15 units. And so she read the whole book and just took over and it made it to where I was like, wow, if we know what we’re doing and we have systems in place, you can really make money from being a landlord. I’d always heard you could, but I was just hoping it was working. I was like, as long as I can pay my mortgages and have some leftover, it’s hopefully working. So before she got involved, before Kaisey got involved, I was just hoping that it was working. As long as I had more money in my account going in than going out, I figured I was doing okay. And so, once she took over, we really got the systems in place that showed exactly how profitable a house was or profitable a deal was. Before that, I was just kind of winging it.
And I’m really big on fake it till you make it, and I was just doing what the pros told me to do and hoping I didn’t mess up too much along the way. And if I messed up, then it would be a learning experience. Someone told me once, you win and you learn. So you don’t win and lose, you win and you learn. So really, I took that to heart and I said if I’m messing up, hopefully I’m falling forward instead of failing and falling backwards. Hopefully I’m failing forward.

Matt:
Well, first of all, it’s very tough to fake property management. You either do it or you don’t. It’s like a Yoda, do or do not. There is no try. You don’t try to be a good property manager, that’s it, it’s just one or the other. I also want to [inaudible 00:17:11] on just the concept of investing with your spouse. It’s something Liz and I did in the very beginning when we first got started in real estate and I commend Kaisey, your wife, for seeing there was a gap in your business and her being willing to step into it as a spouse to say, “Okay, this is maybe one of our weaker points in this business, so I’m going to step in and really learn how to do this by reading Brandon and Heather’s book and learn how to become a phenomenal property manager and perhaps take that off your plate so that you could focus on scaling,” Which I really commend her for being willing to do that.
And I also just want every husband and wife combo listening right now to take note of the way an effective husband and wife can work as a team and having each other’s back.

KC:
I can’t tell you how many times other investors or people that want to invest in real estate are like, “I would do it if my wife was on board,” Or, “It would be so much easier if my wife would support. She fights me on it.” And it’s like, my wife, just honestly, she trusted me at first and she saw that there was a need. And most successful business or entrepreneurs, they see a problem and they have a solution, and so she was that solution in our own atmosphere, in our own world, and she said, “Hey, I see a problem and I can be a solution.”

Andrew:
It’s funny, people always ask me, “What was your most important hire?” And what I like to tell them is I hired an incredibly smart, hardworking, and supportive wife that I would not be here talking to you if I didn’t do, and it kind of seems like all three of us did that so I don’t know if there’s a theme there. Maybe there should be a BiggerPockets dating app coming up soon to help investors looking to get into the business, find like-minded partners.
All right, so Kaisey helped you realize that you could handle more and it sounds like helped get you past some limiting beliefs, helped you see some things that maybe you weren’t doing as well, which, that’s just a note, it doesn’t have to be a spouse. It’s really hard for any of us to see our own weaknesses and just to have somebody else to look at you and who is willing to candidly tell you like, “Hey, you could be doing this better,” Is incredibly helpful. But I want to ask, you were living in Utah at the time, correct? All right, so you were doing some long distance investing in Lexington and then you decided, hey, let’s just go ahead and uproot ourselves and move to Lexington, Kentucky. What initiated that? What led to that?

KC:
By the time we’re done with this, you’ll figure out how to say Lexington, Kentucky. It’s a tongue twister.

Andrew:
Am I going to get a bunch of DMs?

KC:
We’ll have to practice that one, but no. No, Lexington is where I’m from, I was born and raised and I love it, but we were actually living in Utah. My wife’s from there, and so she actually brought it up to me to move back because she was doing the property management thing from Utah and she said… I think that one of the last straws was, we had to send an HVAC company over to an apartment that was complaining of no heat. So the last straw with living in Utah and trying to property manage, we had a tenant complain that they didn’t have heat and so we sent an HVAC company by and they called us out and said, “Yeah, it’s working great. They had it switched to the cool mode and that’s why the heat didn’t come on.” And so we paid 150 bucks for someone to go out and switch it to heat, and I was like, okay, it would make a lot more sense to be closer, little stuff like that. But yeah, so that was what kind of kicked us this way.

Matt:
There you go. And so you’re back to Kentucky now, which is a market that I’m very familiar with. My company owns quite a bit in Lexington as well. See, Andrew, I can say Lexington. Yeah, there it is. Maybe you have to own there to be able to say it. Maybe that’s what the term is because once you buy in Lexington, you’ll be able to say the name, right? You’ve moved your wife and now family out to Lexington, Kentucky, you achieved some consistency, right? Now she’s running the property management side of the business. How did the sales side of your business go so you can generate some income to continue to grow your real estate business?

KC:
So the approach I took was directly into my sales. It wasn’t necessarily, “Hey, I want to do this but at real estate.” My wife was really taking over that, I was just trying to find deals. Most of what we found, I think of the 20 we own now, I think 17 or 16 we’re on the MLS. So it wasn’t like they were hidden deals or wholesale deals, it was all MLS stuff. But to go back to the sales thing, I just tried to eliminate any variables. Anything that I could control, I wanted to control it, mindset being one of those. But with sales, it’s very inconsistent, right? It’s a rollercoaster. You get some really big days or really big weeks, months and then you usually go feast or famine.,But my idea was, let’s get rid of all the inconsistencies so we can be as consistent as possible.
So I would typically sell one to three a day where over the course of a whole summer is a really big summer, but you might have another guy selling five or six or seven in a day, but that’s because they were really riding the waves where I was just trying to keep it flat line as possible, just not get too high with the highs, too low with the lows. We really applied that to real estate because when it rains, it pours. You can get a lot of problems all at once. All the air conditionings go out at the same time, all the plumbing problems at the same time, and so you can really talk yourself out of doing more stuff if you go off emotion. I just tried to eliminate as much emotion as possible.

Matt:
So real quick, just for relatability to the audience, what were you selling?

KC:
Home security. So door to door. So it wasn’t the most glamorous job, but it was door to door for five months out of the year.

Matt:
There’s an old adage, if you serve the masses, you’ll eat with the classes. Home security is something everybody needs, it’s not hundreds of thousands of dollars to price it, so you’re selling something that a lot of people need and are willing to use, so I think that’s great, and it sounds like you were doing very well at it.

KC:
Yeah. It was a home automation too, so you can kind of do it in some really nice neighborhoods. It’s not just security, but it was really neat. You could do everything from your smartphone.

Andrew:
And KC, it sounds like, not surprisingly, you have one of the characteristics that we regularly see in successful real estate investors and that is just the relentless persistence, consistent execution. Could you give some specific examples of how did you optimize your real estate business or real estate investing for consistency, it could be software, I mean it could be rent [inaudible 00:24:10], what are some specifics that you put into effect that made things better for you?

KC:
So tenant communication is a big one just so your phone’s not going off all the time. So we use Buildium. Buildium is a software. There’s AppFolio, Buildium. We’ve used Rent Ready for a while when we had a few smaller units. Once we got bigger, we switched over to Buildium and it really helped kind of keep things organized so you don’t, one, forget maintenance requests, two, you have documentation of everything so you can actually show you’re doing your job, rent collection, people can pay online, you can do your leases online. I don’t know how landlords did it back before smartphones and all this technology because my phone is my office. I can literally do everything from posting an apartment for rent to accepting, doing background checks, everything right there on your smartphone. The mom and pop landlords back in the eighties, nineties, I don’t know how they did it. I would’ve gone crazy.

Andrew:
So KC, going back to the relentless persistence and consistency as being the thing that really delivers results. Your company, you told us the strategy of how rather than going out and having a big day like everyone else and selling five or seven systems and then they take a few days off, you focused on maybe one or two a day, and what did that lead to in 2019?

KC:
Yeah, 2019 was an awesome year. So I really was focusing on sales and I was really just getting better each day at eliminating all the distraction because there’s so much distraction from just social media to, “What does this person have? I don’t have that.” People get caught up in keeping up with the Joneses. And even with sales that happens because I want to have a three or four day every single day, but I kind of just put my head in the sand and just went to work. And so I was actually able to sell an account every single day, which doesn’t sound like much, but when you do two every single day for 150 days, you sell over 300 and you’re the top of the company and then you have the best RMR and you have the lowest cancellation rate because you just perfect your systems down.
It’s weird for me to say, but they actually had an award, which I didn’t know about, but they created an award called the Kevin Massie Award just because I led every single category that year and it was really a cool experience, but it wasn’t something I expected, I just wanted to do the best I could at each.

Andrew:
So then now, that’s a real level up. You didn’t just win the award, you were so far above that they created an award on your behalf. That’s pretty impressive there.

KC:
It was weird for me. It was a very uncomfortable thing, but at the same time, it’s rewarding to see. It’s one of those moments where it’s like, wow, actually, I could focus and achieve, right? Focus and achieve. Too many times we get distracted by all the things that could go wrong instead of just doing it.

Andrew:
So do you keep in touch with the people at that company and whoever wins the award, you’re like, “Hey, you got the KC? I’m that guy. I’ll sign it for you.”?

Matt:
That’s great. That’s great. We should all aim in life to have an award or a street named after us, Andrew. So KC, that’s awesome. I see a culmination happening here, right? Going all the way back to you sitting cliff side with the other Kaisey, then to her stepping into really owning the property management side of the business, you really mastering the sales process so much that they name an award after you. Incredible. Going forward here, you’ve then decided, through all these iterations, to really double down your real estate portfolio and start taking down larger deals. So talk us through that. Talk us through that, what that looked like, felt like as you decided to really scale up into larger and larger apartment buildings.

KC:
So yeah, so I’d always get notifications of everything, and I didn’t really have a realtor that was sending me stuff, I just got notified on LoopNet, it’s a commercial property site that just posts usually bigger things. I don’t even know why, at one point I subscribed to get notifications there and I saw two small apartment buildings, 30 units, basically 30 units each, got posted. And so I was like, heck, let’s just call the listing agent and experiment a little bit because I knew at $4 million, I wasn’t going to come with $800,000 to the table, 20% down on this, and really… I didn’t think I had a chance to even look at this, but something like a voice or something in my own head said, “Hey, if you don’t go look at this now, when are you ever going to look at… You’re never going to go look at a deal of that size if you don’t start somewhere.” And so I went just for kicks and giggles to go see it.

Andrew:
So that’s another strategy, kicks and giggles, just do it. KC, it sounds like you just up and called the listing broker for these things with no… You didn’t have a year of preparation, you were just like, “Hey, let’s just see what happens.” One of the, I think, the biggest and most common challenges people have when they’re trying to make that leap to, “Hey, I’ve been talking with real estate agents about single family and two plexes and four plexes,” To, “Oh my gosh, now I got to call a commercial broker. What do I say? What if I say the wrong thing?” How did you overcome that? Just briefly, what was that conversation like and how did you get past the… Because it doesn’t sound like you hired a mentor and went to three bootcamps, you just did it. So how did you get past that hurdle and what did you say? What did that kind conversation sound like? How did you get that broker to take you seriously as a newbie?

KC:
So I’m a big believer in, if we search in the right places, things will work themselves out. If we’re actually doing our best and being a genuine person, honest, all those things, I feel like karma’s a real thing. I’d really been searching, trying to find something to level up and to get more serious about real estate, and so when I called him, I just was straight with him. I was honest with him. I was like, “Hey, it’s just me. I don’t even know if I have a chance at buying something like this, but I want to come see it, and I think it’s a good looking property.” He was the broker, the real estate agent and the owner. I didn’t know that, but when he took my call, he was like, “Okay, yeah, come, I’m doing a showing at this time. You can tag along.”
And so I went, showed up with my janitorial key belt on my jeans, and I’m walking around with attorneys and doctors and there’s one guy there in scrubs and he’s a doctor in town. And so they’re like, “Who are you?” They’re like, “Are you maintenance?” And I’m like, “No, I’m just tagging along for the tour.” And so I end up looking at a few units, taking some pictures and videos and I went home and I was like, “Oh, that’d be awesome to buy that. I’d have to sell a few things to have $800,000.” And I told him that, and he was like, “Well, you know, call the bank, call the lender. They actually did something unique for me when I bought it where they took less down.” And I was like, “Okay, I’ll call them. It’s always good to make new contacts in the real estate world.”
And so I called the lender and he was like, “Well, we would consider 10%.” But I don’t think they would’ve considered that had I not started with those duplexes, fourplexes, triplexes, and shown some success there. And so once they saw like, hey, he can do it, they offered 10% and then I was able to do a few things to make that happen.

Andrew:
So two things I want to highlight there for everybody. Number one is, that’s another obstacle is, “Ah, how do I do this without a track record?” Well, KC, you didn’t have a track record for a 30 unit property, but you had a track record in real estate, you had a track record in something. And so track record can be good performance in your job, but just shows that you’ve been doing something. So that’s number one. And kudos to you for not limiting to yourself to, “Well, I can only buy eight units because that’s what I’ve done so far.” Second is, you’ve talked about fake it till you make it, and that’s a really common thing that you hear nowadays, but it’s important that you… What you’re doing is not faking it, right? What you just told us is that you were transparent with that broker. You told them, “Hey, it’s me and I probably can’t buy this, but I still want to look at it anyway.” And so that is the right way to do fake it till you make it.
It’s not lying to people, it’s not presenting yourself as someone different than you are, it’s just taking the action as if you had already made it and being transparent about it. I have no idea if this is true, you can debunk me right now, KC, if you want, but I’m willing to bet that one of the reasons that guy wanted to sell to you and work with you is because he probably felt like he could trust you. Most people want to work with somebody who comes across as genuine, transparent, and relatable. And then also, again, most people who are higher up on the ladder and they see someone who’s really making an effort to climb up to go from an eight unit to a 30 unit, they are happy to say, “You know what? This guy’s working hard and he’s doing a good job. I want to help him.” So I’m willing to bet that part of the reason you got that deal is because who you are and how you approached that conversation.
You weren’t faking it, you were just putting yourself out there and saying, “I’m going to do this even though I haven’t made it yet,” And so kudos to you for making that happen.

KC:
So yeah, it was actually really neat when I sat down at the closing table with him. I asked him, I was like, “Why did you take my offer?” He said, “I just believed you.” Because there was a couple other offers on it and he said, “I believed you when you said you would be able to close.” And the crazy thing is, we actually had to do a triple close. I had to sell one property, then we closed on this one, and then he had to close on something he was buying. He was 10 31 exchanging into it so we had to close three days in a row, and there was a lot of things that could have happened, but we ended up making it happen, so it was wild.

Matt:
Yeah. That’s awesome, KC. I want to just give my perspective on faking it till you make it. And in some ways, you’re actually convincing yourself that you can get it done, right? And by you convincing like, “Listen, I can do this. I can figure it out.” And this is maybe you from the cliffs of Hawaii talking to yourself years later and knowing that with enough determination, just like you decided to tour the world, you said, “This is what I want to do and I’m going to figure this out,” So this deal, this 37 unit in Lexington, Kentucky, is almost like a tour of the world, but you said, “You know what? I’m going to go in and figure this out.” And I do believe that a lot of times the universe tends to conspire around confidence, and you walked into that deal, “Well, I’m going to figure this out. It’s what I want to do.”
And all of a sudden, before you know it, the bank’s saying, “Well, we would take 10% down,” And you do have other deals with equity, and the broker believed in you and it’s all because through that confidence you had by telling yourself that I can figure this out, you did. And I think a lot of times people think that actions over time lead to confidence, but it’s the other way around. They just decide to be confident about something and the actions you need to take will automatically become more logical and follow behind it. So kudos to you, man. So now what? You’ve got this 30 something unit under ownership, tell us a little bit about the deal now that you own it, even with a little bit higher debt on it at 90% loan, it seems like it’s still cash flowing. Tell us about that deal and then tell us about what’s next for you and your wife out there on Lexington.

KC:
Yeah, so we bought it in 2021, so it was during Covid and rents were, I felt like, low, and so I felt like we could raise them pretty good without doing a ton of work. They had managed it pretty well, but I did see some holes where we could improve on management, and so we just ran with that. I told my wife and she was just kind of like, “You did what?” We only had 50 units at the time and we doubled that overnight. It was uncomfortable. Most things that are worth… I heard a story once where it said nobody gets embarrassed when they do a bench press and they fail on number 10 or 11 or 12. Usually you go to a failure and you feel good about it, you know your limits, you know where you could go to, but I feel like in life, a lot of times where we go to a failure, we get embarrassed and we kind of shut down and we close up shop because we found our failure. Most of the growth happens at that failing point.
And so there was a lot of things we did wrong when we first took over, but we found our limit and found where our holes were and where our weaknesses were and what we needed to focus on, and so it was the best thing that could have happened to us. We actually ended up, from that same lender, ended up refinancing just about $2 million worth of other property that were on arms with another local bank that were… They were comfortable, they were five and a half percent, but they were getting ready to expire in three years and I was like, “Well, let’s go ahead and refinance and take everything to this bank.” We took everything over there and we ended up getting 3% on all of our existing property, plus this new one we just bought was at three and a quarter or something, and so it was those things that kind of domino into place because we found our weaknesses, we found where we need to improve and we found solutions for those weaknesses.
But you’re asking what’s next? It’s just to try to be the best landlord we can, to provide a good, clean, safe place for people to live and take care of our… We like to have a communication with our tenants, we like to have, not best friends with them all, but we like to respect them. We get them all Christmas gifts, little things like that. Not Christmas gifts that are really ornate, but we make a deal with a local restaurant or something where they get a free something and we’ll give them all Christmas cards and then go cash in for that, go redeem it, but just letting people know you think about them and that they’re not just a number. It goes a long way if you do decide to manage your own property.

Matt:
And I want you to give yourself a quick celebration here because after you bought this building, you were able to create enough income from your portfolio that you did what a lot of folks that are listening to this show want to be able to do, which is…

KC:
Yeah, just spend more time with my family. I walked away from my other job.

Matt:
But you quit… Yeah.
You are so humble, brother, and I love that about you, but you quit your job. I was teeing you up that you were able to quit your day job that allowed you to spend time with family, really own your calendar, own your time and everything like that, and that’s something that a lot of people are aiming to be able to do through real estate investing. But unlike a lot of folks that just talk about doing it, you are able to think a little bit bigger, take some action, take a lot of action, and make it happen, so kudos to you, man.

KC:
I appreciate that. I think a lot of people try to do it too early. I think we’ve talked about it a lot for the past couple of years where everyone needs to sprint to where you can retire. And I’ve seen a lot of buddies try to do that and they’ve done it too early, and so I stuck on where I stayed… Because I liked the company I worked for, I felt like I did pretty good at my job and provided a good service, and so I stuck on as long as I could, probably longer than I needed to, until it was uncomfortable where I didn’t want to be lacking at the real estate. I slowly phased out. It wasn’t like, “Oh, I hit it, I’m done, peace.” I stayed on probably two years longer than I really needed to, but because I wanted to be… You got to build your foundation on a rock and not sandy foundation so I really let it solidify, make sure we’re in a good spot. I couldn’t clone myself, and so I had to pick one or the other.

Andrew:
So financially speaking, where does that portfolio put you guys today? So frame of reference for somebody who’s like, “Okay, if I get to 120 units…” What does that look like financially?

KC:
So we bring in about 105,000 a month in gross rents, just over $900 a unit. Some of those are one bedroom units and some of them are three bedroom units. We have some on Airbnb, which that fluctuates, but about half of that, just a little under half, is actually profit that we get to keep once we plan for CapEx. Brandon Turner’s books on investing in real estate does a really good job of estimating for CapEx. So we plan for roughly about five grand a month in just expenses, just maintenance stuff or repairs, and then we have our scheduled maintenance, which is pest control, lawn, snow removal, all that basic stuff, but yeah. Once you manage it yourself, we could hire full-time management, but we like it. I feel like we do a better job by managing it just because we care more than a property manager’s going to care. And we might not do that forever. There might be a time where it’s like, hey, we’re tapped out, we can’t do anymore, but right now we like to do it, so we just want to do what we like to do.

Andrew:
And I think that’s a constant debate, third party versus self-management, and I think your situation is one of the situations where self-management absolutely makes the most sense, where you have all your properties in a market that you live in and that you know and you have easy access to, and it’s really hard to find good property management for stuff under a hundred units. So it sounds like you’re setting up really well. So last main question before we wrap up. We’ve got the KC and Kaisey dynamic duo, what is your real estate career looking like for the next five years? Are you guys done buying? Are you just aiming to hit a certain amount? Are you going to keep funding it yourself? Are you going to syndicate? What are KC and Kaisey, when we interview you again in a couple of years, what are you going to be telling us?

KC:
Man. Well, again, I’m to the point where, with my wife and I, and we have three kids, we want to have more kids, so that was kind of a goal, to get to where we could spend more time with them. But when it comes to real estate, with rents going up, we hope to keep increasing that. We did lock in all of our commercial lending for 10 years, so we’re good for about nine more years there, so we’re fortunate to time that pretty good. But I would love to buy more. We actually went and looked at a 4 million dollar property… No, sorry, it was 8 million, the other day because I have some friends of mine that they’ve been wanting to get into real estate now, so it’s more of a goal now to get as many people involved as I can. I’ve never done a partner deal with anyone. And not to say I won’t, but I kind of want to help more people that I know enjoy some of the same benefits that real estate’s brought me.

Matt:
There is a book on the BiggerPockets library called Raising Private Capital you may want to check out KC. A few people have read it as well. A new release just came out with a foreword by Pace Morby, KC, so you could check that out. It’ll teach you how to structure those deals with your friends for win-win situations. Just to mention, you might want to check it out.

KC:
No, I love that. Yeah. Actually, your podcast was one that kind of inspired me to think bigger because were in the Pacific North, or sorry, not Pacific, the Northeast, right? That’s where you guys… Yeah. I listened to that podcast and I was like, man, I’m thinking too small. He’s sitting here just exploding. So I had to talk myself out of things where I was like, it’s not about how many numbers, it’s not about how many units. But it was very impressive. I loved your podcast. It really helped me think bigger.

Matt:
I had those epiphany conversations with myself as well. I was not in as cool of places as on the cliffs of a volcano in Hawaii. I’m probably sitting in my living room. But yeah, it’s really a matter. And I attribute a lot of your success here just to you thinking bigger, but then also having the courage to take action on the inner pool that you had to live a bigger life and you chose to live, you wanted to live bigger, you wanted to have a bigger thing, and you decided to follow that desire and take action on it and look at you now. I’m super excited to hear what happens to KC and Kaisey of Lexington over the next couple of years. Man, this has been great.

Andrew:
It’s been great talking with you, and I hopefully will make it out to Lexington, Kentucky, one of these days.

Matt:
Was that good? I thought that was perfect.

Andrew:
Was that acceptable? Was that acceptable? Okay, I don’t want to get canceled.

Matt:
Spoken like a Kentucky landlord. Well done.

Andrew:
Mispronouncing. So a few things that, just to recap, KC, number one, when we look at what’s led to your success, it’s surrounding yourself with people, in this case, the perfect spouse to help you get past your limiting beliefs, consistency, just not swinging for the fences, not actually jumping off the rock in Hawaii, but just showing up day after day, putting in the work, doing the things that produce results. And by doing that, not only in your sales job, but in your real estate career, you’ve exceeded almost everybody else and I think there’s a lot to learn from that.
Another one is, you didn’t do a first deal and quit your job right away and put yourself into a tough spot, and that’s something that everybody has to feel out on their real estate journey, but you built a sustainable real estate business, used your W2 to do that, and then when you made the big leap to 30 units, you said, you know what? Now the W2 is holding me back, and now I’m going to drop that. I’m going to make sure there’s an award named after me so no one forgets that I was here and now I’m just going to go out and I’m going to build my real estate business. And then, also, there’s this belief out there that in order to build a real estate portfolio, you have to go raise money. You haven’t done that. You’ve taken the, I don’t want to say slow, because $12 million in 10 or 11 years is not slow, but you took the slow and steady approach and built it in-house. When you say you have 121 doors, you truly have 121 doors, and that is an impressive feat. So great talking with you. Matt, anything else you want to add before we sign off here?

Matt:
Yeah, I just want to underscore one thing there, and that is the power of leveraging your relationship with your spouse. It is not for the faint of heart to bring your spouse into the business, but if you are aligned with your spouse on where you want to go and the benefits you see real estate investing are going to bring you ala KC and Kaisey now being able to spend more time with your kids and their family, perhaps travel a little bit more, all those kinds of things. If you’re able to be aligned with your spouse and bring them into the folds of your business, there’s so much leverage that they can bring to you. So I commend you, KC, on being able to do that, and I just challenge the listeners here to consider doing that yourselves as well because its made all the difference for myself and my marriage and my business as well too.

KC:
So, yeah, no, I agree with you a hundred percent, Matt. It’s a huge benefit to have someone on your team that has the same goals aligned. One thing that I would probably recommend and some advice that I like to give is building quietly. I think a lot of our limiting beliefs come from other people that don’t know or haven’t done the research, don’t have the same goals, they hear your goals and they shoot them down. And so, honestly, I didn’t really voice… People knew I was in real estate, but they didn’t know to what extent, and I don’t even think my parents know to what extent I’m involved in real estate. I told them I was doing a podcast there today and they were like, “Oh, what’s that? That’s neat.” So building quietly because if you’re good at something, you’ll tell everybody, but if you’re great at something, they’ll tell you. That’s a Walter Peyton quote I heard a long time ago.
And so I didn’t feel like the need to tell anyone what I was doing. One, I didn’t want them to talk me out of it, and two, I didn’t want to, I don’t know, come off the wrong way. And so now when I talk to people about real estate, it’s more to help inspire them and try to get them away from the analysis paralysis type mindset. But yeah, so my wife has really been a huge supporter of that. She’s the only one that really knows our goals and it’s good to have someone that is driven, wants to achieve some big stuff.

Andrew:
I really like what you said about building quietly. That resonates a lot with me, especially when I compare it to what you tend to see on social media these days. Kudos to you, KC. So, for those listeners who resonate with your story and maybe would like to get to know you a little bit more or find out more about you, even if you’re doing it quietly, how can they reach out to connect with you?

KC:
I’m on Instagram, but I usually just post trips that my family and I like to go on. So we try to travel somewhere once every month or two, so that’s most of what I post about. On Instagram, I’m just KC, M-A-S-S-I-E, KC Massie, and then of course, people can text me or email me, but it’s KC, M-A-S-S-I [email protected].

Andrew:
All right. Sounds good. Matt, how do people get in touch with you?

Matt:
Folks can follow me on Instagram at the Matt Faircloth, and most importantly, they can go to my company’s website, just DeRosa group.com, D-E-R-O-S-A, DeRosa group.com to hear all about our company.

Andrew:
All right. And I am only on LinkedIn for social media, but if you connect with me there, that is actually me posting and commenting, so it’s not a virtual assistant or an AI bot, so please do connect with me there. And then for BiggerPockets, please tune into future episodes. Hopefully you got a lot of value from our conversation with KC. Pretty soon you’re also going to be hearing about how to save money on taxes with Amanda Han, and then unconventional options to help you finance deals. Debt and financing is a tricky subject these days, so we got an episode coming out with Zach LeMaster. Make sure you stay tuned for those. And Matt, any parting comments?

Matt:
God, this has been a great episode, Andrew. I always enjoy co-hosting with you. This has been a lot of fun. And if I could have the honor of taking it home today, Andrew. Do you mind?

Andrew:
Please do. Please do.

Matt:
Okay. This is Matt Faircloth with Andrew Cushman, the new awardee of the best substitute podcast host ever, the Cushman Award, signing off.