All Forum Posts by: Mark Allen Kenny

@Mike B. What markets are you focused on?  Building a team becomes much more straight forward when you know what markets you're looking at.  I recommend looking at 2-3 to get started.  I would also say that if you're looking for 24+ unit apartment buildings, the property manager is the most important member of the team.  I would start interviewing PMs in your focus markets.  Let me know if you want a list of interview questions I use.

@Eli Lederman

First I would reach out to the property owners on the tax delinquency list that met my criteria.  For those that were interested in selling, I would research the property online, check on Google maps, etc.  If it looked promising and I would drive out to the property, meet with the owner, etc before getting under contract.

@Adam Bastien Yep, I started in real estate by getting tax delinquency lists from different counties in New York.  Each county is different but you're right.  Some counties only have a list around once a year.  For those, you have to time it and check back in when they publish the list.

It's the ability to repeat and systematize profit generation without being dependent on market conditions or competition. So if you can figure out where the holes are in your market (where you can add value and seize opportunities that no one else thinks are opportunities), your business will explode with growth in profit.

Remember revenue and profits are very different things. Adding more doors doesn't mean more profit. Adding more employees or growing your team doesn't mean more profit. Doing more marketing doesn't mean more profit. Sure, all those things can lead to more profit but a lot of people make the mistake of growing REVENUE without keeping a very close eye on actual profits. Sometimes the most profitable and rewarding business models are the simple ones.

@Wilson Linder What market are you looking at for turnkey investments? 

I would say it really depends if you're okay with teaming up with other investors and having someone else in the driver's seat. I personally don't like turnkey because there isn't an opportunity to add-value (many times turnkey properties are overpriced). But if you're in a highly appreciating market, that becomes less of an issue. 

If you prefer to be more hands-off, be an LP in a syndication where the sponsor/operator is experienced with executing value-add projects. In my opinion, that's better because it's more passive for you AND there's an opportunity for upside (within 12-24 months) simply by leveraging the sponsor's expertise with forcing equity.

@Alex Spahman congrats on graduating from Eastern! I'm from Illinois too (went to ISU). I'd like to offer some humble advice as you start your career in real estate...

1) Take the Myers-Briggs Test
2) Take the Strength Finders Test (now called "Cliftonstrengths")

The reason I'm suggesting this is because there are HUNDREDS of ways to build wealth in real estate. It's really important that you're doing something that you really love doing every day.

When I first started out, I was wholesaling properties. I was making really good money and hated it. The reason is that it didn't fit my personality. I enjoy large, longterm projects where I can visualize big picture scenarios and execute. That's my personality.

It takes a little soul searching (and tests like the ones I recommended) to become clear on your strengths and what resonates with your personality.

Put yourself in a position that leverages your strengths. Surround yourself with people who are strong in areas where you are weak. When you do those two things in real estate, magical things will start to happen.

@Grant Gibson there's a great book called Passive Income In Commercial Real Estate by James Kandasamy.  I highly recommend it if you're just starting your journey as a passive investor.

@Greg Dickerson Sure, but a lot of that "profit" is going to come from forced and natural appreciation.  If the asset appreciates 25%, some might call that 25% equity - which then gets split between GP and LPs.

@Joseph Wells You can structure it a number of ways.  6% is on the low side but I am seeing this more and more.  But with that 6%, there is usually an upside (i.e. addition return than just the pref).  With that said, you can also structure a higher pref with no upside.  Just this week I saw an offering that has a 10% pref but no upside.  Without going into too much detail, the syndicator listed it like this (two options):

--Class A income investors: 10% Preferred return / CoC (no upside)
--Class B growth investors 7% pref; 8.2% CoC; 20% AAR; 16.5 IRR
(5 year hold target)

Is that 6% a preferred return or CoC? There's no way that's the total return on investment. There's an equity split, there's annual cashflow. NC is a great market. For syndication deals in multifamily, LPs can still find 18% IRR and ROI of 2x in 3-5 years. But if the 6% you're talking about is a preferred return, that might make sense.