035: Investor Makes People’s Lives Better

SHOW NOTES FOR EPISODE 035 WITH JEFF KISSEE –  INVESTOR MAKES PEOPLE’S LIVES BETTER

In this episode, former contractor and real estate investor Jeff Kissee shares how his philosophy to “create a positive impact on everyone he encounters” has yielded significant business success.  From long-term broker relationships to creating apartment communities that tenants love, Jeff has kept his focus on making people’s lives better in every aspect of his investing business.

What You Will Learn

• How he developed a strong work ethic working on a ranch as a kid in Oklahoma and how it created a foundation for future success
• Jeff’s unique philosophy that differentiated him from other investors and positively impacted every aspect of his business
• A kind gesture to a broker that resulted in 7 great apartment deals
• How he purchased his first apartment deal with only $1,000 in the bank
• How his investors yield 15-18% returns and better on every investment
• How he uses systems to direct his property managers
• The importance of setting aside amble reserves for every property purchase
• And much more…

About Our Guest

Jeff Kissee

Jeff Kissee is a full time real estate investor, licensed General Contractor, California expert in construction and alternative energy, licensed Colorado Real Estate Agent, and co-owner of The Capital 8 Group LLC. He has sat on building committees for his community as well as on the board for the Home Builders Association.  In 1995, Jeff and his wife Shari relocated to Colorado and together they built Lyntal Construction Company from the ground up, a very successful general contracting business specializing in the construction of high-end custom single family homes.  Later they shifted from their construction business to full-time real estate investing. Some of their specialized real estate investing training includes: Apartment Acquisition and Emerging Markets, Private Lending for Commercial Properties, Short Sale Certification, Special Needs Housing, Highly Effective Property Management, Syndication, Contract Analysis and Negotiation Skills Development, Repositioning of Apartments and many more.  Jeff and Shari are also big believers in giving back to their community and have been involved with their local food bank, Project Angel Heart, Miracle Flights, Special Olympics, Adopt a Family, Athletes in Action, military veterans outreach associations and many more.

More About Jeff

• Was a contractor and developer in California in the Brentwood and Malibu areas
• Built homes for movie stars and professional athletes
• As a kid, raised on a ranch in Oklahoma and learned a good work ethic — “you didn’t finish work until your work was completed” – carried that attitude with him into his working life. Became the key to his success
• He has an engineering degree and his wife has a business degree
• They moved to Colorado, became real estate brokers – built spec homes and fix ‘n flips and sold them
• Didn’t really enjoy the work and after 2 years, decided to go into multifamily real estate investing
• Educated themselves and purchased their first multifamily property just 6 years ago

Their Philosophy

• Want to make a positive impact on everyone they come in contact with
• When they were in single family homes, it was one person at a time.  In multifamily, they could impact hundreds at a time
• Wanted to be the best at their niche
• Targeted C and B class properties
• Sought to improve tenant lifestyles and make properties more energy efficient

Their Objectives

• Change lives
• Be the best at what they do
• Create a small niche in a big market
• Create good investments for investors
• Making lives better for tenants

Building Broker Relationships

• In the beginning, spent time strategically building broker relations
• He called brokers in Minnesota (a market he was not interested in) to test his skills. He had a list of questions and would test his presentation on MN brokers
• Finally, they found their target market and started calling brokers
• One broker that he hit it off with shared how his wife was having a baby
• He and his wife decided to buy designer baby clothes and other items – dropped them off in his office.  Broker was blown away!
• 3 days later, the broker presented them with an off-market deal that they ended up purchasing
• The next 6 deals they bought from the same broker
• Now, when he enters new markets, the first calls he makes are to establish relationships with brokers
• Sometimes he calls to congratulate them properties they sold

Criteria for His First Properties

• 12% cash-on-cash
• 5 CAP rate
• DCR 1.65
• Owner carry
• Told the brokers he is patient and if you take a chance on us that we are very dedicated to the people we work with
• If investors are involved, will pay 15-18% annualized return

First Property Purchase

• It took 9 month to find the first deal – He was 53 years old for their first deal
• Only had $1,000 in the bank
• Looked in Wheat Ridge, Colorado (metroplex/superb of Denver)
• 46 unit, mixed use property, included self-storage
• Was run by slumlord
• Owner Carried back loan – didn’t have to go through the bank
• Remodeled every unit – new cabinets, new appliances, new flooring
• Had two outside investors – his painter who painted his spec houses and the lady who staged all his spec houses
• Sold three years later and investors made 29% annualized return and 65% IRR. They basically doubled their investment.
• When the city saw what they did, they started referring them to other properties

Biggest Mistake

• First apartment
• Didn’t have enough reserve funds set aside to cover vacancies, rehabs of vacant units at $10K per unit

Biggest Success

• Doing what they said they would do!
• Told investors they would get 18% annualized return and they would always surpass that
• 84% of investors come back to invest in other properties
• Honest and integrity were number one!
• Have good systems in place

Other Key Points

• Worked Closely With Property Management
  • Created agendas
  • Set goals and deadlines
• True due diligence doesn’t start until you purchase the property

Indy Townhouse Community

• Targeted tenant demographics: young, professional families
• Focused on “creating community” at the apartment
• Added the following amenities to attract the target market:
  • Barbeque area
  • Big Play area
  • Bark Dog Park
  • Kids Splash Pool next to the big pool
  • Had monthly activities and events
• Tenants began referring their friends when there were vacancies

Researching Markets

• Has 2 underwriters doing continual market research. Looking for Emerging Markets
  • Strong, healthy markets
  • Job growth #1 – multiple
• Markets he’s currently in
  • Most of Texas but not in areas that are only energy driven and not diversified
    • Dallas Metroplex
    • Lubbock #1 secondary market
    • San Antonio
    • El Paso
    • Houston – stay away cause of flood insurance
  • All of Colorado
  • Landlord Friendly States
  • Midwest
    • Indianapolis
    • Nebraska
    • Kansas
  • Southeast
• Divide cities in fours. Find best quadrants Goal: 350—500 units in each city.  Create economies of scale

Rap-It-Up

• Favorite Real Estate Book: Emerging Real Estate Markets by David Lindahl
• Favorite Business Book: Who Moved My Cheese? by Spenser Johnson and Kenneth Blanchard
• Favorite Valuable Website for Success:   Mostly government and county websites to evaluate markets
• Favorite App: smartsheet – team work management app
• Favorite Quote: “30 seconds of extreme courage”
• If you lost everything, except $1,000 in the bank, and had to start all over, knowing what you know, what would you do to try to rebuild your real estate investing business?   Jeff actually faced this exact situation before launching into REI.  When he and his wife were broke, they would tell friends, family and co-workers about the properties they were seeing and what they wanted to do.  Then, one day they found a property and had to make phone calls to get investors.  This really happened to him.  The first two phone calls he made ended up fully funding his first property.

How to Contact Jeff

• Phone: 303-940-1220
• Email:  jeffkissee@capital8group.com

Until our next podcast, keep moving forward and God bless!

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