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SHOW NOTES FOR EPISODE 175: STARTING BIG WITH MULTIFAMILY
When Mark Kenney left his successful tech firm to become a full-time real estate investor he wasn’t sure what to expect. Little did he know, it would be one of the best decisions of his life. Today, he has acquired over 2,600 units valued at over $140 million. In this podcast episode, Mark shares how his move to become a full-time real estate investor was not only a great business decision but it also ended up strengthening his marriage and family.
What You Will Learn
- Sometimes, the decision to become a real estate investor is not always going to result in instant family support
- Why it’s easier to own a 100 plus unit apartment building than a bunch of duplexes, triplexes, and quads
- What the “snowball effect” is that follows you first large apartment purchase
- How a traditional entrepreneur journey differs from a real estate investor entrepreneur journey
- The hard lessons that result from a poor partnership
- The direct correlation between relationship development and real estate investing success
- Why your commitment to steadfast criteria is critical to effective property analysis
About Our Guest
Mark Kenney
Mark is a seasoned real estate investor, bestselling author, entrepreneur, and founder of Think Multifamily. Mark started his real estate career over 20 years ago and has extensive experience in property valuation, acquisition, and operations. Mark is invested in 2,600 units, representing over $140 million in value, and has a top-notch reputation among the multifamily investment community for providing exceptional value to investors and the community while being easy to work with.
Mark is a 1993 graduate of Michigan State University in Accounting and is a CPA. He provided IT consulting for 20 years and is leveraging his vast IT experience to bring new creative technologies that will help others in the multifamily space. He has worked for organizations such as KPMG Consulting, EDS, SAP, HP and founded Simplifying-IT which provides services to Fortune 500 companies.
More About Mark
- Didn’t grow up in an entrepreneurial family
- Mark and his twin brother always wanted to do business activities
- Saw real estate as a good investment because it is a tangible asset that he could see and improve
- The family never really had much so he wanted to do something that would help out his family
- At 21, while still in college, he had an offer accepted on his first property, a duplex, but his father talked him out of it
- He realized his father would not likely approve of any deal he would do so he stopped taking him on property tours
- He eventually made an offer on another property that required a full rehab, down to the studs
- Told his dad after he bought it
- He realized that his dad was just watching out for Mark and trying to protect him
- His dad, who is 80 today, never invested in real estate
- Mark and his brother both became CPAs
- Mark and his brother were hired to consult for a tech project in Michigan
- They ended up doing IT/business management consulting for state and local governments
Increasing His Holdings
- Within a year bought another property, a three-unit, and later a four-unit
- Within a couple years, they had 4 or 5 properties
- Took out mortgages on all properties
- Bought in Michigan
- Had fourteen doors producing cash flow
Formed his own IT Company
- Became very busy with his company
- Stopped investing in real estate for a while
- Sleeping 3 hours a night
- Traveling a lot to Europe
- Caused a lot of stress on his marriage
- He had to make a decision to continue in that stressed out lifestyle or do something else
- Four years ago, he decided to go into real estate full time and figure out how to buy larger properties
- Found out it’s easier to manage a 200 unit than a four-unit property
Starting His Own Real Estate Investment Enterprise
- Moved to Dallas
- Started attending meet-ups and meeting other real estate professionals
- Wanted to partner with someone who had more experience
- Found an experienced partner who gave them more credibility
- Before this, they were self-managing their properties (evicting people, fixing toilets, etc.) – not a pretty picture
First Larger Purchases
- Purchased a 64-unit in Mesquite, TX (two 32-units, right next to each other)
- Stabilized, low 90% occupancy
- Value-add component – Upgrade units at $3,000 per door
- B/B- property, build in the 80s
- Didn’t raise enough working capital upfront to fund improvements
- Raised $1 Million through syndication, to buy
- Still owns today
- Exit plan – 5-year hold
- Four months later, bought a C class 208 unit, which went much smoother
- Was 40% occupied, went to 70% quickly
- The previous owner put in a fair amount of money to improve
- Grew income from $120K per month, to now at $160K
On the Fast Track
- Had great relationships
- 9 months later, bought 255 units
- His brother was living in Atlanta and found 800 units
- Got connected with a partner active in the Atlanta market
- Had a falling-out with that partner
Company Formation
- Just Mark and his wife Camille
- They find and fund deals
- Another partner does more of the asset management
- Started an educational business (three people)
Finding Properties
- No direct mail
- All through broker relationships
- Not all off-market deals are great
- Pick 1 out of 100 deals
- They don’t compromise on their criteria
- Streamline systems to filter through properties quickly
Biggest Mistake
- Their partner already owned the property and they bought out one of his partners
- Found out bad partner that had to be removed
- Luckily they had a Board of Directors that helped remove that partner
- After his removal, a bunch of past invoices showed up that were not on the books. Seemed like the partner was in collusion with a vendor within the LLC
- Ended up inheriting a lot of their former partner’s “past sins”
- His takeaway from that experience:
- Make sure you always get things in writing
- Assume, upfront, that everything will not go well and prepare for that, going into the deal
- Would be extremely cautious buying into an existing partnership in the future
Biggest Success
- Starting his mentoring program
- Dave and his wife have a passion to help others and share how others can do what they did
- Working with his wife on this program has literally saved his marriage
- Helping others avoid the mistakes they made
Advice for Old Dawgs
- Focus on people first
- Go to events, meet-ups
- When you make connection or potential partners, check them out (it’s a pretty small world in real estate investing) and find out their reputation
- Focus more on cash flow over appreciation
- Know your criteria first!
- If you can start with apartments, it’s better
- Less risk than smaller assets
- Get educated before investing
Future of His Business
- Will continue to buy deals
- Will be less involved in finding the deals
- Is most excited about being able to change people’s lives through his educational program
Rap-It-Up
- Favorite real estate book: The Advanced Guide to Real Estate Investing by Ken McElroy
- Favorite business book: Expert Secrets by Russell Brunson
- Most valuable web site for success (other than your own): BiggerPockets.com
- Favorite apps: N
- Here are a few of the great real estate apps he has developed:
- Deal sorting app
- Analyzer
- Property tour app
- Contact App
- To acquire any of these apps, contact Mark’s company at http://thinkmultifamily.com/contact/
- Favorite quote: “You leave an inheritance for someone. You leave a legacy in someone.”
- If you had to start all over, knowing what you know, and you only had $1,000, what would you do to launch your real estate investing business? Use the money to build relationships with people. Take people to coffee, dinner, etc. Get to know people because that’s what’s going to make you successful in this business.
Seminars
R.A.I.N (Real Estate Apartment Investors Networking Event) (Sorry, this is late notice. But watch for future events!)
- Jan 27-28
- Four Points by Sheraton/Coppell Convention Center
- DFW Airport North
- 1580 Point West Boulevard, Coppell, Texas 75019
- Panels of experts
- Tours of properties
- Properties they own
- Properties for sale
- Cost: $497
How to Reach Mark
- Email: mark@thinkmultifamily.com
- Website: ThinkMultifamily.com
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