BiggerPockets Real Estate Podcast - 52: Buying Apartment Complexes, Raising Millions, and Building a Profitable Business with Ken McElroy

Episode Date: January 9, 2014

On today’s episode of the BiggerPockets Podcast, we talk with one of the most influential voices in the real estate investing world today – Ken McElroy. Ken, the author of The ABC’s of Real Estate Investing and several other influential books, shares his story of getting started with nothing and building up a real estate investment company with thousands of units and hundreds of employees. Ken has a lot of great advice and knowledge for people at all stages of their investing careers, and shares it in a fun, entertaining manner. On today’s show we’re going to talk a lot about getting started, raising capital, and investing in large apartment complexes for big wins. Don’t miss a second of this exciting show! Read the transcript for episode 52 with Ken McElroy here. In This Show, We Cover: Getting started with no money – through property management Why should someone invest in multifamily properties? Using other people’s money to invest in real estate Investing at a distance vs. investing locally Determining the best locations and markets to invest in real estate Cash flow vs. appreciation: which is best? Ken’s newest $9 million dollar project  Why Ken loves bad landlords How to find amazing apartment complex deals Raising millions of dollars in 20 minutes How to find a great property manager? Should someone start with Apartment Complex Investing? The worst mistake you can make as a real estate investing Links from the Show What is a Cap Rate? (Capitalization Rate) (article about Cap Rates) BiggerPockets Presents: The 21 Best Real Estate Books Ever Books Mentioned in the Show The Art of the Deal by Donald Trump The Best Real Estate Advice I Ever Received by Donald Trump Turning Pro by Steven Pressfield Tribal Leadership: Leveraging Natural Groups to Build a Thriving Organization by Dave Logan The Crash Course: The Unsustainable Future Of Our Economy, Energy, And Environment by Chris Martenson The ABC’s of Real Estate Investing by Ken McElroy The Advanced Guide to Real Estate Investing by Ken McElroy Tweetable Topics The faster you fail, the smarter you get. (Tweet This!) “You don’t need to be an expert at everything.”(Tweet This!) There’s a lot more money out there than deals. (Tweet This!) The best deals are generated from face to face relationships. (Tweet This!) The entire goal of my company is to replace myself. (Tweet This!) Connect with Ken Ken’s Website: KenMcElroy.com Ken’s BiggerPockets Profile Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast, show 52. You're listening to Bigger Pockets Radio, simplifying real estate for investors large and small. If you're here looking to learn about real estate investing without all the hype, you're in the right place. Stay tuned and be sure to join the millions of others who have benefited from BiggerPockets.com. Your home for real estate investing online. What's going on, everybody? This is Josh Dork and host of the Bigger Pockets podcast here with, My man, Brandon Turner.

What up, B? What up, Jay? How's it going? It's going all right, man. It's going all right. How's your week, Ben? You want to tell people what you've been up to? Laugh at my misfortune.

I will laugh at your misfortune. People get a kick out of this. Before I tell you what my week was like, I will tell you that I got a Facebook message from my brother-in-law who said your new nickname is Murphy. So I was in Southern California for the past. two and a half weeks for holiday with the family. And, yeah, it was cool, man. We drove out, had a good time, arrived, had to go to the emergency room.

A couple days later, Christmas morning, had to go to the emergency room. That night, daughter almost drowned. A couple days later, she fell off a horse. A couple days later, I had to go to the emergency room. And, you know, when I got home from our wonderful trip after a night. long drive with the family. Of course I show up to a house whose boiler was not functioning. Nice. So, yeah, so when we got in, it was a nice balmy 40 degrees in here with the bricks as cold as ice in my nice brick house. Well, and this has been the week where everything in the country froze.

This was like the coldest in 20 years or whatever. Yeah, it's awful, man. You had no boiler. That's awesome. And I can't complain. Like, honestly, like 40 degrees in my house is better than like minus 500 up Canada and like, you know, Detroit and other places. Well, well, for those who can't see, because this is obviously

an audio podcast, Josh is in a like, Eskimo Parker on this, on this podcast recording right now. So it's pretty great. He's, he's bundled up nice and warm. Yep.

That's awesome. For sure. For sure. Anyway. I'm glad you got your kicks off of my misfortune. Yeah, it was great. I like laughing at your pain.

Anyway. Well, yeah, man. So we got a cool show today. I think this is one, well, I know this is one that you are personally very excited about because our guest is one that you've been a monster fan of for a long time. It's like Justin Bieber to me. Yeah, that's kind of creepy. So what you're saying is you like Justin Bieber? No, no, no, I like our guest today, like some people like Justin Bieber. Admire and respect.

and look up to. Yes, because Justin Bieber is... I admire and respect and admire Justin Bieber as well. Yes, of course. All right. So today's guest is Mr. Ken McElroy. Ken's a very active real estate investor and the author of the ABCs of Real Estate Investing and the Advanced Guide to Real Estate Investing two bestseller books, yeah? Yeah, those are two amazing books. They're actually on our list of like the top 21 best real estate books. Yeah. Which I'll link to in the show notes. For sure.

For sure. Well, so Ken started out, the cool thing about the stories, Ken started out like most of our listeners with absolutely nothing and now runs a company with over 250 employees doing multi-million dollar deals left and right. So, you know, he's definitely somebody to get inspired from and learn from. Today we're going to talk about his story and even get into some specifics on a $9 million apartment complex that he funded in just 20 minutes, which is a pretty cool story. So, of course, be sure to stick around for that. But really quick, before we bring in Ken, we've got to do our quick tip.

All right, today's quick tip is make sure to check out the Bigger Pockets member blogs. We send you guys to the Bigger Pockets blog all the time, but we also have this network of blogs that anyone can create a blog for, and there's a ton of really, really good content in there. So definitely jump in there and see what your peers are writing about at BiggerPockets.com slash blogs. And for those of you who are wondering how we decide on who shows up on the Bigger Pockets blog, we actually do pick our bloggers mostly from the Bigger Pockets member blog area of the site.

So if you're interested in potentially becoming a writer on the Bigger Pockets blog, get working on one of our member blogs, and maybe we'll ask you to come and join us. Cool. That's actually how I started. That is indeed. Yeah. There you go.

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Long intro. Sorry to keep you guys waiting, but, you know, well worth it. Let's get to it. Ken, welcome to the show. Good to have you here, man. Thank you. Thank you. Great to be on. Awesome. Yeah, it's good to have you. And I have said this on previous podcast, but I might as well say it here publicly to you, Ken. Your ABCs of Real Estate Investing, that book is actually what got me into apartment investing and why I bought my first apartment complex. So I want to say thank you. I mean, that was...

I hope it worked out. It did. I still have it today. And I love that thing. So, yeah, thank you. This is going to be... I've been looking forward to this show for a while. Very excited. I am excited. Look at this. All right. Go ahead, Brandon. Come on. All right. First question, we like to ask everyone. Well, before I actually ask the first question, let's actually go back a little further. How long have you been investing for? Then I'll ask the normal. Ah, good question. Well, you know, I grew up in the Northwest, so I'm not far from where you are, Brandon. And so I went to Pacific Lutheran University in Tacoma. And I started buying small single families and condos, you know, just like a lot of people, how they start. So that was in the late 80s. Okay, cool. And I guess how did you, I mean, you got started, was that in college or right after college?

Right after. Yeah, I completely stumbled on it, you know, like a lot of people doing real estate. It wasn't calculated. I didn't go to school for it or anything like that. I actually went to school for business. And I just completely stumbled on a buddy mine that was doing a, you know, a condo project and I ended up buying one of them. Oh, okay. Okay, cool. Can you got to tell us a little about that first project? Yeah, yeah, it was a two-bedroom, two-bath.

It was like 100, I think it was about 110 grand and it cash flowed like $100 a month right at 100. That is, of course, if it was occupied. Yeah, nice, nice. And then, you know, like a lot of people, I just kept doing it. And luckily, I was in the property management business, which was also, I lived in Seattle, And so I was managing properties all up and down, you know, I-5, Interstate 5 there, all the way up into your area, actually.

I had some stuff in Aberdeen and all the way north up into Bellingham. So I kind of cut my teeth in the northwest, you know, learning all about tenants and occupancy and rents and expenses. And so that was really my competitive advantage. So when I got an opportunity to buy, I really, I really, I really, pretty much understood the business. Okay. So what got you into the property management field?

You got that first condo. Why did you decide to suddenly deal with the headaches? Like most students, I was broke. I had no money. I needed a place to stay. And my buddy was working for the company. It's a big company in Seattle now. It's called Pinnacle.

Okay. And it was at the time called Goodman Management, John Goodman. And he worked there. He called me up and said, hey, I'll give you a free place to stay and a salary. And that was it. So I did it. So you started working for Roseanne's husband.

Yeah, exactly right. That's the same guy? Yeah, no, no. Okay. I didn't know he was a real estate guy. I literally, I was loaded with student debt, and I had just a very little salary. And, of course, when you're a student, you have none. So a little salary and a free place to live,

was a good place to start. And then I actually learned a lot about the business. It was a 60-unit apartment building right downtown Seattle at Cedar and Fourth. So right by Como TV and underneath the Space Needle. So that's where I started. That sounds great. Yeah, you know, it's something I hear a lot of people do is barter their time for free rent as a resident manager. And, you know, we haven't really talked to anybody who's done that before.

I'd be curious to kind of pick your brain a little bit about what that was like. Well, it was a huge education. My dad was in the, I had a construction company, so I didn't know a little bit about how to fix things. But, man, trying to figure out how to keep the place clean, keep the place occupied, market it, do the books and all that kind of stuff. you know, school could not prepare you for those things. And I just had a lot of people at my disposal and the things I didn't know, I asked. And I ended up staying there about a year, year and a half. I got my real estate license while I was there.

And then I started to work for that company more on a regional basis. But there's, well, we could do a whole show just on the stories from that one. Oh, I'm sure. Yeah, yeah. So you got thrown into the fire and pretty much learned. very quickly that way. Well, yeah, I mean, literally, no joke, the manager and the assistant manager sold my very first job was to fire both of them. And, you know, I was fresh out of college. I'd never terminated anybody in my life. And it was a huge education because I, you know, I had to, I had, you know,

people, people that lived there were a little upset, you know, when they had like, you know, like pay rent, you know, those kinds of things. So, yeah. Wait, and I have to. pay to live. We're just here to party and have fun. So it was fun from that standpoint, but boy, the stories, I can go on and on and on. It was a great way to start. That sounds like a great way. Yeah, I mean, really quick, would you recommend other people start out that way? Or do you think? I would. I would. In fact, it's funny, you ask that question. We actually have had people that want to work for our company now because now I have a large firm, as you know, and it's based in Scott's of Arizona. We have 250 employees. Oh, wow. And so what we do is we actually, we actually take

people and put them at the property first. So they understand what it's like to lease a unit, what it's like to clean a unit, when it's like to deal with a resident dispute, what it's like to collect rent or try to collect grant. And, you know, all the pressures and all the things that happen at the site level, because it makes them more valuable when they work in the corporate office. Okay, cool. Well, hey, let's move on a little bit to something we like to ask a lot of our guests, because, I mean, especially guys like you who have written books before and, you know, a little more well-known, we want to know a little bit about, like, mistakes or things that you've maybe screwed up on in your life. You know, do you mind sharing some of like the, I guess, the downsides or things that haven't gone so well for you. You want me to just focus on today, you mean?

Yeah, what did you? What did you? What did you break today, Ken? Come on. Well, I, you know, it's funny. School kind of teaches you not to make mistakes, you know, obviously. And so I was afraid, I guess, when I first got out of school to even admit that. And it took me a while to figure out that the faster you fail and the faster you make mistakes, the actually the smarter, the more educated you get. And, you know, I never took any real massive risk.

but I always took small risks and boy I really have quite a few mistakes I mean you know in every single way and mistakes in what I thought I needed to do before I bought a building mistakes in hiring people mistakes in raising equity and and getting debt mistakes in the property management business when I was in that gosh it's just mistakes in hiring employees at a later day mistakes of making the wrong choice of resident or tenant, you know, that's into your property. And the list goes on and on and on. All right.

And maybe we can touch on some of those as we kind of dig in a little bit. You know, what I'm curious about is, you know, you started with this resident management. You got your real estate license. You started to kind of expand from there. Can you very, very quickly, just so the listeners have an idea of where you started and where you are today, you know, you said you have 250 employees. But what was kind of the path, right? So you got that management job next, what happened? Yeah, well, for the very first company that I worked for that I mentioned earlier, I started

on site and then I started managing multiple properties of four units, eight units, 12 units, 20 units, and I learned that. And then as I was with the company a little bit, I started getting larger and larger properties. I ended up moving to Las Vegas opening an office for them when I was 28 years old. And we, you know, we had, we did not have a presence there. And I, you know, again, I opened an office, hired new people. And at that point, I was in what they call the fee management business. I was actually going out and managing properties for other people for a fee. And, and so I was really fortunate, I think, for the first eight years of my career to come up in the property management world. And I was actually getting an education of the people I was managing properties for. So I would, you know, people would buy properties and then come to us and ask to manage it. So I got to understand how they capitalized it, you know, with the debt and equity and how they bought it, what price they bought it for and all those

kinds of things. So that was my first real job. And when I was in Las Vegas. And then I partnered on my first business. I've had many now over the years. But I partnered with my first business in the in the early 90s mid 90s and which was I'm going to do this on my own so I started in that I we were building properties and buying properties and and now to fast forward I started this company that I have now which is called MC companies we have 8,000 units in multiple states mostly Texas Oklahoma Arizona and we buy and build apartments so we're just in the apartment business that's it. We have five, six projects under construction right now. I've got one in escrow right now

in Tulsa, Oklahoma that I'm buying. And, you know, we'll probably buy, I think we're scheduled to do somewhere between two and three hundred million and acquisitions are ready for 2014. Wow. That's awesome. So these are large multifamily properties. These aren't like five, ten, fifteen, thirty units. These are like in the hundreds. Right. Yes, that great question, Joshua. I started on those, as you know, but what I quickly realized is it takes the same time and effort to run a five unit that it does to run a 200 unit. And it's actually easier, in my opinion, because the larger the property, the more the staff it supports. Yeah. So once you can train your staff to kind of handle a lot of the day-to-day stuff, those phone calls don't come into the corporate office.

They get handled right there at the property level. Yeah, that's awesome. Well, you know, on a lot of our shows so far, we focused a lot on small multifamilies and single families because, I mean, I started with small multifamily and a lot of people start that way, right? So today, definitely, we want to go like, you know, 201 level here and go with the apartment complex thing. So I guess why don't we just start at the beginning? Why should somebody look into, you know, large multifamily properties to invest in? Well, you know, what I chose to do early on a career because I had lots of choices on what I wanted to do, but I chose to specialize in one sector, and I think that's a mistake a lot of people make. So a lot of people, you know, they might try to buy a retail center, try to try to go buy a strip mall and then buy a, you know, a duplex.

And I'm not saying that investing is wrong, but I'm saying what I want, what I attempted to do was I wanted to really know a lot about. my one business and I also knew that there's millions of apartments in the United States and and it was just it was easier for me to really really understand the sector that I wanted and then what it did is it made me an expert in that one field so everybody you know I get a lot of people asking me about the apartment world because I literally study I still study it I'm still studying and still learning and so for me it's a trend business like everything else you know apartments were not in favor in 07 8 and 9

and now all of a sudden they are they're kind of the hottest topic on wall street but like anything like single-family homes or malls or strip malls or or industrial or even single-family custom or affordable or condos everything has a cycle and you know apartments are definitely a on a high point of a cycle right now primarily due to the fallout in the single family market and the fact that we have some job creation. So let me ask you, you unless I misheard, it sounds like you are saying that you think it's a negative that you're so specialized in apartment buildings. And I look at that as a positive.

I see you as somebody who, you know, you can own that niche. You know, you're the guy to turn to. Is there, I'm just curious what you see as a negative. about that, particularly for somebody starting out? Yeah, no, no, I think I don't see it as a negative at all. What I think is what happens is people think that the jump from, say, 20 units or, you know, a bunch of houses to a 200 unit or 100 unit is a real significant jump. And I'm here to tell you that I did it, and it's not.

It's literally the same thing, just more units. Different people, different team members are needed, but the economics are the same. And obviously, in terms of capital resources needed, those are certainly going to be higher. I mean, if you've got 50 units, you're going to need the capital to take care of those if things go wrong. Absolutely, yeah, it's all scalable. You know, it's just, you know, that's the, you know, that's the, that's the, you know, that's, That was one of the things, Joshua. I believed when I first made the jump from buying a lot of single families to larger properties

is that I actually needed a bunch of money in the bank and I needed all this cash in order to start. And what I found very quickly is that there's a lot more money out there than there are deals. And so once I got educated on the market and I started to find deals, even though I didn't have a nickel. I've found people to help me with that piece. Gotcha. I definitely want to touch on the financing thing. I got that in my list of like 50 million questions here for you. But before we go on, I just want to point out, I love that you said about focusing on one niche because that's something that I harp on all the time is to pick one niche, like, you know, apartment, single family,

whatever, and then one strategy. Do you want to flip them? Do you want to buy and hold? And when you're getting started especially. You don't need to know everything. People get overwhelmed so easy, but just by focusing on one niche and one strategy and learn everything you can about that, you can always branch out later. So I love that. And ignore the shiny object syndrome, of course. And that's the problem with, I mean, like, every week we sit down here with a guest who tells us their, you know, amazing story of how they're making money in real estate. And every week, me and Josh are like, oh, we got to do that. That'd be funny. And if it's happening to us, It's happening to our listeners as well.

And we get it. But to them, we say, you know, definitely take all this stuff in and decide what works best for you, really learn it. And then once you've become good at it, move on to the next thing. That's exactly right. Yeah. It's baby steps and finding good team members around you. Yeah. Yeah, for sure.

So, you know, we're going to jump around a little bit and touch back upon a lot of the topics that, you know, are nagging at a here. But, you know, let's go to local investing versus investing at a distance. You know, it sounds like, obviously, you're acquiring properties around the country, but you're also an expert. You've been doing this a long time. You know what to look for. You know what to do. What's your take on buying these multifamilies at a distance? Let's start with as a newbie and then kind of progress for, you know, anyone else. Whoa. What a great question. that is, well, first of all, I always believe if you're either using your money or you're using somebody else's money, there's a lot of responsibility with that. And so I always advocate,

you know, try to start local, try to learn local, try to make mistakes local. Try not to even outsource your management if you can, if you have the time. If you don't, of course, they're finding a property manager is, you know, a whole other show. Oh, yeah. But I, but, but it's really important, I think, that, that the people you're raising capital from, especially as you start to scale, knows that you understand all the, you understand all the different components. And so there's really no way to do that if you have to jump on a flight and fly to

Orlando, you know, and it's, it's, you know, but a lot of times, by that time, by that time, the problem's gone or over. And sometimes, so I always advocate to start local. I like to drive by my properties. I like to pop in on an ounce. I like to walk them at night. I like to walk them during the day. I like, you know, there's just a lot.

And, you know, in order for the properties to run well, there's so many details that need attention. Yeah. It's just so, so hard. And I, you know, a lot of people are in that trap right now where, you know, They have properties all over the country and they're trying to find, they're burning through property managers, you know, as their places are vacant. And they're sitting back in California or Washington or wherever. They're frustrated and they've got to fly out there for a weekend and try to interview 10, you know, on a Saturday or whatever.

So it's just easier. And then what happened was when we made the decision to get larger. First, it became city to city. So, you know, I started obviously in Seattle, but then I moved to Vegas and I did it there. And then now I live in Scottsdale. And even though I have properties all over those places, when I use that same philosophy here in Scottsdale, then I started branching into Tucson and then I went up to Flagstaff, which are two hours north and south. And again, each of those markets is no different than fly into a different state. It's they're different.

The people are different. The rents are different. You know, the demographics and the makeup of the community are different. The community leaders and what they just, what they believe in are different. You know, all the jurisdictions for water, sewer, trash, and utilities and everything, they're all different. So it might as well be a different state. So I just, that's how I started. I just started to master these other cities.

And then from there, I started looking at the bigger picture on the trends. the job growth, employment growth. And that's when I first started, that's when I went to Dallas, and I bought a management company there six years ago during the recession. Okay. And, you know, et cetera, et cetera, et cetera. Got it, got it. I actually want to dig in a little bit on that if we could.

Like, what are you looking for when you say you're looking at, you know, kind of the demographics or the numbers in another city? I mean, is it just, I guess, what are you looking? Just population, those kind of things. That's the best question. You know, people always laugh because it's so simple, but I need renters. And so, you know, jobs clearly, you know, sometimes even population growth doesn't bring that, you know, because you can have a senior, you know, influx of seniors in an area that aren't working. But primarily it's job growth.

So let me give you an example. When we started to look at Texas in general, we looked at the big major ones. big major cities, Houston, Dallas, San Antonio, Austin, Fort Worth. And each one has a completely different genetic makeup, each one. So Dallas is more services-oriented financial. Houston is more refineries, a little more blue collar. San Antonio is actually health care and some tech. And Austin, of course, is tech, primarily tech.

It's also where the state capital is. So each city is different. and each one has a different bell curve to it. So, you know, we started buying in Austin because of, you know, the spillover of what's going on over there in tech. And, of course, we bought there in 07, 08, and 09. We bought a bunch of property in Austin. And now, of course, it's one of the hottest markets in the country.

And we could have been wrong, of course. But what we were doing was trying to take a look at where housing was, where the the jobs were going and could people afford it. And so we look at that on an individual basis, sub-market by some market, even in those individual cities. So, you know, it's interesting. When I started, I looked at markets, what market is an affordable market, not what market is a hot market.

And I ended up buying in a market that was inexpensive, but which the demographic trends were going the wrong direction. and you know I pretty much plowed together every mistake which was wrong demographic transit economy turning the wrong way I'm at a distance so I couldn't you know drive and check out the property and that really led to a lot of problems and one of the things I like to harp on to new folks you know there's always somebody trying to sell you something hey come buy in Cleveland I'm not going to say it come come buy in Cleveland or come by here because it's cheap it's it's reasonable and and and And, you know, again, cheap doesn't always mean that the trends are going in the right direction. So I think it's awesome that, you know, you guys are trying to buy where the renters are. I think that's probably the right move versus, you know, what I ended up doing. Yeah, that's cool. Hey, hey, I have a question, kind of a big picture question on your kind of strategy.

And that's how much does appreciation and versus cash flow play into your decisions? You know, you talk about buying a hot market. Sometimes that can be expensive. Great question. You probably know from, you know, I study a lot with Robert Kiyosaki a lot. We're really, really close friends. I did a radio show with him this morning, actually. And, you know, I'm really a cash flow guy.

In fact, when I read Rich Dad Poor Dad, that's what he talked about in there. He talked about the importance of a property manager in cash flow. And I would say the majority of the real estate investors aren't really focused on that like they should be, even though they might say they are. Most of our capital gains base or appreciation base. I do think appreciation is important, but I don't base any of our investor money or even our strategy on it unless it's forced. In other words, you know, if I'm buying a property, like I'm buying my property in Tulsa, Oklahoma, we're closing on the 30th of December. 208 units, I'm putting a million bucks into the property. And, you know, with the intention of getting about somewhere between 75 and 90 bucks in rent growth

over a two to three year period, that's, I'm creating that appreciation. So it's important, but I never do it. I never base it on where I think the market is heading. Hey, Ken, really quick for folks who aren't familiar with it. So the forced depreciation is when you can either increase rents or, you know, increase vacancy rates or just get other revenue streams coming in. And as a result, these commercial properties values are more. Is that correct?

That's exactly right, Joshua. It's essentially, you know, we found an old tired property on the corner of Maine and Main that is what we would call an A location. Across the street is Whole Foods and 24-hour fitness, and the area is completely changing, and the homes in the area are 500,000 and higher. And then here's this property where the rents are $800, and it was built in the 80s,

and nobody spent a nickel on it. But in the day, it was new, beautiful in the day. So, you know, what our plan is, is we're going to put washers and dryers in, We're going to put new stainless appliances in. We're going to put wood flooring in. And we're going to completely redo the interiors. We're also going to paint it and, you know, do a bunch on the outside.

But that's exactly what we're talking about. And we have a long-term strategy. We're buying it. We're not flipping it. And, you know, we want to be a good landlord for the people that live there. But a renovated unit commands higher rent than one that's high. un-renovated. And so that's the opportunity. Sure. So when you go into a place like that, are you planning on just doing the vacant ones

as they come available or you're going to kick everyone out, do it, and then get it filled? Yeah, question. Yeah. Well, the bank would not be happy if we kicked everybody. That's true. Mortgage and the utilities and the taxes and, you know, all the other things. So great question. I get that question a lot. It's we do it on turnover. So obviously, When we first get on the property, we'll do the vacants first. And then we'll be testing the market on the rents. And then as units turn over and people move, we'll do those.

And what we found is that a lot of times there's some amazing residents that live in these places that have been there 10 years, 15 years. And what we found is that they actually, because they like the location, will oftentimes move into the new one, which will create. an opportunity for us to renovate one that they were in. So it will take at least two years to spend all the money and upgrade the property. That's cool. I found the same thing. It created like a chain at my apartment. Each one I did, somebody would leave.

And then I had like six or seven people move because of that. Yeah. Yeah. And I tell you, the other thing that's been great about doing this is that the surrounding community, I mean, they come out, you know, the Chamber of Commerce, the police, the local police department and people, hey, we like what you're doing here. You know, so you're really, to freshen up real estate in a market that, you know, people live in is usually a great PR opportunity as well. Yeah, yeah, for sure.

Well, you know, and, you know, it's one of those interesting things. Real estate investors, I always get a bad rap. You know, there's the slum lords and the bad guys, you know, all these bad guys doing all these bad things. And this is the story right here. You know, this is what we do. You know, we improve communities. I mean, there are some bad folks out there. You know, we can't deny that.

But, you know, there isn't any segment of the economy. But, you know, I think it's cool for you to even point that out is how much a community really appreciates when you do it. You know, on a small scale, we may not notice it if we're doing a house. we're doing a duplex or something, but once you start getting to these larger properties, it makes a much bigger dent. It does, and I'll tell you, you know, it's going to sound bizarre, but thank God for those bad landlords because, you know, I get great deals. This guy that I buy this building from is an idiot.

How do you really feel? He's an idiot, you know, and he's just run this thing so bad, and I just, I would, I was talking to the property manager this morning in Oklahoma. By the way, we have our own management company, but I use a local guy down there in Tulsa because I really trust him and like him, and he's managing other property for me in the area. And I just said, I'm just happy that the tenants and the managers and the staff are sticking around because this guy is an idiot.

That's awesome. That's awesome. Hey, so how do you find these properties? How do you find the idiot landlords who, you know, screw up and get it all wrong? You know, it's funny. You know, obviously, you've got all the Internet stuff that everybody in the world is looking at. Yeah. All the websites, the loop nets and things.

But my experience has been that I actually haven't found very much on those very often. More than not, what I find is it's a face-to-face relationship. almost always generates a lead. So let me give you an example. When we decided to buy in Dallas, Texas, we'll just say, I flew down there. I met with all the top brokerage people, spent two, three days, and started to build relationships, got on their mailing list, started to email them, call them, et cetera, flew down there, looked at deals, made offers.

And so I built relationships with these people. And so then what happens is, you know, as you know, there's always the alpha, you know, in every market, whether it's male or female. And they're always, they dominate that market. And they're the ones, even in the single family, I found that this happens. And so if you can create relationships with those folks, what happens is somebody that's even thinking about it goes to. to them and it's very rare that you find owners that sell without first going to the market to find out what the value is because my experience has been a lot of them don't even know. And so they almost always go to some kind of a broker to find out what the things were,

even if they don't use them. And so that's been a really good way for us. We also have a full-time acquisitions person in-house. you know and we probably look at maybe 15 to 25 deals a week. Gotcha. Gotcha. So are you guys, is your acquisitions guy doing marketing or is he just hitting the loop net, the co-stars, or just kind of dealing with potential leads that come from the brokers

that you've got relationships? Yeah. Mostly brokers sending information. It's funny. It's free to get on brokers' email lists. And then my experience has also been that most brokers don't understand what they have. So, you know, they're just commission. They're focused on the commission.

And so, like, for example, when I saw this property come through, I'm buying it for $9.1 million. I already know in three years it's going to be worth $13.5. Wow. So before I buy it, and I'm going to close it in, you know, what, 12 days. So, you know, I have a whole plan to get it to $13.5 million bucks. And if I, you know, so most of them are focused on that commission. And so most of our leads come from that.

Although we get a lot from banks and property managers and, you know, you name it. Now, are you finding, because in the residential space, the small residential, you know, houses, MLSC type folks, most of those real estate agents really don't have a clue, right? what it comes down to as it pertains to investment property. But my presumption would be that the commercial guys know a hell of a lot more. And it sounds like you're saying that may not be true. And I'm actually shocked to hear that. But I get it.

You'd be surprised. It's like anything, you know, I know residential real estate agents that know quite a bit about this. and I know some that don't know any. And the same thing is true in the brokerage world for commercial. You know, you get, you get. But what happens in some of these secondary markets, you find just a lot less deal flow, you know, than you would in some of the major core markets. And in a lot of the major core markets, you're going to find, you know, the real deal makers.

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losses. And that matters more than ever in this economy. That's why I like Mind. Unlike other property managers, Mind manages your property like an investment. They obsessively measure the things that matter for your bottom line. Things like occupancy, delinquency, and net promoter score. And they have the results to prove it. Go to mine.co slash show me to see how mine performs and get your first month free, which is much cheaper than learning the hard way. Well, hey, what do you think makes a good property? You mentioned this one. We talked about forced appreciation. This one needed work. Do all of the properties you look at buying and do that? Is that what makes a good property? Or what are we looking for if I'm going to go buy an apartment? Yeah. So, you know, kind of touching base on a little bit

what we discussed already. The first thing we do really is look at the market. And I think a lot of people, what they do is look at the property, you know, kind of like what Joshua did. You know, he was looking for an affordable property and something that was cheap. That's a very common issue that people do. But, you know, once you buy stuff like that, oftentimes, you know, there's no renters. And so the first thing we do is really focus on demographics. So, and I probably spent half my time trying to figure out where our market's heading. Because each one has a different bell curve, like the ones I talked about in Texas. Once we get past that, then we drill down into the individual market itself.

So, for example, Dallas is a big place, but when we decided to buy in Dallas, and we bought a lot of property there in 2008, 2009, in 2010, we bought only North. So we bought in areas like Plano, Friscoe, Carrollton, Addison, and markets that were growing, you know, because in every city, there's hot areas and not so hot areas. And there's areas that are going through redevelopment or maybe have a higher crime. And then there's areas that have better school districts. And the path of, you know, the path of development is heading that way. So we always look for that second. So once we get past those two things, then we go down into the sub-market.

and we start to look at opportunities in the individual sub-market, because then it makes it really simple. So, for example, in a given month, I might get 20 deals from Dallas, but I might only be interested in three or four because they fall into that spot. Gotcha. And so that's how we underwrite every single deal. And then from there, usually they're not very good deals either because, you know, there's no, there's no, what I call meat left on the bone at all. I don't want to buy something that doesn't have some opportunity in it. Yeah, yeah. Ken, so you're out there making these deals.

I'm thinking about it. I want to be you. What is a day in the life of Ken look like? And I don't need the mundane like, you know, eight Cheerios and brush your hair kind of stuff. Because I know if I asked. So really, you know, my entire goal of my company was to replace myself. So that was my goal from the beginning and still is. So I actually, believe it or not, I take all summer off.

I spend time with my kids. I have a home in Cordillane, Idaho. And I work probably 30, 40 hours a week at this point. And anything that I ever touched or did, I try to find somebody better than me to do it. So that was always my goal because I didn't want to be, I didn't want to be chained to the company. So my day is quite different now. Essentially, I come in and I sit down with my acquisition guy. I find out what he's working on.

And then we'll sit down and we'll take a look at some of the deals that he's working on. And then if I need to, I'll pull the president of my property management company in. Her name's Leslie. She's been with me for 12 years, and she manages most of all of our employees. And then there's different pieces and different team members that we'll utilize in our resources now. So if I'm looking at something, let's say, in San Antonio, I'll call one of my employees down there, or I'll have my acquisition guy call, and we'll have them go buy the property, we'll have them do a red survey, those kinds of things. So I spend a lot of time finding deals and then also managing the debt and equity relationships.

I had a big meeting yesterday with Wells Fargo on a construction deal that we're doing in Tucson. And I'm in the middle of negotiating another one with a group out of Laguna Beach. And so, you know, and then I did the radio interview with Robert today. So it just depends. You know, and I do some teaching and books and things like that, but it's really very secondary. I donate all that stuff. I donate all those proceeds to charity on everything we do with everything in Osaka, yeah. That's awesome.

That's cool. Well, hey, let's move kind of back to the process. We talked about finding properties. We talked about kind of, you know, looking at them, figuring out what a good market is. But actually, we find a property, let's say. We do our due diligence on it. and now we want to buy it, but we don't have any money. Obviously, most people don't have $9.1 million to go out and buy a property.

So what are you doing and what do people do for to finance these things? Well, it's important to know that I started at the same spot. I didn't know at all how to raise capital. I didn't know what the bank was going to ask me when I went in. So I think what happens is a lot of people stop right here because they're fearful that they need to know, especially, you know, what I call the A students, you know, they, They want to know everything before they step in, you know, but what they find out is even then they don't, you know, because you just never know what people are going to ask or what they're going to do. So I jump in feet first on everything.

And so, you know, what I found is the first people that I ever went to were my friends and family, of course. and now they've got this great thing like, like, you know, bigger pockets and they've got, you know, these things on leaked in. And there's a lot of resources where you can get your deal out there quickly. That didn't exist when I started. But I got a lot of nose. And, you know, those nose were good for me because, you know, you're like, okay. You know, and I never asked, you know, I never was trying to sell through it. I was always asking, how can I make this presentation better?

What do I need to learn? And so I just got a whole heck of a lot of nose until I finally. And, of course, the very first deal, I used my own money. But then after I used my own money, I didn't have any money. So, you know, like everybody, you know, at that point, you've got to figure out how to scale it. And so what I chose to do on the equity side is I chose to go out and find what they call accredited. investors. So, you know, we now have a database of over 500 accredited investors of investors that work with us. And, you know, and I, you know, it took a long time to get to this point,

but when we put this deal out in Tulsa, Oklahoma, it's funded in 20 minutes with our accredited investors. And, you know, that sounds all great, but I want you to know that the road to get to that point was not, it was not that easy. That was not a 20-minute road. Hey, Ken, tell us what an accredited investor is and just so people know. That's okay. Accredited investors, I mean, you can Google it too, but it's basically means that you have a million dollars in net worth, not including your house.

And you have, I think it's like $300,000 a year in income coming. And so my experience has been that special. Now, you know, people are really confused as to what to do. You know, they're saving money. They're put, you know, the stock market's dicey, you know, 401K stuff's dicey. People lost money in their pensions and there's a lot of people that are really confused. So if you put together the right team and you can say, listen, you know, you're going to make, you know, seven, eight, nine, ten percent cash on cash over here in this investment and

it makes sense. It's actually not that hard to raise capital if you know what you're talking about. Do you offer just like a flat interest? Do you offer equity as well or is it depend on the deal? Oh, well, we give equity of course to our investors on every deal. Yeah, yeah. And I invest alongside of them now. I mean, when I started I did it because I didn't have anything.

But yeah, we invest right alongside of them. Okay, that's cool. Hey, Ken, what would you say you? think is the most important part of your presentation that really needed the most refinement over all the years? Clearly folks are out there putting together packages, but where did you really screw up the most? And what do you find that your investors are most interested in? Yeah, great question. I think the most overlooked person in the whole team is the property manager. And the reason why I bring that, I really believe that I really believe that's a really

I had a competitive advantage when I started because, and here's why. I'll give you one example. This is back when I was doing fee management. I got this call from this guy in San Diego that's, he got a crazy offer on his building and he did a 1031 tax deferred exchange, which means that he could roll all those proceeds into the next building without any tax. Well, he found a building, put it in escrow, went hard on the money, which means it's nonrefundable, in a property in Phoenix.

that which is where I live and uh he called me one day before he closed and he said hey I need a property manager oh that's right I need I need a property manager and so we showed up and of course the building's full of thugs and it's got all these problems and he overpaid and you know the expenses didn't add up and all those things and so um this is a guy that came out of like a 75 unit building um in San Diego that was 100 percent occupied and he was on his boat every day to fly into Phoenix for a 150 unit building that was that, you know, in the first six months, you know, went more vacant than it, than it was occupied. And so then he was pissed at me, right? Because I ripped the, I rip the band-aid off, right? And I said, listen, this is what you have.

You're the idiot. So, so anyway, and so it's a great question. But I think that if somebody has that type of folks, you know, those folks in there, on their team, they don't, you know, because it all boils down to how the property performs after you buy it, period. So whatever the property produces in free cash flow is a direct result of the manager. And if that's you or somebody else, and if that manager, that manager is, and you made a good, good selection, that manager can sell the investment for you. That's cool. That's a really, really good advice.

I don't think most investors even consider that. Like you said, they just, here's the numbers, here's how cool it is, here's how great it is. But what about the actual making it that time? Now what. That's what it's all based on, right? Yeah. We're going to buy it, but you don't get any money. Yeah.

Yeah. Hey, Ken, so really quickly on this, what makes a good property man? I mean, how would you identify the difference between somebody who's just a total loser and somebody who's killing it? Yeah. Well, obviously, we have a management company, so I have a lot of experience in this area. First of all, experience is a big one. So great attitude. I know it sounds simple, but if a lot of people don't, so, you know, just like any business, you can find people that have been in the management business for 20 plus years.

and they have a bad attitude. So you'd be surprised when people walk in the office, you know, if it's like Nordstrom, you know, everybody's happy and things are good and customer services high, they're going to stay, they're going to pay the rent on time, you know, things are going to get done, the maintenance requests are going to be done.

So I think attitude and experience are the two main things. and then if I had to choose between the two, I would choose attitude first and train them. Pick somebody who's trainable. Yeah, because people with good attitudes are trainable. You know, they're like, what can I do, what can I do, how can I get better? Where, you know, so, I mean, it's nice to have people with experience. And, of course, you don't want to put them in a disadvantaged situation.

And, you know, when you got these multimillion dollar assets. But what we've developed is a system where we, We bring great people in with great attitudes, and we put them underneath people and have them train for a while. And then as the company evolves, they become managers and leaders in our company. That's cool. That's cool. Why don't we go to one more topic before we kind of begin to start wrapping things up here. And that's the due diligence period. I talked about it a little bit ago.

What should somebody be doing after they get their property offer accepted and before closing? and before closing, the period you're in right now on this Oklahoma property. What are you doing to make sure it's good? Yeah, in my opinion, that's where all the magic happens. We do everything in due diligence. And so when I say that, so in 10 days, I walked all 208 units. I audited every file, and I had contractors on the roof, the landscaping, the parking lots, the electrical, the plumbing, and everything.

So it's really got to be coordinated and orchestrated. And of course, I have a full-time person. That's all she does is orchestrate that. You know, we have a huge checklist. People can find it on my website, actually, Kenmacoroy.com. I've got a due diligence checklist up there. And it just gives it's like, I think it's eight or nine pages. And we ask for everything we can and we go through everything.

And so what it does, my experience has been that that's when you find out everything. So we're looking at bank statements. We're looking at financials. We're looking at vacancies. We're looking at, you know, I don't want to spend a bunch of money after I buy it. I want to know what's happening inside the units. I want to know if I'm going to have to replace a carpet or refrigerator in three or four months or six months or one year, even two years. All that stuff we do.

We package it all up and we make it part of our business plan. So I love due diligence because it's the opportunity to flush everything out that even perhaps the seller doesn't know. Yeah, it's like discovery when it comes to legal pursuits, right? Exactly right, yeah. Sorry, real quick. You actually said you personally walk through all 200 of those units. I got to me. I did it.

I say we, my team. I actually haven't even seen this property yet. Okay. I'm going to fly down there after we close it in January. But, you know, we have a team now of people that I underwrote and I've seen all the pictures and I talked to the managers and, you know, I'm involved. But we've had lots of people at the property, but I haven't been there yet. Like, I was just trying to do the math on how long it would take to walk through 200 units.

I'm like, you'd be there like a month. Well, a team of two can do about 60 units a day. Wow. Okay. There you go. So if you bring three teams down there, you can knock out 200 units, pretty close to 200 units in a day or two. Okay. Have you found any kind of pushback at all?

from potential sellers like, oh, well, you know, we got people and they don't want you to see the units. I mean, that's obviously a massive red flag, but I'm assuming you've dealt with that kind of stuff before. Of course, yeah, yeah. There's all kinds of great stories of what you find inside the units and deal with sellers.

Yes, you know, and tenants change their locks, and, you know, there's all kinds of stuff going on behind those doors. Oh, yeah, oh, yeah, for sure. Well, I think the due diligence is probably the most, you know, for the experience investor, that's probably the most fun. I think that's, you know, everything else is kind of operational, but that's kind of where the excitement comes in. What kind of pig am I going to end up with, you know, and can I turn this thing and make it into, you know, a beautiful white horse, right? That's right. And it's, I love it.

I'm with you, Joshua. I think it's when everything gets exposed or should be at least. And it's your opportunity also to go back and tell the. seller about things that he made on an own or she made on an own. You know, we found that in some cases, you know, like in one property in Richardson, Texas, they had put a third roof on, which is illegal from a fire department standpoint. You know, they're supposed to do, too. And so that was a red flag. And, you know, that was a $700,000 fix. So there's, there's things like that that come up and are important. Yeah. Yeah. For sure. All right. Well, what do we move on to, uh, my

favorite part of the podcast. We call this the fire round. It's time for the fire round. All right, the fire round, these are all questions that come directly from the bigger pockets forums. So these are questions that real people are asking and I thought I'd fire some of them at you.

So first of all, how do you determine a local cap rate? Like, who do you ask about that? Or do you not ask anyone? Yeah. The cap rates, the brokers all know what they are. A capitalization rate, all it is is if you paid all cash for a property, the rate of return would be the cap rate. If you put debt on it, it's the NOI divided by the sales price.

So it's pretty simple. I mean, it's whatever the NOI was and whatever the price was, it determines the cap rate. Stronger markets have lower cap rates. And of course, interest rates can also make cap rates go up. Okay. And we'll link to a couple articles, too, in the show notes at biggerpockets.com slash show 52 that talk about the whole cap rate thing too so anyway people are more interested in that we got stuff yep all right so should somebody start with apartments or or do you advise they start

with single family houses and and other property types yeah i do i advise they start small with the single family house or condo or they have duplex and and then move up uh you know and it's just you know the mistakes are smaller and and you're better you're going to make smaller um financial mistakes takes two. Gotcha. Good. 55 plus communities. Do you recommend them or do you say stay away from them?

Well, I have them. And so I'm going to say yes. No, I'm just kidding. Stay away. No, here's the deal. I mean, if you study, one of the trends I study is the demographics of the baby boomers, of course. And they started retiring a couple of years ago at, like, $50,000 a day or something like that.

So it's coming. And it is definitely coming. What I found, however, is, well, there's pros and cons. The pros are that they never move. Once they make a decision, they stay there if the places run well. And they're amazing people. And they have great stories. The downside is that they don't make decisions quickly because they don't have to.

And so if you're, you know, when you're leasing one up, it's brand new. it's going to take a lot longer than you think. And the other thing is, is they don't want anything to do with the next level of care for them. So they don't want any, they don't want to see assisted care. You've got, you've got major different levels. So you have active seniors that are 55. And then when they start getting to a point to where they need some kind of assistance, and whatever amount of that might be, there's the next level.

And then, of course, there's congregate care, which is toward the end. And so there's been, you know, we live in Arizona, so down in Sun City, they tried this. They tried putting all three in one community, and it failed miserably because none of the active people wanted to see where they're heading. Nice, nice. It's funny. I, you know, since I was a kid, my mom was always like, don't you ever, ever put me in a home, you know, how day. Don't think about it. And, you know, I don't know, I think about it.

I'm like when I'm 55, 65, put me in one of these communities. I want to go play checkers and hang and shuffleboard and dancing all the time. You know, I'd be bored stiff if I was in a house with nobody nearby. Oh, dude, and let me tell you something, like men are a commodity too,

because they're going to be a start. If you can make it, you're going to be a study. Nice. That's funny. All right, so next question. How does financing work for construction loans on apartments? Quite a bit tricky. trickier, you know, there's a lot of underwriting that the banks, I just, as I said, I just met

with Wells Fargo on this yesterday. Typically, they're underwriting somewhere between 65 and 70% loan to cost. So let's say it costs 20 million bucks to build an apartment project. They're going to lend you 65 to 70%. The other thing is they're usually recourse loans, which means that you personally are on the hook for, you know, for the performance of the of the property. So it's a, you know, from my standpoint, it's a pretty risky loan. Yeah. Because most of the apartment loans that I'm doing are non-recourse with Fannie Mae or Freddie Mac. You know, they typically don't have those kinds of restrictions.

Okay. Cool. All right. I want to buy an apartment complex. What is my very first step? Like, what should I do today? Well, the first thing is you want to go to where the demand is. So I have a friend that's actually based out of Seattle that they specialize in student housing.

So I was just talking to him last week. So he just bought a building near Oregon State. And because of the student housing was full and had a big waiting list. So when you start to see opportunities like that, wherever that might be, you start to do your research, therein lies, you know, therein lies the reason. So, and so once you start to study a specific sector and become specialized, like my friend, in the student housing, or even in the senior housing, or affordable housing or, you know, high-end, whatever, because there's all kinds of different kinds of apartments.

You really need to understand that niche. That's probably the very first thing, because you can really make. make a lot of mistakes if you don't understand it from a, from a, you know, from a demographic standpoint. Yeah, that's great. Gotcha. Gotcha. All right, Ken, the big, the big question, real estate goals for the future.

Where do you see yourself in five to ten years? I see myself working about the same. And, you know, taking a lot of time off. I see our company more than doubling. And, you know, I also see the apartment market that's going to peak probably in two to three years. So, you know, we'll probably, we're already starting to look at things like self-storage and, you know, mobile home parks and things like that to take advantage of that, whatever that next phase is. But, you know, construction has a cycle, apartments have a cycle. everything has a cycle and the worst mistake I can make is

investing at the top of the cycle. Yeah, yeah. And knowing what that cycle is and just paying close attention to tops and bottoms and understanding that, I think, is really key for sustainability over a long period of time. It's the difference of legacy versus making a lot of money in a cycle. Yeah, yeah, that's great. All right, well, it's time, Brandon.

It's time for the Famous for All right So these are questions We ask to every guest we have on here First question Josh, why don't you start us off?

All right So besides your own books Of course Because those would likely be your favorite Real Estate books What other than your own Would be your favorites

In real estate? Should I try re-spitting that out there? That was really difficult for some reason. Sure, dude. Actually, I have it right here. This book here. Art of the deal, is that what that is? The Trump wrote, it's called the best real estate advice I ever received. It's interesting. It's a small book that didn't get a lot of fanfare, but it's got a lot of really, really good advice in it. He just went to a bunch of his buddies and said, you know, and put it all

together in this book. So this is one of the best ones that I've read in a long, long time. Cool. I haven't read that. I'll make sure to get that. That's cool. All right, what about your favorite business book, non-real estate? Non-real estate. Well, you may know, I got a few. You know, we study books as a company. Last year, we studied a book called Turning Pro, which is this one, Stephen Presfield. We're just trying to get our employees to think differently. We just got done with one called Tribal Leaves. leadership, which is a great book. Talks about tribes and how the natural hierarchy of tribes. And we just did that last week. We brought 100 of our people into Scottsdale and study that.

And then I just did a book study with Robert Kiyosaki, actually. We studied, he gave me this book and I read it, which is a great book called Crash Course and Chris Martinson. And this has a lot to do about trade and foreign currencies and things like that. It's a very big picture of trend stuff. The guy's a scientist, and he puts it all together in grass and stuff. Nice. So these are the books that I just got done reading. So those are great.

Awesome. All choices we haven't yet heard, so that's fantastic. What about hobbies? What do you do for fun? It sounds like you got some kids, so I'm sure spending time with them as part of it. Oh, yeah. Kids are a big hobby. You know, my goal is to make them entrepreneurs.

And, you know, my fourth book was, it's called The Sleeping Giant, is all about entrepreneurship. And so they're on their third business. They're 15 and 12. And, you know, it's, so I'm having a great time just talking to them about all the things that come up day to day. You know, we had a meeting with a marketing, a PR company here in Scottsdale. and they did the presentation. Oh, nice. I'm slowly, that's a biggie for me, a big passion of mine.

I don't want them to be spoiled, rich kids. And, you know, I don't want them to be entitled. And I want them to also have the freedom to do what they want when they want it. So that's a biggie, but also, you know, I love outdoor water skiing, you know, snow skiing, going up to Whistler in a couple weeks and golf. I'm playing golf tomorrow. I'm in a match. I'm in a tournament.

Good luck. Right on. Yeah, yeah. That's very cool. All right. Well, awesome. Last question from me and the last question of the famous four. What do you believe sets apart successful real estate investors from those who maybe never gain any traction or just don't find success?

Yeah. It's actually, it's funny. You bring that up because it's in this book, Tribal. You know, there's five levels that they determine in there. And the third level is what they call, I'm great and you're not. Nice. A nan-na-n-na-poo-poo level. The guy who this guy was a professor at Stanford, he interviewed 20,000 companies.

And he felt like 50% of everybody falls into this category, which is a very eye mentality. And then the fourth level is more of a we mentality. So the whole theme of my company event was going from we to me. and, or from me to we, sorry. So anyway, the point is, is that I think back, this is all team base. So every, every successful person I've ever seen, and you, you know, I mean, you know, the list is huge, you know, like guys like Richard Branson and, you know, Steve Jobs, and you look at these guys and, you know, they leverage their talent with people around them to do,

you know, to make an impact. And of course, those are big names, but there's a lot of small. guys that do it too. And so if, if, uh, where I've seen people kind of go up and down and rise up and down based on the economy or a trend, it's because they, they think that they're the reason that they're successful. And, um, and, um, and, you know, and they're very, very egocentric and they're very eye-based. Um, and they don't value the, the, the power of a team. And for me, um, you know, one of the reasons that we're in business and we got, we grew, we doubled. We doubled. in the recession, we bought $300 million with the real estate in the recession.

And that was when I went out and found the best people because they were on the market and built my company up to where it is. And I think that that's the biggest mistake is they try to do everything themselves and they don't realize that there are people out there that are very, very good at certain things that will free them up to grow. That's great. That's great. And can I say, Brandon, I value you.

Thank you, Josh. I'm glad you leverage my balance. Well, Ken, listen, it's really been a pleasure. You know, we kept it brief. We didn't really get to dig in too deeply on a lot of the topics that I think, Brandon, myself, and I'm sure all the listeners would have loved us to. And perhaps down the line at some point, we can have you back. and we can do an intensive or some kind of focus on one or the other.

It's easy for me. I just do it right from my desk. There you go. There you go. Well, where can people find out more information about you? Well, my company is MC companies, MC, C-O-M-P-A-N-I-E-S. So you can check that out, www.mccom. And then I have a personal website, which is Ken McElroyd.com.

and I'm watching a video series actually next year for a lot of these questions I get just two to four minute videos on a number of topics. So, you know, because I get a ton of emails that you can imagine from the books and the Kiyosaki stuff. So this gives me a format to kind of direct everybody to that. And that's going to be called Ken Flicks. That's coming out in January. So I'm excited about that. Oh, right on.

That's great. Cool. Well, Ken, it's been a real pleasure. I'm very glad that we were able to have you on and look forward to keeping in touch. Yeah, yeah. Thanks, guys. And just reach out whenever you want to chat again on any topic. Happy to do it.

Awesome. Fabulous. Thank you, Ken. All right, everybody. That was Show 52 of the Bigger Pockets podcast with Ken McElroy, bestselling author and very, very experienced real estate investor. And let me add a very, very nice guy. as you guys can tell, he's

super cool and it's kind of neat. You know, when you know, you've got these folks who, you know, we all kind of look up and admire because they've written or done something, you know, special like Ken in his books. And they turn out to be pretty decent people too. So it's really, it was nice

to get to chat with him. It was also cool. I don't know if people noticed. I mean, I'm sure they noticed, but I just wanted to point. out the fact that he says he donates all his the stuff he gets from the whole rich dad thing and the books he donates that all the charity that is awesome that is definitely definitely awesome yeah it's i don't know i i i'm sure other people do that but but i i imagine they're selling thousands and thousands of books and and and the amount of money that they make that he makes is is

probably not insignificant so that's that's fabulous yeah very cool yeah um All right. Well, as usual, thanks again for checking us out. If you are new to the show or unfamiliar with Bigger Pockets, please come and join us on the site. BiggerPockets.com, an amazing network of real estate investors. And there's tons and tons and tons of free information to check out, join today, get involved, and introduce yourself to the community. otherwise of course join us on Facebook Facebook.com slash bigger pockets definitely get with us on Twitter Gplus YouTube and all the other major networks as well and of course come back next week

for our next show show 53 which should be a good one as well we appreciate you listening thanks again I'm Josh Dorkin your host Brandon take it out all right Well, this is Brandon signing off. You're listening to Bigger Pockets Radio, simplifying real estate for investors large and small. If you're here looking to learn about real estate investing, without all the hype, you're in the right place.

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