Ken started out in real estate investing with a two bedroom condo that he purchased using his own money. Now the company he founded with his partner Ross has over ten thousand units and 300 employees throughout the South West. He’s learned a lot about real estate as a property manager and has never looked back. Ross works on the construction of properties while Ken focuses on finding the opportunities and working with investors.
Currently, they are avoiding multi-family dwellings as the market seems overpriced. They are still looking for opportunities but are being careful. They are even selling some of their properties which are in overpriced markets.
Their focus is on the overall return to the investor, so the projects they invest in have to make money. They do their own analysis and do not rely on others optimism. He says, “You need to figure out all of the details to know if a property is going to be viable.” Many people have unrealistic expectations about where the market is going so this is why they are currently avoiding buying.
Value-add has become a catch-all phrase for everything. For him, it means renovating an existing building in a way that rents will increase as a result. Some markets and regions today won’t bring in that extra rent. An example of this is that renters are not going to pay more for better parking lots and new rooves, but they will pay higher rent for interior upgrades.
He says, “The business model is pretty simple.” There are areas where everyone wants to be, where things are expanding and progressive. Then some areas are not as progressive, and there you won’t get the rent growth.
You don’t pay tax on debt which is a great way to build wealth. The entire system is set up for people to use the money that everyone else is parking. Syndication is just a fancy way of raising money.
The team and the culture of a company are more important than the deal itself. Having a company where the people love what they do will reflect on the companies performance.
They have around 1000 investors who are all accredited. He wishes they had new deals, but they just haven’t found them so far. It’s better to be diligent in this market.
It’s essential to avoid overpaying for assets, and many companies will blame the property management company for not turning a profit when they should have gotten a better deal, to begin with. He says, “It’s also important to not overwork your property management teams.”
Talking Points From This Weeks Episode
• Multi-Family real estate is currently over-priced in many areas.
• You need to really study the real estate and rental markets.
• Don’t overpay for assets.
• For Ken value-add means to renovate and improve rental units for higher rents.
About Our Guest
Ken McElroy is Principal of MC Companies.
For over two decades, Ken McElroy has experienced great success in the real estate world–from investment analysis and property management to acquisitions and property development. With over $750 million investment dollars in real estate, Ken offers a unique perspective on how you will get the biggest return on your investments.
Ken’s commitment to the success of MC Companies is rooted in his desire to help others live their best lives. His passion for real estate, speaking, writing and philanthropy is always embedded in his daily guidance whether it be in a meeting at MC or a speaking engagement across the world. He’s been featured on Cheddar, Fox and Friends, Forbes, ESPN and many more. He’s a consistent contributor to Jetset Magazine and Rich Dad Radio.
Ken is the author of the best-selling books The ABC’s of Real Estate Investing, The Advanced Guide to Real Estate Investing, The ABC’s of Property Management, and most recently his book on entrepreneurship: The Sleeping Giant, where he shares his real-life examples and ideology of how to be successful in business and in life. As the Real Estate Advisor to Robert Kiyosaki of The Rich Dad Company, Ken is also a chapter contributor in the newly released Rich Dad book, More Important Than Money: an Entrepreneur’s Team.
Never taking life for granted, Ken is active in the community. He currently serves on the Board of Directors for the Southwest Autism Research and Resource Center (SARRC). Ken was the Walk Chair for Autism Speaks Arizona for both 2015 and 2016. In the MC Family, he is a strong advocate for The Sharing the Good Life Foundation allowing all MC employees the opportunity to join him in the pursuit of giving back to the community. He and his family reside in Scottsdale, Arizona.
If you would like to know more about how Ken shares his formula for success visit kenmcelroy.com