Show Summary

Ken Corsini joins us to talk about the importance of analyzing your real estate investing business, so you know how to prepare for market shifts. If you continuously analyze what’s working and what’s not, from exit strategies, marketing channels, etc, you’ll be ahead of the game…and ready to shift gears as the market demands. Don’t miss this awesome episode!

Highlights of this show

  • Meet Ken Corsini, Founder of Georgia Residential Partners and the Deal Farm real estate Expert Interview.
  • Learn how Ken has built up a successful real estate investing business that wholesales, rehabs, provides turn key rentals, and even builds new construction.
  • Join the conversation of how real estate investing has changed Ken’s life by providing both financial and time freedom

Resources and Links from this show:

Listen to the Audio Version of this Episode

FlipNerd Show Transcript:

Mike: Hey, everyone, it’s Mike Hambright with FlipNerd.com Thanks for joining us for this episode of the Expert Interview Show, where I interview leaders and entrepreneurs from across the real estate investing industry.

If you’re new, if this is the first time you’ve listened, welcome. This is show number 285. So we have a lot of great content. If you’re new I’d encourage you to, of course, after watching this episode, go check out some of our other ones.

If you’re already a member of FlipNerd.com or you’ve been listening or watching for a while, welcome back. This is actually the first new episode of 2016. Hopefully you enjoyed some of the award shows we’ve been showing lately which were the best of 2015. We had some great guests on. And again, this is show number 285. We have lots of great past shows to check out as well.

I want to talk about a few changes, if you’ve been listening for a while, since this is the first show of the year. The format is going to change a little bit towards taking action. I feel like its something we just haven’t talked about enough and it’s actually one of the reasons that a lot of real estate investors fail, is they listen and learn to a lot of things and they never take action. So we’re going to start to focus more on taking action.

In fact, we’ve split the show up into two parts. The first part is getting to know our guests a little bit and the second part is specifically called “Taking action” where our guests will have some discussion on how to help you take action and be more specific, maybe even some quick lessons.

We’re also going to have one show per week versus two shows in the past, in 2016. We’re going to try to improve the quality and really deliver a better product for you.

With that note, if you didn’t already know, we actually also launched another show called REI Classroom and we publish two short lessons everyday there, Monday through Friday, so 40 lessons a month. I’m not actually on the screen. It’s actually our guests.

We’re interviewing them and they’re sharing quick lessons. So if you’re not already watching the REI Classroom, you can go to FlipNerd.com/classroom or look for REI Classroom in iTunes or whatever podcast network you’re listening to.

For today’s show I have a good friend of mine, Ken Corsini is back. He’s been on the show before. In fact, you’re probably going to see us have some guests we’ve had in the past back on because I know who they are, I know more about them and we’re trying to cherry-pick the best of the best. We saved the best for first on this episode with Ken.

Ken: I figured you were going to hold out and ask me to be first.

Mike: Yes, we’re just going to come right out of the gate with number one. Ken Corsini, everybody.

Ken: Well, I’m honored to be first, man. I feel extra special.

Mike: Ken is an Atlanta based real estate investor. He has a ton of experience. He’s the host of The Deal Farm real estate podcast and much more. I’ll let him tell you a little bit more about it shortly. Ken, welcome to the show.

Ken: Thank for having me, Mike. I appreciate it.

Mike: Yeah, great to have you on. It’s good to see you, as always.

Ken: Yeah, good to be back.

Mike: So tell us a little bit about you. Who is Ken?

Ken: Oh man, that’s deep. Well, do you have two hours? I’ll get started.

Mike: No, we don’t.

Ken: Just lay back and [inaudible 00:03:01].

Mike: [inaudible 00:03:01] forward is only a 10 minute show.

Ken: Okay, let me be really quick. I know I was on the show last year, so I don’t want to repeat too much. I’m a real estate investor first and foremost. I’ve been at real estate investing for over 10 years. I started my business back in 2005 and grew it to what was probably the biggest turnkey operation in Atlanta, Georgia.

We continue to do a little over 100 houses a year, some level of turnkey houses, wholesaling and new construction. A bit of everything. We dabble in real estate and like I said, we’re based here in Atlanta.

Mike: Sure, that’s great. I don’t want to steal your thunder but I know we’re going to get into in the Taking Action part, the importance of having a diverse business, being ready to ebb and flow as markets change. I think a lot of us that have been around for a while, we know the market change is coming. We don’t know when, but we know it’s coming, right?

Ken: Absolutely. Well, in just the last 10 years you look at the market cycles we’ve been through. The ups, the downs and the swings and now we’re on an upward swing again. Now we’re all a little bit cautious. We’ve seen this before.

Mike: Yeah.

Ken: You sort of brace for it. You make sure you’re ready and it’s really all about just being adaptable to the market that you’re in, because it really changes from one year to the next.

Mike: Yeah, yep. Why don’t we do this Ken? In the Taking Action part, I know we’re going to talk about being prepared and what to do and how to prepare for being able to pivot as the market changes. But, maybe you could spend some time now talking, specifically about your business and how it’s evolved over the last few years.

I know you’re doing things today that you didn’t do at all in years past and may switch back to those things when they make sense again. Maybe you could share a little bit about how your business has evolved over time.

Ken: Absolutely. In 2005 I was working for Marsh & McLennan, which is an insurance brokerage on the software side of things and like a lot of your listeners, I just knew I wanted to be in real estate. I wanted to unplug from the 9 to 5 corporate job, and I did that sort of unconventionally. I bought into a franchise, or something similar to a franchise, and they were doing training on assignments.

It was not the assignments you think of today in terms of how wholesalers do business, it was assignments in that we would find potential lease purchase buyers. People that couldn’t buy a house but wanted to do a lease purchase and we would partner them with investors who would then buy a house on their behalf, and then do a lease purchase with that investor. We’d create an assignment fee in the middle.

It was a pretty cool business model. In 2005 when everybody just assumed prices were always going to go up and investors didn’t mind buying at market value and “Hey, I’ve got this buyer and he’s going to buy it from me for 10% more than what I paid for it because real estate always appreciates.” There’s nothing wrong with this business model.

Mike: Always.

Ken: Then in 2007, two years later, that company goes out of business. Actually, I think a couple of them are in jail right now, I just found that out, which doesn’t surprise me. But, for me, I was like, okay, I’ve had two years of real world experience. The market is tanking around me and all these big-wigs in Atlanta that were flipping and wholesaling, every one of them has lost their shirts. But now you look at our MLS, it’s just littered with inexpensive houses.

So for me, the light bulb went off “Okay, I can tweak my business. I can figure this out” and I started, of course, I thought I’d coined the phrase “turnkey investing.” I found out later I didn’t. You were doing the same thing I was doing?

Mike: Yeah.

Ken: And so in 2007 . . .

Mike: I think you were the one who kicked it off in Europe. You’re huge in Europe.

Ken: That’s right. Oh my gosh, in Scotland they love me. You should check me out there. So the turnkey model, for us, really took off as a result of there being so much inexpensive inventory on the MLS. I already knew how to find investors and raise the money and so that really began what has been eight straight years of doing turnkey houses.

The first year was maybe 30 houses, the second year was maybe 35 houses. We ramped up gradually to where now for the last four years we have done 100 houses or more. Last year, I think we did 111 houses. Most of that being turnkey investments.

Again, for your listeners, turnkey is a model where we’re buying a distressed property, we’re fixing it up on our nickel, we’re putting a tenant in place, we’re stabilizing that asset. It’s producing cash flow and then we sell that cash flowing asset to an investor. Most of our investors came from out of state, some even came from out of the country. I would say 90% of our investors come from California where they can’t even fathom buying a house for $60,000 with $800 in rent.

Mike: And the tenant is already in and ready to go.

Ken: Tenants are already in it. We’ve got the property management in place. We’ve got the financing in place. It really is turnkey, done-for-you model. And that’s been our bread and butter for the last so many years. But as you know, every year still looks a little different. The market was in the toilet for three or four years.

But then the hedge funds sort of descended on a couple of big markets and I’m sure they landed in Dallas. They certainly landed in Atlanta and that created all sorts of competition for us. Where are we going to get our inventory if the Blackstones of the world are buying everything?

Mike: Right.

Ken: And so we’ve had to reinvent ourselves multiple times in terms of how we acquire, what we’re acquiring and who we’re selling to. To where now, I think turnkey probably comprises about 50% of our business and the other 50% is a mixture of wholesale deals, new construction and fix and flip retail. Flipping a house is just selling to an end buyer, we do a good bit of that now as well.

We still keep the volume up. We’re still, like I said, over 100 houses a year. Its just a different mix of inventory. The other big, big component that’s different than it has been in previous years, is how we find our inventory.

Mike: Sure.

Ken: Where before I could just close my eyes and be like “I’ll take that house, and that house,” and get some great houses. Now that’s gone. There are no good deals on the MLS any more. And so it’s all about finding off-market deals in Atlanta. It takes a lot more resources and marketing dollars to find those deals to keep the engine running for us. So we’ve had to become experts at that.

Mike: Yeah, that’s typical of these market cycles, right? I came in when the market was about to hit the fan. I guess I could cuss on my own show.

Ken: It’s your show man, go for it.

Mike: Yeah, I’ve been involved in riding this back up. Other people have a lot more experience than me, that have ridden up and down many cycles. I think that is the pain that a lot of people are feeling right now is inventory is tight, acquisition costs, marketing and stuff like that seems like it’s higher than it’s ever been.

And that’s just a symbol of what’s going on in the market which kind of tells you that we’re somewhere. I don’t know if we’re at the top. Of course, it differs greatly by market too, obviously, but we’re not at the bottom any more for sure.

Ken: Absolutely, yeah. The conditions aren’t necessarily the same as they were back in 2006, 2007, 2008, where they were handing out loans like candy. I think we’re smarter this go-around and I think some of the fundamental economic drivers that are driving growth are good.

Like in Atlanta, where we are legitimately adding jobs, we’re legitimately adding populations. So we do have a thriving real estate market as a result. So I think we’re going to see upward trends for a while. But at what rate? I don’t know. Probably not at the continued 10% appreciation. I doubt that.

Mike: Right, yeah. We’ll see, the downward slope will start. Something will kick off in California and then [inaudible 00:11:11] across the country, right?

Ken: Yeah. All it takes is some ISIS dude slipping in through Texas and doing something and it could rattle everything. You always have to be prepared for that, as an investor in the back of my mind, I’m always thinking “worst case scenario, what do you do?” But people always have to have somewhere to live. That’s the flip-side of the turnkey model that I think is so great. People always need somewhere to live. And whether the economy sucks or it’s great, if you’ve got a house that will rent, you’ve always got income.

Mike: What’s interesting to me is, I guess I’m a classically trained real estate investor and, it emulates into everything if your life. I can’t pay retail for anything. It’s like I’ve got to negotiate everything, I’ve got to buy everything at a discount.

Ken: Absolutely.

Mike: But when you start the turnkey model that you run, when you start to think about it, if you don’t have any marketing costs, you don’t have overhead with your staff, you don’t have all these things. You don’t have to have a property that’s vacant for months trying to rehab it and find a tenant and all those things. If somebody just hands over a turnkey property, you could obviously pay a lot more for the property, right?

Ken: Yeah.

Mike: And that’s the beauty of the turnkey model. Just like when I go out to eat, I don’t go back into the kitchen and start processing the food myself. They’re adding value and I’m willing to pay more for that.

Ken: Sure. Well, that’s exactly what the model is. And you’re eliminating almost all of the risk, the upfront risk. Buying a house, what if there is a foundation issue you didn’t know about? What if you can’t rent it for some reason? All those things are taken out of the equation. And you’re buying a proven, cash flowing asset.

Mike: Hey Ken, before we jump into the Taking Action part, could you just take a minute or two and talk about your podcast and how folks can connect to you if they want to?

Ken: Yeah, absolutely. So almost a year ago, in March of last year we started the Deal Farm podcast, which is at dealfarm.net. And similar to what you’re doing now, we do a once-a-week podcast where it’s either expositional where we’re talking about something specific to real estate and we tackle a topic, maybe do some training. Most of them though are interviews where we take a guy like Mike, which we’ve interviewed you before on the Deal Farm.

Mike: I think that was your number one show, right?

Ken: I think it was somewhere towards the very top, absolutely. And we just talk, it’s very relatable. I think some of the most inspiring stories are your average Joes who unplugged from the corporate rat race and what was the impetus for that. And what did it look like when they went into real estate full time, or maybe part time.

Our shtick for each of the shows is “What was your best deal ever?” Because I love to hear real world examples of a deal that somebody did. How did you find the deal? How did you source the funds? How much did you make on it? Because I’m just putting myself back in the shoes of Ken Corsini 2004, who was excited about real estate and didn’t know anything. I loved, I gobbled up those stories and it inspired me to get into real estate.

Mike: I agree. I love those too. I had a guy on, this was year three for us, hard to believe, in the first year Luke Cohen and I can’t remember the exact numbers, but he was a mechanic. I’d encourage folks to go back and check out this episode. It was very inspiring.

He was a mechanic at a car dealership, I think he was like 20 or 21, and he just set this goal “I’m going to retire by the age of 25. In five years I’m going to walk in and give my resignation when I turn 25.” His thing was mobile homes. So he bought a lot of mobile homes and seller financing them. Literally, I interviewed him right after his 25th birthday. He literally walked in on his birthday and resigned. It was like clockwork and he played it all out.

Ken: Wow.

Mike: So it was really inspiring. I was thinking for guys like us that are getting old, I’m probably a little more gray than you Ken, but you’re like “Man, 25, if I had just started when I was 20, right?”

Ken: Totally. Yeah. It’s funny, just yesterday I interviewed Paula Pant, she’s been an expert contributor for Bigger Pockets. She’s got her own, very popular, real estate blog. She basically decided she’s going to save up $25,000 and travel the world for two years and she did it.

Mike: Yeah.

Ken: She’s in her 20s. She put away 25 grand from a job, quit her job and literally traveled the world for two straight years.

Mike: Wow.

Ken: To me that’s so stinking inspiring, that somebody just pulls off what everybody else is dreaming of doing and she actually did it. So hearing those stories to me, just inspires people.

Mike: Yeah and that’s why we are about to get into the Taking Action part here, because you and I both know a lot of people, I’m in Texas so I don’t use this but I’ll say it, they’re fixing to do something. They’re going to get around to it as soon as something happens. That may be the first time I’ve ever actually used that phrase.

Ken: It did not sound natural at all.

Mike: I like it. I like it. Even y’all, I never said that for a long time. Because I moved here from the Midwest, a long time ago now, 1999. The first time I heard y’all come out of my mouth, I was like “I can’t believe I just said that.”

Ken: A true Texan now.

Mike: But I might have been drinking. I don’t know.

Ken: That’s funny.

Mike: All right, Ken. You ready to take action?

Ken: I’m ready man.

Mike: Then tell us how to take action.

Ken: I’m ready to tell you.

Mike: Awesome, yeah, I know you’ve got all of the answers. I always look to you for the answers. So why don’t you tell us what we’re going to talk about today? I know your business has changed a lot over the years, we were just talking about. As we’ve talked about, a lot of folks, you need to anticipate what’s coming around the corner so that your business can ebb and flow as the market changes. So tell us a little bit more about what you want to talk about today.

Ken: Well, I think for any real estate investor, or wholesaler or flipper or whatever you’re doing, it’s important to realize that what you’re doing today isn’t necessarily what you’re going to be doing two years from now. And if you think that you’re going to be doing it two years from now, without analyzing the market around you, you might find your strategy obsolete and out of the business. I saw it.

I remember in 2005 all the guys, they were one-trick ponies. They knew one or two things and did them well. When that dried up, they were gone. They were nowhere to be found.

I think the reason we’ve been able to stay in business and keep our volume up for the last 10 years is because we have to stay nimble enough and smart enough to adapt to the changing market around us, and change your model up almost year to year.

And so here we are at the beginning, it’s January 2016, we just did an analysis on 2015. What worked? What didn’t work? What are we going to change in the coming year to stay relevant? I think it’s important for any business owner to do that.

Mike: Yeah, whether you’re in real estate or not. But I think what you just said is critical and I think a lot of people would agree with it. What I would encourage people to do is set aside time, literally just put it in your calendar, whatever it might be, a day, a week or however much time you need. It, ultimately, doesn’t take a lot of time but just have it blocked out that “Hey, the 15th of December every year, this is annual review day for our business.”

If you have a partner or a spouse that you work with, just to analyze your business and think more about what happened. My wife and I do that, this is going to be really nerdy, literally we have time set aside every second week of December where we do just that. Have a look at what worked, what didn’t work, what advertising do we need to get rid of or lean in to and I think that’s all critical stuff.

Ken: Absolutely.

Mike: We didn’t even rehearse this and we’re totally on the same page here.

Ken: Yeah. Well, I imagine that, probably, the majority of business owners are flying by the seat of their pants and don’t take the time to do it.

Mike: Yep.

Ken: And it’s such a critical component to your business.

Mike: Yeah, what’s interesting to me, when I came in in 2008, that’s when I started, we were blessed. I’m not bragging, we were fortunate to have access to some capital through friends and family. We had a couple of bank relationships that actually were willing to work with us, shockingly, because most weren’t. But, people were failing all around us. And we were able to come in and just dominate. I mean, I had literally no experience and we bought 65 houses in our first year.

Ken: Wow.

Mike: In a down market and that was because the competition was largely gone and because we had access to capital. I hear a lot of wholesalers now, people that primarily focus on wholesaling, which a lot of newer people do, and there’s nothing wrong with that. But when I hear them say things like “Well, I don’t need capital. I don’t need money because I just wholesale.” It’s like well, you are missing out. There’s going to be opportunities that you miss out on, right?

Ken: Yeah, absolutely. Well, and to that point too, wholesaling is a business that I don’t think is ever going to go away. You can always be a wholesaler. The question is how are you finding your deals? Because, that’s going to change from one year to the next.

I’ve already seen that change dramatically, even in the last year where you get so many wholesalers flooding the market because they went to the ballroom and bought the course and now they’re putting up bandit signs and sending out a few postcards. But so many people are doing it, they’re just tripping over each other. So much competition.

So stopping and figuring out “Hey, this marketing is not working any more. How should I change this, what should I be doing differently?”

Mike: And it’s a symbol of the time too, that a lot of folks are getting into it right now and doing that type of stuff, are doing super-thin stuff, super-thin margins. Maybe they don’t have a lot of risk or a lot of cost, so maybe that’s fine. But the point is it doesn’t take much for market values to shift one way or the other, to just wipe out your margin. That’s the first thing to go if that’s the only tool in your toolbox, right?

Ken: That’s right. Yeah, if you’re spending x amount of dollars for a thin deal and the market shifts just enough where you’ve got to spend a little bit more. Well, maybe you’re not making $10 an hour any more all of a sudden, because your margins have gotten so thin. You’ve got to analyze that.

Mike: Right. Well, Ken, let’s talk specifically about how folks can take action. Maybe some of the things that you’ve done. I know you started off with doing a lot of wholesaling, moving into turnkey, now you’re actually doing new builds. My guess is, you haven’t told me this, but you know that at some point the new build stuff is going to pull back or go away and you’re going to have to rely on other things. I don’t know if that is true but something like that is going to happen, right?

Ken: Yes, absolutely. So we started shifting away from just turnkey to wholesaling a little over a year ago, maybe a year and a half ago. The retail numbers went up again so right now, probably 50% of the business might be turnkey and the other 50% is some combination of retail, wholesale and new construction. But even within turnkey for us, we’ve got houses that we sell that are A class properties, B class properties and C class properties. So at the end of the year we did an analysis of “Okay, which one of these is working for us, which ones aren’t?”

And we found that our B class properties weren’t nearly as profitable as other areas of the business and yet you spend just as many hours, just as many resources on them. And the same with wholesaling. Sometimes with wholesale we don’t spend nearly as many resources, but we might make as much on a wholesale deal as we do taking on all the risk of fixing and flipping a house.

Really, what we’ve discovered is the highest profit center for us right now is new construction and it’s because of the market we’re in. In Atlanta there is so little inventory and there is such a high demand for new housing. Now there are a lot of national builders that are, don’t get me wrong, creating competition. Here’s what’s happening in Atlanta, that we’ve sort of got our finger on. You don’t have a lot of small builders. You’ve got a lot of national builders.

So our niche is coming in and doing onesie twosies. Whether it’s infill or it’s finding a few extra lots in an existing neighborhood or we’ve even developed small, little minor sub-divisions of five houses. And on bigger lots, a little bit more of a custom looking houses, and we’re crushing it because it’s niche. Because Joe Blow who went to the ballroom and figured out how to wholesale, can’t necessarily build a house. He can’t pull the capital together to develop a five little house sub-division. He doesn’t have a general contractor’s license.

So for us part of it is, what is our competitive edge? What do we do that very few other people can do? And one of things we discovered is “Hey, this little niche new construction product for us, is highly profitable and there’s very little competition for it.”

Mike: Yeah that’s great and I would say, for folks that are listening to this, you said a couple of critical things I want to reiterate there. Finding a niche, finding a way that you can perform differently. Because, I’ll say I’m not a newbie anymore for sure, but we have never done new construction. For years when we get leads, when somebody says “Oh, I’ve got a lot for sale,” we’re like “Well, we don’t buy lots. We don’t buy mobile homes.” We literally just turn that stuff away.

But, there are people that carve out, you’ve done it with new build and there are people that do it with mobile homes and obviously there’s people that do it in every space, is to carve out a niche there that you’re different than everybody else.

Ken: Absolutely. Yeah, and every market is different. Some markets, your B class properties might be the niche that you can just crush it in. I mean, if I was in Indianapolis or some Midwestern town with really good rental properties, I’d be there crushing it with rental properties, probably. It just depends on what market you’re in and what that market is giving you in a particular year.

Mike: Sure. I think we see that now. I think we both know some turnkey players in the Midwest and that’s a hot spot right now as money is flowing there because this is going to be different by market, but there is not generally as much new build construction in the Midwest as there are in the Southeast. So the strategies are very different there. So if you’re listening, it’s very market specific, right?

Ken: Yeah. The other thing is not to get so big and burdensome that you can’t turn the ship when you need to. That’s one thing I’m always very cognizant of. We do high volume, we’ve got ten people on staff that all work, it’s a big ship to steer. But you always have to be nimble enough to turn on a dime. If this strategy is not working anymore, then you’ve got to turn and start working towards a strategy that is working that particular year.

Mike: Yeah. I know that when I came in, there were a lot of folks that made it through but they had some battle scars. And even until today, and maybe some of this is starting to change, based on some of the people that I know, is that they’re very hesitant to add overhead, trying to be lean and mean as possible.

I’m not saying that everybody shouldn’t do that to some level, but I think, when you review your business, like you talked about, it’s important to review “Are there any areas where I can cut costs or get more efficient?” Always be focused on that part. I mean you don’t want to do it at the expense of you can’t grow because you’ve restrained yourself. But I think we all tend to get a little bloated over time.

Ken: Absolutely. It’s funny because last year we had accumulated a number of houses, just over the years, that weren’t the stellar houses. And last year, beginning of the year, this was the year that we were going to take our medicine. We’re just going to dump because I don’t want to carry them any longer.

And so we dumped a lot of dogs and took losses on them, but we just carried them for so long. It’s like you just want a clean house, start fresh and feel good about the business moving forward and sometimes you just have to do that. And just get lean and mean.

Mike: Let’s talk about money. What would you say right now, and again this market cycle is treating markets differently everywhere. But when I came in a lot of people lost access to their credit lines and that wiped a lot of people out.

A lot of them had their eggs in maybe one or two baskets, where they had a huge line but it was with one bank, one lender that pulled out. They really didn’t have any diversification there, and I’m sure you probably went through some things around that time or know some people that did.

Maybe you could, kind of, share your advice on what you think people should be doing right now, early 2016, where the market’s feeling a little ripe in a lot of areas. What should people be thinking about in terms of being prepared on the financial side?

Ken: You should always be raising capital, period, end of story. Regardless of the market you’re in, you should always be raising capital. Because, if you’ve got good capital now, the chances are you could get better capital and a dollar saved really is a dollar earned. Every year that I’ve been in business, I’ve whittled down my cost of money.

And to your point of diversification, it’s funny, I have literally had this conversation this week where I had one of my investors approach me and say “Hey, Ken, I want to be your exclusive source for private money.” And I said “It sounds good and all but I know you have to be diversified because what if a year down the road you’ve got to pull out and I’ve got to go back and raise all this money again? I don’t want to be in that situation.”

Mike: Yeah, raising money is an interesting thing because either people have a difficult time raising money, and then after you get some experience and you get some track record and people want to work with you, then you have this ability all of a sudden to raise far more money than you need. So it’s tough.

Ken: Yes, true.

Mike: Imagine this scenario, I know you can understand this and a lot of people listening will too, is you find somebody and they want to work with you. And they’re like “Hey, I’ve got 3 million bucks. What can you do with that?” And you’re like “Awesome. I just need 100,000 today though. Can you put the rest in a savings account for me?”

Ken: Yeah, exactly.

Mike: So of course, those folks want to put it to work, right? So can you share any tips on how to not raise too much money, where you’re not keeping somebody’s money busy or having too many lenders where they’re all unhappy because you’re not using their line? Effectively you’re not benefiting them.

Ken: You know, I wish I had all the answers because this is the area we struggle with.

Mike: I know people that are listening to this will be going “Oh wah, wah, that’s a tough problem, you raised too much money.”

Ken: It is a good problem. It is, I’m not complaining about it.

Mike: But it is real.

Ken: But it’s a fine line because you don’t necessarily control when good inventory comes your way. I wish I could monitor the deals that come in but they come in when they come in and it’s just sort of a juggling act of the private lenders that are on standby waiting for a deal, versus the deal flow itself. It’s a balancing act, there’s no rhyme or reason to it.

It’s just keeping your guys on standby and trying to feed . . . your good guys, the ones that have consistent money, usually it’s prioritizing and getting their money in play first. And then the guys on the periphery, maybe the new money, probably they take a little bit of a back seat until they have an opportunity to work with you a couple of times. It’s a balancing act.

Mike: Sure. Some folks that I know have found a way to bridge that gap by lending. They’ve got access to money and they don’t need it all, so they can kind of sub-lend that out and make a spread on it, but also just helping the person that wants to lend it, to keep that money active.

Ken: That’s a great point. We’ve done that before as well. But at the same time you want to make sure the money is available for you too, so that in and of itself is a balancing act as well.

Mike: Yes. So Ken, in terms of thinking about what’s working now, evaluating your business, what are some action steps that people can take? We talked about sitting down and evaluating business for the past year. Anything else that people can do to constantly review their business and have their ear to the ground of what’s working and what may be coming up?

Ken: Well, before you can analyze your business you have to measure your business. And so how many people are running a business and not doing a good job measuring? The key is knowing your numbers. How much did you make? How much did you spend? How would you classify these different properties? You have to be tracking that information in order to make heads or tails of it at the end of the year.

Mike: Yeah. So if you’re listening to this and you have zip-lock bags full of receipts from a bunch of projects, you and I both know people that have that.

Ken: Right, totally.

Mike: It’s like October “Hey, do you know a good bookkeeper that can help me get caught up for the year?” My wife would kill me.

Ken: You know, I’m fortunate that my dad is a retired, he was a 30 year IBM’er, so he loves to code. So he’s created this amazing CEO dashboard for me that exports out of your online QuickBooks. So I’ve got the numbers at my fingertips now.

It’s funny, I was probably guilty of not watching it closely enough early on, but eventually it catches up with you and you realize you have to get your head around the numbers. So whatever your system is, get some sort of system in place so you can understand where your business is at.

Mike: Absolutely. We have a bookkeeper and my wife is, kind of, our CFO. We use QuickBooks for everything, but we know within a couple of days of closing out a property, the PNL exactly. It’s important to know that and just learn from it. This is a business that you have to be constantly reviewing, just to say “Do more of that” or “Don’t ever do that again.”

Ken: Absolutely, especially guys throwing marketing dollars, they’re not really tracking where those dollars are going or where their deals are coming from and how much they’re making from those deals. You have to track that information.

Mike: Absolutely. Awesome. Well, Ken, thank you so much for spending time with us today. Any final words of wisdom you want to share?

Ken: Well, I think that’s it. Just get you’re head around your business, make sure your ducks are in order, you know the condition of your flocks, as the bible says, make sure you know you’re business.

Mike: Yeah, awesome. Ken, why don’t you tell folks one more time how they can get a hold of you or how they find more about your podcast.

Ken: Yes, so our podcast is at dealfarm.net. You can check us out. We’re also on iTunes and Stitcher if you wanted to download us. Like I said, it’s once a week and our primary business is Georgia Residential Partners which is at GAinvesting.com. If you ever have an interest in lending or in just buying turnkey properties in Atlanta, we’re your folks.

Mike: Ken, thanks for joining us today. Great to see you and I’ll actually be seeing you in person in a couple of weeks at our mastermind. So thanks so much for being with us today.

Ken: Looking forward to it. Thanks Mike, appreciate it. Take care.

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