Conservative Real Estate Investing and Starting Out with Kenny Estes | BP Podcast 030

TL;DR

Kenny Estes shares conservative real estate investing strategies.

Transcript

Are you looking to become a better real estate investor? Then hang on because you're about to experience another episode of the world's most popular real estate podcast, the Biggerpockets Podcast. But before we get to this week's show, I wanted to invite you to become part of our community, biggerpockets.com, the real estate investing social networ... Read More

Key Insights

• Kenny Estes emphasizes the importance of conservative investing, suggesting that new investors should be cautious and focus on risk management to avoid financial pitfalls.
• Investing in rural areas can offer steady appreciation and rent rates, reducing volatility compared to urban markets, which are more prone to bubbles.
• Estes advocates for having multiple exit strategies when investing, such as planning to rent out a property if a flip doesn't sell, to mitigate risk.
• Building a track record and reputation is crucial for attracting private investors, as trust and proven success are key factors for securing funding.
• The podcast discusses the importance of understanding the difference between investing and having a job in real estate, such as flipping or wholesaling, which are more transactional.
• Estes advises against rushing into real estate with little capital, suggesting that building savings and investing with experienced partners can be a safer approach.
• The challenges of working with contractors are highlighted, with the importance of finding reliable partners who can manage crews and deliver quality work.
• Kenny's long-term goal is to form a REIT and go public, which involves having at least 100 investors and significant assets under management.

Questions & Answers

Q: What is Kenny Estes' approach to real estate investing?

Kenny Estes adopts a conservative approach to real estate investing, focusing on risk management and ensuring that investments are sustainable even in worst-case scenarios. He emphasizes the importance of having multiple exit strategies, such as planning to rent out a property if a flip doesn't sell, to mitigate risk.

Q: Why does Kenny prefer investing in rural areas?

Kenny Estes prefers investing in rural areas because they offer steady appreciation and rent rates, reducing volatility compared to urban markets, which are more prone to bubbles. This stability aligns with his conservative investment philosophy, aiming for long-term passive income without the stress of market fluctuations.

Q: How does Kenny suggest new investors should start in real estate?

Kenny advises new investors to be cautious and focus on building savings before diving into real estate. He suggests investing with experienced partners to learn the ropes and benefit from economies of scale, rather than rushing in with limited capital and taking on high-risk investments.

Q: What are the challenges of working with contractors according to Kenny?

Kenny highlights the difficulty of finding reliable contractors who can manage crews and deliver quality work. He emphasizes the importance of establishing a good working relationship with contractors, as they play a crucial role in managing renovations and maintenance for investment properties.

Q: What is Kenny's long-term goal for his real estate business?

Kenny's long-term goal is to form a Real Estate Investment Trust (REIT) and go public. This requires having at least 100 investors and significant assets under management. By going public, he aims to increase the value of his portfolio and provide greater returns for his investors.

Q: How does Kenny view the difference between investing and having a job in real estate?

Kenny distinguishes between investing and having a job in real estate by explaining that activities like flipping and wholesaling are transactional and akin to having a job. In contrast, investing involves holding assets for long-term returns, aligning with his goal of building passive income and financial freedom.

Q: What role does private money play in Kenny's investment strategy?

Private money is essential to Kenny's investment strategy, allowing him to fund deals and grow his portfolio while maintaining cash flow. He emphasizes the importance of building a track record and reputation to attract private investors, as trust and proven success are key factors for securing funding.

Q: What advice does Kenny give about handling multiple exit strategies?

Kenny advises investors to have multiple exit strategies to mitigate risk. For example, when flipping a property, one should plan on being able to rent it out if it doesn't sell. This approach provides flexibility and ensures that investors are not left in a tight spot if the market turns against them.

Summary & Key Takeaways

• Kenny Estes shares his conservative approach to real estate investing, emphasizing the importance of risk management and building a solid track record. He highlights the benefits of investing in rural areas for steady returns and reduced volatility.

• The episode explores the challenges of working with contractors and the importance of building a reliable team. Estes discusses his strategy of using private money to fund deals and the significance of having multiple exit strategies.

• Kenny's goal is to eventually form a REIT and go public, requiring significant assets and a large investor base. The conversation also touches on the difference between investing and having a job in real estate, such as flipping or wholesaling.