99: Small-Town Long Distance Investing with Alex Kies
Growing up, Alex Kies had no intention of ever becoming a real estate investor. As he said it himself, he was supposed to be a doctor! Instead, he chose the next best thing, and became a musician instead. At 24 years old, he uprooted his life in Missouri and settled into sunny Southern California.
Here, Alex would pursue music to eventually become a regional manager for a non-profit music studio builder called Notes for Notes. While he did enjoy his work here, he found that he was beginning to reach a financial ceiling, as well as a life plateau. He wasn’t making the doctor salary he had prepared for earlier in life. On top of that, he felt that he wasn’t fulfilling his full potential in this line of work. He needed a change.
He read Rich Dad Poor Dad, found BiggerPockets, and decided real estate was what he was going to pursue next. He found a real estate agent back in his hometown in Missouri who was willing to guide him through his first investment purchase. On his birthday, he made an offer on a value-add property that was accepted in 10 minutes! And that is where we meet Alex in this episode.
In the coming years, Alex will continue to help his partners grow their investment portfolio, and he looks to grow his own to 250 rental units!
Our takeaways from our conversation with Alex:
1) Manage optimism AND expectations. While his investing history has been, as Alex put it, “Pretty cruise control,” that goes without saying that starting out, he did have a few bumps in the road. On his first property, he expected to earn $1,200 in rental income per month and to this day, he still does not make that much. It isn’t because it’s a bad deal, $1,200 goes a long way in Missouri. It’s because Alex’s expectations were too high. As a result, the unit stayed vacant five months! And when he finally got it rented out, he only collected $900 per month. Starting out is very exciting, but the drawback is you don’t really know how your first deal will actually turn out. Afterall, you have no experience to refer to. Expect the unexpected and don’t expect too much, too soon. Keep your optimism aligned with reality.
2) Due diligence. For residential real estate, rent prices are more about what the market says they will be, and less about what a landlord says they should be. Just because a seller says their property collects strong rents, doesn’t mean that is actually the case. You have to remember they are trying to sell their property for a reason. Run the numbers, understand your market, and be quick to correct if projections need adjustment. Understand the seller’s situations, the property’s conditions, and the market’s circumstances.
3) Problem solving. When purchasing value-add real estate, you must understand that you are buying someone else’s problem. The better you can become at solving problems, the better of an investor you will become. And similar to expectations, plan for problems that you don’t know will even occur. That entails having reserves to pay to solve these problems, as well as the team to get the job(s) done.
4) While competition is good and can be healthy, there’s no point in purposefully making things difficult for yourself and putting yourself in a competitive disadvantage. Play the hand you’re dealt with and use that to your advantage. You don’t always need the same deck of cards that other people have. And a lot of times, we don’t focus enough on our own cards that we can capitalize on. For Alex, the cards in his deck that he used was that he was from the same town that he invests in and he had an agent he worked with that saw his potential early on. For others, it might be their access to capital, previous work experience, or other hidden skills.
If Alex could go back and talk to his 16 year old self, he’d tell him, “Don’t go to college, major in real estate!”
An unexpected benefit of real estate investing, Alex said, was the opportunity to learn about himself, develop his confidence, and take responsibility for his actions.
A piece of advice Alex would tell his friends looking to get started in real estate would be to hire him as their agent…
Alex recommends using Google Calendar to stay organized and do all the things you need to do every day.
Alex recommends reading Long-Distance Real Estate Investing: How to Buy, Rehab, and Manage Out-of-State Rental Properties by David Greene to learn the same steps he used to buy his first investment property.
If you’d like to get in touch with Alex, follow him on Facebook or Instagram @alexkies
Thank you to everyone that has reached out to us to connect them with our trusted real estate agents in their area! And congratulations to those who have even closed deals using our referrals! For those that didn’t know, we can help connect you with real estate investor friendly agents in your area to help you get started investing in real estate. We recently made some changes to our website that we believe will better suit you in your real estate investing needs. For more information, visit www.millennial-realestate.com and head over to the “Start Investing” Tab. Best wishes and see you in the next one!