Welcome to the Managing CRE Risk podcast with Jeremy Goodrich. Today, we have a veteran CRE investor with us who has more than 25 years of experience, Ken Gee. In our conversation, Ken breaks down risk in different parts of the lifecycle of a commercial real estate deal. He lays out how to succeed in the CRE world and mitigate the risks through due diligence, raising capital, and asset management. You don’t want to miss out on this episode!
Learn more about Ken and his story at shineinsurance.com/managing-commercial-real-estate-risk!
“I’ve always told our investors, it’s my job to try to protect the downside and make sure we have a good upside plan in place.”
Ken has around 2000 doors in his portfolio and he’s been investing in commercial real estate for more than 25 years. He describes himself as a risk-averse person. According to him, one of the hardest aspects of real estate investing is bringing yourself to the awareness of the risks that you want to mitigate.
Ken’s advice on how to successfully identify and mitigate risk:
- Educate yourself on the industry, market, and property.
- Focus on your operation and constantly evaluate your business plan.
- Have a solid insurance policy.
- Identifying risk comes easier with experience, so don’t give up.
“There’s going to be things wrong everywhere. It’s just a fact of life. What our job is, is to identify risks that matter.”
Ken talks about how to manage the risks surrounding the lifecycle of the property.
- Due diligence
Look at the physical property and see if there are hidden things there that are difficult to correct or significantly impact your business plan.
Ken’s advice is to find a mentor at the beginning of your investing journey to help you build out your due diligence process. Document the entire procedure.
- Raising capital
It’s important for passive investors to understand what it means to be invested in a multifamily real estate deal. Ask all the uncomfortable questions from the sponsor to evaluate if they’re professional and knowledgeable enough. Figure out if they’re transparent and have a good track record.
- Asset management
Give yourself 30-60 days to learn everything about the property before you start the renovation. Based on this information, modify your business plan.
Ken shares his insight on CRE risks in the near future. Interest rates have doubled in the last year and we might go into a recession. In the real estate industry, the most important thing is occupancy, so make sure you’re buying in a growth market and keep your occupancy high.
About our guest, Ken Gee
Mr. Gee is the founder and managing partner of KRI Partners and the KRI group of companies. He has more than 24 years of significant real estate, banking, private equity transaction and principal investing experience. Throughout his career, he has been involved in transactions valued in excess of $2.0 billion, much of which has included the acquisition, management and financing of various multi-family real estate projects as well as playing a significant role as a member of due diligence and transaction structure planning teams for several private equity firms specializing in the small and middle markets.
Prior to forming KRI Partners, Mr. Gee was a tax manager with Deloitte & Touche LLP where he focused his practice on state and local tax planning, merger and acquisition due diligence and transaction structure planning for private equity and middle market companies. Some of his major clients included The Riverside Company, Key Equity Capital Partners, Blue Point Capital, Linsalata Capital Partners, The Zaremba Group, Charter One Bank and Applied Industrial Technologies, Inc.
Prior to his career at Deloitte & Touche, Mr. Gee spent several years at National City Bank (now part of PNC Bank) where he served as commercial loan officer, credit analyst, branch manager, and mortgage loan originator during his career with the bank.
Unrelated to his real estate experience, Mr. Gee also owned and operated several certified Cessna Pilot Centers in the Northeast Ohio area. These Cessna Pilot Centers operated an FAA approved professional pilot school and specialized in the sale of new and pre-owned aircraft.
Mr. Gee is a licensed Ohio Certified Public Accountant. He received his master’s degree from Case Western Reserve University’s Weatherhead School of Management and his B.B.A. from the University of Toledo. He is a member of the National Apartment Association, Florida Apartment Association, Bay Area Apartment Association, Apartment Association of Greater Orlando, First Cost Apartment Association, Northeast Ohio Apartment Association, Ohio Society of Certified Public Accountants and American Institute of Certified Public Accountants.
Mentioned in the show:
- His LinkedIn
- Jeremy’s LinkedIn
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Special thanks to Ken Gee for taking the time to share so many great insights with us
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