Subscribe via:
Show Summary
In this episode of the Investor Fuel Podcast, host Michelle Kesil interviews Pat Grace, a seasoned investor and entrepreneur in Kansas City. Pat shares insights into his one-stop shop for real estate investors, the advantages of the Kansas City market, and his strategies for scaling his business. He discusses the importance of networking, the implementation of AI in his operations, and how he navigated challenges in the real estate market. The conversation highlights the growth of Kansas City as a prime investment location and Pat’s commitment to mentoring new investors.
Resources and Links from this show:
-
Listen to the Audio Version of this Episode
Investor Fuel Show Transcript:
Pat Grace (00:00)
So I’ve got two really important things. No matter where you go, you gotta make sure you have a good market and then you have good feet on the ground. You have a good team. And so what Kansas City offers is that low entry and high cash flow, right? So you’re not like California or New York or Hawaii or even places like Oregon and Seattle and even Minnesota and the U.S. I mean in the middle.I mean some of these places the properties are so high there’s no cash flow and so in Kansas City You have that low entry where we can take positions in homes You know that can’t the home you have to repair value of the homes that I’m in are between I’d say 175 to 275 grand so I’m buying them, you know between I’d say 75,000 to 200,000
and I’m fixing them up and then we’re renting them. And so we might get the 1 % rule here and there, but for the most part, even with rates right now, you could be cashflow neutral and I’m still buying a lot of those properties.
Michelle Kesil (02:41)
Hey everybody, welcome to the Investor Fuel Podcast. I’m your host, Michelle Kesil, and today I’m joined by someone that I’m looking forward to chatting with, Pat Grace, who has been making serious moves as an investor, real estate brokerage, construction company, property management company, one-stop shop in Kansas City.So excited to have you on the show today, Pat.
Pat Grace (03:12)
appreciate you, Michelle. Thank you for having me. I appreciate you guys bringing me on.Michelle Kesil (03:15)
Of course.Yeah, I think our listeners are really going to take something away from how you have created this powerful market one-stop shop in Kansas City. So let’s dive in. First off, for those not yet familiar with you and your world, can you give the short version of what your main focus is?
Pat Grace (03:38)
So our main focus is on investors and creating and managing portfolios here in Kansas City. We’ve been doing that for 25 years. And so people don’t have to go recreate the wheel or create a team when they want to invest here. You can just tap in with what we already have. Like I said, we’ve got 25 years of people, network, community, and we know what works. We know the areas we got.All crews, we’ve got a big brokerage here that has 350 agents that helps with all the buy and sell transactions. We have tons of crews for construction, rehab, make-readies, and maintenance. We have a property management company that can manage all the assets. And then all the ancillary companies you’re gonna need, I’m already tied in with mortgage and title and insurance. And so you can just…
go to the places I go, everybody that I do business with, you can do business with. And so we make it real easy, vertically integrated, one stop shop, no guessing involved, just use the same people we use, and it’s white glove service. You don’t have to go make mistakes, hire the wrong people, be with the wrong companies. And then we own a pretty big portfolio here. I’ve got…
over 200 single family homes, I’ve got some commercial, I’ve got multi-family. So we’ve got a pretty big portfolio ourselves that we’ve created over the last 25 years.
Michelle Kesil (05:51)
Awesome. Yeah, sounds like you guys have so many different services and integration systems that you offer. What has been the key to keeping this business running smoothly with all of those moving parts?Pat Grace (06:07)
think for us at staff, know, having good people and having, you know, like just the knowledge of the areas, not buying too much inner city, not buying in bad areas, not buying bad houses. And really, I don’t really manage too much stuff unless people are doing business with me. And so it’s not like I’m taking on property management for whoever. We’re not doing that. And so…you know, just kind of keeping everything inside our little bubble and making sure that we’ve got good assets, good areas, good tenants, know, high, low vacancy rate, high occupancy. And so, you know, making sure we have a clean portfolio with the least amount of stress is probably key for us. We also, you know, and like I said earlier, we’ve got staff, I’ve got people that’s…
I’ve got crews that have been with me for 15, 20 years. I’ve got staff in the office that’s been with us for that long. And so just having a great network of team and people around us makes everything run smoother. And software. And I’ve been really getting into the AI lately. I feel like I’m that old where I was out, I was just getting started when the internet first came out and I watched a lot of old people get caught by the wayside with the internet.
And I feel like AI is that new internet, you know, it’s like, and I don’t want to be that 48 year old that doesn’t know anything about AI getting washed up by this new wave that’s coming in. So I’ve been really, I’ve been implementing a ton of AI and learning a ton of AI into all our different companies, which has helped out a lot.
Michelle Kesil (07:41)
Yeah, absolutely. think all of those facets are so important. The people, the systems, the tech, yeah, it can all integrate all those systems so well.What would you say is like the main reason or selling point for investors to want to come to Kansas City and be in that market?
Pat Grace (08:05)
So I’ve got two really important things. No matter where you go, you gotta make sure you have a good market and then you have good feet on the ground. You have a good team. And so what Kansas City offers is that low entry and high cash flow, right? So you’re not like California or New York or Hawaii or even places like Oregon and Seattle and even Minnesota and the U.S. I mean in the middle.I mean some of these places the properties are so high there’s no cash flow and so in Kansas City You have that low entry where we can take positions in homes You know that can’t the home you have to repair value of the homes that I’m in are between I’d say 175 to 275 grand so I’m buying them, you know between I’d say 75,000 to 200,000
and I’m fixing them up and then we’re renting them. And so we might get the 1 % rule here and there, but for the most part, even with rates right now, you could be cashflow neutral and I’m still buying a lot of those properties.
Like if my tenants can pay for my property management, my maintenance, my mortgage.
and I can buy properties in really good areas, I’m taking positions in those properties. And the new thing that’s happening in Kansas City within the last five to six years is the appreciation bump. And so prior to maybe five, six years ago, Kansas City was like a three to 5 % annual maybe appreciation. Where now we’re in the 10 % and above. So all my assets are going up.
10%, all my investors are going up 10%. So some of my investors might be holding on for five, six years and then they’re selling and they’re making good money when they sell their properties and they’ve cashflowed the whole time. They’re not out of pocket, they’re not upside down. And so that’s gonna be really important and why people come to Kansas City. And then the second part would be just having somebody like me here watching and…
owning all the companies, owning everything that’s going on, creating the systems, the process, the network, and walking into a situation where you don’t have to reinvent the wheel, you don’t have to test people out, we’ve got things already set and already moving. And so having a great market with a great team is the two most important things if you’re gonna be investing out of state where you can’t manage your stuff yourself.
Michelle Kesil (11:12)
Yeah, absolutely. Thank you for sharing that. That makes a lot of sense on that market.Awesome. What are you most focused right now on solving or scaling next?
Pat Grace (11:26)
Right now we’ve got a mentorship and a coaching program that we’re rolling out within the next 30 days where that’ll bring ⁓ a lot of people in and kind of educating people on Kansas City and investing in Kansas City. So I’m rolling that out. I just bought my first big development.So learning that whole land game and the process of entitlements and going through the city and permits and civil and you know, so that’s been kind of new for Other than that, like I said, we’ve been doing the single family, multi-family for over 25 years. There’s nothing that I haven’t really seen or experienced when it comes to that side of the business. But for the new stuff that we’re doing,
is pretty much the development side. the other big thing I talked about is we’re implementing a lot of AI into our construction management, our property management, our real estate brokerage. And so just implementing these systems and processes that need a little bit of time in order to…
Learn I guess is what you know these bots need to learn and then you know once they learn You know how to respond what to say certain situations it should get better so We’ve been implementing a lot of the AI into our systems and processes Trying to get everything to be faster and smoother
Michelle Kesil (12:53)
Yeah, amazing to implement those new systems and yeah, I love that you’re working on that coaching and mentorship program. Is it specifically for investors that are looking at Kansas City as an opportunity or who is this mentorship program for?Pat Grace (13:52)
Okay, that’s a good question. I have two, I have like, it’s not. So the answer is no, you could be from trying to get in, you could be getting into any market.We available. We have group coaching available. And then we have private coaching available. And so I do have a coaching program specifically for Kansas City. And then I have the same program that’s not, it’s more, I guess, generic, I would call it. It’s not as, ⁓ it’s not specific to Kansas City. So I have two different ones that.
We’re rolling out. It’s online. You you kind of go through some course material and you answer some questions, take some quizzes. You know, it’ll come with a Facebook community where you can bounce questions off of and you can, you know, help underwrite and help, you know, talk to other people. So, we’re rolling all that out here in the next, I’d say 30 to 60 days. So that’s something new that we have never done previous.
Michelle Kesil (14:51)
Awesome, that’s so exciting!So every business owner has those moments in business where things get more real. Maybe you have a deal that goes sideways or you need to make a fast pivot. Would you mind sharing one of those moments in your business that you’ve experienced and how you overcame it?
Pat Grace (15:09)
Yeah, I think…good example of that would be, and why I like Kansas City, I noticed when rates got really high, the market kind of slowed down. And I know it was like that for everybody, not just people in Kansas City. And so I’m in a couple big mastermind groups with some really big investor players.
and everybody around the country is experiencing this. The good thing with us is we can pivot to rent. And so as the rates went up and the buyer market slowed down, the rent market got strong in Kansas City. And so we quickly pivoted to a lot of our homes and creating that rental portfolio.
So maybe fixing the homes a little different because we’re not trying to flip them, you know So I’ve been kind of fixing my homes for this dual exit strategy where you know, I put new Things in there, but not maybe tonight like I’m not putting brand new cabinets. I might just paint the cabinets You know, I’m putting in new floor new paint new light fixtures, you know cheap stuff that make it look good where
I can sell it as a finished product and if it doesn’t move, I can always rent it. And so kind of finding that in between, we’ve had a pivot to that because prior if I was doing a flip, I was putting brand new everything and I was kind of fixing the house to flip. And as rates got high, the market dried up. And so kind of pivoting to that whole situation where we’re starting to rent a lot of our houses has been something that
was the last, I guess, thing that I had to really quickly pivot and make moves on was probably that whole rent-buy situation.
Michelle Kesil (16:46)
Yeah, absolutely. That’s great that you found another strategy that can work for your business and keep things flowing.Pat Grace (16:55)
Yeah.Michelle Kesil (16:55)
When it comes to growing your business, whether that be through networking or relationship building, what are some things that have made the biggest difference for you?Pat Grace (17:06)
Yeah, for sure it’s networking and getting out there and meeting people, getting on shows like this, ⁓ creating my own show. I’ve got a show called the Pat Grace Real Estate Show. It’s on YouTube and Facebook and creating this. I’ve also got a Facebook group called Kansas City Real Estate Investment Group and it’s the largest.real estate investment group in Kansas City. I’ve got close to 60,000 followers in that group and everybody in that group’s a friend of mine. All the big players in Kansas City are in that group. Every wholesaler, every off-market deal, lot of roofers and plumbers and electricians. it’s a really good group. You can go in there and ask, hey, I need a plumber and 15 people will respond. And so just creating the network and getting the word out there. And I think…
people have figured out Kansas City. People have been coming to Kansas City for the last five to six years, pretty strong, but I can see it more now, and ⁓ even with the hedge fund stepping back into Kansas City. And so there’s a lot of things happening here, and that’s really kind of boosted our business, along with the economy and everything that’s happening in Kansas City. There’s a lot of things going on right now, and a lot of big tech is now in Kansas City.
There’s a lot of stuff happening here with these technology companies and they’re selling Seattle and they’re selling San Francisco and they’re getting out and they’re coming to places like Kansas City where you’re in the middle of the United States. You can distribute power and memory and you can distribute data really easy, transportation.
when you’re Amazon and you need to deliver things, being in the middle of the United States is much easier to deliver things and get things out. And so this is really good for Kansas City. There’s a lot of stuff, so much growth happening here. So when I first came here 20 years ago, it was like a small Midwest town and that’s what I kind of loved. And now it’s grown into this really big. ⁓
city where you have a lot of big players. got to, I was lucky where I got to be here and take advantage of really low prices 20 years ago and I still own a lot of those properties and now they’re worth so much more. So just being in that position of, you know, still being relatively young, I feel like I’m 48, but I’ve been in the game for 25 years and I’ve owned property for 22, 23 of those years. Like I’ve been able to see.
properties that I purchased for 50, 60 grand that are now worth $300,000. And when I was underwriting them, I never even thought about that or fathomed that. Like I was underwriting them at, you know, buy them for 60 and they got $800 rent. And that’s what I thought when I bought it. Never did I think, you know, 20 years from now I’d own 100 homes free and clear and I got almost $2,000 rent coming off of each one. And so…
You know, just having that long-term vision and creating this buy and hold portfolio has been really awesome for, you know, for me and my family. And we’re now starting to do that and help investors create their own portfolios here. And so, you know, just over the years, starting all the companies that I needed, you know, the real estate agent was…
You know, I was buying so many homes, 15, 20 homes a month, and I couldn’t wait on these agents to write my offers, pull my comps, do everything. So we started that company. We just started all the companies that was in the transaction and perfected the systems for speed and accuracy and getting out things really quick.
getting your rehabs done quick, getting your make-readies done quick. Like I know how it feels to have a house vacant for 60, 90 days and the house, sucks. And not too many construction owner know that if they don’t own property. And so you come from a different, everything comes from a different, I guess, perspective when the owner actually owns properties himself and a lot of it and does it every day. So having that vision is really unique for…
our investors, they’re covered by me and my wife who are also really big investors. We just happen to own all the companies that these investors use.
Michelle Kesil (21:16)
Yeah, that’s incredible. Thank you for sharing all of that.Pat Grace (21:19)
Yeah, that’s been great. It has grown a lot. And then you got Patty Mahomes over here bringing Super Bowls and making it national. And the Chiefs are doing well. And so I mean, there’s, I really do think that that has a lot to do with it. Like whenever I travel now, everybody knows Kansas City. And the first thing they always ask about is the Chiefs.think they kind of put it on the map there and helped us out with a bunch of that too.
Michelle Kesil (21:46)
Yeah, for sure. So before we wrap up here, if someone wants to reach out, connect, learn more, where can people find you?Pat Grace (21:54)
So you can go to PatGrace.com is my website. You can get in touch with me there. PatGrace on Facebook. On Instagram, I’m at PatGrace25. I also have a YouTube channel. That’s PatGrace. So really, if you just Google PatGrace Kansas City, I’m all over the place. can’t, you’re definitely gonna be able to get in touch with me there. Yeah, but that’s, just Google PatGrace Kansas City.or PatGrace.com.
Michelle Kesil (22:19)
Perfect.Awesome. Well, I appreciate your time, your story, and your perspective. Thank you for being here.
Pat Grace (22:24)
Appreciate you, thank you.Michelle Kesil (22:25)
Awesome. And for those listeners tuning in, you got value, make sure you’ve subscribed. We’ve got more conversations with operators just like Pat, who are building real businesses, and we’ll see you on the next episode.
