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Show Summary
In this episode of Real Estate Pros, host Michelle Kesil interviews Gary Knight, a seasoned real estate consultant and investor. Gary shares strategies for helping homeowners avoid foreclosure, investing wisely in properties, and using creative financing techniques like options and take-back mortgages. He also discusses his L.A.D.I.E.S. framework (Leverage, Appreciation, Depreciation, Income, Equity, Shelter) for evaluating real estate opportunities and offers practical advice for both new and experienced investors.
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Investor Fuel Show Transcript:
Gary Knight (00:00)
I just suggest that anyone who’s interested in investing stocks and bonds and currencies are all gamble. No matter what you do, you’re gambling. If you go to real estate and learn the right way and what to look for and what not to do, you will be the safest investor there is in the world. If you watched a movie called The Founder, Ray Kroc,
originally had the idea of McDonald’s, but not just burgers. I don’t know if everyone knows this, but McDonald’s owns the land underneath the McDonald’s. That land is worth a thousand times more than the burgers. It’s the real estate, not the burgers.Michelle Kesil (00:12)
Hey everybody, welcome to the Real Estate Pros podcast. I’m your host, Michelle Kesil. And today I’m joined by someone I’m looking forward to chatting with, Gary Knight, who consults investors and uses cash to buy out mortgages. So, excited to have you on the show today, Gary.Gary Knight (00:20)
Yes, we help people who are in default, are close to foreclosure, but not there yet. I want to advise everyone who has been in that situation where they can’t pay their mortgage and it’s overdue for 30 to 60 days, consult with me, my company, and we will buy out that mortgage and save you from a default. If you get foreclosed onYou’ll never buy anything on time. You’ll never get credit for anything. It’s probably better to go bankrupt if that was the case. Not that I’m advising anyone to do that, but you can consult with anyone like myself. I’m a consultant. That’s what I do for a living. ⁓ Also, let me let me say this. When I look for a property, the thing that I look for is these six items. L.A. ⁓
D I E S. That stands for
Leverage, appreciation, depreciation, income, equity, and shelter. Each of those have to be all six in order for me to go ahead and invest in the property or option the property. If I find a house that’s a fixer-upper, I have many ways to go. One, it’s called a knockdown. When we knock down the house, we bring in a brand new builder who will build a
property on there that’ll be double the size.
Gary Knight (00:00)
And ⁓ I would also ⁓ say that there’s many ways to do a real estate deal. that is to option. Options are controlled without ownership. You don’t have to own a property in order to control it. In fact, that gives you leverage. When you can take a little money,and control a large piece of property, that’s called leverage. And that’s another point that I can make.
Do you have any other questions?
Michelle Kesil (00:36)
Do you want to share how you got started and into this world?Gary Knight (00:40)
Okay.I got started because I was, I bought a house. It was a four bedroom, three bath house.
And it was suggested at the time the mortgage payment was $312 a month, believe it or not through FHA. This is back in 1969. And in order to pay my mortgage, I said to myself, why not make a couple bucks and rent out a room? So I did. And then I rented out another room.
and I had good experiences with these people. And I became a landlord, which in turn gave me management techniques. So I was a management expert since I was hands-on management. And ⁓ that got me started. So I saw on TV, was a, at the time, the prime rate was 20%.
Banks and mortgage companies were not giving mortgages. They were afraid that the 20 % was too much. People couldn’t afford to buy a house. And that’s when the take-back mortgage was created. And that was where ⁓ a person who’s selling the house would take back a portion of the mortgage. A down payment would be put in through an attorney. And then it would be a two-year balloon.
followed by a possible second two-year balloon. But those were the days when creative financing had to go into effect or nobody could buy or sell a house. No transactions could have taken place.
Gary Knight (00:00)
We had local and we had national.We had a fellow who was a bus driver who became a real estate investor listening to people talk on the bus. We had ⁓ Dr. Lowry who invented the ⁓ take back mortgage and buying paper ⁓ notes at the courthouse. There’s all different facets of
of real estate investing.
I just suggest that anyone who’s interested in investing stocks and bonds and currencies are all gamble. No matter what you do, you’re gambling. If you go to real estate and learn the right way and what to look for and what not to do, you will be the safest investor there is in the world. If you watched a movie called The Founder, Ray Kroc,
originally had the idea of McDonald’s, but not just burgers. I don’t know if everyone knows this, but McDonald’s owns the land underneath the McDonald’s. That land is worth a thousand times more than the burgers. It’s the real estate, not the burgers.
Did you know that?
Michelle Kesil (01:26)
I did not. Thanks for sharing that.Gary Knight (01:27)
Yeah,right. It’s the safest. It’s the best. It’s the smartest. As long as you go by the ladies. L.A.D.I.E.S. OK.
Michelle Kesil (01:37)
Yeah, awesome.Gary Knight (01:38)
Anything else I can add, I’ll be happy to do.Michelle Kesil (01:43)
What type of investment strategies are you working with?Gary Knight (01:49)
Well, there’s all different kinds. I like options. Options is control, again, without ownership. There’s a book that I have that ⁓ I recommend. It’s called Options. I have it here. And it shows how you can leverage small amounts of money with big amounts of land. As a real estate developer, you can put upfive different custom homes and use them as models and have people put down payments.
Gary Knight (00:00)
A rolling option is where you take five models,have people put down payments on them, you take your down payments, you put up five more models, more down payments, and each time they close, you’ve got a different layer of five, five, five, until you got a half a community. Then you put in your streets, you put in your cul-de-sacs and a clubhouse. So that’s how to do a development.
I’m seeing people do that once in a while.
Michelle Kesil (00:35)
Yeah, that’s awesome. What are you most focused on right now?Gary Knight (00:40)
Right now, I’m trying to help people get away from foreclosures. That’s a disaster. And that’s the worst thing that can happen to anyone. I’d rather see people go bankrupt, not that that’s good, but I’d rather see them bankrupt rather than foreclosed on. Once you’re foreclosed on, it’s all over. Your credit is gone forever.Michelle Kesil (01:06)
Yeah, absolutely. So how are you supporting people through that?Gary Knight (01:12)
Well, I’m helping people. I’m not supporting them. I’m helping them to support themselves. Hopefully that’ll happen soon. But for experienced investors, I found that they’ve made mistakes and they know they have.They’re saying to me, I haven’t been making ⁓ the investment return that I should be making. And I try to help them to see where they went wrong.
or where they could have gone right. So those are things that I focus on as well.
Michelle Kesil (01:49)
Can you expand and share some examples?Gary Knight (01:52)
Well, an example might be that they’re…They’re allowing people to put pets in a house and ⁓ you gotta clean up and they didn’t tell you that upfront. ⁓ I had a storage bin in a two family house and one of the tenants broke in and stole some things out of there. So I don’t do that anymore. I have a separate storage unit. I don’t do that in the house.
A commercial building.
It’s a different story. Now you’ve got to go by city codes.
sometimes I get motivated ⁓ renters who will do all the work and I’ll give them a good discount on their rent for a period of time. If they do that, I had that situation happen in Plainfield, New Jersey, where a commercial building, ⁓ a gentleman drove by. There was a for rent sign when I
bought the building and he called, he said, I want to put in a bodega. I said, okay, it’s 7.50 a month. He said, what if I do all the work? I said, it has to be by code. He said, it will be. So sure enough, he did. I gave him a rental of 3.95 for the first two years and graduated to 5.95 and eventually 7.50. He was there for a total of eight years. And that’s when I sold the building.
The other side was a barber. He asked to see the right side. said, we need, we need to do work in there before you see it. He said, I just need to measure it and see how many chairs I can get in there. So I let him see it. He said, good. We get seven chairs. Okay. 750 is good. Let me know when it’s completed. And we did that. We had an upstairs 650. The other side was 650 and the price that I paid for the building, believe it or not.
$13,500.
That’s gotta been the best deal I’ve ever made.
My return was probably 2000%. Not too shabby.
Michelle Kesil (04:04)
Yeah, that’s incredible. Awesome.Gary Knight (04:06)
Yeah.Yes. So anyway, my email address is [email protected] Gary Knight. If you want to get in touch with me, ask me questions. I’ll be happy to answer them. No charge. All right.
Michelle Kesil (04:25)
Okay, thanks so much, Gary. Appreciate you coming on here.Gary Knight (04:29)
My pleasure. Thank you for having me.Michelle Kesil (04:32)
Yeah, and for the listeners tuning in, if you got value, make sure you’ve subscribed. We’ve got more conversations with operators like Gary who are building real businesses, and we’ll see you on the next episode.
