The Real Estate Investing Mistake That Can Destroy Your Cash Flow

Kyle Duelund, JK Real Estate Partners (00:00)
Absolutely. So the two main things, because the first time we jumped into mobile home parks or larger multi-family, ⁓ we did one thing well, which was always buy at a discount. You have to know the market value of your assets.

and you have to buy below that number because that’s your ultimate safety net.

Michelle Tack (00:15)
Right. Right.

Kyle Duelund, JK Real Estate Partners (00:19)
that we did, we’ve always done great. We teach people how to do that. That’s fantastic. But when you get into larger asset classes, one thing that we did not do was over capitalize because these larger assets cost more when things go sideways. So this mobile home park, the first one, I mean, we bought it for $25,000 down.

Michelle Tack (00:33)
Right. Yep.

Hi, I’m Michelle Tack. Welcome to the Real Estate Pros podcast. We have a wonderful operator that I’m excited to share his story and what he focused on with you. Kyle Duelund say hi.

Kyle Duelund, JK Real Estate Partners (02:22)
Hi there everyone!

Michelle Tack (02:24)
In all the time that I have spent interviewing folks for content for real estate pros, this is really unique. We’ve got Kyle who focuses on the Canadian market, but is based in United States to attract Canadian buyers who want to buy in the United States as well as Europeans. ⁓ For those that don’t really come from that background or understand that process, etcetera,

Kyle, would you explain what your business is and what markets you serve, please?

Kyle Duelund, JK Real Estate Partners (02:59)
Absolutely, and again, thank you for the opportunity to come speak here a couple minutes. It’s a pleasure to bring value. So yeah, so what we do, what we mainly do and focus on specializes is helping foreign nationals, ⁓ non-Americans invest in the US. Now having said that, our formula is predicated on the fact of like not investing in your backyard. So more and more people are hearing about

Michelle Tack (03:02)
Absolutely.

Kyle Duelund, JK Real Estate Partners (03:23)
like California investors investing in the Midwest. So our systems and all that applies as well to Americans investing in the US, but it’s about identifying the right markets for the results we’re looking for. And the main results that we’re looking for in our community is cash flow. We want to be able to buy real estate that makes sense today, buying it at a discount and buying cash flow today so that today and tomorrow it’s a good investment and quality housing is the product of everything.

Michelle Tack (03:51)
So you have ⁓ folks in Europe that invest as well as well as Canadians, correct? And you serve mostly Canadians. And the markets that you go after are what in the United States? Are they commercial? Are they SFRs? Help me understand that a little bit better. And if you could share that for the group.

Kyle Duelund, JK Real Estate Partners (03:57)
Mostly Canadians, yeah.

Yeah, absolutely. Now we teach and we show and we guide and we support every asset class. We ourselves invest in all the asset classes from single-family homes to mobile home parks to motels, hotels, the whole nine yards. Even land, so long as it’s cash flow producing assets. Typically, a lot of our people, because of our education background, like we do…

Michelle Tack (04:27)
Got it. Yep.

Kyle Duelund, JK Real Estate Partners (04:33)
teach and we’re quite good at it I must say. We can bring someone from no experience all the way up to building and scaling their portfolio. So because of that a lot of our newer greener members start at the start and they start with the residential one to four. But you got some people with hundreds of units and they jump in at the higher level and that’s fine as well.

Michelle Tack (04:36)
Yeah

Yeah, I was really impressed by the 360 approach that you have. have, you know, people come to you and they get a program and coaching and a three day event if they want to participate in that to really understand how the how and the why. But beyond that, you had mentioned that once they go through that process, many of them then go ahead and invest with you, which is a testament to.

Kyle Duelund, JK Real Estate Partners (05:59)
Yes.

Michelle Tack (06:09)
your teaching and a testament to ⁓ your knowledge. How do you keep your business running smoothly when it’s multi-pronged? What do you do?

Kyle Duelund, JK Real Estate Partners (06:20)
Mm-hmm, absolutely. We got to keep our hats and the right people in the right place and we stay in our lanes. So, ⁓ that’s a big question. Let me try to answer that as simply as possible. I’m a genius in certain elements. My partners are genius in other elements and, you know, for the elements of genius that we’re missing, we hire and we fill those gaps. And so we’ve got, you know, we’ve got obviously the bookkeeping and so forth, but more specifically skill sets like we’ve got coaches.

that help us magnify the amount of time and resources that we can give to our community. Because although I do do one-on-one coaching, I do three clients a year. There’s only so much one-on-one you can do before you don’t have time for anything else. And that’s not part of my best life. So it really depends on what they’re looking for. Are they looking to do it all by themselves? Like, just teach me what I need to do, where I need to do it, and what the system is. Great. The blueprint or one of our bus tours, come see what we do. Build your team on

the spot and start putting offers and get your deals. Or the other side is I got money, know, just put it to work, give me a piece of the pie and off we go. Right? So we got the whole spectrum.

Michelle Tack (07:30)
Yep.

Whole spectrum. So it sounds like the subject matter expertise that you have and staying super focused and knowing where to offload ⁓ the needs because that expertise is not in your wheelhouse. You’re executing and that is allowing you to run smoothly. Is that accurate sort of summation of what you just said?

Kyle Duelund, JK Real Estate Partners (07:56)
that and maybe I didn’t quite understand because I am a I am a yeah go ahead

Michelle Tack (07:58)
Yeah.

Yeah, the level of expertise that you have in these areas, the teaching, the knowledge of the market, how to help people invest and when needed to ⁓ look for other expertise to bring in or rely on. seems to want to be the core aspects, all of that together, not just one of those things that I said to allow you to be successful and run the business smoothly. Would that be an accurate?

Kyle Duelund, JK Real Estate Partners (08:27)
Gotcha, yes.

Michelle Tack (08:28)
Okay.

Kyle Duelund, JK Real Estate Partners (08:28)
yeah, yeah, absolutely. And for someone who wants to do it all by themselves, we teach them how to become subject experts in whatever they do. If they want to invest in short-term rentals, in…

Colorado, fantastic, we a program for that. ⁓ But if they’re looking to be more passive, now we know exactly where we’re going. Like we’re in the greater Cleveland area, that’s where we are doing 95 % of our investing. Although we do invest in Michigan, Florida, and in Canada as well, but like 95 % of it is greater Cleveland when people are working with us and they want to be closer to the investments that we’re taking action on.

Michelle Tack (08:53)
OK, good.

We talked about in our preparation for the podcast about, you know, what would you like to achieve in the next year? And can you mention that? Because I think it would be instructive to the folks that are listening and may be a stepping stone for additional business for you.

Kyle Duelund, JK Real Estate Partners (09:21)
Absolutely, yeah, absolutely. It’s very, very exciting. The next year, we would like to do two, well, there’s many things, but the two things we spoke about, let’s keep it focused to that, is one, up to this point over the last 10 plus years of investing in the US, by the way, I love dogs, so every time I hear that dog, I’m like,

Michelle Tack (09:36)
We’ll try to edit out. We’re gonna edit

that out. I ⁓

Kyle Duelund, JK Real Estate Partners (09:40)
So ⁓ one thing is…

Up to this point over the past 10 years, have had strategic partnerships with individuals, with capital, passive structures. So we got a good number of partnerships out there. And after you hit 15 plus, it starts getting a little bit, where do I put my time really? Do I focus on this partnership, that partnership, my own deals? Where does it all go? And I’m not enjoying the scale of all these wonderful partnerships. And so in the next year, we’re gonna combine everything together and have basically one place for everybody to benefit from everybody.

Michelle Tack (10:04)
Right. Right.

Kyle Duelund, JK Real Estate Partners (10:47)
You know involvement, so that’s one putting it all together and now I’m working for everyone and To launch this we’re being extremely generous Giving up to 75 % of the pie to our investors, which we’ve never done in the past We’ve been up to 50 % so we’re excited to give more and to keep things streamlined And I think that’s ultimately going to create more for everybody, so that’s Did you have a follow-up on that or I can go to the second piece?

Michelle Tack (11:10)
Mm-hmm.

No,

I was just going to say one thing to add to that to see if I’m on track. So you when we started, you know multiple businesses, but you have most people may not know, but maybe a comfort that you have construction. You’ve got the subject matter expertise through coaching and being able to consume that online. You’ve got investment. Again, this is all you know folks that are not, know that basically are expats or not in United States. You’ve got that.

⁓ And you’ve got a multiplicity of areas that you can, ⁓ you know, work in. What other things in that concentric circle do you have to bring that integration together? You mentioned a few other companies as well.

Kyle Duelund, JK Real Estate Partners (11:58)
Yeah, we also have a short-term rental management company and a mid-term rental management company. ⁓ over the next, we’ve launched six months ago and over the next year, one of the big goals is to expand that into sober living, which is a mid, it’s a niche midterm rental strategy, which involves specialized management. And so we have that and we’re developing it even more as well. That’s an important piece.

Michelle Tack (12:14)
Yep. Yep.

That’s great.

So let’s turn to the number two of your opportunities for the future that you wanted to discuss.

Kyle Duelund, JK Real Estate Partners (12:31)
Yes, sober living residences. So basically this is bringing people from ⁓ very difficult times in their lives, ⁓ whether they’re on the street, you know, homeless, whether they are recovering, recovered, in treatment, for drug addictions, ⁓ alcoholism, whatever the case might be, if they are willing.

to commit to a sober living lifestyle, right? And work with us, partner with us on their sobriety journey. We want to provide the housing and the structured and accountable accommodations and structure for them to stay on that journey. So this is awesome. I’m volunteering at the shelters here in Cleveland to get the name out. We’ve hired community directors to make sure that they’re, and ⁓ they are also, you know, from the sobriety, sober journey.

Michelle Tack (13:16)
That’s awesome.

Kyle Duelund, JK Real Estate Partners (13:25)
lifestyles, they’re themselves are sober so they understand everything, they understand the meetings and the struggles and so forth. So this is really, really exciting because ⁓ my partner who’s a registered nurse, or actually she just let go of her licenses this year after 10 years of holding on. Yeah, she finally did the plunge to burn the bridges, right, burn the boats. yeah, so that’s really exciting as well. And so the nursing, the helping at the health level ⁓ of humanity is something that connects them. So I got more

Michelle Tack (13:25)
Mm-hmm.

wow.

Good for ⁓

That’s Yep. ⁓

Kyle Duelund, JK Real Estate Partners (13:55)
the teaching, she’s got more of the health, and together, we

Michelle Tack (13:56)
That’s awesome.

Kyle Duelund, JK Real Estate Partners (13:58)
create something quite complimentary.

Michelle Tack (14:00)
Yeah, like I said before, you I love to talk to people like you because of the service aspect. ⁓ You know, obviously the need to ⁓ make a profit is there and there’s nothing wrong with that, but I love the fact that you’re providing service. Every operator that I know that is growing and expanding ⁓ like you are, or maybe not growing as fast as you are, have ⁓ reached

a situation or maybe early in their career or mid or what have you where a deal started going sideways and they had to pivot fast to ⁓ bring in their skill set, what have you, or partners, what have you to rectify the situation. Can you talk about a situation that may have been like that? ⁓ And if not, one that, you know, where you learn from, ⁓

Kyle Duelund, JK Real Estate Partners (14:34)
Mm-hmm.

Michelle Tack (14:55)
Either one would be great if you could share with the group today.

Kyle Duelund, JK Real Estate Partners (15:39)
Absolutely. So the two main things, because the first time we jumped into mobile home parks or larger multi-family, ⁓ we did one thing well, which was always buy at a discount. You have to know the market value of your assets.

and you have to buy below that number because that’s your ultimate safety net.

Michelle Tack (15:55)
Right. Right.

Kyle Duelund, JK Real Estate Partners (15:59)
that we did, we’ve always done great. We teach people how to do that. That’s fantastic. But when you get into larger asset classes, one thing that we did not do was over capitalize because these larger assets cost more when things go sideways. So this mobile home park, the first one, I mean, we bought it for $25,000 down.

Michelle Tack (16:12)
Right. Yep.

Kyle Duelund, JK Real Estate Partners (16:16)
It was a 27 lot mobile home park generating $6,000, $7,000 a month gross income. Beautiful numbers.

then the water lines started breaking. Although in our due diligence we had the proof that they were all repaired. They had spent $100,000 in the last 18 months to fix them.

Michelle Tack (16:26)
my gosh.

Mm-hmm.

Kyle Duelund, JK Real Estate Partners (16:36)
But well, the ones that were fixed stayed and the ones that were not fixed started breaking again. The whole system needed to be replaced, not fixed up. ⁓ And you know, that was another $150,000. And this was earlier, this was like seven years ago. We didn’t have just an extra $150,000 lying around. We didn’t have partners that we can just call up and say, hey, you know, it’s unfortunate, but here’s a cash call. We didn’t have all those mechanisms in place. And so, ugh, don’t under capitalize, especially when you start failing, is the learning point.

Michelle Tack (17:03)
hahahaha

Kyle Duelund, JK Real Estate Partners (17:07)
And there’s two like golden rules of capitalization that I like to teach people is if you’re buying real estate, have 10 % of your assets worth liquid somewhere available. So if you’re buying single family homes at 100,000, I want you to have 10,000 available somewhere just in case that you can, out of a line of credit, out of a credit card, out of a partner call, whatever, 10 % of the assets value available that within 24, 48 hours you could access. And some people,

Michelle Tack (17:34)
That’s great.

Kyle Duelund, JK Real Estate Partners (17:35)
Like that’s a lot, especially when you start building. you start only $10 million. Yeah, start owning $10 million of real estate, $100 million of real estate, that 10 % is a big chunk. But I’m going to go even further than that because this slowed us down for years on these projects that went sideways and really hurt our growth in our early years. The second piece is if you are getting involved in renovations, like large value add renovations, you think it’s going to cost you $300,000 to do a job?

Michelle Tack (17:38)
It is a lot, it is. Yep.

Kyle Duelund, JK Real Estate Partners (18:03)
I want you to have 50 % more than you think it’s going to cost.

Michelle Tack (18:06)
Yeah, yeah, those that that is invaluable advice. Before we wrap up, I one last question is, you know, we all think about our network in terms of developing it, getting better at it or changing it based on, you know, market demand or what have you. Or sometimes we build a network and it isn’t the right network for whatever reason. Can you tell me about, you know, your network, what you do to facilitate it and what have you?

Kyle Duelund, JK Real Estate Partners (18:36)
Absolutely. And so the way we foster community and the community feeling and vibes within our community, our network, is we put on ⁓ weekly free events where people can jump in and just learn a bit and connect with the people that are…

at the same place in their journey. And then from there, our live events, which we almost host about once a month. It’s either we talked about the Cash Flow Blueprint, which is the three day kind of intro to investing outside of your backyard for cash flow, and our bus tours in Cleveland. So those are two. We’ve been doing these bus tours since before COVID.

Michelle Tack (19:15)
That is very cool.

Kyle Duelund, JK Real Estate Partners (19:21)
Obviously we took a break during COVID, but yeah, these are long standing and we like to keep it intimate. We’ll usually like these busters to be around 25, 30 participants. So on the smaller side, but the value, mean, they come and meet our teams, our property inspector, our manager, the bank that wants to fund all of our deals. The team we use, they come in, they speak and they connect so they can build their team right.

Michelle Tack (19:21)
Awesome. Yep.

That’s great.

Kyle Duelund, JK Real Estate Partners (19:48)
during one weekend. What took us over 10 years to build, they come in one weekend, they get all the contacts. So for people who are looking to be active in the Cleveland market, the greater Cleveland market, that’s incredible. And for those who just come and see that Cleveland is an incredible market to invest, but there’s like, you know, this is maybe a little bit more work than I thought it’d be, but you clearly got what you need. You know, here’s 250,000 or here’s 100,000 and you know, let’s, let’s do it together so we can do both.

Michelle Tack (20:07)
Right, right, right, right.

That’s awesome. You’ve been an incredible guest. ⁓ love the, you’re welcome. I love the fact that you’re doing something unique, but that’s needed, that you’re helping people that are, that don’t live in the United States to be able to invest in the United States. That’s awesome. That takes a very special skill. You’re are also doing the sober living thing, which I think is fantastic. And clearly you’ve got a great head on your shoulders. I want to thank you.

Kyle Duelund, JK Real Estate Partners (20:20)
Thank you.

Michelle Tack (20:44)
for your participation today. And before we close, if you could ⁓ provide the team that’s listening a way to contact you for investment, for partnership, for knowledge, ⁓ could you please do that?

Kyle Duelund, JK Real Estate Partners (20:59)
Absolutely, I think the simplest way is just through our website www.jkrealestatepartners.com. like Janey.

K like Kyle. Those are the two that founded everything. So jkrealestatepartners.com and jkrealestatepartners is also in my name. don’t know if people see it on the screen there as well for the spelling. But that’s just altogether.com. ⁓ Through there you can contact us. You can see when our next events are. You can even book a time to speak with myself or one of our co- whatever you need. just let us know what you need but that’s the central point from it all. We’re also on Facebook. You can find us. We’ve got an open free

community, of course we’ve got our private community as well, but ⁓ the website is the starting point to it all.

Michelle Tack (21:46)
Thank you, Kyle. For those of you that are new to ⁓ listening to our content or not subscribed yet, if you found value from today’s ⁓ content, please sign up. And for those that are subscribers, we continue to thank you and hope you had found value on this today as well. Kyle, good luck in the future.