“I think that’s what real estate is about, is about reducing the risk. It’s never risk-free, but there are definitely strategies that you can take to help reduce risks. And that’s really cash flow on day one with the new debt on the property, locking up long-term debt so that you don’t have to sell during a downturn.”
Kyle Mitchell is a real estate entrepreneur who has a focus on Multifamily Syndication and currently has $41MM AUM. He is the Managing Partner and Co-Founder of APT Capital Group and the Asset Management Summit, where their mission is to positively impact the lives of their investors and the communities in which they invest through the highest level of transparency and fiduciary responsibility.
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Building Wealth Through Investment Real Estate With Kyle Mitchell
Brett:
Our next guest is a specialist when it comes to building wealth through investment real estate most investment real estate owners or investors. They really struggle though with connecting and building wealth and helping those who are most in need. And so our guests have a passion for doing just that. He helps low-income neighborhoods and or folks who are looking for housing. And he does this by using class A housing and really instilling a sense of community while inspiring others to do the same. He’s the co-founder of Limitless Estates and also the co-host of Passive Income through Multifamily Real Estate investing. He’s been investing in income properties since 2015 and currently owns nine single-family homes in three different markets, three different States, which he’ll tell you about totaling about $1 million. Hey, welcome our next guest to the show, Kyle Mitchell. Kyle, welcome to the show.
Kyle:
Thanks. Happy to be here.
Brett:
And by the way, you can find Kyle at limitless-estates.com. And he has passive investors guide there you can sign up to receive if you want to learn more about Kyle and what he does. So Kyle, please share a little bit about what you do and a little bit about your story.
Kyle:
Yeah, absolutely. Thanks again for having me on. Excited to be here. And I actually started investing back in 2013 when I bought my first single-family home and now we’re in a multi-family. But when I got started just looking for a way to create some passive income, I had a full-time job that I was not planning on leaving at any time. I was very happy with it, and I just knew that the stock market wasn’t for me. For some reason, I was just really geared towards real estate. It appealed to me, I love the business model of it, and it just made sense. So I started investing there, but I quickly learned that California was not a place that I wanted to invest. Just landlord-tenant laws out here, very difficult. And it took me actually eight months to evict the first tenant that I had in. And I said, “Man, I’ve had enough of this. I’m going to another state.” And so that’s when I started investing out of state. So I did buy nine single-family homes, quickly learned that it was very difficult to scale and build the wealth that I wanted to build. And so I started looking for other alternatives. And at the same time, I started to look for alternatives for my career as well. My company was shrinking and I wanted to always be growing. And so I found multifamily real estate by just looking at some books and listening to some podcasts on the way to and from work. And I fell in love with it and I quit my job 11 months later to basically pursue it full time, even before we had had our first multi-family property under contract. But now we have about 17 million worth of assets under management and doing well. But that’s kind of how I got started in my real estate journey.
Brett:
Excellent. Bumps and bruises along the way and learning through some challenges and now to $17 million in multi-family investment real estate. I think that’s a great, great story to dive into. Now, before we go there, though, I’m curious who was Kyle growing up? And I think we’re all given different gifts in this world and some superpowers, but really, I think they’re just gifts that are given different strengths that we have. So who was Kyle growing up? What strengths or gifts were you given and how does that help you help others today?
Kyle:
I think my ability to focus… So I was a golfer growing up and it was one of those things where as soon as I found the sport, I dropped everything and I was just addicted to it and super hyper-focused kind of like I was with multi-family. Once I found my passion, I really hone in on it and I really focused on it. And really where it takes us today is I’m all about adding value back to people and helping them out and focusing on getting someone from a point of zero education to the point where they feel very comfortable with where they’re at to be able to take the next move in their life. So I would say it’s just hyper-focus.
Brett:
Hyper-focus. Yeah. And was that something where your parents always just said, “Hey, Kyle, he kind of zeroes in on something.” Or was it something you developed along the way or is it kind of a natural gift? What would you say about that?
Kyle:
I was always someone that had to have something a certain way, whether it was like the way I ate food was like this way or which sport I played was this one. It was always like one thing that I was doing and I always stuck to it. And so I that’s as far back. I haven’t been asked that question. It’s a fantastic question. And it brings me back to my childhood, which is awesome. But yeah, that’s kind of just how I grew up. And I was always that way.
Brett:
Yeah. My wife and I were doing homeschool for our kids, we have five kids and we’re studying just that exact thing. Being able to focus on their strengths and what they’re really good at doing. I know from my childhood growing up, I was good at certain things, math, and history, but other things I wasn’t so good at, right. But we were taught to learn all of these different things, but it’s not always the easiest or the most enjoyable thing. As adults, you kind of get to choose that part of it. I’m curious on your journey for education and maybe what you really excelled at, or maybe what you had to grit your teeth to actually just get by with. But were there certain subjects or certain parts of your educational experience where you said, “Yeah, I was just really good at that.”
Kyle:
The school was not for me to be honest with you. I mean, I’m a numbers guy now, but I really didn’t even do well in math. I was just not really into school. I did graduate from high school. I went a couple of years to community college, but I never had any passion for it. And at that point, I was playing golf and I actually left to play golf professionally for a couple of years. Planned on going back to school and never did. And really, I got a lesson in the school of hard knocks. I started out, I was one of the youngest general managers hired by this company at age 21. And I was general manager, sorry, for a golf management company and became a regional manager for that company. I did that for 15 years. And so going back to the focus, I didn’t find my niche or anything I was really interested in until I really got into the workforce. And as soon as I found that managing person and implementing systems and processes, that’s where I really felt comfortable and wanting to learn and exceed and excel. But in school, there was really no one subject that kind of spoke to me.
Brett:
Thanks for sharing and that’s kind of, I think a lot of the entrepreneurs’ journeys are just that until you find your passion and what you’re really excited about, it’s hard to get excited about school. So shifting back to sort of what you do now and how you help others, would you kind of walk us through your journey of not only doing it for yourself but now shifting to, hey, I want to help others do the same, walk it through whether it be wealth building, real estate investing. What is it about it that really propels you forward to try to help other people?
Kyle:
Yeah, so we do a couple of things and really the way it first started was just trying to get started ourselves and listening to others and modeling after others. I’m a Tony Robbins guy and he talks a lot about modeling after others so you don’t have to go through the bumps and bruises that others do. And two years ago, one of the things that were just starting up is starting a meetup group. And so that’s really how we started was starting a meetup group to gather like-minded people and to help people go from step one to five. It slowly grew into a podcast, two other meetups. So we now host three meetups. We’re a part of a larger meetup group that now has 50 chapters nationwide and a couple internationally. And it’s all about giving back and helping people go to the next level, no matter where they’re at. If they’re just starting out, no big deal, or if they have several years of investing experience. So that’s one way we help back is just really talking to people one-on-one, having these meetups, and listening to their needs, which has been fantastic for us, just in the sense of surrounding ourselves with people who think the same way and want the same things in life. And then another way is through our multifamily syndication. There are several people out there who have full-time jobs, love their jobs, don’t want to ever leave their jobs, but need to start building wealth. And there’s definitely some uncertainty in the stock market and the formal ways to invest. And so we look to educate people and help people build their wealth through multifamily real estate.
Brett:
Excellent. And maybe walk us through an average deal, what that kind of looks like. Maybe a deal story, or how you found the deal, source the deal, and sort of the return so far.
Kyle:
Yeah, absolutely. I can definitely share that. So really the way we found the deals is just by hard work. My wife and I used to drive out to Tucson and Phoenix, which our primary markets at two in the morning to get there at 9:00 AM, meet with brokers and have business meetings all day and then drive back and get home at 1:00 AM the next morning and then go to our W2 jobs. So it was really about just having a plan in place and grinding. If we heard about a deal, we’d be out there the next day. It took about a year to get our first deal. But through the relationships we built through consistency, a broker called me on one of our drives out there, one of our seven and a half hour drives, and said that they had a property that they just got. And so he had not even seen me inside of the unit. So we were the first ones to see it. And since we were out there, we put in the time to go that day, walk the property with our property manager. And a couple of weeks later, when it went to market, we were the first one to make an offer on it because we were prepared and we were able to get it under contract pretty quickly. And really the same thing happened with our second deal. We got it before the property went to market. We were out there the next day to take a look at it and we were able to lock it up on day one. So it’s just really being available, jumping on it when the opportunity is there, and doing things that other people aren’t going to do. Not a lot of people are going to visit the market as often as we are. We’re going to drive eight hours to get to the market. And that’s kind of how we’ve separated ourselves.
Brett:
Excellent. So being prepared, being proactive, hustling, and working really hard to be in front of deals versus being second or third to the deal. Great. And how about returns. Can you share a little bit about how that deal went and what the cycle of the deals going and what kind of returns your partners are seeing?
Building Wealth Through Investment Real Estate: “Rule No. 1: Never lose money. Rule No. 2: Never forget rule No.1” – Warren Buffett
Kyle:
Yeah. I can just tell you kind of an overview of what types of returns we look for in this specific deal. As the market tightens, it’s getting tougher and tougher to find these types of deals, but typically where you look for something that cash flows eight to 10% on average. The first couple of years, we are value-add investors, which means we take a property that is currently running inefficiently. Maybe the owners had it a long time and have not put money back in the property. The rents are below market, or the deferred maintenance is out of control. So the expenses are very high and we go in there and we put money in value back into the property, get it operating more efficiently, and force the appreciation of the property. So the first couple of years it’s going to start out slower. Once the values are added anywhere from 12 to 24 months later, it starts cash flowing much better. So we look for about eight to 10% on average and an average annual return of 15% to 16% or higher. And as far as how our deals are performing now, we’re actually looking at positioning the first property that we purchased last May for sale this summer, which is fantastic. We’ll see if that happens. There’s still a lot that has to go through. But it’s one of those things where the market has improved over the last 12 months. Our property’s done great. We’ve been able to push the rents three times in a seven-month period, which was not something we were expecting, but a happy surprise, nonetheless. And that’s positioned us to the point where we may be able to sell much earlier than we anticipated.
Brett:
Excellent. That sounds like an excellent rate, eight to 10% as you’re looking for forced appreciation value opportunities, and then to increase rents in areas that are growing and doing better. So walk us through, what is your exit strategy and, or what do you do with capital gains tax? One of our focuses is helping people defer capital gains taxes, different strategies. So I’m curious, how do you, Kyle defer capital gains taxes and how do you help your clients do the same or partners do the same?
Kyle:
Yeah, absolutely. So exit strategies are typically five to seven years on these properties, but we also always look to either have a refinance event after the stabilization depending on how the market’s looking, or 1031. So I’ve not been through 1031 myself. However, we’re looking at one for this property because we’ve only had it for seven months now to be about 12 to 15 months. And if we can double the equity there, and now we’ve got quite a bit of equity in there to take out into a larger property and defer that tax. So it’s one of those perfect scenarios where 1031 makes perfect sense. The one thing that we’re seeing as a challenge is really finding your upper leg, the next property you get into, because the market’s so high, it’s been difficult for a lot of people that are 1031 from what I’m hearing from other partners to find that next deal that’s going to cash flow just as well as the current one that you’ve had.
Brett:
Excellent. And curious about your entity to your structure, some of the syndicators we work with, it’s tough to get everyone to agree or everyone to come on. Do you have lots of investors? Are they pretty flexible? Do you prepare them beforehand to say we were probably going to be doing 1031, which could be another three to five-year hold? Walk us through how you plan to move the entire entity in itself to do a 1031 exchange.
Kyle:
Yeah. So from what I understand, and I’ve talked to several people about this. Not every investor needs to come with us, just the entity itself needs to come with us on 1031. So if a certain investor does not want to come along, they can take their funds out. We’ll still be able to 1031 because we’re going to do it with the entity itself. So you do have that option. In my opinion, it makes sense at this point with the money only being in for 12 to 15 months. I would say 90%, 95% of those investors are prepared to move that over.
Brett:
Perfect. That makes a whole lot of sense. And then the second part about finding that deal. So the marketplace with the 45 days to identify 180 days to close, it can be kind of, you kind of get pressured and forced to overpay for properties. So ideally you find something you get into contract before you sell you’re down and or your building, maybe an extension in right. Options to extend escrow once your buyer goes non-refundable so that you have even more time built in. So there are different strategies to work with that too. But curious, what have you found? Anything in addition to that to try to give you more time for you to perfect the 1031 exchange that you’ve considered?
Kyle:
Yeah. I think you hit it on the head. It’s just being transparent with the buyer, right. And letting them know that that’s part of the process now that could potentially hurt your buyer pool a little bit, but I think it’s always better just to be transparent and make it’s in the contract that, “Hey, you may need an extension for the 1031 and make sure it’s in there upfront so you don’t get put in a position where you’re buying a property just to buy a property. I think that’s where 1031s can certainly hurt you. And you want to make sure that you’re doing all the due diligence upfront to set that up. And so we’re already talking to brokers, letting them know that we’re going to have this happening. And I think that’s where you can start to get some off-market deals because you have the equity already. And that’s the biggest concern when you’re buying is where’s the equity coming from? Do you have it now? And in 1031, you do. So you can close quickly.
Brett:
Exactly. The certainty of execution, right. And that’s what brokers are certainly looking for. And then the need to have a win-win with the buyer, by being upfront and transparent with what you’re doing as a 1031 exchange. And a lot of them appreciate that too, right? Because they’re likely to be in 1031 to change themselves. So they’re in your shoes, or especially if they’re going to pay some of these higher prices that you’re hoping to achieve as a seller. So I’m curious, Kyle, I consider you’re a wealth advisor, right, for commercial real estate. And after doing all of your podcasts, $17 million in multifamily investing. What are some of the top three wealth strategies you’ve found that can help others create and preserve more wealth?
Kyle:
Yeah. I think number one, it comes down to education, right? Don’t just jump into something that you heard someone else’s making money at, or know is hot. You’ve just got to educate yourself. And I would suggest people take more time on the front end to do that, versus just jumping in. This is hard-earned money that you’re building here. Make sure that you’re doing everything you can to get educated on it. Number two, I would say, know your sponsor. Know the people that you’re investing with. In a hot market as we have now you could have had the worst sponsor over the last seven years and they could’ve made your money. But when the market gets tough, that’s where really your money is going to be put to the test. You want to make sure that you’re with the right people who are going to make the right decisions to help build your wealth and it’s not about building their own wealth. And then we follow three rules of thumb that we love when we’re investing in real estate that really reduces the risk. And I think that’s what real estate is about, is about reducing the risk. It’s never risk-free, but there are definitely strategies that you can take to help reduce risks. And that’s really cash flow on day one with the new debt on the property, locking up long-term debt so that you don’t have to sell during a downturn. I think that’s where people get in trouble with real estate is when you’re forced to sell in a certain market. And then number three we raise all the funds upfront to put back into the property when we add value. So we’re not taking the cashflow or relying on the cash flow to implement into our business plan. We raise all those funds up so that we can implement our business plan regardless of what the economic environment is.
Brett:
Excellent. So, cashflow day one locks up long-term debt so you’re not forced to sell in a marketplace that might not be favorable and embrace all the funds for the value add, forced appreciation projects, rather than relying on cash flow to fund that. In other words, have enough a reserve, a separate reserve from your traditional repairs and maintenance reserves. I found it is about two 50 per unit per year for just general reserves for CAPEX. And what you’re saying is above and beyond that, hey, have a plan. If it’s going to be two, five, 10, $15,000 per unit for value add, raise all those funds before you close so you can just go in and use that budget to turn those units as they come up. Is that a fair summary there, Kyle?
Kyle:
Yeah, exactly. And I would also say that we have an additional reserve account for anything that are things like roofs and HVAC systems that may be in the first two years don’t even need to be tackled, but down the line, they will be. Plumbing is another one. So we are always raised for those things as well because you never know what’s going to happen. And it’s always good to have a rainy day fund because that 250 a unit can definitely be used towards those things. But if something happens, if any, happens and you need to use all that money for something else, now, all of a sudden you don’t have anything in place to take care of those other different items. And that’s where properties really start to go backward is when deferred maintenance starts to stack on top of one another. And that’s when expenses start to get out of control and they get very difficult to get back on track once you run out of money.
Brett:
Yeah, it makes, makes perfect sense. You don’t want your expenses compounding on top of each other. And so Kyle, are you ready for the lightning round?
Kyle:
Let’s do it right.
Brett:
Your favorite book you’re reading right now?
Kyle: 
Shoe Dog. And to be honest, I’m halfway through it and it’s absolutely phenomenal. I would suggest it to anyone. It’s one of the best books I’ve read.
Brett:
Excellent. Your favorite podcast you’re listening to right now?
Kyle:
Favorite podcasts. I am a podcast junkie. I listened to about 18 to 20 a week. And Tim Ferriss is my favorite. It’s a long-form. They’re two to three hours, but I just love the questions that he asks.
Brett:
So smart. Right. And so you can learn so much from Tim. Let’s see. So favorite date night to take your wife on?
Kyle:
Yeah. So for me, that’s one thing I’m trying to implement and we do not do a very good job on it because right now we’re really focused on building our businesses. I haven’t written down my goals to do a weekly date night. And we love eating food. And so really it’s just going out and picking places that we haven’t tried yet and eating the best food around. So that’s kind of what it is now. I need to get better at that. I think my wife would agree.
Brett:
Sure. I hear you. So to that point, by the way, shifting from the lightning round here, how do you not talk about business when you’re on your date night? Right? You guys are so intertwined with the podcast and the business and everything you’re doing together, which is phenomenal but is there… How do you maybe take a vacation from that, right, for just you guys? Are there any strategies that you could share with some of the listeners here?
Kyle:
Yeah. That’s something that I’ve had to really learn over time. At first, when we were first starting our company that’s all we talked about because it’s still building and evolving and we still are evolving, but I think you just come to a point where you just have to be on the same page with one another. And when we go out, we try to focus on ourselves and what our future looks like outside of business and really enjoying each other’s time. And it’s one of the hardest things to do because as an entrepreneur and a type-A personality, the only thing I think about is business, it seems like sometimes. So she’s definitely better at it than I am, but it’s really aligning your goals upfront, which is one thing that we’ve always done and talked about it and being intentional with everything you do.
Brett:
I love that answer. What’s your favorite way to give back and, or charitable cause that you’re really passionate about helping out?
Kyle:
Yeah, so two things, obviously with multifamily, we try to add as much value as possible with free calls, our webinars that we do for free online, and our meetups. But as far as giving back in another way, one thing my wife and I started doing this year, which has been really great for us is every Sunday we go out and we buy food and we drive around and we handed out to homeless people and just trying to help out in the local communities and do everything that we can. And I know it’s very small, but it’s something that we started this year and I think it’s been good and we’re going to continue to do that the rest of the year.
Brett:
I love that. Last question. How do you stay centered on your values and stay encouraged to charge forward to reach new goals?
Kyle:
Yep. Miracle Morning for me, it’s the book by Hal Elrod. And I do that every morning. I wake up at 4:00 AM and the first three hours are really for me on personal development. And it starts my day off right. And not to say, it’s not a challenge. It’s a lot of time. And a lot of that is gym time and things like that. But between that, and then reading my goals every night before I go to bed, it really keeps me centered and keeps me on track with where I want my life to go. It’s very easy to lose track of that if you’re not reading your goals daily. And so those are things that I do on a daily basis to keep me on track.
Brett:
I love that. Reading your goals every day, Miracle Morning, Hal Elrod, and the three hours with working out and personal development. I want to thank you, Kyle, for being on the show. Any last words for the listeners and again, remind them where they can find you and where they connect with you at.
Kyle:
Yeah, I would just say, two years ago or three years ago, I wasn’t sure what my path was going to be. And I found multifamily real estate and I started to engrain myself into the community and try to build my network. And I would just encourage other people to just jump out of their comfort zone, really chase that dream and build a network around you. You’re only as good as your network. And now it seems that I’m just one call away from solving my biggest challenge. And that’s because I spent time building my network. And I think that’s the most important thing when you’re starting out. As far as where to find me, you mentioned we’ve got a podcast, Passive Income through Multifamily Real Estate. Our website is www.limitless-estates.com. And we’ve got free Passive investors to guide on the website that everyone can delve into if they go sign up for the newsletter.
Brett:
Thanks, Kyle. I appreciate all your wisdom and all your inspiration you shared. And thanks again to the listeners for listening to another show of Capital Gains Tax Solutions Podcast. We look forward to connecting with you soon on the next one. All right. That’s a wrap.
Kyle:
Perfect.
Brett:
Thank you, Kyle. Appreciate it. Great job. This kind of went really well. Any feedback from you or thoughts?
Kyle:
I thought it was good. I appreciate you having me on. Let me know if I can help you out in any way and we should have you on our podcast as well.
Brett:
Sure. Yeah. Love to be on. Love the opportunity and yeah, sure. You want me to send you a link for that? Or you want to send me a link?
Kyle:
Yeah. I can definitely send you a… I’ll shoot you an email just to first ask for your bio so I can kind of see where you fit in. We kind of have four different slots every month. And so I’ve got to see where you fit in there and then I’ll send you a scheduling link based on that.
Brett:
That sounds great. Yeah. I’m on my 20th interview. About my 20th one. And I’ve been on about 25 shows myself and so learning this new thing. One of the things that the coach is telling me is to create a story, right, For your podcast like what you’re saying, probably fit into that, whatever that part of the story is, and kind of like a book. You’re writing a big book and it’d be strategic about it. I’m like, “Oh, that’s so smart.” Right. Rather than just doing random interviews. Right. So I don’t know if that’s what you’re thinking or that’s what you have, but hopefully, it is because that’s encouraging to me.
Kyle:
Yeah, absolutely. It’s not a story per se, but what we do is we are intentional about who we interview and week one, two, three, and four of the month. So I guess you can kind of say as a story, but it really gives diversification, but we don’t just randomly interview someone. And it’s just a good pace, I think. And I think people, our listeners like it anyways.
It's just really being available, jumping on it when the opportunity is there, and doing things that other people aren't going to do. Click To Tweet
Brett:
That sounds great. Well, thanks, Kyle. I appreciate it. And good to meet you over here and I wish you well in the next few days. Right. And then when I get on the show. Great.
Kyle:
Definitely.
Brett:
Okay. Thanks.
Kyle:
Awesome.
Brett:
Bye.
Kyle:
Bye.
Brett:
Okay. That wraps up our show with Kyle. Just a few thoughts here. I love that he’s working with his spouse. That’s just so inspirational for me and maybe for some of the listeners out there. If you can work together and build a business and help people alongside your spouse, I think that’s just such a gift to be able to, to have for your marriage and for your family and for helping other people and just spend time together. Because let’s face it, our time is limited on this earth and to be able to spend time with family and to be able to work with family is truly, truly a gift. So this is inspirational to hear about Kyle and how he and his wife are doing just that. The other thing that stuck out to me was the ability to focus, right? Focus and being very intentional about your goals. Reading your goals every night, having a plan for personal development, and also consuming other content from great folks like Tim Ferris, where you can learn so much from different podcasts and different areas of life. So I encourage you to share this episode and write and comment. That’s how we grow our show and our influence here. And the last thing is, is that you’re one call away from solving your biggest challenge. So I think of Russell Brunson‘s, you’re one funnel away from accelerating your 10X-ING your business. You’re one call away from solving your biggest challenge. Or who are your networks, right? Who are the people you’re adding value to or your friends so you can call in a time of need so that they can help you solve your challenge? And or how are you being a friend to others and being one call away so they can also call you and you can help them. So I encourage you to feed that person for others and to add value to others, grow your network, grow your influence and help more people achieve what they’re trying to achieve. And thanks again for listening to the show. We look forward to connecting with you on the next one.
Important Links:
About Kyle Mitchell
Multifamily Syndication | Real Estate Investor | $41MM AUM | Podcast Host | Public Speaker | Mentor | Passive Income Producer | Cash Flow Creator | Asset Management Summit
Our Vision at APT Capital Group is based on 4 key components. Capital Preservation. Better Communities. Exceptional Operations. Wealth Generation.
Our Mission is to positively impact the lives of our investors and the communities in which we invest through the highest level of transparency and fiduciary responsibility
Our Values are focused on the following core beliefs.
First Class Communication
Kaizen
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APT Capital Group offers the chance for busy people to invest in real estate with experts who are aligned with their goals. Together the managing members have over 50 years of management and operations experience. Our fiduciary responsibility and transparency to our investors is paramount. We invest in communities to make a difference for both the residents and our investors. Our exceptional operations are our secret sauce. At APT Capital Group, we make it easy for investors to build wealth with people you can trust!
