HEATHER EWING: The CRE RUNdown
Are you intrigued by Commercial Real Estate? Join Heather Ewing, CCIM each week as she dives into CRE trends, Deals, and Developments throughout Madison, WI. Learn the crucial role of Mindset in CRE and Marathons! Success leaves Clues.
HEATHER EWING: The CRE RUNdown
Ep. 45 Karl Krauskopf - Endurance and Strategy in Seattle's Multifamily Market
Join us as we welcome Karl Krauskopf from Gold Multifamily, who shares his fascinating journey from corporate strategy to mastering the challenging Seattle real estate market. Discover how Karl's transition from day trading led him to the intricacies of multifamily property investment, starting with a humble duplex. We explore the trials and triumphs of managing multifamily properties, with a special focus on tenant retention and streamlining operations. Karl's passion for endurance athletics, particularly ultra-marathons, becomes a metaphor for the discipline and persistence required in real estate. His love for Seattle's mountainous landscapes serves as the perfect backdrop for his blend of physical and professional endurance.
Looking ahead, we delve into the future of commercial real estate with Karl's insights on a stable market trajectory and the innovative role of AI in underwriting processes. We discuss the implications of national debt on treasury rates and the opportunities within secondary and tertiary markets. Karl candidly reflects on missed early investment opportunities and the critical role of rental income, sharing his enthusiasm for educating the next generation about real estate. With a focus on supporting active investors and prioritizing family time, Karl invites listeners to connect through LinkedIn and Gold Multifamily's platform. Tune in for an engaging exploration of real estate strategies, endurance, and personal growth.
Welcome to Heather Ewing, the CRE Rundown. Today I have a terrific guest for you. It is Karl Kruskopf. He is with Gold Multifamily, karl, welcome.
Speaker 2:Hey, how you doing, how you doing. Thanks for having me, heather. It's super excited to be here and, yeah, I was excited to talk about some more endurance athletes and sports that we do and hopefully we get into that and obviously on the CRE side.
Speaker 1:I like it. It's the perfect combination, right? Yep, yeah, exactly so I've known you, for I think what is it? It's a couple of years or so on LinkedIn. So for those that may not have heard of you yet, can you share a little bit more about yourself?
Speaker 2:Yeah, so I am a multifamily operator out in the Pacific Northwest, specifically located in Seattle Washington where people like to not necessarily it's not your first idea of where to start investing in multifamily right? It's a little bit more difficult to manage a property simply because it's not the traditional landlord-friendly area. However, again, I am somewhat of a contrarian thinker and I do love working with and managing apartments out here, spent a lot of time in the residential construction and new development rehabs for the first portion of my career, and before that I was in corporate strategy for about a decade.
Speaker 1:Very nice portion of my career, and before that I was in corporate strategy for about a decade. Very nice. It's interesting how everything in our past kind of helps us on the path to our current rendition, isn't it?
Speaker 2:Yeah, absolutely. I spent a lot of time growing a book of business and really focused on EBITDA improvements, so profit improvements and a lot of that goes straight into multifamily. How do you grow your tenant base, how do you retain your tenants and how do you reduce expenses in the operations?
Speaker 1:Definitely. And what got you into the investing world right? You hear a lot about it. People either seem to really love stocks, some are real estate only, some understand a balance between the two. How did you get into all of this?
Speaker 2:Sure. So I actually started trading day trading when I was a little bit disenchanted with my job at that point let's say this was about seven years ago Really started looking at some additional ways to make more income. And we were having a kid my wife and I were going to have a kid and again we started looking at different options, started day trading wasn't really my thing, didn't have the compute power at that point and couldn't really make make it work with the day job at the same time. Look, started looking at alternative investments and stumbled into owning a duplex Obviously, there was about six months worth of education prior to purchasing that duplex and just fell in love with it.
Speaker 2:Fell in love with the rental, holding rental and getting monthly income. Yes, of course, you still have to manage the property management company Definitely not a passive investment by just buying a rental. Bought a couple of those and then quickly realized we were running out of money and had to start flipping and gaining more capital. And this was back in 2019, when capital was free flowing and people were buying houses and we flipped a ton of homes at that point.
Speaker 1:Perfect, and now you're an endurance athlete, so of course that's near and dear to my heart. How did you get into that?
Speaker 2:Oh, good question. So I have always been hiking. I've loved hiking. I say always. We moved out to Seattle about seven years ago, a little more than seven, and we moved out here for the love of mountains, so it was always into hiking. Since we've been here, I have never really been the type of person who can walk up a mountain. So hike up a mountain and have a conversation. You know it would be at the top of the mountain that I'd be able to talk, or coming down the mountain that I would be able to talk. Meanwhile, I'm hiking with other people that can have those types of conversations, long winded business conversations.
Speaker 2:I start hiking and running with, um, you know, business partners and mentors, essentially, and again, I can't talk while they're running, um. So I've realized, hey, I got to get improved calisthenics, improved cardio. So about 18 months ago I decided, hey, I got to start running. Running on my own Wasn't working, hired a coach, hired a running coach. And uh, this was back in. Hey, I got to start running. Running on my own Wasn't working. Hired a coach, hired a running coach. And this was back in. Let's call it August of last year. And since then it's been. You know, ran my first 50K ultra marathon about four months later. That's awesome.
Speaker 2:Yeah, I've done three so far this year.
Speaker 1:How would you say, in pushing yourself to that level, how has it affected you as an investor and also as as a person?
Speaker 2:Yeah, I think. I think it's all about discipline and just realizing that you have to put in the motions. There are certain motions that you have to put in in order to be successful and it may not it's certainly not going to come overnight. You know, with investing or with entrepreneurship, you know that you have to underwrite. Right now I know that I have to underwrite roughly about 110 deals before you know we're closing on a deal. And you know, when you're at deal number three it's like, okay, now I've got 100,. You know 107 left to go.
Speaker 2:It's going to take a while, but hey, we gotta. We gotta get those that muscle done, or we gotta get those, uh, those reps in. So same thing with endurance athlete. Uh, you know I don't really want to wake up at 4.00 AM tomorrow, like we were talking about earlier. I don't want to spend two hours, two hours running in the dark, um, but I know that's the only way to be successful and not get an injury when it gets to running. You know what I call in season running and competition season.
Speaker 1:So tying into that and this is also why you know with me, marathoning you doing your longer runs is the equipment matters right. And that's where we can easily liken that to commercial real estate and investing. Of the different tools and resources, what have you found works really well for those ultras and, comparatively, what do you find works really well in the investment world?
Speaker 2:Yeah, so I think resources from in the investment space is simply, I would say it would be relationships, right? So brokers, whether it's from the debt side, the equity side, as well as, obviously, the deal size, the deal side of things, and so making sure that you know I'm actively engaged in conversations with each one of those players that holds essentially the keys to the next deal, and so then, obviously, there's other resources like COSAR reports and things of that nature. From a data perspective, that certainly is absolutely helpful. In terms of, obviously, running. One of the reasons why I love running as opposed to any of the other endurance sports is it's to me it's one of the cheapest sports. All I really technically need are a pair of shoes. You know, most people would want me to have some shorts on and more people would want me to have a shirt on. I can do it with it with just shoes.
Speaker 1:Right? Yep, that's great. Well, and I think also it's the simplicity of it, which is what you're saying, and that's why I like too, when we're traveling you know whether it's different business events, networking, things of that nature that you just grab your tennis shoes and you can go from anywhere, which is really nice. Yeah, yeah.
Speaker 2:And I think the simplicity goes back to. You know, I think investing in real estate is one of the most simple things, but it's also the most difficult thing. And in the fact that it's just, it takes discipline right. Same with endurance, running, same with investing, is it? It's simple, we know what the steps are to do and what to and how to be successful. It's just actually putting in the reps.
Speaker 1:Right, and I think also, another big point is seeing the big picture and breaking it down and staying with it consistently, which, as you know, with investing there's always. You can put a great plan together, but there's always going to be some type of surprises that come along. So it's that endurance, long term mindset and the relationships, as you earlier pointed to, that really bring things across the finish line. So, with that mindset, how does that tie in? Where do you see the gaps and where do you see are places that people can really execute due to mindset?
Speaker 2:due to mindset? Yeah, good question. So you know where I think too many people rely on motivation, to getting them up in the morning, to getting them and helping them find either their next deal, whether it's real estate or whether it's, you know, whatever it happens to be you know too many people rely just purely on motivation. Again, I'm a strong, strong believer of set out your goals. What is your end result that you want to be at? It doesn't have to be the 10-year result, it can be the one year result.
Speaker 2:What is your one year result? Where you want to be in one year and then work backwards and figure out what are those steps and then again just remind yourself, reminding ourselves, of what that one year goal is and how. Then you know if you're far along enough in your whether investing journey, business journey, you can start extrapolating that one to three to five-year goal and then even a 10-year goal, and you know some people go beyond that. And that's where you know inspiration, motivation starts kicking in, and you know not to downplay motivation and inspiration at all. It's, you know, that's what connects the discipline to the emotional side of things, and so I'm a huge advocate of motivation and staying motivated, but again, finding those things, those steps that you need to be in order to stay disciplined, coming in day in and day out. Well, and I'm sure you hear it all the time too, because you're very- consistent.
Speaker 1:Well, and I'm sure you hear it all the time too because you're very consistent, you've been doing this for years, similar to myself of well, it's easy for you, carl Right, where people have a premise that, just because you're consistent and you deliver for yourself and also in your races, that it's something that you love doing every day. And, to your point, it's not where we love being motivated and we're frequently motivated, inspired, but some days it's the last thing you want to do, kind of like you getting up at 4 am tomorrow.
Speaker 2:Yep, and it'll probably rain tomorrow as well, so that's raining 39 degrees sounds fun.
Speaker 1:Yeah, and I'm sure we're wired the same way, in the sense that it's who you become because of your diligence. And doing that, the dedication to the sport, the dedication to your clients, investors, that it's very fulfilling and I think that's why it creates such a positive loop that continues forward for years and decades.
Speaker 2:Yeah, certainly positive feedback loop.
Speaker 1:Definitely so. What would you say is something that you envision for the future, with investing and all of those different assets of commercial real estate? Right, we continue to evolve and expand. Obviously, 2020 was a big year several years ago. We're in a completely different arena in some ways, but yet not. What are you envisioning for the industry?
Speaker 2:Yeah, good question. So, from an industry perspective and then maybe a corporate perspective, obviously, from the industry, I think we'll continue to see what I would say a sideways market. I don't think we're going to see, but what I hope that we don't see is any kind of massive downturns and I would define massive downturns as huge spikes in unemployment and then, all of a sudden, we need to start bringing down the rates radically too quick. I think that that's going to be a more or less a doom loop. You know, I think if we're talking about, you know, more globally, you know, talking about national debt, I think that is a big crisis that we need to solve and certainly is going to weigh on a lot of our metrics 10 year treasury, five year treasury, etc. And so, again, my, my anticipation of what we're going to see between now and the end of 2025 is just a continued sideways market.
Speaker 2:And if you're, if you're, in a position to buy, you know, I don't, I don't think this is at all a bad time. I think this is a great time to start buying, which we are doing ourselves in the Northwest, and it's all about finding the best cost basis on these deals and making sure that you're not going into an oversaturated inventory market is what we're looking at, and that kind of plays into the corporate landscape as well. Well, as you know, we're continuing to find secondary, tertiary markets that aren't oversaturated in terms of supply, that have good, strong fundamentals in terms of population and job growth, wage growth as well, and you know places that people want to live and want to recreate.
Speaker 1:How do you see the interplay of AI affecting this?
Speaker 2:Yeah, I absolutely love it Great question, right.
Speaker 2:Yeah, no, absolutely. There's just too many ways that AI can impact all aspects of CRE. We're starting to see more and more startups that can help generate underwritten files for both investors as well as debt. Let's call it five, five stories and above, where you know it would be unsafe to bring somebody in, or rather would be more. It would be expensive to have somebody come in and do it via drop downs, and so, again, I see every aspect of it impacting the market. It's just where where the focus is, and making sure that we don't get the shiny object syndrome.
Speaker 1:Right, exactly.
Speaker 2:All right, here's a good one for you.
Speaker 1:If you were to reflect on the past five to 10 years, what is something that you would have advised yourself to make things easier?
Speaker 2:Yeah, I would have bought a duplex sooner or a small multifamily sooner. You know, my wife talked about buying a duplex probably about 12 years ago.
Speaker 2:And I was like you know, was vehemently against the idea because I didn't want to share a wall with somebody. Now, wanted my own yard, my own space. And now it's like well it was. We should have done that 12 years ago. You know we, we, we bought a remodel. You know, home to remodel, um initially, and then we lived in a bunch of single family homes and you know, live in flips. But you know I would have loved to have started that. You know, rental income uh, sooner, um, but you know that's, that's part of of the part of the learning process and I'm teaching, start a teaching gig, um for high school kids, uh, next year in january, oh, that's terrific, yeah, teaching them more about that basics and basics of real estate investing is the the course topic and, um, yeah, really excited about that are you going to extend that to a basic offering, though?
Speaker 1:I mean that would be ideal for people that are new to investing in general at any age.
Speaker 2:You know I certainly wouldn't. So it could be a consideration. I wouldn't. I'm not looking at it in terms of offering like a coursework and classwork and coaching and accountability programs not something that I would look to get into. But certainly I always offer our investors hey, I'm happy to help work with somebody to get their next loan, their next purchase. So I do do that right now for our active investors, but wouldn't be looking to expand it or commercialize it.
Speaker 1:Rather, Right, right, okay. Here's the final hard-hitting question. All right, so what does living fully mean to you, carl?
Speaker 2:Living. I think living fully means the ability to spend time with the people that we want to spend time with in the way that we want to. So to me, what that would look like in a picture perfect world is spending the most amount of time with my, my family, my daughter, my and you know. Again, being in places that we want to be. I would say largely we do that, and obviously now we're in the confines of, you know, school and my wife's work work environment, so we do have some bounds on that. And so, yeah, I mean I think it's mostly just spending time and being with family.
Speaker 1:Yeah, definitely, it's really that simple right. Yep, yeah, all right. So where can people find you, carl, if you can share that?
Speaker 2:Sure, two places I'd love to post. I post daily on LinkedIn just educational topics. You know lessons learned that I've had going from single family homes to owning will be a little over 100 units in February and post there daily. And then secondarily would be gold-mfcom. So Gold Multifamily is our company and our website is gold-mfcom.
Speaker 1:Perfect. Well, Carl, thank you so much for joining me today and I look forward to next time.
Speaker 2:Thanks, Heather.
Speaker 1:You bet.