Saturday, April 24, 2010

Lessons from a Successful Entrepreneur

"Systems are key...."
"Don't work with partners."
"Learn the business first, then hire people to do it for you."
"Find some good mentors."
"The only problem is, I work too hard."

I had the pleasure of spending some time these past two days with Patrick Grace of Grace Realty in Kansas City, MO. My good friend and fellow investor David Tamburello had brought Pat up to meet with Seattle investors, after having spent the past 1 1/2 years investing in KC with him. I can see why David is so jazzed about partnering with Pat Grace, as much as he is excited about the emerging market of KC.

Pat Grace owns a "vertically-integrated" system of real estate companies focused on meeting the needs of real estate investors. Along the way, he rehabilitates beautiful old houses, provides affordable housing and jobs in his local Hispanic community, transforming neighborhoods and lives. And at the same time, he makes some good money. Pretty awesome work for a real estate investor!

Pat started out in real estate ten years ago, becoming a broker and opening his own real estate company in a room in his house. He then worked for a mortgage company for 1 1/2 years, learning all about the money side of things and figuring out how to gain access to the banks, funding and REO properties.

"Wendy, ya gotta stay close to the money...."

Then he opened his own mortgage company. As both a lender and an agent working with investors, he saw the profits that were being made in rehabbing old houses. He opened his own construction company, and learned on the job how to do construction. He uses licensed electricians and plumbers, but for the bulk of his work, employs many of his Hispanic tenants to do everything else involved in construction.

He kept buying and selling properties for himself and other investors. Suddenly, he had a lot of properties to manage-and who was going to do that?

So Pat opened a property management company. "That's the hardest business so far; the profit margins are small, there's a lot of requirements and paperwork, but it's part of our service to investors."

Pat operates on the philosophy that he is building long-term relationships with his clients. He intentionally keeps his fees low, and focuses on building repeat business over time. The guy is street-smart and business-savvy.

Oh, and it doesn't hurt that his wife is Hispanic, fluent in Spanish, and involved in the business too. Pat no longer has a real estate license, because his wife is the broker in the real estate company and oversees the property management company.

"I have two main jobs, Wendy: find the investors, and find the properties."

Pleasure meeting you, Pat! You are an inspiration, and I suspect there will be some more Seattle investment dollars flowing your way....

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