How to House Hack a Fourplex With 3.5% Down | FHA Real Estate Investing Strategy

Kenny Kirunda (00:00)

One of my friends who I used to work with, his name was Will. He had been there for 33 years. And I was very close with Will, so we got a chance to talk. And one day they were throwing a party for Will because he’s been there for 33 years. And so they brought everyone into the cafeteria, they brought him a small little cake and a watch. I said a small little Timex watch that was less than 20 bucks. And I said, Man, he sacrificed 33 years of his life in this company to make somebody else wealthy.

And he’s only getting a cake and a watch, I said, no, this is not for me. So from that day on, I started looking at businesses that could possibly start for myself. So I looked at laundromats, I looked at convenience stores, I looked at vending machines, I looked at anything that could bring me cash flow without me having to physically work.

Issa Hanna (02:10)

Welcome back to another episode of the Real Estate Pros Show. I’m your host, Issa Hanna, and today we have Kenny Kirunda, Coach Kenny. Welcome to the show.

Kenny Kirunda (02:18)

Appreciate it, so thank you so much for inviting me, man. I appreciate it.

Issa Hanna (02:20)

I’m super excited to have you, man. You are a lot of things, right? You’re a wealth coach. You have an investment group. You invest for yourself. You’re a seasoned real estate investor. So for my people at home wondering who Mysterious Kenny is, why we got you on the show, can you kind of give them a rundown of what you’re doing in the real estate space and then a day-to-day in your world?

Kenny Kirunda (02:41)

Sure. First of all, yes, sir, thank you so much for inviting me. Investor Fuel, I’m big fan, love the show. So my name is Coach Kenny. I’m an investor now in Atlanta, Georgia. Right now, what I’m focusing on is buying as much real estate as possible. Ideally, cash-flowing multifamily properties. We do dabble in some other small niches like mobile home parks and also looking into storage units, but the ideal situation we’re looking for is anywhere from 16 to 100 units in terms of multifamily.

And we’re looking all in Southeast. So it could be North Carolina, South Carolina, Florida, Georgia, anything’s in the Southeast we’re looking at, and just running the numbers as quickly as possible and seeing how we can offer put some deals out there. My day to day is very boring. If I could tell you this, it’s not exciting. But it’s pretty much I wake up five in the morning, go to the gym, hit it from like five to like six, play basketball and lift, and then get right in the office around seven o’clock.

And from seven o’clock, I’m usually checking quick emails, but I’m not really heavy into it. I have some assistants to do that. And then I’m just running numbers. I have about 60 agents who send me deals, and my email’s usually full of some deals from all over, from Arkansas, Alabama, all these places, and I just run the numbers. I go through almost the same kind of format. I have a tool I use, I call it the Only One Calculator, and I just use that, plug the numbers in, and it tells me green, go, red, don’t go, yellow, look at some more numbers or figure out where the issue is.

And I just run that over and over again until I find a bunch of green properties I look at. Then I contact the agents around nine o’clock, ten o’clock, and we start talking about the deal, start figuring out where that value add is, where the opportunity is, and where I could see myself in purchasing that property in terms of what’s gonna look like for down payment, financing, all those specific things. If I’m gonna finance it, sometimes I buy cash and then depends, like I said, on the deal itself. We’ll move forward in the next steps in terms of due diligence. But most of my days is pretty much boring looking at properties twenty-four seven.

Issa Hanna (04:25)

Looking at properties, running numbers, man, and spoken like a true veteran in the game. Because when you get to a certain level and you’re an investor, you have a buyer’s net, what we call that buyer’s net, right? So you have your own philosophy of buying what works for you. Like you said, multifamilies working, cash flow, obviously you need that cash flow. So the fact that you sit there all day and run the numbers so you can, you know, you can deploy that capital the right way, is amazing. And I want to bring up a strength you talked about earlier.

You said you take the emotion out of this underwriting, you take the emotion out of numbers. So you might really like a property, but if it doesn’t turn green, if it doesn’t make dollars, it doesn’t make sense. Can you give us more light on that?

Kenny Kirunda (05:01)

Yes, absolutely. And this is one thing I think a lot of new investors make the mistake of getting emotional about property and real estate. Remember, when you’re buying property, especially when it’s an investment, you cannot look at it as an emotional buy. You’re not buying it for yourself, you’re buying for the cash flow. I don’t care how it looks, I don’t care about anything else. It’s about how much money this is gonna bring me every single month. So for me, there’s a certain percentage I’m looking at in terms of cash on cash return.

And if it doesn’t bring back the same amount every single time on that property, I’m just gonna pass on it. Even if it’s the prettiest property in the best location, the best price, for me, it doesn’t make sense if it doesn’t cash flow. I’m really a cash flow heavy investor because I’m not really worried about appreciation. That’s gonna be automatically ideal. But for me, I need to get that money back as quickly as possible. So for me, a lot of people think, I want a 4% return, a 5% return. No, I’m looking at really how fast is my original capital gonna come back.

So if I’m let’s say a million dollar deal and let’s say I’m putting down 250,000 about 25%, I’m figuring out how quick am I gonna get my $250,000 back. That’s how I’m really looking at the math for me is how quick is it two years, five years, eight years? And I’m looking at those numbers to make sense for me because remember, there’s opportunity costs. So if I’m putting that $250,000 down, that means I’m saying no to a lot of other deals. That’s why I look at so many deals to make sure I’m using the capital properly. So for me, I’m always looking at cash flow.

I’m looking at return on cash on cash. I’m looking at in terms of how quick my original capital is going to come back. So that’s why I’m looking at every single time on every deal.

Issa Hanna (06:24)

That’s an amazing philosophy, man. I’m a big believer in the cash flow. Equity will come over time, right? So you’re buying and holding these properties. They’re gonna go up in the next 10, 20 years. You don’t really gotta worry about that. But if you’re not making that much money and you’ve got such a liability, especially if you’re holding notes on that, it could be very stressful. So the fact that you’re already projecting and you you’ve gotten so good, man, you could probably get it almost to the T when you project these numbers, you know what you’re making when you come into the game. So it’s not as big of a risk when you do have to have to finance some things or when you do have to deploy this major capital.

And I love that you, like you said, you’re taking the emotion out. Something might look really nice. Some something might be kinda like pushing you to buy it, but you know, you stick to your guns and that right there is a priceless lesson in real estate to learn, you guys.

So for all you people at home and take notes because Kenny’s coming with some real knowledge and yeah, I can see that that’s why you also coach people and we’re gonna get into that later, but I wanna get your origin story, right? We all have an origin story. We all stumbled into real estate somehow, a light bulb went off and said, Man, I should keep doing this. Let me get your origin story.

Kenny Kirunda (08:18)

Yeah, absolutely. And thanks for the ask the question. I loved real estate before, but I always thought real estate was very expensive, or you need a lot of money to get into it. So originally when I graduated from college, I got a degree in information systems and technology management. And I got a job at a company called Nova Biomedical in Boston. They make small little medical devices for testing blood and these kind of things. And I was making great money, but I was there for about three years, about four years.

And one of my friends who I used to work with, his name was Will. He had been there for 33 years. And I was very close with Will, so we got a chance to talk. And one day they were throwing a party for Will because he’s been there for 33 years. And so they brought everyone into the cafeteria, they brought him they brought him a small little cake and a watch. I said a small little Timex watch that was less than 20 bucks. And I said, Man, he’s been he sacrificed 33 years of his life in this company to make somebody else wealthy.

And he’s only getting a cake and a watch, I said, no, this is not for me. So from that day on, I started looking at businesses that could possibly start for myself. So I looked at laundromats, I looked at convenience stores, I looked at vending machines, I looked at anything that could bring me cash flow without me having to physically work. Because I thought that’s the best way to do it. And so I started looking into real estate and I realized, there’s ways to really buy real estate at a very lower cost than I thought in my head. So I want you to listen.

Self-education will make you a millionaire. Self-education will make you multi-millionaire if you do it right. So I started looking into real estate. I looked at all the podcasts. I started looking at mentors and all these places and just kind of figure out what’s going on, how do people make money with real estate? And I realized, you know, there’s a program called the FHA program. So I went and looked into it, found a banker, and he said, Yep, you know, you have to get your credit at a certain level and you could put down 3.5% down. And I realized this is the hack, guys. If you can pick this up, it’s a very good hack.

I realized that with the first time homebuyers, they allow you to buy either one, two, three, or four units on your first time homebuyer program. It’s a big hack, guys. I hope you guys take that into consideration. And so I bought a four-unit. It took me about six months to find a four-unit in Boston, Dorchester. I still own it today. It’s a four-unit. It’s I bought it for 395,000. I put down 17,500. I actually emptied my 401(k) because that money was just sitting there. So I emptied my 401(k). I bought the four-unit.

And it was a great price, great location. And it had renters already in there, and they were all pretty much very low market rents. So that’s where the value added I was telling you about, guys. The market rents were about eleven hundred dollars, but the rents were that were getting charged were around seven hundred and fifty. So we’re talking about four or five hundred dollar diff difference. Depending on location, yeah, exactly. Huge. So I realized that’s where the money is really made. You buy cheap low enough.

You add that value. So what I did was I bought that four units. I lived in one unit, and I was able to fix up the other units by putting in about $2,000 each in terms of fixing carpet, painting the walls, changing anything that’s broken in terms of faucets and stuff like that. And then I was able to bump those rents up from $750, $1,200, around $1,200, $1,250. And I was able to add that value and I was able to live for free pretty much. All my bills were paid for and I didn’t have any come out of any pocket for my mortgage, for my insurance, for everything was paid by the tenants.

That’s when realized that I could really do some really damage with real estate if I do it properly. So that’s kind of my first deal. And I started just scaling from there and then started buying out of state because Boston was so expensive. So I went to Indiana, went to Florida, went to Texas, now in Georgia, and I started looking at places where I could buy at a lower cost and be able to still get the market rents. Like I said, find that delta between and be able to make that difference. And that’s I’m now buying multifamily, that’s, you know, two, three, thirty units, forty units, hundred units.

Issa Hanna (11:44)

Love that, man. And yeah, it it’s as simple as that, you guys. First of all, I want to pull out one thing. Education, you said, is key. Self-educ. You really want to learn something. You want to learn the game, you have to put the work in, you have to do hours of research. But you researched it, you found out four units and under is considered residential. It qualifies for an FHA loan. You can go, you have to live there for two years, only two years. So you go, you live in one unit.

They’re paying all your bills. After two years, you can move out and rent that unit if you want. So amazing. And you can you can get in for a very low price. Like you said, three and a half percent down. I’ve represented over 250 first-time home buyers in my career. And I used to get them FHA deals with the 3.5% down and even closing cost credit, you guys. So for you people at home, you know, you negotiate a little closing cost credit, you ask your agent to negotiate a closing cost credit.

That can knock off a few more thousands. So man, I love that you brought up that strategy because we talk to a lot of big investors, right? You’re a big investor now. So when you’re over here, sometimes you forget to basically include, like, hey, you can get in for this. Is how we got in. This is how most investors get in. And look at you now, multi-million dollar deals, six, ten deals a month sometimes. So unbelievable, truly inspiring.

And I want to shift focus though a little bit, right? Because we’re gonna go from inspiring and I’m gonna go to a little bit scary, but inspiring as well. Yes. We all have it, right? The real estate nightmare. Every investor has one. Give me one that sticks out in your mind and how you got through it.

Kenny Kirunda (13:16)

Yes. So listen, with every journey, you’re gonna have ups and downs. It’s just a fact of life. So you same with the real estate journey, everything’s not gonna be rain rainbows and ponies. So one of the worst deals I probably had was I bought a property, it was a multifamily property in Indiana. And one thing is I flew out there, I did everything that I was supposed to, it was a great deal, supposed to be a great deal. The thing that I didn’t do enough due diligence towards was the property management side because all the previous properties I had purchased before I was self-managing myself.

So I knew everything was going on. I hired the plumbers. I hired all these people. This is my first property where I hired a third-party property manager. I thought I did good due diligence, but unfortunately, I didn’t really vet them enough. So, and I’ll give you some tips on how to vet property manager if you really want that. But the thing was, I realized they’ll do they were just running invoices that were not actuals, which means let’s say one of the units needed the water faucet to be changed.

They would say, yeah, we changed the water faucet, but they never changed it. And they would charge me for that. And it happened a lot. It happened over about a year. And so and we’re talking about like simple things like mini blinds, toilets, all these things were supposed to be done and they were invoicing me and taking it out of my rent, but when they actually the actual property was actually getting like ruined because those things were not getting fixed. Until I realized I flew down there, I went and checked the units and I realized all these things were not done.

I fired immediately. So that’s one of the biggest things I dealt with where I did not do diligence enough in terms of property management. And I’ll give you some tips on how to do it. First of all, you have to make sure that they don’t own units themselves. You don’t want the property management company to own units. Why? Because if they own units and those are vacant, they’re gonna prefer to fill those than your units first. Simple fact.

Second thing is you want to ask references of properties that they work with or property owners they work with. You want to ask for least five. If they don’t have five, they don’t give them you, move on because they should be able to give you those five easily and be able to vet those. And you could call them and say how long you’ve been working with them, how many units does it take you do they handle for you? How long is turnaround time in terms of an invoice comes in to fixing the problem? What’s the, you know, terms and days when they pay you? Have they ever missed a payment?

These are some simple questions you can ask, and you could ask a bunch more, but these kind of things you want to definitely do diligence on to make sure that the property manager is actually a solid one.

You want to see also to check out like Business Bureau in terms of how they are, check out their Google reviews, actually read the reviews. Don’t just look at the stars, read what they’re saying. Because people, and you realize this too. I said, when you have a good product or you have a good business, people will speak highly of you. And same thing on the opposite side. If you have a bad business, people will tell you about it.

So use that as a way to do your due diligence in terms of property management, and you should be fine. But make sure you check those properly. And I mean, I lost some other deals where I’ve lost like hundreds of thousands.

That was my one of my first ones where I really lost a lot of money. And it happened over a year period. I just thought I was the man, but you gotta really humble yourself sometimes and say, what? I don’t know what I don’t know. So you learn you learn through the mistake of that.

Issa Hanna (16:42)

And that’s the one thing real estate will teach you is when you think you know a lot, something will hit you and you’re like, man, I really don’t know anything. So the real seasoned investors, we just sit back and, you know, we’re not surprised by anything. And another thing I want to pull out, yeah, every property management company, every property manager are not created equal, you guys. A lot of people can tell you they’ll manage your properties, but you want people to be on top of it.

Going back to what you said about them owning their own properties, their properties get priority over yours no matter what. So these are these are some red flags. I love that you raised a lot of the red flags already and then you gave our people something to look out for. Rewind this. Make sure you guys save that because that could save you guys thousands of dollars.

And one of the smartest things somebody can do in real estate is learn from somebody else’s mistakes so that you don’t make the same one.

That’s why I always ask about the real estate nightmare, because we can pull out and unpack a lot of lessons from it. And now I want to focus on the future a little bit. I’m looking at you in five years.

Kenny Kirunda (17:41)

Uh-huh.

Issa Hanna (17:42)

You’ve got a coaching business, you’ve got an investment group, and like I said, multi-million dollar deals. So, you’re already on this trajectory. So in five years, where am I gonna see you at?

Kenny Kirunda (17:52)

Man, five years. I have my goals written down. That’s why I can look at them. I my goal is to have own two thousand nine hundred and fifty units. That’s the goal. And there’s a certain reason why it’s that number, but it’s there’s a certain goal I’m reaching for, which is at 2950 units. And I’m looking at mostly Georgia, but anything in Southeast, anywhere in those areas, I’m looking to really expand and have a full stranglehold on the possible and could be one of the largest players.

Multifamily game down Southeast. That’s the goal. But also still educate myself because, like as you talked about, let me show you guys something. Even as a real seasoned real estate investor, I’m still always educating myself. So we talked about property management. I went to the library. This is actually another hack, guys. Get a library card. You have a local library in your area, you can get plenty of knowledge. I have a book right here, *Property Management*, right? And then also have another book right here, *Deduct It!*, right?

These look like boring law books, but these are very important books that have to actually help me make a lot of money. So for me, I’m always educating myself. So five years, I should be smarter, I should be richer, I should have more units, and I should have a better situation in terms of my business structure, have better tax professionals, have better property managers. These are things I’m always looking at.

So I’m always looking to improve myself daily, which is through reading. Listen to investors like yourself, listen to podcasts. So I’m always looking to grow.

So five years from now I should be definitely 10X or three thirty X where I am right now. So that’s the goal of two thousand nine hundred fifty units.

Issa Hanna (19:12)

Love that. Two thousand nine hundred fifty. And I bet you did some math to come up with that number, didn’t you?

Kenny Kirunda (19:18)

Yeah. Well, no, so what I did, I said was originally right, the first goal was just buy one unit. That was the original goal when I started first started was buying one unit. So I bought the four units, then I realized, okay, I could do this. So let me say another goal, let me add a zero. So I said, let me get ten units. Finally got ten units. And I realized, man, this is getting easy. So I said, let me just make twenty five. I thought twenty five units was gonna be life changing. Got twenty five units. Then I was like, Okay, this is not bad. You know, let’s get two hundred. Let’s get two hundred.

And I realized, okay, 200. And I read a book called *10X* by Grant Cardone. And at that time I had I had 295 units. And he said every for whatever goal you have, add a zero to it. So whatever you you’re you want to aim for, add a zero. So if it’s a mil if it’s a million dollars, add a zero. So it’ll be ten million. That’s what should be aiming for. So for my two ninety five, I just added a zero, so now it’s two thousand nine hundred and fifty units.

Issa Hanna (20:06)

Love that. And what do they say? What does it reach for the star so you land on the clouds? That that’s that whole philosophy in play right there. You go, it might sound impossible at the time. I know a lot of you guys are sitting down talking about, man, 2,900 units, 2950. It might seem impossible till five years down the line we look you up and you’re sitting on 5,000 properties. And I’ve personally interviewed and know a lot of people who have more than 5,000 properties.

So it’s definitely possible you could start in real estate with this and end up with generational wealth. And now I want your advice for my younger viewers, right? Our business depends on relationships. It depends on growing your network. So if you had to give them one piece of advice on growing their network, establishing that first business relationship, what advice would that be?

Kenny Kirunda (20:51)

So I I’d give a couple of things, but definitely let me give the first one. The first one is you have to look into your phone. Look in your phone right now. And from A to Z, your network, which is your people you have in your phone, the save number, at least they know you. At least they have a warm introduction. Find the wealthiest five people. It might be just one, but just find the wealthiest person.

They might be in real estate, they might not be. Most likely, I guarantee they have a piece of real estate in their portfolio. Call that person, message that person, whatever you have to do is get in that contact with that person and take them out for lunch.

Take them out for lunch and buy the lunch or buy dinner, whatever it is, and get their time and just speak to them. Talk to them about what you’re trying to do. Don’t ask them for money, don’t ask them for favors. Just tell them what you’re trying to do. And the fact that you’re taking them out for dinner or lunch or coffee, they would, because everyone sees themselves in other people, especially when you’re starting off.

So if someone calls me and says, hey, Coach Kenny, I want to take you out for lunch, most times I don’t need lunch. I don’t need the money. I don’t need anything like that.

But I could see that they’re hungry because they’re willing to put the effort out there. They’re willing contact me. They’re willing to DM me. So for me, I take the most richest person I have in my network. If I don’t have a rich person, I go find them. How do I find them? I go to network meetings. I go to Facebook groups. I go to friends and family. I say, who, who’s in real estate? Who’s the wealthiest people we know? And reach out to that person and talk to them, ask them, because now they can give you a quicker path to success in terms of real estate, especially if they’re in real estate.

They can give you ideas, they can give you banking connections, they can give you property management connections, they can give you other people that maybe can guide you. Because if they’re not real estate, they know other people in real estate. Because wealthy people hang out with other wealthy people. So you want to hang out with as many people as you can in that high net worth individual.

If you don’t have a high net worth individual, go find a job at a high-end restaurant or high-end bar or cigar bar and start listening to people. Start they call it ear hustling. Start hearing how people talk about real estate and just introduce yourself and tell them what you’re trying to do.

And I think that’s gonna be one of the biggest ways you can really build your network quickly is by first starting through your phone, find the wealthiest person, and hopefully they can connect you with more people. And don’t mind to ask questions, be like, I’m really started, I have no money, I have no credit. What do you suggest I do?

And it could be simple as hey, you know, fix your credit. That might be the first step. Might not be buy a property, it might be fix credit first. You get the favorable lending. Like all these different things you’ll learn from a person who’s really seasoned in it. So you want to find somebody who’s ahead of you, ideally in business or real estate, and just buy the dinner, buy their lunch, be around them as much as you can, work for them for free.

Say, hey, what are you doing Saturday? I’ll take you out or mow your lawn. Because now they see okay, you’re willing to put the effort in, which is the time. If you don’t have money, you have time. If you have the money, most likely you don’t have the time. So for them, they don’t mind giving you a little bit of time because it costs them money, but in hand that could help you really accelerate your investing and your guidance.

Issa Hanna (23:27)

Hundred percent. Be a sponge, you guys. You get around these people, soak up as much knowledge as you can, show them that you’re willing to work hard and you’re hungry. Because like you said, these wealthy people, these people that have made it in life, they didn’t start out where they’re at, right? Nobody really starts off where they’re at unless they’re born into it. A lot of people aren’t, especially in the real estate world. So if they see something in you and they take you under your wing.

They can plug you into so many different things and literally change your life. But they need to know that you’re trustworthy. They need to know that you’re willing to put that work in. And they need to know that you’re there for them and that you’re always going to benefit them. Amazing advice. Amazing advice. And that’s why they call you Coach Kenny, right?

Kenny Kirunda (24:09)

Yeah.

Issa Hanna (24:09)

I’m going to give you the floor now, right? So people wanted to get a hold of you because we did talk about real estate heavy, but you also do have an investment group and you also coach people.

So if they wanted to get a hold of you, how could they reach you?

Kenny Kirunda (24:20)

Yeah, so my tag is at Coach Kenny. So everything from Instagram, Twitter to Facebook at Coach Kenny. I also run a private group called Invest In Your Future. That’s my education firm. And we just focus on educating people in terms of credit, real estate, finances, to be able to help themselves accelerate themselves to high net worth. That’s the ideal situation.

So we have the private Facebook group where I give out free information, we do some lives.

I also have a school course, same thing called Invest in Your Future. I can give you the link, and then you guys can sign up. That one’s more of a self-educated. Remember, we talked about self-education. It’s more about self-education. There’s different courses on credit, real estate, finances, how to build certain things, how to build assets, how to buy assets, how to buy businesses, all these things, funding, all these things to help you really grow yourself.

It’s really about how quickly you want to go through it. And then once a month I do a one coaching call with all the students.

And they can ask personal questions about their situation to me personally. And I could be able to help them answer that. So everything is Coach Kenny we have the school where we just teach if you have, you want to teach yourself. And also if you want to do one on one, it’s a little more pricey, but you can definitely get me one on one if you want also. Just that’s a little more intense, so that’s—

Issa Hanna (25:28)

Guys, a guy who built it from the ground up, started with an FHA loan in the four-unit. And he’s made it all the way to the other side and one of the biggest operators in the Southeast right now with goals to take over the whole Southeast. So make sure you guys get with Coach Kenny because he could teach you to build it just like him from the ground up. Very personable guy, respectful man. You know, I fully endorse it. Go for him.

Kenny, thank you so much for coming on the show, man. You brought so much education in the short burst of time.

Kenny Kirunda (25:57)

Man, Issa, I love what you guys are doing, man. Education is number one, guys. Follow Issa, follow Investor Fuel. I mean, soak up all the knowledge. If you’re driving somewhere, put on the podcast and rewind it, re-listen to it. And the thing is too, don’t just listen to it for entertainment. Cause if you just listen to it and you don’t do anything, that’s just entertainment. That’s just like Netflix.

Listen to it and take action. Listen to it and take action. Then you start seeing some results from your actions. So you want to see that strength growing from the actions you’re taking. All right. Issa is doing beautiful stuff, which is giving out information and guys, I mean he’s doing it for free, guys. He doesn’t have to. I mean, he’s an investor himself. He has time, he has family, have kids, but he’s willing to put that information out there for you guys to grow yourself.

So take advantage of it and really take it to heart and use it to grow yourself. But I love what you guys are doing. So thank you.

Issa Hanna (26:40)

And Kenny, thank you so much. I really get excited when people bring light and knowledge to the game. Thank you for the plug. I really appreciate it. And to our viewers at home, if you enjoyed my conversation with Kenny and want to see more like it, make sure to hit like and subscribe.

I talk to people every day that can bring us different knowledge on every aspect of the real estate industry. Until next time, the Real Estate Pros are out.