How to Succeed in any Market Cycle through Diversification

For this episode, I welcome fellow real estate investor, Mark Khuri. Mark is the co-founder of SMK Capital Management, which is an investment firm that provides investors with passive income and growth through the creation of partnerships in private commercial real estate opportunities. He has been an avid real estate investor for over 15 years and has sourced, underwritten, acquired, raised capital, renovated, managed, and sold both residential and commercial real estate investments throughout multiple markets in the US. Over the last decade, Mark and the affiliates of his company have invested in over forty-five commercial real estate opportunities across numerous asset classes including mobile home parks, self-storage facilities, multifamily communities, retail shopping centers, and much more.

Mark first shares his life before he got into real estate and the progression to when he quit corporate life and started investing full-time. Mark says that it was a difficult time but he began by partnering with his family members, buying properties that were very deeply discounted, and renovated them. Mark felt like there was a lot more that they could still do, so he and his father decided to partner together and create their own firm.

I asked Mark if he still does any single-family home investing or are they now focused on different aspects of the market. Mark says he still has a small portfolio of SFH rentals, primarily in the midwest, but it is hard to scale a business in that segment of the market so they began to focus more on commercial investments.

Mark shares how they evolved into other asset classes fairly organically. In 2012, they invested in a mobile-home park fund passively by giving up control of the day-to-day operations. Mark discussed how he keeps organized and makes sure he isn’t getting taken advantage of while working in multiple markets. He said that there’s a lot of quality control that they put in place along with different phases of the investment timeline.

We discussed in detail the types of investment classes that Mark really enjoys as his company has diversified in so many areas. Mark explained how they offer different types of deals, or conglomerations of different properties, to their investors. We then talked about the impact of the pandemic on the real estate market and how their company will perform in the coming months if we do hit some sort of a recession or a serious downturn in the market. Mark said that it is important to be sustainable and consistent, to keep occupancy up, and provide good services for the community.

Mark shares all of the different markets that his company is invested in and some of his favorites for investing. He advises that there are many strategies to becoming a successful real estate investor, but everything always came down to surrounding yourself with the right people. You have to build relationships, evaluate the qualities of your partners and the people that have helped you along the way. Mark recommended hiring slowly when you are building your team and getting to know the people you’re working with to make sure they are of similar mind and share your goals.

In this great episode, we discuss value-add investing, deal analysis and underwriting, investment structure, and so much more! You won’t want to miss this installment of the Just Start Real Estate Podcast with the diverse and phenomenally-successful investor, Mark Khouri!

Notable Quotes:

“I learned along the way that climbing the corporate ladder wasn’t for me.”

Mark Khuri

“If you have a property with good access to transit and jobs, and you are a good landlord and take good care of your residence, you’ve got a very good recipe for success.”

Mark Khuri

“You really need to create that community feel so that people are happy to live there.”

Mark Khuri

“At the end of the day, you can have the nicest property in the best part of town. But if you have the wrong people, you’re going to lose money every day.”