Posts Tagged ‘Kale Flagg’

J. Kale Flagg on Von Vesting’s Investment Strategy

In Real Estate on December 7, 2012 at 5:40 pm
J. Kale Flagg

J. Kale Flagg

Von Vesting continues to wow investors. Kale Flagg explains how and why.

Presentation Solutions: Thank you for taking the time to chat with us today. Let’s cut to the chase; Von Vesting has a reputation for earning more than favorable yields for investors. How do you do it?

J. Kale Flagg: Our investment strategy is simple—“steal ’em, so we can give ’em away.”  In other words, buy ultra-wholesale so we can rehab to 2012-2013 standards and amenities (so the properties will move quickly) and offer for sale at sub-market rates (again, so they’ll move quickly) while making a minimum 10-15% cash-on-cash return.

Presentation Solutions: Moving properties quickly–that explains why you are so diligent with ensuring the paper trail is clean with the title, liens, etc.

J. Kale Flagg: Exactly. Also, we have an entire department dedicated to knowing what to improve and what to leave alone.

Presentation Solutions: You tend to market aggressively, does that help the property move?

J. Kale Flagg: Yes it does. More importantly, accurately forecasting the sales price that the improved property will sell at quickly once we’ve completed the improvements is the most important decision we make on a property. We don’t market before we know these numbers.

Presentation Solutions: How do you determine profit on a sale?

J. Kale Flagg: Profit equals sales price minus disposition, carry, improvement and acquisition costs—everything works backwards from sales price so we measure our improvement budget and sales price projection accuracy on a daily basis

Presentation Solutions: It sounds tough to compute…

J. Kale Flagg: Our business model is simple—we won’t pull the trigger on a property unless we know we can earn a minimum a minimum of 10-15% cash on cash in 90 days.   People often think that high returns connote high risk—but the reality is that we’re only averaging approximately 10-15% cash on cash per house flip.

Presentation Solutions: If you are “only” averaging 15%, why are your annual returns so hefty?

J. Kale Flagg: The reason for the Fund’s high annual returns is that we’ve been completing the transactions quickly (98 day average for 2011 and a little quicker then that, to date, in 2012)— which means we can use the same money 3 times in one year to buy, sell; buy, sell & buy, sell again.  If the Fund can make a minimum of 10-15% on a property, and use the same money to do so three times in one year—the total return comes out to 30-45% or more annualized profit for those who can source and secure product.

Presentation Solutions: Tell us a little about the structure of Von Vesting…

J. Kale Flagg: Von Vesting Inc., under its management contract with the Fund (the American Redevelopment Fund, LP), sources, acquires, improves and re-sells single family residences on the Fund’s behalf.   Von Vesting contracts LKT Construction (d.b.a., OneUP Construction), a California Licensed General Contracting Company (owned, directed and operated by Rich Von) to facilitate the property improvements; and one of several third party brokers to sell the properties via MLS.

Presentation Solutions: What exactly is the Fund?

J. Kale Flagg: The Fund is a California limited partnership, formed August 3rd, 2011 for the purpose of investing in real estate assets acquired directly or indirectly by the Partnership.  Investors in the Fund become Limited Partners and hold 100% of the Fund’s equity.

Presentation Solutions: So, who controls the Fund?

J. Kale Flagg: Per the Fund’s Partnership Agreement, the Fund is managed by a General Partner—myself and Tiff Von Alvensleben are the Managers of the Fund’s General Partner.

Presentation Solutions: How do the Fund and Von Vesting coordinate financial transactions?

J. Kale Flagg: The Fund pays Von Vesting, via their management contract, a flat 3%-per-property acquisition fee to purchase, rehab and sell Fund properties.  As an example, if Von Vesting sources 100 properties and does not purchase any of them; then the Fund doesn’t pay Von Vesting any money.  The Fund only compensates Von Vesting for successful purchases that meet the Funds pre set criterias.

Presentation Solutions: What is the general area that Von Vesting tends to focus on?

J. Kale Flagg: The 1,700+ properties that have been flipped over the last 12 years by the Operators of Von Vesting have all primarily been located in the San Francisco South Bay area (where Rich and Tiff both grew up and have family in the business) or the Greater Sacramento area (where the Vons currently reside).  And there have been more then a few in Nevada and Arizona as well.

Presentation Solutions: But how do you choose since there are so many properties for sale at any given time?

J. Kale Flagg: Since flipping is about velocity, picking the neighborhoods with low average days-on-market, the right schools and minimal competitive product is key.  Our advantage is that nothing replaces local experience when it comes to residential real estate, but it is our due diligence and knowing how to comp intelligently on the front end (so the product moves quickly on the back end) that makes the difference between profit and loss.  After 12 years and over 1700 properties, streets in our target market are recognizable and most new product is in close proximity to past projects.

Presentation Solutions: This is all very interesting but we are out of time for today. Thank you, Mr. Flagg, for your time this evening. We look forward to speaking with you as Von Vesting Inc continues to grow.

J. Kale Flagg: The pleasure was mine. Thank you.

J. Kale Flagg is the COO of Von Vesting Inc. His sales and marketing experience lends Von Vesting a unique perspective to property rehabilitation and sales. For more information about Von Vesting, contact the firm directly at 916.625.0235

Kale Flagg: How to Recruit a Great Sales Organization

In Finance on November 6, 2012 at 7:59 pm
Kale Flagg

Kale Flagg

According to Kale Flagg, it’s not uncommon for a team’s success to be attributed to a couple of extremely talented athletes instead of to a great coach. Proving that argument doesn’t hold water, Kale Flagg points to college basketball. Only a few coaches seem to win the championship year in and year out, he says, with the same handful of coaches in the Final Four each year.

This example isn’t limited to basketball. Kale Flagg says sports are filled with examples of teams with extremely talented players who have little or no success. Take for instance, says Kale Flagg, the NBA’s Washington Wizards in the 1990’s, formerly the Washington Bullets. Even though three of their starting five athletes were NBA All-Stars, the team barely broke .500 and didn’t make the playoffs. Kale Flagg also points to the Dallas Cowboys as an example. After Jimmy Johnson left, the team has never been the same.

Great players don’t win championships, Kale Flagg stresses. Great players in great systems win championships.

Kale Flagg also points to basketball coaches of Final Four caliber—Tubby Smith, Dean Smith, Rick Patino, Jim Calhoun and Pat Summit, to name a few. They are more than just great coaches—they are phenomenal motivators, recruiters, and presenters. But most importantly, they’ve all built great systems.

By studying how these coaches lead their teams to success, says Flagg, we can learn how to be great in our own businesses. Through a lot of sweat, effort and tears, nearly anyone can become a great motivator, recruiter, and presenter—if one builds a great system around it. Kale Flagg advises entrepreneurs to build their team the same way the great coaches in modern history have built their teams…from the ground up. He says that you do this by recruiting.

The lifeblood of a sales team is new talent, new blood. For this reason, a team leader should always be recruiting. Kale Flagg advises businesses to start recruiting by talking to the people that they already know, to either get them involved or to get referrals from them. Eventually, you will be recruiting people you have never met before–not only people who answer an advertisement in the newspaper or on the internet; but friends of friends, who you will meet in restaurants, at coffee shops.   Quality people know quality people—so referrals from successful people are the best source for team members, Kale Flagg insists.  And even random people that you’ll meet on airplanes or sporting events can be valuable.  As Kale Flagg explains it, meeting talented people and getting them to buy into your vision is only the starting point.

To illustrate, Kale Flagg returns to the coaching analogy. When Rick Majerus, who was the basketball coach at the University of Utah in the 1990’s and early 2000’s, recruits a teenager to come to his school, it is only the first step in his system of creating a championship program. Once the new recruit arrives at school, the coach begins to develop a relationship with the new player. Kale Flagg has found that it is one thing to know what you want the new recruit to do—to know that they should practice and study and stay out of trouble—it is quite another to get the recruit to actually do those things. A coach needs to build and maintain a relationship, a trust and rapport with his new arrival. The coach’s future depends on his or her ability to develop the protégé’s talent. The coach has to coach, and getting the athlete to dig deep, to strive, to hunger, and to passionately sprint toward success is the key to good coaching. That’s exactly what an entrepreneur should be doing, explains Kale Flagg.

To get a recruit to strive, the entrepreneur must give him or her a little taste of success. As Kale Flagg points out, there is nothing like getting a hit in baseball, scoring a goal in soccer, or making a basket in basketball to motivate an athlete. The same is true in the “sport” of business. There is nothing like making a sale and receiving a bonus or accomplishing market share to build passion and motivation. Once tasted, people know that success can be theirs. That confidence is everything. It is irreplaceable.

But, Kale Flagg emphasizes, you have to build curiosity, create urgency, and ensure that your new prospect is ready to learn. It is the responsibility of an entrepreneur to create desire–preparing the soil before planting the seed, concludes Flagg.

Kale Flagg is a Reno, Nevada-based entrepreneur who has worked on Wall Street. He currently serves as Chief Operating Officer for Array Asset Management, a firm that oversees utility scale solar arrays and General Partner of the American Redevelopment Fund, a $10mm redevelopment fund that sources, improves and re sells single family residences for profit in the Sacramento and Bay Areas of California.

Jeffrey Kale Flagg | Why it’s Okay to Rock the Boat

In Finance on October 15, 2012 at 1:24 pm
Jeffrey Kale Flagg

Jeffrey Kale Flagg

In 2009, Jeffrey Kale Flagg co-founded Eternity Medicine Institute. Eternity, an innovative and pro-active medical institute, equips clients to stay healthy with state of the art diagnostic & therapeutic programs.  Flagg was the co-founder and COO of Stable Development and is currently the Chief Operating Officer of Array Asset Management, and the General Partner of the real estate development fund American Redevelopment Fund, LP.

Do yourself a favor, says Jeffrey Kale Flagg, don’t get caught in the same trap as 90% of the population.  Instead of doing the same thing day in and day out expecting to accomplish a different result, suggests Jeffrey Kale Flagg, change your actions so that you can change your results.  Many of us, says Flagg, have heard insanity defined as “doing the same thing, day in and day out, expecting a different result.” Yet how many people do you know, asks Flagg, that complain every day about what they do for a living, then go right back the next day and do the exact same thing?  Do they want to be unhappy, broke and miserable?  If they don’t, asks Jeffrey Kale Flagg, why do they keep doing the things that make them unhappy, broke and miserable?

Queries Jeffrey Kale Flagg, “Why isn’t everyone happy?  Why isn’t everyone in the career of his or her dreams?  Why isn’t everyone financially successful?”  According to Flagg, everyone would like to be happy, fulfilled and loved—so why don’t they take the steps to insure that this becomes their reality?  The reason he hears most often, reports Jeffrey Kale Flagg, is that “they would if they could.”  Flagg does not buy that excuse.  He says that too many people don’t even try. Jeffrey Kale Flagg believes that it is not the lack of skill that prevents success and it is not the lack of opportunity either.  It is the lack of effort and the lack of Getting Started.

If that is true, asks Jeffrey Kale Flagg, then why don’t people try?  Is it because they are afraid of failing?  Is it because they are afraid of what people will say about them?  Or is it because they are afraid of success? According to Jeffrey Kale Flagg, it is probably all of these things and one more. People are afraid of change. Flagg says that change makes most people nervous and uncomfortable because by definition it is different, new and unfamiliar.

The concept, according to Jeffrey Kale Flagg, is similar to moving a boat out of the anchored spot where it has been floating idle its entire life.  The anchored spot is hot.  It has no shade.  It is in the middle of rough water and it makes for a very uncomfortable life.  It is not a good docking station—which is why the boat owner wanted to move it in the first place.  And, says Jeffrey Kale Flagg, that is a good decision.  There are other resting places that are better, more comfortable, and safer and more rewarding.  But, points out Jeffrey Kale Flagg, when you start the boat’s engine and move, you are going to create waves.  Now that doesn’t mean that you shouldn’t move, says according to Jeffrey Kale Flagg, you absolutely should.  What it means is that you shouldn’t be surprised when people yell out trying to get you to stop making waves.

It’s the same way in business, according to Jeffrey Kale Flagg. Making waves isn’t necessarily a bad thing—it is simply reality.  Once you understand that other people don’t want you to move even though better options are available, says Jeffrey Kale Flagg, that should be a huge motivator for you to never stop moving your boat—to never stop trying to improve your life.