We had the good fortune of connecting with Patrick Kappel and we’ve shared our conversation below.
Hi Patrick, how do you think about risk?
One of the riskiest things a person can do in life is to take no risk. Even getting out of bed in the morning has a level of risk to it. Taking no risk ensures that your growth, and your success, ends at your birth. That said, I believe in taking calculated risk. Taking risk without having reviewed calculated data is simply foolishness. Taking calculated risk however is the path to success. My favorite quote from my mentor, Warren Buffet – a man I have never met but still consider my mentor – is “I’ll tell you how to become rich. Be fearful when others are greedy, be greedy when others are fearful.” You must know when to put chips on the table, and when to take chips off the table. And data, not emotions, should be the driver to your decision-making process.
I open nearly all my educational client webinars with that Warren Buffett quote because I know life can be scary at times and real estate investing can be intimidating – huge sums of money are involved when you are investing in real estate. But it is exactly when it seems the scariest and when you are fearing the most that you need to take the calculated leap, because that’s when you will realize the greatest reward.
I bought my first property in 2008, when everyone was running from real estate. Today, that property is worth over 2X what I paid for it, and because I used leverage (borrowed money) on the purchase, the return on my invested capital has been over 9X. There are few investments in this world, as relatively stable and secure as real estate has been over the last 100 years, that can provide you with as large returns unless you are taking substantial risk. You also minimize your risk in real estate by using other people’s money (OPM) in the form of loans. I haven’t stopped investing since that first purchase nor have I changed my strategy. When everyone was hiding their money in the spring of 2020 at the onset of COVID, I invested in a fourplex, getting an incredible deal.
Risk taking didn’t come naturally to me though. I grew up in a small town in the Midwest with just a few stop lights and mostly dirt roads. Out of high school, I joined the Navy and went on to study at the Naval Nuclear Power Training School and subsequently the Naval Academy. While serving for a decade at sea, in the Middle East, and at various military installations, I learned that the world is full of risk, but so long as you become a student of your subject backed by academic and real-world training, then you will learn how to identify risk, classify risk, and mitigate risk. Once you can do these three things within your field, then you can become comfortable making decisions and operating within a world of risk. Ultimately, the successful use risk to their advantage by learning to classify and capitalize upon risk in a way others will not.
One could say that starting my own real estate team after only a few years in the business was a high-risk endeavor, but I believe if you have the confidence and knowledge, you can accomplish anything. Prior to starting my own team, I earned a Masters in Real Estate from USD and an MBA from UCLA plus I acquired practical experience – both personal and by working for other brokerages as an agent and in the Navy as a leader. In real estate I saw a niche I wanted to fill – real estate investing in 2 – 4 unit properties – and knew I could build a team that would do it better than the status quo. I am incredibly grateful to those who put aside their fear and joined me on this journey to building our successful team.
Alright, so for those in our community who might not be familiar with your business, can you tell us more?
At the Kappel Realty Group, we say we use data and education to move you. A lot of realtors focus on what I call flash – the brochures, the lifestyle, the marketing side with a focus on “selling” clients. Many don’t study the data or the market in-depth and they don’t understand the financial complexities of investment property. It’s rare that an agent truly takes the time to educate clients about real estate and the economic conditions affecting a local real estate market. My team is based on education, and importantly, educating our clients. All of our team members have advanced graduate level degrees in business or real estate, or they are real estate investors themselves. While we work with buyers and sellers with a variety of focuses, from first-time homebuyers, to military personnel using their VA loan, to empty nesters looking to downsize, we really specialize in those looking to build their wealth and financial security through real estate investing or home ownership. We specialize in 2 – 4 unit investment properties. These are great properties for every-day people like you and I building a portfolio of real estate, and 2-4 unit properties are often misunderstood by most agents. You need a combination of commercial and residential real estate knowledge, which our team has, to understand the contracts, the zoning, the management, and the financials for these properties. We take time to explain real estate using real data and our monthly webinar series to ensure our buyers and sellers feel confident in any real estate decision they make. We know that real estate is a significant investment and we want you to be knowledgeable about your investment.
I’ve learned along the way that it is important to hire and surround yourself with the best minds who share your vision. I have Realtors call me every month wanting to join our team, but I have very strict criteria for being a member of the Kappel Realty Group because I want to provide our clients with the best of the best.
For me, this is not a job, it’s a passion. I had been through housing insecurity as a kid, and I know how owning a home in San Diego can transform your life and give you the financial security and return you simply can’t get from most investments. I’m passionate about people and helping families achieve that financial security.
Let’s say your best friend was visiting the area and you wanted to show them the best time ever. Where would you take them? Give us a little itinerary – say it was a week long trip, where would you eat, drink, visit, hang out, etc.
It’s cliché to say, but the great thing about San Diego is you can be on the beach in the morning and the mountains by the afternoon and that is really one of my favorite things about San Diego. I love taking visitors on the Old Town San Diego Trolley Tour to start their visit so they get a great overview of the city. We’ll often hop off and wander around Coronado Island, of course stopping to explore Hotel Del Coronado. I love history, so walking through Old Town and the museums is always a special treat. Head over to Little Italy later and grab a charcuterie board and a bottle of wine from Graze by Sam and then head over to Waterfront Park to watch the sunset over the sailboats and Star of India. It’s hard to make a weeklong trip to San Diego without also visiting the San Diego Zoo, the Wild Animal Park, and the USS Midway aircraft carrier museum located downtown. I also enjoy taking guests fishing on a charter out of Point Loma Sportfishing or, if they prefer a relaxing day on the Bay over an off-shore fishing adventure, we’ll rent a sailboat and spend the day sailing and enjoying the San Diego skyline. Following a day on the water, we always hit up my favorite restaurant and bar in Point Loma, Harbor Town Pub which blends in with the nautical themes of my Point Loma neighborhood.
Who else deserves some credit and recognition?
I’m grateful to my parents and my grandparents, who taught me to hustle. We did not grow up with a lot – a small home in a very rural community. My parents were public school teachers and taught us to always work hard and never expect anything to be handed to us. I opened my first “business” when I was 7 years old – collecting cans in the neighborhood with my sisters and selling them at the recycling plant. I opened my second business in the 5th grade when I started a paper route and became solely responsible for the delivery of the product, the collection of customer payments, and the acquisition of new clients. Paper routes teach a young person a lot about running a business. My parents wanted us to see the world, and every summer we went on weeks-long camping trips around the country, including a trip that brought us to San Diego when I was in sixth grade. I declared I would live here someday, and my parents have always supported that dream. If they had not been determined to show us a world outside of our small town bubble, I know I wouldn’t be in San Diego today and working as hard as I do every day. My grandfather, who was a businessman himself, also imparted words of wisdom upon me at a young age and, like my parents, always encouraged life-long education and learning. Most importantly, my parents and my grandparents taught me that the most important thing that you can do to ensure your success is simple – be kind to others.
Photos courtesy of Patrick Kappel