The Real Estate UNLOCKED Podcast
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The Real Estate UNLOCKED Podcast
How to Succeed in Creative Finance | Episode 10 w/ Kevin Choe
Unlock the secrets of creative finance in real estate and transform your investment approach! Join us on Real Estate Unlocked as we chat with Kevin Cho, a prodigious real estate entrepreneur who began his journey selling gummies in high school and now, at just 19, has completed over 100 transactions. Kevin's mastery of creative financing methods, such as seller finance, lease options, private money lending, and "subject to" deals, allows him to achieve remarkable cash flow with minimal out-of-pocket expenses. This episode promises to equip you with the knowledge and inspiration to navigate real estate investments without the traditional bank loans or credit checks.
Throughout our conversation, we dissect the flexible and advantageous nature of creative finance compared to conventional methods. Kevin shares invaluable personal stories, including transforming a homeowner's existing mortgage into a profitable Airbnb rental and negotiating seller finance deals to avoid capital gains taxes. We delve into the specifics of acquisition strategies like "subject to" and seller finance deals, shedding light on how newcomers can set clear goals, whether for quick cash through wholesaling or long-term investment. Discover how understanding seller motivations and working effectively with real estate agents can elevate your investment game.
Kevin's journey underscores the importance of starting young, learning from missteps, and leveraging community and mentorship. He reveals his biggest lessons and how being surrounded by like-minded individuals has been pivotal to his success. By tuning in, you'll gain actionable insights and practical advice to boost your real estate ventures. Plus, stay connected with Kevin through his social media and continue learning with recommended resources like podcasts, books, and YouTube channels. Get ready to unlock your potential in the world of real estate with creative finance!
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What up everyone and welcome back to the Real Estate Unlocked podcast. I am your host, Joseph Marohn, and today we're going to be covering one of not the greatest investment strategies in real estate little to no money out of pocket, no credentials check, no bank loan or hard credit poll needed. Today we're going to be covering the topic of creative finance. Creative finance is a way of selling your property where the buyer can either make payments directly to you or take over your existing loan payments. This method could be far more beneficial than traditional selling for various reasons, and we will be covering some of that here today. Some of these methods include seller finance, lease options, private money lending and subject to Now. If that sounds like something you've been dying to learn more about and add to your investment strategies, this episode will cover all the tips and tricks to creative finance what types of properties you should be looking for, how to structure these types of deals and how you can get your first deal, starting here today. Now you know how we do it on the Real Estate Unlocked podcast. If we're going to do it, we got to do it right. We can't just bring on anyone to speak about creative finance. We got to bring on the one who's crushing it in creative finance.
Joseph Marohn:Today, our special guest on the podcast is Mr Kevin Cho. Kevin's real estate journey began just four years ago, starting out at the age of 19. Over the last few years, he's done over 100 plus transactions in 20 different states and now owns about $3 million in real estate. That cash flows him over $18,000 a month. He actively does six to eight deals a month and purchased his own primary residence utilizing the power of creative finance. Kevin is a leader in the Sub2 community with Pace Morby and has his own YouTube channel where he now teaches others how to do the same. So, without further ado I've been talking long enough Everyone. If you will, please allow me to formally introduce to you Kevin Cho. Kevin, how's your day going today, brother?
Kevin Choe:What's up, brother, so happy to be here. I know I told you, hey, like on episode 10, bring me on and we'll have a conversation. And I honestly didn't think you would get to episode 10, because nobody else does. And I'm super proud of you for having all these people on the podcast before me because it just shows me, you know, like it's a lot of work. It really is.
Joseph Marohn:Well, I really appreciate you acknowledging that, because you're right, it is a lot of work. Most people they don't understand the amount of effort that goes on behind the scenes to keep a podcast rolling. In fact, when we initially had that conversation, kevin, it motivated me because you set a goal of reaching episode 10. And at the time I was only on episode three, but I just stuck to it. I kept on improving and now episode 10, here we are and we made it.
Kevin Choe:We made it.
Joseph Marohn:We made it, man Awesome. Well, kevin, it's been a long time coming. Welcome to the podcast and thank you for taking time out of your extremely busy schedule to cover such an important tool to having your real estate arsenal. Right now, as you know, home prices are sky high, interest rates are through the roof, sellers are stuck sitting on the market or forced to come out of pocket to sell their home Right, and creative finance seems to be the solution for all that. So thank you.
Kevin Choe:Of course, of course.
Joseph Marohn:So let's kick this thing off by telling everyone who Kevin Cho is and how is it you're finding success at such a young age. Were you just born to do real estate, or what man?
Kevin Choe:I mean I guess. So at this point I don't know what else to do. So, for everyone that's listening, hey, hello everybody. My name is Kevin's listening, uh, hey, hello everybody. My name is Kevin Cho and I am a real estate entrepreneur.
Kevin Choe:Uh, started when I was 19 and have a couple of businesses that I had prior to getting into real estate, and I don't even I don't even know if I've called them businesses at this point, but, uh, when I was, when I was senior in high school, I sold gummies and I made about 60 to 70 bucks every single day selling, selling them on during snack, lunch and after school and you know what like that was a probably decent, profitable business model, considering that I was only 17 and 18.
Kevin Choe:When I was 19, I had my own ATM business, uh, which I started from scratch. I didn't know anything about it, I just watched a couple YouTube videos and I kind of started right from the get-go and I was able to. You know, I was able to and that was my very, that was my very first formal business. I even had LLCs and everything, and then I got and then, right after that, I got into real estate, specifically pertaining to creative finance, because one of one of one of the things that really got me into it was just the fact that you could actually buy and hold real estate without any of your own cash, without any of your own credentials and any of your own you know, your tax returns and all that stuff and and that's what. And creative finance is what is what I've been focusing for the last three years and yeah, that's like. That's like my short intro for now I and down the road I'll talk more about it, but that's how I got started.
Joseph Marohn:Absolutely Great story brother. So, kevin, what the heck is creative finance and why is it such a popular topic in real estate right now?
Kevin Choe:Well, so creative finance is based, as the name calls it, it's you're literally creatively financing houses, right? I mean, creative finance could be with a car, could be with a house, could be with a computer, could be with a car, could be with a house, could be with a computer, could be with a, could be with you, with your, with your phone, could be with literally anything that's out there and it's it's a lot more common than you really think. Right, like so? For example, um, when I was in high school, my senior year of high school, I had my parents buy me a honda accord or um, and no, sorry, I, I, I, my parents had a hord and when I got my license I was like I need a car, but then I didn't have the track record to go get bank financing like I now do. And I'm like, how can I start driving around Because I need to go to work and stuff. And I was able to strike up a deal with my mom. I said, hey, can I bid you $350 every month and I just start driving your Honda Accord and you can go buy another car or something now because you have ability to get financing. So that was my very first creative finance experience without even knowing that it was a creative finance deal up until like three months ago, I mean.
Kevin Choe:Another creative finance is like, you know, when I sold gummies when I was in high school, I'll go to costco with my mom, buy you know big, you know big packs of gummy and big boxes kool-aid. And then I didn't have and those money never came from me. I used my mom's credit card to go buy them and then, as I start to make profits from the, from this, you know, from selling gummies I'll pay my mom back the money that she, that she lent me, right. So that was that. That is a creative finance, right there and like it's literally everywhere. And the reason why it's such a hot topic is because you can do that with houses. At this point you know what I mean. Like I buy houses on seller finance where this homeowner gives me financing. I didn't go through bank credit and none of that. So I think that's one of the reasons why creative finance is getting so popular nowadays.
Joseph Marohn:Right, and what I really like about your story is because most people are going to be like, hey, mom, let me have your Honda so I can drive myself to school every day. But instead you're like, hey mom, I'm going to make you the bank and I'm going to pay you for this car every month. That's awesome, man. Now, kevin, what exactly makes creative finance different from any other traditional financing methods?
Kevin Choe:So traditional financing is very strict, in my opinion. It's very strict in that there's so many hoops that you have to go through because you're working with a bank. When I went and bought my car, I bought two cars in the last 12 months I bought a Model 3 and then I bought an Audi Q5. The amount of paperwork that I had to go through just to get financing for a $45,000, just to get financing for a 45,000 car, is like I mean, I went to the dealers at least like two or three times because I missed a couple documentations like proof of residency and all that stuff, and I had to go to go to go to the um dealership just to get financing. And I'm like, is there a better way of doing it right?
Joseph Marohn:so those, those papers, look like a book, didn't it? Oh?
Kevin Choe:yeah, it was literally a stack of. I mean now it's like digital right, but like I get like emails and I'm like scrolling through, I'm like, oh my god, there's so much, so much here you know right, so do you?
Joseph Marohn:do you think creative finance works for everyone?
Kevin Choe:uh, 100 yeah, I mean I my very first house that I ever bought was when I was 21, and I haven't had a job for two years at that point Awesome.
Joseph Marohn:All right. So in your opinion, kevin, for someone brand new to real estate they start learning how to structure, learning how to do creative finance deals. How do they get the ball rolling and where do they go and how do they start?
Kevin Choe:creative finance deals. How do they get the ball rolling and where do they go and how do they start? Ooh, that's tough. That's tough. First of all, you need to figure out what you want to do, right, because the things that I will say is very different than things that other people will say, and it's different because they have two different things that they want to do. So for me, at this point in my career, I've wholesaled over 150 deals, probably getting close to 200.
Kevin Choe:So for me I'm like what can I do to hold more real estate? Because I'm really not in a position to worry about what's my, when is my? When is my money coming in tomorrow? Like I, that's not a I'm not worried about, like paying food on the table or paying rent. So for me now it's it's more of a, it's more of a question of what can I do to hold more real estate. But then, when I first got started, I'm like I don't, I don't want to hold, I don't want to buy houses right now.
Kevin Choe:I want to be able to just make quick $5,000, quick $10,000, quick $15,000 and have more reserve saves set aside so that I can go buy real estate, maybe two years down the road three years down the road, and that's what I did, so for me. So the first things first is you have to figure out what you want to do. Do you want to start wholesaling these deals or do you want to start buying them and keeping for yourself? Right. But all I have to say is the first things first is you have to figure out, like, what kind of deals are you even looking for? Are you looking for, like, a subject to deal where you take over payments, or are you looking for seller finance, like? I think that's a fair place to start, right.
Joseph Marohn:Yeah, I would say that's a fair place to start, cause I mean, for me personally, I knew I just wanted to get involved with real estate period, right, but I didn't know how to go about it. So for me, I have a high paying W2 job and I'm sure others can attest to this, so I was looking more for the passive income and tax write-offs purposes. So I'm like, well, how do I start? Because interest rates are through the roof. How are investors even buying and holding properties right now with these high interest rates?
Joseph Marohn:So then, as I started learning more about creative finance and learning about subject to and how you can buy properties and take over people's existing mortgages and you can basically take their interest rates that they already have, I was blown away by it. So I was like I got to learn more about this, right. So I mean I get people asking me all the time like, hey, man, where can I learn more about real estate? Or how do I learn more about creative finance? And obviously there's podcasts you can watch, there's books you can read, youtube videos you can learn from, but I just wanted to hear your experiences and how you learned what you now know today.
Kevin Choe:Yeah Well, first off, I paid my way into learning this Exactly. You know, just like you want to pay a mentor to fast track your learning curve, or you can learn it the hard way and not pay anything, but you end up paying the you know what do you call it? Like the ignorance tax, where you have to figure it out on your own, want to go the pay route, hands down, Sub2 is the best paid place to be Because you have access to the people that have been doing this for people like me, and then you have access to people that's that can help you along the way. Like if, joseph, you came to me and you need help with Sub2, most likely I'll have answers to it, but that's because this is within a paid community, but outside of that it's like you have to filter through a lot more people to find the answers for your questions.
Kevin Choe:So if you guys are watching this and you're like, where do I even get started, I would definitely say start watching Pace's YouTube video. I have a YouTube video that I put out three times a week and then, you know, join the free Facebook group that Pace has. But at the same time, like if you have the money to spend and you want to, like you know, shorten your learning curve. I'd definitely say buy, you know, buy some deals, pay your way into the mentorship.
Joseph Marohn:Great answer. You know, as you know, when you're just starting out and you know you're generating leads, it can get quite expensive. You know, data software, pulling lists, vas, auto dialers all that stuff costs money. If you want to put in the work, is it possible to get your first deal for free?
Kevin Choe:Oh, 100%. I mean, all those tools are only there to help you, amplify you, getting deals quicker, right? So it's like when I was talking about was paying a mentor. When you pay a mentor, you pay for. Do you need a mentor? Really, at the end of the day, the answer is probably not. You probably don't need a mentor, but that would help you. Do you need a car to go to the gym? No, you could probably walk Right. But those are only tools that you know if you have, if you have, if you have the capacity to and the budget for it, will help. But you know, I started my very first 20 deals. I got it off of Facebook Marketplace I was just going through this for sell by owners and that's how I was able to get the deals done.
Joseph Marohn:That's crazy to think of Facebook Marketplace. I saw the interview where you were talking about that and that was interesting. Man, I think you were probably the first person to start doing that. Nobody even thought about doing those type of deals, so that's oh yeah.
Kevin Choe:I mean, that's how I creatively finance my you know my broke budget. You don't have a budget for it, so you got to creatively finance a way to get access to deals without having too much spent, without having to spend too much money.
Joseph Marohn:you have to get creative you do what you got to do right 100 cool.
Kevin Choe:So, kevin, help us all understand what the difference is between subject to and seller finance so subject to and seller finance are two methods in which you can get you know which you can get financing for these, you know? I mean I'm just going to we're going to talk about it in the real estate context, right. So subject to and seller finance are two main ways for you to get two main acquisition strategies for you to get access to these properties, right? So first, house number house, house number one, let's just say this is one, two, three main street. There's usually 90% of the time when people go buy houses, they get a traditional bank financing and it pays off the existing mortgage that the existing homeowner had, and now you make payments on that mortgage for the next 30 years. So how that would work is so like the most recent project that I have going on, it's a house on.
Kevin Choe:What's the most recent project that I have? I have a house on 41st Avenue here in Phoenix where I was able to buy the house by simply going in and taking over somebody else's existing mortgage, and the reason I was able to do that was because the homeowner, when I first called her, was like you know what? I just bought this house about a year and a half ago and I bought it so that my husband and I can move into it together. But you know what? We're getting a divorce, oh okay. So what do you guys plan on doing? We just want to sell the house, but, honestly, none of us have the money to come out of pocket. So I think you know, if you, if you give us $5,000 each and you come in and take over my mortgage payment, I think that might be the best way to go, and I was able to. I was, I gave, I gave the wife 5,000. I gave the husband 5,000. I took over the existing mortgage payment, right and, and now I make mortgage payments. The mortgage payment is about 27 50 and I have that house rented out on airbnb for like 30 plus days and I'm making about 4500 every single month. That's a nice return.
Kevin Choe:So one of the ways that subject to is beneficial is going back to the car strategy that I, when I was 18 and my senior year in high school, how, how I was able to take over my mom's existing car payment at $350. I Venmo'd her $350 every single month and then I was able to drive the car around. That's a subject to in a nutshell. But not only are you doing it with a car, but you can do it with a house, right? And the second acquisition strategy is called seller finance. And the second acquisition strategy is called seller finance.
Kevin Choe:So my most recent seller finance deal was a condo that I bought in Mesa, arizona, which is about 25 minutes away from where I'm living right now, and the homeowner he had a home servicing business here in Arizona for the last 40 years and over the last 40 years he just paid off all the houses. It's like, oh, I bought a rental here, I bought a rental here, I bought a rental here. And my homeowner named my lender Tom. He's like, dude, I got 19 houses all in this single, all in this condo right here. And you know what? I don't want to deal with any of the Airbnb tenants, I'm just done with it.
Kevin Choe:I'm like what do you want to do? He goes well, I want to sell it, but I don't want to pay capital gains, because if I sell it $250,000, I'm going to have to pay $50,000 to $60,000 of it to just any fees, right? But I came in and I'm like how about this? How about I buy the deal but you give me financing for it? And we went back and forth for a couple of days and the terms that we settled on was here I give you 5% down, 6% interest, 40 year term, 40 years scheduled with a 10 year balloon, and then I'm like so Tom's going to make for the next 10 years. He'll get a check for 1300 bucks from me, and that's a seller finance in a nutshell. And the best part about it is Tom now has 18 other properties in the same exact condominium and he's like you know what? I'll sell you all of these for the next 24 months if you can prove to me over and over and over again that you're able to perform. And I'm like damn consider it, it done.
Joseph Marohn:That's a good deal right there, man, you found the right seller.
Kevin Choe:But but here, here's, here's, here's. The thing that most people don't talk about is like did I use it, my any? Did I use any of my own money during those times? No, that tom knows. Tom never even questioned my credibility, oh, other than the fact that he just wanted to see what my credit score was. So I just I pulled up, I took a screenshot of my experience, my credit score, which was 792 at that time, and just texted him.
Joseph Marohn:He's like I'm good, all right, let's move forward but you didn't have to actually use your credit to obtain the loan, right, you just had to show him your credit score yeah, it was literally.
Kevin Choe:I just took a screenshot of it. I'm like, here you go. And then he's like, ok, good enough.
Joseph Marohn:Right, awesome breakdown. Man Sounds like I need to find more sellers like Tom man, but not Kevin. You just hit it right on the head, because most seller finance deals that we've structured all came down to the fact that they either were trying to avoid paying capital gains tax or they saw the long term benefit of the monthly payouts. Now, are there any specific properties or sellers that are ideal for subject to? Maybe give us a scenario a seller may be in where subject to would be a better option than a conventional offer.
Kevin Choe:Yeah, so 100%. So in 2023, I focused my entire business off of subject to transactions and I finished off the year with 90 subject tos, which 79 of the 79 of them I wholesale off to my friends and my friends are making payments on those mortgages. And but you let an 11 of them I kept in my portfolio, right? And you might be wondering okay, why would anybody give you, why would anybody just let you take over somebody else's? A random stranger like me because I'm a stranger essentially take over somebody else's mortgage payment and they don't even own the house. And a lot of the situations are where the subject to happens is it's not necessarily because the homeowner wants to do it, but they have no other options selling because the homeowner wants to do it, but they have no other options, right? So, like my very first subject to deal that I've done was an 1188 Southland Avenue in Yuma, arizona, where Diana Hernandez she's a local wholesaler here in town she came to me saying hey, kevin, I have this homeowner. I can't seem to figure this out. Like I don't know what to do with this, like I can't wholesale this deal. Like the homeowner just bought the house. I'm like what do you mean? Like, let's hop on the phone call with the seller. So I hopped, so I hopped on the phone call with uh, with the husband and the wife and diana, so it was four-way phone call. And I'm like hey guys, hey guys, my name is kevin. What's, what's going on? I just wanted to figure out you know how we can, how we can help you guys.
Kevin Choe:And the wife says you know what we're going? We're getting a divorce and we have a house that we just bought, but we, we really need to get, you know, 360 000 for this house. I'm like okay, do you think you know what? Why do you say that? Well, because it's because you just bought it. We just bought it for like 350 000. So like, if you don't get 360360,000, we're going to cut a check. And, honestly, we don't really have money to cut a check for this house. And we're like, okay, perfect. So you're telling me, because you have no equity in this house, maybe the only way for you to sell the house is for you to get a higher pricing.
Kevin Choe:Because her thought process was okay, I'm going to get $360,000 for this house and then my existing mortgage is $350,000. And it was for sale by owner, so she'll pay $10,000 in closing costs and commissions for the buyers and she'll walk away with zero and just hands clean, right, or at least that was her thought process. And I said, okay, that's perfectly fine, but how about this? How about, instead of you cutting a check, I give you a check. And they're like you're going to give me a check for this house? Oh yeah, 100%.
Kevin Choe:I wasn't looking to make anything on this house anyway. But here's the thing is I'll give you 3,500. I'll give your husband 3,500 bucks, but I want to come and take over that existing mortgage payment. And she goes okay, and that's it. You're just just gonna make the payments on it and then, and then I, and then you know I'm gonna get 3 500 bucks. I'm like, yeah, I mean, you guys bought it for zero money. Now you guys essentially made seven grand together.
Kevin Choe:She was so, that was that. But then she was a little hesitant because, okay, what happens if I missed the mortgage payment? What happens if I want to get another financing? Blah, blah, blah, all these things was in her thought process. But obviously we overcome all those objections and there's so many ways to go about it that I will not necessarily share in this video share in the podcast. But homes that were just recently bought, either using FHA loan, va loan or conventional loan at low down payment, less than 5%, all these homes have high opportunity. You know all these homes. If the house gets, if the homeowners go through separation or if stuff happens in the family where they have to sell the house within 24 months, most likely these homes have no equity Right.
Joseph Marohn:So those are great ways for you to just come and take over the existing mortgage payment what's the way, kevin, are you telling me I don't have to go apply for a loan, provide any credentials, give out any bank statements, and I can go and purchase a property? 100 bro, this can't be legal. Is this legal?
Kevin Choe:uh, as far as I know, no, this is 100% legal. We have there's some parts of the states that you know. Some states are, you know, title company states where, like, you close a deal with a title company, but some states are you close a deal with an attorney and we have attorneys closing deals, just like this. So it's like what you know. Why would it not be illegal? Why would it not be illegal? Why would?
Joseph Marohn:it not be illegal, right. And we get a lot of agents that actually tell us that and we have to kind of explain to them on how the HUD statement it shows it on line 203 and 503. And we explain to them it shows right there, subject to the existing mortgage. And yeah, exactly like you just said. But speaking of agents, what advice do you have for those that have trouble structuring deals through agents? You mind sharing some of your strategies and techniques you use to build rapport.
Kevin Choe:So I've worked with hundreds of agents, truly like literally hundreds of agents. And agents say oh, I need to take care of my client, Right, that is the most BS thing I could ever hear in this day and age Agents. They don't care about your client, they don't care about you. All they care about is your commission.
Kevin Choe:Seriously, they don't care anything about it. So when you tell your client, when the agent's like, oh yeah, this would be a really great opportunity for the seller, and then I'm like, oh, okay. And they're like, oh, am I getting paid on this? I'm like, yeah, you are. They're like oh yeah.
Kevin Choe:It's all about their commission. No joke, no joke, joseph. I had an agent that was like you know what? I don't think this is a good fit for my client. And I'm like, okay, even if you got paid your full commission. And it was like no joke. It was like three seconds silence. I'm like, well, and then I'm like, okay, well, let's talk about it again, right, let's start this all over again, right? So now agents. The best way for you to get an agent to work with you is by paying them.
Joseph Marohn:Absolutely, you know. And then it's funny you say that because, like you know, subject to pitches are becoming more and more common. Now I wouldn't say it's saturated, but there are times where I'm sure you can attest to this, kevin that we get on the phone with an agent and within the first five seconds of the conversation the agent says you're not one of those subject to guys, are you? Or maybe you heard this one? Our client is not open to any creative finance offers. What is your response to that? Are you continuing the conversation? And if you are, how do you maneuver around that?
Kevin Choe:I'm not carrying on a conversation, you just hang up. Well, it depends, you know, it depends the scenario, but here, here, here's the way I approach it, and I have youtube videos about me calling these agents and stuff. I don't, I don't force a deal to happen. I never do, I never, I never have, I never. I mean, I have a lot, I try forcing it, but right at this, at this point in my career, I don't force a deal to happen, right, but I, I wait for them and say, hey, all right, all right, joseph here's, here's.
Kevin Choe:The thing is, honestly, totally fine. I am, I gotta admit I am one of those guys, but you, you, you want you, I don't, I, I'm not. I'm not doubting your ability to sell this house, but if, in case that you don't, you don't, you guys don't get the offer that you guys are looking for, you, I would at least consider myself as a backup, because I'll be willing to do hard-earned money with no inspection period, and I'll go into a contract with you right now if your clients are open to it, and I just put myself out there. I'm like, hey, just putting it out there, hey, I'm here, I'm here, I'm here, and I follow up every week or two until the house gets sold, until until the house gets literally sold.
Joseph Marohn:And and I'm like, if I and that's it right, so you, so you don't force it you're just kind of telling them like hey, I'm just a backup option, but I can get the deal done, and you're just kind of showing them what you've done and you know they can come to you if if they're having trouble selling it traditionally is what you're saying.
Kevin Choe:Exactly. That's all I do.
Joseph Marohn:OK, I mean, Kevin, you've done a great job of explaining how exactly subject to works and how it makes sense for both parties. I want to shift a little bit into seller finance for a second. As you know firsthand, there are a ton of seller finance opportunities out here right now. They say 30 percent of real estate is free and clear, which means, as you're making your way through the neighborhood to go grab your morning Starbucks, three out of every 10 houses you drive by are free and clear. Now why would a seller even choose to become the bank and finance to sell their own property instead of just opting for a traditional sale? What's it for them?
Kevin Choe:So this is an interesting question because you have to factor in the fact that where? Where are they in their career? Because just if you came to me and I had 19 houses, free and clear, like tom did, and you're like kevin, would you sell or finance me all your 19 houses? My answer would be never. No, I don't want to do that. No, because I'm 23, like I got, I got, I got a lot of energy. I I'll put in the work.
Kevin Choe:So for me, I don't want $1,200. I want to get quarter million dollars right now, deploy it into another deal, double that thing in six months and I have the know-how to double it. But then you look at people like Tom, who's like you know what. I've owned my servicing business for the last 40 years and I don't want to do work anymore. And he's like you know what. I don't want to do anything for the next 40 years. I mean, I've worked for 40 years and what more do I need to do so so legitimately?
Kevin Choe:When I was on the phone with Tom after the fact that we closed on the deal, I said hey, tom, like why do you? Why do you? Why'd you sell your house? You make the same amount of money and you don't have any more management or anything. I mean, all you would have is a management and he goes. Well, that's exactly what I didn't want is, I didn't want any management. I'm like 66. I don't need more money, I just want more time freedom. My kids took over my servicing company, so the kids took over the existing job and the roles of the, of the, of the company that his dad, that the father built, and now he just wants to relax, relax, right. So you have to find the right client, right, right Person.
Joseph Marohn:Right, yeah, and, and a lot of times, a lot of what I've noticed is like they're just, you know, like you said they're, they're just want to retire from it, they don't want to deal with it, no more, they don't want to deal with the headache, and a lot of times they're trying to avoid capital gains tax. So you know, that's what we found with most creative finance deals, but, like you said, you're 23. You got properties. Last thing you're going to be doing is selling any of those off seller finance. It wouldn't make sense, no, never. Great point, great point. So now can a buyer sell the property or refinance the seller finance loan before it's fully paid off?
Kevin Choe:Yes, yes, you can seller finance another seller finance deal.
Joseph Marohn:Okay, and then I know you do extremely well with wholesaling, but for the creative deals you do hold on to. What's your preferred exit strategy and why to what's your preferred exit strategy and why?
Kevin Choe:My preferred exit strategy is midterm rentals, which is a hybrid of short-term and long-term, so anything between 30 to 60 to 90 days. Those are my bread and butter, because I have a partner that does that, and the reason why I love doing midterm rentals is because it allows me to cash flow like a short-term rental or more with the management of a long-term rental. Right Cause these tenants are playing, staying there for two, three months that we don't need to. We don't need to clean it every, you know, every weekend. So the management is very manageable. But the pay is also very good and it's also pretty consistent because I don't have to worry about.
Joseph Marohn:Oh my gosh, am I getting a booking next week? You know what I mean?
Kevin Choe:right, and you're doing what like traveling nurses or traveling uh contractors, traveling nurses, traveling contractors, snowbirds um medical. You know people in the medical field like startup companies, like there's so many right, right.
Joseph Marohn:So you know, everyone loves to hear great success stories, right? But I think the people really respect full transparency more. If we're going to share the good, we also got to share the bad right. There are risks in everything we do, especially when it comes to investing and are starting our own businesses. Kevin, do you mind sharing a story about a mistake you made in real estate and the lesson you learned from it?
Kevin Choe:Well, honestly, the biggest mistake that I have in real estate is not starting real estate when I was nine years old in 2008. That's probably the biggest mistake that I ever have.
Joseph Marohn:Yeah, I wish I would have started a lot younger as well.
Kevin Choe:I mean, what was I doing at nine years old? Not buying real estate. You know what I mean. That's the biggest mistake.
Joseph Marohn:Yeah, I know.
Kevin Choe:But you know what I, to be honest with you, joseph, like I have no, I have no regrets. I think I started at perfect timing and I think I'm I'm at a really, really comfortable place right.
Joseph Marohn:So you haven't. You haven't had no hiccups or any troubles in the road so far. Everything's been pretty smooth for you oh 100.
Kevin Choe:I mean, I can't say everything has been smooth, but, like you know, I wouldn't consider them regrets, right like I mean, what could I have done in 2008? You know, I was nine years old, I didn't, I wasn't even here in this country, right like um. So I, I have no regrets. I, I'm a huge action taker, so so it's not like I knew about it and then I didn't start for another 10 years. I'm like I, I started when I, as soon as I knew about it, nah, and I get what you're saying.
Joseph Marohn:I mean you started at a good age, right? I mean, honestly, most of us here probably wish we started at that age as well. Plus, you're finding a lot of success. So nothing there to regret, right. But also, I can't claim everything's been smooth either. I mean, for the most part, I've been fortunate to find a lot of success as well, but there have been a few moves I probably could have made better decisions on, and I'm always fully transparent about it.
Joseph Marohn:It's okay to make mistakes, because if you're not making mistakes and you're not trying, the most important lesson is to learn from those mistakes and fail forward. But I'm going to wrap this thing up here, kevin. The last thing I wanted to touch on is when you're first learning about creative finance. Youtube videos, books, podcasts are all great things, right. This is all free, available information to you, but being a part of a community, having a mentor, going to local meetups and being around like minded people, is where the true value lies. It's not only going to help you build connections, but it's also going to help you build a team and really excel. Growth you know, the growth of your business, kevin. Do you agree with that. How beneficial is community been for you, how?
Kevin Choe:beneficial is community been for you? Oh, community is everything you know. It's like I don't think I would be. I don't think I would have the work ethic that I have or the momentum that I have if I didn't have, you know, people around me that was also doing the same thing. It's kind of like competition, because I'm a pretty competitive person.
Joseph Marohn:Yeah, same way.
Kevin Choe:Depends on like what topic right. Like if it's about basketball, like I don't care if you lose the game or win the game, whatever. But when it comes to, like real estate, I'm like, no, I want to get, I'm going to get it, I'm going to get further ahead of you and I'm going to make more money than you. And when I, when you're, when you're hanging out with people, that that's making a lot of money and doing all these things, it's like, oh my gosh, it's not. It's now time for me to get to work.
Joseph Marohn:I love that man. I like to be around people like you because it helps me push me. I'm also a competitive person and when I hear people talk like that, I'm like all right, kevin, I'm coming for you. Man, let's do a little friendly competition, if you will. Cool, awesome. Well, kevin, again, we really appreciate your time and all the game you've given us here today. You've got one hell of a future ahead of you, bro. You're making the right moves and you're surrounded by all the right people. I think I speak for everyone here today when I say we're excited to see where you go from here and we'll make sure to follow you along your journey. Of course, man, appreciate it. Kevin. Where can people get ahold of you?
Kevin Choe:The best way for me to get a hold of me is KevinCho12 on Instagram. It's KevinCho12 on Instagram and YouTube and TikTok and across all social media platforms and I personally respond to all the DMs. You know sometimes I'm late, but sometimes I respond right away. So if you guys have any questions, you can always find me on Instagram.
Joseph Marohn:Now, if you guys are finding value from this podcast, don't forget to show your boys some love. You definitely don't want to miss future episodes, so make sure you subscribe. Don't forget to like this and drop a comment down below. Today what you learned about creative finance. If you're motivated by this episode and you're ready to take action or you want to join the sub two community, feel free to reach out to Kevin or myself and we'll make sure we get you pointed to the right direction. Appreciate all the continued support and, guys, stay tuned, because I'm pumping these episodes out every two weeks. You definitely don't want to miss what I got coming up next best believe I'm gonna keep bringing you that fire. Peace, kevin. Appreciate it. Appreciate it.
Joseph Marohn:I'm not sure what I'm doing here. I'm not sure what I'm doing here. I'm not sure what I'm doing here. I'm not sure what I'm doing here. I'm not sure what I'm doing here. I'm not sure what I'm doing here. I'm not sure what I'm doing here. I'm not sure what I'm doing here. I'm not sure what I'm doing here. Thanks for watching.