September 2, 2024 • 39 mins
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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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Joseph Marohn (00:12):
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 greatestinvestment strategies in real
estate little to no money out ofpocket, no credentials check,
no bank loan or hard credit pollneeded.
Today we're going to becovering the topic of creative
(00:33):
finance.
Creative finance is a way ofselling your property where the
buyer can either make paymentsdirectly to you or take over
your existing loan payments.
This method could be far morebeneficial than traditional
selling for various reasons, andwe will be covering some of
that here today.
Some of these methods includeseller finance, lease options,
(00:56):
private money lending andsubject to Now.
If that sounds like somethingyou've been dying to learn more
about and add to your investmentstrategies, this episode will
cover all the tips and tricks tocreative finance what types of
properties you should be lookingfor, how to structure these
types of deals and how you canget your first deal, starting
here today.
(01:16):
Now you know how we do it onthe Real Estate Unlocked podcast
.
If we're going to do it, we gotto do it right.
We can't just bring on anyoneto speak about creative finance.
We got to bring on the onewho's crushing it in creative
finance.
Today, our special guest on thepodcast is Mr Kevin Cho.
(01:37):
Kevin's real estate journeybegan just four years ago,
starting out at the age of 19.
Over the last few years, he'sdone over 100 plus transactions
in 20 different states and nowowns about $3 million in real
estate.
That cash flows him over$18,000 a month.
He actively does six to eightdeals a month and purchased his
(02:00):
own primary residence utilizingthe power of creative finance.
Kevin is a leader in the Sub2community with Pace Morby and
has his own YouTube channelwhere he now teaches others how
to do the same.
So, without further ado I'vebeen talking long enough
Everyone.
If you will, please allow me toformally introduce to you Kevin
(02:22):
Cho.
Kevin, how's your day goingtoday, brother?
Kevin Choe (02:29):
What's up, brother, so happy to be here.
I know I told you, hey, like onepisode 10, bring me on and
we'll have a conversation.
And I honestly didn't think youwould get to episode 10,
because nobody else does.
And I'm super proud of you forhaving all these people on the
podcast before me because itjust shows me, you know, like
it's a lot of work.
It really is.
Joseph Marohn (02:49):
Well, I really appreciate you acknowledging
that, because you're right, itis a lot of work.
Most people they don'tunderstand the amount of effort
that goes on behind the scenesto keep a podcast rolling.
In fact, when we initially hadthat conversation, kevin, it
motivated me because you set agoal of reaching episode 10.
And at the time I was only onepisode three, but I just stuck
(03:09):
to it.
I kept on improving and nowepisode 10, here we are and we
made it.
Kevin Choe (03:15):
We made it.
Joseph Marohn (03:17):
We made it, man Awesome.
Well, kevin, it's been a longtime coming.
Welcome to the podcast andthank you for taking time out of
your extremely busy schedule tocover such an important tool to
having your real estate arsenal.
Right now, as you know, homeprices are sky high, interest
rates are through the roof,sellers are stuck sitting on the
market or forced to come out ofpocket to sell their home Right
(03:41):
, and creative finance seems tobe the solution for all that.
So thank you.
Kevin Choe (03:45):
Of course, of course .
Joseph Marohn (03:47):
So let's kick this thing off by telling
everyone who Kevin Cho is andhow is it you're finding success
at such a young age.
Were you just born to do realestate, or what man?
Kevin Choe (03:57):
I mean I guess.
So at this point I don't knowwhat else to do.
So, for everyone that'slistening, hey, hello everybody.
My name is Kevin's listening,uh, hey, hello everybody.
My name is Kevin Cho and I am areal estate entrepreneur.
Uh, started when I was 19 andhave a couple of businesses that
I had prior to getting intoreal estate, and I don't even I
don't even know if I've calledthem businesses at this point,
but, uh, when I was, when I wassenior in high school, I sold
(04:19):
gummies and I made about 60 to70 bucks every single day
selling, selling them on duringsnack, lunch and after school
and you know what like that wasa probably decent, profitable
business model, considering thatI was only 17 and 18.
When I was 19, I had my own ATMbusiness, uh, which I started
from scratch.
I didn't know anything about it, I just watched a couple
YouTube videos and I kind ofstarted right from the get-go
(04:42):
and I was able to.
You know, I was able to andthat 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 realestate, specifically pertaining
to creative finance, because oneof one of one of the things
that really got me into it wasjust the fact that you could
(05:02):
actually buy and hold realestate without any of your own
cash, without any of your owncredentials and any of your own
you know, your tax returns andall that stuff and and that's
what.
And creative finance is what iswhat I've been focusing for the
last three years and yeah,that's like.
That's like my short intro fornow I and down the road I'll
talk more about it, but that'show I got started.
Joseph Marohn (05:25):
Absolutely Great story brother.
So, kevin, what the heck iscreative finance and why is it
such a popular topic in realestate right now?
Kevin Choe (05:33):
Well, so creative finance is based, as the name
calls it, it's you're literallycreatively financing houses,
right?
I mean, creative finance couldbe 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 acomputer, could be with a, could
be with you, with your, withyour phone, could be with
literally anything that's outthere and it's it's a lot more
common than you really think.
Right, like so?
For example, um, when I was inhigh school, my senior year of
(05:56):
high school, I had my parentsbuy me a honda accord or um, and
no, sorry, I, I, I, my parentshad 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 bankfinancing like I now do.
And I'm like, how can I startdriving around Because I need to
(06:21):
go to work and stuff.
And I was able to strike up adeal with my mom.
I said, hey, can I bid you $350every month and I just start
driving your Honda Accord andyou can go buy another car or
something now because you haveability to get financing.
So that was my very firstcreative finance experience
without even knowing that it wasa creative finance deal up
(06:42):
until like three months ago, Imean.
Another creative finance is like, you know, when I sold gummies
when I was in high school, I'llgo to costco with my mom, buy
you know big, you know big packsof gummy and big boxes kool-aid
.
And then I didn't have andthose money never came from me.
I used my mom's credit card togo buy them and then, as I start
(07:04):
to make profits from the, fromthis, you know, from selling
gummies I'll pay my mom back themoney 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 ahot topic is because you can do
that with houses.
At this point you know what Imean.
Like I buy houses on sellerfinance where this homeowner
(07:26):
gives me financing.
I didn't go through bank creditand none of that.
So I think that's one of thereasons why creative finance is
getting so popular nowadays.
Joseph Marohn (07:35):
Right, and what I really like about your story is
because most people are goingto be like, hey, mom, let me
have your Honda so I can drivemyself to school every day.
But instead you're like, heymom, I'm going to make you the
bank and I'm going to pay youfor this car every month.
That's awesome, man.
Now, kevin, what exactly makescreative finance different from
any other traditional financingmethods?
Kevin Choe (07:58):
So traditional financing is very strict, in my
opinion.
It's very strict in thatthere's so many hoops that you
have to go through becauseyou'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 andthen I bought an Audi Q5.
(08:19):
The amount of paperwork that Ihad to go through just to get
financing for a $45,000, just toget financing for a 45,000 car,
is like I mean, I went to thedealers at least like two or
three times because I missed acouple documentations like proof
of residency and all that stuff, and I had to go to go to go to
the um dealership just to getfinancing.
(08:40):
And I'm like, is there a betterway of doing it right?
Joseph Marohn (08:45):
so those, those papers, look like a book, didn't
it?
Oh?
Kevin Choe (08:49):
yeah, it was literally a stack of.
I mean now it's like digitalright, but like I get like
emails and I'm like scrollingthrough, I'm like, oh my god,
there's so much, so much hereyou know right, so do you?
Joseph Marohn (08:59):
do you think creative finance works for
everyone?
Kevin Choe (09:02):
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 (09:13):
All right.
So in your opinion, kevin, forsomeone brand new to real estate
they start learning how tostructure, learning how to do
creative finance deals.
How do they get the ballrolling and where do they go and
how do they start?
Kevin Choe (09:25):
creative finance deals.
How do they get the ballrolling and where do they go and
how do they start?
Ooh, that's tough.
That's tough.
First of all, you need tofigure out what you want to do,
right, because the things that Iwill say is very different than
things that other people willsay, and it's different because
they have two different thingsthat they want to do.
So for me, at this point in mycareer, I've wholesaled over 150
(09:49):
deals, probably getting closeto 200.
So for me I'm like what can I doto hold more real estate?
Because I'm really not in aposition to worry about what's
my, when is my?
When is my money coming intomorrow?
(10:09):
Like I, that's not a I'm notworried about, like paying food
on the table or paying rent.
So for me now it's it's more ofa, it's more of a question of
what can I do to hold more realestate.
But then, when I first gotstarted, I'm like I don't, I
don't want to hold, I don't wantto buy houses right now.
I want to be able to just makequick $5,000, quick $10,000,
(10:30):
quick $15,000 and have morereserve saves set aside so that
I can go buy real estate, maybetwo years down the road three
years down the road, and that'swhat I did, so for me.
So the first things first isyou have to figure out what you
want to do.
Do you want to startwholesaling these deals or do
you want to start buying themand keeping for yourself?
Right.
(10:51):
But all I have to say is thefirst things first is you have
to figure out, like, what kindof deals are you even looking
for?
Are you looking for, like, asubject to deal where you take
over payments, or are youlooking for seller finance, like
?
I think that's a fair place tostart, right.
Joseph Marohn (11:07):
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 payingW2 job and I'm sure others can
attest to this, so I was lookingmore for the passive income and
tax write-offs purposes.
So I'm like, well, how do Istart?
(11:28):
Because interest rates arethrough the roof.
How are investors even buyingand holding properties right now
with these high interest rates?
So then, as I started learningmore about creative finance and
learning about subject to andhow you can buy properties and
take over people's existingmortgages and you can basically
take their interest rates thatthey already have, I was blown
(11:51):
away by it.
So I was like I got to learnmore about this, right.
So I mean I get people askingme all the time like, hey, man,
where can I learn more aboutreal estate?
Or how do I learn more aboutcreative finance?
And obviously there's podcastsyou can watch, there's books you
can read, youtube videos youcan learn from, but I just
wanted to hear your experiencesand how you learned what you now
(12:13):
know today.
Kevin Choe (12:15):
Yeah Well, first off , I paid my way into learning
this Exactly.
You know, just like you want topay a mentor to fast track your
learning curve, or you canlearn it the hard way and not
pay anything, but you end uppaying the you know what do you
call it?
Like the ignorance tax, whereyou have to figure it out on
(12:36):
your own, want to go the payroute, hands down, Sub2 is the
best paid place to be Becauseyou have access to the people
that have been doing this forpeople like me, and then you
have access to people that'sthat can help you along the way.
Like if, joseph, you came to meand you need help with Sub2,
(13:00):
most likely I'll have answers toit, but that's because this is
within a paid community, butoutside of that it's like you
have to filter through a lotmore people to find the answers
for your questions.
So if you guys are watching thisand you're like, where do I
even get started, I woulddefinitely say start watching
(13:20):
Pace's YouTube video.
I have a YouTube video that Iput out three times a week and
then, you know, join the freeFacebook group that Pace has.
But at the same time, like ifyou have the money to spend and
you want to, like you know,shorten your learning curve.
I'd definitely say buy, youknow, buy some deals, pay your
way into the mentorship.
Joseph Marohn (13:41):
Great answer.
You know, as you know, whenyou'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 (13:59):
Oh, 100%.
I mean, all those tools areonly there to help you, amplify
you, getting deals quicker,right?
So it's like when I was talkingabout was paying a mentor.
When you pay a mentor, you payfor.
Do you need a mentor?
Really, at the end of the day,the answer is probably not.
(14:21):
You probably don't need amentor, but that would help you.
Do you need a car to go to thegym?
No, you could probably walkRight.
But those are only tools thatyou know if you have, if you
have, if you have the capacityto and the budget for it, will
help.
But you know, I started my veryfirst 20 deals.
(14:42):
I got it off of FacebookMarketplace I was just going
through this for sell by ownersand that's how I was able to get
the deals done.
Joseph Marohn (14:48):
That's crazy to think of Facebook Marketplace.
I saw the interview where youwere talking about that and that
was interesting.
Man, I think you were probablythe first person to start doing
that.
Nobody even thought about doingthose type of deals, so that's
oh yeah.
Kevin Choe (15:09):
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 todeals without having too much
spent, without having to spendtoo much money.
Joseph Marohn (15:17):
you have to get creative you do what you got to
do right 100 cool.
Kevin Choe (15:22):
So, kevin, help us all understand what the
difference is between subject toand seller finance so subject
to and seller finance are twomethods in which you can get you
know which you can getfinancing for these, you know?
I mean I'm just going to we'regoing to talk about it in the
real estate context, right.
So subject to and sellerfinance are two main ways for
you to get two main acquisitionstrategies for you to get access
(15:46):
to these properties, right?
So first, house number house,house number one, let's just say
this is one, two, three mainstreet.
There's usually 90% of the timewhen people go buy houses, they
get a traditional bankfinancing and it pays off the
existing mortgage that theexisting homeowner had, and now
you make payments on thatmortgage for the next 30 years.
(16:07):
So how that would work is solike the most recent project
that I have going on, it's ahouse on.
What's the most recent projectthat I have?
I have a house on 41st Avenuehere in Phoenix where I was able
to buy the house by simplygoing in and taking over
somebody else's existingmortgage, and the reason I was
(16:29):
able to do that was because thehomeowner, when I first called
her, was like you know what?
I just bought this house abouta year and a half ago and I
bought it so that my husband andI can move into it together.
But you know what?
We're getting a divorce, ohokay.
So what do you guys plan ondoing?
We just want to sell the house,but, honestly, none of us have
(16:54):
the money to come out of pocket.
So I think you know, if you, ifyou give us $5,000 each and you
come in and take over mymortgage payment, I think that
might be the best way to go, andI was able to.
I was, I gave, I gave the wife5,000.
I gave the husband 5,000.
I took over the existingmortgage payment, right and, and
(17:17):
now I make mortgage payments.
The mortgage payment is about27 50 and I have that house
rented out on airbnb for like 30plus days and I'm making about
4500 every single month.
That's a nice return.
So one of the ways that subjectto is beneficial is going back
to the car strategy that I, whenI was 18 and my senior year in
high school, how, how I was ableto take over my mom's existing
car payment at $350.
I Venmo'd her $350 every singlemonth and then I was able to
(17:39):
drive the car around.
That's a subject to in anutshell.
But not only are you doing itwith a car, but you can do it
with a house, right?
And the second acquisitionstrategy is called seller
finance.
And the second acquisitionstrategy is called seller
finance.
So my most recent seller financedeal was a condo that I bought
in Mesa, arizona, which is about25 minutes away from where I'm
(18:01):
living right now, and thehomeowner he had a home
servicing business here inArizona for the last 40 years
and over the last 40 years hejust paid off all the houses.
It's like, oh, I bought arental here, I bought a rental
here, I bought a rental here.
And my homeowner named mylender Tom.
He's like, dude, I got 19houses all in this single, all
(18:22):
in this condo right here.
And you know what?
I don't want to deal with anyof the Airbnb tenants, I'm just
done with it.
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 sellit $250,000, I'm going to have
to pay $50,000 to $60,000 of itto just any fees, right?
(18:43):
But I came in and I'm like howabout this?
How about I buy the deal butyou give me financing for it?
And we went back and forth fora couple of days and the terms
that we settled on was here Igive you 5% down, 6% interest,
(19:07):
40 year term, 40 years scheduledwith a 10 year balloon, and
then I'm like so Tom's going tomake for the next 10 years.
He'll get a check for 1300bucks from me, and that's a
seller finance in a nutshell.
And the best part about it isTom now has 18 other properties
in the same exact condominiumand he's like you know what?
I'll sell you all of these forthe next 24 months if you can
(19:28):
prove to me over and over andover again that you're able to
perform.
And I'm like damn consider it,it done.
Joseph Marohn (19:35):
That's a good deal right there, man, you found
the right seller.
Kevin Choe (19:38):
But but here, here's , here's, here's.
The thing that most peopledon't talk about is like did I
use it, my any?
Did I use any of my own moneyduring those times?
No, that tom knows.
Tom never even questioned mycredibility, oh, other than the
fact that he just wanted to seewhat my credit score was.
So I just I pulled up, I took ascreenshot of my experience, my
credit score, which was 792 atthat time, and just texted him.
Joseph Marohn (19:59):
He's like I'm good, all right, let's move
forward but you didn't have toactually use your credit to
obtain the loan, right, you justhad to show him your credit
score yeah, it was literally.
Kevin Choe (20:07):
I just took a screenshot of it.
I'm like, here you go.
And then he's like, ok, goodenough.
Joseph Marohn (20:11):
Right, awesome breakdown.
Man Sounds like I need to findmore sellers like Tom man, but
not Kevin.
You just hit it right on thehead, because most seller
finance deals that we'vestructured all came down to the
fact that they either weretrying to avoid paying capital
gains tax or they saw the longterm benefit of the monthly
payouts.
Now, are there any specificproperties or sellers that are
(20:36):
ideal for subject to?
Maybe give us a scenario aseller may be in where subject
to would be a better option thana conventional offer.
Kevin Choe (20:44):
Yeah, so 100%.
So in 2023, I focused my entirebusiness off of subject to
transactions and I finished offthe year with 90 subject tos,
which 79 of the 79 of them Iwholesale off to my friends and
my friends are making paymentson those mortgages.
And but you let an 11 of them Ikept in my portfolio, right?
(21:07):
And you might be wondering okay, why would anybody give you,
why would anybody just let youtake over somebody else's?
A random stranger like mebecause I'm a stranger
essentially take over somebodyelse's mortgage payment and they
don't even own the house.
And a lot of the situations arewhere the subject to happens is
(21:27):
it's not necessarily becausethe homeowner wants to do it,
but they have no other optionsselling because the homeowner
wants to do it, but they have noother options, right?
So, like my very first subjectto deal that I've done was an
1188 Southland Avenue in Yuma,arizona, where Diana Hernandez
she's a local wholesaler here intown she came to me saying hey,
kevin, I have this homeowner.
(21:49):
I can't seem to figure this out.
Like I don't know what to dowith this, like I can't
wholesale this deal.
Like the homeowner just boughtthe house.
I'm like what do you mean?
Like, let's hop on the phonecall with the seller.
So I hopped, so I hopped on thephone 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 youknow how we can, how we can
(22:11):
help you guys.
And the wife says you know whatwe're going?
We're getting a divorce and wehave 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 youknow what?
Why do you say that?
Well, because it's because youjust bought it.
We just bought it for like 350000.
So like, if you don't get360360,000, we're going to cut a
(22:32):
check.
And, honestly, we don't reallyhave money to cut a check for
this house.
And we're like, okay, perfect.
So you're telling me, becauseyou have no equity in this house
, maybe the only way for you tosell the house is for you to get
a higher pricing.
Because her thought process wasokay, I'm going to get $360,000
for this house and then myexisting mortgage is $350,000.
(22:53):
And it was for sale by owner,so she'll pay $10,000 in closing
costs and commissions for thebuyers 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'sperfectly fine, but how about
this?
How about, instead of youcutting a check, I give you a
(23:16):
check.
And they're like you're goingto give me a check for this
house?
Oh yeah, 100%.
I wasn't looking to makeanything on this house anyway.
But here's the thing is I'llgive you 3,500.
I'll give your husband 3,500bucks, but I want to come and
take over that existing mortgagepayment.
And she goes okay, and that'sit.
(23:42):
You're just just gonna make thepayments on it and then, and
then I, and then you know I'mgonna get 3 500 bucks.
I'm like, yeah, I mean, youguys bought it for zero money.
Now you guys essentially madeseven grand together.
She was so, that was that.
But then she was a littlehesitant because, okay, what
happens if I missed the mortgagepayment?
What happens if I want to getanother financing?
Blah, blah, blah, all thesethings was in her thought
process.
But obviously we overcome allthose objections and there's so
(24:05):
many ways to go about it that Iwill not necessarily share in
this video share in the podcast.
But homes that were justrecently bought, either using
FHA loan, va loan orconventional loan at low down
payment, less than 5%, all thesehomes have high opportunity.
You know all these homes.
If the house gets, if thehomeowners go through separation
(24:28):
or if stuff happens in thefamily where they have to sell
the house within 24 months, mostlikely these homes have no
equity Right.
Joseph Marohn (24:36):
So those are great ways for you to just come
and take over the existingmortgage payment what's the way,
kevin, are you telling me Idon't have to go apply for a
loan, provide any credentials,give out any bank statements,
and I can go and purchase aproperty?
100 bro, this can't be legal.
Is this legal?
Kevin Choe (24:54):
uh, as far as I know , no, this is 100% legal.
We have there's some parts ofthe states that you know.
Some states are, you know,title company states where, like
, you close a deal with a titlecompany, but some states are you
close a deal with an attorneyand we have attorneys closing
(25:14):
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 (25:21):
it not be illegal , right.
And we get a lot of agents thatactually tell us that and we
have to kind of explain to themon how the HUD statement it
shows it on line 203 and 503.
And we explain to them it showsright there, subject to the
existing mortgage.
And yeah, exactly like you justsaid.
But speaking of agents, whatadvice do you have for those
that have trouble structuringdeals through agents?
(25:41):
You mind sharing some of yourstrategies and techniques you
use to build rapport.
Kevin Choe (25:47):
So I've worked with hundreds of agents, truly like
literally hundreds of agents.
And agents say oh, I need totake care of my client, Right,
that is the most BS thing Icould ever hear in this day and
age Agents.
They don't care about yourclient, they don't care about
(26:08):
you.
All they care about is yourcommission.
Seriously, they don't careanything about it.
So when you tell your client,when the agent's like, oh yeah,
this would be a really greatopportunity for the seller, and
then I'm like, oh, okay.
And they're like, oh, am Igetting paid on this?
I'm like, yeah, you are.
They're like oh yeah.
(26:30):
It's all about their commission.
No joke, no joke, joseph.
I had an agent that was likeyou know what?
I don't think this is a goodfit for my client.
And I'm like, okay, even if yougot paid your full commission.
And it was like no joke.
It was like three secondssilence.
I'm like, well, and then I'mlike, okay, well, let's talk
(26:54):
about it again, right, let'sstart this all over again, right
?
So now agents.
The best way for you to get anagent to work with you is by
paying them.
Joseph Marohn (27:02):
Absolutely, you know.
And then it's funny you saythat because, like you know,
subject to pitches are becomingmore and more common.
Now I wouldn't say it'ssaturated, but there are times
where I'm sure you can attest tothis, kevin that we get on the
phone with an agent and withinthe first five seconds of the
conversation the agent saysyou're not one of those subject
(27:24):
to guys, are you?
Or maybe you heard this one?
Our client is not open to anycreative finance offers.
What is your response to that?
Are you continuing theconversation?
And if you are, how do youmaneuver around that?
Kevin Choe (27:32):
I'm not carrying on a conversation, you just hang up
.
Well, it depends, you know, itdepends the scenario, but here,
here, here's the way I approachit, and I have youtube videos
about me calling these agentsand stuff.
I don't, I don't force a dealto happen.
I never do, I never, I neverhave, I never.
I mean, I have a lot, I tryforcing it, but right at this,
(27:55):
at this point in my career, Idon't force a deal to happen,
right, but I, I wait for themand say, hey, all right, all
right, joseph here's, here's.
The thing is, honestly, totallyfine.
I am, I gotta admit I am one ofthose guys, but you, you, you
want you, I don't, I, I'm not.
I'm not doubting your abilityto sell this house, but if, in
case that you don't, you don't,you guys don't get the offer
(28:17):
that you guys are looking for,you, I would at least consider
myself as a backup, because I'llbe willing to do hard-earned
money with no inspection period,and I'll go into a contract
with you right now if yourclients are open to it, and I
just put myself out there.
I'm like, hey, just putting itout there, hey, I'm here, I'm
here, I'm here, and I follow upevery week or two until the
(28:45):
house gets sold, until until thehouse gets literally sold.
Joseph Marohn (28:46):
And and I'm like, if I and that's it right, so
you, so you don't force ityou're just kind of telling them
like hey, I'm just a backupoption, but I can get the deal
done, and you're just kind ofshowing them what you've done
and you know they can come toyou if if they're having trouble
selling it traditionally iswhat you're saying.
Kevin Choe (28:58):
Exactly.
That's all I do.
Joseph Marohn (29:01):
OK, I mean, Kevin , you've done a great job of
explaining how exactly subjectto works and how it makes sense
for both parties.
I want to shift a little bitinto seller finance for a second
.
As you know firsthand, thereare a ton of seller finance
opportunities out here right now.
They say 30 percent of realestate is free and clear, which
means, as you're making your waythrough the neighborhood to go
grab your morning Starbucks,three out of every 10 houses you
(29:24):
drive by are free and clear.
Now why would a seller evenchoose to become the bank and
finance to sell their ownproperty instead of just opting
for a traditional sale?
What's it for them?
Kevin Choe (29:36):
So this is an interesting question because you
have to factor in the fact thatwhere?
Where are they in their career?
Because just if you came to meand I had 19 houses, free and
clear, like tom did, and you'relike 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.
(29:59):
So for me, I don't want $1,200.
I want to get quarter milliondollars right now, deploy it
into another deal, double thatthing in six months and I have
the know-how to double it.
But then you look at peoplelike Tom, who's like you know
what.
I've owned my servicingbusiness for the last 40 years
and I don't want to do workanymore.
And he's like you know what.
(30:21):
I don't want to do anything forthe next 40 years.
I mean, I've worked for 40years and what more do I need to
do so so legitimately?
When I was on the phone with Tomafter 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 ofmoney and you don't have any
more management or anything.
I mean, all you would have is amanagement and he goes.
(30:42):
Well, that's exactly what Ididn't want is, I didn't want
any management.
I'm like 66.
I don't need more money, I justwant more time freedom.
My kids took over my servicingcompany, so the kids took over
the existing job and the rolesof the, of the, of the company
that his dad, that the fatherbuilt, and now he just wants to
(31:04):
relax, relax, right.
So you have to find the rightclient, right, right Person.
Joseph Marohn (31:11):
Right, yeah, and, and a lot of times, a lot of
what I've noticed is likethey're just, you know, like you
said they're, they're just wantto 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 timesthey're trying to avoid capital
gains tax.
So you know, that's what wefound with most creative finance
deals, but, like you said,you're 23.
You got properties.
Last thing you're going to bedoing is selling any of those
off seller finance.
(31:32):
It wouldn't make sense, no,never.
Great point, great point.
So now can a buyer sell theproperty or refinance the seller
finance loan before it's fullypaid off?
Kevin Choe (31:43):
Yes, yes, you can seller finance another seller
finance deal.
Joseph Marohn (31:49):
Okay, and then I know you do extremely well with
wholesaling, but for thecreative deals you do hold on to
.
What's your preferred exitstrategy and why to what's your
preferred exit strategy and why?
Kevin Choe (32:01):
My preferred exit strategy is midterm rentals,
which is a hybrid of short-termand 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 Ilove doing midterm rentals is
because it allows me to cashflow like a short-term rental or
more with the management of along-term rental.
(32:23):
Right Cause these tenants areplaying, staying there for two,
three months that we don't needto.
We don't need to clean it every, you know, every weekend.
So the management is verymanageable.
But the pay is also very goodand it's also pretty consistent
because I don't have to worryabout.
Joseph Marohn (32:43):
Oh my gosh, am I getting a booking next week?
You know what I mean?
Kevin Choe (32:44):
right, and you're doing what like traveling nurses
or traveling uh contractors,traveling nurses, traveling
contractors, snowbirds ummedical.
You know people in the medicalfield like startup companies,
like there's so many right,right.
Joseph Marohn (32:57):
So you know, everyone loves to hear great
success stories, right?
But I think the people reallyrespect full transparency more.
If we're going to share thegood, we also got to share the
bad right.
There are risks in everythingwe do, especially when it comes
to investing and are startingour own businesses.
Kevin, do you mind sharing astory about a mistake you made
in real estate and the lessonyou learned from it?
Kevin Choe (33:18):
Well, honestly, the biggest mistake that I have in
real estate is not starting realestate when I was nine years
old in 2008.
That's probably the biggestmistake that I ever have.
Joseph Marohn (33:29):
Yeah, I wish I would have started a lot younger
as well.
Kevin Choe (33:31):
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 (33:38):
Yeah, I know.
Kevin Choe (33:38):
But you know what I, to be honest with you, joseph,
like I have no, I have noregrets.
I think I started at perfecttiming and I think I'm I'm at a
really, really comfortable placeright.
Joseph Marohn (33:53):
So you haven't.
You haven't had no hiccups orany troubles in the road so far.
Everything's been pretty smoothfor you oh 100.
Kevin Choe (34:01):
I mean, I can't say everything has been smooth, but,
like you know, I wouldn'tconsider them regrets, right
like I mean, what could I havedone 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, soso it's not like I knew about it
and then I didn't start foranother 10 years.
(34:21):
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 (34:27):
I mean you started at a good age, right?
I mean, honestly, most of ushere probably wish we started at
that age as well.
Plus, you're finding a lot ofsuccess.
So nothing there to regret,right.
But also, I can't claimeverything's been smooth either.
I mean, for the most part, I'vebeen fortunate to find a lot of
success as well, but there havebeen a few moves I probably
could have made better decisionson, and I'm always fully
(34:49):
transparent about it.
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 andfail forward.
But I'm going to wrap thisthing up here, kevin.
The last thing I wanted totouch on is when you're first
learning about creative finance.
Youtube videos, books, podcastsare all great things, right.
(35:11):
This is all free, availableinformation to you, but being a
part of a community, having amentor, going to local meetups
and being around like mindedpeople, is where the true value
lies.
It's not only going to help youbuild connections, but it's
also going to help you build ateam and really excel.
Growth you know, the growth ofyour business, kevin.
(35:32):
Do you agree with that.
How beneficial is communitybeen for you, how?
Kevin Choe (35:37):
beneficial is community been for you?
Oh, community is everything youknow.
It's like I don't think I wouldbe.
I don't think I would have thework ethic that I have or the
momentum that I have if I didn'thave, you know, people around
me that was also doing the samething.
It's kind of like competition,because I'm a pretty competitive
person.
Joseph Marohn (35:53):
Yeah, same way.
Kevin Choe (35:54):
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 realestate, I'm like, no, I want to
get, I'm going to get it, I'mgoing to get further ahead of
you and I'm going to make moremoney than you.
And when I, when you're, whenyou're hanging out with people,
that that's making a lot ofmoney and doing all these things
, it's like, oh my gosh, it'snot.
It's now time for me to get towork.
Joseph Marohn (36:18):
I love that man.
I like to be around people likeyou because it helps me push me
.
I'm also a competitive personand when I hear people talk like
that, I'm like all right, kevin, I'm coming for you.
Man, let's do a little friendlycompetition, if you will.
Cool, awesome.
Well, kevin, again, we reallyappreciate your time and all the
game you've given us here today.
You've got one hell of a futureahead of you, bro.
(36:39):
You're making the right movesand you're surrounded by all the
right people.
I think I speak for everyonehere today when I say we're
excited to see where you go fromhere and we'll make sure to
follow you along your journey.
Of course, man, appreciate it.
Kevin.
Where can people get ahold ofyou?
Kevin Choe (36:54):
The best way for me to get a hold of me is
KevinCho12 on Instagram.
It's KevinCho12 on Instagramand YouTube and TikTok and
across all social mediaplatforms 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 anyquestions, you can always find
me on Instagram.
Joseph Marohn (37:14):
Now, if you guys are finding value from this
podcast, don't forget to showyour boys some love.
You definitely don't want tomiss future episodes, so make
sure you subscribe.
Don't forget to like this anddrop a comment down below.
Today what you learned aboutcreative finance.
If you're motivated by thisepisode and you're ready to take
action or you want to join thesub two community, feel free to
(37:39):
reach out to Kevin or myself andwe'll make sure we get you
pointed to the right direction.
Appreciate all the continuedsupport and, guys, stay tuned,
because I'm pumping theseepisodes out every two weeks.
You definitely don't want tomiss what I got coming up next
best believe I'm gonna keepbringing you that fire.
Peace, kevin.
Appreciate it.
Appreciate it.
(38:21):
I'm not sure what I'm doing here.
I'm not sure what I'm doinghere.
I'm not sure what I'm doinghere.
(38:42):
I'm not sure what I'm doinghere.
I'm not sure what I'm doinghere.
I'm not sure what I'm doinghere.
I'm not sure what I'm doinghere.
I'm not sure what I'm doinghere.
I'm not sure what I'm doinghere.
(39:13):
Thanks for watching.
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 greatestinvestment strategies in real
estate little to no money out ofpocket, no credentials check,
no bank loan or hard credit pollneeded.
Today we're going to becovering the topic of creative
(00:33):
finance.
Creative finance is a way ofselling your property where the
buyer can either make paymentsdirectly to you or take over
your existing loan payments.
This method could be far morebeneficial than traditional
selling for various reasons, andwe will be covering some of
that here today.
Some of these methods includeseller finance, lease options,
(00:56):
private money lending andsubject to Now.
If that sounds like somethingyou've been dying to learn more
about and add to your investmentstrategies, this episode will
cover all the tips and tricks tocreative finance what types of
properties you should be lookingfor, how to structure these
types of deals and how you canget your first deal, starting
here today.
(01:16):
Now you know how we do it onthe Real Estate Unlocked podcast
.
If we're going to do it, we gotto do it right.
We can't just bring on anyoneto speak about creative finance.
We got to bring on the onewho's crushing it in creative
finance.
Today, our special guest on thepodcast is Mr Kevin Cho.
(01:37):
Kevin's real estate journeybegan just four years ago,
starting out at the age of 19.
Over the last few years, he'sdone over 100 plus transactions
in 20 different states and nowowns about $3 million in real
estate.
That cash flows him over$18,000 a month.
He actively does six to eightdeals a month and purchased his
(02:00):
own primary residence utilizingthe power of creative finance.
Kevin is a leader in the Sub2community with Pace Morby and
has his own YouTube channelwhere he now teaches others how
to do the same.
So, without further ado I'vebeen talking long enough
Everyone.
If you will, please allow me toformally introduce to you Kevin
(02:22):
Cho.
Kevin, how's your day goingtoday, brother?
Kevin Choe (02:29):
What's up, brother, so happy to be here.
I know I told you, hey, like onepisode 10, bring me on and
we'll have a conversation.
And I honestly didn't think youwould get to episode 10,
because nobody else does.
And I'm super proud of you forhaving all these people on the
podcast before me because itjust shows me, you know, like
it's a lot of work.
It really is.
Joseph Marohn (02:49):
Well, I really appreciate you acknowledging
that, because you're right, itis a lot of work.
Most people they don'tunderstand the amount of effort
that goes on behind the scenesto keep a podcast rolling.
In fact, when we initially hadthat conversation, kevin, it
motivated me because you set agoal of reaching episode 10.
And at the time I was only onepisode three, but I just stuck
(03:09):
to it.
I kept on improving and nowepisode 10, here we are and we
made it.
Kevin Choe (03:15):
We made it.
Joseph Marohn (03:17):
We made it, man Awesome.
Well, kevin, it's been a longtime coming.
Welcome to the podcast andthank you for taking time out of
your extremely busy schedule tocover such an important tool to
having your real estate arsenal.
Right now, as you know, homeprices are sky high, interest
rates are through the roof,sellers are stuck sitting on the
market or forced to come out ofpocket to sell their home Right
(03:41):
, and creative finance seems tobe the solution for all that.
So thank you.
Kevin Choe (03:45):
Of course, of course .
Joseph Marohn (03:47):
So let's kick this thing off by telling
everyone who Kevin Cho is andhow is it you're finding success
at such a young age.
Were you just born to do realestate, or what man?
Kevin Choe (03:57):
I mean I guess.
So at this point I don't knowwhat else to do.
So, for everyone that'slistening, hey, hello everybody.
My name is Kevin's listening,uh, hey, hello everybody.
My name is Kevin Cho and I am areal estate entrepreneur.
Uh, started when I was 19 andhave a couple of businesses that
I had prior to getting intoreal estate, and I don't even I
don't even know if I've calledthem businesses at this point,
but, uh, when I was, when I wassenior in high school, I sold
(04:19):
gummies and I made about 60 to70 bucks every single day
selling, selling them on duringsnack, lunch and after school
and you know what like that wasa probably decent, profitable
business model, considering thatI was only 17 and 18.
When I was 19, I had my own ATMbusiness, uh, which I started
from scratch.
I didn't know anything about it, I just watched a couple
YouTube videos and I kind ofstarted right from the get-go
(04:42):
and I was able to.
You know, I was able to andthat 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 realestate, specifically pertaining
to creative finance, because oneof one of one of the things
that really got me into it wasjust the fact that you could
(05:02):
actually buy and hold realestate without any of your own
cash, without any of your owncredentials and any of your own
you know, your tax returns andall that stuff and and that's
what.
And creative finance is what iswhat I've been focusing for the
last three years and yeah,that's like.
That's like my short intro fornow I and down the road I'll
talk more about it, but that'show I got started.
Joseph Marohn (05:25):
Absolutely Great story brother.
So, kevin, what the heck iscreative finance and why is it
such a popular topic in realestate right now?
Kevin Choe (05:33):
Well, so creative finance is based, as the name
calls it, it's you're literallycreatively financing houses,
right?
I mean, creative finance couldbe 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 acomputer, could be with a, could
be with you, with your, withyour phone, could be with
literally anything that's outthere and it's it's a lot more
common than you really think.
Right, like so?
For example, um, when I was inhigh school, my senior year of
(05:56):
high school, I had my parentsbuy me a honda accord or um, and
no, sorry, I, I, I, my parentshad 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 bankfinancing like I now do.
And I'm like, how can I startdriving around Because I need to
(06:21):
go to work and stuff.
And I was able to strike up adeal with my mom.
I said, hey, can I bid you $350every month and I just start
driving your Honda Accord andyou can go buy another car or
something now because you haveability to get financing.
So that was my very firstcreative finance experience
without even knowing that it wasa creative finance deal up
(06:42):
until like three months ago, Imean.
Another creative finance is like, you know, when I sold gummies
when I was in high school, I'llgo to costco with my mom, buy
you know big, you know big packsof gummy and big boxes kool-aid
.
And then I didn't have andthose money never came from me.
I used my mom's credit card togo buy them and then, as I start
(07:04):
to make profits from the, fromthis, you know, from selling
gummies I'll pay my mom back themoney 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 ahot topic is because you can do
that with houses.
At this point you know what Imean.
Like I buy houses on sellerfinance where this homeowner
(07:26):
gives me financing.
I didn't go through bank creditand none of that.
So I think that's one of thereasons why creative finance is
getting so popular nowadays.
Joseph Marohn (07:35):
Right, and what I really like about your story is
because most people are goingto be like, hey, mom, let me
have your Honda so I can drivemyself to school every day.
But instead you're like, heymom, I'm going to make you the
bank and I'm going to pay youfor this car every month.
That's awesome, man.
Now, kevin, what exactly makescreative finance different from
any other traditional financingmethods?
Kevin Choe (07:58):
So traditional financing is very strict, in my
opinion.
It's very strict in thatthere's so many hoops that you
have to go through becauseyou'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 andthen I bought an Audi Q5.
(08:19):
The amount of paperwork that Ihad to go through just to get
financing for a $45,000, just toget financing for a 45,000 car,
is like I mean, I went to thedealers at least like two or
three times because I missed acouple documentations like proof
of residency and all that stuff, and I had to go to go to go to
the um dealership just to getfinancing.
(08:40):
And I'm like, is there a betterway of doing it right?
Joseph Marohn (08:45):
so those, those papers, look like a book, didn't
it?
Oh?
Kevin Choe (08:49):
yeah, it was literally a stack of.
I mean now it's like digitalright, but like I get like
emails and I'm like scrollingthrough, I'm like, oh my god,
there's so much, so much hereyou know right, so do you?
Joseph Marohn (08:59):
do you think creative finance works for
everyone?
Kevin Choe (09:02):
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 (09:13):
All right.
So in your opinion, kevin, forsomeone brand new to real estate
they start learning how tostructure, learning how to do
creative finance deals.
How do they get the ballrolling and where do they go and
how do they start?
Kevin Choe (09:25):
creative finance deals.
How do they get the ballrolling and where do they go and
how do they start?
Ooh, that's tough.
That's tough.
First of all, you need tofigure out what you want to do,
right, because the things that Iwill say is very different than
things that other people willsay, and it's different because
they have two different thingsthat they want to do.
So for me, at this point in mycareer, I've wholesaled over 150
(09:49):
deals, probably getting closeto 200.
So for me I'm like what can I doto hold more real estate?
Because I'm really not in aposition to worry about what's
my, when is my?
When is my money coming intomorrow?
(10:09):
Like I, that's not a I'm notworried about, like paying food
on the table or paying rent.
So for me now it's it's more ofa, it's more of a question of
what can I do to hold more realestate.
But then, when I first gotstarted, I'm like I don't, I
don't want to hold, I don't wantto buy houses right now.
I want to be able to just makequick $5,000, quick $10,000,
(10:30):
quick $15,000 and have morereserve saves set aside so that
I can go buy real estate, maybetwo years down the road three
years down the road, and that'swhat I did, so for me.
So the first things first isyou have to figure out what you
want to do.
Do you want to startwholesaling these deals or do
you want to start buying themand keeping for yourself?
Right.
(10:51):
But all I have to say is thefirst things first is you have
to figure out, like, what kindof deals are you even looking
for?
Are you looking for, like, asubject to deal where you take
over payments, or are youlooking for seller finance, like
?
I think that's a fair place tostart, right.
Joseph Marohn (11:07):
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 payingW2 job and I'm sure others can
attest to this, so I was lookingmore for the passive income and
tax write-offs purposes.
So I'm like, well, how do Istart?
(11:28):
Because interest rates arethrough the roof.
How are investors even buyingand holding properties right now
with these high interest rates?
So then, as I started learningmore about creative finance and
learning about subject to andhow you can buy properties and
take over people's existingmortgages and you can basically
take their interest rates thatthey already have, I was blown
(11:51):
away by it.
So I was like I got to learnmore about this, right.
So I mean I get people askingme all the time like, hey, man,
where can I learn more aboutreal estate?
Or how do I learn more aboutcreative finance?
And obviously there's podcastsyou can watch, there's books you
can read, youtube videos youcan learn from, but I just
wanted to hear your experiencesand how you learned what you now
(12:13):
know today.
Kevin Choe (12:15):
Yeah Well, first off , I paid my way into learning
this Exactly.
You know, just like you want topay a mentor to fast track your
learning curve, or you canlearn it the hard way and not
pay anything, but you end uppaying the you know what do you
call it?
Like the ignorance tax, whereyou have to figure it out on
(12:36):
your own, want to go the payroute, hands down, Sub2 is the
best paid place to be Becauseyou have access to the people
that have been doing this forpeople like me, and then you
have access to people that'sthat can help you along the way.
Like if, joseph, you came to meand you need help with Sub2,
(13:00):
most likely I'll have answers toit, but that's because this is
within a paid community, butoutside of that it's like you
have to filter through a lotmore people to find the answers
for your questions.
So if you guys are watching thisand you're like, where do I
even get started, I woulddefinitely say start watching
(13:20):
Pace's YouTube video.
I have a YouTube video that Iput out three times a week and
then, you know, join the freeFacebook group that Pace has.
But at the same time, like ifyou have the money to spend and
you want to, like you know,shorten your learning curve.
I'd definitely say buy, youknow, buy some deals, pay your
way into the mentorship.
Joseph Marohn (13:41):
Great answer.
You know, as you know, whenyou'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 (13:59):
Oh, 100%.
I mean, all those tools areonly there to help you, amplify
you, getting deals quicker,right?
So it's like when I was talkingabout was paying a mentor.
When you pay a mentor, you payfor.
Do you need a mentor?
Really, at the end of the day,the answer is probably not.
(14:21):
You probably don't need amentor, but that would help you.
Do you need a car to go to thegym?
No, you could probably walkRight.
But those are only tools thatyou know if you have, if you
have, if you have the capacityto and the budget for it, will
help.
But you know, I started my veryfirst 20 deals.
(14:42):
I got it off of FacebookMarketplace I was just going
through this for sell by ownersand that's how I was able to get
the deals done.
Joseph Marohn (14:48):
That's crazy to think of Facebook Marketplace.
I saw the interview where youwere talking about that and that
was interesting.
Man, I think you were probablythe first person to start doing
that.
Nobody even thought about doingthose type of deals, so that's
oh yeah.
Kevin Choe (15:09):
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 todeals without having too much
spent, without having to spendtoo much money.
Joseph Marohn (15:17):
you have to get creative you do what you got to
do right 100 cool.
Kevin Choe (15:22):
So, kevin, help us all understand what the
difference is between subject toand seller finance so subject
to and seller finance are twomethods in which you can get you
know which you can getfinancing for these, you know?
I mean I'm just going to we'regoing to talk about it in the
real estate context, right.
So subject to and sellerfinance are two main ways for
you to get two main acquisitionstrategies for you to get access
(15:46):
to these properties, right?
So first, house number house,house number one, let's just say
this is one, two, three mainstreet.
There's usually 90% of the timewhen people go buy houses, they
get a traditional bankfinancing and it pays off the
existing mortgage that theexisting homeowner had, and now
you make payments on thatmortgage for the next 30 years.
(16:07):
So how that would work is solike the most recent project
that I have going on, it's ahouse on.
What's the most recent projectthat I have?
I have a house on 41st Avenuehere in Phoenix where I was able
to buy the house by simplygoing in and taking over
somebody else's existingmortgage, and the reason I was
(16:29):
able to do that was because thehomeowner, when I first called
her, was like you know what?
I just bought this house abouta year and a half ago and I
bought it so that my husband andI can move into it together.
But you know what?
We're getting a divorce, ohokay.
So what do you guys plan ondoing?
We just want to sell the house,but, honestly, none of us have
(16:54):
the money to come out of pocket.
So I think you know, if you, ifyou give us $5,000 each and you
come in and take over mymortgage payment, I think that
might be the best way to go, andI was able to.
I was, I gave, I gave the wife5,000.
I gave the husband 5,000.
I took over the existingmortgage payment, right and, and
(17:17):
now I make mortgage payments.
The mortgage payment is about27 50 and I have that house
rented out on airbnb for like 30plus days and I'm making about
4500 every single month.
That's a nice return.
So one of the ways that subjectto is beneficial is going back
to the car strategy that I, whenI was 18 and my senior year in
high school, how, how I was ableto take over my mom's existing
car payment at $350.
I Venmo'd her $350 every singlemonth and then I was able to
(17:39):
drive the car around.
That's a subject to in anutshell.
But not only are you doing itwith a car, but you can do it
with a house, right?
And the second acquisitionstrategy is called seller
finance.
And the second acquisitionstrategy is called seller
finance.
So my most recent seller financedeal was a condo that I bought
in Mesa, arizona, which is about25 minutes away from where I'm
(18:01):
living right now, and thehomeowner he had a home
servicing business here inArizona for the last 40 years
and over the last 40 years hejust paid off all the houses.
It's like, oh, I bought arental here, I bought a rental
here, I bought a rental here.
And my homeowner named mylender Tom.
He's like, dude, I got 19houses all in this single, all
(18:22):
in this condo right here.
And you know what?
I don't want to deal with anyof the Airbnb tenants, I'm just
done with it.
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 sellit $250,000, I'm going to have
to pay $50,000 to $60,000 of itto just any fees, right?
(18:43):
But I came in and I'm like howabout this?
How about I buy the deal butyou give me financing for it?
And we went back and forth fora couple of days and the terms
that we settled on was here Igive you 5% down, 6% interest,
(19:07):
40 year term, 40 years scheduledwith a 10 year balloon, and
then I'm like so Tom's going tomake for the next 10 years.
He'll get a check for 1300bucks from me, and that's a
seller finance in a nutshell.
And the best part about it isTom now has 18 other properties
in the same exact condominiumand he's like you know what?
I'll sell you all of these forthe next 24 months if you can
(19:28):
prove to me over and over andover again that you're able to
perform.
And I'm like damn consider it,it done.
Joseph Marohn (19:35):
That's a good deal right there, man, you found
the right seller.
Kevin Choe (19:38):
But but here, here's , here's, here's.
The thing that most peopledon't talk about is like did I
use it, my any?
Did I use any of my own moneyduring those times?
No, that tom knows.
Tom never even questioned mycredibility, oh, other than the
fact that he just wanted to seewhat my credit score was.
So I just I pulled up, I took ascreenshot of my experience, my
credit score, which was 792 atthat time, and just texted him.
Joseph Marohn (19:59):
He's like I'm good, all right, let's move
forward but you didn't have toactually use your credit to
obtain the loan, right, you justhad to show him your credit
score yeah, it was literally.
Kevin Choe (20:07):
I just took a screenshot of it.
I'm like, here you go.
And then he's like, ok, goodenough.
Joseph Marohn (20:11):
Right, awesome breakdown.
Man Sounds like I need to findmore sellers like Tom man, but
not Kevin.
You just hit it right on thehead, because most seller
finance deals that we'vestructured all came down to the
fact that they either weretrying to avoid paying capital
gains tax or they saw the longterm benefit of the monthly
payouts.
Now, are there any specificproperties or sellers that are
(20:36):
ideal for subject to?
Maybe give us a scenario aseller may be in where subject
to would be a better option thana conventional offer.
Kevin Choe (20:44):
Yeah, so 100%.
So in 2023, I focused my entirebusiness off of subject to
transactions and I finished offthe year with 90 subject tos,
which 79 of the 79 of them Iwholesale off to my friends and
my friends are making paymentson those mortgages.
And but you let an 11 of them Ikept in my portfolio, right?
(21:07):
And you might be wondering okay, why would anybody give you,
why would anybody just let youtake over somebody else's?
A random stranger like mebecause I'm a stranger
essentially take over somebodyelse's mortgage payment and they
don't even own the house.
And a lot of the situations arewhere the subject to happens is
(21:27):
it's not necessarily becausethe homeowner wants to do it,
but they have no other optionsselling because the homeowner
wants to do it, but they have noother options, right?
So, like my very first subjectto deal that I've done was an
1188 Southland Avenue in Yuma,arizona, where Diana Hernandez
she's a local wholesaler here intown she came to me saying hey,
kevin, I have this homeowner.
(21:49):
I can't seem to figure this out.
Like I don't know what to dowith this, like I can't
wholesale this deal.
Like the homeowner just boughtthe house.
I'm like what do you mean?
Like, let's hop on the phonecall with the seller.
So I hopped, so I hopped on thephone 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 youknow how we can, how we can
(22:11):
help you guys.
And the wife says you know whatwe're going?
We're getting a divorce and wehave 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 youknow what?
Why do you say that?
Well, because it's because youjust bought it.
We just bought it for like 350000.
So like, if you don't get360360,000, we're going to cut a
(22:32):
check.
And, honestly, we don't reallyhave money to cut a check for
this house.
And we're like, okay, perfect.
So you're telling me, becauseyou have no equity in this house
, maybe the only way for you tosell the house is for you to get
a higher pricing.
Because her thought process wasokay, I'm going to get $360,000
for this house and then myexisting mortgage is $350,000.
(22:53):
And it was for sale by owner,so she'll pay $10,000 in closing
costs and commissions for thebuyers 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'sperfectly fine, but how about
this?
How about, instead of youcutting a check, I give you a
(23:16):
check.
And they're like you're goingto give me a check for this
house?
Oh yeah, 100%.
I wasn't looking to makeanything on this house anyway.
But here's the thing is I'llgive you 3,500.
I'll give your husband 3,500bucks, but I want to come and
take over that existing mortgagepayment.
And she goes okay, and that'sit.
(23:42):
You're just just gonna make thepayments on it and then, and
then I, and then you know I'mgonna get 3 500 bucks.
I'm like, yeah, I mean, youguys bought it for zero money.
Now you guys essentially madeseven grand together.
She was so, that was that.
But then she was a littlehesitant because, okay, what
happens if I missed the mortgagepayment?
What happens if I want to getanother financing?
Blah, blah, blah, all thesethings was in her thought
process.
But obviously we overcome allthose objections and there's so
(24:05):
many ways to go about it that Iwill not necessarily share in
this video share in the podcast.
But homes that were justrecently bought, either using
FHA loan, va loan orconventional loan at low down
payment, less than 5%, all thesehomes have high opportunity.
You know all these homes.
If the house gets, if thehomeowners go through separation
(24:28):
or if stuff happens in thefamily where they have to sell
the house within 24 months, mostlikely these homes have no
equity Right.
Joseph Marohn (24:36):
So those are great ways for you to just come
and take over the existingmortgage payment what's the way,
kevin, are you telling me Idon't have to go apply for a
loan, provide any credentials,give out any bank statements,
and I can go and purchase aproperty?
100 bro, this can't be legal.
Is this legal?
Kevin Choe (24:54):
uh, as far as I know , no, this is 100% legal.
We have there's some parts ofthe states that you know.
Some states are, you know,title company states where, like
, you close a deal with a titlecompany, but some states are you
close a deal with an attorneyand we have attorneys closing
(25:14):
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 (25:21):
it not be illegal , right.
And we get a lot of agents thatactually tell us that and we
have to kind of explain to themon how the HUD statement it
shows it on line 203 and 503.
And we explain to them it showsright there, subject to the
existing mortgage.
And yeah, exactly like you justsaid.
But speaking of agents, whatadvice do you have for those
that have trouble structuringdeals through agents?
(25:41):
You mind sharing some of yourstrategies and techniques you
use to build rapport.
Kevin Choe (25:47):
So I've worked with hundreds of agents, truly like
literally hundreds of agents.
And agents say oh, I need totake care of my client, Right,
that is the most BS thing Icould ever hear in this day and
age Agents.
They don't care about yourclient, they don't care about
(26:08):
you.
All they care about is yourcommission.
Seriously, they don't careanything about it.
So when you tell your client,when the agent's like, oh yeah,
this would be a really greatopportunity for the seller, and
then I'm like, oh, okay.
And they're like, oh, am Igetting paid on this?
I'm like, yeah, you are.
They're like oh yeah.
(26:30):
It's all about their commission.
No joke, no joke, joseph.
I had an agent that was likeyou know what?
I don't think this is a goodfit for my client.
And I'm like, okay, even if yougot paid your full commission.
And it was like no joke.
It was like three secondssilence.
I'm like, well, and then I'mlike, okay, well, let's talk
(26:54):
about it again, right, let'sstart this all over again, right
?
So now agents.
The best way for you to get anagent to work with you is by
paying them.
Joseph Marohn (27:02):
Absolutely, you know.
And then it's funny you saythat because, like you know,
subject to pitches are becomingmore and more common.
Now I wouldn't say it'ssaturated, but there are times
where I'm sure you can attest tothis, kevin that we get on the
phone with an agent and withinthe first five seconds of the
conversation the agent saysyou're not one of those subject
(27:24):
to guys, are you?
Or maybe you heard this one?
Our client is not open to anycreative finance offers.
What is your response to that?
Are you continuing theconversation?
And if you are, how do youmaneuver around that?
Kevin Choe (27:32):
I'm not carrying on a conversation, you just hang up
.
Well, it depends, you know, itdepends the scenario, but here,
here, here's the way I approachit, and I have youtube videos
about me calling these agentsand stuff.
I don't, I don't force a dealto happen.
I never do, I never, I neverhave, I never.
I mean, I have a lot, I tryforcing it, but right at this,
(27:55):
at this point in my career, Idon't force a deal to happen,
right, but I, I wait for themand say, hey, all right, all
right, joseph here's, here's.
The thing is, honestly, totallyfine.
I am, I gotta admit I am one ofthose guys, but you, you, you
want you, I don't, I, I'm not.
I'm not doubting your abilityto sell this house, but if, in
case that you don't, you don't,you guys don't get the offer
(28:17):
that you guys are looking for,you, I would at least consider
myself as a backup, because I'llbe willing to do hard-earned
money with no inspection period,and I'll go into a contract
with you right now if yourclients are open to it, and I
just put myself out there.
I'm like, hey, just putting itout there, hey, I'm here, I'm
here, I'm here, and I follow upevery week or two until the
(28:45):
house gets sold, until until thehouse gets literally sold.
Joseph Marohn (28:46):
And and I'm like, if I and that's it right, so
you, so you don't force ityou're just kind of telling them
like hey, I'm just a backupoption, but I can get the deal
done, and you're just kind ofshowing them what you've done
and you know they can come toyou if if they're having trouble
selling it traditionally iswhat you're saying.
Kevin Choe (28:58):
Exactly.
That's all I do.
Joseph Marohn (29:01):
OK, I mean, Kevin , you've done a great job of
explaining how exactly subjectto works and how it makes sense
for both parties.
I want to shift a little bitinto seller finance for a second
.
As you know firsthand, thereare a ton of seller finance
opportunities out here right now.
They say 30 percent of realestate is free and clear, which
means, as you're making your waythrough the neighborhood to go
grab your morning Starbucks,three out of every 10 houses you
(29:24):
drive by are free and clear.
Now why would a seller evenchoose to become the bank and
finance to sell their ownproperty instead of just opting
for a traditional sale?
What's it for them?
Kevin Choe (29:36):
So this is an interesting question because you
have to factor in the fact thatwhere?
Where are they in their career?
Because just if you came to meand I had 19 houses, free and
clear, like tom did, and you'relike 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.
(29:59):
So for me, I don't want $1,200.
I want to get quarter milliondollars right now, deploy it
into another deal, double thatthing in six months and I have
the know-how to double it.
But then you look at peoplelike Tom, who's like you know
what.
I've owned my servicingbusiness for the last 40 years
and I don't want to do workanymore.
And he's like you know what.
(30:21):
I don't want to do anything forthe next 40 years.
I mean, I've worked for 40years and what more do I need to
do so so legitimately?
When I was on the phone with Tomafter 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 ofmoney and you don't have any
more management or anything.
I mean, all you would have is amanagement and he goes.
(30:42):
Well, that's exactly what Ididn't want is, I didn't want
any management.
I'm like 66.
I don't need more money, I justwant more time freedom.
My kids took over my servicingcompany, so the kids took over
the existing job and the rolesof the, of the, of the company
that his dad, that the fatherbuilt, and now he just wants to
(31:04):
relax, relax, right.
So you have to find the rightclient, right, right Person.
Joseph Marohn (31:11):
Right, yeah, and, and a lot of times, a lot of
what I've noticed is likethey're just, you know, like you
said they're, they're just wantto 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 timesthey're trying to avoid capital
gains tax.
So you know, that's what wefound with most creative finance
deals, but, like you said,you're 23.
You got properties.
Last thing you're going to bedoing is selling any of those
off seller finance.
(31:32):
It wouldn't make sense, no,never.
Great point, great point.
So now can a buyer sell theproperty or refinance the seller
finance loan before it's fullypaid off?
Kevin Choe (31:43):
Yes, yes, you can seller finance another seller
finance deal.
Joseph Marohn (31:49):
Okay, and then I know you do extremely well with
wholesaling, but for thecreative deals you do hold on to
.
What's your preferred exitstrategy and why to what's your
preferred exit strategy and why?
Kevin Choe (32:01):
My preferred exit strategy is midterm rentals,
which is a hybrid of short-termand 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 Ilove doing midterm rentals is
because it allows me to cashflow like a short-term rental or
more with the management of along-term rental.
(32:23):
Right Cause these tenants areplaying, staying there for two,
three months that we don't needto.
We don't need to clean it every, you know, every weekend.
So the management is verymanageable.
But the pay is also very goodand it's also pretty consistent
because I don't have to worryabout.
Joseph Marohn (32:43):
Oh my gosh, am I getting a booking next week?
You know what I mean?
Kevin Choe (32:44):
right, and you're doing what like traveling nurses
or traveling uh contractors,traveling nurses, traveling
contractors, snowbirds ummedical.
You know people in the medicalfield like startup companies,
like there's so many right,right.
Joseph Marohn (32:57):
So you know, everyone loves to hear great
success stories, right?
But I think the people reallyrespect full transparency more.
If we're going to share thegood, we also got to share the
bad right.
There are risks in everythingwe do, especially when it comes
to investing and are startingour own businesses.
Kevin, do you mind sharing astory about a mistake you made
in real estate and the lessonyou learned from it?
Kevin Choe (33:18):
Well, honestly, the biggest mistake that I have in
real estate is not starting realestate when I was nine years
old in 2008.
That's probably the biggestmistake that I ever have.
Joseph Marohn (33:29):
Yeah, I wish I would have started a lot younger
as well.
Kevin Choe (33:31):
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 (33:38):
Yeah, I know.
Kevin Choe (33:38):
But you know what I, to be honest with you, joseph,
like I have no, I have noregrets.
I think I started at perfecttiming and I think I'm I'm at a
really, really comfortable placeright.
Joseph Marohn (33:53):
So you haven't.
You haven't had no hiccups orany troubles in the road so far.
Everything's been pretty smoothfor you oh 100.
Kevin Choe (34:01):
I mean, I can't say everything has been smooth, but,
like you know, I wouldn'tconsider them regrets, right
like I mean, what could I havedone 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, soso it's not like I knew about it
and then I didn't start foranother 10 years.
(34:21):
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 (34:27):
I mean you started at a good age, right?
I mean, honestly, most of ushere probably wish we started at
that age as well.
Plus, you're finding a lot ofsuccess.
So nothing there to regret,right.
But also, I can't claimeverything's been smooth either.
I mean, for the most part, I'vebeen fortunate to find a lot of
success as well, but there havebeen a few moves I probably
could have made better decisionson, and I'm always fully
(34:49):
transparent about it.
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 andfail forward.
But I'm going to wrap thisthing up here, kevin.
The last thing I wanted totouch on is when you're first
learning about creative finance.
Youtube videos, books, podcastsare all great things, right.
(35:11):
This is all free, availableinformation to you, but being a
part of a community, having amentor, going to local meetups
and being around like mindedpeople, is where the true value
lies.
It's not only going to help youbuild connections, but it's
also going to help you build ateam and really excel.
Growth you know, the growth ofyour business, kevin.
(35:32):
Do you agree with that.
How beneficial is communitybeen for you, how?
Kevin Choe (35:37):
beneficial is community been for you?
Oh, community is everything youknow.
It's like I don't think I wouldbe.
I don't think I would have thework ethic that I have or the
momentum that I have if I didn'thave, you know, people around
me that was also doing the samething.
It's kind of like competition,because I'm a pretty competitive
person.
Joseph Marohn (35:53):
Yeah, same way.
Kevin Choe (35:54):
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 realestate, I'm like, no, I want to
get, I'm going to get it, I'mgoing to get further ahead of
you and I'm going to make moremoney than you.
And when I, when you're, whenyou're hanging out with people,
that that's making a lot ofmoney and doing all these things
, it's like, oh my gosh, it'snot.
It's now time for me to get towork.
Joseph Marohn (36:18):
I love that man.
I like to be around people likeyou because it helps me push me
.
I'm also a competitive personand when I hear people talk like
that, I'm like all right, kevin, I'm coming for you.
Man, let's do a little friendlycompetition, if you will.
Cool, awesome.
Well, kevin, again, we reallyappreciate your time and all the
game you've given us here today.
You've got one hell of a futureahead of you, bro.
(36:39):
You're making the right movesand you're surrounded by all the
right people.
I think I speak for everyonehere today when I say we're
excited to see where you go fromhere and we'll make sure to
follow you along your journey.
Of course, man, appreciate it.
Kevin.
Where can people get ahold ofyou?
Kevin Choe (36:54):
The best way for me to get a hold of me is
KevinCho12 on Instagram.
It's KevinCho12 on Instagramand YouTube and TikTok and
across all social mediaplatforms 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 anyquestions, you can always find
me on Instagram.
Joseph Marohn (37:14):
Now, if you guys are finding value from this
podcast, don't forget to showyour boys some love.
You definitely don't want tomiss future episodes, so make
sure you subscribe.
Don't forget to like this anddrop a comment down below.
Today what you learned aboutcreative finance.
If you're motivated by thisepisode and you're ready to take
action or you want to join thesub two community, feel free to
(37:39):
reach out to Kevin or myself andwe'll make sure we get you
pointed to the right direction.
Appreciate all the continuedsupport and, guys, stay tuned,
because I'm pumping theseepisodes out every two weeks.
You definitely don't want tomiss what I got coming up next
best believe I'm gonna keepbringing you that fire.
Peace, kevin.
Appreciate it.
Appreciate it.
(38:21):
I'm not sure what I'm doing here.
I'm not sure what I'm doinghere.
I'm not sure what I'm doinghere.
(38:42):
I'm not sure what I'm doinghere.
I'm not sure what I'm doinghere.
I'm not sure what I'm doinghere.
I'm not sure what I'm doinghere.
I'm not sure what I'm doinghere.
I'm not sure what I'm doinghere.
(39:13):
Thanks for watching.
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