Categories: Podcast

194 – Completing His FIRST Flip! with Kevin Chou

Synopsis

Kevin is a part-time real estate investor based in Sacramento, California. Because of his desire to accumulate wealth and success, he started investing a year ago as a side hustle to generate extra income. His first real milestone is the purchase of his first property, the one that became his own residence. That was bought two years ago. Conservative by nature, Kevin believes that getting your foundation first set up is crucial to starting a business or investment. Today, Kevin tells us about how he closed his first flip and what’s next in his real estate journey.

Key points

The First Flip In Sacramento

After spending a couple of months learning with the Stronger MOMS meetup team in South Bay, Kevin felt he was ready to implement all that he had learned. He started looking for deals online through sites like Zillow and got on the phone and reached out to agents asking for help in finding a deal.

Eventually, a deal that met his criteria with a wide enough margin came in. It was a property listed for $330,000 that he negotiated down to $309,000. With 20% down payment and hard money financing through Conventus, he was able to close within 2 weeks.

Taking Charge Of Renovations

40K budgeted for renovations

Kevin was firm on acting as a project manager and general contractor for the renovation needed and just finding substitutes for those roles he and his business partner couldn’t fill. They had set aside $40,000 for doing the rehab, but it was really hard to gauge how much time they would need.

The property was acquired last November 2019. Cosmetic renovations tend to take between 60 to 90 days, so Kevin had an estimated 4 months as a reasonable time frame to be able to flip the property.

Then COVID-19 happened.

Facing A Pandemic

With the risk of the property taking longer to sell, Kevin was considering refinancing the hard money loan then finding a tenant. But they eventually decided to stick to their original plan and finished the house by the end of June 2020.

They had also decided to use a different agent when they put the house back on the market. While buyer’s agents may be good at finding deals for the buyer, they may not be the best for selling your property at the highest price possible.

The seller’s agent they used gave a percentage they were comfortable with plus some extra perks. So the property got listed last July 3, 2020, and had 8 showings throughout the long Independence Day weekend.

They received two offers soon enough. Deciding to make a counteroffer, the deal later came in at $435,000.

Advice For Those Getting Started

Make sure to protect yourself from potential risks. Since it was their first time, Kevin and his business partner didn’t have an LLC set up to protect themselves properly especially given the current environment and landscape we’re in.

Get a partner with the same goals, and one who is in alignment with what you want. In cases when you both can’t come to an agreement, there should be a tie-breaker clause in your contract. An exit clause is also necessary to give a partner a way to leave the partnership.

Don’t treat your friend or partner like a slave, but respect that there is a timeline when things should get done. At the end of the day, this is still a business and both should hold each other accountable.

Learning Is Key

Before Kevin went into investing in real estate, he educated himself by listening to podcasts and learned from BiggerPockets. There are a lot of strategies out there, so he wanted to be prepared.

He still considers himself a student learning in the real estate industry. In the future, he wants to dabble in other areas and fields. While he had fears coming into this, Kevin was prepared, but still acted conservatively.

Spending a lot of nights and weekends doing the work to set yourself up is crucial to be ready.

His Plans Going Forward

Kevin is always looking for a fix and flip opportunity or even a buy and hold. Since he is still in the infancy stages of being a real estate investor, he’s keeping himself open to any possibility.

Even at this time where there is a lot of uncertainty, for Kevin, he believes there are a lot of opportunities to be taken advantage of.