Simple Passive Cashflow Podcast Episode 157: Coaching Call w/ Non Accredited Investor Bo Kim

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I met Bo (online) in early 2018. When I first chatted with him he was another propeller hat. What makes him different but more importantly what tangible steps did he take.

Bio: Bo is a buy and hold real estate investor from Southern California and has picked up 6 rental properties in 6 months since closing on his first property. He invests in working class neighborhoods across the markets of Indianapolis, Kansas City, and Little Rock. During the day, Bo works as a senior consultant for a regional CPA firm and hopes to create passive income to become financially free and also educate others to do the same.

How to Reach Bo

Old Dawg's REI Network Podcast Episode 311: Lessons Learned from a Newbie Investor

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He built his real estate portfolio to 16 units in less than one year while working a full-time job, launching a blog and starting a new podcast.  In this information-packed episode, Bo Kim, an accountant and newbie investor, shares his “young pup” insider secrets for the Old Dawg Network that helped him explode his real estate portfolio almost overnight, all at the ripe old age of 29.

What You Will Learn

  • What are the first steps you should take before becoming a real estate investor?

  • How to grow a portfolio of 16 units in one year while working a full-time job

  • House hacking to generate income from and reduce expenses for your primary residence

  • What accounting audit principles helped him in assessing markets and properties

  • How to locate top performing markets with the best investment property deals

  • His top 3 investment markets

  • The importance of carefully vetting your “boots on the ground”

  • Determining your investing criteria as a newbie

About Our Guest

Bo Kim

Bo Kim works as a senior consultant for a regional CPA firm in Southern California, and has been working in the Accounting industry for the past 5 years.  Bo got his start in real estate investing by house hacking his primary residence in Orange County and since then, has picked up 16 units across the midwest markets of Kansas City, Indianapolis, and Little Rock using various methods such as seller financing, BRRRR, HELOC, delayed financing, and private lending.  Bo is also the host of the Bigger Cash Flow podcast, a show aimed to help newbie real estate investors take back control of their finances.  He is an avid writer on his blog, where he shares tips and tricks on personal finance, increasing income, and living a life of purpose.

Mo About Bo

  • He’s currently (at the time of this recording) 29 years of age

  • Growing up, he got “the usual” advice from his parents to go to college, get a great education, get a good job, save and one day retire from your job with your retirement savings

  • So, he went to college and, when he graduated, he got a good solid accounting job

  • His current full-time W2 job is working for a regional CPA firm

  • Has been in the accounting industry for 5-6 years

His “Lightbulb Moment”

  • One day, he read a book that turned his world upside down – Rich Dad Poor Dad

  • The book talked about assets and liabilities in a different way and how you should create “steams of Income” – not just accumulate

  • This was not how he was raised

  • His parents were immigrants coming from South Korea

  • They taught him the value of a strong work ethic

  • They only wanted the best for him

  • But they didn’t even have a good grasp of their own financials

Research

  • Started educating himself on personal finance and got intrigued with the FIRE (Financial Independence, Retire Early) Movement

  • It wasn’t just “retiring early” that intrigued him, but it was more about chasing what matters to him and following his passion

  • Started becoming more active on the BiggerPocket.com forums talking with other investors

  • He realized that 90% of world’s millionaires have real estate in their portfolios

  • He figured if he wasn’t going to become a start-up entrepreneur or big business owner, he might as well learn real estate investing so he can incorporate it into his portfolio

Taking the Big Leap

  • He first wanted buy a primary resident for him and his wife that they could “house hack”

  • He checked with his wife first and she was alright with it

  • Found a 3-bed 3-bath townhouse in Orange County, California

  • He rented out one room of his townhouse for $750 a month

  • This reduced his mortgage payment from $2,750 to $2,000 (which was the same rent amount he was paying for his two bedroom apartment)

  • He now was able to reduce his expenses and allocate more of his monthly income to investing

Finding Out-of-State Markets

  • He wanted to create more passive income, so he started to look at markets outside of California that would cash flow well

  • Looked at mid-west and found Indianapolis, Kansas City and Little Rock

  • How did he choose those three?

  • He applied principals that he learned from his W2 accounting job

    • As a senior consultant, he audits public companies, who are also bring monitored by the SEC

    • They usually take a “top down” risk assessment approach

      • He starts with asking, “What is a risk to this company as a whole and what are controls they can put in place to mitigate that risk?

    • He looked at multiple mid-west markets using macroeconomics

      • Population growth

      • Job growth

      • Home purchase price-to-rent ratios

      • Looked at a couple of markets that fit his criteria

        • And how did he develop his criteria in the beginning, when he didn’t really know anything?

          • Spoke to other investors at REIA groups, Facebook mastermind groups to BiggerPockets forum

      • He found that Indianapolis, Kansas City and Little Rock had

        • Great price-to-rent ratios

        • The markets have the types of homes he wanted to invest in

        • Job growth

        • Diverse economy

        • All in states with landlord-friendly tenant laws

    • He current has 3 turnkey and the rest he used the BRRRR method

How Bo Invests While Working a Full-Time Job

  • One of his favorite quotes is, “If you really want something, you’ll find a way. If you don’t, you’ll find an excuse”

  • He knew that in order to grow his portfolio effectively, he needed to get the right people on his team (brokers, wholesalers or turnkey providers)

  • Also, because his markets are 2-3 hours later than west coast time, he is able to to set up phone meetings at 5 and 6 am (his time) before he goes to work

  • Sometimes he can take a Friday or Monday off from work for a quick three-day weekend business flight when necessary

  • He carefully vetted the members of his team because there is a great deal of trust and dependency you have in your “boots on the ground”

  • He says if people just take the time to evaluate the amount of time spent each day on Facebook, social media and on other non-essential that they would be surprised how easy it is to free up the time needed to manage your real estate investing activities

On Managing a New Marriage and Doing Real Estate

  • Kim and his wife are very different – he’s analytical, she’s more creative (she’s a graphic artist)

  • He shares the “big picture” of what he is trying to do and the numbers than he ran and she’ll shares her feedback and addresses blind spots that he is not seeing

  • She’s very gracious to give him enough room for him to do what he has to

His First Out-of-State Property Purchase

  • Purchased a property in Kansas City, MO through a turnkey provider

  • Looked at the property about a month after be began his research

  • The property had been on the turnkey provider’s list for about 3-4 weeks

  • Single family 3/1 ranch style home with a basement in a C+ neighborhood

  • Working class neighborhood

  • Cash-on-cash 12-13%

  • Did more research on the neighborhood

    • Spoke to investors familiar with the area

    • Got favorable feedback

  • Had an inspection and found a few issues

    • The life of the roof

    • Other areas

  • Started negotiating (some say turnkey providers don’t negotiate but that’s not true)

    • Asked for $2,000 off the asking price

    • Got repairs done from inspection report and replacement roof

  • Had an informal mentor who had 24-units across Alabama and Indiana (met him through Facebook)

    • He really helped him

    • Said to get the inspection report

    • How to ask the right questions

  • Closed in 30 days

  • Cash flowed pretty well

  • Ended up being his worst performer compared to his 16 units

  • Had to evict the tenant after 4 months

Turnkey Provider Issues

  • Didn’t vet the turnkey provider well enough

  • There were some red flags early on how they operated and how he should have documented things

    • They made promises that they didn’t keep

    • Promises were made in a phone call and nothing was documented in the Property Management Software Portal

    • They fired 3 property management companies in less than a year

  • Later, when he wanted to terminate the relationship with the turnkey company but didn’t have the documentation necessary to support his move

  • Luckily, he had purchased 3 more properties in Kansas City and had found a good property manager that he trusted that he could use for his first property

    • The company is not “officially” a property management company because they don’t have a broker’s license

    • They are more “eyes on the ground” and are very cost-effective rehabbers

    • They do paperwork, marketing, tenant evaluation and placement, collect rent payments. They handle about 200 units in Kansas City area

Biggest Mistake

  • Not taking action early enough

  • 4 months into his investing, a broker brought him a property in a B class neighborhood that was listed at $60,000

  • ARV (after repair value) in that area is $110,000 and up

  • He asked for a rent ready bid and it came to about $15,000

  • It would still give him close to $35,000 in equity (not counting closing/holding costs)

  • But he couldn’t trust his own numbers

    • Like for the ARV, he looks at prices of similar homes sold in the last 6 months, within a .5 mile radius

  • A day or two later, it was placed under contract by another experienced investor he knows

  • What he learned:

    • Just because you place something under contract doesn’t mean you have to close

      • There are contingencies in place that protect you if the seller is not disclosing all the facts

        • Inspection contingency

        • Appraisal contingency

    • Knowing what he knows know, he would still put it under contract and then do his due diligence

Biggest Success

  • Taking action

  • Another quote he likes – “Action without knowledge is dangerous but knowledge without action is useless.”

  • Still do your research and analysis but don’t hesitate too long

Advice for Old Dawgs Interested in Real Estate Investing

  • He thought of conversations he’s had with his own parents

  • They’re both in their 60s and are looking toward retirement

  • Bo worked for a mutual fund company at the time

  • The thing he though of was “Having Control”

  • They were nervous that they were not prepared for their upcoming retirement and that they did not have control of their finances

  • S&P 500 dipped about 300 points this year, then went up 200

  • He’s not really following it because he’s focused on real estate as a cash flow investor

  • But to his parents, they care a lot because that could dramatically affect their retirement savings

  • He talked with his parents and talked them into selling their primary residence and downsizing

    • This allowed them to reduce their expenses about $600

    • Then they asked if they could use that $600 to buy cash flowing real estate

    • He’s working on a plan to help them do this

Current and Future Goals

  • Five Year Goals

    • He wants to continue to grow his cash flowing rental portfolio

    • He also wants to help his parents do the same

  • Longer Term

    • Loves his full-time job and all the benefits. So, doesn’t want to quit any time soon

    • Create the cash flow so that, if opportunities come, he can take advantage of them without worrying survival

  • Helping the Homeless

    • Volunteers once a month to help out at a homeless shelter

    • He would like to do more of that

  • Currently Looking at How to Scale Up

    • Mainly buying SFRs, duplexes up to fourplexes

    • Would like to move into bigger multis

    • Paperwork for sixteen doors that aren’t mostly multis is crazy with taxes, tracking expenses, etc.

Which Markets Are the Strongest Now?

  • Kansas City and Indianapolis

    • He likes them because there are a lot of investors, so it’s easy to get good comps

    • He likes the appreciation

  • Little Rock

    • Has low taxes – 1/3 of Indy

    • Doesn’t appreciate as much

    • Steady cash flow

Best Buying Strategies

  • Depends on the deal – Price vs. Terms

    • Seller financed deals

      • Bought 2 duplexes in Kansas City

        • Price was close to market but the terms were real good

          • 12% down

          • 5.25% interest

          • 30 year amortization

          • Good cash flow

    • BRRRR deals

      • With good renovations, can usually get $30k in equity

      • Loves the delayed re-finance strategy

        • For example, he buys a property for $50,000

          • $8,000 basic renovations

          • Gets appraised for $70-75,000

          • Uses a private lender to buy and rehab it all for cash – $58,000

          • Goes to a bank and says, “Hey, I have this great property. Would you like to put a mortgage note on it?”

          • The bank gives 75% LTV

            • If you’re 180 days (6 month seasoning) but the bank caps the appraised value to the purchase price plus closing or 75% of the appraised value, whatever is less

            • This allowed him to recoup most of his money without seasoning

          • In those deals, he’ll have less than $10,000 in and $30K in equity and good cash flow

    • Cash Deals

      • Has two properties he paid cash for

        • C- or D neighborhoods

        • Section 8

        • Inner city

      • Pays $35,000 each

      • Section 8 brings in $850 per month

      • B+ tenants

      • Over the 2% rule

      • Hedging his risk and diversifying his portfolio

Rap-It-Up

  • Favorite real estate book: The Millionaire Real Estate Investor by Gary Keller

  • Favorite business book: The 4-Hour Work Week by Tim Ferris

  • Most valuable web site for success (other than your own): Facebook (especially groups)

  • Favorite app: Refin

  • Favorite quote: “You can have everything you want in life, as long as you help others get what they want first.” – Zig Ziglar

  • If you had to start all over, knowing what you know, and you only had $1,000, what would you do to launch your real estate investing business? I’d buy $500 in real estate investing books. Take the other $500 and take successful people to lunch.

How to Reach Bo

Millennial Real Estate Investor Episode 40: 16 Units Towards Financial Freedom in One Year with Bo Kim

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Bo Kim joins us this week to talk about how he made the decision to start investing across the country and managed to grow his portfolio to 16 doors in his first year. If you have ambitions of getting started in real estate but feel overwhelmed by getting started, Bo is a great example of how to jump in. He explains how he decided where to invest, then his strategy for buying and financing his properties. We also talk about buying turnkey properties, delayed financing for the BRRRR method, seller financing and partnerships. Bo has a very straight-forward approach to his investing that is repeatable and consistent.

 

Bo also runs the site biggercashflow.com and the Instagram page @BiggerCashFlow so go check them out!

 

Mentions

Recommended Books:

Recommended App:

 

Where to Get In Touch

bo@biggercashflow.com

www.biggercashflow.com

@BiggerCashFlow on Instagram

Helms REI: Auditor - The Best Job For A Real Estate Investor

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In this episode of The Best Job For a Real Estate Investor, I’m joined by Bo Kim. Bo lives in LA (and for my Alabama friends, that is NOT Lower Alabama). While Los Angeles is an expensive market to invest, Bo has focused his efforts and found success on long distance investing in 11 out of state units (something I hope to do later this year).

Not only does he share the name with one of my childhood heroes, but he he has also incorporated one of his catch phrases: Bo Knows Cash FlowAnd yes, I still have a box full of baseball cards. The only time I’ve ever been star struck was while eating dinner approx. 5 years ago and in walked Mr. Vincent Jackson (how can I get him as a guest on here???). Anyways…after talking with Bo Kim, I’m CONVINCED that being an Auditor IS THE BEST JOB when it comes to investing in real estate on the side.

KEY TAKEAWAYS:

  • Know YOUR investing criteria.

  • Why Cash-on-Cash Return is important to Bo.

  • Auditors deal with Business Risk Management and SEC Regulations -> key for RE investors.

  • I am not Bo Kim – he is!!

LINKS MENTIONED:

From Military to Millionaire Podcast Episode 18 - How to buy 16 units in your first year of real estate investing!

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Bo Kim is an accountant, real estate investor, and blogger!

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Bo has been investing in real estate for a little over a year and has already purchased 16 rental units! Bo has used all sorts of creative financing method, to include seller financing, home equity line of credit (HELOC), and loans from his 401k.

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His advice to an 18/20-year-old is: Financial education is key, learn the difference between an asset and a liability, and then act accordingly!

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the resource he recommends is: BiggerPockets, Facebook (niche real estate investing groups), and stories from other investors!

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His big idea/parting advice is: TAKE MASSIVE ACTION

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If you want to reach out to Bo you can find him on Instagram at: @biggercashflow or at https://www.biggercashflow.com/

The Corporate Investor Podcast 61 - Interview with Bo Kim

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Matt Nusbaum | Real Estate Investor • 1/11/2019

Today's show features Bo Kim based out of Southern California. Bo is a Business Risk Consultant with a background in accounting. He has an awesome story of jumping right in after starting with a house hack on his personal residence. From there he spent just a handful of weeks educating himself before he went ahead and bought his first investment property. Bo's focused on turn key rentals in the Midwest and today he talks about the benefits of turn keys and how to get started with out of state investing. This is a good show for anyone looking to get into the game through turn keys and Bo offers some great tips to make it happen!

One Rental at a Time: Interview 25 - Bo Kim

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Michael Zuber, One Rental at a Time: After a 15 Year Journey to Financial Independence I have decided to stop working a 9-5 job and instead focus on helping people start their own journey. My year one goal is to help 1,000+ individuals understand the power Rental Properties as I would not be free to exit a 9-5 job without my portfolio of Cash Flow Positive Real Estate. Please let me know your thoughts, questions and concerns as there are no bad questions when you are thinking about committing to a process that could take 15 years+

On this interview, Michael and I discuss how a recession impacts the rental market and how investors can prepare.

Cash Flow King: Episode 67 - Bo Kim Interview

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Bo Kim - real estate investor from Orange County has grown a portfolio of singles and doubles in three different markets all within the past 18 months! Bo takes some time with Dr. Matt Motil to share how he got started, what motivated him, and 3-4 different strategies he's used to finance his purchases. This is a great episode for anyone new or starting out in their portfolio that needs some motivation to get things going! 

Get the full show notes for this episode and other great resources over at www.drmattmotil.com

If you'd like to watch this episode, you can head over to the YouTube channel at www.drmattmotil.tv. Make sure you like, comment, and subscribe to the channel while you're out there!