Commercial Real Estate Investing with Don and Eden

DE 39: Small Town-Big Deal with Carlos Gutierrez

DE 37: Good Research = Smart Investing with Scott Price

DE 36: From Real Estate Agent to Independent Investor- with Brie Schmidt

DE 35: A, B, C, D and a Mobile Home Park with Andrew Cushman

Kevin Amolsch, based in Denver, Colorado, is a very passionate real estate investor. He served 4 years in the US Army right out of high school and worked as a mortgage bond analyst for several large Wall Street firms. In 2008, he started his own financial institute, ‘Pine Financial Group’ which is a nationally known hard money lending company. Kevin is the author of The 45 Day Investor and is recognized as an expert in real estate finance.    In today’s episode, Kevin talks about his start as a real estate investor, raising funds & hard money loans and his 13 unit deal on an assembled lot. He discusses his plans for the future and why keeping your focus is essential.    Episode Highlights: Kevin’s Portfolio Details Process of Assembling Lots His Business Ethics Future Plans for Pine Financial Group   Connect with Kevin: Website: pinefinancialgroup.com YouTube: Pine Financial Group Channel  - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - TRANSCRIPTION   Intro: Hey guys! Today Don will interview Kevin Amolsch. Kevin is a single-family investor who is based out of Colorado and also does hard money lending. Nowadays, Kevin is in the midst of a 12 townhouse development. What I find interesting is how diversified Kevin is and the commonalities we share. Me and Don also started at single families, moved up to commercial and we are currently developing a 30 unit multifamily in Hollywood, Florida. One of the most interesting things we have learned from Kevin is the process of assembling two lots and approving it with the city. I hope you guys will find the interview interesting and enjoy the episode.   Lady: Welcome to the commercial real estate investing podcast with Don and Eden where we cover all aspects of real estate investing with special attention to off-market strategies.   Don: Hey, Kevin, welcome to the show.   Kevin: Hey, Don, thank you so much for having me.   Don: Yes, you're welcome. I know you're a single-family investor and a multifamily investor and you also focus on raising funds and then doing some hard money loans and that's the type of income that you generate. So that you do a lot of things and for that reason, you're on the show, because I bet my audience and our listeners have a lot to learn from you. So, the first thing that I would like to ask you is that the first time that you start to look into real estate.   Kevin: Right out of high school, I got into the Army and in the Army what you find is that you don't make a lot of money but you don't spend it either. So, I was growing a little bank account, I was trying to figure out what to do with it. So, I started reading books and one of the ones that I read it most of your listeners probably know is 'Rich Dad, Poor Dad.'   Don: Yeah, the famous purple book. Okay, guys, if you haven't read it, then please do yourself a favor and get on with it.   Kevin: Yeah, I mean, that's got to be a staple. I don't know if I know any successful real estate investor that has not read that book. Kiyosaki favors real estate. So, I was attracted to it and I started reading more and more and more and I ended up buying my first house. I was just turning 21 at the time. I got out of the Army, moved into the house, moved into some roommates to pay my mortgage for me. And then two years later, I moved out of it and kept it as a rental. I was cash flowing 300 or 400 bucks a month. I saw the value going up. And I knew that real estate is what was going to make me rich. So, I started focusing on it, and I turned it into a career as I was working my way through college.   Don: Amazing. So, what did you study in college?   Kevin: Yeah, I got a degree in finance, which does help. You don't necessarily need a degree to be successful in this business.   Don: Definitely. I always say that on the show that I never went to college. And I don't think in today's world, it's a necessity. I think it's something that you want to do if you want to become a professional if you want to become a lawyer or a doctor, and I think it's definitely for you. If you want to become a successful real estate investor, I don't think it's going to hurt you but I don't think it's something that you need. Because information and gathering knowledge is so easy today with podcasts and books and everything. You did go to college and you studied financials and you became the president of a company that does financial some hard money loans. I'm sure that must have helped you.   Kevin: Oh absolutely. But what you learn in college is more like you said, Don, it's more about the corporations and corporate finance. And small businesses are all very different. I mainly went to college because I was getting it paid for and I had the GI Bill paying me every month to go. So now I need a lot of sense for me. I was using student loans to buy houses at the time, it was a good fit for me. I'm not discouraging people from going. Don't get me wrong. I do agree with you, it is a positive thing, but you don't necessarily need it.   Don: A lot of people go to college and I see that from my home country. I'm from Israel. When you live in Israel, you go to the Army, it's mandatory. So, for us, we don't have a choice. So, we got to go for three years and then women go too, they go for two years. So, by the time we get out of the Army, we're already 21 so some of us you know, after the experiences we've had, we want to go and travel, get to see the world a little bit. And then by the time we get back, we're 22, women 21. So, a lot of people are very stressed. As a reality check, and they're starting their lives, but they're 21. So, they feel that they have to go and learn something so that they can have a degree so that they can feel safe about themselves and good about themselves. I know here in the United States kind of different because you're fresh out of high school, you can go to college, you're doing that when you're 18. So, then you finished by the time in 21-22, and then you have a lot of time to do things with the things you've learned. So, I know it's different. Maybe it's not my place to talk about this. But I think, still, wasting time or investing time incorrectly is a very big problem. And I think if you're investing it in something that you don't know what you'd want to be dealing with in the future could be more of a liability than an asset, even if you finished by the time of 21. Don't you agree?   Kevin: I totally agree.    Don: Yeah. Okay. Let's talk more about real estate. So, I know now you own 20 units. So, you have 20 doors, some of them single families, some of them multi-families, and you're based out of Colorado, Denver, right?    Kevin: The western side of Denver.    Don: Yeah, so the Denver I must say, so Metropolis area. Your properties, are you holding primarily in Colorado?   Kevin: I got eight properties in Memphis and the rest of everything I own is in Colorado. Looked at other areas, but it's difficult to have properties outside your own backyard. So, it's been my preference to try to stay close.   Don: Yeah, definitely. So, these units, you said few of them single families and then some of them are duplexes or triplexes?   Kevin: Yes, some small multies but let me give you an idea. I am shrinking my portfolio right now. I had a fourplex that I had a lease option on and my option was about to expire, I ended up exercising the option on that and combining it with the next-door neighbor's lot. And now we're building 13 units. Those 13 units are going to be for sale. So, it's a for-sale product.   Don: That's very interesting. Let's talk about that. So, you basically had an option to buy, right? So, it was a lease option. And then you exercise the option and then you purchase a duplex, right there was a duplex you said?   Kevin: It was a four-unit and I had a 10-year option on it. And so, I exercised it after 10 years, so I already had a pretty low basis in it.   Don: How much consideration did you put when you put the agreement?   Kevin: Oh, I've never put the consideration down.    Don: Okay, nice. So, you bought those four units for whatever price that you had on the option to buy it. And then you've basically combined the other lot next to it, right? So, you basically did a folio combination.   Kevin: Yeah, we just did a little assemblage. Tracking down that neighbor was an interesting story. But I ended up finding him on Facebook. Messaging him on Facebook, because he would never answer his door when I knocked on it. He was nervous. So, we hired a real estate broker. So, the real estate broker and we spoke and he got a full price offer on that property. But you know what, it added more value to me since I own a lot next door than it was who was willing to pay for it. And then we put the two together and created a nice little project that's going to make a bunch of money. But that's just one example. So now I'm going to be down four doors because I converted my for rent product into a for-sale product.  Don: Yeah, but you're going to be up 13 doors when finishing the development and then you could sell them or you can hold them in, that's up to you right? But I want to ask you about the assemblage. So, you assemble the two lots and so you paid a premium for the lot, obviously, because it makes sense to you. But when you assembled the two lots, what was the process of doing that with the city?   Kevin: What I did was hired a consultant to walk me through that process. That's not my niche. So, I would rather hire someone that's much better at that. I hired somebody and we had an architect involved. And we came up with a plan based on the Denver Code of what we could build. And then we do a pre-development meeting with the city to make sure that they're on board. And then we push it through the process after that meeting.   Don: Nice. So first of all, you went to the architect and you came up with the plans because I'm also developing right now with 30 units here in Hollywood. So, I know that's the first step. So, you went to the architect, you develop the plans, and then you go to the city and try to assemble the two lots?   Kevin: Yes, you get the second lot under contract. And so, you have control before you spend any money on your diligence or your architect. And then they're going to layout a footprint and you know, with the height restrictions, setbacks, all of that and then you can use that information to determine how many units you can build. Then you pull your comps, you find out what each unit will sell for, and you just do a pro forma, starting from the value working your way, all the way down to your profit. And assuming that makes sense, then you go to the city and work towards approval and an assemblage. If it doesn't make sense, and I would have let that second lot go.   Don: So, when you did a contract with the other guy, you probably had the contract for a long due diligence period or inspection period.   Kevin: Yeah, we do like six-month diligence.   Don: Nice. So, you took that six months to figure everything out with the architects, but you did have to come up with some money down to the architect, right?   Kevin: Yeah, yeah, there's a little risk there because you're paying the architect. That's right.    Don: So, what would you say that risk was like 10,000?    Kevin: I don't remember that number, but it's probably close to that.   Don: Okay. So, I know that you have a company that generates one income stream for you, and then the income you make from your company, you invest in real estate, is that correct?   Kevin: Yeah. Let me give you expand on that just a tad. I don't want to spend too much time on this but my passion is finding and structuring real estate deals. And what I've learned about that is the deal structure and the negotiation with the seller always comes down to the financing. So, I migrated to the financing side of this business. Pine Financial raises private money, lends it out to other real estate investors. Because I want to be involved in deals on that side of it. Then I use the profit to either reinvest back into the company, which I do quite a bit. And then you and I spoke earlier too that I also pull some money and distributions out so I can invest in real estate for my own personal portfolio.   Don: Yes, definitely. So how many times did it happen that you lend money to a borrower, and then they defaulted, and you took the property and that became part of your portfolio? Did it ever happen to you?    Kevin: I don't do that because it's not my money that I'm lending to them necessarily. And I invest in my own mortgage funds. So, I guess technically I have a piece of it. But let's say I have one mortgage fund that's about $25 million. So, let's say that fund invests in a deal and that deal defaults, well the fund owns it, not me, per se...   Don: You’re going to foreclose on it? So, you're a money middleman?   Kevin: You can look at it that way. Yes.    Don: Yeah. Interesting. Okay. So, when is this project of 13 town wholesale's going to be completed?   Kevin: It's delivering probably next week or waiting on our certificate of occupancy. We already have eight of them under contract to sell. So, we're expecting closings in the next week to two weeks.   Don: Wow! You must be very excited. I know I'm developing right now, together with my partner 30 units, as I mentioned. And I've done a lot of things in my real estate career but that is definitely one of the most exciting things that I've done because it's like something that you see coming from scratch from a lot, or it's something that you see from your mind because you've been thinking about it and then you see it becomes a reality. And that's super exciting. It's so fulfilling, right?   Kevin: I totally agree. And it's profitable.   Don: Which is the most important thing. So, what's the plans for the future now that you've tasted the forbidden fruit of development? Are you going to keep doing that or you're going to get back to the financial part of things?   Kevin: Now I'm going to stick to Pine Financial and in fact, we're refocusing on it, my team and I, and we're going to see some growth there. So, I'm going to focus on that. The markets got to shift at some point, no one has a crystal ball, but everyone's talking about it. I don't know when but I do think that will see some type of correction. At that point, I think would create some good buying opportunities. So, I might increase my portfolio size at that point. But I'm not in a hurry, I'm going to focus on helping other investors get their fix and flip new construction projects done.   Don: I'll ask you that question because I want to know why you're investing in single families where you could invest in some commercial properties and have you thought about that?   Kevin: I have, and I'm attracted to it. But I'm telling you, there's a learning curve there. I understand it enough to be dangerous, and I can keep my money safe if I'm lending on it, but I'm not an operator of multi-family or commercial. And so, what I do know is single-family and I've done well with that. Warren Buffett says, "If you don't understand it, don't invest in it." I kind of life by that.   Don: I'll tell you something. I've been doing very well single families as well and especially down here in Miami, the market here is a different type of market because the single families here are not cheap, but also not expensive. So, they're just on the sweet spot where you could buy, or you could wholesale a deal and make $50,000 in profit in two weeks. So, if you do that many times, then you could create a very nice income. And you could also invest in very good deals. And as much as it was very, very good and it was a great time for me to invest and we've managed to create a portfolio.    I've been attracted to commercial real estate forever. And when I started doing commercial real estate, if its development, or if it's mobile home parks or multi-families, I realized it's the same thing. They differ in a few things, you got to understand the numbers a little bit better in commercial properties, and you got to know what you're doing and there's always finance and leverage involved. But at the end of the day, if you know real estate, then you know real estate and that is what I think about this and what I would suggest to our audiences, if you know single families, then you should also check commercial properties and see how you feel about that as well. So, I hope it's something that maybe you're going to do in the future?   Kevin: Yeah. And I'm not going to disagree with you. And there's a lot more money in Commercial. The numbers are bigger, which magnifies the risk as well. But yeah, absolutely, I'll be looking at commercial at some point. But man, I'm just doing well with what I'm doing. I haven't done this for a long time. I've been doing it for almost 20 years. And whenever I start chasing that shiny object, which entrepreneurs naturally want to do, that's when you start making less money, at least in my case. The more I stay focused, the more money I make.   Don: Nice. I think that's probably going to be the headline of this episode. 'The more you're focused, the more money you're going to make' right? What do you think about that?    Kevin: I think it's great. And I think it's true.   Don: All right, Kevin. So, what are the best ways to connect with you in case anybody wants to get in touch?   Kevin: Yeah, we started doing a YouTube channel and I'm proud of it. It's not huge right now. But I would encourage your listeners if they want to connect with me to check that out first. It's just YouTube.com/pinefinancial. And we just do one little short video, maybe it's always less than 10 minutes, one per week. Otherwise, you go to our website and that's pinefinancialgroup.com.   Don: Okay, wonderful. So, I want to thank you, Kevin, for coming to the show today and dedicating your time. I wish you'd have a beautiful rest of your day.   Kevin: All right, Don, I appreciate everything.   Lady: Thanks for listening to the real estate investing podcast with Don and Eden. Stay tuned for more episodes. Till next time! 

DE 34: Assembling 2 or More Lots Together with Kevin Amolsch

DE 33: Why It's Never Too Late To Get Started In Real Estate - with Bill Manassero

DE 32: Building a Self-Storage Empire - with Scott Meyers

DE 31: Half A Billion In Real Estate Purchases - Check! with Brian Burke

DE 30: All About Mobile Home Park Investing with Kevin Bupp

DE 29: When & Where to Invest with Andrew Syrios

DE 28: Everything You Wanted To Know About Lease Options And More - with Joe Bodek

DE 27: The Advantages Of Working With Community Banks with Douglas Skipworth

DE 26: Tax Strategies and Real Estate Investments with Thomas Castelli

DE 25: Partnership in Life & Business - with John Casmon

DE 24: The Importance of Knowing your Partners & Working Your Strategy with Benjamin Inman

Welcome to the real estate investing podcast with Don and Eden, where we cover all aspects of real estate investing with special attention to Multifamily apartment buildings and off-market strategies

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Commercial Real Estate Investing with Don and Eden

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