Active Investors Seeking Long-term Partners

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Active Investors Seeking Long-term Partners

Kevin Yoo
San Diego, CA · Member since 2008 · 301 posts · 108 votes

Hi BP community. My partners and I are looking for a classic “boots on the ground” partnership. After several years of investing we have found that although there are plenty of great investor markets, it is ultimately solid partnerships that provide sustained investment opportunities.

EAC Group primarily invests in four US markets – Jacksonville, NC, Birmingham, AL, St. Louis, MO, and South Bend, IN. Although these markets all have their own sets of challenges and opportunities, EAC Group has chosen them because of one critical element they all share – an extremely reliable local team of contractors, wholesalers, attorneys, and real estate agents with whom we partner on all of our projects. We have spent years vetting these teams and building solid relationships based on a shared focus toward the long-term vision of our business plans in each specific market.

Our Needs

Our goal is to carefully vet potential ground partners in various US markets and structure partnerships that produce profitable investment opportunities. We are currently looking for Class A, B & C properties to buy and hold as well as solid fix and flip deals of both single family and multifamily homes.

Company Profile

EAC, LP is a California based Limited Partnership for real estate investments managed by two principals Kevin Yoo and John Hostetler. This company is 4 years old and is growing rapidly. Kevin Yoo is an actively practicing Neurosurgeon in San Diego, CA. He has been investing in real estate for over 14 years and has learned, from hard knocks, what a good partner is and what a good deal looks like. He has bought and sold multiple homes and currently owns a portfolio of rental properties throughout the country.

John Hostetler is currently the “workhorse” for EAC Group Investments and has been investing in real estate for 3+ years. His background is in accounting and he held a position of controller for a large company in San Diego before coming over to manage EAC full time. EAC Group has also built a reliable, well-funded private investor network, comprising approximately 20 individuals looking to diversify their holdings into the world of real estate. We have raised over $3 million in private funding in the past two years, with opportunities ranging from short-term (3-6 months) flip project paying 18-24% annual returns to medium-term (2-3 years) buy/hold projects paying 10-15% annually. We strive to structure safe investments with the highest returns possible to our investors, while building our own portfolio of rental properties to fulfill our long-term passive cash-flow goals.

EAC Group currently holds a total of 39 rental units, with several more in escrow to purchase, and also have seven properties in various states of rehab for retail sale, and is actively pursuing more. Please feel free to contact us using the information below. We would be happy to share more about our company and its plans with you.

John Hostetler, COO [email protected] 760-519-4152

Kevin Yoo, M.D., CEO [email protected] 858-449-9847

Isaac Guzman, [email protected] 619-451-5473 

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Bob Green
Lender · Mokena, IL · Member since 2014 · 1k+ posts · 261 votes
11y

Greetings John,

I am a asset based lender, which means we evaluate the cash flow of the property rather than personal debts - No tax returns required - Bank rates/terms

This type of financing we offer is for acquisition of turn key properties or refinancing to improve cash flow, convert loans to better rate/terms or unleash equity to buy additional properties. It is not used as a rehab loan though. If a rehab is required, I would use hard money or cash and then refinance with us after owning for 90 days. In this scenario, you would be able to cash out up to 75% of the fair market value and leverage the equity for your next property. This is a program for investors who plan on a buy/hold strategy, also.

The main difference's between us and a traditional bank.

1. We offer 10 year fixed rate/ 30 year amortizations. In general, banks only lend up to 5yr/20 amortizations

2. We offer non-recourse loans - Banks only recourse

3. We do not require tax returns and do not look at your personal debts. We only care about the cash flow of the property - With banking, there is something called global debt service ratio that can kill a deal very quickly because personal debts are counted against you.

4. We allow 90 day value seasoning from the day you close. This will allow you to cash out based on fair market value with out waiting 12 months, therefore leveraging the equity to buy more property sooner than later - Most banks will not allow you to leverage the equity until property is owned for 12 months

5. We do not care how many properties you own, we can finance as many as you would us like to.

6. Minimum FICO 660 - Most banks 700 and higher

7. Cash out for anything - Most banks want to know where the cash is going to be spent

8. Minimum Debt Service ratio 1.2% NO Global Debt Service Ratio. We only look at the asset- Traditional banking count personal debts against you

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    11y

    @Wendell De Guzman  I don't think you can compare what Mr. Yoo is trying to do with just straight lending terms.. I believe his model is more of building a business together.

    whether it works for the GP is up to the GP to decide...

    its about building teams not hanging your HML shingle out and doing one off deals with the odd fix and flippers across the country..

    a different business model I think

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  • Wendell De Guzman
    Investor · Chicago, IL · Member since 2013 · 2k+ posts · 1k+ votes
    11y

    Still expensive money any way you look at it. If they want to build a business relationship why not lower their interest (36% is triple what a hard money lender charges!) and ensure that the GP still has some profit left at the end of the day? If all the profit goes to EAC, how can there be a long term business relationship?

    I found a financing partner here on BP who is willing to finance all my rehab projects - 100% - and he charges 1% per month + 15% to 30% of the profit. That's still expensive but more reasonable because the GP will have some profit left at the end of the day and the funder makes a good return on his money.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    11y

    @Wendell De Guzman  I have raised those very points with Dr. Yoo  however like I said its up to the ground partner to decide if it works for them.

    We all have financing options Myself I borrow from my commercial banks at 1 point and 6% and only pay for funds extended and have large 6 figure Unsecured LOC ( a true LOC not some phoney baloney credit card scheme LOL) at the same rate.. allows me to cut a check close then move the asset to my 7 figure holding line which is at the same rates..

    but I have a lot of experience I have a decent balance sheet and cash position that makes me bankable. most of the folks that are trying to get going have none of this. and even most HML if they know what they are doing won't lend to newbies or one's with poor credit and no cash.

    So I think What Dr. Yoo offers is the potential for someone to build a business for themselves and yes they will pay for it.. but they get paid to get experience.. Absolutly none of your top folks in the business would go for the EAC set up.. EAC needs to groom those with massive potential.. and they get paid to take that risk with those folks.

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  • Helen Kirk
    Rental Property Investor · Auburn, AL · Member since 2015 · 227 posts · 80 votes
    11y

    After looking at the EAC documents, I decided not to go forward with EAC.  It may be a good option for some, but I'm not really looking at making this a "business" at this time.  Maybe on down the line, but not initially.  I also went to a Fortunebuilders seminar, which was very informative, but the entire program was also very expensive, and again, geared towards making this a business.  I want to start out slow, and learn my lessons while continuing work at my 9-5 job.  I've just had an offer accepted for a townhome which I will be renting out after fixing it up.  I think I'm just going to aim for a property or two a year, and then see how it goes.

    1Reply
  • Kevin Yoo
    OP
    San Diego, CA · Member since 2008 · 301 posts · 108 votes
    11y

    @Jay Hinrichs Thanks so much for explaining our model. You did very well. But the "horse's mouth" must speak as our model is not easy to understand on the first pass.

    @Wendell De Guzman You are very right about EAC money being very expensive and many of the potential and few of our current Ground Partners have complained. Not a single one of our Investor Partners have ever complained because we pass along a handsome portion of the profits to them.

    You are, however, wrong in that we have had no takers. We have had numerous inquiries to this post and have looked at countless number of deals. We have moved forward with only one Ground Partner who responded to this post who is from Orlando, Florida where we bought two properties with them. We are currently in discussion with several other potential Gound Partners. We have moved forward with only one Ground Partner for two main reasons.

    1. Most people show a lot of initial interest and then simply fade away.

    2. We do not currently have a machinery in place to answer every inquiry and look at every deal adquately. We are trying to streamline this process as I am writing this.

    Despite our money being so expensive, there is definitely a need for what we offer in the real estate investment community. The reasons for this will become evident as I attempt to clearly explain who we are what we offer in the following posts.

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  • Kevin Yoo
    OP
    San Diego, CA · Member since 2008 · 301 posts · 108 votes
    11y

    @Wendell De Guzman

    We call ourselves EAC Community because we operate like a team with each Partner playing their respective roles in creating successful real estate projects. We have 3 categories of Partners. First are the Investor Partners (IPs) who provide the money. Second are the Managing Partners (MPs) who manage the Community and all the workings of the other Partners. Third are the Ground Partners (GPs) who find, fix, rent, and sell real estate projects. We work as a team and support each other to reach our real estate objectives.

    As a Commuinty we try hard to take good care of each other. The Investor Partners are paid very well for their money as we believe that is the first thing we must have for the Community to function. That is why our money is so expensive. We routinely pay our IPs 24% annualized ROI for fix and flips and sometimes even more with prinicipal and interest guaranteed (except for our Preferred Investor Partners). The Managing Partners are currently volunteers but they do have access to all of our projects. We are also trying to come up with a way to compensate our MPs as well.

    The Ground Partners are taken care of by having 100%+ of their projects funded. They have no points to pay, no fund hold back at COE, and no carrying costs to manage. Moreover, the MPs constantly work with the GPs to help them with their projects many times providing them with the knowledge needed to succeed. Lastly, although we ask every GP to guarantee their results, the EAC Company has historically used its own money to make up for the losses on a bad deal to pay EAC Community IPs. When our GPs fall down, the Community steps in to make sure that a mistake does not destroy them.

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  • Kevin Yoo
    OP
    San Diego, CA · Member since 2008 · 301 posts · 108 votes
    11y

    @Wendell De Guzman

    Lastly, I want to correct your post and tell you exactly what we offer for fix and flip projects. There are two funding options and we allow the GP to chose either of them and change between them during the project in order for them to choose an option that makes them more money.

    1. 36% annualized ROI which comes out to be 3%/month. 10% of overall profit is set aside for reserves for any future losses. This option is best for projects that are short as this is a lot less expensive and cumbersome than HML.

    2. 60% of the total profits to the GP but from this 10% will be set aside in reserves. This option is good for projects that take a long time because EAC and the GP share in the risk together.

    We DO want our GPs to feel as though they made good money. You are right in that otherwise, the partnership will not work. I believe what EAC offers is very much needed because of all the known problems with HML and because we can be very reliable source of funding. And once a GP has proven themselves to us, we simply give them carte blanche to buy what they think is good for the EAC Community. We currently have two GPs that are this good. It seems as though that you too are such an accomplished RE investor as you have found someone that is willing to fund you as well if not better than EAC would. That is a great thing for you.

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  • Kevin Yoo
    OP
    San Diego, CA · Member since 2008 · 301 posts · 108 votes
    11y

    @Helen Kirk

    You are right. If you plan to do only a few projects a year and perhaps do it with all of your own money, EAC or for that matter any source of funding is not for you. You are also right in the sense that a few projects per year is not a business and EAC is in the business of funding real estate entrepreneurs. We want to be the reason why you quit your 9-5 job. So, when you have cut your teeth and become a very good RE investor and want to take your RE investing to the next level, you should contact us again. You will then be the individual with massive potential that we want to groom as @Jay Hinrichs said. BTW, Jay, we have "top folks in the business" that want to and is currently investing with EAC on different terms. We look all the time and everywhere for talent that has figured out a working formula and then we try to fund them. You, Jay, I promise, are next in line.

    @Jay Hinrichs

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  • Andrew Davis
    Investor · Asheville, NC · Member since 2011 · 833 posts · 499 votes
    11y

    Hey @Kevin Yoo

    I just finished reading through this thread on ground partners. I think you've put together a great program and I'm happy to hear that you have found at least one good partner in my neck of the woods.

    I don't know that my model and yours would align exactly, but wanted to reach out nonetheless. I recently began raising money in the form of equity partnerships, with the goal of aggressively building a large buy and hold portfolio.

    You can see the post here:

    http://www.biggerpockets.com/forums/517/topics/211189-central-florida-brrrr-equity-partnership

    The goal is to scale quickly and build a solid portfolio of 1-4 unit properties. Within each equity partnership, my goal is to acquire 50 units in the next 3 years, then 1031 exchange those into large, undervalued apartment buildings, creating wealth for my investors and myself.

    Very impressed with what you're doing and look forward to connecting with you at some point.

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  • Kevin Yoo
    OP
    San Diego, CA · Member since 2008 · 301 posts · 108 votes
    11y

    @Andrew Davis

    Andrew, 

    Sorry it took so long to reply to you. I requested from you that we have this conversation in this thread for the sake of the rest of BP. So, here are my comments.

    Your model and EAC Portfolio Strategy align very nicely. We are simply more ambitious than you. Instead of 50 properties in next three years, we want to acquire 500 in next three years. Instead, of just Florida we are in several different markets. 

    We just finished our first $1M portfolio refinance and starting the next one now. Our COO has not compiled all the numbers and gone over them with the EAC Team yet, but here are some of the rough numbers from our first portfolio. We bought, rehabbed, and rented 16 residential properties in St Louis, South Bend, Jacksonville (NC), Atlanta, Jacksonville (MS), and Birmingham. We then refinanced with B2R which took 6 months and tons and tons of paperwork, emails, phone calls, and so on. We got a loan for $735K (75% LTV) for an appraised value of about $980K and set up a separate LLC for these homes. We bought most of these homes with EAC Investor Partners, money. They were paid 12% annualized interest only payments and then were cashed out completely with the refinance. We cashed out and had about $80K left once all the fees and etc. were paid out. I believe we will cash flow about $30K per year once all expenses, reserves, and debt service at 6.5% interest rate has been accounted for.

    B2R is very difficult to work with because of all that they ask for. But they do allow us to refinance with only 3 months of seasoning which starts the moment the property is bought and closed. They do not, however, allow us to refinance one property at a time and sell a portion of the portfolio if we want to. First Key does allow these things. First Key, however, needs at this time 12 month seasoning. For this reason, we plan to use First Key for single special properties and B2R for tranches of properties. 

    The other thing that you have to keep in mind is that the properties have to at least appraise for at least $50K. This is pushing us away from C class properties to more and more B class properties.  As mentioned, we are starting our second $1M portfolio refi with B2R. I would not do anything much less than that as it is not worth their time.

    We have much more than a million dollar worth of residential properties to refinance including the 4-plex and duplex in your neighborhood. We could not have acquired all these homes without the Ground Partners we have now. However, I am sorry to say that the one Ground Partner that we did get from this post who helped us buy the Florida properties is not proving to be an acceptable Partner. He has found us good properties, but he has been been terrible with communication which in our EAC Culture of complete transparency and constant communication is simply unacceptable. It is my hope that he is reading this because I need him to change. However, to prepare for the dissolution of this JV partnership and to find new partners in your area, I propose to you a partnership with EAC. Please consider taking over these two properties. We will provide you with all the funds you need to buy more properties for your portfolio. But we should own them together. If you are interested, we should talk. Send me and our EAC Virtual Assistant [email protected] and email to set up a teleconference.

    1Reply
  • James Ihssen
    Real Estate Broker · North Aurora, IL · Member since 2014 · 130 posts · 82 votes
    10y

    @Kevin Yoo

    I agree with @Andrew Davis that for an experienced investor this may not be the most effective means of building a portfolio by giving up such large percentages of equity and paying so much for the money.

    For a brand new investor with the right qualities and mindset, this may be a good option although @Kevin Yoo did mention that he did not want an investor too green.

    Once you have experience under your belt you can attract money via much more reasonable means as @Wendell De Guzman has stated. Whether you intend to flip and or buy and hold, an intelligent and motivated real estate investor can find funds to operate such activities.  All the while keeping a much larger percentage of revenues.

    I have been interested in this thread from the perspective of eventually considering operating in multiple markets if I ever decide to go that route.  You seem to have the same struggles that I would eventually have at that point; a large amount of funds that you Need to invest and the lack of current means to vet properties and people.  I see you have created a standard 'submission template' for properties which is a really good idea.  It allows you to view properties on an 'apples to apples basis' day in an day out. 

    Best of luck to you and I will be following this thread to see how your business progresses!

    1Reply
  • Wendell De Guzman
    Investor · Chicago, IL · Member since 2013 · 2k+ posts · 1k+ votes
    10y

    @James Ihssen is spot ON.

    1Reply
  • Milad Keshavarz
    Investor · Santa Monica, CA · Member since 2015 · 54 posts · 16 votes
    10y

    Kevin,

    I'm a fix and flip investor in Chicago and currently looking for private money to do more projects as well as looking for partners. I'd be glad to know if you're interested in the Chicago market.

    Thanks you,

    Milad 

    p.s. I live in California and invest in Chicago 

    0Reply
  • Kevin Yoo
    OP
    San Diego, CA · Member since 2008 · 301 posts · 108 votes
    10y

    @Milad Keshavarz

    We should talk. I am flying to Chicago this coming weekend to look at the operation of Profit for Rentals to see if we can do business with them. Call me when you can.

    0Reply
  • Milad Keshavarz
    Investor · Santa Monica, CA · Member since 2015 · 54 posts · 16 votes
    10y

    Kevin,

    I'll call you tomorrow in the AM.

    Thanks 

    0Reply
  • Simmy AhluwaliaPro Member
    Lender · Atlanta, GA · Member since 2015 · 1k+ posts · 200 votes
    10y

    @Kevin Yoo - if your team ever decides to invest in the Atlanta, GA market, please keep me in mind.  I'm both an investor-realtor and private money broker.  I'm very connected in all facets of investment real-estate:  Closing attorneys, GC's, Inspectors, Wholesalers, Funding, Comps, etc......

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  • Kevin Yoo
    OP
    San Diego, CA · Member since 2008 · 301 posts · 108 votes
    10y

    @Simmy Ahluwalia

    Thanks for contacting me. I am sure that you have all the network and experience you claim to have. However, we will only work together if you very much need us. If when that happens, I am sure you will take action. 

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