Investor from the Okanaga Valley, British Columbia

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Investor from the Okanaga Valley, British Columbia

Mike Kohan
Investor · Summerland, British Columbia · Member since 2015 · 19 posts · 11 votes

Hi.  My name is Mike Kohan, I'm a husband and father, a career helicopter pilot and now real estate investor.  I started investing in real estate 5 years ago with a lease/option purchase close to home for a tenant, which is turning out to be my "$100k college education".  Last year I bought my first flip in Chicago, which we are still rehabing. 

 I stumbled across Bigger Pockets about 9 months ago, and am only now spending more time with listening to the podcasts and poking around the site, which I am really enjoying.  I'm looking forward to becoming a valued member of the community and being able to contribute to it in a meaningful way, soon.

Cheers

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Edison Reis
Rental Property Investor · Kelowna, British Columbia · Member since 2015 · 136 posts · 54 votes
10y

Hi Mike

Yes indeed. I also joined biggerpockets 5 months ago and it helped it to learn and avoid some basic (newbie) mistakes as we are new investors.

We are close to lock our first deal.

Welcome

Edison 

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  • Edison Reis
    Rental Property Investor · Kelowna, British Columbia · Member since 2015 · 136 posts · 54 votes
    10y

    Hi Mike

    Yes indeed. I also joined biggerpockets 5 months ago and it helped it to learn and avoid some basic (newbie) mistakes as we are new investors.

    We are close to lock our first deal.

    Welcome

    Edison 

    1Reply
  • Mike Kohan
    OP
    Investor · Summerland, British Columbia · Member since 2015 · 19 posts · 11 votes
    10y

    Thanks for the welcome, Edison.

    Where is your market of interest and are you flipping or BRRR'ing?

    Flipping makes for quicker money in the pocket, but is not ongoing income.  I'm testing what I've learned on a single flip - seeing it through to completion and sale before going hard, leveraging to do multiple flips.  Hope to have the first one completed and on the market within the next 4 weeks.  It is a gut rehab - everything but the floors and exterior brick walls!  

    0Reply
  • Edison Reis
    Rental Property Investor · Kelowna, British Columbia · Member since 2015 · 136 posts · 54 votes
    10y

    Hi Milke,

    There's no wrong strategy in real estate investment. (Buy & hold, Brrrr, flips, etc)

    I think has more to do with whatever you feel comfortable.

    I am currently focusing on buy and hold (rentals) rather the other options because:

    A) I have a full time job and are often travelling. (Hence hard to manage a flip)

    B) i don't have enough money upfront for flips. 

    If wasn't for these points I would split my focus between both strategies but at this point buying and renting it out seems to be the easier way to move forward.

    Does that make sense ?

    Oh ...why did you buy a property in Chicago? 

    1Reply
  • Chris Kenyon
    Vancouver, British Columbia · Member since 2015 · 20 posts · 3 votes
    10y

    @Mike Kohan

    Welcome Mike!

    I am also interested why you chose to do your first flip in Chicago?

    Also, can you elaborate on the 100K education?

    Regards

    Chris

    0Reply
  • Mike Kohan
    OP
    Investor · Summerland, British Columbia · Member since 2015 · 19 posts · 11 votes
    10y

    Hi guys,

    Chicago's underlying fundamentals as one of the last emerging markets from the mortgage crisis looked, and still looks good to me.  Lots of distressed properties for under $100k, a city with many diverse Fortune 500 companies headquartered there, and a large renter pool.  Job growth and GDP growth were both increasing, if only modestly.  I was too late to jump on the Phoenix train, Memphis lends itself more to sfr investments (my focus is multi family) and Tampa/St Pete's went through a condo conversion phase, so again, a little restrictive for multi family.  Chicago just seemed to fit.

    As for my $100k education, Chris, that is about how much I am going to loose on my first real estate investment attempt.  It was a lease/option purchased for a young couple who convinced me they wanted to save hard for two years and buy from me.  It was a brand new builder's showcase home, with all the high-end finishes he could put together.  I paid too much for the house and didn't do sufficient due diligence on the tenants.  After a walk-through inspection three months into the lease, and having told the tenants I would see them again for a walk-through in another 6 months or so, they figured out they weren't going to get the privacy they thought a lease/option would give them.  They did the midnight move after paying only 4 months rent.  The house remained empty for 8 months (expenses were covered by the option consideration they walked away from) until I found another lease/option tenant.  This guy was a model tenant, paying the rent almost always on time and keeping the house in "show" condition.  I visited 4 times in the first year, but just after the 14 month's rent went late, I got a registered letter in the mail to inform me the house was raided and my tenant busted with 490 pot plants in the basement! The remediation was covered by his option consideration, but the house now has a stigma attached.  My last tenant was finally a great pick, except after 18 months, his situation had changed and he had to cut the lease short.  I could make it cash-flow as a lease/option, but not as a straight rental.  Just too expensive with high taxes/insurance etc.  So out it goes.  It's been empty since October and we now have a negotiated purchase offer for $100k less than I paid for it five and a half years ago.  My Realtor said the stigma would cost me 10% of the value, and he was just about bang on!

    1Reply
  • Pawan J.
    Developer · Vancouver, British Columbia · Member since 2014 · 122 posts · 26 votes
    10y
    Welcome to bigger pockets Mike Kohan the community is awesome and a wealth of knowledge on here. Sorry to hear about the house. A Grow-op stigma only really goes away if you tear the place down which in your case wouldn't make any sense. As a landlord this is always a risk with a rental. Im not sure if maybe the lax pot laws in vancouver BC would reduce how many illegal ones are setup?? I have heard mixed reviews about Chicago and contractors. Two investors I know both have had issues with work and just tonight I spoke to someone who said they just couldn't pull the trigger as there was so much variation in quotes which I understand for someone unfamiliar to the cost of a renovation and sub-trades. I feel so much safer investing close to home in Vancouver where I can drive by the asset and have more control (as a contractor and as an investor).
    1Reply
  • James WachobBusiness Member
    Real Estate Broker · Memphis, TN · Member since 2015 · 1k+ posts · 890 votes
    10y

    @Mike Kohan I'm a RE Broker in Memphis, TN focused on helping my investors, from all around the globe: buy, sell, build, rehab, and manage Awesome properties!

    Let me know if you need any help with the TN market!

    0Reply
  • James Martin
    Property Management · Memphis, TN · Member since 2009 · 668 posts · 362 votes
    10y

    Welcome to BiggerPockets!

    0Reply
  • Edison Reis
    Rental Property Investor · Kelowna, British Columbia · Member since 2015 · 136 posts · 54 votes
    10y

    Thanks for sharing @Mike Kohan ! As you said despite the headaches and lost money it was a " MBA in real estate " that probably helped you to avoid bigger issues in a large scale strategy. (I.e: multi family properties which is your niche) 

    I have read lots of forums and watched lots of podcasts that enlightened me a lot. From basic tenants screening, property evaluation, negoticiation to rent collection. I am not saying that I won't make newbie mistakes however I can tell you that the likelihood went down from 50% to 5% kinda deal.

    The beauty of @BiggerPockets is the ability to learn and share as we go along as fellow investors. The market is big enough for the 1% hence why not share ideas, successes, failures and real life experiences. 

    Note: What I mean about the 1% is ..... I am not talking about financial wealth but rather the very small amount of people that have the courage to invest, willingness to learn, research and take risks while most (99%) won't. 

    0Reply
  • Mike Kohan
    OP
    Investor · Summerland, British Columbia · Member since 2015 · 19 posts · 11 votes
    10y

    Hey guys, thank you all for your warm welcome to BiggerPockets.  It really does sound like a great network of like-minded people wanting more out of life than what a 9 - 5 can provide.  I must say I'm thrilled to see fellow investors from my corner of the globe.  The markets seem quite different between the US and Canada, but I guess the underlying concepts of real estate investing are much the same.  So in that regard it makes sense that this site would be useful to both.

    So far, in my MBA course, I've covered; 

    • investment property financing,
    • rent-to-own (lease/options), 
    • new home buying and new home warranties, 
    • tenant selection and levels of due diligence in that regard, 
    • property management,
    • dealing with the police and city hall on sealed buildings, 
    • grow-op remediation,
    • financing and insuring a stigmatized house,
    • negotiating the sale of a stigmatized house.

    The grow-op certainly brought some interesting lessons in human nature, even in how the neighbors have treated follow-on tenants in the same house! The shallowness some people wear on their sleeve can be surprising.  I'm really happy to have supportive groups like the BP community.

    Cheers

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Mike Kohan  well your from one of the great spots in north America.. love the peach's there. And the wine.. and the lake and just about everything else about the Kelowna area.

    I did very well in your area just lending money... better than one could do with rentals in most of the US with non of the risk.. I got 12 to 16% for HML in the Kelowna area..

    I bought a home at the Okanogan golf club circa 2001... love the area. had  a golf buddy that was a mortgage broker and he put me into many deals there.. a couple up in Vernon that paid off nicely. and in those days I was using US dollars to buy loonies and made money on the arbitrage and the interest rate.. plus... unlike selling a property in BC were they hold 25% of your proceeds until you file a tax return.. Notes that are paid off are not run through a closing attorney or solicitor and you just keep the money.. and report the gain.. many benefits to loaning in BC

    what's not good in BC about loaning though is if you have to foreclose that is much tougher than US>. but Canadians pay their mortgages not like US folks that default at the drop of a hat. LOL.

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    1Reply
  • Joel Sherlock
    Kelowna, British Columbia · Member since 2016 · 61 posts · 108 votes
    10y

    @Mike Kohan Welcome to BP

    Your story reminds me of saying I learned from one of my mentors: "I have never made any mistakes, I have invested heavily in my educations" It sticks with me every time I am "getting a lesson" I empathize with you on the 100k education. I could have gone to Harvard a couple of times with my "lessons"

    0Reply
  • Samuel Sedore
    Real Estate Agent · Kitchener-Waterloo-Cambridge, Ontario · Member since 2013 · 408 posts · 90 votes
    10y
    Originally posted by @Mike Kohan:

    Hi guys,

    Chicago's underlying fundamentals as one of the last emerging markets from the mortgage crisis looked, and still looks good to me.  Lots of distressed properties for under $100k, a city with many diverse Fortune 500 companies headquartered there, and a large renter pool.  Job growth and GDP growth were both increasing, if only modestly.  I was too late to jump on the Phoenix train, Memphis lends itself more to sfr investments (my focus is multi family) and Tampa/St Pete's went through a condo conversion phase, so again, a little restrictive for multi family.  Chicago just seemed to fit.

    As for my $100k education, Chris, that is about how much I am going to loose on my first real estate investment attempt.  It was a lease/option purchased for a young couple who convinced me they wanted to save hard for two years and buy from me.  It was a brand new builder's showcase home, with all the high-end finishes he could put together.  I paid too much for the house and didn't do sufficient due diligence on the tenants.  After a walk-through inspection three months into the lease, and having told the tenants I would see them again for a walk-through in another 6 months or so, they figured out they weren't going to get the privacy they thought a lease/option would give them.  They did the midnight move after paying only 4 months rent.  The house remained empty for 8 months (expenses were covered by the option consideration they walked away from) until I found another lease/option tenant.  This guy was a model tenant, paying the rent almost always on time and keeping the house in "show" condition.  I visited 4 times in the first year, but just after the 14 month's rent went late, I got a registered letter in the mail to inform me the house was raided and my tenant busted with 490 pot plants in the basement! The remediation was covered by his option consideration, but the house now has a stigma attached.  My last tenant was finally a great pick, except after 18 months, his situation had changed and he had to cut the lease short.  I could make it cash-flow as a lease/option, but not as a straight rental.  Just too expensive with high taxes/insurance etc.  So out it goes.  It's been empty since October and we now have a negotiated purchase offer for $100k less than I paid for it five and a half years ago.  My Realtor said the stigma would cost me 10% of the value, and he was just about bang on!

     Hey Mike, I was wondering if you could send me some of the under laying economic fundamental statistics you are using to gauge future growth?

    0Reply
  • Mike Kohan
    OP
    Investor · Summerland, British Columbia · Member since 2015 · 19 posts · 11 votes
    10y

    @Jay Hinrichs Hard money lending - that is an angle I have not thought of, though it does have some parallels to opening a Payday Loans business I gave some thought to a few years back. I think your venture would result in more overall satisfying customer interactions, to put it as inoffensively as I can. We may need to have a conversation about this when I have some cash to put forward, some time in the future. One question I have for you now is; Did you ever have to go through a foreclosure in BC?

    @Joel Sherlock I like that quote. I might use that...

    @Samuel Sedore What I look for when I'm searching for a place to invest - I start with cities with metro area populations upwards of 500,000. Easy enough to find through a Google search. The inventory of sub-$100k properties is a little subjective, but homepath.com and homesteps.com can give a pretty good indication of the REO market in the subject city. The diversification of industries and the number of Fortune 500 companies headquartered there is an easy Google search - I like to see at least 5 of the latter, as it gives an indication of what the leaders of these companies think of that city and it's business climate. As for job and GDP growth, +2% makes a nice base. Anything over that is great, less than that, other fundamentals need to be stronger to support further investigating. Marcus&Millichap are a great source for this information.

    Having said all the above, I am a newbie in the US market, so whether or not any of this is actually valid? - time will tell. For me, it's as good a place as any to start the search which brought me to Chicago.

    I'm not sure if that is what you are asking for, Samuel. Your signature line would indicate I'm probably not telling you anything new.

    Cheers

    0Reply
  • Mike Kohan
    OP
    Investor · Summerland, British Columbia · Member since 2015 · 19 posts · 11 votes
    10y

    @James Wachob and @James Martin Thank you for the welcome and the offer of assistance in your market area. I actually visited Memphis two, maybe three years ago to look first hand at the city and meet with a couple of Realtors a GC and a property management company. Awesome BBQ, and I loved Beal St!  Unfortunately, the overall consensus I got was it was great for SFR investing, but that was not my focus. But, things change. It's always good to have names to call when they do.

    Cheers

    1Reply
  • Roy N.Pro Member
    Rental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
    10y

    @Mike Kohan

    A belated welcome to BP from the other side of the country.   We are buy-n-hold types in the Maritimes with a couple of co-owned properties in New England.   Sounds like you had a first-class real-eatate education right out of the gate - the MBA should be a stroll in comparison.

    I do enjoy your part of the country, my wife's family are Kettle Valley folk - her Grandfather and Great-Grandfather were railway men.

    0Reply
  • Mike Kohan
    OP
    Investor · Summerland, British Columbia · Member since 2015 · 19 posts · 11 votes
    10y

    @Account Closed Thanks for the welcome and the offer.  I hope Memphis is treating you well.

    0Reply
  • Mike Kohan
    OP
    Investor · Summerland, British Columbia · Member since 2015 · 19 posts · 11 votes
    10y

    @Roy N. Thank you for the welcome.  It sure is a friendly group!  I'm originally from Toronto area, lived overseas for many years, then returned to BC in '93.  I absolutely love this part of the country for many reasons.  My wife is beginning to struggle with the winters, being from England originally, so we may have to adopt a "snowbird lifestyle"!  I'll bet your wife's family have a fascinating story to tell.  It's rugged terrain for building a railway through.  The remnants of the Kettle Valley line make for some amazing trails.

    0Reply
  • Alex CraigBusiness Member
    Real Estate Professional · Memphis, TN · Member since 2009 · 1k+ posts · 1k+ votes
    10y

    Buying is easy, renting is easy, rehabbing is the most difficult part of the process.  That is where the most money can cash flow the wrong way. Good luck!

    901-848-9028
    0Reply
  • Mike Kohan
    OP
    Investor · Summerland, British Columbia · Member since 2015 · 19 posts · 11 votes
    10y

    But rehabbing is the most fun, @Alex Craig.  At least unless and until it goes sideways - then it can get stressful.  I just wish I was closer to the scene so I could be part of it from time to time.

    My first, and current rehab is down to the bones. Roof, windows, doors, full electrical and plumbing upgrade, HVAC with ducting, re-framing the inside of the exterior walls, insulation and drywall - the works. This house is turn-of-the-last-century and we knew going in it was going to be all the way. The spread between purchase and ARV allows lots of overruns without loosing my shirt, but so far, the only unexpected is how long I needed to keep a house sitter in it for security. The permit process in Chicago really holds a lot of room for improvement!

    The best part about a gut rehab, though, is I know exactly what I end up with and can sell it as a quality product with a clear conscience.  That, to me, is gold.

    1Reply
  • Alex CraigBusiness Member
    Real Estate Professional · Memphis, TN · Member since 2009 · 1k+ posts · 1k+ votes
    10y

    @Mike Kohan  you must like adventure. Personally the rehab is my least favorite part, but it is certainly rewarding when completed.  I could only imagine how much of a nightmare the permit process is in Chicago; I would think Unions further complicate that.  The inspectors in Memphis are getting more difficult too, but sucking up to them seems to work.

    100% agree on the quality product, that is probably the most rewarding part of the process; rehabbing rental homes to retail quality and having tenants come in telling us how much they love their new home.  What is even more rewarding is looking at your house, then looking at the other houses on the street knowing yours is the nicest on the block AND it is a rental!!

    901-848-9028
    1Reply
  • Mike HurneyPro Member
    Real Estate Investor · Boston, MA · Member since 2009 · 2k+ posts · 542 votes
    10y

    @Mike Kohan but there are a lot more mouths at the trough with a complete gut rehab...

    0Reply
  • Mike Kohan
    OP
    Investor · Summerland, British Columbia · Member since 2015 · 19 posts · 11 votes
    10y

    True enough, @Mike Hurney.  No argument here.

    0Reply
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