Becoming An Expert of All Asset Classes with Charlie Kao

Charlie Kao: [0:00] My portfolio is pretty diverse. I'm most known for self storage, I think, because I have a blog for inside self storage and I'm going to be speaking at the RollWide Expo for them. So they share a lot of my content specifically self storage. And then quite frankly, the last three years, with our self storage acquisitions and developments, they've exploded. So I have multi, I have a number of investor opportunities I've invested in as well, which I like the true investment, completely passive. Self storage, industrial, triple net, brokerage, do consulting, mobile home parks, assisted living, and we're kind of all across the board.

Speaker 2: [0:36] Welcome to the collecting keys real estate investing podcast with your host, Mike DeHaan and Dan Austin. From wins, losses, horror stories, and tactics for optimizing your business, Mike and Dan take a real uncensored deep dive into the ins and outs of running a full time real estate investment and wholesaling business.

Mike DeHaan: [1:00] What's going on, guys? In this episode of the Collecting Keys Real Estate Investing Podcast, we have Charlie Gao. And, man, like, I don't know what I was expecting from this episode, Dan, but it was not that. Did you have

Dan Austin: [1:14] low expectations for Charlie? Because that's unfortunate.

Mike DeHaan: [1:16] Like, literally opposite. So, like, what it's funny. When I connected with him via Facebook, you know, I said, like, oh, you know, what are you kinda known for? What's your investment space? And he said, well, I'm mostly known for self storage. And so I was like, cool. Yep. This is self storage guy. We haven't had a self storage guy on the show. So I even introduced him to the podcast as a self storage guy. And then we proceeded to talk about no self storage at all.

Dan Austin: [1:38] Did we even say self storage after like that? Like, Like, was so much more fascinating things to talk about that he was doing in his life or has done in his life, including all of his dad's or stories from his dad. I love those, dude.

Mike DeHaan: [1:50] Yeah. I think we barely touched on self storage at all. So if you're here for a self storage show, I'm sorry. That's not what you're getting. Instead, you were getting a deep dive into the mindset of one of the most impressive, I would say, real estate and investment entrepreneurs, like, true entrepreneurs that we have had on this show to date. Yep. And, you know, he goes into his backstory, his family, immigrated here from Asia when he was a baby. And, like, his dad, like, literally was a chef and the handyman at this commercial restaurant Yeah. And then ended up buying the entire, like, commercial block through, you know, over the years. And, like, his origin story is crazy. And then the way that he goes about his investing, he has invested in everything that you can possibly think of from, like, self storage to multifamily to care homes. And he goes super deep into detail about how he analyzes deals, how he manages all these things. And spoiler, kind of at the end he gets into this, but his 11 year old daughter actually has the final say in a lot of stuff and how they put together their business. So, like, the way that he approaches things was truly just mind blowing

Dan Austin: [2:55] to me. Alright. I'm gonna stop you before you tell the whole episode in the intro.

Mike DeHaan: [2:59] That's a spoiler. Gotta listen to how he does it. Because like, honestly, man, like, was sitting here just dumbfounded on Yeah.

Dan Austin: [3:05] It was a good

Mike DeHaan: [3:06] he went into things. So so many great knowledge bombs and definitely reach out to him. I think he's he's probably a little bit quick because he gets hit up a lot by people. But if you can get on his good rooks and you get some knowledge from him, like, he will blow your mind in whatever situation you're trying to figure out. So Right. Anyways, guys, please share this episode with anyone who might find it interesting. Anyone who's even slightly interested in being an entrepreneur or doing like legit investing should listen to this episode, because it is a really, good one. And aside from that, if go collectthekeyspodcast.com/free, you can get Dan and I's free five step guide to start generating off market real estate investing leads, and that can go and start helping you build wealth so that you can make investment decisions kinda like Charlie does with his big time business. So anyways, guys, enjoy the show with Charlie Gao. It's a really, really good one. Alright. Today on the show, we have Charlie Gao, self proclaimed self storage expert. As he said, that's what he's best known for. Super excited. You are the first self storage person that we've had on the show. And the one thing I've learned about self storage people is they are all either crushing it or they are completely full of it. So we will see which one you are today. No. I'm just No. I'm just just doing

Charlie Kao: [4:17] hard time. They they they spread people's champ introduction. So

Mike DeHaan: [4:21] Yeah. Right. So awesome, Trevor. Thanks so much for coming on the show, man. It's super good to meet you in person. I know we've chatted a little bit via DMs, but I'm super excited to hear about your backstory and everything you have going on.

Charlie Kao: [4:32] Yeah. Thanks for having me.

Mike DeHaan: [4:33] Yeah. Absolutely. So I guess first off, give us a little bit of background to kind of, you know, who you are, people who wanna like a so I you know, more deep dive introduction onto you. Like, where should they start?

Charlie Kao: [4:45] Yeah. You know, I got my start in real estate through my dad. He was a really heavy owner operator. I mean, pretty much every single aspect of his business outside of the tax returns, he pretty much did. So clean outs, doing the repairs himself. He had a contracting background. And kind of long story short, he had a job as a handyman for this woman that owned quite a bit of commercial real estate. And, what happened is one day at one of the restaurants, one of the chefs didn't show up and my dad happened to be, fixing something there. And he said, you know, I think I can, take over as a chef. And she was like, I don't even know, like, if you're joking or not, but yeah, you can try out and do it. And so he did that. And then she's like, all right, well, I don't mind giving you this position, but I need to hire another handyman before I have you take this position. And my dad simply said, I'll I'll do both. So he basically banged out two full time jobs. And then I was kind of this chill guy where, you know, hey son, after work, I need you to do something. Know, mean, pretty much short of making me fake being sick to leave school to work on one of his properties, I pretty much did it all. Every child labor law I could think of, I pretty much violated. And so

Dan Austin: [5:58] Love it.

Charlie Kao: [5:58] Long story short from there, I was like, real estate sucks. I'm getting out of this. And I worked in health, fitness, I worked in commercial lending, I worked in med tech sales. And over that time, when I kind of realized, because I worked for some of the largest companies in the world, sometimes the largest company in its class in the world, where, you know, I'd be making them close to, you know, a $100,000,000 in sales, like, you know, a year. And yet I was making like 0.001% of that. Yeah. So I realized, if I could do this for myself, and obviously I'm working as much as an entrepreneur is anyways, I'm pretty confident I could have a better lifestyle and also not be told what to do all the time. Not be told when I can take vacations, not be told, I can't hire this person. I gotta hire this person because he looked good on paper. Or I can't fire this person because I didn't do enough reports, talking about reports about reports about why I can't fire them or whatnot. So I gotta do things my own way.

Mike DeHaan: [6:55] Yeah. Nice. So where did you grow up? Did you say what part of the country?

Charlie Kao: [7:00] Yeah. So I grew up in Central Michigan area, and then I lived outside of Michigan for about a decade. And then I moved back. I always say a few years ago, but it's over a decade now. So it's 2008, 2007 is when I moved back.

Dan Austin: [7:14] Okay. Oh, gosh. That's when properties are cheap in Michigan, Detroit in particular.

Charlie Kao: [7:18] That's one of the reasons why I moved back was, you know, you had properties that you could seriously buy it for credit card. And one of the first properties I buy, pretty much did buy it with a 0% credit card offer. Then I took it off before the eighteen months is over. So That's wild. I was actually planning to move to New York City for a position there. And then lot a lot of stuff happened. I just realized, you know, like, I think this is a sign that they need to stay. And I'm I'm glad I did, obviously, because I don't think I would have created the wealth I did if I moved to New York City. So

Mike DeHaan: [7:47] Yeah. Right. Absolutely. That's interesting background. And so you said you're got into real estate through your father. I guess, what was his real estate holding situation? Or was he mostly just on, like, the operator side of it? Was he actually investing himself?

Charlie Kao: [8:00] So yeah. I mean, he had he had we had residential properties, but mostly it was commercial. So that that same woman that he works for, he created so much value for her and just eliminated headaches that as she retired, she sold off her a commercial real entire commercial real estate portfolio, which was primarily retail office, restaurants. And so that was kind the early exposure I had. And because my dad didn't really speak much English, I was pretty heavily involved in the business from the fact that I was It's kind of funny, my dad chose me to translate documents more so than my sister because I think my sisters were Anybody that has an interpreter will tell you that you're not supposed to try to give your own spin on what they're saying. You're supposed to translate it for exactly how it is. And I think that's why I didn't get job is because like, I was just using the simplest words possible to just explain that this is what this says, which is what my dad needed. Whereas my sisters, I think, would try to like give a high level explanation on it. It would just make things worse. So I think that's why I was the one that my dad chose to translate these documents that, know, like a lease agreement or whatever legal letter or whatever you can think of.

Dan Austin: [9:10] Yeah. I'm still just like absolutely fascinated. I'm hung up on the fact that your dad was a handyman and just said, can be the chef too. And then and then, but then how that parlayed into becoming a commercial real estate property owner, and like, just showing up and being ready to say yes to anything, like that's just incredible.

Charlie Kao: [9:26] It's kinda weird, because you're kinda like, just because you fix these places up doesn't mean you know anything about it, but you know, you can get You know that fear, but at the same time, I mean, it's kind of like, well, what is scary? Coming to a country when you're 39 years old, can't speak English, trying to find a job and support a newborn and two other kids and your wife or getting into commercial real estate. So from that aspect, when you word it that way, it's kind of like, well, it really wasn't too much of a risk for him. Even I will see that my dad is a ultra, ultra conservative investor and I'm a conservative as well, but he makes me look like completely like, I don't know. So.

Mike DeHaan: [10:02] Yeah. That that's interesting. And where where did they come from?

Charlie Kao: [10:05] I was born in Taiwan, and then we came over here when I was five months old. So I pretty much just raised

Mike DeHaan: [10:09] The United States most of my life. Interesting. Gotcha. So as you started looking at these properties, like, these opportunities came up, how did he pay for them? I mean, especially coming from Taiwan, that period of life, I and, I mean, just culturally as well, I imagine things like credit weren't exactly huge unlike loans. I guess, I I don't know. I'm probably slightly stereotyping here, but out in Seattle, I had a lot of friends with Asian backgrounds, and they typically weren't big on using leverage and that sort of stuff, especially if they had family members that were, like, from the home countries. So how did he afford these properties? It was, like, on seller finance?

Charlie Kao: [10:45] Yeah. So, no, I actually never got that question before, but so he bought them all on land contract, but he had a of money saved up. I mean, even when we were wealthy, even when my dad was a millionaire, we seriously still live like we didn't live off food stamps because my dad wanted to do government benefits, but we lived I like mean, I remember when we were young, there was a time when my dad was like, Hey, you need to take a bath while the bath is still warm. I'm like, Oh, I'm good. I'm like, No, you need to because I don't want to, I don't want to fill the tub one more time with bath water. Reuse the bathwater that your sisters just use. Like that's how crazy, like low budget my dad was. So, so from one standpoint, it's like, he was a millionaire, but not your typical person. Very much the millionaire next door where we just run ultra low expenses, live on $8,000 a year. So if you make $70,000 a year, but you only spend 8, you're good to go. But oddly enough, she, the woman, I actually don't really remember the woman that long because I was so young that sold him off all this real estate. But, she put him in such a situation to succeed that he was able to pay off all those balances off. He might've gotten Bing financing at one point to, you know, for some, which you want to get it paid out. But I mean, I knew that, you know, she didn't want a huge tax burden more than likely. So that's why, you know, she sold it to our land contract.

Charlie Kao: [12:04] But interestingly enough, my dad did not follow that exact same model when he sold his businesses and he paid dearly for it because he sold a number of his businesses off on land contract with the people were not put in this situation as a seed and essentially be defaulted on the loan. It was a huge mess. So kind of funny how like, you know, history repeated itself, but we learned from it in the first place.

Mike DeHaan: [12:26] That is super fascinating though. And, you know, we'll we'll move on to to your story. I'm just like, I love these stories of people that, like, come from these other countries, and they're against they're against the odds really in so many ways, and they're able to figure these things out. Like, that's super fascinating. So that that level of, I guess, frugality did he have? Did you take that you carry that still in your life?

Charlie Kao: [12:47] Or I do now, but I actually went the exact opposite way. I mean, think of it like as like the, you know, the pit bull getting let out of the cage and going nuts. Like, I went nuts for like a few years, actually gotten in the head some debt problems because, know, like I've just always been told, no to this, no to that. Like, you mean, I remember like in seventh grade, I really wanted this Nike sweater that was hanging up in the Foot Locker. I don't even know Foot Locker. Actually Foot Locker is still around, but the sweater I wanted, like I told my dad about it, we went in there and he discounted the ugly brown one by $10. My dad made me buy it. And not only that, but my dad's like, well, you're still lifting a lot of weights. Right? I'm like, yeah. He's okay. Well, let's get the extra large. And at the time I was like a medium. And I wore the XL sweater and towels like a freshman in college before I finally grew into it.

Dan Austin: [13:35] I love that.

Charlie Kao: [13:36] So I mean, like, you know, so so yeah, I I definitely was not all about taking those lessons because, really, honestly, I did not wanna live like my dad, and that's why I got a real c altogether. But eventually, I did become very frugal. I I I see I'm fairly frugal now, But I I I definitely had to experience life on my terms for a period of time before I started listening to what he was saying.

Dan Austin: [14:01] Yeah, man. I bet you I mean, I'm just I'm loving this. I could spend probably two hours hearing stories about your dad and frugality, and those are gonna be the I've gotta be the best stories like.

Charlie Kao: [14:10] Oh, I got another story for you that you didn't find even funny. When I was 16, this kid was telling me about like they were depressed and he got some medication for it. And I told my dad this and he's like, oh, good. I'm glad to hear you say this. He goes into his office. He gives off me this list of chores. And he's like, here, do these chores and you won't be depressed anymore because you'll be so busy. You won't have time to be depressed. And it's it's giving me these and, honestly, the funny thing about it is it actually worked. I was just so busy and so pissed off at him. I didn't have time to think about my own depression.

Dan Austin: [14:43] That's so funny. There you go.

Mike DeHaan: [14:44] That's like yeah. It's like I mean, it's like the disappointed Asian parent memes. If you've ever seen those or like Joe Khoi, if you know that. He's a Filipino stand up comedian. He talks about, like, with his Filipino mom. I know you guys aren't Filipino, but same sort of thing where he's like like, oh, you know, I say, like, oh, my my foot hurts or my stomach hurts. And she would always come in with, like, the icy hot, and she would be like, oh, that fixes everything. Right. So it starts rubbing it on my face and rubbing it on my eyes. I'm like, oh, mom. It hurts. It's like, yeah. But your stomach doesn't hurt anymore. That is funny. Mean, I mean, there's kind of a life lesson there though too, honestly.

Dan Austin: [15:20] There really is.

Mike DeHaan: [15:20] You know, you can't you can't be bored if you're too busy with something else to do. And I think that's something that gets a lot of entrepreneurs when they say that you're workaholics. It's like, you know, it's not that we're necessarily workaholics and we don't know how to have any fun as entrepreneurs. It's just that I mean, I don't know. We never, need to seek out other things. So we all got other stuff to keep us

Charlie Kao: [15:38] Yeah. I I I do follow that mantra. I keep busy. I mean, I keep busy in my business all the time now, but I I keep busy, you know, just in general. So

Mike DeHaan: [15:46] Yeah. Awesome. I love it. Cool. So let's dive into into you a little bit and all the stuff that you're working on. So you went did the full got into the sales realm and a bunch of different things and eventually came back around into real estate. I guess, what did that look like and what exactly does your business look like now?

Charlie Kao: [16:03] Yeah. So along the way, when I well, one of them, I worked in commercial lending. One, worked in like health and fitness and personal training. Like, I kept getting exposed to people that were in real estate that were doing things like completely different. My dad went like, wow, you actually like have a Corvette. You actually enjoy, you actually travel. You actually like do things that actually not what you're doing makes sense. And so early on, like, you know, I knew that I needed to follow the frugal model, but more importantly, the second thing I knew is I wanted to basically put systems in place or to put myself in a position where I had a legitimate exit without just selling off. My dad's exit was essentially run these things super hardcore and then sell everything off, which to be honest, we actually are kind of like on suicide watch till my dad retired because we were kind of like, what is this dude going to do? He's going to go from like sixty hours a week, super busy to absolutely nothing.

Dan Austin: [16:57] Yeah.

Charlie Kao: [16:57] So, so that was kind of always in the back And of my so that's kind of I do it now. Like, I don't have a master staff. It's basically myself, my wife, which kind of worked her way out of the business and then a VA, which we're actually, we let go one a month to rehire another one. And then I have a lot of vendors that work for me. But my life right now is very work life balance where I'm only typically doing like, you know, two to three really large deals a year. And that's all I'm focusing on. I'm not trying to buy like, okay, 50,000,000 deals. I've been in private equity. I've I've been in with actually two private equity groups where, you know, they're doing over a 100,000,000 transactions a deal. And when I really came to conclusion is that, you know, I don't wanna work for somebody else. I don't wanna have 50 employees relying on me. I don't want that pressure. I want as little stress as possible in life. So that's how I built out my business.

Mike DeHaan: [17:45] Nice. And so I guess what does that acquisition process look like then for you? So are you like raising money or do you do you have you accumulated enough cash over your years that you'd kind of just buy things yourself? How are you finding these deals?

Charlie Kao: [17:59] So my my portfolio is pretty diverse. I'm most known for self storage, I think, because I have a blog for inside self storage and I'm going to be speaking at the Worldwide Expo for them. So they share a lot of my content specific to self storage. And then quite frankly, the last three years with our self storage acquisitions and developments, they've exploded so much that just, anytime you kind of toss it like, oh, we had 137% returns on that, then people would just kind of take notice. But in reality, portfolio is diverse, but because my self storage assets have just exploded, it's starting to take over a greater portion. I have multi, I have a number of limited investor opportunities I've invested in as well, which I like the true investment, completely passive. Some storage, industrial, triple net, brokerage, do consulting, mobile home parks, assisted living, we're kind of all across the board, quite a few. I would say though that the majority of my time though right now is spent primarily in the three asset classes, which is assisted living facility, multifamily and self storage. And then I've been doing quite a bit of self storage consulting too as well. So I just broke a hundred hours of self storage consulting, not that long ago.

Charlie Kao: [19:12] So that was kind of all. It kind was of one of those things where it wasn't on my bucket list, but once I hit it, was like, okay, well, I added it to the bucket list so I could check it off. So

Dan Austin: [19:21] Yeah. Yeah. That's cool. I'm curious on the because I've definitely heard about your self storage stuff. Haven't ever heard about how you talk about your assisted living. What does that look like when you say assisted living? Are you talking like larger homes or smaller facilities that and you own natural company as well that that runs the assisted living?

Charlie Kao: [19:36] Yeah. So well, going back a little my first exposure to assisted living was I I was a partner on a deal where I was supposed to be kind of like a limited investor, like just signing a JV partner and the person did not operate a while. And then what happened was I ended up having to be more involved and I absolutely hated it. I hated to hear about tenants dying. I hated like, I just hated going to the assisted living facilities. I'm kind of a pansy like that. So I was like, I got out of it. But then I have a number of both clients and business partners that are very, very wealthy. And one of them was, is very, very successful assisted living. And he came to me kind of with some issues that he was running to where he wasn't sure whether he wanted to go to private equity or, you know, raise funds. But then he also said, you know, I have these deals that are kind of outgrown and I have so much faith in you that I want you to be the broker for it. I'm like, well, I've never brokered a deal before. He's like, yeah, I know you'll figure it out because I've kind of done a number of things. And these clients that I service, I rarely take on new clients, but I pretty much do everything from them, from the bad guy who makes brand news to employees or says no to investor pitches to, hey, I wanna buy this property next door to another one. Okay, go skip trace it and talk with the owners and get a purchase agreement for you.

Charlie Kao: [20:52] So I kind of do all those things. And so as I started expanding those tasks on the system, let me say for this client, I kept just seeing the returns on this. I was like, I want to get in on this, but I would just want you to know that I don't wanna know anything about the operations. I don't want you to tell me a single thing that goes to operations. All you want to do is tell me is, am I getting paid based on what we discussed? And they actually were like, that's great. Because that's exactly what we want. We don't want somebody that doesn't know what they want talking about the operations. So how we're structuring those deals is the value and the tax benefits in assisted living, which are very good, are all on the real estate side, not on the business side. So I don't have any equity in the business, but essentially it's like a triple net commercial deal. I have value in the land and then the owners also have value in the land. So both business and land. So now our opportunities are aligned. And then we got this, you know, twenty five year lease locked in on this assisted living facility where the banks also like to lend on as well. So it really it's not even really necessarily investing in assisted living.

Charlie Kao: [21:57] It's more really investing in a just a triple net health care opportunity if anything.

Mike DeHaan: [22:01] That's interesting. Gotcha. So I guess the the real estate asset on this, when you say it's an assisted living facility, is this like a like a medical facility or is this like a big house, like a big single family home?

Charlie Kao: [22:12] Yeah. So the assisted living can really mean a lot of things. You guys probably saw I recently started the assisted living, tribe for ASA.

Mike DeHaan: [22:19] Oh, that was you.

Charlie Kao: [22:19] Yeah. And I I could have named it 50 things because there's senior living, there's adult foster care, there's assisted living, there's specialized nursing, there's home for the age. I mean, there's so many different aspects of it, but primarily we are more focused on senior living, which is kind of 55 and up. Assisted living, which you can actually be 12, you know, I got 12 years old, but you could be 25 years old, but recovering from a surgery and need to be placed in assisted living at home, which majority of time people assume is 55 and up is that. And then there's also the next destination, which a lot of people go to, which would be kind of either specialized, which is very a lot of logistics involved. It's a whole lot of animal altogether. And then there's also home for the age, which home for the age is basically 55 and up retirement living, which is kind of what people normally think is actually assisted living. The main difference between the two is assisted living licenses are typically smaller and there's a lot, lot less restrictions on it. Like, I mean, you might not see your inspector at all over the course of a year, but your limitation is typically 20 beds depending on what your state is. And so you might see an assisted living facility with 40 beds and people are like, well, wait, how do they have assisted living licenses?

Charlie Kao: [23:31] Because they have two twenty bed licenses. But once you get into 4,160, 300, 400 beds, those are home for the aged, those are much more scrutinized. So there's a lot more legwork that goes into meeting the requirements for home for aids. For example, like if you don't have a lockable gate that can be, you know, tenants can just walk out of that significantly changes the type of on tenant residents that you can have at your facility.

Dan Austin: [23:57] Interesting. Gotcha. Yeah.

Charlie Kao: [23:59] Okay.

Mike DeHaan: [23:59] Man, I introduced you as a self storage guy. Greatly discounted your knowledge. You're just like all over the place. I love it.

Dan Austin: [24:04] Yeah. A lot of deep a lot of deep silos, man. This is cool. Yeah.

Charlie Kao: [24:08] So I take after my dad. I'm deep in the weeds of everything. The biggest thing is I'm deep in the weeds, then I teach somebody else how to do it once I figure out the best way to do it. So that's really kind of been the take from my dad and from my father.

Mike DeHaan: [24:20] Yeah. I like that. That's awesome though. Because like, one of the big things you hear spouted so much by real estate people is like, pick a lane, become an expert in that, and then just like only do that. So you see so many people that like, they only do single family. They only do a self storage. They only do multifamily between fifteen and forty units. They only do 100 plus, you know, multifamily, whatever. But you have your hands in everything. So, like, how did you, like, learn all of it, I guess? Like, how do you feel confident going into these all these different kinds of opportunities? Because, I mean, like, even for us, selfishly, like, we've been more on the residential side forever. You know, we own tons of du duplexes and, like, the biggest unit we have is an eight unit. But, like, going into, like, other assets just seems tricky, I guess, because we're not confident underwriting them. So how did you cross that barrier?

Charlie Kao: [25:10] Yeah. So, you know, funny, I was just on the webinar kind of explaining kind of how I value across the process, but you kind of asked two questions there. So first to kind of preface it, I wouldn't say that me investing in a lot of different asset classes is the best way to go Because personally for me, what motivates me now is I like challenges. I like, I like how I've never done this before. I've never built an eco friendly apartment complex. So I'm going to figure out how to do it someday. At one point I wanted to own a movie theater, but based on how COVID has affected that, I don't think that will ever happen now. But the one consistency though is that I do know West Michigan really, really well. So I'm leveraging my advantages in West Michigan there. And then also I'm leveraging operators that also know what they're doing. I mentioned I invest passively quite a bit too as well. How I diversify now in this, as far as investing passively though, is that there are very, very strong markets that I want to be in that I just don't have the where I don't know Phoenix or Raleigh, those markets very well, but I know very strong operators are investing in asset classes that I like that I do. So that's where my passive money goes into. So that's where like, if I make a million dollars on a self storage facility in Michigan, maybe I'll set aside 20 or 30% of that to invest in Raleigh or areas like that. Now, as far as evaluating all these deals, in almost all cases, it's the exact same steps.

Charlie Kao: [26:31] It starts with basically a feasibility where we are determining how much value they had. So whether it's self storage, whether it's an assisted living facility, whether it is a multifamily, I'm looking at what are the current rents or prices that we're charging now and where is the market gonna be at within a four to 20 mile radius, depending on what kind of asset class it is. And then we're building that up. That at this point is done all by VA for me. If that meets kind of our baseline criteria, then my VA will normally present that to me with kind of four or five other deals. And normally what happens is when they present because what happens, anytime I get a listing from a broker or something like that, or I see a deal, I'll send this to my VA and I'll be like, or my assistant, I'm like, Hey, give me a phase one and then phase two if you like it. So then on a weekly meeting, they're coming back with, okay, these are the five deals you're seeing this week. These are the feasibilities we've done to each of them. And then we're kind of putting them side by side like, well, hey, we have two that we like, but this one is so much better than the second one. Let's just focus on this first one for the next week.

Charlie Kao: [27:32] Have the second one to back up these other three meter criteria, but they're not even close to those. So let's just disqualify those and put them on the burner. And so then from there, then we are determining kind of the value add that would be for us. And so generally, let's say that I have an apartment complex or I have a assisted living facility and I can add $100 per unit per bed or whatever. And let's just say that it's, you know, times 10. Okay. So $10,000 in value add. Okay. Then let's say that I'll just say it's a 100% because like in assisted living, for example, if I go from 16 beds to 18 beds, my expense ratio actually in a lot of cases doesn't even increase because my staffing for a 16 bed facility is the exact same as 18 beds. But we'll just kind of keep, I'll have a formula for how we assume how much expense ratio is going to go up because to be honest, a facility that is 100% occupied has a much lower expense ratio than a facility that's 60% or whatever. So then then so you look at $120,000 and I'll just use a 10 cap, just make it even. So basically just off of rate raises, which is the easiest, lowest hanging fruit, I can add $1,200,000 of value just by doing that.

Mike DeHaan: [28:43] Wow.

Charlie Kao: [28:43] So I have a metric that write off tells me, okay. So for me, that number to me, I'm going after is typically a million dollars. And the reason why I'm going after a million dollars is because if I'm using investor money or my money or whatever, let's say I'm only keeping 30%, then that number might be going down to 300,000. Because if I'm splitting, if I'm taking 30% equity, my limit investors, then they're giving me $700,000 Typically it's a million and beyond, it's kind of pushing more. Obviously, if I'm doing the deal myself, that it can be probably closer to $600,000 because I'm using my own money. And you had asked us before, I do both. It just depends on what I feel like at the time. And so that's how I go. And then from there, then we are building out the first year and what that performance is going to like. That part is the hardest part to outsource to my VA because we talked about niches. If I was doing class A, 100 to 400 units of properties in Phoenix, built in 2000 or newer, My VA could use a reasonable amount of rules of thumbs to put that pro form a to me. But we got cell storage, we got assisted living, we got multi family, we got mobile home parks. And sometimes we're buying 30 year old properties, sometimes we're buying ten year old properties, even though I do have a few rules I just don't break. That part is very hard for me to outsource because I can't teach a VA to do all those things. And honestly, if I teach a VA to do all those things and it's happened for it before, they are getting recruited and they're getting offered 6 figures, you know, to go somebody else.

Mike DeHaan: [30:20] Yeah.

Charlie Kao: [30:21] Such a valuable to have somebody has that much underwriting experience in so many asset classes, you know, because like sometimes I'll have a pro form a, sometimes I have appraisal, sometimes I have actuals, sometimes I have a guy who just give me an offer based off of it and we have to go off of that. And so because we have so many different ways, I can't have a VA go in and say, Hey, use the standard operating procedures for a 30 year old mobile home park that is needs like, you all these things and the rents are significantly below market. And it's like, well, I haven't done that. I've done a mobile home park that's brand new. I've done one that is low income. I've done this assisted living facility for you. So honestly, that's probably one of the most difficult aspects of my business that I can't remove myself from. Well, there's three ways we've done that. One, we've done it by going after super high quality assets in appreciating areas with strong economic indicators. So that eliminates almost all tertiary markets. And then to our deal size, we're going off after 10,000,000 plus. So once you get into 10,000,000 plus, you're less likely to get into these like, Hey, I barely have any docs for you to go after most time working off of an appraisal actuals, or you're working with a pro form a that the broker's given you, which is obviously the least desirable for us to work with for building out our own personal performance.

Dan Austin: [31:37] Yeah. Of course. Yeah. So you talked about brokers. And actually, I do wanna dive deep into this VA thing, but I actually have another And that is, how are you getting the opportunities to underwrite these deals? Like, are they just strictly coming from brokers? Do you do marketing or referrals? What's your main lead source?

Charlie Kao: [31:54] There's a number of them. So at the beginning, what used to happen and I think you guys can appreciate this is that we found a formula and I don't mind disclosing it because I'm not really going after it, but we were using national data. So like everybody goes after the, absentee owner, the high equity list. We all know that right as well. Right. In my market, I essentially found, knew that expiring rental certs was, public information, but only in my market. So if you didn't know my market, you didn't know that exists. You couldn't do that. So what we did was we took the normal indicators, but to make it even stronger, what we did is I found that if somebody had a six year rental certification expiring, if I can reach them roughly between six and nine months and they also hit the absentee owner, they also hit the high equity list, that criteria was almost a 100% chance that they would consider selling. Maybe not at a great price, but it was almost 100% of the time they would do that. And it was a list of only like 40 people I could do to hit those. And keep in mind that I was doing this while I was working a full time job for a 4500 company making 6 figures a year. So I was driving 60,000 miles a year and I was banging out calls through these people while doing that too. But, so that's why I had to, it's kind of like the Pursuit of Happiness where Will Smith just skips to the top of the list and calls the most wealthy guy list. Instead of starting the bottom, I'm just, I'm going call you super 40 qualified people.

Charlie Kao: [33:21] And so that worked out really well, but then eventually what happens, I grew out of that. I'm like, you know what, I want to get into commercial. But then what happened was clients were coming to me and saying, Hey, if you ever have like a fourplex or duplex or something you wanna get rid of that you don't like, go ahead and like sell it to me. I'm okay. And so at the beginning, they're like, Oh yeah, you know, I got this lead, let's just make something off of it. And I'd sell it for 5,000. And so that grew our brokerage side. But then what happened then is that these guys that would had four plexes and eight plexes, a lot of times they also had a 40 unit or a 50 unit, but they're like, I'll sell you my 50 unit, but you gotta buy my four unit as well. I'm like, perfect. This client of mine will buy your four unit, I'll buy your 50 unit.

Dan Austin: [33:59] Got it.

Charlie Kao: [34:00] Then from there, we kept evolving. Like one of the things that if you ask people about me and I'm gonna find, I'll be honest with this, most people have a very strong opinion. The people who know me really well normally have seen really good things about me. There are a lot of people that get pissed at me because they've also heard bad things about me. I'll say that a lot of times is because I'm the dirty work guy. So some of my clients, if they wanna say no to somebody, they wanna break bad news to somebody. If you have an idea to pitch for a new business that you wanna start and you go to one of my clients and say, hey, would you invest in this? Yeah, I've talked to Charles. Charles will tell you. I have to be the one that basically says no. And I basically have to be the one that is candid as possible to say like, this is not investable. We're not going to do this. I'm going to make a recommendation to my client that he not invest in this or she not basically even considered this for these reasons. What would happen though, is that sometimes you would get opportunities Like we had a deal where, you know, it was 84,000 square feet of industrial where the guy basically wanted to expand his footprint for a catering business by like 15 to like 20 or 25,000 square feet. I'm like, you're so ridiculously far below rent.

Charlie Kao: [35:13] Like you can't leave because if you go someplace else to get 5,000 square feet more, you're going to pay double your rent. Like, I don't know how we can help you. And then he's like, well, that was the thing I was thinking. The owner came to me and he would sell it to me for at this price. And immediately he said, wait, wait, what price? And the first thing that ticked in my head was that, okay, well, one, I need to talk to this owner and two, I need to figure out how slow can I play this because I can't say yes so fast if this guy questions why he's selling to us at this price because it's such a good deal? So things like that, opportunities that And then also it comes to two like network with others, doing brokerage listings with others, consulting on deals. For the longest time, I used to do a lot of prove it deals for people or like deals where like some stores guy has a facility that I wanna buy. And they would say like, you know, I wanna sell in four or five years, but I forgot what I wanna do with it right now. And then, so we look at his, you know, pro form a and look at his P and L, like, hey, you gotta raise your rents, you know, like, well, I don't wanna do that. And then it's like, well, hey, let me do this. Let me manage this property for you. I'll do it for like $5,000 for three months and I'm gonna give it back to you worth a million dollars more. But when I do that, my ask for you is that whenever you sell it, I'm the first person that gets to say yes or no. If I don't buy it because you want more money, that's fine.

Charlie Kao: [36:35] But then if you list it, you list it with me. So I whatever way I could find value for other people, whether it's being a bad guy, doing the dirty work that nobody else wanted to do, you know, being the three d guy that basically annoys the star basketball player on the other team, whatever it needed to be, I basically found a way to create value for others. And that's how I built my business.

Mike DeHaan: [36:56] Crazy. That's Like, I need to go like rewind that and just listen to all the things that you said in there because there's so many good nuggets. I'm just sitting here thinking like, how on earth just like a true entrepreneur. We don't have very many people that come on this show that are like true entrepreneurs solving problems, like figuring out how to get stuff done. Like, that's super impressive.

Charlie Kao: [37:17] Yeah. Yeah. Yeah.

Mike DeHaan: [37:18] I'd love to go back just really quick talking about your VA that you had before that you have doing underwriting for you. Because that's highly fascinating because we have a lot of virtual staff from people that are admin that are doing, like, number crunching work to, like, high skilled VAs. But I have yet to hear of someone using a a virtual to solely rely on for underwriting. Like, first off, what kind of VAs are these? Like, where do you find them? And like, how do you trust them with that super important process?

Charlie Kao: [37:47] Yeah. I mean, the underwriting aspect is pretty easy because, like, I can show my VA how to for example, like, when my VA does that level one analysis, let's say it's a high level apartment complex, most of that information is coming from apartments.com or just through a Google search. So I can just show them, okay, need you to use Google Data Scraper, which is a free thing. And then you guys you gotta basically pull Google Data Scraper and pull out all apartment complexes within 15 miles. And then I need you to basically put on the sheet what the unit prices are and also do they have any of them available to as well? Because that's another thing too on our feasibilities we do is that if I show there's 51 bedroom apartment complexes available, I don't really care then what they pay then because that shows that there's a lot of inventory. But if I show that all of them are full, well, shoot, I might realize, you know what, I'm okay with taking a little bit risk on this deal because my numbers tell me is that the demand is so high, Nobody's found me pricing like ceiling on. And then we've had success there too as well. But my secret sauce is simply my daughter is basically my fact checker on these standard operating procedures. So my daughter has just turned 11.

Charlie Kao: [38:59] To be honest, she actually is getting to the point where she's her level of knowledge is probably like better than most adults now that I don't know if I can use her anymore. I basically try to get somebody that does not know anything about real estate, does not know anything, no preconceptions or anything. And they will go through and they will foolproof our senior offer procedures. So they'll go through and be like, well, hey, what is the collecting key software? I'm like, oh shoot, I got to explain what that is. Okay, cool. We have to put the link in the software for them to access it. Or they'll be like, well, hey, what is PITI? I'm like, oh crap, we can't use that abbreviation. We got to do that. And so essentially we're foolproofing it. So then when we get a VA, a VA is basically going through a process that multiple dummies essentially have gone through and basically figured out how to do it with these directions. So that's how we do is we foolproof the process that a 10 year old can do it, a VA should be able do it. If a VA can't do it, then they can't do the job.

Mike DeHaan: [39:59] You're taking the old adage that like, you need to have your processes so simplified that a child can understand it and you're literally doing that. You're literally Yeah. Doing I love that.

Charlie Kao: [40:10] That's so crazy.

Dan Austin: [40:11] But I also love that your daughter's become such an expert, might not be able to use her anymore.

Charlie Kao: [40:14] Yeah. It seems kinda rough too. I mean, and now, sometimes she's getting at the point where she's almost a teenager, so she's getting me like, just the the crap that she basically like says to me like, I'm like, well, dang it. She just talked back to me, but it was like 100% on point with what she just said.

Dan Austin: [40:30] Oh, nice. Yeah.

Mike DeHaan: [40:31] Man, that's crazy. Like, you've just dropped some really awesome knowledge. Like I said, I'm I'm so just blown away by your entrepreneurial nature. Because we, like I said, we don't encounter people like that super often, but you've pieced together some really, really cool stuff. And especially, like, utilizing the VAs and going that sort of way. I think, you know, anyone who's listening to this has thought about virtual assistance. One of the biggest questions people always ask us, they're like, a, it's around trust, and it's always like they ask us how, like, how they can actually find the task that they're able to do because everyone's always thinking that it needs to be, like, number crunching or something super basic. But you're showing that it is only limited by how good you can make your processes that you give them, which is absolutely true

Dan Austin: [41:13] for sure.

Charlie Kao: [41:13] Yeah. Or even, like, another way that you could do it that we've done too as well is that like, we have a task that we give for homework and like, it'll be a task that like, hey, we didn't know they have to do it. And when we interview the VAs, we basically will say, okay, this is the template. This is the finished product. This is the standard wrapper procedures. You have two hours on this day and time. We're all going to give you two hours to do this task. You got to return it back to us. And if we find that only one VA is able to complete it correctly, then for me, some people would say, oh great, we got to hire that VA. For me, that also tells me that, listen, if only one out of 30 VAs are going to do this, then our standard operating procedure isn't good enough. And so that's free right there. We just use our interview process to improve our standard operating procedures there too as well. So that was kind of, that's kind of on the flip side of thing too, as well as that ideally we're giving them tasks that all the VAs or majority of them can do, not just one or two of them, because people say, I want to hire a rockstar VA. On the flip side of that, I wanna have rockstar senior operating procedures. So then that way any VA can do it.

Charlie Kao: [42:17] So so that's not what we look at as Yeah.

Mike DeHaan: [42:21] Yep. That's awesome. And and where do you find your VAs normally?

Charlie Kao: [42:24] I've used a number of things. I've used, like, know, I think onlinejobs.ph. That actually would be a question for my VA for my assistant to to be honest. And then we've also used staffing companies too as well. So

Dan Austin: [42:37] Yeah. Yeah. Awesome. Do you use a virtual for your assistant, like, like a normal VA as well?

Charlie Kao: [42:43] My executive assistant is so I actually, I have, I really have like three VA. My my executive assistant is local, but he works remotely and operates like it. He does pay very well. I have another VA that I pay like, I think 40 or 45 an hour. Wow. And, but, but because I her understanding of bookkeeping and tax benefits to me is like, so on point that like my CPA will not call me. They will call my bookkeeper or my VA bookkeeper and say, hey, we need you to slide $300,000 this $300,000 line item over to CapEx because he's going to get better tax treatment if he does it this year Or, you know, basically like, you know, moving stuff around. And so she understands that. And so from that standpoint, $40 $45 is expensive, but if she does it in five minutes versus five hours, it is better.

Dan Austin: [43:35] That's cheap. Yeah. That's super cheap.

Charlie Kao: [43:37] And then I have a VA that's super, super simple that kind of is more of an assistant to my assistant. Because I really don't wanna have five people coming to me. So really it's more my executive assistant, this is stuff you delegate to what you need to get done, but also realize that you also take accountability for the VA because I'll say that's probably one of the biggest struggles is that when you have a staff member that is overseeing the other staff member, sometimes they kind of become like the, you know, the mother of goose when you say you, you can't act as if they're your child, you have to act as if this is your company and what we would do there. Obviously I have running problems at their as well.

Mike DeHaan: [44:16] Yeah. Yep. That's interesting stuff. Yeah. Dan might need that bookkeeping connection. Yeah. No. He's he's navigating ours right now and it's a freaking disaster. And even like literally right before the show, was looking through our taxes. And I was like, Dan, how come your primary house is listed as a rental property? And he's like, I have no idea. So is a mess. We might need to

Dan Austin: [44:34] Yeah. Was like, that's not normal.

Charlie Kao: [44:35] I mean, you gotta make those cover your butt calls. So I mean, we we could go there too if you want. So Yeah. Yeah. That's funny.

Mike DeHaan: [44:42] No. That that's good stuff. Man, you've we've gotten all over the ship. I I love it, man. You're you're doing some really cool stuff. We gotta start one down here though. So you have any questions on on that last bit there, Dan? I know that, like, VA and that that sort of whole thing is high interest to you.

Dan Austin: [44:56] Absolutely. But we could take that off air so that we don't bore our listeners with my super in the weeds questions about some of

Charlie Kao: [45:02] this stuff.

Mike DeHaan: [45:02] Okay. Perfect. Awesome. Yeah. Maybe I might have to have you back for round two at some point, Charlie. Because I think you got I think so. I just imagine you have so much other great things you can talk about. Yeah. Awesome. So, going to the end of the show here, we have the same three questions that we ask every guest that comes on the show. So the first question, which is always the group favorite, is what is your craziest real estate investing story? And this can be a big win, a big loss, a crazy tenant, crazy transaction. The only rule is you're not allowed to talk about finding dead people in a property because we had that answer too many times and it's never entertaining. It's mostly sad.

Charlie Kao: [45:37] Well, I didn't find a dead person, but we did find a local politician with a prostitute. And so that that enabled me to get a better deal on the property for sure because it was just such a nightmare headache. So my God. I think that would be the nightmare. The only nightmare I would say is that, you know, early on my process, we bought a property that we were flipping in a new market and, just everything went wrong because we couldn't make any assumptions. We didn't have a lot of trust. But the biggest thing that came out as a result of it was that I realized I needed to start networking because I got away from networking for a bit because of, I had a couple of guys essentially I felt tried taking advantage of me, but I got in a really bad buy and I lost money, but then there's some people that just really came out and stepped up and helped us that even though we lost money, the relationships and what we learned out of it kind of hand in. So it just made it made that much better. So

Dan Austin: [46:31] Yeah. That's super valuable.

Mike DeHaan: [46:32] That's a that's a win from a loss.

Dan Austin: [46:34] Yep. How about that?

Mike DeHaan: [46:35] Yeah. Absolutely. Cool. Alright. So second question, what is the number one piece of advice you would give to either a new investor looking to get started or to a small time investor looking to take their business to the next level?

Charlie Kao: [46:48] So I got so notorious for giving this answer the same way that I actually had people reaching out to me that were listening to that. And so the advice I was giving was value somebody else's time at what it's worth. Early on, I had a mentor that certainly he stopped responding back to my text messages. Because I was, I was sitting on like questions he could answer in five seconds, but I probably could have found online like in an hour and a half or two hours. And he simply said to me like, oh, after I kind of confronted him, you know, is that Charles, like, you're acting like I'm here basically to answer your questions. It's like, you know, yes, I'm answering your questions over two or three minutes, but if my time is worth $10,000 an hour, you just cost me like $300 by asking that question. So you need to value my time at what it's worth, not what your $40 an hour time is worth. So if it takes you six hours to find an answer to the question, great. Spend that six hours to find an answer to question versus spending a thousand dollars of my time for me to answer the question. And so now on the flip side of that, now I have people asking me that, okay, hey, I want to pay you for time.

Charlie Kao: [47:50] I'm like, okay, no offense, but I do not want to charge you $1,800 an hour or whatever. Because that's my, that's my consulting fee. I just know you're not going to benefit from it. So, so now I'm going to pivot that advice now. And I'm going to tell people that if you're listening and hearing this advice now, value the person part of that time, also understand when to utilize that. You don't want to throw $3,000 out of advice on advice that I may give you that I've given 50 or 100 people I've done on a ton of other podcasts. Listen to podcasts like these. Sure. Get as much advice as you get. And once you absorb all the free stuff that you can get, then move over to that. Unless your time is worth $10,000 an hour, then yes, call me then because at that point then $1,800 an hour is nothing to you. But if your time is worth under $100 an hour, have to put the time in. You need time, you need knowledge, you have capital. If you don't have the other two, then you have to leverage your time. So that that's that's simply how to leave it that way.

Dan Austin: [48:46] I think that's that's such good advice.

Mike DeHaan: [48:47] Super good advice. And, you know, I guess for context for people, so you said your consulting time is $800 an hour. This show is gonna be just under an hour. So there's a lot of great information people can get for significantly less than that.

Dan Austin: [49:00] Exactly. So That's great. That's cool.

Mike DeHaan: [49:02] I mean, I think that's super valuable and it is especially for newer people. I mean, it's hard for them to understand that and have context. And also too, I guess, in their defense, there's a lot of people out there that are full of shit that'll charge tons of money for time that is not actually Yeah.

Charlie Kao: [49:16] I mean, my consulting fee is not what I think will get clients. It's more of the Uh-huh. Can I do to shock people so much that it scares them away? Because the majority of my time consulting or in the consulting business is people ask me tons of questions about whether they want to do it. So it's easier to just start with this high number and then now I whittled it down. And so now I'm not spending so much time because when I was charging 600 an hour, I was spending ten hours to build one hour, then it was just a complete waste of my time. So

Mike DeHaan: [49:44] Yeah. Totally. Makes sense. Good stuff. Alright. Last question. Where can people find you, follow you, and reach out to you if you'd like them to do so?

Charlie Kao: [49:53] You know, the most useful thing for any of your listeners is my YouTube channel, especially if you're looking at self storage or private lending. I have a couple of different playlists for a couple of different categories, but that's just YouTube at Twin Oaks Capital. That would be the most important because almost any time somebody asks me a question consistently, that mean, you know, this is a good question. I normally make it into a video. So if you're asking a question that in your newer, especially if it's about self storage, I probably answered it in some format or it's something that I charged good money to do that. Or just ask the question in the comments. And if I get that kind of question a ton, then normally it becomes a video in our next one. So I would say the best thing is there. Otherwise, if you want to just kind of follow what I'm doing, you can follow my Instagram. I do talk about investing in things like that, but I'm not a big social media guy. If anything, you're gonna see all the food I've eaten and what I'm doing with my kids, but

Dan Austin: [50:46] Perfect.

Charlie Kao: [50:46] That's a good start though. I do drop a good amount of knowledge there on real estate too as well. And that's, Charles c k a o at Instagram.

Mike DeHaan: [50:54] Perfect. Awesome. Yeah. I'm so I'm not usually a big YouTube guy, but I'm gonna definitely need to go check out your YouTube channel. Absolutely. Some good educational stuff on there because I know that you're actually legit and you're not a a YouTuber that's making, you know, a million dollars a year off your YouTube channel talking BS, like,

Dan Austin: [51:10] with no Talking about the no money you make in real estate.

Mike DeHaan: [51:13] Yeah. Right. So Yeah. Awesome. Well well, thanks, Charlie, man. I really appreciate you coming on the show. This was a super awesome episode. And don't worry, I'll rehash in our introduction that we're gonna record now that you're not just a self storage guy and you are a true entrepreneur of all trades.

Dan Austin: [51:29] You're onto well rounded entrepreneur. Yeah.

Mike DeHaan: [51:32] So awesome. Well, thanks so much for coming on the show. We really, really appreciate it. And guys, if you enjoyed this show, please go and share it with anyone else who might enjoy it. It's the easiest way for us to grow this podcast is for you to go and share it with everyone you know. And honestly, if you didn't enjoy this, you do not appreciate everything that Charlie's doing. I don't know what to tell you because this guy's pretty much about as real as it gets when it comes to being a true entrepreneur in the business, the real estate, the investing space. Agreed. Anyways, guys, go ahead and share with everybody. Aside from that, if you go to collectingkeyspodcast.com/free, you can get Dan and I's free five step guide to start generating off market leads. And then you can start, you know, maybe having opportunities that you need to reach out to Charlie and pay him $1,800 an hour to help you analyze.

Charlie Kao: [52:16] 1,800. 1,800.

Mike DeHaan: [52:18] I'll take that $1,800 an hour for analyzing. So anyways, guys, go ahead and get that free guide at collectingkeyspodcast.com/free. And aside from that, thanks so much for listening, and we'll talk to y'all next week. See you.

Speaker 2: [52:31] Thanks for listening. Please leave us a review on iTunes or wherever you get your podcasts, and check us out at collectingkeyspodcast.com for tips and guides on starting your own real estate investment and wholesaling business.