"Inspired to Invest" Podcast

From Leverage to Legacy: Scaling Your Real Estate Empire

• Serena Holmes • Episode 91

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From leverage to legacy! Scaling your real estate empire.

Welcome back to episode 91 of "Inspired To Invest". This week Ken Chung is here to share secrets of his successful investment journey, inspired by his grandfather's timeless advice. 

To watch rather than listen, click here.

Discover how Ken's strategic acumen saw him rapidly expand his real estate holdings from humble beginnings, using innovative approaches like corporate ownership and personal guarantees. 

He takes us through his transition into property wholesaling, where his deep market knowledge and expansive investor network became key drivers of his success. 

Ken's story offers a robust lesson in adaptability and the power of strategic thinking in real estate.

Our conversation takes a serious turn as Ken candidly reflects on the hurdles he faced in commercial real estate, including the growing pains of rapid expansion and the costly consequences of inadequate due diligence. 

He opens up about the critical importance of building a reliable power team and setting up the right corporate structures to safeguard against financial missteps like theft and embezzlement. 

Yet, amidst these challenges, Ken shares his passion for win-win-win deals that create opportunities for others, such as rent-to-own arrangements that pave pathways to home ownership.

Ken's journey is not just about property accumulation but also personal growth and mentorship. 

From an unforgettable weekend in Winnipeg filled with bold moves and unconventional property acquisitions to planning an opportunity fund for strategic deals as retirement nears, Ken emphasizes the balance of empire-building and knowing when to pause. 

His insights on networking, family support, and continual self-investment highlight how personal and professional lives intertwine, revealing the limitless possibilities when one invests in oneself.

To connect with Ken, go to kenchung.ca.

Thank you to The GeoFocus Group for bringing us this month’s episodes. To learn more about their land development and construction management services to support real estate developers and missing middle housing, go to https://thegeofocusgroup.com. 

“Inspired to Invest” is proud to support the Beyond Success Program, a not-for-profit financial literacy program for students, launched by More To Give & MAK Investments. Find out more at @more2give.ca. 

Join us again for our next episode Apr. 30

Thank you for tuning into “Inspired To Invest”, hosted by @serenaholmesofficial & remember, "when you invest in yourself, the sky's the limit!" 

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Serena Holmes:

Hey everybody, welcome to Inspired to Invest. I've got Ken Chung from Fcubeca here with me. From Kelowna, british Columbia, he's got over 30 years of business experience, which all contributes to his excellent leadership skills, team collaboration and hard work. Some of his accolades include induction into the Hall of Fame by companies such as Wealth Intelligence Academy and Yellow Pages, as well as numerous awards and recognitions in real estate. In addition to his real estate savvy, ken's also very well known for his investment advice, asset protection strategies and out-of-the-box thinking. He approaches every opportunity with enthusiasm and creative direction that results in real, definable, positive changes in his investors' personal and professional lives. So thank you so much for being here today. How are you?

Ken Chung:

Oh, I'm awesome. Thanks so much for having me. It's an honor to be here.

Serena Holmes:

So can you take me back to the beginning? Obviously, you've got this robust career in real estate, but where did this all kind of come into the picture with you in terms of being an entrepreneur and specifically in the real estate space?

Ken Chung:

Wow, well, you're right, I've kind of always been an entrepreneur. I mean, I've had restaurants et cetera, different businesses. But you know, one of the things my grandfather told me is, if you can ever buy the house next door, buy the house next door. And when we bought our first house in Kelowna there's some time down the road, but we had an opportunity to buy one at the end of the block. It wasn't next door but it was close, and I always remembered that and some of the basics that I picked up over time. And it was an opportunity to start something and put something aside for my family. And that's where it all started. So then I bought the one and then I learned a few things. So then I bought two at the same time and then I realized, hey, you can buy more than one in a day. So then I bought three and then all of a sudden, within two years, I had 12 houses.

Ken Chung:

It was, it was crazy. And then, and then I learned something I didn't learn. A friend invited me to something. He says, hey, I went to this thing and I learned this. And I've got to go to this thing this weekend. I think you should come. And I said you did what, paid how much. And so I went down and I figured go with an open mind, you never know what you don't know. And I learned a lot. So that's what started it off.

Serena Holmes:

Now, how are you financing that? Because I have found that a lot of investors start out, you know, buying that first rental property and then you realize very quickly that you can be capped out from the bank. So were you joint venturing with these? Or like, how are you buying them in the early days?

Ken Chung:

In the early days it was same thing. I started on my own and put them in my name and I bought some with my uncle and and then most of it was just just the two of us for for a while. For this fall, and we had the same problem come up and the first strategy I learned was to put them in companies. So when I was buying more properties I put them in a corporation. I personally guaranteed the mortgage and because I'm only guaranteeing it, I'm not actually on the mortgage. And next thing, you know, I bought 120 in 90 days the same way, until I get the phone call from the bank going hey, we need to have a meeting, we need to figure out what you did and how you did it and why. So that was fun.

Serena Holmes:

What were they looking to understand then? Like were you the first person that they dealt with that was buying that many properties that quickly?

Ken Chung:

Yeah, well, I mean, they said they never had anybody put you know 78 mortgages with CIBC at the time. Our first line is through the mortgage broker division and and understanding how I did it. I followed all the rules. It was just learning the rules and they said okay, so they wanted to know first how I did it and I explained it and then they went okay, that makes sense and we appreciate it, but it's a lot real fast, so we need to kind of just slow it down for a minute and you know, until we get, you know, establishing history with it. And they loved the business model, it you know, establishing history with it. And they loved the business model. It was great. So they supported it throughout. It was fabulous.

Ken Chung:

And then I had to learn to be creative from there, because that was my go-to bank at the time and I learned quickly that you know, I like to leverage properties. I don't like to pay cash, even though I could at that time. So I ended up going, okay, what do I do with these properties? And by default, I ended up wholesaling properties out because I was buying three or four a week at that point and all my friends always wanted in on what I was doing and they never wanted to go do the work. So because I had this machine running, I just started selling contracts off and wholesaling properties. That became a whole different thing and it was a whole lot of fun.

Serena Holmes:

Yeah yeah, that sounds awesome. Now for someone that doesn't understand the concept of wholesaling, can you walk us through that process and how you took advantage of that?

Ken Chung:

You know, wholesaling is really just picking up something at a good deal or one that makes sense.

Ken Chung:

And then really at the time I was just assigning the contracts off and I had a network of investors who like cash flowing properties and because I did a short sheet on I call it Tim Hortons math and I handed that out, I sent it out by email and people either liked the deal or they didn't and then they would purchase a contract from me and I would sign it over. There's some rules and all the things you have to do with it and I made sure I followed all those and everybody was in compliance with it. But it worked out really well because I knew the market. I think that was one of the biggest things. There's a lot of people who wholesale but don't know the market that they're wholesaling from. But I had the experience there and that really gave the comfort and security to the people that were buying them, because they also got my network of people, that my power team that was running them and doing everything, because it's not always easy to be an away landlord.

Serena Holmes:

Yeah, yeah. Now I know that somewhere along the way you shifted over into commercial, so can you talk about that transition from the single family homes and wholesaling into larger properties and opportunities?

Ken Chung:

Yeah, well, when I bought all those properties, a lot of it was with private money and I was paying a fair interest rate. At the time it was 15, 20% for people on an annual basis and my cash flow was really well. I did really well with a lot of properties and renovated etc. Brought values up. I was able to return everybody's money and I went to give it back and nobody wanted it back. It was kind of weird. No, I enjoy the interest. It's okay, keep it, go find something else to do. So I said, okay, well, because I was in that limit with single family homes.

Ken Chung:

I'd learned about commercial and commercial qualifying on its own merit, so on its own cash flow and its own values, and if I could improve it and give it some lift and gain some additional value. There it really went well with the bank. So that's how I started buying commercial buildings and it's funny, I bought a meat I don't know what you call it, it's like a butcher and he would do his own meat smoking in the back. You know it was one of the first commercial buildings I bought. And then I bought trailer park and I bought a big 50 000 square foot warehouse and turned it in indoor heated storage in winnipeg, which was never heard of at the time, turns out actually it was the original dairy farm. Yeah, it's a cattle walk going up five stories. It was fun, fun, it was a lot of fun, yeah.

Serena Holmes:

Now obviously there, I'm sure there's been some hiccups along the way. So can you talk about some of the challenges that you've also experienced and maybe what's one of the bigger obstacles that you faced?

Ken Chung:

Well, yeah, there's hiccups. I mean, if you don't experience it in real estate, you're really probably not doing it. You know, the, the, the, the challenges that come are always going to be there. The thing is to be prepared and have a power team. When I first started, where my error was, if you will, was because I was growing really fast. I didn't have enough of my power team in play in the beginning, and then I trusted a lot of people with probably a lot less information that I could have had or done more due diligence on, and that was costing me. I mean, I had some property managers stealing five or ten thousand dollars a month and then I moved to one who embezzled half a million and left me with a huge hydro debt. So there's a lot of those things. I mean, I had hostile takeovers.

Ken Chung:

You know there's a lot of different things in there and it's really about being prepared, making sure that you're you have a good legal team behind you as well. Yeah, every deal is is unique and different. You and I might do a deal today and I learned from that how to go into the deals and go into it with a different perspective that we're we're friends or acquaintances. Let's do this deal great. Um, let's also make sure that we're all protected in the way we do it, just to be fair, because you never know what happens. It might be something out of your, my control that really impacts us, and so having that power team probably ahead of time would have been helpful, and that really probably was my my biggest. So. But getting that sorted out after the fact was good, but it was a huge lesson.

Serena Holmes:

Yeah, I think that's one thing that always surprises me when I talk to different people, and in some instances they didn't have things on paper, whether that's partnership agreements or appropriate contracts and stuff like that. And I think the other thing is just always making sure that you do have independent representation when you are kind of going into that, because you just never know if there's already a lawyer involved, like if your interests are appropriately protected, and also with appraisals even getting your own independent appraisals and things like that. So I think there's definitely something to be said. Even if it's an extra thousand dollars or whatever it is like, it's better to be front-loaded yourself, because if you don't, on the backend it could be far more costly.

Ken Chung:

Absolutely. I was actually having the same conversation yesterday with a couple of friends here and they were saying well, my accountant and my lawyers don't think I need to do all this corporate structure yet. And I said I understand why they would think that way, but they may not see what's coming in the future for you. And to make those changes later can be far more costly than if you did them now. And doing them now, even though there's a small cost to maintain and to set it up, it's well worth doing ahead of time so that you have the proper structure.

Ken Chung:

I remember when I bought all those houses in the beginning I didn't do the structure the way I should have, and it's because I was taught the way to do it. And then they said always talk to local support, find your local lawyer, find your local team. And that lawyer advised me, says you don't need that yet. But neither one of us knew I was going to go buy 120 houses in 90 days. So I should have set up the structure properly in the beginning, because when I went to look at fixing it later I was looking at about a quarter million dollar expense. So yeah, so I had decided to liquidate the portfolio and move those things out. And when I was, and I did set up the structure properly at that point so that everything new was going into it, and and I wish I had done that in the beginning, like I was taught- yeah, yeah, I can understand that.

Serena Holmes:

I mean, you don't necessarily always know, like, how far you're going to take something right, and I think that's important to just reassess at different phases, like you know, to go from zero properties to a couple hundred, like that's a big jump, but maybe every 10, 25 or 50 properties, like reassess what you have going on and if you do need to make changes, then it might be more digestible at those points in time and maybe part ahead of yourself. Now, in terms of things like successes, what would you say? Something that you're most proud of?

Ken Chung:

You know, I think one of the biggest things that came out of this for me when I you know even from the beginning was learning what a win-win-win was. I don't like win-loses. Somebody losing in a deal isn't a good thing, it's not a good feeling, and being able to make a difference for people in their lives is huge. I did about a dozen rent-to-owns for people. There was only one that didn't go the way it was supposed to go, and some people just get in their own way. However, being able to help people through that process and see them get back into the market or get into it in the first place because they never had the opportunity, was a really good feeling, and some of those successes were huge.

Ken Chung:

But probably the biggest success was I once bought 10 fourplexes with a partner of mine and they were in the worst street. If you had ever called up and said, well, where's the address? And you told me the the address, they'd probably hang up on you right, and the reason I bought them was because they were all in the same street and I learned early that if you, if you want to make a change in the neighborhood, buy the whole neighborhood yeah so that's sort of the mentality I went with buying these 10 fourplexes and I also coordinated with a bunch of the other homeowners that were either living there or investing there and let them know what I was doing.

Ken Chung:

I put you know. We bought them and we probably put in 150% of what we paid for it to do the renovations and change it around and put in decent clients and renters so that they were maintained well and taken care of, and having. I hired the best property manager in the city at the time and it was amazing and even the other property owners started using them too. Him and his wife did a fabulous job for us, but we were able to create housing for people that felt safe in their neighborhood, felt comfortable in it, and it was affordable. It was a great deal. In fact. One of the people who grew up in that city, had moved away to Vancouver and was an accountant, actually got ahold of my realtor that I bought it from and made me an unsolicited offer that we just couldn't say no to. And the fact that somebody else at home was going to retire there and take care of it and be part of their community that was pretty cool.

Serena Holmes:

Yeah, that's awesome. Well, on that note, we're just going to take a really brief break for a word from our sponsors and we'll be right back.

Ken Chung:

Wonderful.

Serena Holmes:

Everybody. Welcome back to Inspire to Invest. I've got Ken Chung here with me today from Kelowna BC, and we're talking about his robust career in real estate that spanned a few decades. At this point in time, and one fun question that I always like to ask people is what's one of the craziest things that you've ever experienced in real estate?

Ken Chung:

Oh, wow, craziest you know there are. There's a lot, a lot of things that that can tell you stories that were unbelievable and most of them were negative and I don't always like to go there with it, so I'm going to stay away from that one today. But the craziest things were being able to negotiate deals that, just because I thought outside of the box and I was able to talk to the sellers directly, made it so much easier I once had, so I went into. Okay, so one of the craziest things we did I went into Winnipeg and I called up a couple of realtors but I had one that was willing to meet with me and it was over a Friday night and I said that and I needed a property manager and you guys meet me at the hotel, my business partner that went out with me.

Ken Chung:

We did our own things, but we did some stuff together. We put in 147 offers that weekend and, yeah, we ended up buying three of them the following couple weeks because we found the sellers that were willing to talk to us and and funny enough that you know, the first one I we I ever bought was on a credit card. I mean, it was $17,000. Wow, and I know. And then I put $2,300 into fixing it, reappraised at $29,000, financed at 75%, doing all the conventional things, and I was still cash flowing $900 a month and I got all my money out and paid my credit card off and you know it was infinite return on my money.

Ken Chung:

Yeah, and that was fun. But putting those offers in it was an amazing experience and since then I will tell you that the biggest, most amazing experiences I pull out of real estate is expanding my network. Everywhere I go I meet new people who have a drive and a passion for real estate and usually it's to make a difference, something that really is important and passionate to them. And the best part of what I do is because of the way I think I get asked to collaborate a lot and work with different deals with people and I get to help people realize those dreams. So that's really cool as well.

Serena Holmes:

Yeah, that's awesome. Now, earlier you talked a little bit about education and going to an event where you learned a lot, so, on that note, what would you say? Some of the best advice that you've gained over the last 30 years?

Ken Chung:

Wow, go into every opportunity to be educated with an open mind. There's a lot of networks and groups that I've evolved and belong to and been invited to. There's a lot of networks and groups that I've evolved and belong to and been invited to. I don't always go because of the content of what it is, but rather go to meet people there that are like-minded individuals, and you always find a few. We kind of naturally gravitate to each other and that's a pretty cool thing. So growing my network work. In the beginning, when I took all my training, I learned about land syndication, apartment conversion, condos out of warehouses, store, um, what was creative financing, uh, asset protection, and I learned all these things and the company trained no, unfortunately that company's no longer around and and I don't see people that that all of that. So getting the opportunities whenever you can to go in and get, even if you get one piece of advice that can make a difference in something you do, it was worth going.

Ken Chung:

Yeah Cool and people say, well, do you really find it worth it? Sometimes it's not the content, because it's not the content. For me, it's the connections of the people that I meet that make a huge difference in the things that I want to do or be able to help somebody else achieve. That to me is worth it, and so I look at every opportunity to get educated.

Serena Holmes:

So you know, your internet's frozen a a little bit. So, like what you said, there just got all frozen oh no, okay, it says unstable what's that all right.

Ken Chung:

It said unstable, but it's back now okay, yeah.

Serena Holmes:

So whatever you said, just say it again oh okay.

Ken Chung:

So being educated is huge and knowing how to apply that is huge. One of the biggest differences, actually from an educational standpoint is I go to these events, I go to the trainings that people say, hey, you got to come learn this, or somebody's doing something. I always go check it out Because if I get that one piece of information that makes a difference, that's huge. Whether it helps me or somebody else, it makes a difference. That's huge. Whether it helps me or somebody else, it makes a big difference. And so I always go with an open mind and then I and I enjoy the overflow, the people that I meet, the connections that I have. I've made some huge friendships with people all over the world because I go to these things.

Serena Holmes:

Yeah, and that's that's a big difference, that education is a big part so, with everything that you've like, what would you say is next for you? Like, what kind of projects are you looking for right now? Like, do you feel like you're comfortable where things are at? Are you still looking for the next best deal?

Ken Chung:

No well, I'm always looking at deals, but I'm in a different place in my life now. I mean, back then when I was building the empire, I didn't know how much was enough, and you know you have your rise and your fall and things, and I went through and I lost a lot and what I learned through that process was how much is enough right and for my family and myself. I'm very fortunate. You know, I have an amazing wife and two boys that are not young anymore and you know they're adulting and that's entertaining in itself. However, a lot of people went through the tough times and didn't come out with their family attack. I'm very fortunate that I still have that and that has been my rock and my support through everything that I've gone through. I had the massive portfolio. I no longer desire a massive portfolio and if I do desire to have real estate, it'd be commercial. But where I'm at now in my life, I'm older and I'm trying to get to that point of being able to retire again. So for me it's about building, you know, a fund, if you will, an opportunity fund, so that I can go in and out of deals that you know I find worthy of going in and out of so that I can build that retirement fund, that, because I know that if I pass, my wife would not want to deal with real estate and she would probably just sell it off anyway. So I'm going to create the, a fund or a capital fund that will help me build that retirement fund for myself and at the same time, people that are in that fund are going to benefit from the, the transactions, and we'll all grow together. So that'll be a good thing. So that's where I'm focused now and because of that I end up in all these amazing situations Like right now I'm in Denison, texas.

Ken Chung:

I've never been here and it's because I meet people, because I'm willing to connect, and I get invited to participate in real estate deals that I would never thought of. Sometimes, in real estate deals that I would never thought of, sometimes because they like how I think and that they need to collaborate in some way, shape or form. So that's exciting. So right now I still do all kinds of deals. Right now I'm doing infill fourplexes where I live in Kelowna, because that's what can be done and needs to be done. We don't have enough housing for sure, so I'll make a difference with that. So I'm always looking like I'm doing land development down here in Texas with these guys. So you just never know.

Serena Holmes:

Yeah, no, it's huge. I feel like there's a lot of people that are so attracted to that market Now for someone that's just starting out, what kind of wisdom would you want to pass along to them?

Ken Chung:

Oh, goodness gracious, you know the best thing that I and I always tell people this story. You know, when I started and I started learning, I didn't know how to implement. I could learn it. So the best thing I ever did was I hired myself a mentor, and that mentor actually had rewritten all of the Canadian content for this company from the U? S that wanted to have their their offices up there. And so I went straight to the source and and I hired him as my mentor. We've now been friends for 25 years and it was he came between Christmas and New Year's holiday and spent the time to do the mentoring with me and my and my business partner at the time, and that was the, the, the launching point, if you will, because from the next week to the next 90 days, about 120 houses yeah right, and it was having access to that resource, that support. So I myself you know about 15, 18 years ago actually started doing mentoring on an as needed basis.

Ken Chung:

I don't do it a lot. Um, it's very specific cases if I do it, but because I like to be able to give back and make a difference for others, um, I do some mentorings now too, but anything you can do. I don't care if you're somebody else, find yourself a mentor. Hire one you know, even around here where, where I'm visiting with my friend, he is part of an old boys club. Now he's a young guy, he's a lot younger than me but he hangs out with all these guys in their 70s, eighties and nineties. I met them the other day and they do this coffee group but they know a lot so much and they're passing that on to somebody else because they care and he sees all of these as his mentors. So whichever way you can acquire mentorship, that support, find it.

Serena Holmes:

Yeah, no, I think that's great. Now, obviously, the name of this podcast is Inspired to Invest, so I always like to ask if you have a particular quote that motivates or inspires you.

Ken Chung:

I say do everything that you're going to do with intent, because it will always make you think about both sides, the pros and cons of it and what the potential outcomes can be, but do it with intent and and if you do it that way, it typically comes from the heart and that makes a huge difference in anything you do. So I also say you know, live, live life, play full out and make a difference. No matter what you're going to do, do, make a difference.

Serena Holmes:

Now for anyone that's watching or listening, what's the best way for them to connect with you?

Ken Chung:

Simplest go to KenChungca or drop me an email at Ken, at KenChung, c-h-u-n-gca. They can follow me, but they just have to Google me. Find me on Facebook, you know all the usual stuff.

Serena Holmes:

Yeah, no problem, so we'll include that in the show notes below, of course. Thank you for taking time out of your day, especially since you are traveling to be with us and for anyone that is watching or listening. We appreciate your time as well. If you have enjoyed this episode, make sure that you like, comment and subscribe below and you're following along on social and inspired to invest podcast and remember, rewatch yours.

Ken Chung:

I like your, I like all your previous podcasts. Sorry to interrupt you there, but I did. I did what you said and I liked it. But I found it more interesting when I went back and I saw all the ones you had and I was like, oh my goodness, I got to watch that one. Oh my goodness, I got to watch that one. And there's such good podcasts. You have some great people on your podcast. It's awesome.

Serena Holmes:

Yeah, I appreciate that and obviously, at the end of the day, it's really just trying to pass along that motivation and pearls of wisdom to people that are just getting started or they're trying to scale and they're trying to figure out the lay of the land. So, in closing, I always like to leave with people. When you invest in yourself, the sky's the limit. Thank you, it's gonna hit stop.

Ken Chung:

Awesome.