$0 down deals - How to find and Fund your Seller financed deal in 2024

All right, hello, hello, hello. So this is my first time in a long time double streaming, so we're on Instagram, we're on YouTube. So if either of you notice that I am not looking directly at the camera, I apologize, just let me know. Today's gonna be fun. So I don't usually do lives on a Tuesday, but I really want to get started on this before we get into the new year, so Today, what we were talking about on this live is we're going to talk about the simplicity of seller financing. I'm going to share some strategies and some diagrams with you that I don't always share. We actually should do a better job of this. So I'm going to illustrate how simple this is, and I want to share what we found to be the best seller financing strategy, how we blend in on a partnership, a blend of debt and equity that allows you to maximize your tax benefits. While also doing other— now I have people in the chat on Instagram saying they can't hear me, so we're going to test this. Instagram, do we have audio? Someone give me a thumbs up or a wave if you can hear me now. Looks like still possibly no, so we may actually restart that one. Apologies to our, uh, our YouTube side. Oh, I got the first few thumbs up. Okay, good. We're fixed. Looks like my remote audio is not going to want to participate with us. So go ahead and turn that off. Okay. So now we're live. We're rolling. Everyone can hear us. For those who didn't hear, what we are covering today is the simplicity of seller finance, grabbing a few diagrams. But I want to share exactly what we're trying to do, the strategy that worked for Cody and I to build a multi-hundred unit portfolio. And most importantly, as we've gotten through a few tax seasons now, I think we have a strategy that is my favorite. I think it's the best that everyone can carry into 2024. So very, very excited on either platform. If anyone wants to post in the comments any questions, I'm going to do my best to answer them. I have a screen here and I got a screen here, so depending on which one you are, uh, give me a second to answer the questions. But we're going to do this live and hang out for a bit. So for those who do not know the whole story, so I started out 9 to 5, CoStar Group, uh, did not have any real estate. Until 2020 outside of a single-family rental that I did. Uh, bought a duplex, bought a second duplex, and realized that I wasn't going to get rich off of a little bit of cash flow from a few duplexes. I spent all of the money I'd saved up on my personal residence, two duplexes, and I got to a place where the rent was covering my mortgage, which was kind of cool. Real estate pays for the real estate. Um, but eliminating that expense over the course of an 8-year career while nice, is not financial freedom. Next deal we did was a 38-plex that made Cody and I each $1 million, but we didn't optimize correctly for taxes on that, which I'm going to go into here. So what we learned over time is you really want to start thinking about these things in your deal structure initially. If you watch this whole video and we ask some good questions in here, I think this is something that can save everyone. First, they're going to get you in your first few deals, but it'll save you hundreds of thousands of dollars in your investing career. So we're going to go through that. And Rob on YouTube, yes, no one is chatting yet. You are not, you are not incorrect. Usually the chat starts popping up and getting live about 5-10 minutes in. So if people have questions, just let me know and we will roll from there. So what is the basis of everything we're doing in Creative Finance? This is what I think everyone needs to understand. I'm going to grab whiteboard right next to me. Trying to be clever and get this on both screens. All right. So we have a couple of things you have on a basic level. You have a box here and a box here. Excuse my handwriting. We have assets over here, liabilities over here. We're talking about creative finance. Creative finance is adjusting your liability. Your liabilities over here is debt. If you can use a liability, say this is our liability, and then we're going to use that to buy an asset, and that asset happens to be notably bigger than our liability, we've just created income. Assets produce income, liabilities reduce income. This concept is so ridiculously simple, but But what I think a lot of people miss is if you can determine the cost of your liability and you can fix that on long-term fixed-rate debt, you buy an asset that yields more income. That is all you're trying to do in this game. Now, if you want to play it to the next level, you have more income coming in from your asset than your liability. You can start allocating the income from your assets to eliminate your liabilities completely. You can pay off the debt. So this isn't that much different than the Dave Ramsey model, except that Dave Ramsey hates debt, of course. But basically what we're doing is we're saying, hey, I'm going to control my liability instead of relying on a bank, like exactly what wiped out Dave on his first run in real estate. Instead of relying on the banks, we're going to write our own debt product that is long-term, cash-flowing, fixed rate, and we're going to tie it to an asset that more than pays for it. So the real estate is going to buy the real estate. And I promise I'm going to get into more of the how here. But I want everyone to understand how simple this is. If you're wondering, what is my goal? How do I do this? How do I build a portfolio? Where does this all head? It's all based on one thing: add more assets to the asset column than you have in liabilities. Then when you have enough assets for your financial freedom, you allocate some of that or all of that money towards paying off the debt.. And like that, you end up exactly where Dave Ramsey said you should, except that your tenants or your businesses pay for it. That is creative finance. Dictate the liability to pay for the asset. That is all we are doing. It is as simple as that. If anyone gets any takeaway from this, I hope that is it. I'm going to read a quick run through the questions, then we're going to go a few steps deeper on how we find these deals, how we negotiate them. And as I promised, the best strategy going into 2024 for how to fund them, $0 down, buy real estate and optimize your tax liability, which is one of the biggest liabilities that Cody and I did not optimize for correctly because we didn't know a couple things. Let's see here. It looks like we did start without All Nighter. However, this isn't our normal Wednesday. I'm just going live because I wanted to talk to everyone about this, and I'm having a great day and I'm excited. So All Nighter Hider should appear at some point because he almost always does find us. This webinar will be recorded and should be available to view later on the YouTube channel. This is live and So we'll post it live. I did notice here in the chat, someone said, hey, someone got a new shirt. Yes, this is my French Bulldog polo. That was basically Christmas for me. So thank you for noticing, my good friend Caleb Hommel, who, by the way, that guy's a master of creative finance. He has— he's 20, almost 21 years old. He's still 20 and has 53 multifamily units. And I heard a rumor he's going to be buying another 27, which is very exciting. All right. So onwards, how are we finding these deals? Same way that we have. There's two main ways. And yes, after this on live, it will be on our YouTube channel, Cody and Christian Osgood Multi-Family Strategy, which is also being streamed to right now for those on Instagram. So when we are finding these deals, there's two main things. The first and most important is you want to identify where do I want to buy? Is population going up there? Because supply and demand, you want to make sure if you're providing housing Humans do in fact want to live there. But once you've established that, you go, okay, who in this market has already done what I want to do? If your goal is like mine, to create a 100-unit portfolio, who already has at or near 100 units? Let's go meet with those people first. We drive around on Google Maps, just virtually drive the streets, and you look at, okay, that's a 20-unit building, that's a 38-unit building, that's a 12-plex. You map it out and you figure out who owns the properties. And as you find it out You just give them a call, simple call. Only goal is to meet for coffee. If you can meet all the players in your market, communicate your goal, and actually have an organic conversation with them— I'm glad Caleb's in the chat because Caleb does this exact thing, um, you just drive around, you meet everyone, you get coffee, you go out to barbecue, whatever it is. And as the players get to know you, they're going to want to work with you, they're going to reference some deals to you, they may even sell to you. But it's a relationship game. That is the best way to play. The other thing you do while you're getting started is it takes time to build relationships. Just go look online on the MLS. If you get this creative finance thing and you can write your own liabilities to buy your assets, all you have to do is be able to look at a deal a little differently than everyone else. So look at those listings that have been around for 90 to a couple hundred days on LoopNet and CREXi. Call those brokers and have a basic conversation on, okay, Tell me about the deal. Uh, looks like it's been on market for a while. What has been the sticking point for everyone else? And see if you can't identify how to put together a deal. But if you can do those two things, deal flow is very easy. Once you have that opportunity, you have to figure out, okay, how are you actually going to fund this? You can do that with equity or debt. And let me actually bring out the, uh, let's bring out that whiteboard again if I can find my, uh, my dry erase marker, which I dropped. Boom, got it. Okay, so erasing our thing here, we have equity and we have debt. Where does the money come from? Well, it has to come from somewhere. If we don't start with money and we want to buy deals $0 down, your options are— boom— your options are debt or equity. Debt is generally going to have monthly payments. So every single month you are going to be writing some amount of interest to either a private individual, a bank, wherever the debt's coming from. But you're going to use debt to fund your deal. The fun thing is if you use debt, you usually own your deal. If you fund 100% debt, you are the owner. You don't need partners. What we found is a lot of these value-add deals, if you have something that is stuck on market and you need to get rents up over time, there's not enough cash flow in them to service the debt. And we've seen that a lot in the last couple years. Equity means you bring in a partner. You're actually giving ownership. And what we do every time is we have a fixed buyout in a fixed period of time to eliminate, uh, the equity partner and give them a large return on their money. Equity is typically more expensive, but it preserves cash flow. And if your goal is to have assets that are greater than your liabilities, you have to protect cash flow at all costs. Here's what we found as the best way to structure this. And this is because of taxes. If your deal has a lot of upside, you want to buy it $0 down, and you want to offer something amazing to your investor, we like to go in 49-51% or we own at least 51%. And those numbers can change, but you're going to own a little more than half your deal. And the reason you do that is when you buy them out, depending on where you're at, you may have excise tax for buying out 50% or more of the LLC. So make sure you own at least a little bit more than half of the LLC. They bring in 100% of the money, and 50% is their equity. So you do the deal, 50%, half the money you brought in, you get roughly half percent— half of the deal. That's fair, right? The other half is debt to you, which goes into the LLC. So the rest of it they lend to you. So in my case, they'll write a note to Christian Osgood, and that will be my contribution to the LLC. Why does this save you tons of money? You can't write off money as far as depreciation. You don't get the write-offs if your cost basis, the money you personally have in the deal, is $0. If it's $0, you can write off a max of $0. You actually do have to have money in an investment. However, if that money is borrowed, it's now a write-off. So if I have active income in the LLC or personally that I am writing off, I can use my 50% because it's now my money, right? They lent it to me. I still have to pay it back, but it is now in the LLC because it is structured Half is equity, half is debt. I get the write-offs in proportion to my ownership, and they get equity in proportion to their contribution. One, on a tax basis, this works very well. Two, this is a model that the IRS doesn't argue with. It is simple. It is cut and dry. Half the money is borrowed. Half the money is equity. We are splitting the benefits roughly 50/50. If you get into special allocations or crazy tax things by doing a true zero-down deal where you have no money in and you raised all the capital and it's just equity, you're going to have to justify why it is the way it is when you file your taxes. If you want to keep it clean and simple, that is the best possible model. Borrow half the money, have them contribute the rest of the money, have a fixed note at a fixed price for the cost of the debt. And have a fixed price for the buyout. So let me do this with an example. And I see that in the chat there. Thank you for asking. Yes, we can. And Rob, I have not got my— I have not got my invite to ORAT yet in Vegas, so I don't know that I'm attending. I want to, but surprisingly, I haven't heard from Mike yet. So we will see. We may be— we may be running down. But I'll have to, uh, I'll have to shoot Mr. Zuber a text and see if I'm making it down there. I heard Matt Hawkins is going to be there, and I believe he is the smartest investor, uh, we've ever met. So thank you on the YouTube channel, that's exactly what we want to see. All right, so real example: I have a 12-unit building. Because I am not much of an artist and I'm drawing one-handed and trying to stream on two platforms, we're just gonna try to make this as simple as possible. 12-unit building. This building is going to need some renovation. So as we're renovating this building, there's not a ton of cash flow. Once it is done and the project's complete, this thing is an absolute cash flow monster. We have 4% interest debt on this 12-plex. This is in the city of Ephrata, Washington. Day 1, income's a little bit low. It does support debt as long as that debt is about 8% interest on half of the money down and it's basically break even for us. So we're not making a ton of money day one, but lease up on this type of project is very fast because we own the property management company. So practical application, here is my investor over here. Investor contributes half the money to their ownership and they now own half the building. That is their half of the building. Me over here, I borrow the other half of the money. I believe this was $150,000 down, if I recall correctly, which means me over here, I'm borrowing about $75,000. They're contributing $75,000 on this particular deal. So when we're doing this, debt equity, they own this, I own this because our capital contributions are the same. We have both contributed half. I borrowed from him and contributed into the building. This is getting messy, I know. I get half the write-off, he gets half the write-off. Our actual capital in the LLC is the same. That is the simplest Best model where I, you know, my investor brought in all of the money, 100% of the money is brought in from the investor. I have none of my own money in the deal. However, since I borrowed half from that investor, we both own half, we have equal contributions in, and we have in our operating agreement first money in, first money out, which means if we refinance or sell at any point, the investor is made whole first and then I am paid. There will be a point on this, probably early to mid next year, where we are going to refinance the property. We're going to pull the initial capital out, which will pay them off. Okay, perfect. I answered that question. I was just making sure I did. We're going to be paying off the original investor. They'll have all their money out. We'll pay off the loan. And that will be most of the money from the refi. So Cody and I won't actually get to touch the cash out, but the investor will be made whole both on the debt and their contribution for equity. On this particular one, this is an investor who we're going to actually ride with for several years on more projects. So we're all going to own this deal, the investor and us. $0 in the deal. No one will have any of their original capital still in the LLC. The LLC will cash flow phenomenally, and it will be in a long-term fixed-rate debt product. That is a clean and simple— they call it a full BRRRR. You buy, rehab, rent, refinance, repeat. We're going to pull all the money out that the investor put in. We're going to pay it back to them. No one will have a dollar left in the LLC and we'll be left with an asset. We then use, as I mentioned at the very beginning of this, we then use the income once we buy all the assets we want to in that LLC with this partner. And we pulled all the original capital out, we will allocate the money from the cash flow of the LLC to eliminate all the debt, and you will be left with a bunch of real estate cash flowing in your asset column with no associated liability. That is the best way I have ever seen to play the game. Now, for you Cardone folks and other leverage-to-the-moon folks, There are tax benefits to leveraging to the moon, don't get me wrong. And you can play the game faster and more aggressively if you keep pulling out money forever against your portfolio. However, there is a huge tendency for those people to go bankrupt at some point when they, they reroll, they reroll, they reroll. It's like a casino. I won, I won, I won, I'm gonna put my winnings in the next game, and then you have one big loss and you're wiped out and you start over. I don't want to replay the game. When we did this thing where we actually met all the owners in our markets, we went out and shook hands, had coffee, learned how they played the game, there's one consistent thing. The older players— so we'll say people have been investing for 20 to 50 years— the players who've been playing a long time who never got wiped out usually carry very low to no loan to value in their real estate. They owe very little or nothing at all. So if you can use your own debt, creative finance, You can write a liability to buy an asset. That asset can cash flow so much that it will eventually pay off your liability in full. You essentially get free assets in your asset column, and that is how you become very, very wealthy over a real estate career. You hold the assets, you pay off the assets. If you want, you can roll them tax-deferred into larger assets. There are ways to scale, but at the end of the day, You win when you have assets in your asset column and no associated liability. That income now goes to you and can be spent however you want. Also very easy to pass on to your family, friends. If you're trying to change your family tree or make a difference in your community, whatever your goal is, this is a way to do it and detach the liability from the underlying asset. It is not get rich quick because it will take significant time for an asset to pay itself off in full. You have to scale a business that's big enough, and then you go on and debt snowball one at a time, knock out those loans. But you do this in a 10, 20-year cycle, you can own a ton of real estate free and clear. Is a much better strategy, I believe, than the traditional, uh, get a job, save up in a 401k, and work 40-year career. You can do this in half the time and be a heck of a lot richer doing exactly this. All right, running back through the questions here. How do you get someone to trust you to invest with? Well, it's obviously a lot harder when you have no track record. I had 2 duplexes that I purchased myself before Cody and I went out and bought a 38-unit apartment building, which is crazy. We went out and with the, uh, with a 24— uh, let me try that again. With the 38-unit apartment building over the course of 2 years got the value from, uh, $2 million purchase price, uh, and $5,000 a month in income on 38 units to right now our rent roll is just over $30,000 a month with a valuation of $4.1 million. Now it's Cody and I on it. We've paid out the investors. We just own that building now. And if you create $2 million of equity, and we spent about $600,000 renovating, We made over $1 million on one deal. How did we get people to trust us? We met with the people in that market. We met with the people around us that we had no family and friends money in this, by the way. This is people who were investing at a brokerage that we were associated with. I just went out and I talked to a few of the key clients and said, hey, we're working on this project. It's been on market for 13 years. And quite honestly, everything's wrong with it. It has bad roof, bad septic, and basically none of the tenants are paying. No one's bought it because they haven't— one, haven't identified what the owner wants, which is a $10,000 a month payment, which can be mostly principal, by the way. And no one who has the money to buy this thing in cash wants to spend that much money down on the building. It has to be creatively financed because a bank will not lend on this product. There's too much wrong with it. However, we have a plan to fix it. We have the attention to fix it. And this is the project that we want to do. We did the project, we made 7 figures on the project. Um, there was a point where we actually had someone else buy into it for over half a million dollars. So we sold less than half of the equity for over half a million dollars. So when I'm saying like we made a million, we've cashed out in refinances, buy-ins, buyouts. We've cashed out a million dollars on that one deal. Now that's 38 units. Cody and I have 200 units, so we've done the same strategy on all of them. We're about to do a 33-unit that is going to be basically a carbon copy of that same deal, except for instead of $2 million We're buying it for $1.6 million. There's another $400,000 in upside. Same market, better location. So these deals are everywhere. You can do this anywhere. But if you want a practical example of how you build trust, you meet people and you communicate clearly, this is my vision and this is what I'm going to do. And then you go out and do the thing. I have found— and this is actually a quick story I'll share— when I was at the CoStar Group, So Apartments, LoopNet, Apartments.com, LoopNet, CoStar, that whole organization. There was one rep on a 300 sales rep competition in Florida. We had 3 days to pitch the new LoopNet product on a ridiculous 120-slide pitch deck. It was awful. There was one girl who was just promoted. I mean, just got promoted to sales rep from a client relationship manager. In her first few months, there's a little B-roll of day 1 they play on day 2, and she goes, I'm going to win this thing, calling my shot, which if she missed it, who would have cared? She's a new rep. No one would remember that. However, she went all the way through and out of 300 seasoned reps, she won. She got a $500,000 check and a Tesla Model S for winning the sales competition. I remember that all the time because she called her shot and nailed it. And that's what Cody and I replicated. We said, hey, we are going to do this project. We found a few people to believe in us and fund it, which was the hard part. But we called our shot. We said, we are going to do this. And I posted it online, we posted it on YouTube, we posted it on Instagram. We said, this is what's going to happen. And then we spent 100% of our time making sure that what we said would happen happened. Now there is trust. Now people look at our track record and they go, oh, I remember when these guys said they were going to do this and it happened. If you have a track record of believing in yourself, creating a vision, advertising the fact— like, tell the world, I'm going to do this— friends, family, business associates, let them know what you're doing, and then let the world know when you hit that target. I have found that is the best possible way to build trust and build a track record. If no one knows that you did it, you didn't really do anything for your personal brand. And when you're raising capital, brand does matter. Matter. Let's see here. For the hotel conversions, are these, um, are there particular layouts that make better sense for conversions? Um, are you using the wet wall from the bathroom for kitchen conversion? That's a great question. Um, yes to the wet wall. Um, all of our kitchenettes thus far have been attached basically directly to the, um, other side of the wall from the bathroom, which has been really fun. By the way, thank you. Uh, my, uh, for the polo comment on Instagram, my, uh, my little sister's husband bought this for me. This is my first time wearing it. It's Frenchies, for those who, uh, can't zoom in quite enough to see that. And I have a Frenchie, so thank you, I appreciate that. On the hotel conversions, wet wall answer is yes. Um, put it as close to the existing water line as possible. If you can add— if you need to add kitchenettes, um, we found that if you do the super nice ones, even like an IKEA one where you do a lot of assembling It's a lot of work, it's a lot of headache, there's a lot to figure out. The pre-assembled ones that you pay $2,000 to $2,500 for, you can find them on Wayfair, you can find them on— there's actually hotel supply websites you can find them on. Um, they're very easy to use. You usually do not— they're plug and play, so you don't need the same electric permitting. Um, very easy way to do it. So if you're looking for the best hotels, you want ones that already have some kitchenettes in them or all have kitchens.. It makes it a much easier conversion. You also just want to make sure with the city that you're not going to need to do any upgrades to rezone to multifamily. In some areas, they require very expensive sprinkler systems. In other areas, if it's an older building, it gets grandfathered in. Uh, I've also seen different markets where you don't even have to rezone it from hotel to multifamily. You just run it as a multifamily and the city will let you lease it. And that has some advantages apparently. On the eviction process because they're not tenants, they are clients. They're on month-to-month leases. So a lot of different ways to run the hotel conversions. But the number one thing that I am looking for— do we have to add expensive sprinkler systems, yeah or nay? How many units already have kitchenettes? That will determine the size of your project for the most part. Everything else should be in a hotel room, right? You're gonna have your shower, bathroom, bathroom seat, sink, You can have enough room for a bed, of course, and most hotels have AC already figured out. So you just want to look through the basics and then the rest of it, same darn thing as a multifamily building. They're going to be studios or one beds for the most part. So comp it with studios and one beds for what you're going to get in rent. And we've had a great time doing these so far. From DM here, would you recommend investing into Cardone Capital or something similar if it's more worth it? Um, no, I wouldn't invest in the capital thing. A lot of these, um, a lot of these big funds— and the bigger the fund, typically the worse they are, is what I've noticed— but you're promised X return and there's all these fees. So my problem with the funds is that the fund manager is paid to place capital for the acquisition and the disposition, the selling of the property. So if you see like a Fundrise, a Cardone Capital, what have you, put your money in, it's totally passive, you'll get whatever return. The reason I want to avoid those is because, one, as a limited partner, you don't control anything, and that's really the biggest advantage of real estate. You can't eliminate the debt with it. You can't structure the, the financing or negotiate how it's put together. Uh, the lack of control is a huge problem with those. The other thing is the incentive of the fund manager. We'll take Grant, for example, and I'm not saying that he's just trying to pull money out of it. I'm saying this is what the incentive is. Is the incentive. If I place, uh, say I buy a $300 million property and I get a 1% fee for acquisition, a 1% fee for managing— which, by the way, that's managing the asset, not managing the, uh, the actual property manager— so 1% fee there. There's gonna be a 1% disposition fee. There's gonna be a few other fees in there. But if he gets 5% of his $300 million acquisition upfront is he properly incentivized to watch after your return? If he's paid upfront and something changes in the market during that deal, he can go in and say, hey, sorry, unforeseen market conditions, things aren't working as well, we're gonna have to require additional capital, or we're gonna have to reduce returns. The lack of control is the big thing there. And then the incentives on these funds will drastically increase your risk because their incentives do not align with your incentives. Um, if you're starting with— okay, so in this case, starting with $18,000 to $20,000 to your name, uh, Cody Davis, my partner, he started with $3,000 to his name. I mean, he owns hundreds of units today. I partnered with him on almost every deal that we've done. He owns a few buildings I don't. I own a few buildings he doesn't. But we're partnered on almost everything. He started with nothing. I started with $100,000, which I know is more than a lot of people, and I spent it on 2 duplexes and my house. When we partnered, I came in with about $0. We started without money. You can do this with or without money. You find the deal, then you find— again, it comes back to the debt and the equity. Find the deal, find the debt, find the equity. Deal comes first. Find opportunities. You can figure out the rest of this. If you want to use that structure I mentioned earlier, do that. When looking for properties, do you usually focus on properties with 1 or 2 owners? I've seen this, I've seen some properties with 5+ owners. Um, I don't target ownership. I don't target the amount of debt they have. I don't target anything other than this is the type of building that I want to own in the market I want to own it. I'm not going to ask them to sell it. I just want to meet that player. So if that building happens to have 5 owners, let's try to meet with all 5 of them. Let's meet with one of them, uh, whatever it takes. I just want to get to know that group. If it's a single owner, let's go meet them. But don't target based on who owns it or how they own it. Meet everyone in your market who is a player in the asset type that you want to play with. If you're after 10 to 30-unit buildings, My recommendation is just find out whoever owns the 10 to 15 unit buildings and pursue that. That's been the simplest way I've ever seen to do it. Uh, do you still own the duplex and house or transitioned into apartments via 1031? Um, I own my first ever duplex, though I will be selling it. Um, I'll share that story in a second. I still own the house, though I'm moving to Texas, so I'll be selling the house later in 2024. And the duplex is to date the only property that I have sold. So my first condo, I unloaded the first duplex to roll into Cody's 12-plex to buy out one of his original partners when he got into the game. That was the best use of those funds. So instead of 1031, I just sold, I cashed out, I rerolled the cash. I doubled my money on the sell of the duplex in my first year, a little less than a year that I held it. And then I have tripled that money in the LLC that I bought into. That 12-plex actually was refinanced. It bought a 12-plex— sorry, the 12-plex bought a 10-plex and a duplex. So that portfolio actually doubled in size using its own money. My only contribution was the sale of my duplex. So I turned 2 units into a shared ownership with Cody of 24 units. And over the last 2 years, we 6x'd my initial contribution in equity in the portfolio. And of course, cash flow is a lot better. There's no surprise 24 units makes more money than 2 units, even if you only own half of it or a third of it, whatever your equity stack happens to be. So I did scale up, but I did not use a 1031, uh, because I actually did need to use the cash to buy into an LLC instead of buying my own property. Good question though. Um, the story on the duplex, by the way, I promised everyone I'd share this on live. So we'll do that now. That first duplex that I bought, uh, it's in Bremerton, Washington. One, I was already open to selling it because I ended up focusing on Moses Lake. I like hyper-locality for real estate. So it ended up over time becoming an outlier in my portfolio where it was miles away from the rest of my properties because I didn't know what I know today about underwriting. And we teach this all the time on Multifamily Strategy. But we found out that the lower unit, because it's an additional dwelling unit, it's a 2-unit but it's technically a single-family house, they got all the work permitted, the electric, the gas line, the water lines, all the work was permitted to make that additional ADU, there was a final permit that should have been pulled for it to be considered an additional dwelling unit. It was not. The city decided it no longer wants to grant that. So I just got a letter from the city saying, hey, you need to turn this back into a single-family house. Good news, it's a huge single-family house. It's a 6-bed, 2-bath house. As a house, the value is about the same. Now I'm just going to sell it. I bought it for $395,000. A few years ago, I'll sell it for about $500,000 to $525,000. At the end of the day, it cash flowed the whole time and we'll make a profit on it. But the goal is to not have to unload real estate. How do you buy it? How do you never lose it? I hit a wall on this one where because I didn't do that piece of due diligence, I didn't know how to play the game when I started. I'm now in a position where I will make money, but I will in fact lose the property whether I want to or not, 'cause it does not make sense as a whole as a single-family property. ADUs are huge though. People, people love 'em to, to Noah's point in the YouTube chat. Absolutely. Give Instagram some love here. See if we have any questions there as well. Not too much. That works for me. Um, let's see here. Best way to leverage equity to get into new deals and fund projects. I've done this too. Credit line, refinance, collateral outside of— only risk things that you are willing to lose. Now, for myself, I don't care if I lose my personal residence building my business because my business is what I'm excited about and it's what my wife's excited about. I am willing to back things with my house. If your house was your lifelong dream and you want to live in that house forever and that's been, you know, you've worked so hard to get there, you have kids and you want to provide a house, that's kind of important. Don't leverage your house to go buy real estate. Now, if you don't care and you're willing to say, hey, I can always figure this out and there's different places to live and this is just a place where I happen to live, then go ahead and leverage your house. That's what I did. I took a $100,000 line of credit against my house, which did help us go out and buy more properties. So that is an option for you. Um, so that's one of the best ways. You can also get lines of credit against your rental properties. Cody's 12-unit building is a great example. He pulled out about a $200,000 line of credit on a 12-plex, and on that 12-plex, he ended up building, uh, turning his lower basement unit into an absolutely gorgeous additional unit. He turned a 12-plex into a 13-plex in a huge unit that was very, very easy to rent. So if you put that together, that's a great example of you pulled money out against the property and you got to reinvest back into the property itself. He increased its value by more than he borrowed, and now he has greater cash flow on that asset. It's a good way to look at it, a great structure. As long as the asset can service the debt, that's all you have to do. Again, comes back to those assets and liabilities. Create a smaller liability than the asset you create, then let your asset pay it off. So what Cody's doing on that deal, that's what I did with my personal HELOC. Borrowed $100,000, bought real estate that cash flows much more than my monthly payment, then let my real estate pay it all the way down. Let me know if anyone has any other questions, by the way, both platforms. I got you on Instagram, I got you on YouTube, and always excited to chat. Uh, Rob wants to know what the population of Moses Lake is. Online is going to tell you it's like 30,000, 40,000 people, um, but that's just the city of Moselike. If you actually look at all the unincorporated areas, it's much closer to 100,000 people, and it's rapidly growing. Great place to look at population for any area: worldpopulationreview.com. Uh, Moselike is a graph that looks like this, just goes up and up and up and up and up consistently over time, and they're adding a ton of jobs, so that graph is about to spike. That's what you're looking for on the perfect market to invest in. And for those who are newer, just joined the, just joined the stream, had questions in the chat, what we're talking about today is the best strategies on creative finance going into 2024. Ultimately, what matters is we want to create a finance is creating your own liability on your own terms. If you can buy assets with a smaller liability than the asset, you add to your personal balance sheet and you grow your net worth. As your assets get larger and larger, you can use them to pay off the liabilities and you can own assets without an underlying liability, which in my book is a perfect balance sheet. You don't owe anyone anything, but you have big assets. Backed by real estate that you control. If you can build that portfolio, that is what Cody and I set out to do. That is the simplicity of the game. Your assets are greater than your liabilities. Do I have investors interested in the Houston market? I'm sure I do. And I actually have friends who invest in Houston. Caleb Hommel, who was in the chat on, uh, Instagram a little while ago, Caleb Hommel actually owns a 10-unit deal in Houston. He raised money down there Uh, there are a lot of people— Houston's a really popular market, so do I have investors? I'm sure I do. Um, however, my investors invest in me. What I want everyone watching this to do is go out and build relationships with owners in your market, with investors in your market. Find the opportunity first, and if you have that opportunity, it's going to be super easy for you to find the debt or the equity. Just structure it correctly. And going back to earlier in the call, My favorite structure is 50% debt, 50% equity. Easy to explain to the IRS. It is a true zero-down deal where you can have someone bring 100% of the money, own half the deal, and you can still buy a deal $0 out of your own pocket. And you have an actual capital account, which is your money in the LLC, uh, that is borrowed, which you can write off against. Perfect strategy. Very, very simple, easy to explain, easy to pitch, and everyone's contributions matches their actual equity in the deal. Rob asks if we chase lower population areas because they are more likely to have owners that were open to seller finance. No, not specifically. We've seller financed in Seattle, um, Caleb seller financed in Houston, but what we have found is that you tend to have, uh, what's the, what's the right word, you have higher equity markets. People lever less outside of major cities, so you will find more opportunities to seller finance and potentially a market that has a little bit less competition if you do go to smaller areas. And I'm talking, I'm not talking like ridiculously low population, but Moses Lake's a perfect example. 30,000 to 100,000 people, that's a market that you can come into absolutely dominate and compete on and really set up a good base with a lot of opportunities. If you want to go ahead and compete in, say, downtown Seattle or downtown Dallas, you're competing with a lot of big players. A lot of people want to invest there. You're going to have a harder time. It's still possible, but you're going to have a harder time competing in that market, refinancing in that market, and finding the best opportunities. That being said, you find a deal there your capital raise just got 100 times easier because you get a great deal in a core market. There's a lot of people who want to place money there. So there's not a right or wrong answer, but short answer, I don't chase lower population areas, but you usually are going to move faster and have more control if you do so. How would you convince family real estate is safe if they're scared of debt? And thanks for all the help. So how would I convince family real estate? Is safe. Um, for me, my family does not like debt. My family actually, uh, the way they structure things, um, they borrowed on their house, they worked a job, and as my father retired at the end of his career, they finally paid off their house. And that was their thing. They literally did the Dave Ramsey strategy— pay off the debts over time, eliminate credit card debt. And they have a decent existence. That's, that's where my family's at. They don't like debt. How do I convince them? I would show them that diagram I started with. Uh, let's, let's bust that bad boy back out if I have my pen still, which I may or may not. It's amazing how fast I lose those. Here it is. All right, we're going to clear this off to the best of our abilities. This is how I would show my family. This is what I did. This diagram makes sense. Liabilities, assets. I'm going to customize my own liability to buy an asset that makes more money than the liability loses. Liabilities lose you money monthly. Assets pay you monthly. Every time I do this, my income goes up. If my family is still not on board with this, I'm going to take this money and I'm going to pay off the liability. And so I'm going to eliminate it and I'm going to eliminate the debt. So if you accept that the US prints money too fast, we do inflation, it's not a great strategy. Like the US is going to keep printing money, we're going to keep inflating, dollars lose value. If you go, hey, saving up for my financial freedom over a 40, 50-year career is really hard and not what I want to do. This model right here, liability to asset, asset income to pay off the liability. This is a better way and a faster way and a stronger way to become debt-free and acquire assets. If you spend your time saving, you try to buy everything with your savings. That first deal where Cody and I made $1 million, that 38-plex, we would have had to save. Let's say we would have bought our house and then we would have paid off our house and we would have not used credit card debt. We would have got jobs and somewhere in our 50s, perhaps we would have saved up $300,000, $400,000 to put down on the deal. But if you don't use debt at all, you actually have to go 100% down. So on top of paying off our house, and, you know, whatever it is that we did through our life, we would have to pay $2 million down to buy that first deal to make the million dollars. Playing in cash is very, very hard. We lever to build a base, and we use that base to pay off the debt. You only lose the game if you over-lever or you try to save your way there and you never make it. Those are the two, you easiest ways to lose. This is riding the middle. I think most people get it with that diagram. Giving Instagram some love here. Growing Homes: When you structure the 50/50 owner finance, um, do you eventually cash your investors out, then own the asset? Yes. The debt has a balloon, which is going to be longer than it's going to take for us to refinance. So if we want to refinance in year 2, I usually say, hey, We're probably going to refinance this year too. That's the target, but we're going to do 5-year debt on this. I have more than twice as long as I believe I need to run my project. On the equity side, same thing. So when we refinance, we're going to cash you out of your equity and we're going to own the real estate. Set the same timeline, or you can set it a little bit longer. But typically when you do the refinance, that is the best time to pull money and change the equity. So short answer, Yes, when we structure 50/50, there is two essentially balloons. You have a balloon on the debt, and then you have an option to purchase them out of the LLC at a fixed price at a fixed time. So it's very similar to a balloon. It's technically not a balloon, but it's functionally— it's a second balloon. You're structuring it all more or less like a loan. Except one of them is paid as a multiple of their equity later. The equity, you buy the equity for more than they put in, and the debt is paid on a monthly basis, then paid out at principal value. That's the most typical way to do it. That is what that structure looks like. Good question, by the way. Rob, how is the STR next to Robinhood doing? Excellent. We know it does slow during the winter. It slays during the summer. Um, our, uh, our little property there, we expanded the Robin Hood. We call it the Robin Hood Lodge, even though right now it looks like a giant White House. We will change the siding at some point. It will look like a lodge. Uh, but Robin Hood Lodge is doing, um, excessively well. By the way, for all who want to attend the next Robin Hood event, this is, I think, our most valuable event because we're talking about how you actually make the money as opposed to all about creative finance. We're going to cover how to buy them, but it's going to be, hey, once you pick up your property, this is how you run your business and make millions of dollars. That event is the 19th, 20th, 21st. You can check it out on the events page of robinhoodvillageresort.com. Absolutely go to that. That is the most value we've ever brought, the best lineup of speakers we've ever had. I'm very, very excited for that, and we're less than a month away. I think we have 6 cabins left. And I love to meet all of you. So anyone want to be there, let us know. What type of owners are interested in seller financing? Well, you can finance anything you own. So what you'll find is owners who have a higher equity position are going to be the ones who are able to seller finance. But most appropriately, I find people who have— oh, there's a few things. You have a property with deferred maintenance where it's not bankable. And you're doing a horrible job running it and you're out of money, but you have a high equity position. That was our 38. Uh, losses deferred maintenance, bank would not lend on that, they were out of money, property is only bringing in $5,000 a month, they were overwhelmed. They also have owned it for a long time and did not have a lot of debt on it, so our down payment was more than their debt, which paid it off. They seller financed. That's a great example. Um, so huge value add, seller finance. Another popular one, people play the game, they get, they say you play the game for 40 years, you have hundreds of units, you've paid off your debt, you did this cycle we've referred to earlier in the video, asset buys liability, or sorry, liability buys the asset, asset pays off the liability, done. They've done that cycle. They don't have a lot of debt and they have a whole bunch of kids who watch their parents work really hard in real estate and want nothing to do with real estate. That's really normal. They usually don't need more money because they're already rich. They don't want a taxable event. A lot of them will ask if you're open to doing seller financing on it. They'll lend. If they pass away, their kids get a note and an income stream instead of a bunch of cash, and they don't get a taxable event. Those are a couple of examples of what that will often look like. How do you know when to refinance? Oh, I was going to shoot a short on this today. Um, there is a specific time You're looking at your return on equity in the deal. There's a point where you're— it's basically, well, there's a couple times. So when you're growing, before you do the debt paydown, while you're just building the base, you may want to pull money out of a building to go expand and buy more assets. You don't do this forever. You do this until you buy enough real estate to hit your goal. So in the beginning, if I have, say, I can pull 5 years worth of cash flow out of a refinance, I'm going to go ahead and refinance because I get to skip forward 5 years in the amount of money that I have available to me from that asset until I'm done with build phase. That is my basis there is, hey, if I have enough equity here where we can skip forward 5 years into the future, say cash flow is only $1,000 a month, and so, uh, if I can get 60 months worth of rent out of the refi Absolutely. I'm going to refi, take that money and go buy something else. And that's going to give me more top line income, which will let me pay off the liabilities in the future. That's a good time to refinance. The other time, if you're trying to buy out your investors and say you did that 50/50 debt equity thing. So I borrowed half the money and half of it is the equity that the partner bought in. When I can refinance and completely pay them off and I can own that property by myself in a long-term debt product, That is the right time to refinance. When you can pull money, own the property yourself, and now it is your cash-flowing asset with your debt, no one else is involved. That is the first and most important step, uh, pre-debt paydown, is you have to own the darn property yourself. It's about controlling your future, having stability. Other people are variables. Variables are bad. So we do want to eliminate the amount of partners that it takes, pay them off. That is the time to refinance. Guess. Biggest celebrity that we have met? Um, well, gosh, there's been a few. We've run into Donald Trump. I would say he's relatively famous. Um, I think a few of you have heard of him. Um, we've had more intimate conversations with Grant Cardone. Uh, granted, I'm not a massive fan of his investing model, uh, but huge fan of what he's able to do as a marketer. Very impressive. And I think his things on mindset are amazing. Um, so he's a big one. If you guys haven't caught the Brad Lee podcast, he's a larger influencer in the business space. Um, really enjoyed our time with him. But we've had a chance to meet a lot of celebrities in the space. Those are probably the more notable ones would be, you know, obviously, uh, Trump over Cardone. Cardone's bigger in real estate than Brad Lee. Uh, Brad Lee is probably the biggest business influencer. And then Getting to meet all the team in BiggerPockets, um, in our niche, they're the biggest name of the game. And there's a lot of players there that we've had a chance to interact with and had a great time with. Henry Washington, Rob Abasola, David Green— those are all people I really enjoy being around and networking with. Um, and let's go outside of celebrities really quick. People who I'm just impressed with, uh, Matt the Lumberjack Landlord. He's on YouTube as Lumberjack Landlord. He's the smartest investor I've ever met in my life. You guys want to see people to learn from? He's a 9th grade dropout who knows 10 times as much as anyone who's ever gone to college. He's incredible. How do you convince a seller to create a finance or that I am the right buyer? You don't convince anyone to do anything. It's— if you're trying to sell them on it, it's not going to happen. You can just ask, are you open to carrying a contract? If they say no, not the right fit. The owners who have played the game longer, they're all familiar with seller finance. You have to sell them on it. They know the benefits. If you start selling them on it, they know that you're not the person that they want to work with. Build a relationship. If they know your pieces, which they should— so they should know roughly the amount of capital you're playing with, what your goal is— they'll know if you could buy a property. So if someone proposes a deal to you who has a relationship and they understand your position, they're not going to pitch something that just doesn't work for you. It also doesn't have to be seller financed. There's other ways to take properties out zero down. Cody and I are buying a deal right now, 100% hard money for the purchase and the renovation cost, and the property supports that expensive debt. So there are multiple ways to take things out zero down. Find the deal first. That deal may or may not be seller financed, but if you have to sell someone on it you're not the right fit. The people who will sell for you or to you on seller finance terms are people who trust you as an operator. So you want to have a relationship with those people as often as you can. Rob said you met Dion. He's a celebrity. Yes, he is. Dion is a local hero and, uh, fantastic as smaller unit count investors go. He has a fantastic strategy for those who want to play the game a very simple, repeatable way. Dion has a phenomenal strategy and excellent principles that you can follow. Do you have any specific market we should target as a newbie? No, the market you should target is the one that you want to buy in as long as population is going up there. You want to make sure that there's supply and demand. You also want to make sure that there is no, um, you want to make sure that there is not like a single employer that's responsible for everything. For example, if it's a military town and there's no other major employers, I'm a little skeptical because bases do move. If you have a military town that has a strong industrial presence and maybe has some agricultural around it, now I'm more interested because there is some market stability. But a stable market where population's going up, as long as it has those, invest where you want to invest. This game works everywhere. We have people on our multifamily strategy group all over the country, every corner of the nation and in the center, who are buying properties no to low money down with whatever their position is. Um, we get texts all the time. People buy deals where you want to buy deals. That's the great thing about real estate. There's a lot of it. All right, sorry about that. I saw our connection, uh, faltered for a second. So, uh, welcome back everyone. Let's see here. Do you have a script available on your website for properties to market to or grab coffee? Yes, we do. So this is— you can do this on the mentorship. We talk about all the time, even in our course, there are videos step by step, how to talk to owners, how to talk to brokers. There is specific verbiage and tonality training and emails and texts that you can send on. This is exactly how you book the meeting, what you do when you're in the meeting, what you do after the meeting. We documented everything. There are many videos. They're 2 to 3 minutes long, and they go through each and every step, each and every question, every key point. It's one of the things that I'm actually most excited about how we put together was the scripting and math sections in our course. You can check that out on multifamilystrategy.com. This is not an ad for that though. We share this on the channel freely all the time. If you want to get it all, you know, right at your fingertips in the best organized way, the course is where you get the information. If you want help applying that, we will mentor you. And I am serious about that. It is Cody and I teaching the class. Heavily invested in everyone's success. We will teach you through it if you do the mentorship, and that comes with the course. Is the course different from the mentorship program? Yes and no. One is the information piece. Um, so yes, you can purchase it separately, and there's not one-on-one coaching. It's the information. Um, however, if you buy the mentorship, the course is part of the mentorship. If you have the course, you buy the mentorship at a discount. So that's, that's how that works. The course is different in that it's information and prerecorded mentorship. While every session is recorded and available to you, is live and that is actual coaching. That's how the course is different. You can check both out there. By the way, not an ad for our course or anything. This is a— this is just what we do. And I'm always happy to answer any questions that you guys have on it. But very passionate about that project. Multifamily Strategy is my baby. And we are going to do everything we can to get all the success stories out 2024, which is what I'm so excited about, by the way. 2024, Cody and I have had enough iterations now going through tax returns, going through creative contracts, having deals go extremely well, having hiccups on deals. We've had deals where the first day we own it, 100% of the tenants move out. Hard to factor for. We've had everything within reason happen, and we've yet to lose money on a deal except for a tiny house we bought $0 down. And share that story another time. What size complex would you start with if you were to start over? If I would start over, I really like the 20 to 30— or actually 20 to 50 unit complexes. They're fun for me. There's enough top line to cover the bottom line and add systems to. I find that the smaller buildings, when we have an expense, it wipes out the cash flow for a while. So it takes the cash flow, like a few years cash flow, to cover a brand new roof and plumbing on a fourplex. So if you buy an old fourplex, you can add to your asset column, it will make you money, but you have to hold it longer for it to really act like the asset that it is. I found that pretty consistently. So I would look at, to the extent that you can, uh, 5 and up, because it's based on your performance on the asset, not what your neighbors sell for. Very important. Um, so I look 5 units and up. And I would buy heavy preference if you found a 25-unit building mix of 1 beds and 2 beds. That's like my favorite project. They're not that expensive to get into. They're not that hard to run. And you can make— it's a type of deal you can make a million plus on. And that is my metric. Where can we make a million dollars for our efforts? Let's pursue those deals. And we do a lot of them. So that would be what I'd look at. As far as deal size. Push a little bigger, but you find me a 12-plex, absolutely, let's add it to the portfolio. Love those. Is there a door size you should target as sort of training wheels to learn the operations of a property? Don't— I think that's kind of, you know, that follows the last question. Don't focus too hard on the size. You need to get wins, and wins mean you're buying real estate. So You need to buy real estate. That's, that's the end-all be-all. Go out and buy multifamily properties. And if that means the opportunity that came up was a duplex, even though you just heard me say, oh man, the smaller properties, they're harder— Cody and I own 9 duplexes. Our best cash-flowing property is 3 side-by-side duplexes. As far as cash-in and actual cash flow, those 6 units kick out a ton of cash flow. It is competitive with my 38-unit building as far as like bottom line cash flow. Those 6 units— now granted, we hadn't pulled $1 million out of that LLC, but the cash flow on those is phenomenal. We will hold those forever. And when you're doing your, your debt hammer, where you use the, the income from the assets to pay off your liabilities, those small buildings are the easiest ones to pay off. So you knock those off first. So, um, there's not a door size to target. I obviously go for the 5 and up because again commercial valuations you have a little bit more control of. But look for multi-family properties. Get started, get some wins, get some units on the board. That is the most important thing, and don't lose sight of that. Don't just not do a deal because Christian said, oh, I think those are too small. I still do them. I still love them. Do you put on-site management on your properties? Big buildings, I like to have a key tenant who I give a discount to who will be my eyes and ears on the property. I invest in one market primarily, and that is Grant County. So Moses Lake, Quincy, Afreda. I own a property management company. I have employees who are boots on the ground who do the leasing. They view the buildings. They, they stay very busy. So I have a decentralized management where it's central to the county but it's not central to each individual building. As you get larger and say, say you get 3 30-unit buildings and you sell them and you buy 150-unit on a 1031. So you roll your properties tax-deferred into one larger building. That larger building should have everything on-site, in-house, and it's very passive. Um, so on-site management on my properties, no. If it's 12 units or more, I'm going to look for a key tenant who gets a slight discount to help out with maybe a basic notice posting or a breaker trips. They know where the breaker box is and they can help someone out. I like to have that on-site for, we'll call it like a entry-level handyman who knows the specific property. That's it for what I'm seeing on questions here. Let me take a, let me take a look through the, uh, the Instagram feed here. Not seeing too much except that Caleb almost said, how are you still live? I'm still live because there's still stuff to talk about going into 2024, what to expect from our channel. We go live every Wednesday, and I've got a couple of comments saying, hey, you guys are going live like every other Wednesday, and I've acknowledged that a few times. We're going to be consistent on this. I'm also going to do more impromptu lives. I want to answer everyone's questions and get to know everyone here. We're going to be running some Robinhood events that are going to be fantastic that I really want everyone to go to, and we're going to be talking about them here. Next one's about asset management. January 19th, 20th, 21st. You should book a cabin. The catering is going to be ridiculous. We go all out on these. Um, you're gonna have a great time, meet some investors. You want to raise some capital, there's gonna be some people with money there. So, um, attend that event. But that's what I would look at doing. Like, how am I still live? I'm gonna be live a ton, uh, throughout 2024 because we have stuff to answer and I mean, you guys have kept this thing going for over an hour. I appreciate that a lot. Uh, Matthew over on Instagram over here, how would you approach these conversations with brokers and owners if you are a broker as well? I wouldn't focus on the broker piece. So I, I actually started, I was a real estate agent and I went ahead and let that license expire because I don't like brokering. However, if that's something you enjoy and you want to keep doing as your job, You, you have to one, make sure that you are giving your clients opportunities to invest in. That's very important. So don't be competing with your clients, but be really clear up front. I hate it when people do this. There is a model that's being taught online that says, hey, if you can buy it, buy it. And if you can't, if you don't know how to buy it, wholesale it. If you can't wholesale it, broker it. I hate that because there's no objective. It's just like, well, we're just going to see what's here and we're going to try to pull money out of this opportunity. That's lame. If you want to buy a building, figure out how to buy the building. And that's why we talk about creative finance on this channel. You don't have the money? Figure it out. We'll help you out. We'll help you with the entire help on multifamilystrategies.com or piece it together from all our YouTube videos. You can buy the real estate. So you have a deal you want to buy, call the owner and just let them know, this is who I am. I'm trying to buy real estate. The fact that you're a real estate agent isn't relevant to that conversation. So I really wouldn't open with that. If you put someone under contract and you need to disclose that, just make sure you let them know, hey, just so you know, I'm a licensed broker. We need to put a one or two sentence line in the contract recognizing I'm a broker and, um, I'm buying real estate. It's the simplest thing. Don't worry about that, but make sure that you are actively, uh, you're actively engaged and, uh, just pushing in the conversation, I want to own. If you want to broker the transaction, don't bring up buying it. Keep them separate. You should be fine. Um, are the 25 to 50 unit buildings you're talking about, um, able to be managed by one person, or should we look to hire a PM? I think you should manage your first few buildings. I, I tell everyone this. I manage my first few, and I still own the property management company, so I'm still very active. But you're going to be a better manager of your managers if you know what the rules are. You've posted the notices before. You've actually viewed and logged a work order. There's some pain in figuring out that I think everyone should go through because you're gonna be an astronomically better underwriter and investor if you do. So you buy your first 25-unit, manage it yourself if you can, if it's feasible to do. As you start getting over 30 units, you're probably going to need to involve more people. That's where you get a PM and you have someone come in and start running those things for you.. But if you can manage your first couple buildings, I really recommend it. I think you're gonna get a lot from it. You'll be a much better investor. What state will these be in? I assume this is back to my question on what I look to buy. Washington and Texas primarily for me. Washington State's where we're established. Love it. The government here sucks, but then no one wants to compete here. So we have easy competition. Texas, lots of competition, great laws. Having a balance between those two, a red state and a blue state, has worked really well for me. I have one state that's hard to operate in that has no competition, and I have a state that has lots of competition that's easy to operate in. Balancing the two has worked pretty well for me. Um, were you forced to create your own property management due to lack of other options? Yes. I don't think everyone should create their own property management company. I actually recommend highly against it. But when you are playing the game, um, and there's just no good managers, you got to figure something out. Cody and I bought value-add properties. A lot of companies do not want to manage those. The ones that did wanted to charge huge fees. I came up with a model that would better than break even, where I can pay myself a very small salary to run our properties excellently and affordably. So we pay— and for my clients too, we, we cost about half as much as the competition on some of these buildings, and we lease twice as fast. So figure out what works for you. For us, because we own so much real estate, I was able to run my property management company at a lower cost per unit which made us the best property manager in Grant County, hands down. That's what happened for us. Fixed Life just joined and we're wrapping up, so I just got the comment here. Finally able to join my first live stream. Great to see you. Sorry, we're about to wrap up. Mentorship, uh, starts in about 10 minutes, so we have maybe 5 minutes left here. But it is good to see you. If you have any questions, get them in right now. I'm giving a little look here through our Instagram feed. How would you approach these conversations with brokers? Oh no, we answered that one. We answered that one. So it looks like we're caught up on Instagram. So let me close with this and anyone can ask questions still. This will be the, uh, the wrap-up. The key to winning this game. And this is, I mean, this is even simpler than the explanation in Rich Dad Poor Dad because it talks about how do you build assets out of nothing. Well, sometimes you take on a liability to do that, especially in real estate. Creative finance will let you choose what your liability is and the terms around your liability. So you're looking for long-term cash-flowing fixed-rate debt. So we need low enough interest, low enough payments on your liability. You're going to use that to buy an asset that has higher payments than the liability that you create. If your dividends are greater than your expenses, you're cash-flowing. So every deal you buy on long-term fixed-rate debt increases your income. You want to win the game? Use the income from the assets to pay off all of the liabilities. Dave Ramsey is totally right that debt sucks. However, we also have a government that sucks, that prints money too fast, and you get stuck in the rat race for your entire adult life trying to save. So how do we get around this? Customize your liabilities to buy assets that eventually pay off your liabilities. The goal is still zero debt. It is a faster way to get there than saving, and you can actually scale to something that makes a difference. That is how you control your universe, add to your asset column, and eliminate your liability column. That's it. It's a basic personal balance sheet. Assets make you money, liabilities lose you money. Customize your liabilities to buy your assets. Use your assets to pay off your liabilities. Game over, you've won. This is what the masters of business do. This isn't just real estate, this is business too. Basic concept, everyone should know how to do this. Okay, going through the last bit of questions, then we're gonna hop off and I'm gonna get some water so my voice doesn't die for our mentorship group. Um, where will the events 2020, uh, for with the investors— where will Um, well, our events are mostly going to be held at the Robin Hood Builder Resort in Union, Washington. Our next one, 19, 20, 21st, we've talked about a few times here. Um, absolutely be there. Um, but that's where most of them will be held. We will be doing some speaking around the country this year. However, I don't know the entire lineup yet, though I do know that we should be in New Jersey in, I believe, April. Um, but I will verify that with everyone. I live in Miami. What is the most— or is almost impossible to cash flow? Any advice? Master this creative finance piece, like really, really master it. If you're having trouble cash flowing, so is everyone else, which means the deals are going to be harder to move. Your ability to find creative financing as a solution for the deals that are stuck in your market is actually better in those markets. Now, in Miami Central, there's still a lot of money being moved there. I would highly recommend in Miami looking at some of your submarkets or getting a little further out of the city of Miami so you're not competing with all of the sharks in Miami who are willing to overpay for bad deals. You have a lot of syndicators there who get paid upfront whether their deal is good or bad. I would get a little bit out of the city and then I just master the creative finance piece, which fortunately is very simple. Uniform unit, uh, and turned a duplex into a fourplex for cash flows, but took me 2 years to find. The other thing I would look at, I would look at a little bit bigger buildings. That's— I was getting stuck on the small stuff because all the mom-and-pop investors think duplex to fourplex. See if you can't push that unit count up a little bit, and that should help. And you're exactly right, you're competing as money launderers or just, you know, people with a different business model who don't care about making money. You don't want to do that. Get a little bit outside of the city, master the creative finance, look for a little bit bigger buildings. The combination of those three should start freeing up some real estate for you. By the way, we typically hold— from Vic's Live here, when do we, when do we host these? Every Wednesday. And I'm aware this isn't Wednesday. Every Wednesday at 3:00 Pacific Standard Time, we host a live. Today I was going through my diagram and I got really amped and I was like, you know what, I'm just going to turn on the cameras and we're going to go live. I'm going to talk real estate. So that's where we're at right now. Um, I'm gonna go ahead and hop off and get to our mentorship group for multifamilystrategy.com. If you guys want to go deeper, get the personal coaching, that's the place to do it. But until then, get your questions ready because I'm going to be on, uh, tomorrow, 3 Pacific, and we do this every week. Again, 3 Pacific on Wednesdays. Talk to you later.