0 to 100 units without syndicating - Creative Finance Live

I was going live. You're now live. We're live.

We are live. Welcome back to Whiteboard Wednesday Live. This is episode 5, and we are here at— actually in Moses Lake in a friend's office. I come to you from the field.

Yeah, and today we're starting out with one question we've been asked a ton. Can you actually come out and Work in the field with us? Answer is yes. We have Cade narrating for us today. You want to come say hi? Cade is from Tucson, Arizona. He messaged— what's up everybody— hey, and asked if you could come check out the portfolio mode of the site, learn how we're doing what we're doing, and we said yes. So if you want to come join us and check out the portfolio and see exactly how we built what we built, message us and we'll make it happen.

Wonderful thing is, with a third person here, we have someone to narrate, read comments, so we do not have to read and talk at same time, which will be wonderful. As always, we will start with some of the comments from YouTube and we'll answer your questions as they come through the chat. So, uh, first question we had, uh, this is from Dave G. Can you clarify how broker realtor commission is handled in a seller finance purchase from the MLS? In addition, along what, along what line are you working with the agent through the process? Um, oh, they're basically saying you work with the owner Or the agent.

All right, so if it is listed, you are going to work with the broker. They hired the broker for specific reasons, for representation. So you're not going to go around that broker. As far as commissions go, those are going to come out of your down payment. It all comes down to closing costs. If you're buying a place for $100,000 and let's say there's a 3% commission, if you're putting 10% down seller finance, well, you put $10,000 down. If the commission is 3% of that $100,000, that's $3,000. So $3,000 of your down payment is going to go towards the commission at closing. And some people say, well, that's not realistic, that's not feasible. The very first deal I ever bought was on the market, bought it for $1,125,000 and ended up putting 10% down. 2% went to the other broker as a commission, 2% went to me as a broker. I actually got paid 2% by it. And on top of that, they had their excise tax and some miscellaneous building costs. They didn't walk away with much to any money. But in return they leveraged a ton. I mean, they did 90% loan. They're going to get a very high monthly payment in comparison to if I put a whole bunch of money down.

Awesome. I have another one from Dave G. actually. Okay, um, could you guys answer the question of how do you figure in repair cost on a seller finance deal? Let's say the roof, uh, has only a few years left.

How do you write that into the seller financing? Well, the financing is exactly that. It's the financing to buy the real estate. Now you have to fix it up. I need to figure out where that's coming from. That could be from a second mortgage. It could be from money in your pocket that you earn over time. If you've got 4 years left on a roof, well, you ought to budget for that. Now some of our roofs, we just took a flat roof. It's actually called a butterfly roof where it goes inwards toward the middle and then there's a valley that goes to the back of the building. Terrible design. We just took it to a pitch. Probably seen that on my Instagram channel or Facebook, and that cost $143,000 just to do the roof. Originally it was supposed to cost $90,000, and then materials were up. So spent a ton of money on that 2 years after I bought the asset. Now, I borrowed money against my 12-plex to do that. I put a mortgage on it, and I'm refinancing with the bank right now because I have a new roof. However, you're not planning to do that, you ought to look at it as a cash flow position. If you've already got a trust roof and it's going to cost me $15,000, It takes 4 years to get there. You're looking at like, what, $3,750 a year? $300— yeah, $320 or so every single month that you should just be stacking away out of cash flow. So you can cash flow your problems over time, and cash flow problems are significantly better than equity problems where you need a whole bunch of money today.

Now, if you want to take it to a different level of creativity, another thing you can do is seller financing is just financing. Be used creatively. You can seller finance more than 100% of a deal. You can actually work in the cost to repair. That might not be something they want to take on, something they want to bid for. You can just go, hey, fixed cost, I think it's going to cost this. I've seen this done a few ways. I've seen sellers finance over 100% of the property to get it off their hands and their collateral gets better with a contingency that says you must spend X amount on the repairs for the building and center seats. That's something you can do. You can also combine it with the bank. They want to seller finance, say, 60%, and the bank's willing to finance 60%. You can get an extra 20% to go apply towards those repairs. So you can get really creative with how you fund them, but you always make sure you have a plan to fund them before you close. Again, how do I buy it?

How do I never lose it?

Very important that you map that in. And, um, I have one here from Josh Sather, and then we'll get into the chat here. Um, how do you decide a decent market to start in? And are you guys going to use the same method that you're using with current owners when you choose a new market?

Yes, for the second question, absolutely. We don't change our principles for anybody or anything. It's the same, and that's why I post them online, because you can hold us to it if we ever start to violate those. As far as choosing a new market, we want to look at the same trends. We want to make sure population's going up, incomes are going up,, and people are happy living where they're at. There's a lot more happy people as a percentage base in Grant County than there are in Seattle. So I'm more inclined to buy in Grant County than I am in Seattle, and that's for a whole bunch of different reasons. But there's more disposable income in Grant County than there is in Seattle, believe it or not, because a whole bunch of people lever up, or they have really expensive cost of living to live there instead of a little outside the city. Over here, everyone's got toys. Multiple vehicles, ATVs, boats. Yeah, like a lot of my tenants even have that stuff. Some of them have nicer cars than me, and I, you know, I'm not driving a beat-up Honda Civic. So I mean, they're— a lot of them are doing well. So I'm just going to make sure I'm looking for that in another market. I'm not going somewhere where people are depressed, not happy, losing money, or moving away.

That's the first thing we look at. Is the population going up or going down? That tells you a ton. Another thing that you look at that's true of our market is job stability. Not nearly as valuable as are people moving there or moving away. However, I like this market because we have multiple streams of revenue, very stable jobs. You have manufacturing, R&D, you have data centers with Microsoft, Amazon, Google, Boeing's out here, and then you have agriculture and food processing and other— so you look at the way the economy's stacked, like, okay, people are moving in, it's a lovely place to live, they have toys, the jobs are good. You find those markets, that is 100% where you want to invest. The nice thing is population usually tells you what people are finding those values. Uh, what do we got from the comments, Kade?

We have anything? Yeah, so first question from Janab: hey guys, your opinion on investing in condo as rentals? He's about to finance a condo and put it on rent. So Christian actually owned the condo. I have opinions on this, but I'll let the expert do it. He did it once.

Well, I mean, that tells you a lot of my opinion. I did it once. Um, I, uh, so my first ever property, I actually lived and flipped it. It was a 2-bed, 2-bath. And so I, um, I lived in it. I rented it out to roommates. Um, he moved in about 6 months before I got married, so actually My wife and I lived with a roommate for just under a year that helped cover the cost for it, covered 100% of the cost of renovation, made a great profit on it, made— lived there for 2 years and sold it for a little over $100,000 more than I bought it for.

And why did you live there for 2 years before you sold it?

You don't— on a primary residence, you do not have any tax on capital gains as long as you've lived there for more than 2 of the last 5 consecutive years.

Up to what, $250,000 if you're single and up to $500,000 if you're married?

That is exactly right. And that little condo in, uh, in Renton, Washington did not appreciate more than $500,000. Otherwise I'd have a little bit more real estate than I have today. But that condo got me into my first house, which has appreciated a lot more. It's in a little better area, much nicer. Can you make money in it?

Absolutely. Can you scale that?

Not very, very hard.

Yeah. And it comes down to being a good money manager. I like to think of myself and Christian as excellent money managers and excellent managers in general. Whether we buy just small rental property or a big one, we're going to take a professional approach. We're going to maximize the activity of that property, get it producing where tenants are actually happy to live there. We went by and looked at one of them. It was one of the dumpier properties that I ever bought. It was my second duplex. It was in Moses Lake.. And it was an old motel. It actually had that slanted roof that was butterfly in towards the middle and had a valley. It looked like an old motel. So what? Well, a lot of the tenants there, yeah, rent went up 33%. Rent went from $600 to $800, but a ton of them are actually really happy because of the improvements that we made. We're managing the best we can. In a condo association, the management isn't really up to you. There's this thing called special assessments from people that can't manage money. I say, oh, you have a massive bill, you're gonna have to spend $10,000 so we can fix all the roots or fix the exterior paint. And then you're going to have an HOA that's going to eat away at your profit every month. As fun as it is to give away free money, it's easier to live your life if you don't have to do that. So we stick primarily with just apartment complexes.

We had a question from the chat earlier, um, from earlier in the week that was actually in this one here. How did you guys go from 0 to 100 units without syndicating? I believe the question also said in your 20s.

Ah, well, you didn't do that.

Yeah, I got to about 55 and then I turned 30, so I didn't quite make that. However, Cody, only 8 more years.

The only thing that is certain in 5 years is you're going to be 5 years older or not alive. Those seem to be constant. So Christian's aged out of this, but for myself, I started at 19, so I also turned the deck. 19 years old, I bought a 12-plex. It was on the market, seller financed. I wrote it up. They financed 90%, I borrowed 10%. It was hard money from an investor. I was able to scale that story to buy another 12. Shortly thereafter, I bought another 6. And the $90,000 that I raised for the 6-plex, I raised over a piece of pie at Sherry's. Now, for those of you who don't know, Sherry's, a lot of them are shutting down locally because They're not making as much money as they used to with the whole COVID stuff.

They gave away too much free pie.

Yeah, to me, Wednesday nights, free pie night. And so I had to pay for a burger, but we got free pie, coffee, and I raised $90,000 and bought my third asset, which was 30 units, zero money down. Now shortly thereafter, I convinced Christian to go buy— it didn't take much convincing, I'll tell you that— to buy a duplex right next to my sixplex. And he bought that with hard money, with private capital, 101% financed. He had to put some money into reno and he since flipped that to buy into a deal with me. But we ended up shortly thereafter, he bought the duplex, buying a 38-unit together. And we talked about this in the very first video we ever filmed on YouTube together. We called our shot and said, we're gonna buy a 38-unit apartment complex. And we did seller finance, no money out of pocket. So that put me at 68 doors. Fast forward a little bit later, we ended up buying a 7-plex. In Toquilla. We talked a little bit about that. I think we did a couple videos on that on Instagram, TikTok, and probably YouTube. And that put me at, what, $75,000? Probably thereafter we bought the Pheasant Street Apartments, 3 side-by-side duplexes, seller finance. We had an investor that we called about property management that ended up wanting to invest. Like, we wrote a deal, we ended up partnering, and we put $90,000 in as a down payment. We bought it for just south of $900,000. Cash flow a little bit day one. He wants to double his money every 5 years, he doesn't need cash flow, so we got into that deal. It's your money down. That was another 6 units, put me at 81 units by 21, which leads up to the Bigger Pockets podcast. After that, we bought 2 triplexes, which put me at 87, and then we bought a 10-plex, which was 97, and we bought something else. 8— where's the 8 units? I don't think we're the extra 8. What, how do we, how do we miss count?

But you got, uh, please hold. Uh, we got, uh, we bought a 38. Oh, we bought it. So we bought a duplex, uh, the Gibby Street duplex, and then the 2 triplexes.

Somehow we got— oh no, then we bought the Broadway Sixplex. So that was 6 plus 2, so 97. Yeah, so that got me to 105, and every single deal was seller financed. Shy of the Broadway 6-plex, which was private capital. We got a hard money loan in first position for $440,000 from Flynn Family Lending, bought it for $550,000, got a second position for the remainder.

By the way, we've never shared the whole story, so this is the first time we've ever done that. It's now recorded and we'll go live.

It was chronological.

Yes, for— well, technically we closed the 10 right after the 6 that we forgot about, but other than that, perfectly chronological. The short version is we did everything we did by forming relationships and telling our story, which we just did here. But the best you can get your story— I'll put a link below to our video from Monday. It actually is, the story is worth more than real estate. That is how we went from 0 to 100 units without syndicating. Syndicating, you're going to have to market your way there. It's going to be crowdsourced. Go out, reach as many people as you can, get big ad spend, if you want to do it without syndicating, relationships and storytelling is the only way I am aware how to do it if you're not just absolutely loaded with cash.

Yeah. And turns out we're never loaded with cash when we're both broke. Very accurate. But you can leverage your story when you don't have cash or assets to leverage. Do we have any other questions? Yeah. So we got several lining up, but this next one is from Isaac Myers. He says, hey, my name is Isaac. I'm 16. I'm 18 years old. Oh, what would you recommend for me to get started in real estate?

Ah, so if you are getting started in real estate, I'm assuming you're starting from zero, which is a great place. That's exactly where I started. Where I started too.

Perfect.

First thing I would do is I would just start meeting owners. There is no— well, actually, before that, I would choose the market you want to invest in. I'd look at, okay, what, what are my surroundings?

If you're— if you have a good market near you, I recommend starting close to home.

If you're in just a place that's really rough, go ahead and look at a market, but choose where you want to invest. Once you know that, start building relationships with the owner in the market. Now you can watch our channel, you can watch 100 other channels on how to play the game, but there is not a single person who knows how to buy that real estate better than the people who have already bought in the market you want to buy. So if you learn from them how they got to where they're at today, you can copy that strategy, form relationships with them, and you'll be able to play the game at a totally different level than anyone else.

Yeah. And if you want to get to $10,000 a month, quantify that and then do the math behind it. Once you set a goal, do the math. You want to get to $10,000 a month, $2 million paying you 6%. Now, one way you can do that is find a way to borrow $4 million at 6% and lend a portion of it out at 12 or at 9. You just do the math. You just have to make margin on X amount of money. So if you go buy a real estate deal, seller finance, You buy, let's say, on a 6% return, you can borrow at a 3% return, then you're going to earn 3%. And so you just have to do that margin until you hit your cash flow goal, and then you pay it all off and you're set for life. But set your goal, set your target. How big do you want to get? Do the math to get there, and then meet with the people who have already gotten there because they're going to be the ones who can help you out. And as you start growing and progressing in your career and adulting a little bit, you're going to start getting a lot more advice from a lot less people.

Last thing I'll say on that— way to go at 16 making the decision to buy real estate. I decided I was going to commit to real estate at 26, and I was 29 when I finally closed on a multifamily deal. I didn't find the right mentors, and I was working adjacent to, uh, to investing.

He was in the wrong seat. Yes, he was selling information to people that were using it to go buy big.

I was sitting on the other side of the table from where I needed to be. It took me, you know, 26 years to figure out what I wanted to do and another 3 years to actually go buy something. So last piece of advice, the fastest way to become an investor is to buy a piece of real estate.

You wanna buy multifamily, buy a duplex or bigger and you are on your path. And don't focus, I'm gonna give a little extra 'cause you're 16. Don't focus on protecting and conserving the little that you built when you get your first deal. Until you hit your end goal. A lot of people want to protect the little bits and pieces along the way, but the reality is unless you're hitting your end goal, you shouldn't be protecting it because it doesn't give you what you want.

Okay, questions piling up, so we're going to speedrun a few unless we really have to pause on one. Let's go.

That's good. So the next one from Tim, he asks, how long does it usually take for you guys to fully pay off the agreed price to the seller through seller financing? So the way that it works, you can amortize it or you can pay interest only. Those are the typical structures. You can do installment payments, but the typical answer is amortization. Do a 30-year AMM or interest-only payments and a balloon. Balloons go pop. So if you do a 5-year balloon, that means you have 5 years to pay it off. Now you could pay it off completely, or you could refinance it, or you could sell it, but that's the time that you have to write the check and pay off the loan. If you amortize it, like my very first deal in Quincy My brick blockplex, well, that's fully amortized 30-year note, no balloon. So it's just going to pay itself off little by little, and I'm in no rush to pay that off early. I'll just keep making my payments. It's going to pay itself off like a home loan. It depends how you structure it. Every single deal is going to be different, but I'm not focused on paying stuff off until I've built— again, like I mentioned earlier— what I want. I want to build the lifestyle that my end goal is, and then I'll protect it, pay it off, and I'm Wonderful thing with creative finance is it's all made up.

So the one thing that we don't do, because what we usually do, we have a lot of 5 and 10-year terms. Those are pretty normal for our balloon payments. So again, we have 30-year debt and things that have options to extend to 15 years. Yeah, so we have a lot, but if there had to be an average, I'd say most fall in the 5 to 10-year range. What you want to make sure you do is don't stack them so they all land on the exact same time. You buy a whole bunch in the same year and make them all 5-year balloons, Turns out in 5 years you have a massive problem. I recommend spreading them out. So it's like, okay, I have these balloons this year, these balloons 5 years out. This stuff's 30-year fully amortized, so we'll just pay itself off. Don't put them all in the same place. But if there's such a thing as average for us, 5 to 10-year interest with some principal is typically what you would see.

Next question is from Dave. If you see a building that you want, but it's not listed for sale, you pursue it.

Yeah. That's what I do for most of it. That is how we play the game.

Yeah. I go call them up, build a relationship, and I do a little bit more of this than Christian does. Christian also handles a lot of the relationships in Quincy, by a lot, I mean all of them. I call them up if they have a building that I want, and I want to learn how they did it because there are buildings like that in every city in America. And if I can learn how they bought theirs, I can repeat that in other markets. I need to learn their story, start cultivating that relationship, because whether I buy it or not is not important. Fact of I can learn how to buy it, how they bought it, and use the best pieces from their story to help me build my own.

And we have a whole video, it's 8 minutes on— or even it's 30 seconds on how you find and contact any owner anywhere, any markets. Uh, it's probably our most watched video. I will link it below. Probably be tonight. So if you're, uh, you're watching it, I'm gonna get home from Moses Lake and I will, uh, edit, uh, the description here and I'll add the, uh, the links that I'm promising.

How do you guys approach trying to seller financing on-market deals without having to speak to a hater? Same exact way, but this time you're talking with someone who probably doesn't know how to play this game, because if they did know how to play this game, they would be buying. So you have to simplify it. My, my piece is keep it so simple no one believes it's how you actually did it. So I get a lot of hate online. People don't believe that this is actually how we did it, but it is just this simple. So you have to get really confident and comfortable in your position of saying, this is what I want to do, this is why I want to do it, let's submit the offer, and keep the terms so simple that anybody reads it, that makes sense. Because if you can make it make sense for anyone, you're going to get the deal more often than not.

Yeah, that's exactly what I would've said. So roll, next question.

Awesome. Do you guys have any book recommendations outside of Rich Dad Poor Dad? What do you want? I mean, right? I mean, what do you want? Yeah. He's got business principle books and I'll let you dive into that. Yeah.

So if you're working on how do I set up my business, Ray Dalio's Principles is Awesome book. It's about as thick as the Bible, but it's a great book. It's fairly easy to read. I recommend it on audiobook because he reads half of it and he has an epic voice. But that inspired us to do our Monday videos, which is our principles of real estate. He published everything he has. He runs one of the largest hedge funds in history. Fantastic economist. His principles are awesome. There's also Ride of a Lifetime by Bob Iger. He was the CEO of Disneyland through— or not Disneyland, Disney Company, the whole thing, Disneyland and all associated products. But he did the Fox merger, the Star Wars acquisition, the Marvel acquisition. A lot of takeaways from that book. If you're looking for mindset, 10X Rule. I think we're both in agreement there.

Yeah, 10X Rule by Grant Cardone is a good book for mindset. As far as actual creative strategies, a good book, Deals on Wheels by Lonnie Scruggs. I put that out there a lot. I looked online, it's actually kind of expensive. So if you can find a copy and borrow it from someone, or you just go and buy it, you might have an ebook. But that talks about microtransactions, the idea of going out buying a mobile home. Granted, these numbers probably are missing a zero today, but you buy a mobile home for $50 grand or $5,000, you seller finance it to the tenant, give them an opportunity to actually be an owner. They put $2,500 down and sell it for $12,500, and now you get half your money back and you have a note for the other $7,500. So you can start multiplying your money through small micro lending transactions. What would be the usual requirements for a hard money lender to say that the deal you are presenting is good? Well, cash flow. If things cash flow, your odds of getting money are a lot higher because things that make money are worth more to investors. They need cash flow, you're gonna need equity. And if you don't have either of those things, well, you probably shouldn't be buying the deal anyway. But if you're getting started, and you don't have anything to back it with, you can't cross-collateralize, meaning use your other equity elsewhere to go get hard money loans, you just need to find a stellar opportunity and negotiate terms that no one else can get. Talking about this with a mentorship student yesterday, they negotiated a seller finance deal, zero money down, no payments for 5 months, and then it rolls over to 4% interest only. Nobody can get that loan anywhere. Yeah, it's a ridiculous, it's a ridiculous term. He's like, I don't know about how I'm gonna get money. I'm like, don't worry about it. That is, those are the craziest terms I've ever heard of. That was an on-market deal. So you can structure phenomenal terms that no one else can get, and now that is a reason that other people may want to invest into that deal as a partner or as Yeah, it's essentially that easy.

There's a— we're not big on acronyms, but DSCR, debt service coverage ratio. If it has enough cash flow and you can comfortably service the debt, a ratio a lot of banks will use is like 1.2 to 1.3. Hard money is typically going— we want to see even a higher service coverage ratio because they have different parameters than a bank. But the fun thing with hard money is that it is a lot freer on how you structure it. So your relationships actually have a lot of value in hard money. Yeah, they can make creative decisions that banks and conventional lenders can't make because of heavy regulation.

When first starting, how did you figure out how you wanted to structure your seller financing offers? I assume when first starting, you probably didn't know what you didn't know. Well, that is accurate. I didn't know what I didn't know. I bought a 12-plex, and Cade actually got to see the 12-plex today. It's my prettiest building, I think, but it's my favorite building that I've ever bought. And I just wrote it for a cash flow. I had a little Excel spreadsheet and I had income less expenses equals cash flow. And so when people say, oh, you need to have all these crazy spreadsheets, well, I didn't and it worked. So just make sure that your income is higher than your expenses on long-term fixed rate debt and your odds of success go up. And that is just how I underwrote it, but I didn't know it. I didn't know a lot. I was mowing the lawn because I didn't have money for lawn care. I thought my cash flow was going to be higher than it was. Still cash flow positive with a signature, like $800 a month instead of over $1,000.

Didn't you also get trapped under a bathtub trying to fix something?

That was in Marina. Yeah, don't do stuff on your own when you don't know what you're doing. I've been electrocuted and dropped a cast iron tub on me. Got stuck. But back in Quincy, I was mowing the lawn because I couldn't afford to pay anybody, and I was stacking up the cash. So I was mowing the lawn one day, it was about 3 months after I bought the property, and I look at the bricks, and the bricks are pretty cool. If you ever fly out and meet us like Cade did, you'll see there's some cool brick designs with it. And I looked over when I was mowing the lawn and I saw the bricks, I was like, those are my bricks. I just realized for the first time after 3 months while I was mowing the lawn that I actually owned the place. Didn't know anything. Like, it just hit me. So if you get into it, you don't know what you're doing, well, there's a reason you've never done it before. I have watched your other videos on finding those owners and market. Is the best way to still scroll through Google and then GIS? It's what we do.

Yeah, uh, I don't know that it's the best way. It's what we do. It's free and anyone can do it, and that is why I like that.

Yeah, we don't ever proclaim to be the best. We just know our stuff works.

Yeah, this is a good question.

I like it.

Simple answer, uh, I don't know. That's the best—

could be.

It works.

It definitely works.

I know for 100% confidence we have found A-list celebrities doing that multiple times.

Like, it works. Uh, when making connections, how do you open the door to future private lending if the person doesn't want to sell anything? How do you find your private lender? It's just good to keep in touch. If you're calling up investors, they don't want to sell to you, maybe they are open to investing. We've done that before. Someone funded the Peasant Street Apartments that we referenced earlier today, like 4 blocks that way.

Yeah, not far.

And the investor lived nowhere close to here. We funded it. We didn't try and buy any of this stuff. We didn't try and sell them anything. We just kept in touch and told them what we were working on. That sparked interest. When you're meeting with people, you learn their story, they learn about yours. It's not just, oh, I want to buy. You have an objective going in and a takeaway coming out. The takeaway could be they just want to be involved in your process and your progress and your story. So you share, hey, I'm working on this deal, will you take a look at it? They're investors, they own real estate. Odds are if it's a great deal, they may want to be a part of it, and that could be your next private money lender.

And we have a policy, and this I share with everyone all the time, but If you only met one owner of real estate every week, which for us, that's one or two calls. But I mean, if you're new to this, say you call and get ahold of one person a day and you try 5 times, only 1 out of 5 times they'll get coffee with you. I promise that ratio will go way up. But just for argument's sake, you're brand new, one owner a day, or sorry, a week for one year, it was 52 owners that you just have networked with and communicated with and shared your story and they shared theirs. Opportunities will find you because they'll help connect you to other people. They may sell you something, they may not, but if you keep transactions out of it, just focus on meeting people. 52 owners in one market is a lot of people, and there are not a ton of multifamily owners in any given area. You find it's a pretty small club of very tight-knit people.

So if you just follow that, everything will pretty much fall in line for you. It's kind of hard getting funding as a starter to put down on seller financing deals. How would I go about this? Most lenders want 20% down purchase price. So it depends on how you're structuring your seller finance deal. If the seller's financing 90%, well, that's my very first deal, you're gonna figure out how to come up with 10. And so the trick to coming up with the 10 is to negotiate amazing terms on the 90. Example, my first 12-plex, it was a 30-year M, it was fully amortized, no balloon, 6% interest. You can't get a bank loan for 30-year amortized debt with no balloon. Maybe get a HUD loan for 35, but not on these type of properties of this size. So this was just a loan that was exclusive to my negotiation skills. You can negotiate really solid deals on a large portion of the deal. You just need a small portion. What typically happens if you fail to pay them back. And this was my philosophy in the beginning. Hey, odds are I'm going to learn. I'm either going to make it happen or I'm going to have to sign a deed in lieu and you're going to take over the property. But if you do, this is what it looks like. Yeah, I'm going to pay the hard money lender, which typically they're just individuals, private money. I'll pay you 1% a month. That's how I did my deal, 12% a year. And if I can't pay you back, I'll sign a deed in lieu, which basically says instead of foreclosing, let me just sign over the property to you. You'll get the LLC. And we'll have to pay the excise tax, but they'll get the property. You negotiate phenomenal terms where cash flows on long-term debt that no one else can negotiate, well, they're going to be more inclined to give you the money. In my case, that's where I was going to fail. 19, never done it before. And if I failed, they would get the property and I would learn and I wouldn't be on BiggerPockets. Like, that stuff just wouldn't have happened, but I would have learned a lot. But that got me into the door where if I failed, they would get an opportunity no one else would get. Yeah.

And first you have to master the money. Like you have to have the deal that is going to provide excellent security to your investors to get people excited. The numbers have to be there. However, when you present it, make sure that you tell a story about the property. Nothing is less interesting to me than when someone calls me and goes, hey, look at all these numbers. You want to do this deal? I'm like, Where is it? Why do we like the property? Does it look nice? Would I be excited to own it? Why do people want to live? I have all these questions in my head outside of the numbers. Do the numbers have to be awesome? Yes, bring great deals to great people. However, when you present this, talk about what you're excited about with the property. We had a duplex just down the street that's even closer than the other duplex we were just talking about, and what got the investor excited.

He already knew the numbers were great because he's done a deal with us before.

He's like, I love your math. I know that's a good deal. Why do I want to do this? Well, it's on Gibby Street. No, not on Gibby yet. And it has an apricot tree. Is that a reason to invest? No. Is that a reason that you're now interested? It's like, well, I don't have apricot trees. This is going to be fun. I don't want to miss out on the adventure. It doesn't have to be super significant. Do tell a story of why you want this property. In addition, We wanted to do some building on it. He wanted to get into construction. You tell the story of this is what we're getting, this is what it's going to be. It's right between two properties we already own. You start positioning a story where you go, huh, there's something bigger going on than just buying one piece of real estate. I want to be a part of this. And that is where the money becomes very, very easy to raise.

Do the numbers, tell a story. And like you, me, everyone in the room, all the investors out there, we've all got a story. Properties have storage too, like Christian mentioned, the 38-plex, 228 feet of highway frontage, not any other property quite like it. And it's got multiple acres on the highway. They just put a brand new roundabout, they're building brand new homes, new apartments all around the property right next to WinCo. I mean, it's a great location. The whole area is coming up. We're getting the buildings painted, we're putting new roofs on it, redoing the interiors, and we're taking a property that used to be the single worth property and almost like all of a sudden We're improving it to, you know, we're getting high C class. Eventually it's going to be in B as we start doing more and more of the property. It'd be a great place for people to live. It's got a little park in it, it's cool, it's got something that other properties don't have. But what it used to be is nowhere close to what it's going to be, and that transition is what can get interest from lenders, from investors, from buyers. That's how to play the game.

Yeah, and on that property A lot of the story was this is the roughest property in Moses Lake. True facts. We have a game plan of how we're going to make this an awesome place to live. One of my favorite pieces of this is it's a bad property because it used to be outside of city limits. Now it's in city limits. The cops can go there. The factors that made it get run down, that were problems for the old owners, aren't the problems that we're facing today. We were able to implement that through great management, took it from $2 million purchase price to our recent appraisal a couple weeks ago of $3.1, you can really make a lot of money doing these if you position them right. But you can't if you can't buy a property. So tell the story, get investors on board, and have great communication throughout.

This question is from Hugh. Uh, he says, if I'm correct, Cody can see the deals before they hit the MLS, but for someone who doesn't have a real estate license, how do you suggest communicating with the owners before the property hits the market? So you're not going to see deals even as an agent. I'm not going to see anything before it's the MLS unless I know the owners. The reason that I'm able to scale so quickly in Moses Lake is because I made a commitment at 19 years old to calling every single property owner that owned the multifamily I wanted to own in Moses Lake and in Quincy. So they didn't know me then, they know me now, and that's how I bought a lot of stuff off market. It's not because I had my agent's license. Like, I'm not ahead because I'm a real estate agent. So many real estate agents out there that want to play this game, that they're not getting any special advantage from having their license. Yeah, they can see stuff when it's a market, but so can you. You want to play the game at the highest level, you have to call the people where you want to own, that own the real estate you want to own. And I called everybody when I was 19, 20, 21 years old. That's why I'm moving so quickly today, because 2, 3 years later, I get to reap the rewards of building the relationships as 19-year-old Cody.

And as you keep buying, you become the only logical buyer for some of these properties, and you own everything around it. You've met all these people, you've told them their story. So now their options, if they want to sell, are, well, I could pay an agent 6 percent to sell the property, or I can just call Cody and Christian, and I know they're going to buy this because they buy everything like this, supposedly. And when you're first getting started, you've told your story to enough people, someone's going to go, huh, this kid— we'll use Isaac as an example— 16 years old, I talked to him, he's 18 today, he was committed to real estate, I want to sell this, I want to give him a call and see where he's at. You get those opportunities because of the connections you made 1, 2, 3 years ago. Some of the transactions we're doing today, Cody started the relationship 3 years ago.

And yeah, that was way before I met Christian. But when you start buying deals, talk about building up that track record, you're going to start buying stuff and do this. In that situation, you actually have to do something with it. You can't just sit on the properties and let them rot away because there's a lot of buyers that do that. Go in, make them nicer, stop paying yourself cash flow right now, use the cash. That's what we're doing. We've got a consulting company that makes money, property management that makes money. We've got the real estate that makes money, but we're rolling all of the money back into the assets because if we can make the assets better, we can improve the community. All of a sudden that story's way more powerful than, oh, they just paid themselves right away. We clean up everything that needs to be cleaned up and provide a great place below market rent. And all of a sudden, people in town like when we buy stuff because we take care of it better than the last person. And this is something I heard from Cardone a few years ago, but he said, "Someone's going to get the $50 million. The difference is someone else can get there and do whatever they want with it, or you can get it and be that person and manage it better than anybody else ever would." So if you're going to go there and you're going to play this game, buy a bunch of real estate, but manage it better than anybody else would because you're really just a manager of money and be the best one.

Also, if you're fixing up the properties and you have a reputation, say you get a little farther in the game, you cross 100 units like Cody and I have, and every owner you work with will see you improve the building. A little side note, if someone wants to sell or finance to you and they know that you have a reputation of making all your assets better than they were when you picked them up, turns out their collateral which is the property, gets better over time. They're much likely to be comfortable seller financing to you at a lower down payment if they know you're reinvesting consistently in the portfolio.

So it's very good for your brand to go ahead and improve the properties and reinvest immediately. What are your guys' best resources to keep up with real estate news? Well, you can use Google. Google's kind of my go-to for everything, but instead of just consuming the news, I try and go make the news. We just became the largest owner of family in Grant County by building count. And so we're just trying to go out there and make waves. Because if you get big enough, you have enough cash flow where you sustain stuff that's going wrong. In the beginning, I've seen a lot of people just focus on what's going around and around the world, and it hinders them from actually going and building and sticking to their plan. You just go build. Yeah, interest rates are going to go up, whatever. If you can play this game creatively, or you can just make sure that you know how to underwrite the cash flow, you just keep adding cash flow every month, you're going to be better off than you were, as long as you don't let the lifestyle creep come in.

Yeah, I'd say the only source of news I have on what's been on real estate is we just have so many meetings with owners and the people who are watching the news all the time. Yeah, I got a bunch of calls, uh, the last time they announced, hey, uh, We're raising the prime rate 0.75%. I have a whole bunch of people just call me and be like, wow, did you hear this? Well, I have now. That's how I get all my news. We just talk to people and stay connected. But I personally don't really Google it or listen to the news. I let other people do that for me.

Are you open to syndicating if we find a good creative multifamily deal? If you mean syndicating with you, probably not. We view the story as being worth more than the real estate. And so the fact that we are able to scale to 100 units and eventually 250 and then 500, 1,000, we can scale this without syndicating. I've never seen that done before as quickly as we're going. Yeah, it's been done. There's people out there that have gone to thousands of units over 30, 40 years just earning their way to it, investing really smart, getting into some businesses, but I haven't seen it happen from college dropout, no money, no family, friends in the business, and just scaling it up with one friend that met partway through his career. I've never seen that done. And if we go syndicate, we become like everybody else. And yes, we could do better deals because we could syndicate seller finance deals. And as you know, if you put less money down, your returns are higher. You put 10% down, go to 30%, it's easier to double your money. We could be excellent at the game because we've seen seller finance 432 units in Texas. We've seen those deals where you put 10-20% down. That's not the story we want to put.

Doesn't mean you can't do it, but that's not what we are going to do.

No, that's—

that is not at all the plan. And, uh, I actually said that pretty much perfectly. Nothing to add.

Next question, this one's from Carl. Recently put an offer in a commercial building. Seller was willing to carry the contract, but my down payment wasn't strong enough. I don't have enough cash. Should I use a private lender for bigger down?

Well, you have a few options. You can absolutely use a private lender if you can answer the two questions. Does that help you buy it? Probably. So question one answered. How do I never lose it? Make sure the money is not too expensive. Hard money is typically short-term, so you need to have a set game plan of what am I going to do to get this into long-term debt. No, you can execute on that, otherwise you can lose the property. That is not a good way to move forward. You don't want to buy pieces then lose pieces. So yeah, so I answered the two questions with another option. What we tend to opt for, as opposed to using like a private or hard money lender, we usually use individuals, especially if you're newer to the game. You love the deal, you know the deal, you can tell the story, the numbers are excellent. Bring on a more experienced partner. I wouldn't bring on a partner who has different goals than you. I wouldn't bring on a partner who is wildly in a better financial place than you, if you have someone who is just on a different level. I don't want to partner with people who can afford to absolutely bury me, but find someone who is in the same sphere as you, maybe has a little bit more experience. You can look at, do I raise debt from them? Do I take on an equity partner? I tend to think along those lines. How do I take one, maybe two other individuals on this journey with me?

And do you want to And you asked if you should. I mean, if you want to, then sure, but make sure the numbers make sense. Like Christian was mentioning, if you don't want to do it, then don't do it. Either get, you know, a better negotiation, get less money down. I've had deals that they want 20%, then we're working down to 15, and then we're working down to 10. Being me, Christian's on in that one, but, uh, got him down from 20 to 10. It doesn't sound like a lot, it's 10%, but that is a 50% reduction. So if you can reduce your down payment, just take it from— say, I can put more down. This is why I'm not going to do that. I want to get into the property. I want to take all my extra money and start doing this, this, and this. Yeah.

And one of the, one of the first deals we partnered on was one that I found where they wanted 17.5% down. We ended up doing 4.5% down. We did additional little principal payments at the end of every year of $20,000, but we You bought an asset for $1.1 million for $50,000 down.

You can get really creative with these things.

So first thing I do is negotiate. Second thing is figure out how you want to raise the debt and equity and what makes sense for you, if that's what you want to do.

Do you do any type of realtor-based work to service others, or is it merely investments as a principal? Yeah, if you want to fly out or you want to buy deals we can represent you. We got our license and we do primarily multifamily. You want to go buy single family? Awesome, I'll refer to someone I know because I'm not going to do that. I, I'm not the best person for it. I know Christian isn't either.

Nope, but love to help other people. Uh, we don't make it our main focus. However, the few people that we have helped into multifamily, I can say for a fact they have gotten ridiculous deals. They have been very, very, very good. Um, I will say that much. If we are going to help you, we will only sell deals that we would buy ourselves, and we would have made a lot of money buying them.

A lot of money. Yep.

There's a point where you can try to buy everything yourself, or you can help others get in the game. Um, we'd love to help, and not every deal is the right deal for us to buy right now. Doesn't mean it's not a great deal, so we will absolutely help.

I have a buddy who bought a 9-plex on the same street as my 12-plex and triplex. Bought it for $620,000 waterfront. Ridiculous. 9 units waterfront, $620,000, right next to my triplex. Great deal, but it's worth more if I help him buy it than if I buy it. So you want help, let's know. Do you both go to real estate meetups, or do you focus on finding owners on your own through the power of Google Maps and build relationships that way primarily?

Both. We go everywhere where we can network. Meetups all the time, events. Absolutely. We'll fly across the country for seminars.

Everything starts with hi, or if you're beyond talks, howdy. What's the average down payment? 5 to 10%. And we get all non-recourse debt. The most important question I have for you is what resources or books can I learn from to help me negotiate and structure a robust deal? As far as negotiating a deal, when I started learning about negotiation, I studied from Chris Voss and Jordan Belfort, and I did their masterclass online. And then I used Jordan Belfort's online platform, uses Lightspeed, BT Bradley's platform to host his online education. I mean, that's, that's where I learned it. So that is what I would do in your shoes. But that's about it. I don't read a ton of books because I just go out and learn from people who are living it.

That was my absolute go-to, was Chris Voss. Some just fantastic negotiator. You read his book and apply the principles, you are 99% good to go.

What's the benefits you present to an owner or agent to go ahead and pursue seller financing? Some people like to sell benefits. Some folks, they got revolutionized, I don't know how long ago, 20, 30 years ago, 40 years ago when Cardone started information-based selling. We're not doing that. If you have to pitch on the benefits, they don't really buy into who you are. So we just share who we are, where we're coming from, where we're going. We learn about the same pieces for them, and then we do a deal.

Yeah, information-based selling was a brand new topic, just like you said, 20, 30 years ago. Started getting a lot of traction. Now everyone sells that way. People don't care too much about the information because there's lots of good deals up there. There's lots of ways to get information. Almost everything's online. So I wouldn't go, oh, you're going to have these amazing tax savings, it's going to be fantastic. It's a, you want to sell the property to me, this is how I'm going to take on this property. A lot of these are properties that have been in families for a long time. They just want to see if the property is going to be in good hands, their tenants are going to be taken care of, and that you're not going to drop the ball on their legacy. That is a lot more powerful than, boy, the tax savings could be really cool. I just build a relationship so that they want to sell to you and they want to help you. They'll also teach you how not to lose it.

That's been incredibly valuable to us. You previously mentioned that you raised equity but structured a buyout clause. Do you mind sharing a little more on what the buyout option was and how it was calculated and structured? So the way that we structured it was with an assignment of ownership. And so we had an LLC operating agreement and some extra addendas to sign that basically stated that we have the right, we can unilaterally, us, sign and pay X amount to cash them out. So in a deal, if someone put in $50 grand— and I'm just making these up, I'm not even using deal-specific numbers— someone put in $50 grand, we could buy them out for $100,000. We could sign it, wire it, and then they're bought out, and we sign what's called an assignment of LLC interest. We would have to get that notarized and file with the Secretary of State, and they make their money and we own the asset. That is how we've structured our deals. There's so many different ways to structure it, but we try and keep it as simple as possible.

That's what our attorney recommended.

How do you find the phone number/contact info of owners? We have that one below. We have a video on that, check it out. 8 minutes and something seconds.

Yeah, I think we called it How to Find Any Property Owner Ever for Free. Um, but check out that video. Essentially, the cliff note version is to find the property on Google, plug it into the tax assessor that will show you who owns it. It'll either be an individual or LLC. LLC, plug it into Google, or Google will probably take you to OpenCorporates or a like website and you'll see who filed the LLC. And then same thing, take their name, Google it.

You actually had someone comment right underneath that, that you guys had a video on it. So someone—

oh yeah, there we go. That is our most watched video and I recommend you watch it. I will link it below later tonight.

So that same person who made that comment also asked, do you guys have a video on what a call with an owner looks like and how you get them to go out to a coffee slash lunch with you? We do talk about scripting, I believe. I don't know how many videos we put on our YouTube channel. I'd have to check. We do a lot of videos. We have 100% recorded that on the course, multifamilystrategy.com. However, I feel like we probably put some of that online because we've, we've put some of the mentorship calls here.

I believe we've done some on that. I'll, I'll have to look through for that video. I have a lot of links that I'm now committing to tonight, but, um, I'll see if we have a good video that has that, and if so, I'll link it below.

We will not do live calls though, out of respect. And there's some people online that'll do the whole live call thing. We don't try and monetize our relationships by putting them online. That makes highly transactional, and that's not cool. So we can do mock calls, but I know for a fact we could have some on YouTube. If not, we put more on YouTube and we've got them on the multifamilystrategy.com.

If not, I'm going to just commit to Cody and I are going to do a series of role-play calls and we'll put it on YouTube within the next 2 weeks and we should have them documented. Nice.

I understand why you don't ever want to sound salesy, but who brought up seller financing first with your deals? First deal ever was listed for seller financing on the market. Second deal was not bank financeable because the roofs looked like this and they would crowd. And so that was seller financeable. And then the third deal I bought, still before I met Christian, was a 6-plex from the same owner as the second 4-plex I bought with the bad roof. So he just opted to seller finance, and that was 30 units, which gave me the confidence to start pitching seller financing.

The fourth deal I bought, third deal he bought, was the 38-plex.

Also not bank financeable. Yeah, not bank financeable. We could have taken it private, but we used the fact that it wasn't bank financeable to pitch seller financing. If you've seen our broker scripting, one of our questions is, how's the bank going to look at this? Because if the bank's not going to like it, then we need to get creative. And if we need to get creative, that's music to my ears. Once you get an opportunity, at what point do you meet with an attorney, form the LLC, and set up a bank account for that LLC?

After you are under contract, you will start all that process. Don't do that before. I've seen people Do that many, many times. We're like, we're gonna get it, we put our offer, I'm opening my LLC. Wait till you're under contract.

I did that before.

Oh, have you? Yeah, I didn't know that. It's easy to get excited. Uh, one step at a time. Don't add extra steps. Um, first get it under contract, then you're going to go into, uh, feasibility. So during this time when it's looking like you're probably going to close on it, I usually wait until about the time we wrap up feasibility and know that we are for you're buying this deal, open the LLC. Once the LLC is open, you need to get your UBI number. You then file for what's called an EIN. That's your employer taxpayer ID. You take that and you bring that to the bank and open up a bank account. And that is your full process for all that you need to do. And you do it in exactly that order every time. Under contract, get through feasibility, UBI, EIN, bank account, go to close.

Where should I find legal representation for seller financing and writing up the terms? How did you find your lawyer? We found our lawyer from a past connection, and, uh, there's a few others, and there's a lot of attorneys in town, but you can just look into real estate lawyers. You can also reach out to local real estate agents who've done a lot of deals and ask who they'd recommend Just make sure that the lawyer is someone who owns real estate themselves.

That is my number one recommendation. You find someone who knows how to play the game themselves, they just counsel you differently than someone who knows it in theory.

Uh, next question is coming through. Real Ochoa: When's Christian moving?

Ah, I am still figuring out the right time to move to Texas. It's something that I want to do. Answer to that: we are not going to leave our current market in Washington State until our businesses are stable. Now, we have real estate holdings which are doing great. We have property management which we are growing and scaling out. We have our education company, and we want to add a few wheels to that. Uh, we want Moses Lake especially, but other areas need cleaning services. That's a company that we're actively trying to acquire. We're We're also looking at other things— maintenance, lawn services— but we want to get our, our total businesses completely set, stabilized, with great leadership here in Washington State before we go expand so that we can take all those companies along with us.

And the business— if any business that we're trying to buy is self-financed— so I'll keep you posted on how it goes.

Yes, I have updates for Cody as soon as we're off this.

Oh good, 50% down. That'll be the most incentivized. Yep.

I have a creative way around that, however.

Okay.

I actually have two, so we will, uh, we'll keep you guys updated. If we go under contract, we'll share that as well.

Next question. What's the average interest rate do you take, or would that depend on the deal? 5%. However, everything's deal-specific. I've paid 6%, I've paid 3%, whatever you can negotiate. I've seen as low as 0%, do a lot of 4%, but whatever you can do, and really whatever you make cash flow. Because the way you cash flow is you borrow, which you prevent the return you get if you pay cash.

Yeah, you cash flow 50%, and turns out borrowing at 25%, you still make quite the spread. So, uh, you know, very deal specific, but yeah, $5 average.

Do your negotiations all happen in one sitting, or do you get back to each other over a period of days or weeks? Depends on the deal, but sometimes they just say numbers and I say yes. I've done the 10-plex. They said, this is what we're looking at. It's like, write it up.

And it was awesome.

We got price standards for that. Yeah, ridiculous off-market. And I've been wanting to buy it every time we drive through Morningside. I'm like, I'm buying that someday. I really want to own it. Then he called and gave us a great deal. That was from a broker. Other times we have to go back and forth. The 7-plex, Christian handled negotiation and took it from I think it was $1.25 million purchase, $4 million down at 6%, down to $1.1 million purchase, $50K down at 3%.

I figured we were just weren't buying it. That was the only place that really worked for me because I didn't want to buy in the Seattle area.

And he got it.

But then he said yes, so huzzah, um, which is a good learning lesson. Sometimes if you just ask, it will happen. So that was a, uh, a master negotiation where I just said, I don't think I can do this, and they said Well, I think we can, so great.

Do you guys cover closing fees, um, commissions when seller financing? No, I mean, typically it's just our cost to close. So I mean, we're going to have our buying closing costs, but typically we never have to pay commission.

I would on zero down though. Yeah, they want 100% financing and the broker said, well, how do I get paid? No, we'll pay. Yeah, I'll pay you. Um, so again, deal specific, but typically no.

Do you guys save and upload the stream after? Yes, this will automatically go live right after, but all your questions will not appear, unfortunately.

Though if you look at the computer version, the live chat should appear on the right-hand side.

Okay, should. How long does it take for your deals to close after signing? Uh, after signing a PSA, it depends. I mean, the main thing is you just have to figure out the money down. So if you're doing low money down and you have it get through your inspection if you're doing one, and you need free and clear title, make sure you have title insurance, and then you can close as soon as you have those two pieces.

Typically, uh, 30 to 90 days depending on the transaction.

How are you? All right, we've closed this quick. I'm gonna say 3 weeks. You can close in 2 weeks, I think. Yeah, 10-plex was really fast. We scheduled it for 60 days and we got through feasibility really early, and I called the broker and said, hey, let's do this. What do you mean? Let's close next week so you can go fast. Is seller financing with CalStack possible? Yeah, 100%. Yeah, there's going to be different disclosures on your note if you plan to live in the unit, and you can discuss that with your attorney. However, it is possible.

They won't want you to live in a commercial building. Not that people don't do it, but They'll want you to do that in 2 through 4 units if you want the house hack multifamily. But 100% seller financing, it's essentially just the seller versus the bank.

So talk it over with the seller and make sure your attorney can get it going. But absolutely. When is Cody buying a McLaren? Oh, Jason. I already know Jason. What's that, Jason? Jason Ewert. Ewert? How do you say that? Jason Ewert. Yeah, Jason's fun. Funny. I used to live with Jason. He was, uh, my buddy.

Sold the duplex next to Christian's duplex in Morningside on Peninsula, and I renovated mine, and there's a place for more.

Yeah, I would buy the McLaren, but Jason, I'm sorry, you just won't fit. You're too tall. How long are your average terms? 30 to 40 years? Typically 30-year amortization if we're not doing interest only, and my average is around a 10-year balloon. I have as high as 30 with no balloon, and I have some that are 15 to 20. As an 18-year-old with $10,000, is it better to save up for a deal on a property or spend that to pay more experience with people who are good? I would not send $10,000— if you have $10,000 to go learn some method information age, you can get all the info. Yeah, we've got a course, right? And just use us as an example for other people. There's so many people out there that sell tell you whatever. You got 10 grand, you shouldn't blow 10 grand with anybody, including us. Maybe you blow $2,000 or $1,000 to learn. But turns out it's easier to buy real estate if you have money. And so if you can save as much of that— you can get most of the information online. A lot of the stuff that's in our platform is on YouTube, on Facebook, on Instagram. It's just not as organized. You can organize all the information online and be an expert at whatever you want to be, because turns out I got here without a course. I learned how to sell through a course because that fast-tracked all the right information into my brain. But you don't need to do that to go build relationships with people. You just take the basics of what we put online. You can replicate this. It just depends how fast you want to go and how fast can you get $10 grand again? Because you getting $10 grand again at 18, great job. If you can do that again in 6 months, well, maybe you do blow it to go get mentorship from the pros. But if it takes you 2 years, it's not going to be worth it.

Yeah, that though— caveat— don't be afraid to invest in yourself.

Oh, 100%.

Spend it on going to conferences, sure. Buy an education platform or two. Just don't blow 100% of your money on education because you just don't need to.

It costs less than 10 grand to learn what you need to know to move forward. How do you find seller financing deals when you are new to the market? Same way as if you're not new to the market, you go meet with the people that own the real estate you want to own.

We have about 2 minutes left, or so, I'm gonna call us. So rapid fire, let's bust through as many as we can. There's 4 more left.

Okay, we're gonna go through 4. We will build.

We were told don't develop but build, so build. Means for other people, build is for you. So we will build our own, and yes, we will absolutely do that.

We're working on that now. How many people are in your mentorship program? Hope that's not rude to ask. That is not rude to ask. Um, more than 100. We've had over 100 people sign up across platforms.

Yes, currently active on the online course, I think we have about 60 or 70, and we have probably 15 to 20— I need to check the numbers again—

for, um, our weekly membership. Yeah, we just started that. We migrated over from PayPal to Stripe when we started the new launch to membership. So, ever seller financed a property you never saw in person? Yeah, I didn't see Pheasant.

Yeah, I walked through it once. I didn't see all the units.

I'm glad I bought it. I mean, it made sense and it was in a location that was right next to my other stuff. So I was like, all right, I'll buy it. And Toquilla, I don't know that I— I didn't see the inside of Toquilla either.

I just bought it. I didn't get to walk the, uh, two triplexes we bought. You, you walked those.

I never saw those. Oh yeah, yeah, we do that all the time. Do you try booking multiple appointments in a day due to the commute, or spread them out over days?

Yes, if someone wants to meet, I accommodate their schedule. We've had days where we have like 6 people and we have to go halfway across the state.

We've made it happen. Yeah, I drove 3 hours here for a 30-minute meeting and then drove 3 hours back. Is it a lot of time? Yeah. I was in a Miata and the transmission blew up, but it was worth it. I lost my transmission. And in Miatas, they have this 1-to-1 gear and basically you only have reverse and 4th gear if it blows up in the '90s models. So it was rough, but it was worth it. And I ended up buying real estate from them and I got to learn how they did it with a significant amount.

Oh cool, our next meeting just canceled, so we can, uh, we'll get through the rest of the questions as they come. Nice, that was oddly convenient.

Do you guys write up the seller financing deal before or after the owner accepts during this seller financing deal? Uh, depends. You need to write it up, and so if you have an agent representing you, they're going to write up what's called a PSA, purchase and sale agreement. Some people do LOIs, we skip that. It's like, you want to LOI letter of intent, or do you want an offer? So we write the offer, we being the agent, and we're the agent in this case. So we write it up and there's going to be a form in there, an MLS form for seller financing or payment terms. Line that out, and if everybody signs off on it, it'll go to escrow, and then an attorney will draft a promissory note deed trust. At least that's how it works in lien theory states. I'm still learning the whole title theory state, how all those docs are formed, but lien theory states you have promissory deed trust, and that'll get designed and crafted from an attorney based on the essay.

Will Christian ever get his own Christian shirt? No, uh, one, if I say Christian doing Christian things, everyone will just think I'm talking about church, um, which is cool and I'm totally about that. However, uh, it doesn't really brand, uh, for our channel. Cody doing Cody things is, uh, a lot funnier and rolls off the tongue a little easier.

And even if you're not a Cody, I I know a lot of people that aren't Cody that have Cody shirts. So if you wanna join the squad, we'll drop the link and you can get a Cody shirt. They're not my shirts. My dad bought it for me for my birthday on Amazon 'cause he thought it was funny. And then someone else that was watching a YouTube video bought another one and then Christian bought one to piss off our old mentor 'cause he stole a bunch of money. And so he didn't end up liking me as much after he did that. And it sounds like I have a lot of links to add tonight, but yeah, that's, If you don't want to do work, get someone who will do it for you.

Yeah, the Cody shirt's a fun branding piece. I won't do my own, but feel free to make your own. And, um, I don't know, I'll, I'll call you and thank you or something.

What does the membership provide?

Uh, the, the membership to the, uh, to the course, the mentorship? Was there a specification there? Okay, well, I'll just do the quick breakdown. So our course streamlines everything you see on our channel is It's stream of consciousness. It's whatever is most relevant to us today we're gonna share on our channel.

It means there's no order to it.

The course gives you all the information you need to go from point A to point B, from how am I setting my targets? How am I scripting and convers— crafting my conversations with owners, with brokers? How do I negotiate the deal? What's the first meeting look like? All those things are put chronologically in order for you on the platform. If you're looking for information, You pick it up there. Our mentorship group meets 3 times a week. Mondays, we call it open forum. It's like this, but you actually get conversation with everyone in the group with us. It's a back and forth on Zoom. Day 2, one of my favorites. This is on Tuesdays, deal analysis. We bring the deals that you are working on right now. We look at 'em together and we figure out how to do this creatively. We have done a lot of the deal structures that you just haven't thought of a cool way to make a deal happen. It's not always us. Sometimes someone else on the call just has an idea and deals come together. We've also seen deals funded there. And then Thursdays, Cody and I will take a topic that we might not have covered on YouTube, or it's more complicated than I want to attempt on YouTube because it won't get any clicks, and we'll break it down in depth. So we actually do like structured 30 to 45 minutes, then have a conversation about it afterwards.

Uh, that's what our live membership looks like. Yeah. One's information, one's application. And you know, application's more important than information, but there's a point where you need to actually learn the info. So You can also do that on YouTube. This is why we're doing this. Yep. Does anybody have any other questions? Yeah, we got 3 more. Let's keep rolling. What's a good goal to take home net for your first and second year after taxes from a job? It's kind of vague. Yeah, I'm assuming investing in real estate full-time.

Totally depends on your goal.

Yeah, there's a good— there's not a good answer for that. Just flat out no is a full sentence. Um, no, I mean, I can't tell you that. If you want to make $10,000 a month You need to build a $2 million equity position paying you 6%. Now, however you do that, if you think about on a 6% cap rate, if you raise rent $100, it's $1,200 a year divided by 0.06, $20 grand. Well, you need to do that 100 times. So if you had 100 units and you raised rent $100, so you make $10,000 a month. Oh, that's easy math. If you want to do that, then boom, you're done. Go 100% leverage. 800 unit, raise around $100, and you're done. But you need to set your goal realistically. In one year, you're probably not going to get anywhere. My first deal, within one year, my first property, I had 24 units, 2 12s. My net cash flow on the asset was $2,000 a month. I had hard money still. I wasn't in a great position. Just give you the cash flow, if you are at risk of losing it because you have short-term debt, you're in trouble. So yeah, $2,000 a month was nice, but I was paying myself Still not paying myself a lot. We buy groceries a couple times with our cash flow. Granted, if we quit renovating, we could pay ourselves each probably $25,000 a month between companies comfortably. Yeah, we're not going to do that though. I mean, between everything, we've got over $600,000 a year in cash flow, but we stay broke where I have no money because I'm taking it all and putting it into properties to build the story. It's the stories we're going to the real estate.

It's also really expensive to pay yourself.

I prefer to just be invested. If you guys are open to telling how did your old mentor steal your money?

No, that is not happening.

Sorry.

Uh, no, we, we, yeah, I apologize.

That's, uh, I don't apologize.

No, it happens.

All right.

For legal reasons, it's just best that we, we let that die.

All right. Next question. How about that? Hey guys, Daylon here. What's the difference between seller finance, Syndicated. The seller financing is financing. Syndication is a partnership structure where you raise a whole bunch of money and you have to file with the SEC. And a JV is just a joint venture, which, uh, it's a partnership like Christian and I. We have a joint ownership and a venture together. We don't syndicate because we're not raising a whole bunch of money from a whole bunch of different investors. If we're doing a JV, it's maybe me, Christian, and if Cade threw money in a deal, we'd bring Cade. Jason Ewert, who asked about the McLaren, he's too tall to ride in McLaren. He invested in the apricot trees and he's tall enough to pick the apricots. Yeah, I need a ladder. So we're doing JVs because it's a lot less filings, a lot less regulations, and it's easy. There's less people. Syndication, think a whole bunch of different investors putting money into a pot. Crowdsourcing.

Yeah.

And then there's going to be a couple operators, general partners that manage the asset. And then seller financing is just a form of financing. You can syndicate and have a seller finance loan. I don't know why syndicators aren't doing that. I guess because they don't know, but it turns out if you put 10% down, it's easier to multiply your money than if you put 30% down, but they're not doing that. So you can do seller finance on JVs, sole proprietorships, just in your personal name, seller financing. Syndication, but you got to find the right operator who knows what they're doing. Because at the end of the day, whether you do it on your own, do it with a JV, or you do it as a syndication, your deal is only as good as the manager. If the manager doesn't know how to structure the debt, they don't know how to structure the cash flow, and they don't know how to structure the management, well, now you're, you're out of luck. Well said. What's the minimum amount of units someone should have before you take them out for coffee, and how long do the meetings usually take?

2 for me.

You have multifamily, I want to meet with you if you're in my market.

If you have 2 units, I would love to get coffee. If you have a house, it's just not a game that I'm playing, but that's the minimum for me.

What was your biggest fear starting out and how did you overcome it? Well, my first fear was I didn't know what the heck I was doing. No family or friends in the business. I was signing for a million one It was actually more. I over 100% leveraged. I borrowed $125,000 for the down and $1,012,500. So I basically borrowed $12,500 more than my full cost to close, a slightly leveraged over 100%. So I had a little bit of reserves. I don't know if you can fathom this, but as a 19-year-old with no family or friends in the business signing for a $1,132,500 loan, or whatever. It is scary, very scared. I didn't know what was going to happen. What happens if tenants don't pay? What if, what if? Today the what-ifs don't really matter as much because I'm not there yet. That's been true for everybody's problem, but back then I was super worried about it.

Well, for me, one of my early deals was financed 101%, and I was just counting on the fact that my math was correct for what the after-repair value would be so I could refinance. Um, that was really scary for me. It turns out totally wrong. I got gypped on appraisal and, um, I had to keep more money in the deal than I thought. It was still a fantastic deal. The cash flow was phenomenal. Um, but that's what I was really scared of. And then the thing I was scared of happened and it was fine.

Not sure if this question was already asked, but how did you start with $3,000? Well, that wasn't specifically asked. The $3,000 is a placeholder because I had $3,000, but I borrowed 100 and a little over 100% of my first deal. So I had the deal and I structured the debt, the big piece of debt, negotiated great, great 30-year AM on 90% of the purchase. I borrowed just over the 10% down. I borrowed $125,000 for the down. That was because it was a secondary position. So I didn't actually spend my $3,000. But I had that in the bank, so that's just part of the story. That's what I had, but I didn't actually invest it. You can do this game with no money, and I got paid a commission of 2%, so I got paid $22,000 to buy the deal. All right, we did it! So that is it. Um, we'll see you on Friday.

But yeah, all the usuals— like, subscribe, share with your friends, we're gonna have your dog, your grandma.

We're gonna, we're gonna add links later tonight. You have more questions, we'll see you next week on Whiteboard Wednesday. And if you want to fly out and come hang out and see if we actually own any real estate, you can be like, hey, fly from Tucson and come visit.

Okay, do we actually have it?

Is it all here? Yeah, no, it's all here, guys.

I watched every last one of them today. Okay, good. I just wanted to document that. We have a witness. All right, guys. Yeah, we will see you all very soon.

Thanks for joining.