Christian Osgood explains his wealth-building rule: never spend your equity or cash flow. Instead, reinvest everything into larger properties. He scaled from a condo to a 38-plex by using appreciation and rental income for down payments, turning a $100k HELOC into multi-million-dollar equity.
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Hello YouTube, funny story for you for this week. Before we get into Rule 21, Cody and I actually filmed this from the Robin Hood Village Resort and turns out I accidentally deleted it. So here I am, uh, day of re-recording this for you. So you just get me today, but I am Christian Osgood. It's great to see you. Like and subscribe. We're going to dive right into Rule 21: Don't spend the principal. Now we're actually going to take this a step farther and say don't spend the equity. See, the way that we play this game is you buy real estate. You spend the money you have, or if you're partnered with other people or bringing in other capital, you spend money to buy real estate. You place that capital in a cash-flowing asset. Now, if you could turn all of your income and some of the income of those around you into passive income, you're totally good. You can spend passive income. Earn money, put it in real estate, let that real estate print new money for you, spend that money. One, it's taxed much differently than active income, but two, it's a safe way for you to grow your empire. If you just keep investing everything you bring in and you live off the passive, every time you earn a dollar, you keep that dollar and you grow that dollar. You want a very quick way, an effective way to build wealth Invest 100% of your income. Now, you can't do this before you have cash flow. So we build up our portfolio, we get enough cash flow to cover our cost of living, and now everything you earn and all your additional cash flow is just yours to do what you want. Too many people get addicted to the wholesaling game, the flipping game. Syndicators get addicted to the fee game where you just charge so many fees and you live off the fees. It is not about short wins. It is not about lump sum payouts. That's not how you're playing the game. Take your capital and continue to reinvest it. If you placed $100,000 into a property, say you bought the whole thing cash, just as an easy practical application. $100,000 house, don't really know where in the US that's, that's still a thing, but for illustration, you buy a house, $100,000. Today it's worth $200,000. $100,000. What a lot of people will do is they will sell that house, refinance that house, they'll take the money and they'll buy themselves a nice car. Take the $100,000 and use that as their down payment for their Rolls-Royce or their whatever car you're after. They'll buy a boat. Don't do that. Just, you made, put in $100,000, made another $100,000, you now have $200,000 to play with. If you do sell that asset, what you should do is buy another asset. Even if you're just using conventional financing, no creativity, that $200,000 is 25% down on an $800,000 asset. Now, $800,000 in real estate gives you more cash flow potential. You have a larger property and more appreciation, by the way, but you have a much larger asset that likely spits out a lot more money. Has more cash flow, you can move forward and then you get enough where it covers all your living expenses. You hit all your goals and you keep buying assets that are bigger and bigger. That new cash flow, that cash flow can buy you the boat. The cash flow can buy you the cars. The cash flow can buy you everything taxed completely differently. And you've still saved all that money. It's been converted from dollars into equity in real estate. That is exactly how we play the game. Now, for me, I started struggling with this fairly early on. I had done a few projects. I started with a condo that I lived in with a roommate, flipped it over 2 years, sold it. You have some advantages to selling after 2 years on a primary residence. You actually, to a certain extent, don't get taxed on the capital gains. Now, could have bought myself something nice instead, rolled that all into a bigger property. I was married in that time. And used that to buy my single-family house, which I didn't pull equity out of until I was ready to reinvest it. We'll get into that in a minute. A few years later, bought a duplex, bought another duplex. One of those I sold. It was very, very tempting. The time that I sold my duplex was a 6-figure flip. I planned on holding it forever. I bought it so I could. Had an opportunity to sell it, felt that I had maxed out what I should do on it. When I sold that, there was a temptation to upgrade the car for me. I'm not really a car person, but I also don't drive very nice cars. I have a— well, I have an old Tesla that I got from a, uh, as collateral for a past transaction we won't go into. And then I have an old beat-up Mustang, nothing fancy. Thought about making the upgrade, thought about maybe doing some home remodels. Instead, what I chose to do is I took all the proceeds, every cent, and I bought into a 12-plex. Cody needed a little bit of equity for another project he was working on. I bought into that 12-plex. The duplex doubled my money. 6 months later, the LLC that I bought into with the 12-plex, we bought a 10-plex in the same LLC. We did renovations. We had some rent increases. We tripled the money that I had just doubled in the same year. Because I chose to reinvest that equity and not spend the principal plus the equity, I ended up 6x-ing my money. I put in $50,000, that's worth $300,000 today. That is one of many adventures that we've gone on where we followed our principles. If you follow this principle, all you do is continue to build wealth. And as you build wealth, you can buy more cash flow. With more cash flow, you can fund anything you want to do. That is simply how the game is played. I'm gonna give you one more practical example and then I'm gonna get everyone to their week. So thanks for watching to this point so far. If you haven't yet, Cody's on these consistently, so we'll see him again on Wednesday. Like, subscribe, turn on the notifications if you wanna see when we're going live for our Creative Finance Live every Wednesday. Last example I'm gonna give, the equity in my house. The beginning of this, I told you about a condo that I rolled into my primary residence. Had some extra equity, invested all of it. Now I have this house. Now I've held it for a few years. I've done renovations on it, some of it myself, some of it with contractors. Bought it for $385,000. Appraisal came in around $700,000. Huge difference. Lots of equity there. Now it is tempting for a lot of people to take out a home equity line of credit or a refinance, check out— take out a lump of cash. And again, spend that newfound equity. What I did is I took just a flat $100,000 home equity line of credit at 5.5%, and I used that as my down payment on the 38-plex that Cody and I bought, the first deal we ever bought together. That deal by itself— granted, I own it 50/50 with, uh, with Cody— that deal made over $1 million in the first 10 months. As far as just equity growth. Our monthly payment on it is $10,000 a month. Last month it brought in $28,000. Now yes, there's utilities, taxes, and insurance, but I will tell you, that thing cash flows beautifully. That cash flow by itself is enough to sustain the lifestyle of both Cody and myself. I'm a pretty simple guy. This may look like a big office, but this is a tiny, tiny, tiny room in my house. I don't need much. Cody he doesn't need much, even though he does live on a giant resort. Our expenses are fairly simple. Our cash flow massively exceeds those expenses. We get to reinvest the cash flow, we get to reinvest the principal, we get to reinvest the equity. And every time we do this, our holdings grow and our cash flow goes up, and we have added security. So if you're trying to win the game, simple concept, but I promise you this is one of the most missed things in real estate. If you can avoid spending the principal and if you can avoid spending the equity growth and you continue to reinvest, reinvest, reinvest, you will surpass every goal that you have financially and you'll do it a lot faster than you think.
