3 Keys to buying Infinite Real Estate Deals (with or without Money)

And like that, we are live. Hello and welcome to Multifamily Strategy Live. Joined with, uh, Cody today. Cody, good to see you, man. How's Tennessee treating you?

Tennessee is pretty good. Bought out, uh, some partners on some real estate today. So without buying more properties, I own more property. That doesn't suck.

There we go. You can buy more real estate or you can buy more of your real estate. One of the advantages of partners. Uh, what did today's purchase look like?

Well, I bought out you from a triplex and, and a development site that we own. So I'm excited about doing all the development stuff. I know you're working on moving to Texas. So officially, I bought you out of 2 of 2 development sites.

There we go. That is one way to do it. Well, congratulations on owning more development. I personally am not a developer. I like doing rehab. I like doing value-add. So this is a good example of getting your partnerships in alignment. We hit our goals, we don't renegotiate until we hit those goals. And now that we're there and I'm just about this close to buying the house, we adjust the pieces and away we go. By the way, if you want to see updates on the house, I post every week on my Instagram @ChristianOsgood. For the 2 or 3 people who are going to watch today who don't already follow you, by the way, Cody, where does everyone find you? @DoingCodyThings.

On Instagram.

There we go. And a list of channels showing somewhere below us. You guys can click any of those, uh, links or visit me on Instagram, our YouTube, or our website. So excited to have everyone here. As the chat fills up, we always have a topic of the day before we answer the questions, and we go till the questions end or we hit about 2 hours and it's time for me to eat dinner. It'll be one or the other. First comment, by the way, All Nighter Hider is here this time. He was a little bit late last time, so we can officially start. 3 keys. Now, real estate plays like a board game, and I think this is why Cody and I made it as far as we did, as fast as we did. We're both board game players. Cody played a lot of Magic: The Gathering growing up. Funny enough, so did I. I have a ton of board games behind me, but it is a very simple game. It is a resource management game with only 3 pieces. You have cash flow, you have liquidity, you have equity. Your goal is to get as much of each of those as you want, but keep them all in balance. Now, you may notice we started with zero liquidity, so you don't start with balance, but all of these things are found within the deals that you negotiate. So you have to find deals that get you pieces that can be then traded for other pieces. I think where a lot of people get stuck, and Cody, you can correct me if I'm wrong, But I think a lot of people get stuck on the fact that they don't realize for a fee, you can trade any piece for another piece. So as you accumulate equity, it can be turned into cash flow, it can be turned into liquidity and vice versa. You can take your liquidity and buy more equity, buying more cash flow. How you move your pieces will determine how far you go. You only win the game when you have as much cash flow as you want while keeping the other two in balance. I, I think that—

let's give a real example. Yeah, give, give a real example of that today. What did we do? Because I, I have some newfound liquidity on some of my business adventures. I'm doing some cash-out refis on my sixplex and some other stuff. I just wrote you a check today in exchange for what?

So Cody wrote me a check today in exchange for a triplex and a duplex, one of which comes with a development site. Now development has some outflows of cash for a future payoff, which Cody's still doing the scaling up and paying off of his business. Buying a smaller project, optimizing it by building on the land, and then paying that off fits exactly into what we do. However, I have a goal of closing on the house in Texas, which is the last piece of why I got started in real estate. I retired my wife, house is being built. I do actually have to close on the financing. I need liquidity for that. I traded my equity to Cody in exchange for $20,000 of liquidity. There's not a ton of equity in this particular little property, by the way, but Cody has a lot of upside potential on it when the project is done. That doesn't move me towards my goals right now. That would put Cody at a fully optimized property that is small enough to start hammering all the debt on it very quickly. He can own this free and clear with units. Now, when you're building this, by the way, how many units are you planning on putting on this parcel?

It looks like we're gonna be able to fit 6.

Ooh, in addition to the house, or is the single unit on it going to be demoed?

In addition to the house. So we'll have 7 units there, um, and the average price to build per unit is going to be about $150,000, but they should rent for close to $1,600, and That's a 1% rule deal on brand new construction, and the— should have about $70 grand in equity per unit that we're building.

There we go. So let us know in the chat who you think got a better deal. Hop on my Instagram, check out the house I'm building. This is helping me close that. Look at Cody's newfound stream of income. He's gonna get a new build 7-plex with a renovated— well, a new build 6 with a renovated house. Pretty good deal at a 1% rule. Which I don't know how many of those you guys have been seeing right now, but there's a, there's not a whole lot of those out there. Another real-world example that I think has a little bit bigger numbers that's pretty relatable. Cody and I on our first ever deal, 38 units, we had equity partners buy in and we wanted cash out of the deal to go renovate. We could not do the refi with everyone on the deal. So we had this 5-year thing. We're going to double everyone's money. That didn't work. We didn't have enough going because we weren't going to double everyone's money in 11 months. Just, we did not have the cash to do that. We needed to get some liquidity in, but we wanted all of the equity. So there's a piece of all of this where it's like, okay, we, we need all the equity to do the refinance. We need liquidity to pull that off, but we don't have it. We traded cash flow by having them seller finance their equity to us. So trading cash flow to equity. When we had the equity, we went ahead and went to the bank, got a new loan, which gave us more liquidity, which also had a little higher cost, and so came at a cost to the cash flow. However, we put this in a balance now where we had the money to reinvest into the property to increase the cash flow to pay for the money we just borrowed. All we did was adjust the pieces though. You just need to identify what buckets you have and what could be traded. Need more equity to unlock the liquidity. Need more liquidity to unlock the cash flow. How do you do that? Trade cash flow for equity. Trade equity for liquidity. Invest liquidity for more cash flow. That is a good example of there's 4 moves, 3 pieces. Adjust your pieces, and the better you are at this, the faster the game goes. And I, I honestly think Cody and I did as well as we did because Magic: The Gathering and other strategy games that Cody and I played growing up— we can play a board game pretty darn well. We don't play that often, but when Cody and I play each other, we're both pretty damn good at board games. The basic strategy pieces of how well you move your pieces and how creatively you can move them will dictate how fast you're allowed to go. Anything to add to that, Cody? Any other good examples that you have of adjusting the pieces or using your 3 pools of, uh, of resource to win the real estate game?

Well, something that we've looked at in the past is— so a real example, the 38-plex, we seller financed out our partners. They took a note in exchange for the real estate. One way that we've looked at paying off those notes without money so we can actually hold on to the liquidity is we find a really stellar seller finance deal with a lot of upside and we give them equity in that deal with the plan on— this is something we talk about in multifamily strategy, the debt mule. But you find the one deal that you can settle up all your obligations to and eventually you can sell it and everybody gets paid off. So you send it off into the sunset. And so that is something that we've actively looked at doing where we move investor debts into equity into new opportunities in exchange for waiving their note. Note that every time you do some of these trades, there are taxable events, so you want to limit the amount of trades you do strategically to, to what will actually move you forward. But that way we put the, the risk of the note back on the real estate, which is a great piece of property that's got a lot of upside, and then everybody wins.

Yes, where it belongs.

Yeah, and as long as you could put it on the real estate and you make good financial decisions when it comes to buying real estate and you look at risk-adjusted returns— a lot of people throw risk out of the equation in real estate, it's a very bad idea— but as long as you're doing a risk-adjusted return and everybody's happy with it, you can take on a lot of obligations and get it covered by just a couple properties. And everything else is gravy. You can just spend it where you want. If you want to go buy a $900,000 house in Texas, you can shave that out of your portfolio and you can just do it as an impulse purchase. If you want to buy a resort zero down out of your pocket and then impulse buy the million-dollar waterfront house on the side, you can do it because you make the right adjustments so that you maintain liquidity, cash flow, and equity. And there's— you're not going to start out with all three. You may not start out with any of them. I know I didn't start out with any. Christian started out our investment journey with a little bit of cash and a little bit of equity, but he started out his journey with none of those things. So you have to build up one to build up the second one, and then you can adjust to get a little bit of all three. And what you do from there is up to you.

And the last piece of this is I, I said right in the tag of this, like, these are the 3 resources to buy infinite real estate. You don't want to buy into infinity. You want to define your goal. But at some point, you really do want to look at this and say, hey, if I keep all these in balance, can I scale indefinitely? And can I set a new goal? If these are in balance and you know how to change the pieces around and you can find all of this by doing more deals. The deal unlocks all the pieces every single time. You can just buy infinite real estate. You can buy again and again and again as fast as you can responsibly scale. Where you get burned is you overtap one of these resource pools beyond what it can maintain, and that is how you lose real estate. We always ask the question, how do you buy it? How do you never lose it? This is the answer: keep these in balance. Yeah, all right.

And once you start building up, you'll start defining your, your principles, and you'll start defining what feels responsible. Like, for our portfolio, being responsible, we'd probably both have a quarter million dollars in the bank. Do we have that? No, but, uh, we're working on getting there. You got to balance the pools. So we're actually doing some cash-out refis, which will take cash flow down a tiny bit, but it'll get us in balance again. You're not always going to be in balance.

All right, let's dive into a couple of the channel questions. If anyone has questions specific to the resource pools, managing them, the cost to trade them, let us know. I'm also going to drag a good friend, Caleb Hommel, into the chat who is joining us from Stephenville, Texas.

Caleb, I am good.

Likewise. All right. Let's, uh, let's dive into some of the questions here. Number 1, I'm scrolling back up to them. Okay, this isn't even a question, but I'm gonna talk about this. I'm just trying to figure out how to get rich working a 9-to-5 job. Well, if you find out how to get rich working a 9-to-5, let me know. I was able to get to a quarter million dollar income. That's as high as I made it. Some people listening have a lot more than that. Some people have a lot less. That was enough to get me two duplexes in my house and back out of money. I did not make it in the 9-to-5. I made it by doing like starting businesses and buying real estate. You can still work a 9-to-5 job and do all this though. I didn't leave my job until we had 80-something units, and that's what I did. Cody never really had a job. I mean, you were a real estate agent for a while, but It wasn't until right around the time that you left being in real estate that you really started closing any transactions. Yep, it was right after you needed the money. Caleb, how many jobs have you had?

Uh, does DoorDash count? Yes. Okay, uh, 2.

There we go. You did DoorDash?

Smoothie place. I worked at a smoothie place for 2 weeks and quit because I didn't like being an employee and just went back to playing baseball.

Yeah, so wrong, wrong chat for how to do it in a 9 to 5, uh, though I'm sure some people do. I have found that being on the ownership side of any business, including real estate, is the side of the table that I wanted to be on. Let's go, All Nighter! Do you have, or have you played, the Cash Flow board game? My kids and I play all the time by their request. We have, we have. Cody plays it more than I do though, by quite a bit. Cody, how often do you play Cashflow?

I haven't played in a long time, but when I was getting started, probably the first 2 years, um, of my real estate career since I had bought my 12-plex, I used to play the online version on the website, and I'd play that probably twice a night. And I figured out how to cheat the system in that and how it wants you to play Um, the game wants you to take out debt to invest in the speculative stocks and win. And Robert's actually talked about that a lot in real life, where you borrow money against the real estate, put into precious metals, and then you put the rest into a whole bunch of startups, and you get one of them to take off and you make a ton of money. That's how the game plays as well, uh, which I actually like. We just don't have enough money to do that responsibly. Um, but yeah, I, I played that couple times every single day online until I understood the model.

And my biggest takeaways from that game— and correct me if I'm wrong, anyone, feel free to weigh in in the chat— my message from that game was buy bigger deals. There was no reason to start with small deals. You buy bigger deals, they make more money, and you win the game faster. Don't say no to doing big deals, just eliminate the small things that don't get you to your goal. That was my big takeaway that I got from that game. First time I played, Cody, I was like, why is this not working? And then we just did bigger deals. I was like, oh. And that was shortly before I stopped buying duplexes and bought a 38-plex. So yeah, great game, good takeaways. What was your biggest takeaway from playing Cashflow, Cody? If you had one thing that you learned from that game—

Caleb or Cody, you said both.

Oh, Cody, I played too.

You can't count.

Oh, you play too? Okay, well, let's, let's go down the line.

Uh, Cody, then Caleb. Whenever a unique opportunity popped up, if stock went to $1 or $5 and you knew it could go to $40, you, you look objectively at the numbers. Whenever a unique opportunity pops up, you have the option to borrow money in that game, and not everybody, uh, on this call can just go out and borrow $100 grand or $200 grand or $400 grand. Uh, but most people can borrow enough to get started on a deal. And so every time I saw a unique opportunity on that game, I would borrow as much money as I responsibly could because you sustain the cash flow. And it was like a 10% loan per, per pay period in that game, so very expensive money, 120% a year. If you could borrow cheaper than that and you find a unique opportunity in life then it's worth borrowing the money for. And that's exactly how I built my whole business. I bought the 12-plex, didn't have any money, but it was a unique opportunity, very special. A lot of people could repeat it and find it, but it was very special to me because it was only one I saw in that market at the time. And so I found a way to borrow the money, and then I repeated it the next time a special opportunity popped up. And so every single time that special opportunities popped up, I've always thought back to that game. And said it— well, it works in the game because these fundamentals, and I have the same fundamentals, the same levels of cash flow on these deals in real life, it's worth pursuing. And I have a feeling that's why all of my deals have worked out, because it's fallen back to it's either going to cash flow or it's not, and I can either borrow the money or I can't. And if I can and I can buy it and I'm cash flow, then, uh, should move forward. So take on debt when you have the opportunity to not have to pay for it.

Caleb, how about you? Cash Flow board game.

Yeah, I think the biggest thing from Cash Flow as well, just Kiyosaki as a whole, was kind of changing the perspective I had on debt previously. I mean, growing up in a not super affluent household, um, debt was kind of like, you don't say that word kind of thing, like the S-word and some other words, you don't, you just don't say it. Um, and for me, just kind of changed my whole perspective on, like Cody said, if you can just use debt to buy it, why not do it? And then taught me how to cash flow. I'm piggybacking on both of you said, um, didn't like that it was all kind of stocks and bet on startups till you got big, but just kind of the whole motto of going bigger there. And then it was basically the foundation for when I was really scaling up.

Yep. And there's all sorts of other things in there that are great, like just a general understanding of how your, you know, how cash flow actually moves through your portfolio, what a balance sheet looks like. It's a great board game, highly recommend to anyone. There's a lot of communities where you can just jump in You can also do it online like Cody and just play cash flow with people. And you find a lot of the real estate guys typically clean up at that game. Oh, here's a good question. I don't know that we've come with a final decision yet for our motel. So for those who don't know, we just bought a 33-unit motel, $1.6 million, 120-ish% financed, and well, 115-ish% financed. We bought it. In Moses Lake off the main drag on Broadway, and we're still deciding exactly what color to paint it. I did a post where everyone voted, and a lot of people voted to paint it pink, so we're not going with that one. Uh, Cody, did we come up with an official color for this yet?

We did not. We, we talked about going with like a, a black and some neutral grays and like one bright color for the doors. But, uh, we're gonna have to look at our budget. I just heard we might have to upgrade our transformer and the connection to the building.

Oh, I don't like that. That sounds like money.

It smells like money too.

Okay, well, we'll get those things solved. But yeah, when we— when you do these things, it's, uh, there's always unexpected. Cody, I budgeted for that. We started with some liquidity on this project. We went in knowing full well that we do not have enough money from the borrowed money to go all the way through our project. We knew that there'd be an additional capital injection at some point, but it was enough to get us started. Our goals were new roof, get through the electric, and get most, if not all, of the units leaseable. Because once you have a leased up building, now we can bring it into, uh, more debt, but at a much lower interest rate in perm or mezzanine financing. And Caleb, since you're here as well, what's your vote for color?

Red and white, uh, neon green.

There we go. And if you go into Stephenville, Texas, every neon green building, you know who the owner is.

Oh gosh, and I think if you put a neon green building in Stephenville, Texas, they'd probably try to throw you out. It's, uh, slightly, uh, not very progressive.

I get you. All right, um, quick one from the Instagram feed. Uh, thoughts on a downturn in multifamily housing due to, uh, refi and increased rates, higher insurance, higher taxes, without being able to increase rents? What are your thoughts? Well, my, my first thought is, um, it's a good thing that you're able to increase rents. I mean, honestly, when you have things are more expensive, when you suddenly raise rents and you make insurance more expensive and taxes are more expensive, at the end of the day it gets passed through to the tenant. So the one thing we know will happen is landlords will either lose their properties or rents are going to go up to match. So my short answer to that is, um, you're right. How would you do that if you can't increase rents? I don't know. It's a good thing that we can. Cody, what are your thoughts?

Well, um, We buy all of our deals where we're significantly below market day one. So even if rents went significantly down, we would still be able to raise ours. It's kind of parroting what you're saying, but we only buy deals where we can afford to do that even if we have a massive downturn because we're not willing to play the game twice. We would find a different business. It's only worth doing once and it's worth doing once correctly. So we're building a business where we're not dependent on market rents skyrocketing. If they do, we're going to make a ton of money, but we're not dependent on it. And if it happens, then everyone else is going to struggle a little bit more than we are, and, uh, we'll keep riding it out. And if an opportunity pops up, we'll borrow to buy it from them.

Caleb, you're buying a 26-unit right now. If we had an economic downturn, How do you feel about that particular deal?

Tell—

just give us the basics on the 26-unit that you are working on right now.

Um, market rent, or so rent across the board there, 21 out of 26 units are on month-to-month. Every unit's at $550, uh, rent, all 1-bed, 1-bath. I am leasing 1-bed, 1-baths in my current 25-unit, $850. So I am— and I still have ways to go— I am not really stressed about Uh, if rent starts to come down or stagnate whatsoever, I could really— I mean, I'd make less money on the upside, but I could really care less.

26 units, what are you buying them for right now?

$1.6.

Okay. And I know you're in an area where somewhere between what, $80 and $85 and $110 per door is what an older building— I mean, or how new is this building?

Yeah, yeah, it's '03 product, so pretty new product. Oh yeah, I mean smaller units, 550, 600 square feet, all exact same floor plan. Um, Town Creek where I live now, I bought for $80 a door and I absolutely won on price. I'm buying for closer to $60 a door on another unit, uh, $400,000 cheaper. Okay, 30 years newer.

So on this particular acquisition, you're coming in notably, I mean arguably close to a million dollars under market price.

And you're right, I'd say I have about a million dollars upside on this deal.

Okay, so you're winning on price and you can raise rent about $300. If rent does not go up at all, I'm gonna say if the market stagnates, you're gonna be fine on this deal. That is what we call a good deal.

Uh, yeah, yeah, $300 is conservative. I know buddies down here that are leasing stuff out for $300 more than that, so I kind of the opposite of stressed.

There we go. That's what you look for in a deal. That's why we're not worried about this stuff, because long-term cash-flowing fixed-rate debt is is going to stay long-term and cash flowing and fixed rate. If you were buying things on short-term debt or your mid-development project right now, say you started a larger development a couple years ago, I would carry some stress. That's why I don't love development as much. But again, you win on price, you win on terms. Any of these things work. The stuff that Cody's looking at building, he's going to build them for what, around $150 a unit? They're valued at $250,000 right now if they were built today.

And once they start digging, uh, $225,000. But once they start digging, it takes 5 months start to finish. It's not going to take 2 years or 3 years like everybody else because we have people that will be there every single day and it's a tiny project.

Yep. And so those are the types of things that we look at in economic downturn. You're totally right though, insurance rates are going crazy right now. Across the board, like, like crazy. Um, taxes went up nationwide substantially, almost everywhere. So these are things that we're going to be looking at. Banks are going to tighten up because we had economic hardship. Even if we get a little bit better, banks lag behind reality. So it's going to be harder if you're relying on refinance right now as part of your strategy. This would be stressful. None of us have tax that we need.

Taxes suck right now. The 12-plex I'm buying you out of, there's $793 a year in mosquito tax. I didn't know there was a mosquito tax, but they—

oh, do we want to start talking about Texas taxes?

Do you have a mosquito tax? Cody's taxed by them.

No. Oh no, I'm just taxed out of my butt in Texas.

Texas tax. And so the taxes for property in Texas, I believe, are about like in Washington, you come in just under 1% of the purchase price. In Texas, you're like 1.7, 1.8, right?

Yeah, expensive, which makes it almost like a forever mortgage, which you get the benefit of buying a little bit cheaper out there, but you have a forever higher payment than some other markets.

And we got one question on, on Instagram for you, and then we'll hop back into our YouTube questions. Um, but on my Instagram here from, uh, Tag 13, Uh, what is the term for the $1.6 million project? The funny thing is our project's $1.6, your project's $1.6. It's for one of those two.

Um, so am I going first or are you guys going first?

You go ahead and go first. We're talking about your deal. What, uh, what financing terms are you getting right now on your $1.6 million 26-plex?

Yeah, I am actually not seller financing that deal. I am going to the bank. So I am $1.6, I'm at 80% LTV. Um, I underwrote about 7% of the interest rate. Hopefully, I mean, if rates come back down, I sneak into the 6s, but that's kind of what I'm looking at. 5-year product, 2 years of interest only, 3 years on a 30-year AM is what my terms are.

Love it. For Cody and I, we are doing, uh, we're refinancing within the first— we're targeting 6 months, right, Cody?

Uh, that's the goal, to refinance, and we will put it into mezzanine debt. And I Uh, that'll be for probably a 2 to 3 year product and then refinance it and do a cash-out long-term.

And why are we comfortable doing it?

Uh, because we got a great price.

Yes, we, we stole it.

However, we are also putting about $400,000 in reno. So this is similar how we did the 38-plex, except for we have a little bit of money starting out. Our first debt product, uh, I've actually got a webinar in 30 minutes. Where we're talking about, uh, positioning yourself as a business operator to raise capital. But, um, that specific deal, we positioned ourself in a way where we got $1.8 million in financing on a $1.6 million purchase. We're using that initial capital to give the building the bump it needs to get new financing, putting a new roof on it, and then, uh, updating the electrical. And then we'll take it to another cash-out product, pull another couple hundred grand out, finish the building with kitchenettes, redo the windows, everything else it needs to finish the project. So we get a free building, it'll cash flow at that point closer to $6,000 a month because we're going to re-lever a little bit more money out. But that deal, our first financing product was 13.5% interest only, not exactly the, the 6.85% or the 6.75% that Caleb's going to get on his deal. Not as good. Uh, it's almost double, but it gave us 100% of the purchase and it gave us almost half. We were like 35-40% after fees of the reno money that we needed to get the project finished. And, uh, but it will take us 100% of the way to our refinance, and that is what is most important. Can you see the project all the way through regardless of the rate? Mm-hmm.

Also worth noting, because Cody and I bought this hard money, this was the first property— unless I'm missing one, Cody— this is the first one where you and I bought it, just us in our company with no partners, which is awesome. And we'll be able to refinance it without having to buy out anyone. It is expensive upfront the way we structured it, but later on we don't have nearly as much to figure out, and there's no big expensive pieces of buying out partners or trading equities. We own it, it is ours, and it's a building that's big enough to be worth holding for the long term. All right, YouTube, we still love you and we're coming right back to you with Luke Divine. How do you pick up the— or how do you pick the right agent like your buddy Brandon to pitch a strong creative offer? Do you pay him? Does he get equity? Brandon does a lot of our smaller deals. He actually works at my brokerage, which my property management company legally is a brokerage. I have brokers. But, um, the one who does most of our creative pitching, his name's Eric. And if you guys have been watching my Instagram at all, that— or at all, @ChristianOsgood— Eric actually just popped up there because we were just at a mobile home park we bought with him. He's actually a partner on a deal that we just closed with hard money. So how do you pick the right agent? The first thing for me— and we'll go down the line, everyone choose one thing— the one thing I'm going to choose: an agent who owns real estate themselves. If they can think like an owner, they understand how a broker's commissioned and how an owner thinks. It has been night and day different. Eric owns a good deal of self-storage. As a partner, he's been very active and very helpful. Being able to walk both sides of that was the number one thing for me working with a broker like Eric. Cody, one thing about picking the right agent to write a creative offer.

I actually was just getting a call from our— one of our agents.

Um, by the way, no, they need to have some type of competitive advantage.

Um, man, everybody's blowing me up. I might have to jump off the call. I'm getting lots of calls from, uh, our partners that, uh, shall not be named.

Oh, I think I know who. I know which ones.

I know which ones. But they need to have a competitive advantage of some kind. They either need to have bought real estate creatively, they need to be in the market, they need to be doing the footwork, be in with the city, in with the bank. There needs to be some type of advantage that they have over us pursuing a specific deal or another broker. And if they don't have that advantage, then they're out. And that this just is what it is. If they don't bring anything that is special, it— that— I don't know the right way to put it publicly, but they need to be an A-player. Yes. And that's basically the, the bottom line. And with that, I'm gonna jump off. Someone asked the link to the webinar.

I will—

I'll just text you the Zoom code, Christian, and you can blast it later.

Perfect. Send me that Zoom code. Anyone who wants to join, you can join Cody there. Um, and, and we'll, we'll see you over there. I'll be right at the top of the hour, right? Yep.

Top of the hour.

Perfect. All right. We'll, we'll, uh, speed run through the questions, make sure anyone who wants to see that particular webinar that is free, you can join that. So when Cody gives me the link, I will get the link in here. This is a, a special offer for all of you. Conveniently, the next 2 questions are for Caleb. But I'm going to ask—

I got to answer that. Yeah, I want to, I want to answer the question too.

No, please do, please do. I want you to answer it as well.

I hate almost every single agent I have ever worked with. I went the broker route for 900 calls and I still hate them. I hate them more than anything. It's what I'm looking for, competitive advantage. Um, at least Stephenville, which is where I'm going hyperlocal. I mean, I bought a 25, buying a 26, looking at another 24-unit. Like, it's just hyperlocal here, hyperfocused. The one thing I look for is they have more connections than me in the market. There are certain connections that you just— I just, I can't make after 6 months. I've been here almost 4 now, and there's like— I've met a lot of the guys, actually get lunch with one later this week, but it's like there's just certain things I can't connect with that sort of time. So I'm looking for the agents that have the connections that I can't get to yet. For instance, this one lady, great agent, um, she's got connection on some storage stuff I like that I wanted to buy. Um, there was no way I would have had that relationship. She had it. She set the meeting up. She set meetings up with me with other investors in town before. Um, almost bought a 10-unit off the other guy. It still worked out, but she set those meetings up. So if I was looking for agents, it would be like her that have the pre-connections in a market I don't. And like Cody was saying, competitive advantage— that's exactly what I'm looking for. Perfect.

No, absolutely love that. That is the thing, is if you can have a relationship where there's something unique— I actually like to have two brokers on the roster. I'd have someone with a bigger firm and then someone who is local at a boutique firm. They typically have the more creative stuff that comes in off-market. A larger firm has more access to data and will be the one landing the more traditional deals. I like having flow to both of them. So that's been really good for me building out my team. You do not need to do that to get started. Find the deal and you'll figure out the broker stuff later. You, and you might work with some stupid brokers along the way, and that, that will happen. A lot of brokers don't know how to play the game. Um, Cale, next two questions are for you. So we're gonna get, uh, we're gonna get these up here. Everyone who's posted questions, we're falling behind. So we're going to start rapid firing. Let us know if we're going too fast. Caleb, I believe it was you said something about a prepay when purchasing real estate. Can you elaborate a little bit more? Caleb, have you mentioned anything about a prepay recently? It might have been Cody.

I mean, you can do a prepay. Funny enough, I'm actually looking at a deal right now. That's very funny. It could have been the deal I'm working on right now, the 24-unit complex I'm working on. Um, very— guy has— how do I say this— kind of F-you money. Um, throws out how much he's liquid pretty consistently. It's a very minimum of a few seven figures. So, um, he's basically like, I just don't want to get taxed. I would sell you the building right now, I just don't want to get taxed. I'm just gonna hold on to it. But like, I'm like, okay. Like, I basically was on the phone with them earlier actually today in the coffee shop when I was working. I was like, hey, would you be opposed if I put something together here, um, that basically just delayed your tax burden? Um, and if I did pay early, I just get penalized for it. And his answer was sure, send something over. So I'm probably gonna offer a prepay on that. I mean, he— I offered a note for 4 to 5 years at 4%, and he would like to be longer.

So, and something that I've worked with, uh, and actually, you know, this is a better example, better example, perfect example. Cody's first deal— this is why I think Cody's probably the one to mention this one. Uh, Cody's first deal had a prepaid penalty that was massive. It's like, I think it's like 15% of the purchase price, and it's for the first— wow, first 10 years. They did not want to be paid off. That was the thing. That I want to write this note and I do not want the liquidity event. So there's a huge restrictive prepay so that that person gets to keep their seller finance note in place. It was a 6% note, which was very reasonable, fully amortized over 30 years. Their ideal scenario, Cody does it all the way through the 30-year time period. The guy who seller financed to him was 32 years old. He will very likely still be around at the end of that note. That is a very valid way to do it. Now, I would rather not have a prepay penalty. I want to have as much control as I can. So penalties are restrictive to you, but it could be something that gets the deal done. If they are really worried about, hey, I don't want the liquidity event, putting a prepay into a contract can be a good way to ease those fears and say, hey, I want to keep this note, and if something changed and we had to refinance the payout to you makes it worth your time. And so prepaid just needs to be set where it hits everyone's goals. By the way, for those watching, if you can do me a favor and drop a like, the algorithm will like us more and bump us out to more people, and then we'll get a more, uh, larger variety of questions, which we always love to get. So for those of you who are watching and haven't liked yet, hit that darn button, please. Thank you very much. Emmanuel of Caleb, what are the biggest challenges you're currently facing with your Stephenville property? Is with your 25-plex?

That's a great question. Um, there's two of them. Uh, I think it's challenges. Gosh, I have to dig because there's not that many. It's been a pretty seamless property. I've raised— like, I bought the property in September, mid-September. I've gotten collections from $14,500 to over $18,000, so $4,000 increase in collections in what, 4— no, not 4 months, maybe 6 months. So that's not really a challenge. Um, Challenges. Gosh, I just don't like being the only young person at an old person complex. That's probably— it's not like a senior home, but as I have a lot of older tenants, that's probably the biggest challenge. Don't be the only young person here. Prepare stuff. Like, I had to personally fix an AC unit. I had to get somebody out here to fix an AC unit last week. Um, had a big— a few months back, only cost me $3,000. Um, we're kind of the only 5-unit to have monthly maintenance. Not just—

but yeah, awesome, awesome. And I'm glad the property is running smoothly for you. That's the nice thing with some of these deals. You buy them and they're fairly stable, and you come in and there's not that much to do. I remember you fixed a water pipe. There's a few general maintenance things, but as things clear up, it gets better and better. So it's super exciting.

This has been, this has been by far the easiest property I've ever ran. My other 3 properties, stuff always is coming up, all this stuff. And funny enough, I live on site and move down here. It is the easiest property I have ever run.

From Troy Roberts, we got another one. Question for you guys, if you're self-managing How do you show units on smaller properties when you don't have a manager? That's a great question.

Oh, I know the answer to this. You just— yeah, you can just have an agent in the area show it, or you can show it yourself.

Yep, that's, that's generally how you do it. Um, I run my property management company. We manage about 300 units in Grant County, Washington, and I have shown units 2 times out of 200 units and countless placements. Um, it's not me doing it. It's usually a staff member on my team. However, if you don't own the property management company and you are legitimately self-managing, the way I would do it is you pay a broker a fee. Could be $50, $100. Hey, I have a showing this time. Can you please come out and show this? Brokers work for a fee. They absolutely are qualified to show units. You get some young local person who's hungry for a paycheck. Supplement their, their broker commissions?

Easy.

I have a network of 3 brokers in my city that supplement my employees. So if my employees are too busy or on another project, or we have multiple showings, we just tap our network of brokers. First come, first serve. They raise their hand, hey, I would like to take this one. They show up, do the walkthrough, done. There's a really easy way to do it if you do not want all your times. Like Caleb, for example, Lives on his 25-unit property. If he didn't want his tenants to know that he's the one managing everything, he would hire it out. Now Caleb's let them know that he's the property manager, so it would be normal in your case to show up and say, hey, I'm unlocking this unit, right?

I keep it very clear I am just the manager and that is it. There's complaining and I've like— I have the property management phone. If there are tenants complaining, I am very clear I am just the messenger. And so showing units, all that stuff, walking units, that's kind of part of the job.

Yep.

I had that same question on my resort. I manned the resort phone for my team because everyone was off yesterday and there was an issue I had no idea how to solve. And I'm just like, hey, I just work here. I don't know. Well, we'll ask management, or they can ask the owners.

That's all I say. I'm just like, I have no idea to answer that. Like, a tenant thought she paid her rent and didn't, and some old lady. And I was like, I am just the manager. I collect the checks and I just send them to who knows where.

Yep, we'll ask the counter and then they'll get back to you. Uh, Matt had a good question here. Can you only win the real estate game if your name starts with C? Cody, Christian, or Caleb? Um, yes. Next question.

Yeah, Cardone's a C too.

I'm kidding, I'm kidding, I'm kidding. Um, no, no, anyone can play this game. It's super easy. But we do get that a lot, and everyone confuses our names with the other one. I get called Caleb and Cody all the time.

I do too. And you actually call— your wife calls me your name and calls me Cody's name, so I am—

yep. And when you started, uh, Caleb's first business partner's name was Chuck. So originally a lot of the content was Caleb, Chuck, Cody, and Christian.

It was very hard. He's saying—

yeah, Matt had a question. Oh, what was that?

I would say the guy was saying to make it, um, that, that level of neon, uh, on your hotel. But yeah.

Oh yeah, yeah. Uh, I had a phone call with an owner who I know is selling. It was first time calling, did not mention buying, but I would like to ask, how should I go about it in a second phone call?

I'll take this because this is what I had at Town Creek. Um, I did it on the first call. He actually— oh, he was offering, um, to sell. If you know he's selling, just like for me, it's like I was like, hey, he brought it up. I'm like, okay, what would that look like? But if you're asking him, just be like, I I know you, Matt. We talk outside of this. Um, just be like, hey, I, I mean, it depends how you know he's selling. And just be like, hey, I hear you're interested in selling. What, what's that going to look like? And just open the question up. That's all you do is keep it open-ended. Open the question, let him do the talking.

All right, I'm posting here. Um, so it looks like the Zoom code, I just posted it, um, everywhere that I can. I will also add this over to Instagram here. But if you guys want to watch Cody's business webinar on how to move your pieces and raise capital, that starts on Zoom in about 15 minutes. Zoom code is 253-389-3006, and that is posted everywhere that I know how to post it. For those who need that again, 253-389-3006. That launches in 15 minutes. Looking for an attorney so I can be prepared when doing a seller finance deal. Should I admit to being inexperienced when doing this? How do I go?

I've got this. I want to take another one. Yeah, um, it sounds like you, Luke, you were looking for an attorney when you were gonna go do a deal. Biggest piece of advice: don't look for a damn attorney, look for a damn deal.

Yeah, um, you're gonna find the attorney when you have a deal to talk about, and you're not— when you get there, you're not going to call talking about how inexperienced you are. You're just going to tell them what you need done. Attorneys need bullet points, they don't need backstory, and they bill by the hour. So when I talk to our attorneys, I just did this for a deal recently. I laid out, hey, I'm trying to restructure a deal. I have a new partner who's going to be buying in, and partner's being bought out. Here's what I would like to see in the structure. And I had bullet points of each of these person— or people need to be bought out at this price. After that, this amount of money is going to be funded to the capital account to be distributed again amongst the remaining people in the deal, cashing them out. Moving forward, these are the benchmarks of the project that need to be written in the new operating agreement. All I did though was take bullet points and say, these are the 4 things that I want to happen. When this money, when this money enters the account to buy out people, what do we want this to look like? And then I just listen to them and they put together the documents. Be very, very direct with your lawyers. If you give them a bunch of backstory or try to become their friend or let them know you're inexperienced, they're just less likely to work with you. There's no advantage to doing that because at the end of the day, their job is to fill out the paperwork correctly and represent you. Just tell them what they need to know to get the deal done.

I think this guy— that could— that last one, I think goes down to a lot of things, even real estate and just kind of business, is just not giving away more pieces than they ask for. Like, for instance, when I was— when I'm working at the bank right now, like, I've never worked at the bank, um, I'm not overly qualified at 21 years old to work with a bank on a $1.2 million loan or so. It's like, I'm just not giving— like, they were asking for bios on something and I was just tight. Like, I'm like, I send the basic stuff. Like, can you elaborate more on this? Sent the most basic things. They asked a few times, but I'm just not going to give them more information than they absolutely need. I think that's kind of all things in business.

I believe so. Now let's see here. Cale, this is for you. What is Cale's 5-year exit? Sometime IO, a newer building, uh, is there value add, or just rents are so far below market? I think this is in relation to your, uh, new acquisition that's coming up.

Yeah, it is. I mean Yeah, I mean, you were down here, um, for my birthday actually when I walked this thing.

You hung out with me. Yes, this building is really cool, guys. Really cool building.

Yeah, it's cool. Uh, bank likes it a lot more than I like Town Creek, I'll tell you that much. 3 roofs, paved parking, super simple cut drive, cookie cutter units, all that stuff. Um, as far as like value-add repairs, um, there are a few hoarder units. I think there's 1 or 2 that just how it's gonna go, those are gonna be turns eventually, whatever, fine. Um, newer building, 03 product. Yeah, bank likes that. Uh, 2 years of I/O. Literally the plan is take it from $550— if I go to $550 to $800, then I refinance out, hit my goal. But there's like, for instance, like people are renting student housing, like rooms in student housing for more than $1,000, like per door. It's like per room. And it's like, I'm buying whole units, not— you don't just have a room in an apartment. So yeah, I am about rent bumps. I am the least stressed I've ever been about a project as I am with my stuff in Stephenville.

Good. Making sure everyone has that Zoom code if they want to join Cody's upcoming webinar. Let's see here, which is the next question. Where's the link? Well, it's in the chat since you asked this. Is mezzanine debt the same as bridge debt? Yes. A mezzanine, even in a building, a mezzanine is like a floor between floors, or it's a connecting floor or an in-between. So when you're talking about a mezzanine, mezzanine is a space leading to another space. In real estate, it is a bridge from one debt product to the other. So those are synonyms. Mezzanine debt and bridge debt are the same thing.

I have actually seen and never seen a mezzanine in a building.

Ah, well, we have some touring of buildings to do.

Um, uh, this is a fun one.

Yeah, did you end the partnership with Chuck? I know you're still partnered with him on some stuff and not on other stuff, and it's normal to split up. And then Cody and I talk about this very publicly. I bought Cody out of a lot of the businesses, so I am the business operator. Cody has taken some of the real estate and holds some real estate that I don't own. I also own real estate that Cody doesn't know. So it is normal for partnerships to have different goals and to part ways. I ended up being the business guy. Cody is the real estate developer. I never want to develop. Like, I will if I have to, but I don't want to play developer. So in some extent, Cody and I have done what you've done. What does it look like for your partnership with Chuck?

Yeah, um, so Chuck and I started out, we bought 28 units together. I bought him out of 18 of those. We kept our deal in Houston together. Um, I bought him out of my sales company. Um, pretty much it's just all like, not all partnerships work. It's that simple. It's like a relationship. Sometimes they just don't work out. Like, in business partnerships, there's no— unless like you and Danny, there's no thing as marriage where you have to keep working together forever. Um, so yeah, I mean, it doesn't say in the Bible you can't not— like, you can't stop working with a certain business partner eventually. Like, it just doesn't say that. I mean, it talks about other stuff in business, but yeah. Um, that simple. Just didn't work out.

And that's it. Yeah, that's where it is. You guys still have some stuff together, and, uh, I believe your— how's your Houston deal doing with that, with that last property that you guys have? Does that still cash flow pretty well?

Yeah, um, a lot of repairs. We pretty much— I think we've turned about 7 of the 10 units in the year and a half we've owned it. So a lot of turns. Uh, working on optimizing that right now. It's kind of a pain in the butt because I joined late. I don't get to see the questions. I don't like this unless you just turn them off for me. Oh, there are comments, not private chat. I was on private chat.

Yeah, I was gonna say, you, you, it seems like as soon as I get you in here, you can see all the chat. Um, that's okay. I, I'm throwing them up on the screen as we go. How do you start incorporating leverage into your business at the beginning of the process of scaling your business?

You think he's talking about business or real estate? Because I mean, real estate is its own business, but it's not like—

it's both. This works for everything though. If you're using leverage in your— in the beginning, uh, how do you, uh, so how do you incorporate leverage in your business at the beginning of scaling your business?

Well, I think it's easier to incorporate— I would say it's easier to incorporate leverage than do it in cash when you're starting out, I would say, unless you come from a super rich background.

I was gonna say I wouldn't use that if I didn't have to. And the goal is to become debt-free. In the beginning, you lever as much as you need to, to build what you were trying to build, and the rest of your 4 phases of business are paying that off. So your phases are: you're going to build the base of your business to where it needs to be, you're going to stabilize it, and in real estate, that means you're renting all of your spaces at least to 95% occupancy and solving any major deferred maintenance. Optimize is where you make things better. Maybe you go to higher efficiency windows, you switch from baseboard heating to mini splits. You build another few units on a lot that you own attached to your property, but you optimize it, getting the cash flow to as high as it can be, and then you pay off all the debt. That's how you responsibly do it. That's how it works in real estate. It works the same way in business. If I need a base level of employees and I need some software and systems and I'm starting with no money, I'm going to lever only to what I need to get it off the ground and stabilize. When it is cash flowing, I will invest the cash flow of the company back into the company until it is built and optimized. When it is not a big burden to pay off all the debt, I will go back and clear all the debt on the company, and we'll move forward as a cash flow company. I have multiple companies, businesses, real estate, education. All of them follow this model. Right now, multifamilystrategy.com is in the part where I levered up for systems. It is ludicrously expensive. To market and build websites and to get Multifamily Strategy to where it was today. I am now paying off all the debt on that. I'm going to try to do that all this year.

Baller. How do you get stuck with all these blank jobs on camera webinar? I think that's supposed to be offensive.

Nah, I don't know. I'm just clicking the questions without the question marks. Not a great question.

Pass.

Caleb, how did you go about getting the owner's contact info?

I'd be able to get a meeting with every owner and how long I'm taking to take, uh, reonomy.com allowed me to do it in about, uh, 10 seconds. Uh, I just— I— after I made more money, I just was willing to invest in software. Um, so yeah, I just reonomy.com, called up all the owners. I actually had an owner call today, um, that same guy trying to buy his 24-unit. Called some owners on some stuff near my other properties in other parts of Texas, just run some stuff by him. But yeah, I mean, you can do Google Maps too. Reonomy makes it a heck of a lot easier. Because Reonomy also has unit counts for people's portfolios. So I could see the guy who, um, the ex-Goldman Sachs guy in Steenville who owns 652 units here. Like, I can see what he owns, I see what he has. So, uh, it took 5 seconds, but if you went Google Maps, probably an hour or so, I'd imagine.

I'd say if you're trying to find someone's contact on Google Maps, it takes like 5 minutes per person.

It's like Yeah, super, nothing crazy.

Yeah, I've been calling numbers through TaxAssessor and OpenCorporates in Houston. 6 hours, only 3 people answered. What websites are good to get the phone number? I keep— so, so here's what I do. I hop into Google and you find the property, and if it's an LLC, you go through OpenCorporates, but you find who the owners are. You type in their name and the city that the property's in and the word phone number. And you look at all the phone numbers you get there. And then I just Google the phone numbers I find in conjunction with the person's name until I start seeing repeats. And we've done this for A-list celebrities. We've done this for mom-and-pop owners. You can do this absolutely anywhere. It takes some practice, but when you get good at Googling these, Google is the search engine I use to find their names. If you are struggling or querying Google is not your strong suit, Rionomy is relatively affordable and it is the best for finding owner contacts. Uh, Caleb, you use Rionomy and again, you can do this for free. You can absolutely play the game for free. If you are paying to play, what does Rionomy cost per month? Or at least what did it cost?

I think it's like, yeah, I think I'm closer to like, I've purchased multiple subscriptions. It was either $350 or $500 a month. Um, and it's been 100% worth it. I mean, I've got deals off it. It's like, if I use Reonomy every month for the rest of my life, getting a deal off it is worth it.

And that's a good way to look at software. It's, am I, am I committed to doing a deal? And will this help me get to the deal? And will the deal justify the cost of doing this? Reonomy, it's not free. It's not nearly as expensive as CoStar. CoStar for the same level subscription with more data but less contact info. Reonomy's contact info is better, costs way more than twice as much.

Yeah, the contact info on Reonomy is nothing short of elite.

Dylan has a question for you, Caleb. What's your sales company? Let's talk Dago. What's going on with Dago Sales?

Um, Dago Sales is a sales and marketing company I started about a year ago now, so that's pretty much it. Sales and marketing company that sells, um Basically just plugs into your lead funnels and sells your products. I guess that's as simple as I can make it.

So I have worked with Caleb's company and they are absolutely amazing. Like, I, I will just be a testimonial for them, like, for moving— because I have multiple products, I market a lot of stuff. Even marketing my multifamily, I've used Caleb's company for. Uh, there was a point where Caleb's company was helping me launch wedding events., for the Robinhood. Um, granted your company doesn't do that anymore, but the buildout that he does on the backend, this is what, this is what Dago Sales did for us. So comp, like people who compete with us who have, we'll just be honest, they're lesser courses. Um, but there's a couple of individuals in the creative finance space who have a $2 million monthly marketing spend. Cody and I started with no money, which means our marketing spend was, uh, not that. We're gonna say closer to, closer to $2,000 than, than $2 million. What Caleb's company did was took the pieces that we have and gave us the most organic traffic possible and took my 15,000-person lead and made it legitimately competitive with people who have a 200,000-person Instagram. So you take my little teeny lead flow and my little marketing of, you know, baby Christian's channel And we were getting numbers in sales that were higher than a lot of our competition in the, in a very crowded real estate education space. Um, so if you've heard of me or you've like, we've showed up online, a lot of that is due to Caleb and the build-out that he's done. So hard to oversell how successful Caleb has been helping grow my product. And I know your, your company is still younger. How many clients are you at today? Are you, are you still near 10?

Um, I am actually looking to build up to 10. So right now I'm about half of that. Um, and I'm onboarding 2 new clients as we speak.

So there we go. Really fun to watch you take off. I have a question though for you. Am I still your biggest?

I know exactly what you're— am I still your biggest client? Uh, right now, for now you are. All right, we're working on making you second fiddle.

I'm sorry. Oh no, is it one of the people that you're onboarding?

Um, no, it is okay.

I'm working on scaling up. I'm not competitive, but if I was, I'm the biggest. Uh, JF Lobo, what is one sector of, uh, real estate investor that you haven't explored but would like to invest in? I am a multifamily investor. I want to invest in multifamily. We branched off into hospitality. I regret doing that. That distracted from what we're best at. I believe that if you choose the thing that you could be the best in the world at and you keep reinvesting into that and keep the main thing the main thing, you will get out of your own way and you will succeed. I am the best in my market and will become the best in the world at value-add entry-level housing. We are so good at using replaceable parts and what we call functional flipping. But we come in, and instead of having the marble countertops and the HGTV finishes, we have the same great-looking LVP floors, the same, uh, whatever gloss— I think it's eggshell gloss white paint. My wife's the one who runs that division. We use the same countertops, the same cabinets. We We keep everything in back stock, the same fridges, the same stoves. They all look nice. They look nicer than all the properties around them. And because we buy everything in bulk and we know what works, we charge less in rent than everyone else. We solve affordable housing, we fight homelessness, we do it profitably. That is what I'm good at. I do not want to be good at more things in real estate. Being the best at that is worth so much more to me than having a diversified portfolio where I'm pretty good at everything. That is my choice.

I couldn't agree more. I mean, we— you, you and I were talking about this quite a bit when I was looking at doing that storage deal. Yeah, a few of them, because I called you for advice on it. I was like, hey, um, would you do this? It's an awesome— I mean, there's a few of them. There's one that's built an RV storage. Let's talk about passive. I mean, build an RV store is like, like, ideally, I'm like, this is incredibly passive. There's nothing else. But also comes with 12 acres of land which has ag on it with Texas stuff I don't understand. Was looking at some storage, self-storage, some office where I could build more storage. Was looking at a climate-controlled self-storage facility that had like 300-something units. The guy wanted $5 million for it. I called you and I was like, "Hey, what would you do?" And you basically said the same exact thing to me. And then it came down to, do I want half? That Climate Self Storage deal was baller. And it's like, you basically asked, "You want half of your over— about half of your portfolio, give or take, to be self-storage?" And the answer was no. So I was like, "I'm multifamily. That's what I do. That's what I know.

I'm not going into self-storage." That makes sense to me. It's not that you can never diversify. Some people make it really far in one company or one asset class and they add other asset classes. You can do that, but not until you've hit your goal and what you're doing. So diversification is not a huge focus for me right now. Caleb, where are majority of your deals coming from now?

Uh, sorry, I'm handling something at the same time. Um, where are majority of my deals coming from right now? Um, In-market relationships, I would say. Oh well, yeah, owner relationships too. Um, the one I'm buying right now came from a PM relationship. Um, funny enough, how I, how I started talking to the property manager— drove by, uh, the building, the 24-unit I'm trying to buy now, which she manages as well. Um, was like, hey, this is the coolest looking building I've ever seen in my entire life. Is it for sale? No, but I have a 26-guy that would sell. And I was like, let's do it. Um, took about 2 and a half months negotiating. I was trying to get creative with it, then I finally realized I could just lowball my price and go bank, and decided that was the best case of action. So yeah, it's all in-market relationships. I mean, the 24-unit I'm looking at now, I'm not even talking with her through that. She never made the connection. I just called the guy. It was like, hey, you want to sell? Not that simple. I built a relationship with him, found out his pieces, he was looking to sell. But yeah, in-market owner relationships, property manager relationships, broker relationships here, it all comes from me with the owners, and they introduce me Yep, and that's how it is for most people.

The getting those brokers early, especially the ones they're going to work with consistently, is a great way to build out your roster and build out your deal flow, but they're only going to take you so far. The owner relationships are something that consistently builds forever through your real estate career. They're going to be the people who help you get started. They're going to be the people who help you expand. There's always a bigger fish. You keep growing and growing and growing. This is how the game gets easier. So if there's one skill that you want to learn It's the owner meeting. You can still make it really far with brokers, but there is an end to that. Like, brokers are only going to get you so far. The owners in the market are going to take you the rest of the way. 100%. Um, Dylan has a question here. A lot are out of state, so how should I build those relationships towards, uh, seller finance? I wouldn't worry about Solar finance.

I'm taking another one question. Um, the guy— this guy is out of state. The 24-unit owner lives on the East Coast.

I literally—

I've called another owner who owns 20-something units here, lives in actually Sacramento, California. Oh, there you go. Invests all over the country. He follows me on Instagram. We chat up all the time. He's super into pickleball like I am. I just called him. That's all it counts. It just can— the relationships can blossom over a phone call. It doesn't have to be sitting down. Yeah, it's a lot easier. Especially being extroverted like I am. I know you're not, Christian, but for me it's super easy to just get in front of somebody and just start talking and build a relationship. But it happens over the phone the same way.

Yeah, if, if it's long distance, you start it with a phone call. I mean, just like any other, any other friendship or relationship or whatever, it's like you work with the pieces that you have. If you can't meet them, you have a phone call. I'm not a huge fan of scheduling Zoom calls to replace the meeting. I think a phone call makes more sense. Zoom calls are— yeah, I can see someone's face, they end up being kind of awkward.

So it's like, yeah, they seem really awkward.

Yeah, phone call is a good way to do it. And then when you meet enough owners in the area that you want to invest in, just schedule all the owner meetings in the same 3-day period and just do it. Exactly. And Caleb's done that. I've done that.

That's—

I'll be in Atlanta here later this, this week. I'm meeting with people the entire time I'm down there. I'm there for 2 days. My schedule is completely packed. Everyone who is part of Multifamily Strategy I'm doing a couple of podcasts down there. I'm meeting with a larger owner down there, and I'm just packed it all into a few days.

Are you meeting with the guy whose name starts with an S?

Yeah, I'll be podcasting with him in, uh, some underground recording studio somewhere in Atlanta. Kind of excited, dude.

He told me to come do the podcast with him too, and I haven't booked my flight yet. I should probably go.

Go to Atlanta, everyone else. By the way, I I'm in Atlanta next week. I'm speaking on the 27th.

If he wants me there on the same day as you, he told me to come.

I just don't know if I'm gonna— oh, well, you're going now. Uh, 27th, Caleb and I, Atlanta. We're gonna be there. My wife Dani's there too, so meet the crew. All of us but Cody are going to be there in Atlanta.

Be there. I'm gonna book my trip right now. Uh, what day are we going?

Um, the event is on the 27th, and it looks like everything's happening in the evening, so you could fly in in the morning. I'm gonna be there in the night. Um, I also chose a ludicrously expensive hotel, so you— it's up to you where you want to stay, Kael.

I'm sure I could— I, I know people in Atlanta.

Sorry for the distraction, everybody. No problem. Did you use the free trial of Reonomy before purchasing?

Yeah, I would do that. Did you? Yeah, I did. It's awesome. Yeah, always use free trials.

They're awesome. We do lots of software stuff in all of my companies. I, I'd sample a lot of software.

Software makes everything. I, I sample an insane amount as well.

How do you guys go about contacting owners that are lawyers? They tend to own a lot of real estate where I'm at, but they're tough to get in contact with.

Just wondering.

Yeah, I know a lot of lawyers who own real estate. In fact, I only will work with a lawyer who owns real estate themselves. They just, they treat your legal different when they're playing the same game. So just like anyone else. You pick up the phone, you call. The nice thing with lawyers is they, like, their numbers are extremely public. So they're like, they're probably busy or they have assistants, but you just have to be good at, you know, getting past a gatekeeper if you're calling their office. That's not the end of the world. Yeah, generally speaking, lawyers are easier to reach than other people. As soon as you're a lawyer, you're listed publicly. I find your name, your number's attached to it. Um, it's one of the professions like went to a lawyer, I'm like, oh, thank God, this is gonna be super easy.

Um, so that's one way to do it.

Yeah, so, so you look at the person's name, and I usually put in the address of the property, or at least the city the property's in, and the word phone number, and then phone numbers will pop up associated there. Then it's going to be— yeah, there's going to be like 50 different websites that are like, hey, for this person we found this number, this number, this number. And I'm like, okay, cool. And so if I have 5 numbers for someone, I call the 5 numbers, one of them picks up, we start a relationship, boom, done. Very, uh, very straightforward. Just remember to add the word phone number if you're looking for a phone number. How do you guys initially start the owner conversation connecting with new owners? Is there a better phone script than the rest that gives you a higher chance of getting an in-person conversation? Less is more is the answer to that. You want to share—

I agree.

So we actually cover this in Multi-Family Strategy, the course and the mentorship, really heavily. Um, I'll give you the Cliff Notes version. There's a circle drill. You want to be able to share a relatable point. For me, it was I want to retire my wife, which is— which leads into the goal. And so I'm like, hey— or actually, my relatable point was, uh, when I started, was that I owned the duplex next door. The goal was retire my wife, which is also relatable, so it's an easy tie through, and then the significance of what happens when you actually get there. You weave that in through the conversation, but when you intro in the first 10 seconds, it looks something like, hey, I'm Christian Osgood. I'm your property neighbor. I own a duplex right down the street. I want to try my wife and learned that one duplex at a time is not going to get me there. School district went crazy. We're trying to get this done way faster. You bought a 20-unit. I haven't figured out how to buy 20 units yet. How'd you get started? Their response could be really warm and they'll talk to you a bunch, or it could be, hey, I'm not selling. It's like, that's great news because I just bought a duplex amount of money. Those are the type of conversations that you have, but share a quick relatable point. And that's the script. We have more content on that in a structured format on multifamilystrategy.com. Absolutely invite everyone to check that out. And if you have questions, by all means DM me at Christian Osgood. But like, it, it's fairly straightforward. Your goal is to book the coffee meeting and the call. So share your point, ask them your question, ask for a meeting, get off the phone. That is, that is the script. The faster you can book the meeting and get off the phone, the higher chance you have of having that meeting. Like small talk, bad. Get a valuable insight.

Yes.

Get them engaged while they're engaged and curious. Book the meeting. If you talk too much, there's nothing for them to meet you. With you about. This should be a very, very, very short phone call. The shorter it is, the more likely it is that you're going to meet. Agreed. Uh, Dylan— oh, this ties into our topic for today. I'm gonna— I'm, I'm cherry-picking this question. When does it make sense to pay cap gains? I know exactly. There's a fee that you pay for liquidity. You trade equity for liquidity. So when you sell, you have broker's fees, you have capital gains. When you want more liquidity is when it makes sense. And when liquidity is the piece that you're missing, get liquidity. You want reserves, you want stability. So for those who missed it, because we're a little over an hour in, your entire game— this is how you buy infinite real estate— you have to keep liquidity, cash flow, and equity in balance. Now, at the end of the day, Your goal is, where do I want my cash flow to be? You only get to keep that cash flow if your liquidity and your equity are in balance. Your equity is going to adjust for inflation. It is going to create your net worth. You want a lot of equity. You can lose it if you lack enough cash flow while you're building that equity or you lack the reserves for a major CapEx event. You need to keep them in balance. If you start out with missing some of those, you have no cash or no cash flow, All of those are increased by the deals that you do. So if you think of it like a turn-based game, you do different deals and the deals add to your different pools or take from your different pools, but they give you those resources. And then your job is to rebalance those resources so that everything is— has a good equilibrium. So it makes sense if you are low on cash to keep the cash. If you have a ton of cash and you have the cash flow you need and you're trying to build your equity, 1031, and you don't have to pay those capital gains tax. That is when it makes sense.

I'm sorry, I'm working at the same time. We're doing— no, that's good.

I think you answered this one a little earlier. Membership at Realonomy, you said it was like $350 a month.

$350 to $500, somewhere in there. They could have gone up since. I mean, the software is pretty darn valuable, so I wouldn't be surprised. I, I've used CoStar, um, I do not like CoStar when comparing to Reonomy. Um, Reonomy even has debt products. Like, CoStar's whole thing is data. Reonomy has the same thing.

There you go. What do you make sure your insurance has? Insurance is replacement value, replacement cost. Yep. Yep. Replacement, replacement value on the building and a high enough deductible where it actually makes sense that you'd pay it because I'm not paying like I'm paying out of pocket for anything $10,000 or less. I'm not going to raise my insurance for a $2,000 quote. So for me, $10,000 deductible, replacement cost. When you do functional flip, uh, a bathroom, do you use fiberglass inserts, um, or tub and tile, all tile showers? Um, when you have a plumbing problem and you have to rip out all the tile, tile sucks. It is also hard to keep enough of it as a replaceable part because if you have a whole lot of showers, you do a whole lot of renos, uh, tiles kind of go in and out of style and in and out of stock. The general fiberglass surround, you can actually get ones that look very nice. When you're talking functional flipping and entry-level housing, they don't care much about the tile. It is not an amenity that's going to help with your rent. It's not going to help with stability. It's not going to keep a tenant there longer. So on functional flipping, fiberglass inserts are easy to take out and install. They're less expensive. They're built for that shower, so you have all the pieces that you need. And they look really, really clean on top of being actually easy to clean, unlike grout and tile. Functional flipping, one of the best things you can do is make your bathrooms the same everywhere. We have a standard toilet that we really like that seems to work for our tenants really well. It doesn't break often, and we have them in backstock. Fiberglass surround, basic white tub. We keep it really, really simple. We do ones that look nice, but it's always the same thing. That's a great question. Uh, by the way, we will be adding to Multifamily Strategy here in the next month. Dani is actually joining the course and she's going to have her own section on functional flipping. We're going to talk about exactly that, the pieces that save the most money and how to make them look fantastic so that you have a better unit at a lower price. Talk about managing your, uh, your resource pools. We brought our cost to reno from an average of $18,000 down to $8,000 by bringing Danny onto the team. And looking like apples to apples, looking at the pictures, the units consistently look nicer on average at $8,000 than they did at $18,000. Patrick's— I see Patrick has— I've had a bunch of great owner meetings so far. Any suggestions to keep those relationships going? Their relationships, they should be organic. So I don't keep notes, I don't keep a spreadsheet. I call people when I have a reason to call them. Maybe I implemented a strategy they gave me. Maybe I saw a deal I think would be a good fit for them. There's people that I contact once a year. There's people I contact once a week. If it's an actual relationship, I don't have any strategy behind that other than thank people when you use something that they gave you and ask questions when you have a question. If you do those two things, you're going to get all the touchpoints you need.

I mean, yeah, like piggybacking on that, I literally just texted one of the owners I'm friends with here, older guy. I was like, hey, uh, you want to get lunch this week? I'm just catching up with them. Just, they're like Christian said, their relationships, they're not forced. It's— you actually want to meet these people and get to know them and not just try to quote unquote steal their property. Absolutely.

Uh, from Dylan, why pay down debt all the way if you're going to sell? Uh, seems to make more sense to leverage more, keep cash flow. Uh, and you say you only want to get down to 10 properties, that's why I asked. Yes. So ideally what you would do is the most passive properties are 75 to 100 unit properties that have on-site management, and it's, it's, it's its own contained system. Own staff, own manager, you're hands-off, building runs itself, Class A, minimal maintenance stuff. And to further mitigate your risk, you buy 5 or 6 of these bad boys, and it is like crazy generational wealth. That is the end game for almost everyone. However, if you're buying some small buildings and you get to a certain point, like for me, financial freedom, like absolute freedom, I can do what I want. $25,000 a month pays for a very large house in Texas. It pays for whatever I want to eat, wherever I want to travel, and allows me to have a family. That is enough. So I am going to pay off the real estate that I have that gets me there, and then it's just done. And then the cash flow goes up because I have less debt, but it's stable. It's done. I own it. Then I'll continue levering elsewhere at a conservative 1.5% DSCR. Not leveraging beyond 65%, but I will use leverage to buy more real estate to scale to the next level. And at some point I'll pay those off. Those I'm probably not paying them off until I scale them up into larger stuff. And when I have a 100-unit building that gives me the cash flow I need, I can look at 1031ing the smaller stuff even though I've paid it off. But owning your financial freedom is a lot faster if you pay off the small stuff first, own what makes you free, and then the rest of your goals are based on, okay, now let's get ridiculous. Let's get a 100-unit building and pay it all the way off. Heck, let's go get 10 of them. So Cody has 5 and I have 5. I partner with Caleb on a few buildings. Caleb and I can go ahead and scale up our LLCs, buy a few more properties in Texas, roll them into, you know, 2 75-unit buildings. And that way, because I'm 11 years older than Caleb, if I want to retire, it's very easy to go, okay, um, there's 2 75-unit buildings. Let's get them both appraised. The other one pays the other person the delta, and we just split the portfolio. And congratulations, our 3 pools are balanced. We have cash, cash flow, equity. We're rich. We can part ways. It's a really good way to structure these. So that's how I'd answer that. I want to pay down as fast as I can. I want to have no debt on my financial freedom. Once I own that, yeah, I agree. I'm not paying off debt for the next block until it's rolled into the assets I want it to be. That's a really good question asked really well, Dylan. I completely agree. Hi, Rola. What would that conversation look like getting past the gatekeeper to a lawyer? Um, kind, assumptive, and brief. People ignore gatekeepers, try to blow past them, they're gonna get shut down. Thank them for their time. Thank you for helping. Assume that they're going to let you speak to the person. Hey, I'm calling for this person. I had an important question for them. Uh, it is in regards to their property. I could use your help. Would you be able— and whatever it is, if they're in the office, would you be able to snag them for me? I appreciate it so much. Thank you. I mean, like, simple. People try to explain reasons why they're gonna— it's like, no, you're not gonna sell a gatekeeper. Their job is to keep you off the phone. If it's quick and important, hey, I had a quick question for them. It is really important. It is related to their property. Could you give— have them give me a quick call? All Are they in office? Just get through the gatekeeper. Smile, kind, thank them, move on. What's a good cash to net worth ratio?

I think it depends where you're at in your business.

I do too. But generally speaking, like, what's the worst thing that can happen and can you cover it? It's like when you're, when you're starting, like if you had a, a roof just cave in. We should have enough cash for that. But the odds of all of my roofs caving in at the same time, never going to happen. So I don't need to hold as much cash. If I had— right now I have $30 million of real estate, $1 million would still be too much to hold liquid. There's no reason for me to hold that much because I can get that much if I need it. I have enough of my other equity pools where I can move it around. For me, I would say for a $30 million portfolio, I responsibly should have $500,000 of cash. I am below that right now, but I'm actively adjusting pieces. But again, it— there's not a perfect right answer for it. It's do you have enough cash to weather whatever can come at you? And for me, no, I don't. I started without money and now I have a ton of equity. I have excellent cash flows. I'm still out of balance. I'm very public about this. I don't count as rich yet even though I have a high net worth. I am not in balance. When I own all of them, you can say hello, I've won capitalism, I've won the real estate game. I haven't won yet. I have more pieces to go. Give me a second. I'm playing this thing for 2 and a half years, guys. Could you explain why Cody sued his first partnership and what should have been done?

Why Cody got sued? Um, I, I'm not input.

Cody did not get sued, so very, very important to, uh, differentiate. Um, he had a partner who stole all the rents and all the security deposits and then—

that in fact is not okay.

Yes, Cody dominated that lawsuit. Uh, now additionally, Cody was named in a lawsuit where someone else sued that same partner over another thing, Cody was immediately dropped because he had nothing to do with it. They named like 7 of that individual's employees in the lawsuit. So Cody's been named on a lawsuit before that had nothing to do with him, and it was dropped. But Cody does the suing thus far in the relationship. Cody has yet to be hit with a lawsuit, and never a lawsuit related to a deal that he owns, even, even when, when, when, when, uh threatened with a lawsuit. Now, Cody and I have an active lawsuit for specific performance on a deal where we actually came in, put $130,000 of earnest money down, and we signed, we wired the money, we executed the contract, and the seller didn't show up to signing and then requested to title, hey, um, I actually think that I should get to keep all the earnest money and I'm not going to sign for this. I just don't want to sell the building anymore. And amazingly, Escrow won't release the money to us even though they reneged on the contract. So we go through an entire lawsuit where we take their entire portfolio, put a lis pendens on it so they now can't sell the properties that they wanted to sell. And yeah, 8 months later, $130,000 in escrow. Just can't touch it. It's right there. Thank goodness we didn't raise that money. That was our money. That was part of the liquidity crunch that Cody and I had the last year. Largest earnest money we've ever put out happened to be the only time there was a stupid dispute. So I'm not saying we never have any legal, but Cody has never gotten—

been sued.

I'm gonna reword that. Cody's never been sued over real estate that he was involved in. So thoughts on Section 8? I recorded this for a new chapter of Multifamily Strategy last night. Um, actually, I was talking to Caleb right before I recorded it and the audio got messed up, so I recorded this twice last night. Section 8 is probably the number one thing that stabilized our portfolio. Matt Hawkins taught us how to do this. He's a Lumberjack Landlord online. But we work with housing authority— Caleb, I believe you do on your, um, 25-plex as well. We work with local housing authorities to set our pricing minimums on entry-level housing Absolutely, I can point to about $1.5 million of equity that Cody and I made by using strategies related to Section 8. I have literally all of them in the course. Cliff Notes version: they have pricing that updates every single year, and when you're doing entry-level housing, you're trying to figure out where do I want to set my minimums. I match housing's maximums exactly. Every renovation I do is built to the handbook. Do I have it in here still? No, I moved it. There is a handbook that is national for housing authority. You can go to any housing authority and get it. It's also online, but they have a checklist for renovations. We renovate exactly to their qualifications. So when I market a unit, it's for market rent. Any assistance program, you know, Section 8 or not, can use it. But Section 8's qualifications are good for everyone. And so it has basic safety. Basic, you know, just build standards for your unit. You make sure egress is there, exterior lighting, outlets are updated and safe. But as long as you adhere to their entire checklist, it will tell you how to renovate your unit, how to get it leased, and how to set your pricing for entry-level housing. As soon as we did this, we filled about 30 units that needed to be filled. We fixed negative cash flow in our portfolio. We increased our actual cash flow by like a ton. I think it was about a $35,000-$36,000 swing in cash flow, and it just hyper-boosted us through our 38-plex and several other properties. Section 8 is really powerful. It's not going to help you if you're doing Class A. It's not going to help you if you're in hospitality or self-storage. But if you're like me and you really like the functional flipping value-add projects, taking dumpy properties and making them really nice. Section 8 is like, you can make millions of dollars with really basic things. Uh, Jake had a question, and Caleb, this might actually be well targeted to you because I'm obviously biased. Um, of course, who's it for?

Who's it not for? Um, gosh, I would say it's for people who are just starting out in real estate or they want to scale. I mean, I took it when I was just starting, so starting out. One of my friends I've made from that— I'm not going to say his name, I just don't put people on blast— he joined the pro— I think he joined the program when he had like mid-20s, like I think he had 25 units, uh, he wanted to learn how to scale the right way. It's wherever you're at in your business, if you just want to take to the next level, it's that simple. I mean, it's taught me absolutely every single thing I know today. There's no way I would own 53, soon to be 79 units without taking your guys' course. So it's for anybody and everybody.

The course is information and there's a lot of information that I didn't have when I started. All Cody and I do is meet with owners who are farther than us. We assimilate their knowledge and then we put it into the course. We document it. We actually apply it. The only thing that Cody and I do that I, I think makes us qualified to have a course or a mentorship is we apply the knowledge that we get. We actually built a portfolio in 2 and a half years that is larger than I've seen anyone build in that amount of time with no money. That's what we did. We take the knowledge, we put it online. I would say the course is for anyone who wants to know how to do it. It's not nearly as powerful as the mentorship group, the community piece.

Yeah, not even close.

Yeah, being around other people, the actual application is everything. So if you're watching this and it's something that you're considering, my advice would be— the course is included with the mentorship— my advice would be don't do the course. And if you can't afford the mentorship today, Wait, or shoot me a DM and let me know if I, you know, I can— I'm, I'm the creative finance guy. I'm sure we can figure out a way to get you in. But what I want for everyone is I want to actually get to work with you and help you apply the knowledge. If Cody and I knew what we knew when we start, like, know today, if we knew it when we started, there's a couple hundred thousand dollars of mistakes that we could have avoided. And that is why mentorship is so important. It's tailored to you. So information, you wanna take the course, you can buy whatever you want. I promise the information's there. If you want to do it and, you know, save hundreds of thousands or millions of dollars on mistakes, join the mentorship. That's where I wanna see everyone. No one here buy just the course. That'd be silly. All right, speed run, and then I'm gonna go grab some food cuz I am hungry. Uh, Gail, do you get tax benefits for living at an apartment complex?

I get rent benefits. I don't have to pay rent, but I don't get tax benefits.

Nope. When doing a BRRRR with a bridge loan rehab and building cost, when you refi, do you need equity? Don't you need equity? Yes, you need equity to refi.

Short, short answer, yes. Um, And if you want to learn more about how to basically build equity, Christian's going to teach you.

Yeah. So BRRRR strategy, like if you're doing a BRRRR, you're going to increase the value. So you're going to win on price massively, season it for 6 months and then it's just there. But 99% of the time you're going to increase the value of the property. If you've increased the value, the new increase is your equity. So great example, bought a 38-plex, bought it for $2 million. Appraisal came in at $4.1 million. After we fixed collections, did work on it, and actually got the whole place leased. There's $2 million of equity. It was very easy to get a $2.3 million loan. Exactly. What would you do if the first person you called offered a 16-unit? How would you find the money? Who would be the first person you call? Uh, and a lawyer or accountant? Well, you don't need an accountant because you haven't closed it yet, so accountant would be the last person I call.

All.

That's not going to come into play until I own a building. Lawyer will be needed after you go under contract. I'd probably have a broker write it up though, so you'd find a broker first. But if someone called and offered you a 16-unit, the first thing I would do is make sure I know my math and I know what the deal is.

Yeah, I'd make sure I learned how to take down the deal first and foremost. I'm not buying the deal if I don't know what I'm doing.

Yep. I've seen lots of people call and say, hey, I have this deal, and they show me something. I'm like, okay, so it's 32 units in this market. It's way overpriced and they're not willing to negotiate terms. But man, I really want to buy it and they said I could buy it. I'm like, okay, so where's the deal? I'm like, well, the way it's presented, it loses money, but it is the type of thing I want to buy. I'm like, okay, so you don't have a deal. So your first thing is make sure you know that you're looking at a deal when you have a deal in front of you. If you do have a good deal, you're going to write it up and go under contract. And during feasibility, is when you're going to contact your lawyer, you're going to file your LLC, you're going to get all the pieces going, but not until you actually have the deal. There's no point in having a lawyer for no real estate. Agreed. Should you time property tax during recessions or try to reassess then?

Property tax— you're thinking— he's, he's, he's thinking on the right process, but the that's not how that really works. Yeah, I get you're trying to— he's trying to think down the right path, and I, I love it, but there's just like some other knowledge that comes into that. Property tax is going to reassess regardless.

Yep, they're going to update annually, and you don't get to choose when they reassess your property tax. It just happens.

The government sends— wouldn't that be nice? I would choose it hasn't reassessed since 1900.

Yeah, I wish you could time property tax.

That would be ideal. That'd make this a whole lot easier.

Uh, um, no. Good. A first-time motel owner use Section 8, are there net worth requirements?

He's saying he's in Pennsylvania. That's— Section 8 isn't from net worth.

That's not going to happen. Oh yeah, there's no net worth requirements. But a first-time motel owner, yeah, if you're doing the conversion to multifamily, absolutely, you can use Section 8.

Well, well, if you're converting, yes.

If you're just running it as a hospitality, um, there are Um, so, so I have experience with this because I own two— I own two motels that are being converted. Uh, both of the hotels that are being converted, it wasn't Section 8, but there was, uh, through the housing authority. So different programs, same entity. Uh, they have, uh, transitional housing. And so one of the hotels was actually being used for, um, people would get out of prison and for the first 3 months the state would just place them there. And it was a state-backed program through housing authority. For them to go have somewhere to live, to have housing. It was a 3-month-at-a-time contract that can extend a second 3 months. There are also programs for other transitional housing that are very common for hotels because they want a furnished place to live. So if you are a first-time motel owner, it's— unless you're making the conversion to, to multifamily, you're probably not doing long-term leases, which Section 8 almost everywhere is a 1-year lease. But housing authority, you can absolutely use those housing programs to have midterm leases in a furnished hotel, 100%. So you're thinking on the right track. No net worth requirements though. No, there's no tenant placement that cares what you're worth. Do you like being near a freeway? More crime but more eyes. Um, I don't care.

I, I just— freeway doesn't determine if it's going to be a good deal or not.

Yeah, I, I like the more eyes. Like, I have, I have an R38 plexus that has like 300 feet of highway frontage. Um, I like having that. It's nice, more people see it, but it doesn't— it, it— I have never seen it make a material impact on the property. Everything else leases just fine.

Agreed. No. Short and sweet. We're wrapping this up. Absolutely. There's no point starting that small.

I would, I would, I would. If I was to buy a block of houses, it was 30 houses. You basically have 30 detached units.

Okay, I would do that if you're buying them in a portfolio. I'm not buying one at a time.

No, no, no. Especially sub-$100K. There's no possible way. They'll make enough money to pay for any problems the individual houses have. That portfolio will almost definitely eat you alive. There's too many roofs, there's too many individual panels, there's too many individual everything. I want all of this under one roof. Functional flipping needs replaceable parts. If I get a whole bunch of unique houses with unique problems and I have a ton of them, management is going to be a nightmare. Even if I made a lot of money, I'm going to end up with properties that are in decline because I'd have to buy too many of them. To get an income that actually means anything. So I love multifamily because you're putting all of your stuff under one roof. The one other problem I have with investing in a ton of single-family homes is we actually solve a legitimate problem when we do this. I am fighting homelessness in places that need it. When we use these strategies and we work with Section 8 and we do functional flipping, We are working on the affordability problem. If you're buying single-family homes, you are essentially taking houses that families could buy and live in and just pulling them off the market. I think that single-family really should be reserved for families who want to own a house for the most part. I don't love them as rentals. I understand if you have a second house and you want to Airbnb it, like, that makes sense to me. But, or, or say you bought a house years ago, you moved out of it, you're like, you know, this would make a really nice rental. Those make sense. But as a strategy, I don't think so. Have people from New Jersey or Pennsylvania joined the program before? We have so many people from New Jersey.

We have— I was gonna say that I can name a few from New Jersey right now.

Um, we have, you know, we have people from PA, by the way. Um, and by the way, Luke's from PA. But yeah, there's, there's people from Pennsylvania, uh, multiple. New Jersey is like an abnormally high concentration of people from New Jersey, uh, which by the way, I'm gonna be speaking at on April 2nd. I am in New Jersey. Do not ask me the town. I do not know off the top of my head. Um, but I do know that I'm speaking in New Jersey, so stay tuned on that. I will be there, um, in person. And I know we have a lot of people from the mentorship group who'll be there.

I might come check it out.

New York is an interesting area.

He's basically asking, what is this? Oh, how was that the next question? The guy's asking how to get big like that. Yeah, um, that's, that's a different level. Um, you're not gonna do that the first couple deals.

Uh, the big one, so you have, uh, New York, like New York proper, like the boroughs, if you're buying down there, is insanely expensive real estate. A lot of it is generational wealth. A lot of those, it's very, very, very hard. Almost all of it. Or you can buy very, very, very slummy properties there. There's a ton of competition and a lot of it is owning in New York is a power play. So you're going to pay a huge premium to like for New York, New York. That's how it's the whale owners in New York. That's what it looks like. It's the same in Seattle. Marty Sieglag, uh, he used to be a client of mine, multi-billionaire, majority of the towers in Washington. Like, he's the largest owner, like, individual owner of office in Seattle. Martin Sieglag is generationally wealthy. His daughter is taking over the business from him with her ludicrously rich husband. He's a real estate developer. He built a lot of Seattle. So you see a lot of that same thing in New York. Takes time. Yep. What's our financing terms would be against TILA and Dodd-Frank regulations? You want to make sure on a lot of this stuff, most of it doesn't come into effect because you're not creating a security. If you are doing an LP thing where you have a syndication with GPs and LPs, you have to watch for the SEC and all sorts of laws. When you're looking at, uh, doing seller financing terms, you're usually— you're just looking at like, okay, uh, is interest rate above the federal minimum rate and below the federal maximum rate? There are actual limits on interest rate. And then, are— is everything in the contract legal? Which all you're going to do is just double-check it with your lawyer. Um, a lot of the till-and-dug Dodd-Frank stuff rarely comes into play because you want to keep these things really simple. You're going to have an interest rate, you're going to have a balloon payment or no balloon, uh, you know, might fully amortize, uh, but you're going to have terms, you're going to have interest, you're going to have price. And if you have a special clause, it needs to be really simple and easy to explain. Ty, can't wait to get the course. Ty, I'll see you there and I'll raise you one. Find a way to get into the mentorship. It's more fun, more people. I do run into people all over the place though who all go speak and they're like, I took your course and I bought all this stuff. And I'm like, guys, I would love some testimonials, friends. Uh, let me know when I— if I share something from the channel and you go buy something and you were able to apply the knowledge, please let me know. Shoot me a DM. I would love to interview on our YouTube channel. I really appreciate the success stories. It means a lot. It's really fun to fly into a new market, meet someone, be like, hey, you said something that actually impacted me. That means a lot to me. So let me know. Even if you just take the course, let me know what it does for you. Dylan, what's the least amount of cash flow you would get in your first property? I'm thinking about what if an expensive CapEx problem comes up? For me, I wouldn't buy a deal that cash flows less than $1,000 a month. I think that'd be my minimum. If you're talking about actual cash-on-cash return, it's going to depend a lot on the deal and the upside of the deal. But I know deals are too small if they make less than $1,000 a month. I'm just not interested. What are the main things you look for in on-market deals, LoopNet and CREXi? If it's been on market for a long period of time, say 100 days, might need a creative fix. I find those interesting because they're not having a whole bunch of competing offers. It's stuck around for a while. Other than that, a lot of the deals go to LoopNet and CREXi to die. So I'm like, that's the main thing I'm looking at. Is this the type of property that I'd like to own? Has it been around a while? Let's call and figure out what problem needs to be solved. And that's where creative finance just, I mean, you just kill it. If you can do deals that other people don't know how to structure, you can take these deals that have been around that everyone's looked at and make them happen. That 38-plex I always reference, our Cody and my first deal, on market for 12 years, same price. On LoopNet, cracks, you could have seen it anywhere.

Yep.

Would you invest in an area where population is going down by— No, I wouldn't. There's too many places. There's just too many places that you can invest where population is going up. I just wouldn't mess with lower population unless unless you had something about you live in the area or you have teams in the area where you have a very unique distinct advantage. If you don't have some crazy competitive advantage there though, no. Population's going down. I provide housing for humans. Humans are leaving or staying the same. Supply and demand.

Just go to a better market. Agreed. I might take off here soon, Christian.

All right, well, we have, we have, uh, 4 questions left, 5 if we get through them. So we're gonna roll through these and then we're gonna call it.

Okay, let's go quick.

Let's just roll it. There we go. Caleb, you're gonna get DM'd about, uh, a sales thing you posted on Instagram, so get ready for that. Dago Sales, um, when you say cash flow, you're referring to the profit or net money coming before expenses? Net after expenses. Cash flow is your flow— income minus expenses equals cash low.

Ty, what is considered low population? All relative. People consider Stephenville low. We're probably about 40,000 with the college kids. Um, you consider that low? Realistically, I mean, I consider anything under 6,000.

And low population— we're looking at population growth. I want to see that it's consistently going up. Um, my favorite ones, like Stephenville is a great example, the population graph looks like this. It's like, it's just like exponential growth in that town. That's where I'm like, there is no way building is keeping up with this. And so need more houses. And I know they're building a lot more housing, but you need more housing. Go ahead and solve that niche. They also don't build old houses. Value-add guys like me, I love it because all the new stuff is new build and it's more expensive. People still need affordability. Only the old stuff is going to be the affordable stuff for the most part.

What if you can't afford What if you can't afford a lawyer also having bad credit? Learn how to get creative.

We're leaving it there. Yeah, bad credit doesn't play a role in seller financing, so you're probably doing that while you build up your credit. You're just— you're not going to use a bank, but you're going to do everything else. That's fine. Affording a lawyer, that all comes out of the deal. I wouldn't worry about that at all because you're not there. And if you have a deal that's going to make you safe, for example, 38-plex makes $2 million. Or the deal that I just did, though, we're gonna make $1.5 million on a $1.6 million purchase. If you're gonna make $1.5 million, I guarantee you, you can find a way to pay the lawyer fee. Whoever's gonna help fund the down payment, the $1.6 million, is gonna fund another $2,000 for your lawyer. All right, that is it. No, I'm not hiring right now.

Is Dago hiring? That's the last question. Well, Dago is not right now. Dago, um, pivoted on that.

So, all right, so neither of us are hiring at the moment. However, stay tuned, and if you want to know when either of us are hiring for our companies, I'm @ChristianOsgood on Instagram. I always post there to find employees. Caleb is @Caleb.Hommel on Instagram. He does the same post. This has been a live episode of Multifamily Strategy. Caleb, thank you for joining the channel. We'll see you guys all on the next episode, 3 PM Pacific Standard Time.