7 figure problems on a 1 figure budget

Hello and welcome to unique edition of Multifamily Strategy Live. My entire city lost internet today, so I am over at, funny enough, at my parents' house, which is about 30 minutes from where I currently live using the mobile studio. So different mic, different camera, different location, uh, different lighting. I have a totally different setup. However, the content's going to be the same, the format is going to be the same. Today talking about 7-figure problems on a 1-figure budget. When you are out of money or you're starting with no money, how do you actually solve some of the larger problems? We've had a few major ones in the portfolio. I'm going to share some some of the things that we went through, and then we're gonna open up for questions. We typically go till the questions end or until, for today, my parents kick me out of the house. Now, as a note, I have a totally different mic. I'm trying a different setup. So let me know in the comments here below if audio sounds okay. And as long as you all can hear me, I'll have a screen here and a camera here, and I'll do my very best to stay entertaining for y'all. All right. Let's take a look here. I don't see any thumbs up or thumbs down, so just guys, let me know, let me know if you can hear me okay and we'll go from there. So the things, AV is fine, thank you, All Nighter, there we go, AV is good. Well, that sounds like all 7 of you watching. Drop this a like, we're gonna try to get this thing up to probably 30 to 50 people and this one will be a good live for me. So 7-figure problems that we've dealt with. Well, let me start with some of the 6-figure ones 'cause they add up to 7 pretty quick. Uh, we have had septic drain fields fail. Two of them. One property, I actually bought it with a failed drain field. I was aware of that, so we went ahead and fixed it with the original capital raise. Another one, we had a septic that wasn't doing well that is now, uh, looks like finally on its last legs. We're having to pump about every 2 weeks, which is not good, um, in an account that also has no money. Doesn't mean we don't have any money globally, but all partners on that can't contribute the same. We are figuring out the pieces as we go. We also have a resort that we purchased a while back that, uh, all the values in the terms— if we ever made a shift in our portfolio, we have a million-dollar buyout of a partner that the deal can't afford until it gets near the end of its original terms. So if you have the wrong terms for your deal, you have an unexpected capital expense— we've had failed roofs, what else will we cover today? Oh yes, we had a code change where the city now requires us when we upgrade electric panels to change their transformers for them, uh, which on a $30,000 electric quote that was correctly budgeted for raised it to $98,000. So if you have these 5, 6, 7-figure things come up in your portfolio, you either started without money or you've already allocated all your capital How do you push forward? We're gonna talk about a few different ways to do this, how to avoid it, and, uh, then we'll answer some questions. So let's tackle the septic fields first. So partnership doesn't have money in it. Some of the individuals do, some of them don't. Not everyone can contribute. It's taking time to figure out how to move money in. However, you have a real problem right now. What is the solution? Well, on this particular one, it's on a building that might actually have a buyer. This is one of your options. This is not an option that you rely on, but something that we are looking at is have one of the more liquid partners go ahead, buy everyone else out and say, "Hey, we made the money that we wanted on the particular project and we're going to move on." Now, is that the preferred thing for most people? No, 'cause we buy everything so we can buy it and never lose it. I have more projects than I need right now and more real estate than I need right now. For me, the solution on this one is talk to each of the partners, figure out who has the money to fix it and see if they are interested in buying the rest of the property. Turns out they are. That is gonna be our workaround on number 1. So how do you solve a problem that you can't afford? 1, you get paid to walk from the problem. That is one legitimate option, moving the pieces around. Now I think more practical to pretty much everyone, let's talk about the buildings that we wanna keep. I have a project where we knew the septic drain field was bad, and that is on the mobile home park that we just bought. Now, best case scenario, $30,000 fix. Worst case scenario, about $120,000 fix to re-engineer and build a whole new septic system. We raised enough money to build to the whole $120,000 to rebuild the entire system and to have to remove some trailers and figure out how to redesign it so I could actually work for the entire park. What we ended up finding is that all 6 septic tanks were pretty much crushed. Like, we do have to replace the whole system. However, we did not have to re-engineer it nearly as much as we thought we might have to. It looks like preliminary quotes are coming in closer to $70,000. So what do we do? We raised $120,000 for worst-case scenario. We hoped for $30,000 in expenses. We ended up almost right in the middle with $70,000. The best thing you can do in almost every case is structure deals where you can raise the capital that you think you may need on the front end. It is not always, but almost always, more expensive to fix things mid-project. If you have a multi-phase project where there's refinance, you have to pay points on the front end, points in the middle. You have to do buy-ins, buy-outs, first position, second position debt. The cleanest way to do it is if you can do one capital raise for your entire project and you fund it. It's also— there's— if you started with no money, which that LLC did, there's a new partnership, we came in We bought it 100% debt. We raised enough debt to start the project. Now on our project with the electric quote, this one's a little bit interesting. Went to replace the panels, budgeted correctly to replace roof, to replace panels, and to turn units. What we found is that we actually are gonna get a little bit more value out of painting the building than we thought we were. So that was added to the budget, $40,000 painting, and it just fit in there. I mean, just able to squeeze in painting the building. So we have internet connected, the new roof is almost done, it's, it's all waterproof now, they're just finishing it off. New roof will be on, gutters will be on, once those are done we can get the building painted. Electric quote went from $30,000 to $98,000 and we get no value whatsoever for the other $68,000 quote. That is what they are charging us to replace two transformers that the city owns that are just off of our property they will not issue the permits to upgrade the old bad electric panels. In addition to this, and we already knew this by this, by the way, you always check, they will not give us permitting to convert it to a true multi-family property. Now you can have hotel guests stay as long as you want, is registered as a hotel, but they let us know, hey, we would love for this to be multi-family. All we want you to do is go ahead and demo the building completely and build a new one closer to the street with higher ceilings for ground floor retail and add a sprinkler system to it for commercial multifamily. And you can do mixed use on the top, which is what we want there. Of course we're not going to do that. That's ridiculous. So our options are fix the electric for way more money and no added benefit, build a new building, or do the same thing and just sell it to someone else and walk. Well, this is a building I want. This is a project that we don't want to walk from. How are we pulling this one off? One, we knew this was a project that had a lot of moving pieces, so we won on price by a lot. Finished, it's worth $3 million. We bought it for $1.6. Assuming that with the $180,000 we raised, we'll probably need to put $400,000 into it. We would fix it up to a certain point where it's easier to lend on, and we'd have a second piece of capital— either have a partner buy in, most likely take additional debt, or just refi the whole thing. So that's the— those are the things we're looking at. We now can't finish the electrical piece we wanted. So what are we doing instead? We're going to go ahead and do the roof, the leasing, and the paint, get it to a place where that second piece of debt is going to knock out the project in the future. So what solutions have we talked about so far? We've talked about one, sell to another partner so you can get paid to walk away. Two, additional debt. That is something you can do mid-project. You can phase it out and go, okay, if we're wrong, It's still worth it if we need more money. Let's go ahead and win on price enough where we know we can inject more capital. Third, with the mobile home park, we talked about the best solution. Raise a little more than you think you'll need for the worst-case scenario and close it right there. That is what we did. I have no regrets doing that. That is the easiest of the projects. Now, there's other things that you worry about all the time that can happen. You have expensive evictions. You have a roof fail. There's a billion things, but at the end of the day, structure your deals correctly. Don't just overpay for properties because you get the seller finance terms to close them and cash flow them. Work on building your reserves and have reserves. And if you're starting with no money, buy a property and then immediately work on figuring out how to build those reserves. And if something happens in the meantime, all those problems are going to be solved with money, which means a new equity partner to restructure the deal. You can have someone new buy in. Bring more capital, you can get new leverage and bring in new debt. Um, and those are the main two levers other than go out and earn it somewhere else or do a refi on another property. You're getting started, it's going to be debt or equity almost every time. If you're starting with very few resources, bring on someone to the deal. This is why your first few deals are so important to get a deal that makes sense for you and you don't start on negative deals. Don't overpay for your first deal. Absolutely, you can overpay for deals on great terms on long-term fixed-rate debt. If you start with negative equity, it's gonna be a lot harder to play the game. Keep that in mind on your first deal. You should do your best to try to win on price there. Those are my tips for 7-figure problems with a $1 budget, because I literally do have LLCs that have like— there's no money in the LLC at all. Like, I'll be writing a small check to fund them when it comes to the mortgage. You can do that when you have more pieces on the board. Global cash flow positive. Individual projects that are mid-project, not all of them cash flow fantastically. When you have no money or you have partners who have no money, you need to figure out the pieces. Debt, equity, or just doing a better capital raise on the front end are the easiest ways to do it. All right, uh, by the way, for those who are just joining, uh, my internet's out of my house, at parents' house. Cameras here, laptops here. I'm not ignoring you guys. I read here, I look over here. Read, look, read, look. That'll be our, uh, that will be our rhythm here. Also, I see Cody Davis in the chat. Yo, Cody, if you want to, uh, join for any reason, let me know in the comments, Cody, and I'll, uh, I'll ping you in. You can help answer some of our questions as well today. That'd be fun to get Cody on here. Uh, but let's get rolling. Once I get to the questions, I'm going through. Look, in a warranty deed, is it correct when saying that the guaranty gets both, uh, legal and equitable title? What makes it different from seller financing? So if by warranty deed you mean something like a contract for deed, which I believe a warranty deed is another one of the synonyms for Um, which there are a million different ways to word that same contract, but yeah, so on contract for deed or warranty deed or a sales contract, there's a bunch of different ways to say it. Um, equitable and legal title are different. Legal title, and it will actually change a little bit by which state you're in, if you're a title theory or a lien theory state, but generally speaking Both will show up on title is how it works in Washington State. Both show up on title. One has legal title, which is the seller, because he hasn't transferred full title. So you think of like a car payment. You're buying a car, the lender, the bank, holds the deed until it is transferred for you when you pay off the car loan. That's the, that's easiest parallel here. In this case, both show up on title. Legal title remains with the seller until the contract is executed. That's when the full transfer of deed happens. Equitable title says I have the rights to all monetary income, the rents, the future sale of the property. I effectively have full control, just like we seller financed it. Just how the deed is held is separate. Now, the interesting thing here is when the deed is held separately, um, by the other party— so they show up as legal title, your equitable title— there is no first position lien because they still have legal title. So you have no first position debt. Instead, you have a sales contract in place. The other cool thing here is there's no judicial foreclosure there. So if you fail to execute the contract, it is much easier for them to reclaim the property. So it is the advantage of the seller to do contract for deed or these type of things. It's easier for them on a legal standpoint. For you, you can buy a property that does not have a first position note. Which means if you are allowed to further encumber, you can actually put someone in first position, which is interesting. It is a workaround for some deals. It's not right for all deals. Generally speaking, I prefer seller finance because it is a little bit more stable. Your name is the only one on title, and it's a larger process for the seller to go ahead and reclaim the property should something go awry. That being said, It'll be totally deal dependent on which method is preferable for you and your deal. Cody and I do a lot of both. Dylan, heard someone say interest payments are tax deductible. What does that mean? Is it correct? Interest paid is going to be an expense that your LLC has so that Absolutely could be a deduction. Some of your operating expenses, what you actually paid in interest versus principal, um, anything specific on taxes, I'll always say I'm not a CPA, but yes, that is, uh, interest payments can be something that are written off because that is an expense incurred by the LLC. Again, submit to your bookkeeper, submit to your book— your, uh, your CPA, and, uh, look at more there. Hey Christian, this is kind of off topic, but I have a question. What strategy did you— and then the question cut off. Uh, let me see if I can't find the back end of it. It looks like I have another question here, uh, probably the same thing. Let's see here. Uh, first time joining one of these, watching for a while. Great stuff. Thank you. Thank you, Jay, I appreciate that. I'm curious, what was the process you guys went through when looking for a good market to invest in? The market that we found deals in, driving distance from us, found the opportunity, moved forward and closed it. It's that simple. Find somewhere that you have a unique advantage. Our advantage in this market was one, we had sellers who were willing to sell or finance to us and show us how to play the game. They're the first owner meetings that we had. It was driving distance from us and we invest in Seattle, or we live in Seattle area. We did not want to invest there because it is so landlord adverse. So this was a place where we were able to get in, we had an opportunity, and we capitalized on the opportunity. That is how we chose the market. Cody bought his first and second deal there, and then he was closing his third deal the same time that I bought my first duplex in that market. So we were both finding opportunities there consistently, and then we took out the 38-plex together, same market. At that point we'd done so many transactions in Grant County, Washington, the obvious play was, okay, we have an advantage here, we have momentum here, we're going to follow the momentum. If I had to go back in time and choose any market, it's like— it's a great market, by the way— but anywhere in Washington State would not have been my first pick, except that it was driving distance from me, which gave me a unique advantage of being able to be present in my market. So you need to— it's beyond just market, is where do you have an advantage? I don't recommend that people invest in Washington State, that laws are stupid. But if you live in Washington or Oregon or California and you're finding opportunities in a market, if your individual— if your proximity is a big enough advantage to you, then I'd buy in that market. If it's not, or your active management is not a piece of your strategy, then just choose a market that's more landlord-friendly, uh, that's going to be less price-adverse as some of those priced-up markets and heavy tech areas like California and Washington State. Uh, looking for the next good question in here. I made a little bit more selective. We're getting a lot more questions in these, which is— I'm really appreciating, by the way. Uh, keep asking great questions, everyone. I don't know if a cap call is needed. How do you have that structured in an OA? Generally speaking, I don't do capital calls, and I put in pretty much every OA we cannot do capital calls. When something comes up and it's a JV, so it's a joint venture, I'm going to meet with all the partners and we're going to figure out how we're going to navigate it together. Now I have all sorts of conflict resolution things in the OA. Which says, hey, if we can't agree, this is how ties are broken, or this is how, um, we can vote or get mediation or arbitration or all sorts of other things. But generally speaking, we lay out, okay, here's the capital in, here's the plan for the project, and if things don't go to plan, here are our suggested remedies. I personally do not use capital calls because I do not want to, one, dilute anyone's equity, but two, if you invest in a deal with me I will go ahead and spot the downside of the deal, and we usually get an outside portion of the upside because I have fixed buyouts for all these people. So someone will come in and I'll say, enter this deal, you're backed by equity, and the plan is to buy you out at a fixed price in a fixed period of time. If it way outperforms and I'm doing 90% of the work, I'm going to take a majority of that reward. So if it goes above and beyond their their guaranteed buyout— where, and I'm not saying we guarantee the buyout, but the buyout option, the maximum price that we're allowed to buy them out at. If we go above and beyond that and make a ton of money, awesome, we did a good job operating the property and they got what they negotiated, which is a great return on their capital. If the project gets more expensive or does not go to plan, they're backed by their equity and I can't require that they put more money in. Now some LLCs, you just need more money and you talk to the partners, you go, hey, um, you know, this is what I would like to do, would you like to put in more capital with me to match? I leave it up to negotiation. I put a lot of rules around how negotiations or conflicts are resolved. From Luke, when finding, uh, let's see, when finding a deal on market that the seller— that is seller financeable. B, you let that agent— I just, I might need to reword this a little bit. Uh, do you let the agent you called— okay, I assume that's supposed to be do and it autocorrected. Uh, do you let the agent you called write the offer or do you, uh, go out, find your own? Uh, if it's listed and you're calling the seller's broker, I prefer to write them with my own agent. The reason is the seller's agent is hired by them. They represent the seller first and you second. Dual agency is a little bit difficult because their obligation is to sell the property. They get paid when it sells. They work for the seller. They are going to write contracts that are most beneficial to that party. Best way to do it, in a best practice, is find a real estate agent or broker in your market who can write the contract for you. So talk to the agent, learn what's going on, and then I just let them know, like, okay, I'm gonna go look this over. I will have my agent reach out to you shortly. I like to have my own representation. It is a best practice. You do not have to do that. Cody and I have worked with the seller's agent directly before, and it ended up being one of the best brokers I've ever worked with. His name's Eric. We use him on pretty much, uh, all of our Washington State deals. There's a few that we don't, but he is like my main guy. And our first deal, he called us and represented both sides. How do you determine the type of contract? Use warranty deed, uh, land contract, prom note, deed of trust. How do I know if there's a better one to use for my situation? Um, I ask for seller financing every time, and I work the equation towards seller financing. If there's a reason that that wouldn't work or is the inappropriate, um, vehicle, then we'll go ahead and figure out the We'll go figure out, okay, does it work better on a land contract? It depends on how you want to use debt, and it depends on the structure, and it depends on what the seller wants. If the seller has a lot of hesitancy around seller financing, a land contract could be a better way to put it together just to solve some of their fears. If they're really worried about the way it's going or, or their risk, you can mitigate some of that with a land contract. If you are trying to put second position or first position debt on a property An option to do that would be to go into a land contract because there is no assumed— like, the debt is not against title, so you have some flexibility there. Very case-by-case basis. It's rare that it is the correct vehicle, but if you have a deal that has no due-on-sale clause, their existing debt— and those do exist— subject to is a completely viable model if you're not creating a callable note. Subject to is a clause on a land contract. So again, it's going to depend on your deal. The answer to this one is the classic deal, then debt, then equity. Figure out the deal, figure out what the capital is and how you're raising it, and figure out who the equity partners are if needed. Then look at which one lines up better. Do we want to do seller-financable, and is it an option? And if not, can it be done with a land contract? But I usually put them in that order: seller financing. If not seller-financable, can we put it on a land contract? If not, then you start looking at other more creative methods where we can do something like— I'm not big on the lease option or the management option, but if you need to keep existing debt in place and you are trying to get it to bankable or refinance, you have a fixed exit, then the lease option or the management option contracts can come into play, which will still give you some economic control over the property and give you a fixed price at a fixed period of time. To move on to title. Best practice: get on the title as soon as you sign the paperwork. If it is not feasible under seller financing or contract for deed, then we move to different option contracts. Cody and I haven't had to execute those yet, but they are certainly there as an option to get a property into long-term fixed-rate cash-flowing debt. Do you need buyer's consent to refinance a land contract? Um, No. Now you can put prepays on these like you can, uh, with seller financing or anything else. They can make it inconvenient, but, uh, no, that would be horrific. If a buyer can block you from refinancing, you can just lose the property. They can force you to default. That would be horrible. If anyone tries to put something like that in your contract, that is a hard pass. Your ability to move capital around and create options for yourself is huge. If you have, for example, a 30-year AM and a 10-year note and you hit that balloon at 10 years and they just say, nah, I don't feel like refinancing. What would you do? You just lose the property. And you have equitable title, which means you're responsible for everything— the taxes, insurance, the maintenance. It is not an option agreement. You are the owner. You own the property. They just are the holder of title. Again, think of a contract for deed, just like you bought a car. If you buy a car from the bank and you crash the car, the bank's not responsible for repairs. They're not responsible for your gas, or your— if it's a Tesla, your electric. You have full economic responsibility for the losses and full opportunity to take any gains from the property. All they do is they hold back title. They hold the title physically, just like the bank does on your financed car. It's very, very, very, very similar contract. Dylan, sorry for spam. Got an owner meeting at 5:30. First of all, right priorities, my friend. Owner meetings are everything. Those relationships are everything. Focus on that. I'll answer as many of your questions as fast as I can as we go. Uh, what's mezzanine debt? That is debt between debt. A mezzanine in a building is like a floor between floors, you know, like a 4th floor, 5th floor, and there's kind of like a half floor with a landing between them. Um, that's, that's a mezzanine level. It's a, uh, it's also known as bridge debt. It is debt that gets you from one loan product to another. So you can use mezzanine debt to go from, say, like right now we have a privately financed hotel. We did it with hard money. We want to move from our expensive hard money at 13.5% to a, we'll say, a 2 or 3 year product, mezzanine debt at 9%. We stabilize the building, we increase the value of the building, and we go ahead and get a new loan for a higher price to finish our project so that we can get it into long-term permanent bank financing. That is a perfect example of how one would operate this. Exactly what you'd want to do is hard money— let's close it, get the money we need, get into mezzanine debt, a bridge product, and use that mezzanine debt to get us all the way through our project and into our long-term cash-flowing fixed-rate debt. Can you answer, uh, other questions that come back tomorrow? Oh, thank you, Dylan, you're being nice. I will, uh, I will try to just get through the questions as they come in and answer them all in order. Matt Franco. Matthew, good to see you here, man. Uh, what are the benefits to the seller on seller finance? Never pitch these, by the way. Their benefits are their own. They're not going to sell to you, um, based on your presentation of their benefits. It's going to be unique to everyone. But generally speaking, if they are stuck on price, they can get the price they want if I get the terms I want. So potentially they can get a better price for their property. Two, they charge the interest they want so they can convert things into monthly payments, which may be nice if they don't need a ton of cash right now. Getting interest payments that meet their goals and getting regular payments could be exactly what they're looking for. Get paid, don't manage the property. So it could just be an exit for them that works. The most common for people, and usually the biggest benefit, is the tax benefits of not taking a full capital gain right now if they're not planning on 1031ing into another property. This is especially common for owners who've owned a long time, who have paid off their portfolio, who now want to exit real estate. They're doing estate planning, they don't want to do any management, they want less of the variables, they go ahead and pass it off to the next generation. This happens to Cody a lot, Cody and I a lot on deals where it's just someone who's owned for a long time and they've done what they wanted to do in real estate. It is a good exit on a tax level to go, hey, I'm going to take payments and have cash flow for as long as I want to write this note for, and in exchange, I'm not getting a huge lump sum of tax or of cash that I'm going to get taxed right now. There's also a few people who are about to retire who are selling their properties. We're like, hmm, if I get paid out in 5 years, my actual income is lower, I actually might have a lower tax bill. Again, it's custom to everyone's unique tax situation, so they should talk to their CPA. But more often than not, it's someone who has more money than they have time. They don't need a huge lump sum of cash. They would either like the premium or or prefer their tax situation if it's spread out over multiple years. I talked to an owner who does, uh, dinner table pretty much puts sub-to into a trust, and if anything comes up, uh, just adds the owner to the trust. I don't like things that have a lot of legal workaround. What usually happens, and trust me, Cody and I have done deals that are way too, uh, way too complicated, is something doesn't go to plan and everything gets screwed up, and it's really, really, really hard and expensive on a legal standpoint to correct them. So there are ways that you can structure things, and again, subject-to is a legal strategy in which you can acquire properties. It just creates callable notes 9 times out of 10— actually, a lot more than that. It usually creates a callable note. We don't want our financial freedom based on callable notes that we cannot control. That is why I talk so much about subject-to not being a good strategy. It's not that you're not allowed to do them. It's not that they don't work most of the time. It's that you're creating financial freedom. If your goal is stability, you're choosing an unstable product to create your stable cash flow. It does not hit the metrics for how you buy it, how you never lose it, because we don't have an answer for how we never lose it because we can't control every piece of it. You can put it into trust. There's all sorts of ways to structure it better, but at the end of the day If you control something and the note gets called, there's a lot to figure out there. You do not want the headache because there are way more than enough deals that you can buy without doing that. Just because you have an opportunity in front of you doesn't mean it's the opportunity you have to purchase. My advice to everyone is purchase things that are simple, because if they're simple, they're repeatable. If they're repeatable, they're scalable. And scalability is the ultimate metric that every business is weighed on. If you have a business that's infinitely scalable like real estate, you can't buy all of it. If you have something that is easy to scale and you focus on the things that are easy for you to scale, you'll just grow much faster than trying to force deals to work that don't need to work. And that's usually what I see happen with subject-to, which is why I'm not— I honestly am not an anti-subject-to person. I just think there's better strategies and should be a rarely used tool in your tool belt. Um, all expenses you have to pay for tenant screening, renewals, PM fees for doing this, bonuses, etc. Um, oh sorry, there's a continuation of the last question. How much, uh, do you— or how do you determine how much unit diversity affects value? Um, there's a price per unit on average that, like, an income that you're going to bring in. It's on commercial real estate, 5 units and up. It's based on your total income coming in. A building is not worth more because it has more 2-bedrooms. It's worth more because the 2-bedrooms are bringing in more rent. So you determine value off of market rents and the rents that your property is receiving. So your pro forma, you're like, hey, this is the future value of the property, is based on, okay, what can it get to? And your numbers today are based on what is it actually proving that it does. And that is your true value of the property, is how much money it brings in, um, in net operating income. And in your individual market, the actual thing is just— it's your net operating income. So that's your total operating income after expenses. That does not include any of your debt. That's custom. It's operating. So outside of your debt, income minus expenses. If you're doing this monthly, multiply by 12 because it's annual, divided by your market cap rate. And that will be the value regardless of your bed bath count. If you're just— if you have 1 beds that are making more than 2 beds, that building is worth more. How can you buy from a seller who's only willing to finance 50%? You don't have cash for the 50%. Well, deal debt equity. Uh, you could bring in the other 50% as additional debt. So if you have a great price, um, or a ton of cash flow on your deal, uh, borrow the other 50% from somewhere else and put it in second position. Bring in an equity partner who will go ahead and spot the, the money for you. He can lend you part of it if you want to put some money in, or they can come in, you can structure it just as an equity partner, and you can square up the capital accounts at refinance or sale of the property. Uh, you can also find a bank that's willing to do the 50/50. If the bank goes into first position, your seller's willing to take second position, a very common thing to do is, you know, banks love those because you're like, hey, your risk is you're only lending 50% loan to cost on this. Banks love that. They're like, okay, if we're in first position, we don't have very high risk. Banks will come in as long as they're in first position. You get a lot of flexibility. Some of them want to see you have skin in the game, so maybe they'll want you to come up with the other 10%, which you can also do by having your capital partner, uh, come in and lend you that portion, and they'll bring in the rest of the cash to close. I've also seen people get deals where it's like 40% from the bank and 70% seller finance. They get paid 10% to buy the deal because they structured a good deal. Those 3 ways that come off the top of the head. Bunch of other ways to do it. If none of those work, wrap it up in a lease option, get the value up, and figure it out that way. There's a lot of different ways to do it. Seller financing is not the answer on how do you buy deals without money. It is an answer. You can do it, um, you You can take things out 100% with debt, just ignore the seller finance piece if you don't like the seller finance terms. You can also find a bankable partner, buy it with the bank. I mean, that was what, 5 or 6 ideas off the top of that, just firing from the hip? A lot of ways to close the deal. By the way, Multifamily Strategy, multifamilystrategy.com, the YouTube channel, the whole thing— this is not a seller-financed course. We do a lot of seller financing because it's an excellent answer to a lot of the how do you buy deals without money. It is not the way to buy it. It is a way to buy it. It is often a preferred way to buy it because not a lot of people are as versed as us in that. And if you can control terms that other people don't, that's a huge advantage. So it— while it is a preferred method, we don't look at a deal of can we get seller financing. I don't care. I look at what is the deal, what type of debt is needed to take it out, and if we need it, do we need an equity partner to take this deal out. Those are the only questions that matter. The seller financing, if we don't like the terms on the seller finance, the 50% seller finance might not have any value to you at all. Totally depends on your deal. Great question though, Matthew. I like it. I think that's the first time that specific question has been asked the way that it was asked. Um, what all do you give appraisers for highest value? I, well, usually they do a selection of units, so I do my best to show them the best units and a couple of ones that are the worst units. So they, they see, here's where the best units are. I always get them in those. Like, this is what we're bringing everything to. And give them an honest assessment of like, and here's a couple that aren't there yet. So you get— but you framed it in their head of like, okay, well, I see what they're, what they're doing and where the project's at and where it could be. So if I, if I was able to cherry-pick everything, I would show them one crappy unit and 5 great units in a 12-unit building, and that's probably enough for them to see and give me an evaluation. And then just, uh, the things that they actually look for— they're going to look for the books, the T12, the leases that you have. Just make sure that you've done a good job on solid leases and that you've kept good books. As long as you have all those things, uh, appraiser should be good to go. If you have comps of rentals around you that are higher, that also helps. If you can actually show them like, hey, I know you have your own rent comps, if this helps, here's the neighbor's rents and this is what we're trying to get to. If they can see actual leases that actually can positively affect your value. I've had that happen before multiple times. Why don't I like condos? Because I hate condo associations. They always— I've never seen an exception to this. They have these HOAs and the wrong people who have way too much time on their hands get on the board. No one agrees on everything. Almost every condo association is underfunded. It doesn't have enough, and you get special assessments. And special assessments you don't control, they can kill your cash flow. I do not like variables. Condos have huge variables. Controls. Also, I don't like doing small projects, so I wouldn't buy an individual condo. I'd have to buy the whole complex. If I'm going to buy the whole complex, I want maximum control, which means I want it to be a multi-family building, not individually owned units. And try— it would— it could be a huge hassle. Do you ask for the exact amount of materials, uh, bought, or do you buy the amount they say? How do you keep track? Work they're doing. I assume this is on— I may need more context, but I'm assuming, I'm assuming this is on finding the right contractors. Do you ask for the amount of materials bought, or do you buy the amount they say and keep track of their hours of work they're doing? What do you do if they do a bad job? Okay, we're gonna assume this is about contractors who put on a new roof or siding or electric. This happens to us a lot. Usually they're going to need a certain down payment that's going to cover materials and their upfront cost. Typically that's on the— not always, some of our contractors will just do it, pay them after. That usually takes a little bit of trust though. So typically you're going to have some upfront, could be 30%, 20%, 50% of the project, and then there's going to be a bill due at the end of the project. They should track their hours, but the best thing for you to do is to put a do-not-exceed quote in place. They give you a quote and that is what you will pay. And if they go over budget or they screw up the project or they quote it bad, tough. They have a contract to finish the project and they're gonna get it done. They usually charge you a little premium for this, and in my opinion, it's always worth the premium. I'd rather know what I'm paying and know that it's in budget than be like, oh yeah, this should be a really good deal and let's hope that they don't go over budget, because they tend to go over budget. Um, if they do a bad job, you fire them. They don't get paid more than what they did, and you keep the materials and whatever work they did. And we've had that happen too. When people are halfway through a project, it is not working, you pull them off the project, you get another contractor in there, and it's usually expensive and you usually lose money. And, uh, it's what it is. Part of the game. Contractors are generally not very good business people. They're usually decent builders, and sometimes they're not even that. So what I've learned, service providers are usually good at their— typically they're good at their craft. They're not necessarily good business people. So you need to be on the contracts, the structure, the payments. Uh, you should be a good operator because oftentimes they're not very good at that piece. They're not great budgeters. They're not really good at securing business. They're, they're not good at scheduling. They're usually good at doing what they do professionally. It could be a carpenter, electric, roofer. They're usually good at that one thing more so than they are running the business. So be aware of that when you hire contractors. It's going to help you a lot. Who can I talk to about, uh, rebates and learn? Um, Johnny Nyland. I don't know if he has a YouTube channel. If he doesn't, he should. A very, very, very smart individual in, uh, in my market. He knows a lot about a lot. Um, you can find him— he's Here's Johnny on TikTok. I know that. Um, I will drop, uh, Dylan, you're, you're in the mentorship. I will actually drop a contact for him on the next mentorship call. Remind me to do that tomorrow, 10 AM Pacific Standard Time. Um, let's connect there, or you can shoot me a text. My, uh, I believe you have my number. Um, let's connect on that because I'd love to connect you with John. He knows a lot about a lot. He's very, very smart. Luke, assuming I have at least 25% down, can you refinance any building even if you have no credit? Um, no, not necessarily. Um, if you have absolutely no credit, you might not be bank financeable. So you can always do a seller refinance, you can always do a recapitalization. There's tons of ways you could refinance uh, but you may not qualify, which means you would need to have an equity partner on the deal who would qualify. Also, if you don't have the net worth to back the loan, you may not get the loan. Again, a lot of these things can be solved by bringing in a more liquid equity partner. Bill, do you typically just do projects that have enough upside to pay off the equity partner, or do you do more projects to pay them off? Uh, almost always the— okay, there's the correct answer to that is just do pro— the deal needs to buy the deal. Don't do a deal because you have other money coming in that can buy off the equity partner. Uh, we've had deals that did not go to plan where we had to do that, and it's not fun, and I don't recommend it. I strongly recommend avoiding that at all costs. Uh, real estate needs to buy the real estate. At the end of the day, how do you buy it? How do you never lose it? That is the simplest answer. It needs to pass the litmus test of if I buy this, we write the— you know, it could be raised capital, it could be your money, it could be whatever. We write a check at the beginning of this project, and that check that is transferred at closing on the final settlement statement should be the last time that you inject cash into that property. The rest of it is that property buying that property. It should qualify for its own debt. It should be refinancable. You should be able to do your buyouts through that property. Real estate needs to buy the real estate, not you. The property is personal guarantee that, uh, no matter what happens, you'll pay the debt back. What if you don't have anything else? Yes, personal guarantee is saying I guarantee that I'll pay this. So if the deal doesn't pay for the deal, it's not just the equity in the deal that you're backing them with and saying I I personally guarantee against my other assets that I personally own that I'll back this. You will be made whole. So if you sign a personal guarantee and you're holding the other asset as your primary residence, you're basically saying, uh, I guarantee this will happen and I own a primary residence, and if I don't, I'm backing it with everything I own. Now, personal guarantees are really hard to enforce, and it's a long legal battle, and they're super messy. Personal guarantees are just for everyone's to be aware if you're relying on a personal guarantee. They're really messy, they're not clean, they're harder to go after. Uh, know that before you accept a personal guarantee, uh, that it is going to be not a clean and simple like, oh, it's backed, they have the net worth, this will definitely go through. Personal guarantees are a little bit messy when you get to legal enforcement. Uh, that being said, that is what you are committing to is outside of this deal You're protected by me. You're backed by me, Christian Osgood, and my assets. Mason, if you are targeting a market out of state, how would you approach, approach starting relationships with owners over the phone? Um, same way. I mean, honestly, same way you do anything else. If you're targeting a market out of state, you reach out same phone call that we do to book a meeting. Hey, this is who I am, what I'm trying to do, something that you've already done, love to know how you got there. Now in this one, you're going to form the relationship. You're not necessarily asking for the coffee meeting because you're probably not flying out to them immediately. I would build those relationships with 4 or 5 owners, and when I have enough people to be worth the flight I go ahead and book a flight to that area. So if I'm buying out of state, it's like, okay, I got 5 owners that I want to meet with over 2 days. Now I'm going to call them, book those, say, I am flying into this market, I am looking at some properties, I really want to meet you, you've done what I want to do, and it would mean a lot if you can get coffee with me. Can we meet at this time? And you book all 5 of them. Now it's worth the flight. Now you travel out there. I have done that multiple markets. I know Cody's done that. This is something that you can absolutely do. If you use, uh, HELOC-like, uh, products to help expand faster, are they floating rate? Who do you get these products from? Um, HELOC projects, um, there's fixed rate and fixed rate HELOCs. Um, usually for me, I do fixed rate everything, but, um, that's going to be very— that's just totally— you get what you negotiate on that. Uh, look for fixed rate products to be like long-term fixed-rate cash-flowing debt. When I got started, I got one variable-rate HELOC. It went from 4% to 8.5%. Still worth it. Super bummed I didn't get it fixed at 5%. Just what it is. Um, what else do I want to say on HELOCs? On HELOCs, you get— don't borrow money against something you're not willing to lose. If you are okay with like, hey, I'm dedicated to building my business and moving forward, and it is worth me putting up my house to do that— if, if my goal is bigger to me than the house that I own, then go ahead and leverage your house. That's totally fine. That's what I did. I would rather grow than stay where I'm at, to the extent that my wife and I felt the same, that I'm like, I will start over because I already know I can buy a house. I've done it before. If we got totally wiped out, I'd rather start over than not move forward. That is me. That is not everyone. If that is not you, don't risk the house. Don't get the HELOC. That's how I determine. Cody's done HELOCs on his, uh, I guess 12-plex had a HELOC that allowed him to, uh, go out and build another unit in it, improve the building, and that's a great use of funds. Um, but don't lever things that you're not willing to lose. What's the best way to do owner meetings when targeting a market out of state? Oh, that's kind of like that, uh, that last, uh, question. I think I, I answered both with the, uh, with the prior question. Uh, Dylan, what is the proper time to refi? How long before balloons do you want to get started? Uh, department refi is before your balloon and whenever market conditions are where you want them to be. That's why I like long-term debt. What I know in a 10-year market cycle is that— or a 10-year balloon— is that we're going to have at least one market cycle, usually multiple market cycles up and down, where there'll be ideal times within there to get debt. So recently that was like 6.5, it's now back up to 7. If things hit 6.5 again and my deals work at 6.5 and I can extend my balloons, we'll go ahead and refinance there. Um, if we got 5% again, I'm refinancing everything that I have instantly. Um, so the timing is going to be dependent on the market. That's why long-term debt's so important, is when your deal is where it needs to be and the debt product that you want to make your deal work has enough benefit— extending your existing balloon, being able to pull cash out, lowering your interest rate— all of those are reasons to refinance. What you don't want to do is get right to your balloon and then be like, oh gosh, I need an extension. I need— so I mean, if you have a 5-year balloon you're— you should absolutely have it refi by the end of year 4, or obviously by the end of year 4, uh, by the end of year 3. When you still have a year left, you should have that thing refi'd. You shouldn't just wait till the last second. But ideally we get long terms so that we get to choose the time that we refinance or pay off the debt or otherwise restructure. Mason, how do you do napkin math quickly to see if a deal makes sense? Learn loan factoring. If you don't know it, this is where you take Multifamily Strategy, the course. Mentorship will walk through this all the time. We do like every cycle, I think we do about every 6 weeks, we do a math lesson and we talk about loan factor rate. Loan factor rate is where you calculate true cost of debt. And if you compare that to your cap rate, your true return on every dollar invested, if you're making a spread between your cost of debt and the amount of money each dollar invested makes, That is how you know that you have a positive cash flowing deal that's going to work. If you master the loan factor rate, it takes you about 5 seconds if you're Cody, you can do it in your head, and about 15 seconds if you're me and you need a calculator to tell them exactly what interest rate is going to work for your deal and what terms you need. That is loan factor rate. It is all up and down multifamily strategies in our math section, and we cover it very, very often in the mentorship calls. That is a good one though. That is, that is how you do the math, the napkin math quickly on that, is, uh, true cost of capital and return on every dollar invested. If there is a positive— if you have a spread in there where your cost of capital is notably lower than the return, that's how you know. Dylan, do you have to pay taxes to move money from one property to another? Yes, unless you have a holding company that can freely— that has the same equity and you to move it from one thing in the account. Otherwise you're commingling money. Um, so when Cody and I move money from one LLC, say we have a big exit on a property or a big refinance, so we pay ourselves, we pull the money out, and if I want to move that money to another property, I have to pay myself first and then do an owner contribution to the next property. That increases my capital account in that property. It sometimes has positive tax benefits for myself in that LLC and what I can claim for depreciation. But it is a taxable event to take money out of one LLC, pay yourself, and move it to another LLC. That's what you legally have to do to contribute your money to another LLC. Otherwise, you're commingling accounts, which is— someone said in past mentorship, uh, delaying expenses for tax purposes. Um, Well, if you're trying to delay, um, there's multiple ways to answer that. Yeah, we really need more specifics on that, but generally speaking, I want to reduce my tax expense, especially on the front end. I would rather delay paying taxes now any way that we legally can and pay them later, because if I'm in the build phase, I'm trying to build my business and build my incomes. At a mature business can pay for the taxes easier than a business that is getting stabilized and optimized. So I, I'm going to say in the beginning, anywhere where you can pay less expenses or move the same expense further down the line, I would always opt to do that because I'm going to build a business that can pay itself off all the way. We have 4 business cycles: build, stabilize, optimize, pay off the debt. I would rather have expenses come up after the stabilize And ideally after the optimized phase, so they're very easy to pay down out of a mature, cash-flowing, stable business. What's a good asset-to-liability ratio during each phase? It's going to change so much for everyone individually. As many assets you can, the least amount of liabilities is the answer. I know that's a cheap answer and I apologize, but that is true. You build net worth by consistently buying assets in which your liability is smaller than the asset that you're building. The specific ratio between the two, like debt and income ratio, uh, what I like to see on a loan-to-value standpoint, like 65%, really comfortable, really comfortable. You can hover somewhere around there. A debt service coverage ratio of a 1.5 or higher, love those metrics for safety. Asset-to-liability ratio is going to be mostly covered in those two things. So those are good targets. But the name of the game is buy an asset with a liability that is smaller than said asset and do it again and again and again, and you will just get— you know, you'll grow and grow and grow. That's how the game is played. Uh, reading this one. Your 5-year balloon, instead of review, what type of terms do you offer? Hit keep in line to that point. Uh, if you have a 5-year— well, I don't have quite enough info to answer that question. 5-year balloon instead of a review. For those who don't know, review period is like you at the end of a balloon, and instead of having a balloon, basically say if we hit these metrics, we can pay X amount and we can extend the note. Um, I guess this is saying if we have a solid balloon and there's no review what, uh, terms you offer to hit, keep in line until that point. Long-term cash flowing fixed rate debt, that's midterm debt, it's 5 years. So cash flow needs to be high and have to have a solid plan of at that 5-year period or before, how am I moving into a new debt product or paying it off? Those are the only metrics that I need to keep in mind. How are we going to extend it? And if you're going to be sell, refi, or pay off I need to know which one I'm doing, why I'm doing it, and I'm going to do that before I close my deal. There we go. Luke wishing, uh, Dylan some luck. We always appreciate that. How much would you overpay to get seller in second for hard money in first? Um, way too deal-dependent, way too deal-dependent. Cannot answer that question without a ton of outputs. This is why it's deal, debt, equity, though. You need an actual deal in an actual situation, and then we can look at the debt equity. Um, how much would I overpay is totally arbitrary. What's the deal? What's the cash flow? Uh, why are we doing this? Do we need to take it out this way? A million questions before I can answer that. Mason, if you were starting over and had to buy out of state, how would you start building your network with owners to put yourself on the map? Conveniently, I'm doing this in Texas right now, real time. This is, uh, this is something that I'm doing. I met with an owner yesterday. Um, so buying out of state, building the owner relationship, first thing I do is I find— this is what I would do. I would call owners until I found an opportunity., and I would buy that opportunity, and then I meet with everyone in that. And that is— I only focus on that. I own in the border towns in Texas, Laredo, McAllen. I'm working on actively deals in Laredo because I'm seeing deals there and I'm meeting owners there. And next time I fly down there, I'm meeting with all of them. Find a deal and then double, triple, quadruple down in that market. Meet the players. It's so much easier once you find that deal to call people as, hey, I'm a fellow owner, I just bought this property, we're property neighbors. That is an easier in than, hey, I, I'm starting from zero and I, I want help getting started. You will get deals that way. And that's that, like, if that's where you're at, that's where you're at. That's where we all started. Basically everyone started with zero deals. Some people inherited some, but most don't. If you're starting from zero, be honest about it. Once you buy that first deal, everything gets so much easier because now you're a fellow owner in their market who, like, it is just different. The game gets way easier, which is why Multifamily Strategy does our guarantee that we'll keep coaching you until you get that first deal. I recognize the first deal is the hardest. It's the biggest hurdle. There's the most you don't know you don't know, so there's the most uncertainty. You haven't paid a lot in stupid tax yet for just not knowing what you don't know, so you know you're going to make some mistakes that are going to cost you some money. If you can get over that and get in the game suddenly all these deals open up. So I would focus on how do I close the first deal, because once I close the first deal there, we're going to focus on meeting everyone else in the market. The game's gonna get a lot easier, a lot faster. What's a good percentage to budget when it comes to expenses in Texas, specifically near DFW? Um, it is higher. I would go with a 45% expense ratio, could be all the way up to 50 on an older building. Um, but 40 to 45 is pretty average. The reason with Texas— Texas does have higher taxes and it has a higher electric utility bill than it does in Grant County where I invest. Grant County, Cody and I consistently hit stuff that's closer to 35% on a lot of the buildings that are— that once they're stabilized, um, that's pretty reasonable. About 10% more in Texas because your taxes are going to be higher and some of your utilities typically are going to be a little bit higher. Um, by the way, don't discourage this— don't let that discourage you from buying in Texas or other states where you have higher expenses in proportion to the percentage of property tax because it's a free market. It's priced into the deal. Property in Texas, astronomically different. If you guys are watching my, my Instagram, uh, @ChristianOsgood, by the way, I'm posting a whole bunch of stuff on my house I'm building down there in Texas. That house is just over 3 times the size of my current house. My current house is worth about $725,000. My new house is worth $850,000. It doesn't cost that much more, but it's 3 times the house. Sure, the taxes are higher, but it is priced into your market. So just know that when you're buying stuff. Don't be— too many people reach out to me like, oh, insurance and taxes are really high on my market. Like, good, properties are cheaper. It will balance pretty much everywhere. And if there's a weird discrepancy where it doesn't balance, don't buy there. Uh, Luke, for on-market deal that doesn't show current rent or income, which are most of them by the way, uh, how do you go about getting that? Uh, do you have to be under contract before finding out? Um, so you're gonna reach out to the real estate agent, or your agent will reach out to the real estate agent and see what they can get. You can't always get all the numbers. Sometimes you do have to be under contract, which is why it's so important that we make earnest money due after our feasibility. If they're not providing all the paperwork up front— and I've had this happen before where they said I don't want to do earnest money after feasibility. I was like, okay, well, here's why we do this. Can I get access to this data before we go under contract? They said absolutely. It got me absolutely everything I needed to do. I got all the way through feasibility prior to going under contract, and then we didn't have a feasibility period because we didn't need one. So it always depends on the deal and the seller and what you're working on, but if you don't have enough information I wouldn't put money down on a deal, and I wouldn't, I wouldn't spend a bunch until I know, okay, what they said is actually true and what I was provided can be verified. And so if we've gone through due diligence, we're good to go. And you can't go through due diligence without those numbers. So sometimes you're going to go under contract, sometimes you're not. It's going to depend on how much information they're able to provide you up front. Deal debt equity though, figure out what, what's unique to your deal. Should be figureoutable. What can you say to avoid the proof of funds question? Fake it till you make it. Well, don't lie, but, um, something that I've done when I don't have funds, which is very often because I spend it all on renovations, projects, and like we expand, expand, expand, expand. When I'm low on funds or I have less funds than I think they're going to want to see, I can look at, okay, who would logically in my network fund this project?. And then I tell them honestly, hey, I could, because I usually send them my schedule of real estate up at this point. Usually when people, it's a new party, I'm like, hey, just so you know, this is who I am, what I've purchased in the past. Like, I give them my professional resume. I'm like, I will be bringing on a capital partner for this. Here's the partner who is looking at it with me. Here is their proof of funds. And then I show their proof of funds. That's pretty normal. We do that all the time. And it's honest. I don't have the money. I am looking at it. It doesn't mean that person's going to be the one to fund it. You're not committing to that. You're saying, this is who I believe will be funding it. This is where the funds would come from. You're just showing I have access to the money. That clears it every time and it's honest. So don't fake it, but you don't need to fake it. You can honestly tell them, this is how I see this working and this is why we're writing the offer the way we are. Can I show you my pieces? But yeah, always be transparent. Well, Naira, thank you for the ear candy while I work. You're welcome, my friend. You're welcome. I'm sorry I don't have Dion's fantastic voice, by the way. Of all the YouTube channels in real estate that we're on, Dion has an epic voice. I unfortunately lack that. I apologize. You guys get my nasally, my nasally voice, but I can help you on creative finance and buying stuff with no money in a way I don't think most channels can, and that's my commitment to you. What's the best way to structure a deal to get the most cash flow? Um, well, you borrow, uh, less money or you borrow cheaper money. You put more down, you get more cash flow. You borrow cheaper money, you also get more cash flow. Those are the only two ways, uh, on the front end. On the back end, once you've closed the deal, cash flow can be done by decreasing expenses or increasing income. Those are the only four levers you have to pull, and only two of them can be done prior to buying the deal, which is the amount of money that you're putting down and the interest rate in which you're negotiating. How do you find a trusted real estate lawyer to do your contracts? Uh, a real estate lawyer who owns property in your market, uh, one that either you've worked with before, or if you're in the beginning, you don't have ones that you've worked with before, uh, talk to the other owners that you've met with in the market and figure out who they use. That's how we do handle all of our evictions in Grant County, Washington. By the way, not the best lawyer in the world, just the best lawyer in that area. They get stuff done. We work with them. They make plenty of mistakes. I wish there was a better lawyer. It is the best available, and we have access to them because I've talked to everyone else who's been through the eviction process. That's how I chose. Um, so those owner meetings and those owner relationships, that's going to get you the best vendors, period. That's true for contractors, accountants, property managers, legal team. Same thing across the board. Uh, mentioned earlier that you are calling owners, uh, until you find an opportunity. Are you being transactional? No, no, I'm being relational. I am asking them how they, how they would maneuver with the pieces I have. So I'm calling to ask them how they built their business. I'm gonna go with some takeaway. I'm gonna learn something from it. Could be applicable to me, could not, but I'm gonna learn something. And I usually am going to ask— and in the owner meeting, not in the phone call, in the owner meeting— I'm going to ask, all right, with my pieces, knowing what you know, what do you think next steps would be for me? Sometimes they bring you a deal, sometimes they bring you a piece of information, sometimes they bring you a relationship for someone who would have a deal. But you do enough owner meetings— I do about one a week, so about 50 a year— of all those meetings and all the people who have given me a next step, they've introduced me to enough people and enough opportunity, and I get enough of them calling me back 3 months later saying, hey, I just ran into the deal, it's not right for me, this might be the one for you. Because of those relationships, deals will come. If you don't go after a deal— I've still never asked anyone to sell me anything because we're— well, not successfully. I did on my first ever call. That's how I learned not to do that. Uh, ask for the information, ask her how to play the game. Be a student and the deals will come to you. And it takes a little bit of belief and a lot of patience, but literally in your first year doing this with one owner meeting a week, you will find a multitude of deals and you will buy your first property. Like 100%, that will happen. How do you be the most efficient in the build phase? In the build phase, keep it very, very simple. Cody and I regret every complicated deal that we've put together. What I look for in the build phase is, does this deal make sense? Can I buy it? Can I never lose it? Does this increase my net worth? Because that's what I'm trying to build up right now. If the answer is yes to all of those, buy it. Simple. Could be seller financed, could be bank financed, could be hard money. Doesn't matter. Does it hit the metrics? How do I buy it? How do I never lose it? Do I have a plan for it? Does it move me forward? Put it in the portfolio. As you get a little bigger, you get to be a little bit more picky. You hit your goal and you set a new set of goals. My goals are now, okay, how do I trade my pieces to build a portfolio of larger buildings that are a little bit more passive than the heavy projects that we've had? Especially as I'm moving on to the next phases of life, like, I don't want to just do heavy value-add, really hard projects for really high margin forever. I would like to step off the gas a little bit and actually enjoy the net worth that we've created. That's where most people are. To do that, we set a new goal, and with more passivity being one of the resources that I'm trying to gather, we only do deals that are tailored to that. And that, that's how almost everyone plays the game, is you hit a point where you have made your money, you did hit your original goal, you lock in those gains, and you go, okay, in the next phase, let's do a build phase. Where we maybe don't need as much margin, but we'd like to buy bigger projects with more passivity. And then now you're working on building generational wealth. Emmanuel, good to see you again, my friend. You gotta, gotta meet him at our, uh, Atlanta meetup, which was awesome. By the way, for those who want to meet us, um, Northwest Action Summit— I'm serious, sign up for that. That is a beautiful hotel, 2-day event. It is May 3rd and 4th. I just got out of a meeting for that. Tickets are actually selling out very quickly, so please, if you want to attend that, don't be one of the people who try to buy it the last week because there is no way we're going to have tickets. If you want to do that, um, I love, love, love getting to meet you all in person. And we have a few people in the chat, actually a lot of people in this chat that I've met in person, and it's been amazing. Uh, Manuel, how often do you encounter owners that are already familiar with seller financing? I would say about 80% of the time. How often have they already done some sort of, sort of seller financing? I would say less than 50% of the time. But most of the time, people are familiar with seller financing. It's not a new concept by any means. People who invest in real estate, you already know what you want to do. They've probably learned a lot of things you have. Seller financing is very much a— well, we won't call it 101, but maybe like a 102 or 201 level sort of thing. Seller financing is something that people usually learn fairly early in their career. Does everyone utilize it? Absolutely not. But most people have a familiarity with it. This is why I never try to sell anyone on it. Different people have different comfort levels with different financing. I don't assume anything. We just go for the best that we can. I always ask. So when we're looking at our pieces— deal, debt, equity— I go through the deal as if it's not going to be seller financed. I never ask for seller financing. Just at the end of it, after I've talked about the deal, the opportunity, the upsides, downsides, how the bank's going to look at it. I just go, okay, do you know if it's a broker? Is the owner opening carry contract? Or if you're talking to the owner, hey, you open a carry contract, you're just documenting what the pieces are. We're going to build a puzzle based— we're gonna put together a puzzle based on the piece that we have. And Mason closes us out here on the, uh, the YouTube comments on, thank you for these great lives. Well, I'm glad that you enjoy that. I enjoy doing live a lot. If you've noticed, I've been going live— I've been going live a lot more often recently, uh, just because I enjoy doing this. Now, the set piece that I always commit to is Wednesdays at 3. Uh, hopefully I have internet back at my house when I go home today because I love doing these. It's a little bit more fun to do in studio. I will be grateful to my parents for letting me use their internet and their house. This chair I'm not grateful for. My back Isn't it? Um, anyone ask your last questions here in the chat. I'm going to look through Instagram for any questions asked on that platform, and we will, uh, we will wrap once the questions are officially dead. Instagram, you asked me no questions today. Shame on you. Shame. Okay, that is it for today's live. We went about an hour. If anyone has more questions, hit me up on Instagram. If you want to attend a live event, the one to go to is absolutely Northwest Action Summit, co-hosted by Multifamily Strategy. I let them keep the name because I thought that would be a little excessive to be the Northwest Action Summit Multifamily Strategy live summer event. Just seemed a little bit too long for a suitable acronym. Uh, but check out Northwest Action Summit, nwactionsummit.com. We'd love to see you live. If you haven't yet, like, follow, subscribe to Multifamily Strategy. We go live a lot, and I will answer your questions as they come up. Without further ado, we'll see you guys on the next episode.