A quick Friday night live - Multifamily Strategy is live!

Welcome, multifamily strategy fans. So due to a technical error and a lack of communication through my day, uh, it turns out that we missed our normal video. Uh, typically what we do is we post every Monday, Tuesday, go live on Wednesday and Friday. However, on Wednesday we were working on our new hotel conversion, turning our hotel into a multifamily property. So out of our commitments to get content. I'm going to go live here tonight on Friday. I expect very little attendance, but that's okay because there will be something to watch. We're going to release a bigger video on this. In fact, it's already recorded, but I wanted to take a quick personal note and talk about something that's really helped us build our business, me in particular. So a little while back, this is years ago, I used to get panic attacks like, uh, every like 3 or 4 months. It was a little bit gnarly, but when you go into business and you're borrowing millions of dollars and you have partners and there's people and there's employees and there's all the things that are hitting you at once, it can actually be fairly stressful. So to combat that stress, what we came up with is— this is actually one of my early mentors taught me this and this totally solved it. So on million-dollar things, say something goes sideways, deals are delayed, you don't know if your deal is going to close. There's lots of things that come up. You put it into 3 buckets. Bucket number 1 is things that you can directly control. This is where most people actually get stuck. People, uh, people just think, oh, okay, this is stressful. I don't know what to do. I don't know where to start. You freeze. That's where a lot of people actually don't end up buying real estate or finishing transactions or moving forward in general is the fear of getting started. So identify what you can control and control those things. Take those actions. Next is what can you influence? That's either actions you can take that either move the needle, may not solve the problem, but move the needle. But more often influence means your circle of influence. It's asking for help, reaching out, coordinating a new employee. A lot of times our whole strategy is actually based specifically on meeting with the people who've already done what you want to do so you can learn how to build that business. It's not just about getting deals. And so when you are stressed or there is something happening in your business you haven't handled yet, You just call the people who you've already worked with or who have been through what you're going through. The last bucket, and this has really helped me, the things that you can't do anything about. Real estate and business in general plays a lot like a board game. So your options here are, okay, I can knock this out right now. We can, we can, we can work on it. Things I can control, things I can influence. I'm going to move the pieces, move it down the field, and then there's going to be a point where you've taken the actions you can take. That is the end of your turn. It's a turn-based game. You are not allowed to stress when there's no more actions you can take because no amount of stress is going to help anything at all. So put it in those 3 buckets. You can always knock everything out. That has helped me tremendously. I haven't had a panic attack in years. That's helped us buy over $25 million of real estate. I think we're getting closer to $30 now. I should do the math again on that. I'll get back to you all. But yeah, that's been really, really helpful for me. Wanted to share that tip again. We're going to launch a way bigger video on this. Later in the week, but since our, uh, we miscued with our editing team, uh, for the first time ever, I don't have a Friday video. So here we are going live. Um, I will take all the questions and, uh, see where we're going. I'm also at my, uh, parent-in-law's house, so if my internet, uh, isn't great, let me know. Oh, by the way, we missed Wednesday. I apologize. So if anyone has questions, post them in the chat. We'll talk, uh, business, real estate, You name it, we'll, we'll rock till the questions stop. But I want to give a few pieces of practical application. So places where this stress model has really helped. There's a time early in my career I was actually working on a project at a call center with 10 employees. We swapped systems and it was supposed to be a super easy transition. However, our CRM system where we kept all of our data and all of the phones went down simultaneously for 3 days. I had employees sitting there doing absolutely nothing who we needed to pay for. And no way to solve it. That was the last time I've had a panic attack, years ago. And that's where I learned this whole control, influence, and something you can't do anything about. How we solved it? I couldn't control anything because I'm not a programmer and I couldn't fix it. So we made some calls, even though it was really expensive. We ended up hiring another team who knew how to do the programming. It took another couple days, but they got everything online. As a band-aid, we got through everything, stress went away, I was able to sleep and relax. Another instance that we had this, we actually had a— I'm trying to word this correctly— we had a partner and a mentor early in our career who did not handle business very well. I'll leave it there. It caused a lot of stress in the partnership as we were trying to separate. Now, this was before we actually owned real estate or assets together. But when we separated, there was a ton of stress. The people stress is insane. Control those, make quick decisions, take action. Super helps. You're going to move forward a lot faster. What's another big one? There's one other one that I did want to share. Oh yes, real estate. We've had a deal. It's actually the Robinhood. When we got near the end of the Robinhood, our million dollars was in escrow. Everything was set to close. And we— so money's already wired. We got a call that the insurance we were told we could assume was not in place and it was going to take weeks to find a new insurer. We had to go to the sellers and ask for an extension that they could have not granted. We could have lost $45,000 of earnest money, which at the time was earnest money that we borrowed. Couldn't afford to not close that deal. It would have been very difficult. That could have been insanely stressful. But again, we followed the steps. And things you can control, absolutely nothing there because I cannot make insurance happen. Things you can influence, absolutely. We called 3 different people. We stayed on them. We weighed all of our options. And as soon as something came in, we waited and had 2 options, selected one, closed the deal. And here we are at the Robin Hood Village Resort. That could be cripplingly stressful for some people because you are holding $1 million of someone else's money. However, Stick to the rules. Not allowed to stress on the weight phase. I'm gonna see if we have any questions. If we don't in the chat, that's just fine. Again, I apologize. This is a very informal video, but if anyone has any questions, we'll dive right in. Josh is doing some remodels. Dude, awesome. We are— I'm remodeling everything right now. It's super expensive, but I have a couple units, Cody and I, in almost every building that's getting just a little bit of love right now. So we are, uh, Remodel central. Remodeling houses, I think, a lot more fun than remodeling your multifamily properties. But keep on rocking, Josh. Thinking AI says hello. Hello to Thinking AI. Josh, let me know. I'm breaking up a bit, so glad that got better. And yeah, sounds like a business major. Funny enough, I have a business major and I never use it. Like, literally, I did not need to go to college. For those who are wondering if you need to go to college to be in real estate or in business, If you're planning on being the owner, no, you don't. Because turns out I still hired myself regardless of my resume. In addition, for those trying to become a real estate professional, become an investor, a step people like to add is becoming a broker. Also, don't do that because that's a complete waste of time if the goal is to own real estate. Now, if the goal is to actually facilitate transactions and you're putting a business plan around being a broker, that's totally up to you. You can absolutely do that. Kevin, I know anyone investing in Chicago suburbs, any idea about that market? I know a little bit about the Chicago suburbs only because I have a friend who's trying to invest there right now. We have a few people in Multifamily Strategy, multifamilystrategy.com, in our mentor group who invest in the greater Chicago area. So be sure to check that out. But generally speaking, very competitive market to get into. It's a little bit— traditionally, areas of Chicago are a little higher crime, but rental market's really strong. Population growth is absolutely there. In general, people like living there. You have a lot of job diversity. It's not going to be your cheapest properties in the US, but that's okay. I invest in Washington where price per unit is on the, like, the high, high end. So yeah. Uh, check that out. We also have a Facebook group, uh, Multifamily Strategy. I know there's a lot of deals that pass back and forth and they're a good place to connect with people. Uh, from Alex, can you explain the hammering the debt when you do it and how? Okay, great question. So for those who don't know, uh, we have 4 business or a 4-cycle business phase. First is build phase. That is extremely important. Don't worry about the other phases until you have something to actually stabilize. Number 2 is going to be the stabilized phase. So you take the pieces you have and you make sure they're performing the way that they should. In our case, we buy basic entry-level multifamily. That's most of our portfolio. We're going to make sure that it's fully rented, that the appliances are all good, the sinks, bathtubs, plumbing, electric, whatever. Everything is stable with no major capital expenses inbound. Then we do optimize. Is there anything that we need to do? Do we need to build another unit? Are we going to upgrade things? Are we going to add a whole new roof? Is there a major CapEx project that would actually enhance the property? Once it's optimized and you have the maximum cash flow that you could get from that property, we let that cash flow stack up on the side. Now, some people will say if you want to pay off the debt, like the Dave Ramsey debt snowball, is okay, let's start rolling it down, make payments towards the debt. However, if a major thing happens, say even one of those new roofs you just put on, hailstorm, roof gets destroyed, water heaters go out, something terrible happens. What you don't want to do is have no cash on the side. Keep the risk on the lender. Keep it leveraged until you've saved up enough in that side account to pay off the debt in full. So for Cody and I, we have about a 200-unit portfolio right now. What we do, we're still finishing out stabilization of some of the units. We're optimizing a few of them. There's a cycle for each property. Once everything is optimized, we're going to take that cash flow and start paying off some of the lower mortgages. So a couple hundred thousand dollar mortgage here, a couple thousand dollar or $100,000 mortgage there until we have a few million in equity, completely paid off real estate on the side. Eventually you build this to a point where you can pay off something like the Robinhood, which is a $3.5 million debt. We're going to write that check. And at some point, for Cody and I, we're going to build $100 million plus portfolio and we are in fact going to pay it down using that method. Are we in the BP 2023 cons? Funny enough, I'm wearing my property management shirt, Kensho Property Management. I bought the company from Cody a while back. However, Cody is the one who is still scheduled to speak on property management. So Cody will be there representing my company., and doing a fantastic job. He's gonna be on one of the panels. Funny enough, they lost his headshot. So if you're looking on the site for the different panels, Cody is the only one without a picture of Cody. Uh, but yeah, super excited to see anyone there. If you guys want to connect at BPCon, best way to reach out is via Instagram. So I'm @ChristianOsgood. If you want to connect with Cody or I, because I am easier to reach than Cody is. That was just the just the fact with our personality types. So, um, @ChristianOsgood on Instagram. If you guys are going to be there, it's in Orlando, Florida. I am super excited. If anyone wants to hang out after the event, I'm going to stay in Florida for a few days, and, um, I don't take a lot of vacations. I'm going to pop over to the Bahamas for a bit. Um, so if anyone is around, let me know. Excited to hang out. Uh, from Alex, when you say debt, do you pay Do you pay off or pay out your private money lender/partner, or debt isn't paying off the seller lender? When we say paying off the debt, we mean all of it. So the first, first and foremost, you look at your options and your obligations. So for example, I want to try to pay off the lowest debt, but if the debt is $500,000, if I have to say $500,000 due in 3 years, and I have $200,000 due in 8 years, I'm probably gonna pick the $500,000 that is going to balloon first so I can get that out of the way. I have to prioritize my investors over the lenders, 'cause you can always recollateralize, always, always, always. So for my private money lenders and investors, I make sure that I hit their cashouts and their goals first, because that's money that's gonna come back, and that's, 'cause they're gonna wanna reinvest with you. You want to make your immediate circle the happiest lender. If you need to extend the debt or refinance, we always underwrite so you cash flow long-term fixed rate debt and that you buy deals that are in an equity position where you are in a position to refinance. So always keep that in mind. But yeah, when I say pay off the debt, I mean everything that you owe, own, you want to pay off. I love the Dave Ramsey philosophy of not having debt. I don't believe that we have a government or even world economic system that works on real money anymore where you can actually earn your way through anything significant. So we lever up so that we can get an income that is large enough to pay off all the debt. The goal is to end the game with a large portfolio, to own your time, own your cash flow, and not owe anyone anything. So that is the ultimate target. Kevin, thank you for the Super Chat, by the way. I appreciate that. What is the best way to get an out-of-state broker to rep me? Oh, good question. So, well, if it's an on-market listing, you can always call the broker who listed it. But I like to find the brokers who are most active in the market that I— one, I don't like to be represented by the seller's broker. That's just personal preference. So what I prefer, and this is what I've done because I have done 2 transactions for a total of 18 units in Texas, which is out of state. I hop on CREXi, LoopNet. I look at who's really active in the area. I'll call 3 or 4 of them just to start a conversation. If I want to write up a deal, I'm not going to tell them, hey, I got a deal for you. I'm going to let them know who I am, what I'm trying to do, and I'll go with the broker who I like the most. So with brokers, the key is finding someone. They are transactional. That's how the relationship's built. So reach out to them on a business building call and find a transaction for them to rep you in. That has been how I've built most of my relationships with the best brokers. I've had them rep me on a deal or two. Usually they're deals that I spent all the time putting together. They'll come in for a nominal fee. I get used to working with them, then that is the broker that I use. So if I'm looking for someone to rep you on a deal, that's what I'm doing. Who's active in my market? Who's a mover and shaker? I love paying brokers because again, they're salespeople, they're transactional people. That's how they get paid. That's how they provide for their families. If you respect that, they're going to respect you and you're going to get deals done. Alex, thanks for the explanation. Makes sense. I'm glad that makes sense. It's a different way of doing it. The big thing is just don't— you still have to hold reserve cash. Sometimes it's easy to get excited about the debt paydown and pay down debt too early. It's super important. There's a balance and there's a little bit of feeling it out. No, really know your goals and targets. Um, there's a couple of things that people really miss. One, they overexpand, so they just never stop growing and never pay it off. You don't want to do that. Uh, two, they set a goal that's too small, so they'll buy like 4 or 5 duplexes and go, okay, now I pay these off and I'm done. And you find that you don't— you pay that off, you spend all that time, you go, oh shoot, I wish I scaled 5 times as big, but now I have to start the build phase again instead of just building a big enough engine. So find that balance for you. What is it that you're really trying to do financially and make that happen? And yes, there is good debt and there are tax disadvantages to paying it off. So I totally get that. And that is heavily advertised, especially online. There is good debt is the debt that we pick up. It's long-term cash-flowing fixed-rate debt. You know what's better than that? Hitting a point where you don't owe anyone anything. You don't track a darn mortgage. The paychecks come in and there's other ways to, to manage your tax liabilities. Go and run a lot of cost segregation studies. We have them staggered. We'll talk about that strategy another time because that's a little bit more nuanced and CPA heavy. Alex, are you picking a few brokers to work with in Texas since it's a large market? Yes, I have a couple that I work with in the Dallas-Fort Worth area where I'm going to be moving, by the way. To put a down payment on a house that will be built. I think we're 9 to 11 months out. We're getting, we're getting there. I just got that offer accepted and very excited. But I have a broker or two in the DFW area. I have some friends in Houston. And then where I actually own currently is in McAllen and Laredo on the border towns. So I have 3 main broker relationships and I'm going to be working with some bigger movers and shakers as I get down there. Right now I'm still focused on optimizing the Washington State business before I make the move, because I have seen a lot of businesses crash because their owners move too early. Are you in dire need to sleep? I'm assuming there's supposed to be an "of" there. Yes, I am. In fact, my wife told me I look super tired, and I am. I worked late last night. Today's been a long day of meetings. Meetings, which is why we're behind the media schedule and I'm going live on a Friday. So thank you, Rob. My wife will give me crap for that, but I've been called out. From MG, how would I find owner financing deals in my area? Easiest way to do this by far is you're going to look at who owns the multifamily in your area, which is really easy. You go to Google Maps, you look at the big long roofs in residential areas. They're usually multifamily properties. They're bigger than the ones around them. Uh, you are going to go to the county records and see who actually owns them. And you're going to plug their name into Google. You can do all sorts of skip tracing software. There's easier ways to do this, but I have had no problem. I've never bought skip tracing software. I Google who the owner is. I Google what their phone number is. I get a number. I dial the number. We actually have a video on YouTube on this. If you look for our most watched videos, I think it's like number 4 or 5, big pink background. You can't miss it. Um, we talked about exactly how we find them. But when you build these relationships, don't go after the transaction, go after the knowledge. Explain what it is you're trying to do in 30 seconds or less and ask them how they built their business. I did this today and I got a verbal agreement on a little fourplex next to a bunch of other buildings I own. I don't buy a lot of small things, but if I'm doing an assemblage, I absolutely do legitimately. I mean, that's, that's a call that I do once a day, every day, and it books about 50 coffee meetings a year. Everyone in my market knows who I am now. Gets a lot of deals done. That is the best way to find seller financing because people understand your financial position because they have a relationship with you. So when they know where you're at, what you're trying to do, they're only going to suggest deals to you that make sense with the pieces you have. And that's worked for Cody and I. We do a deal about every 45 days on average, and to date we've only done seller finance deals. So works everywhere. And we do have mentees who've done this in Texas, Tennessee, New Jersey, New York, Rhode Island, Florida, Oregon, California, Arizona, and Minnesota are the ones that I know of. I know there's been other deals. I just don't know where they're at. Let's see here. Kevin's going to jump. Kevin, thank you for being here. I appreciate you hanging out with us late on a Friday. Let's see here. How was the season at the Hood? So for those who don't know, we own Robin Hood Village Resort. That has been a huge and very fun project. Summer was awesome. I didn't have a summer here. Winter was really rough. I'll be honest, it's hard to run a resort in Washington in the winter in a summer town. We had the best month to date in the 89 years the Robin Hood has been in existence that it has ever had financially, which I'm very grateful for and very proud for— proud of. We ran a concert series. We actually had Sugarland down there., as our opener for that. For those who don't know who they are, I'm sorry, neither do I because, I'm not a country music fan yet. I'm being converted. Um, but, that really helped on the marketing standpoint. Um, and for those who want to come, we are running our next event, Robin Hood Village Resort, um, Creative Finance Summit, November 11th. Uh, check out my Instagram for more of the details. I know I post on there a bit, or my Facebook page. But yeah, on Instagram, I'm @ChristianOsgood. You guys can check out the Robin Hood, stay there. I think we have 4 cabins left for that event. So if you want to stay there, it's a 3-day event. If you just want to pick up a day pass and be there for the main event, it's all creative finance. It's Cody and I for like 5 sessions. Then we have 3 guest speakers who are epic. So really excited to do that. But yeah, good season at the Robin Hood. We got to where we needed to be for the year, just barely scraped by on the first year. Next year we learned a lot about a lot. We're going to do a lot better. Let's see here from Alex. Are you speaking to owners or brokers in Texas? Yes. Speaking to owners often. Brokers are doing a lot of the intros for me right now because I'm out of state, but I've flown to Texas several times through the last year just to meet with owners. Since I'm out of state, I try very hard to meet— I mean, with a little bit bigger owners, I'm a little bit more picky. And I'm stacking about 3 meetings per day. So I'm letting people know when I'm going to be in town. I'm being very intentional with the time so I can land, have a rest day, and then hit the ground running on, on owner meetings. I try to go for at least 3 a day when I'm doing an out-of-state thing over a couple of days. So last time I was down there, scheduled 6 meetings, we made 5 of them. One of them had a bump, but had a great phone call with that individual. Painful conversation. Did you find the new house? Oh yes, yes. When we were down there, yes, we did find a new house. I got the offer accepted. That's getting built. That is going to be phenomenal. I'll share a little bit more about that when we're a little farther along. Right now it's a big chunk of land in a really cool neighborhood. Over just a little bit north of Fort Worth. But yes, we are down there. Any other questions? I always do a last call in these lives and then we just rock. I always give it a couple of seconds because I know there's a slight lag and then we'll get one or two more and then we'll call it a night. Oh, there it is from Chris. Oh, there we go. Let's see here, Chris. Do you have any concerns about the real estate market, inflation, rates? No. I mean, I think it's going to be a rough year in 2024, but that's not a major concern because I'm picking up long-term cash-flowing fixed-rate debt, which means anything that's happening in the market right now is not going to be a massive effect because everything I buy is increasing my income and I'm fixing all the variables, which is absolutely why I love creative finance because you set your own terms. So not only do you understand your deal, you understand your loan product because ultimately you write your loan product. So the interest rates don't really affect me very much at all. It will affect you if you do short-term balloons, because if you're trying to refinance in a different environment, you don't know where they're going to be. That's going to be rough. Most people— and again, my crystal ball is as good as yours— but most people are thinking very tail end of 2024, 2025, we're probably going to see rates come down. Gradually but steadily. That seems to be what the Fed's predicting. That being said, I'm not banking on anything. So a majority of my debt is sub-6%. Not saying that's all of it, but majority of it is. I'm not banking on any refis. So your strategy needs to be a strategy that works in every market. That is actually why we selected creative finance multifamily because of the stability, long-term leases, and set variables that you can pick it up on. From Dory, did you guys get a chance to retire Cody's mom? Yes, funny enough. Okay, so I should probably let Cody share this story because it's really funny. Cody's goal was to retire his mom. That's like why he got into real estate. Him and his mom actually recently just went condo shopping, which is where he wanted to retire her. So they looked at this great waterfront condo and his mom said, hey, you know what, I actually love where I live right now and I'd like to do it for another 2 or 3 years. So financially, yes, we have a plan. We have done what we set out to do. Cody's mom doesn't want to be retired for a couple more years, funny enough. So, sorry, Cody, if you're watching this, I apologize for spilling the beans. But yes, he hit the goal and it will happen. The great thing is we're in the position to do it faster than we thought and faster than his mother is ready to be retired. Let's see here. They got it. Thanks, Alex. Alex, I appreciate it. As far as goals go, by the way, my original goal is to retire my wife. We knocked that out of the park. Texas house. We set the goals where Cody wanted to buy a house for his mom. It's the same price as the house that I'm buying in Texas. We hit the goals. Cody's sidelining that money. So his goal is— his goal is hit. It's just, you know, the full gratification will be delayed. But really, really happy for him. Happy that his mom's in a position where now she gets to do what she wants when she wants. So ultimately, I think the answer to the question is yes. The way it plays out is not the way it was originally envisioned. But that's the fun thing about, about hitting goals. Often when you get there, the targets change or your goal moves on to the next goal. I'm going to go ahead and hang out with the rest of the fam. Everyone, thank you so much for joining. If you guys have more questions, hit me up on Instagram @ChristianOsgood. If you want to check out the Robinhood Creative Finance Summit, that's November 11th is the main day. This is going to be our best summit to date. I have gone all out on the catering, the event. I've changed the venue around. So I have a couple of surprises for everyone. So really, really excited. And I'll get to the last questions that just popped up from Rob going to Texas from Washington. How you live without 11 months of rain? We will see. That is the sole reason I visited Texas to see if I want to live there. I am sick of the gray. I want sunlight and big old skies and Texas has it all. So We're going to see if I can survive without water, but I'm pretty freaking excited. Everyone, thanks for joining, and I'll talk to you all soon. We'll be on time on Wednesday this week, I promise. Wednesday, 3 PM. Be there and bring your questions.