Caleb and Christian Live !!!!

All right, and welcome back to another episode co-hosting Multifamily Strategy and Believers in Business. If you guys have been wondering, yes, Uh, Caleb's channel has changed names many times. I think we found the one because we both believe in business and are believers in business. It works both ways no matter how you want to read it, and I like it. So welcome back to the channel. Today we're going to be having a special broadcast talking about Caleb's 26-unit acquisition he did officially close recently. We're going to be talking about his business success in his sales company and just get caught up on his adventures in Texas, figure out what's next. Caleb, like me, started without any money. While I started in, uh, well, in a horrible, uh, church planting situation that turned into a cult, they took all my money. And you started with just not having any money in general. We both found different ways to start from zero. So whether you are, uh, 21 like Caleb or you're 32 like me, uh, anyone can do this with or without money, regardless of age, experience. And that is the purpose of today's episode, talking about the successes that Caleb's had, how he got there, and what it's looking like for him right now. As always, we're gonna have, uh, we'll get to some questions in the chat, but I think Caleb has about 14% battery on his laptop and it didn't start fully charged. So we're gonna go until his laptop dies, and that is probably about as far as we will go. Um, all right, Caleb, you just closed on 26 multi-family units. First of all, ridiculous. Second of all, second of all, uh, how many units does that put you at today?

So that puts my portfolio total up to 79 units today, dude.

Okay, 79 units, all in Texas, right? Yep. Okay, you started seller financed this most recent purchase. How is it financed?

Uh, this was actually my first bank deal, and it was not as bad as I thought it was going to be. I think the reason for that is I went with a credit union, um, And while it did suck compared to a seller finance deal, it wasn't as bad as most people make bank deals out to be.

How many months from going under contract to close?

Goodness gracious. I think I went under contract about January 15th, closed March— Gosh, what was last Wednesday? Whatever last Wednesday's date was.

Basically 90 days from start to finish to get through the bank finance. Financing and close it?

Uh, well, if I went under contract January 15th, I closed like March 25th.

Oh yeah, I'm sorry, I heard the first. Okay, so it sounds like 75 days.

Yeah, 75 days. And I had to get an extension in there, um, it was legal stuff. Um, the bank did not hold it up at all though. Uh, the bank was flawless, pretty easy to work with.

There we go. Um, okay, uh, let's get some of the details. Uh, 26 units. What was the price?

Uh, it was only $1.6 million.

You just bought a 25 for $2 million, right? Yep.

One on price. This one, while the units are smaller than the 26— or the 25 unit, excuse me— it is 30 years newer. Instead of 7 different buildings, it's only 3 different buildings, which banks like a lot more. Nice paved parking, um, nice roof.

So yeah. So, huh, I'm, I'm thinking about this. This is, this is an interesting deal. So it's 26 units, they're smaller, but it's newer, it's more units, and it's $400,000 less. Yep. In your opinion, is this a better deal or are they both about equal deals?

I think they're both about equal, um, as far as my 25-unit, um, so the 2 beds make a little higher of the rental upside. Also paid more on the price, uh, this one a bank's gonna like it more because we have less debt and it's just a leaner setup for banks. Less moving parts, uh, less buildings, newer everything. Banks like that a lot more.

How much did you spend out of pocket on this deal?

Um, I put earnest money down, but I got everything back, so a grand total of another $0 in a deal. So zero down, seller financed— or no, zero down, bank financed.

I was gonna say, this is— yeah, excuse me, the details are getting murky here. No, I'm kidding, I need more caffeine. All right, so Uh, bank financed, $0 out of pocket. Uh, for those listening, I do a lot of seller finance. I'm also not opposed to bank finance, and I have closed bank finance. Cody has done a lot of refinance, my business partner in Washington. Um, however, I have done multiple bank finance deals, multiple bank refinances. Uh, this is bigger than anything that I have done up to this point. So you have 26 units. Bank finance. You said it was pretty easy. $1.6 million. Uh, how much down?

Uh, 20% down, so 80% LTV. Um, and I know where you're going with this already. I do not qualify for the note on that. Uh, what is that, $1 million?

So how did you buy this zero down, or zero out of pocket, I should say?

Used a capital partner to fund the down payment, and said capital partner has a very successful business, um, out of San Diego. So used that. Um, he qualified and then some, to say the very least. So use that for the down payment and the qualification.

Fantastic, fantastic. Okay, uh, for everyone listening, you can buy deals with or without money. I'm gonna do a video— I just realized what I need to record for my channel. I will do a video on 10 different ways to buy things without money. There are so many more than that, but there is a bunch of ways.

I would love to be on that episode because we, we could talk about all of them.

There we go. We can talk about, uh, when, when to use options, seller finance, land contracts, a combination of bank and seller finance. I mean, we can go on and on and on, dude.

I've been—

I literally—

you literally rattled off two offers I've thrown out in the last week in Stephenville. Different option contracts and partial bank, partial seller carry. Granted, neither offer landed even though it hit the pieces they were looking for. Um, just not wrong time, but I've literally thrown out 2 of those offers in the last week.

For those who are interested, Caleb does a lot of things differently than I do, which is awesome. Caleb started in multifamily strategy, seller-financed some deals, and his deals looked more similar to how I was structuring them. As he's played the game, he's made this his own. This is what I love about real estate. There is more than one way to play the game. In fact, there's a ton of ways. You follow the main rules though. How do you buy it? How do you never lose it? Keep it simple, buy for cash flow. If you can do that, there are so many different ways that that exact thing can be structured. So, uh, super happy for you, man. Uh, you've owned it for like, what, like a week?

A week and 2 days.

Yeah, that's exciting. How are you cash flowing on this day 1?

Day 1, we're sitting about 6%. Um, the big thing of this deal, we won on price, so Steam deal cap rate for something like this, you're around a 6.5. We bought it about a 6.5 to 6.7 cap, and we have $200, $200 very conservative dollars of rental upside we've already captured. Before we closed, I didn't even know there were 2 vacancies on the property. Going long story longer here, and I was like, hey, if you can fill one of them for $750, go ahead and fill it. They were currently all at $550. The property manager was like, oh, no way we're going to do that. They didn't even tell me they actually did it on one of the units. So we've already captured the rental upside on one of the units to prove there. And now we're pushing for the extra $300 rental upside. So bought this about 6.5 cap. After done with the project, we're gonna be sitting closer to 9 to a 10.

Wow. That just based on the success of your prior deal, and we've talked about on the channel for that 25 unit is probably to date the best deal I've seen purchased through anyone who has gone through any of Multifamily Strategies courses. I think that takes the cake as my favorite deal. The fact that you won on price, and not by a little bit, I mean, you won— oh, this is $400,000 less than the best deal I've seen.

Slaughtered on price.

That is fairly ridiculous. One thing that I don't think we talk about enough, you do eventually have to win on price. Like, terms are more important and cash flow is super important, but you can never refinance something if you have no net worth. If you do zero equity deals where you you overpay but you win on terms. You can build financial freedom doing that, but you're not worth anything. You have to win on price occasionally. And one where you won on price by this much, the day you close, you are worth more. And every one of those units, you get up $300 in rent. And I believe that's a— was that 6, 7 cap area?

Yeah, about a 6.5 cap.

Oh, good guess, Christian. 6.5 cap area. $300,000 of rent bump. Let's run the math here, assuming that we bought anywhere near market, which I think you already won with the day one equity. But say you bought it at the market rate based on the income that it brings, which I know it is lower income, but do you know what it appraised for?

It appraised for $1,629,000. So pretty much bought it right where it's worth.

So rents are low. Yep.

Quite low.

Okay, so it's okay. Well, this is perfect. So we're going to say we bought it for what it's worth based on its income, but we're increasing income by, you said, $300 per unit?

Uh, yeah, there's 26 units. So Josh, what is that? Um, $7,800 a month.

Okay, well, this is exciting. This is exciting. Okay, so, uh, for those who are newer in real estate, this is, this is where you make money on deals. This is under market rent. You bought it for what the bank says it's worth today based on its income, right? They use the income approach. You have to, um, but good verifying. So $300 times 26, you're right, $78,000. You made $7,800 of additional revenue. You're already cash flowing day one, and I know that because they're going to want a debt service coverage ratio of at least 1.2. So I know it's cash flowing day one, the bank wouldn't allow it otherwise. Um, you're gonna add another $7,800 per month. We're gonna annualize that because that's new net operating income that comes with no new expenses. Your expenses don't go up for raising rent $300. So multiply that by 12, and we're gonna divide by 0.065. Caleb, on this deal, when he stabilizes it, stabilizes it, it's gonna make $1,000 $1.44 million of upside on this deal fully stabilized.

And that's conservatively with a 6.5 cap there. Stuff like this in Steamville usually trades lower. Um, so yeah, conservative there on cap rate as well. But yeah, not a bad little project.

So zero, zero dollars out of pocket. The last— oh, this is an important question. Uh, you said you had an equity partner who put in the money. What percent does your LLC own? What percent does his LLC own?

Yeah, on this one it is a 60/40. So he gets—

are you the 60 or the 40?

I am the 40.

Okay, so on this deal that you spent $0 on, you're managing it, right? Yep. In exchange for your management— so essentially you're a property manager, is the job on this, that's the trade.

Yep.

Because you are going to manage it, your fee as a property manager will be $576,000. $800,000 of equity plus 40% of the cash flow of the 7— well, no, because you already cash flowing, but $8,000+ a month of rental income. Yep. Yeah, that is correct. If I'm wrong from our prior things, you get these rents up, you are now a millionaire. Uh, yeah, because if I remember correctly, you were already worth in the ballpark of half a million. Is that right?

A little more depending how you value certain things, but yeah, this one will surefire make me a millionaire.

You're 21. I met you what, about 2 years ago?

Yeah, just about 2 and a half. 2 and a half.

Met Caleb 2 to 2 and a half years ago. You're a millionaire once you finish this. It doesn't suck. Keep us updated once you get there. We'll, uh, we'll definitely have you back on the, the main channel We'll do a full episode on exactly the math of how you got to a millionaire. We'll go through all of your deals. We'll do a long episode of literally exactly going from $300, having your second $300 payment bounce to me for mentorship, literally go from, I can't make a $300 payment to worth a million dollars. Caleb, that's an excellent deal. Everyone who's wondering what an excellent deal looks like, that is half a million dollars to be a property manager. Yep. And granted, you have to have the skills to find and fund and negotiate and raise. So you're better than a property manager, but you put together an opportunity and you will make half a million dollars doing so in equity outside of the income this property is getting you. Fantastic deal. I love everything about it. Let's talk, uh, let's talk your business because I've, I've got to talk to you. As, as many know, we're very good friends. Um, last we had you on, I believe you were, uh, talking from your apartment in Stephenville. Yep, your background looks slightly more epic. Is that, is that a picture? Is that a real background behind you?

Uh, this is a picture of the Stephenville Skylight. No, I'm kidding. Uh, this is the background of downtown Dallas.

I knew the answer to that, by the way, everyone. That's— I'm not, I'm not that dumb. Um, sure, that, that, that's new. Did this new apartment afford that or what? Uh, that is a nicer— it looks like you were in a nicer area than previously.

Uh, yes, I am. A new living situation, moved up to Dallas about a month ago.

Dude, that's fantastic. Congratulations.

I appreciate it tremendously.

How has business been? You run Dago Sales, which I have contracted for not just, not just, uh, my mentorship product, but I mean, you've done some work with me, uh, in the past helping with, uh, Robinhood events. You've helped me with property management. Like, I have used your company for a lot of a lot, and you guys have been fantastic. Outside of me being a client, how has business growth been for you over the last, we'll say, 3 months? Yeah, great question.

Over the last 3 months, um, I don't know if it's a 2x, but we've gone, um, about a 1.5x upwards.

Oh no, we may have hit the point. Where Caleb's battery died. We knew this would happen. Well, it sounds like business is going well for Caleb. Oh, he will be missed. I'll see if I can get him in on his phone. I'm gonna see if he can, uh, I want to get him back because I want to get this answer. We're gonna work out— this is the fun thing with live, everything happens live. We knew this would happen, but it happened, it happened at the wrong time. Then I'm going to get to some questions here. Uh, let's see here. Join on your Phone, bro. Okay, we'll get a Caleb back in here in a second. Um, oh, where do I want to pick up? Let me answer some of the questions in the chat if we have any, and I do see a few, so this is good. I'll answer some questions, they'll get Caleb back in because I want to get the, uh, I want to get the answer. So this is what we call an unintended hook. Everyone wait for the, uh, wait for the answer to the question of how is Caleb's business doing. Find out later in the episode. Let's get rolling here. Um, oh, that's so funny. Uh, can we do this from Joe? Can you guys do a video that deep dives, uh, refinancing, how it works, how you anticipate using it on your deals? Absolutely. The long and short of it is I want my deals to buy my deals. Sometimes it's done out of refinance. I do a couple of flips every once in a while. Um, it's rare. But like, I'm doing a mobile home park right now, has great cash flow, but we're going to do, we're going to go ahead and do a flip on that property where we're going to repackage it, sell it because what we're best at is stabilizing rents and fixing occupancy. There's a small issue there. So Caleb, Caleb just wrote and he will dive in. He's going to plug his phone into a phone charger and he'll be joining us again very, very shortly here. So I'll keep an eye out for him there. Uh, but yeah, essentially what you're going to be doing is we're going to get the value up like Caleb did here. His investor, he said his investor put in $400,000. He has $1,440,000 in upside on this deal. And I, I, I've looked at the numbers on this. I think he's right. When he goes to refinance this, he'll have no trouble pulling all the money out for his investor. I believe his structure on that particular deal is the investor gets their cash back and then they just split all the money buy their equity. So they're going to do a refinance at some point, pull some additional capital out. The new income will service that. This deal will probably cash flow after you pull some money out of it, probably going to cash flow closer to $5,000 a month, and they're going to split that 40% to Caleb, 50% to his investor. But Caleb has no money in that deal whatsoever. His investor is paid back and made whole. They have equity in the property, and away they go., that'll be at around 70% LTV, which makes it a very good deal. Jake mentions, uh, makes sense that we haven't been able to meet up. Yeah, Caleb has been busy. He is up in Dallas. Um, I have— he's in Fort Worth every once in a while. Uh, by the way, Jake, Caleb mentioned you. Uh, he wants to meet up next time he's in Stephenville, so keep bugging him because he will absolutely 100% meet up with you. Luke, during the New Jersey event, there was a speaker, Janelle Wilson, who was saying she used credit cards to, uh, get cash paying zero interest a year and was able to fund her down payments. I did not do down payments like that, but I've done renovations that same way. Funny enough, Janelle is, uh, outside of meeting her in New Jersey as well— I had the privilege of meeting Luke at that event— uh, Janelle is already slated to have an episode on multifamily strategy. So she's going to share more about her strategy and how she started using zero interest credit cards. Uh, just fun fact, that was a really fun event. That was, uh, me, Janelle, Henry Washington, Cody, a few other fantastic speakers. But, um, really fun event. Luke is awesome seeing you in person. Everyone who wants to see us in person, by the way, if you are anywhere near the West Coast, NW Action Summit, Vancouver, Washington, is in less than a month. Book your freaking ticket. We have a few spaces left. I see Caleb in here, so we're gonna get Caleb back on.

Caleb, it's good to see you again. I have returned.

That dude, your phone camera loves that lighting, by the way.

I like that setup. Quality. That setup eats batteries, so I apologize.

That is, uh, yeah, wow, still, that's, um, that— yeah, image quality is great from the iPhone. So good to see you. Um, all right, we're just answering some questions from the chat about the, uh, the New York event.

And, uh, I heard, I heard Northwest Action Summit, which I will be attending.

Oh, if you want to meet Caleb there too, that's right, Caleb's going to be there. Uh, Cody's going to be there for about half of it and then he's gonna bail to his sister's graduation, which is allowed. Um, we have, uh, Dion, Mike, who are personal friends of mine. Michael Zuber is going to be keynoting, who I have had on the channel, uh, multiple times before. Uh, but yeah, we're gonna have some great people there. It will be a good event if you guys— actually, a great event. Uh, if you guys want to go to like a big conference at a nice hotel and really get to network, the format of this one is the best. And that is it for my advertising. You guys do need to be there though.

It is epic. And it is the best because Christian is designing it is why he's saying it's the best. Christian, did you already drop that you are a partner on that?

Yes, I— it is my event co-hosted with Northwest Action Summit. I spoke at the event before I co-hosted it. I liked it so much that we're going bigger and better, and it is, uh, my event. I have only run 6 events at the Robin Hood, but this is my, my launch at going much bigger with our events. I said I was done advertising it. There's one more thing. Every speaker save one who's gonna talk about mindset, every speaker there has done creative finance. Every speaker there has done creative finance differently than someone else, and every single strategy works. Michael Zuber has a fantastic model for mixing bank and seller financing that he gets done all the time. Dion has used it differently. Mike Newton, Millennial Mike, has used it differently. I use it differently. Caleb does it differently. Everyone there has used creative finance. There's going to be a massive focus on buying deals without money. So if you're trying to learn this and you want to learn multiple ways to do it, I'll see you there. Caleb, we were asking about your business. So you've moved to Dallas.

Yep, you can still kind of see the skyline, I guess, from here.

Yeah, it works. You've done a 1.5 Increase. Uh, so you, you increased 50% in sales over the last 3 months, which by the way, you keep that up, that's, uh, that's gonna be pretty dang good. I don't know if you can share this or if you wanna share this, but if you're comfortable, top line revenue before expenses, uh, where was your company at? Or, and you can use round numbers, it's fine, but where was your company at this time last year? Where's it at today? What does, what does growth look like in a company like yours?

That's a great question. Um, top line this time last year was probably pushing up to the 5-figure mark, um, consistently. Um, so right now this last month we were about 25, um, and last year we were about this time about 10. So I guess, um, I guess we've done the 1.5 then. Um, even then, probably 3 months ago is closer to 15. And like I said, right now we're at 25.

So, so that's not bad. I mean, 21, your company, I imagine it has fairly low overhead because for those who don't know, Caleb's company sells products for other companies. Like he just runs a sales org with a few employees and himself and some ridiculously cool automation systems. Um, I can't imagine you have high overhead. So you're, you're bringing in a lot in your portfolios and your company is doing $25,000 a month. That's not bad. I, I would assume there's a lot of room for, uh, expansion there. Uh, how many clients do you have thus far?

Um, fully up and running Consistently, I'm sitting about 3, in the process of onboarding another 3. So basically doubling my clientele as we speak.

That's interesting. So if you double the clientele, are they all, all about the same income generating? Like, are you going to double income when you double clientele?

I think we're going to go from $25,000 to $40,000 is my guess.

That doesn't suck. $40,000 a month. Outside of the fact that your real estate's kicking ass, I'm going to say that you were doing okay for '21, my friend.

Not doing too bad.

I think there's a natural question. I don't know if everyone else is thinking it, but I was thinking it. You have multiple buildings in Stephenville now. Are you still expanding in Stephenville? More opportunity down there?

Stephenville, surrounding areas, yeah.

Are you at the point, since I know you're already self-managing multiple buildings, where you put it into one house and build a property management company? Are we there yet?

Yeah, it's not fair, you know the answer to the questions, man. Um, Yeah, I just filed my LLC this week.

There we go. I, I have to tee up somehow. There's no story if you don't have the questions.

I appreciate it.

Yeah, I think, I, I think it's natural. Okay, so let me ask a question that I might not know the answer to yet. If you're looking at starting a property management company, and I've said a lot of times on this channel, I, I recommend not starting a property management company. You built a business where your trade Was, I'm gonna find the deal and I'm going to manage the deal personally. So now adding staff makes sense. Putting one billing unit, since you're already managing either way, putting in one billing unit makes sense. Exactly. Anytime you start a company, every company needs to have a goal. You already have a successful business. You already are a, I, I would say quite a successful investor. You've invested better than I did at 11 years younger than I. You did better deals and you got the same income in fewer deals. And that is always the goal. The more income per deal, the better. Amen. You've built a cash-flowing portfolio that needed less pieces cycling and moving around. So you've built a good business. In this business, the property management company, where is it servicing? And what is the overall goal? And you can give me like a, here's where I want to be year one and here's where I ultimately want to be.

Yeah, great question. I mean, we're serving the counties of— so Stephenville, Erath County, um, can't remember what Weatherford's county is, um, but serving Weatherford, Stephenville, Granbury areas. I'm gonna eventually look into Fort Worth, some more Tarrant County, and goal by the end of this year is 500+ units under management.

Being that I know exactly what a PM company at that many units is worth, as I manage 300 and I have evaluation for my company that is— I'm happy with, uh, that is also going to contribute to your overall net worth. Doesn't really count too much until you get 2 years of business behind you, but starting that counter now, you're gonna get a pretty— that's a pretty, uh, substantial portfolio.

Yeah, and that was exactly the reason starting it now was getting the clock as well. So that was a big part of it.

There we go. So Caleb will be the owner of 2 businesses if you don't count, you know, real estate acquisition as a business, and then a whole bunch of real estate. Dude, you've, uh, you've been busy. It's only been like a month since I've had you on here.

Yeah, working about, um, one thing up here too, the productivity has, um, allowed me to be off the charts since, um, I'm right in the middle of everything. I don't need to drive anymore. So I pretty much walk everywhere when I do go places. Uh, pickleball is a 5-minute walk away. So, um, yeah, productivity's kind of gone through the charts. Um, about 12 to 14 hours a day right now.

So yeah, absolutely insane. By the way, um, I know on top of everything you are going to be pushing more content to YouTube.

You've—

I mean, obviously your laptop shut off, um, but prior to that adventure you had, um, Prior to that, you have like new camera. I can tell you have good lighting. Yep. Your mic's up. You've changed, and by you, I mean, I've got in and like changed the name of YouTube channel like 3 times. What is your plan for the YouTube channel? Which by the way, this is streaming to, if you're watching this on Multifamily Strategy, we're streaming to 2 YouTube channels at the same time, Believers in Business. Lastly, share about that and then let's answer some of these questions in the chat.

Yeah, um, so yeah, just getting out there more, um, looking to go on more podcasts, gonna start posting to that YouTube channel more, maybe even start a podcast in the future. But yeah, looking to get on to other people's platforms. Yeah, definitely did not invest, um, nothing into lighting, camera, mic, um, obviously the background is not a screen that is real. But yeah, investing heavily into that, so looking to get more on the podcast circuit and pumping out some more content.

Oh, that's gonna be fun. So everyone who is watching, all, you know, 14 of you on my YouTube channel, and, uh, you know, if you have to watch on Instagram, uh, follow it. Believers in Business, uh, on YouTube is going to be the place to watch Caleb start to take off. Uh, really fun. Excited to watch that. I will watch every episode that you put out because, uh, while I'm your friend and I know most of the stuff you're working on, it is fun to watch it and be a fan. So I appreciate all that you give there. Um, all right, so I'm going to, uh, answer the rest of Luke's question here. So what I was answering, uh, he ran to Janelle, who I'm gonna have on my channel here very soon. She used the zero interest, uh, to fund her down payments. I've done the zero interest cards, uh, to fund renovations. So similar—

I funded— I've done it with earnest money.

So— oh, that's right, you have done the credit card thing with earnest money. Um, yeah, there's multiple ways to play the game. Uh, Luke, if so, how many deals did you do before implementing the strategy? Did you do this, and if you put money into a, uh, VIP or emergency expense instead of a down payment? So, uh, yeah, I guess I kind of answered that question. I used it for renovations. I've done this on the Robinhood because the expenses were higher than I thought they were, and I actually ran out of money, which was bad. Um, that gave me $24,000 at zero interest that I was able to pay back. In the summer where income is triple what it is in the winter. That saved me in a down season. You need to be able to cash flow back though. I just saw someone in a credit stacking group that literally, this is all they do is they teach people how to fund things zero, uh, on zero interest credit cards. They're like, oh, I started a bunch of Amazon stores and they all failed. I have $200,000 of credit card debt. What do I do now? It's like, you can't fail. You actually do have to be able to cash flow. The reason that I like this strategy for real estate is if you know how to underwrite and you can predict your cash flow. So I wouldn't do this on my first deal because everything you're doing is in theory, right? You think you know the underwriting.

Gosh, isn't that the truth? Yeah, 3 times longer, 3 times more expensive at least. You don't know, like, gosh, it's—

yeah. But on either of the 51 units in Stephenville You know what the cash flow is on?

Oh, 100%. I would have done that. I would have funded everything out of 0% interest credit card debt.

Like, as long as you can pay it back before it starts bearing interest.

So exactly, because yeah, it's once you do— like, for me it was 3 deals really. Um, so I went bang, bang, bang, and then took about a 9-month hiatus until I bought my next deal, and then took another 4-month hiatus. I bought this one. Um, if I knew what I knew now, I would do a lot of things differently. So I think the same thing. I think that's great advice when you're starting out. I would definitely not be using a high-interest, eventually credit card debt.

Yep. No, I think, I think that's the way to think about it. It's like if you're creating like your New Deal, you're creating an additional $7,000 of revenue. Once I started seeing, say, say you saw 2 or 3 more rent bumps, I'm like, okay, we're, we've already seen one, we're, we're seeing them come in consistently and people are staying. Then I can look at that and I can reasonably assume, okay, I can, I'm comfortable I'm going to add at least $5,000 of revenue throughout the next few months, if I was to borrow, say, $20,000 on a zero-interest credit card to knock out a project, I would be comfortable being able to do that because I'm very confident that the property will be able to pay back the card. Exactly. And that's the way to do it. And I'll tell you, I have done this on 4 different LLCs. I had one LLC that had more projects come up and I wasn't able to pay off the card. So I have on one LLC, and it's a big LLC, so it's not a ton of money, but the interest is high. I'm paying 18% on a credit card that has about $10,000 left on it. It's only a few hundred bucks a month on an LLC that does a lot of money, but I'm still funding projects, and it's more important to finish the project than it is to pay off the card. So I have this random small thing I consider myself fairly good at this game, and I've done this successfully multiple times. Cody and I have had it happen where it's like, oh, I guess we're paying a little bit of interest. It's still worth it because we got a year of no interest and we're going to have about a year of 18% interest. It balances out to 9% interest, which isn't a horrible loan, but you have to get it paid off. So weigh all of your options and understand how the math works and the economics of your deal. But know that like stuff comes up and if you're taking on debt that will come expensive later, you do need to have a very solid plan of how you're going to pay it back. I've had a partial miss one time out of four times doing this strategy, and it is an expensive way to do it, especially if you don't have a lot of cash flow to service the debt. Yep. You did this for down payment, by the way, before we go to the next question. You did this for down payment. What does that look like?

Uh, you pay it back. Oh no, I did it for earnest money, not down payment.

Earnest money. Earnest money.

Okay. Yeah, earnest money, uh, funded with credit cards. Kind of weird getting the money from a credit card to the earnest money, um, to title. That was kind of interesting, uh, but figured it out, got that done. Um, then yeah, paid it back as soon as we closed. If I wouldn't have closed, what do I do?

Is it a cash advance on the card, or how did you do it?

Can't remember. I think so.

Okay, I know I have had to get the money off the credit card. I couldn't— it wouldn't let me do a cash advance, so I ended up Uh, Venmoing the money. So I had to pay a 3% fee, but I Venmoed it to the LLC from the credit card.

And that'll work.

And that'll work. So there are workarounds for everything. But yeah, I've, I've done the thing and the credit card, uh, when you start with no money, you take money from where it makes the most sense to do. Just make sure wherever you can get it. From Shiloh's Crib, if you do negotiate on price, would you basically increase the interest rate?

Not necessarily. This comes back to the relationship point. I'm going to hop in here, Christian. That basically comes back to the relationship point of what are their goals? Like, for instance, the guy I just bought from, I wanted the deal to be more— I originally offered more on price, offered to get creative with an option period, all that stuff. His goal was, if I'm going to sell this, I do not want to deal with it whatsoever. I need to be cashed out. So for me, I could drop price. If somebody's like, hey, I need 20% down, No matter what, I have to go pay off something after this. Uh, it wouldn't make sense to then just say, okay, I'll increase your interest rate because you're not hitting their goal and it seems like you don't care. So not necessarily, it kind of depends on their situation and learning more about their situation.

I have nothing to add to that. That is just— that's the correct way to do it. Uh, win the deal as much as you can, but if the deal works, I, I tend to close it. I, I will say this, I've had this comment come up a bunch the last 2 weeks, so I was already gonna put I put something out on this, but people have texted me like, hey, do you think I can negotiate another $5,000 off the deal? This is what they said they want. I think you can go a little lower. It's like, I mean, sure, but what's the point?

At that point, I, I agree. Don't be weird about money.

If your deal works, close the deal. And what will happen is sometimes you'll over-negotiate it and you'll lose the deal, and then you just don't close the deal and you don't move forward. I'd rather do more deals that move me forward and I'll just do more volume than everyone else and all of my deals cash flow. Then be like, hey, I did 3 deals and I pushed, you know, the extra $10,000, $20,000 on all of them and I'm worth that much more. And it was— I'm so glad I did that. It's like, I would rather get more deals done when I have something that works for me and the other party is ready to accept.

Get the deal done. It's go time. Yep. Oh, what's this next one? Caleb, are these partnerships joint ventures or are they something else? Oh yeah, I only do joint ventures. I'm not a big fan of the 50— what is it, 506(c), 506(b) syndication stuff, SEC filings. Not a big fan of those. Um, so yeah, these are joint ventures. Um, there's a million different ways you can skin a cat, but I have found that's the most simple and straightforward way.

I don't, I don't understand why that saying's a saying, by the way. Just, uh, you know, unrelated.

Well, I think because they're— I, I am not a hunter, so I cannot tell you.

Who hunts cats? Not okay. Not okay. That's what we have for questions here. Caleb, do you have any other parting thoughts for today's episode?

Parting thoughts? Um, well, one, come to the event in Seattle. I will be there. Two, if you are in the Dallas-Fort Worth Metroplex area or anything of North Texas or Southern Oklahoma, Go ahead, shoot me a message. Would love to connect, meet up more. Yeah, those are the two big things for me. And I think another thing is just piggybacking on the getting started point like we were talking about. You're going to screw up, you're going to make mistakes. I've been there, Christian's been there. Not every deal goes as planned. If on paper it looks great, sometimes that doesn't always mean it does, especially when you're breaking into a new industry, new asset class, whatever. Yeah, just kind of stick to what you know. Don't even overcomplicate it, and no need to reinvent the wheel.

Ah, I got, I got a couple questions that just popped in on Instagram if we want to, uh, answer just a few more.

Let's do it.

If I can buy something that's making $7,500 a month and optimize it to $13,500 a month, how do I calculate the value of the property?

So what you do— I was going to say, starting off, um, I never like to throw a price first. I'm going to start off there. I would see if you can have them throw a price first, or is he talking—

or he or she talking about after, um, talking about how to calculate the value of the property based on the increase of income. So I, I'll do the math super basically, um, assuming that you bought it at market price at $750,000. It's based on the income. You're going to look for the market cap rate. That's not the cap rate of your deal. That's what is the market cap rate in Caleb's market in Stephenville, which I'm also going to be buying in, uh, pretty heavily as soon as I move into Texas for sure. I'm super excited for that. Um, so assuming you buy at market rate, the new net operating income you create— so in this case, um, uh, the extra $5,000 a month— he's a 6.5 cap area. So if you create— if you add $5,000 a month, $5,000 times 12 is $60,000, divided by 0.065.

PSA there, Christian can't do that math in his head.

Yeah, I, I can't. But you—

he can't, he can't do 12,000 times— or 5,000 times 12.

That's impossible. Well, no, I, I can't do that. I can't do— I can't do 60,000 divided by 0.0065.

Oh no, no, nobody can do that. But you can't even do the first part, so it's okay.

Oh, I could do the first part. I can do 5 times 12. Um, so we have a grand total of, uh, about $923,000 of added value.

And I just— and I just did something similar on the 25 unit I bought when I bought it, collections were closer to $14,000/$14,500. Um, today collections, once I fill my vacancies, are going to be closer to $19,000. So yeah, right in that ballpark. So that deal still might be the better one.

I'm looking through some of the, the IG questions because I, I focused a little bit harder on the, uh, the YouTube one. Let's see, uh, what's the event in Seattle? That is, uh, Northwest Action Summit, NW Action Summit.

Is that, is that in Seattle proper or are we in a suburb?

Uh, no, it's down in Vancouver, so it's actually about 3 hours south of Seattle.

Okay, so we are in Seattle. Oh, that's the one. Oh, okay, that's the one like across over from Portland, right?

Yep, that'll be the— that'll be the big one. Um, I do have events that I'm doing in Seattle.

I think I have one on the 26th of next month, but not that you're running, right? You're just participating in.

Yeah, I'm just participating. And, um, Is Los Angeles, as an expensive market, a good market to invest in as a beginner?

I think you could— as a beginner, no. Um, I think how I look at the— I mean, California markets as a whole are very interesting, to say the very least. Um, especially you're getting started, you want to go somewhere there's a little more opportunity. If you're playing in Los Angeles, uh, you might get eaten alive when things start popping up. I mean, Christian can speak to this. I've only bought in Texas, but if you want to talk about expensive an eviction can get. If you're on your first deal, that one eviction can sink you.

So yeah, which is something that you want to avoid. Don't— you don't want to— you don't want to sink on those. Um, if you live in LA and you want to buy in LA, I know people who do it very successfully, and there are a lot of strategies to play the game in LA. Your advantage there is that you're local to the property and you can put in some sweat equity. If you do not want to work on the property yourself or you don't want to actively manage it your proximity is less helpful, and I look at another market. So you're just looking at competitive advantage. You have an advantage over people outside of LA by being in LA. As I'm moving to Texas in the next few months, everyone's going to see me start playing the game a little bit differently. I'm unwinding some of the— not all of, but some of the Washington portfolio actively right now, freeing up money and moving to Texas. Yeah, super excited. As I start to make these moves, um, it is because I'm losing my competitive advantage in Washington. I'm not going to be based here. I'm not driving distance from my portfolio. That's not the place that I want to hold. So I'm taking some of that money and I'm moving it into Texas, closer to where I'm going to live.

Christian Osgood, future member of the Village Church in Flower Mound.

Let's go! There we go. See if I have any remaining questions. Nope, we are, uh, we are through the questions. So this has been another episode of Multifamily Strategy Live partnered with Believers in Business. Follow it on YouTube at Believers in Business, I believe. Um, but yeah, check out the channel, follow Caleb's story. He's gonna be posting a lot independently of me. Uh, we always do some adventures together, but you're gonna see a lot more from us, uh, moving forward. Caleb, excited to touch base with you again. We'll do some more lives here shortly, and everyone else, have a fantastic weekend.

See ya.