Christian, Caleb, Ethan and Eddy Multifamily Live

We're live. We have zero people, zero thumbs.

Well, yeah, we just started. You talked a little bit.

People don't like me.

This is true. Put it on me, I'll get started.

This is vibes.

All right guys, we're in the car. Hello YouTube, this is live from Florida in the car. So this is, uh, this is on the go, but we have a lot of investors here. We got me, Christian, we got I'm gonna keep looking here instead of at you. We got Caleb. We— oh, we got a car full of people and others. Yes, but, uh, today we're gonna be talking about one topic and then we're gonna open up for the chat. A little intro on the people in the car. Uh, Ethan, you're sitting at, uh, what, 34 units?

34 units and 2 flips.

And 2 flips.

Oh, Dividend Dave says hello.

Dividend Dave, welcome. It doesn't start until Dividend Dave's here. Uh, we got Eddie all the way in the back. Eddie, how many units are you at?

34.

Amazing. It's almost like they're partners, which they are. Uh, then we got Caleb Hommel in the car. Caleb, how many you got?

53 today.

53. And, um, I've lost count exactly, but somewhere in the ballpark of 200-ish. Um, so today we worked on a project for someone, and so I'll share that knowledge and then we'll dive into any questions you all have in the chat. So, uh, earnest money— how do you not lose earnest money, especially when you're raising it or when you're putting it down on a deal? Um, and you don't have it yet. What does it look like? So we don't like to lose money. That's one of the goals. The easiest way to maintain earnest money while getting into a contract is you have it due after due diligence. If you don't have all the facts yet, you do not want to tie up actual money. So there's two things you need to remember on this with earnest money. So first of all, you set your timeline. Say it's a 3-week feasibility. You have a clause in there that says after feasibility is done, you have 1 or 2 days is to wire earnest money. In addition, you don't want the seller to drag their feet on getting you all the parts you need for due diligence. These documents include rent roll, bank statements, any utility bills you want to review, could be stop-will letters, but whatever you need to do your due diligence, you don't want to give them money before that. You also don't want to drag their feet, so what you do is you put a clause in there that says the countdown, that 3 weeks that you gave yourself for due diligence, that countdown starts as soon as the listed docs are received, and you list out everything you need for earnest money. We're going to be adding this into our course, but, um, that question came up today and I realized we did not put out enough content on exactly how to preserve and protect your earnest money. We've had one deal one time where we didn't lose our money, but it got tied up for a prolonged period of time because the seller took way too long to get the documents. And what happened is in the course of a month interest rates went up and our down payment for the prospective deal went up $500,000. If you did not plan for an extra half million dollars, that can really screw up your deal. So that is a best tip and today's tip of the day. Now we have some stuff in the chat, you're gonna have to answer those questions. Okay, I'm driving.

So we got Dividend Dave saying, that's right, Christian, don't know exactly who's referring to. We got Emmanuel saying, hey guys, wanted to know the qualifying questions you all ask a prospective property manager. Oh, it's a good question.

I know some people in the car who some pain on that. Want to pass that bad boy? Yeah, we all do. Pass it back to Ethan because he's going through something right now.

Yeah, we ask a lot of questions. The one that we learned primarily from Cody and Christian is if they own real estate, because that can lead to a big conflict of interest if they don't. When property managers do own real estate, they tend to think more like an investor. Agreed. And that is exactly what we want because we are investors. In this particular situation, we went with with the person who managed the most and also owned the most. And it turns out they had too much on their plate. So we're not getting the attention that we really need for this property. It's a big lift up front and they haven't been able to perform like we wanted them to. So we are in the process of deciding if we're going to self-manage or hire somebody new. Caleb, any insight on that?

Yeah, our first insight is Christian lost his glasses. So, we are— I'm going to grab my glasses. So, we are dealing with that.

I knew we forgot.

They're on the fence.

But as far as it goes with managers, my biggest piece of advice, like Ethan said, they need to own the real estate, but they also need to have time for you. If you're dealing with a management firm and you're their smallest client and they've got all these titans with a ton of units, they're just not going to be interested in what you're doing day to day. And that just kills a deal. If they're not placing tenants, they're not placing the right tenants, especially in your units, that can make or break your entire deal.

Fact. Do we have any other questions in the chat yet, or this could be a light day?

We, we do not yet. I'm going to pass the phone to Ethan because I need to pull up where we are going.

There we go.

We are lofted.

Somebody better ask a question.

We are, we are live. But, uh, what, what else went wrong with your PM? Because you guys are looking at self-managing. What would that look like?

We are.

Um, Eddie, that's actually a good question because I'm about to self-manage.

What is self-managing gonna look like?

So, I mean, as far as self-managing, I would say that we are 2 hours away from the property it's in Huntsville, Alabama. Um, it's definitely gonna be a little bit more time-consuming, but that being said, uh, I think it's the best route to go because our property manager has not been leasing up units. They've been slow. They're not doing the work that they need to do, like Ethan says, because they just have too much on their plate. So looking for, as Christian mentioned, maybe 2 realtors in the area that would be open to showing units when we do get properties that are, I guess, tenants, potential tenants that want to look at the units, paying them what, $20, $30 to go show it. And then also having a tenant or someone on site for when something goes wrong and we need to, you know, fix it immediately, such as plumbing or electrical issues or what have you.

Passing the phone back up. Okay, we got another question. I heard y'all say that LoopNet is the deal graveyard. Is there another place these deals are listed before they go to LoopNet, CREXi? There is, and it is called Google Maps.

You can find anything off market there because the map that shows everything. There's a— yeah, there's LoopNet. CREXi is actually slightly better. I used to work for LoopNet. Um, on LoopNet, they are pay-to-play primarily, so they'll actually restrict listings if there's too many listings in a given area. They want to give priority to the brokers who will pay the most. Uh, CREXi will show you more overall deals. So if you're going to go to one of the two places where the deals go to dive, CREXi is going to be a little bit more all-encompassing.

Yeah, and then Google Maps is by far the best. We got somebody else. How would you—

really quick, I actually wanted to touch on, because you're looking at doing some self-management on some units too, Caleb, I wanted you to answer some of that question, uh, the previous one, because I know you have some really good insights.

Let's do it. Yeah, I am actually moving down to Texas in early November to self-manage my 25-plex. And like Ethan and Eddie were touching on, you need to have somebody there. I'm not always going to be in town. I'm traveling around events, going up to Washington to see Christian and Cody, all that stuff. So you need to have somebody there when you aren't there or something goes wrong in emergency, whether that's just an old property manager that used to help out the deal, which is what I'm looking at, or whatever. And then also, you need to make sure you have that phone on for emergency contacts in the middle of the night, because I mean, a few nights a year— Christian, what do you think? Maybe 1 or 2?

I'll have an emergency call in the middle of the night, possibly, uh, on 25 units. Yeah, you're probably gonna have— I'm gonna guess you have 2 emergencies.

2 emergencies a year. Those nights are gonna suck, but you gotta have the phone on you because you need to help out. And then move it. You say I touched on that pretty good?

Yeah, I think so. And then I run a property management company, and there's, I mean, there's just a lot that, that goes on. I had no good managers in my market, and I mean no good managers. If you guys are thinking about getting into property management as a long-term gig or starting a company, uh, don't do it unless you have to. I was in a position where that was the play, uh, as a career path. It is a low-yield, low-margin, high-stress job. You do not want, uh, you do not want to do that. Oh, and the main reason person, by the way. Um, there's a huge service side to it where you have to be great with people, great with clients, and you have a ton of responsible financial ability— financial ability, let me try that again— responsibility, financial responsibility. Uh, you're gonna have, uh, you're gonna be managing people's money, holding security deposits, and you have a high audit risk in that job. So, um, generally speaking, you're getting started, self-managing can be very good for you. If you want to start a whole company out of it, I would recommend not doing that. Okay. Back to the questions.

There you have it. Do not start a property management company unless everything else in your market sucks. So that—

like pain.

Yes. Or you like pain, but to each their own. And then Orlando Scott said, how would you go about showing someone that wants to seller finance to you the numbers? Would you do it in Excel? Okay. I think that was meant to be two questions. So how would you show somebody that wants to seller finance you the numbers?

Oh, I don't know. Do you show them like— so I usually go over it with everyone verbally. I usually don't send them a whole bunch.

That's how I do it as well.

Yep.

I make it as simple as possible. This is where it's going to work for me. If they need to see it in writing, which, which does happen, um, I usually do an email summary, very, very simple. So they're not— the seller doesn't need to see your numbers and why it works for you. They need to see what your, your offer is. So you go, hey, this is where it works for me, this price, this interest, this loan term, so how many years before the balloon, and if there's any special clauses or anything creative in there, uh, what those pieces are going to look like. That's, that's it.

Yeah, the last thing you want to do— I'm— you can correct me if I'm wrong on this, but I don't show the sellers my numbers. I like, whenever I'm getting something over to them, it's either in text or email format. James Alger says James, can you hear us? We will see. And then we got another, Emmanuel said, no, Cody isn't there, but had a question about the 12-unit he, who I'm sure you can answer this, he used hard money for.

Yeah, that's his first one.

He paid the interest monthly and when the balance was due, he paid it out of his cash flow?

So that one, he paid it, so we're talking about the borrowed down payment?

Yes, we are. Okay.

He earned it. So actually what he did, and he shared this before, so I'm comfortable sharing this, he actually gave himself a 1-year balloon. This is why we do everything on long-term debt. He got to the end of his 1 year and did not have enough money to pay it. He could have borrowed more from someone else, but what he did, and this is the right thing to do, is he reached out and got an extension from them. He got a second year on it for a small fee, I think a few thousand dollars. And what he did is got an extension and in the next year refi another building which gave him the cash he needed to go ahead and cash out and get that paid off.

Yeah, I was gonna say, that kind of goes into the whole thing. You don't want to keep re-levering to the moon or you're never going to be able to pay off your debts. And that's step 4, the debt hammer. You do need to pay off debts as you go and just re-levering doesn't always work.

Well, and Ethan, pop quiz time. See if you've been paying attention. What do we pay debts with? How do we pay off our debts?

Money.

With money. Um, it could be your money, it could be someone else's money, it could be earned, it could be refinanced, you can restructure. But at the end of the day, um, you have to have a plan where either the property is going to pay it off or some other property is going to pay it off. Outside of earned income, those are the ways to do it. So you need to make sure you have the pieces in place to do so, which is why the game gets so much easier when you have more assets and long-term debt, is you can move your pieces around in more ways to get creative.

Yep, and it does take money. Um, Ethan and Eddie, who I have no idea where they are, asked if I'm excited to move to Texas. The answer is yes, I can't wait to get out there. I've got about another 15 to 16 days. And then Isaiah says, hey guys. Hey Isaiah. So what else do we have? Christian, what are you thinking? Why is Ethan so handsome? From Ethan Wilson.

I can't answer that question. It's just I was born that way, guys.

Oh, there we go.

You got anything else?

Can we, uh, well, let's do a little bit more on why Ethan's so handsome. So Ethan, one, has a lot of multifamily units, which is good for your health.

There we go.

Also played soccer for a long period of time.

Doesn't matter, we're talking about real estate.

He's big into pickleball now too.

Yep, pickleball. This is actually a proven fact. We've polled a lot of people on this. Pickleball makes you more attractive and lets you buy more real estate. Right. Yeah, everyone in real estate looks good when they play more pickleball.

Fact.

That is a fact. It is.

Somebody said meet up in Texas when you move. Yes, I am moving near Fort Worth, so if you were in Dallas, that would be awesome.

And I'm going to be down fairly frequently, and I will be moving down in 10 months, so we'll do a lot more in Texas. For those in Dallas, I may be down there for a little bit, but I'm slammed in November. But start of the year, uh, let's, let's host an event down in Dallas, Texas. If anyone wants to join that, let us know in the chat and we'll put that together. Uh, in addition, speaking of events, uh, Robin Hood Village Resort, it's coming up really soon now. We have, I think, 2 cabins left if you want to stay the 3 days, but it's November, uh, 10th, 11th, 12th is going to be our biggest event yet up at our resort in Washington on the Hood Canal. So if you guys want to snag tickets for that Go to robinhoodvillagersort.com.

Russell says, I am in. I don't know if that is for the event or what that is for, but either way, he's in for both.

He's committed. We have it in writing.

We will see you there. It is in writing. It is proven. It is legally binding. No, it's not.

Do you have any other questions in the chat? I always give everyone a few minutes to, to rush those in.

Christian, how was BPCon?

How was BPCon? We should talk about that. BPCon was great. You guys need to do— if you're not doing them currently, be at some of these events. It's like a cheat code to getting to meet other investors. Um, I got on— I think I have 3 podcasts that I'm gonna get to talk to awesome investors lined up for people I met at that event. I met some friends of friends I didn't know existed. There are great opportunities to move yourself forward at these events. I have found typically the education side is usually a little bit light, but the networking is very good. I consistent here. There are a few good takeaways but a lot of great connections. How about you guys? Caleb, you first.

Um, I thought it was great. And real quick, a great question came up from Isaiah. He asked, hey Caleb, he basically is asking how I was able to afford a lawyer with, um, zero, no money. Uh, there's this thing called a credit card. I put everything on a credit card, earnest money, everything, the whole nine yards. Wouldn't recommend it, but that's how I got it done. Um, as far as Pecan goes, thought it was awesome. Second year, they're definitely expanding. I mean, this year I double the people, maybe double the people.

Next year will be smaller but, uh, cool, even cooler location.

Yes, next year. Well, they already shared it, um, other guys shared it. So next year BPCon is in Cancun at an all-inclusive, so that is going to be awesome. Um, that's my thoughts, just getting better and better. Great event, great connections. Ethan, what are we thinking?

Yeah, Eddie and I both talked about how we ended up staying in an Airbnb with a bunch of guys that we met last year, so we got to nourish some relationships and make some new ones. Um, Um, people talked a lot about not casting as wide of a net but just focusing on 1 or 2 or 3 deep connections as opposed to shaking 100 hands and not sticking with anybody. So we really focused on that, made 1 or 2 connections who we'll stay in touch with and maybe see back next year.

Well, that is awesome to hear, and I definitely agree. We got Russell asking another question: does registering for the Robin Hood event also provide access to your course?

It is—

in fact, it does not, I believe. That would be a deal and a half. You'd be paying less than half, I believe.

So yeah, that would be, that would be less expensive to pop over to the event. But the event is a good deal because I went all out on catering for this one. We've really dialed it in. So we did 4, 4 big events and 3 small real estate, uh, breakfasts. I'm going the wrong way in a one-way, um, but, uh, when we put that together, uh, this will be our best event at, I believe, the best price.

That it will. And I am a speaker there, so come check it out. We, um, I almost got hit by a car. Thank you, Christian. But we are doing well.

Um, you're gonna dodge and grab my missing sunglasses as we go. That's what I love about lives is they're live. Anything can happen outside of that. So, um, that's Robinhood event. If you guys want to check out the course though, or the mentorship, up, uh, just let us know. That is on multifamilystrategy.com. Is there anything else on here? I'm seeing no more questions, so this may be a wrap. Let's take a look, give you guys 10 more seconds. Other than that, this has been an unorthodox but still fun live. I'm really excited to get to spend the time with you guys, uh, here in Orlando. All right, we're gonna call that a video. Everyone, if you have additional questions, reach out. Look at our YouTube videos. I'm gonna address one last thing here. I've gotten some flack on our last YouTube video. It's, um, it's about why we don't use Subject To. And no, this isn't a shot at anyone. There's a company out there with a similar name, uh, with a bigger player in the space, but this is not a shot at them. They actually use that individual, and I think a lot of you guys know who that is. Uses a lot of clauses and a lot of different contracts. They're actually fantastic. It's the actual clause, subject to, that we avoid. And the reason we avoid it, we share in that video. But there's 3 main reasons. I have others, but it is a clause that has a lot of trouble, especially in today's market right now. So keep an eye out for that and, and stay safe. Oh, I got a couple more questions. Okay, let's, let's dive right in. Okay, we got Emmanuel and we got this King.

Okay.

Have you all considered midterm rentals? No, I have not. I like, like my long-term fixed-rate debt on long-term fixed-rate leases. I like stability. Now, can you get creative like we did with Robinhood on a resort? Yes, you can do that out of a base of cash flow. If you're starting, consistency is key. You don't need to go for home runs or pushing your yield to the max like a midterm would. You want consistent stability. Midterm can be a business that you choose to do, but it is not, it is not our preferred method. So it's not something that we're gonna get into. There's also a little piece of staying in your lane. We're good at running the resort and we are very good at midterm rental— or sorry, long-term rentals. All right, Disc King, how many students do you have in your program? What is the success rate? I can actually, I actually pulled these stats recently so I can give you guys some fresh fresh statistics. So people who have gone through the course, we have about 2,000 people have taken the course. If you take the course, I hear a lot of success stories, but there's no way to know how successful you are because it's not live mentorship. We don't have the same relationship. I answer questions in there and in the chat all the time. Know a lot of people have bought, but of those 2,000, impossible to track other than we don't really get any negative feedback, which is great for the mentorship. And this is true for all mentorships— 50% of people are not going to buy real estate, just, just period. Doesn't matter who their coach is, what the program is, 50% off the top, um, are not going to be big action takers. They're going to be course takers. It is a sad but true statistic. Uh, what I can say, uh, for sure is pretty much everyone who has taken the course, uh, who's actively engaged has bought real estate. And everyone who I see consistently on the calls, I know 50% off the top I believe about 30 to 40% have gone under contract, at least under contract on a deal within the 3-month period of the mentorship. But there are more people, and more consistently you go through the mentorship, you get your first few at-bats. Most people get the most traction between months 3 and 9. Even Caleb, who's probably among the most successful of our mentees, as well as Ethan, the guys who were on this call earlier, uh, they all went through the mentorship program. They all successfully bought uh, you know, 32 to 53 multi-family units at young ages. If you're someone like that, you're going to do very well. That is not incredibly uncommon, but most of them do take more than the first 3 months. So if you're trying to get into this and do it real quick, probably not going to happen. Um, not a whole lot less than 50% of people buy real estate within the first year, but I would say a vast majority— you're looking between month 3 and month 9 from really diving in and committing to when you start to get the most traction, start buying deals. That was the case for Cody too. Ethan said 100% success. That's, uh, I wish that was success rate, but that's just not realistic. Some people, you know, real estate is a large financial commitment. Not everyone can hit that. Um, there's a little bit to wrap your head around, a little bit of mindset that we work on a lot, but but it is not for everyone, and sometimes you find that out when you take the course too. All right, I think for real that is it for the questions. We've answered them. I have my glasses back, so, um, thanks for joining for an unusual ride for us in Florida.