Cody And Christian - Multifamily Strategy is live!

Hello, we're live. We missed a week again. We were trying to get way better at this. I took my first vacation that I've ever taken, uh, since I've been married. So for the first time in 6 years, we actually went to, uh, uh, Nassau for a vacation. So we are a little bit behind on the normal schedule. That being said, we are back and ready to rock. So going on walk here, going to take all of your questions here on creative finance, oper— operations, multifamily, hospitality. You You name it, we are going to cover it here. As always, we're going to start with updates and then we have a topic of the day and then everything else, we're going to see the questions. Now, All Nighter Hider is here so we can officially start. So, welcome to the chat, All Nighter. So, here are the updates. Cody and I are at about 200 multifamily units. One of our star mentees, Caleb Hommel, has now moved to Texas. I just helped him with the move down there, by the way. He got baptized on the way down there, so go Caleb. But, uh, we got him all moved into his 25-unit house hack in Texas. Super excited for him. He is day 2 of living there now. Um, but yeah, this works every market, every place, any age. He started with $300, uh, so super proud there. Ethan and Eddie, uh, Ethan was one of our original mentees as well. Uh, he is at— he just closed the 5-plex, so he is sitting at 37 units under contract for a 32-unit. And while we don't usually partner with people in our mentorship group, uh, we are looking at doing that with him as a project that we're actually gonna flip. So flying out to Kentucky in 2 days to start flipping. Now, why would we flip? Because I get this question a lot. Our whole model is How do you own it? How do you never lose it? Well, flipping sounds like selling it, and selling it sounds like losing it, doesn't it? Well, we have bought our financial freedom. We have the unit count that we need and the projects we need. I don't really want to hold property in Kentucky. I do, however, see an awesome opportunity in front of us and have the systems to take it out. So it is not the opportunity that we want to hold forever. We are buying it on terms where if we end up wanting to hold it forever, we can. So it does fit the bill. How do you own it? How do you never lose it? We answered the questions. So we're going to be flying over there, starting due diligence, but just went under contract with a couple of our favorite people from the group. So extremely excited, though I am a little bit tired of traveling. We're going to land in there and have a little whirlwind trip of walking the 3 buildings that make up that deal. The most important message that I want for everyone out of this is start by building your business before you do anything. Like right now, we want to start paying everything off. We're on the payoff phase. So you have your 4 phases. You build, you stabilize, you optimize, and you pay off all the debt, and then you win. Everyone who stays leveraged has not finished their business cycle and is at an elevated risk of losing their stuff. Since we don't want to lose, we've learned from the masters who played the game. All of them have low to no debt, so we're going to build the same engine. This is an income piece that is going to start paying off the debt on all the portfolio. We'll own a free and clear resort 200 multifamily units. I'll pay off my house that I'm building in Texas, which is the other thing that I just traveled for. That is coming along, and we're going to start the actual groundwork on foundation here in about a month. So very, very excited. But that is what we were up to. Those are the updates and the message here for today. Uh, do the properties that you want to hold first. Build the darn business. There's all sorts of stuff you can do in real estate, and it's not our model. So wholesaling doing a ton of flips. These are all things that are a distraction if your goal is to buy and hold real estate. As you obtain your goals, you get to choose what projects you want to do. I'm taking the pieces we have and accelerating that debt paydown. If you're not on the debt paydown phase yet, just focus on the things that you can hold. Build your portfolio. It is so much easier to build and then earn than earn to build your portfolio. I learned that the hard way. 8 years of working, bought 2 duplexes, 2 years of buying, bought 200 units. Now we're going to pay it off and it's going to feel darn good to pay off about $15 million of debt on our $25 million portfolio. All right. So going into the question section, if anyone has any questions, let us know because we go until the chat's done. By we, I mean I, because I'm going solo today because we're about to go under contract for another big building in Central Washington. I will not announce that until it's ready to announce, which should be next Wednesday. Today on this live. So let's see here. Money, Mike, money is good. That's why. Yeah, that is a, uh, that is a good reason. We have never actually had money. We did build our entire portfolio without money while we cash flow globally. I just looked at this number too. Cody and I each cash flow out of our portfolio about $25,000 a month, and we have other companies, but I think the portfolio is doing about $50,000 in bottom line cash flow. But as we were building this, all the money went back into the portfolio to fix it up. So we actually never have money. So that's another reason to flip. We will in fact have money, which is great. What part of Kentucky is it? It is the side that is right next to Nashville. I'm going to fly into Nashville, drive over. It's going to be a very short drive. So I know it's on the border there. I can't even remember the name of the town. I did the analytics forever ago. We've been working on putting this under contract for about 4 months. I'll tell you this, though. It is a beautiful building that is grossly mismanaged with horrible tenants, which is my specialty, by the way. It has almost no books, which is also my specialty, is getting stable books on a beat-up property. But we are buying it in a stellar area for a little under $25,000 per door. So if you're looking for a flip, you do in fact have to win on price. Uh, we are crushing the price on this particular one. And by the way, speaking of properties in the Midwest, we have Millennial Mike in the chat. So anyone wants to know more from him, yeah, he's the king of Gary, Indiana. No longer the murder capital of the US, but a close runner-up. From Julie, how do I like Texas? So Texas is a little bit different than Washington in that it has nicer people, better weather, better food, better politics. So short answer, I like it a lot. I've discovered down there that frozen custard is standard and not a rarity. That is empirically better than ice cream. So right on that, right on that metric, I already like it better. But in all seriousness, my wife and I like the heat better. I'm playing pickleball here at like 31 degrees last night, I think it was. I could do with an extra few, few months of heat. Are you in fact supporting BiggerPockets by wearing that shirt? I suppose I might be inadvertently. They certainly don't reward me for promoting their stuff. That would be great, but we do appreciate them a lot. Their episode with Cody about a year and a half ago, 2 years ago, was the first video that we ever had that got a million views. That really helped launch the public part of our channel, and so I'm always happy to pass some love their way. They do support a couple strategies that I don't necessarily love, but we love them, so it's okay. Speaking of strategies that we don't love, unsolicited advice. I was at a meeting with a couple legal teams and title companies last night, and they were talking about subject-to clauses, our least favorite clause. Now, there is a correct use case for subject-to, which is usually when it's part of a larger transaction. Cody and I technically have done very, very, very little piece of subject-to on one portfolio we picked up. It is helpful if it gets a deal done and it's part of a larger deal. If you're trying to use subject-to as an acquisition strategy or business model, it's insane for 3 reasons. One, you're almost exclusively buying deals that have no equity if the deal only works because subject to. Two, banks have every incentive to call that note due. Every incentive. You're talking about deals that are like 3% interest. You buy a deal at 3% interest, then the bank goes ahead and does a title search and calls the note due, and now you have to replace it at 8% interest, or you sign the property back, pay excise tax, which no one's talking about. You sign it back, you do in fact pay tax on that. And after that, you don't own the property and you can maybe put it into a lease option with an option to purchase it later, which means you don't own it. The third thing with subject to, and I learned this last night, uh, Washington State title companies, currently one out of every five subject to deals is getting called due. 20%. If you're relying on subject to, to hold your property forever. Uh, you really only have an 80% chance of even being able to hold the zero equity property. You may just get it called due, and then you have to either again, uh, sign it back and do some sort of lease option, pay excise tax, and, uh, yeah, I guess eventually maybe have an option to buy it back at a higher interest rate. Um, or you have to refinance and go from, you know, 2.5% to 8%. So Terrible. Uh, Kevin O'Neill, what would the incentive be for owner to seller finance at a similar or lower rate than a money market account? Okay, so if you're doing low interest, typically they're winning somewhere else. So you're either solving a problem with the building or the books. So a good example would be the building that we're buying right now. In Kentucky. Um, in terms of books, there are none. So if there's no bookkeeping, you can't verify income, you're not going to get financed through a bank. So a seller who wants a certain price— and we did also crush on price— they don't know how to manage this. Their property is getting overrun. It's a beautiful property, but it has a bunch of deferred maintenance and they're out of money. They want a bailout here, and they happen to own the property with very little debt. So that means they're in an okay financial position, but the property is still eating them alive trying to figure out how to manage it. So we're going to solve the management program problem. We're going to solve— I mean, really, that's the main thing. They just don't know how to manage it. So we solve that problem, and the reward is, uh, we're gonna give them a better price than other people have offered, and we're going to execute our project. They're getting a little bit more money than they would have had they tried to sell any other way. And there's no way someone would get bank financing. Another reason that someone would do it is because they want a certain price, but the property's not worth that. If they're absolutely stuck on a price and we can lay out a path to get it there, it may be just they're under market rent, something along those lines, has a little bit of deferred maintenance, some value out there. We can buy it at the price they want, but on the terms we need to keep cash flow going. If I can present the business plan and how we're going to pull it off, that is exactly exactly what we would do. And we get a yes on that a lot. I'm, uh, I'm gonna be filming at a building that we bought a couple years ago with, uh, about a 7-plex in Seattle, 3% interest on a 5-year note. And by the way, if anyone's trying to buy in, uh, in Tukwila, Washington, uh, it's the only building that I am currently willing to sell because I ended up building a portfolio elsewhere and it has no place in my portfolio when I moved to Texas. Zach, Mike, you two need to connect, make that happen. Dick Grayson, since I'm out of state, I have to go through brokers. Because of this, I've not made many relationships with private money lenders. How do I make relationships with lenders out of state? Find a deal out of state. Deal, debt, equity. Always follow that order. The DDE is If you find an opportunity down there, lenders, partners, people with money just come out of the woodwork. I tell everyone this every time. It is the number one question that I think we get on the channel is, where does the money come from? The concern is always the money. Don't worry about the money. The money will find the deals. If you go the other way around and find all the capital partners and you don't end up finding a deal in that market, or you just spend all the time trying to generate interest, you're going to blow a lot of time. And you're going to build a clunkier machine than what we did. Find the opportunity, then find the money. This is— I promise you, it's a million times easier. All nighter. What kind of ratio do you see your community as far as fully owner-financed versus partially owner-financed deals? Fully being owner carries all debt minus, uh, one. Okay, um, I would say on average, and it's hard because they are all creative finance, which means they're all custom If there was such a thing as an average deal, 10% down is the typical, which means the owner is going to be carrying 90%. That is the most typical. We've seen everything though. You don't necessarily have to have a second. You can just put 10% down and that could be your money. You could have an equity partner, which means all the debt is still the seller because you have an equity partner that you're going to buy out in the future. Or You get second position debt or another debt product to close it with deal debt, debt instead of deal debt and equity. So it totally depends on deal structure. Um, I'm going to say more often than not, the deals that we see are lower down. So again, about 10% down, 90% seller financed is pretty darn common, uh, throughout our mentorship group, which you guys can all check out on multifamilystrategy.com. Parker, I met an older owner who should retire, uh, but said he likes the job. I asked what he would do, um, as me, and he said meet people like him, but doesn't seem to put himself in that group. What would you do? Well, first of all, agree with them. You just keep meeting with owners. You have one relationship, it takes a few to get rolling. Great example, Caleb, uh, moved to Texas. He officially moved in and is staying down there. Yesterday was his full first full day in Texas. He has done 6 owner meetings. That is how long it takes to meet all the owners in a market. When you get good at this, which doesn't take that long, follow a very, very, very simple talk track and you can book these meetings left and right. Once you meet those owners, they're going to push you to the next step. Not every single meeting is going to result in the takeaway you were looking for, but you need to have some objective and some takeaway with every meeting. If he doesn't put himself in the group of people that you need to know, that's fine. Stay in touch with him. He may be someone you need later. He might have that connection. The question I would have with him, because owners know owners, is, okay, I appreciate that. If you're in my position trying to invest in this market, who would you meet with next? See if he can't get you your next connection, because that would be a perfect application of exactly what he told you to do. Emmanuel, thoughts on using services offered by a tenant? If they offer to clean— oh, who's ready for a horror story? So I have had a tenant in a building offer to clean, and I never offer my tenants work. We did this one time, they destroyed the unit, and by destroyed I mean like they, they brought all their friends in to party and they did drugs and trashed my unit. Then they found out that I owned another building down the road. They broke into it, ripped all the trim off the walls, for some reason stole all my light bulbs. That wasn't the most costly thing, but kind of annoying. Uh, smashed my window. And when I evicted them 2 months later for not paying for 6 months, what they ended up doing was going to court and saying that we stiffed them on renovations they did to the property. So when they broke in They 6 months later tried to— or a few months later tried to invoice me for the renovations they did, tearing my trim off the wall, smashing my window, and vandalizing my unit. So a short answer is no, I would not use services from a tenant. I do like to have a lot of key tenants, so I will take a great tenant and I will personally invite them to be my on-site manager. So they'll be the one who just basic— say there's a quick notice you need posted or keeping eyes on the property. I like those people. But if you're doing actual work or services, don't have your tenants work for you. It's a nightmare, or can be. From Luke: Hey Christian, can you explain a note in terms of— a 6th grader can understand— of your killing it at Robin Hood Resort Rehab? Yes, Robin Hood is going very, very well, and I'm very grateful for that property. That is a Well, probably was not the project that we should have taken just because it is too active and a distraction for the multifamily. I would in fact have more money if I didn't do that deal. In the long run, that is a deal that makes a ton of money. And we structured a note so it's basically paid off in 8 years. So after 8 years, you know, we own a resort worth about $6-7 million in cash, which is going to be pretty darn cool. So can you explain a note? Yeah, so a note is just basically think of an IOU. It's, uh, here you go, um, in exchange for this property, or exchange for really anything. You can do this on a car, you do it on literally anything. You can sell a baseball seller finance if you want, I suppose. But in exchange for X asset owned by one person, I have a promise to pay, and that is called a promissory Note, it is the IOU. It is backed in real estate by something called a deed of trust, which is the actual ownership of the property. So it says, essentially, the note is, I promise to pay, but if I don't, you will get the deed to the property back. That is the simplicity of a note. A note is completely negotiable between two parties. So price, terms, the length of the deal, the interest rate, and any special clauses are all going to show up on that note, and it will be backed by the deed or document that proves ownership of the property. When you call an agent about a listing, um, at what point you ask about financials like NOI, assuming those numbers are not on the listing? Okay, so if they don't provide all the, uh, net operating income and different things on the listing, that's actually pretty easy. I don't dig too deep into it. I usually ask for rough numbers. But when I call on a property, my basic script— we share this in Multifamily Strategy, but I'll just give it to you guys for free right now. The basic script is going to be, number 1, is it still available? So many people forget to ask that. You talk for 30 minutes about a property and then turns out someone's about to buy, it's under contract, and, uh, you lost all your momentum. Not good. So, is property available? 2, tell me about the area. Even if I know everything about the area, I want to see how much the broker knows. I want to get some small talk going. It's really just an easy open-ended question, which is what you're going for. So, tell me about the area, tell me about the property, what do you think about the neighborhood, anything like that, open-ended. 2, what don't you like about the property? We're getting a little bit more pointed. 3, most important question I think, how's the bank gonna look at this? Because we don't know if it's seller-financable or not. We don't know what they want to do. This asks a ton of questions in one question. First of all, if it has deferred maintenance— bad roof, bad plumbing, bad electric— this is something that's going to come up when a bank takes a look at the deal. So you're asking about deferred maintenance without asking. Two, you're gonna need great books for a bank to lend on it. So I was asking, how good is the bookkeeping? Is the bank going to see— need to see more down because there's some problems? Or do you have nice clean books that are going to be easy to lend on? And 3, you're opening the door to talk about financing without sounding like you don't have any money because you're not asking, is it seller-financable? You're just asking, you know, how's the bank going to look at it? You're hoping for some good clues here, but it's also a closing question because now you're talking about the money. That is the point after that when they start telling you the pieces from the bank. That is where I would insert any questions you have about the net operating income the expenses on the property, anything that you have on what's listed. I would ask after that question because you've already established, established yourself as a ready, able, and willing buyer. And if you are looking for seller financing, by the way, the next question after the bank is, if you decide it's a deal you want to buy, super simple: would the seller be open to carrying a contract, or are we taking that side with the bank? We're We're good either way. I just want to see if they're open to it. That question, would they carry a contract, has resulted in 18 deals that Cody and I have done. What do you, uh, see, do I happen to know anyone executing your multifamily strategy in Georgia? I do. A friend of mine who actually, well, he lives here, um, but a friend of mine, Pat, purchased a triplex and a fourplex seller financed in Georgia. I believe that was a little bit outside of or in Athens, Georgia. I also have a very dear, dear friend in Georgia who has purchased a 12-plex, who's also helped me fund one of my deals here in Washington. But yes, definitely works in Georgia. Georgia is actually one of the states I looked at investing investing myself. Any, any area with high population growth is going to be fantastic. Georgia is, uh, Georgia is a great place, but anywhere where buildings exist you can do the strategy. Kind of fun. Uh, from Dick: Do all interest-only loans have balloon payments at a certain point, or do you just pay interest only until the mortgage is paid in full? Well, you can't pay interest only until the mortgage paid in full because you're never paying down from principal. Um, so you do in fact have to have a balloon on interest only because there is no principal paydown. It will never pay anything off the principal at any point. Um, so typically you're gonna have a balloon on those. However, you can have long periods of interest only with what's called a review period. So say I have an interest-only loan with a 10-year balloon and then a review period that says we can extend another 10 years if the loan is in good standing and I've met any metrics that they need. It could even be, oh, there needs to be a small additional down payment at that point. That is something you can do. I've met people who've had the same interest-only loans for over 35 years. They don't have a 35-year balloon, they have a 5 or 10-year balloon, and they just keep extending or renegotiating at the end of every contract. I'm gonna try not to get hit by a car here. There we are. So, um, yeah, that's how the interest only works. If it's, it's IO, I love it because you get to conserve the cash flow and use it how you want. But that is how that works. Um, yes, the light bulb is missing. That stream's crystal meth. Uh, yes, it was, uh, there was definitely some meth going on there. That's, uh, that tenant is no longer one of our tenants. That it was an easier eviction. Another promissory note is just a contract filed with the state. Yep. Simple but comprehensive too. Yep. Promissory notes are actually pretty darn simple. Actually, realistically, basically all of real estate is really darn simple. Anyone who says any strategy is the secret to multifamily success or there's one way that no one knows about is just trying to sell you something. Real estate is very simple. It's not necessarily easy, but it's very simple. It's very repeatable. Creative finance itself is, I mean, you're coming up with a price, a term, an interest rate, a balloon payment that allows you to cash flow on long-term fixed-rate debt. I mean, it's not rocket science. This is why half of our mentees never went to college. This is why Caleb and Cody are absolutely slaying it as college dropouts. Is because it's not all that heady to figure it out. You can just kind of go at it and buy multifamily. There's not a whole lot of rules, not any really hard math. If you pass 5th grade algebra, you can pretty much do everything in real estate. Let's see, Financial Firefighter, welcome by the way. Hider, you are everywhere. Yes, he is. We can't start the video until All Nighter is in fact in the chat. Um, I don't make the rules, I just enforce them. Uh, let's see here from Edmund. Can you go under contract without putting the earnest money deposit right away? Absolutely. Not only can you, I never give earnest money until I'm done with my financial due diligence. Couple reasons for this. One, I'm not a huge fan of verifying everything all the time. I think it's kind of rude and nosy to be asking questions and get every copy of every lease and everything in their books. Plus, it's a waste of time because other people come in and swoop the deal. If I like a deal and I like what's been presented, we put it under contract with the understanding that there's gonna be a feasibility period. So I'm going to review their books, but after I've already established that I'm the buyer and we actually have a contract contract in place. So simple way to do this, first of all, I usually say earnest money is due after financial feasibility, and I give myself, depending on the size of property, let's say, uh, 14 to 20 days to get this done. Pretty easy. The countdown, however, doesn't start until all the docs that you needed are in. If you get every doc that you need in, you have a ton of time. It does not take a long time to look at bank recs, against the tenant estoppel letters and against the stated profit and loss of the company. If you get all the documents that you require for due diligence in and you get your property inspection, it's a pretty quick period. However, I have had deals where the sellers took a very long time to give me information. We had to extend. I don't want to do that, and they certainly want to see the earnest money hit the account. So I always follow those rules: adequate time for due diligence, earnest money due after due diligence, whatever countdown you negotiate starts as soon as you've received your list of documents. You list out specifically what they need to provide you. Uh, Manuel saw Caleb's manager suite in his 25 units in another video. Do you find a lot of multi-families with a manager suite, or you pretty much make a unit a manager suite? I've seen both. And I've done both. I actually have one that has a manager suite that I'm converting to a unit, and I'm converting a unit to a manager suite. Usually on a larger building, and really starting at around 20-25 is where you typically see those. I've seen them in as small as 12-plexes, but on-site management is awesome to have. On bigger buildings, it's almost a requirement to be able to run it. You have to have key people and somewhere for people to ask questions, drop off rent, but As a standard, I'd say usually you're going to see that 25 units and up. Caleb was really fortunate that he had actually had a tenant living in there, just the general tenant, and they wanted a 2-bed unit. That one's a 1-bed, and he was able to switch them out and move in immediately, which is really cool because I love that unit. That was really fun moving them down there. Uh, let's see here. Dario When are you coming to Portland? Man, I did a speech down in Portland a while back. We spent a couple days down there. I had a blast. No one's invited me back since. If anyone has an event or something for me to speak at in Oregon, that is an easy drive for me. I have friends along the way. I own a resort on the way down there, so that kind of helps. But yeah, if anyone wants to put together something and there's some event, yeah, please invite me because Portland's awesome. Not downtown Portland though. Downtown Portland's gross. That's worse than Seattle, which is saying something. Uh, Xylon, any advice on where to find capital partners to help with down payment, especially on the first deal? I only have owner connections. Well, good news, people who own real estate typically also have money if they've held it for a while. So, uh, likely one of those owners in the market would be a really good fit for you. I highly recommend That's where we find most of our capital is owner meetings. Otherwise, you find the deal and you start meeting people. Real estate meetups are a really easy place to do that. I know that people hype that all the time, but I found that really consistently true. If you just go network with people who want to get into real estate, you'll find that there are people who have deals and no money, and people have money and no deals. It is easier if you don't have money to focus on the finding a deal part. So take your deal, bring it to those people at those events who have money and no deals, and get your deal funded. If you want help underwriting it, reach out to us or hit me up on Instagram. By the way, on this channel we have a free course if you want to get like the basics of what we did. It's like 10 minutes, and I think I also have a download for a free document on that too, if my media team was kind enough to put that in. But go to literally any of our YouTube videos, you should be able to download those. For free. Uh, let's see here. Forum Darius. I talked to Cody when he was booking for those 30-minute calls on IG. 18 as well, trying to learn the math, you know, the investors. Awesome. I'm really glad you had a chance to connect with Cody. That was a cool thing Cody did while I was out of town, is he basically took— I think he took 100 calls, which is insane. I looked at his calendar, it was like 9 to 9 every single day. Um, so really appreciate that Cody did that for us. I'll do one of those open office hours as well for, uh, if I can just shake out a free day or two. Um, so keep watching on, on my Instagram for that. If, uh, if I post that, uh, we'll book those up. But dude, um, we've worked with a lot of people in their late teens, early 20s who have bought a lot of multifamily. So I'm really excited that you guys connected. Uh, so you wanted to ask if the math terms are the most important seller finance deals. Or what math terms? Um, DSCR, debt service coverage ratio, because that includes your, uh, income minus expenses including the mortgage, unlike NOI, which is net operating income. So DSCR is fantastic because if you have a good DSCR, let's say 1.5 or higher, you're saving 50% of whatever your mortgage payment is every single month. That's a great place to be, and the bank's gonna love that deal. That gives you options to refinance, that gives you security. So now you have a high cash flow deal that is highly bankable, DSCR is my number one. Number two is called loan factor rate. That is in our course in depth. Does not matter much on a conventional deal. On a seller finance deal, this is how we determine what interest rate we can offer. It is very simple math. It is your true cost of debt against your cap rate, which is the true return on any money you have in the deal. It tells you what a— what spread you're going to make on your debt. So if I borrow at a loan factor rate of $5,000,000 and a cap rate of 7%, every dollar I borrow I'll make 2% on. Super easy math. No one ever talks about it, but that is my second favorite thing. So we got DSCR, we got loan factor rate, and we got cap rate. If you understand those three things, you can buy any deal where it cash flows. Long-term fixed-rate debt. What parts of Texas— what part of Texas am I moving to? A little north of DFW, a little town called Flower Mound. I love it down there a lot. Very, very excited to live there. Uh, right now I'm walking around outside and it is cold. Beautiful day in Seattle, by the way, but it's cold. I need help with how to start real estate from someone who knows nothing about it. Where do you start? I would start with meeting owners. I mean, that's the biggest thing. And by the way, I count as an owner. Um, I would meet with the owners in your market who've done what you want to do. So if your next step is, hey, I want to buy a 12-plex or a 20-plex like that building right there. If my goal was to buy something like this in my hometown, I'd figure out who meets that, which I do on Google Maps. But I would figure out who owns it and I'd give them a call. And instead of asking them to buy it, which is what everyone seems to think, like that's what you do, I would meet with them for coffee and say, hey, this is where I'm at, I'm trying to get started, do not know how to buy a 20-plex. You've done something I haven't done. I'd love to know how you got started. That is the conversation that has built all the business we have. Currently, we own 200 units, but we have another 200 units in the pipeline from sellers who were just owners that we met, and now they're people who want to unload their real estate, and they've given us a commitment to sell it all to us over the next 5 years. This is multiple owners. These relationships eventually turn into deals, but you never go after the deal, you go after the knowledge. And that has never failed us. And I have— every mentee who has started by calling brokers and doing deals has converted to my method of meeting with owners. It is better, I promise. It is the best method to do this. That is where you start. If you need help on how to script that or how to put together the pieces, that is where you follow this YouTube channel or you look at our mentorship programs. But ultimately, at the end of the day, your goal is to meet with the people who've done what you want to do and learn from them on how you're going to do it yourself. Do I invest in stocks? No. Uh, the day that I closed on a 38-plex, I sold every stock that I have, including my 401k. I paid the tax penalty and everything. I do not believe in things that I cannot touch and control. I only own precious metals, which I do not keep at my house, by the way. So do not, uh, do not try to rob me. They are not there. Um, but I will save a little bit in gold and silver because it's out of the system, and, um, I like having stuff that the, uh, government doesn't just have their hands all over. So I have that, and then everything else is in real estate. Stocks are silly to me because there's someone else who's captaining that stock. CEO sneezes, uh, politics change, your money can change. If the goal is financial freedom, I don't think stocks are the way. Now, owning businesses, I'm all about. I have several businesses outside of, outside of real estate directly— property management company, education company. We have a few different companies. I don't even talk about all of them in this channel. But for all the LLCs that we do and we own, uh, captaining and owning a business, love. Stocking someone else's business, uh, not as much. How can I tell if there's enough multifamily in my area? Well, there's— if there's any, there's enough. But like, looking around, this is just really convenient. Fourplex right here. There's a fourplex over there. Those are all fourplexes. That's an 84-unit building. That's a 69-unit building. And yes, I know it's exactly 69 units. Um, there is an 800-unit being built right across the street. There's a 20-plex over there. There's a 20-plex over that way that we just passed a little bit. There's enough multi-family that I see around here where I'm sure if I wanted to own a multi-family and rent them, I could buy one of them. But generally what you're looking for, for is this the right place to buy, is population going up. Because you're supply and demand, you're providing housing for humans. Do humans want to live here? If yes, there's probably a demand for housing, especially right now where building costs are high. And then, you know, I like to see populations of, you know, greater than a few thousand people. There are some markets where there's just homeowners. Like, people buy— it's the house, white picket fence, 2.5 kids, 1 dog, 1 cat. There are places where culturally there's not renters. That's not most places, and our, our US government system has done a great job of trying to force everyone into renting and not owning. So pretty much anywhere in the US is gonna have enough multifamily for the most part, if you're not in a tiny, tiny town. The question is, is it a place that people want to live? All Nighter had a good comment here. Dion Talk, Lumberjack Landlord, uh, both have great channels. They both have great channels. Dion has a different strategy than me, and I love Dion, and his method works, period. He has great advice on his channel. If you want to scale quickly, Dion's probably not your guy. If you want to stay out consistently, or have a W-2 and don't want to absolutely just, you know, if you're not going to make real estate your main thing, Dion's strategy is the strategy for you. One rental at a time, consistent cash flow, 10 years to retirement. Uh, follow the Daylights Out channel, and some of his property management advice for self-managers is fantastic. Lumberjack Landlord is the only guy in our immediate group I call him my mentor because he is the one who I reach out to whenever I have a question. He is the only one of us who is legitimately just really, really, really smart, and he is a high school dropout. Um, but he is extremely intelligent. He's way smarter than me. He's smarter than anyone else I know in real estate. He's a freak of nature. Uh, if you guys want high-level anything in real estate, Lumberjack is— that, that is the main channel that I listen to. And the main person I reach out to when I don't know the answer to something. Is the pitch of the actual deal more important than the deal itself? No. Um, you can always work on your pitch. Your deal— your deal's your deal. If you do a bad deal, um, you are SOL. It is very hard to recover from a bad deal. Um, so the deal itself is everything. If you botch a pitch, there's always someone else to pitch. And you can, unless you like absolutely just like go off the rails and cuss someone out, you can always get a second shot at a pitch. Landing every pitch that you have either for capital or just for a deal. I see this all the time. Cody has botched pitches when he was new. I've botched pitches for sure when I was new to real estate. I bought properties from most of those people I bought, I botched a pitch to. Or I've had deals funded later by the same people. So the pitch is not the main thing. Presentation is important, but you can always work on that. You can always improve it. You get a second chance on that. Your deal structure and what you put together, once you sign that contract, you are locked in. Do I still meet with owners? Yes, every single week, no exceptions. Conversation sounds— now that I'm no longer in the starting stage, that's a good point. I have a habit of always parroting back how I started because it's more applicable, I think, to more people. Now when I meet with owners, we talk about— I mean, it's the same concept. I talk about where I'm at, what my goals are, and what they've done that I haven't done, because everyone who I talk to owns a property that I don't know. So for example, I did an owner meeting when Caleb was in town. He invited me to two of his meetings, so we came in And they talked about it and they actually asked us if we wanted to buy a 12-plex. So we went through the whole drill. Um, it's, hey, I am, uh, I'm an owner in Washington. I own some rentals up there. Uh, and they're like, how many? It's not insignificant. I, I have a few rentals. I've done well establishing my business up there, but I am looking at breaking into a new market. I don't know everything about Texas. And I don't know anything about this town. I do love your building. How did you get started? And we go right into the same normal pitch that we always do. We learn their story, how they got started, who they bought from. Turns out they were ridiculous on what they wanted for their building, but the builder of their 12-plex was also in town, owns a few hundred units themselves. And as soon as I left town, Caleb went and met with that owner. So conversation really looks the same. You start with your story. It just used to be, I have 2 duplexes. Now it's— I never, I never lead with I have 200 units because that just sounds like I'm showboating. It doesn't land well. But what it does, at least what I've found, you start with, hey, look, I've established a business in Washington. I've done okay with rentals. We own a little bit of hospitality. And I'm an operator. I manage my own property management. I run my own property management company. Um, that's why I let them know what I'm trying to do is move to Texas with my wife, and I want to establish down here. I love this market, I love the property. How did you get started? That, that is how that conversation goes every time, and that's the literal same conversation I've had, uh, since I had that first duplex. All nighter, I totally agree. The binder strategy from Dion. A great reason to watch them. The only way— here's what I found. The binder strategy is fantastic if you're self-managing or you have a smaller portfolio. It is absolutely fantastic. Binder strategy on a super large portfolio, it gets— the personal touch does get lost a little bit. I could do the binder strategy, give everyone a whole thing about here's where market rent is and here, and get, get people to raise their own rent. If you're starting Binder strategy, fantastic. Your tenants will raise rent for you. It's really cool. When you have a couple hundred units, or I think right now I manage about 260 units, soon to be over 300, we just get rolling all the time. We're super busy. And yeah, when it's time for rent increases or rental changes, everyone's getting a mass notice and we're moving fast. But yeah, if you guys are starting, binder strategy by itself is fantastic. From Emmanuel. What gave you the confidence to leave your 9-to-5? Did you have a lot of reserves saved up? No, I did not. Um, what gave me the confidence was I wasn't doing what I want to do. I was working for the CoStar Group. Um, oh, Cody Davis, uh, joined the chat and dropped, uh, dropped $2.99 in the Super Chat. So there is Cody. Hello, Cody. Cody, if you have a question feel free to post it in the chat. I'm kidding. But welcome to the chat. If Cody has anything to add, he is in the house, so you can direct questions to him as well. Kevin, thank you. Thank you for the Super Chat as well. If you guys want to attach a question to a Super Chat, by the way, I will give you special priority and I'll answer it immediately. But what gave me the confidence to leave the 9-to-5? I knew what I wanted to do, and for the first time I think ever for me, I had clarity in my goal. I wanted to retire my wife and I was really serious about that. She got an injury in school as a kindergarten teacher. Kid pushed her, knocked her hips out of alignment and caused some shoulder and lower back issues. It was actually a pretty long recovery. In addition, this was in the middle of the political tomfoolery. Don't want to get canceled here. The political nonsense that was 2020 to— I mean, it's really still going on now, but schools got weird, my wife got injured, my plan of retiring her in 5 years became a "We need to do this immediately." I made it a 2-year goal and Cody and I did it in 11 months because my why of why I wanted to retire my wife and why the financial independence mattered mattered enough where I left my 9 to 5 because I could not save up enough to possibly hit all my goals, retire her, and still be financially secure. So what gave me the confidence was the fact that I had to do it. And that's been really consistent for a lot of people. If you just set a goal that's important enough to you though, it's not that hard. Like, you, you set a good strategy, you work hard, You buy assets that produce income. It's a lot of work, but I mean, as far as like brain power to get it done, you just kind of do it. There's a ton of entrepreneurs. I've met a lot of idiots in business who probably have no business being in business, and they still do well. So I figured if they can do it, I can do it, and we found that consistently true. However, if you don't want to be an idiot, Cody and I just released a video that says how not to be an idiot in Idiots in Real Estate. We shared like 30 things that have come up where either we or people around us have been idiots in real estate. You guys check that one out. All nighter, see the scalability limits on the strategy. Yeah, that's the only thing with Dion's thing is it's not designed to be scalable. It's how to stay small and elite and do excellent deals and retire consistently in long-term fixed-rate cash-flowing debt. It's a freaking phenomenal model. If you don't want to go huge. So scalability only matters if you need to scale to hit your goal beyond, uh, where Dion did. If you're trying to pick up 20, 25 units, you like your job just fine, uh, binder strategy, everything Dion does— I mean, that is the strategy to you. Take his course, follow this channel, do the whole nine yards. Uh, let's see here from Manuel. When calling owners, what question do you ask on the phone versus what do you say for the meeting? I just recorded this yesterday. So good, good question. I'm prepped for this. So when you call owners, first of all, your intro of your goal is like 30 seconds, maybe. It's super fast. So when I was starting, hey, it's Christian Osgood. I'm an owner right down the street from you. I just bought a duplex, wanted to introduce myself. And I go, okay, why are you calling? Well, I'm trying to retire my wife from teaching. She just got an injury. I just realized one duplex at a time actually didn't make a huge dent in retiring her. You have this 12-plex. I wanted to learn how you got started and how you got to a 12. They're usually going to be defensive. They'll say something like, well, I'm not selling. It's like, good, I don't have any money. I just bought a duplex. I just really want to learn from owners here because I don't have friends or family in the market. And you roll from there. So it's a very quick phone call, boom boom boom. Once there's any energy coming from them in the call, they share any piece with you, Cut off the meeting, book a coffee meeting. It's like, oh, that is amazing. I love how you built your portfolio. I want to learn more. I'm in town next week. Let's meet Wednesday at 2. Are you available? Like, that's— that is the basis of the phone call. On and off the phone as soon as humanly possible. Communicate goal in 30 seconds. On the owner meeting, you're going to elaborate a little bit. People love stories. So I'm going to set a verbal agenda. Here's why I want to meet, and we'll dive right into like, okay, I'll tell them a little bit more about my wife. So yeah, she just got pushed on a playground, uh, when she was teaching kindergarten. She's been injured and in and out of work and in and out of doctors trying to get that figured out. In addition to all the political madness that we're dealing with, uh, I decided I want to try to get her out of that, and I bought two duplexes. One of them is that one right down the street from you. I really just want to learn from you how you scaled your business because you've done something I haven't done yet. And then you shut up and let them talk. But it's basically a longer version of what you did there. And you're going to get into more lengthy questions and ultimately you're going to ask for a takeaway at the end of that meeting. You're going to close with, well, based on my pieces and where I'm at, what do you recommend that I do next? What's the logical next step for me? And let them tell you a step. Then you go out and apply that step and ta-da, you have a relationship, you have buy-in, they understand your goal. And you are the most obvious buyer for anything they have moving forward. Let's see here from Cody. He found another 20-plex today. It's amazing that these are just everywhere. We— Cody and I are in— I'm assuming it's probably in Moses Lake since that's where Cody is. But there are— when I say these deals are everywhere, I mean these deals are everywhere. Every market, every every city around the US. The more practice we get, the more often we find them. I am 100% sure that if Cody and I were dropped anywhere in the country with a population of greater than 2,000 people— and this is true of Caleb as well, probably Ethan and Eddie, who are some of our mentees who've done the most deals recently— you can drop us anywhere and we will find a deal and we can get it under contract. We can meet an owner. Caleb did it in less than 24 hours with 5 owner meetings. It's not— once you get the rhythm, it's not very hard to do. You can do it absolutely anywhere. Sorry about that, I had a little lag on my system, so I apologize. Cody says yes, it's in Moses Lake. Literally finding buildings in a market that we've been at in for years, uh, we still run into new buildings. I drive past things all the time, or we'll be looking on the little Tesla map. And you're like, whoa, what's this building here? I never noticed this. We'll drive down one street off the main road. I'm like, oh my gosh, there's a whole nother complex back here. We didn't know. And right there you find new owners, you buy new deals. Well, let's see here. Do you guys have goals in place to where you want to scale with content making, or do you guys use social media strictly to document your process? It started out as process documentation. For me, and Cody can answer this as well in the chat, for me there are so many bad strategies or inferior strategies or people trying to sell everyone on, I found the way in real estate, it's all based on this one clause or this one lending product. Um, it's now just become a competitive adventure for me. I believe the only thing Cody and I did better than anyone else, and this is the only thing that we're I just think we're absolutely dominant. This is really simple. We have made it very simple. How do you buy it? How do you never lose it? Uh, that is another fancy way of saying buy and hold. Buy and hold anything is not a new concept. We just actually laid it out for what does the buy look like and what does it look like to never have to lose the asset. I mean, that's it. So if we can get that message and the simplicity out to the maximum amount of people That is something worth doing. In addition, I had a lot of fun driving out with Caleb when he moved to his property in Texas. I have a lot of fun flying out to our mentees all around the country, and it is really fun dropping into markets and finding people who consistently say, hey, I just bought this duplex seller finance. I took your method, found an owner meeting. I just bought something conventionally. I've actually had someone apologize they bought a conventional deal. It's a good way to buy a deal. If you have, you have money, go out and buy real estate. But it is really rewarding. So the goal with the content making is we're just gonna try to eliminate all these stupid gurus and dumb strategies, and we're gonna make real estate simple. And so whatever I have to do to do that, we will do that. So that is the content goal for me. Pretty simple. Onyx. Hunt is great for scanning and seeing who owners are. Ooh, I've never seen that. OnX Hunt, super useful to see the owner name really quick. Interesting, I have not seen that one. What's worked well for me though is Google, go to the county assessor, see who owns it, and if it's an LLC, type in their name. Once you find the owner or creator of the LLC's name, Plug it back into Google with the city name and see what it spits out. Oftentimes it will spit out a partial redacted of their phone number because they used it to sign up for some sort of social media. So you'll see the first 6 or the last 4, which is just fine. You take that number and you paste it right after their name and city that they're in. Google will find and fill in the rest. It is literally re-Googling things as you get clues. It takes very little time. We find almost everyone. I would say 19 out of 20 times. That will get you the correct phone number, uh, that you're looking for. And with that, we're out of questions. So I'm going to talk for another few seconds, we're going to get a final call for questions, and then we will wrap up for today. So in summary, topic for today was buying before you pay off, keeping your phases in order. See, a lot of people focus on the money, so I talk to people Hey, I'm a wholesaler, I'm a flipper, I'm a broker, I'm trying to save up for real estate. You can buy real estate zero down. I would start with buying the assets first, then you stabilize them, then you optimize them, then you pay them off. Cody and I are entering the payoff phase. So when we're talking about doing flips, we're gonna hop on a plane, go out of state, we're gonna be doing larger flips. And it's Cody and I, so we might end up holding some of those too and refinancing. We'll see, we'll see what we do. But that's the general strategy is we're starting to do things for active income so we can pay off the debt because we hit our primary goals. Follow that order every single time. If you're going to do anything, if your goal is to buy real estate, I would start with buying real estate and then focus on the money piece out of your long-term cash-flowing fixed-rate debt on your properties. That is my major piece of advice. We're gonna get through the last few questions, and when the questions end, we are calling it a wrap. From Edmund, how do you guys find events to go to? I'm looking on trying to go to some events in Houston, but not sure where to look. Honestly, like my answer to almost everything, we turn to the Google. Look at the— look at like meet real estate meetups in my area and choose a few that are really local to you. What you'll find is you may not find the best real estate meetup, or you might, but the people there also attend other events. And so when I get talking to people, I'm like, dude, this is awesome. I'm trying to do more of these. Is there any other real estate groups that you guys meet up? So whoever you meet there, they're going to reference you to the big ones. And it takes a few meetings, maybe 2 or 3, to where you'll find all the people you see at one meeting are pretty much the ones who go to the other ones. Real estate's a pretty tight-knit community. Houston's obviously massive. So for Houston, you know, find the one in a submarket and then just keep following meeting to meeting, getting recommendations on where to go next, you will find the best ones. And that's been very, very, very effective for us. We have— oh, interesting. So the hunting app, that app is what Fish and Game rely on, and then goes to the assessor site from there. Okay, well, if anyone wants to audit that for me, OnX Hunt. Let's see if, uh, let's see if that is a good one for finding an owner contact. That's pretty fun. Oh, let's see here. We're gonna be huge. I don't know if I go to Texas, I will be literally huge though because the food is astronomically— when I go to Texas, it's a lot better. Barbecue and frozen custard is better than ice cream, which is my favorite dessert. So, um, I will be huge. I don't know if we'll be on social media, but, uh, I'm gonna be eating some calories when I'm down there. Uh, let's see, Edmund Zuber's having an event in Vegas in Feb if you're interested. I saw that. I think he's doing a party for hitting 50,000 subscribers on YouTube, which is really fun for Zuber. So, um, I think there's gonna be a few people. I know Matt Hawkins is gonna be there, Lumberjack Landlord. Um, and again, he is the one we learn a lot from, so check him out for sure. Manuel, are you flipping multifamily? Yes, we are. I hold everything in Grant County, Washington. Everything that I can, I hold in Grant County. By everything I can, I mean all of it, because we buy things with the plan of being able to buy and hold them. I am flipping multifamily in markets where I have excellent opportunities to do what we do, creative finance, but I don't want to own it. I don't really have a a desire to run a property management company across the entire country. I like being small, I like being local, something that's worked really well for me. So when we're running our businesses and scaling, I don't want to own the whole world. I don't think that's something that I, I need to do. I do have opportunities to accelerate the payoff of our properties, so we're looking at that. Um, so with flipping multifamily, if it's something we can fix on from an operational standpoint, use creative terms, we're all in. Deal we're looking at is seller financed. Be driving it this weekend, and I'm sure you'll hear a lot more. How many doors do you recommend for your first deal? As many as you can comfortably do. I recommend starting at no less than 10. However, lots of people like myself start with a duplex. If you have a duplex and it's in your wheelhouse and the deal comes along, don't not do it because it's too small. Buy multifamily. But if you're looking for like what type of deal are you really focused on, I would really look between 10 and 25 units for a first deal. Very manageable, not much harder to run a 25-unit than a duplex. To be completely honest, it's just not that much harder. And it's a good starting point. You make a lot more money with 25 units than you do 2. So just keep that in mind. Cody started with the 12, I started with the duplex. Our first deal we did together was 38-plex. Um, I've seen people start with a 32. A lot of ways to do it, but bigger is better. I would not start with a 100-unit building. That is big enough where if you were wrong on something, uh, the financial punishment is high because there's some extra zeros involved in doing those transactions. Uh, see, all-nighter, 40% 99 for the year. Oh yeah, pretty good. Uh, perfect. Okay, that's it for the questions. We have— we have attained our mission. If you guys want more of this, we post videos 3 times a week: Monday, Tuesday, Friday. We go live every Wednesday. Yes, I know we've missed a few. We will stop doing that, I promise. Um, so, uh, we do more of this every single Wednesday, same time, 3 PM Pacific. But yeah, anyone have any other questions feel free to reach out to me or Cody on Instagram. Cody's Doing Cody Things, @DoingCodyThings on Instagram. I am @ChristianOsgood on Instagram, and we'll see you guys there.