Cody And Christian - Multifamily Strategy is going live!

All right, and like that, we are live. Well, welcome to my office. We took a couple weeks off going live, which I apologize for. However, we did this for good reason. We have been closing a few deals, and our, our CPA got very, very sick, and our backup CPA just shut down their entire firm. So interesting chain of events, but we have been bogged down in bookkeeping and in closings. Currently Cody and I are under contract for another 15 units and yesterday closed on officially on our 22-unit hotel conversion. So I'm going to talk today a little bit about that, and then as people actually start entering, we'll start going through the chat and answer any questions you all might have. Dividend Dave, welcome to the chat. Yeah, just talking about the, uh, the 22-unit that we just acquired. Is a hotel conversion where we're going to be taking 22 hotel units and converting into multifamily. And so the actual project right now, we partnered with someone who had the liquidity to close the deal, $300,000 down. Half of that was structured to Cody and I as a loan. So we're equal partners with equal contributions, which makes distributions really easy. However, when we actually finish the conversion to multifamily, We're gonna go ahead and pull the money back out. The money that we put in will go to the financier who is our partner, and away we go. So it should be about that simple. Never is, uh, you know, real estate is never as easy as you hope it is on the front end. But looking at it objectively, really liking the pieces we have, like the partners we have, and everyone should own it with no money in the deal within the first 3 to 5 months. So that project is underway and we will keep everyone updated on the YouTube channel. Other updates. Yeah, K-1s for taxes. If you have like 20 LLCs, take forever and life is pain until Friday. Then we get all the K-1s done, signed, and away we go. But yeah, for those new to LLCs, that is one of the harsh realities. So as always, we're going to answer some questions from the channel here. I'll give a couple more updates from our projects. And I'll make sure that I can view the live chat. So one of the big projects that we worked on, and I know we've announced this a few times, but we are actually going to be, uh, or we actually did revamp our course and mentorship. So we took the platform— this was about a month ago, uh, but took the platform, migrated it to a software called Mighty Networks. We like this way more. There's a lot more community features in there. It is a much better platform. We're really excited about it. We are launching a ton with our community groups. And last major announcement, we have our next Robin Hood Village Resort event coming up. So if you guys have not come out yet, if anyone has missed the events, please make it to this one. I'm very excited. We have a couple of tweaks from what we did in the last few. One, if you book a cabin, dinner's on us. Canale across the street is now officially open. They have the best pizza I've ever had in my life. They do this wood-fired pizza outdoors. It's gorgeous. It's going to be in November, but I'll be announcing it on Instagram first. I think we're a few days away from getting the website up and running, but book a cabin, get a free dinner on us the first night. Then Cody and I are going to spend more time than we have in previous things. We actually intentionally brought less guest speakers Everyone speaking is going to talk about creative finance. So again, this is Robinhood Village Resort, Union, Washington. I believe it's the second week of November. Watch out for more announcements, though, because cabins are limited. We're going to have up to 50 tickets. It should sell out pretty quick. And it is all about creative finance, multifamily. Two amazing guest speakers that we're going to announce soon. Cody and I, and I booked out twice the event space that I typically do. We are changing our Robinhood suite where a lot of people could stay historically into an event space. So we're gonna have a bigger space, more people. If there's ever been one to attend, that will be the event. Now, per our usual pacing here, let's see if we have any questions in the chat. I see our, uh, our two favorite supporters of the channel, Dividend Dave and, um, All Nighter Hider, immediately in here. So thanks for coming. Nick, I see you here. Welcome. My laptop didn't want to fire up today, so I'm on the bouncy little stand for my iPhone, so sorry if I'm moving around a lot. Dividend Dave asks a good question, a hard to answer question. There's a lot of nuance. I'm kidding. Why am I so awesome? Oh, well, I'm not all that awesome, but I do have tips on how to become more awesome as far as a business owner. I actually just talked to someone about this. I spent a lot of time not doing what I wanted to do, and so I'd call that being sub-awesome. I did that for a long time in the 9 to 5, starting businesses that didn't quite take off, and I found that the difference between where I wanted to be and where I'm at was identifying the actual target. For me, it was getting to 100 multifamily units and then going and buying the darn units. And I wish someone told me beforehand not to add steps. So, if you want to be more awesome than you currently are, because I think I'm more awesome than I used to be, definitely not that awesome, but more awesome than I was, the key for success there is don't add steps. If you want to buy real estate, go buy real estate. I'm done with all the questions of, "Should I become a broker to get better at real estate investing?" It's like, well, if you don't want to be a broker, then no. "Should I buy houses before I buy multifamily?" Well, if you want to buy multifamily, then no. That's not what I would do. Julie, For the next Robin Hood event, it's gonna be second weekend of November. So I need to look, uh, my phone's hosting the live right now, but it's gonna be second week of November. I'm gonna get a website up with tickets. It's only $250 to actually book a ticket, and it is an all-day event. And then if you want to stay at the Robin Hood, you can book a ticket for, um, you'll book a cabin for Friday night and Saturday night. I have food trucks coming in. We're going to host a fantastic party across the street opening night for everyone with a cabin. Everyone who wants to come in on just a day pass though, it's $250. It's going to have 4 absolutely amazing speakers, if you count Cody and I as amazing. Um, I'll give you guys one of them, but Caleb Hommel, who's on our channel a lot, by popular demand, uh, we have had people ask to bring him. He's going to talk about the Hommel Hack, his favorite real estate maneuver that he invented, and he's going to talk about out-of-state investing and creative financing at a distance, which is a different strategy than what Cody and I teach. So really excited for that. That. Now hopping back into the questions, I believe we had one on capital. Yes, we do. How can you raise capital quickly? Lots of vacant homes and awesome deals. So raising capital quickly, this actually came up for me recently because I had a deal that the capital partner dissolved their companies and filed bankruptcy right before close. So that's kind of a bummer. Um, this is for one of my, my really close friends, but we just had this conversation. How do you raise capital quickly? In this case, 24-hour dash to where's the money going to come from. So on the deal, uh, the first thing that you do— and I have this list, it's a capital list— and it says 4 calls. Super easy. This is to raise capital for any deal, anywhere, anytime. When I talk to people, owners, other investors, people at events, people I fly next to on the plane. Sometimes people go, hey, I'm trying to invest in real estate, I have X amount of money, and this is my overall goal. Which is why Cody and I are always asking, what is the actual goal? What's the real estate for? I map those out. So you have the person's name, you have how to contact them, email, phone number, you know, the basics. You're gonna have a column for how much money they want to place, because you really don't want to call someone who has $50,000 for like, hey, can I borrow $1 million for this deal? That's not going to probably work. And then you're going to write out what is their goal. It's like 1 to 2 sentences. So like Wants to retire spouse, needs $10,000 a month, would like to invest in deals of X size. Like, I have someone who's specifically, hey, my spouse is a real estate professional, we would like more cost segregated benefits, how can we run more partnership cost segs where we all get additional bonus depreciation? And so I write that there. We're looking for deals that are big enough where they bear running a cost seg, and how much are we actually trying to offset in income? But for raising capital quickly, when you have the deal, it always goes DDE—deal, debt, then equity. So find the deal first, figure out what the debt product is, and then if you need that equity partner, if you're raising the private capital either as additional debt or equity, what you're going to do is you're going to actually take that list, you're going to look at the deal and the debt and go, this best solves the situation for this individual. I'm going to look through that and say, hey, This person, they have the right amount of capital, or at least enough capital to make a dent in what we're trying to raise for. My phone call to them goes something like this: Hey, it's Christian. I really appreciate our time getting coffee a few weeks ago. In that meeting, you mentioned you were trying to do this and this. I have the deal that I want to do with you, and that is why you were my first call. Here's what it looks like, and then I'll lay out the pieces of the deal. Last time I did this, it was It's 12 units. It's going to fit the cost seg. Uh, we're going to be running cost seg on it for sure. They were a higher income individual, but they're trying to build passive income for 10 years in the future. And so the conversation was, hey, this is a reno project. It's going to take us a year to stabilize. If you can put the capital in now and we're willing to wait, we will hold this with you long term. And this is going to be a cornerstone piece of the portfolio that we're trying to build. It's going to hit your cash flow goal, and we're going to get to where you want to be. Simple enough, right? But that is the pitch, and that raises capital every time. If you have someone with the liquidity and the ability, they will do it. All right, now we have a few questions to catch up on, so give me a second. Again, on the iPhone today. Uh, how could someone who has a full 9-to-5 job make cold calls? My cold call method. I think it's perfect. I think it's— everyone can do this. I make one cold call today to an owner that I don't know, or, you know, sometimes even someone I've just been trying to reach. One cold call day, that's 5 per business day, so 5 calls in a week. Of those, 3 people usually won't answer, 2 people will, and 1 person will book a meeting on average. That means on average I'm going to get coffee with 50 people a year. So as a 9-to-5er, you have to find a day of the week where you can get coffee at lunch, you can get coffee after work, you meet up with someone on the weekend. But the commitment is 1 hour for coffee a day and 5 phone calls. And if you can do that every single week, you're going to meet with— and say, say you start out a lot slower than I did, say you have half the success— you're going to meet with 25 to 50 people in your market who own real estate, who you communicate your goals to, who have their own real estate connections, who can help move you forward. That is all you have to do to get started in building relationships. In addition, With today's market, there's tons of deals that are sitting online because people are stuck on price. If you are the one who can negotiate terms, which we show you how to do on our channel and our courses and our mentorship group, but if you have any way to come up with a creative solution to their problem, and that problem happens to be they want a certain price, anyone can knock out deals on the MLS. First one Cody and I did was on market for 13 years at the same price. Absolutely insane, and anyone could have done that. Let's see. See a lot of properties on LoopNet, I'm getting properties from brokers, but how can I tell if it's a deal? Well, if it's a deal, it has to cash flow on long-term fixed rate debt. That's, that's the main thing because we're going to buy it, we're going to increase our income forever. So you can tell it's a good deal. Like LoopNet, you don't have enough inputs. So if it's on LoopNet, you're going to call the broker and you're going to figure out as many details as you can. Are they open to carrying contract? What, you know, Why hasn't it sold yet is gonna be a good question if it's been on LoopNet for a while. But you're gonna do your own sleuthing, and before you put in an offer, you're gonna at least know enough about the income expenses to go, okay, property makes about this much, or at least they say it does. You'll verify everything in due diligence, but we believe the property makes X, the expenses are about Y, with a debt cost of Z, we're going to cash flow a certain amount. And if we can get that on a long-term fixed-rate debt product and there's cash flow, it's a good deal. You're not going to see all those inputs to analyze up front on LoopNet. You're gonna have to pick up the phone and ask a couple of questions. Um, and we cover broker scripting in, in our course too, but there's like 5 main questions that you're going to go through, which essentially— is it still available? That's the first question, always the first question, because you look like a doofus if you talk about a property for 5 minutes and it's off market. So, "Is the property still available?" "Tell us something about the area or about the property." General open-ended question about the property. Then you're going to ask, at least I like to ask, "Why hasn't it sold?" or "Is there anything that you don't like about the property? Is there anything that should be improved?" And that will test how honest the broker is, and it's getting a little bit more narrow in your questions. Then you're going to ask my favorite question, "How is the bank going to look at this deal?" We're not jumping into, will they carry a contract? It's, how's the bank going to look at it? That's going to ask the rest of our questions in one shot. Because you're asking if the maintenance bad, say the roof's bad and the plumbing's bad, the bank's going to want more down. So you're asking about deferred maintenance. You're asking how collections are. If the books are good and it's bankable, then the bank's not going to need a ton of money down and they're going to love it. Or the broker's going to go, well, you might have some problem with conventional finance because X and Y. You're going to uncover a lot about the deal. It's a pro question to ask. And it's a closing question because now you've established your interest, you've asked questions about the property, now you're talking about money, which means you're thinking, how am I going to buy it? In the broker's mind, okay, we're narrowing in on the sale. Then I usually ask a question around like, okay, is there anything else I need to look at? And they'll either tell you something else about the property or a different property. But either way, I want to know, are there other deals that I should look at before moving on this one? And if everything is a green light Then you can ask, okay, how are we taking this out? Am I taking this to a bank or are they open to carrying a contract? But that is the basis of how you get the details of a loop net deal is you need to call a broker and go through a similar talk track to that. There's a little bit more nuance, but that is the bones of it. Thoughts on a 15-room motel? Can't run it by myself, but would be a nice deal. 15-room motel, some people make their whole entire career doing exactly that. They do small hotels. Everyone I know in the hotel motel business says, well, some say 40, more of them say 60. 60 units or up is easy to run because you have enough staff, enough systems. It's a buy on a small hotel. Because I run a resort that is 19 individual spaces, it's very hard. Your staffing is brutally expensive in comparison to the income. I have found that it's very active for the owner and would not be my first pick because you just don't have enough economy of scale. Now, if it is in an area where the city is open to converting to multifamily and they already have kitchenettes, that could be interesting. If there's kitchens in them, sink, refrigerator, stovetop, I would look at doing that. That makes sense to me. If you're looking at a hotel where it's a massive conversion, you're going to need to add sprinkler systems, I would steer clear of that one. And if you're just gonna run it as a hotel, my opinion, 15 units is too small to have significant income on it beyond the headache that's gonna cost you to run. Alrighty. How many hours a week should one dedicate in cold calling and how long before you find your first deal? I mean, gosh, we found our first deal in like 10 minutes on LoopNet, but I don't do a lot of cold calling. I probably spend 15 minutes a day, maybe, when I started. Now it's less. There's a lot of strategies that are about volume. Our strategy does not have anything to do with volume. It is specifically meeting with the owners who've done what we want to do. There's X amount of people to meet with. I will call until I meet them, but there's not— I'm not calling these huge lists trying to find a deal. I'm talking to owners about how they run their business. And deals will come from that. And it takes time. Uh, the LoopNet stuff, what we just talked about with calling brokers on active deals, I mean, you could find that tomorrow, and that's going to be a quick phone call, but you have to find the right one. So all things to look at, all things to look at, but not going to be a time commitment for me. I don't like doing a lot of phone calls. I love coffee meetings, so I don't do I don't build a business doing a bunch of stuff that I don't want to do. I don't understand that. I could just get a job and get paid to do that. That's my thought. I have friends who cold call all day long and it's silly. Travis, welcome to the course. Excited to have you there. If you have any questions, feel free to reach out to me directly anytime @ChristianOsgood on Instagram. But really exciting. I'm hoping you like the new platform. Let me know what you think. If you have any feedback, I'm open to it. I like the new platform a lot better than I like the prior platform that we were running through Lightspeed. It was a little bit clunky for what I was trying to do as we evolved. Good platform, but not what I was trying to do. Let's see here. I have an outline of a deal with an on-market seller financed. Now, do I go to a lawyer or find my own broker to make the official offer? I like using brokers for the official offer. Lawyers sometimes are a little bit easier. You can do it yourself, but I like having a broker represent me for two reasons. One, they're all about the transaction. They are paid to get the thing closed. Lawyers are paid to write the paperwork. I like having someone who— where the incentives match the objectives. And so brokers, I think their incentive package is most closely aligned with what I am trying to do, so that's very important to me. Um, for I don't know, just thinking through everything. Sorry, I lost the, I lost the question. This is me being, uh, being silly. Official offer. Oh yeah, the other thing with brokers that I absolutely love, uh, when you close with a broker and they get paid, they want to work with you again and again and again, especially if you are like us and you know how to buy real estate without any money. If you can buy things without any money, uh, you can buy anything, and your broker is going to love someone who knows how to buy anything. So they'll have to train them on what to look for and how to buy it correctly. But we get sent a lot of deals because brokers know that we close and money is not the problem. So that's important. No kitchens, but near a lake. I, I personally wouldn't do it, the motel. That doesn't mean that it's not a go for you. It could be perfect for you, but it depends on what your plan is. And you have to have a business plan because there are problems with small motels that make them very hard to run profitably. Um, the question is, when you look at the project and what you're gonna have to do, whether you're converting it or running it as a motel The question is, are the problems that you have to address the problems that you want to have? And if that's the set of problems you want, that's how you make a lot of money in real estate. And that's traditionally what I've done my entire career, is you identify the problems with a certain property. Take our 38-plex, the first one Cody and I bought. There's tons of problems— subject to bad roof, bad tenants were not paying for the most part. But that was the set of problems we wanted because it's a lot of real estate and we had a path to get it there. And then we executed our vision, and it was hard, and there's a reason a lot of people passed on it. We made $1 million. That's amazing. You could make a ton of money being the one who wants to take on the problems. Just know that particular set of problems, uh, you'll, you'll want to have a very good business plan going into 15 units. Okay, from Obie: What is the framework for the circle drill? So the circle drill is Essentially, it's a way to map your own story. So we have 3 quadrants, and so you basically, you put yourself at the center of the circle, and then from that you're going to go out 3 directions. You're going to have your actual relatability. This is some point where people relate to you, and it could be anything. It could be, hey, I used to play high school sports. It could be like, for me, I'm trying to retire my wife through real estate. It could be, hey, I hate my job and I'm been trying to make a change, whatever it is, it's a reason that you're pursuing the goal that you have, which ties directly to the next, uh, the next third. That is the, uh, the actual goal. So what is it that you're trying to do? For me, it's like, okay, uh, replace my wife's income and my prior income and just have the cost of living covered so that I can continue to grow the businesses. So the first goal is, hey, let's get to $10,000 a month. And then that became $20,000 a month after we hit 10. The nice thing with the goal is it changes and grows with you as you hit targets. But you relate that to, hey, this is what I'm trying to do, and this is the actual objective. Now, hitting $10,000 a month is great, but no one's gonna invest with you or sell you something because you want $10,000 a month. That's not gonna fly, even if it's for a great cause. That'll be a reason later that they want to work with you over someone else, But no one cares on the front end what you're making per month, or, you know, no one has a major concern about retiring your wife or your financial freedom. What does change is if you can communicate the significance behind it. For me, my wife suffered a back injury and she was teaching during COVID where it was just an absolute mess. They have all the teachers and students masked up in kindergarten, which has its own problems. It was really a mess. So when you're looking at things like that and you're trying to figure out, okay, what are we doing with the pieces we have? What is my goal and why is it important? It's like, we're going to get this person retired. We're going to move them into something that they want to do. It's going to be life-changing for my wife, and she's going to come and work at the companies. We're going to acquire a bunch more stuff. All those things go together to make a compelling story, but you need all of them for someone to want to invest in you as an individual. You need to be relatable to them. You need to have a clear goal of what you're marching towards and what happens when you get there. Why is it significant? That's where you get buy-in. That's where people start building a relationship, and that's what they're going to remember when they run across the deal they don't want to buy themselves. That's why they call you and say, hey, I have a deal that hits your, uh, hit your goal. All-nighter is officially parked. That is it for the questions that we have here in the chat. So I want to do one last reminder because I'm excited about it. November, second weekend of November, we will release more on this. But if you have questions, message me on Instagram. I'm making a whole event page for it. Robinhood Villagers or Creative Finance event. Cody and I are speaking 3 times as much as we usually do. Traditionally, we bring in a bunch of speakers and we give ourselves 1 or 2 little spots. Per popular request, we're going to be answering a lot more questions. There's going to be time for Q&A. We're going to talk about structuring creative deals, finding creative deals, and we're going to really map out like these are the cornerstone pieces. But the biggest piece of this, besides being totally fun and having cabins with hot tubs and pizza and coffee trucks and all the fun stuff that's going to be in there, outside of all the fun, it is a live venue to ask questions like this where we can actually interact, actually work on your deals. Get to know you, and I'm very excited for it. So if you guys want details on that, more will be perpetually inbound. I saw a couple more things going through. I'll answer those questions and then we will call it an afternoon. When vetting PMs, what are some questions to ask and any red flags? Um, so main questions to ask, I like situational ones a lot. So you have stuff like, how is our security deposits handled? How is maintenance handled? You have your basic, your basic things that you need to know. However, once you get through the basics, I like situations. So hey, someone calls at 11:30 on a Friday night because the septic has an issue. How is this being handled? I just want to understand what the systems are. Now, generally speaking, sometimes there are terrible things that happen on Friday night. You can't get a service provider out there, you're stuck. But I want to understand what they're going to do about being stuck, even if they can't fix it immediately. Those are good questions. What are they screening for, for tenants? What is their goal for the property? Like, how would you run this? What do you think market rent is for this unit? These are all things I want to know because I want to understand how they're running it. Most important screening for PM and the biggest red flag: if the owners of the company do not own real estate themselves, I would not use them as a property manager, period. There is no service provider I've ever met who looks at someone's business the same way an owner does. But an owner of real estate understands what it is to own real estate. I've seen multiple problems from it, but one of them is their property manager should be fantastic for your tenants and you should provide fantastic housing. But if you are too tenant-friendly, you can actually do the tenants a disservice because they will not optimize the revenue that it takes to make the place fantastic for your tenants. And I've seen properties get mismanaged where they always side with the tenants to the extent that the owner cannot operate the business the way it needs to be operated to be optimal for the tenants. So they may side one way or the other too hard. Two, it's just getting employees or people working for you who have an employee mindset. Hey, I'm on and then I want to clock off and I want to do my own thing. Property management is a 24/7 job. Like, they need to be on all the time, or at least available all the time. It's hard if they're not owners themselves to understand how critical and how stressful some of these things are, because when you borrow millions of dollars to buy real estate, there's a stress that goes with that. And your PM should, should understand the pressures and realities of being an owner. That's my biggest piece of advice on finding a PM. And that is what we have time for. So everyone, thank you for joining the live. I hope to meet a lot of you in person, for those who I haven't already met, um, at the Robinhood event coming up second weekend of November. More details to come, but don't wait for more details. Reach out to me and I will get you guys hooked up, uh, @ChristianOsgood on Instagram. I'll see you guys soon.