Cody and Chrsitian discuss Multifamily Live!!! how to pitch investors

we wanted to do. All right, now we are live and we are live correctly the way we intended.

Neat. We made it.

Yeah, I like this better. YouTube made some changes on us, which means we failed to launch correctly the first time, but we're now live and it's looking good. So I'm going to say this is legitimate. Everyone can find this chat again and jump back in and everyone will be happy.

It's either going to work or it won't. Those are the—

those are the theories. Dividend Dave is back, so I know we're safe.

We made it.

Hello, Dividend Dave. Welcome back to the chat. YouTube changed the format thing. It changed completely the way that I launched these. So now we know.

Today we're talking about pitching investors, right?

Yes, we are. That's going to be our topic of the day. We'll give everyone a little bit to get back into the chat since we messed up our intro and then we'll roll from there. But Cody, let's start with a little news update from the portfolio. I think last we talked, we had just either just closed or we're just about to close on another deal. We closed that 12-plex out. Have we updated everyone on that yet?

I don't think so. Well, this is, as everybody knows, stabilization year, so we're not buying anything except for all the stuff we're buying. So we bought, we bought a 12-plex. Seller financed. We bought that with a good friend of ours and I'm currently under contract on a 5-unit that I'm going to put into an LLC TBD with Christian. I think it's going to go into Big Six, talking with our buddy about that. And I would fix it. That would fix all the problems on Big Six and it wouldn't cost us any money to buy it. So we are looking at that actively. But yeah, close to 12, working on a 5. That'll put me up to 127 units. And the RH. And then Christian, you're at 112 right now, about to be 117 rentals. Also looking at buying Clock Tower. So I heard.

I'm looking at it. Looks like it's going to be a heavy reno project if I do it. There you go. It would be a large project. We'll see if it happens.

That happens. But in other news, we just got our refinance closed. That recorded yesterday. And so we've got $320 grand that we are throwing at our project to get it optimized, and then we're going to pay it off. Super stoked about that.

Very, very—

I don't think we have any other news. We're shuffling around some companies and trying to optimize everything to its highest potential.

But other than that, in step 3 of our 3 or 4-step cycle, Yeah, excited to give you guys more updates on the cycling and shifting around of ideas in the companies, but we are not there yet, so we'll share that very, very soon. But all good things. We had a question here on the last update, actually. How did the event go? For those who missed it, and I apologize, the video didn't work. The changes YouTube made to how we stream, I have learned within the last 2.5 minutes, so I was not able to figure it out during the live event. However, you guys got audio only from Deanna and Mike. The actual event itself went fantastic. That was my favorite event that we've done to date. They seem to just keep getting better. Funny how that works. We practice more of these, we get a higher budget and they go even better. But awesome speakers, a ton of fun. Some people brought archery, so we had archery at the Robin Hood, St. Patty's Day at the wine bar and poker tables, which Millennial Mike beat me in an hour and a half poker battle. So that was really fun. I had a blast. Cody, how did you— did you have a fun time at the event?

That was a good time. Got to hang out with a lot of creative and intelligent people, and I was like getting to network. So that was fun.

That was fantastic. I love getting to share that space with people. If you haven't seen it yet, you're always welcome down Robin Hood Village Resort and check it out at RobinHoodVillageResort.com. All right. Diving into our topic of the day, we're going to be talking about— oh man, what was the topic? I knew I had this and now I forgot.

Pitching investors.

Pitching investors. That's right. This keeps coming up in our mentorship group all the time. And we learned that this is the number one thing that people get stuck on. At least I have found this seems to be where most people are the weakest. So we wanted to break this down into a simple, topical way to learn it and not overpitch it.

Yeah, so it's super simple. You have an idea, you share it with people. But when you actually go into the, the deeper details here, what most people do is they like to overshare. You don't omit data, but you don't need to explain why you need to share or preface the conversation. A lot of beginners, even when they, they talk with us and we're We're not that far into our career. We've only been in partnership for about 2 years now. People will talk to us and they'll pitch us on an idea, and then they'll try and quantify why it's important, why they're pitching what they're pitching. Just make the pitch, keep it simple, keep it concise, have an idea, and then just share the vision of where it's at and where it's going. Most people want to jump straight into a spreadsheet. I'm a numbers guy, but if you jump straight into a spreadsheet, you lose my interest. Christian can even elaborate on that, but it's most people want to jump just into the nitty-gritty versus sharing, okay, this is where we're at, this is where we want to take it. This is an idea when it comes to money. It's all an idea.

A lot of these, we take a look at them and people start presenting and they open with, hey, yeah, look at this spreadsheet, look at this property. I don't know where the property is. I don't know anything beyond if it's in a terrible area. Why would I be interested about the fact that it cash flows 20% if it's losing value every year and I'm overpaying for it? There's things that I just don't know where you could be really excited about the numbers, but that doesn't tell any story. So the simple way to do it— and people get nervous and tend to overshare. So the easy way to go about this is just, okay, let's start with where the property is. It's on a great location in whatever town, like fantastic street or crappy street. It doesn't matter. Just tell me where it is. Love the area, love the property. It's a 5-plex brick building. And the opportunity is the prior owner mismanaged it. So we're going to be going into day one are going to be low rents. And this is why I think we have an opportunity here. This is how I'm going to raise the rents. Now let's go take a look at the numbers right there. We've overcame the objections because we know the problem is going to be the rents on that hypothetical deal. We've explained what we're buying, where we're buying and the fact that the rents don't look good is the reason that we're buying it. So any objection they have, we've already overcome, or at least the big one. That's all you do to pitch a deal. What are the flaws? Put it into your initial pitch of whatever's wrong with this deal is what we're going to fix. And that's why I want to buy it. If it was just a whole bunch of flaws and it was a terrible deal, you wouldn't be pitching it because your deal sucks. So that's, that's all that it comes down to. The more you say, the less likely you are to get the deal. Make it really concise and just tell a story that makes people want to be a part of the journey. And that's really all it is.

And when we bought our first deal that we actually put together about a year and a half ago, we didn't have any experience partnering together. And the building we were buying was the single worst building in Grant County, had the biggest drug sting operation in history of Grant County in the '90s. It was a negative cap rate, meaning the operating expenses were higher than the day one operating income. You own it outright, you still lose money. Not a great place to be. There was a lot of questionable individuals living on campus, both as tenants and squatters and as homeless. There was a camp in the back. And if you watch some of our original videos, you'll see us talking about how we navigated that process. But it was also a bad location overall. I mean, phenomenal geographical area, but just that whole little community, that little section there was bad. It was surrounded by vacant land, campsites from the homeless, completely rundown buildings. It was— it's next to a mobile home park. It wasn't the greatest. However, it's got 228 feet of highway frontage. And as soon as we bought it, Hayden Homes started building their homes in the back.

Cleaned it up and built a brand new roundabout. There's a whole bunch of stuff that went in.

We had to keep it as simple and as concise as possible and let people know, yep, we're buying a terrible block, terrible buildings, less than ideal tenants, negative cap rate, loses money day one, and had the biggest— to top it off, had the biggest drug bust in history in Grant County. All that to be said, we're going to be the ones who turn this around and we're going to make this a phenomenal asset. As a location cleans up, we're the only people who are qualified to do it. It's been on the market since I was 8 years old. We're going to buy it 13 years later. And this is how we take it from being the worst property to a great asset to live in. And we just shared that. Go ahead.

I can say on that topic, Cody, let's talk a little bit about how we raise capital for that deal, because you're talking about where we took that deal and where it went. Like that first call, you call on a property. If your selling points are biggest drug bust in history, bad plumbing, bad electric, bad tenants, homeless, scary basements, really scary basements, how on earth do you call people and go, This is the opportunity that everyone passed on and we need to do.

Look, nothing can go wrong. Everything already did. Can't go wrong for us. Already went wrong. You know, there's nothing else that could go wrong. If the building burns down, then we get insurance money, but nothing else can really go severely wrong. So the only way we can take it is up. And really, it's just we found an opportunity where everyone said we were overpaying. Price only matters in the absence of value. And so we found value in the fact they'd seller finance it and you can't replicate that location along the highway. It would be incredibly difficult to get that land assemblage in that specific location where they're doing a whole bunch of development around it. That would just be incredibly tough to do for $2 million. And so while we overpaid for what it was at the time, we saw an opportunity and said, look, We're going to make this happen. And as simply put as possible, we're coming in at $2 million and within 24 months this thing can be worth about $4 million. These are the numbers behind it. This is the income today. It's negative. This is the income in 12 months. And this is where we're going to get it in 2 years. And we hit every metric because it's all simple math. Real estate analytics seem complicated until you realize it's a function of top line rental income, less operating expenses, which are predictable, less debt, and you have cash flow. And debt's an option. So if you want to value something, you don't even include the debt. You just say, what's the top line rent less the operating expenses divided by an average multiple in that market, the cap rate? And we could easily peg it out at double what we bought it for. And while we bought a year and a half ago, in another 6 months, it'll be worth about $4.5 million. Took a lot of rental to get it there, though. So you just got to simplify it. We simplified the math and said it'll cash flow at $700 rents. The fact that we got rents to $1,150 on some of those is a plus, but it's really easy to get $700 rents in Washington State, and the path to get there was easy for people to see. And so when it came to getting the money, we forgot to raise the money until like 2 weeks before we closed.

So it's not a best practice.

No, but deal debt equity. We did what we say we do. And so 2 weeks prior to close, we made 4 phone calls, 3 people funded $100,000. We cashed them out later. And that was because of our ability to get the rents where we needed to in a quick manner. We're not just investors, we're operators. And not so much we, but Christian Osgood. I'm just good at figuring out how to buy it, but as a team—

very good at figuring out how to buy it.

But as a team, we figured out how to buy it, manage it well, effectively get some of the less than desirable non-paying tenants out, get some of the great tenants who were unable to pay help so that they could start saving money and start paying their rent. And then we filled up the rest after we renovated it. But we had a vision, we saw it through, and we made it super easy to digest for the people that were putting money in with us. If we just get rents to $700, markets over $1,000, then we will make money. And this is how we're going to do it. This is our timeline. Typical stabilization of an asset takes 18 to 24 months. The fact that we did it sooner is a plus. But we made the pitch.

Now, this wasn't a question, but a statement, but it brings me to a question. I need to find some investors. It's hard being a new investor. On the 38, we were new investors. But when you are a brand new investor, you're just starting out in the game. You haven't raised capital before. How and where do you find investors?

Well, the the people that have the money you need are the people that you see around yourself, whether you're at work, walking through public. I mean, I just met up with the guy at Applebee's, and after that we went to his $2 million mansion that he's renovating, and he's got a castle and he's got a $10 million villa. He's got an 8-figure asset. But we just met at Applebee's. The investors that you may not think have all the money could just be around you. We were sitting around 8 people in Applebee's. Guarantee you, no one knows that guy's worth 8 figures, but he's there and he's liquid more than some of the asset values that, that we control. So random people that you would never know that are just in your sphere, in your universe, walking around every day in the environments that you're at, they have the money that you need. And if you go up and just talk to people that are in the space, even at your job, if you do sales, a lot of salespeople make a lot of money and then they don't know where to put it, and so they blow it. But if you just share what you're working on, you pique interest of the right person, whether it's at work, whether it's at a real estate meetup, the right opportunity, they could be the person who funds your deal. Just like the guy that I met with, he's working on building two $2.5 million houses right now while he's doing his $2 million development and his $10 million villa. Like that. He's just another guy that's out there that started with nothing, but he's in my sphere and I would never have known that unless I had reached out to him.

I would love to have that set of problems. Those are fun properties.

We're going to get there. Well, it'll take 2 years.

I'm going to see here, going through the questions from Sonoy. When you guys find the cash-on-cash return, do you give the entire return Like if it says 17%, you say 17% or do you go lower? Lower. Let me see here. I'm trying to—

I like to make spread.

Yeah, I wouldn't give someone the entire return and then do all the work. That doesn't make sense to me. However, if a deal makes 17%, a lot of people would accept something like 11 or 12%. So if I find a deal that cash flows 17% and someone else can bring their money, make 12%, which is fantastic, and I can make 5% for finding the deal, putting together the deal, and managing the deal. I'm inclined to do that.

Absolutely. But you have to have enough spread to where if someone's expecting 12%, if you borrow that money, you need to be able to hit that 12% with margin and confidence. That's where you can't just do a tiny deal in the Midwest where it cash flows like $200 a month and it's 20% cash on cash because you can blow $200 a month instantly. Something can happen. So you got to do big enough margin deals where the person who's lending you the money or, or you're doing a joint venture with has confidence that some little expense is not going to blow you up.

All right. Dividend Dave got a tenant to agree to a $230 rent increase. Well done. That's a That's a big rent increase. I assume they're pretty far under market or you have an extremely nice unit, but well done, Dave.

Yeah, that's great. Ridiculous.

The— how do you get $300 for yourself when your rent is like $1,000? That doesn't make sense to me. Cody, break down the math.

How do you get $300 for yourself? So that's for cash flow.

So they're saying, how do you— if you have $1,000 rent, how on earth Do you only have $700 in expenses is basically what he's asking per unit.

Okay. Yeah, let's, let's break into that. So let's say we have a $1,000 rent on a 12-plex and you're making $12,000 a month. Well, that's phenomenal. However, we have these things called property taxes, and property taxes on said 12-plex be about $800 a month. So that wipes out 80% of one unit. You have insurance, which is going to be on that 12-plex, $400 a month. So that wipes out 40% of another unit. So now you got 1.2 units of rent just going away. Utilities on that asset are going to be like $1,500 a month. It's another unit and a half. So now we're up to 2.7 units gone. You got management on that 12-plex with our— with multifamily property management. Costs about $600 a month to manage. So that's 0.6 units. So now we're over 3, like 3.5 units of rent going away. That's before maintenance. That's before management. Oh no, that's after management. That's before maintenance, capital expenditures, and the big one, debt. So on my 12-plex, for example, it may make $13,000 and like my 12-plex makes about $1,300 a month when it's rented out. However, I've got a $6,000 mortgage and about $3,000 in operating expenses. So cash flow is about $4,000 a month. $4,000 out of $13,000. I mean, if you divide that out by the units, we're a little over $300— it's $333 a month in cash flow per unit. Even though the rent's a little over $1,000. So you got to remember that there's debt and then there's operating expenses. Real estate's not free. And if you have a huge capital expenditure, that cash flow can get eaten up really quick. Currently doing $138,000 of remodel on that building. That $333 a unit gets eaten up pretty quick.

Yes, it does.

When it's done, it's done. And I'm building out another unit which will add value and cash flow. But you can easily eat through $1,000 a month. And so while you may be making that much until you have it paid off, you're not going to net that much on your rentals. Real estate is a long-term play. And we just had this conversation with Caleb and Chuck. We actually told them when they first got started, Some of our very first mentees were like, you're not going to get rich through real estate right away. They thought they could outbuy us and outbuy the system and retire early. And they just called up Christian Osgood, was like, I'm not financially free yet. I have 28 rentals at 20 years old, but I thought I was going to be done and I'm not. Like, yeah, welcome to the club.

They're doing well though. Overall, their portfolio cash flows, I think they're negative on one property, positive on two. And they're fixing the problems. But that's not financial freedom, right? That's just doing pretty well and really well for their age. It is a lot more work than a lot of people think. This is one— let's see if you know the answer to this, because I've actually never in my life looked into reverse mortgages. So in the seller's point of view, what would be the difference between seller financing and a reverse mortgage? Cody, as our resident real estate guru, what is our— what is a reverse mortgage and how does it compare to seller financing?

Yeah, reverse mortgages are stupid. One. Okay, so I'll start with what it is. So let's say you have an aging— you're aging and you're old and you've got all this equity in your house and you want to turn it into the equivalent of a note where you start getting payments. Your reverse mortgage, you can get monthly payments and it starts accruing into a mortgage balance over time, and then you die and the asset gets sold and it goes to the estate and you, you lever it up. The difference between the two is one creates an asset and one creates liability. While you're doing a reverse mortgage, you're adding debt every month. You're living off of the equity in your house. However, you're creating an ongoing liability. When you sell on a seller note, you're creating an asset. It's an accounts receivable backed by the equity where you would collect the note payments versus collecting debt payments. That does become a liability against your net worth and your name. So why would someone do a reverse mortgage? Well, if they're about to die and they don't care, Cool. However, there's not really another reason you would. Reverse mortgage is one of the dumbest debt products I've ever seen. And if you want income, then either rent it out for income or seller finance and create a note, an account receivable. Because if you do a reverse mortgage, you're violating a principle that we have, which is you never spend principal. In that case, you're spending the principal. With a note, at least you're collecting a dividend backed by the equity that eventually gets cashed out at value versus living off of debt backed by the fact that your place might have appreciated over time. And when you die, it's going to get sold off to someone else.

How do you— okay, this one, I feel like we may have already kind of covered this, but let's answer this question nonetheless. How do you convince the investor to give you the money when you were new to the game? Someone you didn't know, to get them to trust you may have been or must have been hard. When, when you're doing this, it is hard.

It is definitely hard.

But if you make it simple, it's really easy to digest. A lot of people just don't know how to play the game. A lot of people want to invest and they just don't know how to do it. If you can make the opportunity very simple and your path from A to B really clear, it's not that hard. You have a couple of pieces when you're presenting any opportunity, but if someone is investing, you need to make it very clear what is it that they're investing in? What is their backing if everything would go wrong? And most importantly, what is your plan to give their money back? Any time the money goes out, They don't have direct control over it. So you just need to be able to communicate, this is what your money is being used for, this is the game plan, and this is exactly how your money is going to be returned to you and how I'm going to grow it in the meantime. That's all you're doing. And if you have a great story and a convincing reason why I'm going to be successful here and your money is likely to return to you with growth, most people will say yes to that. It's how clearly you can communicate that above anything else, above any of the other trust factors. It is hard and it's way harder when you're starting, but if you can just communicate the path and get someone to believe in you, you can buy anything.

Yeah, absolutely. It's just the circle drill. That's what we mapped out. Relatable points, goals, and significance. You map that out, you you learn it from their perspective and they understand your perspective, then you're set. You can buy any piece of real estate you want. Like Christian mentioned, you can get any debt product you want on the private side because when people buy into who you are, they give you opportunities that they don't give anybody else. So the relationship's everything. All right. Looks like we're on the Applebee's question. What's in it for the Applebee's investor to fund your deal? I'm curious. Well, I'm not asking them to fund any deals. I don't have any deal that I need funded by them. But the owner meeting is something that we've been preaching on YouTube and through our mentorship at multifamilystrategy.com. We've talked about it for a while now. We still do it. And I'm meeting with bigger and bigger players. I'm working on meeting with the guy who's a developer. He's a multibillionaire. And he's developed in some of the areas that we buy. But I am actively meeting with big-time owners. Just met with Ken a little while ago, Ken McElroy. I met with the Kiyosakis and the Cardones and always just pushing out and seeing which relationships that will stick and start and where I can learn from some of the older or further along generations. On how they played the game at a higher level than I did. And there are some things I'm talking about with, um, this guy who's got the villa, and he actually lives not too far from us. I don't need his money— well, I mean, it would help, but I, uh, that's not why I met with him. I want to learn little bits and pieces of a strategy, and he gave me a lot of advice, practical application from a different perspective on managing not only the real estate but some of the business aspects of the partnership. He gave me advice on what logical next steps are and how to execute it from some of his past partnerships and how he scaled it to another level and went from the 7-figure range to the 8-figure net equity position. And that, that's why I meet with him. It's not for the money, just like in the beginning, not meeting up to buy the real estate, but how the heck did you do this? What practical application? What practical next steps would I take in your shoes to, to get there? The advice is worth way more than the real estate and in this case, way more than the money. Okay. Someone just asked, would you promise Applebee's investor to give him double his investment? Absolutely not. There's no such thing as a promise in investing. You can't promise people stuff. You can, but you might get in prison. Um, that you don't want to promise stuff, number one. And double is expensive. But again, when you're getting started, just build those relationships. Don't look for the money. When you find the right opportunity and you share it with people that are in the space, the money will show up. But if you're just trying to pitch and you're trying to say, "Oh, we'll do this, this, and this. We'll get you a double and we'll get the cash flow and the equity growth," that's going to scare off some of the experienced people. And I was talking with them, this guy, and he was making jokes about how people have done that with him and he just laughs and moves on. He showed me his office at his mansion where he trolls people on the internet that try and do that. And Very funny guy.

Yeah. And I think the question, like you said, you can't promise anything, but you go, hey, this is, this is the game plan and this is how it's backed and this is our path there. Right. And so if you're— if the question is really just like, is a double on investment a good thing to offer? The answer would be you just don't know. Like, is it a deal that can support that? Is it a deal that can support debt from them? Are they giving them an equity position with the buyout? How long do you need the money for? If the answer— like, if we have a deal where, like, I want to double my money in 10 years, then, like, absolutely, that's not hard to do. That's really easy to do. I would do that for most of our deals all day. If I'm doubling his initial investment in 6 months, which we've done before, that's really expensive. I wouldn't go for that. So deal, debt, equity. It depends on what your deal can support, and that lets you know what debt product would work for the deal that you've negotiated. And that's, that's all there is to it. From Aaron, jumping on to the live, thanks again, Christian Cody, for the great and beneficial time at your Robinhood event. Oh, absolutely, Aaron. Super good to see you there. Thank you for making it. That was very, very fun and fun to have another buddy there who does not drink. Let's see here. How would I be able to find money for the down payment? When trying to do seller financing? Well, that is going to be a multitude of things. We're talking about private investors, and I think we've covered that pretty darn well today. So that's one way. But if you're looking for how to cover the down payment, one of the first deals I did was hard money. It was a deal that supported a hard money loan where I went out and borrowed money at 9%. Rates were a little lower back then. And did my entire rental project and leased it up. That was 101% financed. So I actually borrowed 1% more than I needed to close that deal. Cody, how else can we do that?

Well, we talked about private. You can do hard money, you can do seller financing, which is nice for private. You can do conventional, you can just go get a bank loan. Make sure you do your fixed rate, though. I was talking with that one guy at Applebee's. He has a buddy whose loan went from a cheap rate to 14% on $32 million loan.

Oh, oh, that's a lot.

So make sure if you're going conventional, make sure that— make sure that you fix your rate. But conventional is a great product. You just do a JV with someone who's got the money. But I mean, conventional or private or cash, you got to have one of those three. There's not really another option. For financing. So either go the private route through debt or equity, um, or you go get it through a bank or credit union, or you do the hard money route. Yep. There's not that many options in real estate, which is convenient because you don't have to learn a whole bunch. You just learn a few things, or you learn a lot of things about a few things, and, uh, you can become a pro.

How soon do you call back after an owner doesn't pick up the phone or they don't respond to their voicemail? Oh, this is one where people overthink this all the time. You call people back when you have a reason to. If you didn't reach them the first time, I'm probably calling them back the next day, maybe 2 days. Like if you call them 3 times day after day after day, like, sure, give it a rest. But I mean, generally speaking, people try to come up with formulas for what is the exact right amount of time. It's like, do you have a reason to call them? Is it important that you get in touch with them? Then keep calling. For the Robinhood, I called those owners the day that I decided I was calling on that. I didn't reach them. I called them 4 times that day and I called and I caught them the last segment of that day, like very end of the day, called them on the last call I was going to make. I went, oh my gosh, I never answer my phone. I'm so glad you called when you did. And Cody, you know, the owner, he does not answer his phone. He literally never has it on him. That's just how they roll. 4 times a day was just fine. And that— is that excessive? Maybe. Did it work? Absolutely. It's our biggest asset dollar amount that we've ever purchased.

Yeah, it'll be our biggest asset for— I mean, I'm guessing like a year or two, we'll probably go buy a huge apartment deal, but That was worth the 4 calls.

Yeah, I'd say. And I think a lot of people would call it excessive. It worked. So don't, don't overthink that. I don't even think there's a right answer. Just call until you get an answer. And that worked for me.

Yeah. All right. Refiguring my screen.

That's okay.

I see it here.

Oh, we did have a comment here. 25% likes to views ratio. We got to keep that under control, guys. If you appreciate this, hit a like. If the chat's in your way and you're on your phone, hit X on the chat, hit like, and then click join the chat. Well, yeah, we do appreciate those because then YouTube thinks that we have valuable content. So if you appreciate this, hit that button for us. After them turning turning the deal, would you do installment payments to them monthly and lose cash flow? I don't know exactly what turning the deal does, but I think I get the gist of the question. So basically, once you've hit the goal of the deal is renovated, I guess turning means renovated in this case. So you get a deal, you bought something that you needed an equity partner on. That's my understanding. Is there a point where you do monthly payments to replace the equity? And the answer to that would be yes, you can change equity to debt. You don't have to do that, but that is something that we've done before. If we bought a property that didn't cash flow well, we couldn't raise additional debt, we brought on equity partners, we got the income way up, and then we bought them all out with a note. And that is an option. You can trade debt for equity, equity for debt, however you want to raise capital. That was part of how Cody launched his business is he bought out a— had some people buy out his partner. They sold that equity to Cody. Cody got the equity, needed money, and sold that equity to a couple other people. So you can change your position into cash, you can change your cash into debt. There's a whole bunch of stuff you can do. But, um, yeah, that's— I believe that is the answer to that question if I read it correctly.

And there's ways to convert it to debt. I mean, I've done it. This guy, Brian Flynn, family.

Brian, there he is.

We're live. Oh, nice. Yeah, but you can convert to debt with the investors or you can go find someone who will give you new debt to cash out the equity position. You can buy equity. We do that literally all the time. Doing it today. You can, you can do it on your real estate, on your companies. If you do it too much, then you're going to have to remember there's taxes. Taxes are a thing, but you can absolutely convert it back. And I've done it a couple of times with Flynn now where they've given me the money to buy out equity positions. Shout out to Flynn. We share an office. All right, next question.

I got one here. I've been meeting with very large owners in my market and I've gotten great advice. You'll notice that happens a lot. The very large owners didn't get there on accident. They usually have great advice. Most of the advice doesn't really apply since all of them got in market when prices were a lot cheaper and easier. I have found this to be true. Whenever you bought, if you let enough time pass, all the properties were cheaper and easier to buy. That's just a function of time. When they bought properties, I guarantee you they had everyone telling them either interest rates are too high or prices are too expensive. And it was the same thing. Time fixes all things. And most of the big investors in your market are where they're at because they had time. Wait to see where Cody and I are in 5 years. It will look a lot different and everyone will say, well, when they got started, that was before all the inflation. It was cheaper and easier. It's like, yeah, but when we got started, it was the price is the price.

It was freaking hard, man.

Not easy.

Yeah. Everybody looks like a genius in real estate when you wait. My first deal that was on the market for almost 2 years, I overpaid. It sat on the market for a year, then they raised the price and I paid them their price. If I could buy more deals at that price today, I would buy every single one. Time fixes all things.

That's why the buy you— why do you buy it? Oh my goodness, it's been a day. How do you buy it? How do you never lose it? The thing I say every single week, you— that's why that's so important though. You know how to buy it, but if you never lose it, time will fix everything else as long as you can hold it long enough. I've seen a lot of people buy deals where it's like, oh no, I bought wrong. The market turned on me. Something didn't work. And they still made money. It took more time, but they were able to float through and the market corrected. If you bought a cash-flowing deal in long-term debt in 2007, you watched your values plummet and it took years to come all the way back up. You still made money and you got paid to wait. And that is exactly what you're trying to create.

All right.

New to the channel. Where do you guys buy?

What's that?

Oh, sorry, I was reading one. Here, you read your question, then I'll read this one.

Oh, oh, so I see your question. I missed that one. Where do you guys buy? Grant County and Mason County, primarily Grant County. We did a deal in King County. Yep. King County sucks. Never buying there again.

Fact.

But I'm going to keep buying in Grant County. And that's primarily where we're at. So we're over in Eastern Washington. All right. From Lowell, how often do you recommend calling up your favorite broker to get up-to-date figures on market cap rate, sales price, rent per unit? I mean, I don't really care about that. I call them about deals, not about market figures. That doesn't really matter to me. I'm going to be looking at enough deals where I know what the market figures are. You see, you see what trades, you'll see what doesn't. You'll get an idea.

And if you're getting started and you're meeting brokers and that's something that you're asking for someone in your market, like, that's fine. But I wouldn't be asking them for updates all the time. Like, once you know the market typically doesn't massively change every single week, month, quarter, you look at, you know, every 6 months I might do a quick update like, hey, I've been running my numbers. What have you been seeing in the market? I want to make sure that I'm using a good cap rate or whatever. You can use that relationship point, but having that conversation once, maybe twice a year.

Okay. When dealing with hard money lenders, how would you set the down payment? I was told by brokers, hard money lenders wouldn't fund the down payment in a deal. So how would I go about doing that? Well, some people will, some people won't. So you're going to find a company that can do a second position. And it gets easier when you build equity. If you don't have any equity, you're probably not going to work with a hard money lender. You're probably going to have to work with someone who is a private individual. It's just like if you want to get an apartment. It was very hard for me to qualify for a traditional apartment a year and a half ago. Now it's easier. But back then it was very difficult because I didn't have a real job. I didn't have a stable income. However, I had the money and I could make the payment. If I had just gone to a mom-and-pop single-family house rental, I would have qualified easily. So if you want to get into it in the beginning, you're going to have to take it private. You're not going to use some huge corporate company. You're going to have to go with a smaller mom-and-pop lender because just like with the rental, I wouldn't have qualified a year and a half ago on my own to rent a corporate apartment. I don't fit their box. Small mom-and-pop operators don't have a box. Same with lenders. Okay. How would you recommend starting for rental investments? First-time homebuyer looking to go single-family, fourplex? Well, get prequalified. You get your prequal letter and your prequalification and then your preapproval. That's going to be worth more than your prequal. But once you're pre-approved, you have a number with a reputable lender, then go out there, start working with your real estate agent, looking at 1, 2, 3, 4-unit properties and make your offer on something that works. But house hacks, a super simple way to get started. And if you qualify, fantastic. Make it happen. All Nighter Hider asked, so it sat and they raised the price. Absolutely. A lot of people do that. It'll sit and then they'll make some type of improvement. And so they put in all new sprinkler systems, sidewalks, and so they raise the price. But nobody asked why they raised the price.

Who just raised the price? I've seen that happen too. They've done no improvements. People started cooking meth in there and then the price went up. I don't understand that strategy, but I've seen it happen.

Yeah, they're smoking something. All right. How often do you guys go live? Every single Wednesday, 3 p.m. PST. All right. Thanks. My short goal is to offset my living expense. I live in Bay Area. Do you recommend house hacking or investing in another state where numbers make more sense? You can absolutely house hack. You're going to have to live somewhere unless you're moving. But even if you move, you're going to live somewhere. So if you can mitigate the cost of living or remove it altogether, that will be beneficial for you in the long run because you'll be able to save more of your income. You should also— oh, good. You should also invest for cash flow. So if you have an opportunity to get a great deal that adds $1,000, $2,000, $3,000 a month in cash flow somewhere else, absolutely go for it because that can pay for your rent where you're living. But you have to buy the best asset in the best location that you can that provides the most stable and consistent cash flow for you, because that is what's going to change your life and minimize some of the cost of living that you're experiencing. Do you know anyone buying in Oklahoma? No. Unless it's Tulsa. I do know someone buying in Tulsa. All right. Our last question in the chat: What's the best way to meet these large owners in real estate? I'm a college student, Staten Island. Or Staten Island. What would your advice be for me to get started in buying rentals? Well, we have a video, How to Find Contact Info for Any Property Owner Ever. That's on our YouTube channel. It's one of our most watched things. It's our second most watched video ever. Big pink background. You should check that out. That's how you connect with the top players. Super simple, free to do. But check that out and start making the cold calls because that's how you're going to start reaching these people.

Yeah, the biggest thing. Yeah, the biggest thing is just set your goal and then find the people who've done what you want to do. I mean, that's all it really comes down to. So your goal is to get to 100 units, find people who have 50 to 1000 units there, there'll be people who are approaching or have surpassed your goal. And then you just find those people in your market. They'll teach you how to get there. You want a streamlined way to get some of the basics. We teach that in our course on multifamilystrategy.com. We teach it in our mentorship. But ultimately, the entire goal of our mentorship program is to give you the basics to find your own mentor in your own market who's going to help you. And they will probably do that without asking for money from you.. But we can give you the basics, the know-how, how to talk. But at the end of the day, there is not a single person more qualified to teach you how to play the game than the person who's already done exactly what you want to do. And that is it for the questions. So we will end right there. That's a live. We'll see you guys exactly the same time next week. I now know how YouTube has changed the backend so I can launch these streams from Zoom correctly the way we always have. Till then, we'll see you all soon.