Creative Finance 150 rentals by 24 years old with Cody Davis

Everything you want, someone else has. To do that, as soon as you meet with them, you have to shift. If you don't shift, you're going to be the most liked, unproductive person on the planet. They will love talking to you, they will never work with you. And that's just the reality of the situation. So your goals, we put that down here, you've got your future. And without fail, this always works. This is how every conversation in every interaction is going to go. You use this to book your meeting, whether it's a cold call, you meet them up briefly in coffee, whatever it is, you have to move to this position. Because people will work with you based on where you're going. That's been true regardless of the relationship that we've built. Maybe it's your spouse, they're going to stick with you based on where you're going. If you're not going anywhere and you're living in the past, they will leave you. If it's a business partner, it's the same thing. You have to focus on this, and this is just the core, uh, before we even talk about properties. You share your goals, where you're going, people will be more inclined to work with you. And the last sector here is S. Anybody know what that is? Significance. So the last piece, significance, and this is not your why. That's what most people get wrong. Why are you doing what you're doing? That's not the most important piece. What changes for you when you hit your goal? That's the most important piece of this. If you can get in front of someone, an intelligent human who's done what you want to do, who has what you want to have, great. You've done the first piece. You've shared your goals, they like your goals, they want to help you get there. That's great. Significance is the only reason I was able to turn $3 grand into $10 million. And I only have half that because Christian has the other half.

Aha.

Aha. Significance is the magical piece. What changes— and this is the question that I crafted over time that everyone should write down— what changes for you when you hit your goals? If you can figure out how to effectively communicate that without overexplaining, you can lace it into conversation, you will get audience members who are way further down the path than you and have a conversation with you. When I was getting started, I wanted to help my mom. That was it. That was my why. I wanted to help my mom. But what changes for me when I actually hit that goal? My future generations that aren't even born yet won't have to be stressed to go through this cycle. I want to make sure they know it, but they won't have to. They won't have to be as sharp. They won't have to be in as much pressure like most people are today. And that is the significance piece. It's not the why, but it's the what actually shifts. And so I figured out how to map all that out. It took years to draw the circle, and now looking at it, it's pretty dang simple. Shouldn't have taken that long. But this little sector drill, if you can master this and practice communicating with people, this is the difference between getting a deal that you probably can't afford and making it in your budget, which can really take a lot of time out of the situation. You go from investing for 20 years to get to financial freedom all the way down to maybe 5. So Christian and I did this, we started meeting up with people. And one of the people we met up with on this resort, they were— it was undisputed that they were farther ahead in life and financially than we were. We also did that over in a little place called Grant County, Moses Lake, Freida, Quincy. We had met with owners, people that were way further ahead. We went through this drill, and Christian and I did the intentionality drill where he mentioned it earlier. We go in with an objective, we walk away with a takeaway. Has anybody done that before? You say, I'm going to get X out of this meeting, and then you actually sat down and wrote out what you got. If you haven't done that, you should do that. That's how you grow. That's Tend to go really fast. We did that. And as a result, we started learning from these people that had 50 years, 40 years, 30 years of experience. So we condensed it into an hour, 2-hour long conversation, which brings us to the next step, the actual finance piece, the main topic for today. You want to buy a property for a million bucks, and the only problem is you don't have a million dollars. All right, so how do we come up with a million bucks? Ask nicely. Okay, I have done that a couple times, but okay, so that's, that's one way you could get a million dollars from one person. Done that before too. Christian Osgood, when we raised this, we were originally going to raise $250,000 from 4 people. One person brought in a million $1 million. That is possible, but it comes down to what? Coming up with money. And there's two types of money. What are they? Anybody know? You go take a car loan, you get money. Debt. Debt, alright, so that's one. So you got your price up here, and we have two types of money. You have debt and equity, there we go. The question is, and this is the creative piece, which one do we use? How much of each one do we use? Because if you use too much debt, you go bankrupt. And if you use too much equity, your returns are too small. And if you don't have cash, you don't have any equity. So that's a tough place to be. When I was starting out, I had $3,000 I could use as equity to buy a million in real estate. It's not quite enough. So I ended up doing 100% debt. And if you're going to do that, there's some rules. You have to make someone else pay for it, because when you have a stupid tax, even if you have to pay it, you want to use other people's money. So, uh, rule number 1: someone else has to pay for it. And if you follow these, you will not get burned in real estate. So you don't pay. Number 2, and this is just for the debt piece right now, it has to be long-term. You have to make it long-term. And what that means could be different for you, could be different for us. Christian and I like 7+ years. 7 years is a long period of time. Some people want 30-year fixed-rate debt. There's nothing wrong with that. That's better than 7-year fixed-rate debt. But 7 is a good timeline to get your business model done. And then the third one, it has to be fixed rate. There's no exceptions to this. If you violate this, then you're at the wrong place. 100% of the time, even if it's a high interest rate, it has has to be fixed rate. Christian and I are doing a refinance right now. It's 9.875% interest, but it's fixed for 10 years. And cash flow. It's a high interest rate, we'll probably refinance it. But we hit our criteria. We're not paying for it. It's 7+ years. And it's a fixed rate loan. If you follow these and you create a finance team, you're You're not going to get burned. So when it comes down to actually creatively financing something, you choose to do debt or you take on a partner. Let's say we want to buy a 12-plex for $1 million. What are some things we should consider if we're going to try and follow these rules? Where your debt's coming from. Okay, so we should consider where the money is going to come from. Christian, I've done a lot of seller financing. If you're not familiar with seller financing, I own this pen, I can accept payments to give you the pen, or you can give me a bunch of cash. That's the simplicity of it. That's what we did here. They don't need cash, they accepted payments rather than getting a lump sum. So you got to consider where is it going to come from, because the money does have to come from somewhere. Usually it's just equity tied up in an asset. It's someone like Eon who's paid off the house, they've owned it for a while and they have no debt. He can take payments and sign over title. He doesn't have a bank that's telling him what to do. He's put himself in a great position. You gotta figure out, are they going to want any money down? When you sell real estate, it is very expensive. You have transfer fees, excise tax. The government loves taking their money. Taking her money. You're going to have probate taxes if you haven't already paid them. You have lots of expenses you got to pay. So they might want some money down. And so no matter what you're going to structure in this deal, if you follow these 3 rules, that's going to help you determine down payment. Like, I think you, Mike, you did a seller finance deal with Gary, right?

I've done a few.

Yeah. You want to give us an actual number?

Uh, one I did zero down on?

Oh boy, okay. Let's do one you did a little bit of money.

Okay, uh, I did a 20% down seller finance on a— see, it was an $80,000 duplex.

Wow. So we got a double, we got a double house. Yeah.

Okay, 20% down, so $16,000 out of pocket.

Uh-huh.

5% interest rate. Rate, and it was 15-year amortization, fixed for the whole 15 years.

Okay, so you had a $64,000 loan. Yeah. All right, so did you follow these rules?

Um, I mean, I did pay some because I put a down payment in, but I'm over 7 years and I got a fixed rate.

So that's awesome. And then the don't pay, you don't have to worry about not putting money down. You don't want to pay for the debt. That's the biggest piece. So what's your debt payment on this?

I believe it's like $550 or something like that a month. $550 a month because amortization's 15 years.

That's crazy. All right.

And each side is rented to a Section 8 tenant for $1,050 a month.

So $2,100. Wow.

Yeah.

Oh, that's good.

All right, that payment does not include taxes and insurance because the seller financed.

I pay that out of my own pocket, so maybe another $200 a month. Okay, so make that 7. Yeah, but you get the idea. He's hitting all these rules. He's not paying for this debt. If you can get other people to pay for your stuff— I said this earlier when we were walking around at the triplex— you don't have to have any money if everyone else pays for yourself. That's the core of what we figured out how to do. You can take on as much debt as you want. You want to go buy a million-dollar house, find someone to pay for it. I'm sure that every deal you've done probably hits this criteria. Absolutely. Successful investors hold real estate for long term. It's fun to get creative, it's fun to figure out the financing piece, but every single deal of people that buy and hold real estate is going to follow this criteria. Now the next exercise I want to do— how do you double money in real estate? We're going to use your deal too. If this goes from $1 million to $2 million, what's our ROI? 100%. Okay, how much did you put in the deal? Huh? How much did you put in the deal? That's right, you need one more input. What's your capital in? Investors love returns, right? If you paid cash for this and went to $2 million net sales price, you're going to double your money. If you put $100,000 down, you turn $100,000 into $1 million. This is where the creative piece gets a little bit interesting, because investors love returns, and I had to borrow money from investors if I wanted to play this game. Didn't have any money. If we go to Mike's duplex deal right here, how much would it have to go up in value for him to double his Bought it for $80,000, $16,000 down. What would the value have to be for him to double his money? $96,000. It's worth way more than that now. Oh yeah, it's like $160,000. Okay, so that's where the creative piece can get really fun, because if you don't put a lot of money down, your returns explode. And this is where you can start borrowing money from other people. This is where it gets to be a lot of fun. When Christian and I bought a deal in Tequila, terrible market. Sorry if anybody likes Tequila, but we, we hated it. We bought a deal for $1.1 million. So I'm going to put $1.1 million purchase price, $50K down. Most real estate people are going to have to put $250,000, $275,000 down. When you figure out, okay, we can put less money down, you unlock new opportunities. If we do two examples here, we're going to do our purchase price of $1.1 million on both sides. One person's putting 25% down and they're buying the same deal you are. To go up and double your money, what does that have to go to? $1.375 million. If we have the same return over here, the same value increase, your equity gets multiplied like crazy. And so now it comes down to figuring out, okay, well, how do I get the low down payment? Christian, how do we get the low down payment on that?

Oh, we asked for it, but we had a, we had a relationship with the seller, and so that was where the deal works. They actually wanted a lot more money, and And on this particular one, we came up with a structure where it's like, okay, well, the longer we hold it, they wanted— originally they wanted $150,000 down, I believe was the number. We said, well, look, between all of us, we can do $50,000 without having to raise any money. The 3 partners were able to do $50,000 in. We said, okay, but at the end of every year, we'll do an extra $50,000 or an extra $20,000 of principal paydown. We'll pay you additional principal every year. It's not your $150,000, but the longer we hold it, the more and more principal you get back in addition to the amortized note. Which I believe had a custom— and we're also paying $1,000 of principal back every month.

And Christian had done the relationship piece. This was not my relationship. He did the circle drill. He did the sectors. I'm just I'm going to subtract this out so I don't make a mistake. So we have, oops, unless someone wants to do the designated calculator, Christian, because apparently I can't do this one. 825. Huh? 825. Perfect. All right. So we owe $825K over here, and this is our debt. Goes to, say, $1.4 million, right? We have $350,000. We 7x our money. Goes to $1.4 million over here, we have $575,000. We just over doubled. Our return goes way up. Your goal when you're buying real estate is to create an opportunity that is in plain sight that other people don't see. You do that, you can make what's called spread. And so if you can do 700% on your money versus a double, you think there's a little bit extra money left over for you. That's, that's the name of the game. When Christian and I got started, we took an asset where we put very little money down and doubled the asset value, went from $2 million to almost $4 million. And we took about 700% return on our investor's money but promised on the double. You see how that starts to stack up? You offer someone $600,000, you walk away with $2 million. Starts to add up very quickly, which I wanted to take all the way back to— sorry, very far— the car debt.

Someone said get a One Rental at a Time book out.

Sorry, it happens. All right, so this is all fun, but we got to go back to the principles that I shared earlier. You can't pay for your debt. So there's this thing called a factor rate. Has anybody heard of that? This is— yeah, if you've been in multifamily strategy, you might know a thing or two about this. This is probably the most important number in our business. And I learned about this when I got COVID, so all good things came out from COVID Factor rate is your cost of capital, simply put, that's all it is. If you can figure this piece out, you will do very well with borrowing money. This is your cost of capital, and I think it's It's important to know what things are, it's important to know how they work, and it's important to know the equation. So in this case, all you're gonna do, this is something that you'll probably take a month or so to study, I feel like that's average timeline for everybody. You're gonna take your annual, with real estate everything is on an annual basis. So if you have the monthly number, multiply it by 12. So it's your annual debt payments divided by your loan amount. All right, so that's the equation. Now what this represents is your cost of money as a percentage. Is anyone on Wi-Fi? All right, so let's just go to a mortgage calculator. Let's say we have a round number. You're buying a deal in Gary, Indiana. You owe $100,000. I think that's fair. 30-plex. Yeah. Oh, 30. All right, so, so if we come down here, you've got a loan amount of $100,000. And we're going to do that at 6% interest. What would that payment be? $5,000 a month. $5,000 a month? That's going to be expensive. 6%. What time period? 30? Yeah, let's just do a 30-year AM. I mean a year, not— $599,000. $599,000, okay. So if we're doing a 30-year AM, And your amortization is just your payoff period. That's why car loans are so dang expensive, everybody. You pay them off so quick. If you have a 30-year amortization, you're gonna have a $598 payment? $599. $599, so basically $600. Alright, $600 on an annual basis, 'cause we need our annual payments, would be $7,200. Alright, so our payment is gonna be is going to be $7,200 per year. Alright, so the next part of the equation is we have to divide that by how much we borrowed. So what is our cost of capital? We take $7,200 divided by $100,000. 7.2%. Alright, so this is why most people get burned in real estate, and while it's a little bit clunky today, and I'm having a brain fart, This is super important to note. Most people go and buy a real estate deal. They say, well, I'm going to borrow at 6% interest and I'm going to go earn 6% and I'm going to break even and it's fine, it's going to get better over time. If you borrow at 6% interest on a normal deal, your cost is 7.2. And most people, once they figure out they can buy anything, they try and buy anything and they end up like our mentor who helped Christian and I get started, and you lose everything, which is less than fun. He bought— was it 20 condos? Yep, 20 condos, and lost them all. And then he bought 2 commercial buildings and lost one in the process of another because he didn't figure this out. Your cost needs to be less than your dividend. So we're gonna go to our dividend. How do we make sure that this is And not Dividend Dave. I don't know if we're live, but we are live.

Oh, heck yeah, Dividend Dave's in the chat. Say hello.

Hello. All right, so your dividend— and this is just something that you have to figure out— is called the cap rate. Anybody heard of that? That is not in Multi-Family Strategy. So your cap rate's your cash-on-cash return when you pay cash. It is just that simple. If you buy a $100,000 property in Gary, Indiana, or in Moses Lake or Evansville. I have a couple properties 5 hours from you. I've heard. Yeah, if you buy it for $100,000 in cash and at the end of the year you got $10,000 in cash flow, that's a 10% cash-on-cash return. If you paid cash for it, it's a 10% cap rate. You're looking at what your actual dividend is. And you can get this with stocks because you're paying cash for stocks. Hopefully, hopefully you're not leveraged. Whatever money you put out, you pay cash for a deal, You're going to get X amount of cash back. That's going to figure out how do I get my cap rate. And the equation on this is you have your NOI divided by your price. For those who are new to this term, NOI is cash flow with no debt. That's all it is. Imagine you're Dave Ramsey, you're paying cash for stuff, you have no debt. That is the simplistic view of of this. So it's debt-free, unlevered cash flow divided by your price. And that's going to figure out, okay, what's my dividend? I pay X amount of dollars, I'm going to get that return on that deal. So we have our cap rate, which is our dividend as a percentage, and we need to do an apples-to-apples comparison. We have our factor rate, which is our cost expressed as a percentage. So if we just look at the simple math, we want our cap rate to be higher than our factor rate. For those who are writing this down for the first time, cap rate always needs to be higher than factoring. And in a simpler form, your dividend has to be higher than cost. If you can do this equation— and while I apologize, it's a little bit confusing the first go-around— you can borrow as much money as you want and you will never lose a dime on the debt. Cap rate Needs to be bigger than factor A. Did everyone get the equation down from the last slide? We're good? Okay. Does anyone have questions on this? Yes? Okay.

Okay, so can we use like a real mortgage as an example?

Go for it. Okay, great.

So, uh, let's just start with some numbers on that for like one property.

Okay.

Uh, $109,488.75 is currently what they're putting in, and then $1,483.11 is the payment. That does include—

this is a house?

Yeah, it's a house.

So it includes tax and insurance. So first of all, you want to include that in your calculation of, uh, so You got to take the taxes and insurance out. Okay, take taxes and insurance out.

Because we're just looking at debt payments. So this, this is your, this is your house. Okay, thanks. So you've got a house. Yep. You owe— I don't know, I think it said, uh, okay, so let's say you owe $110,000.

Yeah, and let's see, the So the actual, the principal is $713.47, interest is $205.29.

What are those added together?

Uh, $917.

Okay.

$917 and—

So you have $11,000 a year in payments. Uh-huh. Okay.

And change. So $918, maybe, round it up.

Alright, everyone, those are your answers? Round it up, sure. Yeah, $11,000 in payments on a $110,000 loan. I like these numbers, they're very simple. Your cost of capital is what? We take our annual payments divided by our loan amount. 10%. So that, it's a 10% cost of capital loan. Okay, what's your interest rate? 2.375%. So you have a 2.375% interest rate, but your cost on that money, you would get a 10% cash flow bump in your universe if you paid it off. Okay. You know, it's at 2.2% because you could spend $110,000 and get $11,000 back per year. Okay. So this is why it's so important when you're looking at these numbers, the further you get into your loan, the worse this ratio is going to get. Because eventually you're going to have the same $11,000 in payments, you may only owe $11,000, right? You pay it off, you get the money back in a year. Now you may not do that, but you get the idea. You should look at all your debts when you're doing this. You've got to make sure cash flows, but you should look at your total cost. It's never just the, uh, the interest, right? When people go out and buy bunch of real estate, they like to say, well, I'm borrowing at 4% to make 5%, and they're actually losing money. You got to look at what your cost on the debt is. Well, what's the difference between the cap rate and the fact rate that you look for? I, I know you said the cap rate needs to be more, but how much more is it? Sure. So if we go back to that, let's say you bought a deal where Your cap rate, your dividend is 5%, and your cost is 4%. If you were out— and this is where it gets really important just to go through the equations, practice the numbers— if you're buying a $100,000 deal and you borrowed the total amount, you're going to make a 1% spread. So you're going to cash flow $1,000 because loans you can have. That might sound enticing to someone getting started, but $1,000 will vanish like that, especially in this case. So the spread, maybe you want to be 4 and 10, 4 and 6. It depends on the size of the deal, because if this was a $100 million deal, everyone would take a 1% spread, right? Make a million bucks a year on a $100 million loan. So your goal should be, how can I borrow in the most efficient manner? How can I borrow the most amount of money with the biggest spread? And that's it. It doesn't have to be crazy, you don't have to make 10% on someone else's money, but if I can borrow at a cost of 4 and make 5, then if I'm borrowing a million bucks, I'm cash flowing $10,000 a year for signing a piece of paper. Scenario, some money. So the whole idea of what we've built is trying to simplify the fact that things are going to cost you money. If you borrow money, it's going to cost you money. All commercial real estate, which is what we buy, even residential real estate, is going to have some cap rate associated with it. It makes a certain amount of net income, and you're paying a certain price. So if you take the net income divided divide by the price, it's going to give you this ratio every single time, whether it's 5, 8— somewhere in Indiana you probably get 10% cap rates. Your deal you bought for $80,000, what's the cap rate on that?

The one that we just talked about?

Yeah.

Put me on the spot for quick math.

It's okay, I did it to myself when I'm here.

30%.

He gets a 30% cash-on-tax return when he pays cash. Your cost of capital is not that bad. I mean, if we go back to just your deal, you have a 30% cap rate. And I went through a lot of these. What happens when you're less forced? The Robin Hood All right, so you had a $550 interest and principal payment we added for the extra taxes and insurance. $550 times 12, your annual debt payments, divided into your loan amount of $64,000, so your cost of capital was 10.3%. Your factor rate was 10.3%. Your dividend was 30%. You're making 20% to sign that loan. So I do it, guys. No big deal. Yeah, but that's ridiculous. And that's why if you go into cash flow markets like that, it's way easier to go on debt. Way easier. Because your dividend is significantly higher typically than your cost of capital. Your cap rate's higher than your factor rate. Your dividend dividends higher than the cost, you can borrow a ton of money. So Christian, I did this in Moses Lake. He's doing it in Texas. Every single deal that we buy, without exception, will follow this. We talked about the rules here. There's one more rule when you're getting creative on stuff, and it's on one of these pages way over here. Your cap rate has to be higher than your factor rate. Those who wrote down the equation, I just want you to think. You don't have to know all the intricacies of how this works right now. If you can think through that, this is how we finance every deal. It's how we come up with ideas to propose stuff. Caleb bought a deal where his cost was higher than the dividend, so he asked for 6 months no payments. Was that the longest one you did, or did you do 12 months? That was the longest.

I think the most creative thing I've done—

well, that is, but I did a negative AM on a deal a while back Okay, so let's talk about how do you lower your factor rate, your cost of capital? Have the loan balance go up every month, don't even pay the interest. Maybe not the smartest move for all deals. Not for long-term stuff, no. But Caleb made it work, he followed the rules. Because what Caleb was able to do is by lowering the amount of interest he paid, He didn't lower the interest rate, he just didn't pay the interest. And you have to sell her to be on board with that. He lowered his annual debt payments, which got his factor rate, his cost, below his dividend. There's a ton of ways to make it work, and the creativity is going to come from you. But if you follow these rules, you can get any deal to pencil. And at the end of the day, that's what matters. So last thing we're going to do, we're going to go back to the, the debt products. We talked about in the beginning, Johnny has a $42,000 car payment, or that's how much he owes. What is the most efficient path to knock that out? Sell the car. Okay, without selling the asset, put it on Turo. Appreciating asset. All right, it is a depreciating asset, but selling on some stuff— effort. Okay, put it on Turo. All right. So let's figure out a real estate solution. So for real estate people, I want to figure out how to wipe out a $42,000 obligation. People that do well in real estate are able to manage their options and their obligations. Johnny has the option to pay extra every month. He has an obligation on his balance sheet of $42,000. We need to not get a whole bunch more of those, or we're going to go bankrupt. So we want to get proactive and knock it out. So I'm going to make it a real estate problem because right now it's a personal problem, and I'm doing the same thing with my car. I gotta pay it off. So let's say Johnny goes out and he buys a 6-plex. We got 6 units and we want to knock out a $42,000 payment. You buy it at market value, you don't even get a discount. What do we think our first step is to knock that out? Anybody can answer. Multi-family strategy. Caleb can answer. Find the 6-plex. Okay, so you gotta figure out how to buy a 6-plex. You're gonna pay market value for however it's doing. Okay, that's a good start. So we gotta increase rents, but the question is how much? Because whenever we have an obligation, we're gonna do the car, then we're gonna do the house to where you pay off your house, and you can do this in a year, by the way. We want to make all of our personal problems a business problem because you put it on the real estate, the real estate doesn't have feelings, we do, and it's less stressful. It's not a problem. So let's say we get a 6-plex, we pay market value, and you raise the rent $100. So if we raise rent $100, we get an extra $600 a month, $7,200 a year. If we go back to that cap rate function, let's say that we're at a 6% rate of return. We've got $7,200 a year in new NOI. We divide that by a 6% return, how much did we go up in value? $7,200 divided by 6%. $120,000. So just like that, we got an asset that went up $120,000, and all we did was raise around $100. So we could go sell the asset, we could refinance the asset, and maybe we get the value up $120 grand. Maybe you go to a bank and you ask for $42,000 against the equity in your deal, and now it's paid off. You put it on an asset that you didn't know. The question is, how do we get the 6-plex, right? And this is the game that Christian and I are always playing. How do you figure this out? And that comes down to the relationships that we've built through the circle drill, making sure that no matter what debt we negotiate, that our dividend's higher than our cost of capital. And now you could pay market value for this, you could overpay for it a little bit. You just have to figure out, can we find a 6-plex where we get rents of $100? Or can we get a 12-plex where we get rents of $50? And you start asking yourself that question, because as soon as you ask yourself the question, you can start to see the opportunities. And you could make $780 a month payment into a real estate problem that's paid for by the cash flow. So that's what I'm working on right now with the sixplex. We're gonna do the same thing with the house. I'm gonna quiz somebody in here though. What is the factor rate on Johnny's car? Annual debt payments divided by the loan amount.

22.2%.

That's expensive. So he's gonna get a 22.2% cash-on-cash return by paying that off on a personal level. So he just has to make sure his cost of capital on his commercial loan is a little cheaper than 22%. He's gonna feel good. That's the simplicity of what we're doing. That multi-family strategy, trying to move personal obligations to business obligations. Christian helped me out with that a lot. Our first mentor indebted me $450,000, and that sucked. But as a— on a personal level, makes me want to file bankruptcy. On a business level, I'm like, that's a duplex. So whatever you have, if you've got a car loan, you got a credit card, if you've got a house loan— this is the reason we do what we do. Let's do the same thing here. So my first deal is a 12-plex, so we'll use a 12-plex. As a quiz, who can figure out how much we have to raise rent to knock that out? What would be the steps? We work backwards, so we just worked through an example forwards. We took the NOI bump and divided it by 6%. What if we multiply 380 by 6% to figure out how much NOI we have to boost it by? All math can go forwards and backwards. And, huh, $22,800. Okay, so we need $22,800. $1,900 a month divided by 12 units. $158.33. Okay, so if we wanted to come up with this amount of new equity that we didn't have before, we'd have to figure out a 12-plex where we could get the rents up $150. Is there a 12-plex in the United States where rents are $150? Whose house was this? Mine. So That would be my question to you is, can you figure out and commit to finding a 12-plex where the rents are $150 low? Yeah, you can find that. I can find that. That would be my next step if I were you. And you want to just start going through this exercise and make anything that's on a personal level a business obligation. Because as soon as you do the math, there's 12-plexes out there where the rents are $300 low, $400 low. I bought a 12-plex where the rents were $550. Now they're $1,125. You can start stacking massive amounts of capital just by going through this exercise, going through what we went through earlier to make a pitch, to meet the people that have what you want. Caleb did this. He took the rents from $550 to $1,100 on 25 units, 26 units. Think about how much equity he's building in 6 months, 12 months. Instantly your house goes away. And right now it's all just numbers on a spreadsheet, but when you make it personal and say, I don't have a house payment because I spent 6 months to figure this out and another 6 months to optimize it, it becomes personal and it starts to emotionally move you forward.

So that's what I have for We're going to jump into Q&A pretty soon, and so we stay on schedule, we're going to bring all the speakers up. So the first questions to Cody, we'll just, we'll just launch the first few to you. We just did a bunch of math, so let's take a second, stretch, move. We're on the home stretch. We're gonna ask a lot of questions to all the speakers. We're also gonna bring Johnny up, so Johnny's gonna be up here. Ask all of your questions here in a little bit. For a second though, get the blood flowing. We're on the home stretch and then we go, we wrap and we grab some food.

Watch your head.

You're good.

I felt it as I was standing.

Yeah, yeah.

And then here you say you need to pay that off with at least a 5-buck.

I want 12.