Creative Finance Live - When everything goes wrong...

on for the whole call because I'm going to go get food.

You are allowed to do that. And like that, we are officially live. So everyone, thank you for waiting a couple extra minutes. I have Dion and Cody today. I wasn't sure if Cody can make it because today's topic is when everything goes wrong, which in a little bit Cody's going to talk about because everything's gone wrong. For us today, and it's gone double wrong for Cody for the last 24 hours straight. So Cody, thanks for making it for at least a little bit of this video. And Dion, thank you for backstopping Cody. Your presence on the channel is always greatly appreciated.

No, I appreciate the invite. I'm excited about this.

I am too.

For some reason I'm only seeing you on the live stream though. There we go. You're not in gallery view.

Oh yeah, you should put it on gallery view so we see everybody at once.

Oh, that's super cool. Well, everyone on YouTube Live, I'm going to learn live how to run these things live.

So I'm curious, Cody, if you'll share the premise of today's video. It is basically Murphy's fourth corollary. You're familiar with Murphy's Law, right? If anything can go wrong, it will. The fourth corollary is if any sequence of events can go wrong, they will, and in the worst possible order. So tell us about your day.

Well, it started yesterday. Yesterday was a great day. I got to meet up with investors, got to hang out with Christian Osgood, got to hang out with a really good friend, went ice skating later, and then that's where my day really started. Which was about 10 o'clock at night when I left Woodinville. So I drive back, I go charge my car all the way up because I got to drive all the way back to Union. And so I get to Union at about 12:30, driving, I'm 5 minutes away from the resort, and there's a tree that falls and blocks the, the way to the resort. So I have to drive back, and I had probably 40 miles on my charge. I was like, all right. So the other path was, it was like 25-ish, 30 miles. So I was like, I can make it. And turns out the snow eats away at the battery. So what happened out of that is I ended up getting close, but not all the way, and my car dies. And something that I learned about Teslas is when they die, if you leave the car, the doors will lock and you can't open them. From the outside. So there's no manual door. You can go through the trunk if you have jumper cables, but only if you have jumper cables. And so what happened was I called the tow company, tried to get some help. I get scammed on the very first call I make and they take my credit card info and then they have all these excuses why they can't show up. It turns out they're actually in Texas. Based their online business out of Belfair, which is right next to Union. So I'm sitting there for a while, and every other hour I'm making a little— you— or not YouTube, but Instagram update about what's going on. And after the third one, it was getting pretty cold. I couldn't feel my feet. And so in the morning, I have someone who's coming in to pick me up, and then they couldn't end up doing it. So fast forward 11 hours of no heat in 25-degree weather with 6 inches of snow everywhere. I didn't have a blanket, didn't have a real jacket, hadn't had any food, and I've been on the road since way before that yesterday because yesterday was a long day as well. Here I am with no sleep. Everything went wrong in that order. And to top it off, when the tow truck finally picked me up The tow truck got stuck in the snow. So we get to the resort and I'm on the vehicle and they can't get me off. And when they finally get unstuck, the— my vehicle's dead. They can't get it to go into neutral. So my vehicle is stuck on their slanted ramp. So after they get unstuck, now they just can't get the vehicle off. So that was a chain of events that lasted over half a day. With no heat, no food, and I hadn't slept since the morning before. And now I'm operating off of no food. And if anybody's watched our lives before, you know that that is not a good place to be when you're working with me.

So no, it is not. Cody is, uh, food dependent. He is the possibly the funnest person on earth to be partnered with. I am extremely blessed to have him as a partner. When he doesn't have food, he is exactly the opposite. So if Cody disappears to get fed, that is good for all of us. By the way, I have, uh, a few people up on Instagram as well. Hello everyone! If you really want to, uh, see all of us, we're all on the same screen, so you don't just have to listen to half of us. Uh, it's Christian, Dion, and Cody. We are all available on YouTube. However, I'll answer your questions both here and on the YouTubes. Um, but YouTube is the place to see it. Yep, so Cody's car died. The next thing that happened, when everything goes wrong, uh, we got a lot of snow at Union and we were told, hey, it rarely ever snows here, it's at sea level. So we took a little extra time ordering new snow gear. Previously they had a whole bunch of heavy machinery that could clear snow. We did not inherit all that when we took over the resort. So it took out basically every tree that could fall down did. We lost parking structures. We lost, uh, apparently there's some amount of damage to the structure of the wedding tent, which conveniently is not the tent itself. That would have been expensive. Um, the structure is PVC, you can, you can fix it, but that was damaged. Uh, we lost power, we lost the septic backed up.

Yeah, we still don't have power for every cabin except for the one that I'm in. So that's a little weird. It's on its own grid.

Which cabin are you in? Are you in the honeymoon suite, or—

Yeah, yeah, I'm in the honeymoon suite. Okay.

It has been a party. And so we're talking a little bit about what happens when everything goes wrong. Uh, Dion, out of curiosity, you've been playing this game for, you know, roughly 4 times as long as us, maybe 5. Um, Have you had days like this in your properties? You have a smaller portfolio. Have you had days where everything goes wrong that can go wrong?

So I kind of feel like it feels like that whether you have a W-2 job or you're investing or you're trying to have a relationship, like everything all seems to pile up at the same time. And I have a friend who's been investing even longer than me, decades longer than me, has 30 rentals. He's been retired for a few years. I think he retired at like 55 and I was talking to him about a year into his retirement, and he was going to a rental because he's one of those guys that self-manages, self-runs the crews, hires the handyman, kind of does everything himself. Not my style. I'm the lazy investor. I want to, you know, I have one thing to do this week. One thing. I have to put a motion sensor LED exterior light on, and I'm probably going to hire someone like two wires and two screws. But, you know, I'd rather pay someone. And he was telling me, he says, this really sucks. It's like my third thing I'm going to today. Real estate is very stressful. Everything happens all at once. And this one day, he says, most days I feel great, but this one day, this sucks. And I looked at him and I thought, okay, you have cash flow of tens of thousands a month in profit with 30 rentals, all owned for decades, most paid off, doesn't refi, doesn't— he doesn't raise rents as much as he could. So he's not making as much as he could, but he's making tens of thousands in profit per month. And this is the one day you're complaining about because you have 3 things to do. Like, turn that switch off in your brain and go back to having a 50 to 60 hour a week, you know, work week with a boss and coworkers depending on you and customers with Yelp reviews and all those things you dealt with to get to financial freedom. And then remember that, yes, Cody, things like this happen and it's stressful and you have the car issue, but then you're going to have the septic and the trees and the tent, like all these things all at once. But it beats 40 to 60 hours a week for a paycheck every time, hands down.

Dion, can you imagine Cody with a boss?

Yeah, so both of my brothers have— one of them, my one brother had a boss for about 2 weeks when he worked in a restaurant, but they're, they're in their 50s and have never had a boss. I can't imagine either one of them having one. Like, both of them told me I was, um, use a different word, but mentally challenged for joining the military because they said, I can't believe you let somebody tell you when to go to the bathroom. Like, that's their whole perception of the Marine Corps. So no, I can't picture Cody with a boss.

I can't either. Helping run Cody's schedule is as close as I would dare get to being anyone's boss, and it's still a huge job. Um, um, I Yeah, working 40 hours a week sucked, and I never really did that. I only work sales jobs, and I, I can't think of a time I worked less than 60 hours a week. Um, I will take these problems over those problems any day of the week. Having a boss is awful. Uh, 1 out of 5 stars, would not recommend to a friend. The, um, by the way, diving into some of our YouTube questions, by the way, everyone go ahead and post your questions below. We will answer them in the chat as they come up. We'll go tell you guys stop. Cody may jump off early to eat. Dion—

I will probably jet off in 15 minutes.

All right, so if you guys have questions for Cody, post them right now because you have limited time with him. Cody, I wrote down our first question here. Hopefully everyone on Instagram can hear you as well. If not, everyone just hop to the YouTube channel, Cody and Christian Multifamily Strategy. But question 1, oh, we get this question like every week, but I'm going to— we're going to ask it. Okay. So seller financing. I have brought up seller financing on 4 different deals. Every time, either the owner is not clear on how seller financing works or is straight up unwilling to do seller financing. Cody, what do we do in that situation, or what could they do on the front end to fix that problem?

Well, if you want to learn how to play this game, you need to go meet with people who have done it. So if you're just trying to buy real estate from people that are not open to it, there's probably a reason for that. And so instead of just trying to buy their stuff, I'd be more inclined to learn how they played that game because there's probably something they know that you don't.. And you can combine the strategies from people that you learn from to go buy a whole bunch more real estate seller financed. I mean, that's how we're doing everything we're doing. We got offers out on little properties and mid-sized properties and looking at bigger stuff. Everything seller financed, of course, because that's our, our brand. But we didn't do that by just trying to, to beat up one tree and say, hey, look, I don't care if you don't want to do it, like, we're going to do it. It's like, We're gonna go find qualified people that can teach us how to play the game. And then when the opportunity does come up that they're open to it, this is like the idea of selling anybody who's, you know, closing on anybody who's closable versus just trying to close anybody. There's a point where if people are on the verge of maybe like, yeah, I'd be open to it, like let's close that deal. But if they're just like, no, if there's no interest, then there's no interest. So I would, I would keep it just that simple. Learn from the people who are unwilling to do it. If people don't know what they don't know about it and they're unclear on how it works, then your ability to communicate how it works is going to determine if you get it or not. And you communicate it and it gets received. That's the important part. And if it's not received, then they're probably not going to do it. But when you get the maybes, when your skill set's high enough because you ended up meeting with enough people that taught you how to play the game at a higher level, That's where you start closing those deals. You close the closable opportunities.

And when you're doing this right, I'm going to add to that, your maybes are always yeses if you've identified their objectives right. If you identify their objectives, keep your presentation extremely simple, you align your proposal in a way that cash flows to you but hits their objectives, they will accept that every time. Like, if you do it correctly, it will always be a yes. The only time that I see people consistently miss it is one, they're overpitching it on benefits and that's not what it's about, or two, they just talk themselves right out of it. Make it really simple, identify what they're doing and what they need, and if you match what they need, you will get a yes.

I've— and I'm curious to hear Dion's thoughts on this.

And so the main thing to remember when you're talking with a seller is sometimes you have the ability to meet the seller and talk to the seller and find out what they want. But a lot of times you're dealing with an agent and most agents deal with homebuyers, not investors. You know, the four-tiered who will pay the most for property and agents are paid on commission. So a homebuyer buys on payment, so they'll pay the most. Investors buy on yield, flippers buy on value-add, and wholesalers buy on the gap, right? So the agents want to work with homebuyers most times. So when somebody pitches seller financing, it's coming from an investor's perspective of this is how I benefit both of us. Most agents will tell the seller it's illegal because their perception is somebody trying to buy with seller financing is trying to go around paying agent fees. So if you're going to pitch seller financing and there's an agent in any way involved on the seller side, make sure one of the first things you communicate is my down payment will be enough to include the agent fees, which answers the question that is on the YouTube questions about how do you cover agent fees during seller financing if there's an agent? The seller isn't going to want to write a check to offload an asset. Usually you're going to want to make sure your down payment covers that. And letting the agent know it is your intention to make sure that the agents get paid is the way to have them on your side when it comes to pitching to the seller that this is an option.

Absolutely. And that's one of those things that should be done as simply and briefly as possible. If you want to build confidence in brokers, that should be a one sentence. Are they open to seller financing? Down payment's gonna be enough to cover your fee. Is the owner open to this idea? I see people overexplain that and it just gets this big convoluted back and forth debate. Overcome the objection before it comes up. Do it in one sentence and move on. That's at least my experience. I just got, um, in the chat on Instagram, uh, Julian asked if it's realistic to house hack as a college student. Well, Cody, you were college student age when you bought your first thing. You did a couple months of college, wasn't for you.

I think you made the right decision. What is college student age? I know people that are in their 40s doing college. I mean, I would establish that True. You know, youthfulness, right? It's not age. And so if you're going to college and you're 30 or you're 20, yeah, you should house hack because if you can reduce your expenses and you can only reduce them so far, but you can reduce them like they can only go so low. But if you can get rid of your housing payment, which is probably going to be your largest cost, you're going to be in a better position. Like, that's what I did with the resort. Now you're probably not going to house hack a resort, but I don't have a housing payment here. I have a fat mortgage, but, you know, the business pays for that. Yep. So yeah, do it.

Good. Now, I started with a house hack on a condo. I got a 2-bed condo and shared it with a roommate. Even after I got married, we kept the roommate around for a while. House hacking was a great way for me to start. I did it right after college. But I think the earlier you get started on whatever strategy works, the better. The one thing I wouldn't do is dedicate myself to, I'm just going to house hack. You can also find a low-down deal that you buy as an investment, but look for the investment properties. If house hacking is what makes it work for you, I would have done it when I was 18 if I had the ability, um, regardless of life stage. Dion, you still house hack. Uh, what's your thought?

So I think most of us start house hacking and don't realize it. When you're living with your parents, you're not paying housing until a certain age, right? So if you're moving out and going to college, it only benefits you if you cannot all of a sudden add a housing expense to your life. So think of the target-rich environment a college student is in. If you are doing anything like rent by the room and if you're going to house that close to a college, it's probably one of the strongest strategies. Yes, it probably makes more sense to buy a small multifamily, live in one unit, rent out the others.. But I think since you are a college student interacting on campus, the, again, it's the target-rich environment. You're gonna have the easiest time finding people to rent by the room and understand the mentality of the people going to that college. And I have a friend that lives in Bellingham, Washington, so very, really close to the Canadian border, far north. All he does is rents to college students. And even in 2020 when the pandemic hit and colleges trained all at a distance, he never had one vacancy. Because college students still wanted the college experience of not being at home. So I think it's a very viable way of house hacking. And when you graduate, it's going to be so much better to start your career with your shiny new degree on whatever you're training for, to use it and to work if you have cash flowing assets that you acquired while you were a student.

So great idea. Yeah, I'm 100% on board with that. The next question I had, again, is from Instagram. We have All right, from Malik, best way to look for a seller finance deal in Virginia or neighboring states? Well, I like this because we— the way you look for a seller finance deal is the same everywhere. You look for relationships. I have found that you find more seller finance deals with greater frequency and you get a yes more often when you work with masters in the space. So building your network in that area in Virginia and the neighboring areas. That's where I would start. Who owns the real estate? Go out and meet them. Cody, we have limited time with you. What do you think?

I mean, if you want to go start a new market, same thing that I had to do in Moses Lake. Moses Lake was a foreign market. I grew up in Tacoma, Tacoma, you know, Tacoma's kind of rough. Moses Lake everyone thought was rough and ended up being much nicer than where I grew up, but it was 3 hours away. And whether you have to drive or you have to fly. Sometimes you have to fly to Moses Lake because the pass is just awful. So you can pick any market you want, but you do have to meet with the players. There's a revolving theme here. You meet with the people, they teach you how to play the game, you play the game, and then you become the people. Like, it's crazy, but that, that's how you do it in any market, regardless of whether you want to buy in Virginia, New York, Alaska. You just pick a place and nobody's going to know that market better than the owners in that market.

That, that might actually be our 36th rule of real estate right there. Uh, multifamily is multiplayer. You have to go out and meet all the players. It's not a single-person game. You're meeting with other owners.

Unless you're in Quincy, Washington, then it is a single-player game.

There is one guy who owns Quincy, Washington. That is true. However, When you find that guy, you meet with him and you learn how did you become that guy? And then you become that guy and that the first person to learn how he did it. No one lives forever. The real estate's either going to his heirs or it's going to someone else. Might as well be you.

The only advice I would have for when you said I'm looking for multifamily in this state or surrounding states, pick 1 or 2 markets and kind of focus because it's really hard to have the bandwidth to know which areas to avoid in 3 or 4 states. I mean, if you're talking whole entire states, I invest in 2 counties in one state. And even with that, I still want to go do a drive-by before I buy a property if it's a neighborhood I'm not actually familiar with. So maybe narrow down to the state you're in or the state that you know somebody in. Get to know the players because other investors are your best source of information as far as which areas to avoid. So seems like a lot of areas if you're going to just do all of the surrounding states.

Mm-hmm. I also agree with that. Finding your market and sticking to it is really important. Our, our mentees, Caleb and Chuck, chose the state of Texas. They bought 2 deals pretty close to each other and then they bought one over in Houston. If they keep doing that, they're going to have a really rough time. If they just focus in on their main markets McAllen, Texas, Laredo, Texas. If they focus in there, I think they're going to absolutely dominate the game. But we'll see. And you'll probably see most of the adventure on our channel and theirs, Caleb and Jack on YouTube. Question from the YouTube channel, Mason, could you talk a bit more about loan assumption for multifamily? How would offers for that be structured? There's actually a building with a VA assumable loan right next to Cody.

Yeah, I have a buddy who's looking at buying a duplex, beautiful building, and there's room to build more. Waterview, Union, Washington. So Mason County, it's your county, Mason. But yeah, absolutely gorgeous building. They're able to assume a $500,000 loan on an $800,000 purchase at 2.75%, 30-year fixed rate debt. Now, the lender that they are assuming the mortgage with is actually quite difficult. They're— most lenders require the same things. Like, overall, what I've heard from this person who's trying to work on this deal is that they're requiring extra documentation. And I'm guessing that might be because they're trying to assume a VA loan and they're not a veteran. You can do that. From what I've seen. However, I haven't done it. Maybe one day. If this wasn't live, we'd clip Dion's clip in there.

So the caveat to assuming a VA loan is what a VA loan does for the person is it basically provides mortgage insurance, lets you do zero down. So if you want to assume a VA loan, there has to be enough equity for the person to do it with. You could add mortgage insurance, but if there's enough equity when you assume it, then, then that's how people that aren't veterans can assume a VA loan.

Cool. Maybe we'll do that, but not today.

Now, they're the VA entitlement. They don't get to recapture that while their VA loan is assumed.

Is that correct? So you're going to want to talk to lenders on that because I get a different answer every time I talk. Okay. I talk to lenders who will do multiple VA loans without a limit. They say limits went away in 2020. I talk to other ones that say, here's the exact number, which can't be because it's different in each county. So lender-specific.

Uh, from the Instagram, uh, feed here, Garrett asked a question for Cody: over-under on 8 hours of sleep tonight? Uh, for those just joining the chat, Cody has been up for God knows how many hours. 36? A bunch of hours. His Tesla died in the snow. And he has been stranded. It's a miracle he's joining us today. Uh, Cody, on a day like today, how many hours do you think you sleep when you finally get to bed?

I'm gonna go get food at the Alderbrook because my car is dead and I can't drive to Dos Margaritas, so I have to go to the Alderbrook. I'm gonna get food at 3:45. I'll be back at 5. And then I'll be up probably at 5. So I'll sleep 12 hours.

That sounds really good. I will, uh, I may aim for that in a few days. Sleep deprivation is not recommended, especially if you make a lot of decisions per day like Cody does.

Um, there's one thing that's kind of hard to wrap a person's brain around until you've been in this situation. But if you have a job and a schedule Monday through Friday, 8 hours a day, whatever it is, 4/10, doesn't matter. You have an alarm clock that says this is the time to wake up, this is when you get ready, it's when you go to work. With financial freedom, yes, you have challenging days where a bunch of things blow up in your face, but most days, one of the benefits, the fountain of youth with financial freedom, is you wake up when your body says, I think it's time to wake up, and it's freaking amazing.

Yep, I'll end up falling asleep really early today, and then I'll probably wake up at midnight and kick myself for going to bed super early, and then I'll find a way to fall back to sleep. It's usually how it goes.

Uh, Malik had a follow-up question to the Virginia thing, and this is exactly what we touched on last week, Dion. Um, he goes, does it have to be a red state, like a landlord-friendly state, or other? We had some thoughts on this last week. Dion, you want to do a recap for us?

So in this, I always try to give credit where it's due. So if I'm on my channel talking multifamily, I talk to you guys. If I talk out-of-state, I talk Millennium Mike. So when it talks the colors that I'm not going to say because it can demonetize your channel and Cody dipped out, looks like his connection was unstable, he'll probably be back. But this is something Grant Cardone said in one of his two BiggerPockets interviews. I don't know which one it was, but he talked about most people want to buy in a landlord-friendly state where the tenant laws are more in line with easier evictions, less red tape to get through. But in the multifamily space, Grant Cardone prefers the states that are more tenant-friendly because they're also more restrictive on building. And when you're more restrictive on building, you force appreciation. Less supply means more demand, or the demand stays the same and supply goes down. So in an example, here in Washington State, we have like 37 or 39 counties. I forget because I got a terrible memory. 37 of them were one color and King County is the other. It's the only one really that's solid that color had 31% appreciation where the rest of the state had 24%. There was more appreciation in the county that is very restrictive and very not landlord friendly. So what's your play? Cash flow, ease of operation. I like the more landlord friendly areas. If appreciation And if you're going to recycle capital like home equity lines of credit, cash-out refi, second mortgage, sell for 1031, then I might start looking for the places that appreciate more.

Yeah.

Now, that's not to say it's not difficult to operate in non-landlord-friendly areas. We've run into stuff where in Washington, month-to-month lease, if you inherit one of those, you can't just decide to terminate it unless they've signed a 6-month lease elsewhere. You also cannot require them to sign a 6-month lease. They can literally stay there as long as they want as a loophole, as long as they keep paying you. It is extremely difficult to move people around. Just little things you have to be careful about. Two caveats.

Yep. If you're going to owner-occupy, 90 days, and if you're going to do a rehab, 90 days.

Yep. And fortunately for us, our 38-plex, you definitely cannot owner-occupy and pull someone out. That's— they're not going to— they're not going to let that happen. In fact, it's part of your loan where you disclose it's commercial property that I will not live in. However, all but 5 units have some renovation that does need to be done, and we do intend to renovate that unit and we will do so. It is the loophole, but you have to be really good at playing those games. In states that are difficult to operate. The plus side is because it's difficult, less competition, which means you can dominate your market easier in a more restrictive area. Did I do that right without demonetizing myself, Dion?

Yes, and it's tricky. There's so many things you could talk about the events of 2020 and use the names for them that could demonetize the video. But if you are found to be political, depending on the moderator that sees the political statement, they can take your whole channel.

Dear moderators, we like operating in states of all colors for different reasons. We are commenting on trends that we see in these markets. Please spare me your wrath, oh great YouTube gods. Um, all right, I'm gonna go hop back to the, uh, our YouTube here and see what we have. Explain cap rate. Well, I like that a lot. Cap rate is not something that I give a rip about because I don't sell anything ever. It's nice to know if you need to refinance, you have an idea what your cap rate is going to be. So it doesn't play no role. Dion, do you— I'm going to start with, is cap rate something you care about at all and why?

So here's the difference. I actually thought you would care cap rate because you're in the multifamily space. So if you don't, that's good to hear because and I'm going to be very clear, I invest in 4 units or less currently, right? That's my investing portfolio is 16 rental units on 7 properties. There is absolutely no use for cap rate in residential. It means nothing. So when I hear people talking about it, I sit back and turn my brain off because that's a multifamily thing. So and even that it's something that people use that I've still never heard of a viable use for, even my friends who invest in multifamily. So I'm kind of— I actually thought your answer was going to be different. I thought you were going to bust out with, it's exactly how we compare all properties to not look at debt. Why?

Why would you ever look at something without factoring in what the debt's going to be like? Exactly. Cap rate matters if you are playing the multifamily flipping game. If you're going to, hey, I need to get rents to X so that this cap rate will get my— the market cap, not the building cap, but the market cap My market cap rate is X, that's gonna affect the valuation of my building. Cody and I need to track that number for refinance 'cause it is something a bank's gonna use. Outside of that, it has no use. And that is a market cap rate, not a property cap rate. We bought our 38-plex, which made 7 figures in its first year. We bought that pro— and that's an actual like appreciation appraised value. But we bought that deal on a -1 cap rate. If you're someone who cares about cap rate, that is what we call bad. It lost money operating with or without debt. Operating expenses were higher than gross rental income on acquisition. Essentially what it is is a way to compare properties apples to apples. If you remove debt because everyone's debt's custom, it's just saying what's the net operating income, income minus operating expenses divided by purchase price. And that's, that's what a cap rate is. It's just a way to compare properties apples to apples. To Dion's point, I don't care at all if the property is the same to another one apples to apples because I have custom debt structure. We do creative finance. My debt structure is the most important part. So if you only care about debt structure, why use a metric that doesn't account for your debt? Which is why Cody and I say that. Now, the BiggerPockets police may come and arrest us at any moment because that group really loves that metric for whatever reason. You can ignore it. Sorry, I'm moderating an inappropriate comment in our chat.

You should take somebody like All Nighter Hider and give them a wrench.

I will do that in the, in the future. And I think All Nighter Hider is still here. Um, All Nighter, let's chat after this. I need someone to remove inappropriate comments as they come in. XXX69.biz, you are not welcome on my channel. Moderators, I'm reading a name. Do not ban me for saying any of those things.

It's one of the things that kind of sucks on my channel is I had to— I have to make it to where you have to be a member for 5 minutes before you can make a comment. Because for some reason I just get a bunch of the spammy bot stuff and eventually on a long enough live they start to get through that barrier too.

That is a bummer. The internet will always be here, as will All Night Hider. Thank you, All Night Hider. But the internet will always be awful and people will always jump on our stuff that shouldn't be here. By the way, if you're not in our YouTube yet and you're watching on Instagram, you can see Dion's face and Dion's a lot better looking than I am. Hop onto the YouTube stream. It's on our channel, Cody and Christian Multifamily Strategy. I have some more questions here from the Instagram. Oh, I have Malik said he's going to stop by the Robin Hood sometimes when you're in the area. Malik, if you are anywhere near the Robin Hood, we will take you out to breakfast when you're down there. Just let me know when you're coming down. I have had people show up at the Robin Hood and just text saying, where are you guys? Cody travels a lot and I don't live there. So if you come down, give me a heads up and we'll say hello. Looking through the comments here, through the comments here. Oh, this one's actually— I'd like to see your, your take on this, Dion, because you don't do a lot of creative finance. But someone just asked, in general, if I'm looking to buy multifamily, what interest rate is good for debt? Good is totally subjective, but Deon, how would you answer that? 'Cause my interest rates are made up. Good for me is where does it cash flow?

Right, interest rate is one part of the calculation to find your yield. Annual profit divided by cost to acquire. Price, rate, all of that is impacted by terms. Is it a 15-year mortgage, 30-year mortgage? I would prefer a 40-year mortgage. I'm not looking to ever have properties paid off. I don't care about that. I want the cash flow. I'm investing for cash flow. So what interest rate is good? Sometimes the person wants a great interest rate. So you say, good, fixed rate debt this many years, your price changes based on that interest rate. So calculate your yield. And what I like to do is study the market that you're going to be investing in. If you don't already know it for 60 to 90 days, figure out what an average yield is. And the way it works in my market is out of 100 properties that I look at, 80 suck. They're just not going to cash flow. That's wish pricing or crazy people trying to sell properties for an amount that doesn't make sense. But 20 would cash flow. And out of those 20, the 2 make sense. What's an average yield? So I invest in 4 units or less. So it's small multifamily, not quite multifamily. And in my area, a 6 to 8% was kind of average. So I invested in ones that hit 10%. So the idea is you learn average in your market and then find the deals, hunt for the deals. Create the deals. And for me, all of my deals are from the MLS, all with traditional lending. Right now I'm watching days on market. If a property sits on the MLS for 3 times longer than what was normal and normal a few months ago in my area was a couple of days. So if I'm hitting the 10 or 20 day mark, I'm making embarrassingly low offers, disrespectful offers. 60, 70, 80% of their list price, pretty much ignoring list price. And so far I've gotten 2 accepted this year and I've backed out of both of them because once you get into the deal, you can back out without losing any money and then find out the reason why it's actually for sale for that amount. And they took your low offer, but it's a way to find motivated sellers.

Yep. A lot of times when you find those unicorn deals, the first thing— because I have, I have people in our mentorship group all the time calling me like, I found the deal. This price is insane. There's so much upside. Rents are really low. And I'm like, if you're telling me you're getting price and terms and the rents are low, I'm going to tell you right now, there is way more hair on that deal than you think. And I've never seen an exception to that. Even the great deals that we've bought, the 38-plex made a lot of money. My goodness, the septic's bad, the electric's bad, one of the roofs, it hasn't leaked yet, should at some point. We're getting that done shortly. There's a lot of problems with that building. Hence, we got it for an amazing price. Those buildings, just know if you're picking that stuff up, you can't do the Deon lazy way if you're only picking up buildings with a bunch of hair on it, which is why Deon's very, very selective over what he buys. And he's done a phenomenal job consistently buying one rental at a time. Thank you, Michael Zuber. But one rental at a time, one or two buildings a year, only stellar deals that move you forward. Different model than us, yes. Better model, arguably.

I don't know that it's better. We have different goals. You guys want a massive portfolio and I want it to never have to work again in my life.

I'm going to say for people watching on Instagram and YouTube, I'm going to say statistically, this is a made-up number, but I believe it to be true. 95% of people here want financial freedom more than they want to have a giant portfolio. I'm going to say almost everyone here resonates with your goal.

I'm going to make a poll on YouTube later.

Okay. Because I'm going to say that your strategy gets more people where they need to go, and more people should follow that strategy. The actual reason, if anyone wants to know this, I got to remember to turn this into a 30-second short. This is the reason we have a YouTube channel. Cody and I started our YouTube channel because we want to do something big enough that people actually pay attention. We show you what's possible. That is the sole mission. I want to teach this and I want to do something ridiculous so that we set the bar here of you can achieve anything in multifamily. That's what we want to do. I don't think very many people— maybe I'm wrong. I don't think that's a lot of people's goal. I think a lot of people want freedom for themselves. Their spouse, their children, generational wealth. And if you want to do that without creating a job for yourself, Dion's the way to do it. I just want to be super clear on the channel. Cody and My Thing is a job. I have employees, I have tons of contract work, contract work. I'm talking to lawyers and accountants every other day. Like, we work full time. If you want financial freedom, and you just want to own your time, do what Dion did, and it will probably take you a decade.

I like All Nighter Hider's response: do both.

If you find the way to build a massive portfolio quickly and be hands-off, first of all, I'm hiring you as CEO, and second of all, um, you, you have broken the code. That is Cody and my stated mission for the next 90 days. We are going to automate 50% of our business.

We are adding some people. Here's something that Michael says, you know, he wants financial freedom, but he just doesn't know how to put together a deal. So there's a lot of things you can be doing, Michael, before you put together that deal. And it's kind of a progression of things that just makes sense to do right now. You can be increasing how much you save, and that doesn't mean eliminating expenses. That means increasing what you make. Is it overtime? Is it changing companies? Is it developing a side hustle? Is it playing online games and selling things on eBay or whatever? Find a way to increase money. That's how you increase your savings. That's more important than reducing saving, reducing expenses to save. The second thing you can be doing right now is working on your credit score. And most of the YouTube content creators that are in the real estate space are going to say get to 740 or higher, because once you hit 740, all the best loan options open up to you. If you're going to use traditional lending, doesn't really matter with seller financing, but if you're going to use traditional lending, 740 or higher matters, but you're going to want to shoot for like a 780 because there's a big difference between Credit Karma and a FICO score. So what the lenders are going to see is could be 30, 40 points less than what you see. So be working on saving, be working on credit score, talk to lenders to find out what your options are. Sometimes, especially in the multifamily space, creative financing is using a lender asset-based DSCR loans based on your portfolio. So knowing what your options are with the lender matters. I do 4 units or less, so it's conventional loans in my own name. Long list of reasons why I don't have an LLC, but I don't know. I didn't know what my options were until I talked to a lender. And a lender actually told me that I was making so little, I had such bad debt-to-income ratio because I'd been laid off from the police department. Started work at a truck driving school. I was making $17 an hour, found out about $89,000 in bad debt in my name I didn't know existed till the divorce. And the lender said it's going to be really hard to buy rentals unless you had rental income on your tax returns for 2 years. So I moved from my house into an apartment, rented out the house for 2 years, and then was able to buy a duplex because the lender looked at the rental income from the house on the other side of the duplex, and my income meant almost nothing to make that purchase. But I wouldn't have known that unless I talked to the lender. So those first 3 steps you can do before you've even ever made an offer or chosen a strategy or a market that you're investing in. So it doesn't have to feel like if you're not buying deals, you're not doing something. Success is created over somewhere between 5 and 10 years of investing in real estate, using all of those strategies before your first deal and in between your deals.

Yep. And for those on YouTube or for those on Instagram, The audio died there because my phone has like 1% battery. So I hope you're joining here and I hope I see our viewers go up over here to answer some of the questions. One of the questions that we did get over there was, and this is specifically for Brendan Turner, not to be confused with Brandon Turner, but Brendan asked, what do you do to check market rents? Is there a website that you use? I know you use more than one. Cody and I actually purchased CoStar nationally because we coach so many people. And they own Apartments.com and they have a 2,000-person research team that calls on these. So I kind of use their research as my, my baseline. I use really expensive software. Deon, I'm going to guess that's not what you do.

So I'm hoping Brendan made it from Instagram over to here since that feed died. But I'm going to give you a CliffsNotes version as I can of how I found— how I find market rents and stay on top of them. In normal years, so 2011 to 2020, I would use something like Rentometer and or, you know, a company that you talked about that owns Apartments.com. They have historical data. They look at what rents did in the last year. They tell you this is with a slight increase. This is where rents are fairly accurate. In 2020, rents went up 30 to 40% in most markets. And my, in my market, my tenants actually asked me to raise the rent 20 to 28%. That was the window of requested rent increases from the tenants. So rents went up so significantly that Rent-O-Meter didn't stay accurate. They're 30% low in my market. So what I actually do is I go to Apartments.com, Craigslist, Facebook Marketplace, Zillow, Hemline, look for properties that are for rent that have the same number of units. Don't think square footage. That's an investor's mindset, not a renter's mindset. And watch them for about 2 weeks because what somebody lists a rental at means nothing. Did it rent immediately? It's too low. Did it sit for 2 weeks and get a rent adjustment? They listed it too high. That doesn't mean rents are coming down. It means that person thought they were going to get more or tried to get as much as possible and overshot. But with a 2-week window, actually watching how many days something sits, how fast it rents out, you'll get to learn a market, which goes back to about 17, 20 minutes ago. We were talking about it's really hard to learn the state you're in and surrounding states. Pick a market. You know, whether it's a couple of zip codes, a couple of counties, or your state, depending on the size, so that you have the mental bandwidth to learn the rents for an area, to know what they are. So that's what I do. It actually takes about 2 weeks and then I kind of stay on top of it. Normally, if you're familiar with my content, I would use the binder strategy to get the tenants to ask me to raise the rent after owning the property for 2 months. And then every other year I would do a 5% increase. So one year there's no increase, next year 5%. That worked for a decade, but rents went up so much in 2020 and 2021 that in 2021 and the beginning of 2022, I did the binder strategy on existing tenants and had the rent increase because it was so much more than what 5% would cover.

Super, super smart. Dion, you are a boss, by the way, for joining the channel today. Thank you. Our, our topic for the day, for those who joined recently, is when everything goes wrong. Everything went wrong for Cody and I, but especially Cody. So he is eating his first meal in a long time, and then he's probably going to sleep because his car died and trees fell on our carports and our structures and the septic backed up again. And we have all sorts of stuff. So Dion is coming in to save the day. Thank you, Dion. I owe you one. Hopping into the chat here, we had Landon just commented that he just bought the course and is part of the Multifamily Strategy Squad. Landon, welcome to the team. I'm excited to see you on our call tomorrow. If anyone ever has questions about that, feel free to hit me up @ChristianOsgood. Love to talk about it there. Don't talk about it as much on our YouTube channel because this channel is not an ad. That being said, Dion, When do we get a review video on our course? Do I need to create a login for you? I, I would love to. We do a different strategy. I'd love to get your review of our course.

So I would love to do a review of the course. I wanna make sure I have some time to dedicate to it. Right now I'm narrating an Audible book, which is taking up a lot. I wish I knew what time commitment it was when I opened my stupid mouth and say, hey, Zuber, let me, let me narrate that cuz your first version kind of sucked. The Audible version sucked because it was a robot voice doing it. Oh, I said, just let me do it for you. So absolutely. And I would love to take a deep dive into it. I dove into Zuber's course. I looked at another content creator's course that doesn't talk in our circles and didn't do the review because I was so neutral on it. Hmm. It wasn't good. It wasn't bad. I don't know that it was a waste of money. I just, I would've had some, I would've had such a bland response to it that I thought, yeah, I'm just not gonna do it then. But I look, really look forward to doing yours.

Everyone look at Dion's channel. If you see no response in the next 6 months, that means Dion's part was bland and you don't need to do it. That's a, that's a review. Fair enough. Thank you for doing that, Dion. And if anyone wants to do that, that this channel's all about the information. If you want to push to the next level for the application of the information, that is why we launched that. And that's, that's all I'll say about that on here. Going through the questions, Divergent Minds. When you work with an attorney, does everything get implemented during the feasibility period if you're having an agent write up the offer? And what and when would the attorney work their operation?

Okay.

So basically, what is the timeline within the transaction that the lawyer is doing everything? When you're under contract, you're going to contact the lawyer, especially with creative financing. They're going to be drafting the note, deed of trust, and any of your creative terms for your operating agreement. Assuming that you're doing all these pieces in an LLC, you go under contract, you start that work because it can take some time. I actually had the Robinhood transaction got delayed because we couldn't get the operating agreement done in time from one of our capital partners' lawyers just to get the money moved. It was an extra 40 days from what I thought was gonna be a 5-day thing. So you want to get on that immediately. Um, you're likely not going to finish it all during your feasibility. If you're doing a 2 or 3 week feasibility and you have any moving parts, my experience is it can take a while. However, you should have most of it figured out Dion, have you had it? I mean, you've done a lot of small multifamily, a lot of it conventionally purchased. I imagine you'd have a little bit less to do with the lawyer, but what's your experience been as far as timelines?

So if I was going to create a note, I would use an attorney. That's the one time. So I would actually be reaching out to you guys, Christian and Cody, Multifamily Strategies, to say, what's the timeline on this? Since I have used an agent and all my properties are from the MLS with traditional lending, I have either used the agent and title to make sure everything's done right. Yep. But if it was going to have something like a note creation, I would have the attorney do it. And I don't know the actual answer to the question because it's a timeline question and I haven't done it.

Yeah, they— I have attorneys that will do that, turn stuff out in a week. The nice thing is if they've worked for them before and I'm doing an operating agreement that's just like another one, the second time I call them, it's, hey, it's going to be just like our Pheasant Street LLC contract. I want you to swap out the names and instead of being 45 percent to one person. We're all going to go in this one, 33, 33, 33. So change some inputs, same thing, boilerplate. Let's make it happen. If you do something complicated like we did on the Robinhood, which I'm not a fan of complicating things, but we bought a business which came with the wedding venue and the employees and the equipment, and then we bought the real estate. And so dividing out that purchase, that was extremely lawyer heavy and you're going to need 60 days from when you employ them to when it's done to get it all done. So depends on the complexity of your deal. But if you're under contract immediately, if you're using a lawyer, get them working. One more question from Divergent Minds. What do you guys do to decide on the right property manager? Just found out my property manager lied on her experience. And blank space on what to do. Well, our first property manager stole the rents and security deposits and moved states. That's been my property management experience. Cody and I started our own property management company. I have— there have been two instances now of property management companies operating out of Grant County. I won't name anyone. Who's actually— they've actually called us and said, can we direct more clients to you? You guys manage better than we do. So the property managers call us to say, oh wow, we don't run buildings like you do.

Can—

because a lot of them are brokerages as well. They're like, can we start referring clients your way because you guys manage properties better than we know how to? Property managers, as a general rule, are really bad at managing properties. They think like, they think like employees. And as an owner, you think like an owner. The only way I've seen around that is if you can find a property management company that manages a bunch of their own properties as well and does third-party to experienced investors. I like Cody and I will manage your properties, but it's about 10% of our portfolio of property management is third-party. You have to be a friend. I do not manage for first-time investors. I do not want property management to be a job. So we work with experienced people in a market that we're already heavily concentrated in. That's been my solution, is put on the gloves and do it yourself. That does not qualify as the lazy way, I'll say that much. Dion, what, what is your thought on the property management and how to not get screwed?

So I'm actually in your court. There's a reason why I self-manage. It takes me less than 2 hours a month to manage 16 rentals, and it would cost me over $30,000 a year to pay somebody to manage my properties if nothing was broken and they didn't upcharge for handyman fees or, you know, time or anything. So to me, it's not worth $800 an hour for somebody else to do this stuff. So I do it myself. But if you're going to pick a property manager, I look at them like employees. They're going to be working for you. And I was the president of a truck driving school for the last 13 years, and I retired in July of this year. So I'm no longer a company president or an employee at all. But I really liked, um, hire slow, fire quick. That— and if, if it's not working, get rid of them, move on to someone else. So with property management, the power of local REI meetups cannot be overstated. Get in-person references from other people using property management because you have a divergent goal as an owner than a property manager does. As an owner, tenant turnover is usually very expensive and you don't like it. Sometimes, like in 2022, it could be a great thing to have tenant turnover because you're going to see a 40 to 60% rent increase without having to raise the rent on your own tenant, just starting a new tenant at the new amount. So sometimes tenant turnover is good, but 99.9% of the time it's an expense that you don't want. So you lose money on tenant turnovers most of the time as an owner. But property management companies, their revenue source is tenant turnover. They're only getting their 6 to 12% per month out of the gross rents, which ends up being 50% of your net. So that's not good. And then they get somewhere between a month and half a month's rent if they place somebody. So if I was going— excuse me— if I was going to use a property manager, I'd look for a flat fee company that is just as scared of tenant turnover as I am because I want them to lose money. I want them to take more time than it's worth to place a tenant so that they fight as hard as I do to limit tenant turnover and have tenants renew leases and not want to move and provide better customer service because it's in their interest to make money based on just a little bit of work they have to do every month instead of placing a tenant. But when you're determining whether you keep that property manager you have, I don't care if they weren't true about their experience. What's their job performance been like since they've started? And is it something that you can live with even if you have to train them what you want? And if not, when you find another property management company, understand your contracts and what it takes to get out of the one that you're in now. Make sure that it's for breach or something so you don't have to pay the cancellation fees. And, and if there are no breaches, maybe that's the property manager you should keep, right? But if there are reasons why you want to switch, talk with other investors that are in your market to know who to use and who to avoid.

And if you're in Washington, you want to work with a flat fee company, I am happy to talk to you. I do not want to work with people who are super, super, super needy because we don't have bandwidth. So I just want to throw that out there. If you're buying your first duplex and you're super nervous about it, I'm probably not the management company for you. If you're buying your first 12-plex or your first 20-plex and you're in Washington, I am willing to have that discussion. But we're a flat fee company. That's exactly what we wanted to do, Dion. I like to manage in markets that we own a lot of real estate in because we have a greater influence on market rents. And on a 100-unit portfolio in Central Washington, when I raise rent $100 in a 6-cap market, we make $2 million, which means my incentive is to control your property really, really, really well. And I want to keep tenants there. I make money when market rent is stable, predictable, goes up. That is why I want to manage your property. Absolutely makes sense.

Yep.

But work with, work with property management companies like that. If they're just a service provider, they're worried about their employees, their profit margin. I'm sorry, you're just not the most important thing in their universe. Making payroll is the most important thing in their universe.

It's—

there's no exceptions to that. Incentives don't align well for most property managers. Let's see here. Christian Osgood, what are some of the things in real estate, in the real estate space that you would love to learn about moving forward? Oh, what I'd love to learn on. Well, I know what I want to get better at. I want to get better at the hospitality game. We're starting to book out our weddings. We're actually pretty much booked through 2023. We're booking out 2024. But Cody, I want to buy a castle. I want to buy vineyards. I like this whole event space thing a lot. My team is good at it. It's really fun. And I have a good employee base right now for the customer service stuff. So booking events, hosting events, I have a ton of fun with it. And so I want to keep expanding that. And I like to be entertaining. I just feel like we'll have great content if we buy a castle and we have the whole adventure of— we bought a castle, everything's gone wrong at the castle. Um, it will be an adventure. I promise we will deliver, uh, The entire story, but I want to learn more of that space because I'm having a lot of fun with it. We will never deviate from the backbone of our business is multifamily long-term rentals. I mean, that is, it's predictable and I live on it. So we'll always buy enough multifamily to back the fun stuff, but I really want to learn how to operate the fun unique properties. Um, Dion answered this in the chat, but Dion's channel, uh, Dion spelled with an O just so everyone knows, And it is Dion Talk Financial Freedom. If you want to learn how to do this in a simpler manner than Cody and I do it, do what Dion does. If you really want to make this game work, learn all the creative tactics from our channel and then follow Dion's model. And I think that is palatable to everyone in the US. Get 16 units on creative terms, do deals no one else can do. If you can combine those two strategies, you're invincible and you will surpassed Dion and Cody.

What I really like about the community that we're in is you have Michael Zuber from One Rental at a Time, Millennial Mike, Lumberjack Landlord, Cody and Christian Osgood, me, Beth Traverso, like people who are doing this with different strategies. Because here's the sentence I hope everybody mentally records or writes down: there is no one right way to do this, but there is a one right way for you. And the one right way for you is going to have a little bit of Cody and Christian, a little bit of Lenny and Mike, a little bit of Dion, a little bit of Mike Zuber, a little bit of Matt Lumberjack Landlord. And then you're going to amalgamate that and turn it into your version of financial freedom.

Absolutely right. That's actually why we named our company Multifamily Strategy. The whole strategy is learn other people's strategies and implement them yourself.

That's, that's it. And I don't see any other questions popping up yet, so give everybody a chance to get questions in there if they have them. So I'm going to take a stab at that. What would you like to learn going forward?

Okay. And last call for questions. So you guys get them in now because once we're done reading the next round, we're off.

I'm trying to think of a way to answer the question without sounding like a giant douchebag.

Yeah, because this is a real content.

Let's go for it. What I'm going to share is a real problem, something I would like to learn. But my goal, if everybody can understand that, that from my heart I'm trying to drag people kicking and screaming to this problem so that they can have the same problem. So it's not, it's not a way of bragging, it's a way of saying this is what I'm dealing with, but I would love it if all of you had to deal with the same problem. I would like to learn how to spend money. I made it to 40 without ever having $1,000 in the bank. Was working for pensions, tried the Marine Corps. They downsized after Desert Storm, tried law enforcement after 2008, got laid off because of the recession, tried a trucking company with a union. They went on strike. Like, every way I've tried to build a pension, it went away. And I just— I was a single parent trying to raise 3 kids. I was always struggling. I was always used to being poor. And basically, I made money to pay for life. Spent the last 12 years building a rental portfolio, reached financial freedom in 8 years, and then worked for 4 more because I liked my job, but finally retired. In those 12 years, it was always, what do I do to increase the income? House hack to eliminate expenses, right? I didn't have a budget. I didn't eliminate the small things, but I eliminated housing. I actually get paid now $2,500 a month to live in the unit that I'm living in, right? So I'm profiting on housing where I live. Ridiculous. And then you have the rental portfolio, right? So my brain is in every penny that I can put into the investing fund buys the next asset, which increases, increases the cash flow. Rinse, repeat, rinse, repeat, rinse, repeat. 7 properties. I'm making a video later today, like as soon as we're done, which will be coming out tomorrow called the 4X Rule. Like why I retired after getting 4 times my freedom number and why that number mattered to me. But I can't wrap my— I've tried everything. Been retired for like 4 months now. I've tried cruise, rent, see-dos, rent quads, rent side-by-sides, travel. Planning a trip to Panama, planning a trip to Thailand. And I'm like, every time I turn around, there's another like $10,000 to $15,000 in the investing fund that just is there that I don't know what to do with. And it's like I said, it sounds like a douchebag thing to say, I have so much money, what do I do? But I'm trying to figure out how do I learn how to spend money? Because my brain says if you don't spend money, you could buy another asset, increase the cash flow. But what's the point? Once you reach financial freedom, 4 times your freedom number, or I'm at like 5 now, but when I hit 4, I was like, yeah, I'm going to retire. Um, so if anybody has any suggestions, like, other than dating— I can't afford that— but everything else that I could figure out a way to spend money on, um, I would love it if the people watching our content got to that point where that was the problem they were having.

You know, the obvious answer there is you just need to have more kids. It will all disappear, right? No, no.

No, the smartest thing I've ever done in my life is fix that problem. The—

I don't have an answer to that because everything that Cody and I do, we're paying off. We're paying off debt. Like, one of the things I want to do is— Dave Ramsey say you can't borrow your way to freedom. Dion, you've just proved that empirically. Cody and I are in the process of showing that that is incorrect. I, I'm just thinking we just might just kill all the debt at some point and just say, hey, if we pay it all off— I don't know anyone who's done that— borrow your way to freedom and then eliminate all the debt, and then you're just like, you're done done.

I see a couple people here asking where we are. Um, we are in Tacoma. We're close. I was actually— I hung out at your house last week, came over. You've been over here, done videos at the slides. So yes, uh, Divergent Minds, we do the Facebook group TACOMAFI. We do a monthly meetup every— the second Tuesday of every month we get together at a local restaurant or something and everybody talks. It's not a pitch. There's no sponsor. We don't have like a lending company come in or a brokerage come in and try to pitch their products. It's just investors, not all real estate. It's financial freedom people that hang out and share concepts.

Let's hear your thoughts on Cincinnati, Ohio. That's funny. I have— Sole is going to be on the channel this Friday, she actually invests in Cincinnati, which is funny. She loves the market. It's a high cash flow area. You're not going to see a lot of appreciation in areas in the Midwest traditionally. They tend to not appreciate nearly as much. You tend to get a higher rent-to-purchase price. One thing that I really like doing, and this is my personal thought, Dion, I actually really value your opinion on this. I've talked to a few people What if we bought big assets in a cash flow heavy market, use that to pay off all of our debt over here, and then we sold all the stuff in the Midwest?

Do you have boots on the ground in the Midwest where you're going to invest that meet two criteria? First, you trust them so much you think they're going to come to your funeral. And second, they are somehow connected with the industry. Contractor, agent, property management. To pick a market that you're not in, you can do it one way. You're investing where you used to live, or someone that you know and trust that much lives there, or you use the Millennial Mike strategy where you have somebody that you trust, like a mentor. He was very close with Mark Matzke from Matzke Finance and invested at a distance in a market that Mark was investing in to use his network of people that Mark trusted. So Not a bad strategy. I think you'll struggle with the same thing. You buy the new asset, you see the increased cash flow, and you'll think, okay, I can take this cash flow and take care of this debt. And if it has balloon payments or an adjustable rate, great idea. But if you have fixed rate debt on your seller finance properties, you're going to see the cash flow and think, I could pay off this, or I can get twice the return on another investment. The same problem that I've had where people go at retirement age, don't you stabilize and pay off some debt? Yes. But I can just take and buy another property and increase the cash flow or pay off the debt and increase the cash flow. So it's going to be one of those conundrums that you actually like having because it doesn't suck when you're trying to figure out what to do with money. It sucks when you're trying to figure out how to get money because you don't have enough.

Mm-hmm. All, all good mysteries. Dion, what does your crystal ball say about the future of interest rates?

My crystal ball says anybody saying I'm not going to take action unless interest rates do one thing is going to fail. If it's I'm not going to do anything unless interest rates go up so high that I can buy all cash because prices will come down, because that's not what happens. Or if they say I'm not going to buy unless interest rates go down so I can afford to buy a property, that's not going to happen because prices will go up if interest rates come down. Because people's buying power will be increased. So I use a version of dollar cost averaging when I invest in real estate, and I ignore what I think is going to happen with interest rates in the future because no one knows. Not the Fed. No one. People are shocked by what's happening with CPI. They expected it to go up and it came down to 7.7 in the last reading. Like, no one knows what's going to happen. So in the CliffsNotes version from somebody who doesn't invest in stocks, I'll probably butcher it, is you take a set amount of money and you invest it at a set repeating time period of, you know, once a month, once a week, once a paycheck, you keep buying stocks so that as values of stocks go up, you're buying less. And as values of stocks go down, you're buying more. Seems to be consistently the way to invest successfully in stocks. My version of doing that in real estate is constantly saving the down payment for the next deal and hunting for the next deal every day, no matter what's happening with prices or rates or rents, until I find a great deal that currently makes sense with current interest rates, then I buy the great deal. So it's not on a set timeframe. It's when I find the great deal, I buy it. So I don't have an answer on whether interest rates will be 10% or 5% in 6 months, but I have a plan to buy the great deal whether either one happens.

That is exactly my answer there. The future is unknown. I mean, if you forced me to guess, I think 2023 will continue to go up, maybe at a lesser rate, but I think we're probably going to see Rates go up and I'm hoping end of the year or going into 2024 rates come down because if we do that, I'm going to be refinancing a whole lot of expensive debt and I'll be very liquid. That'd be great. But my plan has nothing to do with what interest rates are doing. To Dion's point, the plan's long-term fixed rate for me, non-recourse debt. We buy stuff that cash flows, it cash flows whether the rate is up, down, sideways, whatever happens. I don't buy off of what the Fed is going to do or what rates are going to do. And if you aren't buying real estate, you're not getting any of the benefits of real estate. There's a lot of them.

So here's the problem with creating content like this. Reaching financial freedom by buying real estate is actually not complicated. It's fairly simple. It doesn't mean it's easy. Taking the commitment to not buying the toys and buying the assets until the assets can buy the toys, like, that commitment is, is not easy. But it's very simple to buy real estate. You buy real estate, you have tenants in there that pay more than what your debt costs, and you rinse and repeat that. Yep. But we don't get very many views. A couple thousand views per video, 20 to 100 people in a live stream. There are content creators that are satisfying an itch that most people have— not investors, not people who are going to reach financial freedom, but most people. Most people want an excuse, a reason that them not taking action is okay. So all of the housing crash is going to happen at the end of summer, there's going to be a 20% drop right now, interest rates are going to do blah blah blah, so there's going to be a crash and you want to wait to buy. So those get 30,000 to 60,000 views per video. There's a channel with a guy who rents where he lives and owns no investments and has over 40,000 subs on his channel because he does nothing but every week put out a new channel A new video, here's why the crash is, here's why the crash, 2 years of here's where the crash is, the crash. Imagine the people watching that channel for the last 2 years missing out on the appreciation, the cash flow, the principal paydown of the last 2 years, which have been the best 2 years for buying and owning real estate pretty much in my entire life. When everyone on, you know, all of the channels, the fear porn channels were saying because of these things that I don't want to say to demonetize your channel, but these things happening in 2020, is why you don't want to buy. Interest rates doing what they are, a recession coming is why you don't want to buy. So yes, a tenant might stop paying rent during a recession, but if your job is your only source of income during a recession, it's a lot easier to have a portfolio with some rentals in it and have one not paying than to have an income and it's not paying and it's your entire source of revenue for your, your way to support your life. So to me, that's a little bit frustrating, but I get it. Like, I totally understand. If my goal was to grow a YouTube channel, I'd make fear porn. I'd say, here's why it's going to crash. Here's why you should wait. It'd get a ton of views. I'd be disingenuous and lying in each video instead of saying buy a deal, because there has never been a time— I've been alive, you know, half a century— there has never been a time in my life where if you bought a property and waited 10 years, that that deal didn't make you look like a genius. It's the people thinking, yeah, but in 6 months you might save $10,000 and pay rent for 6 more months. And have the interest rates go up to where it costs you more than $10,000 to make the property. Like, so I get that's a great question on what's going to happen with interest rates. But if you're looking for a reason to wait, you will find it.

Join us next week for the market's crashing and we're all doomed. I'm kidding. We're not going to do that content because Dion and I are dedicated to actually showing you how to play the game, which involves actually playing the game. Sitting on the sidelines is not a position. Uh, Cody asks, uh, he— it looks like he got in the chat here. Christian Dion, how do I grow a beard? Dion, I don't know if he can answer this because when he was 3 years old, his hair migrated from the top of his head to his face. He was actually born with a beard. I'm kidding.

Um, I actually— I don't know, Heider, listen to me, um, because the Lumberjack Landlord was picking on me one time about my hair, which everyone does, and I said I was given a choice when I was born. I could either have testosterone or full head of hair.

I had a choice.

Um, so how do you grow a beard? Uh, good question.

Move to a colder climate. Cody has that nailed. He got stuck in the snow for like all night last night in his Tesla. Um, well, Cody, good news. I couldn't grow a beard till I was 29 and my beard still sucks, which is why it doesn't look nearly as good as Dion's. Dion is what we call genetically gifted. He was born with a beautiful beard and a beautiful voice. We don't have that. Um, Dion, is it useful to always have a coach/mentor even being at a high point in your career?

What are your thoughts on coaches and mentors? So I don't want to derail you, your video, because this is— so like when I talk about my tenants ask me to raise the rent, I get attacked in the financial— when I talk about having rentals in the Choose FI group, you get attacked, right? So I'm going to say something that will probably get me attacked. I have never and will never have a coach or a mentor. I won't. I'm an autodidact. I'm going to educate myself. I hated being stuck in the school system. I never would have got my CDL and become a driver and then drove long enough to run a CDL school if I had to go to school to get my CDL. I don't think anybody else can teach you anything as a coach and mentor that you pay thousands of dollars to spend time with you because they don't have your goals or your resources. You can learn from people, you can take a course, you can have a mentor, you can have a coach, but don't think that that's going to be— that mentor or the coach is going to be why you succeed.

Um, derail your channel. No, no, our— and our channel is not about, hey, join our mentorship.

No, that's not what he's asking. That joining a mentorship is different than having a coach or a mentor. I think this is you're having like that specific person you go to.

Yeah. Well, and I'll just add into that though. That's why we, Cody and I stopped doing one-on-ones because people benefited from being in a group setting like that, being a part of a community where you pay a little bit and you have some, like you have coursework and you meet with other investors. I think there's value there, but we shut down that used to be one-on-one for that reason. It's I don't want to be your only person.

I don't. So I sat down with Michael Zuber from One Rental at a Time and Matt the Lumberjack Landlord, and I said, look, you know, we've been making videos now for like a year. I want to do a bit. And this was my, my ninja trick. I said, I want to do a video where you guys critique my portfolio. Hmm. Neither one is a coach for me. Neither one is a mentor. But that accountability group that— here, let me share my numbers and my goals with you and telling it to someone else makes you more likely to follow through. So I wasn't saying don't take a course, don't join a member, don't have a membership, don't have a mentor or anything. I'm saying I've never done it, but I've taken courses and I would have a mentor first. Like if I wanted to learn a specific skill set, yes, I'd probably go and have a coach. But my first agent that I worked with had 30 rentals and then has since retired at like 55. He ran a brokerage, had like 19 agents working for him. So he was doing really well. I thought, this guy's got 30 rentals. He's an agent with decades of experience. This is my mentor. And he would have bankrupted me if I got my first two offers accepted. I would not have continued investing in real estate because he'd never invested with a mortgage and he'd never invested in small multifamily. He didn't understand the strategy I was trying to do. He'd never house hacked. Your mentor can ruin your life if you think you need a mentor. So you date the courses, the mentors, the coaches, the agents, the lenders. You marry the properties.

That's why it takes like— anyone just tagging on to that, Dion? I've never seen anyone who's been hosed more than Cody for trying to find a coach like his first. Mentor, coach. We learned a lot from them, don't get me wrong. We learned exactly how not to buy real estate, how not to raise money, how not to employ people, and how not to run a business. Those lessons created 35 principles that we don't violate that have given us a lot of success. That being said, oh my goodness, painful lessons. Cody and I partnered much less expensively with someone else who the goal was, this guy's going to be our business mentor. Did nothing, drained money out of our accounts, and then hopped on his plane and disappeared. Worthless. You don't want— I just, I don't like trusting any one person with your success, which is what, which is what I read too when I see coach and mentor. You should have relationships, you should have people you learn from, people you learn with. You should learn from people who are ahead of you, but it shouldn't be one coach, one mentor. It should be a community like One Rental at a Time, Dion, Millennial Mike, Michael Zuber, Matt, Lumberjack Landlord, different strategies. I partner with that group, One Rental at a Time community, as often as we can on any piece of content because I want more people who have done things I haven't in our sphere sharing content. So I'd I love what you said there, Dion. I could not possibly agree more.

Nice.

Yes, that is my favorite thing that you said, I think, on this entire thing, and you've dropped some golden nuggets. Uh, but I— yeah, if you guys follow that, do not rely on one person for your success because you are not them. It's not gonna work. Do we have any other— I don't know if any of these are Questions? I think we've wrapped up questions. Dion, you are so kind jumping on 2 weeks in a row to help me fill out this channel. Cody got a vacation and you spotted us on a bonus live, and, uh, Cody had the worst possible day possible and you filled in again. So thank you so much for your contribution to this channel. If there's any way Cody and I can contribute back to you, we will, and we love being on your channel. So let us know if we need to join you at any time. Anyone have any other questions? Join the next live, or Dion, you go live every week as well.

What time do you go live? Tuesday afternoons, 4 PM Pacific. I do a live that generally lasts as long as the questions do, usually somewhere between 1 to 3 hours.

There we go. So you can get Wednesday, you can get Thursday, 4 PM. We're just on and we're available and we do this every week. So we will, we'll see you all in the comments section soon. And yeah, if you guys have any other questions, hit the like button before I turn this off so it has more likes going into the algorithm. I appreciate you all.

And yeah, we'll see you next week. One really, before you hit the off button there, bonus content. Yes. When people put up a video saying our live is coming, you can absolutely put questions and comments and we answer them all. But I'm going to say one last thing and hopefully people can take a mental note or write this down. Because this matters to me. This is why investing for me was so easy. Not, you know, like, investing isn't easy, it's simple. But it was easy for me to do because of this one sentence: you are going to be alive in 5 years.

Start investing like it. That's a wrap. Perfect note to end on. Everyone write that down, post your tattoos of that next week. Uh, Dion, seriously, thank you so much. Awesome content. We really appreciate having you on.