Creative Finance Q&A - Live

Okay, and just like that, should be live. Welcome back, YouTube. Super stoked to be here. Christian's not going to be here with me today. He's over at the Robin Hood. If you'd like to check out the Robin Hood, that is a $4.5 million resort we bought zero money down, seller financed, and, um, would love to share it with you. Today we're gonna be jumping into some of the questions that I've got here, and if you've got any creative finance questions, feel free to drop them in the chat. With that said, I'm gonna get started. Uh, first question is, love your content, I've got a question though. I'm 19 years old, I don't have near any money, where should I start to get into the real estate game? So you're 19 years old, and, uh, that is Ethan. What I would do, you need to establish your objective number one. What is the goal with the game? So are you trying to get into apartments, trying to play the single-family rental game, Once you've established that, pick your market. It doesn't have to be local to you. However, you should have boots on the ground in any market you jump into. I got that from Dion, and he's on YouTube as well, but very, very intelligent investor. You should be able to build out your boots on the ground in whatever area. And once you've established a market, you need to meet with the people that own the type of real estate that you want to buy. The most knowledgeable player in any given real estate market are the people who own the real estate that you want to own. It's not the real estate agents, it is not the title companies, it's not the lenders. They all think they are the most knowledgeable, but typically they actually— they're the least knowledgeable. It is the people that own the type of real estate that you want to own. Dividend Dave, hey, you made it! You're the first person in the chat. Welcome. Uh, but Ethan, once you establish the market You have, you have your goal, you establish what market, you meet with all the players in that market. Your objective should be, I want to grab coffee with these people, I want to learn how they played the game. And the reason we named our company Multifamily Strategy is because when I got started, I looked at everyone in the market, how they played the multifamily game. I took all the little bits and pieces from their story, I took their strategies, combined it into one conglomerate for my multifamily strategy. Everybody's a little different, but you can take the best pieces and omit the worst. Dave, miss you too. We got Tamir here. We got My Apple ID. I don't know who that is, but, uh, welcome to the chat. If you have questions, make sure to drop them below. From Jonathan Williams, do you guys invest in Texas? Not yet. Christian is looking at moving to Texas. I am not, but he wants to buy there, so I think he is going to buy into some apartment deals over in Texas, and specifically in the Dallas area. All right, let's see. From Dividend Dave: Can you go over how you're going to get funding for the down payments and upfront costs for the property you presented at the summit? Yeah, so working on buying that and actually a few more deals all in that same area in Eastern Washington. The total down payment for everything can be about $2 million. That is bigger than our biggest raise, which was $1.2 million to buy the Union properties. That was the, the Hood Canal Sauna House and the Robin Hood Village Resort. $2 million is more than the $1.2 million we raised before. Everything comes down to deal debt equity. If you want to buy stuff with no money, which is how I operate— I've never got any money because it all goes into the renovations— then you have to find the deal first. Well, we did that, check. It's going to be 72 total units, 60 of which we talked about at the presentation, and then another 12-plex. But, uh, we did that. Now we lined up the debt, and the debt seller financed at a point where it will cash flow well over 15% on the $2 million down. Now we're still waiting to go under contract, so I'm not just dropping all the deets. But what we did is we lined up a deal that, number one, we love. It's got a phenomenal location, phenomenal building. It's just a cool asset. It's got one owner. The, the owners right now built it, which is really sweet. And then we lined up the debt, and the debt is just as sick as the asset is. It's going to be low interest rate, long-term fixed rate seller finance mortgage. So it's 5% interest only for 10 years. Now, the reason I like that is, number one, 10 years is a long time. 10 years ago I was 13 years old. So that's, uh, this is a good portion of my life, and real estate does go up over the course of a decade. I love that it is 5% because I, I know I can make more than 5% on that asset. And interest only keeps the risk on the lender until the last minute. Some people love to amortize their mortgages. Interest only, from a risk mitigation standpoint, on long-term fixed rate debt is absolutely the way to go. Because if I were to pay down my mortgage on that deal, if I had a stroke, something went wrong, then I lose all the debt that I paid down if they take it back, versus having all that cash in the bank. And then I can just write a check and pay it off when I'm ready or refinance it. All that to say, where's the $2 million coming from? I know that I can find money for cheaper than 15%, and day one it cash flows at 15% with upside. I can make that deal work. And do I know where all the $2 million is coming from? Absolutely not. But I do know it's coming from people, and I've met a lot of people over coffee. So what I'm going to be doing as soon as we're under contract, assuming that Eastern Washington deal comes together So I'm gonna be calling the network, we're gonna grab coffee, catch up, and I'm just gonna share what I'm working on, show them that I'd like them to be involved in it, and then show them if you're ever coming up with money, the way to do it is you need to show the stability of the asset, where the money's going, and how they're getting paid. And I'll be able to do all three of those things within that little presentation. From Anna, or Anna, would you recommend having an agent represent me on my first deal? Absolutely use the professionals. It is 100% worth it. I'm a real estate agent and I still don't rep myself on bigger apartment deals. And bigger for me is midsize for everybody else because people love to do those institutional assets. But when you're getting started, absolutely use a professional. Don't try and think that you're going to save money not using an agent. It will cost you more if you are trying to skip using a great agent. Now, a terrible agent can cost you a lot of money. But a solid agent will make you millions. All right, let's see if we have some more questions here on YouTube. Oh, and from Dylan, would you target, or what would you target first when negotiating on a 22-unit with seller financing already being offered 75% LTV 25-year am, $1.4 million purchase, 6.5% cap. Okay, so what you're telling me is $1.4 million purchase, and I'm going to work backwards on this deal because I love underwriting deals. You're putting 25% down, meaning you're getting a loan for $1.072.500. You're cash flowing $1,800 a month. You've got a cap rate of 6.5%. On your $1,430,000. So you're gonna have a $93,000 a year NOI, or $7,745 a month. If you're saying your cash flow, $1,800 a month, that means that, um, your mortgage is going to be $5,900— well, $5,945 a month times 12 $71,000 a year divided into your $1,072,500 mortgage means you're borrowing at a total cost of capital of 6.65% interest. Uh, so that could be interest only. Oh wait, yeah, yeah, so that could be interest only, or that could be your total cost of capital loan factor rate. So that sounds like an okay deal to me. The one thing that I'm thinking about right off the cuff is that you're cash flowing $21,600 a year, $1,800 times 12, on your down payment, which is a little over $300,000. So the cash-on-cash return is not phenomenal, but it's not bad. What I'd want to know on that deal is where are you buying? Is there upside? And, um, yeah, I mean, those are the main things. It sounds like it cash flows well day one. You're going to be in like the, the 6 to 7% rate of return, which is not terrible. And if there's upside and it's a good location, absolutely. And I love the size of the deal— 22 units for a first opportunity. Is great. I see that it's a 25-year, I'm not interest only. So you— what you're going to do is you already know the interest rate based on what you're sharing, but you can work backwards. And if there's upside and it's a 6.5 cap market, go for it. You got your deal, now your debt, now you have to figure out the equity down. And, uh, if you're making 6-7% cash on cash, you need to find money that is okay with that in the beginning and will understand that there's upside and the The money you want is just from the people in your network. Dividend Dave, thanks so much, Cody. My head is still wrapping around raising $2 million. Luckily you're not raising $2 million right now, unless you are. But, uh, it just comes from people. That is the thing that so few investors understand. Everything you want— money, real estate, management, uh, getting your labor— everything is just from people in your network. That's why we advocate for grabbing coffee. I've had 4 coffee meetings today, some with owners, some with brokers. And yes, I drink a lot of coffee, maybe too much. However, I am getting the network built out. And so whether it's 1 coffee meeting a week, 2 a week, 1 a day, whatever it takes to build out your network, as soon as you map out people's goals, just don't forget it. Share it with them when you, uh, have something that makes you think about them, and they'll remember it. Talk about some of your zero-down deals and why you believe the brokers and sellers were both open to your offers. Absolutely. The only zero-down, 100% seller-financed deal I've ever purchased was a tiny home. And I bought it because someone DM'd Christian Osgood on Instagram. I was like, hey, you want to buy a tiny home? No, no, no interest there. What if I seller-financed it? Well, what are you thinking? Well, zero money down. Okay, we're interested. And we bought it just because we could. When we talk about zero down real estate, the reason we buy all this real estate zero down— I mean, well over $25 million in real estate with $10 grand out of pocket, which is negligible compared to the amount of real estate that I bought. The zero down piece, you find any piece of real estate, the way to buy it is you line up debt that allows it to cash flow and then find equity or debt for the down payment, whereas it will not kill your cash flow. And you don't just give up all the deal, you need to keep the actual equity. So I usually do deal debt debt, but I just have to structure my debt where the cost of capital is less than the dividends that it produces, expressed as a percentage, because everything in real estate or investments can be expressed as a ratio. So, uh, zero down deals I can talk about the 38. When I bought a 38-plex, that was the first deal I ever bought with Christian, had 3 equity partners, gave them way too much of the ownership in the asset, had to buy it out at a very expensive rate later. But Christian and I are 50/50 on that asset now. But when we first bought it, it was $1.7 million seller financed, and then we borrowed the $300,000 and gave someone an equity position in that real estate with a buyout agreement. So $300K came from here, from investors, and $1.7M came from the seller. And we eventually cashed out the $300K investors later down the road. But we got into the real estate zero money down, we got the asset value up, and then we were able to own the real estate, just us, later down the road. If you want to buy— it doesn't matter what you want to buy, it could be anything— you just have to line up the money. Once you find the opportunity, you get the big piece of the money, which is the debt. And if the deal doesn't support more debt, then you can't borrow the down without negative cash flowing. So you go to an equity partner with a buyout agreement, which is structured very similarly to debt because you have the option to cash them out for some value in the future and own it 100% yourself. There's a cost of getting into the business, and then there's a price of staying in the business. I guess that could be flip price getting in and a cost of owning it. But, uh, that's why you got to make sure that you get your real estate to buy your real estate and you negotiate the debt long-term fixed rate and cheap enough to where you can cash flow enough to buy out your investors later. Ryan Mitchell, good to see you. Also for, uh, Anna asking, does the seller pay agent fees And normal closing costs on a seller finance deal? Yes, so it is a closing cost on your settlement statement, and your settlement statement will have costs that they have to pay. Now, where's the money come from? Typically from the down payment. Sometimes they just write a check to get out of it, but typically seller finance stores are not in a pain point, so typically they're not going to write a check. You're going to have to come up with a down payment if you're doing it zero down. The trick is it's not your money. Either bring on a partner or you borrow the down payment, and that will pay for the commissions. Gigi, I'd love to shadow someone doing multifamily deals in St. Louis market. I own a couple single-family rentals but not confident enough for multifamily yet. Anyone around here would like to connect? Thanks in advance. All right, well, I am not in that market, but that is a shout out. If anybody's in St. Louis, feel free to connect. And as far as the, the confidence piece for jumping into multifamily, the only thing that's different is you make more money and you have more expenses, but you're just— it's just a multiplier. You are going faster. If you've already done multiple single-family, it's the equivalent of you doing a smaller multifamily. So if you'd like to, to double your portfolio, maybe you got 2 houses, 3 houses, go buy duplex or triplex. You're going a little faster, but what you're going to realize is, yes, it's a little scarier until you actually do it, and then you realize, oh, it makes a lot more money and it's a little bit safer than just buying rental houses. Dividend Dave, I'm having trouble finding people via phone calling to add to my network. Any ideas of how to get past this to grow your network? So what I do on the Google Maps play— and we have a video on our YouTube, how to find any property owner ever, it's like 8 and a half minutes long. Check that out again. But what I do is I look at where am I at or where do I want to buy, and I just pick a big roof, then I go outwards and call every single property owner. And it's really easy if you're doing it around where you live because, hey, I'm in the area looking to grab coffee and curious how you did this. And that's how I started to build out my network in the Moses Lake market. But if you can't do that, then what I would do if you're not just finding success is go to the local real estate meetups start meeting with them. And, uh, like, I just did that today with 3 people, business partners, and I— they could invest into a deal someday, maybe not, it doesn't matter, but I want to hang out with them. So I said, what if we went bowling? Now we're going bowling this weekend. So doing stuff like that, uh, little real estate meetups, try to make friends with those people because people that own real estate know people that own real estate. And the rule of 6 states that within 6 degrees You know, every single person on the planet. Feel free to look that up, but that is just a statistical fact. How much equity did you give up for that $300,000 on the 38? Originally, we messed up because this is our first deal, we didn't know what we were doing. We gave up 20% to each person for $100,000. So 20% times 3, because we needed $300 grand, each person put $100,000, we get 60% of that deal. Big oops, should not have done it. We were able to buy it back later because we negotiated that on the front end, but it cost us a lot of money. And, uh, it is what it is. You get to— you get what you negotiate. You don't get what's fair. And we didn't know how to negotiate, so we did not get what was fair, but we got exactly what we asked for. When you're getting started, don't give everything away. That is a bad idea. Some people say do it just to get the deal done. Don't do a bad deal. Uh, they cost a lot more money than it should have. 4.5% interest for Dylan. Oh yeah, and that would make sense because you said you're on a 25-year round. Uh, rents are estimated to be $150, $200 below market, been on the market for 220 days in a submarket of Detroit. My question to you is, Detroit, 6.5% cap rate market. If it is, phenomenal. I actually haven't looked, so I have no clue. If it's not and you're overpaying, that could be okay, but I'd want a very long-term seller finance note. Maybe you've got a 25-year deal and no balloon. Now I'm interested, because if you can figure out how to buy the real estate and how to never lose it, you're set. Some people are going to say you can't overpay. Well, they probably don't own a bunch of real estate. You can overpay at a secure location if the debt product is permanent and you cash flow with margin and a great location. You can figure out how to buy and how to never lose it. You can overpay a little bit as long as you have that long-term fixed rate debt product that allows the real estate to pay for the real estate. Sounds nice. I love the fact that it has upside and it cash flows day one. How did you raise money for the unexpected or unplanned repairs? Well, some of them went on a credit card. A lot of people live on debt. It's amazing, even landlords. But, um, for us, I already had 30 apartments. Christian had his fourplex— or not fourplex, his four units, two duplexes. His real estate covered his real estate, so everything his wife made at the time was saved, and everything that I made at the time was saved. And I had a little bit of cash flow, just a little bit, not a lot. And this was over 2 years ago now. So, uh, everything that we made— and still to this day, everything that we make goes into the business, every last dime. And so, um, we live broke, and, uh, the real estate eats before we do sometimes. And that is just how it is. Now, it's easier today than it was 2 years ago, but, uh, if you have a little bit of extra money that you can borrow from someone to make sure you've got that reserve and the deal will still cash flow, borrow a little bit extra, I would opt to do that than to do what we did, because it's better if the real estate can feed the real estate, and you can feed yourself. Dividend Dave, $1.99. Money to be a 0.0000001% partner on your next deal. Dave, I appreciate you. You're so nice. Also love the shirt. I wonder where you got it. For those who don't know, we were hanging out in, uh, Portland, and I got a selfie with Dividend Dave in a Cody Doing Cody Things shirt. So that was a lot of fun. Thinking AI, what percent of OpEx do you allocate for cash reserves for your deals? I do things a little bit differently. I like to look at everything globally. Some people say, well, all your deals, you need to stack like $100 a month toward CapEx. I stack 100% of cash flow towards a reserve account until I have 3 months reserves for the asset, for all expenses, or if it is a greater amount on a small deal, the ability to turn 3 units. Because depending on how cheap your debt is, 3 unit turns on a 10-plex might be more expensive than 3, uh, 3 months of reserves. So I'm gonna do either one of those, but it's going to depend on the size of the deal. 3 3 months of all expenses or 3-unit turns, whichever is greater. Dylan asked, would giving up equity growth but buying based on cash flow and debt hammer down the road be my strategy? Absolutely could be. We buy based on cash flow for equity growth, we being Christian Osgood. So we will always buy based on the cash flow for the ability to multiply the money. Your strategy in a super high cash flowing market could be, I'm just gonna buy a ton of cash flow and then use all of it to hammer the smallest mortgage and then debt snowball and then pay it all off. I love that strategy. Turns out if you have a whole bunch of free and clear real estate, you have a lot of cash flow. But, uh, that said, I like to buy for equity growth as well, so I like to see the upside. Sounds like your deal has some upside with the $150 to $200 rent bumps, but if you're overpaying, which again, I don't know that you are. I don't know that market. If you're overpaying, then that gets nuked even if you're doing the rental bumps. So if you want to make $10,000 a month, buy real estate that can make you $10,000 a month, then debt snowball it and you're set. Okay, my Apple ID. Okay, where did you get the debt for the down payment, your first couple deals? Well, my first deal was a 12-plex, and I bought that 12-plex in Central Washington in Grant County. And, uh, million-dollar loan from the seller. It was $1,012,500. Then I did 10% down. I bought it for $1,125,000. I borrowed a little bit extra so that I had little reserves. I had like $5K in reserves plus my closing costs. So I borrowed $125,000 in second lien position. And, uh, so first for the seller, second for the private investor, and that covered my down payment, my closing costs, and then my with a little $5K in reserve budget, which probably wasn't enough, but it is what it is. I made it. So where'd that money come from? It came from an investor in the real estate office. What I did, and I did this for my second deal, and then my third deal I pitched someone that I met and actually raised the money over a piece of pie at Sherry's. I'd helped him sell one of his flip houses, he was liquid, and, and I asked for money. But my, my first two deals, I asked all the brokers in the real estate office to see if I could pitch their clients that had money, because I didn't have any clients, didn't have any family, didn't have any friends with money, and didn't have anybody in my sphere that would invest in real estate. Tough place to be. But I asked them to make the pitch, made a bunch of pitches, botched a bunch of pitches, and, um, through that process got a little better and had a lot to learn. But I squeaked through a couple pitches that worked for my first and then second deal. Got the, the deal lined up, then the debt, the big piece of the debt, the $1,012,500 lined up, and then the $125,000 for the down payment. After all that was said and done, still cash with $800 a month. Second deal, 12-plex. I did the same thing. I made the pitches to investors of the brokers in the office, but it was different. It was not a turnkey deal like my first one. It was a fixer-upper. So instead of buying it for $1,125,000, I bought it for $650,000. $80,000. I had to put $120,000 down, so it was a $560,000 loan, $120,000 down. So I borrowed $125,000 to cover closing costs. Didn't have reserves on that one, but I had a little cash flow from the first deal, and that one cash flowed $1,250 a month day one with zero money out of pocket. That was after all mortgages, after, uh, all OpEx. I was self-managing though, so it was tight, but that's what you do in the beginning if you don't have money. You play the game to the best of your ability. And that put me at $2,000 a month cash flow with zero money out of pocket. And it only got better with time. From Jay Yen, I have a deal lined up, 30-year seller financing, but there is a lot of red flags. Anyway, you and Christian Osgood could help? Absolutely. Put some details in the chat and I will give you— if you have direct questions on the red flags, I can help you navigate them. But I need more details. Ryan Mitchell, I'm finding that private lenders, not hard money, typically want someone with decent experience before they lend on a second position deal. How do you navigate through that with as much confidence as you can? I was just talking with my buddy Brian before this call, and he needs $1.3 million down for his deal and was very worried. Well, if you're worried, the seller's definitely going to be worried. So you need to cut that out. You have to believe that you can put it together. Now, you need a plan. You should not go into deals without a plan. That is a good way to fail and wreck your credibility. As soon as you do it once, it just— it will snowball and it gets worse and worse. So you need to do deals that are feasible, where you could actually come up with the money, not just do this huge 100+ unit complex where you need $5 million down. However, if you find a deal where you need $100,000 down, $200,000 down, $300,000 down, There's a lot of people with that type of money. It doesn't seem like it, but there are a lot of people with that money. If you want to inspire confidence and come up with money, I've mentioned this on the channel before, but there's only 3 things you need to outline. You need to outline where the money's going, number 1. What is the stability of where it is going? If it's not a stable deal, they're more likely to lose their capital. And number 3, how are they getting paid, which is a function of positive cash flow? One way the deal could maybe not be stable is it's a short-term debt product from the seller. They're not going to give you the money. But if you can illustrate where the money's going, how it is stable— long-term fixed-rate debt with cash flow and margin, and it's a solid location— and then how they're getting paid, you show them the cash flow numbers where you have solid cash flow that can actually afford to pay them, and then extra that will supersede the need for your experience. Because those 3 items, those are the only things people care about with money. They don't want to lose money, they want to make money. So where's it going? One more time, where's it going? How is it stable? And how am I getting paid? And if you can map those 3 things out, illustrate the qualities of the asset that produce stability, where all the money is going to, whether it's going towards down payment repairs, just down payment closing costs, et cetera, map that out, and then how the cash flows are going to pay them and then pay them back eventually. Maybe get the asset value up and refi. Again, everybody starts from ground zero, but not everybody from ground zero knows how to map this out. So hope this helps. Oh no, not the credit cards. Credit cards are bad, but sometimes money is necessary even if it's expensive. If you're going to have to do that, make sure you have a business plan to pay it off well before it's due and you do a 0% interest promo because I don't like 18% and 20% money. That is a bad idea. How did you know I was wearing that shirt today? Sent pic. Dividend Dave. Oh, you are wearing that. Look at that. That's Dividend Dave, everybody. Anybody wants an I'm Cody Doing Cody Things shirt, I will 100% take a selfie with you if I see you in public. Can I come check out the Robin Hood before I leave to go back home? Absolutely. Christian's down there right now. I don't think he'll be there for that much longer. He was working over there today while I was having a party with investors and renting, grabbing coffee. But you're more than welcome to drive by robinhoodvillageresort.com. Also, we've got 16 people in the chat. If you have more questions, put them down below. We have 4 likes, so if you'd about, that would be much appreciated. Boosting the like numbers, because that does help our channel out a lot. But we appreciate everybody being here. Now you have 5, Ryan, you are a baller. Appreciate that. It was also good to see you in person. Thinking AI, if you were to bring along a mentee, what value would you want them to bring you? I feel like the mentor-mentee relationship is It's a two-way street. It absolutely is a two-way street. And some people, when they're getting started, they think they have to focus on bringing value. I sure as heck was told that when I was getting started, but I had this conversation with someone earlier on the phone about 2 hours ago. And what I told them is, stop worrying about bringing value. You're working with people that are affluent. You're working with people that are masters of the game. If you're playing the game the way we are, some people like to play the distressed seller game. We don't do that. So if you want to play the game at the highest level, you are working with people that play at the highest level, and those people have a lot of money. They don't need more value. Learn how they play the game, apply what they teach you, let them know it worked. And the value you're going to bring them is the fact that they helped push someone else forward. There are some people so poor, all they have is money. If you can bring people the satisfaction of giving them an opportunity to teach you, and then you actually go back to them and say, hey, this worked, it moved me forward, I'm hitting my goals, I couldn't have done it without you. That's more valuable to them than the money. Again, some people are so poor, all they have is money. So if you give people an opportunity to share what they've learned the hard way, that will absolutely be valuable to them, and it will push you forward, it will push them forward. And, uh, that, that is the main value that you will bring to a mentor if they're a good mentor. All right, we've got some people in chat. And if they see you replicate it, I'd bet the mentor would be amazed. Absolutely. And that is what I did with my Moses Lake mentors. One of them told me, buy— if you buy the building, you need to put a pitch roof on it. I said, well, I don't have any money. And he said, I know, Cody, but when you do have money, whether you borrow it or write a check, you need to do this. And then I did it, and now he's looking at seller financing me a bunch more deals, brand new construction. He's helping me develop. Could not be here without him. Without a doubt, would not happen. And he's getting a lot of satisfaction out of me replicating what he built faster than he did it. Okay, from Rob. Hey Rob, are your brokers putting a great volume of deals across your desk that will entertain owner financing? Absolutely. Working on buying from the housing authority right now. Working on buying over in Eastern Washington, Central Washington, down near Union, all of which are seller financed, all of which are through brokers. One broker in particular is a good friend of mine now. Started off as a complete stranger, but there's a lot, lot, lot of seller finance deals out there, and people that say otherwise are wrong. I was talking with another broker today in Georgia and he said, we don't do that here. You may not— I didn't say this to him, but I was thinking, you may not do it here, but I promise people are doing it there. So you do have to find a competent broker who understands the scheme. Family friend has a 2-bed, 1-bath starter home renovated 10 years ago, very good location. House ups value every year. They want to sell it to me. Costs $130,000 to $140,000 market price. Cool. Uh, rent income in the area is $1,200 to $1,500. Is a good deal. Would be my first house. Will never be a super profitable house, but area is really nice and I can either live there or know renters that would. At the end of the day, you need a place to live. If you can figure out how to buy something and how to never lose it, you will do well in real estate over the long term. As a function of long-term fixed-rate debt and cash flow. So if you can solve for the how to buy it, how to never lose it, and it fits the overarching idea, your ideal scene for your future and your goals, go for it. If it doesn't fit the long-term portfolio, then I probably wouldn't. I'm not a fan of temporary fixes. I've seen a lot of people try temporary fixes and they usually hate it in the long run. So don't Don't do a temporary deal just to try and make some money. Just because something makes money doesn't mean it makes sense. Make sure it is fitting that long-term vision, because the shorter sighted you are, the less likely you are to do well in the long term. What do you do if a mentor gives you some advice and genuinely is just not good advice? You, you move on. Part of multifamily strategy, even with us, we give advice some people are not going to resonate with. That's fine. It works for a lot of people. You, uh, get to take the best pieces from all your mentors because you're going to probably have more than one in your lifetime, and you omit the worst, and you have a reason why you omit it. There's going to be something that they did or they do that is not repeatable. And I've had a lot of mentors who have served like that, that built massive portfolios, and their strategies literally don't work anymore. What they did is now illegal in the mortgage industry, but it was perfectly legal back then. Can't use it. What I can do is figure out, okay, how did they manage this? How did they oversee all the debt products? Because there are things, even if you can't do the whole strategy, you can take the best pieces and omit the worst. Credit cards are great. I've done all of my rehabs on 0%. It works great. It works till it doesn't. That is something to know. Things work until they don't work. So make sure you have a strategy in case your flip doesn't sell on time, because when it goes to 18 or 20%, that can mess up your deal if we're talking bigger numbers. Hey Cody, just talked with you yesterday and I called the VA. I can't use the VA loan because I don't qualify for the benefits yet. That is fine, Jonathan. Give it time. I remember talking with you yesterday on that, and, uh, just keep doing what you're doing. Nothing happens overnight except for the few things that do. So give it time, stay part of the course, and make it happen. But when you are ready, now you know what to do. House hack over in Texas and you're ready to rock and roll. All right, from Chandler: want to start in a long-term portfolio because location, it will always have renters, never be the breadwinner, but will be winner. Will be a winner. Okay, that's great. If you can add positive cash flow to your universe in excess of your expenses every single month, it's hard to go broke. So if you can buy it, you can cash flow it, long-term fixed-rate mortgage, do it. Okay, can you get into multifamily with no money but good credit? You can get into multifamily with no money and no credit. It's exactly what I did. Seller financed. You don't need credit. You need to have a conversation. You need to know what you want. You need to know who has what you want and then be able to effectively communicate where you're trying to go. But that is the way to play the game, whether you have credit or money or not. Ryan Mitchell, serious question, where's all your furniture? I have 2 camping chairs. The other one's right behind me. And I have a bed. I rent where I live and all of my money goes to my apartments. When I say that, I mean that. I live like I'm broke because I am broke because all my money goes back into the real estate. That's what we recommend to everybody. Christian has a wife, so he also has animals and furniture. I have an animal, but she doesn't want furniture. She just likes the bed and laying in the sun. So I have camping chairs. Keep it simple. When's the next Robinhood event? I don't know. I think that'll be in July or October, but I don't know that for a fact. Rob said to Section 8 or not to Section 8, that is the question. I've done Section 8 and I've had very, very nice people in that program. I've also had people that do drugs and ruin the community. There are good people in every life situation and there are bad people in every life situation. There's good rich people, good poor people, bad rich people, and bad poor people. It happens. Money just amplifies who they are. So I absolutely am all game for Section 8. Everybody needs a safe, clean place to live. I have a few in the portfolio, not a ton. I do like the guaranteed income, but what I really like more is that I know I can pay my bills, I can cash flow the real estate, and that people that are not in the best financial position don't have to worry about where they're going to sleep tonight. There are some people that will not rent to Section 8, that's fine, but, um, there's a need for housing for every person on every level in the economic cycle. And, uh, just because they're there right now, give them a great place to live, work with them, and then maybe you can get them to buying their own house someday. But, uh, everybody needs a place to live, and I like providing that for people that take care of it. When are you buying your mom the condo? I have to file my incredibly complicated tax return. I did a tax extension, and as soon as that is filed, I will qualify for traditional financing. So I'm guessing that's going to be in October. But I know the condo complex she wants to be at. I just don't qualify until taxes are filed, and my taxes, believe it or not, are not simple. My whole brand is simple. My taxes are not. All right, does your mentorship break down your deal components, etc.? Absolutely. And we do it as simply as possible. If something's not simple, it's not repeatable. If it's not repeatable, it's not worth anything. And price is only an issue in the absence of value. So if you want to create the value, you have to simplify your universe. We break down the deals, we break down the terms how we structure them. That is a big component of what we do and why we do it the way we do it. From Rob: Love is the greatest thing you can buy with money, dot dot dot. Nice. Dividend Dave: What was your favorite part of the Action Summit? Dion said it was being— or it was me being there. Absolutely. I was so happy to see you, Dividend Dave. It was great, but no one was calling you Dividend. I heard that was your first name, but, uh, no one recognized that. Everyone recognized Millennial Mike is millennial. But no, it was, it was good to see you. And my favorite part, I love networking, meeting with people that are playing the game at a different level. There's some people playing above, some people playing down below a little bit from where we're at. But getting to meet people in all different levels of the game and all different parts of their business cycle is a ton of fun. And with that, let's see. Oh, we got one more question. If you have more questions, make sure to put them in the chat. I'm just going to keep going through this until the questions run out, so that's going to be on you. Uh, let's see. Did you renovate your first deal right away, or did you wait? My mentor at the time said don't rock the boat if you can't afford to get wet. If you go into a whole bunch of renovation, some people will leave in fear that rents are going up. So I did not change anything for the first 6 months. After that, as I started stacking cash flow, I changed the hot or the, uh, the water heaters. So I replaced the water heaters after 2 years after I bought the asset. I replaced the electrical panels. Well, actually, that was 3 years because I just did that electrical panels. I changed the heat, the heating in the building, adding another unit, but I did not do anything in the beginning because I could not afford, in that analogy, to get wet. Didn't want to rock the boat, so I did not change anything about how the asset was run. And I still have some people that are living there that were living there when I first bought it as a result. What market do you recommend? The market that you have an understanding of and boots on the ground in. I would not just buy in the Midwest for cash flow until you understand that market, who are the main economic drivers, are who your tenant base is going to be, and how you're going to manage that asset. It's cool to see great numbers, but if you don't have a way to manage it, it doesn't matter how good the market is, it's hard to make money. So, uh, I would recommend the market that you can you can easily understand and get to if you need to be there, and that you feel you can build a team in. For me, that's Central Washington, and really all of Washington. For some people, that's Illinois. For some people, it's Texas. For some people, it's in their backyard. There's a lot of people that build their whole strategy off of investing in their backyard, and that's cool. That is not what I do. How much is your course? The course is $1,499. And 3 months mentorship is $2,000. From Jonathan, can you explain how you use a balloon loan to your advantage? Yes, depends. If people have balloons on their real estate and the debt's way higher for their refi than it was when they got into it, then you can go in and probably lowball them because if they can't afford to refinance it, If you wanted to be a jerk, which you totally could, then you could offer them a low price. And the closer they get to that balloon, if they can't refinance it, they have to sell out, and you can get a very good price on the real estate. If you have a balloon, you want to push it as far into the future as possible, because balloons do what balloons do, and they pop, and then you owe a whole bunch of money. So What I like to do is if I'm paying a higher price and maybe it's worth— I'm going to put a balloon way down into the future so that I know I can optimize the real estate, get the value up to exceed it where I know I could refinance it and cash flow a much higher loan. If I'm getting a really good price on a deal on seller financing, I will incentivize the seller to give me that price with a short-term balloon because they're going to get all their money sooner than all the people that are given maybe a little more money but an extra 10 years down the road. So if you're getting a really great price, you can do a shorter balloon. If you're doing a really high price in comparison to what the asset is worth, or close to market value, then I want to push the balloon as far into the future as possible. And you can use that to incentivize them to give you a long-term debt product. If you don't qualify yet for bank loans and you're trying to build, then I'd probably opt to pay more and have a long-term balloon. If You have a decent net worth, decent cash flow, you're bankable. I'd opt for a really good price below market and short-term balloon so you can refinance, pull your money back out, and, uh, keep multiplying your net worth. But depends where you're at in the business cycle. Is it really as simple as I want $6,000 a month in net income, so I just need to get a property that will get me that? How do you find your apartments? Google Maps, etc.? Yeah, it is. If you want to make $6,000 a month in net income, $72,000 a year, you need to find a property that'll have a $72,000 NOI. You need to figure out how do I get the debt. You find your deal that gets you what you want, you line up the debt, and then you line up the down payment, and then you get the real estate to buy the real estate. The beauty of the game is rents go up with inflation, and we need some incomes to go up with inflation so that, uh, the whole system doesn't pop. But I, I do see that happening in the near future. But it will track with inflation. So you figure out what asset can get you what you want, and then you pay it off. Now what you probably want to do is figure out, how do I figure out which assets can get me $6,000 a month with leverage so that when I pay it off it actually goes up? And you're going to have a little bit of room for margin there, because if you want $6,000, you should probably opt to make 12, but you figure out what real estate will do this for me in a location that's not going away. And then once you build the business, pay off the debt so you don't have an underlying obligation of owing someone money. You don't own it till you own it. Is Washington the only state you're investing in? Have you looked into Northwest Arkansas? That's very specific. I know I haven't looked there, but I only invest in Washington because this is the only market I understand right now. I understand that it sucks, but at least I understand it. Does the amount of rent you've raised divided by the market cap rate is your net profit on a deal, not including cash flow? You're gonna have some fees in there. So if you're ever gonna sell and you want your profit, you got to remember that there's like an 8 to 9% cost to sell. So you're gonna tax that off of your actual, your net profits on a sale. You lose money when you sell to fees. And typically your expenses will go up a little bit, so you need to project for— your PM will probably go up, your utilities won't, your taxes won't right away, your insurance may go up every little bit. But if you take 80% of the new rent, then yeah, you can divide that out by your cap rate, and that is going to be your new value add, and then you sell it and you pay your fees to sell, and then anything left over is profit. What are typical— oh, I skipped one. On the first deal you negotiated on your own, what was the asking offer terms versus final price and terms? Every deal that I've negotiated, I've bought at the terms. I don't renegotiate deals unless there's something material. And the 38-plex, the 12s, the 6s, when I signed the paper, I did not go back and forth with them. When it was signed, it was signed, and we closed it. The very first deal was originally going to be 15% down, 6% interest on a 30-year arm, no balloon. It ended up being 10% because they wanted a ridiculous term that was actually illegal. And you can't— you just can't have it on a note. So I was like, look, I'll, I'll just put it on here, we'll get it into legal words, and then you're gonna have to do 10% down because this is dumb. And they said yes. So I bought that with less money down. But usually, almost all the time, whatever I submit, I close. And there's something we talked about briefly on the channel, but your goal should be to strengthen the weight of your signature. If you sign for something, it will happen. And that is always front of mind for me. When I say I'm going to do something in business or I sign for something, I'm going to do it if everyone else upholds their end of the bargain. And to the extent you can do that, people will start trusting you with more money. What are typical balloon maturities? There's no such thing as typical in seller financing. You don't get what's fair, you get what you negotiate. However, in commercial debt products, typically you're going to see a 3, 5, 7, or 10. There are deals that are 25 and 30 and 35 and 40. It just depends on what you are working on. Have you ever executed Jeff Stephens' strategy of re-property and the financing? That whole concept blew my mind at Action Northwest. I haven't done it with real estate. I have done it with businesses where I've moved debts from business to business and from real estate to business. You can absolutely substitute what is backing a loan. It doesn't just have to be between real estate. It can be between different business ventures if there's an equal exchange of value, and it can be from real estate to business. But everybody has to be on the same page, and we haven't had a need to do that for the real estate because most of the real estate is on phenomenal debt products that wouldn't really get better if we swapped them around. Can you explain refinance to your advantage? Absolutely. So if you've got a 6% interest loan and someone's willing to finance it, whether it's a bank or an individual, at 4 or 5%, it would be in your advantage to pay off the 6% loan with a 4 or 5% loan. But, uh, it's just readjusting your debt stack. So if you can improve global cash flow on long-term fixed-rate mortgages then it does make sense to knock out your current debt, pay it off with a new loan, which again, in refinancing, you're just paying off one loan or adding a new loan in addition to that. So, um, you just have to figure out, does my global cash flow go up or down? Does my liquidity go up or stay the same? Does my balloon term on the debt when it's due get pushed out? Is it sooner? Is it the same? And you just weigh the pros and cons. And if it— if there's more pros than there are cons, then typically, more often than not, you'll move forward. Do most of your students in the mentorship program get seller finance deals with no down payment? It depends on their situation. There are some people that have gone through the mentorship that are liquid more than my total equity position in real estate. Like, they're liquid millions and millions and millions of dollars. They don't need to do zero down. They're just trying to figure out how to play the game with their money. There are some people that have no money that are broker than a joke, and I can say that because I've been broker than a joke more times than once, and, uh, they've still managed to buy real estate. And that is not limited to just Caleb and Chuck, like, doing that in Texas. We've got people doing it all over the states. We've got people doing it Oklahoma. I always forget where Vlad bought his 14-unit. I can never remember the state. It's not Jersey, it's not Maine. I don't remember. But, uh, Vlad bought a 14-unit. You can do this anywhere. We've got people buying in Moses Lake. They're my neighbors now. But yeah, you can absolutely do it zero down. But again, if you're doing the zero down thing, the money does come from somewhere. It's not like it's just made up, except for the seller finance one. That is made up. Deal debt equity— find a deal you want to buy, you have to line up the big piece of the money, which is the debt, and then you either borrow or with it down if you're doing it with no money, or you have to figure out an equity partner with some sort of buyer agreement because you don't want to partner with people long term. People have variables, we don't like variables. But the money just comes from somewhere, and the goal is the seller financing— what you negotiate, you get them to finance the biggest piece possible, if not 100%. What trouble should you expect when buying a rental management-wise? Well, buyers are liars, sellers are worse, and brokers suck. So that said, sellers will lie to you. So when you're buying something, you don't know if it's going to be stable or not. You have to do your best due diligence, but people still lie. Brokers want to typically just get paid and move on. So until you find a great one, that's going to make it tough for your management. But until you know what you're doing, you're just wandering around trusting everybody that what you believe to be true is true. And often, more times than not, it's not true. So onboarding tenants can be a lot, figuring out how to best communicate, complying with all the laws in your area. It's harder here than it is in a lot of states, here being Washington, especially in King County where I live. But figuring out how to best manage and keep your tenants happy. Happy tenants do not trash your property. So keeping them happy, making sure that their stuff's taken care of and that they're taking care of your stuff is a big one. Learning how to best communicate with the people that share your properties with you is a big one. And you don't know it till you know it, and you don't really know it until you go through it. So, uh, there's a lot of trial and error when getting started. I, I learned all that because I self-managed my first 30 apartments. You're investing in Georgia next. What city? I'm not investing in Georgia right now. I just had a broker email me. He got my email from somewhere, so I was like, hey, let's chat. I, I don't think he is a— I hope he's not watching this, but I don't think he is the broker for me. He doesn't seem to know all the things he should know for what he's trying to sell. How do you find investors and raise capital for your down payment and renovations for your seller finance deals if you have no connections in real estate? Built up yet. David, you have to go build those connections. And the way you do that is you call the people who own the real estate you want to own in the market you want to own in. Stop trying to buy the real estate, start trying to network. Hey, I'm calling because I saw you on a 12-plex on Marine Drive, not selling, not sure how I'd buy it, never bought a 12-plex before, let alone real estate, but I want to. Can we grab coffee? I want to learn how you got to where you're at. That was the general talk track that I had when I was getting started. And then I bought a 12-plex on Marina Drive. But, uh, like, that was the literal talk track that I had to get to where I'm at. That is what it takes when you have no connections. You have to go build your connections with people that own in the market you want to own in. People that own real estate know people that own real estate, and that is the best way to play the game. You got to go meet with those players. This live stream will make you a multi-millionaire. Love it, Dividend Dave, with all the dividends. Yes, but no, we appreciate the support. I know Chris is not here, but he appreciates everybody being here because this helps our channel, and we're happy that we can share a lot of things we've learned from the players in our market. What is your goal in the next 5 years, and what is the main strategy to make it happen? Well, 5 years is a long time because 5 years ago I hadn't even gotten into the real estate space yet, and we've done a bunch relative to what we could have done. So, uh, in 5 years I think we will pass 1,000 apartments seller financed without syndicating, and I'm super stoked about that because that's, uh, that's more than a little, and that would make us a competent player in the space. But we're going to keep scaling We want to be the best buyers. I believe we've got a shot. Best buyers and managers of real estate in Washington State, and we will grow into that role as time progresses. But I don't have a unit count goal. I, I know we will pass 1,000, but that's not the target. You— buying units just to have units is dumb. Buying them, improving them, and managing them better and keeping tenants happier than other people would is our objective. So we're going to shoot to do that, and I do think we'll pass 1,000 in the next 5 years. And then how can I get started? Well, establish your goal, figure out who the players are in the market that you're in, and then reach out to said players and learn how they did it. Because if they give you a step-by-step how they did it where you live, you just have to take what they tell you and repeat it. That is the simplicity of this game. And again, to the extent you can simplify your universe, it will become repeatable. And once repeatable, it's valuable. David, once we join your mentorship, is there a set period of time until you recommend us mentees can get our first deal done? Are you and Christian kind of hands-on in helping us through our deals? Yeah, I've been on an abundance of calls today, just one-off calls with people that are trying to get their deals done. I'm looking at driving over to Sunnyside with my buddy Brian to do an owner meeting. That was the one I was mentioning earlier that needs $1.3 million down. And my funding is $1.3 million? Absolutely not. But I will help them structure it. Can't do that all the time because then I have no time. But, uh, when I'm available, we are absolutely here to help you out. We coach all the calls except for if we're signing for deals. Yesterday we were busy, uh, the walk-in, the real estate. But we always make sure that we have competent people leading that. And we meet 3 times a week. Every single week we record the calls and we lead the calls. And our next one is tomorrow at 10 AM Pacific. So if you're interested in that, multifamilystrategy.com. When you're looking to raise that $2 million and you reach out to your network, what exactly do you propose to them? Do you accept capital from them in return for part of equity? Depends on the deal. It goes deal, then debt, then equity. If you have a super high cash flow, it can go deal, debt, debt. You could actually borrow the whole thing without giving up equity. The Problem is most people buy deals that don't have that level of cash flow because they negotiate bad debt. If you want more cash flow, borrow cheaper money. So if you borrow cheap enough money on a long-term fixed rate period, you can actually typically more often than not borrow the down payment and then keep 100% of the equity, and then the real estate pays for all the debt. But again, it comes down to ratios. You don't want to just squeak by and own 100% of the deal I'd rather own a little less with a buyout agreement and have a significant cash flow because that reduces my risk of losing the asset. It is an investment, not a guarantee. So you have to make sure that you do your best job at doing due diligence so that you don't lose real estate. That is a poor business practice. Let's see how— oh, and then how do you propose it to them? When I'm going out and proposing anything, if I need money for anything, it comes down to these 3 principles. Where's the money going? You have to illustrate that. So part of my pitch, this is where the money's going. It's going into the down payment, closing costs, or it's going into renovations, XYZ. It's going to do this. It is stable. People want to know that their, the money is in a stable place. So when I'm making a pitch, I show them the economic drivers why the asset is a phenomenal location that's not going away. And again, it's not a guarantee, so you're not— there's no guarantees, but you're just showing these three things. It's where's it going, what's the stability looking like based on economic drivers, and then how are they getting paid. And when I illustrate that, that is all part of my pitch because I found that to be true. Those are the three top things people want to know about when they're putting money into anything. And that's just how I've pitched to my relationships that I've built As long as I answer those 3 things, every single time I made a pitch, I've gotten the money from the relationships that I've built. And those are just people that own real estate in the market I want to own. Will you keep all your properties or will you sell some? How do you determine that? I'm a proponent for buying and holding cash-flowing real estate. You figure out how to buy it, how to never lose it, you're going to be better off than those who can't figure that out. I'm under contract to sell a triplex because I spent a lot of money on reno and I want to spend more because I love seeing projects get completed. So I'm trading equity in an asset, paying the brokerage fees, and I'm going to renovate one of my buildings. But that is the only time I would sell is if I need cash to improve another asset. We have a principle and we put— published all of our principles here on our YouTube channel, but don't spend principal. Different type of principle. But don't spend your money that, um, you've earned. So while we're getting this money that we've earned from improving the quality of the asset, we only spend the cash flow to the extent that we can. We don't want to violate this. So we're taking the principle from triplex A: I'm gonna take my money, throw it into my sixplex, make it better, and then I'll take cash flow from the sixplex to live off of someday, but not today. Hi Cody, great to see you. From out-of-state investing perspective, do you think it's possible to develop relationships with owners, or should you focus more on a team and realtors? If I had to start over today, I would start with real estate agents knowing what I know, because, uh, it is easier when they build the relationships, but it's more meaningful when you do. If you're doing out of state, I would start and just use an agent to get some deals done. A competent agent can find you a lot more deals than you can if you don't have any relationships in the market. As soon as you own some real estate, call your property neighbors and start building up a relationship there. Go fly out there, go meet with 5 or 10 property owners that own near you, and now you can start cultivating that in-person relationship, and it'll be more efficient for the cost that you're going to spend. Julian, oh man, I'm late to the show. It appears you are late, but late is better than never, and I appreciate you joining in. What do you do with your net income? I invest every last cent that I possibly can back into the real estate. And when I need a little bit of money to pay bills, Christian and I will do a 50— these are 50/50 on most of our stuff. We'll do a little distribution so that we can pay our bills, but then every last dime goes back into the real estate. And we pay ourselves out of cash flow. All of our earned income, all of it goes into the real estate. There's no exceptions to that. It goes back into new real estate or goes into fixing up our current real estate. And when we need money, we scrape by. Again, I'm just sitting in my camp chair because it's all I have. As, uh, we just do a little cash flow distribution, and then I pay the rent for the apartment I live in, pay for food, pay for my cat, and then boom, We're out of money, but, uh, live on cash flow and invest every last dollar you make that you can. It's hard in the beginning, but you reinvest it all back into real estate. That's what we do. What do you think of large single-family homes that rent by the room? I would not rent by the room. It's hard to evict a roommate. You can't really do that in Washington. So I would not buy single-family rentals. I just don't like them. If you want more income, buy bigger buildings that have more units. That is up to you though. Everybody's strategy is a little different. Will you be uploading this video? This will automatically upload. This is just live. There's no edits, so it will go to the YouTube channel and you can feel free to watch it whenever you want. We appreciate the support. If I sign up to your mentorship, will you explain every step and help me buy my first property? I will explain every step and I will help you go through the process. Can't make you buy anything. That is the one hard part with mentorship in this space. Can't make you sign papers. However, I will, and by I, I mean we, we will show you how to play this game the way we play it. We'll show you how to make the contacts. And just want to put this out there, you can absolutely do this without the mentorship. We've got videos on YouTube that'll show you how to play the game, how to find contact info. We have that on our YouTube channel, it's 8.5 minutes long, how to find anybody's number. It's how a lot of people find my phone number. Everybody's phone number is on Google if they're playing this game. But, um, that is just a streamlined process. We're there to hold your hand, show you how to play the game. We'll hop on a phone call. Uh, we're, we're leading 3 Zooms a week. We've got one tomorrow morning. You can do it without it. That is just a streamlined way to make it happen. How do you receive the money from people Do they submit it to escrow and title company? So if people are wiring money for a business deal, like let's say we're going to go buy a 10-plex and it's $100,000 down and we're bringing in a partner for $50,000, we would set up an LLC. Our attorney would draft an operating agreement, everybody would sign. So we go through the legal process first, takes a week or two. Everybody reviews, everybody signs, then we file for an EIN number, and then, um, we get your UBI. When you file the LLC, your attorney will file that for you. You'll file for an EIN number. That EIN will then go to whichever bank you're using. They'll use that and the OA to figure out who are the signers on the bank accounts. They'll open up the bank account, link it to the EIN, employer identification number, just for the IRS. And then everybody can contribute their money to that, and then that money will go to title and escrow. I messaged you on Facebook after the Action Summit last week. Is there a better way to reach you? Absolutely. My phone number is on Google, as is, uh, it is in that video on our page, how to find contact info for any property owner ever. I'm all for giving it out, but you gotta do a little work for it. Check out that video, it's 8 and a half minutes long. It's on our YouTube. If you go to the video section, then look at popular. It's the one with the pink background. Just shoot me a text and we'll go from there. I am not good at seeing Facebook because there's too many messages. Are the mentorship meetings a set time each day? Nope, they are set time. They do not vary. Monday, Tuesday, 4 PM Pacific Standard Time, and Thursday at 10 AM Pacific Standard Time. They are all recorded for the off chance you can't make them. To the extent you can make them though, people tend to do better. And again, multifamilystrategy.com. How do you interview your future tenants? What do you look for in a tenant? Well, I want them to make at least 3 times the rent. I also keep the rents affordable for that reason. I don't have rents in the $2,000 range. A lot of my rents are $850,000 to $975,000. So I'm looking for people that make at least $3,000 a month. I don't want to see a bankruptcy. I don't want to see a— like on a report, I don't want to see someone who's been evicted. People are habitual, so I don't want them to do that to me and file bankruptcy on back-to-rent and have to get evicted. That's not fun. I've seen it happen in the business. So those are the things I'm looking for. I just want to make sure they have income. I don't care a bunch about credit because I bought real estate without credit, and I think it would be a shame if people couldn't rent real estate without credit. But, uh, if they seem a little bit higher risk because maybe they make a little less money in comparison to the rent, I'm not going to just turn them away. I'll just do a little higher deposit, and they can do that on a payment plan. The goal is to get people into affordable real estate, affordable housing, and just be a resource for them. But we expect that they will still pay, so we're just trying to to vet the risk. Why don't you invest in red states where they are landlord-friendly? I invest in Washington State where I live. It's just, I bought the biggest piece of real estate in the best location I could that I knew about, and that was here in Washington State. And then I scaled that in the market because I built relationships. I'd love to buy somewhere that's friendly. I'm sure that I would be much happier and I I'd be stress-free in comparison to my existence right now. That said, I bought the best deal in the best location that I could. I'm sure there's better deals and better locations that are landlord-friendly. There's also more competition there. I don't have competition in Washington. Nobody's competing against my stuff. I've got mentees that are buying stuff in Texas and Oklahoma, and that's cool and all, but they have a lot of competition. I can go in and just start sniping deals. And am I getting this crazy deal where I'm getting a great price? Not always, but I am adding to my cash flow, and I care more about that than anything. If I can just keep increasing my income and fix my variables, I'm a happy camper. They're going to get some deals, but they're highly limited because they're competing against really rich people that want all the benefits. I'm not a really rich person. I have cash flow and I've got equity and I've got upside and all that. One day we'll get there and then I can have the luxury of buying there. But I don't want to compete against all the people that already made all their money that can just throw it at deals and outbid me. Thank you very much for your answers. As an 18-year-old, I look up to you and hope to succeed as you one day. Much love from Israel. I appreciate that a lot. It is difficult to get started when you don't have guidance, and I recognize that. And I was a huge introvert, not anymore. Had to get over that through talking to Starbucks baristas because I figured if I butchered the conversation, they'd forget about me and I could do it again tomorrow. But that's how I learned how to communicate. It is hard, and there's a lot of people that are introverted, but it's tough to break out of that shell, especially when you don't have a mentor or anybody in the space. I got through that the hard way, and we are happy— we being Christian and I— that we can just share this with people to help them break out of it a little easier than we did, because it sucked in the beginning. Cody, you've mentioned you focused early on getting good at math. As a newbie, how do you recommend getting good at the numbers? Simplify the math. People care about all the wrong things, care about their IRR and their cash-on-cash return and all these things that don't really matter in the beginning. Trying to figure out how to get the best cap rate. Figure out how to buy real estate and how to never lose it. You got to simplify the math. Income less expenses equals cash flow. Make sure that number is as big as possible in relationship to what you're putting down and call it a day. J Yen, do you guys ever help people find deals? Absolutely. So I have the down payment, having a hard time finding the right deal. Yeah, just shoot us a message. My number's in the YouTube video, How to Find Any Property Owner's Contact Ever. It's an 8.5-minute video. Shoot me a text and we can go through Google Maps together and go on the MLS. I can show you how to play the game, and congrats on saving up money. Something a lot of people struggle with. From Julian Cody, for long-term buy and holds cross-border investing, which state would you personally choose to focus on with your knowledge? Florida, Georgia, South Carolina, Texas, or Arizona? You're ditching Denver, Colorado. I would opt, if I was starting over, to probably check out, uh, the Carolinas, potentially Georgia or Texas. I don't believe Arizona will have a forever water situation, so that is what it is. Maybe I'm wrong, who knows? I'm only 23 and I don't know a lot about a lot, but I'd pick somewhere that's warmer, that's tenant-friendly, and that has a good supply of water. Do you prioritize cash flow over unit count? Absolutely. But unit count matters because if you have a 20-unit versus a 4-unit, they could both cash flow the same day one based on your debt structure. But as soon as rent goes up just a tad bit on your 20-unit, you're going to blow past the 4-plex. So always opt to do bigger. You said you stopped being an introvert the hard way. What's the easy way? I don't know. I haven't figured that one out. Sucks. Flavio, I have a few single families and I'm struggling with cash flow and suggestions. I will appreciate it. Well, if you have a few single-family rentals, you could always exchange them up for multifamily. You're It turns out if you have more rental income, you have more opportunities to cash flow. But again, keep it simple. If you have more units paying you more money, odds of having more profit go up. So I'd find a way to transition what you've built into a more optimized version of your business. And with that, I'm out of questions. So I'll give it a few seconds because I know this is on a slight delay. If anybody has any other questions, feel free to drop them in the chat. If not, we will end for today. And I'll see everybody next week. All right. I will see everybody next week. If you have any questions, feel free to shoot me a DM. Oh, what's your opinion on assisted living? I don't do assisted living, don't understand them. And, uh, it is a necessity, but it is not something that I'm jumping into right now because just because something makes sense doesn't mean it makes sense for— or just because something makes money doesn't mean it makes sense for your business. Anybody has any questions, shoot me a text message. Phone number is in that video, how to find property owners, uh, contact info that is in our popular section for YouTube videos. Just shoot me a text. You have more questions on mentorship, multifamilystrategy.com. And as always, we answer your questions here for free every single Wednesday at 3 PM Pacific Standard Time. Till next time, have an awesome rest of your week.