Exclusive Seller Financing Strategy Unveiled!!! w/ Alex Gonzales and Shannon Ludlow

If I heard what you guys did correctly, that is a piece of creative finance that I've never seen executed. You got the broker to effectively seller finance his commission.

Yes, yes.

No equity, no equity.

First of all, first of all, I have never heard of or thought of attempting anything like that before. This is a great highlight on you don't have to get that creative. Hello and welcome to another episode of Multifamily Strategy. I am your host Christian Osgood, today joined by two extremely special guests, uh, people who've become my friends over the last several months, uh, Alex Gonzalez and Shannon Ludlow, business partners. They just closed a deal. Uh, this deal had some drama. I know 50% of it. There's a whole piece of this deal and a renegotiation that occurred that we're going to learn about, and I'll be hearing about it for the first time as well. So I am so, so excited for this episode. Uh, everyone, welcome Shannon, and Alex to the channel. Welcome, friend.

Thank you for having us, Christian.

Thank you.

It's a blessing to be here.

It's a blessing to have you. So you guys just closed on an 8-unit deal in Pharr, Texas, a state that I am just about to move to. I am so excited for you guys. This building, uh, I'll actually link a picture here on the YouTube version of this, but this building shows really well. Cute little building, excellent area. How did you two find this deal? Who found it? How did— give us some of the story of this specific deal because I think it's a perfect example of creative finance.

So I found the deal on CREXi, actually. I found it the day that it went live and I called the broker and I was very quick and submitted an LOI the next day.. And they were like, oh, this is perfect. We love seller finance. We've done it before. Let's just go back and forth to make whatever works for the both of us. So very at the beginning, they were just interested in working with me and gave them an original price and had some trouble getting it under contract. Because I got an insurance quote that messed up the number. So we had to negotiate a bunch, but Yeah, finally got on the contract and that's when Shannon comes in. I pitched the— I did a deal deep dive on the multifamily strategy call. And at the end Shannon reached out to me and that's history from there.

So a question I have in here, and I think a lot of people wonder this. So you put in an LOI and there's like, we love seller financing. How do you present that? Do you just put in a letter of intent, hey, I want this to be seller financed? You put together terms. When you first offer a deal, you saw it on the market and you just went like, "Hey, straight shot. We're going right to creative finance." They accepted it. How does one ask for seller financing when you're just submitting an offer for a listed deal?

Yeah. So I mean, I had told them that I had never done this and that I had no money, which probably was not a good idea.

"Hello, I cannot afford to buy this deal. Will you sell it to me?" Interesting pitch.

Yes. But yeah, I knew what I was talking about, right? And so I told him that I had some mentors that were telling me how to do it throughout the journey. And I told him, look, if we put it on the contract, we'll have to raise this amount of money. And so just over the phone, he was already excited to do it. And so I was like, sign me in. So I just underwrote it, sent the LOI, and from there we went back and forth maybe 20 times to actually get it on the contract.

What was the hangup? And then I'm going to go to Shannon right after this, but Alex, what was the hangup in the deal where there was so much back and forth? Your original proposal, you said in this letter of intent, they're like, hey, we love seller financing. What was the sticking point that made this so hard to get under contract?

Yes. So, uh, they were listing it for $600,000, uh, and they wanted $25,000 down. And I knew, I mean, I had never raised money. So just the fact to raise $25,000 was kind of scary to me. And, um, I didn't know enough about the property yet. And so I wanted to get a better price and get a down payment. And, um, he was just not willing to get less money and we'll get later. Um, on this episode on how we ended up getting a lower down payment. But that was the biggest issue. I was just trying to push to get lower down payment, lower price. We were always agree. We agreed on the note and the amount of the note, on the interest. The real issue here was the purchase price and the down payment.

Okay, so stuck on purchase price, down payment, but we love the deal. We got great terms. And in many ways, Price is the best thing to win on. I think everyone knows that, but everyone's competing for price. If you can win on terms, you can do deals that other people can't do. And so, you figured out a way where you're like, "Okay, I got the terms. We may need to work on the price, but we have enough of a deal here to lock it up." We have the privilege of having both Alex and Shannon in the Multifamily Strategy Mentorship Group. We've actually never really had mentees on here. We've had Caleb Hommel, a past mentee, share some of his backstory, but that was more of like he's already built his own business. You share with the group the actual deal. Shannon, you're on one of those calls. You guys connect. Talk about it from your end now. So you're coming in. What are you bringing to the deal? Besides, obviously, I'm imagining there's some money here. If you're raising money, there's a capital component. What is it that you're seeing in this deal, Shannon, where you're like, this is the one, this is the deal that I want to invest in? This is the partner that I think I want to have going into this deal. There's two big decisions as an investor. Talk a little bit about that decision.

Great question. So for your viewers that are watching this on YouTube, I'm actually a little bit older than Alex is. So I'm 20 years older than Alex. But with that, I've built a career and I've got more capital to invest and to deploy. And when I joined the multifamily strategy, I had two specific goals. Number one, I wanted to find my Cody. Because I have a full-time job, it takes up a lot of my time. I don't have a lot of surplus to be able to call brokers, to call owners, to try to get a deal under contract. Alex pitched this deal on the Tuesday calls and everything lined up. There was an opportunity to double rents. And some of the other deals, and most of the deals are fantastic, by the way. From the other mentees that are presented on Tuesdays. But this one in particular, you could double the rents, $550,000 to $1,100,000. So the upside potential, I could see it, right? Knowing how to do the math. So I DM'd Alex, I said, "Congratulations on this project." And immediately, "Are you interested?" You know, she, Alex DM'd me back, "Are you interested in investing in this deal?" And I said, yeah, I am. And then we started talking. And so Alex and I connected offline and he was very, you know, smart with the numbers. I love the negotiating the deal. And to your point, also the property, I mean, from the exterior, it looks beautiful, metal roof, you know, and I'm in insurance. So metal roofs are, you know, that thing's going to outlive all of us on this call. Brick veneer exterior and an exceptional location. So the things that I could quickly underwrite, it interests me. And then the more that I learned about Alex and his work ethic, it made me want to do the deal.

There's one thing, and we're going to, we're going to talk about, you know, the things that you guys are best in the world at in relation to this partnership. One of the things, having worked with both of you guys, Alex's presentation of numbers and images and pictures, the organization that goes behind those is phenomenal. Shannon, on your end, as the investor, when you're asking someone to show you a deal and you see the level of— how much of a difference does the level of presentation make when you're trying to feel comfortable investing in someone else's deal? When you see the organization, the, like, here's the pictures, here's the story of the property, here's what I'm working on. When someone can competently dive into things and show you every piece of the deal and answer your question with actual, like, well, that is in file number 3 in this Dropbox folder that I have shared with you here. When you have that level of organization, how does that make you feel as the investor looking at this deal?

Warm and fuzzy, Christian. Warm and fuzzy. So Alex is highly, highly, highly organized. The Google Drive, there's multiple folders based upon specific things regarding the deal. And you want to, as an investor, if you're going into partnership with someone, you want to know that they understand everything about the deal and they have mastery over it. And Alex was able to provide me a level of confidence that he had a mastery over the deal. What was wrong with it, what did you know at the time they went under contract? And there's some other things that came up later on that Alex and I had to address together, and you're going to learn about it in a second. But I was impressed and it made me interested and I said, yeah, let's, let's do the deal together.

Okay, well, let's dive right into that then. There was some adversity in this deal. So you get on a contract, you've got 20 back and forths, you have it under contract, you have the partner that you want, you guys have your partnership set up. You're ready to buy this. I remember this piece of the deal because we're on the call. You guys are like, we're going to buy this thing. Slam dunk. Love everything about it. What came up mid-transaction?

Yeah, so basically first thing was the due diligence, right? We ended up going on the contract for already a better price than $600K and a better down payment at $25K. So we got on the contract for $567,000 and we had to put down $17,500, same 4.5% interest only with step-ups. Okay. And we also had 6 months of no payments. This is how we went on the contract. And then the diligence came. We got some financials. And when we read those and we did our due diligence, we We figured out 6 months was not enough. 6 months is not enough. And so what we did is we negotiated an additional 6 months of no payments. But this one, these extra 6 months are actually going to occur and we're going to owe them the balloon payment. And then we also negotiated a prepayment penalty of 2.5% interest only prior to the 3 years of no prepayment penalty that we had previously.

So as an investor, one of the things that I was concerned with if I was bringing the capital, the original deal was that the owner, the seller, wanted to get those monthly payments after the first 6 months for 3 years. So you couldn't refinance, you couldn't pay them off. So if we execute our strategy and there's an opportunity to refi into long-term cash-flowing fixed-rate debt, I wanted to do that. I wanted to pull my capital out and then invest in another deal, velocity of money. So Alex and I strategized and we went back and forth. What do we think the seller is going to accept from a prepayment penalty perspective? And we thought, well, they probably want 7.5%. And in the mentorship, you teach us, Christian, you and Cody, ask for what you want. So we asked for 2.5% and it turns out that they took that. So if we tried to ask for something that we thought the seller would take, we would be paying more money. So part of your mentorship kind of guided us on that principle.

Oh, that makes me so happy. And if you guys want to know how I taught that is because, yeah, because I overpaid for a bunch of stuff. We've done it enough times where we're like, what will— I literally remember sitting in an office going, what do we think they would accept that we can handle? Instead of going like, what do we want to see in the deal? Sometimes you just get a yes. I remember the first time I ever asked for no payments for an extended period of time. Like, what if we just had no payments for 6 months? And the response was, well, that doesn't work for us. What if we had half payments? I was like, Never even thought of that as an option, but that actually does work. Now, had we just gone with what we thought they would accept, it's like, I don't even think, I don't know. I don't know what the answer would be, but asking for what we wanted on that deal got us to something where I'm like, that is better than what I would've proposed for sure. Can I just pay you half payments for 6 months? I wouldn't have thought that they would've accepted that. I just asked for what I wanted and they gave me halfway there. We met in the middle and that was excellent. When you guys are doing this on deals, yeah, it's palatable. You now have some flexibility in the deal. For those who are, you know, if you're newer to deal structures, prepayment penalties are just in there to essentially say, hey, this is an incentive for you not to pay me early. And if you do pay this note off early, I get a little kicker. Like, I get a little bit more money. If you do this in your case, instead of saying you just can't refi for 3 years, but there is a prepayment penalty. Now, if market conditions change and you would like to pull money out, if it is worth it to pay that extra fee, you now have flexibility. That is an excellent, excellent, excellent addition to the contract. Um, that's fantastic. How did due diligence go, by the way? You're in this property. Was everything exactly as you expected when you're going through, uh, from what you thought you were purchasing for, uh, 5 point, what were you at? $566,000? For what you thought you were buying for that, what ended up happening when you actually did your walkthrough?

So the next negotiation phase, because I think we amended the contract like 4 times. Yeah, the next thing was the property inspection. That was a big one. It revealed that the 8th unit was actually a 350-square-foot unit that was gutted. And there was, you know, much more CapEx expenses than originally thought. So immediately the whole deal just shot in our eyes because what we had planned, our partnership and our, you know, my pitch to him didn't make sense anymore. The price didn't make sense anymore. Nothing made sense anymore. At this point, I'm like, great, I understand now I got this on the contract. Now how do we actually buy it?

Right?

And so Shannon and I got on a 6:00 AM call on Saturday because as you know, he has a W-2 job. And, you know, we just, we thought, okay, this needs to cost us less to purchase and we need to have a much lower down payment. So we thought, okay, why don't we negotiate with the listing broker that we'll pay the commission? Because we were unrepresented and the broker was getting 6%. And I'm thinking, right, we're paying the seller all this big cash so he can later go pay the broker. Because the thing is, he didn't want to come out of pocket. So Shannon and I were like, okay, We'll cover it. And so we offer the broker to give him 10% of cash flow until he got the amount that he was going to get for 7 years. And he agreed to it. And that's what allowed us to go from the 25% down that he wanted to a 5% down, um, and, uh, day 1, and then a 5% down end of month 6. So we got a 10% down, but split to give us some sometime. And then we also ended up negotiating the purchase price. We just took down the amount of a unit and we just, we took down that money because you lied to us. It's gutted. It's not producing anything.

And that pissed me off, to be honest with you, because how did the listing agent not know that the 8th unit was gutted? And it was basically a large closet, right? So the 8-plex went to a 7-plex. Now we do have plans in our, in our strategy to convert that to like a kind of like a studio, almost like a hotel motel type deal in the future. But we had to kind of like restructure everything. And then in the property inspection, we uncovered, like Alex said, a tremendous amount more of non-permitted repairs, shoddy repairs that are adding to the CapEx expenses that we didn't know about before. So those are all big disappointments. But to renegotiate, I think there was, yeah, 3 or 4 negotiations with the seller after the initial contract, just not giving up on the deal because Alex nailed it. The seller wanted out. He's owned this project for a long time. He's, he's a little bit older. It's just a headache. He hasn't increased rents over the years. Because he doesn't want people to move out and then he has to get the property ready for a new tenant. So a huge opportunity. But where other people saw problems, we saw opportunities. And I got to give it up to my partner. Alex never gave up on the deal. I did once. I did once, but Alex pulled me back in, to be transparent. And, and we closed on it.

I want to go back in time just, just like 3 minutes. If I heard what you guys did correctly, that is a piece of creative finance that I've never seen executed. So in lieu of doing the full down payment, yes, you got the broker to effectively seller finance his commission.

Yes, yes.

No equity.

No equity.

First of all, first of all, I have never heard of or thought of attempting anything like that before. This is a great highlight on you don't have to get that, you don't have to get that creative. Like the actual concept itself isn't ridiculous, right? You have partners who sell or finance their equity all the time. Uh, you can finance anything you own. You can finance anything that is owed to you. Um, it's not that uncommon to have a financing agreement, even with a vendor, right? You get a construction company that will finance a— the concept is there. I've never seen it applied like that. That is the type of thing that one would do if you understand creative finance. It's not like, oh, I need to know everything about everything. It's the ability to look at a situation and ask yourself the question, what would make this deal work for me? You hit the piece, Alex. Like, you had a deal. Shannon's like, I'm out. It's dead. This sucks. Good 'Good try, let's do it again.' You're like, 'No, this is the deal and I believe in the deal. You asked the question, what would make this work? And you came up with something that I never would have thought of in a million years.' Yeah, I had two things going on in my mind, right?

I'm like, okay, this is not making sense for the seller or my partner right now. What do I need to do to get those pieces together, right? The seller didn't want to come out of pocket, so I knew I needed to make that happen. Right. And so a way was for that, that commission not being paid. Now we got that part figured out. And the second thing was pitching Shannon that we had, well, we got a quote for how much it would be to get all this CapEx fixed. And the second thing was to pitch Shannon again. Hey, we can do the deal. We just need more money and more time.

We got a new deal. It was the old deal, just better. I love that. This is creative finance. This is what you do. If you are a soccer fan, you have a goal on either side. You need to know where the goals are. You identified what the seller's trying to do and you know what your capital partners and you are trying to do. Here's what we need. Here's what they need. You had those things mapped. So when the deal wasn't matching, you're like, I know what's wrong. We've drawn the wrong boundary lines here. I'm just going to redraw the lines so that we have a field that works for everyone. It's genius. That's what I love about this, because all you have to do is you just have to change a couple rules. Everyone would assume, well, of course the broker has to be paid. That's a fixed. You're like, what if it wasn't? And then you— I love everything about this. This is the— there has not been a better example on the Multifamily Strategy Podcast of creative finance. Creative finance isn't just seller financing or special contracts. It's what does it take to get the deal done? What are the objectives? And you get to write your own rules as long as all partners can agree on it and the lawyer sign off. That is a very simple fix. While very creative, it's not that creative, right? It's, it's, it's super simple.

It's very simple, but you know, everything that I've learned right through the course, it's not like you're saying, it's not just seller finance. You got to stay creative and adaptable throughout the deal. And you know, like we were saying earlier, you got to ask for what you want. If not, you'll never get it, right? So you got to ask that broker. He could have said, oh, hell no. Right. And nothing would have happened, but you got to ask for what you want otherwise. You'll never get it.

Do you feel in this deal with that 8-unit that there was some level of dishonesty with the original seller or the broker? Do you feel that that was something that was intentionally hidden?

Yeah. Yeah. Yeah. 100%. We were lied to. We went under contract thinking some stuff with some pictures. It turns out, we didn't even mention this, but it turns out only 2 of the units are actually as renovated as the pictures. The other ones look Yeah, look, much more dated, a lot worse.

Vintage.

Yes, we were definitely lied to and we were definitely pissed. And, uh, we let them know, right, that we felt lied to. We let them know that for the last 2 months we thought this was the project that we were putting ourselves into, and this is another project. So now we gotta renegotiate. And so, you know, I think that us being transparent that we felt lied to allowed them to kind of be open to other renegotiations.

I love being lied to. I'm serious. I love being lied to because if you're good at due diligence and you catch it, you have all the cards, right? And you can call it. They can't bluff you anymore. I see your hand. I understand what happened here. This materially changes the deal. You all of a sudden have all the power in the negotiation when someone else lies. This is one of our rules of real estate. Everyone lies. It's really important to remember there's a threshold that everyone will lie at. One of the things that I actually try to test with people is I want to see how easily that they will lie to me because some people, which is, and I mean everyone will lie. I've, I've got people have gotten pissed about this. I'm like, if you had to lie to save a child's life? Would you lie? Yes. Like everyone should be a yes there, right? There is a threshold in which people will be dishonest. Some people is like, if you could make 50 cents, would you lie? There's some people like, yes. I want to know what that threshold is. You know, on this deal that the seller doesn't want the property. You know that they don't want to pay. You know what their objectives are. But then you find out like, hey, you guys told us something that was not true to try to get this deal done. Once you know that, the negotiating power is yours. When you pitch something crazy, like, what if I pay the broker? And then you pitch the broker, hey, you guys lied to us. We'll still close it, but you're going to have to overcome this with every other seller. We're still willing to work through this. Here's what it's going to look like. That's how you get some of these crazy things done. I love when we get lied to, as long as we find it, which is why due diligence is so important. You guys did your physical due diligence. That is a Uh, we don't talk about that a lot, but everyone will lie. If you can be the, the last one to lie and the first one to catch it, uh, just like a game of poker, it puts you in a very, very good negotiating position, which I think you guys really did use to your advantage, which is an awesome piece of this deal.

And I think as real estate investors, we kind of knew, right, some of the due diligence, even like the T-12 that we got was bogus, and that was the first renegotiation that we did once I looked at the numbers, some of the basic math didn't add up. So I'm like, Alex, these numbers are not making sense. I don't believe these numbers. And when we were underwriting the deal, that's why we renegotiated the additional 6 months initially to try to get more time to try to stabilize this property. And then finding out, you know, the 8th unit is gutted and it's basically an oversized closet. All these things, you know, we weren't shocked. We were upset. But then you have to take that information and then you execute a new, a new strategy. You renegotiate.

And that's what we did. What things in the numbers were a red flag for you? Were there any specific examples of what was not adding up?

Looking at the expenses mostly. Uh, the income kind of all made sense and jived with what they provided, but it was mostly the expenses. Um, the, the math didn't add up. And, and also when you underwrite enough deals, you can take a look at it, just a snapshot and know this is bogus versus looking at something that comes from like building a portfolio where it's professionally done and it's clear and the numbers don't always end in zeros or fives. That's what we got from this guy. It looked like they hopped onto a 1997 Excel spreadsheet, popped it out in 5 minutes and put it in front of us.

Yeah. And not only that, but the broker also commented, ah, he just put that so he can, you know, get some tax benefits. So very all over the place.

How easily will they lie? We know that they lied to the IRS. We at least have, we have that as a starting point. That should be a red flag on what they may say to us. Uh, I have seen that many times. So that's a conversation we have all the time. Like, did they, were they honest to the IRS? No. How, uh, how likely are they to be honest to us? Uh, on a, you know, 6, you know, multi-6-figure transaction, right? There's significant money going back and forth on this deal. There's more at stake than just their taxes. Uh, their odds of lying are not particularly low. You guys did a great job of reading that and a great job of playing that. Uh, everyone listening, and I'm, I'm talking to, uh, I'm talking to people in our mentorship group as well as just general buyers. There are so many people who don't even bother to read their contracts. Uh, this stuff matters. And I mean, this is the difference between making a lot of money or losing your investor's capital. In many cases if you do not do these steps, if you don't look at the math, if you don't spend the time learning how to do this. Um, you, you guys played it perfectly. I wanna switch gears to partnership. You guys, I, you two get along fantastically well and it's really been fun to watch your guys' friendship start to grow. And you guys, this is your first month owning the property. So I mean, you guys, there's a lot more relationship that is gonna be built here. But it has really been fun to watch the journey. I'm going to start with Shannon and I'm going to go to Alex. Shannon, as the investor and just you as a person, what is it uniquely about you that you feel that you bring to this deal that has made this partnership work and that will continue to make the partnership work? This is the question I ask every podcast. What is your superpower? What is it that Shannon is best in the world at?

Sure. So I think I'm very good at underwriting. So a majority of my career, I'm a spreadsheet nerd. So I love looking at numbers and calculating them. So when we first got the T-12s and the financials back from the seller, you know, I have my own deal analyzer that I put into and it just didn't make sense. Like things didn't make sense. And then seeing the CapEx expenses that were coming aboard. With the capital we were looking to contribute to this deal, it just, it didn't make sense. I think underwriting the deal, you know, is one of my strong suits. Also financial management, setting up the LLC, setting up the business checking accounts, getting everything organized so that when we go to refinance this project later on, the banks can see that this was professionally done. It was done in a high manner. I understand how the financial institutions want to see paperwork because I've closed a lot of deals in my day. And that was the experience that I was able to bring into this partnership with Alex. And I think Alex really benefited from that as well.

Awesome. Alex, same question to you. The ability to underwrite Shannon, that is a highly valued piece of the deal. And especially as an investor, that is the— you're coming in bringing capital, that's what you want to see. Alex, what is it about you that's uniquely your superpower that made this deal come together? You brought up like 2 or 3 things that it could be.

Yeah. So I believe I'm very good at negotiating, at least throughout this, this project that I found out that I've been getting a lot of the things that I wanted to get. And most likely just never giving up my resilience and, and, you know, my willingness to do whatever it takes to make it work. I, you know, I've been a D1 athlete, super competitive and just never giving up, always giving it your all. And that's what got us in this position today, I guess.

What sport were you a D1 athlete in, by the way?

Soccer. Yeah.

So I used the right analogy.

Yes, I did it. Yeah. Yeah. So a bit of a backstory. That's actually how I got to the US with a full scholarship to play D1 soccer.

Oh, that's fantastic. That is absolutely fantastic. Yeah, the US could— we could afford to be better at soccer. Our women's teams are amazing. Our men's team, it's like, oh my goodness, every year, every year I have some glimmer of hope and then it is dashed. We need to be better at soccer. We get everyone once they get too old to play in another league. They come to the US league. Well, I think that has so much to do with being a competitor and being a negotiator. There is a really— I think negotiation comes down to stress, like your ability to handle stress. If you can just persevere through things, negotiation, when you've done what you've already done, right, you mapped out everyone's goals, you know where you're headed, you know where the pieces are. Where people really fall apart in a negotiation is they get in their own head. Your ability to push through that. I've seen it a million times in the calls. This is a deal that I think a lot of people would have given up on. Yeah, you found the solution. You negotiated with Shannon to get him back on board. I mean, you got it. You got everyone— true story— you got everyone sold on the vision. You kept everyone engaged, and you got the pieces done to get the deal done. I, I think it's, it's inspirational watching the way that you played I have backed out of deals for less where I'm like, there is too much resistance. I'm just going to go find another deal. And you were like, I'm sold on this deal. And I know you've been looking for a deal for a significant amount of time. You're like, this is the farthest I've gotten. I'm going to see if there's a way to push it all the way. And I'm going to take that one more shot. It's freaking awesome.

Freaking awesome. Yeah, that was just my mindset, right? Like, this is as far as I've gotten. There's nothing stopping me now. Yeah, like, I get this thing close. Like, I want to become a real estate investor. So yeah.

And this is the point for me. This is the point of multifamily strategy. Like, there's a million— honestly, there's, there's a million mentorship groups taught by, you know, someone that you saw on Instagram somewhere. And a lot of them suck. And some of them are really good. The only metric that I have found that matters are people getting together who wouldn't have otherwise got together? And are they buying the real estate that they came here to buy? That's the only metric that matters. How many attendees are there? Average team calls, hours of whatever. People talk about all these things. I'm like, the only thing that matters is did you do the thing that you came here to do? And so I thought this was just the perfect example. It was like that you came in with this deal that you presented beautifully on a team call. It attracted other people. I mean, I went through this deal and I was like, it's in Texas. I love Texas. Far Texas is actually pretty close to another property I own. So I'm looking at this. I'm like, I like the location. I like the property. The presentation was amazing. It's not super surprising that people on a call like Shannon go like, hey, this is also what I am looking to do. And a partner who's organized like this. I thought you might say your superpower was organization. I'm actually glad that you're like, no, it's actually negotiation. I'm just also really, really, really good at other things.

It definitely is.

That's another one for sure. It's, it's ridiculous. It's ridiculous. You put it together, you, there's a community piece. You figure out stuff on your own though. And this is the most important thing that I wanna say. There is still no one ever in my mentorship group, or I believe any mentorship group who is successful because of the mentorship group. It helps. Right? It gets you in the community, or maybe it— maybe you took something cool out of it where you're like, hey, I have this cool creative idea. Everyone who has been successful or bought a property in Multifamily Strategy would have been successful with or without Multifamily Strategy. That is a fact. Alex, who you are as an individual, and Shannon, who you are as an individual, you would have been successful regardless. The fact that you came here in the community, met each other, and this particular deal happened there that is the only measure of success that I care about. And it's super fun to be in any way involved in the journey here. And this is, this is the reward. If anyone is in the coaching space or in the mentorship space and this is not what you're excited about, you're doing the wrong job. This is 100% what it is for. This is fun. This is exciting. And now I learned that I can finance the broker's commissions as part of my negotiation tactic. Will I do this in a deal? I don't know. That's pretty unique. Um, but it is repeatable, right? That is a tool that one could use to close the deal that could be replicated on any other deal. If you're like, hey, I found out some things that were originally presented weren't true. Instead of paying you all your commission up front, I'm going to pay you over time now. That's a reasonable consequence for misrepresenting a deal is we still will pay you and you'll still make your money and you don't have to resell this, but it's going to look different now.

Yeah, he's interested in actually in other deals also replicating the same structure. I mean, because for him, he's getting monthly payments, right? Almost like dividends, and he's growing his income. So he'll do it. So he's actually looking for other projects for us. There's one right now where we're— we think we have a good opportunity of getting it, which we're all excited about. We have a third partner that didn't want to be on the call, but We all work very well together, but I will tell you this, anyone watching this right now, you need to go where people are doing the thing you want to do. And I joined the multifamily strategy because I could get to where I wanted to get to, but it would take me longer. I could not have found Alex. I could not have found my third business partner, other people that are trying to go down the road in the same direction. There really truly is people that are highly interested in real estate investing multifamily in this community. And you guys should check it out. If you're looking to partner up with someone, it's harder to go to your friends and say, hey, do you want to invest in real estate? Because they may not know what you know. But if we're all singing or dancing to the same tune in your mentorship, it makes it that much easier for sure.

These were not paid actors. These are actual testimonials. What is the disclosure they always put on the ads that you see?

I'm keeping it real.

Trying to help your viewers, you know, actual clients, clients not paid for their testimonial. It is really fun. We have too much fun. It is really fun to be a part of these and see this stuff happen. I'm so glad that this is the, you know, what you guys have gotten out of the community. And it means a lot to me that it's like, hey, you, you were able to do something faster than you otherwise would have. That to me is the mark that I'm trying to hit. And then we get to have conversations like this. And I think the biggest thing for me personally is that I get to learn from you guys through your transaction. Like, I had a reasonable amount of involvement with the beginning of the transaction. I didn't know at all what the changes were midway. I kept hearing like, the deal's off. The deal's on. It's an amazing story. And I'm like, what's the story? You're like, I want to share it on your podcast. I was like, okay, fine. Blackmail me. You'll get on. Um, but it's like, it's so fun to get to be here with you guys today and just hear this whole story of like, wow, it really did, like, it came together, it fell apart. This is how deals happen. The reason I wanted to have you guys on today is because I thought it was really important for people to hear from inside a deal with the new owners. What did it actually take to close a first deal? If you're out there and you're like, I'm, I'm feeling stuck, or I've looked at a bunch of deals These guys were there on this deal. This is a legitimate, like, they are hard. Your first deal will be harder than your other deals because you've done less negotiation, right? You now have experience where your next deal and the next deal, it gets, it does get a lot easier. You guys closed the darn deal. You did the thing. You're now the owners. That is like, ah, it's so exciting.

Very exciting. Yeah. It was hard and it took sweat and tears.

That's for sure.

Next steps with a lot of early mornings and late nights for sure. I mean, Alex and I, we probably communicated, I mean, hundreds of text messages, countless Zoom calls, um, but we never gave up.

What does the partnership look like from here? But let me do this in two questions. What is the next step with the deal? You've closed now. What, what are the next things that you guys are doing over the next few months in stabilization?

Yeah. So right now we didn't have the people on leases at all. They're just month to month paying cash. So right now we're getting our property managers to put everyone on the portal to get paying online. And then we obviously want to secure those leases. We don't want just month to month. So a couple of them, we're going to secure 6 months. So we don't have any unexpected selected vacancies. And then the other ones, one is vacant. So that one for sure is the first one that we plan to renovate to bring it to the market value. And so we're going to play a bit with the units, right? And try to move tenants from one side to the other and ending renovating all of it. But it will take some time.

For the first year, we plan to at least renovate 2 to 3 And Shannon, what's next in your, in your mind for the, for the partnership as a whole? Is— you've already alluded to another deal, but is this one where it's like, hey, we want to do a few deals together and expand into other partnerships? This one where you're like, hey, this is a particular partnership that we plan to grow for a long period of time? What does the actual partnership have in store over the long term?

So Alex and I, uh, when we first partnered together, we agreed to 100 units. It doesn't matter if Alex finds a deal, I'm in it. If I find the deal, I'm in it. We've basically agreed to scale to 100 units. With the third partner that we brought into this project, where our clear goal is to get to 50 before the end of 2024, that is a very doable goal. And I think we're actually going to blow past that.

And the fastest way to do this, someone once told me, a 20-year-old named Cody Davis, when came into my office, the fastest way to get to 30 units by 30 was to buy a 38-plex with him because that will put me at 42. You guys are only one deal away, right? You guys have your first 8. You guys find a 42-plex. If you can't find that, there are plenty of 20-some-unit buildings that you can do in 2 transactions. You guys are not a lot of transactions away from hitting that initial goal, which I'm really happy for you guys. Uh, you two are amazing, like, just as individuals, you're really amazing. Shannon's done some amazing stuff community-wise outside of anything in multifamily strategy. He runs his own, like, subgroup. It's fun when your community has community. Uh, what Shannon does is incredible. What Alex does is unbelievable. Uh, you guys are just awesome.

I want to say something real quick about what you just mentioned about Shannon. Yeah. Um, Shannon created kind of like an after call after your calls. And that's really what allowed us to find that extra capital that we were needing for the deal. So it's not only been a great way to connect all of us, but actually, you know, look and look at deals together, combine thoughts. And it ended up working out great. We got, we got this other mentee. Partner with us and we couldn't be happier. He's even more organized than me, so you're going to have to talk to him.

I'm aware if that was possible. I want to point out how much better Alex is than I am at organization. I did a presentation recently and I was like, oops, oops, typo, typo. I got it done, but I've relied on— I can sell my— I am a better salesperson than I am an organizer. So I've relied on my skills. To overcome the fact that I'm literally not good at anything Alex is amazing at. Like, Alex would be a fantastic partner for Christian because you are good at the things when you put it together. I'm like, this is embarrassing. I can't teach on this because I can't do this. This is really, really good. Uh, just absolutely amazing watching this partnership grow. I think you guys are gonna go a very long way. I do think you guys will go very fast. I'm excited to have you guys back on. To really answer the question that I didn't ask, I ask every time, which is highest stupid tax you paid. And the reason I didn't ask that, for those waiting for the question, I don't think you guys have paid it yet. I don't think it's come up. It will come up. But the highest stupid tax, there, there will be something you don't know that you don't know on the path from 8 to 100 units that will actually be kind of expensive. And how you guys handle it will be fantastic. If I can help you mitigate that, I will., but there will be, I promise there's gonna be something that happens where you guys are like, oh no. Yeah. And when you overcome that, I want that lesson on the podcast. So I'm committed. You guys committed me to getting you on this podcast and having this conversation that I have absolutely loved. I'm committing you to another episode. Um, and you got, you guys are gonna make some mistakes somewhere and you guys are gonna share it here and everyone's gonna get to learn from that. And at the same time, they're gonna see how much farther you are than this episode right here. Whenever that comes up, you're like, this was hard and we overcame. It's like, man, when we're at unit 148, we did this one thing we shouldn't have done. And then we're going to go back like, wait a second, you made a mistake, but you went from 8 to over 100 units in how long? I'm excited for that episode. We'll get that on the calendar here shortly.

Very excited.

Very excited for you too. If someone wanted to engage with you guys or plug into the community or ask you a question about your, your partnership, this deal. I mean, you both of you have been amazing sharing with other people within my community. If we wanted to extend this beyond those already a part of Multifamily Strategy, um, Shannon, how would people get a hold of you online or otherwise?

Sure. So I created kind of like a real estate investing, um, profile on Instagram, @shannonjludlow. Perfect.

So everyone check him out there @ShannonJLudlow. The adventure continues there. Shoot him a DM if you guys have a question. Shannon has been so open with everything that he's done. Seriously, someone you should connect with, especially if you're investing in Texas or based in Florida where Shannon is based. Alex, how about you? How would one find you online?

As well, probably on Instagram @Gonzalez Multifamily.

Excellent. Makes it easy to—

multifamily.

We know what to message Alex about. You guys, thank you so much for joining. I will, I'll post both of your links in the show notes here. Everyone listening, thank you so much. Share this, like this, if you can do whatever you do on any platform you're listening on, because we put this podcast everywhere. Give it the like, follow, whatever you need. I would love to get get this out to more people. I think people need to see real examples of real owners doing deals. I have built my personal career, hundreds of units— Shannon and Alex are going to pass me really fast, I gotta keep buying— but hundreds of units purchased by doing owner meetings. This is a place where you can just view the owner meeting in your car on your— well, don't watch it in your car, that was a stupid piece of advice. Don't view it in your car, listen in your car View it from your house. Be part of the community. So I appreciate your support for the channel. We will keep ripping this out every week, launching every Friday. You guys are fantastic. I'm so excited to follow your journey and everyone listening. We will see you on the next episode.