Finding Multifamily Deals in the Midwest Live

Hello, today going live, good buddy Phil, who is entering the stage right now. Phil, how's it going, man?

Oh, there we go. Okay, found the mute button.

There we go, there we go, we got Phil, we got Phil. There we go, we're officially here live doing the thing. Um, I'm super excited for this. This will go live on pretty much everything. But we are solving a major problem. Uh, we have a bunch of people in the Midwest who are not, uh, not buying deals, and there's a ton of deals available in the Midwest. So I brought Phil on.

Phil's also watching his kid today, so he'll have, uh, yeah, that I told the terrorist to be quiet in the background. So we'll see, we'll see how well that goes.

We'll see how it goes. Well, Phil, uh, bring us up to speed here really quick. So you have, uh, you have done 2 deals in western Pennsylvania, which is— counts as the Midwest. It acts much more like a Midwest market than it does an East Coast.

If you ask Pittsburghers, they're East Coast, but they are about as— they're like the kids up against the window glass licking the glass, as close as they can get to, uh, to Midwest. I mean, like, Ohio's Midwest and it's like 20 minutes that way.

Yeah, that's— I, I absolutely agree with that.

I think, I think Pittsburgh is East Coast, but the inventory here, as far as like real estate, it's— it as Midwest as you can get.

I absolutely agree with that. As far as real estate is concerned, Midwest market. You've done 2 deals. Uh, what was the last one? They're both this year, right? They're both 2025.

Yeah. Okay, we did the first one in— yeah, I joined the mentorship in, I want to say, September of last year. Yeah. And sort of sat on the fence and sort of, you know, just sort of creeped around the outside edges learning as much as I could. And then in January, I finally had done enough underwriting where I felt comfortable, like I could present, um, on the deal deep dive Tuesdays, the Tuesday calls. And, um, like the third or fourth deal I presented, I actually ended up making an offer on, um, and closed that deal. That was a 9-unit, uh, we closed on that in March. And then, uh, in October, closed on a second property, a 12-unit. About another 30 minutes down the road here. And, uh, yeah, so now I'm at 23 units. Not, not quite the 38 you started out with, but yeah, we're getting there.

23. What does cash flow look like currently in the first year of 23 units?

Um, so I haven't taken a penny. I was actually, uh, I've been focusing on building a team, building guys. I was joking around with one of the guys that I Um, one of the laborers, he's like, oh man, you make so much money. No, I'm, I'm in— there's a reason I'm the one going to get all the material. I'm the gopher because I'm the one that's the cheapest. I don't try— I don't pay myself anything. Um, so yeah, cash flow is good year one on paper. In reality, it's all getting thrown back into, um, into the property. So I bought the property, right about almost tripled my NOI. So my collections went up, I raised rents, renovated all the units to get the rents up. Um, so I'm at about $5,500 a month cash flow on the first property. The second property, I've only had it for about 3 weeks. We closed— 3, 4 weeks. We closed just before Thanksgiving, um, and got the first First unit turned and rented, um, for about $400 a month more than what they were previously. So if I can do that 12 times, we're going to be looking pretty good. We should be cash flowing around about $7,500 to $8,000 a month off that property. Um, so we're, you know, that'll, that'll put me a pretty good chunk towards my goal. It moves me forward for sure.

No, I mean massively to get that far in 2 deals, because I mean, your cash flow is how much you have to pay yourself and reinvest back into the property, right? Like, that's—

yeah.

You're improving your property and increasing your NOI. You could pay yourself, but it'd be at the detriment of pushing the project forward, which I think you're doing the right thing.

Yeah. And I— the way I sort of looked at it, the way my wife and I sort of game planned it out, is the first year I'm not— I'm going to reinvest everything. And then at the end of that year, we'll reassess and we'll see where we are. Um, I mean, with the team that I've got, very fortunate the guys that I got in place as far as like maintenance crews and contractors and whatnot. I, we, I was, I was expecting a 2-year project and we got it done in like 4.

Well, that's fantastic.

Um, so yeah, it's been, it's been going really quickly and really nicely. So I'm actually in talks now with my banker about refinancing the first property, and we're not even, you know, we're inside a year. It's been like 9 months.

That's amazing. What are you expecting if you did a cash-out refi today? How much money would you be expecting to pull out of that deal?

Um, so I paid $430,000 for it. I think it'll assess over a million. Um, so like, how much did you put down? I put a hundred— so with closing costs, I put $130,000 down. $130,000 down, $110,000 down, and $20,000 to close for closing costs. Um, so I'm $130,000 into it. I put it— I raised enough capital to where I then put another $100,000, about $120,000 into it, you know, replaced 41 new windows. This was very— I had very heavy intensive, um, rebuild, you know, heavy lift project, which is what I'm actually— I was looking for. That's— that fits my, um, fits my expertise. It's fits my, my knowledge base. It's just where I'm comfortable. Um, so yeah, I put $120,000 into it with, uh, windows, roofs. We repointed both buildings. We remodeled 7 out of the 9 units, and we're now in the middle of building a 10th unit. So we poured footers and foundations, um, filled in a well. Oh, there we go.

Yes, yes, yes. Uh, I saw the pictures that there's a well underneath your foundation.

There's quite literally a 15-foot well at the— that we found underneath the foundation that was causing all sorts of chaos. Um, so yeah, got that all remedied.

So you're all in cost, down payment plus all the repairs for this. How much are you in on that property?

Near as makes no difference, about $200,000.

Okay, $200,000. And how much do you expect to be able to pull out at the refinance?

I'll pull out $550,000. Yeah, $5.5 to $600 grand.

So you'll get paid $300,000 to $400,000, somewhere in that range.

Yeah.

How much would you cash flow after refinance? Because of course you're levering up, so it will reduce the cash flow.

Yeah.

What will cash flow look like at that point?

It depends on what interest rate I get, but I'm thinking it'll stay about the same. It you know, $500 here or there, it doesn't really change your world. But, um, I think I'll get anywhere between $4,500 and $5,500 a month.

Okay.

Because, because I'm, I'm adding that additional 10th unit, so that 10th unit goes a long way towards covering the additional mortgage. So my cash flow won't change all that much. I'm fingers crossed.

But that's amazing. So, so essentially you're going— at end of your project, we'll go conservative, You're going to get, after 1 year of labor and not taking any draws from your property— so 1 year of work— you'll get paid $350,000, which is significantly higher than the average income of a U.S. employee.

That's a hell of a lot more than some poor broke—

especially for Pittsburgh. Pittsburgh is not a, uh, Pittsburgh is not a notoriously high-income area, nor are any Midwest markets. For the most part, you have lower median income. So you'll make in one deal, you'll cash out profitably, you'll get paid, you know, roughly 4 or 5 years the average salary for the area, I would assume. And then you're gonna additionally get paid $60,000 a year forever if you never raise rents.

Yep, exactly. I mean, it's definitely—

that's a phenomenal deal.

Definitely have been my biggest year by like an order of magnitude, many times over.

You don't make that, uh, you don't make that money sailing.

You want to know how to make a million, you know, how to become a millionaire in sailing? Start out as a billionaire.

Yeah, I am sure that is the case. And then your next deal is looking like pretty similar numbers as far as ratios, um, from, from what you told me.

Yeah, it's not as heavy of a lift, so I can't I'm not going to be able to force as much appreciation. Um, it, it was in better— it was in a better spot than before. The area is just really good, so the rents were higher than what the building really called for. It was a bit of a crappier building in a really nice area. Um, so the rents were a little higher than what they probably would have been otherwise. So I don't have as far to push the rents, but this building, like I said, it's going to— it's in a much better area, so it will appreciate. But also, um, that building, I can, I can, uh, separate out all the utilities for the most part. So there's a lot lower, um, my, my expenses are a lot lower on that building.

No, it's such a good deal. On this video, by the way, if you guys are just joining, we're going to show how to use AI to rapidly pre-analyze deals. We're going to talk about how to find these deals anywhere online. Of course, you can always go direct to owner, but like the quick and easy— there are deals that you could be analyzing today. There are offers you could be making today. We had a couple of mentorship calls where Southeast region, more deals than we can look at in the hour and a half. West Coast, we're seeing deals everywhere. The South, we're seeing deals. Midwest, highest cash flow markets in the US, least amount of deals happening. So we're fixing that problem here today. So we're going to show you how to do it, just like I will everyone in the mentorship group. Phil, for your deals, how did you find the 2 deals that you purchased?

Um, so yeah, just through the mentorship, I was, you know, learned how to look and, and search on CREXi and LoopNet. I think I found it on CREXi, called the broker, had a really nice chat. Um, And just even before I've called the broker, was just looking through. And because I, because I had, um, underwritten so many properties, as soon as this one popped up and I saw it, I— the numbers, just the, the surface level numbers made like, oh, I've seen this before, this is a good deal. And okay, I'll have that. And made the call to the broker, had the chat, and the rest you know, it all worked out. So, uh, yeah, it was, it was just through CREXi and LoopNet. It wasn't that difficult.

I love it. I love it. Well, let me show that. I'll give Phil a chance to mute because, as I mentioned, he is dadding at the same time. It's one of the fun things about real estate is this is why we do what we do. You have to have a good why, and Phil has a fantastic why for everything that he's doing. I will share screen and hop over to CREXi. Um, feel free to ask questions in the chat. I noticed, uh, Oscar has a couple that we will get to as we go here. Um, but for the time being, let me go ahead and share screen and I'll show you what we're looking at on CREXi. If I still remember how to do this, I believe I do. Share entire screen. You guys should see a million of my same screen. Oh yeah. Oh yeah, we're there. So you can go to CREXi. I pre-selected Columbus, Ohio. We're talking Midwest markets. Uh, never looked at a deal here, never purchased a deal here. However, if we type in multifamily, uh, guess what? There are a ton of deals here, a lot of opportunities to look through. So as you're looking through, some are expensive, some are not. Here's the most important thing: people think that the listed price is what the property is going to sell for. You don't know anything about the deal, the seller's motivation, what the actual numbers are, what the actual price is going to be. All this is is a picture of a building that an owner is willing to part from. That's it. Our job is to figure out what would make this a good deal and have a conversation with the broker and actually figure out what are the pieces we need to move. Now, I do live calls all the time on the Multifamily Strategy Mentorship. I do them frequently on Thursdays, call random markets. The last 3 times we've done this on an hour call, we found actual viable good deals calling on listings that make no sense the way that they're listed. But we've discovered all sorts of different motivations. One was about to fall out of contract. One of them, you had to take over the HOA, which I wouldn't do, but it was a doable deal for someone. Uh, one of them, we just straight up had a fantastic deal that was listed, needed to take a little bit off the price, and turns out seller was super desperate to sell it, would absolutely do it. In this case, I'm going to go select this $2.2 million building. My instinct— Phil, tell me your thoughts because you know the Midwest. Phil's actually our Midwest regional coach for Multifamily Strategy now. Uh, 14 units, $2.2 million. If you looked at this, that's probably a little bit pricey for what it is, right?

That's eye-watering. That better be like right next to a university and new builds, you know, top of the line premium. Um, yeah, that, that's gonna be—

and I'm gonna say this doesn't look like a new build to me.

No, there's probably not a lot of meat on the bone. I'm just guessing.

I'm guessing so too, but we know nothing about it other than it's been on market for 1,000 days.

There you go.

So has not traded for a long time. Many people will look at deals like this and say, oh well, I'm not underwriting it. Now it looks like they're pitching this as a redevelopment opportunity, which I, uh, don't think anyone has had any interest in. We don't have a whole lot of details on it.

Is something— some— probably something big is going in next door.

And so it has approved plans for an additional 24 units on the rear of the site. What I would be curious on this, just immediate anticipating the call, is it possible for this to be subdivided so I can separate out the development parcel? Because obviously no one's bid on that. Is there a way to just buy the multi-family, have it subdivided, and then Am I solving a problem for them doing that? That's, that's my immediate thought. This is priced as a development plot and a multifamily building. Next thing we're going to do is we're going to go to the OM, the offering memorandum. I had a chance to look through this. Uh, they obviously put this together in 5 minutes. It's— this is not a fancy offering memorandum by any means. Uh, the pictures are weak, the formatting is weak. Uh, the rent roll looks like actuals. I, I would believe that this is the current rent.

Yeah, it's not, it's not really round. The dead giveaway is all the round numbers.

Yes, I agree, those look real. They, they— and just the variety of them. Yeah, I feel like if it was made up, they'd put a little bit more effort into making it up. Um, I go through what the highest rent they've proven is when I do my underwriting. So like for your 3 beds, I believe $1,675 is market rent because they have one lease there. There's also some lower. They're saying basically $1,100 for apartments they're leasing for $780. Their highest is $950, uh, $955 up here.

I have a question for you. That $1,675, I've been tripped up once before looking at that. Yeah, when you dig in further, that's Section 8. Like you get one that's at, you know, sort of $200 or $300 more than FMR. Like, FMR will be $1,100, but you'll see something at $1,350, like, oh, that's a Section 8.

Interesting, interesting.

So you're off the street price might be a little closer to maybe that $1,300.

Now the other thing, and I'm going to show how we put this in the AI, this is going to be ludicrously simple though. Some of them have pages upon pages upon pages of numbers. I'll show you guys what we do on the AI, uh, really, really simply here. You can do it through general ChatGPT. We also have a custom one that I will, uh, I'll be using for this. But they say that the cap rate on this deal is a 6.76 cap. Now I know that that is below market for Columbus, Ohio. I believe 7.5, 8 cap market, most likely.

Yeah, we can do a little bonus research on that, but 7.5, 8 would be reasonable.

So looking at this It's like, okay, well, we already know we have a pricing problem. We knew that going in. Other thing I'm seeing here, they're claiming $56,000 in expenses and $160,000 in revenue. That is a really low expense ratio. In fact, I'm going to calculate that here. $56,000 divided by $160,000. That's a 35% expense ratio. I don't think that's realistic. I'd probably underwrite this as a 45% expense ratio. Meaning I'm going to take those expenses up to $72,000. I think that's more reasonable. So if we came in here and said $160,000 in income minus $72,000 in expenses, I'm coming up with an NOI of $88,000 as opposed to an NOI of $104,000. That's a massive, massive swing.

In value.

Now, if we assume about an 8 cap, this is good to know going into deals. If we assume an 8 cap, maybe a 7.5, let's be generous. We have a building that's worth $1.173 million. Phil, with this upside, is this deal more attractive to you at $1.173 million? I actually think, yeah, kind of interesting.

Yeah, 1.7 for—

still for 12, 1.2. It's monthly bringing it, so it's a little under 1.2. It's bringing in a little over $1,300 per month. I'm gonna guess we're probably in the ballpark.

That's probably about correct. It would depend on the buyer. This is— you can definitely get deals that will earn you more money in this area than this property. But if this is— this might be a good deal for somebody that's like a 1031 where they want to they don't want a headache, they don't wanna manage, they don't want a project, they want something that's sort of plug and play, turnkey. Mm-hmm. Yeah. This, this could certainly be a, a use case scenario for that. It just, yeah, it depends on your, what you're trying to do. I think so.

We're, what we're gonna do here is we will take this and you can do this with any OM. This is a very simple one, but we'll take it as a, you know, we'll, we'll take it as it is. And we'll just go ahead and ask here, in ChatGPT. There's our custom OsgoodGPT, but normal ChatGPT will give you pretty good info on this as well. Summarize this offering memorandum and let me know what price I would be able to purchase this at, at a DSCR of 1.25 or better.

Oh, that's a good question.

That's my minimum for where I want to buy a roughly stabilized property. And so this will just give me a quick analysis. Now this will run it through some filters that we use in multifamily strategy, but it's good. This is completely doable, completely doable for anyone on ChatGPT at any time. So it's going to run this here. This is saying NOI used, we're going to adjust this down too. So interest rate 7%. Look at all this math you don't have to do.

I didn't, I didn't pay attention that day of the third grade, so this is helpful.

Maximum price at their NOI, yeah, 1.45 to 1.5. That's already taken a ton off. Yeah, coach's perspective. So this is Christian's perspective, and it'll go through and give some more, more feedback on what we'd be able to do to make it a deal. Man, I love our AI. This is amazing.

There you go.

Yeah, let's make a, uh— wow, did it actually suggest what I would have suggested?

Yeah, very good.

Everyone buy my AI. That's amazing. That is exactly what I would say.

Put Osgood 5.2 in charge. You you can go on vacation.

That is amazing. I am so happy with this.

It—

granted, it is programmed off of every YouTube video I have ever filmed.

We put it—

we took the transcript from every video that we've done over the last 5 years and plugged it in here, so it should know what I would say. But that is amazing.

That's very good.

I am so happy with that. Now let's make an adjustment. Remember, we were looking at those expenses. I didn't quite believe them. Run the same scenario if expenses were at $72,000 instead of what they currently are?

Yeah, they're just pricing it with a premium for the, for the, for the future potential. Yeah, they're trying to get a piece of the action but not have to do any work.

Yeah, but I think that's the— I think that's the pitch. And at 1,000 days on market, that's probably what the conversation is going to look like. Hey, has anyone tried this and is this viable? I'm interested in the multifamily. I'm really not interested in developing. So this is going to rerun it.

I mean, there's got to be a price point for them.

Yep. So hey, when we did our valuation, we came out at, um, we came out about 1.173 for our napkin math. If you use DSCR as your, as your baseline, you're coming out about 1.25. This is giving you just an idea of where you need to come in on this. I love to do this pre-call. It doesn't mean that I'm going to negotiate this. Yeah, but this gives me context up front before I go into the call. It's uncomfortable if you're going in, you're like, ah, you know, I'm plus or minus $500,000 in my, my head. If you can get a good basis for where you should be on this— this is why it hasn't moved, and the broker knows this. They've listed it for 1,000 days. It's been on market for almost 3 years. They— there's no mystery here. You're not surprising them by saying, okay, we need to make some adjustments. But you would call Alex Marsh, and so you would Click his number here. So here's Alex's number and you would call him and you would give a quick— and I won't do this on a YouTube Live because I don't want a broker calling me back being like, you posted me online. I've had that happen before. But you would call this guy and you'd say, I'm looking at this deal. I'm actually really interested. I want to own the multifamily. Tell me about this deal. And I let him get into his rhythm. And somewhere in that call, after we've built a little bit of momentum, and say, hey, I saw the development potential here, I'm less excited about that. Is there an iteration of this deal where we can separate out the development potential from the acquisition of the multifamily? And if so, I have some ideas of what this would look like. And then you can go down the rabbit hole of, well, pricing is probably looking a little bit closer to $1.2 million. Um, we need to flesh that out with a little bit more financials, but that's around where we're going to be at if we came there I'm confident we can do bank financing. Would they prefer to carry the contract themselves, or do they just want to get cash out of this? And now you can kind of entertain the different debt options, but we go deal first, then debt, then equity. That's the general flow of this every single time.

Do you think that the brokers would have the experience or the acumen to, um, have thought through that option before. I would think if they had, they— it wouldn't be sitting for 900 days. They would have shopped it around to—

so there's a common adage to them, the common adage everyone in the industry knows it, uh, buyers are liars, sellers are worse, and brokers suck. Um, there are, there are some good brokers out there. They're few and far between.

Yeah.

Um, I see a lot of brokers who don't know how to position. Even worse, I see brokers who will list stuff they know will never sell. That, that's not helpful to me. Um, I really want to work with brokers who understand the deal. But here's the big lesson for everyone: you don't know enough by this listing. You know that they've listed the property too high. That doesn't mean it's a good deal or bad. It doesn't really mean anything. It's just a thing. It's a, it's a property that I would love to own that happens to be listed for more than I would pay. I don't know what the seller's feeling right now. I don't know what problems they've tried to solve. I don't know any of this yet. So I'm gonna go in and solve those problems. But that's the simplicity of this. You can do this in any market. But I mean, look how many deals there are on here. When people say I can't find a deal, like, are you kidding me? This is page 108 for one city. We chose one city. 16 units, $1.8 million. This is actually kind of a cool building too. You can do the same drill here. It's been on market for a while. It's probably a little overpriced.

Just switch over to your screen share so we can see.

Oh yeah, that really helps, doesn't it? Turn that off to try to be helpful and then look, look what happens. Entire screen. This is why we bring Phil on, to make sure I actually do the job.

So everybody's staring at my ugly mug.

Uh, let's see here. Boom. This deal here, there we go. Oh, 16 units, $1.8 million, professional photos. I think we're probably still above price for this area. But wow, I'm trying to decide if I love or hate the ivy. I think I hate it.

That looks a little— that looks unkempt.

And I think there's a way to make it look cool, and this is not it.

Yeah, get it—

one, get it off your wood. That's gonna wreck your, your wood. But there could be a little ivy on brick thing going on. I'm okay with some of this if it's well maintained and kept.

Uh, what's the occupancy? That's gonna be I'm wondering if this is a completely empty building.

I do, man.

There's a— doesn't look like there's a whole lot of life.

No, there's a lot to like here though. Um, let's see, we don't have an OM, so let's see what we got.

Uh, steps from Ohio State University. Okay, good. 16 units, that's good.

Yeah, location's awesome. Uh, man.

Oh, they're all 2-bed, 1-bath, so that, that's actually something that I've found is really important in your market is understanding what is in demand. Is it 2 bedrooms or 1 bedrooms or studios? Like, my first building, man, the 1 bedrooms fly off the— just, I can't— I get— I put— I put a listing up and I get hundreds of people replying. The 2 bedrooms and the studios, nothing. I get nothing. They're so hard to fill. But one bedrooms, they're going for above market rent. It— so like in this scenario here, I would think, okay, it's near a university, a two-bedroom near university. Most students are going to want a one-bedroom or a studio. Yeah, it's cheaper and they, they want quiet. They'd rather not have a roommate because they've had, you know, they've been living in dorms, so they're trying to get away from the dorm situation and roommates.

And this looks like a college rental. This would be a great rental unit.

Great.

This looks really similar to the layout of my unit when I was in college, except I didn't have a cool accent wall. Mine was like a crappier version of this.

If these were one beds though, I'll bet your occupancy would be really easy to fill being next to a university.

Yeah, okay. And this is one either replace or tidy up these cabinets.

Yeah, I—

you could probably restain these. I, I, I mean, if it is for college housing, which I think is the play here, The high-traffic paint would do well. This looks nice. This is a completely doable, especially for college housing. This looks like college housing. Easy to turn, generic doors that are easy to replace, they're cheap to replace. I like a lot of this. Problem with this, there's no details. I don't, I don't have the income, I don't have anything. There is no info. So what do you do? You call the broker, you figure out the info. Super easy. Super easy. I'm gonna do one more here. Uh, 10 units, $13,500. I like this one less than I like this one at face value, but looks older and, uh, worse pricing. On market the same amount of days, pretty much. No, you know why? Because it's probably the same owner, same guy, same broker. Is that 119? I think that was the other one. 119 days. 118 days.

Oh, there you go. He's getting rid of a portfolio.

Ohio State University. Yeah, these are right next to each other. It's gotta be the same owner.

Oh yeah, maybe right there.

If you called him, he would have said, oh, you know, I have other stuff in this area. If they've been around for a while, how do we package these and get a better price for just taking out the portfolio? Do a whole student housing thing, though this one might be a little bit less cool. What does the inside look like? That's what I want to know here.

Oh geez, is this just the one nice unit or—

no, they're all exactly like this one.

It's all the same blue.

They're all perfect and all staged. But I mean, overall, this is great.

Yeah, if, if this is when you walk the property, if this is actually what they all look like, home run.

Yeah, it was never quite like this.

1.3, 1.35 for how many units?

Uh, 10. So you're probably coming in on this, uh, college housing, I'm gonna guess you're probably coming in closer to under the door. And this is again, yeah, top of the head. Uh, this is what your cabinet should look like in the other one, by the way. You should just paint your other cabinets to look like this and swap out the handles.

Yep.

These are super inexpensive. You can get these at Lowe's. They're like very, very, very basic. Uh, they did the thing they're supposed to do— the fridge matches the range. Nothing I hate more than a black fridge and a white range, or vice versa. Just like, have your appliances match. You get some forgiveness on the stainless steel toaster, but in an ideal world, that matches too.

Yeah, don't—

so that's just the other appliances acceptable.

Don't do stainless steel fridges because people ding them and scratch them, and they put magnets all over them, and you can't— you have no option to repaint.

Or if you're doing Class A, stainless steel. Anything below Class A, white or black doesn't matter, just make sure they match.

Yeah. No, how far I've got— I've got half of my units, and it's Class C. Half of my units are, are stainless, and they just— those are the ones that look the worst. The black ones look great.

So we've spent all of a couple seconds looking through properties that are interesting. These are things where you just call the broker if you were trying to get into real estate. Oh, this one's not priced terribly either. This, this one, and for what it is, for 40 units, that's not bad. No, that's what I'm thinking. $112 a door. Again, Columbus, Ohio. I like things— I get more interested around $100 a door, but I mean, we're in spitting distance. Really nice layouts. Stainless steel, but at least it matches. This is the type of stuff that I like to see. This is really, really, really simple. Really simple stuff. Let me go to our—

there we go.

I'm back. Go to full screen. Let me go, uh, let me get some of the questions in here, uh, answered, and then we will call it a day. I have a webinar to lead. And I am also stupidly sick, so I'm gonna have to blow my nose before we do that. Um, okay, uh, these are from questions throughout, so we'll catch up on some of the questions. Uh, I get the acquisition fee, but who— ah, okay, so, uh, Phil, you haven't had to do this yet actually, so I'll answer. No, uh, acquisition fees are in syndication, but if you're doing the assignment fee, which is more common in a JV structure, um, the partners pay it. So you are going to, like a wholesale, assign from your name and/or signs to an LLC. You found the deal, you negotiated the debt, you're signing for the debt, you have the management structure, you found all the capital, you did all of the upfront work, you get paid for doing that. There's a fee for putting together the returns for everyone else. So great example, 44-unit, uh, investors invested $180,000 each. Each of them are expected to make about $575,000 at the end of 5 years. They're like Fantastic deal, fantastic deal, tripling everyone's money. A little bit more than tripling because it also cash flows really well. So you're getting like a 3-4x return on investment in a 5-year period. They don't care that I got a $36,000 assignment fee for putting the deal together. We bought it for $1.8 million. I got a 2% fee. That's just part of the package. Hey, for me to come in and 4x your money in the next 5 years, Putting this package together took me about a year of negotiating time, and then I'm going to be managing this. There's a whole bunch that goes into this. My fee for such activities is $36,000. I assign it to our new LLC. It shows up on your settlement statement. It says— it literally says assignment fee to Christian Osgood, $36,000. You're not doing anything underhanded. You're not surprising your investors. You're like, haha, I'm getting paid. It's a, I'm getting a nominal fee because I did all the work to get us here and the deal merits this for me creating this opportunity for you. This is the cost. That's all it is. Very, very common, but you should have an acquisition fee anytime you're doing a joint venture, as long as you have a good enough deal to merit it.

Is this, is this something you would recommend for a first time? You know, is this your first rodeo or is this like, uh, stage 2, stage 3 kind of complexity.

I wish I did this on my first rodeos when I did the capital. There's so much work that goes in, and there's so much work that happens after close. Most of the returns are in favor of the investor on a deal, for the most part. They have the capital in the deal, so you're trying to multiply their money, and then also you get paid because you have a good deal. That little bit on the front end especially for a lot of newer investors, that is your pay. Like, if you're trying to escape the 9 to 5, that's bankable money. That's— this year I will make about $200,000 on assignment fees. Everything that I bought this year has cash flow to my investors. I have not got a distribution from those. They all— all the distributions kick in next year. So up front, I made $200 grand. Investors are getting all the returns. I've stacked it in their favor. And then next year we have a little different split of the cash flow. The income starts kicking in on those deals. If you are trying to leave the 9 to 5 and you can do 3, 4 deals and make an extra $200,000, $300,000, that really, really, really helps leaving the 9 to 5. Having liquidity is awesome. Highly recommend. When I bought the Robin Hood, $4.5 million transaction, I should have charged 1 point for putting together all the work because there's a crazy amount of work. $45,000 would have really helped at the beginning of my career. Yeah, and it would have covered a whole bunch of other stuff that I did on the Robinhood later.

When you're— that's what I found, starting out, having that extra cash in the beginning is so much more important than having it later on down the end when you have more cash. When you're, you know, later in life, you're going to be cashed up and you're going to have all your assets paying you, like the extra $50 grand later on down the road isn't as important to you, whereas up front you can magnify it so much more. Yes, it's just so much— it's leverage. You need, you need more to leverage at the beginning rather than at the end. Yes, and it's one of the most important things that you can do is You need, you need enough to get that escape velocity out of the rat race.

I agree. By the way, uh, for everyone here, the immediately after this, at top of the hour, I'll be running a webinar upstairs in my studio, uh, that is going to go over creative finance, how we're actually buying these deals. So if you're listening to some of these creative structures, how are we getting paid to buy deals, I'm going to cover that on this webinar. I just posted it in the chat right now. Uh, you can see it everywhere except for Instagram. So if you're on Instagram, it's just multifamilystrategy.com workshop. You guys are more than welcome to join us there. We're going to go about an hour and a half-ish going over how we are funding deals with or without creative finance, but zero-down real estate, and in many cases less than zero down. It's getting paid to buy properties with or without any of your own money. So if that is interesting to you at all, it's not just like a, it's the creative finance webinar, it's creative finance and creative equity. If you don't know what that means, You're missing out on like 75% of the deal. 80. So you guys can check it out. And that's what we call an in-stream advertisement.

Is that what that little pause thing was?

Uh, no, actually that was just the internet flickering, which hopefully does not happen during the webinar for a minute.

All right.

Oh, that was funny.

Didn't know what that was there.

No, it just literally my power.

Uh-oh. There we go. Lost him again. Ah, you get the black hole. Oh, there you go. You're back.

Internet. Okay, so what is the script to schedule a coffee meeting? Phil, when you do owner meetings, how do you get them scheduled? How do you actually go out and meet new people?

Oh, this is one I've always struggled with.

Um, no, good, it's a good question then.

It— you know, you gave a piece of advice, it's like when you get the phone number, just dial.

Yep.

I, for the longest time, I bat the eye around, I do as much research on the guys I possibly can, I try and— it's just like I overanalyze, I over— it's that analysis paralysis is really what it is. Um, now what I do is I just I just dial and then I just say, hey, I'm the new guy down the street, I just bought this property. Um, it just be open and honest, like it's just a conversation. If you're— if you have a script that you're kind of reading off of, it comes through. People pick up on that tonality. Um, I just say, hey, you've built something that I really admire and I want to get to where you are one day. How do I do that? And then get off the call as quickly as possible. Once they're interested in what you— well, yeah, once they're interested in what you sort of are about and they engage, it's just a matter of like, hey, look, I'd really love to continue this conversation. Can I buy you coffee? I'm gonna be down the street at such and such coffee house on Tuesday. Can I meet you there and buy you a cup of coffee? Yeah, I need 10 minutes of your time. And you sort of just get that interaction. I've got a couple of owners in the neighborhood that, you know, I've found The lawyer I've been using for my, for my, um, my refinance— not my refinance, sorry, my property tax reassessment— found a great lawyer through a local guy. He's like, oh, this is the guy you want. My tax guy is now somebody I met through another owner. Um, it's, it's really good to get those connections. You can answer so many questions that you just would spend years trying to figure out on your own through trial and error. Like, how much money is it going to cost you? How much time is it going to cost you to find the right lawyer? Like, you're gonna get— you're gonna get in— you're gonna waste a lot of time and a hell of a lot of money.

And you can just ask someone who's built the business that you wanted to build. They've already— they've already hired the bad lawyers. They've already made all the mistakes. You can just cut the line and start wherever they're starting. That's the magic. The, the basic script for this is like Phil said. You call, you let them know a piece of your story. So when I started, hey, I'm trying to retire my wife one duplex at a time, has not been cutting it. I have 2 of them. It's taken me 8 years to do that. You have a much bigger portfolio. Assuming that I don't want to get to where you're at when I'm 85, I'm calling to see what the next steps are. They're like, okay, well, it's kind of generic. It's like, yes it is, sorry about that. Um, here's where I am stuck. I'm fine. And then you Give them something specific and you get into the conversation. And as soon as you get momentum, the goal is not to have a great phone conversation. The goal of the call is to book the appointment. So as you start to get momentum, you're like, hey, this has been extremely helpful. I have to run, but I am going to be in town at this time. This has been super, super valuable for me. Could I get you coffee and get 30 minutes of your time? I have a few more questions I would love to go over. But meeting owners in this market is the sole thing I'm trying to do. Cause you already built a business that I wanna build. I rarely get a no to that. Maybe, well, by rarely, I mean like 3 out of 4 times they say yes. That's not too bad. Make like 10 calls, 4 of them pick up, 3 of them say yes. You have 3 coffee meetings. Do that once a weekend. You have 52 people in your market who built the business that you wanna build, who are now on your side. Easiest. Easiest thing you can do. To Phil's point, don't waste a whole bunch of time researching the owner and try to figure out, you know, I'm—

I am the king of that. This is gonna be uncomfortable. Okay, I'll research everything I need to know about the guy.

I'm gonna go chat.

You just end up never doing it.

Who is Phil Toth, the multifamily investor? Well, he owns in Pittsburgh, we know that. Um, he says he's associated with Multifamily Strategy. Go figure. Knows this. Um, let's see. Oh, he's a reformed professional sailor. I love the word reformed. We've cured him. We've swapped him from fun on the ocean to, uh, filling in wells under his property.

Yeah.

Oh yeah, Olympic.

I could be on a beach somewhere, and yet here I am digging ditches and filling in wells.

Yes, and only making a lot more money. Yeah, uh, which is helpful. Which is helpful. You don't have to do too— you don't have to do too many deals if they're adding $60K a month— or sorry, a month, that'd be amazing. If your deals are adding like $60K a year in cash flow and they're paying you $300K up front, some of your deals wouldn't be far off that, wouldn't they?

Yeah, cash flowing, that sort of neighborhood.

My first deal cash flowed $9,000 a month and I cashed out $780,000. That was very helpful. Helpful.

Nice.

If you want a cheat code to making a lot of money in real estate, make a boatload on your first deal. Don't screw up the first one. Very helpful. Um, our YouTube lives are never an ad for Multifamily Strategy, but Phil did it. He has a bunch of rentals. Well, it's doable.

It's legitimately doable.

It, uh, yeah, if you want to minimize your mistakes, we have a community that will help you do this with less mistakes and make more money. That's if you're going to buy a deal, join Multifamily Strategy. If you're like, I don't know if real estate's for me, keep watching the YouTube channel, it's free. Join our school community, SKOL, also free.

Yeah, I was watching a thing through, uh, I think right before I joined, Alex Hormozy said, you know, it was just that how much time are you— how much are you gonna— how much time are you gonna spend and waste trying to figure all this stuff out on your own? Like, if you can buy knowledge You can always get more money. You can't get more time. So if you're wasting time, like that's the most expensive resource.

If you famously paid $150 to Grant Cardone for 3 meetings, he's only used 2 of 'em. And the first one is for 3 hours. The first meeting apparently he only spent like 20 minutes. Like he, he is like, oh cool, got what I needed to know. Thank you very much. I'm gonna go apply that. Goodbye. Like paying for education, is awesome. I'm not saying like buy my course or buy any specific course. I'm definitely not saying that an hour of Grant's time is worth $100,000. That's a— tell you from experience, that would, uh, I've not paid him that, but I've had a lot of time with Grant. It's not worth that. But if you go in and you are learning what you came to learn faster and you can apply it, uh, best example that I have Gary Mann has built the business I want to build in Moses Lake. That's where I started. The time spent and money spent being around him, that took what he built in 50 years and I built a larger portfolio in 2. I just applied what he taught me and didn't deviate from that. Like Gary Mann, Dan Eilers, there was one or two other people who came in there. Uh, there's a guy, uh, Paul Lischka over in Ephrata. I learned so much from these investors who had some of them rentals for generations, some of them built their entire empire in one lifetime. You meet a few of these people, you apply what they do, you can literally do a 50-year career in 2 years. It is incredible. So I'm just doing the math on this. So you did 2 deals this year. If you keep doing deals like this, you're gonna make like $600,000 a year in cash-out refis.

And then Don't jinx me.

Okay, I'm just saying. Okay, okay, let's say, let's say your next deals suck. You're gonna make half a million dollars in like cash-out refis.

If you just add $60,000 every time though, like, yeah, that's, that's the amazing thing with the math in real estate. Like, every time you do a deal, your, your yearly income, your, your take-home goes up essentially.

I mean, essentially you could do 4 deals like your first deal, and you've already done a second deal that's pretty similar. You do 4 deals like the first deal, you would have about $1 million of— like, you got paid $1 million, and you would end up with a residual income of about $250,000 forever.

Yep.

You would do that in 2 years if you do— if you just repeat what you already know that you can do this year. If you just do the same thing next year, your 2 years That's, that's, that's ridiculous.

It's doable. I mean, there's nothing, there's nothing special about the formula. It's just, it's repeatable. If it's repeatable, it's scalable. And it's just, you know, it's the old, the old adage by what's his name, Buffett. You know, do, do what you know, and be an expert at it and just do it on repeat. Like, don't, don't go do things that you, you don't have any advantage in. Like, I, I mean, I, I've made a career sailing, and— but I happen to be able to do a little bit of plumbing and do a little bit of drywalling and do a little bit of electrical. I know enough to, to make my way around, and it just— this all sort of fell in my lap, and it just— you're Yeah, it's just, it's not, it's not hard. It's not rocket surgery. It's just, just got to sit down and do it and just do it on repeat. Yeah, you do a lot of it. If you do a lot of it, you become really good at it. And the other people that start out, they look at you and go, wow, how did you get to this spot? Well, I've just been doing it for, however, you know, for years and years and years and years. Like, you do this for a year or two, like, you're going to be so much further ahead than the guy that's— that hasn't done it for a year. You're going to be a lot further ahead than the guy that's done it for a year and you've done it for 5.

But I've seen people come— the fun thing with multifamily strategy is, like, I've— my podcast too, Owner Meeting Podcast, all I do every single week, I interview interesting owners of interesting businesses related to real estate, primarily related real estate. Sometimes we'll deviate a little bit. But I get to do that every single week. I meet with owners every single weekend, and then we compile all this information into one spot. I've had so many students do so much better than I have. Like Phil's residual income— Phil's going to surpass me because he's not— like, just by not buying the Robin Hood Village Resort, like just not, not diverting into hospitality, doing 4 great deals instead of doing like a deal that doesn't make any sense. Phil's gonna have an unbelievably easier time. Uh, Caleb Hummel is 18, he's at 200 units. Next week he's going to be at, uh, 353 units, which is crazy. Um, I haven't met— there's someone in the mentorship group who went from 0 to 600 units in the first year. Uh, he prefers to remain anonymous, but Caleb is actually like my third most successful, uh, successful mentee. But I've seen people go to an incredible level, it helps that that individual started with a little bit of money.

Uh, but the biggest compliment to the mentor is when your mentees surpass you, because like, they should. You, you didn't have a Christian Osgood when you started out, right? We, we all did. So yes, the biggest compliment is that these— we are starting at a level, a much easier spot than you did. So we should be able to— like, that's a huge compliment in your direction that people can accelerate as fast as and faster than you did. Oh yes, we have such a bigger head start.

And, uh, Buildy Bunch did comment— oh yeah, the Robin Hood, throw it under the bus again. I love the Robin Hood. Um, so some fun announcements of the Robin Hood, and then I'm gonna go, um, I'm gonna go get on my traditional black shirt and I'm gonna, I'm gonna get in uniform for the webinar because I always like to look at the same, same. Uh, but Robinhood, I bought out all the partners this year and that solved a lot of the pain. That cost me $1.4 million, which sucks when, uh, Phil can tell you how hard it is to earn $1.4 million in real estate that's liquid. It's hard.

Oh, liquid. Yeah, on paper, easy.

That's like, that's like 6 of Phil's deals. Yeah, that's like 6 Phil deals and then refi. Like, that'll go through all of the pain. That took me about 3 years to save, and it took me all of that money to buy them out, which sucked. I took everything I built in 3 years of grinding. However, Robin Hood, we now have a whole organization in the city called Robin Hood Revitalization. They've collected a ton of old art, old Robin Hood paraphernalia. They're renovating the pub. The pub is going to be— it's non-commercial. It's, it's been downzoned to residential, but we have a permit to open the pub twice a month for concerts every single month, all off-season. We have concert series, Hoodstock. Uh, in fact, 3 years later, after a ton of pain, Robin Hood cash flows like $200,000 a year, which isn't terrible. The cost to get there was absolutely terrible. Uh, it was brutal. It almost wiped out my multifamily portfolio. However, on the back end, uh, throwing some love to Robinhood— coolest piece of real estate I own, completely unique, probably will never sell it.

I did—

now that it's—

now that we made it through, that's a big call.

I don't think I'll need to because it makes money now and I have no partners and I have awesome staff and it does better every single year.

Yeah.

And now the marketing's all kicked in and I don't have partners who downvote me when I'm like, we should probably spend marketing dollars. We got— I'll do the math on this because I saw this right before, and then I'll, then I'll head out. We spent $151 on ads in the last week, which is like nothing. It brought in 26 bookings. Our average profit on a booking in the off-season is $30. So 30 times 26, $780. $1,000 divided by $151 of ad spend, I'm getting a 5.1x return on ad spend. If you can spend $1 and make $5— I've been blocked from doing that by my partners for 3 and a half years. Dumb. I now have control.

My, my wife is a very high— she's, uh, yeah, corporate world in marketing world and very, very high up. And yeah, you two should sit down and talk about it. She's really good at quantifying, yeah, ad spend and like how do you convert that to a quantifiable number of like, okay, leads brought in. It's—

I have a 500% return on investment in a 1-month turnaround.

That's pretty good.

Annualize that, it's freaking amazing.

That's pretty good.

I will continue to invest in that strategy. That is fantastic. Uh, so Robinhood is doing well. A lot of pain to get there. I just wanted to share that Phil will go farther because in the time it took me to fix the Robinhood, Phil will just do 2 of these deals or 4 of these deals a year, and he'll be sitting back being like, oh, what, you don't cash flow $1 million a year? Oh, I'm sorry, you were too busy spending all your money fixing your early problems because you didn't have You didn't pay for mentorship, you did it the free way, Christian. You started a podcast and got people to tell you online, uh, doing it the hard way. But I really appreciate it, guys. I'm gonna go head out. Phil, thank you for spending an hour with us. You are fantastic. Uh, for those in Multifamily Strategies, Phil is the regional coach. Every Tuesday he's on, uh, sharing the, sharing the knowledge as well. We have regional coaches all over the country now, including— we hired back Cody Davis. So fans of the channel, sweet. You want some Cody exposure? Cody's back on staff. Daddy still owns the company, but Cody is there. So appreciate you guys a ton. Driven Addict also mentioned he's in the mentorship, bought a 7-unit. Actually, I suppose they— I don't know that it's male or female, it just says Driven Addict. I don't know who that is, um, but I'll find out. Driven Addict, text me so I know who you actually are in the mentorship. Appreciate you all a ton. Uh, again, If you want to join the webinar that starts in 3 minutes, it is multifamilystrategy slash work— or sorry, yeah, slash workshop. It's in the chat. See you guys later. Phil, see you soon.

As always, see ya.

Bye.