Guys I just figured out how to make $5,000,00!!! so I am going live. Math is cool

All right. And like that, I'm magically live, guys. So I don't usually go live on Fridays, but I was just doing fun math and I didn't want to put together a full edited YouTube video. I just want to share what I was doing with you guys. So welcome if you're actually watching this live right now. Hello. Good to see you. If you're watching this afterwards, the math is still super cool. So I was down here. I'm in New Hampshire right now. I'm watching my— looking at my friend's portfolio, Matt Hawkins, Lumberjack Landlord. So I'm in his studio today. Um, but I was down here and we've been talking operations. And so a lot of what we do on this channel is I talk about the, the math going into deals, your actual structure, buying real estate, stuff on the channel, uh, especially creative finance. Operations is where you make most of your money. Like, sure, you make some money on the buy, that's like where you set up your deal, but operations will make and break your deal, and you can make a ton of money in ops. Uh, what I have never done for some reason is I've never actually looked at how much money my operations make And so if you guys are like, well, how does real estate work? If you're like, uh, how do you actually make lots of money in real estate? I'm going to show you the math and what you really have to do. Um, so first caveat, yes, you do need to buy multifamily. Unit count actually does matter here, but that's not the hard part. And if you want to learn more about that, watch more videos on my channel or check out my upcoming book, which launches on the 22nd. The book on creative real estate. But, um, here's the math. This is super fun. So I have today 600 units. When I started, there's a lot of things I didn't know, and Matt and I have talked about a bunch of these things here. But like, are you using the right toilets with the right water flow? Um, because if you can reduce your water bill, awesome. Also, if you have nicer toilets that cost a little more that have lower flow, you save on expenses, but also they hold up better against your tenants, and your tenants have a nicer bathroom. So it helps you cut down on turnover. Obviously you don't do that with just the toilet, but it's the whole complex of things. We get the right windows, the right toilets. You get water heaters that are a little more expensive where you can replace what's called the sacrificial anode. I won't get into all the boring pieces, but I'm just saying as operator, what you really need to do if you want to make millions of dollars in real estate, and the math is actually stupid, um, I figured out from when I started to where I'm at today, same units, I have $50 per month less in average expenses per tenant just from being inexperienced to being experienced. If you can get just that good at operations, here's the fun thing with expenses: commercial real estate is valued on net operating income. Uh, if you reduce the expenses by $50 a month, it's a 1-to-1. Your, your NOI has increased by whatever you've reduced the expenses amount, right? You're reducing your top-line income buy exactly that much less money. So $50 a month on my portfolio today. So you build a portfolio, which again, you've read my book and you watch this channel and you know how to do, um, or you've learned it one of a million other places because I'm not the only person who knows how to do this. Real estate's not that hard. Uh, $600— or sorry, 600 units times— and this is, that is the actual math, this is what has happened in 5 years in my portfolio— 600 units times $50 per month doesn't seem like huge savings, but multiply by 60, we start with a number of $30,000 a month increase in global cash flow. Now remember, I have some partners, but I own a little over 36% of my portfolio. Basically 40% of my portfolio is my equity. Um, so $30,000 a month of increase in my portfolio, um, multiply that by 12 months per year So there's our new annual cash flow for me and my partners, of which I own a lot of this. So I invest in what's called a 7-cap market. An investor would expect an average return of 7% in my specific market. So, uh, 7 cap rate on the new income, because remember, this is new added NOI. If I bought it for exactly what the property's worth and I've done this on 600 units, and I've decreased my expenses per tenant by only $50, that is the new added NOI. How much value have we added? I just, I've never done this. This was insane. Uh, so divide by 0.07. So that is getting a 7% return on the new income. That is the value that an appraiser would give me for that net operating income. I make $5.142 million. Uh, which by the way is what we made on that portfolio with that move. This is money that we've actually done. Uh, now remember I own about 40% of this, give or take. Oh, let's round down. I'll call it the like 36, 37%. Uh, so take that times 0.37. Uh, Christian makes $2 million in operations. Notice, um, that's with my existing portfolio. I didn't buy anything new. So the argument of you make all your money on the buy, That is a cheap piece of crappy advice that became really popular. Now, you can't make money if you bought wrong because then you're just paying catch-up in operations. But through better operations, that's the dollar difference you're talking about in multifamily. It's massive. It's millions of dollars. But that is a true, literal, roughly $2 million of worth that I have created while buying my portfolio. Now, yes, we have tens of thousands of dollars a month of monthly cash flow that comes in from that, which is awesome. And yes, you get refinances and other liquidity events throughout the way for the tune of hundreds of thousands of dollars. There is not a simpler way in your portfolio to make millions of dollars than to just keep getting good at operations. So what does it really come down to? And Matt's way better than— this is why I'm in New Hampshire today. I'm learning this from him. I'm going to be at his properties. But it was the stuff that I mentioned earlier. It's the, it's the, the countertops, it's the sinks, shower heads, the toilets, the things that you do, the LEDs you install to use less electricity, conserve more water. You put less wear and tear on your septic systems or on your sewer pipes. All of the things that you do, it adds up. And if you do these little things, you get a lead at them. What you end up with is you get a property that's way more aesthetic. Because you have— remember, all these things are nicer. So you have nicer toilets, less leaks, uh, nicer showers, nicer windows, um, lights that don't need the bulb changed. So I mean, you end up with happier tenants. You cut down on turnover, which I didn't factor into this, by the way. My occupancies have gone up. I've made more money than this with the strategy. I'm just illustrating just the basic cost savings. We spend less on power. We spend, uh, we get more conservation. I often get tax credits from from the city for energy conservation when I do these renovations. Um, so there's, there's tax credit benefits, um, there's often grants that are available to actually pay for all of this stuff. Uh, my stuff lasts way longer, so my general maintenance has gone way down. So I have happier tenants whose stuff doesn't break, who has nicer stuff in their unit, who leave less often, who may even rent for more, which we also didn't factor for in this math. If you see where I'm going with this Factor all of that, we probably make an extra $50 to $100 a month because of these improvements, and we spend $50, maybe a little bit more, less. So you make— like, you really look at this and you're like, okay, well, if you're making an extra $150 per tenant, if you count the rents increase, your lack of vacancy, and your actual operational cost decreases, it's like $15 million on a 600-unit portfolio. That's the difference between random guy on YouTube who only knows how to buy real estate doing these units and the way that we chose to build our business. So it's just fun to look at this and be like, okay, and if $15 million sounds like an unrealistic amount to you, put this in the context of the portfolio itself. When I— like, based on acquisition, is worth about $60 million. Today it's worth more than that, but we're talking like operational adjustments that are a significant portion, but in the portion— proportion to our portfolio size, it's not like we're just magically making little tweaks making $15 million. It's not a crazy amount of money based on the amount of value in the portfolio, but it's really cool. And I've just— I haven't looked at this way in a long time. It's cool to look at it like, what difference does $150 or even $50 make in your portfolio if you go into multifamily? And that's what the numbers actually look like in my portfolio today. So That was the point of today's video is I just wanted to share this with you guys because it was fun math. And also I'm in New Hampshire, so my video editor is not here with me. So I figured going live, I don't have to edit, which is great. So you guys are watching this. So thanks for watching. And again, my book is coming out. You can buy it on Amazon or anywhere you buy books on the 22nd of this month. So May 22nd, look for it. It's The Book on Creative Real Estate by Christian Osgood. It's coming out. I'm super excited about it. I priced it as $3 as an ebook because that is less than a black cup, uh, black coffee in my home market at Starbucks. So I, I go through deal examples, creative structures, creative clauses, uh, I lit— what I call it the book on creative real estate. I, I literally spent 3 years writing the book on creative real estate. Uh, so I go creative debt equity. Um, I think you're gonna love it. It's a $3 ebook, which is the cost it takes me to produce it. So, uh, that is yours. If you like paperback, which I recommend, I, I— it's like $20. Um, but look for that. Super excited about that. But that is Real Estate Math. That is how we make $5 million, uh, through like basic operations. And we're talking like toilets, water heaters, sinks, and showers. The basic stuff makes you so much money. And, uh, I, I I, we just spend so much time looking at the money we make by purchasing. It's really not where the guys who make a lot of money in real estate that I know, especially like Matt, the Lumberjack Landlord, my good buddy, comes in bobblehead as well. Uh, that's how we're making money in real estate, and that's really how you make money in this business. So treat your business like a business. Don't just look at your top line, manage your bottom line, and your values go up to the 200 millions of dollars. I hope this was helpful. Awesome seeing you guys live. So thanks for joining me on this impromptu live, and we'll see you guys on the next episode.