Christian Osgood and Cody outline their 2023 real estate strategy: locking in fixed-rate debt for four years, stabilizing existing properties instead of acquiring new ones, and positioning their mid-tier portfolio to capture tenants fleeing expensive Class A properties during a likely recession. They're expanding their team and automating systems to support this shift.
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Hey YouTube, this is Christian. This is my first time using the gimbal, so I'm on vacation in Mexico. If this works well, great. If the lighting gets off, well, I apologize. However, this week we are talking about what Cody and I are going to do for 2023. I'm going to talk a little bit about the economy, what we're looking at, if there's going to be a recession, how we're going to react, and really what our plans are going into the new year. So for 2023, the first thing we're going to do is we are not adjusting to exactly what the economy is doing. Now, is the economy pulling back? Almost definitely we're going to see a little bit less in economic development than we did in the last couple years. We've been on an 11-year run of non-stop appreciation. Everything has been good, the economy's been fairly easy, which comes at a price. When the economy is really good and everything is really smooth, everyone looks like a genius. However, this is why Cody and I bought long-term fixed rate debt. Our nearest balloons are coming due in about for 4 years, which means if the economy pulls back this year and next year, even the year after, we're able to get paid and wait. So that means, like we've talked about on this channel many times, stabilization is the first thing that we're doing. We have a few vacancies and a few properties that actually need a little bit of love. We haven't given them enough attention because we focus really hard on acquisition. We have a few vacancies, a few renovations. The first thing we're going to do in 2022 is we're going to fix those up. We're going to increase the amount of occupancy we have, lease up a few more units, and that just means doing some basic TLC. Hired a new team for that. That's going to be objective number one, is going into a recession you want to avoid vacancy. The next thing we're going to do is we're not going to do major rent increases. There's a few properties that are just way under market rate that are still going to see a little bit of bump, but the goal is to get people in the units. Vacancy will actually cost us a lot more than just under-renting by a few hundred dollars. In a recession, what we typically see is Class A properties. You'll see a lot of those tech jobs— Amazon, Microsoft, and so forth— those jobs are going to start disappearing. You're going to see layoffs, and we've already seen some on Amazon, Facebook, some of the larger tech jobs. We'll see some of the fluff starts to get trimmed. Obviously, you've seen Elon Musk buy Twitter, massive layoffs there.. But I think we'll see a lot of, uh, we'll call it trimming of the fat in the, uh, the economic windows. What that means is that people move from Class A to Class B or from Class B to Class C properties. If you own a lot of Class B, Class C, the nice thing is everyone still needs roof. Now, single family, those are based on sales comps. When the dollar's worth less, typically you see prices go up. For us, when the economy gets a lot slower and you see interest rates more than double, We'll probably continue to see housing— I'm going to guess single family and even some of the duplex, triplex, fourplex— those are probably going to drop in price significantly over the next year, maybe 2 years. However, if you've already purchased, I would not make any adjustments, and we're just going to hold small rent increases or no rent increases, fill those vacancies, and get ready to ride out 1 to 2 years, which Cody and I are ready to do again. Long-term fixed-rate debt, that is the name of the game. So what does stabilization look like for Cody and I? Well, besides just filling the vacancies, we have a few more employees we need to onboard and some systems we need to automate. The nice thing is you can do that in absolutely any economy. We're moving a new player into Central Washington, Moses Lake. Gavin's going to be joining our team, probably see him on the YouTube channel a little bit, but he is the one who's gonna hopefully coordinate and help us fill a lot of those vacancies in Central Washington, adding stability there. The Robin Hood Village Resort, we're going to continue to improve. Right now revenues are up there about 25% since we acquired, which is excellent because we've had most of the problems that you can have in a forest. You've had trees fall down, we've had storms, tide came in— we'll show you guys a picture of that in the near future— tide came in almost to the back door of one of our buildings. We had one of the biggest high tides combined with melting snow from a previous snowstorm and heavy, heavy rains. Exactly what you don't want to happen in the first year happened, and we've survived it. So the Robin Hood, we're going to be doing some upgrades. We'll keep you guys posted on that campus. The main focus though for 2022 is there's going to be opportunities to buy. As prices come down, we're going to be looking like we always are to acquire. Much, much heavier focus though on stabilization. If you can ride out the bad times and you see a lot of the wholesalers who are just looking for deals to sell to someone else, the flippers who are relying on appreciation to make their margin, you're going to see a lot of them start to fall out. I love market pullbacks because the best operators, and only the best operators, get to survive those. People who are surviving off of dumb luck or just surviving off of, hey, you know, the market keeps going up, you can't lose, A lot of those online gurus are going to start disappearing or getting completely wiped out. I love this time of year. So other goals for Cody and I going into 2023, what you can expect from our channel: at least 3, probably 4 videos per week consistently. Mondays, we're going to start having a guest star every single month. January, pretty early on, you're going to see Sole Cayetano, and she's going to go from 4 to 6 weeks with us co-hosting the channel every Monday. After that, you're gonna see Matt the Lumberjack Landlord gonna be co-hosting with us consistently for at least a month. We have a few other people in the pipeline. I guarantee you'll see Caleb and Chuck on the channel more, but we're gonna have every single Monday guest stars, people who are absolutely slaying it in real estate, maybe a little different strategy than Cody and I have. We're gonna have them contribute to the channel. Tuesdays, we're gonna keep doing that Multifamily 101. If you're new to the game, we are committed to showing you for free on this channel how to play the game. So it'll be Christian, Cody, Brandon. We moved Cody back up to Renton, so Cody's a little bit closer to me, which is going to be fantastic, which means you get to see more of him on Tuesdays. Fridays are always going to be our bigger video. We have more editing, so you're going to see a bigger team, a little bigger production. But Friday is always going to be one of our most valuable pieces, one of those either story pieces from Cody and I or just some major lesson that we want to share. So stay tuned for Fridays. Fridays are always my favorite, and we'll figure out the rest of the lineup. I'm looking at maybe expanding into Saturdays, but I'm not committing to anything yet. In addition, our mentorship program, we are going to be expanding that yet again. We want to get that to maybe another 25 people actively in that. If you've been looking at that and you're looking for a New Year resolution, themultifamilystrategy.com, or just message me @ChristianOsgood if you want to talk more about it. Would love to get more people into real estate. Again, I think this is an amazing buying opportunity. While Cody and I aren't buying as much because we're stabilizing, this is the absolute best time for new players to jump into the game. A market pullback means you get your pricing. Are interest rates high? Yes. The nice thing with interest rates is that you can always refinance in the future. You can't renegotiate the price that you purchased the property for. That's almost true. There actually are some ways you can go back and kind of adjust the debt stack, but generally speaking, Get your price now, work on the rates after the economy improves. That's what Cody and I are working on for 2023. In the comments section below, post some of your goals. I'd love to see what everyone else is working on. The big things for Cody and I, again, they're stabilization and expansion. Maybe not as much purchasing real estate, but you better bet we're going to be buying some big, big projects. If we do an acquisition. It's likely going to be a very, very big deal, so stay tuned for that. Again, post the comments below if you're ready for a great 2023. Like, subscribe, turn on those notifications because at least 3 times a week we're gonna be coming at you with content throughout the entire year. Happy New Year, and we'll see you all soon.
