How Cody bought 100 units next to $0 down - Creative Finance Live

Hey, we're live! First time on TikTok while we're doing YouTube. That's pretty fun.

Yeah, we're just gonna try this out. I've never gone live on TikTok. I have a phone up just kind of playing it, so if it works, cool. If not, also cool, because I love YouTube Live, and so we're gonna do what we do.

All right, so heck yeah. So this is Whiteboard Wednesday. If you're new to this channel, this is where we go over your questions. Now we've got a bunch of questions through the YouTube chat that we're going to start going over live, and then we're going to dig into your questions. So if you have questions that you want addressed live, put them in the chat below in our YouTube stream and we'll go over it. First one from Elijah Wilson: I'm trying to get to 100 units with $0 of my own money. Do you think I can do it even if I'm not a real estate agent? First answer, yes, you definitely don't need your real estate license to buy real estate at all. It's an extra step. We don't recommend adding steps. All you need to buy real estate is you need a deal, you need debt, and if you can't get 100% debt, you need equity. That is all you need. There's no equation there that requires you to have a license. Could a license get you into space to see the MLS? Sure. But a great real estate agent could also do that and it doesn't cost you any money. So it comes down to deal, debt, equity. That is it. You want to get to 100 units, you just got to do the math. If 100 units at $100,000 a door, that's $10 million of real estate. For super simple math, if it's $200,000 a door, $20 million real estate. And if you're doing 10% down seller financed, you're either going to need $1 million down or $2 million down. How nice of an area are you buying in? You need to find that money and you can either borrow that money. Now you may be thinking, "Okay, where am I going to get $1 million?" Well, that's not the right question right now. If you find a deal worth that, oftentimes you can get what's called a second lien position loan against title if it's a good enough deal. And now you can buy it with a signature. That's how I bought my very first 12-plex. It's how I bought my second 12-plex, my 6-plex. I mean, you can repeat this over and over, but it comes down to deal, then you find your debt, which is in our case seller finance. And if You can't get 100% debt, then you find the equity. That's it. So if you want to play the game, you want to get to 100 units, you got no money, don't focus on just getting your license. It's a bunch of garbage. You don't need to do that.

Everyone else gets stuck here, by the way. I want to do a quick disclaimer because I ran into this with like 5 different groups this week, big players in the space. It is all about deal, debt, equity, period. There are more deals— or sorry, less deals than there are money. There's just more money out there. So people who try to start raising capital and figuring out the capital before you have deal, you are doing it backwards. The money is easy when you have a great opportunity to match it to. Just focus on the relationships and the real estate. I promise you, when you get those pieces right, the money will come.

Okay. And then from Ryan Craig, I'm so lost on how to find the private money. Okay. So you found a deal at this point, I'm assuming, because you put that in the comments. How do you work that into conversation with the owner to lend to me? Well, The main thing is you share your story. Everybody's trying to get a deal. That is the wrong place to focus right now. You should be focusing on how did they get to where they're at? Because whether you buy their deal or not, you can repeat their story on other properties, but you got to learn the best pieces of their story and the pitfalls that they found. Because if you can avoid all the pitfalls, but you can take the best pieces out of how they accomplished their goal, you can go there a lot faster. I met with someone earlier today and we've built very similarly sized portfolios. The difference is it took them 25 years and it took me 2. I'm not saying that to just, "Gregg." I'm saying that because I learned from all the people that have spent 20, 30, 40 years building their portfolio. And I looked at what mistakes they made, avoided those, and repeated what they did. Now, back to the actual finding the private money. You're not getting private money, hard money from a seller typically. You can, we've done that, You're trying to get the seller finance piece from the seller. And then when it comes to actually getting private capital, once you find an opportunity and you've gone out, maybe you'd go to local real estate meetups, or you've just met with people on Facebook or people around you. Maybe you don't have that if you're in a really small town, but you just put your story out there. You start meeting with the owners, share what you're working on. It's pretty easy to get capital. There's so much money out there, yet so few people looking at putting together these types of deals. Everyone's trying to do the conventional or the syndication or sub-to, you know, you could try and do all that stuff. It's great. But if you really just focus on the story of the owner, you're going to get great deals that are going to pop up. And when you find great opportunities, it's really easy to find the money. You just got to share that with people.

Now, one of the questions that we did want to go over today, and this came in earlier, More specifically for you, Cody, because you're as young as you are, you're 22, you have 105 units, you live on a 20-unit resort that closes later this month. How did you get, you know, in the short live version conversation, how did you get to where you're at from when you started at 19, right?

Yeah. And it started with a 12-plex. It was on the MLS for a year and a half. I just started with the only thing I could. And some people are looking for the unicorn. I bought the deal that nobody else wanted because it gave me a start where I could start building a track record, build up a little bit of history behind who I am. I can show people that I'm real when I own something. And so I bought the thing that no one else wanted to buy. And it ended up being a great deal. I underwrote based on long-term debt and cash flow, 30-year fixed-rate mortgage, no balloon, and it cash flowed every single month. And as the rents went up, cash flow got better. I started paying down the debt. I've paid off 6 figures of debt on that asset in the last couple years, almost 3 years now. And so it's just gotten better and better and better. But it came down to buying something that was just the low-hanging fruit. I needed to get an entry. And most people are trying to focus on that unicorn day one. Focus on getting your entry point into the real estate space, whether it's a 12-plex, a 4-plex, a duplex. If you got a house hack, a house, okay, get your headquarters, get your base, and then you can expand more into the multifamily space. But if you're just trying to go after that unicorn day one that everybody's looking for, it's going to be very difficult to do.

Absolutely. Do we have anything else from the comments that I wanted to cover before we started diving into the chat? By the way, if you're watching on TikTok, add comments to our YouTube channel. It's the main screen that we're going to be looking at, um, on YouTube. If you guys are watching it live right now, type your questions in the chat. We will answer them as they come in, and we will go as long as you guys have questions.

Yeah, we're not going to see it on the TikTok, so if you want to put it in the YouTube in the chat, that'd be awesome. Let's see, can you repeat this in Dubai or Australia?

I know for a fact you can do this in Australia. In fact, you can do this, they call it vendor financing instead of seller financing. It's functionally the same thing. From my understanding, granted I've never bought a deal in Australia, it is more common there because it's a little bit harder to use bank debt. So it is more common practice to actually do things with vendor financing. So creative financing works everywhere that I've looked into. There may be places where it doesn't. I haven't found them yet.

All right. And then we've got 2 more questions. We'll go over from the actual chat and then we'll be jumping into the, the live chat on YouTube. So from Sean Connolly, how can you do a seller finance deal when there's a broker involved and it's listed on Craigslist and LoopNet? Okay. So seller financing is just a form of financing and a listing broker's job is to sell the deal. Now you have a deal, then you need the debt and you need the equity. That is all you need to transact on a deal. So seller financing is just financing. It is a bridge. So it could be a long-term note, it could be a short-term bridge note, but regardless of whether there's a listing agent or not, their commission is just a line item on what's called a settlement statement. And you get a settlement statement, could be called a HUD statement. And it's just going to be an outline of all of the debits and credits for the transaction, meaning you're going to have a down payment typically. It doesn't have to be your money. Don't worry about that piece right now, but you're going to have down payment, you're going to have closing costs, you're going to have your loan outlined. That's a balance sheet. It's going to balance on one side and the other with a debit or a credit. And so it's going to list all that. And the seller's commission, their listing agent, or if you have a buyer's agent representing you because you're not an agent, that's going to show there. And so if the Agent's commissions are $40,000. That's just a $40,000 closing cost that'll get paid out of the down payment. It doesn't have to be your money, but it's no different than if you got a normal loan. It just has to come out of funds out of your pocket or your investor's pocket, your lender's pocket, whoever's loaning you the money or partnering with you. That's it. Just keep it super simple.

Super simple.

Last question from Derek Cates. Can you please make an in-depth video about how to structure the equity and debt of deals and most importantly explain how to buy them, uh, buy them and the terms that you use. Yes, we can definitely make that and we've done deal deep dives on YouTube, so feel free to check those out.

Uh, we go even deeper in those, uh, we have an online course if you want to streamline that, but we do share that intermittently on YouTube.

Yeah, absolutely, check it out. I mean, your debt, you know, when you take it private, you do seller financing or you have someone lending you the hard money, as a down payment. All of that's negotiable, whatever both parties are comfortable with. Just make sure that you're working with a good attorney that can secure it because debt is only as good as the backing behind it. And you need to make sure you have a good attorney protecting all parties. Because if you're just trying to do this yourself and scratch it, you're just trying to put it on a napkin math, that's a good way to get burned over and over and over. So make sure you have good legal representation to draft up all your promissory notes if you're doing this, because You want to make sure everybody's protected. Good business is good business. Use good best practices. And, you know, vice versa, if you're doing bad business, you don't follow good practices, people will get burned. You will lose money. It's a bad way to operate. So let's jump into the, uh, the live chat.

All right, let's see here. Uh, Warren, what's up guys? Well, hello Warren. Um, we have from Darius, how do you guys figure out and find the right deal? Well, there's a lot of different ways that we do that, um, a lot, lot. The main thing that we do is we meet owners in the market that we're buying in. The best people to teach you how to play in the market that you want to invest in are the people who have already done it. They're the most experienced in exactly what you want to do. Learn from them. And I'm not saying buy from them, I'm saying meet the people who own real estate, get them coffee, get FaceTime, and get to know them and how they got to where they are. You do that with enough people, deals just start to appear. They take care of themselves when you have the relationship first. That's the first thing we do. Second thing we do, we look at what's on market. If there's something that's, you know, say it's been around for 4 months and no one's moved on it, they may be open to a creative proposal. So there's a lot of different ways to do it. There's probably our top 2.

Yeah. And then from Carson, actually on TikTok, I can actually see a question on there. Those are small. Did you raise down payment on your first seller finance deal? We did. Yep. Yeah. I mean, my first seller finance deal, I didn't have any money. I had $3,000 to my name. And if that's a lot of money to you right now, I understand because that was a lot. I mean, that was all I had saving for years at 19 years old. But when you're buying a million-dollar piece of real estate, it'll become very insignificant very quick. And so my very first deal, I borrowed $125,000. Now your thought is, okay, I can't borrow $125,000. I don't have anybody in the space that I know. I didn't either. I had to pitch real estate agents' clients. I had to pitch their investors. And I bought so many of those meetings but got one. And that's all you need. So you find a deal, you make the pitch, even if you're inexperienced, you start shaking, you forget your numbers. If it's a good deal and you're doing good by people, you can find the money.

And I actually saw the, um, that deal is on market for $2 million. Our first deal that we did together also seller financed. We had a $300,000 raise. We hadn't raised together. We started our capital raise 2 weeks before close. It took 4 phone calls. We asked 4 people, 3 people came in with $100,000 each. Done. Onto the next deal. Find the deal first, the money will follow.

All righty. And then we've got Elijah in the comments. Would you consider a 5+ unit property with a 7 of 10 flood factor? Well, get good insurance, right? I mean, I don't know where you're at, but if you want to drop that in the comments, that'd be kind of fun. But yeah, I mean, it comes down to the deal. I don't know what you're looking at. You have good insurance, then you should be covered. But it comes down to, is the reward worth the risk? And can you get solid insurance to cover it when it goes wrong? It's only great if it can provide cash flow for you forever. Like, how do we buy— how do we never lose it? If you can't insure it because of the area, then I probably wouldn't buy it.

Yeah, there's one thing that is true about flood zones. If it floods there often, it will flood at some point. You want to make sure that you're insured against it. The beautiful thing about the game is you're just trying to buy cash-flowing assets in long-term fixed-rate debt. So you make sure that insurance cost still allows you room to cash flow on that deal. As long as you're covered and you bought cash flow and long-term debt, Love it.

Also from Carson, are you ever doing on-market deals? Yep, 56 of my 105 rentals have been on the market, so almost exactly half. Yeah, you can, you can definitely do this on-market game. It's very easy to do when they're just sitting there and nobody wants it because they're overpriced. Okay, next up, can you tell us more about your technique that you use the formula All right, I'm going to do my best to decipher that, but the overall technique, I mean, it's— we're calling people that own real estate. We find their real estate on Google Maps. You look for the big roofs. That's all you do. We have videos on how to find any property owner ever if you need to watch that on YouTube. Check it out. But, uh, we just figure out who owns the real estate that looks cool. We do the Google Maps drive-by because it takes less time than actually doing a real drive-by, but we're looking for big roofs because The bigger the roof, the more likely it is to be an apartment complex. And when we find out who owns it, we call them up, share a relatable point, try and book a coffee meeting. Again, if you need to figure out how to find their phone number, we have a whole video on that where I actually show you my phone number. So if you have questions, you can call me. But that is it. We call them up, try and learn their story, learn how they did what they did. And that's how we built out our own multifamily strategy. We picked the best pieces from the people that we cold called and learned from. And built out a plan and followed it. It's just that simple.

Yep. Goal is to keep it simple enough that it's repeatable. So figure out the strategies that work best for you, implement them. Don't get overly complicated, which is where I think most people get lost, is they add too many steps. But how do you own it and how do you never lose it? Answer those two questions. You can buy literally anything.

Gabe, I've called 250 people using their method. Heck yeah, out of Texas. Alrighty. Guy Dassone, can you answer my TikTok? Uh, please put it back in the TikTok because that would take a lot of scrolling, but yes, we can appreciate you making it to the YouTube.

Yeah, if you want to just post it in the YouTube too, it will be much bigger and easier for us to read.

Yeah, that'd be awesome. All right, um, from Chaya again, how did you work out the down payment on your first deal? "How did it work out so that they would profit?" Okay. So again, I just shared that I got it from an investor of another real estate agent in the office I was at. Did I know them beforehand? Absolutely not. And I had no family or friends in the business. But how did they profit? Well, they secured the loan. Again, loans are only as good as the stuff that backs them. And so I put them in second lien position on a quality asset. It was a 12-plex that I bought, brick buildings next to Microsoft, great location. All the trends are going up. So it's just wonderful. But they were in second lien position and I paid 12% a year, meaning I was paying them 1% a month. It's hard money. And if you don't know what hard money is, you should look it up. Very expensive. Hard money is easier to get than traditional debt and it's a lot harder to pay off because it's easier to get. And you really don't want to have a whole bunch of hard money. That is a good way to lose everything. So you need to make sure that you're Leveraging less, because when you borrow money, your risk goes through the roof.

That's how Dave Ramsey lost everything.

Yeah. You don't want to borrow short-term expensive debt. I'm just putting that out there. The more debt you add, the more risk you add. And so if you could do it in cash, you'd have a lot less risk, but I didn't have the cash, so I had to leverage. And so they made their 1% a month, 12% a year. And the way that I pitched it to them is if I couldn't make all the payments and they had to foreclose, I'd sign what's called a deed in lieu, something for you to Google, but basically I'd sign over the ownership in exchange for not foreclosing on me and they'd get to run the asset. And it was a great asset. I have to have a great deal. If you don't have a great deal, all this just falls apart. It's built off of cash flow and long-term debt. But if I failed, they get a great property that they liked. They underwrote the property themselves. They looked at it, they liked it. They'd be happy to take it from the 19-year-old Cody. And if I paid them off, which And if they did, then they'd earn their 12% a year. And that's how it works. So that is how they made money. But again, it comes down to you got to have a great deal, you got to have a great attorney, making sure that everybody's protected, have a solid strategy for getting them paid off. And if you can't pay them off because something goes wrong, how do you at least protect the person who's lending you the money? Because you don't want to owe people money that you can't protect. I mean, that's just a bad business model. You don't want to go bankrupt.

Our next question, I own one single-family property. This is from Garrett. Garrett also gave us a couple of thumbs up emojis. Thank you for that. You guys, if you get a chance, smash that like button. More people will see this. But from Garrett, I own one single-family property right now. Should I even consider duplexes to move up slowly or try to go bigger? Or should I look for properties that I can buy and never lose no matter The size. Awesome question. I'll take the first part of this here. I started buying small. My first property ever was a live-and-flip property, so it wasn't fully investment. I had to live somewhere and I improved a little condo, and that's how I got started in real estate. I bought one property and it made some money. I was like, okay, this real estate thing is pretty cool. My first investment property for purely investment was a duplex, then another duplex, then I bought a 38-unit. The 38-unit could pay for all of that real estate by itself. Bigger is better. Now don't go so big that you blow yourself up.

Yeah, you don't want to implode. We've got Caleb and Chuck who are buying seller-financed real estate right now. They're buying 28 units, 2 10-plexes, and an 8-plex. Very excited for them. They also found a seller-financed 46. I said, if you do this, you will implode. It's not because it didn't cash flow. It was a great deal, but they didn't have the systems yet. You don't want to go so big that you just lose it because if you can't manage it, it's one thing to buy it. It's another thing to never lose it. And if you can figure out how to buy and never lose real estate, if you can figure that equation out, that just simple equation, you'll be richer someday down the line. This isn't get rich quick, but this is let's get rich as surely as we can. If you can figure out how to buy cash-flowing real estate and never lose it, your odds of making money are better.

Now, I don't buy a lot of small stuff anymore, but we have over 100 units between the two of us. I own 95 units, so I'm not quite over the 100.

Fabian, best—

I know, we're closing on a resort that has 20 cabins, but they're not multi-family units. It's, it's a different animal. As we're buying real estate, getting bigger, I don't buy as many duplex, triplex, fourplex. That being said, throughout our growth, uh, one of my favorite deals we ever did was 3 side-by-side duplexes. They're completely passive, they cash flow beautifully, they're really nice properties. Talk about turnkey. I had one tenant who had a problem getting their porch light to work, and it turns out The light bulb wasn't screwed in quite all the way. That's the maintenance we've had to do on that project. So to your second part of the question, buy deals of any size that move you closer to your goal. There's probably going to be a point where you get big enough where the small stuff doesn't make sense, but if you're not there yet, just buy the deals that move you farther along than you are today.

Someone asked in the TikTok chat I saw if the Robinhood position was still open. It is for the time being. So if you are curious about that, shoot Christian a message. We had some people come, uh, check it out and it wasn't quite the right fit. We have some people still applying, but, um, if you have questions— it needs to be a duo, two people that are comfortable living together that have some experience in cleaning and maintenance. So if you have that, feel free to shoot Christian a message on Instagram at Christian Osgood.

The experience piece matters to us, by the way.

It matters. All right, from Joel Williams, because we haven't answered that one yet: What's up guys, were you ever in sales before you started?

I was 7 years. Um, you don't have to do that. Uh, just like you don't have to be a real estate agent to be an investor. You don't have to be a salesperson to be good at sales. Um, it helps. There's carryover. I learned a lot, but you should be learning a lot in every single position you have, or you're in the wrong position. So I do have a sales background. Cody had to figure out how to sell to do this, but you learned all your sales in the real estate process.

Yeah, I learned pretty dang quick. So I mean, the last 3 years I went from being really uncomfortable to talk to everybody. And now I like to think that I'm pretty okay at sales. I know how to close a deal.

You have a great story on how you learned to talk to people. You should share that though. Yeah.

So I was the biggest introvert, didn't have a ton of friends in high school. I was in the jazz band, had a couple friends there, and that was about it. I was super uncomfortable, super awkward talking to people. So what I did was, as I started learning how to talk to people, I started to like coffee. I started going to Starbucks, and through Starbucks, I'd talk to baristas, and I would try different language patterns, tonalities, phrasing, all that. Because if I botched it, which I did, then I would never see them again. And so that was the thought process I had. It's like, okay, if I'm super awkward— a lot of times I was super awkward— they would never see me again. And so I learned through that and the comfort of, huh, I can mess it up and it really doesn't matter, and they probably don't even remember me, so it's perfect. And then I learned how to talk, and when I learned how to talk and get comfortable in my own skin I started getting better at selling. And one of my old mentors kind of put me down. He was like, you're not a closer yet. You're not a sales guy. And then when I met Christian, he's like, oh, you could sell.

And it was more than that. I was like, you're the best salesperson I've met in a long, long time.

But through that process, we started a little consulting company and people would cold call me. And this was before we really had a solid product. And people would cold call me while I was driving and I was in Christian's Mustang and We'd be driving around, and in one cold call, people would call me and I would send them a link and they'd sign up before we were off the phone. And that's when I started realizing that, huh, I, I have learned how to communicate. But the confidence didn't come right away, and I definitely didn't have a sales job before this because I didn't know how to talk to it, but Reece does.

So whether you're, you're classically trained or you have to figure it out, it's doable. Don't, um, I think my message for everyone is just don't add steps to it. You don't need to have a sales job. You don't need to be in real real estate, you don't, I mean, heck, you don't need to have a bunch of money. No, you can just get in the game and learn how to do it. But we do have a sales background, either had to learn or got to learn. Yes to that question.

Yeah. Gabe asked us if we can let them know a little bit more about our zero-down deal. Well, most of our zero-down deals are low money down, and then we come up with the capital. So I've either brought it in as debt or as equity where we bring in an equity partner and then we have an agreement to buy them out, all drafted up by a solid attorney. We're now moving attorneys because our last one never returns our phone calls.

But yeah, after all the business we sent to—

yeah, so we're gonna get a better attorney. However, uh, you get an attorney, draft it up, and if you're bringing in a partner, it should be someone that you know. Don't just go partner with Joe Schmo down the street. But that's why we focus on building relationships first, because if you have solid relationships, people that you trust, you know, will do the right thing when things get tough. Then you can partner with them and buy them out in the future.

From Sean Connolly, if a seller is willing to do seller financing, wouldn't that mean they believe the property is in good enough condition to cash flow or else they wouldn't take the risk to hold the loan in their name? Not quite. They need to know, and this is actually really important for banks too, this is for anyone lending to you, they need to know that you are a competent enough operator. Our 38-plex that we brought up earlier in the call, this is a perfect example for this. The property is not even close to bankable. Mismanaged, tenants not paying rent, vacant units, plumbing problems. I mean, a lot of problems with that property. What they wanted is someone who could take that property to the next level. We had a solid plan of how we were going to take it from about $6,000 a month of income to $20,000. And we blew that out of the water.

We went from $5,600 to about $28,000, and that took less than a year.

Which is more better.

That is more better. It's easier to pay bills with $28,000 than it is with $6,000. Math wins.

Yes. So on that one, they just believe that we are the group that's going to take it to the next level. It's one of the cool things that happens. Your biggest hurdle, if you're getting started right now, your biggest hurdle is getting those first few properties. Once you get that track record of this is exactly how I operate properties, Cody and I can pull up a Google Map of our portfolio and show pictures that we've attached to that of here's where the property was when we started, here's what it looks like after we renovated. We can show books of like, hey, we picked this property up renting at $400 average rent and now it's $800 average rent. You can move these pieces around, but you want to be a great operator and they'll invest in you as the operator more than they will Just about.

And then from Chris Ballard, what are the exit strategies for seller-financed deals? Well, you can recollateralize, meaning you can refinance. You can totally refinance. However, if there's a prepayment penalty on your seller note, which would have been negotiated during your feasibility and your purchase and sale agreement, then you may have to pay fees. So you want to try and get rid of as many of those as possible. But you can refinance, you can sell, you can write a check for it if you just become rich overnight. I hear there's some Bitcoiners are, you know, I'm rich overnight. And, you know, I guess that does happen, but didn't happen to us because you have to actually invest to do that, or speculate, which is a better word for it. Um, yeah, you can refinance, pay it off, sell it. Those are the options.

Yeah, that's a question we get actually really frequently this last week for whatever reason. So, um, yeah, 1,000%, that is— I would say that's probably the standard way you do a seller finance note, is most people Not all of them. Cody has 30-year fixed-rate debt, but a lot of them are going to be 5, 10-year balloons, and you'll pay those off by refinance, which is typically through a bank. Though you can also do a seller refinance. You can go back to them and say, hey, this has been working really well, do you want us to take this to a bank, or do you want to extend for another 5, 10 years? Yeah, so you have a lot of options, but bank is probably the catch-all standard answer for how you're going to navigate that.

And last one from TikTok, Gabe asked How'd you learn about structuring debt and equity? Well, from the owners I cold called. So I learned from the people that I cold called that owned real estate. All righty. So we've got James Harold. I'm looking at an owner finance project. It's a perfect scenario. Great. Oops. Meant to ask a question. It's a $3 million deal. It's my first deal. Do you think that's too risky for a first deal? Well, your risk is limited to a few things. Number one, your ability to operate that property. If you can't operate it, well, odds are you're going to lose it. I mean, that just happens. If you can't manage something, you're more likely to lose it. If you've got short-term debt on the seller finance note, well, odds are you're not going to be able to refinance if it's a 6-month note.

I'm guessing that's a big chunk of seller finance debt.

Yeah. So if you can't refinance it, well, then you're going to lose it. I mean, you got to be able to pay your debts, right? And it has to be either your money or someone else's money. And typically that means someone from a lender. So if you don't have the ability to refinance before it's due, well, now you get in trouble. If it doesn't cash flow, well, then that's going to be really risky. When you add debt, you add risk, always. There's no exception to that. It's just how it is. So you either pay cash to mitigate some of the risks or you get really wicked cash flow and you have some reserves. And if you don't have reserves, you need really, really high cash flow. If the deal doesn't cash flow, well, now you're in trouble. So I don't have enough about your deal. Just the fact that it's $3 million, I don't have enough pieces for you. Even if it's your first deal, if it cash flowed $100,000 a month, which it doesn't, but if it did, well, I'm going to say it's probably not that risky unless you don't know how to manage that deal. So there's a few components, but think about it like that. If you can't manage it, it's going to be riskier. If you're adding a lot of debt, it's riskier. If your debt's really short-term, It's riskier. And if it doesn't cash flow, well, I don't even know why you're doing the deal.

But based on price alone, since that's the only input, $3 million isn't inherently too big of a deal. Over-leverage is completely a function of what you can handle and what the property itself can afford.

All righty.

From Chaya Grossman. Also, how did you pay back the guy for the down payment? I'm assuming that's your 12th.

With money.

Funny enough, not everyone actually realizes that, um, you have to make money in real estate. And sometimes it's not just, hey, I'm going to wait for the property to pay off everything. Cody and I multiple times have to actually gone out and make money. Yeah, make active income. Um, we don't do a lot of brokerage, but we have a broker's license and we've done that.

Yeah. And today we've got a property management company that makes some money. We've got our consulting company which makes a little money. And all of that gets reinvested back into debt payoff and expanding the companies and all that. We're not actually paying ourselves all that much. We just started paying ourselves, which is nice, but it's a lot less than the real estate makes. And so we're just rolling everything to reinvest, pay off the debt. When you borrow money, you're buying time. And when you borrow money on stuff that actually pays you, that cash flow is positive, as Rich Dad Poor Dad, Robert Kiyosaki would say, is good debt. You're buying yourself time because you're purchasing something you couldn't afford otherwise. However, you have to pay it back. If you borrow money, you have to pay it back. And if your real estate isn't going to do it, you shouldn't just go borrow money willy-nilly. You should get in a field where you can actually earn the money to pay it back. Because yeah, some people want to be debtors forever. That's cool. You're like, I'm going to pay less tax. I'm like, well, okay, cool. I'm going to own my stuff. I want to own it outright. Pick your problem, but I don't want to risk losing what I've built anymore, what we built together. I don't want to risk that. So we're going to find a way to earn enough money to pay it all off. Some people are going to say, well, you're inhibiting growth. Like, okay, well, you know, how big do you need to be? You know, $18 million. When we get it paid off, I'm going to be satisfied. We'll re-leverage other stuff on non-recourse debt. There's recourse and non-recourse. If you don't know, recourse means the lender has recourse, they can come after you. Non-recourse means They're out. They'll come after the property, try and get paid back, but if they don't get paid back, they lose. All right. So I'll leverage with non-recourse at that point, but I'm not willing to risk what I've built today. So now we're going to pay it off and we'll keep expanding, get the cash flows up, get the income up. But if you borrow money, you need to find a way to earn enough money to pay it back over time.

And part of that is the cash flow of the property. Sometimes, and this isn't part of our game plan. But what I've seen some people do is you buy 100 units, you cash flow them. As you get closer to the, the note at the end, you might sell a few of those and pay back the debtors if they've appreciated over time. I'm not a big fan of flipping, so that's not the main model. But your properties, you can sell them at a higher price. You can take the cash flow and you can also earn income like a normal person for the hours that you work. But a blend of those are how you're going to pay back your debtors. You have to make sure at the beginning it's our two questions: how do you own it? How do you never lose it? The how do you never lose it is going to be a blend of those factors. Make sure you know how you're doing that before you buy the deal.

Yeah, don't borrow money you can't pay back. I, I had an old mentor who did that. Bad business model. He's not my mentor anymore. Alrighty, so we've— oh, I scrolled way too far.

Oh no, we need to rapid-fire a couple. Okay, because we have a lot of questions from My Attack.

Uh, any websites or specific organizations that provide a cash Or a list of cash investors, uh, not that we've used. We don't do lists.

There's one though, um, Google Maps does show every multifamily property, and if you get to know those owners, a lot of those will become your lenders. They're people in the real estate space. Some of them are done with their acquisition and they have more money, they know what to do with.

Wow. Yeah, that— yeah, that's it. And we have a video on that. Man, we missed a lot of these. I'm sorry.

My goodness.

Okay, um, is there some book or course that you recommend? Well, yeah, a book. The one that I started with was by Lonnie Scruggs, Deals on Wheels. Now this is about microlending, microtransactions. It's like a $100 to $200 book used. Why it's that expensive, no clue. However, I started with it, and so I would read that if I were you. I don't have an affiliate link because I I don't know.

I will find some link to it and drop it in the chat though. So if it's on Amazon or wherever, I'll find it and I'll put it here.

Now if you just want a course, check out themultifamilystrategy.com. That's ours, so shameless plug. Check it out.

It happens to be the most comprehensive course on creative finance on the internet today.

Now that you're watching this, you know, 30 years down the road, it's not going to be the case. Yeah, one of you will come up with an even better Yeah, you'll build your own multifamily strategy, but for now, check that thing out. Michael Smith question, when buying a seller-financed property, how do you ensure the seller pays the monthly mortgage? Well, if you're doing a contract for deed, there are some types of insurances for that, but that's also going to be built off of trust because if there's clauses for that, if they don't pay, you know, they can get fined and you have the option to pay it.

You can also insure against that. There is insurance for that.

Yeah. However, With seller financing, typically if you're not doing a contract for deed, you shouldn't have a mortgage that's still in place. So they shouldn't have a mortgage. And at that point they shouldn't be able to re-lever the asset because you're going to be on title. So simple answer. Uh, Daylon Harris, what IRR does your equity partners typically like in order to hop on the deal with you? 15.

I'm going to say 15 is probably about the average. It depends on the deal. If it's a newer project for us, we might go as high as 18%. I have, um, I know a few people who just standard do 22% because as an equity partner you don't have to pay monthly payments. All those payments are deferred until the end of the whatever the timeline you negotiate. So you can actually borrow more expensively.

Yeah, but we're also doing a little different because we don't syndicate. We'll just bring in one person, so it'll just be a little JV and that's it. So it's— we try and keep simple, limit as many pieces to just like 1 or 2 people. Try and do that on every deal. Yeah.

If we're doing it as straight debt, it's usually going to be somewhere between 8% and 12%.

Yep. Because debt costs us more today, but equity costs us more later, so we can pay a little more. Okay. Another question from Joel. Where do you think the housing market is going? There's a lot of people saying to wait, but I feel like as long as the numbers look good, you're good. Okay.

So Correct, by the way.

Well, yeah, that's how we're playing the game. A lot of people saying to wait, that everything is going to crash. Well, I don't really care. They can sell all their real estate. I'll buy it from them at market rate today. I don't care because they're wrong.

As long as you can— again, how do we buy it? How do we never lose it? That's the theme of pretty much every call.

If my property value goes from $3.4 million back to the $2 million I bought it for, 11 months ago, I'm still cash flowing $10,000 a month and I have long-term fixed-rate debt. I don't care what the asset value is. Now, for a lot of people that are trying to speculate and flip, yeah, you probably should be a little cautious, but that's not our business model. We buy long-term fixed-rate debt with mortgages we can afford to pay off before the debt is due. We have sufficient cash flow, great debt service, meaning if our debt costs $100,000 a year, we're going to net $180,000 to $200,000+ NOI. We want to make sure we have great margin. But a lot of people are speculating. They're like, "Okay, if I can get this rent and I can minimize my expenses," and a lot of syndicators are doing this, they're going to get caught with their pants down. "If I can just get everything right, then I'll be great." We don't do that. And so it depends on your strategy. If you're just trying to squeeze a deal together, probably be cautious. But we don't care because how do we buy it? How do we never lose it? We can answer those questions on all of our deals and we can pay off our debts. A lot of people are borrowing stuff they can't pay off. Well, yeah, if you borrow money you can't pay off, that's a bad business model.

Now, I do want to address the first part of that question. What do we think is going to happen? This is my personal opinion. Cody, feel free to agree or disagree. I think housing prices— so I'm talking 1 to 4 units, something that people live in— I see those going down in price a little bit as interest rates have gone up. They're valued based on comps. We're seeing things stay on market longer. We actually have some downward pressure there. However, when we're in hyperinflation like we are, everything's getting more expensive. As expenses go up, rents go up. Rent right now nationally is going up even faster than inflation, which is insane. However, that pushes up the value of buildings.

Now, will your income go up? Yeah. Will your expenses go up? Yeah. So people are like, well, that's a wash. Well, not quite, because your mortgage doesn't go up as long as it's fixed. And so you're making a little spread. Are your properties appreciating? Is it actually worth more? Probably not. However, your debt becomes worth less. And that's why we buy, because you get appreciation. You get, well, first of all, cash flow, appreciation, you get the tax benefits, depreciation, you get debt reduction if you're borrowing on amortized debt, meaning you're paying it down a little bit every month. And the fifth metric is debt devaluation. When things inflate, your debt stays the same, so it becomes worth less. If there's more money in the economy, every dollar is worth less, but your debt amount doesn't actually go up unless you're pulling out more money. So that's the beautiful fifth component of debt devaluation, which is why we're buying a lot of real estate leveraged.

Another thing that does happen is so rents go up, you buy a deal that works today, Rent's gone up, so your cost of debt's gone up, your rents went up to follow. When that cost of debt goes back down in the future, when we get in an up market and money's a little looser again— we've, since 1920s, haven't nationally seen rent come back down. So you get the income up, all of a sudden you can get new debt at less money. You just make a spread. So this is why we're always buying. There's room to buy good deals in every single market, up or down.

Okay, I got lost in all the questions. I think we got from Michael Smith, how do you keep a real estate— oh wait, do you keep a real estate attorney on retainer? We're about to, but, um, we're moving from our current attorney.

That will be within the next 2 months, but before the end of the year.

Yeah, we got to build out our, uh, board of directors. That, that's really important. Gabe, what are you doing putting illegal links in our TikTok? Get out of here.

My goodness.

All right. Michael Smith, uh, how do you see Europe and California's energy problem affecting real estate in your area?

Well, fortunately I'm not invested in Europe or California, so that does help a little bit.

I'm not worried super much about it because I haven't even looked into it. Um, is it real? Uh, yeah, but I don't know anything about it. So there we go. Sold by Hobbs, maybe a stretch, but can this type of value-add multifamily be done remote? Yes. We invest 3 hours from where we live. That's pretty remote. We work from home, as do our property managers. Everybody and all the companies are on the cloud. The cloud's somewhere up there. Uh, yeah, you can do this remote, but you have to build out your systems. Again, why I said Caleb and Chuck would implode if they did the 46, because they don't have the systems to manage remote. Can you do it? Yes. Can you do it all overnight? No.

You can do it pretty darn quickly though.

Yep. All right. Mitch Levi or Mitch Levy, message retracted. Okay.

I don't know what you said, but if you had something important, put it back.

Yeah. Put it back. All right. From Christopher Hyatt, probably not the owner of the Hyatt Regency. I live in South Carolina and make $10 an hour, but I have a 740 credit score. How can I qualify for a loan to buy my first property? Well, it depends on what type of debt you're doing. If you're trying to get a Conventional loan, you're going to have to find a property that generates enough income to help qualify you. If you use a professional property manager on a duplex, triplex, or fourplex, you can typically use a percentage of that income to help you qualify for the acquisition. If you're doing FHA, I don't know if it's for conventional, but you can use it with VA if you have a professional property manager or you've managed rentals for 2 years. So you check with a local lender. Yeah. See if you can get pre-approved. I don't know what the prices are where you're at. If you can't, you need to be responsible with this because you can borrow private and you can go seller financed. You just got to make sure that your deal cash flows. If you can live in a duplex, I don't know what they cost there, but let's say it costs $100,000 and you're going to have, let's say your payment, if you did 100% seller finance at 6% interest, fully amortized would be about $598 a month or somewhere in there, $600 a month. If you can rent out one side for $800, well, That's probably a good deal to do in your situation, but you got to make sure that you're not over-leveraging too much, meaning that you can't handle the negative cash burn when things go wrong. It's hard to do in the beginning, but if you can afford an $800 payment and your total payment is $600, when there's a tenant, great. When there's not a tenant, okay, you can still afford it. Don't put yourself in a corner in the beginning where you physically can't afford if it goes wrong. Our first deal, 38-unit, That went wrong at that time. Christian couldn't afford it. We couldn't— I couldn't afford it. Today we could afford it, and we have afforded it. We went negative $15,000 a month for a while, but in the beginning, very, very hard to do. So you want to build a small portfolio on something that cash flows well, that you can afford if it goes wrong, and then you can keep scaling from there as you get your income up. And I would look for opportunities where you can start getting your income up. That could just be as a property manager if you want to get into the business. But I would find a way to get that income from $10 an hour to $15 to $20, because it's not always an expense problem. It could just be an income problem. I'm not saying that you have an income problem, but it's something to look at. How do we start multiplying that money you have coming in? Because if you made $30 an hour, it'd be a lot easier to play this game than making $10. It's a lot easier when you're making $10 than when you're making $7. So just keep that in mind.

By the way, that's why we're doing the resort adventure that we're doing. I would not start with resort because it's variable income, it's up and down. Multifamily is how you add stability. However, we now own enough multifamily with enough positive cash flow where if that resort made $0, we can float it. It's helpful that we already have 1,000 bookings for next year though.

And then we have, yeah, from Yiknates, or probably Nikki Eights if you switch that to be funny. Do you reach out to as many large property owners as you can or only a select few? Well, I want to learn from everybody, so I'm going to reach out to people until the people know who I am. I've met with people that have been worth billions of dollars. I've met with people that have been worth millions and hundreds of thousands, and I've worked with people that have lost everything. But I'm meeting with people that can teach, as people that have a story, and everybody has a story, so I want to learn from that.

Gabe asks here, uh, can you talk about how you do it virtually? Oh, I assume that's the, uh, the property management companies in the cloud. Well, the great thing is we have technology, and technology— yeah, uh, COVID actually kind of helped this because they put a whole bunch of co-working stuff, got a bunch of investment Um, but the nice thing with property management is you need a few contractors who are your boots on the ground. And for us, it's actually, uh, sometimes it's tenants at the property that we've had for a long time. But you start to network with people as you pick up enough properties. You find, hey, I like working with the contractor, I like this plumber. You get a team of people that you can just call when you have a problem. Then you need someone to manage those people, which we've hired for, and You need great software. For us personally, we use AppFolio to manage our portfolio. If you have more than 50 units, you can use it. If not, I hear Buildium is the next best thing for a smaller portfolio.

Do we know? No, no, that's what we've been told, so check it out.

Yeah, heard good things. But that's how you do it. You find the right software to manage the teams, and as you scale, you need more software. We're looking at some schedule management stuff so we can all see what each other are doing. But that's how you put it in the cloud, is just digital software. There are so many solutions.

Hey, Mitch commented, hey guys, that's probably the comment you retracted. Hey guys, trying to build my team remotely. Any tips for buying out of state? Do you guys have property management? Well, we have property management in Washington state. We're not trying to do a whole bunch of third party. We're going to do a little bit if we like you. So if you need help, you can reach out Instagram or Facebook or whatever. But, uh, if you're buying out of state, you should interview property managers. You should also check out the location. Don't just trust some turnkey people to take care of it because it's probably not going to work out so well. You need to go interview the people that are managing your stuff. And if you're going out of state, I would probably want to buy bigger so that it has enough cash flow to justify paying for the flight because you're probably going to want to visit it once a quarter or a couple times a year. It's something that I would want to do, so it could be a little harder. We haven't done out of state yet. We will get there probably in the next 12 to 24 months, 12 to 18, I don't know. But we'd want to buy something bigger, 30, 40, 50 units.

Uh, from the TikTok chat, uh, Liquid Otis says, how can you put— or can you put these lives on YouTube? Yes, we're actually streaming on YouTube. This is our first time actually putting the TikTok—

Cody and Christian Multifamily Strategy, check it out. Yep, we'll, we'll see more of your comments on there. I have taped my phone right below our webcam, so we're cheating because we're looking at two cameras at once. Uh, Chris Hyatt just added you on LinkedIn. If you want to add us on LinkedIn or Instagram, shoot us a message. We're on both.

I'm @ChristianOsgood. He's doing Cody things.

Yeah, doing Cody things. Okay, uh, hit the thumbs up button. Appreciate you, Michael Smith, you're awesome.

Yes, and please do that.

Yeah, that would help us more than you know. Christopher Hyatt: I'm 21 and I've already started working my, my 60 hours of my pre-licensing. Okay, you're trying to get your real estate license. I don't have a lot of income. Same here. I was 19 making no money, but I want to start buying and managing my properties. Great. Also, what should I focus on learning for syndication? Well, we don't syndicate, so if you want to syndicate, you should meet with people that do that. That's not our business model.

Michael Blank has some great content on that.

Yeah. Nighthawk Equity, they're baller. I mean, if you want to learn from some of the top people, Michael Blank's great.

And a fantastic teacher. He's really passionate about teaching.

He's got a program that's great. I've actually been through it. We don't syndicate. That's just not our business model. We like seller financing, borrowing 100% of the down, then paying back some of the debt and holding it for the long term. Syndication's just not our thing. If we need an equity partner, we'll bring in 1 to 2 max. We did 3 on one and it was bad. So we don't like adding a lot of steps and we don't like adding a lot of people. We want to keep it simple And syndication, while it can be a great method to build a portfolio, it's not our method. So we're not the ones to teach you on that because we don't like all the regulations.

There's— yeah, there's only 3 things that we don't love on syndication. Again, you— we're called Multifamily Strategy. Learn as many strategies as you can. If you want to learn syndication and you want to apply it, there are great ways to do that, and people have made a lot of money doing it. The reasons that we don't do it: one, I don't want a lot of partners, even if they're all limited partners. I don't want a ton of people. Two, I don't want all the extra legal of figuring out the SEC and just extra steps. The more steps, the harder it is to repeat. And, um, three, I want to own all of our deals. So even when we JV, we have a buyout agreement available for everyone, and I want to keep that in place. We own all of it. Syndication, traditionally, you own a small percentage of the full deal. So even if you bought 100 units, you might only own 10% of that whole thing. So something to keep in mind. It's a valid strategy, it's just not our strategy.

Okay, uh, thank you. All right, Alex, thank you. Question: saw your Google Maps video, but how do you find out there's even a tri or quad down the street to research?

I look at the rooftops.

Yeah, look at the rooftop, figure out what's bigger, and then you can go to the Google Street View and see how many doors there are.

And if you zoom in enough, you usually see multiple addresses on top of the roof. That's a sure sign it's multifamily. Now, some markets, they, um, there's a different word for it, but essentially I'm making up this word.

I think you can get flats.

I mean, yeah, condominiumize the multifamily. So sometimes depending on where you're at, I know it's popular in Colorado.

Someone invited us to go live. Sorry, we declined you. I don't know who you are, but you can put your chat in the YouTube and we can chat about later. That'd be kind of weird if it came through our TikTok and then went to YouTube because it'd be echoey. Maybe another time. Uh, okay, so we've got Sean Connolly: What DSCR ratio do you look for? Well, a minimum of 1.3, but a lot of my deals are over 2. All of my deals are over 1.8.

We really like cash flow, and so we buy for cash flow. The deals are all way above standard requirements. If you ask a bank, most of them want to see 1.2 to 1.3 as your minimum. It's going to be in that range.

We're a lot higher than that. Even with rates going up, we can still over 1.8 cover on most of our obligations if we had to refi. All our seller notes are above that. Okey-dokey. From Mike Smith, do you have any customized lease agreements? We do. We have RHA, and then we used attorney verbiage to make those even stronger.

We just call it RHA. Plus, um, from Elijah Wilson. Oh, it's a good thing I jumped in then. From Elijah Wilson. We know Ethan Wilson. If you're watching, Ethan, yo, hi. Um, how do we, uh, eventually ask the owner to lend to us, or bring that up in a way?

Well, if you're meeting with them off market, we're not asking them to lend to us. The go-to question, say, how would you recommend we go do something similar to you? You've learned their pieces, they've learned your pieces, they know what you're trying to accomplish, why you're trying to accomplish it. How would you recommend I go do something like this? And when I've asked that question, they've typically said, well, what if I just sold your building? It's like, that's great, but I don't think I'd qualify. You know, my piece is like, well, what if I financed it for you? And that's happened on many, many more than you can imagine from different sellers.

And if they propose a transaction like, hey, you want to buy this building, another question is, okay, well, what were you thinking for terms? I might not qualify for bank, like you said. But you get to know the terms. A normal question once you've gone through, okay, what are you guys looking to accomplish? What's the price? What's your real goal and why would you sell the property? Once you understand what they're doing, are you open to carrying a contract? Not everyone will say yes, but that's just a natural question. People get a little bit weird about it and they jump the gun and right in the beginning go, hey, would you be willing to sell or finance this to me? When you phrase it that way and you bring it up too early, It makes me uncomfortable because I just hear, hey, I don't know what I'm doing and I don't have money to buy this. I don't introduce that until we've actually talked about the deal. Everyone's had time to wrap their mind around, okay, we would like the property to trade. Now let's work on how. Just keep it in that order, keep everything in front of you, and keep your questions natural. Good way to ask for it is, are you open to carrying a contract?

Can we do a seller carryback? Second mortgage for the whole portion the bank won't finance. Yeah, you could do that with small credit unions. You're going to have to ask around a lot, but we know, we both know some people that have done that. You can also get it private where you get hard money in first, and you have to let them know, like, you have to disclose. Don't do silent seconds. Those are illegal. You'll get in a lot of trouble where you don't disclose debt. You have to disclose all your debt to all the lenders, but you can get a seller to finance in second lien position. It would only do that if there's trust, which 5(b)(2) relationship first, but you got to get a conventional lender or private money lender to be comfortable going in first with a seller in second. Everybody has to be comfortable with that. From, okay, uh, Mitchell McCallie, that Mitch guy sounds pretty cool. Agreed.

Uh, from Joel Williams, do you guys recommend finding a partner in the beginning, or a mentor? Mentor? Absolutely. Our first mentor sucked. However, we learned a lot from him on how not to do business. Business.

Granted, I bought 30 units before I partnered with Christian.

He had a dinky little portfolio of 2 duplexes, but those 2 duplexes covered his mortgage. So I had 5 total units and my real estate bought my real estate. It didn't suck, it just wasn't what we have today.

Yeah. So you don't need a partner and you probably shouldn't partner on your first deal. I wouldn't just go do all the work and have someone front the money. That's probably not the best way to do it because that's not what we did. But just find a way to buy something, whether it's a house hack or whether it's a duplex or a fourplex or a 12-plex or something bigger. Maybe you one-up me and buy a 13-unit on your first deal. Whatever you do, you don't necessarily need a partner. And if you don't know how to do it on your own, if you just figured out how to do it because you had a partner, you're not gonna be able to repeat it if that partnership goes wrong. So make sure you're just thinking, how do I repeat this? And if you can keep it simpler, less people, the simpler it is, the more repeatable it is. And that's what we want.

Mitchell has an awesome question. I actually wish this came in the chat so we could have named this whole episode this. How do I do Cody things when I'm Mitchell, but I want to do Cody things?

Well, there's a lot of people that have bought I'm Cody Doing Cody Things shirt. I've had people fly out and they're just wearing the shirt, I'm Cody Doing Cody Things, and they're not even named Cody. So if you want to join the Cody Squad, you should do it.

If you're on YouTube, the link's already in the chat. We get like an iteration of that question.

We just have it auto-saved because people want it. It's not our shirt. Yep, not my shirt, but I wish it was.

We would have killed it themselves.

Oh yeah, we made like a dollar a shirt or something. However, not our shirt. If you want to join the Cody Squad, do it. And if you're going to BPCon, how funny would it be if everybody was just wearing Cody shirts? I'm going to be wearing mine, so you should get that shirt.

I need to get a couple more colors of that for BPCon.

Yeah, that'd be great.

Um, let's see here. I have, uh, from Christopher Hyatt, uh, so what are the different things that are out there? Syndication, seller financing, etc.? Oh my goodness, that would be an hour-long episode.

FHA, Conventional, VA, seller financing, contract for deed, lease option. Um, some people are going to say sub-to, but that's a clause, part of a contract for deed, which is also named a real estate contract.

Uh, contract.

Yeah. Land contract. There's hard money. Um, there's private money where you just find a wealthy individual. I mean, there's a lot.

So did we go through, just like Conventional, normal, just buy the deal. There's also cash. You could have a bunch of money cash.

You can actually finance it yourself. Uh, there's commercial loans, DSCR loans.

For certain deals, SBA could be—

yeah, SBA. You could owner-occupy.

HUD.

HUD. There's a lot of loans. Uh, syndication isn't the form of a loan, but you can syndicate equity to buy stuff. You can go get, um, your agency debt. Fannie and Freddie. That's— you can get a lot of non-recourse debt that way. Those are the main ones. It's probably ones I missed.

Oh, I'm sure there are. That was just a rapid fire off the top of the head. Uh, that would be multiple hours to explain all of those, but there are a lot of different avenues to get into real estate. The goal is to find the ones that work for you, and then within those there's a whole bunch of sub-strategies— the house hacking, BRRRR, all these different things. So there's a lot to learn. The good news is You have time to learn them.

Jason asked, how do I change my name to Cody? Go to court, Jason. Do it. I'll buy you beans if you do.

When my wife and I got married, I didn't realize how long the process is to actually change your last name. Women, I'm— for those of you who are changing your last name, it is a bit of a process, is a bit expensive. However, it is doable. So Jason, do it. Talk to my wife, she'll walk you through the process.

Then you can wear the Cody Thing shirt and I'll buy you beans. And if you don't get that inside joke Which is everybody. I'm sorry for you because it's funny. Joel, what do you guys do outside of real estate? I do parkour and gymnastics. Uh, Christian goes fishing all the time. I go kayaking all the time because I just moved to a resort. If you want to come visit the Robin Hood Village Resort and Union, come say hi. We can go kayaking and talk about real estate.

Also has fantastic fishing, so if you want to fish and you like not talking and fly fishing, then you can join me and hang out down there. But Fly fishing, guitar for me, and hiking. I like being outdoors.

Justin Ray, looking at a seller finance deal with 25% cash on cash return, but they want 10% interest rate. Well, if it makes 25% cash on cash after paying the 10%, I'm going to say that's a doer because I like 25% cash on cash. Now, if you're only putting $1,000 into it and you're cash flowing $250 a year, well, no, that deal sucks. You need to look at more than just your cash-on-cash return. How much cash flow are you getting? Because if it only makes $250 on a $1,000 investment, yeah, it's a great return, but it's no money. And if $250 is a lot of money for you right now, that's great. But when you have an obligation of a mortgage and expenses, that's not a lot of money because you can blow through $250 on a property in a second.

Okay, we're at the part of the, uh, the part of the live where the questions are running slim, so we'll do our last call for questions. So we'll talk for a second while you guys have time to post your last few questions. We'll answer those and then we will be off for the day. Conveniently, this went almost exactly an hour, which is perfect.

Jason Ewert, what are your guys' end goal or vision as investors? As Kanye said, buy planet Earth and then mechanical bees. Um, if you haven't seen the Joe Rogan thing, just look up Kanye West mechanical bees. It's, it's entertaining. 3 minutes.

Um, well, I'll start with our initial goals. And the fun thing with your goals is that you hit your goals and then you set new goals. That's just kind of like the human existence, is you do things. But, uh, for me starting out, the most important thing for me, um, was getting my wife out of teaching. She'd been a kindergarten teacher for a while. She actually got injured on the job and had no support from the district. They also just had some weird political stuff in Washington that didn't quite agree with us. But the priority for me was providing for my family and giving my wife the freedom to take the next adventure. And so for me, I had to buy enough real estate and cash flow to retire my wife. Cody and I did that in 10 months of partnership, which is spectacular. The good news is you can hit your goals pretty fast there. Cody, your initial goal?

I wanted to retire my mom.

And he has a clear path of exactly what he wants to do and cash flow to do it. There's a couple of steps that you still have as far as situating the house you want to live in.

And we got to figure out, you know, that there's some tax ramifications for gifting and paying mortgage and all that. But getting through that and then we can just start rock rolling on it.

But as far as the cash flow basis, we've built what you have to build to get where you want to be, right? It just takes a little bit of time on his goal.

Yep.

So from there, we're above the immediate needs. We have enough cash flow to sustain ourselves and our families forever. So the goals changed a little bit. I love expanding our companies. I actually have a lot of fun, uh, with the whole hiring, building our teams.

And I have a lot of fun making problems for him to solve. So he gets to do all the hiring and building the teams. Not my problem.

Cody has a lot of fun expanding, doing acquisition. I have fun figuring out how it all comes together. So for us, most of our goals at this point are corporate goals. How do we reach more people? Because this is totally doable, and there's a lot of real estate out there. We can't buy it all. So no, this right here is a huge part of our goal.

We're looking at, um, rented landing, and we're like, okay, Elon Musk, if he could liquidate his whole net worth, he could buy a block of it, and that would be all he owned.

Crazy.

Yeah, insane. Hundreds of billions of dollars, just like, oh, you could buy this.

Yeah, uh, you can't buy all the real estate.

So impossible.

Showing more people what I have found, especially as we get on larger real estate podcasts and channels. People don't understand what we're doing because it's too simple for them. They've added too many steps. So simplifying real estate, helping people reach financial freedom and get their time back, because it's hard to do in the system right now, is just busted. So showing people how to do this, number one goal. Hiring a team where I have a community around me who are fun to work with and allow us to expand. I love doing that. Cody and I would like to start picking up more fun projects every year, do 100 units and do a resort. We love the resort thing. Um, I'm having a lot of fun with it, so it's a new adventure. Those are the types of goals we're setting. But the first things everyone should be focused on is not, hey, what's fun, what's the next adventure, what's the biggest sports car I can buy, what's going to get you to the goal, right?

Yeah. And the main thing, keep it so simple no one believes it's how you actually did it. We're getting on podcasts with big investors, big syndicators. They don't believe it's how we actually did it. And we're like, no, like we're being serious.

Yeah.

And they just don't get it because it is so freaking simple. Buy stuff that cash flows, get private debt from sellers that allows you to buy stuff you couldn't afford with the bank, and then let the real estate pay off all the debt. It is so ridiculous, but it works.

And you get to a point where your real estate buys your time. And like my dad always tells me, you can't catch a fish without a line in the water. So it gives me more time to fish. That's also a major goal of mine.

Okay. Uh, last few questions and then we will wrap this thing up to get everybody back. Wow, a lot of people retracted their question. Quitters. Just kidding. Uh, do you guys market for deals sending out mailers? No mailers, just a phone call. Uh, how impactful was joining forces as partners to accomplish your individual goal? It meant everything. I had 100— I had 30 rentals, Christian had 4. Between two of us, we have 107. I'll get 105, he got 95. And I've got 12 plex, he doesn't, he's got a duplex, I don't, and he has his house.

So together with Cody and I, it's like 1 1 11.

Uh, we work better. I like that better than 1 1 3 because I could see how you get from there.

Yeah, yeah, that actually just occurred to me as I was— that's all right, I'm saying, uh, but when we work together, we just accomplish more. I don't know how to advise or coach on how to find a partnership like that because it really does feel like 1 in 1,000.

Our trait just complement. I go get a lot of problems that make money, and then he figures out how to not let the problems destroy us, and then we make money.

And the nice thing is we both enjoy our roles. Like, I, I'm actually kind of having fun playing with legal structures and tax stuff that I thought I would hate.

It turns out I love it.

And I like making messes that make money, and he's great at it on both messy problems that make a lot of money. Um, I have a few things from the TikTok chat that have come in. Um, our single-family homes paid in full, bad investments?

Well, I mean, what's your goal, right? There are deals where you can buy it's 8% cap rate and you're making your 8%. And if you like 8%, it's great, but it depends on what you're looking for. You got to quantify the goal. And if you just wanted 10 houses that paid you $1,000 a month net, buy 10 houses that pay $1,000 a month net, you can manage it. Maybe it's all in one neighborhood. That could be great for you. It's not what we want to do because if we traded our— my 105 rentals for 105 houses, I would go cliff jumping and I might miss the water. You know, I would, I would be so—

that'd be awful.

Oh, if it's your goal, do it.

If it's not, don't. Yeah, it's really hard to lose a house paid in full, so it's not a bad investment. It just depends on your strategy because if you're trying to lever up to 100 units, it's a horrible strategy. Um, uh, from Yiknates again, I love this question. If you had to start over again with everything you know now, how would you get to 50 units ASAP?

I'd buy a 50-unit building.

Uh, ta-da, magic! Uh, my— I had this goal of getting to 30 units. Uh, we missed it. I want to get 30 units by 30.

He got to 55 by 30. Yeah. And now he's still 30 and he has 95. Yeah.

Um, wow, we beat that by a lot. But when we first bought, I went from duplex to duplex and we bought a 38-plex. So I jumped from 4 to 42. We just hit the goal, surpassed it, on we go. I need to save that soundbite. That's, uh, that was a funny one. But, uh, that is exactly what I would do, is I would buy bigger earlier, because getting, you know, house by house, duplex by duplex is a very slow way if you— to move if you have a very big goal.

Yeah, you can buy a bunch of duplexes, that's cool. I know people that did it. But it's a lot easier to buy a 30-unit than it is to buy 15 duplexes. It's easier to manage, easier to cash flow, easier to get the debt on. And whether you do seller finance or not, a lot less loans. Keep it simple. If you want to buy 50, buy 50. You can buy 25 duplexes, you can buy 50 houses, you can buy a whole bunch of fourplexes. I'm not going to do the math on that.

Uh, from, uh, Mitchell McCauley, I'm an accredited investor, made most of my money from e-commerce, still need to focus on e-com.

Awesome.

If it's working, keep doing it. Is going into real estate still a good idea? If you're making a lot, your tax benefits alone are probably a good—

yeah, you should figure out a good EA. There's a CPA and then there's a level above a CPA, and you should be working with a CPA and an EA, but an enrolled agent, it's like the next level above. You should chat with both and talk about a good tax strategy, because if you're making a ton of money, you probably don't want to pay a ton of taxes, but you're going to pay a lot of taxes unless you get the write-offs. In real estate can be a great way to get a lot of write-offs.

We don't give tax advice. However, real estate plays a critical role in almost all tax strategies for us.

I mean, that's, that's the way that we pay no taxes, and we have a good CPA and EA that are helping us navigate that.

Um, from Ice, Ice, Ice, Ice, Ice, what is your buying criteria for multifamily?

All right, I'll say number 1, and Christian will say number 2.

How do you buy it?

How do you never lose it? That's it. Ta-da. Because if you can figure out how to buy it and how to never lose it, you're going to wake up wealthier than you are today someday down the road.

Now, people use the term buy box, by the way. I hate that. It's just how you find something that you want to own. That's actually, I guess, one extra step. Buy the things you want to buy. How do you buy it? How do you never lose it?

How do you buy it? You got to find the debt. It's deal and debt, then equity if you need equity, if you can't get 100% debt. And then how do you never lose it?

Is you buy cash-flowing assets that cash flow day one on long-term fixed-rate debt.

We hate variables that pay themselves down over time.

Yep.

And real estate, buy real estate. Okey dokey. So we've got, how do you find great deals? We're not looking for deals.

We're looking for owners that can teach us. So meet great people. Ta-da! That's actually—

that's all I have to say on that. Q&A format's great.

Thanks for taking questions.

Appreciate you, David.

Absolutely.

Got my first deal because of y'all. Well, Jordan, you should send us a video.

I want to know about that.

Yeah, tell us about it.

Do you use CoStar? We do. I used to work for them for years.

We do use sales. That was some of the sales background.

Yeah, but very recently we didn't use that. We picked it up last month, so it's not like we used it to get to where we are.

We already had it, already at 105 rentals. Yeah, so you don't need it, but— ah, the EA advice is A+.

Thank you, thank you for watching. We got that from Matt the Lumberjack Landlord. If you haven't checked out his channel, it's a great one. Big baller. He is the master.

He's bigger than that.

Yeah, he's bigger than us. If you want to get your stuff into bank debt. He is the conventional finance guru.

He's amazing.

Yeah.

You wanna do the creative stuff, follow us. If you have us down.

Yeah.

Well, yeah. But, uh, you know, if you look at like investor size, you know, most people are, you know, maybe here when they're getting started or up here. And then Matt, like he's somewhere through, like, I, I'm not, I'm not tall enough.

I'm 5'8" with shoes. I'm, I'm 6' with short arms. Um, all right. We're almost there. Um, Elijah, why don't big banks, uh, let us do seller carryback?

It is illegal to have seconds behind a lot of primary financing. They just don't allow it, and your notes can get called on commercial and resi. So you got to be careful. There are programs out there that allow you to do it. However, most big banks aren't going to allow it because they don't want to get creative.

They have to just fit a box so they can sell their loan, and that's it. When they manage billions and billions and billions of dollars of assets, they don't care about your $200,000 loan. They need cookie-cutter stamp of approval. The banks that you're looking for are going to be local or regional credit unions. Usually you're looking for total assets managed between $500 million and $1 billion.

It's those small—

$1 million, $1 billion.

Well, they are probably not going to do that. Are DSCR loans easy to obtain?

Well, they're easier.

It depends. Do you have a positive debt service coverage? Because if not, then they're going to be pretty hard to obtain. But if you have great coverage, you got good liquidity, then yeah, Yeah, you could probably get one. Um, so with seller financing, the main thing is the relationship over the deal first, which builds trust and value between each other. Boom shakalaka! Good job, Joel, you got the takeaway. But we are ending for today because we got no more comments and we got to go do a company barbecue to do a little org chart. And if you haven't done an org chart, you should check it out.

You should map out what you want to build, assign roles, and focus on those.

Yeah, talk about our hobbies, brain fart, building the business, smoking meats, and dropping pans.

And it sounds like my cats have gotten into something, so this is a great place to hop off. Thank you guys for joining. Like, subscribe.

We have one more question Cody's gonna answer. Can I get you two and my team on us of six on a call?

Yes, message us on Instagram at Christian Osgood.

Send it to me. Yeah, send it to him because I, I'm still trying to get through messages. Thanks for dropping it into the chat. This is our first time on TikTok. We'll do this more and more, and we're still rolling on YouTube, so appreciate you following along. And if you haven't checked out Cody and Christian Multifamily Strategy on YouTube, check that thing out because we go live every Wednesday for Whiteboard Wednesday. We have videos on Monday, Wednesday, Friday, and now we're doing the resort on Saturday. So check that thing out.

Appreciate you being here. Smash that like, and we'll talk to you all soon.

Bye.