How I Use ChatGPT to Run My Real Estate Business - Osgood AI

All right, welcome back to Multifamily Strategy Live, guys. It took a little bit of a hiatus, so if you are just logging in now, welcome, welcome, welcome. Also, new intro video since half of you loved our old soundtrack and half of you hated it. We went with a nice neutral soundtrack. We have been busy launching a whole bunch of new stuff here, so excited for the new format. Also, welcome to my downstairs office. Today we're going to be talking about AI in real estate. This has made me millions of dollars, it's quadrupled my output, saved me hundreds of hours, and Saved me hundreds of— well, not hundreds, but maybe a dozen employees. I'm going to show you guys an AI that we have created and customized called Osgood AI. It's a custom GPT where we have fed it our YouTube channel transcripts. We've fed it every podcast I've been on, every money model and calculator that we can possibly think of, and every principle that I invest on. We spent a few months on this, getting it perfect with the maximum amount of inputs. I am so excited to release to you guys for free. Osgood AI. Now, if you're here on YouTube, you can go down below and check out the free school community. Osgood AI is available there temporarily. It'll be there for free. So if you wanna help test this out, I'm gonna show you guys ways that we are using AI. I'm gonna actually hop into the new AI, which is free to you, and show you how we're prompting this to find deals, negotiate deals, use creative finance the way that we run it in our mentorship, the way that we do it on this channel. So very excited to have everyone here and share the journey. So a couple of updates here for everyone. I'll go pull up the school community here on my other tab as well, and we will get off to the races. So here we go in school. I'll share my screen and we'll get rolling. But super excited to share this all today. Uh, by the way, we have a bunch of cool deals in the pipeline too. I use the same technology to find a 144-unit and an 80-unit deal that are live and active right now, starting the fundraising on those shortly. Um, you saw some of those in our new intro video here if you guys logged in right at the beginning and were on time. Let's go ahead and share the screen and get rolling. Entire screen, and off to the races. All right, if you guys are unaware, school community is completely free. It's called Multifamily Strategy Community. You guys can go to skool.com and join for free. And we have a bunch of cool stuff in here for you. We have a free calculator that anyone can download at any time in our additional resources. And today we're talking about the launch of Osgood, our brand new AI. It is a cooler version of ChatGPT that uses all of the content I have launched in the last 5 years as its brain, which is pretty cool. We've tested this for a bunch of stuff. I'll be running you guys through finding a deal instantly, analyzing a deal, and how we implement creative finance on today's live. But if you haven't yet, join this. All of the resources are in here, as well as about 1,700 other people who find, fund, negotiate deals alongside you. We've seen about $40 million of deals funded through this page since we've started it. So this community is very active. There's lots of deals happening here, and you can be part of the action for free. So check that out. Now, in the actual Osgood AI, let's hop to that. Here is the Osgood AI. You can find it again on the school community. Go to the classroom and click Osgood AI. There'll be a link there for you. If you're part of the mentorship, by the way, there's a full class on this, but I'll give you guys a mini, a little, a little taste of what we do here on today's video. So you go to Osgood AI, you can ask it just about anything. You can ask it to write an LOI for you, analyze a document. But what I use AI for in my portfolio is saving me a boatload of time. If it's a document that does not need legal review, this engine writes it for me. I want to write a letter of intent for a deal. I will dictate verbally what I want and it will just write it for me. I can download it, read it, submit it, done. Uh, what I'm going to do today is find a deal, plug it in here and get rolling. So first thing I'm going to use this for, let's hop into CREXi, another free resource, and I'll do a deal in— we'll use Abilene since I'm currently investing there for 224 total units. So we'll go to Abilene, Texas. Now, if you want to quickly figure out what's going on with the deal, this can be really overwhelming if you're new. I'm looking for buildings that are multifamily. This is one. This is one. Actually, that's really low cost per unit too. This doesn't have a whole lot of details on it, so this is actually a good one to run AI on. Unpriced deal. And this is a development site, not as interested there. This looks like a I don't know what this building's for. It looks like it has some multifamily use, but, uh, these two are the most interesting currently listed in Abilene. I can go straight to view the offering memorandum here. So we're now on CREXi. Now what I would usually have to do is really just start digging into this thing. We have, what, 42 pages of stuff? Some of it maps, analytics, market analysis. This is a whole lot to go through and read. Now while we can do that I find it easier to download it and feed it to Osgood, our custom GPT. Downloaded into the GPT. Let's go ahead and upload it. And I'm just gonna tell it, summarize this offering memorandum for me. I would like to see the numbers and projections on this deal that are contained on the memorandum. And I would like to know if these numbers are pro forma or if this offering memorandum includes actual numbers. And like that, it's going to read it for me. So as we're talking here, instead of me doing all the analysis, look at this quickly summarized, no digging needed. So this is a 44-unit. One thing I love about this right here, I like having a variety of bedrooms. If you have 44 one-beds, you have one type of tenant you're serving. Diversity in units is really helpful, especially on mid-sized multifamily. 44 units, 1964, it's a little older, uh, mid-century. Purchase price $4 million. Price per square foot there, price per unit $91,000. It's on the pricier side. It also is a very nice looking building, so this is not necessarily a problem for me. Financials are all pro forma projections, not actuals, which means we don't actually have real numbers. So everything in here is made up. It's good to know that when you go in. I asked that question every time. Uh, so this is potential revenue, potential vacancy, uh, our estimated operating expenses. Okay, so they're saying that this is like a 5.9 cap in a market that tends to trade around 7. So I know right now off the bat it's probably a bit overpriced. Investment metrics, exit cap rate of 6.5. So there's actually— they think they're pretty close to where it could be if we did a syndication on this, the IRR is only 4%. The lowest I will go is 18%. So I know right now I couldn't do this as a deal. We can only maybe get a 23% growth on people's money as an exit multiple. I don't like this deal as it stands. But now we can start using the GPT to play with this. We can actually ask it, okay, well, let's figure out what would make this deal work. I'm going to guess we're probably pretty close to $3 million. One thing that I train this to do, and this is important for everything you do, this is going to always recommend your next steps anytime you ask for any analysis. So request actuals. This would be from the broker. Verify expenses. See if this ratio is realistic for Abilene for 1960s property. If we get the actuals, that should actually really help us with that. Uh, run different leverage scenarios, which is what we're going to do next. So let's see what happens if we— let's assume we can get 75% loan-to-value. I've gotten 80 on a lot of deals in Texas lately, so I think it's conservative to say 75 is reasonable. And let's say interest rates are going to be 6.5. They're trending lower, but let's be conservative there too. At what price can we hit a 1.25 debt service coverage ratio, assuming that we are purchasing this deal 75% loan-to-value and the interest rate is 6.5% on a 25-year amortization. So here we have a standard debt product, a standard loan-to-value for acquisition. This is probably— we might be able to do better than this. I think we could, but let's see what this will look like just with this scenario. So here's our assumptions. It's doing the math faster than I can do in my head, tell you that much. What I do love about this too is it breaks down the math and how it got there. So you're like, okay, if you want to learn how to do this yourself, you can follow along. $3.1 million. So if we bought it in this debt product, conventional financing, it's worth $3.1 today. Where we can get it to cash flow just to make it bankable. This doesn't even mean it's a good deal. This just means it's good enough where the cash flow is strong and it is actually going to be bankable. The DSCR at a full $4 million price. Let's see what that actually would be. Yes, I do want to know, but it's going to prompt you through your analysis. Now the next thing we're going to do is we're going to add creativity to this. We're going to get creative finance and we're going to, uh, we're going to see what this scenario looks here. By the way, this is live, so go ahead and, uh, if you guys have any questions, post them. I'll hop back into the chat here once I'm done with this quick training for you. You guys can ask any questions. We can still continue to, uh, try different things in the GPT, whatever you guys want to do. This is your live. I'm just here. I'm just here talking at you. All right. 0.97. That means that this is cash flow negative by just a little bit. This is basically break-even at $4 million, and we know there's not a ton of upside just based on the future cap rate. So let's ask here what we can do with creative finance. I don't know if this is seller financeable, but let's shoot it with seller finance first. At what interest rate seller financed would we be able to hit a 1.25 debt service coverage ratio on this deal, assuming that we purchased at their asking price of $4 million. So right now here, if we knew we wanted to get creative, they were open to creative finance, there's a lot of awesome math you can do to estimate what your correct interest rate would be, or you can just cut right to the chase and have the AI tell you. This is how I'm analyzing deals as fast as I am today. Double-check the math. This doesn't replace broker relationships. This doesn't replace knowing how to do real estate, but it makes it a heck of a lot faster. About 4.5% interest on a 25-year ARM. That's right around where we start to hit this. It's possible they might say yes to this. It's a little bit lower than I would usually see. Is it market? DSCR is negative, cash flow negative. That doesn't work at all to hit this. Okay. Uh, to really be safer, probably between 3% and 4% is what this is recommending, but at a bare minimum, 4.5%. Now we can try different scenarios. What if we did interest only on the seller financing? What is the highest interest rate we could do interest only? To maintain a 1.25 debt service coverage ratio and purchase at $4 million. So IO doesn't pay down your loan at all. So on this particular thing, you have to be able to get the value up. So you want long-term debt if you were to attempt this. But what this will tell us here is that we can go all the way up to about was it 6.3? So realistically, if I wanted to do interest only, I wanted to have cash flow, I want to have some safe margin, I'm probably asking them for something like 5% I/O. Now again, we're figuring out our debt service coverage, we're figuring out how to get this thing bankable. It doesn't mean it's a great deal for investment. So let me go ahead and ask one more question here, see if we can't figure out— okay, if we went to syndicate this, what is the internal rate of return here, and what does our cash flow look like? Using our previously— our previous assumptions of 5% interest only. I realized that wasn't our previous assumption. Let me try this again. At 5% interest only, what does cash-on-cash return and IRR look like? For a $4 million purchase of this property. And let's run it. So it will cash flow pretty strong. IRR Too low equity multiple. Too low. Do you know why? Because we're still overpaying for the real estate. So we've answered question 1, how would we buy it? A bank would lend on this. But if we have to raise capital, so we don't have all the money to put down on this, it's still not going to work. This is still not a deal for us. So realistically, what you would end up doing is you would have to come down on price, but maybe you wouldn't go to 3.1. You do a blend of these two. This is how you start to play with this, though. And what this will start to do is recommending different scenarios. See what it's doing right here? What if we did 5% I/O and reduce the price to $3.5 million? Well, yeah, let's take a look. Do we get a deal there? Let me show you one more step that's going to save you guys a ton of time. It's going to be epic once we figure out how we want to do our deal. Equity multiple of 2, IRR of 15. Okay, we're really close here. I don't want to do this, but let's see here. What is the simplest adjustments we can make to have the IRR come out to 15%? Oh no, 15— I wanted 18. Change that here. 18% is our minimum. It's already at 15. Purchase price down and online growth up, 3.25, assuming seller financing at 5% I/O. If we got a yes here, we still can't save them that much on price. This is really where it becomes an excellent deal, where if you were going to syndicate it, you'd be looking at it around here. If you're trying to buy it conventionally with a few other partners, there's some other ways you can run it with the high cash flow on a longer hold. You could offer a higher price. This would be the best I can probably do if we had creative finance available. Maybe we can push it to 3.3. Now I will outline a value-add plan and all sorts of other things that we can do, and it will keep asking you questions until you get all your answers. But next thing I want to do is let's, let's say this is perfect. Let's write a letter of intent to offer on this. Let's use the $3.25 million purchase price and the 5% interest-only seller financing on an 8-year balloon to write a letter of intent to purchase this property. Buyer's name will be Christian Osgood. Now it's probably going to have some questions for me to help me fill this out. I didn't specify how much earnest money. There's a few things I didn't do, but let's see what it comes out to. So here are the current owners. Uh, here, these are— this is the broker, this is to Brook Hollow Apartments. The buyer is me. Property price, earnest money, it automatically assumed I'm gonna do $50,000. You still have to read these. Transaction will be seller financed. Here's our loan amount, here's our price, interest only, 8-year term. This is how much we would need cash at closing. This is assuming that 75%, uh, loan-to-value here on this. Suggests a 45-day feasibility or due diligence period. I would probably actually be okay with 30 on this if they pushed back on that. Non-binding because it's a letter of intent. This is awesome. This is super simple. Yeah, this, this did the whole thing for me. I would be okay with this. I might actually go a little bit lower, maybe say, uh, do 1% for the earnest money. So I would just say adjust the earnest money to 1% of the purchase price and then create this as a PDF for me to send. And look at that, we have our full written LOI exactly the way we want it. Our earnest money has now been adjusted. Well, if it didn't just disappear for some reason— there we go. Earnest money has been adjusted to $32,500, 1% of the closing cost. And like that, we have a letter of intent. We go ahead and sign this bad boy, get it over to them. Now, I did this while explaining what I'm doing. In real life, this would be a 5-minute project where I'm just asking GPT what to do. We send a letter of intent. If they accept it, we're in business. You can do this with on-market listings anywhere in the country. This is one of many ways I'm saving a ton of time in real estate. You can do a heck of a lot more than this, but this is what we're doing actively in AI. This is how I'm saving hours and hours and hours of underwriting and creativity and limiting it to a system that knows everything that I already do. I can ask it to do a deal like Christian would do it, and it'll recommend it. It'll even tell you what not to do. For example, I don't like subject-to clause unless you have written permission from the seller, from the loan holder, the note holder, to sell it subject to. That's fine on seller financing if there's no due-on-sale clause, but if there's a due-on-sale clause, this system knows Christian recommends you don't do this and it'll let you know. All right, let's hop back into the chat here and I'll stop sharing my screen. All right, we got a few comments going in here, so this is awesome. Uh, see, so we have a question on the mentorship program in school. Join the mentorship yesterday. Oh, well, welcome, welcome, welcome, welcome, welcome. I can't open the lessons in school even though emailed. Well, that is good news. I can hop in there and fix that for you here in real time. So while I'm answering some questions, I'll hop in and take a look. Conveniently, I'm sitting here at a computer on a live. I should be able to get that done. You should have also received an email. So if you emailed admin@multifamilystrategy or me, Christian@multifamilystrategy.com, I can also fix that there for you as well. But easy to do. I'll hop into the members and I will find that for you. I believe this is you here. So that should be resolved as long as your name here is the same. Perfect. Next question. Oscar got here late. Oscar, good to see you. And sorry, I've been off the live here for just a little bit. I am back. We're full force and even a new theme song for the beginning of this. Oscar, you missed out, but I got rid of the, uh, our controversial intro music and we have, we have upgraded. Uh, let's see here. Uh, in a nutshell, how, how do you use AI to find deals? Okay, so in a nutshell, do a quick summary of it. I go to, uh, CREXi. I find the offering memorandum just for listed deals. I'll take the OM. Instead of reading it, I'll plug it straight into ChatGPT. I'll generate a summary. Of what it is, and then I'll ask it questions until it is a deal that fits in the parameters that I want. You can even ask this thing such as, what would Christian recommend you do? Or how would I make this deal cash flow? Or how would I raise capital from investors for this type of deal? And how would I structure it? It will recommend all of it for you. Uh, there's the main thing I'm doing. I'm also having it review every single partnership agreement I do, every buyout doc, every, uh, every purchase and sale agreement. I— my lawyer sent me one, um, he, he and I both missed, uh, one thing like 40 pages in to a very long, very complicated PSA, and this was able to highlight it. So I'll take my purchase and sale agreements after my lawyer's drafted it, and I'll say, hey, what are weaknesses in here that we can improve, and how would we improve them? I'll then take that list of things after I read it and agreed with it and send it back to my lawyer and say, here, here's what I'm thinking we should do It doesn't replace having a lawyer on a legal doc, but what it does is it has a system that doesn't make mistakes, look at it, look at it quickly, and help you interpret it. Especially if you get a document— some of these, like some of my partnership agreements, are over 100 pages. If I can get a summary of what I might be missing, it helps me and my lawyer review it faster because your lawyer might miss something in a multi-hundred page document. If everyone misses it, it's a problem. What mine caught was contradictory language. There's two things that could not work together in the way that we're going to do our taxes. We cleared it up and wrote a better operating agreement, and it took us all of like, what, 12 seconds? Sydney is here using the Osgood right now for a deal. She's working. See, that, that's awesome. That's what this is for. Again, it's free on the school community, so you guys can pop over there anytime. Ken McElroy, huge fan of him, says to search migration patterns. What should we Google to investigate migration patterns? Oh, oh, oh, I got a thing for you. Okay, I'm gonna share my screen again. Get ready to have your mind blown. We're gonna do this the Christian way. Share screen. All right, so we'll start a brand new chat and all is good. Okay, so what is housing and what are migration patterns? Well, what do we do? We provide housing for humans. That's what real estate ultimately comes down to in multifamily. So if we're providing housing for humans, we want to figure out where are the humans actually moving to. First, I want to know where I want to invest. I like to be able to drive to my properties. I like building my property management company with my team, which means we can service a 3-hour radius of Dallas-Fort Worth. I also don't want to compete with people inside the major metroplex. I want all those markets outside, the Abilenes, the Stephenvilles. I'll go as far as Waco, Texas, down south. I want to analyze these markets, my favorite size being 25,000 and 125, maybe 150 person population. So we ask for exactly that, and I ask for the highest growth areas using my favorite site, worldpopulationreview.com. Check this out. Using data from worldpopulationreview.com, please show me the highest population growth markets with populations between 25,000 and 130,000 people Make this within a minimum of our— no, wait, wait, wait. I tried, try this one more time. This is the problem with doing it live. I'm at a maximum. We want it to be between an hour and 3 hours away. I'll do it using the data in worldpopulationreview.com. Show me the 5 highest growth cities, highest population growth in the last year, uh, that is between a 1-hour and 3-hour drive of the Dallas-Fort Worth Metroplex. Do not show me any markets that are part of DFW, but show all the surrounding cities. Let's see if this gets it. The beautiful thing with AI is you don't even have to be that articulate. That was not the best way to answer the question. That was just off the cuff.. But I want to see what this pulls up. So we'll start searching the, the web for our cities. Here we go. Josephine, Collin County growth 18%. Salina— Salina, I forget how to say that one. All Collin County though is taking off. These are pretty tight into the Metroplex, so I might want to expand this a little bit farther, but you get the gist of it. It's going to show me the highest population growth areas We have Prosper, Texas. We have— we have Josephine, Texas. We have Princeton, Texas. Now, I didn't stipulate the, uh, the size of the county, so I can always modify this to say, hey, I'm looking for above 25,000, or I can just say, hey, most of these actually fit this, so this is fine. So we'll take something like a Prosper, Texas. Tell me more about Prosper, Texas. What's driving the population growth there, and what is the outlook for the multi-family market? Over the next 3 years. And you can start to cut through all this. I won't bore everyone with all the details here, but this is exactly what you can do. This is talking about how fast things are leasing up. The Arts District, all the new development that's going in there, what you're going to be competing against. Now, this looks like— again, I think this is pretty close into the DFW area. It looks like it's pretty high income, which usually means we're gonna have compressed cap rates and more competition. But I am very interested in markets like this. They have recommended articles. But that's how I'd use this to quickly find, analyze markets that I might have never even heard of. This is how I can find hidden markets anywhere within the vicinity of where I want to invest. All right. Have you tried metrics with the AI for assumable mortgages? Yes. And the fun thing is you can even do first, second, and third mortgages. So I can do blended rates. I can do a— if we assumed this mortgage and let's assume it's like 40%. LTV. We want to get additional debt. If we can put a second behind it, I can say, hey, let's blend this with— we're going to assume their existing mortgage at X percent. We're going to get a second position note at, say, 6% interest only, and we're going to service a— we'll raise some private capital in this as well on the equity side, and we're going to be doing a 6% preferred return. It can combine all of those and give us the full cash flow picture, as well as how much we have left over to pay ourselves after we pay Loan 1, Loan 2, and investors. It's super cool. But yeah, assume below you can plug them right on in. Would it be used to use both calculator spreadsheet and GPT? Absolutely. We have a free calculator also in the school community. You guys are welcome to borrow. Also, Tatiana, I— this is the only Tatiana I see. I don't know that lines up exactly. So the Tatiana wanted, uh, me to get the school access going. Uh, just confirm with me via email. Just shoot me an email. It'll take me 2 seconds to upgrade your access if it didn't automatically happen. It might be a discrepancy in the email used, but in the school community, you guys can use that calculator. I'll use this GPT all the time to find inputs that I don't have too. If I'm in a new market, I want to know what average insurance is per unit. The best thing you can do is call an insurance agent and get a more exact quote. But for napkin math, I'm looking at a new market, I just need a general number to take a first look. I can simply ask it, hey, for buildings in 1950 that have a, say, 40-unit complex in, you know, pick your market, Tulsa, Oklahoma, what are we seeing for average insurance rates in 2025? It'll spit out a price per unit. I use that for my deal. I plug it into the calculator. Good to go. Nothing we do here replaces using the calculator. Nothing in here replaces doing math. Nothing replaces broker or owner relationships. What it does is it speeds up your time between them. It speeds up the information gap so you can analyze, make better decisions, and you can negotiate faster. Being able to do this in real time on the phone is phenomenal. I've actually muted brokers and I said, hey, run this, run the scenario they just pitched me. It will run the scenario, and then I'm looking in real time at the metrics. I can negotiate in real time If you really want to do this smoothly, ask them a question that merits a response. Like, hey, tell me a little bit more about this neighborhood. And as they start talking, I just mute them and I ask all my questions to GPT. It all comes up. I can plug it into the calculator. It's awesome that you can actually negotiate on the phone real time with AI informing all of your answers. Final question we have here is from Oscar. Please tell me about the time you got investor, a time you got investor slash equity partners to invest in a deal with you. What's the story pitch? Picture you painted. So every single deal is unique. Um, I'll share one that I'm just about to release, uh, Robin Hood Village Resort. I bought all the partners out of that, so that is now 100% mine and it is absolutely ripping. However, it would take me out of my saved income to take it from a 3-star to a 4-star resort, which is the vision. It would take me about 2 years. I would like to get through that project faster, so I'll be starting my next set of capital raise. It's sub-million dollars that we're going to be bringing So on this particular investor pitch, the first thing I'm going to do is you're going to share the story. So I want to show them where the Robin Hood's been. I want to show pictures of the, uh, the project. I'm going to show the concerts and the corporate events that we run there, the food trucks, the farmers market, all of the amazing things that we've already done. But 90% of raising capital with investors is finding a deal that people actually want to invest in. You are excited when you see the Robinhood Villagers, or of like, this is cool to be a part of. Same with the 76-unit we just raised for, or the 144-unit that I have in the intro video to this video. If you look at these deals, it's like, this is exciting, I want to be a part of this. And that is the goal. So when you're doing these, uh, absolutely tell the story first. Second most important thing, you're going to always make sure you make it clear how they are backed. What is the equity in the deal? How do the financials stand? And why is their money safe investing with you? It's actually more important to communicate than returns. Now, if you have a deal that people want to invest in and they're confident they're not going to lose money by placing it here, now you explain the returns. And that's like the last 5 or 10% of it. They want you to give them good enough returns because they want to say yes. That's how you raise capital for everything. But it's telling the story that's true for the deal. For Abilene, Texas, I'm going to be showing everyone a whole bunch of slides of the Stargate project. So we are the second closest multifamily building to the Stargate project, a $500 billion AI infrastructure project going in in Abilene, Texas. It's on Old Anson Road. Guess where my building is? We have 144 units under contract called Anson Park on Old Anson Road, and we also are under contract for the senior living facility, 80 units on Old Anson Road. I'll be talking about Abilene I'm talking about how nice the deal is because it is amazing. The property is beautiful. The inspection came back fantastic. But how can you invest in a massive development and new jobs coming in? Well, you buy the housing next door. Now, if this is exciting to you and you're like, okay, well, gosh, I hope the numbers are good. Now I explain the equity stack. I explain how the numbers save. And then I go, hey, this happens to have— until I file the actual thing, I can't actually disclose the numbers because this is not an offer. But XIRR, I'll just give you guys a preview. It's really good, but there's a very high return deal. So someone coming into this deal would make a ton of money. Now they're like, I love the deal. I feel safe in the deal and I'm going to make a ton of money. Let's do it. That's how you raise. Mason, how do you find reputable banks or lenders to get the debt for your first deal? Number one way to do everything in real estate: ask the people who've already built the business that you have— you're trying to build. So ask the neighbors around the property, get to know the other owners in the market, talk to the most connected brokers, ask them who they recommend that you reach out to as a lender. There is usually, almost without fail, everyone in town uses the same 3 or 4 lenders. All the established players use the same people. They're the right banks to use. There's the right people who want to deploy capital. I know in Washington State, uh, shout out to, to Crux as a, uh, as a mortgage broker. So they find mortgages for you. They're the group you get to— you go to to get stuff done. Uh, they're well known, they're well established. If you have a deal that is a little bit more complicated, you need to have second position debt and private capital, you go to Flynn Family Lending. Everyone in Washington State will tell you this. So as you, as you get established, just meet the other players. They'll tell you who to go to. If you're looking for private capital, by the way, they advertise. Go to any real estate meetup, it's the people sponsoring are the people who want to place capital. It's without fail. Biggest hurdle to managing your properties after closing. Biggest hurdle to managing is getting a team that is bought into the vision alongside you. They have to be bought into what it is you're doing and how you are doing it. So if I— like, for example, uh, we just closed on the 76. I'm setting the right staff there because the way it was managed is not the way that I'd manage it. In fact, that's why we bought it. There's the upsides. We're gonna do a better job than the last manager. So my biggest hurdle for managing my properties after closing is making sure my team is bought in, we all understand what the roles are, and since this project has renos and leasing going on at the same time, everyone's clear what roles they own. The biggest problem I've had in a lot of my portfolio is I'll have, you know, as you scale, you have a multi-person team. One person thinks the other person did their job, another person thinks another one did it. I just had this happen yesterday. Where my team thought they handed off a bunch of the maintenance tasks. When we reviewed it, really all they did is they sent one text that said, hey, can you help me with some of these, to another team member. It was not assumed that they now own the task. So going and making sure everyone is accountable for the tasks that need to be done and everyone knows what their roles are— I found that's actually the hardest and biggest hurdle is just becoming a good manager and creating teams. Once you get good at it though, it is— you're just on easy street. And there's so many investors who are bad at it that you can buy deals that are underperforming, just be a little bit better at managing your team, and make unbelievably more money. How do you effectively market your apartments to quickly find tenants? Well, the number one thing— let's see, I just put a few— my PM's been a little bit slower just this, this last season in Moses Lake, Washington. So I find Facebook Marketplace is something you can actually influence yourself. I'll list some of my properties that are going a little slower I'll manage it myself. Let's see if we got any here today. I'll literally, uh, I'll literally share my screen and go to it. Let me pull it up first and we'll go to Marketplace and I'll share screen here in a second. Okay, this is perfect. So I listed one today. I've already got a lead. Share screen again. Facebook Marketplace. Someone named Angel reached out about a 1-bed, 1-bathroom apartment. This is in our hotel conversion. Uh, they had reached out and asked if it's still available, which I think is the automatic thing. I've responded, they haven't responded back, so it's probably just the looky-loo. But, uh, this is a great way to start doing this. I posted this like a couple hours ago and people are already reaching out. Uh, the main thing that you do though is you get a good PM. They're usually gonna have AppFolio or some other software. They're and they're going to push out to all the other listing sites. The way to lease up though, if you're self-managing or if you're just managing your manager, it's speed to lead. If someone reaches out, especially in entry-level housing, if someone reaches out asking about rent, if you do not respond to them almost immediately, you can guarantee they're reaching out to multiple people saying, hey, is this available? Is this available? Is this available? Is this available? If someone gets to them faster and gives them a showing and the place works, they're going to move there. So your mission is to make sure— or your PM's mission is to make sure that that person, as soon as they reach out, you are booking a showing. Notice what I did here when this, this lead came in. I did respond to it. Lead comes in, is it available? Boom, yes it is. Almost immediate. We just renovated and are touring units. Are you interested in renting? Happy to discuss further. Instantly reaching out, trying to get the ball rolling with everyone who comes in. I have alerts set up on my phone. I will kick these to the PM. I also keep my own software, even for Washington State, where I can run background checks and have them do an application and then kick them to the PM. But this is something that you can do actively, super easy. Uh, things like AppFullo, you have more and more listings kicking out to everything— Apartments.com, Zillow. Uh, having a lead source where everything goes into one file so you can then reach out to people is the other way to do it. So Facebook Marketplace plus that. Uh, the third and final thing you can do— signage, especially entry-level housing. Get a big old for rent flag in front of it and a big old sign that has the number that they need to call, either for you or your PM. Make sure people driving by know, hey, this is a place that's available. When a local wants to move, they know that you have a space for lease. It's that simple. Should I recommend using a third-party management for your first few deals? If not, what's the next best thing to do to manage them? I think for your first few deals you should self-manage. And even if you miss out on a little bit of money right on the front end, you're going to learn so much more about managing your manager, about what you need to look for. I recommend people do that. Not only do you save the management fee, it's not that hard to run few units, up to about 30. Once you surpass 30 units, it's time to make your business a business and start hiring the manager. If you follow this step, you'll probably do better than the person who doesn't do it, but you can also start with third-party management, no problem. It's still a viable option. Uh, by the way, before we get too much farther, we have a webinar tonight on creative finance. So not only am I teaching AI on this live, right after this I'm doing a structured webinar for an hour and a half talking about creative finance. I've run this several times. If you guys have attended, it's more or less the same presentation, uh, but you guys are all invited to that. If you don't know how to do this or you've looked into multifamily strategy before, you're like, yeah, is this for me? Uh, we talk about how to buy deals zero down, seller financing. We talk about zero down with the bank, how to get paid to buy deals that pay you forever. The link is below. You guys are more than welcome to register for that. If you want to put up with a full 3 hours of Christian today, uh, you guys can learn about AI here and creative finance there right after this. That starts top of the hour and 18 minutes. I'll be getting prepped for that soon. If you guys haven't yet, join our free school community as well. That's where the AI is stored. That's where I answer most questions. That is where you can raise a crazy amount of capital because there are a lot of investors there. We grow by about 100 people per week now. So, yeah, we just, we just fully optimized school. It just became searchable last week. So if you are ready to join the community, we're already up to 1,700 members. So would love for you guys to be a part of that. The AI and free calculators are all downloadable in there for everyone, not just the mentees. Should you market your rental properties on Facebook? Oh, I obviously answered, uh, answered this question by accident. Uh, yes, yes, yes, yes, yes, and yes. I like managing that because I can respond fast too, so I know this is happening. If you don't have time, don't do it. It costs me nothing to have a little thing on my phone just ding and go, hey, you got a lead, would you like to tour? Here's a copy of the application. Can I connect you with my property manager? It's so easy to do. I don't see a reason why not to do it unless you really just don't like working. What's the best software to use before you hit 50 units? I personally like Buildium. There are a lot of options. My friend Dion and Cody Davis use a software called Hemlane. H-E-M-L-A-N-E. Uh, they're pretty awesome. I just started using them for a side project I'm working on. Uh, but Hemlane or Buildium are probably your two biggest ones. I'll say as a testimonial, Buildium support is fantastic, and I'm not sponsored by anyone. Uh, so that is a, that is a true testimonial of a product I use. Oscar, uh, we should get the seller to understand their property isn't worth what they're asking for. What can we say when the seller is motivated but has unrealistic terms? Well, if there's no seller carry here, the nice thing is you throw the bank right under the bus every time. Hey, I love the deal. I have no problem with your price. Let's use that one from earlier today where we just analyzed it. We found the deal in Abilene, Texas. It works at $3.1 million. They said no creative finance on this. We're not getting creative. Okay, so I do my underwriting. I love the deal. I think it's worth $4 million. I actually agree with you, but The bank is not going to budge with a DSCR where it's at. So either we have to get income up immediately, or we're going to have to bring the price down to about $3.1 million, maybe $3.15 million. We might be able to push it, but $3.1 million is about the most the bank's gonna let me. If the bank's in, I'm in. But the beautiful thing with conventional finance is you just throw the bank right on the bus, because if the deal works, the bank will lend on it. And in today's market Deals where the bank's willing to lend are deals that you should be buying. So, uh, that's the easy way to solve that every time. How do you self-manage and what are the biggest hurdles in doing so? So I do a hybrid model. So I'm not a true self-manager. There's 3 types of management. There's, there's self-management, there's third-party management, and then there's what I do, which is self-third-party management. I have a director of PM. I have a maintenance director. I have a field team, like a regional director for each market we're in, for Abilene, for Waco, for Stephenville. We'll be opening up one here in DFW here very shortly. But I have regionals, then underneath them at the property levels, I have people. We play zone defense, not man-to-man. So I don't have a property manager on every site, but I have actual like leasing staff who actually has offices in these markets, who spends office hours and also does drive around, does the showings for us. You also manage contractor teams. So for me, how do I self-manage? My biggest hurdle is managing the teams, hiring and firing. It's really hard when you're not physically— when you take that step back where you build your team and you step out of the market. I don't do as much of the groundwork, though you guys probably, if you ever watch my Instagram or this YouTube channel, I'm in the field a heck of a lot. But I'm not the one who's doing the repairs. I'm not the one who's renovating. I couldn't fix a tub anymore if I, if I tried. I might be able to, but my days of, of painting and wiring and plumbing are behind me. When I am in the field, the biggest hurdle for me is making sure I have the right people who take ownership of their role, who care about the outcomes and understand the objectives, which is we want to provide excellent housing for excellent people first. Second, we want to make all of our owners the maximum amount of income without being unfair to our tenants, which means we're staying within market rent and we're providing more value than anyone else does at the same price. So it's not saying I'm gonna just lower your rent because I'm a nice guy. No, we have a responsibility to our investors, or in third party, our responsibility to the owners. But it's, hey, if your rent is $1,000, there is nowhere else in this town that you can rent to get the level of service, the amenities you have, or the space you have. You get more with your $1,000 here than anywhere else. That's serving our tenants while still serving our owners. I need to have a property management team who understands the objectives. We do have to make money. We do have to pay payroll. Owners do need to make money or else we lose the job and someone else takes it. So running that balance between tenant and owner, profit and service, and doing it all at the same time and keeping people on mission with that, which means you have to be okay with firing people, which I have had to do this week and will be doing in, uh, in some of the upcoming weeks. We've done throughout all of my companies 15 hires and 4 fires, uh, in the last 7 days. I'm a bit tired, but you asked a question, uh, right in the middle of it, so I'll give you the unmitigated answer. All right, we're coming up on webinar time, so I'm going to speed up a little bit, but I'm loving these questions, guys. How do you qualify or become classified as a real estate professional? It's like 700 or 720 hours. You can look it up, um, and well, actually, while we do this, I'll just type it in the ChatGPT here really quick. It'll answer it for How many hours do you need to be working to be considered a real estate professional for tax purposes? Okay, I'll pull that answer for you right now out of Osgood GPT. 750. I was wrong. 750 hours. The more than half rule. More than half of all your professional services you perform during the year must be in real property trades or in businesses. I have huge advantages to being a property management company in this regard. There is no argument that I do not spend 750 hours and that more than half of my time is spent in real estate. However, it is worth noting that I do run a very large mentorship program. It does bring in revenue. Not— I don't charge as much as other freaks do. Like, people who try to charge like $35,000 for less value than we do, which I think is criminal. But we do have a large program. I have to make sure that I'm spending enough time in the field, enough time in the portfolio to make sure that I get those tax benefits because they actually get to offset my active income. Uh, last year I was able to offset about $1.8 million-ish of active income, which is really freaking helpful. Uh, that's between all companies, and again, it's not just Multifamily Strategy. I have a sales company, a marketing company, I have I have a resort, I have all sorts of stuff going on. We need those deductions. Uh, but that is the official rule here. Um, you double-check this in that— in ChatGPT, but those are the two tests that you qualify with: 750 hours, which is about 15 hours a week in real estate. That's not that bad. That's not even close to a full-time job. Uh, but that's the metric that you're looking for as far as hours. Are you running ads on your listings on Facebook? Uh, on one of them I'm running at $8 a day for 5 days, see what it does. I'll let you know how that, uh, comes back on next week's live at the same time. Uh, we'll run a little beta test to see how this did because since I just got them up again today. Uh, but generally speaking, I just throw them up there. We usually get plenty of action without advertising directly to them. Troy, out-of-state investor here. Troy, good to see you, my friend. Troy's part of the mentorship. 2 years self-managing, I learned so much. Highly recommend doing it on the first deal. I, I, I have to second that one more time. It is— I self-managed my first 2 duplexes, the 38-plex, a 12-plex, and a 10-plex before getting, uh, building professional management. My first property manager, I did not get a reference for. They stole all our security deposits and fled the state along with about 100 other clients. Horrible. I had to sue them. It cost me exactly as much to sue them as it did to win the lawsuit and get our security deposits back. So I still lost all the money, but at least I took the money back from them. Um, horrible experience. Uh, that's where I decided just to do it myself. For 95% of people, I think you can stop at stage 2, which is hire a professional manager, uh, retire from, from real estate, unless you need it to get into the, uh, unless you really need it to get those hours up for your active real estate investor qualification. If you're doing enough time buying and selling real estate like I do today, I probably don't need the PM job to justify the hours, but it certainly doesn't hurt. Makes sense to self-manage if you live 3 hours away. I think it does. I live 2.5 hours away from Moses Lake, uh, where I started my first 100-unit portfolio. Um, it made all the sense in the world for me. I also left my job probably— I would argue probably a little bit too early, but I was like, I'm going to be successful in this. So once I bought the 38-plex, left my job immediately. Probably not the right thing to do, but hey, it worked out. How do you apply for SEC regulation exempt for both accredited and non-accredited partners who are not friends and family? So you want to go through a lawyer, and the lawyer you want to go through is named Todd Robinson. He is on, uh, you can find him on Instagram as Syndication Expert. He actually runs a— he runs a mentorship program specifically for syndications. I've taken it. It is very good. He writes all of my syndications. But you need to make sure that if you are marketing actively a deal to accredited and non-accredited investors, that is a 506(c). There we go. Looking at a camera. 506(c), which is what you are, uh, which is what you're looking to get done. His team will do it better than any firm I've ever worked for, and they'll do it cheaper than any firm. It's usually very expensive to do. Uh, Todd is a very, very, very good lawyer. He works with all the big names. He does not discriminate though. You need to run a— you need to run one, he is your guy. In fact, I like him so much I've partnered with him on a deal. He's going to be running, uh, he's actually one of the partners on this one 44-unit. He is a very, very good investor in his own right. He has about the same size portfolio I do. He's about 400 units in. How do you manage yourself? You don't have regional managers under you? Well, if you don't have, uh, if you don't have multiple regions and tons of properties everywhere, uh, it's pretty easy to do. Most like, I drove out there, I managed the contractors. I was my own GC. I found the people for each thing. And as far as leasing, you can usually do showings with brokers. They'll usually do it for $25 a showing. It doesn't take a whole lot of time. They come in, you put a lockbox on the door, they come in, they type in the lock code, they do the showing for you. As long as the person shows up, you pay them $25. Thank you for your time. It really— especially with younger brokers who are building their portfolio, it's a little thing they can do for, you know, 15 to 30 minutes of their time that can pop out and help you lease. So I get an army of those for showings. Uh, contractors— you find a few of the best ones in town, you coordinate all the other ones yourself. You put together your, your roster of vendors: electrician, plumber, handyman, general contractor. Go 2 to 3 deep on each of those, get your little list. Everything that comes up, there you go. Uh, get a free Google number for your tenants to text in and get software to run, uh, background checks. And rent collection such as Hemlane or Buildium or Appfolio. There's, there's hundreds of them out there though. So Appfolio is the most expensive and most robust. I use that, but we are a premium product. We also do asset management, so we'll take stuff down to the LLC level and do waterfall distributions for people. We are a, uh, we are a full-service big kid property manager. Um, for, you know, self-management or even just basic property management, AppFolio is probably, probably not the software to go with, just that it's so robust and so pricey. I actually do like this comment. Uh, this is true, so it is not a question and is what we'll end on here today. Warren Buffett just bought a ton of real estate. Uh, he's, uh, banking on rates dropping. Now is the time to pounce on investing. Oh my gosh, yes. While rates are still high, we still have the pricing restrictions for conventional debt. I am doing so much zero-down bank debt right now, specifically because the opportunity is here. I have bought in multiple— most years I buy about 100 units a year. I'll buy about 400 or 500 units this year because this is the end of the time to load up. 2025, from right now to the end of the year, is our time. Which is a great place to close because running a webinar on exactly how you can buy these, uh, link is below. You guys can register for that if you'd like. If you're already in the mentorship, don't bother. I cover this stuff all the time and there's a 50% chance that the group will just kick you out automatically because I don't want everyone attending the same thing every time. I'd rather just coach you guys myself. Uh, but webinar is running, uh, here in 5 minutes. I'm gonna go get a drink of water. Oh, actually I'm gonna refresh my coffee because I just ran out. Uh, guys, that is AI. I hope you enjoyed the hour here. We are back on the live's regular schedule, so I expect to see each and every one of you next week. Like, subscribe, do all the things on the channel. We appreciate you. I'll see you on the next episode.