In this conversational YouTube episode, Christian Osgood and Cody discuss their ongoing flip of a 38‑unit apartment building in Moses Lake. They detail the hands‑on renovation work—complete demolition of three units, installation of granite countertops, under‑mounted sinks, new appliances, and replacement of leaky water heaters—while emphasizing the need to overhaul the property’s culture and reputation, which previously included a homeless encampment and severe maintenance issues (e.g., a septic system that was not properly pumped, causing sewage backups). The hosts explain that shifting the culture through high‑quality upgrades is essential for increasing net operating income, lowering the cap rate, and boosting the building’s value. They also touch on a small land sale to the city that will help recapitalize the project, and they stress the importance of branding for attracting tenants, investors, and future sellers. The episode concludes with advice for younger investors to focus on building a reputable brand, using creative financing responsibly, and delivering a superior tenant experience to enable scalable growth.
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Hello YouTube, it's Cody and Christian again. Today's topic, we're talking about episode 2 of flipping a 38-unit apartment building. We have had a couple of recent updates, the biggest of which being we are renovating a few of the units. Cody, what are we adding to these units?
So as of right now, we've gone through complete demolition of 3 of the units down to the studs, and we're going to be completely changing the feel of this. Now something that we figured out is that it is a little bit difficult to culture shock an environment, meaning that you find a place that has a reputation, it can be really hard to change the reputation of that location. And so what we've had to do is we've had to do everything as good, if not better, than the brand new complexes that are being put in around the surrounding locations. So we've gone down bare studs, we're going to be doing granite countertops, like new everything, under-mounted sinks, It is going to be amongst one of the nicest places in Moses Lake, and our goal is to really change the culture. When people go there, they're like, wow, someone really cares about this.
What we're trying to overcome is the property before we took it over, it had a homeless camp. We have them off now. Uh, it has junk everywhere. We have got a good chunk of that junk gone. Oh, leaky basements, water heaters are being replaced as we speak. I believe one of the units is already completely done. And tomorrow we choose the stone for the countertops. The culture there has been very rough. Uh, in fact, we had an interesting scenario while I was out of town. The septic, which we were told was pumped, turns out was not pumped. We had poo coming through the bathtubs and the toilets.
Less than ideal, to say the least.
It's— when you're rebranding an apartment unit and you're creating a new culture, poo coming through the pipes is not the message that you want send. Now, of course, this happens on a Friday night when no one can get out there, so it happened for 3 days. This is the type of stuff, the type of stuff that you need to overcome. So we're gonna make a show of getting in new stoves to everyone, new fridges. We're gonna make these units excellent, uh, but it's a journey, and that's, that's what we're learning. It costs a little bit more and takes a little bit more time. It's a lot of effort to flip a 38 unit.
And if you're going to start doing this yourself, whether you do it with just a duplex, whether you do it with a 4-plex, an 8-plex, a 30-plex, whatever size of building, just understand that your number one goal, at least our number one goal when we're looking at something like this, is to completely shift the culture of the property. We're going to go find a property that's a little bit run down, maybe the owners haven't been able to keep up on management and keep up on the deferred maintenance, so you have an opportunity to really improve someone else's lives, and in the process you get to make money. We'll go through how that all works, through how the math works in a future section, because if you can increase the net income, you can increase your value. And if you can lower the cap rate, which this is getting a little complicated, but if you can do that, your value goes up. And the way that you do that is you improve the culture of that property and you give your tenants a better place to live than they are used to living in.
Yeah, and this one's a cool property, right? I mean, we control a high-traffic corner of Moses Lake. We just learned that the city is gonna pay us a little bit more than I thought to buy a little chunk of land from us. Our little sliver of land is gonna help recapitalize some of our projects. But as the area comes up, especially on a— 38 units is a sizable project for people our age. Investors in the town are watching what we do with this. So the branding piece is really important.
And at the end of the day, if you get anything out of this, as you start your journey, especially as a younger investor. We've talked about this in the past on this YouTube channel, but you want to grow your story. And part of that is through branding. How are you going to be recognized by your tenants? How are you going to be recognized by investors in the area? If you're going to be recognized as a slumlord, you're making more money, yeah, maybe in the meantime, but that branding is harder to scale. So if you give people the best place you can, and you give them an affordable rent, it's going to allow you to scale up quicker. So just tip of the day, really focus on building a brand that you and your family would be proud of, because in return your tenants are going to love living where they are and you're going to create a better space in the community.
Last point I'll make, when you're using creative financing like we are and people are watching what you're doing, if you do a great job of this and they see happy tenants on a nicer looking building. If you improve buildings and do a good job, sellers know that if you do a lowdown situation, they have to take the property back, they know the quality of work that you're putting in. They're gonna be much more likely to work with you. A lot of reasons to do things right, but if you're going to do it, make a great place for your tenants to live. They'll stay and they'll love living there. It'll be good for them, it'll be good for your brand, it'll be good for your future business. It is worth spending the money to do everything right. That's what we're learning here.
Um, follow along for next steps on how we're flipping an apartment building, what we're looking for, and we'll see you guys next time.
