How To Structure Creative Partnerships

Hello, YouTube. Today I present to you a magic trick. By the end of this video, you'll be able to fund any deal, creatively financed, bank financed, without any money, any credit, any of the things that everyone promises you. But I'm not going to talk about creative finance today. We're going to talk about creative equity. If you can structure the final money creatively, you can buy literally any deal. The banks can't stop you. The lenders can't stop you. The brokers, the sellers, nothing can get in your way. The most powerful piece, it's not actually creative finance. It's creative equity, and I'm going to share exactly how we use it and how you can do it to buy a portfolio that ends with you having all the real estate and no partners. Sound interesting? Enjoy. So by the way, why listen to me? Well, I'm Christian Osgood. I've bought over 400 rental units in the last 5.5 years and a seller-financed resort, which is hosting some epic events and concert series right now as we speak. I also own a couple of property management companies, multiple other businesses. I have an idea about what I'm doing in this particular space. Over 31 transactions has got me to where I am today, and I'm gonna share the best of the best. Now deals can be structured with multiple financial structures. So I did the first 17 out of 21 deals were seller finance. That was a lot of the money came in through creative finance. But to close those, if you don't have any money, you need to bring an equity partner. So you have to structure what is it that they want? What does the deal bring? Of course, I'm gonna say it, we follow the order of deal, then debt, then equity. Find an opportunity, find the debt product, which was the financing, and then after that, You have a deal that either has a lot of cash flow or a lot of upside. If you have neither of those, turns out you don't have a deal. But if you have an opportunity that makes money, you need to find how does it make money and who, what type of investor would be attracted to this kind of deal. How do I reward them? But more importantly, how does this allow you to buy anything? How can you bypass the banks? How can you beat them at their own game? It's all about building the team. So First step, you do the deal, you find the actual opportunity, you get it under contract, you line up the debt product. Okay, we now have a package. We know what we're selling. When we go for the equity, you're allowed to borrow their cash, their liquidity. Many banks will look at this. They want to know you have the net worth at least equal to the loan. They'll want to know, hey, what experience do you have operating these? If you're new, you're like, hey, I am all in for this business. I'm going to buy rentals. I'm running the portfolio. But how do you get experience when you don't have experience? It's a heck of a lot like how do you get the first job when every every job requires 3 years of job experience. You have to grind it out. You get it. You can borrow the experience. You find someone who's done the thing that you want to do. They usually have more money. They usually have a higher credit score than you, and you add them to your team. But we're not going to keep them there. We're going to temporarily put them on our team and we're going to close the deal. So we've borrowed anything that we're missing— the cash flow, the liquidity, the credit score, the experience. We have built an ownership team and the total amount of money to close the deal. Here's what you're going to pair that with. Without exception, you're going to put an option agreement in place. Now, if you have a wonderful partnership and you want to extend it or do more deals with them, guess what? Option agreements are optional. You don't have to buy out the partner, but you are going to secure your position by agreeing with them upfront. What is a reasonable return where you would allow me to buy you out on this deal within a fixed period of time? And so for many people, If you can in less than 5 years double their money, they're very happy to do that deal. If a deal has a lot of cash flow, that future buyout of course gets lower because they get paid more while they hold the deal. But I'll structure a deal, say, just as an example, in year 4, I will be able to return double your money. I need $100,000 to close this deal. I selected a bank finance deal. It wasn't seller financeable, but $100,000 gets us an opportunity to make $500,000. At this time, I'm going to refinance the property. I'm going to pull out, let's call it $250,000. Of that, I'll give you $200,000. You will double your money in 4 years or less. So I have a 4-year option contract, which gives me the exclusive right. Only I can buy them out at this fixed price at a fixed period of time. Guess what? If we outperform, I just got that much of a better deal. They still doubled their money. We've made an agreement where they are happy. They now exit the deal. The real estate, the refinance bought the real estate. I now am holding what I started with no money. I am now holding a property I didn't previously have. That property is still cash flowing on the new debt. Otherwise the bank would not have issued the loan, which means I have got an income stream I didn't previously have. I got cash out of the refi if there's extra cash, and I get to hold a property in my portfolio indefinitely with or without money. Experience, credit. It is the simplest of all magic tricks. And there are so many videos online going creative finance, finance, finance, finance. Creative finance can open a lot of awesome opportunities and it can make deals work that wouldn't otherwise have worked with the bank. But at the end of the day, creative finance, bank finance, hard money, if you have a down payment or you're lacking credit or experience, the easiest answer is a temporary addition. To your team. Put the members on your team who have that experience. This is why I think it's so important to go out and meet the people who've built the business you want to build. Those are the people who are going to help you move forward. Practical example, Ethan and Eddie, some of my earliest mentees, they bought an 11-unit by themselves. They bought it 100% financed between the bank and the seller, 50% bank, 50% seller. They funded their own renovation out of working a 9-to-5 in their own company cleaning the floors of an airport. They started a cleaning business. They used the money to fund the rent out. When they finished this project, they did a refinance of $750,000 tax-free dollars pulled out of their portfolio, and they used that to buy a 44-unit all by themselves. They turned 11 units into 44 units, but the bank said, hey, you can't buy a deal this big. You don't have the experience. You don't have the net worth. They added one mentor to their team. It wasn't me. They added another local investor, a personal mentor of theirs was added to the team for 10% of the deal with an option to buy them out in the future. This has allowed them to go to an 11-unit that they own by themselves, a 44 that they own 90% of with an option to purchase the last 10 for a nominal amount. They gotta borrow the experience, they gotta borrow their credit score, and all they had to do was just build a team to tailor to what the bank's asking for and get a yes. Short video today, but this is one of the most important things in real estate. If this helped, please like and subscribe to the channel. It's appreciated. We get this out to more people, including you, if you actually watch and engage in the video. You have any questions on how to structure equity or what these returns look like, let me know in the comments. I'll answer every single question. And if you want to join us on our live Wednesday, we go live every single Wednesday, 5 Central. I'll answer your questions there as well. See you on the next episode.