In this reaction video Christian Osgood and Cody break down the mechanics behind their acquisition of the Robin Hood Village Resort in Washington. The resort was bought for $4.5 million, financed with a $3.5 million seller‑note and a $1 million down payment. They explain why the sellers agreed to finance – to meet a $1 million cash‑out goal, spread tax liability, and secure a retirement annuity. The note carries a 4.25 % interest‑only rate (about 2 % below market at the time) and a term of eight years. To avoid negative cash flow in off‑season months, they pay only interest monthly and make a $225 k lump‑sum principal payment each year after the busy summer season. The hosts also discuss raising the remaining equity: they secured investors who provided roughly 60 % of the asset’s equity, using a cost‑segregation study to accelerate depreciation from 27.5 years to about five, allocating tax benefits preferentially to investors. The overall philosophy emphasized fixed rates, timelines, and prices to simplify cash‑flow planning and debt management. The video concludes with a reminder that the structure is complex and not intended as a template for viewers.
Chapters
Fixed rates, fixed timelines, fixed prices. You need to know what you're aiming for and when.
Today we're doing a reaction video. We had a bunch of questions on our 7 figures in 7 minutes short where we're talking about how we came up with multiple 7 figures in 7 minutes. Let's talk about that.
Hello everyone, I'm Christian. This is Cody. Welcome back to the channel. If you haven't yet, please like and subscribe because we do this 3 times a week and here we Go. So on the 7 figures in 7 minutes, which we did 2 times on the same transaction, we had a lot of questions around what were the actual terms. If you guys haven't seen that video, we actually did launch a full-length video, uh, sometime last month. We will link that below. But a lot of the questions were around the seller financing. What were the actual terms of the deal? Now, we bought a resort. It's called Robin Hood Village Resort. It's in Union, which is on the Hood Canal in Washington, probably the most quintessential Pacific Northwest place in the entire state. Maybe Mount Rainier can compete, but we can debate that at another time. You got the water, you got the woods, you got the mountains. It is beautiful. The resort itself was $4.5 million with $3.5 million seller finance, which is a bulk of the money. So let's talk about how we put that together before we get into the details of the cost of the money and the structure. Why were they willing to seller finance $3.5 million to us?
Well, they were leaving the country and their big thing is they wanted to leave with $1 million in their pocket. That was the biggest part because they bought it for less than $1 million. So their thought was, if we get $1 million, we basically just get annuity payments and we get all of our original capital back, which is a phenomenal place to be. The big reason that they did that is, number one, they could break up their tax obligations for receiving all the capital up front. They get enough money to go live their life. Get their dream house in Costa Rica, and then they get their monthly payments, which pays for their lifestyle.
And I've seen pictures of the house. It is a beautiful house.
So I'm going to say congratulations.
Yes, the transaction did hit their goals, which is the first and most important piece when you are negotiating anything. You need to understand what the other party wants. Now, in conventional finance, you can't modify a whole lot other than the price. So if they want anything other than a certain price and a cash out, you're probably out of luck. But in seller financing, you do get to negotiate all of your pieces. So that was one of the key pieces. The reason it was $1 million down was because that hit their primary goal. Now we get to talk about, okay, what was the actual interest rate, the cost of capital, how long of a note do we have on a huge resort? Let's get into some of that. Interest rate on this particular deal, oh, we were at 4.25%, which is phenomenal because at the time rates were still hovering around 6.5%. So this wasn't— we didn't pick it up all that long ago. So this was about a little over half a year back now. We came in about 2% under market rate for interest. It is interest— it was serviced as interest only.
And the reason we did that with hospitality, you have ups and you have downs. And so the summers are really great and the winters are hard. So we didn't want to have an amortized payment because then we're going to have a higher payment every single month, and then we'll actually be negative cash flowing really hard in the winter and not cash flowing as great in the summer. So what we did was we did interest only so that we can go through winter and summer and cash flow through all of it. And then at the end of every calendar year, we have an additional down payment that can be serviced by all the cash flow. Everything that we do in business revolves around positive cash flow. So what we built was where we can get collective average, more cash flow, stack all the cash, and then make one lump sum payment so we're not negative in the winter and positive in the summer.
Now we are pacing fantastically for being able to hit the next piece, but instead of doing the, uh, the amortized schedule and bake it into the monthly payments, once a year after the busy summer month, we have, uh, $225,000 in principal pay down. So it's like we, it's very similar to us doing an amortized schedule where we actually do pay off a big lump sum of principal, but there's two reasons that this is really helpful. One, the lump sum's due right after the busiest part of the year where we have the most income. So it makes it very easy. We normalize the whole year. We have the down season, the up season. We have our full year's books and we go, okay, now we have to pay the actual price. Also, we're doing extremely well. We're on pace, we're gonna do just fine. If we were wrong about any of our numbers and we set this up and we had to bring in additional capital, if we averaged it throughout the entire month, we'd have to be figuring this out every single month. Where's the money coming from? Are we gonna be short? Are we not gonna be short? When it's one lump sum, if something went awry and we had to inject additional capital, we have time to cash flow plan, which as Cody said earlier, is everything. The real estate game is a cash management game. When we have a simple target at a fixed price at a fixed period of time, I can plan my pieces to be ready at that time. So with a deal like the Robinhood, that is most of what we did to structure the debt is you have a simple interest rate that works where it's going to cash flow throughout the year. You have your actual principal lump sum that we're going to be paying down on this particular one. We hit their million-dollar mark, $3.5 million. The last thing is the term. What term is the note and why did we need that amount of time for this particular project?
We asked for 8 years and we got 8 years. Originally it was going to be 7 and we got it pushed back to 8, but within 8 years we can absolutely, without a doubt, pay off the Robinhood.
If you own an asset like this in cash, you're pretty much done. Like, a piece of real estate this size is enough to be our retirement when owned in cash. And that's what it was for the original sellers. Their escape to Costa Rica, their monthly payments for the next several years, this is enough to retire pretty much anyone, and it's one of many assets.
That's why we really love paying down some of our bigger stuff, and that is why the debt hammer is one of our favorite parts of the cycle, because it's fun to build the portfolio, it's really fun to buy it, but it's really fun to own it, and we're pushing to that right now.
Now we had a lot of other questions too on the other side, the other million dollars we raised. How do we actually bring in the down payment? I'll give you some of the simple structure. There is actually more complicated than I think I want to share because I don't want people trying to recreate it. I regret how complicated we made some of the tax pieces of this. We got creative with the special allocation of tax, all legal, all a pain. So I don't want you to listen to this video and try to copy it. The nuts and bolts of what we did, though, is we backed it by 60% of the equity of the asset. We found investors who wanted to park capital for a while. They actually had additional capital and they wanted a deal that was big enough where we're going to be running what's called a cost segregation study. Essentially, we're taking the 27.5 years of depreciation and compressing a vast majority of it down to 5. So we have accelerated tax benefits. We share those specially allocated, weighted towards them in the actual operations. We take the business write-offs, they take a majority of the real estate write-offs. But that's what we are looking for. The big pieces of this is within 5 years, we will be able to pay them out completely. They're off the deal. We own 100% of it. It's at a fixed time, at a fixed price. And that is the biggest thing when you're managing any of your debt, any of your capital. Fixed rates, fixed timelines, fixed prices. You need to know what you're aiming for and when.
Yep. You don't want variables in this game. And people are variables. So we made one phone call, one coffee meeting, and lined up the whole million dollars.
And that is the nuts and bolts and the actual numbers behind what we did when we raised 7 figures in 7 minutes, 2 times over. Thanks for watching. Please like and subscribe for more. If you guys have more questions— we don't do a lot of reaction videos to our stuff, but if you guys have a lot of questions on any specific topic, topic that we've ever covered, please let us know and we'll shoot a video just like this and go deeper into depth.
