How We Make our Next Million - Creative Finance Live

All righty, we are live again. As everyone joins the chat, which should start at about 0 people, we'll pick up as we go on. We're going to do the same format that we always do. We're going to talk about a structured thing, a topic of the day, share some of our experiences, share some of our adventure, and then as you all start asking questions, we'll start answering those questions, and we will go until the questions stop, which is the rules of the game. So excited for today. The topic for today, how we're making our next million. For those who haven't followed the adventure, I'm Christian Osgood. This is Cody Davis. We are the host of the channel. We've built about a 200-unit multifamily portfolio. We have a seller finance resort. I run a property management company. The two of us run multifamilystrategy.com. We have built six-figure businesses, seven-figure businesses. And the question is, how do we make our next million? Which is really important because we have well over a million of projects that we do in fact have to make that million for.

And the next million that we're each going to make, because it's cool if we both made a million rather than us splitting a million dollars. Yes, we are buying some hotel conversions. We bought one and we have offers out on another two. The beauty of those types of deals is typically you're buying it half of what it's worth when it's done. So if you want to become a millionaire, you buy a million-dollar property with a path to get to be worth 2. Well, we're doing exactly that. We're buying a project for about a million and a half with the value add to get to be worth north of $3 million, and we're doing 2 of those deals. So that is our mission right now, is to go get some massive value add so we can get the race to $10 million.

Now there's different pieces on how we make these multiple million dollar plays. Um, so Cody, in this iteration of our business— because each business cycle you want to make sure that you have the right players in the right seat on the bus— Cody, what is your primary role for yourself during this multi-million dollar run?

Well, my goal is to get some buildings on my own, but also we're trying to get liquid because we've got an investor we need to pay off in the next couple years, and that's going to be a check we have to write for $1.1 million to buy out an investor on the Robinhood Village Resort. If you want to stay there, robinhoodvillageresort.com, you should check it out. But we've got to get very, very, very liquid, so we're doing massive value adds so we can pull out tons of cash on cash-out refinances against stable multifamily assets so that we can pay down our investors and our debt on the variable income Robinhood Resort.

Now, the fun thing with Robinhood Resort and any of these buyouts is while it does feel like, oh my gosh, we have all this cash that's to go somewhere, it's turning cash directly, directly into equity. It's not going into principal paydown. We're not just paying off a note. This is—

we're buying back our equity position.

Yes, we bought a property, a $4.5 million property, $0 out of pocket, and we have operated it for years at the time of buyout. And that will be the time where we go, okay, our— this is essentially— this is us paying our down payment. We had 3 years of operations and savings to put money into the property. We are buying the equity, and we will be the owners. Of the Robinhood Village Resort without the partner.

Yeah, without any partners.

It'll just be us, 50/50, which is the right place to be on a large resort that is going to be about halfway paid off by what it's worth. And what will be about 50% LTV on it at the time of buyout.

Now, uh, if you want to go buy— we call it the stupid tax— you want to go buy things and you don't fully understand them. That was us when we bought the Robinhood. We didn't fully understand hospitality, and we also didn't just start with an Airbnb. We started with, uh, you know, about 20 of them because we bought the Robin Hood, which had 17 cabins, and then we bought the triplex next to it. We learned through what we call the stupid tax— we have to buy a bunch of multifamily and make all these millions outside of the Robin Hood so that we can actually pay that stupid tax.

Yes, the Robin Hood is a fan— actually fantastic deal if you look at the actual price and what we actually bought. The problem with the Robinhood is wrong deal structure for our current business cycle. If we were farther along and more liquid, it would have been the right structure.

It'd be great if we bought it like a year from now.

Yes. However, that's not what we did. So we did right deal, right property, wrong time, wrong structure. Should not have done hospitality when we did. Should not have structured the deal to pay it off as fast as we do. That being said, the good news is a lot of this money is going towards actually paying off the deal, and once it's done, it's done. And I will say this, that resort with no debt on it, with no partners, and retire both of us. Yes, Cody and I could be done now. Of course we won't be because we have too much fun on this adventure and we love multifamily. Yes. So Cody's focus, very similar to my focus, but Cody is going out and he's going to buy some properties on his own and we're going to continue our property, our partnership until we hit the goals that have been set out, which the first goal is retire Cody's mom, retire my wife.

We have the money to do so and we need to rip out about $2 million liquid in the next year and a half to hit all of our goals.

Our last goal together, which would be phase 3, is Cody and I will sit down and figure out what does it look like to actually eliminate all the debt in our joint portfolio, and we will accomplish that. And that is the last thing that we have planned. Does not mean it's our last adventure, but that'll take a lot of years. So we are, uh, we have an 8-year trajectory on that. So I do it faster, we may do it faster. However, uh, you guys will all be along for the ride on this channel the entire time. My role throughout this, and my wife's role because we operate as one now in the companies. We stabilize everything that's brought on as fast as humanly possible. That means I am focused heavily— while Cody is doing some deal finding, I am focused very heavily on building the people, the infrastructure, the planning, and the systems that go into actually taking these and making them make money. The projects that Cody is bringing on make millions of dollars only if you complete the project. That is not saying that I'm not finding any deals, and that's not saying that Cody's not doing any, uh, any work on the properties. We were in Moses Lake together, him and I throwing blood-stained mattresses over a railing last week. Found dog poop underneath one of the beds. Um, we are turning some nasty properties manually into rentable spaces. Got 4 units available, which is about another $4,000 of revenue.

That's whatever it takes, you got to get it done. Yep.

But that is what we're working on. Cody is going to be finding the deals, I'm setting in the operations so we can come in, execute, pull pull out money, which will be the second phase of Cody's thing, is he runs point on the bank stuffs. And, uh, Cody finds the deal, I work the middle, Cody works the end, and we pull out money, pay off debt. That is how we make our next few million. We have a few other strategies to make your first million, which we will definitely be sharing in here. But per the rules of the game, put your questions in the chat. We're going to be answering them, and we'll give you guys about 5 minutes or so to do so. In the meantime, Cody, where— what are the— I was gonna say the other ways to do— to make a million dollars in real estate, but I'm going to rephrase that. How did we make our first million dollars in real estate?

Well, we bought a building that could make us each a million dollars. We figured, you know what, if we want to be a millionaire, the quickest way to do that is to buy a deal big enough, which was 38 units, and it was a value-add opportunity. They did not have any books on it. So we got a decent price for what it is. However, it wasn't cash flowing because nobody was paying. We had to fix the management. We had to get people caught up. Some of that was through government programs. We had to get consistent books and great accounting so that we could actually peg a valuation for an appraiser. And, uh, within 2 years— it was less than 2 years, 18 months— we doubled the valuation of that building. Bought it for $2 million, got to be worth a little over $4 million, and we each had $1 million of equity. But it's not like we had to put a ton of blood, sweat, and tears into that project either. We just had to get income coming in. The more income that you can get something to produce, the more it is worth to the organization or the next person if you're looking to sell an asset. So anytime you can optimize an asset, a property, get more income coming in, which is what we did— we went from next to no income to a rather large amount of income for that project. Valuation skyrocketed. They had terrible collections and terrible management. We had good communications with the tenants, got them new appliances if they needed it, fixed things as they broke. And imagine that, people started paying.

It's a miracle.

All the new income increased the valuation of our project and doubled the, the actual value of the asset. You don't have to make it rocket science. It's a very simple model: buy stuff, make it produce more money. Spend less money on expenses, and you have more value.

Now, that is how you make a million dollars on the first two phases. So you have your build phase where you're actually buying the property, and you have the stabilization phase where you actually stabilize it. That's where you get your new value, you can pull new money, you have the million dollars— in our case, $2 million split amongst two people. Now, we did this multiple times in our portfolio over the last couple years. Acquiring either assemblages of smaller properties, acquiring a resort, however you wanted to put together the transactions. We acquired enough so that when we are successful in our projects, we have millions on phase 1 and phase 2. Now we have a 4-phase business cycle. Optimization is another place where you can make a lot of money. In optimization, these are the things you don't need to stabilize the property, but they're the upgrades where what things could you do to increase rent by, say, $100? And if you've built in the build phase a 1 or 200-unit portfolio, every $100 goes a long ways. Mm-hmm. You're talking, uh, another $100 over 100 units. That is what we call a lot of cash flow. Those things can be done over things.

Good math.

Yeah, lots of cash flow. That's all the math you need. Uh, more money means more money. If you can add to the top line without creating recurring bottom line, those are the optimization pieces. So it could be something like upgrading the heaters to mini splits across your whole building. You lower your utility bill, so lower expenses and increase the value to the tenants. Now, is that going to make you an extra $100 in rent? No, but that could save you $20 on the electric bill and it could, you know, make you another $25 to $50 per unit for the amenity. You do those little optimization pieces after you've built, you get another round of making millions on your portfolio.

Yep. And make sure that the, uh, the opportunity you're looking for is in the area you're looking for. You can't just expect to make a million dollars on a single-family house, probably not going to happen. You probably got to buy a little bit bigger. And so make sure whatever you're searching for, if you're trying to make $100 grand on your first deal, I'd say go bigger because $100 grand isn't going to do you much good. You may be cash flow $5 grand, $6 grand a year on that, which is exciting, but shoot a little bit bigger out of zero and make sure that the deals you're buying and looking at can actually get you what you want if they went well. Now we've got some questions in here. One to ask: high-level outline of your screening process for tenants.

Oh, okay. So tenants, you're going to want to run a background check. You want to make sure you know who's in your buildings. One of the huge things for us, especially because we do a lot of value-add, is like we picked up the building that I am quite certain has had more murders at it than any other building in Grant County. Um, I, I haven't verified that statistic, but I'm very confident.

You don't know that for a fact?

I don't know that for a fact, but it's probably true. Um, it used to be outside of city lines, so cops had trouble getting there. It has been incorporated into the city. However, dangerous property— when we're placing tenants, we want to make sure that we— if we're especially for removing dangerous times, we want to replace them with safe tenants. So your general criminal background check is extremely important. Uh, credit score and just credit checks are very important. We want to make sure they don't have any prior evictions. We've had people that make 6x the rent on a monthly basis who, when we did a check, uh, they owe their past two landlords money and they've narrowly dodged eviction, but they have a ton in collections. Not someone I want to rent to. Are they capable? They have no criminal background, they have, uh, the financials to do so, but they don't have the credit history. So those basic checks— we are in Washington State, so we're very limited on what we can and cannot do.. But on a basic level, who is in there? Are they dangerous to your knowledge? Um, does their credit look acceptable? And, um, do they make enough? We like to see— at least I like to see— 3 times the— they make 3 times what their actual rent is, is a really good metric.

All right, from George Evans: Will you ever go into different asset classes within real estate? Very likely. We'll buy more hospitality businesses, more of the niche resorts around the, uh, in the United States.

And we will not do that right now. We started that project too early. We will develop systems that will carry over to other properties, but that, um, don't do multiple models at the same time.

I'd like to buy a castle, but that'll also fall into the short-term rental type of project. We're going to keep buying multifamily, and we're going to pay off our multifamily. If we had no debt in our existing portfolio, we could go do a very adventurous project that we haven't done before. Open to storage, but we're going to stick with multifamily because we know it works and it is a staple to our investment journey.

Mm-hmm. By the way, I'm in for the castle. Cody wants to buy some stuff by himself, but if we do a castle, I would—

the CCC. Yes. Cody Christian Castle.

Yeah. I would love the project. That'd be fun. Castles would be good. Vineyard would be good. We've seen some cool vineyards that come with hospitality as part of it, and they'll be like cabins on a vineyard. Some of those are really cool.

But however, if we commit to buying a castle or a vineyard, folks that are encouraging that have to come visit and stay for a night.

That is a good point. Now, there have been a few people from this YouTube channel who have attended the Robin Hood events, but for the amount of people been excited about us buying the Robin Hood, I'm gonna say most of the names here have not yet showed up at a Robin Hood event. So see you there. You're now all committed. All of you who said yes to the castle must first come to the Robin Hood.

From Salim, where'd the money come from to rehab the 38-unit project? Well, the first bit of money came from the government. We had these things called tenant ledgers with a whole bunch of back due rent. We took that to housing authorities, and the housing authorities paid the back due rent so the people didn't get evicted and go homeless. That brought in well over $100,000 of capital. Which doesn't suck. That went straight into renovations. We got back to rent for a lot of people, and that was money now into our pockets that we used to renovate the building. From there, once we got stable books because we got all our tenants caught up, we ripped out about $300,000. I think it was like $280,000 on a bank loan. We got our first loan for $1.25 million, or $1.9 million and a quarter. And we pulled out a bunch of money, had six figures hit the bank. Used that to renovate the asset, and then shortly thereafter we got it even more stabilized and got a loan for $2.3 million and finished the rest of it out.

There are many ways to do the renovations on a value-add project if you're starting with no money. Um, the way that we did it was simple— is probably the most expensive but a very simple way to do it, where you essentially improve the asset, refinance, improve with the new money, refinance again. You kind of just do it in tiers. And by kind of do it in tiers, I mean that is exactly what you do. The other ways you can do it— because the answer is, how do you do the renovations?

With money.

Where's the money come from? Somewhere. A good process is to raise the money up front. And I think in retrospect, that's what we should probably should have done, is start— instead of doing the multi-refinance, start with the first $300,000 in cash from raised money. So instead of raising $300,000, we should have raised $600,000. $300,000 would have gone very far on the renovations, and we would have done a bank refinance out of those. It would have gone faster, which in our rate market back then means we would have actually been able to lock in a lower rate than we did on our refinances. That is one way to do it. The other way to do it is you buy a property that cash flows really well and you just accept like, hey, there are some things that are going to get fixed over time, uh, and you go, hey, I'm intentionally not going to cash flow or pay myself at all from this property. It's going to 100% reinvest, and whenever it has enough for the next project, the real estate can pay for the real estate. Those are the three main ways to do it. Do it as debt up front, do it out of refinances along the way, or do it straight out of cash flow.

Our next question— and if you wouldn't mind hitting the like button, that would help us out a lot, would really appreciate it.

Yeah, 2 likes for 18 people. Come on, friends, help us out.

Do you analyze a deal prior to calling the owner? No, because my objective is to meet with them over coffee, learn how they got to where they're at. There's no deal to do numbers on. I'm identifying they bought some stuff that I haven't figured out how to buy before. But that's the reason I'd like to meet with them. I'm not trying to buy their property. If you are, you should probably do the numbers up front if you plan on making an offer, but that is not our business model.

Yep, it's deal, debt, equity. But to get a deal, you need to know what the other party wants to do, and there's no deal on the table unless someone else brings up the deal. I do not like to be the one, and we rarely are the one who proposes a transaction. It is typically someone is either found a deal that is not right for them and they call us, which happens all the time because they know our goals and not every deal is right for every investor. Or they hit a point in their career where they're like, you know what, I am actually ready to unload some of my smaller stuff, or in some cases all of my stuff. I like the way you guys operate, I appreciate our relationship, I would like to sell it to you. Which is why so many of these opportunities sell off market. Deals happen when you have relationships. The best way to say it would probably be It needs to be our DDE: relationship, deal, debt, equity. That is the actual cycle that we follow.

How do you make sure a property is unencumbered? Well, when you're under contract, you go through a title company to make sure that you get free and clear title. And then, do you only take on unencumbered properties? Yes, we don't leave their debt in play. They have to provide free and clear title. Any word of advice for building courage and calling owners and brokers. When I had Christian make his first call, he was very nervous. I know the building that he called, I know where we were at when he called it, and I said, it's either going to go well or it won't.

And I want to point out, courage doesn't mean that you're not afraid to do something. It encourages doing things that you're afraid to do. As far as doing that call, for all the things we do, we've done a ton of things wrong, and we share those all openly on this channel. Uh, Cody said call this owner. I picked up the phone and called the owner. I had no script, I had no plan, I had no idea what I was going to say. I did know that there was a chance that they'd pick up on the other end of the line, and the call went terribly. It did. And that was fine.

And that was—

it was fine going in, it was fine going out. I got better at doing these calls by making the calls. I had this question yesterday, one of our mentees called and like, I don't want to ruin any leads. Like when I have an opportunity, I don't want to go bad. I'm like, well, bummer, your first few will probably be bad. I'm— I've made, I don't know how many thousands, it has to be tens if not hundreds of thousands of calls in my career. I've been a phone sales rep for years and years and years before I was an outside sales rep. I, I was making hundreds of calls per day. My first owner calls weren't good because I didn't have a script, and that didn't matter. The big thing is you see a number, you call a number. That's what the— that's the amount of courage you need. Are you dedicated towards your goal? Are you dedicated towards getting better? The only thing that I knew for sure is not calling the owner would not get me closer to buying a property.

And Christian made the call and stumbled through it, and afterwards it wasn't that bad. I mean, the call was, but he was okay.

I was fine. And guess what? I got better, and the other opportunities that came up I handled better because I went through that call. And you have to have a takeaway. My takeaway there was I went two directions. I went, is there a deal here and can we book a meeting? And I was like, well, there was no real objective. That was the, that was the takeaway from the call. So my next call, I went in and said, okay, what is it that I really want to do? Do I want to ask them to buy the property or do I want to learn something that I can apply to the business? And in this phase, the answer was let's learn something. So all of my calls from that point on became, hey, this is what I'm trying to do, how do I get to the meeting? And that is how I really refined my script when I call people, is what is the— why am I calling, what do I want to communicate, and what is the goal. And they're very short, efficient calls, and they work well over 50% of the time. And people answer, we get through the conversation, we buy properties.

Should I learn more about the property structures before getting into the deal, or about property structures, uh, maybe debt structures? Yeah, you should learn about how to structure debt and equity. But go learn from owners. Don't worry about all the nitty-gritty right now. Go learn how they built their portfolio, and you can take what they give you and build something out of that.

And if you're asking about the building structure, like the, the physical asset, I don't worry too much about that until we're under contract. Like, figure out what you can, but often for me it's look on Google Maps. If I see something apparent, I'm like, well, good to know the roofs were bad last time those were photographed. But the actual property, if, if that is the question, um, you have a due diligence period. You figure out a lot during that time.

From Salim, how long does it take to cash flow after you guys buy and renovate on average? You should give it 2 years. It should be about 2 years and you should be able to pay yourself dividends. My first asset did cash flow significantly more 2 years after I bought it than when it was when I bought it. And another 2 years after that, it's doing quite well in Quincy. It's cash flowing much better than it used to. So, uh, if you give it 2 years and expect it'll be 5 years before you're really paying yourself and you can walk away from your job, you're going to be content.

On our first deal, the rent roll was about $10,000 a month, and collections on that rent roll were about 5. So about 50% of the people who should be paying were, uh, today the rent roll on that same building, and we've owned it just over 2 years The rent roll is $26,000 with a few vacancies, with, with 3 vacancies left, or 4, 3 or 4, I have to check that again. But with a few vacancies, um, we're bringing in $26,000 with collections of about $23,000, $24,000. We still have 1 person in eviction. It's not that we're perfect, but this building is that close to fully stabilized, and we're talking a major renovation project on both management and physical asset.

Do you consider return on equity when deciding your debt hammer strategy? No, because your, your return on equity is probably going to be 4 to 5% when you pay stuff off, and that just is what it is, unfortunately. I mean, if you're in some markets, it'll be closer to 6, but, um, it doesn't matter because you're doing your debt hammer when it doesn't matter, when you have more than enough cash flow to do everything you want to do. That's when you solidify your base.

Your cash flow goal, you should be hitting right around the stabilization phase. When we talk about the 4 phases, you buy enough properties to build a business that you want to build, you stabilize those properties, your cash flow at stabilization, then you optimize, which is like how much money can we actually get this existing portfolio to, what's the correct place to renovate to, and how do we actually get this thing dialed in.. And then with that optimized cash flow, you should be now cash flowing more than you need to hit your goal, notably. And you're going to apply that straight into paying down the debt. And when the debt's paid off, there's just mortgages you're not paying. Your cash flow is pretty astronomically in excess of whatever your original cash flow goal was. There's just no reason to carry debt. Eliminate the stress. Own your properties. The Besides like natural disaster, the only real way you can lose your real estate is you stop paying taxes. It's paid off, it is very, very, very hard to lose the game.

Some people do that. We just met up with an owner the other day and he said a third of the property neighbors around him didn't want to own in that area, so they stopped paying their taxes and they couldn't sell the land. They just let the government take it.

It happens. Yep. At the end of the day, you own the title and control the property, but it will eventually go to another owner or back to the government. You get a book, basically you get the land. While you have the land, utilize it wisely.

Do you allow pets in your rentals? Yes, not all of them, but in some of them, yeah, many.

Um, have a pet deposit, have pet rent.

Rob said any castles we buy must have a moat.

We will make a moat if it doesn't have one, and if, um, if it doesn't have one, we'll borrow to do so.

So we'll have a moat note. Emote note. All right, thoughts on home warranties? Well, I've never bought a home, so I don't buy home warranties on apartments.

Yeah, I, uh, I don't really worry about a lot of the warranty stuff. I have a single-family house. We're in my single-family house. Uh, welcome home everyone. Um, the basics for any of the warranties, guarantees, anything like on my properties— this is across the whole portfolio Um, we have property insurance at replacement value, so if we had to rebuild the building, what would it cost? That's, that's where we put the, uh, insurance at. And in addition to that, Cody and I both have an equal balloon policy— or umbrella, not balloon— an umbrella policy that covers the entire portfolio. So if something happened in one place, we're additionally insured. For most people, that is enough, uh, guarantee for disaster.

Stuff's gonna break. Make more money. Figure out how to make more money.

I, I can say this for a fact, this is, this is universally true for everyone. It is easier to make money than it is to save money. Top line, you need more top line income before you have bottom line. If you overfocus on warranties and guarantees and insurance, it is easy to add expenses into your universe and build a very small, very safe business. I would rather build a business that, uh, looks like what I need it to look like, and then we'll focus on securing it. Hence paying off the debt and adding all the other features. Yep, that's all optimization stuff.

How many phone calls end up with click?

Not many anymore. When we started, plenty. When I was at CoStar, plenty. About half the people want to talk, half people don't. Um, when people are new to this most of them will end in click. I did some practice calls with a few people in our mentorship group today, and I love it when people do this, by the way. If you're in the mentorship group, they cold called me in the middle of the day and they just went right into role-playing. They just pretended they were a person. I was like, I know whose number this is, this is kind of fun. Um, I would have hung up on them if I was any other owner but me. I would have hung up on them, but I listened to their pitch and I gave them pointers. That individual had a fantastic hook, so it wouldn't have ended in immediate click, but then their questions were really weak. And if someone's just gonna start interviewing me on a phone call, I don't wanna be on that phone call. I'm busy. So they would not have booked a meeting with me, but they would've got through the intro. They had a fantastic intro. You will get a lot of clicks while you are learning this and it is fine. It does not matter. These people didn't know you before the call. They won't remember you after the call. Some of Cody's first calls, a property that we bought together, 6-plex. He had botched the call multiple times. His intro to the call was, hey, I'm the, I'm the guy who called you when I was 19 and I, uh, I botched the call and asked you to sell. I noticed that you lived really close to me. I was wondering if we can get coffee instead. And they got coffee, and guess what? That guy said, hey, you want to buy the property? It's funny how that stuff works. Um, so Lots of them will end with click when you're starting, and it doesn't matter.

From Carter: I'm currently about halfway through the course. I feel like I have a good understanding of the math, moving differently or different topics through the, the box drill. If I feel ready, should I start seeking deals? Absolutely. Go, go put some deals together. You don't have to wait till the course is done.

That's probably the number one problem that happened with me is I felt like I needed too much information before I got started. I read books, took courses, I took different jobs to try to learn the industry, to go like, okay, how am I really going to understand this? Um, nothing teaches you how to do a deal like doing a deal. And if you're in the mentorship group, you have us as a backstop. We can help you underwrite the deal, we will guide you through it, and we will definitely grill you on due diligence because that is the one thing that you are not allowed to mess up. So as you guys are pushing for these Um, like, yeah, absolutely. Don't let a lack of information be what stops you from looking for deals. Look for them early. Cody and I bought stuff, uh, well before we were qualified to own that. I guarantee you 19-year-old Cody did not have the necessary skills to run a 12-plex.

He learned them by buying. Yep. Salim asked if we can run down the Kentucky deal. We will do that next week because we are renegotiating it right now.

Yes, positive, positive renegotiations. We need to do some work, uh, we need to get all of the ideas on signed paper. Yep, I like everything that has been proposed. It is all in our favor. The paperwork does not reflect it yet, so we will give you guys the rundown when we have the final numbers on that.

But yes, who are the key players in your PM company?

So key players in the PM company, so I have Hannah Caldwell. She is on maternity leave now as of a week ago. But she has been the director of property management. I am sitting in that role for the next roughly 90 days, so that will be fun. It's a lot of work. I have a gal named Corey, is a newer hire. She is fantastic, and she has our boots on the ground in Moses Lake. Um, if, if we're managing there, she is, um, she goes above and beyond. She just shop-vacced one of Cody's apartments in her free time which is just awesome. And then, uh, there's myself. I run and coordinate most of the bookkeeping, and the— I make all the hard calls, essentially. I do the hiring, firing, and when the government does not write us the checks they need to, I call them. And Dani is, I would say, probably the MVP. She manages all of the contractors, and we have a ton. Dani knows at any time what units are renovated, where every contractor is at, timelines. Um, she does a lot, but that is our key players. We built the majority of it, lives in the cloud. We only need one boots-on-ground person right now to manage a few hundred units. Moving forward, we'll probably get a second person in there at some point, but, um, that is how we built our property management company. If anyone's trying to figure out how to manage your portfolio, wants to dive deeper into that DM me at Christian Osgood. I can help you break that down because that's been a lot of iterations of doing things right and wrong to get to where we're at.

Next question is in regards to the return on equity not being a factor. Yes, we will just keep buying and we'll have a continual debt hammer. We're going to keep expanding, but we're building out our foundation so that we have more and more paid-for in-cash real estate. But we do have leverage in the portfolio to buy bigger and bigger assets. Eventually we'll trade out of the paid-for little stuff to buy slightly levered big stuff, and then we'll pay all the big stuff down and have legacy properties.

Yep. The, uh, and this is— talk about owner meetings. This was a very, very, very big owner that reached out to Cody, but they basically taught us the strategy of like, hey, you guys are doing— this is a summary, but essentially they said, you guys are doing everything right and you're fun to watch and keep doing what you're doing. There's more levels to this game, which we already know. Um, they're like, the next level, like the end goal for you guys, what you're trying to get is 75 to 100+ unit buildings, Class A, fully stabilized with no debt on them. If you can get those, your family's basically just cared for for generations. They're very easy to manage because you have on-site staff. So that is the end goal. But you don't get to start there because if you start with a highly levered, uh, you know, you do the creative finance strategy and you just start on a 120-unit building, that one can eat you alive. There's a lot of zeros involved.

A lot of zeros. Can't earn your way through that.

Yep.

From Rob, has it snowed at the Robin Hood yet?

Not this year. Last year we got dumped on in November, we got dumped on in December. That hurt. Yeah, uh, that was awful. Um, this year we're actually doing pretty okay. We're hosting more events there and it has only rained. We had a little bit of flooding in one cabin because we had a drainage ditch block up and form its own stream. Other than that, we've— fingers crossed, knock on wood— we haven't had any major disasters this year. And if you run a 12-acre resort in the woods, like, trees fall, flooding happens, there's always some capex in the winter. This has been a pretty light one for us so far.

Yep. And that's it for questions.

No way, we did it. Okay, so now we'll follow the, uh, the rest of our rules. So if you have more questions, we will do a little bit more chatting. We'll let a few more questions accumulate, and after those questions end, this meeting is adjourned and we'll be on to, uh, the next week. Cody, of all of our projects, which one are you most excited about right now?

We are working on buying a 33-plex and a 20-plex, and those are going to be really fun because we only have 2 buildings over 20 units. Getting more and more of those to get more units under the same amount of roofs— the 33-plex is one roof, the 20-plex is one roof— it's going to make our lives a lot easier. Also, when we stabilize some of our buildings, we're going to have buildings that cash flow well north of 6 figures a year. Per complex. Doesn't take a ton of those to be financially well off. No. So now that we are finally stabilizing and optimizing our real estate, we're going from assets that have never paid us before to paying 7, 8 grand a month. That's going to go a long ways.

Yeah, I would say those are the same projects I'm most excited about. I'm really excited to finish our first hotel conversion. It's really fun to talk about the projects as they happen, but as we know Um, we mentioned this earlier in this, uh, in this particular episode. There's a stupid tax every time that you do something new. There are things that you don't know that you don't know. We cover this all the time in our course too, on our box drill. Those are the things that cost the most. We're going to run into more of those on this hotel conversion, 100% guaranteed. Thus far it hasn't been too bad. There's been the old manager's been renting out units and having people pay in cash. We've more or less dealt with that situation. Contractors have been a little slow or a little expensive or not shown up, so Cody and I went over and had to turn some units ourselves. But overall, getting an actual full cycle— like, we've converted a hotel, we've pulled cash out of this, and we've proven concept— I'm very excited for the completion of that deal.

Yep. And our last question here: in addition to looking for long roofs, are there any other creative techniques to find properties on Google Maps? No. There's not. Just find the big groups, find the areas where there's a lot of multifamily, and start looking at them. My buddy texted me last night. He's like, hey, I, uh, I'm looking at buying this 10-plex. It's over in Davenport. What do you think about it? And he didn't give me any other details. He's like, do you like Davenport? And I said, is it the one on— I'm not going to name drop it because anybody could find it based on the street. Davenport's small. And he had to close it. I said, is it on this street? He said, yeah, how did you know? It's like, I just found out on Google Maps. There's only so many 10-plexes in Davenport. Find the long roofs, you will find the owners in that market. What's the worst stupid tax you had to pay? Oh boy.

Robinhood. Robinhood. Deal structure of the Robinhood. That was a bummer. So here I'm going to show the pros and cons. Pros: we built a business that can support it, and that was our decision-making for the Robinhood. If we are wrong on anything