In this YouTube episode, Christian Osgood and Cody discuss the common objection that real estate is too expensive in a market where interest rates and the cost of capital have risen sharply. They argue that price is only a problem when it isn’t accompanied by value creation and that the real lever is negotiating better debt terms. The conversation covers why seller‑financing allows custom amortization schedules, interest‑only periods, and lower rates compared to traditional bank loans. They emphasize a cash‑flow‑first strategy, using long‑term fixed‑rate mortgages and HELOCs to fund improvements that increase property value. A detailed case study of Cody’s 12‑plex (now a 13‑unit) illustrates how zero‑down financing, a 30‑year fixed loan, and a $75‑$100k renovation added $200k in unit value and $700k overall equity, turning an initially over‑priced purchase into a high‑cash‑flow asset. Throughout, they debunk the “real estate is too expensive” myth, stressing that negotiating terms, leveraging inflation, and time are the true wealth‑building drivers. The episode ends with a call to action to visit multifamilystrategy.com and sign up for one‑on‑one coaching.
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That's the bottom line. Negotiate better debt products, you'll increase your cash flow. Deal. Deal. Real estate's too expensive. Today we're talking about that.
I'm Christian, this is Cody. Today we're going to be talking about real estate being too expensive. This is the main objection we get, especially in our current market where the cost of capital has more than doubled as interest rates have gone way up and will probably continue to go way up for the foreseeable future. How do you navigate this? How do you continue to buy real estate? That's what we're gonna be talking about on today's episode.
With money. Fact.
In fact, you buy all real estate with money and you pay your debts and obligations with money.
Wow.
You're getting it. Everything is doable. However, how you structure the money is everything. This is why our strategy has become so popular over the last few years. Now, when we were buying, interest rates were in the 3s and we were borrowing at 5-6% seller financed.
People called us losers.
Yeah. Wow, expensive debt. Good luck with that. Well, now my 5 and 5% debt is awesome. And now we're borrowing a lot of stuff at 3% and 4% debt.
And their 3% and 4% debt is just expiring.
Yeah, it's only an issue if you're not getting the terms. You can negotiate on price, you can negotiate on the terms, you can get both, but you certainly can't do neither. Right now everyone's hyper-focused on price. Let's break down why that is. Mostly it's because people are used to buying things in cash or with bank debt.
And people have flawed business models.
Yes, they do.
They buy it to sell it. Or they buy just to pull out as much money as possible. That's a flawed business model because it doesn't work in every economic cycle.
But Kiyosaki said that that's the only way to get money tax-free, Cody.
Well, then just get less money. Go buy more real estate though. And in the reality of it all is price determines how long it takes to pay off your debts. That's it. Because you're gonna have to borrow more. However, borrowing more money isn't going to break your model if you borrow cheap enough money on long-term fixed-rate mortgages. Price is only an issue in the absence of value, and the value that you're going to create is in the terms that you negotiate. That's the bottom line. Negotiate better debt products, you'll increase your cash flow.
Deal.
Deal.
Now, why do we use seller financing? It's because with the bank, they have specific requirements. They're going to want to see a specific price based on the actual valuation. There's a certain loan-to-value that they're going to come up with. But when you're working with a seller who's financing their own equity, You get whatever you negotiate.
Custom AM schedules, interest only. If you did 50 years of interest only at 1%, you could overpay a little bit. Yeah.
Now what I've seen an absolute ton of is people want the price they could have got last year. You see sellers right now a little bit panicked going, huh, I wanted this price. I've been waiting for the market to keep going up because I just got accustomed to the last decade. The market didn't stop going up. Now we've seen it plateau in some areas, start to come down a little bit. The cost of capital has risen astronomically. They went, oh, well, I wanted to sell it for this price. Well, if the debt costs twice as much through a bank, people's ability to buy that now has reduced dramatically. These properties are all stuck. So when you can come to someone right now, this is really popular. You find something that's been stuck for 100 days online. Talk to me about why it's not working. Well, we want this price. This is where it worked for us and it won't move. Awesome. I can get you your price. Can you meet my terms? You need to know the seller's objective and objections to the other deals. Like, if it's just price, easy, right? An interest rate where the deal makes sense and cash flows, long-term fixed-rate debt. You buy it, you get paid to buy it, done, right? If they have a specific goal beyond the price— this is the price that works, but we really want to see X payments per month. We want to see someone hold a note for at least 5 years. We want to see whatever it is. You need to figure out what their goals are. And if you can write custom clauses or just a basic contract that hits their objectives— and again, long-term cash-flowing fixed-rate debt— that's all you have to do in seller financing. You buy these deals regardless of price. So being too expensive isn't everything. Price is only a problem in the absence of value. Cody says this all the time.
All the time.
It's one of my favorite lines, but it's true. If you can find the value or create the value, you have a deal. The price is one of many things you negotiate.
Yep, price is one thing, terms are everything. I'm gonna opt to go with everything.
I love that. Yeah, and there's a lot of things that are encompassed in that. So like, when you're negotiating, you have— sure, you have price, and that's what everyone's playing off of. If you're doing conventional or bank financing, price is all you get. Terms There's a lot that goes into that. You have the interest rate, you have the actual loan term. How long is the balloon on that? You have special clauses. If you have anything custom in there, maybe you have additional down payments due in future years or something that you negotiated to make the deal work, an escalation clause, an interest rate as you improve the property, what have you. But you have more pieces you can adjust than just the price. And I think a lot of people forget that. So when you're hunting for a deal, you focus on, well, what am I getting in value day one when I buy it based on the purchase price instead of can I construct something where it's going to be worth more in the future and I'm going to get paid to wait to get it there?
Yeah. And if you have a long enough term note, you can get paid for an awful long time. Yeah.
Your first note ever. I mean, we have a lot of 10, 15-year notes, but your first self-financed deal, I'll let you tell that story.
That is 30 years, fixed rate, no balloon. So by the time that I am 49 years old, if I didn't pay it off early, then it will just be paid off as if it was a home loan.
Yeah, because that one's fully amortized, right?
But the beauty of it is, is the rental income today is about $3,000 a month more than it was when I bought it. It would be a lot easier to pay it off sooner now, and if I give another 10 years, it'll be really easy to pay it off. The rents will probably be another $6,000, $7,000 a month more thanks to the government that keeps printing money.
Now, with prices being high in proportion to bank debt, you do have to think really hard about that long term, right?
If it was a 3-year product, that would suck.
Yeah, especially if rates don't come down in the next 3 years. Now, we think they probably will. I think we have another probably year of, uh, upside, then it's going to kind of plateau.
Yeah, but if it doesn't, and if you negotiate a 3% rate and it comes from 7% down to 5%, you're still in the red.
So you got to find out what's going to make the deal work. In a long period of time, there's a few things we know that are going to happen. Over any long period of time in real estate, values will go up because we're going to keep— inflation will stay up as they increase expenses landlords' rents go up. When rents go up, again, prices typically go up to match. So we know that over a long period of time prices will go up, but there's also a lot that can happen to a property. Let's go back to that first deal that you did. You've changed something about your 12-plex since you bought it.
It's no longer a 12-plex, it's a 13-unit.
I'm gonna imagine another unit there changes your actual valuation.
Absolutely, and it's gonna take the rental income from just being $3,000 a month more to being about $4,200 a month more.
And when you bought it, would you say you bought it at market rate? Did you overpay?
I overpaid for it.
Okay.
But I had a 30-year fixed-rate mortgage and it cash flowed day one.
You've owned it for about 4 years now?
Yep, 4 years going on next month.
There we go. Okay, so you've owned it for 4 years. Compared to where you bought it 4 years ago, is it at the price that you paid? Did you still overpay for it?
Well, absolutely not.
Exactly.
It's worth a lot more than when I bought it.
And even with your renovation, so you're adding a unit, how much value does that unit add and how much are you paying to add the unit?
Well, I spent about $75,000 to add the— $78,000 to add the unit. The unit's worth about $200,000 based on the income that that will produce, the net income it'll produce. And on the property, in addition to all that, I've spent another $100,000. So I'm in like $180,000 over the course of 4 years. I bought it zero down. Doesn't mean you're in it for zero forever, but, uh, the asset value is worth about $700 grand more than I paid for it.
And all that to illustrate, this is 4 years into a 30-year note. I'm going to say there is a good chance that in 30 years the property is still worth a heck of a lot more.
I'm going to assume, yeah.
As you're doing these projects, time is your friend, and that is actually the main driver of wealth because over time your wealth multiplies with Cash flow is fantastic. It's monthly additions to your wealth, to your stability. However, if you can keep making those payments, which is why we're so focused on cash flowing fixed rate debt, that long term is where the money multiplies over time with inflation, with improvements, with good management of the property, just general economics. Your money will multiply. That time component is the most important, as long as you can afford to make those payments.
And for Those worried that are like, I can't do the $180 grand in rent now, I did that on a HELOC. I got the value up through getting the rents up and borrowed it.
The real estate buys the real estate, the real estate improves the real estate.
And it's a long-term fixed-rate HELOC, so—
Well done on that, by the way.
The cash flow will more than pay off the HELOC before it's due.
That is how you design everything. How would I buy it? How do I get the property to pay for the property? And if it does that, who cares if you're ever paying? So to the objection, real estate is too expensive, final verdict. False. Absolutely false. Stamping false on it. Not happening. Myth busted. If you want to learn more about how to play the game or how we structure more of these deals, like that first deal he did was just absolutely masterful and so amazing to see where it's been in 4 years. If you want to follow the journey through all the properties, you want to learn how to build this for yourself and really structure something that is a long-term business that is built to last, keep following this channel. Check out our website multifamilystrategy.com and watch our next video right here.
We're also opening up one-on-ones. If you want to tag along to Moses Lake, we will have a link for you. We're gonna put it in the bio down below sometime soon.
Aha!
But that'll be a one-on-one opportunity, so check it out. We'll see you then.
