Christian Osgood walks through his first 38-unit deal in Moses Lake, Washington: $2 million purchase with a $1.7 million seller loan at 4.5% and $300k down from four investors. Banks wouldn't touch the distressed property, so he used seller financing and the BRRRR strategy to refinance into a $4.1 million appraisal after renovations.
Today you get to join me in the field at my first ever seller finance property. We're talking 38 units in Moses Lake, Washington, how we actually structured the deal, the entire backstory. You get to see it on campus at the actual building. This is a fun thing to film. I'm glad I got to put this together for everyone. I'm going to do a ton more of these, but this is an actual from the field deal deep dive on the seller financed 38-plex. I hope you enjoy.
All right, we're doing another deal deep dive, but we're doing this one from the field. So welcome to the first and ugliest building of our 38-plex. This is the first seller finance deal I ever did. This was on markets. For 13 years at the same price, $2 million before he bought it. No one had actually asked about seller financing. Turns out totally seller financeable. So the question went like this, we cannot buy that because it is unbankable. It has some major deferred maintenance, the collections are bad. So you have bad books, you have a dirty building, banks don't want to lend on that. What do we do? We go ahead and say, hey, well, banks won't lend, would you lend on it? And they said, okay, we need $300,000 out of the $2 million down. So that's 15% down payment. That's reasonable. We're almost done with the front building. We'll show you the back, which is actually beautiful. We've done a ton of reno back there. But bought this seller-financed, 4.5% interest. They gave us $1.7 million, which means we found a deal and it was on market. So that's just a deal that's out there. Anyone could have bought this. This is in every market all around the country. There's deals that are listed. So found a deal on the market that we liked, wanted to take out, a project that we were interested in accomplishing. Then we found the debt, $1.7 million. This did not cash flow day one very well, so we needed an equity partner. Couldn't take on additional debt, that would have tanked us. So what do we do?
We called—
I didn't have any friends and family in the business, so we called all the people in the brokerage office that I was working at the time. We asked, hey, brokers, do you guys have clients who have smaller multifamily and who might be interested in investing in larger multifamily? We were given 4 names, we made 4 phone calls, and 3 of them gave us $100,000 each, which means we raised $2 million with no experience, no money. And, uh, no friends or family in the biz. We just met people who were interested in real estate and tried to figure it out. So now here's the courtyard here.
Look at these, by the way.
These were like ugly brick buildings, resided, new roofs, landscape. I think one of my sprinklers died, so this is a little yellow patch. But other than that, I mean, look at the lawn. This is a cute little campus back here. It's quiet, safe.
Beautiful place.
When we bought it, there was drug problems, homeless, chickens, dogs running around. This was— this place was pretty gnarly. This was what we call a heavy lift, but we got through it. No one wanted to take on this project. Here's why we got the deal, by the way. If you're looking for these opportunities, people who had enough money who were buying large buildings like this, 38 units or above, they had enough money and they were big enough where they didn't have to take on this big of a project. They didn't need the huge return. Everyone else is looking for these stupid duplexes and triplexes. I started on those and I was like, wait a second, we can just buy bigger. My best duplex deal I did made me $100,000 in a few months. It was a great deal. Um, I bought it, renovated it, rented it out, ended up selling it as a flip. Uh, was not my design for it, but it's what we did. I sold it as a flip and I net over $100,000. It's amazing. This property I BRRRR'd this property. So buy, refinance, whatever the thing is. Buy, rent, buy, rent, rehab, rent, refinance, repeat. Is that what it is? Yeah, we did the whole thing where we bought this, spiffed it up and pulled the money out. Well, the money we pulled out was like $1 million. So we got $1 million of cash while this thing still cash flows and we still hold it. We bought this for $2 million, put a few hundred thousand into it, paid off our investors. So we own the building just ourselves. And then we, We got an appraisal for like $4.1 million on this bad boy. So this massive thing is right on the freeway, one of the main roads through town. This is what we call a fantastic deal. We wanted to buy hundreds of other units, but this is the first ever seller finance deal I did. I wanted to show you guys the actual property, so here it is. I'll see you all back in my office.
Welcome back to my office. That was the seller finance 38-plex. That deal was, well, really it was the deal that put us on the map. That led to an episode on BiggerPockets, actually multiple episodes on that platform. Brad Lee dropping bombs, a whole bunch of other things where people were talking about how are we buying these deals. We went on to buy hundreds of other units. I've done over 20 transactions now. My last couple deals were 25-unit buildings. Anyone can play this game. You can do this in markets all over the country. If you want a cheat code to this, I like the tertiary markets better. If you get out of the main cities, somewhere like Grant County, Washington, there are opportunities to buy this midsize multifamily all over the place. And yes, you can negotiate your terms, especially in a market like this. Things like seller financing are fantastic when interest rates are up and you can negotiate your own interest rate. You can do anything. Now, if you want to learn how to play this more, one, give this channel a follow. If you want to play this game, you want to build your own portfolio, we talk about a ton of different structures, not just this one deal, but we talk about a bunch of deals. If you want community and resources around this, check out multifamilystrategy.com, both the course and the mentorship group. We have a community that this is all we do. We look at deals and we go, what's the deal? What's the debt? What's the equity? How do we take this out? How do we buy it? How do we never lose it? If that's interesting to you, check out multifamilystrategy.com. If you want the free version, follow here on YouTube, like, subscribe, share this with a friend, and we will see you on the next episode.
