Christian OsgoodCEO, Multifamily Strategy · CEO at Multifamily Strategy

Make sure your 🍑is covered! #multifamilycollective #realestateinvestment #shorts

5 Aug 2025 · 1 min

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1:01

Christian Osgood explains why real estate partners need a buyout clause in their operating agreement. In his first deal, an investor put in $300,000 toward a $2 million apartment complex with an option for Osgood to buy them out at $600,000 within five years. When the property refinanced, the proceeds covered the buyout, giving Osgood the building free while the investor doubled their money.

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Don't be an idiot when you partner in real estate. Too many people assume they're going to partner forever. It's going to be this magical partnership. There's no predetermined breakup. Look, your partnership is not a marriage. You're buying an apartment complex, maybe you're buying a few apartment complexes together. At some point, there needs to be a clear path to separate. Now, you can always change the plan in the future, but you want to pre-negotiate exactly how you are going to divide the assets in the future. You do this with an option contract. When you write your operating agreement, you put a little clause at the end that says, hey, uh, one of us has an option to purchase the other out at fixed price that everyone agrees on. For me, my first deal, someone invested $300,000 to help me buy a $2 million building. I had an option to purchase them out for $600,000 in a 5-year period. Now, when we refinanced, the building paid that for me. So while I got a free building, they doubled their money. It's a great trade, but you always have that option. The goal is to own your real estate. If you don't have enough money, you use the partnerships to buy time and make sure that everyone gets a massive win. If you do this, you can buy an unlimited amount of real estate as long as it cash flows every time you buy it.