In this solo video recorded on location in New Hampshire, Christian Osgood reflects on his experience scaling a real‑estate portfolio too quickly and emphasizes that the true source of profit lies in operations, not just acquisition. He recounts visiting “Lumberjack Landlord” Matt for inspiration, then details how Osgood and his partner Cody Davis bought over 100 units across many LLCs in their first year, leading to severe operational bottlenecks—unfinished maintenance, inflated contractor costs, poor accounting, and flawed partnership structures—that turned a previously positive cash flow into a negative one. Osgood explains the concept of bottlenecks, identifies four primary constraints (maintenance completion, contractor bidding, accounting/tax handling, and deal structuring), and argues that investors should limit first‑year acquisitions to 50 units or fewer to master these processes. He outlines concrete operational improvements: standardizing maintenance workflows, optimizing utility bill‑backs, using low‑flow fixtures, and systematically tracking expenses. By saving roughly $50 per unit per month across his 600‑unit portfolio, Osgood demonstrates a $360,000 annual expense reduction, which, at a 7% cap rate, translates to over $5 million in added property value. He concludes that elite operators who focus on operational efficiency can generate outsized returns and achieve near‑passive income, making operations the most critical lever for real‑estate investors.
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Hello and welcome from New Hampshire. I am here at the house of Matt, the Lumberjack Landlord, a huge inspiration for me. I go to him whenever I get stuck. While he may have a technically smaller portfolio, he built his whole business with no partners. He is worth so many more times the net worth that I've accumulated in real estate, and he's done it over 25 years, and his model is fantastic. If you guys haven't followed the channel, uh, absolutely do so. But I get his studio today, So welcome. And in meeting with him over the last 3 days and seeing his portfolio, I have a phenomenal topic for today. If you've ever heard the term, you make money on the buy, it's still true. But that's less than half of the equation. The buy is a thing that happens one time, and you do have to buy right for your deal to work. That is where you set the stage to make money. But you really make money in your operations. And here's where I see most investors get stuck. They don't fix their shit. And I know this is a clean channel. I rarely say it, but it is the right term for this right here. I see this happen often, like especially when people acquire a lot of real estate fast, is they have vacancy issues, they have operational issues. They become really good at buying real estate and they structure deals that honestly are really good on paper. The problem is the operations don't happen, so they miss projections. And I've seen deals all over the state of Texas, Washington, all over the country fall apart because of the operational piece. And you go back and look at the deal and those operators are like, look at my assumptions were fine. I don't know what happened. It's like, yes, yes you do. You didn't go back and fix everything. You need to have a plan to really operate your property, which we're going to talk about today because that's where you make all the money. I'm also going to share the biggest mistake that I made. Cody Davis and I, we started this channel together. We bought over 100 units in our first year partnering together. That was stupid. And we've shared it all over BiggerPockets. There was a time where we were getting millions of views on every podcast because of all the buying we were doing, and everyone thought Cody and Christian are amazing and what they're doing is so inspirational. I am here to tell you that was the wrong Smart move for our portfolio. Smarter move in the first year, buy 50 or less total units. I'm a huge fan of buying bigger. Get some 12-plexes, buy a 25-plex, buy a 50-unit building, do one deal, but learn your operations. Here's where we got killed. I, I believe this will save you a ton of money if you just follow this exact formula here. This is what we did wrong. I'll show you how to do it right. What we did wrong, there was vacancy, there was collections issues in the 38-unit, there was maintenance stuff. We hired contractors. We got the work started and then we bought 3 side-by-side duplexes, still within the range of, okay, happy we did it. Then we bought a 7-plex, then I bought a 12-plex and a 6-plex and a 10-plex and another set of duplexes and another set of triplexes. And then we did a whole bunch of other transactions very shortly after that. But we bought way too many units in way too many LLCs way too fast. Here are the things that you learn after you buy your first deal. So there's a concept called bottlenecks, and even if you've heard this a billion times, Bottleneck, nothing can get through anywhere else in your pipeline. If you have a bottleneck here, if you don't fix the bottleneck, your flow is limited right there. Cody and I were limited by 4 things. Number 1, maintenance projects were getting worked on, not completed. So we didn't have any ability to occupy the units. So income, while the projects were moving along, income was not increasing, which means we would never hit our projections. 2, we were not monitoring the bills for the contractors or bidding competitively enough. Turns that should have taken us $5,000 were costing us $20,000, and we were too young and dumb to focus on that because we were too busy buying good deals. And to be fair, every deal we bought was a good deal. The deals were great. Our operations in our first year absolutely sucked. Problem number 3, we did not know how to do accounting. To be fair, you don't have an accounting problem until you buy the real estate. We really should have just slowed down, taken a year, done a year of filing taxes, understood your internal basis in an LLC, what type of debt products mean what. We had never gone gone through a full cycle of what does it actually look like to file taxes on this amount of income with this amount of acquisition. Third, I structured deals better than I did in that first year because I've actually gone through years of being partnered and navigating deals. We should have just slowed down just to learn. There were so many structural things. Even that 38-plex, we could have made an extra $225,000 had we structured our partnership very slightly differently. We put in a term there that said we'll double their money in 5 years. So we have an option to buy them out in the next 5 years for double the money. We had a position where we needed to refinance, so we got a lot of money out, but we refinanced at month 11 of owning that property. The option said we have to double their money. So they were expecting like a, you know, roughly your money's compounding at like 18-ish% compounding. They're expecting a return that looks like that to double your money in 5 years. We doubled their money in 11 months. They got over a 100% annualized return. We effectively borrowed the $300,000 down payment at over 100% interest. That's what we did effectively in our contract. I would not do that today. The time value would've been baked in where, hey, if we buy you guys out super early, it's a different price than if we buy you out later on. These little things didn't find their way into our contracts because we didn't have the experience. So am I saying start small, buy a single-family house? No, absolutely not. You need to buy bigger. You need to buy faster. A 12-plex isn't that hard to run. A 25-plex isn't that hard to run. I have not seen mentees in Multifamily Strategy. I've coached hundreds of people, hundreds and hundreds and hundreds of transactions. I have not seen anyone struggle significantly on any building until they start getting to 60 units. That's the— I've seen a few 60 units where it was a huge struggle. They all made it through. They all made money. But the learning curve, easy rule, in your first year when you are finding success, you'll find that it's easy to keep succeeding. Just say, I will not buy more than 50 units in the first year. You're going to solve a ton of your problems. What you do, you fix your shit. What should we have done? What would've made us hundreds of thousands of more dollars? Stop buying after those duplexes. We buy a 38-plex, we buy 3 side-by-side duplexes, focus 100% of our attention. Are we optimizing our contractors? Are we standardizing our maintenance? Are we thinking of the little things? How much water are we paying for when we renovate a unit? Are we using high-quality but low-flow toilets so that we're like, you do all the little stuff, like how do we save on water bills? What can we bill back to tenants? How do we fill the building? What happened for Cody and I, and I've shared this openly all the time, we had built a cash flow of positive $20,000 a month as we kept buying good deals, truly, honestly deals with great numbers with day one cash flow. People would move out. We would fail to fill the units. We bought a ton of them. So with about a 150-unit portfolio, our cash flow went from positive $20,000 to negative $21,000 a month. We had done one massive cash-out refinance. And so Cody and I didn't feel it or realize what happened until about 3 months after it got that negative. And I was like, this doesn't make sense. We have a lot of money. Everything's working. We bought cash flowing deals. Why does it look like our accounts keep going down dramatically? And we get in there and we're like, oh my gosh, I remember the car ride. We were driving back from the Robinhood, which was another problem that we shouldn't have bought in that first year. We're driving back home and I'm like, why do our accounts keep going down? This doesn't make sense based on how we bought these and our operating plan. Just fix the stuff. And so then here's all you do. This is the answer to real estate. You identify what the bottlenecks are in your business, and ideally you have one thing that's really obvious where you're like, oh, this is the slowdown. It's available units. If we're not finishing the contract work and we need to lease the units, what do we need to lease units? We need leaseable units. If everything's 90% done and no one's getting the finishing touches in bottleneck, the problem that Cody and I created is that we couldn't identify the bottleneck because that was one. We also have leasing strategy. Is it working? Are we attracting the right people? I don't know. We don't have the data yet. That could be a bottleneck and it could be the big one. And I don't know, have we fixed Enough of the core issues so that if we do the make-readies, the building is actually leaseable, the plumbing's going to work correctly. Have we addressed septic things? We had no idea what the bottleneck was in the business. And there was like 5 or 6 things that it could be. So we had to fix 5 or 6 things at the same time. It took us about 6 months to get back to positive cash flow. It didn't have to be negative. We bought deals that were fantastic. Moral of the story here, you, yes, you make money on the buy, But just because you buy right doesn't mean you make money. Your operations are the most important thing. And people go into real estate thinking it's going to be passive. On a stabilized finished property, take my 44-unit in Steenville, Texas, for example. I spend about an hour a month on it today. When we bought it and we're stabilizing it, lots of hours every week, lots of onsite. We're overseeing it. The project gets done. Fix your stuff before you move on. If you do this, there is actually a model and I am living it. I have many projects that are legitimately actual passive income, 1 hour a month, larger buildings on autopilot. We have the employee model, the systems. We've thought about everything from electrical current to water flow to tenant bill back to leasing strategy. When you optimize, the difference is tons of stress and I mean a ludicrous amount of money. All right, let me do a little bit of math for you here. So with our operations today, from where we used to operate, when we're looking at things like utility bill back, we're watching our water water flow, we're having better maintenance plans, we're replacing ACs less often. Our average savings are $50 per unit per month. Now I own a little over 600 units, so let me run this math for you because this is actually insane. 50 times 600 units, we're saving an extra $50. That's $30,000 per month that we are saving right there. That's a ton of money. Now multiply that annually, 12, That's $360,000 per year. Now our average markets today are 7 cap markets, so we get valued on a cap rate of 7, which means to find value, you say, what is our new operating income? If you save $50 a month on expenses, your income goes up by that much. Your net income, because you have less expenses, goes up $50 per unit. So this is our actual new NOI. It is worth divided by 0.07. $5,142,000. Do you know how many deals I have to acquire to make $5 million? I'll tell you right now, it's a ton. It took me a long time to make $5 million in real estate. If you go back and optimize your stuff and you run your building right, that is where you make money in real estate. That's actually my first time ever doing that, that math. That's actually super cool. But yeah, in my portfolio, if I can figure out a way to save $50 per unit in expenses, which I have done over the past few years, that's worth $5 million. Why would you not prioritize that? And so many people go, hey, I'm comfortable with acquisition, or this is very stressful to dive in. Roll up your sleeves, fix your shit. You'll make so much more money. Become an elite operator. It is so much easier to responsibly save money on bottom line while making your units nicer for your tenants. You'll have less turnover. You'll have less expenses, you'll have a nicer unit, you'll be proud of the units. And most importantly, as an investor, you do actually in fact have to make money. That's your easiest path to the next $5 million is get super elite at the operations. Much easier than acquisition. That is where you make money in real estate. That is how you make good deals work better than you projected. That's how you give outsized returns to your investors. That's how you make 7 figures in real estate. Hope this helps because that realization for me was mind-blowing. In fact, if you noticed, I did a slight jump cut because when I did that math, I was like, there's no possible way that's right. That's my first time on this video. I was like, I knew it was millions. I didn't realize $50 on my portfolio of savings per unit does in fact equal $5 million of value created. So you guys can check my math. It is correct because I did it multiple times during the filming of this. But yeah, that is how real estate works. Remember that. Fix your portfolio before you acquire Elite Operations worth unbelievably more than just being a good deal buyer. See you on the next episode.
