Multifamily investing live from Las Vegas

Hey, we did the thing.

We're looking left.

We are looking left. Camera's on that side. I'll hold over here. There we go. Hello everyone, welcome from Las Vegas. I'm Christian, this is Cody. Welcome to Creative Finance Live. Cody, where are we today?

We should turn so we're not facing the sun.

Smart.

Alrighty, so we are in Las Vegas. We're at 10x Growth Con, meeting with Grant Cardone, a lot of his speakers. This has been a fun event.

Whoa, it has.

And now they can see your thumb.

There we go, keeping the camera clean.

Yeah, but we are in Vegas. Vegas. Next week I'm going to be in Arizona, Scott— with, uh, Ken McElroy in Scottsdale. So that's gonna be a lot of fun. But we are meeting with the pros in the space so we can go to the next level.

Yep, really excited to be down here. Some of the speakers have been fantastic. We saw Dana White, who I've wanted to see forever. He is just a badass. But been super fun. I see all-nighters officially in the chat, which means that we have officially begun.

It can only take 1 minute for you to get here. You're on time.

Yep, today will be a little bit shorter because right now we have a few good speakers live in the event right. But I want to share some of our takeaways with you guys right now, talk a little bit about multifamily, and we may get Caleb and Chuck joining us out here if they, uh, if they get my text, they're here with us as well.

It'll either work or it won't.

They'll be, they'll be one of the two. Yeah, well, maybe we get half of them there. We could get a 50%. There we go. But excited to see you all. Cody, what was, uh, we've been here a day and a half, what's your biggest takeaway been thus far?

As far as we're operating our business, we are just a small fish and there's a lot of players. Like, we're doing 7 figures a year, multiple 7 figures a year in revenue, and there's a lot people here that went from even less than we have to multiple 8 figures a year in income just by building out an idea and then really optimizing it. Right now, and we've been this for a little while, there's 4 stages in our business cycle. You got build phase, stabilization phase, optimization, and dead hammer. And right now we're in optimization, and Christian's making me shorter and shorter and shorter. However, We're in the optimization phase and what I learned from in there is that the people that just got an idea, shared it with others and optimized it were able to scale from next to no income to an 8-figure-a-year income which is $10 million plus. It's ridiculous how many people actually did that.

Yeah, absolutely insane. We're going to have Cody text Caleb so Caleb can find us because I believe he's looking for us. Yeah. And I will take the camera. So we learned how to scale, we learned how to optimize. We're mid-phase, like Cody was saying, we're in the stabilization mode. We're going to be moving into optimization really soon. Excited to share that story with you guys. But some really big players— it's really good to be reminded that we are very, very, very small fish in a very, very big pond. There are a lot of players, and, uh, while it's cool that we've made our first few million and our company does well, we have a ton of growth. So I want to talk our goals and, uh, share those with you guys in case that lines up with your business cycle, inspires you, or you guys have any feedback for us on what we should be doing next. The biggest thing for us on our property management side is we are hiring our second employee in the main company, uh, who's going to help us run Moses Lake. We tried that before, person didn't work out, so we're bringing a new person. It's going to be fantastic. We're very, very excited to have her on our team. We're going to be expanding that. Right now we manage 162 units last time I checked, unless you know something I don't. And we are looking to get that number to probably about, what do you think, 250 this year?

I think we can get to 250, of which 200 will probably be ours, which would be ideal.

I would love to see that in our mentorship group. That's going to be one of the biggest things that I really want to push. We are ready to scale that and talk to more people about how we did what we did, how you can scale your portfolio. But we are ready to grow that. We finally got the formula down. I see Caleb and Chuck, who I'm waving at right now. Oblivious. Yep, I see the oblivious boys walking over this way right now. But we've had them as a huge success story in our group. We want to bring in a lot more people. We're seeing success after success after success. We have a model now, and we haven't even marketed it yet. I know, we've just been talking about it on our channel. That is going to be one of our biggest focus is this year. We hit our goal, we built over 100 units. Yes, you're going to still see us buy fun creative finance deals.

You better believe it. And we're going to be pumping the resort. We want to get as many people to come check that out, share the experience. And then on top of that, we're stabilizing our existence. That is the— I mean, that's the big one for us.

Yep, that is the huge thing for us. Let's get stable, reach more people, buy some more apartments, scale. Now welcome to the channel. Making it happen.

The only 19-year-olds I know that have ever passed me up without syndicating.

How many units are you guys at right now?

Oh, we're at 28 today.

Dude, that's crazy. How big are you guys going this year? How many units you're going to end 2023 with?

Bare minimum, 100.

Bare minimum, 100.

Over 100 for sure.

Okay. Without a doubt. But how are you going to do that?

All seller finance.

Okay, but let's actually talk about that because we're talking about creative finance live. These boys did more than I ever did by— before you turned 20. You had 28 apartments. By the time I had 28 apartments, I was 21. So you guys did it at 19 years old. How are you going to take that from where you're at to 100 units? Because people are watching right now, maybe they have a little portfolio. That was my Q&A for you guys. How are you finding your deals? Is it the broker route or the owner route? And how are you getting enough to where you can actually vet these and make sure they're great opportunities?

Yeah, so we went different than Christian and Cody here. They're up in Washington State, pretty near their market. We're actually living in San Diego, investing in Texas. So quick 1,500-mile drive away from our units. So we have to go the broker route.

Okay, so you're going the broker route. How do you inspire confidence in brokers for folks that are trying to get seller finance deals? A lot of people are saying it has to be off-market. A lot of people are saying it has to be direct to owner. How do you actually get these seller finance opportunities? Because I've been saying this forever, they sit on the MLS. They're everywhere. How do you find them?

Yeah, it's kind of crazy. I hear that all the time too. Oh, owner finance deals aren't out there. Oh, they're harder to find than you think. It's like Well, I found them sitting on the MLS, so they can't be that hard to find. It's just we go after what the owner is looking for. Two of our first three deals, the owner was looking for price, sitting on the MLS for 150+ days, and just through a conventional lens, the deal didn't work. And if that's how everybody else is looking at it, then it's not going to work for other people. But if you're looking at it through a creative finance lens and hit your metrics, the deals are everywhere.

I'm going to put it here. How did you do earnest money?

Oh, that's a fun one. Yeah, we put it straight on a credit card.

Okay.

Yeah. Dave Ramsey would love this. Yeah. So they— I told them this, if it went wrong, they would be in big trouble. You'd be screwed. That said, uh, it would take them ages to pay off that credit card of $7,000 through their DoorDash.

It would have been like $500 a month for like a year and a half.

Yeah, forever, something like that. Yeah, you guys could have drank by the time you finally paid that thing off.

No, I want to do a quick observation in here, by the way. We'll get a bunch of people in the chat, where are you guys? Is it sunny in Seattle?

No.

Are we in San Diego? Also no. So why are we all together? We're at GrowthCon. We're in Las Vegas right now. I want to point this out. The people in our group who buy real estate are the people who go out and network. Does it have to be a Grant Cardone event?

Absolutely not.

It could be any event. In fact, we're hosting an event at the Robin Hood Village Resort. You guys should be there. It's March 17th, 18th, and 19th. Main speaker's on the 18th. Are you guys going to be on that one?

Uh, we'll be up there, yeah.

Okay, perfect.

You have a commitment. All 4 of us are going to be there. The people who go out, not just attend the groups, not just take online courses, but actually go out, do the work, and meet people who are at these events are the ones buying real estate. If that's not you, give that some thought.

Yeah, think about it. It could totally be you. Now we got another question from Blaze. How did you cover the costs of the deal? Your lawyers, your contracts, acquiring tenants? How'd you do that on your first one? Because you didn't have any money.

Yeah, we didn't. I mean, we scrounged together some lawyer fees at closing just to review it.

And how much were lawyer fees? Like, realistically, you got a promissory note, need a trust, you're going to have your purchase and sale agreement if that's not drafted up by your real estate agent, and then you're gonna have all your LLC-related documents.

I think our total cost was $2,500. We pulled that out of savings, paid that for the LLC, all the doc review, everything.

Okay, so they actually had $2,500. It does cost a little bit of money, and in real estate, $2,500 is a little bit of money to play this game. You're not gonna get it absolutely free. You guys had to Scrounge up all your DoorDash money.

Actually, we scrounged it up. I think we actually took another loan out for that because we didn't— yeah, that is actually a loan we took out from my mom. So we paid that back. We did not have that. So that is how we scratched. Yeah, yeah, we borrowed it from his mom, paid her, and then we got the money. When we got the money, we raised a little bit extra so we could pay off them.

So, okay, so it was mom and dad's money.

I'm gonna add to this.

$500.

Yeah, so we paid her back her $2,500. But that's—

now, before we, before we get all the hate in the comments of, oh well, my mommy doesn't have any money for me. Fact, everyone who is watching this, I guarantee if you're watching a multifamily video, you want to better your financial situation. You want to invest in multifamily and you want to pass a better life to your kids. Now, granted, it's only $2,500. That being said, if you have the million and you started there because your family put you in a better spot, good for them.

We support them. Million to a billion.

Yeah, just scale what you're given. I don't care if you start from square zero. Cody started with $3K, right?

I had $3,000, but I had saved up all my money for years as a gymnastics coach. Shows you how much I was getting paid.

I saved up $100,000 in a multi-year career to actually buy my first sizable piece of multifamily. I had no money from my parents, but I had a college degree, which you could say is a huge head start. No matter where you start though, you can do this. What's your education level, by the way?

I dropped out of college. I, I don't talk about this all the time, but I didn't do too well in my accounting class. I passed the first round of accounting classes, and then the second round I didn't do so well. So instead of restarting, I dropped out.

Uh, also a college dropout. I think I made it through a semester and then just never registered again. Same thing, college dropout.

Once semester finished. I made it all the way through and look at me now. The champ. I'm the old guy who has the same amount of units as Cody minus 10.

Yeah, same amount minus 10. All right, now we got some questions in the chat from Tyler. The story is worth more than the real estate. How do you find the people with the story? Well, I found people with stories from Google Maps because people that own all the real estate happen to own the real estate that's on Google Maps. Oh, that's how that works.

What?

So we have a video, how to find any property owner ever. My phone number is in that video, so feel free to text me. That's how most people reach out to me. But you can find anybody's contact info from Google, promise you that. And there's a couple people that you probably can't, but there's enough properties where you can find enough people to meet with.

Facts.

If they own the real estate, they can tell you how to buy said real estate. Isn't that right?

It's crazy, but it's correct.

Could you tell someone how to buy a 10-plex like you bought? Yes, absolutely. Owners of real estate know owners of real estate. Fact. You just have to meet with them. So check out that video. Now we got some more questions.

I'm gonna rip through these because my arm's getting really tired holding the phone. I brought no gimbal.

This is all live. Christian doesn't lift weights, so the 1-ounce or the 1-pound phone's really killing him. Just kidding.

Not facts.

Not facts. Christian Osgood lives way more than me. All right. So all on the live as well, how do you find seller financing deals? Cold calls, friends, owner, or MLS listings? We've done it from cold calls and we've done it with direct-to-owner, which is from the cold calls. We've also done MLS listings.

MLS listings are awesome because a lot of people look at them conventionally. If you're a creative finance guy, you don't have to get stuck on the price. You're not worried about how it's going to appraise. It's how do I own it, how do I never lose it. If you want some MLS deals, just look at the stuff that's sat there for a while and think, "How would this deal work?" instead of, "What price do I think I can get?" If you can do that, you're going to find the same deals.

Now Caleb and Chuck, how do you pay off your debt and how do you pay off your investors?

I'll ask you.

With money.

With money. Shoot. You're doing it wrong.

It's crazy.

You just have to find the money. So if the real estate doesn't buy the real estate, which by the way it should if you're buying great deals, the real estate will pay off the investors. Investors, and it will pay off your debt. It should have enough cash flow to do that. Facts.

Facts.

But if it doesn't, you need to figure out how do I earn it or how do I borrow it. The problem with borrowing it over and over and over is if you never pay off your debt, there's a guy named Mr. Ponzi, and you don't want to do that. You do have to actually figure out how do I earn the money. So you have to optimize the real estate to where it can pay for it, or you better figure out how to earn some money so you can pay off your debts. What's your guys' What's your plan to pay off your investors?

Uh, we're doing a cash-out refi is our plan.

What if that doesn't work?

Have to earn the money.

Oh, how are you gonna do that though? I mean, like realistically, if you kicked it out long enough, let's say you refinance, how much do you owe your investors on your first deal?

$145 grand total. $135 grand total, yeah.

Okay, $135,000. We just shaved $10,000 off of it. Yeah.

Wow, that was quick.

Do the math, right? Yeah, we're going down every second.

Better math saves you $10,000.

No, but $135,000. What's the asset worth and what do you owe?

Right now it's worth a little under $900,000.

We owe what?

We owe $810,000. Okay, so you're highly leveraged.

Yep.

How long is your note to the seller on that deal?

Our note to the seller is 5 years and our note with the investors is 7, so we have even more time.

Okay.

There you go.

That'll work. So what's your plan to get the value up so you can refinance?

Our two plans there, we've talked about this before a little bit, was selling off the acre on that property. That thing got delayed a little bit, but we've re-upped on that. We're going to sell off the acre, put that towards principal pay down most likely. That brings our debt down, get the rents up to where they should be at market, and let them grow organically over time. And if they grow at a very slow pace, we're still going to hit those numbers.

All right, 3 more questions so everyone gets to watch them. Everyone drop a like right now. There's 29 people watching and 6 likes.

I'll hold it so your arm doesn't—

we got more time, we got more time.

We have more time now, but I'll give you this so you can read the questions. Okay, here we go. Someone did ask though Did you guys calculate your closing costs before you wrote up the deal or did you figure out the deal first?

Deal always comes first no matter what. We actually on our first one, we didn't know this about seller financing before, never really asked the question of how much are closing costs in a seller financing deal.

Not a lot, right?

Yeah. We had seller cover them because we didn't know, but oh my gosh, they are next to nothing.

Yeah. I got an awesome question here. Hey guys, love the content. You mentioned calling and meeting with sellers. Do you call anyone or just the ones who have the properties you're interested in? So first of all, you do want to find the people who've done what you want to do. However, it's not just the properties that I want to buy are the lowest-hanging fruit. A lot of people go after, well, let's look at distressed properties because we might get some creative terms. Yeah, exactly. Keep it this simple, high level. If you want to buy multifamily, call the multifamily owners in the market that you want to be in.

Well, I like that question though. How much debt do we have?

Oh, I have $12.5 million and I share basically all that with Cody.

What do you have?

$2 million. $2 million? That's a lot.

Plus there's a rookie number. No, I'm kidding. They're just both turned 20, right?

Pump those numbers up.

$19 million.

$19 million.

$2 million in debt. Call Dave.

Someone get Dave Ramsey.

Now I just need to make $2 million.

How much equity? About $500,000. $500,000. That's a lot. So you guys are what, 80% LTV? Yeah.

Okay.

Bringing that down. How much equity do we have in our portfolio?

Oh geez, let's see, we have $12.5, we have about $21 million.

$21 million in real estate and $12.5 in debt. You can do the math.

Yeah, that's not too bad.

It's more than $7. Better. More, better. They'll be there next year. All right, what are some other questions that we got?

Well, that seems to be about where they were, uh—

Oh, I'm sure we had more questions.

I might have, I might have, uh, scrolled down past a couple then. We kind of ended around where—

Greetings from Slovakia, say hi to Caleb for me.

Hi Caleb.

Hello Caleb. Howdy. Alright, how do you convince people to seller finance?

How do we convince? We don't convince anyone to do anything. You form relationships so they want to sell to you and you're the only obvious buyer. You become the only logical buyer for property when you actually know them, they understand your goals, and they have absolute faith that you are able to close on the deal and able to manage the property better than anyone else. Seller financing The collateral is most often the property itself. They need to know they're selling to a capable operator. Your ability to do that and instill confidence in them is everything. But when you're talking like seller financing, it's either going to work for them or it's not. It's been stuck on market forever, for example. It's like, okay, I can give you your price.

Cool.

You found what they wanted. Why would they seller finance to you? That is going to be up to you and how well you communicate who you are and what your story is.

Josh Burdick, hi from Spokane.

Spokompton.

Hey, all right, so that's funny. Let's see here, what do you do all day? Well, I'll tell you what these boys do. He surfs, he goes through Instagram and messages literally everybody, something like that. He's a social butterfly, and we just pay bills. We don't have a day, we don't have any fun anymore. I'm just kidding, we have fun on a day.

This time of year though, this is a tax season, so many bills.

No, but seriously, we, uh, we're working on finalizing taxes. Our tax situation's less than simple. It's the one piece of our business that is complicated. But really, it's just managing the assets. We got to manage— I manage all the money, so I watch all the accounts every single day, in the morning and at night. I monitor the cash accounts, and they get to have a little more fun than we do because they built their business with less obligations.

Let's talk about that for just a second.

Obligations versus options.

We set up a business where we manage all of our own properties, and that includes a very active resort with a lot of employees, uh, multiple companies with employees. We run our own mentorship groups. We don't hire out coaching. It is us every week. We actually had our second sub ever yesterday as a guest speaker, but we are very active in our business, which takes a lot of time. You guys built your business a little bit differently because you can't manage that far away. So what do you guys do?

You chose not to.

You chose not to. You guys didn't have the pieces where it made sense. I agree with the decision not to do it, but why did you guys do that? What does it look like compared to our very active, busy business? What's it look like for you guys to manage 28 units?

Yeah, for us, kind of the background there is, I mean, I think we could have figured it out to buy in San Diego. It would just been a lot more time intensive. Legislation is a lot less favorable for landlords there. So we ended up buying in Texas, over 1,500 miles away from where we live, on all 3 of our deals. So our day-to-day on the managing side is we kind of just monitor our property managers. We're watching the cash accounts like Cody does. It's just more of an overseeing role instead of as much hands-on there.

Okay, so we got a couple more questions here. Excellent. How did you get half a million in equity? Gotcha. How do you get half a million dollars of equity without any money of your own? Someone here is asking, how do you play the game if you actually don't have any money?

Turns out you got to use other people's money because For deals, I mean, it'd be ideal if we could do every seller finance deal, zero deals. Yeah, it would be nice if we could do everything with zero money down, but they at least usually want a little piece of equity up front. So for us, that's raising the capital. And the way we build equity is usually we don't have an issue with price. On our third deal, it was an off-market deal that was about $400,000 below market value, so that was immediate built-in equity. And then increasing the value of our two previous assets before that.

By the way, guys, It is really important, like the most important piece, to buy cash-flowing deals. You want to buy cash-flowing.

Positive cash-flowing deals.

They can cash-flow either way.

You have to have an adjective.

Positive cash-flowing deals on long-term fixed-rate debt. That being said, if you do every deal close to 100% leverage and you're always going, "Well, I can overpay for the property as long as it flows," you do in fact have to have equity at some point, especially if your exit strategy is refinance. You have to have equity. I love that you guys added in a property. We actually won on price for one of these because you want to make sure the real estate is actually appreciated. You have something to refinance.

Now, I really hope I'm not butchering your name. If I am, you can scold me in the comments. Jakub from Slovakia. Is it possible to apply your strategies outside the US? Absolutely. It's called vendor financing. Almost every other country calls it vendor Yeah, I haven't seen another country that calls it seller financing. So I look up vendor financing and just make sure that you can do it in your locale.

But before all the conventional bank products, this is how everything was financed. Like, you look historically, that is how you do stuff. You go, you have something I would— I want, I have something you want, in this case money for your building. Let's come to terms that work for everyone. It's a standard transaction like you would do anywhere else. It just doesn't involve the bank.

Question. Oh, that's good. It's Whiteboard Wednesday. Would you bring an equity partner to bring the down payment with a conventional loan, then after closing have the down payment distributed back to— No. I would not commit mortgage fraud. If you're telling the bank you're structuring a certain way, I wouldn't just undo it right after you close.

Do the things that you're supposed to do.

Fraud is bad.

You heard it here first, folks.

To have an overall 0% down deal with the down payment seller financed. Oh, so could you have the down payment seller financed? I mean, absolutely. You just have to find a primary conventional lender who will allow you to do that, and then you have to disclose it. Just don't hide stuff. That's the big thing. Don't circumvent banks.

You want to know how to do that? You look for local banks, regional credit unions, they most, most of them will have a charter that says we have to deploy X amount of capital into assets like multifamily and it has to be in our area. That's what they're based on, especially those local credit unions. So if you're looking for people who get a little bit creative or work with you on, hey, I have an opportunity, I want to invest, I'm a great operator here, the people who let you do those blended, hey, that you can bring in seller financing and bank debt, when it's combo, it's usually not gonna be your big box banks. You're not gonna go to Bank of America and get it approved.

All right, now from the same person, they asked, so banks don't lend on that? I just had a commercial lender pitch me that. Well, look, commercial lenders, just because they're licensed doesn't make them ethical. Now, if you disclose everything and they're on board, go for it. However, if they're saying not to disclose it to the actual direct lender, if you're working with a mortgage broker, Wouldn't do that.

Do all of your disclosures in writing, and anything that happens, you have an email chain that says we put through everything that was requested, we committed no fraud.

Everything goes in writing for this. And the main thing, because they were just like, I didn't know that was fraud— the thing is, if it— if they wouldn't allow you to borrow the down payment in the first place, they're not going to want you to borrow it right after closing. If you're saying you're going to bring it in as equity, then it's equity, it's not debt. If they're not going to give you the loan based on it being debt, then you shouldn't just change it right after close.

Now, if you give that some time and you restructure, that's not that abnormal. But if you do it just immediately, that's going to be a red flag.

Yep. All right, from Cody Harris, how exactly are you finding owner numbers? All right, so we have a video on that, how to find any property owner ever. That's on our YouTube channel, you should check it out. It's like 14 minutes. Do you take on debt or equity partners, and if so, how do you find them? Yes. Yes, we find them the same way that just on that video, cold call people that own the real estate. How did you guys find your equity partners?

Equity partners were longtime family friends in the first one, and then our third one on that first deal was actually off a Facebook group.

Facebook.

I think, I think one thing that gets lost in translation is people trying to figure out the money before they have the deal. Deal always comes first. Finding an opportunity good enough Somebody invest in, they also invest in you.

What resources do you use when assessing a deal? Rental estimation, taxes, insurance. So how do you guys underwrite your deals for what you can rent it for and what you think expenses are going to be?

Yes, sure. Great question there. So our calculator as a whole, we got from them day one of our mentorship start. Taxes, we go, we go to the tax assessor, figure out that way, talk to people in the area what they use as an estimation. Always be a little more conservative. And for rents, if you want to dig a little deeper, you can go CoStar. You just have to be a CoStar account. They can pull a report. Or what we do usually on top lines, we use Rentometer.

Rentometer is fantastic. The one thing with the rents, this is really important, if you're using something like Rentometer or anything that has rental comps, they're historic. Rent tends to go up, which means it's usually a little bit low. They're actual rents. If you're looking on something like Apartments.com for what's asking rent, just remember asking is not actual. They're usually higher and then people negotiate stuff down. So if you're looking for an average between them, always go conservative, lean towards the actual comp side even though they're probably a little lower than market. Better to be too low than too high on your estimates.

How do you establish credibility without the ability of meeting a broker or an owner that's out of state? Your deal, you've worked with a lot of brokers. Buyers are liars, sellers are worse, and brokers suck. Harsh reality. How did you navigate that, especially without meeting them?

Yeah, for me, the biggest— two biggest things there, it was my age. Didn't want to go around telling people that because if I lead off with I'm 19 years old, they're probably gonna get hung up on pretty quick. And then out of state, so it wasn't a face-to-face meeting, and those things kind of played together. It was building a script that established credibility in my scripting and showed I knew what I was talking about. When they'd send me deals, I would send it back to them, explain why that deal didn't work and what I was looking more in the future.

Active communication.

Now we got a question here. Do we still offer mentorship? I'm not here to pitch our mentorship. However, you guys went through it. Should we keep offering the mentorship? 100%.

Okay. Zero doubt. Solid investment for us. Okay. Yeah. You would be looking at two junior college students if that mentorship never came into our lives.

Yeah.

Okay.

That's, that's awesome. If you guys want to learn more about that, you don't need to ask me. You can ask them. How do people reach you guys? Caleb, someone's going to message you.

What's the easiest way? Caleb.Hommel on Instagram. Instagram, Chuckie_Sotelo, or Caleb and Chuck on Instagram and YouTube as well.

It's either of them. It's easy for us to want to get you into the mentorship, but take it from people that have actually done it. Just reach out to them, shoot them a message and a follow on Instagram. They're pretty cool people most of the time.

As far as mailers, we don't do mailers. As far as marketing goes for real estate, it is the least personal. The goal is to get to the coffee meeting. A phone call is way more powerful. Now, I don't do door knocking. I find it super invasive. That's not my thing and I don't want to do it. That's just uncomfortable. Also, for the buildings we buy, the owners don't live there. I can knock on every door in the building. I'm not going to find anyone I can talk to. Crazy. So the easiest way to do it is find who owns the building, call their number, share your story extremely quickly. This is who I am, what I'm trying to build to, and I admire what you've accomplished. How did you get there? Book the coffee meeting and have the rest of the conversation there. That is the best way to do it. If you're going the broker route, do what Caleb just said. Call them, build credibility, buy a deal.

How did you guys vet your equity partner? I'll take over.

Yeah, first one, it was long time family connections. Nothing but good things to say about the people. And then that third one, it was off Facebook. Got a ton of messages. I mean, on Facebook or any social platform, you're going to get a ton of scammers hitting you up. So it was hopping on a phone call multiple times, seeing what their goals were, how they aligned with ours, and how we could work together in the future.

Future. That's awesome.

I got a fun one here. Are you willing to give estimates of your investment portfolio in percentages for like stocks versus crypto versus real estate?

Oh yes, I'd love to. I can do that. 0% stock, 0% crypto, 100% real estate.

100% real estate. 100% real estate. I used to have stocks, sold all of it, went to real estate.

And like, I convinced him to take the tax hit and put it in real estate. I'd say that worked out.

I spent like It was like $15,000 in taxes and we made $3 million, $2.5 million.

Millions of dollars.

Millions of dollars.

Million billion dollars.

Yeah. Well, we're at a TEDx event, so I'll go ahead and quote Grant. Don't trade paper for paper. I don't want to own anything that I can't control or at least strongly influence the value of. It's a huge difference. Just buy real estate.

You can't influence the value of Coca-Cola by buying a Coca-Cola?

You have to buy a lot of Coca-Colas.

So we need to borrow a ton of money and buy a ton of Coca-Cola after we buy all the stocks.

Warren Buffett did it. Warren Buffett. Buffin. Mr. Buffin.

Mr. Buffin.

Warren Buffett can do that. If you don't have billions to do that with.

That one went away.

Oh, let's see here. We got a new one. Will you guys continue to find your equity partners via Facebook, LinkedIn? Did you build relationships and equity partners even if you don't have a deal? Ooh, two good questions. Let's answer the social media one first.

I mean, not opposed to it. Right now, we've continued to build our equity partners through the ones we know. People have come to us, hit us up about it. We met them at meetups. We met a couple of them at BiggerPockets. Networking here— networking is the most important thing, whether it be in person or social media.

That's awesome. Now, as far as actually building those relationships, finding the people before you have the deal, when it comes to actually buying real estate, the order of operations is deal, then debt, then equity. So you find your deal first, then you line up your debt. Could be a conventional mortgage product, it could be seller finance, could be private debt. And then you find the equity down, which could also be in the form of a borrowed loan. Now, all that to be said, in the beginning, if you don't have anything, you probably ought to go learn from the people that have something that you want to have.

Yep.

So I would absolutely start building those relationships now. I wouldn't ask for money. That would be out of order. That's what a lot of syndicators do and then they lose their pants because they have all this money and they just want to place it into the next mediocre deal. Not a great place to be. But if you build the relationships first, when you find a great deal, then you can line up the money relatively easily.

And when you get to know the person that you're forming the relationship with, which is how relationships are formed— crazy— you're going to match the right deal to that person. You're not just going to people being like, "Hey, they have money they want to put into deals." It's, hey, they had— they were looking for a deal that's a little bit larger. They have some duplexes, they want to get into a 12 to 30 unit building, and they're trying to defer some taxes. They have some taxable gain and they want some tax benefits. So the deal for them is gonna be something we're doing 12 to 30 units that we're gonna run a cost segregation study on. I'm looking for that investor. I'm not just reaching out to everyone with money. You're forming relationships and the deal will tell you who the investor is.

Every time. Completely agree. Everybody's playing with different pieces.

Do we have any other questions in the chat? Oh, yep.

I see. Oh yeah, we have a couple. Do you still nurture your existing equity partners? Our phone call right before this.

Yeah. I mean, I was just chatting with someone who's lent me a lot of money seller financed and he's gonna help build. He has become one of my closest friends in business and he was the first guy who ever helped me get started. He seller financed me my second 12-plex and then a 6-plex duplex, then a duplex. And he keeps making jokes he's going to sell me everything, but those jokes might become reality someday. He offered to fund my development, seller finance development cost. I mean, it's crazy, but absolutely. Right before this, like literally minutes before we launched this, I got off the phone with him. He just got back from Mexico. He's having a blast.

They asked how— a follow-up question to that— how often are you getting those touch points with your existing partners and investors?

So I I connect with everybody at least once a month now, but it's not scheduled. It's when I think about people, when something pops up in the business, I'm like, I want to share this with my partners. I will reach out. Could be with a text, could be with a phone call. I could just send them a photo of what I'm working on. But it's simple. It is genuine. It's never scripted. Perfect.

By the way, I see 40 people in the call, 21 likes. Those are, those are out of whack. Everyone who hasn't done it yet, hit the button for us so more people will see this. I appreciate it. Yeah, come on now. How many units would you guys recommend starting with? Do you need an LLC to start? No to the second question, unless you have partners, in which case you should put in an LLC with a strong operating agreement. Talk to your lawyer about that though. If you're just buying a property by yourself, I wouldn't add the steps. Just great, great insurance.

First question, how many units should you buy for your first deal?

5 and up. Don't go under 5.

I like that advice. Yeah, I think that's solid. Cody, start with— I start with duplexes. I love my duplexes. I learned a lot from I would be a lot farther had I gone bigger. I think the more important question is, are you going to buy a deal? If you find a duplex, you love it and it makes money, are you going to pass on it so you can find a bigger deal? I figure out how to buy both. I don't think the size matters for your first deal.

Yeah, I'd agree with that.

Just buy multifamily, don't buy a house.

Yeah. Okay, so size doesn't matter. More than one, preferably over 5.

No, one is too small.

One is too small. Um, let's see here. What specific sources do you use for finding information about property ownership and history? Refer again to that one video.

Yeah, refer to the video.

It's, uh, it's all there. It's like our fourth most watched video on YouTube, maybe third most popular.

Just sort by popularity.

Yeah, it's a big pink background, you can't miss it. Um, very important last question. Uh, not, not for us.

So size does matter.

Facts. We'll go into that math on some other videos as well.

How's the event going? Event's going great. Awesome. First half of the day was a little iffy, everything else has been —Yep.

Nate asked, can you tell Uncle G hi for me? If I run into him, I'll tell him Nate says hello. I'm sure he'll know which Nate.

I think so too. I think he knows exactly who you are.

No, no, no question. Edmund, Caleb, and Chuck, I heard you guys had an additional land in one of your deals. Are you guys planning on developing?

We are not at that cycle, not planning on developing at all. We're actually actively working on selling that off.

Yeah, development is awesome. But not during your build phase. You're not at optimized yet. Pass that project off to someone else. When you guys circle back, you'll pick up other land, things in your deals. Once you're stabilized, you're a little bit bigger, you have more cash flow, you're like, oh, I have my unit count and the inflow I was looking for. Then you get to go back and go like, you know what, maybe we learned to build.

That's exactly what I would do.

Everybody's had a different— and just because something makes money doesn't mean it makes sense. I knew that development was how I was going to get to my first 8 figures, but I can't develop until I have the cash flow for my first 7 figures. There's stages. Just because it's a great project doesn't mean it's a great project for where you're at. And just because it's a great opportunity doesn't mean it's your opportunity.

Couldn't agree more. Seth asked—

I'd hope so, I coached you.

I couldn't disagree more. Seth asked— I didn't coach you. How do you ensure your tenant— oh, this is funny. Do you ensure your tenants know how to cook so there aren't any fire issues? While I don't ensure that they know how to cook because I myself don't know how to cook and I have not yet started a fire, There are rules in all the leases for things like barbecues have to be X amount of feet from the apartment. Please don't dump grease down the drains, especially in my septic systems.

Yeah, stop that. Damn it.

Learn that. But generally speaking, no, it's all in the lease. You communicate that and then we do regular notices of like, hey, reminders, these things have to be this far off the wall. Make sure you're not dumping grease down our stuff. But there is no way that I know to require know-how to cook. That would eliminate a lot of people, especially me.

Mandatory programs and classes.

You have to cook meth. No, no, no, do not do that. None of our units have meth. That is bad.

I don't know, maybe in your Texas properties.

No more teenagers on the channel.

In the 38plex. Yep, you guys grow up.

Danielle wants to know when we're going to be in LA next. I don't know, but I love Disneyland, so I'll be down there this year.

If you invite us, maybe we'll come.

Yeah, send us an invite. What is the interest for borrowed down payments? A lot.

Typically a lot. It's double-digit interest rates. More than 10, less than 30 usually. Yeah.

It can be whatever you negotiate, but that's— you're very impressive if you can negotiate less than that. I've seen someone do it at 8.

I've done it at 8.

You were the someone I was thinking of. Oh. Oh, there's another someone I'm thinking of now too though. She's done it. So you have a total unit count target before you start? Not total unit count, because every market's going to be different for how much a unit cash flows. There should be a specific cash flow number. For us, we just made an easy target of at 100 units. We know we'll have enough of that cash flow, we'll be a little bit above it if it's optimized and stabilized. Yeah, so for us, 100 was a good number. However, don't worry too much about the number because it varies wildly from market to market. Just think about what do I need on a monthly basis.

I agree with that. I mean, if you're buying in LA or New York, it's gonna be a lot different if you're buying in BFE, Southeast, Midwest.

Politically put, what is BFE?

Uh, the middle of nowhere. Yeah, okay.

Cap rate markets.

I don't want to swear on your channel.

You get mad at me? Thank you, I appreciate that. We appreciate being able to share. Politically correct. Uh, when will we be coming out to Salt Lake City, Utah for the best ever conference in March? Will we be coming out? Oh, uh, no, because we're running our own conference mid-March and We are doing conference after conference after conference in February.

You should come to our conference.

You come to ours.

17th, 18th, 19th.

Are you gonna be there?

We will be there. Oh good.

It's happening.

Remember, if you guys want to come to our events or if you want to really repeat this and scale the game, message these guys on Instagram. They're pretty cool most of the time.

Keep saying that, man. Wow, someone had a Gap lender quote them 80% interest. What?

That sounds crazy.

It says 80%. Is that—

80% interest is a lot. Don't do that.

Yeah, unless that's in response to a different question. It says, quote me, 80%. It doesn't say 80% what though. 80% LTV?

I don't know. All right, on to the next question.

Have you heard of HML lending off of zero background, zero equity?

Hard money lenders? HML?

Yep. Have you heard of HML lending off of zero background, zero equity?

No, those are typically scams. To get your first deals done, you're probably gonna have to take it private. There's not— there's no company that's gonna give you 100% LTV, or they're gonna charge you insane rates. Yeah, you gotta have the relationship, gotta go private.

Best speaker in the conference so far, and what did you learn? Dana White. Dana White is a baller. He just reminds me that there is so much more that you can do. Everything that guy touches— yeah, markets it to It's gold.

He makes me think if we earn less than $10 million a year, we're small potatoes. Yeah, I'm a small potato. You're a small potato, Christian. In the business world, for regular life, that's a lot of money.

Yeah, right now, Megyn Kelly's speaking, and my wife's been texting me saying she has been the best so far. However, we're spending this time with you because you are a priority, but apparently she may be the best.

I don't know.

Yeah, we caught a little bit of it.

It was incredible. I'm a fan. Baller. Have you ever bought a property that was in a trust and was there any difference from buying it from an LLC?

Yes. Yeah, we bought from a trust. We actually bought it on a real estate contract. We bought 2 triplexes like that.

Oh, I got a clarification. It was 80% interest per year. Second mortgage on a flip.

I would not do that. I wouldn't do that unless you had a clear path to make like 200% to 300% conservatively.

Yeah, you get 79% interest from somebody else.

Yeah, there's always something better. I'm sure you could get 79%. You could beat 80.

Most important things to look out for in due diligence: lying sellers. You're just going to match what people are saying they're paying to the actual bank statements. Like, that bank statement is everything because that will tell you what is actually happening on the property and very, very hard to fake. Yep. Great.

Okay, that was easy.

Um, what do you look for? Questions you questions to ask property managers? You guys have actually hired more property managers. I can tell you what I want you to ask us, but what did you guys actually ask?

Yeah, the biggest thing for us is they had a solid base in the area, then they have a good plan for the property that we agree with, and they see it going a similar direction to us. And that's kind of it. Just keep it simple, but you need to vet them thoroughly. Make sure they aren't going to take your security deposits and run away is the biggest thing I would say.

How much real estate do you own? That's one for me. If they don't own any real estate, I don't care how big they are.

They're not good enough for me. Yep, they're a service provider if that's what they do, which means they have— like, they make their money off your property. When we property manage, the better the properties around us do, the higher rents go, which makes us millions of dollars. We are incentivized to optimize the performance of every asset in the market that we're in. Facts. So work with owners who are operators and own in that market. That's the— is the only way, in my opinion, to work with great property manager, someone who thinks like an owner.

And you can't think like an owner unless— Fantastic.

All right, what else? That is— and then we got one more, we got one more. Caleb and Chuck, how did you guys know to trust the property management were the right people?

I mean, there's no— there's no guarantee. We were out of market, we had to vet them the best we could. But after interviewing a couple and getting recommendations, the biggest thing for us was the recommendation from 10 other brokers in that market that they were their go-to. The more people are talking about them, the better they probably are. So we gave them a chance after vetting them, and they've been the best decision we've made.

Would we move forward on a deal with no past books or information on the expenses? No. Okay, but the rent roll is vetted? No.

I'd like—

no, no, no. I told them not to do it because they threw earnest money on a credit card and they, they didn't— you know, yeah, they were doing out of state. I have thoughts on this too, that I bought a sixplex And the 6-plex was the one that put me at 30 apartment units. I was super stoked about it. But when I got my rent roll, it was on a paper plate and I didn't get the paper plate. It was just, you know, it was Sharpie on a paper plate and I got a picture of said plate and that was it. That is how I bought the deal. I didn't see leases because there weren't leases. There was just 6 numbers in Sharpie on a paper plate. And yes, I did buy it. So I would do it, but it was a great deal and I could float it with the other real estate if I had to.

Worst experiences with tenants? My worst ones, like the worst, worst ones, I can't share online. Yeah, literally. We've had some horrible stuff happen. There is stuff we can't talk about on the interwebs, but we have dealt with some really, really hard stuff. One of the things I'll give you is a general—

one of them made us tear up. We were in Texas.

Yeah, that's the the one I was thinking of. Most terrible things that happen happen at home. It's domestic situations. If you own hundreds of units where people live, shit happens. Shit happens. And it gets rough. Just realistically, the worst things that have happened have been to people who rent to us that we have to then deal with. It's not fun. If you buy enough units, it will—

no, going in, it will happen to you. It will make you cry.

Yeah, it is hard. It's the hardest part of the business, hands down. Yeah.

Yeah. All right, what else we got going on?

So watch Beijing, Megan Kelly.

No, I meant for questions.

Uh, Daniel's, uh, looking for teachers when he's in, uh, coffee— or what's that, when we're in LA?

Let's grab some coffee. Okay, bet.

And, um, the last question I see in here, Caleb. Now that you're in the game, are you targeting San Diego properties?

This is for both of you guys. No.

I am not. I have no interest in San Diego properties.

However, it's a great seller finance market because a lot of the properties don't pencil conventionally. So if you want to get into the game, it's not your guys' strategy. I love what you guys are doing. You're buying in a cash flow market. You guys are doing well.

There's also debt and equity markets. There's a— in really low cap rate areas, it's more of an equity market because they can't have a lot of debt and service it. So there's going to be a lot of seller finance opportunities. Yep.

Okay, I'll ask one more.

One more came. One more and then we're leaving you.

Caleb and Chuck, how do you keep the people messaging you on Facebook from stealing your deal when you are under contract? So when you're raising capital, you're talking to people about the opportunity, how do you keep them from slipping in beneath you?

Great question. I mean, when you're just marketing out there, you have to be very careful on your diction first of all. Due to the SEC, you don't want them breathing down your neck and coming after you. So that's number one. And then number two, You got to vet them first before you share the intimate details of the seller, the address, all that stuff. So that's how we did it. You vet them first and then you start to share more intimate details about the deal.

All right, perfect. That is time. We are going to go back in and enjoy Vegas and the event.

We spent a lot of time on this though, so like and subscribe if you want more, and we will see you guys at our next Wednesday.

Also, if you want to repeat what they did, it's cool that we were able to get to 100 units, but if you want to be like these two studs if you're in your teens or 20s and you want to get to 28 apartments with no money, themultifamilystrategy.com is the way to play it. It is better than it used to be. It used to suck.

They could tell you firsthand.

And horrendous.

You bought 28 units.

Yeah, it's so horrendous. They only bought millions of dollars of real estate. That said, it's a lot better now. themultifamilystrategy.com. Check it out, and we'll see you on next