Multifamily Live from Moses Lake!!! With property tour!

Live from the field, which means I didn't pre-schedule this, which means it could take everyone a few seconds to load in.

Nobody's going to be here. We're going to talk to ourselves live.

But as everyone starts to come in, and if you're watching this recorded as the re-record, we are live today in Moses Lake. If you're filtering in right now, welcome. Cody, what are we doing in Moses Lake today?

Well, we had a couple owner meetings. We've met with 2 property owners, one of which we've actually bought from before, and one of which we were just getting to, to know a little bit, met for the very first time, learned a little bit about how they're playing the game. Their daughter actually is getting their first flip at 16 years old, really fun. But, um, just had lunch with them, and now we're at a 38-plex. We're looking at building an 8-plex on the back of this lot. Christian had a meeting with the city because we're putting Moses Lake RV Storage on the map. But no, we are, uh, we're just hanging out at the property.

Yep. One of the things that we do, and I think everyone should do this, but, uh, we actually practice what we say we do. And we said that we were going to go out and meet with owners and regularly build new relationships. Today was a brand new relationship. It was reinforcing old relationships, but we were in Moses to meet with the people who, one, taught us how to do the game people who are trying to learn how to do what we did. We're giving back. And then, uh, we have a whole bunch of properties to look at and a whole bunch of stuff to build.

And I got a text last week, I want to put this out there, that's one of the reasons that we're here today. And one of these property owners that I've met with over the past, they said, hey, do you want to buy a duplex? And so we come out and we're chatting about it, and we're not huge fans of just, oh, just buy a duplex. This is a beautiful duplex, actually in one of the best neighborhoods in all of Moses Lake. And so we're looking at picking that up. There's a huge— they've got 2-car garages per, and they're 2-story townhome style. Beautiful lawn, beautiful area. We met up with them, they started telling us about it, gave us some numbers. We're gonna drive by it. We've seen it in the past, but he said, yeah, there's someone building these brand new 4-plexes next door. And it's like, that's pretty cool, someone's developing a great area. And then we go meet with these other property owners, and it turns out they're the ones that are building the 4-plexes.

Who would have guessed?

Small world. People that own real estate know people that own real estate. That is crazy.

Now, as people start to filter in, I have a question for the crowd, but feel free to post this in the chat.

And I've got my phone here so I can see your comments.

Oh, thank you. That makes my life so much easier.

Thank you. Yeah, you don't have to read a little screen on the phone.

But out of curiosity, for the few that are here in the chat who actually found our channel because they saw Cody's BiggerPockets podcast and saw how much he bought when he was young. This ties into our meeting from earlier today. We just met with someone who is a heck of a lot younger than Cody. She's on her— she's starting her third property flip.

She's doing her flip. She's done two deals since before she was able to legally drive. Absolutely incredible. And she was thinking she was going to slow slow. Sophia, if you're watching this, you're not going too slow. You're doing awesome. But, uh, yeah, just meeting up with the owner and their daughter, and they're both making it happen.

Yep. You can do this at 14. You can do this at 18, 19. You can do it at 30. It works at absolutely any age.

Dividend Dave said he learned about us from Dion. That's awesome.

No way. Well, thank you, Dion, for that.

And we'd like to put it out there that if you have questions, feel free to drop them down below. One of the big questions we get all the time is, are you still meeting with owners? Yes, did it twice today. We're probably going to meet with some more. And we met up with another owner actually named Doug, and Doug has done a lot of development. He's doing a 128-unit development for a client of his right now, and we're like, Doug, I want to build an 8-plex. I've got a piece of land and I'm curious how we could do it. And so he's going to help us do that, but If you want to learn something, you want to go accomplish something, the quickest way to do it is meet with the people in the market you want to be in that have done what you want to do. Doug's played the game with clients and for himself at small levels. He's done big levels. He has 128 units and he wants to help us get there. So he's going to help hook us up, but he's an owner of real estate. He's got an Airbnb that does absolutely phenomenal on the water here in Moses. He's got a house next door. And we wanted to learn how to play development, so we went into his office, crashed his party, and started talking about it. If you want to learn how to play the game, we are still meeting with owners all the time. I thought it was 2, but I realized it was 3 when I counted Doug in that one. 3 owner meetings today.

And we have one more on the books.

If you want, yeah, if you want to make it happen, go make it happen, but you got to actually go do the meetings even if you're nervous. Call them up, learn how they got to where they're at, and pick their brain over coffee.

Yep. Everyone that I know who's actually lost all their real estate, where they figured out how to buy it but didn't figure out how to never lose it, they did that because they tried to scale too big without finding new mentors, without getting advice from people in the space, or they got really lame advice and then tried to implement it themselves without help. That's not what we want to do. When we wanted to get into the resort space, we found someone who's owned a resort for many, many, many years and had them teach us how do they do the operations.

Yep.

When we wanted to— now we're getting into a little bit of development, and we didn't start as developers.

I want to say that developers are the richest people on planet Earth until they're not.

We're in stabilization here. We bought all the multifamily we needed to stabilize our existence and to reach our goals. That came with some extra land. So now in stabilization, a big piece of stabilizing is optimizing in the areas where we have just extra land parcels that we own that aren't doing anything. Now we get to play developer and we get to start on a smaller scale. We're going to build some 4-plexes, some 8-plexes, some storage, and move from there. That's exactly what we're doing and how we do this without blowing up.

Yeah, and I had someone call me earlier today, and this is just a question that wasn't on our YouTube channel, but they're like, where should I start? Should I do multifamily? Should I do single family? I, I could get into flips. Just because it makes money doesn't mean it makes sense. There's a reason that we've shared that on the channel a You can make money doing a lot of things. You can make money doing almost anything, but it doesn't mean it makes sense. You can get super rich in development, as can you do that in flipping. Same with BRRRR, you know, different strategies you can do with apartments or single-family. However, you need to look at what makes the most sense from a cash flow perspective because when the cash flow dries up, people tend to lose their stuff. And that's the nice way of putting it. We live and die off of cash flow. We get our net worth based on the equity growth of the asset, and that's based on the performance and the net income, but it all comes back to cash flow. And so for them, flipping doesn't really create cash flow. You get cash injections, but now it's just a sales job. You have to go get the next deal, just like wholesaling, to get your payday. Apartments for us have been what have created wealth, and that allows us to go do the big paydays like development. The 128-unit development that they're doing looks like they're going to make a net profit of about $10 million. That's a lot of money.

That doesn't suck.

Because when they leverage it, they can put $5 million down and it'll turn their 5 into 15. That is a freaking awesome deal. That's more than our whole net worth times 2. Yep.

Well, there's a difference between being a developer and being a builder. For them, they very well might hold that. They hold a lot of real estate themselves. They do sell some properties, but a huge part of what they do is they build and hold, or they build and hold a piece of it and sell off some of it. They actually have a strategy where they are building their wealth, keeping buildings, and if you can build it— what was their cost per unit over there, $150 a unit?

They built a 7-plex for $900,000.

Oh my goodness.

So less than $150 a unit.

Oh, I'm talking about that new development they're working on. Oh, the big 120-something?

128 units for $15 million.

So they're actually just a little over 100 units.

Yeah.

In a market where new units are going for $270— I'm gonna say their option to hold with their ability to build, fantastic advantage in this market.

Yeah, it's phenomenal. They will do well on that without a doubt. I was asking the guy who showed it to me, like, how the heck do we buy that? I need a $20 million loan.

Yeah, it turns out you just need more money. We're not there yet. However, we have some people in the, uh, in the meeting now. We are rolling. As always, the rules go, we'll answer your questions until you stop asking questions. So start posting them in the chat. We're gonna start reading them now.

We have a whopping 1 question, so this will be the fastest.

Okay, everyone think of a question right now, post it. There's a 2-second delay.

Any tips for finding the right piece of land for a fourplex?

Yes, I have one. It's the piece of land that already has multifamily on it. If you can buy the property and it cash flows day one and you find a little chunk of land that you can build a 4-plex on, that's what I do. We are actively doing that on, uh, Gibby.

Yeah, and if you want to build, I would go find assets that come with extra land. That's what Caleb and Chuck did. They bought a 10-plex that came with an extra acre and a quarter, they're going to sell the land. They're going to opt to do that instead of holding on to it and developing because they'd rather get the cash. And in their position, I'd rather get the cash too. But it's quite simple. You just go find a fourplex or more that comes with land that allows you to build with similar zoning. We bought a sixplex that came with an extra half acre on Broadway, and we're working on putting storage back there.

Oh, I see Caleb in the chat.

Welcome to the chat, Caleb. Mr. Hommel. All right. Yeah, just find a property that already has it. Don't go after negative cash flow day one. Land is not going to cash flow in most situations. We found ways to cash flow land. We are cash flowing land. We're working on that project right now, and that land should cash flow about $60,000 a year. However, we had to get a little creative on it.

And that land came attached to multifamily.

Ta-da! And that $60,000 a year is cash flow without the multifamily. However, we got multifamily family that helps pay for the mortgage while we are getting it up and running.

That's how I would do it. And when you find that land, the things to check— if the goal is to build on that land, you want to have connections in the city, you want to talk to other people, like always, who have done what you want to do. So you're going to want to talk to other builders, other brokers who've worked with builders, but you want to come up with a plan, uh, make sure the numbers work with or without the development. But if your goal is to learn to build, find that piece of land, find a way to cash flow that acquisition and then know your city's codes. That is the biggest thing that I see people do wrong, is they buy a thing and find out, "Oh no, I can't do what I wanted to do on this." That happens all the time. Don't let it be you.

Oh no. All right. From Ethan Wilson, "Can you lease option a property with debt on it?" Typically, yes. You get a recorded option, you have a lease in place. Typically, yes. Do I know that for a fact in every single geographical location on planet Earth? No.

However, logically, if I own a building— we're sitting in our 38-plex that has debt on it. We lease the space in this building. Every unit is rented. A lease option is a rental agreement with an option to purchase. There's two things you are allowed to do as an owner. If you own multifamily, you can rent the space and you can sell your building. There are no jurisdictions I'm aware of where you're not allowed to do those two things. If you're on a contract that has an option to sell it and a master lease for the building, you can usually do that. The only place that you might run into issues is there are some places that do take some issue with a master lease for the entire building and subletting. So you just have to make sure there's no rules locally around subleasing a space. That is the That's the only red flag I would see on doing that with a building with or without net.

Yeah, and lease options are great. I'm not sure if you're trying to do that for your 93-unit that we were talking about. However, I probably wouldn't do that. I was talking with Ethan earlier today and he's working on a really, really creative deal where they wanted him to buy a portion of the LLC and keep them on the LLC. Not a fan of that. I've seen it happen a lot.

We've looked at that with one person once for a 1031.

Yeah. But not a fan of partnering with people on an LLC where you don't know the debt obligations. Yeah. And you don't know the person. So lease option could be a good way to do that. Oh, that was for a 23-unit. Okay. Different deal.

I like the size for that. The end goal and the way that we use lease options— I love this question. We never talk about these. They are basically just putting a pin on the map. A flag in the future for, hey, we're going to acquire this. The goal is how do we own it? Sometimes it's not the right time, it's not the right structure, it's not the right debt, or you just don't have the ability to take out the property right now. If you can stagger a couple of these where you're like, hey, I have a 4-year option to purchase this, well, now you've attacked the question of how do I own it? I have an option to purchase. Now you have 4 years to figure out how do I structure this in a way where I never lose it. So we do love that as a tool. What we don't advocate for is called rental arbitrage, where that is your whole model is I'm going to lease the space and then I'm going to sublet the space.

And we have some friends that make bank doing that. They make good money. However, what are you left with at the end of the day?

I mean, money.

But if you're doing it just for money, I mean, what does it leave you with at the end of the day is really what matters. Because you can make a lot of money, but if that business model goes away and you have nothing to show for for it. All of a sudden you're left with a broken business.

Wealth is built by stacking assets.

All right, from Rebecca: How do you buy seller financing if the property's in the MLS or the seller is represented by an agent? I'll take this one. Go for it. Seller financing is just debt, and on a settlement statement, you go and buy a piece of real estate, escrow or an attorney is typically going to prepare— and by typically I mean they always prepare what's called a settlement statement or a HUD statement. And that's going to have your debits and credits from the transaction. That's going to be all the expenses that are associated with each party. There's expenses for closing costs on a buyer's side and a seller's side. Typically, the seller pays the brokerage fee, and so that's going to be an expense on the line item. Now, with seller financing, there's no bank coming in with a bunch of money to pay these items. You have your down payment plus your bank money, typically. And then whatever's left after all the expenses are subtracted out from the seller side, that goes to the seller, and it's what's called seller net proceeds, because it's the net proceeds to the seller from the transaction. Well, if you don't have a bank coming in, that means that the down payment, the money coming in, has to wipe out all those expenses. Otherwise, the seller net proceeds would be negative, and the seller would actually have to pay to sell the asset. That actually does happen. However, that's typically not what's going to happen. So if you're buying a deal that's on the market, where there's an agent, the main thing they're going to be concerned about, because they don't know how it works, is, "How do I get paid?" Well, you get paid with money, just like debt gets paid with money, and bills get paid with money. The money comes from the down payment. And whatever's left, if I put 10% down, and 3% goes to the agent, 2% goes to the government, and maybe 1% goes to title and escrow. How much is that? Is that 6%? I didn't actually listen to what I was saying. Anyways, I'm going to pretend that was 3 2 1. All right, so that is 6%. If I put 10% down, less 6%, 4% goes to the seller. And that is exactly how my first deal went when I bought on the market. Some people will say that's impossible. Well, it's possible. It's about half our deals. About half our deals are on the market. Now, the very first 12-plex I bought, 10% down, There was 4% commission, 2% to the other broker, 2% to me. I got paid to buy my first deal. And then 2% went to the government, so that's 6% right there. And then there was more fees for title, escrow, and all the doc prep. So they only walked away with maybe 3% of the purchase price. They wanted to get out of a partnership. It was on the MLS, and they wanted payments. They annuitized what they built. They put some money down way long ago. They paid it off. Now all of a sudden they're just getting $6,070 a month, every single month until they're in their 60s because they were in their 30s when they sold it. So you could play that game, but just know it comes out of the down payment. And if it doesn't come out of the down payment because there's not enough down payment, they're typically going to have to pay. And that happens if you're buying in less desirable locations more often than not. Karen Smith, do you typically buy off-market MLS? Or find off-market properties? Oh, do you typically buy off the MLS?

Well, we just kind of answered that question, but yeah, 50/50, more or less. We push very hard for the relationships, and the best deals, save one that we've done, have been off-market. We had a 10-plex that came to us that was better than I would have negotiated it off-market. I would have offered more. Broker didn't know that, and that's fine. You can do good deals either way, and a very skilled broker can negotiate great terms for you. Sometimes the seller just wants to get rid of it. They bring it to the broker and say, "Hey, we're willing to finance this," because they know it's going to be difficult to sell. And sometimes they offer you ridiculously great terms. The main thing is that if it's a broker, you can confidently ask— I don't even remember if you covered this a second ago, but The biggest thing with a broker when you bring this up, by the way, is you want to ask very simply. As soon as you start over-qualifying it, people will just not believe that you can execute. If you just ask, "Oh, are the owners willing to carry paper on this? Are they willing to seller finance?" You don't need to go into a large explanation of all the benefits. You don't need to ask a bunch of follow-up questions. You don't need to ask details.

People who over-justify are worried about something, and that rubs off on the person that's receiving it.

If your pitch has a whole bunch of extra words, I will check out. Cody and I get pitched a lot, and as soon as you start talking about something that is irrelevant, I just don't have time. I know a lot of the owners we meet with are even busier than us, which is crazy. I don't know how they do it.

More of the time, being busy is on vacation. How However, they are busy.

Yeah, they are preoccupied, and the last thing they want is someone telling them about, oh, you know, this is a long story about my goals, and this is why I think you should seller finance. If you're talking to someone who has mastered the game or playing at a high level, they know why they would seller finance.

They don't need you to explain it to them. Alrighty, so we— and if you're making it this far, we'd really appreciate if you hit the like button, by the way. It does help us out. Out. From Nick, I recently had the opportunity for a seller finance deal, but I realized it would be dumb to refinance after repairs in order to regain my money out of pocket. How do you guys recoup funds? With cash flow. If you— I mean, that you can pull money out, and I don't know that it's dumb to pull your money back out. However, not— I mean, it's— if you're saying it's dumb because you want to stay in the seller finance debt, that's not necessarily how it is. And the story is worth more than the real estate. We're refinancing a seller debt from 4% interest to bank debt at 6%. On this building? On this building. And the reason we're doing it, even though our cost basis goes up 50%, people are like, well, it's only a 2% bump, but 2% on 4% is 50%. It's a high increase on the interest we're paying. The person that sold it to us, that's holding the note, is in their 80s, if not 90s. They want to do their last development project. They need it more than we do. So we're going to take the hit. We're getting a little bit of cash out. However, You don't need to just pull— I mean, you can pull it out, like you can go to bank. Now we're going to be more bankable to more banks.

That is the main reason that I want to do it personally, outside of we said we'd cash them out, so we are. But the main reason I want to do this is we used to run into problems with banks where their biggest problem lending to us is we don't have other loans with banks. So here we are, $2 million loan with the bank. Turns out we can get banked at.

Yeah, but But if you want to get your money back out, make sure you do deals that cash flow. Somebody was arguing with me about this on Facebook. It was just a discussion and they're like, well, your deal, your strategy only works if you're young because you have to wait forever to pay them off. I'm like, well, if it cash flows, you don't have to wait. But it's not going to cash flow. I'm like, then make it cash flow. Negotiate better deals, increase the income, decrease the debt, decrease the expenses. Yeah, there's so many ways to do it, but I mean, there's 4. Now you put more money down, meaning you borrow less money, you borrow cheaper money, you increase income, or you decrease expenses. Like, those are the options. So pick one and then execute on it. If you want to do the game, you know, whether you pull money out in the form of a refi, you sell out equity to a partner, or you just cash flow. If you have cash flow, you can get incredibly wealthy, and it doesn't take forever. It took me 3 years to get to 6 figures a month between everything in cash flow, between the companies and the real estate. Granted, I split everything basically 50/50 with Christian. There's some stuff where he owns 10%, there's some stuff where I only own 20, like on the Tequila building, but generally we split everything 50/50. That took 3 years. Now, if that's too long for you, then I'm sorry, I don't have a get-rich-quick solution. However, the way you get recouped capital is you buy great deals that pay you every single month. As soon as you start doing deals that take money out of your pocket every single month, you're more likely to go broke. Not a fun place to be. Yeah.

And if you didn't create a finance, by the way, on your, your comment of make it cash flow, if you're doing creative financing, your deal's not cash flow, you're not doing creative right. When you get to set the price, terms, balloon, and interest rate and you can't find a deal that cash flows, rewrite it so it does. So that's, there's not all that much to it. And you just went through all the inputs you can adjust. You either lower the price, you increase the down payment, you lower the interest rate, or you do something creative in the special clauses that lets you, gives you time to change income or expenses. Yep.

Caleb and Chuck asked, will food be provided at the Robinhood event? For the one we're doing this weekend, we're buying breakfast. We may be doing a special dinner for the one in December. We're seeing if we're able to book that. We're not 100% sure that we are able to, but, um, that one we don't have any food planned. There's a bunch of restaurants though nearby.

Yep, we can recommend you and get you guys mapped to all of them. Um, moving forward, we'll be working with the Alderbrook, um, and doing some catering, but that will probably be reflected in the price as well.

And yeah, and done is better than perfect. We, we decided to book an idea before we had any relationships with vendors, so So we don't have anything planned. However, that will happen in the future. Yep. All right, Rebecca says she loves us. Thanks. All right, Channing Holloway, does the property have to be paid off or close to do seller financing? It depends. Did we talk about the settlement statement earlier on this call? The settlement statement, you have your items that have to be paid off by the seller. If that debt doesn't have to be paid off, then the answer is no, meaning that it can either be assumed or it doesn't have a due-on-sale, or it can be moved as a real estate contract, which is not actually a loan. There's a lot of ways where you don't have to pay it off or you don't have to seller finance with a free and clear property. However, best practice when buying real estate, if you want to play the game, is to keep things simple. As soon as it's not simple, it's not super repeatable. And so the way we do things is we do free and clear title every time we buy something. We're not assuming mortgages, we're not doing subject-to, because we haven't had to. However, if you can buy free and clear real estate, that's going to typically be simpler. You can definitely seller finance and you can definitely do real estate contracts, contract for deed, when there's a mortgage on title. That said, it's typically simpler and easier to do it without.

By the way, if you're watching right now, thank you for watching. Just had an idea. We're at one of our first— oh, our first together purchase ever. Do we want to do a brief property tour of this live? Yeah, is that an option? We can do that. Cool, stick around. Once we get through the questions, we'll walk you through some of the building. I'll show you some of the problems directly out the window, and we'll show you why we bought it.

We've got more highway frontage on this property than most pieces of real estate in Grant County.

Yeah, but if you guys want some bonus content, stick around.

Alrighty then, we've got— let's see, just got off work, glad I can make it. Glad you made it, Gavin. All right, from Dividend Dave, did you guys have your speech recorded at the One Rental at a Time gathering?

Yes, we did. Millennial Mike, if you don't follow him, he's another YouTube channel that I should watch more, but I really like the content that I've seen from him. He was at that event. He is doing the editing for us in real time, so at some point we will show up on Michael Zuber's channel for our speech there. Once that's out, I'm sure we'll be dropping links in our YouTube videos.

Alrighty, from Jacob Lopez: How do you guys find tenants when needed? We have a Hannah.

Hannah is the best property manager I've ever worked with, and she's definitely not listening to this right now because she is busy being an awesome property manager and leasing our spaces. She works very, very hard. We use a whole bunch of marketing platforms. We're on Apartments.com, Facebook Marketplace. We put it out on— man, what else are we on?

Rent.com. A whole list. It's on a lot of different sites, and that auto-propagates from Appfolio. We work with Appfolio property management software. They're very good. However, they're not the most intuitive. So you have to really learn it and you have to have a minimum of 50 rentals. So if you don't have 50 rentals, either you need to partner with someone who has more rentals than you that add up to 50. Mm-hmm. Okay, we are on Ryan. How much of an emergency fund is kept for your properties?

How much is kept currently or how much should we keep? I guess we answer both.

We are not where we should be. We do have 5 figures, multiple 5 figures of reserves across the portfolio.

Yeah, but when you have $20 million of real estate, that's not a whole lot.

No, it's pretty pathetic. We talked about this with the old or the prior resort owner. Our cash position is low. However, our cash flow position, we cash flow twice as much as we have in the bank every month. So we can come up with new money rather quickly. I have this thing and some people have told me I'm wrong and that's okay because I'm 22 and I can be wrong. It's more important to have a ton of cash flow than it is to have a ton of reserves. If you know you have money coming in every month, you're more likely to be okay than if you just have a little bit of money in the bank.

That said, we should have practice and what we're shooting for, uh, I actually— this is one of the things I love from Dave Ramsey. I apply it directly to everything that I do. We aim to have 3 to 6 month reserves in every single company's bank account for every single individual else.

Do we have that today?

No, we don't, because we started with no money. And if you start with no money You're not going to earn money without doing some work.

We have enough to pay every single mortgage we have 1.5 times. That's not enough. So we could get through a month and a half if every single person stopped paying and consulting died.

And property management stopped and the resort closed.

So if the world ends, rest in peace Cody and Christian, because we won't be able to hold our stuff.

Nor will anyone else because the world is over.

Okay, so that said, it could be worse. However, we are aiming to have double to 4x the liquidity position that we have. We recommend people focus on building up liquidity as much as you should build up your cash flow. However, if you have to pick a problem and you're going to have real estate without liquidity or liquidity without real estate, I'm going to opt to have the real estate without liquidity. Not everybody's in that same boat. However, I'm in that boat because 'cause I want a problem to solve when it pops up. Neat. All right, now, nice to meet you in Fresno. What do you look for in a deal to qualify pitching seller financing?

Well, if we're pitching seller financing, I just wanna see if it's financeable. I mean, typically for traditional seller financing, you're going to be talking about a property that has lower debt. The funny thing is, I might be the wrong one to ask. I've never actually asked anyone to sell a property. So I'm not really looking for anything. What we're looking for is people who own properties. And when we start talking about who we are and what we're trying to do, we're just being honest about the pieces that we have. If we're coming in and we have no money, well, they know that down payment's not going to be a big piece of that. And know that bankability is not going to be a big piece. When someone proposes a transaction to us, it usually involves creative finance at the proposal because they know that we're working with pieces that require creative finance. That's been my experience. Now when we talk to brokers, we do have to ask for it, but that question is just, someone wants to sell, well, are they able to carry a contract? What you're gonna find is on those deals where they can seller finance, they're gonna be a lower debt situation. It's typically someone who's owned the property for a long time.

Awesome. All right, from Cloudy, how can I get started with $1,000 in the bank and a credit score of 700? 30.

Well, you have twice the credit score Cody started with and 1/3 of the money, so you are well on your way.

Twice the credit score?

What do you mean? You didn't have any credit score.

It's actually infinite. Yeah, it's infinite plus 730. That's just bad math. I was like, I never had 365 credit.

I was using a figure of speech. You're in a way better credit position in an equivalent cash position.

Alrighty, so, um, Number one, your credit's probably not gonna matter if all you got's $1,000. And I'm not saying that to say $1,000 is nothing, because that is a third of what I had when I got started. It's a lot of money when you're getting started. The thing that you're gonna have to keep in mind though is when you're buying real estate, now you have nothing. Just like we have nothing. Like we have some money saved up, however it is nothing in comparison to what we are doing. So if you wanna go buy a million-dollar property, Now we need to figure out how we bulk up your reserves over time and know that you're not going to use your $1,000 to buy real estate. If you acknowledge that, okay, this is set aside, this is not going to be for the real estate, this is going to be to pay my bills because I do have bills, you got to keep a little bit of money in your reserve account. If you do decide to do the real estate game and you're not going to play the Dave Ramsey route, you're not going to play in cash, then you're going to realize really quickly that you either need to partner with someone, which we're not a huge fan of, We're not going to say just go partner with everybody. Bad idea. It's not a good best practice because you get in bed with a whole bunch of people and you end up with something. So if you want to play the game, you need to figure out how you borrow a bunch of money. That wasn't an innuendo like that, but I can see how it got taken that way. I didn't mean it like that. I just meant you get legal problems. But yeah, it could go both ways. You want to buy real estate, deal, debt, equity. That order always. You don't have any equity based on what you shared with me. So once you find the deal, you need to figure out 100% debt, which could be 100% from the seller. It could be 90% from the seller, 10% hard money, or 10% from someone else. But understand that you're probably not going to use your credit, and you're probably not going to use your own money. I didn't use my credit, and I didn't use my own money. If you want to play the game, you just have to be great at managing pieces. People who think they own their universe typically lose it. If you understand that you manage your universe, you manage the pieces, and your ability to manage it better than others determines how fast and how far you go. That is what's going to take you to that next level. So you have $1,000, which is phenomenal. You're 25 years old. Thanks for sharing the info. But if you want to play this game, you're probably not going to use anything that you shared with me. Other than your story. And if you can use your story to connect with others, learn how they played the game, and then use that to build your own story, now you don't need money. You find a deal, now you just have to figure out how do I get the debt and how do I make a cash flow. Because it's one thing to buy, it's another thing to never lose it. And if you can do both of those, figure out how to buy it, how to never lose it, one day you wake up wealthier than you are today.

Yep. And way to keep that credit score. Just, you know, if you get 5-year debt, just know that at some point you're either going to sell, refinance, renegotiate, or possibly, you know, in that refinance, you pull in the bank debt. Having that credit score could help you later. So just don't tank your credit in the meantime.

You should be good to go. Dory said hi. Hey, Dory.

Hi.

I hope the Robinhood's going well. We appreciate you helping out. All right, from Jacob Lopez, do you guys pull lists or do you just look at what's on the market and talk to owners to convey your goals?

Google Maps. We just look at the map. We drive the map like we would be driving down the street.. And if it has a big roof, probably has multiple doors. All we want to do is talk to owners who own multifamily. So we find the multifamily and we call them. I'm not looking for old buildings, beat-up buildings, nice buildings. It's just, is it multifamily and are they there? That's the only way we're prospecting.

Neat. Oh, Dory said, well, the Robin Hood hasn't burnt down yet. I've heard there might have been some stuff today. I'm glad it didn't burn down.

That would be Rough. Yeah, I heard there was a water issue, so they're probably too wet to burn down right now.

But don't freaking jinx it. All right, uh, Paul: Hey guys, how much vacancy do you anticipate for factoring in for a loan on a fourplex? Well, for a loan or just for the overall cash flow? Because on the portfolio, I mean, we could sustain a 40% hit and not absolutely get wiped out. But the main thing that you got to do is just make sure that you can manage the cash flows because if two people leave, can you hold it? That was something I got Christian over relatively quickly. My first deal, if it went wrong, I couldn't flow it. Christian's deals, if it went wrong, he could flow it.

He could pay it out of his job. Yeah, I had two fourplexes. That wasn't too bad. Two duplexes.

Duplexes. Oh, sorry, four units, two duplexes. I'm the numbers guy. But no, Christian had real estate that bought his real estate and if If it went vacant, if the tenant died, which he had a couple die, I guess it happens sometimes, then he could flow it. He could pay for it out of his earned income. He had reserves. If you're in that position, wonderful. If you're not, you're doing something like me, you're a little bit more risky in the beginning. Well, you got to take risks if you don't have any money. I would factor in maybe up to 2 people leaving at any given time. It's probably not going to be more than that. Could be, probably not, but if it goes to 50%, can you survive? And see how long it takes to refill it. Because vacancies don't stay vacant for years, typically. If you're buying in a decent location, it should fill up in a month.

And if you're asking how much should you factor in your specific market for vacancy, it's going to be market dependent. There's some places that just are always leased and you're going to just say, hey, it's going to be 5% vacant. There's markets where it's really hard to lease and you're going to have to factor for 25-30% vacant.

Okay, that's good news. Apparently the dehumidifiers are working. For those who don't know, at the Robin Hood, we had a water heater in the ceiling and the line disconnected and flooded a unit. And it not only— it flooded the historic cabin built in 1934. We appreciate that update, Dory. Thank you for letting us know.

Glad it is working. It is fantastic, by the way, when you have the right team. So thank you, Dory. It's really fun being able to be here in Moses Lake and doing what we're doing and getting updates in real time on our YouTube video that things are going well and that everything is being taken care of. When you build your team right, this all becomes a lot more possible.

From ST3M, what is in your course that isn't in your YouTube videos? Number 1, structure. 2, we have some speaking engagements. 3, we've got all our tools. However, I usually don't recommend people just go and buy a course. We made one because people wanted it. However, the real thing that people sign up for is the actual mentorship.

Yeah, we will give all the information on YouTube for free. I'm not about holding it— holding back information. And we talk so much on this channel, I forget we were supposed to hold back if we were supposed to. So what we do is we share everything here. If you want like a structured how do we get from point A to point B, we put it in a linear path without a bunch of extra fluff. Sometimes YouTube, we're gonna hop on and talk about something that might not be as relevant to getting started.

Relevant?

Irrelevant. It's a mythical creature. It might not be as relevant to your stuff. So we put what is relevant to actually do what we did in the first year and go from 0 to 100 units. That is in the course, that's streamlined. If you wanna just learn how to play this and you have time, watch the YouTube channel. We're here for free.

Ask your questions on our live. Yeah, we made the course because people wanted it, but people pay for the mentorship. That is the reason people do it. So we're out of questions on YouTube. So this is our last call for questions. If you have questions, put them in the chat right now. We've got 36 people here and 0 more questions. So we'll give it about 10 more seconds because we are on a delay. However, that is really it. Oh, what's up guys? Halfway through Richest Man in Babylon, loving it. What are some books What books do you guys recommend reading? Deals on Wheels by Lonnie Scruggs.

Yes, it is expensive. Yes, that is the actual price. It's like $150. Why is it that expensive?

It's out of print. Supply and demand.

People keep ruining the books and that makes all the rest of them more valuable. Excellent book though. Most of the great books on seller finance— there's one other person that we heard about at our speaking engagement in Fresno and I cannot remember the name, but that book was also out of print. For some reason, a lot of these techniques, they're classic ways to buy real estate Nothing we do is brand new, it's just we learned from older people who used to do this. Most of the books on how to play the game we play, the way we play it, they're out of print. Weird stuff. Another great book if you're just trying to structure your business, I really liked Phil Knight's book. I related to the journey a lot, called Shoe Dog. It is, it's really good. It's on the founding of Nike, but he had a lot of the same problems we've had. Yes, just in shoes, not real estate.

Alrighty, and then we've got best— oh, someone else put best books for someone looking into real estate. Also, do you recommend getting real estate license? Only if you want to be a real estate agent. If you don't, just understand that that is a career path, not an investment path. That is not the quickest way to buy real estate. The quickest way to buy real estate is to put in an offer and buy it.

I got my license to help start a property management subgroup for someone. My license expired on the 11th. I did not renew it. Being a broker is not a critical piece of playing the game in any way. If you want to learn how to do this, you're not gonna learn it in a class setting. You're gonna learn it by doing it. You're gonna learn it by the people who are actively playing the game.

Okay, and then our next one. What information do you use to underwrite your deals, or what numbers matter for underwriting with seller financing other than cash flow? Well, cash flow is great. People look at cash-on-cash return. They're like, okay, well, how much do I put in? How much do I get out on an annual basis? That matters. Debt service coverage ratio matters more. If my debt costs $100,000 a year, I want to make sure that the property nets $200,000 a year. The resort that we bought, we have a total of $400,000 a year in debt service. Day one, the NOI on it is about $400,000 a year. So we have to make it better. We're a one-for-one. We can pay our debts with net income. That's after paying all the operating expenses. It doesn't cash flow much day one. We have to get the income up. We can get the income up pretty significantly by optimizing systems, which will allow us to reinvest, to do pay raises for people. But debt coverage matters more than anything. So if we have $100,000 debt service, we want to see a path to get it to $200,000 of N-O-I, net operating income. Okey dokey, then we've got, what information do you, oh nope, just asked that one. I'm reading things twice. Shafar, no, no, I must join. It'll be my Thanksgiving, Christmas gift to myself, you rock. Oh, we appreciate you. Let us know what you think of the course.

If you're gonna do the course, bust through it, and then look at joining the mentorship. I find that is where people actually start buying stuff.

The information's great, but you do have to apply it. Yup, alrighty, from Jacob Lopez. Have you ever been asked to show proof of funds by an owner?

I've been asked once with you on that one 10-plex deal we didn't buy. Yeah.

8-plex.

8-plex. Oh, I was actually thinking about the 10 that we manage now. We were also asked on that one.

Oh yeah, that broker didn't know what he was doing.

Some people are dorks. Yeah, we didn't do that because I didn't want to work with that broker. That was the main reason that we backed out on that. Yeah, as we put in an offer, they asked for a bunch of stuff. He was a jerk. And I was like, I don't want to work with a jerk, and I don't want a jerk to get commission. So we just backed out because we didn't like them.

Yeah, not often. The only reason you'll get asked for proof of funds is they don't believe you can close. And some people will challenge me on that. However, if you're working with a seller, if they knew you could close, they wouldn't ask you to prove that you have funds. I've never had a broker other than I was gonna name drop, can't name drop on YouTube. Other than that guy that was brokering a deal, and he's not even from Moses Lake, but he was brokering a deal. I've never been asked for proof of funds because everybody knows I can close. If people believe that you can close the deal because you can communicate effectively, you're confident, you know what you're talking about, you're not adding extra words just to fill space. Getting comfortable with silence is a great thing. You will not get asked for proof of funds.

That just doesn't happen. Now occasionally people ask where funds are coming from and we usually share our scheduled real estate so we don't actually show them bank accounts. We show them, look at how much we've actually purchased. Look at all the real estate. I'll send them that because you can verify that on public record. It's better than, in my opinion, it's a lot better than a proof of funds.

Oh yeah, because people, you can back that. Yeah, people get proof of funds from other people and it's not real.

It's like, we got the real estate. I don't know what would keep you from just pulling an image of someone's bank account from Google. So, yeah, we will share that, but we're rarely ever requested.

Okay, and then we've also got, and I know about the free versions, how would you guys recommend the best way to get a real one? Okay, a real proof of funds comes from a bank account.

Where you prove the funds.

Some people are like, where do I get a proof of funds letter? From your banker. Well, I don't have any money. Then you don't have proof of funds. That is about how simple it is. You either have money or you don't. And I'll share with you, I never have money. So I'm grateful people never ask.

And we've actually never, I've never been requested to have a proof of funds letter from a bank. That is more common when you're buying a single-family house you're going to live in. I see that happen a lot. When you're playing the investment game and you're buying multifamily, I've never seen that requested personally.

Usually if they want proof of funds, they literally want a screenshot of your bank account. Shafar Incorporated asked, is it ever an encumbrance to have a real estate license when speaking to brokers?

Mild, very mild, not a big deal, but you do have to address it. So you have to make sure that they know we don't represent ourselves. So when we call, hey, we're talking about the property, hey, interested in this property, as we start getting into it very early in the call, you let them know, hey, just so you know, I'm a broker, we're not representing ourselves, I am interested. In our relationship, I am just a prospective buyer. I don't care who represents me, I will not be self-representing. Is it an encumbrance?

Yes.

Is it a hindrance?

No. Mild inconvenience at worst. Jason Ewert. I know that guy. Yeah, we, If anybody's ever wondered why the heck Moses Lake, there's two properties that has Beans LLC on it, we bought a couple buildings under Beans with Jason. That is a story for another day.

Yeah, we just passed both the big bean and the little bean today.

Yep, the OG bean and the new bean. But what is the agenda for December 9th through 11th event? The 9th is a Friday. We're going to be having just networking evening. We may go do margaritas at Dos Margaritas, maybe not. We'll see how many people are under the age of 21. However, the agenda is we're gonna have networking on that Friday. Saturday, multiple breakout sessions. May go do breakfast at the Alderbrook. We'll see what their availability is. May have to go to the deli. We're not there yet. However, we will have a lot of different breakout sessions. We'll be there. Caleb and Chuck will be there. They'll be talking about buying out of state. We haven't bought out of state, but they took practices to buy out of state. They'll talk about property management. With third party, we'll talk about self-management because I actually self-managed most of my portfolio before I met Christian. And by most of it, I mean all of it. And today we own a management company, so we'll be talking about asset management best practices, business best practices, and how to go buy real estate with zero money. I'll be leading some of it, he'll be leading some of it, we'll do some together stuff. We'll give you a property tour, how we bought it, how we financed and how you could do that for yourself.

If anyone wants to take an ice cold kayak trip, I will join you.

Yep. Jason said he has no money. It's because you put it in the beans. For those who don't know, I'm sorry. However, there are these beans in Tacoma that are amazing. We named an LLC after it. Kevin, how many are going to be at the Robin Hood this weekend? Is there a set schedule this weekend? Yeah, that's this weekend. That's in a couple days. That's— yeah, that's going to be breakfast. We'll have network in the evening. I'll be there Friday. I'll be there Saturday. Some people booked all the way through Sunday. I'll be there on Saturday. Yeah, Christian will be there Saturday morning for breakfast. If you are there, we're going to be— we're buying breakfast for everybody. So feel free to splurge whatever you want to get. They've got amazing food, seafood. They've got great breakfast, great Greek yogurt, bacon, eggs. It's phenomenal. But we're going to be doing networking in the evening. Most people have hot tubs. We'll do a campus tour. We'll show you the triplex and the sauna house that we just picked up. And you're welcome to kayak. You're welcome to just hang out in your room. But we will be networking that evening. We'll also be networking over breakfast in the morning, and that is on us. So if you're there, excited to meet you, excited to see you. And if you have questions, it'll just be live. Okay, so Whoa, a lot of stuff came in. Shafar, is your event schedule posted anywhere? I'm new. We haven't gotten there yet. Done is better than perfect. That is one of our principles.

So we haven't built it out yet.

However, we are going to be building out an event schedule for next year.

I keep telling everyone we're going to announce the January one on the live, and we will. This will be the first place that we announce it, and I was hoping to get to it this week, and then we have been out of town. So, I don't know, do we just want to just commit right now? Next week we're going to have a date for January? Yes.

Okay.

We will do that next week. And we will announce it on the live next week.

Yep. Dory said, "Mmm, breakfast." Dory, we will do a team breakfast sometime very soon. We'll go over to Alderbrook and make that happen.

We can also commit to that and that is happening.

We're saying it publicly so it's now a thing. Now it is online. Okay. How did you two meet? How did the trust develop? Have we ever been asked that on this channel? No, not on a live. So we met at a company, we were working together at a real estate brokerage. He was founding and heading up a call center. As soon as he got it profitable, literally the first month he got it profitable, the employer shut it down. He's like, we lost too much money getting started. He decided to hire too many people and then he made Christian fire all the people. So that was a whole wild ride. But out of that, we ended up partnering. This As far as the trust goes, you build trust when someone tells you to do something or they give you a piece of information, you apply it, and let it know it worked. Everything that I've told Christian to do, he's done within reason, and vice versa. When it comes to actually going out and applying this stuff, I told Christian to go buy a duplex before we'd ever partnered on anything. He bought it and he made a lot of money. Like, it just worked. And I'm not talking about making $10,000 $200,000. That's a lot of money. Christian made a lot of money on that duplex deal. Yeah, a 6-figure deal. He trusted me. I called him up and said, you got to do this deal. And he did it. It was on the market. The walls were filled with roaches. They were all dead, but he opened it up and that was disturbing.

It was nasty.

Bonus insulation. It was 3 hours from anywhere he'd ever bought real estate before, and before that he owned one duplex. It was really a house with an ADU. He owned a condo and he owned a house at the time. He took a leap of faith on some kid and when he won, which was months after, like it was less than a year after, that started to solidify that relationship. You gotta start sharing things with people and if they execute on it, you either work with them more or if it doesn't go well, typically you split. Whenever I share something with Christian and it worked, it built trust. Whenever he shared with me something and it worked, like, we just got closer and closer and things started working. So we met together at real estate brokerage, but we built trust over getting takeaways from each other, applying them, and seeing it thrive. Dory said she's gonna hold me to it. You're welcome to do that. You know where I live. But for those who don't know, Dory is my neighbor. All right, from Ryan: Why don't you represent yourself when buying real estate? Is there a reason other than for the convenience? Typically, brokers need money more than we do. We never keep cash anyway, and I don't want the legal trouble of it going wrong.

I don't want the legal liability. And also, if you want to build relationships, getting brokers paid is good. Brokers want to work with us when we are not trying to compete with them ourselves. I do not want to compete with the people who are working with me. Therefore, that was a conscious decision we made. I'm like, look, there's no deal— say it's a 3% commission— there's no deal that we have ever bought or ever considered buying where 3% made a notable difference in the deal. If a 3% margin is why your deal makes sense, it was a bad deal to begin with. So I would rather someone else get that 3%, because guess who's going to bring their next deal to us when we close a deal? The guy who just got paid for bringing a deal to us.

—Or the gal. —Or gal. If you're a gal and you got real estate, hit us up. All right, Channing Holloway, who pays for inspections in a seller finance deal? Typically the buyer. You can negotiate whatever you want. If you're like, well, you're going to need an inspection anyway, you should pay for it, well then you can probably get them to do it.

But typically the buyer pays for it regardless. Yeah, and I like to be easy to work with, so I recommend you do it.

All right, Jason said that Christian's duplex looks so much better than his. Well, those of you who don't know, After I got, um, was Jason first or were you first? Uh, Jason bought it first. Okay, so I convinced my buddy Jason to buy this duplex, and then I convinced Christian to buy the duplex next to him. His was the better duplex, same price though. Yeah, it was the same price. He bought a superior duplex. It's the reason that I told him to buy it. I was like, this one makes more money day one. So he bought it, and then he ended up redoing the plumbing. So he did all the bones of the asset. Christian did a lot of the bones and then did the exterior. And completely redid the interior. His looks nicer.

Jason's plumbing is superior to Christian's. Yeah, well, I have better references for you on contractors than the ones that I used for that, so. But they both have new roofs. Yeah. If you ever need a paint job, we can spruce yours up.

All right. Esther, are there multifamily available for purchase in Moses Lake area? Always.

Oh, there's always stuff for sale. I would not recommend it because you're competing with two very, very, very aggressive buyers out here.

Yeah, named Cody and Christian. Yeah, you can come play in our space. And we bought— so we have three real rules: how do you buy, how do you never lose it, and will it be fun? We bought two triplexes because we figured out how to buy and how to never lose it, but they weren't really fun for us because we'd already done a bunch of other stuff and there wasn't really a story other than we just— we bought it because we We bought it zero money down. Jason actually funded one of them. Well, for the most of it, we put some of the money down, but we bought it with next to no money down. And we partnered, and that's how Beans formed. But the two triplexes aren't our absolute favorite. And so if you want to buy those, I mean, those are great deals. We're going to probably keep at least one of them because one of them actually makes a good amount of money. The other one, which we do with Jason, is kind of limping along, but it's having fun. If you want to buy something like that, then we won't compete with you because we already own it. We'll just sell it to you. One of them is waterfront, one of them's not. But yeah, you're welcome to buy stuff if it's on the market. We've looked at it, so just know that if it sits on the market in Moses Lake, there's a reason we didn't buy it.

And we've had a mentee in our mentorship group, uh, Alex beat us on a duplex. We put in an offer, he wrote a better offer, and he won.

So if you want to play out here, you can. Oh yeah, Jason's, oh Jason, we already read that. Cloudy, how do you go over the fear factor? Oh, I get that question all the time. That is where I am at.

I'm afraid of losing money. Cody doesn't have that thing in your head that says like, oh, maybe I shouldn't do this. Cody's, there's a reason that Cody is as far as he is as young as he is. I definitely have that voice. That, that like, oh my gosh, how do I hit the jumping-off point? For me, the fear factor was the 38-plex is the first deal where if we're wrong on something we've never done before, if our numbers are wrong, I cannot write a check to cover the negative on that. That would be like having my best month at the company I've ever worked at every single month and draining all of it on into this building to try to float it. When we first bought it, we started negative $15,000 a month. Not ideal. That we could just barely cash flow with a very, very clear plan of how we were going to fix that. And we did very quickly. We also had lower monthly payments for a few months while we got this up to, up to speed. The fear of if we're wrong and we're stuck at negative $15,000 a month and we raised money to get here, what the heck happens? Is a real thing. You're gonna hit a point where you go, do I believe in my numbers? And is my level of commitment to my goal high enough where it doesn't matter? And you do this enough times and you realize, huh, when I decide I'm gonna do it, if I just do it, it keeps happening. And that builds confidence. But when you're first starting and you don't have that level of confidence, it is very, very hard. I don't have any piece of advice for that other than you just have to do it. Like, if you look at your numbers and you believe in your numbers, take inventory of where am I at today, where do I want to be, and will I get to where I want to be without making the jump? That was the thing for me mentally that got me over the hump of, okay, this is scary, there is fear, there is risk, and it's also risky and scary to be dependent on someone else for a job. So I'm gonna go ahead and, uh, I forget the red pill, blue pill, which one's the adventure pill?

Red. Gonna take the red pill. All right, so from Ryan, how many— and I would like to point out there's 2 questions left, so if you have any more questions, get them out now because it's 4 o'clock. We will go till the questions die. However, these 2 go together and they're from completely different people. From Ryan, how many units did you self-manage before putting it into third party? And then, is there a lesson that slapped you in the face, something memorable? Oh God. Those go together. I have always self-managed my portfolio. I've shared a story when I got slapped in the face, which is when someone else managed the portfolio and stole a bunch of money. We're gonna dig into that because I haven't really shared how that worked. I self-managed the assets, but I had someone else manage the money. So I've always self-managed. We're still self-managing 108 units. The difference is we've got people on the team now. It used to just be me up until 30 units. The problem was I had 68 units and someone else was managing the money, and then they started going what we call bankrupt, except for without banks.

So it's just called rupt. Yeah, they were corrupt.

Yeah, nice. It was fraud. And I called them out on that and they took all my rents and my security deposits. I'm still waiting to get my security deposits back. I'll never get the rents. We settled on that. That's fine. They're gone. I'm happy with it. However, when they didn't send me my deposits, I got mad and I sued them. So we'll see if that comes through. They signed a settlement and never sent the money. Funny how that works. Slap in the face. I let someone else manage the money. I don't do that anymore. For the resort, for the apartments, I manage the money. I oversee all of it. For AppFolio, for PM, if something's gonna happen, it's gonna come back on me anyway. So I oversee all of it. Learn that lesson once, not twice. And don't learn it on yourself if you can help it. Learn it from me. I let someone else manage the money and it cost me a lot. So that was my slap in the face. Did you have one?

My slap in the face has been trusting other people. I've had it happen twice, and again, it was partnerships. Not with Cody. Cody's the one that doesn't slap me in the face or apologizes, you know, when we piss each other off. But we've had partners who've said, "Hey, we're gonna do X and Y," and it's not happened. I think the big one for me was the second time we tried trusting another major partner. Um, got a deal. We're gonna help you start these companies. I'm gonna share all my experience. I'm gonna do all the admin for you, which is both of my weak points. You're like, I'm gonna take out the business operations side, um, if you guys can just sign this lease to, um, rent the space with me. We signed the lease and then he ghosted us and enforced the lease. Yeah, that was pretty lame. And granted, it wasn't a lot of money.

That was a $12,000 loss.

Over the course of the year. Which is like, does it hurt? Yes. That's not nothing, but that's on a $20 million portfolio and all of our other businesses, it's not a lot of money. It felt, that was probably the worst feeling I've had.

Just being blatantly screwed for no reason. Yeah, and from a cash flow perspective, that pays bills. That pays quite a bit of bills. And the money's gone and the hard part about me being 22 having done all this I look at it as just a whole. Any amount of money within reason that can pop up, like the resort, there was a septic line that was not good and it's gonna cost like, it's gonna cost 5 figures. The problem I have is now I see it as, well, shoot, there just goes liquidity, but we got to do it to get it back. Whatever it costs, it costs, and it's irrelevant because of the portfolio size. However, it is actually a lot of money and that one hurt because of the $1,000 a month that I could have used, we could have used to expand the business, and it went to waste.

It was a significant delay in being able to hire another employee. Yeah. Like a 6-month delay in what we wanted to do because I was like, oh, that's just money that I would have allocated towards a rent credit to get them out into Moses.

Yeah, because that's what the rent credit will be. It's $1,000. Like, that's just what it would have been. So we could have done that half a year ago. However, live and learn. It's just It puts unnecessary stresses on businesses.

The slap in the face though to me was more of the just like we acted in good faith and when you trust someone and you do something without great paperwork where we guaranteed they would actually do what they said, uh, people just don't do it and that is bummer and that was a really, really, really good lesson but it wasn't fun to learn. Do you pay yourself or do you reinvest? We reinvest. Everything. Until very, very recently, uh, Cody and I did not pay ourselves at all, pretty much to our first year.

Yeah, a whole year we were working like every day, all day, and it was very stressful. Gave up a lot. Christian missed weddings, I missed a wedding, uh, missed friends, family events.

We put everything into growth. Starting next year, we will pay ourselves a salary that I know for a fact is less than probably a lot of people on this call. We're still reinvesting almost all of it. My wife has left teaching, she's retired. We are gonna pay ourselves about what it costs to cover our expenses.

Yeah, and that's it. Everything is reinvested. Some people go out, try and build a business for money. Look, businesses are designed to make money, but what you do with it is what makes a difference. And so all the money that we get, We could throw $1 million at the building we're sitting in right now and it would not be finished. No one's willing to do that. And if they were willing to do it, they would've done it because it just hadn't been done. This place, stone countertops, we put in stainless— We're doing everything we can to make it better. That's it. That's what money is for. And if you don't reinvest it, typically you just become another slumlord.

Yep, but that's not what we want to do. This building was really beat up when we first bought it, but I mean, you can see behind us, these— it's not a bad place. Stainless steel appliances, stone countertops, the whole nine yards. Added a dishwasher somewhere over here on the other side. It's a cool place. We reinvest everything because we want to be able to keep everything, and that means we maintain and improve and rebuild.

And the story is worth more than the real estate. We're doing what no one else is willing to do. If you could do that, your story is worth more, and the story is always worth more than the real estate. The story allows you to build new relationships with people. We're the guys that came in and revitalized the places that no one wanted to do because they were absolutely rough patches in the city. Now we have buy-in with the city because we bought a whole bunch of stuff, kept it how it was, and at once flipped the switch, and now we're making it all better at the same time. Grab attention? Nope. Everything gets reinvested.

How can I start networking so I can build trust? Find people in real estate in your market. That is real estate meetups, that's calling owners directly, and they're owners, not sellers, you have to remember that. Call people directly, book meetings, talk to local brokers. But just get really good at telling your story very simply. This is who I am, what I'm trying to do, and why I'm trying to do it. And you should be able to do that in a few sentences. The rest of your conversation is getting to know other people and their goals. But if you can just build that network out, the opportunities, I, I promise you, they will find you. You don't have to look for deals. You don't have to target properties. Just meet people, learn about their goals like Cody and I have been doing all day today, and we'll continue to do into the afternoon here. Just meet people, and if you do that, you will learn how they played the game, how they bought the real estate, and they'll connect you with the other people who can help you get to where you're trying to go.

All right, and we got one last one. I gotta go, I gotta make a quick call for a refi. However, I'll do the property tour with you guys. Curious about your goals, seeing as you guys have gone into hospitality. Are you guys franchising hotels in the future, owning Hilton, Sheraton? We will own big hotels, but I'll let you talk about that.

I'm gonna go make a phone call. All right, I promise that we'll take you guys on a property tour of our first deal. We're in it. We're in our hotels though. Yeah. Yeah, we're going to do big hotels. I'll talk about that, but I'm just letting everyone know why we're moving. There's our really, really, really uncomfortable lawn chairs. They were $1.50 at Walmart. All right. As far as the big hotels, we want to scale up to that. We're not there yet today. I would— we're not quite there yet today. So we will scale there. We're going to buy more multifamily to get a bigger base so we can scale up to that. But first, we want to master the hotel that we have now, really improve that, get our systems down, make sure everything works, and once we're stable, we move forward again. So this is the back buildings of our 38-plex, and the road is nearby, so you might get some road noise. But this is actually the first deal Cody and I bought together. Repainted the building. Very, very simple building. We got a lot of 1-beds, studios, few 2-beds, one 3-bed. But here is the property. Couple problems with it. We started with a lot of homeless and not a lot of people renting. We now have more people renting, which is great. People actually paid the rent once we fixed up things. Now we're towing some cars off the lot, so if you see a totally destroyed car behind me, that won't be there next week. One thing at a time. But one of the really cool things about the property is, and the reason that we actually purchased it, was because behind me they're building all of that. That is all brand new housing that was not previously there before. The area is getting a lot nicer. They're doing development and we're just really stoked about that. The funny thing about this property is that this was actually on market for 13 years at the same price. Behind me is our little park. It's really pretty in the summer. Leaves are kind of falling off the trees, so it's not as pretty. But we have this courtyard, that building, that building, that building, and on the other side there's a huge long L building. It's a total of 38 units, purchased for $2 million day one. It was collecting about $5,500 today. Rent, uh, what are we at? I think last I looked at it, we're like $20,000 to $23,000 a month in rent. So a little scary day one. Now it's doing a lot better. As Cody said, we can invest a lot more money into the property, but this is where we got started. The actual lot is huge. If you look back there, that whole long building all the way to the end, that's another 14 units. And over there, that's the new Home Depot. All the development over here is coming on in. All right, I got— I could see some of the questions and then they disappear. I just saw one come through from Marvin. How did we get the original renovation budget for this property? So on this property, the renovation budget started with a little bit of out-of-pocket. So we raised the $300,000 down payment, seller-financed deal, $2 million, $300,000 down, brought $100,000 in from 3 different partners. Yeah, here's the, uh, this building still needs to be painted. This one's kind of still the gross one, but $300,000 for the renovation. I put in $45,000. Cody put in $45,000, then we started rolling. Uh, from there, rents were— and they still have been— every time we collect rent, it's 100% reapplied to this. In addition, the city just built the roundabout. I don't know if you can see it right back there. There's a brand new roundabout that was not here originally. We sold off some land to the city to actually to build that. That recapitalized the accounts pretty well. We also created an easement for them to park some equipment on the back, which increased revenue again. I'm thinking of what else came in. We haven't raised any additional capital, but over the last year we spent about $250,000, I believe, on renovations. But yeah, this is the first deal. This is how we got started. I see a body running up to us in the courtyard. But yeah, we were just sharing how we're doing renovations, how the city bought some of the land. We were sharing about, uh, where we're at today, how much we've invested, and how we got started.

Yeah, we've invested some money. Wow, that's loud. Back to inside we go. Yeah, we are, uh, Eventually building an 8-plex. We've got land back there, about half an acre.

The reason we bought it—

we got a great location. We're on the highway. Some people don't like the highway. However, got a roundabout out there, and this has got more traffic than any roadway in Moses Lake, let alone Grant County. So we have a lot of traffic, a lot of visibility, great park. We're going to build out the park, the land over there. We're going to put an 8-plex, and we've got all these buildings We're going to reside these someday. For the meantime, we're painting it. And the front building, we're going to knock down because absolute garbage.

Yeah, I showed them the back of the front building. Yeah, it is a turd. It is the reason that no one ever bought this property.

It'll get better though. Yeah, one day at a time. Did you show them the back here? Come on.

Yeah, I showed them a little bit. Yeah, I was, I was a little farther down though. You should show them. So this is Hayden Homes back here. They're going to build us a fence Yeah, they're building us a stone wall, not a fence.

However, talk about location. We're sandwiched between high traffic. Everybody's gonna see our apartments. And then we got all the brand new homes. And then that turd that's getting pulled out of here in a minute. Tow truck's on the way. But we got all these brand new homes. If you want to buy real estate and you want to make money so you can improve said real estate, It's important to buy in a location that is improving, and we bought between a growing area, which is the highway where they're building and developing, and now they're building homes which will never be competition for our tenants. We will always have people that want to stay. And then we're back in our little space here, put it back.

I think we got some questions. I'm sure we do.

It was hard to hold walk in. Oh my Goodness, there we go. And we made it back.

This is a fun life. I know, we should do this in all our properties. We should go live from the Robin Hood. We'll go live from the Robin Hood, do an actual like mobile tour if we can keep stable internet that time.

Yeah, hopefully it's been good here. That's Home Defecto. Home Depot. Oh, that's funny. Oh my goodness. All right. So Dory put eyes in there. How did you guys get funding to actually do the initial renovation on the property?

I did answer that one. Okay, cool.

From Scott, what do you think about conventional traditional B&Bs to Airbnbs, pros and cons, profitability between the two types? Airbnbs are fine. I mean, we, we have, uh, the Robin Hood on Airbnb. All for it.

But, um, the big thing with Airbnbs is that you get a very unique property that's not like everyone else who's doing it, because it is a very competitive space. People rush to that.

I'm gonna cough.

Stop dying.

The cold has killed me. Look, it's a competitive space. However, we structure the resort as an actual hotel so that if Airbnb ever gets outlawed, which granted They want to bring people to the Hood Canal, and we want you to come visit the Hood Canal. Robinhoodvillageresort.com, or just text us, come hang out. But if Airbnb ever got outlawed, we've got it operating as a hotel, not solely an Airbnb. We don't want other people's restrictions to tank us. It turns out if the Robin Hood makes $0, while we could afford to hold it, that would hurt cash flow quite a bit. That's not what we want to do. Not what I want to do. From Shafar, heck yeah, live from the Robin Hood. What are your thoughts? Is it ideal?

Oh, live from the Robin Hood. Same spelling.

I do live at the Robin Hood though, so I thought— No, no, it made sense. That was my logical train of thought. Live from the Robin Hood. Is it ideal to stay off CREXi for the first deal? Well, I mean, you can. It's up to you. You can find deals, you can find brokers on CREXi. You can find them on LoopNet, find them on CoStar. All up to you. Just know that everybody's gonna see it. Love from Minnesota. Wish you'd do a tour seminar. All right, from Ryan. At what point did you guys go completely self-employed? Since I quit coaching gymnastics at age 20.

I went self-employed at 20— 29. We left before I turned 30. Um, then Cody and I have been running this company together for a year. My wife went self-employed, actually self-unemployed, uh, end of last school year. She's a kindergarten teacher for 5 years. So, um, of our group, uh, the 3 members of us, uh, my wife, Cody, and I, uh, my wife very recently, Cody at 20, me at 29, all, uh, all left the 9 to 5. I will not go back at any point ever for any reason.

Then on the— on this 30— from Marvin: On this 38-plex, you mentioned raising $300,000 as equity. Are these permanent partners? How exactly are these guys cashed out of the deal, if ever? We structured them originally as equity partners, then we cashed them out. Now you can structure people as cash out, as debt, or equity. I prefer to do it as debt as often as as possible. If you have to write a check, you can. You can do it with equity. You can also sell it out to new people. However, the preferred structure for us is that we can convert it to debt and then pay back the debt over a long term. The goal when doing anything is to create long-term problems, not short-term problems. Because long-term, if you have time, you can solve for it. If it's due tomorrow, you have a buyout agreement, well, Shoot, you gotta come with money and you either have it or you don't. However, if we can make it a debt problem over the long term, you can do a 10-year deal where you can just amortize it, meaning you're paying it down a little bit every month. It's a better place to be. It's a lot less painful to do it that way too. Absolutely. That looks like Hayden Homes development behind the property. Yeah, you can tell because of the way it is. No, it's actually super close together and nobody has a yard, so.

Yep, I guess that's it. It is amazing they can pop up about one of those every 2 days. It is so fast how quick they build those. Yep.

What do you think of one time? I have no idea what that means. I'm sorry. Oh, what do you think of one time construction? They put a second comment. Oh, it's like one rental at a time, like the Zoomer. What's fun at a time? Yeah. Um, One-time construction loan. Oh, okay, that's a lot of different comments for one point. Sorry. What do you think of one-time construction loan? Well, if you want to get a construction loan to build, I think it's a great product. However, you do have to figure out how do you exit that because those typically aren't 30-year products.

They're usually very quick.

Yeah, you got to turn and burn. It's fun to turn and burn. You can make a lot of money that way.

However, you can also lose your butt. Yep, I'm big on not starting in construction. I'd say start in stable multifamily or really any business that's cash flow stable.

Before I realized who this was, I was like, that is not an appropriate comment. Julie Anderson, I want your wife. We need to bring more women into real estate. Ah, I was like, I was like, okay, but no, it's Julie, so that's okay.

Cody is from now on required to read the entire sentence before commenting. Uh, my wife is fantastic. She does does not like being on camera. That was actually one of the first things that we agreed upon when she joined the company, is I do not want to be online. That being said, I am actually very actively working on trying to bring in more amazing, incredible female entrepreneurs onto our channel. We have found that about 85% of the people who follow and watch end up being young to middle-aged men. I would like to widen that demographic a lot because Cody and I are both young men. Uh, we want that message. This works no matter who you are— young, old, male, female. You can do this. We want some diversity on the channel.

We're actively working on that. Yeah, and if you are a female in real estate, let us know because we'll put you on the channel.

Yeah, on Mondays we, uh I'm gonna run out of stuff to do. We only have 5 more rules of real estate to cover. So if you follow that series, um, yeah, if you're young, female, and on multifamily, 30 weeks ago—

well, actually, not young, just female in general. Yeah, if you're just a female and you're in the space, hit us up, we'll bring you on the channel. And if you're a male in the space, hit us up, we'll also bring you on the channel. Uh, that was future Cody's problem though originally, because we had that idea of recording our videos for our rules and we were like, we have 35 weeks, we don't have to worry about it. Well, here we are. So if you wanna be on the channel, regardless of who you are, hit us up, we'll put you on the channel. Julie Anderson qualified her question saying to meet, she wants to meet your wife.

Oh, that could be doable. My wife is, she'll probably be at one of the Robinhood events. I will try to coordinate that. If you are out at any of our events that we'll do fairly regularly. Yep. Let me know and I will try to coordinate Dani being there. She is fantastic meeting people one-on-one.

She just doesn't like being on camera. From Marvin Diaz, I hope I'm not pressuring you guys by asking details on this deal, but your insight is so valuable on deal structures. Sale price $2 million, $300K down from 3 investors, $100,000 for each investor. Simple math. You guys put up $45,000 each for the renovation, how much was the equity split originally? It was 20-20-20-20-20. Looking back on it, we wouldn't have given up more than maybe 40% of the deal. Maybe.

But I mean, I could be persuaded to do 49. Nah, I would do 40. I don't want to— I do not like going over 50 though because you trigger excise tax.

Yeah, so learned our lesson. Can you get extra bills for, for, uh, having to buy up more? On that deal, this was our very first deal we ever did together. We had to learn a lot, and by a lot I mean literally everything. We didn't know what we were doing. We gave up 60% of an asset when we were running the show, and by we I mean us and then Hannah, who is awesome. She's probably not watching this, but she is phenomenal. We couldn't do this without her. We couldn't do it without each other. It would have been very difficult to do if it was just one of the three people. So looking back on it, the amount of work that did to get it to where it's at, we would have not given up even close to as much. Would have been easier to buy it out. However, live and learn. So we have 100% between two of us now. It's just 50/50. In the beginning, it— we only had 40%. Not good. So here we are though. I'm happy where we're at, and we paid the price to learn how to play the game. Do you have a video of rental properties cost and calculation? We do. We have videos on how to calculate the real estate math 101. We also have another video, maybe we labeled it 201. That seems intuitive or smart, but I don't know if we did that. Well, I know we have a couple videos. Maybe it's 102.

I don't remember. We'll check. But there is a first and second to the real estate analytics, and they're both longer videos where we really go through the details of the calculators and what we're looking at.

Esther, is it okay to contact owners directly if the property's in the MLS? No.

Yep, MLS is gonna be listed by an agent. You are violating their relationship with their agent. Don't do it.

Yep, don't do it.

Now you can get permission from an agent to talk directly to an owner, but that is between you and that agent and that owner, in that order. They are an intermediary until they tell you they're not. Awesome.

That is our last question of the day. Awesome.

This was a long live.

I appreciate you guys joining us from the field today.

And literally from the field.

Oh yeah, we were in the field. We were in a field. If you want to see more of the properties, we're an open book. We've shown our addresses on the YouTube channel. If you want to come hang out, check out Moses Lake, shoot us a message. And if you want us to do more property tours, Whiteboard Wednesdays at the different properties, let us know in the comments. But we appreciate you staying along for the hour and a half. Like, comment, subscribe if you haven't already, and we'll see you next time. Someone asked, wait, how often do we go live? Every single Wednesday at 3 PM Pacific.

3 PM Pacific, specifically speaking. Yes, unless we are on a plane. We will— we've done it live from Denver, we're doing it live from Moses. Wherever we are, we will drop what we're doing and make the live.

Yeah, we will make it happen. All right everybody, we'll see you later.