Multifamily Strategy is live!

From the kitchen, there's gonna be a short live because I just finished barbecuing up our beer can chicken. So I'm going to be trying that as that starts to cool and the sides get ready. I'm out here with Caleb, not even film—

there we go—

for a quick vertical live off the cuff. If you guys are waiting for the big, uh, you know, hey, we're in the studio, we have a big topic today— we do have topics today, but we'll probably spend a little bit less time on Q&A because we gotta go eat. Everyone, welcome to the channel. We are working on—

never been here before.

Never been. If you guys don't know who this kid is, he probably statistically owns a lot more rental properties than you do. Uh, he's at 130-something like that, 130-something units, uh, and under contract for a 76, which is going to close here, looks like end of May, middle to end of May. Uh, so very, very excited for that. Um, we're gonna give a quick update on that deal. So that deal is, uh, that is a 76-unit. I'm not allowed to post the price However, we got an excellent price on it. I'm very happy with the deal. I think the owners also make— the current owners make a lot of money on this deal. This is one where everyone wins. We are in the middle of our capital raise, and this is the first time we're running as a syndication. Feedback that I've gotten from the community, a lot of people go, hey, I thought you don't syndicate. We don't like syndications. I want to clear up a couple of things. One, there are a lot of very bad syndicators out there.

In fact, there's a ton of them.

Yeah, there's a— well, Meridian is the most notable where they kind of just tanked Fannie Freddie loans nationally for a lot of people. That was very public. But there's a lot of the online syndicators who are exactly that. They're online gurus. They don't really know what they're doing. They don't put together good deals. And their distributions to their clients have been zero to no.

Yeah, non-existent.

Yeah. Either complete loss of capital or zero return deals. We've seen a lot of it. Syndication itself is simply filing an SEC fund, and it's not crowdsourcing. It is just saying, hey, we're going to bring on 5 or more investors. Otherwise, it's better to JV. We bring 5 or more capital partners into a deal. The general partners have control of that deal. The limited partners are brought in just as capital. And now in a JV, all of the members have to be equal or not equal, but they all have to be active in a syndication.

You can actually have legally passive investors. And that's the difference.

Yes. And some people don't realize this. So when they come in, they do these deals where it's like, oh, okay, I'm just bringing in a passive investor to my joint venture. That is incorrect. And the way that you file taxes for that, they are not an active partner of the LLC. They have to have roles, they have to have jobs. It doesn't have to be perfectly evenly distributed. That's impossible. But you have to have the argument that everyone is an active owner. This is a way for us to do on a really technical deal. This is light tech. There's a lot of restrictions. The deal needs some operational nuance, which is why we decided to structure as a general partnership and a limited partnership so we can still make amazing returns for our investors. But I'm not sure what's a couple of things that we're going to do differently on this syndication from what other syndicators do.

Let's do it.

We have an open door policy, which is our LLC meetings. There are no closed door meetings when the partners meet and we discuss the operations. Our limited partners are allowed to attend.

And this is not something normal people do. Usually when GPs meet, GPs meet only and no LPs are allowed. How we're running is full and complete transparency because of all these other syndicators out here that are like, hey, no cap, like unlimited capital calls, no returns, barely returning your capital. That's why we're keeping this open door policy so everybody can see what's going on behind the scenes. Christian and I just need control since it is a light tech deal and there is that more nuanced aspect.

Yeah, but it's also— it's a larger deal. It's 76 units. It's not one where you want a— you don't want a less experienced investor having a lot of voting control of how things are run. We run this like we do our companies. Everyone is heard, but there is a weighting on the experience of every operator. In this case, we have experienced operators— myself, Caleb, Corey Witten, Barger— and then I have another investor who's also very seasoned who's going to be on this with us. The people driving the ship are people who have worked together before, who understand how to operate this type of property, and will have the voting power to make sure that no one Everyone makes money, but more importantly, no one loses money.

The syndication actually protects these investors when people are coming in all with limited chunks and nobody's bringing the total amount of capital. As a syndication, when people are passive, they don't have certain voting rights and we have control. That means everybody's capital is equally protected. Instead of you have some member who tries to come to a coup, they actually like a JV where there's that opportunity depending on operating agreements can get kind of murky. When it's syndication, it's very cut and dry. You know who's in the driver's seat, you know who's in control, who's protecting your capital.

Yeah. Now, generally speaking, if you're doing a multifamily deal, you usually want to structure a JV, which has been about 23 of my last deals. They've all been joint ventures with other people, or I bought them myself.

Love JVs.

If you have just a few members and everyone wants to be active, that's, that's the cleanest, easiest way to do that. We did this as syndication, one, for the type of deal it is, two, for the size of capital raises, a few million dollar capital raise. Three, this structure is something that I've wanted to do for a while. There's one thing as a coach and a YouTube channel to talk about how things work. It's another thing to actually go out and do them.

Absolutely.

It was important to me that as we're weighing in on syndications and the pros and cons, that we're talking out of experience. Like, this is something that we have done, executed on, and this is something we can compare and contrast. So while it's the correct structure for the deal, we're not structuring just to get a good story for YouTube. It is an influencing factor of why we decided to take on a deal that allows us, you know, it's the appropriate deal structure for so that we can share, share the adventure here with you guys. Uh, very important. Um, now I'm getting the signal that it is time to eat. I spent most of the day smoking chicken today, but I have a gift for you guys. Uh, in about 45 minutes now, uh, I'm going to be sharing how we find these deals, how we fund these deals. No matter how you want to structure them, if you have less than the amount of money you need to close these— which, by the way, this one's going to cost about $2. $2.3 million to close. If you have less money in your bank account than $2.3 million, how are we finding deals like this and how are we closing on deals regardless of how much cash we have on hand right now? If that's interesting to you, if you guys want to learn how to do that, go ahead and register for that webinar. I'm going to be putting a link in my story on Instagram right after this. So go to Christian Osgood. In my story, there will be a link to register for the webinar. I will see you guys there if you guys want to check that out. I do see one question.

I think you should just message us on Instagram. Just shoot you a message.

Oh yeah, yeah. If you guys have any questions, just shoot me a message. I do have— I'll answer the one question since it's already here. Work with the banks or max leverage using seller finance deals? Own a good chunk, considering financing, expanding. So my whole thing is don't leverage things that you're not willing to lose. So I try to keep everything at about a 50% LTV. Right now I'm about a 65% LTV and we'll go a little bit higher than that when we close this deal at 80% LTV.

Yeah, it turns out when you add multimillions in debt, 80% LTV, that's going to affect your overall LTV. Of your portfolio?

Yes, balancing the debt stack is really important. What I would look at above, like, hey, do I or don't I leverage? If you are in the build phase of your portfolio, you're trying to scale, you haven't hit your financial goals yet, look at how you would leverage with the pieces that you have.

Absolutely.

I would look globally at, instead of loan-to-value, I would really look at debt service coverage ratio, DSCR. If you can lever no more than, throughout your whole portfolio, a global 1.5, which means you can pay all of your mortgages and pay yourself at at least half of what you're paying the banks, that puts you at a really low risk of losing your portfolio.

Exactly.

And a very high chance of being able to refinance in the future if you needed to pull money out of your portfolio. It keeps the equity stack in check, it keeps you highly bankable, and it's a good indication that you're going to be cash flowing very well. So hope this helps. Sorry for a short live today, but again, I'll be posting a link here in my Instagram right after this for where to join the webinar. Uh, exciting. If you guys want to check that out, go ahead and register there. We go live in about 45 minutes. Other than that, We will see you there. Let's eat.