Multifamily Strategy Real Estate Q&A live

All right, here we go. All right, and welcome back to another episode of Multifamily Strategy Live. I'm Christian Osgood, your channel host, and excited to be talking about real estate today. Now, we usually start with a general topic, and sorry that I'm late to my own live. Turns out my normal camera right here, uh, decided to not work today, so I had to swap out cameras and I forgot how to use the old one. But nonetheless, here we are, uh, back in HD, streaming to everywhere that can be streamed. If you haven't yet Give a listen to the podcast. We are now a podcast. We are on basically everywhere you listen to podcasts. I choose Spotify, but iTunes and everywhere else. Last interview was with Sam Prim, a fantastic investor. Really exciting interview. I think one of my favorite ones that I've had the opportunity to do so far. More to come, but give that a listen wherever you listen to podcasts. Also available on my main channel, Multifamily Strategy, on YouTube. So today, talking just briefly about something I'm very excited about, we have, uh, the largest event that we've done. Now, we used to— we still do, but we've run a lot of Robin Hood Village Resort events. So we're learning to do the event thing, and it's about 50 people. I love doing those. We'll open those up again next winter. But, uh, going into summer— and this is, you know, it's a May event, uh, we have 10 days from now, I think 10 days from now, kicking off the, uh, the end of the year here, or the school year. I'm used to my wife being a teacher, uh, but kicking off the back end of the academic year with an event that is going to be fantastic. It's Northwest Action Summit, nwactionsummit.com. 250 people, best catering, best food. Super, super excited for this event. Um, I have a great lineup of speakers. A lot of friends who you see on this channel are going to be speaking there. I'll be there. Cody will be there. Caleb, who's a common contributor to this channel, is going to be there. Uh, it's basically all the main characters of this channel minus, uh, Matt Hawkins, who's one of our favorite guest stars. Uh, everyone else is gonna be there. If you wanna network with owners at a different level, uh, these are people who are actual operators. I, I just wanted to say this really quick. There are a ton of events that I've been to that are hosted by real estate influencers, just online people with tons of traffic. I have interviewed a lot of them, a lot of them, not all, but most of them. Don't know much about real estate. They're media people. They're not real estate people. This event, these are operators. These are people who know how to play the game, who can articulate how to do it, but they're not just social media talking heads. These are people who know the game. I've seen their portfolios. I've been in their real estate. If you're looking for a place to be, this is the event to attend. May 3rd and 4th, nwactionsummit.com, Vancouver, Washington. We'll see you guys there. Now, every Wednesday at 3 Pacific, and today 3:15, but every Wednesday at 3, we go over your questions live here on Instagram, on X, LinkedIn, Facebook. We're talking multifamily. For the very few who don't know me, I started really buying multifamily in 2020. Started with a duplex, second duplex, bought a 38-plex, scaled to multi-hundred unit portfolio. I'm actually working on Probably doubling that this year as I'm selling off some of my properties that I've either been able to cash out a lot of money from or just aren't as strong performers as my other ones. I'm editing my portfolio, still planning on doubling this year. Done a ton of seller financing, bought with conventional, bought with hard money. I mean, any way that you can buy a deal with or without money, I have done it in the last 4 years. And so we are answering your questions here on deal structure, how to run these. And, uh, yeah, also run a PM company that manages hundreds of units. So let me know your questions in the chat. We're gonna dive right in. Uh, Luke, who's part of Multifamily Strategies mentorship group— Luke, good to see you. Um, Luke has been a consistent contributor to these lives, so I appreciate seeing you here a lot, Luke. Yo to you. Ooh, here's a question. Um, I— now it is a semi-private group. You have to, if you want to join this group, just, you just have to submit a basic like ask to be invited and someone on my team will just do a very, very, very quick vetting of you. And, uh, we are inviting more people into that community. So there's a great question. Uh, Multifamily Strategy, by the way, on Facebook. You'll notice that's my name for everything. Hey Christian, on Facebook, uh, Going Public. So it's, it's pseudo-public. It's still monitored. Pace Morby's group has many lenders that are scammers. How will lenders in the group be vetted? Now, I don't know anything about Morby's group, um, as far as his actual page. So if that's happening, I can neither confirm or deny. I have no knowledge. Um, however, how will they be vetted? I actually do go through everyone who's in that group. Now, occasionally someone may slip in. Um, we had, for the first time ever, I had a dispute recently where we had someone in the group and someone who had a profile that looked less built out than what I would expect a profile to be. Um, they had a disagreement in the comments. I have a moderator who watches every single post in real time. That got taken down very quickly. Everyone received a warning. I referee that very closely. I actually do have a full-time staff employee who moderates all of my media across all platforms. They catch these very, very quickly. The Facebook group and growing that has been a mission that I gave them, uh, 3 weeks ago is when that started. And we have committed first to education. So the course, the mentorship, I want people to graduate and build their own business. This isn't a guru thing where you have to join my community and be part of my thing and we do deals together. Multifamily strategy is about find the simplest way in your markets to buy real estate, move forward, build your own business, graduate from the education. So we focused on that first. We're starting to build out more community because people want to do deals together. People want to see some deal flow. They want to connect to others. I'm going to invest in that. A huge piece of that is making sure that we do not have a group like everyone else who has 100,000 people. And in that group, you know, there's just constant sales pitches and scams. We are being very selective. If someone posts anything promoting lending, a product, a contractor, that person has to be vetted by my team. We're not allowing people to just solicit on that. I monitor it really strictly. Facebook page that we're modeling after is WARRI, Washington State Real Estate. My friend Yan, who has the best course on mobile home parks, by the way, MHParksAcademy.com. With Yan's page, he does a fantastic job of moderating that and obtaining, maintaining community guidelines. We are investing heavily into that group. Starting very recently, but that's a great question. I think that's something worth addressing here. And everyone on this live who happens to watch this, you are invited. Multifamily Strategy Facebook, go ahead and request an invite and we'll go ahead and do a very, very, very quick view of your profile. If you look like a legitimate person, welcome on in. If you violate a community guideline, we're also very quick to ban you. Bruno, have you thought about becoming a hard money lender? No, I have not. I actually just went to an event with Flynn Family Lending, James Deynard, a few other lenders through the Wari Group. Just to— it's something that I've never explored and they were talking about hard money lending and the pitch was actually like, this is how you become an operator and why you would do this. So I attended the event and I got a bunch of great takeaways. I love what they're doing with their business. My goal is to own real estate. In fact, after I moved to Texas, I am going to make a legitimate play at trying to be the largest landlord in Texas. And there are some huge people to compete with. Uh, but I'm 32. I have time. I have partners who wanna do this. And, um, I like staying in my lane. Every time that I've gotten out of my lane, take the Robin Hood Village Resort for example. I'm not a hospitality person. And what we found is I took my other not hospitality people and I put them in a position that they did not thrive in as well as they did in the things that we're best at. We buy, renovate, and operate multifamily buildings. I specialize in entry-level housing, offering nicer units than all the surrounding properties at a lower price. We're amazing at working with Section 8, with other assistance programs, but I can actually come into a community, take ugly buildings and make them pretty, and provide affordable housing and actually like solve community issues. It is rewarding, it is fun, and it is very profitable. I will never deviate from that. Hard money lending to me is a distraction. Is profitability important? Yes. Do I think about and need money to survive? Absolutely. Do I need money to support my staff and grow my organization? Yeah. We think about money a lot, for better or for worse. I think a ton about money, but I don't only operate for money. I do tasks that are fun, that are exciting, that better my communities. Hard money lending is not what I'm best in the world at, so it's not going to be something that I push forward as a business. Oscar Pena, other than making sure your deal meets a 1.5 DSCR, that is debt service coverage ratio, uh, what is a good exit strategy to pay off a hard money loan slash any loan? If you can't get a cash-out refi, what else can you do to pay off short-term loans? First of all, don't take short-term loans, but if you do, you need to have a very clear path to exit them. I do a couple of flips a year, which is typically done on a 2-year hard money loan. That is a shorter timeline. So what are the rules for this? One, You have to be able to service that loan out of cash flow from the portfolio. If no one pays anything, I cannot go negative to do a project. If I am using hard money, I'm very, very, very careful to make sure on a global basis I can easily flow that project. You pay off your obligations with money. That's a, uh, that comes up a lot in the mentorship, and that is the answer. And we'll break that down. But ultimately, hey, I have a balloon. How am I going to pay it? Well, with money. Let's break that apart though. How do you pay for something with money? Refi. That is one and the most common way for the real estate to buy the real estate. Two, you sell the property. You have an exit from the property. Does it meet the criteria of how do I own it? How do I never lose it? No. But is it a viable exit that can make you money? Absolutely. So refi, you can sell. Now you have more strategies. You can also renegotiate. You can extend a loan. You can also go get, you can get new private debt on something. If you have a short-term loan, And say you're doing a renovation project where you have a short-term loan, go find someone else to fund the money. The money's probably not going to be more expensive if you have a first position. Like right now I have a project where I'm borrowing at 13.5% and the deal absolutely works. But if I hit the end of that balloon and I don't have the money, but I've improved the property and the income is higher, I can just find someone else to give me a 10, 11% note. Might even be able to get a more conventional product and get closer to 8% note on that project. I can refinance, continue to cash flow, first lender pays off the second. So it's a different form of refinance, but I get another form of private capital. You can renegotiate with the existing lender. You can also do it out of earned income. If you have other business or another property that you can pull money from, you pull the money from there. It's important to have a lot more pieces on the board to do this, but at the end of the day, you need to have multiple exits and you need to have a way where it's like, When the balloon's due, money is due. Where's that coming from? You can earn it, you can borrow it, or you can liquidate an asset and pay for it with the equity of your existing portfolio. Those are the primary ways that you can pull that off. From Luke: Cody said there are no comps. If there are no comps, the banks will just throw a BS number for the appraisal. Is that going to be a problem with my case with the, uh, with my 2 and 4 units. Um, or we'll start with your 2 4-unit buildings. Um, I can't remember, Luke. I'm trying to remember because we looked at these there. I don't think the 2— if they're side by— if they're on separate parcels, they're going to be appraised based on sales comps. If they're on the same parcel, they're going to be commercial. Um, either way, if you have a lack of comps, they tend to go more conservative, which means you actually can get hosed on appraisal. This is happening to a friend of mine right now. I have also had appraisals on resi stuff. So on the duplex, it came in low because they comped mine. They're side-by-side identical duplexes. One was bought by my friend, one was bought by me. I renovated mine completely. Like I put a ton of money into it and made it beautiful. Got more than doubled rents, got new tenants in there, decked out the building. They comped my building on the purchase of the other unrenovated building. Same project, same purchase price, but they said, uh, this person just bought it for like half the price. I'm like, yes, I doubled the value. Like, yeah, but we have to include it as a comp. So residential stuff, you can really get hosed on other comps if they don't have actual income approach data though. They tend to go more conservative. Banks worry about those things. Uh, you— it can be a problem, especially in more rural areas. You have to be able to get good comps. You really do have to get those comps. So that, that's something to look at. I'm helping someone right now where they're buying a property across the street from where I manage. They could not find good comps. Fortunately, I have leases that match the rental income comps that they were looking for, so I'm sending them over the— sending that over to them today. Emmanuel, hey Christian, uh, when it comes to functional flipping, what type of window blinds do you guys opt for? That is a fantastic question. I'm going to text my wife right now and we will hop right back to this one. That is— Functional Flipping is Dani's Instagram page, by the way. You guys can follow that. She doesn't post nearly as much as me, but the stuff she posts on there is gold. Um, I'm gonna ask her right now, uh, can you come in and answer one question for us? And blinds. Let's see if we get— uh, we'll see if we get Dani on this one. It will either be yes or no, but, uh, we'll, we'll find out. I texted her, uh, stay tuned for, uh, potentially a showing from Danny. Luke, what is the vacancy rate? What vacancy rate do you think is too high? Does it depend on the size of market? Uh, it is usually gonna be pretty market dependent. Like if you're in a depressed area, you're gonna have higher vacancy. In most places I invest, 95% is generally what I underwrite to because my buildings are generally 100% occupied. Um, so it's going to be very, um, very dependent. Danny says that she is in a meeting and can't join us. Okay, I will text her the question then. Um, what type of blinds do we use in rentals? I will still get the information for us. There it goes. What was the Facebook group to join again? It's Multifamily Strategy on Facebook. I'll actually, as I talk here, I think I can pull that up, and I'll do that as I answer the next question. I work for one of the largest landlords out here in Texas, does, uh, doing security, not the cool RE, uh, real estate stuff. Um, well, first of all, that's a great way to get into real estate, by the way. I have no problem doing a job that's related to real estate as long as you're trying to get into the game and you're moving forward and making connections. Awesome, awesome. I hope to be one of the largest landlords in Texas before too long. We'll see what happens. Uh, Luke, what is your most common ways to pay off debt for down payment? Uh, what would paying off without refinancing— I heard you say you can structure it as equity. Uh, so one thing that you can do is if you— so if you borrow for a down payment, you can convert it to equities. You can say, hey, instead of paying off here, would you actually just Hey, take an equity stake in the property and here's the plan for the property and here's how you're going to cash flow. Or if you have a plan to sell the property in the future, here's what the exit looks like. You can change debt into equity. It's more common to turn equity into debt though. If you have an equity partner, hey, instead of paying you off with cash, can I pay you off with, maybe I give you a little bit of money right now and then we write a note due in the future. If you have good cash flow and you can sustain that, You can trade your pieces. So that would be a way to do it, but that's debt for a down payment. So if you borrowed your down payment, that's a way to do it. If you don't refi, you have to get the money from somewhere else. So best practice is not to just borrow it again from the next person, but if you get to the end and you need more time— I've had this happen with the deal that I bought into. We bought into the property, multiple properties, our our multiple partners, our solution was specifically, hey, let's just bring in a new partner to buy out the partners, get them their return. The property has progressed far enough where it's worth it, and I have a new partner. That person will need to be bought out in the future. So I've delayed things. I don't have a fix. You can't just continue to just cycle investors forever. That's a horrible model. But If you hit the end of a deal and market has shifted, it's a not optimal time. You don't have the money, project didn't go where you thought it would go, and you can't refi to pay them out. You either need to earn it, you need to sell the property to make them whole, or you need to bring in a new investor to buy out their position. I have done that on one project and I'm working on a second one where I have an investor who I would rather have a different partner who is actually an operator with me. This is a passive investor, so I'm looking at cashing them out and swapping out partners, which is another way to cycle through the borrowed down payments. And now we can actually get started because All Nighter's here. So All Nighter, thank you for joining us. Um, I'm gonna go back up to this question because I got the answer for the blinds. By the way, uh, we don't have a ton more questions here. I'm gonna hop over to Instagram and answer some of those questions as well. Uh, so those watching on Instagram, go ahead and post there. All the other ones feed through here. Uh, but Emmanuel, hey Christian, um, when it comes to functional flipping, what type of blinds do you guys opt for? I got the answer here. Um, we are looking at— ah, um, we always look for cordless blinds. And the reason we do the cordless is because it eliminates a choking hazard both for pets and for children. If you have the little, little toggles on the end of blinds, um, not not great. Also, they tend to get damaged or broken or caught on something. So we have the ones where you basically, you pull them up or down and they stay wherever they're at. We're going basic because people mess these things up, especially in entry-level housing. They get jacked up really easy. So we do something that's affordable, but something that, you know, you slide it up and down, they look nice, they're very, very simple, and that's what we'll do on every apartment. I don't really care what type of style it is, if it's the type of slats that you move up and down, or it's the type that's kind of that like, you know, blackout papery look. I actually have a good example here. I'm in a tiny room, by the way. Some people think my studio is actually like some big room. This is a tiny room in my house. Give me a sec. I actually use this for my house. This is ideal for a rental. So I'm going to turn the camera over here. Cordless blinds like those. They're blackout, they're nice. I pull them there, they stay there. Very simple. Also, I need to clean that window. Yeah, welcome to my house. And, uh, that's a perfect example of a cordless blind that would work in a rental. Is exactly what I put in my house, which I am probably going to convert to a rental here when I move to Texas. And I jacked up my camera. So as I fix this, we'll dive into the next question. I did say I'd get the Facebook group up too for Bruno. So let's, let's snag that. I think I can screen share. So if I go to facebook.com, Multifamily Strategy is what I believe we just called the groups. If I go groups, Multifamily Strategy. There we go. Okay, I'm going to hit share on this. Share screen. Yep. And yep, share. Okay, right here we're looking at it. Multifamily Strategy, a mighty 592 members. We just made this available for everyone, so anyone can apply to this. It's Multifamily Strategy. It's a private group, so we will actually go through Anyone can find it, but you do have to be permitted to be in. And so you can look through, we have all sorts of conversations on deals, upcoming events, uh, people connect here. You know, if you're in Central Washington, you can hop in, apply, look through what's going on. But we are building out this community actively. There are going to be some vendors who are getting approved right now who are either hard money lenders or contractors. I have an application process for them. So anyone who is posting on here has been approved and vetted by us. Anyone who is violating community guidelines will be banned. So hop on in Multifamily Strategy. It's a national group. So whoever's watching, you're invited. You're allowed to be here. What are your most common ways to pay off debt for a down payment? Oh, don't worry. We got that one. We got that one. Um, oh, from Emmanuel, appreciate the efforts on the window blinds question. You're welcome. I, I like to have a little bit of fun. I, I'm not as, uh, well, we'll say I'm not as professional. The real answer is probably I'm not as organized as I need to be. Um, but there are some people who are just like big studio, major broadcast. I'm just going to tell you guys how it is. I'm in the field. Uh, I'm gonna post some fun content from this, but isn't a 15-unit that is just messed up. I have a— just posted a photo of a tenant got locked in a unit, and so instead of, you know, like figuring out the door or calling— this isn't one of my buildings, it's a building I'm looking at buying— but instead of calling property management and saying, hey, the door's stuck, uh, they just ripped through the wall and exited through the neighbor's kitchen. Um, crazy stuff. We have a lot of fun. I'm actually doing this stuff in the field though. Um, okay, I have a question here from Alex, uh, Johnson, this is in on the Instagram feed here. Best advice for someone wanting to stop using their own funds? Here's my advice. If you have money, this is what it is designed to be used for. If you have money, you should spend it on assets that continue to pay you more, and out of that money you can pay. I am not particularly a fan of Grant Cardone. Um, He did a deal with someone in our mentorship, and I did not like how that went down, and I told our mentees not to do that. However, um, like him or not, his book 10X is fantastic, and his real estate model is also fantastic. Take the money you have, your earned income, and put it into real estate, and then the dividends that that pays, you can spend on whatever you want. If you continue to do that, make money, take the earned income, turn it into an asset, and live off your assets, you can scale up your lifestyle, you can spend more and more, and it really doesn't affect you because you're only spending cash flow. Now, I have the argument reinvest everything until you get to your goal, but once you hit your goal, you can start to spend your passive income, and that is acceptable. If you have money, spend it on real estate. I wouldn't be weird about that. However, if you're doing deals consistently, you should be able to buy deals at a higher velocity than you currently earn money, And if you're trying to scale your portfolio, my recommendation is become excellent at underwriting deals because you need to know if you're looking at a deal. It always goes deal, then debt, then equity. So know when you have a deal worth pursuing. It is not a lot of math. It is quite simple to do. Someone can learn this in everything you need to know in a day, like a few hours. You can be like, okay, I understand the basics of this. And then take a few weeks to practice, actually underwrite deals. And you'll find anyone within a 14-day period can become excellent at underwriting deals on a very basic level. You can look at a deal and say, I need to pursue this, and this is why I need to pursue this. It is not that hard. Then I would start meeting the other people who've done what you want to do. So if you want to get into 20-unit buildings, who owns a 20-unit building in your area? Just go meet them, learn their story, learn how they build their portfolio, build that relationship. Those two things will pretty much carry you through everything. There's a little bit more nuance to how do you actually grow your relationships and get to the next level. But on a 101 level, know when you're looking at a deal, financially understand how to underwrite a basic deal. And then number 2, be around the people who are doing those deals. If you do those 2 things, the deals start to flow. You will buy real estate. That is a fact. And we got a request to join for the Facebook group. All right. My wonderful assistant Corey will will be in there later today and we'll be doing the approval. So anyone who wants to join, you're invited. Welcome to the club. Any other questions on the Instagram feed? Oh, I do have some. Oh, good, good, good. OK. I'm trying to read this one. Uh, never mind. I can't, uh, I have comments, I can't read them in English. I have no idea what they're, uh, what they are trying to say there. So never mind, disregard. That is a, that is a non-question. Um, I do have a final one from Luke if no one else has any other questions though. This is a lighter live and is probably my fault because I started late and I didn't do a good job advertising this one. One. Uh, my bad. However, Luke has a good question here. Uh, do you, uh, do you only do subordinate debt if it's 100% seller finance? Need some help. So subordinating debt, for those who don't know, it's basically you have different positions of debt. So you have a first, which is whoever placed the debt first, they're in first position. If you were to sell the property, that's paid off first. Second goes behind that. So if you have— and you can do it infinitely— but if you have first, second, and third position debt on your property, um, in the event of foreclosure or sale of the property. First person is paid off in full first, and if there's money left over, the second person's paid off, and if money's left over, the third person's paid off. Uh, subordinating is choosing someone in, say, first position, choosing to move to second position and subordinating their debt to another lender. Uh, that can— that falls in the category of you get what you negotiate. If you have a deal or a reason why you would need someone to subordinate, they're going to need ample compensation and reason to do so. In seller financing, it is a little easier because you have direct contact typically with the owner, and you can say, hey, would you mind shifting your position to a subordinate position? I'm going to bring in first position debt, and in exchange, I am going to pay you a higher interest rate on your second position. Or you can show them, here's how much I've increased the value, here's why you're still covered, and I'm going to pay down my loan by X amount if you're willing to subordinate, lowering your risk. These are all ways that you can present this type of stuff to a seller if you have a reason for them to subordinate. You can also have these conversations with any private money lender. If you have a private lender or any, you know, equity part— or sorry, debt partners who have given you money to close your deal, you can change position, but you have to give them financial reason to do so, which is usually a paydown of the loan, an advance, you know, paying down the principal with some interest, or an increase in interest rate to account for the increase of risk. Another thing that you can do with, um, support outside of subordination, if you're trying to move your capital stack, there's also substitution of collateral. So you can also move one loan on one building. I'm looking at doing this right now. We have a sixplex. I have a loan there. I actually kind of want to own it free and clear, and I have other assets that have the equity. I would like to take that money and move it to another asset. Cody and I did this on a refinance where we actually just got the, uh, we had a land parcel on a multi-family complex, 7 parcels, one of them was just raw land. When we refinanced, we said, hey, we've got the value on this way up and we're refinancing at a very low LTV. Is there any reason you need this land parcel as part of the collateral, or can we just go ahead and own this thing free and clear? They're like, oh yeah, absolutely. Just cut that off. Uh, we'll put the loan against this building. You now have no debt on this piece of land. We start picking up some debt-free land around our properties on refinance. These are all different ways that you can get around subordination. You can also do substitution. So depends on what you're trying to do, but, uh, no, it's not just for seller financing. Private capital is easier. Uh, rarely, if ever, you'll get a bank to subordinate. It's not that it's impossible, it's just it would be highly unlikely, and you would have to have very little debt in proportion to the value of your building for a lender to, like a professional lender, to swap positions. Emmanuel, how do you handle pest control services for tenants? Do they pay for certain pests? Generally speaking, in Washington State, that's going to fall on the landlord. So we do a lot. I've had units that have unbelievably bad— these buildings that we've inherited tenants from other people, the worst bed bug infestation I have ever seen in my life. You could actually go in there and scoop bed bugs with your hand. The exterminators required a professional to come in and clean the unit and get all the trash out of there before they could even start trying to remediate the bugs. It was horrifically bad. It cost a ton of money to exterminate them. They were burrowed into the walls and into the paint. Usually with bed bugs, one treatment will do it. You have to wait like 30 to 60 days to go through the whole process because they have a life cycle and the eggs hatch and they have to get killed. It took 3 or 4 full treatments to get that thing done, and it was really expensive as a landlord. Those are a bummer. It looks like I may have a bed bug problem in one of my Texas units. That type of stuff, you hear about it, you just You write the check, you get it addressed immediately. You don't want to bug problems. You don't want them getting around. They're nasty, they're gross, and they multiply really fast. So if you get roaches, fleas are horrible, we've had that happen twice, or bed bugs, which are just the grossest of them to me. I, I hate bed bugs. Um, any of those, get all over them immediately as a landlord. Assume that's going to be your expense and, uh, and move from there. Luke, Um, was talking to the broker of a property I pitched yesterday in the mentorship. Um, great advice. He asked me to walk the property even though it's a 9-hour drive here and back. Should I go? That's going to be up to you. 9-hour drive, I would— my hope would be that there's an easier way to fly there, save some time. But, um, 9 hours there and back, I would. Still a day trip. To drive a property. I think that would be, I think that would be worth it if that's somewhere that you want to own and that's a relationship that's worth having, especially if they have other rentals. You can go there and just learn something you wouldn't have otherwise learned. I think that's a good use of a day being around people playing the game that I've taken owner meetings where it was a total waste of my time and I flew to Dallas for the meeting. Someone who owned 2,000 units, Thought it'd be interesting. I went down there, completely wasted my time. But then I've had other times where I'm like, yeah, it was a 7-hour round trip, but 7-hour drive, met an owner. I learned so much in that owner meeting that I still use today and how I operate my properties. So I would say at this stage of your investing career, you have an owner who wants to walk a property with you and you have something to learn from them. I think it's worth a day of your life to head out there and do that. Already sent an offer on it too. Yeah. In addition, there's a transaction on the table. I think there's a lot of reasons why I would look at this. My answer is yes on this. I like this. Manuel, was the infestation caught during due diligence period? It wasn't. It's on a larger building. On due diligence, I don't always get into every single unit. We usually, and I do it on, I do it randomly, so I don't let the landlord dictate which units. But on a 30-unit acquisition, I'll usually get into— it needs to be more than half. So if, uh, I'm buying 32 units, I need to see at least 20 of those units randomly selected. And this one was not one of those, but I had been in this unit before and there were no bed bugs. There was no clear sign other than it was definitely a very messy tenant. There was no sign of infestation. We had owned it for a while, tenant we inherited, but we had owned it for 2 years before a neighbor complained, hey, I'm getting a bed bug problem. And I actually, he actually came in and did his own extermination. He's like, dude, I've cleared these things twice, they keep coming back. And that's where you look at it as an owner and you go, hmm, I have a very messy tenant in the adjacent unit. We haven't had a chance to walk that unit yet this year. I have a reasonable suspicion what is going on. And we came in and it was Horrific. So yeah, being a landlord is not a particularly passive job until you get really far down the road and you have 75 to 100 unit buildings, Class B+ to A, with in-house management that is totally off your hands. That's passive income. And you don't have— you're not syndicating that. You just own it. You hire property managers, you have their operations, and you check in on the financials once a month. Like, that's passive real estate. On the way up, this is all stuff you have to deal with. Like, I've gone into units that look pristine. I'm like, oh, this is gonna be a really easy turn. We walk in, check everything, it looks good. And then halfway through, you're like, oh boy, something keeps landing on my leg. And you lift up your pants and your whole legs are just covered in fleas. I've had that happen before.. And it's like, oh boy, this is not in any of the books that I read on creating passive income and retiring from real estate or with real estate. Yeah, bugs are nasty. Bed bugs are my least favorite. They creep me out. They're weird looking. They have all sorts of disease. They're horrifying. Fleas are gross, but at least they're small enough where they're not as freaky looking to look at. Bed bugs get really freaky looking. And if they've been like munching on people, they get big and full of blood and nasty looking. I just— least favorite of all the bugs. Giving Instagram some love here for the last time, looking through, seeing if we have anything new there. Nope, no questions. You guys are watching but not, uh, not chatting. That's fine. Um, I'm out of questions here, so this is a shorter Instagram and, uh, YouTube Live for me, but this is what we have. So if you guys have any other questions, I'll answer them, but I'm gonna wrap with this. We're about 10-ish days out, I believe. Let me see when the event is. The event is, it's the 3rd and 4th, so Friday and Saturday of next week. It's Wednesday today. So yeah, we're about 10 days from the event. If you are planning to attend Northwest Action Summit, uh, we are so far beyond, uh, the time to do so. I will extend the live code that I offered over the weekend. I'll turn it on right after this. Code is LIVE10. Website is nwactionsummit.com. nwactionsummit.com. That is the event to attend if you would like to meet the owners, meet me, meet Cody, meet with Caleb, Dion, Mike, Michael, Mike, Mike Zuber, and Mike Newton. Bunch of other fantastic speakers. We just booked my good friend Beth Johnson. Private money lender. She has— I've borrowed millions and millions of dollars from Flynn Family Lending. They're going to be speaking on our lending panel. Come to this event. It's a good place to network and I will be there. It's going to be a good time. I'm going to answer these last two questions and then that's going to be a wrap. So we have— I have Oscar here. There we are. Can you explain how Cody acquired money for his first deal? I remember on a YouTube video said he pitched the brokers. So on that first deal, he pitched the brokers in his office on, um, yeah, basically he just presented it. He said, does anyone have a client who would look at lending on this? He had 4 people be brought up as a potential lender. He pitched all of them. Uh, Cody's told this story before on this channel, so I'm not throwing him under the bus or anything. Uh, he botched all the pitches. He forgot the actual dollar amount he was asking for in his first pitch. He was so nervous. They're like, okay, what do you need? And he's like, um, um, um, I will get right back to you. Uh, this is, this is what the deal is. Uh, like he was a 19-year-old learning how to pitch, but he got 4 shots at it. And one person did say yes. And the reason they said yes is this, and this was a good pitch that Cody finally put together. The final pitch was this, look, I'm 19. This deal is going to easily make the money to pay you. Like, this is a good deal. I believe in this deal, but I am 19. And if I lost this, I am backing it with my equity. You will get this deal and this terms. You will— I'm backing it with the LLC. So you will get the LLC in the event of my failure. And I'm 19. It's likely I'll fail. Is this a deal that you want for yourself? And they're like, Ultimately, the investor had two possible outcomes. One, they lend to Cody at, I believe it was 10% interest. And this is back when rates were at 3%. They lend to Cody at 10% and they get paid and they get cashed out. And I think it was a 2-year note, or Cody fails to cash them out and they take a property at an excellent price in an excellent area, in excellent condition. Cody was successful. He did keep the property. He did pay them off. But 4 attempts, 3 of them are botched, one of them was landed. He landed his first deal, no equity partners. It was Cody Davis and a debt partner. He paid them off. I believe he had a slight extension. I think he was off by a few months where he's like, I am really close to paying you off, but would you mind giving me a little bit more time to move my pieces? They said, yes, that's fine. He paid them off. And like that, Cody owns his first 12-plex, no partners, just A seller finance note and 10% down private investor. That is it for questions, everyone. Thank you for joining. This has been a 40-minute edition of Multifamily Strategy Live. If you enjoyed this, please like and follow. Show up to the next one because today's attendance kind of sucked. I'll be the first to admit that. 20 people. I'm getting a few more people in right now and I'm like, oh well, no one attended the last 48 minutes. Uh, Mason wanted to know how the, uh, the T12 broker, uh, the T12 they give you, how do you make sure that T12 is accurate? You check it against bank statements. They're going to give you numbers on the property. You're going to pull all the bank statements for that property, and those need to line up exactly. If there's anything that doesn't line up, you ask the questions, and you do not close without getting the answer. So for those who made it for the last 10 seconds, I apologize. We'll go live again next week. If you haven't yet, like, follow, subscribe to the Multifamily Strategy Podcast. I am doing the owner meeting so you guys don't have to. Now still meet with owners, but I'm meeting the biggest owners in the country I can find, and we're getting their takeaways. I'm asking them what they do best and what they do wrong. We're learning their stories, their methods, their strategies. It's a 30-minute episode each. We just launched an episode with Sam Prim, uh, who is a larger Instagram influencer, and he's one of the guys who actually operates. He knows how to do the real estate side and the marketing side. I loved meeting with him. I thought it was a particularly good episode. But check it out. Support that podcast for me. That's the best thing you can do for me and growing this channel. Let's get the word out there. I got the owner meetings on lockdown for you all, uh, so give that a listen. Other than that, I'll see everyone on the next episode of Multifamily Strategy.