Our Craziest story yet! - Multifamily Strategy Live

Sorry, today's been really busy. It is the day before Thanksgiving. So for all who are about to be watching, key topic while everyone joins the live, and then we're going to get rolling from there with the questions. We go to the questions, stop though. I'm a little bit limited on time today. We'll do what we do. Also, you guys are going to join me on a walk because I've been cooped up all day. So update number 1, we are on day 6 of the 90-day burn. For those who are not familiar with the 90-day burn, what is that? That is where we work a minimum of get my connection rolling. That will help a lot too. But, uh, yeah, it is a very quick, very, uh, well, I guess not that quick, but you know, 90 days, 3 months, hard push. Uh, last time we did this, we got 2 of our companies off the ground, pushed the revenue on one of my companies from $30,000 to $83,000 per month. Um, so this is, uh, a time to focus up workouts, food, sleep schedule, sauna time. Everything is optimized around the, uh, the efficiencies of getting the projects done. Speaking of the projects, We have updates and the craziest story I think we've had yet in the portfolio. For all the weird things that happen when you manage and renovate things, uh, this is a good one. So we have the hotel conversion, which is by the way going very well. We're getting some leases in, some great tenants, and, um, I'm really surprised at the pricing we're getting. We're actually getting, um, we're doing really well, really well on our lease price. Cabinets are going in, we got a great price on those, so we're getting kitchenettes in the units that did not have kitchens. The surprise— there was not a lot of money coming in, and there wasn't supposed to be because it's supposed to be mostly vacant. However, what we found is there was, um, there was a lot of cars there all the time. When I got my team out there, we just signed the management agreement, so I got my team out there to start posting notices and checking out units. They found something in one of the units— people. And then we went to another unit, there's more people who shouldn't be there. My initial thought was squatters, but no, it is actually the original manager of the hotel, the one that the past employers had hired had moved himself into the building and is running his own hotel inside our hotel. We've interviewed some of the people staying there. They have all been paying in cash to an individual living in our building without a lease, and they're on weekly rentals at ridiculously high pricing. And he is just renting these out to anyone and anyone, or yeah, anyone anywhere who will give him cash. So yeah, police are helping me with that situation, but it looks like he's stolen about $14,000 and that is being rectified. Not worried about it because everything else is going well and all the units that he has people in are somehow they're paying like $1,400 a month for a crazy gross unit because he's not cleaning or turning these units. He is just doing his own thing to steal as much as he can before I toss him in jail. So Fun stuff, always, always a, uh, always an amazing, uh, always an amazing thing. But that is the story. Now that we are done with the intro of our section and people are starting to join the chat, which is great to see everyone, uh, we're gonna re-explain the rules here. I always, uh, give you guys some updates on what's going on in the universe, share a quick story, and focus on a quick lesson since we're dealing with the, uh, with the police and, uh, and fun stuff on a troublesome building, which happens when you do renovations. Um, I'm going to leave— I'm going to start with this one. Everything that you do, and I've never seen an exception to this, it takes exactly 3 times as long, 3 times as much effort, and 3 times the cost as what you originally expect. Until you get very experienced, you can estimate these things better. Um, that is consistently everything. That's true from home projects, uh, you know, they cost you $5,000 to $500,000 renovation projects, which we've done plenty of. Um, did a little over a million last year in total renovation. But we have found that to be true. This hotel thing, I actually called a couple of my buddies who own hotels. It turns out they've all had the same thing happen. They said almost everyone they hire as a manager for a motel at some point will find a way around the system to embezzle money. This is pretty frequent in this. Now, not— they don't usually stay there when you shut down the hotel. That's new. But, um, this stuff happens, and we're turning around a hotel and reclassifying it into long-term leases. This is just part of the game. Okay, turning to the chat. All Nighter's here, which is good. That is a requirement for the video to be real. Ned asked, what's up? Well, all the stuff that I just shared is up. Um, crazy start to the day. I was really trying to figure out where the heck those rents were going. Um, and why there were cars there. That has now been made clear to me. Um, Wada said, uh, for the first few minutes of the stream, just BS around. Perfect. That is the, that is the exact plan and how we structure these. We're here to answer questions on the live, but we always start with letting you know what's going on in the portfolio and the craziness that has happened within the day. Uh, Bruno trying to get a hold of seller through our real estate agent. Any tips? Um, Or does an offer have to be made? It seems like our agent isn't wanting, uh, me to meet the seller. Yeah, usually on the agents, they're, they're hired by an owner to sell the property. So typically an owner doesn't want to really engage with the seller until you're under contract. That being said, if the deal is just stuck or negotiations aren't happening on a listed property, then you can always actually ask an agent to connect you. Cody's first deal actually was a 12-plex, and the reason it didn't sell is a lack of competency from the agent. They eventually had the owner, Cody, called to cancel the contract. So he almost didn't buy his first deal. And the owner reached out around the agent and said, hey, what's going on? I thought this was— we're on the finish line here. And they got the broker's written permission to connect with the seller outside of them. They negotiated the rest of the deal and closed it. So unless you have an issue like that, listed property, stick with the sellers, can be more transactional. Build the relationship with that owner after you close. Uh, what, I maybe find another agent? Um, yeah, I wouldn't worry too much about the agent. They don't want you to have a meeting with the seller, that's, that's as much the seller as the broker. That happens pretty frequently. Um, that's not really an agent problem, uh, like problem. Their job is to represent the seller and to sell the property, so they don't have any obligation to, um, to make that connection. Even your agent, that's usually once it's listed, it's agent, agent to agent. Daniel, hey Christian, great story. It is a fun one. If this was early in my career, I'd be stressed, which, you know what, I'm going to jump into one more, one other quick lesson out of this. I know this is answer your question time, but you know what, it's my channel, so I'm going to share this. When you're doing projects, we talk about buying things based on cash flow. And when you have a ton of cash flow from other properties, the only time you're allowed to take a cash negative property as a project, if this was my first ever deal, if I saw this opportunity, and this one has about $1 million of upside on it, a little south of that, maybe $750,000. But we have a lot of upside on this project, and it is a management play. It is, it is a simple conversion, a relatively inexpensive renovation on a building that's been very well maintained. When we're putting these things together, if this was my first project and I had this problem, it would be very stressful. There's someone living in my building, it's Washington State, it's going to be hard to get him out, he is causing problems, he is taking money from people. That is obvious, like, that's obvious criminal activity. When this stuff is happening, that would be like, oh my gosh, how am I gonna make money on this? I'm gonna go cash flow negative. You don't have to worry about these things if you have properties that are supporting the negative. You are not allowed to take on projects that bring you globally negative. So when you take a cash flow negative property, the rule is you have to be able to cover all expenses if the property makes $0. I actually have some great people there who are putting into leases, but if I didn't, I would have to rope off that whole building, kick everyone out, and totally restart from zero revenue. That would be a little scary. So yeah, while it is an interesting story, there's always a lesson in there, and this one is a reminder: build your portfolio with cash-flowing properties that cash-flow day one until you have enough cash flow to take on big projects with big upside. That's what this one is, and that is on a 23-unit. Uh, let's see here from Darius. Quick question, how do I get in contact with the seller, um, if the property is under an LLC? Easiest way is OpenCorporates. There's also True People Search or a million other websites, but it's going to be on Google. You're going to search the people who filed for the LLC, agents of the LLC, anyone who looks like they would be the owner. Type in their name and the address in which the LLC was filed and the words phone number. Oftentimes you're gonna find a few different phone numbers that give you partials, so it might be the last 4 digits or the first 6. Simply input those into the same search and Google will automatically search for any combinations of those same things and will fill out the rest of the phone number. We do this all the time, but basically it is find clues, include those clues in your Google search, and be a good Googler, and you will find them. It is more accurate and more consistent than any skip tracing software I've ever seen because you're doing basically the same thing as scouring the internet, but you're applying logic, which an algorithm cannot do in the same way. Worth noting, if you're trying to call a million people and you're going the mass marketing thing, Google is not the way to do this. This is a very targeted approach. This is an area where I want to meet the owners and I am looking— I've already chosen my market. If you're trying to do this everywhere, Google will take you forever. If you want to find your owners in a market like I do in Moses Lake, Washington, this is how you focus up. Let's see here. Uh, Daniel, I'm from Kentucky. Where in Kentucky are you guys doing the flip? That is in good old Hopetown, Hopkinsville, uh, uh, Kentucky. This is— I actually have some friends over in Clarksville, which is over in Tennessee, right across the border. And then you have in Kentucky Hopkinsville, very near the base. This property is going to be quite the turnaround. It's a, it's a fairly rough building, but the price we're getting on it is ridiculous. Also, I was on site with their on-site manager and walked through all the units. We felt very, very safe over there, but it is a rougher part of town. Apparently there's some nice areas. This is not one of them. But that is fine. This one, just based on the financials, we'll be able to stabilize collections, put it in good property management, construct the books, and refinance out astronomically more than we put in. Uh, though most likely it is just going to be a flip and we will go ahead and find a buyer. But if we don't, we can, uh, we can do it on the refinance very conservatively. Should be about a 10 to 11 cap rate deal. On acquisition. Let's see here. Also, what size multifamily would you suggest we stay with for the first deal? My mind, I feel best to do 10 to 15. Um, I found even 38 wasn't that bad to start with, and we started with a really rough 38-plex. Um, so if you're starting on like any basic property, I would say target 10 to 25 units. It's a really comfortable place I've had 20-unit properties that don't really take any more management than a 10-plex. They're, they're, they run about the same. Where it starts getting a little harder is you get to 40, 50, 60-unit buildings. Uh, you, those are best done with a professional manager. I, in my experience, I think you can easily self-manage a 25-plex. Um, you get too much bigger and it becomes a lot. A good person to have on the channel again would be, um, if I, we bring Caleb back on. He's, he's managing his 25-plex by himself. We could see how much effort it is for him to do that one because he is, he is on-site. Let's see here. All Nighter. Those are two I use, OpenCorporates and True People Search. Yeah, they're super easy. OpenCorporates used to have a little bit more information for free, but it still works just fine. I actually used it today because I couldn't remember what address one of my personal LLCs were under.. So I actually looked up my LLC name, uh, to remind myself where I actually located that one for tax purposes. So yeah, I use them to research myself sometimes, and that's OpenCorporates. True People Search is a really popular one. And I know if you can't get some of the information, they also both have some paid features that lets you do a deeper dive, but I have never once had to use those. Darius says a thank you, uh, to us guys. So No, Darius, thank you for having questions. Today is going to be a quicker one, and I know this because tomorrow's Thanksgiving. So today is basically travel day for majority of people. It's all day. And, uh, yeah, I know, I know the game. That being said, we'll do what we always do. We're going to leave an extra few minutes for people to ask questions. So I'm going to add a little bit more color to some of our conversation. And then we will, uh, if we have no more questions, we'll go ahead and call it a wrap for today. And everyone can have a happy Thanksgiving. Tomorrow. But, um, I'm gonna leave with this: renovation projects are really fun. I, I think they're— I think they're incredibly fun. It's a little bit of systems, a little bit of art. If you're doing this right, you can get creative with these, just not too creative. But you're really creating the space that you want to create to maximize revenue and create a great place to live. So you have the human and the math side of this. I think it's important to remember both sides and to keep them in check. I've seen a lot of both. I've seen a lot of slummy properties and I'm typically the one buying these and fixing them, but a lot of slummy properties where people did not care about the art side at all and just went, hey, let's, let's not spend anything. I would focus on building top line revenue before you focus on bottom. You don't have any bottom line without top line. So do the things you need to do to stabilize the property, maximize rents, and do the best job that you can. From there, you can do more renovations and get the property to look like, look how you want. You can't go cash flow negative, so money needs to be considered, but do not be cheap. I buy a lot of properties from people who go cheap because they lose the properties or they have to seller finance them because they are not bankable. So those are all things to keep in mind when you're doing these projects. But if you keep the balance right, you come up with affordable, very aesthetic, nice places to live. I have found that is the most stable real estate that there is. And that's where you get a lot of the upside on these deals where they're under market rent, is you have to be very, very efficient. And hey, we can come in, we can move quickly, and we can do affordable rents with affordable renovations. Our final question is going to be from Daniel, unless someone posts while I'm answering it. Love to connect with you and Cody even more. What's the best way to stay in touch? I don't have any social media other than YouTube. You can check out multifamilystrategy.com. I actually have an email in there for me where you can reach me. I think it is actually just Christian@multifamilystrategy.com. But it's possible it's our administrative one. I'm on my phone. So I'll kill this thing if I, if I search it, but anyone can check that out, go to multifamilystrategy.com. There's an email there where you can absolutely contact us. There's also where we have our course and mentorship group, which is where we spend the most time coaching people. Mentorship is my absolute passion project. We meet 3 times a week, and I meet with our mentees all the time. I just did a trip around the country with a bunch of them. And, um, yeah, I mean, we're heavily invested in people's success. So check those out. If you have just a general question, best place is Instagram. But if you don't have social media, then that would be a limiting factor. Other than that, if you guys have not checked it out yet, or you missed the last one, Robin Hood Village Resort— I'm coming up with the date here. I'll announce this on the next live, and I'll probably announce on my social media before then. We are picking the dates today for the next Robinhood Village Resort event. It is going to be in January. This one is going to be focused on making millions in asset management. I know it's not as sexy as the creative finance one that everyone wants to see, though we will definitely be covering it in this presentation. We've done the math. Cody and I have made more money off of our renovation and stabilization by quite a bit than we actually have on the purchase side. Now, you can't renovate something that you don't purchase, so we're going to cover that, I promise. We always have to do creative finance. But keep an eye out for that. That's robinhoodvillageresort.com. It'll be on the events page, and I will be announcing that all up and down the media after we've locked in our dates. I have some great speakers already set up. The last event was the best we've ever held, and the catering is going to be ridiculous because I love So really excited for it. So thank you guys for watching on this Thanksgiving Eve. Anyone has any questions, drop them in the chat, send us an email at multifamilystrategy.com, or reach out to me on Instagram @ChristianOsgood. See you guys next time.