In this Whiteboard Wednesday episode, hosts Cody and Christian Osgood answer viewer questions about starting rental‑property investing. They discuss whether to involve a property‑management company during due‑diligence, emphasizing that early involvement helps secure estoppel letters, deposits, and onboarding steps. They explain how to communicate with a property owner when a broker represents the seller, advising respect for the broker’s role and, when appropriate, obtaining permission for direct contact. The duo outlines their exit‑strategy philosophy, stating it remains unchanged across market cycles: acquire properties with cash‑flow that covers debt service even in downturns, use metrics and wide margins, and hold until the cycle recovers. They compare lien positions in seller‑financed deals with private lenders, noting that first‑position liens can be held by either party and that the cost of hard‑money versus seller financing must be balanced to maintain cash‑flow ratios. For beginners, they recommend starting with a duplex or the largest multifamily unit the investor can comfortably afford, stressing that “bigger is better” if the math works. Finally, they advise scaling portfolios in line with personal life‑stage: younger investors can be aggressive, while those with families should protect assets and grow more conservatively. Throughout, they share personal anecdotes and practical metrics to illustrate their points.
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Hey YouTube, Cody and Christian back for this week's video of Whiteboard Wednesday, where we answer all of your questions that we see in the YouTube comments. That said, moving forward, if you have a question you want addressed, post it down below and we'll see you guys next week. So for today, starting out, question number 1.
All right, this is from YouTube user Christ Gives Life. If I were to have my properties professionally managed, would you recommend hiring a management company before acquiring? To help with due diligence or wait until afterwards like the other team members?
Oh, I would definitely get them involved in due diligence. I've seen this happen from folks in the past where they go buy a property, they don't do all the necessary due diligence, especially if you're starting out with your very first deal. You don't know what you don't know about buying a piece of real estate. And if you're working with a property management company that's been around the block a couple of times, They're going to be able to direct you on what they need for the onboarding process. If you don't know to get estoppel letters and you don't collect deposits at closing and you start missing these items, it can get very difficult to get caught up with property management. And now since you're hiring property management, it becomes even more of a chore because they're going to tell you what to do. You got to go get that from either the previous seller or you got to get it from your tenants, and now that can be a difficult task that you have to go address on your own.
Yeah, now the advice still holds. Don't use that as a reason to not do a deal or not find deals. Don't stack, hey, I need to find a property manager and a lawyer and an accountant before I get started. You need to move quickly when you find your deal, but don't let that hinder you from focusing on finding a deal because that always comes first in your priority stack.
And then our next question from Giorgio. Hey Christian, thank you for the video. I have a question for Wednesday. "how do you contact a property owner when there's an agent in between you and them?" Well, that is an excellent question.
The owner has already contracted a broker to represent them. You do not want to violate that relationship.
That—
it's a transaction. They put that out there. So in this case, you're not starting with relationship. You're starting around a listed transaction. You're going to work directly with the broker because that is what the owner has put in place.. And you can talk to that owner on how to treat the transaction. And if appropriate, you can work with the broker to connect to the owner. A few times we've gone through this, we've closed, and after the end of the sale, we've got to meet the owners. They have questions for us. We start a relationship. However, when it starts as a transaction, don't try to skip a step or go around a broker because you'll end up frustrating both the owner and the broker who is in charge of selling the property.
And in the case of owner financing, you close on your very first deal, well, now that owner isn't just a client of the broker, they're your lender. You could reach out to your lender, and I've done that multiple times. I've been water skiing with my lender, the guy who sold me my very first property. This was a listed 12-plex, and at the time, the broker was a little bit difficult to get communications through. There was just a period of time and a delay and a misunderstanding that kept going from me to the owner and vice versa. I got permission in writing from all parties to communicate directly with the owner, and I did that until we closed. And today I'm still friends with them, and I can reach out to them anytime. We've been water skiing, we've gotten drinks, we've hung out. So it may not be that relationship-based transaction or selling that we start with, right? We're just going out to meet with them, genuinely want to build that connection. But you can transition out of this transaction that they asked for in the first place by listing it and turn that into a good relationship that is for the long term. Then we've got, uh, awesome video. Does your exit strategy change as the real estate market goes through different points in the cycle?
Okay, so short answer is no. As the market cycle changes, our exit strategy actually doesn't move because we're buying on two rules. Once you found your location, how do I own it? How do I keep it forever? We're going to put metrics in place so that when we buy the property, the cash flow is going to debt service cover even in a down market. We're not going negative. We can make the mortgage, so we're not going to lose it. Because we don't have to lose it, market goes down, we're just going to wait for the cycle to come back up while we're cash flowing. If we have a 5-year balloon, say, that falls in the middle of that down market, we factor for that on the front end of how much is this property realistically going to be worth in 5 years, put wide margins around that so we know we can hit our goals, and we're buying off those metrics. So how do we own it? How do we never lose it? That means we control when we want to dispose of that asset, if we ever do.
Last question.
This is from Fluffy Cloud. Love the video. If there's a private lender involved in the deal with seller financing, does the seller of the property or the investor have the first position mortgage?
Well, that depends because I've done both. My very first deal, it was structured as the seller financing, that seller finance loan was first lien position. And it was essentially hard money from an investor paying 12% interest was the down payment, and they were in second lien position. Now, the real estate game is a balance of debt and equity. You've got the folks who do 100% debt, got people that do 100% equity, and then a mix of just about everything in between. On the first deal that I did, and the second deal, and the third deal, it was 100% debt at the beginning. And something you need to think about, whether you're doing the private money lender as the first lien position, you know, doing a very big private money loan and having a very small bit of seller financing, versus doing a really large percentage of it as a seller finance note and a very small percentage hard money, is hard money is typically more expensive than the seller finance note. So if you don't have a ton of cash flow, it may not work. You may not be able to cash flow having 12% interest or 10% interest on 90% of the deal, having the seller finance 10%. You have to tailor this towards your deal because just because you can buy something zero down doesn't mean it makes sense. I've watched people buy stuff zero money down, $3 million of real estate. They lost the whole thing. It's going away because the debt got too expensive the way that they structured it. You can have seller financing in first position, second position, third position. But that said, you need to structure every deal, the debt and the equity, to where you cash flow with margin. If my debt costs $1,000 a month, I want my net operating income to at least be $1,500 a month. It's all about ratios. If your ratios are out of whack, you're at risk of losing the property at the end of the day. And then our actual last question of today, we've got, what kind of rental property do you recommend for beginners? Duplex or single-family home?
Well, if it's only those two options, I would say a duplex. That being said, bigger is better. Most of this depends on who you are as an individual though. If your goal is, I want to have the best Airbnb rent empire of all time, and I love this model, and I want to just go buy short-term rentals, well, then buying a 38-unit probably doesn't make any sense for you. If you want to do that, master that game and go buy houses in excellent locations. Answer for that person would be single-family. If you are really not comfortable with commercial debt or doing a 5-plex or above and you find this gorgeous 4-plex and you love the numbers on it and you love the location, the answer is 4-plex is the right buy for you. For me, I started with a duplex. The mistake I made was my second property was a duplex. I could have gone bigger at that point. Figured it out and I had a goal of reaching 30 units. Instead of adding steps going duplex, duplex, duplex, Cut out extra steps, go buy a 38-unit, and now you've surpassed your goal. So I would suggest as large of a multifamily property as you are comfortable with, where you can sleep at night and you feel good about the math. That is where I would start.
And everybody's at a different point in their life cycle. When I got started, 19 years old, I bought a deal 100% leveraged. It was all long-term debt shy of the down payment that I borrowed at 12% interest. But if I lost the property to the person who loaned me the money, you know, I'm not out anything, but I do have some experience under my belt now. I learned some stuff. Granted, it went much better in my favor on that deal. I've kept every piece of real estate I've ever owned. I've never lost a single property to this day. You know, whatever happens in the future, you know, we have a huge disaster, that can happen. But what I will not lose is the information that I've gained and the experience that I've gained in the relationships that I've built. That is worth more than the real estate. And I've always said this online, that your story is worth more than the real estate. So I was in a different position than a lot of people. If you're in a similar position, you're not married, you don't have kids, you don't have a ton of obligations right now, stop worrying about losing everything because you have nothing to lose yet. If you get to, let's say, 50 apartment units, but 50 apartment units doesn't hit your long-term goal, stop trying to protect, stop trying to conserve that. Don't try and conserve something that doesn't actually fulfill who you are and what you're trying to do. So for me, at 81 units, I'm not in protection mode yet. I'm still scaling on getting to 100 units, and then I want to pay it all off, protect something that actually hits my goals. If you're older and you have a wife, it makes sense to go a little bit slower, or you got a husband, it makes sense to go a little bit slower and protect that because there's no reason for you to jeopardize what you've built. Don't jeopardize the foundation to try and go scale a little bit quicker. It's not worth it. You have to assess where you're at in your life cycle.
Yeah, so essentially, if you haven't hit your goal yet, be on the offensive. I mean, don't lose everything you've done, but don't play defense until you've made it, and then protect it as much as you possibly can, which means eliminating risk, eliminating debt. However, if you're not there yet, I would keep scaling with as many pieces as you need to hit your goal.
Yeah, so that's it for today's video. If you have more comments or questions, put them in
