Christian Osgood and Cody argue new real-estate investors should buy a property first, then build legal structures and systems around it. Christian scaled from a duplex to a 38-plex; Cody started with a 12-plex. Waiting to perfect your setup just delays wealth creation.
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Hello YouTube, it's Christian and Cody. We are back this week for our Rules of Real Estate. We are shooting from Chelan, Washington. We're just about to head out and realized we haven't filmed a video for Monday, so we're just— we're doing it here. Hopefully the audio comes out correct for y'all. But, uh, today's rule of real estate is don't build a boat before you catch any fish. We have a lot of reasons for this, but I'm gonna let Cody kick off the topic.
Yeah, so the first thing people want to do is they want to get expert advice on the legal, and then they want to figure out property management. They want to build all the backend components of a solid business. It's a great idea, except for the fact that while you're doing that, you're not spending time actually buying real estate. And the quickest way to buy real estate, we've talked about this in the past, is to go out and buy a piece of real estate. And then we follow our best practices, make sure it cash flows. But if you spend all your time on systems, you're not going to have anything to systematize. So go out, buy a piece of real estate, It may not be making the best return right now. Maybe you're making 3-4% in Seattle, maybe you're making 20% in the Midwest. It may not be the perfect system, but if you spend all your time on systems, you'll never have anything worth owning or systematizing.
I think what a lot of people have gotten stuck is if you read a real estate book, a how to get into real estate, they're going to teach you as much as they can. So they're going to put all of it in the book. If you read the book cover to cover, you're going to end up reading, hey, you have to learn this. Analysis, then you have to build your team. Who's your lawyer going to be? How do you— what's the right LLC structure? And people get stuck on that. So by the time they have a question for us, it'll come through, you know, Instagram, text, email. The questions for us look a lot like, well, what is the right legal structure? Can you help me analyze this exact deal? What return am I targeting in my market? You're getting too far ahead of yourself. Your first goal is choose where you want to buy. And then buy something. Cody bought a 12-plex first, which is a big start, and it's repeatable.
You can totally do a 12-plex. I've seen people do that multiple times. They've done bigger, smaller. The size of the deal is not the important piece. It's go out and how do we buy it, how do we never lose it. That's it.
Exactly. And I started with a duplex, and that was right for me, and I learned a lot there. And it took me, what, 3 transactions, and I scaled up to a 38-plex. So where you start and how you start is less important than actually starting. The other thing you're going to prove to yourself is if you metaphorically cast your line out and catch a fish, like, hey, there's fish here, I know how to do this. You're going to get some skills that you wouldn't otherwise have. That's why we call it don't build a boat before you have any fish. The last thing you want to do is choose a market that's not right for you, choose an asset that's not right for you, and you build all your systems, you build all your relationships, you get out there, you have no luck at all, and you go, huh, I hate this, I quit, I spent all this time. Just choose your market.
Yeah, and on that point, I mean, the fish you're looking for may not be in that pond, you know, you may have to go somewhere else. But if you build all your systems, you build the boat for that pond, well, now all of a sudden you're out of luck. If you find an area where you can buy real estate, then there's probably an opportunity there. But if you just build your system so that you can be the best in a specific area and it doesn't work out the way you think it will, Well, now you just blew, number one, a bunch of time, a bunch of money, and a bunch of resources, which, you know, that costs you a lot. Because we did everything we did in 12 months. We just passed 1 year. That's why we're in Chelan. We're actually meeting up with one of our good friends, Adam. But 1 year of partnership as of this week, we did a lot in a year. And if you're blowing a year building systems on an unproven market, unproven model, it's probably going to cost you a lot because it costs— that would cost us financial freedom.
Yeah, which brings us to another point. Real estate isn't get rich quick, it's just get rich for sure a lot quicker than people in the 9 to 5 if you buy on, you know, good principles, which is why we're sharing all of ours here on this channel. But a key factor that I think a lot of people don't realize when you're getting started is you're probably not cash flowing $100,000 a month in your first year of real estate. I know, right? Time is a huge factor in real estate. Every year Rent should go up a little bit, which should increase your cash flow. Values go up on average over time, even more predictably on larger assets. You need time in this. So as you're building out all your systems, every year that you're not buying real estate— this took me longer to figure out than Cody— is just you're not getting cash flow, you're not getting appreciation, you're missing out on wealth creation.
If all Christian did was buy his 2 duplexes 8 years ago I mean, that would be insane. I mean, they'd probably be paid off today, but yeah, you couldn't be where he's at today. I mean, he'd be a little bit further probably, but the main thing is you just have to go out and buy said real estate. Don't build a boat to go somewhere if you don't know where you're going. Just buy something and build the boat around you.
Yeah, this is a pretty short rule for us, but I don't have anything additional to share on this. This is just a really important point. We'll keep it short and sweet. Cody, do you have anything to add before we, uh, peace for the weekend and head back home.
No, keep it simple. Go buy some real estate and then build a boat around you so you can go buy even more real estate. Perfect.
