Takaways From Ken McElroy - Multifamily Live!!!

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Hello everyone. Welcome back. Welcome to our channel. If we look a little bit grainy, we have— we are mobile, which is why apparently the audio wasn't working.

And we are grainy.

And we are grainy because we're on my laptop camera. I left my other one in Vegas where we were at the 10X Growth Conference.

You can tell it's bad because of the way it is.

Yep. So for today, what we are covering is going to be— Cody just flew back from meeting with Ken McElroy in Arizona. We're going to talk about his takeaways there. I've debriefed some of those with him and they're fantastic. Before we get into that though, last time you guys saw us, we were at 10X Growth Conference. We're going to share a couple of our biggest takeaways while people who are now listening to the audio that is not working for the first time are jumping into the channel. So Cody, Cody, you were just starting to talk about this, but top 2 takeaways from GrowthCon, race it go.

Oh man. Well, I have the same 2 takeaways. We are small fish. It is incredible seeing people that are doing billion-dollar revenue per year. Some of them didn't go on stage, but getting to meet with some of those players is just great perspective. Getting to watch the speakers on stage was nice because I saw a lot of our principles. We got our 35 principles that we've shared for running a good business. We share those on this YouTube channel. I see a lot of that in most of the presenters that were on stage. And so there's a lot of longevity with what we do and the way we run our business. And it's really cool to be able to see that it can go to the billion-dollar level.

I think my favorite speaker overall was probably Dana White. It's just exciting to see him. I've been a UFC fan forever. Um, but one of his big things was He finds opportunities that he wants to do and he makes them work because he can outcompete everyone in his space. And I love that because that was the third rule that we actually took a while to add was the, how do we buy it? How do we never lose it? And is it going to be fun? Dana White lives off of the, is it going to be fun? Is this a project I want to do? Because while we focus on multifamily real estate, that was a good reminder that you can succeed anywhere. There are a lot of stable businesses like multifamily that you absolutely need to have, For example, if you're an HVAC company in Arizona, you in fact have to have AC. Some of those service businesses are a lot like multifamily where they're absolutely necessary. The question is, are you going to have fun doing it and how competitive can you be? If you're ready to go out and compete, multifamily is just an entrepreneurial venture. But it was really fun seeing other people in other spaces were absolutely slaying it and taking their principles and translating them over to us.

Yeah. Now, as far as Ken McElroy, Trip. That was a day trip. And I've said this to everybody on this channel, you can book an owner meeting with any owner regardless of how big they are. I sent a message to them. I didn't have his phone number, could have gotten it, but I didn't want to do it that way. So I sent it through Instagram, connected with his social media guy Kevin, and Kevin sent me a link. I sent an email and boom, booked a meeting. So that meeting was just coming up and what came out of that was I flew out, woke up at 4 a.m. on a Monday, got there early morning to Arizona. I was in Scottsdale, flew into Phoenix, had the meeting and left the next day. Woke up at 2:30 Pacific to get back, then off to Moses Lake.

You had a crazy couple days.

That was an adventure. But I was able to book an owner meeting with an individual who's got billions of dollars of real estate. You could play this on any level. It's what we've been sharing on the YouTube. I just proved it. You could check it out on his channel and he's got a podcast that has a lot less cuts in it. So A little easier to follow, but biggest takeaways from that meeting, we're looking at developing 38-plex right now, and he recommended that we just cash flow it and wait. We've got time, we've got no partners on it. Just cash flow it because we can get to a good cash flow on that asset, wait it out and build later when it doesn't matter, because the odds of that getting us to the next level are high. But the odds are also good that that could knock us out. It wouldn't take down the whole portfolio, but it could take down that asset. And so we don't want to do that.

Yep. And that was really fun for me getting to hear all these things from Cody. I was working on a lot of the not fun projects, so I was working on, as always, accounting because that's a never-ending project. And I was also working on upgrades to our website. So stay tuned for those. The multifamilystrategy.com in the next month will have— it'll still be open, but we'll have an additional sexier domain, which I'm very, very excited for. So stay tuned for that. But got some good projects done. It's really fun to hear when you're mid-cycle from people who've already done it. Remember, our strategy above anything else is play with masters of the game, play with the biggest fish. Just book that owner meeting. Cody got an invitation and hey, if you can be in Arizona, I'd love to see you.

And it was either Arizona or Zoom. And I was like, shoot, I'm booking. I'm going to Arizona.

Yeah, Arizona is not nearly as fun. You can't book things over technology. The relationships aren't built primarily over the phone or over Zoom, and I think that's a big mistake that a lot of people make. Now, if you physically just can't make it to the market, a Zoom is better than a phone call, but an owner meeting is easily— this is an exact metric— it's 97 times better. That's just a fact. Fact. Yeah, you can Google it.

All right, so we're gonna go through our questions. I've got questions on My phone.

Oh yeah, let's do the, uh, the questions for the Ken McElroy podcast. Let's go straight through those.

Well, this wasn't from the Ken McElroy podcast. This is just from Instagram. I made a little post if people had questions about business.

Oh nice. Okay, let's do that. Why so cute?

Uh, what, what's your favorite thing about what you do for a living?

Um, my favorite thing about what we get to do for a living is that we get to network with so many people. The fact that my day isn't the same every day and that I work with different people every single day is my favorite part of the business for me. How about you, Cody?

Yeah, the things that come out of it, not the money, but the ability to help those around you. Like, I'm looking at buying a million-dollar condo for my mom this year, and that is super exciting for me. And then getting to help people that are in the sphere— had a lot of people come to us through social media, and now they're buying multifamily, and that's going to help them do the same thing I'm working on doing for my mom right now. So that's really cool to be able to see. Very fulfilling. I live in California, which is anti-landlord. Should I invest out of state? Well, we invest in Washington, which is anti-landlord as well. However, it's not as broken as California.

I wouldn't buy in California, but I know people that have billions of dollars of real estate in Cali, and you might be able to persuade me to do something hospitality in California because it is warm and fun and I can get behind. There will always be a market for people traveling to California. If you're playing the long-term game, which is a vast majority of our business, I also probably would avoid California unless you live there, in which case investing in your own market has some efficiencies that might override the fact that the market's wonky.

How do you find private money lenders?

The same way you find owners. You call people, you meet with people in the space, you show up at events, but you build those relationships so that they know you before you even find the deal. You're not trying to raise the money before you find the deal, but you're building the relationships before anything. When we have an opportunity like a 12-plex we're working on right now, it is one call to the right investor. Because we have, I don't know, maybe 10 people that we like to work with, where it's who is the right person for this? Whose goals are aligned by this deal? And then when we make the call, it's just a continuation of a past conversation. Hey, you said you were looking for this. I have the one deal for us. Here's what it is. Here's what I want to do with you. That easy.

From Zach, if there's a financial event that caused you to lose all your material wealth, what are you doing?

Wow. That was like the question that everyone got asked on the GrowthCon stage too. If I lost all my wealth. So there's two ways to answer this. First of all, I would do the same thing that we did and I would do it probably a little bit more efficiently because I've had the experience of— I know what I can and can't do. And in 2 years, I can build back to where we've built. I'm 100% sure in multifamily we would do the same thing on the same principles. That's why we documented the principles before we did anything else on our YouTube channel.

We can do it in the same market. A lot of the people that we bought from would just sell to us again.

That's true. So we could literally copy and paste the exact same model. If we can't do that, so let's assume for some reason that I'm banned from real estate or repeating the same strategy. You can creatively finance anything like this. I would go through businesses and I'd go through stable businesses that are service businesses until we got back to $5-10 million, and then we could venture out onto bigger projects. But stability is everything.

Yeah. And the really nice thing about that is once you've built it once, it doesn't matter what you have net worth back— like if you have network backing or not, Because when you play it in the private game, you build connections, you build owner connections, investor connections. They were never betting on my net worth anyway. If this all went away, we'd still be able to access the money from those people 100% without a doubt because they've never counted on me having money. That's the reason I need it from them. But I have to have an idea. I have to be good at math. That's the one reason that I really focused on the math in the beginning. So that no one could manipulate numbers around me and make me make a mistake. So we, we don't lose our relationships even if we lose our real estate. But don't lose your real estate. I don't recommend that.

Losing real estate is bad.

How do you start your first LLC? Well, my first one was— it was $180 to form it with the state, and then it was a $20 filing fee. And so $200 later, I formed my LLC.

Very easy to do online. It's also very cheap for a lawyer to file it for you. So if you want a lawyer to do it, it costs them— it's like $200 to actually file it. The lawyer's probably going to charge you like $100, $300, $350 is usually what I see for those LLC filings. Very simple. I just remember to do the correct spelling. My first LLC, I had someone show me how to do it and they spelled Peninsula, Penisula. Oops.

Yep.

That was a weird debit card to get in the mail and cost $50 to correct the name. So if you're going to do it, Fill the right fields with the correct spelling.

Hey, it's Arturo. So Arturo's in Multifamily Strategy, multifamilystrategy.com, soon to be. What's your minimum cash-on-cash return and your minimum day one debt coverage ratio?

I'll start with the cash-on-cash, you cover the debt coverage. I typically, if it's just my own money and so I'm not giving any, I don't have any additional debt or investor that I'm paying out, if we're investing in a deal, I like to see my side of that be an 8% return. 8% cash on cash is a window where I'm comfortable that the property is going to continue to cash flow and I can hold it forever. So that's the, that's the number for me. It will depend on how risky the deal is. If you have a deal that's a whole lot of work though, or a really rough area, you better have a game plan. You better have more cash flow. But if we have to throw a general rule of thumb at it for an average property, 8%, hold forever.

Yeah. And then as far as debt coverage ratio, What really matters for me is I want to be at 1.5. Now, have we violated that? Absolutely. But if my mortgage costs $10,000, I want my NOI, my net operating income, to be $15,000. That way I have $5,000 in cash flow. I have a 50% margin. We've bought deals that were below 1, meaning the debt cost $10,000, maybe the NOI was zero.

However, we look at it, we look at the DSCR on a global basis. So between all the properties, we stay above 1.5. We just cycled a few people out of one of our larger buildings. But typically we hover right around 2 or a little bit north of 2. Right now we intentionally brought that down for renovations, but 1.5 to 2 is where I like to see it as well for an average deal. Again, if you're doing a large project, you have to do math on the front and back end. What is it day one, and was it going to be when I'm done with my project? And you have to be comfortable with how am I getting to A to B.

All right, well, let's go through our questions on the YouTube, and if If there's no questions on the YouTube, then we are done.

But I see a few.

There are a few.

Everyone start posting them now so we get a few more and away we go.

David Priest. Ken and both of you do agree on one thing for sure: long-term ownership. Ken gets properties in great locations and never sells. He does cash outs instead of paying off debt. He does infinite returns. Yep. The nice thing is when you don't have any money and you buy real estate, it's an infinite return from day one. That was fun to talk with him about.

And that's something that we work really hard on. While we do want to pay off our debt, which is not what a lot of people say to do, Typically the first thing we do is if we have money in or we have a partner who has money in, we do that cash-out refi, we pull all the money out. So we're in it for $0. The difference is then we apply the cash flows and pay them off after we have no money in the deal.

Yeah, we have no money in it and we have no investors. If there's nobody lending us the money privately, like if someone gave us $100,000 as a second loan against the real estate, once they're paid off, we're hammering that mortgage. Okay, from Lavon: I'm meeting with owners over Zoom. What are your thoughts on that? That's better than not meeting with owners.

Oh, by, by a ton. So your order of operations goes, um, as far as like how valuable it is, the phone meeting is usually how you're going to get the introduction 9 out of 10 times. That being said, fairly low value. Relationships aren't built over the phone. Uh, your next highest value is Zoom meetings. You actually get a face-to-face, you get an interaction, you feel good afterwards. It's not the same as an in-person meeting, but it's a lot better than a phone call. So you get the Zoom meeting, especially if you're investing out of market. Fantastic. Good, good thing to do. Your next most valuable thing is showing up to like real estate meetups. You're just running into people organically in person. You're not going to have this intense one-on-one in a group conversation, otherwise you're just a weirdo and people are gonna be like, gosh, this guy pinned me in a corner and talked to me for half an hour. But you need a really high-value interaction where you can actually shake hands, talk, discuss things outside of a structured meeting. And then the most valuable thing you can possibly do is that coffee meeting, the dinner meeting where you sit down and you have an extended conversation, talk about your goals, and really try to make 80% of the conversation talking about their goals, how they got from A to B.

Hey, we've got Dividend Dave.

Oh, now we're started.

Hello! With three exclamations.

Well, hello!

With 4 exclamation points!

To Dividend Dave.

Carson, do you find it better to bring up your age in the first phone call when trying to book a meeting? I used to do that. I don't bring up my age anymore. I found it doesn't really move the needle. So if you're confident and you want to book a meeting, just let them know where you're coming from, where you're going, what changes. But share a relatable point and try and book the meeting. Don't make it too long over the phone call. Otherwise, there's no reason to meet.

Caleb and Chuck, who are absolutely slaying at multifamily, when they started, this is their actual pitch. And I told Caleb, I shared the story, so if I embarrass him, this is permitted. But his original pitch, we talked about like, what do you have going for you? Map out your story. And a big piece of his story at the time was, I'm young, dropped out of college, and I'm pursuing real estate. I'm like, okay, so the big piece of your story for you, how you want to communicate, is that you're young. So his thing was lead with his age. His original pitch when he started was, hello, I'm Caleb, I'm 18 years old, and I'd like to meet you. Not a great intro. I was unaware there was a level zero to sales until we had that. However, as he got better at this, he started weaving that artistically into the call where he would call, hey, I'm Caleb, I'm just getting started in real estate. I'm 18 years old. And I'm going to be buying over 25 units in this market this year. And while that's not how I like to intro a call, he landed it very well and he resonated with people. A lot of people who drove really hard to get their first deal, those brokers, those owners resonated with him. That pitch worked. So your age is part of your story. It could absolutely be a tool if you can land the pitch, make it.

But if you're not landing it, Don't bring it up. Yeah, I wasn't landing the pitch with that, so I stopped bringing it up.

Yeah, I'm 18 and I want to meet.

It's probably not gonna work.

It sounds like you're soliciting something else.

All right, what's up? Well, that's our last question. Oh, okay. Well, guys, oh, we got one more.

We'll get a few more questions.

Stoners, do you guys want to grab coffee Sunday or Monday coming up? I'm in Auburn. We'll meet you guys anywhere. Well, how about this? We're out of town on Sunday. We're going to be speaking at Troy Kern's event in Vegas. I never get a break. I'm always traveling. But we get back on— do we get back on Sunday?

Uh, yes, you get back on Sunday. I have to fly late Saturday.

Okay, well, if you want to grab coffee on Monday, I'm down.

Uh, yeah, it'll be midday. Ping me on Instagram @ChristianOsgood and I'll get it scheduled.

Would you recommend using CoStar? I have access— nice— to draw a radius where I like to invest and compile properties. You can absolutely do that. I did that with the free version called Google Maps. But if you have the tools, use them.

Yep. As I've shared many times on the channel, I used to work for CoStar for a long time. I was one of their trainers for the greater Seattle area, then I sold it for many, many years. CoStar is a fantastic tool. It makes it easier and faster. However, just know that you don't have to use paid tools. You can do it for free. I showed Caleb some of my, my CoStar tricks and he texts me almost every day now asking for a CoStar report. Don't do that. But yeah, CoStar is fantastic. You want to draw a radius, things that you want to look for in that area. If you go to that analytics tab, once you do that, on the very bottom it shows top owners, top sellers. It will tell you everyone who is a mover or shaker in your market. So a really fun way to start learning, like, oh, who do I want to learn from? You can go through that top seller list and go, who is actually selling off their properties right now? You can click on their name and see how many properties they still own. So you might run into people who are like, wow, they have 10 properties, they've just sold off 3 of theirs. You might get to stack the deck towards someone who might be willing to sell you something if you do those little tricks.

Hey, Matt, the Lumberjack Landlord's here. If you're watching this, which 45 of you are, you should follow him. He knows how to own real estate better than anybody in this chat. We know how to buy it, but he knows how to own it.

Yeah, there's how do you, how do you own it? How do you never lose it? With Matt, it's how do you own it? And then how do you own it? Matt is a badass.

Yeah, he is just really good. So we have N.A. Hi, I live in Renton, Washington, and would like to invest in my local market. We should grab coffee. You're looking— they're looking for suggestions. So yeah, we should grab coffee. We do have themultifamilystrategy.com that you can check out. But really, if you're just looking to get started, we live on Exit 5.

Yeah, Kandor Coffee or Cloudburst are usually my— or Cloud Break. Yeah, I should know what it's called. We meet there all the time, but uh, two rented coffee shops that I like to go to. So, um, yeah, if you want to meet up, uh, again, @ChristianOsgood on Instagram, happy to put that together.

Lavon, did you start with the mindset of I want to make a relationship with this person, or I want to apply their lessons? Well, both, and you do them simultaneously. It's not like an either-or. I want to learn from them, and I want to build a relationship with them because they can help me get to the next level. I have a connection in my area that has been playing the game for many years. I'm not very close with them, but I want to get in the game. My family got me nervous into talking to him. What do I do? Talk to him. Don't worry. Yeah, just go talk to them, whoever it is. That's, uh, if you want to play this game, you got to learn the rules. And the way you learn the rules is you either wander aimlessly and you break a couple of them and you get fined, or you learn from the people that have played it at the highest level, and then you just play by those rules. Just started as a real estate agent, became one because I wanted to invest in real estate. Just don't know anything about it other than the books I've read. Any advice for being an agent and leveraging that? Well, you have the MLS. That's nice. I like using the MLS. It's cool to be able to see properties, but having my license doesn't give me an advantage over Christian, who does not have his license. At all?

No, I let that expire. I've not, not had any need for it because we don't need CoStar to meet people and we don't need the MLS to meet people. We just need Google Maps and being around other investors.

All right. What about college student housing? What are your thoughts?

College and student housing. That's funny. Matt's on the call. I believe Matt has some of that.

Matt gave us $10. Matt, you're so nice.

But student housing, so we don't do any of it. That being said, I have some friends who really like to. When, man, I don't know why I was just telling all the stories from when I was at CoStar, but there's a bunch of property managers in Seattle that actually specifically loved managing for student housing. There was a huge craze for it in Seattle for a while where people just loved that asset and they were selling for a premium. You can make your niche absolutely anything. Cody and I don't exclusively own low-income housing, but we have a lot of entry-level housing, and we got really good with working with entry-level housing.

Entry-level isn't low-income.

No, but we, but we have some of that that's going to be in the entry level. That is something that you do deal with, with entry level.

If you control the bottom and the top and everywhere in the middle, you're never going to sing the blues. It's great. Like, it's, it's just wonderful. People can move up when times are good, they can move down when times are bad, they can move down whenever they want. You control it all. Odds are you're going to have people renting your stuff. All righty. Let's see.

Let's see if we can get lucky. Matt Lumberjack, like landlord, if you are— if you're still on, you can just join our Zoom and weigh in on some of these because you are, in fact, smarter than us. So if you're still watching, I just sent you a text with the Zoom code. We'll see if we'll get lucky enough.

Either will or won't. Those are the options.

Those are the options. He's going to outbeard me by a lot, though, if he shows up.

Yep. You got to go get your charger, though. Otherwise this is going to die.

No, convenient. I'll work on that while we try to recruit the math.

Lavon says he's joining the multifamily strategy by Monday and he's going to be there. Okay. See you there, Rob.

Ta-da!

I'm here. What did I miss? Everything.

Okay, let's start from the beginning for Rob.

All right, starting over. We had to start over twice because we didn't have audio in the beginning. Matt just joined the call.

There we go, we did it.

What's up, boys?

Sup?

What's up?

You've been all bearded.

I never— look at you, even more famous guy.

Let's go! Whoa, it's Matt without a hat! I have not seen that yet.

Yeah, I had, I had to take a shower for court. No joke.

Yeah.

Awesome.

Today was a court day, so I was like, I don't like hats in the courtroom, so I don't want to piss off the judge.

That's funny. It's a whole new man.

Yeah, literally. I was like, oh man, I got to take my shower and do my hair and not look like a hillbilly anymore.

There we go. We'll just tell everyone that you just got made up for the Zoom.

I did that. Yes. Yes. I mean, I'm just trying to keep up with you guys. I'm old, so anything I can do to make myself keep up with you guys, it's work, man.

It's work. Well, we're trying to catch up to you on the rental front. We're almost there.

Yeah, I was going to say you'll catch me, I think, with your next deal.

So we're working on it.

You do some student housing, don't you?

Yeah, a lot of it. Yeah.

Okay. Okay. You can answer that question better.

We have Christopher who asked, what are your thoughts on student housing?

So I love it. So that was actually how I built my empire was I found a town that was university adjacent and really learned and understood how the college calculated their dorm room costs, understood how I could then get much greater returns. Instead of renting to families, I could rent to students, and I just had to curate that experience. So one of the things I actually teach in my course is finding the college, finding the market, and then curating the experience for students. And that was tough for me because I didn't get out of high school. So I had to talk to a bunch of people that went to college and say, well, what would you want? What would you want? And what would you want to have as an experience? And it was, you know, things like, you know, Cat6 cable in the walls so they could be, you know, gamers and, you know, also Wi-Fi at the same time so they didn't have to be connected in their rooms. And every single room having, its own high-speed access so they could choose whether or not they wanted to have dedicated lines and just all sorts of little things that we did that really gave them an unbelievable experience. And then when you do that, I would rent a 4-bedroom to a family and you'd get $2,000 a month. I'd rent it to 4 students and I get $3,000 a month.

So that's, that's, that's incredible.

It's one of the ways that you can get, you know, 30-plus percent returns is just understanding you know, exactly how the college is set up, the percentage of the student population that they have that they actually give housing or have housing for, what all the rules and regulations are around that housing. And so that's one of the things that is literally an entire module in my course because it's an hour, hour and a half long of teaching.

A lot. So for those who don't know you, yeah, I want to give a formal introduction. This is Matt. And Matt has more rentals than us and he is a baller.

He— we—

I think I have a shot one day of being the best buyer of real estate. I will never be the best operator because Matt is here. Matt knows his stuff.

You'll be the best.

Outlive Matt. We're going to be damn good.

Yeah. Yeah. Cody's got a really good shot. I got 23 years. Cody's got a great— and he's got like 7.5% body fat or something. I'm like, I'm like, I'm like 37.5% body fat. So, but, but yeah, I think, I mean, again, I think the buyer thing, you know, that's, I totally agree with that. I think you're one of the best buyers right now as it is.

I appreciate that.

And I think that, you know, after you've got 20 years in the business like I do, you'll be a better operator than me because I'm hoping you guys stand on my shoulders and not have to learn all the horrible lessons that I've had to learn.

I will do my absolute best.

Yeah, you'll do it. There's no doubt in my mind that you guys will do it. That's why I'm so excited about kind of the next generation, kind of your guys' generation of investors. You know, I actually met one at court today and I literally, I finished my case in like 17 seconds. And so I finished my case really fast and I had seen him before walk into the courtroom and I said, landlord or tenant? He goes, landlord. And I said, is this your first one? Because he could, you could tell. He goes, yeah, it's my first. I said, okay. So I just stuck around. I said, hey, if you get whatever, I'm first row right here for you. And so I, you know, he finished his case and he was just like, what, what that guy said, what that guy said, what that guy said. And so we walked out of the room and, and but made a good contact and helped him out. But he was a younger guy, I think late 20s, and he's got 7 units. But it's always a pleasure learning from, you know, and helping new investors for sure. That's, that's honestly the only reason I do YouTube. It's not because of how much it pays.

Oh yeah, because YouTube just makes so much.

You don't like your $400 a month, Matt? Yeah.

Who's making $400? Not me. I'm not making $400 a month.

Oh, file for bankruptcy now. All right, so from Rob, there's a break in the Matrix. Matt showered.

Yeah, true story, Rob. Yeah, Rob. Rob, I think, is from San Diego. So, you know, I mean, what's, what's it like having one season?

And the only season is epic all the time.

Yeah, it's awesome all the time. Exactly.

There's also only one scent. It smells like—

yeah, the crazy thing is it's like in the wintertime, it's like it's tough to sweat when it's zero out.

Like, that's facts. Didn't you guys get down to like negative 30-something recently?

Negative 47 was our wind chill.

Wow.

Yeah, I had 7— I had 17 pipe bursts.

Pass.

Well, it was 17 pipe bursts. It was only 5 units. So 5 out of 137. I'll take that number any day of the week.

Oh, that is way too cold.

I was like, the fact— the fact that it got -47 wind chill and I only had 5 units that were issues, I was like, that's amazing, right? Yeah. After I like made it to like Tuesday because I had slept like 7 hours over 3 days, after I made it to like Tuesday, I could open up my eyes, I was like, we did it, we made it.

Yeah, brutal.

Oh, that's awful.

Well, we got a question from Arturo. What is— so this is for everybody on the call. What is your minimum cash-on-cash return to buy a deal? Also, with seller financing and private money combined, what is your minimum DSCR to enter a deal? So cash-on-cash and debt coverage. What about for you, Matt?

I mean, for me, it's, you know, it's— I think when you're a new investor, it's different. You really have to, you know, when you first look at your market, if average is 6 and, you know, you're finding an 8 or a 10, then that's a great deal. So I'm always looking for relative to the market. Once you've been in it for a while, it's not relative to the market anymore. It's relative to what you can get. Because as you get better, as you get further on your path, there's a deal that you guys would have done 3 years ago that you wouldn't do now. And so it's the same thing for me. You know, 20 years in, I get 7 to 10 deals a week across my desk and I don't pick just one. I don't usually pick any. I usually pick— when I was heavily buying, I was doing probably one deal every 3 to 6 weeks.

Yeah.

And now I've seen a lot of good deals and they're like, you don't understand, it's a 14% return. I was like, you don't understand, my last 9 deals were above 25.

Yeah.

What do I care about 14? Like, yeah, because I'll hold out. There's not an— the beautiful thing about your strategy is you never run out of down payment money. That's—

I like not running out, right?

And the challenge for me is I run out of down payment money, you know, I— because I, I try and do— we try and do a lot of seller finance stuff here, and seller finance stuff here, for some reason in my state it's an infinitesimally small percentage of deals that get done.

You know what? I'm going to move out there for a 30-day video series and see if I can find something. Now, you have a—

you have a place to stay. You can stay in my house. I have enough room, so you got free room and board, my man. Anytime.

We'll have to do it when it's not 45 degrees. Yeah, that's a good idea.

But yeah, wait till it increases like 80 degrees.

Yeah, Millennial Mike came out for 5 days, so he just came out, hung out for 5 days, stayed with me for 5 days, and we just basically went out and hit a bunch of my properties that are in different stages of reno or completion and just kind of hung out and talked real estate nonstop for 5 days.

That's epic.

It was fun. So anytime you guys want to do it, you're more than welcome.

That sounds like a plan.

Do it anytime.

All right. Oh, this is a really good question for you. When I grow my portfolio, will I need a property manager to help me out?

Oh yeah, that is— I'm glad I'm not.

No, I don't think so. I have 137 units. I have a full-time job and I don't have a property manager.

So, so, yeah.

So it's the concept that I've come up with is basically called PMI, Property Management Insourcing. So it's not— it's— it gives people the ability to properly understand how to set up your business where I can manage my entire business right from my phone. So it's not to say there's no work. It's just to say that anything that comes up, I can send the message to anybody, message, email, whatever. It's about checks and balances. It's about having systems in place and efficiencies, and it's about understanding exactly what the asset is. Because now when somebody says, oh man, this, this breaker's a faulty breaker, well, I already know what that breaker is, and so I can actually order it, ship it, send it. And then actually tag, you know, my electrician and say, hey, it's going to be shipped to you, it's going to be here in 2 days, go replace it. I can do all that right from my phone.

That, that's phenomenal. And you talk about that more on your channel, right?

We do, we talk about it a little bit on the channel. Um, the challenging thing is, is it's one of those things, and you guys know, it's like you can cover something in like 5 or 10 minutes, but to teach it, it takes an hour, hour and a half, and then you have to walk people through what all the steps are.

And so Is that on your platform?

It is. It's on the— it's— that one's all in the course. Yeah.

Yeah.

Because that was the big one. We had to— I was local. I only bought local real estate for 20 years. And then my daughter got sick. And when she got sick, we were quarantined for 11 months.

The name of your platform is better than anyone I found. What is it again?

It's Oh Shit, I'm a Landlord. Now What?

Yeah, I didn't want to misquote it, so.

Yeah. It was, it was an honest feeling. Like, I was literally sitting there at the closing table. I was 20. I was way older than you at the time, Cody. Like, I was— you weren't born yet. I was 21 or 22 when I closed my first deal. And I was at the table and I was like, oh shit, I don't have leases. I didn't even know what an estoppel was. I had none of that stuff. I was like, what am I going to do? I was screwed. I had nothing. And so that's why I made the course.

Yeah, that, that's always a fun adventure.

I was breaking my arm, patting myself on the back, going, you just did it. You get— you're going to, you're going to be rich now. I was like, oh shit, how am I going to get rich? I don't know. I don't know who my tenants are. I don't know how.

Yeah, yeah. My, my first 12-plex was really nice and you can go to it and it's just aesthetically appealing. Like, it looks nice.

It looks really nice.

You guys, my second one's a turd. It was a, it was a mega turd when I bought it. And so when I closed, I shook the owner's hand, who is now the seller, and he gave me the keys and he's like, all right. And the day of closing, he pulled up. I don't think he showed it to me. I think he bought like a month before. He bought a brand new AMG. So he rolls up and he says goodbye to all his tenants rolls away in the brand new car that they never knew he had.

Adios.

I was like, I looked at the building and it was a turd.

Do you, do you drive your Tesla to pick up rent?

I do.

Okay, Christian, what do you drive?

My Tesla.

Oh yeah, but he got it like, he got it used. I was a dumb 21-year-old and I bought new. I regret that. However, financially it's okay for me and the tenants know, but they know that I take care of the property. I barely pay myself anything. I don't pay myself out of the real estate yet. Eventually I will. Yeah, but I've spent more money on one of my buildings than I've spent on all of my rent on anywhere I've ever lived, my car, and all of my living expenses combined. Just on one building. I'm 12.

Oh yeah.

Yeah. I've spent significantly more on all my buildings than I've ever spent on consumption. So they don't really mind, right?

I go and collect rent in my '04 Yukon.

We also only really collect rent now in person for one tenant.

Yeah.

Oh no, it's one now. We got one the last one. Yeah, just one guy.

Yeah, we had—

we—

because we did— we have 400 tenants in the 137 units. Because with student housing, they don't, they don't, they don't pay together. They pay.

Oh yeah, that's right.

So instead of one transaction out of those units, you have 4 or 5 if it's a 4 or 5 bedroom. So, yep, yep. When I was evicting a tenant and I just felt like I needed to nail the final nail in the coffin, I drove my Porsche.

What Porsche do you have?

See, I have a 911.

Oh, nice.

Yeah, nice car, fun car.

All right. Well, for Mr. Bobini, you mentioned deal debt equity. You say find a deal that makes sense. Now, in a competitive market, how do you make sure you have the deal under contract or offer accepted without preapproval or financials? Well, nobody's ever asked me for preapproval or financials other than the Robin Hood, which we're in right now. Robinhoodvillageresort.com on the Hood Canal. Matt, we're going to have to get you out here. But, uh, other than this deal, no one's ever asked. And I'm a true, like, firm believer that if you know how to present yourself well, they're not going to care. Because the only reason they'd want to see it is they don't believe you can close. And if you hold yourself high enough and you present yourself in a position in a way that they believe this is just going to close, they don't care who the heck you are because they want their money.

I think that's a phenomenal point. And I think, quite frankly, That's what I love about how you guys buy. You know, I kissed a lot of bank frogs.

Oh, and most of the banks are frogs. They're, they're brutal.

And that's the thing is, I mean, what Cody said is exactly right. You know, I can walk in, I have all the credibility in the world with the bank and the bank, but the bank still makes me prove everything, you know?

Yeah. You're more bankable than I mean, anybody in my immediate personal sphere.

Yeah.

And the fact that they still ask you for proof— no one ever asked me for proof, and it's a good thing because I never had it.

Ken's probably a little more bankable than me.

Well, yeah, I guess I— having Robert and Ken in my sphere does help with that.

It does. Yeah, a little bit.

So, but, but on a close personal level, we're, we're a little bit closer friends than I would say.

Yes, true story.

Yeah.

Yeah, true.

So the question from Sean here: Do you agree that if there's a Starbucks in your town, that should be a good area to invest?

What do you guys think? I'm interested in your opinion on that.

So we're buying a 12-plex right now and I could throw a rock. That's from my 12— from my 12-plex to the Starbucks. So it's not just an indicator that says this is going to be a phenomenal investment. However, proximity to up-and-coming opportunities is important. Having a Starbucks there, having a Whole Foods, having the different, different outlets right next to your asset, even if the area, like the general city, may not be growing. I want to buy in growing areas, but if it's not, if it's just staying stagnant, the people that live there are going to want to live in the best areas there. And so regardless of what city you invest in, if you see it there and you're buying close to those types of places where people want to hang out, I think you're going to have better occupancy levels throughout ownership.

Yeah, I think— well, we're also in Washington, so every city has multiple Starbucks. So I mean, there's crappy places to invest here, I guarantee you they also have a Starbucks.

Just—

yes, actually. Um, so it's not a huge indicator here, but when you do see high-end retail, like Starbucks is somewhere who traditionally is good at buying the best retail space. So if you're in a city If you're buying near the Starbucks, you're likely buying in a good part of the city because Starbucks doesn't like to place their stuff in a crappy area in the city.

Yeah, my focus is always kind of how can I get within 15 minutes of the desired area? Because then I'm going to probably cost— have a lower cost basis, but I'm also going to be able to— it always moves, right? And so it's like there was one town that we started— I never invested in, but I always watched it and I always said that town's the marker here. And so I was like, so long as we were— we were always 15 minutes from that town. And now that those— that town, their rents used to be 2, 2.5 times what our rents are, and now they're only about 40% or 50% higher than ours are.. And so they were the rising tide that brought me up. But that was the whole goal, was there were tons of people that wanted to be there. The other thing too is, is that the only speculation you should ever have in my eyes is if you're looking at a 2-lane road going to a 4-lane or a 6-lane road, if you know that's gonna open up and you know that's a project and you know it's been approved, it might be 3 years down the road or 5 years down the road. I started investing based on, I knew that there was a 2-way bridge that was gonna be 6 lanes. And that opened it up because everybody used to be like, oh, I don't want to make that commute, it sucks. Well, that commute went from 30 minutes to 15, and that's huge. Yeah, it was— it crushed.

All right, let's keep going through these questions. Someone asked if we have a great attorney local to us. If you want that, we're not just going to put them on blast because then they'll have no time for us. But you can message us directly. And by us, I mean Christian, 'cause I may not see it, @christianosgood on Instagram.

Do you guys have one attorney or multiple attorneys?

We got three that we, one of 'em we, we burned. So we really only have two. I, I don't like the other one, but we have one for the west side of the mountains and one for the east side of the mountains. And then, okay, for general business stuff, I'll ping either or.

Got it. All right.

How about you, Matt?

9.

Yeah, that sounds right.

9 attorneys.

Yeah, you have more systems than we do though, so—

and longer in the game.

Yeah, and that's, and that's, and that's the funny thing is, is I have more, I have more attorneys than agents now. I mean, it's just one of those things, and you'll see it because like I've got one guy who's a phenomenal— but like no one can touch him in a courtroom. So as a litigator Yeah, I mean, I, I literally have to pay to watch.

So yeah.

So for those who are worried about getting sued, I've been sued a couple of times. You've been sued. You haven't told me that, but I'm 100% sure you've been sued.

Some people— only I've never— I've never actually been sued.

What? In 20 years, you've never been sued? Huh? As an owner?

Would you want to show— would you want to sue somebody that shows up on your front step that looks like me?

Okay. I'm a 5'8" on a good day.

Yeah, I'm like 6'1", 260. It's bad.

Yeah, I've never seen you in person, so I guess. Yeah, that.

Yeah, well, I'm used to seeing Dion.

He's like, so, so give me, so give me the name. So the way that— so in the last— so in 22 years, I've done 9 evictions. Wow. 9. I've never been sued, not once.

Were you ever worried about it? And at what point, if you were, did that worry go away?

Um, that's a great question, Cody. Um, I think I had somebody tell me this week that they were going to sue me and take everything I had. And then good luck with that. Yeah, I said, I mean I look forward to it. Like, I'd love to see how you're going to try and do it. Like, because what was really odd was that he had gone to the doctor because of his— he'd gone to the doctor because of his daughter. She had a rash on her feet. And then they called me and said, the problem is your carpets. I was like, you've lived there for 9 months. The problem isn't my carpets. The problem is you're kind of unclean. And so they had made all these accusations, and I just said— they said, look at what—

that's—

it's— that's not a typical disease. And I know a little bit about a little bit. And so I said, that's actually the clinical definition of athlete's foot. So that's a you issue, not a me issue.

Yeah.

So I mean, maybe, maybe I'm jinxing it and I'm finally going to first time get sued. But I think the— so here's the reason that everyone gets nervous about getting sued. No matter what, you have to pay to defend yourself, right? Here's the cool thing. You might have to pay to defend yourself, but if you have good insurance, You don't do anything. I literally go, paperwork, there you go, insurance company. And so I've set it up from a system perspective that if I do ever get sued, I actually literally just take the lawsuit and I hand it to my insurance company because I have high insurance on the houses, on the buildings, but I also have an umbrella over all those. So if for some reason that athlete's foot case is worth $1.7 million and they find that, and that insurance company loses that case, they're going to be the ones that pay it, not me. So I think the key to it is— I think your point is better than my point, Cody, which is you can't guarantee you won't get sued. So you should probably make sure that you have the right insurances in place. And if you fix things in a timely manner, it drastically reduces— because you can't stop somebody from suing you, but you can make it an open and shut case.

Oh, absolutely. I mean, both of mine got dismissed. Exactly. They were silly BS, but I'm actually very shocked that's never happened to you. I've never met an owner in the game for 20 years. Yeah, it never happened. No, I just need to be 6'2", 260.

Yeah. 6'1", 260. Yeah, you do that.

And apparently even 6'200". I haven't been sued yet either.

So see, there's time. Dang, I'm the loser.

But you're— I mean, yours literally were dismissed. Way prior to court. I mean, they got— you resolved a few emails.

People are like, in all honesty, like, that's the toughest thing for you, Cody, is age. Like, that's just a tough thing. That's— I mean, I was, I was in high tech. I broke into high tech at 19. The thing that I always got hit with was, oh, that's so cute, when's your dad showing up? I was like, oh, don't worry, after this quarter you'll be calling me Daddy.

I'll beat your ass.

We have a sign From the triplex. We bought the triplex right over there next to the Robin Hood. Yeah. And this is Daddy's home. If we still have it, we should give it to you.

But, but that's the key. Like, I, you know, I get it that people would take their shot with you. Like, I get it. Like, that's what they would do. And I think that to your point, though, it's the same thing that when you show up to buy a property that you can have the talk, you can walk the walk, you have the vocabulary. Where there's no question by the time you're finished with that first conversation that you're a guy that can close and get that deal done.

Oh yeah. And when people bring up like that, the— we won't talk about the case, but I mean, it was so silly. Yeah. The fact that I was even involved and just say a couple things and it gets shut down.

Yeah. Yep.

Agree. All right, let's keep going through these questions. Sure. Matt's got a truck, no heater though.

I do.

Is that Millennial Mike or Rob?

That's, that's Rob.

Rob, what would Rob know? The only thing you need where he lives is an AC. I mean, that's— I mean, some might say that makes you soft. I'm not going to say that.

You've got enough cash flow, fix your dang heater.

Well, what's really fun— well, no, it was more for Millennial Mike. Oh, it literally— we were in the car, and what's really funny is I was driving out of the airport to pick him up. So no joke, midnight, I'm driving down an hour away to pick Mike up at the airport, and it's— I was going to have a limo service do it, but they were like, No, we don't have many cars then and blah, blah, blah. And I was like, I'll just do it myself. But I wanted to meet him, so I drove down and then literally on the ride down, my heat broke, stopped working.

Yeah, that's awesome.

I mean, I won't lie, I paid $1,000 for that Yukon, so I won't.

That's a good deal.

It was a good deal.

Arturo asked us another question. When underwriting multifamily, what's the minimum debt coverage you need to see on your total debt portfolio to feel comfortable moving forward on the deal. So on my total portfolio, like for my total debt payments right now, my NOI on the whole portfolio is a little over $1.2 million a year. Just, it's, it's a bit over that. My total debt for mortgages is like $7 $700,000, $800,000. Yeah, so I think it's between 7 and 8. So what is that, like 1 point something? 1.7, 1.8? I like it to be high. So on the current portfolio, I need to stay above 1.5. I'm not willing to violate that. That is— that would be silly for me to do. So yeah, we're at 1, 2 divided by 7. So we're at 1.71, which I'm happy with at 23 years old. It'll get better over time.

And that's post-evictions. We typically have a right at 2 is where we typically hold out. We got through a big refinance and we had a few people who we needed to get out of the building. And so while I hate doing evictions, we don't do them often. It's time on our portfolio. So midwinter, if you're going to clean house any time, It's good to get all of them done in winter. You get in the spring, it's a really good time to lease up and you get a whole bulk of people in right at the beginning.

Now, Arturo, something to think about when you're underwriting this, make sure you're doing it on your net operating income, not your gross. If our gross income was $1.2 million, we'd be negative.

That would be gross.

Yeah. So you need to make sure that there's a lot of margin. The rentals, fully stabilized bring in a little over 2 a year. So having 1.2 NOI, that is the actual income after all of our operating expenses, because debt is an option. You got to remember, debt is an option. You could just be rich, identify as rich. That's what Dave says to do, no debt. So just make sure you're running it on the actual net operating income. Now, Matt, what do you do for yours? Have you mapped out what your debt coverage ratio is amongst the portfolio?

I'm over 2, but like you said, that just happens with time and with aging assets. You know, that's, that's the key there. So I'm over 2, but, you know, it's, it's— you're not— if you make a mistake with one building when you own 49, you're fine. Doesn't matter what the mistake was. Unless it's like plutonium, you know? You know, so it's like, but yeah, I mean, percent, you know, the— I, I still underwrite each deal individually, but I have, you know, we have like $500,000, $600,000 worth of projects going on right now as far as rehabs go. I don't like having 3 going at the same time, quite frankly. It kind of sucks.

I was talking with Ken, talk about scale. He's doing 600 units right now, and that's all— that's only That's development ground up. And that's 2 of his— I think it was 2 of 6 projects.

Just so much.

600 units. How many units does he own? Like 14,000 or something?

He's over 10,000. We talked about a little bit in passing, but he's over $2 billion in assets right now.

It's crazy.

It's more than me.

Yeah, a little bit. This is Coach. Yeah, but you know what, though, Cody? I'd bet on you at your age versus him at his age.

I appreciate that.

Legit, he does have a little bit more runway.

Yeah, just—

yeah, yeah, time to do Cody things.

Yes. Yeah, by the way, I noticed there's 60 people, uh, viewing and 17 likes. If you want to get that ratio a little bit more reasonable, that would be greatly appreciated. We work really hard on this.

I agree with you.

Yeah, let's, let's see, at least, uh, if you guys can get this to 30 likes, I'll be happy.

I appreciate it.

That'd be pretty then more people will watch it and like our stuff. And I, I do appreciate that.

How long should you offer interest only when do seller financing? So if you're going to do interest only, this is something you have to think about. You have to do long-term debt because what you're betting on is that your loan-to-value is going to get fixed. Instead of amortizing your debts and paying it down little by little, you're going to fix it by the asset going up in value. That could be through doing the renovations to physically make it nicer or betting on the market that you're in. It's not a guarantee, it's just a bet in that case. So when I do interest only, I did a 10-plex, bought it for $900,000. I would have paid more for it today. I have a path where before the note is due, I believe it will be worth over $2 million. However, I could write a check for the amount of debt that I have on it right now because currently with its current value, I'm at like 55% LTV. We only owe like $700,000 on a $1,300,000 asset. So like, I'm comfortable today. You have to have a plan with enough runway. We have 15 years on ours. It's 7 years with an option to extend another 8 at 5% interest only. Wow. The asset cash flow.

Does that— is that a one-way or is that a bidirectional? Like, do you both need to agree or does it just— you can exercise? Is it a one-sided exercise option?

Correct. Unilateral.

That's beautiful. That's beautiful.

And I don't know that we will, because at that point I might want to pull money out of that and pay off my littler stuff and just write a check, like pull that in with another 12-plex that I own in the same LLC, put it on to agency financing, non-recourse, and then pay off my stuff that I own just jointly with Christian. That might be the play on that, but it's a great loan product. We have enough runway to where 15 years we could hold it out. At that point, we could just pay this thing off. The risk is gone at that point. And that's a big thing. If you're going to interest only, you're betting on your ability to slash the LTV through some other means than paying down the loan. What are your thoughts on that, Matt? You, you're down on seller financing, right?

I've done, um, I've done one hybrid. That's it. That's it. It was, uh, it was a 50-40-10, whereas I got a bank to take 50% of the debt, I got the seller to finance 40%, and that way I only had to put 10 points in the deal. And then I did a leaseback, and then I did a leaseback for 10 years.

Oh, that's awesome.

It was a fun deal. Yeah, it was cool. And so I started marketing to bankruptcy attorneys. Oh, that's smart because they have people that need to reimagine their assets if they want to stay in their home.

So now you still are. So you still buy single family?

I will only buy it with weird terms like that because I hate singles. So I own— I own, aside from the one that I live, 2 out of my 49 buildings are single families. So I like small, I like small multi, 2 through 4, debt, 30-year fixed. Yeah, I like— that's the, that's the stuff I like.

Speaking of, from Anthony, what's the difference between Matt's buying strategy versus yours?

Theirs is better.

Well, you're still—

there we go. That's a YouTube short.

Okay, what's the difference? Yours is better. Well, we'll clip that. Write that down. Yeah, but no, seriously, uh, Matt really structured like the best game with the banks. Yeah, you can make your own bank products. He talks about that in his course. He also talks about that on his YouTube channel, Matt the Lumberjack Landlord. But playing the conventional game, he's the best player out there.

Thank you.

On the small residential 2 to 4 unit portfolios, and there's a huge market for that and you can get rich. I mean, I would say without seeing your exact financials, you're doing better off than the average American.

A little bit.

Maybe just a little bit. Maybe it's taken— it's taken time.

Sure.

But you've started stacking rentals. Yes. Yeah. Multiple. And you've done that with the 30-year fixed-rate bank products. On our end, we've done a lot of 2 to 4 unit deals. I've got 8 duplexes. He's got 9. We've got 3 triplexes. And a bunch of smaller stuff, but a lot of our debt products are just different. I didn't qualify, and I don't know if I could have made my own product that I would have qualified for, but I didn't even have the down payment. So that— you work with your money, I work with whatever I can. Yeah, and I think that's the big difference.

Yeah, but as guys who are all about long-term fixed-rate cash-flowing debt, you can't beat the 30-year fully amortized debt that you have on your whole portfolio. I mean, it's just ridiculous.

And a lot of my rates are 5 to 6, some are 7. A lot of yours are in the 3s, in the 4s.

Yeah, so reasonable, of course.

Yeah, yeah. If you can— like, our big thing is how do you buy it, how do you never lose it, and will it be fun? And if you can figure out how to buy it, the 2 to 4 unit range with the conventional debt products, and do what we're doing, I think that would be the ultimate hybrid model.

Yeah, I agree.

Nobody's done that, but We got to figure it out because I'm—

so I just did a deal. So I paid— so it was a value-added deal. Paid $515,000. Yeah, paid $515,000 for the deal. I put 20% down, but I got the bank to finance and give me the $200,000 to remodel it.

That's awesome. And how is that— is that a line of credit? Was that 30 years?

Even better. So it's a construction loan on the asset.

Yeah.

So I don't even have to refi it when I'm done. It just converts from existing rate into the mortgage that I'll have. And I'm already buying down on the 30-year fixed amortized.

I want to do that.

It's an awesome deal. It's, it's like literally I said to her, I go, after we signed and closed, I said, I honestly can't believe We did that. I was shocked because I told her, I said, I only brought $100,000-something to the table and you gave me $200,000 back to rent out the whole thing.

Yeah.

And it's 30-year fixed rate debt. And, and I, I only pay interest on the— so the— I don't have to refi it. That's the big thing. I just don't— I don't have to refi it. So that deal is locked in at like 4.5.

The only time you can get overleveraged is when you have to get new debt.

Correct.

And that's a balloon or when you don't have cash flow and you solved for that. That's awesome.

Yeah, but I think— but you guys, like, the power of your strategy though is, you know, the ability to scale without credentials. And that's really, really hard. You know, you guys mastering that and being able to teach that to folks when you can scale with no credentials, largely no down payment. And not a bank account that shows, you know, 7 figures, that's really like— if I had— for me, I went the only way that I could because 22 years ago, if you did seller financing to somebody, you'd like to get punched or they're just like, what are you talking about? Like, that just wasn't— that wasn't a thing back then. Wasn't really allowed. Like, people would talk about it, but no one was doing it.

Yeah.

And now you guys have kind of made this you know, helped be a big part of making this mainstream. And, you know, now you can be 18 or 19 years old, know your numbers cold, and get a deal for 10 units done. And I just, I just got my first building over 10 units like 18 months ago.

Yes, you're part of the cool kids club.

Now, one of the things that I think people need to hear is like your first deal when you have no credentials, you can do it.

1000%.

You can do that first deal. It is doable. And it doesn't have to be seller financing, but it probably will be. It's probably going to be somewhat creative if you don't have a bunch of money and don't have any credibility. Like, those are the two huge things people look for.

Absolutely.

That being said, we've had a bunch of people in our course— Caleb and Chuck, we use all the time, uh, are great examples. Vlad in our group had a few units. He bought a 14 seller finance, I think, 16 units.

He had a fourplex, which is awesome.

Yeah. And I started with 4 units conventional, and then we, we went creative. However, the ability to instill confidence in others is all you have to do. It's a basic sales thing. Your first deal, 1000%, is going to be your hardest deal. And I don't care if you are buying your first duplex, you're buying your first 38-plex, whether it's conventional, seller financed, it's gonna be your hardest deal cuz you just don't know what you're doing.

That's right.

You have to learn from the best, which is why you guys wanna learn how to keep it. Take Matt's course. It is, um, Matt is the best operator of real estate on the planet.

I believe that.

Yeah, pretty good.

Back.

Yeah, because you do it part-time with a very full-time job.

You have like a 12-hour day job and you do, and your annual cash flow is like our NOI.

So it's, it's what's really funny because it's like, you know, most people, you know, and this isn't to down-talk smaller or less expensive markets. Sure, you fish where the fish are, and where you are and where you're building your business, that's all that matters, is that you're great at what you do where you are. But that's the challenge is that there are markets where a duplex like Seattle is $1.2 million, and then there are markets like Gary, Indiana, where a duplex is $47K. And so that's where unit count doesn't really matter. It matters like where you're doing it, what market you're doing in, what we're really talking about from a balance sheet perspective. And so that's where it greatly changes. It's same thing as like owning property in downtown San Francisco. If you want a triplex in downtown San Francisco, it's probably worth 5 or 6 million bucks.

It's crazy.

You know, it's one— it's one building. So it's like— so that's why it's like I don't really count, like, don't really look at doors. I'm more like, what's, what's the return on— what's the return on the deals that you're doing?

You know, flexing door count is for insecure real estate investors.

Totally agree.

It's all right.

Honestly, once you're over 100, it's like what you and I do. We just make fun of each other because you're going to pass me. So it's like, it's like, who cares? Like, who cares? I'd rather have 50 at 25% than 250 at 7%. And I know somebody with $250 that they're lucky when they hit 7%. And I'm literally like, hey, just pick your, pick your bottom 10 assets or your top 10 assets. Pick your top 10 assets and just bundle those and start to think about what you're going to sell those to me for because you're going to need a bailout.

Yeah, well, and if you wanted more doors than us, when we pass you, you'll just call Mike, buy 200 of them in Gary, Indiana for $17, and you'll be ahead again.

Yes. Throw it on a credit card. I'm sure you have a line of credit big enough to buy all of Gary.

Yeah, it's, it's funny. It's funny because I've talked to Mike about Gary and I've done some work in Gary, like looking at stuff. I'm just like, I don't know if I have the stomach for Gary. Like, that's hard, man.

I don't know that I'd self-manage that one. That sounds like it gets—

I mean, Yeah, I mean, thankfully I'm from New Hampshire, and so we actually have— literally, it's a statistic for our state— we have more guns than people.

So there you go. We don't have that in Seattle.

You do not. Not most of us here. Most of us here kill our own food. That's why.

Yeah.

See, that's fun.

So we have a question from Alan to Christian. How's the Airbnb going?

Oh. So our 4 days to flip an Airbnb, we're rounding out the end of the 4th month. It is rent ready.

Units of measure matter. Month, days.

And yeah, I— there was one counter that we screwed up the paint on and then we lost the paint color. So I have to re-coat one counter. I don't know where it went, but the rest of the project's done. I'm putting it online on Friday. It is done. It'll be painted on Friday. And by the time someone books it, the paint will be dry. So it is a ready-to-go, done project, um, that will— look for that on the Robin Hood website because the resort is actually going to lease that space.

Mass release.

Yep, mass release that top space, and away we go. So very, very excited to be, um, showing that. Look for that on robinhoodvillageresort.com. Not the, just robinhoodvillageresort.com.

Sweet. When speaking to a broker, what numbers do you care about?

All of them.

But more specifically, I want to know what's my top line income, how do we break that down from all the income sources, being the— it could be which tenants are paying what, is there storage. I want to know all the incomes. There could be utility income, laundry income, and I'm going to underwrite based on the rents because I'm not buying big enough stuff to where the utility income or the laundry could really influence the value a whole bunch. Eventually, one day that'll change. But I'm just looking at what are the rents, what are the actual expenses. I'm going to mark up the expenses on taxes and insurance because I'm guessing that they're underinsured for their basis and that they— the taxes will go up. And then I need to look at what my management's going to cost because I own PM. It's different for Matt, but I care about income and expenses and then I need to figure out my debt product. But that's not coming from the broker because Buyers are liars, sellers are worse, and brokers suck. Yep.

Brokers are way more worse. That's the correct English for that.

It's true, actually.

Yep.

Yeah. Brokers— there are very few good brokers. That being said, if you find a great broker, make sure that they get paid a lot on every transaction.

Yeah, you got to do that. You always dance with the one who brung you, number one. And number two is if you don't have a good transaction with somebody, you make sure that you never use them again.

Again.

It's because they're not going to get better. They, they— is the— it is the field that never— they— people, once they hit where they're at, they just don't get better.

Christian just has spider jump on him.

That was, that was—

I didn't know we had jumping spiders here.

Oh, that was, uh, yeah, I could have done without that.

Uh, how do I negotiate a seller that wants to do seller financing but wants a big down payment?

Ooh, I have a good one for this.

Do it.

All right. So the big down payment, the first thing you're gonna do is, uh, if you raise the money or bring in an equity partner, does the deal still make sense? Because the fact that the down payment's big is one of many factors. So there's certain deals where like this building had a million dollar down payment. I'd consider that a fairly large down payment.

It was for us at our point in the business cycle. Yeah.

And it's a $4.5 million purchase. So it's, it's not like we got like a 5% down deal. Like that's a, that's a chunk of change. It's the biggest capital raise we've ever done. However, the deal made absolute sense. The price that we're paying for the resort is a lot less than market value. The income justified it as is, and the potential income of this under different operations was way higher.

The reason it wouldn't sell for more is because there was a lack of systems. So we build out systems and it becomes— and we're not going to treat it like this because we love this property. This is my favorite asset in the portfolio. We'll never sell it. So the valuation really doesn't matter other than it looks good on our balance sheet, right? But we get the systems in place. If someone wanted to buy it, which no one will ever get to buy it, they could buy it as an investment, not an owner-operator, which is the way that it's been run for 88 years.

Right.

That's how we're adding a whole bunch of value because as soon as it goes from an owner-operation business to an investment, the cap rate goes down, which means the value Which is an inverse, goes way up.

We're the first owners who've ever lived offsite and run this property for 88 years. The 4 groups that owned it, they all lived here, worked here, or at least lived like 2 blocks away. So to turn this into a business, it makes it an actual sellable thing. Like he said, though, we're never going to sell this. This is like the crown jewel. I love this thing.

That's awesome.

It'll be the coolest asset we own until it's not, but we'll hold it forever regardless.

I know. What would it be that would ever top that?

I don't know. I'm not there. Mar-a-Lago. I don't know. I think bigger resort. Hey, Donnie, seller finance.

He's leveraged to the moon, so probably not.

The moon.

Oh, yeah. I was going to say that thing's probably got a first, a second, and a third.

Give me Mar-a-Lago subject to.

Oh, no, no, we're not doing that. I'm going to say the bank's going to find out about that one. No, we're a lot of trades. It's like, wait a second, Donnie's still paying the debt. What happened here?

Yes, we'll just sign in through his online mortgage statements.

You guys, you guys got to look at that. The most expensive house in the Caribbean just went on the market. $203 million, I think.

You know, if my portfolio was 10 times bigger and paid off, If there was no taxable event in selling it, I could buy that.

$203 million for one asset. It's amazing.

That's ridiculous.

I want to say it's like, yeah, look it up. It's a pretty impressive property, but I don't know that I could ever get emotionally get to $203 million.

That's a lot of money.

Essentially a $203 million single family.

Imagine you could buy Indiana, let alone Gary. Hey, Mike, I own all the land underneath your buildings.

The rent's due.

Rent's due. All right. So on Franklin's point, though, if they want a big down payment, another way we've done in the past is do a smaller down payment and then do additional down payments in the future. Unlike with a bank, it's really easy to negotiate that with the seller. Say, hey, what if I give you $20,000 down right now and then next Christmas I'll give you another $20,000 and then Christmas after that I'll give you another $20,000. That's how we bought Tequila. 4.5% down, 3% interest.

Oh, I love that deal.

I don't love the property, but I love the structure. Cash flows really well.

It'll be lovable in a while. Couple more renovations.

Lovable, not livable. It's livable now.

Yeah, lovable.

It'll be lovable.

It's always been livable except for the one unit that is vacant. Because we're renovating it. That's not livable.

No, that one's gross.

I know.

Split pea soup on the walls. That's the color anyway.

They painted it yellow and green on the inside, but they didn't finish painting it. So it's like partially bright green and then it transitions to like a lemon yellow and then it's just like taupe. It's terrible.

That's artistic.

Yep.

All right, Anthony, I am a professional poker player and have a significant amount of cash low. In my situation, what would you say Matt's way— wait, in my situation, would you say Matt's way is better for me?

Matt, um, professional poker player, lots of cash flow, but my guess is, assuming— so what I know, so I've talked to some poker players, they have significant cash flow, somehow all of it doesn't make it to the balance sheet. So you can only borrow off of what your balance sheet says you actually make. Um, I, I still think for acquisition, my way is get rich for sure, but it takes a long time to get rich. And I think that your guys' strategy is more risky but absolutely get rich a lot faster. It's more, it's more risky just only because, you know, in fact, I think that, I think that the way that you do that, it, it's, it's only more risky because of factors you can't control, right?

Yeah. And our strategy, it is difficult. Due diligence is the one big one that can kill you. You don't have an appraiser looking at your evaluation. You don't have an underwriter saying, oh, this actually makes money. They're not fudging with the numbers, or they're fudging with the numbers. You don't have a professional whose job is to check all the boxes, right? So the risk just comes from a lack of knowledge and a lack of practical application. In theory, this makes sense, but in reality, I don't know what I'm doing. And it's, you know, that's, that's hard because getting your loan products, you have a professional that's going to want to see the cash flow statements. Some—

yeah, for when— and I'll have to literally point out to an inspector or an appraiser, I have to tell appraisers they're not inspectors and I have to tell inspectors they're not appraisers. You know, they're all like NBA players that want to be rock stars and rock stars that want to be NBA players. It's like you can't say, well, I have concerns structurally. Yeah, well, that's not your— that's not in your purview. You're an appraiser, right?

Yeah. So that's the big risk. Due diligence is difficult if you don't know what you're doing. What if your goals are higher than the owner's? Well, they're probably farther ahead than you are. I can learn a lot from Matt regardless of what his current goals are because he's further ahead than I am. So if you're not going to meet with someone just because they don't have the same goals, people will work with you based on the goals that you have. The person ahead of you, like Matt, wants to help us out. We've got big goals. If our goal is to buy a single-family house, I don't know how far that help would extend if that was just the goal, because it doesn't resonate, right? But I can still learn from them. Sure.

Well, I mean, I, I want to do— I'm in position where I believe your strategy with the amount of racks that I've created means that I can probably get to $100 million.

Mm-hmm.

That's— I can't, I can't get— I don't want to get there with bank debt because I don't want to do the things that they want me to do to get there with bank debt.

Yeah. And $100 million, you can crush.

Yeah.

Yeah, no doubt.

Yeah, that's, that's not that far out. Yeah. Is CapEx a key component when you guys underwrite your properties? And do you talk over CapEx to your equity partners?

Well, that's a, that's a big yes for us. That's a, that's a big part of the actual pitch is you get them excited about the projects that you're doing. If you're bringing on an equity partner, that's, I mean, that's everything. You're so big mistake people do is they start with the numbers. No one wants to see a spreadsheet to open a meeting. That is just lame. Even Cody, who's a numbers guy, he does not want a bunch of numbers just in his face. Like, hey, what do you think of this deal? It's like, I don't know what the deal is.

Yeah.

So you're gonna talk about the real estate itself. This is the property we're buying, a 12-plex right now. This is the 12-plex, 2 10s and a duplex. Beautiful area, best street.

I'm the math guy. That was 22 units.

Oh, I'm sorry, 2 5s and a 2, whatever the numbers. But you explain the property, you show them a picture of the property like this is what we're looking at purchasing. I'm really excited about this. Now, the upside here is we're going to be repairing these 2 units and we're going to be doing these exterior upgrades. Right there, there's the CapEx. You're explaining what you're raising money for, and that's the reason you're excited. Now they're not surprised when you're like, hey, we're gonna need some money to renovate this. Like, the opportunity is we're picking this up at a great price, under market rent, with stellar terms, and we're gonna have enough money at the beginning of this with partnering with you to fix it up and bring the rent closer to market. It's gonna make X amount. And then you can get into the numbers, but that's how you present that. And that is the reason they're going to invest with you is because of the CapEx.

All right. Well, we've got one last question, and this one is for Matt because it's not applicable to me. Are— well, I don't know that's applicable to you, but the odds are great. Are unpermitted units that have been added to a property a red flag? Have you dealt with that?

Yeah, yeah, sure. Yeah. So the big thing that you have to— so when you find out about it, so, so I believe in always being honest. And that's why my YouTube channel has only 6,000 subscribers, because I will tell people exactly what I think.

You're going to grow. Yeah.

The good news is, is that when I've actually— I bought it, I bought a duplex and it was being marketed as a triplex. And I found out that that triplex, that bottom, that basement unit was completely illegal. No egress, no this, no that, no other. And so to get myself— it's the right thing and honest thing to do. But you know what, that code enforcement officer in that town, I can literally do pretty much anything I want because he knows I'm as honest as the day is long. I called him and I told him, and I tattled on the house, on the, on the guy that was selling the house. I said, he's got an illegal unit down there. And I said, I'm going to buy the property, but I need a letter from you saying that that unit's illegal because I checked and it's illegal. No egress, no this, no that. I said, they had no permitting. They— it has everything down there. There's no— it's, it's unsafe. Someone would die in that basement if there fire. And so he's like, man, I really appreciate that. I said, I appreciate the letter that you're going to write me. I use that letter, I got the price down significantly, and I bought the asset. Now it's not like— and so I literally went in there and I said, he— I wrote them a letter and I said, day one, I'm going to go in there, I'm going to destroy that unit. And I did. And so to that question, you really have to be careful about those things, because if they're willing to put an illegal unit in there, who knows how they did it, what they did, and the quality of the rest of the work in the building. Because I bought one place that I called Sharkbite Palace and it was just one sharkbite after another. And it was like, holy crap, the guy spent probably $2,000 on sharkbites.

That's crazy.

It's horrible. And, and that quality of work is going to lead to a high-level maintenance building that is going to cost you money. So even if your return on capital is fantastic on the deal, you're going to spend a lot more in CapEx over time on that building. Maintaining it.

That's awesome. Well, appreciate the insight because I couldn't give anything on that. I've never bought a nonconforming asset. That is called nonconforming for those who don't know. That is it for YouTube. Oh wait, REI Stoners asked, how do you find out that mat? Oh, that info mat. And is it in your course?

It is in the course and it's the part of the course where we actually talk to you how to talk to code enforcement. I literally do— part of the course is how you have a conversation with code enforcement. And that's the type of stuff that you find out. I wasn't going to out the guy. I always call on these things to make sure it's a legal whatever. What's really interesting is I found a number of properties that were turned into single families that were duplexes that were then sold as singles that I bought as singles, turned them back into duplexes, and I got $100,000 in equity just for going from a single, a larger single family to a, to a decent-sized duplex. So, yep, it's absolutely in there.

That's awesome. Yeah, that's really awesome. Thank you. All these questions keep rolling in. If you, if you have anywhere to be, let us know.

I don't. I'm good. I can go forever.

Okay. Does it only take one call getting all the numbers from the broker using your script? It takes me one phone call.

Yeah.

Yeah, if you're good, it doesn't take you 2 calls.

That's exactly right.

Does Matt buy real estate in Massachusetts? I live in NH as well.

I would never buy real estate in Massachusetts. Literally, literally crossing that border is like the difference between crossing from like Ukraine into Russia. It is not— it is not a line you want to cross. I had the opportunity. So where I live, I live 7 minutes from Maine. And I live 15 minutes from Mass. And so I could invest in any of the 3 states I wanted. And I chose New Hampshire because they are aligned most with landlords and landlord rights because we pay all the taxes. The other 2 states don't care. They're literally— in Massachusetts, you can't evict from October to March even if they're not paying. And if you're paying the utilities, you still have to pay them.

I know where I'm living in winter.

Yeah, true.

That's, that's terrible.

It's awful.

It's not worth the money to me to live in that -47-degree BS.

Yeah.

All right, that's why I'm buying the base. From Daylon: Matt, how did you meet these guys? I'm guessing he's referring to us.

Yeah, uh, I think Dion. I think Dion actually connected us.

I believe so.

Yeah.

Yep, what a nice guy. We wouldn't have had this deal without Dion. He told us this was a zero-down seller finance resort. He was only off by all the other zeros and the one.

Very close, very close. Just a little bit of binary between 1 and 2.

Yeah. Let's see. Do you guys have any experience with starting a PM company and how did it go?

Oh boy, do we.

We do. 10 of 10, don't recommend.

Just now we have an awesome team and I do love that we have it built, but it is so hard. There's a few problems with PM companies. It's hard to do.

It's hard to do. Fast. Yeah, we had to do it fast.

Yeah, it's hard to put together in a rush because there's a lot of regulation. There's a lot of like, okay, well, hope we did this right. And then you, you learn, you, huzzah, we did. But it was, it was hard. And a lot of that added admin legal backend stuff ended up on me, which was just brutal. I had to figure out a lot of stuff that was high stress. That being said, once you build it, I do love the team we have. I love the efficiencies of being able to have W-2 people who can move from place to place, fixing the stuff. It was just like, I like being responsible for the team. Uh, Matt has a model where you don't own a PM company, but I mean, you have— it's not like you're physically at all your building. Like, you, you run an organization, it just is insourced and optimized.

Yeah, for until 2 years ago, I was the one in the properties.

My goodness, that's so much.

Yeah.

So it was like—

That's crazy to me that you do that.

Yeah. Plumbing, electric, like I can fix pretty much, and I can fix pretty much anything now, but 22 years ago I couldn't and YouTube didn't exist. I used to pay contractors to work alongside them so I could learn what they were doing. That's how I built, that's how I built my business.

That's crazy. So no matter which way you do it, the message is it's hard and it's gonna be a little bit hard. It is.

And you have to learn from the people who know what they're doing regardless of whether it's contracting or real estate.

100%.

Simple game. Yep. All right, let's see. We have more questions. Rockin' and rollin'. I know this stream is about Matt. Yes, yes, it is about Matt. But Cody, with your first property, how did everything go after you purchased it? Well, I was cash flowing $800 a month, and then 6 months in, I had a $5,000 bill. So if you do the math, $800 times 6 was $200 shy of my water heaters. But I got the water heaters done. And so I had to write like a $200 check. And that was all— that was all fine. I got paid back basically out of next month's cash flow. But the first deal did not get me rich. People thought it did. In 12 apartments, I had $1,000,001 in real estate and $1,000,001 in debt. I was ballin'. No equity, but I did have cash flow because regardless of your equity position, if you borrow cheap enough money, you, you can have cash flow on every asset, but you can get to positive cash flow. And so first deal kind of just sat there. There was nothing really to it. It was stable. People paid and then I paid all my bills and I had no money left over. Like it was just this thing. But after 2 years, the rent went up.. And now that 800-month cash flow is $4,000, which is better than $800.

Yep, it is. Equity is like crypto. You can't, you can't, you can't spend it.

Yep. Except that equity is real, right?

Well, so crypto— so I'm not a crypto guy, but here's what I will say. So yes, you can sell. You're going to— you're literally— your channel is going to blow up. Like, that's like you're going to— you just made 10,000 people angry. The Crypto Bros, right? So, so we, we had a lot of them on my channel. But the reason I say you can't spend it right is when you have that equity and you've got 30% equity, you can't tap— you have to borrow against that equity. You can't show up like you can spend cash flow. And that's the point is that's what I love about assets that throw off cash flow is that you then have something you can spend. If that you— if that building you had, Cody, wasn't throwing off cash flow, you were writing a check for 5 G's out of your pocket, right?

So while it wasn't comfortable paying $200,000 plus all the reserves I had— and I was 20 at the time, this would have been— this would have been in like March of 2020. That was painful. But I didn't have to work for that $4,800. I just had to work for the $200,000. Correct. And now I'm doing renovations and blowing multiple 5 figures, closer to 6, and I'm not spending any money that I had to work for.

Exactly.

It's a little more better. Amazing.

I have to hop on a very, very quick phone call, but we're still getting great questions, so I will keep going. I'm going to just leave you to do it. I'll be right back.

For those who don't know, I'm in the pub and you should come check out the Robin Hood. These lights are awful though. Prior ownership did LEDs and they're direct. Oh, Yeah.

However, come check them out yourself at our event.

Yeah. March 17th, 18th, 19th, I think it is. Yep. 360-490-8168. Somehow I memorize all the phone numbers for all the companies. I don't know. Okay. From Rob, do you use agents more to find deals or owner direct? I would say that today most of my new deals are coming from agents. And one specifically, shout out to Eric with the Foundation Group. He's my broker, not yours. No, I'm just kidding. But anybody can use him if they're buying here. But Eric's awesome and he, he found me my seller finance 10-plex. He found me my seller finance 12. We're working on a huge storage opportunity for $6.5 million. We'll see that they have an expense ratio of 12%. So I'm going to beat them up on that. You go, I don't think that's real. I think the taxes will be like 5% of what I'm buying it for. But all the owners that I built my relationships with in the beginning were the bulk of my first deals, and they're going to be the bulk of all my deals into the future because they're selling their whole portfolio. Yeah, they're going to exit at one point. And if you can become the most logical buyer in a real estate transaction, you win out over everyone else. And for them, I became the logical buyer.

What about you? So that's one of the things that, you know, so my last 5 deals, I think, were agent, off-market, wholesale, MLS, off, seller finance, or the 50/40/10 deal. So it's everywhere. It's everywhere. And I think the key is, is just relationally You know, I didn't— I was 12 years into my investment journey before I got an off-market deal. Yeah, like, wow, wow, yeah, 12 years.

Yeah, that's a unicorn.

Yeah, I was like, you, you guys like do this and don't put on MLS? What do you mean? What are you talking about? And then I was like, wow, that's a thing. And then it just became more and more. But, you know, but so 10 years ago was when that was. And 10 years ago, pretty much everything went MLS. Pretty much everything. Now it's one of those things where people will actually consider doing a seller finance deal.

10 years ago I was in 8th grade.

I know. 10 years ago I was 35.

Wow.

Getting my, getting my first—

3 and 5 equals out to 8. We're the same. See, there you go. There we go. We're the same, you and I. They asked if we've got onsite maintenance for Robinhood. We do. Yes. Nice. How do you contact owners of multifamily properties? With a phone call. I've got a video, How to Find Any Property Owner Ever. Check that out on our YouTube channel. You can do that. That's how I got in contact with the Belfort family and Pace and Cardone. You can find anybody's phone number online. It's all free. When you hire a PM company, do they double-check with you guys to make sure that they are not over-budgeting on expenses? I— what I want to see when I'm talking with a PM company, and this is different than Matt because, I mean, you, you do everything in-sourced, but eventually you may go to third party. I want to make sure that they own a similar amount of rentals that I— than I do, because they can operate that level of ownership, because if they give me expenses, they could be ripping me off. A lot of PM companies— I'm not trying to dish on PM companies, but it's not hard to be better than the next person. It's not. So if you're gonna chat with them, I'd first, before you even talk about expenses and talk about comparing and contrasting, see what they own. Because if they own a duplex and they're trying to give me advice on a $21 million portfolio, they're probably not going to have the experience from an ownership perspective. They're going to run it as, oh, we'll just hire out this vendor and this vendor, and it's going to cost a bunch of money, rather than thinking about it as an owner. Because if I just worked with all the PM companies out there, they'd hire it all out, they wouldn't understand it, and I'd be working with all these vendors paying a premium for everything, and my expenses would be really high. If they're an owner, they've already gone through the processes to make sure that they can get everything affordable. Horribly. Yeah, otherwise they go bankrupt, and that's just not a good way to go.

Yeah, I would never, um, you know, if you're using PM, you're likely— they're paying them more money to manage your property than you're making off your property, number one. Um, that's why I'm passionate about PM insourcing. Um, then the second thing is, is that nobody is as good of a buyer as us that have to pay for it. You know, I made one phone call— I just did a video on this— I, I made one phone call, I saved $1,800. With one phone call.

For most people getting started, I mean, that's like 7 months of rent.

And Gary, it's a ton of money. It's a ton of money. $1,800 is a ton of— I don't care how much money you have, $1,800 is a lot of money.

Yeah, that adds up really freaking quick. I mean, that's a lot of people's pay period.

And that was one phone call. So it's like, and it's like, how do we not get to this point? You know, how, how did we get to this point where I have a conversation with you and I say, you know what, you hold, I make one phone call and I save myself $1,800. You know, yeah, that's a problem.

Yeah, it's huge. I mean, that for me, that would have been life-changing money because I started with $3,000. That's 60% of what I had. Exactly.

Yep.

All right, after you make the first call, you're scheduled to meet for coffee. What do you talk about the coffee appointment? So what most people butcher in this is they try and connect on relatable points. And relatable points gets you to the table. They talk about commonalities. If I'm into shooting and I know they're into shooting, I'd probably talk about that as I was getting started. Anything. If they're into cars, cars, that's not what you want to talk about. You should talk about your goals when you get to the meeting. If you just talk about relatable points, they're going to think you're a nice person, but they're not going to want to work with you. You're just another friend and they've probably already got enough friends. They don't have enough time for you. If you share your goals, they'll want to work with you. And that's why I mapped out the circle drill. Relatability—your past gets you to the table, your goals get people to work with you, and your significance behind set goals—what changes when you get there—determines how much buying you're going to get from those people. So when you get to the meeting, focus on what you want to accomplish and learn their story.

Agreed. People buy from people. And interested is interesting.

Love that. Matt talked about house hacking as a great option with low down and cheap debt. But what if you're living in the Bay Area or New York? Would you still house hack?

Absolutely. The more expensive the market, the more valuable the house hack is. Because if you're buying a $3 million home and you're able to buy it with 3.5% debt down or 5%, money down as opposed to an investment at 20%. I mean, unless you can get something seller financed, which if you've done their course and you've gone through that process, you'll likely put yourself in a position. That's why your course is just so outrageously underpriced is because one deal and that thing pays itself back 10 times. I had somebody say on my, on my livestream on Sunday, they said I saved $15,000 based on one thing that I learned in your entire course. I saved 15 grand this week. That's amazing. I was like, damn it, I should have charged more. I only charged $1,000.

The thing is, I learned this when I was over in Vegas last week. Yeah. I learned it from Brandon Dawson, and I've heard it before, but I forgot about it and I shouldn't have. I wrote it down this time. Price is only an issue in the absence of value. Agreed. Agreed. That's it. It doesn't matter what it costs. We could charge— I mean, we could justify it. I, and I did this on my, uh, 38-plex. I was like, I'm buying it for $2 million. It's been on the market since I was 8 years old, and I could wholesale it for $2.5 million. And I know I could get the half million fee because there was absence of value the way other people positioned it. Same thing with the course. A lot of people charge $15,000 to $25,000, right? I could do that, get a lot less people into it. Um, but for those who are listening to this, if price is an issue for you on anything and you're trying to make money or trying to justify a deal, find the value. And if you find the value, you'll find the money. Because when there's absence of value, that's the only time that price becomes an issue. Exactly.

If you have a PM and you take my course, I save you $1,000 in the first month that you're managing your PM better. Because for me, I want to teach people how to manage it themselves so they can— they don't have to pay a PM. But you can still keep— you can still keep your PM, but just manage him better because you know better how to calculate things.

I need to fire myself. All right, uh, I'll get on that after the call. I'll break the news. How do you find an agent that will source you owner finance deals? They found us. That's all I bought. I bought a tiny little triplex. We call it the Beanplex because my business partner and I first met over beans. It was these refried beans at a Mexican restaurant, and then I ended up selling him some deals. And so we called it Beans LLC with a Z. It wasn't B-E-A-N-S, it was B-E-A-N-Z. And so we bought this little Beanplex, and this is weird. Like, the property is small. It's 1,152 square feet, waterfront triplex. Wow. Yeah, tiny.

So that's why we thought like 400-foot units.

Yeah, we call it the Beanplex because it's the size of a bean. It's so small.

That's awesome.

But I buy this property, and for Beans LLC, that was one of the most recent transactions in Grant County records. So this broker calls up Christian Osgood because we listed him as the rep because I didn't want to fill out all the paperwork for our LLC this time. So I was like, here, you do this. So he calls Christian, he's like, hey, I got an off-market 10-plex, seller financable, it's on Division Street. And I, I turned to Christian, I said, say Chad's name. And he said, oh, that's Chad's building. He's like, how the heck did you know? And then he passed the phone to me, he's like, oh, hi Eric, that's his name. I know all the owners in Moses Lake, let's do this, I want to buy it, what are the terms? And, uh, I didn't ask him for price. I said, what are the terms? And so we went down the line and he told me, done, let's write it up. Like, you sure? No, I'm Cody. Let's get it up. So, uh, we wrote it up, got through feasibility. He's like, do you want to renegotiate? Why would we do that? I already signed for this. Let's go. Great deal.

Closed on it.

And, um, but that was just out of the blue, picking up a phone call that, yeah, Christian didn't have the number saved.

Do you have, do you have a lot of, um, investors in that 50 to 60 year old age that are still acquirers? Oh yeah, a lot.

Yeah, everybody that's selling to me. So one of the biggest players, I won't name names of the plaza that he just bought in Grant County, but he just bought a baller plaza. I mean, it's, it It's near one of my properties and I drive by all the time when I'm over there. It's just cool. And he also bought another strip center. He's buying more multifamily. He owns the railroads. He's, he just owns everything and he's starting to offload that stuff to me, but he bought the plaza in cash. Right. Got it. Got it. He's playing the cash game. I give him like $100 grand down on a deal that I have to go find from someone else. I don't have— well, I mean, I have that now, but I didn't have that. Sure, sure. But so I give them $100 grand, they pay their taxes, and they take like $60 grand, and they take the $60 and throw it as part of the down on the big plaza that they paid $3 million for in cash. And eventually I'll go buy the plaza for like $300, $400 grand down. I buy it for $4 or $5 million, but they are actively buying. Amazing. That just expands my horizon. Like, shoot, I guess I'm buying a Plaza someday. Exactly. Yeah, that's beautiful.

Yeah, and that's the goal.

That's like the relationship lasts forever, but they want to keep playing the game because they're having fun.

Yeah, well, it's one of those things where it's like, did Jordan ever get tired playing basketball? No. When you get that good, like, no. I mean, it's like, no.

Rob said, new story, Cody and the Beanstalk for the Beanplex. That's great. All right. I'm going to buy the course this week. Matt just sold me on the first month and the PM. I got a PM for my second property that I just moved out of. Nice. Congratulations. Sounds like you did a house hack and now you moved out and renting it out. That's Paul or Mark? That's Mark Ham.

Good for you, Mark. Good for you. I mean, that's the stuff that I love to hear, you know? Like, I got tortured by friends to be like, dude, you got to do a course. And I was like, I do not want to be a course guy. And they're like, no, you gotta— you like, you gotta do a course.

And I was like, for you, it's for— it's for people.

That's what it was. That— because I was like, I don't— because I didn't want to do that. And he's just like, you need to do it because people are getting ripped off every single day. With PMs or by tenants. Like, there's literally a part of my course where I teach them, this is how you don't get bullied by a tenant, because that can be bullies.

Oh, oh my God.

Right? Yeah, right.

But, but the big difference between you and I and the rest of the world that does this stuff— because I, I didn't want to do a course in the beginning. I was just showing people how to do it on Zoom. $200, we hop on Zoom every, uh, every other week. And people wanted it. But like, what percentage of your gross income is from the course? It's probably not less than 1%.

Yeah.

When there's other people, the crypto bros, who their course sales are probably 99% of their income, right? And it would have been lower, but all their losses in crypto really moved their, their income, you know. Yes. So it's really important to look at who you're learning from, because for me it's not less than 1%, but I also haven't been playing the game as long. Sure. I'd say it's probably like 15 to 20%. Okay.

But the real estate does the rest, right? Well, I mean, that's the thing is, for, for me, the course could go away tomorrow and I would still have my real estate business. I'd still be doing that. That's still my focus. And that's what I think The other thing too that makes you guys really good at your course is the fact that you're still doing the work every single day. So the guys that kind of give up the ghost, they're like, yeah, I've been doing this for 20 years, but now I'm going to do courses. Well, that's what got a lot of the Flip This House guys in trouble. Like, they weren't flipping houses anymore. They were only doing course stuff anymore. So the market started to shift and they had no idea that the market shifted. Yeah. So it's like when people are like, you know what, Lumberjack, you don't put out enough videos. Yeah, I'm busy working. I'm only— I'm running my business. Like, so it's like, uh, you know, so now we're kind of committed to like, we'll do a couple a week, but that's it, because I'm not gonna be doing a bunch of that stuff. I'm running my business and I'm learning the next thing and the next trend, you know.

Rob just said the biggest difference is about 6 inches and 150 pounds.

That's true. That's amazing.

It's true. Best comment. I wish if I could pin that, I would. Oh, I can't wait.

You can pin it.

Pin message. You're pinned. You're famous.

There you go.

All right, well, I have 10 minutes until I have to go across the street, so let's knock out some of these questions. Got it done. Ready? Okay, uh, how would you go about getting your deal if you could only do it off market from an owner? I would go meet with the owners in the market you want to buy in, learn from all of them. You will get a deal from one of them without a doubt.

Yep.

Cody's strategy is definitely best there for sure. Matt, how high are you planning on scaling long term? Well, we talked about that. $100 million. Yeah.

I mean, I think, you know, I, so it, um, I won't get to $100 million conventionally. Let's put it that way. So the only way that I would get to $100 million is unconventional and seller finance and that type of, the type of stuff that you guys do. So I have no goal. My only goal for the last 22 years was make the next deal a great deal. That's it. And so we, when debt was really cheap for the last 2 years, guess what I did? A lot of deals. And now that debt's expensive, I don't do a lot of deals.

I know how you would get to $100 million without seller financing. You go start doing the 50, 50-unit complexes with, with agency debt, because right now agency lenders are looking at placing on cash-flowing assets 10-year fixed-rate IO loans on a commercial level. You put 35% down and they really want to do it on the 5 to 60-unit level because there's not a lot of operators on that level. So if you were to go in and start taking down 50 units, with 35% down, you could absolutely crush it. And that is where I see you skyrocketing, because that scale—

you're gonna have to retool your system a little bit, maybe a little bit more, just more, just adding people on our side. Because I think the, the processes that we have now, they— everything that was built was built based on the fact that I needed to— I know I needed to know that I could scale specifically to at least 500 to 1,000 units. Yeah. And so I know that the systems and process we have in place, the only thing that we have to do is add people to the existing processes and systems.

The other reason I think that you would crush it and get to $100 million really quickly in that you have to put 30 to 35% down depending on the market. However, the non-recourse debt options are freaking phenomenal. And you can get like 5% interest only right now, like 5.15% IO, 10-year fix if you're putting 35% down. And if you're— if you can find deals on 6 and 7 caps, you start making a 0.2 point spread on all the borrowed money. Your returns blow up and it's non-recourse, so it doesn't jeopardize what you've built, which is a huge—

1,000%. And when you're looking at that, when you look at rent increases over the next 10 years, like to your point, that's a massive number.

And if you picked up 4 properties that were 50 units, you get 200 units and you just had a $200 bump in 10 years. Like, that gets ridiculous. That's an extra half million a year in net income. Yeah, very ridiculous. It actually gets very ridiculous very fast. Yeah. Okay. How do you have a strong seller finance offer? Same way as you have a normal strong offer. You present yourself as a logical buyer. You figure out what you're doing for earnest money and you don't have a whole bunch of back and forth. Deal fatigue is real. If you do a whole bunch of back and forth with any financing, people are going to think you're flaky. And if you're flaky, you're not a logical buyer anymore. So you just have to keep rapport tight and, uh, don't play a lot of games. Yep. Yep. Agree with that. Do you talk about your mentor with your other mentors? I've let them know who I'm learning from, but I don't go out of my way to just say, yeah, I'm working with this guy. I share all of it with my brokers to make them jealous because I'm like, you'll never get these guys to sell to you because they're only going to sell it to me direct. But that just gets them fired up to find other deals. But I don't, I don't need to. I don't see a logical place where that matters. Yeah, I agree with you. How useful would being a property manager before owning real estate be?

I think the biggest mistake that people make is that one of the things I talk about with people is I said, so you're going to go out there, you're going to buy your first property. And if your option is buying a $25,000 course or buying your first property, I would buy your first property. If your option is buying a few thousand dollar course, I would buy the course because that is going to save you. A, it's likely going to get you a deal faster your way. My way of managing the asset after you've got it, that is the fastest way to, to not only go from acquisition to stabilization, but then to optimization. That's the fastest way to get through those 3 steps is by investing in yourself in education to know that when you're going after that deal, you're going to buy the right deal, not the deal, not your first deal that comes across. And then when you're managing it, you're not going to make all the mistakes that people make that get you, you know, another 2 months lost revenue because you didn't properly talk to the tenant and that sort of stuff. And like managing costs.

And just like that, we are out of questions. But for those who don't know, because I'm not wrapping up on that note, for those who don't know, my business cycle, our business cycle, our being Christian and myself, was build, stabilize, debt hammer. That was the 3-stage optimal business cycle, but it missed one step, and we learned that from Matt. Build your portfolio, stabilize the portfolio to consistency, optimize it to maximum efficiency, maximum income, lowest expenses, lowest headache, and then pay it off. Yes, that's where we messed up in the beginning. So it's one thing to buy it. Don't go blowing all your money on a course. Don't go spend $25,000 on some mastermind. That would be stupid. But if you can spend a couple thousand bucks, play the game, or just do what I did and learn it for free from all the owners in your market. The most knowledgeable people in any given market are the owners who own in the market you want to buy in. You may not get all the takeaways, like it's not going to be as streamlined as when you just go work with people, but don't spend your last dollar just to get info if you could use that money to buy the property.

So you're, you're very humble in that regard because here's what I will tell you. Yes, that strategy works, but that strategy takes long, takes time, takes time to form relationship, right? So for years, that's— and that's where it's like, again, if the idea is velocity, that's where you pay, that's where you invest in yourself. Absolutely right. If the deal— if it's Hey, I'm going to build this over time, then yeah, you'll build— you'll start building relationships that will take 6 months, a year, a year and a half, 2 years. You can get all the tools that you need upfront to start the game. So from my perspective, I think it just matters of if you have $0 to invest in yourself and you have more time, then do what Cody just said. If you have the money, you're better off investing that in yourself and then investing in that in yourself and then creating the time. That's the way I look at it. If you don't have any time, it doesn't matter.

If you have money, it doesn't matter. Right. And the thing I'll end on, on that note, because I got to head over across the street to meet with another owner, my Ken McElroy meeting, because that's what the title of the live was. For those who have made it all the way through, we've got like 43 people still here. That owner meeting took over 2 years to book. I've had breakfast with him in the past. I've had dinner with him. Those were like, uh, 2 years ago I had a breakfast. A year ago I had dinner. We got to chat, got to do a lot of one-on-one on the poolside over in Belize, but it took 2 years to meet with him in his office one-on-one and ask all the questions I wanted to ask. That's awesome. It does take time. It does. So that's what we'll end on for today, but make sure to give us a subscribe button to both myself and Matt. Don't worry about Christian because he left us. He's not the real MVP. However, we are going to end the YouTube Live on that. We appreciate everybody joining in today, and we'll see everybody next time. Thanks. Anytime, man. All righty. Cool.

Very cool.

Good hanging with you, man. Yeah, that was fun. We should do that again sometime.