Christian OsgoodCEO, Multifamily Strategy · CEO at Multifamily Strategy

Take notes people📝🤷🏻‍♂️#multifamily #realestateinvesting101 #realestateadvice

20 Feb 2025 · 1 min

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In this segment, Christian Osgood explains a cash‑flow management tactic for multifamily investors who use interest‑only loans. He argues that instead of using excess cash flow to accelerate principal repayment—risking loss of that money if the property is sold or foreclosed—investors should keep the risk with the lender by making only interest payments. The surplus cash flow should be placed in a separate interest‑bearing account, building reserves that earn interest and increase financial stability without reducing the loan balance. This approach preserves capital, adds a safety buffer, and keeps the investor’s risk exposure low.

Chapters

Now, on one property, take some excess cash flow, you pour it into the property, you pay it off over time. If you lose that property partway through, something tragic happens and you lose the money, you do not want to lose both of those. You actually want to keep the risk on the lender. On interest only, we pay interest payments, we don't pay down the loan, but that money doesn't disappear. That principal gets paid to you. What you can do instead is store that money in a side account. Don't spend it on the car, don't spend it on a fancy house. It's not spending money. You take what would have been forced to pay into your loan and you sideline it in an interest-bearing account. Now that money is making money, it's increasing your reserves, it's adding stability, and you are keeping the risk off of yourself.