The Creative Multifamily Model: Episode 1 of the Live Robin Hood Sessions

All right, so the goal for this mission, I actually altered it very slightly because so many of you guys from the mentorship group made it. I've made this just very, very, very slightly more advanced, just, just a little bit. I kicked it up a little bit over the last few days. Uh, so I'm going to intro with the basic thesis, but no matter what level you're joining coming in here, we are going to go in detail through the entire process, how like My rules for real estate. We're going to share a ton of actual stories. I have some awesome guest speakers coming through. You guys are going to hear from Cody multiple times. Rumor has it Cody might actually close a deal while he's talking. So we'll capture that on camera. That's going to be fun. But there's a whole bunch of fun that's going to be happening. We'll have Eric here later today. Schedule's right up here, but Eric's going to— I've done a ton of transactions creatively financed with Eric. And so we're going to have a little Q&A with him talking about, you know, how do you negotiate creative finance with a broker? How does this look? If we're able to, we're going to do live calls. If the internet doesn't want us to do that, I have a backup plan. But today is going to be really fun. We're going to get into the analysis. There's a lot of meat and potatoes. Tomorrow I'm going to do something a little weird. Tomorrow I'm going to open with some of the mindset pieces and some of the— what I found really motivational because it was really hard. Usually what you're supposed to do at an event is like open with like, hey guys, let me get everyone pumped. This is going to be good. I'm just going to dive right into the actual content today. I want to make sure that everyone learns what they came here to learn. And then we'll kick off tomorrow with the story of the Robinhood and why this project was really hard and how I do it differently and how you guys can save a ton of money doing this correctly. I was closing tomorrow with Phil, who basically took everything that I did wrong and then didn't do it. Which I think your life looks really cool when you do exactly the thing. So Phil's probably the best example of like, I just did the only things that were the correct things and not any of the other steps. So we'll hear about how to do it correct. We'll hear about how to do it incorrect. I'm really excited to kick this off. So we got the clicker working, which is a huge win. You have no idea how hard that piece was. Thank you, Chris. Which, by the way, if anyone heard Chris sing last night, Chris is on camera in the back. Chris is amazing. Thank you, Chris.

Thanks, Chris.

Now that he is embarrassed, we're off to the races.

I know, Chris is awesome.

Oh, Chris is awesome.

Holy shit.

All right. So, guys, welcome to day 1. So, the target is the same as my target is for every time I speak about anything. Welcome on in. Everyone who's here today, regardless of if you're in the mentorship, not in the mentorship, within 6 months of today, I would like you to buy at least 1 apartment complex. I think this is a reasonable goal. We're going to go through all the steps again. Just quick show of hands. How many people have bought their first apartment complex in the crowd currently? Perfect. Cody and Ashley, I believe you guys have bought some apartment complex at some point. I believe, I believe that that is true. About a third of you. So this is perfect. So there are plenty of people here have done the thing once. Some people have not had a chance to do that yet. Either way, I'm really excited to share what I think is the simplest method to buy apartments and then not lose them, which is, as I was talking to Phil last night, Phil's favorite part, the not losing them part. It's a really revolutionary idea. And if you guys have watched the media lately, a lot of the people who bought in 2020 and 2021 who have been large influencers did not do the don't lose the real estate part. So that'll be a huge focus of this. is how do you buy in a sustainable way that works virtually every single time? We will talk about what happens when it doesn't work. But for the most part, if you follow these steps, it's going to be really, really, really, really hard to run into significant problems. So excited to kick this off. So if you guys are starting in multifamily or you guys are expanding your existing portfolio beyond where it's at today, a huge focus today is going to be how do you get creative? And a lot of it's going to be based on, well, how are we doing this conventionally in the first place? One thing I'm gonna be teaching consistently is how do you set a baseline of, hey, we underwrite every deal the same way. I need to understand where it works conventionally so that when we get creative, the creativity makes sense and we have a way to pivot out of it. One thing that Cody and I did very interestingly in our career is since everything was creative, the question was, how do we close it? The problem that we were trying to solve is I actually remember having this conversation with Cody in our office. Our boss had said, well, you can't buy every deal. And Cody and I were like, well, what if you could? And so that was the problem that Cody and I were trying to solve. How could you close every deal that you want to close that's in front of you? What I've learned and what I'll be sharing is you really need to understand and factor for, if we had no creativity, how would we do this deal? And from that baseline, When we add creativity, how close can we get to a deal that would have worked conventionally as well? It gives you a standard of underwriting your deals. So if you guys are like, wait, I came here for all creative finance, a lot of this feels a little conventional. Good. That's our, that's our starting point. That's our baseline. We'll talk a ton about how to get creative throughout the entire event. So a little bit about me for the very few of you guys who don't already know me. I'm Christian. Hello. Founded Multifamily Strategy. I've done 2 PM companies. One of them I sold here in Washington. I own the Robin Hood Village Resort. So guys, welcome to the Robin Hood. We shouldn't have bought this, but we have it now. And I love the Robin Hood. This is a project that I will probably never sell. We structured it completely wrong. That's going to be a sneak preview into day 2. Tell about how we bought this wrong and how that pivoted the entire strategy. But I own, when I made the slide, over 500 rentals. Now I think just over 600. We went under contract officially yesterday for 372 more units in Longview. So that's a thing. I don't share that to brag. So thank you for the applause. But I don't share that to brag. I do share that to say that we are actually actively doing this. I, a huge inspiration for this event and multifamily strategy, Is I get really frustrated the few times I actually get on social media and I see people talking about like, oh yeah, you should do all this with your rentals. And then you like look at their portfolio and the last time they bought was like 2016. Just want to say we actively do this all the time. This is my actual job. This is what I do. We love buying rentals. We love managing rentals. I love providing great housing to great humans and like a few not as great humans, but mostly really great humans. You have a 1,000-person portfolio, you have a couple of bad apples in there. But I love providing great housing to great people. It's really fun to come into different markets and actually provide a legitimate service. There's one thing about multifamily, it's really easy to talk about. Of course, we're going to get into it. It's easy to talk about the cash flow and the rentals and the growth. What I've found most rewarding personally is it's really fun to go into a town beyond just buying single-family and houses. To go from apartment complex to apartment complex and be like, wow, we actually had a material impact in this town. We were able to keep rent affordable, still make money, which is still important, but we increased the value or the quality of life for all of these people. Not the value of life. That'd be a crazy thing to say. Their value is there. The housing. It's really fun to come in and see a campus that was struggling or had management problems, lease-up problems, and we come in and fix the problems, which is Very much what the Longview Project is going to be. So I love getting to do that. That's a little bit about me. Run the YouTube channel Multifamily Strategy. Many of you guys originally found me there. I appreciate everyone following the journey there. This is really fun seeing this culminate in a bunch of humans here, especially because I recognize so many of your faces, which is fantastic. Also wrote the book on creative finance. I have a couple of copies. I'll hand some out as we As we go through this, but wrote the book on creative finance because I was really jealous of Brandon having the book on rental properties. I was like, you know what? I like this naming scheme. We're going to take that. And amazingly, no one else has technically wrote the book on creative finance. So that's also a thing that we did. But this is literally all I do. Most important for me personally, I didn't start with the Dave, with the Rob Kiyosaki, the business creative. I started conventionally. Now we have speakers who are going to come here who started just as entrepreneurs, people who only had Like a couple hours of grocery store experience is their only real job. We have all sorts of different speakers at different starting points. For me personally, I didn't start as an entrepreneur. I started to work as I believe a majority of you did, 9 to 5. I personally did college, don't really use that part of my degree, which is hilarious because it's business and I do business. I can't point to one thing I learned in college that I use today, but I did the degree, went to first, second, third, fourth. 5th job, scaled a sales career, even got jobs in real estate. I worked for the CoStar Group, LoopNet, Apartments.com, worked for them for 4 years. CoStar Group was awesome, except that I got good at selling data. I didn't buy real estate, and I would meet with people all the time. And this was the revelation for me that I hope a lot of you guys have here, because there's a lot of people here who do own apartments. I was talking to all of these people who have done the thing that I really wanted to do. And 4 years in, I had overstayed my career. I came there to get into real estate and I didn't own any real estate. So for me, it was 4 years of college, then 8 years career of working for me to go, wait a second, there's other people who have done the thing that I want to do. It's obviously doable. And that's around the time that I met Cody, which is why he's one of our speakers today, because he was the kid in the office who was like 19 years old and he had, he was just about to close on his 30th rental. He was I remember being on a boat that his boss had absolutely no money to actually afford buying. But we're on the same little mini dinner cruise in Lake— was that Lake Washington? I think that was Lake Washington. We're out on this little mini cruise and they're like, oh yeah, and this is Cody. He's bought 24 units and he's 19. I was like, wait a second, I may have missed a potential step here. My goal of today and our multifamily thesis for the first section I'm going to share here, My goal is that no matter where you start with, like, as an entrepreneur, as an investor, as a 9-to-5er, went to college, didn't go to college, the point is you could do exactly what we did. You can scale larger. I'm technically, I think Mark has a higher unit count than me now. So it's like you can, you can literally just, you can be any size investor in any amount of time with any amount of units. Phil has no partners in his portfolio. That's another cool thing to do. There's a bunch of different flavors of real estate and ways to structure this. We're going to go through a ton of them. The main goal for me is that you put together new pieces of how this is possible. If you have a few takeaways of this clicked and I now have an idea of how I could attack this deal, that's a successful event for me. And everyone gets out of here and buys an apartment complex. So again, came from the CoStar Group. The difference in life. From Double Chin Christian here on one side of the screen with Jeff Goldblum, our Apartments.com rep, who actually, fun fact, he— a condition of his contract, he came up with the character Brad Bellflower, which is also just Jeff Goldblum. Like, there's— it's just normal Jeff Goldblum, but his contract says that everyone calls him Brad Bellflower, and that is his character for Apartments.com. I was like, that's a very Jeff Goldblum thing to do.

Favorite coworker.

Going from a relatively successful career, I did really well at CoStar, to owning buildings like the one behind me in that picture. That's a 44-unit. That's the office of the building that actually Matt and I own together. Sweet property, 100% occupied. Going from corporate to this, I can't fathom ever wanting to go back. Even if I, even if I say lost all the rentals, which would be really, really hard to do. Well, when you're cash flowing. But if all of it disappeared, I'm like, I would just do this again. I love everything about the life that I get to live, providing apartments, going to projects, meeting tenants, and then getting to do it all from a house, which is really sweet when you have a wife who's in the business and you have kids. It's just, I don't get— I don't miss out on any of life, which is the one thing that you do get for working really, really hard. I've already said that. So here's what we're going to cover today. We're going to learn math and analysis with the one and only Cody. That's him at another event. And I have the same whiteboard for Cody right over there with the same markers. So you guys are going to get— Cody has done this before. He knows what he's talking about. We're going to go through the math and analysis. We're going to make sure that you're actually doing the right deals and structuring the right way. You guys are going to meet Eric, who I've done multiple transactions with. We're going to have to get to have a conversation with him on how you position with brokers. One of the most common things that I personally get when we talk about brokers is how do we do creative finance with an agent without sounding like someone saying, hello, I don't have any money. Eric's going to go through that in detail. I've done 4 seller finance deals with Eric. I've partnered with Eric on a deal. People here have done trans— multiple people here have done transactions with Eric. It's going to be really fun having him up here because he's a broker who understands the business. He's going to say it really simply, but also knows how to get creative. I've done deals with Eric when I didn't have any money, so it is possible to do with a broker. Eric's going to help us go over that. I'm going to talk about negotiating live deals. Again, internet dependent. I'll either literally call some brokers live and I'll do the live call in front of you guys, or if the internet and cell reception don't want to work, because I don't know if you noticed, we're a little bit remote, I have a plan B to go over that. in more of a roleplay sense. But either way, we will cover exactly what that looks like today, uh, and we're going to discover a lot about creative finance. Uh, this is a campus that I bought, uh, 144 units. It's just crazy when I look at that picture. I know the screen is really small, our big TV died. If you look at each of these buildings though, it is so weird to go to that campus still and go, we own every single one of these. It's like 22 acres of just building. And then you go 6 blocks down the street and we have another campus. And we just went under contract for another 80-unit on the other side of town. It's really just a surreal feeling to go— 2020 was when I really got out of just buying a couple duplexes to apartments. It's a surreal feeling to go from 9 to 5 to you're just in a city and you're just a part of the business there. It's a really fun experience. We're gonna talk about how you get there using a little bit of creativity, because that's where I personally started. Left my job. Oh right, we're not on YouTube. I can say the word COVID. Ah yes, go ahead. You know what I'm talking about. So COVID hits. I'm an outside sales rep for CoStar. That was the best thing that ever happened to me personally, because it had me stop what I was doing. And have time to actually just sit and think, like, what do I actually want to do? And that's how I landed on, like, we're going to do the apartment thing. I remember having the decision on the train into Seattle a year before, but then I didn't do anything meaningful with that decision other than just, like, read a bunch of books and research. So I learned, learned, learned, learned, didn't apply. COVID hits. I was like, I am definitely not doing this. There is no possible way I'm going to sit in my house while my wife's teaching kindergarten over Zoom. And my house is like 1,000 square feet and renting at the time. There is no possible way I'm doing this Co-Star thing. Left my job, then go back to, go back to real life. My wife breaks her back and I'm like, oh shoot, well now we have no income. I have 2 duplexes, so my mortgage is covered. My duplex is cash flowing $2,000 a month. My mortgage, because I bought my house in like 2016, it was a tiny house. It's like $2,000 a month. So I'm like, okay, house is covered. Food, insurance, gas, I'm now at a loss. So I'm like, okay, options, go back to work or figure out the apartment thing. We opted to figure out the apartment thing. But that's how I got started. My recommendation to everyone, don't actually start from zero. Very difficult to do if you could avoid it. Some income is nice. Oh, and there's ghost Christian apparently on this slide. I made myself transparent. We'll also talk about how you disappear as you raise capital. No, we're gonna talk about how you actually raise money for these, how you put together the equity structures. The equation that we're gonna go over in this session right here is deal, debt, equity. If you guys have ever seen the YouTube channel or been part of any mentorship call ever, I've said this like 5 or 6 times. I'm gonna go over exactly why this works the way that it works. We're gonna hear every single piece of this, and for the most part, These 2 days, we're going to go in order through finding the deal and negotiating the deal, which is why we stacked this the way we did. We're going to get into the math and analytics, which is how do you determine your deal is a deal? We're going to talk about the debt products and creative finance, and then we're going to get into the equity structures. I have a ton of questions that many of you guys have asked over the last several months prepared to be answered in all of these, especially on the equity side. I had a lot of questions on how do you structure this? So Target there. I really want everyone to understand how you would close a deal, how you're going to underwrite it, and how you're going to put the pieces together. Because any deal that you see online, offline, there is a price or a structure that it would work at. It doesn't mean it's what's going to get accepted, but if you can look at an opportunity and you can, you have the tools to know when that opportunity is an actual opportunity, You can buy literally anything, including this. Don't buy this. And we're going to learn some practical application from the Filionaire right there. The man himself, named by Matt, I believe. I believe you first coined that. I love, I love that nickname. But it's been really fun watching Phil literally apply exactly what I'm teaching, I think, in the purest way. I've had people do technically more than Phil, but Phil just did it. I love the way that he structured it because he learned all the things that you learn buying apartments. It's not like everything went absolutely perfect for him. But the amount of mistakes that he cut out going from A to B that most people don't, I'm really excited to have you. I'm really excited to have you talk about this, actually. There's a couple of things where I'm like, I have questions for you on how you make less mistakes and a whole bunch of other stuff. So I'm really excited to have you guys here. So before we get started, this is more of a, for a newer crowd, this particular slide. But if anyone here has still had these, any of these thoughts, I do want to dispel these because these, it's the wrong way to attack this business. If anyone's like, hey, I should get my real estate license to buy my real estate, I should be a property manager, a wholesaler, I need to make 200 dials a day, whatever your original ideas were, mine was I need to go to CoStar and then I became a broker. Cody and I were like the best brokers at never selling anything because we've worked in the same office. I added all of these steps. What I learned is that the Simplest way to do something is just, you need to map what is the end goal and then how does one get there? The path to buying an apartment has nothing to do with being a property manager. You're gonna pick up property management skills doing that, but you're not building a resume. If you're someone who is trying to leave the 9 to 5, a mindset problem that I, I think a lot of us run into is we're used to having to qualify to do the next thing. So you're trying to build your resume. And while it helps like a tiny bit with bank debt, 70% of my deals I created finance that didn't even— it wasn't even a factor. It's not about building your resume. It's about mapping the most efficient way from A to B. Where do I want to be specifically and where am I at now? So quick drill for everyone. For me, when I started, My wife's injured. I left CoStar. I don't have income. What do I need? Well, mortgage is $2,000 a month. My 2 rental properties do cover that. Everything else costs less than $10,000 a month. Awesome. If we get to $10,000 a month, I have an excess of capital for my current lifestyle. That is a great place to be. So my first target gets $10,000 a month. And then you hit that target and you set your next target. And so the next one was like, okay, well, you did it once. Let's do it twice. $20,000 would be— $10,000 was like— We're in Seattle, so I'm like, okay, I can survive. And then $20,000, I'm like, okay, well, I have some excess here. This would be a more comfortable place. And then we engineered to that. Challenge for everyone while you're here right now, think about it. Where do you want to be specifically with rentals beyond, hey, I want to own more buildings, I want to have more money? Because for 8 years, I wanted to one day retire off rentals. And I ended up with 2 duplexes in those 8 years. I didn't do nothing, but it wasn't a meaningful life-changing amount of, you know, a lot of people will watch BiggerPockets like, if I get a couple duplexes, I could be set for life. And it's like, not, not, not really. They're helpful. It's cool when your real estate pays for real estate, covers, covers my tiny little mortgage. Really understand where do I want to go and how would I build the path from A to B? When I talk about the Robinhood, Day 2, our first meeting, like the 9 o'clock on day 2, I'm gonna go really deep into like, what if you have like a ridiculous thing that you need to do? But wherever you are right now, just like really map it out. This is what I am trying to build to. And then let's cut out the extra steps, not skip steps, but go, what are the actual necessary steps? And what I usually find is there's a bunch of extra stuff that we've added, especially if you were a 9 to 5er. Because a lot of us went from first grade, second grade, third grade into middle school, high school, some college, some didn't. But then you went into your first job, your second job, your third job. You started a company, you went back to the 9 to 5. We're used to adding qualifications to get to the next step. As an investor, the way that you process these things, you have to have some knowledge, but it's not like this resume or like, hey, I must do this to cross here. You're your own boss. It's the fun part about being an investor. And we will talk about some of the mindset of that because being your own boss can be really hard. All right. So again, this is our general structure for today. I'm going to dive into number 1. I'll do our best to keep us on time. Last announcement before we get rolling. Every section should have about a 10 to 15 minute break between mingle, hang out. My goal is that while we go over a lot of structured stuff, I hate events where we just sit the whole entire time, and then they freeze out the room so that everyone's cold. So you pay attention. This is organically breezy. It will get warm. We did a good job here. But when you guys are when we're actually going through and like doing it, be social, network with people. The point of the Robin Hood is that this is supposed to be fun. There's five kayaks. There's like forty-five of you. Figure that out. We all we also have. Like frisbee. We have little trails around here. There's fun restaurants. I tried to build in downtime. I found every time we run an event here at the Robin Hood, by far the most valuable thing, every single time, the feedback we get, no matter what we teach, is, hey, I connected with someone here and I learned something from someone in the audience. That is always what happens. So I try to build in an absolute ton of that. So please take the time. We're in Union, Washington. In the summer, one of the only 2 months that Washington is habitable. I don't like gray. Okay. This should be really fun. You guys should relax a little bit and let's have a good time. Okay. So the basic multifamily thesis, only buy deals that increase your income on day 1. I have done multiple deals that did not increase my income day 1. They had a ton of upside and they're technically Good deals. That being said, a deal that bleeds money, a delay, you just continue to bleed. It's really stressful. I was talking to Matt, if you don't mind me sharing, last night you had mentioned this. You factor correctly your math for a deal that does bleed for a while. You have like an excellent opportunity, but actually physically watching the account go down and then go like, hey, I hope that everything does actually happen the way that I thought it would. There's a certain amount of stress that comes with that that makes real estate less fun. And what I find happens is one of two things. When you don't buy based on cash flow, you either buy one deal and it consumes all of your energy, and now you are trapped in fixing that one opportunity for a long period of time, or you decide, okay, this was hard and real estate sucks and I'm out. And I've seen a lot of that too. If you just do deals that increase your income, I look at this, I'm a board game nerd. As many of you know, I'm going to do this like a video game though. It's like a save point. Like, I closed and it has positive income day 1. If nothing else changes, if none of my business plan even works, I've increased my income and my income stays up. If I bought a deal and I don't lose it and it pays me money, I've given myself a raise for life. People, especially the internet, like to pitch like, oh, all the value of real estate is appreciation and depreciation. And those things are awesome. And frankly, appreciation, when you have a nice run on the market, is what's going to make you rich in real estate. Net worth, you can skyrocket. Build your business on cash flow, period. I get pitched, and a lot of you guys have sent me deals where you're like, I have a vision for this deal and it's awesome. I'm like, it does look really awesome. Please don't do that. It doesn't make money yet. Just buy it where it makes money. If you just do that, the thing that I promise you, you're going to find amazing opportunities. If you say no to the ones that don't make money day one, you will go faster. You will buy more deals. Drive literally anywhere and just look around you. There are buildings everywhere. Someone owns them. You can do it too. Literally every single building is owned. Whenever I feel a little bit down in real estate, I drive literally anywhere. Well, except for west because I live in a bunch of ranches. There's no, there's no properties. I drive east and You look at— you're the town, there's lots of buildings. Okay, someone owns that, someone owns that, someone's— there's a way to do this. There's no amazing, ridiculous skill set that you need to do this. You just need to understand the math and a little bit of negotiation. So we increase our income from day 1. Never do a deal where it only works when you sell it. This is a very common model, especially in syndication, where all the returns are based solely on the exit of the property. Which means this works as long as everything goes right, or most of the things go right. I just saw a podcast that Cody was on where the guy, dude was debating Cody, was like, dude, my business model works as long as there's nothing goes wrong. I make money. I'm like, I can't believe you said that on a podcast. That's a crazy thing to say. I'm going to side with Cody on this one. No, you need cash flow and you need margin. Just do deals that are better. If your deal doesn't have enough cash flow or enough upside, What that means is you just don't have a deal. Go back, keep negotiating. So if you buy income and you hold it forever, you know what happens? Your income goes up forever. You get that save point. Your income goes up and up and up. You buy based on cash flow. When people will talk about this, it's a really common talking point online for the, oh, real estate just doesn't cash flow. Buying a couple of houses for a few hundred dollars a month and then having to fix a laundry machine, that doesn't cash flow. Real estate is a business. It just happens to be a business that works better at scale, which is why the argument is multifamily. If you can do even midsize multifamily, if you can do a 12-plex and a 20-plex, do a 44-plex, then find another great 12-plex really close to that one, you can actually add— you're not going cash flow per door, you're going global cash flow in my portfolio. You can build a portfolio that cash flows $10,000, $20,000, $30,000, $40,000 a month. And I've seen people do this. I've seen a lot of people do this. You can structure this in a way where you do have ridiculous cash flow. Real estate just happens to have accelerated bonuses of depreciation and appreciation and all the other pieces, which is why I love it so much. But please build a business that cash flows day one. Cody and I built that and then we unbuilt it, which sucked, and then we had to build it back. Just don't do the part where you lose cash flow. And then if you do it a few times a year, this is my other favorite thing about multifamily. I did 2 deals this year and we're at 224 units. Technically, we closed one December 31st. So I mean, I'm going to count it as this year. We really closed it this year. I've done 2 transactions this year. I'm scheduled to do 2 more transactions this year. We'll have bought over 500 units this year. You don't need to buy a multi-hundred unit building, but the illustration here is when you are scaling, you only need to succeed a couple times a year. If all I did was that first and second transaction this entire year, 224 units, and they cash flow quite nicely and they're beautiful properties, we moved unbelievably farther than most people will in their entire lifetime in the real estate space.

Hey.

It's what I really like about multifamily. It's, you don't actually have to be very successful often. And there's a ton of buildings that you can potentially buy. So as the business goes, while it can be a little discouraging sometimes, because it's a long sales cycle, right? Sometimes you're grinding for a while. When you break through, you get some momentum. Once you get this pipeline built, you're not actually transacting very often. I look at all these other businesses, wholesaling, house flipping, all the, these active single-family or small duplex businesses. And they're like, yeah, I do 12 transactions a month. I'm like, that sounds like a lot of paper. That sounds like a job. This is a job too, but it's just not a— it's not— acquisition is not a full-time job. You cannot force this to take all of your time unless you're doing it completely wrong. You have relationships, you work deals, you underwrite with them where they work. When you know where they work, you submit the offer. I'm gonna go over this with Eric and I'm gonna go over it in the negotiation piece in detail. But you end up with a massive income at the end of it, only transacting a few times a year. If you want to get more aggressive, you can, but I have not found a meaningful reason to. The next really important piece here, you need a deal, not more money. A majority of people will come in, and if you're in the mentorship, you know I talk about this all the time, like all the time, but I really want this to sink in. We did not have any money to buy the Robinhood. It was $1 million down. The deal actually wasn't any good, which we discovered after we closed it, unfortunately. We still raised the $1 million in 7 minutes, and we had never raised that amount of capital. We pitched one person, and then they brought in one other person. A lot of people on their first capital raise, when you have an opportunity, I'll hear people reach out and they're like, I'm really worried about this. I have a lot of stress around raising capital. I'm like, I know everyone does. You're fine. And then two days later, they're like, "You'll never guess what happened." I'm like, "I'll bet you I can guess what happened. You raised the capital." Yes, it happens all the time. It's usually like one person. Like Phil, how long did it take you to raise your capital from when you were like, "Hey, this is a little bit difficult to." I sent one text. Yeah, there you go. I presented on the call Tuesday call. Two people sent me their proof of funds while I was still on the call from the mentorship group, and then that night I sent a text to. To a guy I sailed with. He's like, yep, I'll do it. Phil had like a 5-minute conversation with me on one of the calls about like, man, just feeling a little bit of anxiety around the first thing. I think Phil spent a little bit more time telling me about his anxiety of raising the capital than he did raising the capital. Yeah, spent more time worrying about it than actually making it. When you have a deal that makes money, essentially all that you're doing is you are presenting to someone, I have an opportunity and it's currently making money. Would you also like to make money? Like, that's a— I know it's a little bit more complicated than that, but like at its core, when you do this in order, deal, debt, equity, you're creating a product that makes money. And then we are using that to find other people who have money. And I don't know if you guys noticed, but we print a ton of this stuff. So it is out there. Like, people have money and the deals are here now. So this is— I'm not harping on Brandon, by the way. I just— it was a really good example. So I just want to be clear. Generally speaking, huge fan of Brandon's books. But Brandon and a whole bunch of other major names are doing posts like this. We're like, hey, oops, we lost $15 million of investor capital. Why this is interesting for us, there's a bunch of, like, here's a bunch of the big, big, big groups that lost billions of dollars on syndication, just as like a quick little example. Thank you, ChatGPT, for making this really easy for me. The deals are out there now. The deal that we are purchasing is next to $0 down. The bank is assigning almost their entire note to us for a $13 million, 200-unit transaction. Why? It's in a second— it was a tertiary market, and the current owners blew their property management plan. The bank's like, okay, rates have adjusted. The deal's not bad. The deal's actually fantastic. But the current operators cannot finish leasing the building. So we're coming in to solve a very simple problem. The bank is basically just saying, like, look, we do not want to foreclose on another investor who did not execute their plan correctly. All of these people who are losing real estate, what's really happening is a lot of the players who have held a lot of this are actually shifting the portfolio right now, which is why I think it's so important to learn this now. Is this is, in my opinion, a very unique time to be able to take a disproportional amount of real estate because the people who've held a lot of it very publicly are transitioning out of a lot of it right now. And if you buy it and you hold it forever, you are that guy or gal now, which is awesome. So what does the deal actually look like? Well, it's long-term fixed-rate cash-flowing debt. Talk about this all the time. If you get the best terms, Of all time, you have a ton of cash flow. You got three percent interest only from the seller on this amazing one-year note. What happens at the end of one year? You're oh no, my deal doesn't work anymore. The value of getting the terms that you want, the cash flow you want, is in the duration in which you've attained it. Now, market cycles generally speaking, and they do fluctuate. There's no magic rule for this, but it's like seven or eight years. You usually go full. Full cycle in an average environment. You'll have ups, downs, little crashes, sometimes big crashes, little booms, big booms, but you'll go through these different market cycles. So if you have debt that's like 7 to 10 years, that's considered fairly long-term in almost every market in the US. I know there's certain exceptions in certain, like when the auto industry left Detroit, for example, but in general, over that time, You do get a lot of appreciation. You do get— you get a great market cycle somewhere in that time where you have opportunities to lock in and reposition your debt. If you have less time than that and you end up in a bad market cycle, rates tripled right now and my refinance is due right now, you've lost everything that you just built. So long-term cash-flowing fixed-rate debt, that's the motto. I need to make a t-shirt for it, but turns out it's like a lot of letters. He's come up with a cool acronym for it. That's the magic is we're going to negotiate terms that work and we're going to lock as many variables as we possibly can. Your 2 biggest variables in real estate are typically going to be your debt product and the people that you bring along with you. You really need to choose those really carefully. And when you get good ones, good debt or good people, lock them in.

Can I ask you a question?

Yes.

I took a picture of that slide because it seems to me that's Biggest slide you got, and it's impressive. Anybody here know Canadians? Have Canadian friends? You know they didn't offer the type of debt that we've offered, and so they have not had the crises.

Yes, that is true.

Singapore was the first out of the recession. You know they had different structures, but we have. You know rates are historically low. You can get this 2.9 percent rate, but cut it. 2 little tents and no variable debt. Why does anybody do that? I'm old enough to have gone through the '87 crash, the '08 crash, when I was buying— I'm selling in '07. You would just see the cycles. Why would anybody do that? I don't know, but ask your phone, ask AI, ask your browser, ask Google. For the majority in 2020 to 2022, properties bought multifamily Bought with variable debt? And she says, yes, the majority.

And those are the same ones that we just saw on the last slide. Everyone who had variable rate debt or had too short-term debt. People do projections. When interest rates were at 3%, people projected, oh yeah, in 5 years out, rates are still going to be 3%, which is a crazy thing to think.

So the challenge you run into, there's some people I've run into that said, well, I've got money, but not for that. I hear it's just a bloodbath in multifamily right now. It is. And that's why we're buying, because we're buying.

Exactly right.

And you never do it this way. And if you follow the structure, so there's an educational process.

Absolutely agree. Which is why we do exactly this, which is DDE. That one I do have a good acronym for. I can make a hat out of that. DDE, deal, debt, equity. We're always going to do it in this order. So deal is the actual opportunity. All that means is that you have someone who is willing to sell the property. And you have an idea of what they want and you know exactly what you want, which we just established. It's long-term cash flowing, fixed rate debt. That's what we are after. That is a win for me. I've determined this is the goal. I know what I want. I have someone who is willing to entertain the opportunity. So I put together my deal. Now, I don't know all my numbers yet until I know what my cost of capital is. So the next one is debt. Now, debt, sometimes it's deal, debt, done, just DDD. In that model, it's just 100% financed. We did actually, some of you guys will actually go out. Matt's, I think, doing a, are you doing another tour of your RV park here while you're here? I don't know. I heard rumors that that might happen. I heard rumors that might happen. Matt owns an RV park right up the road. He bought it from me and it still has a lot of upside. Matt did a really good job where he bought it. When we bought it, it had some big problems that we had to fix. It had a failed septic system, which turns out you actually need those on a 25-unit RV park. The laundry room had failed and there were some really gnarly tenants in there. We got the worst ones out. I think Matt still had a little bit of work to do there. Sorry, bud. But we got a lot of the problems solved. We purchased that thing at $300,000. It was 200% financed. We got a loan at around $600,000 for a $300,000 RV park. For the right opportunity, You can do deal debt, and that can be the end of it. You can just have a deal that has enough cash flow where it can sustain the debt. You get the right product and you close it. Most deals require some amount of down payment. The beautiful thing is it doesn't have to come from you. We're going to talk about the structures for that in super detail. But the equity is just you and partners. I have the opportunity and I package the opportunity. Now, I actually know how much money this makes. When you have the entire deal, so the numbers of how it's performing now, the price that you plan on purchasing it for, and you have the debt product, you now have the inputs to say, this is how much cash flow and how much projected upside I have. Basically, what you've done, if you put together a package that says, this is how much money I can make for myself and my investors, we have the total pool of money now captured. Now you're doing what Phil does, and you send a few texts, you're like, oh my gosh, I can't believe that this just got raised. Sneak preview on this. I actually track this. I try to interview everyone who, when they close a deal at Multifamily Strategies. So from our group, basically 100% of people are most worried about the money when they enter the group. They're like, well, I haven't done a capital raise. I'm like, okay, that makes sense. It's not going to be the hardest part, but that's going to be what everyone's most worried about. When they do one, more than 90% of the time, it's almost every time, I will teach how to raise capital with webinars, with meetups, with Facebook groups without breaking the SEC rules. I'll teach a whole bunch of methods to raise capital. And almost every single time it is someone who is in your phone book or someone who is in your phone book, someone they know. It is 1 to 2 degrees of separation from you for your first $1 to $2 million of raise, no matter who you are. Best example for this, Caleb Hommel. Raised his first several hundred thousand dollars at 19 years old. He had no family or friends that had money, no one in real estate. He raised all of his money from people who he did not know, but someone that he knew knew. One family friend, he called them, they don't have any money. They're like, hey, you should talk to these people. Regardless of your level, capital will be attracted when it is making money, when you can just— I mean, what an easy investment. I have a deal that's cash flow positive day one. It is currently making money. We think it's going to make this much money, which is how you're going to make even more money. But if I'm wrong, it's already making money. Do you like real estate? Capital raised. I— it sounds too simple. Oftentimes it's actually that simple. Oftentimes conversations like, I would like to do this. People are like, I too would like to do this. I guess we're partners. I'm serious. It's so stupidly easy when you do this in order. So everyone worries about the money first, which is the normal thing to worry about. That's where I got stuck. That's where almost everyone gets stuck. Most important thing that you can take away that I could— this is my favorite slide. No one— it's probably why it has too many words on it. This is my favorite slide that I have in any presentation. I include this in literally every deck that I do because this is where almost everyone is stuck. I am worried about the money. I have never in five years of mentoring seen someone fail a capital raise in our group. I have seen reasons that deals didn't come together: bad foundation, partnership structure structures that didn't work, their capital partner three days before the close went to jail. No, actually that was me, and then we figured it out, so we had to close that. There's lots of things that can happen. I have never seen a deal not close, like a good deal not close because of the capital raise. The money always gets lined up. up to the deal. The beautiful thing about this though, if you have decided beforehand, so who here is familiar with the BRRRR method? Quick show of hands. Okay, everyone. Great. I will get a bunch of people very consistently who are like, hey, I've decided that I want to do a BRRRR. Can you teach me how to BRRRR a multifamily property? Yes, I can. Also, don't decide on your strategy before you have an opportunity. 'Cause you might have a deal that you can get in $0 down where there's nothing to BRRRR out. But if you're only looking for deals specifically for one strategy, you're only going to see what you're looking for. I don't know if you've ever done this drill, but it's kind of fun to do around family. You'd be like, okay, everyone, name everything that you can that you see that is red. You look around and you have 5 seconds. Try to memorize all of them. Awesome. Okay. Now, how many things in that scene that you just looked at were blue? And if someone tries to remember that, you can't. You do not see anything but what you are looking for. So what I— my goal of DDE, and this is what was life-changing for me, is if you remove the, oh, I've decided on the BRRRR method, I've decided on this structure, I've decided that I'm going to need this partner, I decided I'm going to use a hard money lender. If you remove that and you go, I have an opportunity and this is how it makes money. Now, which debt product makes the most sense that is available for me? Which is usually only a few. You have like bank financing, you could have a DSCR loan if it's really cash flow heavy. You don't have that many options. You, you select the one that makes the most sense to you. You underwrite to that, and now you know what other money do I need? The deal will tell you how you need to structure the capital. You only have 2 resource pools here. It's you have cash flow and you have equity growth. As far as your deal goes, you can give investors one, other, mix of both. There's not a lot of inputs. It's what I love about this, though. The deal will speak to you. Quick illustration. For me, every deal is the same. This analogy works really well until the very end where I realized yesterday that it kind of falls apart because the goal of soccer is not for both of you to score on each other. You actually want to score on them. However, the illustration otherwise works perfectly. Imagine any sport that resonates with you. If you played football, then anything that has 2 goals on either side. Canadians, maybe hockey. I don't know. Cash flow, fixed rate, long term. That is a goal for me. I score when I get an opportunity that hits that box. The seller, I just don't know exactly what it is that they want every single time. That just honestly is it. My job is to underwrite this deal where it works for me, and then figure out what is a win for the other party. If I identify what they want, and I write a deal that hits everything that I want, We now have an opportunity. We have a deal. That is what we close on. We're not like amazing deal finders. This deal that we're doing, I referenced this deal in Longview. It's like $700,000 total down on a $13 million deal with a bank. It's not even that creative. The opportunity came up because I knew what I was looking for. I need to know how to make this cash flow, and I'm trying to do this as little down as possible to take out this deal because we have some problems to solve that we want to align the capital with. My underwriting says, I can buy this at your price, but you need to basically finance the entire thing. What do they want? The seller wants to not get foreclosed on. Okay, well, that's a pretty easy objective. Must move property. Okay. What does the bank need? The bank wants to not own the property. We want to find the right operator. If I was trying to force some strategy through, or I was looking through a certain lens looking for deals, I would never in a million years look at that deal And say they want $13 million. There's an occupancy problem. This doesn't work at all. Like I would never look at this deal and say like, oh yeah, this is just super simple. You map this out and you go, okay, how would it work? We met with the bank. The bank's like, this makes perfect sense to us. We hit. There is no iteration where you hit everything they want and you get everything that you need, and someone says no unless they're crazy. So I mean, there's almost no situation where you hit. Exactly what they're looking for. You offer them what they want and they say no. Your job is to basically identify what that is within the bounds of long-term cash flowing fixed rate debt. So with seller finance, private capital, everything that we're gonna go through through the event, you have all the money that you need for your deals. If you have any anxiety over raising the money, just like for the next 2 days, just let that go. If you are processing on like, wait, how's the money gonna come together for this? You're going to miss out on a system or a process that we're talking about on how to structure the deal and the debt, just for 2 days. Imagine that money is just not an issue and just focus on how do I create the actual product that I am selling, which is a piece of property and an opportunity to buy it that makes everyone money. That is all we're looking to do. And also note, we're going to talk a ton about seller financing. We seller finance this, we seller finance—

Everything.

Over 70% of my portfolio. This banknote is basically written like seller finance, even though it's a banknote. Seller financing is the best tool you have for creativity. It is also not the only way to do this. Like every other strategy, do not marry the strategy. We are not— this is not an event saying this is how you win seller financing. We're just going to talk about it a ton because it's one of my favorite tools. The goal is to have the tools in your tool belt. To close on deals that are good. Last example, and then we're going to wrap because I know I went slightly over on the intro here. This is that first deal. Now, this is much prettier today. Cody can show you some pictures on his phone. Cody owns it now. Cody and I bought this 38-unit seller-financed, $2 million. It was on market since Cody was like a small child. It was on market for like 13 years. So this was a property that was on and off listed. Anyone or their sister could have found this deal. So if you're like, Where do you find these deals? I don't know. It's posted online. You can just Google properties for sale. They're out there. They want $2 million. There's a bunch of problems with it. There's septic problems. Cody just solved a found a new one recently, actually. Congratulations on not getting caught digging up your septic tank. Yes, Cody did nothing. No, but don't worry. The live stream is only going to a few people.

Yeah.

When, when we bought this thing, there were some problems. There was occupancy problems, there were huge collections problems. But $2 million for 38 units in central Washington State is an insane price. And we wrote it in a way where we had lower payments in the first 6 months while we stabilized the property. Now, we'll talk about all sorts of mistakes that we made in our structure, which you guys don't have to make because you're here. However, what ended up happening is we had to raise $300,000 as 2 guys. Cody had 30 units. I had 4 units. We'd never done this type of value-add project before. And we just had to talk to investors who I had never met. And we had like 1 or 2 degrees of separation from, of, yeah, we need $300,000 to close a deal that no one else wanted for the last 12 years. Like, there's your pitch. Everyone's passed on this. Everyone and their sister has said no with more experience than us. We're the ones to do this. Please invest in us. We pitched 4 people. For $100,000, three people said yes. Cody and I forgot to start our raise until two weeks before. I took DDE too seriously, and I was like, "Oh, we do have to start the raise though." We didn't stress about it, but we didn't stress about it for too long. We got right to the finish line. We raised the capital, closed that deal. When we did our cash-out refinance, it appraised close to four million dollars. We were able to pull out a ton of money, buy out all the investors. Cody and I owned this building right off the bat. Him and I, I think we were financed around month eleven or twelve. I mean, it was like. Basically, 1 year in, partners were already bought out. That helped catapult us into real estate. But in the time that we bought that, between that and refinance, we bought a 7-plex in Seattle, which actually was a really good deal, wrong partner. We bought side-by-side duplexes. We bought— I bought into one of his 12-plexes. We bought a 10-plex in that same LLC. Like, we had expanded to, I believe at the end of a year together, it was 81 units if I remember Correctly. Is that— Cody, you have a pretty good memory. Yes. We got to 81 units in our first year of this theory of what if you could buy everything that was worth buying? This is what it looks like in practice today. This building is resided, new windows, new gravel. It's a whole new project. This campus actually looks beautiful. And we have more guests. Who did I— who did I— I mentioned we were going to get mobbed by deer at least once during this.

Yeah, last night. Yep.

They're messing up my frisbee golf course. I'm kidding. We're in a beautiful spot. I, I love being down here. So anyway, this is what it looks like in practice today. I found that you can actually buy nicer buildings than this building on the same strategy. I think if I could go back in time, I still would have done this deal. This launched us, but you can actually buy nicer properties, newer properties Which will cut down on your headaches as well. The point is, though, these are out there right now. This was on market for 2 people in their 20s with no realistic experience to knock out of the park. My eyes are here, Phil. Right here. I'm kidding. I'm kidding. I was like, what is that noise? Deer. If anyone sees a beaver going up the creek, by the way, chase it off. They're bad. I like these trees. I also like the cabins that you guys are staying in. Do not, if you see a beaver, we don't, we don't like all of the wildlife. Do not feed the beaver. Okay, so as usual, I'm slightly behind schedule, but that's fine. I'd want to be 10:10. We're like 5 minutes over. We're almost perfect. Let's take a break here for the next, next just few minutes. We're going to get kicked off again at, go 10, 15 minutes from now. So try to be back by 10. Again, restrooms are over in the pub right behind cabin 15. There's muffins, bananas, coffee. Enjoy.