The Importance of Relationships in Seller Financed Real Estate with Ethan Wilson

She called me up and she's like, hey Ethan, do you know who Grant Cardone is? I was like, of course I know who Grant Cardone is. And she was like, I just reached out to him. And it came from that. She heard back and connected us, got us on there with the filming crew, and that's how that got started.

It's something I always tell people, the first thing that you want to do, the absolute first thing you want to do if you want to go fast in multifamily is create great owner and broker relationships. Hello and welcome back to Multifamily Strategy. I'm Christian Osgood, your channel host today, joined by one of my really good friends, uh, one of the like OG mentees of Multifamily Strategy, someone who's been really successful in his business, Mr. Ethan Wilson. Ethan, welcome to the pod.

What's up? Thanks for having me, dude.

It's so good to see you. For those who haven't seen Ethan on the YouTube channel or followed some of the adventure, I have— I've hung out with Ethan 3 or 4 times in various states. I've seen him in Tennessee, I've seen him in Florida, I've seen him in California. This is a guy who is going places. Him and his business partner, Eddie, have built quite a business. He has retired from the 9-to-5 and working full-time for himself, building out his companies. And some of the success you had has been just really cool. So, I'm excited to talk about some of your deals. You've been on some very unique adventures with some very unique investors. We'll talk a little bit about that for the little bit that you're allowed to share on one of those adventures. Dude, I'm super excited to have you here.

I'm excited to be here. A lot to, a lot to share for sure.

Yes, yes. And in every episode we talk about, you know, the things that you're best at and your highest stupid tax. Uh, you've had some interesting ones there too, so I'm excited to see what your opinion is of, uh, the highest price you paid for things you don't know you don't know. Because yeah, you've had 2 or 3 things that I could think of that it could be. So everyone stay tuned all the way to the end because he's had a lot of adventure for a very short period of time. Let's talk about where you started because you have several rentals and we'll talk about some of those deals. When we first met, if I recall correctly, I think you had a single-family house. But talk to me a little bit about your starting point.

Yeah, it was single-family was the start. And I'll back up a little before that to preface it. My business partner Eddie and I have known each other since we were 3. We started playing soccer together, really grew up side by side. And went to the same school, same neighborhood, same soccer team. So really the business has been built on that friendship for what, 22 years now?

Wow.

And we both started single family. We were able to leave that 9 to 5 life pretty quickly and jump straight into multifamily and scale from there.

Now, how many multifamily deals have you done over the last couple years?

We've done 2.

2, and then you guys have been working on 1 for like—

For 8 months. Yeah.

You've been working on that 1, that 12-unit deal. That's closing, I assume, pretty soon?

We hope so. It's supposed to be 2 weeks.

Okay.

It has been a long, long time coming.

How many units will that put you at total?

That'll put us at 45 units.

See, that's not half bad. And you're 25?

That's correct.

There we go, 25 years. I did the math there. Like, you guys met when you're 3, it's been 22 years. Uh, there we go. That's about all the math you need to know for real estate. A little addition and subtraction, you're usually pretty good to go. Yeah. So you guys, you're 25, you're gonna be at 44 units with you and your partner. Uh, then in addition, you left the 9-to-5 really, really early in your multifamily career. And for those who know how multifamily works, having 44 units with some leverage usually isn't enough for Complete financial freedom. So how did you leave the 9 to 5 and how are you earning money to supplement?

It was a risk, that's for sure. It was actually before we had bought any multifamily. We, it was Eddie and I, of course, just us the whole time in the 9 to 5. Back up, before that, we had our internships during college summers. We worked that during the day and We did little side hustles like landscaping, moving, junk removal, all that sort of stuff in the evenings and on the weekends. And pretty much just, we were big savers. We saved every penny. When we had our single families, we, that cut down on our biggest expense is we just house hacked those and got into couch flipping. That was a big cash step for us. And then during COVID Eddie started a sanitizing business that did really well. He ran that for a few years during COVID And then after that, kind of fell off, which we can talk about this in a little bit. It has picked up again. We're cleaning floors now. But we flipped a lot of couches, sold 200 couches over the 2 years that we were doing it and saved up all the money, flipped the house, bought a 24-plex, and just been scaling from there.

Yeah. I'm so excited to get into the multifamily as that is the main topic of multifamily strategy. Turns out that makes some sense. But I love the grind piece. And that's a big, if you are like, hey, I need to get outta my job and I don't want to be an employee. And some people just, some people being an employee for a while and saving your way through is just fine. For some people, there's like, you're born to be an entrepreneur. I love that you just stepped out and you did a whole bunch of projects. Question number 1, what the heck is couch flipping? How does that work? How lucrative was that? I want to hear all about this. Couch flipping. I can't imagine that's as lucrative as flipping a house, but maybe I'm wrong. How does couch flipping work?

I mean, it's just buying and selling couches. Eddie got the idea from an Instagram video from Ryan Pineda, and we just started doing it every single day. It was while we had the full-time jobs. And once I moved back up from Huntsville after I had quit and Eddie still had his full-time job, we were still doing it while we were starting real estate just to have some of that cash flow. But pretty much every day we'd either buy or sell a couch, go on Facebook Marketplace, buy it typically for $200 to $300. It was just people who didn't want their couches anymore. We'd throw the cushion covers in the washer, take better pictures and offer free delivery, and we'd sell a couch on average for $600 to $800. Sometimes if they were nicer couches, all the way up to $2,000. I think the most expensive one we sold was like $2,500.

Um, so how many, how many of these couches are you doing at a time? Is this like a, because I know it's a side hustle, so you're not doing this full time, but are you doing like 2 couches a week, a couch a day? How many couches are you flipping?

It was a, it was either buy or sell 1 couch every day. Um, at least, at least 1 couch a day. Uh, so we had a storage unit where we'd put them. We had, I mean, 5 to 10 couches in the storage unit at a time. And so we just had to shuffle them around, bring them out, take pictures, deliver them. It was a grind, but it was fun. Good stories, good cash for the time.

Yeah, when you're starting, that's actually, that doesn't sound too bad. You're making a few hundred to a few thousand dollars a flip. You're doing several flips a week. So what do you need for that business? You need a truck and a storage unit. Is that, and some cleaning supplies?

Yeah. I mean, really a truck to transport the couches. Maybe a little vacuum machine that you can get some stains out of. We had a little sewing kit in case there were holes. That didn't really happen very often, but a washing machine to put them in. And yeah, just, you could use a garage, a storage unit, wherever to hold the couches.

And then free delivery. That makes it seem like no one's coming up to your storage unit being like, what? This is a flipping operation.

That's right.

It's a bonus. The couch gets delivered and it makes you look like, you know, someone just selling a couch. That's super interesting. Okay. So, and this makes sense how you build to real estate from from this too, right? You're getting the, the basic sales skills, you're getting in a rhythm, you have the supply and demand. Like, you're, you're building all the necessary skills that one would have to flip a house. Uh, so through some of this multifamily process, uh, you started doing a house flip. And I actually had a chance to tour one of the houses you guys were flipping, uh, before you guys actually got to the flip. I got to the— like, I gotta walk the empty beat-up house with you guys, which is really fun.

That's right.

Talk about, uh, talk about the flipping side. You have multifamily acquisition and then You guys aren't necessarily professional house flippers, right? You're not ripping out, you're not doing 5, 10 projects a month. This is another, this is a side hustle.

Yeah. Yeah. Not at all.

Talk to me about the flipping business though. How's that, how's that been? How many flips have you done? Give us some of the numbers. I want to hear all about this.

Yeah. Back at the beginning when I was in the multifamily strategy, Eddie had joined a flipping mentorship. So that's where that came from. We just kind of combined those two worlds. And the first one, it was on market. It was not anything special. It was right when the market had peaked and started coming down. So it wasn't the best timing. We made like $8,000 or $9,000 net on that. But for that, for us, it was a win. We didn't lose money and we got a good experience out of it. We got to get through the process. And that was just kind of the base of that. The one that you came and saw was our second flip, which we've only done two. And that one, we, knocked it out of the park. We made six figures and were able to take down some multifamily and keep 100% ownership of that because we had flipped that house.

See, that is awesome. When you have a big cash-out event and you use that, you lever that into more equity, or all the equity in this case, of your next acquisition, that is a really good move. That's something that I actually implemented through my career with, uh, with Cody Davis. We had a big win, we took the cash, and we went out and bought a hotel conversion just 2 of us, 50/50. We did the same thing with a mobile home park. Less partners is awesome. You can do that if you earn some money.

Yep.

So 2 flips in, first one, man, that's a tight margin on the first one. You didn't lose money on the first one, which is very impressive. Well done. That's the main thing. You made it all the way through. You paid yourself a teeny bit, but more importantly, you didn't lose. Uh, then number 2, you took those skills and you knocked it way out of the park. That was a really cool flip too. That, that you guys executed really well. The design was fantastic. If you By the way, I'll plug you guys early here. If someone wants to watch some of your adventures, can you guys do some fun, exciting stuff? Where does someone find you online if they want to follow you or you and Eddie's adventures?

We are Ethan and Eddie on Instagram.

There we go.

And YouTube and TikTok, Eddie with a Y.

There we go. Find them everywhere on every channel that people watch things, YouTube, TikTok, Instagram, Ethan and Eddie. That's exciting. So you guys did a really good job on the flip. I want to talk about a partner that you almost had on a show that may or may not air at some point. There's a very interesting story here. But before we get to that one, last question. Let me hear about this cleaning business. When I first— so when I first met you guys, I'd get all these pictures when you're like, yeah, we're starting our own business. And I just see pictures of you guys like scrubbing the floors in an airport. I'm like, you know, it doesn't sound exciting to me. Doing exactly that. But it sounds like Eddie found a real niche here that actually was quite lucrative, especially during the pandemic. Talk to me about that business and then what that's evolved into now.

Yeah, it was a sanitizing business during COVID Eddie started that. He got some electrostatic sprayers and honestly, he killed it. He was knocking it out of the park. He was doing all these businesses across Nashville. He was sanitizing every private school bus in Middle Tennessee. He was in the airport, uh, had got up to double-digit employees, I believe, working for him for a few years. Yeah. And then the CDC came out with this announcement that the spraying method was not as effective as once thought. And so that kind of took the business, slowed the business down for sure, and left us just cleaning floors in the airport. Um, so we had Well, he had at the time a couple contracts there and that was it for a few years. It just remained as a couple stores in the airport cleaning floors. And recently, as of, I mean, maybe a month ago, a few weeks ago, we got a call from the same manager and he wanted us to clean more stores. So now Eddie and I go twice a week, we scrub floors, and that is great cash flow for the business.

That's awesome. And I love the— for those who are looking at starting a side hustle, even if it's to help fund real estate, but if you're looking at a side hustle, that was a good job of just looking at like, okay, what is in demand now? And how— what is our time that it would take to start a business? That was one thing with all three of these businesses that we've mentioned. The actual capital needed and the time from concept to delivery of the company is super short. And if you're looking for side hustles and supplemental income, that is a fantastic way to launch a build, a business. Like, okay, we need some electrostatic cleaners, uh, couch flipping, we need a storage unit and a truck. Like, a lot of these things aren't that technical. You can get them started very quickly, and if you market them well, you can actually make good money. And what you've done is you've had multiple businesses that you've been involved in that you've started them, they start with profitability, so you don't have major negative drains up front and you've made money, which has helped you buy real estate. That's fantastic.

Yeah. And I will, I will say that we, the main focus is the multifamily. I don't want it to seem, and I don't want to encourage a lot of running around in the shiny object syndrome, but throughout this whole time, every hour of every day is multifamily. And then for example, on Tuesday and Thursday nights, we spend 3, 3.5 hours each night, um, twice a week, just cleaning floors for some cash flow. And it's, it's not the main focus. We don't want to grow and scale that like we do multifamily. But like you said, it funds the real estate, keeps the lights on. It's a good side hustle.

That's how my property management business started. It was, I'm already managing my own properties, this is a direct plug-in, let's offer the service to more people so that we can up cash flow while we're starting the business. And that's what— and then when my wife left teaching, she ended up wanting to work in that company. Uh, that sustained the two of us for several years. I actually sell that company this week, funny enough.

Um, congratulations.

Thank you. Uh, yeah, I decided I'd rather spend the time that I spent in that company being a dad and spending more time investing in the podcast and multifamily strategy. And of course, I'm starting another PM company in Texas because, you know, apparently I like pain. But those supplemental businesses, the fun things is you can— you build these up with very little startup cost. Some of these, you can reach a point where you can actually have a pretty lucrative exit, which is really interesting. I'm actually selling that for quite a bit, and that's something that's just a system that I needed to run my business. And then when I downsized my business a little bit in Washington, turns out it's worth something more to someone else. And so you get paid along the way. And then, you know, you think like a cleaning company, for example, at some point you have contracts, you have a business at some point Eddie can go, hey, I'm done with this. Someone else might pay for these contracts and then you can get another liquidity event. It's great. Liquidity on liquidity is great.

It is.

Let's talk about the, the fun ones. We've seen some pictures of you with Grant Cardone and there's a show that may or may not air at any point. Um, and you guys may or may not have won the show. Um, I'm sure we can't disclose that until the show comes out. If it does. Tell us a little bit about the actual deal. Why, why would a Grant Cardone fly out to Middle America for a couple— at the time you guys were 23, right? When that was, when that was filmed.

Yeah. 23, 24.

A couple of 23, 24-year-olds, Middle America, 44-unit deal. Was that 44 units?

It was 44. Yeah.

Okay, good. Memory still serves. Why is Grant Cardone flying to the middle of nowhere to meet some 23-year-olds?

He was filming a show called Cashflow King. Actually, I think it's Real Estate King now. I don't even know. He was going to different cities across the US and the premise of the show, as much as we can talk about, I guess everything, all the factual things about this discussion are hypothetical, of course. But Grant Cardone was going across the country. He was filming a show where he would bring 8 to 10 investors from each city that he went to, look at their deals, visit with them, walk through them, look at all the numbers, and he would pick one to fund. He would partner with them. So he came to Nashville. We had a broker friend who reached out to the team, to the Cardone team, and got us on the show. We interviewed, had this deal, happened to be working on this 44-unit. In Murfreesboro, Tennessee, and it was a good deal. They liked it. They liked us. They liked our story. And we got on the show. So Grant Cardone showed up in Nashville with Eddie and I and 8 other individuals who each had their own deal. And we were on the show pitching against each other. He came and looked at the deal in Murfreesboro. And, you know, the rest is is hypothetical history.

There we go. Well, so one takeaway from this, so your broker was the one who put together the connection. I talk a lot about the importance of relationships. How did your broker think to do that? Did you guys tell him about the show? Did he just come up with this idea on his own? What, how did this transpire where magically Grant's coming out on a deal that you were already going under contract on either way?

Yeah, we had just cold called this broker months before this. We had built a really good relationship, some random deal, a little 3-unit deal. And we were talking, started looking at other deals together, built a really good relationship with her. And one day in December of 20— whenever, a couple years ago, whenever that was, she called me up and she's like, hey Ethan, do you know who Grant Cardone is? I was like, of course I know who Grant Cardone is. And she was like, I was on LinkedIn and saw this post about this show they're filming and I just reached out to him. And it came from that. She heard back and connected us, got us on there with the filming crew, and that's how that got started.

It's something I always tell people. The first thing that you want to do, the absolute first thing you want to do if you want to go fast in multifamily is create great owner and broker relationships. And it does not mean that you make 1,000 calls to 1,000 brokers. It's you build deep relationships with a few people who control your market. In your case, you found a broker who was hungry, who was interested in your business, that made a connection. Uh, it's fun to see a deal get underwritten and, and for someone in the Multifamily Strategy community to come through and be like, hey, just so you know, potentially Grant's going to fund my deal. Now, uh, we can, we can assume that there's going to be a reason that the deal didn't eventually close. Whether we can talk about it or not is one thing, but, uh, we did notice that you don't have a 44-unit, uh, unit count yet.

So we do not own that deal. I can confirm that.

That, let's talk about the negotiations for the deal because that we can do. That's, that's fact. You originally had it set up seller financed.

Yeah, that's correct.

Okay. Now, I loved that deal seller financed. I liked the structure. That makes sense. The goal of real estate is that you own it, you never lose it. You had a structure that worked there. Grant's team proposed some changes through this process. What was the proposed change from, we'll call it the potential investor side? What changes did they make to that contract as you went through to the close?

We were challenged with the task, like you said, of changing the deal. We did that. It was from seller financing to sort of a lease option to put less money down. To then in a few years turn into seller financing. So, it kind of muddied the water, changed the deal up, and made it a little more complicated than it needed to be.

What I found really interesting about this, and again, I am being sensitive to the fact that you don't want to disclose too much here, so I apologize if I make you at all uncomfortable with the questions. What I was really impressed with was the ask from that team was a really tall order. You had an already negotiated deal that was a good deal. And they, they gave you objectives that were kind of insane. Didn't they also ask for the broker's commission to be waived, if I remember correctly?

That's correct.

That's— see, that's kind of wild. That's— who would say yes to that? They gave you all these targets that were more or less impossible to hit, and you took all of their feedback. Hey, we want to do this lease option and it turns into something later, and we want to do, uh, no commission to the broker, and we have all this all these requirements. Did you get all of their requirements accepted by the seller?

Well, that is the craziest thing. Through the brokers and the seller, we did get everything accepted, got everything changed, which, I mean, at this point, at that point, it seemed impossible. At this point, knowing what we know now, it seems even more impossible. But we got all the terms accepted, everything negotiated and changed. Did we win the show? Did they fund the deal? I can't confirm or deny that. But, you know, we don't own those units. And here we are.

So wait for— I guess it's now Real Estate King. Wait for Real Estate King to come out if they ever bother publishing it. It has been a couple of years since filmed. If it comes out, we can share the whole story. If not, you know, you know what legal team you really don't want to have a disagreement with? Grant Cardone, rumor has it he has some money and occasionally sees people. So you're playing it safe. These are all true things that happened. The deal was in place. It was renegotiated. You got the terms accepted. And if anyone's wondering, you may get to pitch a deal to Grant Cardone if you join Multifamily Strategy. That's a fact.

MultifamilyStrategy.com.

Overall, would you recommend someone? This is something that I push really hard for partnering with people who are significantly larger than you. Obviously, at some point when you're starting, the people who have capital are probably a little larger than you. But, um, going through your experience, if you had to go back and do it again, would you involve someone of the Cardone caliber on a deal that early in your investing career? Was that, was that helpful? Was the learning lessons worth it? Uh, just general opinion and takeaways. If the same opportunity was offered to someone else, what would your advice be to them?

Well, I'll answer that in two ways. If we could go back and change it, I wouldn't. I think we're better for it. We learned a lot. We lost a lot of money, but it was a huge education and a great story. Now, if the same opportunity came to us again or came to somebody else and they asked for our advice, I would highly recommend that they avoid that. Situation and don't go that route. But like I said, we wouldn't change it for the world. It's a good story, good education.

I like that takeaway. And I was trying not to steer you with the question. I kind of, I had a suspicion of what you might say. I'm glad that you went through that too. Let's talk about a deal that you definitely did close, the Red Brick. This one was interesting. Looked through the underwriting on this one quite a bit. This was, this was right on the tail end of the mentorship, if I recall. Uh, so you, like, we were actively, like, we were chatting on this deal for a while, and my overall takeaway was I probably wouldn't buy this deal. It's— there's a lot of work here. And I think at some point my advice to you was, I'm like, well, the only reason that you would buy this is if this is so important to your career, getting these units, and finishing the project. It could be a really hard project. I'm like, the only reason you do this is if you can't afford not to do it. Like, you need to do this to move forward in multifamily. And then to my surprise, you ended up closing this deal. So let's talk about this, this deal, because this one was— there was a lot rough here. This is what you call a deal with a lot of hair on it.

Yeah.

Uh, tell us a little bit about the Red Brick. Like, how did it originally come up and what were the initial problems with Yeah.

This is the best, our best deal origin story because we joined the multifamily strategy way back and it was probably, it was months before we took any action. But we were kind of learning the fundamentals, hopping on the phone call, the Zoom calls with you guys and going through everything. And at some point you and Cody started pushing us to reach out to brokers to start practice underwriting deals. Get a real-life example and put some pen to paper. So we called a broker. This was the very first broker that we ever talked to, the very first deal, multifamily deal that we ever underwrote, like real-world deal. And it's wild. And so that was, we did that, talked to him, put this crazy offer together. That, I mean, looking back again at this point, it was the boldest, dumbest offer we've ever submitted. It was 10% down, 1% interest only for 5 years and something that a broker would just laugh at. And so obviously they said no and moved on. Fast forward 1 year later, we closed the deal for 10% down, 1% interest only for 1 year, and then a 5-year balloon with 4.75% interest after that.

That is insane. That is insane. Now, this, this wasn't just like a slam dunk turnkey property, which is probably why you got your insane terms accepted, right? Quite the opposite. It was a listed property when you called a year ago. It was still around. You're like, hey guys, we're back.

Yeah.

Uh, you know what's changed? Nothing. Same offer. Let's do this.

That's right.

What had to be overcome on this building?

Well, It was 50% occupied and it was in horrible condition. The previous owner was out of state, lived on the other side of the country. He bought it in 2020 for $1 million cash, never visited the property, had bad property managers, had bad contractors who were stealing from him, not doing any work. So it was just, it was down in the hole. And from that 1-year period, I mean, nothing changed. It just got worse, if anything. And so it was actually a buddy, Max, who had called those brokers again a year later and kind of re-woke this deal up. And throughout the whole period it was listed, nobody wanted to buy it cash, obviously didn't make any sense, and no bank would finance it. It's 50% occupied in horrible, horrible condition. And so the only way really that he could get out of the deal was seller financing. And that's what was pitched. That's how we closed it. And it's been, it has been hairy to say the least, but it's been, it's been a great project.

Now I remember there's a point where you called, I can't remember how many units, but you're like, hey, we went under the building today and it was, it was like a crazy number of leaks. You had like insane amount of, uh, talk, talk about the, talk about the plumbing really quick. I remember this is the first call I got. You're like, hey, good news. There's like 5 units that aren't leaking. How, how was that discovered and how has that overcome?

Well, and the worst part is that we got inspections. We paid for inspections, had everything checked out, and the inspector, he didn't want to go in the crawl spaces, which honestly, these crawl spaces are the roomiest crawl spaces that we've ever been in. I mean, you can stand up in the crawl spaces. Oh, that's cool. And so he sent these little robot cameras in there to check it out. And in the report, everything's fine. Yeah, plumbing's great. We buy the building and there are leaks. And everywhere, every pipe is pouring out water, which, I mean, yeah, that's our fault. We, we didn't know what we didn't know. We should have checked it out. But, you know, we get under there and it's just, there's, there's 3 brick buildings and each one has a pool underneath in the crawl space.

That's a bummer. And plumbing can be expensive. Uh, how bad was the fix?

Not horrible, to be completely honest. I think we spent, we got a pretty good deal. We've, we've gotten some good contractors, some good teams down there. I don't remember the exact price for replacing the piping in the crawl spaces, but it was significantly less than what we had expected at first once we ran into that problem. And let me say, I mean, yes, we have fixed so much with the plumbing, but it is old cast iron. Even to this day, the property's fully stabilized, but the plumbing still comes up. We were there, we got home at midnight last night because we were there all day working on some cast iron plumbing.

I'm on my, on my hotel conversion. I think I'm on our 9th leak just as we lease it up. We have some units that have been reno'd, uh, but they've been shut down for years and you run water through them and they work for a couple weeks and then all of a sudden like, oh, plumbing failed. So I get it, dude, those old buildings, you have to factor for for plumbing to fail. And if you see cast iron, yeah, galvanized steel, even copper sometimes, like you see some of these older plumbing things, you're like, wow, they haven't used these in a lot of years. Like everything's PEX now. It's due to fail. So you have to know it's probably going to fail in your first 5 years of owning it if it doesn't fail within the first 5 days of owning it, which also happens.

Yeah.

I mean, you guys learned that. Uh, how about drugs? Do you have any drug problems at this building or is this one fairly clean tenant-wise?

Everywhere. Everywhere. Needles, crackheads, drugs everywhere. I mean, it was pretty much everything that you could imagine going on. Drug dealers, drug users, just people running around with their shirts off, chewing rubber, climbing fences. It was, uh, it was— we have stories that you just can't make up from this property. Um, but Like I said, we bought it half occupied. There were 12 units occupied out of the 24. On this day, as of today, I think we have 3 of those remaining tenants left. So that was just a huge— and it's been probably what, 13, 14 months of owning that? And yeah, it was just a big turnaround. It was the biggest challenge was managing the cash flow. Of course, we had the 1% interest only payments for the first year, which was great. Our mortgage was $1,100 a month, which was less than our single-family house that's 5 minutes from that complex. Um, but the biggest thing we wanted to do was make sure we weren't just going to bleed money through maintenance and renovation and all that. So we kept the majority of those full, with the exception of a few just horrible tenants who we had to get rid of while we leased the rest up. Um, and then started dealing with the inherited tenants who we needed to to find a different place for, bring in better residents, and improve just the feel of the building.

And you've gone through it fairly quickly. I mean, you're about a year into it and you're pretty far through the project. That's really hard to do. So first of all, really good job running that project. If you guys want to follow the story of the Red Brick, by the way, that they do a lot of posts on that one. So for that, for that building, if you want to follow that one again, Ethan and Eddie, Instagram, YouTube, TikTok, the whole nine yards. That's, that's a fun, that's a fun saga to follow online. It's fun watching that thing come together. You guys have done a really good job.

Appreciate it.

What did you buy it for again? How much did you pay?

We bought it for $1.53 million.

$1.53 million. What do you think it's worth today?

Right now, maybe just shy of $2 million. We got a BOP for, I think, somewhere between $1.8 and $1.9 a few months ago. And at this point, I think we've, we're getting pretty close to the $2 million mark.

That's perfect. And you closed this with partners, right? You raised the down payment with equity partners?

That's correct. We raised the 10% down payment and an additional renovation budget to take. I mean, we didn't have any money to put into it, so we had to raise everything. And it was just a joint venture. We own 30% of the deal, the investors own 70%, and everything that we get is just our sweat equity. We also self-managed, so we get that management fee on top of that.

So you guys get the management fee, which— well done on that. A lot of my deals, I just manage it for free because they give me a lot of money. Um, sometimes I do get management. So you got management fees, so you have a little bit of— you have a little bit of cash flow for the work that you're doing, you get a little bit of income in, and then you have 30% of the deal for $0, and you get a 24-unit experience. You've now experienced drugs, you've now experienced pipe leaks, you've experienced leasing, rent increases. Renovations, and you got paid to do so. In my opinion, that is better than anyone's college experience.

Agreed.

You got paid to learn some really hard stuff by doing it, and you learned it in a year. You didn't go somewhere for 4 years to learn this.

That's right.

You bought a deal. I originally told you I wouldn't buy this deal. This is one of the deals where I'm like, I think I'd still carry this one. I am so glad that you didn't listen to that.

Same.

I said if you can't afford not to do it, then do it. And you went in and you did it. And I don't think you could have afforded not to do this deal. This moved you forward astronomically.

Agreed.

You guys made the right choice and you guys stuck with it. And it is a hard project that was beyond your current skill level when you bought it. And guess what? You grew to— you rose to the occasion. You grew your business, you grew your skill set. You can now handle harder projects now. You can do the same thing on a 50-unit building now because you know everything that's going to come up. Well, not everything, but you know a lot of lot. That's fantastic.

Yeah, we are, we are much more prepared going forward with that deal. Um, especially in the numbers, just with underwriting everything before that was hypothetical, which of course our expenses unfortunately are a little bit higher than we had underwritten, especially the maintenance and repair, just because of the cast iron plumbing. But we are getting much higher rents on that as well. Luckily, we were conservative going into it. So it's working out. Investors are happy. They're getting paid. And like you said, we can look at a lot more deals a lot more confidently at this point just because of what we've gone through over the past year.

Absolutely. Okay. I have 3, 3 final questions. The 2 that we always ask. When someone's new, at what point in your opinion is it the right deal to buy? Because obviously there's a point where it's like you don't want to do a bad deal as your first deal. Like if you have no money, losing money is a really bad idea. There is a certain amount of risk of you're never going to know what things actually cost until you actually do it. You don't know how long it takes. You can join a mentorship. We can tell you how long it took us. It's going to be different for you. Like, and your market's not going to be exactly the same. Nashville and Alabama and the places that you invest are not the same as Dallas, Texas or Seattle, Washington. I can tell you all of my experience, but you're going to learn things and it's going to take you time. It's going to cost you money when you're buying that first deal. How did you know that it was time to pull the trigger? Because you made the right call. If someone is feeling stuck, I'm thinking of these people who are listening who are like, I've been listening to podcasts for 5 years and I haven't bought a darn property. I've only bought a duplex. How do you know that it's the deal that you need to buy?

I would say you got to have connections. I mean, whether it's joining a mentorship, whether it's having people you can reach out to, other investors, other people in the industry. I mean, don't get it twisted. We were swinging for the hills before this deal. I mean, we were putting offers out left and right, getting hundreds of nos, writing off— I mean, everything. Putting the numbers up, it's for us to some extent, it's a numbers game at the end of the day. But I mean, we had taken, of course we had gone through the mentorship. We had helpful feedback when we were looking at all these other deals that thank God we didn't buy. We had other people in the space who we were able to take some deals to and be like, hey, this is what we're looking at. What do you think about this? And they would point out flaws in the plan. They would, say why this deal is good, why it's bad, why the structure is good, why it's not, what they would change. And so it was just a lot of trial and error. And once we did find the right deal, once we had Red Brick come up and we took it to these same people, we took it to you guys, we took it to people here in Nashville and they gave their thoughts and opinions on it. That's when we knew it was like, okay, our safety net, it's passed the safety test. You know, we've reached out to the people who know more than we do. And there's people who want to give us money to buy this deal now. And so, that's how we knew it was time to go.

That's the common thread here. You have a deep relationship with the broker. You got on a TV show. You met Grant. You got all that experience, whether it was a good or bad experience, you learned a ton. You then went out and it's like your deals, you met with other owners. You were able to soundboard it. Meeting the people who are doing the things that you want to do is the way to play the game. You did it exactly, in my opinion, you did it exactly right. And look where you're at today. You're 25 with 44, well, about to be at 44 units. You're going to do a lot more deals, a lot, lot more deals because that velocity and that story, that's going to carry you through hundreds and hundreds of units. And you're super young and early in your business. It's a great place to be. Okay. Questions we always ask, the thing that you're the best in the world at, what is it about Ethan, the person? And this can be also Ethan and Eddie as a duo. You answer this question how you feel, but what is it about you or your partnership that has uniquely made you successful?

Well, our partnership is very unique. I'll say that. I'll put that out there. We complement each other extremely well, Eddie and I. I don't think there's any— I don't know of anything in the world that I'm best at right now. You know, we've been doing this for 2 years. There's not a whole lot that's super special about us. We're just We're two guys who will hustle and grind. We'll wake up every single day and get after it. We'll put ourselves into bad situations and we'll figure it out. Now there's things in the business that I'm better at. There's more things in the business that Eddie is better at. But that being said, like I already said, we balance each other so well. We play off each other. We have two different perspectives on deals, on people, on different situations. Um, so that's been crucial to our success is having each other. Um, it's, it can be tricky getting into a bad partnership. Mm-hmm. And I would, I would say definitely don't rush it. But Eddie and I's situation is unique in that we've known each other since we were 3. We have the same goals, we have the same values, we know where we're going, we want to accomplish the same things. And so every day, you know, we're out here together hustling. We have the same mentality, the same work ethic. And that's gotten us to where we are. And that's what I feel like is going to get us to where we're going.

And if I'm allowed to add an opinion to this, I don't know that I am, but you know, it's my podcast, so I'm going to. I think the fact that you guys played soccer together and really competitively, the way that you guys work together from the outside in, the way that you guys play business is very similar to the way that people play elite sports.

Yeah.

You guys are dedicated. You get in the reps, you understand how to handle the stress, but you guys look like a pair of partners who have played a sport together for a really long time.

The chemistry.

Yeah, you guys have that chemistry and it's also the competitiveness. You guys have a drive as a partnership where you play as a team that I think is really cool to see play out into your business. You guys understand being a team, you understand not being weird about equity. It's like, I think you, You're like, there's stuff I bring to the table I'm better at and stuff that he's better at. Partnerships are never 50/50. They're just everyone doing the best they can, or, you know, on a failing partnership, some people doing more than others. But when both people are pulling hard and bring unique things, you guys have a really cool friendship and partnership that I think is going to carry you guys through a lot more business if you guys can keep that strong.

Yeah. Yeah. I agree. I mean, business is the ultimate competition. You know, I thought, I thought it was soccer before and that was, my whole life. That was me and Eddie's whole life growing up together. But now we get to compete for the rest of our lives in business and having each other to get, have each other's backs, hold each other accountable, push each other. Yeah, that's what's, that's what's making our business work.

I was hoping that was the one you choose. I'm, it's fun watching you guys' partnership. You guys are really good at being partners, which is really fun to see. Opposite end of the spectrum. You've had— I mean, even in comparison to other people in Multifamily Strategy, you've had some really expensive lessons. Uh, you've had a lot of things happen. There's your period. And you've also had some huge wins. Like, you guys have made some money and you guys have lost some money, and you guys have— like, you guys have gone through the whole thing. In your opinion, starting out without having a bunch of real estate Over the last 2 years, what is the highest stupid tax that you paid that someone else could try to avoid learning from you? What was the highest lesson? It could be emotional or monetary, by the way. It's either one. Sometimes it's just like, for me, I think my highest actual tax is I lost a friend who invested in a deal who he tripled his money and he wasn't happy with it and it blew up the whole friendship and it was a huge bummer. That's probably my highest stupid tax. But for you, what is your highest stupid tax?

We got into bed with the wrong people. We got into bed with Grant Cardone. Oh, yeah. I mean, it's really just you got to pick who you're getting into business with and who you're going to associate with. You know, the worldwide saying of you're the average of what the 5 people you hang around with the most. Eddie and I want to stick together. We want to attract the best people to us. We want to hang around the best people and, and getting involved in the wrong groups, in the wrong people's circles has been what's cost us the most money.

I love this episode. The, the, the main— so the best things that have happened to you, you got into the right circles with the right brokers and the right owners to close your deals. And the most expensive thing that happened to you is you got in the wrong circles with the wrong people. People will make or break your business. And the more you scale, it's going to take more people to scale it. Right now you're in the 44-unit. It's like the Ethan and Eddie universe can be Ethan and Eddie up to about 100 units. And then you have to start introducing a few more people to start. You're going to have tasks that you're going to have to start delegating that you can't see to everything. As you start to scale, you're going to run into the same thing the next few places, in my opinion. You're going to run into like, oh, you know what the bottleneck always is, is always people. It's always people and it's super hard to manage. I love that you have a partner that you can trust and rely on, 'cause that's gonna carry you guys through a lot of those problems. So fun to see the success you guys have had though as two solopreneurs. You've done a lot of things and you successfully left a sales job, which is like the ultimate, like you work for yourself. That's so fun.

It is fun. It's a blast.

I'm proud of you guys. It's fun watching. It's so fun watching the adventure. Uh, if you guys ever show up to events, like, these are guys— everyone listening, these are people you want to know. Talk about getting the right circles. Ethan, Eddie are guys who you want in your circle. I have stayed in rental houses with them in Florida. Uh, we've hung out in San Diego. Like, these guys are a fantastic time. They know how to take work, and I think you guys can balance it with fun. A lot better than me and a lot of my partners can. You've done a really good job of having fun along the way, which I think is a really important part. If you're gonna leave your job, do something that you love doing. So yeah, guys, this is Ethan. I'm Christian. This is Multifamily Strategy. Ethan went through Multifamily Strategy. I'm going to end on this. There is no one who's ever been through Multifamily Strategy who's successful because of Multifamily Strategy. That would be ridiculous and narcissistic to be like, oh yeah, they're just mentees. They learned from Ethan and Eddie were always going to be successful. That's why they've been successful in literally everything that they've done. Or they learned a lot from the things that didn't go the way they wanted to, and they adjusted and added to your business. The goal of Multifamily Strategies is to help people move faster, make a few better decisions. If you want to look into Multifamily Strategy, you can check out multifamilystrategy.com or shoot me a message on Instagram @ChristianOsgood. We'd love to have people in the community, at least add a few people to that circle. Be around people like Ethan, Logan, Eddie, Caleb, people who have joined this podcast and have really contributed a lot. Get in the right circle here. MultifamilyStrategy.com with Ethan. Follow the adventure. Ethan and Eddie, these guys are just freaking phenomenal. I'm really excited to have you back on in a year and see where you guys are at. Do you guys have any targets? What is the target a year from now? Let's— I'll put this on my calendar. We're going to do a podcast. Same time next year.

All right.

Where are you going to— where are you going to be? You and you and Eddie, where are you going to be this time next year in your business?

It's hard to put a number on it, but we'll be— we'll own more apartments. Maybe we'll be cleaning more floors. Who knows? But our goal right now is to scale the multifamily.

Okay. I am highly confident that they're going to have over 100 units. Unit counts, not everything. But I think that's a big benchmark when you get over 100.

Absolutely.

I'm calling your shot for you. You guys, you guys are going to do it.

Uh, we'll be there in a year for sure.

Perfect. All right, well everyone, we're going to check in in a year with him. Other than that, follow Ethan, uh, check out Multifamily Strategy. Thank you for listening. By the way, I probably should ask this in the beginning— give us a subscribe or a like or listen or share us with someone. Help me get this out to more people. We do the owner meeting for you so you can learn from everyone else's mistake. If you've listened to the last 20 or so episodes, you can probably save yourself like $1 million in your business just with everyone else's stupid tax. So save yourself the money, save yourself time, help us get this channel to more people. We appreciate you and we'll see you all on the next episode.