Christian Osgood breaks down the first step in multifamily investing: setting a specific cash-flow goal, then working backward to figure out how much equity and income you need. He retired his wife in 11 months by targeting $10,000 per month, which required roughly $1-2 million in equity and $30-40k monthly income. Find deals by meeting owners directly, using seller financing, or searching MLS, Zillow, LoopNet, and CREXi.
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This is the most important and the hardest and the most fun phase in your real estate journey. Today we're talking about the build phase. Hey, welcome back to the channel. My name is Christian. We're going to talk about how much real estate you need to buy to hit your goal, how we're going to acquire it, and all the steps needed there. Now, if you haven't yet, please like and subscribe to the channel. If you haven't yet, please click the free course to learn how to buy Anything with or without money and how we built our 200+ unit portfolio on the free link below. And without further ado, off we go. So the build phase, we're going to do this video in 3 parts. First, you have to have a goal that you are chasing. This will tell you what size foundation you need to build off of. The build phase is extremely important in real estate. This is where you actually do all of the acquisition that you need to hit this goal. If you build too big a foundation, you're never going to get to the vertical part. If you build too small a foundation, you're going to implode or just straight up not build the right building to hit your goals. So when we're constructing our actual financial freedom through multifamily real estate, this is what you have to do. So phase number 1 is the goal. Phase 2 of this video is going to be the actual buying, and then phase 3 will be how do we transition to the next step and when is the time to do so. So the goal needs to be measurable, it needs to be specific, it needs to be a large enough goal for you to actually want to attain it, needs to have a set timeline. These are all the hallmarks of a good goal. So I got stuck for a long time because my goal was I want to build more passive income to replace the income from my day job so I own my time. Not specific, had no set timeline. In 8 years, I bought one single unit until the very end where I finally bought a duplex. As far as I got, 8 years of having that goal. Then my wife got injured at school. She was a kindergarten teacher. She got pushed by a kid, had actually a pretty serious injury, was out of work for a while. And this is when the whole world was falling apart in 2020 through 2022. So Since the school district got very oddly political and weird, our goal of retiring her, we had set a rough timeline of 10 years, uh, turned to, hey, we needed to actually do this fairly immediately. Now I have urgency. My timeline is 2 years or less. We want to completely replace her income. And I had just left my job to pursue all this, so I had to replace both of our incomes in a 2-year period. That is a goal that has some urgency. That is a big audacious goal. That has a very specific timeline. And with that, we bought over 100 units and retired my wife within 11 months of that goal. So your goal is really important. What you need to do on the measurability is, look, what does it actually look like financially on a monthly basis to hit my goal? So if your goals cost $10,000 a month, uh, say you wanted to have enough money to vacation and replace your day job. And $120,000 a year does it for you. Perfect. You're looking for $1,000,000 a month. This is not a massive business. This is actually much easier to hit than you might think. What do you need? You need $2 million of equity in real estate yielding 6% or $1 million yielding 12%, depending on how much cash flow you get, where you invest, and how good of a deal that you do. But you need somewhere between $1 to $2 million of equity. What if you're like me and you started with no money? Well, we have to figure out how to build equity based on cash flow. So we're going to buy in markets where we expect some appreciation over time, but we're not going to bank on the appreciation. We have a blend of natural appreciation, which is where the market just goes up because people are moving there and want to live there, and forced appreciation where you actually have opportunities to be a better operator than the person that you bought the property from, increase the value. And build equity. You can build that $1 to $2 million net worth in real estate and you can do this relatively quickly. Your $10,000 a month is right there. So that is the goal phase. You set that, that is, you write it down, you talk to your significant other, your business partners, your friends about this. You establish this is what I have set out to do. And I think this is really important. Cody and I called our shot on YouTube when we first set our goal and we said, we're going to buy this 38-unit building and we're going to retire Christian's wife in 2 years. We set it all online. And we knocked it out. You don't have to say it online, but talk to your friends, talk to your family, actually commit to it and call your shot. Two reasons we do this. One, it's going to hold you accountable and it's going to motivate you to hit this goal because you've committed, hey guys, I am going to do this. Second, if you happen to fail to do it, no one remembers. When you do hit your shot, everyone notices and it feels really good. To say, hey, I said this would happen, I committed to this and I made it happen. So you're going to do that with your goals. You're going to set them, you're going to calculate the time that you want it to happen in, how much money it costs on a monthly basis, how much cash flow we're going to need to build. And then you're going to tell friends, family, significant others, this is what I'm doing, why I'm doing it, and here's my goal. Now we're going to get to the how part, and this is really important. You need to buy the real estate. You need to buy enough real estate for the $10,000 a month to actually yield that. So you're really looking to buy $30,000 to $40,000 a month of total top line income, which is going to filter all the way down to bottom line. And once the properties are stabilized, which we'll talk about on next week's video, you're going to be cash flowing where you need to. This takes a few years. It's not instant, but my, is it better than working a 40-plus year career. This is something where you can do relatively quickly, but you're going to find opportunities by meeting owners in the market that you want to buy in. This is the number one way to buy real estate, period, especially if you want to go low to no money down and you're looking at creative finance or seller finance as your option. You're going to meet with these people who've already done what you want to do. You're going to learn how they did it. This is where you're going to find your lawyers, accountants, property managers, team, maintenance guys. You're going to find the buildings and opportunities. You're going to get your financing. Oftentimes, you're going to get your equity partners out of these owner meetings. Everything comes from meeting owners, doing what you want to do, where you want to do it. In addition, you're going to look on the MLS. You're going to look on Zillow. You're going to look on LoopNet, CREXi, and you're going to find the multifamily properties that have been listed on market for a while, and you're going to give them some basic phone calls. Going over the deal, try to figure out why it hasn't sold yet, and see if it's a problem that you can solve with creative finance. Hey, is the owner open to carrying a contract on this? Very simple conversations. You will find deals here. Almost 50% of the deals that I have done are from that exact same method. So that's the basis of what we're doing. Clean and simple. You're going to go out, you're going to meet the owners, and then you're going to find deals. Now, we're not at this phase worried about the money yet. We're not worried about what is the debt, who's the debt partner, uh, what about the equity, what about the earnest money, the cost to close. We're not there yet because we don't have an opportunity to line any of that stuff up for. You're going to focus on the deal, you're going to negotiate the deal, you're going to figure out the pieces, you're going to meet with the people. And when you have an opportunity, then you can ask, how do I own it, how do I never lose it? I need to have a debt product that cash flows on long-term fixed rate debt. That is the piece where we do this. This is a fun piece. This is where you start knocking out properties and every time you close on them, your income goes up a little bit. It's usually not as much as you want, but say you buy a 12-plex, the cash flow is $1,000 a month. Excellent. 1/10 of the way there on the cash flow goal. But you may not need that many units if you stabilize and optimize correctly. Again, stay tuned. We're doing this in a multi-week series for all 4 phases. But once you have built the amount of units that you believe you need stabilized, so you buy this over— you typically, it's going to be a 1 to 5 year period depending on who you are and how aggressively you're going after this. Once you own the real estate that you need to, and simultaneously you are starting the stabilized phase. Now we're going to talk about stabilize next week, but the nuts and bolts are you're going to get these properties performing as they should. Oftentimes when you do seller financing, sometimes you get a fantastic deal on a stable property, but usually you are fixing some problem that the past owner did not fix in exchange for getting excellent rate and terms on your note. So when you're putting this together, put your deal together, structure it correctly, set your goal, and then go buy the real estate. When we stabilize, we're now going to get these things performing, and that cash flow number is going to go up astronomically. Until you hit your cash flow goal. If you found this helpful, again, please like, subscribe, share this video with someone. And if you have more comment or more ideas of things that you want us to cover, put it in the comment section. I look through those all the time and that's how we do a lot of these videos. So if you want us to cover something specific, let us know and we'll see you on the next episode.
