The REAL Cody Davis Story- the TRUTH about teenagers Financing hundreds of rentals

You don't have to know how to get there, but I'd have a clear goal and don't have a BS goal of, well, I want to make $20,000 a month or $150,000 a month so I can drive Lamborghinis around and do whatever I want. That's stupid and nobody's going to buy into that.

Hello, YouTube. I'm Christian. This is Multifamily Strategy. This is going to be a super fun episode. We've never done this before. For all of you who watch our channel, this is Cody and my channel. We talk here on business, real estate, everything about how we got to where we're at today. I have never interviewed Cody Davis. So this is going to be fun. This is Christian Osgood interviewing Cody Davis. I'm going to do this like I do with everyone. I want to hear the backstory, who you are, where you're headed, where you're at today, the whole nine yards. So Cody, welcome to our channel.

I made it. I did the thing.

There we go. Good to have you here, man. I wanted to start with a question that I don't think I've asked you for 3 or 4 years. When you got started in real estate, What was your original goal? Like, you were in college, you were deciding if you wanted to finish it out or go into business. What was the thing that made you decide, hey, I'm going to go and try something different?

Well, the big thing I realized, um, for my whole adult life and before that, I'd always been wandering. I didn't know what I was good at. I was very shy.. And I always just drifted through things, whether it was in school, whether it was just getting my first job as a gymnastics coach. If something popped up, I would pursue it. And if it worked, it worked. And if it didn't, it didn't. And that was all that I ever did. And so getting out of high school, there's a million different directions I was getting pulled. Go to college, do this, do that. You can go to prestigious school, you can community, you could just get a job. But that wasn't really a big option because I was being pushed just to go to college. That was the thing that people in my family were pushed to do. And so that's all I really knew. And going through that, I didn't know of anything that I could do where I was smart enough and outgoing enough. I wasn't an extrovert at all. To where I could earn enough money to have a good life. I didn't, I didn't understand that part because I always just wandered through stuff in school. I never studied for anything, and people would spend 8 hours to get an A, and I would spend 10 minutes and get a B+. And so I would just wander my way through stuff, and, uh, I didn't see any path to make any real money doing that other than real estate. And the, the whole real estate thing The reason that popped up was a friend of a friend of my dad was a— like, he was kind of like a tradesman. He would go in and renovate homes and pressure wash stuff. So I was helping paint and pressure wash outside. And he talked about getting into real estate someday. And that's how the whole thing came about. But it was just revolving around the The idea that I can't make enough money. So my goal, being able to take care of family, which is something I wanted to start back then, is thinking to the future. The only way I could do that was real estate. And it all revolved around that mission of how do I financially set myself up coming from that background of not being willing to talk to people. I mean, I was afraid to— when I was a kid, I wouldn't ask for chicken nuggets if I was still hungry and I was at McDonald's. My, uh, my mom would be like, here's, you know, $3, go ask for more. And I said no because I was so afraid to talk to people. So that wasn't very conducive to getting real estate and, um, or to getting money, uh, to take care of family. And so the only way I could do that was being an owner. And very long-winded, uh, answer to your question, but, uh, I want to be able to take care of family. That's the only way I saw fit.

What was the difference in your life when you started moving from wandering towards having a set direction? Like, what did that transition look like? And what did that change in you as an individual?

Well, I still do a little bit of wandering, still figuring stuff out. But I always find a way to make something work. And so maybe that's just the direction of I'm going to move towards financial freedom. And there's gonna be a lot of issues, I'm gonna have to problem solve them. But that transition took a lot of practice of communicating with people. Because one thing I've found is that now when it comes down to building a relationship with someone in person, I'm quite good at it. And in order to build the portfolio and, and get some direction in my journey, it came down to effective communication. And so that's been the main focus and change from when I got started. I didn't know how to communicate. I did not know how to present myself in an in-person conversation. And there's a lot of nuance to that and being able to read the room and not just be so focused on what you're saying, but see what's going on when you engage with people. And that skill set is probably the only major thing that's really changed as I've started to grow that, as I found some more direction and purpose with what I was doing.

How does a young entrepreneur go about building those skills? If you go from, hey, I'm scared to order chicken nuggets, to, hey, I'm becoming a master at reading the room, at communication, What steps did you start taking that got you from where you were at? You started when you were 19, right?

Yeah, it was a little bit. I got my, my license at 19, but I started this at 18.

So at 18 years old, you have essentially no skills in what you do today, right? I mean, really no background in this at all. What steps would one take at 18 years old to get where you at— you're at today at 24?

The thing you need to focus on is definitely the effective communication. And in order to get that skill set, you just have to be a part of a lot of conversations. And it's really uncomfortable. I did it with Starbucks baristas. That's when I started drinking coffee, because if I messed up the conversation, which I did a lot, a lot more than I didn't, I'd never see those people again. And if I did ever see them again, I'd just find a new Starbucks. That was the mindset behind it. So you have to get good at communication. And then when you get good at communication, there are going to be people that come into your life who have similar goals to you that can get on board with what you're trying to do because you know how to get it to be received. It's one thing to say something, but to get the actual message to be received is a completely different beast. And if you can figure that piece out, You just need to find the right person that will execute your plan for you. And so while I was wandering, I didn't really understand a lot. So in the beginning, I worked with real estate agents, and then I started working with clients, and then we had our business partnership. And in the beginning, I had a lot of the ideas and you did a lot of the execution. Because we had similar goals, I was able to communicate a clear path to both of our goals. And I think it's a fair statement to say that you did percentage-wise more of the work over the life of the partnership. I don't think that is a stretch or exaggeration.

I appreciate that. And this is something that I think everyone— this is a lesson that everyone can take away. Everyone has different skills and people bring different things to the table. I want to point out Cody, and we're gonna talk about this first deal, but Cody had bought 30 multifamily units by the time I had met, or you were just about, I think you were just closing on number 30 when we really connected. I had had a significant career and all I ever learned how to do is work for money. I went through the college thing. I had the skill of I can vision and work and create, but Cody had done something that I had no idea how to do. The company is built on what Cody has done. Everything that we've done is I found a young guy who was doing something that was way cooler than I knew was possible. The workload, sure, maybe over time, enough time, your workhorse partner brings X amount to the table. Nothing that we've done in our partnership would have been possible without Cody Davis. I invested all of my, all of my money, all of my time, and at the time, a 21-year-old who hadn't proven himself in business yet. He's done a couple of cool things. The things that you brought to the table are the things that got us to where we're at today. We built this, we built everything off of who is Cody Davis. Appreciate the, the work thing, but it's an encouragement to everyone. Know your strengths and know who you are. Cody and I work together because I think we've done a very good job in partnership of identifying our strengths, our skills, our goals. And working together. And when we hit goals, we sit down and we trade pieces and we balance things out. All relationships will become imbalanced in some way. You adjust, you move forward. I, I love the business that we have today. So thank you, Cody. When you got started, on that note, how old were you when you closed the first deal, and how did that deal come about? Let's talk about deal number 1. What did it look like?

Deal number 1 was a 12-plex. It eventually became a 13-unit I had a vision of turning a 700-square-foot basement into a unit, and 4 years later I did it. But that was a deal that was on the MLS for a very long period of time, and it was in a place called Quincy. And if you're not familiar with Quincy, neither was I or anybody else that I knew. But it was just sitting there in Grant County, Washington on the MLS. It had never been pending. They hadn't gone under contract, and I ran the numbers and it made sense. But they offered it with seller financing, and I wasn't looking for any of this because at the time I didn't know anything about anything whatsoever. Just didn't get it, didn't understand the broker route, didn't understand owner conversations. I was getting better at underwriting, I'm a math guy, but I wasn't as good back then. Hadn't done enough reps. And what happened was, the reason that even popped up— seller financing, 10+ units, Grant County. There was another broker in the office who was doing exceptionally well compared to me, and he had 22 units under contract for a client, seller financed in Moses Lake, which is just down the road from Quincy. But I underwrote this Quincy 12-plex and I could borrow the money for the down payment at 12% when everyone else was borrowing 3% and 4%, and it still cash flowed. And that was mind-boggling to me because it was just sitting on the market. And turns out nobody knew what Quincy was. They didn't understand it. So I did some due diligence, looked up who the employers are. Drove the streets. And it was a great little town, growing a lot. So I ended up making the pitch to a bunch of people for the money down. Didn't have any family or friends that would do it because they were still upset with me for dropping out of college. And they didn't, frankly, have any money for that kind of stuff. So I pitched all the brokers in the office to try to pitch their clients. He and got turned down just about every time outside of one. One person lent the money, they were happy with it. I negotiated a 30-year fixed rate note, no balloon. So the thought process was if I couldn't pay back the lender, then they would, the down payment lender, they would just take the property over and they'd be content with that cash flow. But for a signature, I lined up, I didn't understand it back then, but I found a deal I lined up the debt and then I lined up the down payment, which is typically equity, but I actually borrowed that. So it was deal, debt, debt. And that's what started the whole multifamily strategy concept years later.

You said something in there I want to unpack a little bit. You had— not only did you not get money from your family to get started, you had resistance from your family on your path from wandering to purpose. You actually had pushback from family. What did that look like and how did that affect you through this journey?

Well, if we go back, I mean, that's, this started with, I got accepted to University of Puget Sound. I got track scholarships, jazz band scholarships, and they weren't insignificant. I mean, both of these were 5-figure scholarships. I got academic scholarships and that was, it was somewhat of a prestigious school. University of Puget Sound. And I turned those down to a place where I don't think I got any scholarships. I went to Tacoma Community College. And after my first quarter, I told my parents I wanted to drop out. And they're like, nope, not acceptable. And then a couple of weeks after that, I said, no, I really want to drop out. I don't think this is I want to figure something else out. And they said, well, finish the quarter and then you can think it over, make a decision. And then I think it was a week or two after that, I said, I'm done. And got my real estate license at that time. Didn't make any money after that for 6 months. But all that to be said, they were not happy with the decisions that I'd made at the time. So I didn't have a ton of support on the real estate front. Of course, they love me as a person, but they weren't very fond of the decision I made. So didn't get any support on that until I bought my first 12-plex 9 months after. And then they're like, "Oh, that's cool. But, you know, be careful. You're a million dollars in debt now." And then I did it again and then did it again. And then we met. And then they started being on board.

How many millions of debt are you in today?

I don't know, like 16, somewhere in there.

How do they feel now with the business you've built, the debt you've taken on, the decision not to go back to college? Where's it at now? Is there enough success there or is there still hesitancy?

What does it look like? They're on board. My mom doesn't get it 100% and my dad's starting to learn. My dad lent a little bit of money to my old mentor and he defaulted on that. So I actually gave up a little tiny percentage of ownership in my first deal, I think a year ago, so that he didn't lose out on that bit of money he put with my old mentor. And so now we're partnered. So now he's starting to learn, you know, how to cash flow stuff and how to— I mean, he's in business, so he understands basic numbers, but he's never been in the real estate business. So he's starting to learn how that all works. And that's pretty fun.

And I think that's really important for all those, all those haters online who are like, oh, it's all daddy's money. You dealt your family in, not the other way around.

Ultimately, after the fact.

Yeah, that's awesome. What does the portfolio look like today? What did, what did the $16 million of debt, what did that end up buying you?

As of this upcoming week, I'll have about 216 apartments we have the resort together. And we've got a couple of motel conversions. So I mean, it does pretty good if everything was all set and stabilized. I know we just had our one big building flood out, and that's doing what it's doing. But when we get everything all fixed up, we'll be cash flowing. I think my cash flow will be about $20,000 a month. Net-net, after all my obligations. And that's like, you know, that's after living. So probably like 25 all in. So that's pretty cool, but not there yet.

Building that size portfolio, every episode we talk about the stupid tax. You don't know what you don't know, and it costs money to learn, and that's fine. It's an education cost. Where you get wiped out is you don't factor for that as you learned new things. And I know you didn't have a mentor for all of it. We've had a lot of mentors come in and out throughout the process. But as you were learning how to play this game today, what is the largest stupid tax that you've been charged and what did you learn from it?

Well, the biggest mistake that I made that cost me money was straying from my core market. And I wouldn't say it's switching asset classes because The hotel we own makes a lot of money. So it's not like that's the issue. If I just kept buying apartments in my local market of Grant County, I would have done better than if I had strayed outside of that. Every— and I've made money off of the stuff that we bought outside, like we made money on King County, we made money on Mason County. But if all I did was buy up the monopolies in Grant County and stick there, I would not have been distracted and jumped on other opportunities that came up that stretched resources, that stretched cash flow. Because when everything is in one local area, you have one set of contractors, you've got your PM team, and you don't have to worry about managing a bunch of other people. You just, you get known as the person for that core market. And as soon as we ventured out, had— we had other problems come up. And every deal that's been outside of that county, it's just siphoned cash flow from Grant County. So it took all the money we made there and, and put it into these other areas. I would rather just reinvest all of my money back into one area because if you think about it like a partnership, like an example, if we owned a 12-plex together, you and me, every $1,000 I take out siphons $2,000 from the company. If we've got a third of our portfolio in Mason County and two-thirds in Grant County, every time we have to siphon $10,000 to the Mason County stuff, it pulls out the equivalent of, you know, basically $20,000 out of the Grant County stuff. So it disproportionately taxes your other stuff. So I would just buy in one local area and not venture out of that until you until you pay off all the debt and hit all your original goals.

I just recorded an episode with Michael Zuber, and we talked about the buy box. About a year and a half ago, when we spoke at his event, you and I were resistant to this idea of, hey, there's a box of things that, like, really you should specialize in and stay in your lane. I have come to the conclusion that we may have been premature in our assumptions. I think when you're getting started perhaps, uh, look at the opportunities you have and be a lot more flexible. As we've done more business, I'm starting to side with Zuber that I think there is at some point you need to put some strict guidelines on these are the things that we are best at and these are the locations you want to be in. What is your opinion of setting a buy box? How strict should this be? What does that mean to you?

Well, I would not build it around a specific asset class more so than just a specific location because I'm looking right now at stuff I'm just, I'm working on stuff right now. Like there's commercial districts in Moses Lake that I'm trying to get control over so that we can fix it up because then we can— there's a lot of business ops on that. But we over-improve, we under-rent to bring in new companies from out of area. We can raise the rent up later, but it brings new jobs, new people, new money, which directly impacts our rentals. Across the street. So if I just said I'm just going to buy apartments or I'm just going to buy hotels or just buy single family, I wouldn't do that for a buy box. I would limit it to a location and probably like a profit size because you'll never make $10 million flipping a single family house. Nobody watching this will do that. But if you want to make a million dollars, you know, what type of deal can make you a million bucks? And then I would maybe that's your buy box. Only buy deals that can make X amount of money, cash flow along the way, and that limits what you can pick up.

So in terms of buy box, the message is essentially double and triple down on one area and pick the type of projects you want to do. Like for myself, I really like renovating the older inventory and making it really nice. The whole functional flipping thing, having some amount of control over studios and one beds has been phenomenal for our business. Doesn't mean I'm only gonna buy those. So I might go outside of that box, but I'm primarily looking at things that go, how do we better control the things that we're already, we already have an advantage on? Which brings me to my next question. What is the thing that you feel that you are best in the world at and how has that affected your business? What is the one thing that makes Cody Cody?

Getting people on board with where I want to go. I think since, I've been getting started, I've been able to convince people to do things that they wouldn't do for other people in the business game. So I think if there's any one thing, it would be getting people aligned with the mission. And I do that mostly in person. But whenever we need someone to flex or to bend their rules or to just make something happen. It seems like whether I'm influencing the final decision maker or influencing the person that's going to make the final decision maker pull the trigger, I can always get someone committed to moving forward if I think that's the right thing to do.

Going back to the beginning of this, when you're starting, how does an 18 or 19-year-old who has some amount of struggles talking to Starbucks baristas, how does that become the thing that you're the best in the world at?

Being very committed. And the big thing that I've always focused on has been strengthening the weight of my signature. Whenever I say I'm going to get something done, or that this is how it's going to play out, I don't ask how it's going to play out with stuff that I know. And there's a lot of stuff that I don't know. But when it comes down to the apartments, it comes down to the numbers, or it comes down to a deal structure, on something that I've done before. Every time I said I'm going to do something, I've gotten it done. And whether it's been me doing the work or getting someone else to be committed to getting it done and then finishing it, there hasn't been a point in my adult life yet where we've called our shot and really aimed at it and haven't gotten it done, whether it was the Robinhood when we had no idea where the money was coming from. That was a 7-minute conversation. Or paying back, you know, almost half a million dollars of someone else's debt that wasn't mine. Call the shot. I shouldn't have been able to do that, but I found a way to do it at 20 years old. And 21. So strengthening the weight of your signature however you can— say you're going to do something, get it done. If it's really hard, still figure it out. And in the process, that made me a lot stronger as a business operator. But I think that is what, uh, if someone wanted to repeat this, that's what they would do, is find a task, something that should theoretically not be possible, but still the right thing to do and find the way to make it happen. And I think, I mean, we haven't shared everything with this channel, nor will we ever, but I think that I've done that a few times now in the last 5 years where it probably shouldn't have been possible. And, and you, you know, most of the stuff, but Um, still made it happen and told people I was going to make it happen and then did.

And you know what, that's, that's why I initially partnered with you, and that, that has been the defining characteristic of a lot of our companies together, is when you were 20 years old and at 24 units, that, that, that should be impossible without, without having starting money. I think a lot of what has occurred is like, hey, I have a vision for this and there is a way, and it's been simple enough where it's been something that we've been able to structure things around repeatedly, where it's like, okay, we do the deal, we find the debt, we find the equity. We talk about that all the time on this channel. It's been made simple enough. And I would argue that that plays into your ability to close everyone. And your superpower is, if anyone watches Cody on any other podcast, Cody is a master of the one-liner. And it's not that he practices these, it's you just are really good at breaking down things to where they're so simple they can't be refuted. It's very hard to argue with Cody because some of the points, there's like, there's like one, he has one sentence that you then have to argue with 15 sentences to get around. And then he has another one-liner and you're like, dang it, I have to think around this. But when you're presenting something, the ability to take the complicated and make it simple I think is what you do that makes the impossible possible. It's incredible skill that you have.

Appreciate it.

What are you up to now? So you've built the 200+ unit portfolio. You have the resort that makes a lot of money, though it may not make a lot of sense for our portfolio. It certainly does, you know, make a lot of money. You've built these things. What are you working on next?

The next goal. So I'm buying out some partners on some real estate. I'm doing some development. I think in the next year, I'll probably, like by the end of this year, I'll probably only be at like 30 rentals in my personal name without partners. And maybe the partnerships have 100 or 200 rentals at that time. I don't know what we sell or keep or whatever. But I want to have my 30 rentals and it's personal name, all new plumbing, all new electrical, get rid of every CapEx item. I've already done all the roofs on those buildings. Those will outlive me. And so I figure, you know what, do the plumbing, do the electrical, make it like new, redo the windows, insulation, or whatever it needs, make it new, and then pay it off. And I think feasibly, I can redo all the CapEx items this year on the 30 rentals. I think we have enough projects to get the income to do that. And then our portfolio, the joint stuff will keep growing. I mean, that could easily in the next 5 years get to $100,000 a month cash flow. But I want to solidify my base. I was doing the math since I'm doing my partnership buyouts, just the stuff that'll be in my personal name, I'll be able to pay myself about $10,000 a month out of. It's a little north of $300 a unit. It's going to cost about $400 grand, maybe less, maybe, maybe $300,000 to pay off the one HELOC, do the partnership buyouts, and then finish the reno. And when that's said and done, I'm basically trading $300 grand for $10 grand a month forever. Plus all the future rent bumps and the, the benefits of what happens when I get rid of my $13,000 a month in mortgages on those units. So it'll get better eventually. But I want to buy my freedom this year outside of the partnership, because I haven't had a job in a while. And then let's see how big we can scale the partnership from there.

And you did all of this in essentially 4 years from when you bought your first property. You're, you're buying out— you already have financial freedom within the partnership. You're buying your own financial freedom outside of it as well. So you have double financial freedom. You're doing that 4 years in?

Yeah, well, I'll be 5 years in 8 months. Okay. So I think it was 10/31 or 10/30, something like that, where I, in 2019 that I got started. My first deal. But yeah, so going on 5 years and it's been a lot. But I think to be able to buy financial freedom twice over— well, our partner stuff outside of the resort— the resort's stupid because that cash flow is $20,000 a month over the course of the year, like probably, probably closer to $17,000. But then we pay it down every year by a quarter million dollars. So it's like it doesn't It doesn't really pay us. But, but, you know, outside of the resort, we'll be able to pay ourselves at the end of the year, probably 10 grand a month each out of our partnership. I truly believe that. And then having the 10 grand a month out of my stuff, that, that's what I'm excited for.

Tell us about Doing Cody Things. I'm seeing a new YouTube channel come out. What is that project about? What are you going to be talking about there? Let's hear a little bit about Cody Doing Cody Things, which is also your Instagram handle. If anyone's not already following you there, get on it.

Yeah. I found that doing Cody Things is kind of becoming my brand. Because turns out I just do Cody Things. But that the actual YouTube channel, which I'm sure we'll link here, is just the adventures that I'm going on. It's been a lot more deep dive that we haven't talked about a ton in multifamily strategy. Of how I came to, to the mindset and the skill sets and the, the business knowledge that I've come into, how I really created that. Because all this came from nothing. I didn't know anything about anything in business or real estate. And while there's so much still to learn, I'm sure we'll, we'll launch some news on some of our latest business ventures in the future and But like, we've bought and sold companies at this point, which is really cool, bought and sold real estate, sold out of opportunities to recapitalize other ones. So I'll just be sharing a lot about that and what I've come to basically find my role as in Christian Osgood Partnership, as a solo adventure, and then some of the stuff I'm going to be doing in the future because I'm going to be pushing more into the development, which is the ultimate goal for me because my first really solid mentor taught me a little lesson about that, that we haven't shared multifamily strategy a bunch, but I was too broke to play that game in the beginning. So be sharing all that online.

Yeah, link will be below. Follow the adventure of Cody specifically on Doing Cody Things. Follow him on Instagram, follow him on YouTube. The journey continues. Cody, leave us with one more final piece of advice for those getting started, especially those young ones, because I think that's a lot of your story. You went from no skills and no money to having very specific skills and, you know, what I think is a very significant net worth and cash flow. If you were starting again, someone's 18, 19, same position, give us one final piece of advice.

Well, when I got, when I got started, and you know who I'm talking about, but someone basically put their thumb down on me and held me down for a while and downplayed my abilities. And I believed it because I, I feel like most people, especially when they're younger, are super impressionable. And they take other people's words for gospel. It's like whatever they say is true. So if you're told you can't sell, you're not a closer, then you create a box. And it's almost like the aquarium where if you put certain fish in an aquarium, they'll grow to the size of the tank. And I had that box put on me by someone that I viewed almost as a father. It was very tough. They weren't my dad, but it, you know, I've looked up to them like that. At the time. So I would have a mind of your own when you're getting started. You don't have to know how to get there, but I'd have a clear goal and don't have a BS goal of, well, I want to make $20 grand a month or $150,000 a month so I can drive Lamborghinis around and do whatever I want. That's stupid and nobody's going to buy into that. But if you have a clear, defined goal of I want to be able to make sure I don't have to worry about money again because my family's worried about money or whatever it is, I want to be able to build financial freedom so that I can do X. And then learn how to not only identify that, communicate it, and then communicate it with enough people that want to do the same thing. You will be able to find someone who could probably do 80% of the work to get you there. And I think that is a very fair statement for young folks. People want to help you out, but you probably don't know how to communicate what you want effectively in a way that's going to resonate with that crowd. So if you can figure that out, communicate it with enough people that could move you forward, and to have something that's actually meaningful, then you probably will have to do 20% of what everyone else on planet Earth would have to do to get the same goal. And I don't know that my, my actual number was 20%. Maybe it was 30 or 40. But, um, the way that I did it was much easier. It was still very difficult, but much easier than I think most people would— what they'd have to go through because of the way I did it.

Cody, thank you for joining us on the channel again. This has been a really fun interview. We've never got a chance to do this, so thank you for, uh, for hopping on, joining us. If you've made it all the way through this and you haven't liked and subscribed yet to the channel, please do so. We launch videos like this every single week, 2 times a week. We go live every Wednesday at 3 PM Pacific Standard Time. So if you have questions, feel free to join the chat because we go till the questions stop. Other than that, we will see you all on the next episode. This has been another broadcast of Multifamily Strategy.