Christian Osgood breaks down a four-phase framework for multifamily real estate: Build, Stabilize, Optimize, and Debt Hammer. Start with a passive-income goal like $10,000/month, then buy properties that get to 95% occupancy and market rent. The final phase is paying off all debt to create a cash-flow-rich, debt-free portfolio he calls invincible.
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If you want to win, you buy it and you make it invincible. This is the best way to do that. This is how all the major players do it. You may not know this, but there's actually a way to win in real estate. Yes, you can win the game. There's actual rules. We have interviewed people all over the country in every market, and there in every single market, there are a few players who have won. We're going to share with you exactly how you do that in this video. Welcome back to the channel. My name is Christian Osgood. Please, if you haven't yet, like and smash that subscribe button. We're going to share winning strategies. There are 4 phases to your business. If you complete all of these phases correctly, you win the game. We have done this all over the country. I've seen people do this in markets on the East Coast, West Coast, Central America, southern side of America, north side of America, every corner of this country. We have seen people successfully execute this, even seen it done in Canada. So we're multinationally, these strategies work and we're gonna share it all with you right here. So your 4 phases, you have build phase, stabilize, optimize, deadhammer. We've done a few videos on this. We're now doing a 5-part series. Today I'm gonna intro the concepts, then we're gonna break each of these down individually. Pay close attention to every video in this series. We have done a ton of research on these and this is extremely important for you to know. So build phase. Essentially, this is the part where you start building your portfolio. You do not add steps before this. You're not worried about optimizing. It doesn't matter who your lawyer is, your property manager is, your— where's all the money coming from? We're not there yet. We're looking at deal and then we're going to look at debt and equity. For this phase, you're going to need to have a set goal. You're going to build the right size foundation for what you're going to build. What we see a lot of people do is, one, they have a very simple to reach goal, say $10,000 a month of passive income. That does not take that long. That is fairly simple to construct. You do not need a huge foundation to build that. Some people overbuild all their teams, their systems, their legal strategy, and then they do a real simple business plan, or they build such a big foundation they never actually get around to the part where they build up and do what they set out to do. Other people have huge goals and build very little foundation and build a business that implodes. Build phase is very important to match with a goal. So you're going to set what is my goal? What do I want to do with life? What is the real estate for? And what is the monthly cost of the life that I'm trying to build through multifamily investing? Now we're going to take this piece and we're essentially going to say, okay, if— let's call that $10,000 a month. Now I'm going to buy enough property to yield more than that top line, not way more than that, but enough where we're going to on the top line, say it's $20,000, $30,000 of top line income and the bottom line income after all expenses is around the $10,000 a month that we're targeting. So the first question is, how much real estate do we need to buy? We're going to match it to that. And then we're going to focus very, very, very hard on the acquisition phase, which of all the phases is actually the easiest and least expensive phase. A lot of people don't know that, but build phase, while it seems intimidating to go buy a bunch of real estate, is actually the easiest one to execute. Then we're going to go into stabilize. So once you buy all this stuff, Not all of it is going to be perfectly operated, especially if it's seller financed. What we find is a lot of these are properties that you can manage better than the last person, and that is the reason that you got the deal. There's something that you are fixing, which is why you got the financing, and you're going to go run your projects. Now, stabilization in a nutshell: 95% occupied portfolio, no major deferred maintenance, which means your electric, roofs, plumbing, septic, all looking good. Your appliances are all nice. So we're looking at water heaters, toilets, ranges. The main set pieces in a property that you expect to be fixed up are fixed up. You have nice livable units that look a little bit nicer than the properties around it. That is interior, exterior. If everyone around you is a B, you're a B+. And your rents are comparable to everyone else. You're a little nicer place to live at the same price. If you can get there, and occupancy and rent is very close or at market rent, you are a stabilized property. That is an expensive process. Expect about 3 times the amount of time and money that you allocated to get there. Stabilization is very hard and probably the hardest of the phases. Once you get through stabilization, you probably have the cash flow that you need to retire. If your goal is that $10,000 a month, and you built the right size business and you stabilized it, you're probably cash flowing your $10,000 a month right now, but you haven't won the game. The next two phases, optimization and then the debt hammer. Optimization is where you go, okay, how can we push the value of this building and make it its highest and best use? This could be building additional units. This could be doing major exterior overhauls, say a full residing, brand new windows on the whole property, and you added dishwashers to units. If you have smaller units, this could be building new kitchens. But this is the thing where you take the building from, hey, it's performing well, to this is bringing in the maximum amount of income and is as nice as it should be for the area that it's in. Once it is fully optimized, you should have enough cash flow and enough value created to work on the debt hammer, which is our favorite phase and the phase that almost everyone skips except for the masters of the game in every market. There's usually 5 or 6 groups of people, or sometimes individuals, who own a majority of the units. They've owned them for a while, and they have little to no debt on the portfolio. Now, online, it's very popular. A lot of the online gurus pitch the lever, lever, lever, lever. We're going to scale to the moon. Always be building, always be building. That's a great way to lose real estate eventually. Something shifts, they miscalculate something, and the whole empire crumbles. You set your foundation, Let's build the business and then let's pay it off. When you owe no one any money, you pay your taxes and you get to keep the building. Cash flow is insane. Stability is insane. If you want to win, you buy it and you make it invincible. This is the best way to do that. This is how all the major players do it. Even my friends who've become developers, they paid off their multifamily first and out of that cash flow funded their projects. You can do whatever you want in life, whether that's you want to scale again and do a whole nother cycle of build, stabilize, optimize, and go to a new level. If you want to quit real estate and travel the world, if you have paid off the real estate and it's all optimized and you've put your systems in place, that's your— now your legal team, your property management, your accountants, everyone's in line and in lockstep. You now own your time. You now own your freedom. You can do what you want. You can scale. You can do another business venture, take 2 years off to travel the world. It's whatever you wanted to do, but this is where you actually own it. There's a difference between how do I own it and how do I own it, capital O-W-N. These are the strategies we're going to be talking about this week and next week and the subsequent weeks. Each individual phase we have learned a lot about. Right now, we are in the middle of optimizing and stabilizing a lot of the portfolio. Yes, we're still doing some acquisition., but it's very measured acquisition now. We are very highly focused on bringing in capital to finish all of our optimization and out of the new cash flows, paying off debt in its entirety. Now there's a strategy to why you do the debt hammer, not the debt snowball. We're going to be sharing that in the last video of this series. I hope you enjoyed this, by the way. And if you want to learn the basics, we do have a course on multifamilystrategy.com. You can check it out there if you want a free preview of that. Go to the link below. There is a free course that gives you a 10-minute overview of how we built our 200+ unit portfolio in 2 years. Until next time, we'll see you soon.
