Christian OsgoodCEO, Multifamily Strategy · CEO at Multifamily Strategy

Up to my Nose in Debt - $22,000,000 owned

17 Dec 2024 · 1 min

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1:25

In this monologue, the speaker recounts his experience after reaching 100 rental units, highlighting warnings from a seasoned investor who lost his portfolio due to simultaneous debt maturities. He then consults a veteran owner of thousands of units who predicts that aggressive leveraging will eventually bring the speaker to a critical debt point where they must either sink or swim. Faced with a $250,000 budget overrun, the speaker restructures the business by expanding property management, renegotiating debt, and adding a partner, enabling the venture to survive. He distills the experience into a core lesson: scale the business so that large financial challenges become manageable within a larger operation, turning $10k problems into $100k problems, and $100k problems into million‑dollar problems, thereby allowing growth to continue after the crisis is resolved.

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Around the time I had 100 rental units, a much more seasoned investor gave me a call and said, hey man, I'm worried about you. I think you're going to lose it all. He too had bought hundreds of units and scaled up aggressively year over year over year. The market shifted just a little bit. One debt came due. He owed $100,000, then he owed two. Everything was coming due at the same time. He couldn't cycle the money. He lost all the real estate. Then I met with a much bigger owner, someone who owned thousands of units, who had owned for a long time, 50 years. And I asked him his opinion. He said, don't stop what you're doing, but you will reach that point. You're going to hit a point We're going to lever up, you're going to lever up, you're going to lever up, you're going to build your portfolio and you're going to be up to your nose in debt. You're either going to sink or swim right there. But he hit that. Instead of giving up, he found another way around it. He earned his way through the debt. He figured out how to maneuver his pieces and he made it happen. It wasn't too long after that we actually had something come up where we went over $250,000 over budget. We had stuff come and do— we had to figure out how to cycle the money. And you know what? Instead of giving up, we structured our business in a way where we could push through. I expanded the property management company, restructured some of our debt. I brought on one more partner. We switched the pieces around and it allowed us to push through. At the end, it wasn't even all that hard. Here's the lesson: if you have a $10,000 problem, solve a $100,000 problem. You have a $100,000 problem, solve a million-dollar problem. Scale your business to a place where your big problems become small problems in the context of the business that you've built. The beautiful thing is that business will continue to grow and grow and grow after you solve the problem. You still have all the revenue. It's a good place to be.