Christian OsgoodCEO, Multifamily Strategy · CEO at Multifamily Strategy

We ran out of money again?!

8 Jan 2024 · 1 min

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0:51

In this solo YouTube update, Christian Osgood explains that he and his partner Cody have temporarily run out of cash after a series of real‑estate purchases and renovations. Despite the cash crunch, they have just secured a $2 million capital raise to fund the acquisition of a 33‑unit motel conversion priced at $1.6 million. Osgood outlines their standard "deal, then debt, then equity" funding hierarchy, noting that they entered the contract with no financing lined up. Their goal was to obtain 100 % debt financing, but the lender preferred a higher loan‑to‑cost ratio (around 125 %) to ensure sufficient renovation capital. Ultimately, they will purchase the property with 100 % debt, without any outside partners, and claim the deal required $0 out‑of‑pocket cash, projecting strong cash‑flow performance.

Chapters

Cody and I are out of money again because we bought a bunch of real estate and we renovated it. However, we just funded a deal, about a $2 million capital raise on a deal that we're buying for $1.6 million. So what does this look like? Well, we always follow the rule: deal, then debt, then equity. When we went under contract, we had absolutely no idea how we were going to fund this. $1.6 million, 33 units, it's another motel conversion. It's already half converted, half leased, beautiful building, and we had absolutely no money lined up for this. Got in our first meeting. The goal was to get 100% financing to fund it. However, they wanted to fund a little bit closer to 125%. The lender actually felt more comfortable if we started with more capital for renovations. We're going to buy this with 100% debt, just Cody and I, no partners. This is going to cash flow like crazy, and we did it with exactly $0 out of pocket.