Christian Osgood and Cody spent $4.5 million on Robin Hood Village Resort, a hospitality asset outside their core multifamily business. They call it a strategic misstep that diverted time and resources from apartment investing, and now enforce a rule that every new venture must be profitable from day one.
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However, in 20 years we're going to look back and say, that's a fun resort. I'm glad we bought it.
Yeah, exactly.
Today we're talking about buying real estate and the reason why just because it makes money doesn't mean it makes sense.
Buying the Robin Hood was dumb. Well, kind of. We're going to go into it in this video. We're really excited to share with you. I'm Christian. This is Cody. This is Multifamily Strategy. And here we go. Robin Hood Village Resort. Cody, why did we initially buy a resort?
Well, you talked me into it.
Yes, I did it.
I wanted to buy another apartment building.
Sales.
Yeah, he's a good sales guy. He convinced me to do it. But in reality, it was a cool adventure. There's a point where the adventure is worth more than the money. And when we're going out buying real estate, we know apartments, we know how to manage apartments, we're pretty good at it, and we're getting better every day. But we went on this little segue, a different direction, because of the Robin Hood Village Resort.
Now, all the things that went right on this, and by the way, I love the Robin Hood. We were down there yesterday, it was like 80 degrees, sunny, it's fantastic. What we missed by doing this is the opportunity to continue to build what we're already good at. So what did the Robin Hood do well for us? We learned how to grow teams. I learned a heck of a lot about hiring.
We ran our first events.
Yeah, we ran our first events. It pushed our team. It really highlighted our strengths and weaknesses as a team. We will be a better org and a richer org for doing this deal. It was a fantastic deal. I don't regret doing it, but was it the right thing for us to do? I would make the argument probably not. Why would we not do that? Because it makes money, it is fun, we did grow. Why would a deal like that not make sense for us in retrospect?
Well, we only have so much time in a day, and now a lot of the time on your end is focused on that asset. Yes. As is a lot of our team members. So instead of focusing on the apartments, now we've got a lot of focus directed at the Robinhood. Cool asset, really fun story, it's fun to share it with people, and it completely differentiates us from all the other apartment people on planet Earth because they're just sticking in their lane. We're showing we can do both. So it adds a little bit of depth and credibility to who we are as business people. However, it took away from our ability to just focus on the apartments and become the best players in that space. 'Cause now we're focused on hospitality. It diverts attention. So there's just that opportunity cost. There's a price of buying it and a cost of being in that business. And the cost is our time is getting pulled off of the other assets.
So the question you really need to ask yourself as a business owner, 'cause you're gonna have a lot of opportunities. If you do creative finance where money is not the biggest obstacle, well, you're gonna have a ton of opportunities. So how do you choose which ones you do? I look at everything for vertical integration. Does this add to our existing stuff? And there's a lot of things the Robinhood does do. You mentioned the, speaking, the marketing, the uniqueness, the operations, like it does add a lot. I thought that it was gonna be the right thing. It's probably not the right thing to add. We would be at over— I'm 100% convinced we'd be over 300 units right now had we just focused only on multifamily.
But now we'll be over 300 units in December instead of right now.
Yeah, delayed gratification. We'll still continue to build that business. But when I'm looking at the things that are most valuable to us, an obvious one that was the right decision. It makes money, it makes sense. Property management— we own a whole bunch of properties, we have a vision for how they need to be run, and we're doing something in a city where there's not a ton of great managers. There's a few that are okay, but for the most part, there's a lot of issues with property management there. Having control of the rents, control of the contractors, bringing it all in-house— that directly helped us be better at what we're good at, which is buying multifamily, and expanded our ability to pick up more because the management is already spoken for. Those are the types of projects that you have to weigh. If I make this decision and I go on this adventure, does it directly plug into and complement my existing business? I see a lot of people just get a Frankenstein of a whole bunch of different businesses and it doesn't make any sense. And I've seen them, those people go out of business, uh, all the way to where one good idea sunk their entire business and they had to restart.
I know who you're talking about.
Yes, you do.
It's a rough place to be. Just master the few pieces you're working on and then you can move on to the next piece. But you need to make sure everything works together. When this one goes up, this one goes up. It's not this is up and this is still down. That's kind of how it is with the Robinhood. It's a phenomenal asset, but the Robinhood doing better doesn't make the apartments do better. Mm-hmm. Different management teams. Completely different locations. They're not correlated at all. However, we go buy in Moses Lake, we raise rent here, that helps boost market rent over here. So everything lifts with the rising tides. Mm-hmm.
So just be really cautious on it because there is a certain point of you want to have fun and you do want to have adventures that push you forward. That's really important. So there's a lot of things where, like, again, I don't regret buying it. It was just not the right decision for our business. We would in fact be farther financially and just business-wise. Like, we'd have a stronger, more cohesive— I think that's the word I'm looking for—
org. However, in 20 years, we're gonna look back and say, that's a fun resort, I'm glad we bought it.
Yeah, exactly. So choose the things, weigh out, you know, is this going to add to my business directly? Is this the right time for this? Which I think is really the thing with the Robin Hood. Had we done this a year later, something like this, we would have been in a better position to do it.
It probably would have still been on the MLS.
Yeah, because it was out there for a while. These opportunities, especially when they're really unique, do tend to sit around a little bit longer. They take the right buyer. Do we regret it? No. Was it the wrong thing for the business? Probably at this point in time. However, we made it work and it is a fantastic asset and it does make money. One more thing to add, just because they make sense doesn't mean it makes money. We haven't made that mistake yet, but Everything that makes sense, where it's like, hey, this would be awesome for my business, we should totally do this. I've seen people spin up a whole bunch of side businesses or have no idea how to run property management. It's a great example. And they lose money in property management to try to add it to their business.
The idea made sense. Yeah, logically it's like, huh, if we take over PM, our apartments will do better. But if you don't know how to run it, the apartments will actually do worse. So just because an idea fundamentally in theory will work doesn't mean that it's actually gonna make money. It can drain your time and drain your bank accounts.
Which is why we have a rule for all of our businesses: you have to start with profitability. I need to know from day one this is making money. I'm not gonna start negative and go, wow, I really hope this idea works. That's not the model that we do.
And if you don't know all of our rules or principles, you should check them out. That is before we started working with our guy Chase, and so those are not edited. Those are on the back of our flip— or not our flip phone, We don't have flip phones anymore. No, it's on the back of our iPhone, but you can check those out. We do have those on the YouTube channel.
Yes, we do. All 35 of them. That's all I have for this. Cody, anything else?
No.
Okay.
Just because it makes money doesn't mean it makes sense and vice versa. Just because it makes sense doesn't mean it makes money. Regardless, what does make sense and does make money is hitting the like button because then you can learn how to go buy your own real estate. So do that, hit the subscribe, and we'll see you next time.
