What Really Happened - How our $30,000,000 Real Estate Partnership ENDED Between Cody and Christian

Hello, YouTube. It's Christian. I am sharing today a question that we've got a lot on the YouTube channel. My business partner Cody and I have split up a lot of our businesses, and I've been getting more questions than ever, even though we split up most of our businesses at the beginning of the year. I'm getting a lot of questions now on like, what happened to you guys? Are you still doing business together? Why did you split up? What does this mean for the partnership? Uh, how does this apply to me? I followed you guys for a long time. I saw one of you on Bit— whatever the, whatever the thing may be, we've had a lot of questions on why we broke up the partnership. And divided things the way we did. And to be clear, Cody and I still own over $8 million of real estate together, but why do we go from 30 to 8? Who runs the companies? How, how did it all go down? It's a question that we wanted to answer directly on this video today. Oh, by the way, if you're new to the channel, my name's Christian Osgood. I've been doing multifamily strategy, uh, this channel for the last 3 years. In that time, I went from 4 to a little over 200 rentals, actually a little bit closer to 300 rentals. And I started with literally no money. We did it with creative finance. And I did it with my business partner, Cody. I'm going to share exactly what we learned along the way, why we divided up the business. I think it's actually going to be very applicable to you, especially if you're looking at ever partnering with anyone. There's some huge takeaways. But I want to start with the actual story. If you guys don't know, Multifamily Strategy started because Cody Davis did something amazing. At the age of 19, he bought two 12-plexes for a total of 24 units. He had worked at Safeway grocery store for about 34 minutes, and that was his W-2 experience. He did a little bit of coaching gymnastics as well. He'd never really had a job. He'd never really had income. He didn't graduate from college. In fact, he only did a semester of college with very little education, only a high school diploma and no work experience and no income. He figured out how to go from a lower middle class family, go out and buy a 12-unit building, not once, but twice. By the time I partnered, he'd also bought a 6-plex. He was 20 years old with 30 rentals. We bought a 38-plex together. When I had 4 rentals at the age of 29. In our 20s, we ended up scaling over 100 units. What Cody was doing was amazing to me, but it was so simple. Instead of starting with the fact that I need to save up for money, or I need to save up money, or I need to have access to money, he started with opportunities. He stumbled upon this by working for someone who was very good at doing this, but at an unbelievably young age, he was doing something very cool. I realized, hey, there, if, if some 20-year-old can do this, of course I can do it. And it turns out that was true. I could do it. And then when we discovered, we look all over the country and people all over the place can do this too. So we started Multifamily Strategy. Over 1,000 students have gone through this. Unbelievable amounts of real estate were purchased last year. Tens of millions of dollars of real estate funded just through our tiny little Facebook page, which has been incredible. Putting together the whole thing, it started with a 19-year-old and what Cody did added tremendous value. What he didn't have was a brand. He didn't have a company, he didn't have a platform. He was just buying real estate. When I came in and we figured out we could replicate, I felt this was a story that needed to be shared. Cody was like, well, how do we, how do we, how do we put this together? I'm like, oh, let's hop on a few podcasts. Let's like maybe we even start a company, maybe make a course or something. So that's what we did. We made a little course and then around that time, BiggerPockets was like, hey, what you're doing is really cool. They picked us up. Cody immediately got a million views. So I want to point this out. When we started our company, Cody brought like all of the value. I knew how to run a business. I knew how to do multifamily. I've done renovations. I've done single-family. I was really handy. And I've had a long sales and marketing career and I've been in real estate for 8 years. I brought experience, but not in what we were doing. Cody had the experience. Cody had the story. I had the ability to help tell that story and help build Cody up. Cody's podcast launches, it gets a million views. It's the most watched interview ever on BiggerPockets Podcast, which is a very big real estate podcast. I got an episode which is not nearly as good as Cody's, and then we had a great episode together, episode, I believe it was 599, where we really got to share the journey further down the road. Then we've had a bunch of other really fun podcasts and, and adventures together. But the story started with replicating something that Cody did. And realizing that the story is just as important as the business. The, the story's worth as much as the real estate. And as you meet more people and you build your story, that, that we were able to build a whole portfolio on that. We told people what we were doing. People liked the vision. They liked that Cody's trying to retire his mom and I was trying to retire my wife. We were relatable and we learned that, hey, if you just get around owners and you meet with owners and you form real connections, you don't have to ask for a sale. You can actually just organically do deals by being around people. Who are doing the type of deals you want to do and own the real estate you want to own. It worked really well for a long period of time. We're running multifamily strategy. We started a property management company together. We bought hundreds of rentals together. We bought a resort together. What we found is Cody had the funds to retire his mom, which was his original goal. And I was able to retire my wife from teaching. She actually came and worked in the PM company that Cody and I owned 50/50. So our first imbalance was there's, there's two Osgoods working full-time, one Davis working full-time. I own half. Cody on TAF, you can kind of see where it's like, oh, the company's evolved in a way where it's not as much utility. I retired my wife from teaching. She decided, hey, I want to join the businesses. I'm like, well, now we just have more capacity because you have two people instead of one. Multifamily strategy starts taking off and Cody's having more fun doing the core thing that he's always done. He's like, I like buying and renovating real estate. And I love doing that too. But Cody wanted to do some of his own projects and have more equity in his own buildings. I was having a lot of fun on the coaching side and growing that. I really do enjoy getting out and speaking and running the YouTube channel where Cody's like, Cody enjoys it, but didn't want to put in the same hours I did where I'm like, I want to do 15, 16, 18 hours a day. I want to do every waking hour working on multifamily strategy, building the best community we can, the best, the best resources, the best course, which is like a tiny piece of what we do. But really have the best and most successful mentorship program. Cause I believe that we've stumbled upon something that works. And by believe, I mean, I know, cause we've had people replicate this everywhere at all ages from 19 years old, all the way up to 70 years old. People are buying real estate all over the country from one coast to the other using this method that is, it's buying on cash flow and how you can structure creative finance. It's just saying, hey, we're going to buy cash flow and we're going to buy and hold real estate in a sustainable way. That's all we really did is we found a model that works. And if you can't win on price, you win on interest. And interest only matters if you get great terms. It has to be long-term, otherwise there's not much value. I mean, these were basic things, but we put 'em together where you can put this in a contract and you can consistently increase your income year over year over year, buying just a few deals a year. As I'm focused on that piece, Cody's focused on owning more of his stuff. We set some rules, and I think this will save you if you're in a partnership. There's no such thing as an even partnership. In the beginning, Cody brought more value than I did. And when we got to the running a company thing, I brought more value than Cody did. And Cody will tell you the same thing. And when we go into a big renovation phase, there's many times where Cody lives closer to the property, the team brings more value. When it comes to running resort, Danny and I bring more value. There's no such thing as a balanced partnership. However, if you're both headed in the same direction, it doesn't matter. When we were both trying to retire a loved one, Cody, his mother, me and my wife, same cost, same goal. We're like, let's get to 100 units. 100 units will get us there. We hit that goal. Don't change anything until you hit the goal. It doesn't matter if it's unbalanced. It's always going to be unbalanced. Someone is always going to be pulling harder or have more skill or have whatever. It doesn't matter. You're headed towards a goal. When you hit that goal, you evaluate. So Cody and I sat and evaluated 100 units. And we said, what do we want to do? That worked really well. We love everything we're doing. Let's do it again. So we're like, okay, let's go to 200 units. Let's make the push. And on the way, we bought a resort and that caused its own problems. But we came through. And we did the thing again and we looked at it and Cody's like, I want to move to Tennessee. He had met a fantastic girl and he's like, I want to, I want to keep getting to know this, this, this lady. So he moves out to Tennessee around this time. I'm building my house in Texas, which was my dream. I want to build a house, start a family. Today I have a kid. I have built my dream house. It is absolutely massive and in my favorite place in the country. Cody moved to Moses Lake, Washington, where we started our portfolio. And is really fostering some of those original relationships. Cody wants a smaller portfolio with more equity. I want a bigger portfolio and I want to keep expanding and I want to grow multifamily strategy. So our goals don't look the same anymore. So when we went to iteration 3, so first get 200 units, loved it. We get to iteration 2, we want to build a 200-unit portfolio. We did it. We bought a resort along the way. We, we look, okay, how do we adjust the pieces? Because now there's imbalances in PM, there's imbalances in multifamily strategy. There's different goals for the portfolio. All you have to do is this, and this, this saved us. This could have been a horrible breakup where people are frustrated and we looked at it and said, okay, we did what we set out to do and we didn't just do it once. We did it twice. We love our pieces. However, if we could adjust all of them, I'm like, I would like, I spend more time and more effort in multifamily strategy than anything else we do. I would love to have more equity in the thing that I spend the most time and effort on. My biggest passion project, I would like to have more equity. Cody's like, I would like to have less partners. I would like to have a simpler existence and I would like to own my stuff sans additional people. He's like, I don't need to have hundreds of units. He's like, I really need to have 50 units, no partners. And that would be freedom for me. I'm like, okay. So Cody wanted freedom. I wanted growth. I ended up with the PM company. I ended up with Multifamily Strategy. Cody's still an employee and he's a fantastic employee and we're great friends. We still have $8 million of the $30 million of real estate together. Cody got a lot of the smaller buildings that are easier to pay off. Got a few of the larger buildings and the larger partnerships, the deals that had multiple partners. I bought Cody out of those. We adjusted our pieces in a way that was equitable and fair and realigned the goals with the objectives. Now we do a few projects together and Cody and I still make about $1 million a year together, maybe $2 million a year depending on how many projects we're doing. Right now we just did a hotel conversion we bought for $1.8 million.. We put a quarter million in, it just appraised for, well, we actually bought it for $1.6 million, put a quarter million in, so we're all in $1.8 million. It just appraised for $2.64 million. So we just had a deal where we turned about a quarter million dollars into about a million dollars. We had a 4x within the calendar year. Example of a great deal that we're doing together. We just don't do every project together anymore because he's in Washington, I'm in Texas. He wants less partners. I'm doing more partners. I'm expanding what we're doing. I loved the way that we built and I'm having a lot of fun doing it. If you just keep everything the same, you build your partnership, whatever the equities are for us, it's 50/50. I'm never gonna compete with you, Cody. You and I are on the same team. We are pulling together and we hit the goal. Then you evaluate, then you set a new set of goals, and then you hit the goal and you set a new set of goals. And as soon as we got misaligned, we didn't go at each other's throats. We didn't have a big falling out. We sat down and said, where are the pieces? Is there a better way to shuffle these now that the, now the goalposts have changed? And turns out there was. And so now Cody owns more buildings by himself. He has less partners and he's doing fantastic. He lives in Moses Lake and he has engaged the woman he moved halfway across the country to date. I moved my family to Texas. I have a 6-week-old son. It worked. But for those who've been asking, there's a long story, but I think there's some great lessons in it. That's why I wanted to share the whole thing. At the end, Cody, so Cody and I started, I had a lot of equity in my house. I had no cash, but I had a couple duplexes. I had a total net worth of about $500,000 and no liquidity. Cody had a total net worth when we started of about $450,000 and he had less cash than I did. I had like $10,000 and access to a small HELOC. He had like $5,000. We started broke, but both worth near half a million dollars. We ended between the two of us, we made over $10 million in 3 years, a little less than 3 years. We made a lot of money. That is for us. We made our partners money as well. But Cody and I each went from $500,000 to about $5 million by the time we started really dividing stuff up. The partnership freaking worked. None of us, like neither of us look back at that and say, oh, I would have done this differently. We had to do things the way we did in the order that we did them to be where we're at today. That— a great phrase that Cody says all the time, and I absolutely love this: what will get you to this level, or what got you to where you're at, is not the same thing that's going to get you to the next level. Each level has a different set of skills, a different set of objectives. Cody and I did our first 2 or 3 levels of business together perfectly. Now we're doing projects together, but we're just doing less projects together because he's headed this way. I'm headed this way. We don't want to pull like that. I'm aligning myself with people who are pulling the exact same direction on those projects. Cody's doing the same thing. If you do this in your business and you treat it like a business, Cody and I were able to maintain a fantastic friendship that we still have today. We just ran a fantastic event at the Robin Hood. We're finishing up a couple of projects right now in real estate, looking at next acquisitions. You can run partnerships even when there is friction, even when there's misalignment. If you follow those principles, you can go really far in there. I hope this story helped you. If you're trying to build a portfolio, if you're looking at using partners, here's the takeaways. Partnerships are never even, accept that. Do not fight about stupid shit. Like, just don't do it. Pardon the language. Don't fight about stuff that doesn't matter. Don't renegotiate the equities until you hit the goal. Unless you have a serious problem, just stick it out, hit benchmark that you set out to hit, and you can always shuffle the pieces after you make it. So many partnerships blow up halfway to somewhere. Both just work hard, focus up, do the best you can, build the business you're going to build, know it's going to be uneven, go for it. Don't renegotiate until you get there and be okay with realizing that not every partnership has to last forever. They're not designed to do that. Businesses don't last forever. Hit your targets, don't renegotiate. When you hit a target, be willing to shuffle the pieces. Follow those principles. I think you'll go really far. I'm glad we learned what we did. I'm glad we've made what we've made. We're going a lot farther. If you guys aren't part of Multifamily Strategy yet, there's a free Facebook page and the link is in here. You can literally join the community for free. We are growing this thing like crazy. Go ahead and click on that. That is my gift to you. If you want to learn how we actually bought the real estate, also for free. There's a link to a free course here in the description below. Give that a click. If you've already watched this whole video and you're like, wow, this is actually like a cool thing that was really helpful and really real. That's what this channel's about. We're not gurus. This is actual people doing actual real estate and buying a whole heck of a lot of it. If that's something you want to do, like, subscribe to this channel. We share everything we do. The information lives here. Appreciate you guys watching and I'll see you all in the next episode.