When is it time to sell a property - Creative finance Live

All right, hello, hello, hello, and welcome back to the channel. I'm Christian and I'm excited to get launched here on today's live. Grab my coffee here and we're gonna get rolling. As always, we're gonna start with a quick lesson, something we're working on in the week, something working on in real time as people start to enter the chat. Now usually I do this on both YouTube and on Instagram, however Instagram doesn't want to work today, so if you want to view this, you better get on in here. So for the 3 people who are watching at the start of this, thank you. We hope to get a, a good grouping for today. But here's the format as always. I'm going to talk a little bit about the topic of the day, which is the correct time to sell an asset. Cody and I are buy and hold guys. We always preach buy and hold. I'm going to talk about some rules around that because there is a time to scale up your property or pay off debt, and occasionally that does mean you get rid of an asset. However, You never want to be in a position where you have to. So we're going to dive into that and then we're going to open it up for questions. So if anyone has any questions, let us know in the chat below. So number 1, when is it time to sell a property? Cody and I love, love, love, love, love buy and hold. We want to hold everything. However, you get to a point where you have a bunch of triplexes and you have a 38-plex and a 33-plex and a resort. And you realize, huh, the small stuff is not making a difference. But I do want to start paying off my debt. How do you choose which properties you want to keep, which properties you end up selling? We've come up with a really simple rule that works very well for me that I think is transferable to everyone else in your portfolio. And you can do this on a quick review quarterly, even annually. Look at the amount of cash flow that you have per property. Then look at the amount of work that property actually takes for you to run it. How much time do you actually spend on that individual property? And then look at how much equity is in that property. Now, at some point, if your goal is like ours where you want to use leverage, debt to buy assets, and then use the cash flow from those assets that you bought with that to pay off the debt, if you want to do that cycle, at some point you're going to have a high equity position in a lot of properties. While you're in the build phase and you're trying to pull money out, or when you're in the debt paydown phase, you want to identify what properties take the most time Which ones yield the most cash flow per the amount of time I put in them as a proportion of the actual property? For example, we have a 6-plex that kicks out about $3,500 a month. I have a 38-plex that kicks out about $4,000 a month in cash flow. One of them I've already pulled $1 million out of. There's another million dollars of equity in that LLC. Which building would you sell? The big building that has a ton of equity and about the same cash flow, or the very easy to manage 6-plex. In this case, because unit count doesn't matter, I'm going to choose the least amount of work for the most amount of cash flow. I have a lower equity position in a fantastic cash flowing asset that's easy to pay off, that doesn't have a ton of debt. I'm going to keep that one. Our 38-plex, I am actually receptive to selling that one. And while it was our first property Cody and I bought together, and while we'd love to keep it, we pulled out enough money from it to expand our operations where it hits this rule, and this is the rule I want to share with everyone. You can start looking at offering an asset if your payout at sale is equal to or greater than 5 years. And then this is including all— after all fees and expenses. If your equity in that that you can take out of the property at sale is greater than 5 years of the cash flow on that property, you essentially can take that cash and move forward. Now, there's two ways to do this. When we skip 5 or more years into the future, You can defer taxes by doing what's called a 1031 exchange. So you can take your equity, roll it into a new bigger property, and that is the best thing to do in most cases for the build phase. This is a fantastic wealth-building tool. It's called a 1031 exchange. If you don't do that, you will— you have the option to just say, hey, after fees, after taxes, I'm going to take this cash out. And if it's still greater than 5 years, I can now flexibly use this cash to pay off debt, to do renovations of my portfolio. If you are in the stabilize or optimize phase, you're going to have to make a decision. Do you want to do a 1031, or does the capital mean more to you? When you get to the last phase of your business cycle, the debt payoff, typically what ends up happening— and this is what happened to Cody and I— we bought more real estate than we need. Are we still buying excellent deals? Absolutely. But we've slowed down the buying since we have more real estate than we need to hit our cash flow goal. We're looking at what assets can we start selling with the intent of speeding up our payoff of debt, which means we are going to cash out. We are going to go ahead and pay taxes on the sale and we're going to take the money and we're going to pay off investors. We're going to own the rest of our portfolio ourselves without partners. And then the cash flow in that portfolio will go ahead and pay off the rest of the debt. It takes a lot of discipline to do this, but depends on your phase. If you're just in build phase and you have high equity in a property and it's a smaller property, You probably 1031 it up. That's probably the best use of funds. If you're in either of the future phases— stabilize, optimize, or debt pay down— you're going to need to weigh the benefits of 1031 versus just taking cash and deploying it into your existing portfolio. Depends on how much you've built up, if you're overbuilt, underbuilt. Those are all questions for you, but that is the rule of thumb. If you can cash out 5 years of cash flow right now, you basically get to just skip into your financial future for what asset you want to buy or what project you want to do. That is when we look at, is this an asset we want to hold forever, or is this something we want to sell? Our little 6-plex in this example, I'll hold that thing forever. They're super easy to manage, they're on a great location, they have basically no problems, very high cash flow, easy to lease. There's no reason to sell something like that. It will just print money. It's not going to make anyone rich, but it's certainly a great place to store, you know, when you pay that off, it'll be worth like $1.3 million, $1.4 million. Um, you just leave the sixplex alone, just let it do its thing. It's done, project complete. That's the type of stuff that we like to do, and that is the right time to pay off property. Now we're gonna go ahead and jump into the questions on the chat. Everyone, while you're in here, if you can do us a favor, please give this a like, leave a comment, say hello, do a thumbs up, whatever. But apparently likes and an active chat get more people to join the chat. So if we want to get a good robust amount of questions, let's all do our part, hit that like button, and here we go. Um, first comment in the chat, by the way, is Happy New Year's. A super Happy New Year to everyone. I hope the goal setting is going well. If anyone is trying to get into real estate and this is your year, uh, commit to that now. Set a quantifiable goal like, hey, I'm gonna get this far in this amount of time. This this year and then go knock it out of the park. I'm really excited for people's, uh, people have a great 2024. If there's anything we can do to help you on that, let us know. Uh, we'll see here. And no competent young— ah, yes, a good strategy. Yeah, no, no, the people on the come up. Um, it's fun getting to move quickly. I think this is worth pointing out on this channel. Cody and I are allowed to move as quickly as we are move as much money as we do and build the portfolio that we did solely because we spent the time meeting the owners who've done what we want to do in our market. If you can gain knowledge from anyone— that could be on this channel, this could be on any YouTube channel, any meetup— the knowledge of the people who've already done what you want to do, you can condense time. A lot of the people I learned from built 1 to 300-unit portfolios in a 30 to 50-year real estate career. Cody and I were able to take what they built and condense that into 2 years only because they were willing to share the information and we took the time to ask. Instead of trying to buy all their stuff, we sat down and said, what do we wanna build? Who built it? And then we just learned how they built it, take their lessons and apply them as fast as humanly possible. Uh, you can condense time if you spend time, uh, learning from people who are doing what you want to do. If that happens to be us, I'm happy to share all the knowledge. That's why we do these lives. Do you guys come across properties that are owned by the city? Yes, we do. And housing authorities, another government entity that tends to own a lot of them. Is there a way to build owner relationships with the city? Absolutely. So with the city specifically, if you are involved in any of their planning departments, you start doing projects, especially when you're doing value-add like Cody and I do, the city generally likes us quite a bit because we take properties that have a lot of code enforcement violations, that have junk cars in front of them that need paint, need new siding, need a new roof. And we do all of those projects. We've also been cleaning up some of the hotels that we've been sharing here. We buy the rundown hotels. A lot of these are areas that have a lot of homeless. They just kind of hang around, and we're turning them into stable, nice, clean, secure apartments. The city appreciates that. And so now when we go to buy stuff, I can talk to the city and they go, oh, it's you guys. We know the type of projects you do. It benefits the city. Now they're more willing to work with us. That is a longer play, but that is from doing good business over some sustained period of time. And remember, Cody's been in Moses Lake for 4 years. I entered that market a little over— about a little over 2 and a half years ago. Um, Grant County knows who we are. We're very active. That's how you build a relationship with cities. On the housing authority side, um, if you are good at getting your paperwork in, you work well with them, and you help them place people, you get preferential treatment. Uh, something to note with housing authorities, they usually have an obligation to attempt to sell to nonprofits first. If you want to buy something from them, you absolutely can. Cody and I are working on 3 transactions with our local housing authority. Um, it can take a year or more depending on your housing authority to actually get through the final approvals. So we're still working on, uh, one of ours. Um, it's been in progress for months and months and months. We probably have another 6 months before we hear anything. Of substance back, but I'm highly confident that we will be the buyer for that building. All Nighters referring, uh, Emmanuel to Matt Lumberjack Landlord. Yeah, please do. He's the best. Matt is amazing at what he does. He's a fantastic landlord. Absolutely fantastic. Good YouTube channel too. Uh, underrated. Let's see here, going through the questions. Hey, question, do you go, uh, can you go a little bit more over the circle drill? Yeah, so circle drill, we covered this. This is actually how we started our whole mentorship was we built this, and this is how we built all of our relationships. Funny enough, I actually got a lot of the fundamentals along with Cody in a like old Grant Cardone video on marketing that I don't think anyone saw. It was this obscure video that happened to come up in his Cardone U course. It was just a live presentation he gave. Um, he didn't have it in a circle, but these are the fundamentals that I got from his branding thing that actually led to our ability to build relationships. So, um, I don't think I've ever shared that origin story. So that's where the circle drill came from, was, um, our experience, um, a simple diagram, and some obscure Grant Cardone video. Funny how those things come together. So circle drill, you have 3— I always call them quadrants, but that would be 4, wouldn't it? So we got a circle and you got 3, uh, sections. You divide into thirds. Your first one is relatability. So when you meet with anyone, you need to map this out. What are the relatable points about me? And that is just knowing yourself and taking time just to journal. And this could be things as simple as, I dropped out of college. I, in my case, I graduated college, I got a business degree. I worked in sales. I did a certain sport. This injury took me out of my sports career. Take the highlight reel of your life and basically go, what are the things that make me me? You'll find out a lot of people relate to these. Sports people get the sports analogies. People will align with, hey, I went to college, I didn't go to college. I had this struggle. A lot of the things that I think people should highlight on are how they overcame struggles, but relatable points, things that you can talk about that make you who you are. That someone else is gonna connect with. Those come up in the first few seconds of a conversation, but you wanna have them mapped out so you're not sitting in a meeting just struggling to find something to talk about. Understand your own story well. That's why relatability is so important. Then we're gonna move into the real important pieces. Goal is the next thing. People will only invest in you, help you move forward, send you deals, refer their friends to you if they're bought into your overall goal. What is it that you're trying to accomplish? There's a dollar figure to this, so, uh, but, but it's not the main goal. You need to be able to lead this into significance. For example, when I got started, rent in school districts got super weird. Well, they always were, but they got really weird during 2020. My wife was teaching kindergarten, uh, from home during the shutdown. Politics got in every single inch of school. And she made the decision, I don't want to teach anymore. After 5 years of teaching, we had this 10-year goal of retiring her. It became a 1-year goal. We went, at the end of this year— she also got injured— uh, at the end of this year, she's not coming back to teaching. I now need to figure out, like, right now, because I had just left my job to pursue entrepreneurism and start a company. I'm like, hmm, we have no income after she leaves her job. I need to build a business my 10-year plan in a 1-year plan. And that's what accelerated me forward. That's the goal. Retire the wife. It's going to cost me about $25,000 a month because I have to sustain my business and grow my business. I need to get her out of her job, and I've already left my job. I have to support 2 people, 3 pets, a home mortgage, and a growing business. $25K a month. We have 1 year to build it. Let's go. I can communicate that goal. The significance is what happens when you get there. It's really easy in mine to communicate that significance because it's in the goal, right? My wife just got injured. She's struggling. The politics are going crazy. I'm trying to get her out of this situation. And when she's out of the situation, now our family can start investing heavier in Moses Lake. We can fix up these projects. Um, just on a personal level, we can look at, you know, what do we want to do? We want to start a family. What do you want to do with stability, um, but it opens that up. The goal is relatable. People understand wanting to provide for your family. The target is reasonable. People want to help you get there. And what happens when you reach it actually makes a difference for the city, for my wife. That is the way that you map a circle drill. The last piece of circle drill, which I think is really important, is your mission in every meeting is to know your circle drill well enough where you can go through it in 30 seconds and and spend the rest of the conversation— 30 seconds to a minute— and spend the rest of the conversation mapping out the other person's circle drill. And when there's alignment of the two circles, when your relatabilities are lining up, when both of you have goals that make sense or complement each other, you understand what's significant when the person reaches their goals, that is where suddenly, hey, this person I aligned with, our circles lined up on this deal, and they're going to fund this deal because this deal moves them forward on the goal they communicated. I can communicate this— get— so, so say someone else had the same goal and I found this deal is going to cash flow $5,000 a month. I now communicate, I remember when we met and we talked about whatever their relatable point was, like, remember when we got together and we were talking about this? You communicated a goal to me then that you wanted to retire your wife and it cost $25,000. I have a deal that gets us 1/5 of the way here. I love the project. I want to share it with you. Can we meet for coffee? If we find out that my deal and my targets align with their circle drill and I answer— we had the relatability, we like each other, this deal solves their goal, and this gets them closer to the significance— you get your deal done, you get your deal funded. That's what the circle drill is. You got to be able to map it for yourself and others. I know that was a long answer to a question. Uh, but I think it's one of the most important things that Cody and I have ever come up with. It's super simple, it's very easy. Know your circle drill so you can talk less about yourself, communicate easily, and spend your whole time mapping out everyone else's. That will find you your deals, your relationships, your capital. It's all based on that circle. That's the strategy. Oh, let's see here from Harry. I mean, owners, but I believe the meetings are not effective. We're not connecting on the level that they might remember me. Wow, that, uh, That just ties right into the circle drill thing. So I'm glad that, that makes sense that that was part of the same question there. Yeah, that is how the circle drill works. If you're not getting the connection, one thing that helps me every time, you need to go into every meeting with a goal and you go out of every meeting with a takeaway. The takeaway doesn't always have to be what you wanted to go into the meeting with, but you need to take the time going in saying, okay, I'm meeting with them. Why am I meeting with them? If it's to find a deal, you're probably going to be very transactional. If it's, hey, I want to learn something that's going to help advance my goals, or I'm going to learn something about real estate, or I just want to hear their story and see how it applies to me, now your questions will automatically start becoming things like, okay, how did you get started? When— here's where I'm stuck right now in my portfolio. Did you ever run up against X or Y. We've done that with vacancy, we've done that with renovations. It's like, hey, renovations cost more than I thought, we have a ton of upside on this deal, and I'm out of capital right now. Have you ever run into it where you have high equity, excellent projects, and no money? And how did you overcome it? And those are things that I sit down with owners and I learn. And then my takeaway is, oh my gosh, they had a great idea on how I can move capital around or recollateralize so that I can move forward, push through this project, cash out, and move forward. Lots of different ways to do that, but if you are going in with the goal of, hey, I am going here to learn something I don't know from someone who's done something I haven't done yet, your questions will automatically start matching that, and the circle drill should help. Um, let's see here. You're a college senior looking to join commercial real estate space. Um, Hiring is minimal these days. Any advice? Goal is to be entrepreneurial like you too. I have some advice. Yes, yes, yes, yes, yes, yes, yes, I do. I took too long going through college and trying to find a job to get another job to get another job. I was looking for— like, for me, join the commercial real estate space looked like joining the CoStar Group, Apartments.com, LoopNet. I had a high salary career for a while, and it was good. And by high salary, I mean it was, you know, this is back in 2016. I was starting to get close to about a quarter million, and I passed that in income on an average year. So I was doing well in sales in a stable job in commercial real estate. What happened in 2020 is I left that security. I committed to, I'm going to build my business, and building my business and buying real estate moved me forward. So we're starting 2024. My advice to you would be if you want to be a real estate investor, focus as little as possible on how do I earn income right now in commercial real estate space and focus on how do I buy my first 1 to 4 properties in this calendar year. If you can answer that question, you skip the 8 years that I took from wanting to be a real estate investor to just being a real estate investor. You can skip all that time and say, hey, I want to be a real estate investor. Let's start by buying real estate and we'll engineer everything else to that. So don't put the cart in front of the horse. Don't add steps. Keep it really simple. I think what a lot of people do is they go, hey, I want to be in real estate. I'm going to get my real estate agent license. I'm going to start selling or I'm going to start my own wholesaling business and I'll find deals and I'll sell the deals to other people. And there's all these different ways to make money.. But if you just focus on what are the skills that I need to buy properties that pay me every month, you can build a multi-hundred unit portfolio like we did in a couple of years. And Cody and I combined, without having optimized our portfolio yet, there's like $50,000 a month of cash flow in the portfolio. We each cash flow our $25,000 and we're finishing multiple projects right now, including a hotel conversion that's adding 20 more leases to the portfolio at $1,000 a month. So end of summer this year, we'll add another $30,000 of passive income between the two of us. You can absolutely do that too if you're focused on the acquisition and build phase as early as humanly possible. Have I ever inherited a tenant? Boy, have we. And when they moved out, tried to lie and say damages were prior to them moving in. Yes, we have this happen all the time. People lie. Uh, your lenders will lie to you, your partners will lie to you, your broker will lie to you, um, your tenants will lie to you. Unfortunately, honesty is not something that we run into a ton of. So, um, yes, if it depends on where you're at, but in Washington state in particular, if you did not have a move-in form that checks off the condition of the unit and that was not transferred to you at sale, um, don't tell your tenants this, but if you can't prove it wasn't damaged before they moved in, there's actually nothing you can do. You have to return their security deposit. You need to have a, a walkthrough when you go through the unit, and you need to have a walkthrough when they leave the unit. You need to be able to compare notes, have pictures. If anything was billed to them, show invoices. Washington State, it's very arduous. I'm not actually against that. I think that is a good practice. You should protect tenants. And just like tenants lie, landlords lie too. I think it's actually a good protection for tenants that we make the landlord prove that the damages were actually caused by the tenant. There's too many slumlords. It's a good thing overall. We've had it happen. There's not too much you can do, um, other than get the best documentation you can. And whenever you place a tenant, make sure you do that, uh, move-in checklist, that everything that you are going to be checking for damages has been checked. We just had one, uh, great example. The unit's ruined from smoking inside, absolutely ruined. And on their original lease says no smoking. Now we put them in a new lease that says no smoking, uh, but they're sorry, their first lease says, uh, doesn't say anything about smoking. So what they claimed, which is not true because I saw the unit before this, they claimed, oh no, this was, uh, uh, all this smoking was done inside before we signed the lease. It wasn't. But there's no way to prove it. And in this case, tie goes to the tenant. Nothing you can do. I know that's not true in every state, but in Washington and most states, burden's on the landlord to prove the, uh, the fees that you charge. And I think it should be. Uh, let's see here. I was just thinking about if I should sell some of my properties. Fabian. Yeah, for those who missed the intro to this call, by the way, um, the time to sell properties for us— and again, the goal is buy and hold, but there's a time where you have enough equity in a property. And if you are in any of your phases— build, stabilize, optimize, or, uh, pay down— anything prior to I've won, I have a debt-free portfolio, there may be a time to off an asset to further your goal. So number one, look at, okay, what is the actual property and how much time do I have to spend on this property? How passive is it? If you're spending a ton of time on this one building and it cash flows as much as another building that you spend half the time on, keep the one that's less work for the same income, off the other one and buy another one exactly like that. I use the example of our 38 because we pulled $1 million out of it to build. It cash flows about as much as our best cash flowing 6-plex, which does phenomenally. I'll keep a 6-plex with the same cash flow as a 38-plex. Take the million dollars left in equity in the, uh, 38-plex and I'll buy 4 more 6-plexes that do the exact same thing. I'll just do that more passive deal again. Unit count doesn't matter. Cash flow matters. Ease matters. The amount of time that you have to spend on your portfolio matters. So when we're putting together things like this, super simple, go after cash flow and always be optimizing. When you can look at selling is when you have enough equity, at least in my book. And this isn't saying sell when you hit this. This is you can consider selling when you have 5 years or more of your total cash flow. If I saved all my cash flow for 5 years, if I net more than that at sale, I get to skip forward 5 years of my investing career. I can touch that cash today and I can either build which is probably going to be 1031. If I want to expand my portfolio, I'll buy more assets. Or if I'm doing the stabilize and optimize, I could be improving some of my other units, taking money and making my other top performers even better. Or if I'm in debt pay down, if I've built more cash flow than I need to hit my goal, I can now sell down some properties to expedite the debt pay down and have a debt-free passive portfolio. So no matter what phase you're in, unless you're in the I've already won fifth phase, there's reasons that you would sell and those are the rules around it. So for anyone thinking about that, it's— that is the rule that we use. By the way, thank you to the 5 of you that gave me a like. Last request, we have 15 people in and 6 likes. This is appreciated. Toss some thumbs up in there because, yeah, We want the algorithm to say that this is a good live that provides some value. So thank you all for your support. All right, we got a good blast of questions here, so excellent. If an owner doesn't pick up the phone after a couple calls, do you guys ever resort to texting, emailing, reaching out? Yes, I have this in the course now, but we have— there's a couple of fantastic emails and texts. That Cody and I have sent that work extremely well. And you can literally— you read them and you're like, oh my gosh, this makes sense with the circle drill and everything they say to do with relationship. There are relational messages that you can send that are not spammy, they're not annoying, and they are not something that you can just auto-program into a mass text dialer. They're lightly personalized texts that are super easy to do. We include that in our course, we talk about it in our mentorship. There is a point where some people don't pick up the phone and they respond in 2 seconds on a text. You should absolutely have those tools in your arsenal. That is definitely in the war chest of information on multifamilystrategy.com. I can share those at another time. I don't have the text like right in front of me here for screen share on YouTube Live, but the gist of it, I'll tell you the basic framework, is you can reach out, hey, I just passed your property on whatever street. Don't put the specific address because because that looks spammy immediately. It looks like an autofill thing. Just, hey, I drove past your property, as long as you really did, drove past property on the street, um, been trying to buy in this market and have not found any opportunities. Curious if you have any advice on where someone like me would look. And then they're probably gonna respond like, so you're asking to buy it? It's like, well, no, I'm just— what I want to know is, do you know, like, You bought in this market, I haven't. Where would you start? And from that text, I've actually had people just say like, oh, well, I would start by buying this one because I don't want this building anymore. And it's like, oh, okay, cool, free deal. I've also had people just refer me to other people. Cody unlocked one of the largest opportunities that we've ever done by doing an email that was basically the same thread. Hey, I'm Cody. This is what I've accomplished. You've done something I haven't done yet. I would love to get coffee with you. And basically just had the conversation on an email. They responded almost immediately. He drove down to Oregon, met with the owners, and turns out their building that's bigger than anything we've ever bought is the smallest building that they currently own. They're miles ahead of us. They asked, hey, not right now, but in the next couple of years, would you guys be interested in buying this building? And we probably will. So yeah, short answer, text, email, all great. We have templates for that that work very, very, very well, um, that I'm actually very, very proud of. I think we've done a good job and we get great responses on those. One of my markets is kind of dumpy, but now I live in New Hampshire with an hour of Axel. That's awesome. Axel does some interesting deals, um, and he funds things a little different, but he does a lot of creative finance. He's good at using seller finance and other fundraising methods. He buys some bigger, large projects Uh, Axel's a Wall Street guy. For those guys, so for those who don't know Axel Ragnarsson, um, he's interesting. He has a higher risk tolerance than me. That does not mean he's wrong. It means, uh, he's willing to take on riskier projects than I want to take on. Uh, but he's interesting, and he's a perfect example of you can seller finance everywhere. New Hampshire, New Jersey, New York are somewhere where people have a tendency to tell us they have a harder time finding seller finance deals. That being said, we have multiple mentees who have done it over there. Uh, Matt Hawkins, Lumberjack Landlord, also New Hampshire. Um, Axel Ragnarsson does big deals creatively financed. It works everywhere. Um, so yeah, uh, good luck. And New Hampshire, by the way, has some very nice markets in it. Um, Cody and I love dumpy markets as long as there's population growth. We love fixing them up. It's a project that I have fun with. It also feels very good to invest in low-income housing in areas that truly need it. Uh, so for me, this is a like life goal. It, it's very rewarding to go, hey, we're actually providing excellent services, excellent property management, and a very nice place to live for people who otherwise would have a lot of difficulty affording the cities that they want to live in. So means a lot to me. If you have a dumpy area but it has good growth, could you— could be the type of landlord I am where value-add projects and good management on low-income properties is the most, I think, altruistically rewarding for me of all the real estate projects that you could do. Julian asked, hey Christian, was wondering if your thoughts on buying properties remotely as opposed to locally. I'm in Massachusetts, cost of real estate here sky high, so are the rents worth it? Short answer, yes. I'm in Washington State, rents here are sky high, prices are sky high. Every deal is unique. So just because the pricing is high does not mean that the price of your deal that you find is going to be overpriced, or that your interest rate or whatever you put together— every deal is based on its own merits. Cody and I, one of our, uh, honestly one of our higher performing properties is our property that we're selling in Tukwila, just outside of Seattle. Seattle's ludicrously expensive. But the deal we did has 3% interest. So we got super low interest. We came in at around market price and we got a 5-year note. We fixed up the property, we increased the income. It had a lot of work to do. We got the work done and we're looking at— because we don't own other things in Seattle, we're looking at selling it and rolling the money back into Grant County, which is where we do most of our projects. So you can do this anywhere. Regardless of expense. But I, um, it really just depends on where you want to invest. It works out of state, it works in-state. We've had so many friends have success on both sides of that. Cody also owns in Indiana. I own in Texas. My Texas stuff does just as well as my stuff in Washington State where I'm local. So it all just depends on how well you can manage the asset or hire out the management. Uh, Fabian looking for a sell from there and, uh, into a market near me. Investing in your backyard has some efficiencies. Uh, just make sure wherever you want to invest is where you're investing. I've had a bunch of people who are like, well, I'm investing over here because it's inexpensive, and it's like, cool, you have great cash flow, no appreciation. I've seen people do, uh, deals that have super high appreciation but they don't cash flow and they lose their portfolio. That's not good either. Um, at the end of the day, build— you need to look back at your portfolio. You need to say, did I build the business that I wanted to build when I got into this? And the answer is yes, you did it right. If you have a portfolio in a city you don't care about, or you just bought because it cash flows, you have no love for the properties, um, odds are you're not going to be passionate about your business. You're never going to get to the optimize phase, and it'll just make you some money and it's just not as fun of a project. Invest where you want to invest. If that happens to be your backyard and you get to contribute to your community, go for it. If you find a small town that you love being in, like we did with Moses Lake, or Caleb— Caleb Hommel did in Stephenville, Texas— you find somewhere that you like being, where you love the town, and you invest heavily in it, I find that's a lot more rewarding. And people tend to do a lot better and make it all the way through their 4 phases because just out of you retain interest in your business. Boy, I have some catching up to do. Thank you everyone for keeping the questions rolling. This is, this is what I like to see. You got the talkative guy in the run in this. You guys are asking questions faster than I'm answering. Have we ever done a mass release? No, we've proposed one though. Mass releases are interesting. In Washington, you actually can't sublease commercial multifamily. So I can't do a master lease. I can do what's called a, uh, so it's like your standard lease option where you put a lease on the whole building, you sublet it, and you have an option to purchase. You can do what's called a management option, which is effectively the same thing except you're the property manager with an option to purchase, and you're paying a fee for your purchase option. You manage but you don't sublet. Um, so there, there's ways around everything. You can technically— it's effectively a lease option, just has a different name and is structured very slightly different on the paperwork. Um, but if you— if anyone here is like, uh, what's a management option? It's a lease option without having a lease in place. You have a management agreement instead of a lease. That's the difference. Um, we've looked at doing that to pick up a couple properties. We've never executed it because we found another way to do them seller financed and actually just own them on the front The reason that you would use them— there's, there's only two reasons. One, there is no way you can figure out the creative finance. There is no way to make it work, but you have a clear path to make it work if you get more time on the asset. So you take over management, you get the option, you now have control of the asset. You're going to put basically a little pin in your timeline for, hey, we're not buying this now, but we have a path to buy it in the future. And so you can execute that path. The other reason you would do this is because it's not seller financeable. And it's not bankable, the sellers cannot operate it as well as you can, if you can come in and fix the operations to get the property bankable and buy it conventionally, that is a great use of the lease option or management option depending on where you're at. Um, but putting that option in place basically says I have control of the asset so I can get it where it needs to be to be financed. I don't take on as much risk or put in as much down payment and this will give me a clear path to owning the property. That is the correct use for them. Again, Cody and I haven't had to execute on this because we found other ways to own them, but that is theoretically— we are open to using them for those two purposes, and that is the correct use of those. Um, sounds like Fabian and Luke need to connect over IG, which you guys should definitely do. Uh, do you guys have some sort of video call interview as part of your screening process for tenants? No, we don't do a video call or interview. In fact, almost anything that they can say there in Washington State is going to be illegal to make a decision on. In Washington State, in most areas, you can't even discriminate based on criminal background They can have, you know, realistically, if they've killed someone, there's not that much you can do to turn them down if they otherwise qualify. So you do a basic screening, you can check their credit. And so, and that's the big one, because you want to make sure they have no evictions on there. You want to make sure that they, they don't have any huge delinquencies. We want to make sure their credit score is in line. We can check their income so we can make sure that they are employed and make our minimum income requirements for the property. Um, but at the end of the day, that's about it. They do a basic background check. We can still screen for stuff like the sex offenders list, which is good. But outside of that, most of the stuff that they could say in an interview— if we did an interview with the tenants and they said something and we didn't lease to them for any reason, they could basically say, hey, it's because of my race, religion, orientation, the way I looked, my familial status. It could be a million things. You don't want to give them room to accuse you of discriminating for any reason. So, um, super long answer to a short question. No, we don't do a video call or interview. We have them fill out the application and we do our basic screenings for credit and criminal background. All-nighter. Part of my business is to call foreclosed homeowners. They don't answer very often. I can imagine they get a lot of calls. Um, I need to start calling responsible owners. You can create those relationships. That's been our strategy. You can make a boatload of money calling on foreclosed and pre-foreclosure properties. If anyone's followed the creative finance space, there's a guy that we occasionally bring up named Pace Morby who he loves distressed sellers and he buys these houses from people who are losing their houses. I found that I've never learned anything of significant value from someone who is losing their business as opposed to people who've mastered the game. So we spend all of our time networking with people who are winning because I like to be around those people, I like to learn from those people, and I like to buy from those people. Uh, they tend to be more honest with you, they tend to have more advice that will move you forward. Conveniently, the people who aren't losing their properties also have money, which is really nice if you're getting into the fundraising or figuring out where capital is coming from for your deals. It's often from the same people who are already winning in your market and have capital. Um, so All Nighter, you're doing a business strategy that works. We know it works. We've seen it work. That's why it's so popular. Uh, you're absolutely right. If you work with more people who are winning the game and start doing transactions with them, you're going to find you close easier, you have less problems, you have more advice, you have more resources. What are you predicting for the housing market in 2024? I love this question, by the way. Around $100K in cash saved up waiting for the right opportunity. Johnny, here's what I would do. All in addition, he's in Reno, Nevada. Current rents around $2,400 a month. Okay. Love this. Love this. Love this. Okay. Good news. You have more cash than I did when I got started. And you have about $100,000 more than Cody did when he got started. So you are in a good financial place. Housing market in 2024, we're probably going to be pretty flat on prices because we have counteracting pressures here. Rents are not expected to increase this year, but over the next decades, they're expected to skyrocket. I don't know when that is going to start specifically, but rents will go off based on how much we are scheduled to print and pretty much every other fundamental right now. Interest rates are going down, which puts upwards pressure on price. However, inventory has stayed really low, which is why prices have stayed high. We're going to hit this point where interest rates are low enough where people who want to move are willing to accept— say they currently have a 3% interest. They're willing to stomach the 5.5% interest to move somewhere else. And so I think we'll see more inventory come up and lower rates, which means a pretty flat pricing market. Those should more or less counterbalance. That's what I'm expecting. It's hard to say exactly where, but no dramatic shift in pricing is what I'm expecting. We'll see interest rates go consistently and very, very, very slowly down. Through 2024. The Fed's pretty much choreographed what they're going to do. I doubt they're going to change that, although we apparently just approved a massive round of printing, which means we could hit inflation. My instinct, just being the political, uh, skeptic that I am, I have a feeling that they're not going to announce true inflation numbers till after the election. So I don't think we're actually going to feel the effects of high inflation and high printing until 2025. Um, and in that, in that case, I know we're pretty much looking at, uh, what type of president do we have in office, because they have massively different views on interest rates and the economy. So depending on who's president, that will tell us a lot about 2025. But 2024, expect flat pricing and decreasing rates. If you have $100K, um, find a seller finance deal, 10% down. Buy a million-dollar property with $100K, no partners. That's what I would do. Um, want to learn how to play the game? Uh, you are invited but not obligated to join multifamilystrategy.com. Uh, check it out. This is— 2024 is going to be a big year, uh, for our group, and we have a lot of big deals coming up, uh, through multiple mentees that people can participate in. Something I've seen people with six figures do is they've partnered with people within that group, and people have closed on deals. Different partners have either scaled their portfolios, bought other partners out, but deals get found, funded, uh, every Tuesday on our mentorship calls going through the deal deep dives. So I would love to see you there. That goes for everyone. Johnny, uh, rundown single wide trailers for around $350,000. Super bad here. Yeah, Reno's hard. So Caleb Hommel, who's been on this channel multiple times, one of our first mentees, he started looking in Nevada and he did not get a lot of luck. And so he did— he prospected both Nevada and Texas at the same time, found 2 deals in Texas, closed on both of them, and ended up finding Texas as a market. Texas, by the way, is not a market. It's way too big. There's a lot of submarkets there. Caleb learned that the hard way. He spread out all over Texas. He found his favorite area. And I will bet you, I don't know this for a fact, but I'm going to bet over the next 3 years Caleb sells out of his other deals as interest rates come down and will roll that money into his chosen market a little bit outside of Dallas-Fort Worth. That is my, that is my prediction for him. Um, but yeah, Nevada can be difficult. I have friends who've seller financed there. It takes a little bit more time to find a deal. If you look at Las Vegas area, just like the whole greater area, um, almost every multifamily property is traded in the last 5 years. There's almost no property owned free and clear in that market. People came in and just bought it up. Uh, can you still do deals though? Yes, it's just, it's, it, all of Nevada right now is unusually competitive. Something to keep them, keep your eye on. If you get a deal there though rents are still going up and up and up and up. Um, let's see here. A little more about bookkeeping accounting practices in your PM company. Bookkeeping and accounting in a PM is so hard, and you have to be amazing at it. PM has a huge personality problem. Um, you have to be really good at the relationship side, really good handling tenants, really good talking to owners, and you have to have a really good math mind to be really good with accounting. That's why PM companies usually have multiple people with multiple personalities. Uh, one person usually is not good at heading that company. Um, Hannah Caldwell is another owner in that company with me. She owns 10% of the company, and she is the administratively minded person. I am the one who goes out, gets the business, and then I oversee the bookkeepers. So our systems, we use AppFolio property management. You can do that if you have 50 or more units. Um, for friends who have less than 50, I've helped them get set up on Buildium, which is excellent software. Both of those are the only two softwares that I personally will back and recommend. They are fantastic. They're both— AppFolio is hard to use and very robust. Buildium is very easy to use and not as robust as AppFolio, but you can track everything to the dollar very, very well. Um, I use a company called APM Help. Which is a third party that audits every account every single day to make sure that our trust account matches the balances in that folio, that our rent collection matches the balances in that folio, and that any transaction that comes in or out of those accounts at any point is logged in our software. Bookkeeping is extreme in property management. There is nothing more important than making sure that the money that you owe other people is going to the right place. If someone else's rent ends up in another owner's pocket, uh, that's horrible. If you lose trust account funds or you misaccount for them, uh, that's federally— that's illegal on a federal level. You have to be good at it. So the bookkeeping, the accounting, that's the first thing you set up, is you set up your bank accounts correctly and you make sure that you have an understanding of how money moves through those accounts. That is the most important thing. And I do that with Appfolio software, APM Help, a great banker, and I personally audit all the time. Another reason I tell people not to get into property management: put the liability on someone else. In Moses Lake, there is no property manager who's even close to as good as I am at playing this game. We have the best contractors, we have the best bookkeeping, and I own a huge portion of the inventory for, for one-bed studios. And we're branching out to a bunch of the two-beds now. Um, when you control the inventory and you're in our position, it's a role that I am obligated to play. PM is low margin though, and your best bet is put the liability and the job onto another property manager and vet them like crazy. Uh, probably too early to ask, but do you guys have an estimate on when your next event will be after the January one? Hate that I can't go to the January one. Emmanuel, we'd love to see you there. I'm, I'm sorry you can't make it. It will be in March. I usually do them about 6 to 7 weeks apart. I have not nailed down the exact date, but there will be a date in March that will be our last event of the year. I was gonna run 4 and I decided that 3 is the correct amount for the Robin Hood. We got too many bookings, which is nice, but we got too many event bookings where I couldn't find the next weekend to do it. Um, so we're going to be running in, uh, we did our November one, we're running our January meeting, and then we're going to run a, uh, March one as our final event of this season. Um, if anyone wants to attend, by the way, I have 8 cabins left, possibly 7. I think one might have booked today. Um, but there are 7 or 8 cabins left. It's the 19th, 20th, and 21st of this month, so we're about 2 weeks out.. If anyone can make that, I love to see people from the YouTube channel there. So by all means, go to robinhoodvillageresort.com, uh, check out the events page, not the booking one, but the like current events page, and it'll bring you right to the event. It's probably going to sell out next week. There's a group that wants to take every available ticket. I'm holding it open. So if you want to go, this is the live to hop on and, uh, go straight to that website, book a cabin. We'd love to see you there. Talking about asset management, we always talk about creative finance, but this is the one where we actually talk about, okay, uh, here's how you buy it. More importantly, how do you make millions of dollars as soon as you own it? And so we're going to talk about all the tips and tricks that make— they literally just have made us millions of dollars a year doing exactly what we do. Um, I'm from Indiana. What town does Cody own units in? I believe it's called Evansville. I have not been there. It has the word Evan in it. I think it's Evansville. But it's somewhere in Indiana. Never been. One of the only states I've never entered. Would you buy in a flood zone if numbers still look good? Yeah, I own stuff in flood zones. That's just— it's part of your insurance and that's part of your numbers. So you get your insurance quote and your insurance goes into your numbers and you're good to go. Flood zone, absolutely not a, not a problem. It gets factored in as a line item in your projections. Let's see, Johnny remembers in '09 when everything came crashing down. The '08-'09 crash is a large part of the reason I'm in real estate, because I remember being just too young, just too young to invest, barely. Um, but I was ending high school going like, man, I wish— granted, high schoolers could buy real estate, but it's not common. I didn't know that then. I remember looking at it going, oh my goodness, if I had money right now, I could take over everything and make a bunch. I want to invest in a down market. And, um, yeah, it wasn't until about a decade later I learned that I didn't need money to buy real estate. So that, uh, yeah, wish I saw this video earlier. But as you're learning, yeah, um, when there's a market pullback or market instability is our favorite time to play. Cody and I went hard, hard, hard, hard, hard, hard, hard at acquisitions in 2020, uh, specifically because we were sitting in the office and I'm like, hmm, COVID shut down the planet, people are uncertain, so money's not moving. When everyone stops playing, that is my absolute favorite time to go ahead and take the field because we get to do our own game, buy everything, and take market share. I love it when the other players stop playing. I hope that that happens again this year as interest rates change and as we get new markets. We've still seen a lot of money sidelined. I, I want it to stay sidelined as long as possible. Like, seriously, in an easy market, it's so much harder to find a good deal. When there are some challenges, your opportunities go up 10x. Right now is just factually a fantastic time to be buying real estate. A question from All Nighter: Zuber's reached out and invited you guys. Uh, yes, yes he did. Uh, Zuber reached out and invited us to his event. I think it is while I am still in— I believe I am actually in Mexico, funny enough, speaking in Mexico. I'm doing a family vacation. I'm popping over to Cabo really quick to speak at an event, then I'm popping back over to Puerto Vallarta. Um, I don't do a lot of vacations. I did one recently. There's a big family event, uh, and one of the last big ones with my wife's family, so I will not make it there. It is possible that Cody will, but I'm not sure. His girlfriend is getting knee surgery, so we may just be hanging out with family during that time, but wishing him a fantastic event. Property manager, are you, uh, subbing this out? Property management, I don't sub out. I own the property management company. We manage about— end of this month, I think we'll manage about 300 units. I actually love running the company, but PM is low margin. It's a business that is hard to run. I always tell people to avoid it if you can. I would sub it out, except I'm just— we're really good. We're better than everyone else in our market by a lot. And I manage so many of my own units that we actually make a lot of money on the individual LLCs that own the real estate. They make a lot of money by our ability to lease, maintain, and operate great bookkeeping on a large portfolio. So I don't sub it out. But yeah, 8 to 12% is what you would budget for, for a standard midsize multifamily building. It gets a little cheaper as you get higher unit count. All right. How are you determining cost for renovations? Do you have a general contractor come and get the best bids? Yes, we used to do that all the time. To date, Cody and I, I know last year we spent, it was about $1.1 million of our own cash that we earned through our portfolio and businesses. We spent on the portfolio doing renovations. Prior year, I think we spent about $300,000 to $500,000, somewhere between $300,000 and $500,000. We have done a ton of renovations. We've renovated more than 40 units in the last 16 months. I need to get a count of them. There's a lot. I would assume safely over 50 units have been fully renovated. I have done so many projects in our market. I know what everything costs. I am extremely confident when we walk through a unit, I know what I'm looking at. I know what it's going to cost. I know what the contractor is going to bid. If you haven't done, you know, 7 figures of renovation in your market, if you haven't done this project 50 times, um, that's exactly what you do. You walk through with a contractor, you get into quote, and when you get these quotes— Cody and I learned this the hard way— um, it's fine if you pay a little bit more for this, but get a must-not-exceed bid. Have them fix the price of their bid. They go, hey, we'll get this project done and we will not go over this price. And usually what that looks like for me is whatever they quoted you with overage, they add another 15% to the bid and they go, okay, this is your new bid. We pay 15% more and we don't deal with overages or people changing price on us. Highly recommend, because then you just know, hey, the cost is a cost. This is what it's going to be. Contractor's going to get it done, sign the contract, get it done. That's the best way to do it. Fun project, by the way. I also know what all the materials cost. Cody and I on February, I think it's 4th, I'm spending one week in Moses Lake because our contractors are busy on so many projects and it's going to be so expensive to do one of our renos with labor. We're going to do a project that Cody and I both know how to do. So we're going to be doing wiring in our building, redoing our floors, painting our walls, installing kitchenettes and replacing water heaters. All things I can do. I'm gonna bring a team of like 5 guys and we're gonna crash in Mosley for a week and I will video the whole darn thing for everyone. Um, so I know the cost of everything. If you don't know the cost of everything in your market better than your contractor, get those bids. What about buying apps for property management? Uh, is it the same tools? Or what about apps for— oh, oh, sorry, what about apps for property management? Like applications for property management, I assume. Oh, oh, and then right under that, I guess, clarity. AppFolio and Buildium, um, very similar tools. Um, your accounting principles are the same in them. AppFolio has way more automations, um, so I can set a lot of fees up on Auto bill. I can do some of the accounting reporting that I can pull out of AppFolio is very robust. Um, there's— I would say if you're running a sub-100-unit portfolio, there's no reason to use AppFolio because Buildium has a friendlier interface and it's easier to use. If you are over 100 units or intend to go over 100 units, AppFolio is going to have the automations and the systems and the process. Basically, with AppFolio, if there is something that you're like, is there a way to do this? The answer is yes. And they add to their system like crazy. Both softwares are amazing, but if your goal— say you're trying to get to $10,000 a month and you're going to self-manage a lot of your portfolio, Buildium is going to be perfect for you. You don't need AppFolio to build a $10,000 a month portfolio. You can build that, you can buy that in a year, stabilize it another year, and in 2 years have $10,000 a month, run it in Buildium and have basically all automated systems. It's very easy. Um, anyone who wants to do that can attend the Robinhood event because that's all we're talking about is how to manage and optimize these systems. Having the best optimizer of systems we've ever had at an event. Uh, Matt Hawkins, Lumberjack Landlord, is going to be speaking. He just had a baby, so he's going to be speaking on, uh, well, specifically his wife had a baby, um, so he's going to come in virtually. I've never done a, a screen on an event, but Matt's knowledge here is so good that we're going to set it up and we're going to port him in remotely and he's going to provide probably the most valuable presentation of the entire event. If you raise the down payment as debt and second lien position when calculating the DSCR, which is the debt service coverage ratio, and factor rate, would you count the second position in DSCR and factor rate? Yes. The debt service coverage ratio, you need to factor for all of the debt— first, second, third, fourth, fifth position— any debt that you have that you need to cover. Um, ultimately DSCR is important because it is how much cash you have at the end of paying everything. NOI, your net operating income, is great to evaluate a property, but it doesn't take into account your personal debt. So it's not a good cash flow metric because everyone's debt is custom outside of your operations. DSCR actually takes into account every expense, which is why that ratio is so good, because it's saying at the end of everything, every single expense, I get to save what percentage of my mortgage. And so if you have a debt service coverage ratio of 1.5, which is Cody and my minimum, that means at the end of every single expense, the debt's covered, the operating, the CapEx, you name it, everything is covered I get to save at least 50% of whatever the mortgage is as cash flow. It is a good cash flow metric, but it only works if you factor for all your debt. Loan factor rate is the same thing. It is your true cost of debt on an annual basis divided by the total amount borrowed. And for those who thought that was really wordy, it's principal plus interest times 12 because annual divided by how much money you borrowed. The delta between that and your cap rate is how much money you make as a percentage on every dollar you borrow. So if your loan factor rate is 3% and your cap rate, the deal that you make on every dollar invested or the cash you make on every dollar invested expressed as a percentage, your actual return on money invested in the deal is your cap rate. So say your loan factor rate's 3 and your cap rate is 5, you make 2% on every dollar you borrow because your true cost of capital compared to the true return on capital has a 2% delta. For those who have the course, because I see a few of you in here, for those who have our course, uh, if that was confusing, there's a video on it. It's like 5 minutes long. You can watch it 100 times when it makes sense. All of a sudden, you know what interest rate to ask for every single time. It takes 2 seconds. I can look at a deal and go, okay, this deal is going to cash flow this much. The cap rate is X, I need to borrow at Y. And if you want to make your loan factor rate really easy, since it's principal plus interest divided by the total amount of debt, an interest-only loan is going to be like the interest only is equal to the loan factor rate. So if I'm like, oh, it's a 6 cap deal, if I want to make a 1% spread, 5% interest only will cash flow 1% on every dollar borrowed. Easy math. So yes, those are others calculated. Samuel, good question. Detailed question. Really good one for you guys who aren't math nerds. Become math nerds. This is easy math. Do you— do your expense ratios— words. What do your expense ratios look like? Before you buy and after when you start managing the property? Um, so it's going to depend on every single property, but generally speaking, in our market, because utilities are very low and taxes are lower in Washington State than other places, we have a little lower expense ratio. Often we're seeing around 35% throughout the portfolio on average after we buy them. The expense ratio is a ratio of the income. So on some of our buildings, we've just had like really low income, so your expense ratio is out of whack because your expenses are more or less fixed, but your income is lower than it should be. So we've bought some that are, you know, 50-60% expense ratio because they were mismanaged. We take over management, we get them where they should be, they normally normalize at around 35%. If you're doing this in a state that has higher fees, like electricity and taxes are higher in Texas, your actual expense ratio is typically closer to 40-45% depending on the deals. Uh, oh, we're getting close to the end. If anyone has any last-minute questions, we're over an hour, so if you have last-minute questions, let me know and we will get them answered. But once these end, I'm hopping off. Emmanuel, process for finding and screening contractors? Referral, referral, referral, referral, referral. And not from your broker, from the people in your market who own real estate. Contractors are the— I hate contractors. They mess up everything. They don't take responsibility for their work. They overcharge. They keep horrible books. Contractors are notoriously very hard to work with. Usually they're tradespeople. They're very— if they're a good contractor, they're good at their craft. So it could be laying floors, it could be electric, it could be plumbing, it could be roofing, whatever. They're good at what they do. Oftentimes they're usually horrible at running business because they're craftsmen. They're not business people. Um, I see that very, very, very consistently. It's very rare that I see a contractor firm who's both good at running the business and accounting side and good at doing your project. Um, so the people you want to work with are the ones who other people in your market have already had good experiences with. That is why those owner relationships and working with people who are winning is so ridiculously important. Um, that is how I screen contractors though. Then they have to be licensed and bonded. I get a copy of their license and bond and we move forward. So I basically go strong referral, who's using them, and let's get a— let's look at their bond, put in a do not exceed quote for the work they want to do, and let's roll. Or must not exceed, I believe is the correct verbiage. Uh, when you're doing a cash-out refinance Do you have to keep any equity in the building, or can you cash out all of your equity and the bank 100% finances it? If you're going through a bank, they're probably not going to do more than 80%. A lot of— I usually underwrite to 70%, but the most I'm seeing banks do right now typically is going to be 80. Now, if you're taking it private, you can do whatever you want. A good example, Cody and I right now are doing— that's loan to— there's two types of finance, right? There's loan to cost and there's loan to value. If you're talking about loan to value, so that's appraised value, banks give you 80% of that. However, loan to cost, what you actually purchased— we purchased a 38-plex for $2 million, we improved it. When we refinanced, we got a new loan for $2.3 million. So we pulled out more than our cost. So the banks financed more than we had in it. We got to cash out $300,000. Loan to value, I think at that time it was like, I think we got valued around $3.6 million. The next time we did a cash-out refi, we did a new loan, it got value, got pegged at $4.1, and we brought our loan to $2.6 million. So those are all ways that you can, um, you can structure those. Loan to cost, loan to value, those were like way less than 80% loan to value on the property. We actually got very conservative loans from the bank. If we took it private with a private investor, We could get a hard money loan for 100% of it, but that would be at much higher interest. I want to have long-term debt that I could pull more money out, but it'd be higher interest and it'd be shorter term. I'll opt to take the risk off the table, borrow 70-80% loan to value. Why did Cody deserve to be dropped in Well? Ah, yes. Cody, uh, context. We don't just kick Cody in the wells. Cody has a window well that has flooded, so we, uh, it is his window in his building that I do not own. Uh, his contractor did not install a drain, and his contractor was forced by the city to use a specific subcontractor for that project as part of the permit, and that subcontractor lined the bottom of the well, so instead of like— they did gravel like you're supposed to for drainage, and then they lined it with a waterproof lining. So they basically created a swimming pool. And they're like, oh well, it's your gutter is leaking into it. First of all, the building doesn't have a gutter. The roof extends over it. So that's— yeah, that's not the problem. Um, then they said, oh, you just need to put a cover over the hole. There is a cover over the hole. What's happening is it's a very low water table there. The window well is deep enough where the water, when it rains, is just seeping through the soil, coming up from underground, and filling the entire window well and leaking in through the, uh, underside of the seal of his window. So I did what any responsible friend would do. I drove over the mountains with Cody. We bought a sump pump. It was me, Cody, my wife. We did our Moses Lake run. We did some projects. We got there late at night., and we got a very quiet sump pump that pulls all the water out. At some point you'll put a drain in there, but the first thing you got to do is fix your problems. So that is why Cody was dropped in a well, uh, because his contractor did not do something that Cody didn't know to look for. This is our first basement unit conversion that either of us have ever done. That goes in the bucket of, uh, we call it the stupid tax. It's not that Cody's stupid, it's you don't know what you don't know. If you're doing a new project, there is an extra fee for the things that you don't know. That was one of those. Fortunately, we got the water out. It looks like it did minimal damage to the unit. I thought it was gonna be a lot worse. There's some damage to the flooring. I think it is completely salvageable. And the last question, Nick Acosta, what do you say on follow-up calls if the first call doesn't go good? Like, what do you, uh, talk about or say? So if your first call doesn't go well, this is a great example. Cody and I both had calls that went terribly. Um, my favorite example is one of Cody's. So Cody and I own a sixplex on a street called Broadway. It's like the main drag through Moses Lake. Uh, Cody called this guy when he was 19 years old and said, hey, when Cody was 19 years old specifically, and Cody said, hey, um, would you consider an offer on your place? Like, I said, no, I'm not selling. And then he called later when he was 19, hey, would you consider an offer? No, I'm not selling. Uh, when Cody was 20, he He called, hey, I am still trying to expand. Would you be willing to meet with me and talk about possibly selling your property? No, not interested. Stop calling me. Then Cody turns 21, calls and says, hey, I have an idea. I just, I, I just looked up your property and I saw you live about, I think it was about an hour south. I see you live like 40 minutes away from me. I'm that kid who called you and kept asking you to sell the property. And I had that terrible call and he's like, I remember you. Yeah, I'm still not selling because like, I understand, I understand. I heard you the first 3 times. I'm not buying. I want to meet owners who've done something I want to do. You've bought in this market. I love this building. I haven't figured out how to buy on Broadway yet. I would love to learn from you. And if you still live 40 minutes south of me, would you be open to me buying you coffee? He said, absolutely, let's meet. And at the end of that meeting, he goes, Cody, I really like you. I would like to sell the property to you. And we bought the property. Cody and I bought the property together. We still own it today. Perfect example of like the intro to the call was, hey, I'm that guy who called you and botched the first call. Generally speaking, people don't remember you. And if they do remember you on a bad call, you just, you just hit it on the head. Find a Circle drill, relatable point, relatable point. Hey, remember that idiot who called you? It was me. It could be humorous. It could be simple, but get over the objection and just get to like, hey, I'm calling to meet and learn. And if you can make it about that, you're gonna do really well. And Rob, yes, I did get the ORAT invite. That was— everyone checked that. So thank you. Thank you. Yes. Everyone, everyone who knows Michael Zuber, send him a message and tell him thank you for inviting Cody and Christian. Cody and Christian got the invite, and we appreciate him. And, um, whether we can make the event or not is still up in the air, but we appreciate it. So Rob, um, let Mike know we received the love, and, uh, he's going to have a stellar event. Vegas is also very fun, so I hope they have a good time. That is what we have for questions today. Got an hour and 10 minutes, and if anyone else wants to join the Robinhood event. It is the 19th, 20th, 21st. Please book quickly because those cabins book out right around this time. Is every event— this is the week that those start getting booked out. I think it's going to fill up. Um, if anyone has any other questions they want to ask offline, Christian Osgood on Instagram. By all means, give me a follow, but, uh, more important, um, ask your questions there. I'm super responsive. Just, uh, you guys have something there, let me know. And, uh, lastly, we still have our free course live. If you haven't had a chance to take that, you don't want to spend any money, I spend an hour on this channel for free every week. We love giving free information. Um, check out the free course. It's like 10 minutes on how we did our strategy. I think a lot of the questions in here are going to get answered in that video. So check that out. Other than that, we'll see you all next week.