{"id":2543,"date":"2022-05-05T13:22:39","date_gmt":"2022-05-05T13:22:39","guid":{"rendered":"https:\/\/imsfund.com\/?p=2543"},"modified":"2022-05-05T13:22:39","modified_gmt":"2022-05-05T13:22:39","slug":"why-investors-should-search-for-fresh-headaches","status":"publish","type":"post","link":"https:\/\/imsfund.com\/index.php\/2022\/05\/05\/why-investors-should-search-for-fresh-headaches\/","title":{"rendered":"Why Investors Should Search for Fresh Headaches"},"content":{"rendered":"


\n<\/p>\n

How many rental units do you want?<\/strong> Depending on who you ask, the number of rental properties can differ dramatically. A young investor may be looking to scale their portfolio<\/strong> quickly, eyeing ten, fifteen, or even one-hundred units. But, for a veteran real estate investor, who may already have a three or four-figure portfolio<\/strong>, the optimal rental unit count could be none at all\u2014they may purely want passive income<\/strong><\/a>.<\/p>\n

Christian Osgood<\/strong> knows this all too well, and it\u2019s how he\u2019s grown a seventy-one-unit portfolio <\/strong>in such a short amount of time. As half of a dynamic investing duo, Christian and his partner Cody Davis<\/a> know that the first place to look for a deal is within someone\u2019s goals. Unlike most off-market deal hunters, Christian and Cody don\u2019t blatantly ask a seller if they\u2019re willing to part ways with their property<\/strong>. They do something much different and a bit unorthodox.<\/p>\n

Christian and Cody have grown a massive multifamily portfolio in an impressive amount of time<\/strong>. Christian walks through the reasons why this partnership works<\/strong>, how they divvy up their roles, and why new investors should learn to love new problems<\/strong>, not cower in fear over potential pit-stops on their wealth-building journey.<\/p>\n

\n

David:
This is the BiggerPockets Podcast, show 605.<\/p>\n

Christian:
Now I\u2019m learning accounting. I have the right person to teach it to me. I have a CPA, it took me a while to find, but I have the right CPA who makes me go through the steps and learn it before he\u2019ll file anything. While it\u2019s a pain, I\u2019m understanding it. And next year, when I get here, I\u2019m not going to have an accounting problem. I\u2019m going to have a whole new set of problems. And that is what I\u2019m targeting every time. When I\u2019m stuck, I need to make sure I\u2019m not stuck on an old problem.<\/p>\n

David:
What\u2019s going on everyone? My name is David Green, and I am your host of the BiggerPockets Real Estate Podcast. The podcast where we teach you how to build wealth through real estate and improve your life through the financial freedom that it can provide. We do that by bringing on different guests that have walked this journey before you to teach you what they did and maybe left some bread crumbs along behind the way so you could follow their path. We also bring in experts in the industry to teach you things like tax savings, bookkeeping, renovation tips, how to find deals, how to find on market deals, how to use an agent, how to get lending, all the pieces that you need to build your wealth through real estate investing. I am joined today by my co-host the amazing Rob Abasolo, who joins me in my interview with Christian Osgood, the partner of Cody Davis, who we interviewed on episode 554 and had a very popular episode.
Now, Cody and Christian are both young men that are somewhat new to the game of real estate, but have had a lot of success by finding off market deals and structuring them wisely through building relationships. This is pretty much a can\u2019t fail approach. If you\u2019ve been trying to find deals and can\u2019t find them, if you\u2019ve been nervous about paying too much for a deal, well, these guys are finding deals, naming their price, and working with the sellers to make it work. It\u2019s harder work, but it is definitely something that has a much higher upside and today\u2019s interview with Christian was fantastic. I loved this conversation. Rob, what were some of your favorite parts?<\/p>\n

Rob:
You know, I think it was really nice to find out that you\u2019re never really ready to scale. I think we all try to put all the systems in place and build out the teams and spreadsheets this and all the \u2026 I mean, I think kind of what we learned from Christian was that they relatively had a good structure in place, but the only way they could really scale was by throwing themselves into a deal. And he talks about that because his first two deals were two units and then his third deal was a 38 unit building. So I think that right there, he had to learn a lot on the ground. And so we talk about that. We talk about his different partnerships. We talk about networking with people and really getting to know them and knowing their heart and knowing their story and leading with that to close deals versus leading with, Hey, do you want to sell me your property? And they\u2019ve had a lot of success doing that.<\/p>\n

David:
A ton of it. And then they also have learned that everything is figureoutable or as they say in today\u2019s show, everything is Googleable. And that leads us to today\u2019s quick tip. You can use Google Maps to find just about any property that exists and then find the owner afterwards using that. Rob, have you ever done this yourself?<\/p>\n

Rob:
I haven\u2019t. No. Yeah, it was actually ridiculously simple. I was like, can you just, can you walk me through this? And then he told us the steps and I was like, okay, I guess it\u2019s as easy as it sounds. Just Google it.<\/p>\n

David:
That\u2019s it. So make sure you listen to the full episode today so you can learn how to just Google it yourself. All right. I want to make a reminder if you like this show, go back and listen to episode 554, where we interviewed Christian\u2019s partner, Cody, who has an inspiring story. These two are working a method that anybody can use. There\u2019s a lot of good advice here about the right way to contact people, how to make sure that they\u2019re talking more than you, and you\u2019re bringing more value than you\u2019re asking for from them. We get into some of the mistakes that they made in their scaling quickly, so you can avoid those same mistakes, as well as a really good blueprint. Any last words, Rob, before we bring in Christian?<\/p>\n

Rob:
You know, I think my favorite part of the show was he talked about a very honest and big mistake that they had in their business, and it was a very vulnerable moment. I was like, man, I wish a lot of people opened up like that, because there\u2019s a lot to learn from these moments. So stay tuned for that.<\/p>\n

David:
Yes. And we\u2019re going to be doing more of that. I\u2019m coming after you. You come on the podcast, you\u2019re going to share the good, you\u2019re also going to have to share the bad and the ugly. All right. Without further ado, let\u2019s bring in Christian. Christian Osgood, welcome to the BiggerPockets Podcast.<\/p>\n

Christian:
Hey, thanks for having me.<\/p>\n

David:
Yes. I think this was probably set in stone from the time that we interviewed Cody. That episode was very, very popular. If you didn\u2019t hear our episode with Cody Davis, go check out 554. And Cody is what 21, 22 years old? How old is he now?<\/p>\n

Christian:
He\u2019s 22 now.<\/p>\n

David:
22. Okay. He\u2019s grown up quite a bit.<\/p>\n

Christian:
He\u2019s done it. He\u2019s old.<\/p>\n

David:
He\u2019s buying multi-family properties and he was crushing it and it was a very inspiring show, and you are his other half, as I understand.<\/p>\n

Christian:
Yep. On the business side, I am his partner on a majority of the deals that he\u2019s done and we\u2019ve done pretty much this whole venture together for the last 13 months or so.<\/p>\n

David:
You\u2019re significantly taller than Cody, right?<\/p>\n

Christian:
I am. That is always difficult on the YouTube channel or any filming we have to be really conscious of is Cody actually showing up on the camera?<\/p>\n

David:
I ask, because I think I saw on your Instagram, like I think I\u2019m following Cody and he was posting pictures with someone who looked like Groot standing next to Rocket Raccoon. And now I\u2019m seeing this is Groot.<\/p>\n

Rob:
Let\u2019s get this man in apple box.<\/p>\n

Christian:
There we go. I am Groot.<\/p>\n

David:
So let\u2019s start off tell us. Yeah, that\u2019s a perfect reply to what I just said. That could be the intro to this show. So start off telling us how do you and Cody sort of divvy up the responsibilities of what you\u2019re doing? What skill sets do you each bring? How\u2019s your partnership look, and then we\u2019ll dive more into your portfolio.<\/p>\n

Christian:
Yeah. Well, important thing is we can both do what the other can do. We have overlapping skills, however, we have different specialties. The way we\u2019ve designated it is Cody brings in as much fish as he can while I build a bigger boat. Cody brings in a lot of fish. So that\u2019s a lot of ship building. We can both sell. We can both raise capital. We can both negotiate deals. However, Cody probably does about 75, 80% of that. I do a lot of the backend accounting, getting the right systems. It turns out when you buy a lot of real estate really fast, there\u2019s a lot of bills to pay. You have to keep track of those things. I have a little better memory for that piece than Cody. Cody is great at driving fast. My job is to make sure that we have the capacity to haul in everything that Cody brings.<\/p>\n

David:
That is so well said. In fact, every business venture that I started, I typically operated like the Cody and I needed a Christian, and the times I did not do well was I didn\u2019t have a person in place that could keep up with the mess that I created, frankly. Like I got all these fish, I dumped them in the boat and somebody else has to figure out what to do with them before they rot, they go stinky, someone slips on them. And so I really think that\u2019s like, if you\u2019re going to start a business or a partnership, what you\u2019re describing right now is the first thing everybody needs to work out is if we are successful in getting opportunities, if they\u2019re a real estate agent, that\u2019s leads, people that want to buy or sell homes. If you\u2019re a real estate investor it\u2019s properties, we might want to buy.
That\u2019s the hardest part is you got to fill up a pipeline full of leads and opportunities that you want to be doing something with. Well, the next piece is who is going to clean up this mess, track the accounting, follow up with the contractors, know where money\u2019s coming in and out, help you understanding if you\u2019re even profitable. So I love that you\u2019re acknowledging that, because I think this is where sometimes you get two Christians where both people just want to have everything be nice and clean, but they don\u2019t go get any leads, so you never get anywhere. And sometimes you have kind of how Brandon and I work, where we both just create big messes and that there\u2019s nobody left to clean it up. So tell me a little bit, like how did you guys come to this understanding that this is the way that work was going to be split up?<\/p>\n

Christian:
Well, it happened organically. I guess, sticking with the ship metaphor, what we\u2019re going to do is when you have a partnership, you want to make sure the ship is sailing in the same direction. It\u2019s the most important piece. So we have the same goal. We\u2019ve agreed where we\u2019re headed. That was the first thing that we did. That came into existence at the 10X Growth Con. I actually accidentally roomed with him. Someone had a spare ticket, they ended up not going. They had already booked a hotel room. So the two of us connected there over three days. When you\u2019re in that environment, it\u2019s all, hey, 10X let\u2019s set huge goals. So we set this massive goal of, well, I\u2019ve always wanted to hit 30 units by 30. At that time I had two units and I was 29. So it seemed like a little bit of a stretch, but we set that goal together.
Cody was really looking to expand and grow his portfolio to a hundred units, which we\u2019re going to hit here in the next few months. And so we connected on those points and then everything else is just organic. Our first piece was we got to find a piece of real estate to buy. He got me into my second duplex. Then we bought a 38 together, which was an effective way to get to 30 units, huge fan of skipping, or not skipping, but not adding extra steps. So if you want to get to 30 units, the easiest way is to buy more than 30 units. So we started doing that and just a natural progression. As we started doing business, we found Cody brought in a few more deals, I was better at cleaning up the back end and it just kind of evolved into what it is today.<\/p>\n

David:
Okay.<\/p>\n

Rob:
Sorry. So just to clarify, you went to a conference, someone\u2019s like, hey, I got an extra ticket, here\u2019s a caveat, you got to sleep in a room with a stranger. So you guys were bunking and then, one of y\u2019all were like let\u2019s scale. And then the other person\u2019s like, yeah, sounds good. And then you guys came together as a partnership?<\/p>\n

Christian:
Yep. That\u2019s been pretty consistently the entire partnership. Sometimes we\u2019ll find a deal and Cody will throw it in front of me. And I feel like we\u2019re already operating at capacity. He\u2019s like, I love this deal. You want to do it? And I usually say, okay. And if I don\u2019t, Cody goes well with, or without you I\u2019m doing it. And I was like, well, I don\u2019t want to be left out. So let\u2019s do it. There\u2019s certain balances between, hey, do you want to get it perfect or do you want to get it done? And my policy is strive for perfection, but at the end of the day, you just have to get it done, get yourself a new set of problems. So a year ago I had a duplex and not enough real estate. Now I have enough real estate to get started and I\u2019m having to learn how to master accounting and get through all the legal and the pieces that come with that.<\/p>\n

David:
This is so good. I mean, you might be what you\u2019re describing as the case study for the right way to scale. So I just had a meeting with my real estate team yesterday and it\u2019s sort of the end of the first quarter so we were talking about what we\u2019re going to do going into quarter two. And I have a lot of newer agents. They\u2019ve been an agent for 12 months or less. And our system has mostly been built on somebody comes to me, they get assigned to a senior real estate agent who\u2019s going to oversee their deal. And then that senior agent leverages out the junior agents to go show the houses, call the listing agents, research property, sort of the senior agent\u2019s the one that communicates with the client and the junior agent\u2019s the one that kind of learns the game by doing all of the work.
And what I\u2019ve been finding is that the junior agents are just very hesitant to go tell anyone they\u2019re a real estate agent. They just want to stay in this very comfortable lane, and they keep saying, I don\u2019t know what I\u2019m doing. I don\u2019t know what I\u2019m doing. You\u2019ve been an agent for 12 months. You know more than almost every other agent in this office, because you\u2019ve worked with like 50 clients in the 12 months that you\u2019ve been here instead of the average realtor might do one or two. But it\u2019s this idea, what we found is that they have this belief that they don\u2019t have all the answers and so they can\u2019t go take action yet. They need to know first exactly what to do before they go tell somebody, Hey, I want to sell your house or I want to help you buy a house or they go hold an open house.
And my advice was, that\u2019s not how you learn. You learn by going and saying, I want to sell your house. And then when you run into something you don\u2019t know what to do you look at the resources you have around you and you talk to your broker and you talk to another agent in the office, you come talk to us and you learn. And then the next time you come across a problem, you have a little bit more confidence to take it on. That really, good entrepreneurs and business people are just problem solvers. That\u2019s it. And you can\u2019t get every single answer that you would ever need. It sounds like that\u2019s sort of how you and Cody are doing things.<\/p>\n

Christian:
Yeah. I think we\u2019re programmed to think that way. We go through school, you go through first grade to get to second, second to get to third, you graduate high school hoping to get a high enough GPA for college. You get a first job. It scales to the second. That\u2019s the scripted system for everyone. And so we\u2019re trained to add steps to get where we want to go. I see a lot of people say, hey, I want to be a real estate investor so I went out and I got my broker\u2019s license, and then I worked there for a few years and then I became an appraiser cause I wanted to value properties, and then I became a lender because I wanted to borrow money. The fastest way to become an investor is to go and buy real estate, and you have to learn to get there. So information\u2019s important and if you want that, fortunately you have BiggerPockets. But at some point you need to transition from information to actual practice. The application is more important than the information.<\/p>\n

David:
Rob, what say you?<\/p>\n

Rob:
Yeah man, I actually kind of want to establish here, well, first of all, I assume that if this relationship is working and the partnership is working, you each like the tasks or the job responsibilities of each side, is that right? Or is there ever kind of any dissonance on things in that you and him don\u2019t want to do?<\/p>\n

Christian:
Yes. Well, one thing there\u2019s no such thing as an even partnership, like people are just different. When you have different roles, there\u2019s going to be different workloads. So there\u2019s always going to be some level of dissonance you have to resolve. I\u2019m pretty sure neither Cody or I wants to sit on hold and pay bills. That\u2019s just not a task that anyone enjoys. However, I\u2019m going to remember each and every one we have for the properties better than Cody. I would rather have Cody out bringing in new business and forming those relationships. He\u2019s an amazing storyteller. So when he gets in front of clients, I just know he\u2019s going to land that pitch nine out of 10 times, where I\u2019ll do it seven out of 10. So we\u2019re not always doing what we like to do, but we\u2019re doing what we\u2019re best at. And at the end of the day, we\u2019re moving forward at a very, very fast pace. Not everyone\u2019s done what we\u2019ve done in a short period of time. And I love being able to do that. So when things are difficult or things are out of whack, we have excellent communication, so we know how the other one feels at all times. And at the end of the day, it\u2019s about getting it done. And that\u2019s what we do.<\/p>\n

Rob:
That\u2019s really nice, man. So let\u2019s kind of lay this out tactically, because you say you kind of handle the back end and then he\u2019s on the front end, which I think makes sense to me, but to kind of give some good definition here, let\u2019s say Christian, my dad\u2019s got this 30 unit apartment complex. We want to get out of the business. I\u2019ve got this deal for you, and I hand it over to you as a sale, right? We lock it up. How do each of you work in that specific deal?<\/p>\n

Christian:
Well, we\u2019ll look at the pieces that we have. If there\u2019s something on the front where someone\u2019s obviously going to be more relatable than the other, we\u2019ll take that sales call. So if it\u2019s someone like we find out, hey they started really young, they did a lot of creative financing, I\u2019m going to put Cody in that position every time because Cody\u2019s the most relatable and his story is absolutely incredible. I don\u2019t know a lot of people who\u2019ve done what he\u2019s done by 22. If I talk to someone who\u2019s started very conventionally, they had a nine to five for a long time, it depends on the story, but if I feel that I\u2019m really going to connect with that person, I might reach out. But again, we typically send Cody because Cody\u2019s going to be the one to land those. In that relationship, we would take a look at the deal. My first thing I always want to do when we\u2019re talking deal is I just want to meet. One of us is going to go out and get dinner, get coffee. We\u2019re going to get to learn who they are, what their goals are, what they want to accomplish. And most importantly the why behind that. And once we have those pieces, we can strategize on how we need to progress.<\/p>\n

Rob:
Okay. So you talk a lot about learning the accounting and all that kind of stuff. What is your background? Is it in accounting specifically or have you just been sort of been tossed into the accounting deep end and you\u2019re just kind of learning everything as you go?<\/p>\n

Christian:
Definitely the latter. We have a policy of we can\u2019t have the same problems this year that we had last year, that\u2019s how you know you\u2019re stagnant. If I look at 2021 Christian, I go, wow, I don\u2019t have the real estate I want to have. Well accounting for real estate doesn\u2019t matter until you have the properties, right? So we scaled from two units to 71 units. Well now I better know how to account. Quick recommendation for everyone, if you\u2019re buying a lot of real estate for the first time, don\u2019t close it all in November and December, you don\u2019t have a whole lot of timeline to learn the accounting, but we came in, we solved the first problem. I don\u2019t have the real estate I need to achieve my goals. With that problem gone, we had a, hey, I\u2019m not a master of the legal docs.
Well, we had to do a whole lot of that in creative financing and partnership structures. And we got really, really good at it. Now I\u2019m learning accounting. I have the right person to teach it to me. I have a CPA. It took me a while to find, but I have the right CPA who makes me go through the steps and learn it before he\u2019ll file anything. While it\u2019s a pain, I\u2019m understanding it, and next year when I get here, I\u2019m not going to have an accounting problem. I\u2019m going to have a whole new set of problems. And that is what I\u2019m targeting every time. When I\u2019m stuck, I need to make sure I\u2019m not stuck on an old problem.<\/p>\n

David:
Man. This is gold.<\/p>\n

Rob:
Yeah, yeah, yeah. You\u2019re looking for, I\u2019ve never really heard anyone excited for the next set of problems, which is really funny because you\u2019re just trying to solve today\u2019s problems. And then you\u2019re like, all right. My goal is next year to have a whole nother set of problems. That\u2019s a pretty rare thing to say, I think.<\/p>\n

Christian:
Well, that\u2019s how you know you\u2019re moving forward. If your problems aren\u2019t old problems, new problems are good. That\u2019s how you benchmark success. At least that\u2019s how I\u2019ve done it.<\/p>\n

David:
I think there\u2019s some magic in what you\u2019re saying right now, to be honest, like this should be one of our better shows because this is what everyone who\u2019s struggling needs to hear. I\u2019ve often wondered why an incredibly intelligent person can go to work for another company and fall into a rut, let\u2019s say if they get hired to be a CPA for another company, if they\u2019re hired to be a CPA, they probably have a mindset and a skillset and they\u2019re already kind of geared towards looking at the world that way. So they have an inherent advantage in how successful they should become. And very rarely do they ever progress through the ranks and go start their own business or become an executive in that company. Most humans, when they go work for someone else, just fall to a rut.
It\u2019s almost like a mindset that encourages you to do as little work as possible, as slow as possible, as easily as possible. Don\u2019t think creatively. Don\u2019t look for ways to make things better, and just stay in that rut and wait for someone else to give you an opportunity. Wait for the boss to come say, I\u2019m going to give you a raise and then, oh, I\u2019ll give my best now. It\u2019s just, there\u2019s something about human nature. I rarely ever go into a Subway restaurant and have the sandwich maker that\u2019s crushing it. Who\u2019s like man, I at the bottom of the totem pole and I hate it and I just got to get my way to the top so I\u2019m going to do the best job I could. Right?
It\u2019s not normal. We don\u2019t see that very often. It\u2019s very rare. But then I also come across the business owner of the Subway and it could be a Subway restaurant, it could be any kind of business, but it\u2019s often somebody who came from another country who had no skills who did not speak the language nearly as well as people here, who had none of the advantages was not educated, doesn\u2019t understand the culture. By all means they should be failing. They should be at a disadvantage. And that person is the most successful one in that company.
And they\u2019re doing things like managing people, making a schedule, ordering the food, doing the payroll, understanding profit margins, doing the marketing, solving the problems, like all of these different things that we typically hire out individually in a company, when someone owns the business, they do it all themselves and magically, they figure it out, like what you\u2019re saying, right? So I come to the conclusion that I believe it\u2019s the degree of responsibility that a human being is willing to take on over their own success or the success of their endeavor that determines how successful they\u2019ll be like you, by your own ambition were not an account. You don\u2019t keep books. That\u2019s not something you had ever done before, but because your company needed that to be done, you rise the occasion and you figured it out.
Rob had a story where one of his children had accidentally snorted play dough right up their nose. And Rob became an ER nurse in that moment, right? Like he came up with the idea of how they were going to get it out. He executed it, it worked out, nobody trained Rob how to do that. He wasn\u2019t like, I\u2019m not going to move forward with having a kid until I know every single scenario there could be. It\u2019s literally the act of taking on the responsibility of raising the kid or starting the business that puts you in the mindset that the solutions start to be made clear. And I\u2019m going to hand it back to you to get your opinion on that. But this is what we\u2019re getting at when we talk about the mindset, are you approaching it? Like it is my job to make as many problems as I can and solve them as well as I can. Or are you approaching it like it is somebody else\u2019s job to take away all my fear, to give me every answer that could ever be there before I start.<\/p>\n

Christian:
Yeah. And I think a lot of people have had that moment. For me, I think about high school in science class where you\u2019re paired with all the smart kids and at some point someone might have had a point where it\u2019s, hey, I don\u2019t really feel like learning this right now, so I\u2019m kind of going to let everyone do the work, and I\u2019m just going to play team coordinator. You do this job, you do this job and you don\u2019t do anything. And at the end of the day, that\u2019s the wrong practice. You nothing gets produced if there aren\u2019t producers. At the end of the day, you have to go out and accomplish what you need accomplished. I completely believe in finding the right people, in getting employees, in scaling and creating jobs.
You should have all these roles, but if you\u2019ve never done it, you don\u2019t have a knowledge base, it\u2019s really hard to manage people and lead people if you just don\u2019t know what you\u2019re doing. I think there\u2019s a ton of value in going out and actually learning the accounting myself so that when I hire a bookkeeper and an accountant, when we can scale to that level, I have a basic idea of what they\u2019re doing, and if they leave my company, I\u2019m not totally hosed. Like you just need to learn how to run your business if you want to run a business. I\u2019m not free of time yet. Turns out when you buy a lot of real estate low to no money down, it\u2019s actually a ton of work. So this is not passive income, or at least it\u2019s a ton of work to get passive. But as you\u2019re scaling, you just need to have the ability to know exactly where you\u2019re headed, why you\u2019re headed there, and then just go and knock it out.<\/p>\n

Rob:
Yeah. I don\u2019t think you can really ever be really fully prepared to scale. Like obviously there\u2019s a good understanding that you want of the problem, but at a certain point you also have to just believe that you can kind of get through a lot of those problems. It sounds like you sort of went through that. It\u2019s the classic, I guess the adage of like a fish that\u2019s in a very small tank is going to just grow to the size of that tank, right? It\u2019s not really going to get big, but if you give it a really big tank, it\u2019s going to get bigger and flourish, and that seems to be what happened with you, because you said you were in two units and then your next deal was 30 units like a 30 unit apartment. Is that right?<\/p>\n

Christian:
My third deal. I started with two. Cody got me into a deal for another two units right across the street from them, which I did hard money, 101% financed, and then did a refinance. That was my first foray into some level of creativity and rehab. Then deal number three, 38-plex Moses Lake. I would not have had the confidence to do that if I didn\u2019t buy the first two deals, but that was scaling pretty rapidly to go from December 2020 at my first duplex to here I am today with 71 units. That was quite a sprint to get where we\u2019re at.<\/p>\n

Rob:
Well that\u2019s exactly what I\u2019m talking about. That really proves my point even more. You had two units, your next deal was two units, and so you\u2019ve sort of mastered the art of owning and managing two units, right? And so logically next step is, hey, maybe we graduate to a four, maybe a six, hey, let\u2019s get crazy. And maybe an eight unit and you say, no, let\u2019s do a 38 unit and you jump into that deal. That is a tank that is much larger than what you are currently swimming in and you figured it out. So can you tell us more about the mechanics of that? Because you said 101% financed, how did that deal come across? And was this really the, kind of where your relationship and your partnership started to flourish? Because I imagine that all the problems you were excited about really probably started with this deal.<\/p>\n

Christian:
Yeah. So that second deal is the duplex 101% financed, then that gave me confidence to use some creativity, get out of the conventional box. So deal number three to 38, I\u2019d already communicated my goal to Cody on, I want to get to 30 units by 30. And unit count isn\u2019t really a relevant goal, it was just my goal. And once I\u2019ve committed, I\u2019m like, okay, we got to hit it. My options are, I have two duplexes, so I can find 13 more duplexes and keep doing what I\u2019m doing or I can grow and expand. The 38-plex was a stellar opportunity. It was seller financed. And Cody did a lot of the negotiations through just meeting the seller. He identified what they really needed, this property was on market for 13 years at the same price on and off. No one\u2019s figured out how to make it work.
Cody got in front of them and just found out they had a set number that they were looking for on monthly payments. So we came up with a custom amortization schedule that got them the $10,000 a month they needed. And we were off to the races. The seller financed 15% down and we had to learn a new skill. About three weeks before closing, Cody and I looked at each other and went, huh, we should probably raise the $300,000 down we need for this since we don\u2019t have it and none of us have ever done this. And so we had three weeks to learn, okay, how do you make $300,000 appear for the right deal with the right amount of upside? And in four phone calls, we made it happen, and now we know how to do it.<\/p>\n

David:
Let\u2019s unpack that for a second. Because as someone listening, you\u2019re going to hear, okay, well I hear you telling me, I should just go make it happen, but I don\u2019t know what that looks like. So let\u2019s try to paint a picture for what happened on those four phone calls, what words were used, what objections were received, walk us through what that was like.<\/p>\n

Christian:
So in every deal we are 100% relationship based. In lieu of asking for deals or dialing for dollars, we call owners of multifamily. There\u2019s no list or target. I don\u2019t care if they\u2019ve owned it for one year. I don\u2019t care if they\u2019ve owned it for 30. I don\u2019t care if they\u2019re out of state, any of that low-hanging fruit. All I need to know is that owners know other owners, and if I want to be in this market, I need to know the players. So we just call owners of multifamily property and we get to know them, who they are, where they\u2019re headed and why they\u2019re going there. I communicate succinctly the same pieces about myself, the relatability, the goal and the significance behind what I\u2019m doing. So now we all have a relationship.
It\u2019s the same exact thing when you\u2019re raising capital, I know what pieces people have, so when I make that phone call, I\u2019ve already met with them. We didn\u2019t talk about a deal. I talked to them about what\u2019s happened in their life, what their target is and why they have that target. So for that we call and the phone call starts, hey, based on what you told me, I have an opportunity and I wanted to run an idea past you. And it goes from there. And it\u2019s just an extension of a conversation we\u2019ve already had. And if you\u2019re getting started, that\u2019s the only thing that I think you need to focus on, this is a contact sport. You need more contacts. Don\u2019t worry about the deals, worry about the relationships. And only the relationships. There\u2019ll be a time to be transactional. And if you\u2019re getting started, you\u2019re not there yet.<\/p>\n

David:
So let\u2019s role play that.<\/p>\n

Christian:
Yeah.<\/p>\n

David:
I will be the person who could be a potential investor and you\u2019ve got the deal. So you\u2019re calling me.<\/p>\n

Christian:
All right.<\/p>\n

Rob:
I\u2019ll be the phone ring, ring, ring, ring.<\/p>\n

David:
Hello?<\/p>\n

Christian:
Hey David. It\u2019s Christian. How are you, man?<\/p>\n

David:
I\u2019m good. Thanks for calling Christian. What\u2019s on your mind?<\/p>\n

Christian:
Yeah. Well I wanted to touch base with you. Based on our last conversation, you had mentioned that you\u2019re really, really trying to get more units to your name, and you\u2019re looking for a deal that has both cashflow and upside. I had a unique deal come across my desk, I want to run an idea past you.<\/p>\n

David:
Okay. Would this be something you\u2019re bringing to me to buy? Or is this something you\u2019re going to buy?<\/p>\n

Christian:
This is something I would actually like to buy with you. I would back this with equity. This would be a deal that we would do together. I found a stellar opportunity. It\u2019s in central Washington where the rest of my portfolio is. My other partner is Cody Davis, who you remember meeting with him. He has a lot more units than I do out here, but this is the single biggest opportunity that we\u2019ve come up with and based on our last conversation, I\u2019d like you to be a part of it.<\/p>\n

David:
Okay. Can you sum up what you like so much about this deal?<\/p>\n

Christian:
Well, first of all, it\u2019s a seller financable opportunity, which is how we\u2019ve leveraged low down to quickly multiply money. We\u2019re only going to need 15% down to close it. The upside on this is seven figure upside and I am absolutely sure that we can reach this in the timeline we\u2019ve been given. We have five years to do about one year worth of renovation. Cash flow is a little light day one, but we\u2019re going to compensate with a equity bump on the back end. So we\u2019ll offer you two to one on your money in five years, so you put in 100, pay you 200, and as it\u2019s cash flow, you get your percentage cash flow.<\/p>\n

David:
All right. Now I don\u2019t quite understand what you\u2019re going to do to add value. Are you saying that they just need to be renovated and made nicer?<\/p>\n

Christian:
So first of all, it\u2019s 38 units that today is bringing in about seven and a half thousand dollars. This is ad acquisition. We bought this thing, day one was like a three cap deal.<\/p>\n

David:
Okay.<\/p>\n

Christian:
Terrible performance, has been mismanaged. Conveniently, we have a property management company. We\u2019ve done this, so we know what we need to do on the rental bumps. In addition, there\u2019s a contractor that I\u2019ve already used on my little duplex. He did a phenomenal job. We took rents on that property from $700 a month to $1,400 a month. They\u2019re beautiful units. We get the highest rent per square foot in Moses Lake. We know how to renovate. We know how to manage. Cody\u2019s already raised rent on 30 units over the last few years in the same market. This is exactly what we\u2019ve done to create value on every other property. It\u2019s just a larger scale.<\/p>\n

David:
Okay. So you\u2019re saying that it\u2019s being mismanaged, the rents are not as high as they could be, and you think you can change that.<\/p>\n

Christian:
Yes. This property, we started, the septic tanks were trash. Water heaters were either not working or leaking everywhere, there\u2019s a homeless camp on the site. I mean, this had everything wrong with it, but there were all pieces that we\u2019ve dealt with similar stuff on other properties. This was definitely a stretch for us to get, but this pushed us to the next level. We knew we had the requisite experience to make it happen. We just needed the right people to believe in us, to prove concept and make it happen.<\/p>\n

David:
So is the plan to bump rents, increase the value, and then refinance in five years?<\/p>\n

Christian:
Yep. The first thing we do is we show energy on the property. So we have a whole bunch of bad appliances, we brought all the appliances in at the same time and start bringing them into units. Immediately started renovating all the vacants. They had a ton of non pays, who they just hadn\u2019t made any effort on. After we put energy in the property, we started fixing things up. We repaired electric problems. We replaced appliances. A majority of the non-pay just started paying. We posted notice and asked them to pay and just started receiving rents. We moved in the first six months, we brought the income from $7,000 a month to a little over $20,000 a month in less than half a year.<\/p>\n

David:
Okay. So how can I be sure that I\u2019m going to get my money back?<\/p>\n

Christian:
Well, we have enough equity in the property day one. I mean, day one, we bought it for two million. It was still, there\u2019s no way you could buy a property like this, that many units, for less than 2.8 million today. I value it a little over three, but we back it with equity of the property, on this particular deal, we had three investors come in, each brought a hundred thousand to the table and we gave them each a 20% equity stake in the property.<\/p>\n

Rob:
Honey, honey, that sounds like a really great deal. I think you should invest.<\/p>\n

Christian:
What we recently ended up doing on this, you always go in with a clear plan of how you\u2019re buying everyone out. That said, typically equity is going to be a lot more expensive than debt. We recently cashed out one of the investors. He wanted to move his equity into another project that he wanted to invest in. So we moved our pieces, we got him cashed out early, and then we converted the equity from the other two owners into debt through a note. So we basically bought them out with a new note and we pay them out of the new cash flow. So now Cody and I own a hundred percent of the building between the two of us, we\u2019re 50-50.<\/p>\n

David:
Gotcha. Okay. And then how are you coming up with the actual people that you\u2019re going to call and propose this to?<\/p>\n

Christian:
Google Maps. 100%. I have no software. I have no list. I have no skip tracing. Turns out every single off market property exists on Google Maps because every property\u2019s on Google Maps. First thing we do is we start with location and then we ask two questions. When I have the market I want to buy in, how do I own it, and how do I never lose it? If I can answer those two questions, we can acquire absolutely anything and know that we\u2019re never going to lose it. We can hold it through good times, through bad times, we buy on cash flow for equity growth. The location\u2019s going to help us grow the money and multiply the money. Cash flow makes sure that we can keep it forever.<\/p>\n

Rob:
So can you clarify when you say you find it all on Google Maps? Like, what do you mean by that? Do you mean you, let\u2019s say Houston, for example, you\u2019re looking there and then do you just start zooming around and saying, oh, that looks like a multi-family deal or how does that work? What\u2019s that process?<\/p>\n

Christian:
That\u2019s exactly it. I look at the roofs. I go, hey, that looks like a 12-plex. I\u2019m going to go zoom in and I\u2019ll drop my little guy on street view and look at it. I\u2019m like, wow, I\u2019d love to own that building. Right now, we have a lot of wholesalers and other people who just grind the phones in the market who are calling saying, hey, can I offer on your property? I have a deal for you. Do you know what your property\u2019s worth? I don\u2019t do any of that. We call and we just ask for a meeting. So I\u2019ll take Moses Lake as an example, because that\u2019s where we started.
When I owned a duplex, I was going to call people with a 12-plex or with a 38-plex. And the phone call looked like, Hey, I just bought a property in your market. I\u2019m a new investor. I have a couple duplexes. I\u2019ve come to the realization that I can\u2019t scale buying two units at a time to where I want to be. Saw your 12-plex here, I was curious how you got started. And then you just listen to them talk. I follow the 80-20 rule as close as I can. They should do 80% of the talking and I should do 20, but I\u2019ve practiced this so I can communicate my pieces, my significance and my goal. I can communicate those really simply, really effectively without a lot of words. So when I\u2019m talking to them, I listen to their story, we have them back and forth. And then I ask to meet them for coffee. It\u2019s never about a transaction, the coffee, I\u2019m going to expand on what they\u2019ve done and how they\u2019ve done it. That\u2019s how Cody and I learned how to do all the creative financing.
There\u2019s two guys in particular, central Washington, we called them, no idea how to buy their big buildings. We just know that they\u2019ve accomplished something we haven\u2019t. After a few phone calls and about a year of work, one of them finally picked us up, put us in a truck, drove us around all of Moses Lake told us exactly how they bought stuff low and no money down, seller financing, and one of my favorite deals we\u2019ve ever done was three side by side duplexes. We did that deal with them, seller financed, 10% down, because we built that relationship instead of going after a transaction. They probably would\u2019ve sold us a duplex 20% down because we have a relationship they\u2019re now invested in having us succeed and they\u2019re willing to get much more creative. But we all do that with Google Maps. I just, I shop the market, I click on the roof. It\u2019s a property that I like, something I would like to own. I call them and I just try to build a relationship.<\/p>\n

Rob:
Okay. So to click into that a little bit, you find that property, then you just go and skip trace them or use kind of softwares or services at that point?<\/p>\n

Christian:
Nope. Google again. You could find pretty much everyone\u2019s number on Google. We threw a little thing like eight minutes on how we do this on our YouTube page, Cody and Christian multifamily strategy, how to find every owner ever. But most of these are going to be held by LLCs. Not all of them, but LLC, you can drop it into a site like open corporate, which is free. See who owns that LLC. You can usually Google their name in their city and find a phone number. And then you just don\u2019t overthink it. You pick it up, you dial and you let them know your pieces. This is who I am. This is why I\u2019m calling. I want to know how you got started, and start talking, but I have never paid for skip tracing software. We\u2019ve never paid for leads. And I know most of the players in my market and as we expand markets, we do the same thing. I have a bunch of other people who have asked for help getting started, who Cody and I have done some coaching with. It works in every market in the US. Click on a property, find the LLC that owns it, call the owner, Google their name. It\u2019s that simple. Works for people on every level. I\u2019ve talked to people with thousands and thousands of units and their number is just a Googleable event. Googleable. That is a word now.<\/p>\n

Rob:
Googleable. Yeah. So it sounds like you\u2019re effectively just a master networker. Like networking is really what got to this point. And you kind of mentioned something a little earlier where you said the 80-20 rule where they talk 80% of the time you talk 20% of the time. Why is that?<\/p>\n

Christian:
Well, one, people love to talk about themselves. So you\u2019re giving them room to talk. But when you\u2019re building a relationship, I don\u2019t know why the heck they would listen to you. If you just call them and start just talking about yourself, which is what most people do the first time they make these calls, we call it feature dumping. You\u2019ve practiced all this in your head. You just dump everything in your head onto them. Hey, this is who I am. And this is how old I am. And I have a duplex and I want to be like you and I don\u2019t know how you did financing. Did you ever do seller financing? Everyone does that on their first call, and at some point you just have to get through that. But the 80-20 rule just helps you remember, you can benchmark, okay, am I doing too much talking here?
If they start sharing pieces of their story with you and they really get into their story, you\u2019re starting to build a relationship, and once that gets enough momentum, that\u2019s where you know you need to wrap up the call, close it and basically end with thank you so much for sharing. You\u2019ve done something that I never knew was possible. I appreciate you sharing your steps. I\u2019m going to be in town next week, can I buy you coffee and learn more about how you do this? And if you really want a great closing question, hey, I\u2019m newer to this. I haven\u2019t done what you\u2019ve done yet. How would you recommend I get started? Those are non transactional questions, but that\u2019s how you build a relationship that\u2019s going to get you opportunities that no one else can get.<\/p>\n

Rob:
That\u2019s awesome, man. So where this all comes full circle is that me and David are practicing the 80-20 rule on you.<\/p>\n

Christian:
Yes. This is the time where I get talk because you guys were nice enough to ask me to come on. But yeah, if I had either of you on our channel, I\u2019d be doing the same thing. I\u2019d be asking questions and my goal is to get you talking and gets you excited about a story, because it\u2019s really fun to share the journey that you\u2019ve been on. Everyone has a story to tell. Your job in that first phone call, it doesn\u2019t matter if they\u2019re going to sell you the property or not. If they are invested in you and you\u2019ve communicated your goal, people are going to want to help you reach there. Especially if you have a great why behind it, people are going to invest in you and they\u2019re going to get creative to help you get to the next level. Whether they have a deal, they have someone else with capital or they have friends who have the deal. If you don\u2019t focus about the deal, the deal comes. My old sales coaches would slap me in the face, but we do all of our transactions by not asking for the sale.<\/p>\n

Rob:
You know, I think why this is very powerful and just the genuine kind of authentic side of this is that if you really think about why this works, most real estate investors don\u2019t get to talk about this stuff with their friends and family. Like most of my network, my friends, family, closest friend, best friend, they don\u2019t care at all. Anything I do, they\u2019re like, dude, we get it. You Airbnb, shut up. You know? And so if you contact these different real estate investors and you\u2019re interested in their story, they\u2019re probably dealing with the same thing where their network probably doesn\u2019t really care about their real estate business. And so it\u2019s a very rare opportunity for them to get to speak to someone that\u2019s like, oh my gosh, I\u2019m very interested in what you do. And it helps them feel better about doing it because they don\u2019t ever get to talk about this stuff. I mean that\u2019s how it feels to me. I\u2019m not really sure if that\u2019s true across the board, obviously this is very anecdotal, but we could all probably relate to that in some capacity.<\/p>\n

Christian:
It\u2019s a smaller field than we realize, in that small mid-size multifamily, even the larger multifamily, there\u2019s not that many players. So when you get to know the other people and you get to engage and share your story with someone who actually cares and understands and wants to learn what you did, it\u2019s really fun to share. I love doing it. I over talk. I know that\u2019s my weakness, but turns out that\u2019s a weakness that most people in real estate have. We love to share. We love to tell stories. We\u2019re really engaged. We\u2019re entrepreneurial. So you get a lot of luck in that call. When I have friends make that call for the first time. It is so fun when they call you back and they go, oh my gosh, that worked, we\u2019re meeting for coffee, what do we do next? I\u2019m like, yeah, it works. People want to share what they\u2019ve done and talk about their story. And it\u2019s a small enough community where it\u2019s not a difficult call to make and to land that first meeting.<\/p>\n

David:
All right. So let\u2019s get into some of the fun stuff here.<\/p>\n

Christian:
All right.<\/p>\n

David:
Tell me about some of the mistakes that you guys made, things that took a left turn, maybe some quicksand that you found yourself in, and what you did to get out of it.<\/p>\n

Christian:
I have an excellent one for this. Most painful lesson we learned, Cody and I talk all the time about how it\u2019s relationship, relationship, relationship, know your partners, know their pieces, know their why. We egregiously missed the mark on someone\u2019s why. We got who they are and they communicated their goals, but we ignored their significance, this was actually on that 38-plex. I talked to him before this call, he said, I could share this story. The only investor who ever asked to be cashed out early, he had another opportunity. However, the reason he really wanted out is we got a message from saying, hey, you\u2019ve failed to hear me and my goals, I don\u2019t want to place capital with you guys anymore. And it was a shock, because we put him in our biggest deal, most cashflow, most upside, this was a phenomenal opportunity. And we wanted him to be a part of it.
Every time we\u2019ve met with him, he\u2019s talked about a few things. He\u2019s a little older. So he is like, hey, I haven\u2019t built portfolio to the size I want, I want unit count and I want to see some cash flow. And this thing will be a cash flow monster when we\u2019re finishing the rental bumps and getting the property stabilized. It already cash flows decently. It\u2019s going to get insane over the next year. So we put them in the best deal ever. We\u2019d communicate on what\u2019s happening with the property and what we\u2019re doing. And every time we met, I thought he was happy. Turns out what he really wanted to do. He never had kids. He wanted to be part of the team. He wanted to contribute. He wanted to coordinate contractors. He wanted to be hands on in the field. At the end of the day, he wanted to feel needed.
And looking back through all the nights that we played the cashflow board game together, had dinner together, it came up in every conversation. He talked about cashflow, he talked about unit account, but he talked about wanting to do more for the team and we focused too much on making him money. So at the end of the day, he just got frustrated. It was, you\u2019re not hearing what I want to do. He missed out on another opportunity because he was involved in this opportunity, and it\u2019s the only client we\u2019ve ever lost. We\u2019re still friends. We still play cash flow. It ended well, we did get him cashed out, but we had a five year note where someone wanted to get out in six months because we missed the reason behind it. And the lesson there, you have to return money to people. You have to make money to raise capital. It\u2019s super important. That being said, no one\u2019s reason is money. There\u2019s a deeper reason for every person. And if you want to play this game at the highest level, you need to learn their why behind everything and it goes beyond money.<\/p>\n

David:
Have you thought about going back to that person and saying, hey, I have a great deal, but I can\u2019t take it down myself. I really need your help with this aspect of the deal. Would you want to partner with us?<\/p>\n

Christian:
We\u2019ve thought about it. And I am undecided on what the best thing to do there is since we have precedent of having to pull money, it is a consideration. It is not off the table to do another deal and to try to do it right. I would probably do a smaller deal and rebuild that trust. For the time being, he was very, very gracious and he\u2019s good at keeping business and friendship separate. So we\u2019re still friends. He\u2019s still helping me out with a house project. We\u2019re still going to play board games together. I\u2019m probably going to let it cool down a little bit on the investment side, but I am very open to trying that again. We\u2019re going to do it completely differently.<\/p>\n

Rob:
So Daniel, if you\u2019re listening to this, Christian is ready. He\u2019s ready to have you back. No, I\u2019m just kidding. That\u2019s not his name. I just made that up. Unless it is and that\u2019d be so awkward.<\/p>\n

Christian:
That would be incredible. It\u2019s not Daniel, but we\u2019re open to trying it again. Absolutely. Relationships, we have to do a better job of identifying the why and I\u2019m open to having that conversation again. But the main thing is really identify what you\u2019re doing with someone. If you know who they are, where they\u2019re going and why they\u2019re going there and you know, the real reasons why, you\u2019re always going to be able to raise the capital. You\u2019re always going to be able to find the deal. You\u2019re going to be able to close. You\u2019re going to be able to keep those relationships strong all the way through. That was not fun, having to come up with money to cash someone out six figures when I was illiquid, we had to move a lot of pieces to make it happen. But at the end of the day, we\u2019re always going to take care of our clients. We did make it happen. Everything\u2019s good.
We actually went and called every investor that we have. And we checked in with them. We thanked them. We let them know what their contribution meant for us moving forward. And we asked them how they want to participate. There were a few people were like, wow, this has been hands off. I love that it\u2019s hands off. Just let me know when the next opportunity comes up. I asked some other people who responded with, oh, my gosh, I was waiting for this call. This goes such a long way that you asked me how I\u2019m feeling. I actually would love to participate in the capital raise for the next deal. While it\u2019s not something that we always need, it\u2019s fun to let other people participate, make sure that you hit their targets. And so it was a lesson we learned, we applied it immediately. I always say, get a new set of problems. We had a big problem there. The problem is resolved and we\u2019re not going to make that mistake with anyone ever again.<\/p>\n

David:
Well, that\u2019s really good.<\/p>\n

Rob:
Let me just say, dude, thank you. That is like very honest. That is a very honest lesson that we can all learn from. I\u2019m already thinking in my head. I\u2019m like, who can I call back and say, hey, I\u2019m sorry. No, that\u2019s really great, man. It\u2019s really honest and vulnerable for you to come out and say that because a lot of the people who come on to BiggerPockets and it is the success stories and hey, everything went well, no one really harps on something like this. And seems like you guys are going to really change a lot of how you interact with potential investors and partners from it. So in the end it\u2019s going to be one of the greatest experiences you\u2019ve ever had, probably.<\/p>\n

Christian:
Yep. And as a consequence to going quickly, like you\u2019re, you\u2019re going to have difficult times, stuff will get hard. You just have to learn. And again, you come back and you build a bigger boat and you go back at it again.<\/p>\n

David:
It\u2019s really good. What about a mistake from an operational standpoint that you can share?<\/p>\n

Christian:
Operational standpoint \u2026<\/p>\n

David:
Miscalculating cash flow, renovations that went poorly?<\/p>\n

Rob:
Legal paperwork that might have missed? I think your article [inaudible 00:48:15].<\/p>\n

Christian:
Oh boy. Oh boy. Yeah. I won\u2019t go into the details too deep on this one. But like I, when we got the 38 structuring everything as equity instead of debt was a mistake. However, we didn\u2019t know how else to do it. So looking back, I\u2019m like, well, we got it done. It wasn\u2019t perfect, but it was as good as we knew how to make it. So operationally, technically it was a mistake. Also, I wouldn\u2019t be where I am if we didn\u2019t do it anyway. A big one was property management. We put property management under one company. The company went under and the communication was horrible. It was a ton of work to get set up and correct all the books. And, oh my gosh, it was just months of pain. Cody and I actually opted to start our own property management company out of that. Our options were find a new vendor or just do it ourselves. I conveniently had someone in my network who was perfect, her name\u2019s Hannah Caldwell. She runs our property management and she is phenomenal. So we had the pieces to do that. But operationally, I didn\u2019t spend time vetting that property manager. That was just a lot of pain. I wouldn\u2019t do that again.<\/p>\n

Rob:
I mean, your property managers are the lifeblood of your business, right? Especially once when you get 71 units. So yeah, I think that\u2019s one of the things that you don\u2019t really know until you know how to vet your property managers because really property managers, they kind of run stuff. So it\u2019s a learning experience on how to navigate those people because no two property managers are the same. I mean, not at all. Everyone\u2019s very different on how they run businesses.<\/p>\n

Christian:
I got a bonus answer to that question too. Before you close, check your septic tanks. We had a massive septic problem with less than a week after we closed. We closed that thing. We were just told, yeah, the septic tanks are fine, they\u2019ve been pumped. They haven\u2019t there\u2019s poo coming through showers. It was awful. Add that to your due diligence. If you have septic, take a look at it before you close, because that sucked.<\/p>\n

David:
You\u2019ve got me going back in time and thinking about every unexpected problem. A huge proportion of them are related to septic things. Always man-<\/p>\n

Rob:
We call that doo diligence. D-O-O diligence.<\/p>\n

David:
Doo doo diligence. Yeah. Like the lines coming out of the, even single family homes into, to tie into the city sewer are often time needing to be looked at or needing to be scoped. You get literal tree branches and roots that can go through these things, puncture them and leak. You have septic tanks themselves that have been corroded and they\u2019re leaking into the area. Like there\u2019s so many ways that septic can go wrong, but it\u2019s not something they talk about on HGTV. So nobody ever thinks about it.<\/p>\n

Rob:
Well, they do talk about it on dirty jobs though.<\/p>\n

Christian:
Yeah. If you want to be a good operator, you got to be number one in number two.<\/p>\n

David:
There it is. That\u2019s [inaudible 00:51:14]. Very well, Christian. All right, well, I\u2019m going to move on onto the next segment of our show. It is called the deal deep dive. In this segment of the show, we will dive deep into one specific deal that you\u2019ve done. Do you have one in mind? Christian?<\/p>\n

Christian:
Yeah. Cody shared a lot on the 38 unit. Now if you haven\u2019t seen his video yet, go back and watch it, because he did incredible. A really fun one because it\u2019s really critical how the relationships came together was the three triplex deal, seller finance, side by side.<\/p>\n

David:
Okay.<\/p>\n

Christian:
We did that, I believe we closed that December of last year.<\/p>\n

David:
So we will fire some questions off about that one. So the first kind of question is what property is it? It is a three triplex deal.<\/p>\n

Christian:
Three duplex. Three twos. I sometimes mis say that\u2019s hard. Three twos, six units, three duplexes.<\/p>\n

David:
This was what you were talking about when you said that the owners that you knew were driving around, they sold you these on the 10%. Okay?<\/p>\n

Christian:
Yes they did.<\/p>\n

David:
Rob, next question.<\/p>\n

Rob:
How did you find said deal?<\/p>\n

Christian:
Well, we built the relationship, we met with those owners a little while back after a lot of calls and a lot of learning how to frame that call. One of the calls Cody actually made was, hey, it\u2019s Cody. I\u2019m the guy who called you a few months ago and botched the call. They\u2019re like, oh, I remember you.
So we finally built that relationship. I closed the duplex that they were actually the listing agent on. That was the second duplex I ever purchased. That was how I started in that relationship. But we came in after close. They finally agreed to meet with us. First thing they did was pop us in the truck, drive around and we looked at a bunch of their portfolio. They have hundreds of units, almost no debt. They\u2019re in their early seventies. And they just talked about, hey, this is how I structured this deal. This is how I structured this. They taught us how they bought a duplex. Then placed the second lien on it as a down payment on a larger building. So they taught us how to buy deal zero down once you build some equity, but they taught us all these different strategies and drove us around.
Those were one of the properties we passed and he mentioned in the car, yeah, we have a couple partners on this that would probably like to be cashed out. This could be a good deal for us. And then we moved on. We don\u2019t make it transactional. So we didn\u2019t bring that up again until a couple months later when we were in office, I was like, hey, you mentioned you had some partners who wanted to be cashed out. Where are you guys at with that? And they proposed, well, how about you guys put an offer in front of us and we\u2019ll play the bank.<\/p>\n

David:
Okay. So what did you end up paying for the property?<\/p>\n

Christian:
So for the properties, we paid 900,000, so 300 a duplex, seller financed, 10% down. Those guys typically will do 20 or more and you could call them and probably do a deal because we had the relationship and they know we know how to structure these because they taught us how to structure it. They allowed us to play with 10% down, which was a huge advantage.<\/p>\n

David:
Okay. So we would normally say, how\u2019d you negotiate it? You just explained that right there. How\u2019d you fund it? You put 10% down of your own money and did seller financing. Did you do seller financing for 10%, so it was half the down payment, or did you do seller financing for the whole thing other than the 10%?<\/p>\n

Christian:
Whole thing, so it was 90% seller financed.<\/p>\n

David:
Okay.<\/p>\n

Christian:
But I didn\u2019t use any of my own money on the 10%.<\/p>\n

David:
Where did that come from?<\/p>\n

Christian:
So this was from a client, this goes back to learning everyone\u2019s story. So the sellers, we learned what they\u2019re trying to do. We know they\u2019re trying to convert their portfolio over the next 10 years into passive income through notes. So I offered to be their buyer on everything and we\u2019ll start taking on those transactions as we go. The person who funded it, I met him a while back. He had just flipped a property and he was just asking for advice on how to move forward. He had lost money on flips, he\u2019d made money on flips and he is like, you know what? I just kind of want to place this money in syndications or other real estate and just see it double every five years. And we got really deep into that. He has a great job at Microsoft, he doesn\u2019t need the cash flow. He just wants to double every five years.
This deal was under market rent. It was about a market purchase, we might have got a little discount on it, but we knew we had upside in rents. Didn\u2019t have a lot of day one cash flow. We had a lot of upside on future valuation. So when I called him, I had my normal call. Hey, based on our last conversation, had an opportunity, came up, wanted to discuss it with you. We wrote a note that says he funds the entire down payment, $90,000, we get cash flow for the next five years on this as we raise rents, no distributions, no interest, that\u2019s just a hundred percent of it, we paid nothing and we get to cash it for five years. In exchange, at the end of that, we will take his 90 and we\u2019ll pay him 180, which it will do in cash flow, and will probably also do in appreciation. So we\u2019re can refinance and pay him, or we can just sideline money and pay them. But at the end of the day, zero down deal, the properties will buy the property for us, and his collateral is in the event we don\u2019t cash him out, he gets all three duplexes, but at five years ago dollars, and we\u2019re improving him and raising rents. So his collateral is probably better than his buyout.<\/p>\n

Rob:
That\u2019s amazing. Well, congratulations on a good deal. I mean, what lessons would you say you\u2019ve learned from this deal?<\/p>\n

Christian:
Well, I learned, like I\u2019ve said through this whole call, relationships are everything. We couldn\u2019t have done that if we didn\u2019t know what people\u2019s goals were and what their why was, because that\u2019s a really unique structure. You don\u2019t usually just do a deal and structure it all on the back end of, hey, we\u2019re just going to pay you out one time in five years. That opportunity is not always available. We also learned that a little bit of creativity can take a 10% down deal and make it a zero down deal, and you can cash flow zero down. I\u2019m not a math wizard, I leave that to Cody, but I can afford a lot of real estate for $0.<\/p>\n

Rob:
Yeah, but you are on the accounting side of it. So I think he might throw it back to you.<\/p>\n

Christian:
Cody looks over the numbers. I make sure we categorize everything in the right slot and everything gets filed. When it comes to doing the math, Cody is a legitimate genius. He is faster at doing math in his head than anyone I\u2019ve ever met. That being said, I account for said math and make sure that everything actually does balance at the end of the day.<\/p>\n

David:
All right. Well that sounds fantastic. We\u2019re going to move on to the next segment of the show. It is the world famous, famous for. In this segment of the show, we are going to ask you the same four questions we ask every guest and get your perspective on them. Question number one, what is your favorite real estate book?<\/p>\n

Christian:
Favorite real estate book is actually a BiggerPockets book. It\u2019s Brandon\u2019s book The Book on Rental Property Investing. That is the first book I ever read on real estate. I love it because while the application\u2019s more important than the information, that book gives such a broad spectrum of stuff on just about everything. I read that and that was the point I realized, oh my gosh, I can totally do this. That book got me started. If you\u2019re looking for just a broad entry point, that book changed my life.<\/p>\n

Rob:
Great. Question number two, favorite business book?<\/p>\n

Christian:
Favorite business book. It\u2019s not directly business, but 10X Rule, Grant Cardone, the mindset applied to business has allowed us to do everything that we do. Love the guy or hate the guy, the content of that book is exactly what you need if you want to scale really quickly and scale effectively, it\u2019s all about eliminating the distraction, setting high enough goals, and then smashing those goals way out of the park. That book has taken our business to a whole different level, and that conference is where Cody and I really connected. So for a lot of reasons, 10X Rule is my favorite book to grow your business.<\/p>\n

Rob:
Super fair, man. That\u2019s sounds like it was the beginning of a beautiful relationship, the beginning of a beautiful bromance.<\/p>\n

Christian:
Yes.<\/p>\n

Rob:
Question number three here, what hobbies do you have outside of getting seller finance deals and crushing it in the real estate game?<\/p>\n

Christian:
Well, I got a couple guitars behind me. I haven\u2019t played them as much as I would like to this last year, to scale from two to 71 units and leave the nine to five, I\u2019m professionally unemployed right now, it is a heck of a lot of work. So I can honestly say my hobby right now is real estate. Like that is all I do. I talk real estate, my wife will tell you this too. I talk real estate. I think real estate. I think deals. I think systems. I\u2019m having fun, doing what we do. However, once we get a little bigger, we get stabilized and I have a few less projects, I\u2019ll be right back to playing guitar and will probably add to that wall significantly.<\/p>\n

David:
All right. Awesome. In your opinion, what sets apart successful investors from those who give up, fail, or never get started?<\/p>\n

Christian:
You don\u2019t define the why behind what you\u2019re doing. It\u2019s pretty easy to set a goal and there\u2019s a lot of attainable goals out there. For a lot of people, they\u2019d love to have $10,000 a month, passive income. They\u2019d like to have 20,000 a month. Whatever your goal is, it\u2019s easy to set a goal. It\u2019s not hard to set a timeline on it, but to actually achieve it, you need to have a big enough why behind what you\u2019re doing. For me, one, I want to retire my wife. She works in the school district and she has a really rough school district here in the Seattle area. I want to give her the option to retire. I\u2019m not going to force her to, but I want her to have that option where she gets to go to work. She doesn\u2019t have to go to work.
I also have lived here for 30 years in Seattle. It\u2019s gray, it\u2019s cold. The food\u2019s not very good. The people aren\u2019t that nice. I would like to move somewhere warmer, and I would like to own my time when I do that. Those goals for me are absolutely big enough for us to get huge in scale. Cody and I have a shared goal of we want to share this with a lot of people, there\u2019s a ton of ways out of the nine to five, this is a way that has worked really well for us. The creative financing, I haven\u2019t seen enough people share enough depth on it. So the big why behind the massive scaling and the going fast is I want to share this with as many people as humanly possible. I don\u2019t believe in the gurus who talk about stuff and don\u2019t do anything. So I want to do something incredible. I want to scale the unscalable so I can show other people how to do it.<\/p>\n

Rob:
That\u2019s awesome, man. Thank you. I appreciate that. We can tell you\u2019re very passionate about it. So last thing here, Christian, can you tell us where people can find out more about you? Where can people invest with you? Where people learn more about creative financing, a la the Christian method?<\/p>\n

Christian:
Well, Cody and I have a YouTube channel where we try to put everything. There\u2019s some people who hold stuff back. We put everything we have on there. Any strategy, we teach you how to look up owners, we use the example of how to find our actual cell number. I mean, I actually share everything. That\u2019s Cody and Christian Multifamily Strategy. You can follow us on YouTube. We post three times a week. Midweek we do whiteboard Wednesdays where we just take five questions from people and answer there. That is an excellent place to get information on how we did what we did. If you want to go deeper, our website, themultifamilystrategy, we have a course, it\u2019s brand new, launched on May 1st, that you can follow the link and find out exactly how we did what we did and create your own multifamily strategy and your path to success. Either one is fantastic. You can follow us on YouTube or follows us there, themultifamilystrategy.com.<\/p>\n

Rob:
Awesome. David, what about you? If people want to invest with you, if people want to learn all about your real estate nuggets, where can they find out more about you?<\/p>\n

David:
Got lots of nuggets, man, this is McNugget right here. So you could go to investwithdavidgreen.com if you want to invest with me, that\u2019s pretty simple website to navigate. You can follow me online at David Green 24, see what I\u2019m up to. I actually hired a new marketing company. So I\u2019m doing the cool stuff that all the young guys like you, Christian, are doing, TikTok, weird little emojis in the videos, cute stuff, something I never thought that I would ever be doing. So please let me know what you think about how my content looks right now. And please help me to know that my screaming insecurities that this is a terrible idea are unwarranted and people actually like what\u2019s being seen. Christian, I\u2019d like to get your opinion on that as well. Check out my page and tell me what you think.<\/p>\n

Christian:
I\u2019ll take a look. What I found with the whole Instagram TikTok thing, you could follow me at Instagram by the way at Christian Osgood, but the content that does the best is the dumbest content. And I hate that. I hate putting out stupid stuff. That being said, if I can reach a million people on TikTok and 1% of them click to my YouTube page, and I know we have excellent content there, it\u2019s worth the reach that it does. But I consider that the garbage part of the funnel, everyone who really wants to learn or cares what we did can trickle down to YouTube where we actually have great content, just like you, David. You have some of the best content on the internet within BiggerPockets. People should watch you there so that they watch you here. Because anything that gets clicked on is invariably my stupidest video does the best. And if I put excellent content, 12 people watch it and like it.<\/p>\n

David:
I know.<\/p>\n

Christian:
We do a dumb thing where Cody\u2019s wearing a hoodie and says a couple stupid things, quarter million views in like an hour. I don\u2019t get it at all.<\/p>\n

David:
It\u2019s a problem. You try to use it as a hook to get people\u2019s attention and then say like, now actually go eat real food over here that\u2019s going to help build you wealth and make you money. Not like just fast food that people can get right off the bat. So if you\u2019re listening to this and you\u2019re addicted to fast food, well, I guess you\u2019re listening to this, you\u2019re not addicted to fast food. So you are doing good. Rob, how about you? Where can we find out more about you?<\/p>\n

Rob:
Oh, you can always find me on the YouTubes. Smash that subscribe button. Leave me a comment. Let me know something you learned from my videos over at Rob Built. You can find me on Instagram at Rob Built as well. TikTok at Rob Builto. Hey, if you\u2019d like, if you\u2019d like, just if you want, don\u2019t feel like you have to, but if you want to just head over to Twitter and follow me too, Rob Built channel.<\/p>\n

David:
I\u2019ll take a moment to be serious here. Here is what I would like everyone to understand. If you are standing on the edge and you feel like I don\u2019t want to take the leap, I don\u2019t know where I\u2019m going to end up. There are many options that don\u2019t involve you just buying a property and hoping that it works out, especially when the market\u2019s hot and the stakes are higher, because you are going to have to make decisions quicker than you ever did before, unless you\u2019re doing what Christian and Cody do, where you get off deal stuff, off market stuff, and you can make personal relationships. The normal buyer, this is a very challenging time to try to move forward. You\u2019re going to pay more than what you wanted to pay. There\u2019s going to be a degree of value add that has to happen in almost any deal. You have to have a vision for how you\u2019re going to make that property better. The days of look at it, analyze it, see the return you want and buy it are largely over, in most cases.
So do something to make this journey easier for yourself. Get connected with someone else who is doing deals, invest in a deal with someone else and just get your foot in the water. See how it feels. Get used to what the world of real estate looks like. It will help make those fears go away. Get around other people, make more friends that are in real estate that talk about it all the time. Hang out with real estate agents, hang out with real estate investors. Be curious about what they\u2019re doing and kind of like peek behind the curtain and realize it\u2019s not rocket science, just feels like that when you\u2019re on the other end. Don\u2019t think it\u2019s got to be all or nothing. I don\u2019t know what I\u2019m doing, I\u2019m just going to go buy a property. Get yourself immersed into this world. A lot of mystery will go away. Would you two each kind of agree with that advice?<\/p>\n

Rob:
Oh yeah, definitely.<\/p>\n

Christian:
Absolutely. Absolutely. You just got to get out there and do it. That is the end of the day, nothing replaces actually buying real estate. If you want to be an investor, there\u2019s only one way to do it. Buy something.<\/p>\n

David:
Yep. There you go. Get in the position where you can handle that. House hacking\u2019s a great way to go about that. You need to buy a house anyways. You might as well start there. Get some momentum, realize that, oh, I just have to track income, track expenses, see what works, see what doesn\u2019t work, and then go buy another property after that. So, Christian, thank you very much. I just want to highlight to everybody again, reach out to us, contact us, try to figure out how you can get more into our world so you get exposed more to real estate. Follow Christian on Instagram at, is it Christian Osgood?<\/p>\n

Christian:
Yep.<\/p>\n

David:
Follow Rob at Rob Built, and follow me at David Green 24, and follow BiggerPockets everywhere because they have tons of content that you don\u2019t realize is out there. There\u2019s interviews like this. There\u2019s more interviews on YouTube that are much shorter, hard hitting, get to that point, also maybe more entertaining. There\u2019s some fun stuff that\u2019s out there. So check out BiggerPockets on YouTube, follow their channel and learn as you go. Christian, thank you very much. It was great to meet you. Please give Cody our best.<\/p>\n

Christian:
Yes sir.<\/p>\n

David:
This is David Green for Rob doo doo diligence Abasolo, signing off. We might have just created a thing. That might get some traction.<\/p>\n

Rob:
Doo doo diligence, baby.<\/p>\n

\u00a0<\/p>\n<\/div>\n

Help us reach new listeners on iTunes by leaving us a rating and review! It takes just 30 seconds and instructions can be found here<\/a>. Thanks! We really appreciate it!<\/p>\n


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