Why Investors Should Search for Fresh Headaches

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How many rental units do you want? Depending on who you ask, the number of rental properties can differ dramatically. A young investor may be looking to scale their portfolio 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, the optimal rental unit count could be none at all—they may purely want passive income.

Christian Osgood knows this all too well, and it’s how he’s grown a seventy-one-unit portfolio in such a short amount of time. As half of a dynamic investing duo, Christian and his partner Cody Davis know that the first place to look for a deal is within someone’s goals. Unlike most off-market deal hunters, Christian and Cody don’t blatantly ask a seller if they’re willing to part ways with their property. They do something much different and a bit unorthodox.

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

David:
This is the BiggerPockets Podcast, show 605.

Christian:
Now I’m 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’ll file anything. While it’s a pain, I’m understanding it. And next year, when I get here, I’m not going to have an accounting problem. I’m going to have a whole new set of problems. And that is what I’m targeting every time. When I’m stuck, I need to make sure I’m not stuck on an old problem.

David:
What’s 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’t fail approach. If you’ve been trying to find deals and can’t find them, if you’ve 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’s harder work, but it is definitely something that has a much higher upside and today’s interview with Christian was fantastic. I loved this conversation. Rob, what were some of your favorite parts?

Rob:
You know, I think it was really nice to find out that you’re 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 … 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’ve had a lot of success doing that.

David:
A ton of it. And then they also have learned that everything is figureoutable or as they say in today’s show, everything is Googleable. And that leads us to today’s 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?

Rob:
I haven’t. 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’s as easy as it sounds. Just Google it.

David:
That’s 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’s partner, Cody, who has an inspiring story. These two are working a method that anybody can use. There’s a lot of good advice here about the right way to contact people, how to make sure that they’re talking more than you, and you’re bringing more value than you’re 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?

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’s a lot to learn from these moments. So stay tuned for that.

David:
Yes. And we’re going to be doing more of that. I’m coming after you. You come on the podcast, you’re going to share the good, you’re also going to have to share the bad and the ugly. All right. Without further ado, let’s bring in Christian. Christian Osgood, welcome to the BiggerPockets Podcast.

Christian:
Hey, thanks for having me.

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’t hear our episode with Cody Davis, go check out 554. And Cody is what 21, 22 years old? How old is he now?

Christian:
He’s 22 now.

David:
22. Okay. He’s grown up quite a bit.

Christian:
He’s done it. He’s old.

David:
He’s 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.

Christian:
Yep. On the business side, I am his partner on a majority of the deals that he’s done and we’ve done pretty much this whole venture together for the last 13 months or so.

David:
You’re significantly taller than Cody, right?

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?

David:
I ask, because I think I saw on your Instagram, like I think I’m following Cody and he was posting pictures with someone who looked like Groot standing next to Rocket Raccoon. And now I’m seeing this is Groot.

Rob:
Let’s get this man in apple box.

Christian:
There we go. I am Groot.

David:
So let’s start off tell us. Yeah, that’s 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’re doing? What skill sets do you each bring? How’s your partnership look, and then we’ll dive more into your portfolio.

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’ve 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’s 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’s 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.

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’t 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’s like, if you’re going to start a business or a partnership, what you’re describing right now is the first thing everybody needs to work out is if we are successful in getting opportunities, if they’re a real estate agent, that’s leads, people that want to buy or sell homes. If you’re a real estate investor it’s properties, we might want to buy.
That’s 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’s coming in and out, help you understanding if you’re even profitable. So I love that you’re 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’t 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’s 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?

Christian:
Well, it happened organically. I guess, sticking with the ship metaphor, what we’re going to do is when you have a partnership, you want to make sure the ship is sailing in the same direction. It’s the most important piece. So we have the same goal. We’ve agreed where we’re 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’re in that environment, it’s all, hey, 10X let’s set huge goals. So we set this massive goal of, well, I’ve 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’re 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.

David:
Okay.

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

Christian:
Yep. That’s been pretty consistently the entire partnership. Sometimes we’ll find a deal and Cody will throw it in front of me. And I feel like we’re already operating at capacity. He’s like, I love this deal. You want to do it? And I usually say, okay. And if I don’t, Cody goes well with, or without you I’m doing it. And I was like, well, I don’t want to be left out. So let’s do it. There’s 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’m having to learn how to master accounting and get through all the legal and the pieces that come with that.

David:
This is so good. I mean, you might be what you’re 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’s sort of the end of the first quarter so we were talking about what we’re going to do going into quarter two. And I have a lot of newer agents. They’ve 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’s 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’s the one that communicates with the client and the junior agent’s the one that kind of learns the game by doing all of the work.
And what I’ve been finding is that the junior agents are just very hesitant to go tell anyone they’re a real estate agent. They just want to stay in this very comfortable lane, and they keep saying, I don’t know what I’m doing. I don’t know what I’m doing. You’ve been an agent for 12 months. You know more than almost every other agent in this office, because you’ve worked with like 50 clients in the 12 months that you’ve been here instead of the average realtor might do one or two. But it’s this idea, what we found is that they have this belief that they don’t have all the answers and so they can’t 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’s 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’t 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’s it. And you can’t get every single answer that you would ever need. It sounds like that’s sort of how you and Cody are doing things.

Christian:
Yeah. I think we’re 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’s the scripted system for everyone. And so we’re 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’s 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’s 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.

David:
Rob, what say you?

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’t want to do?

Christian:
Yes. Well, one thing there’s no such thing as an even partnership, like people are just different. When you have different roles, there’s going to be different workloads. So there’s always going to be some level of dissonance you have to resolve. I’m pretty sure neither Cody or I wants to sit on hold and pay bills. That’s just not a task that anyone enjoys. However, I’m 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’s an amazing storyteller. So when he gets in front of clients, I just know he’s going to land that pitch nine out of 10 times, where I’ll do it seven out of 10. So we’re not always doing what we like to do, but we’re doing what we’re best at. And at the end of the day, we’re moving forward at a very, very fast pace. Not everyone’s done what we’ve 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’s about getting it done. And that’s what we do.

Rob:
That’s really nice, man. So let’s kind of lay this out tactically, because you say you kind of handle the back end and then he’s on the front end, which I think makes sense to me, but to kind of give some good definition here, let’s say Christian, my dad’s got this 30 unit apartment complex. We want to get out of the business. I’ve 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?

Christian:
Well, we’ll look at the pieces that we have. If there’s something on the front where someone’s obviously going to be more relatable than the other, we’ll take that sales call. So if it’s someone like we find out, hey they started really young, they did a lot of creative financing, I’m going to put Cody in that position every time because Cody’s the most relatable and his story is absolutely incredible. I don’t know a lot of people who’ve done what he’s done by 22. If I talk to someone who’s started very conventionally, they had a nine to five for a long time, it depends on the story, but if I feel that I’m really going to connect with that person, I might reach out. But again, we typically send Cody because Cody’s 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’re talking deal is I just want to meet. One of us is going to go out and get dinner, get coffee. We’re 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.

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’re just kind of learning everything as you go?

Christian:
Definitely the latter. We have a policy of we can’t have the same problems this year that we had last year, that’s how you know you’re stagnant. If I look at 2021 Christian, I go, wow, I don’t have the real estate I want to have. Well accounting for real estate doesn’t 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’re buying a lot of real estate for the first time, don’t close it all in November and December, you don’t have a whole lot of timeline to learn the accounting, but we came in, we solved the first problem. I don’t have the real estate I need to achieve my goals. With that problem gone, we had a, hey, I’m 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’m 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’ll file anything. While it’s a pain, I’m understanding it, and next year when I get here, I’m not going to have an accounting problem. I’m going to have a whole new set of problems. And that is what I’m targeting every time. When I’m stuck, I need to make sure I’m not stuck on an old problem.

David:
Man. This is gold.

Rob:
Yeah, yeah, yeah. You’re looking for, I’ve never really heard anyone excited for the next set of problems, which is really funny because you’re just trying to solve today’s problems. And then you’re like, all right. My goal is next year to have a whole nother set of problems. That’s a pretty rare thing to say, I think.

Christian:
Well, that’s how you know you’re moving forward. If your problems aren’t old problems, new problems are good. That’s how you benchmark success. At least that’s how I’ve done it.

David:
I think there’s some magic in what you’re saying right now, to be honest, like this should be one of our better shows because this is what everyone who’s struggling needs to hear. I’ve often wondered why an incredibly intelligent person can go to work for another company and fall into a rut, let’s say if they get hired to be a CPA for another company, if they’re hired to be a CPA, they probably have a mindset and a skillset and they’re 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’s almost like a mindset that encourages you to do as little work as possible, as slow as possible, as easily as possible. Don’t think creatively. Don’t 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’m going to give you a raise and then, oh, I’ll give my best now. It’s just, there’s something about human nature. I rarely ever go into a Subway restaurant and have the sandwich maker that’s crushing it. Who’s 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’m going to do the best job I could. Right?
It’s not normal. We don’t see that very often. It’s 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’s 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’t 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’re 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’re saying, right? So I come to the conclusion that I believe it’s 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’ll be like you, by your own ambition were not an account. You don’t keep books. That’s 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’t like, I’m not going to move forward with having a kid until I know every single scenario there could be. It’s 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’m going to hand it back to you to get your opinion on that. But this is what we’re 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’s job to take away all my fear, to give me every answer that could ever be there before I start.

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’re paired with all the smart kids and at some point someone might have had a point where it’s, hey, I don’t really feel like learning this right now, so I’m kind of going to let everyone do the work, and I’m just going to play team coordinator. You do this job, you do this job and you don’t do anything. And at the end of the day, that’s the wrong practice. You nothing gets produced if there aren’t 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’ve never done it, you don’t have a knowledge base, it’s really hard to manage people and lead people if you just don’t know what you’re doing. I think there’s 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’re doing, and if they leave my company, I’m not totally hosed. Like you just need to learn how to run your business if you want to run a business. I’m not free of time yet. Turns out when you buy a lot of real estate low to no money down, it’s actually a ton of work. So this is not passive income, or at least it’s a ton of work to get passive. But as you’re scaling, you just need to have the ability to know exactly where you’re headed, why you’re headed there, and then just go and knock it out.

Rob:
Yeah. I don’t think you can really ever be really fully prepared to scale. Like obviously there’s 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’s the classic, I guess the adage of like a fish that’s in a very small tank is going to just grow to the size of that tank, right? It’s not really going to get big, but if you give it a really big tank, it’s 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?

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’t 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’re at.

Rob:
Well that’s exactly what I’m talking about. That really proves my point even more. You had two units, your next deal was two units, and so you’ve 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’s get crazy. And maybe an eight unit and you say, no, let’s 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.

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’d already communicated my goal to Cody on, I want to get to 30 units by 30. And unit count isn’t really a relevant goal, it was just my goal. And once I’ve committed, I’m 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’m 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’s 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’t 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.

David:
Let’s unpack that for a second. Because as someone listening, you’re going to hear, okay, well I hear you telling me, I should just go make it happen, but I don’t know what that looks like. So let’s 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.

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’s no list or target. I don’t care if they’ve owned it for one year. I don’t care if they’ve owned it for 30. I don’t care if they’re 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’re headed and why they’re going there. I communicate succinctly the same pieces about myself, the relatability, the goal and the significance behind what I’m doing. So now we all have a relationship.
It’s the same exact thing when you’re raising capital, I know what pieces people have, so when I make that phone call, I’ve already met with them. We didn’t talk about a deal. I talked to them about what’s 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’s just an extension of a conversation we’ve already had. And if you’re getting started, that’s the only thing that I think you need to focus on, this is a contact sport. You need more contacts. Don’t worry about the deals, worry about the relationships. And only the relationships. There’ll be a time to be transactional. And if you’re getting started, you’re not there yet.

David:
So let’s role play that.

Christian:
Yeah.

David:
I will be the person who could be a potential investor and you’ve got the deal. So you’re calling me.

Christian:
All right.

Rob:
I’ll be the phone ring, ring, ring, ring.

David:
Hello?

Christian:
Hey David. It’s Christian. How are you, man?

David:
I’m good. Thanks for calling Christian. What’s on your mind?

Christian:
Yeah. Well I wanted to touch base with you. Based on our last conversation, you had mentioned that you’re really, really trying to get more units to your name, and you’re 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.

David:
Okay. Would this be something you’re bringing to me to buy? Or is this something you’re going to buy?

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’s 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’ve come up with and based on our last conversation, I’d like you to be a part of it.

David:
Okay. Can you sum up what you like so much about this deal?

Christian:
Well, first of all, it’s a seller financable opportunity, which is how we’ve leveraged low down to quickly multiply money. We’re 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’ve been given. We have five years to do about one year worth of renovation. Cash flow is a little light day one, but we’re going to compensate with a equity bump on the back end. So we’ll offer you two to one on your money in five years, so you put in 100, pay you 200, and as it’s cash flow, you get your percentage cash flow.

David:
All right. Now I don’t quite understand what you’re going to do to add value. Are you saying that they just need to be renovated and made nicer?

Christian:
So first of all, it’s 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.

David:
Okay.

Christian:
Terrible performance, has been mismanaged. Conveniently, we have a property management company. We’ve done this, so we know what we need to do on the rental bumps. In addition, there’s a contractor that I’ve 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’re beautiful units. We get the highest rent per square foot in Moses Lake. We know how to renovate. We know how to manage. Cody’s already raised rent on 30 units over the last few years in the same market. This is exactly what we’ve done to create value on every other property. It’s just a larger scale.

David:
Okay. So you’re saying that it’s being mismanaged, the rents are not as high as they could be, and you think you can change that.

Christian:
Yes. This property, we started, the septic tanks were trash. Water heaters were either not working or leaking everywhere, there’s a homeless camp on the site. I mean, this had everything wrong with it, but there were all pieces that we’ve 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.

David:
So is the plan to bump rents, increase the value, and then refinance in five years?

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’t 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.

David:
Okay. So how can I be sure that I’m going to get my money back?

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’s 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.

Rob:
Honey, honey, that sounds like a really great deal. I think you should invest.

Christian:
What we recently ended up doing on this, you always go in with a clear plan of how you’re 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’re 50-50.

David:
Gotcha. Okay. And then how are you coming up with the actual people that you’re going to call and propose this to?

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’s 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’re 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’s going to help us grow the money and multiply the money. Cash flow makes sure that we can keep it forever.

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’s say Houston, for example, you’re 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’s that process?

Christian:
That’s exactly it. I look at the roofs. I go, hey, that looks like a 12-plex. I’m going to go zoom in and I’ll drop my little guy on street view and look at it. I’m like, wow, I’d 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’s worth? I don’t do any of that. We call and we just ask for a meeting. So I’ll take Moses Lake as an example, because that’s 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’m a new investor. I have a couple duplexes. I’ve come to the realization that I can’t 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’ve 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’m talking to them, I listen to their story, we have them back and forth. And then I ask to meet them for coffee. It’s never about a transaction, the coffee, I’m going to expand on what they’ve done and how they’ve done it. That’s how Cody and I learned how to do all the creative financing.
There’s two guys in particular, central Washington, we called them, no idea how to buy their big buildings. We just know that they’ve accomplished something we haven’t. 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’ve 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’ve sold us a duplex 20% down because we have a relationship they’re now invested in having us succeed and they’re 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’s a property that I like, something I would like to own. I call them and I just try to build a relationship.

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?

Christian:
Nope. Google again. You could find pretty much everyone’s 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’t overthink it. You pick it up, you dial and you let them know your pieces. This is who I am. This is why I’m calling. I want to know how you got started, and start talking, but I have never paid for skip tracing software. We’ve 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’s that simple. Works for people on every level. I’ve talked to people with thousands and thousands of units and their number is just a Googleable event. Googleable. That is a word now.

Rob:
Googleable. Yeah. So it sounds like you’re 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?

Christian:
Well, one, people love to talk about themselves. So you’re giving them room to talk. But when you’re building a relationship, I don’t 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’ve 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’t 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’re starting to build a relationship, and once that gets enough momentum, that’s where you know you need to wrap up the call, close it and basically end with thank you so much for sharing. You’ve done something that I never knew was possible. I appreciate you sharing your steps. I’m 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’m newer to this. I haven’t done what you’ve done yet. How would you recommend I get started? Those are non transactional questions, but that’s how you build a relationship that’s going to get you opportunities that no one else can get.

Rob:
That’s awesome, man. So where this all comes full circle is that me and David are practicing the 80-20 rule on you.

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’d be doing the same thing. I’d be asking questions and my goal is to get you talking and gets you excited about a story, because it’s really fun to share the journey that you’ve been on. Everyone has a story to tell. Your job in that first phone call, it doesn’t matter if they’re going to sell you the property or not. If they are invested in you and you’ve 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’re 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’t 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.

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’t 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’t care at all. Anything I do, they’re like, dude, we get it. You Airbnb, shut up. You know? And so if you contact these different real estate investors and you’re interested in their story, they’re probably dealing with the same thing where their network probably doesn’t really care about their real estate business. And so it’s a very rare opportunity for them to get to speak to someone that’s like, oh my gosh, I’m very interested in what you do. And it helps them feel better about doing it because they don’t ever get to talk about this stuff. I mean that’s how it feels to me. I’m not really sure if that’s true across the board, obviously this is very anecdotal, but we could all probably relate to that in some capacity.

Christian:
It’s a smaller field than we realize, in that small mid-size multifamily, even the larger multifamily, there’s 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’s really fun to share. I love doing it. I over talk. I know that’s my weakness, but turns out that’s a weakness that most people in real estate have. We love to share. We love to tell stories. We’re really engaged. We’re 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’re meeting for coffee, what do we do next? I’m like, yeah, it works. People want to share what they’ve done and talk about their story. And it’s a small enough community where it’s not a difficult call to make and to land that first meeting.

David:
All right. So let’s get into some of the fun stuff here.

Christian:
All right.

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.

Christian:
I have an excellent one for this. Most painful lesson we learned, Cody and I talk all the time about how it’s relationship, relationship, relationship, know your partners, know their pieces, know their why. We egregiously missed the mark on someone’s 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’ve failed to hear me and my goals, I don’t 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’ve met with him, he’s talked about a few things. He’s a little older. So he is like, hey, I haven’t 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’re finishing the rental bumps and getting the property stabilized. It already cash flows decently. It’s going to get insane over the next year. So we put them in the best deal ever. We’d communicate on what’s happening with the property and what we’re 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’re not hearing what I want to do. He missed out on another opportunity because he was involved in this opportunity, and it’s the only client we’ve ever lost. We’re 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’s super important. That being said, no one’s reason is money. There’s 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.

David:
Have you thought about going back to that person and saying, hey, I have a great deal, but I can’t take it down myself. I really need your help with this aspect of the deal. Would you want to partner with us?

Christian:
We’ve 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’s good at keeping business and friendship separate. So we’re still friends. He’s still helping me out with a house project. We’re still going to play board games together. I’m probably going to let it cool down a little bit on the investment side, but I am very open to trying that again. We’re going to do it completely differently.

Rob:
So Daniel, if you’re listening to this, Christian is ready. He’s ready to have you back. No, I’m just kidding. That’s not his name. I just made that up. Unless it is and that’d be so awkward.

Christian:
That would be incredible. It’s not Daniel, but we’re open to trying it again. Absolutely. Relationships, we have to do a better job of identifying the why and I’m open to having that conversation again. But the main thing is really identify what you’re doing with someone. If you know who they are, where they’re going and why they’re going there and you know, the real reasons why, you’re always going to be able to raise the capital. You’re always going to be able to find the deal. You’re going to be able to close. You’re 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’re always going to take care of our clients. We did make it happen. Everything’s 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’s 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’m feeling. I actually would love to participate in the capital raise for the next deal. While it’s not something that we always need, it’s 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’re not going to make that mistake with anyone ever again.

David:
Well, that’s really good.

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’m already thinking in my head. I’m like, who can I call back and say, hey, I’m sorry. No, that’s really great, man. It’s 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’s going to be one of the greatest experiences you’ve ever had, probably.

Christian:
Yep. And as a consequence to going quickly, like you’re, you’re 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.

David:
It’s really good. What about a mistake from an operational standpoint that you can share?

Christian:
Operational standpoint …

David:
Miscalculating cash flow, renovations that went poorly?

Rob:
Legal paperwork that might have missed? I think your article [inaudible 00:48:15].

Christian:
Oh boy. Oh boy. Yeah. I won’t 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’t know how else to do it. So looking back, I’m like, well, we got it done. It wasn’t perfect, but it was as good as we knew how to make it. So operationally, technically it was a mistake. Also, I wouldn’t be where I am if we didn’t 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’s Hannah Caldwell. She runs our property management and she is phenomenal. So we had the pieces to do that. But operationally, I didn’t spend time vetting that property manager. That was just a lot of pain. I wouldn’t do that again.

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’s one of the things that you don’t really know until you know how to vet your property managers because really property managers, they kind of run stuff. So it’s a learning experience on how to navigate those people because no two property managers are the same. I mean, not at all. Everyone’s very different on how they run businesses.

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’ve been pumped. They haven’t there’s 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.

David:
You’ve got me going back in time and thinking about every unexpected problem. A huge proportion of them are related to septic things. Always man-

Rob:
We call that doo diligence. D-O-O diligence.

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’re leaking into the area. Like there’s so many ways that septic can go wrong, but it’s not something they talk about on HGTV. So nobody ever thinks about it.

Rob:
Well, they do talk about it on dirty jobs though.

Christian:
Yeah. If you want to be a good operator, you got to be number one in number two.

David:
There it is. That’s [inaudible 00:51:14]. Very well, Christian. All right, well, I’m 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’ve done. Do you have one in mind? Christian?

Christian:
Yeah. Cody shared a lot on the 38 unit. Now if you haven’t seen his video yet, go back and watch it, because he did incredible. A really fun one because it’s really critical how the relationships came together was the three triplex deal, seller finance, side by side.

David:
Okay.

Christian:
We did that, I believe we closed that December of last year.

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.

Christian:
Three duplex. Three twos. I sometimes mis say that’s hard. Three twos, six units, three duplexes.

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?

Christian:
Yes they did.

David:
Rob, next question.

Rob:
How did you find said deal?

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’s Cody. I’m the guy who called you a few months ago and botched the call. They’re 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’re 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’t make it transactional. So we didn’t 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’ll play the bank.

David:
Okay. So what did you end up paying for the property?

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.

David:
Okay. So we would normally say, how’d you negotiate it? You just explained that right there. How’d 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%?

Christian:
Whole thing, so it was 90% seller financed.

David:
Okay.

Christian:
But I didn’t use any of my own money on the 10%.

David:
Where did that come from?

Christian:
So this was from a client, this goes back to learning everyone’s story. So the sellers, we learned what they’re trying to do. We know they’re 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’ll 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’d 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’t 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’t 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’s 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’ll pay him 180, which it will do in cash flow, and will probably also do in appreciation. So we’re 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’t cash him out, he gets all three duplexes, but at five years ago dollars, and we’re improving him and raising rents. So his collateral is probably better than his buyout.

Rob:
That’s amazing. Well, congratulations on a good deal. I mean, what lessons would you say you’ve learned from this deal?

Christian:
Well, I learned, like I’ve said through this whole call, relationships are everything. We couldn’t have done that if we didn’t know what people’s goals were and what their why was, because that’s a really unique structure. You don’t usually just do a deal and structure it all on the back end of, hey, we’re 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’m not a math wizard, I leave that to Cody, but I can afford a lot of real estate for $0.

Rob:
Yeah, but you are on the accounting side of it. So I think he might throw it back to you.

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’ve ever met. That being said, I account for said math and make sure that everything actually does balance at the end of the day.

David:
All right. Well that sounds fantastic. We’re 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?

Christian:
Favorite real estate book is actually a BiggerPockets book. It’s Brandon’s 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’s 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’re looking for just a broad entry point, that book changed my life.

Rob:
Great. Question number two, favorite business book?

Christian:
Favorite business book. It’s 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’s 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.

Rob:
Super fair, man. That’s sounds like it was the beginning of a beautiful relationship, the beginning of a beautiful bromance.

Christian:
Yes.

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

Christian:
Well, I got a couple guitars behind me. I haven’t 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’m 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’m having fun, doing what we do. However, once we get a little bigger, we get stabilized and I have a few less projects, I’ll be right back to playing guitar and will probably add to that wall significantly.

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

Christian:
You don’t define the why behind what you’re doing. It’s pretty easy to set a goal and there’s a lot of attainable goals out there. For a lot of people, they’d love to have $10,000 a month, passive income. They’d like to have 20,000 a month. Whatever your goal is, it’s easy to set a goal. It’s not hard to set a timeline on it, but to actually achieve it, you need to have a big enough why behind what you’re 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’m not going to force her to, but I want her to have that option where she gets to go to work. She doesn’t have to go to work.
I also have lived here for 30 years in Seattle. It’s gray, it’s cold. The food’s not very good. The people aren’t 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’s 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’t 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’t believe in the gurus who talk about stuff and don’t 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.

Rob:
That’s awesome, man. Thank you. I appreciate that. We can tell you’re 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?

Christian:
Well, Cody and I have a YouTube channel where we try to put everything. There’s 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’s 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’s 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.

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?

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’s pretty simple website to navigate. You can follow me online at David Green 24, see what I’m up to. I actually hired a new marketing company. So I’m 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’s being seen. Christian, I’d like to get your opinion on that as well. Check out my page and tell me what you think.

Christian:
I’ll 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’s 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.

David:
I know.

Christian:
We do a dumb thing where Cody’s wearing a hoodie and says a couple stupid things, quarter million views in like an hour. I don’t get it at all.

David:
It’s a problem. You try to use it as a hook to get people’s attention and then say like, now actually go eat real food over here that’s 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’re listening to this and you’re addicted to fast food, well, I guess you’re listening to this, you’re not addicted to fast food. So you are doing good. Rob, how about you? Where can we find out more about you?

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’d like, if you’d like, just if you want, don’t feel like you have to, but if you want to just head over to Twitter and follow me too, Rob Built channel.

David:
I’ll 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’t want to take the leap, I don’t know where I’m going to end up. There are many options that don’t involve you just buying a property and hoping that it works out, especially when the market’s hot and the stakes are higher, because you are going to have to make decisions quicker than you ever did before, unless you’re 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’re going to pay more than what you wanted to pay. There’s 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’re 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’re doing and kind of like peek behind the curtain and realize it’s not rocket science, just feels like that when you’re on the other end. Don’t think it’s got to be all or nothing. I don’t know what I’m doing, I’m 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?

Rob:
Oh yeah, definitely.

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’s only one way to do it. Buy something.

David:
Yep. There you go. Get in the position where you can handle that. House hacking’s 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’t 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?

Christian:
Yep.

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’t realize is out there. There’s interviews like this. There’s more interviews on YouTube that are much shorter, hard hitting, get to that point, also maybe more entertaining. There’s some fun stuff that’s 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.

Christian:
Yes sir.

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.

Rob:
Doo doo diligence, baby.

 

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More Problems, More Money & Why Investors Should Search for Fresh Headaches

How many rental units do you want? Depending on who you ask, the number of rental properties can differ dramatically. A young investor may be looking to scale their portfolio 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, the optimal rental unit count could be none at all—they may purely want passive income.

Christian Osgood knows this all too well, and it’s how he’s grown a seventy-one-unit portfolio in such a short amount of time. As half of a dynamic investing duo, Christian and his partner Cody Davis know that the first place to look for a deal is within someone’s goals. Unlike most off-market deal hunters, Christian and Cody don’t blatantly ask a seller if they’re willing to part ways with their property. They do something much different and a bit unorthodox.

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

David:
This is the BiggerPockets Podcast, show 605.

Christian:
Now I’m 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’ll file anything. While it’s a pain, I’m understanding it. And next year, when I get here, I’m not going to have an accounting problem. I’m going to have a whole new set of problems. And that is what I’m targeting every time. When I’m stuck, I need to make sure I’m not stuck on an old problem.

David:
What’s 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’t fail approach. If you’ve been trying to find deals and can’t find them, if you’ve 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’s harder work, but it is definitely something that has a much higher upside and today’s interview with Christian was fantastic. I loved this conversation. Rob, what were some of your favorite parts?

Rob:
You know, I think it was really nice to find out that you’re 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 … 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’ve had a lot of success doing that.

David:
A ton of it. And then they also have learned that everything is figureoutable or as they say in today’s show, everything is Googleable. And that leads us to today’s 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?

Rob:
I haven’t. 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’s as easy as it sounds. Just Google it.

David:
That’s 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’s partner, Cody, who has an inspiring story. These two are working a method that anybody can use. There’s a lot of good advice here about the right way to contact people, how to make sure that they’re talking more than you, and you’re bringing more value than you’re 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?

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’s a lot to learn from these moments. So stay tuned for that.

David:
Yes. And we’re going to be doing more of that. I’m coming after you. You come on the podcast, you’re going to share the good, you’re also going to have to share the bad and the ugly. All right. Without further ado, let’s bring in Christian. Christian Osgood, welcome to the BiggerPockets Podcast.

Christian:
Hey, thanks for having me.

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’t hear our episode with Cody Davis, go check out 554. And Cody is what 21, 22 years old? How old is he now?

Christian:
He’s 22 now.

David:
22. Okay. He’s grown up quite a bit.

Christian:
He’s done it. He’s old.

David:
He’s 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.

Christian:
Yep. On the business side, I am his partner on a majority of the deals that he’s done and we’ve done pretty much this whole venture together for the last 13 months or so.

David:
You’re significantly taller than Cody, right?

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?

David:
I ask, because I think I saw on your Instagram, like I think I’m following Cody and he was posting pictures with someone who looked like Groot standing next to Rocket Raccoon. And now I’m seeing this is Groot.

Rob:
Let’s get this man in apple box.

Christian:
There we go. I am Groot.

David:
So let’s start off tell us. Yeah, that’s 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’re doing? What skill sets do you each bring? How’s your partnership look, and then we’ll dive more into your portfolio.

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’ve 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’s 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’s 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.

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’t 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’s like, if you’re going to start a business or a partnership, what you’re describing right now is the first thing everybody needs to work out is if we are successful in getting opportunities, if they’re a real estate agent, that’s leads, people that want to buy or sell homes. If you’re a real estate investor it’s properties, we might want to buy.
That’s 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’s coming in and out, help you understanding if you’re even profitable. So I love that you’re 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’t 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’s 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?

Christian:
Well, it happened organically. I guess, sticking with the ship metaphor, what we’re going to do is when you have a partnership, you want to make sure the ship is sailing in the same direction. It’s the most important piece. So we have the same goal. We’ve agreed where we’re 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’re in that environment, it’s all, hey, 10X let’s set huge goals. So we set this massive goal of, well, I’ve 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’re 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.

David:
Okay.

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

Christian:
Yep. That’s been pretty consistently the entire partnership. Sometimes we’ll find a deal and Cody will throw it in front of me. And I feel like we’re already operating at capacity. He’s like, I love this deal. You want to do it? And I usually say, okay. And if I don’t, Cody goes well with, or without you I’m doing it. And I was like, well, I don’t want to be left out. So let’s do it. There’s 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’m having to learn how to master accounting and get through all the legal and the pieces that come with that.

David:
This is so good. I mean, you might be what you’re 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’s sort of the end of the first quarter so we were talking about what we’re going to do going into quarter two. And I have a lot of newer agents. They’ve 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’s 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’s the one that communicates with the client and the junior agent’s the one that kind of learns the game by doing all of the work.
And what I’ve been finding is that the junior agents are just very hesitant to go tell anyone they’re a real estate agent. They just want to stay in this very comfortable lane, and they keep saying, I don’t know what I’m doing. I don’t know what I’m doing. You’ve been an agent for 12 months. You know more than almost every other agent in this office, because you’ve worked with like 50 clients in the 12 months that you’ve been here instead of the average realtor might do one or two. But it’s this idea, what we found is that they have this belief that they don’t have all the answers and so they can’t 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’s 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’t 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’s it. And you can’t get every single answer that you would ever need. It sounds like that’s sort of how you and Cody are doing things.

Christian:
Yeah. I think we’re 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’s the scripted system for everyone. And so we’re 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’s 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’s 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.

David:
Rob, what say you?

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’t want to do?

Christian:
Yes. Well, one thing there’s no such thing as an even partnership, like people are just different. When you have different roles, there’s going to be different workloads. So there’s always going to be some level of dissonance you have to resolve. I’m pretty sure neither Cody or I wants to sit on hold and pay bills. That’s just not a task that anyone enjoys. However, I’m 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’s an amazing storyteller. So when he gets in front of clients, I just know he’s going to land that pitch nine out of 10 times, where I’ll do it seven out of 10. So we’re not always doing what we like to do, but we’re doing what we’re best at. And at the end of the day, we’re moving forward at a very, very fast pace. Not everyone’s done what we’ve 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’s about getting it done. And that’s what we do.

Rob:
That’s really nice, man. So let’s kind of lay this out tactically, because you say you kind of handle the back end and then he’s on the front end, which I think makes sense to me, but to kind of give some good definition here, let’s say Christian, my dad’s got this 30 unit apartment complex. We want to get out of the business. I’ve 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?

Christian:
Well, we’ll look at the pieces that we have. If there’s something on the front where someone’s obviously going to be more relatable than the other, we’ll take that sales call. So if it’s someone like we find out, hey they started really young, they did a lot of creative financing, I’m going to put Cody in that position every time because Cody’s the most relatable and his story is absolutely incredible. I don’t know a lot of people who’ve done what he’s done by 22. If I talk to someone who’s started very conventionally, they had a nine to five for a long time, it depends on the story, but if I feel that I’m really going to connect with that person, I might reach out. But again, we typically send Cody because Cody’s 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’re talking deal is I just want to meet. One of us is going to go out and get dinner, get coffee. We’re 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.

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’re just kind of learning everything as you go?

Christian:
Definitely the latter. We have a policy of we can’t have the same problems this year that we had last year, that’s how you know you’re stagnant. If I look at 2021 Christian, I go, wow, I don’t have the real estate I want to have. Well accounting for real estate doesn’t 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’re buying a lot of real estate for the first time, don’t close it all in November and December, you don’t have a whole lot of timeline to learn the accounting, but we came in, we solved the first problem. I don’t have the real estate I need to achieve my goals. With that problem gone, we had a, hey, I’m 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’m 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’ll file anything. While it’s a pain, I’m understanding it, and next year when I get here, I’m not going to have an accounting problem. I’m going to have a whole new set of problems. And that is what I’m targeting every time. When I’m stuck, I need to make sure I’m not stuck on an old problem.

David:
Man. This is gold.

Rob:
Yeah, yeah, yeah. You’re looking for, I’ve never really heard anyone excited for the next set of problems, which is really funny because you’re just trying to solve today’s problems. And then you’re like, all right. My goal is next year to have a whole nother set of problems. That’s a pretty rare thing to say, I think.

Christian:
Well, that’s how you know you’re moving forward. If your problems aren’t old problems, new problems are good. That’s how you benchmark success. At least that’s how I’ve done it.

David:
I think there’s some magic in what you’re saying right now, to be honest, like this should be one of our better shows because this is what everyone who’s struggling needs to hear. I’ve often wondered why an incredibly intelligent person can go to work for another company and fall into a rut, let’s say if they get hired to be a CPA for another company, if they’re hired to be a CPA, they probably have a mindset and a skillset and they’re 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’s almost like a mindset that encourages you to do as little work as possible, as slow as possible, as easily as possible. Don’t think creatively. Don’t 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’m going to give you a raise and then, oh, I’ll give my best now. It’s just, there’s something about human nature. I rarely ever go into a Subway restaurant and have the sandwich maker that’s crushing it. Who’s 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’m going to do the best job I could. Right?
It’s not normal. We don’t see that very often. It’s 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’s 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’t 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’re 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’re saying, right? So I come to the conclusion that I believe it’s 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’ll be like you, by your own ambition were not an account. You don’t keep books. That’s 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’t like, I’m not going to move forward with having a kid until I know every single scenario there could be. It’s 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’m going to hand it back to you to get your opinion on that. But this is what we’re 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’s job to take away all my fear, to give me every answer that could ever be there before I start.

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’re paired with all the smart kids and at some point someone might have had a point where it’s, hey, I don’t really feel like learning this right now, so I’m kind of going to let everyone do the work, and I’m just going to play team coordinator. You do this job, you do this job and you don’t do anything. And at the end of the day, that’s the wrong practice. You nothing gets produced if there aren’t 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’ve never done it, you don’t have a knowledge base, it’s really hard to manage people and lead people if you just don’t know what you’re doing. I think there’s 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’re doing, and if they leave my company, I’m not totally hosed. Like you just need to learn how to run your business if you want to run a business. I’m not free of time yet. Turns out when you buy a lot of real estate low to no money down, it’s actually a ton of work. So this is not passive income, or at least it’s a ton of work to get passive. But as you’re scaling, you just need to have the ability to know exactly where you’re headed, why you’re headed there, and then just go and knock it out.

Rob:
Yeah. I don’t think you can really ever be really fully prepared to scale. Like obviously there’s 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’s the classic, I guess the adage of like a fish that’s in a very small tank is going to just grow to the size of that tank, right? It’s not really going to get big, but if you give it a really big tank, it’s 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?

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’t 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’re at.

Rob:
Well that’s exactly what I’m talking about. That really proves my point even more. You had two units, your next deal was two units, and so you’ve 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’s get crazy. And maybe an eight unit and you say, no, let’s 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.

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’d already communicated my goal to Cody on, I want to get to 30 units by 30. And unit count isn’t really a relevant goal, it was just my goal. And once I’ve committed, I’m 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’m 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’s 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’t 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.

David:
Let’s unpack that for a second. Because as someone listening, you’re going to hear, okay, well I hear you telling me, I should just go make it happen, but I don’t know what that looks like. So let’s 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.

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’s no list or target. I don’t care if they’ve owned it for one year. I don’t care if they’ve owned it for 30. I don’t care if they’re 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’re headed and why they’re going there. I communicate succinctly the same pieces about myself, the relatability, the goal and the significance behind what I’m doing. So now we all have a relationship.
It’s the same exact thing when you’re raising capital, I know what pieces people have, so when I make that phone call, I’ve already met with them. We didn’t talk about a deal. I talked to them about what’s 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’s just an extension of a conversation we’ve already had. And if you’re getting started, that’s the only thing that I think you need to focus on, this is a contact sport. You need more contacts. Don’t worry about the deals, worry about the relationships. And only the relationships. There’ll be a time to be transactional. And if you’re getting started, you’re not there yet.

David:
So let’s role play that.

Christian:
Yeah.

David:
I will be the person who could be a potential investor and you’ve got the deal. So you’re calling me.

Christian:
All right.

Rob:
I’ll be the phone ring, ring, ring, ring.

David:
Hello?

Christian:
Hey David. It’s Christian. How are you, man?

David:
I’m good. Thanks for calling Christian. What’s on your mind?

Christian:
Yeah. Well I wanted to touch base with you. Based on our last conversation, you had mentioned that you’re really, really trying to get more units to your name, and you’re 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.

David:
Okay. Would this be something you’re bringing to me to buy? Or is this something you’re going to buy?

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’s 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’ve come up with and based on our last conversation, I’d like you to be a part of it.

David:
Okay. Can you sum up what you like so much about this deal?

Christian:
Well, first of all, it’s a seller financable opportunity, which is how we’ve leveraged low down to quickly multiply money. We’re 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’ve been given. We have five years to do about one year worth of renovation. Cash flow is a little light day one, but we’re going to compensate with a equity bump on the back end. So we’ll offer you two to one on your money in five years, so you put in 100, pay you 200, and as it’s cash flow, you get your percentage cash flow.

David:
All right. Now I don’t quite understand what you’re going to do to add value. Are you saying that they just need to be renovated and made nicer?

Christian:
So first of all, it’s 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.

David:
Okay.

Christian:
Terrible performance, has been mismanaged. Conveniently, we have a property management company. We’ve done this, so we know what we need to do on the rental bumps. In addition, there’s a contractor that I’ve 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’re beautiful units. We get the highest rent per square foot in Moses Lake. We know how to renovate. We know how to manage. Cody’s already raised rent on 30 units over the last few years in the same market. This is exactly what we’ve done to create value on every other property. It’s just a larger scale.

David:
Okay. So you’re saying that it’s being mismanaged, the rents are not as high as they could be, and you think you can change that.

Christian:
Yes. This property, we started, the septic tanks were trash. Water heaters were either not working or leaking everywhere, there’s a homeless camp on the site. I mean, this had everything wrong with it, but there were all pieces that we’ve 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.

David:
So is the plan to bump rents, increase the value, and then refinance in five years?

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’t 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.

David:
Okay. So how can I be sure that I’m going to get my money back?

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’s 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.

Rob:
Honey, honey, that sounds like a really great deal. I think you should invest.

Christian:
What we recently ended up doing on this, you always go in with a clear plan of how you’re 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’re 50-50.

David:
Gotcha. Okay. And then how are you coming up with the actual people that you’re going to call and propose this to?

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’s 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’re 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’s going to help us grow the money and multiply the money. Cash flow makes sure that we can keep it forever.

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’s say Houston, for example, you’re 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’s that process?

Christian:
That’s exactly it. I look at the roofs. I go, hey, that looks like a 12-plex. I’m going to go zoom in and I’ll drop my little guy on street view and look at it. I’m like, wow, I’d 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’s worth? I don’t do any of that. We call and we just ask for a meeting. So I’ll take Moses Lake as an example, because that’s 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’m a new investor. I have a couple duplexes. I’ve come to the realization that I can’t 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’ve 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’m talking to them, I listen to their story, we have them back and forth. And then I ask to meet them for coffee. It’s never about a transaction, the coffee, I’m going to expand on what they’ve done and how they’ve done it. That’s how Cody and I learned how to do all the creative financing.
There’s two guys in particular, central Washington, we called them, no idea how to buy their big buildings. We just know that they’ve accomplished something we haven’t. 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’ve 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’ve sold us a duplex 20% down because we have a relationship they’re now invested in having us succeed and they’re 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’s a property that I like, something I would like to own. I call them and I just try to build a relationship.

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?

Christian:
Nope. Google again. You could find pretty much everyone’s 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’t overthink it. You pick it up, you dial and you let them know your pieces. This is who I am. This is why I’m calling. I want to know how you got started, and start talking, but I have never paid for skip tracing software. We’ve 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’s that simple. Works for people on every level. I’ve talked to people with thousands and thousands of units and their number is just a Googleable event. Googleable. That is a word now.

Rob:
Googleable. Yeah. So it sounds like you’re 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?

Christian:
Well, one, people love to talk about themselves. So you’re giving them room to talk. But when you’re building a relationship, I don’t 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’ve 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’t 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’re starting to build a relationship, and once that gets enough momentum, that’s where you know you need to wrap up the call, close it and basically end with thank you so much for sharing. You’ve done something that I never knew was possible. I appreciate you sharing your steps. I’m 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’m newer to this. I haven’t done what you’ve done yet. How would you recommend I get started? Those are non transactional questions, but that’s how you build a relationship that’s going to get you opportunities that no one else can get.

Rob:
That’s awesome, man. So where this all comes full circle is that me and David are practicing the 80-20 rule on you.

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’d be doing the same thing. I’d be asking questions and my goal is to get you talking and gets you excited about a story, because it’s really fun to share the journey that you’ve been on. Everyone has a story to tell. Your job in that first phone call, it doesn’t matter if they’re going to sell you the property or not. If they are invested in you and you’ve 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’re 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’t 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.

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’t 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’t care at all. Anything I do, they’re like, dude, we get it. You Airbnb, shut up. You know? And so if you contact these different real estate investors and you’re interested in their story, they’re probably dealing with the same thing where their network probably doesn’t really care about their real estate business. And so it’s a very rare opportunity for them to get to speak to someone that’s like, oh my gosh, I’m very interested in what you do. And it helps them feel better about doing it because they don’t ever get to talk about this stuff. I mean that’s how it feels to me. I’m not really sure if that’s true across the board, obviously this is very anecdotal, but we could all probably relate to that in some capacity.

Christian:
It’s a smaller field than we realize, in that small mid-size multifamily, even the larger multifamily, there’s 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’s really fun to share. I love doing it. I over talk. I know that’s my weakness, but turns out that’s a weakness that most people in real estate have. We love to share. We love to tell stories. We’re really engaged. We’re 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’re meeting for coffee, what do we do next? I’m like, yeah, it works. People want to share what they’ve done and talk about their story. And it’s a small enough community where it’s not a difficult call to make and to land that first meeting.

David:
All right. So let’s get into some of the fun stuff here.

Christian:
All right.

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.

Christian:
I have an excellent one for this. Most painful lesson we learned, Cody and I talk all the time about how it’s relationship, relationship, relationship, know your partners, know their pieces, know their why. We egregiously missed the mark on someone’s 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’ve failed to hear me and my goals, I don’t 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’ve met with him, he’s talked about a few things. He’s a little older. So he is like, hey, I haven’t 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’re finishing the rental bumps and getting the property stabilized. It already cash flows decently. It’s going to get insane over the next year. So we put them in the best deal ever. We’d communicate on what’s happening with the property and what we’re 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’re not hearing what I want to do. He missed out on another opportunity because he was involved in this opportunity, and it’s the only client we’ve ever lost. We’re 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’s super important. That being said, no one’s reason is money. There’s 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.

David:
Have you thought about going back to that person and saying, hey, I have a great deal, but I can’t take it down myself. I really need your help with this aspect of the deal. Would you want to partner with us?

Christian:
We’ve 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’s good at keeping business and friendship separate. So we’re still friends. He’s still helping me out with a house project. We’re still going to play board games together. I’m probably going to let it cool down a little bit on the investment side, but I am very open to trying that again. We’re going to do it completely differently.

Rob:
So Daniel, if you’re listening to this, Christian is ready. He’s ready to have you back. No, I’m just kidding. That’s not his name. I just made that up. Unless it is and that’d be so awkward.

Christian:
That would be incredible. It’s not Daniel, but we’re open to trying it again. Absolutely. Relationships, we have to do a better job of identifying the why and I’m open to having that conversation again. But the main thing is really identify what you’re doing with someone. If you know who they are, where they’re going and why they’re going there and you know, the real reasons why, you’re always going to be able to raise the capital. You’re always going to be able to find the deal. You’re going to be able to close. You’re 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’re always going to take care of our clients. We did make it happen. Everything’s 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’s 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’m feeling. I actually would love to participate in the capital raise for the next deal. While it’s not something that we always need, it’s 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’re not going to make that mistake with anyone ever again.

David:
Well, that’s really good.

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’m already thinking in my head. I’m like, who can I call back and say, hey, I’m sorry. No, that’s really great, man. It’s 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’s going to be one of the greatest experiences you’ve ever had, probably.

Christian:
Yep. And as a consequence to going quickly, like you’re, you’re 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.

David:
It’s really good. What about a mistake from an operational standpoint that you can share?

Christian:
Operational standpoint …

David:
Miscalculating cash flow, renovations that went poorly?

Rob:
Legal paperwork that might have missed? I think your article [inaudible 00:48:15].

Christian:
Oh boy. Oh boy. Yeah. I won’t 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’t know how else to do it. So looking back, I’m like, well, we got it done. It wasn’t perfect, but it was as good as we knew how to make it. So operationally, technically it was a mistake. Also, I wouldn’t be where I am if we didn’t 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’s Hannah Caldwell. She runs our property management and she is phenomenal. So we had the pieces to do that. But operationally, I didn’t spend time vetting that property manager. That was just a lot of pain. I wouldn’t do that again.

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’s one of the things that you don’t really know until you know how to vet your property managers because really property managers, they kind of run stuff. So it’s a learning experience on how to navigate those people because no two property managers are the same. I mean, not at all. Everyone’s very different on how they run businesses.

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’ve been pumped. They haven’t there’s 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.

David:
You’ve got me going back in time and thinking about every unexpected problem. A huge proportion of them are related to septic things. Always man-

Rob:
We call that doo diligence. D-O-O diligence.

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’re leaking into the area. Like there’s so many ways that septic can go wrong, but it’s not something they talk about on HGTV. So nobody ever thinks about it.

Rob:
Well, they do talk about it on dirty jobs though.

Christian:
Yeah. If you want to be a good operator, you got to be number one in number two.

David:
There it is. That’s [inaudible 00:51:14]. Very well, Christian. All right, well, I’m 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’ve done. Do you have one in mind? Christian?

Christian:
Yeah. Cody shared a lot on the 38 unit. Now if you haven’t seen his video yet, go back and watch it, because he did incredible. A really fun one because it’s really critical how the relationships came together was the three triplex deal, seller finance, side by side.

David:
Okay.

Christian:
We did that, I believe we closed that December of last year.

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.

Christian:
Three duplex. Three twos. I sometimes mis say that’s hard. Three twos, six units, three duplexes.

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?

Christian:
Yes they did.

David:
Rob, next question.

Rob:
How did you find said deal?

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’s Cody. I’m the guy who called you a few months ago and botched the call. They’re 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’re 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’t make it transactional. So we didn’t 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’ll play the bank.

David:
Okay. So what did you end up paying for the property?

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.

David:
Okay. So we would normally say, how’d you negotiate it? You just explained that right there. How’d 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%?

Christian:
Whole thing, so it was 90% seller financed.

David:
Okay.

Christian:
But I didn’t use any of my own money on the 10%.

David:
Where did that come from?

Christian:
So this was from a client, this goes back to learning everyone’s story. So the sellers, we learned what they’re trying to do. We know they’re 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’ll 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’d 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’t 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’t 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’s 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’ll pay him 180, which it will do in cash flow, and will probably also do in appreciation. So we’re 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’t cash him out, he gets all three duplexes, but at five years ago dollars, and we’re improving him and raising rents. So his collateral is probably better than his buyout.

Rob:
That’s amazing. Well, congratulations on a good deal. I mean, what lessons would you say you’ve learned from this deal?

Christian:
Well, I learned, like I’ve said through this whole call, relationships are everything. We couldn’t have done that if we didn’t know what people’s goals were and what their why was, because that’s a really unique structure. You don’t usually just do a deal and structure it all on the back end of, hey, we’re 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’m not a math wizard, I leave that to Cody, but I can afford a lot of real estate for $0.

Rob:
Yeah, but you are on the accounting side of it. So I think he might throw it back to you.

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’ve ever met. That being said, I account for said math and make sure that everything actually does balance at the end of the day.

David:
All right. Well that sounds fantastic. We’re 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?

Christian:
Favorite real estate book is actually a BiggerPockets book. It’s Brandon’s 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’s 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’re looking for just a broad entry point, that book changed my life.

Rob:
Great. Question number two, favorite business book?

Christian:
Favorite business book. It’s 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’s 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.

Rob:
Super fair, man. That’s sounds like it was the beginning of a beautiful relationship, the beginning of a beautiful bromance.

Christian:
Yes.

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

Christian:
Well, I got a couple guitars behind me. I haven’t 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’m 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’m having fun, doing what we do. However, once we get a little bigger, we get stabilized and I have a few less projects, I’ll be right back to playing guitar and will probably add to that wall significantly.

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

Christian:
You don’t define the why behind what you’re doing. It’s pretty easy to set a goal and there’s a lot of attainable goals out there. For a lot of people, they’d love to have $10,000 a month, passive income. They’d like to have 20,000 a month. Whatever your goal is, it’s easy to set a goal. It’s not hard to set a timeline on it, but to actually achieve it, you need to have a big enough why behind what you’re 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’m not going to force her to, but I want her to have that option where she gets to go to work. She doesn’t have to go to work.
I also have lived here for 30 years in Seattle. It’s gray, it’s cold. The food’s not very good. The people aren’t 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’s 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’t 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’t believe in the gurus who talk about stuff and don’t 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.

Rob:
That’s awesome, man. Thank you. I appreciate that. We can tell you’re 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?

Christian:
Well, Cody and I have a YouTube channel where we try to put everything. There’s 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’s 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’s 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.

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?

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’s pretty simple website to navigate. You can follow me online at David Green 24, see what I’m up to. I actually hired a new marketing company. So I’m 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’s being seen. Christian, I’d like to get your opinion on that as well. Check out my page and tell me what you think.

Christian:
I’ll 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’s 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.

David:
I know.

Christian:
We do a dumb thing where Cody’s wearing a hoodie and says a couple stupid things, quarter million views in like an hour. I don’t get it at all.

David:
It’s a problem. You try to use it as a hook to get people’s attention and then say like, now actually go eat real food over here that’s 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’re listening to this and you’re addicted to fast food, well, I guess you’re listening to this, you’re not addicted to fast food. So you are doing good. Rob, how about you? Where can we find out more about you?

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’d like, if you’d like, just if you want, don’t feel like you have to, but if you want to just head over to Twitter and follow me too, Rob Built channel.

David:
I’ll 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’t want to take the leap, I don’t know where I’m going to end up. There are many options that don’t involve you just buying a property and hoping that it works out, especially when the market’s hot and the stakes are higher, because you are going to have to make decisions quicker than you ever did before, unless you’re 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’re going to pay more than what you wanted to pay. There’s 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’re 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’re doing and kind of like peek behind the curtain and realize it’s not rocket science, just feels like that when you’re on the other end. Don’t think it’s got to be all or nothing. I don’t know what I’m doing, I’m 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?

Rob:
Oh yeah, definitely.

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’s only one way to do it. Buy something.

David:
Yep. There you go. Get in the position where you can handle that. House hacking’s 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’t 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?

Christian:
Yep.

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’t realize is out there. There’s interviews like this. There’s more interviews on YouTube that are much shorter, hard hitting, get to that point, also maybe more entertaining. There’s some fun stuff that’s 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.

Christian:
Yes sir.

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.

Rob:
Doo doo diligence, baby.

 

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