How I Took On $25 Million in Seller Financed Debt Before 31

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0:00 large part of what I learned throughout
0:01 my career was I needed to scale. So I'll
0:04 give you a little bit of backstory on me
0:06 specifically and how multif family
0:08 strategy even came about. So this will
0:09 be a little backstory for me, a little
0:10 backstory from Cody. I started got out
0:13 of college, got a business degree and I
0:15 subscribed to the Dave Ramsey policy of
0:18 save save. Don't take on debt.
0:21 Eventually you can afford to buy a house
0:23 and then you can get a couple of rental
0:24 properties and you can snowball this
0:26 into infinity. Uh the problem is that
0:28 the government kept printing money the
0:29 whole time. So every time I would save
0:31 the money's worth less and it took me
0:33 eight years of scaling a career. I
0:35 started at 1150 an hour printing screen
0:38 uh screen printing t-shirts. I then went
0:41 to the supplier and started selling for
0:43 them for a salary of $42,000 a year. And
0:47 I did that for two years. I finally
0:51 got a job at lands.com. I had always my
0:53 whole career wanted to get into real
0:54 estate. Zillow was never going to hire
0:56 me because I had no relevant experience.
1:00 Lands.com
1:01 selling farmland, ranchland, it's
1:03 advertising. It's basically Loopnet or
1:05 Zillow for hunting land, ranch land or
1:08 developable plots of land. I work for
1:11 this company for about a year and a
1:12 half. Co-star buys them and they own
1:15 Loopnet Apartments.com,
1:18 the Co-Star data product. And I move up
1:21 that company for four years. I made this
1:23 one critical mistake. I wanted to get
1:26 into real estate. So I worked for lands
1:28 and then I worked for Loopnet. Then I
1:30 worked for apartments. Then I sold the
1:31 main co-star product. The whole time I
1:34 managed to buy a single duplex. So I
1:37 have my single family house. I have a
1:39 duplex. I spent eight years saving and
1:42 earning, saving and earning, saving and
1:43 earning, saving and earning. And I
1:45 bought that property. I had a little bit
1:47 of money left over. Co hits. I leave the
1:50 office. I I I could not do corporate
1:52 world in co working from my house.
1:53 Wife's a kindergarten teacher, so she's
1:55 teaching kindergarten from the other
1:57 side of our thousand foot house. I'm
1:59 over in the other office just having all
2:01 of my clients call in. I have a whole
2:03 lot of office and retail clients in
2:04 COVID. Uh, hey, we're not doing any
2:06 business. Can we cancel our
2:07 subscription? That was my job for a year
2:10 was, hey, we're not buying anything, but
2:11 can we get a refund? Like that was that
2:13 was the job at CoStar. So, I leave
2:15 CoStar and go to this little office in
2:16 Tacoma. I'm running a data center where
2:19 we're generating leads for brokers and
2:21 I'm working for a brokerage that has no
2:23 idea how to service a lead. There was
2:25 one kid in that office. He was 20 at the
2:28 time
2:29 who you send him a lead and then
2:31 magically he gets you an offer. In fact,
2:34 he was so good at this I got my broker's
2:36 license and Cody Davis and I just
2:39 started knocking out all these leads in
2:41 the call center. We do a forplex right
2:43 the actually not too far up the road
2:44 over in um was Port Orchard. We did a
2:48 duplex over in Breton also just up the
2:50 road. We just started knocking out deal
2:52 after deal from this call center. And
2:54 Cody being a young broker just keeps
2:56 showing up at the office. I'm like,
2:57 "What's this kid doing here?" I'm like,
2:58 "Oh, of course he's sniping all the
3:00 leads. He's coming in here brokering
3:02 deals." Cody's in my office probably
3:06 once every other day. We formed this
3:07 friendship and I have this realization.
3:11 Cody at the time had seller financed a
3:13 12plex. He'd seller financed a another
3:15 12plex and he was just, if I recall
3:18 correctly, just about to close on the
3:20 six. I don't think you own the six yet
3:21 when I met you. So, he has 24 rental
3:24 units. He's 20 years old. He's about to
3:27 close on his third seller finance deal.
3:29 And I'm looking at my single duplex
3:33 going like, "Wait a second. There is a
3:36 potential problem with this Dave
3:38 Ramsey's model. I have two units, eight
3:41 years of work, a college degree. I've
3:43 gone up the corporate ladder. I don't
3:46 have much more money than Cody does. I
3:48 have a little bit of cash,
3:50 but I spent most of my money buying my
3:52 house and my duplex in a really
3:54 expensive market. Cody then comes in the
3:57 office. He's like, "Dude, there's this
3:58 duplex right across the street from the
4:00 six I'm buying. You should buy it." Now,
4:02 what wasn't explained to me at the time
4:03 was Cody was wanting to broker the deal
4:06 to me as I was a real estate agent. That
4:09 was not made clear. Cody was just like,
4:10 "You need to buy this." I was like, "I
4:12 do need to buy this and I can use my own
4:14 commissions to fix it up." And Cody's
4:16 like, "And so began the rivalry." No,
4:18 I'm kidding. So Cody and I, that's
4:21 really the start of the relationship. I
4:22 buy this duplex across the street. I
4:25 make up for it later. I buy this duplex.
4:28 I'm fixing this thing up. He's running a
4:29 sixplex. We're car pulling to Moses Lake
4:31 all the time and then this 38 unit comes
4:34 up and Cody's like, "Hey, I've been
4:35 looking at this thing for years and I
4:36 want this thing, but
4:39 that's a big project." He's like, "I I
4:41 can raise the money, but I don't think I
4:43 can run my existing 30 unit portfolio
4:46 and another 38 because this thing's a
4:47 heavy value ad." Cody in my office was
4:50 like, "Hey, what if you and I figure out
4:52 how to raise the capital?" And I
4:54 remember sitting there and many of you,
4:55 if you ever have to raise capital for a
4:56 deal, it's your first time, you've
4:58 probably had this thought. It's like I
5:00 love the deal. What if the money doesn't
5:02 appear? And I remember we were sitting
5:04 here um and I was playing one of my
5:07 clients gave me this uh sword. I have a
5:09 sword from Lord of the Rings, Gandalf
5:11 sword. I remember going around the
5:12 office and we were just playing with the
5:13 sword thinking I'm like, "How would we
5:16 raise the capital for this deal? How
5:19 would we do this? How how what are the
5:23 risks?" And Cody's like, "Well, the
5:24 risks of not putting it under contract
5:25 is not buying it." like, "Okay, good
5:28 enough reason for me." We put it under
5:30 contract. We put together our deal. The
5:32 capital raise ended up being the easiest
5:34 thing of the entire transaction. We
5:36 forgot to do it. We got so caught up
5:37 with the negotiation, the due diligence,
5:39 coordinating the contractors. We were,
5:42 correct me if I'm wrong, Cody, I believe
5:43 it was 3 weeks out, may have been two.
5:46 We were 3 weeks out. And Cody's like,
5:47 "So, we should probably do the part
5:49 where we bring in the money." And I was
5:50 like, "Oh my gosh, that was the part we
5:52 were worried about."
5:54 We went through found. So we went to the
5:57 uh the office. Our designated broker was
5:59 named Brandon. The office specializes in
6:01 selling duplex, triplex, and forplex,
6:04 which is not a 38 plex. We went to
6:06 Brandon and said, "Hey, we're making
6:08 some calls. Do you have anyone in your
6:10 arsenal
6:12 who might want to scale up their
6:14 portfolio?" And Cody had a couple of
6:16 clients who we reached out to. Over the
6:18 course of about four calls, we had three
6:20 people say, "Hey, I would like to commit
6:22 $100,000 to this." One of them was
6:23 someone who had successfully run a flip
6:25 project with Cody. So Cody had
6:26 essentially just made them that money.
6:28 Easiest pitch in the world. Hey, I heard
6:30 you're liquid a new $100,000. You want
6:32 to put it here? Easy pitch. We had one
6:34 of our pickle ball friends from Renton
6:37 ended up funding the deal. And then we
6:38 had one other individual who lives
6:40 actually not that far from here who's
6:41 become a fantastic friend and Cody
6:43 worked with on a lot of projects.
6:46 These three people come in, fund the
6:48 deal. It was two or so days of calls and
6:52 a little bit of negotiation. It just
6:54 came together and we closed it. And then
6:57 at the same time go under contract for
6:59 three sideby-side duplexes. Need another
7:01 90,000. I meet a guy in a Starbucks who
7:04 just lost money on a flip. And he's
7:06 like, "I'm tired of losing money on
7:07 flips. Just want to double my money
7:09 every few years." I'm like, "Boy, do I
7:11 have a plan for you." I remember we were
7:13 sitting, this was sitting in my home
7:15 office and Cody and I were sitting there
7:17 and he was like, "How should we
7:18 structure this?" I'm like, "Well, we
7:19 need cash flow." Welcome in, by the way.
7:21 Snag a seat. Good to see you. How would
7:23 we cash flow? Cuz the investor coming in
7:28 ideally would get all the cash flow. I
7:29 was like, "Well, what if we give them
7:31 all of the uh all of the projected
7:33 original upside?" He's trying to double
7:35 his money every 5 years. What if we just
7:36 write a contract that does that? I'll
7:38 buy you out. You put in 90. I'll buy you
7:41 out for 180. I have five years to do so.
7:44 We'll try to do it early,
7:46 but all the cash flow goes to Cody and
7:48 I. And somehow they're like, "This is a
7:50 great idea." He's like, "I have a
7:52 highpaying job. I don't need the cash
7:53 flow. I need the appreciation." I'm
7:55 like, "Well, I don't need appreciation
7:56 right now. I'm trying to retire my wife
7:57 from teaching." Appreciation doesn't get
7:58 you out of teaching. So, we took the
8:00 pieces that we need and the pieces that
8:02 the investor wanted and the pieces that
8:03 the seller had. We mapped the same
8:05 thing. We said, "Okay, we need someone
8:07 who's trying to multiply their money,
8:09 not trying to get cash flow right now."
8:10 We found that one person in a
8:12 conversation in a Starbucks after we
8:14 were under contract, which is the
8:16 craziest thing to me. And this this
8:19 tends to be what happens when you listen
8:20 to the stories of a lot of people within
8:22 the multif family strategy mentorship. A
8:24 lot of people like, "You won't believe
8:25 how the money came in." I'm like, I
8:26 trust me, I'll I'll believe it. That's
8:28 it's never how you expect it's going to
8:30 come in. It's a conversation in a
8:32 Starbucks. It's a seller who said, "Hey,
8:34 I like you guys. I want to sell this
8:36 building to you. I'll give you less down
8:38 because I like the way you guys
8:39 operate." It was one relationship.
8:42 The seller was some or the sorry the
8:44 funder was some random person in a
8:46 coffee shop who had a high-paying job
8:48 and was interested in what we were
8:50 doing. They wanted to buy a little
8:51 bigger and six units was better than
8:53 what they were doing. Cody and I, all we
8:56 cared about in the beginning was cash
8:58 flow. I just wanted to I really I set my
9:00 goal at 15,000 a month, but if I'm being
9:02 honest, I really just wanted to get to
9:04 $10,000 a month. I'm like, if I had that
9:06 passive, even though it's less than half
9:08 of what I made at CoStar, I can do that.
9:11 I already own my house. I have a rental.
9:13 $10,000 a month at least gets me to the
9:15 point where I don't have to worry about
9:17 the money coming in. I can afford my
9:19 cost of living. And if my wife left her
9:21 job, we can make it work and scale from
9:23 there. That's all I wanted to do. And so
9:26 Cody and I stacked our next deals very
9:29 similarly almost every deal. How do we
9:31 stack the cash flow so that we are
9:33 getting paid, investors are multiplying
9:35 money, and then once we hit t cash flow,
9:38 we started playing with that structure
9:39 and then you can kind of swap it. You
9:40 get 15,000. Oh gosh, how much was that?
9:43 50 bucks.
9:46 We bought groceries with our
9:47 I Oh, I do remember that. Yes. Year one.
9:50 So So in year one of this one, uh we did
9:52 come in and we decided So we had a few
9:53 moveouts. Rents were low. When we raised
9:55 rents, a couple people moved out. That
9:57 thing rips cash flow. Uh, from year two
9:59 on, I have a 100% occupied at market
10:01 rate. It's a It was a great acquisition.
10:04 Cody and I had a bad habit in the
10:06 beginning of buying deals where they
10:09 cash flow with absolutely no reserve
10:12 whatsoever. We're like, "Hey, we can
10:14 close the deal." So, we close the deal,
10:15 we have no reserve. Someone moves out,
10:18 it's cash flowing,
10:20 but it goes into renovating the next
10:22 rental, and then we get it open. Cash
10:24 flowing and still having no money is a
10:26 hard place to be. This is a model for
10:28 everyone. When you buy a deal, your
10:30 renovation cost, your reserve, all of
10:31 this needs to be in upfront. And if you
10:33 can't do the deal, if you don't have the
10:35 money and if you raise the money, if the
10:37 deal doesn't pencil with a full reserve,
10:39 a full rena budget, and the cash you
10:41 need to close, you haven't negotiated a
10:43 deal yet. Cody and I didn't quite yet
10:45 understand this until five deals in and
10:47 being broke for a year. We film a video
10:50 from my house with a bag full of
10:51 groceries. We're like, "Guys, it did it.
10:54 Cash flow." And I I don't even know if
10:57 we spent all $50 on grocery. I think I
10:58 think it was like 45 bucks. And I was
11:00 like I'm like we did it. Bacon and eggs.
11:02 And that fed us for, you know, two days
11:04 because we were two young guys in our
11:06 20s. And that was our first year of real
11:08 estate. Now the 38 cash flowed a lot
11:10 more. We we had a lot of distributions
11:11 from that one that helped us go. But
11:14 what we did and what we focused on was
11:16 based on cash flow, let's stack as many
11:19 rentals as possible. And that is the
11:20 best decision that I think that we made
11:22 is we set a fantastic base. And as we
11:25 got better, we set more and more rules
11:27 such as have a reserve, have, you know,
11:29 all the normal things that one would do.
11:31 But I think the most important thing for
11:33 me was that we didn't let all of the
11:35 unknowns stop us from moving forward in
11:37 the business. You should plan, you
11:39 should buy better than Cody and I did on
11:41 our first like five deals. You you
11:42 really should have more money in the
11:44 accounts. But what we ended up doing was
11:46 we stacked a very very large rental
11:47 portfolio. And eventually we were able
11:50 to refy, restructure, fill those
11:52 accounts. was fantastic, Remy.
11:54 Yeah.
11:55 With that property. Do you have like a
11:57 separate contract with them that says
11:58 I'm borrowing this much from you?
12:00 So, we have a we have an option contract
12:03 that I put as an addendum to the OA.
12:05 It's technically a separate contract. I
12:07 just have a soul sign at the same time.
12:08 So, it's nice and clean. So, we have our
12:09 operating agreement and then I add the
12:12 option contract. So, it says standard
12:14 purchase option. It just says, "Hey,
12:16 within 5 years for this fixed price," so
12:18 in that case of the six unit uh for your
12:21 consideration of $90,000, we can buy out
12:23 your equity stake, which was 33% of the
12:26 six units for $180,000 within 5 years.
12:30 Now, one thing with options is options
12:33 legally have to be optional. Hence the
12:35 word option. You can't have a
12:36 requirement, otherwise you've created a
12:39 security. The SEC doesn't like this. you
12:41 would have to file that as a
12:42 syndication. To have an option contract,
12:45 you have to have an option, but you can
12:47 put triggers for if the option isn't
12:49 executed, then this happens. And so, our
12:52 option is secured by our equity. So, we
12:54 said, hey, we have an exclusive right to
12:57 buy you out for 180 within 5 years. In
13:00 the event that we do not do that,
13:02 we surrender 100% of our equity to you
13:05 and you get all of these properties,
13:06 like all three duplexes at the awesome
13:09 basis that we currently have them for.
13:11 You get a great deal. We do not want to
13:14 lose our duplexes. That is not uh that's
13:16 not the goal. So, we've incentivized the
13:18 objectives with the outcomes, but that's
13:20 how we use the option contract. It's
13:21 essentially I just tack it to the back
13:23 of the operating agreement and those sit
13:26 in our file. Uh, but that's all it is.
13:28 Purchase option contract. Good question.
13:30 Those are really helpful on the on the
13:32 JV structure, which is how Cody and I
13:34 have done most of our structures. If you
13:36 have five or less people on the deal,
13:39 great way to structure it. If you're
13:40 going to have passive investors who have
13:42 no activity whatsoever in the LLC, or if
13:44 you are doing if you have guaranteed
13:48 exits, if you have a lot of specific
13:49 metrics, you're going to want to file
13:50 with the SEC, run a syndication. I've
13:53 done a few. They're expensive. They are
13:56 timeconuming. And you have to report
13:58 regularly to like 15 partners. It's not
14:00 my favorite way to do real estate. If I
14:03 was going back and starting over again,
14:05 I would raise more money on the front
14:07 end of my deals. I would not change the
14:08 deal structures that Cody and I used.
14:10 Not significantly. We kept simple
14:12 structures, simple contracts that we
14:15 were able to actually structure
14:17 correctly and then bring to a bank to
14:18 refinance, which is something that I
14:20 didn't realize. If you get too creative
14:22 in your contracts, you do tons of crazy
14:24 deals. I remember the first and second
14:27 time we went for a bank loan. The
14:28 lender's like, "Dude, your portfolio is
14:31 amazing what you guys put together." But
14:33 it is held together with like bubble gum
14:35 and duct tape of like how did you
14:38 structure this? I don't know. Was it
14:40 toothpicks and bubble gum? Is that what
14:41 they That was the phrase. Toothpicks and
14:43 bubble gum was the exact word from like
14:45 this this works. This is legal. They're
14:48 like, "This is going to be really
14:49 difficult to explain to a lender because
14:51 every single loan you have, no bank has
14:53 ever bet on you ever. You structured
14:55 everything creatively." So, one of the
14:57 things that Cody and I learned through
14:58 this adventure is this. The simpler the
15:00 contract is and the simpler the
15:02 structure, the easier it is to take it
15:03 to the bank. The 38, we have a very
15:06 standard seller finance note and a few
15:08 partners that are getting bought out at
15:09 the refi. There's nothing crazy to
15:11 explain to the bank. When they we got
15:13 the funding for it, they wrote us a big
15:14 old check. We bought out the partners.
15:16 We owned that building by ourselves for
15:18 years. Eventually, Cody came in and
15:20 bought me out of the building. So, Cody
15:22 now uh turned it into 39 units. So, the
15:24 38 is a 39 and it is solely Cody's. Some
15:28 of these structures absolutely
15:31 absolutely simple and without fail. Our
15:33 best deals were that I'll close on the
15:36 biggest mistake from our structure
15:39 here. Oh, little story of the Robin
15:41 Hood. And we've shared this a little
15:42 bit, but now that the transactions are
15:44 all done, we bought this with a few
15:45 capital partners, Cody, me, and we had
15:48 another operator. The other operator,
15:50 I'll be nice to them, they didn't work
15:51 out, I'll leave them not to be named.
15:53 So, within the first year, Cody and I
15:54 cut them a very small check and said
15:56 like, "Hey, your options are we're going
15:57 to pay a little bit of money or we're
15:58 probably going to just have to sue you.
16:01 This isn't working." Uh, and they were
16:02 like, "Oh, I would love money." So, that
16:04 worked out really well. They they left
16:05 the resort. Cody was living here by
16:07 himself with less help and was like,
16:10 "Bad news, Christian. I'm now uh 21."
16:14 And turns out living in Union and often
16:16 commuting to Moses Lake or Renton is not
16:18 super fun when you're single and 21. If
16:21 you guys have seen the average
16:22 demographic of Union, there's not a ton
16:26 there's not a ton of 21 year olds.
16:28 There's there's there's really not. So,
16:32 we ended up with
16:34 we had borrowed the or not borrowed, but
16:36 we partnered for the million dollars
16:38 down. We had an agreement that, hey,
16:39 we're going to we're going to give you a
16:41 little return on 700,000 of this was a
16:43 private investor. We're going to give
16:45 you a little return on year three. What
16:47 we did with the Robin Hood is what we
16:49 did with everything at that time. We
16:51 started the Robin Hood with no rena
16:52 budget, no reserve, renovating out of
16:54 cash flow. The way that we structured
16:56 the note, all of our proceeds through
16:58 the year at the end of the summer pay
17:00 down our loan, which means Cody and I
17:02 perpetually for three years on a project
17:05 had $0. It makes money. Then you pay
17:08 that money to the prior owner. We owe
17:10 less. Our mortgage costs go down, which
17:12 was sweet. So our our our money goes up
17:14 a little bit every year. And then a tree
17:16 falls and we have to get trees removed.
17:19 And then we're out of money. And then we
17:20 bank all the money in the summer at the
17:22 resort. And then we hand it over to the
17:24 prior owners. And so we were running in
17:26 board games, we call that top decking.
17:28 You're out of cards and you're like,
17:29 "Next cards got to save me. Let's go."
17:32 We were just drawing the next dollar and
17:34 putting it in the next thing. And we got
17:35 stuck on this for a while. Eventually,
17:37 we got to a point where I had scaled my
17:38 business enough in Texas. Cody is buying
17:41 up central Washington. And the other
17:43 investors were like, "Hey, Robin Hood's
17:45 working, but not the way that we wanted
17:46 it to." We traded around the pieces.
17:49 Danny and I just in the last few months
17:51 restructured the Robin Hood. Cody and I
17:53 trade around some properties. Danny and
17:56 I now own and operate the Robin Hood.
17:58 That was three years of absolute pain
18:01 from structuring our loan as we have 700
18:04 as a semiquasi passive investor. We have
18:08 some private money lenders who joined
18:10 for the accelerated tax benefits. So, we
18:12 did some special tax maneuvers.
18:15 Cody and I are partnered with an
18:17 operating team that no one has ever run
18:19 a resort in their life. So, we put
18:20 together the dream team of three
18:22 inexperienced people. It was the dumbest
18:24 thing that we did in our career. Now,
18:26 today, if you were like, "Hey, would you
18:28 sell the Robin Hood?" No, this is mine.
18:29 I love this. If I could go back in time,
18:31 I would have not bought the Robin Hood.
18:33 I put my whole business behind 3 years.
18:35 It put strain on Cody and my it put
18:37 strain on our friendship, our
18:38 partnership, but more importantly, it
18:40 put strain on our wallets while we were
18:42 trying to build two other businesses.
18:43 We're trying to scale property
18:44 management. We're trying to scale multif
18:45 family. And every time we earn money, it
18:49 gets sucked up by this project. It was
18:52 very, very frustrating. So, if I have
18:54 one lesson for everyone, I'm going to
18:56 repeat the beginning of this. If it's
18:58 simple, it's repeatable, it's
18:59 repeatable, it's scalable. Buy based on
19:01 cash flow with margin. If you just do
19:05 that, you will get a raise every single
19:07 time you close. Your stress level will
19:09 be like here. Actually, lower than here.
19:11 It's less stressful than it was before
19:13 you bought the property cuz now you just
19:14 have more money.
19:16 I have done that pretty much exclusively
19:18 through my Texas portfolio. That's the
19:20 way Cody buys all of his deals now.
19:23 Cody, I'm sure you'll probably talk
19:24 about it, but Cody is swapping a lot of
19:26 his old 1950s inventory for new built
19:30 2023
19:32 2023 built buildings that are gorgeous.
19:35 They cash flow. If you get nothing else
19:38 from this entire event, just remember if
19:40 I buy income, my income goes up. That's
19:42 that's Christian's Dave Ramsey
19:44 equivalent. Dave Dave Dave's like, if
19:46 you spend less money, you have more
19:48 money. It's like, well, thanks Dave. I
19:49 see why everyone buys your book. That's
19:51 hard to argue. So Christian's Dave
19:52 thesis is if you only buy income, you
19:55 will have more income. So everyone buy
19:58 my upcoming book. I'm kidding. I don't
19:59 have one yet. The down payment for this
20:01 was $1 million. I was told zero, but it
20:03 became 1 million. The original plan for
20:05 the embarrassing Cody and I were in our
20:08 20s. Cody's still in his 20s.
20:10 Our exit plan for this was they're
20:12 making so much topline income, but we're
20:15 going to run a tighter set of expenses.
20:16 We're going to be much better marketers
20:18 than the prior own. Basically, we did
20:19 our our projections on we're going to be
20:21 better than the prior owners. But with
20:22 our proforma, we were going to increase
20:25 the value of the Robin Hood
20:26 substantially and just earn our way
20:28 through the buyout with the projected
20:30 cash flow. We're going to write them a
20:32 check. we're just going to earn it out
20:33 of cash flow. So all the operating
20:36 income from the first three years we're
20:38 going to go to the investors. We'd buy
20:39 out the first one and then the other
20:41 person who was in for three. So one was
20:43 the 700. We're going to buy them out.
20:45 And then the other person at 300 had a
20:47 five to eightyear window for us to buy
20:49 them out. They're like we'll ride as
20:50 long as you want. We just want a return.
20:52 So we had uh staggered timelines to buy
20:56 everyone out out of cash flow. Then what
20:58 happened is there was no marketing
21:01 budget because the marketing budget was
21:02 spent on tree removal and cabin
21:04 revitalization and roof fixing and all
21:08 of the stuff we furnace fires. That was
21:10 actually one of the least expensive
21:11 things we had to do. Thank you Johnny
21:13 Nyl for cutting us a a friends and
21:15 family pity discount for like you guys
21:17 got screwed. He came in and helped us
21:19 out with some of our furnaces.
21:21 But as we went through that project that
21:23 the vision was hey we're going to do
21:25 this out of cash flow. We're going to
21:26 sacrifice the income to pay out
21:27 everyone. What happened in practice was
21:30 we realized Cody and I realized because
21:32 despite our original structure, Cody and
21:35 I can both do math pretty well. That was
21:37 one of the the things that we both have
21:38 the ability to do, which I'm grateful
21:40 for. We knew about what end of year one,
21:45 we're like, uh, two years we're going to
21:46 be in a lot of pain. Like we got through
21:48 the first one. I remember sitting in my
21:50 house just feeling numb on my fireplace
21:52 like, "Cody, I don't know what we're
21:54 going to do in two years. The math's not
21:56 mathing. There's no way." Yep. I I
21:58 remember when we were sitting down and
21:59 Cody was like, "So, I math it out for
22:01 how much we need to save per month
22:03 outside of the Robin Hood to pay off a
22:05 million dollars in two years." I was
22:07 like, "We're not c we're not cash
22:10 flowing what is that? 415ish. We're not
22:12 cash flowing $415,000 yet. We're we're a
22:15 year and a half into this puppy. This
22:17 isn't good." We ended up figuring it out
22:19 and the you know I'll leave this as my
22:21 closing encouragement to everyone. I got
22:23 this from Grant Cardone and love them or
22:24 hate them. I tend to be more on the like
22:25 not really a huge fan side. He has this
22:28 saying that I loved which was hey if you
22:30 have problems just scale until your big
22:32 problems are small problems. And so that
22:35 was a big reason why I moved to Texas
22:37 and started expanding the portfolio down
22:38 there. If anyone has seen any of my
22:40 content online you're like oh you went
22:42 from what four units to 400 units. Uh,
22:46 end of next week we should be at 500 and
22:50 I'm closing on 144 roughly 550 rental
22:53 units. It's like, wow, how did you scale
22:54 so aggressively? I'm like, uh, the Robin
22:56 Hood was scary enough where I had to get
22:58 my butt in gear and get to work. That's
22:59 that's the honest answer is you can
23:02 scale it, but what I what I learned from
23:04 that is I'm like, okay, so I could have
23:06 done this the whole time. the five
23:09 years, four and a half I spent to build
23:11 the portfolio that I have today, which
23:13 cash flows way beyond the original 15K
23:16 that I was targeting. I built that
23:18 because I was worried about our
23:20 decisions that we made at the Robin
23:21 Hood. And eventually what happened is
23:22 that business did scale enough or just
23:24 barely barely. I sacrificed the income
23:27 from those two years of all of the work
23:29 we did to be able to own the Robin Hood
23:31 with just my wife and I, which has been
23:32 a really cool ending to the story. Now,
23:35 we still have like a million dollars of
23:36 stuff to do here, but now we know we can
23:39 do it because we've done it before. So,
23:41 my big encouragement was I spent eight
23:43 years trying to save for a couple of
23:44 duplexes when I had a target that was
23:47 clear enough, someone with no
23:50 significant real estate experience, no
23:52 friends or family money, very limited
23:54 connections, was able to build a huge
23:56 portfolio. In fact, I'll have Matt speak
23:58 a little later today. Matt's done a
24:00 very, very, very similar thing with a
24:02 very specific why. So, when you know
24:04 where you're headed and you know what
24:05 you have to do, it's amazing how much
24:06 you can scale. Some points I'm like,
24:08 "Wow, I wish we didn't go through so
24:09 much pain." On other points, I'm like,
24:10 "Wow, wish we had a $5 million problem.
24:13 That'd be sweet if I could solve that in
24:14 two years." That's my biggest takeaway
24:15 from real estate.
24:18 We'll start uh right at the top of the
24:20 hour. All right, guys. Thank you so much
24:21 for attending.