Financing and partnerships
From a $112,000 Duplex to 24 Units in Three Years, No 1031
How I used four transactions, BRRRR, and seller financing to grow from a duplex to a 24-unit portfolio without adding more personal capital.
I want to walk through how I turned two units (a single duplex) into a 24-unit portfolio. I used a little bit of creativity, and I did not use a 1031 exchange. If you're already thinking "oh, you just rolled a duplex into more properties," it was more nuanced than that, and that particular strategy never came into it.
What I actually did was loop together several real estate strategies you may or may not have heard of across four total transactions. After that first duplex, I did not put a dollar more into the deal to get to 24 units in less than five years. That LLC today has six figures of cash flow sitting in it, which is enough for most people to call financial freedom.
Related reading: Dylan Osmon: From a $33,000 Triplex to 215 Units in Five Years
The reason I keep telling this story is that it's ludicrously simple, and I think you can copy it. Here's the whole thing, transaction by transaction.
Starting Position: $55,000 and Eight Years of Saving
Let me get the caveat out of the way, because it always comes up. Yes, I had some money to start this.
I had saved for eight years. I had already bought my first duplex, and I had a little bit of money from selling the first condo I ever lived in. When I started duplex number two, I had about $55,000 in my bank account. It took me eight years to get that cash. This was also one of the last times I was ever able to use my own money on a deal.
I'll come back to why that $55,000 is mostly irrelevant to the outcome. But that's the honest starting line.
Transaction One: A $112,000 Duplex, 101% Financed
The purchase price on the duplex was $112,000, in central Washington.
I don't do a ton of heavy value-add projects. This was heavy value-add. We retextured the walls, redid the roof, the flooring, the countertops, the kitchens, the bathtubs: the everything. We completely redid and flipped a duplex.
I bought it with a private money loan at 101% financing. I actually got paid a tiny bit at close, so virtually 100% financing and no dollars out of pocket to acquire it. What I funded myself was the renovation: just under $50,000. I had budgeted $40,000 and we came in around $46,000-something. That took me down to about my last dollar. I could not have afforded to do another piece of that project, and I'm glad it went roughly to budget.
We leased it out and it did fantastic. Rents were $1,400 a side, so cash flow was about $1,400 a month: one side completely covered my expenses, the other side was all profit. Then, instead of selling, I refinanced it into permanent debt.
Transaction Two: Trading a Duplex for Half of a 12-Plex
Around this time I had a buddy named Cody who had a 12-plex he'd been working on for a while, and he needed capital. He'd taken on some obligations from a past business partner and was paying those off.
So we landed in a funny spot: I had a duplex and no cash. Cody had a 12-plex and no cash. Cody needed cash. I wanted to scale.
We partnered on it. I sold my duplex: no 1031, no rolling it up, none of the fancy strategies, though they're not too hard to do. I did a straight-up sale after owning it for a year, paid my short-term capital gains, and turned the proceeds into a partnership on the 12-plex.
The equity math worked in my favor. I'd built about $100,000 of equity in the duplex, and coming into the 12-plex at a fairly good price turned that into roughly $150,000 of equity.
Transaction Three: Two Roofs and a Seller-Financed 10-Plex
Over the next year Cody and I did an excellent job leasing and running that building. It kept getting better. We did some projects there, and eventually we added pitch roofs to the two side-by-side six-unit buildings.
How do you fund two pitch roofs on a 12-plex? The buildings were doing really well, so we went to a private money lender and said, in so many words: hello, we'd like to put some new roofs on this bad boy and get it refinanced. That's exactly what we did.
Then we took the brand new stabilized property (new roofs, all the upgrades, higher rents, full occupancy) to the bank, and they gave us the money to buy a 10-plex right down the street, built by the same builder.
That 10-plex was seller financed. We bought it for $900,000 at 10% down (might have been 15%: I blank on that one), 5% interest on a 15-year note. Either way: low down, seller financed, low interest. That is a fantastic debt product.
Related reading: How I Took On $25 Million in Seller Financed Debt Before 31
That put us at 22 units.
Transaction Four: A $400,000 Duplex for a $3,000 Check Each
There was a very nice duplex right up the street from the 10-plex, and I had a buddy who wanted to sell it. The price was reasonable, and the seller financing was 10% down at 5% interest. I liked that deal too.
We had just enough leftover capital in the LLC that Cody and I each had to write about a $3,000 check to finalize the transaction. For $400,000 we got a two-story duplex with full garages (a massive building) and it cash flows beautifully.
Every single one of those buildings performs excellently today. And all of it was three transactions after I bought a duplex zero down.
Why the $50,000 Was Irrelevant
Yes, I funded the renovation. At some point I used money I'd earned and put it into the deal, and I'm not going to pretend otherwise.
But if I hadn't had that money, I could have brought in a partner to knock out that project. If you're sitting there thinking "well, I don't have $50,000": that's fine. The $50,000 is not what made the deal work. It's completely irrelevant.
What made it work was the building, and the ability to trade a duplex for a 12-plex, improve the 12-plex, take the money and buy a seller-financed 10-plex, then take the excess and buy another seller-financed duplex. We're close to the point now where we could run the same play again: get a portfolio loan across all of those properties and go buy yet another building.
This is basically an advanced play using three things stacked together: seller financing, partnership, and the BRRRR method. Buy, rehab, rent, refinance, repeat. You put money into the deal, improve the project, get a higher valuation, and cash-out refi to pull the money back.
The difference here is that instead of just pulling the capital back, I improve the building, take that capital, and immediately buy another building. Then improve that building and pull the money into the next one. And it isn't just recovering the original capital: we usually get a lot more out than we put in. Improve a building, pull capital, buy another building, pull capital, buy another building. It's a commercial play on BRRRR.
The Part That Actually Compounds: Relationships
The reason we were able to buy so much real estate is that we paired that refi loop with low-down seller-financed deals, which exist in that market and in every other market in the country.
Related reading: 3 Buildings, $2M, $100K Down: My Triple Seller Finance Deal
We just met other owners and talked about the projects we were doing while we were doing them. Turns out people who own a lot of real estate like talking about your active projects. The guys watching us put a roof on the 12-plex. The neighbors saying, "Oh good, you're putting a roof on that ugly building, our property values are going up."
You're playing the game alongside other people while you make those connections, and transactions come up. Somebody says, "Hey, I've got a 10-plex right down the road" (turns out same builder as the 12-plex you just repaired) "are you interested in buying it?" Well, I don't have the money to do that. "What if it was 10% down?" Now we're talking.
That's how the game's played. It's a relationship game. It doesn't go at light speed: it took three years from start to finish to get to a 24-unit portfolio starting with only that duplex.
I ran the same strategy in Mason County, Washington, and I've repeated it throughout the state of Texas the exact same way. Buy a building, meet the owners, talk about the projects you're doing, make connections, and right around the time your value-add wraps up and you get some liquidity, the next opportunity usually appears. Scale, scale, scale. That's how I ended up with over 300, soon to be over 400, rental properties in about a five-year period.
Key Takeaways
- A duplex bought at 101% private money financing can become the seed for an entire portfolio: the acquisition cost me nothing, only the rehab.
- You don't need a 1031. I sold, paid short-term capital gains, and the deal still worked because the equity gain was bigger than the tax.
- Improving a building and refinancing it doesn't have to end in a cash-out to your pocket. Roll the proceeds straight into the next acquisition inside the same LLC.
- Seller financing is what makes the loop repeatable: 10% down at 5% on a 15-year note is a debt product a bank won't hand you.
- The next deal almost always comes from someone who watched you do the last one.
- Repeatable means scalable. Scalable means it's a business worth being in.
There's no rocket science here, and that's the point. Watch the full video above for the whole progression in my own words.
If you want a mentor who'll actually work the deals with you, you can learn about the mentorship at mentorship overview. We also have a free course on getting started in multifamily investing, and a free community on Skool where we share the calculator we use to run these numbers.
Read the episode transcript
0:00 On today's episode, I'm going to share 0:01 how I turned two units, a duplex into a 0:03 24 unit portfolio. Now, I used just a 0:06 little bit creativity and I did not use 0:07 the 1031 strategy. If you're immediately 0:09 thinking like, oh, well, you just rolled 0:11 a duplex into more properties. It was a 0:13 little more nuanced than that, and I 0:14 didn't utilize that strategy. However, 0:17 there were many real estate strategies 0:18 you may or may not have heard of that I 0:20 looped together to do multiple 0:22 transactions, four in total, to get to 0:24 24 units after only buying that first 0:27 duplex. After that first duplex, I did 0:29 not put a dollar more into the deal to 0:31 get to 24 units in less than 5 years. In 0:33 fact, that LLC cash flow is enough for 0:35 most people to have financial freedom. 0:37 There's six figures of cash flow sitting 0:39 in that portfolio. So, how do we do 0:40 this? Can you copy the strategy? I think 0:42 you can because it's ludicrously simple. 0:44 Hello, welcome to Multif Family 0:45 Strategy. I'm Christian Osgot. I have 0:46 bought hundreds and hundreds of rentals 0:47 using just a little bit of creative 0:49 finance uh throughout the whole 0:50 portfolio. A little bit of creativity 0:52 can go a very, very long way. The goal 0:54 of this channel is to show you how to 0:55 play the game in the simplest way 0:57 possible. Yes, there's a lot of 0:59 strategies we cover. None of them are 1:00 difficult to execute. The whole goal 1:02 here is that anyone just like me can 1:05 start from virtually nothing and turn it 1:06 into a huge portfolio. Now, for this 1:09 deal, this was one of the last times 1:11 that I was able to use my own cash on a 1:13 deal. So, I had saved for eight years. I 1:16 want to caveat this when you guys are 1:17 like, "Well, you had some money to start 1:18 this." I had saved for eight years and I 1:21 had bought my first duplex already. I 1:23 had a little bit of money from selling 1:25 my first condo I ever lived in. So, yes, 1:28 I had a little bit of cash. It took me 1:30 eight years to get that cash. I had 1:32 about $55,000 in my bank account when I 1:35 started duplex number two. Now, let's 1:37 talk about the acquisition. How we 1:38 turned this into 24 units because you 1:39 can copy this too. With or without 1:41 money, you can copy this, too. Purchase 1:42 price for the duplex was $112,000. 1:46 It was in central Washington. I don't do 1:48 a ton of heavy value ad projects. This 1:51 was heavy value ad. This was retexturing 1:53 the walls, redoing the roof, the 1:55 flooring, the countertops, the kitchens, 1:57 the bathtubs, the everything. We 1:59 completely redid and flipped a duplex. 2:02 Now, instead of selling it, I refinanced 2:04 it into permanent debt. So, I used a 2:06 private money loan to buy it 101% 2:08 financed. I actually got paid just a 2:10 tiny little bit at close, but virtually 2:13 100% financing. So, no dollars out of my 2:15 pocket to buy it. I funded the 2:17 renovation. It was just under $50,000 of 2:20 rena. That what took me down to just 2:22 about my last dollar. I could not have 2:25 afforded to do another piece of this 2:26 project. I'm glad it went roughly to 2:29 budget. I had budgeted for 40,000. We 2:30 came in at like 46 something. We renowed 2:33 this duplex. We leased it out. It did 2:35 fantastic. I refinanced it. Cash flow on 2:38 this duplex was about $1,400 2:41 per month. I rented it at 1,400 per 2:43 side. One side completely covered my 2:45 expenses. One side was all profit. 2:48 That's basically how the math worked on 2:49 these two units. Now, around this time, 2:52 I had a buddy named Cody, and he had a 2:54 12plex that he had been working on for a 2:55 while, and he was in need of some 2:57 capital. He took on some obligations 2:59 from a past business partner and was 3:01 paying those off. And so, we came into a 3:04 situation where I had a duplex and no 3:06 cash. Cody had a 12plex and no cash. 3:10 Cody needed cash. I wanted to scale. We 3:14 partnered on that duplex. I sold my 3:16 duplex. And no, I didn't 1031. I didn't 3:18 roll it up. I didn't do any of these 3:20 fancy strategies, though they're not too 3:22 hard to do. I simply did a straightup 3:24 sale of the property after I've owned it 3:26 for a year. I paid my short-term capital 3:28 gains, and I turned that into a 3:30 partnership for a 12plex. Now, that 3:32 12plex, I got in at a fairly good price. 3:35 I actually increased the equity I built 3:37 in the property, which was about 3:39 $100,000. That turned into about 3:41 $150,000 of equity. Now, over the course 3:44 of the next year, Cody and I did an 3:46 excellent job of leasing and running 3:47 this building. It got better and better. 3:49 We did some projects there and 3:50 eventually we added pitch roofs to the 3:53 building. Now, how did you fund two 3:55 pitch roofs to a 12plex, two sidebyside 3:58 six-unit buildings? The buildings were 4:00 doing really well. We went to a private 4:01 money lender and said, "Hello, we would 4:03 like to put some new roofs on this bad 4:05 boy and get it refinanced." That's 4:07 exactly what we did. So, we put the 4:08 roofs on it. We to we showed the brand 4:12 new stabilized property with the brand 4:14 new roofs, all of the upgrades, the 4:17 higher rents, the full occupancy. We 4:20 brought it to the bank and we got a loan 4:22 and they gave us the money to buy a 4:25 10plex right down the street built by 4:27 the same builder. It was seller financed 4:30 10% down. We bought it for $900,000. We 4:33 put 10% down. Might have been 15% down. 4:35 I'm actually blanking on that a little 4:37 bit. Either way, low down, seller 4:39 financed, low interest, 5% interest on a 4:42 15year note. Now, that is a fantastic 4:45 debt product. So, right there, we're at 4:47 22 units. Well, there's a little duplex 4:51 right up the street from that, and it 4:52 was a very, very nice duplex. I had a 4:54 buddy who wanted to sell it. The price 4:56 was very reasonable. The seller 4:57 financing was 10% down, 5% interest. I 5:02 liked that deal, too. We had just enough 5:04 leftover capital in the LLC where we 5:06 each had to write like a $3,000 check to 5:09 finalize that transaction to buy a 5:12 duplex, very nice duplex, twotory, full 5:15 garages. It's a massive building to buy 5:18 that for $400,000. It cash flows 5:21 beautifully. Every single one of those 5:22 buildings today performs excellently, 5:24 but it was three transactions after I 5:27 bought my duplex zero down. Now, yes, I 5:30 funded the renovation. So, I want to 5:31 point out I did put money into this 5:32 deal. At some point, I had used money 5:35 that I earned and I put into the deal. 5:36 Now, if I did not have that money, I 5:38 could have brought in any partner to go 5:40 ahead and knock out that project. So, if 5:42 you're sitting here going like, "Well, I 5:43 don't have $50,000." That's fine. The 5:46 $50,000 is not what made the deal work. 5:48 It's completely irrelevant. It was the 5:50 building. It was the ability to trade a 5:52 duplex for a 12plex. to improve the 5:55 12plex, take the money and buy a seller 5:57 finance 10plex and take the excess money 5:59 and buy another seller finance duplex. 6:02 Today, we're close to the point where we 6:03 could do the same play again. I could 6:05 get a portfolio loan for all of those 6:08 properties and we could go ahead and buy 6:11 yet another building. Now, this isn't 6:13 the first time I've done this play 6:14 either, but this is basically an 6:16 advanced play using seller financing, 6:19 partnership, and what's called the burr 6:21 method. You've likely heard of it. Buy, 6:23 rehab, rent, refinance, repeat. It's 6:25 basically a way where you put the money 6:26 into the deal, you improve the project, 6:29 you get a higher valuation, and you get 6:30 a cash out refi. Pulling all of that 6:32 money back. The difference in this 6:34 strategy is instead of just pulling the 6:37 capital back, I'm improving the 6:39 building, taking that capital, and 6:41 immediately buying another building in 6:42 the same LLC. And we improve that 6:45 building, and we pull the money, and we 6:47 pull it into the next LLC. And it's not 6:49 just pulling back the original capital. 6:50 We usually get a lot more out than we 6:52 put in when we do these. So you improve 6:55 a building, pull capital out, buy 6:57 another building, pull capital out, buy 6:58 another building. It's just another 7:00 commercial play on the Burr method. The 7:02 reason we were able to buy so much real 7:04 estate is because we paired that with 7:07 low down seller finance deals that are 7:09 available in that market and every other 7:11 market everywhere in the country. We 7:14 just met other owners and talked about 7:15 the projects we're doing with them while 7:17 we finished the projects. Turns out 7:20 other people who do a lot of real estate 7:21 like talking about your active projects. 7:23 The guys who are watching us put a roof 7:25 on it. We talked to the neighbors like, 7:26 "Oh, good. You're putting a roof on that 7:27 ugly building. Our property values are 7:29 going up. Hooray." You get to play the 7:32 game with other people while you're 7:33 making these connections. Guess what 7:34 happens? Transactions come up. Sometimes 7:37 people are like, "Hey, you know, I got a 7:38 10plex right down the road." Turns out 7:39 same builder as the 12plex you just 7:41 repaired. Are you interested in buying 7:43 it? Well, I don't have the money to do 7:45 that. Well, what if it was 10% down? Now 7:48 we're talking. That's how the game's 7:50 played. It's a relationship game. And 7:51 the nice thing is while this doesn't go 7:53 at light speed over a few period, it 7:56 took three years from start to finish to 7:58 get a 24 unit portfolio starting with 8:01 only the duplex. Now I was doing the 8:03 same projects in Afraid of Washington. 8:05 We are doing the same exact strategy 8:07 down in Mason County, Washington. I've 8:09 repeated this strategy throughout the 8:11 state of Texas the exact same way. buy a 8:14 building, meet the owners, talk about 8:16 the projects that you're doing, make 8:18 connections, and magically as you're 8:20 finishing your value ad, around the time 8:22 that you get some liquidity from your 8:24 project, the next opportunity usually 8:26 appears. And you scale and you scale and 8:28 you scale, and that's how in a 5-year 8:30 period, I ended up with over 300, soon 8:32 to be over 400 rental properties in my 8:34 portfolio. And anyone can do the same. 8:36 There's nothing special about this. And 8:38 there's absolutely no rocket science. 8:40 And that is the simplicity. Here at 8:41 Multif Family Strategy, we try to make 8:43 it palatable, easy, repeatable steps. 8:46 Remember, if it's repeatable, it's 8:48 scalable. If it's scalable, it's a 8:50 business that you probably want to be a 8:51 part of. If it's simple, that makes it a 8:53 heck of a lot better. But if you want to 8:54 make millions of dollars in real estate, 8:56 you want to play the game, not get rich 8:57 quick, but move forward, you know, a lot 9:00 of millions of dollars in about a 5year 9:02 period, that's a strategy you can copy. 9:05 Hope this helps. See you on the next 9:07 episode. Christians out.
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