$25M at 23… A Less-Known Real Estate Investing Strategy!!

this 23-year-old and his partner built a $25 million real estate portfolio without using their money but I'm skeptical is there success a random Stroke of Luck or have they truly unlocked the real estate code you can either buy real estate with two types of money there's debt and there's Equity we bought that 0 out of pocket seller financed as well there's only three things investors care about so the order is always deal then debt then Equity we bought about 90 rental apartments and then the resort so in the Summers we do a little bit over

32,000 per day that's for the real money in real estate's made guys your success at such a young age is quite inspiring it's incredible before we get into how you purchased your first property no money down negotiation skills relationship building skills give our audience a little bit about who you guys are and my name is Cody Davis I got started in real estate at 19 as a College Dropout and since then I had bought 30 apartments by the age of 21 and I had ended up meeting Christian at that time but I realized he had

been in the real estate for a little while in a different sector I was a real estate agent not a very good one wasn't making any money when we connected we went out and bought a little bit bigger yeah so I did the uh the opposite route I did the whole College 9 to-5 thing so I worked uh college to get a job to get second job third job fourth job ended up at the co-star group they own loopet apartments.com basically the internet of commercial real estate I worked there for four years trying to get

into real estate I had the assumption that if you're around real estate and get a job you're better qualified to go buy real estate uh what I learned was that the only way to be a real estate investor is to actually go buy the darn real estate um I used the money I earned there to buy two duplexes that was all the money I earned there and I had to figure out how to buy without money which is where I ran into Cody started with no money got 30 units and I'm like well I started

with some money and I got to four there's probably another way to play the game we partnered on a 38 Plex as our first deal together and it's the rest of this history let's go check out some of your units yeah let's do it [Music] tell us a little bit about Robin Hood the uh acreage here anything else you want to highlight about this cool place Robin Hood was built back in 1934 and so this has been around for a little while we're going on 90 years next year but this is on the Hood Canal

in Washington it's about 12 acres it wasn't 12 acres when we bought it however we bought the White House just across the street different owner different transaction but we bought that $0 out of pocket seller financed as well and that added 2 and2 acres to our 9 acre assemblage [Music] here all right what is this place you guys welcome to the Robin Hood Suite this place is pretty cool cuz I got the chance to stay here last night the Cozy Cottages you've got what total 16 17 here uh total of 18 Cottages got if you

include the big house across the water there why this place out of all the places walk us through the process of deciding to acquire this property well originally one of our mutual friends said hey there's it's the zero down Resort you should go check it out it's on the water and it' be really fun for you guys it's too active of a project for me so we came to come see it and ended up being really cool found out it was a lot more than $ Z down but we fell in love with the project

and the property so it was just one of those oneoff Adventures gotcha so it wasn't zero down how much down was it then it was a million down so it was one of the few zeros they were really close they're off by one dig yeah exactly yeah so we bought this for 4 and half million bucks and um with a million dollars down the carried a note at $35 million for 8 years our ongoing debt cost is about $154,000 a year mm so when we were underwriting the deal we looked at topl line income less

what we thought was the operating expenses we made some mistakes there we didn't know what to underwrite to but we projected for about a $400,000 net to pay the 150 in debt service what are you on average bringing in per month as a total revenue for the property so in the Summers we do a little bit over 35,000 per day so we're bringing about $100,000 a month in the summer in the winter it's about a third of that we're in a very heavy summer town so there's concerts here boating right out front uh tons of

hiking in the winter it slows down quite a bit yeah we just getting outside you guys cuz getting a little toasty inside and balance it with some cold Pacific Northwest Air Cody you started investing with absolutely no money right how is that possible well it starts with a lot of debt you can either buy real estate with two types of money there's debt and there's Equity Equity is cash and debt is is a borrowed cash and if you don't have any money that you can actually contribute you have to borrow it so I got the

seller to finance as much as possible which was a little bit north of a million dollars and I still need another 125,000 bucks so I ended up borrowing that from an investor which was basically a hard money lender at the time cuz they lent me money at 12% from my down payment when everyone else was borrowing at 3 or four that's crazy how did you convince that investor I mean you had no money what $3,000 to your name or something that's all I had and they were banking off the fact that probably wouldn't make it

work you got to think about what happens if it goes well well they're going to earn their 12% then they'll get paid off right what happens if it doesn't go well I didn't know how to do all this at the time I had to lean on mentors that I met through the real estate brokerage to show me how to do this with attorneys they had a clause where I'd just sign over the ownership in the LLC if I could not pay them back they get a stellar asset it was a 12px they were happy with

the terms of the Stellar Finance note and because of that if I won I got a property they got 12% gotta what did you learn in that initial uh relationship with the hard money lender there's only three things investors care about whether they're investing into debt or Equity where's the money going how's the stability of what's backing it and how do they get paid back and if you map out those three things they will give you money and it's almost always a discussion it is a sit down over coffee we don't put up big slido

presentations together we don't give them a word dock we have an idea this is why it's going to work this is where your money is going this is how it's coming back mhm that's it super simple do you guys know why most investors fail very very early on the answer might be surprisingly simple so keep watching to find out later in this episode I'm curious cuz it looks from just the outside just like a regular house you got the 2bay shop with a carport and stuff like that SOS about the deal here you what did

you pay for it did the seller finance it as well they did so it was listed for 900,000 they had a mortgage they said we can't sell a finance I said well this is what we were thinking we were thinking about putting about 200 Grand down and uh we'd like you to finance it for a few years and this would be the payment and so they thought about it and said oh we're just going to pay off our mortgage and so they did and we bought it seller finance we brought in an equity partner with

a buyout agreement on this place so that we could buy it with $0 out of pocket and we've been operating it successfully as the Rob Hood Lodge man let's get inside cuz it's getting windy and cold and gnarly all right so how are you using this place I mean it's winter it's slow are you doing a daily rental monthly rental what's it bringing in just give our audience a quick snippet so we've got two long-term rental down below that are rented out around 1,450 bucks a month upstairs we've got a Master Lease from the Robin

Hood Village Resort and so we've got consistent income of 4,500 a month coming here and then Robin Hood sublets it out to make the Delta gotcha okay part of Robin Hood uh the 12 plus acres right with the white house that's 12 total yep you own that beautiful Waterfront as well right with the fifth wheel we've got some Waterfront over there with the uh the Water Wheel yeah water let's go check it out man all right so for the year kaying is done right y this ship is definitely retired as you guys can tell can't

believe this was what three stories high you're saying yeah there was a party deck on top sheesh and it came with Robin Hood this came with the White House ah okay what was some of the initial challenges that you guys faced well you'd think it'd be starting with no money but turns out the money is actually pretty much the easiest part I think the hardest part for me was doing all the real estate we bought a lot in November in December when we started scaling our business and it was learning accounting not having the background

in that and immediately going from hey I have a duplex and a W2 job to 55 units going into a CPA's office and ask he ask you questions you're like I don't know the answer to any of these that was hard now you're not doing accounting for your company well we were were just just until last year we did all the bookkeeping and I was doing all the bookkeeping for us in the the beginning and making sure all the taxes looked okay for our CPA what would you do now would you hire someone from a

Geto you got start every Venture with profitability and if you don't have enough cash flow to pay whatever bookkeeping cost for every entity that you have then you do it [Music] yourself all right back to a warm spot so this place used to be a restaurant here at Robin Hood like what's the what's the back this used to be the bar actually the uh the Robin Hood Suite the big A-frame in the front used to be the restaurant then this was the bar all right how many properties did you guys acquire in the first year

of partnership ship together we bought about 90 rental apartments and then the resort that over about seven or eight transactions gotcha within a within a onee period what areas were we talking about Moses Lake Renton the Taquila area and then here in Union why did you focus a lot on Moses Lake I Believe in the market and that's where all the opportunities were you buy where the opportunity is and you don't always know what that opportunity is going to be until it pops up and it's probably not what you expect I've never been to Moses

before we started buying there how did you come across that market what made you decide that this is the opportunity area there was a real estate agent in The Brokerage I worked for when I was 19 and that agent had a deal that was seller finance that they were brokering that's how I learned about seller financing and Moses lake so besides renting Cottages enjoying the lake there's other things that I could do here right so I kind of want to go take a look at where the venues would take place for what the weddings or

concerts lots of corporate Retreats and get together yeah barbecue pits stuff like that okay let's go check it out and show our audience where it is yeah let's talk about your biggest setback in your first deal how did you overcome it I think of all the things with the 38 Plex the biggest setback was probably drugs that's the one with the chicken infestation and the couple bad roofs that one had some difficulties however the biggest thing was we had a bunch of non-paying tenants and some of them were dealing drugs now we don't do heavy

value ad on every project this one was really difficult to figure out cuz there were some very very rough tenants to the point where it was actually dangerous to be there at c times a day W how did you overcome that without whatever you can disclose with time and money yes it it took time and it took a lot of money we had to do some evictions and uh and some cash for keys yeah we had to offer people money and if you're doing cash for keys don't actually give them cash has to be certified

funds that you can verify at the bank level because otherwise they will uh they'll say you never paid them mhm what's the most important thing you've learned through that project uh be very kind but firm exactly makes sense so there's this guy on YouTube Ben MAA real estate you guys have probably heard about him he talks about real money coming from refinances instead of the actual sale of the property do you agree with that like what have you learned well I'd make the argument that the real money comes from holding real estate and not over

Levering it so while you could refinance and pull out cash I would disagree and say you should just keep the cash in the deal that'll increase your cash flow over time you pay it off that's where the real money in real estate's made I agree it's not the people that flip them and sell them to that point he is correct but folks that leverage forever are always at risk mhm folks who own their stuff whether it's 10 million 100 million or a million dollars of real estate whatever their goal is the people that can buy

the real estate and pay it off are the ones who make the real money because they minimize their obligations absolutely do you want a professional website for your business then you need durable the number one fastest way for entrepreneurs to grow their skills into Revenue with durable AI driven website builder you can generate a website in 30 seconds and then customize it using an impressive Suite of drag and drop design tools you don't need to be a techie or a creative genius to establish a web presence with durable even adding Advanced features like chat Bots

social media feeds Google reviews only takes a few clicks durables tools go beyond the basic website too you can generate copy with the integrated Google ad writer or use durable AI assistant to automate tedious tasks does that sound like something you need then give durable a try it's free to publish a website and start booking jobs just click the link below to head to durable. and give your business the web presence it deserves Blitz time with Cody and Christian thanks guys for submitting your questions first one is does risk scale proportionately with large larger multif

family property Acquisitions or is there disproportionately larger risk for properties with larger unit count if you go bigger to an extent there will be less risk if you're just getting started and you go too big there will be more risk because you won't be able to float the capital expenditures however 20 units is less risky than two by far because you've got way more money coming in awesome next one what is a guiding principle you have returned to in times of uncertainty deal than debt than Equity whenever you're worried about the money whenever you're trying

to figure out the opportunity you have investors you want to place Capital you always start with the deal you never violate that principle and the money will always appear love it how do you get started in a market that doesn't have many multifamilies for sale that don't need to be fully renovated you meet up with the owners that own the rest of the multifamilies go meet with the players they can teach you how to play the game and they can give you the opportunities that you're looking for how do you apply seller financing in a

multif Family Market where all properties seem to have negative cash flow you lower the cost of Capital One way to increase cash flows to either borrow less money or borrow cheaper money so you could do less money borrowed by reducing the price or putting more money down if you don't have more money the best way to do it is to lower the interest rate all right what's the weirdest interaction you've had with a tenant weirdest interaction with a tenant I actually had a tenant uh from Moses Lake find my house Drive 4 hours across the

mountains show up on my driveway while I was pulling out of my garage and said hey I don't have a cell phone but I got a notice that I'm delinquent on rent I believe I paid I was like oh good I thought I was about to be killed um you're fine what is your name and we looked it up and we found the check in our system and they were good to go what's the biggest misconception people have about real estate that real estate is complicated real estate is a very simple model people own stuff

they rent it out to people they confuse hard with with uh simple it is not a uh complicated game and is just hard if you could have dinner with one person Dead or Alive who would it be in why the person I would talk with his name is Mike clug he owns a bunch of real estate and has owned all of the biggest properties in Grant County and I've tried to reach out and he's just unavailable to to meet he's a little bit older but every time I've looked at a big building in Grant County

his name has been on it at one one point in the past what would you talk about well I want to figure out how he assembled that massive portfolio because we're talking average size of the buildings or 4050 units and he owned all of them what about you Christian I think the person I would meet with would be Mark Cuban Oh Yeah from Shark Tank he's done so many interesting businesses and he's so consistently successful I just feel like there'd be so much to ask and so much to learn he has such a simple take

on money I would just love to sit down and see what uh what nuggets he drops when we talk about the business model that we've built how many properties do you guys have as of today not the ones that are pending we've got the resort in about 70ish 180ish between the two of us cuz he's got some stuff in Texas that I don't have I've got some stuff here in Washington he doesn't have but combined we're right around 180 and we're under contract on about 50 more wow how do you guys manage all these properties

across different counties different states I mean do you have 10 management Partners or what's what's the secret here yeah so Cody and I started a property management company together and eventually I ended up trading up a building for the company and so I run the company today I see our Resorts business where we bought two properties and we're right now working on a uh we're actually working on RV park down there uh that is in Mason County so we have individual hubs but you really want to focus on individual areas so that you're not spread

out 10 deals in 10 different markets that gets super messy and that's where a lot of people get sloppy bookkeeping buildings go into disrepair it's very very hard to manage if you spread out too wide too quick talk to us a little bit about the cost of management for somebody that doesn't know and is new to this industry so cost of property management in a lot of markets is going to be somewhere between 8 to 10% of the rents that's usually what you would allocate for our portfolio because I own and manage I'm able to

do that as a discount especially on some of our properties where we're getting rents up over time I can come in at a lower cost Cody and I I managed stuff at $50 to $60 per month per unit when we set a lease $500 flat fee that's lower than you're going to find in most areas that's an advantage of self-managing when I manage third party it's going to be $75 to $80 per or $85 per unit same system though renewal fees 200 bucks leasing 500 bucks it's pretty cut and dry what were your goals when

you first partnered up when we got started I wanted to help retire my mom and he wanted to help retire his wife which we successfully built the business within 11 months to do that but we figured we needed to buy about 100 rental apartments to hit both of those gos talk more about you know the the relationship of your mom why why was that important and then touch on retiring your wife as well that's pretty ambitious well my parents split back in ' 08 and I've always wanted to be able to help my mom cuz

she she helped me a lot and financially my dad's been able to get to a point where he's able to retire pretty well and I just want to be able to help my mom live where she wants to live and do what she wants to do without having to go to a job what about you so my wife was a kindergarten teacher we had this 10-year goal of retiring her then the Pand mic hit and she also got injured at the same time so my 10-e goal became a one-year goal I was like okay she's

not going back to teaching next year I already left my job to pursue real estate so I'm like we're not going to have income in about a year we set this two-year goal of like maybe she has to work another year we ended up in 11 months of partnership we hit the goal where we were able to bring her full-time into the property management company which she now loves and she gets to work with us my wife and I wanted to buy a house in Texas we're just starting laying the foundation on that right now

so all those goals were hit in our first two years of partnership absolutely we'll talk about more about why Partnerships fail so keep watching to find out so you've mentioned that focusing on Capital first is a backward strategy talk to us about that what do you mean why so a lot of people worry about the money especially if you don't have money it's like okay how am I'm I going to buy real estate for millions of dollars if I don't have the money however the money depends on the deal you don't know what the debt

needs to be what the equity cuz ultimately you're going for a deal that cash flows day one on long-term fixed rate debt that is the goal so the order is always deal then debt than Equity because your deal especially in Creative Finance completely dictates the debt and the equity that you're going to need to close it and so if you don't have money a quick way to not add steps is to go get real estate because if you had the real estate youd have the money so let's figure out how do we structure the purchase

in a way that actually gets you to be an owner and most people are going to say well I don't have the money to buy it so I can't buy it you don't have the deal you don't have a property you don't have something that makes any sense financially so go find that piece first cuz that's way more important and way more more scarce than actual money we bought the Robin Hood we thought it was going to be $0 down ended up being a million dollars down we had never done a raise for seven figures

we did that in one meeting their first question was well what would it look like if we funded the whole deal to which I said well it look like you writing us a check for a million dollar and they said yeah let's do it and so we just asked them a question hey we're not trying to borrow this we'd like an equity partner buy them out in the future so we can own at 50/50 which we thought would be really cool mhm and they said we'd love to do that and they got some cost segregation

benefits out of it which we can talk about later but yeah man that's I mean that doesn't happen though unless you have a relationship established right yep that's a total fluke they are the people I bought my first duplex from oh wow he didn't realize that until we went to go meet with them years years down the road M that's pretty cool talk to us about seller financing I know we can write books about it but for the snippet here what's most important to know well it's really simple and that's what makes it repeatable there's

a promisory note which is a prom to pay if you take a dollar bill out of your wallet that's a note promisory note is bigger than a dollar bill and it's just a promise to pay any amount over any payment schedule so you have that and then uh A promise is only as good as what backs it so there's then a deed of trust against the property which says in essence the seller trusts you're going to pay them in case you don't they're going to have a lean against title so that they can try and

take it back if you don't pay them right and the seller is the bank they would be the bank right and you can Finance anything that you own so if they have Equity they can finance that equity what um three things stand out to you as far as what you've learned when it comes to Sal financing people will finance you because they trust you and especially on a lower down deal where their lender risk is higher they want to know that you are a good operator and so we've found that when we meet with people

and we actually learn how they built their business instead of trying to buy their properties we focus on learning how did you build your business and what worked for you they know that we're going to apply those practices towards running that property and that results in more deals lower down payments and ultimately a much easier transaction cuz they do stay involved as a lender they're a part of the deal and a stakeholder of the deal throughout the whole transaction so trust is the number one thing how do we identify properties that we want to acquire

I mean do you have a set of criteria that you follow and stick to or just $50 doors plus you'll look at it we like playing Monopoly that we love the board game and we like playing in real life if you find a market where you can get one opportunity which is what we did we found most like Washington mhm we thought if it's worth buying one it's worth buying everything so every apartment building we're buying them if it's a sixplex a sixplex will never change our universe at this point in time however it's another

sixplex that we could buy next to our other sixplex it becomes a 12 and we can start doing this Monopoly board game and so for folks that are getting started pick a market get an asset and then start buying up that neighborhood because if you own all the neighboring real estate you can guarantee your property will be a good area I was going to say you're not spreading out over over a big territory you're almost like let's dominate one neighborhood Washington gr County and to that point we're buying one neighborhood and then we're buying another

neighborhood and then every time we buy an asset maybe we buy 12 Plex a mile apart from each other we can call all our property Neighbors in two locations now hey I'm your property neighbor want to meet up we do that in you know the Lakeside area and then we do it on the peninsula and we can start taking over until we own properties that get closer and closer and closer and then we own a big strip and we've seen people do this all over the country multiple markets when we talk about meeting owners and

people who mastered the game right this is almost universally how they play the game well s let's get out of here let's go get warm how do you find off-market deals we found a magical map online it's super cool it has every single off-market prop no way what is it Google Maps is it free yes it is and you can do it for free that's how we started and that's how we continue to operate uh Google Map you can do this in any Market I just did this with someone in our mentorship group they're like

hey I'm stuck in this market he said find the large roofs on gole is I'm not finding them ho into their Market you basically find an apartment complex and typically in cities when you have an apartment building there'll be other apartments next to it so you look at the residential areas find an apartment building there and you can just drive straight down the street kind of like a lot of people talk about driving for dollars you can do it on the map and you look through and you go okay that building looks cool that building

looks cool this is the type of stuff I'd like to own now we need to figure out who actually owns these and that's almost always on the county assessor site or if you're somewhere in the country where the county assessor is harder to access you pretty much Google parcel map this area you'll find the ownership name Pages for phone numbers exactly or uh opencorporates decom is one that we use all the time but that's how we find these people is I go here's building own that I don't in an area that I would love to

own in how did you get to where you're at basic phone call super simple only objective in that phone call book a coffee meeting all we want to do is create enough interest to sit down and meet and once you actually meet people share their stories and we've learned 95% of what we've learned from the people who've already done what we wanted to what is the biggest investment mistake and lesson that you guys have learned let's start with Cody my biggest mistake was not buying deals that made sense for my criteria I thought I was

scaling too quickly in the beginning and this was before I actually partnered with Christian there was a ton of opportunities that I had the deal lined up and I had the debt lined up to buy 100% debt it would have cash FL a few thousand bucks a month on multiple properties and I could have been at six figures Cash Flow Free and Clear at 20 years old and I opted to say well I'm scaling too quickly I don't see anybody else doing this zero money down could have bought them but I didn't want to go

too quickly that was a mistake my biggest mistake was staying in the 9o5 too long and buying too small so actually very similar it's a a fear of scaling too much I'm like I'm very comfortable in my job I was making decent money until all of a sudden I had a larger goal where I wanted to retire my wife almost immediately yeah well if you scale too fast in certain industries that could damage or hurt you um what can you tell our audience as far as your Lessons Learned I mean a lot of people watching

right now sitting on a deal and they're like yeah do I pull the triggle do I not when you buy a project there will be some underlying obligations that you have to meet so make sure that you have more options than you have things you have to do cuz as you're building cash flow it's great to have more money coming in every single month but if you've got a whole bunch of roofs you got to do you got electrical you got to do there's a lot of obligations that will eat up that cash flow if

you're sitting on a deal and it doesn't have a ton of stuff that has to get done today but it does bring in a bunch of positive cash flow you should probably buy it mhm tell us about the Journey of acquiring Robin Hood and specifically what you've learned in terms of negotiation due diligence seller financing really the best of the best that you can share with us oh yeah so we were sitting down in the Robin Hood Suite so they asked us what our experience was in business and they were asking about terms and what

we thought about down payment and they asked to you just bring a whole bunch of cash like well yeah let me grab it I got a suitcase in my car and so um jokingly we said well we're we're working on another deal down the road and we're doing a million dollar on that deal that's our down payment because that is what we were actively working on buying 85 rental apartments over in Moses Lake they said okay we want a million said well well who what if we did uh 450 10% down they said H we

like a million and in the process we made the mistake of telling them all the special Clauses we had done in the past about additional down payments interesting so we said what if we did for 50 down with additional down payments of a quar mill each year and they said we'll do a million but I really like your idea of additional down payments so we'll do the quarter million as well so we made that mistake but that is um unfortunately what we negotiated now the benefit is we're going to basically have this place paid off

at the end of the note which is fantastic the problem is at this phase of our business when we're in the build and stabilized phase this is the most important part to optimize cash flow like we want to reinvest the cash back in our business we now have to reinvest a lot of the cash into paying off the debt here and while the property supports it that is the wrong debt product for our phase of business right I mean you said earlier to the negotiation table start with what you want work backwards what does you

do wrong here it's you kind of just said too much maybe or we were excited CU this was a new adventure I think we put a lot of respect on the fact they had done something we hadn't done before and so we just took what they said as what will happen if you're an inspiring entrepreneur looking to start or currently have a business that you want to scale head over to upflip docomo prints mentors and more is Robin Hood Village profitable today and do you regret purchasing it what can you highlight as far as the

whole deal it is profitable today and I definitely do not regret buying it this is a fantastic place and every time we come down here the immediate thing we say is like oh my gosh this place is so cool I'm so glad we bought it uh what we do regret is the way that we structured the actual deal the debt structure has a us paying off this building very very quickly or this campus very very quickly uh which is great but it doesn't help for like the next 5 six years can you share some numbers

Cody as far as where you're at for Robin Hood Village the best year ever before we bought it was 620,000 Topline MH our first year of operating we brought in over 7:30 what changed between those time periods we did some more marketing and we held events we are shifting from just a hotel model to more of an events venue events are a great way to increase your revenue and so we brought in 730 in 2024 we're shooting for $850 and then the following year to get to a million of that of course there are expenses

with a million dollars of Revenue in the next 3 years we should be netting about 600,000 to pay our debt and then cash flow not bad how many people do you have working on at the Village well any given point in time it can be between um dayto day 3 to 5 okay but I think on staff we've got five or six people right now what is the most surprising thing you guys have learned about real estate that you didn't know before everybody's broke they don't have any money at least they don't hold any money

folks believe in real estate a ton and so they put all their money into it as soon as they get a million dollars or 100 Grand they're going to put it into their next deal and that is not exclusive to small investors we've seen people that have got hundreds of millions of dollars with the real estate and they'll spend down to their last little bit of cash just to buy the next deal people put their trust in real estate more so than cash how do you guys avoid that for you I mean you don't want

you don't want to be in that spot about 5 years from now well we actually do because the most successful people get rid of their cash to get cash flow so every time you expend all of your money if you spend a million dollars or if you're smaller 100 Grand or 10 million you have more cash flow coming in every month to regenerate quicker Christian you mentioned earlier on investing in real estate as a side hustle right because you had a 9 to-5 job would you recommend this to our viewers somebody starting out yeah I

I think getting into real estate it doesn't take as much time as people think people think hey I got to sit here and make a thousand calls a day and I'm going a fulltime it it's not a super timec consuming thing to get into your first few deals and so I think most people can self-manage start building their portfolio really up to probably 30 to 50 units depending on how you are usually once you get that 50 unit thing if you love the game that's where it makes sense to jump off and maybe start going

a little bit harder at real estate I mean it sounds like for those who do love the game you have no reason not to do it on the side while providing for your family absolutely absolutely not it it takes time it takes effort but it doesn't take that much time it is not all consuming to own a little bit of real estate right uh let's talk about first time investors beginners looking at this episode and they're wondering should I focus on residential should I focus on Commercial can you guys speak to that a little bit

commercial residential as far as Apartments go is where you should start that is the most stable asset class commercial residential yeah which is Apartments oh okay so that's where more investors are buying it's not the the newbies that are buying duplexes and fourplexes but folks that are buying six to 20 rentals that is an ideal starting range a lot of that because your values are actually based on your performance if you're a good operator it's worth more whereas in the duplex and fourplex you're valued on how your neighbors are doing when they sell their property

right what is the most important decision Cody that you've made and I'll ask you this Christian to later that propelled you forward both physical spiritual material whatever it could be I committed to learning how to communicate with people I was introverted very introverted not willing to talk to folks I would never tell that based on our interaction today I was a kid at McDonald's with my mom and I was hungry I I like the four piece or six piece and I wanted a little bit more she's like okay here's $3 go get some more and

I said no I'm not hungry anymore I was unwilling to talk to the cashier I was that afraid to talk to people when I got out of high school I made a commitment to learning how to communicate I did that through communicating with Starbucks Baristas I'd learn how to talk to them I would try and get the the flow of conversation right the tonality correct and every time I botched it I realized I'm never going to see them again and if it went well I'd get the takeaways for what went well and then I'd try

and apply it again over and over and that single skill set is taken me farther than anything else in business uh have you read books that helped you do that was just basically the the inperson Barista experiences the application the actual going out and doing it took me farther than any book what is your top advice for negotiating seller financing deals well there there's a lot of Clauses out there that you could add to a contract it could be from no payments for a certain amount of time it could be negative amortization it's best to

keep it simple just have a standard loan product that doesn't have any exceptions to it because most people make the mistake of focusing on those exceptions so there's key Clauses that will make a deal work when you should just make the deal work standardly and then if you get those extra Clauses later down the road in negotiations then it's just a better deal did you learn it the hard way yes we've done a few special Clauses that were very complicated both to explain to the investor and then more importantly to have to explain to our

CPA to put things through to the IRS what we found through experience is it's actually very simple to keep it simple you just don't add steps you look at what answers the question and what answers it in the easiest way possible right let's present that uh the one other piece that goes hand inand with this is just ask for what you need Cody and I have a problem of occasionally asking for what we think will get accepted the deal still works we don't violate any principles but we could have done a better deal if we

just asked for exactly what we wanted sometimes you ask what you want and you get it so when you're negotiating start with what you want to happen and work back from there gotcha what's the one piece of advice that you guys uh would leave our audience with to the extent that you can simplify your Universe it becomes repeatable you can get complicated but if it's not repeatable it's not scalable so make sure you keep things simple I like it right in that same vein quantify your goal like put your goal out there figure out what

does it actually cost to hit my goal on a monthly basis put a time line on that and the clarity around your goal is going to help simplify your Universe keep it simple give us some insight on negotiation skills you've done a lot of deals now and you've pretty successful so what can we learn from you as far as negotiation well just cuz you can doesn't mean you should and so we try and keep everything in our negotiation super simple and if we're unwilling to move on something we'll shut it down but for the majority

of the conversation it's a very open discussion we are trying to meander through uh an Unwritten path and so we're trying to figure out how do we get what the other person wants how much report building do you do before you actually sit down and talk terms options or is that how important is that that's extremely important and it will depend a lot on the deal for example if a broker brings me a deal it's going to be a very transactional conversation and it's going to be pretty much like okay what do we need to

do what are the objectives let's go most of the leg work they've done a lot of the leg work and they're going to do a lot of the communications if we have a relationship where the seller is financing to us who we've had a long-term relationship it can take months it can take years wow but we'll build a relationship and the best opportunities we've had our large owners who have hundreds of units will come to us near the end of their career typically and go hey um I'm ready to back out of the game turns

out my kids don't want the whole portfolio because they know us and they like the way we operate they go I trust you with this portfolio so that if I seller or Finance it to you I don't have to take it back when I'm 85 years old this is the game of the Long Haul right yes you're not in it for the short term n want toed right Y and we got to learn strategies that no one else got to learn cuz we learn from the people who've mastered the game in the market that we're

in yeah if you want to master any game just learn from the players who've already done what you want to do right that's what this strategy does what are some perceptions of wealth for both of you guys that turned out to be not true as as you're in this chapter of your life I don't want to you've made it right cuz there's always the ex ceiling higher and higher but what have you learned so far as far as wealth when I got started I thought a couple million dollars was going to be good and when

we crossed that in equity like because we basically were at the same point from when we started we both partnered when we were both worth about 400 and we scaled past a few million bucks and realized very quickly that's not enough to really expand and be safe today I mean even if you're in a 6% you're getting six figures a year but you still all the liabilities and assets they got to take care of along the way so it's not actually as much as people think and I really thought there was two phases I thought

if you buy it all and you stabilize it you're done like you're cash flowing and it's good and you'll refinance when the debt comes due and you just kind of keep the ball rolling what we found is almost every single Master of the game the guys who've been playing this for 50 60 years they buy it they stabilize then they optimize everything they go do I need to build something here is there a Next Level I can take this asset and then they do pay off their debt in their entirety and that is what it

looks like like to actually make it mhm it's interesting cuz I've heard many uh successful investors say it's hard to get to the first million then it's difficult to do the next 10 and then it just becomes easier and easier right the 2 million becomes 20 and so on like as far as the challenges talk to that the reason that it's so tough to get to the first million is because people buy little Deals they think they have to get started to start which is true but they don't have to start at the bottom most

people start with a single family or duplex you're not going to make a million on that it will not happen but there's that mindset barrier like are you kidding me 38 units I'm not never going to buy that I didn't even buy a duplex I got to start there before I buy a 38 unit complex longer walls and a longer roof there's more people that will support you along the journey if you have 38 of them versus two and the more support you get from people whether it's tenants whether it's mentors the the more likely

you are to win in this game share one book every investor should read you should read Deals on Wheels by L Scruggs absolutely without a doubt that uh book talks about mobile homes and seller financing it's about private money okay what about you Chris what's what's a good book I'm the systems guy of our business so principles by Ray doio fantastic book it's about the size of a Bible it's it's a big book but he runs one of the largest hedge funds in the world and he talks about the principles that he built his companies

on and the biggest takeaway that I had from that is just it's not even the principles that he shares it's how you document principles and how you put those throughout your company culture gotcha okay how many years in are you already as far as this business goes yeah I've been investing for a little over four years now gotcha and what about you I've been investing about the same amount of time but I started a lot smaller gotcha okay are you guys paying yourselves anything today well no but out of all of our real estate and

all of our business ventures we pay ourselves 60 Grand a year each MH and as a ratio to our income that is next to nothing so we reinvest everything into the growth of our assets and the acquisition of new assets guys so why is that important I mean you could pay yourselves a lot more and live a little bit more lavishly every year that we push that off means that we can further stabilize what we've built and it's cool to buy real estate but it's even bigger Flex to never lose it and most people lose

it the real estate because they go out they get 100 Grand a year passive income and they buy the nice car that costs them four grand a month half their passive income goes to the car I could go buy my dream car tomorrow but that would be a sacrifice to stuff like this and this is way cooler than any car that I could buy there's a bigger win it sounds like in delayed gratification right and a lot of people just can't do that and they lose they they all could they just choose not to it's

a conscious decision to say it should be okay but we don't want to gamble with our financial future right should be is a bad business model well said guys it's been a pleasure appreciate your time I think I learned a lot and our audience did as well you want the Ultimate Guide to real estate investing make sure to check out episode 152 as thatch reveals the same investing strategy that took him from being a homeless Refugee to now owning more than $100 million in real estate and earning more passive income than you think is possible

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