Podcast Episode 150 Transcript

Episode 150: Using Creative Financing To Build A Passive Income with Christian Osgood & Cody Davis

folks this week on the pre-real podcast
we're joined by Cody Davis he's 23 and
Christian Osgood he's 31. they've built
this amazing story uh two young men that
have really figured out this game their
multi-family investors primarily uh
though they're starting to dip their toe
into some Hospitality stuff uh they've
put together about 120 unit portfolio at
this point
um they've got a real simplified
approach to real estate and I think
that's what has allowed them to execute
as effectively as possible they're the
founders of multi-family strategy some
amazing takeaways from some from from
young men in the business takeaways you
would not experience normally unless you
were seasoned in this business 15 20
years these kids really have it together
uh tremendous job and I say kids and I
shouldn't because they're they're very
very seasoned investors
so give this a list a listen it's Cody
Davis and Christian Osgood founders of
multi-family strategy it was a really
enjoyable conversation don't miss it
this week folks are you ready to bring
your real estate game to the next level
my name is James prendamano I'm the CEO
and founder of free
25 years I've closed over a billion
dollars in transactional real estate
each week a meeting with outstanding
investors, High performing individuals
and Visionaries operating in the real
estate space these are the people that
are actually out there in the real
estate game right now getting it done
this podcast aims at bringing anyone's
game to the next level
this is the pre-real podcast welcome
everyone to the pre-real podcast we have
got a super treat for you today uh we're
joined by Christian Osgood and Cody
Davis just to put a little perspective
folks Christians 31 Cody's 23 they are
the founders of multi-family investing
strategy
um
these are our amazing young men that
were put on my radar by one of my
younger team members that have seen the
work that you're doing uh you you've now
closed on 110 units and a resort you're
out there doing uh what we hear about
and we see all the time on these
investment channels at a really young
age uh thank you guys so much for taking
the time to join us today
thanks for having us yeah I appreciate
being here I have to say like tip of the
Hat congratulations thank you for uh
sharing your story it is absolutely
amazing guys
appreciate that one thing that I've
learned over the last three and a half
years of doing this is that the story's
worth more than the real estate and
in that uh learning curve that I have
experienced I figured we should share it
so how did you all meet how did this
come together
so we actually met we were working at
the same firm so I knew of Cody but he
worked in a different building than me
at the State Farm yeah real estate firm
we were working in Tacoma he was the
when I first
knew he existed I knew he was the uh 20
year old with 24 units and I had no idea
how he got there and I was focused on
building my research call Center for
that for that org but we really hit it
off when we went to uh grant cardone's
growthcon our the owner of that firm
backed out at the last minute he's like
hey guys I have a hotel you guys are
both going there's two beds you guys
should have room together free free room
I was like okay that sounds great reason
budget for 20 year old Cody yep and I
just left my job to uh to start a new
adventure so I was like ah budget slow
let's do it
we were room together for three days you
get all pumped up from the whole
entrepreneur thing but more than that we
talked about goals and we realized that
our goals were aligned I was trying to
figure out how to expand my real estate
so I could retire my wife from teaching
and Cody was trying to figure out how to
expand his real estate to retire his
mother you guys
um had some sort of real estate
background mentors in the business like
how did you get to the point where you
realized okay real estate's the pathway
this is this is where I want to spend my
time
we both had completely different ways of
getting there
yeah I'll go go first go first I like
yours 14 year old Cody
was um I was at my mom's house and my
parents split when I was
eight about six years later my mom had a
friend and
he had been in real estate and through
divorce had to liquidate but he had 12
apartments and so he he gave me this
book you might have heard of it Rich Dad
Poor Dad
and so I read it and I got super excited
and I wanted to buy a duplex and then I
realized that I was 14 years old
and it was a little hard to buy real
estate at 14 years old so I put the book
back down I went on with life
and then fast forward
three-ish years three and a half years I
was 17 or 18. and I was in my last year
of high school
so this would have been 2018.
and uh my my teacher at the time was a
Civics teacher she was teaching us about
torts and all this
he last he said last day of school you
come to school which nobody did I'll
teach you how to make money when you
sleep and I thought that was pretty cool
and one of my buddies ended up telling
me before that class he said because he
had been through it the the quarter
before
and he just said look it you just buy
these five thousand dollar houses
and you rent them out and then you get
rich
and so I was like all right I wanna know
how that works so I went to school and
that's what he said he bought a five
thousand dollar house for sale by owner
it was that real estate concept again
so I I read Rich Dad Poor Dad I got
interested
and I was cleaning up at um a friend of
my dad's house
they they had a place and I was pressure
washing and cleaning up outside
Landscaping because I thought that's
what I wanted to do at the time I just
had fun with it they said you should
join this Facebook group and so I joined
the Facebook group made a post I wanted
to buy a duplex by 21 I was 18.
and so I figured you know what three
years I can work a few jobs I was
applying to multiple jobs I was a
gymnastics coach for a few years
I could get enough money to buy a duplex
and someone online said hey because I
was going to college at the time at the
at this point you should just drop out
of college get your real estate license
you'll make a ton of money
and so I did it
and I ended up at the firm where I met
Christian
and for me getting into real estate it
was pretty simple instead of reading
Rich Dad Poor Dad I had a great real
world example my dad worked in nine to
five and hated it but it provided for us
so I didn't get a bunch of time with him
but we were really blessed that we had a
single parent who was able our one
parent's income could cover both parents
and my two siblings so while that was
awesome my dad worked a lot of 11 hour
days six seven days a week so I didn't
see enough of him
next door actually Three Doors Down uh
my friend Jake's dad John
had bought rentals fixed up houses
bought some small multi-family bought a
bunch of laundry mats
and at around I want to say he was about
35 he retired
nice house not insane house but a nice
house hot tub convertible cars I was
like wow he has some toys he has a house
and he's out of the game he just
flips a house or two a year and that was
his whole thing so that that turned me
on to real estate I took a long way to
get there though
he started as well comparatively to Cody
uh he'd had the uh he started as a
banker and he saved up and he would take
his money buy a house take his money buy
a house
he wanted to get his wife into the game
she had just immigrated from Canada
wasn't able to work here yet so he's
like well what can she do I can buy some
businesses about a bunch of laundry mats
I'm like well if I'm trying to get
started I have to go start getting money
so I went to college got a sales job in
apparel
wanted to get into real estate so worked
at the co-star group at the time
lands.com they just acquired it then uh
sold for apartments.com Loop that and
co-star data core product for those who
don't know co-star is like the internet
for commercial real estate they own they
almost have a monopoly on the data it's
crazy but worked for them and I made the
mistake that being
in real estate is not the same as being
an investor I was around owners property
managers I was in but I wasn't in the
game
it wasn't until 2020 when everything
started shutting down where I realized
hey
I'm not actually where I wanted to be
I'm in a high paying job and I have no
real estate outside of my house
so bought my first duplex
fell in love with buying real estate
quit my job right there
but I bought another duplex and then we
bought the 38 Plex together uh not long
after that
how did you guys bridge the gap what was
the the step you took that said that's
probably not the way for us
what we found to be true for
playing this game is we keep everything
really simple
it's not for other people that's for me
because I'm not super smart
I know how to use the pieces I have I
just don't have a lot of pieces so
simplify everything and then we go in
with an objective and walk away with a
takeaway
because that keeps us intentional so we
go in with a goal for all of our
meetings
whether it's with an investor now or a
property manager or a tenant or
potential business venture partner
and then we leave it with a takeaway
a lot of people go and they just wander
through their meetings and they don't
really identify what is the number one
takeaway I got from this meeting what's
the number one thing if there was one
thing that I got out of this
conversation
and when you start identifying the one
thing
and then you just become a master of it
you put it into practice until you're an
expert
eventually you start getting different
takeaways from the conversations and
that's I didn't know how to articulate
that in the beginning but that's what we
did
over and over and over every owner
meeting every investor meeting
every time I met with a tenant because I
self-managed my 30 Apartments
it was an adventure but I would go in
with an objective to learn and leave
with a takeaway and we started
implementing that amongst the
partnership and that is what allowed us
to really simplify everything
and not worry so much about the unknowns
because there's always going to be
unknowns and in line with keeping it
simple we have a rule of not adding
steps it doesn't mean you can skip steps
because you absolutely can't skip steps
but you can just won't go well yeah
exactly you start with okay where am I
actually heading so you start with what
is the goal and that's what Cody and I
ultimately did at that growth con we're
in the hotel together we said we had
similar goals and that's what you need
for partnership is okay we're heading
the same direction we know where we're
going what would it actually take to get
there and then we don't add any steps
the one thing and it's the simplest
thing in all real estate I wish someone
had told me before I did the whole
college to get a job job to get a second
job that whole route
was you're not a real estate investor
until you buy a piece of real estate you
don't have to think too far past that if
you want to get into the game
for kodio (Cody) is 12 Plex for me it was a
duplex I'm a huge proponent of
multi-family so I say duplex should
probably be the smallest you go that's
my opinion I agree but by the property
all you have to do is figure out how to
do that once you get that step out of
the way the rest of it is so much easier
if I heard anything when I started I
wish I heard that 10 years before I did
because I could have been you know Cody
was 19 when he bought his first deal I
could have been assuming I had the same
life trajectory I had could have got out
of college at 22 couldn't figure out how
to do this you figured this whole damn
thing out at 23 years old
it took me and now prior to me launching
the investment side you know we've got
hundreds of units now we're in a number
of different asset classes but it took
me 20 years being at the top of my game
in what I did
we we brokered 100 million dollar deals
we did every type of transaction you can
imagine we had a billion dollars in
transactional real estate under our
belts before I made the jump
okay yeah
on that point
I'm really good at addition subtraction
multiplication and division and the
logic test
when I say I'm not that smart my
vocabulary sucks
Christian can verify that there's a lot
of words that I don't know what they
mean and uh when it comes to life skills
I don't have many
but I just understand very simple math
and logic and all of what I've done I've
just logiced my way through it and when
I look at a deal
you got up all the income you subtract
all the expenses and then the debt and
you either have a positive number or
negative
and I logic My Way Through It Is it
feasible to put it together and if there
is any takeaway that you're going to
take out of this podcast folks
Let It Be money does not matter if you
have the deal you're gonna find the
money
I have the skill set to find the deal
you mentioned a billion plus dollars of
transactions that's ridiculous that's a
lot it's actually a lot
um
the ability to do that is worth way more
than the people putting together the
capital yep because they could they
could Bridge all the money they want
they can't buy stuff they can't figure
out the relationship piece
and they may be able to buy a nice car a
nice house but they're not getting the
real estate that we want to buy yeah and
there's a lot more money out there than
there are great real estate deals to buy
they're not even printing it anymore
they can just add it to the digital
currency
[Laughter]

we'll back all you guys we'll just print
it that's gonna work yep well it's
fascinating that you guys cut through
this the way you did
um
I really applaud you for for how you've
accelerated this process and you've
identified and simplified the things
that you can Outsource
um and without a doubt the deal if
you've got the deal
um you've got the Golden Goose so what
was the the the experience like when you
went to uh the grand Cardone seminar was
that productive for you guys
that was fun for us I think we went to
the first two days and then enjoyed the
beach on the third day we got our
takeaways
I had I had one take away from that that
I actually really funny enough launched
it wasn't the takeaway I expected but we
do review all of our takeaways all the
time uh Mike wrote from Dirty Jobs which
was one of the very few shows that were
just fantastic on Discovery is each
launch Star Career it it really did he
talked about so he started in uh
infomercials that's where he got his his
start and they would put an item in
front of him that he has no idea what it
is and he has to talk about it
coherently for eight minutes
and the ability for him to talk about
anything confidently for eight minutes
allowed him to launch Dirty Jobs because
he's like hey I get thrown into
situations I know nothing about and I
just have to talk about it while the
camera's on you know I can do that we're
fine and it never rolls for more than
eight minutes on the clip so I'm good
we took that skill which conveniently
YouTube algorithm we cut off his eight
minutes for when it wants to push you
but when we started talking uh online
about what we were doing the ability to
get in front of people and just go you
know what I'm going to open my mouth and
even when I don't know exactly what
direction I'm going like when I started
this sentence
I know I'm going to land where I need to
go and we applied that to our entire
career and that's our whole ability to
communicate with people coherently
came from that one speech with micro
saying hey this is what I this is the
skill that I had
we adopted that skill
and we applied that same principle
to all of real estate and it got really
ridiculous when I heard the other line
from Cardone where he said you don't
have to remember what you said if you
tell the truth so we combined this uh
the skill set of
just you don't even remember anything
you say if you tell the truth and then
if you can talk about anything for eight
minutes you're set so we don't script
anything and I never remember what I say
I have to re-watch stuff I'd love to
jump in on a deal or two and just talk
about like what are your metrics what
are you guys looking for in a deal uh
what type of returns what what are the
things let me not put words in your
mouth you tell me when you're looking
for a deal what are the things that
you're looking for
you talk parameters but I'm going to
start with the first and main thing
we're looking for a long-term fixed rate
cash flowing debt Define long term
long term so two two things on it long
term I would usually call 10 years plus
however not every deal we've done gets
us there it's having a very very very
clear path to get it into long-term cash
flowing fixed rate debt and
in the past a decade plus is plenty long
term for people getting started today
it's a little different for us so if
we're doing a bank refinance we're
taking it to 10-year minimum debt and we
do our fixed rate mortgages and we're
good and that's going to be a commercial
product because we're buying commercial
residential real estate however we don't
need to do tenure day anymore long term
for us means that we can pay off the
mortgage before it's due
so we've got a three and a half million
dollar mortgage due in eight years it's
not 10 years
but we could pay it off before it's due
out of the cash flow from the asset
we've got a three-year mortgage on a
little duplex development site
we can pay it off before it's due
it doesn't take three years to pay that
off so long term in the beginning we're
talking decade plus after you build a
little portfolio
it's an asset that you can afford to
write a check for before the term is up
because that is a long enough Horizon
for you to ensure you're not going to
lose it that leads into our criteria and
figure out how do I buy it how do I
never lose it then the last piece which
is really not important to people
getting started is will it be fun
because it doesn't need to be fun in the
beginning you just need to get started
but for us how do you buy it is you line
up your deal and your debt and your
equity
how do you never lose it is long-term
fixed rate debt that cash flows with
margin so are you guys targeting seller
financing deals only at this point on
the way in
no I mean seller financing was a means
to get in but Christian bought his first
deals without seller financing that
board of operations is deal debt equity
and that's for how do you buy it it
doesn't say deal seller finance Equity
it's deal debt Equity you have to find
the best debt product seller financing
is not the best debt product for every
deal
it's not it could be but it's not
feasible that it it will be for every
opportunity so you have to line up the
best product we've bought deals with
hard money he's bought deals
conventionally now I've done
conventional deals we're working on some
conventional purchases right now I've
only done conventional refi's
but you have to line up the best at
product so we're not just targeting
seller financing we're looking for the
opportunity because if we just targeted
seller financing
we'd be looking at debt deal equity and
then that's going to cap the deals that
we're going to be able to get our eyes
on
yeah I think the seller financing came
into play for us as the optimal debt
product for two reasons one when we were
starting we didn't qualify or at least
Cody didn't qualify for conventional
financing and for the size deals that
we're buying our first deal together
being a 38 unit neither did I
so when we got started that was off the
table then as we started to actually
build some net worth
we ran into the issue of interest rates
doubled so seller financing was a
fantastic solution for a lot of these
because people who were still stuck on
their price but the bank interest rates
just wouldn't allow it to work
we're able to come in and it's like well
everything's negotiable so we were able
to play on the rules that they wanted to
play on with just completely ignoring
the shift in the market so that was a
huge Advantage now that people are
starting to accept Okay interest rates
are higher they're probably going to
stay up and people are now scared
because the banks are finally popping I
I saw two I don't I haven't looked at
the news yet this morning so I imagine
we're going to see some more fun this
week
but as we're starting to see it all
unravel it will be interesting to see
what it looks like to get lending or if
seller financing is just the way we
continue to do things because I don't
know enough not having gone like 2008
was before I was in the game we just
went Mutual three seconds ago on a
another set of Finance deal oh huzzah
okay well there we go
we're the seller financing but it'll be
interesting to see what bank policy
looks like because I'm imagining it
tightens up a lot in the near future so
it's a method
it seems to be the right time to be
really good at it you guys are uh you
took down 110 units and you took down
the resort is that the Robin Hood
Village Resort is that what that deal is
yeah
give the audience a few minutes on what
that deal is about
yeah so that one was fun it's my
favorite property every time I go there
the first thing I say to Christian I
look around it's a Cabin Resort on the
canal and I looked around and said
Christian I can't believe we did this it
is it is the coolest thing that we've
ever bought today and it's not like it's
Taj Mahal but
it's really fun it was built by John
Beckman he was the set designer who
partnered with Walt Disney way back when
for the Robin Hood movie back in the 30s
he built this
and says the Robin Hood Village Resort
was built by the set designer and
partnered with Walt on the Robin Hood
movie in the 30s with Errol Flynn it's
just a fun piece of History it it's got
a beautiful campus we've got 12 acres
originally it was nine and a half acres
at the Robin Hood it's got a little bit
of Waterfront it's got dog
but then there was a Triplex that came
for sale adjacent real estate two and a
half acres
and so I called them up it was on Zillow
they want to be cashed out and I said
hey would you sell our finances
and I said we have debt on it
but we'll we'll just pay it off we'll
sell our finance it
so they wrote a check for their debt and
uh we bought that on a contract and then
we assembled it and the fun part was
one of the prior owners of the Robin
Hood
was the person who built this house Mr
woodcock's it's a Triplex house we call
it the sauna house it's got one upstairs
and two downstairs so he built the house
so we got to actually reconnect the
campus
but my favorite part about it is he
owned a lot of the campus he didn't own
the main Pub building the uh the
Nordstroms owned it and so the prior
owner that sold to us bought from the
Nordstrom so we got to assemble this
this huge campus that hadn't been
assembled before
so that that's my favorite part about
the whole story we got to put something
back together
put together a piece of History
and uh yeah it's been fun and it was all
seller financed yeah zero bank loans and
zero dollars out of pocket we bought um
seven million dollars of real estate is
it like a limited Hospitality play
What's the the end product here what is
it that you're doing with it yeah so it
was run primarily as a two to three days
stay you come in to the hotel cabin get
away you get your hot tub you can go
kayaking go see the seals go see the
wolves and through the summer wedding
venue yeah but we are primarily using it
as an event space we have our own event
and we're doing a lot of weddings we're
working on getting the writers Club
there's a pnw Riders club that hosted
their event in January I don't remember
where the host I think it was Puyallup
or something but we're gonna try and get
them in next year to fill in some winter
stuff but big country music concert
that's going to be there this year we're
doing concerts again bringing music back
to Union which is something that they've
been missing out on for a long time used
to happen
we want to just Embrace what it used to
be not change change it so
that's that's the story behind the Robin
Hood
and I'm not a huge advocate for going
out of your lane like we're good at
multi-family we're good at acquisition
and stabilization and we're really good
at that we can come in we have the teams
to turn a unit we make things really
nice
and primarily we're entry level housing
we make it
really nice and we cut we were able to
cut down on property management fees by
starting our own property management
company
and so we're able to come in typically
we're just a little bit under Market
rent for above average Market inventory
because we fix them up really nice so we
just have fantastic Leasing and that is
what we are good at we did this one
because we hit our goal 100 units
this came up and I was like this is the
adventure that we want to have
but I always I always say that on all
the podcasts if you're going to do
something it is a best practice to stay
in your lane hospitality is out of our
lane and it was really really difficult
to learn a brand new space I do not
regret it at all but that is where we
would have just been Rich how do we know
about that yeah that was a that was a
huge sacrifice it will move us forward
but that was a huge huge undertaking
that is why that rule will it be fun is
so important especially as you get
established
because we could be done instead we
decided to have an adventure and I'm
super glad we did it's it's very easy
guys to get lost and you'll you'll lift
your head up and a decade will come off
the calendar I promise you so uh we just
did it we just did a similar deal where
we took a golf course and a 1400 unit
housing complex that was at one point
together and it got bifurcated and had
its challenges we bought the two assets
independently put them back together
same thing we didn't have experience in
that space specifically but it is so
rewarding it is so fun you get to do all
the things that you're talking about you
get to bring great amenities back to the
community and you have to enjoy what
you're doing uh because if you don't I
promise you 10 years will go by and and
you'll you'll lift your head up and go
what in the hell just happened here I've
got two kids and you know I haven't
lifted my head up for the last decade uh
I love every single thing that you guys
are doing you're winning in every single
way congratulations on absolutely all
the success where's the best way for
folks to to find you
a YouTube channel our videos are getting
a little better than they used to be if
you watch some of our first videos they
were pretty rough however we documented
everything we documented it all from
before we owned anything together that
is Cody and Christian multi-family
strategy
so as always folks uh the links will be
below guys I I really appreciate the
time Cody Davis Christian Osgood
um founders of multi-family strategy
love what you're doing congratulations
on all the success and thanks for taking
the time
thank you absolutely best of luck guys
as always please everybody stay safe