Agents Building Cashflow

EP 185: Creative Financing Leads to Real Estate Success with Christian Osgood

• Christian Osgood

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Accomplished real estate investor and host of the Multifamily Strategy Podcast, Christian Osgood, talks about his journey from owning two duplexes to building a portfolio of over 200 units in just three years. He dives deep into creative financing strategies, the importance of mastering a niche before expanding, and the nuances of property management. 

Christian also discusses his methods for identifying and securing high-cashflow deals, making this episode a goldmine for aspiring and seasoned investors alike. Tune in to discover the secrets behind his rapid success and actionable tips to grow your real estate portfolio today!

Key takeaways to listen to:

  • Discovering how creative financing unlocks high-cashflow deals.
  • Learning the importance of mastering one niche before expanding.
  • Finding success by building relationships directly with property owners.
  • Understanding how strategic property management creates millions in equity.
  • Realizing the benefits of buy-and-hold strategies for generational wealth.

About Christian Osgood

Christian Osgood is a dynamic figure in the world of real estate investment, renowned for his innovative strategies and commitment to empowering others. As the host of the Multifamily Strategy Podcast and YouTube channel, Christian shares his wealth of knowledge and experience, inspiring countless individuals to achieve financial independence through multifamily ownership.

His journey in real estate began with humble beginnings, as he diligently saved for eight years to purchase a house and two duplexes, exhaustively investing all his capital. He then had a wake-up call in 2020 after his wife Danni suffered a serious injury during her job as an elementary school teacher. Christian set the ambitious goals of retiring his wife from teaching and relocating his family to Texas to start a family. 

Within a remarkably short span of three years, Christian amassed over 200 rentals, fulfilled his goal of retiring his wife from teaching kindergarten, and built his dream home in Texas. Today, he works alongside his wife, Danni Osgood, as they passionately build their companies, Multifamily Strategy, Kensho Property Management, and Apex Property Management, all while growing their ever-expanding portfolio of properties.

Connect with Christian Osgood:

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Christian Osgood: [00:00:00] You can buy any deal with or without money. If it is high cashflow, you are looking for debt.

Generally speaking, if you're property can service debt, you want long term fixed rate debt. You can get that through hard money. You can get that through the seller. You can get as much as you can, but it always goes in this order. Find the opportunity, then find the debt product and say you get 85 percent seller financing.

Now you just have to figure out the last 15 percent and 15 percent of the money is much easier than trying to figure out a hundred percent of the money before you have a deal. So deal first, then find the debt. If you can do Deal-Debt-Done, congratulations, you found a high cashflow deal that services your debt.

Intro: If you're a real estate agent earning 200, 000 a year and you want to grow your passive income, this show is for you. Learn secrets other agents use and hear from experts in our field who will guide you on your journey to investing in assets like apartment communities so you can take your commissions and turn them into cashflow.

Here's your host, Randall. Let's dive in. 

Randal McLeaird: All right, welcome back. We have an awesome guest on today, [00:01:00] Christian Osgood. He's only been in the multifamily market for three years or so and the guy's crushing it. He's got over 200 units and he's buying more. We talk about a 44 unit that he's closing on right now.

 And he just moved from Seattle area, to Dallas area. We talk about some of the ways he goes about getting business and finding deals. And it's a lot easier than you think based on the way he does it. And and so we talk about that and just how we structure some deals. He runs multifamily strategy.

It's like a coaching and mentorship program that he runs and coaches. He's got a property management company where they run and manage some of the properties here now in Texas. Now they're buying so many deals. And so he's a great source of information, knowledge, very inspirational. Just again, in the way he's structured it and his business and his philosophy around the business side of things, you know, he's like, I'm only going.

Long term debt and I'm holding these things for a long time. I'm not bringing on a thousand partners and syndicating a bunch of deals, small JV one off partners coming into his deals. And so [00:02:00] it's a refreshing way of doing it and hearing somebody talk about how they're just managing their own pipeline of deals.

Rather than just bringing in thousands of people to invest in a deal, right? I hope you're getting value out of the show. We read the comments on the reviews that you guys write, so please go on and rate and review. If there's something that you would like to hear us talk about or address on the show, by all means, leave it there in the comments and we will read them and get that on the show or try to.

All right. Without further ado, let's go. Here we go with Christian. Hey man, welcome to the show. It's good to have you on today. I'm excited for the conversation. Again, just diving in and learning a little bit about you, what you're working on and all the different types of things that you're buying.

And even just now, before we even jumped on talking to you about, you know, the deals you're closing right now in Texas. So welcome to the show. Look forward to the conversation, dude. I'm super excited to be here. Thanks so much for having me on right on. All right. So, Let's jump in. Again you're, you just recently moved down from Seattle market down to the Texas market.

Give us even before that, let's just jump in before that. What was your entry into the real estate? [00:03:00] Did you buy that Robin Hood resort as one of your first things? Or like, where did you guys start into the, to the business? Oh, that's funny. Yeah. 

Christian Osgood: Robin resort. Yeah. We'll talk about that one.

That was that was about a year and a half in. Okay. That was why I should not have, I should not have jumped into hospitality. However, I'm a multifamily guy. We made the assumption. So I started actually going all the way back. My first job in real estate was the co star group. So I've worked for apartments.

com, loop net, that's right. Okay. So now homes. com. They hadn't launched that yet when I was working there. I worked for them for a long time to save up to buy real estate, which bought me two duplexes, which cashflowed enough to pay the mortgage on my little house in Seattle. I bought it. Back in 2016, I got a 2, 000 a month mortgage.

So I built 2, 000 cashflow. My real estate was paying for my real estate. That felt pretty good. Except that the goal was financial freedom, which that does not look like financial freedom in Seattle. It looks like, you know, essentially it's like a level up from house hacking, right? I have a house and I have rentals that pay for the house.

Yeah. 

Christian Osgood: Basically what I did is I [00:04:00] scaled up one step from a house hack and I had a high income. So I was like, okay. Earning your way to financial freedom. Super difficult. I've actually interviewed a bunch of people on my podcast, but you know, the golden number seems to be if you make half a million dollars a year or more, it's actually probably feasible to save your way to financial freedom.

If you make less than half a million dollars a year. You're going to have to utilize some sort of leverage or creativity at some point if you want to get financial freedom. At least that seems to be today's market, the common thread. So, discovering this, I met a, at the time, 20 year old named Cody Davis.

He was working in my office, funny enough, as a real estate agent. He had never actually closed a The commissionable deal. So he had no income and he had bought 30 apartment units in Grant County, Washington. I was like, okay, I make astronomically more money than him. I went to college. He didn't. He has more rentals than I do.

And they cash flow. So he was getting paid to buy these deals. I was like, there is a [00:05:00] different way to play the game. When I talked to him, I was like, how would I get to 30 units by 30? the time. He's like, I cannot help you because I want to buy a 38 unit building, but that would put you at 42, not 30. And so we partnered on that deal.

That was seller financed 15 percent down. So, 300, 000 down on 2 million purchase, 38 units. That deal made we bought it for 2 million and it appraised about a year and a half later for 4. 1 million. And I learned a lot of things there. One we raised the 300, which I'd never done before. So you don't need friends or family or money.

If you have a good deal, you, and that was a deal that was on market. So there's not hard to find these deals. And when you buy a bigger deal, you traditionally. Would make more money because of duplex. We'll just never make you a million dollars. Not in that market. Learned a lot on that and eventually scaled up within two.

Like, once I understood the basics of creative finance two weeks after I closed that we closed on three duplexes one week after that, we closed [00:06:00] on a seven plex in Seattle. I think two months after the 12 plex, and then we just kept scaling. So I think I haven't counted for a while, a little north of 225 units.

So my portfolio, and I've been doing this for three years. It's not like I've been doing this a long time. It just took eight years to build up to two units. And then it took three years to build up like. You know, 200 plus. 

Randal McLeaird: That's awesome. All right. Good backstory, man. So you, you had a brokerage, is that what I understood?

Christian Osgood: So I went so this was during the that, well, I don't want to tank your take your algorithm here that there's a thing that happened in like 2019, 2020 that, that shut down some things during that time, I left the co star group to start a business, actually a call center gathering data for the small multifamily.

That was when I was still focused in duplex land. I was like, yep. CoStar doesn't compete on duplex data. Zillow's data sucks. There's this little middle ground where I was working on the data product. The company that I partnered with to start that project happened to also own a property management company and a brokerage.

And so [00:07:00] I worked at a different building than my buddy Cody, but same city right across the street. So a lot of my early years of investing was me and him sitting in my office. I was in this otherwise vacant office building during that time. And so it was just me and my tiny little call center. So much of the learning creative finance was done just like at the top of this building, watching the guy we were working for, absolutely just tank his business and learning how not to do business.

It was a very crazy adventure. I got a masterclass in what not to do which ended up being a, probably as as beneficial to my career. Anyone to learn from is like, Oh, this is the person not to learn 

Randal McLeaird: from. And boy, all right. Give me the what's the one, two takeaway. What are you talking about? What was happening in the business that was getting, that was taking it.

So he was 

Christian Osgood: the best single still to this day. The best capital raiser I've ever met. Problem is he could raise capital for deals that made no sense. He was really good at creative finance. So he had bought back in 2007, he bought [00:08:00] 20 condos, 0 down, which he promptly lost because then 2008 hits the next year and he bought them all cash flow negative thinking, oh, there's going to appreciate one day I'll be rich.

Turns out no. In response to that, he decided, you know what? Condos suck. Single family sucks. I'm gonna go into office. And so he bought fantastic purchase. Bought this beautiful historic mansion downtown in Washington. It's a great location. Great asset. Great price. Seller financed for a million dollars.

He then decided to buy the tower across the street. That was 100 percent vacant. That was maybe worth 1, 000, 000 for 3, 000, 000 seller financed and proceeded to lose everything again. So during that time, 1st lesson I had there was I remember sitting upstairs again with my 1st business partner. Cody, we're sitting upstairs going Oh, my gosh, if he could, if 1 could figure out a way to buy anything like this guy does, And then just not lose it, you would be so rich.

And so then we came up with a plan. How would one buy it and never lose it? And that is how we stumbled on this [00:09:00] strategy. That, this little known strategy no one's heard about. Called buy and then hold. You do in fact have to be able to hold. I learned that watching him firsthand that if you understand how to structure a deal and present a deal, you can buy anything.

Then it's having the discipline of choosing what you want to buy and how you are going to hold it, which is, I'm sure we'll bring up more in this podcast, but my entire business is built on longterm fixed rate cash flowing debt because you're getting eight to eight and you have a longterm with no variables.

Well, it's real estate, low variables. You are going to be in a very good position. 

Randal McLeaird: All right, good back story. Let's talk about Robin Hood. Then how do you transition into that 

Christian Osgood: deal? 

Randal McLeaird: Okay, so we made this 

assumption, 

Christian Osgood: I believe, and I've learned this many times prior to this, you should stay in your lane in business.

You should become very good at very specific things. You shouldn't do people who own a laundry mat should not necessarily Oh, Then go [00:10:00] into the, a candy store business, different business models, different customer bases. We made a false identification of what we were. We had done very well in value add, entry level multifamily.

In this point, we were over a hundred rental units. We'd done a good job operating them and we'd found every time we bought a property, probably started performing better because we were better operators than the person that we bought from. So the assumption that was made was we're creative finance real estate people.

This is a piece of real estate. We're buying a four and a half million dollar resort seller financed. This is in our wheelhouse. No, hospitality is not multifamily. They're astronomically different. It would take so much more time. So many more employees financially very good deal. Four and a half percent interest, three and a half million of it financed.

If you can get three and a half million dollars at four and a half percent interest in today's market, phenomenal debt product purchase this resort. It has done better every single year than it did when we bought it. We did get, we executed well on a lot of [00:11:00] things. It's the only deal I've ever not hit my original projections on because we didn't know the industry.

We had way too much to learn. It took way too much time. And that is the biggest thing. Running hospitality takes a lot of time. Unless you have a really big hotel, it's 20. They're beautiful, but it's 20 historic cabins on the water foothills. The Olympic mountains, hot tubs and every cabin. It's very nice.

Awesome. I was on the site checking it out. You guys still on that? 

Yeah, 

Christian Osgood: I still own it and it's and it did better this year than it did last year and better last year than it did the year before. Huge time suck, though, 

the 

Christian Osgood: other big mistake we made on it, the owner wanted more down and we're like, we're not doing more than a million down.

That's insane because we have to borrow the million. That's a lot down on the 4. 5 million dollar purchase. That's a big down payment. We ended up stupidly accepting. A proposal of like, well, what if you just paid an extra quarter million dollars every year? And I was like, with our current cash flow from our portfolio, if our projections are wrong, [00:12:00] we can still cover the extra down payment and we're just paying down debt.

Like it's principle. That's fine. It turns out. Yeah, we did have to cover most of that from our existing cash flow because while we were profitable, the additional principal pay down in the 1st year. We banked like 20, 000 of it. And so we had to pay like 205, 000 of the cashflow that we built in our multifamily business to pay down the mortgage on Robinhood.

So net worth goes up, cashflow goes down. That violates the, how do you own it? How do you never lose it? We only didn't lose it because we built enough business and enough cashflow prior. Is that, was that a scary prospect? But you have to, it takes time now on a great day. We're just going to build equity.

I don't keep snowballing, but it's like. We lost time. We lost liquidity, which we sacrificed for net worth, which is more or less, you know, it's great, but it's more or less useless. I can't spend my net [00:13:00] worth of the Robin Hood until I sell 

Randal McLeaird: it. 

Yeah, not unless it 

Randal McLeaird: helps you secure debt on some other assets you're going after.

I mean, that it's one aspect of it. I'm sure it helps you get the. 

Christian Osgood: But you know what else works really well is just have hundreds of other rental properties that help you secure debt on other assets too, which would have been the way to go. So the lesson there, if you guys are looking for the takeaway stick with what you're good at.

If you're a hotel person, buy more hotels. And once that business is self sustaining and big and scalable and optimized, then look at other stuff. Robinhood would have been a fantastic purchase if we were already rich, which we weren't. We were completely broke and had a ton of cash flow, 

high 

Christian Osgood: income and buying that resort.

That was the wrong time. If I bought the Robinhood this year, it would have been Astronomically better than had I bought it two years ago. 

Yeah. 

Randal McLeaird: Interesting. Man. I looked at a deal here. It was there's a lake just outside of Austin's marble falls. I don't know if you're familiar with it, but LBJ and there was a resort up there.

Not, it wasn't, it was kind of cabin style. There was [00:14:00] one actually built multifamily building and had like eight units in or something, but then they had all these little cabins that were all over the place. And we looked at it and I was, I had a broker partner buddy who they have like a boat business and he was like, man, it's right on the lake.

We can sell boats out of here. We can do all this. It was like, it's one of those very similar set up. I was like, it's not really, it's not really the same. So we walked from it, but, you know, it's so, I don't know, hearing your story kind of, speaks to that. And You did a good job that you did the right thing.

Yeah. It's like stay in your lane, stay in the state of your 

Christian Osgood: lane. It's a good thing to do. Become a master at one thing before you master another. We were not, a year and a half is not enough time to be a master of multifamily. That was enough time to get some momentum. Yeah. 

Randal McLeaird: Well, let's talk. Okay, man.

So you got a Kencho property management, right? You guys are running this. Sold that two weeks ago. I do have apex property management now. Congrats. 

Christian Osgood: All right. Yes. And I seller 

Randal McLeaird: financed it. So I'm finally on the other end. All right. Well, I mean, that's a whole [00:15:00] conversation in itself. Just like how you sold that business, how you priced it, what you guys are getting as a multiple.

I don't know. Like, you want to go down that road? You want to talk about that? Sure. Sure. All right. So you've got a property management. This is one of the things that I always talked about when we're doing like wholesale as a business. It was like, this is not a sellable business. Anybody can go and do this wholesale business.

It's not a book of business. And so I always looked at even brokerage. It's hard to, you know, price or value those businesses on a resale unless you have a massive book of business or you have something that's proprietary to your brokerage. So property management on the other hand is different.

You're building a book of business, you got recurring income, that sort of thing. So, Tell me about the deal. Like you, you had it. How many units did you have? How did you, what did you sell? What was the multiple? Can you talk about it? Oh yeah. 

Christian Osgood: We're, so we were managing 

Randal McLeaird: about, 

Christian Osgood: I think it was about 350 units maybe a little South of that.

We weren't a big PM company. Sure. And of those units, about 180 ish of them were mine. Yeah. Cody. So Cody and I started the company together. Partway through, [00:16:00] I bought him out, I do more day to day operations, and my wife joined the company. So we had a weird, and this happens in partnerships, there's no such thing as a true 50 50 partnership.

We had a partnership that was working well, and now it's two Osgoods working full time, one Mr. Davis. We had the conversation of like, look it. It's imbalanced and it's no one's fault. Everyone's working great. It's just, you can't do the work of two people. Like the equities are a loft. Would you be open to us just buying out of the company?

And he's like, dude, I hate managing. I'm like, well, this is fantastic news. I was waiting for you to ask. Yes. I, so I traded him the equity of one of the buildings we bought together. So I traded him a portion of one building for the PM company which we had mapped out of so now I own the company.

We ran another two years, scaled it to the 300 plus units and we took it to market, got a valuation, went into praise. It wasn't a huge multiple just because the company was only two and a half years old when it got appraised, but it was valued at 300, 000. And I was like, okay, [00:17:00] what was cool about this is the company was bought when we had enough rentals at different campuses and different LLCs, where it was efficient to bring the same employees to help us manage the entire portfolio.

Cause we live three and a half hours away. What I essentially did is I created systems. I needed to run my portfolio. I subsidize it by ranching out to other nearby owners, which also gave us direct influence over rent. So I managed the properties around my portfolio and the systems that I had to create either way to run the portfolio that I had is what I sold, which is crazy.

So I ended up selling I cherry picked who was going to run it because. They're managing my properties. They got a 50, 000 discount to do so I sold for 250, 000. They were able to put 110, 000 down. And then I seller financed the rest of my equity. And they'll pay it off. It's like, I was generous on the interest.

It was like 6 [00:18:00] percent interest. But every year they're going to pay off 50, 000. So basically, I get, After all accounts were settled. I basically got 50, 000 this year. I'll get payments for four years and at the end of every year, I'll get another 50, 000. 

Yeah. 

Christian Osgood: We're not working anymore. What a fantastic trade.

Yeah. 

Christian Osgood: Solid. Three years of systems for four years of 50, 000 a year. I was like, that is a good deal, but you can accidentally build a business when you're running your business. And sometimes your systems are sellable because like you said, there, there are in property management, which is a hard job, by the way, If you do it well, you have recurring contract income that is worth something to other people and PM companies sell often.

If you ever look on biz buy sell funny enough on my co star if you ever look on like any of those business selling websites. Property management companies are one of the most prevalent things you see on there. There's always someone trying to get in or out of property management. 

Randal McLeaird: Yeah. So [00:19:00] you're trading on the on net income or what are you trading on?

Yeah. Okay. Yeah. I was just kind of curious how they were valued. Yeah, I think 

Christian Osgood: mine, I think mine went on like,, I, man, and I should know this cause I'm a numbers guy. I'm so focused on the real estate. The PM was like bonus money for me. 

But it was. I think we traded on like a five or maybe a two multiple of even a 

Randal McLeaird: yeah.

Interesting. Well, let me ask you this because I'm looking at this. Look, my wife and I worked together for a long time. She does a lot of the back office stuff. We're looking at these multifamily deals, like we were just talking about. 

I was 

Randal McLeaird: like, look, if we buy a small one, we're going to have to manage it ourselves.

We're going to, you know, figure out the processes and do all the things in house so that we can so that we can grow that business. Right. And in doing so, and in talking to some guys who have, you know, thousands of units and have vertically integrated property management like, you know, is it worth it?

Is the property management side of things worth it? You monetized it, right? You made some money. But at the same [00:20:00] time, that's one side. Is it worth it? And then the other side is there a way from having done it, that you can introduce technology that will, Eliminate the need for like onsite management because on some of the small deals, you just can't afford to have somebody there, right?

Christian Osgood: I have what I, it is my own internal term for it, but I call it decentralized management. I invest primarily in secondary and tertiary markets. I love the ability as an outsider to come in and buy enough real estate to actually. materially impact the market. You can't do that in a major metro, generally speaking.

Maybe a small neighborhood of a major metro you can do. I like some of the smaller markets. I also do a lot of creative finance. I find typically in smaller markets, owners have higher equity. There's a larger percentage of people who opt to pay off or pay down their real estate in smaller markets.

General rule of thumb. So when I'm operating there, I think it's worth it for me. To do the management because [00:21:00] I keep finding that I'm a better manager than the manager and when you are trying to materially impact income like Quick math for those who don't do commercial real estate on a cap rate of six which just happens to be an average cap rate in a lot of markets I invest in every time you raise rent 100, that's 1, 200 a year of net new income.

You have no new expenses for raising rent, which means that's just new income. On a six cap, you divide by 0. 06. Every 100 of rent I increase on a property, we get 20, 000 of new net worth. That's really important to me then, that I can manage those 100 rent increases that we hit them. I've seen managers unable to do that.

I bought in Stephenville, Texas, I bought two deals. I'm under contract for a 44 there. I had a manager of a property tell me there is no way you can possibly get rents of 750 here. The rents were 450. We just leased it. I bought this six months ago. We just leased one at 890 or [00:22:00] no 985. Basically a thousand dollars rent when they were renting at 450.

And the person who's in there is stoked because that's way lower than the rest of the market rent in a market like that. You come into the market and if you can control the rent, it's like, Oh, I can buy things where they're valued on four 50 rents. And then I immediately get rents at a thousand. 

Yeah.

Christian Osgood: You can double the value of a property, but so it depends on your strategy. If you're buying in bulk and you are really taking over an area, Doing your own management. I have made millions of dollars being a better manager than the people around us, controlling those systems, millions and millions of dollars by being good at doing that.

The 38 plex, we, the reason that we went from 2 million to 4. 1 million is because we got the income from 5, 000 a month to collections of about 28, 000 a month building is worth a lot more when it's bringing in a lot of money. So in that sense, it was worth it. It is a hard business to be good at. Because you have to be good at two things.

[00:23:00] There's a heavy importance on accounting. You cannot screw up security deposits. You can't screw up other people's rent. You have to be amazing at accounting and there is a lot of money moving back and forth and there's delinquencies and there's evictions and so that the actual right brain side I forget which one's right and left, but which one's the creative one.

Is that right? Analytical side, the analytical side of your brain needs to be really good. But then the people side, the creativity, the creating an experience for your tenants, how you market, your branding is actually really important in this business I found. And so your ability to be really good with people and owners and interpersonal relationships, both sides of the brain have to be really strong to run this, which means you generally need multiple people.

With very diverse skills to have a company that doesn't just absolutely fall apart or only good at half of the business. It is both people and numbers. The last thing that sucks about it is all of your clients. If you do a great job raising people's income, what they typically will [00:24:00] do is they go, Oh my gosh, my buildings with a lot more now than they sell it.

And then you probably lose the business. So if you're really good, you lose the business. If you're really bad, you get fired. The only way to keep businesses is to be extremely mediocre at what you do. Which is not the goal. So we end up cycling a lot of business cause I'm like, we're very good at this.

Then people would sell their buildings and then we may or may not win the new business. There's a lot of churn and you deal with stuff like, you know, you manage a few hundred units. One of your tenants will probably kill someone at some point over enough time. Domestic violence happens at homes.

You manage homes. That's it. It happens. Drug use happens at home. Guess who gets the call? There's a lot of things that are abnormally difficult about that industry. And your actual margin for what you make, is definitely not worth the headache of doing the job. If you want to start a PM company. To start a PM company, you're an idiot.

I, in my opinion, if you own a bunch of rentals and you're starting a PM company [00:25:00] and it can subsidize the cost of having great employees, I think it's been one of the best financial decisions I've ever made. 

Randal McLeaird: Yeah. I mean, not just that it would be starting it. With the intent to have that extra, you know, I bump because you are finger on the pulse of that property, right?

So to say that you know, you're not getting the return, you know, that's where it's built in I would think right 

Christian Osgood: I paid myself 3, 000 a month salary out of that company That you know one's 36, 000 a year and that was Astronomically more than 36, 000 a year worth of work. 

Randal McLeaird: Yeah, for sure. In 

Christian Osgood: the process, we made a few million dollars in our portfolio.

And then I sold it for a price that actually, in retrospect, was actually pretty reasonable compensation. But that's when you sell it, not when you have money. 

Randal McLeaird: Put the work 

Christian Osgood: in, 

Randal McLeaird: get paid later. That's the name of the game. All right. Well, look, okay. So we're talking about, we're talking about property management.

Let's move on. Like, I want to talk to you about some of the deals that you're working on. Deal flow in general, [00:26:00] you moved to Texas. So are you buying only in Texas now? Is that the main? 

Christian Osgood: I'll still buy in Washington because I still have great resources in Washington, but I am doing a bulk of my buying in Texas.

I would say 90 percent plus is going to be Texas. 

Randal McLeaird: Okay. All right. So you're buying and you're looking at small multi, what sub 80 units, a 50 unit. Would it, what's the, or are you just agnostic? If a deal is a deal, I'm going to buy it type deal. 

Christian Osgood: I'm pretty agnostic. We, we've done a lot of deals. I don't syndicate.

I don't have a fund. I do everything for the most part JV or just debt. Like if you get a great property and it has high cashflow and I can do it without any partners. Yeah. And no money, I'll do that. I'll do that. I've done 100 percent seller finance deals before. I've done 100 percent hard money deals that cash flowed 13 and a half percent, 120 percent finance, still cashflow.

So you can do whatever less variables, the better. But when I am buying real estate, yeah, primarily I am looking, I am buying based on [00:27:00] cashflow. For equity growth. That is what we are after. I'm buying all over Texas, Stephenville, Texas in particular. There's been a market that's been extremely good to me.

But the greater DFW area has been my focus. 

Randal McLeaird: Yeah. Nice. I mean, I've been seeing some deals blow through from Dallas, but I haven't been heavy looking in that area. So, let's talk about some deals in, all right, one, are you a direct to seller? Most of the time, if you're getting owner finance deals, it sounds that way.

Christian Osgood: Most of the time. I have. I stumbled upon this when I was learning because I had this amazing mentor on how not to do business. So, learning a bunch from him, I went, you know who I probably should learn from at some point. Cause I learned a bunch about what not to do. Then I went, you know what?

We should probably talk to the people who are succeeding in business. So I had this goal when I started if I want to retire my wife. And I think if I do this with my, with a business partner, which I did, so I had a 50 50 partner. I was like, I probably need like 50 units myself. So we would need to build like a hundred unit portfolio to really have financial freedom.

No, that was the number I came up [00:28:00] with. Yep. Unit counts, not everything, but whatever. It's the number I came up with when I started. I mean average rents unit count. They 

Randal McLeaird: matter. 

Christian Osgood: Yeah. Yeah. You stack up long enough over time. And you know, I was looking at my market that many units was probably with the average cash flow for what I was saying was probably going to get me about there.

So what did I do? I just interviewed all the people in that market who already had 100 units. That seemed like the most logical thing. I learned so much and almost all of them started by using creative finance. All of them started with no money. All of them understood it. And then when you actually get into a deal, you're pitching them terms that they just taught you.

So it's really hard for them to say no when you're like, well, I mean, based on what you taught me, everything should cashflow day one. And you know, this is seller financing and this is how one would structure the deal. When you pitch them what they just showed you how to do, you get a lot of yeses. I found that consistently true.

When I came down to Texas, it was more or less the same thing. I met with owners. And those owners know other owners. It's not that you're meeting with sellers because that's not what you're doing. Every player is an [00:29:00] owner. And I eliminated the word seller from my vocabulary. If everyone does that mentally, you will do more creative finance deals.

Because just everyone is like, what do I have to learn here from someone who's done something I haven't done? I came into this market, it was the same thing. Five or six people control most tertiary markets for most of the multifamily. I like to buy units 12 to, I don't really care how many units, but most I've ever offered on is 140 unit.

I'm doing a 44. I should be under contract for a 72 here in about a week or two, same seller. And they were referred to me by another another owner. So it's all just direct to owner meeting. And then I would say maybe 35 percent of my deals. Well, we'll say a third. A third of my deals are from local brokers.

And I like to have one or two who's really good. I don't like working with a ton of people. One or two good brokers who have assisted me in those other transactions. They understand how I do deals. They've worked with me before. They helped me write contracts I'd found between those two lead sources.

[00:30:00] I have never done any other type of prospecting. I don't do cold calls, mailers, door knocking. So Jen, how are 

Randal McLeaird: you 

Christian Osgood: getting 

Randal McLeaird: in front 

Christian Osgood: of owners? I found this, I found a free map online that actually had every property. If you guys haven't heard of this, it's Google maps. You can go on satellite. I'm serious though.

You can go on satellite view. And you look for the larger roofs and residential areas, and they turn out they're using multifamily properties. Because cities have zoning codes, if you find one, you usually find more right around it, because they're multifamily clusters. And it is also free to Google a property on a tax partial search.

So you can go to your county's GIS data. Everywhere but LA County, California, you can find a county map and you can find out who owns the parcel and then you take their name and you Google the word phone number next to the address and almost invariably you can find their phone number for free without skip tracing.

This does not work if you're just trying to mass dial people. I left a sales job. I don't want to create another one. I do that on average twice a day. I call two owners a day [00:31:00] over the course of a five day work week. I'll make 10 phone calls, whether I answer or not, on average, one person will book a coffee meeting with me in a year.

I meet 52 owners in the markets that I want a minimum 52 owners. That's not including like events or weekends where I meet two people just doing that. A minimum of 52 people know who I am, what I'm trying to accomplish, where I'm at in my journey. And I've spent a half an hour to an hour interviewing them on how they built their business.

We now have a relationship that has been all of my deal flow. It is a super non salesy, very easy way. If you enjoy caffeine to to get coffee once a Saturday, every Saturday for a year, you'll own a lot of real estate at the end of that. 

Randal McLeaird: That's awesome. Good 

Christian Osgood: advice, man. Like solid advice. Yeah. That's the secret formula.

How do you do this? I'm like, Oh, this is so palatable to write on a marketing standpoint. Would be like, how do you do this? It's like, there's no money spent and there's no sales calls. You're like, Whoa. Yeah. It was like, yeah. We introduced a lot of [00:32:00] technology to real estate over the last, especially over the last decade.

I think a lot of business owners really focused on like, how do I leverage technology? And I went, everyone's trying to leverage the same technology. What if we just didn't and we just do what everyone did beforehand and met humans. Yeah. And turns out that's the revolutionary idea. I had was talk to humans who've done the thing.

Randal McLeaird: I interviewed I interviewed Bob knackle earlier today. He's a huge broker, you know, in, in New York. And anyway, he I was talking to him and asking him the same thing. Like, what do you, what are you doing? And he holds up his yellow pad and he's got all these phone numbers for people he's calling.

He's like, yeah. I mean, we use a lot of ai, but at the end of the day, man, this is my CRM. I just call people like I do the work . It's like, yeah, there you go. 

Christian Osgood: And everyone who's trying to circumvent that, which is like 99% of operators are trying to figure out the new way to do things, it's like it's just not as effective.

Yeah. It's like, no, everyone was trying to do the same thing I am. Then arguably AI would just [00:33:00] dominate and then I would go the other way. 

Yeah. 

Christian Osgood: Red ocean, blue ocean. If everyone's already feeding over there. I just go where the water's clear right now. That just happens to be my favorite method.

Just happens to be really good in today's economic environment. 

Randal McLeaird: That's awesome, man. Two things I want to touch on before we end this. So yes, one, one, one is going to be structuring your self finance deals, how you guys are working on that. And then the, before we get there, since we were talking about property management, what are some of the things that you when you're looking at somebody's T12 or you're looking at a rent roll or something like that, where are you finding The most value either on efficiencies or on it, or are you looking on the other side, not the expense side, and you're looking on the income side, like I can grow this by 900 increase in rents.

Like the one you just talked about. Where are you seeing the most value creation? It's hard to answer. I 

Christian Osgood: don't want to. Well, I know the answer is, I'm seeing it on the income side. I don't want to discount because people hear that and they assume like, Oh boy, so we don't, we can [00:34:00] ignore expenses.

Due diligence is ludicrously important. You need to understand how to read a fricking PNL, a balance sheets, a bank statement, and a T 12. I have seen huge opportunities. There was one, there was a 200 something unit deal that I was looking at in Fort Worth for a while. They had misclassified $250,000 of expense that was not actually legitimate expense.

And so their number was based on a quarter million dollar off where the income was too low. Had someone looked at that closer, that there was a huge opportunity that was missed that was hiding the expenses. So I don't want to say that it's never that I have found in most of the markets that I go to though because I'm secondary and tertiary, primarily outsiders control those markets, not the insiders.

And so you get a lot of people who are a little bit older who've kept rents low for a long period of time, and I see that all the time. So when I'm buying deals, I am seeing a lot of stuff where they're like, Boy, I can't. [00:35:00] When they bought the property, they were renting these out for 100. And now they're like, Man, it's 700.

Seven times what I bought it for. This is insane. And then you come in and you just do a basic analysis of market rent. You're like, yeah, market rents like a thousand, 200 bucks. Like we're gonna, we're going to kill it. Yeah. If we can get rents to a thousand, I find that consistently where I make the most money is on the actually on the increasing income side.

Yeah. On the Robin hood, it was the opposite. There was a ton of fluff in the expenses. I thought we can get the income way up and turns out they were actually doing a better job than I thought for what you can actually bring in. We increased it, but by half of what we thought we would huge miss because we had no experience doing that hospitality.

Not my thing. We saved crazy money. We saved six figures on a hotel that was making 600, 000 a year. We saved a hundred thousand dollars in expenses by running it differently with a better payroll model. We have better compensated employees. We run it with [00:36:00] less people. And we saved a boatload of money through operations.

So it is both. Yeah. In multifamily though, it is like, it goes back to that original math, right? Six cap market every a hundred dollars. I raised rent. I make 20, 000. Is there what I'm looking for? Is there properties in this market where rent can be raised a hundred bucks? Without harming tenants like staying below market rent and oftentimes you find out.

Oh my gosh, we can raise it 300 bucks on 25 units that's 25 times 60. Yeah, that's a lot of money. Yeah for sure. 

Randal McLeaird: No, that's all that's awesome Okay, so then let's talk about an actual deal then and how you structured it. So your most recent one that you've actually closed on and Tell me I guess a little bit of how you structured the seller finance And if it's the 44 unit deal, then fantastic.

But if you have a close on it, you don't want to talk about it. Then 

Christian Osgood: I haven't closed on that one yet, but it is is active. Always happy to talk about it. That one's actually funny enough, conventionally financed. I've of my last 20 deals, two have been [00:37:00] big financed. One has been 120 percent part money.

And then there were 17 of all been seller financed. This would be the rare occasion I'm doing bank debt. Super interesting. It is a it's a LIHTC property, so it's a low income housing credit property. It is rent restricted 50 percent of the building. I think it was, I'm trying to remember the exact, of the 44 units, it was about half of them are like all the way down to 30 percent of market rate as the restriction, which is ludicrously low income.

The other half is 50, then the rest of the property is just market rate. It is 44 units for a million eight, which is insane. Yeah. If you look at the building, this would be the single nicest building that I've owned. It's built in 2004 townhouse style apartments, has a clubhouse with a gym. It is freshly paved parking. It is super nice. The problem is, you have to know what you're doing to buy it. There's a few rules. One, you must have you must work with what's called a CHDO. In the state of Texas, if you don't know what this is. They are [00:38:00] nonprofit groups that allow you to buy properties that have some of these restrictions.

They must own 1 percent of the deal. They have to be a partner of the LLC. What does 

Randal McLeaird: CHDU, what does that stand for? Do you know? 

Christian Osgood: I know that H stands for housing.

Randal McLeaird: Housing Development Opportunity. 

Christian Osgood: The they call themselves Chodos though. You have to be, you have to be partnered with one of these to buy some of these. The owner has to have owned them for five years and you have to have one year of operations in that market and one year of working with low income programs.

I, we happen to have the perfect storm. I've just crossed one year of owning in Stephenville, Texas, the 25 unit I bought. I also bought a 26 right down the street. So I'm already in that market. We have section eight in those buildings. I also have three years of managing about 20 percent of my portfolio is on some sort of housing program.

So I'm like, this is my specialty. We have the experience. The owners have it. You also, you can't sell it once you buy these. You have to hold them for five years. [00:39:00] So you have to have someone who has a medium hold. You can't flip stuff like this because of the restrictions. They have a pretty small buyer pool for this.

You're talking, you know, a secondary market with a small buyer pool. We're able to negotiate a 1, 000, 008 for 44 units. This thing's in a cash flow. Eight or 9, 000 a month, right off the bat fully occupied. It is just, it's just gorgeous. I think it will be the best deal I've done. In addition, I'm going to add a a low income restriction to 10 more units.

And in exchange the state of Texas is going to give me a 50 percent discount on the property tax. I figured, since we're already almost to the 60, which is where they offer that, I'm like, let's just go, you know, a little further. 50 percent off taxes we're in a great debt product, and then because of all the low income in LIHTC, there's actually some unique debt products with banks that are actually a little bit lower interest rate than standard [00:40:00] products.

So you get lower interest rate, you get lower price, you just have to be able to operate it. Which, turns out, I started Apex Asset Management in Texas. I have a property management company here now. By the way, plug, anywhere in the DFW area and all the way down the 35 until you hit Templeton, Texas is where I'm comfortable managing.

So let me know if you want us to manage for you. I'm, I am pretty aggressive in the way I manage and I love, love, love the game. That property is going to make us a ton of money. And the low income restriction on expires in 9 years. 

Randal McLeaird: Yeah, I was going to ask how long that lasts. So, I was looking at one in Austin that has that set up on it and it's got 5 or maybe 8 years left to burn off on it.

Yeah, and if you're a buy and hold 

Christian Osgood: guy and it cash flows to get there, it's like, okay, so we're going to get paid well. To make a ton of money later. Yes. Super yes. Absolutely. Add to my income today, and then in ten years when I totally forgot that the thing is going to [00:41:00] expire. It's going to expire, I'm like, oh, we just made like, two or three, well, I guess it's also going to be worth more.

You know, in a decade. But like, oh yeah, we just made three or four million dollars today. Congratulations, boys. Like, that's a fun phone call. Whoever reminds me that expired is, I'm going to be like, yes! 

Randal McLeaird: Yeah. 

Christian Osgood: But yeah, setting those up, I think it's really important. You there's some cash, some properties that I bought just to get the cashflow going, but once I got, you know, cashflow portfolio wise to like 50, 000 a month.

Randal McLeaird: I 

Christian Osgood: don't need more money right now so we can do these longterm plays regardless of their cashflow. As long as they're positive, we can wait because we did what we wanted to do. I retired my wife, I bought my dream house and that's all I wanted to do. So I hit my goals and now it's like you get to have, you get a little bit more creative and you have a longer time horizon, which just opens up the deals.

Randal McLeaird: Yeah. It's awesome, man. Yeah. I mean, again, I could ask you some of the details and sell a fine. I think that's a good spot to wrap it up just because it's a it's like [00:42:00] focus on your goal. You hit what I love about that. Just that way. But that is like, these are the 2 things I wanted to hit my number, hit my thing.

And now I am focused on long term generational wealth. And that's what I'm doing. That's I'm working on. I don't have to go out and raise a bunch of money to go buy a 400 unit deal to make you know, a. Three, three year return, whatever it is, right? One of those massive, you're like focused on your thing.

So I love that. Yeah, I think I can give you 

Christian Osgood: one quick tidbit because that is the main thing people always want to hear. It's like, well, let's talk about the creative finance stuff. On any deal you, so you can buy any deal with or without money. If it is high cashflow, you are looking for debt.

Generally speaking, if you're property can service debt, you want long term fixed rate debt. You can get that through hard money. You can get that through the seller. You can get as much as you can, but it always goes in this order. Deal first. Do not try to line up a deal to the money you have. Find the opportunity, then find the debt product and say you get 85 percent seller financing.

Now you just have to figure out the last 15 [00:43:00] percent and 15 percent of the money is much easier than trying to figure out a hundred percent of the money before you have a deal. So deal first, then find the debt. If you can do Deal-Debt-Done congratulations, you found a high cashflow deal that services your debt.

You buy it, you're done. You bought a property. If you need to bring in more money, you find an equity partner. They, the nice thing with equity is it's flexible. If you have a property that has a ton of upside, say this 44 unit right now, let's pretend this was seller financed. Do I get, we got great seller financing terms, but we still need to bring in a partner to close it.

We need the equity. They can write the check and then in the future you can buy them out for some multiple. And a lot of my properties are like that. I had one where it said it's a two to one in five years. I get all the cashflow day one, which was significant on this little six bucks. I bought, they put in 90, 000 and in five years I owe them one 80.

I paid them out in year three just to clear it. And now I own the property, but for 0 in, I bought an income stream. And if I failed to pay that off, they would have just got the properties back. Like they, they would have [00:44:00] got my equity. Zero down out of, or at least out of your pocket, it's possible. Zero down, there's like a bunch of structures where there's just, it's all debt.

But if it's lower cashflow, you're going to need a partner. I do a ton of JVs. If anyone wants to hear like more about it, it's free. You can do it on my YouTube channel, like 2000 videos. We finally hit 100, 000 subs. Nice, man. If you want to learn about that, check out Multifamily Strategy. If I'm allowed to plug that here.

For sure, man. Like, we're going to drop 

Randal McLeaird: all your contact info in the show notes in these plugs as well. Awesome. Yeah. But yeah. If 

Christian Osgood: you want to see the structures, they're all over there. There's a million ways You don't need money to play the game. You 

Randal McLeaird: need deals to play the game. Awesome, man. Again, I appreciate you jumping on like just all the stuff that you're working on the way you've done it, the way you've structured it it's phenomenal.

So, I appreciate you sharing your knowledge and your time with us, man. We'll catch you guys on the next episode. Did you know that 80 percent of the agents we speak with got into real estate in order to gain passive income so they could obtain financial freedom and become work optional? If you want to stay up [00:45:00] to date, the best way is to make sure you're subscribed.

So if you haven't done that, go ahead and do it now. We'll catch you on the next episode. 

People on this episode

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Randal McLeaird

Host
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Christian Osgood

Guest