Cody Davis: Broke at 19 to $25 Million in Real Estate by 23

Ready to fast-track your journey to real estate riches? In this episode, meet Cody Davis, a 23-year-old who's amassed a jaw-dropping $25 million in real estate. Inspired by the book 'Rich Dad Poor Dad' at 19, Cody leveraged creative financing and unconventional strategies to defy traditional industry norms.  Learn how Cody built crucial connections with real estate moguls, and how you can too, using tools as simple as Google Maps and tax assessor websites to identify prime opportunities.

Cody doesn't just stop at acquisition; he dives deep into managing debt and equity, emphasizing the power of seller financing and long-term cash flow. By focusing on these, he's not just buying properties; he's securing a financial fortress. From his early inspirations to his tactical approaches, Cody's insights offer you a masterclass in youthful real estate success. Don't miss it!

Visit Cody's Website: https://bit.ly/3ZfTeJN

Follow Cody:
Instagram: https://bit.ly/3RjkeG9
LinkedIn: https://bit.ly/3LjURQU
YouTube: https://bit.ly/3sT4Qq4

Transcript

•  Cody Davis a 23 year old real estate entrepreneur who is lighting up the scoreboard. This dude has gone from zero to 25 million dollars worth of real estate owned in just four short years and he's done it all using creative financing seller financing zero percent down you name it. He's done it and he's doing it at a really high level at 23 years old. This is insane in this episode we go over a bunch of different things. Cody talks about his beginning how he started in real estate at 19 years old with no money to his name and how he managed to navigate through all of that to eventually getting to over 25 million dollars worth of real estate owned we go over the tactics that he used the current strategies that he's deployed and we also go into some of his philosophies. Some of them are contrarian. He doesn't necessarily believe in the same principles that a lot of us Real Estate Investors in today's day and age have been conditioned to believe. But Cody is truly breaking the mold thinking outside the box all while keeping it surprisingly simple You're Gonna Love. What he has to say without further Ado everyone Cody Davis Curry welcome to the gold mine thank you glad to be here yeah man well you. Know I I first saw your Bigger Pockets episode. You were uh. You actually owned the record yeah for like the most views on YouTube I believe for any Bigger Pockets episode. Ever yeah I just passed 1.2 or something like that so super stoked about that one but blessed by the algorithm for sure yeah well. You never have. I don't know how that works sometimes you know I'm like hey. Some view some videos. They get lots of views but yeah man. I think it has a lot to do with the the content and the story you started at the age of 19 years old and that was when you did your first real estate deals but most people that age are nowhere close to buying their first deal. What was it that inspired you or like kind of take us through that like aha moment where you decided hey. I'm not just gonna be a a kid anymore. I'm gonna be a real estate investor right like what is that what was that like I figure you can make the argument. I wasn't close until I was nobody's really close until they're on their first deal. It's not real till it is but um getting started at 19. The big push was I had read Rich Dad report at a young age. One of my mom's friends gave me that book and I didn't really see that person again much but the year of the book said to read it and you fast forward. I was super stoked in the beginning want to get a real estate want to go buy a duplex. But I was like 14 years old and so that wasn't feasible in high school. So it's teacher teaching us about torts and it is an attorney brought up real estate again on the last day of school and how he makes passive income at night and so that got me interested again. I read Rich Dad Poor Dad actually started going to college for uh that was it like two quarters in and made a Facebook post saying I want to get my uh first duplex and I wanted to actually get into real estate and I was working a couple jobs working in local gymnastics coach job as uh at the YMCA I just got accepted at Safeway and then I was applying to Target so I wanted to work three jobs. You get into real estate. Some random person I never met before they dmed me and said I should drop out of college to get my real estate license and I'd make a lot of money and so I did that and I didn't make any money but um back to that point of not being close. I was really far from running real estate. I was six months in I had left college and didn't have anything really going for me. But one of my gymnastics buddies calls me up at night and it was late and asked if I could buy a house. I said what'd you bought a duplex instead. So I saw the meduplex made a little over three thousand bucks after splits because it was a cheap market and it was 50 50 split. But a little bit more money so I kept pushing and there was another broker in office brought up a seller finance deal never heard of that before in a little Place Called Moses Lake Washington and so I started learning about seller financing and I read a deal. Deals on Wheels by Lonnie Scruggs I read a couple other books listened to some podcasts. Carlton sheets has an audio book I'm buying real estate loading no money down. So I listened to that in my 1991 Miano before it blew up going to check animals just like but um had a whole bunch of fun learning and in the process I started meeting with some owners. But I was calling them more as it was a transactional deal. They were sellers not owners which is not how I view them today. Uh people are just owners. They don't sell but uh you gotta start somewhere gotta learn and so I was calling all these people trying to buy their stuff and realized that wasn't a winning strategy and ended up finding a deal. It was on the MLS and it was 12 units. It was a little place called Quincy and when I brought that up to the owner of The Brokerage she said what the heck is a Quincy and I decided to do my research and check out the market. But it was about nine months into my brokerage career. Three months after I sold my first deal that they uh I got them to hold the owner contract seller finance deal and I bought that piece of real estate with no money down and then started to learn how to repeat it okay. So let's dig into that a little you make it sound so easy so let's talk about the okay. Let's talk about the logistics of that sure so uh step one figure out what you want which is something that I had to do and I actually my mom just sent me a picture. I left a journal at her house and this was from when I was 19. I had my vision board to get to a hundred thousand dollars net worth and I was fundraising through that but you figure out what you want to figure out who has it and then go meet with the people and then it's one thing to get in front of those people. But it's another thing to not get kicked out of the table.
•  It's like if you find someone at dinner and you're able to just go sit down and they welcome you versus. They say hey let's chat sometime next week right. There's a there's a difference there and so what I didn't know how to articulate back then which I have figured out has been repeatable and it's worked is there's three main sectors to building Rapport and you've got relatable points which ultimately are your past you relate to People based on the things that you have in common or the things that you've done. It's where you're coming from and then you've got your goals. That's where you're going and the significance is what changes for you when you get there. When I mapped this out I realized hot people will actually get you to the table. The first step to let you sit down if you've got enough relatable points. They'll want to work with you leaving that table if you've got goals that are going to resonate with theirs and they actually are meaningful and then they truly understand what changes boring you when you hit those goals which is a significant reason and how that moves you forward and so mapping all those out the Simplicity of it is there's only three things you have to where are you coming from where you going what changes for you when you get there and then lastly how do you actually communicate that to somebody and get that to be received because nobody's doing this there'll be a point where no one has time to grab more coffee meetings because everybody's trying to do it. We're not there yet. So I'd be doing some copy meetings. Today I'm driving over Moses lake right after this and I'm just gonna go meet with some more people and keep doing what I want to do. I want to get into a little bit of development. So I'm meeting with some guys that are building like 200 units right now and then I'm meeting up with a landowner so that I can put all the pieces together someday that's interesting so your strategy right now just to make sure that I understand this correctly so your strategy right now isn't let's go find sellers. It's let me find people who are doing what I'm doing and figure out a way to get a seat yeah or right that I want to do and then go get a seat at that table and like start chatting with them and figure out how they got to where they are yeah because if if everything worked out and you built the perfect business would you have everything that you wanted to have and if it's just the real estate then yeah go be transactional. But I'm looking for people that will back me up and be in my corner that are further ahead of me so when something goes because it goes wrong for everybody. If you keep rolling the dice long enough. I want really well-off individuals that know what I'm about and I know what they're about. I want them to be in my corner so that if something goes wrong I can make a phone call and figure out how to fix my situation. These odds are if I know enough of those people they've probably gone through it. It's not like there's anything super special in real estate very simple business and so they've probably been through it in the 20 30 40 years. That's a very fascinating take and I want to dig into that a little bit deeper because judging based off of what I've heard on other podcasts and everything there are systems behind this I'd love to know what is the what is the system for for getting in front of owners. Like this like are you just like cold calling them every single day like what is what does that look like like how are you identifying who you're uh who your avatar is like who you want to meet with and then like how are you getting a seat at that table. How are you getting in front of that. It all starts with Google Maps and uh something that I've had to be consistently true is every property I've bought or wanted to buy was on Google Maps and so that's the the magical map that has all the properties and now that I figured that out. I look at the aerial review and the reason I look at aerial view is because there's you can tell if they're bigger groups or not and the bigger the root. The more likely it is to not be a house and so I don't want to buy houses I'm looking for multi-family. But I just look for the bigger roofs and I go to the street view and see if I like the aesthetic of the building and it's I'd love to own stuff like that doesn't have to be that specific building. I ought to figure out who owns it because they figured it out and they can teach me how they did it. And so I just did that over and over I found a bunch of these buildings that I'm interested in and then I'll go to the tax assessor website figure out who owns it if it's an LLC I'll put in open corporates figure. Everyone's LLC you just go down the rabbit hole and if it is a person it has a tax billing address. Then I'll plug in the person's name. The address and then I'll put a phone number and their phone number will pop up nine out of 10 times and it's a little more than that. It's like 95 of the time I can find the phone number within 10 minutes so now that I've got that data point now. I have to figure out my pitch because it's not a pitch to buy their real estate. It's trying to grab coffee if remember what you really want and that was the first thing we talked about is identify what you want. I want a meeting and so the the whole idea is okay. I'm not bringing up their property. I'm gonna mention. That's the main reason why I called. But my goal is to grab coffee and learn how they actually got it. And so you just go through the the steps there and you don't have to make a ton of calls for someone yes. If you're really nervous and you sound scammy. Then yeah you're not gonna grab a coffee meeting. Why would they people are too busy for people. They don't know or like but if you come off and you map out those three points you can map out a goal on the phone call and a one or two relatable points or you're coming from and the reason that their property stood out to you is something you haven't done before and you're looking to get into that space so that you can do X for me. It was Stout sorry my mom when my taxes are filed. It's delayed this year because the illness with the CPA but uh get that file I can buy your condo and then she can retire that was my admission mission. In the beginning. It was the original goal and so I could share that with people people would want to meet up to grab coffee and so I would just call a few people every day. If I had a phone number I'd hit dial. I was super introverted and nervous and that's just how I've been my whole life. But if I hit dial then it would look weird if I hit end before they picked up and that was the process so that that all started when you were 19. Yeah you started that process like and you're 23 3. Now that's four years ago three and a half four years ago. What has changed since then in the approach because obviously you've made you've learned some lessons.
•  What are the things that have worked for you and what are the things that have not you say relatability. You say bringing up points like talking about your end goal was there anything that didn't work are there is there any are there any questions that you have found or talking points that you have found to be helpful and or hurtful like talk us talk us uh talk to us about like the the differences in in the conversations and what you've learned so far yeah. You just have to be genuine and I've seen this where people try and say things they think people want to hear and then it moves them backwards. I tried that in the beginning where I was listening to people online talking about sales and you say what people watching here and they get some excited about doing deals. That's not the way you do business and you need to just be a straight shooter and say these are my bases and song negotiators don't like showing their cards but when you're playing the game with no money you have to let people know what you're working with otherwise. They're not going to trust you because they're going to feel like you're hiding things from them and why would they lend you all this money seller finance if they don't trust and so you just have to be up front keep. It simple don't add steps and don't over talk so someone's listening to this podcast and they're in the exact same position that you're in maybe they're a little bit younger older. But they have no money walk us through that conversation like what is frame that out in a way that someone could basically take that same conversation and make it their own someone. That's let's say that said there's no money needs to understand there's only three pieces to buying any property. You want. You've got the actual property. You've got the debt and you've got the and it's one thing to hear that it's another thing to fully understand what that means there's two types of money there's debt and there's equity. Equity is cash. It doesn't have to be your cash. It can come from other people if they're they're a partner with you but probably don't partner on your first couple deals. It's a good way to not learn a lot and then there's debt where you borrow money from people and debt is always traditionally cheaper in the long run than Equity is. But it it's more expensive today not because the rates but because you have to make your mortgage payments when you find a piece of property. Otherwise you lose the property if there's no dividends with an equity partner or if you throw in a bunch of cash and there's no dividends. There's no dividends. You can't yell at the property and tell it to give you money because that's not how it works so debt will cost you more today and it's a lot easier to get when you're doing solar financing. It's just. It's not hard to to get the debt when you understand this. But if you want to go buy any piece of property that you want you find the property that's stuck one and it's on Google Maps. Just find something you want you just need to map out what combination of debt and Equity works for you and if you have no equity you do 100 debt. That's how I did my first three Deals and you borrow the first portion the big portion from the seller at a cheap rate and then you go find a money chart and there's a lot of them out there that wants a really high rate. When everyone was borrowing at three I was borrowing at 12. Yeah it was just it was a big difference wow but you find someone who wants a high rate of return on a very little amount of money in comparison. So you get maybe 90 percent of the seller 10 from the that person that investor the money shark as you can call it. You just have to make sure that collectively it cash. And if you've got enough cash flow to service your debt and you've got long-term fixed rate mortgages. You can buy whatever you want so when you map all that out and you figure out the math that income less expense equals net income. Less debt equals cash flow if you're happy with the amount of cash flow. You've got with your debt and Equity stack then you're good to move forward and it's one thing to buy real estate. It's another thing to never lose it a lot of people show they could buy real estate. You mentioned you've. Talked with some syndicators yeah. Not all of them figured out how to hold their real estate. That's just not. I'm not saying the people you talk to but a good majority of the people that uh went on built business. They figure out the buy side but you gotta figure out the whole side so and start with no money. You map out the types of money. You map out the market you figure out who are the players that own the real estate you want to own as you start calling them. They'll teach you how they play the game. But the core of the strategy is you figure out. How do I buy the real estate which is deal. Then you line up your debt first always first because that helps you project cash flow and then you figure out the money to that's the order of operations and then when it comes to never losing the real estate as you're beating with these owners as you're chatting with them you're just saying it hey. This is Cody stay on to a 12-plex submarine Drive. They're going to tell you they're not selling you don't know how to buy it. That's why you're calling you try and grab coffee. They will teach you how to play the game over coffee over lunch over dinner. Whatever you try and book in the meantime. You start learning about these numbers so that you can adjust your debt. Stack and Equity stack if you need to make sure you cash flow and then just get a long-term fixed rate mortgage and do not violate that. But that I said all that without pause because I feel people can re-watch this yep.
•  That's the core that of everything that I do and everything that we do with my business partner Christian out and I met him after I had my first 30 Apartments. How did that uh all go down. I know that you guys were you you bought properties close to one another is that is that more or less the yeah we were working at the same real estate brokerage. He had two units at 29. And I had 30 at 21 and his goal was 30 by 30. So I helped them buy a duplex which was right next to my six Plex so that he gets comfortable with that market. It's like you should buy this deal and he met a killing on it. It was a great opportunity to buy it cash flow really well and then he flipped it and traded it into a 12 Plex. But uh we ended up buying a 38 unit. Together. I pitched them well if you want to get to 30 units and you're 29 and you've got a couple mods. Let's say you're 30. What if we just bought 38 units and now you got your two dupe boxes and this 38 unit deal. You'll be at 42 doors at 30 years old that'll crush your goal and so we ended up partnering on that. We bought that one zero dollars out of pocket as well that was another seller finance transaction and uh that kicked off our career together and that would have been in 2021. That's awesome so that was all in the middle of that was smack dab in the middle of covid when a lot of people were fearful not leaning into the market. At all you guys did the opposite you leaned in sounds like you got a great deal on the property when you when you say 100 financing to seller finance was that one a hundred percent seller financed or was it 90 or like some combination of private money and then that was 85 seller finance okay and then we went to bridge the other 15 and what we did is. We did Equity partner with the buyout agreement and at this point in time I had been in business for a little. Bit I did a flip with someone and they ended up multiplying the money a lot my buddy Paul and so he made some money so he threw that money from the flip and it was a six-figure profit deal either that has an equity position into 38. But it's it's cool to partner with people but you need to have a plan extra partnership because the the second piece of the equation how you buy it. How do you never lose it. You eliminate variables and people are variables. I like Paul and I like all the people I ever partnered with. But I don't want to stay partnered with them forever because that that adds risk to the overall portfolio. So we have buyout agreements to where we can just write them a check in the future whether it's for refinance whether we earn it. Whether we borrow. It does not matter but we write them a check for x amount and we can buy them out and so Christian I bought out the partner and uh we own the real estate now. So when you're talking about different forms of creative financing. You just gave two different types. So the first one is. It's essentially the same type but one sounds like more of like a private money lender. This guy was a private money Equity partner with a buyout with the buyout agreement. Yep very distinct difference there yeah so what other forms of so we talk about debt. And if we're talking about debt capital then you're primarily getting it through the sellers. But when it comes to the private side of it. The money sharks aside from so there's there's Equity partner. There's private money lender what other forms of private money private money. Equity lending fill in the blank here creative financing have you guys used well. There's only really two categories. It's debt and equity and our whole brand is then keep it simple because we can list out all the different types of equity and all the different types of debt but for someone who's just trying to get started. That's not going to be beneficial. For them. They need to really simplify it and say that you can borrow money. There's lots of different programs. You can do short term long term there's mezzling money you can do whatever you want but if it doesn't cash flow it doesn't make sense and so then you might have to bring an equity partner who is just someone bringing cash to the table and get they're going to own a portion of that deal and the Baseline for everything that we do is we borrow money. It's long-term fixed rate mortgages the cash flow and it doesn't matter if it's 12 percent or two has to cash flow on a long tier big straight mortgage. And if we bring in a partner there has to be a buy at agreement and that's it doesn't matter what type of equity we bring in or what time of debt that we don't violate those rules for those categories that keeps it simple and allows us to move quickly when we find an opportunity and back to your original point on the 38 Flex that was on the market for 13 years and nobody bought it. It was listed so no it wasn't a great deal but uh when I was eight I bought it when I was 21 and we doubled the asset value in 18 months and you did that through Renovations how did she do that we did that through optimization so there's a four-stage business cycle that we follow you build a portfolio. You stabilize the portfolio to consistency so we did that first and so we got stable income on that set and then we took that to Bank debt I never had a bank loan. Before that. I refinanced it but stable income allowed me to get a bank after I got the bank. Loan got a little bit of cash because I did a little cash out took cash renovated the the property and then we push into stage three which is optimization. Optimizations highest and best use which really boosts the value and you can only really push for that. Once you're stable and have a little bit of cash to the bank and so we pushed optimization and then when we're happy with the portfolio. We pay it all but we're not there yet there so is this dscr debt. Then is that what is that what you were taking on when you when you refinanced or it's just a commercial loan yeah. Yeah got it. You can make any deal cash flow on Instagram post where you say that explain that to me what what other what methods have you used you you've talked more about cash flow than purchase price which is interesting so I I'd love to hear what your methods are to unlock cash flow on a seemingly gut investment sure although the only time price of matter is if you plan on not holding and really that's it or if you don't have a business model that allows you to hold the old real estate. Forever. Price dictates how long it takes to pay it up and then the charge of company in it. But uh price is only an issue in the absence of value and the value. That person I like to negotiate is in the terms that we get and uh that's where we see the most value that the money is worth more against the real estate. Then actual real estate is at that point in time and everybody's paying a price. But I see all those people try and flip out of it when times get done.
•  So. There's only four ways to increase cash flow and there's two categories. You can optimize the real estate or you can optimize the debt. That's it you optimize the real estate you can increase income or decrease expenses. Those are the only two ways you can do that and um I mean there's lots of ways to increase income or decrease expenses. But those are the only two things you can do there. So that's simple you can't do that day one doesn't happen literally day one. So I push to optimize the debt you can borrow less money which is funding. You can put more money down until you have it. I'd never had that or you can get a better price that's fine because now you're borrowing less money. It's a function of it or you can borrow cheaper money and it's just bad. You can always borrow cheaper money until you get to zero percent. IO right I mean people are going to pay you to lend you the money. So I don't see that being feasible but zero percent IO is the cheapest and just a little nugget for everyone is you've got interest rate and you've got. Factor rate. Factor rate's the only important one they're tied to each other but everybody's so focused on what's their interest rate the the only number that really matters in relationship to the the cap rate. The cash on cash return we get when you buy something catch which you always do is just not your. Money is the factory is that it's a true caustic Apple. You've got principle. The equation is principal plus interest on an annual basis divided by the loan amount. That's it that is the true cost of capital. So if you were borrowing six percent interest loan someone says well you could earn six percent break even that's true on a six percent IO loan. But if you're on a 30-year am you'd lose 1.2 percent because if you look at the annual loan payments on that a million dollar loan it's gonna be about seventy two thousand dollars which on the million dollar loan is a 7.2 percent cost of capital so you have to minus 7.2 cap before you break. Even so when I learned all that math I just figured out okay if I negotiate all this debt. True cost of capital expressed as a percentage has to be less than the cap rate which is your dividends expressed as a percentage and if I could figure that out long-term picture a mortgage. Then I can buy whatever but uh increasing cash flow which is the only thing that there's you buy on a two percent cap rate deal in a 10 cap rate. Market you're probably an idiot but if let's say it was a 100 million dollar deal and um you've got two million a year in net operating income if you bought it on a two cap. If you did one percent interest only for 50 years you'd catch for a million bucks a year on zero dollars down and now your job is to redeploy the million dollars a year for 50 years so that you can build a big enough net worth to where the the 100 million dollar deal is irrelevant. Meanwhile the government will keep doing their job and printing money but uh that's the overarching messages if you're smart with money now don't overpay like that. That was a stupid example just to get a point but you can make egregious deals work like that. That deal should have traded for 20 million on a 10 cap instead of traded for 100 million. I want two and you could still make a cash flow but if you don't have a long enough Horizon on your debt product. You don't fix your debt product then your true. Caustic Apple can get out of whack and you can go negative cash flow really quick and that's how people go bust. They have to sell their real estate because I can't afford to keep it because they don't cash flow or the debt comes to speaking of debt coming dude. There's a lot of debt coming due right. Now there's a lot of variable interest rate mortgages out there that are close to the end of their initial you know period. What do you before it adjusts what are you seeing right now in terms of opportunities that are either here or on the horizon. The people that I work with and buy from are not affected. By that is they paid all their stuff up so this business model is just going to keep on moving. There's debt markets there's Equity markets. The debt markets are the places that are popularized by social media and people borrow and this bunch of new money. Everybody's levered they can't do this. However there's Equity markets all over the United States or people have been playing the game for decades and they don't have luck debt if any and nobody's trying to learn how they did it so if you just walk in the door and learn from them. Odds are you probably get a pretty good opportunity so um for people that are doing it the way that I did it and they're smart about not just going into a new money market but they're looking at okay. What's not popular right now is it a sustainable Market. What are the many drivers you can't just buy in a declining area but you go to the places that aren't all over the internet. Yet that's what I did with Moses Lake and then you just go figure out who's done it there. How do they do it. How could you repeat it and then you just have to do what they say you have to repeat the steps and the people that I met with taught me how to do the seller financing um zero money down personally and secondly and like borrowing the down payment out of pitch it. These people taught me how to do it but I didn't know him four years ago. I decided to build those relationships and for people that build this business model. It doesn't matter what happens in the network. A lot of people are going to be in a lot of pain but for the individual that's just looking to get ahead get 5 10 15 grand a month cash flow. The world can go to chaos and they could still build this. In these markets. It's a really interesting take and are you finding or do you find and actually. This is I mean it makes a lot of sense when you say it because your sellers in order to provide seller financing probably have to have quite a bit of equity in the property or have it completely paid off in order to offer that solution for you yeah to to keep it simple yeah. There's ways around it but just in case you can doesn't mean you should and every time that I've tried to get complicated. It's backfired so right Simplicity matters yeah because I guess you could do like a sun to on the mortgage and then seller finance the rest. But that's not an answer for how you never lose it which is the problem that model Works while the rates go down because why would someone trade a six percent piece of paper for a two percent piece of paper. Now a lot of people are getting called because the rates comes from two to eight. Nobody wants to hold the two percent money so they're finding a reason to call the note due if there's anything wrong. There's a lot of companies out there that are checking stuff now to see who's the actual title donor. It works till it doesn't and there's not a single person that I've met that owns tens or hundreds of millions of dollars of real estate paid off that ever said a subject to business model was the way they did it. Their business model was simply find people who play the game you buy their stuff like even how they bought it. You buy their stuff and over long periods of time you build up your cash flow and you pay it without exception that has been the number one answer figure out who has what you want what you figure out what you want go get. It pay it up but not never once have I heard any special Clause was the the reason they built Master's success and held it for decades. It is so fascinating about this is that I'm hearing you talk and everything that you're saying makes a hell of a lot of sense and at the same time when I've talked to when I talked to a variety of you. Everyone has a different way of doing it you know and that's kind of the beautiful thing about real estate is that you're taught you are have built a business and are playing the game in a different way than other people. Yet you found massive you found massive success massive success well. I'll say that five times fast that's um. That's that's a really interesting take. And I I think that you know when you look at like a 30-year time Horizon. It's definitely a more bulletproof approach right because from what I've experienced at least in my eight years to people that play with fire. It's like you say you roll the dice long enough you're gonna get burned feel like it's easier to do that if you take on a lot of debt uh versus if you play in the equity Market thing. That's not a question. It's just like me talking to you yeah. No that's fine. I mean if it's okay to borrow a lot of money. But you need to make sure that the money you're borrowing makes sense for the portfolio because the order of operation still debt. Equity debt will break a phenomenal deal Okay so not to get morbid on you or anything. But I'm assuming that. Some of these people are some of the people that you're buying properties from are probably like in later stages of life.
•  So when you when you structure. One of these notes I'm assuming that the no it's not held by an individual or is more often held by a trust so like like I'm just curious right like what's what's the structure generally like to like make sure that the note doesn't die with the seller. So it's just a it's a balance sheet the way that the attorney set this up and they've got the asset which is the real estate and then the the new asset that comes into play. Out of thin air is promissory and it's your liability. It's their asset they have a promise right now which is an accounts receivable and if they die that goes to their heirs and so that is just how the note servicing but title transfers over to me. They're collateral and they're being. The seller finance or their their collateral is a lien against the asset which states that I can't refinance or sell it without paying them up and then if they die. That money would then go to the errors. What's the normal term length. On one of these notes are you structuring it like 30 year or is it a shorter term like what are what are you looking. At like the first deal I ever did was a 30-year am no bullet. The second deal I did was a 30-year Adam 10-year Berlin. The third deal I did was similar uh I left 30 year am um but I've done 15 years of interest. Only. I've learned that interest illness phenomenal because uh if you're not Reckless then you can decide where the amortization goes take all the cash flow and Hammer a property. It's basically take all the amortizations of your whole portfolio and amortize. One deal. So you pay it off really quick but um there's a lot of different ways you can do it. You can do it interest only you'd amortize. You can have payments not accrue for a period of time. I'm signing for a 22 unit today and no interest is going to accrue um this year. So just no payments no interest which is nice because um I like free real estate. But on that one we got price and terms. It's a two million dollar property for a million bucks. It's a hotel conversion but um you can negotiate whatever you want. You just have to have an idea know what you want have the idea and then convey it to competent attorney that can put it on paper. You're converting that hotel to Apartments yeah. It's a big play right now you people that are doing that that I know really really well with that. I wouldn't do it on my own but um I took on a a joint venture partner on that deal and they own more property and most like than I do so. They're just one of the bigger players and they've done a ton of Hotel conversions in that town. Awesome what's your biggest failure bin to date as a real estate investor not trusting numbers. When I got started. There was a couple opportunities I could have bought that would have Set Me Free. A lot sooner made life a lot easier and uh they're just easier. Sooner. I didn't leans in the map I believed in the real estate but I didn't believe in the math and uh how to bought those deals a couple years ago. Probably 12 months sooner than I did I would have hit up on a brand a year in cash flow and a difference of that. It 22 versus 21 sure but um that would have been I had some obstacles I had to overcome at 21 years old where if I had that extra cash flow that would have solved a lot of problems. So um. There's a great deals I had the deal lined up. I had the seller finance debt lined up the money down. I figured out how to borrow that from uh another investor or broker in the office. Then the real estate agency that I was working at I had everything lined up and zero money down. It was going to get cash flow four thousand dollars. They went with nothing down long-term fixed rate seller finance mortgage. The private money note for that down payment which was going to be like 100. Grand was going to get paid off in a couple years out of real estate. It was beautiful and I was just like ah scaling too quickly. I don't I don't know that it's going to work 100 because I'd only been doing a couple deals at that point and um I just didn't trust them out and uh that deal now is worth well under the million dollar range probably close to 2 million bucks and I could have bought it for 680. So that was a mistake and you said that was like within your first year or so of that would have been within two years yeah that would have been early 2021 or later in late 2020. Early 2021 yeah okay and the takeaway. There is trust the trust yourself enough to so do you think the part of that too is like you hadn't had enough at bats to fully know whether or not it was like a juicy well. It was a great deal on the map made sense it was everybody that I had met with and started learning from taught me about how they underwrote their deals and that deal just made sense. But I didn't trust the process and been doing it long enough and I didn't have enough confidence in myself because nobody told me to go do this I was just going out and meeting with people I was just figuring it out. No one said you need to go meet these owners and learn how they did it. So I didn't have any validation from people and I don't have any family in the business. So I couldn't really look to them for advice and uh it was just tough so my mistake was not trusting the fact that I met with all these people. They said that when you find a deal like this and you can structure the deal the debt and the money down the cash flows day one. I think that's a good deal and I just didn't. I didn't do. It are you currently invested only in multi-family.
•  That's the asset that plastic you're focused on. I've got a hotel. There's a Cabin Resort down in the Hood Canal yeah about that seller finance to Porsche last year awesome and uh yeah that was a fun product and that uh it's still that is staying as a hotel right. Now yeah nice. You have a manager on-site manager or is there like a management company. Okay yeah. There's on-site team there well so when you're looking at deals to invest in what indicators are you using to assess whether it's a good deal or a bad deal because you've talked a lot about you know cash flow looking at the debt. Looking at basically you know debt versus cash flow and what those numbers look like is that primarily what you're looking at are. You also focused on economic drivers like walk us through your underwriting process and and like overall deal analysis process. Yeah I want to look at who the main employers are in town how much job diversity. There is absolutely but another metric that I I look at I want to look at my risks on a deal. If I could put 10 grand into a property and I've done a deal with ten thousand dollars and you get the property to cash flow two grand a month as you negotiate a great debt. I've seen deals like that I have buddies that have been deals like that. Even local to I'm in the Seattle area they did a little bit south of it. Like you can get great deals like that um but you get all your money back in five months if you've got a five-year note 10-year note. It's a non-recourse step product even if the area is not the best if I get all my money back in five months and there's not a whole bunch of cat-backs where I'm gonna have to throw massive amounts of cash into the deal. If it's a non-recourse deaf product. If I mess it up and they take it back in five years and they resell it. I probably multiplied my money many times over. Now you build a model where you can hold it forever but if um if you find deals where you can get a ton of cash flow with not a lot of money in and there's very little risk with the debt product that you can get negotiated where they just take the real estate instead of coming after you for everything then that could be a great deal and then your job would be how do. I reinvest all that cash flow to make sure I never lose the real estate because you get the real estate to buy the real estate and everything's free but um the the risk reward there if if I get all my money back out in a year without refinancing it. I'm a happy camper as long as this non-recourse that product long-term fixed rate mortgage. A standard deal economic drivers do matter the area does matter and if you're buying in a terrible area you need to build a business model to buy that whole community and then fix it at once not right away but as soon as you have that whole community on lockdown you on every building there or you own a bunch of the buildings and then you've got some other people to buy the rest of them. You don't fix it until everybody fixes it. That way the whole Community is just brand new at once and there's not a uh just a transitionary period where it's like oh I guess that's kind of nice because then you're going to get not the best 10 MX. If you just do it all at once. My people drive the streets they're clean. There's trash homes are beautiful. Apartments are beautiful so buying a great area unless you can afford to figure out how to fix the whole area. It's uh that's interesting and is that is that what you're doing with Moses. Lake then is that what you're trying to do or or is. Moses like already a good like area. I I don't know anything about this like most likes getting a lot better. It's uh. There was a lot of really bad properties and so I went and bought them and then I started buying some of the really nice properties. But uh the small nice properties there's a balance. There you don't distract the really nice big stuff but bought all the bad ones and then within a one year time frame fixed all of them up and it doesn't happen overnight but it can't happen relatively quickly. So as I got the cash flows up. I got a couple of refinances. Done I took all that money and reinvested into Moses and now the worst building that was in. Moses is actually quite nice and uh we're gonna pay you that it'll be even nicer and then some of the other really bad buildings. The rents were 600 bucks and now we're getting the median rent and Moses at that property and like our tenant base is phenomenal. The really nice people stable jobs happy where they live in and that was not the case when I first bought there. But I didn't do it all at once because people that renovate too quickly lose their real estate. I've learned that from the folks that uh taught me how to play the game. There's a lot of people that'll come in renovate and then they'll lose their asset because they went too quickly. They didn't buy enough before they built it out and renovated it. So. That's what we did when I bought a bunch of junk and bought some really nice stuff and then took all the money and renovated the jump until it was quite nice when you're structuring the debt on this because you just said like oh we're not recourse and you know 15 or you know 10 year blue and 15 year blue who taught you how to structure all of that or is. It is this what you learned from from your sellers. Like did the sellers help you structure the note how like who who watches you see that yeah. There's a couple folks that taught me and um. I'm not gonna name names because by name names people would be able to find them the most like I know that's not what I want to do yeah yeah. It is the people that I met with the everyday people that helped me guys they got me started call them out and I was sitting on the back porch beautiful house where I I view them as a second that and um it was over and was like and help me get started but we're selling backwards and he was teaching me about why paying off that house was dumb um in relationship when he had like a two or three percent mortgage. But he's teaching me in his lessons. He paid off a really cheap mortgage um and this was probably a year and a half ago but if they have stupid cheap mortgage instead of reinvesting it which is he didn't do it. But he taught me all these little lessons just on his back porch of this beautiful home. When um he actually sold that property. It was a six bucks that was the first project he ever bought. Seller financed ten percent down and he spent every dollar. He had on that 10 down payment and it was like nine thousand bucks and uh now you can afford that on a monthly mortgage on his house if he wanted to and it wouldn't really matter. But uh he just taught me the lessons and showed me how he the owner occupied that 10 down seller finance six bucks. There's roaches. He got chased up properly with a shotgun. He's telling me all these lessons and uh told me what not to do and how to structure loans when to walk away. But he didn't come from any money and he's got more money than I've got debt which is incredible. I mean he's done exceptionally well on the fact that he started with nothing a little over 20 years ago and but you just learn from those people. They they're just Everyday People. You wouldn't know it unless you called them and then they showed up and that was the reason for your meeting. But they're just everyday humans have done exceptionally well in business and they're everywhere. Someone's listening to this right. Now they're 19 years old no money. What advice would you give them. It just comes back to the first thing. I said you got to figure out what you want who has it and then you have to figure out how to get in the room with those people doesn't matter if you have any connections right now or if you've got all the connections in the world. You got all the connections and you don't meet with them. It's worth just as much as the people that have no connections. So you you have to actually whether you're introverted or not go meet with people that have done what you want to do and what you want to have everything you want. Someone else has it and it's not like you can just go meet with them. You absolutely can you'll meet with people that have got 100 million in real estate. There's lots of people like that I was amazed when I realized how many people actually had a ridiculous amount of money and like no Partners no dad there's so many of them out there and you just have to call one so figure out what you want who has it call them up and you can find their number on Google if you haven't found it. Yet. You probably don't know everything you need to know about how to find their phone number. But we we put a video on our YouTube how to find contact info for anyone everywhere and if you need help my phone number's in that video because I didn't want to put anyone random on the internet on blast. So uh you can text and happy to help you out but it's it's not a complicated game.
•  It's difficult but it's very simple. We're uh we're coming up on time here and then I want to be respectful of that. So only a couple more questions I have for you first of all um. Let's chat a little bit about the the course that you and Christian have built out. So what is. What is that about that is just more uh more so a honed in platformer than the YouTube. Our goal is to share everything we can on YouTube so it put a ton of videos. We go live every week but the the course is just more directed and uh it's just you want to answer it right here that that was the the whole idea behind that and people kept by people. I mean only two people kept bugging me when I was getting started how the heck do I repeat this and I was explaining the same thing over and over and this is when I had been part of attrition and so I was just tired of explaining the same thing over hours or like what if we just recorded all this and that would have been two years ago. So um we just started recording. What mattered and cut what didn't and then there's nothing else. There's not we don't need to overwhelm people to bunch of info. Some of the videos are 22 seconds long and Christian looked at me and said you can't have a 22 second long video and of course like go watch it. You're like oh. I guess you can and the market industry average is like you need six to eight minutes your video for maximum engagement. I don't care about that I care about people getting the insole and applying it so it's just simple. That's what you need to do this the way we did it and you can also learn that from YouTube and where can people find you on YouTube Cody and Christian multi-family strategy being Christian multi-family strategy love it and Cody leave us with your final. Gould nugget for someone that's sitting at home right. Now what knowledge do you have to drop on them right now if it's not simple. It's not repeatable and if it's not repeatable it's not worth anything so to the extent you keep something simple it becomes repeatable and then it's worth a heck of a lot to you and everyone around you if it gets too complicated don't do it now where it says just keep it simple and if you can't make it simple then figure out something else to do love it. That's simple enough uh. Hey Cody thanks for thanks for the time my friend and for those of you who are listening all of Cody's Instagram. All of your social media profile information will be in the description box down below Cody thanks for stopping by my friend thank you all right man.