130 Multifamily Units With This Simple Seller Financing Strategy

TL;DR

Cody and Christian use seller financing to build a multifamily portfolio.

Transcript

this is the BiggerPockets podcast show 7.99 people will seller finance if they trust you and you get trust through having a relationship you communicate who you are and your goals so the first rule is that you're not coming at these people like sellers they are owners you're meeting them as an owner you want to learn from them you're going to find ... Read More

Key Insights

• Seller financing can be a viable strategy if trust is established with the property owner. Building a relationship is crucial to negotiating favorable terms.
• Understanding the owner's business model and goals can lead to opportunities, as it positions the buyer as a logical and trustworthy partner.
• The order of operations in real estate should be deal, debt, and equity. This ensures that the financial structure supports the purchase and long-term stability.
• Long-term fixed-rate debt is preferred to avoid the risks associated with variable rates and balloon payments, especially in volatile markets.
• Cody and Christian emphasize simplicity and repeatability in their investment strategy, which allows for consistent deal flow and portfolio growth.
• The duo has successfully scaled their portfolio by focusing on properties with significant equity and negotiating terms that allow them to maintain cash flow.
• They have acquired both on-market and off-market properties by leveraging relationships and understanding market dynamics.
• Their strategy involves buying properties that can be improved and stabilized, increasing their value and cash flow potential.

Questions & Answers

Q: What is seller financing and how do Cody and Christian use it?

Seller financing involves the property owner acting as the lender, allowing the buyer to make payments directly to them instead of a bank. Cody and Christian use this strategy by building trust and relationships with owners, negotiating terms that allow them to acquire properties with minimal cash down and favorable interest rates.

Q: How do Cody and Christian find properties for seller financing?

They target properties with significant equity, often reaching out to owners directly to understand their business models and goals. By establishing a relationship and positioning themselves as logical buyers, they are able to identify opportunities for seller financing both on-market and off-market.

Q: What is the importance of long-term fixed-rate debt in their strategy?

Long-term fixed-rate debt provides stability and predictability in their financial planning, reducing the risks associated with variable rates and balloon payments. This approach helps them maintain cash flow and avoid the need to refinance under unfavorable market conditions.

Q: How do they ensure they never lose their properties?

Cody and Christian focus on maintaining a strong cash flow and avoiding over-leveraging. They ensure that their debt service coverage ratio is healthy, allowing them to withstand market fluctuations and economic downturns without losing their properties.

Q: What role does simplicity play in their investment strategy?

Simplicity allows them to create a repeatable and scalable investment process. By focusing on straightforward principles and maintaining a clear order of operations, they can consistently identify and execute deals that align with their long-term goals.

Q: How do they approach negotiating terms with property owners?

They prioritize understanding the owner's needs and goals, which allows them to propose terms that are mutually beneficial. By focusing on building trust and being transparent about their objectives, they can negotiate terms that align with their investment strategy.

Q: What markets do they focus on for their investments?

Cody and Christian primarily invest in central Washington, where they have established a significant market share and influence. They focus on areas with strong demand and pride of ownership, ensuring long-term stability and growth potential.

Q: How do they handle properties that require significant renovations?

They ensure their portfolio has enough cash flow to support renovations without jeopardizing their overall financial stability. By strategically acquiring cash-flowing properties, they can fund renovations and improvements on other assets, increasing their value and income potential.

Summary & Key Takeaways

• Cody Davis and Christian Osgood have built a multifamily real estate portfolio through seller financing, focusing on building trust with property owners to negotiate favorable terms.

• Their strategy involves understanding the owner's business model and goals, allowing them to position themselves as logical buyers and secure deals that others might miss.

• By focusing on long-term fixed-rate debt and maintaining cash flow, they have created a portfolio that is resilient to market fluctuations and poised for growth.