Multifamily Listings Exploding | Cash In Refi Update

0:00America leads the world in medicine development. It matters. We get new medicines first nearly three years faster. Five million Americans go to work because we make medicines here at home and not relying on other countries keeps us safe. But China is racing to overtake us. Will we let them or will we choose to stay ahead? When America leads, America cures. Let's tell Washington to keep us in the lead. Learn how at americancures.com paid for by pharma. Already folks, we need to talk about the fact that Cody Davis has broken ground on his first development. Talk about a cash in refi he had to do. I'm sure that wasn't any fun. But more importantly, we are going to talk about more multifamily and listings than Cody has ever seen in his market. I have my thoughts. I think I know what's going on. But let's talk to the man myth the legend. Mr. Cody Davis, how you doing? Doing good. Other than the cash in refi like you mentioned, writing a multi five figure checks never fun when it comes to low appraisal. But

1:04that is just an issue that pops up when you do short term balloons. That was a three-year note that came to the end of its time. I was waiting on a boundary line adjustment to go through and it took two years when I thought it would take a matter of six months. I learned my lesson. And so now that's done. Yeah, I had to write a check and broke ground. I'm super happy about that. Well, let's start. We're closing all that because that's all well and that's all fun. But I think we need to talk about the fact that in your little part, you know, piece of heaven where you invest, you told me offline that there's more multifamily listings than you've ever seen. So I'm curious. What do you think's going on? Because I have my ideas, but I'm curious what you're seeing. Because again, that's your buy box. The most interesting piece about it is all of those listings. I've looked through title history. I know the owners out of all of them. None of them are over leveraged. None of them have impending doom. Which is super odd. They're all experienced

2:09owners who have owned for decades. And they're all trying to get their pie in the sky super high price. And so it's it was really interesting because it's different than what I would have expected. But they all just happen to hit the market at the same time. They maybe trying to get out before something that I don't know, but I don't see that. So. Okay. So so A, it's not one seller, right? It's not one seller trying to dump the portfolio. It's multiple. You've done the you've done the due due diligence to dig in and realize there's not a debt problem or a leverage problem. It sounds like you know most of the owners, if not all of them. So there's not a syndication, right? It's not a busted syndication. And the prices are high. Or a list. Yeah. Yeah. And some of them are transacting, which is interesting. There's one that's listed at sub five percent cap rate. And I told them I was like, you guys are crazy. We're talking

3:11about Moses Lake. This is not Seattle. This is not no one retires in Moses Lake from a different location. And talking about like a 4.8 cap in a rent controlled market is incredible on 50s product. So old product too. Wow. Oh yeah. And it's all old. A lot of Moses Lake is 52, 54, the newer stuff in the 60s and 70s. So it's incredible. Okay. All right. So it's going to be interesting to track these, you know, over the next 90 days because you know, I've been watching my market of Fresno. And there's more and more stuff coming. I think Fresno's, I think Fresno's got some problems, right? That's why I raised a million bucks in the last 90 days or so. Because I'm starting to see the same behavior that I saw in 2009 and what was that? Property owners listed properties at what I'll call high prices. Unlike it sounds like in your area, they were in trouble. They had

4:13financing problems. And what happens is the seller knows they're going to lose. So they stop taking care of the property. And it just goes into disrepair. And then at some point, probably a year out, the bank's going to finally figure out they made a mistake in four clothes, right? There's a lot of pain coming, but it doesn't sound like that's the situation where you are. Well, what's interesting is there are multifamily owners who they're not listing their stuff on the market, but they are in a lot of pain. They have upcoming balloons. Their properties are uninsurable now because of the the level of disrepair. So they don't have insurance. And they're trying to shop, they're trying to shop it around off market so that they don't I maybe it's not to bring attention to the building putting it on the market. But there are a few owners that are doing that actively in my market. So they're there's definitely pain, but it goes back to there's so much opportunity here.

5:13I wish it was like this when I was getting started. I probably would have bought too much. You probably would have bought too much, yeah. But it's cool. I mean, it's interesting to see the market is just flooded with supply right now. And again, as somebody that's looking to still grow a little bit, this is probably the perfect time for you, right? You like lots of supply because it allows you to be creative and find that motivated seller, right? Yeah, absolutely. And having met most of the owners here in town, I've run by pitches and some of them just don't work. Some of them want the cake and to eat it too. So they're asked for the price has to be cash out. They're not flexing. They're like, I own this and cash. I don't care. So give it to me or don't. And they're probably going to sit on the market for 10 years till it sells. And I've seen that. I bought a deal that was listed for 13 years straight. So you know, it does happen here. Oh, it's super crazy. I paid them their original list price. They listed it in no way. So and they eventually got it. There you go. There you go. Time, time heals all wounds. I guess you just list it long enough.

6:16It'll eventually transact. All right. Well, let's talk about a cash in refi again. It sounds like you did a deal. It had some short-term paper call it three years. You were doing a property line adjustment took longer than expected. Did a, you, you're casting this out with a refi and the repraisal came back light and you had to go right up, you know, multiple five bigger check that, that's not fun. But you know, the other short-term debt behind you. Yeah. So I don't have any more debts like that as far as property related. So I don't have any more mortgages that are under seven years. So that's really, that's cool. That's really. Yeah. It's very nice. Everything for the most part is long-term fixed rate bank debt. So 10-year mortgages, a couple years in. And so right now, I'm optimizing that, but I had to refinance this loan is basically what I did is I had three parcels. I turned it into two and I made, I made the, the second one a lot bigger. So I'm going to be building on that. And I moved all the debt from the three lots to the one. So now I have one unencumbered lot

7:17and I have one lot that holds the debt. And the problem is the front lot, it has two houses on it. There are independent houses, one lot. It appraised for 295 where there's homes in the area appraising for three by themselves. Oh, and so it was just too low. And if I had more time, that'd be great. But I was at my balloon and the person who I had the money really needed the money. So I could have, of course, gone to default. But I owe them on other deals and they're going to continue to sell me stuff. So the best solution was just to write the check. It was 47,000. I got a DSCR loan at 6.99% and called it a day. There you go. Yeah. Or if, you know, again, that's, that's a view of having liquidity and playing your game. You could, you could take a, you know, maybe a step back in liquidity to pay them off because it'll, it'll bring you goodness in the future. Yeah, absolutely. And I'm working on buying more townhomes from that individual. And so it, you know, I keep sending love their way and doing what I said I was going to do even if it's short-term pain and it's well worth it. Nice. Well, let's close on the final topic. You are

8:21breaking ground or have broken ground on your first development. What the heck are you doing, Cody? Oh my goodness. I'm borrowing $2.25 million for something that doesn't produce any income. That's a little scary. Yeah. No doubt. So tell us about it. Well, it's 14 townhomes. I have a site where I can build 21 and I chickened out on doing all three at the same time. So it's like baby steps. So I'm starting with two seven plexes and break it down. There's three lots. There's a quadnutriplex per lot. And I already own one of these seven plexes just down the street. So I'm planning to do more of this and eventually control the whole street. And really what I'm trying to do is put more of my focus and concentration on owning new stuff. Right. Rather than the old. And so my goal on this is to be as conservative as I can on the build, get it constructed, get it rented, stabilized and then slowly but surely offload some of my older stuff and consolidate into newer but nicer newer properties. And we talked about

9:23it before. This is part of me getting to 70 side by side townhomes with no partners. And so that I'm building this one with one partner who's actually my age. She did good in the e-commerce space. He's 23. So he's a little younger. My only partner has ever been younger. Yeah. Wow. Good on him. But we're building this together. And then I'm going to slowly but surely offload some of my older stuff. I got an L.O.I coming in to sell my whole portfolio on a wrap of all the old stuff. So I'm I am looking at that. Nice. All right. Yeah. Well, that would be a big reset. But then I would just have brand new properties. And I think that aligns more with the D on model. But I'm really excited for it. That's very, very cool. So how long do you expect this build? I've never done a ground up development. What you broke ground. But how long do you think it'll be till it's done? This should be done within nine months. And there's a good track record because the person building it built the rest of them. So it typically takes eight to nine months

10:25to get it complete. Okay. And unfortunately, that's going to put me into January for leasing. However, there are worse problems. Right. Yeah. January and Moses Lake is that I'm guessing it's a bad time weather or what? It's pretty dead. It's cold. It's gray. It's 20 degrees. No one wants to move. But, you know, people are still looking. I moved in December or November. So, you know, people still move in the winter. Okay. However, I'm fully aware this is going to be the hardest project I've ever done. And just due to the nature of building ground up, it's not a beginner move. And so I'm really curious when we're talking in a year from now, the lessons that I learned that I don't even expect right now. That's going to be fun. It's difficult. But the prize at the end of the rainbow is that I'm going to have a brand new asset that I'm not going to have to worry about as much. Right. And there's two million bucks you borrowed. I'm guessing that's a construction loan. Yeah, construction loan in the low sevens. And then you're doing what

11:27draws every six to eight weeks on it or something or with the contractor? It'll be draws as completed. So yeah, so that's so we had to put some money in up front. So we paid cash for the land and some of the prepaid and all that. And then they're going to start paying for these draws. And once it gets completed, they will roll over to a permanent loan. Oh, it'll go right to perv, that's nice. So I don't have the refinance. I probably will because this lender, they're out of Texas. They made an exception. They have a loan cap limit of five million. And I'm at like 5.8 with them with this loan. So I told you guys are going above and beyond for me, I'll refinance and get it back down. So that's nice. Very, very cool. Well, this is exciting stuff. Again, I love the fact you're on the channel every week talking about this. How was the Gen Z plus accountability call on Saturday? What was that? What was that like? Well, so this Saturday, I wasn't there. And here's I drove over to the west side to sign a doc. And then they said,

12:27oh, the docs didn't go over there. You have to drive back. So I basically drove a thousand miles over the weekend. And I had Dylan, who's an awesome co-host to that cover down. So, okay. Yeah. That was the one I missed. That's all right. That's right. Again, I love the fact that you guys do that. Love you and Dylan doing these together. Where can people find you? Cody Davis Business Adventures on YouTube. Awesome. Appreciate you, man. Take care. Yeah, thanks. See you. President Barack Obama. Virginia, we are counting on you. Republicans want to steal enough seats in Congress to raid the next election and wield unchecked power for two more years. But you can stop them by voting yes by April 21st. Help put our elections back on a level playing field and let voters decide not politicians. Vote yes by April 21st.