On the show today we talk… 24 Doors By 20 Years Old with Cody Davis!
Listen on: Apple Podcasts | Stitcher | Spotify
Show Links:
– Cody’s YouTube Channel
Show notes for 24 Doors By 20 Years Old with Cody Davis!
The Vantastic Life is…
– is in Moab UT!
Cody is in Tacoma and is ONLY 20 years old!!!
Julie is multitasking like crazy today! With kids downstairs and listing coming on. Joe is at a mountain bike trail head in Moab UT, and Julie should drive down to bike!
Cody Davis owns 24 doors, which is more than he is old.
Julie
We can’t wait to hear your story today Cody, so let’s jump right in.
Joe
How did you get into real estate?
Cody
It was a family friend that gave me the book Rich Dad Poor Dad. I wasn’t really into reading, but they also got the board game, so I wanted to buy a duplex.
Then a few years later I picked up the book again and set a goal of having a duplex by the time I was 21.
I had a friend that pointed me to WAREA and was hooked up with Robert Slattery, who’s the owner of Blackwell Real Estate in Tacoma. And that’s what kicked it off.
Julie
So you were deciding if you were going to work in retail or real estate?
Cody
Yeah, and it was a small crew at the time. Founded in 2015 but not opened up to folks until 2018, so I was one of the first guys on. It’s amazing to be with something at the beginning.
Julie
Did you succeed… of course you did! What did you purchase?
Cody
My first deal was a 12 plex. I love Grant Cardone and the 10X Rule. So I wanted to start with the biggest deal that I could get into in a good market.
Julie
I think that so many people that get into flipping realize that it’s like a day job because of the taxes. You will get to the point where you realize that you should keep those properties and you just need to do the big stuff and understand the financing.
You can be like Cody here and get to your goal 5 years down the line with these bigger deals.
How did you get your first deal?
Cody
The #1 issue that people have is they don’t think they can get the money for it. But the real concern that I had to face is… do I love the deal. If I don’t then I won’t be able to sell the deal to investors.
I was looking in Central WA. And I found a seller financed deal that was supposed to close in a few days. It was a 22 unit property. But the seller said he wasn’t going to assign it to me.
Then I looked on the market.
Julie
Why did he not want to sell it to you?
Cody
It might have been my lack of experience or some more extensions in the contract. I also might not have been ready.
I had $300k raised to buy the property.
At Blackwell we have funding called Blackcap that raised money for us to use.
I found another deal on the market that was seller financing. I called the guy and closed on is 2 months later. I partnered with Robert on that one. He gave me an option to do it together.
Partnering with Robert was a HUGE boost of confidence going into my first deal.
Julie
I absolutely think this is the best way to get into real estate.
What’s the status of the deal today?
Cody
We got it for $1.1m and I pitched it to Robert. He like it.
And I knew I could raise the rent up to the market value.
The units are gorgeous and were from the start. This was a GREAT deal. I’ve done some work, but the demand in the area is awesome with Microsoft and T-Mobile.
I projected that it would be worth a million five, and we are close to that and being able to refi, and I’ll have nothing into it.
Julie
So you weren’t really looking but a deal came up and you kept looking over there. Would you continue to invest in that area?
Cody
Yeah, I’m working on a 6 and a 16 over there. I’ve learned that the more I do the more I can do. It gives the seller confidence about getting paid.
Julie
Have you felt any push back?
Cody
I think that was self imposed. I’ve never had a seller ask for my credit score or proof of funds.
Most people think this is super cool that I’m investing at such a young age.
I just needed to get over it in my head.
Julie
Did you get your license right away?
Cody
I did. I like to go all-into things. I spent 2.5 weeks start to finish and was off to the races as a real estate agent.
Julie
It’s my soapbox that I think someone on the team should have a real estate license. How has it benefited you?
Cody
I wouldn’t have found the 12-plex without my license because I wouldn’t have had all the search inputs. I wouldn’t have been able to have the intelligent conversations. And I wouldn’t have been in the environment everyday.
Julie
Right, instant credibly! Absolutely!
If you own a business and the inventory for your business is a Costco… would you borrow your neighbors Costco card? No you wouldn’t. It’s the same thing with real estate. And it’s an insurance card.
How long were you in real estate before you got your first deal?
Cody
9 months!
Julie
Are you to the point now where you’d like to get seller financing, and how you feel about it?
Cody
I’m working on buying with bank debt. I have enough cash flow coming in so I should be able to qualify for a conventional loan on a 4-plex. So I might do 3.5% down on a 4-plex. Also, if I’m a agent… I’ll only have to put .5% down.
Julie
How about with commercial lending?
Cody
Right now my next objective is to handle refi’s on my current buildings. They want to see that I’m experienced so I want to stabilize my assets right now.
Then I’ll have built that partnership and relationship.
Julie
What are the commercial lenders saying to you right now?
Cody
They do want to see the experience and time right now. They have a timeline of pulling money out, I have to hold it for at least a year.
At the end of this month I will have held my 12-plex for a year.
Julie
I keep telling my girls that when you are of age (18) you will own a duplex and live in one side.
We’ll have to have you back on to get details of your journey, and I’d like to be an investor in one of your deals.
Are you going to keep holding or 1031 to trade up?
Cody
I’ve thought about that a lot. I have a few hundred thousand in equity. So maybe I should trade up. I look at Grant Cardone who says one of his biggest mistakes is not going big enough. So I might just keep going big.
Julie
And you don’t want all your eggs in one basket. So rolling all of your deals up probably wouldn’t be a good idea.
Hopefully the democrats don’t take away the 1031’s. Not political, just what’s going on.
Where are your properties?
Cody
I have 2 12-plex’s that are both in Mosses Lake. The 2nd one was a big fixer upper. It had a huge upside.
I used the cash flow to fix up the 2nd 12-plex.
I’m not buying on 12% cap rates, but I want 4 figure cash flow every money. So I’m making at least a thousand bucks every month.
There’s enough cash flow on a 12-plex to take the risk. $400 a month doesn’t get me out of bed in the morning.
Julie
Right, there’s no reason that you can’t go bigger.
People talk about cap rates, and I’m always in the value add game. There’s a difference in cap rates for actual numbers and cap rates on stabilization. And those are two different things.
Your point is forget about cap rate and focus on cash flow.
Cody
Right, I had to raise the money and they both cash flowed $2-3k per month.
Julie
You play a preferred return?
Cody
I pay 1 point a month.
Julie
I got started with a huge real estate investment company. I started off doing all the work, I was overseeing the stabilization of these project. It started at 5% and grew to 15%, and I had to pay back my balance sheet guy 12% before I ever got back a dime. We’d get our refinancing back within 3 years. It absolute changed my life.
Great stuff!
What has been your worst experience so far?
Cody
I had a tenant call me on my fixer upper property saying we have a plumbing issue. I called a plumber who said we are booked up for 6 weeks. And I had a tenant that moved out of another unit. So I moved the tenant into the other unit and keep the plumbing unit empty for 6 weeks.
Julie
I have an all around go-to punch list guy that can do almost anything.
What’s the best experience that you’ve had, meeting Grant Cardone?
Cody
I started Cardone university last year. Read all his books, watched his YouTube. Then I realized that I needed to meet him. So I took a personal video and told him in the video that I wanted to meet him. I sent it to all of his top sales guys. And I flew over to meet him at a mastermind a few weeks later.
Julie
What was it like?
Cody
There was maybe 30 people in the room. I met someone worth 7 million and another worth 35 million. Getting into a room with them is life changing.
I’ll trade money for a connection any day of the week.
Julie
I did the exact same thing with Sean Terry. Just got to hangout with him and other great investors.
Wow! Just curious how much is Cardone University?
Cody
You can buy it outright… but Blackwell bought it in bulk for $100/month per person. It’s taken me to a new level.
Julie
I’m going to look into that for my crew.
Did Grant give you any person time?
Cody
I asked him some one and one questions. He kind of reformed what I was thinking. There are a few other properties on the same block of my properties. We got to do some one and one conversations about that.
It’s amazing to hear from someone that hasn’t lost a property in 30+ years.
He said to liquidate and go to a different market where I can get more doors for less money.
Julie
What were your take aways?
Cody
He’s just another guy that’s been playing the game for a long time. The success he has is obtainable. That was huge for me.
He started when he was 32-33 on his first bigger apartment deal.
I learned how to make sense of a 4% cap rate. Which helps in Seattle. Cap rate is cash on cash return if you pay cash. But I could never justify it. But I didn’t have access to the right kind of money. Grant is buying for the appreciation, and he wants to convert everything to a REIT and sell off at a 2.5% cap rate.
Julie
Do you feel like you have access to him going forward?
Cody
It would be another paid event.
Julie
What have you learned about raising money?
Cody
If you are sold that what you’re doing is a good thing.. you’ll be able to raise money for it. I believed so much in what I was doing, and that’s why I was able to convey a story. The lenders will fall in love with the story.
Julie
That’s all good stuff. Did Grant give you tips how to raise money?
Cody
#1 fall in love with the deal
#2 share it with the world – he uses a lot of social media.
You have to find the deal and then get attention, and you want to share the opportunity with people. I pitch people about an amazing opportunity and that I thought of those people. And that’s genuine.
Julie
What will you not buy?
Cody
I won’t buy development projects. It has to cash flow day 1. I haven’t made it yet. I don’t have enough free and clear cash flow yet.
Julie
What are the upside that you’re looking for?
Cody
The first thing is number of units. That’s my multiplier right there. If you raise rents on a single family $100… you get another $100 a month. If you raise rent $100 on a 12 unit… you get another $1200 a month!
I need to understand all my deals. All of my deals have a 1 year waitlist. I can target and put ads in those places. I want to also know my upside. And I buying from a mom and pop… I get to be the new sharif in town and say we are going to market.
Julie
Can the current tenant base handle the rent raise…
The other thing that I see people mess up is having all the leases maturing in the same month. If your leases are expiring when you loan refinance is happening.
My neighbor has some rentals and all her leases are up at the same time. I advised her to move the leases to different times of the year.
Cody
I was 100% in line with all that. A lot of my leases are month to month right now because of COVID going on. I prefer to keep it month to month. If people want to leave then I can fill it up with market rents.
The new deal that I bought, most are month to month, one is six months. I’m not going to be looking to refi that for quite a while.
It’s all a bonus, the deal has to work today.
Julie
Totally different perspective than what you hear people talking about on social.
What’s your 12 month goal?
Cody
I want to be at 50 apartments by the time I’m 22.
Julie
How do you feel about buying Jennifer Beadles stuff?
Cody
I don’t think I’ve seen her deals.
Julie
You should get on her list.
Believe it or not but you could be units in Tacoma for $50k or less. Those were the good old days. I have a deal in Lakewood right now.
Cody
Depreciation is huge! I paid no taxes last year because of it.
Julie
It’s insane.
I don’t think that people understand Trump’s tax’s. Not a political thing, but I don’t think people are understanding it.
Cody
My end goal is about 1400 apartments by age 40. So I have 20 years.
Julie
My prediction is that you’re going to beat that?
What do you do in your free time?
Cody
I still like to do gymnastics, parkour (jumping off buildings), and I’m a car guy.
Julie
What’s the most badass car you could get?
Cody
I’m a McLaren guy. It’s a $20 million dollar car.
On the months that aren’t so great I make sure that I have a strong hold on my goals to keep me going.
Julie
Who would you like to meet?
Cody
Someone who is potential driven and focused long term. Someone committed to goals and them growing. Real estate investing is not a promise or get rich quick.
People that are focussed on grown a little be every day.
Julie
I have some young guys that I want to introduce you to.
We never hold back information… I am an open book! I want to share everything! There’s enough to go around. Get with people that are doers!
I’ll be thinking of some people that you might not know that can help you out and move you forward.
Who do you listen to?
Cody
I heard to focus on just 2 mentors. Otherwise you get distracted. One is Robert and the other is Grant. I don’t want to get confused. Between those two I don’t get distracted.
Julie
I love it!
It’s like reality TV to watch all these real estate forums. The most successful people that I know aren’t on there.
You’re going to be talking more, I’ll be pushing you, Robert will be pushing you, but in the meantime, you’ll be posting stuff on your YouTube channel.
What is your YouTube?
Cody
24 Apartments at Age 20. I’ll get you the link for that. I’m sharing everything that I’m learning. I’m putting it all out there for folks to be able to follow someone who hasn’t completely made it yet.
Julie
Which is much more interesting. I bet someone would rather listen to you when they are just getting started.
You never know.
Cody
Cody Davis is my YouTube channel.
Julie
Today we are sponsored by Certain Lending who is our preferred hard money lender. They can help you with your lending needs and will help you get pointed in the right direction.
If you have a deal shoot it over to Nghi@certainlending.com
Join us on our weekly mastermind at https://meetup.com/seattleinvestorsclub every Thursday at 11:30am PST. Investors, brokers, lending, everything. It’s a great place to be to connect.
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