REIA 73 Brian Wagers: Transitioning from active investing to passive investing

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Enlightened Investors. If you're interested in transitioning from active investing to passive investing, we have the expert with us today who has gone through that process. Brian Wagers, the founder of Wagers Capital, has played an active role in the acquisition and management of over 447 units in his home state of Arkansas and a passive role in syndications in Texas and Oklahoma. He has founded Wagers Capital to help other busy professionals and entrepreneurs take advantage of the benefits of investing in apartment buildings in a passive manner. So welcome, Brian, and take us into the show by telling us a moment in your formative years that helped to shape the person you are today.

Yeah, well, thanks for having me on. I appreciate it being on here with your listeners. So I would say every, you know, every moment is defining us. So I would take it back to my childhood being just my mother and I growing up. It was definitely interesting seeing her work so hard to put me through a good school system, you know, in a good neighborhood and everything. And I think I maybe took it for granted back then, but now looking back at the hard work that she put in so I could be successful and the person I am today, really, it's really nice to look back and see that. And that's probably where some of my work ethic came from.

It is easy for us to take all of that advantage when we're children and not really understand the effort that it takes to actually put a home together and certainly to raise a child. But I certainly do admire single parents who are able to do that because it is truly a burden. I've been there, done that. So I know what that's like.

Yeah.

Well, you talk about reverse engineering our personal and our financial goals. What do you mean by that and how do we do it?

Yeah. So I think reverse engineering your goals is a big step for really any goals, you know, whether that's financial or personal development or business development, figuring out what your end goal is and working backwards from there. So, you know, I think a lot of your listeners will relate to that, you know, when they're trying to find their financial independence number or some others put financial freedom number. So finding out what you need to live off a year and working out From there, how much you may need to invest and how much you can compound from there. So if you want to live off of $100,000 a year, that could be a good goal of yours. And then you would reverse engineer that and see, okay, average investment for syndication, maybe 6 to 8% cash-on-cash return. And what does that look like for your investment?

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Yeah, looking to the end goal and working backwards, probably a lot of professionals are used to doing that because most of them have been through a college experience and they had to look towards the end of that college experience to even start out that journey. But transitioning that to the financial world is probably not something that is quite as natural and normal for many of us because it seems like Most of us really just do not have a good solid financial education. And we oftentimes have to learn to do that on our own there. Well, how did you find your path to that secret of reverse engineering your financial independence there?

Yeah. And on your point there too, I think a lot of people may get stuck in the 9 to 5 zone and they may not even take a step back to really think about that. You know, they're just working day in, day out and maybe not have that the time or the energy to really take a step back and think about that. So for me, it was— I was working at building a book of business with my company in a sales role, you know, it's commission sales. So really, it was my own book of business. I was setting up my own customers. I put my head down for about 4 years and really was plugging away, maxing out my Roth IRA account. And I was at that point where I was making sizable income and I wanted to do something with it. And a lot of roads either lead to the stock market or to real estate. And I looked at the stock market for a little bit. I even tried to invest in the stock market personally outside of the Roth IRA and learned the hard way that it's very out of your control what a CEO of a company does or what their business plan is or how it can go up and down. So even though you are controlling what you're investing, it's not very passive, especially if you're trying to buy into speculative stocks. So the other road, the other fork in the road was real estate and everything led me to that. I think a lot of people start with single-family real estate, and that's where I started. You don't necessarily have to, but that was what I could grasp my head around. At the time, I knew that real estate was a wealth builder, that it's not going away, can't really go to zero like stocks can. And I dove in and bought myself a single-family home. I'd been making offers for a long time, and I got it under contract and rented out. And Just about as fast as I had it rented out, the economies of scale and the timeline that I really wanted to get to, that financial independence number that you talk about, it was just going to take way too long, 10 years, maybe more. And that was going to be managing it myself, no professional property management, running around to 10 different houses. So I quickly pivoted to multifamily. Everyone that I had researched, listened to on podcasts like yours or on books, and everyone had wished they went from single-family to multifamily sooner. That was one of the most common themes I saw was they wish they had stopped flipping so many houses and gotten into multifamily or stopped doing single-family and jumped in. So I really just zoned in on multifamily and started going. And after that, I bought a 12-unit later that year into the beginning of the next year. Sold my single-family house and just dove all in to multifamily. Yeah.

That allure of going with single-family, I guess it's because we understand it. Most of us have had the experience of purchasing our own home and we know that process, understand it. And getting a rental as a single-family, it's just a shiny object out there that so many of us have to go through before we realize that it just isn't really going to be able to scale that without a ton of work. There are certainly people who have scaled that and They own, I mean, there's people out there that I've talked to and visited with that own some 400, 600 single-family homes and why they'd ever want to do that, I don't know, but there certainly are people that have managed to do that and are making a fine and excellent living doing that. And then also, I mean, I have been hearing that institutional buyers are going to single-family residence because the single-family market is supposedly exploding in terms of single-family rentals. And so a lot of institutional buyers are going to that, but they're not— Starting out with 1 or 2, they're buying all of those in bulk. And then of course, having property managers take care of those. Still not a direction I want to go. No matter how many homes you have, it's just not where I want to be. But I had to go through that single-family phase and, and have decided it's just not where I want to be. Well, you talk about sacrificing and delaying gratification. What have you done to sacrifice and to delay gratification?

Yeah. So I think delayed gratification is a big aspect in both investing. I talk about just financial development, but I also talk a lot about personal development. I think they go hand in hand. I think if you're not developing yourself, your body, your mind, what's the point of just building your wealth? So I think when it comes to investing, if you're just speaking truly on investing, maybe not pulling out all your money right away, reinvesting it, The compounding fact is the 8th wonder of the world is what they say. Albert Einstein talked about the compound effect and how important that can be. So that's great for me, that single-family home, when I sold that, that would've been great to go buy a new car or buy something material. But when you can really reinvest your earnings, that's truly when you get that generational wealth building. And same thing with real estate. You know, whether you're reinvesting and saving up your W-2 earnings or the earnings from your business, whether not spending it right away and saving that up and investing that, I think is a great way.

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Yeah, I just recently, from another blogger and poster, he had shown a chart and it was, his whole thing was that your first million is the hardest to get. And he charted it out, how long it's going to take you to reach $1 million if you've got $10,000 and doing that through compounded interest, and I forgot the number of years that it was, but he compared that to compounding interest on $1 million and how quickly, once you get that first million dollars, how rapidly you can get to that second million dollars because the compounding is just multiplied. And so yeah, the sacrifice and the delayed gratification is always going to come at The front of that. And if you're going to get anywhere in life, you're going to have to learn to do that. And I like that you pointed that out, that it's not just financial. And being in higher education, I see very, very disciplined students and that's what they're doing to get their education is they're delaying that gratification and sacrificing a great deal oftentimes to get the education, particularly those who are going on to graduate school and to those higher levels, put in something like 8 to 10 years before they even start earning. dollar or a penny. So they know how to do that. And we just need to help them, show them how they need to do that financially as well.

Yeah. They're not having that instant gratification of going out with friends. Instead, they're— maybe they realize that they're going to do that down the road. You know, they're studying or they're putting in that work at the front end, you know, so they can do that later. You know?

Exactly.

Exactly. Well, you certainly found your why. Tell us about finding your why and the path and the journey that you took to get to that discovery.

Yeah, so I think finding your why is really important to really push through. Like anything, you know, real estate can be tough, and so can life in general. So I think having a strong why, why you're putting in the work and why you're doing what you're doing, is going to be one of those factors that gets you through, you know. So for me, it was, you know, retiring my wife and setting up our future family, creating generational wealth so that our family will never have to worry about money. And so I could have that financial freedom later in life, you know, not necessarily reap the benefits right away, but have that down the road. So I think that was a strong why for me. You know, maybe a broker— I had talked to a couple brokers and they told me no, or I talked to a couple lenders and they may have said no, we can't finance this, or even a contractor could maybe fell out. But having that strong why, it's going to help you push you to the next call. When you get rejected, you have a lot thicker skin. Just another no closer to a yes. So I think when you have that why, you can really keep pushing yourself and really keep getting closer to your end goal.

And how did you come to that discovery that your why was your family?

It's kind of an internal self-talk. I think just asking myself that when things are going wrong, why am I doing this? And you make— you really have to think, sit back and reflect on why you're putting in the extra work and why you're making those extra moves and making those extra pushes. For me, it was just really thinking about why I was doing what I wanted to do. And some people meditate, some people pray. You know, I think those are all great ways to really help you discover yourself.

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Let's cover that exactly. Well, along the way, I mean, you just mentioned that there are hard knocks, there's rejections, and things that you have to push through, and your why is certainly there to help you to do that. How do you know when to keep pushing and when to change course and reposition the target and go at it a different way?

Yeah, that's a great question. You know, so me, I'll keep pushing until someone shuts me down or calls the police. You know what Grant Cardone, I think he said, keep calling until they call the police. It's a little extreme, but it kind of puts it into perspective. I think that's another reason why it's important to have those goals. And, you know, when you have those goals, something we didn't really talk about, but putting a time and date to those goals, I think is important too. You have a certain metric that you want to hit and you haven't hit it in the time and you've been doing all the right steps, then it might be time to reevaluate your goal or what your process is. Maybe the goal isn't wrong, but maybe what you're doing to get to the goal is wrong. So maybe your lag measures are not what you need to be doing. So I think putting a timestamp to that would be important in figuring out whether you're not on the right path or not. And for me, I knew I wanted real estate and then multifamily. I was very honed in on multifamily. You talked about the shiny penny. I made sure I didn't get the shiny penny syndrome. And I think that was helpful too. I might have been brought a flip house, maybe I could have made some good money on that. But it also would have took away my time for potential deals. So real estate creates more millionaires in the US than any other profession. You know, there's a million different ways you can make money in it. But I think getting super specific on, on how you want to do that is going to be super helpful.

Yes, absolutely. And we talked about staying the course and what have you. But if you're on the wrong course, your stubbornness is not going to Be your best friend there. And I think sometimes it's difficult when we're down in the trenches to really to know whether or not we're on the course that's the correct course or whether there is a course that could be better for us. And I think people, particularly people who are starting off with the single-family perspective and they just keep pushing and pushing and pushing and never look up to see that There could be a course that could be better that could actually get them to where they need to go a little bit faster. But that happens a lot of times in life, I think, particularly for us who are more stubborn than others there.

Yeah, I agree. I think, you know, like you said, look up and see, are you getting closer to your goal? You know, yes, it's important to put your head down and keep working, but you do need to look up and check yourself and check your goals. Are you getting closer to them? Are you You're spinning your wheels.

Yeah, exactly. Well, Brian, what do you have to offer our viewers and listeners, and how can they get in touch with you to get your offer?

So I have a free ebook on helping busy professionals diversify their wealth plan. You could get that at our website, wagerscapital.com/wealthplan. So it's just a small little PDF for your listeners to go through there. And I'm sure a lot of it, some of it they've already known before, but some of it can be a refresher too. You can reach out to me at brian@wagerscapital.com as well.

Very good. Well, Brian, share with us one of your most difficult setbacks in life and how did you come through that and what did you learn from that?

Yeah, I've definitely had some setbacks in life and I think making sure they don't last very long. I think one was when I first got invested in the stock market. I put a lot of money in GoPro. It was a company and their stock price went from $35 to $5. And I had no control over it. So I pivoted to the greatest thing that's happened to me, and that's real estate. So specifically multifamily real estate. I didn't sulk about it or anything. I just made an immediate action that I knew I was not going to stick around in the stock market or actively investing in the stock market. Yeah.

Unfortunately, I was looking into the stock market too, and I was actually just using play money to do so. But after, after several months of doing that, this is just not for me. I just might as well go out and bet my money on the horses. It seemed about the same to me. I mean, certainly there are people who've learned to work that, but it wasn't for me. Well, Brian, how are you putting your success as an investor and entrepreneur to work to create universal wellbeing and abundance for all beings?

That's something we're working on right now. We're giving back to the SPCA Foundation in our area, and I am actually working with one of my old high school teachers on setting up something for their entrepreneurial class and speaking with some of the young entrepreneurs on how to get started in creating their own businesses.

Well, excellent. Well, our last question is, imagine that you've come to the end of your life. And I ask this question because, not that I hope that this happens to you soon, but we never know when that is going to happen. It could happen tomorrow because life is just that uncertain. But imagine that you have come to the end of your life, and as you lay on your deathbed, what will you look back on with your greatest sense of joy, fulfillment, and satisfaction?

I think, you know, having a positive impact on my family and my close friends, you know, hoping that I inspired them to be the best versions of themselves. I think we all have it in us to be the best versions of ourselves, and I hope that I can inspire some people to be that.

Well, Brian, it has been a pleasure having you and delight getting to know you. Thank you so much for being on the program today.

Yeah, appreciate you having me. Thanks again.

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