Sponsored Episode: Passive Income & Real Estate Investing with Wayne Courreges III

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Good afternoon guys and welcome to the Financial Freedom Podcast. I'm really delighted about today's guest, Wayne Courageous. He's coming from College Station and he's going to talk to us all about his work with CRE Partners, Real estate Investments. And for the audience, the doctor, lawyer, dentist, high income, high net worth, professional looking to grow their wealth, protect their wealth, generate income, passive income, save taxes, generate generational wealth. Wayne's the guy, so I'm really happy to have him on and pick his brains. Welcome.

Hey, thanks Chris for having me on. I really appreciate it.

Talk about your journey and how you got to be doing CREI Partners.

Yeah, so I've been in commercial real estate or real estate in general over the last 20 years. I went into the Marine Corps in 2007, which is really where I started my journey and bought my first single family rental in. I said 2007. In 2003, excuse me, 2004, I bought my first single family rental. You Speed up to 2007, I joined CBRE where I worked with them for about 16 years, heavily focused on commercial investments. On the asset management side. While working though with CBRE, I started CREI partners in 2019 and we have been scaling mostly, I would say 80% multi family, 100 to 150 units. And then we've been doing storage developments, a little bit of hotel and multi use type developments.

Yeah, interesting. Yeah. And we'll. So we'll dive into it. That looks like one thing is talk about your client avatar who comes to work with you, invest with you. What distinguishes you from all the other investment firms out there?

I just really try to be me. Very transparent, open communication we get. Most of our investors actually come through word of mouth and other investors telling the their experiences about us. I think for a lot of people, they come into real estate having gone and Trying to be active investors when they are other professions, backgrounds and other expertise. I think for us, like for me, I don't know anything other than real estate. Like I don't when I go places like it's real estate. I've done it for my entire career and, and that's what I love. I have a friend who's asked what would you do if you had all the money in the world and it would be real estate? Like I just, it is what I do. It's what I love and my passion and that actually really matters. Chris because not all real estate goes well. There's ups and downs and if you're not enjoying real estate to begin with and you're having to go through rough Cs like you're not going to be on your A game and perform. And so I've learned grit and a lot of that comes through enjoying good ups and downs. But we also, most of our investors are accredited investors. We have a lot of high net worth individuals with doctors, attorneys, engineers and others but and a lot of entrepreneurs. I can't forget the business owners the like their passive income.

Yeah. And the these clients the portion what proportion are just. They just want to set it and forget it just basically diversify have a hard asset versus like passive income or maybe leave it for their legacy or save taxes or is it a mix of all of the above?

A really great question. So we I've noticed there's two really types of investors. There's the cash flow investor and then there's equity upside and maybe there's a third where it's like they want to see both. And most people that invest with us and this is just what I've noticed is nobody really hates their day job. That's a big thing out there. Like most people actually like what they do and they went to school for it. They have a passion for helping people like in the medical field or I don't meet a lot of people that absolutely hate what they do where they expect this passive income to give them this freedom that they most people like myself, like we are I'm gonna do real estate because I love it. And most people go to the office and help people in whatever form because they love it but they want that cash flow. But more so that those investors want the equity upside. So they want the cash flow 4 to 7% or so which is not crazy sexy numbers but over a five year period that average annual return could be 20 to 25%. What we've seen because in the equity Upside is our investors participate obviously in that profit. Then you also have investors who are more heavily on the equity upside. So there's risk and I always do a, you have your value stocks and your growth stocks. You think about that way similar real estate growth stocks being development and we've got 20% of our portfolio development. That's ultimately the biggest value add. Right. The raw land developing but it's also the highest risk. But in order to get that highest risk you also have the highest return potential.

Right.

And you're comfortable with that. And then you've got your cash flow investors who or you know they want to buy an existing multi family partner with us. They want that cash flow and they want that equity upside. It's a different risk profile. So it just depends on where people are in their career and their risk tolerance at that time. But it ranges which is why we do heavily on cash flowing day one assets which is the bulk of our portfolio and then we'll have the more opportunistic investments like development.

Interesting. Yeah. I was thinking if a client is investing with you, obviously they're, they're doing very well and I, I, I take it that not very many of them hate their, hate what they're doing. The next question I have for you is you mentioned your investment strategy. Talk about what is your distinguishing strategy and also where are you is it I know you're based in Bryan, Texas and or are you throughout the country or just specific locales? Talk about that.

Yeah. So our main investment strategy is multifamily. We have doubled down on multifamily. There's been a lot of people that have gone to other asset classes and I always think of these people like herd mentality. And I have cows on my land and the cows go like they hear noise or like they know that like I'm bringing them like cattle cubes. They all come right. And it's like I see that with like people going into car washes and ATMs and all this other stuff. It's what is shiny today or what's going to feed them some adrenaline or dopamine for the moment. And I'm like guys like multifamily historically is the high returns, low risk. There are going to be moments of highs and lows. That's in any investment no matter what it is there's going to be moments of cycles. Right. That's just part of any investment. But and so I've been really blessed with finding opportunities with multi family with fixed rate debt loan assumptions, seller financing. We've been really getting some great opportunities on the multifamily side because a lot of people are going to wherever the herd has taken them. So that's, that's been really our investment. It's doubling down and focusing and also being an expert in a certain asset class. Like I'm not doing five or six different like heavily multi family and then we're doing, we. I have this RV boat storage that I think has been fantastic. We can talk about that if you want from a multi family. It's 1980s or newer 100 plus units. It's defined in our Texas triangle. So we are lead sponsors. So we take on the full asset management. We don't partner with other groups as capital partners, so we bring in our own capital. We, we partner with other people to join our team. But we have on our team portfolio managers, asset manager who oversees property management and runs that day to day leadership for our properties. Which is another way a distinguishment of our business is we are so hands on, not just we don't raise capital and help a little bit and go out like we are the lead, lead sponsors.

Yeah, interesting. Yeah. Look, I'm looking at your portfolio and looks like you've got Huntsville, Houston, Texas. What one thing I curious to ask you is just the lay of the land. I know recently like in since 2022 or 23 with this kind of the Fed, how are, how have you managed and then also what are your thoughts going forward Because Trump is trying to sabotage Powell and trying to get the rates lower so people can buy more housing. So what are your thoughts on that?

I think a lot of people don't realize that the real estate interest rates don't really tie to the Fed rate it's based on. So once we started to take away the smoke and mirrors of what like reality is when the like I do have a construction loan that's tied to the prime rate and that prime rate is tied to the Fed rate. Right. I have one loan like that and so yeah, every time they go down 25 basis points I'm happy because that loan literally goes down 25 basis points. But most of all of our other loans is tied to 10 year treasuries and 10 year treasuries fixed at a time. So you're really buying in. Like when you buy a property, you close on a property, it's that moment in time, that rate. So it doesn't really matter what's going on during the hold period because we buy fixed rate. All of our properties are fixed rate. We don't have any bridge debt or any variable rates. That's a way that we reduce our risk. I don't have to worry about what's going on. And the Twitter world or tweets or X whatever you call it now or like geopolitically or a war across the seas, everything is fixed rate and it's very local to, to our, wherever we're living. And as far as what's going on politically, if we want to go that route, it's 100% depreciation is back. And so that's a huge win. And so when you have these investors and we have a lot of doctors who 1 million, 2 million, they put investments and they're getting great cash flow. And then every year we send a K1, we have a group cost segregation. And then we maximize and leverage all that depreciation. And so we maximize paper losses. And those paper losses offset passive income, passive losses offset passive income. And there's there, there is positives on that front. But I think what everything going on with Powell and Fed rate, it doesn't really impact actually what we see boots on the ground because it's all tied to Treasuries and bond. It's more do we feel confident in the market? What does the world feel confident? And that's when we get in the bond market and the Treasuries and yeah, that's what's really going to impact us.

Yeah. I was listening to a podcast recently and they were just talking about how the two and the 10 years and then I think Besset was talking about how like this idea of the Fed is just antiquated and obsolete and they got inflation wrong. They said transitory and then they jacked up the rates like super high and just, and they just like he just, he was criticizing them. That was. Which was really interesting.

I do think it should, the politics should stay out of the Fed. I think it needs to be separate. And I do think based on where we were at high inflation and the amount of money and I think Covid look right or wrong, like I'm pretty conservative, but I can also say a lot of money was put in a short amount of time during COVID And so for us to have a soft landing, and I would say this has been a pretty soft landing. Like, I think overall, whether you're right on the right side of that or whoever, it doesn't matter. It just a lot of this is just politics. And again, smoking mirrors. Yeah.

Interesting. Next question I have for you is talk about just Your, your, your portfolio and your history, your wins, some of your successes.

Yeah, absolutely. I always appreciate you allowing me to talk through that. We started off doing a development in Lafayette, Louisiana. It was a builder rent community that was going to be a 98 single family home. And the last couple years we've built 65 of those homes and finishing the remaining homes this year. And so that one's been staying. That was again going back to cash flow or equity upside investor. It was heavily equity upside. That was raw land that we were to develop. Our Huntsville, Alabama location, we have a retail center and a storage and we partner with a close friend of ours there on, on those they have cash flow day one and provide a great passive income and paper losses in the form of depreciation. And so those have done well. In Houston we most recently bought a property that was a loan assumption. So that was a 3.82% fixed rate loan that had five years remaining. And so in essence the seller was look. So they were more focused on bigger properties. This was 128 units. And so we went in and took over that loan which was great cash flow and deal for our investors. Another property prior to that was seller finance. 6% fixed rate. Part of that there was a property we bought in 2022. That property has aged me a thousand years. It has been tough. It's not all roses and rainbows. We modified that loan and we're in much better position. But going into if every, if you're batting 100 on everything or people are telling you like they're batting 100, dig in, there's probably a problem child there or something's happening. But from an investor outside looking in and why investors have gone and told other people. So we were been very transparent. We modified the loan. We got into better days. Like we didn't put our head under a pillow. The marine and me fought. We're always like going through. But that has always been a challenge. But and then. And Brian we developed a 72 unit storage facility that's 62% leased in the last year which is fantastic because storage typically takes about three years to get to that point. And then. And we just bought a property in San Antonio and that was fixed rate debt. We bought it at $3 million less than the seller bought it last year. Imagine that like huge discount. And the reason on that is that seller, the lender for that seller called all their loans. So they had multiple loans with it with the, with that lender. Sad for those, for that seller and those investors. But great Opportunity for us to come in and buy great value real estate. So majority and I'm knocking on wood, Chris. Like we've worked really hard to have a successful portfolio and even the one black eye that we've work through it lives to another day. That's it's just part of this real estate. It's not all easy but we do like to focus more on the wins than the black eye.

Yeah, really fascinating. And then one, I guess one question from the way around. Six, seven minutes, the live stream. What, what brought you to Brian? Is it the community, the development or.

Oh goodness. So lifestyle. So I grew up in Austin and mentioned Marine Corps. It took me around. It was in Washington D.C. houston when I got out of the Marine Corps we lived in Bee Cave, Texas outside Austin. So near Lakeway and California. Money was coming in and I'm a real estate guy. And so we, we sold our house for crazy stupid money for cash and leased back our home for three months while our kids finished school. And we're were like we can't, we don't want to live in Austin anymore. We want to go out to the country. And so what we did, we came to Brian and bought 20 acres. And in Texas there's the ag exemption. So if you have some cows on your land, you don't pay taxes on all 20 acres. Like I pay taxes on my one acre that my house sits on and have it fenced and then the other 19 is mowed by my cows. They provide tax benefits and they provide free mowing. So yeah, that's a big reason. It's just that we love being out there and my parents still live in Austin. Like this week past weekend we went there and so my brother and my parents, so it's close enough to be near family but far enough where we can just have silence and enjoy country living. And I was not impacted with the egg price hike because we had our own chickens. So there are some benefits of living in the middle of nowhere.

Yeah. And it's a great college town as well.

Yeah, this town's, it's massively growing and we're part of that growth. Like we're developing, we've developed storage but we also have 150 unit multi family development that will be starting this year in 2025. And then we have a hotel which is going to be a Spring Hill Suites. It's all part of this development off Highway 6 here. And then there will be an office retail component as well. So we're part of that growth here in Brian. And excited, you know, just continue seeing it grow because it is geographically for those that may not know, it's right center in the Texas triangle. So you're between the Dallas, Austin and Houston growth and just all the growth happening in the Texas triangle, like this area is posed for a lot of growth. I will say that's another reason why we moved to this area is just being center to all the different cities where we purchase properties.

Final question for you is what are your the terms? Like how much, what are your minimums and holding periods, etc.

Yeah, so we do it based on. We have three primary investment classes. One typically is 250,000 minimum, but it's a 10% with no upside. So those are the cash flow investors. They want, they put in 250,000 and they get 25,000 per year. Typically they'll do say a million and they'll get 100,000 of passive income per year. It's structured as equity, which is great because you get to benefit from the K1 depreciation. It's not structured as debt. So that's a huge benefit there. Then we have another class of investor that's 100,000, typically an 8% preferred return, which means if year one you don't hit 8%, maybe we're at 4 or 5% that that the other 3% or 4% accrues to the following year. And I like that for investors because it makes sure that they're paid in full before the sponsor's paid. So I like that model. And it's an 8020 split. So when the profits are split, 80% goes to the passive investor, 20% goes to the sponsor or myself and our partners. And then lastly is a $50,000 minimum investment. That's a class C investment and that's typically a 7% Prof. With a 75, 25. So we've split it in three, just so that way it fits different people's comfort. And whether they're cash flow or they're more of the equity upside type investor.

How can people contact you, connect with you and reach out to you?

Yeah, so I think my biggest thing is education. I think people listening into this podcast want education. Creipartners.com is our website, but if you go to passiveinvestorcoaching.com in passiveinvestorcoaching.com that is a free like 5 hour plus content of videos of how to underwrite a deal, how to look at a sponsor, what things to ask for in an investment for those that put in time up front and learn as much as they can about passive investing. And again, there's there's no cost, there's no commitment, there's nothing. It's just my way of providing value. But while doing that, you do get into our email sequence every couple weeks and there's CAL link where we can connect as well. But education is important, so hopefully you and the all the investors out there check out passiveinvestorcoaching.com I put a lot of time to hopefully provide a lot of value to the audience.

Excellent. Thanks so much for coming on and talking about your journey and your work with CREI Partners. And keep up the great work.

Thanks, Chris. I appreciate you having me on today. Okay.