GI138: Acquiring Over 400 Units While Working a Fulltime W2 with Brian Wagers

GI138: Acquiring Over 400 Units While Working a Fulltime W2 with Brian Wagers

Brian Wager is today’s guest on the podcast. Brian started off with a single-family rental acquisition and was cash flowing monthly with a $450 mortgage and $900 in rent. However, he felt that he could be doing more and decided to then get into multi-family rentals. He chose the value-add multifamily strategy and Brian, along with his wife, would drive around different areas, look for value-add properties, contact the owner and ultimately make an offer. While Brian Wager relied on bank loans and loans from friends for his first acquisitions, he found his niche with seller financing. Seller financing worked for Brian because it allowed him to avoid banks and friends while the owner was able to receive a higher price for their property. Additionally, the seller didn’t see this arrangement as high risk because they were well acquainted with the property and how it performs. Typically, Brian would payoff the seller in a few years after he had completed his value-add strategy and refinanced the property. Brian’s company; Wagers Capital, is based in Arkansas where he now focuses on acquiring 100+ unit multifamily properties.

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Transcript:

Announcer:
Welcome to the Global Investors Podcast, a show that focuses on helping foreign investors enter the lucrative US real estate market. Host, Charles Carillo, combined decades of real estate investing experience with a professional background in international banking to interview experts in all areas of US real estate investing. Now here’s your host, Charles Carillo.

Charles:
Welcome to another episode of the Global Investors Podcast; I’m your host Charles Carillo. Today we have Brian Wagers. Brian has acquired a total of 350+ rental units, valued at over $14 million while also working fulltime as a logistics manager for a Fortune 500 company. So thank you so much for being on the show, Brian.

Brian:
Hey, thanks for having me Charles.

Charles:
So give us a little bit about your background. You’re buying all this real estate you’re working full time, so let us know kind of how you what happened prior to getting involved in investing in real estate.

Brian:
Yeah, absolutely. Thanks for having me first off and yeah, those numbers are a little bit, oh, we’re at 447 doors now here at the, since the start of the year, but yeah, I got started about four and a half years ago with a single family purchase. That was my first kind of foray into real estate, you know, altogether, you know, a lot of people, I think it’s a lot of people’s first step as a, as a single family purchase before they get into multifamily and, and that’s where I started.

Charles:
Nice. Okay. And so why did you choose real estate? I mean, you’re buying as a single family. Why did you choose real estate as an investment field of something you do on the side while you’re working full time?

Brian:
Yeah, so I, I had been working full time for, you know, by of three and a half years and I was really doing well for myself and I wanted to make my money work for me and everything led me to either stocks or the stock market or real estate. And I actually dove into the stock market at first and I lost quite a bit of money on company called GoPro. I spent they were doing up and coming and they decided not to get into, I guess, drones or something. Some sort of decision really tanked their stock. And I lost you know, about a thousand dollars overnight. And I had like no control over. Yeah, no control over it. So I, I knew stocks really wasn’t what I wanted to do. I was, I was spending a lot of time watching it, but really I didn’t have any control over that.

Brian:
So everything led me over to real estate and, you know, I was listening to bigger pockets and going to a couple seminars and reading books and just started looking for houses under a hundred thousand dollars in my area and dove in on a little single family rental. You know, the, the mortgage was four 50 and I had it rented out for nine 50, nice and E everything was going great, but it was just going to be too slow to be, get really where I wanted, you know, it there was no nightmare tenants or anything like that. There was nothing wrong with a property, but to get really where I wanted to grow exponentially, it was gonna take too long with, with a single family and everything I had read. And everyone that I spoke to people in the Reno, they had wished they had started in multifamily, you know, sooner than they had.

Brian:
And I, I didn’t really wanna delay. So I just started looking for multifamily properties just a, a few months after I had that house rented out. And, you know, I think I had the confidence of being able to, that I actually did a deal all by myself, you know, when I was talking to brokers and talking to lenders and talking to even potential investors at the time. So I found a 12 unit right after that. And then from there that, I guess I, I got that 12 unit one year after I got the single family. Nice. And from there, you know, grew to the portfolio we have today. How’d you

Charles:
Acquire tell us about that 12 the 12 unit how’d you acquire it? Yeah,

Brian:
The, the 12 unit, it was actually on the market. So I just sent up some notifications. There was it was actually on the market. And it, I reached out to the broker. I ran the numbers that I had learned how to do. And it had once I had finally convinced a family friend to best with me. They were a, they were a big proponent of single family, but I showed ’em the numbers and everything, and worst case scenario, best case scenario for the, for the 12 unit. And when I had finally convinced them, the 12 unit had fallen off the market, but I had stayed in touch with the broker. And about two weeks later I had re-listed on the, his website, but not on, on the market. And wow, I was there ready to close before anyone else, you know, got to it. The previous offers person finance fell through. So we were there to scoop it

Charles:
At. And how did you finance that with conventional, like local bank financing?

Brian:
Yeah, conventional local bank financing. I family friend actually lent me $125,000 loan. And I, it was actually just a a primary. It was before I really knew a lot about the syndication model and knew about any sort of model. I, I told him I would give him 10% and I would pay him back, you know yearly. And he was good with that. He was making like 8% on his houses and it was a quick return for him. And so he financed a down payment and then the local bank finance, the rest of the purchase.

Charles:
Awesome. That’s a great way of hacking it and getting into it. And did you self-manage that you were, I imagine you were self managing your single family. I,

Brian:
I self-managed a single family. But I did not. I, I got into profess, you know, that was one of the reasons why I wanted to get into multifamily because of that level of, you know, professional property management. It wasn’t, you know, the a hundred unit ideal for, you know, most property managers, but this property manager had a lot of other units in the area. So, you know, he had units across, it was a local property management company and they were very familiar with the property in the area. So they were able to get in there. The previous owner actually managed it himself. And we were able to get rinse up quite a, you know, do some exterior renovations into your renovations, new parking lot. And we were able to get rinse up pretty quickly there. Yeah.

Charles:
That’s great that you had a local property manager. I’m a big proponent of that because they know the area better than probably you knew the area. I mean, they knew they had properties around it. So obviously if someone wanted to rent in that area, they have a lot more units, they can show ’em. But the other flip side of that is they’re in the neighborhood pretty often, you know, there’s gonna be handy, men fixing a toilet across the street, you have your property there. And so it’s not like they’re 30, 40 minutes away and never see your property unless there’s an issue, you know, so exactly. But that’s awesome. That’s great. So how did you go from 12 unit? Did you start how did you scale to your next property? What was your next property after them? Yeah,

Brian:
So, so at the time, you know, like we were writing letters to owners my wife and I actually, she wasn’t my wife at the time. She was my girlfriend, then fiance, then, then wife. But she would drive her around and drive me around the areas that we were looking at. And I would write down addresses of, of properties that looked that I could kind of tell, were owner operated, you know, maybe the grass was growing, maybe the exterior needed new paint kind of wrote down addresses of more distressed apartment complexes. Cuz that was gonna be my strategy. It still is my strategy going after, you know, value, add properties. And we found a 20 unit someone, someone got back with us and he was actually willing to sell or finance a down payment. So he, oh, nice. He seller finance that I actually have done two seller finance team deals two 20 units. Those were my next two deals were, were two 20 units that I used took advantage of seller financing on those off market from, you know, driving for dollars on that.

Charles:
How did you structure those deals? Did you get like 15, 10% down and then you financed the rest or?

Brian:
Yeah. So the first one I, I did both of ’em did 20% they sell, they carried back 20% and the local banks carried the other 80%. Not all banks will do the seller carry back. But a lot of local local banks are more flexible with that, you know, so I just made a list of all the local banks and called them and, you know, asked them, you know, gave them an idea of what I was doing and showed them my numbers on how it would work. And I found a couple that were willing to do the seller carryback and I, I structured it with the seller. I would just pay them. It was it was $500 a month. I was going to pay them back and then I was gonna give them 7% interest on their 7% annual interest, not compounding interest, but annual interest. And that I would have a balloon payment in three years when I refinance a property, but both properties I refind after one year I was able to, you know, implement everything pretty quickly. So I was able to get the sellers out, you know, within a year of owning those.

Charles:
Yeah. And you probably got debt a lot lower than 7%. So it worked out for everybody.

Brian:
Exactly. Yeah.

Charles:
That’s awesome. Yeah. The local banks have done the same thing is I call around, especially when you have smaller properties and when you’re dealing with these local banks and credit unions, you know, they have a small investment committee, you know what I mean? And that they might actually, the person you’re working with at the bank might drive by that property every day and they might know the area as well. Just like your property manager does really well. And they know that with you show them you over your 12 unit and your one unit and all this other stuff that you have going on, that you’ve done. It gives you a great track recorder and that’s where you’re gonna find it. If you go to a big bank, you don’t care, you know, they’re not, they have a set parameters of what they’re working with. You know,

Brian:
It’s a, I think it’s a Testament too multifamily too, when, you know, they, they get business ideas, given them all all the time. But when local banks sees that, you know, a hard asset, like a multifamily apartment complex that they know is in the area and you know, they, they’re not really as worried about, you know, getting the keys back, you know, per se for something like that, they, they know that multifamily is a strong asset class and they’re pretty protected just by that apartment building. So I think, you know, know seeing how flexible local banks can be with terms on multifamilies is a Testament to the, you know, risk profile of a, of a multifamily investment.

Charles:
Yeah. It’s definitely something that you’ll always get a call back on when you call to a bank. You know what I mean? They’re interested in hearing about it. How did you just one last thing on the sourcing of the funds, when do you, when you started building these relationships or look looking for these relationships, was it when you had like a deal with an executed letter of intent or was it something that was actually under contract or you were just like, Hey, maybe if I find this I’ll need a bank and I’m just gonna like just cold call now and get some people lined up.

Brian:
Yeah. So for the banks I got started when, when I first knew that I was gonna get into multifamily before where I had any deals, I, I just called all 10, you know, all 10 to 12 local banks and gave them an idea of what I was doing and try to get in touch with the commercial lending department and who, who the point of contact would be. And like you said, you know, when you say apartment complex is their ears, you know, kind of perk up. So as far as investors go, that’s something I just have done recently in the past year, you know, get on podcasts like yours and start telling people more about what I’ve been doing. Before I have a deal, you know, the, the first couple years it was find a deal, then try to reach out to family and friends in my own pocket, you know, after I had a deal, but now it’s a continual letting people know about the benefits of real estate, opposed to the stock market or any other sort of investment vehicle and, and diversifying there. So at, at when I first got started, it was find a deal running the numbers and then, you know, talk to investors. And now it’s, it’s a kind of continual process, you know, doing both at the same time. Yeah.

Charles:
You gotta keep all the plates spinning when you’re finding deals and finding investors because especially when you’re getting into larger deals. So what is your current investment strategy and criteria over 400 units now? What are you looking at? How have you define your markets and why do you like those markets and,

Brian:
Yeah, so not quite, you know, driving for dollars anymore now with, with the smaller stuff, but it was a great start. You know, now we are looking for I, I still look at the 20 to a hundred unit properties. But if I’m going to be doing that, it’s gonna have to be in my backyard, which my backyard’s inventory is only so big. So which is Northwest Arkansas, we’re headquartered here which is Walmart’s headquartered here, Tyson JB hunt, some, some large players in our area, but I’ve started to look at Tulsa, Oklahoma a market it’s only about an hour and a half here. I have a property manager that’s in place there also looking at Oklahoma city, Oklahoma and Dallas, Texas submarkets anywhere in Texas is good. You know, everyone has their eye on Texas with, with the influx, especially now, you know, you’re in Florida.

Brian:
So you’ve seen the influx of people come into of states like Florida and Texas a lot of growth there. So I keep an eye out on those markets as well. You know, now that I have more investors looking to invest with me passively. So as far as criteria goes value, add apartments, anything out of this market, I try to go for a hundred units up some sort of value add component. Doesn’t have to be, you know, it’s a heavy value add that I, I had started with, you know, whether it be property property management implementation and then try to look for anything 8% cash on cash return and then anything, you know, try to get close to the 20% average annual turn, you know, 15 to 20% I think is a good target, but you know, 20% really makes people happy.

Charles:
Yeah, no, that’s a, it’s definitely a fantastic return. So you were wearing a lot of hats earlier in your career with real estate. I mean, what is your role at your company now? What do you focus on daily? It sounds like you’re more on raising money. Are you also working on sourcing deals?

Brian:
Yeah, so in the beginning I was doing a lot of, of finding deals. And then, you know, I kind of pivoted more now that I have the experience of finding deals, underwriting deals and E even managing deals. I have started to focus more on raising money and partnering up with other people that are finding these larger deals that are more boots on the ground in markets like Texas, you know, Dallas and Houston and Oklahoma city. And those markets that I talked about. I was my goal when I first got into real date, you know, a lot of people try to retire. My goal is actually to retire my wife. So she is now retired from work and, and she works on, on the business and creating the website, putting out social media information and, and taking talking to investor and managing our, our investor portfolio there. So that was kind of the goal there to get her more involved with the business.

Charles:
Right. Yeah. That’s awesome. So it’s great that you guys are able to split roles like that. How did you manage everything now? Your full-time. So how do you structure your day, your week and being able to work full-time and it sounds like a very busy professional sales position while also buying hundreds of multifamily units. Yeah.

Brian:
So you definitely have, I mean, if, if you’re wanting to do it full time and something else, you have to sacrifice, you know, so me it’s, I, I definitely sacrifice my social life, which is fine, you know, for me, I, I, I don’t go out or anything like that anymore. I, I work in the evenings and in the mornings I get up at 4:00 AM every day. And I’m working most weekends too. So yeah, I, I, I try to work after work and weekends and mornings and, and lunch and lunch breaks as well.

Charles:
Yeah. Awesome. I wanna just as we’re like going through here, I had a couple questions more about the seller financing. Cause as I’m thinking about it, yeah. This is a great way. And it’s, it’s very, I mean, we have a lot of people come on the show and they’re getting traditional financing or conventional, let’s say from banks or from agency debt, Fannie, Fred max, stuff like this. And but let’s talk more about like how, when you were finding these self storage, cause I really want kind of drill down or not self storage when you’re finding these properties that are doing or financing, how did you bring up seller financing? Was it something that, how, how did you build rapport first and then you brought it up, were you finding out what they needed and then you brought it up? I imagine it was always something in the back of your mind that you wanted to ask ’em, but

Brian:
Yeah, it doesn’t hurt to ask because it, it really can be advantageous to the seller depending on what their goal is. So my first, you know, question is why are they selling, you know, if they needed to deploy a bunch of capital into something else, or they’re just tired of managing properties, you know, so these, these guys that I was buying from, they were just, it was more the latter. They were, they were tired of managing properties. I had the conversation with them, you know, I think I can get closer or, or even more high, higher purchase price. If you allow that seller financing with me, being able to keep more equity in the deal, you’ll be able to defer some, you won’t have to report all your capital gains at once. So it’s actually tax advantage for the seller to carry back some sort of seller financing.

Brian:
So they don’t have to have a huge tax bill on that, that, that lump that they would’ve got. Also, I asked them if they would be interested in keeping in some sort of cash, you know, while they work on getting putting that capital U to use. So I, all my deals, I had them keep some sort of cash flow coming in just to hold them. And, and I let ’em know, you know, if I don’t pay, if I, my payment stop, you’re protected, you get the property back, you know, everything that I’ve paid you up into that point, you know, you still have your property. But you’ll have, plus the income that you were gotten, you had gotten from me. Yeah. That’s very, so it was really a couple different, you know, avid advantages for them.

Charles:
Did you, when you were structuring out the deal, did you come up with this? Cause this is very interesting. Usually I imagine they didn’t owe anything on the property, so it wasn’t like a rap mortgage. It was something, a straight seller financing. That’s how you were able to do this. And the bank took the first position I imagine. And then they took the second position, cuz I, I doubt the bank would want to do such a large second position if that’s even possible. But did you come up with the strategy? Like did you structure it like in the, I, when you gave it to ’em and was like, Hey, this is what we can do. I imagine you already had like some sort of verbal communication and confirmation.

Brian:
Yeah. I would give it to them in the LOI and just put ’em how, how the payments would work, what the interests annual interests looked like when they would get their, their money back by, which, for me, I, I told ’em three years at least, you know, with a balloon payment due at three years, but I, like I said, I did it in one year, but in the LOI I had it in there. What their annual interest rate was gonna be, what kind of monthly payments I would give them in the meantime. And then when they would get the full 20% back. Nice.

Charles:
So when, when I’ve done like seller financing or I brought this up to people before to you know, to sellers and you outline in the yellowy exactly how you want to do it and you’re going through all these different benefits to them. Now, when you’re the benefits, I think most people see that aren’t involved with real estate. Oh, I can get in for like 0% down or low down payment, which make it it’s true. You know, you can get in for a lower down payment and a hot real estate market. Like this is probably not as easy to do that. And you might lose great deals because you don’t have any money or don’t wanna put money down. But how, like how, what other benefits do you find? And I find another one is that you can get rid of a lot of junk fees as another benefit. What other benefits do you find that with working with seller financing versus just going to traditional 75% loan of value 25% down.

Brian:
Yeah. And also it’s something that you made me think of. I, I would give them two offers. I would give them a traditional offer and a seller financing offer. So I didn’t necessarily lose them, but usually the seller financing offer would be a little bit more attractive to them. I would have a higher purchase price tied to that, you know, if they were able to do that, but you know, with the seller financing, you’re just dealing, you know, the seller is basically the investors. So you’re only dealing with one person that you’re having to manage as far as distributions go to, to the seller on that part. And then, you know, you, you’re getting a lot more equity, so yeah. It’s, it’s on all the equity is coming back to you.

Charles:
Yeah. It’s funny how that works because if you talk to a seller, they have all different types of requirements. Some of them before I’ve told me you know, 10, 15 percents down, some say, listen, I need 25% down and they have all their number one goal. And then they have kind of, as you talk to ’em it’s number one, then it’s number two. And then you find out, oh wow. What I really thought was gonna be a big selling point or something I could do, they don’t even care about. So it’s or it’s not really super important. So that’s, that’s very, very interesting. I always say like, you know, when you’re dealing with the seller financing, my thinking is that it’s really, I would pay another 5% almost on top of a deal for getting seller financing because you’re avoiding a prepayment penalty.

Charles:
You’re avoiding all the points and everybody, you have to pay off of the bank really to generate the mortgage, which is amazing. You know what I mean? So at the end of the day, and with the easy under of writing cuz it’s gonna be a completely different underwriting procedure from what they’re doing to you because with them already owning the property, my thinking is that you know, they already know how this, this property performs. They’re very comfortable with it. I mean, they’ve probably had it for decades, so I just, it’s such a great thing for them to hold it on compared to, if you just brought someone a property and was like, Hey gimme money. And this is property over here that you’ve never been to. And you can finance it to me. So it’s, it’s such a great, such a great avenue. It’s awesome that you’re able to structure it like that.

Brian:
Yeah, absolutely. There’s de there’s definitely a bunch of different ways to do it. And I think finding out why they’re selling it is, is a big key to help it go through.

Charles:
So what are some common mistakes you see with, with other real estate investors, whether it’s new or existing investors in this market cycle or any portion of it?

Brian:
I think I, I think new investors, it’s typically they start asking questions before they’ve looked up the, they, I think they, people try to ask questions before they’ve done any work, you know, so I, I would suggest try, find the answer yourself before you’ve you, you start trying to ask someone that’s experienced or anything like that. You know, a lot of people ask me how to get started you know, newer investors and, and they haven’t necessarily even read a book or listened to a podcast like yours or listened to all the, you know, as many as they, they can cuz a lot of those, you know, those questions are, they can be answered with, you know, doing some research themselves. And when you dive into the research, I think you’re gonna be able to have some more, you, you can start thinking of scenarios that maybe get you a deeper que you know, might bring you more value to ask an experienced person. And I think another thing that I wish as far as getting started, I wish I would’ve wore the multiple hats at at first, you know, I was super focused on finding deals in the beginning, but I wasn’t as focused at telling people what I was doing and, and raising money. So I think it’s good to do everything simultaneously. You know, I, I was all about finding deals, putting deals together. And now I do everything at the same time.

Charles:
Yeah. That’s awesome. Yeah. So you, you kind of have an idea of how everything works. It’s much easier to bring on team members when you have an idea of how these different parts work. So like if you’ve ever done, you know, you’ve you’ve done some property management yourself before now, you know, what issues you dealt with, even if it was on the smaller property, when a larger property, you understand what kind of issues could happen and how you rectify ’em and seeing how your property manager works with them. And, and it lets you allows you to be, I think, better at asset management when you’ve done some of the property management yourself as well.

Brian:
And I think that made me more comfortable too, starting to ask, you know, before it was just my own money and family money. And now I’m kind of expanding, you know, now I’ve got more experience and I can say that I’ve done it. And you know, it’s, it’s definitely a level of comfort and comfort confidence and, and taking other people’s money and helping them grow that money. You know, now that I’ve done, you know, all these deals so far, so it’s, it’s a good, good to have that experience. And also, you know, my end goal is to be completely, to be a passive, you know, I’m actively investing now, so I can be a passive investor too, at some point, you know, invest with and someone else’s syndication.

Charles:
Yeah. No, that’s, that’s an awesome goal to have. So what do you think are the main factors that have contributed to your success?

Brian:
I think not giving up, you know, sacrificing, you know, it, it’s gonna take some, you can’t just keep doing what you’re you’re doing to and expect the same results. So you know, being 10 to anxious you know, not giving up when you hear the first broker say, no, not giving up when you hear the first lender say no, or the first investor say no, you know, keep, keep on trying and keep on going and try to always be learning. You know, I feel like I’m always learning every day talking to people like you and talking to other people in this space. I think it’s good to genuinely grow and not try to think that you’ve already gotta figure it out.

Charles:
Yeah. Especially in real estate, as it changes so fast where people’s tactics and how people are making deals work and returns come changes where we are in the market cycle and changes every cycle. So how can our listeners learn more about you and your business, Brian?

Brian:
Yeah. So, so you can email me directly, Brian B R I a N wagers capital.com. We have YouTube channel and we have a website wagers capital.com. So reach out to me on any of those

Charles:
Avenues. Awesome, Brian. Well, I will put all those links in the show notes and I wanna thank you so much for coming on today and sharing all your wisdom with our listeners. I imagine they picked up a number of nuggets that they can now instill into their life and looking forward to connecting with you in the near future.

Brian:
All Right. Thanks Charles.

Charles:
Hi guys! It’s Charles from the Global Investors Podcast. I hope you enjoyed the show. If you’re interested in get involved with real estate, but you don’t know where to begin, set up a free 30 minute strategy call with me at schedulecharles.com. That’s schedulecharles.com. Thank you.

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Nothing in this episode should be considered specific, personal or professional advice. Any investment opportunities mentioned on this podcast are limited to accredited investors. Any investments will only be made with proper disclosure, subscription documentation, and are subject to all applicable laws. Please consult an appropriate tax legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of Syndication Superstar, LLC, exclusively.

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About Brian Wagers

Brian Wagers is President & CEO of Wagers Capital, an integrated real estate investment firm which he founded in 2017. WC operates on several platforms, directly managing active syndications for the acquisition of multi-family in growing markets in Northwest Arkansas and surrounding markets.

Brian has acquired a total of 447+ rental units, valued at over $14M, since moving to NWA and seeing its incredible potential in 2015. He brings a focused dedication to the oversight of the portfolio, leveraging his local knowledge and relationships to execute our strategy.

Brian is also a logistics manager for a Fortune 500 company, where he is the top broker in NWA and top 10 in his region. Brian earned his BA in Economics from the University of Kentucky. He lives in Rogers, AR, with his wife and two dogs.

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