ITF 44 | Buy-And-Hold

 

If you’re in it for the long haul, it’s possible to be financially independent through real estate even without being an aggressive investor!

Wayne Loux first discovered FI in high school. But in college, he learned more about buy-and-hold, started crunching the numbers, and got licensed in 2007. He and his college roommate-turned-business partner house hacked their first property (before house hacking was even a thing!), and they have worked on several properties since then. Now, he has 12 doors under his belt and 4 more deals in the works!

In today’s show, Wayne talks about that very first house hack, how they closed and then renovated it. He also explains some of the financing strategies he utilized for his other properties, offering advice for people who are interested in buy-and-hold.

Listen to the podcast here


 

An OG House Hacker In Jersey With Wayne Loux

What’s up, Z Money?

Not a lot. I am living it up. We are in Estes Park, housesitting a $1.5 million house enjoying the views and the luxury life without having to pay for it.

What is this housesitting that you do? What is that?

I use an app called Trusted Housesitters, and my way of house hacking is that I go and stay in people’s homes for free to watch their pets, but then I go and rent my place out on Airbnb so I’m getting paid that way, which would be way more than if somebody was paying me $40 a night to stay with their pets. We make $250 or something from renting out our place. We love doing that and the thing that we do is because we have an app with a lot of options. We are picky about where we say. We are only staying in homes that are exciting and luxurious. Anything better than where we live, so it is pretty nice.

I know a lot of people do that. It is helpful for traveling. It is amazing stuff. Speaking of amazing stuff, we have got a pretty cool guest, Wayne Loux, which is a great name for a real estate agent, but he is also an investor and a guy who is a little bit further along in his journey. Like a lot of us, he started back in 2007, which is interesting, but it is neat seeing the forest through the trees. If there was one sentence or one catchphrase that describes this episode is, “To see the forest through the trees.” It is because that is exactly what he did and he is crushing it now.

I love that you can see a zoom out of the long game. He was not super aggressive. He was not buying multiple places every year. He had a lot of space in time in between each investment. This is over 13 or 14 years but you can see how maybe even in ten, you can become financially independent and if you are more aggressive, five. It is great to see that it is possible to even without a solid plan.

You don’t need to think ten years ahead of time. Think about, “Let’s make the next move.” Let’s buy this property and you know that in 10 to 15 years, it will most likely work out. Let’s bring him on the show.

Wayne Loux, welcome to the show. How are you doing?

I’m great. How are you, guys?

I am doing good. We were making fun of you because anytime you see OUX, you assume that X is silent but you throw us a curveball that the O is silent.

I get that a lot.

I’m sure who would have thought there would be so many different ways to pronounce four. Why don’t you tell us a little bit about how you discovered financial independence and what year that was? Let’s go for a ride on your journey.

I was probably introduced to financial independence from somebody that my mother knew years ago when I was in high school. I saw them. They went from two multifamily properties to building their own new primary residence, and it was probably one of the best houses in the neighborhood at that time. I said, “That is interesting. That is how you do it.” From college, I ended up meeting my landlord in person because he owned a liquor store in town at Rutgers University. He is a well-known guy. He had several investment properties, and I would be the only guy dropping off rent checks to him, instead of sending them in the mail or giving him cash.

I got to talking to him about his day and he said that he takes inventory from 9:00 to 10:00, and he goes home and spends the rest of the day with his family. I was like, “That sounds interesting.” We dove deep into how many investment properties he had and it was mostly college rentals. I started crunching the numbers on everything that he owned or at least the ones that I was living in with a couple of buddies and I said, “He is making a killing.” I got my real estate license from my junior and senior years in college. I started selling that and I bought my first place in my senior year. I started at Rutgers University.

It is awesome that you were able to get that at such a young age. What year was that?

Unfortunately, it was 2007.

Perfect timing. In 2007, you’ve got your real estate license and you’ve got to learn about this juicy thing called real estate investing.

It is the upside and the quick downside.

The cards that you drew. It looks like you have got a nice office there. Tell me what happened after 2007 and 2008.

That was the first investment property. We had planned to live on the one side of a two-family. It needed a lot of work so we renovated it to our style. We were broke college kids so we went on Craigslist and bought kitchen cabinets from somebody who was demoing their old kitchen. We did everything that we could to get the place ready for us to move in. We started seeing that we could probably make a couple of bucks from the rental market at the end of it. We said we had no problem moving back with family and friends or whatever. We ended up renting it out and that next year, we decided to buy an investment property in Pennsylvania. That same buddy of mine and I bought it together.

You keep saying we. Who is this?

He’s a college roommate of mine and one of my best buddies. We’re still business partners and we have a couple of places together. He and I bought that place with the intention of moving in together after college.

College rentals are big money makers but are quite difficult. College students are not the easiest clients to handle. Click To Tweet

Let’s dive into that first one real quick and that is the for-real deal, the deal that makes you a real estate investor. You had a partner on this deal who was your college buddy. This is an interesting story, because how do you get in college when you are broke and don’t have any money? Do you guys create an LLC? What did that whole structure look like? What did that deal look like?

We were complete rookies. He had a good 9:00 to 5:00 job with Apple while at school, so the loan was going through him. I signed a promissory note to be a business partner with him. We didn’t form an LLC at that time. We did pretty much everything backward. We were literally fumbling our way through the first investment. We still have it. It is a pretty good cashflowing property and he and I went on to buy some other properties together.

Can you dive into the numbers of the deal, how much you bought it for what you put down? Do you remember all those details?

We bought it unfortunately in 2007, so it was a total fixer-upper. It was $265,000 and we bought it with an FHA loan with a minimal 3.5% down.

That is $265,000 for this duplex and 3.5% down, so that is roughly $10,000 or so out-of-pocket after closing costs and all that. You were living on one side. What were you renting the other side for?

It was $1,250. It happened to be a Section 8 tenant that we acquired when we bought the property, so it was offsetting our living expenses quite a bit, but we had probably about 4 to 6 months’ worth of renovations because we were doing it ourselves, and the second floor needed a ton of work.

That was on your unit. At this time, it is $1,260 for every unit rent. What was your mortgage payment?

It was probably right around $2,100 or something like that. It was not that bad.

You are paying about $800 to live there and you have got this huge renovation ahead of you. Can you talk a little bit about what type of renovation you did?

It was flooring, kitchen and bath. We had to replace a water heater. It was mostly cosmetic for the most part. We made the mistake of doing it ourselves, which took extra time when we were both working jobs and doing it on the weekends pretty much.

I hear you say that that is a mistake, but do you think that you would have been able to do it at all if you didn’t do it yourself? It sounds like you have had to scrap it together.

At that time, if we had to pay anybody, we would have been way over our heads up. We had to tie up our boots and go to work because we are working, but we did not make a lot of money out of college, so we had to do it.

That is not really a mistake. It got you going. Maybe you are like, “I won’t do that again.” That was the learning there.

I wish I had said that but I definitely made a mistake multiple times after that. I have worked on several properties since but I have gotten better.

I’m sure you learned a whole lot and I bet you that the whole project first allowed you to also be able to talk the talk with contractors. Maybe you learn how to throw some floors in and do whatever but more than that a bit, you know how to talk the talk so then you are not getting screwed over by contractors later. How did you feel more comfortable with that?

We were 20 or 21, right around that age, talking to contractors who have been in the business for 20 to 30 years. You quickly learned who to trust and who to negotiate with and it was definitely a learning experience. I say it was a bad one but, to be honest with you, it was well worth it.

I’m curious about what happened next. In the next year, the recession hits. I don’t know how soon you started to feel it in your market. Normally, if you have a cashflowing property and you are not trying to sell it, it does not affect you, but I know that in 2008, rents did go down in certain markets, which is rare. How was that for you guys? Having a Section 8 person sometimes can insulate that because they are paid by the government.

Having the Section 8 tenant paying, at that point, they were covering about 80%, and it is something high so that helped us out drastically. Both of us continued to work and we decided to rent out the upstairs. We were only maybe cashflowing $150 to $200 if that. We had a lot of trouble with tenants moving in and out. It is definitely a learning experience with becoming a landlord and self-managing but it was a good one.

You’ve got to learn the ins and outs of being a property manager, being a landlord, and finding good tenants. In 2008, there was a change in the real estate market in the country but New Jersey surprisingly held its own for the most part by being so close to the city. The town that we bought in does have train access to Manhattan, so that certainly helped.

On this deal, you said that you also hold this property. You’re cashflowing a couple of hundred dollars at a time, even through the Great Recession. That is the great thing about cashflowing rental properties. Even when the market goes down, you are able to at least hold on even if that value has plummeted from $265,000 to $150,000 or whatever. At least you are able to hold. My question is, we are over ten years past then. Do you know what that property value is now?

Anywhere between $379,000 up to $400,000. We have seen a huge bump over that area and the rents have drastically changed too. We are still holding on. We refinanced and the cashflow is pretty decent for us. It is about $1,200 a month cashflow so we are holding that that is going to be a buy-and-hold forever. It is definitely going to be one of our portfolio pieces.

That is the power of real estate. We have said this countless times where you’ve got to be able to see the forest and the trees, and that is a perfect example of seeing the forest and the trees. It is $200 a month. No one is jumping on a bed for $200 a month especially during a Great Recession or whatever. Being able to hold on for 10 to 12 years and now you’re getting $1,200 a month, that’s where real estate starts to get sexy.

ITF 44 | Buy-And-Hold
Buy-And-Hold: 3K loans turn out to be way more stressful and harder to do than it actually dissipated because there’s a lot of paperwork that needs to be filled out.

 

I hear you say it all the time, “To ride the waves and stuff like that.” We definitely saw the downside of the real estate market. It did handcuff us for a few years after that and looking back. It would have been the best time to buy a couple more properties. We bought a single-family home in 2008 or 2009 but then we stopped and we worried about our own primary residences and stuff. If we continue to invest with the mindset that we have now, forget about it. It would have been a totally different animal.

Tell us about that next deal. How did that happen knowing that everything was down? I imagine you guys were a little bit spooked.

In 2008, my sister had been going to college and said that there were no apartments up by where she was going to school in Pennsylvania. She said, “Would you consider buying a place for me and my girlfriends to live in?” She did all the homework for me. She ran around. She was either a sophomore or a junior and she found a pretty large 3,000 square foot home in a college town and said, “This would work for us if the numbers work for you. Let’s jump on it.”

We caught the market in the regard that they were still giving loans. We use this as a vacation home loan and that is how we were able to get it. We did borrow some private money from a family member for the down payment and we utilized his capital. We got a loan as a secondary vacation home and ended up renting it out, which was probably not the best idea.

Can you talk to us a little bit about a vacation home, and what are the upsides and maybe downsides of getting a vacation home loan?

I don’t know if they are still doing it right now. This vacation loan was allowing a 10% down payment back then, so we were able to put 10% down and we borrowed the money through a relative of my business partners, and that is pretty much it. It was 10% down and closing costs are pretty standard for Pennsylvania.

I can tell you that vacation loans still do exist as of May 2021. I’m doing one. I’m buying a place in Florida for the family. It is still 10% down. I’m not sure if I’m doing the down payment myself so I’m not sure if they are allowing gifts for down payments. That could be an error they may have missed.

Technically, for the vacation home loan, they want you to go use it as a vacation home for at least two weeks. The way some people have gotten around that is that they don’t rent it for two of the weeks of the year or whatever, but it is good if you intend to use it. It sounds like Craig’s family is going to use it. I did hear that they have restricted the amount of loans that they are doing. Fannie and Freddie are restricting that so they are a little harder to get, but you are probably going to be looking at a higher interest rate than normal. The 10% down usually makes the numbers work better.

My wife and I, where we are, are looking for a vacation home in Maui but Maui is a different animal. They require 30% as far as I know.

It depends on the unit. To have a great agent in Maui, I grew up there and I can help you. I have the best people.

Your first deal was one in New Jersey, in Rutgers. Your second deal is basically the same thing you did in Rutgers but in your sister’s college in Pennsylvania. All this was happening in 2007 and 2008 when the world was falling around us. How did you feel during that? How hard was it to pull the trigger on a property when everyone was saying stay away from real estate?

We were so young and naive that we dove right in and said, “We are going to make it work.” Looking back, it was a big learning experience but it didn’t scare me that much. I always had the mindset of buy and hold, trying to get that cashflow later on in life, even if it is not cashflowing right now, but that was the mindset that we went into.

Back then, we didn’t have that much guidance. We bought the first place because our landlord said, “Invest in real estate,” and that was that. Looking back now, being in real estate for many years, it’s like, “We probably should have shopped around. We probably could have done better deals,” but it is what it is.

Your landlord says, “Invest in real estate,” andso you did it. It is like a car salesman saying, “Buy a house. Buy a car,” so we did it. He knows something and you are able to go back and run the numbers and be like, “This guy is making probably hundreds or thousands of dollars a month on these rentals.” What happened after 2007, 2008, 2009 and you see how this thing starts to work? First off, did your sister’s property work out there? Did that work out well for you? Did you cashflow and all that?

That worked out well. It was cashflowing pretty decent for us. We went to grab our primary residences because, at that time, I was close to getting engaged with my now wife so we bought a two-family house which we also hacked. We lived in one unit and rented out the other. That was my primary residence. My buddy went on to move to Jersey City or Hoboken.

We had a house hack in 2010. It is a great property. We still have that one too. We rent that out. It has great cashflow now. After house hacking that property, my wife wanted a single-family home to grow a family, this and that, so we bought a single-family in 2014 or 2015. Since then, we have sold that and now, we are in a single-family house that has an ADU in the back of the property. We are house hacking again.

You are like the perennial house hackers. It is crazy house hacking before you even knew what house hacking was probably.

I didn’t learn about BP until about 2017 when a colleague of mine was like, “You are doing everything that BiggerPockets does and you have never heard of them?” She turned me on to them. She has been on the FI path for over five years. She turned me on to all the podcasts and all the books and everything.

BiggerPockets is a great resource. I’m sure you are reading BiggerPockets, but if you don’t, you have got to get on there. It is a tremendous resource for everybody.

I want to do a little bit of a recap. On that first property, you are making $200 to $300 cashflow. What were you doing on each property so we have a little bit of a following along in your story?

We had a joint account. We kept the cash in there and let it grow. It was not anything substantial. That dwindled whenever there was a capital expenditure. We had Hurricane Sandy rip the roof off and we thankfully got most of that covered. The contractor tried taking us for some money. That was definitely the best learning experience. We had so many different experiences with that first deal. We had a tenant who became a hoarder. It was a wild ride. Everything that real estate could throw at you, it has in that particular property.

One thing I will also point out is college rentals as much as they can be big moneymakers are difficult.

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We were at Rutgers when we bought our first place but it is not in a college town, the two families that we own.

I was going to go back to that and say now that property values and rents have gone up, do you still cater to college students? They are not the easiest clientele.

That is our Pennsylvania house. We are debating about throwing that on the market. It has seen a little bit of improvement up there. The college towns have been hit because of COVID.

We are in 2009 and 2010 with that second property. What happens after the second one? Also, how are you saving up for these down payments every year?

The 2010 purchase would be the third property that we picked up. That was a two-family and it was between my wife and I. We were dating at the time and she wanted to own. I said, “We are going to buy a two-family.” That was another FHA 3.5% down. We probably should have gone with the 203(k) route because we also needed some work on the property but we renovated it and moved in a month later, and lived there from 2010 to 2014 or 2015, something like that.

Can you explain what a 203(k) is for readers?

No problem. It is a renovation loan. It allows you to roll the renovation costs into your mortgage. At that time, they were at an interest rate a little higher. It was 5.5% if we wanted to go the 203(k) route, but we had to cash that in hand because my wife or girlfriend at that time were both working two jobs.

You did not end up going that 203(k) route.

We had the cash to renovate and it took about a month, then we were on the move. Both units were rented. One was rented and we were living in the other.

One thing I will say about the 203(k) loan when you hear about it, it sounds all amazing because you can lump the rehab costs into the loan but it turns out to be way more stressful and way harder to do than dissipated because there is a whole lot of paperwork that must be filled out. Contractors need to fill out and contractors hate paperwork.

In 2007, 2008, and 2009 when contractors were strapped for work, maybe you get them to do it but now everyone is so crazy busy, only the crappy ones are not busy. If you get someone that wants to pull up to go 2 or 3 paperwork, it probably means they are not good. Get a look into a little bit more if you can, fund rehab with your own money. I would highly recommend that.

You moved into this third property, your second house hack this time with, for all intents and purposes, your wife, and that you basically stayed there until you bought your single-family. What do the numbers look like on that one? Did you have to go through any convincing that needed to happen between you and your wife?

She originally wanted to do that townhome low maintenance but I said, “We could offset our living expenses by having somebody else paying basically a portion of our mortgage.” She was finally on board when she saw the numbers. It made sense on paper when I finally doped out how much the mortgage payment was going to be, what the rent was going to be and she was like, “That makes complete sense.” It took some convincing to also live below some people because it was not side-by-side multifamily. It was top and bottom. Other than that, it was great. We made good friends out of who we rented upstairs to. We are still close to this day.

I wanted to hear a little bit more about the numbers. Do you remember how it all shook out for that deal?

Believe it or not, that was another $265,000 purchase with 3.5% down? We did have to put probably about $30,000 worth of renovations into that property because we gutted basically the entire house. I’m pretty frugal with my renovations, and I did a lot of the work myself.

That is exactly what I was going to ask you. You do a lot of it yourself. Is that $265,000 a similar property in a similar neighborhood? Is that what the market has done over the course of those five years where it dipped and came back up and that is where it was?

Yeah, another Central New Jersey property. It was $265,000 back then. It is probably about $475,000 now and the rents are solid.

What were the numbers that convinced your wife? What was that mortgage payment? What was the rent that you rented it out for?

It was close to about $22,000 to $23,000 a month but we were getting about $1,400 or $1,500 in rent.

You were not cashflowing. I always wanted to reiterate this, too. It is fine to not cashflow a house hack. As long as you are offsetting your rental expense, you are coming out with a win and now you are able to hold on to this thing and build that wealth so many years later. That is an incredible thing. It is not forever because you had said that you are living in a single-family house and it is all swept up if you do need to help your significant other understand. You say, “It is not forever.” Anything to add there, Z?

If they went out and got the townhome that she wanted, they might have been paying $1,500 and rent with no offset. Seeing how you are getting part of it paid down subsidized, and all of that is easy to convince someone at least for a short time.

If you buy your single-family house, that is pretty traditional. Where did you take your real estate path from there? Are you buying them straight up with 25% down? What is the deal now?

ITF 44 | Buy-And-Hold
Shoe Dog: A Memoir by the Creator of NIKE

For our primary residence, we put 20% down. Since listening to all the podcasts and everything, I went on to buy other investment properties. I have another two-family down in South Jersey, Ocean County. I bought it through an auction website, Hubzu.com, and bought it in 2017. The numbers are pretty good. The purchase price was $242,000. I did have to put 20% or 25% down.

It was on an auction website. I always thought auctions had to go cash. Was that not the case?

They allowed financing for this. Hubzu has changed its procedures. This was 2017. Some deals do allow financing but most of them are cash now.

You are a good example of even though you were doing this before house hacking was a thing, but it is the whole idea of how you are house hacking for 5 to 7 or 10 years max and you graduate into this, “I can live by myself now and buy my own properties because I have got wealth through real estate.” You are probably doing well the way you make an active income so I love this whole story as it is going. I want to say that before I forget it. Z, is there anything you want to add to that?

He sold that single-family and now they live in a place with low maintenance. I’m wondering if you realize that it does hurt with no offset income.

It pained me to sign on the dotted line for the single-family house that didn’t have any rental aspect to it. It killed me. We bought it in 2014 or 2015. We spent about four years there. Unfortunately, our taxes were going up. We had our first son and we were expecting a second. I said, “We have got to move.” I finally convinced her to look into going back to some form of house hacking. We stumbled upon a property that was too good to be true.

Why don’t you take us through that too-good-to-be-true property? We have talked a lot about the traditional house hacking and we talked a little bit about even what you did with your sister and now you graduated into luxury house hacking.

This home was on the market on and off. The listing agent is pretty well known in the area that we wanted. It has a great school system and is close to my in-laws. It was listed for $750,000. The attractive thing, in my eyes, was there was a large detached garage in the back of the property that had an apartment in it. It was set so far back from the primary residence, the single-family home, that I said to my wife, “It is like our neighbors are paying for our taxes or whatever.”

She was like, “Let’s go see it. Let’s see how far it is from the home.” She walked through the single-family house and said, “This is amazing.” We loved the layout. Everything worked for us and for our family. I walked into the backyard and I didn’t have to see the inside of the garage and the apartment. I said, “It is a no-brainer.” We have been here for over a year. We closed on the first day, March 10th, 2020, which, not to be grotesque, but was the first death of COVID in New Jersey, which was crazy. Timing is everything.

I’m sure that must have been a little bit scary, especially if you were thinking about Airbnb-ing that ADU. Were you able to afford that mortgage payment by yourself if you could not get rented? What were your thoughts there?

The mortgage was less than the primary residence that we were living in that we sold. It was a couple of hundred bucks less, believe it or not. Anything that they brought was offsetting our mortgage so we were going to be cutting our living expenses or housing expenses by almost $1,000, if not more.

Was that because of the low-interest rates at the time? What was the main reason for that?

We closed on the house for $740,000 and we put 20% down. The interest rate was still pretty low and the rent was $1,470, so our mortgage was $3,950 and the rent was $1,470. Significantly less than what the single-family that we had in a different town was.

For those reading, when I hear your numbers, I’m like, “That sounds like a high monthly payment for that purchase price,” especially with the Denver properties and I’m suspecting that is because New Jersey taxes are ridiculous.

They are high. We are at $15,500.

That is nuts. I’m in a $500,000 house in the Denver suburbs. It is $2,500 a year and it is such a difference.

That is huge. It is a game-changer. I don’t even want to think about all the taxes I paid to the state of New Jersey for all the properties that I have. It will make me sick.

That is what gets you the training that year in your records, property, or whatever.

Have you thought with that in mind that you would sell some of these and 1031 into markets that have less taxes? I know that you said you want to buy something in Hawaii? Hawaii has one of the lowest tax rates in the US.

We have given it a thought of 1031-ing it into some other properties into some other areas. We have not dived into certain markets. My wife and I want to buy something in Maui for a vacation rental property or something that we are going to use when we can get out there. That is our long-term goal but my business partner, with the two properties that we have, we have thought about 1031-ing but we have not seen a certain area that entices us.

I’m curious, at this point, you have been an investor for many years to give people a little bit of scope. I know you have not been super aggressive. You are buying a house every couple of years but are you at a place where you can live off the cashflow that you are getting or is it still that you are working full-time and you see it as a vision for your retirement? What is your plan with your properties?

It has become a force that we want to get our cashflow to be something that is either going to offset. My wife has a W-2 and I have a W-2 and a 1099 job. I’m a little nuts. I’m a workaholic for the most part so I work a lot, but I would like to offset something, whether it is the W-2 or her W-2. We definitely are at that point where the cashflow is good enough where we are basically banking anything that we make. Our housing expenses are pretty much covered by our cashflow. She has no car payment and we have no debt. Now, it is all savings and that took place when we finally moved to this house hack.

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There is the power of real estate. If something were to happen at your W-2, your W-2s are never safe. The company can always go down, get fired or whatever. You are still feeling good with your cashflow and your 1099 work.

1099 has been phenomenal. I have been a real estate agent for over fifteen years that has been excellent in the state of New Jersey. My wife has a phenomenal job with the Board of Education. We are happy with those two jobs. The goal right now is to drop the W-2 for me in the mornings because it is not necessary at this point but it is almost a safety blanket to a certain degree because it is a steady income instead of 1099 but with real estate. It has been on fire.

Do you think you are going to have any trouble getting loans if you were to quit your W-2 job? Have you had any issues with that or is your 1099 good?

1099 is phenomenal. I don’t foresee any issues getting loans in the future. Being in the business for over fifteen years, I have worked with several lenders that would easily work with me again so it won’t be a problem.

That is a big risk when you leave the W-2. Give a quick recap again of your story. You started back in 2007 or 2008 when the world was melting but you were in college. Maybe your ignorance provided you value there and you got that first house hack while you were in college and not in a college town but while you were in college with your buddy. Your sister was like, “I saw you did that thing here. Can you do it over here?” That is when you got that for your second one. You were like, “This stuff does work.” You slowly grew that portfolio with you, your wife, and different people along the way. What does your portfolio look like if you were to catch the whole thing?

We have a total of twelve doors but we are clear to close on four more doors. We are going to have five 2-family, one 3-family, one single-family, and our primary residence.

With those twelve doors, you are pretty much able to live a pretty comfortable lifestyle passively.

I have not run the FI numbers for the heck of it but once we fully rent out those four doors that we are acquiring, I can probably scale back one of the jobs where it is like, “We can easily live off the rental income from all the doors.”

Have you paid off any of those rental properties or anything like that?

As of COVID, we went intense on paying off one of the two families. We paid $110,000 for seven months on one of them and we are down to about $70,000 on the one that is probably worth about $475,000.

If you refinance or whatever, you will get some more cashflow off that too. A little tip, I know a lot of people do the 30-year loan versus the 15-year loan. One of the strategies that I like to do, but I don’t do it myself, but if you were going to do it, is you get a 30-year loan and you pay it off as if it is a fifteen-year loan because then more of that money goes towards your principal then that weird split that they do. It is something to think about. Z, anything to add there?

It all depends on how people want to strategize. There are some people that never want to pay properties off and there are other people that want to have less properties and have them paid off. That is more on the financial independence side, less debt and concerns of anybody being able to take something away from you. It is figuring out what side you are on.

COVID definitely threw curveballs where we were like, if one property was paid off, we don’t care what happens because we are still going to try and work. We didn’t know if tenants were going to pay. Still to this day, the state of New Jersey is allowing tenants to not pay so things are a little crazy. If things did hit the fan, we wanted to have at least one property paid off. That’s the main goal of my wife. She is a little bit more worrisome, so she said, “Let’s get this thing taken care of.”

Sounds smart and it is to your goals. Wayne, any parting words of wisdom before we head over into the final four?

Start, get into the business and learn. You are going to fumble the ball. Pick it up and run with it. Just go. Get into real estate and try your best and try to find some niche within this industry because the rewards are definitely worth it.

You have got to get started. Z, are you ready to head into the Final Four?

Wayne, what are you reading right now?

I wrapped up Shoe Dog. That was a good book. My sister-in-law and brother-in-law work for Nike Corporate, so I was like, “Let me read this one.” It is a great business book.

That one has been mentioned a couple of times here. Honestly, that is one of those that slipped through the cracks for me. I have not gotten to pick it up, so I’m going to add that to my list so I will get to it. Wayne, what is the best piece of advice you have ever received?

Besides, “Pay yourself first,” I would say something my father used to tell me all the time. It is vulgar but he always said, “It doesn’t matter who the person is. They wipe their butts the same way you do.” For me, that always puts things into perspective. You could talk to anybody. Go up. They are humans like you. That is certainly helped me in business. It has helped me in meeting celebrities and stuff like that. It doesn’t matter. They are people like yourself.

What is your why? What keeps you going through all this?

To have that freedom. To go to Maui, whatever the hell I want. That is the goal. We have been making the point to get out of New Jersey every single year to get out there. I love my son. He traveled so much with us the first year of his life, and we had such a great time. I want that flexibility and that ability to pick up and go whenever we want. My second son was born in Cinco de Mayo in 2020, and we haven’t taken him anywhere, and it is killing us. We want to get out there and travel.

ITF 44 | Buy-And-Hold
Buy-And-Hold: The power of one property a year is incredible. You just save up for one and repeat that process every five or ten years, and you’re in a really good spot.

 

Do you feel like you are exercising that freedom? A lot of people talk about it and you said, “It is easy to get sucked into being a workaholic.” It is this idea of freedom but is it real?

The idea is fantastic, and being so involved in real estate and being my own property manager and self-managing, it is work. When I say I could pick up and leave, I probably have to put a couple of key people in certain roles in order to accomplish those goals. Down the road, if more properties are either paid off or I have a ton of cashflowing properties, you can start putting in different key people.

I appreciate your honesty.

Last question. If animals could talk, which would be the rudest?

Probably the hippos. They kill the most people. Let me think about the rudest animal. This is an awkward question.

We like to get the odd word out.

I destroyed this. Let’s say a monkey or a chimpanzee.

They sling poop.

That is what came to my mind when I said that. I was like, “They are jerks.”

Monkeys can be jerks. I was thinking a hippo could potentially be one because they sit there and don’t do anything.

They are floating in the water and yet they kill a lot of people.

They kill a lot of people by doing nothing. That is rude. Good answers. Where can people find out more about you?

Instagram, most likely. I have two handles. One is for my personal and real estate business, and the other one is more for my wife and our FI journey to get us out of New Jersey winters.

I don’t blame you. I grew up in Massachusetts, so our winters are similar. I like Maui winters a lot more.

Enjoy your time out there. It is unbelievable.

Thanks for coming on. We will chat soon.

Thanks, guys. I appreciate your time.

That was Wayne Loux. Z, what do you think of Wayne?

It was great. I love his story. I love how people make it through a recession and keep on moving on. I love that he continues to house hack after all these years. He realized that man having that extra income makes a big difference. It also shows the power of can you buy one property a year. You don’t have to be crazy but can you save up for one and repeat that process, and maybe in 5 to 10 years, you are in a good spot.

We didn’t ask him his exact age but he is already pretty comfortably financially independent living in a $750,000 home. It must be pretty nice with an additional dwelling unit. If you count that $1,500 a month that is getting an ADU, that is basically living in a $750,000 place for $500,000 or whatever it is. It is an interesting way. Honestly, I see myself getting to that level of house hacking and doing that for as long as possible. How about you?

I have always house hacked and I probably always will. Once you get used to living for free, it is hard to go and suck up paying for it. It is an addiction.

That is it for this episode. If you guys could, please leave a comment or rating review. We always love to see those coming in. It makes us know that we are talking to someone out there. We will see you all with another exciting episode.

 

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