October 30, 2024 • 44 mins
Jason and Rachel detail how they went from being worth more dead than alive, to surpassing $1M net worth in 5 years through real estate investing.
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Episode Transcript
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Jason Wagner (00:00):
Welcome back to another episode of the Real Life
Investing Podcast, with Jasonand Rachel Wagner Going into
something that we track on aregular basis, actually every
month.
It's our net worth and justkind of, why is it important to
track your net worth?
If I were to ask Rachel, do youhave any idea of what our net
(00:21):
worth is?
Before I said we should have anet worth conversation, would
you have had someacknowledgement of where we
stood?
Rachel Wagner (00:30):
No, no, I mean I would be able to figure out a
rough idea, I think, because Iunderstand how it works.
But no, I would not.
No, no, I'm pretty out of ourfinances.
Jason Wagner (00:44):
You're out of the finances.
Does that make you feelcomfortable, or is that?
Rachel Wagner (00:48):
It has taken me some time to feel comfortable
being out of the finances, and Idon't recommend that for
anybody.
I think people should probablybe partners in finances, but
this works for us for now, atthis stage of life.
Jason Wagner (01:00):
Do you want to explain, like what our finances
are kind of like, or yeah, Imean.
Rachel Wagner (01:05):
Well, we actually before we got married, when we
first started living together,we decided the easiest way for
us to split our bills 50 50would be to get a shared credit
card.
So anything that we boughttogether we put on the credit
card at the end of the month wesplit it 50 50.
And then all of our individualexpenses we did separately.
So then when we got married, itwas actually pretty easy to
combine everything because wewere already practicing like
(01:27):
that sort of flow.
But we combined our bankaccounts and everything.
We had full transparency intoeach other completely.
We were both working at thetime and we just put it all in
one big pot together and paidour bills together out of the
one big pot.
So it wasn't ever like a splitand that's been the continuous
(01:50):
practice.
And then you know, we each havehad our turn leaving the
paycheck life.
Mine's now, I think, extendedyears a little bit, but yeah,
yeah, yeah.
Jason Wagner (02:03):
No, you know, when we we got married, we both had
corporate w-2 jobs.
You know, I think I was at like60 grand a year, you were at
like 80 yeah you wereoutperforming me pretty nicely
yeah and you know, we, I oh yeah, it made a lot of sense.
(02:26):
Let's just combine.
I mean, we're married, let'sjust combine everything.
So I absorbed your debt, yourstudent loan debt.
Yeah, I was in a blessedposition where I didn't have to
take on any student loan debt,but we absorbed all of yours.
Yeah, and it's interesting, youtalk to some couples and
they're just like well, whyshould I have to pay for that if
(02:47):
it's not under my name, orthings like that?
And so they just continue tohave these split finances.
It seems to make things verycomplicated.
Rachel Wagner (03:00):
I didn't have the expectation that you should
have to share that student loandebt with me, but we also were
just very firm in the fact thatwe're getting married.
Everything is the same.
Jason Wagner (03:09):
Everything's ours.
Rachel Wagner (03:10):
Yeah, it's ours together as a whole.
Jason Wagner (03:14):
Just because you brought something a little
different to the table.
I mean, you also brought apension that you were able to
get from your employer, which isthe government, so you still
have some type of vestinginterest.
Rachel Wagner (03:25):
I have two, two, yeah, you have two types of
pensions.
Jason Wagner (03:28):
You know, should I marry you, you gotta get a
pension.
Rachel Wagner (03:31):
You got some student loan debt I had a lot of
student loan debt making goodmoney, yeah so I I had a lot of
debt, but I was also on a trackto like keep raising my income
yeah, yeah, yeah, yeah.
Jason Wagner (03:48):
So we started, we really started to.
You know, from the beginning Iwas always into excel and just
kind of tracking our finances,coming up with a budget, and
that budgeting process was justso, so imperative for us Because
as you decide to go from W-2life, salaried money's always
(04:11):
going to come in to.
All of a sudden you're now yourown boss and you've completely
given all that up.
You have to penny pinch and yougot to figure out where every
dollar goes.
Rachel Wagner (04:20):
Yeah, and we were doing that before we even got
married, I mean the first.
So we moved in together rightafter you graduated, which was
pretty early, and we had apretty cheap cost of living then
.
But like both of our salarieswere pretty low coming out of
graduation and I remember whenwe first moved to sign that
first apartment in davenport therent was like a thousand or
eleven hundred or something amonth.
(04:40):
Like that was a huge decisionfor us.
It was like can we actuallyjump our rent up that much and
afford that?
Jason Wagner (04:46):
Yeah, because we started an apartment that we
were paying what?
$650?
Rachel Wagner (04:52):
or $700?
Something like that.
Yeah, it was very low, yeah, soit was a big jump for us, yeah.
Jason Wagner (04:57):
It was a big deal yeah.
Yeah, it was a big deal.
Rachel Wagner (05:00):
So we've been budgeting the whole time, I
guess is my point.
Jason Wagner (05:03):
We've been budgeting since day one.
Yeah Right, and so it's notjust the budgeting part that I
think is really effective,because you get awareness into
where your spending is.
That's very obvious.
If you track it where everydollar is going and you compare
it well, how did I compare it tolast month or last year?
(05:24):
And you start doing that on aregular basis, obviously you get
more visibility into yourfinances, the better, and so I
just took it a step further, andthen we just tracked what our
net worth was.
And what is net worth.
Can you give me the definitionof net worth?
Do you know the formula?
Rachel Wagner (05:41):
Assets minus liabilities.
Jason Wagner (05:43):
Nice Wow.
Rachel Wagner (05:50):
Yeah, so it's an asset, something to value that
you own outright.
So cash is an asset yep, whatelse equity in a property?
So you can't count the fullvalue of the property because
you gotta less your liability onit.
Jason Wagner (06:01):
Obviously, obviously, 401ks, pensions, some
, some types of property stockstock yeah, yep, bonds, yep, Yep
, cool Yep, exactly.
So what's the liability?
Rachel Wagner (06:15):
Something you owe .
It's like a loan.
So student loans is a bigliability, a mortgage, a car
payment credit cards.
Um yeah.
Jason Wagner (06:25):
Yeah, and the obligated expense you have to
pay, pay back yeah.
So you take your assets minusyour liabilities.
Actually, just to clarify yourassets, you said for real estate
it's only equity.
That's really more of like thenet of the two.
Rachel Wagner (06:43):
Well, I guess, yeah, I guess that's already
doing the calculation.
So if you're doing a big wholepiece, you'd put the entire
value right, the value of theasset, and then minus your
mortgage.
Minus your mortgage, yeah, yep,the loan balances too.
That's a good clarification.
Jason Wagner (06:55):
Yeah, yeah.
So so if you live in, a,$500,000 goes into that comment
or into that column, for that'swhat I have in assets, and then,
well, but I owe 490.
Well, you really only have$10,000 into the house, right?
Rachel Wagner (07:11):
so yeah unless I just bought it right, you just
bought it exactly.
Jason Wagner (07:19):
Yeah, so, anyways.
So then you get down to yournet worth, which is basically
your assets minus yourliabilities, and you know when
you're first starting out as amarried couple.
And you know you're 25, 26,back in 2015,.
I guess that's what was our ageat 2015?
.
Rachel Wagner (07:33):
I think I was 27.
I think you were 26.
We had both just had ourbirthdays.
Jason Wagner (07:38):
Well, you got married in 2015,.
Right, so I was 25.
Rachel Wagner (07:41):
When we got married?
Yeah, oh, then I guess I was 26.
Are you sure?
Jason Wagner (07:44):
Oh yeah, Anyways, we can do the math.
Oh no, you're right, I was 26.
Rachel Wagner (07:50):
Yeah, I was going to say I'm pretty sure I was 27
.
All right, cool All right, goodmath.
Jason Wagner (07:54):
Okay, so I was 26.
You were, yeah, in 2016, whichisn't bad, because I had like 80
000 in student loan debt.
Yeah, yep, yep, in 2016.
(08:15):
So this is like when I left myjob, somehow we had a net worth
of 17 000.
Yeah, well, yeah it's verypossible that I was gambling in
the stock market during thattimeframe.
Rachel Wagner (08:26):
Well, you were.
Yeah, I had a.
I had a pretty significantraise, yeah, Yep.
Jason Wagner (08:33):
I lost my income but I'm pretty sure that I still
had.
I had some gambling earnings.
That was happening there inthat year.
Rachel Wagner (08:41):
Yeah, I mean higher earnings paid down some
debt.
Yeah, I mean I think we alsoprobably paid down like some
debt from the wedding yep, andthen in 2017 we went from.
Jason Wagner (08:53):
So in 2016 we were positive 17 grand, 2017 we went
negative negative 25 000.
Yeah, this is when, when Jasonreally lost his money in the
stock market, started buyinghouses.
Rachel Wagner (09:08):
Well, that was the first time he lost money in
the stock market.
Jason Wagner (09:11):
Yeah, when I had lost $40,000.
No, that was in 2018.
Rachel Wagner (09:15):
Oh, 2018 was when I lost Okay.
We're getting to that numberBecause it was my 30th birthday.
Yeah, okay.
Jason Wagner (09:19):
We're getting to that number.
My 30th birthday, so in 2017, Istarted flipping houses on the
south side of chicago and,whatever phase we were at then,
we had a negative twenty fivethousand dollars it's because we
were putting materials for thehouse on the zero interest
credit card loans yep, we werebeing a little bit more creative
(09:39):
in terms of how we were goingto finance that project.
Yeah, and.
And in which that drags downyour net worth, if you got to
owe all that for sure.
And depending on, like, thetiming of that sale and whatnot,
and so, anyways, yeah, so wewere.
Here's the joke that we alwaysused to make we're worth more
dead than alive.
Rachel Wagner (09:57):
Yeah.
Jason Wagner (09:58):
When you got a negative net worth of 25 grand
2018, okay, combined the big $4040 000 loss of money, I lost
that much money in one day.
Rachel Wagner (10:09):
yeah, dude, like that's, that's a problem he told
me the night of my 30thbirthday because we threw like
this big octoberfest party andwe were gonna have like an open
bar tab, which we did.
We did have an open bar tab,but you closed it, and you close
it kind of early and I was like, oh, come on, let's like just
keep it open for like another 30minutes or whatever.
And you just gave me this lookand you were like, no, we can't.
And I was like, oh, okay, whathappened?
(10:31):
We'll talk about it later.
You were so afraid to tell me.
Jason Wagner (10:37):
It's so funny I was just like oh okay, well,
don't do that again of yourdemise there you.
Rachel Wagner (10:45):
I handled it very well.
Jason Wagner (10:47):
I mean, I had shown you.
I'm like hey look, I'm doingquite well trading stocks.
Look, I can do this.
Rachel Wagner (10:52):
Oh yeah, you were so proud, I don't need to go
back to the corporate world.
Jason Wagner (10:54):
I'll just trade stocks, yeah.
Rachel Wagner (10:57):
And I did make a good amount of money and it was
all the money that you had madefrom your first house flip.
You put in the stock market,yeah, and then you lost it.
Jason Wagner (11:06):
Yeah, all In a day .
How about that?
It's like putting it on black.
Rachel Wagner (11:11):
Yeah, seems like a good idea.
40 grand in a day yeah, that'sbad, like you're an idiot.
Straight freaking idiot.
Jason Wagner (11:19):
Yeah, but I didn't say you were an idiot.
Somehow you were just like okay, don't do that again.
And I was like wow, she tookthat incredibly well.
Rachel Wagner (11:26):
Yeah, I mean we had no like when we talk about
this, like with our net worthand like being in the negative
or whatever.
Like we didn't have any kidsand we didn't have any plans to
start having kids at this stageof the game.
Like we were just trying tostart your business.
So like it was very understoodthat times were going to be hard
, we were going to be livingthin and this was the time to
(11:47):
make the mistakes.
And if we lost it all?
Jason Wagner (11:52):
we weren't really losing that much.
Yep, so Yep.
And then in 2019, everythingreally kind of turned around.
Here we bought another property.
This one ended up turning intoour first rental, where we had
bought a cheap condo in WickerPark.
We upgraded it.
We were originally going tosell it, but then we turned it
into a rental and so now we havea good amount of equity that's
(12:14):
in that property, because wekind of essentially flipped it
without selling it.
Now it's a cash flowingproperty for us.
And then at the same time, Iwas also starting to really get
into the sales side of thingsand selling homes, helping my
friends buy and sell real estateat that point mostly buyers at
that point.
So we went from a negative$34,000 in 2018 to 166 grand
(12:38):
positive 2019.
Rachel Wagner (12:40):
Well, we bought two properties that year because
we bought Sunnyside December of2019.
But Sunnyside right at the andthat was significant.
Jason Wagner (12:45):
Well, we bought two properties that year because
we bought Sunnyside December of2019.
But Sunnyside right at the endof December.
So that does certainly kind ofput a little piece in there.
But we were still leveraged onit because we did a 3.5% loan.
There's really not a whole lotthat's actually in there.
Rachel Wagner (12:58):
Yeah, but there's still some Sure Because it was
a huge value property.
Jason Wagner (13:02):
Yeah, yeah, yep.
And then 2020, we went from 166in 2019 to 317.
Wow, yeah.
Rachel Wagner (13:12):
So the income from Claremont continued and the
income from the multi-propertyreally started to blow in Well.
Jason Wagner (13:20):
The value of the property ended up going higher
because we increased one of thewe had to renovate.
We renovated one of the units,and this was the COVID era.
2020 is when we started to seehome values really start to take
off, and so we had twoproperties at that point, and in
(13:42):
2021, we bought our thirdproperty actually two properties
that year single family homeand then we did a partnership.
Rachel Wagner (13:49):
So this is when the real estate and this is when
the real estate really starts.
Jason Wagner (13:52):
Yeah, yeah, you really see an acceleration here,
which is really cool.
So in 2020, we ended with 317,in 2021.
Now we've got 576.
And we just kind of keep goinghere 2021 to 2022.
We really didn't add a whole.
Rachel Wagner (14:08):
There was there's a slight game, oh in 2022,.
Jason Wagner (14:11):
You left your job Okay 2021.
Rachel Wagner (14:13):
I left my job after Layla was born.
Jason Wagner (14:15):
So we kind of have more of a flattening, that's a
that's happening here 576 to 604in 2022.
And then in 2023 we go up to842 and then in 2024, we have
crossed the million dollar markand we are at 1.1 as and that
was in like may of 24 yeah, oh,excuse me, this is august.
(14:38):
This is now august 2024.
We crossed, we crossed themillion dollar mark in in may.
Yeah, after now, we own six,six properties.
Essentially, the secret here isit.
What's what's really funny islike if you, if you think about
any like bigger pocket stuff, um, which is real estate investing
, or anybody that's like intoreal estate investing, becoming
(14:59):
the millionaire is kind of likethe uh, that's the big target,
it's, it's it felt really goodto cross that mark because, if
you actually look at it, itdidn't take very long.
It went from in 2018, we werenegative $34,000 and now in 2024
, we're millionaires.
Rachel Wagner (15:17):
And we bought the first property that we held was
in 2019, so in five years.
Jason Wagner (15:21):
First, property we bought was in 2019, yeah yeah
so in five years, first propertywe bought was in 2019.
Yeah, yeah.
So yeah, in five.
In five years, we went fromessentially zero to 100 or to a
million in five years.
Yeah, like what and that's, butwhat's the secret here?
The secret is is not a secret,it's just buying real estate
(15:43):
yeah and finding ways to buyreal estate.
Buy at least one property everyyear, and that has always been
the goal.
If I could just buy oneproperty per year, I guess we
didn't buy one in 2020.
Rachel Wagner (15:55):
We bought two in 2019, nothing in 2020.
Two in 2021.
Very kind of technical.
Basically, we didn't move inuntil 2020 because it closed,
yeah, but we owned it yeah.
Jason Wagner (16:07):
Yeah, very technical here.
Rachel Wagner (16:10):
On average one a year.
Jason Wagner (16:11):
On average, we just bought one per year and
when you understand what'shappening with the market in
general we have low supply.
We bought when interest rateswere incredibly low.
We took extreme advantage ofthat and we continued to buy
even when we had interest ratesthat were high.
I mean, we bought a propertythis year and the interest rate
(16:33):
on it is 6.75.
We bought a property last yearwhich was our house, and we did
some tricks with the interestrates and whatnot, but we just
continued to buy and it was agood thing that we bought our
house when we did, because allof a sudden our real estate
market here in Arlington Heightshas allowed our.
Let's see what did we buy thisfor $765?
Rachel Wagner (16:55):
$765?
Jason Wagner (16:57):
$765.
Yep, you're right, $765.
In our neighbor's house Justsold for $840.
Rachel Wagner (17:04):
The exact same thing.
Jason Wagner (17:09):
Absolutely the exact same property, and it's a
good thing we bought last year,because now we've just
recognized that the market hasgone up that much.
Rachel Wagner (17:15):
Well, that's been true for every property.
Jason Wagner (17:17):
Yeah.
So the secret here is not thatwe just made a killing with you
know, our jobs or whatnot.
I mean, the secret is all theaccumulation of market
appreciation.
It's the fact that every monthour tenants pay down our
mortgage, every month ourtenants pay down our mortgage,
(17:40):
and that has just really grownthe net worth big time.
And so it's kind of fun to kindof like look at that because we
really don't have, you know, wedon't have a lot of stock
investments, or you know wedon't have these huge.
Rachel Wagner (17:54):
Don't contribute to 401ks or anything anymore.
Jason Wagner (17:58):
We do very little because we don't have a ton like
, like leftover.
You know, because my wholemindset has been like, well, if
I've got extra money here, I'mgoing to put it into another
deal.
And we kind of look at it aslike, well, one of these
properties could be our kid'scollege fund.
Just from the differencebetween the market value and the
(18:22):
loan amount over the next 18years, if we hold on to one of
these for that long, there'sgoing to be enough money for
college out of that.
So you start thinking about itfrom that perspective.
It's like shit.
Real estate's really powerful.
Rachel Wagner (18:39):
Yeah's really powerful yeah, yeah, yeah.
I mean obviously none of that'sliquid.
So yeah, you know I did rightand none of it.
Jason Wagner (18:46):
None of it's liquid and literally it could
all go away.
It could all go away if we had acrash in the market and we're
not going to have a crash onmarket, because I look at the
data very, very closely and likeI'm very confident in that and
I advise people that you shouldbe buying now because we're
still going to have a crash onthe market.
Because I look at the data very, very closely and like I'm very
confident in that and I advisepeople that you should be buying
now because we're still in alow inventory environment and
I'm going to continue to take myown advice and, you know, keep
trying to buy more properties ifI can, and you know.
(19:09):
Then it comes down to like thequestion is always like well,
how can I, jason, I don't havejob that I got all this extra
cash?
It's like well, then you got tofind people.
You got to find businesspartners, and that's exactly
what I did.
What we did is that we foundbusiness partners.
Well, what if the businesspartner doesn't have a lot of
cash?
Well, what could they do?
(19:29):
Could they be an owner-occupantin one of these multifamily
properties and then, all of asudden, house hack it, allowing
you to get a lower down paymentopportunity to buy that property
?
That's exactly what we didwhere we bought our house hack.
We only needed 3.5% down.
Then we partnered with anotherguy who was the house hacker and
we only needed 3.5% to buy thatproperty.
(19:49):
Then we partnered with anothercouple who were the house
hackers.
At the time.
We needed only 15% instead of a25% down that a regular
investor would need.
And so you find ways to do lowdown payment strategies.
We bought this house with only5% down.
We bought our last house withonly 5% down.
(20:11):
And so what are the low downpayment strategies?
How can I buy real estate everysingle year for the next 10
years?
To really set me up straight,you think about the low down
payment strategies, you thinkabout who's in your life that
you could partner with, and thenyou just do it.
I wrote a post when we did crossthat line, because I thought it
(20:32):
was very monumental for us.
Here's what I wrote, and thiswas in April 20th.
Actually is when we did it.
So this month, my wife and Iachieved millionaire net worth
status.
We did this at 34 and 35 yearsold, with two kids.
I'm the only one that works andmy wife stays home and manages
the household.
In 2016, I left my corporate jobto pursue a career in real
(20:54):
estate, had no idea what I wasdoing, but I had a strong desire
to learn and take a risk.
It is no secret that our networth took off because we found
ways to buy property everysingle year since 2016.
You can't buy property withoutmoney, though, but the secrets I
discovered was that we didn'tneed a lot of money to get
started, and we utilized lowdown payment strategies to get
(21:15):
our foot in the door.
I also realized that a salarywill never get me the result I
was seeking.
I needed to be in sales andearning money directly related
to the activities I was doing,with no cap on those earnings.
The combination of sales mixedwith buying one income producing
property every year is theblueprint to success.
(21:35):
Sales fuels investments.
Sales are short-term gains.
Investments are long-termwealth building tools.
So my advice one get a sales joband become a subject matter
expert.
So the reason I say get a salesjob is because you can have
unlimited income potential.
You can have really good years.
(21:57):
You can also have really badyears, but when you don't have a
cap on what you could earn,there's way more upside, way
more upside than a salary.
So that's my number one piece.
Two have one spouse, maintain aW-2 job while you become a
subject matter expert to helpyou qualify for loans.
(22:20):
Three buy income-producingproperty with low down payment
strategies.
Four once your sales pick up,reinvest that money into more
property.
Five have your spouse leavetheir job to assist in your
sales business or run thehousehold.
Six continue to sell and buyproperty until you don't have to
put so much focus on sellingbecause your investments have
(22:41):
gained in value and provide youwith income.
And finally, dedicate 10 yearsfor this result.
You might achieve it in.
I say eight, like we did, Iguess it had been eight years
since I had left my job by thetime we reached that millionaire
status.
And so I guess, back when I wasin April, when I was thinking
(23:02):
about that was that if you gotsomebody in the household who
has the ability to captureupside through their job, which
is through a sales environment,really leverage that.
At the same time you alsoreally need to qualify for loans
and the only way you can dothat is with W-2 earnings.
Even if you're both decent W-2earnings, you can really
(23:23):
leverage that too.
And maybe you find somebodywho's in a sales job who has
some extra cash and they mighthave a harder time qualifying
for loans because they're notW-2'd right.
They might be peer commissionedor 1099 contractor.
It makes it harder for somebodywho's self-employed to qualify
(23:43):
for loans.
So it's like, well, hey, we'vegot stable salaries, you have,
you know you make more money.
Or like, could we partner, wetake on the debt type thing?
You know you can work outarrangements.
Rachel Wagner (23:58):
So it's just finding people that are willing
to do some of that stuff did youlook back over the last five
years, or maybe even more thanthat, like when we were in the
the negative net worth area timeframe?
Is there anything you would dodifferently?
Jason Wagner (24:13):
I wouldn't have wasted I don't know, because I
feel like I wouldn't have gonein.
Like I don't advise people togo into the flipping stuff.
I tell people to go straight tothe house, hack stuff and then
kind of ease your way If you'vegot to update some things, like
it's a lot easier, a lot lessrisky to do that and you're
doing it in a building that youalready live in type thing, and
like it's just, it's just, it'sjust easier.
(24:39):
So yeah, I would, I would havetotally skipped the whole
flipping part of part of it.
But at the same time that was athat was a real crash course of
housing and real estate andlearning, construction and
contractors and, I'll be honest,majority of real estate agents
never even touch any of that.
They never touch any of that.
Rachel Wagner (24:56):
It's out of their ballpark yeah, I mean, that's
actually what's given you theskills and the resources and the
contacts it's yeah, gonethrough that experience, so it
made you a more valuable realestate yeah, and that's why it's
it's hard for me to say, oh, Iwouldn't have, I wouldn't have
done like.
Jason Wagner (25:10):
I don't advise people to do that.
Let's just put it that way Idon't advise people to do.
Would I have changed anythingthat I had done in the past?
I don't necessarily think so,because that that put really
hard shit on my shoulders andonce you realize that you can
get through the hard shit, thenit's like you can do anything.
And you know it just actuallymade things easier by going
(25:31):
through the really hard stuff.
But I don't advise people to doreally hard stuff like that.
Like stress yourself out, maxout your 0% interest credit
cards, go into the worst creditand net worth perspective ever
Like.
I would never advise anybody todo that.
That's terrible advice.
Rachel Wagner (25:47):
Yeah, that's the lowest I've ever seen you.
Jason Wagner (25:50):
Yeah.
Rachel Wagner (25:50):
Yeah.
Jason Wagner (25:51):
Yeah, that's terrible advice.
But when you think about theschool of hard knocks and like,
yeah, did I?
You know, did I kind of earnwhere we're at now?
Fuck yeah, I did, Fuck yeah.
Rachel Wagner (26:02):
Yeah, yeah, I agree.
Jason Wagner (26:04):
Yeah, so so it's cool to talk about and hopefully
it's inspirational because itdoesn't take that very that long
.
It just takes focus.
We're just average people,nothing special.
But if you live in America andyou understand that real estate
is the ticket to changeeverything in your life, you can
(26:27):
have a job, do whatever youwant.
You can be a plumber, be in thetrades, be a teacher.
Everybody has access to realestate.
People say that they don't,which is total lie.
Everybody has access.
You just don't know.
If you think you don't haveaccess, you just don't know the
right person.
And you can find the rightperson by Googling.
(26:51):
Where can I learn about realestate investing?
Where can I buy a book aboutreal estate investing?
And I can give you all kinds ofbooks.
Start with some of BrandonTurner's books.
They're so freaking great.
Rachel Wagner (27:03):
Oh, I thought you were going to say Rich Dad,
Poor Dad.
Jason Wagner (27:05):
Oh, Rich Dad, Poor Dad is a great mindset book.
Yeah, that is one of my bestand favorite.
I mean that changed it all forme.
Rich Dad, Poor Dad by RobertKiyosaki is like everybody needs
to read that book.
I should actually read that oneagain.
But Brandon Turner is like theKing at like making real estate
investing very simple, and he'sgot the what's called the
multifamily millionaire, which Ithink is a very tremendously
(27:26):
well-written book, and I highlyrecommend reading that one,
because he does.
I'm pretty sure he talks abouthouse hacking in there, but it
just like the simplicity of likewhat it means to buy a two flat
or two unit duplex, Like that'sall the same same terminology,
and so you can.
You can learn these things.
You just have to dedicate sometime to do it.
(27:49):
The problem is is that whenpeople get older in age, they
just they've got kids, they'vegot responsibilities.
They can't learn to reallyprioritize their time, and so
learning new skills like that ortaking risk is certainly a lot
harder the more mature you arein life.
We did this when we weremarried.
No kids.
Is it impossible for people todo it?
(28:11):
Who's married with kids?
Rachel Wagner (28:13):
Partially.
No kids.
I mean, we hadn't bought aproperty to live in until we had
Scarlett.
Oh, you're totally you'retotally right.
Jason Wagner (28:21):
You're totally right, we had.
We had in 2020, when what wasour net worth in 2020?
We had just bought twoproperties, or we had two
properties under our belt, andin 2020, we were worth 317 by
the end of that year, but priorto, because scarlet was born in
2019.
2019, oh shit.
Rachel Wagner (28:39):
Yeah, in 2019, okay yeah, so the year we bought
the first rental and then thedecember we bought the sunny
side property.
So yeah, we really we had onlydone flips, because when I was
pregnant with scarlet, you werestill in the hole, mad ada yeah,
all right.
Jason Wagner (28:56):
So you got no excuse, you got kids, whatever.
We still did it.
Rachel Wagner (28:59):
Yeah, I mean, I think I think there has to if
you have kids.
There's like a willingness.
I guess it depends on how youdo it, because you don't have to
house hack, but I think for usthere needed to be a willingness
to be a little bitinconvenienced and uncomfortable
for a while.
Right, cause we have we'vemoved with Scarlett three times,
right, and she's five.
So you know that was it washard and it was it was hard to
(29:25):
have, you know, all the babygear and all the baby stuff on
the third floor, right, you knowit's like when we I cause I
remember when we had theconversation about buying
Sunnyside it was like, well, wecould go buy like our first,
like traditionally, it makessense to just go buy your first
family home in the suburbs thatyou're going to live in for like
(29:46):
the next five years or whatever.
Right, and instead we werebuying a multifamily and it was
like okay, well, eventually wegot to get to that, right.
Jason Wagner (29:53):
So there's like this I know, and people looked
at us crazy.
Man, People looked at ustotally crazy.
It was like why would you buy?
Why would you buy an apartmentbuilding Like, yeah, and a
neighborhood we hadn't lived in?
Don't you need a yard?
Rachel Wagner (30:05):
from all of our friends Right.
And then we moved away fromeverybody, so it made everything
more complicated and yeah makecommute to work for me much more
difficult, and yeah, I mean itwas, it was worth it.
Jason Wagner (30:16):
Yeah, oh, of course, it was one year of
sacrifice.
It was a year and a half thatwe lived there for right, and
that's, that's the power ofthese, you know, these house
hacking strategies yeah, youonly have to live there for a
year because why?
what if?
If we didn't do that, we wouldhave had to buy that property
with 25% down?
(30:37):
There was no freaking chancethat would have ever happened.
We never, ever, had that kindof money ever, and we still
don't.
In terms of liquid cash, westill don't.
Putting 25% down on a propertyis not really possible.
Rachel Wagner (30:52):
Yeah, I don't even know what that is, but
Right.
Yeah.
Jason Wagner (30:56):
And that's just.
The reality is that if youdon't know about these lower
down payment strategies and howyou can utilize the people that
are in your network, Again, Ijust found a guy that I went to
high school with and told himabout my house hacking strategy
and said we could do the samething with you.
He was like all right, let's doit, and that has really worked
(31:19):
out.
Did the same thing with anothercouple.
Rachel Wagner (31:23):
Yeah, and the first guy you were talking about
he's already moved out of thatproperty too.
He was there for a year, andthen he moved out.
Jason Wagner (31:28):
Right, and it's just.
It sets you up.
It's one year, it's one year ofsacrifice.
So even if you do have kids,could you sacrifice your family
for one year to set you up?
Rachel Wagner (31:43):
Sacrifice your convenience, not your family.
Jason Wagner (31:45):
But yeah, thank you.
Yeah Right, sacrifice yourconvenience for one year you and
your family's convenience forone year to set you up, right.
Your kids will probably be veryupset about it at the time, but
you know, it's I don't know.
(32:07):
Here's the blueprint.
It's clearly been effective forus.
So when you know that this issomething that works, then you
know, and it's something youwant to go after, then there's
tons of resources out there foryou.
You know, and all it takes isjust education and spending time
to learn it.
So it's, it's not rocketscience, it's it's.
This is a great thing aboutreal estate and this is why so
(32:27):
many people get into it.
Is you can be an expert inwhatever field so many people
get into.
It is you can be an expert inwhatever field.
Real estate is always still verysimple.
It is like oh, there's a house,what could I buy that house for
?
What's going to be my monthlypayment?
What could I rent it for?
Let's factor in a few moreestimates for things breaking
every month.
Let's factor in an estimate forwell, if I don't have it leased
(32:50):
, I'm waiting for somebody torent it.
Let's factor in an estimate forwell, if I don't have it leased
.
I'm waiting for somebody torent it.
Let's factor in an estimate ofmight have to potentially
replace the furnace, some otherbig capital expenditure repairs.
And then what's it look like?
And is it cash flowing?
Great, we got a little bit morerent than all the expenses and
the mortgage Great.
If it's not, is it in anappreciated market that's
(33:15):
expected to go up in value inthe next five years?
That's a big one.
Let's not forget that everytime you do have somebody in
there and they're paying you,every month you're paying the
mortgage.
That mortgage balance getssmaller and smaller.
There's so many great thingsabout real estate and for us,
because we are real estateprofessionals, because I'm a
real estate agent and I don'tunderstand why majority of real
(33:39):
estate agents don't takeadvantage of this, but when
you're a real estateprofessional status, you can buy
a property.
You can then write off a lot ofthat property against your
earned income.
You don't pay a lot in taxes.
Now, there's a skill set there,right, there's a cost
segregation study that you haveto do on the property and then
you can take a big chunk of thatand offset a lot of your
(34:00):
earnings that you've had and allof a sudden, your tax liability
is much, much less thansomebody.
That's a W-2 person and that'skind of the cheat code, I guess,
but it's there in the tax law.
So anyways, long story short, Ithink the big takeaway here is
that real estate's the ticketyou got to get in.
If you buy one property peryear for the next 10 years, I
(34:24):
think that's going to do reallywell for you.
So and we're still on our wayon to that we are on year six,
19?
.
Rachel Wagner (34:33):
Year five.
Jason Wagner (34:34):
Year five.
Rachel Wagner (34:35):
Year five yeah.
Jason Wagner (34:38):
We're only at year five.
One, two, three, four, five.
Why do I count?
Rachel Wagner (34:42):
six bars here, because this is a year One, two,
three, four, five.
Jason Wagner (34:48):
I see Year five.
Yeah, you're five.
Yeah, all right, cool your bigtakeaway.
Rachel Wagner (34:58):
Yeah, I mean, I think you were right back when
we were having all these earlydiscussions about you leaving
your job and you going into realestate and look what it could
do for us, and now this is theticket and all those
conversations you were right,yeah, and I got sold by so many
gurus you did, you did and Ithink you know it's a good
(35:20):
nugget to say that you wouldn'trecommend getting into flipping
because I was.
Those are high stress, highstress, uh the thing is?
Jason Wagner (35:28):
the thing is is that the market is really good
for flippers right now.
Like we were in a very balancedmarket when we were doing it,
we were in a low inventoryenvironment.
It's actually pretty hard toscrew up a flip opportunity
right now.
If you underwrite it well, it'sjust more stress.
Rachel Wagner (35:44):
Yeah, it's a lot of work.
It's a lot of stress.
Jason Wagner (35:47):
And the biggest thing that just kind of went off
where I had the aha moment islike, dude, you put in so much
time and effort into doing oneof those flips, why the hell do
you sell it?
Why don't you just keep it?
You put in all that time andeffort, why would you sell it?
There's so many othercomponents too, because, like
flippers, you have to paycapital gains taxes on all that
(36:10):
stuff.
Rachel Wagner (36:11):
That's a really good point.
Jason Wagner (36:13):
When you're holding these properties, you're
only paying taxes on like thecashflow that you're earning per
the IRS and if you do it right,you get depreciation that you
get to basically offset it, likewhen you make $50,000 from
rental income.
It's not the same as making$50,000 from your W-2 job.
It is not even close to beingthe same, because I can take
(36:33):
that $50,000 that we justbrought in from rental income
and I've got all the expensesI've got.
Rachel Wagner (36:39):
Yeah, and that's what Rich Dad, poor Dad really
explains.
Well, I think, is thatdifference.
Jason Wagner (36:45):
Right and I've got all the expenses to write off
against it.
I've got the mortgage interest,I've got this thing called
depreciation, which is basicallytaking the property, saying
that it's only going to lastabout 27 and a half years and
coming up with a monthly figurethat you can write off against
(37:05):
any income that you have on thatproperty.
And then if you do this thingcalled a cost segregation
analysis and you are able to,instead of saying that the
kitchen sink is going to last 27and a half years, you know that
the kitchen sink is only goingto last five or seven years,
Well then you can acceleratethat depreciation much faster.
What Trump brought in, whereyou can take a lot of the lower
(37:37):
useful life items that are in aproperty and you could take it
all in year one as a major loss,this is where you can kind of
come up with $100,000 worth ofstuff can offset your income
because you could have that bigof a loss that you identify
through bonus depreciation.
Rachel Wagner (37:52):
Isn't Kamala Harris proposing an increase on
taxes for capital gains?
Jason Wagner (37:57):
I don't know, I don't know.
She brought up the unrealizedcapital gains and taxing
unrealized which is what?
Which is owning stocks, andjust because they've gone up 20%
but you haven't actually soldit and realize the gain in your
pocket, she's saying that youcould be taxed on that.
Rachel Wagner (38:21):
Right, that's right, that's right.
Jason Wagner (38:23):
No, I think there's stipulations on all like
, like and I don't.
I don't know all the rules andit might only affect people that
are like a million there's ormore.
I don't.
I don't want to misspeak, so Idon't quite know it.
Rachel Wagner (38:32):
Okay, yeah, I don't know, either there's
something there with the capitalgains tax, but I don't remember
.
Jason Wagner (38:38):
But yeah, she might be doing something with
the capital gains tax too.
So yeah, long story short,that's where you see $50,000 in
your W-2 job, because mostpeople they only bring home.
You know, if you bring in$50,000 a year, you know like
half of that goes to thegovernment.
So it's just a lot different.
(38:59):
So this is why buying incomeproducing properties is one of
the best things that you can doand why it's better than just
buying the stock market, becauseyou have these other components
that investments don't have.
Right, A stock isn't going toget you a tenant that's paying
down your loan balance.
That's like risk-free.
You got a tenant that's in yourproperty, they pay you rent
(39:22):
every single month and you arepaying down a portion of your
loan balance.
I actually have a stat here.
I'm pretty sure I do here.
How much in principal pay downdid we gain last year?
Just principal pay down,meaning we were able to write
down the balance $41,000.
Just last year, from tenantspaying our mortgage, we were
(39:46):
able to earn $41,000 in equitybecause the tenants paid us rent
.
It doesn't count the cash flow,it just says we paid the
mortgage, we took the money thatyou paid us each month and we
gave it to the bank and the bankwrote down the loan a little
bit less and in total, when youhave six properties one, two,
(40:07):
three, four, five, six, oh,seven, seven properties that was
$ one thousand dollars that wewrote down from principal pay
down.
That is it's huge, it's huge.
And then I also did kind ofbreak this out, which is another
interesting as you take it from.
I also have another interestingone which is like okay, well,
(40:28):
that was the principal pay downeffect, but then we have the
market appreciation effect andjust last year in our property
values we earned over $125,000in market appreciation.
Rachel Wagner (40:41):
So I guess, where are you pulling the market
value of homes, right?
Jason Wagner (40:49):
I run it as an agent.
Rachel Wagner (40:51):
Okay, so you look at comps.
Jason Wagner (40:52):
So I'm super confident that I could sell
these properties for theseprices.
Rachel Wagner (40:58):
So you're pulling comps.
Jason Wagner (41:00):
Yes.
Rachel Wagner (41:00):
Okay, yep, yep.
How would somebody who doesn'thave access to the MLS do
something like that?
Use your Redfin.
So, like those estimates, yeah,the Redfin estimates.
Jason Wagner (41:10):
Yeah, I mean because those are like a good
ballpark to kind of figure thatout.
Or just call your agent, figureit out.
Just say, hey, just running mynet worth, can you give me a
quick update of what you thinkmy house is worth?
An agent would do that for you.
So yeah, do you have theCybertruck in here as an asset?
(41:31):
Of course I do.
Oh, it's probably another.
Yeah, it's in this bucket.
Of course I do yeah.
There it is.
There you go.
Well, good conversation, bigtakeaway.
Rachel Wagner (41:46):
I gave mine.
Jason Wagner (41:47):
What was yours again?
Rachel Wagner (41:49):
That you were right.
Jason Wagner (41:51):
Oh nice, I just wanted to get it one more time.
Rachel Wagner (41:55):
Oh, there you go.
What's your big takeaway?
Jason Wagner (41:56):
I didn't ask you trust your husband I thought you
were gonna say trust your agent.
Rachel Wagner (42:03):
But or actually I was like oh, he's gonna say buy
property now well, that'sthat's true.
Jason Wagner (42:10):
Yeah, no, I'm just kidding.
If your husband is interestedin buying real estate and he
heard this podcast, you shouldtrust him in terms of looking
into it more.
I think that's that's a goodone.
If your wife is interested inbuying real estate she heard
this podcast you should trusther instinct to look into it
more.
Rachel Wagner (42:29):
I was going to say, cause it's not always.
It's not always the husband.
We've had it the other wayaround, where people have come
to us.
Jason Wagner (42:35):
Oh plenty, yeah, the wife is a bit sick and the
husband's a little more riskaverse For sure.
Rachel Wagner (42:40):
There's always one partner who is willing to
take the risk and one who's morerisk averse.
Jason Wagner (42:45):
Yep, yeah, yeah, it's a good balance.
Good, it's good balance to have, but you have to take risk,
otherwise you will, without risk, I mean, you'll just go at a
snail's pace.
So real estate seems very risky.
If you were to be flippinghouses, obviously very risky.
But there's other, non-riskierassets or past activities, which
(43:06):
is the house hacking, which isjust buying a rental property.
It's not as risky as you think.
So, anyways, let's turn thisone over and we will catch you
on the next episode.
Welcome back to another episode of the Real Life
Investing Podcast, with Jasonand Rachel Wagner Going into
something that we track on aregular basis, actually every
month.
It's our net worth and justkind of, why is it important to
track your net worth?
If I were to ask Rachel, do youhave any idea of what our net
(00:21):
worth is?
Before I said we should have anet worth conversation, would
you have had someacknowledgement of where we
stood?
Rachel Wagner (00:30):
No, no, I mean I would be able to figure out a
rough idea, I think, because Iunderstand how it works.
But no, I would not.
No, no, I'm pretty out of ourfinances.
Jason Wagner (00:44):
You're out of the finances.
Does that make you feelcomfortable, or is that?
Rachel Wagner (00:48):
It has taken me some time to feel comfortable
being out of the finances, and Idon't recommend that for
anybody.
I think people should probablybe partners in finances, but
this works for us for now, atthis stage of life.
Jason Wagner (01:00):
Do you want to explain, like what our finances
are kind of like, or yeah, Imean.
Rachel Wagner (01:05):
Well, we actually before we got married, when we
first started living together,we decided the easiest way for
us to split our bills 50 50would be to get a shared credit
card.
So anything that we boughttogether we put on the credit
card at the end of the month wesplit it 50 50.
And then all of our individualexpenses we did separately.
So then when we got married, itwas actually pretty easy to
combine everything because wewere already practicing like
(01:27):
that sort of flow.
But we combined our bankaccounts and everything.
We had full transparency intoeach other completely.
We were both working at thetime and we just put it all in
one big pot together and paidour bills together out of the
one big pot.
So it wasn't ever like a splitand that's been the continuous
(01:50):
practice.
And then you know, we each havehad our turn leaving the
paycheck life.
Mine's now, I think, extendedyears a little bit, but yeah,
yeah, yeah.
Jason Wagner (02:03):
No, you know, when we we got married, we both had
corporate w-2 jobs.
You know, I think I was at like60 grand a year, you were at
like 80 yeah you wereoutperforming me pretty nicely
yeah and you know, we, I oh yeah, it made a lot of sense.
(02:26):
Let's just combine.
I mean, we're married, let'sjust combine everything.
So I absorbed your debt, yourstudent loan debt.
Yeah, I was in a blessedposition where I didn't have to
take on any student loan debt,but we absorbed all of yours.
Yeah, and it's interesting, youtalk to some couples and
they're just like well, whyshould I have to pay for that if
(02:47):
it's not under my name, orthings like that?
And so they just continue tohave these split finances.
It seems to make things verycomplicated.
Rachel Wagner (03:00):
I didn't have the expectation that you should
have to share that student loandebt with me, but we also were
just very firm in the fact thatwe're getting married.
Everything is the same.
Jason Wagner (03:09):
Everything's ours.
Rachel Wagner (03:10):
Yeah, it's ours together as a whole.
Jason Wagner (03:14):
Just because you brought something a little
different to the table.
I mean, you also brought apension that you were able to
get from your employer, which isthe government, so you still
have some type of vestinginterest.
Rachel Wagner (03:25):
I have two, two, yeah, you have two types of
pensions.
Jason Wagner (03:28):
You know, should I marry you, you gotta get a
pension.
Rachel Wagner (03:31):
You got some student loan debt I had a lot of
student loan debt making goodmoney, yeah so I I had a lot of
debt, but I was also on a trackto like keep raising my income
yeah, yeah, yeah, yeah.
Jason Wagner (03:48):
So we started, we really started to.
You know, from the beginning Iwas always into excel and just
kind of tracking our finances,coming up with a budget, and
that budgeting process was justso, so imperative for us Because
as you decide to go from W-2life, salaried money's always
(04:11):
going to come in to.
All of a sudden you're now yourown boss and you've completely
given all that up.
You have to penny pinch and yougot to figure out where every
dollar goes.
Rachel Wagner (04:20):
Yeah, and we were doing that before we even got
married, I mean the first.
So we moved in together rightafter you graduated, which was
pretty early, and we had apretty cheap cost of living then
.
But like both of our salarieswere pretty low coming out of
graduation and I remember whenwe first moved to sign that
first apartment in davenport therent was like a thousand or
eleven hundred or something amonth.
(04:40):
Like that was a huge decisionfor us.
It was like can we actuallyjump our rent up that much and
afford that?
Jason Wagner (04:46):
Yeah, because we started an apartment that we
were paying what?
$650?
Rachel Wagner (04:52):
or $700?
Something like that.
Yeah, it was very low, yeah, soit was a big jump for us, yeah.
Jason Wagner (04:57):
It was a big deal yeah.
Yeah, it was a big deal.
Rachel Wagner (05:00):
So we've been budgeting the whole time, I
guess is my point.
Jason Wagner (05:03):
We've been budgeting since day one.
Yeah Right, and so it's notjust the budgeting part that I
think is really effective,because you get awareness into
where your spending is.
That's very obvious.
If you track it where everydollar is going and you compare
it well, how did I compare it tolast month or last year?
(05:24):
And you start doing that on aregular basis, obviously you get
more visibility into yourfinances, the better, and so I
just took it a step further, andthen we just tracked what our
net worth was.
And what is net worth.
Can you give me the definitionof net worth?
Do you know the formula?
Rachel Wagner (05:41):
Assets minus liabilities.
Jason Wagner (05:43):
Nice Wow.
Rachel Wagner (05:50):
Yeah, so it's an asset, something to value that
you own outright.
So cash is an asset yep, whatelse equity in a property?
So you can't count the fullvalue of the property because
you gotta less your liability onit.
Jason Wagner (06:01):
Obviously, obviously, 401ks, pensions, some
, some types of property stockstock yeah, yep, bonds, yep, Yep
, cool Yep, exactly.
So what's the liability?
Rachel Wagner (06:15):
Something you owe .
It's like a loan.
So student loans is a bigliability, a mortgage, a car
payment credit cards.
Um yeah.
Jason Wagner (06:25):
Yeah, and the obligated expense you have to
pay, pay back yeah.
So you take your assets minusyour liabilities.
Actually, just to clarify yourassets, you said for real estate
it's only equity.
That's really more of like thenet of the two.
Rachel Wagner (06:43):
Well, I guess, yeah, I guess that's already
doing the calculation.
So if you're doing a big wholepiece, you'd put the entire
value right, the value of theasset, and then minus your
mortgage.
Minus your mortgage, yeah, yep,the loan balances too.
That's a good clarification.
Jason Wagner (06:55):
Yeah, yeah.
So so if you live in, a,$500,000 goes into that comment
or into that column, for that'swhat I have in assets, and then,
well, but I owe 490.
Well, you really only have$10,000 into the house, right?
Rachel Wagner (07:11):
so yeah unless I just bought it right, you just
bought it exactly.
Jason Wagner (07:19):
Yeah, so, anyways.
So then you get down to yournet worth, which is basically
your assets minus yourliabilities, and you know when
you're first starting out as amarried couple.
And you know you're 25, 26,back in 2015,.
I guess that's what was our ageat 2015?
.
Rachel Wagner (07:33):
I think I was 27.
I think you were 26.
We had both just had ourbirthdays.
Jason Wagner (07:38):
Well, you got married in 2015,.
Right, so I was 25.
Rachel Wagner (07:41):
When we got married?
Yeah, oh, then I guess I was 26.
Are you sure?
Jason Wagner (07:44):
Oh yeah, Anyways, we can do the math.
Oh no, you're right, I was 26.
Rachel Wagner (07:50):
Yeah, I was going to say I'm pretty sure I was 27
.
All right, cool All right, goodmath.
Jason Wagner (07:54):
Okay, so I was 26.
You were, yeah, in 2016, whichisn't bad, because I had like 80
000 in student loan debt.
Yeah, yep, yep, in 2016.
(08:15):
So this is like when I left myjob, somehow we had a net worth
of 17 000.
Yeah, well, yeah it's verypossible that I was gambling in
the stock market during thattimeframe.
Rachel Wagner (08:26):
Well, you were.
Yeah, I had a.
I had a pretty significantraise, yeah, Yep.
Jason Wagner (08:33):
I lost my income but I'm pretty sure that I still
had.
I had some gambling earnings.
That was happening there inthat year.
Rachel Wagner (08:41):
Yeah, I mean higher earnings paid down some
debt.
Yeah, I mean I think we alsoprobably paid down like some
debt from the wedding yep, andthen in 2017 we went from.
Jason Wagner (08:53):
So in 2016 we were positive 17 grand, 2017 we went
negative negative 25 000.
Yeah, this is when, when Jasonreally lost his money in the
stock market, started buyinghouses.
Rachel Wagner (09:08):
Well, that was the first time he lost money in
the stock market.
Jason Wagner (09:11):
Yeah, when I had lost $40,000.
No, that was in 2018.
Rachel Wagner (09:15):
Oh, 2018 was when I lost Okay.
We're getting to that numberBecause it was my 30th birthday.
Yeah, okay.
Jason Wagner (09:19):
We're getting to that number.
My 30th birthday, so in 2017, Istarted flipping houses on the
south side of chicago and,whatever phase we were at then,
we had a negative twenty fivethousand dollars it's because we
were putting materials for thehouse on the zero interest
credit card loans yep, we werebeing a little bit more creative
(09:39):
in terms of how we were goingto finance that project.
Yeah, and.
And in which that drags downyour net worth, if you got to
owe all that for sure.
And depending on, like, thetiming of that sale and whatnot,
and so, anyways, yeah, so wewere.
Here's the joke that we alwaysused to make we're worth more
dead than alive.
Rachel Wagner (09:57):
Yeah.
Jason Wagner (09:58):
When you got a negative net worth of 25 grand
2018, okay, combined the big $4040 000 loss of money, I lost
that much money in one day.
Rachel Wagner (10:09):
yeah, dude, like that's, that's a problem he told
me the night of my 30thbirthday because we threw like
this big octoberfest party andwe were gonna have like an open
bar tab, which we did.
We did have an open bar tab,but you closed it, and you close
it kind of early and I was like, oh, come on, let's like just
keep it open for like another 30minutes or whatever.
And you just gave me this lookand you were like, no, we can't.
And I was like, oh, okay, whathappened?
(10:31):
We'll talk about it later.
You were so afraid to tell me.
Jason Wagner (10:37):
It's so funny I was just like oh okay, well,
don't do that again of yourdemise there you.
Rachel Wagner (10:45):
I handled it very well.
Jason Wagner (10:47):
I mean, I had shown you.
I'm like hey look, I'm doingquite well trading stocks.
Look, I can do this.
Rachel Wagner (10:52):
Oh yeah, you were so proud, I don't need to go
back to the corporate world.
Jason Wagner (10:54):
I'll just trade stocks, yeah.
Rachel Wagner (10:57):
And I did make a good amount of money and it was
all the money that you had madefrom your first house flip.
You put in the stock market,yeah, and then you lost it.
Jason Wagner (11:06):
Yeah, all In a day .
How about that?
It's like putting it on black.
Rachel Wagner (11:11):
Yeah, seems like a good idea.
40 grand in a day yeah, that'sbad, like you're an idiot.
Straight freaking idiot.
Jason Wagner (11:19):
Yeah, but I didn't say you were an idiot.
Somehow you were just like okay, don't do that again.
And I was like wow, she tookthat incredibly well.
Rachel Wagner (11:26):
Yeah, I mean we had no like when we talk about
this, like with our net worthand like being in the negative
or whatever.
Like we didn't have any kidsand we didn't have any plans to
start having kids at this stageof the game.
Like we were just trying tostart your business.
So like it was very understoodthat times were going to be hard
, we were going to be livingthin and this was the time to
(11:47):
make the mistakes.
And if we lost it all?
Jason Wagner (11:52):
we weren't really losing that much.
Yep, so Yep.
And then in 2019, everythingreally kind of turned around.
Here we bought another property.
This one ended up turning intoour first rental, where we had
bought a cheap condo in WickerPark.
We upgraded it.
We were originally going tosell it, but then we turned it
into a rental and so now we havea good amount of equity that's
(12:14):
in that property, because wekind of essentially flipped it
without selling it.
Now it's a cash flowingproperty for us.
And then at the same time, Iwas also starting to really get
into the sales side of thingsand selling homes, helping my
friends buy and sell real estateat that point mostly buyers at
that point.
So we went from a negative$34,000 in 2018 to 166 grand
(12:38):
positive 2019.
Rachel Wagner (12:40):
Well, we bought two properties that year because
we bought Sunnyside December of2019.
But Sunnyside right at the andthat was significant.
Jason Wagner (12:45):
Well, we bought two properties that year because
we bought Sunnyside December of2019.
But Sunnyside right at the endof December.
So that does certainly kind ofput a little piece in there.
But we were still leveraged onit because we did a 3.5% loan.
There's really not a whole lotthat's actually in there.
Rachel Wagner (12:58):
Yeah, but there's still some Sure Because it was
a huge value property.
Jason Wagner (13:02):
Yeah, yeah, yep.
And then 2020, we went from 166in 2019 to 317.
Wow, yeah.
Rachel Wagner (13:12):
So the income from Claremont continued and the
income from the multi-propertyreally started to blow in Well.
Jason Wagner (13:20):
The value of the property ended up going higher
because we increased one of thewe had to renovate.
We renovated one of the units,and this was the COVID era.
2020 is when we started to seehome values really start to take
off, and so we had twoproperties at that point, and in
(13:42):
2021, we bought our thirdproperty actually two properties
that year single family homeand then we did a partnership.
Rachel Wagner (13:49):
So this is when the real estate and this is when
the real estate really starts.
Jason Wagner (13:52):
Yeah, yeah, you really see an acceleration here,
which is really cool.
So in 2020, we ended with 317,in 2021.
Now we've got 576.
And we just kind of keep goinghere 2021 to 2022.
We really didn't add a whole.
Rachel Wagner (14:08):
There was there's a slight game, oh in 2022,.
Jason Wagner (14:11):
You left your job Okay 2021.
Rachel Wagner (14:13):
I left my job after Layla was born.
Jason Wagner (14:15):
So we kind of have more of a flattening, that's a
that's happening here 576 to 604in 2022.
And then in 2023 we go up to842 and then in 2024, we have
crossed the million dollar markand we are at 1.1 as and that
was in like may of 24 yeah, oh,excuse me, this is august.
(14:38):
This is now august 2024.
We crossed, we crossed themillion dollar mark in in may.
Yeah, after now, we own six,six properties.
Essentially, the secret here isit.
What's what's really funny islike if you, if you think about
any like bigger pocket stuff, um, which is real estate investing
, or anybody that's like intoreal estate investing, becoming
(14:59):
the millionaire is kind of likethe uh, that's the big target,
it's, it's it felt really goodto cross that mark because, if
you actually look at it, itdidn't take very long.
It went from in 2018, we werenegative $34,000 and now in 2024
, we're millionaires.
Rachel Wagner (15:17):
And we bought the first property that we held was
in 2019, so in five years.
Jason Wagner (15:21):
First, property we bought was in 2019, yeah yeah
so in five years, first propertywe bought was in 2019.
Yeah, yeah.
So yeah, in five.
In five years, we went fromessentially zero to 100 or to a
million in five years.
Yeah, like what and that's, butwhat's the secret here?
The secret is is not a secret,it's just buying real estate
(15:43):
yeah and finding ways to buyreal estate.
Buy at least one property everyyear, and that has always been
the goal.
If I could just buy oneproperty per year, I guess we
didn't buy one in 2020.
Rachel Wagner (15:55):
We bought two in 2019, nothing in 2020.
Two in 2021.
Very kind of technical.
Basically, we didn't move inuntil 2020 because it closed,
yeah, but we owned it yeah.
Jason Wagner (16:07):
Yeah, very technical here.
Rachel Wagner (16:10):
On average one a year.
Jason Wagner (16:11):
On average, we just bought one per year and
when you understand what'shappening with the market in
general we have low supply.
We bought when interest rateswere incredibly low.
We took extreme advantage ofthat and we continued to buy
even when we had interest ratesthat were high.
I mean, we bought a propertythis year and the interest rate
(16:33):
on it is 6.75.
We bought a property last yearwhich was our house, and we did
some tricks with the interestrates and whatnot, but we just
continued to buy and it was agood thing that we bought our
house when we did, because allof a sudden our real estate
market here in Arlington Heightshas allowed our.
Let's see what did we buy thisfor $765?
Rachel Wagner (16:55):
$765?
Jason Wagner (16:57):
$765.
Yep, you're right, $765.
In our neighbor's house Justsold for $840.
Rachel Wagner (17:04):
The exact same thing.
Jason Wagner (17:09):
Absolutely the exact same property, and it's a
good thing we bought last year,because now we've just
recognized that the market hasgone up that much.
Rachel Wagner (17:15):
Well, that's been true for every property.
Jason Wagner (17:17):
Yeah.
So the secret here is not thatwe just made a killing with you
know, our jobs or whatnot.
I mean, the secret is all theaccumulation of market
appreciation.
It's the fact that every monthour tenants pay down our
mortgage, every month ourtenants pay down our mortgage,
(17:40):
and that has just really grownthe net worth big time.
And so it's kind of fun to kindof like look at that because we
really don't have, you know, wedon't have a lot of stock
investments, or you know wedon't have these huge.
Rachel Wagner (17:54):
Don't contribute to 401ks or anything anymore.
Jason Wagner (17:58):
We do very little because we don't have a ton like
, like leftover.
You know, because my wholemindset has been like, well, if
I've got extra money here, I'mgoing to put it into another
deal.
And we kind of look at it aslike, well, one of these
properties could be our kid'scollege fund.
Just from the differencebetween the market value and the
(18:22):
loan amount over the next 18years, if we hold on to one of
these for that long, there'sgoing to be enough money for
college out of that.
So you start thinking about itfrom that perspective.
It's like shit.
Real estate's really powerful.
Rachel Wagner (18:39):
Yeah's really powerful yeah, yeah, yeah.
I mean obviously none of that'sliquid.
So yeah, you know I did rightand none of it.
Jason Wagner (18:46):
None of it's liquid and literally it could
all go away.
It could all go away if we had acrash in the market and we're
not going to have a crash onmarket, because I look at the
data very, very closely and likeI'm very confident in that and
I advise people that you shouldbe buying now because we're
still going to have a crash onthe market.
Because I look at the data very, very closely and like I'm very
confident in that and I advisepeople that you should be buying
now because we're still in alow inventory environment and
I'm going to continue to take myown advice and, you know, keep
trying to buy more properties ifI can, and you know.
(19:09):
Then it comes down to like thequestion is always like well,
how can I, jason, I don't havejob that I got all this extra
cash?
It's like well, then you got tofind people.
You got to find businesspartners, and that's exactly
what I did.
What we did is that we foundbusiness partners.
Well, what if the businesspartner doesn't have a lot of
cash?
Well, what could they do?
(19:29):
Could they be an owner-occupantin one of these multifamily
properties and then, all of asudden, house hack it, allowing
you to get a lower down paymentopportunity to buy that property
?
That's exactly what we didwhere we bought our house hack.
We only needed 3.5% down.
Then we partnered with anotherguy who was the house hacker and
we only needed 3.5% to buy thatproperty.
(19:49):
Then we partnered with anothercouple who were the house
hackers.
At the time.
We needed only 15% instead of a25% down that a regular
investor would need.
And so you find ways to do lowdown payment strategies.
We bought this house with only5% down.
We bought our last house withonly 5% down.
(20:11):
And so what are the low downpayment strategies?
How can I buy real estate everysingle year for the next 10
years?
To really set me up straight,you think about the low down
payment strategies, you thinkabout who's in your life that
you could partner with, and thenyou just do it.
I wrote a post when we did crossthat line, because I thought it
(20:32):
was very monumental for us.
Here's what I wrote, and thiswas in April 20th.
Actually is when we did it.
So this month, my wife and Iachieved millionaire net worth
status.
We did this at 34 and 35 yearsold, with two kids.
I'm the only one that works andmy wife stays home and manages
the household.
In 2016, I left my corporate jobto pursue a career in real
(20:54):
estate, had no idea what I wasdoing, but I had a strong desire
to learn and take a risk.
It is no secret that our networth took off because we found
ways to buy property everysingle year since 2016.
You can't buy property withoutmoney, though, but the secrets I
discovered was that we didn'tneed a lot of money to get
started, and we utilized lowdown payment strategies to get
(21:15):
our foot in the door.
I also realized that a salarywill never get me the result I
was seeking.
I needed to be in sales andearning money directly related
to the activities I was doing,with no cap on those earnings.
The combination of sales mixedwith buying one income producing
property every year is theblueprint to success.
(21:35):
Sales fuels investments.
Sales are short-term gains.
Investments are long-termwealth building tools.
So my advice one get a sales joband become a subject matter
expert.
So the reason I say get a salesjob is because you can have
unlimited income potential.
You can have really good years.
(21:57):
You can also have really badyears, but when you don't have a
cap on what you could earn,there's way more upside, way
more upside than a salary.
So that's my number one piece.
Two have one spouse, maintain aW-2 job while you become a
subject matter expert to helpyou qualify for loans.
(22:20):
Three buy income-producingproperty with low down payment
strategies.
Four once your sales pick up,reinvest that money into more
property.
Five have your spouse leavetheir job to assist in your
sales business or run thehousehold.
Six continue to sell and buyproperty until you don't have to
put so much focus on sellingbecause your investments have
(22:41):
gained in value and provide youwith income.
And finally, dedicate 10 yearsfor this result.
You might achieve it in.
I say eight, like we did, Iguess it had been eight years
since I had left my job by thetime we reached that millionaire
status.
And so I guess, back when I wasin April, when I was thinking
(23:02):
about that was that if you gotsomebody in the household who
has the ability to captureupside through their job, which
is through a sales environment,really leverage that.
At the same time you alsoreally need to qualify for loans
and the only way you can dothat is with W-2 earnings.
Even if you're both decent W-2earnings, you can really
(23:23):
leverage that too.
And maybe you find somebodywho's in a sales job who has
some extra cash and they mighthave a harder time qualifying
for loans because they're notW-2'd right.
They might be peer commissionedor 1099 contractor.
It makes it harder for somebodywho's self-employed to qualify
(23:43):
for loans.
So it's like, well, hey, we'vegot stable salaries, you have,
you know you make more money.
Or like, could we partner, wetake on the debt type thing?
You know you can work outarrangements.
Rachel Wagner (23:58):
So it's just finding people that are willing
to do some of that stuff did youlook back over the last five
years, or maybe even more thanthat, like when we were in the
the negative net worth area timeframe?
Is there anything you would dodifferently?
Jason Wagner (24:13):
I wouldn't have wasted I don't know, because I
feel like I wouldn't have gonein.
Like I don't advise people togo into the flipping stuff.
I tell people to go straight tothe house, hack stuff and then
kind of ease your way If you'vegot to update some things, like
it's a lot easier, a lot lessrisky to do that and you're
doing it in a building that youalready live in type thing, and
like it's just, it's just, it'sjust easier.
(24:39):
So yeah, I would, I would havetotally skipped the whole
flipping part of part of it.
But at the same time that was athat was a real crash course of
housing and real estate andlearning, construction and
contractors and, I'll be honest,majority of real estate agents
never even touch any of that.
They never touch any of that.
Rachel Wagner (24:56):
It's out of their ballpark yeah, I mean, that's
actually what's given you theskills and the resources and the
contacts it's yeah, gonethrough that experience, so it
made you a more valuable realestate yeah, and that's why it's
it's hard for me to say, oh, Iwouldn't have, I wouldn't have
done like.
Jason Wagner (25:10):
I don't advise people to do that.
Let's just put it that way Idon't advise people to do.
Would I have changed anythingthat I had done in the past?
I don't necessarily think so,because that that put really
hard shit on my shoulders andonce you realize that you can
get through the hard shit, thenit's like you can do anything.
And you know it just actuallymade things easier by going
(25:31):
through the really hard stuff.
But I don't advise people to doreally hard stuff like that.
Like stress yourself out, maxout your 0% interest credit
cards, go into the worst creditand net worth perspective ever
Like.
I would never advise anybody todo that.
That's terrible advice.
Rachel Wagner (25:47):
Yeah, that's the lowest I've ever seen you.
Jason Wagner (25:50):
Yeah.
Rachel Wagner (25:50):
Yeah.
Jason Wagner (25:51):
Yeah, that's terrible advice.
But when you think about theschool of hard knocks and like,
yeah, did I?
You know, did I kind of earnwhere we're at now?
Fuck yeah, I did, Fuck yeah.
Rachel Wagner (26:02):
Yeah, yeah, I agree.
Jason Wagner (26:04):
Yeah, so so it's cool to talk about and hopefully
it's inspirational because itdoesn't take that very that long
.
It just takes focus.
We're just average people,nothing special.
But if you live in America andyou understand that real estate
is the ticket to changeeverything in your life, you can
(26:27):
have a job, do whatever youwant.
You can be a plumber, be in thetrades, be a teacher.
Everybody has access to realestate.
People say that they don't,which is total lie.
Everybody has access.
You just don't know.
If you think you don't haveaccess, you just don't know the
right person.
And you can find the rightperson by Googling.
(26:51):
Where can I learn about realestate investing?
Where can I buy a book aboutreal estate investing?
And I can give you all kinds ofbooks.
Start with some of BrandonTurner's books.
They're so freaking great.
Rachel Wagner (27:03):
Oh, I thought you were going to say Rich Dad,
Poor Dad.
Jason Wagner (27:05):
Oh, Rich Dad, Poor Dad is a great mindset book.
Yeah, that is one of my bestand favorite.
I mean that changed it all forme.
Rich Dad, Poor Dad by RobertKiyosaki is like everybody needs
to read that book.
I should actually read that oneagain.
But Brandon Turner is like theKing at like making real estate
investing very simple, and he'sgot the what's called the
multifamily millionaire, which Ithink is a very tremendously
(27:26):
well-written book, and I highlyrecommend reading that one,
because he does.
I'm pretty sure he talks abouthouse hacking in there, but it
just like the simplicity of likewhat it means to buy a two flat
or two unit duplex, Like that'sall the same same terminology,
and so you can.
You can learn these things.
You just have to dedicate sometime to do it.
(27:49):
The problem is is that whenpeople get older in age, they
just they've got kids, they'vegot responsibilities.
They can't learn to reallyprioritize their time, and so
learning new skills like that ortaking risk is certainly a lot
harder the more mature you arein life.
We did this when we weremarried.
No kids.
Is it impossible for people todo it?
(28:11):
Who's married with kids?
Rachel Wagner (28:13):
Partially.
No kids.
I mean, we hadn't bought aproperty to live in until we had
Scarlett.
Oh, you're totally you'retotally right.
Jason Wagner (28:21):
You're totally right, we had.
We had in 2020, when what wasour net worth in 2020?
We had just bought twoproperties, or we had two
properties under our belt, andin 2020, we were worth 317 by
the end of that year, but priorto, because scarlet was born in
2019.
2019, oh shit.
Rachel Wagner (28:39):
Yeah, in 2019, okay yeah, so the year we bought
the first rental and then thedecember we bought the sunny
side property.
So yeah, we really we had onlydone flips, because when I was
pregnant with scarlet, you werestill in the hole, mad ada yeah,
all right.
Jason Wagner (28:56):
So you got no excuse, you got kids, whatever.
We still did it.
Rachel Wagner (28:59):
Yeah, I mean, I think I think there has to if
you have kids.
There's like a willingness.
I guess it depends on how youdo it, because you don't have to
house hack, but I think for usthere needed to be a willingness
to be a little bitinconvenienced and uncomfortable
for a while.
Right, cause we have we'vemoved with Scarlett three times,
right, and she's five.
So you know that was it washard and it was it was hard to
(29:25):
have, you know, all the babygear and all the baby stuff on
the third floor, right, you knowit's like when we I cause I
remember when we had theconversation about buying
Sunnyside it was like, well, wecould go buy like our first,
like traditionally, it makessense to just go buy your first
family home in the suburbs thatyou're going to live in for like
(29:46):
the next five years or whatever.
Right, and instead we werebuying a multifamily and it was
like okay, well, eventually wegot to get to that, right.
Jason Wagner (29:53):
So there's like this I know, and people looked
at us crazy.
Man, People looked at ustotally crazy.
It was like why would you buy?
Why would you buy an apartmentbuilding Like, yeah, and a
neighborhood we hadn't lived in?
Don't you need a yard?
Rachel Wagner (30:05):
from all of our friends Right.
And then we moved away fromeverybody, so it made everything
more complicated and yeah makecommute to work for me much more
difficult, and yeah, I mean itwas, it was worth it.
Jason Wagner (30:16):
Yeah, oh, of course, it was one year of
sacrifice.
It was a year and a half thatwe lived there for right, and
that's, that's the power ofthese, you know, these house
hacking strategies yeah, youonly have to live there for a
year because why?
what if?
If we didn't do that, we wouldhave had to buy that property
with 25% down?
(30:37):
There was no freaking chancethat would have ever happened.
We never, ever, had that kindof money ever, and we still
don't.
In terms of liquid cash, westill don't.
Putting 25% down on a propertyis not really possible.
Rachel Wagner (30:52):
Yeah, I don't even know what that is, but
Right.
Yeah.
Jason Wagner (30:56):
And that's just.
The reality is that if youdon't know about these lower
down payment strategies and howyou can utilize the people that
are in your network, Again, Ijust found a guy that I went to
high school with and told himabout my house hacking strategy
and said we could do the samething with you.
He was like all right, let's doit, and that has really worked
(31:19):
out.
Did the same thing with anothercouple.
Rachel Wagner (31:23):
Yeah, and the first guy you were talking about
he's already moved out of thatproperty too.
He was there for a year, andthen he moved out.
Jason Wagner (31:28):
Right, and it's just.
It sets you up.
It's one year, it's one year ofsacrifice.
So even if you do have kids,could you sacrifice your family
for one year to set you up?
Rachel Wagner (31:43):
Sacrifice your convenience, not your family.
Jason Wagner (31:45):
But yeah, thank you.
Yeah Right, sacrifice yourconvenience for one year you and
your family's convenience forone year to set you up, right.
Your kids will probably be veryupset about it at the time, but
you know, it's I don't know.
(32:07):
Here's the blueprint.
It's clearly been effective forus.
So when you know that this issomething that works, then you
know, and it's something youwant to go after, then there's
tons of resources out there foryou.
You know, and all it takes isjust education and spending time
to learn it.
So it's, it's not rocketscience, it's it's.
This is a great thing aboutreal estate and this is why so
(32:27):
many people get into it.
Is you can be an expert inwhatever field so many people
get into.
It is you can be an expert inwhatever field.
Real estate is always still verysimple.
It is like oh, there's a house,what could I buy that house for
?
What's going to be my monthlypayment?
What could I rent it for?
Let's factor in a few moreestimates for things breaking
every month.
Let's factor in an estimate forwell, if I don't have it leased
(32:50):
, I'm waiting for somebody torent it.
Let's factor in an estimate forwell, if I don't have it leased
.
I'm waiting for somebody torent it.
Let's factor in an estimate ofmight have to potentially
replace the furnace, some otherbig capital expenditure repairs.
And then what's it look like?
And is it cash flowing?
Great, we got a little bit morerent than all the expenses and
the mortgage Great.
If it's not, is it in anappreciated market that's
(33:15):
expected to go up in value inthe next five years?
That's a big one.
Let's not forget that everytime you do have somebody in
there and they're paying you,every month you're paying the
mortgage.
That mortgage balance getssmaller and smaller.
There's so many great thingsabout real estate and for us,
because we are real estateprofessionals, because I'm a
real estate agent and I don'tunderstand why majority of real
(33:39):
estate agents don't takeadvantage of this, but when
you're a real estateprofessional status, you can buy
a property.
You can then write off a lot ofthat property against your
earned income.
You don't pay a lot in taxes.
Now, there's a skill set there,right, there's a cost
segregation study that you haveto do on the property and then
you can take a big chunk of thatand offset a lot of your
(34:00):
earnings that you've had and allof a sudden, your tax liability
is much, much less thansomebody.
That's a W-2 person and that'skind of the cheat code, I guess,
but it's there in the tax law.
So anyways, long story short, Ithink the big takeaway here is
that real estate's the ticketyou got to get in.
If you buy one property peryear for the next 10 years, I
(34:24):
think that's going to do reallywell for you.
So and we're still on our wayon to that we are on year six,
19?
.
Rachel Wagner (34:33):
Year five.
Jason Wagner (34:34):
Year five.
Rachel Wagner (34:35):
Year five yeah.
Jason Wagner (34:38):
We're only at year five.
One, two, three, four, five.
Why do I count?
Rachel Wagner (34:42):
six bars here, because this is a year One, two,
three, four, five.
Jason Wagner (34:48):
I see Year five.
Yeah, you're five.
Yeah, all right, cool your bigtakeaway.
Rachel Wagner (34:58):
Yeah, I mean, I think you were right back when
we were having all these earlydiscussions about you leaving
your job and you going into realestate and look what it could
do for us, and now this is theticket and all those
conversations you were right,yeah, and I got sold by so many
gurus you did, you did and Ithink you know it's a good
(35:20):
nugget to say that you wouldn'trecommend getting into flipping
because I was.
Those are high stress, highstress, uh the thing is?
Jason Wagner (35:28):
the thing is is that the market is really good
for flippers right now.
Like we were in a very balancedmarket when we were doing it,
we were in a low inventoryenvironment.
It's actually pretty hard toscrew up a flip opportunity
right now.
If you underwrite it well, it'sjust more stress.
Rachel Wagner (35:44):
Yeah, it's a lot of work.
It's a lot of stress.
Jason Wagner (35:47):
And the biggest thing that just kind of went off
where I had the aha moment islike, dude, you put in so much
time and effort into doing oneof those flips, why the hell do
you sell it?
Why don't you just keep it?
You put in all that time andeffort, why would you sell it?
There's so many othercomponents too, because, like
flippers, you have to paycapital gains taxes on all that
(36:10):
stuff.
Rachel Wagner (36:11):
That's a really good point.
Jason Wagner (36:13):
When you're holding these properties, you're
only paying taxes on like thecashflow that you're earning per
the IRS and if you do it right,you get depreciation that you
get to basically offset it, likewhen you make $50,000 from
rental income.
It's not the same as making$50,000 from your W-2 job.
It is not even close to beingthe same, because I can take
(36:33):
that $50,000 that we justbrought in from rental income
and I've got all the expensesI've got.
Rachel Wagner (36:39):
Yeah, and that's what Rich Dad, poor Dad really
explains.
Well, I think, is thatdifference.
Jason Wagner (36:45):
Right and I've got all the expenses to write off
against it.
I've got the mortgage interest,I've got this thing called
depreciation, which is basicallytaking the property, saying
that it's only going to lastabout 27 and a half years and
coming up with a monthly figurethat you can write off against
(37:05):
any income that you have on thatproperty.
And then if you do this thingcalled a cost segregation
analysis and you are able to,instead of saying that the
kitchen sink is going to last 27and a half years, you know that
the kitchen sink is only goingto last five or seven years,
Well then you can acceleratethat depreciation much faster.
What Trump brought in, whereyou can take a lot of the lower
(37:37):
useful life items that are in aproperty and you could take it
all in year one as a major loss,this is where you can kind of
come up with $100,000 worth ofstuff can offset your income
because you could have that bigof a loss that you identify
through bonus depreciation.
Rachel Wagner (37:52):
Isn't Kamala Harris proposing an increase on
taxes for capital gains?
Jason Wagner (37:57):
I don't know, I don't know.
She brought up the unrealizedcapital gains and taxing
unrealized which is what?
Which is owning stocks, andjust because they've gone up 20%
but you haven't actually soldit and realize the gain in your
pocket, she's saying that youcould be taxed on that.
Rachel Wagner (38:21):
Right, that's right, that's right.
Jason Wagner (38:23):
No, I think there's stipulations on all like
, like and I don't.
I don't know all the rules andit might only affect people that
are like a million there's ormore.
I don't.
I don't want to misspeak, so Idon't quite know it.
Rachel Wagner (38:32):
Okay, yeah, I don't know, either there's
something there with the capitalgains tax, but I don't remember
.
Jason Wagner (38:38):
But yeah, she might be doing something with
the capital gains tax too.
So yeah, long story short,that's where you see $50,000 in
your W-2 job, because mostpeople they only bring home.
You know, if you bring in$50,000 a year, you know like
half of that goes to thegovernment.
So it's just a lot different.
(38:59):
So this is why buying incomeproducing properties is one of
the best things that you can doand why it's better than just
buying the stock market, becauseyou have these other components
that investments don't have.
Right, A stock isn't going toget you a tenant that's paying
down your loan balance.
That's like risk-free.
You got a tenant that's in yourproperty, they pay you rent
(39:22):
every single month and you arepaying down a portion of your
loan balance.
I actually have a stat here.
I'm pretty sure I do here.
How much in principal pay downdid we gain last year?
Just principal pay down,meaning we were able to write
down the balance $41,000.
Just last year, from tenantspaying our mortgage, we were
(39:46):
able to earn $41,000 in equitybecause the tenants paid us rent
.
It doesn't count the cash flow,it just says we paid the
mortgage, we took the money thatyou paid us each month and we
gave it to the bank and the bankwrote down the loan a little
bit less and in total, when youhave six properties one, two,
(40:07):
three, four, five, six, oh,seven, seven properties that was
$ one thousand dollars that wewrote down from principal pay
down.
That is it's huge, it's huge.
And then I also did kind ofbreak this out, which is another
interesting as you take it from.
I also have another interestingone which is like okay, well,
(40:28):
that was the principal pay downeffect, but then we have the
market appreciation effect andjust last year in our property
values we earned over $125,000in market appreciation.
Rachel Wagner (40:41):
So I guess, where are you pulling the market
value of homes, right?
Jason Wagner (40:49):
I run it as an agent.
Rachel Wagner (40:51):
Okay, so you look at comps.
Jason Wagner (40:52):
So I'm super confident that I could sell
these properties for theseprices.
Rachel Wagner (40:58):
So you're pulling comps.
Jason Wagner (41:00):
Yes.
Rachel Wagner (41:00):
Okay, yep, yep.
How would somebody who doesn'thave access to the MLS do
something like that?
Use your Redfin.
So, like those estimates, yeah,the Redfin estimates.
Jason Wagner (41:10):
Yeah, I mean because those are like a good
ballpark to kind of figure thatout.
Or just call your agent, figureit out.
Just say, hey, just running mynet worth, can you give me a
quick update of what you thinkmy house is worth?
An agent would do that for you.
So yeah, do you have theCybertruck in here as an asset?
(41:31):
Of course I do.
Oh, it's probably another.
Yeah, it's in this bucket.
Of course I do yeah.
There it is.
There you go.
Well, good conversation, bigtakeaway.
Rachel Wagner (41:46):
I gave mine.
Jason Wagner (41:47):
What was yours again?
Rachel Wagner (41:49):
That you were right.
Jason Wagner (41:51):
Oh nice, I just wanted to get it one more time.
Rachel Wagner (41:55):
Oh, there you go.
What's your big takeaway?
Jason Wagner (41:56):
I didn't ask you trust your husband I thought you
were gonna say trust your agent.
Rachel Wagner (42:03):
But or actually I was like oh, he's gonna say buy
property now well, that'sthat's true.
Jason Wagner (42:10):
Yeah, no, I'm just kidding.
If your husband is interestedin buying real estate and he
heard this podcast, you shouldtrust him in terms of looking
into it more.
I think that's that's a goodone.
If your wife is interested inbuying real estate she heard
this podcast you should trusther instinct to look into it
more.
Rachel Wagner (42:29):
I was going to say, cause it's not always.
It's not always the husband.
We've had it the other wayaround, where people have come
to us.
Jason Wagner (42:35):
Oh plenty, yeah, the wife is a bit sick and the
husband's a little more riskaverse For sure.
Rachel Wagner (42:40):
There's always one partner who is willing to
take the risk and one who's morerisk averse.
Jason Wagner (42:45):
Yep, yeah, yeah, it's a good balance.
Good, it's good balance to have, but you have to take risk,
otherwise you will, without risk, I mean, you'll just go at a
snail's pace.
So real estate seems very risky.
If you were to be flippinghouses, obviously very risky.
But there's other, non-riskierassets or past activities, which
(43:06):
is the house hacking, which isjust buying a rental property.
It's not as risky as you think.
So, anyways, let's turn thisone over and we will catch you
on the next episode.
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