How Investors Can Build 7 Rental Units in 2 Years With Low Down Payments

Wayne Paprocki (00:00)

Now with DSCR loans, that’s a whole new world that’s popped up for real estate investors in my mind, ⁓ based on the criteria. Now the government, about two years ago, put down that 5 %

down payment for four units more owner occupied, which is a tremendous tool for investors. I’ve just been selling some investors on buying a four unit under that 5 % down program, renting out three, living in one, staying there a year to meet the criteria for owner occupied, move out of there, buy another four unit, live in that one. And in two years, you’ve got seven rental properties and you’re living in one.

Michelle Tack (02:07)

Hello everyone. Welcome to Real Estate Pros Podcast. I am Michelle Tack. I am the leader for today’s podcast. I have a wonderful ⁓ person here today, Wayne. Go ahead and introduce yourself. I’m super excited that you’re here with us and ⁓ excited about ⁓ chatting with you.

You’ve been making serious moves in real estate for 40 years and have focused on some great opportunities in Houston. Wayne, introduce yourself, if you don’t mind just your name and we’ll get going.

Wayne Paprocki (02:46)

I’m Wayne Paprocki, pleasure to be with everybody sharing some thoughts. Basically concentrate in the Illinois and Houston, Texas markets with investment property and training for real tours all across the country, but mostly now Illinois and Houston.

Michelle Tack (03:02)

I appreciate that. And I think our listeners really want to understand how you got your strength that you have the volume of success that you have today. You mentioned that Houston, ⁓ that one town that’s the biggest growing area in Texas. But can you talk about, if we segmented out strengths, we say capital, it could be capital.

you know, raising capital, could be scaling flips, it could building a team. But what do you think are the most important things that have, ⁓ you know, really separated you in terms of your.

Wayne Paprocki (03:43)

I started many years ago reading a book by Andrew Carnegie where he created this very simple system that said roughly 90 % of the self-made millionaires made their money in real estate and owning businesses. So at that point in my life, I said 50 years ago, why would I not rediscover the wheel? Real estate and owning businesses. So I’ve owned a lot of businesses, bought them, sold them, all related to real estate in most cases. But then I started real estate investing with no money at all.

And I started creating a package of how I could do this with very little, money down, but listening to Robert Irwin and his books on wealth without risk and nothing down. And eventually came to a conclusion that I was actually renting a home when I was buying rental property as an investment. So I actually owned rental homes before I owned my own home, because I was renting myself to somebody else. ⁓ So that became the nucleus of looking at real estate as a solid investment.

Michelle Tack (04:33)

Mm-hmm. Mm-hmm.

Wayne Paprocki (04:38)

for all kinds of five major reasons, or as I can talk about later if you’d like. But more importantly, for me to realize this is the way to go, starting businesses and owning real estate.

Michelle Tack (04:49)

Understood. is your main focus now, Wayne, that you’re focused on currently?

Wayne Paprocki (04:55)

in the process of downsizing and looking at some larger properties through 1031 exchanges to maybe like right now I’m in Illinois here I’m going to sell three properties right now to buy something in Texas ⁓ that’s more commercial.

Michelle Tack (05:59)

That’s interesting. Had you done commercial before? That’s interesting. What markets are you operating in? Is it Illinois and Texas? Are there others? ⁓

Wayne Paprocki (06:02)

done commercially.

They’re the

major markets and my partner and I do a luxury listing designation for real tours and then I do some wealth building seminars and negotiation seminars for real tours. ⁓ Those are our main focuses as well as me buying and selling.

Michelle Tack (06:24)

You know, what caught my attention when we were talking before is your ability to, ⁓ you know, touch a lot of areas within the real estate market in terms of starting yourself, then being able to grow SFRs, doing it for 40 years continuously, and also being able to obviously provide content to folks. ⁓ Can you talk about, you know, in this climate, you know, how you make

your machine runs smoothly. There’s always obstacles. There’s always things that get people defocused. But how do you run your business smoothly and successfully today?

Wayne Paprocki (07:04)

think to me it’s always been three words. I’m very consistent, I’m very persistent, and I’m very resilient. Not all deals work, not all things that look good are actually good once you look at them. And every day I’m doing the same thing I did years ago, doing my prospecting, doing my searching. AI has made it so much easier to accomplish, so much more faster. And so that’s excellent. I wish I would known AI 30 years ago if they had it. It would have been a much easier task to do with

Michelle Tack (07:31)

Well, it sounds like you are adopting to changes that are occurring and taking advantage of that for your continued success. ⁓ Now, every operator that I know has a moment in time where things got real. And what I mean by that is, know, a deal started going south that was important and they had to pivot quickly.

they learned from that process, whether they salvaged the situation or not, but something that was really pivotal in their career. Can you talk to ⁓ something like that that has occurred in your long-term success here?

Wayne Paprocki (08:15)

Well, I think several things come to mind, one of which is the fact that I’ve been very focused on using other people’s money. So at the height of my, I guess, building that process, I have over 200 credit cards. And I use those for balance transfers for the down payments on almost all the property. So I come in with nothing down. I’m getting 12, 15, 21 months at 0 % interest.

and I can easily get some cash flow and pay down that 0 % in 21 months. If I still haven’t paid down, I could just find another card that will give me another 12 or 15 months and pretty soon I’ve got the equity building up, got the appreciation building up, and now I’m starting to make money off other people’s money. So I think I’m down to 184 cards because they’ve been consolidating, but that’s been a big help in allowing me to buy things with

very little or no money down.

Michelle Tack (09:11)

In terms of the operational side, you talked about consistency. You’ve talked about raising, ⁓ getting money at 0 % interest. What else helps that engine run smoothly for you?

Wayne Paprocki (09:25)

Well, a team of people, obviously. I’ve got a good, good contractors. I’m doing some rehabbing or flipping. I’ve also got good people. All on all my single family homes and duplexes. I have home warranties for my tenants who never call me. They call the 800 number to get things fixed, prepared or replaced. And I actually, when I started my business, I like multiple streams of income. I created my own home warranty company, my own home inspection company in my own

design and remodeling company. So it’s getting multiple streams of income, sometimes making more money off that than the commissions and the real estate says.

Michelle Tack (10:35)

That’s very interesting. That’s interesting.

Wayne Paprocki (10:37)

And so I believe home warranties are the best way to go because I very rarely worry about anything because I know the home warranty is going to take care of it and the tenants have the 800 number they’re happy. So win-win.

Michelle Tack (10:49)

Yeah, I mean, what you’re talking about is things that are not sexy, but are smart, right? And you’re doing consistently, right? You’re finding ways to leverage, ⁓ you know, ⁓ folks ⁓ leverage this ⁓ external warranty, et cetera. And, you know, that makes a difference between folks that are dabbling in real estate, right?

versus being in there for the long term. 40 years, you’ve seen a lot. You’ve seen 2007, you’ve seen the late 80s, right? And all of that. that’s interesting. Again,

Wayne Paprocki (11:29)

Here’s a good example. All my higher end properties, because in my market in Illinois, we’re talking about, I’ve got large homes, five, six bedroom homes that rent for a relatively high price to executives, consulates, etc. Every one of those has a whole house generator in case they lose heat or power. They’ll pay 200, 300 bucks more a month to have that safety knowing we’re never going to be without power from a snowstorm, an ice storm, or any other kind of problem.

Michelle Tack (11:55)

Incredible. What are you focused on now in terms of scaling your real next goal for you? You indicated that a little bit in terms you’re looking at some commercial things, but can you talk about what’s getting you excited and what you’re focused on ⁓ now in the next?

Wayne Paprocki (12:11)

I could sell some multi-units, maybe four, six-unit buildings, 12-unit buildings, and go to the 32-unit building. And I have less property, but a more valuable property than all the other ones combined. So I guess it’s getting rid of less properties because at the height of all my investments, I had 186 properties. Well, I’m down much slow, but sure.

Michelle Tack (12:20)

Mm-hmm.

Yeah, absolutely. ⁓ That’s big, especially when you have so much in your portfolio to now consolidate it as it were. ⁓ And when that occurs, when change occurs, it brings opportunity clearly, but also can create chaos just generally. And I know a lot of people listening are interested in the journey in terms of leveling up and

you know, building relationships, you know, how have you built those that have helped support you and made the biggest difference for you?

Wayne Paprocki (13:15)

Well, I mean, there’s no doubt building a network of people that can do so many things. And by starting my home warranty company, my home inspection company, my design remodeling company, I built a network of people that I controlled versus looking for people when I needed them. And then over the years, they gave me other connections to other people in those trades. And all of a sudden you’ve got this massive network. If I need a roofer here or a contractor there.

And know the home warranty company will take care of things. In the last couple of months, I’ve had one property needed a whole new air conditioner, another property just put in a $2,000 range hood, another one they put in a new toilet, another one put in a new garbage disposal. All I know is it was done. I paid my $75 trade fee. Everybody’s happy.

Michelle Tack (13:57)

Yeah, absolutely. Have you had a deal that you had to get back into shape that, you I’m always interested in people that can dig in and find a solution that maybe you could talk about that if there’s one that comes to mind, if you don’t mind, Sherry.

Wayne Paprocki (14:17)

First of all, lot depends on how good of a negotiator you are. And I’m a very strong collaborative negotiator looking for the win-win for somebody. So maybe creative financing, give me some terms, I’ll give you your price. A lot of other things you can do with contract sales.

Now with DSCR loans, that’s a whole new world that’s popped up for real estate investors in my mind, ⁓ based on the criteria. Now the government, about two years ago, put down that 5 %

down payment for four units more owner occupied,

which is a tremendous tool for investors. I’ve just been selling some investors on buying a four unit under that 5 % down program, renting out three, living in one, staying there a year to meet the criteria for owner occupied, move out of there, buy another four unit, live in that one. And in two years, you’ve got seven rental properties and you’re living in

Yep. lot of good, those two tools in the last two years,

I think you’ve opened up doors I never saw before.

Michelle Tack (15:55)

That makes sense. ⁓ You you provided a lot of great information and before we close, ⁓ I wanted you to provide your contact information, but also ⁓ the myriad of things that you’re doing in real estate. So if you could just give your information, but before we do that, just maybe talk about a couple of things that you’re doing in real estate in terms of training as well.

Wayne Paprocki (16:24)

Okay, well, as I said, I focus a lot on real estate as an investment for agents. So I have a program on that. I do a 10 in Commandments of Wealth building, which is generic, but I apply it to real tours or investors. I also do a whole negotiation seminar, which takes two days. We do a five to seven week selling skills program to teach people how to sell and handle five major areas in real estate. Then we do a luxury listing specialist designation to help people learn how to.

work with luxury listings and working with luxury buyers and sellers because it’s a different language. mean, if you’re selling a $5 million house, you got to know different kind of brand names. You got to know different kinds of construction. You got to know a lot of things that a typical person selling $500,000 homes or less doesn’t understand or know to fit in nicely. And then we’ll do some other things that a company might want. If I go into some companies, like some of my commercial companies,

they ask for certain specific things they want for their salespeople. getting agents specifically or investors to buy a consistent at least two income properties a year, use that 3.6 % depreciation every year for 27 and a half years to write off income. So to me, if I own a $3 million worth of real estate, I don’t care what it is, one building, 10 buildings.

got $108,000 depreciation to write off against my income. That makes a big difference for 27 and a half years. And if you’re getting 6, 9, 12 properties, you should be basically in five years paying no federal income taxes legally in my mind.

Michelle Tack (17:51)

Absolutely.

Absolutely. Look, ⁓ perfect. I know that I appreciate your time, your story, your perspective. We need more people in space who are doing what you are doing it the right way. ⁓ Purchasing, showing, teaching, et cetera. And thanks again for being here, ⁓ Wayne. We really appreciate it. ⁓

But before we go, can you provide your contact information, where you’d like to be contacted for those that are interested in ⁓ potentially working with you or what have you? Can you provide your, how folks can get in touch with you?

Wayne Paprocki (18:39)

Well, I think the best first step is a text. Phone calls, fine, but texts are better. And that text number is 847-293-2369. My email address is my domain, Wayne@WaynePaprocki.com. So it’s W-A-Y-N-E at W-A-Y-N-E P-A-P-R-O-C-K-I.com.

Michelle Tack (19:04)

That’s awesome. ⁓ Again, ⁓ it’s always great to meet people that have been doing this for a very long time, which you are. We really appreciate, again, the perspective and the story. I’m sure we’re get folks to chat with you. And again, Wayne, ⁓ wish you the best of luck. And for those that are ⁓ subscribers, ⁓ we hope you got value from this. We’ve got more conversations with other operators, ⁓ just like Wayne, who are out there building real businesses.

we’ll see you on the next episode. Thanks again. Thanks, Wayne.