3 Paid-Off Rentals: The “Boring” (But Proven) Path to Financial Freedom

Henry Washington (0:00)

Financial freedom with just three rental properties? It almost sounds too easy, but it's reality for today's guest, who went from making roughly $11 an hour to having more than enough cash flow to live on. With a little hard work and discipline, Lucas Teague saved $10,000 to buy his very first rental property. He made several offers and heard several no's, but he only needed that one yes, and that first yes changed everything. Lucas repeated this process, buy a cheap property, live in it, fix it up and make tens of thousands of dollars. But instead of racing to build some massive portfolio, Lucas settled on just three rentals and started paying them off. Now, he's almost completely debt-free, living in his dream home, and he earns enough rental income to cover his family's expenses and then some. Lucas has all that he needs. Now he's focused on a new objective, giving back. In this episode, he's sharing his unconventional, but proven path to financial freedom, so you can do the same.

What's going on, everybody? I am Henry Washington, co-host of the BiggerPockets Podcast. And today we have an investor story with Lucas Teague from Indiana. So let's bring him on.

Lucas Teague, welcome to the BiggerPockets Podcast, my friend.

Lucas Teague (1:22)

Yeah, thanks, Henry. I've been watching the show for probably 10 years now, and it's an honor to be here.

Henry Washington (1:26)

Why don't you give us a little bit of background? What got you into real estate in the first place, and when did you get started?

Lucas Teague (1:33)

I'm in my early 30s now. I've been investing in real estate for about 14 years. And really, I think it boils down to financial freedom. As a kid, I had a parent who lost their job after working for a place for about 30 years. And just all of a sudden, they came home one day and didn't have a job, and I was probably 15 or 16

And after that, I made the decision, I've got to prevent that if at all possible.

Henry Washington (1:56)

How did that turn into real estate being the source for that extra income?

Lucas Teague (2:00)

Yeah. So I've always had the mathematical lens. And so I looked at, hey, can I buy a business? And this is at 18 years old. So it's zero capital at the time. Well, with no money, it's a little bit difficult to buy a business. So then I turned to, okay, what if I invest in some stocks? Well, once I get to like $2 million in stocks, maybe I can make 60 to $80,000 a year, but it's gonna take me about 100 years to get to 2 million at the money I was making at 18

So I moved on to the next thing, which was real estate. And in my area at the time, there were houses selling for 20 or $30,000, and you could rent those out for $300 or $400 a month. And I'm crunching the numbers, and man, this could, I could do something within a decade probably, or 5 to 10 years, and get the tax benefits and all of the other benefits that come with real estate investing, and it seemed like a no-brainer.

Henry Washington (2:47)

So what year was this when you've had this epiphany?

Lucas Teague (2:50)

Yeah, this was probably 2012 So I graduated high school in May of 2012, and I worked in the pharmaceutical industry at the time, and I still do today. I work for Eli Lilly, the largest pharmaceutical company in the world. So I do that, and then I'm also a real estate agent. But at the time, I made about $1,195 an hour. And so my first year was essentially just saving up $10,000 for that, either down payment or that first house that I purchased later in 2013

Henry Washington (3:15)

Okay. Well, that's some good bit of background. You bought that first property in 2013 What did that deal look like?

Lucas Teague (3:21)

Yeah. So this was a HUD foreclosure, and it was listed on HUD.gov on an auction website for about $50,000.

And my poor realtor friend, we spent probably a month. We'd submit our offer on the auction website. We'd wait a week. It would get declined. And so it was listed at $50,000. We started at $6,000, then $7,000, then $8,000. And after about a month of doing that, the bank or whoever owned the house on the auction website, they finally accepted the offer of $8,000. So at the time, I had about $10,000 in cash and I went for it. So I figured, hey, for $8,000, what could go wrong?