477: Best of Old Dawg’s REI Network Podcast – How a Girl from the Projects Became a Millionaire Real Estate Mom

SHOW NOTES FOR EPISODE 477: BEST OF OLD DAWG’S REI NETWORK PODCAST – HOW A GIRL FROM THE PROJECTS BECAME A MILLIONAIRE REAL ESTATE MOM

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Show Introduction

She grew up in a tough part of town, the oldest of six kids, being raised by a hard-working single mom.  All she knew was that she would work hard at school and every job she ever got so that she would never end up in the same situation as her mom.  In today’s podcast, financial expert, real estate investor and founding partner of Zenith Capital Group, Apex Multifamily and REIMom.com Anna Kelly, shares her amazing story of how she, her husband and four children overcame challenging life obstacles, against the odds, including surviving as an investor during the 2008 recession, to retire early as a multimillionaire real estate mom.

What You Will Learn

• Some of the life obstacles that can prevent us from investing in real estate
• Why it’s a good idea to hold on to your W2 job until you a truly prepared to become a full-time investor
• How much you need to have in savings before buying your first investment property and why
• The reality of flipping homes without much training
• What Anna learned from the 2008 crash that helped her in her investing today
• The reasons why multifamily investing is the best type of real estate investment
• What is the one main thing you really need before attempting to get seller financing?
• How she learned that real estate is not meant to be a solo business

About Our Guest

Anna Kelley

Anna Kelley is the founding partner of Zenith Capital Group, Apex Multifamily, and ReiMom.com. As a top ranked former Financial Relationship Manager for a Private Bank, and having worked in the financial sector for 20 years, Anna has a keen understanding of various financial tools available to grow and preserve wealth. Believing real estate to be one of the most powerful tools for creating stable cash flow, asset preservation, & equity growth (the trifecta of investments), Anna began investing in real estate 20 years ago.

She has purchased, renovated, sold, and rented millions of dollars in real estate across numerous asset classes, while working full time and raising 4 active children. Anna recently retired from her corporate career, after creating financial freedom through rental property investing. She currently owns and manages a portfolio valued over $16 Million across 175 doors, and is a passive investor in multiple apartment syndications.

As a General Partner and sponsor, Anna actively seeks out the best multifamily investment opportunities for her partners and investors.  She has coached numerous new investors through the purchase of their first rental properties and flip projects, and enjoys helping others to overcome their fears, increase their knowledge, and minimize their risks in real estate. Finally, she is an Amazon #1 Best Selling Author & runs a meetup group for Women in Real Estate: REI Like A Girl!

More About Anna

• Anna is the oldest of six children being raised by a single mom
• Her mom was a leasing agent in a Section 8 apartment complex in San Antonio, Texas
• Grew up in Section 8 housing from age 6 to 15
• Took care of her siblings while her mom worked two jobs
• As she grew older, she was more and more driven to change he life and succeed at whatever she did and to get out of that environment
• She thought money was the only answer
• If she could just do well in school and everything that she could change her situation, get her own house one day and can take care of herself

New Career

• She got a job as a Financial Relationship Manger with Bank of a America at 24 years of age
• Started learning about money and investments and what the wealthy did with their money
• She also learned about taking control of her own personal finances
• It was also the time that she learned about real estate
• She advised her wealthy clients about all types of investments (annuities, stocks and bonds, mutual funds, etc.) but the thing they all got the best returns in was in real estate
• This caused her to look more into real estate and eventually investing

Real Estate

• She was renting an expensive apartment at the time
• So she decided to buy a condo instead of renting, with the thought that she could rent it out when she buys her next property
• However, she got married and her husband had high student loan debt, so they sold the condo to pay down the debt
• After she got married, she bought a house in a re-gentrifying up and coming area, thinking that they would be able to sell it off later at a pretty good profit

Another Career Change

• Bank of America was bought by Nationwide and they discontinued her position
• She got a new job with AIG, selling life insurance
• She stayed there for 20 years

Expanding Family

• In 2003, she had her first child
• The baby was premature and it made her think about her career and how she didn’t want to put her child in day care
• Unfortunately, her husband’s chiropractic practice was struggling and she was making the majority of their income
• Their expenses wouldn’t allow her to stay home
• She had to put her child in day care
• But while she was on maternity leave, she watched a lot of shows about flipping houses
• She thought she found the solution – if she flipped 2-3 houses are year, she could be a stay-at-home mom

Becoming a Flipper

• With a 6 month old baby in-tow, they bought their first fix ‘n flip property
• It had a little bungalow in the back where a tenant stayed and paid rent, which helped pay the mortgage on the property
• They made every mistake imaginable with that project
• After a year of holding the property and because of the mistakes they made, they lost about $10,000
• Her husband also lost his job at that time
• They had a school loan at 6 figures
• 2 mortgages
• 2 car payments
• A brand new baby
• And she still. thankfully, still had her insurance job

Moving to Pennsylvania

• Three years later, they were able to pay off her husband’s  student loans
• In 2007, they decided to move to Pennsylvania from Texas so her husband could start up a new practice
• She was also on a trail basis with her job, to see if she could work from home
• They bought a building for her husband’s practice that had tenants renting living in apartment units above and behind the building
• At first, they were living with her husband’s parents for a year
• She got approval from her job to work at home
• They then bought a fourplex, lived in one unit and rented out the other 3
• The 3 tenants covered the mortgage, taxes and insurance

The Crash

• 2008-2009 economy happened
• Husband had been working only one year
• Had $300,000 business start-up debt
• Also had $400,000 mortgage debt
• Anna had to keep working from home but had more kids now
• Mother-in-law helped with the kids during the day
• She had hoped she could quit working within a year’s time, downsize and stay at home with her children
• But when the market crashed, AIG almost went under, except for a 2 trillion loan from the federal government
• She lost 2/3 to 3/4 of her 401K almost overnight and was told she would likely lose her job
• She was fearful that they would lose everything
• In 2009, she borrowed against what she had left in her 401K to buy another fourplex
• Her thought was that at least, if she loses her job, and they have the 4-unit building,  they could get another $1,000 to $1,200 per month to cover groceries and gas until she finds another job
• Fortunately, by the grace of God, they got the loan approved to buy the second fourplex before things got worse
• It was a difficult 3-4 years
• Banks tightened up on lending and because of their debt and the fact that she worked for AIG, it made things even less likely they would be approved for a loan
• Her husband’s practice suffered as well during this time
• If it wasn’t for the rental properties, they would have likely closed down his business

Expanding Their Real Estate Portfolio

• It took another 4-5 years before the banks would even consider lending
• But they kept going back to the banks to get a loan on their equity to purchase more properties
• In the meantime, the rentals were producing income that they were pouring back into the properties to upgrade, increase rent, reduce expenses and, therefore, boost equity
• Eventually, she found a bank that would lend on the equity in one property, even though most would not lend

Seller Financing

• She also decided to attend a local real estate meet-up group
• At one meeting, a seller stood up and said he was selling a small multifamily property in her area
• Because she knew she would have a tough time finding a bank to finance the purchase, she approached the seller to see if he was open to seller financing and he said yes!
• When she sat down with the seller, shared the advantages to him (including deferred capital gains taxes, etc.) and he sold the property to her, it built up her confidence to try to do another seller financing deal
• She found another retiring landlord who was willing to do seller financing with a balloon payment after 5 years
• They she found a partner to buy another fourplex
• She set a 5 year plan to slowly and methodically purchase 4-unit apartment buildings until they could generate enough rental income to replace here six figure income from AIG to finally be able to be home with her children

Reaching Her Goal

• A little over a year ago, she reached her goal of acquiring 60-units, which were bringing in about $150,000 per year
• She knew if she could pay down the debt on those units, save enough money to cover 6 months of expenses on all their properties, and save enough money to cover one year’s salary — then she would be able to retire and live on the rental income
• She wanted to be prepared for a future recession
• Also, to pay down her mortgage debt, she wanted to step it up even further and acquire at least one larger multifamily property
• She found an off-market 73-unit apartment building with 44 storage units in a B plus to A Class area, 1985 vintage, new roof, siding, patios and driveway.  Rents were low.  She knew that, with minor interior improvements, she could up the rents a few hundred dollars and force appreciation.
• But wasn’t sure how she was going to fund it
• She knew there were people who wanted to invest in real estate so she started started to talk with people about how good an investment real estate is and that she could produce returns for them better than what they could get in the stock market
• She had spoken at a lot of meet-up group meetings and met a guy who also talked to groups and when they talked, they saw there was a joint interest in multifamily properties
• She partnered with the guy, negotiated the deal, got it under contract, and her partner brought in another person.  The 3 of them Joint Ventured the deal and bought the apartment
• All three partners want to hold the asset for the long term.  In 10 years, they will assess if they still want to hold or sell
• Did a traditional Freddie Mac loan, all three signed on the loan doc
• She was able to pay off the debt on her other properties from the acquisition fee you received from that one deal
• Her partners and her bought a few more apartment buildings, over 200 units, worth over $20 million and she was able to retire last May (2o19) – She now has 4 children
• She just closed on 250-units in Atlanta in two separate complexes
• She and her partners are also now looking at a 96-unit apartment

Biggest Mistake

• Trying to do everything on her own
• Not getting a chance to stop, sit back and think of what they could do to connect with other people
• Not attending more meet-ups
• Not finding partners sooner

Your Biggest Success

• Finding Partners
• Buying bigger apartment assets
• The first JV large apartment building deal (the 73-unit)
• Negotiating with the seller
• It propelled her into bigger deals

Advice for Old Dawgs Looking at Real Estate for Their Retirement

• Look at your time and your money availability
• Some may have more time than they have money.  Some may have more money than they have time
• If you don’t have the money, look at your network and see if there is someone who may be able to help fund you
• If you lack time, is there someone in your network you can partner with that can do the leg work
• Or, buy a turnkey rental where everything is already done for you (But be careful!!!  Not all turnkeys are the same – a note from Bill)
• If you have the time, you can buy a property, do the rehab and management yourself
• If you have retirement funds, you can roll those into a “self-directed” retirement account and you can invest those funds in real estate
• You can also invest passively in a real estate syndication and get the “bonus depreciation” tax savings, and create an income stream without having to to the work

Current Business

• They have worked 70-80 hours a week for 12 years to get to this point of financial independence and enjoy their kids
• They want to be there for their kids when they’re not in school
  • Sports
  • Plays
  • Other activities
• While the kids are in school during the day:
  • she can work on getting larger multifamily investments
  • build a family legacy
• They want to do more family vacations
  • Last summer was the first time they spent a month with their kids on vacation
• Give back
  • through ministries that are really important to them
  • to kids in Section 8 housing
    • Showing them Hope through Jesus
    • Teaching them how to make wise financial decisions so they can move out and upward in their lives and careers
• She doesn’t have a monetary or “number of doors” goal
• God has provided them with all they need
• She hopes to do good things with the extra funds they generate

Rap-It-Up

• Favorite real estate book: Multifamily Millions by David Lindahl
• Favorite business book: Lifeonaire by Steve Cook
• Most valuable web site for success (other than your own): BiggerPockets.com
• Favorite app: Google Calendar
• Favorite quote: “You should always love people and use money rather than the other way around.” – Bob Proctor
• If you had to start all over, knowing what you know, and you only had $1,000, what would you do to launch your real estate investing business? Target market sellers to find off-market multifamily property deals and use the money for direct mail letter campaign and find partners to take the deals down.

How You Can Reach Anna

• Her website: REIMom.com
• Email: info@REImom.com – write her to get a free copy of her best selling Amazon book: Resilience: Turning Your Set Back Into a Come Back

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Additional Episode Sponsor: Meno Studio – menostudio777@gmail.com