Listen to hear how Anna Kelley, a mother of four juggles family life while building a $60 million real estate portfolio which allowed her to retire. Anna has been investing in real estate for over 20 years and has a ton of information to share. More important than all of her wealth and success is her passion for giving back. A special place in her heart for working moms and her strong Christian Faith that promotes greater purpose.
Table of Contents:
- Where To Listen To The Podcast
- A Woman of Greater Purpose
- Being Driven Takes You Places
- Controlled Finance
- Debt: A Good Tool but Terrible Master
- Opting for Legacy Assets Serves a Greater Purpose
- Don't Be Afraid to Make That Phone Call
- Moms Have Greater Purpose
- The Greater Purpose Capital
- A Woman of God Is a Woman of Greater Purpose
- How to Reach Anna Kelley
A Woman Believer of Greater Purpose
Darin: Anna grew up in Texas, but she is an East Coast girl now living in Pennsylvania. She's a mother of four and built a real estate portfolio of 60 million-plus. She's an investor, speaker, and author. More importantly, she loves to give back and has a special place in her heart for working moms.
Anna and I have actually not met personally before, but I'm part of a multifamily mentorship group. I've just had several people ask me, "Hey, do you know Anna Kelly? You guys need to connect." and just singing her praises. We connected over Facebook and I've been watching and she comes out with some incredibly inspirational messages. It's very evident that she loves to give back and she loves to help the next person coming up.
Anna, can you just share with us how many units and how long you've been in the real estate business?
Anna: Sure, I have ownership in the active side, 520 units. I've invested passively in a little over 2000 and I'm under contract on another 650.
Darin: Fantastic. And I think I saw that you've been investing in real estate for 20 years.
Anna: I have. Yes.
Darin: That's crazy. So, I'm only in it for three years now and you must have just a credible wealth of knowledge. So I'm excited to hear what you have to say. Where do you live?
Anna: I live right outside of Hershey, Pennsylvania where the Hershey Chocolate factory is. About 30 minutes from the Capitol, Harrisburg, Pennsylvania.
Bring the Greater Purpose From Houston to Pennsylvania
Darin: East Coast girl. I'm originally from Connecticut. I lived in South Florida for 14 years and I've been in the Dallas market now for the last 10. I love the East Coast, but it's cold in the winter.
Anna: I'm actually from Texas, Houston area and I miss the heat so much in the winter. Every winter I'm bracing myself about the end of September knowing that I'm in for six or seven freezing months. My goal when my youngest is out of high school is to have a home back in Texas. To be there all winter and then I'll come back to Pennsylvania for the spring and summer.
Darin: Fantastic. So, my understanding is you have four children. What ages do they run?
Anna: They are from nine to 17. So, I have a fourth-grader, a sixth-grader, a ninth-grader, and a senior.
Darin: This is exciting because one, you're the first female I've had on the show. You're a mother of four and you figured out how to get into the real estate game. I have to imagine there's going to be a lot of female listeners out there that are just trying to figure out, "How do I get into this space?" You provide a lot of services in terms of not only putting yourself out there and doing investments. But also you've got a mentorship program that you help other people with. So, help us understand what that's all about.
Anna: Sure. When I grew up in Houston and San Antonio, between the two cities, I'm the oldest of six kids. My mom was a single mom, she was a leasing agent in a section eight apartment complex and I grew up in section eight housing.
Challenges Build a Character
Anna: I had nobody in my life or my family who had a college education. Except for one uncle who was a missionary in Africa or knew anything about finances. I was very driven from a very young age to break out of that cycle of poverty. Just seeing other families who had seemed like they had an education, they had better jobs, they had more money. I was very driven to learn to master money so that, one day, I didn't have to raise my children in section-eight poverty. And so even from a young age, I was looking for people that could show me a better way. There weren't very many people until after I got out of college.
My heart and the reason that I do coaching and why I'm so passionate about projects within my apartment communities is because I grew up without anybody that could show me. I had to figure it out the hard way and the long way. I just love to be able to pour into other young girls and women in particular, but really anybody. But a special place in my heart for working moms, who are just trying to provide a better way and to understand finances. So that they could become financially free and not have to be working two jobs as my mom did. Their kids being latchkey kids at home and wanting to have success. But also wanting to be able to nurture their family and do it more easily.
Darin: That's amazing. I love people that love to give back and obviously, you're one of those people.
Every Journey Leads to a Greater Purpose
Darin: You mentioned the word driven when you were growing up. It brings back a story from me when I was in, I think kindergarten. We were brought into the library, we had a guest speaker come in. He told the story about two brothers and one brother was always in trouble and ended up in jail. The other brother was extremely successful. So the interviewer asked each one, "So, why do you think that you are in trouble all the time?". The brother said, "My dad was an alcoholic?" And then asked the same question to the successful one. He said, "Because my dad was an alcoholic."
You were raised by a single mom and grew up in section eight housing but for some reason, you had a spark in you, you had drive. You had to search to try to find a better way. And you didn't use that as an excuse to not find a different way and now you're giving back to others, which is amazing.
Anna: Yes, it's been an amazing journey. I've come to realize that success isn't only what's at the end of the journey. Your journey sometimes becomes your reason for success. The difficulties in my early childhood and different parts of my life are really what's led me to say, "This is going to make me stronger. I just have to figure out how to take whatever this challenge is, overcome it, and become stronger and wiser for the next season of life." That drive and determination was just always, "I know, things are going to work out for good if I just keep going and don't give up hope."
Darin: Absolutely. Tough times is what helps build your character.
Being Driven Takes You Places
Darin: You mentioned you're trying to find somebody to teach you and you couldn't find it growing up and it wasn't until after college. What happened after college? Did you meet somebody that helped you along the way?
Anna: I worked full time while I went to college full time. The last two years of school, I graduated in three years, had a full-time job, and went to school at night. When I got out of college, I had already had two years of a degree required position. I stayed in that job for about another year. A friend of mine that I had worked with, left to go work for Bank of America in their private banking department.
She met the director. She said, "You've got to talk to my friend Anna, she's really smart and been in banking before." I'd been a teller. He interviewed me and I had zero experience in the financial services industry. I didn't know anything about money. And he's like, "You're driven. You've got all these employee awards and we're willing to give you a chance to train you as a financial advisor. I put you in this role and you'll take over the wealth relationship of the top wealthiest clients at our bank."
I thought, "Wow! I'm under-qualified for this, but I'm going to give it a go." So I went to Bank of America and started working in their private banking department. And it was the first time that I started learning about money. I had a business management degree, minor in accounting. I had studied some basics, but no one had ever taught me budgeting or personal finance. But yet I was learning, if you have money, here's what you can do to grow money.
Taking Opportunity for Greater Purpose
Anna: I was trained in my role in private banking to learn about stocks, bonds, mutual funds, how to grow your wealth once you have it, how to preserve it, how to create income. That's where I started to get my education in all things, investments, and finances.
Darin: Sounds like this gentleman saw something in you and gave you a chance. That probably sets a little bit of the foundation for you wanting to give back as well.
Anna: 100%, I was very blessed my entire life of always getting jobs that I felt under-qualified for. Thankfully, because they saw on my resume, it was just like I graduated high school early. I got Teenager and Employee of the Year Awards and those kinds of things. Them seeing that I worked through it while I worked just gave people enough, "This girl's driven, she's going to do a good job. Let's give her a chance."
I tell people, my kids, and my students, "You have to have something in you that shows other people that you're serious, that you're driven, competent, and going to do a good job." That's the foundation of almost every job that I've had since then. Even as an investor now, completely self-employed, it has worked well for me. It’s going for things beyond what I had the experience for at the time. But giving all I've got and taking every opportunity that comes my way to grow.
Darin: Awesome. Now, you mentioned talking to your kids, you've got four kids ranging from 9-17. I've got a sophomore in college and a senior in high school. When they were young, dad was their hero. But as they get older they tend to, all of a sudden, I don't know anything.
Times of Crises
Darin: They get more of their advice from friends and other people. The education system grooms kids. I was in the same situation. Go to school, get good grades, get into a good company, and then climb the corporate ladder. They don't teach you about money, how to grow it and other streams of income. You've to figure that out on your own. So, I imagine that you talk to your kids about that, how is that received on their end?
Anna: We talk a lot about it, especially with my older two. Thankfully, they've seen us struggle quite a bit for most of their early childhood. Essentially, we left Texas to come to Pennsylvania to start my husband's chiropractic business. I desperately wanted to be home with my children. Even though I was very driven, once I had a baby, I was like, "I need to figure out how to replace my six-figure income and get home with them." My husband was a new chiropractor, came out of school making $30,000 a year and I couldn't stay home. He had huge school debt, not unlike a lot of people today.
I just thought I've got to find another way. Well, we tried flipping houses, the first one didn't go well. My husband's like, "We're never doing that again." I thought, well, the next way to get money if it wasn't just working, it's become an entrepreneur. So, we started a business here in Pennsylvania. Height of the economy 2007, I kid you not, $700,000 in debt to start his business.
I wish I'd understood macroeconomics, cycles, recessions, and expansions and that we were on the cusp of the great recession. So we struggled as entrepreneurs and we had real estate, which was the one thing that was doing well.
Hard Work Pays Off for a Greater Purpose
Anna: During that time, I'd left Bank of America and went to work for AIG. So in 2008-2009, when the recession hit, not only was my husband's business hit hard, I was working for one of the biggest companies that was hit hard during the recession. Because of insurance, mortgage insurance, credit default swaps.
I realized that my job, even with one of the biggest companies in the country, wasn't as safe as I thought it was. Being an entrepreneur wasn't as lucrative as I thought it was. The only thing that was going well, were my rentals. So we realized, we've got to be able to take control of our finances. We need to create some passive income, where we're in control, not the economy as much, not a company, not Medicare, and what they're going to pay doctors.
My children saw us work 70-80 hours a week for 10 years to create that passive income, to create financial freedom. While for years, they're like, "We're never going to do real estate, we hate real estate, we hate it when you buy apartments and make us sleep on crummy floors." All that stuff. When I retired from AIG at 44 and finally was able to be home with my kids, it took a long time.
But my kids were like, "My goodness mom, you never have to go back to work again and we're buying a bigger house and we have beach houses now. We're able to travel and all the things that we desired." They now see it happen because of passive income because of real estate and that it wasn't my education or my husband's seven-year education or entrepreneurship that created it.
Anna: All of a sudden they're like, "Okay, mom. Why do I wanna go to college and have six-figure debt and have to pay it off for years like you and dad did? If I don't know what I want to do and I know you can teach me to become a millionaire in a few years through real estate?" So, they're finally listening because they've seen the hard work pay off and the results that it yields. I'm thankful for that.
Darin: For them to see that happen in front of them is an amazing experience. You mentioned control of your finances. I'm not in the same situation that you were in, but I fell into the world of chasing the corporate thing. But I always wanted to start my own business and so I did back in 2007. I still have that business, it's a trade loan portfolio between banks. That gave me time flexibility, but I just put 10-20% away and then put it into the stock market.
That's what I was trained to do. All of a sudden, 3-5-10 years goes by and look at it and it just didn't grow. It grew, but not to the point that I thought. Shame on me that I didn't take control of my finances. I just segmented off a piece, threw it to the side, and hoped somebody else would take care of it.
And with real estate, it's forefront in your mind and there's work to it but you're taking control of your finances. There are sacrifices along the way, but look at what happened at the end. Now you guys are in a fantastic position and you're teaching your children and they'll most likely teach their children.
The Greater Purpose of an American Dream
Anna: It's along with the same the American dream of go to school. Get an education, a good job. Then one day when you're 65, you can retire and enjoy it if you set aside the right amount and you happen to make 10% per year in the stock market. We're not taught how to even evaluate what we're investing in within our 401k and stocks. We're just taught that "Hey, it's all going to work out if you put in a little bit every year. Eventually, it's all going to go up and you're going to make enough money to retire."
The reality is there's so little control that you have. Not only in what happens at the board's and the management level of those companies. But you really don't even understand the fundamentals of the stocks that you're buying and the underlying value of the company compared to the stock price. You're just trusting that someone smarter than you can figure it out.
I had multiple different economic dips in the stock market. So I had my grandmother who lost $300,000 of a huge piece of what she had left in the market when she retired and my grandfather passed away. I realized, well if you need to get out when it's bad because they never tell you when it's bad. They just say stay in. You're toast. My uncle lost a couple hundred thousand dollars. Then I lost most of my 401k in 2009 because I was heavily invested in AIG and financial stocks. Because that's what I thought was safe. It's all I knew. I realized that I didn't know what I didn't know even about my own company. That I was really involved in a lot of major projects.
Focus on What You Can Control
Anna: I realized, if I'm going to invest in anything, I need to be able to really understand it and have significant control over how that investment works itself out. Even if I can't control all of it. When you are invested in the stock market, you don't control any of it. Well, other than, "Do I think it's a high day or a low day, do I buy a stock?"
All of that taught me seeing in real-time people losing money in the stock market, that the stock market wasn't really all that it was cracked out to be, and that I really didn't have control or understand why myself and family members and people I knew all over the country lost most of their retirement accounts. I needed to make sure that I found something else that I had better control of.
Thankfully, I had just started to buy a few rental properties when I moved to PA, which made me say, "Hey, the only thing that's been consistent has been my rental income." And this is a much better investment, I believed and I still believe, than giving it to somebody completely passively in the stock market.
Darin: It's great that you had those few and you saw it working and you pivoted. But you had some challenges along the way. The other great aspect is that you get surrounded by so many great like-minded people and an abundance, thinkers. And so when I got involved about three years ago, I had someone tell me, "Hey, Darin, not only did you not have control but think about it, most people don't ever want to pull from that nest egg."
Thriving Towards Greater Purpose
Darin: It doesn't matter what that number is, you've spent years to build it. Even if you retire, you're pulling and you see it go down, that is not a good feeling for anybody. If people don't want to, what are you going to do? You're gonna live a very, meager lifestyle.
They helped me change the mindset to stop focusing on building up this huge nest egg. Start focusing on building positive cash flow. Set your lifestyle to be less cash outflow than the cash inflow. That made so much more sense. It doesn't matter how big the nest egg is if you've got all this passive income coming in and your lifestyle is less than that and you've got positive cash flow every month.
Anna: The other thing is we tried. I follow Dave Ramsey. I still really like Dave for people that are getting started to learn about finances. It's a good basic financial education. But we were convinced that we have to save our way to retirement and cut our lifestyle, expenses, save, and eventually one day you'll get there.
But it makes it very difficult as you have children and you have school debt to pay off and need vehicles over time. It's impossible to really grow significant wealth just by saving. Especially if you're setting it aside in something that let’s say makes 10%, and let's just say it averages out to that. By the time you take out the fees, taxes, and inflation-adjusted value on that 10%, you're really looking at about 3% growth and I can show you the numbers for that. But 3-4%, isn't going to get you super-wealthy. It's gonna help you to continue struggling to live below your means when your income is going down.
Good Strategy Is Needed for A Greater Purpose
Anna: I had this aha moment. It’s I can't live below my means because we lived on rice and beans for a long time. And I can't trust that this nest egg is actually going to grow to 10%. Then I can live on 10% because it's going to stay at 10%. I've seen enough in my life to see the dips in that 10% and the instability of the financial system.
I realized through that I have to figure out a way to expand my means and not just by working more hours. We already work 40, 50 hours a week. We hope that if we work 10 more we'll get a better raise. But then companies freeze when the economy shifts or you started out your own business. You go into tons of debt like we did and hope that you're going to expand your means.
So real estate to me, the aha moment was, "Wait for a second. I don't actually have to have money to start, I can borrow that money. I can fight inflation by the bank taking the hit on that inflation by leverage. And I can then create extra cash flow, which is expanding my income, but also expanding my net worth as that mortgage is paid down." So real estate was this like, okay, I can save and I can live below my means, but it's the way I can expand my means both today and in the future and not have to wait till I'm 65 to hope that I have enough.
Darin: Great point. Now, you talked about debt in a couple scenarios. One with your entrepreneurial business with your husband and then two with real estate. Would you characterize good versus bad debt?
Debt: A Good Tool but Terrible Master
Anna: Debt is a really good tool and a really terrible master.
You don't want to be in so much debt that you become enslaved to paying off that debt and trading your time for dollars to pay it off.
So I'm going to be very, very careful about the debt that I do take on. I don't go into debt to buy a car, I don't go into debt to buy clothes, I don't go into debt to take big vacations. We won't go into debt to put our children through school, because we saw how hard it was to pay it off and how little pay off there was. But the only debt that I'm comfortable with, Darin, is debt that is buying assets, that the income generated from those assets actually pay the full debt and then some and then pay me income.
When I can borrow to buy a million-dollar apartment building, I can borrow 3-4% and my tenants are paying down that three to 4%, it allows me to basically buy something five times more valuable than the down payment I have to put in it and creates five times more income for me than if I didn't use that debt.
It's a low-risk transaction to take on debt as long as it's a low-rate, long-term, fixed debt. I'm not a proponent of bridge debt, I know there's a lot of multifamily investors who are. But for me because of my background and because of the difficult challenges that I've seen through these different financial periods of life, it's so important to me to preserve my wealth and not chance to take on debt that I may not be able to pay off, like bridge debt.
Defining Debt for Greater Purpose
Anna: Fixed low-interest debt on assets like multifamily, where the payments on that asset pay off the debt and then give me quite a bit of extra cash flow, is the only kind of debt I'm really comfortable with.
Darin: I'm completely in agreement with that. I would say using debt to buy positive cash flowing assets is smart, but using debt to buy stuff is not smart.
I saw it with my other business, trading loan portfolios, residential, multifamily, commercial real estate loans in the great recession, 2008-2010 where I saw people get in trouble. This is from the loan trading side, but dealing with banks where I saw loans go bad when the loans come due on the reset and you're in a bad economy.
Cash flow goes down and now the bank says, "Hey, the property's not valued at what it was when we originally put out this loan, so now you have to come to the table with another million or $2 million in equity." They don't have it and so the bank takes over the property. So, that's stuck in my mind from being on the loan training side, so I'm very much in your camp there, that I think that that's one of the biggest risks.
I think multifamily and real estate, cash flow, and real estate is a low-risk investment and is a great way to preserve capital. The one challenge is you can't get a 30-year mortgage. Like you can on a residential. So every loan is going to have some kind of balloon feature where the loan comes due and you owe, you have to either refi or sell the property to pay off that loan.
The Bridge Debt
Darin: Some people will use bridge debt, it's typically a three-year loan. A lot of them have one year resets, extensions. But if you're in a bad economy, the lender most likely is not going to give you that extension. So, if you can get through rehab and refi in that two or three-year period, you're safe. But if you come up in a bad economy to that reset, you're at risk.
Anna: Yes. That's why it's really important, and I didn't understand this in 2008 and nine, but I learned from it to really understand real estate cycles and economic cycles in general. So when I saw after 2009, that in 2019, we were in the longest expansion or growth period since President Abraham Lincoln was in office. We were having all kinds of rumblings when the Fed tried to raise rates at the end of 2018.
We thought, okay, the economy's not quite as stable as we thought. I learned to watch what the Fed is doing, I learned about things like the yield curve to pretty reliably predict when a recession is coming, that, "Hey, we're probably on the verge of another recession in the next year or so."
So you've got to really understand cycles to know, "Am I in a period of recovery and growth that I think is going to last longer than three to five years?" And if you are in that growth phase, then most likely, you can be in and out of a deal in 3-4 years and pay off that bridge debt.
Knowing What You're Into Is Key to a Greater Purpose
Anna: As soon as you get to the height of the economy, where you're at risk of hyper supply in a lot of major markets, it's time to start saying, "We got to get a little more conservative. We're going to presume that in two to three years, we're going to be in a recession." The average recession lasts 18-24 months.
In a growing economy, bridge debt may be okay if interest rates are low enough and you've got enough value add in the back end. And that you know the property is going to be worth a lot more than it is when you buy it, bridge debt at that time could be okay.
But for the most part in the economy, like we're in now that we're in a recession, I think bridge debt is fairly dangerous to do. It's just something I'm not personally comfortable with right now.
The other thing though, is there are other types of loans where you still can get long-term financing. So I am kind of a mixture. I don't only invest in really big multifamily deals, I like them, but they're really typically a three to five-year hold, maybe seven.
The smaller multifamily properties that I buy, I buy really like a long term hold. Just to continue that passive stable cash flow for the long term and I easily get 20 to 25-year mortgages. Even though the rate might reset after five, I can lock back in but my mortgage itself doesn't expire. So that's one of the things I really love about some of the smaller multifamily loans or loans with a small bank, a portfolio lender, a credit union. They'll give me 20, 25 years on up to about a $7 million purchase.
The Fannie and Freddie of Loans
Darin: I agree. The one downside of that, I'm assuming that it's a personal guarantee loan. So whenever you're doing bank financing, they're typically looking for a personal guarantee. Not always, but typically.
Anna: It is true. The one thing I'll say about that though Darin, is even on the agency debt. So, I've signed on multiple agency loans. They say that they're non-recourse, but you still sign a bad boy carve-out. And if you look at the bad boy carve-outs now, they essentially say anything that you do that could screw this up, not just fraud, not just incompetence, but not just gross negligence. But if you fail to make a mortgage payment, you're technically in default to that bad boy carve-out and you technically, your guarantee gets kicked in.
So Freddie and Fannie may not go after you. They have the right to go after you for any reason that you default on that mortgage. So it's not as non-recourse as people want to think it is. Now, a COVID type situation, Fannie and Freddie are more likely to say, "Okay, this was no fault of your own," and take over the property if they need to where a smaller bank may have a harder time doing that. But I just want to throw that out there.
Darin: Sure. So when you say smaller multifamily, I'm also assuming that you're predominantly doing this with your own capital, not syndicating these smaller deals. So, what size are these deals? Are these duplexes and fourplexes? Are we talking larger than that or what are you focused on?
Anna: Sure. So I have three different models that I chase after. And it depends on the size of the deal and how much capital I need to take it down.
Opting for Legacy Assets Serves a Greater Purpose
Anna: If it's 150 units, 300 unit apartment building, I'm going to syndicate that deal. I'm not going to put all the cash in it. If it is a 30-100 unit, I'm probably going to a joint venture. I have 200 units and three different purchases with two partners that are joint ventures. So we didn't syndicate it, it's just the three of us.
Then basically, I take money that I make from the joint ventures and the syndications. And my husband and I continue to buy smaller properties for our portfolio. In the beginning, while that was mostly four-unit apartment buildings. Now we look for 10 to 30 unit buildings that we can take down on our own with our cash.
It feeds different buckets. So, syndication because you have so many investors and they care about IRR. The internal rate of return, and the time value of money, they want their money constantly turning. They typically want to be out in five years. So those are short term deals that will bring you some growth in your growth bucket. If you think about financial goals and they'll bring you some cash and maybe some chunks of cash for putting the deal together through an acquisition fee but they're not that long-term income bucket.
So I like the syndications. Now joint ventures, our partners typically are saying, "Let's hold this for at least 10 years. Let's make it a hybrid buy and hold, we'll cash out and refi our cash, and then after 10 years if it's still doing great, we may keep it another 10 years." But there's still some shorter time horizon. The things that I buy on my own, we're buying for legacy wealth, legacy building.
Anna: Cash that we can bank on for a long time. That in 20 years when our kids are in their 30s and 40s, we can gift those properties to them and they can continue to value add them and make them nicer and keep them in our portfolio. So I have a different means for different sized properties based on the general time horizon that those properties lend themselves to.
Darin: Great strategy! It sounds like you have strong, small local community bank relationships for your smaller deals. When COVID hit, were you able to go back to some of those lenders and get better terms on your existing smaller deals? Save yourself some additional cash flow?
Anna: I believed at the end of 2018 when the market was starting to rumble that we were heading towards a recession. So I thought in 2019, we're going to hit a recession probably by the end of the year. I was a little early, but I decided at that point I needed a start. Rates are really low, they're staying low, I expected them to go back up after a few months. I called my banks and I had several loans that were coming due, the end of their five-year term.
So typically, you get a five-year term and they reset annually unless you extend them. I started calling my banks. I said, "Listen, I've got either equity that I want to cash out," because I wanted to prepare for a coming downturn and I wanted to tap into my equity at low rates. So I tried to do a cash-out refi or a second mortgage on the buildings that I knew I had enough equity I wanted to do that with.
Consider Things for a Greater Purpose
Anna: For the other buildings, I said, "Listen, I'm at the end of my five-year term. Or it's coming due within the next six months, can I go ahead and lock in another five-year term and what's it going to cost me to do that?" So I essentially paid 300-$400 per loan to lock in my rates for the next five years. I started that process about October of last year and I finished it in February of this year right before COVID hit.
So I had already negotiated those. Now when COVID hit, I did think, "Okay. Maybe this is going to be a longer, worse recession." We're starting to have some layoffs and I started to see eviction moratorium talk through the Cares Act. So I called two of my local banks. I said I haven't locked in new rates for all of them because a few of them I was going to float. There were some that I was only a year or two, I had three years to go through. So I said, "Can I pay a fee, even if it's a bigger fee to drop the rate?" Because a year and a half ago I was still close to five, four and a half, five. And get back down to the three and a quarter rates.
They agreed to do that as long as I didn't think I was going to need to ask for a forbearance. I said, "Listen, I'm liquid enough. I've got enough savings. I sold several properties to get liquid. I’ve refi’d in cash out to get liquid to prepare for a recession. I will be faithful to make my payments come hell or high water if you'll drop the right for me."
Don't Be Afraid to Make That Phone Call
Anna: I had almost all of my mortgages, even those that weren't coming due for another 3-4 years, drop the rates sub 4, and had the cash and the banks were happy to do that because they were just happy I was going to continue to pay.
Darin: That's awesome. And I would highly encourage listeners, if you do have other investments, it's just a phone call. Call your banker and see if there's anything they can do. So I go back to the prior real estate run-up before the great recession 2008. I was living in South Florida and I had a mortgage and it was with a large, well-reputable lender. They, out of the blue, just sent me a loan modification letter, "Just sign this one-page letter and we'll modify your loan from this rate down to this rate."
Because at that time loans were prepaying so quickly and so banks were losing the loan and people would go to the next bank down the street. So they sent this letter because they didn't want to lose. I wasn't the only one that got it, but it's called a loan modification. So I didn't have to pay anything for it. I just had to sign the letter.
So when COVID happened, I own a duplex and then a GP on a 76 unit apartment community but on the duplex, I called up the bank. I said, "Is there any way to drop the rate through a loan modification?" And I and I said the same thing to them. "Look, I'm extremely liquid. I have plenty of reserves. There's no issue in terms of making the payment." And they came back and they dropped the rate and I didn't have to pay anything.
Your Reputation Is Your Ticket to a Greater Purpose
Darin: Whether you pay $300-$400 or not, some people think to themselves, "I don't wanna go through the refi process. It's expensive and I have to pay for a new appraisal." Well, a lot of banks want to keep your business.
If they know that we're in a much lower rate environment and they're at risk of losing your deal and you're a good deal, then they may be willing to take a small fee and just lower your rate. So get out there and talk to your bankers.
Anna: This is still the time to do it. Lending is tightening and banks are nervous about the rental property right now because of the eviction moratoriums. But if you can go out now and you've had a good track record with them, they're much more likely to work with a borrower that they understand is stable and is going to be faithful to them.
I had to, for one of my banks, say, "I've got another bank that's modifying me at this rate, which is below your floor. So, I'm tempted to go to them, even though I value our relationship if you can't at least match their rate." And they did.
It's just a matter of a phone call, letting them know that you value the relationship, they value the relationship, the small portfolio lenders and they can't handle as many people going under as big banks can.
So they're more likely to work with you. Go ahead and try to refi now, because if you've got equity and you can cash out and lock in a new rate for below 4% pretty easily, you should go ahead, do that and have some liquidity so that you can weather any storm if it gets worse than what's right now.
Moms Have Greater Purpose
Darin: I mentioned you have a heart for moms. I think that there's a lot of moms that did what you did, they may have started in the workforce, they got married, have children and then they decided to, "I want to be home for my children." And so they did. They stayed home and that's a sacrifice.
I think that as time goes on, whether kids get into high school and they're not around as much or they go off to college, moms start to rethink to themselves like, "Should I get back in the workforce?" But there's a mindset thing. Some of them talk themselves, "I'm not valuable enough, I've been out of it for so long, who would want to work with me? What skills do I have? Then side hustles and other payment streams getting into real estate. I don't understand it." All these different negative thought processes that can go through a mom's mind. How do you deal with that and help other moms take action and get past that?
Anna: I have a lot of friends actually who were able to stay home with their kids and their kids are getting older now and they're in that exact place. They think that what they've done has somehow taken away their edge and their ability to be productive in the workforce. And I think a lot of times, what I hear over and over from moms is they've lost their identity because their identity has been completely in their children and raising their families.
Knowing Yourself Is Knowing Your Greater Purpose
Anna: Just a matter of encouraging them that, "You are a brilliant woman, you've worked, you've taken care of the kids and the household and you've taught them. It is time when your kids are a little older, to be able to regain some of that identity and figure out who you are and who you're becoming outside of just the role of wife and mom."
Just encouraging them that if I could do it while I was working, they could do it too. They've got time and it's worth putting in the time to really realize what their dreams are.
I spend a lot of time with my coaching students. Before we start teaching them how do you buy properties, what do you really want out of life? What do you really desire to gain? And why do you think you want to do real estate? Or why do you think you want to get back into the workforce?
Is it you've just got this inner determination that you want to become successful or is there a certain dollar number that you need to help pay for your kids' college? What is it that you're trying to achieve and why? And then once we know that and that is ingrained in you, then I'll teach you the fastest way to get to where you want to go in a way that's not going to make so many sacrifices for you, that it's not fun in the process or you think this is too hard or why am I doing it this way?
So knowing what you really want and then figuring out how to get there and realizing that you are worth it and that you've got many years ahead.
Be Young at Heart
Anna: I'm in my mid-40s and I feel really young some days and other days I think, "Oh my goodness, I'm halfway through life, like almost over the hill." But I think my grandmother is 94, she's almost 50 years older than me and she's had an amazing second half. I think it's important for us to realize our time with our children is just a small part of our life, a third or fourth of it. There's much life left to live and many more great things that we can do.
Darin: I feel the same way. I feel young at heart and my kids are like, "Dad, you got white hair." I'm like, "But I look at the mirror, I don't see that." They're like, "Well, you got to look harder."
But you said, "If I can do it, you can do it." I think that that is such a great message because moms I think need to know that other people have done it and then what a great way to go out and achieve it yourself, is to learn from somebody that's already done it, to attach yourself with a mentor that can lead you through that process.
The other thing is, I know now with COVID we have a ton of unemployment, but let's talk about right before COVID, we were at the lowest employment in history so my thought process was there are two things. One is do I want to go work for somebody? And two is, do you want to do a real estate career or some other kind of entrepreneurial process? But it's all about mindset, still is. Am I good enough? And I'm like, "Look, people want to deal with people that they like and that are personable."
Your Network Has a Greater Purpose
Darin: Everybody has relationships and moms have built tremendous relationships through different child PTA groups and hanging out with other moms and you have your own network that you can pull from.
Also, I've seen some moms that were not working, get involved in real estate and not only make great money for themselves but also because of the tax benefits, they've been able to really help the family because some of the depreciation associated with the real estate can offset some of the income from their husband's income.
A lot of people don't even understand how that works. So, there are so many different factors that, yes, you are valuable, yes, go out and find somebody that can help you along the way and Anna right here is one of those people.
Anna: Yes, thank you for that. I think as women, one of the things that I'll say that I think makes certain women feel, "I just can't do this," is they see a lot of young guys out on Facebook and social media and they're working 10X and they're up at five and down at midnight and grind, grind, grind. It looks like they're making all this money because they're doing all these deals. And the reality is as a woman, of course, we're just as capable. Intellectually, sometimes women are more capable than men, studies show that. So I don't mean to sound sexist.
We have this brainpower but the issue is when you're a young single guy or you're a young married guy with a new baby and your wife is at home taking care of them, you can give it all you got all day and then come home and have someone that's taking care of the house, kids, and food for you.
Have Faith to Yourself
Anna: When you're the mom and you're working and you're raising the kids and now because of COVID they're homeschooling like I've got one home today, I had two home yesterday sick. It's like, "Okay, now I have to be a wife, I have to be a mom, I have to cook, I have to clean, I have to train the kids and know that by the way, I have a full-time job and now I'm doing real estate too."
So the reality is, it sometimes takes women longer to seem like we're reaching success and doing it well because we're juggling so many balls.
Women need to give themselves the grace to say, "No, I can't give it 50 hours a week and become a multimillionaire in a couple of years because I still have to keep the first thing the first thing." And that for most of us moms is that nurturing and education of our children. So yes, it took me longer and it seemed like it took forever.
Only looking back when I retired at 44, could I say, "Wow! I retired 21 years early while working full time, helping my husband run a business, raising my children. How did I do this?" And it was because I had faith in myself, I had faith that I was going to take it one day at a time and do it for however long it took me to reach those goals, instead of comparing myself to the young guys on Facebook or the guys whose wife or the trophy wives that stayed home and did everything that could get it done faster because they could give all of their time to that.
Realizing Your Greater Purpose
Anna: We as women have to realize we're not in the same position as a lot of the men that we see out there doing these deals and it's okay. You can still have that balance and you can be a good wife and a good mom and smart and bring in money and a good entrepreneur. It's just going to take you a little bit longer to do it all and to feel like you've made headway towards your goals.
Darin: I think that's great because it brings so many more women into the fold if they don't have that pressure that they have to become an overnight success. What I was thinking when you were telling that was progress, not perfection.
Everybody has their own timeline and it's not a race. It's just trying to give back and trying to help other people advance themselves and it doesn't matter how fast you go. But if you take action to move forward one step at a time.
Anna: Right. And it's all about that gradually expanding your means. For some people, real estate is, "I'm doing big deals and huge chunks of cash and its growth for wealth." Other people, it's like, "I just need an extra $500 a month so I can put my kid in a private school or so I can go on a family vacation. Or whatever it is."
And so, every deal that you do, no matter how small that brings you in a little extra cash flow, is progress on your journey. And so you just need to think of it as this is a long game of creating real estate wealth that lasts over time and not a sprint that you're going to get burnout doing.
The Greater Purpose Capital
Darin: Before we started this show, we were talking and you mentioned that you are about to come out with a new website and you're creating this new brand. Help us understand what that's all about and where that's coming from.
Anna: Thanks so much for asking. So, one of the things that has been on my heart for a really long time, Darin, as we mentioned is because I grew up in section eight housing. I've always had a heart for young kids in the same situation and for single moms and have done a lot with inner-city youth ministry in my younger years when I was in Houston.
During the time that I lived in Pennsylvania, really over the last 13 years of growing my husband's business and mine and working and raising kids, I really didn't have much extra time to give back to those causes. Now that I really am financially free and I don't need to do another deal just to do another deal, I don't want to do another deal just to do another deal, I really want to spend my time doing deals that have a greater purpose and a greater impact on the world.
So I'm launching my new capital brand, which is Greater Purpose Capital, where I'm really committed to bringing alongside me investors who equally want to make an impact with their dollars. Maybe they don't have the time to make an impact in serving, but they can invest in opportunities that are going to make a greater impact for their own families and create some passive income but also really make a greater impact on the communities in which they invest.
Leaving Footprints to the Community for a Greater Purpose
Anna: I'll focus on taking down apartment buildings and potentially some homes for people with intellectual disabilities like autism and assets where we can create strong returns for our investors, where we can work and create programs, where we're giving back to those residents that we serve.
For example, I'm working on some education for children who are in apartment buildings to teach them how to master their money and how to get out of the cycle of poverty. Teach them what is poverty mentality, that cycle, and the things that they can do to master money so they can break that cycle.
I want to be able to have programs that teach single moms how to get involved in real estate and create financial freedom. These things where I really can make an impact is so important to me – to spend the rest of my time and energy. Not just trying to think of creating returns, get in, get out in 3-5 years. But let's leave a lasting impact on the resonance in those communities and make their lives better as we do it.
Darin: That's awesome that you're at that place in your life. It's obvious that if you're making this choice and the shift, that not only are you looking to serve the communities, but you've built up a reputation and an investor database that you can choose who to work with to make sure that you're both in alignment. So you're putting yourself out there saying, "I can invest in a lot of deals, but I'm going to choose to invest in deals that are important to me. Not only financially but also have this other importance. I want to bring other people alongside me that are in alignment with that. I want to attract those types of people."
Giving Back to the Community
Darin: From my perspective, I'm still on the camp of, "Hey, look, the property could use a new paint job and new interiors and if we do that, then, we're helping the residents because we're giving them a better community to live in. Then we can afford to charge higher rent and then we get better returns to the investors." I'm at it from the business side, you are 5, 10, 15 years ahead where you don't have to do another deal and you're choosing to align yourself with other people that are very like-minded and I applaud you for that.
Anna: Thank you so much. I think that in some ways when we think it's either-or, we've got to create these strong returns for our investors, so we put the lipstick on the pig, we make it look nice, we flip it and everybody's happy, but it doesn't take really honestly Darin, a whole lot of money to go a little step further. Maybe our returns will hit 0.1% or our IRR is 0.15% less. But if I can go in and create programs and teach one or two residents even in that community to get out and move out and move on to better things, I'm happy that I've done that.
I'm happy to take a teeny tiny hit in my returns and still really do good while I'm doing well for my investors. There are other groups out there that actually have hearts to come in and work with people in apartment communities where we can create some synergies with those groups like Children's Hunger Fund, for example, to come in and bring school lunches for kids that are at home or bring them backpacks and school supplies before they start school.
It Takes Purpose to Help Others
Anna: So it doesn't necessarily take a lot of money, it just takes a purpose, where I'm going to align myself with others in the community, who also want to pour into the lives of their community and to create some strategic partnerships and programs where we can do that without spending a significant amount such that it has to be either I give or I make money. It really can be both.
Darin: Yes. But you also have to have the heart for doing that. It's obvious that you do. And I know other investors that have that focus, where they build community and they bring in third-party groups to bring backpacks and whatnot to the children and I think that that's fantastic. Hopefully, someday I will have a heart for doing that.
My thing, I tithe to the church and I'm more of a check writer. Make money and write a check and have somebody else disperse it. But other people just have a heart for getting out there and really impacting people on an individual level and I applaud you for doing that and it's awesome. With that, let's shift over.
I know that you have a very strong faith and some of the people that told me, "Hey, Darin, you got to talk to Anna," they have a very strong faith and Christian faith and they're like, "Anna is just salt of the earth." So talk to us about your faith and how that's led you through your career in real estate investing? And I'm sure that that has something to do with your new brand as well.
A Woman of God Is a Woman of Greater Purpose
Anna: My parents were Christians and believers, and even through really hard times taught us that God will provide a way and God will take care of us. And we had some churches that came to pick us up from our apartment complex through VBS Ministries to take us to church when my mom couldn't and people that were pouring into my life.
I went through a lot of really difficult things in my childhood, my mom was married multiple times to very abusive men and so I had to take care of her and the kids. My siblings that I called my kids and just went through a lot of things. But I always had this knowing deep, deep down, there's a scripture in Romans eight, that says, "God is faithful to work all things together for the good of those who love Him and are called according to His purpose."
And I knew that from a young age and every time I went through something difficult or I cried or I had challenges in my adult life, through 2008, everything that seemed to not work out, I just had this faith that God has something bigger.
He's got something planned and that if I just got through every challenge, put my faith in Him to work it all together for my good realizing that every trial and tribulation creates perseverance and it creates character. It makes us the stronger, wiser people that God is making us to become for the greater things that he has for us in the future. If we hold on to those promises, we can get through anything, we can stay determined, we can continue to persevere.
Faith Will Keep You Stronger
Anna: Oftentimes, it's not for years or sometimes decades, that we see how could these hard things possibly work out for my good, and looking back and even creating this brand, Greater Purpose Capital, it's always been on my heart to help other kids to get out of this cycle of poverty and figure out how I can help them and make a greater impact than I can one on one.
It's going through all of these different challenges that's really given me not only the wisdom that comes through living through a lot of that but the financial means that I've actually created financial freedom. Now I can go back and really be that evidence to kids that I'm not just telling you what's in the books, but I have done it.
God has been with me and if you trust Him and you put your faith in Him and you learn how to love God, love people, use money and never give up, there's hope on the other side and it's all going to be okay.
And it's just something that's been in me and I've known it and been very thankful that God's constantly given me that peace through many, many storms that He's working it all together for our good and we just have to keep going.
Darin: I just got chills. It says be the light and you are. I see it when you send out Facebook posts and you talk about your successes, more times than not, I read you're giving the glory back to God. You're extremely grateful and thankful and you're not hiding your faith.
Money Is Not the Bearer of Joy
Darin: I know that for me there's been a lot of crossroads in my life and I've had to turn to God and actually just starting this podcast back in February. I was locked and loaded trying to get a 200 unit deal done and I thought we were going to win the deal and we came up runner up. And afterward, I was like, "All right God, what do you want me to do?" I had one of my goals was in 2020, which was to start a podcast.
Well, He just put the idea in my head, I looked on my phone, "Where's a podcast conference?", there was one going on the next week in Orlando, I flew down and now I've had the pleasure of getting to know Anna Kelly. I wouldn't have been able to do that most likely if I didn't start the podcast. So God, can see things that we can't and so lean on His understanding not our own.
Anna: 100%. It's really important to me, as a believer. Yes, I pursued financial freedom, but the money isn't what brings joy, the money isn't what brings happiness in life. Money can allow us to have a greater impact and have an easier journey in some ways. But really, you can have all the money and all the business success in the world and have a family that's falling apart, be emotionally not strong, and be lacking something.
I know that true freedom and true joy comes through knowing God and his love for us. This is what you can do to grow wealth, really the wealth that matters, and that lasts is that joy that comes from knowing the Lord.
There's Fulfillment in Helping Others
Anna: It is important for me to share that with people because I don't want people to look at Anna and say, "Anna is someone who was poor and became really wealthy and that's why she's valuable."
I could honestly lose everything tomorrow and I would be okay, living back in one of my little four-unit apartment buildings. Would I like it? No. But would I be okay? Yes, because the money isn't what's important. It's the joy that comes from the life that you're creating by design. And that's something that can't be taken away from you whether you lose the next deal or get the next deal, the economy crashes or not. That joy is something that's lasting when you really know God and you know that He is for you.
Darin: You said it before, "I don't need to do another deal." But, you're choosing to stay in the game and choosing to teach other people how to do it so you're giving back, you're serving others. So, that's fantastic. Anna, what do you do for fun outside of real estate?
Anna: I love to just spend time with my kids now going down to the beach. It's something that we didn't do for many years because we were working so hard and grinding and not taking the time to stop and smell the roses on occasion.
Darin: What beach are you going to?
A Mom Outside of Work
Anna: We primarily go to Ocean City, Maryland. So we have two beach houses there now and we've enjoyed going there and making memories. We have a bayside resort, so there's private beaches and indoor pools and we have a fireplace. So we like to go and get away for the winter and just enjoy seafood. Really, that's our happy place and our memory place that we just pinch ourselves every time we're there like, "How did this happen?"
So we enjoy going to the beach, I enjoy being able to be done at 3:00 or 3:30 and go watch my kids play sports. Thankfully in Pennsylvania, they're able to play sports again. Just being able to enjoy the things that I feel like I missed during the hard years of having to work to five and missing my kids' games. I just am so thankful that I get to just go and enjoy kids being kids and watching their games and grabbing ice cream and singing with our windows down. Just really the little things in life is what make me most happy.
Darin: That's fantastic. Anna, I really appreciate you coming on the show and sharing so much. I can't wait to continue to watch how you inspire so many. If people want to reach out to you what's the best way for them to reach you?
Anna: You can send me an email at email@example.com, you can follow me on Facebook at Anna REI Mom Kelley, or find my websites @reimom.com and greaterpurposecapital.com.
Darin: Fantastic. It was a pleasure getting to know you and thank you for sharing.