Guide Yourself to the Dream Lifestyle with Passive Income
On this episode of Next Level American Dream, Abigail and Sean are joined by Anna Kelley. Anna, known as "The REI Mom," is a full-time Multifamily Real Estate Investor and educates the masses on anything and everything real estate. During the episode, Anna discusses her former corporate job dealing with investments, her family life, and her lifestyle as a REI Coach.
Key Topics
Anna's Background
Experiences as a REI Coach
Her new American Dream
Connect with Anna Kelley:
-
SUMMARY KEYWORDS
buy, debt, work, money, property, unit, Real Estate, Multifamily, people, tenants, flip, AIG, home, baby, American Dream, pay, learn, house, mistakes, create
SPEAKERS
Abigail Thomson, Anna Kelley
Abigail Thomson 00:01
Welcome to the Next Level American Dream Podcast brought to you by Thomson Multifamily Group. Your hosts, Abigail and Sean, will discuss how you can take your American Dream to the next level through real estate investing, business practices, and personal development. Join us as we share our experiences as a father daughter duo who are trying to accomplish our goal of financial freedom. We hope you learn more about how to define and achieve your American Dream. Here's another episode of Next Level American Dream. Welcome to the Next Level American Dream Podcast. We have a great guest for you today, but first, please make sure you've subscribed if you haven't already. We also love getting your feedback through likes, comments, ratings, and reviews. Today, I sat down with Anna Kelley. Anna is known as the, 'REI Mom,' is a full time multifamily real estate investor and educates the masses on everything in anything real estate. During the episode, Anna discusses her former corporate job dealing with investments, her family life, and her lifestyle as an REI coach. If you found any value from today's episode, then please share it with a friend and help us grow! For more information on our sponsor, visit: www.thomsonmultifamilygroup.com to start taking your American Dream to the next level through passive investing! Hi, Anna, thank you so much for joining me today! How are you?
Anna Kelley 01:24
I'm good. It's so nice to be your guest!
Abigail Thomson 01:27
I'm so excited to have you. Let's start off with telling our audience a little bit more about yourself. So, what's your background in business? What are you doing now?
Anna Kelley 01:37
Sure! So, I started out my career actually, in the financial sector, I was a private banker for Bank of America. We managed the wealth of the top 10% of the wealthiest clients in our bank. We taught them about retail investments, traditional investing in stocks, bonds, mutual funds, things of that nature. No one had ever really talked to me about real estate. Through all of my training in college and my business degree and going through financial advisory training, I had never once taken no budgeting class, I didn't know how that make money. I knew how to tell you what to do with money once you had it and how to make more. But nobody really talked to me about funding, how do I get rich? How do I create wealth and have financial freedom and independence. And so in talking to some of my wealthy clients, I had an older gentleman, when we talked to him about the returns, we could make him at our bank through our products. He laughed at me. Now number one, I was in my young 20s. And he was probably I don't remember in his 50s or 60s at the time. But he said I make much more than that in my real estate investments. And it was the first time I knew anyone that had real estate. And I thought, you know a bunch of my wealthy clients have real estate, that's something I should, you know, learn more about. And one day I'd like to own some. But it wasn't until about five years later, when I had my first child Abigail, I held that baby in my arms, I had been climbing the corporate ladder I had bought into the American dream of you go to school, you get a good degree, you're driven and you're determined and you climb up the corporate ladder, you're going to make all this money, and then you're going to be happy, right? I grew up in section eight housing. So I was very determined to get out of that. And so the money was what I thought was going to buy my happiness, right. Then I had a baby. And I realized all I want to do is be home with this baby. And I don't care how much money we have, I just need to have enough that I can be home with him. And I can be the one raising him. And putting a child in daycare was the hardest thing I ever did. And what happened was I had been climbing up this corporate ladder and doing really well. And I met someone and fell in love. And my husband was a new hire Proctor coming out of chiropractic college with six figures in debt. When most people at that time had you know, $40,000 education. His was, you know, six figures. And so we had so much school debt. And he came out of school basically making about $35,000 a year as an associate chiropractor for other doctors. And I made about triple that. So there was no chance for me to stay home with my baby because we had six figure school that we had a car payment. We had a house because we were chasing that American dream, right? You get married, you have a house, you buy a new car, and then you have kids and the debt that we had kept me from being home with my baby. So during the time I was pregnant with him, and I'll fast forward the story because that's a long story. I was watching a lot of HGTV and it was the year that all the flip this house shows had just started to come out in 2002 and 2003. And I was convinced because they don't really tell you all the behind the scenes costs and nature that I could flip a couple houses and easily make 90 grand a year and I'd be home with my baby at no time. So we flipped a house didn't go well. We made a lot of mistakes, and last a lot of money. And my husband said, We are never doing that again. So I said, well, you're going to have to quit working people and making $30,000 a year and open your own practice. So entrepreneurship must be the way to create financial freedom enough for me to be home with my baby. So we picked up from Texas moved to Pennsylvania, where he's from. And we started a practice in 2007, the height of the economy. And we bought a little building that was a mixed use that had an office on the bottom, and three tenants on top and some garages. So I bought first real rental property, multi-unit rental property, because we just wanted a place where he could practice and we realized it smarter, cheaper to buy the place and have some tenants paying rent than it is for us to lease space. So the hope, again, was that I could be home with my kiddos. Long story short, I also bought a four unit apartment building, we decided to house hack, because I worked for AIG. And AIG was one of the largest companies in the world. My job was very secure. But they were letting me try working from home for six months. And they said, we'll give you six months. Nobody works from home, we don't think it's going to work. But we'll let you try it right. So I said to my husband, we can't afford to buy a house, we're starting his practice with the building and his equipment and startup loans with $700,000 in debt to start his business. And I said, it's not very smart to do this. So we need to, let's just buy that for unit down the street will live in one of the units, and we'll let our tenants pay our living expenses. And at least if I lose my job with AIG, we will have a roof over our heads, your practice will be getting off the ground, and we'll have enough to pay for diapers for our babies, right? 2009 happened and the world economy collapsed, AIG almost went under, there was a multibillion dollar loan to the government, I was told I was going to lose my job. And my husband's business was hit hard. Lots of debt. And the only thing that was going well, Abigail, was that my tenants were still paying. And I had this aha moment of the largest company in the world, one of the largest company in the world was not nearly as safe as I thought it was, depending on a corporate job wasn't nearly as safe as I thought it was. starting a business and being an entrepreneur, er was a really risky thing. And was really, really hard. And the only thing that I could depend on was that stable monthly rent that was coming in from our two buildings that we own. And I knew at that moment, despite all of my financial training, I didn't know what I didn't know. And I had to take control of my finances, and take control of how I made money and not depend on a business and not depend on an entrepreneurship, but to depend on and create more passive income. And that's really in 2009 and 2010. When I got really serious about real estate investing, I had bought other properties. I had a small condo in Texas, we bought a house on speculation, we flipped and had a small tenant. But it wasn't until then that I realized, this isn't just a way to protect ourselves and have a little roof over our heads. This is the way to create that financial freedom to allow me to be home with my babies. And that's what started me on the path and the journey to where I am today. And I currently am primarily a multifamily singer and operator, I have ownership in little over 1200 doors and about $160 million in realist date, from that time with nothing in 2009 until today in 2021.
Abigail Thomson 08:46
Wow, that was an incredible story. I loved your aha moment of passive income, because there's so many people that are on the path that you were on where they think that this is the traditional steps or the way that they're going to create this incredible lifestyle that they want. And in reality, so many people don't know what passive income is. And I think that that's was absolutely incredible. So you mentioned you're currently now a multifamily syndicator. So you started doing more multi-unit stuff. Why didn't you want to start with single family? So many people go from single family to multifamily? How did you go from just that one flip house was just a bad experience to straight into multi units.
Anna Kelley 09:45
Really, it was just because I had enough financial know how to know that we need to be able to sacrifice today for what we can grow tomorrow. And that having another big house when we had all this debt was a really risky thing. To do, right, so I saw that there was a practice for sale that had tenants and I knew that if I could spread that mortgage payment across multiple units, that was the smarter thing to do than lease the space. So buying the first mixed use building was really just to help my husband's business get off the ground, and not take as much of a monthly expense on ourselves by leasing a space as we could, by having tenant help cover that. The same thing with the unit. The only reason we bought the four unit is because we lived with mice for a year with a three year old and a 10 month old while we were starting his business. And I'm like we've got to get back out into on our own. And it was very humbling, but very hard to go from a very big house a nice place in Texas to moving in with your in laws with two little babies not having your space other than a bedroom, right. And then thinking, we need a house. Well, we knew we needed a house. But I also knew, you know, we have $700,000 in debt, we can't afford to buy a house. And I may not have my job in a few months because it was a trial. So when I saw that four unit apartment building, it was like, hmm, it's really nice to have these tenants paying for the practice. Why don't we just move into one of these apartments and have our tenants cover our expenses. So the two small multi-unit bought, I bought as a protection, airy move just to be financially wise, I didn't buy because I was thinking these will make great investments down the road. I just wasn't thinking about that at the time. I just wanted to be home with my kids, and be smart given that we were taking so much debt. From that point, though, Abigail, the town that I'm going to is a pretty small town. So I went to Houston, Texas, millions of people to a town of 7000 people. And so the investment properties I did see on the market were mostly four unit apartment buildings. And so I thought, you know, it's been really nice to have these four unit buildings, there's another one for sale. And if I put the down payment on one of them, I've got four tenants paying rent instead of one on a house, right? So it wasn't even a conversation in my mind or with my husband, should we buy a single or should we buy a mold guy, it's like, there's another four unit, I've lost two thirds of my 401k, by the way, in 2009, because I was heavily invested in AIG stock and financial sector stocks. I took what little I had left in my 401k. I took it out, I actually borrowed against it. And I use it as a down payment on a four unit building that just popped up on the market. And I thought, if I lose my job, I'll have an extra 16 $100 a month coming in from that four unit. And that'll pay for groceries, and the new baby that I found myself pregnant with the week that everything was collapsing, right? So it was just starting out to be this is a protection, there's something for sale, let's buy it and buy ourselves some cash flow. So I recognize the power of that 16 $100 a month that would be met on a four unit. I'm like, okay, we need to buy as many four unit properties as we can. And so I really just stopped there and kept with that. I did buy a few single family properties, foreclosures, there were a lot of foreclosures in 2010, and 2011. But every foreclosure that we bought, the reason we bought them is because we knew that the first failed flip, if we updated a few properties and did so successfully and learned from the first failure that we could make 40 or $50 for per flip and then use that equity as the down payment on our next multi-unit property. So for me flipping and singles was always the way to get more cash to buy more cash flowing rentals, like four unit buildings, when otherwise we never would have been able to grow, Abigail, because we had serious debt, no lenders would lend to us and we didn't have money to make down payments on multis unless we created it through rehabbing single family houses in order to do that.
Abigail Thomson 14:02
Oh my gosh, okay, so I want to unpack some of that. And we're going to, we're going to break it down a little bit. So, I have one question. This is a little personal, so you don't have to answer but when the crash happened, did you end up losing your job or were you able to stay on?
Anna Kelley 14:21
It is amazing. And by the grace of God that I never lost my job through years of AIG downsizing and cutting and selling off businesses. Part of the reason for that Abigail is because I worked in one of the most complicated complex divisions of our company, I worked with ultra-high net worth investors and what we did is we allowed them to bring private placement investments similar to an apartment syndication, and we'd allow them to select a syndication or a private placement and bring it to us and then we would custom make them an insurance policy that allowed them to earn Invest in that fund within their policy so that the value and the income grew tax free for their heirs. And so I worked with offshore hedge funds and offshore investments and the SEC handled audits and things that were very, very complicated and hard to hire out. And so our division is so complex to unwind that they couldn't sell us. And my job was so specialized and needed that they had to keep me. And so two years ago, I actually walked away after 20 years at AIG and retired without ever being laid off. But in 2009, and 2010, we were told many times, we're probably going to be sold, you're going to start, you should start looking for another job, and I didn't, then lose it.
Abigail Thomson 15:49
Wow, that's incredible that you didn't actually end up losing it. And that very stressful being constantly told that you are going to, but that's intense. And I'm sure a lot of those skills you're now using for your apartment syndication business, because that's really, really awesome information to see the other side of it in a whole different world, and with a significantly more risk and higher amounts. have what are some of the skills?
Anna Kelley 16:19
Oh, absolutely. You know, at the time, I just thought, here I am wanting to wanting to do real estate so that I could be home with my baby. Yeah, not having the money and having too much debt that I couldn't be home with my kiddo, right? So kind of be grudging. The fact that I had to go to work every day, my mother in law was raising my kids during the day, I had this mother skill because I wasn't there. But yet I knew that my job was what was sustaining us and that my job was, you know, I needed to keep my job and keep doing well, during you know, during this crash, I kept hoping that I'd get a package. Because I had been there so long, I thought if I just get a package of you know, 70 or $80,000, then I will use that to buy more property and I'll retire, right. But we could never get there because up on with the economy. But I realized sometimes life happens in such a way that we think things are happening to us. And really, they're happening for us. And my job was a perfect example of that. Because I never would have imagined, you know, back in 2009, we were $700,000 in debt. We had no money to our name, it was all in the business. Yet I was working with clients and brokers, their wealth managers, helping wealthy people to make more money. But I was I was struggling to find out myself. But through what I learned working with investments, and working with the SEC, and working with audits, I learned to have a financial mind. And I learned about risk mitigation. And I learned what wealthy people do to grow their money, right. And so it helped me I never envisioned at that point, that I would walk away retired from AIG, and be one of those accredited investors that I used to help them to make more money. But it was really kind of an epiphany when I walked out that wow, not because of my job, not because of entrepreneurship. And despite what happened with the economy. Someone who works full time has four kids, helps run her husband's business can truly create wealth, significant wealth, art time, buying four unit apartment buildings, and make enough money that I could replace my six figure income, walk away, an accredited investor and completely debt free. That can only happen in America. You know, I'm just so blessed and thankful that I had to work because it gave me the determination I needed to actually make it happen. Yeah. And I learned the things that helped me to be a better investor today, and a much wiser investor in the types of things I buy, and how I help my investors make good decisions and the right types of properties to buy to extend their wealth as well.
Abigail Thomson 19:02
Oh my gosh, every single time you answer one of my questions, I am just completely astonished at the fact of how you can just talk your life in transformed it so much, and what that did for you and your family. And that's just beyond amazing. And I'm in complete awe. And almost speechless. My next question. And again, this is slightly personal. So once again, you don't have to answer this, but are you guys debt free now because of what you did with real estate?
Anna Kelley 19:37
So, I'll tell you the difference. Debt free? No. In control of my debt? Yes. There's a big difference in that, right? So, in the beginning when my husband came out of school, we had all this debt. We follow Dave Ramsey. I went through something called Financial Peace University, which was a 14 week class, which I'm telling you, Abigail, even though all my financial advisory training I had never had personal budgeting classes. When I went through his program that teaches you to live below your means, and to get out of debt as much as possible, we use those principles to live well below our means, and to pay off my husband's school loans in seven years. So by the time we came to Pennsylvania, we were debt free. But then we went right back into a lot of debt. And half of that was to start a business and half of it was to buy the property. So what I realized through that is, he says something that is in the Bible, actually, it's the borrower is the slave to the lender. And that is very true. The reason I couldn't be home with my baby, when I had him in 2003, is because we were in so much debt, that I was slaving my time away to pay off the lender to pay off those school loans, right, and then to pay off the business loans. So I view debt as a very powerful tool, but a very horrible Master, as much as you can avoid debt for personal things for school loans, even for cars, and for house payments. And for vacations. Avoid debt, I don't believe in debt in that regard. The only debt that I'm comfortable with, Abigail, is fixed, long term, low rate debt, on mortgages, for cash flowing investment properties, where the tenants income is paying down that debt, and leaving me a lot of extra income for myself. So I love that for mortgages on cash flowing investment property, right. And you can actually significantly increase your net worth and your cash flow by using leverage or using debt. Because nothing else Abigail, if I'm going to go and I'm going to buy stock, I can't generally borrow 80% of that money and buy the stock. For real estate, I put 20% down, sometimes zero or 10%, down, borrow the rest, and then create myself 1000s of dollars a month in income because I borrowed money from the bank, as long as those tenants are paying down that debt. And there's enough left over to give myself some wiggle room if they can't pay. I am all for debt. And I will always continue to borrow from the banks as much as they'll let me borrow, as long as those rates are low and fixed for a very long time.
Abigail Thomson 22:23
So, that's really interesting. I'm curious, are you using bank loans for funding your properties? Are you using private lending or investor connections for that now, if you have expanded your business?
Anna Kelley 22:40
All of the above! Any way that I can leverage other people, other people's money, other people's time, other people's skills and experience, I learned to leverage other people, because in the beginning, we tried to do it all on our own. Like I said, when we flipped properties, why we didn't love flipping properties, but we knew it was a way we could create our own money to buy our own deals. If you don't have any of your own money, you've got to leverage other money. And that could be leveraging money or investment accounts, like I took money from my 401k. Or it can be leveraging money from my bank. Or it can be borrowing from private lenders, which I've done multiple times. It can be a hard money loan, which I've done. It can be partnerships, which now I do all the time. And so now when we buy big deals like really big apartment buildings, we raise money from investors, and we're creating them a return, but we're using their money as the primary down payment. And then we're borrowing the bank's money for the difference. Now I'm investing in every deal that I'm purchasing as well. But I always want to put as little of my own money in a deal that I can and borrow or leverage the rest if possible. And that leaves me more money to continue to do more and more deals, spread, spreading my money across multiple deals, instead of having one chunk of money and being able to afford one property and being stuck, unable to buy anything else. Right?
Abigail Thomson 24:03
Wow. Oh my goodness, this is probably one of my favorite interviews I've done so far. I am blown away. Okay. So the next thing I want to talk about is how has that changed your personal life? Because before you were always feeling this? Mom guilt, like you mentioned before you had this intense desire to be at home with your family. What is that progress looked like since you started doing the real estate since you had that four unit at the very beginning? And what that looks like now and in your world today?
Anna Kelley 24:38
Yes, that's a really good question. So you know, for the first it took me from the time in 2009, right before the crash, maybe late 2008. I thought we are a year away from my husband, making enough money in his own business and I'm going to be able to leave my job and in one year I'll be home with my two kids. And the third one That was on the way. And because of the crash, that one year timeline was extended. And what I didn't know about at the time were syndications. I didn't know much about syndications. But at the time, nobody was lending to anybody that didn't have a lot of experience, right? And so syndications were harder kind of at that point. So we had to do everything on our own. At least it felt that way, right? We were so busy working full time trying to keep his practice afloat and raising these babies that I still had a lot of mom guilt, because I'm like, they're there with my mother in law during a we're working on parties at night. They're lying on yucky carpet watching us paint till two o'clock in the morning, our own apartment units. They're in the car with us driving around meeting with tenants, and, you know, they were always with us. But I felt like the quality of their lives were not good. You know, I thought I'm a horrible mother, I can't be home with my babies, I can't figure this out. It's so hard, I thought it was going to be so easy. And you do have that mom guilt because you're doing you're spread so thin, right? So fast forward several years, I realize they are seeing what it takes to work hard and to create, you know, the dream life that you want. And there is value in that. But I struggled with mom guilt until the day I walked away from AIG, which was two years ago. So again, we moved here in oh seven, I thought a year or two away. And it took me until 2019, May of 2019 to actually retire and to have created enough wealth, enough cash flow and net worth, that I knew if I never bought another deal a day in my life, we are set for life, we're truly financially free, if we don't choose to expand our lifestyle, right. So once I retired, it totally changed. Now I will say this, it took me till my last child was already in school, to be able to retire from my corporate career, I dream of being a stay at home mom never materialized in the way that I envisioned it right. But at the same time, I'm still thankful for it all because it was the written the determination that really got us to where we are now. And now, I have built my multifamily business in such a way, Abigail, that by 330, when my kiddos walk in the door, I turn real estate off as much as possible. There's always something urgent, there's new deals, you know, I'm always on and working a little bit. But from 330 until they're in bed at 930, I'm wife and I'm on and we're making memories. And so the mom guilt is like it's completely gone. Because I no longer have, I no longer feel like I have to do that next deal. And if I don't answer this call, while I'm at their ballgame, I'm going to lose out on a deal that can get me home, it's like I have enough that I'm content. And so nothing, no one more deal or one more, you know, notch of an acquisition fee is going to make me sacrifice the time I have with my babies, because that's what I've done it all for. And so now I really have that balance and the guilt has gone. So but it took a long time to get there.
Abigail Thomson 28:05
I can only imagine. And something that you didn't really mention, but we talked about right before our interview started is one of your sons will actually be joining you shortly and helping you so all of your work and then seeing everything happen, actually inspired him to want to go into the field now, which I think is really interesting. And is what happened to me. It relatively with my dad, which I think is really interesting and awesome. It kind of pays off you show you see that? Oh, well. They saw me do it all. And they saw all the hard work. And he still thinks that this is the best path for himself. And he wants to join you and you guys get to continue building that which I think is really awesome!
Anna Kelley 28:49
Thank you! Yeah, it is really rewarding. Because I will say until about a year and a half ago, all of my kids who hate real estate, I'm never buying real estate, I'm never owning real estate, because all they saw was the blood, sweat and tears and us having to be so active in all of our real estate, like the idea of passive income. It's built on the blood, sweat and tears of years of active income. So it's not passive day one. If you start with a lot of money, sure, you can invest passively day one and never have to swing a hammer. But when you start with nothing, you're going to work really hard for a really long time until it's passive, but it's all worth it right. And so now to have the Epiphany in my son to go, Wow, Mom, I can go to college and I can work like you did. And then I'm always going to wish that I had financial freedom. They are now enjoying the fruits of what it really means to be financially free. We're going to travel a month this summer and go wherever we want. And we can do that without having to worry about a job because of what we've built and he sees that he sees the lifestyle that we have now and the fruit of all the hard work and it's made him finally go okay mom, I want to do what you did. But I don't want to do it the way you did teach me the money side teach me the financial side, I don't want to swing the hammers and beat it to am like we were when I was little. And so it's helped him to know he wants to do it a different way, which I love. And it's what I tried to coach. I'm a coach, too, for real estate. And I try to tell most of my students like, in the beginning, if you're not financially minded, and you don't have all the know how it's fine to get started having your own property and swinging your own hammers and doing the work. But if you if you have that financial acumen, and you want to be on the business side, that's where syndications are great partner with other people and learn the business side and hire the people to do all the stuff that I had to do myself when we started out.
Abigail Thomson 30:42
Yeah, exactly. Okay, so you mentioned your coach. We've been talking about kind of how you got into real estate and what that process looked like, and all the ins and outs of it. But you mentioned earlier that you guys did a single family flip at the very beginning when you were watching HGTV, and you notice that you made so many mistakes, and you have now kind of corrected those in doing a few other single family flips, that have now created income to produce more multi-unit purchases. So what are some of those mistakes that you guys realized you made? And then what are some of the things that you guys did after the fact that helped you kind of reframe that or resolve that issue?
Anna Kelley 31:29
That's a great question. I will say this, there's a fine balance. People are usually bent to go one side or the other between educating yourself first, and being willing to jump in so that you're not in analysis paralysis, right? Yeah, I wanted so desperately to be home with my kiddo. And he was a preemie. I was on bed rest for three months. He was born a month early. So he was sickly as a baby. And every night, you know, I'm up in the middle of the night going, I just got to figure out a way to be home, right? And so I'm like, I have a financial background. I've done mortgages for people, how hard can it be, I'll just go find a property. I'll put a mortgage on it. And then we'll just find some contractors and we'll turn it. Well, my daycare providers husband was a contractor. And he had people and they said that they flipped houses. And I knew how to get a mortgage. And I'm like, okay, I found a property. This one, this one probably can be worth I think, two or 300,000. More when we're done with it. I didn't know how to run market comps had no idea how to compare what things really should sell for, I just knew I see other big houses that have been redone. And they're selling for two or 300,000 more than this one. So surely, it won't cost me two or $300,000 to rehab it. And I've got to make money, right? Like the mistake of getting a traditional mortgage instead of going to private money lenders. So I had lots of closing costs, a big mortgage payment that I was paying principal and interest fun. Or if I had gone through a private money lender, I could pay interest only until it was we made the mistake that was a rookie mistake, location, location, we bought a property in a really walkable area really up and coming. I'm Gen X. And it was like all Gen x's and everybody was you know, having fun. And all the shops and the restaurants and clubs all walkable to this house. But this house looked out on one side at really nice property. And on the other side, it was facing a parking lot for a grocery store. And to the left, although it was blocked by mines, there were the dumpsters at the back of the grocery store. We bought the property in the winter. By the time we got done flipping it. It was late spring, early summer, and in Texas, you're in 90 degree heat. And 90 degree heat mixed with trash from the grocery store in the dumpsters made our property Reek between 3pm and 6pm when people wanted to come see it. So we made the mistake of thinking it's no big deal. Everybody wants to live in this area, not thinking about how that location could detract from getting the right buyer. And we paid contractors who were not here legally didn't do things to code, things had to be ripped out. Things had to be redone, and our property set on the market for a year. During that time, my husband lost a job. We now had to market two mortgages, a school loan, two car loans, a baby and I was pregnant. And we learned a lot of lessons about going in over our head not knowing anything about rehabbing not knowing anything about contracting. I saw a design and I said I want a new kitchen and the bathroom and I don't want this and this and this and my budgets 50,000 and they're like we're at 80 and we're going to go to 90 and we're going to go to 100 and then it took me forever to sell it and so we learned a lot of lessons about debt and about jumping too soon. So I do tell my coaching students don't just quit your day job. Because everybody says you'll make money and you can do it full time. Don't jump too soon, make sure you can meet your needs plus cover the cost of the flip if something goes wrong, right? And learn, what does the cost of a window replacement cost? How much should it really cost me to replace hardwood floors and a roof. So you need to learn about sales comps, and costs of rehab, and private money loans and get a partner someone that can guide you. But before you just jump in, and so we jumped in, because I wanted it so desperately that I didn't spend the time learning what I needed to first. And so it's important to learn, get to a certain comfort level with the next step, and then jump and not be afraid to jump.
Abigail Thomson 35:45
That's really interesting that you say that, because I feel like so many people I've talked to are just like, go and do it. Like you already know everything, I've just go do it. And it's better to just do it once learn as you go, and then keep going. But I think it's really interesting that you need to know certain things, you need to know how much it's supposed to cost. And not just blindly being guided by whatever contractor is helping you and learning that a dumpster next to a house is actually probably not the best thing in the world. But it can really hurt you in a major way that you wouldn't even come to think of.
Anna Kelley 36:24
So, it's really interesting. And it's all about risk and reward. Right. So for every real estate deal out there, there is reward, but it comes with an other side of risk. And so we have to learn to calculate that risk before we take on the risk. And the issue that I see a lot of people making mistakes on is they think I'm going to go bigger faster. Because if I do a bigger property, a more expensive property, I'm going to make more money and have to do less properties. Same with let me skip the four units in the eight units and go for a 50 unit, you're going to make mistakes based on your lack of experience you are so I'd much rather see people count the cost calculate what they think the risks are. In reality, the risks are probably greater than what you calculate. Right, right and make your mistakes on a small scale, instead of taking on something so big that it ruins you financially with one mistake. That deal even though it was a single family house, given our debt, and our family makeup, and at the time was too risky for us to take on because of what we didn't know. And so it's important, calculate your risks, partner with someone else on your first deal or two that does have the experience that can tell you what you need to you know, be cognizant of and, and the things that you don't know that you don't know, and then be willing to go you know, more all in. The other thing, just real quickly to throw out there too. So we've talked a little bit about you're young compared to me, I'm 46. And you're graduating college. So here's the thing, me starting out real estate when I was 30. No, I was a little less than that. But in my late 20s, right, me starting out really real estate flipping a property in my late 20s. We already started with six figures, a school that and a baby. So we couldn't afford to take on the same level of risk that you can or my son can, because when my son is living at home and doesn't have an income, if he goes out and I give him a $20,000 down payment, you know, in exchange for going to a less expensive college, right? And I say, Okay, I'm going to give you 20 grand, we're going to do a down payment on your first flip. If he makes some mistakes, I'm going to help him and it's not going to destroy him, because he doesn't have a family to support. He doesn't have a mortgage, people that are in their young 20s, who don't already have a highly expensive lifestyle, can afford to go all in and do a flip. And instead of working if they can live at home, right. So if your cost of living is low, you can you can retire early and go full time in real estate after doing a property or two. But if you your costs are high, and you have a family to support, the risk of going all in on a bigger property quickly is much, much higher than the risk for a younger person. So start as soon as you can take the risks early before you have people depending on you for your livelihood.
Abigail Thomson 39:17
Right, exactly. I love that point. I think that's really interesting and something that I'm very grateful for. My dad is in the same place as you are he's thinking about his retirement and how he can support me my mom and the rest of our family. It's a much different mindset, but it's really interesting. I hope that you get this feeling when your son goes on is "Your Why," shifts a little bit to it being each other and it drives your business in such a major way that you guys are able to create incredible, incredible success. So, I'm super excited for you guys and I hope it works out and that he learns a lot through the whole process and he does get to start early which is really awesome, so I'm excited for him. Okay, so my last question for you. And this was, you had some incredible information that I can't wait to share with our audience. My last question, and we've talked about this a lot. In the very beginning of our interview, you mentioned that you were chasing the traditional version of the American Dream. You have now since learned that there's multiple different ways of viewing that. So, what is your American Dream now?
Anna Kelley 40:31
My American Dream is to teach my kids to learn from the mistakes that I made, so that it's much easier for them. That life really isn't about money and about chasing money. Money is a tool that allows us to live the lifestyle that we desire for ourselves, and to live who God has made us to be. So, you know, for me, that's about service. It's about serving my children, it's about serving others, it's about helping women and children in my apartment communities, to learn financial literacy and have hope for themselves. It's about helping my investors and my students. And by creating the financial freedom through real estate, it's allowing me to live my purpose. And I couldn't really do that and give back to other people when I was so worried about just putting the food on the table for myself, that I had to work a full time job and help my husband with his business, those things in order to keep up with the debt that you have, and the lifestyle that you're choosing to live the size house and the cars that you drive, in order to try to keep up with that idea of the American Dream, you slave your time away for the dollars needed to pay for that. But if you could start out with saying what kind of life Do I want to live? What's important to me? What's my value system? How many people can I help? What's going to give me joy? If you build your business around the lifestyle, instead of sacrificing your dreams for a corporate career, right? And then hope that you could figure it out later, you'll start off with a y, which is what's important. So, start off with the why. And then figure out how do you create the passive income to allow you the time freedom not to have to work to pay for that stuff, because the money's already coming in. Now, my time, if I want to do a deal, I do a deal. If I don't want to do a deal, I don't do a deal. I want to travel with my family, and turn off my phone, I travel with my family and turn off my phone. But you've got to get the why. First, it sounds cliche, because it's all you know, everybody what's your why. If you lose sight of your why and your dream, you will get on the rabbit trail. And you'll get on the hamster wheel and you will chase the dollar and you'll chase the career. Then, your lifestyle will your needs will go up you once will go up and you can't get off the wheel when you're too far down the track. So get the why right and build your life, your career. you're investing around the lifestyle you want to live from the beginning, and you'll do a lot better.
Abigail Thomson 43:01
Absolutely. Well, this was an incredible, incredible episode that I'm so excited about. I'm so happy that I've been able to meet you. I've been following you for a little bit. We networked a while back, and I found you on Facebook. I've been following you recently, and it's so inspiring to see you building your business and chasing your dream and really going after that, and being able to do what you want, when you want where you want however you want, which I think is awesome. I'm so happy that we got the chance to sit down and talk about everything. Your story is absolutely amazing. I'm so glad I got to hear it. Thank you so much for sharing it with me!
Anna Kelley 43:44
It's been my pleasure!
Abigail Thomson 43:49
Thanks for joining us for another episode of Next Level American Dream. If you would like to learn more about what we talked about today, want to contact the team directly, or are interested in passively investing and being a part of our deal room, head over to our website at www.thomsonmultifamilygroup.com -- Before you go, please leave a review! Your comments help us create more episodes for you to enjoy.