Personal Finance: 7 Keys to Getting Wealthy #Finance

you have heard Anna Kelly and I talk about things that we have gotten wrong on our journey we also heard us talk about the first five years being hard and difficult for new Real Estate Investors so I so I thought it was time we kind of merge those together and actually talk

about things that Anna and I got right during those first five years that increased our chances of success that gave us a fighting chance because again wasn’t guaranteed nothing was guaranteed but I think there was a couple of moves we each made that M gave us increased chances we’re

going to play the game of ping pong where she goes then I go we’ll go back and four two or three times but Anna what was something you got right in those first five years yeah hands down and I know people will argue with this but it was really really important for me is to get on a budget and

live below my means because if I hadn’t done that and gotten rid of all of the Debt that we had accumulated we first got married um mostly school Loans but very expensive school Loans uh we did get a mortgage and we got that car you know

those weren’t the smart things we did that with Debt but we had to learn to live below our means and really get on a budget and before I got married I had a really good Income I spent a lot of money on clothes and multiple Starbucks a day and going out to eat

with my friends and didn’t have much left at the end of the month because I was spending a lot of it so I went through Dave Ramsey’s Financial Peace University at my church learned to really get on a budget and learn to live below my means and prioritize what was important that

that’s still something I live by today might not agree with everything with him where I am today but those baby steps of learning to be on a budget learning to spend my money on paper before I spent it and learning to live below my means has been invaluable to me yeah I I love that one that

was a big step for Olivia and I too but I’ll give you another one um that again I think really impacts a lot of people out there and it’s hard to tell in the moment but obviously I live in Silicon Valley uh a lot of those early books that I read and I read dozens of them said invest in

your backyard and I’ve been very clear with folks I I took that to heart right we would drive every Sunday we drove for 52 Sundays in a row so a full calendar year and we didn’t find Cash Flow it just doesn’t exist it didn’t exist in in the Bay Area in 2001

let alone you know 2024 so folks if you’re in an environment uh that doesn’t Cash Flow sometimes you got to live where you want and invest where the numbers made sense now a lot of people hear that and they immediately jumped to out of state that wasn’t an option

for us because I didn’t want to get on a plane to see my stuff that was just a mental block I had but it’s amazing what you can get to in two two and a half hours there are other cities other towns uh for us pulling out the California map and going hey what’s 30 minutes

what’s 60 Minutes what’s you know two hours and ultimately two and a half we found this this little sleepy city called Fresno California with nearly a half a million people Olivia and I knew nothing we knew no one the only thing we knew is you could buy a house for 100 grand that rented

for a thousand bucks and we’re like that’s better than the Bay Area why don’t we go figure that out uh but kind of rounding that out just to really Hammer this home I learned Real Estate investing by spending a year in my backyard I do not believe that I could

have learned Real Estate investing while I was learning Fresno right that would have been two steps removed it would have been that much more difficult I probably would have I just it would probably have broken so while I think that first year was a little wasteful because I think

I should have called it after six months at least I was confident in running the numbers in networking and and getting to know the right people so when we found Fresno I just had to learn Fresno I didn’t have to learn evaluating a deal and you know all of those other things so I I believe for

a lot of people that live in expensive Markets learn the skill in your backyard and then once you have it you know go learn another city so that was big for us yeah I I agree I did the same

thing and my my second thing was going to be really the other part of my you know Financial Freedom equation is is find a way to create more Income right and so we live below our means we had to find a way how do we now expand our means because you can’t save your way to

wealth you get the discipline to build wealth and manage money by by living below your means but we had to figure out what what can we do to make more money and I knew I was about to have a baby and I had dabbled you know we had bought a house speculatively I had bought a condo that you know we

could rent out once I moved out but I didn’t really go aggressively actively into Real Estate until I had my baby 21 years ago and I thought I just want to be home with this baby as much as I was corporately driven and you know moving up the corporate ladder and I made a

really good Income I was like I need to figure out how to replace my Income so I can work Less hours and spend more time at home with this baby and so you have to think about what can I do to expand my means and if you’re young and you don’t have kids

like or or you know a brand new baby like we did everybody has time so you have to learn to prioritize your time into expanding your means and that’s something we still do today as well but for just like you I thought okay um I watched all these HGTV Flip This House shows they were just

coming out when I had my kiddo in 2003 um and I was like how hard can that be there’s people flipping houses all over Houston I see them all the time you know and I had enough of a background I had worked at a bank I had done mortgages I knew money and you know I I thought oh I’ve

watched httv now it was much harder than it looked but I decided let me try it like what do I have to lose right we have two good Incomes um we’ll do it in our backyard I have a baby so I knew this was going to be hard we flipped our first house Michael when Daye was three

months old that’s when we bought the the house and decided to flip it but we decided we might as well go for it and so you know we didn’t end up making as much money by doing it in my backyard in fact we did it about a few streets away from his daycare and where we lived because we knew

the neighborhood really well so I was like hey this neighborhood is turning around everybody’s restoring these beautiful old Victorian homes and they were going for top dollar I mean like four times the value before it was redone once it was redone so we’re like we’ve got a great

Market we know the neighborhood we’re there all the time and so it’s very similar to to yours if we hadn’t done it in our backyard that we knew like the back of our hand even though we didn’t know Real Estate we didn’t know you know too much about

values but it was like kind of a no-brainer let’s do it in our backyard and we thought you know what worst case if it didn’t make money we could always sell our house and move into it so expanding your means and then again doing it in your backyard like like you said I think is really

important yeah the next one for me uh and again I I do admit that I was fortunate here is that Olivia and I were were really one team we were on the same page and what does that mean that means my job was to find deals and secure Capital uh and she ran the day-to-day she ran the

books if you will operations she would have the calls and approvals and you know all of those things so it was always always there was never a question about whose responsibility was what we never had a disagreement about any of those what she decided I agreed with and and vice versa the other

thing is is we talked right we had we had a standing well we for us was a standing Sushi dinner Friday where we would go out uh together and you know obviously catch up and do all of that because I was probably in some other country but we would talk about the business and I would tell her what

I’m seeing she would tell me what happened we commiserate a little bit so we’re kind of on the same page um that was that was both rewarding and and probably a little bit of um you know reflection of you know hard work and and sharing what’s going on so you got to get on the same

page with your significant other create those lines um and then talk about it I think I think a weekly checkin uh even if it’s only 20 to 30 minutes over coffee it just it just I think about those times and some of those those dinners and I’m like I just felt better like she knew what I

was doing and she you know she would tell me about the latest eviction or the you know the approval that was you know she had to go get a second bid for or whatever it was um it was just a stay a way to always make sure we were connected week after week and we probably made in a calendar to year we

probably made 40 of those uh so we we did them rather relatively frequently so that was that was really good for us yeah yeah yeah that same same with us my husband and I definitely did it together from the beginning um where he had a little bit of construction background I had kind of the

financial background and we said hey let’s just figure this thing out I think my next one would be um I had a mindset which is really important that I was going to do it no matter what it took and I was going to stick with it and not give up when it got hard because I knew anything you do in

life it’s hard and you’re going to make some mistakes and so I and our first house flip Michael most people never would have done it again in fact my husband said we’re never doing that again um because it took a year we made so many rookie mistakes that I could I could do a whole

show just laughing at myself all the dumb things we did because we didn’t have the the um experience right it’s not that we weren’t smart but we didn’t have um intelligence by doing so we made a lot of mistakes but the thing that I was determined to do that I think was

really key to my successes I looked at it as I’m not afraid to go for it and I’m gonna figure it out and I’m not going to give up and I’ll learn from my mistakes so we did that and we made so many mistakes and the first thing I did was say okay we learned from that that next

time we’ll make money let’s do it again um and and I cannot tell you how many times that has served me in life and throughout my Real Estate investing career and and even outside of that is hey we’re going to make mistakes but the only I tell my kids the only

failure that’s fatal is the one that you allow it to be final right so you can you can keep failing forward and say I now have have gone through schooling in in real life I’ve learned something and now I’m going to be better so that determination not to quit to figure it out to

you know take every obstacle as this is the next PATH on my growth is is something I got right that it’s really really I can’t underestimate how important that is yeah my next one is uh what I’m going to say is no shiny objects right there’s a lot of things that can get

distracting in Real Estate investing especially at the beginning when it’s so slow you know is it a different city is it a different type of Real Estate is it a flip versus a wholesale vers Buy and Hold vers short-term versus midterm you know you know the

drill um we were just always laser focused uh in the beginning the first three years single family homes three or four bedrooms two bass two car garage you know between 1,50 and 2,000 square feet that was my buy box it was only that it was that for three years um just so many people bounce around

every month on to you just don’t get any momentum you don’t get any compounding of knowledge you don’t get any ability to you know it’s like a metal detector right when you have it and you you you’re over something and if you’re changing all the time it’s

it’s just not that so one of the things that we got right is we were laser we were laser focused for 15 years right just you know at one at a time right not like the book one at a time so that that was a certainly a strength for us absolutely yeah you you and me both and and part of that I

think um a lot of people don’t really think about this but what’s really important and I learned this um back when I was in private banking is you have to ask yourself before you say what’s that one thing I’m going to laser focus on is it singles is it quads like I did you

know is it big multifam storage whatever it really comes that shouldn’t be your first question it should be what are your primary financial goals and what do you need in the next five years is it more Income more growth and appreciation or cash or is it asset preservation and

for us we knew my goal is I need enough Income to replace my Income from my W2 so it was Cash Flow so that allowed me to say where am I going to get the Cash Flow where am I going to actually get money in my pocket every single

month that I can duplicate and then it became a very easy path to I need X dollar a year I need to back that into right now in my backyard I can buy these kind of properties that’ll give me that much it means I need this many in 5 years to accomplish it and so when you know your financial

goal you don’t get as distracted to your point by those shiny objects so many people say oh I see you’re doing big multif family so I should do that they don’t realize big multif family doesn’t bring you Cash Flow it gives you chunks of cash at the beginning

at the end but if you need Cash Flow that is not the place to start right despite what’s sold in the guru courses so you want Cash Flow you buy you know at the time we buy the singles or the the quads or whatnot and so you’ve got to know your financial

goals and then stick to it for five years don’t switch your strategy your strategy is Cash Flow then the tactic is what kind of properties do I buy and wear to accomplish my goal and my strategy of Cash Flow yeah I’ll give you I’ll give you

another one uh something that I believe and I it was it was a book I read it’s called Extreme ownership by Jacko Wick uh jao willik uh but that was something that I held in the in the first five years you know again we got to remember we didn’t know Fresno from from anywhere right I

drove through one time on the way to yusan as a 13-year-old kid and you know any Market certainly the size of Fresno’s got the good and the bad and you found some people that you thought were good that turned out to be you know thieves and lots of things and something that I have always

believed is it’s always on me right somebody stole from me I didn’t do enough reference checks I didn’t have you know checkins um you know a property manager tried to double dip on a water heater shame on me I didn’t do this I didn’t do that uh and then I I’ll

just I’ll morph one in there because I had another one is uh when data changed we took Massive Action right I didn’t I didn’t look for kind of a second or a third opinion if I thought somebody was stealing they were gone right if um uh one of the biggest things that saved us in

those first five years was actually year three or three and a half uh we were we kept earning I went to a I paid I paid to go to a Bruce Norris event and Bruce Norris had this report called the California crash and I I bought the ticket because I was a California investor and I had you know seven

figureure Net Worth at the time in California Real Estate and I didn’t want to lose it again like I did in stocks so Bruce uh did his song and dance he introduced thousands or hundreds of charts that I had never seen before but he gave me this word called the

affordability index which I’d never heard of so instead of you know just going away and going about my business uh I got inquisitive and figured out that the affordability index in Fresno had never ever ever ever been that low and once you once you see that you can’t unsee it so uh we

very quickly started to sell all of our houses like you got to remember right we’re going three years three and a half years in One Direction only singles single single singles we did buy one duplex which was two houses on one lot but still all houses and because of one event which I paid to

go to because he he knew his stuff because I could validate it because I could see the red light you know the big flashing red light we sold all of our houses so we went a different direction and of course we moved that Equity into apartments and multif family but sometimes when it

changes you know because if we don’t make that move I’m still working think about that if I don’t if we don’t go from Eight houses to 80 units I’m still working that’s crazy 100% I say all the time that’s why we talk about the economy you’ve got to

know when things are shifting so that you know whether it is time to Pivot partially diversify or or fully one of the thing that I would I would throw in there that I think is really really important is that you’ve got to be good to people but also not take on everybody’s problems and

burdens as your own and that is a hard balance especially as a landlord right so one of the things is if if you if you’re in this for me first you’re going to make some really bad decisions when you’re in this that I’m going to be a blessing to everybody I come in contact

with I’m going to be respectable there’s going to be challenges but I can be respectful to people while I’m also prioritizing you know what my needs are it’s really really important because word gets around and especially if you’re a sub if you’re in a a market

and you’re becoming a bigger player in that market the Realtors know how you treat them and their clients the tenants know how you treat them the attorneys know how you treat people and they will call you and give you deals when they know you are a good person who is going to treat them and

their clients and their referrals with a respect at the same time the opposite side of that that I also eventually got really right is that you’re going to have lots and lots and lots of people who have St Saab stories whether it’s a contractor who shows up drunk and they ruin your

hardwood floors because they were drunk on the job right or whether it’s the Five Tenant out of 50 that month that say I’m so sorry I can’t pay rent because you know we just got back from summer vacation or it’s like Sorry Charlie I’m not your lender like you can go

find someone who can lend you money otherwise sorry we evict on the sixth and so you’ve got to have you know you you’ve got to be good to people but you don’t compromise your business plan you don’t compromise um your tenant screening you don’t compromise your rules

you treat everyone the same you can be good to People by saying hey let me refer you to some people that can help you with rent here’s some agencies that help with rent assistance but our policy is you know you you’ve got to you’ve got to have good Credit

you’ve got to have co-signers you’ve got to you know pay rent on time Etc so being good to people but also not making everyone’s problem your problem problem both of those things are really important and it’s a hard balance to find Anna you are amazing thank you for being

here each week how can people find you you can find me here on your show every week you can find me at social media at anak Kelly riom and for Real Estate investing coaching and Consulting anakelly investing.com thank you so much