How To Invest in Recession Resilient Markets & Niches

Welcome, ladies, to The Real Estate Investor Show, providing inspiration, strategies, and insight to empower women investors to live balanced and financially free lives.

Now, here are your co-hosts, Liz and Andresa Guidelli. So on today's episode, we have Miss Anna Kelly. She is a third-time guest for The Real Estate Investor Show. What I think you're gonna get so much from her and our interview with her, it was amazing. I was taking tons of notes myself, is that we, we have someone on today that's not only has been investing for two decades, over two decades. She's an active investor, she's a passive investor. She's involved in like seven different niches, but she also has this phenomenal financial background and expertise. So when she talks about inflation, she talks about stagflation, she talks about the economy. This is not someone who's a theorist. And out there just reading books. This is someone who's an active and passive investor and has been for over 2 decades. So you get so much right from the economy and what's happening right now that you can use.

And one thing that she talks about is underwriting, but she's not talking about underwriting the deal. She talks about your personal underwriting. What does it matter? What matters to you? What are your goals? She even talks about you should think about the market first, not the deal. So the question is, should I invest in this property? The answer is, it depends. So she gives you the fundamentals that you can look at your life and your lifestyle, your goals, and see what applies to you. This is a must, ladies, for all of you that are listening. We are going through uncharted territory here. This is a must to all of you. Enjoy.

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Welcome back, ladies.

This is Liz, and this is Andresa.

Welcome back to the Real Estate Investor Show, where We're all about empowering women to live a financially free and balanced life. Right on, Jessa. That is what we eat, breathe, and sleep, as they say. Indeed.

Indeed. Even in the shower, keep thinking about all of you guys.

So we appreciate you being back on with us. We have a phenomenal guest here today, a friend, a colleague, and, uh, so excited, a pod mentor of ours in our Strive community. We're so appreciative to have Anna Kelly on today. I think she's one of the only guests we've had on probably at least a few times here on our show, right?

That's it. That's Anna has been before, right at the beginning. When we could barely speak, right at the beginning in 1997. No, just kidding. At the beginning. And then we talked about trailblazers and now we're gonna talk about the economy.

Yes. We're gonna get into all things, the economy. If you're not following Ana on Facebook, you need to be. She puts the most thoughtful and, and most helpful posts out about the economy. I always read her posts.

Yeah.

Whether she's talking about the economy or her life, of course. But especially when it comes to this topic because she has such great insight. And it's not about just insight in general, it's about what can you do now and how do you position yourself for, for growth, not just sustaining what you have and investing. So excited to jump into you. So thanks for being on our show again, Ms. Anna Kelly.

You're so welcome. It is always my honor and privilege to talk to you guys, to support your amazing community in any way that I can. And I just appreciate the value that y'all bring to so many women, and it's why we love to collaborate and do things together because we're, it's all about keeping moving no matter what economy you're in and doing really good deals and empowering you to grow as a woman and as an investor. So I, I love that we get to do this together.

Awesome. So I'm on to share a quick story for those who are joining us for the first time. We share a very quick story, very quick lesson that you can take into your life, whether it's about investing, whether it's about business, or whether it's about self-care. Or it's about life in general that you can use to be the, the fullest version of who you are. 'Cause that's what we stand for. Not just giving you tips and strategies on how to grow your real estate portfolio, but to be the best version and more, more importantly, the fullest version of who you are. So I'm on the docket here, Andresa. I've been away on a couple trips for vacation, took some much needed family time. So I have a lot of stories I could share. I'm gonna take the next hour to share them, but I'm not gonna do that. I'm gonna share a quick, Quick story. So we weren't sure if we should sign up our kids. You know how they have excursions when you go away? You know, you, you go to the little office and they're like, what excursions do you have? And they're always a little like, it could be a little intense. You're driving for an hour. You know, it's a long day, 7 to 3. And I said, can we, you think our 5-year-old can handle an excursion? And Matt and I are like, it's 50/50, not sure. So let's do it. You know, that's how him and I are a little more risk-taking. So we go to do this, you know, swimming and snorkeling with the sea turtles. We saw one, by the way.

And then—

Right, you got it.

You got it.

The second half of the, of the excursion was to go into, uh, we went to Mexico and they're very known for like, they have over 300 caves. So it's, they're very known for their caves and the historical value of that. And there's water. It's a very cool experience. So anyway, that was like the two things we did in the one day. So the first event, my daughter hung on for me during snorkeling the entire time and cried. They had to put a life, one of those little life things around her. They called it her Uber. And that's how we traveled with her during snorkeling. Okay. Because she just, She wasn't into it. Her goggles were loose. She literally cried in my arms while I'm trying to snorkel and look at the sea turtle. She's like literally screaming in my ear. So that was phase 1. Phase 2 was the cave. I'm like, oh my God, how am I— how's this gonna go? When is this thing over? We're like an hour away from the hotel. So we go into this cave. I didn't know what she was gonna do. I'm like, is she just gonna like freak out? And it was— she was pretty into it. I was like, all right, this is good. This is good. She's not freaking out. And you go up to this cliff and there was water below. I'd say it was about 10 feet up. And then all the people in front of us start jumping off. The guide was like, oh, this is the time to jump off. I'm like, oh my God. I was starting to get scared. So now I'm the one that's like freaking out. So Sammy goes up. She's like, I can do it, Mom. I can do it.

I'm like, oh my God.

I don't know if I'm like, I was, I was like, you know, when you have like, um, you're in shock and you're almost like in a shock as a parent. You're like, should I let them do this? Is this a good opportunity? Will they grow? Will they hit a, hit their head against the cave wall?

And we're going to show up in a hospital.

In Mexico. I didn't know which one it was, you know? So I'm like, let me jump off with you. So she's like, okay, mom, I don't feel like, I don't wanna do this by myself. 'Cause it was pretty high. I mean, and then I'm like freaking out. I don't wanna jump off this freaking cliff, you know? So then I'm like, I gotta do it. I, I mean, I said, all right, 3, 2, 1, 3, 2, 1, Sammy, 3, 2, 1. And we jump in and she had fun and I did. My point to all this long story is that, oh, Jesus Christ. I, you know, I thought about it and I said, you know, there's lessons in everything, any of experience. And I thought for me, holding her hand and jumping off that cliff together was so powerful. And it reminded me so much of what you and I are doing with this community, Andresa. We're literally and figuratively and in real life holding one another's hands, right? The experience that we had at InvestHerCon, all the meetups, the circles, the support we're, we're kind of pouring into women. That's our goal, right? Globally to empower them. And it wasn't until I held her hand and she held mine that we felt comfortable enough.

Right.

I still was scared, but I had her with me and she had me. And so I thought that was a cool metaphor beyond just the story of her, you know, the day unfolding and whether we should have taken her on this excursion. But metaphorically, as you're listening to this, who do you need to hold the hand of? You know, and that's how we thrive during a recession or a course correction in a market. And that's why I think is a good lead-in as we get into that. Topic today, holding hands metaphorically and figuratively and in real life is really powerful. So it's a reminder for that. And we don't need to do anything alone. So that's what I got for this week.

All I got for you is that I miss you so much. I didn't know what to do. It's like peanut butter and jelly. They're like, they're good separate, but together they're much better. I, I just miss my, my business partner, my friend, my confidant. I like, who am I going to call today? Right. But I think that what you're saying is so powerful because women, we are masters on trying to figure figure it out by ourselves. So we're trained to do that. And sometimes we're not even conscious, right? That we are trying to figure things out all by ourselves. And it's very heavy on our shoulders. It's a very daunting thing to do. So I always say it, always say it to every single person of the real estate community. Number 1, we have your back. Number 2, you don't need to do it alone. Lean on this community Liz and I created because I hold her hand, she held my hand, and then together we really lock arms with, with all of you. Idealize the resources of all the women. Don't rely on your own resources and experience because that's going to limit you. And if you have not took time to listen to this podcast, this is the time. Pause it, go ahead, grab pen and paper, and buckle up. Cause it's gonna be great.

Let's rock, rock and roll, as I like to say. I don't know if anyone else says that, but I'd like to say that. So Ana, we're not gonna ask you how you got started in investing, cause we've done that. We've been there, done that. What I think would be really helpful as we kick off this particular episode is just share a little bit about what your investing, you know, activity is right now. What do, what are you involved in right now? So I think that could give color for the folks that don't know you, don't follow you yet. And then that will be very helpful as we get into talking about the economy, you know, the looming recession, interest rates, so they can give context of what you're actually involved in. So that'd be great if you don't mind sharing that in terms of, you know, your kind of breadth of what you're involved in right now.

Sure, absolutely. I'm happy to do that. So I have been an investor for about 24 years now in real estate, and I've invested in all kinds of assets. I believe that there's a different time in everyone's lives and everyone's economy where different asset classes work better than others for you personally, right? And so right now I'm invested in large multifamily and full disclosure, we're selling most of those properties. So we're still looking, we're still buying very, very carefully in large multis. I'm also buying small multifamily properties, more of them for my own personal portfolio and to build a legacy for my family. We're also invested in vacation rentals. I've bought 5 in the last year and a half, luxury high-end vacation rentals, and I'm still buying more of them in the right markets. That make financial sense. And I'm also investing passively in self-storage units, in real estate notes. Those are the primary asset classes. And I'm also looking at and actively working on some development of small multifamily properties as well.

That's so you're keeping busy.

Yes.

And your, your background in finance on that, I think it plays a lot into it because your experience, you cannot dismiss that your background on your corporate life previews to it. And so when we look at interest rate, right, for a lot of investors that are quote unquote starting now, or they didn't see interest rates hitting 2 digits, I think the older generation say, what are you talking about? You haven't seen anything, right? You're freaking out with the digit and you did not play that scenario. But let's talk about the micro, right?

Yes.

The Fed changes that we were seeing it, or probably going to see more. How does the interest rate impact the real estate cycle?

Sure. And just to give a little flavor, I did private banking for several years and I worked with institutional investments. So I really think more as an investor overall and, and about financial goals and how, what are our financial goals as women? And how do we find the right opportunities that help us move the needle forward to our financial goals rather than being in love with one asset class and one asset class only? So you start out investing in real estate, but you've really got to move on to thinking about how does the macro economy and the micro economy impact what I'm investing in today? And how do I move the needle forward financially in any economy? Some economies you're going to leap over your financial goals and others you're just going to inch and you're going to move the needle a little bit, right? And interest rates is one of those things that can have a large impact on what you're able to do. So when interest rates are really, really low, like they have been over the last decade, for the most part, it becomes easier to make deals cash flow, right? Because you're able to buy and buy a property with 80% leverage and a very low interest rate that allows you to increase the cash flow higher than what your return would be if you paid all cash, right? So we've been really spoiled with those very low interest rates and the ability to borrow a large percentage of the down payment of what we want to invest in, no matter what your asset class is. So what's happened is now because of mass inflation, the Federal Reserve essentially needs to kill inflation. And they do that by killing demand. So all prices for anything in economics are a basis of supply and demand. So when, when there's a ton of demand and a lot of supply, It's kind of a buyer's market. We get things cheap. And if you have low interest rates in a buyer's market, it's incredible. And we've, we've been spoiled with that for years, right? The last couple of years we've seen supply kind of dry up and interest rates are just ticking up in the last 6 months. And so it's making it hard for some of you ladies to cash flow, right? And that's been the biggest thing I hear is there's no deals. There's no deals. They're not cash flowing because prices are so high. Well, prices of real estate and everything else have gone high. So the Fed has to raise rates to try to kill demand. They're saying, wait a second, there's little supply and tons of demand. Prices are going crazy. We've gotta pull back in everything. So as they raise the rates, Andresa, essentially what that does is it makes it more expensive for us as investors to buy whatever property it is that we want. But as it gets more expensive for us as investors in terms of the loan rate that we're paying, more and more investors give up, they drop out. So it kills demand. And we hope that what that does is it starts to drive prices back down to a more reasonable price. So in some markets, you have a very high price and a very low rate. It may be hard to do deals, right? It may be easy if you get creative. In this market, we're gonna see higher rates, but we've gotta get a much lower price to continue to make that deal happen. So rates are going up and they're going to continue to go up, I believe, at least through the end of this year, maybe into the middle of next year, because the Fed has basically said we're going to get the Fed funds rate, the rate that the banks can borrow from the government and from each other, essentially up to 3.5% or 4%. So expect that over the next year to year and a half, your interest rates are going to be higher, which means you have to be more selective in what you purchase. And be able to get creative to where your prices are lower and you're not in a bidding war anymore. So that when you put into the table, the price you pay and a higher interest rate, you can still make those deals cash flow.

And just to piggyback on that, how can women navigate that? Because that's a big one, right? And they navigating that by, you know, the fundamentals of going to a market that might not be as popular as everyone else, or is it going to a popular or more you know, high-density market that, you know, jobs are thriving and there's a whole philosophy of like your investing strategy and then what to do with the current kind of market and economy. So you talk a lot about fundamentals. I saw that.

Sure.

In one of your posts. So good. How does that impact your own, you know, as you're evaluating, as you're evaluating your own deals, especially your small multis? 'Cause I think that could relate to a lot of women listening.

Absolutely. You know, the key thing is to, number one, the most important thing that you can learn and understand about ask yourself are, where are you really financially? And what are your financial goals? Right? Because every investor at the, at different places in your life is going to move from a place where your primary, your primary investing objective for some people is cash flow, right? In my first 10 years, I did deal after deal after deal that were not great properties, but they had a lot of upside that I could use for down payments when I forced that value to use to create, buy more properties that cash flowed. So cash flow was my sole purpose. So I looked for certain types of property. Then as your cash flow needs are met, and mine are at this point, I shift to looking for some deals that might be a little riskier. I might not get cash flow day after day, but I'm gonna have some upside in a couple of years. And to be honest with you, in the last 10 years we've had this growing cycle. Growth deals have been easy to make happen right now that we have an economy that's settling down and we're heading probably into recession if we're not already there. Or a, a really difficult financial market, whether it's higher prices and stagflation or inflation or recession, that growth is gonna be harder to get really quickly. It's gonna take some time for the economy to settle and start to go back up to an expanding period. So unless you have the wherewithal to wait several years for that big upside, you probably shouldn't be investing in growth deals if you need income today, right? Then when we get a certain amount of wealth, when the economy starts to shift and we start to see a recession, and I'm just gonna talk about recession because I believe Liz and Andresa, that that's either where we are or it's where we're headed very, very quickly. We wanna move a little bit into wealth preservation mode, right? We wanna buy assets that are gonna have us move the needle on, on the income. They're gonna give us some appreciation, but they're not gonna take so much risk that we're banking on the economy bouncing back really quickly. Because if the economy doesn't bounce back very quickly, we want properties that have tenants that are gonna be able to pay. They're gonna have the wherewithal to be able to pay during a recession. And we're gonna want deals that we're banking on preserving the value, keeping them updated, raising rent slowly, and, and really making those, those deals better as we go. So it really depends on you and your financial goals as to what you invest in today.

So what are you, what, what are your thoughts? Let's say, how long do you think it will take for the economy to bounce back considering we quote unquote are in a recession right now or about to? What are your predictions in terms of bouncing back? Because then I can think about it and calculate an underwrite considering I am optimistic, conservative, And I understand the opportunity. So I want to run my underwriting in different ways so I can evaluate my tolerance and preserve wealth. So what are your thoughts?

Sure. I'll say this, you know, I study a lot of economists. I read them daily, and I can tell you that they're all over the place because as time goes on, our economy in the United States, as well as globally, becomes more and more intrinsic integrated and complex, right? And so there's things that happen like the conflict with Russia and Ukraine that's impacting gas prices, for example, and that's going to tie some things out that could make these predictions, you know, not come to fruition. So with that said, I don't want us to get stuck with the complexity and go, it's so hard, I can't understand it, so let me just stop, right? So what I'm looking at, Andresa, is I look at a couple of key things. When we look at history, we can tell that in order to kill inflation, and we haven't seen mass inflation since the '70s, and before that, probably the '40s, and then the '20s at some point, the Fed always raises interest rates. So what we can bank on is that the Fed is going to continue to raise interest rates until they kill that inflation. The last time in the '70s, it took a couple of years. So Jerome Powell and all these smart economists have basically said, We don't know exactly, but we will kill inflation. That's their number one priority, even if that kicks us into recession. And they're saying that in Fed speak, but essentially they're saying, we know this is going to slow things down, but we have to, to get a hold of inflation. So usually it takes 6 months to even see a little movement in the economy based on those rates being risen. And they've only really started raising rates in the last several months, and I expect they're going to raise them pretty substantially again this week, right?

Yeah. When we look back, right, we look at 2008 and some people are like, oh, we're going back to 2008. It was like, that's a different, completely different animal. So let's break it down. What is the difference for the people that didn't get started that time? What is the fundamental difference between what happened in 2008 and what our current scenario?

Sure. To tie into that, I want to make one other really quick point about the rates, right? So I think that rates are going to probably go up for a year, and if that puts us into a recession, which the Fed is basically saying it probably will, usually within 6 months the Fed reverses course and they cut rates drastically again to get the economy humming. So I'm expecting that by 2 years from now, maybe sooner, rates come back down, right? So I want you to think about that. Underwrite your deals at a higher interest rate tomorrow and in the next year or two, and don't expect your rates to come down to be able to refi until 2 to 3 years from now. That's my general expectation.

You're underwriting, what is the interest rate that you're currently underwriting?

It really depends on the asset class that you're investing in, right? So large multifamily right now, you can get 60 to 65% loan to value at about 5.25%. Smaller multifamily deals with a small bank, you might be looking at 5 to 6%. And if you're looking at vacation rentals or you're looking at, you know, going with traditional financing, DSCR loans, you might be between 7 and 10% right now. So it really depends on the asset class you're going into. But in terms of your question about 2008 and now, it is very, very different, right? 2008, It's a very complex reason that everything crashed, but essentially it was the intricacy of financial companies, financial institutions buying mortgage-backed securities for mortgages on properties that the values were just skyrocketing. But by and large, I believe over 75% of those mortgages were adjustable rate mortgages. And so what happened was as values continued to skyrocket, investors went in and people bought properties with adjustable rate mortgages that they thought the rates would never increase. When suddenly mortgage-backed securities started to fail, foreclosures started to happen because rates did increase and people couldn't keep up with that increased payment. It started a wave of foreclosures and a wave of defaults. And then all these companies that bought the insurance, bought the mortgage-backed securities, they started to fail and companies that bet against them and basically hedged mortgage-backed securities started to fail. And so it was a domino effect institutionally for most major financial institutions in the country, including the one I worked for, AIG. So it wasn't just real estate. Real estate really was to blame for the '08 recession, but it was all of the financial engineering of the companies and the banks around mortgages that really caused the entire financial system to almost crash. We don't have that today, Andresa. So if you look at loans that have been done on mortgages since 2009, let's say over 80% of them are fixed-rate mortgages. And most of them are between 2% and 4.25%, right? So most people now are in long fixed mortgages. They don't have to sell now that rates are going up. Right? So the average homeowner isn't forced to sell. They might want to move, but they probably won't for a while. So supply might be even more constrained this time because less people are gonna have to sell and they're not going to. Where in '08, we had this mass supply because of these mass foreclosures. And I think that that's gonna be a big difference in how this recession looks versus '08. I don't think real estate is going to crash per se, right? I think certain markets are definitely significantly overvalued for the incomes in those markets. And so those particular markets will start to have some softening, some leveling off of appreciation, and potentially some decreases in their values. But I, I don't expect it to be nationwide like it was in 2008.

Yeah, no, that's, that's great. And it, it's really important to It's really important to note that because if not, then you just start to just make assumptions, right? Oh, we've been through this. Well, to your point, it's very, it's very different. In terms of asset classes, let's, let's talk a little bit about that because, you know, there's opportunities all the time, but you have to be, you know, mindful and, and, and conservative in a sense. So what have you found to be asset classes? 'Cause you're involved in a lot of different ones passively and actively.

Yes.

So curious to get your thoughts on the ones that tend to be better for dealing with inflation and, and a recession? Are there asset classes that you want to move towards and others to move away from?

Absolutely. So this is a fundamental, when we talk about the fundamentals, something that I'm really sticking hard to, and, and I really have over most of my life as an investing, is that I've dabbled in properties that were in really low socioeconomic areas that cash flowed like crazy. But that the tenants are harder hit when the economy takes a hit. So your Class C minus types of property, right? So I learned the hard way that when the economy struggles and there's layoffs, the people hit the hardest are those that live a below average income life, right? They're already living check to check. And so when their gas is $5 a gallon, Liz, if it's inflation or if there's recession and wages come down and there's layoffs, they're hit the hardest day to day. So they struggle to pay rent. They really do. And so for me as an investor who needs that cash flow and doesn't have just a ton of liquidity to float when tenants can't pay, one of the fundamentals is recession-resilient investing. And so it doesn't necessarily matter, Liz, if that's a single-family home, if it's a small multifamily, or if it's a very large multifamily complex. I want to be in markets markets that are large, that have a lot of employers around so that if people are laid off, they can very quickly go find another job. Even if they can't find the job in their industry, they can go work for $20 an hour at a gas station or at Walmart, but there's work available. So investing in larger areas that have a lot of employers and a lot of diversification within the types of jobs and industries that are around Areas with really great schools and really low crime, those tend to be those that are most recession resilient and that will get you through this kind of period of uncertainty. If you invest in those markets for the long term, your tenants are more likely to be able to continue to pay and your values are more likely to continue to increase.

Yeah, I've created like a slide that says market over the deal. So yes, so many, so many women in our community, should I buy a multifamily right now? Should I buy a single-family home? They get so specific so soon.

Right.

To your point, and I completely agree, and, and we've taught that is it's actually less important from the sense of yes, the market. Right. And yes. So I think that's so, so important. You, it's like, what do you have control over? What don't you have control over?

That's exactly it, Liz, because so many things that we don't have in our control right now, and it can be daunting. It can be paralyzing to say, how do I move forward when all these things are happening that I can't control? Real estate has shown to be very resilient from the 1950s forward. Year after year after year, it generally goes up 1 to 2% above inflation over time consistently, even if there's little blips. But that happens in these key markets that are gonna continue to grow, right? So I don't really wanna be out in a tertiary market in the middle of a cornfield where there's one employer, even if it's really nice, right? I wanna be in the, the best property that I can afford to buy in one of these really great growth markets where population continues to come. We have a continued demand for housing, and I'm always gonna be able to have that renter because really it's all about consistency of cash flow of the investment and the consistency and the probability for growth in that market long-term that gives me that perfect blend of asset preservation some growth and some cash flow. So what you can control is where do I invest that gives me the best chance that tenants are gonna move there that have the money to pay me, that they're gonna wanna live in that market, that if it gets really tight, people will prioritize staying in an area where their kids can keep going to a good school and where they feel safe and they'll pay a premium for that. Yeah.

So, and one of the things you said you're doing right now is vacation rentals in luxury high-end areas. So tell us a little bit about that strategy with what we're dealing with, with the economy.

Absolutely.

Because on one hand you can say or make the argument to say, you know, when a recession hits, people pull back.

They're not going to take as many vacations.

Or is that, or is that just kind of limited thinking? I'm curious to get your thoughts because, you know, we definitely on the same page of making, making moves in that, that space.

Absolutely. So I would say this, a lot of it has to do with your risk tolerance and your time horizon, right? So If you want something that is the safest type of investment you can make and you wanna play it safe, right? You provide housing because people need during a recession or during inflation, housing, food, and energy. We're not in the energy or the food business. So we're in the housing business. If you provide nice clean housing in nice areas, you will continue to do well. And it's less risky during these hard times. Anything that's discretionary will take a hit. right? Including people that want to take a vacation, to your point. So I would not buy a vacation rental that I need last year's equivalent of income in order to make a profit or even break even. When I'm buying vacation rentals, I'm buying luxury high-end vacation rentals. Number one, they are more expensive, so there's more risk. But the people that are going to continue to vacation are those that are upper income people. They're not going to be as hit hard during a recession. They have expendable income. A lot of times it's two jobs or they have a lot of savings. They're still going to travel. And history shows that during recessions, properties near water and nature, actually more people rent them and rental income goes up during a recession. Your values of the property may come down, right? And so when I buy, I know I'm not gonna freak out if next year or the next year or the next year my property value goes down. I'm just not gonna sell it. Right. I'm going to make sure that I can handle that mortgage payment and the taxes and the insurance and the HOA, even if I barely break even or I have to put a little money into it. So they really should be these investments that can weather a recession, higher end and near water. If you're near oceans, lakes, rivers, you will continue to do well in a recession. Maybe not as well as last year, but again, you have to have this long-term hold perspective. That recessions don't last forever. It's scary and it's scary to think about, but the average recession is somewhere between 8 and 18 months and then it starts getting better and people start vacationing again.

But I think your point's so well taken before we move on is that so many, so many people see others, right? Investing in so many different, you know, vacation rentals, Airbnb, and they, instead of asking what the goal is, to your point, you put some money in. And that's okay because that's what, that was the intent that you went into it. I think that's a very, very, very important like clarity that women, all investors need to have. Right. One of our goals, Andresa and I, I'll just speak, speak it publicly, is to buy a vacation rental to serve the businesses that we're involved in for retreats. You know? Yes. Something really beautiful, something that's very inviting and something that we could start to hold. Right. And, and even team meetings and having our team and, and just something we, we had that vision. And to your point, going in with the intention is critical and the, and the clear expectation of what are we really trying to accomplish here? So if your goal is cash flow, ladies, then you need to assess, is that strategy and that market going to yield that during the recession or in the course correction? Don't even call it what you want, but there is a course correction happening that we all can agree to. Is that gonna yield the goals you want? And I think that's the questions we need to be asking right now. Not how to rush to buy a vacation rental or not, because it's like, yes, if that's your strategy and no, if that's not gonna achieve the goals you want.

Absolutely.

So just wanna make mention of that.

And the other thing that people need to think about is, is with higher returns should make you think higher risk, right? Because as investors, right? If I can go invest in a treasury, I can stick my money in, in for 3%, right? Then if I'm gonna take the risk of a residential house in a really nice market, I might want 6% of my money. But if I'm gonna take the risk that I'm buying a million-dollar vacation rental right now, it looks like it's making me 20%. Well, there's risk that comes into play between that 6% in a single-family house and this 12 or 19% you can make in a vacation rental. So expect that it's gonna be bumpy. The higher the return, the higher you have to understand what's the risks and how do I mitigate those risks if the worst case happens. The nice thing about some vacation rentals is if I'm going to make 19% in a good market, I probably can at least break even. If I do a recession analysis, I'm correct, at least going to break even. And I can be flexible and say, you know what, maybe I rent to travel nurses, maybe I put a long-term tenant in and I only buy if I can break even with a long-term tenant. So that's another thing. I don't need the 20% to break even. It's long-term will break, break even. Everything else is gravy. But you got to be thinking about that in every single investment. What's the return? What's the risks? What are my mitigation strategies if it doesn't return what I'm hoping it does? And at what point do I break even?

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And also, to your point, you also are diversifying into passive income strategies.

Yes.

Notes and self-storage. Think about a recession, right? Those are two areas that will thrive probably in most tight kind of course corrections. Nope. So yes. And in some ways, some people could just take that 7, 8% and they passively invest and that's what they really wanted to achieve because it's going to get them where they need to go. Other people are like, no way, 8% is not gonna cut it because I'm trying to, you know, I have other goals. So ladies, you gotta be mindful of who's sharing the deal with you because they're financially motivated. That's, so you have to be mindful of what advice you're taking, right?

Yes.

The most important thing is it's more important to get that clarity. So I love that.

I think that everything that we are talking here is so important and I encourage all of you to listen to it again and take notes on the fundamentals, right? Because we're not just saying, oh, let me teach you how to BRRRR or how to syndicate or to run a short-term rental. What we are saying is that let's look at your situation holistically and evaluate even like how thick your skin, right? Because Andresa 10 years ago would not take the risk that Andresa right now is willing to take.

Yes.

There's a lot, you know, our experience, even the goods, the bads are really preparing us to make wiser decisions. Right now. And I don't think that we need to just say, oh, just because I saw so-and-so doing this, let me just do that. Your needs, your family needs, your lifestyle, your long-term goals, you might justify things. You might look at somebody else and say, I don't understand how the hell they were able to purchase that property for that. Well, they're thinking about holding it for 10, 15 years.

Yes.

For the rest of their lives. They don't need that because they're already retired. So it's not apples to apples. Does that make sense, Anna?

100%. And I try to keep people, you know, we get shiny object syndrome and we see people do this, they make money. People do this, they get money. And if you're not careful, you'll start chasing someone else's dream and it actually derails yours and it derails your financial goals. So I really encourage you ladies, put blinders on and you need to know two main things. What are your financial goals, right? What do you want from your life and how can you make your investments serve the life that you want to live? Don't do an investment because it's money. Make sure you take an inventory. I do a personal underwriting just like I do a financial underwriting and say, how much of my time is this going to take? How much of my stress is this going to take? How much financial outlay might I have that puts my family at risk? And if those things are not going to be aligned with my personal goals, I'm not going to do them, at least not actively. So there may be times when you're so busy or you're juggling families and businesses and the recession hits you hard that you just— it's not in your best interest to even invest actively at that point. You know your financial goals and you say, I'm going to invest passively. In really strong markets with people who have competence, right? Decades of experience with their team, right? And integrity. And you invest with people that have competence, experience, and integrity that are in really good markets. And you ask them, what are you doing to stress test this deal? What are you doing to make sure you can weather a recession? And you understand that how they're going to help you meet your financial goals. And that's what I do still today. I have my lane for active investing. But then I have a lot of money that I place with others because I don't have the time to learn notes and self-storage and ATM machines and all these things. So I'm investing with those operators that I know and trust to be able to make those investments for me.

Yeah. And that allows you to diversify, right?

And yes.

You know, and that's the best kind of diversification is that, you know, you're, and I love the term personal underwriting. I think that's something if we, if we start talking about that, we're gonna give you huge credit. Trademark that by Autica. Hashtag personal underwriting. But that's so much more important, right? Than the financial underwriting. Not enough women even ask the question. I know we were on a mastermind the other day with our Strive, our Strive community, our Strive members. And, and one of our members is thinking about diversifying to another business as she grows her real estate business. And these are questions, right? These are, is this going to add? Is this going to take away? What do I need? And to get to your point, the question of what do I really need financially? Because I love what I'm doing, but is that going to yield, you know, the expenses, my son or daughter going to college, right?

These are real, right? Right. And that opportunity cost, not just financially, like you said, paying for my kid to go to college, but is this taking time away from me growing personally, from taking care of my body, from having a relationship with my husband and with my kids, right? Is this just another thing that's going to add time and stress. And is that 5% return worth giving up, you know, a week with my family, week after week after week? And a lot of times I say no to those deals and I take deals with lower return that are truly passive so that I really can grow as a person and as a woman and not have the stress of the finances on me 24/7. It's really, really important.

I don't know about you guys, but after I turned 40, I'm like, I don't want it. I, and time is my biggest asset. Not that I'm thinking that I was like, oh, it's about over. No, I'm just getting started. But time, it's, it has such a bigger weight than it had in the past to me that I am more selective of the market, the deal, the people that I work with. I just don't. Wanted. And then I also think about, okay, what is the least that I can do here? Focus on my core genius, what I bring to the table so I can buy time.

Absolutely.

Because I want to be able to choose where the hell do I go? When do I go? With whom do I go? How often? That's what it's all about.

Absolutely.

Not for us to just, oh, let me show you what car did I buy with it. It can't be.

Right, right, right.

But I think that we are playing a different game here holistically.

And part of that leverage, like you talked about in the beginning, is leveraging each other, right? Don't just think about leveraging your money. You leverage money and usually you can rapidly expedite the amount of properties that you can buy, right? But if you leverage not only operators that you wanna invest in with passively, But leverage partnerships, you know, you and Liz have created an amazing partnership because you have the same values, you have the same goals, but you're different and you both bring your different core genius. And we can't do it all and do it all stress-free, right? I can do it all, but I can't do it all without really great partners and I can't do it all stress-free, right? So finding that balance and saying, how do I leverage other people's time, other people's money, other people's passion? Get creative with financing, get creative and diversify with your partnerships. It's all about leveraging every area of your life to be able to marry whatever opportunities you see in any single market that you see for your financial goals and your personal goals. And that's what it really comes down to. So that personal underwriting leverage, they're the most important things.

100%. And we have built this community with people like you on them that always were a phone call away for Listen, we call people, right? We're not trying to be the masters of everything. And ladies, for all of you that are listening, Ana had an amazing presentation during InvestorCon 2022. So for all of you that attended, you have access to the recording and I highly recommend you to watch it. For those of you that did not get a chance to go, we're going to put the link for the recordings on the show notes. So you can purchase it and make sure you come to InvestHerCon 2023 in Arizona. We're gonna put the link there for more information as well. But take notes. This is a video of her, her presentation is the type that you can, you know, take notes, stop, wait a minute, what did you say?

Go again.

Absolutely. And it's about really doing deals and moving forward in every single economic cycle and using some creative financing, some seller financing, and some partnerships to continue to be able to leverage and do really good deals and to keep moving the needle forward.

Ana, this has been amazing as always. Where can the ladies listening learn more about you and follow you along your journey?

Great. You can find me at my website, reimom.com, or on social media at Ana Kelly REI Mom.

Awesome, Ana. And I will ask you right now, we already asked before, but let's see if it changed. Okay. This is our fabulous 3 questions. The first one is, What's the most powerful book you ever read or recently read?

Two: the Bible and Who Not How.

There we go. The Bible was always one of them. It's amazing, right? Second question is, what's the most powerful routine that you do to create a financially free and balanced life?

I pray for wisdom and I do a personal underwriting every single day of every opportunity that I look at beyond and primary to my financial underwriting.

Wonderful. Last question. Which woman, famous or not, has inspired you the most?

Oh, I'm inspired by so many. It's really hard to say. I really value Kim Kiyosaki. She was one of the keynotes at our last event and all she's done to empower women to think about assets and liabilities, how to be a financially wise and financially independent woman.

Awesome.

Awesome. Thank you so much for coming back on our show. Thanks for sharing your wisdom. Thank you for being you. We appreciate you so much being a key person, a key leader in our community, and we just, you know, so great to have you back on and sharing some great, great wisdom with us and the community.

Thank you. It's my pleasure. Love you girls.

Love you. Bye. If you enjoyed this podcast and want to receive updates on our next interviews, go to our website, therealestateinvestor.com. There you can subscribe to our show, become part of our investor community, and get updates on upcoming episodes.

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