Sarah Larbi: REITE Club nation, welcome back. You are in for a very awesome podcast today with Elizabeth Kelly. She is about six hours north in Kirkland lake. She's a property manager, an investor, very successful investor doing many things multi-family rent to own the BRRRR. She's also a coach. Mentor and many other great things. She shared a lot of great information with us today. I think you guys will like the podcast. By the way, if you haven't left a rating and review, please do so and check out thereiteclub.com. We've got tons of great events. We have tons of great content.
We are definitely full of content from even many years of doing this. You can find so many different topics. If you haven't registered, it's completely free. Go to thereiteclub.com and create a profile and start networking and connecting and building your network because like they say your network is your net worth. Laurel, let's bring in Elizabeth Kelly, what do you say?
Laurel Simmons: Let's do it.
Sarah Larbi: Elizabeth Kelly. Welcome to the show. How are you?
Elizabeth Kelly: I'm awesome. Thanks. How are you guys doing?
Sarah Larbi: Amazing. You are up in Kirkland lake. How far is that? Just to get an idea, from Toronto.
Elizabeth Kelly: My other home base is a new market, so it's about six hours from six hours north of the new market.
Sarah Larbi: Wow. It's quite the track, but once we get into how you got up there maybe let's start by how you got started in real estate investing, to begin with.
Elizabeth Kelly: My husband and I started buying investment properties in a new market in 2005. We started actually, and we figured out we were doing the right thing. We were buying investment properties, but we were doing it the wrong way. The wrong way for us anyways, we bought some condos and then we decided we didn't like the special assessments that can come with those condos.
We moved over and started buying single family homes and converting them to duplexes. And this was 2008 at this point. We were figuring things out as we went along. We didn't have fantastic groups, like the ones that you guys have where people can get support and knowledge and that kind of thing. Every property was a new adventure for us.
We basically worked our way up 2009, 2010. We started buying multi units. We bought a bunch of stuff in St. John, New Brunswick, and then we moved up to Kirkland lake. At the same time, as my husband was buying the multi-units, I was focusing on rent to own, and then we just grew from there.
Laurel Simmons: What does your portfolio look like now?
Elizabeth Kelly: Our portfolio for the most part right now is multifamily. Everything from, our smaller ones would be, we have some single families, duplexes, that kind of thing all the way up to, 18 unit building 25 unit building. Some of the bigger things.
Also like most investors, we do private lending with our RRSPs and we do some joint ventures and some stuff on our own. And I find as an investor, over time you acquire more and more skills. So you're able to look at a deal and figure out what the highest and best use of that property is. You end up going in some different directions that you didn't necessarily anticipate. You have some great opportunities to work with new people and learn new skills.
Laurel Simmons: Elizabeth just, it struck me as you were speaking. Oh, I bet I'm gonna ask this question because this is the question that sometimes occurs to me. It's simple, what's your favorite? Like you've had experience now, so what's your favorite? Is it multifamily? Is it the rent to own? Do you have a favorite?
Elizabeth Kelly: I do, I have two favorites if that's okay. I love rent to own because of my background. Before I did real estate, I actually worked in the not-for-profit world for years. I was a fundraiser for United way. I loved just being able to help people going home at the end of the day, feeling really good about what I did. That's why I love rent owns in terms of being able to feel really productive
I love seeing the results of flips and taking something from the bare bones that look super rough, like nobody would wanna live there and seeing the progress over time. I love the end part, where you stage or take the photos and everything, and just sitting, I feel an immense sense of pride looking at the before and after. I love that one.
Sarah Larbi: Absolutely. Maybe walk us through how you got to Kirkland lake and what you're doing up there.
Elizabeth Kelly: Sure. My husband has always loved multi-unit buildings. It's really, that's the thing that he's been really passionate about for years and back in 2009, he was just running numbers and looking for places where the numbers made sense.
Even then, to generate the kind of cash flow that we were looking for. We certainly weren't finding it in Toronto. We weren't even finding it in a new market at that point for the larger building. So that was really how we ended up in St. John and in Kirkland lake, as the numbers made sense.
We were generating, we were looking for around $150 per door for the bigger buildings. That's really hard to come by now. Those are sort of Alberta-type numbers. Potentially right now. Definitely in the smaller markets as well, where you're paying less per door.
Sarah Larbi: That's six hours away and moving there probably was a bit of a shock in the beginning, but like, how did you adjust to life, going from a new market up to a much smaller town.
Elizabeth Kelly: It's funny that you asked that in the beginning we anticipated, we were just gonna have a property manager and, we were just gonna go back and forth, once or twice a month and kind of check on things, make sure everything was okay.
We took the rich dad education courses and we took the property management course, and we really saw in that the kind of experience we wanted our tenants to have when they were living in our buildings and it's really challenging people don't tend to respond super well if you go in, you're like, okay, love it, love what you're doing.
Great, I wanna hire you, but I wanna completely revamp everything. And I want you to start fresh and use all these templates and these systems and these processes. We figured out it's probably easier if we hire our own staff. We had our own company. We hired our own staff. We've just gone from there.
In 2017, I had resisted moving and I stayed down south in a new market for a while, but by 2017 it was really apparent that I was needed up here, so packed everything up and came up here and it's been fantastic. It's been a great community especially during, I know people have had such a hard time during the pandemic and to be able to be in a Northern community where, there's less stress, there's less pressure, there's less traffic, there are less people.
You get the opportunity to spend a lot more time outside. It's been I've come to realize that things don't happen to you. They happen for you. The opportunity to be able to live here for the last five years has really been a gift for us.
Laurel Simmons: Have you seen any Northern lights while you've been up there?
Elizabeth Kelly: No. I haven't, but I'm so disappointed. Because they're beautiful. But for whatever reason, I just wherever, whatever reason where they are and where we are, it hasn't seemed to meet up, but I'll keep my eyes open and let you know if I do Laurel.
Laurel Simmons: Okay. Because the Northern lights are similar, I remember once in Ottawa, in the city of Ottawa, in the middle of Ottawa, I looked up and saw the Northern lights.
That's extreme, extremely rare. But up there, I would've. Yeah. You know what? It's just the time of night that you're looking up, right? Because that can happen many times. That's one of the benefits of being where you are. You look at that light pollution or the noise pollution or not a whole lot of pollution, way less than in the south.
Elizabeth Kelly: Absolutely. And the air, the quality of the air. We feel the difference when we come back to Toronto to see our friends and family, and then we come back out, you get outta the car, you just breathe and the air is so clean and yeah. It's pretty amazing.
Sarah Larbi: Amazing. So obviously you have many tenants. And you've been investing for a little while now. The market's gone crazy, I think since the pandemic started, what are some things that you're seeing maybe from an investor's standpoint, as well as a property management standpoint, any key learnings in the last year or two.
Elizabeth Kelly: I really, one of the things that I've been focusing a lot on is not to have a strategy. It's not, pick a strategy and then execute it. I find what's in short supply right now are opportunities. It's really more about how do you find an opportunity. In a property, purchase under market value, which is much more challenging now than it was, even just a few years ago.
Finding a property under market value and then figuring out what the highest and best use of that property is. Whether it makes sense to do a BRRRR or whether, you do plex it and then sell it or use rent to own as your exit strategy. The more tools you have in your tool belt, the more strategies, the better equipped you are to look at an opportunity and say okay, how do I maximize this?
How do I get the biggest bang for my buck? It's harder to get mortgages. And it's harder to find opportunities. I want to be able to look at a deal and figure out the maximum return that I can generate from it.
Laurel Simmons: You mentioned that, the highest and best use of the property. And I think for a lot of people, I don't wanna say this, a stumbling block, but I think it's something that probably, isn't the first thing that comes to mind. Because I think a lot of investors and I'm probably guilty of it too.
You go out with a specific point of view, like I'm going to look for a, whatever rent to own or a BRRRR or a flip rather than approaching the property. Instead of going with the strategy, first, what you're saying is you look at the property and then you say, okay, what's the highest and best use of this property. So how do you make those decisions? What kind of things run through your mind?
Elizabeth Kelly: That's a great question. It's a little bit, I think like becoming a professional basketball player when you're a new investor starting out you want like a script and you wanna plan and you wanna, follow all these things because you believe that following these steps, especially ones that other people before you have followed will make you successful.
I think once you have some experience with real estate and you take a breath and relax. Then you can really start to think about, what are the opportunities or the possibilities with this property? What is the market that I'm in? What is in the most demand here? What is the zoning of this property?
What are the opportunities? How can I add more? Because in most places it's cheaper to add a unit than it is to pay for an extra unit. It's cheaper generally to buy a single family home and add a second unit in the basement than it is to buy two units separately. I always like to look at how I can generate the most income. It may mean, looking at a property and saying, yeah, I'm gonna put a long term tenant in the basement, but I'm gonna Airbnb and be upstairs. Or it may be looking at a single family home and saying, you know what, the ceilings aren't high enough.
There are a lot of things that don't work here for a BRRRR. I'm just gonna turn around and I'm gonna do, based on the neighborhood and the market and the square footage and everything, I think a higher end flip would make both sense. It really is about collecting all the information that you need and then sitting back and looking at it and saying what makes the most sense.
Sarah Larbi: A hundred percent agree with you because I think Maybe three years ago on my podcast as an example, or on this podcast, when we started it, we were talking about picking a strategy and sticking to that strategy and learning it and perfecting it. I think that was true and it made sense back in the day and because the deals are tighter and fewer and further between each other.
I don't think that same advice applies anymore. I think it's looking at the deal and what can you do with it? And if it's something different, maybe you have a handful of BRRRR deals. Maybe the next one is, like you said, doing short term midterm rentals instead of long term, if that makes sense or converting it, and maybe adding a unit in the backyard or severing the law or something along those lines where in the past, you might have not done that where, you buy maybe a currently done duplex and it cash flowed. Now the strategy needs to be a little bit different because there's a lot more investors, I think, than there even were five years ago.
There's also a lot less inventory than there was. It's just harder to find deals in our market. That prior advice, I don't think makes sense anymore for the market that we're in today. Thoughts on that? Anything you wanna add?
Elizabeth Kelly: I would agree with that a hundred percent. The way I look at deals now is I break it down into their basic components. How am I acquiring this deal? What am I doing with the property and how am I exiting? That's how I tend to look at things now. If I'm buying from a realtor, if I'm buying from a wholesaler, if I have an opportunity to buy privately, I'm always looking to still try and make money in the buy. It's hard with realtors.
There's so much competition now for properties. I look at, in the middle of the deal, how I can generate the maximum return. Sometimes it's literally by looking at the end of the deal and going, you know what? I can sell it with a realtor. I can list it with a wholesaler or I can do a rent to own on this and figuring out how, which of those levers do I pull?
How do those components fit together to create the best deal? I think it's important with markets like we've seen in the last few years, they've continued to go up and up and it becomes harder to lose money in markets that are consistently increasing. I think as investors we can become complacent with that and having come through 2008.
Seeing what happens when, we get complacent and we start focusing mainly on appreciation and going, negative cash flow from the beginning without a plan to turn that around. I think that it's important that we focus on the fundamentals of every deal and make sure that we're not growing complacent and just counting on appreciation to provide a return for us.
Laurel Simmons: I think that's really good advice. You've got a lot of experience and of the three of us here, we've all been in this game a long time and relatively speaking, it's been a pretty long time. I'm thinking now about the Laurel of 15 years ago, or maybe the Sarah of 15 or years ago, or maybe Elizabeth of 15, 20 years ago.
What would you say to one of us 15 or 20 years ago? We're just starting out and we don't have a clue what to do because it's easy to say look at a property and assess it. We know all these different strategies and we'll use the highest and best use of the property. But if I'm just starting out it's I don't even know what the highest investors of our property are. Let alone choose one. How do you, what advice do you give to people who are just starting out or maybe just have one or two properties?
Elizabeth Kelly: I think there's two really fundamental things. One is to make sure you know how to analyze a market, make sure you know what to look for when you're deciding where you're going to invest. Cause we're not talking about buying a pair of shoes and you get it home and you try it on. You're like, this is really too small. Like it's not gonna stretch.
I'm not gonna wear it in. This is really too small. It's important to know, look at the economies and, look at the employers, look at the average household income. Look at the population, increase, look at the fundamentals of the market. I really think that the second thing that's really important is to know how to run your numbers properly.
If you are looking at multi-unit buildings, don't think that you can just put in 5% for maintenance. In an 80 year old building and think that's enough to get by. Those are two things. I really suggest that investors If you have some funds available and you wanna educate yourself, make sure that as you're walking away from, however, you choose to consume information that you know how to analyze a market and you know how to run solid numbers.
I think that's one thing that you guys focus on with your groups as well is making sure that people have those fundamental understandings. There's nothing worse than buying a property and actually owning it. Six months later, you look at the numbers and you go, wow. I thought I was gonna have cash flow.
I have nothing. I have nothing available for repairs and maintenance for capital expenses, because I didn't factor any of that in . I think that's probably one of the biggest mistakes we make as investors is not running true numbers before we decide to move forward.
Sarah Larbi: A hundred percent agree. I think a lot of the numbers on the listings and the listing agents, they paid them up to make. Let's just talk about multi-family for a second. They make the NOI, the net operating income, a lot higher than it probably is by decreasing or not showing many expenses that you might want to consider.
You named two of them, capital expenditure costs and maintenance, but there's many others, especially when it comes to multifamily that you're like, where did they even put a vacancy? Where is there even anything for property management? A lot of the time you're looking at an asset and they're basing the price on the operating income and the cap rate.
The net operating income could be a third less if you really do the math. Don't take everything for face value. I can tell you, that's probably 90% of the time, those numbers are not accurate when you see them on the MLIS. Do your due diligence. What about the coming year?
Obviously, you have a lot, just from an investor's standpoint, you've got a lot of assets, a lot of units. Are you doing anything to prepare for potentially a little bit more turbulence? Or, who knows what's the market's gonna bring, but do you have a plan going into the next year or two?
Elizabeth Kelly: I feel like I've reached a point where everything is stabilized and I'm pretty comfortable with where we are and what we've done to get here. I'm really at the point where I'm ready to grow. I'm starting to look at some land development and some of the new build things I also would like to trade some of my time back.
I think I may move some stuff around, shift some things in my portfolio and start looking at doing a little more private lending and basically just being able to look at some of the longer range things that require less hands-on management and will give me back some of that time, freedom.
A lot of people when they started real estate, they wanted time freedom. You get into it and you realize you love what you're doing. You're in this pursuit of the next deal and the next opportunity. It's so exciting and it's so thrilling. After, like I said, it's, when I am at 15 years now thereabouts 17 years.
Now I'm like, you know what I want to see. What the other opportunities are. I love that about real estate is that you can always acquire new skills, new knowledge, new information. There's always communities that will support people in their growth and their learning. I just find it really fulfilling. Honestly, we stumbled into it by accident, but there's literally nothing else I'd rather be doing right now, to be honest.
Laurel Simmons: As you were talking, I was thinking, yeah, you know what, cause that's where Daniel and I are right now with this it's about, you mentioned the time freedom and it's not being so hands on with things anymore and shifting things around and because time is a non-renewable resource, right?
We got exactly the same amount of time, but, and yet money is a renewable resource. It's how you shift things around and use them to make you well. Hey, to customize your life, cause that's what we're talking about. That's why we get into real estate. Most of us are able to have those options, to make those choices. Not just to, it's not just about buying the property because in the end, that's just a resource that we can use to create what we want in our lives.
Elizabeth Kelly: It's a vehicle. Real estate is a vehicle. You could choose Bitcoin and you could choose crypto and they're the same, stock hacking and there's so many different vehicles that you can choose. Real estate is the one that's resonated the most for us. But time freedom is really what we're all striving for. And like you said, it's absolutely a non-renewable resource. One thing I like to make sure that investors are paying attention to is that we're not so heavily in pursuit of the deal that we're sacrificing the quality of the journey.
We're not giving up our health. We're not neglecting our family. We're not doing the things that, when we slide into home base, we look around and, we've lost the people and the things and the occupations that we care the most about.
Sarah Larbi: That's a great point. Are you able to share, like maybe what a typical week looks like for you and how you fit everything in.
Elizabeth Kelly: I love that. The majority of my week is actually dedicated to my coaching clients. That's been one of the biggest gifts that I've received from real estate is the opportunity to be able to meet new people from across the country and be able to help them on their journey as well.
The majority of my week goes to coaching clients. I have a percentage of my time as well. Probably. Depending on the week in between half a day and a day that goes to property management and managing my portfolio and those kinds of activities and things are a little bit quieter right now.
I've taken a bit of a break from rent to own just so I can focus on some other things. And yeah it's, then there's all the other stuff you do too. So all the day-to-day stuff, family, and all the other tenants.
Sarah Larbi: Absolutely. And I think that those are the important parts, right? Where you like to plug in your free time and the stuff that real estate provides you, the ability to.
Laurel Simmons: What are you looking at, for the next year? Because as you said, things are still altered. We just don't really know what's gonna happen in terms of whatever pandemic I'm getting, it's getting so that I even hate to say the word pandemic. It's just our lives right now. But overall, what do you see happening in 2020? Coming up.
Elizabeth Kelly: I think as the interest rate the interest rates slowly go up, I think we'll see. I don't think we're gonna see a major crash, but I think we'll see periods where the market slows a little bit before it picks up again.
I definitely see there being opportunities coming, whether they'll necessarily appear on realtor.ca I don't really see that. I think there'll still be a lot of competition. The reality is there's a lot of people looking to come and live in Canada. It's a pretty awesome country.
As long as the supply is tight and the demand is high, I don't think there's going to be the opportunities that we saw 10 years ago. But I think we all have the opportunity to create our future and I definitely intend to be able to, enjoy the time that I have and focus. I'd like to focus more on my health. That's I think one of my big things for 2022.
Sarah Larbi: Awesome. Love that. Elizabeth, thank you for sharing so much great information. The next part of our podcast is the lightning round. Laurel and I will take turns asking you the questions that every guest gets. There's four questions in total. I will ask you the first one and you're gonna give us the first answer that comes to mind. Are you ready to play?
Elizabeth Kelly: Absolutely. .
Sarah Larbi: All right. Here's question number one. What is the best advice that you have ever received from another investor or at a networking event?
Elizabeth Kelly: People matter more than the deal, how you do business with people matters more than any deal that you could possibly put together.
Sarah Larbi: Great advice. That's awesome.
Laurel Simmons: Okay. Second question. What's your favorite resource for real estate investing and it could be anything book training person event.
Elizabeth Kelly: Can I use sort of a group cause my favorite go-to for real estate right now is audible. I was really struggling to have the time to read and I just found audible and being able to access and personal development information, while I'm doing things like making my smoothie in the morning, I just find audible, such a worthwhile investment and such a great tool because I've been able to consume personal development stuff. When I was challenged before.
Sarah Larbi: That's a great resource question number three, in your opinion, what is the attribute that has made you most successful?
Elizabeth Kelly: I think I love people. I love learning about them and trying to figure them out and trying to understand them. I think real estate is not about the numbers. It's about the people. I think that's probably been my biggest asset is that I genuinely like people and I wanna understand where they're coming from and figure out a way to help them solve any of their problems.
Laurel Simmons: Your real estate business is first and foremost a people business. It's really good for you. Last question. What do you typically do on a Sunday morning?
Elizabeth Kelly: I usually sleep in.
Sarah Larbi: What time is sleeping in?
Elizabeth Kelly: Nine o'clock.
Sarah Larbi: Okay. That's good. That's a good sleep in time. Sometimes people say seven. Sometimes they say 11, like you never know. It's all subjective.
Elizabeth Kelly: I like to sleep in and Sunday mornings are my lazy days, so I try and, spend time with the dog and spend time with a family and maybe have waffles for breakfast or something. That's my downtime. I love my Sunday morning.
Sarah Larbi: Very cool. That was our lightning round. Thank you for playing Elizabeth. Where can our REITE Club nation reach out and find out more?
Elizabeth Kelly: You can find me on Instagram Elizabeth Kelly consulting. You can also find me EKconsulting.ca is my website, and you can send me a message there. I'm also on Facebook. I'm not hard to find. Thank you so much, ladies. This was such a pleasure.
Sarah Larbi: Thank you very much as well, and tons of insights and great information. Thank you for providing those.
Laurel Simmons: Enjoy and go look for those Northern lights.
Elizabeth Kelly: Thank you. That's great. I'm definitely gonna look for them. It's beautiful up here now.
Laurel Simmons: Okay. Sarah. I really liked what Elizabeth had to say. And I found it so fascinating when we were talking about the difference now and approach for, not just because as we said, it was like the, before it was all about the strategy of focus on your strategy. And now we're saying, you know what? It's not that we're saying we don't decide on a strategy, but you gotta have your eyes open and understand what's going on.
Sarah Larbi: Absolutely. It's about the highest and best use, right? It's just, can you make this deal work? And if so, what is the best strategy for it? It may not be what it could have been five years ago just based on the market and all that good stuff. I used to say stick to strategy, but I don't think that, in today's market 2021, 2022, it makes sense to always just stick to that one strategy. In that one market.
You could go to different markets, you could switch up your strategy. The only thing I would just say is no shiny penny syndrome where you don't take action, learn about it enough that you can take action and go and execute and execute on the right deals. And she was talking about markets. And fundamentals and learning about those markets and also for cash flow, understanding how cashflow works. Of course, there's gonna be a little bit of work to do. You can't just jump in and buy anything, but there's that balance, I think, between taking action and analysis paralysis, where you never do anything and taking action too quickly, thoughts?
Laurel Simmons: You're right. It's all, like you said, it's about learning the fundamentals. As Elizabeth said, running the numbers, know what your numbers are. So if you have the fundamentals and you have the basics and you know what the numbers are, then you go out like you and I don't, we don't do everything.
Do we go out and we get the experts, but we know what questions to ask. And we even know enough to go to the experts and say, you know what? I don't even know enough to ask the right questions. So you tell me, and that's how really successful people work.
Sarah Larbi: Yeah, absolutely. Laurel, it's always a pleasure hosting with you and The REITE Club nation. Thank you for tuning in. Don't forget. What do we say?
Laurel Simmons: Come grow with us and customize your life.
Sarah Larbi: See you guys next week.
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