JF2602: From Single-Family to Almost 800 Doors with Edna Keep #SkillsetSunday

Edna Keep started her real estate journey after transitioning from financial advising. Now she owns almost 800 doors and coaches others to change their mindset and take action. Today, Edna is talking about how she encourages new investors who think multifamily is overwhelming, what you need to know about your network, and the #1 thing holding people back. 

 

Edna Keep Real Estate Background:

  • Owns 778 doors valued at $70 million of real estate
  • Started with single-family homes, but now primarily buys multifamily and does some development projects with other people’s money
  • Based in Regina, Saskatchewan, Canada
  • Say hi to her at: www.ednakeep.com

 

 

 

 

 

 

 

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Deal Maker Mentoring

TRANSCRIPTION

Ash Patel: Hello, Best Ever listeners. Welcome to the Best Real Estate Investing Advice Ever Show. I’m Ash Patel and I’m with today’s guest, Edna Keep. Edna is joining us from Saskatchewan, Canada. She is a previous guest of the Best Ever podcast. If you Google Joe Fairless and Edna Keep, her episode will show up.

Edna, thank you for joining us, and how are you today?

Edna Keep: Hey, thanks so much for having me, Ash. I’m doing awesome.

Ash Patel: Great to hear. Today’s Sunday, so Best Ever listeners, we’re going to do a Skill Set Sunday, where we talk about a particular skill that our guest has. Edna started with single-family homes and then moved on to multifamily investing. She now has almost 800 doors, valued at $70 million, and is an expert in using other people’s money for leverage.

Edna, before we get started, can you tell the audience a little bit more about your background and what you’re focused on now?

Edna Keep: Sure. I used to be actually a financial advisor before I got into real estate… And once I understood the power of real estate, I actually sold my financial planning practice – I sold mutual funds and life insurance – because I couldn’t sell mutual funds anymore. So that was kind of a funny story. People always wonder, how does that happen?

But as a financial advisor, we were never trained on anything else other than what we sold, so we did not have an understanding at all. And now, I mainly coach and train other people to do the same thing we’ve done, which is buy real estate, particularly multifamily, with investor capital. And the last purchase we made was in March of this year, 178 units in Memphis, Tennessee.

Ash Patel: Edna, a lot of people that you coach – are they former financial planners, advisors?

Edna Keep: No, all walks of life, everything; lots of technology backgrounds. I’ve had small business owners wanting to do something different… I’ve just got off a call with a lady who worked for the government and she doesn’t want to go back to her job. So all walks of life. Most students, when they come to me, already have purchased two or three houses and they know they want to scale, but don’t know how to scale, and that’s when we get into the conversation about moving to multifamily and then using other people’s money.

Ash Patel: Well, let’s dive into that.

Edna Keep: Okay.

Ash Patel: You’re coaching somebody who’s got two or three single-family houses, and is set to do maybe a dozen more over the next two years. Why convince them to go into multifamily?

Edna Keep: Well, just like our story, Ash, when we started getting into multifamily, we actually got to the point where I think we had 15 mortgages. But at one point, no matter who you are, you’re going to get cut off from your ability to get mortgages, or at least mortgages at a decent rate, and that was us. And that’s what I find happens with most people. Nowadays, they’re lucky if they can get two or three. We started in 2007, so it was a lot more lenient back then. Nowadays they get two or three, it doesn’t even matter how much money they have, because they look at people when you’re buying residential as you have to have the ability to pick up the slack if a tenant moves out. And with multifamily, it’s different. They do look at you somewhat, but first and foremost, they look at the building; does the building make sense? They take into consideration income and expenses, and they treat it like a business right from day one. So that’s the biggest difference between the two.

Ash Patel: Well, now if I don’t have the liquidity or the net worth, how do I purchase a building that has great numbers, banks love it, but they don’t love me?

Edna Keep: That’s a good question. And you know, that happens a lot, too. And not necessarily because they have bad that credit, but most reason because they don’t have the money anymore. They’ve maybe bought two or three properties. Or maybe they have enough money to buy one or two buildings, but if they really want to scale, it’s always about other people’s money. And what is really, really powerful about that, Ash, is you’re also doing a really wonderful service for these people because there’s a ton of people that’d like to invest in real estate, but don’t have a clue how, where, why, and really need to be educated. So using other people’s money is a service for them, and you provide that service; you’re the one who does the work, finds the deal, puts a deal together, puts some financing in place and all that. I always say I’d rather own 25% of four buildings than 100% of one. It reduces your risk and also allows you to scale, because you can use your investment partners net worth, their credit rating, all of that, to be able to keep qualifying for more and more mortgages.

Ash Patel: Well, Edna, you make it sound easy. Some of our Best Ever listeners may be wondering, “Well, look, you’ve got a great track record. You’ve got a big network, you’ve got the financial background. I am maybe working a 9-5, have a couple homes on my block that I have as investments… How do I dive into giant multifamily, other people’s money?” What do you tell the person that thinks all of this is overwhelming?

Edna Keep: Well, typically, I don’t teach to dive into a big one right away. That 178 unit we just bought… We’ve been doing this for 14 years, so it’s a different story. I recommend a six-unit, eight-unit, 12-unit as their first purchase. And what a lot of people don’t know is we can actually get 85% financing for a building. I’ve had students approach me and say, “Yeah, my realtor told me I have to put 35% down on this building.” Yeah, we can get 85% financing, and great interest rates, like 2% or under, 35-year amortizations… So right off the bat—I’ve had students buy $600,000 eightplexes, and I’ve had students come to me who just finished buying a $600,000 duplex, they have to put 20% down. Multifamily, they can get away with putting 15% down.

The other thing that we can do, which really helps, is a lot of time we can get vendor financing.

Ash Patel: What is that?

Edna Keep: That’s seller financing, the seller agrees to leave some money in the deal. And I’ve actually had students routinely do 5% to 10% vendor financing. I had one student that got 13% vendor financing, and that was lender approved; you don’t try to do it behind their back. 85% from the lender, 13% from the vendor or seller, only had to come up with 2% of their own money and closing costs. So people a lot of times talk themselves out of looking at it, because they think the numbers are huge. The numbers don’t necessarily have to be huge.

Ash Patel: Edna, how often are lenders okay with seller financing?

Edna Keep: We’ve had lots, but it is specific lenders, who are familiar with the whole multifamily process. Like we don’t go to the big five banks in Canada because they most of them don’t understand. They’re the ones telling you you’ve got to put 35% down and 25-year amortizations, and you can’t even get any cash flow. But the lenders who lend primarily on multifamily – they understand it, they get it and it happens lots.

Ash Patel: And then you mentioned a 35-year amortization. That seems odd; it seems like a wind, but I didn’t know that was a thing.

Edna Keep: Well, a little bit different from the US, Ash. So you guys would go a term. I say amortization as in that’s what the payments are amortized over, 35 years; but we go with like a five or a 10-year term. So the five-year term might say, “Okay, right now, 2% for the next five years, then you refinance and get it whatever the next term is”, or right now, we have some students that are financing for the 10 years, because they’re paying a little bit more, maybe 2.5, but then that price is locked in for 10 years.

Break: [08:16] to [09:49]

Ash Patel: Do you coach students both in the US and Canada?

Edna Keep: Yeah.

Ash Patel: And what nuances do you have to deal with when you cross the border here?

Edna Keep: Well, what we’ve done is we paid cash for our buildings and then we refinance after we’ve done—we’ve bought very undervalued buildings, like highly vacant, run down, did our magic with them, and then financed them. So that’s one thing that we’ve done, is paid cash for them. And quite often, if you’re looking at that BRRR strategy, that’s what you have to do. But you know what? People can get financing. What we do, and this is the easiest way, because again, you don’t have to know everything yourself… I use a mortgage broker in Canada all the time. I use a mortgage broker, and they’re the ones who can educate you. They’re the ones who have the relationships with each one of the lenders, and can, based on your particular situation, point you in the right direction for which one you should be talking to about the financing.

Ash Patel: What does a mortgage broker typically charge?

Edna Keep: Anywhere from 1% to 2%.

Ash Patel: And often it’s well worth that fee?

Edna Keep: For us it is. It is.

Ash Patel: Yeah.

Edna Keep: I’ve had partners that did the work themselves and got us the mortgage, and so it is doable. For me, I’d rather pay the 1%. It’s a lot of work. It is. I think they’re worth their weight in gold. Some people think they’d rather do it themselves. But again, different strokes for different folks. I don’t want to pull like all those pages and pages of paperwork together.

Ash Patel: Edna, what do you say to the people that don’t have large networks, but want to get people to invest their private capital into their deals?

Edna Keep: Well, first of all, you have to build a network. But you know, lots of times you can short-circuit building that network by the people that you’re around. I have a networking group that I put my students in, where they’re networking with each other. Right now there’s at least 10 of my students that are funding other students’ deals. So sometimes students have the money, sometimes students have the deal, and they pool together and partner. Sometimes they want the deal in this certain area, so then they find the partner in that area. Network equals your net worth, absolutely, all the time.

But I’ve also been part of networking groups where 80% of the audience do not own even a house, let alone an apartment building. So you have to be around like-minded people, doing what you want to do. Because if you’re in a group, where 80% are not pulling the trigger, there’s an 80% chance you’re not going to pull the trigger. So you have to be around action-takers as well. And actually, when I signed people up for my program, I tell them, “If you’re just here to learn, probably not the best place, because I fully expect you to take action, and that you’re going to own a building in the next year.” So if you want to just learn, go watch YouTube, go read a book. If you want to learn, take action, actually apply the knowledge you learn, then it’s a different story.

Ash Patel: What causes students that go through your program, but don’t execute? What do you think it is holding them back?

Edna Keep: Sometimes it’s just fear. Sometimes they come in thinking, it’s going to be easy, and it’s not. I’ve actually had people here go, “Yeah, you know what, now that it’s time for the rubber to hit the road and I have to do the work, that one over there, the webinar I just listened to or the YouTube ad I just listened to, that one sounds easier.” So that’s what happens, and then they’re always chasing the next best thing; Airbnbs, fix-and-flip; there’s always the next best thing.

The fact is, all those are designed to sell you on a program, every single one of them; there’s work required. And there’s a learning curve with every single one of them. So you don’t get to just buy a course and get a building through osmosis; you actually have to do the work. And it’s unfortunate, but there’s people out there looking for a get-rich-quick scheme, where they think just by buying the course, it’s going to magically happen. And it doesn’t.

Ash Patel: Edna, I tell a lot of people that are wanting to get into real estate that there’s so much information out there for free, you don’t have to pay for it. But now here, you are charging. What makes your program worthy?

Edna Keep: Some of the feedback that I’ve got from the students is I actually have a system – do this, then do this, then do this, then do this. With YouTube or books or whatever, they’ll give you the general strategy. But everybody has different challenges. I also focus a lot on mindset, Ash, because I believe “new level, new devil,” every time that you’re trying to grow as a person, you’re going to come across challenges, because you’re here wanting to be here; your mindset has to shift. And the best way to do that is working with somebody who can see the future you as opposed to the present you. I’ve done it like 778-doors times. Yes, it’s foreign at the beginning, but very soon, it’s not foreign anymore. So putting it into a system, I think it’s a really big thing.

Ash Patel: And the difference between a course and a coach?

Edna Keep: Well, mine is both, because I don’t [unintelligible [00:14:49].03] to do one without the other… Because there’s a few people that will take a course and run with it and never need any help. But my experience is, is that most people need help. This is a really good example.

You go to school to be a teacher, say, for example. You’ve spent four years in school, you know how to be a teacher; it’s still different when you’re standing in front of the classroom, being the teacher. This side of the fence, you’re a student, you’re sitting there, you’re learning, you’re learning, learning. When you’re a teacher, you’re on that side of the fence, and you’re teaching, teaching, teaching. So trying to implement it all by yourself, it’s two different ballgames. And I always say, “You can study till the cows come home; it’s not till you actually do what you’ve learned that you’re really even going to know that you know what you know…” you know? [laughs]

Ash Patel: And what mistakes do you see people making after they have the deal? Let’s say they closed on the deal and they have it up and running… What are the common mistakes that people make?

Edna Keep: I’ll tell you a big one. And this is actually how we got our last deal; beautiful deal, 21,600 a door. They think that the buildings are going to run by themselves, or with a property manager. The fact is, you still have to oversee the manager, and actively. Like, a misnomer in real estate is that it’s passive investing. Even when you have anything to do with the active side, you still got to oversee your managers, and it’s your responsibility. It’s not the property manager’s responsibility. To them, it’s just a job. It’s just a job, pays the bills.

You have to oversee and make sure that they don’t – I always say – “use your building as an ATM”, because I’ve seen that happen. In recurring conversations with students, we have to initially have a professional property manager manage your building. But when you know what you’re doing, sometimes it makes more sense to oversee it yourself. That’s not to say you have to do all the day-to-day work of dealing with the tenants and the toilets, but you have to oversee it. Because if you think you’re just going to plant a property manager and that he’s going to care like you care when it’s your building – not going to happen.

Ash Patel: Do you still invest in equities, or is it all real estate?

Edna Keep: All real estate. With one exception, I will tell you. We recently bought an Amazon FBA store, but we bought it for one of our kids. So we’re getting that all in motion, too. Because I do think, like — I love Amazon; I’m on there all the time, all the time. We always have somebody at our door going, “Delivery!” So that’s the only two we have on the go right now.

Ash Patel: Will you ever invest in equities again?

Edna Keep: No. As a financial advisor for 15 years, there’s so much that goes on behind the scenes that you have no control over… When I was taught with mutual funds, it was supposed to be a long-term buy-and-hold. I sat in a conference one time where this hedge fund manager was telling me how they play with mutual funds and take all the profit off the top, and I went, “No wonder the markets keep going like crap all the time.” So no, I never will.

Ash Patel: And financial advisors – they make decisions based on their commissions, right?

Edna Keep: And who’s training them. We were only ever trained by mutual fund companies. So most of them pay very similar commission, so not so much “I’m going to sell this one because I get a better commission” or whatever; they all pay very similar commissions. But if you’re only taking your training from a mutual fund company, what’s your only response to a problem? Mutual funds. Same with the doctor; you go to a doctor, and most of them are trained by pharmaceutical companies. When you go to a doctor, what do they try to do? Give you a prescription. Why? Because they’re trained by pharmaceutical companies. Same thing.

Ash Patel: And why is it that there’s no way for financial planners to make money off of real estate investments?

Edna Keep: There is actually, but they have to be independent; they have to be independent financial advisors who are usually fee-based only. And then you know what? If they were actually involved in the real estate deal, there’s ways for them to make money too, but they have to give independent fiduciary advice as a licensed financial advisor. So you really have to know what you’re talking about and put in all the disclaimers too, “I can’t guarantee anything.” Just like when you sign all the documents when you buy a mutual fund, “This is not guaranteed. The market will fluctuate. You can’t come back on us on anything. Sign here, sign here, sign here.”

Break: [19:11] to [21:51]

Ash Patel: Edna, have you tried to court other people in the financial industry to sway into real estate, or perhaps put some client money into some of your deals?

Edna Keep: I had a few clients that moved over with me, but they were people that were really close to me. And they were asking me, “What do you do now, Edna?” Like, “Geez, I’m not happy over here.” Like, “What are you doing?” So they kind of approached me that way. But most of my investors are people I met after the fact; like, people who were just open to real estate right from the start.

Ash Patel: Yeah, I’ve got to ask you this question. I know a fair number of people who have mentored for years and are very good at it. And it’s gotten to the point where it’s taking a lot of their time, and they have to make a decision about discontinuing mentoring people, or actually charging for their services. What are your thoughts on that? And these are people that are very passionate about mentoring, they get energized by helping others.

Edna Keep: I believe if you don’t charge, a lot of the times people aren’t committed. It’s like buying that book, and I’m going to read it, and I’m going to take that $100 course, and stuff like that. I want to work with committed people, so I charge more right upfront, because I don’t want you coming to me and saying, “Ah, here’s 100 bucks” and then never show up. It’s like, “Whatever, it doesn’t even work.” And it does take a lot of time. So you have to make a business out of it. Myself, if I had to choose today between coaching and buying more real estate, I’d just coach, because I love it. I still get to buy buildings vicariously through my students, but I don’t have to own them afterwards. So yeah, if I had to make a choice at this point, that’s the way I’d go.

Ash Patel: And have you had success with your students bringing deals to you?

Edna Keep: Yeah, I don’t recommend that. I do have students that want to, but I just feel like I’m on a different level, because I’m teaching my students to buy their first one or two or three buildings. And we’re buying like 178 units at a time. So we’re just playing in a different field. Now, with that set of students, funding students, you know, people who’ve been around three years, that are already making some really good money, and they’re helping the other ones fund their deals… But no, I don’t.

Although one of my goals, Ash, going forward is I would like to—I’d like to allocate 100,000 a month just to my existing students in deals. I see some amazing deals. But I also do not want them to rely on me. I want them to rely on themselves. It’s kind of like — that’s handing out fish, when I should be teaching people how to fish.

Ash Patel: Have you had students bring great deals, but they failed to capitalize on them?

Edna Keep: As in found a great deal, but could not find the money for it?

Ash Patel: Correct.

Edna Keep: Sometimes. It’s more of a mindset if they can’t. So I have strategies, I try to get them around on that. And then I show them that if they can’t actually close on themselves—because sometimes they get a large deal at the beginning that’s a great deal, but they’re brand new, so they can’t raise the capital – to partner with somebody more senior who could bring some value to actually pulling that together. Because I think that that’s a good way to do it. Or wholesale – sell their deal to somebody more experienced who could do a big deal like that.

Ash Patel: And have you looked at other asset classes besides multifamily?

Edna Keep: In the real estate world?

Edna Keep: Yes.

Ash Patel: Yeah, we have. We almost bought a strip mall quite a few years ago. Now, what would that have been? In 2013/2014, something like that. And we would have bought it, but our lender was scared of the environmental that came through. And of course, we only had the one lender lined up. We thought we have it, and then when the time came, the lender said, “No”, there was no time for us to look for a second one… So we had to let it go, and another group got it. So we did. But now I actually am most comfortable in the residential, and I’ll tell you why… You know, I think COVID really hurt a lot of retail-type space. Everything was shut down. For two years, we really couldn’t go anywhere. Grocery stores were open, and doctors’ offices, but restaurants were shut down, all this stuff. Did you know that Donald Trump’s group actually bought — I think it was $30 million worth of real estate in residential Memphis, right around the same time we did? And I think their idea there was they had everything in retail, and office.

Ash Patel: Interesting. Yeah, timing is everything. Do you have a coach a mentor or do you take courses? Or how do you continue to educate yourself?

Edna Keep: I have had at least one coach ever since 1999. And sometimes I have more. Hey, I’ve got a stat for you. You probably don’t know this, this is so interesting… I keep it on my desk, because I just found this out about three months ago, but it’s so true.

People who earn less than 100,000 a year – zero coaches. People who earn 100,000 to 250,000 a year, one coach. I know that very well, because that was about what I earned when I was a financial advisor; I had one coach. People who earn 250,000 to 500,000 a year have two coaches. People who earn over a million a year, 4-5 coaches. Isn’t that interesting? Currently, I have four right now.

Ash Patel: That is interesting. I used to make fun of friends of mine, because they would pay six figures a year for coaches, until I got to coach and realized how valuable it is. In addition to the real estate portion of what you teach, do you teach anything about habits, morning routines?

Edna Keep: I have a large portion that focuses on mindset, Ash, which is all part and parcel of that. Because when you set goals, they’re meant for you to grow. And when you’re growing as a person, you’re always going to run across challenges. That’s how the world is designed. As we grow, we get better. And you know what? We get better, mostly through the challenges, not through the easy times. We get better through the challenges.

So focusing on mindset – I believe you have to. Because otherwise, if your mindset stays here, you could go win a $20 million lottery and you’re going to go back to here; that’s a proven fact. You have to grow with your income level or above it all the time. And that’s why you keep seeing people reinvest money in themselves again and again and again, and why people are paying 100 grand a year to work with the coach, because the coach also sees your blind spots and can help you see the next version of yourself. When you’ve been here a long time, it’s hard to see the new version of you.

Ash Patel: What advice would you give to high earners, successful people, who need to change their mindset to get to the next level? They’ve already achieved a lot of success, but they want to continue on and they’re plateauing.

Edna Keep: You have to get a coach. First of all, you have to set another big goal. Because if you’re not continually setting new goals, you might think you’re staying flat, but you’re actually going backwards. You’re either growing or you’re disintegrating; one of the two. And I find that the best way is through working with a coach. Because in the changes I’ve had over my lifetime — like, I started, like I said, my first coach in 1999, and I’ve never been without one. Every single one has taken me to a new level of the way to think, as well as the people you’re around.

So a coach can take you so far. But being around like-minded people is also so important too, because if you’re scratching with the turkeys five days a week and soaring with the Eagles one day a week, you’re going to kind of stay neutral, right? You’ve got to be around people who are doing what you want to accomplish, because other than that, you’re living in two worlds; you’re kind of straddling two worlds, and it’s hard.

Ash Patel: Well, Edna, thank you again for being on our show today. A lot of good advice on mindset, getting to the next level and taking action. So we thank you for joining us again on the Best Ever podcast.

Edna Keep: You’re most welcome. It was my pleasure, Ash.

Ash Patel: Best Ever listeners, thank you for joining us, and have a best ever day.

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