Unlocking Real Estate Success: Eric Kelly’s Expert Tips for Investors

Kristen Knapp (00:02.333)
Welcome back to the Real Estate Pros podcast. I’m Kristen Knapp and I’m here with Eric Kelly, lender and investor in the Birmingham area. Thank you so much for being here today.

Eric Kelly (00:12.034)
Well, Kristen, thank you for having me. I appreciate it. And thank you for doing what you’re doing. You know, in my opinion, you can’t have enough education out there for investors and things like that. So thank you.

Kristen Knapp (00:14.248)
Yes.

Kristen Knapp (00:23.571)
Of course, I agree. think that you hit two sides of the coin here where we can really get into a lot of great information. So how about you just start by introducing yourself and telling everyone kind of what you’re working on and how you got here.

Eric Kelly (00:37.504)
Okay. Started out, do it as a mortgage lender when I was in college. My brother got me into it. Anyone that’s a loan officer will know that that’s not a job that you look for when you don’t go to college for. You you don’t even know about it until somebody maybe pulls you into it. you know, I feel lucky that I got into that a long time ago and been doing it ever since, roughly about 30 years. And I’ve

I’ve done every different aspect of it. So I’ve been with a large corporate lender. I couldn’t pay my rent at one point in time because as a mortgage lender, at least initially, it’s all commission, 100 % commission. And I had a couple of deals fall out, couldn’t get paid and couldn’t pay my rent. My dad says, son, you need a salary job. So I got a job at a large corporate lender.

Man, I just, I wasn’t happy. You know, I’m the type of person that like works and I like to see the results of, you know, me putting in extra effort and things of that nature. And that just wasn’t happy.

Kristen Knapp (01:57.403)
like you might have an incoming call.

Kristen Knapp (02:07.571)
I’m unable to see you right now. I think that you might have a call.

Kristen Knapp (02:21.649)
Okay, there you are. wait.

Kristen Knapp (02:28.851)
We’re gonna just wait for him, he’ll come back.

Kristen Knapp (02:33.853)
Hi.

Eric Kelly (02:34.15)
Sorry about that. That’s why I didn’t want to be on my phone, but anyway

Kristen Knapp (02:38.823)
All good. So if you want to pick up from you went to you went from having commission to actually going infirm.

Eric Kelly (02:48.741)
Yes, so I was working at the large corporate lender and a broker said, why don’t you come back here, come back home, which was the broker I was working at initially. He said, I’ll pay you a salary, plus a commission. I did that for one month. And then I saw how much money I was missing on the commission side and I said, all right, I don’t want to do that. I’ve been commissioned ever since. fast forward.

ended up moving to Birmingham after Hurricane Katrina and really gave me an opportunity for a lot of different things. you know, really seeing the different worlds of I was doing investment properties, I was doing flipping, was also on some rental properties in Baton Rouge and just the laws around evictions and things like that. Totally different here. So that kept me out of the rental market here.

because the eviction law is being much longer than they are in Louisiana. So I just continued the flipping thing because I enjoy that a lot. anyway, fast forward till now, I’ve been in Birmingham for right at 20 years and just really enjoyed it. It’s lot of opportunity, you know, when it comes to just the knowledge that I have on the lending side of it, but to be able to help

investors out if they are buying investment properties. But to me, y’all do the investor fuel, right? And to me, investor fuel is investor money. It’s capital. you can’t do it unless you have a pile of money sitting on the sidelines to be able to buy properties, to invest them, to cover reserves, all that good stuff. You got to find capital.

You’ve got to find some money. That’s what I’m good at. I’m good at making money. I’m good at turning money into more money. I like to help people. I like to give back as much as possible and educate investors on what they can do if you’re just starting out or even if you’re a seasoned investor, maybe having access to more capital could be even more beneficial.

Kristen Knapp (05:12.531)
Absolutely, and you’ve been in the game for a while. You’ve been lending for 30 years and investing for about 25 years. It’s not right. I mean, that’s so much good. You you’ve seen a lot in the market.

Eric Kelly (05:19.694)
Yes.

Eric Kelly (05:26.562)
Yeah, there’s been a lot of changes, know, ups and downs, different administrations and things like that, lending standards. You know, we’re in a position right now, I think it’s a fantastic job to be investing in, fantastic opportunity to be investing in real estate, just because the changes that are happening in the lending world, think yesterday or day before yesterday, FHFA put out a statement that they’re allowing crypto.

to be used in obtaining a mortgage loan, whereas right now you can’t use it. It’s an asset that a lot of people are going towards, a lot of people are investing in, and a lot of people have had a lot of returns from that, if they’ve been investing in it for several years. So being able to use that to leverage a mortgage loan or mortgage transaction to purchase an investment property to make more money, it’s small things like that that’s

It’s really opening up the opportunities for investors to get out there and have the opportunity to buy investment property to build wealth.

Kristen Knapp (06:36.401)
Right, and then what would you say to someone who’s kind of concerned about interest rates and the future of that?

Eric Kelly (06:42.998)
Interest rates, in my opinion, interest rates, they’re always up and down. They have been at an extremely high level over the past couple of years, but they’re certainly coming down. When they hit a point of about 8 % for a primary residence, it was a little bit higher for investors. We saw investors really just stop and go,

my cash flow doesn’t work at this, you know, especially if you didn’t have more money to put down to get the principal balance down low enough so that it would work. But the thing is, you know, the great thing about real estate is appreciation, you know, and even though interest rates have been extremely high over the past couple of years, you still see the appreciation. And even if you can make it to where you’re losing a little bit of money,

initially, you know, when rates drop, you’re able to take advantage of all the appreciation that you gain. You’ve paid the principal balance down and then you refinance to a lower rate, get the cash flow and take advantage of both the, or taking advantage of mainly the appreciation that you’re going to gain. And I feel like there’s going to be a huge appreciation spike over the next couple of years.

with the decrease in interest rates and just more houses going on the market.

Kristen Knapp (08:14.491)
Yeah, that’s a really good breakdown of everything. I really like that. What are some, you you just mentioned a big, you know, thing for borrowers to keep in mind and maybe even a mistake you’re seeing. What are some other things that you wish people knew before they went out to borrow money?

Eric Kelly (08:33.635)
So I see it fairly often as a lender, lending to investors, maybe first time investors that get out and a lot of people want to be flippers, right? A lot of people think it’s easy. Hey, I’m going to buy this house. I’m going buy this $40,000 house. I’m going to put $10,000 into it. And man, it’s going to be worth $100,000. And everything is just going to be great. And it sounds so easy, but that’s just not how it turns out.

for a lot of people. I would suggest anybody getting into it, make sure that you surround yourself with professionals. Make sure if it’s a lender, I would say if you’re gonna have a lender doing investment properties for you or helping lend to you on investment properties, someone that’s been in the business at least for several years, and if they’re also an investor too, that’s even better.

you know, the access to capital. There’s companies out there that do 100 % financing on investors and that’s almost unheard of, you know? mean, in most, like what I see on my end, like on the lending side, a lot of first-time home buyers, they think I’ve got to have excellent credit and I’ve got to have 20 % down. And that’s the furthest thing from the truth. There’s 100 % financing out there. You can have

640 credit, isn’t great, and obtain 100 % financing on a lot of deals at really good rates. just educating yourself on what’s out there, not taking the first thing that you see, because there’s just a lot of opportunities out there. And there’s so much information, just like your podcast, that you can obtain so much information.

For one, you gotta have a game plan. Just like anything, you gotta have a game plan on what you’re looking to do. You gotta make a commitment to yourself to do it. Because if you halfway do anything, it’s not gonna turn out well. So you make a commitment to it and you take massive action to go after it and make all your dreams come true. To hit your goals and hopefully exceed your goals. now we’re talking about, if you think back 10 years ago,

Kristen Knapp (10:43.432)
Right.

Eric Kelly (11:00.514)
You know, everybody’s like, you know, I a million dollars. know, a million, if I could just get a million, I’m a millionaire. Now it’s billions, you know, everybody’s talking billions now, you know? And it’s just everything scales up so rapidly that you just, you’ve got to have big numbers in mind. You’ve got to have an end goal, you know, you got to have an end game, you know, doing one or two deals, you know, if you’re, if you’re a flipper and you do, you know, a couple of deals a year.

You’re doing okay probably, you know, but you just need to think big. You know, if you’re to do it, do it. And if you can find, you know, for example, if you can find 100 % financing, man, why aren’t you doing as many deals as you can find? You know, because you have zero capital up, you know, you have zero. And if somebody’s paying you to buy the house and do the renovations, my gosh, I mean, to me, that’s almost like the Holy grail.

You know, that’s the avenue to get you to where you want to be, especially if you’re thinking big and you’ve got a good game plan in mind, but you’ve got to surround yourself with individuals that know what they’re doing. And a big part of that is who’s going to be doing the renovations. You know, are you the builder? Are you a contractor? Are you going to be doing the renovations? Do you have knowledge about that? You know, so gaining some really good

if it’s contractors, it’s subs, whatever, to be able to do the work that you want to put into it because you could have a great buy and then you put the money into it and it looks like crap. And then no one’s going to buy it and then you’ve to take the price down and it just doesn’t turn out well in the end. So having yourself a good team is super important.

Kristen Knapp (12:53.317)
Yeah, I mean, I think you had so many good tidbits in that where I think a lot of people probably let the fear of maybe not having perfect credit, maybe not being good enough in that way, or the fear of risk get in the way from building wealth for themselves.

Eric Kelly (13:10.568)
Right, exactly. You know, it’s always been risk reward, right? And like I mentioned earlier, if you can find a lender that does 100 % financing on a flip, your risk is pretty low. You know? Your risk is pretty low, so whatever you can get out of that, you’re winning, you know? But it’s certainly, you know, I think for a lot of people, getting over…

multiple kind of risk factors. If it’s, you know, hey, I’ve got this salary job and, you know, I don’t want to take time away from that, you know, or if it’s the risk of, you know, I don’t know if this is going to turn out right or I don’t have the education or whatever it is. You can overcome those risks by a lot of things. Like I said earlier, by watching podcasts like this, just educating yourself, talking to people, getting out in the area.

and kind of submerging yourself in the scenario that you want to be.

Kristen Knapp (14:15.665)
And I’m sure there’s a lot of people, seasoned investors that are always looking for some help and always looking, like always willing to, you know, give people knowledge when they’re first starting out.

Eric Kelly (14:27.314)
Yes, I mean, to me, giving back just in general is huge. I think you have to have a giver mindset to excel in this world. If you’re just a take-taker and you’re just greedy and you just want to make as much money as I can, I don’t care about anybody else. I personally don’t feel like that avenue ever works out for people. So if you have a giver mindset of, hey, I’m going to

I’m going to make a million dollars, I’m going to make a billion dollars, you know, and of that, man, I’m going to give back and I’m going to help. I’m going to be able to do this. Or if it’s just given of time, you know, it doesn’t have to be giving of money, it can be giving of time. And like you mentioned, there’s a lot of investors out there that, you know, would love to come on podcasts, would love to educate, would love to, you know, speak to individuals to try to help them move up and be successful.

Kristen Knapp (15:25.511)
When you think back to when you kind of not made the transition, because they know you’re still doing lending and investing, but when you did that first investing deal or when you were first starting out, what were the biggest challenges you felt like you had to overcome?

Eric Kelly (15:40.371)
What a great question. The financing piece initially, so this was a long time ago. There was not that I knew of anyway. There wasn’t 100 % financing out there for investors. I had zero experience. A lot of the hard money lenders want you to have multiple deals under your belt before they’re going to lend you maybe higher LTVs or anything like that.

kind of got creative myself and did a owner financed type of deal where I didn’t have to put up any money and structured it in a way so that I could get in with no money out of pocket. that was my first, I bought five rental properties from one person that was looking to get out of the business. He was getting up there in the years. He had like 120

rental units, and he was just wanting to get out. So I was talking to him about what his plans and goals were for the future. So we were able to structure something so that it was beneficial to both of us. So that got me into it. And then a lot of times it’s trial and error about things, but of course you don’t want to run into the mistakes if you can help it. That gets expensive a lot of times. I think being in specific areas

is pretty key. I was speaking to an individual just the other day that has over 100 rental units in the area and he was like, I only lend to a specific population. And I only, not lend, he’s like, I only rent to a specific population. have, that’s where I buy houses is,

you know, in specific areas because from the experience that he has, he’s got a lot of experience. He was like, I get paid on time. He was like, they take care of the houses, you know, and that’s the two main things that you want as an investor, as a landlord. You know, you want somebody taking care of your property and paying you on time, you know, or they can be late, you know, if you want them to, but still pay you, you know, you can collect the late fee and still get paid. But

Eric Kelly (18:03.869)
And he just continues the cash flow and continues to build, continues to get the appreciation on the properties because they’re taken care of. He doesn’t have to dump money back into it a whole lot when they happen to move out. Even for me, I’ve been doing this a long time. I learned something new. And I’m like, we’re talking about different areas, like I was talking about earlier, different areas of the country that may be good to invest in. And here he is telling me about a specific, like he,

looks to buy houses and rent in specific communities. There’s a lot of different avenues to go about it, to me, that is one really big one that’s going to keep you from losing a lot. Jumping on the first deal that you can find because it’s cheap. It’s cheap for a reason. Make sure you’re getting into a good market because that’s where your tenants

are going to be. If you are in a very, very depressed market, you’re only going to attract low income individuals that are probably struggling themselves and probably going to have a hard time paying you. It costs money to get an attorney. It costs money to get evictions. It’s time that sitting there, and if you have a mortgage on the property and you’re not getting paid, you’re covering that.

There’s a lot of hurdles to overcome, education, just educating yourself as much as possible, talking to as many people as you can with social media and podcasts like these, just filling yourself up with as much information as possible is pretty key in

Kristen Knapp (19:55.773)
I think that was such valuable information and I couldn’t agree more. Going back to kind of where you were talking about how different areas in the country are specifically good for real estate, you’re obviously so passionate about this industry, which I love to see. Can you talk a little bit about the Birmingham market and what makes that so special?

Eric Kelly (20:15.558)
Yeah, it’s phenomenal. Just Alabama in general, my opinion. mean, Alabama’s been ranked on Forbes best states to invest in for several, several years. The main reason for that is the prices are relatively low. The rents that you can receive are relatively high. Taxes are low. Insurance is low.

There’s just a huge, you know, supply and demand piece. There’s a huge demand for houses. If it’s investors, like I do investors from all over the world, you know. I have a group of Israeli investors that I work with, you know, that they’re in Israel and they want to buy investment properties here. But there’s people from all over the world looking to invest in real estate in the United States.

and all over the states, of course, but they seem to focus on Alabama as a good spot. It’s for the reasons that I mentioned earlier, but the supply-demand piece, we have a continued influx of people coming in, the jobs market is good. It’s just overall, as an investor,

a really good state to invest in. The Birmingham market, even more so, I think it’s magnified just because of multiple factors, a lot of economic factors that play into it. But there’s a lot of higher wage earners here. The job growth that’s in this area is phenomenal. And you just don’t see a lot of people moving out. know, schools are such a huge center.

for communities, know, and why people are moving to specific areas. you know, any, just about any place that’s got a good school around here, I mean, the home values are just soaring, you know, and there, those, those communities are run very well. And that’s something else you need to look at, you know, like who’s the, who’s the mayor, you know, what are their thoughts on things, you know, what are they thinking about cutting things or the thing about adding things in, you know, you got to look at a

Eric Kelly (22:38.253)
a lot of different factors that play into it. But there’s so much information out there these days that you can get your hands on in terms of the growth for that area, the number of people moving in and out. You can see trends of a lot of different things, and one being income. If there’s income growth in that area, if there’s population growth in that area, schooling, again, a big factor to it.

But yeah, mean, you gotta look at all those factors to find out what’s gonna be the best for you. But that’s what makes Birmingham a huge, huge place to invest.

Kristen Knapp (23:17.659)
I love that, and you gave some tips on how to scope out some other great areas as well, or how to decide if your area is a good place to invest. So what’s next for you? You’re doing so much already, but what’s on the horizon?

Eric Kelly (23:31.643)
I’ve started a couple of different businesses that I’m trying to take off. If it’s on the lending side, on the investing side, website, on sales, a lot of different things on top of trying to my lending business as well. mean, Assurance Financial, we’re a phenomenal company. I’ve been with them for 20 years. in my opinion, it’s…

we’re the best run mortgage company there is. We have construction loans that are out there and stuff like that. So I’m continually hiring new loan officers in different markets and growing that. But on the personal side, looking to invest more. This year I had scaled up my goals for investment and what I’m looking to do.

It’s really not that hard, you mean, you reach out to real estate agents, you know? I mean, they want to sell houses, you know? And they’re working for you. So I’ve reached out to multiple, multiple real estate agents. And I said, hey, I’m a buyer. I’m a buyer, send me what you got. And I mean, I get so many emails a day about houses, you know? it’s, you know, I will say this, you need to figure out what your calculation is.

is going to be. How much money do you have to invest? Are you going to do the 100 % financing? What are you comfortable at? You’ve got to have that calculation down on what you’re looking to do. To me, it mixes in with your goals. I’ve scaled my goals up. I’ve reached out to a bunch of different agents about getting stuff. It’s flowing in. There’s so many opportunities that are out there.

You just gotta find them. Unless you’re active like that and you have other people helping you be active. And there’s a lot of websites out there that can, you you plug some stuff in and man, it just spits it out. So there’s a lot of opportunity out there. You just gotta go grab it.

Kristen Knapp (25:38.619)
Awesome, and then where can people find you?

Eric Kelly (25:42.33)
I’ll put my number out there. Anybody can call me, 205-542-2327. Happy to talk to anybody about investing, funds for investing, it on the assurance side, be it on the hard money side, whatever it is, or E. Kelly at AssuranceMortgage.com. So feel free to reach out at any point and happy to do it.

Also on social media, Eric Kelly Lones. yeah, reach out to me on social media. Thank you to my assistant over here, Davina, for informing me on that. She keeps me up to speed on everything. So yeah, I love to help people any time that I can, any way that I can.

Kristen Knapp (26:34.439)
I love that. Listeners, please take advantage of that. feel like Eric has so much knowledge to give. I mean, we’re so lucky to have had the last 20 minutes with you. Thank you so much for doing this.

Eric Kelly (26:46.777)
Well, thank you for having me. I’ve really enjoyed it. again, it’s thanks to you, you know, for even having this podcast and allowing individuals out there to learn and grow.

Kristen Knapp (26:57.297)
Yes. Awesome. Well, thank you so much. We really appreciate it. And everybody subscribe to the podcast if you love it. And please contact Eric if you want to learn more. All right. Thank you so much. Have a good one.

Eric Kelly (27:07.234)
Thank you.