Kelly Iannone is the founder and owner of Waypoint Commercial Investment Partners, LLC, which focuses on multifamily syndication. In this episode, she tells us her reasons for getting into real estate investing and how she maintains stability as a multifamily syndicator.
Kelly Iannone | Real Estate Background
- Founder and owner of Waypoint Commercial Investment Partners, LLC, which focuses on multifamily syndication.
- Portfolio:
- GP of:
- 357 units across three properties
- One six-unit property
- One single-family rental
- LP of:
- One property
- 45 RV pads
- Works full-time at the Walt Disney Company as a senior manager of business planning and strategy.
- Based in: Orlando, FL
- Say hi to her at:
- Greatest Lesson: I’m super passionate about the FIRE (financial independence, retire early) community and I believe anyone within my circle of influence has an opportunity to become financially free within 10 years. Regardless of if they want to retire or continue working, having the option is the goal!
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TRANSCRIPT
Slocomb Reed: Best Ever listeners, welcome to the best real estate investing advice ever show. I'm Slocomb Reed, and I'm here with Kelly Iannone. Kelly is joining us from Orlando, Florida, she's a principal at Waypoint Commercial Investment Partners, and in her portfolio, combining her GP, LP and personal portfolio positions, she has a total of over 400 units, for over $45 million in assets under management. Kelly, can you start us off with a little bit more about your background and what you're currently focused on?
Kelly Iannone: Yeah, thanks for having me. I'm excited to be here. So my background - I started investing in real estate back in 2017, really as a way to move forward on the path to achieving financial independence and becoming work optional. I'm a longtime corporate employee, with an 18-year corporate career, so I found real estate really on that path to figuring out how do I achieve financial independence for my family. As you mentioned, my portfolio consists not only of large apartments syndications that we talk about so much on the show, but also personal holdings. As I grew on my journey, I grew from single family to small commercial, and then of course, in these large apartment syndications that I'm doing now.
Slocomb Reed: Awesome. So I have sort of similar story, Kelly. I'm an apartment owner-operator in Cincinnati, Ohio, more focused on the personal portfolio, and I have some joint ventures. I'm not a limited partner in anything yet. I self manage. I have my own management company. But financial independence and retiring early, FIRE is our acronym. It's a large community. That's the reason that I got into real estate in the first place. I was really just looking for a side hustle. I didn't have a large employee W-2 income that I needed to replace. I was a full-time professional youth minister, and I was just looking to do something on the side, and then real estate became my hustle. Let's talk about that progression. So what is it that attracted you to real estate in the first place, Kelly? And did you start with single family just because it was the most mentally and emotionally accessible? And why did you make the transitions you made when you did to get into larger deals?
Kelly Iannone: So like I said, on that path of financial independence, like so many people, I read that very popular purple book, Rich Dad, Poor Dad. I read it, sat it down, came back to it a couple of years later; I didn't read it and go, "Oh my gosh, I need to do this. And I need to do it now." I was well into my corporate career, at least 10 years into my corporate career when I kind of hit this epiphany, read the book, and then another couple years later I started taking action from a real estate perspective. But all that time, I had already been investing through my 401K, and I was fortunate enough that I was raised in a family that we talked about finances in our home; my parents invest in their 401K's and pensions... So I had that foundational financial literacy information. But when I started to think about how do we amplify it to secure our ability to be work-optional - that's where real estate really came into play. And our first big action was when we bought a new home back in 2017. And actually, let me back up... My first property I ever bought was a primary residence back in 2004, prior to the economic and the housing crisis. I bought 100% financing, interest-only, 80/20 loans. Everything said that I should have lost that house in the financial crisis. It was underwater for many years, Adjustable Rate Mortgages... But like so many of us in this space, I'm a hustler, and I'm going to make it work and do whatever I can... That house became my first rental property, and that we still own to this day. When we moved out of that primary residence and moved into a new home, very specifically, we weren't accidental landlords; we wanted to have rental properties. And that property was our first rental property back in 2017.
Slocomb Reed: Did you buy it with that expectation that it would be a rental?
Kelly Iannone: No, I did not buy it with that expectation. I bought it with the expectation that I would move in five years, make a ton of money, and move on.
Slocomb Reed: Gotcha. Kelly, I want to dive into a couple of things. I want to take a quick aside for our listeners. I just had a realization about what it is that attracted me to Rich Dad, Poor Dad so much when I read it... And I think it's the reason why so many entrepreneurs, hustlers, people like you who figure it out - I think you just used the phrase "figure it out"; you definitely said "hustle". I think the biggest reason that we're attracted to Rich Dad, Poor Dad among all of the authors and quote unquote gurus out there is that he's really good - and everyone in his company is really good at giving you the why, and the what, without the how. He doesn't say -- Rich Dad, Poor Dad is not a real estate investing book; it's a book that makes people realize the power of real estate investing. They do a very good job of explaining why investing in yourself, investing in assets, instead of liabilities, to use their language - they explain why it's good, they explain what happens as a result, but they don't tell you how to do it. And that lights a fire eventually under you, and definitely under me, and under so many people, because as soon as we get a hold of the why and the what, we have to figure out the how and do it for ourselves.
Kelly Iannone: Absolutely.
Slocomb Reed: There are so many books out there that are much more prescriptive, that tell you exactly what to do and how to do it, and I never am as interested in those as I am in the ones that dangle a carrot, or show me what is possible, without telling me exactly how to get it and I have to figure that out for myself. I'm sure that whatever that is courses through the entrepreneurial veins of a lot of us, for sure.
Kelly Iannone: Yeah. In those entrepreneurial veins; that's such a good point. I didn't think I ever had those. I never wanted to own my own business growing up. I grew up in a family, my parents were factory workers, I went to college, I was supposed to get a good corporate job, get a pension; that was my path. I never wanted to be an entrepreneur and own an entire company and take all the risks and obviously the reward that goes along with that. But Rich Dad, Poor Dad, to your point, explains the why, which really changes the mindset then. So then going on that journey of figuring out the how, we did that once we moved out of that home and now we had a rental home, which we did self manage the first few years, because we wanted to learn what that was like. Fortunately, we had great tenants. We did a great job screening. It's now under property management... But that started our journey of self-education, joining local meetups, figuring out what are all the niches in real estate that we weren't aware of... And went down this path of "Is single family right for us? Is small multifamily right for us? Is fix and flips or short-term rentals right for us?" And we dabbled in a few of those different places. We dabbled in fix and flips. We did one of those. We really looked at short-term rentals and made some offers on short-term rentals. We live in Orlando, it's great tourist destination... But where we landed was commercial multifamily, because of the longevity of that asset class, the cash flows, obviously the depreciation we can get from it, but the stability of it and the returns without adding another job as a passive investor.
Slocomb Reed: You said you decided on commercial multifamily, and I was standing here thinking "She's gonna say scale." Scale is the reason; scale is the reason everyone does it. Everybody wants to scale, and that's not actually what you said. The longevity of the asset class; it's really interesting, and you have an interesting perspective, especially on short term rentals, being that you're coming from one of the entertainment capitals of the world, at least the entertainment for small children capital of the world in Orlando, Florida. In Cincinnati, Ohio I've done my dabbling too flipping houses. I'm flipping a house right now that I shouldn't be flipping. I did... I might still technically be an Airbnb superhost if my status hasn't expired, because I gave that up at the end of 2021... I get where you're coming from here. Kelly, I also know a lot of people who feel the things that you were feeling living and working in corporate America. Do you still have W-2 employment?
Kelly Iannone: I absolutely do. I absolutely do. And part of my husband and I's journey is that we live on one income. We live in an entertainment destination; when COVID hits, what happens? I'll give you a quick synopsis. He was furloughed for 14 months during COVID. It didn't impact us financially, because we live on one income. I continued to work, because we put so much money into real estate every year. We continue to feed the real estate assets and that investment piece to build a passive income.
Slocomb Reed: Kelly, it's great that you have that fiscal discipline, and fiscal discipline is definitely something you hear a lot about in the FIRE community. What advice do you have for people who find themselves in a similar situation, where they may be a dual income couple, or single, or single parent, and they want to diversify their income, invest, find other ways to make money outside of W-2 employment for large companies where they may not move the needle all that much - what advice do you have for people who find themselves in that position and are considering real estate investing?
Kelly Iannone: Consume the content. There's so much content out there on YouTube, in podcasts, going to conferences, that when you start consuming this content and engaging in it, your body, your emotions will tell you where your passions are and what you're interested in. And then go down that rabbit hole, and that will tell you what you need to be focused on in order to optimize your time, in order to create more income through a side hustle, or what asset class you're interested in investing in; maybe you're not interested in real estate at all, except for you know that real estate is a great asset class, so you want to look for them more passive investments where you can still get all the benefits, but not have to deal with any of the day to day... Really engage in the content and seek out individuals that you can network with and learn from, and see what sparks joy or interest in you.
Slocomb Reed: Kelly, that makes a lot of sense, investing in yourself. That's always the best first investment that anyone can make. You talked about consuming knowledge... Let's fill in here with some of your answers. Having done that yourself, having educated yourself, resulting in real estate investing, resulting eventually in commercial real estate investing and becoming involved in general partnerships in commercial multifamily syndications - what is it that led you down that path when you looked at the options available to you? A different way to ask that question, Kelly, is "What is it that other people could be feeling or thinking about themselves that you think should lead them to invest in commercial multifamily the way that you have?"
Kelly Iannone: So I think one of the big things is that I wanted something that I had more control over. I didn't have as much control over my investing in the stock market as I wanted to have. In real estate, I had the opportunity to have as much control or as little control as I wanted, either through owning an individual property all on my own, or investing passively in syndications as I've done in the past, or a nice blend in between, where I am active in syndications, but also have the opportunity to invest passively in syndications in order to grow the real estate portfolio.
So I think as an individual who's assessing themselves and what their interests are, if they are looking for more ways to optimize what money they might have to invest, or if they don't have money, and they have time, and they're able to network with operators and exchange time for equity in a particular deal, those are great ways to be able to really dive in in the real estate space and the commercial real estate space, and start working on some of these larger deals to grow your personal wealth, and also your impact; we have great impact when we acquire properties that we can go in and renovate. We are providing a nicer, safer, clean place for our residents to live.
And then the third piece to that is for me personally, because I'm so passionate about the FIRE community, is I get to share with others what the options are on the FIRE path, and provide opportunities for them to invest alongside me and deals that I'm investing in, so that they can continue to grow their passive income and wealth as well.
Slocomb Reed: Kelly, within your general partnerships, what do your responsibilities tend to be?
Kelly Iannone: My responsibilities tend to be more on the investor relations side. So working on our monthly updates, working with potential new investors, educating on how syndications work, how they make money in the deals, what our business plans look like, putting together investor presentations... And then I also do sit on the asset management side. So I oversee and help facilitate conversation or feedback on assets that we currently own in our weekly meetings with property management or construction teams. And one of the great things about this space is that, as we talked earlier, I have a full-time job, and doing commercial multifamily real estate can be a full time job as well. I work with a fantastic team. There's five of us on our team, so three of the five are full-time in real estate, so it gives a great opportunity where I can continue to have my full-time job, bring in additional active income to feed into these syndications, support the syndications while I also have team members who are on the ground and are spending more full-time on each of the projects that we own.
Break: [00:14:24.01] to [00:15:30.01]
Slocomb Reed: Thank you for helping me make a segue here, Kelly. I want to dive into your portfolio. I'll come back to this with your asset management and your general partnerships. Let's build up to that. You started with intentionally keeping a home that you were moving out of for the sake of renting it out. And then you tried some things, you scaled into residential multifamily, and then into commercial multifamily, and now you're doing commercial multifamily syndications.
Kelly Iannone: I would add just one correction. I never technically did residential multifamily. We went from a one-unit to a six-unit, and did a full gut renovation on the entire thing, and then jumped into 136 units.
Slocomb Reed: Single family, to six-unit, to 136-unit.
Kelly Iannone: Correct.
Slocomb Reed: Gotcha. Well, that makes my next question a little more interesting. I'm wondering, what are the throughlines for you among all of those properties? What are the similarities? What are the strategies, business plans, aspects of each of the deals that you've done that attracted you to doing those deals in the first place?
Kelly Iannone: I think in general, we get really worried when we start to think big; the end of the day, what we are doing in real estate is pretty basic conceptually. Whether it's a single family home, a fix and flip property or a large commercial multifamily, there's a lot of nuances in there. But the basics of what we're doing is we're acquiring a property, we're underwriting it to make sure it cash-flows, or that we can renovate it, push rents to make sure it cash flows, and then we either enjoy the cash flows, or we sell at some point and enjoy the returns. That fundamentally is the basics of what we are doing. How we get from a one-unit to a six-unit is the intentionality of knowing we need more doors under the roof, so that we have better efficiencies in that cash flow. I truly believe if it wasn't for that six-unit, I never would have got to this 136-unit. It gave me the confidence to be able to know that I could take on something bigger than I ever thought I would have been able to. 10 years ago I never would have thought I owned a six unit apartment building, that we totally renovated everything, but haven't been able to do that and completely reposition, refinance out of it, take some capital back out to reinvest in our next deals, which turned out to be syndications on the general partner side; that then enabled me to network and have some experience to talk with partners who were active in the real estate syndication space, and that were continuing to grow their business and had a need for somebody with more of my background to come in and play a very specific role, as well as bring additional capital to deals. And that's kind of how I was able to scale from one to six to 136 units in each subsequent deal.
Slocomb Reed: Let's talk a little more about the deals that you're doing now. Let me draw a baseline - we have a fairly sophisticated audience for this podcast, that is very heavily leaning towards apartment syndication, more LP side than GP side; naturally, there are more LPs and GPS. So the standard apartment syndication has a preferred return, a targeted IRR, a three to seven-year hold period. For the deals that you guys are doing, do they fall in line with those norms?
Kelly Iannone: Yes, they actually do. So our team primarily focuses on Georgia, Florida and Texas; we look for value-add assets in B class areas, not D. B as in boy, class areas. We like to find those C class areas in those B class assets. And one of the reasons why we're focused on that asset class area is because when we think about potential recessions, you've got the A class folks that buy down, and you just kind of continue to move there, but you keep a strong base of residents there in the B class. And then from a returns perspective - yeah, we've been underwriting for a three to five-year target hold period, looking at that 17% to 20% IRR. And I'd love to see a 2x multiple. Preferred return 7% or 8%. Obviously, with increased debt terms, we're having to cherry-pick deals a little bit better, and of course, being conservative on the back end... But we're still seeing great deals out there and are able to target and get those returns in our underwriting.
Slocomb Reed: Kelly, I'm sensing a throughline here and the way that you talk about your investing, in the way that you talk about what your goals were when you got started and what your goals are now... And I'll draw this comparison in a moment, but - gut-renovating a six-unit and living on one income... I'm seeing some throughlines in both of those things, as well as getting into value add-apartment syndication with a 136-unit. There's a throughline of investment stability there; your first rental was a property that you already knew very well, because you had lived in it for several years. So there's stability there. Staying with single-family rentals. Shout-out to single family rentals. This is a commercial real estate investing podcast, and everybody likes to talk about how there's more cash flow in apartments, but there's more cash flow in single-family rentals. You have much more control over the value of your asset when your asset is a single-family. But I digress. I will argue all day that a six-unit apartment building that you have to gut-renovate to get up to market is a stable investment if you buy it right. I have a personal example of a six unit here. I bought one in a joint venture, that needed something similar. It needed - not necessarily gut renovation, but to be re-tenanted to get to market rents. And it needed some capital improvements, for sure. My partner and I decided not to, because we scaled too quickly; we went from a duplex to a six to a 24-unit all within a few months... And the six unit was lagging behind, so we just sold it. But we sold it for a significant profit, because it came to us off market. If you're buying right, even if you have to gut-renovate a six unit, anywhere along the line of that renovation or of that business plan, you'll be able to sell for a profit, which makes it a stable asset.
And now you get into value-add apartment syndication, which Joe Fairless, Mr. Best Ever, wrote the book on literally, as well as figuratively. And if you're buying something that already has current cash flow, that has good occupancy, that's performing, but has the potential to perform better, you're engaging in investing in a way that has similar stability to renting the home that you used to live in, because you already understand that you already have a baseline of cash flow to work from; you're not taking too big of a risk, and you're in a good position to make sure that your initial capital is protected. It's not the most exciting... The FIRE community is very rarely ever about excitement.
Kelly Iannone: That is true.
Slocomb Reed: It's not the most exciting. It's not the highest returns, but it's stable and predictable. And there's a sense of stability and predictability all the way through the decisions that you've made about your investing. I've just spent the last few minutes talking to you about you, Kelly. Let me at least ask, does this resonate with you?
Kelly Iannone: It absolutely resonates. One of the things - before we moved out of that single family, we replaced the roof, the air conditioner and the water heater, so we wouldn't need to touch it. I don't want to get called by the residents. I mean, the property manager is going to get called, but... I don't want to have to deal with that. Same thing with this six-unit. We knew it needed a full renovation; we went in there -- there were some things that we ended up doing that maybe we didn't need to, just so we didn't have to worry about it the next couple of years. And that's what I also love about these large ones. Now, syndications is a different game than my six-unit or my single-family, where our intention is we're going to hold that long-term; those are legacy properties. Much of what we do in syndication - we're talking about selling in three to five years. It's a longer term flip property, so I'm not necessarily worried about getting a call from a resident in 10 years... But we want to make sure we have a nice, stable asset so that our residents aren't having issues that come up, their retention is higher, and we're able to meet what the market rents are for them.
So yeah, I love stability, security... I think that's something that comes across from me too with having such a long corporate career; I say long corporate career - 18 years now. So I guess it's not long for some people, but it feels long... But having an 18-year corporate career and building a successful real estate syndication business, and having our own pile of properties - I get peace of mind in that stability, and that's something that all of us investors have to keep in mind, of what are we comfortable with from a risk/reward perspective. And you asked if I still have my corporate job - part of why I do is because I can keep putting fresh powder into these deals, which adds to the stability for me.
Slocomb Reed: What is it that you do corporate-wise?
Kelly Iannone: I have had a variety of roles over my career in business strategy and planning, in finance, namely forecasting and planning, which goes really well when we talk about underwriting deals, as well as sales and marketing. But I work for one of the large entertainment companies here in Central Florida... Which is not a surprise, but...
Slocomb Reed: Well, Kelly, are you ready for the Best Ever lightning round?
Kelly Iannone: Let's go.
Slocomb Reed: Awesome. What is the best ever book you've recently read?
Kelly Iannone: So a book I recently read is called "The only women in the room", compiled by Ashley Wilson. And this is a book that speaks to about 20 other women real estate investors who are excelling in their particular niche in the field. And what it helps for me as a woman in this space is it helps me know that I'm not the only one, and that we can power through and make a stance. And I love the stories that are in there and being able to hear other people's experience in the space.
Slocomb Reed: What is your best ever way to give back?
Kelly Iannone: I'm a thought partner. I love to be a thought partner, so I love to make myself available if anybody wants to talk about the FIRE movement, their personal financial literacy, or of course, if they're interested in potentially investing in real estate syndication, or just educating themselves on what it is, so that in five years, maybe when they're ready to invest, they'll have some additional baseline knowledge. But I love to be a thought partner.
Slocomb Reed: Thus far in your real estate investing, Kelly, what is the biggest mistake you've made, and the Best Ever lesson that resulted from it?
Kelly Iannone: I think my biggest mistake I made - and I think with any mistakes, we learn and we grow from them - is as part of my journey and my husband's journey of learning the real estate space and all the different niches, we decided to do a flip with a couple of partners that we had known for a while in our local community... And we ran into a variety of challenges on this flip; we went over-budget, we 2x-ed our rehab plan, we overpriced it when we put it on the market... We didn't stage the house, and this is a higher-end market... This was in November 2020. And then we started to have deteriorating communications between the partners.
So I would say, fortunately, that's my biggest mistake. At the end of the deal, we ended up losing about $1,500. And this is where living on one income is really helpful, because if we go twice over the rehab budget, us and another partner were paying the rehab budget, so it was literally taking our savings from our corporate and throwing it into this deal to continue to keep the project going so we could get it to the finish line. So fortunately, at the end of the day we only lost $1,500, and we learned a tremendous amount.
Slocomb Reed: What is the lesson there, Kelly?
Kelly Iannone: The lesson would be, one, be careful who you partner with. I don't think you can always see these things coming... And sometimes things are going to happen. Fortunately, this was only one deal. We weren't in on another deal yet, so it was easy to kind of go full-cycle on this one flip, and then move on to the next deal.
The other big learning there was to make sure that you've got enough buffer from a finance perspective, so that you can handle any overages and keep the project going. It would have been a much different story if ourselves and our other partners didn't have the capital to continue to put in to finish off the rehab; we would have had to sell the property in a distressed state, which we most certainly would have lost more money than what we lost on the deal.
Slocomb Reed: Gotcha. Kelly, what is your best ever advice?
Kelly Iannone: My best advice... So it's a little different than what most people say. I would say start small, start now. And I think of it twofold. From a limited partner perspective, just get into a deal. Start investing in deals. If a deal has $100,000 minimum, but you only have 50k, have a conversation with the general partner, because oftentimes there might be flexibility in that if you're an accredited investor.
From a GP perspective, I would say that when you're first getting started, don't worry too much about your percent of share in a deal. You're working on getting experience, and you're working on getting the insights and understanding how syndications really work, and all of the different ways that deals can be structured.
Slocomb Reed: Awesome. Last question - where can people get in touch with you?
Kelly Iannone: People can reach out to me at my website, which is www.waypointcip.com, or I am extremely active on LinkedIn. You can look for me on LinkedIn. Kelly Iannone. I'm super-active on LinkedIn. If anybody wants to schedule a call and have a thought partner, I'm certainly open to it.
Slocomb Reed: Awesome. Those links are in the show notes as well. Kelly, thank you. Best Ever listeners, thank you as well for tuning in. If you've gained value from this episode, please do subscribe to our show, leave us a five star review and share this with a friend who you know could gain value from this conversation about reasons to get into real estate investing and ways to maintain stability while investing in apartments. Thank you, and have a best ever day.
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