Listen to Anna’s most recent podcast guesting, an interview with Jason & Pili of The Real Estate Investing Foundation.
Anna Myers Dominates the Real Estate Space Using Tech
Announcer: Welcome to the REI Foundation podcast where we cover all the steps and strategies to make your real estate dreams a reality. Now your host Jason and pili.
Jason: Happy Wednesday. Thanks for checking back in with us. Super excited for today’s guest and a Meyers. Hi Anna. How are you?
Anna: Hello. I’m great. Thanks for having me. I’m super excited to be here with you.
Jason: Good and super excited to have you and here’s a little bit more about Anna she serves as vice president at grow capitis a commercial real estate investment company in the San Francisco Bay Area.
Anna is a modern entrepreneur who applies for 20 plus years of experience in technology and business. Finding analyzing acquiring an asset managing commercial properties in Key markets across the u.s. Together with her business partner Neil Baba. And if you remember we had me on the show. It’s about a hundred twenty episodes go to have to search for it, but it will also have a sewed.
They approach real estate through a data science lens to create compelling profits for a thousand plus investors. So Anna we’re excited to have you and we have so much of done 20 plus years of experience.
What was 20 plus years of experience in business which stands for a lot? Right? So sure though in real estate.
It’s a very multifaceted industry. And so my my Beginnings actually is is I’m the third generation commercial real estate. Entrepreneurs my grandfather was a commercial real estate Maverick in Southern California. He actually began his real estate career by flipping houses in Southern California in the 40s and he is just a go get em type person and then he built up his portfolio and a massive very large portfolio we started.
Eventually buying orange groves and walnut Grove’s and building shopping malls. So became an all-out developer so might the fabric of my life is just growing up with this large commercial real estate portfolio that my dad and his brothers help manage. My father’s are also an architect and a developer, but I didn’t go into commercial real estate as a you know, as I was coming out.
I actually went into the tech world, so I went into. I became a programmer and a systems analyst and had a mini years in Tech, but I always knew the power of real estate because that’s the foundation of my family. So when when my paycheck started really getting deteriorated by taxes, I turned to real estate to solve that problem.
So with your grandfather, can you recall one? Piece of advice that really stood out from you from him just building up his legacy.
Anna: Well, I have to say that I was four when he passed him the youngest grandchild and he died fairly young but one thing that was always passed on is it’s not what you make its what you keep so we have a lot of strategies that are just very normal in my family for how to navigate.
Not just acquiring real estate, but navigate the tax structures and the deal structures. So that you know, it’s structured in a favorable way. There’s lots of loopholes and areas within the tax code. They’re very favorable to Real Estate Investors. You know, I’ve already done seven 10:30 ones which all started from acquiring from from.
Bit stuff things that were passed down to me from my grandfather’s estate that basically required me to jump in and 1031. So I’m not one of those people that are afraid of 10:30 ones like oh yeah time to 1031 baby, you know. Yeah. I love it flavors of 1031 to so so Building Wealth. Through those very specific tools is a great way for yourself and your future generations.
And that’s one of the I really appreciate the wealth that he builds creating a foundation not only for all of the grandchildren to be able to go to college which was very important to him. But he also, you know, obviously he’s been gone a long time, but he also cared about the community. So there is a charitable trust that he’s been gone for decades, but we’ll go on forever.
That is basically all of the income from that just gets divided yearly amongst the charitable the truck the Charities that my family chooses and that I think speaks a lot to the power of real estate to not just a bill that just to support our families but to support our communities once you reach that level we all have a responsibility to give back.
Jason: Yeah, and if you think about that, you just look at that in the broad spectrum and that’s what it’s all about, right you do as well as you can create for your family and then create for others and you see generations going to go by right. So like you said, you know, your grandfather passing your for I mean hundred years from now, it’s still going to be what he’s built and that’s just incredible.
Did your father and brothers did they stay in the same space or have they transcend into a different area?
Anna: So yeah, my father my uncle’s know they also weren’t they were all in construct commercial real estate construction development. I mean all of them were firmly in trenched in that their whole lives.
My brother or my oldest brother is actually an architect as well. And and all of us kids. There’s I have seven siblings and all five biological and to step all of us have dabbled in real estate because we all inherited so by that by inheriting real estate and the responsibility to get out there and do a 1031 you go out and you get busy, you know, but we didn’t have all these podcasts and all these wonderful educational opportunities that we have now.
So when I had to get into it and invest in the early 2000s, you know, I certainly made a lot of mistakes. It was a difficult Market to invest in. You know, I’ve gone through a short sale. I’ve gone through a very bad land land acquisition process for the real estate broker who was helping me ended up being a fraud and is actually in jail now not just because of my situation but everything he was doing everybody else.
So I definitely learned a lot of. Hard lessons ups and downs. And that’s what I was working with smaller properties. But now that I’ve scaled to commercial properties and how like some legs underneath me. I feel really confident about where I am in the commercial real estate space.
Jason: Yeah. It’s also the resilience that you put forth their right because you could have just said all yeah, I had to short sale.
I’m done. It’s real estate doesn’t work, you know work for my grandpa to different area now, you know. My dad’s a different era now. I’m done. I’m just I’m not going to but you see it through and you learn from your mistakes and I think people are worried about that that mistake that could happen could potentially happen.
But you set yourself up best you can market dynamics. There’s many things that are outside your control addictive course, you couldn’t predict, you know could make the project turn out different than what you anticipated, but you have to hang in there because ultimately if you look at it for the course of history, it’s it continues to be the way that people really accelerate their wealth and their growth and really be able to give back so.
You went from Tech into real estate. What was the advantages you were able to use when a text based at maybe the average investor who jumps into the commercial space is missing.
Anna: So I’ve always been a very analytical person and it’s always been about the numbers for me and I say those are the earlier mistakes that I made were that I didn’t understand how to run the numbers as well.
And I didn’t I didn’t understand how to search for markets as well. I live in California. So all of my investing other than my primary home has always been out of state. So that’s always been a huge challenge for me to figure out how do I figure out the best market? And how do I know where to invest?
So what I’ve learned from the tech industry is you know numbers numbers… numbers. I’m like the spreadsheet Queen and then a few years ago. I saw an eel Bawa speaking on stage about real estate Trends and I was. This guy I really get this guy like what he’s saying makes so much sense to me. I eventually took a bootcamp with him and through that boot camp started volunteering.
He has asked for volunteers for so actually to write a deal analyzer. So I started volunteering and working more closely with him as a volunteer and you know became an at this point on his business partner. So we definitely are paths really clicked and with both of us having a tech focus and the way he thinks about about applying data science to real estate just is a perfect match for the way I think and I’m able to help him execute spreadsheets and EPS execute.
Experiments were always experimenting and bringing data science into what we do. It’s all about data driven numbers, you know experiment and just proving it all out, you know from the market standpoint from the neighborhood standpoint from the acquisition standpoint. So there’s numbers through everything and and we also bring that into how we asset manage because once you buy a property, it’s not game over.
Yeah. And so numbers help us there and we have lots of ways that we look at the performance of the property and lots of things that we do from a technology standpoint. Not just analyzing but using technology to increase our leads to increase all kinds of efficiencies that we bring through technology.
So I think it’s kind of a superpower we have.
Jason: Yeah, it sure is and you know and you’re right the numbers don’t lie. You get you get the numbers you get in there. They do not lie and for investors who maybe are in experience on the underwriting side, maybe on the market on the property. What are some of the common mistakes that you see investors make through that underwriting process?
Anna: Well from the market perspective, let’s let’s start there sure great that that often times people especially newer investors who hear about this, you know, two percent rule or 1% rule. Whatever the rule is these days because the markets changing right? They’re so focused on the one percent rule or one-and-a-half percent rule.
They’re not understanding the market. They’re investing in and the neighborhood they’re investing in. So if you’re able to get let’s just say two percent people are like so excited. Like I found a 2% deal. This is amazing. Well, do you think you’re actually going to get that cash flow? Let’s let’s double-check.
So first of all, you need to look at the market. How strong is the market fundamentals. Is it losing population? Are there new jobs coming in the market has to support your asset and and we all know a recession is coming eventually. I mean that’s you know, I don’t know when it’s going to come but it’s coming the market will have a downturn does your Market support the neighborhood is there room for the market to go down without you losing tenants without tenants being driven out of your Market because they can’t afford to live there.
There’s no job. Right. So that’s the first thing and then the neighborhood that you’re located in you need to dig into the neighborhood and understand key demographics such as and I’m talk about the micro neighborhood so like that, you know, the three or four blocks around it. What is the poverty level?
What is the unemployment level? And what is the median household income? Okay, these three things if you understand what those are then you’re going to be able to determine will my tenant be able to pay me rent 12 months out of the year, right? So our are what the numbers we look for for median household income for example is $40,000.
That’s our that’s our you know cutoff point. It could be, you know, sometimes it might be. 37 38 and then we’ll look at the neighborhood right next to it. Maybe a couple blocks away. It’s 42. So we’re like okay or we could look at the meeting house will then come and see that it’s it’s 35 but you look at the demographic and you see 25% of the the neighborhood is students is college students.
So you have to look at and understand the context for what it is and that also obviously if there’s a lot of students that might also impact the employment. Numbers that you’re seeing but all of these things are very critical to understand where you’re investing and what is the. The potential of the market supporting you and getting paid 12 months rent out of the year because it’s very expensive when your when your tenants can’t afford to pay you rent and you have to evict what first of all what is the eviction laws in your Market.
You need to understand that and how long. They can potentially live there in your unit without paying you rent. What is the cost of getting them out? Right some cities and counties are much better than others and some states. They should say landlord friendly States and then within the state Which counties.
Work faster. I’ll give you an example. We’re in Georgia. We have three different. We have two in Atlanta and one in Dalton, Georgia. These are all apartment buildings value-add apartment buildings and the two in Georgia and Troy in Atlanta or in DeKalb County County and the one adult and I honestly, I can’t remember the exact County its end, but it’s far enough away that it’s a different County.
So same state same eviction laws, but if we need to do an addiction in Dekalb it takes third 90 days. Praying the start of filing eviction to when the sheriff actually gets out there and removes them from the premises. Okay, if they played a game that long in Dalton, Georgia, it’s like two weeks.
So again, you can’t just say, oh, I’m in a landlord friendly State look into the county find out what what the county is because that’s 90 days of lost Revenue.
Jason: And you talked to so many key points right there with that. That’s exactly right and you just mentioned just because the state is 10 and friendly doesn’t mean that everybody going to move on the same page.
Every department is fully funded as the available resources to be able to do it. And when you look at that from a capacity of it what your biggest your biggest cost is really just having to downtime when the tenants going out you have to turn the property and now you have to lease and get it back up if you can.
Find that you’re going to be doing this in a downturn. You know, what your stress test. What can you do with rent growth? Which if you’re at negative rent growth, is that going to sustain and can you afford just to not really be pushing rents and hopefully can your tenants afford just to stay in there.
I mean just absolutely great points and the 40K medium income for that. Are you based on that again now, of course on what available how sales are around there too. Is that a key point for you?
Anna: Available Health says we do look at house what the houses are worth around there. But remember we’re commercial real estate.
So we’re apartment building so. You know what mean? We’re looking at it. What we want to see related to housing is we want to see an increase in the caught the appreciation of housing between the year two thousand and the year 2016. We want to depending on what Market I think it’s 20 percent appreciation is what we’re looking for in that space.
So yes, we do look at it because we want a market that’s that is appreciated. For sure, so that is that is a big one. I’m just double-checking. Oh, no, it’s 40% median house or condo value between 2000 and 2016. If we’re using City-Data.com you want to have 40 percent appreciation in the median house or condo value if you’ve got that you’ve got a city on the move.
Jason: Yeah, that’s great points. Yeah, we’ll look at it from sometimes from a standpoint of you know, it can our tenant jump out because house they’re so cheap and get into a house right in the area because houses are so neglected and that’s probably not the only one to be in especially if we’re going to be in an area where there’s less than $40,000 medium household income.
Ideally. It just may not warrant the best tenant either. Unfortunately, you know, you may have more crime and other data points.
Anna: They can’t afford if you get in an area where the median household income is 28k. They can’t afford to pay you rent 12 months out of the year. I mean, let’s not hold it against them that you know, the numbers are right there.
So it’s by using specific tools. You can simply choose a different neighborhood. I’m not saying you have to go to an entirely different Market, but you need to understand your micro neighborhood when you’re looking at your assets so that you are best position to actually receive the income that your underwriting says the projections that you’re.
Are true or more likely to happen. I should say
Jason: Love it.
Anna: Well, you know, we always try and have some conservative projections. So the way that we’re projecting rents rent growth the way that we’re projecting expenses these types of items. We always try and have some additional working capital. So but I also want to go back to I know I’m always talking about the market but certain markets are going to just fair a lot better not all markets are equal in where they are in the recovery process.
So it’s not a given that the entire United States is going to experience a recession in the same way. We didn’t experience it the same way last time. If you look at Dallas, they hardly had any downturn in their housing versus in the 2008 2010. Look at their trend lines. It’s remarkable. It’s like you can’t even tell her assets their session happen when you look at some of the metrics for Dallas, but look at Vegas how hard Vegas got hit and again, what does it come down to Market fundamentals is definitely a big part of it.
So that is part of safeguarding. Your underwriting is starting with a strong underlying Market that’s got jobs and population. And you know, it’s got those things going for it. We try to find markets where we feel there’s you know, 5 5 or 10 years growth going into it and then like for example, there’s a market called st.
George Utah that were very very enamored with we like Utah overall. First of all, we’re big fans of Utah. And st. George is one of the fastest-growing cities. In fact it is According to which quarter you’re looking at it for the past few years. It’s the fastest growing city in the u.s. And that’s not going to stop anytime soon the vacancy rate if you’re looking for a vacancy in that area is 2%.
Well your percent and if you do we’ve had an actual Market study done because we’re building. It’s a new construction project that we got. So we did a market feasibility study by the leading person in the in that state for market feasibility studies. They actually found that the actual vacancy was point eight percent out of like 1,200 units that were surveyed there was only eight units they.
Jason: It’s incredible.
Anna: Yeah, incredible so you can find places like that. And so you see it with a downturn are you know, maybe we go down to 92 percent in a market like that or maybe even go to, you know, go down lower. But if you have a strong Market versus a market where the normal is 92 percent vacancy, you’re going to drop a lot further than we are where we’ve got 98 percent vacancy.
You know 98 99 % vacancies are normal and st. George.
Jason: I remember doing some digging in on Provo Utah to had similar Dynamics had so much so much Tech move again so many companies moving in and they’re all like 25 to 28 year old living there all median house or meaning that it was like a hundred and fifty thousand dollars was like insane the only negative factor that was hitting them.
Was that the number of available multifamily buildings. I think we’re like over 200 units was. Three that was like the one of the only Dynamics was there was like a lot lower count of available buildings in the area for larger house.
Anna: So guess what we’re doing we’re actually doing a project in Provo to but we’re building so we actually have a project in an opportunity Zone.
That’s a multi-phase project We Love Provo. Yeah, and that project is right at the other thing. That’s great about Utah is the transportation that the state has committed to these are things you want to look for in a market. You want to look for the state city and county committing to development and committing to being business friendly.
So the state has put a lot of money into the the train. The I think it’s called the front line or a front-runner The A-Team 80 mile-per-hour bullet train that runs up and down Utah very quiet and then Provo they just installed. It just created a new bus system that goes all through Provo, you know Provo has bring them Brigham Young University as well as UVU.
So highly educated skill Force Workforce and then this so this bus system goes all the universities all of the malls all the retail you can get anywhere and guess how much it cost. I’m
Jason: Going to say free. Wow. Yep. It’s free
Anna: And the bus comes every seven minutes to every stock so you don’t have to be like, okay.
I’m going to go wait for 45 minutes at the bus stop. Like nope. Just go to the bus stop. It’ll be coming seven minutes. So this and this this location that we have in Provo is actually transit-oriented development. So it’s connected to Provo station residents will just be able to walk right into the train station and.
Get on the train. So
Jason: You’re listening and you’re hearing the details of which Anna’s doing there, but even just thinking about that like is a City built out to face this growth. So I was I was going to San Antonio they have infrastructure built out to go to carry it, but you look right up, you know, right up the road.
There’s Austin and they’re overwhelmed and they have the traffic and so but it wasn’t in their plan. It was in San Antonio’s plan to build out for the future here just like Utah was doing but if you have a city right here if it’s got rapid growth when you do have to look, On that level dantas looking at like is it set up for this growth?
Is it set up or is it going to be the point that all the roads are going to fall apart in five years and are going to be in the major buying the
Anna: Taxes. So when you have a City built a set up for growth one of the reports, you can look at to find out well which cities are set up for growth. Look at the Milken Institute report and it comes out every year and actually for the last two years Provo has been selected as the top city the best-performing city in the nation.
For all of these types of reasons, but you don’t have to invest in Provo. I mean you look at these types of this type of data and figure out where are the jobs going to what cities are really performing and doing things now, I don’t recommend. I know San Jose is like number 2, but the cap rates are so low in San Jose.
We don’t we live in San Jose San Jose Metro, but we don’t invest here. So unless I was like an opportunity Zone like new construction and we can get the deal structure to work. So it actually cash flows. That’s the challenge, right? In California, but but use those resources. Look we’re text going look where the dynamic that the movers and changers in the in the future.
The future is coming. Where are those jobs going? I
Jason: Love it and looking at that. What is that? The next five-year Horizon look like for girl capitis. We’re with the aim was to focus
Anna: Well. We’re doing a bigger and bigger projects which we really like. I would say that we’re going to be doing more development projects.
We really enjoy our new construction and development projects, but we’re not going to be leaving behind our value add because value-add makes good money. So either because new construction you have to be in the exact right market like we’ve been discussing value-add there’s more markets you can be in that, you know, there’s more forgiveness because it’s already built right so.
We I think that will be you know, we just closed eight deals in the last 12 months thirteen hundred units. So I easily see us doing that again in the next 12 months, maybe even 10 deals in the next 12 months. So we’re growing really really fast and but we’re also looking to. Protect from the recession and what will be our moves in the recession so that will that will be you know your question about what we doing the next five years.
We will be pivoting according to what the economy is telling us where we not only track the Micro Data of neighborhoods and markets. We also track the macro data of you know, the major indicators to try and really be aware of what’s going on and speaking of the major indicators. What about those interest rates, huh?
Jason: Yep, it’s pretty interesting
Anna: Environment. I mean, we’ve got some great things going for us in the in the economy right now. So I know that there are some shaky things happening but so many good indicators right now the same time so I don’t feel like the party’s going to stop immediately. I mean trade Wars are definitely a risk that’s affecting us.
But so many good things going on with all the other indicators. It’s it were in amazing shape and so many. Meaningful ways.
Jason: So doing a project over the last 12 months. We is there what are some of the the metrics that we are is the return metrics that you’re focused on which the focus to give a green light for a project.
Anna: Well, I’d always all start to the market neighborhood. So let’s put that aside because we talked about it and then it depends on the asset class if we’re talking about value-add.
Jason: Yeah, let’s go to stay with value at multifamily sure
Anna: Value-add multifamily. If it’s a you know a C-Class then we’re hoping to if it’s a five-year project.
We’re hoping to double our investors money in five years. Deliver as close to you know, nine nine and a half percent cash on cash as possible. If it’s a be class that is a less risky assets. Oh and there’s a there’s less cash flow to be had in those assets. So we might be delivering more like eight and a half percent eight percent cash on cash the cash the cash on cash might be lower and the.
You know, we might be talking about instead of doubling the money, you know, 1.8 times the money, but we really always are striving for that double your money or triple your money in ten years. So double in five triple in 10. If we can get there, that’s that’s our Goldilocks zone for every investment.
Sometimes where the be investment you can get there as well because of the appreciation that the market will be experiencing in the not the market, but the way we’ll be able to force appreciation and the interplay with cap. So that’s a golden Mark for us double and triple.
Jason: And so this has been highly beneficial for so many out there listening to the show for you being most productive with your day.
Is there anything that you set up in your daily routine and really allow you to be able to conquer so much data in a day and not get just overwhelmed with spreadsheets in
Anna: Front of you. Well, I’m really big about exercising I get up very early and walk the dog at I make sure I get my exercise in.
Otherwise, I do not think I would be saying. It really helps me Focus, you know to be able to sit down at the desk all day. And you know, I’ve got three screens around me and all the time. It’s we work in a very fast-paced environment. We have a team of nine virtual assistants in the Philippines.
As well as our local team members, which is about numbering about four or five right now. So very fast-paced environment Neal Bawa is no joke for a business partner. Let me tell you we are all about it. So I so many things happening all the time. So I’ve got to stay hydrated. It’s like I’ve got to prepare for a marathon every day get my get my workout in stay hydrated.
We have very long days because we’re you know, I’m usually teaching webinars. Or hosting webinars are speaking at meetups at the end of the day. So I we’re growing very fast because we’re putting in the work and we’re enjoying it.
Jason: I think what you just said right there as we’re growing really fast because we’re putting in the work is to the words that need to resonate for people because everybody wants to growth but you gotta you gotta do the work.
He just yeah with the work and you know, it’s long hours, but that’s if you love it. That’s awesome. So good for you. And this has been awesome. Thanks so much for coming on the show.
Anna: Thank you Jason. It’s been amazing being here with you and nice to get to know you
Jason: Good. So for people when I want to reach out here more about you hear more about grow capita some of the webinars.
What would be the best place to reach you?
Anna: Well grow campus.com is where we have our investors where you can look at what’s happening with our deals and deals that we have coming up, but we also have an education portal because some people want to learn how to. Basically by their own apartments and so our Education portal is multifamily you.com the letter U and we teach a boot camp.
For times of once every quarter Neil is phenomenal. He loves to teach that’s actually his main passion is teaching. So he teaches the majority of the class. I teach the underwriting. It’s the boot camp is live three times a year via a knee boot camp format and one time of year. It’s in person in this year’s in San Jose in September.
So multifamily you.com is a great place to check out. And again, we have a free webinars that happen on a very regular basis. I host most of them if people we just had co-star on for Atlanta as well as Dallas Market, we have syndication lawyers. We have financing people like old capital coming on lots of great people contributing content pitch free.
Just for you to learn so you can just go there and look through our library of information and start learning. That’s
Jason: So amazing, and I thank you so much. It’s been incredible show. Really appreciate your time.
Anna: Thanks. It’s been great being here.
Jason: Good and well, this is Jason with the real estate investing Foundation podcast huge.
Thank you to Anna Myers for coming on the show and a huge. Thank you to you for listening. Have a great day now. Bye.
Anna: Thanks for tuning in to the REI Foundation podcast check back next time for more awesome tips and strategies to launch your new you in real estate.