Conventional wisdom says to go to school, get a good job, and retire at 65.
In his early 20s, Kyle Jones’ path was unconventionally conventional. After forgoing college, he ventured off into the corporate world. He quickly rose through the ranks of his company and saw a clear career trajectory.
However, the redundancy and stress of his 9-5 job led him to search for a profession with more flexibility. It wasn’t long before Kyle connected with a friend who flipped houses—the kind of job he could get excited about.
Within a few years, Kyle was part of a team that had flipped over 150 houses across the Atlanta metro area, along with other parts of the southeastern United States. To date, he has amassed significant experience in real estate investing, including flipping houses, long-term rentals, and employing the BRRRR method.
Despite his financial success, Kyle took a step back to think about the big picture and his legacy. “I didn’t want to be one of those guys that goes to a meetup and brags about how many doors I have,” he said, recognizing that there’s much more to life.
It was time to reverse-engineer his definition of success by focusing on helping others first and profiting second.
Conscious Capitalism
If you spend just five minutes with Kyle, you’ll immediately sense that he is driven by a strong moral compass. Throughout his investing career, he’s been outspoken about investors who take advantage of unsophisticated sellers. He feels the same way about those who squeeze every penny out of those trying to make ends meet.
He urges all investors, especially those working in low-income communities, to ask themselves a simple question. When debating what to charge for rent, ask yourself, “Would an extra $100 change my life?” For those trying to survive, it might be the difference between being able to buy groceries or not.
Seeing room for improvement in the real estate space, he founded Keyvest to inspire ethical investing. His mission is to create more affordable housing by investing in disenfranchised communities.
Stonecrest, Georgia: A Case Study
Stonecrest, Georgia, is 30 minutes east of Atlanta by car. As you drive around the town, you’ll quickly notice various construction projects and recently developed medical facilities. If you explore multiple condominium complexes, you will see a range of housing options from A to C-class areas. By many metrics, this area appears primed for economic growth.
One particular condominium association is more the exception than the rule– at least for now.
Imagine driving down the street and seeing dilapidated buildings where people are struggling to get by. Insert the name of any forgotten neighborhood in America, and you’ll see many of the same things as Kyle did when he came across this community.
People in these circumstances are often stuck in survival mode, which perpetuates the same problems from generation to generation. There were a number of uninhabitable units in one condominium complex that had been neglected to the point of no return. This association had been mismanaged, and the people of the community were paying for it.
Kyle decided to purchase as many units as he could in order to change the way things were done. In many ways, this served as Kyle’s case study for what he hopes to accomplish on a national level.
This begs the question: can purpose and profit coexist?
Five Key Lessons Learned
Many real estate books tell you to stay away from the types of neighborhoods that Kyle invests in. To that, he said, “I don’t want it to be easy. I want to earn my money. I’m committed to solving real problems, even if it isn’t always a walk in the park.”
As you can imagine, there were a host of trials and tribulations along the way. Here are some key lessons Kyle learned.
1. Slow and steady wins the race
Kyle went all in immediately once he identified a problem with a clear solution. While it’s crucial to take action, you need to be methodical.
Let’s just say that that lesson was learned the hard way.
There weren’t clear exit strategies, yet he had several properties on his hands. That forced him to rush to complete his early projects to pay back lenders. It also meant that he was figuring out his exit strategy on his way out the door rather than having it predetermined.
In retrospect, he would have taken on fewer projects to start. Using the early projects as experiments gives you the chance to mitigate risk and apply findings later down the road. Once he identified the right tactics, he began to profit.
2. Prioritize community involvement
This particular Stonecrest HOA was plagued with systemic problems. Kyle was adamant about change and doubled down on purchasing properties to renovate in this community.
What he later realized was that community buy-in was not only essential but instrumental in evoking change.
“It’s important to show your face in the community and to work with stakeholders to see real change,” Kyle noted. He worked with the police chief to get drug dealers out of the complex. At the city council level, he was able to advocate for support on many fronts. Since joining the HOA board, Kyle has even personally funded the replacement of rotted pine siding with Hardie Plank siding in parts of the community.
There has been a significant amount of support from everyone since an olive branch was extended. As new projects come up, there are people who welcome the chance to get involved. Even locals who spend most of their time loitering have started to buy in by helping pick up trash from time to time. The hope is that by seeing a continued path to progress, the community will support this positive change.
3. Build a strong team
Convincing a lender to front money in a rough neighborhood was extremely challenging. Not many people saw the upside of renovating units in a seemingly downtrodden area. Many lenders passed on funding these projects, and onlookers from other aspects of life thought that this would be a disaster.
Having a strong support system was Kyle’s saving grace. He leaned on people who saw a shared vision and believed in him. Two lenders, Gillen Joachim at Meredith Shearer & Associates and Kelli Garrett at Rehab Wallet, agreed with his mission and the potential upside. “It took a great team, from lenders to family support, in order to see this mission through when no one else believed in me,” Kyle said.
4. Progress paves the way for more progress
One day, an 80-year-old woman and her son with special needs called Kyle to show him the unit she lived in. He noted that “her and her son sleep on the couch because there’s a hole in the roof. When it rains, these rooms get flooded and have deteriorated over time.”
These people, and many like them, now have a roof over their heads and a place that they feel proud to call home. Kyle has employed the BRRRR method in this complex—each of his units has quartz countertops and high-end finishes.
Such costly attributes are typically not seen at this price point, but if you ask yourself, “Would I live in this unit?” you always want the answer to be yes. The reason is simple: ”It doesn’t cost significantly more to build, and yet the impacts are profound,” Kyle said.
It’s also created a change in mindset for many of the residents of this community. You can walk in and see neatly kept homes, and a sense of pride emanates from many residents. Additionally, there’s a lack of late rent payments—only one resident has failed to pay rent on time. As these changes occur, they also bring in more income for the housing association because these units were previously uninhabitable.
Moving forward, the plan is to develop one street of the community at a time.
5. Purpose-first investing is profitable
When done correctly, these projects have enabled Kyle to cash-out refinance about $30,000 per unit. Though he admits that it hasn’t always gone according to plan, as any real estate investor knows, his model proves that you can make purposeful investing profitable. Top-end rent in this area is about $1,800, but he charges $1,500 a month and still cash flows. Although he takes home a bit less, he does so to ensure that people can afford their community and aren’t priced out by gentrification.
Conclusion
While meaningful progress has been made, the job is far from finished in Stonecrest. Kyle is ramping up to further the progress of this community and inspire change from the ground up—literally.
What’s your legacy?
It’s no secret that many millionaires were made from real estate investing. That’s why many people get into it—to escape the 9-5 life or to build passive income for retirement. You also have the chance to literally transform entire communities or even just provide housing to a family.
No matter how large or small an investor you are, you can make a big difference by investing ethically.
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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.
