Tammy Phelps-Keglovich
Leader, ccREIA
When Tammy Phelps looks at a possible future investment, she also looks back. The leader of Capital City Real Estate Investors Alliance (ccREIA) and multifamily investor recalled her own struggles when she evaluated and eventually purchased her first multiunit community in 2007 after a terrible accident left her unable to pursue her first passion as a master hair colorist, one of only three in the country at the time she was licensed.
Those memories guided Phelps as she began her new career in multifamily real estate investing by transforming her first purchase, an apartment building in the middle of inner city Baltimore. “I knew firsthand what my struggles were as a single mom,” she said. “I felt alone and abandoned, just like that building. The complex looked just like I felt: vacant and literally burned out. It was very dead, with no breath or life in it.”
Phelps believed that a spark of life was really all the building needed and, after doing some more traditional due diligence, she purchased the property at a rock-bottom price, $375,000, and got to work. “I am a due diligence fanatic,” she warned, noting that no one should mistake her emotional connection with her investments for a failure to run the numbers.
“I knew that within five to eight years, that building was going to be right in the middle of the revitalization effort that Baltimore had planned. I was right, and furthermore I was part of that revitalization and growth because I was investing in partnership with the community to create it. The last time we had that building appraised, in 2015, it appraised for $2.4 million.” [see picture on pg. 105]
Right (and Ripe) for Creating Community
The building in question is 25,000 square feet and now boasts a fenced courtyard, nearly unheard of for that part of Baltimore when Phelps and her husband, Jim Keglovich, purchased it. While others in the area were, she says, “worrying about her being shot,” the two were renovating the building, installing her courtyard, and implementing the countless little details that she says keep her properties fully occupied with loyal, long-term tenants.
“I create communities in my investment properties where we truly focus on families, whether both parents are present or not, where they can count on having clean, safe, affordable places to live that they are proud to call home,” she said (image right).
Those “little things” make each of the 400 units in their seven multifamily communities unique and create a sense of security and ownership. For example, each door is individually keyed with a custom key. The units are equipped with intercom systems so that occupants do not ever have to be surprised by a visitor or feel alone if they need assistance or feel threatened. “We make sure that every unit has a “feeling of home” added Phelps, noting that this is becoming less standard in new multifamily developments.
Most importantly, however, the building itself is designed and operated to foster community development and growth. “We ripped out the cement in the courtyard area and put in grass. We are installing a barbeque pit and benches. We built raised-bed gardens so that we have a garden,” said Phelps.
“In the summer when most ‘city kids’ don’t have many places to go, our kids are hanging out together in their courtyard, working on their gardens and learning valuable life skills instead of possibly getting into trouble,” she added.
Networking When the World is Your Family
Phelps’ approach to real estate investing and the large projects she manages is somewhat unconventional in its intimate approach. She knows many of her tenants personally, sharing the triumphs and tragedies of their daily lives in many cases, and works almost exclusively within an ever-widening network of investors with whom she clearly feels a strong bond.
In fact, the ccREIA leader credits most of her success with big projects to the power of her extended “family.” Many of those family members are also members of ccREIA, Phelps’ local real estate group. “I dreamed for years about creating a real estate investors’ association (REIA) that focused first and foremost on the personal growth of the individual, the real estate entrepreneur, and secondarily on the business development of that entrepreneur,” she said.
Now, ccREIA is a thriving community focused with laser precision on the success of its members. Phelps, who is the only female REIA owner and founder in the region, credits the group’s success to “hands-on learning and forced networking, which helps people understand their skills, talents, and strengths.”
This philosophy also has the added benefit of creating a tightly knit group, much like a family, because attending the meetings means that you will be meeting your fellow investors and getting to know them through something Phelps calls speed networking, wherein investors line up and have about a minute per person to meet everyone in the room.
“It’s kind of like speed dating, but networking instead of romance,” Phelps explained. She added that she originally called the activity “forced networking” but that the name seemed a little pushy so she changed it. It follows naturally, Phelps explained, that this type of networking leads to a better environment at ccREIA for doing deals.
“It’s just like a garden,” she said. “You can’t just go into a networking event and shake someone’s hand and say, ‘Be my partner on this deal.’ You need to know them, have grown that trust so that instead you’re cultivating your relationships just like we cultivate our gardens. Then when the bounty is ready for harvest the fruit of your labor is ready for picking and people want to work with you.”
Family Everywhere
Phelps’ network is not restricted to Baltimore, and Phelps and her husband are quite happy to invest themselves personally and physically in their own properties and projects. Recently, the two sold nearly all their belongings in order to move into one of their own mobile home park investments, a recent purchase on the Atlantic coast. “We teamed up with two residents and created a community garden right off the bat,” said Phelps, bragging on her “phenomenal zucchini, huge radishes, and amazing tomato mozzarella salad.”
She noted that one of her newest projects involves the implementation of a children’s gardening program focused not just on growing fresh fruits and vegetables, but also on the power of focused energy to change a life. “We’ll talk about the importance of preparing your soil, fertilizing, planting and watering the seed, choking the weeds, and taking care of what you planted,” she said. “Of course, we’ll also focus on the harvest and enjoying the reward!”
Tough Love for Reliable Returns
Because to the Phelps-Kegloviches, their investments are their family, Phelps is not above doling out a little tough love if the situation calls for it. “Sometimes, you have to say to someone who is applying for a home, ‘Let’s sit down and look at your budget, is that ok?’”
Phelps says no one has ever turned her down for her “financial counseling.” She explained, “When they can see they don’t financially qualify [to rent], they end up having a better understanding of why we’re not accepting their application. The best part is when they return one or two years later, better prepared, and can financially qualify for the home they wanted,” she added. “This process breeds loyalty because they know we care.”
Phelps transmits her philosophy of financial literacy directly into her communities. She spends hours on financial literacy sessions with her residents and their children. “What I’ve learned in property management is that our society has done the greatest disservice to our young people by not teaching financial literacy,” she said.
“We are the wealthiest country and yet we are the most financially illiterate. Kids come out of college and have no idea how to do a checkbook register, calculate interest rates, or use a credit card responsibly. Well, not in my communities.” That philosophy is working not just for Phelps-Keglovich’ family, but for their real estate portfolio as well.
Tammy Phelps-Keglovich is a commercial multiunit investor and the founder of ccREIA. She may be reached at hello@capitalcityreia.com.
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