Table of Contents - Deals and Dough for Apartments with Tim Bratz
Dave Debeau [00:00:09] Everyone, Dave Debeau here with another episode of the Property Profits Real Estate podcast today, zooming in from a sunny tropical look in Charleston, South Carolina. We've got Tim Bratt's. How are you doing today, Tim?
Tim Bratz [00:00:23] Doing awesome, Dave. Appreciate you having me and excited to be here.
Dave Debeau [00:00:25] Yeah, I'm excited to have you, too, because you are a young guy who's done some amazing stuff in real estate really fast. So if you guys if you haven't heard of Tim Tebow focuses on multifamily properties, commercial properties. He's an investor. He's a consultant. Here's a cool thing. Four thousand units give or take. Three hundred million dollars portfolio, give or take. That's pretty cool. That's pretty cool. Plus, he consults on this stuff. So, Tim, let's start with, first of all, kind of big picture. There's a thousand different ways to make a lot of money in real estate. You like to focus on multifamily properties, if I'm not mistaken. Why that niche? Why do you why is that the best bang for your buck?
Tim Bratz [00:01:11] Yeah, well, great question and I think a lot of people get involved in real estate for that, that allure of passive income and residual income, but we all think at least I did when I first got started, that I needed to go stockpile a bunch of my own cash in order to go and invest in those kinds of assets. And so that's what I ended up doing. I thought that the gradual progression to becoming a real estate investor was get a real estate license, learn how to wholesale, learn how to flip. And I went through this this process and then I got into buying and holding smaller single family and smaller multifamily properties and just kind of fell into an apartment building in 2012 that was so cheap I couldn't pass it up. I bought an eight unit apartment building in Cleveland, Ohio, to fix it all up. And I was all into it for like eighty thousand dollars. So it was really, really cheap. C class area, really tough clientele of renters. But I was at such a low basis it was hard to mess that up. And when I when I bought it, I renovated. I put all the tenants in place and then my idea was then turn around and flip it for one hundred fifty two hundred thousand dollars. And if it sold amazing I get a great return. But if it didn't sell, I had like a 30 percent cap rate on that property, 30 percent return on investment. And so I loved the aspect of I was really bad at flipping houses. So like the retail HDTV kind of stuff that you see, I was not very good at that. I didn't like that. It got very emotional with the buyers, somebody a little bit
Dave Debeau [00:02:39] about their numbers to their term, like,
Tim Bratz [00:02:41] I don't know, but you definitely have
Dave Debeau [00:02:43] to. I suspect the numbers might not be quite exactly the way they portray them.
Tim Bratz [00:02:48] Yeah, they definitely do. And they don't bring in holding costs and carrying costs and brokerage commissions and closing costs and all these other things. All the stuff that service. Yeah, exactly. Which is expensive stuff. Right. So what was I, I like the idea of flipping properties but flipping rental properties. So that's why I got heavily into like turnkeys single families and that is when I got scaled into the apartment space too. And I like just the scale of the apartments. I love that you can go to one location instead of ten locations. I love that you can look at one roof instead of 10 roofs. I look at I love looking at one foundation set of ten, raising money from one borrower or lender instead of 10 lenders and negotiating with one seller instead of ten sellers. So there was more scale to it. Now there's definitely some nuances and some things that I had to learn along the way. But you're able to grow that much faster. As you said, I picked about forty two hundred units, four thousand one hundred eighty units in the past five years, which is a lot of growth. But what I will say, I was bad at real estate for about seven years before that. So it's not that I was it's not that
Dave Debeau [00:03:53] the rest of us. Is that what you're saying? Is that.
Tim Bratz [00:03:56] Yeah, I didn't just get lucky and fall into this. I was really bad and stumbled forward since two thousand eight two thousand nine when I first started investing and just kind of got good at around twenty, sixteen, twenty seventeen is really when I caught my eye, caught my stride and then all of a sudden you look like an overnight success. So I think that's a lot of things in life. I think it takes a lot of hard work and there's a lot of things building up under the surface and a plant's got to grow down before it grows up. So it's still working underneath the surface before it starts sprouting from the earth,
Dave Debeau [00:04:25] before it becomes visible. Exactly, yeah. Very, very cool. So you're this eight, nine year overnight success with the whole process going from fumbling around and flips and single family homes, getting to multifamily. So why don't you? Because I think a lot of people could really relate to that. Can you kind of walk us through? He told us about you've got this eight unit building and that was where the light bulb went off. How did things really start to snowball for you after that? How so? Let's talk first things first. So finding the deals when you go back, because I know you're at the stage now where you're working on, I would imagine, multiple hundreds of units per property kind of thing, but not when you're getting into the eight. Plex is 12. Plex is the smaller multis. How did you find those kind of deals?
Tim Bratz [00:05:19] So when I started buying apartments in 2012, so everything was listed on the MLS, it was just a different market back then, but it's a lot harder to find money. So I think there's always this dichotomy of it's either easy to raise money and hard to find deals like it has been for the past several years, or it's easy to find deals and hard to find money like it was back in 2010, 11 12. So it was back then. It was easy to find deals, really hard to find money. So you can just jump on the MLS and find find opportunities all over the place. Today, I find my deals from really just networking, talking to different people, talking to residential wholesalers and investors and brokers and agents and telling them that I buy apartment buildings. And so I found that a lot of residential people in real estate don't know how to underwrite a commercial deal, but they still come across those opportunities and then they discard them because they don't know what to do with them. So by just being top of mind and letting them know that I'm a buyer, a real buyer of real estate, of apartment buildings, they think, oh, it can cost the building. I don't know what to do with it. Maybe I'll call him maybe to Tim's team and then my team reviews it. We pay either commission or we kick them some equity in the deal even. And it's a win win for everybody. So that's how I get a lot of my deals today. If I were just getting started today in a new market, I didn't know anybody. And and maybe you don't want to go after one hundred or two hundred unit deals because it's a different ball game. I think there's a big opportunity for like ten to 50 unit apartment buildings, though, for people especially just looking to start scaling out of residential and into multifamily, that's kind of bigger than what a lot of the the small flippers and wholesalers are looking for. And it's too small for guys like me to come and compete with you so you can really get in there. And that's that's actually what I ended up doing, is I ended up building a portfolio of a lot of buildings between 10 to about 60 units. And that got me up to several hundred units, about four or five hundred units. And that's when I started taking out portfolios of two hundred units and three hundred units and seven hundred units at a time, which is really helped me snowball my growth. But I started out with being the guy who went out and bought a bunch of 20 unit, 30 unit and 40 unit apartment buildings and just stabilize those small or bigger than the small guy, smaller than the big guys kind of a thing. That is a nice little niche. Yeah, yeah, yeah. And and it allowed me to grow my portfolio kind of under the radar and then boom, once I had a few hundred units, then I could qualify for a loan on a two hundred unit apartment complex or I can at least have some posture and puff up my chest a little bit when I'm talking to brokers who are listing a two hundred unit apartment complex. So it gives you just a little bit more confidence and respect, I guess, in the community. Once you have a certain number of units,
Dave Debeau [00:07:58] you got some mojo. Yeah, that makes sense. So I know you do lots of training and coaching with people getting into the space without giving away all your secret sauce or anything like that. What do you recommend for people that are making that transition, single family and multifamily when it comes to raising money to do those kind of deals? Because most mom and pop real estate investors don't have that kind of money. Again, depends on the area, depends on the price point on the properties are looking at. We got a lot of Canadians and listen to this. Our price points are stupid compared to what you guys can get stuff for s and a lot of cases. What's your recommendation there when it comes to bring you on investor partners or joint venture partners or however you do it and raising capital for your days?
Tim Bratz [00:08:47] Sure, sure. Great question. I think finding deals you're hitting on two of the things that I think are the most important in doing deals. One is finding deals. The other is raising capital. And like we said before, there's always a dichotomy. So you always have to be doing both of those at the same time, regardless of how much money you have set aside, I'm still always having conversations with private lenders. Regardless of how much deal flow I have, I'm still always out marketing and sourcing opportunities. So as far as raising money goes, remember how I said earlier how I went through this natural progression of broker flipper or wholesaler, turnkey buyer manager, all that kind of stuff, and got into apartments? There's a lot of private money lenders that do the same thing and a lot of your hard money lenders that are lending money on single family Flip's. They're like they kind of tired of the transactional stuff. They thought it was going to be more automated. They don't like underwriting deals over and over again. And at the end of the day, it's just getting a check and they have to go do it again in order to make another check. So they want to learn how to build wealth. As well, so I converted a lot of my private money lenders on the single family side and said, hey, here's what I'm doing, I'm paying you 12 to 15 percent annually right now. What if I paid you eight to 10 percent over here? And so that way you have something safe and steady. But then I'll also kick you a little bit of equity in the deal. So now you can build wealth. Now you have depreciation appreciation, reify proceeds, sales proceeds, cash flows. And I get your money back. And you made a good solid return, eight to 10 percent while it was invested. And you still got some cash flows coming on over here because the equity that you're building up and then there's more velocity on your money and we can roll that into another deal, another deal, another deal. And by just explaining that they didn't look at the the surface level of the rate of return. They looked at the long term picture and they realized they can make a lot more money long term and build wealth and have tax advantages if they invest this way. So I've been able to move a lot of my single family lenders over to the equity investors in my commercial real estate. So that would be one spot. Another one is I love hanging out with entrepreneurs, specifically entrepreneurs that are not in real estate. They are very good at making money. They are not good at all, at saving it and deploying it to make more money. They are they don't know what to do with it. I can tell you, I don't know. Pretty much every entrepreneur that I know who made money outside of real estate has lost a significant portion of it, 30, 40, 50 percent of it, because they're trying to do new things and they're not linked up with the right people or they haven't. It's almost like starting a new business if you're really good at commerce, let's say. And then all of a sudden you want to get into real estate. If you want to go and operate real estate again. I've been in this for 11, 12 years now and have taken a lot of lumps and learned from the school of hard knocks on how to do the stuff the right way. And so a lot of the properties that I buy today are actually from entrepreneurs who made money in another business and then deployed it in real estate on their own without being educated, without joint venturing with somebody who knew they would do what they were doing without screening a management company. And they just got their legs taken out. And then they have to figure out either lose the real estate or I lose my primary business. And they give the real estate away to a guy like me who comes in and knows what the heck I'm doing. So I think at the very beginning, if those entrepreneurs would have just linked arms with a guy like you or a guy like me or somebody else is a great operating partner and create a collaborative relationship, I think they could be way farther ahead. So I raise a lot of money from from entrepreneurs there. And then the other the other third one, I would say, is turnkey single family buyers. Essentially, they're looking for predictable fixed returns. They don't want to do any work and they still want equity upside. So what I offer is a hybrid of predictable return with equity and being completely passive. They don't have to do any of the work. So I've been able to convert a lot of my turnkey buyers of single family houses into equity investors as well, just by letting them know that there's just a bigger, better play for them.
Dave Debeau [00:12:49] Smart. So you've really parlayed everything you're doing and single family stuff over into the multifamily space by educating people about the big benefits of doing this and how they might not make it, especially with your hard money lenders. They might not make that 12 percent a year. They're they're making loan money on Flip's, but they get to get in here long term. They don't have to return on that money all over, over all the time. Plus, they're getting a chunk of the back end of that as well, which you educate them about multiple profit centers and real estate investing. That's going to juice them up and turn their them. And then those those turnkey people are juiced up about a single family home. They're juiced up about what real estate can do for them long term. They don't want to give a crap what that looks like. And the less the more hands free they are, the better. So it would just make sense partnering with an active partner like yourself. Smart, very, very, very smart. Also, General time definitely flies when we're having fun here, my friend. I told you would. And I know you've got you've got a lot of experience doing deals. You also help people get into this whole space of transitioning from single family homes into multifamily space. Tell us a little bit about that and how people could find out more about you.
Tim Bratz [00:14:06] I appreciate that. I mean, just connect with me on social media. I'm real active on Facebook. I answer all my own messages, send me a message on either Facebook or Instagram. I do have some coaching for anybody. It's not entry level. It's not beginner. This is like for people who are already doing real estate and they're looking to scale up into more long term goals and really building that legacy wealth through apartments and commercial real estate. So it's called commercial empire. And I do an event and it just kind of fell in my lap. People started hitting me up on Facebook actually saying, you coach, do you mentor, you consult. And so I decided to put this event together four times a year. And people come out that are great operators and they they say, hey, now I learn what I'm doing, but we also. Or with a lot of our our students, so we'll bring capital, we'll sponsor the loans, so that way they can bring they can do the work, we can bring the money, and all of a sudden we can both get into deals that we couldn't have gotten into without the previous relationship. And then there's other people who come out who have money and they're like, wow, this is a lot of work. I don't want to do that. How about I just deploy my money with you or I have access to capital that I can invest with you. So it's a really cool community of individuals and entrepreneurs that we built where there's a lot of deal flow going around in the works. So a lot of opportunities are getting into and partnerships to joint venture with and wealth to build. So that's commercial empire. But just follow me on connect with me on Facebook or LinkedIn or Instagram and I'll get you more details on that to shoot message. So I appreciate that. Dave, thank you for having me.
Dave Debeau [00:15:32] Thank you very much. Tim, congratulations. And all you've accomplished in this, you know, 12 year overnight success thing that you've got going on. That's why he joined the sunshine in your neck of the woods. It's raining today. It's rainy, miserable and very folley here in British Columbia.
Tim Bratz [00:15:49] But you're making me jealous. You got to come down to visit, man. There you go.
Dave Debeau [00:15:52] I will. All right. Thanks a lot to everybody. Well, hey there. Thanks for tuning into the property profits podcast. If you like this episode, that's great. Please go ahead and subscribe on iTunes. Give us a good review of that. Be awesome. I appreciate that. And if you're looking to attract investors and raise capital for your deals, that may invite you to get a complimentary copy of my newest book right back there. There it is, the money partner formula. You get a PDF version at investor attraction book, dot com again, investor attraction book, dot com ticker.