As I prepared for the Multifamily Investor Nation Summit, I had some inspiration (and realizations) of what it takes to make it in this business when you’re starting out – even if...
He’s at it again! BAM founder and CEO, Ivan Barratt, recently sat down on the Lifetime Cash Flow Through Real Estate Investing podcast with host Rod Khleif. Ivan shared his thoughts about what it takes to succeed in the field, the realities of financing, and advice he’d give to anyone considering making the leap into the world of investing.
In the podcast, Ivan shares with the host how he got his start and how it almost ended in flames. Ivan began his career buying a small property, then nearly lost it all when he invested in a 30-unit property and made what they both agree is the “mortal sin” of investing. Ivan tried to renovate the property out of cash flow; which he then tells investors to know the cost of turnover going in and not assume they’ll use cash flow for the repairs/renovations. Luckily, he bounced back and counts the deal as part of his continuing education in the business.
Ivan also talks about the realities of managing multiple properties spread across various states. Once again, Ivan notes the importance of a key BAM philosophy: treating the maintenance team “like gold.” He points out that by hiring a solid maintenance team leader and team, he’s able to handle nine out of every ten work orders in house, without having to rely on subs.
Ivan talks about working hard to be the dumbest guy in the room, and having a team that excels in their specialty. He also talks about what he’s learned from peers not in the real estate industry, and encourages people to find groups where they can both give and get a little from others who might not be in the same field. Ivan’s enthusiasm for his membership in the Entrepreneur Organization is obvious, where he talks about associates helping keep him focused in seeing the big picture.
Ivan gives a great, detailed account of his experience with specifically HUD financing. He tells the host about what he calls a love/hate “but mostly love” relationship with the financing. Ivan talks about how HUD can give you 30-40 year amortization and 75-100 basis points below agency debt. He mentions how if you put the right deal together, HUD will finance 85% loan-to-value on purchase, reserve, and renovation budget.
Of course, he mentions the downside: HUD has higher upfront fees, demands very specific compliance, and has enough paperwork to, as he put it, “kill more trees.” Ivan mentions the possibility of monthly financial audits, as well as physical audits every few years. Yet, as Ivan notes, he wants to do the best he can and HUD prevents you from “screwing up the deal.”
Ivan’s advice to beginners in the business is solid and simple. He tells listeners to never give up and to aim with a rifle instead of a shot gun. Ivan’s mantra is to focus on one thing and do it very, very well. Given his rise in the industry, he’s clearly heeding his own advice.View More Articles