Ivan Barratt: Find Deals & Stop Chasing Returns on Target Market Insights Podcast
21 Aug 2018
This week, BAM founder and CEO Ivan Barratt shared his experience and insight with John Casmon on his podcast: Target Market Insights. Ivan’s episode, “Find Deals and Stop Chasing Returns” provides both practical wisdom and tips from an experienced insider.
You can listen to the podcast in its entirety by clicking the link here. If you only have time to catch the BAM Blog today, we recap some of Ivan’s MVPs – most valuable pointers, below:
Ivan grew up with a dad who had an “entrepreneurial spirit” as well as real estate. He learned from working summer manual labor at his dad’s properties that he wanted an education; Ivan went on to graduate from Indiana University’s highly-ranked real estate program. Early in his career he decided to focus not on what he would be paid but what he would learn – this turned out to be a pivotal decision.
Ivan went to work for a developer and offered to essentially work for free, taking a fee only if he sold something. Selling condos and later land, Ivan also gained valuable on-the-job experience and education. Yet he credits 2008’s Great Crash with providing his greatest lessons.
In 2010, Ivan founded Barratt Asset Management in a room of his home. He knew he needed to create a “machine” that could get him where he wanted to go and scale up. Early on, each part of the company went through Ivan. Now, he’s able to connect with his staff because he knows what it takes to succeed in that position.
Ivan began acquiring assets and from his early start with a single duplex, BAM now has $150 million assets under management. They’ve syndicated $110 million of that $150 million. Ivan credits his partner with being excellent at finding and underwriting deals as well as setting the tone of day-to-day management. This is a great balance because he prefers raising capital, and to focus on ideas and planning how to grow and improve.
Ivan advises not to chase cap rates; by looking at some “line in the sand” number you can get burned. He says that you’ll either need to take a lower return or more risk – and he prefers the lower return. Ivan prefers a B or a C+ asset in an A location over a true value-add, $10-$15K a door property, which exists in really troubled areas.
Ivan talked practically about being a solid operator. He recommended doing what you say you’ll do, not talking out of school when comments can come back to bite you, and really understanding that it takes patience and discipline.
Ivan also talked about coastal investors flocking to the Midwest. He discussed Indianapolis being attractive to investors and its flourishing economy. He recommended that any potential out-of-state investors actually visit the city and drive around – don’t just trust Google maps. Ivan suggested calling a well-regarded property management company to find out if that so-called B-area is really a B-area or not.
He mentioned where BAM likes to invest: workforce housing, areas with good schools, access to transportation, and a diverse work environment.
Ivan talked about BAM financing with HUD due to the excellent terms and opportunity. HUD finances all asset classes and up to 35 years with no balloon payments. He cautioned that you need a good team and the patience to get through the hassle of the HUD loan process, and also recommended a 150-200 unit deal because of the fees.
One of Ivan’s favorite reads this year: If You’re Not First, You’re Last by Grant Cardone.
A daily habit for success: Keeping God and family first and working out daily.
Another tip for staying on top: Don’t be afraid to pivot or make a course correction.
If you’re interested in more multifamily investing advice from Ivan Barratt, check out our other BAM blogs and catch the linked podcasts.