Ivan Barratt: "Winter Always Comes" and More on Real Estate Investing in a New Podcast on Cashflow Ninja
Looking for some insight into real estate investment, or are you looking for a way to spend your Friday picking up some tips? Well, look no further: BAM founder and CEO, Ivan Barratt, sat down recently with Cashflow Ninja podcast host M.C. Laubscher and shared his thoughts on everything from how to avoid risks in a down-turn to what's a good industry read right now. Catch all of Ivan's insight here; don't have time for the full listen? We share some key points of interest below:
Ivan grew up in the industry, starting as summer-time manual labor on properties owned by his dad. He caught the real estate bug and later went to I.U., where he studied real estate and finance.
He knew what he loved doing; yet early on he had to get comfortable doing “what he hated.” Ivan loves raising capital and investing but had to gain experience building and scaling a property management company. He even spent plenty of his early years working for a developer before going off on his own.
Ivan sees his front-row seat view of the 2008 crash as a gift. It allowed him to re-focus his attention on cash-flow instead of looking for the next big deal and flipping it.
Thanks to what he learned, Ivan's philosophy on growing wealth is all about cash flow. As he said, “winter is always coming.” While you may not know how long or cold it will be, it will come. His plan is to have a model that thrives during such a “winter” instead of collapsing.
Ivan said he looks for real estate that is like a “well-run business.” He isn't into heavy value-add right now. He also avoids the banks because “they're your friends until they're not.” Ivan tends to utilize Fannie, Freddie, and HUD financing. He pointed out that HUD finances assets in all classes, and can give a 35-year loan that you can still refinance or sell 5-10 years later depending on the terms.
Loans like HUD's help you avoid the issues of a down-turn, in which banks often re-value assets and may call a loan unless you can “right size” it. This means that you may owe quite a sum immediately and end up losing the property, as many did during the crash.
Ivan prefers the Midwest and states like Indiana, Ohio, Kentucky, and beyond. Red states such as the Midwest tend to be more landlord-friendly.
He also said that when looking for a good deal they'll go through 200 to find that one “golden goose.”
Ivan noted that they're choosy about things like location and school district, and they prefer workforce multifamily properties.
When it comes to raising capital, Ivan focused on using his extensive network. He referred to building a network and to treating people well and doing what you say you'll do. It also comes down to doing good deals.
Ivan isn't content to sit idle and continues to learn his craft: while he often re-reads favorite books, he's currently reading Principles by Ray Dalio and has picked up Collusion by Nomi Prins.
On tips for the future, Ivan said he won't be a dad who just hands down money. He hopes his children will grow into the family business but he'll have them work somewhere else first. He also said to focus on cash flow over capital gains and recommended finding one model and doing it well. His final piece of advice was to get used to doing something you hate before you earned the ability to do what you love.