Recently BAM’s founder and CEO, Ivan Barratt, was a featured guest on the Pillars of Wealth podcast. Ivan talked with host Todd Dexheimer about his history, his philosophy, his advice for those getting into multifamily investing, and more. We recap the high points in today’s BAM blog…
If you have time to catch the podcast in its entirety, we encourage you to listen here or here (for Apple listeners) or watch here on YouTube! Ivan spoke at length with the Pillars of Wealth host about how he got into the business and how he’s grown successful since first jumping into the multifamily industry. If you can’t listen to the podcast, the important take-aways are below:
Ivan’s Early Years: Ivan had the example of entrepreneurship at an early age, as both his father and uncle were involved in real estate. Ivan graduated with an Indiana University degree in Real Estate Finance. He also took advice from the book “Rich Dad, Poor Dad” to heart and decided to work to learn and not to earn. By doing so, Ivan worked with a developer on different facets of real estate: development, property management, asset management, putting deals together, etc. Then came what Ivan calls one of the “biggest gifts” of his adult life: the crash of 2008. Ivan calls himself a “wannabe, who thought he knew everything” during this period; however, he quickly realized he’d been focusing on capital gains and not cash flow. This is where Ivan decided to switch his focus to cash flow and begin working toward other goals – as he says, “the journey to 10,000 units begins with the next deal.”
Building the “Machine”: Ivan started his property management company, BAM, knowing that he could manage other people’s properties, gain cash flow, and at times it was easier to win a management contract than find a good deal. Early on, Ivan worked every part of the business, and as it grew Ivan was able to transition to where he is today: focusing on big-picture items, equity finance, and acquisitions. From humble beginnings, BAM now employs around 70 team members and is a best-in-class company.
His Take on Property Management: Ivan tells host Todd Dexheimer that property management is often a “game of pennies” and that he can spot a rookie investor because they’ll talk about not wanting to be nickel and dimed to death; as he notes property management isn’t even nickels but a game of pennies. Ivan shares honestly that property management is hard and there isn’t always a lot of profit, but there is opportunity because no one really wants to do it. For Ivan, it was about building his scale-able machine, building the team, and executing the business plan. Ivan realized that he needed to let employees make decisions and try to “fail forward.” His track record also helped attract investors.
One Key Mistake He Sees Investors Make: Ivan notes that one common mistake investors make is not accurately figuring cost for rental turn-over. If an investor owns one rental home, turn-over could include new carpet and paint, and for a 2,500 square-foot house end up costing the owner $10,000! On the other hand, a 300-unit property would have less turn-over expense: the same new paint and carpet might only cost $2,500 (and that’s the high end of the scale). Another point Ivan makes is that if you’re cutting corners, you’ll probably attract the wrong type of resident. He says to make sure you get it right with maintenance and management.
Ivan’s Advice on Starting: Ivan says to start wherever you can and whatever you’re comfortable with. He points out that if you’re waiting on business cards and the perfect office and business plan, you’re not actually working toward your goals. Ivan suggests setting goals like meeting with a mentor or potential investor once a week, and knowing that it’s the little steps that add up. As he says, you don’t get a six-pack from one day at the gym! It’s all the small steps in between that create success.
Ivan’s Perspective: Ivan says that managing and leading people can be harder than real estate, but it’s a necessary skill. He also says to develop perseverance and accept that there will be inevitable set-backs and failures. Ivan chooses to see these as stepping stones to future success. As he says, he may hit every bump in the road but he’ll never hit the same one twice. Be sure to learn from all your experience, whether it’s positive or negative. Ivan also points out that you can’t anticipate every bad situation ahead of time and learning from those situations is what he calls “paying tuition.”
How Ivan Deals with Investors: Ivan believes in being fully transparent, owning any mistakes, and maintaining great communication with the investor.
Ivan’s Pillars of Wealth: Host Todd Dexheimer asked Ivan for his top Pillars of Wealth and Ivan listed them as follows:
- Business – the management company, which keeps the lights on
- Acquisition/syndication – the “wealth bucket”
- Liquidity – maintaining a good amount of liquidity for unforeseen events and which also helps with financing
- Good Insurance
Ivan Recommends: Ivan told host Todd Dexheimer that he highly recommends books by Grant Cardone as well as a recent book by Nomi Prins, “Collusion.” Ivan feels that if you’re going to get into investment properties it’s helpful to understand global currency, and Prins’ book is very enlightening.
For more professional multifamily investing tips and education, visit ivanbarratteducation.com! You’ll find a free library with videos featuring Ivan and articles written by Ivan and about the industry.