Many people get lured by the idea of making “easy money” by investing in real estate. Like anything else, if it were easy, everyone would do it! It isn’t easy and doing it well takes time, education, and experience. There’s a reason that BAM founder and CEO, Ivan Barratt, advises that most people do better as a passive investor and by working with a sponsor than by being an operator themselves.
Don’t Quit Your Day Job
The number one tip that Ivan has is that unless you’re ready to commit the majority of your time (including after hours, weekends, and leisure time) to this industry, you’re probably not ready to be an operator. In other words, it isn’t something that you should do as a second job or a hobby. In fact, most people who are considering multifamily investing already have successful and lucrative careers in another field – making them ideal passive investors.
As a new operator, it’s likely you’ll make mistakes early on. When first starting out, Ivan refers to his early mistakes as “paying tuition.” He learned from these early lessons and the money he lost on his own small deals. As he got more experience in the industry, he didn’t make the same mistake twice and they proved to be valuable lessons. Ivan estimates it takes thousands of hours to get good at the business; for people essentially jumping into a second job, they’ll have to be ready to pay that tuition, which could come at a steep cost. The better bet is to work with a seasoned sponsor, which will minimize risk.
Another hurdle for the aspiring operator is figuring out property management. As Ivan has said previously, bad property management can ruin a good deal, while good property management can turn around a mediocre deal. Finding a quality property management company is much harder than it sounds, and you may not find out until it’s cost you. That’s the main reason that Ivan built the property management team at BAM; so that the assets are being handled by a dedicated team they know always performs. If you’re a lone new investor trying to put the pieces of a deal together, and handle property management, it could be a major risk. Working with a group like BAM minimizes your risk because those elements are each handled by an experienced, knowledgeable team.
Multifamily investing is a great way to build wealth; however, for many interested investors, working with an established operator is a better bet than trying to become one. A team, like BAM, that has a deep bench is ideal when looking at entering the multifamily field.
Want more info on multifamily investing? Go to investments.barrattassetmanagement.com and sign up for an account. Once there, under “offerings” you’ll find a free library with articles and videos featuring Ivan and his insider knowledge and insight, as well as a ton of info on BAM, its team, track record, and offerings.