Tim Bratz, Founder of Legacy Wealth Holdings, joins us to discuss going from a blue-collar background to 4,800+ units of multifamily real estate. We discuss team building for investing in real estate, finding and focusing on your strengths, how Tim bought an island, and much more.

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Devin Elder : (00:03)
Tim, welcome to the show. How are you?

Tim Bratz : (00:05)
Excited to be here, man. Thanks for the invite Devin.

Devin Elder : (00:07)
Yeah. Awesome. Awesome. Well, glad to have you on. I know you’ve been super busy for a long time. You’ve been doing commercial real estate for a long time. You’ve got your hands in a lot of deals, in a lot of markets. Lots of exciting things going on. I’ll say right out of the gate, you’re a awesome social media follow. So if you’re listening to this, follow Tim on social media, there’s killer stuff there in the commercial space. But before we get into what’s going on now, let’s just kind of dial it back for somebody that’s listening that hasn’t met you, hasn’t come across your stuff. How’d you come to real estate? Why real estate? What happened there?

Tim Bratz : (00:41)
Yeah, man. Well, again, I appreciate you, appreciate the relationship and the friendship that we’ve had for the past couple of years, and it’s awesome to be here. So, any way that I can add value, please. There’s no question that’s out of bounds or off topic, so-

Devin Elder : (00:54)

Tim Bratz : (00:55)
… as far as when I got started, man, I was going through college when the market was going crazy last time. ’03 to ’07, everybody’s making money in real estate. And I remember meeting people thinking, if this guy’s making money, I’m going to get rich in real estate if I get in.

Devin Elder : (01:08)
If this idiot can do it.

Tim Bratz : (01:10)
Yeah and so I’m a blue collar kid from Cleveland, Ohio. After I graduated from college in 2007, my brother was living out in New York, I’d go out there. I thought you got involved in real estate by becoming a real estate agent. So I get my real estate license. And instead of going the residential route, somehow I parked my license with a commercial kind of boutique brokerage. And I just brokered leases for offices and retail. And I got the bottom of the barrel listings. And I knew that, but I closed deals that were $10,000 a month for 400 square feet on a 12 year lease term. And you’re like, dang, there’s more money in owning real estate that they’re in is brokering real estate.

Tim Bratz : (01:46)
So I realized I wanted to become an owner of real estate. And I was in New York, crappy weather. I moved down to Charleston, South Carolina in 2008 and just went through the whole studying everything, buying all the courses, following the gurus and the blogs and the blogs and all that stuff. And it was ready to start buying, in 2008 bottom falls out. So everybody’s running from real estate, but it was kind of cool because I got in it a good time and I bought my first house in 2009. It was totally opposite of today’s market.

Tim Bratz : (02:15)
Today there’s money everywhere and there’s properties are harder to come by. Down like 10 or 12 years ago, dude, properties everywhere. You couldn’t walk down the street without seeing two foreclosed houses that they were giving away for pennies on the dollar. But there was money nowhere, at least for a 23 year old punk kid like me, who has never done [inaudible 00:02:33] in that market. And so I ended up buying my first house on my credit card and just used my credit card to buy the house, fix it all up, sold it, made 14 grand in about 100 days. And it was the biggest check I’ve made up to that point in my life. And I was like-

Devin Elder : (02:45)
Love it, love it. So, okay, credit cards. So what’d you buy it for? Did you pull a cash advance out? Or I mean, how much was this house?

Tim Bratz : (02:52)
Yeah, it was, I found the cheapest house in the entire MLS, it was 25 grand and I went in low. So I go in, I am at a $15,000 credit card limit, so I go in at 12, they come back at 20, I come back at 14, which is my highest and best and they ended up accepting it. And so I essentially had a balance transfer check and I was like, “Yeah, I’m going to go and pay off some other credit cards.” I just wrote the check to myself, put it my bank account.

Devin Elder : (03:13)
Love it.

Tim Bratz : (03:13)
Closed on the house. And then I had a couple thousand dollars saved up from broker deals up in New York. And I just used that for three, four months while they renovated it, didn’t know how to sell it. Put some signs up in the yard, had an open house. One of the neighbors came in and paid $33,000 for it, so that was first deal.

Devin Elder : (03:29)
For a renovated house, yeah, that’s good.

Tim Bratz : (03:31)
I mean, it was a pig, dude. It was just lipstick on a pig, it was horrible, hardly functional. But I was like, I just made money doing this, so if I can make money on this dump, I can definitely make money on nicer stuff. So I get into wholesaling, like assigning contracts, got into flipping and then chase some shiny objects, all that kind of stuff. Got into some rental properties, partnered up with people who had cash. I did the work, they put up the money and we just kind of did equity splits. And then in about 2015, 2016, I just kind of started doing my own thing where I would, I did like a turnkey single family business where we were flipping single family homes about 80 to 100 of those a year. Started a big management company in Cleveland, built that up and sold it after a couple of years and just realized, majority of my wealth, in 2017, I sat back and I was like, I had a few hundred units in my portfolio.

Tim Bratz : (04:21)
And then I was doing the transactional stuff with the flips and I just sat back and looked at my net worth and where was I spending my time and what I want out of life. And I realized 90% of my net worth came from my apartments and it was like 10% of my time. So, I remember going back into the office and just pivoting the entire team and saying, “Hey, we’re no longer… I mean, just totally burn the ships with single family. We’re no longer doing any of that. We’re only buying apartment buildings.” And that’s when I got a lot of momentum built up.

Tim Bratz : (04:46)
So 2018, yeah, I guess over the next six months I picked up another 3, 400 units. I was at like 600 doors and then June of 2018, I took down a portfolio of five buildings that just more than doubled my unit count. So I picked up 730 doors. So it was that like 1300 units. And then in 2019, picked up another 2000 doors, 2020 picked up another 1000 doors. This year, we picked up about 550 doors, plus another couple of unique type of properties, bought an island, bought big estate up in a mountain, up in North Carolina.

Devin Elder : (05:20)

Tim Bratz : (05:21)
Yeah. So, our bread and butter is the apartments. I have a few office buildings, a few storage facilities, but 90% of my portfolio is that workforce, B class, multi-family housing in secondary markets, mostly in the Southeast and the Sunbelt.

Devin Elder : (05:38)
I love it. I love it. Yeah, it’s such a simple business plan. When I explain it to the uninitiated, they’re like, “Well, why don’t you do this or this or this?” And it’s like, “That’s kind of middle of the road stuff.”

Tim Bratz : (05:48)
Yeah man.

Devin Elder : (05:49)
Is just bread and butter. Maybe not the sexiest thing. It’s not an island to buy, which I definitely want to find out more about that, but I’ve had the same kind of epiphany over the years. It’s like, ah, this is really where all the wealth building is. And then also, you look at COVID and all that stuff, that sector held up real well. If you’re in landlord friendly states.

Tim Bratz : (06:10)
Yeah. The C class stuff, we had some tenants game in the system, but I’ve sold off most of my C class, everything under 100 doors I’ve sold off.

Devin Elder : (06:17)
Love it.

Tim Bratz : (06:18)
So, I’m really just focused on that 100 units bigger, then B class, kind of secondary cities. I don’t come from wild money from New York or California or anything, I’m a blue collar kid. So I can’t really compete at four caps and five caps in Miami, in Dallas and some of those other markets. So, I stick to the Charleston’s, the Cleveland’s the Savannah, Georgia, the Lafayette, Louisiana, Springfield, Illinois. I have a bunch of stuff in those areas, so.

Devin Elder : (06:45)
Yeah. I love it. I love it. And so, how are you guys approaching property management for those types of assets, given that you’re pretty geographically diversified there?

Tim Bratz : (06:54)
Yeah, man. So, as you mentioned earlier, I’ve always been real active on social media, not really to intentionally, early on, it was just trying to share value. And then all of a sudden I got people saying, “Hey, can I sell you a deal? Can I buy a deal from you? Can we joint venture on a deal?” And then that turned into kind of like a coaching platform, which brought a lot of deal flow and a lot of money flow into my operation. So, the reason I’m in 12 different states is because I’ve had joint venture partners, like students of mine that have brought me those opportunities.

Devin Elder : (07:22)
Love it.

Tim Bratz : (07:22)
I got thousands of people, bird-dogging opportunities all over the country. And we cherry pick the ones that we really like and that beat our buy box. And so, that’s why I’m in 12 different states. We have a local boots on the ground partner everywhere with obviously local management, leasing, maintenance. And then we layer that with a third party management company, that’ll charge 3 to 4%, depending on how many units we have with them. And then my team works remotely. They’re headquartered out of Cleveland, Ohio. They do all the asset management remotely. And so it’s got a few layers before it gets to me, which is nice. And dude, we’ve done it, like you said, it’s just cookie cutter. We’ve done it so many times that it’s hard to pull the wool over our eyes. And we know exactly what we want. We have checklists and SOPs is in place for everything that we’re buying and how we’re operating and all that stuff. So it’s just very, yeah, it’s very predictable for us.

Devin Elder : (08:12)
Yeah. I love it. And that’s a great win-win approach to scaling other markets. You got people to come in, pay for coaching, which I think is, if you’re starting this business, you got to have a coach.

Tim Bratz : (08:23)
Got to.

Devin Elder : (08:24)
And I think it’s important to pay for it, to show yourself and the coach that you’re serious. There’s so many free resources. This podcast is going to be free. Somebody can listen to this, get a lot of value, but if you really want to go do it, you’re going to buy that 5, $10 million building, 100% you need a coach and you can push the fast forward button with that. And then that allows them to win. They’re getting educated, they’re getting access to you, which is extremely valuable, then partnering with you. It’s like a win-win all around. And then you’re getting access to deals that you might not see because you’re not boots on the ground every weekend in Savannah, or whatever the case is. Yeah. So, I love that approach. So you mentioned earlier, you’re kind of shifting the focus there, but let’s get into the island though, real quick. I got to hear about that, man. What’s the story there?

Tim Bratz : (09:09)
Yeah, man, so like I told you, I have a few other asset classes, about 10% of my portfolio is a few different asset classes. And I got some small office buildings, more like micro offices, entrepreneurs without a big team, just need to meet somewhere with clients and get the hell out of the house. And then I have a little bit of mixed use retail type stuff with apartments above and retail on the ground floor, a few storage facilities. And then I have a few vacation rentals and the idea was, it came from, how can I turn liabilities into assets? That’s been this philosophical shift for me over the past few years of, how could I have my lifestyle, but I’m cheap, man. I am very frugal. I don’t like to spend money. I shop at and get super… like this a $5 t-shirt that I’m wearing.

Tim Bratz : (09:56)
And so, I’m not a big spender of money because I messed up when I was younger. 2012, man, I went broke, I bought the Mercedes. I joined the private clubs and did all that kind of stuff. And so I don’t know if it’s PTSD because of that, or I’m just a better steward of capital today because of it and I respect money a little bit more. But for me, whenever there’s a liability that I want, I want to try to figure out a way, how do I monetize this liability and turn it into an asset. So like I wanted… I’ve got two little kids and I wanted a house down by Disney World. So I found some houses down by Disney World, bought one of them and for $490,000, put it on a vacation rental program. And then I’d go down there for two months in the winter time.

Tim Bratz : (10:39)
And then a couple other times throughout the year with friends and family and just have a second home down in Orlando. And it kind of worked out, I structured it in a way that I, no better now, but I essentially syndicated it. I got a loan. Then I syndicated the down payment and it was just a lot of debt service and at a higher rate than what it actually yielded. So I sold those off, but I found this ridiculous mountain estate earlier this year, 12,000 square foot, unbelievable home in Western North Carolina, up in the mountains, right in the Smoky Mountains and got that one seller financed, 4% interest only 10 years.

Devin Elder : (11:18)

Tim Bratz : (11:19)
Syndicated the money on that, the down payment for my investors at 4% pref, which doesn’t seem like a lot. But then they each got a week at the property also, which is worth about, it rents for around $15,000 a week, $20,000 in the summertime. So although it’s not like money in their pocket, it’s real value there. And we stepped into a lot of equity. We bought it for $3 million, it’s worth $5 million. So it made a lot of sense, even though the pref was low. And so I was like, dang, this really makes… and I had people like knocking down my door, trying to get involved in that. And I only raised 800 grand. I had $2.5 million of people who wanted to commit. So I was like, well, let me try it again.

Tim Bratz : (11:56)
I looked for some beach houses down in… I live in Charleston, South Carolina now. So I’m very familiar with this area, look for some beach houses. And I was looking down the coast and I found a house on actually some acreage. I was either looking for a beach house or plantation homes. And I found a house on 110 acres. And I was like, where is? I couldn’t find the address. It was 0 Rose Island. I was like, oh, that;s because it’s an island. Its the entire island, 110 acres of uplands that is buildable, already parceled, with a four bed, four and a half bath house on there with a dock, infrastructure, everything.

Devin Elder : (12:31)
110 acres is no joke, man. That’s some dirt.

Tim Bratz : (12:34)
Dude, Richard Branson’s Necker Island’s only 74.

Devin Elder : (12:38)
There you go.

Tim Bratz : (12:39)
So, winning, right?

Devin Elder : (12:41)
Oh yeah, obviously, got him beat there.

Tim Bratz : (12:44)
And then there’s 350 acres of marshlands around it. So it’s like a conservation easement. It’s an inland island. It’s not like out in the middle of the Atlantic Ocean, it’s right next to Hilton Head Island, if you’re familiar with that area of South Carolina. Parris island, where the Marines train and all that stuff. So it’s right there, but you could see the ocean, it’s surrounded by some rivers and it’s all conservation easements. And I was like, hey, I always want to own an island. It’s been on my list for 15 years, my bucket list. And I was like, well, I can’t totally monetize the house. House is nice, but it’s not extravagant enough to charge somebody $2,000 a night for it. So I was like, what else can I do?

Tim Bratz : (13:21)
And I looked at a lot of different options, a lot of different things that we could do. And I thought, hey, maybe I’ll build out some cabins, cottages, maybe do an event pavilion or something at the one end of it. And then somebody’s like, “Hey, check out these canvas safari tents and look into those, like glamping style.” And I looked into that and dude, they’re one tenth the price of what it would cost me to build out an actual cabin or cottage. You don’t have to go through all the zoning garbage. The insurance is nothing on them. And if a big, bad wolf comes over, blows them over, then it’s all in the infrastructure anyway. So I can buy a new tent for three grand and throw it back up. And so it just made so much sense, so that’s what we’re doing.

Tim Bratz : (14:00)
We’re going to build out a bunch of glamping style safari tents. They’re nice. They have bathrooms in them. They’re going to have air conditioning and heating units in them. They will have… and I don’t know if I’m going to go with that in all of them, but there’s going to be suites that are really, really nice. And there’s going to be other ones that are just nice tents and everything in between with little campsites and pavilions and all that kind of stuff. So essentially keeping it as natural as I possibly can, while figuring out a way to monetize it and dude, the financials on it, the way that we played it was super conservatively. It’s like a 13% cap rate on it at our cost basis. So I think it’s going to cash flow like a monster. If we build out a few more campsites, it turns into astronomical cash flow numbers.

Tim Bratz : (14:42)
And that’s kind of what I’m doing, so I’m selling off actually the storage units. I’m selling off the office buildings. I’m keeping 90% of my portfolio as these B class apartments, like you said, not sexy, but it’s very predictable, very easy, almost boring. And you know when it’s boring, it prints money. And then I’m doing some of the sexy stuff like these very unique assets, like an island, like a mountain house. I’m looking at a couple other kinds of beach type things that are more front of the brochure.

Tim Bratz : (15:10)
They look nice and they have some functionality aspects to it and lifestyle advantages for the investors that want to invest in it. So I’m doing the island the same way that I did the mountain house, where I pay, I got it seller financed, I’m paying at 4% pref to the investors, but then they can come and use the house once a year and they can use the tents whenever they’re vacant. So especially if it’s somebody local to North Carolina, South Carolina, Georgia area, they can really get a lot of use out of it and say, “Hey, I own part of an island.” So, it’s kind of neat.

Devin Elder : (15:38)
How cool is that? Yeah, that’s irreplaceable, anybody can be an LP in the next 1984, 200 unit apartment complex, which is great. We all want to do it, but not a lot of us have a piece of an island. That is such a cool story. And love the tents. Yeah, 3K to throw up a tent, hurricane knocks it over, whatever.

Tim Bratz : (15:59)
Yeah. I mean, there’s some infrastructure. I got to put in septic and well, I’m going to do a little solar field and I got to build some decks and all that stuff, but that can’t get that messed up from a hurricane, or high winds or anything like that. But the tent itself, yeah.

Devin Elder : (16:13)
Yeah. Exotic animals coming on the island?

Tim Bratz : (16:15)
Yeah. So I’m looking at that. Dude, I know nothing about farming, but I had some people. My broker, actually, his family owns a farm of exotic chickens and stuff. And he’s like, “Dude, I’m going to give you a credit of $1000, buy as many as you want.” And I was like, if people are like, listen, you just want hens, only have one or two roosters because otherwise it’s going to be… so I’m learning about all of that. They used to have some horses on there. They used to have some goats and stuff on there. People telling me I should get alpacas or something like that, whatever. So yeah, I’m considering that. It’s actually zoned right now, agricultural land. And I need to maintain that in order to keep the taxes down.

Devin Elder : (16:59)
Tax exemption, yeah.

Tim Bratz : (17:00)
And so I’ll probably do something along those lines. I don’t know exactly what that’s going to play out to be. But yeah, absolutely.

Devin Elder : (17:06)
What we do down in Texas is we put exotic animals on our ranch and they’re a 100% write-off year one, and then they reproduce. So the investment’s just growing and growing and eventually you can sell them. And then in the meantime, we get to enjoy them, go down to the ranch and look at zebras and stuff and everybody gets a kick out of it.

Tim Bratz : (17:23)
Yeah, that’s awesome.

Devin Elder : (17:24)
So, I’m like you, man. I want to find a way to do this stuff I want to do, accomplish my dreams and how can we make it make money? That’s such a fun game to play, there’s no better game to play than figuring out, how do we make a business around whatever it is you want to do?

Tim Bratz : (17:40)
Yeah. Well, it keeps the creative aspect of being an entrepreneur. I’m not really the corporate guy that once it gets too structured and too just the same redundancy, just over and over to the same thing, mundane, over and over again, it just kind of gets boring for me and I’m looking for something else. But I realized that that is where you make the most money. So I don’t want to stray too far, but these unique assets, I have the team who understands vacation rental, short-term rentals and all those things. And so that kind of keeps that spark of excitement going for me. And I like that, so my team really handles, man, all the B class apartment buildings and I kind of quarterback these new, unique acquisitions.

Devin Elder : (18:20)
Yeah and kudos on being able to separate that because that’s hard. Somebody’s got to charge over the hill first and that’s you. It doesn’t mean your skill set is necessarily reviewing the budget variance reports every month and making sure… those are kind of two different skillsets and I know you’ve built a team over the years to handle that stuff. And you just kind of do the stuff that you’re good at and that you enjoy at this point, right?

Tim Bratz : (18:47)
Yeah. I think when you’re early on in your journey, I know there’s a lot of people I’m sure that watch this podcast that want to be operators of commercial real estate. I think early on in the journey, you get your hands on a lot of different things. You are the COO, you’re the chief investment officer, you’re the acquisitions director.

Devin Elder : (19:05)

Tim Bratz : (19:06)
Yeah, you’re doing everything. And then eventually you realize, what is my behavioral type and what am I good at? And then all of a sudden you start staffing out and you find somebody to do the things that maybe you’re not as skilled at. We can all do it a little bit. But it’s more of a drainer activity on some of those things for some of us. So I found a COO that’s amazing at spreadsheets and SLPs and KPIs and all the other analytics and metrics for building a team and growing an organization and measuring the performance of the assets.

Tim Bratz : (19:38)
And then I’m the marketing guy. I love being out, talking at events and being on podcasts and posting on social media. And that drives deal flow for the team, that drives investors for the team, that drives resources, connections, vendors, suppliers, all those kinds of things for my operation side. And so, I found out what I’m really good at. I know what I’m really good at. I stay in my lane and I’ve staffed out people and partnered with people, who can complement what I’m not good at. And we complement each other really well, but we’re not dancing on each other’s strengths.

Tim Bratz : (20:08)
And we all know our role and our responsibilities in our organization. And dude, when you do that, one plus one equals three. You can accomplish way more because you’re doing the stuff that you like, which means you get better and better at it. The better you get at it, the more you like it, which means just like, it’s this amazing spiral of momentum that you get in whatever that task and that activity is. And so, we’ve become very compartmentalized of what we do. And it’s helped us grow substantially.

Devin Elder : (20:35)
Yeah, I love it. There’s a book, Rocket Fuel, from the guy that wrote, Traction, that books got a lot of traction, I suppose, the word for it. But that book’s pretty popular and so that Rocket Fuel ideas that you have the visionary, and then you have the integrator, that’s kind of your COO role. When did you know you needed that COO person and how did you go about finding them?

Tim Bratz : (20:57)
Yeah. So, good question. Dude, I remember early on when I was doing everything. When I first started… well, I bought my first property in ’09, bought my first apartment in 2012, but I was still doing everything up until 2015, everything. Sourcing deals, overseeing contractors, swinging the hammer sometimes myself, collecting rent, showing up in eviction court, all of it.

Devin Elder : (21:17)
All of it, yeah.

Tim Bratz : (21:18)
And I was like, I couldn’t understand how does somebody build a team, I just couldn’t wrap my head around, how do you get 100 employees? And I remember going out to a Mastermind Event in February 2015, and the people in the room were like, “Dude, just hire an assistant, just start with an assistant.” And I was like, “Yeah, that’s cool. But I made a little over $100,000 in 2014.” And I was like, “I can’t afford a $40,000 assistant.” They’re like, “Listen, it’s not $40,000. It’s $3,000 a month. Can you afford $3,000 a month? And if you can’t… can you risk 6 grand, $9,000? If it doesn’t work, then guess what, Tim? You can go back to banging your head against the wall.” And I was like, “Yeah, I guess that’s a different way of looking at it. I can do that.”

Tim Bratz : (22:00)
And so I hired that assistant March 1 of 2015. And in the next 10 months, man, I made $400,000 because they took all the non-revenue generating activities off my plate. And I could just focus on the revenue generating activities, which was essentially sourcing deals, raising the money, and then refining our operations or whatever your dispositions method is. And then I ended up hiring an intern and there was somebody that I co-wholesaled with that ended up coming on as our operations director. And now he’s my COO. And so I just kind of hired everybody almost at like an assistant level, knowing what their kind of behavioral type was. And thinking, I’m not hiring them for this. I’m hiring them for the next two roles in advance.

Tim Bratz : (22:44)
And that’s always been my philosophy of hiring somebody low. So that way they don’t expect a C level executive salary right out of the gate. And at the same time, they can work their way up. They can show me that they’re going to perform and do more than what they get paid for in order to make an investment in their future. And I will recognize that. And I tell them early on, I said, “If you crush this, there is a lot of growth potential here.” I’ll give an example, my education. I just hired an operations person, January 1 of this year. I gave her a 50% salary increase after four months of working with us. And then I’m about to give her another, it’ll be about 60% salary increase again, three months, four months after that. So it’s like, if somebody performs, the vaults are open, you know what I mean?

Devin Elder : (23:33)
100%, all that counts is results. All that counts is results, and if they’re doing it…

Tim Bratz : (23:37)
And we know how to make money. And so if you find somebody who’s, especially today, right, it’s very difficult to find great employees. More so in probably lower, entry-level type position, like the maintenance and that kind of stuff. But dude, if you’ve got A-caliber talent, there’s plenty of options for them to go around. So if you find somebody who’s a rockstar, you’ve got to make sure you treat them well and make sure that… and sometimes it’s not always about money. Sometimes it is. Sometimes it’s about fulfillment, personal growth, personal development, opportunities to grow and connections and being in the limelight, or whatever. Being appreciated is a big one too. So yeah, I think just paying attention, building up that culture, knowing that we’re a family as we’re growing and we got big ambitions moving forward. And I think that’s really, really important in order to build up your team the right way.

Devin Elder : (24:27)
I love it. Yeah. There’s so much good information there. And I love what you said about the risk, because as entrepreneurs, yeah, you’re looking at the year of a salary and then you’re adding your taxes and your load, maybe another 25% on top of that, what it’s going to cost you. And that’s a big, daunting number and the person might not even work out. But it’s a three month risk. Can you afford to gamble three months to try it out? And you’re going to know in three months, whether or not you made the right decision. And I love that, it breaks it down, de-risks it for the entrepreneur and kind of allows you to move forward.

Devin Elder : (25:00)
So you mentioned the coaching program, well, let me see, what do you say to folks that are coming in, don’t have a ton of experience buying apartment buildings or whatever, they want to get in and become operators. What are some of the common mistakes you see that, maybe somebody listening to this that’s in that position, could benefit from hearing because you’ve coached a lot of people, you’re in a lot of deals across the country? What are some of the recurring themes that you see of that newbie coming in?

Tim Bratz : (25:30)
Yeah, I think that’s a great question. One of the first ones that comes to mind is, a lot of the people that… I don’t coach necessarily newbies totally. There are some people who have never done a deal ever, and they want to get straight into apartments. Most of the people that come to me have a single family business, flipping houses or wholesaling houses, or they have a rental portfolio of 70 single family homes. And they’re looking to get into more scale. So they already understand business. They already understand the mindset. I don’t have to deal with the blame game and the victim mentality that a lot of people who aren’t entrepreneurs, then have to face when they go through that. So, fortunately, that’s good. But one of the things, because they are in the single family game, they’re used to owning 100% of the deal.

Tim Bratz : (26:14)
And it’s a solo sport. It’s like tennis or it’s like, you know what I mean? Or golf. And then all of a sudden they come into multi-family and it’s a team sport and they’re like, “Wait a minute, wait a minute. I’m only going to get 20% of the equity in this deal. I’m only going to get 5% of the equity in this deal.” And they end up bottlenecking themselves because they think about this deal. And I’m like, “Listen, it’s not about this deal. It’s about, what does this deal do to set you up for the next 10 deals or the next 100 deals that you can take down because you have a percentage of GP ownership in this first deal?” And by the way, there’s a lot of nuances, man. It’s a different business doing single family than multi-family. So you’ve got to learn this whole thing. And you’re going to be able to link arms with somebody who’s got experience of thousands and thousands of doors and blah, blah, blah, blah.

Tim Bratz : (27:01)
So, I think it’s really important for people to realize that it’s not about this deal. It’s about the next. What does this deal set you up for? And it’s a team sport. And what I love is that it’s a bigger piece of the pie. It’s like, you can have 100% of a grape, that’s okay, or you could have a quarter of a watermelon. There’s a lot more juice in the squeeze of a quarter of a watermelon. And you got to be okay taking a smaller percentage because then you could focus on what you’re really good at. Somebody else can focus on what they’re good at, exactly what we were talking about before Devin. And I think, again, one plus one equals three, you can accomplish more that way if everybody stays in their lane. And that’s why we’ve been able to grow so much. And so, you got to have… get out of that scarcity mindset and have more of an abundance mentality is a big deal with getting into the multi-family stuff.

Devin Elder : (27:50)
I love it. And then now you’re playing the watermelon game, which is very different than the grape game, because you can get, I mean, I got really freaking good at the grape game and bang my head against the wall for years and flipped hundreds of houses and it made money. But it didn’t set me up until I got a little piece of that watermelon game. And once I was on that track, I mean, my first deal was a six unit by myself and the bank. The second deal was syndication 75 units. I owned a comically small GP piece of that deal and put more time and energy into that deal than any deal since. But now I’m playing that game and it sets you up to where, now we can go buy whatever $30 million deal. And I’m the only partner on it or whatever the case is.

Devin Elder : (28:34)
So it just sets you up for that game, that is going to be such a bigger game long-term. And there’s an analogy, I don’t know if it’s true or not, but if a monkey will reach into a tree and grab something, grab a nut in the tree and he’ll die there because he won’t pull his fist out because he don’t want to let go of the thing he’s got. It’s like people just can’t let go of the… you got to kind of expand beyond that. And it’s such a powerful thing too, to see, when people grasp that concept that, listen, just get in this game, get on this track.

Devin Elder : (29:03)
Maybe you’re just putting up some earnest money and getting a little tiny piece of it. Maybe you’re just raising a little capital for this deal, but now you’re on a team that’s doing the big things and you want to be in that position in the beginning. You don’t want the responsibility of running that whole thing your first time out, that’s not wise for anybody to go do that. But you’re at least getting on the train that’s going to the place you want to go. And that’s super powerful and then you can grow your share of the GP over time.

Tim Bratz : (29:34)
Yeah. I agree, 100%, man. If you have 100% of the ownership, you’ve got 100% of the responsibility. You’ve got 100% percent of the liability, all the questions, all the headaches fall on your shoulders. Guess what? They get bigger. There’s more zeros behind them when you’re dealing with bigger commercial properties. So, it’s just better to have a team and put a couple of heads together and you’re going to have way more success by being able to bounce ideas and just kind of partner up with people and just accomplish more man. So, that’s probably the biggest bottleneck that I see with a lot of people getting into multi-family is that, that scarcity mindset, getting over that and then getting into the more abundance mindset of sharing a piece of the pie.

Devin Elder : (30:12)
Yep, 100%. So we’re talking mid 2021 right now. COVID obviously was a wild ride of a year. And then now kind of coming out the other side of it, we’re seeing huge asset price increases, inflation. We’re seeing rent growth, all that stuff. What do you guys see kind of for the next year, for your core multi-family business? Obviously, there’s going to be some exciting new projects that you’re probably spearhead that you haven’t even come across yet, but for the multi-family stuff, we’re in a competitive market. What do you guys see for the next year or two in front of you in that space?

Tim Bratz : (30:44)
Yeah, man, I think none of us have a crystal ball.

Devin Elder : (30:48)
Of course.

Tim Bratz : (30:48)
If you talk to speculators and the economists in January of 2020, at what 2020 was going to look like, every single one of them would have been wrong.

Devin Elder : (30:56)
Dead wrong.

Tim Bratz : (30:58)
I don’t like to speculate of where the market’s going, but I mean, the market’s good. I think there is real demand in the marketplace. I don’t think it’s fake, like it was 13, 14, 15 years ago.

Devin Elder : (31:12)
Sure, huge distinction, yeah.

Tim Bratz : (31:13)
Yeah, I think it’s a very different marketplace. There’s huge demand, prices of money, the cost of capital is super cheap. So that’s why it’s driving prices up of assets. There’s a lot of inflation going on in the stock market and people want to pull out and they want to put into fixed assets. And so whenever there’s demand, there’s going to be price increases. So I do see that happening. We’re getting involved in a lot of different projects from a standpoint of, we’re buying some things that are already existing. And I prefer that because the fastest way to get into cash flow is to buy into cashflow.

Tim Bratz : (31:49)
But we’re also building some things too, because we realize we don’t have as much equity and as much upside in the existing assets as we do, maybe if we build something. So we’re buying some stuff that already has the infrastructure roads and sewers and electrical and all that stuff in place. We can essentially go in and go vertical in a pretty short amount of time and have it occupied. So, we’re doing a little bit of that. We have, I don’t know, probably four or five development deals going on right now. And then we’re figuring out how to restructure our projects. I mean, you and I have had a drink at the bar and talked about how I structure, which is a little bit different than traditional syndication.

Tim Bratz : (32:27)
I buy, typically, heavier value-add type properties that have more potential and ability to push appreciation, force appreciation through the sweat equity. Now there’s obviously some additional risks in that because you got to be really good with management and construction. But I’m able to be and do a $10 million building for 7 million bucks. And then my model is essentially the BRRRR method, buy, renovate, rent refinance. And so, I stabilize that asset in 12 to 24 months and then we’d refinance it at that higher valuation. I get a 75% loan, which allows me to pay back the acquisition financing, pay back all my investors their capital, and then carve up some refinance proceeds amongst everybody.

Tim Bratz : (33:09)
And then we hold onto the property for the next 10, 15, 20 years. Our back’s not against the wall anymore. Those deals are a little bit harder to come by, or they’re more distressed than what I want to deal with right now. So I think the creative entrepreneur, the person who could creatively structure deals and look at things from a different angle and figure out, what do the investors want? They have money. I’ll give you an example. I got a bunch of investors who have boatloads of… they’re selling more houses, they’re in the single family game and they’re making more money than they’ve ever made selling 3, 4, 500 houses. And they have multiple millions of dollars of income and tax liability that comes with that. [inaudible 00:33:47] depreciation and they’re full-time real estate professionals. So now, maybe I can sell them some more depreciation, where I don’t have to pay as high of a pref.

Tim Bratz : (33:54)
I can give them more depreciation in a deal and because of that, I can get into a $10 million deal for $10 million without having to have my back against the wall and create all this appreciation and all that kind of stuff. So we’re doing some more creative things like that and really looking at some different angles of what kind of finance available, what are LPs and are passive investors looking for? What kind of deals are out there? Can we get the seller to carry back 10% of it? Maybe if they’ll do that at 0% interest for 10 years or whatever, however long the primary debt term is, then guess what? Maybe I can pay them $10 million for their $10 million building and not have to try to beat them up on price, or have to take on these heavier value-ads. So, we’re just doing things like that.

Tim Bratz : (34:39)
And going back full circle to your question though, is I’m not looking for home runs. I’m just looking for base hits. If there’s a good deal that comes across our desk, dude, we’re taking it down. I think baseball games are won with base hits, not for swings, not by swinging for the fences. And so we just want base hit after base hit. And you know what happens, is some of those base hits turn into doubles and triples and they do turn into home runs. But realistically, if I just get base hit after base hit, I’m here in the long game just like you are. And so I don’t need grand slams in order to feed my family this year. I just need base hit after base hit because I know, with enough appreciation, enough time, appreciation will come, principal paydown will come. And all of a sudden, we’re sitting on hundreds of millions, if not billions of dollars of equity over the course of the next 20 to 30 years.

Devin Elder : (35:24)
Base hits win games, man. I love it. Especially at this, where we are with whatever’s going on with the market. You’ve built a team, you built the system. You’d taken your lumps many years ago, that kind of experience is irreplaceable and you’re using it now to continue to get into deals. I love it. Absolutely love it, man. Tim, thank you for sharing some of your story here. I know there’s plenty other stuff, we could do a 10 hour podcast, if time allowed. If somebody wants to connect with you, learn about your coaching, learning about your company, et cetera, what’s a good place for them to do that?

Tim Bratz : (35:56)
Yeah, man, I appreciate that. No, thank you again for having me on. It’s always easy to talk to you, man. You’re a great conversationalist and I appreciate all the value that you’re putting out here. Yeah. If anybody wants to connect, just hit me up on Facebook or Instagram and I’m most active on those two platforms, or you could go to my website, legacywealthholdings.com and connect with me there too. Just shoot me a message or let us know how we can help and any resources we can share and connect. Happy to point you in the right direction and offer any insights that I possibly can. So, yeah, buddy, I appreciate you again having me. Thank you.

Devin Elder : (36:27)
Awesome. Thank you for jumping on, Tim. We’ll link to it in the show notes. You guys listening can click that link and follow through there and connect with Tim. Listen, man, wish you continued success and it was great to catch up. We’ll see you soon.

Tim Bratz : (36:38)
Absolutely. Thanks buddy.

Devin Elder : (36:39)
See you.