MB 112: Scaling Up from a Duplex to 2,700 Multifamily Units

MB 112: Scaling Up from a Duplex to 2,700 Multifamily Units – With Ivan Barratt

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Financial Freedom with Real Estate Investing

MB 112: Scaling Up from a Duplex to 2,700 Multifamily Units – With Ivan Barratt

Show Notes

“It’s these little things that we do every day that get us closer. I remember climbing a mountain in high school, and the guide told us, ‘Don’t look at the summit. Focus on putting one foot in front of the other, and the summit will take care of itself.’ That’s exactly how I treat business. As long as I know I’m on the right mountain—which I firmly believe is multifamily—I come in here every day and focus on putting one foot in front of the other.”

Ivan Barratt is the founder and CEO of Barratt Asset Management, a real estate investment and management company out of Indianapolis that specializes in the acquisition, redevelopment and management of multifamily apartment communities. Since forming the firm in 2010, Ivan has raised tens of millions in equity, acquired 2,700 units, and grown BAM to a best-in-class management company, boasting $100M in assets under management.

Ivan joins me to explain how he started small with a duplex and 6-unit property, financing deals with hard money loans. He discusses his gradual transition to larger deals, describing his approach to raising capital by building trust with potential investors in the business and medical communities. Ivan shares his ‘mortal sins of multifamily’ as well as the game changers that have allowed him to scale up to 2,700 units. Listen in for Ivan’s advice around doing little things every day to prepare for your career as a multifamily investor!

Key Takeaways

How Ivan got his start with a duplex

Put down as little as possible
Lived in one side, rented other
‘Journey of $10K units starts with first deal’

What Ivan would do differently given the opportunity

Go straight to 20-, 30- or 40-unit deals
Takes same effort to close small deal as large one
Track record and momentum are most important

How Ivan got started with hard money loans

Small multifamily opportunities in market
Great lender put up cash for acquisition, renovation

Ivan’s early 6-unit deal

Evaluated using simple flipper equation
Bought for $150K, $100K in renovations
Refi nine months in to put high-interest debt to rest
Sold for $350K

How Ivan transitioned from hard money to raising capital

Built large pipeline of contacts, ask for referrals
Conversations with people in business and medicine

Ivan’s approach to building relationships with investors

Get to know people through common interests
Explain what you do and treat people well
Deliver value, educate on what good deal looks like
Network multiplies on its own over time

Ivan’s ‘mortal sins’ of multifamily

Tried to renovate project out of cashflow
Viewed property management co as profit center

Ivan’s AHA moment after the crash

Rereading Rich Dad… reinforced cashflow as king
Realized need to build model and scale
Reduced risk for WHEN market changes, not IF

The game changers that have allowed Ivan to scale

View property management arm as a necessary machine (not a profit center)
Bring in a partner for sweat equity, combined forces greater than the sum of parts

Ivan’s advice for aspiring multifamily investors