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September 14, 2021

How To Build Legacy Wealth With Multifamily Apartments With Tim Bratz [EP066]

Are you looking for a way to build legacy wealth?

Tim Bratz is an expert in multifamily real estate and has built his portfolio up to over 4,000 units. He’s created online boot camps and masterminds to help others do the same. You can learn from someone who knows what they’re doing with this guy!

Imagine getting your hands on a step-by-step blueprint that will show you how to create massive wealth through multifamily investing. He describes himself as a blue-collar guy from Cleveland.  That may be where he's from but he's a take action type of guy and loves to share his knowledge with others.  Get this!  Tim just crossed off one of his goals from 15 years ago — he bought an island!  Yes, that's right — an island!

Listen to this episode to learn from Tim Bratz, a guy that started with one small single family and built financial freedom from there!

Table of Contents:

A Take Action Guy Building Legacy Wealth

A Take Action Guy Building Legacy Wealth
Photographer: Jeremy Dorrough | Source: Unsplash

Darin: Tim Bratz lives in Charleston, South Carolina with his family. He started with one single family property and grew to over 4,000 units. He’s a take action guy and he fills his mind with positivity. There’s absolutely no distracting this guy from reaching his goals.

This is actually our first time talking together, but I know of Tim through social media. I've had a lot of people in conversation saying that they've either gone to one of his events or have worked with him. They have nothing but great things to say. So I’m really looking forward to this conversation. The first thing I typically ask is how many properties and how many units are you currently invested in?

Tim: Huge honor to be here, in any way that I can provide value, I'd love to. I'm an open book on any of that stuff. Currently, I was up to about 4,800 doors, 4,840, and I just sold about 800 of them though. I'm hovering right around 4,000 doors. Currently, I'm going to sell probably another 3 or 400 which probably dropped down to 3600 over the next 30 days. Then we have some new acquisitions that are hitting the pipeline as well. So I'll jump up to about 4,000 by the end of the year.

Darin: I want to get into a little bit of your history in terms of how you got into the real estate space. But before we do that, I'm going back to your childhood, where'd you grow up? How many brothers and sisters, were you rich or poor, were you motivated back then? How'd you grow up?

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Jobs the Big Guys Wouldn’t Take

Tim: I grew up in blue-collar, Cleveland, Ohio. I'm one of four kids. My dad was a police officer, my mom had a teaching degree. She was essentially a stay-at-home mom with all the kids. Then by the time I was born, I had two older brothers. My dad worked his way through the police force and they were paying for his higher education stuff. He had earned an associate's degree, a bachelor's degree, a master's degree, and a PhD.

Darin: As a police officer?

Tim: Yes. He was teaching at the local community college. That also turned into some opportunities for him to create a personnel security business for local hospitals, factories, foundries, apartments, all around Cleveland. He would take the jobs that the big guys wouldn't take. And he was like the best of the small guys. He had a part-time business, he worked multiple jobs all the time. I wouldn't say we were rich, but we were middle-class. My parents definitely lived on less to give us more kind of a thing.

That's what gave me some good insights on the hard work and also the Rich Dad, Poor Dad mentality. Although my dad lived more like a rich dad, hey let me start a business and create value, and do some of these things. He always told us to go to work, get good grades, go to school, all that stuff, so you can get a good job. I was always like, "Dad, but you're making money over here. I know this is where the majority of your money's coming from versus 60, $70,000 a year on the police force."

Business Ownership, Entrepreneurship, and Work Ethic

I was like, "You're making a lot more part-time in your business than you are in your full-time job." That opened my eyes to business ownership, entrepreneurship, work ethic, and then just the idea of owning my own business. And that always appealed to me. I never really liked being told what to do. So I always hustled a little bit, created ways to make money, and didn't like working for other people. I would burn CDs, like when Napster and audio galaxy and all these. You can burn music and then turn it onto a CD and I'd sell mixed CDs.

I cut my buddy's hair all the time. I’m like the haircut guy and I'd cut everybody's hair in high school and college. l made some money that way. Then I had some odd jobs and then got into more entrepreneurship, had my own painting business in college. That's what really ignited the entrepreneur piece like, oh, I like this. I call the shots. I'm not answering to anybody. I can dictate what my value is versus somebody else telling me what I am worth and paying me an hourly wage.

Darin: When you first said that your dad was a police officer, I'm thinking, you grew up with a dad who was a W2 guy. But you saw that he was an entrepreneur also. He had these other side hustles and you picked up on that. You're like, “you're actually making more money off these side hustles, off these other businesses,” and that sparks something in you. So at an early age, it sounded like you knew you wanted to go off and do your own thing at some point.

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For Money or Achievement and Legacy Wealth

Tim: Yes, I would say so. I've always been motivated. I don't know if it's for money or achievement or what it was. I wanted to be a doctor for a while. I went through a phase where I wanted to be an attorney because I didn't really understand entrepreneurship and how you start your own business. So I was looking for white-collar professions. Then once I understood, once I got to college, I could go and start my own business.

I can paint people's houses. They pay me this much, I pay the guys this much. I have this much in material and I keep this much in profit. How many of these can I do? And how many crews can I run? When I was in college, everybody was making money in real estate. So 03 to 07 is when I was in college and people were like, get involved in real estate if you want to build wealth.

So I interned for a big home builder. I remember the VP on a Monday morning meeting, because he brought in a stack of 100 bills. He's like, "Somebody give me a good idea." And he was just handing out $100 bills for people who didn't even give good ideas. Even when people with bad ideas, still got $100 bills. I was like, what world do we live in right now?

Darin: I want to be in that meeting.

Tim: I was like, what? That really got me excited about real estate investing. I moved out to New York City after college and got my real estate license. I thought that's how everybody got involved in real estate. So I started brokering leases, like retail leases, office leases.

How Much Money Is There in Legacy Wealth

How Much Money There Was in Legacy Wealth
Photographer: Cole Parsons | Source: Unsplash

Tim: I just saw how much money there was on the ownership side versus the brokerage side. I was like, that's where I need to be. That's when I moved down to Charleston, South Carolina in 2008.

I wanted to become a real estate investor and then the market collapsed. It's good timing though because I didn't do anything stupid. I definitely would have taken out no doc loans and stated income loans if I would've been a year or two older and got into real estate at that point. But fortunately, I got into real estate right at the end of 2008 when the market's collapsing. 2009 is when I bought my first actual rental property.

Darin: Is that where you live now? In Charleston?

Tim: Yes, went back and forth a little bit, I lived in Charleston until about the end of 2012. I moved back to Cleveland for about seven years. Then I came back down to Charleston during COVID. I came back down here and we're here full time now.

Darin: A good market, the Carolinas, Nashville, South Florida, Texas, Phoenix. All great growth markets into today's market, so you're in a good spot. You bought your first investment property in 2009. What did you learn from that and how did that propel you forward?

Tim: Yes, the market back in 2009 was very different than it is today. Today there's an abundance of capital and it's very hard to find deals. Or at least there's not really a lot of low-hanging fruit deals. You got to really search, turn over a lot of rocks in order to find the opportunities, opposite market in 2009. In 2009, there were deals everywhere.

Money Was Nowhere

Tim: You couldn't walk down the street without tripping over three foreclosures that were being given away for pennies on the dollar. At the same time, money was nowhere. At least for a 23-year-old kid who'd never done a deal before, that money just didn't exist. I know banks were still lending, but they were only lending to people with big balance sheets. With a lot of liquidity, who had proven track records in owning and operating real estate. I'm 23, none of my friends have any money. Any money that they're bringing in, they're drinking away at the bar.

My family, although they love me, didn't respect me enough as a real estate investor to give me money on my first deal in 2009. The only person who was lending me money was a guy named MasterCard. I was like, "Hey, MasterCard, I need a raise. And I need an increase in my limit." So I called up MasterCard, they increased my limit from $3000 to $15,000, which is crazy to me. I bought the house on my credit card, I bought it with a balance transfer check. Found the cheapest house in the MLS, and made an offer on it.

It was listed at 25, I came in at 12. They came back at 20, I came back at 14, which is the highest I could pay. They ended up accepting it. That first house, I did all the work. I did it for a lot of the houses, a lot of the properties that I bought. That first one, it was like a learning curve for me, I figured out how to change out the carpet. I figured out how to change out light fixtures, painted it, I landscaped it, I did the work.

How the Real Estate Market Happened to Everybody

Tim: Then I figured out how to sell this thing. I hosted an open house, I put out a bunch of bandit signs. I’ve painted the town with flyers. All of a sudden, I had a bunch of people come out. One of the neighbors came in and bought the house for $33,000. In about 110 days, I made about $14,000 on that deal in the worst housing recession ever.

Darin: Basically, you doubled your money.

Tim: As a punk 23-year-old. What was really eye-opening for me was, the same real estate market happened to everybody. The same argument that some people sank and these other people swam. I was like, how could the same market happen to everybody and some people got rich off of it and other people are going totally broke off it.

That opened my eyes to, it's not about the market and what happens to us. It's how we respond to what happens to us.

What's our business model, what's our business strategy, what's our investment strategy, what deals are we buying? I went through this phase of just studying the people who were worth tens of millions and they went broke. What deals did they buy, what did the business model look like? Then the people who were worth tens of millions and now are worth hundreds or billions of dollars. I studied that in my own local market and then at a national level too. And I realized that many different things and how my business is today is based off of a lot of that stuff.

Darin: Share a few of those things.

Build Legacy Wealth by Buying at a Discount

Tim: One is, I always buy at a discount. I don't pay a real retail price for anything, I always buy at a discount. If you're buying a discount, you have a lot of exit strategies, a lot of different options. Buying a discount was a big deal, buying at a wholesale price. Second, I create appreciation, I don't speculate on it. I create, I force appreciation by putting sweat equity into properties. It's very predictable on the value increase at any of my properties.

I never speculate. If I get natural appreciation on a deal, that's just the cherry on top. But I'm never going to bank on that, buying for cash flow. I don't buy for speculation where I saw a lot of people go wrong. They paid retail price for a property that they thought tomorrow would go up in value. It didn't have any cash flow.

Then when it didn't go up in value and it went down a little bit, they couldn't sell it. They didn't have exit strategies. And they didn't have any cash flow to cover the operating expenses or the holding costs or anything. They ended up going bankrupt. The people who bought for cash flow, that cash flow covered the operating expenses. It covered the debt service and it still put money in their pocket.

So even if values on paper went to zero, they were still able to have value in that. And ride out any economic storm or market cycle, and 2, 3, 4 years down the road they paid down enough principal, property appreciated. All of a sudden, they were able to sell it. Those were a few things, the type of financing you put on it.

A Completely Different Market

Darin: Talk a bit about buying at a discount. Today's market is a completely different market than it was back in 2009. It's very difficult to find a deal where you could buy it at a discount.

Tim: I would say twofold. One, there's always deals and you just have to go through more numbers. It's a more in-depth ratio. 10 years ago, 6 out of 10 deals would have been great deals. Today, it's 1 out of 10 deals. You actually have to go through more numbers and underwrite more deals and cast a wider net. Sift through more trash in order to find those diamonds in the rough.

They're out there, every single day, like the four Ds of motivated sellers, death, disease, divorce, disaster. There's a disaster happening. There was a hurricane that just came through Louisiana. I see pictures of towns that were just devastated. There's people who are taking insurance checks and walking away from their properties. You can go in, pick up those properties for pennies on the dollar and then make some improvements to them, so disaster.

Somebody passed away who's got a big investment portfolio. The kids want nothing to do with managing grandpa's or grandma's investment portfolio. They just want to cash out and they want to go on vacation. Buy fancy cars and stupid liabilities, and they just want a quick solution. There's other people who made money, lost money at other different business ventures. Got kicked in the stomach from the COVID pandemic, and what happened to their other traditional business? They need to get out of whatever their assets are. That stuff's happening every single day. You just got to turn over more rocks.

When to Know It’s a Good Deal

Darin: I was playing golf yesterday and one of my golf buddies was looking to buy some land. The landowner, he owns like close to 400 acres or something. He's an older gentleman who doesn't want to sell. But the kids, they want him to sell. They want their share of that now, so that they can go buy the liabilities. You didn't use this word, but when the market is the way it is today, where you have to sift through more, you also have to be more patient and not chase and run after every shiny object. That's good advice.

Tim: You got to do that. You've got to go through more numbers. You have to be more patient. One of the things, I don't force deals. I stress test the numbers on deals and I try to kill deals. If I can't kill it, that's when I know it's a good deal. Then the other thing is you're going through more deals, you got to get more creative. The second part of this is going through more deals in order to sift through more numbers and figure out what that ratio is.

Then the second part of the deal is how do you get more creative with the deal structure so it does work. It was very predictable on what investment properties are worth. It's all based on the income approach of what is the income minus expenses equals the NOI. A lot of people that I see only look at what are the rents and the laundry income and that's it. Then all the basic expenses. I was actually on a phone call right before this with a firm that does a lot of prop tech.

The New Thing on How to Increase Legacy Wealth

The New Thing on How to Increase Legacy Wealth
Photographer: Sarah Dorweiler | Source: Unsplash

Tim: It's like the new thing of property technologies on how to increase income, decrease expenses. I'm invested in a venture capital fund that does a lot of this stuff. There's a lot of different ways to reduce the operating expenses to create additional value. You could increase the income of a building and it equally impacts the NOI if you decrease the expenses of that apartment building as well. We're always looking for ways to increase the income and decrease the expenses.

Let me give you a quick example on a 550 unit building that I have. I bought it in Texas earlier this year, it's in Houston. It was listed as a $70 million apartment building deal. We looked at it and it was in good shape. It was pretty occupied. We had good financing terms, all that kind of stuff. It was listed with a broker. They were going to get, I think it was in the low $73 million or something. After a couple of years, it's worth $80 million. It's not a smoking deal, it's okay.

If you've got access to money and you want to throw 15, 20 million bucks at this thing for the next couple of years, you're going to get a decent return, but nothing crazy on it. Everybody's like, the most I could pay is $72 million. We come in and we look at it through a different lens. How can we increase our income? We realized that the unit mix was way off. It was 550 units, 100 bedrooms, 200 bedrooms, and 250 bedrooms.

Not Enough Market Demand

Tim: Looking at that, we're like the three bedrooms are rented for almost the same price as the one bedroom. There's not enough market demand for them. They're like 1400 bucks for the three bedrooms. It was 1200 bucks for a one-bedroom. What we realize is a lot of the three bedrooms were townhouse style. About a 100 of them we could take and cut in half and make them two one-bedroom apartments.

Add a kitchen, just cut them in half, put a couple of walls up, add a kitchen, and then separate the utilities. All of a sudden we're able to take something that was only getting 1400 bucks for that square footage. Now we're getting $2,400 for that square footage. It was only a few thousand dollars more per unit in order to turn it over. It’s like extra five, six grand or whatever. So it costs us an extra $5 million dollars.

It wasn't even that much, it was actually $3 million or something. Let's call it $20,000 per door in order to separate them out. But we were able to find something. We were able to come in and be the top bidder or one of the top bidders on that property. Pay retail price for what it is right now, realizing that we can cut these things in half.

Add a $1,000 times a 100 doors to a $100,000 a month to 1.2 million a year at a 5% cap rate, which is what Houston appraises for. You're adding 1.2 million divided by 0.05. Five and a half percent cap rate adds $22 million of value to the property for investing about $3 million.

Something Other People Can’t See

Tim: We saw something that other people weren't able to see. We’re able to create and get into a deal. That is now worth $105 million and we're all into it for like $77 million. That's a deal in the peak of this market that we’re able to still come in and make it make sense. We looked at it through a different lens that a lot of other people weren't looking at.

Darin: You still bought it at what the broker thought was retail.

Tim: Right then and there it was retail price.

Darin: They didn't identify all the different factors that could’ve been used in operating that property in a different way. I love that story. When people first get into the space, they think that everybody underwrites exactly the same. How do you differentiate yourself? You just talked about one way.

I don't know if you've read the book by Sam Zell. He said that he became the top commercial real estate guy because he was creative. At first, you don't really think of real estate as being creative. You think of creativity like arts, music, and painters, that sort of thing. But having to look at a deal and look at it from a different lens can make a huge impact.

Tim: It's a science and an art, this business. There are some hard skills. There's a lot of soft skills of dealing with tenants, lenders, joint venture partners, and private money people. In getting creative on what you’re doing with the actual canvas. What are we doing with the actual property and how can we make it more beautiful? How can we increase the income, decrease the expenses? You make a really good point on that.

Every Deal, You Learn How to Build Legacy Wealth

Darin: Every deal, you learn from it. Either you or somebody on your team probably ran across that type of thing on another deal. Or heard of it from another person that they networked with and heard the story. So that sticks in somebody's mind. Now all of a sudden you take that knowledge and you apply it in the real world. These people that have said that they work with you, they think you're a great guy. You have helped them, and I don't even recall who it was or what capacity. What do you do for helping others in terms of getting into space and learning?

Tim: You know what's funny is my mom was a teacher. I had mentioned that a little bit earlier. She had a teaching degree and she was always very involved in the school district and PTA. Giving, community development, education and kids, and all that stuff. This education, I got bite of that from her. When I started doing deals, I started talking about how I was doing deals, how I structured it. How I raised the money, and how I put this together.

Maybe walk around the house and show on my camera some of the improvements that we're making. It was remarkable how many people reached out. How much engagement that got from people saying, "This is amazing. I want to buy an apartment building. Can I buy one from you?" Or, "I'm a residential broker and I just came across an apartment. I don't know what to do with it. Do you want to buy it?"

The Way To Raise Legacy Wealth

Tim: Or, "I came across a deal and I want to take it down. But I don't have the balance sheet or the way to raise money. Can we partner up in a joint venture?" Or, "I love what you're doing. I'm sitting on some cash. Can I lend you money?" I was getting a deal flow. And I was getting buyers from it. I was getting private money investors. A lot of people started sending me a message saying, "Do you consult? Do you coach? Can you put together an event? Can I come out and pay you to consult with me and teach me this stuff?"

I had so many messages on that front that I ended up putting together a little boot camp we call a Commercial Empire. Just teaching people how to scale into apartments. Not really for newbies. It's more for people who've done a few deals and they're trying to scale into growing their rental portfolio. That's really what I talk about. Here's how we sourced off-market deals, direct to sellers. Here is how we raise private money. Here's how we underwrite these deals. Here is how we structure the financing. Here's how we oversee project management, property management, asset management, exit strategies.

Disposition my business development side of it, how I put my team, and all this other stuff. I have some discussion panels, I share all of my resources, all the people that I do business with. That just turned into thinking I'm going to make a few bucks from it. All of a sudden it turned into more deal flow and more private money investors. Lot of people came out there like the active operators that fell in that category.

We’re Building Legacy Wealth Together

We’re Building Legacy Wealth Together
Photographer: Edgar Chaparro | Source: Unsplash

Tim: They said, "This is amazing. I'm going to go take down a bunch of deals. Anything that's bigger than what I could take down Tim, I'm calling you. Will you partner with me?" I was like, "Yes. Help me get into more deals, help you get into more deals. All of a sudden we're building wealth together. That sounds awesome." Then there were other people who were more passive. They're like, "I love what you're doing. Don't want to do it, but I have money or access to money. Let me just deploy it with you." It opened us up for more private money.

If you've got those two things deal flow and money flow, you could do a lot of deals. Now in order to keep those deals, you need really refined operations. That's one of the other things that education has actually helped me do. It made me refine my operations even more because people are looking at me. They're dissecting how I do things and why I do things. I was like, I need to make sure that the checklists are in place, and the SOPs are in place. The KPIs are in place and all that stuff.

It's been a really, really cool thing. There's been a lot of people that have come through that. Then I have an ongoing mastermind where we're a support network. Like a board of directors for people's business who can't or don't want to take on the overhead for having a big board of directors. Pay a bunch of six-figure salaries. We're available on a daily basis to do a group Zoom call and do Q&A. So that's really it, that's all I do.

Can You Do This?

Darin: It started with people reaching out to you and saying, "Can you do this? I'd like to invest some money to learn. Can you spend some time to push your knowledge off to us?" Is that in Charleston or where do you do that?

Tim: My boot camp is virtual and I do it about four times a year. Once a quarter and it's just a two-day virtual boot camp. Anybody can plug-in from anywhere on those. Then my masterminds, it's mostly virtual, obviously on the group Zoom calls. But we get together about four times a year in fun locations. We're going to be down in Orlando, Florida, right on Disney property in November. We've got a bunch of amazing speakers.

Steve Forbes is coming out to speak and some really influential people. The idea is to cultivate the relationships and cultivate the networking. That's where the magic happens with these groups. It’s by stimulating some ideas during the day in the more formal type setting. Then really set them up for an awesome more social type setting in the afternoon.

This is where the relationships, the breakthroughs, the ideas, the strategies, really happens. Amazing joint ventures, amazing partnerships and more amazing opportunities come from that. We just want to stimulate those environments. It's made a big impact on a lot of people, so we keep on doing it.

Darin: You said you wanted to make a few bucks, you do it, you make some money. But then it sounds like you're a guy who, I made some money on this. Now I'm going to reinvest a piece of it back, make it even better. You bring more value to all the people that keep coming your way.

90% Of Legacy Wealth Built on Apartments

Tim: I'm not like the guru who makes money from being a teacher. 90% of my wealth is built with my apartments. This is like 10%. To me, it's nice, but it doesn't move the needle. But it helps the real estate investment side of our business, obviously. I could take all that money, I can just roll it forward into more resources. More access to the content, awesome ideas, opportunities, and events and all that stuff.

It's fun, and it's cool, and we just have an amazing community of a lot of very giving people. Like I mentioned earlier, I did it to make money and for deals. Now, it's more of an impact piece. I want to make some money myself and then I want to help other people make money. Now it's like, I want to help everybody in my tribe become leaders and impact another 1,000 people.

If I can help a thousand people become millionaires, that's great. I made a billion dollars of value. If I could make a thousand people leaders that then each impact another 1,000 people, that's a trillion dollars in value. That's a needle mover.

Darin: I saw a post with you probably in the last few weeks and you were wearing a shirt that I love. It said goals, set ‘em up, knock ‘em down. I think that just simply writing your goals down, differentiates you from, probably 90% of the people in this world. Talk about what your thought process was in wearing that shirt, putting that together, and your view on goals.

Making Positive Affirmations

Tim: Early on, before you have success, you hear about, making positive affirmations in front of the mirror. Write down your goals, then the universe will respond, very ethereal kinds of things. The good news is, I was broke enough. I just didn't care if it was goofy or not, I just did it. It was better than the situation I was in. So I just wrote down the goals. I went to some conference. Then somebody is like, write out 100 things you want to accomplish before you die.

Or like a bucket list, things you want to see, things you want to buy, things you want to own. What does your bucket list look like? It's pretty easy to get the first 20, 30, maybe even 40 things. It gets hard when you're getting into the 60s, 70s, 80s, 90. What else is there after buying a fancy car and a fancy house? All of a sudden you're like, well it turns into more impact pieces, it turns into more legacy pieces. It turns into more long-term longevity, paying it forward stuff which is cool.

But anyways, on that list, one of the first 20 was to own an island. I wrote down, I want to own an island, I want to own a beach house, I want to own a mountain house. There were some of those material things back in my early 20s. I didn't know how it was going to happen, I didn't have a plan in place. Just wrote it down because they said the universe will respond. I don't know if there's a scientific method, or path, or the secret thing that you attract, whatever you put out there. There's probably something to that.

Working on Building Legacy Wealth Through Apartments

Tim: Essentially, I wrote it down, I knew it was a goal. I knew it's something that I've had in the back of my mind for 15 years. And I just put my head down and started working on building wealth through apartments. I wasn't really looking for an island. But I was looking for some land to come up with a unique Airbnb type of an opportunity, whether that be a beach house or more like a plantation-style house somewhere in South Carolina or coastal Georgia. This 100 acre plus parcel popped up.

I can't find the address on this thing because it was an entire island. It’s 110 acre island with 350 acres of marshland around it. It had a single family house, and a dock, and infrastructure, and all that stuff on it. I was like this is it, I can't not do this. I’ve found it on Zillow two months ago and I'm thinking, this was put in front of me for some reason. The price point was not that bad.

It's mainland United States, it's right next to Hilton Head island. I'm looking at Hilton head island from my island. It's 110 acres, like Richard Branson's island's 74 acres. This is a pretty decent-sized island. I'm thinking, I can't not do this. I got to take this thing down. Ready, fire, and then aim kind of thing is usually how I operate.

I like putting those constraints on myself, I like contracting something and then figuring it out because it creates constraints. Before, constraints used to happen to me. The lender would back out on Friday before a Monday closing. I got to go and raise $4 million over a weekend.

Putting a Business Plan in Place

Tim: Whenever there's a constraint, I have these big leaps forward in business and success and opportunities and stuff because of these. When you get uncomfortable, all of a sudden you have these big breakthroughs. So now instead of constraints happening to me, I try to create the constraints myself. That was one of those things that I did. I just contracted it and I was like, I'll figure this thing out. And I went and structured the money. I raised the capital and put a business plan in place.

And I didn't know how I was going to monetize it, but we figured that out. Just by talking with friends, talking to people about it, visiting the island a few times, doing all the due diligence. We closed on it last week actually. Contractors are cleaning up the existing infrastructure. We've got a great plan in place, to meet with the city next week.

You don't really know how you're going to get there. But the more important thing is to know what the destination is and then you'll figure out the path. If you know the destination, then you can create the roadmap in order to get to wherever you want to be.

Darin: First of all, congratulations, that's an awesome story. You're the only person I've interviewed that has told me that they had a goal of buying an island and they did it. But you said a lot of great things there. When you're writing your goals down, you're writing down where you want to be, the destination. Somebody had told me a story about goal writing.

Write Down Those Goals

Darin: Just imagine going to the airport and showing up at the ticket counter. The lady says, "Where do you want to go?" And you say, "I don't know." The airline attendant is not going to be able to write you a ticket, without you telling them where you want to go. So many people in life, they may think that it's time wasted to write down those goals.

But if you don't write them down, a week goes by, a month goes by, three months goes by. A year, 2, 3, 5 years and you didn't get where you wanted to go because you didn't have that focus. The other thing that you said was being uncomfortable and figuring it out. There's a lot of people and I'm sure that you run across this. You have to advise people on the real estate side.

A lot of people want to know all the answers and have all the ducks in a row before they pull the trigger. At some point, there's a leap of faith that you're just going to have to do it and then figure it out. You're not going to know everything. It's not going to be all on a silver platter for you. So, from one house in 2009 to over 4,000 apartments.

Tim: Some blue-collar kid from Cleveland, Ohio. Well, if I can do it, anybody can do it.

Darin: You're obviously a man of action. That differentiates you from other people that may be afraid. Talk about fear.

The Worst-Case Scenario

The Worst Case Scenario
Photographer: Hennie Stander | Source: Unsplash

Tim: What’s the worst-case scenario? You brought the word fear. Fear's in the exact direction that I wanted to go with this. You think about fear. Fear actually releases hormones in your body that tell you fight or flight kind of a thing. Get scared, don't go down that dark hallway, don't do anything that could put you in danger.

That made sense, because fear is something that we feel in order to keep us safe. It's something that has been instilled for 3 million years since human beings have been on the planet. We needed fear to not walk down the dark wooded area during the last polar ice cap. A saber tooth tiger could jump on your neck and eat you, fear saved you from actual danger. Fear, we have associated it with danger. Now, a lot of danger is not there. But we still associate anytime we get the feeling of fear with life-threatening danger.

Let's talk about buying a house. You buy a house, you feel fearful. People have the same hormones going through them as if they're getting attacked by a saber tooth tiger. As if they're going to die. At the end of the day, if you buy a house for $100,000 it's a $100,000 risk. Is it? Or is it, even if you sold it and you fire sold it next week at a loss, you could still sell it for probably $90,000. It's a $10,000 risk not a $100,000.

Reclassifying things like that, realizing fear is not real, fear is the exact same thing as faith. They are both believing in something that's never happened. They're both believing in some set of circumstances that has not yet occurred and may never occur.

Faithful Instead of Fearful

Tim: The difference is, fear is negative and faith is positive. And if it's just a story in our head, guess what, that means we're making it up. It means we get to choose whether we want to be positive or we want to be negative. If you had a choice, just go down the road of being positive. I would rather be faithful, instead of fearful.

I'd rather look at, don't buy that apartment because the contractor could burn you. The seller is probably lying too. The tenants are all going to move out and the city is going to be on your tail. You could lose a bunch of money, I could also get rich. I could also build wealth, I could also create cash flow that allows me to retire my wife. That allows me to retire my parents, that allows me to send my kids to any school I could ever imagine. To live a lifestyle and visit places that people only read about in magazines. I'd rather focus on that stuff rather than focusing on the negative stuff.

Darin: You said the worst-case scenario and that's been a common theme. I've heard from different, very successful real estate investors that they think to themselves, what's the worst thing that could happen here? Can I live with that? Most of them are like, you know what, I could live with that. Then they'd look to mitigate those risks and then they think of the upside and the upside is so much better. So why not go for that?

Having That Momentum to Build Legacy Wealth

Darin: When you're talking about fear, it made me think of high school football. If you're running at the opponent and you slow up, you're going to get more hurt. More than if you are going full speed, and drive completely through the other opponent. That doesn't really make sense to a lot of people.

You slow down, you're being careful. But you could actually get clobbered that way versus driving through and having that momentum on your side. That's what you've done since buying that one single family. You focused on trying to keep your mind positive. That has created this massive momentum, that has completely snowballed in a good way.

Tim: I think it's two-fold. A lot of people think I need to add all this positive stuff to my life in order to have success. That is part of it. But equally as important is removing the negative stuff, removing anything that's holding you back. Any toxic relationships, toxic thoughts, toxic philosophies. If you remove the negative, just by universal law, something's going to go and fill that void. Chances are, it's going to be more positive, more optimistic, and better for you than whatever the negativity is that you're removing.

Eliminating, that's one of the things I've been very intentional about. It’s getting rid of all the negativity, getting rid of bad relationships, getting rid of toxic people in my life. Anybody who talk smack about me on social media, if it's constructive feedback, absolutely I'm going to engage and talk with them. I think that's healthy. If it's just negativity, they're just trying to pull you down, I don't have time for that. Life's too short and I just remove that all altogether.

Remove the Negative, Add the Positive

Tim: I've removed a lot of the negativity from my life. I don't watch Desperate Housewives. And I don't watch stupid and mind-numbing type of TV. I don't listen to the gangster rap that I used to listen to back in high school and college. Now I listen to things that are more positive, more optimistic, more insightful, and uplifting. So I do that with TV, I do that with music, I do that with relationships. I do that with business, I do that with everything that I do. So I try to remove the negative and add the positive.

Darin: Yes, this is a real estate show, but this is real mindset stuff. Because the biggest stumbling block for most people is between your ears. It’s your mind and what you are putting in your mind, positive or negative. The other thing is surrounding yourself with people that have done what you want to do. Your mentors, people that you look up to probably have changed over the years.

Like when you bought that one-unit house, you were looking at one person. Now you're at a completely different level. You're probably looking at somebody completely different. That's so important because a lot of your friends and family may not have done what your dreams and your goals are. They could have good intentions, but they could talk you out of going after what you want. If you can get around the right people that can encourage you, that's huge.

The People Holding You Back

Tim: There's people in your life that don't know they're holding you back. They're not meaning to, they're not doing it for a reason to try to hold you back. My dad is my idol. I've looked up to him my entire life. It's a protective instinct, he's been, he’s shoveled crap for a long time in his traditional business. He had to go and miss less for me and my little sister, but more for my older brothers. It's like he sacrificed a lot of family time in order to go and build the business, and go to school.

It was work all the time. I remember some people no-called, no-showed, their job or their responsibility on Christmas morning. My dad had to go in and cover that shift. He knows how stressful and difficult it can be to grow a small business. He’s always like, just go get a job. Just go be safe and go do that. It wasn't that he didn't believe in me or that he didn't want me to have success or be an entrepreneur. It was just like, I think he knew how difficult it was for him.

Some sacrifices would need to be made in order to build a successful business. Whether he thought it was worth it or not, or just didn't want to see his little boy go through a lot of those same sacrifices and hurdles, is part of that. I say that because there's other people who, you've got family members? People you love, people you respect, people that care about you and you care deeply about as well. They are saying, "Just calm down, lay off the gas, pump the brakes, play it safe, play it cool."

Questions Will Lead You Down the Path of Legacy Wealth

Questions Will Lead You Down the Path of Legacy Wealth
Photographer: Patrick Fore | Source: Unsplash

Time: What does that mean? Is that being, play it small? Does that mean don't push my limits of what I think I can achieve? I understand where they come from and I respect them and I appreciate them. But I also understand that, that's the space that they're coming from. I'm not going to let that influence me. There's not a lot of people who think for themselves, unfortunately.

You got to be emotionally intelligent, ask a lot of questions. Asking a lot of questions will lead you down a path of asking better questions, more progressive questions. Getting more answers, better answers, more progressive type answers to whatever your hurdles are.

Darin: You mentioned sacrifices. What sacrifices did you have to make as you were growing this business?

Tim: I've always been pretty intentional trying to separate family time from work time. That way, I'm more present with family. Like right now, I moved to Charleston, South Carolina. I don't have an office here. My desk is in my living room and my son is right there playing as you and I are talking. If you can hear him in the background, he's like, "Daddy, will you come play with me?"

As much as I want to go and play, I need to differentiate. In order to own a house on the beach, and own this and own that, I got to be in the zone for at least six hours a day, four days a week and doing work. It's hard for him to differentiate that in his mind. He thinks daddy's home, daddy should be playing.

Darin: How old is your son?

Tim: He's four.

Darin: That's tough for a four-year-old.

Sacrifices From a Team Building Perspective

Tim: That's been really hard on me, I just need to leave the house. But then, traveling to a coffee shop, ordering coffee, then sitting there and not having the right internet connection, all this other stuff. It's an extra hour of my day that I'm not here or I can't be doing business. It is all that stuff that I just make it easy and do the work here. But then he's looking at me right now. I see you, buddy. I'm going to complete a puzzle with you in a minute. That's tough, at least on me. Hopefully I'm present enough when I'm not here working that he appreciates that.

But I think sacrifices from a team building perspective of being a bad manager, being a bad leader early on. Not screening my team properly, not training my team properly, not measuring their performance properly. Like essentially saying, "Welcome to the shit show." I could say, "Good luck and figure it out." And, "This is how we work in a small business." I burned out a lot of really good people that way, unfortunately.

Some great people who I would have loved to have on my team still today, and I wasn't a good leader. I think that's a natural growing pain. Do I regret it, do I not regret it? Would I change anything? I wish I would have been better. But I wouldn't be where I am today if I didn't go through some of that stuff.

Being a good steward of capital is because I messed up. It’s because I bought a Mercedes when I didn't have the money to buy it. Because I joined private clubs when I didn't have the money to join them.

Legacy Wealth From a Sacrifice Standpoint

Tim: I went on vacations to exotic places when I didn't have the money to go to those places. I’ve done all those things and messed up really bad and learned from those experiences. As long as you learn, it's okay to do some of that stuff. But from a sacrifice standpoint, I try to be very vigilant with my time, how I spend my time, and where I spend my time. When I'm in the zone working, I'm in the zone working.

My family knows that, they try not to interrupt me. If I'm hanging out with family then I try to be 100% in the zone with the family. Not checking the phone, not checking email and doing all that stuff. I'm not perfect with it, it spills over. But just being conscious of it, understanding that it's something I want to work on, I'm trying to work on, is better than not doing those things.

Darin: You've had a ton of success. But you're very upfront that you've had lessons learned along the way. You've tripped up, some things you've goofed up on. We are always learning and trying to get better. There's no final destination. It's like when one thing you're trying to get better in another area, or just try to improve in certain areas.

But sacrifices, when I think of people who are either trying to break into real estate space or they're trying to scale, you are going to have to sacrifice something. It may be that, yes you have this income, but you're going to live off a much smaller percentage of it. So that you can siphon off some money so that you can get into some deals. That's a sacrifice.

Invest Time if You Want to Grow Your Legacy Wealth

Darin: A lot of people want to have nice vacations, have nice cars and nice houses. Then they wonder why they're stuck in a W2 job forever. Every time they get a raise, they're up there, they're spending.

I've talked to others where they're like, "Well, I saved my W2 job and I wanted to have a family life. When the kids went to bed, I would underwrite a ton of deals, putting offers and that sort of thing." Somewhere along the line, you're going to have to invest time if you want to grow your wealth in real estate. You're going to have to figure out where that's going to come from.

Tim: Sacrificing sleep is definitely one that I've done. I work in the middle of the night. I'll put the kids to bed, fall asleep, wake up at one, two o'clock. Work for three hours and then go back to bed. Because then you don't have the distractions of, I'm not talking about family. I'm talking about emails, ping pong, back and forth when people reply.

I get most done in a few hours in the middle of the night versus six hours in the middle of the day. Then I would say I sacrificed a lot of the TV shows, movies, and stuff like that. Going out, partying, and a lot of that early on in my 20s, when I was trying to build the business up. When a lot of my friends were drunk at bars and chasing girls around and stuff, I was just focused. Not saying that I didn't go have fun and do those things, I just didn't do it as much.

What Freedom Means

Tim: I didn't do it four days a week, I did it one day a week, kind of thing. There's definitely sacrifices, but it's not anything that you're going to miss a year from now.

Darin: You've been extremely successful and I'm sure you're thankful that you made those sacrifices. At the moment there were other people that were enjoying going out four days a week. That's what they wanted to do and that's where they spent their time. Can you talk about freedom and what that means to you? Then two, with all your success, you really don't need to be building all this legacy network and helping other people. Talk about freedom and about why you still do it?

Tim: Early on, when I was naive, I wanted the fancy material type stuff that's why I pursued money. But as I became more aware, I realized it's not about what the money can buy. It's what it can do, and the options that it can give you. Where do you want to send your kids to school? Does your spouse want to work or not? Can you travel?

Instead of being handcuffed to a desk or a W2 job, can you go and travel the world for two months, three, five, six months, whatever? It gives you options, it gives you a lot of different opportunities that you could pursue and a lot of different freedoms. I'm an entrepreneur, I like the limitless income potential, but really for the freedom. For not having anybody else tell me what to do, and being able to dictate what my schedule is.

Darin: You still work really hard but you get to do it on your own terms.

The Legacy Wealth Piece of Why You Do It

The Legacy Wealth Piece of Why You Do It
Photographer: Joel Moysuh | Source: Unsplash

Tim: I couldn't imagine, as a grown man asking somebody else if I can take my family on a vacation for a week. Asking somebody else if I can leave the office at five o'clock, if I can go take a leak in the bathroom midday. As a grown adult, can you imagine, I couldn't even fathom that at this stage in my life. There's people who do that, and it just boggles my mind that you are a grown adult. Anyways, the freedom piece is very important to me.

The legacy piece of why you do it, I haven't overcome major sacrifices in my life. I was raised with two parents who love the hell out of me. They lived on less to give us more. Sent us to school, paid for my college, gave us opportunities. We weren't rich, but we were never hungry. There's people who have overcome a lot more than me in their life. I don't really have a reason to not be successful. There's other people who could use their shortcomings in life as a crutch. I don't have that.

There's other people who have sacrificed a lot, people I've never even met and fought wars. Relatives who traveled to this country that I never knew, and sacrificed. My dad working his tail off, my mom working her tail off, I don't have an excuse to not be successful. I need to be successful in order to pay homage to them for all the sacrifices they've made. That's one driving factor. Another one is, there's not enough leaders in the world. There's not enough people making enough of an impact.

What Can Opportunities Look Like

Tim: I want people to realize if a blue-collar kid from Cleveland could do this stuff, what can those opportunities look like? People are like, "It's such an inspiration that you bought an island, I need to level up my goals."

I love that stuff because I love helping people see themselves as more than what they could see themselves as without me helping them. They're able to see themselves as being more, achieving more, doing more, making a bigger impact. That's like the stuff that feeds the soul now.

Darin: There's a piece that builds wealth and gives you that financial flexibility and freedom. But there's another piece that feeds the soul and being a good human. Impacting others and seeing how something you did helps somebody else achieve something. You may not get paid for that, but that just pays you internally so much. What do you like to do outside of work?

Tim: I went for an hour-long walk on the beach this morning with my dog.

Darin: Tough life, the violins are playing for you right now.

Tim: I like being out in nature. Anything that I can be outside, active in nature, that's what I love to do. When I'm back in Ohio, I'm walking in the woods all the time with my dog and hanging out there. I'm down here on the beach, I'm on the paddleboard. We just got a little pontoon boat for the island. I've never been a big boater, but I'm trying to get out of the water a little bit more, it's fun. I'm getting to fishing.

Leaving Legacy Wealth and Life Lessons

Tim: My kids are at an age where they're just like learning all the time. So my daughter learned how to ride a bike last year, and she also learned how to swim. She learned how to cast a fishing rod last year and work on some of that stuff with my little guy too. Those are life lessons. How to ride a bike, how to read, how to write, you learn a lot at the age of five that sets you up for the rest of your life.

Realizing that, seeing that with my daughter and knowing that my son is like on the verge, on the cusp of that is fun. I want to make sure that I'm there for that. Just going out and hanging out, having fun. I like playing sports more than watching sports, I love hanging out, just talking shop. Having a beer and just talking about business, about life, about philosophy, about logic, reason, ideas, all that stuff. That's interesting stuff for me.

Darin: If somebody wants to reach out to you or learn more about you, what's the best way to do that?

Tim: I'm very active on Facebook and on Instagram. I have a YouTube channel called Legacy Wealth. We're putting out a couple of pieces of content per week on there. Some really good stuff. I'm on TikTok even, I'm on LinkedIn. Just find me on any of the social media platforms and hit me up on there. If I can help anybody, I'd be happy to point you in the right direction. To share some resources, and connections or whatever that looks like.

It Starts With One

Darin: Do you have a website also?

Tim: Yes, legacywealthholdings.com

Darin: Tim, really appreciate you coming on the show. It was great to get to know you more and what a great story. How old are you now?

Tim: 36.

Darin: So listeners, it starts with one. You got to get your first investment property. Then just continue learning and let that momentum take you forward. Tim, again, thanks for being on the show. Listeners, I hope you enjoyed that one until next week, signing off.

How to Reach Tim Bratz

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Darin Batchelder

Wealth creation through real estate provided me with a new passion to get the word out and let others know that they have an alternative to investing in the stock market.

If I can inspire and educate just one person to take action that results in life changing wealth creation then the work to launch and grow this podcast is well worth the effort.

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