Welcome to the first interview episode of the Managing Commercial Real Estate Risk podcast. Today, our great guest is Tim Bratz, a real estate investor and coach. In this episode, we dig deep into Tim’s investing strategy and how he manages risks. We talk about seller financing, how to navigate the current state of the market, and preparing for the biggest CRE risks.
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Learn more about Tim and his journey at shineinsurance.com/managing-commercial-real-estate-risk!
“You don’t go to the gym and start benching 300 pounds right away, you have to work your way up.”
Tim got interested in real estate investing in college around 2007. He moved to Charleston, South Carolina and started investing in residential real estate soon after graduating. In 2012, he bought his first apartment building.
Currently, Tim has around 4000 doors and coaches other investors on how to succeed in real estate.
“Anybody can play with the numbers and make a deal look good on paper. You got to do your own due diligence.”
According to Tim, the biggest risk in the current market is the short-term mindset. Many investors are not disciplined enough and force a deal to happen.
Here are ways to mitigate this risk:
- Stress test all the numbers during your underwriting.
- Don’t use flat taxes and be conservative.
- Run the rental comps and the expenses.
In the current sellers’ market, many people buy high. Tim shares his advice on how to succeed in this environment.
- If you don’t have a big portfolio built up and you don’t know many brokers in your area yet, then go off-market. Reach out to sellers directly.
- Find hairier deals in B or C class properties.
- Look around in secondary markets.
“The seller is an investor, right? And they’re already comfortable with their asset and the location.”
At the end of our conversation, Tim talks about how he sets up a deal to make it work for the seller by using seller financing. He asks the seller for an additional 20% on top of what he gets from the lender and essentially makes them the investor. This way he reduces the cost and unlike in syndication, he doesn’t give away almost any of the equity.
About Our Guest, Tim Bratz
Tim began his career in the competitive New York City real estate market working as a broker leasing ground floor retail units. Here, he saw the true potential of real estate to transform lives. Although Tim was limited in means, he spent his time reading, attending workshops, and networking with accomplished entrepreneurs learning that being resourceful was the ultimate path to becoming successful.
With this knowledge, Tim embarked on building his real estate company in Charleston, South Carolina, where he had relocated in search of a better quality of life. Arriving in 2008, after the real estate bubble burst, Tim quickly adapted and using a credit card, increased his limit and then wrote himself a balance transfer check to acquire the cheapest property he could find. Armed with his personal investment and plenty of sweat equity, Tim transformed a rundown duplex and turned a profit on his first deal. He then took those proceeds and reinvested them, while seeking private capital to expand his growing company. Today, Tim still uses this formula for success, which all starts with being resourceful and having the right mindset.
Mentioned in the show:
- Tim’s LinkedIn
- Jeremy’s LinkedIn
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Special thanks to Tim Bratz for taking the time to share so many great insights with us
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