Episode #100 – Mindset Secrets To Commercial Real Estate Success with Tim Bratz

You're listening to the “REI Marketing Nerds” podcast, the leading resource for real estate investors who want to dominate their market online. Dan Barrett is the founder of AdWords Nerds, a high-tech digital agency, focusing exclusively on helping real estate investors like you get more leads and deals online, outsmart your competition, and live a freer, more awesome life. And, now, your host, Dan Barrett.

Dan: All right, hello everybody, and welcome to this week's episode of the REI Marketing Nerds podcast. As always, this is Daniel Barrett here from AdWordsNerds.com, and this is our 100th episode. Ladies and gentlemen, this is Episode 100. I cannot believe I have done a hundred of these. [01:05.5]

That completely blows me away, and before I continue, because I have an excellent, excellent episode for you today, I just want to take a moment to say thank you. Thank you for listening to the show. If you have been with me since the very beginning or if you are just joining in, I appreciate you, and I have had an incredible audience for the show since the very first day I started and it just means the world to me. It means the world to me, and I take your time and your decision to listen to me very seriously, and I just couldn't be happier to have you with me.

I won't gush any further other than to say thank you for being here and what better way to celebrate our 100th episode—our 100th episode, which is completely mind-blowing to me—what better way to celebrate than with today's interview. I am interviewing Tim Bratz from LegacyWealthHoldings.com. [02:10.9]

Now, if you don't know Tim, Tim is kind of in the multifamily and commercial real estate space, but he has an extensive history doing residential investing. He is getting into writing books. He is all over the place. And the thing that I love about Tim, first of all, really easy guy to talk to, really funny, really friendly, just a really awesome person all around, but the thing I love about Tim is that Tim is incredibly thoughtful, not just about the tactics of what he's doing, but why he does what he does. He thinks about mindset. He thinks about philosophy. He thinks about his purpose. He thinks about the impact that he's having on the world, and he brings a truly refreshing and unique take to real estate. So, I couldn't be any happier that Tim is the interview that landed on this episode, our 100th episode, and I couldn't be any happier for you to hear it. [03:07.8]

Without any further ado, let's get into this 100th episode, my interview with Tim Bratz from LegacyWealthHoldings.com.
…
All right, I am here with Tim Bratz from LegacyWealthHoldings.com. Tim, how are you, man? Welcome to the show.

Tim: Dude, excited to be here, Dan. Thanks for having me, man.

Dan: I couldn't be happier. You came. So, Lou who's someone who works with me at AdWords Nerds, he'd spoken with you before. He saw that you were on my calendar for today and he was like, Tim is super nice and very funny. That was the intro I've got for you, so I'm going to expect you to deliver on this podcast.

Tim: And very funny. Is that what he said?

Dan: Very funny. That's what he said.

Tim: All right.

Dan: So I was like, Yeah, it’s going to be great. For those who don't know you, because I have kind of a broader understanding of who you are, probably not as deep as we're going to get on the show, so I'm pretty excited to learn a little bit more about what you do. [04:04.8]

But you are kind of involved in a variety of things in real estate and I will say you're also someone that does a really good job of leveraging the online space. So, for people who don't know you, aren't familiar with you or your business, give us the, kind of a little bit of context on who you are and how you're involved with real estate investing specifically.

Tim: Yeah, man. Again, thank you again for having me. I love all the value that you're always putting out there, so appreciate you. As far as when I got started, I got started, I was going through college ’03 to ’07. Everybody's making money in real estate. You're like, you’ve got to go and make money, get involved in real estate. That's what motivated a 20-year-old kid. So I jumped in real estate in 2007 and I got involved the way that I thought everybody got involved in real estate, by becoming an agent.

I'm a kid from the Midwest. I'm from a blue-collar town outside of Cleveland, Ohio. I moved out to New York City just because my brother was living out there at the time, and ended up getting a real estate license and working for a commercial real estate brokerage. [05:00.3]

Dan: In the city?

Tim: In the city, in Manhattan, yeah, a little boutique shop, and they handled a really retail leasing and office leases, and a little bit of investment sale. But, listen, that sounds more complex than what it really was. I was essentially a workhorse, right? I'd go and canvas neighborhoods and look for businesses that want to either expand, find another location, or I'd look for vacant retail space and I handed it off to somebody who knew what the heck they were doing.

So, I ended up just kind of doing the marketing side of things, but I learned enough about it where I closed the first deal and it was a lease in Greenwich Village and at the corner of Bleecker and Thompson, 400 square feet, signed a lease for 12 years at $10,000 a month. About 400 square feet, and I'm like, Holy cow. You start doing the math on that and you're like, This guy, the landlord, is going to make almost 2 million bucks off a 400 square feet for that over the next 12 years by doing something one time, and I'm like, Holy cow. [05:59.6]

We all hear about residual income and then we know about passive income and this mailbox money, and the myth or mythology of it, and you're like, That's why I want to get involved in real estate. But then I think we all get stuck in this transactional trap, right? And so, I'm like, I need to be investing.

So, I moved down to Charleston, S.C., in 2008, and I get go through the whole analysis paralysis phase, and I realize I'm going to start wholesaling, single family and doing a lot of that kind of stuff, and I got stuck in the transactional rat race and was flipping houses, wholesaling houses, invested or eventually got some private money lenders and started building up a small single family portfolio and about 10 houses. By the time I was 25, I was financially free. I wasn't rich, but I had enough residual income created where it covered all my recurring expenses and left me with a thousand bucks a month. I'm I figured out, but then I went down the path of--

Dan: How old were you at that point?

Tim: Twenty-five.

Dan: So, at this point you hit that one, that 1,000. You were 25?

Tim: Mm-hmm.

Dan: Okay. So, $1,000 a month when you're 25 is like $10,000 a month, right? [07:05.6]

Tim: Exactly. Right. I can eat as much ramen as I ever want. I just ate it, you know?

Dan: That’s healthy.

Tim: No, but I ended up then getting invited out to a home meeting. I'm going with this, right? So, I'd go out to this network marketing meeting and the guy in the room, he's like, Oh yeah, this great business, but it correlated really well with real estate. It was home services, TV, internet, phone, the natural gas and those services, and I'm like, what? I have 10 rentals, right? I'm getting residual income here. I'm going to go visit, welcome all these other services, da-da-da.

I ended up being one of the top 1% of performers in this marketing company, but I made zero money two. In two a half years, I made $60,000, right, and I am selling nine of my 10 houses and I just drove myself into crazy amounts of debt. I had $25,000 of credit card debt. I had 80 bucks in my bank account.

Dan: Wow.

Tim: Legit pain for gas with the coins out of the cup holder of my car. I don't know if you’ve ever bought gas with 92 cents before, but it’s really embarrassing, dude. [08:05.0]

Dan: Yeah…

Tim: Like eating peanut butter out of the jar and just borrowing money to make the minimum payment on my credit cards. It was just terrible.
And so, what got me out of it, in August 2012, September 2012, I was like, I’ve got to go back to real estate. I had to figure it out. Two years ago when I went completely broke, my situation had totally spun on its head and I ended up… What saved me was real estate. I sold my primary home, which had about, I don't know, $60,000 worth of equity in it in Charleston, and I ended up moving back to Cleveland, Ohio, and moved back in with my parents, but at least I had this cash, this chunk of cash where I was at least able to pay all my expenses and kind of get my feet back underneath me.

There were a couple of guys that I met in that network marketing company that said, “Hey, we got into this. That way we can get into real estate. What if we put up some money and you do the work?” and I ended up creating this collaboration in late-2012 with these guys and we were partners for about four years. It was good. Got me up. I made them a lot of money. I was able to kind of get my feet wet and go through the learning curve through that. [09:01.7]

Then, eventually I became very valuable and they became less valuable to the operation, and what happened was we just didn't see eye to eye and we couldn't come to an agreement moving forward. So, we decided to liquidate about 140 units in 2015, 2016. I started building my current portfolio, which actually just as of Monday surpassed 4,000 rentals, about $350 million of value.

Dan: Wow. And you still pay with gas with the change out of your…

Tim: Yeah.

Dan: To keep yourself humble every time you…

Tim: Yeah, just to keep myself aware of where it all started, right? I’ve got to fill up gas every two days.

Dan: It's funny, I remember I heard this lady, I can't remember who it was now for the life of me, but I remember there was some podcasts interview or video or something she was on, and she was saying the one thing that she always did, she was like, Oh, even when I was broke, I was trying to fill up my gas tank because it's like the psychic weight of knowing you don't have a full tank of gas really affected her and it really made me think. [10:04.1]
It really is like there's some on your card or whatever, you don't have money and you put $4 in it or something weird, and I don't know, it's this weird sense of anxiety. It reduces your personal…

Tim: Yeah, your personal self-worth. What do you value yourself at?

Dan: Yeah. There’s something that's interesting to me about that story and I really like to see the patterns among all the people that I interview, right? You did something which I think a lot of the really successful investors that I've spoken with have some variation of this theme, which is you basically set it up where you could learn and earn on the job at the same time. So, you were trying to get back into real estate. You sort of tapped your network to put this partnership together, and even though you were the one doing all the work, what you're doing is accruing this knowledge capital the whole time.

Was that deliberate? Were you always like, Okay, I'm going to learn this here and I'm going to break off on my own, or was that just like, I need to survive that and this is how I'm going to put it together? [11:05.4]

Tim: Yeah, I would say it was probably more survival mode. When you're that broke, dude, I value myself at essentially… Here's what that partnership was. They got 67% of the company. I got 33% and a $3,000-a-month salary. That's all I asked for. I was like, Dude, I just need three grand a month. That's what I valued myself. That was $36,000 a year in 2013 and 2014, right? Because of just the, I don't know, self-deprecation of being like, I'm not worth it. I need to earn it. I need to wait for somebody else to anoint me as worthy, right?

And so, going through that whole thing, eventually what I realized is like, dude, I'm working my tail off here, man. I found this. I'm the one who's getting the phone calls. I'm the one that's collecting rent. I'm the one who's negotiating with sellers and brokers, and creating the value. I created value in some inanimate object, and then I sold it and the value that I created there, I think somehow kind of reflected on like, Wow, I created the value, so I must be more valuable now. Actually, I never even thought about this until talking through it right now. [12:10.8]

Dan: Yeah.

Tim: But I think those little victories of mine early on helped me grow that. Then, all of a sudden, people were knocking on my door saying, “Can I give you money?” Hey, I'm sorry. I have an exclusive partnership with these guys. “Hey, Tim, can we partner up on this? Hey Tim, can we do that? Hey, Tim.” There were a lot of little things, a lot of little things of why that business partnership didn't go well, but I wanted to invest in more and get better, and they didn't want that. It was almost like they were trying to suppress me.

They took the salary away, and then, all of a sudden, there were no distributions, even though we made money on paper, all of us. And I have a tax liability; I can't pay my tax liability. Then they didn't want me to work any other jobs or businesses, and then I had a kid on the way and there was a lot of little stuff, man, that then added up to this colossal breakup.

We had to liquidate at about 140 units. I don't know if that put up a million, a little over a million bucks. It turned into $5 million, maybe $4 million of property. Today it’s worth probably 10 million, right, because values have gone up so much. But I made them millions of dollars and they were just keeping me down kind of a thing. [13:12.5]

I think, eventually, when you keep somebody down that is meant to fly and spread their wings, there's going to be some sort of eruption that occurs. And, dude, it was stressful. That was another press of the reset button, right? The first one was when I was totally broke, press the reset button, but at least I had the knowledge, right? And then, I go through this for three, four years. I press the reset button again. We had to liquidate the whole portfolio, but I still had the knowledge, and that's something that you can never take away, because if you're working harder on yourself than you even do in your business, dude, that's an investment. That creates a return.

And that's why over the past periods, it's been less than five years, it's been 60 months and I picked up 4,000 units, $350 million of property because of all the struggles and all the learnings that I did with 10 years previous, and it put me in a position of where I am today.

Dan: It's so fascinating to me and I do think, because I was talking to someone recently and they were like, How do I…? I want to start a business. They're working a regular job and they're like, I want to do something outside and want to make money. [14:13.2]

And I'm just kind of like, Oh, they know that I've done that, so I'm like, Okay, let's just talk through it. I'm not a business genius by any means. Business isn’t my natural inclination at all. But I'm like, All right, I've done this, so let's talk through it.

We were having this conversation and it's becoming more and more clear to me that there’s this huge gap between how I view this and how you view this, because I've done it a couple times now and I know that if a hurricane came and destroyed everything that I owned, I could start over tomorrow and my time from 0 to 1 would be a fraction of what it was the last time, which was a fraction of what it was the first time. It's just like you're like, Okay, I kind of know how this works and just having the confidence of “I did it once,” you view the whole risk of it very differently. [15:04.3]

It's interesting because I'm going to ask you a little bit later in the interview about kids, because we were talking that you're kind of working with kids specifically in the space, which will be interesting to get to. It kind of made me think about what you were going through and you were realizing your value for the first time. We have this whole thing of we want to teach kids self-esteem by telling them that they're great, which can be objectively true, but, to me, it's like you only get self-esteem by being able to look back at a track record of having done stuff. Right?

My son just learned to ride his bike. He's six. He learned to ride his bike without the wheels and, yeah, it took him two days or whatever. It wasn't a big deal, but you could see every single time he went a little bit further on the bike, he got a little bit more confident and a little bit more confident. Now he's like, Yeah, whatever, it's no big deal. He's going to ride off a ramp or something. And I'm like that's how you build that self-valuing sense of self-worth and it's literally exactly what you did. You just made everybody else a bunch of money, and then you're like, What about this guy? [Crosstalk] [16:10.5]

Tim: Why not me? Yeah, I'm waiting for somebody else to tell me I'm worth it and I'm like, Dude, it's my turn. I'm tired of suffering. I'm tired of struggling. I'm tired of going through all this garbage. And it's only going to come from internally, right? My mom has always been like, Oh, you can do whatever you want. You're so smart, Timmy, and da-da-da. That’s good and builds up some confidence, but you're a hundred percent right. You have to have this. It's these little victories.

But it's kind of a chicken and egg thing, right? How do you win if you've never done it? You don't have the competency to do it, and then how do you get that victory if you don't even have the competence to start? So, you have to have a little bit or at least just an “I don't give a crap” in order to jump in.

But here's what I think about and obviously we can talk about technical stuff, but I read a lot of stuff now on fulfillment and reaching the highest peaks, and wisdom and that kind of stuff. I just read a book called, what is it? Five Things You Need To Know Before You Die or something like that. [17:06.0]

One of the people in there, and they’ve interviewed all these people that were perceived as wise people in whatever parts of the world that they live in and they asked them all these different five questions, and they got these really unique answers and a lot of collaborative type answers, too. One of the questions was and one of the people said, “I look at the best case scenario and I look at the worst case scenario,” right, and it’s that simple. You look at the worst case scenario with launching a business or with buying a piece of real estate, and you think, What is the worst case scenario? I don't know, I lose it and I go bankrupt? Is that the worst case?

But here's the thing. We correlate and the hormones outside of our head create fear that correlates with death, right? We have fear hormones that get released when we're scared that we're meant for survival instincts back, whatever, 3 million years ago, and those same hormones, although it's not real danger, it takes those non-dangerous things that because we're fearful of them, it releases a hormone that associates whatever you're doing with death, and so, we think that we're going to die from this. [18:15.2]

But if you sit back and you take an objective look at it and you're like, Oh, I'm not going to die. It's not the worst case scenario. Obviously, I lose some money and screw up my credit, but here's the good part. You go to zero. At least there's a floor there, right, versus what's the best case scenario?

Best case scenario is like, What if it works? Right? Could you imagine if I could have financial freedom, if I could retire my spouse, if I could send my kids to any school that they wanted to go to, if I can retire my parents, if I can buy a beach house, if I could buy that mountain house, if I could travel the world and visit places that people only read about in books and magazines, is that worth? It's limitless upside with a floor on the downside. I think about real estate like that. I'm not going to die, right? I mean, unless I rip off some Russian hard money lender or something maybe, but you don't want to do that. [19:02.7]

Dan: If that’s the primary strategy…

Tim: That's not how to build wealth.

Dan: Stealing from the Russian underworld and just hiding yourself.

Tim: So, I think about it that way and I think about what is the real threat to this and what is the real downside of this? And I just know that I would fear regret far more than whatever the result of this could be, and I think the result of going bankrupt isn't realistic either in most scenarios. You go out and you buy a property for $100,000 and you sell it, I mean, at worst, what happens? It drops by 30% like it did 15, 10 years ago or whatever it was? Okay, so you sell it for 70,000. You’re not going to have $100,000. You're going to have $30,000, right?

At the end of the day and worst case scenario, frigging rent the thing and you ride it out for another five years, and then you can sell it for 100,000 again. Real estate is enough of an insulated investment where you can take the leap and have very little downside risk. As long as you're not totally stupid and you're speculating on appreciation, and you're buying at a retail price and hoping tomorrow it's worth more than what's today, that's stupid, right? You buy it at a wholesale price. If you put sweat equity if you buy for cash flow, you're going to be in a really good spot and it's hard to screw that up. [20:14.5]

Dan: I think you're exactly right. It's about the mental model you take going into it, and if you think about it from the beginning of my job is to cap my downside in relation to a significant potential upside, you only have to… I say this all the time, this is a Nassim Taleb idea, right, freaking antifragile. It's just like you only have to succeed a couple of times and then you're good, right? You could fail 90% of the time if those couple bets that you make really pay off and it really is a significant potential upside. It’s pretty amazing.

This is really good because you're talking about this, and this tends to happen with me most of the time where it's we pretty quickly get into the sort of philosophical aspect of… [21:00.6]

Tim: Yeah, I’m telling them to, man, something [crosstalk].

Dan: [crosstalk] talk about, yeah. Okay, so let's transition this, though, to talking about Legacy Wealth Holdings. Let's talk about what you are doing right now, right, because you're in the real estate side, but you're also putting yourself out there in the kind of educational space a lot. Explain what that business is today. When you're working with people, whether it's sellers or investors, how are you doing?

Tim: Yeah, so we almost exclusively buy apartment buildings. Probably 95% of my portfolio is apartments. The other 5%, we have some vacation rentals and we have some self-storage facilities and a little bit of office, but otherwise 95% of my portfolio is all apartments. What we do is we, I come from the residential world. I used to buy single family, fix it up and sell it, and I'd have to be all in for 65% of the after-repair value, pretty standard formula in real estate.

I never went to college for finance or real estate. I never took commercial real estate courses. I don't come from a family that's familiar with how to syndicate and do all this crazy commercial stuff. Right? And in my mind, commercial real estate is way outside of the realm that I thought I could ever be in. [22:14.3]

But I fell into this eight-unit apartment building seven or eight years ago, and I'm looking at this thing and I'm like, I can't lose on it. I'm buying it for $30,000, right? So, I ended up buying that building. I took the exact same principles I use in residential and I just parlayed that into commercial. I have to be all into this thing for 65% of that after-repair value.

So, I bought it. I renovated it. I rented it all out. And the valuation is different because it's not based on comparables of what the house down the street sold for. It's all based on the income approach, meaning what's the income, minus the expenses, what's the net operating income, and then it's valued based on a multiple of that. And so, I just kept on doing that, doing that. Instead of selling buildings, what I do is I turn around and I refinance it.

So, I go and get a 70% loan. Let's say, the building is worth 10 million bucks. I'm all in for $6.5 million. I'll get a loan for 7 million bucks once it's stabilized because I’ve created that value, and I'm going to be able to pay off my short-term loan, like bridge financing or construction loan, and I'm able to pay back my private money lender, and then I just have house money in play. Right? [23:18.7]

All of our chips are off the table. It's just long-term, Fannie Mae and Freddie Mac commercial debt on the property, non-recourse, meaning that only recourse against that loan going bad is the property itself. They can't come after me personally. And it's a fixed interest rate and it's got an extended amortization schedule, extended term, and I can ride out any sort of storm if that's what you're putting on these properties.

So, it's a really cool way to really build a lot of wealth, and then you can recycle capital very fast. My investors then can roll into another deal every 18 months or so, so that I can just recycle our capital and keep on rolling it forward and rolling forward.

So, that's what I do, man. I buy an apartment building. I force appreciation. I then turn around and refinance in 12 to 24 months, pay back my investors, and then we go and do it with another deal knowing just how much can you… It’s the BRRRR method—buy, renovate, rent, refinance, repeat. [24:07.4]

Dan: Yeah.

Want to find motivated seller leads online, but don’t know where to start? Download our free 2019 Motivated Seller Keyword Report today. AdWords Nerds have spent over $5,000,000 this year researching the most profitable keywords for finding motivated seller leads, and you can grab these exact keywords when you download our report at www.AdWordsNerds.com/keywords.

Dan: I know BRRRR. That's been around for a long time, right? It's a well-known thing, but I had never heard of it until recently. I don't know if you've ever seen that meme where it's the “Money printer Go BRRR” or whatever and it's this meme about the Fed printing money. Not that it was referring to that and I got really confused, and now every time I hear it, that's what I think about, but…

Tim: I think I will find that. I might use that. [25:03.3]

Dan: Yeah, you should. It's pretty fine. But I'm really interested in a couple of things about the multifamily world, right, because most of our clients are residential. We've had multifamily clients certainly before, but residential is where most new investors are going to start probably I think primarily because of two reasons.

It’s, one, similar to exactly what you said, there's this image of commercial real estate being kind of real serious business, almost like I need to have a three-piece suit and it's going to be real. And then, also just because most of the education that's available to people is about residential. People teach what they know. Most people know residential. So, if you buy a course, it's primarily about residential, yada yada yada.

But I'm wondering or I was wondering two things about the kind of multifamily world. One is do you find that it really is a significantly different mindset, or is it really a completely different set of skills to go multifamily or commercial than it is to go residential? [26:11.8]

The other thing I always wonder is, in some ways, is it actually even easier because there's less competition? It's like if you go for a residential property as an investor, let's say, in Austin or whatever, there are a lot of other investors going after every single property, plus you're competing with realtors and whatever. Multifamily or commercial, is it a smaller world? And then, therefore, it's almost kind of like you just have less competition and it’s a little bit easier or am I off base on this?

Tim: Yeah, so a couple things. One is I want to hit on the education piece real quick. The reason most courses are residential is probably because it's easier to get into residential, right, or at least perceived to be easier to get into residential.

But the other thing is a lot of people who get into residential and they're doing a lot of residential, it is brain damage, right? You burn some calories doing that, and it is hard to feel and to do that at a high level. [27:11.3]

Dan: Yeah.

Tim: I used to flip 80 to 100 houses a year and I make net profit or not, or gross profit, and I have to pay my team and stuff out of this, too. It was like a million bucks, right? And so, you can turn around and you can sell courses to make a million dollars in a heartbeat, and it has no liability, no risk, no headaches. Right? All you're doing is sitting in front of a computer and selling a course. So, it's like I see why a lot of residential people turn into gurus in the residential space, because it's hard to make a million bucks in residential.

Dan: It must be almost like [crosstalk], right?

Tim: And it’s easier to do.

Dan: Because it's like, Oh God, I could just… You're just going to download a thing and hand them out, which you can pay for, right? Yeah, I totally [agree]. I think that's a really good point, man. I never…

Tim: That's why a lot of these guys are like, Dude, I'm done with this. It's way easier to just do the education piece. So, you’ve got to be aware of that and that's why, hey, how come these operators aren't still operating and they're just kind of coaching this stuff? Because it's freaking easier to be a coach than it is to actually operate at a high level of real estate. Right? [28:07.6]

Dan: Yeah.

Tim: So, that’s number one. Number two: do you have to have a significantly different skillset in commercial than you do in residential? I can say that the majority of things are very much the same. Finding deals, right, I source deals the exact same way in commercial as I did in residential, direct mail, dial for dollars, drive for dollars, email lists, reaching out to different vendors, having bird dogs, talking to broker relationships, all those different things that you can do in commercial as you can do in residential. So, that's it.

Financing and it goes to your third point, which is, is it easier to actually do commercial? And in many ways it actually is because you don't have Billy Bob in a truck working on commercial projects. Does that make sense? As a contractor. You have sophisticated business owners who understand the elements of scale and really the business side of business, not just the swing-of-the-hammer side of business, not the technical aspects, but also the business elements of it, and they're the ones that you're working with. [29:13.4]

So, they're more accountable, right? They actually show up and do what they say they're going to do. They're not getting drunk after payday and not showing up on Monday morning. Right? And so, it's easier to do bigger deals because you're dealing with a higher caliber of crowd.

The other thing is, do you think the banker gets a bigger bonus on an $80,000 house mortgage or an $8 million commercial mortgage? The banker gets a bigger deal. The brokers are more sophisticated and they're trying to help push to the finish line because they're making a multiple six-figure brokerage fee versus on a residential they're making six grand. Now they're making 60 grand, maybe even $600,000. So, everybody's kind of in the boat, rowing in the same direction, trying to get these deals to the finish line, and it's more collaborative than anything else on the commercial end.
The other things to be aware of is there are more sophisticated snakes in commercial real estate. [30:04.3]

Dan: Yeah.

Tim: Right? So, you’ve got to watch out for those guys. I mean, there are people who are just total rip-offs and there's not the safety net that is there for residential real estate owners. The little old lady who just inherited the house because her husband passed away and never ever dealt with any of the finances before, you need to make sure that some big bad realtor or investor doesn't take advantage of her.

If you're playing in commercial real estate, it's assumed that you're a pretty sophisticated investor and you're buying for investment purposes. So, you don't have all those safety nets and whatever they call them, the property condition reports and that kind of stuff that they require on residential.

So, you’ve got to be aware of that, but it's actually easier I find to do bigger deals than smaller deals, and here's why. One, everybody's working with you, right? Everybody's an A player on your team, so all the vendors are A players, and so it's easier to manage and operate, renovate and everything. But also in house, I was able to bring on a COO and I was able to bring on chief investment officer, and I was able to bring on a director of acquisitions and a chief marketing officer into my business, because I'm not… [31:08.2]

What I do is I pay them a base salary that allows them enough money where they're not stressed about money but they're not content either. So, I pay everybody about $50,000 a year. It’s what everybody makes, including myself. And then, everybody either gets a profit share or some sort of equity in deals, and what that allows me to do is we're not carving up a $20,000 flip profit four ways.

That doesn't get anybody excited, especially A-players. These are all six-figure talents. But when you're carving up $2 million of equity, five ways, all of a sudden everybody's net worth increases by $100,000 to $400,000 or $500,000 a piece. Now you're getting their attention, so you can pay them a base and they're getting the value. You can attract those people.

And then, what it allows me to do is to not be solopreneuring anymore. I don't have to go and be a Jack of all trades and some renaissance man like I was in residential, doing everything from start to resale of the property. Instead I can focus on what am I good at then? Let me do the social media stuff. Let me drive deal flow. Let me drive money flow, hand it off to the engines that run my business, and let me just give them the resources and be the fuel to those engines. [32:15.0]

And so, that's what allows me to do. It’s just to stay in my genius zone, stay in my silo, and then everybody focuses on what their skill set is.

Dan: Man, I think that your insight there on hiring, the importance of it hiring, and it’s like you don’t really talk about it this way, but it comes across in how you describe your team, hiring people that are going to be hungry to push things. I think we have this image of the heroic entrepreneur. They're like, I built the entire thing. But there's so much friction and there's so much inertia to everything, and you've got a feeling you’ve got to build it, but if you get people who are…they're going to push because their incentives are aligned with yours and they're going to push whether you want to push it or not. That's when things really start to take off. It sounds like you just have a killer team behind you, too. [33:12.2]

Tim: I do. My team is absolute rock stars, but they grew with me, right? I hired them, not because they had their skillsets. We all went through the lumps. They're loyal and they understood the long-term vision, and they have an amazing attitude and amazing work ethic. Those are the key things that I look for when I'm hiring somebody and we can teach them the skill sets. As long as they have a work ethic and they're willing to learn, and they have the growth mindset and specifically the long-term vision, they're going to not allow those short-term hurdles and struggles to derail them and get them off track.

And so, again, I didn't spend a lot of lumps. It’s been a lot of messing up. And we all have a long-term vision. We know that real estate works. It's not an experiment. It's not like some tech startup. Is it going to be the next Uber or not? It doesn't matter because I know real estate works. Since the beginning of humanity, wealth has been measured in landowners.

Dan: People hate getting rained on. It's pretty easy. [34:02.3]

Tim: Yeah. Right, so it's easy to do, right? They want to stay warm in the winter and cool in the summer, and they don’t want to get rained on, right?

Dan: It’s really a strong value proposition, warm in the winter and cool in the summer. I’m like…

Tim: Yeah, perfect. So, it's not difficult. It's not like it’s just going to work for me. It’s going to work. It just takes time. Right? You've just got to get through it. How much, how long does it have to be? And the longer you stick with it, the more refined you get, the stronger you get, the smarter you get. You don't make those same stupid mistakes you made earlier on and now it's very, very difficult for somebody to pull the wool over my eyes.

They have to essentially commit straight fraud, a seller, in order for me to not catch something going on, either with the financials or the physical due diligence of a property, because we've been screwed so many times and because I screwed up so many times.

Dan: It's just pattern recognition for you at this point.

Tim: Yeah, man.

Dan: You can almost feel it before it happens.

Tim: Yeah, and we’ve got all the checklists in place and we’ve got all the SOPs in place and we keep on refining them. My first tenant was whoever raised their hand with first month rent, right? You, pay me the deposit over the next three months, right? I don't run background checks. Come on, move in. Bring your cousins. Bring in your girlfriends. Bring in your whoever. Right? And so, if they raised their hand with money, come on in. [35:15.8]

I had a one-page lease. Guess what? Now my lease is 13 pages long because I’ve been stood up so many times. I’ve got to make sure it’s long now.

Dan: You're just like every time something happens, you're like, Let's put this in the document.

Tim: Yeah, I’ve got to. One of my buddies had…what's it called? I can't remember what they're called, but they come out and they do the at-home birth.

Dan: A doula?

Tim: A doula. So, we had a doula come out, fill up this frigging tub and in their living room, da-da-da, and he has a baby and I sent him a text message of congratulations. We go out. I'm like, I’ve got to take you out. We go out. We have some drinks. He gets a little bit loopy and he’s like, Listen, man, we have to put it in our lease. I was managing a bunch of his properties at the time. [36:02.8]

He goes, “We have to put in our lease no at home water birth. We cannot have it. If this thing would have leaked, it would have ruined the whole property.” And so, now that’s in our lease that you can't have it at-home water at one of our houses or buildings.

Dan: Yeah, every time you read a contract or something, it’s like there's something so specific in it and you're like, I know there's a story behind this thing.

Tim: Exactly. Yeah.

Dan: Oh God, man, I have heard so many stories like that where it's like amend the document. Yeah, it's almost like a scrapbook of everything bad that's ever happened to you.

Tim: I would say, yeah.

Dan: I'm really curious. We were talking about it and you mentioned this thing was very true to my heart. It’s the exact same way I built my team, which is I hired people based on their personality types and who they were rather than what they knew, right, and it has worked out really well. And you were kind of talking about your team growing with you, so let's transition from that. [37:00.1]
You literally are writing a series of books, kind of like I don't want to say self-help but sort of growth and biggest growth--

Tim: Kid-oriented is probably what I would call them.

Dan: Yeah, for kids. So, let's talk about this project for a second. Give me the background. First of all, are you a writer? Did you want to be a writer? Was that a thing that was in your wheelhouse?

Tim: Yeah.

Dan: What made you want to start this project? And then we'll get into the specifics of what exactly was going to be in there.
Tim: Yeah, man, it's always been on my bucket list to write a book. I want to write a book of some sort, but it's one of those things where it's like commercial real estate. When you're first getting started in residential, commercial is like, Oh my goodness, I couldn't even imagine. I don't know what I'd have to learn and get through to writing a book. And so, it's always been on my list, something that I’ve always wanted to do.

But what I ended up doing, I was at a mastermind event down in Florida, flying back, about a little over three years ago. It was March 2017. My daughter was just about to turn two years old and sitting on the floor. It was a two-and-a-half hour flight or whatever and I'm reading the Magic of Thinking Big by David Schwartz, and I'm reading this book. [38:11.0]

Just the first 10 pages, I'm like, Oh my goodness, these are such…I'm 30. I was 32 years old at the time, I guess, no, not quite, 31 years old. I was like, These thought principals are just unbelievable, and I'm wondering I’m going to be 31 years old and changing my life and my philosophy, how I'm looking at things, and I'm thinking about my daughter and her birthday coming up. And I'm thinking, How do I…? Can you imagine having these thought principles just ingrained in you from the time you were born?

And the most malleable age, they say that whatever 80% of your personality is developed in the first five years of your life, and so, I'm like, I need to get these thought principles into my daughter's mind, so that way she just has these, and she could be a hundred millionaire by the time she's 20 years old potentially if she was born this way, or not born, but taught these things earlier on. [39:03.0]

So, I get off the flight and, as I'm waiting for my bag, I'm Google searching different personal development books for kids, achievement books for kids, success-oriented books for kids, these thought principle books for children, and, dude, literally nothing. I couldn't find anything. I found some. There's the Berenstain Bears books of how to be nice and how to have manners, and how to live by the golden rule, and there's a lot of that stuff out there.

Dan: Yeah, there’s lightness. It's ethics, right, which I feel kids can have, but I think what you're talking about--

Tim: How do you build confidence, right, like we were talking about before? How do you build self-esteem? How do you build the idea of thinking bigger? How do you ingrain that now, so that way, when kids hit the real world…? Right now, my son who's about to be three, he wants a Batmobile with frigging wings on it that goes outer space for his car, right, when he's able to drive. Then, all of a sudden, we hit the real world and it's like, You know what? I just want something reliable. [40:06.3]

Dan: I’m not going to do it.

Tim: Let's get me something to get from A to B, yeah, just something to get from A to B and it's going to be good on gas. And you're like, Dude, what happened to people's mindsets? What happened to their dreams? And so, I want to instill thinking big and my daughter forever and I want her to always think on a grand scale.

So, when I'm thinking about that, there are no books like that out there. There’s a couple about working hard and stuff like that that are good, but I'm thinking, What are the books that made the biggest impact on my life? You know what they are? Think and Grow Rich. It’s How To Win Friends And Influence People. It's The Richest Man In Babylon. It's The Magic Of Thinking Big. It's The Power of Positive Thinking. It's Rich Dad Poor Dad. It's all these different books that have changed my philosophy on life as an adult, that if I had those as a child, holy cow, can you imagine what I'd be able to accomplish by the time I was 30, 35 years old? [41:01.2]

Dan: Yeah.

Tim: And so, I'm like, You know what? Somebody needs to write a book on these things. I'm going to do it. If it's me coming up with the idea, it's like you raise your hand in school or a corporate office, and you're like, It's a great idea. Why don't you go ahead and take on that?

Dan: Yeah, go ahead and make it happen.

Tim: But I'm busy, right? I'm growing the business and I’m building my portfolio. This is really why my trajectory took off. It came to a point where, dude, I sat on the idea for almost, I don't know, a year and a half to two years, and then I was on vacation. We go on vacation every fall with two other families, two of my best friends, a girl and a guy.

Dan: Awesome.

Tim: They have their own family. My good buddy is married. My good girlfriend is married. And then, my family comes. We all have kids that are the exact same age. They're all five and three, right? So, it's mayhem. There are six kids running around, six adults.

Dan: That’s the best.

Tim: Yeah, and so we go on vacation every single year together and we were down at…I have a vacation house outside of Disney World and we were there about two, I guess, about a year and a half ago. [42:06.4]

As we're sitting there and the pool, kids are down, we're having some cocktails, hanging out in the pool, and I'm just talking about how this is an idea that I really, really want to implement. And one of my best girlfriends from high school, she wasn't my girlfriend, but a female friend, right?

Dan: Yeah, there needs to be a word, female friends and girlfriends.

Tim: Exactly.

Dan: I get what you mean, yeah.

Tim: So, her husband is really high up and she's super sharp. She was running the marketing department or something or brand management at one of these big pharmaceutical companies. Her husband is really high up in the sales organization, too, there, and he got moved for his job. She had to leave hers and she was staying at home with the kids temporarily. She was looking for something to do.

She goes, I'll write the books. Why don't you give you the ideas? Let me read the books. Let me come up with the storyline and you can kind of give me feedback and what you want to do and all this stuff. And I was like, Let's do it. Let's do it. [43:00.0]

Somehow, her and my wife kind of partnered up, and then I got pushed out of it. They have 70% ownership now of my own frigging business. I'm like, What? What just happened here? Anyway, that's neither here nor there. I'm not salty about it.

Dan: Yeah, right, but a little bit of commentary is really going on there.

Tim: So, the first book takes us a year to write and it takes us an entire year. It's based on Think and Grow Rich. It's called Think Big & Go to Baseball Camp. And so, we had it finished about six months ago, but we never did anything to it because we're developing a website and we want book two and book three, and we want an entire book series on these books to be available. So, we just wrapped up book number two and we have book number three done, being illustrated right now, and it’ll be done in about 30 days. And then, we have four, book number four written, and number five is pretty much we have the outline and we have to finish writing that.

But the idea is we're going to launch book number one, which is Think Big & Go to Baseball Camp. We're going to launch that next week, which is my son's third birthday. I'm excited about that. And then, about every five to six weeks, we're going to launch another book up until Christmas, so we'll have a five book series ready to go by Christmas. [44:09.8]

We’ve got a bunch of other cool stuff, like we have a coloring book version of it and we have the puzzles, and all these different take-action steps at the end of each book, so that way you can work with your kid and instill these entrepreneurial and achievement-oriented principles and physically do some stuff with them.

We're going to turn it into some workshops and maybe some retreats where you can go there, come out to, I don't know, a campground with your kid and the entrepreneurs can go in one room and the kids can go in another room, and we're bringing some child psychologists and kind of do some fun stuff, and you get together and work on some things. You go zip lining, kayaking and a bunch of things. We've got a lot of really, really cool ideas for it, so we're excited about it.

It's more of a passion project, but I truly believe it's something that can scale pretty quickly and who knows, man, maybe Scholastic comes in or Baby Einstein comes in and wants to buy us out, but it's one of those things where I'm more excited about that than doing real estate, right? [45:07.8]

Real estate is boring and I'm doing the same thing over and over again. This is something that really got me excited and I think it's an impact piece. It's making an impact for both entrepreneurs and their kids, and I just think it's an amazing set of books. We're really, really proud of it. They came out awesome and I'm excited to launch them.

Dan: Yeah. I was going to say, you said before, right, the whole idea of having an impact. I think, especially for me, it was when I had kids was when I started to become really concerned with broader impact. It’s not that I don't care about the world, but I was always just I’ve got to pay my rent, right? That’s what I focused on. But, yeah, it's clear in your voice. So, the first book is going to be called Think Big & Go to Baseball Camp.

Tim: Yeah.

Dan: I'm going to have a link to it, so at the show notes, if you go to REIMarketingNerds.com, you can find the show notes for this episode. Or where are you guys going to sell it? Are you going to sell it online? If people go on Amazon, they can find it? [46:07.6]

Tim: Yeah, the name of the company is called the Little Legacy Library. Legacy Wealth Holdings, Legacy Wealth Fund, all that stuff is mine, Legacy Wealth Education. Legacy is my thing and I think this is cool because it's a little guys’ legacy and a library, obviously. So, LittleLegacyLibrary.com. You can go there. You can order it right there. It'll be on Amazon, but it's going to be a couple of weeks out before it gets pushed out on Amazon.

Dan: I'm definitely going to link to all this stuff that's going to be up. By the way, just so you know, if you're listening to this podcast, the first book is already out. So, you will be able to go and find it, LittleLegacyLibrary.com, but like I said, you can find it in the show notes for this episode. I'll link to all Tim's stuff.

I'm going to wrap this up because we are coming up on the time and I thought we were going to be done way before, and instead you're all interesting and smart and stuff, which is super annoying, so thank you for that.

Tim: You asked good questions, brother. [47:00.0]

Dan: Yeah, for people that want to learn more about you, they want to follow up with what you're doing online, where's the best place for them to find you?

Tim: Yeah, I'm really active on social media. You can connect with me on Facebook and connect with me on Instagram, even LinkedIn. I'm always trying to just provide value, right? Try to put some good stuff out there and good vibes out in the world, and help people out with their business and with their life. So, connect with me on social media, and then I think you're going to put a Little Legacy Library, and Legacy Wealth Holdings is my investment company. So just go to LegacyWealthHoldings.com and LittleLegacyLibrary.com.

And if you guys want to ask any questions, shoot me a message. I'm happy to help out or push in the right direction, offer insights, connections, resources, any way that I can.

Dan: Yeah.

Tim: Dude, I appreciate you having me, man. Thank you so much. You asked amazing questions. I loved the dialogue and the back and forth that we had.

Dan: My pleasure, man. It was super fun. And for everybody listening to this, if you just want to be super lazy and you want to Google it, it's Bratz. It’s spelled B-R-A-T-Z, so Tim Bratz. I just was able to pull up all the stuff on Google, so that's the easiest way, too.

Tim, thank you so much, man. This was awesome and I really appreciate your coming out. [48:05.3]
Tim: Thanks for having me, bud. Good to see you.
…

Dan: That's it for this interview with Tim Bratz. I hope you enjoyed it. I had an amazing time talking to Tim and someday we’re going to get him back on the show, for sure, but I want to make sure to point out, first of all, Tim's website, Legacy Wealth Holdings, f you haven't checked it out, it is excellent. It's at LegacyWealthHoldings.com.

And, of course, Tim's passion project of creating these self-development books and personal development books for kids, I think that is incredible, and you can find that at LittleLegacyLibrary.com. If you're listening to this podcast, by the time you're hearing this, by the time this is hitting your ears, those books are already out, so I highly encourage you to go check that out right now. That's a LittleLegacyLibrary.com.

Like I said at the beginning, thank you so much for being here for this, our 100th episode. As always, you can get all our past episodes and ask to talk to my team. If you want to talk to me or my team about upping your online marketing game for motivated sellers, you can do that at reimarketingnerds.com. That is REIMarketingNerds.com. As always, thank you for being here and I will see you next week. Cheers.

This is ThePodcastFactory.com