Tim Bratz Owns $400MM in Real Estate by Age 35 (Part 1)

Steve Trang: Everybody. Thank you for joining us for today's episode of Real Estate Disrupters. Today, we have my good buddy, Tim Brotz, with Legacy Wealth Holdings. And he flew in from Charleston, South Carolina to talk about owning 400 plus million dollars in real estate by the age of 35. This is your first time tuning in, I'm Steve Training sales trainer.

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So if you're interested in working with us, go to disruptors.com/hiring. And we do have a Discord that we're gonna be doing a live AMA on. So be sure to check out that link below. And this is a live show, so please ask your questions for Tim to answer. Ready?

Tim Bratz: Let's rock and roll, buddy. I'm bored.

Steve: Well, thanks for coming. I mean, I think this is like two years.

Tim: In the making. No. I I do. I have a ton of respect for you. I have a ton of respect for what you've been doing.

I apologize it's taking this long to get out here. But no, man. I'm super excited to be here. I came out here, flew out here just to come and hang out with you and spend some time together. So I'm excited.

Steve: I appreciate that. This is gonna be great. So the first question, softball, is what got you into real estate?

Tim: So I was going through college, 'three to 'seven when the market was going crazy last time. So everybody's like, You can make money in real estate. And I was a money motivated kid when I was 20 years old. So I interned for a big home builder, one of the biggest home builders in the country actually. And then I had a painting company and I just saw that there was a lot of money being made.

Steve: And then you had the company you had?

Tim: I did. Okay. So it was me and a couple of my buddies, all about twelve, fifteen guys I had working for me and we'd just go paint the exterior of houses every summer. And so, that's how I paid for school and travel and drinking and everything else. And so, when I graduated from college in 'seven though, my brother was living in New York City and he's like, Dude, come and live with me.

And so, I moved out in New York City. And I thought I got involved in real estate. The way to get involved in real estate was to get your real estate license. So, I got my real estate license. And for some reason I parked it with a commercial brokerage instead of a residential one.

And so I brokered retail leases and office leases. I wasn't like, they weren't gonna give a multimillion dollar investment building to some kid that's 21 years old to go and broker. So I didn't really get those, but I saw it happening in the office. And I brokered my first deal, it took me eight months. It was 400 square feet, about the size of this room.

And when I went in there and I brokered a deal, it was a ten year lease agreement at ten I'm sorry, twelve year lease agreement at $10,000 a month with a 4% annual increase on 400 square feet. And I started doing the math as a money motivated kid. I'm like, This landlord is gonna make almost $2,000,000 over the next twelve years for doing something once.

Steve: And I

Tim: was like, I'm on the wrong side of the coin. I really wanna be owning real estate. And so, it was bad winter up in New York and I was like, I'm going south. I need some sunshine. Moved down in Charleston, South Carolina And just went through that whole analysis paralysis phase and realized pretty quickly that I wasn't going to learn how to invest in real estate by reading about real estate in a book.

Like I needed to actually go take some action. It's like swimming, right? You can read about swimming, you can hear testimonials about swimming, you can have all the gear, but if you don't actually get in the water, dude, how are you going to swim? You've got to get in the water. And that real estate's the same way.

You've got to get in the water and get into a deal. And so the caveat there though is that this is 2008 that I decided I'm going to become a full time real estate investor, summer of 'eight. And as I'm going through analysis paralysis, the entire market collapses. Lehman Brothers go out of business, the Bear Stearns, all this other stuff. And so as I show up to the party, everybody's running out the back door saying, Get the hell out of real estate.

Don't do real estate. The good news was I didn't take out no doc loans or stated income loans or anything like that. And so I walked into a market where the prices just started bottoming out. And I looked at the MLS and I found the cheapest house on the entire MLS. It was $25.

And then I ended up calling up friends and family and nobody would give some punk kid who doesn't have any experience in real estate, never done a deal in the worst housing recession ever, money. So call it Go ahead.

Steve: Can we just take one step back?

Tim: Yeah.

Steve: So you were doing retail spaces. So my understanding, I don't know if this is the way it was for you. Punk kid wants to get into commercial real estate. It's not like, Hey, here's some opportunities. It's Go grind the phones.

Yep. Right? So It

Tim: was grind, grind, grind. It was like the business that rented that 400 square foot space was like a falafel shop, like their first falafel shop, right? They might make it, they might not make it. Or maybe they have one I would either represent the landlord in marketing the space, or I'd represent the tenant in finding another space. So the listings and the tenants that I had were side street, back alley tenants with a small business, but they couldn't pay more than $1,000 or $2,000 or I mean, that guy had $10,000 and so I did one deal that was like $15,000 a month.

And so, but dude, it was grinding. But here's the thing, I think there's people who, Oh, I don't have that person's experience. I don't have their knowledge. I don't have their resources. If you are resourceful, resourcefulness is the ultimate resource.

Yeah. You can go and find the money. You can find the deals. If you're willing to pound the pavement hard enough, somebody who's your age or my age or older than us might see some young kid straight out of college and be like, they got something, right? They at least have the work ethic.

Steve: Right.

Tim: They have the disappointment. They're willing to show up early. They're willing to stay late. And do that, to me, I hire based on attitude, not based on their their technical knowledge of of real estate. I want a badass.

I want somebody who's fun to work with and somebody who works hard when it's time to work, and then they they play when it's time to play.

Steve: Well, the reason why I wanna emphasize this point, right, because obviously you've had a lot of success. But you started off just grinding the phones. And there are so many people, you know, like, that are getting into our space, wholesale and real estate. And instead of, like, grinding the phones, like, they can't wait to hand it off to a VA to cold call or hire someone else to cold call and do the lead gen. And I think Personally, I think that's a mistake.

Yeah. So I think How much do you think that helped you when you were buying houses or when you transitioned to buying apartments?

Tim: Yeah. I think that's a great point. And I think, I do coaching just like you do coaching. And so people We see people in different stages of their business. And everybody wants to task out the revenue generating activities.

That should be one of the last things that you task out, right? Like the first thing that you, if you're gonna hire somebody, the first hire should be to take non revenue generating activities off your plate. An assistant, an admin to do all the things that are less than $100 per hour tasks, hire someone for that. I will say the next hire typically though, in my mind, it would be an acquisitions person. But you can't train an acquisitions person unless you know acquisitions.

You need to know Think about what's important in real estate. It's really three things. Sourcing deals, sourcing capital, and then either dispositions if you flip, or it's operations if you hold like I do. And so those three things are the only things that matter. That's it.

It's not the software. And I have a software. It's not your business cards or like, if somebody asked me if they if I have a business card, I'm like, dude, no. Look me up on social media. Send me a DM.

Right? Now they're engaged and we can stay connected longer term versus giving me a business card that I throw in a in a recycling bin. You

Steve: know? Like, these days when someone like gives me a business card, I kind of like flinch. It's like, no, I don't want it. Because I know exactly what's gonna happen. It's gonna sit in my pocket for a little bit.

Yeah. And it's gonna go in a dresser. And then at some point, I feel bad for throwing a recycle. And that's the the life cycle of business card. It is.

It is.

Tim: Connect with me on social media, send me a message. If you wanna stay engaged with me and stay top of mind with me, and I know it's for you, we're buddies with Brian Pineda and a couple of the other, some of the good guys in real estate that are big influencers and coaches. The people who stay relevant to me, I don't know if it's the same for you, but it's people who are typically engaging on my posts. People who are sending me DMs, who are liking, who are commenting, who are sharing my posts. They get my attention.

Steve: It's top

Tim: of mind. And those are the ones that I pay more attention to, right? Yeah.

Steve: Know, just real quick, you just brought up Ryan Panetta. So, we hung out in in Tampa about a year ago. Right? This is a collective genius.

Tim: Yeah. Fifteen months.

Steve: Yeah. And I remember, like, we're drinking late night. It's, like, 01:00 in the morning. Mhmm. And it was me, you, Ryan, and Casey Ryan.

Yeah. Right? Also from Vegas. Mhmm. And I was looking there.

I was like, man, how much would someone be willing to pay? Right? Now we we do pay. Right? We're we're paying Jason Medley, Collector Genius.

Yeah.

Tim: We pay him for so we can be friends.

Steve: So we can be friends. But like, I was just thinking like, what would somebody be willing to pay? Right? To just listen to this conversation. And in that conversation, we were all we're talking about was reducing taxes.

It wasn't like something like, here's this amazing project we're gonna work on. We're talking about, here's how we reduce our taxes.

Tim: Mhmm.

Steve: But anyway, that was a quick tangent. All right.

Tim: So it's being What's a shortcut to success? There are no shortcuts. You got to go out and do the work. But I will say if there's one shortcut, it's being in the right room. Yeah.

With the right people who are going in a direction that you want to be going. That expedites everything. Think about this. You've been in business for how long? Fifteen years.

Fifteen. I've been in business for fifteen years also. Okay, so we've both been out there doing real estate deals for fifteen years. You know certain CPAs and attorneys and marketers and all these different people. I know some people too.

Private money lenders, whoever. We become friends because we both pay to get in that same room. You're paying for proximity. We start rubbing elbows, we start connecting. Hey, I like you, you like me.

Let's go do a deal together. And all of a sudden, you're able to bring money, let's call it, to one of my apartment deals. You get into a deal that you couldn't have gotten into.

Steve: Right.

Tim: I get into a deal that maybe I couldn't have gotten into, or I get introduced to your private money lenders that you've taken fifteen years to build respect and credibility with. You know what I mean? You transferring that relationship over to me is something that would have taken me fifteen years to develop. So by being in the right rooms and not being transactional but being relationship driven, that is the way to fast track success.

Steve: Absolutely. So, all right. So now you were talking about you were on the other side, you're looking to acquire. So sorry, I stopped you there. So continue that story.

Tim: So the step that got me into real estate investing was I didn't have anybody with money, but I wanted to go out and do a deal and I realized these houses are like, You can't lose money on these houses. Well, it's a $25,000 house. Yeah, if I fire sailed it, I could probably make more than that on it. Or what if I sold it for $20,000 Guess what? It's not a $25,000 risk.

It's a 20 or it's a $5,000 risk. You know what I mean? But people build up these stories in their head of, I can't go buy a house for 150. What if I lose it? Right.

If you gave it back to the bank or if you sold it at a discount, you're still gonna get 120, 130 for it. So it's not a $150,000 risk. So in my mind, I was like, Let me go and try this thing out. I called up my credit card company and I said, Hey, I'm about to make a big purchase. I need you to increase my credit limit.

And they're like, All right, Mr. Bratz, what would you like? What do you need your credit limit to be? And I was like, dollars 100,000. And the lady laughed just kinda like you did.

She was like, You've been a great customer for fourteen months since you graduated from college, but we can't really give you a $100,000 limit from $3 that you're at right now. But they gave me 15. And so, I go find the cheapest house on the MLS. It's listed at 25. I went in at twelve.

They came back at 20. I came back at 14, which was really the highest and best I could do because that's the most money I had and they accepted it. And so, dude, an idiot kid who didn't know anything about real estate contracted this house, and you think it's scary to make offers, wait until one gets accepted. You know what I mean? Then you really, Oh my gosh, now what do I do?

And I actually took a balance, like a perforated balance transfer check handwritten to the title company. I was like, Hey, here you go. And they're like, what? No, take this back. Go get cert certified funds, bring it back tomorrow.

I was like, Yeah, yeah, I just.

Steve: So you legitimately bought a house with a credit card?

Tim: With a credit card. It was 0% interest for, I think it was six months. And it was like a $200 fee or something in order to borrow money.

Steve: Yeah.

Tim: And one hundred and ten days later, I flipped it. I was all into it for about 19 and some change and sold it for $33,000 to one of the neighbors. And so sold the house and made a check for about $13,000 $14,000 of net profit to me. It was the biggest check I've ever made to that point in my life in a single check. And I was like, Dude, people are saying don't do real estate.

Steve: This is easy.

Tim: There's, I mean, somebody's making money in real estate. Right. And so I did it again, did it again, started meeting people who saw my work ethic, who saw that I knew a little bit, that I was gaining knowledge and insights. And they ended up saying, Hey, you can go do the work. I have money or I have access to money and I don't have the bandwidth to go and do that.

How about I bring the money, you do the work, and all of a sudden I started creating like joint venture partnerships with private money lenders.

Steve: When did you start doing that? Because you're saying around 2008 is when you started buying houses.

Tim: I bought my first house in April 2009.

Steve: 2009. When did you do enough to demonstrate the credibility that people were saying, Hey, Tim, I wanna lend you money.

Tim: I did some wholesaling deals. And then from doing those wholesaling deals, I bought my first buy and hold rental. I wanna say it was, oh man. I got a seller finance deal and I brought private money. I paid someone for coaching through the old Rich Dad thing when that was a thing.

And my mentor introduced me to a private money lender who had $15 or something, or $25 in her IRA. And so she was a But guess what? She didn't know me, but because it was introduced through somebody that she respected, that respect transferred to me and she ended up becoming a private money lender of mine. So I got the seller on my first buy and hold. I think it was July.

My first buy and hold, I ended up buying it with seller financing of $32. She brought $25, but the total purchase price was only 50. But I had $57,000 So I walked away from a two unit, both rented at $5.50 a month. And I walked away with a check for $6,600 from that closing using none of my own money, none of my own credit with a cash flowing asset, dollars 6,600 in my pocket and about $400 a month in positive cash flow. And I'm like, Dude, there's something to this.

And so that's actually how I started doing How I got into like real estate or apartment buildings and and what my business model is there.

Steve: So, well, so this is around 2010. Like when did you transition to apartments? Because, you know, that's something I do want to talk about. Yeah.

Tim: Apartments came in, bought my first apartment in December 2012.

Steve: Okay. So you were you were in it for a while because I think that along the way because you had success Mhmm. On the single family side. Right? I mean, it's 02/1132, it was really hard to make a mistake.

You were making money if you were doing single family houses.

Tim: But I figured out how to make mistakes. So here's really what happened. I don't usually get into this story, but we got some time. So I had 10 units by 10 houses. 10 houses.

Yeah, 10 doors, all single family houses. One was two houses on a single parcel. And then one was my own primary residence that I was house hacking. So I had two of my buddies renting from me, paying me rent to live in the other two bedrooms of my house. So I had 10 total houses.

And I think I got it figured out, dude. My residual income coming in paid for all my operating expenses, all my debt service, all my private money lender payments, all my personal expenses and put another thousand dollars a month in my pocket. So I'm like, Dude, I'm not rich, but I'm financially free. I think I got this figured out. So then I go and bought a Mercedes.

And then I went and bought a private membership to a business and dining club. And then I started going on some fancy vacations and I just started racking it up. I didn't have the cash. Right?

Steve: Your expenses were catching

Tim: up. But I had this credit card and I had this residual income and I think it's just gonna pay for that all the time. So I started racking up expenses on my credit card. And then somebody shines a dangly object in front of me. It was a network marketing company.

And it made sense, right? It actually aligned with real estate really well. It was like home services, like internet and home security and TV and electricity and natural gas. Yeah. That's a what.

And so I'm like, Well, I'm in real estate. I have my own rentals. I know a bunch of people who have management companies that could push this. And so I joined and I drank the juice hard for about two, two and a half years. And I had some immediate success and then it it waned off considerably.

But the relationships that I got out of that and the personal development that I got out of it was like unbelievably impactful that I still use a lot today.

Steve: Who's the guy? Robert Allen, right? 12 streams of income, whatever it is. That was one of the things he talked about. I never joined an MLM.

Tim: Mhmm.

Steve: Might be joining one in the very near future. You know, I kinda talked about that one earlier. But he talks about, like, the importance of joining an MLM in your in your real estate when you're trying to get multiple streams of income. Mhmm. Not because MLMs are great.

It teaches you networking, marketing, relationships, personal development. There are so many things that it teaches you that doesn't really necessarily help the MLM business, but the skills you need will apply everywhere.

Tim: That's how you keep people, right? Yeah.

Steve: If you're

Tim: not paying them anything, you gotta give them value somewhere else. And the value that you give them is in the personal development side of things and the relationships and they don't wanna leave their friends. You know what I mean? And so, that alone is a concept that people can employ in their own businesses.

Steve: Right.

Tim: It's not always about the money. Hey, this person's gonna stay with me if I give them a raise. It's not necessarily the case. If you empower them, if you give them personal development, if you help them improve and gain new skills, they're gonna appreciate you more than just a $5,000 raise. So that's what the MLM business knows really, really well.

And dude, I was so sold out on it that I sold nine of the 10 houses that I had. I only kept my own. And so I sold them and I went all in on that for two years. And then just found myself completely destitute. I had $80 in my bank account in What happened?

In August 2012.

Steve: So you had this really lucrative real estate thing going?

Tim: Yeah.

Steve: And then you just kind of put down the back burner.

Tim: Well, I thought that I can generate more revenue quicker, more residual income quicker by pursuing the MLM business.

Steve: So this is something that's I think, everyone in our space, everyone that's watching this podcast, we all suffer from shiny object syndrome. And it sounds like you had a really bad one there.

Tim: And I have a way to combat that. And I want to come back to it a little bit later. It's called the three year rule, but I want to come back to that. It's powerful. So I dedicated two years to this and I sold my real estate off and thinking that I was going to make more money in this other venture faster and exponentially without having overhead, without having loans, without having property taxes, all that kind of stuff.

It's exponentially scalable, at least theoretically. And then I just realized, dude, I was in the top 1% of performance, but I had 800, 900 people in my downline and whatever. It was 3,500 customers. And dude, there was one month, it was in August 2012 that I was the only person who got a check on the entire team. And you start thinking like, dude And these are people who are showing up, who are following the system, who are doing what they're supposed to be doing and it wasn't working for other people and it wasn't working for me.

And my check was like $60. It wasn't like a big check. So I remember being so broke. I was selling Ikea furniture from my house or Walmart furniture side tables, selling DVDs for $2 to $3 a piece, trying to be able to buy food. I'd go to Subway and I'd go and buy a foot long sub at lunchtime for $5.05 dollars a foot long.

Steve: I'd load it up with

Tim: as many veggies and all the free stuff as you could. I'd get half of it at lunch, eat half of it dinner, and then I wouldn't eat again until the next day when I went to Subway again. So I was intermittent fasting before it was cool to intermittent fast. I

Steve: was gonna say, I thought you were gonna say, you

Tim: bought those You're still being broke. I thought

Steve: you were gonna say, you were buying those foot longs and selling it afterwards. Man, this guy's really resourceful.

Tim: But dude, I was paying for gas with the coins out of the cup holder of my cup. I don't know if you ever bought $1.24 of gas and coins before, but it's freaking embarrassing.

Steve: What happened that caused ACN to kind of

Tim: crumble? I think they're still around, right, as a business. But you're the whole line. Yeah, it was just like, dude, they just burned through people. Here's the issue.

There's no real, there's no real, margin in cell phones. Right? I mean, there's only a handful of companies because they have tens and hundreds of millions of customers. And so they have a very little margin across so many customers. That's how they make money.

There's so much competition in cell phones and electricity and natural gas and TV and internet and all that other stuff.

Steve: Got it.

Tim: That there's not real money in the product. Yeah. Right? So when you sell juices and lotions and potions and coffees and all this other stuff that people sell in MLMs, So like makeup, like there's real money in Avon and in Mary Kay and in some of these other businesses because they sell a product that has real margin built in. There's no margin in that.

So the reason they make money is by running through people. And this isn't meant to be shit on that company or anything.

Steve: No, but I mean, I'm asking about this because

Tim: But that's why I realized, if you're not running through people and there's a lot of people that you're just gonna take money from to sign up and you know they're never going to be successful. And I just couldn't look at myself in the mirror knowing that that was happening after I realized nobody's making money.

Steve: I don't think there was a networking event I can go for a while in 2011 to 2012 that someone did not hand me an ACN business card. That's the reason why I was asking that question.

Tim: It lit up like a torch, man.

Steve: So three things to prevent shiny objects syndrome. What are the three steps?

Tim: Well, it's I call it the So there's been a lot of shiny objects, right? And I'm sure you get a boatload of opportunities sent your way. Yeah. I get a boatload of opportunities sent my way. As soon as somebody knows that you have influence or you have money, they're sending, Hey, will you invest in this?

Take a look at this company, throw money at that. You've seen it with crypto. It's become a shiny object for a lot of people. NFTs have become a shiny object for a lot of people. And some shiny objects can be good.

It could be a new opportunity. Apartments have become a shiny object for a lot of hope. House flippers, Amazon stores, e commerce stores, right? That's been a real shiny object. And so this is where I really came up with it about a year ago is, people started bringing me, like, the e commerce.

Dude, Bratz with your audience, you could sell these e commerce stores, you can make a million dollars in a webinar.

Steve: Mhmm.

Tim: And for me, you know, there's certain opportunities. I've been around the block enough times. I've seen this, you know, the insider track on stocks and insider track on crypto and all this stuff. And you always like lose money. Right?

Always every single time, even though you got the insider knowledge on it. And if it's too good to be true, that is, that is a real statement. Then, it probably is, you know? And so these e commerce stores started popping up and people selling Amazon stores and people selling, the Walmart stores. And they're like, hey.

You should you should share this. You should share this. Promote it. Let's do I was giving you an affiliate. And, I was like, dude, I just don't one, I don't like it.

It's too good to be true kind of a thing. The algorithm can change in a heartbeat and everybody can lose all their money. And I just don't see myself doing it long term. Now, that's an interesting thought. Right?

Think about you being in business. How long will it take you to become an expert at real estate?

Steve: Right? I still don't concern myself to be fully an expert. Yeah. Still learning. So you

Tim: can read books and there are statistical, metrics on this that it takes ten thousand hours minimum to become an expert. Yeah. Ten thousand hours, if you're working full time, forty hours a week, fifty weeks a year, that means five years it takes to become an expert at any one thing. Now there's some of us that are kinda psycho and and will dedicate sixty or seventy hours a week to it and can probably expedite that to like three years. And so that was my thing.

If I do something, I get very obsessive over it. If I do it, I'm gonna be all in on it. And so for me, if I don't see myself doing it for three years, I'm not gonna do it. Right? Because I know what it takes to become an expert at any one thing.

And there's a year of just planting seeds, of just creating the relationships, making the connections, gaining access to the resources, setting up the accounts, like all that kind of stuff. Then there's year two, year one's planting, year two's cultivation. Now you're working through it. You're working through all the bumps in the road. You're getting punched in the gut over and over and over again, pushing through, pushing through, pushing through.

Year three is when you start having the harvest and you really start winning. Everybody quits in year one and two typically. They don't wait for the harvest. Here's the caveat. Your for and beyond is where you really start the consumption phase.

Right? Like that's where you it gets so stupid simple and so easy that like the the the more simple and boring a business is, the more money I see at printing. Right. Because And it's only boring to you because you're an expert in it. It's exciting for other people who aren't involved in it.

But for me, the more boring my business is, the more money I end up making, the more automated it is, the more staff I have in place and team that I have running it, the more money I end up making. And so that to me became like this all encompassing idea of plant, cultivate, harvest, three years minimum. If I'm not doing it for three years, I'm not doing it. So I do crypto. I invest in crypto because I see myself investing in crypto long term.

I know you're doing NFTs because you would see yourself doing NFTs long term. I didn't see myself doing e commerce stores for minimum three years. And I was like, I'm not gonna do it at all. And then what happens, dude? All the Amazon stores get frozen, all the Walmart stores get frozen.

It's like a shit storm. All these guys making all this money and now have to return millions and millions of dollars.

Steve: Not a good spot to be in.

Tim: No, no, it's not. And then not only did they not make that money, right? They probably lost money because there's real overhead in that stuff too. And it ruins their reputation. And it takes them two years to deal with the cleanup and cleaning up the mess.

What if they just doubled down on what they were already good at and focus more on the harvest and the consumption?

Steve: Right. So things are not going the way you're expecting with MLM. And now you're paying for gas with coins.

Tim: Yeah. You

Steve: just jumped right into apartments?

Tim: No. No. So here's what I ended up doing. I was crying on my bed in that August, September 2012. How did I get here?

I had it figured out two years, two and a half years ago, where I was financially free. And, I was like, how did I get here? I had it figured out with real estate. This obviously isn't the vehicle I'm looking for, this MLM thing. So let me go back into real estate.

So I shut down that distributorship or membership or whatever it was to the MLM. And I got back in and I sold my home in the last house that I had, my own primary residence and real estate is what saved my ass. I saved that house, I had $50,000 that I made on it and I was able to pay down my credit cards. I bought a ring for my girlfriend who's now my wife. She didn't know how broke I was.

And then, paid down some debts and I moved back in with my parents at the age of 27 back in Cleveland, Ohio.

Steve: So went back to Cleveland. Mhmm. And you got engaged.

Tim: Yeah. And so I only met my parents during the engagement phase, but then

Steve: So say, but you proposed and then you moved in your parents. Yeah. Great one. My

Tim: wife didn't live with me. Right. She lived with her parents who was also in Cleveland. And then we And then her grandparents had passed away many years before and there was a little 800, 900 square foot bungalow house in a decent area that they owned free and clear. And they offered it to us to go and live there for two years.

And so, this little yellow three bed, one bath house dated from the 70s, We decided to move in and that was our first home, my wife and I. And that's where we had my daughter and, and that was that was the house. But, like, you know, I think a lot of people that they reach a point where, like, they have a certain amount of success. I got rid of the Mercedes and I started driving a 2000 this was in twenty twelve, 'thirteen. And I started driving a 2005 Honda Accord, right?

Because there was no payment on it. I can get that with no payment. I moved into that house because there was no rent payment. All I had to pay for is utilities, taxes, and insurance. So it was like $300 a month and I could just start chipping away at all my debt and I could start building my net worth again.

And, I think a lot of people don't swallow their pride like that. They try to fake the story. They try to fake the success. And here's the thing, the same thing that they're doing to try to show that they're successful is the same thing that's keeping them broke.

Steve: Interesting.

Tim: Right? Because they're trying to fake it till you make it. And faking it and having these nice things and having these expensive watches and cars and homes and toys and vacations typically is what keeps people broke and living paycheck to paycheck.

Steve: Gotcha.

Tim: It's wild, right? Yeah. How it comes full circle of the same thing that I think is gonna get me there is actually the thing holding me back. And so I just realized, I need to swallow my pride. Let me go and buy an older car, trade in the Mercedes, let me go and live in a family house for a couple of years until I get my feet back underneath me.

And what was funny is a couple of people from that network marketing company reached out to me and they're like, Hey, we got into this business so that way we would make money to then deploy into real estate. And they said, How about we partner up? How about I bring money and you do the work and we'll come up with some sort of an equity split? And so it was me and these two other guys and I ended up having 33% ownership in this new entity and they had 67% ownership and they put up about $300,000 And I went to work buying houses, flipping houses in Cleveland, buying some single family rentals in Cleveland in the hood, in really, really tough areas and ended up falling into my first apartment building. It was an eight unit apartment building in a C- area and it was listed for $50,000 I bought it for 30.

So, and then I put another $50,000 into it. So, I was all into an eight unit building for $80,000 and it generated $27,000 a year in net income. Net income. 33 percent cap rate. Is that good or bad?

Steve: That's incredible.

Tim: But I was also self managing. Yeah. And so I'm like After that first year of doing flips and single family rentals and then buying a couple small apartment buildings, I bought another eight unit for $40, put another $30.40 into that one. And it was like, this is the absolute trough of the real estate market. So it's 2012, 2013, and I'm buying in war zones for the most part.

And so but I'm getting these ridiculous prices. And I'm in Cleveland, Ohio is the other part. So it's like, there's a lot of things that were good on timing. But after that first year, I looked back and I realized I'm really not good at flipping real estate because I just don't have that attention to detail type thing. I don't like the customization of it.

And then the single family rentals were cool, but it didn't meet my ambitions and my goals. The apartments did. Because instead of going to eight houses, talking to eight sellers, getting money on eight different deals, having eight closings, having eight tax bills, having eight water bills, having eight foundations, I can go buy one eight unit building and have one foundation, one closing, one seller, raise money one time, one roof, one tax bill. And there's so many economies of scale by buying apartments versus buying many single family doors.

Steve: Yeah. So before we continue the apartments thing, I imagine at 21 killing it in real estate, you might have been a little overconfident, potentially arrogant.

Tim: Very arrogant.

Steve: So I had the same issues as well. So, what lessons did you learn? Like because, like, for me personally, I needed to be humbled. Right? Like, I had these crazy ambitions.

Not to say my ambitions are less crazy these days, but, I needed to be taught to slow down. So did you have did you learn any of those lessons?

Tim: Very much so. I mean, I wouldn't be as good of a steward of capital today and I wouldn't respect money the way that I do today if I didn't lose all that money back when I was 25, 26, 27 years old. Because I went through that lesson, I know the power of money. I know the power of investing in assets versus liabilities. And that's why I obsess over buying assets.

Dude, I have a very simple lifestyle. Like these jeans, I think they're from Old Navy. Think about them for $20, dude.

Steve: Yeah.

Tim: You know what I mean? Like, this is a self branded hat that my company gave me. Right? I can buy big watches, but I've never spent more than $5,000 on a watch. It's hard for me to spend money on assets.

I drove a 2016 Jeep Patriot up until a year ago. And so I traded that out and I got a Jeep Wrangler instead. I I I can go and get a Range Rover. I can go and get a G Wagon. I can buy a dealership.

I just I don't see the value in doing it unless it's gonna be an asset. Does that make sense? Yeah. And so but it's it's been burned in my head of, you know, don't be wasteful. The efficiencies are a big thing that I pay attention to.

And then just respecting what money can do. It could be either a resource and used for good or it could be a weapon and used for bad.

Steve: And it kind of goes back to where I like, you can read it in a book, but you got to live it.

Tim: You got to. I can share this story with every audience, everybody on this and hopefully it gets a lot of exposure and hopefully somebody takes it and they're like, you know what? I'm not gonna do the stupid things that that guy did. And then at the same time, you're like, you just gotta go through it, man. You gotta go through it.

It's hard part of having kids. You don't, like, listen, here's why you don't touch the hot stove. It's because you're gonna get burned. Well, dad, they touch it and they're like, now they don't touch it again. You know what I mean?

They gotta get burned. They gotta get hurt. And, that's that's like a really hard part with parenting for me right now because, you know, you wanna help your kids out and and, some there's some things, some lessons that they just have to learn for themselves.

Steve: Absolutely. Okay. So now you figured out economies of scale, you figured out, Okay, apartments is the way to go. And then So in 2014

Tim: then, I'm like, I'm all in on apartments. So I did a lot of ten thirty one exchange Not a lot, but I did a couple of ten thirty one exchanges. I bought an eight unit, bought another eight unit, bought a 12 unit, bought a 14 unit. I sold the 14 unit, bought a 23 unit, bought a 15 unit. I bought this 31 unit.

Steve: Are you at this point still partners? Yes. With the other two guys.

Tim: And so those guys ended up We ended up making a lot of money from the properties we sold that I generated additional value from. And then they ended up infusing more money. So they ended up putting in a little over $1,000,000 in a span of about eighteen months. Okay. So now I got a little, you know, a good chunk of change to go and spend some, on some deals and, turn that, you know, million bucks into, I mean, shoot, today it'd be worth $15,000,000 of property.

But back then, it was about 140 doors, So we got up to 140 doors and then life happens, dude. And people go in different directions. I become more valuable over the course of like three years of being in a partnership. They say they don't want to bring any more money, so they end up becoming less valuable. And there are some things like they had some credit things where they couldn't sign on loans, but they wanted to maintain.

It just

Steve: They were bringing different things to the table.

Tim: Yeah. They could Now that they need me to raise money, they need me to go out and sign on loans, they need me to do all the work Fuck, what are you there for? You know what I mean?

Steve: Yeah.

Tim: So my value kept on increasing, their value kept on decreasing. And there were some other things, like I had a salary, they took it away, they wanna put more on my plate. I tried to join a Mastermind, they're like, no, you're not allowed to do that. We can figure it out in our little inner circle. And it's just like, they weren't empowering me to go out and grow this thing.

Instead, they just want to hold me down. At least that's how I felt. And I'm sure they have their side of the story. I got my side of the story. Truth is somewhere in the middle all the time.

And, but we ended up saying, Hey, We decided to dissolve the partnership. It got kinda ugly. We we both lawyered up and, you know, had some different claims against each other. And then after about two, three weeks of paying attorneys full time, one of them called me and they're like, Dude, the only people getting rich here are gonna be the attorneys. So let's sit down and reasonably hash this whole thing out.

And that's what we ended up doing. We decided let's liquidate everything. And, Tim and I And

Steve: you guys liquidated everything?

Tim: We liquidated everything. Man. And I had an exclusive partnership, so I couldn't do deals outside of them. So I had to liquidate the entire portfolio. And I'm pressing the reset button again in 2016, 1516.

Early it was mid fifteen, sixteen, whatever it was. And so, yeah, for three years of that, I like, son of a bitch, dude, I gotta start all over. But some of those things that we think are setbacks are really, you know, set ups for better things to come.

Steve: I mean, you're probably flush

Tim: with capital at this point now. It was coming in over time.

Steve: Yeah.

Tim: You know? So I had, you know, some cash coming in, but I needed to figure out a way to keep the lights on. I had a a new baby at home. We're in the process of of building a house. And, what was good is like, I had other people who were like, dude, I wanted to do a deal with you.

I wanna bring money to your deals. And, you know, you had that exclusive partnership, you know, or now we can partner up. Now we can joint venture. And then I joined a mastermind in 2015. And dude, just the connections and the resources.

And what that led me to was like, you're a smart guy. Right? I have a decent level of intelligence. The people watching this have at least a certain level of intelligence and ambition. But because you're here, you are setting yourself apart from everybody else who's not investing in themselves.

So you're gonna be successful and you're gonna figure out a way. And I was successful and I was figuring it out. But dude, I was on this trajectory. As soon as I joined a mastermind, it was like this.

Steve: Yeah.

Tim: Dude, it was like, boom. It was the piece that was missing that helped me jump to that next level. And so I started flipping houses again because I needed to keep food on the table. And we were doing turnkey single family stuff at a management company. We're talking about how bad management is, especially you got turnkey and you're investing in C and D class areas.

And so that was a nightmare. We made some money and then we lost a bunch of money to the management and then we sold the management, thank God. But as I was doing that, I started passively investing or raising money for or sponsoring loans on different apartment buildings. And I found myself in 2017 with about 300 doors. And I was on vacation in 2007.

I rented an awesome lake house, brought my wife's family out for a week. They left and then I brought my family out for a week. And as I'm there, you know, on vacation, you you get kind of like reflective on life. And I was sitting out, grabbing coffee, overlooking the lake. It's a beautiful morning.

Steam's coming off of it. And, I'm doing my net worth statement. And I realize 90% of my net worth was from my apartments, which was about 10% of my time. And I'm like, What if I dedicated all of my resources, all of my team to just investing in apartments? And that following Monday when I got in the office, I said, Guys, shut down the single family side.

We're not doing it anymore. Whatever's in the pipeline, we'll see it through, but we're just gonna focus on multifamily moving forward. And so acquisitions guy, you're not underwriting or reviewing houses and running comps on houses, you're underwriting apartments now. Project manager, you're not flipping houses, you're renovating apartments. And dispo guy, you're not selling houses, you're only asset managing apartments, our own portfolio.

And here's the beauty of it, it was our own portfolio. So we were the buyer, you know? And we didn't have to worry about dispositions, but we did have to worry about operations and stuff. But you can control the deal when it's your own portfolio instead of just doing the transactional thing. And over the next, whatever it was, into 2018, about six, eight months, picked up another 300 doors

Steve: and just Like doubled your count?

Tim: Doubled my portfolio just because I focused. And then another deal came across my desk. This is the one that put me on the map, I would say. A 700 unit portfolio came across my desk and it was a bunch of guys or two investment bankers from New York owned it, but didn't have any experience in real estate, didn't have a partner who knew anything about real estate and didn't interview a management company. So they buy all these doors because they're making millions of dollars on Wall Street and they buy all these apartments or 700 units down in Georgia and just get clobbered.

And they realize this ship's sinking. This ship, if their other job, their Wall Street job, is gonna sink also if they don't just burn this one, right? And then focus back on this opportunity or their main source of income. So they just let this go. And we came in, we made an offer, bought 700 doors for $10,000,000.

So $15,000 a door, but it needed another $20,000 door in renovation across every unit. So it was a disaster, dude. Yeah. I mean, we put $20,000,000 into or 15 to $20,000,000 into renovations alone. It's a big rental project.

So, and there's there's more of a story. The the private money lender who's gonna write the whole down payment check, which is about $4,000,000, backed out the Friday before the Monday closing. So we can get into all that stuff if you guys want to, but I had to raise $4,000,000 essentially in forty eight hours. And I'd never raised that much money before, but I got it done. And I talked about it on social media and then I did some posts about it and it went viral.

And I got all these people, so I'm reaching out and they're like, dude, didn't even know that you raised money that way. Didn't know that you syndicated real estate. Didn't know that you took on investors and you paid them in a fixed return plus equity and this other stuff. And like, let me know about the next one. And then all of a sudden, people started reaching out saying, hey, I wanna invest with you.

I wanna sell you a deal. I wanna buy a deal from you or I wanna pay you to coach me. And, like, I didn't intend to get into coaching. It was like, just this tidal wave of people saying, dude, you need to coach people. You need to teach people this.

And I was like, all right. And I started putting together something called Commercial Empire, which is how to scale into apartments. Yeah. And, so I've been doing that for the past three and a half years. And, and that's cool.

We partner up with a bunch of students and stuff, but, it's helped me grow my portfolio. Right. Helps me get into deals that I couldn't get into helps me raise money that maybe, that I couldn't have raised before. It helps other people joint venture and get involved in deals. And so it's like, it's worked out pretty well until you realize some joint venture partners don't do what they said they're gonna do and all this other stuff.

So So

Steve: Uh-huh. Let's say right? Like, someone's listening right now.

Tim: Mhmm. And they're

Steve: like, man, like or let's say me. Right? Because, I think we're closing on our first one this week.

Tim: Oh, boy.

Steve: Yeah. So that's gonna be our very first, one. They're supposed to supposed to close, like, in January then in February. Now, like, loan docs are finally done.

Tim: It's always it always So

Steve: loan docs are finally done. Right? So we're closing, I I think, it's it's this week. So but if I was starting brand new, I was like, Tim, help me. I wanna get my first apartment.

What's the first thing you tell me?

Tim: Yeah. I I would say there's two ways in my mind to organically build or to build a real estate portfolio in multifamily. The first is the way that I did it. And it's actually the way that I teach my students to go out and do it too, which is organically buying a building, Buy a four unit. Buy another four unit.

Buy an eight unit. Buy a 16 unit. Buy a 22 unit. Buy a 50 unit. Buy another eight unit.

Right? And just organically grow your portfolio to at least a 100, preferably a couple 100 doors. If you do that, you're gonna go through the learning. It's a lot easier to raise money on a 20 unit building than it is 200 unit building or 2,000 unit portfolio you wanna take down. It's easier if there's a roof leak and you have to deal with it on a 15 unit building than it is on a 150 unit complex.

You know what I mean? It's easier to raise capital to sponsor the loans and qualify for the financing. You get a lot more respect, right? Once you already have a portfolio. If you didn't have a portfolio, now you would because you have a lot of real estate experience, but if somebody has never done a deal before or they're newer, they don't really have the reputation.

They only got

Steve: one year of experience.

Tim: And they go and try to put a bid in on 150 unit building, even if they do have access to the money. And you're bidding against a guy like me who owns over 4,000 doors. Dude, they're gonna take a lower offer from me because they know that I'm gonna close versus a higher offer from somebody else who might not be able to close or doesn't have the experience.

Steve: So, they're looking at the buyer's background as part of considering the offer.

Tim: Yeah, very much so. Very much so. It's a lot about reputation. So, that's not to say you should discard every 150 unit building though. Build up your portfolio organically.

And then if the 150 unit comes across your desk, then you reached out to Steve Trang or Ryan Pineda or Tim Brotz or somebody else in your local community who has the balance sheet, who has the experience, and can posture up and you can link arms with them. And maybe you don't get a 100% or 50% of the deal even. Maybe you get 5% of the deal for sourcing that opportunity and bringing it to a guy like you or me. But you get 5% and you're able to say, I own 5% of those 150 doors. And that now builds your balance sheet.

It builds your net worth statement. It builds your credibility. And you learn through that whole process. So I would say do both. But one way is if you have money or you have access to a bunch of money, like Pineda.

Pineda is like, Oh, I wanna get 50 doors this year. I was like, Dude, are you out of your mind? I called him a name when we were offline, but I won't do it on the air. And so I was like, Dude, with your level of influence, there's no reason that you shouldn't own 500 doors this year. He's like, Dude, you really think so?

I was like, I know so. And so he started a fund in, I don't even know, it was like April 2021. Yeah.

Steve: Not even a year ago.

Tim: Yeah. And within, I don't know, six months, I helped him take down. I brought the deal, my team's doing operations, he went and raised the money, we co signed on the loan, he signed on it and I signed on it and we co sponsored the loan. And guess what? Dude, now he owns three thirty four doors with me in Georgia.

You know what I mean? And so that's a way that you can get into a bunch of apartments very quickly if you do have money or a big balance sheet or you can source and find deals. You can do that and bring a big building to somebody like me and and joint venture. The other way is the organic growth way that way that I grew my portfolio. But I would be doing both of them at the same time.

Steve: So let's say someone's you know, we got a young hustler. Right? They're like, man, I I wanna get into apartments. Like, I'm all in. I'm sold.

How do they even find the apartment? Like, what's step one in finding

Tim: Bro, how do you find single family houses?

Steve: Pull this and skip trace. So if I'm asking you, like, where do they pull that list?

Tim: Yeah. So nobody even knows about this yet. I'm not even announcing this, but I'm gonna announce it if you're okay with it. Yeah. Let's do it.

There's a lot of softwares and stuff for single family. There's not many. There's really two of them, CoStar and there's another one called Reonomy. Reonomy just got bought by private equity. So they've gone downhill.

Steve: Oh, really? Yeah. That was a big purchase.

Tim: It was a big purchase. And, due to customer service is dog shit now. Their quality of lists have gone downhill big time. We We used to use them for everything. We just referred a ton of business to them.

And then when they got bought, we just were like, dude. And then CoStar is just old, antiquated, slow, expensive, and,

Steve: Definitely expensive Yep. And difficult.

Tim: Not easy to use.

Steve: Yeah. The it's not even like that. It's hard to use as far as, like, a learning curve. It's just a crappy interface.

Tim: Yep. Yep. It's horrible. And it's but there's such a behemoth in the industry. They've been around for so long that dude, they're too big of a ship where they can't move.

They're just going in one direction, they're staying in that direction. So one of my good buddies, somebody that I think you know as well, owns one of the largest data aggregators and softwares in the single family space. He's like, dude, we should do this in the multifamily. So we've been working on this for six months over that seven, eight months. And, we're we're launching it this month, actually.

It's gonna be called Commercial Empire Deal Flow. And Commercial Empire is my coaching, but anybody can jump in. There'll be a monthly, probably in that $2.99 a month range, which is, I think, Reonomy is like $500 a month and CoStar is thousands, or it can be thousands depending on if you want nationwide access or not. And dude, you can skip trace right there. You can pull lists right there and you can do even direct mail pieces right from the software.

So if, I'm gonna get you the link. Don't buy it yet. It's not even available yet, but you guys will have the link through him. Yeah. And I'll get you an affiliate link for it.

And that way, you can get a discount and then, you know, for being your your audience. But it's not available yet. It'll be available in the next, like, two weeks. So as soon as it is, man, it's gonna I'm excited for it. It's gonna crush.

Steve: Alright. So that's the list. So before then So that's

Tim: where I get the list.

Steve: So before then, costar was your primary?

Tim: How about this? How about, what if you don't have money? What are some ways that if you don't have money? Start dialing for dollars. Pick up a phone and instead of calling for for sale by owners, call for rent by owners.

Hey. I saw you have an apartment for rent. I'm not interested in renting. I'm interested in buying your building. Do you have any interest in selling?

Well, yes, no, maybe, who knows? Start the dialogue. Driving for dollars. Just like there's houses with tall grass and boarded up windows, there's apartments with tall grass and boarded up windows. You can pull a list for delinquent taxes.

The software will do that too, but, you can pull a list on delinquent taxes and start banging off phone calls to delinquent tax properties. How about Google? Just Google search apartment buildings, Tempe, Arizona, and see what pops up. Go to the ones with the worst ratings because those are typically physically distressed or managerially distressed.

Steve: Yeah. Totally mismanaged.

Tim: And start banging out phone calls to them and say, Hey, let me get this headache off your plate. Because if the tenants are pissed, the city's probably pissed, the management company's probably pissed. Yeah. And you could probably find a pretty motivated seller because they're not infusing money. Maybe they don't have the money or maybe they don't wanna spend the money or maybe they're too old and they don't wanna deal with it.

You can go to the building department. Sometimes the building departments, at least the one where my office is up in Cleveland, they keep a database of every property in the entire city and they rate every single one of A, B, C, or D based on how many physical distress items are on that property.

Steve: It's like when you go to the restaurants, it's like A, B, C, or D on the last food inspection.

Tim: Yeah. Yeah, exactly. Exactly. So each building has that in at least in that building department. But there's I know other ones do it too.

But if you can pull that list, start reaching out to all those landlords because the city's finding everybody who's in the d category every every month. What was

Steve: I've seen was, when the renewal is coming up not renewal when their their note was about to redo. Uh-huh. Yeah.

Tim: So I get I get those calls a lot from brokers, who wanna redo them, the the capital.

Steve: So, pulling a list, calling them. And then besides that, what else is different in the multifamily space versus the single family space?

Tim: One thing that you haven't heard me say is brokers. I work with brokers now because I have a big balance sheet.

Steve: I have a

Tim: you know, I say, Hey man, I own all these doors. I have this much experience. I've raised this much money. I have this big portfolio. And so they'll give me respect, but they do not respect people who just come off the street.

They don't have a portfolio. Send me some deals. Well, you're not gonna get that. The commercial brokerage world and residential brokerage world are two very different things. Think about residential brokerage.

There's people who shouldn't be homeowners who end up owning homes in the residential world. Like inheritance. Right? I'm thinking like, I don't know, some little old lady who never handled the bills or anything, the finances, her husband passes away. This little old lady dude, could the wolves start coming in on her.

Right? And they're like, there's investors, there's brokers, there's all this stuff. There need to be laws and regulations to protect somebody like that who doesn't have the business or financial acumen, who finds himself owning a piece of property. So, you know the broker. Like, what are your rules here?

If you get a listing, how soon how long do you have to put on the MLS?

Steve: Twenty four, forty eight hours.

Tim: Yeah. So in Ohio, I know it's seventy two hours. You have to get it up. Otherwise, you're violating your license rule.

Steve: The clear cooperation law.

Tim: Yeah. The difference is in commercial real estate, dude, these are all investors. They're buying for investment property. So it's assumed that you know what the hell you're doing. And commercial real estate, it's the wild, wild west with brokers.

They can hold that listing. They don't ever have to put it on. And there's not really like an MLS. There's LoopNet and stuff like that, but they don't have to actually put it out to market. They can keep that as a pocket listing.

Steve: They're all pocket listings.

Tim: And you think they're gonna take it to somebody with no portfolio? Or do you think they're gonna take it to their top buyers in town that have performed over and over and over again?

Steve: Well, they want to double net it too.

Tim: And they want to double net it. Although you're seeing in the commercial side, they're like, No, if you want to get paid a brokerage fee by a representative buyer, you need to get it from the buyer.

Steve: Well, yeah. No, they're saying that, but they're still charging 5%, 6%.

Tim: Oh, for sure. Yep. And when you get into the bigger stuff, they'll charge a little bit less. That'll come down. I'm selling $26,000,000 They're charging me like a 1.5% fee.

So two buildings together. But anyways, so just know that, like, the brokerage world, once you build a portfolio and you have the the the respect from the brokers and you can gain that respect from the brokers, yes. Like, that's a good way to go out and source deals. I wouldn't start there, though. I would start off market and try and go direct to the seller.

Steve: So you mentioned earlier, there's three things. Sourcing deals. Mhmm. Kind of covered that a little bit. Sourcing capital.

Tim: Yep.

Steve: I think everyone's always wanted to get better at sourcing capital.

Tim: Yep.

Steve: So how do you source capital?

Tim: Oh, man. This is one of my favorite things to talk about. There's a lot of different ways to structure raising money. And what I noticed is that if I paid somebody a 8% return on a single family house, if somebody else dangled a 9% carrot, they would usually jump over to the higher rate of return. So what I started doing when I was still doing single family was I would raise money and say, Steve, you bring money to the deal.

I need $150,000 to flip this house. I'm gonna pay you a fixed 10% annualized on your money or 15% of the profits, whichever is greater. Now, you look at it like my worst case scenario is 10%. I could potentially make way better than that.

Steve: And

Tim: you almost feel like we're partners, right? Like, Oh, I'm in on this too. You know what I mean?

Steve: Right.

Tim: And so it's a way that you can really attract a lot of money and make it exciting. Like they're actually not just lending you money. Whenever somebody asks to borrow money, like, Dude, I'm never gonna see this money again. But if they're like, Hey, you wanna partner up on a deal? And you wanna bring the capital?

I like partnering up. That's more exciting to an entrepreneur. So that's one part as far as single family goes. I learned in multifamily, there's really two types of loans. One of them is like the debt loan.

Let me pay you a fixed We see it. You know some guys from CG and stuff that pay like 6% pay as you go. And then they, whenever they sell or refinance, they pay another 6%. So it's like a 12% total return annualized on their money. Same situation is over here.

Those 13% carrot, all of a sudden they jump ship. The other side of the coin is equity, right? And say, Hey, there's no fixed return, but I'm gonna give you equity in the deal. And you might bring the cash and own 50% of the equity. Or like the partnership that I had, they had 67 of all the equity in the deals, but there was no fixed return on their money.

That's fun for somebody who's a little bit more risk averse or no, risk, pro risk, I don't know what the word is. So like they're okay with with the ups and downs and the cycles and potentially not making any money on something, but, you know, having bigger upside when they do win. It's not so good for somebody who wants predictable cash flow on their money. So I thought, dude, you either got this or you got this. Why not create a hybrid?

And so the way that I structure is I pay a fixed return of usually 7% to 8% while the money's deployed. So if you invested in one of my deals, you put $100 with me, I pay you 8%, let's call it, for about two to three years while the money's invested in this value add apartment. Then I go and refinance or sell. I typically refinance. At that time, you get all your money back, $100.

In the meantime, you've made 8% per year paid as we went along and then you still maintain a piece of equity in the deal forever. So, that And it might not be 50%, maybe it's 25% for the entire investor pool. But because I paid them a fixed return, you can get away with maybe offering a little bit less equity.

Steve: Yeah.

Tim: And to somebody who's a lender, they're like, Dude, I made 8%. That's just gravy, all this equity over here now. And you still get depreciation and you still get cashflow and you get some portion of the refi proceeds and you get some portion of any future sales proceeds and principal pay down. That's a really sexy offering to bring that to an investor.

Steve: So Stephanie, right, she was the one that reached out to me and was like, Hey, you want to fund this deal? And same thing. She was like, Hey, I just closed my first apartment. Anyone