All Forum Posts by: Ivan Barratt

Last time I check (it's been a while...) HUD had a moratorium on TIC's. Who's your HUD originator? Are they a servicer? If you're going the HUD route I strongly recommend an originator/servicer with a long track record. HUD is wonderfully structured debt (we have many HUD loans) however it's a mine field that requires the very best of teams!

@Bobby Shell great post! Lucky for me in 2007/8/9 I was working (working to learn) for my mentor as a junior developer. Thought I would be a millionaire playing the capital gains / speculation game. Wrong! Got a front row seat to the GFC and it forever altered my investor DNA. Ended up being the single greatest biz lesson of my early career.

Great Topic.

For BAM, an in-house vertical integration strategy is mission critical.  Does it make profit? No. Instead of focusing on a small margin of profit we instead focus on attracting great people, paying them well and giving them the tools to succeed in an environment of growth opportunities.

Further, we no longer have to acquire, refi, or sell to make payroll. Management fees cover the overhead. This allows us to stay disciplined on the acquisition criteria.

@Ben Leybovich thank you for the kind words. That warmed my heart almost as much as good scotch does. I look forward to that day!

@Ben Leybovich well thought out counter points! I look forward to continuing this debate one day over a nice scotch or high end tequila.

I'll leave you with only my experience having a front row seat to the GFC as a young developer who THOUGHT he was hot Sh$t! The smart and experienced firms who expanded and even thrived in the great recession were multifamily owner/manager firms with mostly/exclusively HUD and Agency backed debt.

I see your point @Ben Leybovich however I think out of all 4 points (solid market, solid asset, solid plan, solid operator); removing the operator would add the most risk/cause the most damage. That being said I do agree it's paramount to lock in all 4 variables. :)

@Michael Bonanno the "TK" model is a broken model. Dig deeper my friend. There are no short cuts!

@Jordan Archer got news for you. Lower cap rates are here to stay for a while. 10 years ago, apartments were the "step child" of commercial real estate. Getting a B deal at an 8 cap is history! Today the perception of the asset class is WAY different. And, that's a mega trend that's not going anywhere anytime soon...

 Further; in Europe, average cap rates are 3.5% on A real estate while interests rates there are zero. Think that's low? Well, 350bps spread above the risk free rate is considered a healthy delta! US rates, and cap rates subsequently will do the same. After all, US is a much better place to buy real estate right now right?

You heard it here first! ;)

1. I own nearly 3,000 apartments. I started with a house hack! :)

2. Out of state turn key rentals are a broken model. Rarely they work out; at best to be a get rich very, very, very slow model.