Turning B-grade apartments into A-grade investments – Tim Bratz of CLE Turnkey Real Estate

Tim Bratz, CEO and Founder of CLE Turnkey Real Estate

Tim Bratz, the CEO and Founder of CLE Turnkey Real Estate, grew his company’s revenue from $1.5 million in 2016 to $3.5 million in 2017, a 133% increase, and hit $15 million in 2018.  

CLE Turnkey Real Estate is a real estate investment company that acquires and transforms distressed apartment buildings into high-yield assets for their own portfolio.  

In this interview with Eversprint‘s Malcolm Lui, Tim shares how he and his team accelerated their high value sales by:  

  • Focusing exclusively on building their portfolio of cash flow positive apartment buildings. 
  • Generating deals and sources of capital by educating others on their process. 
  • Structuring the financial side of their deals to encourage long term investor partnerships.  

Computer generated transcript - CLE Turnkey Real Estate Interview (transcribed by Sonix)

Download the "Computer generated transcript - CLE Turnkey Real Estate Interview" audio file directly from here. It was automatically transcribed by Sonix.ai below:

Malcolm Lui: Welcome to the High Value Sales Show of Eversprint.com. I'm Malcolm Lui, the Managing Member of Eversprint, and today we're speaking with Tim Bratz, the CEO and Founder of CLE Turnkey Real Estate, a real estate investment company that acquires and transforms distressed apartment buildings into high-yield assets for their own portfolio. Welcome to the call Tim.

Tim Bratz: Malcolm, I'm excited to be here. Thanks for having me buddy.

Malcolm Lui: Tim, you grew your company's gross rental revenue from $1.5 million in 2016 to $3.5 million in 2017, a 133% increase, and in 2018 you hit $15 million. Before we talk about how you grew your company so fast, can you briefly share what your company does beyond my quick intro, and how your company differs from the competition?

Tim Bratz: Sure. So I'm on a real estate investment company. I buy apartment buildings all over the Midwest southeast south and started out doing all sorts of different sorts of real estate though I was a licensed real estate agent out in New York City for a couple of years and I remember brokering a just a retail lease and selling the landlord. And it was about 10. Now Rob I'm sorry about 400 square feet and we signed a lease for ten thousand dollars a month for four square feet in New York City with a 20 a 10 year I'm sorry 12 year lease term and 4 percent annual escalations every year during that lease term. So I did the math on it. I saw the landlord was making about almost 2 million dollars for doing something at one point time so I decided I want to become a real estate agent. So I've done everything from brokering real estate to wholesaling real estate to fixing flips type stuff that you see on HDTV. A lot of turn key residential real estate buying a single family house fixing it up packaging it with a tenant and management and then selling it to you know more of a passive investor and about almost two years ago I looked at my my net worth and where I was spending my time and where I was spending my my efforts and realized that I was just kind of doing a lot of transactional real estate you know getting paid one time then having to go do it again not to get paid again on it.

Tim Bratz: And I realized the reason I got into real estate was for the passive income that residual income. And you know 90 percent of my wealth at that time came from my apartment buildings and it was only 10 percent of my time. And they were easier to manage in bigger projects easier to get financing on and so over the past couple of years I've been focusing just on apartment buildings and by making a declaration to the universe of saying you know I'm burning the ships on all other part the pieces and parts of real estate investing and only focusing on buying apartment buildings. You see what happened my numbers. So it's been it's been kind of a whirlwind the past couple of years it's been awesome and we're excited about our future as well.

Malcolm Lui: So it to me the biggest driver of your growth from one point five million in 2016 to 15 million in 2018 was primarily a focus on buying apartment buildings and holding onto them for the passive nature of their revenue and income. All

Tim Bratz: Yep

Malcolm Lui: Right

Tim Bratz: Yep exactly. And it's that focus as you had mentioned is absolutely critical. I see a lot of entrepreneurs who get involved in the business they call themselves serial entrepreneurs because they get their hands on many different things and a serial entrepreneur when somebody self-described himself like that to me I actually get a little bit leery of it because I realize that they're not focused because I used to be one of those serial entrepreneur or self-proclaimed right and had my hands and all sorts of different things. But because I wasn't focused on any one thing I was just spread real thin instead of diving deep into any one business. And what I realized it's kind of like telling like the medical field you know you take a look at a general practitioner a physician and they can make good money you know six figures hundred eight hundred fifty two hundred thousand dollars a year but then you take a look at the people who are specialized in the medical field the heart surgeons and the neurosurgeons and all those specialists and they're making multiple hundreds of thousands out of not seven figures a year because they're the best at what they do. And I realize over the past 24 months that by focusing just deeply laser focus on one thing that you could be the best in the world. It's amazing how many people want to be involved with experts in their field. So it's been it's been easier to find more opportunities to invest in it. It's been easier to raise private capital and equity investors to partner with on my different projects. And yeah just by just by you know that that intense focus it's really to grow my business pretty significantly.

Malcolm Lui: So you said before briefly that you that you're focusing on one thing that you do extremely well. What would you describe as that one thing

Tim Bratz: Probably my unique ability is is really connecting people and understanding you know a desire of all of Real Estate Invest because I've done everything in real estate investing. I know the acquisition side and the financing side and all the private money side. I understand though the project management the renovations and the property management piece and the refinance and all those you know from A to Z of real estate investing I understand. So I can you know speak knowledgeably to sellers and buyers and private investors to talk with them and overcome a lot of objections. But you know that's from you know getting getting kicked in the teeth from a long time of being in the business. But my unique ability is really just connecting with people and educating people in the process. I think true sales is just an educational process and I'm pretty good at I guess conveying my message and taking complicated things and making them very simple like a third grade level. I think true genius is not. And how complicated and complex something is but how how simple you can make a complicated subject and not that not that real estate investing is that complicated but it can be kind of overwhelming to somebody who's not in the field on a on a normal basis. And so on able to take some of the complex pieces of real estate simplify it and boil it down to more of a third grade level because then I can then understand it if it's above that above my pay grade and I'm a lot and then I'm able to convey that information to others and so it makes it very simple and easy for people to want to invest in our projects. It makes it very simple for our team to understand what the next step is our standard operating procedures everything that we do and and it's again it's it's a communication and also simplifying and just doing things super super easy for everybody to understand

Malcolm Lui: Ok. Got it for the second driver of your growth Tim when you grow your business from one point five million in 2016 to 15 million dollars in 2018 how much of that was from acquiring new properties. I imagine most of it was and how much of it mattered from increasing your rental rates

Tim Bratz: Yeah I mean majority of it's from from acquiring more properties right. In real estate I have a fixed business meaning if I go buy a 50 unit apartment building and I can rent out each unit for seven hundred dollars a month. That gives me thirty five thousand dollars a month in revenue or four hundred twenty thousand dollars a year in gross right. Right. The issue with that is there's only 50 units and when there's only 50 units I can't I can't increase the revenue of that building. Now nominally I could. Can you bump up rents a little bit every year to 3 4 percent. Yes you could do that. Could you add laundry services and that way increase some revenue there. Yes you could. Is there signage that you could put on the side of the building or parking spaces you can rent out or storage spaces you can rent out or additional amenities that you can include and then charge for or even cell phone towers on top. There's a lot of the little things that you can do but it's not a massive impact to the to the building. The best way and that I've that I've found to increase my revenue is just by acquiring more buildings and with the lending environment the way that it is and a lot of people little bit hesitant on the on the stock market how volatile that's been.

Tim Bratz: They're trying to put some money into fixed assets and so we have a pretty significant amount of people who want to take some money out of the market and invest it in real estate with us. We're phenomenal operators and we're able to deploy that money into great deals great projects. I do a little bit of the education I'm kind of bigger than a lot of the traditional investors in real estate but I'm not quite like a hedge fund or a real estate trust. So because I'm in the middle I do some coaching and educate other residential investors house flippers and people in the turnkey game and all those kinds of things on how to get out of that transactional phase and leverage up into apartment buildings and by putting on educational seminars on a quarterly basis. I'm able to develop relationships with people who can either go out and find deals for us or who want to invest passively with us. And so I have some pretty significant deal flow new opportunities coming across our desk on a daily basis. We're able to cherry pick the best ones the best of the best out of hundreds of deals that we look at on a monthly basis.

Tim Bratz: We could pick up to three for the best ones at the lowest cost basis and it creates a good return for us. So we're buying a kind of a wholesale price versus more of a retail price and we're able to come in. We understand operations really well so we're able to you know for some appreciation there by putting in some sweat equity in these deals so we're able to increase the income decrease the expenses. Do all those kinds of things which then increases the net income which increases the value of the building that you can then sell it for or refinance it for. And so that's my that's my business model is I buy distressed apartment buildings fix them all up and then we refinance them cash out our investors and then we let it cash flow the property cash flow for the next 10 12 15 years and we'll let future Tim deal with with what we do with the building 10 years from now based on what the economy is like in the market. And real estate in the different towns that we own

Malcolm Lui: So that to acquire new units on key is finding the right properties to buy that meet your criteria. Being distressed many you can clean up and raise the value and raise the rent subsequently. Now is getting the leads from your educational programs that you do the primary source of finding deals or do you have another source as well.

Tim Bratz: Yeah I mean we do a lot of a lot of marketing on our own. We've kind of built a reputation as I said to be the apartment buyer in town. I'm not the biggest even in Cleveland there's several people probably half a dozen to a dozen people who have more units than I do. And I've been doing this longer but because I have such a heavy social media presence and network a lot and I and I educate a lot I'm probably known as the biggest apartment but like I'm the best known apartment investor in in Cleveland and really in many markets across the country just because I'm pretty active on social media which spans across the United States. But yeah I would say it's probably about I I've only launched my education business about six months ago and so we're getting a lot of leads and educating people on how to search for good deals. And we have a couple really really good projects in the works right now. Majority of my my opportunities and deal flow comes from my team my marketing referrals that we already had network that we already had and it's increasing though from my education business where we have this this this increasing flow of opportunities there though too. So I expect it especially the next six months to be majority of it from my education students

Malcolm Lui: Ok now so number one driver is your focus on buying apartments for passive income. A second one is acquiring more units. Is there a third driver of your growth in your gross rental revenues.

Tim Bratz: Not. I mean that you know we again we don't we don't try to spread ourselves across too many things we just we just focus on buying more apartment buildings we buy at a wholesale price and we're able to increase the values pretty significantly. We refinance them and then we can sit on them and hold them and then our investors get paid back. So now we have more money to deploy of of properties and we just keep on doing it that way. And that's that's the primary driver for us. And how we do deals

Malcolm Lui: Right now when you say you refinance the properties and you cash out your investors your investors are essentially just lending you money to finance the property that they don't have an equity stake in it

Tim Bratz: We do a little bit of a hybrid so I'll give an example. Let's say here's here's a deal that I just did. I had 48 units in Cleveland Ohio. Actually it was in like a suburb of Cleveland up near the lake solid B class kind of an area and we bought for sake of using round numbers we bought and renovated the building for two million dollars. That was our all in cost two million bucks. The bank gave us a loan for one point five million and then we raised five hundred thousand dollars from a private investor. That happened to come from one individual more often than not we usually have you know five investors at one hundred thousand dollars apiece. Who then it would invest but you know for it for E's sake of explanation here it was one investor who invested five hundred thousand dollars. It took us about 12 months to buy renovate re rent but better management and play stabilize the property and over the course that 12 months we we pay them. We paid our investors a debt piece of 10 percent regardless of the property's performance. So on five hundred thousand dollars we paid them fifty thousand dollars in interest payments over that that 12 month period and then the property appraised for three point five million dollars. Twelve months later. So we're all in for two million bucks. The property praises for three point five million dollars and we're able to get a 70 percent loan on that property. So hang on a second 30 points. So we get a loan for just shy of 2.5 million dollars on the property when the when the new lender gives us a loan for 2.5 million dollars. We take 2 million of it and that goes to the bank that gave us the construction loan of one point five million and pays back our investors on their five hundred thousand dollars. Then there's another five hundred thousand dollars spread there. Are you following me so far Malcolm.

Malcolm Lui: Yep got it

Tim Bratz: Ok. And on the five hundred thousand dollars at that time we actually give our our investors another 10 percent equity in the deal in perpetuity. So it's just kind of a cherry on top. A little bit of icing on the cake as a thank you for being involved and so on those five hundred thousand dollars of refinance proceeds 10 percent of that. If another fifty thousand dollars would go to our investors so our investors in that deal made made more than 20 percent return on their investment in twelve months and then they make 10 percent of all the cash flow it's about seven thousand dollars a month in cash flow so their portion is 10 percent of that. So it's about seven hundred dollars a month. And when I say cash flow cash flow means that you know there's the gross income minus all the operating expenses minus the debt service and that's whatever's left over is the cash flow. So they get seven hundred dollars a month in cash flow for as long as we own this building. And again they don't have any money involved in it anymore. So it's pure gravy and it's essentially an infinite return.

Malcolm Lui: Yeah. Pretty good for

Tim Bratz: And

Malcolm Lui: Them.

Tim Bratz: Then and then they have you know that they're they're entitled to 10 percent of the equity in the property too. So on that you know it's worth three point five million and our loan is only 2.5 million. Their equity in the project or the total equity the projects a million dollars their equity 10 percent of that is one hundred thousand dollars which they're able to put on their balance sheet increases their net net worth by that amount of money. So

Malcolm Lui: Okay.

Tim Bratz: It's a it's a good deal for the investors. It's a good deal for me because as you can imagine as soon as I repay somebody that five hundred thousand dollars. What's the first question they asked me it was the next one. Right.

Malcolm Lui: Yeah.

Tim Bratz: So they're asking me whether I'm building a long term relationship with someone or able to turn that money over maybe six or seven different times over the course of ten years. And then they can have a little bit of equity in all these different projects with passive income hitting them from six or seven different deals and having these big pops of refinance proceeds and sales proceeds whenever those events occur. So

Malcolm Lui: Right.

Tim Bratz: It's a it's a good opportunity for them it's a good opportunity for me because I don't have to go out we raise money every single deal that I do because a lot of these people like and trust me and they understand our business model and it makes sense for everybody and I think you know a rising tide lifts all boats you know. So it makes a lot of sense

Malcolm Lui: Yeah definitely. Now when you say they own 10 percent equity is a real equity. Their names on the on the title and everything or is it more of a phantom equity peppering

Tim Bratz: Yeah. So it's real equity we create a new LLC for every apartment building. And so let's say it's one two three main street is the property that we're buying we'll create an LLC that's one two three main street LLC and of one two three main street LLC my entity and any joint venture partners we have would own you know X percentage of it and then the investors however much they invest in how do we break that down would own another 10 percent of the project and so they're actually on the operating agreement for that LLC and then that LLC owns the property itself.

Malcolm Lui: All right. Very cool. Now for your cash flow definition. He didn't mention anything about setting aside some some money for capital expenditures. Is that something that your original investors don't need to worry about not something that you will take care of going forward.

Tim Bratz: So that's that's actually kind of in the expenses of the property. So

Malcolm Lui: Like

Tim Bratz: When we have you know taxes insurance and maintenance utilities and property management and all those different things there's also a maintenance reserve in there as well that is usually a couple percent per month that we take off the top and just leave it in a reserve account and then you know that way it doesn't doesn't mess up the monthly cash flow too much. If a big expense pops up but we do some pretty heavy improvements on these properties on the front end. So we try to normalize and have very predictable expenses on an ongoing basis as we manage this thing for the next 10 15 years. You know we're we're doing plumbing and electric and the roof and new windows and new flooring paint fixtures all those kinds of things. New mechanicals on the front end. So we don't have these these surprises. I guess we'll

Malcolm Lui: All

Tim Bratz: Collar

Malcolm Lui: Right

Tim Bratz: When they do occur in real estate

Malcolm Lui: Right. And if something unusual does happen that you weren't planning that it consumes all of your capital expenditure reserve fund then what happens

Tim Bratz: Then either I would contribute to the to the project and then pull my money back off the table from the cash flow. We would just figured out that way in most my investors. We have really good working relationship and a very reasonable people so if I said hey you know I had to put in another thirty thousand dollars because the boiler busted and we only had twenty thousand dollars in the reserve account and it was a fifty thousand dollar boiler it there's no way to finance it or or put it on a card or something. Something along those lines. I have good enough cash as I've plenty of cash reserves where I can then contribute the 30 thousand dollars and then that's seven thousand dollars a month would go back to my company until we're made whole and that thing and then we start distributing cash flow again

Malcolm Lui: Right. OK. It makes sense. So for 2019 What are your plans. What are your

Tim Bratz: Yeah.

Malcolm Lui: What are you

Tim Bratz: So we're

Malcolm Lui: Telling

Tim Bratz: We're ambitious we're excited and things are going really really well with the education piece and our operations really dialed in and we're excited about what we have going on and so we have another summer. I'm a little I've just over two thousand units as we speak today rental units in my portfolio and some of those I own 100 percent of some of my own 25 percent off. So just kind of ranges on how much my ownership is but I have equity significant amount of equity in over two thousand units in Ohio South Carolina Georgia Florida Texas Oklahoma and we're and we're looking to expand that. And actually for a little over 400 almost 500 those units were just picked up in 2019 so far. So when I give you my numbers it was around sixteen hundred units in in 2018 and so we're already at two thousand or twenty one hundred about and we expected to hit around 3000 units this year and once all that stuff stabilized and cash flowing that'll kick off north of 30 million dollars a year in in gross rents. So that's not that's not net revenue but that's majority of our money. You know it's not like it's a typical business that has like sales revenue.

Tim Bratz: Our sales revenue is our rental revenue and so we'll have about 30 million dollars gross rents on average about 50 percent 40 to 50 percent of that goes to expenses. And. So we have about a 60 percent is the net income that's left over 50 to 60 percent depending on the market and the area where we are. And then we have debt service after that. So our cash flows typically around 20 to 25 percent of the of the gross revenue. And that's that's just pure cash flow that we're able to put in our pocket at the end of the day. So after all expenses and operating capital and all of those things all debt service and all that. So it's yeah we're pretty excited about it or we should be north of 30 million by the end of 2019 and we'll see where it goes from there. We have a a portfolio value by the end of this year we expect it to be around 300 maybe a little bit north of 300 million dollars in assets that we own and manage that we own. We don't manage anything for anybody else but we manage our own stuff. And our goal is to hit a billion dollars in the next 36 months.

Tim Bratz: So I know that we can do it and it actually was forty eight months and I and I scaled back to thirty six months so I'm confident in our team I'm confident our ability to raise the capital and find awesome deals find awesome projects and we do a little bit of ground up construction as well. It's actually a little bit more predictable in in the cost of of the total project and it kicks off a little bit more cash flow and a little bit less maintenance on an ongoing basis because everything's brand new. But you know you have a little bit more downside on the front end anyways because you don't have as much cash flow coming in as we do on some of the other projects that are already partially occupied. And so it is more of a cash flow management piece than anything else but yeah we're we're excited we're building quite a bit down south southeast area Georgia South Carolina and buying a lot and renovating a lot in the Midwest and Texas Oklahoma kind of areas and we're open to buying and other other locations too we just haven't partnered up with anybody in any of those areas yet.

Malcolm Lui: So how are you finding these deals and other states. You have people on the ground in Georgia South

Tim Bratz: Yeah.

Malcolm Lui: Carolina Texas

Tim Bratz: Yeah. They're students that come out to my events or people that I know just from the general network of real estate contractors. I'm part of a couple different mastermind groups that meet on a quarterly basis every year and so I know some of the best operators across the country in residential real estate and all of them got into real estate because they want that mailbox money right. The residual income the passive income and so they know how to work with contractors. They know how to find good deals. They can be boots on the ground in whatever market that we're investing in and my team has I have the balance sheet to go and acquire any sized loan for apartment buildings. I have the liquidity also to do that and the experience to do that so I can get the financing. A lot of times I can raise the capital and my team handles the property management from right here in Cleveland Ohio because a lot of that stuff could be done digitally nowadays you know utilities can be set up over the phone and maintenance work orders can be done online or over the phone and tenant rental applications and leases can be signed all through. You know Doc you sign and anything like that so we can market leases on units online. All we need is a boots on the ground partner to help with open houses and move ins and move out and a lot of that stuff and usually our properties are on average around one hundred little over one hundred units apiece.

Tim Bratz: So then it makes sense to have an onsite property manager as well and then they all just dial into our management software and we're able to manage the property look at real time reporting any time we want and it's a it's all dialed in. You know it's been a lot of it's been a lot of struggles and try to figure it out. You know I've been in real estate for 10 years now. I've only been good at it really the past like three. So it's been a lot of getting kicked in the teeth and struggling and failing forward. Just sticking with it learning curve after learning curve after learning curve and and now it looks like we're an overnight success right. So there was a lot of a lot of sweat and tears and work that went into that getting the basis of knowledge and understanding of how we do what we do and you know just dialing in those systems and refining everything over the past decade has put us in a position where we could buy several hundred million dollars worth of property every single year now.

Malcolm Lui: Basic. What do you see are your biggest challenges this year.

Tim Bratz: I'd say the biggest one is you know nobody can predict the economy right. And so one of the biggest scares is what's going to happen with the housing market. Obviously everything's going great right now and financing is easy to come by but as interest rates increase a little bit as speculation occurs in both the stock market and the housing market. How is that going to affect us in apartments. So you know I was going through school and decided I want to become a real estate investor in from 0 3 to 0 7 but I never bought anything until 2009. But my first my first duplex and two thousand nine and this is right after the market shifted last time right. And so in 2009 I looked at everybody who either made money and we're able to ride out the storm or went bankrupt and what was the difference between those two the difference a major difference was excuse me the major difference was the people who lost everything and went bankrupt their head foreclosures on their record or had short sales on the record they bought for speculation meaning they were rolling the dice they were gambling. It's like you know buying at or at a retail price today hoping that it's worth more tomorrow. And when it wasn't worth more tomorrow and actually went down in value because they bought at the top of the market they were not able to do anything with that property.

Tim Bratz: And so the people who bought for speculation ended up getting beat up pretty bad. The people who bought for cash flow and could could had an asset that somebody else was paying for either tenants the tenants made made payments every single month that covered the operating expenses that covered the debt service and that put cash in the investor's pocket. And when I take a look at that and especially the ones who who did really well were the more the B class kind of areas. So it's pretty arbitrary. You know a Class B Class C Class D class and you could judge it however you want D classes you know the the war zones and the hood but the places where are very dangerous the worst school systems the highest crime rates like those are the D classes a class areas are the best school systems the safest neighborhoods you know the places where you would desire to live. And so in between that what I found is that the people who own it kind of the B class areas and that's where I grew up I grew up in a B class area a suburb of Cleveland Ohio the average home sale price was a hundred thousand dollars but it was good school district.

Tim Bratz: I felt safe playing outside was raised there in those areas. Everybody can afford those areas when the market's good. And then when the market shifts and the economy scales back a little bit or housing prices come down a little bit all those a class luxury kind of renters they move into B class areas. So regardless of the marketplace those B class apartments stay occupied and I and I realize that and that's why I've developed my company the way that it is is to be completely recession proof. I don't have a high degree of of risk tolerance you know for me I never ever want to risk principle. That's why I buy at a wholesale price. I physically force the appreciation by doing the work myself. I never speculate that prices are going to go up or that rents are going to increase. If they do that's just the cherry on top. I have a very predictable system of buying apartment buildings and refinancing apartment buildings and cashing out my investors because I know what the property's worth and I and I project for higher interest rates. I project for a lower loan to value on the renovation than I can get today and I'm I'm projecting twelve months from now to try to compensate for a lot of those risks and a lot of that uncertainty that that could be coming down the pipeline especially next year.

Tim Bratz: You know it's a an election year and whenever there's an election year the stock prices start going crazy. The market starts going crazy and we're expecting that to occur and we're buying at even a deeper discount today because we know that when it comes time to refinance at 12 or 18 months from now then that's the kind of stuff that we to be facing. So the fortunate part is we've proven that the concept works we've proven our model we've proven that we're bankable and we're financing well and even in 2009 2010 when the when nobody was lending on real estate there were still people getting loans on real estate. It was just they were the most bankable they were the ones who had great assets who had the cash flow who had the experience. And we are those people. So I'm not too concerned about how lending is going to affect us because we just keep on buying at low low prices. We have cash flowing properties we have a big balance sheet. We have a lot of liquidity.

Malcolm Lui: So Tim what needs to happen this year. You know if he had a magic wand that you wave and make happen what would it be. Would it be you know finding more deals would it be finding more investors. What would it be to really make things rock and roll for you. This year maybe even bump up your targets even further. Maybe it's going for four billion you shoot for two billion of assets

Tim Bratz: I love it. That's a great question. You know I think as real estate investors we're always looking for deals and we're always looking for money right. So we're always looking for an opportunity for new opportunities to invest in and at the same time we're always looking for capital to deploy in those projects and very rarely are you deal heavy and money heavy at the same time. So although you know sometimes I have access to a lot of capital and I don't have enough deals sometimes I have access to a lot of deals and not enough capital and just weighing the balance or doing the balancing act between those two things. Is it just a constant thing that we're paying attention to in order to double our goals and aspirations for this year. We would just start looking at some bigger stuff. The only hurdle that we face when we get into the bigger stuff is now you're playing with the hedge funds and the real estate trusts and they have hundreds of millions of dollars that they could deploy and they can come in and buy it with cash or just investor capital. And it's hard to compete with that because we always balance out with finance and that's why we're able to pay our investors you know 10 percent on their money because that's that's based on 20 or 25 percent of the down payment. And the other 75 or 80 percent of the money comes from the bank at 5 percent interest rate. So our blended cost of capital is only about 6 percent when you know some of these hedge funds and the rates and they have they have they pay their investors less.

Tim Bratz: That's just the reality of the situation and they can go in and they have so much money that they can go and deploy it in cash and and buy up properties it's hard to compete with them and you see we're kind of in between again we're bigger than all the all the residential investors but we're not quite a hedge funder or a real estate trust. So our ballpark is right in that seventy five to maybe two hundred units written that ballpark is really our sweet spot. And if we started going above that then then again we compete with a real estate trust. So it's not really are our goal to compete with them unless we had access to hundreds of millions of dollars at that time we would probably get it as a bigger properties. And I mean just like there's distressed single family houses that people didn't take care of there's distressed apartment buildings that people to take care of or companies that went out of business and and let their office building go. And I'm talking about big office building. I know some stuff in Ohio that some of the couple the largest apartment built or office buildings in Ohio that are only 20 percent occupied because the fund that owns them just didn't care about it anymore. And so I'll probably dive into some of those and start buying some of those bigger opportunities there out there. It's just I would need to have a need to have access to tens and hundreds of millions I have access to you know 10 20 30 million dollars that I could probably deploy if I if I really got to work on it.

Tim Bratz: But you know I don't have I don't have crazy access to capital in the hundreds of millions and getting to that bigger stuff. So we're OK where we are right now we are launching our own fund and we'll see how that goes over the course the next six months here. I think we can raise probably 20 or 30 million dollars in that based on what we do and how we do it. In the meantime we're doing one off kind of investment opportunities for our investors. So we'll see how the fund works out but I did. I have realized that that finances that industry that commands all other industries. So if we can launch our own fund and especially paired up with my educational events I could see us getting involved in a lot more transactions a lot more opportunities just from the mine out from the money from the monetary side of helping other people buy apartment buildings and still you know keeping a good grasp on it to make sure it is managed properly and operated properly. And so so I think there's definitely opportunity it's pretty. Especially as you got to my numbers it's impactful on how much this stuff compounds and how this snowball starts really gaining weight and gaining momentum. Year over year over year and so we've been able to pretty much five times are our income in 2018 than we did in 2017 and we're getting more than double it again in 2019. I can see that potentially tripling or quadrupling again maybe even this year if the right opportunities come about and the right money comes to the table. So it's definitely possible

Malcolm Lui: Yeah. Especially since you have the educational component which can appeal to students and investors both the ones who actually want to be involved with real estate as opposed to just being in a investor real estate

Tim Bratz: And that's that's the crazy part. You know I had an event back in October and somebody came up to me and said hey listen I know so-and-so and who's who we would all know. It's a very famous very famous person who's also a billionaire made a lot of money in the entertainment realm and music and movies and then a smart very smart from a business acumen as well and wants to deploy a bunch of money in real estate and so this person comes up to me he's like dude I know so-and-so who's a billionaire wants to deploy 100 million dollars in real estate this year but he doesn't have anybody who you know he came to me I'm just a residential guy I could deploy 2 million of it and that's about it. But maybe there are some things that we can do together so like you know he's get me on a phone call with a billionaire and really at that level it's just really the billionaires attorneys and CPA. But you never know who could come in to one of these events and who you could connect with and it's so it's hard to project where we're going to be and what we're gonna do. But from a very predictable standpoint I'm very confident we'll hit 3000 units this year and you know be able to be able to take our revenue to at least 30 million dollars. And I think we'll be able to increase it maybe a little bit more than that. So we're excited

Malcolm Lui: Yes. Sounds pretty pretty exciting as well. Now I saw from your LinkedIn profile you had another Web site for vacation home rentals with two properties in Florida. Now is this a another business you're thinking about ramping up

Tim Bratz: Yes. So that was one of those things when I was not very focused and I was doing a bunch of different types of asset classes and I bought two vacation houses outside of Disney World and thought I would be an awesome investment and realize it just took up way too much time. We make a decent return on it but the financing is not as easy. The management's much more difficult. It's a new learning curve that we would have to go through with my team. And so after buying two of them I stopped doing it. They're great little projects. We have them dialed in they're pretty much on autopilot. I gave them to a I actually brought in a business partner have him and his team running it. So it doesn't affect my team. And so it's pretty much passive for us now. But you know just with where the residential housing market is and all that stuff we decided to stop buying vacation rentals and just focus on what we're good at in our bread and butter. Is B class apartment building. So we just stick to that

Malcolm Lui: Now for the education is a fantastic way of finding leads new property connecting you with investors. How's that coming along in terms of the growth. You have growth targets for getting more students enrolled in your program and getting them started.

Tim Bratz: Yeah you know social media is a very powerful thing. Have a lot of people who reach out to me. I just I just try to share information on on how to do deals and a lot of people you know keep that content and keep their secrets pretty close to their chest and don't want to share that because they think that'd be good. You know creating competitors for me I don't see it that way. And what I've actually found is the more information I give away the more I I interest people and becoming partners. And for me I'd rather have 25 percent of a watermelon than 100 percent of a grape. You know to me by that there's a lot more squeeze in twenty five percent of a watermelon. There's a lot more juice in that squeeze than in 100 percent of a great. And so for me it's more of an abundance mentality than anything else of being able to do more deals being able to do more deals across the country in different markets with more different operators and other people it's a way that I can grow my business without growing my overhead in-house. Right. So I can I can partner up in joint venture with people who are only compensated based on equity in the deal and the deal performing. And it's a way that they can get involved in apartments. That's a way that I can grow my portfolio without having to grow my team at the same time and take on all that additional overhead. And so it's a it's a really cool but at the same time I'm not getting married to anybody. It's just on a deal by deal basis. And

Malcolm Lui: Right

Tim Bratz: So we're still able to control the money we can still control the management and we can see real time whether the property's performing going in the right direction or not. And we can step in because we have the acumen of love and knowhow of how to do a to z in real estate. It is a pretty unique position to be in. But to answer your original question on the growth metrics of of yeah the education side I only held two events. Well two formal events one informal event in in 2018 and we had. A look at the total revenue but it was it was just shy of about seven hundred thousand dollars in gross revenue in twenty seventeen. And that was just with a couple of events and just launching this brand new brand this year we expect to be in excess of of probably five or six million dollars in gross revenue. And we want to be at 10 million in 2020 is the goal. So we're on our way we're on track to do that. To do at least 5 million this year so we're pretty excited about that piece.

Tim Bratz: And who knows something something could pop or we're still making some tweaks. We're thinking about doing bigger events at a lower ticket price and just trying to find our sweet spot in all of that. And I'm work with some of the best people in the educational business to really take that piece so that way I don't have to run it. It's something that I don't have to relearned or anything I just kind of come in either percentage ownership in that and it allows me to then you know really do more deals. That's the main the primary driver of doing the educational pieces more deal flow more money flow. And so it's a yeah it's an exciting business to be in. I love teaching. I love meeting with people I love trying to educate and help people help inspire people to see themselves as able to do more than maybe they could see themselves without me helping them and really get outside the box and dream bigger and it's pretty exciting for me. I love that that aspect of the business. So know

Malcolm Lui: Now

Tim Bratz: We'll grow that piece too and as that piece grows I'm sure the investment company will will mirror the same growth.

Malcolm Lui: Yeah. Now how does that work out. People attend a live event. They pay to attend it and then what happens after that.

Tim Bratz: So. So I teach people how to how to buy apartment buildings. You know it's a desire on everything that they would need to do from cradle to grave on how to buy an apartment building find off market direct seller deals how to raise all the money for the downpayment how to secure the financing and then and then once you close on it how to improve the building in a way where you don't have a mass exodus of tenants. And it's very it's a very scientific step by step process that you go through on how to bump up rents and renovate units and renovate the exteriors and then get this thing stabilized over the course of 12 or 18 months and then refinance it. And what that looks like what the terms look like on the back end and then how to how to manage it on an ongoing basis so somebody can come out to one of my events and they can learn everything they need to know in order to do this on their own. And the reality though that happens is they say hey listen I think of my first deal I'd rather partner up with you Tim to make sure you hold my hand and make sure I don't screw anything up. And so it allows us to kind of partner up it allows me to focus on what I'm good at allows them to focus on what they're good at and then even after after they understand the process they say hey I'm just I like focusing on my piece. Let me focus on that let you focus on on your piece and the reason we're able to do that is because we're working in multimillion dollar projects. You know it's hard to carve up the equity on a single family house. It's a couple hundred thousand dollars and there's only twenty thousand dollars of profit built in to it but you could do it on a 10 million dollar building when there's 2 million dollars of equity built in and there's more of a pie to go around it's just a bigger piece of pie.

Malcolm Lui: Right.

Tim Bratz: And so yeah so. So people come out to my event we educate them give them all the tools that they would need. I introduced my entire power team my attorneys my CPA is my commercial mortgage brokers my insurance agents all those different people they're on discussion panel so they're not only getting information from me they're getting information from industry experts that have taken me 10 years to find the best in the business. And so I give them access to a whole bunch of stuff like an online vault of information as well. So anyways they get everything they would need to go do deals. And then when they leave I connected with my acquisitions guy or with my chief investment officer if they want to be a passive investor not connected with my chief investment officer. If they want a joint venture and partner up as an active operator I'll connect them with my acquisitions director and he'll he'll help them review deals help them negotiate contracts help them put purchase agreements together help with all the due diligence. We hold the hand the whole whole way through the process and not only are you able to build some wealth with us but you're also being educated at through real world experience. It's one thing about reading about how to do this stuff in a book or going to a seminar. It's a whole another thing about actually jumping in the water you know that's when you learn how to swim.

Malcolm Lui: Yeah definitely. Now I see on your website here that at least for your past events it was a three day live experience. Was that your offer or do you have other things

Tim Bratz: We

Malcolm Lui: Like

Tim Bratz: Have a couple of different things right now that there is an online type training as well. A couple different price points couple different things that we have to offer. So there's an online type of version more more just how to find deals and then the three day is the is like the the intensive seminar. Dive deep for three days on everything that how we do what we do. We have a mastermind group to that's by invite only invitation only for some of the higher level folks and entrepreneurs that want some ongoing support. But that's not something that we we really advertise. But yeah I mean we try to keep it simple I don't have like all sorts of different products and stuff that we offer. It's really just more of an online alive. And then when you get to a point where you're ready for it we have we have the. The mastermind

Malcolm Lui: Ok. Fantastic. So I know you said before you're you're adjusting the pricing. Can you give the rough ranges for these three different categories.

Tim Bratz: Yes. So I have to talk to my I have to talk to my business partners on it because they're the ones who adjust the pricing. But you know it depends on if you're bringing a business partner to the live event or if you're coming solo you need Hotel and Lodging and all that different kind of stuff. It usually ranges you know five thousand eighty five hundred dollars depending on where we are. What's going on and how many business partners and stuff that you're bringing in and all that. So that's for the live event. The online is I think it's only a couple thousand dollars to plug into that. It's online plus we do some phone calls and stuff some group calls and a Facebook group. And then our masterminds I think it's twenty four thousand dollars a year. So it seems like a big price point but the reality is you know you do one apartment building deal and I mean you take a look at the deal that I just I gave an example on earlier. Do you buy one forty eight unit apartment building and if you own 80 percent of let's say you own 50 percent of that deal you get two hundred fifty thousand dollars from tax free loan proceeds inside 12 months. That's a good deal. It's a pretty good return on investment plus you have cash flow of around thirty five hundred dollars a month for the rest of your life as long as you own that building. And so I'm teaching people how to build wealth and if you put it in that context of really understanding what the information is worth and not having to go through the 10 years of being kicked in the teeth like I have and have all the tools and everything they're available for you.

Tim Bratz: And like in the palm of your hand and rubbing elbows with I mean these are not these are not newbies that come out to my events. It's usually people who are making several hundred thousand a couple hundred thousand dollars a year a hundred thousand dollars a year up to billions of dollars a year in their traditional business whether that's real estate or they're an entrepreneur and something else. And so it's it's a high high caliber of individuals that come out of that. So it's that networking alone is insane. Plus the education's pretty amazing. And then and then and then the advisors council is our mastermind. That's like having a board of directors for your business for two thousand dollars a month. You know you put it that in that context and you think about the support and the advice and the people that that can give you direction and every time as you reach different levels in business there's different levels of hurdles and obstructions that you hit to right. And so how do you break through those barriers that much faster by meeting with a group of advisors on a regular basis usually quarterly and they can help you push through those barriers that much faster because they've been there they've done that they've they've Hey I went through that three years ago on my business here's what I did that I would definitely do again here's what I did that I wish I didn't do and you have to learn from other people's experiences. And so yeah it's pretty exciting. I like being in the education realm but I also do a lot of deals with my students and people that are in the group. So it's it's fun from that capacity to

Malcolm Lui: Yeah and I do like the model you have because I really see how you build that out. If you do it in a way that doesn't take up too much of your time that you can leverage then you can get more leads more investors more partners and that can really see that really grow your business rapidly

Tim Bratz: Yes I have. I have a small percentage of ownership in the in the in the education business I actually just get paid a speaking fee and like a royalty. And my my main purpose of doing that business is because of wanting to do more deals with students. So it has become a great funnel of opportunity and both for deals and money. But again my my main focus is building true legacy wealth. By buying apartment buildings. It's not a bucket. Rich in the education business that's not that's not what I do.

Malcolm Lui: Right. Exactly. Three last questions for you. First one is if you were to have a billboard advertising CLP turnkey real estate on a fast moving busy freeway that moves quickly. What would your message be. Typically people only have six seconds to read a billboard before they drive by. So what's your six second billboard message

Tim Bratz: So if it was a pitch for my business it would just say invest in apartment buildings. Call Cleveland turnkey real estate.

Malcolm Lui: Okay.

Tim Bratz: That it would be straight to the point direct. In that capacity if it was a billboard just for inspiring other people or like a life billboard on bus life advice I could give would be be your best. I it's in my email signature it's in my Facebook profile it's it's something I live by of be your best in everything that you do. You know what's to be the best in that whatever you do. But you need to be your best like push the limits. If you're not using your talents to their capacity then you're wasting talents. Right. And I think a lot of us are given gifts. I know everybody's given a gift. Sometimes they just have to find it. And if you're not using your gifts and you're not pushing your limits and you're not being the best spouse you could be being the best parent you could be in being the best friend you could be and being the best boss you can be and being the best entrepreneur being the best you know physical physically that you can be and not not pushing your limits all the time. I think you know we're we're. We have the ability to be great and I think we have the responsibility to be great. And so I would say be your best would be my other one

Malcolm Lui: All right good. And finally two questions. Maybe you recap again who your ideal investors are or perhaps ideal partners and what's the best way for them to reach you and your team.

Tim Bratz: I appreciate that. Yeah. So if if there's anybody who wants to sue the ACT anybody who is an active real estate investor more or less doing it on a full time basis and they're trying to get out of the transactional flipping of houses and then you sell the house and you go do it again do it again do it again in order to get paid. Again and again and again they're trying to scale up into apartments in commercial real estate that would be one category of of the people that I work with. And then the other category is typically successful entrepreneurs who are not involved in real estate and they have a traditional business a successful business they have product launches or they're selling their business and they have some some extra cash or cash flow or a significant pool of cash that they're trying to then invest into something that's just safe stable insulated and it still kicks off a good return with some upside equity. And those are passive investors. And so if anybody fits either of those molds those categories you can connect with me either on social media. Tim Brat's find me send me a message or go to my Web site I'm sure Malcolm will share it. C L E turn key dot com and there's submit an enquiry on there asking for some more information and depending on what you want to do. So that's probably the best way my education if anybody wants to plug into that commercial empire dot com that's my educational brand and my team will reach out to you with some details on that. If once you fill out that application but that's usually the best way a social media follow me on social media if you're not on if you're on Facebook please find me on Facebook. I try to put out a lot of free content a lot of insight on deals and talking about stuff that I have going on and not only help people with real estate but helping with wealth building and helping them with with life. So it's it's important stuff to me

Malcolm Lui: To me would you like to spell out your last name. Because the way you say it is spelled live a differently

Tim Bratz: Yeah it's brought b r a t Z.

Malcolm Lui: All right fantastic. Thanks for joining us today Tim and sharing how you grew your company's sales so rapidly.

Tim Bratz: Malcolm I appreciate it thank you for putting this stuff together I know it's a lot of work on your end and you're making a big difference or big impact in the world so appreciate you too buddy.

Malcolm Lui: All right. Thanks for that.

Malcolm Lui: We've been speaking with Tim Bratz, the CEO and Founder of CLE Turnkey Real Estate, about his company's rapid growth. For interviews with other fast growing, high value sales companies, or to learn how we can accelerate your firm's high value sales through automation, visit Eversprint.com.

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