How do you ensure that your online actions lead to in-store purchases? Join Andy and Fabian on this week’s episode as they sit down with Ivan Barratt, a multifamily unit owner, syndicator and owner of Barratt Asset Management. In an era of smartphones and digital accessibility, we’ll learn what leads a customer to their purchasing decisions and hear how Ivan grew his business along the way.
Ivan Barratt: What’s a little frustrating in multifamily that I see coming, and other industries are doing this so much better, but every single advertising funnel needs perfect tracking.
Andy Medley: The Bridge is a podcast for all businesses where the consumer purchase takes place at a physical location, but those same consumers are shopping and narrowing their choices down online. That jump from online to in store is where most businesses struggle. Each episode we will focus on real strategies and examples from industry experts on how to dominate this complex and competitive environment by sharing the latest trends in technology and process.
Andy: Hey everybody, welcome to this week’s edition of The Bridge, where we’re talking to different business owners that are dealing with the complexity of having more of their consumers shopping online, but yet the sale is still done face to face. We are super excited this week. We have, Ivan Barratt, a multifamily unit owner and syndicator who’s going to tell us what that means here in a minute, specializing in a FHA and agency finance projects. Since 2015, Ivan has raised $60 million in equity, acquired over 2,500 units and has grown his company Barratt Asset Management to a best-in-class, vertically integrated asset and property management firm. Today, Ivan focuses his time on equity, finance, acquisitions and companies strategy. And currently managing well over $250 million in assets. How’s it going Ivan?
Ivan: Hey guys, thanks for having me. It’s great to be here. I’ve been excited seeing this on my calendar for the last few weeks.
Andy: Haven’t been able to sleep?
Ivan: No, no, the sleep has been, has been reduced for sure.
Andy: All right, so we’re getting you a little bit deprived, but still on your A game, I guess?
Ivan: I do well under pressure and lack of sleep. Three kids will do that.
Andy: Yes. Yes. Two will do that. Actually even one… now real quick before we get started, you recently spoke at a summit talking about real estate syndication?
Ivan: I did, yeah. I just got back from Chicago… was up there over the weekend. I got to be on a panel about syndication and also a little breakout on scaling a real estate business. Had a lot of fun, always enjoy hanging out, delivering some value, hopefully paying it forward.
Andy: So what does syndication mean for those people that aren’t maybe familiar with the concept?
Ivan: Yeah, so real estate syndication or syndication in general is where you go in as like a private equity firm and we buy businesses. Our businesses just happen to be apartment communities. So we’re looking for a well run business that will benefit from a new management team and new capital to make improvements. And then we put our own skin in the game, um, and we raise the rest of that capital from outside passive investors who come along for the ride with us and let us in our team handle the operations and decision making, and we seek to deliver a solid return for our capital and our investors.
Andy: So I’m specifically investing in one particular property or community as opposed to maybe multiple.
Ivan: They can be set up in either fashion. So we have single asset raises that we’ve primarily done in the past and now that we’ve got a track record of over 250 million in AUM, we’re actually moving to a fund model, which is just a fancy way of putting a few assets into the same placement offering to provide another measure of diversification for our investors and lowers the risk and also can increase the probability of a higher return when you’ve got several different assets in the same pool, so to speak.
Andy: Yeah, that makes sense. Very cool. It’s like very similar to a VC funded back software company that is going out and individually raising for a particular return. So we’re on the spectrum.
Ivan: VC would be, you know, higher risk, higher pay for sure. Right? We’re more if we were buying businesses, they’d be middle market, with a decent track record already. Right? But there’s still room to add value, get cashflow by bringing in new management, new efficiencies, new capital, make improvements, raise the top line, reduce expenses. So on and so forth.
Andy: Yeah. And that’s how you started? No, I mean as far Barrett Asset, was every one based on syndication or is that something that’s evolved over time?
Ivan: Well, BAM started in my spare bedroom as a property management company. In the beginning I performed management services for small investors. It was 2010, so I had landlords by necessity, meaning they couldn’t sell the place and they needed to rent it out.
Ivan: And so my goal was to grow the management company first. I learned my lessons the hard way while I was small, where they wouldn’t be quite as amplified as they are now. And I knew that if I could figure out management, which I didn’t really, you know, love the management side of it, right? Uh, but it was the machine. The repeatable machine I could build that would enable me to execute on these larger deals down the road. And so we started small. I was the one man show for a while and started hiring people and went through, you know, the grind of hiring and firing and firing and hiring and firing again, uh, to where we’re at today. 80 employees, 20 at corporate, which is our asset management team… the people that manage the managers and then the bulk of the staff is on-site in a management or maintenance function.
Andy: Okay. So always entire history for you has always been in property management or anything before that?
Ivan: No. So after graduating at Indiana University with a fancy degree in real estate, I thought I wanted to be a developer. There’s the Kelley school now. It’s more known than it was back then. Yeah. Back then it was all.com, this and.com that uh, there was like 30 of us in the real estate program. I thought I would be this hot shot developer and went to work for one and basically got my foot in the door and said, hey, I’ll work for free. I’m here to learn, pay me if I sell something. And, uh, that lasted right up until the great recession where everything fell off a cliff. I am upside down in debt and more cash going out than coming in. I’m trying to convince my girlfriend at the time who’s now my wife, that I’m still a safe, you know, stable bet, uh, for marriage material.
Ivan: Yeah. It’s all a part of the plan and somehow convinced her to stick with me and marry me. And she had a great job at the time. Through a lot of soul searching, I figured out this model that I could repeat and scale and again, you know, had to do what I hated first to get to where I’m at today. And that was the genesis of the management company.
Andy: So what do you hate?
Ivan: Everything… No, it’s, you know, the management side of is just not easy, right? You’re, you’ve got lots of residents, you’ve got lots of maintenance issues, right? Everybody’s got their opinion on, on what a good experience should be. And then you, when you’re working for owners, they’ve got their own idea of what the decision making process should be. It’s like any business when you start off, you’re working for somebody else, your margins are low. Hours are long. My health suffered. I was getting bad grades in marriage and fatherhood.
Andy: So now that you’re not doing everything you hate and you get to occasionally do the things that you like, which include answering a bunch of investor emails. Um, how do you spend your days?
Ivan: I get to spend most of my time now raising capital. I get to talk about the fun stuff with the investors and then when they actually need answers or details, we’ve got a relations team that handles that. So I don’t screw it up and I tried to stay in that visionary lane if we’re talking about visionary and integrator. And so my goal is to keep my head in the clouds these days focused on our big rocks are our mission or our vision. Uh, I get to look at a culture from a high level and, and sort of pointed that mountaintop and, and help everybody figure out what we’re doing this for, where we’re going, where we’re headed.
Andy: That’s great. And so I’m curious because you know for people that have been in a position like yours and myself having done it, there is the people who used to talk about how we grew so fast early and it was cause I didn’t want to cold call anymore. It was like how fast can I get out of this with somebody else who can do it. But also it’s good to have the perspective of understanding all the dials that make the business run. And so for you to have spent that amount of time on the ground floor, seeing the process probably really helped build that client experience that you’re wanting to manage your rest of your team to the standards.
Ivan: It’s a badge of honor… was definitely trial by fire, but I can look anybody in the eye and say, Hey, I’ve leased units of coordinated maintenance. I’ve signed leases, managed people, been on the collection side. Right. I’ve done it all at one point or another.
Andy: Yeah. Awesome. And how do you think about how you guys differentiate or what your main goals are when you’re talking about consumers that have multiple options and they choose one of your properties over somebody else? What’s an expectation you give your team on what that resident experience should be?
Ivan: Yeah, it’s a constant moving target these days. Our resident is at almost every income strata now, whether we’re talking about some of our more affordable properties or something that’s a little bit closer to luxury, they’re all online. They’ve all got smartphones, right? And they’re all using that as a tool to narrow down their search before they ever get off the couch or leave the office. And so, you know, the front line that to all this is how do you provide some sort of, um, sticky experience when they land on your property, right? When they land on that community, how do you, how do you keep their focus there? I mean there, you know, there may be hitting interested on 20 or 30 apartment projects these days, right? Communities these days. And how do you remain at the top of that list? How do you get them out to see your community before they pick something else? And our business, the average lead is, is like the half life of a fruit fly. I mean, you’ve got to get them quick, get them in there and get him signed up. Or they’ve moved in somewhere else.
Andy: I think you kinda nailed it. That’s obviously what we talk a lot about in here as the reality that as a consumer, I want to be in control. But at the same time, when I want to question, I expect immediate response. Even though don’t think that I’m giving you a giving you control. I still want control. I just want you to answer my question and that’s it. So how do you guys think about the bridge? How has your leasing agents’ responsibility in terms of looking at the website and understanding, you know, what consumers are engaging on the website versus what their responsibilities and helping bridge that online to in person.
Ivan: So it’s almost analogous to what happens in say, like the hospitality industry these days. Yeah. Multifamily tends to sort of follow hospitality, right? So if it’s going on in hotels now it’s going to happen in our industry, a little bit farther down the road, but it becomes the norm, right? So landing on a nice website with nice floor plans, easily searchable information… I mean, that’s 2012, man, if you’re not not doing that, you’re already losing. The leasing agent obviously has to have a lot of that information at their fingertips, right? They’re really the frontline salesperson in so many ways. So they’ve got a customize their follow up, their contact to what the resident wants. Right? It’s the same way I raise capital, one person, you know, I can email him 10 times and he doesn’t respond and I text and two minutes later he’s texting me back. It’s the opposite for the other person that I’m going after. Some people, you have to get them on the phone and you, you’ve got to be ready to pivot for what that customer who wants to be in control desires.
Andy: Yeah. And so one thing I’m curious about from your role, we’ve talked a little bit about… like with Katrina for example… a lot of pipeline measurement in terms of leads that are generated online and then once it gets to the leasing agent to the fact that they’ve actually closed the lease and those persons, those people are in. So their ROI is a little bit more at the granular level. When you’re looking at it from a portfolio perspective, are you more focused on NOI or what main marketing intelligence — and if you even remove marketing — what kind of data are you looking at to understand the performance of your properties?
Ivan: Yeah, NOI is still the end all be all in our industry and it’s something we have to look at on a regular basis, but we’re much more granular than that weekly. So we have meetings with the executive team every Monday and we’re looking at performance portfolio wide. What is our satisfaction survey score on move-ins? What is our conversion ratio, right? What are, how many people contacted us, how many tours were scheduled and how many leases were signed. And we’re watching that on a weekly basis to hopefully spot, well first of all to to call out good trends, right. To give shout outs to our team that’s doing it well, doing it right. But also to hopefully nip those issues in the bud.
Andy: When those numbers start falling in the wrong direction, do you benchmark properties against each other?
Ivan: Oh, all the time. It’s benchmarking, but it’s also setting that competitive nature with leasing agents and property management teams, right? So they’re all on the same slack channel and there they’re getting Kudos and shout outs and where we’re recognizing when people are doing a great job and also kind of throwing it in the face of the other management teams. Hey guys, you know, these guys are killing it. What are you up to over there? What’s going on?
Ivan: No, the way I’ve been able to scale this business effectively is of course it takes great people. But if you aren’t constantly on the search for great tools, right, that helped them do their jobs better, you’re f*****.
Fabian Rodriguez: Have you ever been surprised by any of the data that you’ve dug into?
Ivan: What’s a little frustrating in multifamily that I see it coming in other industries doing this so much better, but every single advertising funnel needs perfect tracking. And we’re getting better at it in multifamily, but it’s still not where I wish it was from a campaign standpoint
Andy: I think you’re going to see some of that happening and, and it’s a muscle. One of the things that we talk about in here is the trend that you can look at on the history of automotive. Where third party lead providers, Auto Traders, the world cars.com… this is early 2000s, late 90s, really started on the digital landscape. And for lack of a better way of saying it, it made the dealerships lazy because all they did was rely on cars.com and Auto Trader and all these companies to be able to provide them the leads. They didn’t need to own their digital landscape. They just needed to provide it. That also created a massive vacuum around a lot of the things that you’re talking about including attribution on channel. And that evolution started to take place what naturally happened, where they saw these companies, saw the reliance on them, their prices increased, and these dealerships started to realize, wait a minute, uh, we got to figure this out. Maybe I need to be a little bit more in control of my world and more importantly, my sales process. Because why do I want to be given a lead that’s being given to my other competitors. As a result, you saw all this massive amount of technology that started to enter into that space at a time when all of it was still developing. You can look today in multifamily and there is a certain amount of ecosystem, even riding on a similar trend with Google. So if you follow me on this… on Google seven years ago, if you typed in used cars, you’d see that little box in Google, you know, where it’s got the individuals by the area which show the dealerships. Now Google is smart, they do that because I know I can get more money from all those dealers. That’s just from Auto Trader, you know, owning one line right across the nation. And recently Apartments Near Me. They started to do that for the multifamily space because there is this continued… if you don’t study history, you’re doomed to repeat it. We’re in the same spot right now with multifamily where that’s now offered. There’s a bunch of different technologies that are starting to come out to be able to put the communities back in control and not rely on third party leads because those prices only continue to increase. So channel attribution is one that you see as frustrating. Are there any others?
Ivan: Channel attribution’s a new word for a real estate guy like me, but I’m gonna I’m going to steal it and use it.
Andy: So channel attribution means if I spend a dollar on Google, how much money do I get back directly tied to the lease took place as a result of that person having seen it on Google? In a way that’s an ROI per dollar spent on a channel. So channel attribution, attributing it to its particular channel.
Ivan: Yeah. I think that’s the part of our business right now that we’re missing, right, is really assigning dollar values to those channels and what the cost and the ROI is. And that’s gonna change somewhere down the road. Right now. It’s a great time to be in multifamily, but great time to be an apartment. High occupancy. Um, I think Indianapolis will be less sensitive than some other parts of the country, but gosh, when those occupancy rates started dropping, everybody’s going to get real, real serious about where they’re spending their money. No question. Yes, they are. Yeah. Not a question of if, just when.
Fabian: I want to jump in here. SO at a point you’re talking about occupancy rates being really great right now, right? So in those times when you’re at whatever a good occupancy rate is 98% or above, right?
Ivan: Yeah. It depends on the deal. Let’s say 95 to 98. If over that, your rents are too low. Right?
Fabian: But what do you do, you know, as someone who wants to continue to market or wants to continue to be visible in front of other people, what do you continue to do or what are you continuing to invest in when your occupancies are at such a great rate or if you’re at full occupancy?
Ivan: Yeah. Yeah. So obviously you don’t want this to be a, you know, a commercial, but every one of my managers does love PERQ. I mean, they love the resident experience. Um, they haven’t, you know, it’s still relatively new I think in the industry. So most of these people haven’t seen it yet. And they like the like the format. They like the sort of customization of it to where it, it’s not just a, hey, put in your number, your name and your email and wait for me to call you. What’s your budget and how many bedrooms and baths do you want? Right. That’s what everybody’s doing. Yeah. Versus, um, you know, I was just looking at it today, uh, before I came in here and seeing some of the wants and needs assessments, uh, that are kind of done in a way that, um, are a little more compelling I think to the the end user. You know, in general in the industry, I think there’s what excites me is right now, you know, bigger, older companies are going to be more lackadaisical about this, right? So it gives opportunities for young companies like ours to get out ahead of this, find those great tools, not rest on our laurels and, and not really, um, or should I say, smooth out those future bumps when everybody else is playing catch up.
Fabian: It’s a mindset thing too, right? Like when things are going well, you can’t see them necessarily going wrong. So I think there’s like a whole section of people they do or have that mindset of prepared for the worst at all times. Or when things are going good, you can’t really see past your nose and you’re just like happy because things are going well.
Ivan: Yeah, I mean I love the anecdote or characterization of the Turkey, right? The Turkey thinks he’s got a great life. He’s fed, he’s sheltered every day. It’s relaxing until Thanksgiving, right? So how as an entrepreneur, how do I make sure we’re not the Turkey? And, and it’s that mindset of, okay, it’s continual improvement everyday where, where our blind spots, how can we do better? Um, we don’t think the party’s going to stop tomorrow, but let’s, let’s invest and let’s pretend or play or strategize as if it will.
Andy: And for those of us that are a little younger, Fabian, those that survived the recession, you get us. I think we all have a scar as entrepreneurs right in the back of our neck that, uh, all you gotta do is if you get too fat and happy, you just kind of go, oh yeah, I remember 2009. I remember that. Uh, that was, that was no fun. All right. So the future, um, so going back to what you talk about and said, you know, you’re working on the vision, all that stuff, how do you think the trends are going to change? You know, we’re talking a little bit from the perspective of technology, you know, one anecdote that’s out there and that you’re starting to see some companies pop up is, is the idea of a, of a 100% automated experience for the consumer. Meaning I’d never talking to a human at all, uh, to the point where I have my phone and I got a barcode and I go to this nice little hardware that’s on a door at the apartment. I scan it, it opens it up and it comes, I check it out, I leave, and if I want to live there, then I’m going online and filling out the application and the financing and all that stuff. Um, that’s obviously way out there a little bit compared to what most people are doing today. But that’s one example. I’m just curious from your experience and where your mind is going, how you see, how far you see it going and kind of what you think might even be three years from now, for example.
Ivan: Yeah, I mean what you’re saying now… what popped into my head was me getting up in the morning and leaving my house in my Tesla that I don’t own that picks me up. Right. Takes me to wherever I’m going. That’s still pretty far off.
Andy: It’s pretty far, pretty far off. Well unless you’re, I mean Elon, this is going to be next year.
Ivan: And for the record, we were promised flying cars back when I think they were building Epcot. Right. So we’ve got a while. Um, I think that’s a real thing somewhere down the road for part of our potential residents. For a cohort that’s going to want that. Yeah. I think for the foreseeable future though, the majority of folks are going to want some sort of human interaction. So again, it’s going back to offering your perspective residents or your perspective customer, whatever it is, uh, a process that they want to be a part of. So having that ability at any time for a human to step in and help. Um, I think the trend though is that human interaction does get pushed farther into the funnel in a lot of ways. You’ve seen it already where even when I started my property management company, there was a lot more email interaction. Right now it’s whatever you do, don’t email me. And now you’ve got a lot more information that you can gather without speaking to human. Leases are performed electronically most of the time. Now, I still see that when it comes to somebody’s home that at some point, most of us are going to want to talk to somebody here and there. Right. They’re gonna want that personal touch. Um, but that, yeah, that could go away completely at some point down the road for, for a certain percentage of people.
Andy: Yeah. We talk about that a lot in here and I think we’re more on the same page and how long it’s going to take before it gets there. And it’s also the reason that, um, there is that considered purchase, that expensive thing, that thing that takes me as a consumer a long time to figure out what I want to spend my money on. Uh, that thing that once I’ve done enough of my own research that I still want to talk to somebody and ask them questions and then I want to see it. And maybe that human interaction is what makes me feel comfortable to do… you know, maybe we can get to 99%, and there’s still that 1% that is me shaking somebody’s hand and saying, thank you. But probably some point it’ll be 100%. Uh, but when that is, I’m with you. There might be a cohort of people that, uh, are ready for that right now, but, um, it being facilitated in a smooth manner would probably cause enough frustration for them to not want to do that.
Ivan: So back to that hospitality piece, you know, as a multifamily owner, operator, entrepreneur, I’m watching for it in hospitality first, right? If somebody’s going to the a the Four Seasons or the Shangri-La and never speaking with someone and checking into their room and, and using that, that smart phone to manage the whole process. When I see it there, then I’ll know we’re, we’re closer in multifamily.
Andy: Very true. So, um, we’ll jump to the end here. But curious from your perspective, what is the role of the leasing agent, the sales process, if the technology is working correctly? Is the digital experience selling the consumer and the leasing agent is facilitating the close or as the leasing agent, the one that’s getting the close?
Ivan: Ooh, that’s a good question. I think you still have to have a salesperson in the process. So what we found is most successful is that that leasing agent has some sales training, right? They know how to close a prospect. If they’re customer service oriented, right? Here’s the bathroom, here’s the kitchen. And they’re not saying, hey, you know, what do we need to do to overcome any objections or help you get through this process. If there’s no sort of sales training in that, in that funnel, whether she’s in the back of the funnel or up front, then the whole thing tends to fall apart. Right? Because you give people too much time and too many decisions, you’ll lose them. You lose them to the other leasing agent.
Andy: Yeah. It’s is an interesting example, you know, cause you brought up Tesla and you know, when you go buy a Tesla, uh, and you go into that store, they’re not sales agents, they’re just incredibly understanding of the product and they are able to help you understand why the product is better. But you don’t feel necessarily like you’re being, you’re being sold.
Ivan: Well, when we see four, five, six more Tesla competitors, I think we’ll see more.
Andy: There we go. I like that. That’s a good segue. All right. So, um, how do you keep your yourself educated?
Ivan: Oh, I love my audible app. I read a lot of audio books, so I try to get in little bits of education right now.
Andy: What are you reading right now?
Ivan: Oh Gosh. I’m rereading Fooled by Randomness. I know that’s another Nassim Taleb plug. But, uh, I just love his investment thesis and a, so I’m rereading that for fun. Oh, what was the last thing I read for fun? It was something Tom Clancy. Hey, I don’t read a lot for fun.
Andy: Awesome. All right, well let’s get you out on this. What are you currently obsessed with?
Ivan: Oh, I’ve been doing this obstacle course racing thing called Spartan, so it forces me to train harder, faster, farther, all that stuff. I try to keep up with, with guys like Fabian here, but I just get smoked every time. But that’s been kind of a fitness obsession of mine getting my mental game and physical game ready for this.
Andy: Yeah. Awesome. All right, Ivan, we really appreciate it. Thanks, buddy. It’s been good.
Ivan: Yeah. Thank you guys. Appreciate it.
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