I'm excited to be able to welcome Tommy Bateman to the show this week. Tommy started his career with a single town house in SE Washington DC that he bought with the help of his grandmother. His focus as been to find problem properties and add value in a short period of time, using the equity he creates to purchase more real estate. Today he owns apartment buildings, rentals, a property management company, and he loves development projects. Here are some of the things we talk about in this episode:
- How Tommy got started in real estate with a town house rental.
- The importance of a mentor, in Tommy's case, his grandmother.
- Read books and educate yourself but take action.
- Changing your mindset to think more creatively.
- Dealing with unsupportive family members and friends.
- Tips for taking that leap of faith.
- Scaling the business and creating other, related businesses.
- The importance of studying and knowing your market.
- How to create value with apartment buildings and using the equity to buy more.
- How Tommy experienced failure and setbacks and how the lessons learned affected his career.
- The difference between successful and unsuccessful investors (or those who never get started).
- Personal success habits.
Listen to The Show on iTunes
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Listen to the Podcast Here
Links from the Show
“My grandmother taught me to buy the worst house in the best neighborhood”, Tommy Bateman (Tweet This)
“At the end of the day, failure is just another part of your career.” (Tweet This)
Books Mentioned in the Show
- The Art of the Deal, by Donald Trump
Connect with Tommy!
How did you get started investing in real estate?
Through my grand mother, she owned like 6 houses. I didn't really understand anything about real estate, but I did understand that my grand mother didn't work and didn't have any retirement. When I graduated, I had a desire for more. The first person I talked to was my grand mother. She advised me to find the worst house in the best neighborhood. I bought my first deal in SE Washington DC when I was 20.
When I fixed the house up I didn't know what to do. I studied Carlton Sheets, but his techniques did not work in DC. I didn't need the techniques, but I learned the RE language.
I learned to look for deals in the newspaper. A loan officer's ad is promising 100% loan, Mike Dogherty, works for Suntrust bank. He taught me to think creatively. I took the money out of the first property and used that to invest that. I put tenants in there and kept pulling money out to re-invest. I bought my first house in 1997. Two years I bought my second house, 4 bedroom, put a Section 8 tenant in it. I thought it would have $40K equity, but for some reason, I had $100K equity, so I used about $80K, and used that 4-unit, and then another 4-unit. I don't rely on appreciation.
How did you finance the first house you bought?
I pulled equity out of my with a LOC.
I was working full time as a parole officer until 2005, so I did real estate on the side. In 2002 it was getting very hard because I had about 20 units, and my job started to job suffer. In 2004 I got a real estate license to get access to the MLS listing. My realtor would find me deals, and sent me a bunch of stuff that didn't work. So I spent a lot of time on realtor.com getting to know the areas, the rents in the areas. She taught me all of the laws and forms to use. So in 2005 I decided to quit. My parents didn't agree. They felt like I threw my education away.
I believed in myself, and I made a leap of faith.
Why did you take that leap of faith?
I met Jerome Bailey, who became a good friend, he knew Mike Dougherty as well, who taught both of us. He made the leap first, and I followed. It seemed that life became better for him. I had an example prior to me doing it.
What did you like about real estate at the time?
I actually enjoy dealing with tenants. I went to a college for social relations. I wanted to be a lawyer, psychologist, some kind of public servant. I ended up being a parole officer. A lot of the tenants I deal with are subsidized mental health tenants. It's a win-win, I make a lot of money for my company and my family, and I also help people.
What was holding you back from getting started and how did you overcome this?
The only thing that held me back are the people who cast doubt in my head. I had an aunt, she did real estate, she picked up what my grandmother did but her ambitions weren't as high as mine. They didn't think real estate would work the way I thought it would.
My friends and family didn't believe or support me. Now it's getting better, but it's been 10 years.
What's your business like now?
Today we develop property, renovations, property management – what I like doing is developing property. I'll go out and find rental property, fix it up, and have my property management manage it.
It's all about helping other people. The more I grow the more I can help. My CEO is TJ Adams, he's a child-hood friend of mine, and we'd always talk about working together, and now we do. And he's done an excellent job the last nine months.
How were you finding deals back then? How about now?
Anything that's on the MLS is going to get bid up. At the end of the day it's relationships. I know a lot of people in the city. So the power brokers call me up because they know I'm a serious buyer. It's about relationships. Like last week I went to Capitol Bank, met some of the board members. They've financed deals for me before. Over the last 10 years I got two deals directly from owners I've sent letters to. But the brokers are the ones doing the cold-calling, so I get the majority of deals through them. But we still do letters. We haven't had any bites recently.
How were you funding your deals? How about now?
The majority of the deals are done through Signal Financial Credit Union, half my portfolio is financed by them. Also Eagle Bank and Capitol Bank. On the equity side, it's funny. Some of my family members are interested in investing now. The majority of the times I create equity when I buy. I like vacant buildings. I may use their cash for down payment, but when I'm done fixing it up, I re-finance and give them 12% per year within 6 months. I also use some hard money as well, I started that about 3 years ago.
What are you most excited about right now?
Helping my family. I'm happy that they opened up their mind. I have a younger cousins. When she graduated, I told her to save $10,000 and one year and I'll teach her what I know. And she did it. I've taken her under my wing, and she's about to close on a 4-unit. She's going to live in it and rent out the rest. What a great way to get into her first multi-unit property!
Do you have any kind of success quote? Tell us a story about how you applied that to your life?
I don't really have a quote, but I say that you have to be ready for opportunity. For me it was Carlton Sheetz, I found the opportunity after reading that, it was like an aha moment, it opened my eyes and allowed me to speak the language. Opportunity is everwhere, but we have to look for the opportunities.
Talk about a time you failed.
Yes, it's happened to me twice. Both times it was because of my ignorance. In 1998 I put $10K into a stock I knew nothing about, and I lost every cent. And then in 2005 I went and bought property in Texas, in areas that I had no idea about. I went through a good realtor friend of mine. But I lost it in foreclosure. I learned to do always do your research. I lost my head for about 3 years. It took me like 4 years to have credit to be able to buy more properties. In 2010 I was able to buy more, but it was mostly because I was managing so much property for others, so that banks started to lend me money again.
Talk about any kind of “aha” moment you had, and how that impacted your life?
That foreclosure really opened my eyes. I really need to do research. There was a documentary on LeBron James (NBA), if you practice and play as much, everything moves around you in slow motion. I know the DC market so well now I can tell you rents and values. I don't need to go to a spreadsheet to know if it's a good deal.
What do you think sets apart successful investors from those who fail or never get started?
Successful investors look at failure as success. I failed miserably at buying property out of state. Successful investors set them themselves apart because they aren't afraid to fail. At the end of the day, failure is just another part of your career. I've built companies in the last two years that failed. You just get back up and get back into the game. You're not going to get anywhere not doing anything, that's for sure.
What’s a Personal habit that contributes to your success?
I'm OCD with studying the market. I'll lay on my bed at night with my laptop, studying the marketing, looking at MLS, Washington Journal, seeing what's happening with DC. I'm definitely obsessive with studying my market. I learned my lesson.
Do you have a favorite online resource you’d like to share with our listeners?
Realtor.com is something I used regularly, now I use MLS. I use realtor.com for comps, even zillow is a great tool where you can see what the property sells and rents for, just the general synopsis of the market, that's how I got started. Once I saw it on zillow, I'd drive by to look it.
Any Favorite books?
Art of the Deal by Donald Trump. I love how he structured his deals. He's an amazing guy. Like when he structured the Chinatown deal, reminds me of Douglas Jamar, when Chinatown in DC was just a dump, to have the vision to buy up everything to make it what it is today. They definitely think creatively.
How can people find you?
Urban City has a website www.UrbanCityMgmt.com.