SPEAKER_00: This is your daily real estate syndication show. I'm your host, Whitney Sewell. Thank you for listening to the show. My goal is for you to become a savvy investor by learning from some of the best operators and investors in the business. I'd like to hear from you. If you have questions you would like us to ask on the show, or if you have someone you would like me to interview, please let us know by emailing info at lifebridgecapital.com. We would Love to hear from you. Please leave us a written rating and review. I would be grateful. Do not hesitate to let me know how we can best serve you at Life Bridge Capital. And now for an amazing interview with my friend, Lance Peterson.
Lance Pederson: This is your Daily Real Estate Syndication Show. I'm your host, Lance Pederson co-founder and CEO of Passive Advantage, where we simplify the process of vetting real estate syndication deals for passive investors with our LP Deal Analyzer tool. So I'm sitting in today for Whitney Sewell, founder of LifeBridge Capital. Our guest today is Ivan Barrett. He's the founder and CEO of BAM Companies. He's a 20-year veteran in the real estate industry. So since 2015, he's raised over $400 million in equity and acquired over 7,000 units. and grown the BAM Companies, which he refers to as the BAMFAM, to a best-in-class, five-time Inc. 5000 private equity and management firm. Ivan focuses most of his time on equity, finance, acquisitions, and company strategy. As you'll hear, he's big, big on culture. So in today's episode, Ivan shares how the driving force of his company's growth came from focusing on people first, building an amazing company culture, and his decision to build out a highly skilled technical trades team to manage and maintain the properties in their portfolio. It's an amazing story. Hope you enjoy. Ivan, how are you doing, man? What's up, Lance? Good to see you. Yeah, it's good to catch up here. Yeah, I mean, we go way back knowing you for years. I know you attended one of our conferences and just love spending time with you, getting to know you. And I'd say, and I think there's a lot of stuff we'll talk about in today's episode, but the thing that I always appreciate about you is, I mean, this was back in what, probably 2016, 2017. So I mean, you guys were in, you know, it was about halfway through your journey. And, you know, if we take where you started in what, 2010, I think, and then, today you know we're in 2024 so but yeah the thing I appreciated most about you man is just you're just highly inquisitive and and always wanting to learn right like not assuming or posturing and trying to to uh demonstrate how much you know and how great you are and those sorts of things so it's just always about you know hey man what can I learn from somebody else and and obviously highly relational and and full of energy so I'm looking forward to uh having a good
Ivan Barrett: Thank you for noticing brother. I appreciate you saying that.
Lance Pederson: Yeah. Yeah. You're a caring guy. It's authentic. I appreciate that. So with that said, I mean, you guys have done a great job at, at, at BAM companies, um, really around building a strong culture. And that's something near and dear to me. I think that that's often the overlooked piece, especially real estate guys. I love doing deals. They're just very much in the deal. And as they grow at scale, they just it's sort of like they wonder why they plateau to some degree. And I think it's often they've sort of skipped building a strong culture and maybe not having refined strategy. So for you, having been someone who really likes to learn and and educate yourself in those things. I mean, what was that like for you as you got the company started and you started to hire all these people? I mean, what were the resources you went to? Like, how did you come to the realization that, hey, I need to build a strong culture in order for this thing to work?
Ivan Barrett: Yeah, I mean, as you probably can attest, starting a business, being a solopreneur, and then hiring people was really freaking hard. Early on, we were mostly managing for other people. That's how I figured I could grow a big operating company and figure out the management game before I started taking on investor capital. And in the beginning, it was a grind, especially going through people early on. We still have a couple people that I would say I was lucky to find. that had been with me for a long time, but in the beginning, a revolving door at BAM. And I remember just having this realization. I can't remember what I was reading at the time, but it was definitely on people and culture and growing a business. And the book, gosh, man, it might have even been a Rich Dad Poor Dad book. I forget. This was a while ago now. Reminded me that the people game, or building a real organization with lots of people, a big organization, because that's always been the dream, would make the real estate look easy. And what I mean by that is growing teams, managing people, leading people, let alone building out a great culture, is incredibly, incredibly difficult. But the thing that kept me going, man, was just this realization that I'm going to get hit in the mouth. There's no book I can read, no class I can take that's going to smooth out this learning curve, this process. There's no hack. There's no shortcut. I just got to get in there and figure it out. It's sort of my personality, the fire ready aim. And I said to myself, all I have to do when I get hit and knocked on the ground is just keep getting back up. Just keep getting back up. Keep trying new things. And there were times when it was stressful and Weekends were filled with working, high amount of stress, right? But it just constantly, almost like a mantra telling myself, don't quit, just keep trying. And as we grew a little bit, I found a couple really great people. I was able to share with them this wild and crazy idea. I'm glad you're sitting down for this one, Lance. What if we had a management company and a maintenance company where people liked their jobs? where people were banging down our door to come work for us. What if? How crazy would that be? And again, luckily, I was able to find a few people early on that took that proverbial baton and were able to run with it. and execute it far better than I can. And out of that, we would hit these plateaus and we have to find new tools. So like many entrepreneurs, we found EOS, I believe now back in 2018, 2019, somewhere in there. And as we brought in EOS, we really got serious about our core values here at BAM and really started hiring and seeking out folks that met those core values and weeding out the folks that didn't. And these interesting things started happening. Probably my favorite example is a maintenance guy that had come to work for us. He'd only been here maybe a few months, doing a bang-up job, just absolutely killing it on the job for us. Well, he gets in a motorcycle accident. And he's out of work for, I want to say, 10 or 12 weeks. And he didn't check the disability box. Well, my team took care of him anyway and said, hey, we're going to take care of you. You get well, you're going to get paid because one of our core values is we're a loyal, loving family. Because he was loyal to us, we were loyal to him. And nobody came to me, Lance, and asked me permission to do that. Nobody came to me when another gentleman's son died of an overdose at age 21 and said, hey, Ivan, can we pay for this guy's son's funeral? Because they already knew, based on our core values, what the decision is. And so being able to get out of the way and know that the leaders are gonna make decisions based on our core values and what a big company with a great culture would do, even when we weren't a big company yet, was tremendously freeing and very gratifying to watch.
Lance Pederson: Yeah, so it's interesting you mentioned that. So it sounds like you had this, the one thing moment or kind of the North Star moment when it, as it pertains to, hey, we're running a property management company. It's highly transactional, finding guys who are willing to do the dirty work, so to speak.
Ivan Barrett: Especially on the maintenance side, man. I mean, it could be a revolving door if people don't like the environment. It's a hard job. These folks are on the front lines every day, right, dealing with the proverbial tenants and the toilets. The reason why the returns are so great in multifamily is because it's the most intense asset class of all the asset classes when it comes to actually executing. And so it just made a lot of sense to me that if we can find a way to take care of these folks and provide an environment where they actually like their job, then we're going to have a much better time as we grow than the typical modus operandi for management companies.
Lance Pederson: Yeah, and I think, for those of you who aren't picking up on this, I mean, this is a story I always tell about my first business as well, is that it was this drum that I chose to beat on, and it was a similar thing. It was like, wouldn't it be crazy if there was an IT company that actually answered the phone when you called them and responded to your emails quickly? Right. And so and they're like, yeah, but you know, like, okay, but I'm like, no, I mean, I'm being serious. So like, I want to think, how long does it take to answer the phone, and we got to respond to all emails within 10 minutes. And I did that for two years straight. And I just never shut up about it. I'm like, this is the thing. I don't mean anything else. It's not that. I don't care. It's all about responsiveness. And it sounds like for me, like we're going to take care of these people, make sure the family, so they like doing this. They like, you know, fixing things, taking care of our properties.
Ivan Barrett: No, I mean, I couldn't have said it better. It's actually a really simple idea at its core. It's just incredibly difficult to execute. You've got to really sometimes force it in the beginning to get that thing, that idea to germinate. And for me, it was really finding those key people that were good on the execution side and really, truly in their core believed in what we're doing.
Lance Pederson: Yeah. And so when you, when you sort of made that a big deal and you guys are like, okay, we're going to find good people. We're going to take care of them. We're going to make it to where it's fun to come to work and they enjoy doing it. Was that that juncture you were still just exclusively doing property management or is that kind of coincide with when you started to actually acquire your own assets?
Ivan Barrett: Well, from the beginning, I was doing my own little small real estate deals. I started very small, taking the worst property in the best area I could find and doing heavy lift value add two, three units at a time, then building up six, 15, 30, 35, and so on. But that took a lot more time to really start ramping up because it's so capital intensive. And I didn't want to screw it up with investors' dollars. So I was using private debt to do those first early deals back in 10, 11, 12. and then started syndicating some of those smaller assets, the 30s, 35s, the 60-unit deal. So we're doing both at the same time. And once we got enough units or trajectory of our own, we started firing third-party management clients in order of the ones we liked the least first, because we sort of had our way of doing things and really Now, we don't do any third-party management. BAM Management is a captive service provider to our investors, and it only works on behalf of the partnership and the investors. And we feel really strongly about that. It just wouldn't work. The culture wouldn't be the same if if we had to answer to multiple different owners who had different ideas and philosophies on how things should be done. And the big advantage is BAM Management is really a loss leader, Lance. I don't have to have a lot of profit margin in that business. In fact, a good management company may be making 10-15% margin. Instead, what we do is we take that extra margin and we put it back into the company to grow it and also to help finance culture. Quarterly employee events, flying everybody in twice a year, once for BAMCon, which is our big conference, two-day conference where everybody comes in, very proud of that one. And then my favorite night of the year, is our Christmas party. I didn't say holiday party. Our Christmas party. And it's like a freaking wedding, dude. Everybody gets a plus one. We put them all up in hotels, plated dinner, no buffet, award ceremony, lots of different awards for folks throughout the company and communities. and a big after party, open bar. And it's just an incredibly fun night. And I would much rather roll those proceeds into that than try to be miserly with my management company. It's a little bit easier for me to do that because I have these other businesses that the management company runs and executes our business plan. And that's where the wealth is generated. Those businesses just happen to be apartment communities.
Lance Pederson: Yeah. So when, you know, when you look at it from that standpoint, the, you know, making that one decision to really focus on having people at the, you know, at the ground level that are going to take care of the assets. I mean, how do you think that translates into additional value added, right? Like when it comes to the execution side, then like how much of that to tribute, because I mean, you guys are consistently on the Inc 5000 fastest growing list. I mean, and you continue to do so. So you mean you're growing at a rapid pace, but. And like you said, a lot of these guys, which means you say this stuff out loud, it sounds like, well, it's common sense, but in practice, it's not. A lot of people do. They just cut corners on the property management side and they're disconnected from it. Even if they are vertically integrated often, it's just sort of this other thing. It's almost like the redheaded stepchild. rather than part of the BAMFAM, as you guys call it, right? So, I mean, it translates into tremendous value, doesn't it?
Ivan Barrett: I mean, like your ability- Absolutely. Some of the big ones, and I think this will eventually change in industry, but we're one of the only ones doing it. The maintenance supervisor and the property manager are not subservient to one another. So the property manager is not the boss of the maintenance supervisor. They're on the same team, offense, defense. They have to work together. In fact, if we got a maintenance supervisor we really like and he's or she's not getting along with the property manager, you know, the property manager might be the more likely one to exit that situation. But those two together have to have to team up versus one being subservient to the other. And then we've been able to really build out a technical trades program in within our maintenance department. We hired a fantastic individual, Sam Stahl. We got him out of retirement. Another management company that I won't name burned him out. And he was done with the business until he found the BAMFAM, and we were able to bring him out of retirement. And all he does now is really focus on training, bringing up the next generation for technical trades, and having our staff able to do light electrical, light plumbing, and HVAC especially. So one big money saving thing for us, it's not easy to pull off, simple to talk about, but hard to execute. is our ability to do a lot of HVAC maintenance and repair in-house versus having to pick up the phone every time something goes wrong, which really can exacerbate costs.
Lance Pederson: Yeah. Yeah, definitely. The, as this translates then to, you know, you guys just make the decision to become stewards of other people's capital, you know, bring outside investors in, you're syndicating, you guys are now running, you know, pooled funds. Yeah. How has that translated for you to build your investor base, who are the ultimate sort of stakeholder in this equation? What was that narrative that you were sharing? Is a lot of stuff we've just talked about, is that how you positioned what you did as the secret sauce? What do you think, from your perspective, is the thing that really attracted people to BAM? and allowed them to get comfortable. Because I say there's, you know, three conversions have to take place for an investor to invest. They got to believe that alternative investments of any kind are worth allocating to. Sure. They got a strategy that's being executed, you know, value add multifamily, but ultimately they need to believe that the sponsor can execute that strategy. And ultimately it's trust is the transaction. Like it requires a tremendous amount of trust to say, here's a hundred grand or 200 grand or half a million bucks. Absolutely. just abdicating everything to you and having you, you know, be a steward of it. So what do you think was that really got the flywheel spinning?
Ivan Barrett: There's a lot we can unpack there, right? Today versus in the beginning. But what would really help the flywheel start spinning, start showing some movement was the management company. Some of my earliest investors, alongside friends and family that knew me and trusted me more than anything in the beginning, that's how I started, right? Sometimes two lunch meetings a day and coffee in the afternoon and just getting out there and telling people what we're doing. A lot of early investors came out of the property management side where we were managing single family homes and duplexes for them. And I showed them the business plan that started an investor network for us in Southern California, which today is now our second greatest concentration of investors from some channels out there. But a big portion of that is from a handful of investors that I was managing for. Um, continue to refer and those folks referring and still are our greatest source of new capital is referrals by focusing on being a great partner and, and Kaizen, you know, continuing to improve every day a little bit. Um, we tend to, we tend to get repeat capital and more referrals. The management company still though, is one of the dominant, um, differentiators or competitive advantages that we have. It's, on me to get that out there more now than it used to be, because now everybody says they're vertically integrated and they've got in-house management. And so now maybe sounds a little bit more like table stakes. But the spectrum of management performance is a wide one. Amongst all my peers that say they're vertically integrated, there's still just a few that do it really, really well.
Lance Pederson: Yeah, I agree. And I think it's, you know, obviously it can be a differentiator, right? Vertical integration, but, you know, on its face, you have to dig a few layers deeper. And I think this stuff we just talked about, so it's important, you know, for any LPs that are listening to this episode, it's just, it's don't take it as a face. Hey, we're going to clean it. It's great. I think it is important to dig into what is the culture of a place. I mean, and some of this is, is as much feel. And as I said, even when I initially met you, I could just have, you know, it's just, you have a different sort of aura about you and you can just tell you're excited about these things. So to see me be successful is not surprising, but it's, if it's not there, then, you know, it could be a big red flag.
Ivan Barrett: And to the aspiring GPs in your audience. Start small. I am so thankful that we started with a small management company, made a lot of small mistakes, learned a lot on my own dime, paid my own tuition, versus trying to jump into the property management game at 1,000, 2,000, 3,000 units. That is much harder to pull off, certainly not impossible, much harder to pull off. And also the mistakes are much larger. And I don't really see a way to not make any mistakes. It's just kind of part of the entrepreneurial journey. So that cliche, it's a cliche for a reason, you know, fail small, fail often, fail early, fail small, fail often, is incredibly important in the management side.
Lance Pederson: Yeah, I think it's right. I mean, I always say that too. It's just like the real estate investment game is it's a linear type of deal. It's not an exponential type of deal. And all you can really control is how steep that linear angle is, right? And in this case, I think it's important to, if you translate all of what Ivan said, it's just He's been able to get his angle to be steeper because he made a conscious effort to build a strong culture and to focus on strategy, meaning saying no to many things and yes to the most important things and then being really good at those. and then iterating along the way.
Ivan Barrett: Well, I still got to give credit Lance because it really becomes a people game pretty early. Finding the right people that believe in that and they can execute on it better than I ever could. I am not the execution detail oriented, see it to the finish line kind of personality or DNA structure. I've got to find those folks that had that DNA, that can really see that through, take that baton and run with it. And it's a beautiful thing to watch as the company's grown, how the stewards of our culture have continued to not only to maintain it, but even grow it alongside the pure growth of the company. It's like my fourth child and it is so fun to watch it growing up.
Lance Pederson: Yeah, there's no doubt about it. And I think that is, it's a bit, you know, the chicken, the egg sort of thing that is like great people, A players, the best people will never work for companies that have a terrible culture. Right. And so I think that, you know, like it's, if you're the leader, you woke up this morning and you're the one who's in charge, you own culture. I mean, I'm using sort of EOS parlance here, but you own culture, you own strategy. For sure. vision. And I think that those are the things we've sort of heard is that Ivan, you, you didn't shirk from those responsibilities. You, you embrace them. And when you do that, your ability to go out and convince somebody who's better than you at something, you know, what they're really great at is a far easier to do because it does get easier.
Ivan Barrett: It does get easier in the beginning. Um, you've, I, I had to sell a few early people on my dream, right? And luckily, I was in the zone that day and sold a guy on the maintenance company that I wanted to build or the maintenance department within the company. And I was able to grab a guy there who really took that real far. Unfortunately, we outgrew him at a certain point, but he still deserves a lot of credit for what he helped accomplish. And then another gal. It's been with me early on that really believed in what I said and own those core values, even more than I could as we, as we grew, but you're right in the beginning. It's, it's imperative for the entrepreneur to focus on that. believe in it and make sure that it's actually happening. There's too many aspirational core values out there, too many fluffy core values out there. That's just going to be a big bump in the road somewhere on the journey if it's not taken care of.
Lance Pederson: Yeah, and that's why I call that conviction. Conviction, baby. Love that word. You have to have it. You have to have conviction about what it is that you're doing. And it's not easy to find, and sometimes it is a lot of soul-searching to be like, what is it that we really stand for? And I think you can pick it up just through this conversation with what Ivan's done. I mean, it's just, you guys believe in what you do. You believe in Multifamily you believe in impacting the communities like it's not just lip service.
Ivan Barrett: You're you actually believe it Well, not only that man, but you know, we we passed my ability to work harder a long time ago So if I can't find ways to bring other people on the journey and get their buy-in and their belief in what we're doing, it's destined to fail, right? And if I can get the right people in place and help sort of build the guardrails, but then get out of the way, a beautiful thing can germinate.
Lance Pederson: Yeah, that's right. Yeah, it's empowerment and getting people super engaged. So as you guys have grown and scaled, I mean, have you, are you at the point where you look at when you guys are looking to acquire assets? Are you looking at complexes that have 500, 600, 700, 800 doors?
Ivan Barrett: Not typically, because there's a diminishing return on your economies of scale. So typically, you're looking for 250 to maybe 400 units. In some cases, you might get a little bit bigger than that. But if you look back in multifamily history, in a lot of places, those six, seven, eight, 900 unit apartment communities end up being not maybe a failure, but a mediocre outcome because you get so big, it's hard to keep them full. It's hard to keep an eye on them. It takes a lot of staff. Yeah, it can get dangerous there if you buy too many units in one place.
Lance Pederson: How have you approached just You know, I know you guys are, you know, Indianapolis metro area. Looking at other markets and expansion sort of market-wise, have you done much of that or do you?
Ivan Barrett: Oh, yeah. I mean, we're in five states now. We put a big bet on in Des Moines, Iowa. That should pay off really well. The last couple of years, it's been easier to buy in Indianapolis as the institutions have been penciled down with the volatility in the market. So we've been able to pick up some interesting communities. We've continued to sort of go up the quality chain and now mostly chase new to almost new institutional assets and really good solid growth, solid jobs, picture suburbs, love Indy. But we only have these windows at Indy where it makes sense for the return metrics that we seek out. Typically the institutions come back in when markets thaw out a little bit. And so we have to go other places to find value. Very thankful to be born in the Midwest. I had this, I saw this early on that the Midwest was sort of a tortoise versus the hare story. And I saw up close these cities that were really starting to thrive post Rust Belt with diverse jobs, great suburbs, safe suburbs, great school districts, diverse employment. And my thesis was that the Midwest would not boom, but it wouldn't bust either. And she's doing just what she's supposed to be doing right now, which has been very gratifying to watch. Really just lucky to be born here. I don't know if I would have come up to this conclusion if I was looking from the outside. But very, very thankful the portfolio is doing solid from that standpoint.
Lance Pederson: I agree. When you're either born on either of the coasts, The Midwest seems terrifying or like, you know, it's, you know, but it's funny, you know, I was born in North Dakota and raised in North Dakota and, you know, that's Midwest. And it's, it's the same thing. It's just, you, it is that whole notion of, yeah, you might not boom, but. You probably won't bust either. It's just steady, Eddie. And to me, I look at the now being in the real estate game, and that's risk mitigation. It's just it's terrifying to know that you can have wild swings. That's called volatility. That's what I'd rather avoid.
Ivan Barrett: we would tend to call ourselves value investors and living through 2008 as a young real estate cowboy that thought I knew a lot. Um, you know, when, when Vegas was down 40, 50%, Indy was down 10. So I thought, huh. Okay. That's probably a good thing.
Lance Pederson: Yeah, that's right. Yeah. And that's what you're going to see. I mean, it's not always going to be up and it's, it's, you know, these markets cycle, I mean, looking forward for you guys. I mean, it is, It is a bit scary with all these bridge loans that are becoming due and debt maturities. I mean, there's going to be some carnage here.
Ivan Barrett: I mean, don't believe it, man. Don't believe it. It's a very small part of the market, mostly garbage that's going to come back. I talk to CEOs every day. That's one of my favorite things to do. And almost every lender, especially the banks, even some of the big debt funds, don't want the properties back in there, especially for the operators that have capital. They're working everything out. You can also look this up. The Fed is basically giving guidance to all its member banks, which is pretty much everybody. Do not crush your borrowers. especially the good ones. Extend, pretend, rework out loans. If payments are being made, don't foreclose. So the central bank is doing what it can to certainly shake out some weak hands from the table, but not elicit another contagion of assets. I don't know what I could say about office, but at least in the multifamily space, you've got a lot of fixed agency debt. You've got a ton of bank debt, which is being extended and worked out with all the good borrowers. You've got some debt funds that are maybe taking the keys back, but Really, the only signs we're seeing of actual keys coming back for multifamily is mostly on garbage or unfortunately some of the urban centers where a lot of apartments were built on this thesis that every millennial and empty nester was going to live downtown for the rest of their lives in this cosmopolitan utopia, which COVID completely crushed. that idea. So garden apartments, suburbs across the country are doing pretty well. You're going to see some supply problems in some markets. But what I think will happen is you just won't see a lot of sales because anybody that can hold through the supply overhang knows that there's undersupply on the other side. And so transaction volume, we'll see, but I don't foresee a lot of carnage.
Lance Pederson: Some, but not a lot. Yeah, that's right. I mean, it's certainly office is its own category. And I think often when they're, you know, Wall Street journals referring to commercial real estate being doomed, they really mean office.
Ivan Barrett: Yeah. Yeah. I mean, industrial is going to have some issues in some markets. Retail is actually on the upswing. Yeah. My retail guys are having a lot of fun. My retail buddies.
Lance Pederson: Yeah, yeah. I'm glad to hear you say that, too, because that's what I think, too. I'm just like, you understand. One, it would be if they let everything go that wasn't performing, or there are any little hiccups, it would be an existential crisis. I mean, it would completely tank you.
Ivan Barrett: Yeah. They stared the abyss in 2008. Ben Bernanke did, in my opinion, a great job. Didn't act fast enough. They figured that out in COVID, acted faster. Fiscal's given a lot more problems right now with the Inflation Reduction Act. which is another $2 trillion or whatever of spending. But I think the central bank is doing a pretty good job of managing it and not allowing another 2008 to spread and crush good operators, good borrowers. Some of the garbage that, you know, the book devil take the hindmost, you know, the hindmost, the operators that went into, one of the operators that went into Phoenix and bought, you know, 50 year old product for 350 a unit thinking they're going to double the rents, that stuff's going to have some turmoil. But for the most part, those of us in the business don't typically buy that kind of product anymore. That's really old. Yeah, that's right.
Lance Pederson: Yeah. And unfortunately there's a lot of LPs that went into those deals that were being done.
Ivan Barrett: That is the unfortunate part, Lance. A lot of people were just chasing returns.
Lance Pederson: Yeah. Yep. Yep. For sure. Cool. Well, this has been great catching up, man. So where can people learn more about BAM and, you know, maybe connect with you or yeah, just, uh, the numbers on the screen here, BAM capital.com is the easiest place to find us. Awesome. Thanks so much, man. I really appreciate your time. It's always good catching up. Yeah.
Ivan Barrett: This has been so fun. One of my favorite podcasts, man. It's great to hang out with you for a bit.
Lance Pederson: All right, brother. Thanks, man. You bet.
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