Bryan Pritchard: You know, when you're hiring a property management firm, specifically, my expectation is, and this is proven out, you're hiring, you know, a group of trained soldiers. And they are very, they have very good training and their process and their procedure and what they bring to your to your asset, but they need a general or, you know, or somebody in the field that gives them direction or gives them a mission every day. And that is your job as an owner.
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 : This is your daily real estate syndication show. I'm your host, Lance Peterson, 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. So our guest today is Brian Pritchard. He's the founder and CEO of TriCap Residential Group. He's conducted over $500 million of real estate transactions throughout his career and currently has a multifamily portfolio of over 3,100 units throughout the Midwestern United States. So in today's episode, Brian shares why he made the difficult decision to switch from handling property management internally and significantly reducing his acquisitions team due to the current market forces in the multifamily sector. Enjoy. Hey, Brian, how's it going, man?
Bryan Pritchard: I'm doing great. Nice to see you again.
Lance : Yeah, you as well, man. It's been too long. Yeah. So no, you've got a lot of, a lot of great stuff going on with your company, with TriCap over the last couple of years, a lot of changes and pivots. Obviously it's been a pretty turbulent market and difficult to find deals. And so, you know, I know you guys and a lot of people talk about, you know, how great vertical integration is and, you know, having your own property management company, which, you know, oftentimes is, True, and is the case, but I know for you guys, you had, you built up a sizable property management company that was captive, that managed your properties, and had, you know, made the decision given the nature of the, you know, the environment and all the things going into it to actually move away from that and actually go the other direction and have someone else manage your properties. Maybe speak a bit to like, how did that decision come about? And you know, what were the driving factors that went into that?
Bryan Pritchard: Yeah, happy to. So thanks again for having me on. I really appreciate it. My story started in 2007, right before the last downturn. And I actually started the business without property management operations. And a very smart person told me, you're going to need to have a skill and a way to butter your bread every day and make money when the economy turns sideways. Otherwise, it could create a problem for you. And, you know, being the very intelligent 28 year old that I was, I told him he was crazy and that would never happen to me. And then immediately we went into the downturn of, you know, 08, 09, and exactly that happened. And so that was really the genesis for bringing all of the operating businesses that we are hiring people to do. We brought them in house so that, you know, at the time it was property management and some leasing activity and construction management. management activity and even some third-party general contracting. And over a period of time, that became our identity. We were an owner-operator and our story and the reason you invested with us was to go direct to the operator of the asset, not through a fund or some sort of capital allocator. continue to be our story for for ten plus years and then a second thing happened to us when covid hit you know and it really our experience that was first i think we adapted really well as a team we went hard into some virtual leasing and some offsite management activities and perform quite well and then as normal life resurfaced, we found ourselves with the geographic footprint that was eight states and not a lot of scale or property mass in each of those states. So sometimes only one or two assets. And the employment market got extremely challenging. And so we were competing not only to retain our existing employees, but also hire into a company. And the first question somebody would ask is, great, if I do a really good job, how do I get promoted? and the unfortunate nature of our business was, you need to move three states away. That's our next opening. The lack of the ability for people to advance internally started to disappear for us, and it became very challenging to hire. As an owner who expects to do a really perform at a high level in whatever we do, it started to hit our performance. You know, and so I had to take a hard look at at at our operations and what our long term goals was and make some hard decisions.
Lance : Yeah, because how many units did you guys How many units did you have at that time?
Bryan Pritchard: We still have over 3,000 units and had it at that time. One of the challenges with growing a real estate business is 3,000 units may sound like a lot, but as far as property management firms are concerned, it's totally in the gray area. between you can do it on your own and scale in order to have a company with all of the back office, full-time recruiting and training that you need internally, the accounting support staff that you need from CFO all the way down to bookkeeper. You really need to have scale, probably 10,000 or more units in order to be able to afford that infrastructure. So we were very much in the middle of that range.
Lance : So, I mean, you know, having, having been on both sides of the table now, you know, vertically and integrated and not, I mean, many people, you know, syndicators, I mean, they just tout that as the greatest thing since sliced bread. But I mean, given what you just said, where, I mean, 3000 units is like you said, I mean, it's a small number of the grand scheme of things, especially for property management company. I mean, what. when is it viable? Like, you know, if an LP is looking at it, like when is it legit? Like when, when it actually is somehow adding some, then is it really when you have a bunch of properties in a similar, the same market or when does it make sense? Or is it just, it's just fun to say out loud and sounds good.
Bryan Pritchard: I don't believe in right or wrong answers and so I do believe in there's right and there's wrong for you or whoever you are as an individual. And so what happened to me as an individual, I am by nature an entrepreneur with a passion for real estate. And so the things that I am passionate about and I want to do really have to do with finding opportunities, figuring out how we take that, you know, what the given asset or property, invest dollars and turning it into something that's better. That's a lot of creative energy and complex problem solving that really gets me going every day. And what I found over 15 plus years is that I had built a company and put myself in the position of being a manager within that company. And I didn't like it anymore. I didn't like the job that I had. And so I had to do something about it. And and that's the that's another personal thing for me is I found over time, I don't do anything that I don't like doing, at least I don't do it very well. Yeah. So my options were to bring in somebody to to run that business, you know, and I and I had put a few presidents in place. And for whatever reason, it didn't work or didn't work it didn't meet my expectations for performance for that part of the business. And so I went in the other direction, which is I hired a professional organization to do it on our behalf.
Lance : Yeah. And I mean, and I've always said, I mean, it's, it, a lot of it too comes down to is that if you have a strong asset managers, right, the people who are, who, who the property managers are reporting to, right. And if you stay on top of them, I mean, a lot of it, you have a lot of sway as a client still, right? Like, here's how we want things to go. And I mean, it's our property, you're managing it. Right? You're still making those high level decisions. You're just not managing the boots on the ground.
Bryan Pritchard: Yeah, I would look at it this way, in that, you know, when you're hiring a property management firm, specifically, my expectation is, and this is proven out, You're hiring a group of trained soldiers and they are very very good training and their process and their procedure and what they bring to your to your asset but they need a general. Or, you know, or somebody in the field that gives them direction or gives them a mission every day. And that is your job as an owner. And so if your expectation is you're going to hire a property management firm, and then just like call them up a couple times a year and be super pleasantly surprised, I think you're setting yourself up for disappointment.
Lance : Yeah, that's right. So, I mean, you still have to have a business plan and you have to then set expectations and you have to, right, and then having them say, like, you guys aren't meeting this criteria and you have a stay and you're at your seat at the table as far as how things are going to be run at that particular property.
Bryan Pritchard: Business planning is a very, very good example. You know, we just finished our annual planning for all of our different assets. And, you know, property operations and the operating budget is a component of it. But so are renovation activities. We don't outsource those. We find it very hard to do so, to have, you know, an outside firm understand sort of an active renovation at a property. Property management firms have no idea what's going on there. What's your investment capital structure look like? Not only your debt, but your equity. Combine it all together to figure out what your sources and uses look like for a given investment. Property management firms have no idea what's happening. So the crux of the investment is still very much in your control and purview, as it should be. They just happen to handle one component of it with their employees rather than your employees.
Lance : Yeah. I mean, and I seem to remember too, for you guys, I mean, when, you know, when you were at full scale and vertically integrated, I mean, you did put a lot of it's, it's so it's not to any confusion here. I mean, like you guys put a lot of effort into building a strong culture down to the property level, right? Like this isn't with, this isn't just a, I would try to do it and work sort of thing. This is after banging your head against the wall to do everything you could to make it work.
Bryan Pritchard: Yeah, so we'll up years, if not decades measured in years, you know, if not, if not decades, and dollars, I don't want to think about it. And so there was a tremendous amount of effort, none of which I think was lost in that process. You know, I think defining your culture and who you are as a business really is a reflection of who you are as a person and the other people that you want to surround yourself with making sure that there's alignment for character traits and you know, and and just how you conduct yourself every day. I led the exercise to go find a management partner and went through a number of different firms and made a checklist. These are the things that are important. These are the things that we need to do internally. These are the important things that we want to see in an outside firm, and culture fit was number one. unequivocally number one. And so out of all of the different firms that we spoke with, I feel like we aligned ourselves with a management partner that is a very close, if not perfect culture fit for who we are as a company.
Lance : Yeah, see, there you go. It always comes down to that is that there's there's always more than meets the eye. So it's, you know, there's a lot of, you know, a lot of things. I mean, I work with a lot of sponsors, syndicators, and it really does come down to just getting them to understand this, the notion of you know, culture, creating culture, right, and understanding that you're responsible for that. Like, Brian wakes up in the morning for TRICAP, it's, you own culture, you own strategy, you know, you need to know who you are, no one else is going to figure it out. And if you don't do that, then the organization won't know where it's going, it won't know what it's trying to do, it doesn't know who it is. you know, all those things, but it takes a conscious effort. And when it comes into then the, you know, the messaging and having a messaging go out, right? Like people want to lean on, well, we're vertically integrated and they just check the box. And I'm like, it's not that simple. Like it has to mean more than that. It just can't be what we have our own captive property management company, right? It has to be, but what specifically do we do? What do we care about? What do we have conviction about? And I think that's, what's beautiful about what you did. It's like being honest with yourself, looking yourself in the mirror and saying, like you said, this isn't the job that I want. And I'm the boss.
Bryan Pritchard: So I wasn't good at it. You know, there were better people at it than me. And I was, I felt like I was in a position where I couldn't be the, you know, the best at who I think I am as a person, because I had a job that I didn't love. And so, you know, it was incumbent upon me as the leader, most importantly, to be honest with myself and do something about that situation.
Lance : Yeah, that's right, which is, you know, is easy to say it's hard to do for all of us. I mean, it's it's hard to be honest with ourselves, a lot of the times and it requires reflection, it requires you have to dig deep and, you know, really ask yourself if You know, you're being honest with yourself, and it's difficult to do, but to build great organizations, no matter how you do it, and to be content in that piece and enjoy what you're doing, it's an absolute requirement. I mean, so looking forward for you then, you know, doing this and realizing, like, you know, and I've always known this about you. We've known each other for a number of years. you are a bit of a deal junkie. I mean, you love structuring deals. You love finding deals. You love being creative with that. So it's no surprise to me to hear that, you know, that's the direction you went. So in this environment, it's really hard time for guys that love doing what you do, right? Like, it's just a bit of a barren, it's barren land out there, right?
Bryan Pritchard: Very challenging. You know, um, So one of the things, and this is, I'll go back to the beginning of 23, so over a year ago, you talked about being honest with yourselves. We had a full acquisition team. I had four full-time people that were out looking for deals and underwriting, et cetera. And we had to take a hard look at the landscape and say like, okay, how long did downturns last? And when do we really expect these things to turn around? And I leaned hard on my experience in the last downturn between 08 whenever that ended. And if you think about the timeframe for that is in about September, September issue of 08, Lehman collapsed. And nothing really, delinquencies peaked in 2009. Somewhere in twenty ten of the beginning of twenty eleven somewhere in that range people started to do very challenging capitalizations on new deals again that's a three year period. And even before that you know leave and collapse banks really pulled out of the lending world you know i recall trying to get a loan on a acquisition in two thousand seven. And one of our banks that we went to just said, yeah, we're not lending on real estate anymore. That's a big deal for a bank. So like 2007 to 2010, that's a three year downturn. So let's fast forward into our recent down cycle. In May-ish of 22, through the summer, through Labor Day, capital went from being exceptionally plentiful and fluid to nothing. And that faucet turned off very quickly. So 22, three, four, maybe 25, we're doing deals again. And so as an owner of a company who's carrying a large acquisitions team and a deal team, you have to think about, am I going to carry this for maybe two or three more years? to the tune of millions of dollars? Or am I going to take a hard step back today and make sure that we've covered all of our bases, that we've taken care of our obligations and our debt structures and our current portfolio so that we can live and fight another day? And I took the latter approach.
Lance : Yeah, well, it's in good to great Jim Collins' book, right? It's Confront the Brutal Facts. Brutal facts, right? It goes back to that intellectual honesty. Once again, that's what it takes. You've got to do it. And I tend to agree with you. These sorts of situations, having gone through that whole 2008, 9, 10, 11, 12-ish debacle as well. And it just, right? Like, and it, that's what it felt like. It was just like everything in slow motion. It just was, we went into this deep freeze and it just took forever for things to thaw. And you look at that environment that we're in now, I mean, maybe, maybe not bad. It's different obviously, but it's just, it's, we're seeing that same thing. Like you said, I saw the same thing in August of last year. I mean, we had this great deal. It was this industrial deal. And the banks were like, oh, yeah, hoorah, this is going to be great. And then we couldn't get the seller to agree to terms. The next thing you know, we go to the bank like, yeah. Yeah, no, not so interested. And it's just like overnight.
Bryan Pritchard: You have this triumvirate of things that have to align in order for you to do new deals. One, the market has to be right. And I mean that the market, the apartment market and the renting, you know, we're all multifamily. The rental market has to be good and people have to have a positive future outlook for that rental market. You have to be able to underwrite rent growth with a straight face or you can't do deals. Nobody underwrites a recession and says, let's do it. So that's still good. We're still lucky in that regard. You have to have buyers and sellers that are on the same page. And right now, buyers and sellers are not on the same page with the valuation of assets. Buyers have a price in mind. Sellers have a higher price in mind. And if that seller doesn't have an extenuating circumstance, like maybe an expiring loan or troubled capital structure or a family or life event that requires them to exit, they're sitting on their assets today, they'll wait for another day when they can get a higher price. And third, you have to have a capital structure or capital capitalization opportunity that matches the first two. And that means you have to have the right you be able to get the right amount of debt at the right interest level that correlates to your purchase price right now those things are out of whack. And you have to have investors that are ready, willing, and able to do real estate deals. And right now, there's, in my opinion, very little to nil sense of urgency from investors to put money into real estate. And that's hard.
Lance : Yeah, that's right. And those are the dynamics. And it's ultimately the, I mean, And I think what we're going to see, it's my opinion, is that these banks, even with assets that are, I mean, they're just going to keep kicking the can down the road. I mean, I think everybody's just Yeah, everybody's just waiting for this inflation issue to sort of at least become under control. The Feds will slowly ratchet the rates down, not nearly to where they used to be, which I think is a good thing. But I mean, that's where everyone's just going to wait till the sun comes out, which will be not this year, not next year. It's probably the year after that when it starts to return to where there's just some semblance of normalcy where, like you said, I mean, the big one is where then sellers, they're just in a better position. Because that's what happens when it gets to a big run-up, is that it's just people were overpaying for way too much stuff. So now they're sitting there, and then their lenders have to be patient with them. Because if they just foreclosed and took back all these assets, it would just be a complete unmitigated disaster for the economy.
Bryan Pritchard: We're not saying any of that happened, specific to apartments. Office has a significant amount of challenges. They have the further complicating matter of, yes, interest rates are higher, but they also have no users. or a significant decline of users. And so those two things, one of those things is hard to overcome. Two at the same time, and as dramatic as a fashion, that's tough. You know, we're multifamily, industrial, probably hotels, data centers for sure, you know, good retail, they only have interest rates, everything else, you know, there's still still users in place. So we'll get through it, it just takes a while.
Lance : Yeah, it just takes well, because I mean, correct me if I'm wrong, but I mean, there still is a pretty big supply and demand imbalance of I mean, like, there's in a perfect world, there need to be more inventory of apartments, you know, to be rented. I mean, that's still that still persists. I mean, we still didn't even build enough to meet the demand.
Bryan Pritchard: Correct. Still persists. And really, then it even gets down to the micro level. You know, that's at a macro level. And then you get down to the micro level. And there's only a handful, maybe 10 or 12 markets where there's real overbuilding. And then the rest of the country has continues to be underserved, you know, has, you know, I look at a city like Chicago, which I'm most most familiar with that the level, what you can buy a high rise newly constructed high rise apartment building today, the prices are 70% of replacement costs. And if that's really the case, and construction costs never really go down. So even if they stabilize for a while, it could be five or 10 years before somebody puts in and it takes four years to get it entitled. So it could be five or 10 years before you see a new high rise delivered into the marketplace. That's a long time.
Lance : The really long time. Yeah, that's right. And did you, you mentioned, I think you guys are working on a development deal.
Bryan Pritchard: We do. We have one development deal that we've been working on for a while. It's in West Des Moines. So it's in the Des Moines market in Iowa. It's been very hard to capitalize the deal. We think that we're close on a structure. And, you know, what I'll say is that we're getting a bank deal that's generally in, you know, that would be a normal bank deal, you know, even in regular real estate times, and an equity deal that's expensive. If you got money today, it costs a lot of money. And if you look at sort of like the whole capital stack, there's a rush to be in preferred equity positions for capital providers. And those, they want to be placed in the 15 or 16% range. Now I'm not sure all that money's, I'm not sure there's as many takers in that range as there are providers, but that's where it wants to get placed. And so if you're doing common, you know, naturally you think common equity is gonna have to be at some premium to the preferred position. And so you're talking high teens, maybe even 20 hurdles, you know, on common equity. Yeah. And that's what it costs.
Lance : That's exactly right, yeah. That's super expensive, super expensive capital. Yeah, Iowa's an interesting market. I've always, I mean, I'm from North Dakota, so I'm sort of just bullish in general on South Dakota, Iowa, Minnesota. I mean, it's just where you're from. You tend to be a little romantic about it. But I mean, Iowa, it just seems to get a bit of a bad rap because there's no one really big city in Iowa. There's a lot of decent-sized cities. And it seems to be, you know, like it's, It's a great market, but I think that from outsiders who've never been to Iowa, you've never been in these cities, is they don't think they have a full appreciation of how vibrant some of those communities are. And it's a place, livability is super high. I mean, I think the cost of living is pretty good, all things being equal. A lot of skilled labor. It's just got a lot going for it. I mean, and obviously, it's got Chicago. I mean, it's just the stone's throw from there, Minneapolis. I mean, you can get anywhere from there.
Bryan Pritchard: Yeah, it's been a great partner for us. We own two other assets, two other value-add deals that have gone really well for us in the Iowa market. That's how we started there. So we like it. And we're a Midwestern company. You talk about decisions and directions that need to be made at a company level. At a certain point, we're just boring Midwesterners. I live in Ann Arbor, Michigan. I was born and raised in Michigan. I spent some time in Chicago, but now I moved back to Ann Arbor and love it. And that's just what we know. We understand the people. We understand the real estate. We understand sort of the intangibles of the market. And for us to be, we're not institutionally capitalized. And so our capital doesn't care if we're in Austin or Des Moines. And so for us to be, you know, trying to compete in an Austin market where we're the hundredth person to see an opportunity, it just doesn't make a lot of sense for us. So we stick to what we know.
Lance : Yeah, I agree. What is your take on just like Illinois? I mean, did you I mean, because it's it's a bit weird, like property taxes. And I mean, were you ever much into like, actually owning assets in Illinois proper or
Bryan Pritchard: Um, yeah, totally. So we still we just actually sold two assets in the last couple weeks in suburban Chicago, we still own two assets in Illinois, and both in Cook County, which is where Chicago is in is in Cook County. And they perform well from a leasing perspective. Unfortunately, a lot of our gains in NOI from our value-add programs have been given back in the form of real estate taxes, and that's a real scenario. And it's not only the amount of money we pay in taxes. Over the last four or five years, there's been a tremendous amount of uncertainty over as crazy as it sounds, what your tax obligations are. There have been long stretches of time where we didn't know what our real estate tax obligations were for the asset, which is a real, talk about freezing the market, that'll really put a freeze on buyers and sellers. And so it feels like we're on the other side of that. But you know, Not sure.
Lance : How does that happen? Is this just it's just for management? Like they just for leadership? Like, how does how does that happen? Why? I mean, because it seems like that's always that it's always been the knock on Illinois. Like, why can't they figure it out? Like, what's what's the deal?
Bryan Pritchard: It's a great question. If I knew, you know, if I guess if it were that simple, then you know, maybe somebody would be doing something about it. I think you have a you have an ingrained sort of way in doing things and that in Cook County, specifically, that's takes a long time to sort of to change and overcome. And from an investment standpoint, you know, that's the number whether we like it or not, is somewhat irrelevant. You know, our job is to, to have conviction, but also make sure that we can raise capital into these different into these different geographies. And we get a tremendous amount of investor kickback about investing into, you know, Cook County specifically, just due to the tenuous political and tax environment.
Lance : Yeah, for sure, for sure. For you guys, you know, and the capital partners you had over the years, I mean, what has been the thing that, you know, attracting it and like, what was your tactics and your strategy for sort of, you know, I know you've got a great stable of, you know, more well-heeled, you know, family office type investors, but like, how did you cultivate those relationships and get them comfortable?
Bryan Pritchard: It takes a long time, you know, like it doesn't happen overnight. And I can go back. I recall this often. I actually teach a real estate development class at University of Michigan now. So I have a lot of students that want to sit down and have coffee and talk about like, how do you own your own real estate business? And so I have this conversation a lot. And I vividly recall my first deal, which I was buying a neighborhood apartment building in Chicago, and I needed to raise $500,000 in equity. And I thought, no problem. And I made a list of everybody I knew that I thought would give me money. I called them. And at the end of the list, I had about $10,000. Not quite, not close enough. And so what it really became for me over a period of time is number one, relationship building. You know, like I don't come from a family that has money or at least a family that's going to invest in real estate. And so I needed to build those relationships. I needed to perform over time and perform does not mean I needed to hit some crazy IRR. It means that I did what I said I was going to do. good, bad, or indifferent. I was transparent with my investors. I cultivated a relationship with them. And at the end of the day, I told them what I thought was going to happen, and then that did happen. And so that really became the linchpin or the foundation. of those relationships. And what I have found is that, you know, each relationship you build has the potential to turn into three or six or 12, you know, and has the potential to grow. And so that's really how our capital raising has grown, has been through relationships and reputation.
Lance : Yeah, that's it, that word of mouth. Doing what you say you're gonna do is a big one. And I mean, which kind of a good segue into just, you know, the whole notion of you talk to any syndicator, it's all about, well, we're conservative underwriters, right? Everyone just conservative. Everyone's conservative, but it's not, if everyone's conservative and they can't be true. And I know you guys. you know, you, you are legit conservative. I mean, when you, once again, given what you just said, you look at it and say, what do we know we can do? And that becomes like, here's, here's the numbers. Well, today, if anyone's trying to do deals, if they were conservative, it wouldn't pencil, right. More often than not. Right? So like, what, what do you think that probably, cause you have, on one hand, you got investor expectations who are all, you know, got really accustomed to what happened in 2016, 17, 18, 19, 20, like we're, you know, everyone just crushing it. You'd have to even know what you're doing. And now they think that they can get a 20 IRR on a, you know, a light value add multifamily deal where we just talked about like, you'd be lucky to get that on a development deal. You know, how, how did you guys respond to that when investors, when you guys are coming out and saying like, yeah, we think we can hit, I think, you know, 13 IRR and, you know, maybe we have 1.7 multiple. And they're like, oh, I can go find something better. I mean, like, how did you respond to that?
Bryan Pritchard: that we encourage them to do so. And so if somebody thinks that they have a sponsor that they like more, and that they want to invest their money in, then they should go do that. We're giving them an honest opinion of what we think we can do with the investment and the capital. We've structured it in such a way, to our detriment many times, as interest rates over the last 10 years ratcheted way down for a period We were in a bunch of long-term fixed rate loans that were at higher rates, that had we not had the cost of exiting those loans through defeasance or yield maintenance, we could have either sold and made a lot more money or refinanced and made more money. So that conservative capital structure was to our detriment, but it is what it is. Now, I will tell you, on the other end of that, over the last two years, as interest rates have gone through the roof, we're in a bunch of fixed rate, long-term loans to our benefit. And so for the moment, we're very smart with regard to how we've capitalized ourself. But as far as people saying, I think there's really two things that people will say, and my answer is the same, which is then you should go do that. One is, I got this return from this other sponsor, and I would just say, that's fine. Make sure you understand the risk and that you're comparing apples to apples. Based on the risk structure that we're presenting to you, we think this is a fair return, and if you want to go do it somewhere else, you should. That's your right. I also tell people, don't give us all your money. We don't want it. If you're looking for an apartment guy who's going to be honest with you and do what they say they're going to do, consider us to fill that role for you. The second is, we don't charge extraneous fees, but we do a lot of work. in our expertise adds value to the deal. And we need to be compensated for that, you know, in a reasonable manner. And so when I get kicked back and somebody says like, oh, you're charging too high of a fee, or, you know, you should not charge any fees, I kindly tell them, it sounds like this isn't the right relationship for you. And we move on.
Lance : Yeah, yeah, that's right. And that's the right response. It's only a way to combat, you know, sort of dysfunctional, dysfunctional sales process. Right. It's just by one part, one of the parties is going to have to actually get real and just call it how it is and not kowtow to the other. And I think it goes both ways. And I think that's the issue of then, you know, caving to the pressure and then having some inflated pro forma and then saying it's conservative when it's not so that you can get the sale is only going to backfire in the end.
Bryan Pritchard: It's hard to do these things. OK. And so, you know, the longer you've been in business, the better position hopefully you are in to be able to, you know, be a little bit more choosy with who your capital partners are and who your investors are. When you're starting out and trying to do deals, it's really challenging. The one thing that I would caution entrepreneurs to think about as they're building real estate companies is, You got to remember, it's a slow, long game. And so if you're trying to scale really rapidly, it's a challenging thing to do to match a fee structure and a deal structure to a growing organization to make sure that you don't get sunk on both ends. It's really challenging. And I think if you're trying to grow an organization to scale, it could put you in the position of having to do deals rather than doing the deals that you should do, and it can get you in trouble.
Lance : Yeah, I agree. I call it the dip. It's, you know, it's all great when it's just a couple of guys and you're doing a couple of deals. We're going to, we're going to be gazillionaires. This can be great. And then you start to hire people and any little thing occurs, it pulls you in the dip and now you're making less money than ever made. And there's a great chance that you could just completely tank the organization. And this is, there is no such thing as financial growth in this business. It's all linear growth. And to some degree you can, you know, if you've got great culture and great strategy and great capital partners, like you can increase the, you know, the steepness of your of your linear upwardness. Right.
Bryan Pritchard: But the students that I have that, you know, are looking for the higher growth businesses, you know, I tell them they should go into tech. If you're passionate about real estate, you're going to stick with it no matter what. But if you're really passionate about trying to make as much money as possible, as quickly as possible, you should go into technology or finance. You're in the wrong business.
Lance : Yeah, there's, there's no question. Yeah. And you have to, I mean, that's in this business, you do, it's a long game. It's a, it's a decision you make because you love real estate and you're, you know, you got to figure that out. And if you figure out that's what you're about, you just realize you'll be doing this probably for the rest of your life because you enjoy it. And it's, you know, it's, it's super rewarding if you do that, but if you don't love it and you're just getting into it because you think you make a bunch of money, you have to wait a really long time.
Bryan Pritchard: Or you get I tell people, yeah, so you picked up on something that's very smart, which is like the nice part about real estate is if you are, if you do take a slow and steady approach is that you can do it for the rest of your life, or for as long as you choose to do it. Nobody can really kick you out. And if you're not willing to wait, and you know, there's a It's my experience has been it's not so much what you're willing to do. It's what you're willing to give up in order to pursue this kind of role. And if you're willing to give up, if you're not willing to give up certain things in order to get through that 10 year sort of startup period for real estate companies, don't start. It's going to chew you up. Just don't start.
Lance : Yeah, that's right. You'll just be super frustrated. Yeah. And I run into all the time. That's where I say it's like, it's all these guys who looks like overnight successes. And I'm like, trace it back to when they got started. And it's, I mean, for, I went through the same exact experience. I mean, it was a grind. Like it just, those first four or five, six, seven years, It's just, it's really, really, really hard. It's, it's, it's a lot of work, a lot of hours, super intellectual. You got all sorts of things going on. You got to have the stuff, you got to have grit, you got to, you know, you got to be a conviction and you believe in it and you want to do it. But if you can't muster it, you just, you'll be miserable for sure.
Bryan Pritchard: Yeah. Yeah, totally. I totally agree with you. So I happen to love it. And so, you know, um, um, I was the, one of the most fortunate thing that's happened for me is that I knew what I wanted to be at a very young age. And so I was able to start focusing on it young. And that was, I wanted to have my own real estate company and be careful because sometimes you, you get what you asked for. So hopefully you like it. Uh, and I have to love it. And so, you know, for me, I have challenging days, but I genuinely don't really have bad days.
Lance : Yeah, that's great. So, Brian, where can people connect with you if they'd like to? LinkedIn or where can they find you?
Bryan Pritchard: Yeah, sure. You can find me on LinkedIn. You can find me on our website, which is TriCap, T-R-I-C-A-P-R-E-S dot com. Feel free to go to our contact page and reach out anytime. Happen to talk to anybody.
Lance : Awesome. Thanks, man. It's good catching up with you.
Bryan Pritchard: You too. Thanks. Take care, Lance.
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