February 25, 2024

JF3461: A Master Syndicator’s Formula for Crushing It in Any Economic Environment ft. Ivan Barratt




Ivan Barratt is a multifamily owner, manager, and syndicator who specializes in large apartment communities in the Midwest. The founder and CEO of The BAM Companies, Barratt joins host Ash Patel on the Best Ever Show to discuss how his company not only weathered the high-interest-rate storm in 2023, but thrived, and is in a position to continue thriving in 2024 and beyond.

In this episode, Barratt discusses why and how his company prioritizes an operational value of traditional physical value-add approach, creating a company culture that cultivates loyal team members, how his company deploys and distributes its capital, how he’s finding deals today in a competitive market, and much, much more.

Ivan Barratt | Real Estate Background

  •  Founder/CEO of The BAM Companies

  • ~7500 apartments total (sold about 2,000 so far)

  • Based in Carmel, IN

  • Say hi to him at


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Ash Patel (00:05.604)
Hello, best ever listeners. Welcome to the best real estate investing advice ever show. I'm Ash Patel and I'm with today's guest, Ivan Barrett. Ivan is joining us from Carmel, Indiana. He is the founder and CEO of BAM Companies. They have 150 full-time employees across their operations. Their business model is on value add multifamily real estate. Their current real estate portfolio consists of 7,500 apartments.

And they've also sold about 2000 apartments so far. Ivan, thank you very much for joining us and how are you today?

Ivan Barratt - BAM Capital (00:39.562)
I'm great, Ash. Thanks for having me. It's great to be here. It's been, it's been a little while since I've been on the best ever podcast. It is fantastic to be back.

Ash Patel (00:47.7)
Ivan, it's our pleasure having you. If you would, will you share with our best ever listeners a little bit about what's going on now and what you're focused on?

Ivan Barratt - BAM Capital (00:55.882)
Yeah, so BAM today is, as you said, a little over 150 employees. We're, gosh, closing in on about a billion, two of assets under management. We've got over 1100 investors that come alongside us into our, into our funds. We switched over to funds several years ago and I get to have a lot of fun. You know, I get to speak on occasion.

And I spend the most of my time meeting with other CEOs, usually that are a little higher up the mountain than I am, seeking their wisdom and their experience so we can continue to scale this company. And right now we're keenly focused on that scalability. And the big question is, you know, how do we get there, but still maintain the culture and the really the investor experience for our major stakeholders, the investors that come alongside us.

Ash Patel (01:49.6)
Ivan, where are the majority of your properties?

Ivan Barratt - BAM Capital (01:53.11)
We're highly focused here in the heartland or the Midwest, Indiana especially. That's our hometown, but also Ohio, Illinois. We've got a big bet in Des Moines, Iowa. And then we just went a little farther south into northwest Arkansas near the headquarters of Walmart.

Ash Patel (02:10.904)
Near Bentonville, right? Yeah.

Ivan Barratt - BAM Capital (02:13.046)
Bentonville, yep, that were a suburb of Bentonville called Rogers.

Ash Patel (02:17.156)
How come you're not in Phoenix, in South Carolina, in Nashville, in South Florida?

Ivan Barratt - BAM Capital (02:22.782)
Well, I'm glad you asked me that question, Ash. For us, being value-oriented investors, we just really didn't see the types of returns in those markets. Sure, they're high growth and they're sexy, but when we would underwrite deals in the Southeast, for example, we really just weren't seeing a high conviction in being able to achieve the returns that we look to achieve.

And then places in the Sunbelt, same story, but also whenever we go to a market, we've got to have our ability to build a boots on the ground team. So we tend to be pretty careful and disciplined on how we hub and spoke here in Indianapolis, Carmel as our main headquarters, because we want to control every line item on the P&L of that apartment project and run it like a business.

And having the luck or benefit of being born here in Indianapolis, I saw this Midwestern story. I could see the future that the heartland, especially cities like Indianapolis, were successfully decoupling from the rust belt moniker of old and starting to have green shoots, diverse economies, lots of demand for housing, and people starting to move here in some really steady population growth. So when others were looking and chasing those hotter markets, we went elsewhere a little bit contrarian to find value and be able to again have that high conviction of delivering the returns that we seek to achieve for ourselves and our investors.

Ash Patel (06:58.744)
Ivan, why have you not ventured into some of those hotter markets?

Ivan Barratt - BAM Capital (07:27.306)
Yeah, the short answer is, Ash, we saw a lot of value here in the Midwest. We saw cities successfully decoupling from the rust belt moniker they've had of old. I think the best quote I could use would be Wayne Gretzky and skate to where the puck is headed, not where the puck is. And so when others were chasing sort of sexier, hotter markets and paying more for those assets, we were able to find much more value here in the Midwest in markets that were successful in diversifying their employment, great school districts, great suburbs. We tend to buy suburban markets where there is a slow but steady demand for housing.

Ash Patel (08:17.736)
And is your model the same as the majority of multifamily where you do interest only variable rate loans?

Ivan Barratt - BAM Capital (08:28.41)
We have a mix in our funds of interest only floating debt. When we use that tool, we are pairing that with lower leverage and some hedges, either rate caps, interest rate escrows, or just cold hard cash in the bank, or a combination of all three to hedge that risk of rising rates.

Ash Patel (08:54.96)
How bad did the rising rates impact your business?

Ivan Barratt - BAM Capital (09:02.13)
I would say bad is a relative term. Inside the funds, we have a couple deals that the debt cover is around one or maybe just a little bit less than one. But in those same funds, there's assets that are still cash flowing quite strongly. So the advantage of having the fund is that you've got some trophies in there that can carry the cash flow needs of the entire portfolio if one or two assets aren't treading water are performing as well as they should be. And so that, and pairing that with lower leverage and keeping a lot of cash on the sidelines, we've been able to weather that storm quite well.

Ash Patel (09:47.308)
Have you done some risk modeling in terms of how long these higher rates are sustainable for your business model?

Ivan Barratt - BAM Capital (09:58.31)
Oh, we stress test the portfolios constantly looking at what are the run rates or how much cash we can burn before things start breaking. Absolutely.

Ash Patel (10:11.493)
And how much runway do you have?

Ivan Barratt - BAM Capital (10:17.646)
Oh gosh, that's a good question. I don't have the answer to those specific portfolio questions off the top of my head, but what we've done that's been very effective is to have a lot of liquidity on hand. So across four funds, the current liquidity is somewhere between 35 and 40 million of excess cash that we haven't distributed to our LPs.

And most of our assets are still debt cover of anywhere between 1.1 and in some cases still 1.5, because we've got a mix of floating and fixed. And so while I can't tell you it's four years or five years of runway, we still have quite a bit of runway left. And then here in the Midwest, unlike some of those hotter markets you and I were talking about a little bit earlier, we've still got rising rents.

We've still got rent growth versus a Phoenix or some of the other hotter markets in Florida and Texas. So the rent growth here is still in some cases double digits at the asset level. Overall, it's high single digits. And then we didn't see the increase in costs, uncontrollable costs that a lot of other sponsors have seen in other areas of the country, namely insurance. Some of my friends in other parts of the country are dealing with double and triple the insurance rates where here they were up about 9 percent. And then also property taxes. A lot of municipalities have been chasing property values and increasing property taxes on owners of real estate. Indiana is a shining example. I believe it was number three this year in best property tax regimes in the country.

Ash Patel (12:06.744)
I'm glad you brought that up. That really is a silver lining in that rents in the Midwest have not really gone down, whether it's commercial, single family, multifamily, whereas nationally they're down about 1% year over year. Um, so yeah, do you also get tax abatements on any of these properties?

Ivan Barratt - BAM Capital (12:27.86)

Ash Patel (12:31.184)
They're value add properties, right?

Ivan Barratt - BAM Capital (12:36.362)
Well, the way we approach value, Osh, is different than most people approach value. We look for operational value first and foremost. So if I were to have, say, a pie chart in front of me, operational value, physical value, and then finding markets where we still have a high conviction that the market can grow with rents, that section of that, or that slice of that pie, attributed to operational value or saving dollars is significant. And so what we've been able to accomplish the last couple of years is look for operating value versus a traditional heavy physical value play.

Ash Patel (13:24.34)
Ivan, you mentioned you want to control every line in your P&L, and you've got 150 plus full-time employees. Does that mean you're vertically integrated, you self-manage all of your properties?

Ivan Barratt - BAM Capital (13:38.53)
Self-manage everything and we've got the, one of the best management cultures, I would say in the country. I'd put my maintenance team up against anyone. You know, I started this business as a property management company, first serving investors on their properties. Today, we don't do that any longer. We only deploy our special team on assets that we're the general partner. But for example, maintenance is a huge factor for that.

So we, train and develop folks in-house on the maintenance side of the equation. So much so that we rarely pick up the phone for an outside contractor, save for HVAC, air conditioner unit goes out. We're typically able to troubleshoot that and repair that in-house, which is one of several big money savers. And every dollar, as you know, I add to the bottom line, increases the value of that property.

Ash Patel (14:37.872)
How do you cultivate such an environment where you're not like the rest of the world, you're struggling to keep and find good maintenance people?

Ivan Barratt - BAM Capital (14:48.778)
Well, you know, it started a long time ago with a wild and crazy idea, Ash. What if we had a management company where people liked their jobs? And what if we had a maintenance team where maintenance technicians were knocking on our door to come work for us? And starting off with that question, um, was, was really the catalyst to building that culture.

And I was lucky enough to have some incredible people that I hired early on that took that belief and that proverbial baton and ran with it and executed on that idea much better than I could. It's really quite simple when you think about it. If I treat people well and I take care of them, they'll take care of the business, they'll tend to stick around longer and they'll tend to do a better job. We put a high emphasis on that employment or that employee culture.

Over time, you know, it's certainly not a straight line to get to where we've gotten, but over time it's really started to mature. And I'm seeing some unstoppable momentum in our culture. Now we've got to hold true to that as we grow. We've got a lot of people that are really charged with making sure that we do. On the maintenance side of things, it first starts with, like I said, taking care of those people.

Now that we're big enough, we've got full-time dedication to in-house training, getting folks certified in EPA and other maintenance technical skills. And we take care of stuff. I think the best anecdote I could give you would be we had a maintenance technician. Only it worked for us for about three months, but had been an incredible, loyal person on on our team and he gets in a bad motorcycle accident and he's going to be out of the job for four months.

Well guess what? He didn't check the disability box on his benefits form. And if we're going to, if he's going to be loyal to us, we're going to be loyal to him. It's one of our core values. We're a loyal, loving family. And so we said, hey, we got you. We'll take care of you. We'll continue to pay you. You get healthy and come back and now I've got another loyal, loving maintenance person who will tell other people in the industry just how great his experience has been here at BAM.

Ash Patel (17:31.052)
Yeah, that's a great story. Ivan, you've got $40 million in liquidity. Are you just out on a shopping spree trying to find great deals?

Ivan Barratt - BAM Capital (17:42.87)
Well, I am on a shopping spree. Last year was pretty fun. Even though the equity has gotten harder to raise, we have found some great opportunities. That 40 million in liquidity is at the asset and the fund level. So that's just cash sitting there in an insured account, earning about 5% right now. And that's there in case interest rates continue to rise or other unforeseen circumstances so that we can continue to weather the storm as rates stabilize and we're able to maybe fix a little bit more of that debt that cash eventually will be distributable to the investors.

Ash Patel (18:18.108)
And is that new money coming into the fund or is that money that's been gotten from P&L's operations and sales?

Ivan Barratt - BAM Capital (18:30.634)
It's not new money. That's previously raised capital, new operations, maybe a property sale, depending on the fund we're talking about, but that's just money that we've stored up. We're typically anywhere from five to six times what bank mandated reserves are.

Ash Patel (18:49.244)
And have you had to pause distributions to build up that reserve?

Ivan Barratt - BAM Capital (18:56.026)
No, so we actually told our common equity investors early on that only our preferred equity investors would likely see any cash flow out of funds until a capital event. So our common equity investors have or shouldn't have any expectation of cash flow along the way. We only distribute to our preferred equity shareholders, if you will, and we store up the rest of that cash.

Ash Patel (19:26.96)
The preferred equity, is that a flat rate of return? Is that a debt investment?

Ivan Barratt - BAM Capital (19:34.154)
I would say a lot of it walks and talks like debt. It's technically equity, but in some ways how it's classified for taxes, it's equity. But it really feels more like a debt instrument to the investor as it's a monthly cash flow payment with no further upside at sale, just return of capital.

Ash Patel (19:57.2)
Got it. So today you mentioned difficulty with raising equity. What are you finding with investors sentiment with everything that's going on in the economy, geopolitical issues? I'm sure you're having a lot of conversations with investors. What's their health? What's their sentiment towards multifamily?

Ivan Barratt - BAM Capital (20:19.102)
It spans the whole spectrum of sentiment. I've got large wealthy families that want to double down on real estate because they see a sale on assets. And then on the lower end of the net worth spectrum, maybe the million to five million net worth investor, there's a lot more uncertainty. A lot of people say be greedy when people are fearful, but most investors really can't adhere to that rule when the proverbial, you know what, hits the fan.

And then even there, we're seeing some headwinds, right? So you've got lots of investors that were expecting a capital event, a syndication that they're in to sell, which is now not selling. So their portfolio is maybe tied up and more illiquid assets. And we've seen a lot of investors be on the sidelines. So we've had to go out there and fill the pipeline with new investors.

And across the board, we're seeing, I would say, certainly more negative sentiment than we maybe did in 21 and early 22. And it seems to have settled down now in the last few months where more people are sort of poking their head up, looking for opportunity.

Ash Patel (21:34.572)
With higher rates being paid on savings accounts, I would assume cash is king now more than ever. How are you getting investors in that are okay with not receiving any payments until a refi or a sale?

Ivan Barratt - BAM Capital (21:53.154)
Well, we've got two classes of investor now. We've got the investor that's looking for monthly cashflow, which we've been still, again, consistently paying that over the last four years. And we've grown that tranche of capital significantly in that time. That investor's typically more liquid. They've sold a business, they're retired or semi-retired, and now they're just looking for yield on that investment. And then our common equity.

Investors, typically someone's still in their earning years, they've got income coming in from elsewhere, and their interest is in the outsized returns that we offer on the back end. Less concerned with cash flow.

Ash Patel (22:36.908)
And what are those typical returns in today's environment? So the monthly payments is at 10%.

Ivan Barratt - BAM Capital (22:47.478)
We have products ranging from 9 to 11, depending on how much the individual invests. And on the common equity side, we've had 12 exits so far, about approaching 250 million return to investors. That's been a two and a half X average return on a three and a half year hold, which generated an IRR around 34%. I certainly wouldn't expect that to continue forever.

I think over time, hold periods will get back to around an average of five years, maybe a little bit more in certain circumstances. And if I can keep that two and a half X multiple on a, say a five year hold, that's still a mid twenties annualized return or IRR.

Ash Patel (23:37.888)
Ivan, what are you doing to find deals today?

Ivan Barratt - BAM Capital (23:43.426)
Same thing we always do, Ash. Relationships matter a lot when we're buying institutional assets that are typically 50 to $80 million purchase price. A lot of that's run through the brokers. We're very keen to have a great reputation, not only as great buyers, but as great sellers, easy to work with. And even our off-market deals typically come to us via an institutional multifamily broker.

So it's, got a team dedicated to staying out in front of those brokers and keeping those relationships warm. And it's after that, it's kissing a lot of toads. There's one thing I can't change about a business plan, and that's what I paid for the asset originally. So we have to be very disciplined. And that buy box is pretty small. This year, or 2023 rather.

A few more opportunities were square in the middle of that buy box, and it just became a little bit harder to raise the capital to find those assets. So it's really just working muscles I haven't needed in a while when deals were harder to find and equity was everywhere. Now that's flipped, right? There's more opportunities and less equity to go around. So you've got to work a little bit harder on the equity side. And the same amount of effort on the acquisition side produces a few more fat pitches.

Ash Patel (25:12.932)
What are you doing to lure investors in, educate them, and bring them onto your platform?

Ivan Barratt - BAM Capital (25:22.302)
Oh gosh, what are we not doing? You know, I can't tell you necessarily one way to find a thousand investors, but there's 20 ways to find a couple hundred. We do a lot of online outreach, a lot of education, a lot of video content, webinars about who we are and what we're offering, and try to be as transparent as we can with the individual investor so that they can self-select, if we are a good fit, a good partner for their portfolio. Our greatest source of capital is still repeat investors and referrals from those repeat investors. And then beyond that, we do a lot of outreach, a lot of marketing and advertising to meet new potential investors, new potential partners.

Ash Patel (26:12.48)
I think a lot of syndicators overlook the value that they have in referrals from existing investors. Is there any advice that you have in implanting that into your investor's mind that, Hey, if you have friends and family that are interested in growing their capital, please refer them to us? How do you get them on board with that?

Ivan Barratt - BAM Capital (26:37.546)
Yeah, you know, the easiest thing you can do, or I should say the simplest, it's not that easy, but the simplest thing you can do is perform for your current investors. The good news about the business we're in, Ash, is everybody likes to talk about the real estate they own. So if you perform well for your investors, chances are you're going to come up at a cocktail party here and there. And you can get a lot of referrals that way without really pursuing them too diligently.

You've got to balance it there because just flat out asking people for referrals can work against you. But there are a dozen ways to sort of weave that into a conversation. One of which, just like you said, is literally asking your LP, do you know anyone else that you think would benefit from what we do here? And if you do, we'd love to talk to them.

Ash Patel (27:29.96)
Ivan, you've got a very strict buy box. However, there's a lot of distress out there in the market. If you saw deals that were outside of your buy box, both in number of units, age, or geographic location, would you entertain taking those deals down or are you staying true to your buy box?

Ivan Barratt - BAM Capital (27:53.39)
I think it's very important to stay focused and stick to our knitting. Now we are looking at more markets. We will continue to look at the Southeast a lot. I think there's gonna be some more opportunities as the shine sort of comes off the Southeast. But you won't see me necessarily going to Phoenix or South Florida anytime soon. My goal is to do this one thing really, really well and stick to what I know.

And I've seen too many times, not only in real estate, but in other areas of business, folks that spread themselves too thin or they get that halo effect, hey, I'm good at this, so I could certainly be good at this other thing. And I think that's a recipe for disaster, Ash.

Ash Patel (28:42.156)
Ivan, if you think back to maybe some of the early days when you started this company, what's one of the biggest mistakes that you made that hindered your growth at the time?

Ivan Barratt - BAM Capital (28:55.594)
Oh gosh, we could spend a whole podcast on that, man. You know, I made every mistake in the book along the way. That's why I started with a management company and started small so that I could fail small and learn those mistakes on 15, 30 unit projects versus a 300 unit deal. Certainly made a mistake early on of thinking that I could repair a heavy value add deal with cashflow from the deal. That was almost the kiss of death making that move, wouldn't do that again.

I think the biggest mistakes that are really tough to avoid in scaling a company are hiring. You know, people say, oh, hire slow, fire fast. Well, when you're growing a company, sometimes you just have to hire fast and fire fast. And so we, you know, before we got our core values down and really got a good group of people, there was a lot of hiring mistakes mostly made by me being in a hurry to hire people and grow a company.

So I would pass that on to anybody, be really diligent, but understand that in almost every case, an entrepreneur or founder like me, it's just something we go through. It's really hard to reduce those mistakes altogether. It's just something we all have to learn. And my advice to best ever listeners who want to grow and scale a big company, really is just to remember to get back up after getting knocked on your ass.

Ash Patel (30:28.8)
Ivan, you could take a minute to think about this next question, but what is one thing on your to-do list, something that's on your task to-do list that you are procrastinating or not looking forward to doing?

Ivan Barratt - BAM Capital (30:47.731)
Let's see, thankfully that's probably a shorter list than it used to be.

Ash Patel (30:53.34)
Everybody has that list.

Ivan Barratt - BAM Capital (30:57.875)
Oh yeah.

Yeah, there's probably a few people on that list that I need to make time for that are just still sitting on that to do list. That person I haven't called in a while that I keep saying, oh, I need to get back in touch with them. I haven't talked to them in years. And they're sitting on my people I need to call list.

Ash Patel (31:21.388)
What do you do to motivate yourself to knock those items out?

Ivan Barratt - BAM Capital (31:29.442)
Oh, I try to own my morning. I try to set up my mornings to where I'm not on the phone or checking email or in a meeting. And I try to keep those mornings free. And then I've got little reminders on there. One of them is my 50 people list. People that I wanna keep in touch with that I don't necessarily get to talk to on a regular basis. So they're on a list. I know where they're at and I know what I need to do. Now it's just making that time and getting my morning back.

Ash Patel (32:00.196)
Good. Ivan, what is your best real estate investing advice ever?

Ivan Barratt - BAM Capital (32:08.93)
Best real estate advice ever? Well, you know, I think there's a fork in the road for a lot of people that wanna be in real estate. And I think people need to sit at that fork in the road and really think about which way to go. And that's whether to be an operator, which is a full-time pursuit, or at least it should be, takes up a lot of time to do it well, or whether they should be a passive investor and just be educated on how to be a better investor because they're already good at something else.

For example, a doctor or an executive or somebody that's really good in another industry. I oftentimes will see people that want to jump to real estate because they think it's easier than the thing they're already doing and probably successful at. And most of those people should double down on what they're already good at, what their gifts are and be an LP.

And then there's that few that the ones that are really designed to do what fearless does and what I do what I do and turn on that path less taken and grow a successful real estate business.

Ash Patel (33:20.264)
I have an off the wall question that I'd like to ask you is how often do you communicate with your investor list or potential investor list? And the reason I asked this question was I do a lot of market research on competitors or different markets. I signed up to receive an OM from a syndicator and within 24 hours I had three voicemails, multiple texts, emails.

And those haven't stopped until I had to reach out and just say, please stop taking me off your list. It was, they inundated me. Right. And that was a bit much. I don't want to be on that list ever again. How often do you reach out to your list?

Ivan Barratt - BAM Capital (34:06.922)
Yeah, that's a tricky dance, right? And it's a little bit like dating and you don't wanna be too desperate to win that date, right? What we're striving to do is say, and I don't have the cadence in front of me, but we try to send something out weekly. What we're striving to do though, is to have eight or nine of those emails that would go out, for example, be educational versus hey, here's a deal, do you have any money? If it's a new lead, we do try to reach them immediately with a text or a voicemail, but then we're not blowing them up three times a day, every day, until they answer, because as you know, that can really work against you.

Ash Patel (34:58.728)
Ivan are you ready for the best ever lightning round?

Ivan Barratt - BAM Capital (35:03.622)
Oh man, this whole thing felt like a lightning round Ash, but I'll do my best.

Ash Patel (35:07.34)
Alright, Ivan, what's the best ever book you recently read?

Ivan Barratt - BAM Capital (35:13.282)
I brought two, man. I'm rereading Mastering the Market Cycle by Howard Marks, a very timely book, great investor, especially a market conditions based investor, Mastering the Market Cycle by Howard Marks. And then I read a lot of biographies now. They're some of my favorite books to read versus the next How to Be Great in Business or a real estate book. Favorite biography I've read in a long time is The Gambler, How a Pennyless Dropout, Kirk Corian, became the greatest dealmaker in capitalist history. I don't know if he's number one, but he's way up there on the list as far as what he did, where he came from and where he went. And he did it with class and integrity. Fantastic page turning story. I think I gobbled this one up in a matter of days.

Ash Patel (35:59.456)
Awesome, I just put that on my list. Ivan, how can the best ever listeners reach out to you?

Ivan Barratt - BAM Capital (36:06.934)
BAMCapital.com or 317-762-2625.

Ash Patel (36:16.248)
And Ivan, what's the best every way you like to give back?

Ivan Barratt - BAM Capital (36:22.07)
Well, we give a lot of treasure both as a company and my wife and I personally, but I think the best way to give back, especially with little kids who live in this fantastic life, this bubble here we call the US of A, is to give back time. And we like building homes in other parts of the world that are really suffering from third world conditions.

Ash Patel (37:12.572)
Ivan, thank you very much for your time today. You are one of the pioneers of real estate syndication and one of the most respected people in this industry. So thank you again.

Ivan Barratt - BAM Capital (37:28.27)
It's an honor to be here, Ash. Thanks for giving me the time, and I sincerely hope we've added some value to your audience.

Ash Patel (37:34.884)
Best ever listeners, thank you as well for joining us. If you enjoyed this episode, please leave us a five star review, share this podcast with someone you think can benefit from it. Also follow, subscribe and have a best ever day.

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