November 4, 2022

JF2983: From Airline Pilot to Multifamily Syndicator ft. Satch Bernhardt

Satch Bernhardt is the managing principal at Bernhardt Capital, LLC, which helps airline pilots and busy professionals invest in value-add multifamily deals through real estate syndications. In this episode, he shares the steps he took to jump from wholesaling single-family homes to raising capital for multifamily syndications, the hard lessons he learned from hiring too quickly, and why he believes more pilots are looking to diversify their investments right now.

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Satch Bernhardt | Real Estate Background

  • Managing principal at Bernhardt Capital, LLC, which helps airline pilots and busy professionals invest in value-add multifamily deals through real estate syndications.
  • Portfolio:
    • GP of 350 units
    • Fund manager for a $25M fund
    • LP of 726 doors.
  • Based in: Orlando, FL
  • Say hi to him at:
  • Best Ever Book: What It Takes by Stephen A. Schwarzman
  • Greatest Lesson: Real estate is a team sport. Collaborate with others to go far in this field.



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Slocomb Reed: Best Ever listeners, welcome to the best real estate investing advice ever show. I'm Slocomb Reed, and I'm here with Satch Bernhardt. Satch is joining us from Orlando, Florida, managing principal at Bernhardt Capital LLC, which raises capital for value-add multifamily syndications. Currently a GP of 350 units, fund manager for a $25 million fund, and also an LP of over 700 doors. Satch, can you tell us a little bit more about your background and what you're currently focused on?

Satch Bernhardt: Yes, absolutely. Slocomb, thank you for having me on the show. So I'm actually originally an airline pilot; I flew for the airlines for about seven years, and I started when I was 21 years old. And four years into my airline career, I quickly realized that flying the airplane was pretty cool, but the lifestyle that went along with being an airline pilot was just not something that I saw myself doing for the next 40 years; the typical pilot flies until 65. So I started looking for other things to do out there, and real estate was something that always caught my attention. I knew I never wanted to be a real estate agent. My wife was a real estate agent, so I saw her driving people around, and looking at houses... And I just didn't see myself doing that. So I stumbled upon wholesaling.

So in 2018, I started a wholesaling business while I was still flying, and I started growing that business and learning about real estate, learning about flipping houses... And in 2020, which is when COVID happened, my airline shut down. So luckily for me, I was just enough established in real estate that it did not affect me. So the income that I was making already in real estate was enough for me to keep going. So I just continued to grow that business. But what I realized was a lot of my peers that were at the airlines at the time were struggling, because they literally had no job, they had not prepared for anything else out there, and they were not being able to be hired at any airline, because nobody else was hired. I don't know if you remember, but all flying went down, there was no traveling... So they were literally struggling to make it through this time. So that was my mission moment, when it clicked in, and I said "Hey, I can do something good for people." And my target audience is helping airline pilots invest in real estate.

So I created Bernhardt Capital to help pilots invest in value-add multifamily properties, so that they can start generating cash flow, passive income while they're still flying, so that if any other 9/11 happens, any other COVID event happens, they're still financially secure.

Slocomb Reed: Yeah, that's true, airline pilots have gotten hit twice in the last 22 years, haven't they? Oh, I didn't mean to make it sound like that, "got hit", not after you bring up 9/11, but I know what you mean that the two major world events that have impacted the United States have both significantly impacted airline pilots. And I get what you're saying about lifestyle. Improving one's lifestyle is often what brings someone to real estate.

Did you jump directly from wholesaling single families to raising capital for multifamily syndications, or were there steps in the middle?

Satch Bernhardt: There were steps in the middle. So the first step was knowing that I could even do a big multifamily deal. I was so caught up in that mentality that I just saw a big building and I just kept thinking, "How long is it going to take me to put a down payment for something that big?" That was my first limiting belief. And once I got past that, and I realized that there's not a single person that owns a 350-unit apartment complex, it's a group of people that get together and buy it. So that changed immediately the way I was looking at things, and then I realized, "Okay, well, then to go into buying a multifamily building, you don't do every single thing like you do in a flip." I don't know if you've done flips, but typically, in a flip you go and manage the contractors, you go pick the materials, you're managing the lender... Just about everything that goes on with the flip, unless of course you're doing like a big-scale operation, right? If you're doing one, two flips a year, you're probably doing every single thing. And when you think of the multifamily valu-add deal, you're probably think "Oh man, I'm gonna be doing all of these things", but it doesn't happen that way, right? It tends to be that most people focus on one thing that they're good at, and they just go really deep and wide on that one thing.

So it was a couple of months of me trying to figure out what was it that I wanted to do in multifamily when I finally stumbled upon capital raising being the one thing that I wanted to do. And I just went hard, and I started joining masterminds, I started getting mentorship on raising capital, and I went all in on that.

Slocomb Reed: Nice. So how many different sponsors or GP organizations are you working with, are you putting your capital, the capital that you raise with right now?

Satch Bernhardt: Yeah, so there's two teams that I work with, because there's some SEC regulations around this. You can't just raise capital for the sake of raising capital, and then just give it to a company; that will fall under like you're brokering, raising the equity. So I team up with these two companies, and I exclusively raise money with them. And I have other duties within the company as well; I have more investor relations duties within them, and I only stick to them.

So I started by investing as a passive investor in a couple other deals, and I just wanted to see how it was from the investor side... And I just wanted to see the communication that they had with investors, and who I liked the most, and after that, I started approaching them, saying, "Hey, I really like you guys. I like everything you're doing, and I want to be part of the team, to help you guys on the capital side." So yeah, there's two guys that I'm mainly focused on. Their investment thesis lines up with what I like as well.

Slocomb Reed: Who are those two teams?

Satch Bernhardt: Elevate, and Rise48. They invest in the same areas that I like, which is Arizona, Texas, in the Southeast, and mostly doing value-add apartment complex deals.

Slocomb Reed: Gotcha. So Satch, we're recording in August of 2022. At this point, what percentage of the investors that you work with right now are airline pilots?

Satch Bernhardt: About 50%.

Slocomb Reed: Gotcha. Okay. So I'd like to focus in on that 50% then... A question that often gets asked, that I often ask capital raisers for apartment syndications is, "What are you feeling from your investors right now?" Are there a lot of people with capital looking to deploy, are a lot of your investors feeling more conservative with inflation and interest rates? Is supply and demand the only thing they care about? Is that all that matters in apartments right now? Specific to airline pilots, with that being half of the investors that you work with, there is -- I'll use the word volatility; there's a lot of volatility in that space right now, with a lot of the pilots who were laid off not returning to work; there's a very high demand for pilots. I personally have a couple of friends who are in the process of pilot training, primarily getting up to that 1,500 hours of flight time to get hired by one of the major airlines... So I know there's a lot of fluctuation, there's a lot of demand, there's a lot of change happening in that industry right now, and I know a lot of capital raisers who raise from airline pilots, and focus on airline pilots. So let me ask specific, to them and their appetite for apartment syndication right now, what are you seeing?

Satch Bernhardt: As far as their concerns, I feel like the ones that have already invested and know about real estate, they are not changing their perspective on investing on future deals, just because they understand that as long as the underwriting is done in a way to protect them from any unforeseen situations, we put enough buffer there for any fluctuations in interest rates and stuff like that - they understand how real estate works and how we make sure that our downside is protected. So those guys feel pretty comfortable with. It's the newer folks that haven't invested yet on any deals at all. Like i said, I couldn't really tell you a percentage or a number, but it's for sure the guys that have never invested at all in real estate, and they just hear what happens in the news, or hear the media saying, "Hey, interest rates are going up", and they are the ones that are very hesitant about pulling the trigger or anything like that.

Slocomb Reed: Keeping in mind that this is a conversation with a capital raiser with a professional career as an airline pilot, who raises a lot of capital from airline pilots, let me ask this way, Satch... Are you seeing that the fluctuations in employment of airline pilots has any impact on the way that your pilot investors want to invest?

Satch Bernhardt: No. I have not seen any change on that. I just want to make sure I understand the question. So you're saying we're seeing a lot of demand for pilots out there...

Slocomb Reed: Yeah. So there's a high demand for pilots across all airlines. I subscribe to a handful of Wall Street Journal podcasts, and regardless of the topic of the podcast, every single one of them has touched on the demand for airline pilots, whether it's a travel podcast, or a money podcast, or even a tech podcast. Everyone's aware of that. There are a lot of pilots who decided that COVID was the right time to seek another profession. That sounds familiar to you, Satch... Or they decided it was the right time to retire. So I also know that there are other capital raisers out there who have this niche of working with airline pilots, in large part because of the lifestyle question, that they have the capacity to be very high-income earners, who are going to have difficulty based on that lifestyle of having a side hustle, or doing anything else actively to earn, so they seek out passive income earning opportunities, like syndications.

So the question here really is - we've seen a lot of pilots leave the space... Is that because they are finding things like apartment syndications? I think we're seeing a lot of younger pilots coming on board and getting a lot of experience... You may have already answered the question, but are you seeing the passive investing appetite for pilots change as COVID as a pandemic is now behind us, and we're experiencing new challenges in that industry?

Satch Bernhardt: No. I think I've got a better direction for the question, or I guess more perspective on what you were trying to get at... I think it really changed the view on a lot of the policies; at least everyone that is in my network, and everyone that they're connected with, it changed how they view things, and they realize - especially right now, like you said, we're obviously in 2022, and a lot of people, their 401-K's have lost 40% to 50%; [unintelligible 00:12:01.00] trending up again, but... They saw such a decline that the amount of folks that have reached out to me to tell me, "Hey, man, I'm really looking to diversify." COVID happened, and then the stock thing happened at the beginning of this year that they all started turning around and looking for all the things out there to invest in. So I think those two things combined were a catalyst for more pilots to start looking out for other things.

The other part of the question - even though we're seeing a lot more demand for pilots, it's not that too many of them left... And I'm not saying this is what you were insinuating, but I just wanted to go over that, that it's not that too many left. Obviously, I left, but not everyone left the industry. What really happened is that the demand not only got back to the same level as it was before pandemic levels, but it just skyrocketed way past that. So now they're struggling to really find, and they're ordering new planes, they're putting new routes, the airlines are expanding, so they're having trouble filling in those new spots. It's not just replacing the old spots, but putting people in the new spots.

Now, there's a quite a few amount of people that left because usually their retirement age is 65, and there's people that left at 63. They said "Screw it. I've got two years left. COVID happened... I'm out." So there's quite a few spots at the top that left the industry that now they're having to fill in. So those are quite a few that left, but there's a lot of new spots that are not having to be replaced, they're just simply new spots that need to be filled in. So the airline industry is definitely suffering from both sides - expanding, and all the people that left.

But yeah, man, I think I'm pretty excited to see that a lot of pilots are turning up their investing appetite to wanting to diversify other than just simple 401-K's.

Break: [00:13:48.03] to [00:14:51.18]

Slocomb Reed: You said that about half of your investors are pilots. Where are the other half of your investor base coming from?

Satch Bernhardt: It's just family and friends. It's funny enough that it's also people that have just regular W-2 jobs, and that's all they've done their whole life, and they started seeing what I was doing, and they wanted to invest with me in some flips, and a couple of them did... But as I started growing, I realized I could not fit as many people in the flips. I wasn't doing that many flips to be able to accommodate everyone to start doing flips. So they started saying "Hey, man, do you need some money for your next rehab?" So I just started -- instead of putting money into flips, which I don't know flips anymore, I started putting them into multifamily syndications.

Slocomb Reed: Gotcha. In your intro, you have - you're a fund manager, you're also GP in 350 units. Thinking from the perspective of someone who not necessarily wants to remain passive, but plans to become a capital raiser, tell us about the difference for you between being a fund manager and being a member of the general partnership and how that impacts the way that you invest, and your own returns in these deals.

Satch Bernhardt: Honestly, there's not much -- what I love about syndications is that the profits for the GP, they're heavily weighted on the performance of the asset, meaning the passive investors need to get paid first, and successfully achieve certain metrics before the GP gets paid if you're active, in the active side of the deal. So I actually invest in all of my deals as a passive investor, just because I obviously want to get those returns, and the cash flow from the deals.

When you're on the active side, or the GP side, there's really not much going on in between once the deal closes; like, we get paid an acquisition fee upfront, and there's really nothing going on in the middle, unless there's something like a management fee, and stuff like that. But it's really not that significant or life-changing. So you don't see anything else until the dealer sells on the backend. So that's why I'm very active, I guess you can say, on both sides, the active side and the passive side.

Slocomb Reed: Yeah, that makes sense that you personally are seeing those kinds of returns over time, with the cash flows of the property, and then seeing that targeted IRR achieved for limited partners, however your deal is structured. What I'm asking is, when you differentiate between being a fund manager and a general partner, why do you make that differentiation? And how does that change the way that you earn as an active investor, and how does it change the way that your limited partners earn as well?

Satch Bernhardt: Yeah, so I hope that was not confusing there. So I invested as a fund of funds of another fund. So I'm a fund manager of that fund that we invested in this project... And it's actually still an open-ended fund. It's a 506 B, so I cannot disclose the details of it...

Slocomb Reed: Sure.

Satch Bernhardt: So it's a completely different deal than where I'm at GP on the 350-unit. And on both deals, I'm sort of getting the same profit as being on the GP or the fund manager side; there's really no differentiation when it comes to what I'm profiting myself, if that's, I guess, what we're trying to get at. But the reason why that was structured that way, it was just because of the way the fund model worked for this specific project that we were doing. And I personally prefer to just help on the GP side and be a part of the GP side rather than the fund model, because it's just too much paperwork, and forming that entity for the fund of funds - there's a lot of different tiers and things like that, that are just too much hassle.

Slocomb Reed: Gotcha. Why did you decide to use the fund of funds model when you did?

Satch Bernhardt: That's just the way that the fund was structured. So if you wanted to participate in this specific fund, you had to form a fund so funds model to participate in it. So there were eight teams of us that were involved in it, and that's just the way it was structured.

Slocomb Reed: Cool. Well, Satch, are you ready for the Best Ever lightning round?

Satch Bernhardt: Yup.

Slocomb Reed: Awesome. What is the best ever book you've recently read?

Satch Bernhardt: It's called "What it takes", it's from Stephen Schwarzman, which is the CEO and founder of Blackstone. It's one of my favorite books. I don't see it too much out there being spoken, but it just goes from his story from going in college, all the way to forming Blackstone and growing Blackstone. I focused on capital raising too because in the future I see myself owning a private equity firm, doing the same thing with multifamily as with businesses. So that book really gives you a detailed look into his perspective on his outlook on forming a company that became such a big company that it is today.

Slocomb Reed: Thank you. That should be a very interesting listen. I'm looking forward to it, now that I have it in my library. What is your best ever way to give back?

Satch Bernhardt: Honestly, helping other people do wholesaling. And wholesaling is a big topic, and most people know me prior to multifamily syndications from the wholesaling business, and a lot of people reach out to me for advice and tips on how to set up their cold calling teams, how to grow their company... Typically, the stuff I learned, I pay a lot of money to learn them, and I just typically give it away for free when people reach out to me.

Slocomb Reed: Thus far, Satch, in your commercial real estate investing career, what's the biggest mistake you've made, and the best ever lesson that resulted from it?

Satch Bernhardt: The biggest mistake I made was hiring too fast. When I started, I wanted to scale very quickly and I just hired people based on gut feeling, and just because I thought they were just okay for the job, rather than taking a step back and really thinkin them through, making sure that they were the right fit, and that their core values align with the values of the company, and really making sure that they were the A players that I was looking for.

I think a lot of times we look at our company and we think, "Okay, our company is a five out of ten", right? And you look at a potential employee who is a ten, and you look at a company who is a five, and you say, "Well, that guy is a ten, and this company is a five. He can't work for us." But you've got to switch it around. The reason why your company is not a ten is because you don't have ten employees.

So it's not what you think you deserve, it's what you're gonna be looking out there for. And the more ten players you bring into your company, the quicker your company will rise to be a ten.

Slocomb Reed: Absolutely. I totally feel that when it comes to hiring too quickly, and those kinds of concerns as well. Satch, what is your best ever advice?

Satch Bernhardt: Team with other people. If you want to get into the real estate game, don't do it alone. A lot of people want to just stay small and do their own project; in my opinion, just team up with other people. You can't go that far if you're just doing it on your own.

Slocomb Reed: That's awesome. And where can people get in touch with you?

Satch Bernhardt: If you go to my website, I have a free eBook that people can download. All my contact information is on there. So if you go to, download it for free. Yes, I'll get your email, but I won't spam you. I put a lot of content into it, so I really hope you enjoy it.

Slocomb Reed: Nice. And that link is in the show notes. Satch, thank you. Best Ever listeners, thank you as well for tuning in. If you've gained value from this conversation, please do subscribe to our show. Leave us a five star review and share this with a friend who you know we can add value to through this conversation. Thank you, and have a best ever day.

Satch Bernhardt: Thank you, Slocomb.

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