Multifamily has long been considered the darling child of real estate among investors due to cash flow stability, capital preservation, and appreciation potential.
BAM Capital is democratizing this hot investing space with private equity funds designed for accredited investors, giving individuals the opportunity to invest in institutional quality apartment communities. The vertically-integrated investment, construction and management company boasts a Midwestern portfolio spanning approximately 6,500 apartment units and is currently fundraising for BAM Multifamily Growth & Income Fund IV, its largest fund to date with a target raise of $165 million. TRD sat down with the BAM Capital team to learn how their focused investment strategy is purpose-built for today’s thriving multifamily market.
Democratizing Real Estate Investment
Ivan Barratt founded The BAM Companies, formerly Barratt Asset Management, in 2010 after he identified a gap in the multifamily investment space. The BAM Companies consists of BAM Capital, BAM Management, and BAM Construction.
“The most sophisticated retail investors and wealth managers recognize the benefits of private real estate investing,” explains Barratt. “Whether they are seeking portfolio diversification, tax efficiency, the ability to generate both passive income and long-term growth, or any combination thereof, private real estate is a winning solution.”
However, investing in this kind of large, high-quality multifamily property was reserved for institutional investors and ultra-high net worth individuals with access to large amounts of capital.
To close this gap and bring institutional quality multifamily investments to the individual investor, Barratt founded BAM Capital, which offers accredited investors a way to gain access to the multifamily investment space through private equity funds. Fourteen years later, BAM Capital has opened up this growing investment space to a new tranche of LPs, with an investor base that spans roughly 1,400 households, including Registered Investment Advisors (RIA’s) and high-net-worth individuals.
A key driver behind that growth has been its successful track record of results for investors, which includes delivering an average internal rate of return north of 35% and an equity multiple of approximately 2.6x. These results have, in turn, spurred more organic growth through referrals and relationships that the firm has built with trusted financial advisors.
“Growing up, my family, like many others, faced challenges in accessing high-quality investment opportunities,” says Abbas Hashmi, Chief Strategy Officer at BAM Capital. “The most lucrative real estate deals were often reserved for large institutions and a small group of affluent families with access, leaving us with limited options that ultimately hindered our ability to build generational wealth. This experience has fueled my commitment to ensuring that BAM Capital continues to curate wealth-building opportunities for families who might otherwise be overlooked. It’s not just about access; it’s about empowering them with the knowledge and education needed to make informed, impactful decisions.”
The Iron is Hot
Looking back at market cycles, investors who were on the sidelines during the dot com bubble and the Great Financial Crisis missed out on huge buying opportunities. That’s why BAM Capital has been quietly taking advantage of buying opportunities in today’s market. For example, the firm acquired four assets in 2023 and is on pace to buy five or six properties in 2024.
“We’re still active in the marketplace, and we’ve been able to buy assets at an incredible basis over the last two years,” says Tony Landa, Chief Investment Officer at The BAM Companies. “We have very strong conviction in our underwriting, due diligence process and operations team. When we see an acquisition opportunity that meets our strict acquisition criteria, we buy, and we don’t blink.”
Research supports the continued investor appetite for multifamily real estate. A recent FINTRX study showed that 36% of family offices have multifamily real estate in their investment portfolios, the highest allocation of any property type.
“The numbers are out there for us, and addressing that demand is paramount,” says Hashmi, who explains that BAM Capital is well-positioned to take advantage of opportunities in spite of the high interest rate environment thanks to having capital already in hand.
The BAM Capital Model: Vertically-Integrated, Laser Focused
One important differentiator for BAM Capital in the multifamily space is that it serves as a hands-on manager and operator as well as the owner.
“We’re operators at the core, and that’s what defines us and makes us a huge success,” explains Landa. “That’s a big benefit to our investors. Our operations team is able to share resources from property to property, which creates significant economies of scale within our portfolio.”
This structure has allowed the company to focus on a very specific slice of the multifamily market today, specifically institutional quality apartments in the Midwest that are 2015 vintage or newer. The logic behind this choice is elegant: not only has new construction lagged in the Midwest compared with other regions like the Sun Belt, but multifamily is moving into an era where new barriers to supply are mounting.
Because it’s harder to get shovels in the ground today due to higher capital and construction costs, tighter liquidity and what is oftentimes a challenging city permitting process, the prospects for asset appreciation in multifamily increase. Across its portfolio, BAM Capital is maintaining an average occupancy of 93%.
“It’s a great long-term investment for institutional capital, private equity, family office and your individual investor,” summarizes Landa. “Multifamily has always been the darling child among real estate investors because of cash flow stability, capital preservation and appreciation potential.”
The company uses a mixture of floating rate debt and fixed rate debt. To help mitigate the rise of interest rates that comes with floating rate debt, the firm employs a number of interest rate derivatives to hedge against such a rise. For example, BAM Capital locks into rate caps and buys down the rate on fixed-rate debt.
“We’re always trying to protect ourselves from interest rate increases,” says Landa. “We don’t want to focus on things that are outside of our control.”
Additionally, BAM Capital creates positive leverage by focusing on the stabilized yield on cost. For example, the firm might buy a property with a 5% cap rate today and then work to take that property to a 7% or 7.5% cap rate by increasing the net operating income at the property level through improved operations. This strategy is paramount when evaluating real estate and ultimately drives value.
Beyond Compliance: Building Investor Confidence Every Step of the Way
BAM Capital is committed to transparency with investors, which is especially important in today’s world in which other sponsors/operators are making capital calls and pausing distributions. The company makes a point of addressing these concerns in its communication with investors via quarterly reports, monthly updates, webinars and everyday conversations with investors and advisors.
“Although not required, we have intentionally elected to subject our funds to voluntary audits on an annual basis,” notes Barratt. “We work with multiple, national CPA firms who ensure we are in full compliance with relevant securities laws and accounting standards, as well as attesting to the legitimacy of our track record. Our portfolio valuations are derived from third-party appraisers rather than internal calculations. These examples demonstrate our commitment to ethical business practices and transparent reporting.”
This sense of responsibility is evident throughout BAM Capital’s culture. By building a company full of supportive team players with a shared commitment to excellence and growth of every kind, Barratt has created not only a new model for multifamily investing, but a hard-working and dedicated family of management and investment professionals.
“We talk about our culture, and everybody thinks it’s an internal thing,” says Landa. “But it transcends into the public forum as well. That helps us see attractive buying opportunities that others don’t.”
To learn more about BAM Capital’s current offerings, contact the team via phone at 463.227.0773 or via email at invest@bamcapgroup.com.