In today’s episode, we chat with Brian Burke, the President and CEO of Praxis Capital. Brian shares his journey into real estate investing and explains why he chose to focus on multifamily properties. He discusses the current market conditions and how his company navigated them. Brian also talks about his approach to finding investors and the importance of client communication. He emphasizes the benefits of the fund model and his company’s geographical focus. Finally, he shares why investors should consider investing with Praxis Capital.

Listen To The Podcast Here

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What’s Covered In This Episode: 

  • Focusing on multifamily properties has been the most successful strategy for Brian Burke and Praxis Capital.
  • Communication with investors is crucial, and Praxis Capital prioritizes detailed reporting and transparency.
  • The fund model allows for diversification and minimizes single points of failure.
  • Praxis Capital has a strong track record and experienced team and prioritizes risk over reward.

Connect with Brian Burke:

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Read The Transcript Here: 

Trevor Oldham (00:01.706)
Hey everybody, welcome back to the REI Marketing Secrets Podcast. Today on the show we have Brian Burke. Brian is the President and CEO of Praxis Capital, a vertically integrated real estate private equity investment firm, which he founded in 2001. Brian has acquired over $800 million worth of real estate over a 30-year career, including over 4,000 multi-family units and more than 700 single-family homes.

with the assistance of proprietary software that he wrote himself. Brian has also subdivided land, built homes, and constructed self-storage, but he really prefers to reposition existing multifamily properties. Additionally, he is also the author of The Hands Off Investor, and is a frequent public speaker at real estate conferences and events nationwide. Brian, super excited to have you on the show today.

Brian Burke (00:52.167)
Thanks, Trevor, I’m excited to be here.

Trevor Oldham (00:54.43)
And Brian, going back to say, you know, in your early years, like why did you decide to just say, hey, I wanna start investing in real estate? You know, if you could think back 20, you know, 30 years, what got you into the game all the way back then?

Brian Burke (01:06.855)
Well, I think it was a combination of two things. One is what choice did I have? I didn’t really have a lot of skills in doing much of anything, of course. When I started, I was 20 years old, just not too long out of high school. And I think my first business was selling pomegranates on a card table on the intersection by my grandmother’s house that were grown on her tree in the front yard. So I guess I figured I had to be in some kind of a business.

And from everything I had heard and read in all the books and everything else was that real estate was the way that most wealth was made. So I figured that sounds good to me. I’ll start investing in real estate. And I made my first real estate investment when I was 20 and it was a terrible experience. So I was therefore hooked.

Trevor Oldham (01:53.226)
So do you mind, what happened with that first experience? Was it the tenants? Was it the termites? Was it the toilets? Which one of those was it? Ha ha.

Brian Burke (01:59.651)
Oh, it was every one of those things, believe me. Yeah, it was everything. Everything that could go wrong, of course, went wrong. And at the end of the day, when I finally sold that property, it was, I had it as a rental for a couple of years, and when I finally sold it, I think I either broke even, or maybe had like, I don’t know, a few hundred dollars lost or a few hundred dollars profit. I mean, it was certainly wasn’t worth the effort, but it was a really, really incredible opportunity to learn.

a lot about what I didn’t know and learn about how difficult the business is so that I don’t take it too lax a day. I had to take it seriously if I was going to be successful and that was a good time to learn that.

Trevor Oldham (02:46.19)
So now that you got your start into real estate, maybe the first deal didn’t go out as good as you wanted, but you got your teeth into it. As I say, the first deal is always the hardest. And then now, as you’ve been building your company, why multifamily? Why multifamily over mobile home parks, over self storage, over the hot thing of short-term rentals, midterm rentals? Why did you decide to go with multifamily and build your company around that?

Brian Burke (03:13.627)
Because over the years I’ve had the good fortune of acquiring almost a billion dollars in real estate. It’s like almost, I’m coming up on almost 800 properties. And in amongst that, I’ve done almost all of those things that you mentioned. And what I found is that I was best at multifamily. I would have all kinds of challenges that.

were steep obstacles when I tried to stray off the path into some other kind of asset class, like hospitality and vacant land and development. And you know, some went well and some maybe not as well, but they were all very difficult and challenging and seemed like they took forever. Yet multifamily has been one that, despite the fact that of course it has its challenges and we’ve had our deals that struggle like everybody else.

That produced much better results for me and for our investors for every unit of risk and for every unit of time. And I’ve just found that that’s what we’re really good at and you might as well stick to what you found your best at and just stay that course.

Trevor Oldham (04:27.778)
Yeah, and I think that’s a good example. I find that sometimes you might see an operator where they go into multifamily and then the next year they might be in an RV park and then the next year they might be in a laundry mat space. And to me, it’s like, how much am I gonna trust this operator where someone like yourself, they’ve been in the business over 20 years, you rode through 08 and obviously more recently, in the last year or so, you’ve seen a lot of these multifamily operators really get hammered with their bridge debt.

with a lot of them not buying any interest rate caps and different things like that. But for your company as a whole, obviously going through 08 and then now, obviously there’s a ton of syndicators that got started the last two or three years, where almost you could go buy any property and you put 50K into the deal, you’re giving someone that 2X equity multiple after a year or two, where I feel like in the last maybe year or so, as interest rates have risen, maybe a little steeper than what the majority of us expected.

How has your company sort of navigated those waters in the multi-family space, just given that maybe two or three years ago, it was almost like anyone could buy a multi-family property and make some money on it.

Brian Burke (05:38.119)
Well, and that was the very thing that played right into our strategy is anybody could buy multifamily and when it gets like that, that’s the time to sell them all the multifamily you have. So over the last couple of years, we sold every almost everything we started selling in 2021 and by the middle of 2022, we had sold three quarters of our portfolio. It’s over 3000 units we sold. And you know, that’s

Trevor Oldham (05:48.238)
Never.

Brian Burke (06:06.823)
The beauty of real estate is there’s always an opportunity somewhere. And that’s why you’ll see a lot of people kind of drifting from one asset class to another. And today it’s self storage and tomorrow it’s hotels and the next day it’s offices. And that’s the beauty of real estate is you can always find opportunity. And that’s great if you’re using your own money, but when you’re investing someone else’s money, you better stick to where your core competency lies. And again, we found Multi to be our

core competency and I think that played really well into, you know, kind of the recent turn of events where we were very entrenched in this industry. We could see the signs and signals very clearly and it was telling me, while it was telling everybody else get in, it was telling me get out and that’s exactly what we did. And now it’s been over two years since I’ve bought a multifamily asset and I couldn’t be happier that it’s been that long.

And I suspect it may be a while longer before we actually make another acquisition. I just don’t think the market’s ready for that yet. And we’re just waiting for it to get there and come to us. You know, I don’t have to chase opportunity in every sector. I’ve been doing this long enough that now I don’t have to do anything and I can be just fine. So we only buy when it makes sense to buy. And so that’s also been another leg of our strategy is.

standing down while we watch values fall down.

Trevor Oldham (07:38.022)
I think that’s a great point where I think a lot of again operators were You know that maybe the more shady ones, you know, they’re coming through and they’re just trying to collect the fees You know, maybe an asset management fee, maybe a finder’s fee, whatever that may be So it’s nice to see that your company’s coming in They’re not you’re not necessarily like trying to pump out a new property, you know every single month just to you know Have a property and I think an example of that is the company, you know They foreclosed that when Texas might have been Houston, you know, it’s three or four hundred million was wiped out of there So that’s you know, that’s good to see

but just curious, you know, down the road, you know, let’s say you do find a multifamily property, you know, whatever, maybe say 50, 100, 200, 300 units, you know, how do you, you know, really find your investors, you know, they’re going to partner alongside you, you know, and invest in that deal. Are you finding them through, you know, doing like podcasts like this and promoting yourself through that is like, you know, maybe being an influencer, you know, say on like on like dinner or similar platform. Just curious to see like how you.

you know, find investors or you just go and like say more the institutional route, you know, maybe bringing endowment money, you know, over toward you.

Brian Burke (08:41.135)
Yeah, we’ve certainly done some institutional work, but that’s not really our core focus. You know, we’re a boutique investment firm that caters to high net worth individuals and family offices, and that’s where our capital comes from more so than from institutional partners, although we’ve certainly gone down that road before, and you know, we could do it again if the situation were right. But you know, in the earlier years, I’ve been doing this for 34 years, and in the earlier years…

We used to seek out investors, you know, by any means possible. But, you know, nowadays I don’t do that anymore. So I don’t find my investors. They find me. You know, people, we’ve been around long enough that people know who we are and what we do. We’ve been around long enough that I have.

2,000 investor relations people. And those are our investors who go out and tell their friends and their colleagues, hey, I’ve invested with these guys, it’s been a great experience, you should invest with them. And so people come to us. And now we do zero marketing. The only, sir, I appear on these podcasts, I think mostly because I just enjoy talking about real estate.

But I suppose at the end of the day, there’s people that do find us by hearing us for the first time on a podcast like this. But really, I think as a business matures, it begins to grow organically. And we’ve always grown by word of mouth and referrals. That’s always been our primary model. But, you know, as the years tick on, that growth gets a lot faster.

than it does earlier on when you’re really trying to build that investor base from nothing.

Trevor Oldham (10:38.458)
I think it’s a good example. A great answer there is building up through that referral business. There’s nothing better. Especially as an investor company, you want to get those referrals. If you’re not getting referrals, something might be wrong. Maybe there’s too many capital calls or something like that. Hopefully, that’s never the case. With that said, let’s say you find that deal in a year, hypothetically, a year from now.

Do you even really have to market the deal or is it just like, you know, hey, you know, you’re sending out to your investor relations folks, you know, they know that because, you know, just for your track record, you know, or is it like, do you have to like sell them on the deal? How does that sort of look like when you want to come in or does the deal, you know, get fully funded and, you know, a day or two once you guys finally do find something?

Brian Burke (11:22.275)
Yeah, you know, we used to do single assets indications where we would find a deal and we would raise money for the deal. And, you know, we’d show people here’s the property we’re buying and this is the amount of money we’re raising. And a lot of those raises were five to $10 million on average. And we would generally fill those up in a couple days. And we would do it by just sending out an email to our investor base. We’ve got another property.

Here’s the specifics, if you’re interested, let us know. We’ll send you the information. And we would send out the information and they could make soft commits. And usually a couple days later, we were fully funded. And then the problem that we had was we had this long line of people that missed out, and they didn’t get in. So we eventually shifted over to a fund model where.

Trevor Oldham (12:03.893)
Yeah.

Brian Burke (12:10.435)
we would raise money for a fund with a strategy, and the strategy would be when we’re gonna acquire class A and B, multifamily, over 100 units in the Southeastern U.S., blah, whatever the particular model was. And that’s generally our model, newer properties, newer multifamily properties, mostly in the southern half of the U.S. And we would send out a notice to our investors that we’re opening up this fund. And I think the last fund we did, we raised close to $50 million in about six weeks.

Maybe it was a little less than that. And we haven’t had to raise since. Now, this says two things. One is it says that we’ve done a really good job over the years, we’ve produced really good results for our investors, that’s made people happy. And as a result, they invest repeatedly with us. A large, large portion of our capital comes from repeat investors, which is great. It’s a great spot to be. So it says that, but it also says that around that time,

The real estate market was really hot. Everybody wanted in and investors were investing in every opportunity they could get their hands on. So we can’t get complacent as an operator and say that today I could launch a $50 million offering and fill it in two or three weeks. Because I don’t know that would actually happen and not because of anything that we’ve done, but the market has changed. It’s different. People might not have as much affinity.

towards real estate as they did a couple years ago. There might be a lot of passive investors that invested with other operators that have had challenges such as capital calls, maybe some mortgage defaults, you know, the list goes on and on and that creates wounds that create scars that heal very slowly. And I think down the line, I would expect that we would raise capital slower than we have in the last five or six years. It’s gonna be more like it was.

you know, ten years ago than it was two years ago.

Trevor Oldham (14:06.442)
Yeah, that definitely makes sense. And, you know, thinking about, you know, I know you mentioned like the fund model. I’m invested in a couple of deals. You know, some of them, you know, they have four properties in it. You know, some of them, I think one has two, and then you have like a single asset allocation. You know, there’s one property in Texas I’m invested in. You know, what’s your preference on that? You know, do you like more of that fund model? You know, I know as me as an investor, I almost think of it like an index fund. You know, per se, if you’re investing in the stock market, instead of me, you know, investing in one, you know, specific stock, I’m investing in these four different properties.

Yeah, the fees might be, yeah, they might be a touch higher, you know, maybe a quarter of a percent. But if one property defaults or, you know, the one I’m thinking of, I’m invested in a triple net lease deal, you know, so there’s four different tenants, you know, one of the tenant moves out, they have a vacancy, you know, I’m not going to get, you know, I’m not going to, you know, that cash flow, you know, I invested in that deal strictly the cash flow, you know, not a ton of appreciation and a corporate grade A tenant. But curious what your thoughts are on the fund model versus that single, you know, asset allocation.

Brian Burke (15:02.659)
Yeah, I prefer the fund model both as an investor and as a sponsor. And as a sponsor, a fund gives us more purchasing power. It gives us a stronger negotiating position when we’re acquiring property. It’s easier for us to administer because, you know, we only have one main accounting vehicle as opposed to, you know, all these different ones with different tax returns and everything else. It does consolidate a lot of that.

which is really nice. For the investor, it’s kind of like the same reason why you would invest in apartments versus single family homes, right? If one apartment’s vacant, you know, you still got 99 other apartments, but in a single family home, if it’s vacant, it’s vacant. You know, a fund is kind of the same way. I don’t care how good an operator is or how long they’ve been in this business. Everybody has deals that struggle eventually. And so what ends up happening is you’ve got like,

Trevor Oldham (15:37.925)
Yep.

Brian Burke (15:58.775)
nine deals that are doing great, one deal that’s not doing so great, which is typical, and you got nine sets of investors who are really happy and you got one set of investor that’s like, you guys are terrible, what’s wrong with you guys? Now, of course, if they’re invested across multiple offerings, then they see what’s going on big picture and they don’t feel that way, but if their only investment with you is in that one asset that isn’t doing so great, then those investors are kinda like, you know, hey, what’s going on, you know?

The fund smooths all that out, you know, so the good deals and the, you know, mediocre deals end up in the same vehicle. It’s not luck of the draw, you know. I know investors like to think that we’re so skilled that we could pick the winners and not end up investing in the one that struggles, but the reality is you can’t. You don’t know which one’s going to be the difficult one. So if you’re investing in a fund, then you get to blend all of that out. It’s less risk for you. So I think…

Investors, passive investors especially, should be looking for ways to minimize single points of failure. So that means if you invest in a fund, you’ve got multiple properties. If the fund has multiple locations, then you don’t have one single location that’s a risk. You know, if there was an economic collapse in a city, for example, it’s not like it took down all your assets. You know, that’s just one of them.

If you invest in funds across a variety of sponsors, you eliminate single sponsor risk. Just anything you can do to try to spread your risk around will give you an investment in real estate as a whole versus an investment in Marvin Gardens. So then Marvin Garden burns down and now your investment went to crap.

Trevor Oldham (17:41.05)
Yeah, I think that would be a yeah, I can definitely see that I think to going back to that, you know, if we could all pick winners, you know I think we would all try to get like, you know, 3x equity multiple in five years Yeah, you know triple our money, you know if we could all do that But then you know speaking of the properties that you’re going out and buying, you know Are you going you know primarily in like, you know the southwest so like if we’re talking like, you know, Texas for Arab You know, Florida Georgia, you know, Texas is pretty far Western, Florida Yeah, just curious like the locations you are and because I’ve seen

Some really good deals come across, but they’re in California. And it just worries me. It just really worries me investing in those states. Like for me, I’m primarily in Texas and Kentucky, I think Arkansas, West Virginia, more of your, if you’re looking at your political map, more of your red states, more than your blue states, just as they’re more landlord friendly than, in New York, we’re definitely more tenant friendly than you are landlord friendly. It could take a couple of months to evict someone.

Just curious like where, you know, which part of the country, you know, your company really specializes in investing in.

Brian Burke (18:42.503)
Well, in my 34 years I’ve owned in California, I’ve owned in New York, and I’ve owned in a lot of places in between. So that’s a pretty national footprint. Our current focus right now is on the southern half of the US, not California. Certainly not New York, but right now we own in Arizona, Georgia, and Alabama. But we’ve had…

extensive holdings in Texas, Florida, but now we’ve just, you know, as I mentioned earlier, we’ve sold three quarters of our portfolio, so all that’s left is in those states I mentioned, but our acquisition targets would be anything from Arizona to Florida and as far north as like Carolinas and Tennessee, and anything in between.

Trevor Oldham (19:32.162)
You know, let’s say now, you know, we have someone that it’s out there, you know, they’re listening, you know They like those geographical locations, you know, they’ve like what they’ve heard, you know now that they’ve let’s say they become an investor of yours You know, they’ve invested with your company, you know for that potential listener that wants to invest with your company You know, they say hey, this all sounds great. How does that sort of that client communication, you know sound like on the back? And you know, we’ve heard horror stories of you know, you invest in a deal and it’s super hard to track down

the operator or maybe it’s a capital raiser that got you into the deal, you know, that extended arm and then you’re having a hard time to hear from them. You know, luckily for me, you know, all the deals I’m in, you know, either get quarterly or monthly reporting, you know, and they’ve been consistent, you know, for the last couple of years doing that. But for your company itself, like how often do you communicate, you know, with the clients or let’s say something comes up, you know, I don’t know, the renovations are taking long, you know, the contract are up and left.

and now all of a sudden the renovations, what you thought were gonna take six months are gonna take nine months. Do you communicate that with your investors or do you just do that in like a single monthly or one-off or even on all hands call? I’ve seen investors do where they just bring everyone on a webinar or a Zoom call, explain what’s going on. Just curious what that looks like from your company and on that client communication aspect of it.

Brian Burke (20:49.923)
Yeah, you know, it’s really not uncommon for especially newer and first time sponsors to suffer from massive communication failures and complications. And I hear that a lot. It’s probably one of the chief investor complaints you’ll hear out there in this industry is lack of communication, especially when things aren’t going right. When things are going wrong, you’ll find that there’s like this

this course that I always talk about how it’s gonna go because people will say like, oh, you know that I think that something’s going wrong with this deal and it’s like, okay, here’s what’s gonna happen next. You’re gonna send an email and they’re gonna put you off. And then when you ask again, they’re gonna completely ignore you. And then, you know, there’s like this whole path that seems to happen. And if you’ve been in business long enough, chances are.

that company isn’t gonna have that same problem because you don’t last in this business by ignoring your investors. Your investors are your lifeblood, the capital they contribute is the only thing that keeps you going. And if you don’t communicate with them, then that’s gonna be the end of the road. You’re gonna spend all your time looking for new investors instead of cultivating the relationships you already have. So I’m a big believer in reporting and communications. I remember one time somebody that’s a very active

passive investor and had started a group that supports passive investors had once written an article about us calling us the gold standard for investor reporting and asked if they could publish our reports in their In their stuff so that they could show other sponsors how they’re supposed to do it. Of course, we said no You know, go let them, you know invent their own proprietary methods of communication

I fully support growth in this industry and people doing a better job, but I don’t need everybody out there just copying our stuff. We tend to issue extraordinarily detailed reports. I think our last quarterly, and we do them quarterly, but our last quarterly report for one of our funds was something like 15 pages long or something. I mean, it was really, really extensive, and most of that’s narrative.

Brian Burke (23:04.151)
We talk about all sorts of things that’s happening at the property level, the fund level, the macroeconomic picture. Just all sorts of information. You know, we provide comparisons between projected performance and actual performance. And when things aren’t going according to plan, we say things aren’t going according to plan. And here’s why. And here’s what we’re gonna do about it, if we can do anything at all. Like right now, things aren’t going according to plan because the market’s terrible.

And there’s nothing we can do about that. We can’t do anything about rising insurance rates. We can’t do anything about runaway interest rates. We can’t do anything about the fact that no one’s out there acquiring anything and the markets come to a standstill. We can’t fix those things. But what we can do is we can show our investors how we were prepared for that already and why that isn’t a big risk to us and why impacts to property cashflow could mean

massive trouble or might not mean massive trouble, depending upon how you structured the deal to begin with. And then we point out how we structured it to make sure that these kinds of things weren’t a massive impact to us. So we don’t want investors hearing about things on the news. So when we’ve had like buildings burned down, it’s like, you know, we send out an email like, hey, the building burned down yesterday. And you know, and.

here’s what we’re gonna do. And we’ve already hired a public adjuster and we’re filing an insurance claim and so on and so forth. Cause we don’t want them to, somebody call up and say like, hey, I saw this newspaper article, that mentioned the apartments we own burned down. Why didn’t you tell me? We certainly don’t want that. So always communicate the bad news, especially with investors, but also make sure you’re communicating really with the good news.

Trevor Oldham (24:55.218)
Yeah, I think that’s a good example. I think definitely having like, not that everyone has to do a 15 page, but I mean, I guess if that’s gold standard, that’s what we should all be striving for. I know as myself as an investor, and hopefully most investors out there, when they’re getting into a deal, they’re reading the PPM. So that’s a lot more intense than the quarterly report that you’re sending out. So that’s great that you’re doing that. But then let’s say, some of them in the audience,

I guess to try and get over that last hump, you know, I know for me personally, you know, your company sounds great, the track record speaks for itself, but just one last little bit of, you know, why should someone invest with your company over say another operator within the space?

Brian Burke (25:35.663)
Well, I think most people invest with us for a couple of reasons. One is because we’ve been around so long, we’ve proven that we know what we’re doing. The second reason is, is we have a highly experienced team. You know, our senior leadership here has a hundred and six thousand units of multifamily experience. I don’t think you can find that anywhere. Even if you went to Blackstone, you’d have to put together like a whole cadre of their leadership team to add it all together to get to that.

But here we’ve got four guys who are at the top of the leadership on operations here that have over 100,000 units of experience. And that means a lot. I think the other thing is we prioritize risk over return. People don’t invest with us because we’re going to have the highest projected return. If that’s what you’re looking for, you’re not going to find it here.

and you’re probably not gonna find the actual performance that you’re seeking with who you do choose, if that’s your criteria. But we like to prioritize risk and over reward. And that’s worked well for us. In all the years I’ve been doing this, we’ve never lost a nickel of investor principle.

And that’s, you know what, how many hundreds of millions that we’ve raised from investors. And we’ve never issued an unplanned capital called knock on wood. So I think for those reasons, you know, track record, experience, integrity, and just operational skill and structuring our deals to survive adverse market cycles by not taking on too much debt, not over leveraging, having plenty of cash reserves.

a deep balance sheet, and also a leadership team that doesn’t have to transact just to keep the lights on are probably the reasons why we’ve been as successful as we have.

Trevor Oldham (27:32.374)
Yeah, that’s awesome. I really like that risk versus reward. I know for me as an investor, it kind of scares me. Where sometimes I’ll be speaking to someone and they’ll be like, you know, the IRR will be like, you know, 45% per year. And we’re talking maybe class A, you know, class A property. And I’m like, you know, that’s, you know, that’s terrifying for me, you know, where, you know, I’m just looking for a standard, you know, you know, overall, you know, at the end of five years, 10 to 14%, maybe get a standard 8%, you know, preff, you know, just something simple like that. I know I run away.

Brian Burke (27:44.188)
What?

Trevor Oldham (28:00.822)
when I see an investor give me a deal, and it just sounds too good. One guy here was promising Christmas bonuses. Another guy, he was in an oil and gas field where there was 200% carbon depreciation or capture. I was like, that sounds way too good to be true. Unfortunately, his thing ended up being a Ponzi scheme. So it sounds too good to be true. It probably is, so I’m right there with you. I’d rather have a little bit less risk, be a little bit more standard than trying to jump for the fences.

Again, we’re talking like class A, maybe class D, class C, heavy value add, maybe you could get that at the end of the deal, but yeah, that all sounds great. And then Brian, last question of the day is, if our audience is interested in learning more about you or learning more about your company, where can they find you?

Brian Burke (28:46.531)
They can find us on our website for Praxis Capital. The website is praxcap.com. It’s P-R-A-X-C-A-P.com. You can also find me on Instagram at investorbrianburke.

Trevor Oldham (29:00.254)
Awesome. Thank you so much, Brian. I’ll make sure to include that on the show notes on our website. And thank you again for coming onto the show today.

Brian Burke (29:06.663)
Thanks for having me here, appreciate it.