Bruce Petersen is the Founder and CEO of Bluebonnet Asset Manager LLC and Bluebonnet Commercial Management. He started his real estate journey in 2011. He was a previous guest on episode JF1274, we highly encourage you to check out his first one to get an understanding of his full story.
Bruce Petersen Real Estate Background:
- Founder and CEO of Bluebonnet Asset Manager LLC and Bluebonnet Commercial Management
- Started his real estate journey in 2011, buying his first deal (48-unit) in 2012
- Portfolio consists of 6 syndications and 1,108 total units
- Based in Austin, TX
- Say hi to him at: https://apt-guy.com/
- Best Ever Book: Sell or Be Sold
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Best Ever Tweet:
“Find a coach or mentor to have a model to follow, why try and reinvent the wheel?” – Bruce Petersen
Theo Hicks: Best Ever listeners, welcome to the best real estate investing advice ever show. I’m Theo Hicks and today I’m speaking with Bruce Petersen. Bruce, how are you doing today?
Bruce Petersen: I’m doing great, man. How are you?
Theo Hicks: I’m doing great as well. Thanks for asking and thanks for joining us again. So Bruce is going to be a repeat guest. He was on here a little over two years ago. If you want to check out his first episode, it was Episode 1274 – Challenges That Syndicators Face When Executing Their Business Plans. So today, we’re going to catch up, talk about what Bruce has been up to since then. As a refresher, Bruce is the founder and the CEO of Bluebonnet Asset Management and Bluebonnet Commercial Management. He started his real estate journey in 2011, buying his first deal, a 48-unit deal in 2012. His portfolio now consists of six syndications and over 1,100 units; 1,108, to be exact. He is based in Austin, Texas, and you can say hi to him at his website, which is apt-guy.com. So Bruce, do you mind telling us a little bit more about your background and what you’ve been up to since we last spoke?
Bruce Petersen: Just a quick recap of who I am and where I came from… I’m a college dropout, barely got out of high school, grew up pretty poor. I think it’s a fairly common story, so I’m not really different there. I fell into retail for about 18 to 20 years, did that until I realized, “This sucks.” I convinced myself like a lot of people in retail do – “Well, I’m a people person, so I like retail.” And then 18 years, 20 years later, I thought, “Okay, I’ve been lying to myself. I do like people, but I don’t like what I’m doing.”
So in 2008, I believe it was… 2009, somewhere in that area, I walked away. I was 43 years old, decided, “I gotta find something else to do with my life, because this is not working for me.” So I just started educating myself on real estate, found a very highly qualified mentor; that was a godsend for me. Found that person in 2011, worked with her for a while, and got my first property in 2012, and I held that for almost two and a half years. It was a syndication. Sold it for a 300% passive investor return. Now I tell everybody going forward, “Don’t expect that. We’re a totally different market than we were back in 2012.” But my first one was very successful, and I’ve just been off and running since. I met my wife through real estate. So I’ve been married now for almost six years. So that’s going very, very well. We do it together. She’s the CFO and I’m the CEO, and we’ve been doing it ever since and having a ball.
Theo Hicks: Thanks for sharing that. I believe, on that first episode from the show notes I read, that we’ve talked about that 48-units syndication deal. So let’s not focus on that. Let’s focus on a more high level of syndication advice. But one thing you didn’t mention in your little intro was your mentor. So this is coming out– this is in the future, but today, I just recorded a syndication school episode talking about mentorship based off of a blog post one of the members in our team wrote about how to hack and save decades of time by finding a mentor. So it sounds like a mentor was one of the main reasons why you were able to be as successful as you are today. Maybe walk us through how you found this person, why you picked her and why it was beneficial to you.
Bruce Petersen: Tony Robbins’ Napoleon Hill thing – find a mentor, find a coach, a model, somebody that you can follow behind, why reinvent the wheel. I’m saying things that everybody’s heard before, but a lot of people still don’t believe it strongly enough to go out and do it because they don’t want to pay somebody. Well, why would you not pay somebody to teach you how to have a multiple hundred thousand dollar business or even a million-dollar business? A lot of people will spend $50,000 to $200,000 or more on college, go for four to eight to 12 years, and that’s totally fine. Many of those people don’t get a job in the discipline that they studied. And if they do, they don’t like it very often. So I don’t know why people wouldn’t find a mentor. They can shorten your timeline to success. They can help you avoid a lot of landmines, because there are going to be a lot of landmines, I promise. No matter how good you are at this, there’s always going to be something that’s going to come up, and if you’ve never done it before, you don’t know how to deal with those landmines that you trip over.
So yeah, I was very fortunate to find a very, very good mentor. She was a multifamily broker, actually. So she was a buyer’s broker; very rare in this industry. But she had tons of experience on the management side and on the purchase side. So it was a perfect match for me. I listened to her because I knew I didn’t know what I was doing. I’m a retail guy. I’m smart, but I don’t know this industry. So I had to listen to her, trust what she was saying was true and just execute on the roadmap; and I did, and it worked so well. So I just released a book called Syndicating Is a B*tch. It’s hard. It’s very lucrative. It’s very, very rewarding. But in the book, I implore people, I’m going to teach you every step of the way how to do a syndication. You still need a mentor, because this is only a book. It can’t deal with all the things that pop up that were unforeseen, like a black swan event we’re dealing with right now. We’re dealing with COVID-19. Nobody saw this coming. If you don’t have a mentor that’s been through some ups and downs in the industry, this is gonna be really really hard for you. So yeah, man, I cannot agree with you guys’ take on it. You do need a mentor. Don’t do this alone.
Theo Hicks: I really like your analogy or metaphor or whatever; it’s comparing it to college. I think that’s a really good way to position it. People will spend tens, sometimes hundreds of thousands of dollars to go to college, and the reason why they’re doing it is because they need that degree to get a job in order to make money. So they’re willing to invest that capital into four years of their life into school in order to get a job to make money. So why wouldn’t you do the exact same thing? Why do you expect someone to mentor you for free or just to not do it at all, when you can potentially have an ROI, as you mentioned, of ten to a hundred million dollars or even more? I like the way you position that.
Bruce Petersen: I think there’s a bad stigma in the industry right now because when you hear the word mentor, you think guru. And then guru makes you think of the guy in the 80s and 90s that would pitch crap to you at 1 o’clock in the morning, and you take pictures and videos on a yacht that he rented for the day and a car that he rented for the day, and that’s what people think of. That’s not what a true mentor or a coach is. They’re not selling you a bill of crap. They’re teaching you the right way to do it. Again, find somebody that’s been successful doing it. Not everybody’s going to be a great mentor… But yeah, I agree with you guys completely on it.
Theo Hicks: So you’ve got your syndication book; I enjoy the title. So let’s talk about raising money. Everyone loves to hear about raising money, so maybe walk us through some of your tips or since you wrote the book, maybe you’ve already got a five-step process to raising money for deals, and let’s approach this from raising money for your first deal. So let us know what type of background someone needs before they can get to the point where they can raise money, and then let’s talk about what your top tips are for going out there and making sure you can raise money for your first deal.
Bruce Petersen: Alright, so it all starts with the investors. People ask me all the time that are just getting started, and I mentor people myself now… And one of the first questions is, “Bruce, okay, this is great. I’m super excited. Well, do I find the investors first or do I find the deal first?” You better find the investors first. If you find a deal with no investors, legally, you’re probably going to get yourself screwed up because you can’t raise money the way you’re probably going about it; you’re probably going to go about it backwards. So you’ve got to be careful there. And then if you can’t raise the money, you’re gonna have to drop the deal and you’re gonna start to burn your name in the industry that “Oh no. Bruce is a tire kicker. He can’t come through at the end and close. So he just ties up a property for 30 to 60 days, and then he has to bail.” Get your investors first.
Bruce Petersen: Tip number one to me would be over, over, over raise. If you think the property that you’re targeting for your first property — because you have an idea that “My first one, I want to be maybe a 20-unit or 40-unit, maybe built in the 80s. This is my rough price per door.” So you have an idea, I hope, of what it is you’re trying to find for your first deal. And let’s say that first deal is going to cost you about $500,000 in a cash raise to get it. The cash raise would be your down payment, your closing costs, your rehab that didn’t get rolled into the loan, and any operating capital that you may need. So let’s say you need $500,000 to close this deal. You better raise a $1,000,000 to $1,500,00, and that chokes people. Well, I promise not everybody’s going to come through at the end when it’s time to put money in your bank account, because something will have come up in their life. They maybe had a family emergency, they maybe just decide “I don’t want to invest with anybody anymore” or maybe just to be honest, maybe they don’t like you now that they’ve got to know you a little better. So just be prepared for– you’re probably going to have at least 50% of your list not come through. So you better over raise. So that’s tip number one.
Tip number two, for me, would be you got to get out there. You’ve got to be agreeable. You have to have a good personality. This is very personality-driven and based. If people don’t like you, they’re not going to give you their money. I had a guy come up to me after an event one day and I had presented on stage, and he came up to me after… “Bruce, man, I love your story. I’m going to be a syndicator, too. This is great. I understand spreadsheets and everything. But there’s one problem, Bruce. I’m a jerk.” I’m like, “What? Come on, man. Really?” He said, “Yeah. I’m a jerk. People don’t like me and I hate people.” I was like, “Well, you can’t do this.” And he looks shocked like he was gonna cry. I’m like, “There’s a lot of money to be made, but if you’re just not a pleasant person, nobody’s going to give you their money.” So know who you are, present yourself professionally and with dignity. Don’t be rude, don’t be aggressive, don’t be arrogant. Because a lot of the people you’re going to be talking to trying to raise some money, they’re probably a bigger deal than you are. So keep your ego in check. One of the key things that really helped me early on was I started my own meetup back in 2011, and all but two of my first investors in that 48-unit deal came from that meetup. So we got to know each other for about six to nine months. They got comfortable with me having no experience, having no job, but they got to know me very intimately, so they agreed to invest. That was a big help for me.
Theo Hicks: So my next follow up question was going to be what’s the process that someone should go through in order to create their initial list of investors or people? It sounds like for you, for your first deal, everyone came from your meetup group. So your advice would be to start a meetup group, I’m assuming, right?
Bruce Petersen: Absolutely. And if you don’t want to do that, that’s totally fine. If it’s not your personality to lead something, there’s nothing wrong with that. As long as you do have an agreeable personality and you’re likable… Well, just go to the Joe Fairless stuff, the Jake and Gino stuff, the Michael Blanc, go to all the different events that are going on around the nation. You’ve got to get out and mix and meet with people. So I think that you don’t have to start a meetup; it definitely helps. There’s a definite way to go about doing this in the right order. I would say, dress the part. I don’t want to get stuck in the millionaire mindset thing, the millionaire next door. Don’t dress below your means. Dress at your means or above. You have to convey confidence and success when you meet with people. Have a good quality business card, dress appropriately. Don’t dress over your head. Don’t show up in a $400,000 car if you work at McDonald’s. Don’t do stupid things like that. Act like you belong, but still, keep yourself in check. But yeah, just get out to all the things you can get out to, join some of the groups that are out there too. You can get some education from the groups like your group, you can get educated there. You’ll meet other members that are looking to get into deals or looking to raise money themselves.
So the biggest thing is be engaged. Make sure you understand who you are. I’m naturally introverted. I can be on stage and talk to 20,000 people. I light up, I’m fine. You put me in a room with people I don’t know, and I got to go work the room and network and I freeze. I just completely freeze up, and I honestly– this is not an exaggeration… I try to find the quickest exit because I get really, really uptight. I’m very aware of that. My wife is just the opposite. She hates being on stage, but she loves working a room. She used to be a flight attendant. She’s very, very good at that – striking up small talk with people. So I smartly go, “Okay, I’m not good at that.” So I follow my wife around the room, I’m not embarrassed to admit it. I just follow her around like a puppy dog. She strikes up the conversation. I come in. I can now participate in the conversation because I didn’t have to start it. But again, I know my weakness and I work with what I have.
Theo Hicks: I think that’s super important to know. So you talked about a tactic for actually going about raising money, but what are your thoughts on the experience, the background, the track record someone needs to have before they even consider raising money? When they raise money on their first deal, their second deal, their 10th deal? Is there a certain number of transactions? Is it a certain dollar amount of deals done? What’s your thoughts on that?
Bruce Petersen: Again, so on my first deal, I had no experience, I had nothing. I had never invested in real estate my life at that point, but again, it’s personality-driven, so I didn’t let that stop me. Don’t look for excuses not to do it because you’re always going to find that excuse not to get out there and do it. You don’t have to have experience, but you have to be transparent. Let them know up front, “I have no experience.” One of them laughed at me in my face. “I’m not gonna invest with you.” I didn’t take it personally. “I totally understand. You don’t feel comfortable investing with me and that’s okay. No worries. I want to move on and keep meeting other people.” Don’t get tore up by rejection, it’s going to happen. But again, just own up to who you are and what your experience is.
What I tell people that I’m mentoring is, when you decide, “Okay, you’ve been getting educated for a while, Johnny, and it’s time to go out and let’s go do your first syndication now. Well, when you walk into a room, you have to be confident. Again, don’t be arrogant, but be confident. I have no experience, Mr. or Mrs. Prospective Investor. But I’ll tell you what, this is what I’m doing. I’m targeting a 40-unit to 60-unit property in my hometown in Austin. I’m targeting something probably built in the 80s.”
Have the elevator pitch for what you’re trying to accomplish. That will convey confidence, that will convey preparedness, and people will become more and more comfortable with you because you have an idea. If you walk into a room and say, “Yeah, I’m gonna try to be a syndicator and try to do a deal.” “Well, what are you looking for?” “I don’t really know. Probably something close to my house.” So if you go into it like that, it’s like being a jerk. It’s not going to work. You have to be prepared. Again, you don’t have to have experience. Own the fact that you have no experience, but be prepared with somewhat of an elevator pitch that’s true and genuine, and walk into a room with confidence. That’s it.
Theo Hicks: Perfect. Okay, Bruce, what is your best real estate investing advice ever?
Bruce Petersen: I hit on it a little bit, but you’ve got to know who you are. The book that I wrote is designed to help people understand that syndication is not for everybody; it really is not. Everybody thinks it is for some reason, but it’s like any other business. If you’re not an entrepreneur by spirit, if you don’t have the personality that people are going to be drawn to, I don’t know that this is the right move for you. So I think it’s self-awareness. You have to know who you are. If you’re scared of people or if you’re a jerk and nobody likes you, be honest with yourself. We all like to lie to ourselves and make ourselves out to be bigger than we are in our own minds. I get it. I’m probably guilty of it sometimes, too. But if you lie to yourself in this, and you go out and raise $500,000, and you’re not equipped emotionally, mentally, any way to handle this, the deals not going to go well and you’re gonna have a lot of very unhappy investors on your hand, and you’ll probably never do another deal anyways, because it’s not gonna go well. So that’s my biggest thing is just be self-aware. If this isn’t for you, go find that thing that is for you. There’s lots of ways to make a lot of money in this world. You can have all the money you want. You just got to find the thing that works for you. So – self-awareness.
Theo Hicks: Perfect. Okay, are you ready for the Best Ever lightning round?
Bruce Petersen: Yep, let’s do it.
Break [00:18:57]:04] to [00:19:59]:03]
Theo Hicks: Okay, Bruce. What is the best ever book you’ve recently read?
Bruce Petersen: The best ever book that I’ve recently read… Honestly, it was one I was very hesitant, but I was looking for the next book. I read Sell or Be Sold by Grant Cardone. I don’t like that flashy sales guy with the shirt halfway unbuttoned and gold medallion hanging around his hairy chest. Don’t like that image, but I read it and it’s fantastic. I gave it to my staff to read. It’s an incredible book.
Theo Hicks: If your business were to collapsed today, what would you do next?
Bruce Petersen: Well, I firmly believe I know how to make money. Now that I got out of the 9 to 5 – or really for me, 9 to 9 – working for somebody else, I’ve learned how to make money. So if I couldn’t do this– I’ll be honest, I’ve got some money saved up now, so I’ll be fine for a little while, but I would probably just devote most of my time to teaching. I absolutely love everything about teaching. That’s why I love being on stage. I’ll be on stage for free or I’ll pay people to let me on their stage because I just want to help people. So if I couldn’t do this, I would just find a way to teach.
Theo Hicks: So you’ve got six syndication deals. Tell us about the best deals, not your first deal. You already talked about that 300% return. Tell us about your second best deal as you’ve done so far, specifically in the apartment syndication arena.
Bruce Petersen: So I’ll talk about one of the most recent ones, actually. We bought it in 2017, roughly a 200-unit property in North Austin, and we’re getting just hammered with yearly tax increases, yearly insurance increases that are just higher than anybody’s ever seen, but we’re so profitable there. We bought a fully stabilized asset. We expected to maybe have a little bit of upside when we sell five to seven years later, but this deal has been so strong. We keep pushing rents, we keep doing unit upgrades, we keep instituting new revenue streams that weren’t there before, and everything we’ve tried there has worked.
We communicate very well with the residents. We make sure they understand we’re in this together with them. We’ve created a fantastic feeling of community there. And this fully stabilized asset, well, we just added executed a 50% cash out– well, not a cash out, refinance. It’s the same concept, but it’s a supplemental loan. So we were able to take out more loan dollars because we drove our value tremendously higher. So again, I think it was letting the residents know that we’re on their side. They’re willing to pay for some extra stuff, because they don’t want to leave us because they know they’ve got a good thing where they are. It was built in 1973, nothing special in a C class neighborhood. But again, everything we do here has worked and we started rolling out a lot of these ideas to other properties in our portfolio.
Theo Hicks: What is the best ever way you like to give back?
Bruce Petersen: Well, one of the most interesting things that we’ve done, the most rewarding things, we had a 120-unit property that we own, again, in Austin, and we realized that it was very working class, they have a hard time making ends meet, putting food on the table even sometimes. So we thought, “It’s time for school.” Most families in this neighborhood can’t even afford the $20 to $30 it’s going to cost to buy all the school supplies that kid needs for the upcoming school year. So we reached out to all the local schools, found out what all the different grades needed. We bought all the school supplies for every student on our entire property. We fed them pizza in a vacant unit one day.
So they came in and got pizza at the front door in the kitchen with my daughter – she was handing out pizza – then they walked over to a table with my wife and the property manager, and they got to pick their own backpack. Then they went into the bedroom with my autistic adult daughter and she had said, “What grade are you in?” So she was able to hand them their grade-specific pack, and these kids walked out with the biggest smile on their faces because they’re prepared this year; they don’t have to worry about it. That’s the coolest thing we’ve ever done, but we also hope to open a 24-unit to 36-unit affordability-based nonprofit apartment complex for adults with intellectual disabilities in the next five or ten years. So that’s our next big thing.
Theo Hicks: And then lastly, what is the best ever place to reach you?
Bruce Petersen: The best way to find me is just apt-guy.com, like you said; it’s the website. You can see a little bit more about what’s inside the book, decide if you think it’s a worthy purchase. If you’re thinking about syndication, I firmly believe it is, because I’m just going to tell you the truth. This is what it is and if you want to do it great, it’s a great way to do it, go about making money, but this is what it’s really about. You can follow me on LinkedIn, Apartment Guy, or you can go to Instagram, @apt.guy.
Theo Hicks: Perfect. Okay, Bruce, I really appreciate you coming on the show and talking to us today; solid information. I like the way that you break everything down by here’s tip one, here’s tip two, here’s tip three. So I really appreciate that makes it better and easier to digest for our audience. So just to quickly summarize what we talked about. We first talked about mentorship. I said this earlier that I really liked your analogy, comparing it to people spending all their money on college, then they can’t find a job afterwards a lot of the time. Whereas people are super hesitant to spend money on a mentorship on, a coach, and you mentioned why that is, that people have a negative connotation with a mentor, but you talked about how it’s helped you on. On our blog, we’ve got plenty of articles talking about how mentorship has helped Joe, mentorship has helped every single person who’s successful. So I really appreciate you reinforcing that.
We talked about your top tips for raising money for your first deal. You said the first thing you need to realize is that the investors comes before the deal. You gave an explanation of why that is. And then your top three tips for raising money is number one, make sure you’re always over raising. So if you need to raise $500,000 for a deal, then you should be raising $1,000,000 to $1,500,000. We talked about number two, which is a get out there. The fact that this is very personality-based. So you can start your own meetup, you can go to meetups, go to different events across the nation to just get your face out there. And then you talked about what type of personality you need when you are out there. And then you also, number three, was to dress the part. So don’t dress below your means. Dress at or slightly above, but don’t go too intense. I think the example you gave was rolling up in a $500,000 car when you work in McDonald’s; don’t do that. You talked about if you need experience to raise money, and your answer was no; don’t use that as an excuse to not raise money. But you need to be transparent. You need to let them know that you don’t have experience, but still have an elevator pitch to show that you do know what you’re talking about, at the very least, and that will portray confidence, it’ll show that you’re prepared, that you have an idea.
Something else that you said too that I think is very important is that people are gonna say no. People are gonna say no, whether you’ve got a bunch of experience or no experience. Not every single person you talk to is going to give you their money. So don’t take it personally, move on and keep meeting other people. And then your best ever advice was, know who you are, have that self-awareness to know what you aren’t good at, and [inaudible] maybe apartment syndications is not for you, and if it’s not for you, there’s still plenty of other ways to make money out there.
The next example you gave before you gave that advice was how you’re really good at speaking in front of large groups of people, like on stage, but you have difficulties and gets a lot of anxiety working a room, whereas your wife’s the exact opposite. So you have the self-awareness to know that about yourself, and rather than forcing yourself to be the person who’s in charge, walking around the room, you just let your wife do it. You follow her around and then accomplish the same thing without the anxiety. So I appreciate you sharing all that advice, Bruce. Best Ever listeners, as always, thank you for listening. Have a best ever day and we’ll talk to you tomorrow.
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