An Inside Look at How BAM Capital Evaluates Properties
An apartment community can look like a great investment on paper. The projected returns are attractive, the location seems promising, and the photos are impressive. But things can be very different when you see the property in person.
For Alec Bannister, BAM Capital’s Director of Acquisitions, property tours are a critical part of multifamily due diligence and can often be the deciding factor in whether a deal moves forward. Maintenance issues, concerns about the surrounding area, or financial projections that don’t hold up can quickly turn a potential “yes” into a “no.”
We take you behind the scenes of how BAM Capital determines which properties are the right fit, which ones aren’t, and why being selective matters. Ultimately, we take a measured, disciplined approach to acquiring quality assets at prices that support our investment strategy and deliver value for our investors.
A Good Deal Starts With the Right Market
Before pursuing an opportunity in any market, BAM Capital ensures the purchase price aligns with its investment strategy, allows room for growth, and accounts for potential downside. If the numbers don’t support the investment, we pass on the deal.
Beyond pricing, the team evaluates markets with strong fundamentals, including population growth, job opportunities, affordability, and apartment demand, while also analyzing incoming construction and its potential impact on the market.
“We’re laser-focused on the development pipeline,” Alec explained.
When apartment supply outpaces demand, it’s harder to attract residents, maintain occupancy, and grow rents. That’s why BAM Capital looks beyond just current construction to see what’s planned over the next five years. The team analyzes how many units are under construction or scheduled for delivery within the relevant market, whether defined by a specific-mile radius, submarket, or broader metropolitan statistical area (MSA), to get a better sense of future competition.
In Leland, North Carolina—part of the Wilmington MSA, where we recently acquired two properties for BAM Multifamily Growth Fund V—apartments under construction or in development represent roughly 1.5% of existing inventory. By comparison, submarkets within Columbus, Ohio, are seeing incoming development representing more than 5% of total apartment inventory.
Why does that matter? In markets experiencing major construction activity, BAM Capital must evaluate the ability to strengthen an asset’s value against the downward pressure of incoming supply. The right opportunity may still exist, but the property and purchase price must make sense, which is why we targeted a pair of communities in Leland.
BAM Capital applies this same level of scrutiny to every potential acquisition. The acquisitions team reviews around 200 opportunities a year and physically tours more than 50 assets. Even when a market or an asset looks promising, the acquisitions team’s disciplined analysis and approach enable BAM Capital to be highly-selective in choosing the right opportunity, at the right price, at the right time.
When a Property Looks Better on Paper
A newly built apartment community looked promising through underwriting and analysis, and the location fit BAM Capital’s strategy. But when Alec and Danny Stahl, BAM Management’s VP of Maintenance, toured the property, it didn’t live up to their expectations.
“There have been a number of assets that look great on paper and in pictures,” Alec said. “This one was a brand-new build in a great location, but when we got there, we realized there were a number of shortcuts taken in construction and it wasn’t what the pictures had led us to expect. So we passed.”
A similar situation played out at a potential asset in another Midwest market. The property had an attractive asking price and room for growth, but something felt off during the tour.
“It felt like a hotel; it didn’t feel like a community,” Alec recalled.
That was enough to make the team reconsider the opportunity, despite the potential for high returns, and ultimately walk away.
The 3 Biggest Red Flags That Can Make Us Pass on a Deal
Every multifamily due diligence process is different, but Alec’s experience points to three common reasons BAM Capital decides not to pursue an apartment deal.
1. Maintenance Issues and Unexpected Costs
BAM Capital looks closely at building conditions, mechanical systems, and signs of deferred maintenance. Danny—who must personally tour every property BAM Capital pursues or makes an offer on—brings a maintenance-focused perspective, helping spot issues that might be easy to miss, even in newer properties. Plumbing problems or signs of water damage can point to repairs the team hadn’t anticipated.
One issue might be manageable, but if the same problem shows up across multiple units or throughout the complex, the repair costs can add up quickly. If the property needs more work than expected, it can change the financial picture and make walking away the better choice.
2. The Surrounding Area Raises Questions
A property’s location can look promising on a map, but the surrounding area matters, too. The team drives through the neighborhood to see what’s nearby and how it might affect the property’s appeal to renters.
In one case in central Indiana, Alec noticed a rundown strip mall right next to a potential investment. As he put it, “It was an eyesore.” It’s the kind of detail that listing photos don’t capture but can shape how prospective residents view a property.
Meanwhile, in Kansas City, the team toured a property that perfectly fit its acquisition criteria but noticed that the apartments on either side looked remarkably similar.
What would make renters choose this property over the others? When nearby communities offer a similar experience, it can be harder to stand out.
Case Study: How BAM Capital Protected an Investment From a High-Risk Development
3. The Numbers Don’t Justify the Risk
A property can look great in person and still not make sense as an investment. Alec and the team evaluate historical performance, operating expenses, market conditions, potential rent growth, and purchase price to determine whether the projected returns justify the investment.
That was the case with a new development in Kansas City. Although the property looked impressive during the tour, the financial analysis told a different story. The projected returns didn’t justify the investment, so the team decided to pass.
“There’s a chance we really like the asset and its location but can’t make the numbers work,” Alec said.
How Vertical Integration Benefits Our Investors
BAM Capital’s vertically integrated approach brings acquisitions, property management, asset management, and construction together in-house. These teams work together to evaluate potential acquisitions, bringing different perspectives to the decision and ensuring the teams that will manage the property after closing are involved before a deal moves forward. When Alec and Danny tour a property, they look at both its investment potential and its physical condition, including maintenance issues or repairs that could add to the cost of ownership.
Having that expertise involved from the start helps BAM Capital spot potential problems before buying a property and better understand what it may take to maintain or improve it. After an acquisition, the same in-house approach helps keep property management, maintenance, and renovation decisions aligned with the investment strategy.
For investors, this means BAM Capital has more direct oversight of a property from the initial evaluation through day-to-day operations. By identifying potential costs early and managing the property with its long-term performance in mind, the team aims to control expenses, protect property value, and deliver long-term value for investors.
Sometimes, the Best Deal Is the One You Don’t Make
Passing on an apartment deal isn’t always easy, especially when a property looks promising at first. But a strong market and an attractive property don’t automatically make a good investment. The numbers still need to make sense, and the risks need to be worth taking.
That’s why BAM Capital takes the time to tour properties, look beyond first impressions, and carefully evaluate each opportunity before making a decision. Sometimes, knowing when to walk away is just as important as knowing which properties to pursue.
Interested in learning more about BAM Capital’s approach to multifamily investing? Schedule a call with our team to discuss our investment strategy and how we evaluate potential opportunities.
Disclaimer: This content is for informational purposes only and is not financial, tax, legal, or investment advice, nor an offer or solicitation to buy or sell securities. Investment opportunities offered by BAM Capital and its affiliates are made pursuant to Rule 506(c) of Regulation D, available exclusively to accredited investors, as defined by the Securities and Exchange Commission (SEC) and, if applicable, qualified purchasers, as defined by Section 2(a)(51) of the Investment Company Act of 1940. Verification of accredited investor status is required before participation in any investment.
Contact BAM Capital for details on current offerings. BAM Capital and its representatives are not fiduciaries or investment advisors. The information provided is general and may not reflect individual financial goals. Financial terms, projections, or forward-looking statements contained herein are hypothetical and should not be interpreted as guarantees of future performance or safety. Such statements reflect BAM Capital’s opinion and are subject to market fluctuations, economic conditions, and investment risks. Investing in private real estate securities involves significant risks, including, without limitation, illiquidity, economic downturns, and potential loss of invested funds or capital. Past performance does not predict or guarantee future results. Historical transaction figures represent past performance across multiple deals as of the date this information was published, not a single investment transaction. BAM Capital and its affiliates do not guarantee the accuracy or completeness of this information. Prospective investors are strongly encouraged to conduct independent due diligence and consult with legal, tax, and financial advisors before making any investment decisions.
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