The Multifamily Mistake Costing You Financial Freedom with Sam Morris

The Real Estate Investing Club

Join an active community of RE investors here: https://linktr.ee/gabepetersen   🎙️ In this episode, host Gabe Petersen sits down with Sam Morris, Partner at Lone Star Capital Real Estate (LSCRE), a Texas multifamily firm managing nearly 6,000 apartment units. If you're ready to move from single family into large scale apartment investing, this episode is packed with actionable strategies.   🏦 FROM COMMERCIAL LENDER TO MULTIFAMILY OPERATOR  Sam started his real estate career in 2001 underwriting commercial loans as a bank analyst, racking up 10,000 hours of underwriting reps before he ever bought a property. He explains how that lending background became the foundation for evaluating multifamily deals and why reading a rent roll is a lot like reading words once you know what to look for.   🌀 THE HURRICANE THAT BECAME HIS BEST EDUCATION  Sam's first big multifamily deal, a 100 unit complex purchased in 2007, went from nearly full occupancy to just 12% leased after a hurricane hit a month after closing. He shares the real world lessons on insurance, contractors, and landlord obligations that no underwriting model can teach, and why every investor eventually gets "punched in the mouth" by a deal that doesn't go as planned.   📊 UNDERWRITING MULTIFAMILY DEALS THE RIGHT WAY  Gabe and Sam dig into the mistakes most new apartment investors make, including underwriting aggressive rent growth in a market where supply is still outpacing demand. Sam shares why Lone Star Capital underwrites conservative rent growth in 2026 and instead focuses on NOI growth through ancillary income and expense optimization.   Want to learn more about our guest? Connect here:  YouTube: https://youtube.com/@sunsetcapital?si=FjrdtKsdNZFCSeSa LinkedIn: https://www.linkedin.com/company/sunset-capital-tx?trk=blended-typeahead Facebook: https://www.facebook.com/share/S54M39sokxEcEJLt/ Instagram: https://www.instagram.com/sunset_capital?igsh=MWtkZmRzcmlyOHlkbw== Website: https://www.sunset-capital.com/   Want to learn more about the REI Club Podcast, how to invest with Gabe at Kaizen, or join our community of active real estate investors on Skool? Visit the podcast website at https://www.therealestateinvestingclub.com or click here: https://linktr.ee/gabepetersen

Transcript

00:06all right we are back with another episode of the real estate investing club i hope you guys

00:11are having a great day great week wherever you are and whatever day it is for you as always it

00:17is friday on the podcast we're bringing that good friday energy to you and on top of that it is

00:22friday in spring and it is nice and sunny here in seattle so i'm feeling good feeling good for a

00:28second reason though because we have sam morris with us on the podcast from lone star capital real

00:34estate they do multifamily over 5 000 units under management so if you guys are interested in

00:39getting into the multifamily game maybe you've bought a single family a duplex triplex and you're

00:43looking to level up this is the episode to listen to sam i'm excited to jump into this thanks for

00:49hopping on gabe glad to be here it is a beautiful day here in houston texas i think it's about

00:5584

00:55degrees outside right now so we're just loving it nice 84 that's actually hot for us up in seattle

01:01so i don't know if i can handle that just took off the sweater is really what i did

01:08nice man well i told you before we got on here we always like starting with stories we like to

01:12hear

01:12how people got to where they are so why don't you take us back to the beginning of your story

01:16in real

01:16estate and just tell us how you got here yeah you know so i uh i'm one of the rare

01:21few i really started

01:22in real estate in some form or fashion really in 2001 so almost 25 years now and i started on

01:28the

01:28on the lending side so i became a banker uh right out of school and it was uh it was

01:34one of those

01:34things i didn't realize the training i was having while i was doing it so all i did really all

01:41day

01:41every day for the first few years being a banker was underwrite deals because i was an analyst and

01:47what that did was it gave me an immense amount of talent and immense amount of knowledge and

01:53learning how to underwrite commercial real estate deals and so when you do that for years you get

01:59your 10 000 hours at a young age you know you could learn how to master the quantitative underwriting

02:04side of it so one of the things that you know gave me the ability to do was go all

02:09right now i have a

02:10that understanding of you know the the financial side and we started lending money and so i became

02:17you know a lender and i was able to participate in you know well over a billion dollars in commercial

02:21real estate loans and i quickly figured out who the players were in our local markets and who was doing

02:27things and uh it wasn't long after that i'm approaching these people and going hey can i you know

02:33can i invest alongside you in these deals and so i started out as a passive like a lot of

02:37a lot of

02:38other people and so i did my first real big real estate deal you know apartment deal probably in

02:432007 and it was a 100 unit deal that we did and oh my gosh you know what a life

02:50lesson that was

02:51because a month after we purchased it i was gonna say bad timing a hurricane came through oh you destroyed

02:58the property and so and i mean we literally went from probably 100 percent lease to 12 percent lease

03:04overnight oh geez and you if you want to talk about a learning curve you know the financial side

03:11of it can prepare you for so many things but then the reality of the operational side of it and

03:17what

03:17you have to do and what you're legally obligated to do and understanding insurance understanding

03:22contractors understanding all those other aspects and the third parties that you have to have alongside

03:27you to be able to own and operate a deal um really was the start of a of a you

03:32know education really

03:33by fire and uh you know but it was one of those things where it turned out great at the

03:39end

03:39um but man going through it there wasn't a better education to being able to learn

03:45you know real quick insurance contractors what you need to do as a landlord and what you're legally

03:51obligated to do as a landlord and uh just knowing to have all the relationships around you to help

03:56you get to that next level when when things don't go exactly the way that you had a business plan

04:02you know 30 days in on a on the deal yeah yeah man that sounds like uh i've only been

04:08through one

04:09insurance claim so far knocking on wood but those definitely uh there's so much you learn going through

04:14that process um that you honestly i don't feel like i could have learned that a different way

04:19it's not fun it's not something you want to have happen to anybody but once you do go through that

04:24that experience you come out the other side with a different perspective on the deals that

04:28you're underwriting um and a different perspective on the fact that pretty much anything can go wrong

04:34it's it's and it's not i mean you're you're talking about a hurricane that's not something

04:38you could have predicted obviously houston you guys do have hurricanes so you can relatively you you can

04:43know that hurricanes happen but you couldn't predict that it would have such an effect on on your on your

04:49asset and that kind of thing happens all the time with all different types of assets things happen

04:55that just you you don't plan for or that you couldn't reasonably expect to have happen with your

05:00asset but it just happens all the time one of the there's a law for that right it's uh yeah

05:04and

05:05learning it at a young age yeah but learning it at a young age was actually really helpful and

05:09doing it on your your first real big deal you're like oh my gosh like did i just make a

05:14huge error here yeah but yeah you know since then obviously now i've been through quite a few

05:21different natural disasters and fires and you know all the other things that occur and you know

05:27we're dealing with a couple insurance claims right now right um and so it's it's something now becomes

05:33a little bit more i don't want to say old hat but it's just you've been through it you know

05:37the

05:37steps to take it makes it a lot easier and so that just comes with kind of time and gray

05:42hairs

05:42so to speak and uh it's been great though so yeah and that just speaking from the perspective of your

05:48the um progress of a career in real estate it it does i remember back at the beginning things would

05:55go wrong things always go wrong in real estate that's just kind of the name of the game is solving

05:58problems and uh but things would go wrong at the beginning and it would just be it would seem

06:03overwhelming um and then now when i deal with that exact same problem it doesn't i don't even like

06:08doesn't even stress me it's just something that happens something you expect

06:12and you just solve the problem um and i feel like that's something that only comes with having

06:17gone through uh the experience and and getting those gray hairs um so when you guys are out there

06:22you're getting deals done thing and things are going wrong don't feel like it is the end of your

06:27career don't feel like it's something that you that uh that is irreparable that is you know

06:32unable to be overcome because it is something that is that other investors have dealt with

06:37they've overcome and it's just the name of the game it's just part of the process

06:40dealing with those issues and then getting to the next level um one thing i liked about your story is

06:46you talked about how you started out in lending and i i've mentioned this a bunch of times on the

06:50podcast i kind of wish that i'd you know i i worked in corporate for um you know up until

06:562019 i worked

06:58you know microsoft here in seattle and i i always wish that i would have started my career in a

07:04real

07:04estate adjacent um you know industry whatever it is insurance uh lend are being a lender um anything

07:12like that mortgages and uh just getting the exposure to real estate i feel like puts you in such a

07:18better

07:18position once you do start uh you do decide that you want to become an active investor you having all

07:23that experience underwriting deals that is i mean that's one of the most important steps of a real

07:28estate deal is understanding how to underwrite um so you're coming into the you know into the into

07:33the race with that skill and that really puts you far ahead um so let's take that as our starting

07:40point

07:40with you today you have this underwriting chops what are the things the key elements to your underwriting

07:46process that you feel like you took from that time um at the bank and a lot of people are

07:51missing

07:51when you're you're seeing their underwriting with multi-family yeah you know so i'm very fortunate

07:56at lscre i'm i'm the partner at the firm and so i get to oversee our our asset management our

08:02acquisition side and our investor relations side so i'm heavily ingrained uh with what's going on in

08:07the underwriting and being able to express what it is that we've done within the underwriting um but

08:12what i'll tell you is you know from doing that for as many years and you know that i did

08:18you become to

08:19learn how to read words the other you know the way people read them you know we we we wear

08:24numbers

08:24the way you read words and so it tells that story you can build those trend analysis and you can

08:29actually see the performance on paper and what's going right and what's not going right and on the

08:35quantitative side you may know that there's an issue you just may not know the exact issue or what

08:41it is that's actually causing it because you're not sitting on site right um and so from when you're

08:48you're doing the underwriting now having a lot more of the experience of what goes on operationally

08:52and things of that nature you're able to underwrite a deal that is going to actually be executable from

09:00an on-site perspective and so that's really that's really a big difference too is because you know

09:06things look great on paper i've never seen an investor deck that doesn't look amazing

09:10but getting the buy-in from the on-site staff that's going to be actually operating it and going

09:17okay this is a reasonable business plan that you know our on-site teams can execute that's a whole

09:23nother level in the underwriting where you go okay we're now set up for success here versus we're just

09:29going to provide them our business plan and tell them to go execute on it where it may be reasonable

09:34or

09:34not um and so marrying those two really between like the asset management and the property management

09:41has been probably one of the better skill sets that i've learned over the last call it 10 years

09:45um to being able to execute upon that and that's married into the underwriting yeah yeah which is

09:53why i feel like it's very important to um to put in a buffer in your underwriting uh because i

10:00mean

10:00we're going back to the issue or to the the fact that things just go wrong and things are unexpected

10:05often um and so you when you do your underwriting put in you know 10 5 whatever it is buffer

10:13on the

10:13expenses um to make sure that when things do go wrong you aren't uh you're on you don't experience

10:19negative cash flow at least for too long um on the multi-family side a lot of people underwrite

10:25or have been underwriting um historically in the last five six years pretty significant

10:30rent increases are you guys uh what is your i mean what are you seeing on the horizon for

10:34multi-family um especially i haven't seen that yeah i haven't seen those significant bumps i mean

10:40it might be in some specific sub markets of the country you know and i would tell you we because

10:45we focus on texas we have just shy of 6 000 units here in the great state of texas or

10:50as texans would

10:51say the greatest country in the united states but um you know what what we really focus on is

10:57the markets that we're in and i would tell you even within some of the sub markets of those markets

11:02you

11:02will see some growth and things of that nature but um i would say when we're doing our underwriting

11:07we're we're we're you know we're typically underwriting very limited rental growth a lot of

11:13what our focus has been on the last several deals that we've closed has been on expense optimization

11:18and that's where you're seeing a lot of the noi growth at least in the first year or two

11:22and or ancillary income so we're you know we're showing you know there's amenities at the property

11:28that we know the residents desire that we're able to provide that that's where we're seeing

11:32the total income growth from not necessarily rents and so we're still seeing because of the supply

11:39factor that we've had there's still a lot of compression for that rent there's still a lot of

11:43competition for that resident and so we just we're not underwriting a large increase in rents now you

11:50do see people that'll say hey we're doing a value add and we think we can add x if we

11:55do you know

11:56these these amount of things to the property and with where we are with supply we're just we're not

12:01really seeing a lot of those come to fruition as well as the way people have underwritten them and so

12:07a lot of where our focus is when we're talking about value add it's not physical value add it's

12:13going to be operational value add or it'll be you know financial value add meaning we're structuring

12:19the capital stack the appropriate way it's it's not necessarily going to we're going to go in there

12:23we're going to spend you know fifteen thousand dollars a door rehabbing this property and then that

12:29because of that we're going to get two hundred dollars more rent we're just not seeing that play out in

12:34the market overall and so but what we are seeing is if you can go in there and enhance um

12:40you know

12:41the the expense side of things to where you're able to get a little bit more lean for certain areas

12:46or

12:46you'll be able to have some greater efficiencies whether that's scale or scope um that's where you're

12:51seeing a lot of that noi increase generation and so it's uh you know it's kind of just where we

12:58are

12:58in the market you know if this was if we was 2020 you know anybody could do anything and the

13:03rents

13:03were going up um but because the supply being one of the more um constricting factors of that you know

13:10you really are kind of getting a little bit more hand-to-hand combat and trying to do what you

13:14need

13:14to do to just grow it just an incremental basis and so uh yeah interesting fortunately yeah i've been

13:20fortunate i was talking to our teams uh earlier this week and it was you know explaining to them how

13:26cash

13:26flow matters explaining them how value gets driven and how small changes can become large if we

13:33institute that across the portfolio so i want to take that just one layer down so my personal

13:40investing experience so i buy mobile home parks rv parks and self-storage facilities i've never bought

13:45a large multi-family so i don't have i'm just curious to hear what you guys like what are the

13:51major

13:51um ancillary income opportunities that you have at the at the complexes and then what kind of expenses

13:58do you generally see that you can reduce um when you're looking at expense optimization sure yeah

14:04well i'll give you like we closed the deal last month um it was a 376 unit deal here in

14:10houston

14:10and you know some of the things that we targeted when we were doing it is one the property didn't

14:15have

14:15bulk wi-fi and so from an income perspective you know an amenity that we could add

14:20we would bring bulk wi-fi to the property and so the residents would pay for that through an amenity

14:26fee

14:26and there's other things we would put into that like a we're bringing a parcel locker station to

14:31the property things like that so there are amenities that we're adding to them and there's a cost

14:36obviously for those but there's a larger delta for what we're charging them for that and that delta is

14:42what we can make and there's there's obviously a time frame for that to take into full penetration and

14:47so that gets built into the model of hey this is going to take you know two years before we're

14:51stabilized for that aspect of it and so it's things like that but from a cost reduction perspective

14:58you know we looked at a few different things and because this one was pretty significant we're buying

15:03it from a larger institution who you know for lack of better words they were you know it was a

15:08very

15:08healthy expense model um but they would have things like on that property in particular there was a valley

15:15trash contract that they had and they paid 56 000 a year just for that one contract well that was

15:21something that we do typically in house and we have a porter that's typically at the property and that's

15:27part of the porter's job so we were able to just assume that right and so that that expense goes

15:33away

15:33and you know from any kind of commercial property i mean anytime you do something like that it's cap

15:40right so if we can immediately just 56 000 is taken out of the expense and you put a cap

15:46rate to that

15:47well that's immediate value that you're driving to the property itself and so and there are a couple

15:52different things that are like that too like they had a big um courtesy officer contract that was about

15:5870 some odd thousand dollars a year well the way we do ours is our courtesy officers live on site

16:04um and we give them a discount to rent to doing so and then there's expectations for them uh while

16:10they're there but that that delta was pretty significant as well and so when you look at those

16:16kinds of things and they just all start to add up and you start saving hundreds of thousands of dollars

16:21in year one um it's pretty significant for the value add that you're doing it doesn't have to be

16:27something that you're spending a whole lot of money on it could be just you're getting greater

16:30efficiencies with you know the way that the expense structure is and you create value yeah yeah and i

16:37want to um kind of stress the the garbage or trash was a trash compactor or something like that you're

16:43talking no it's the valet trash service that we have at that property and so people you know they

16:47would pay so that somebody would come and pick up their trash at their door yeah um and that's that's

16:53great it's obviously something the resident base wanted but it's something that we could do internally

16:57pretty easy with our staff and and do it more efficiently too right yeah and that goes away

17:05yeah and for for anybody out there who's you know you're not buying multifamily or buying something

17:10else that that same strategy of reviewing reviewing your contracts your contractor contracts and seeing

17:17if they are at market or may or way above market is so crucial to increasing your noi we we

17:23just did this

17:24with a mobile home park um that we're buying and they were paying like double what the standard rate

17:28is for for trash pickup it doesn't sound like a lot if you're if you're talking about just absolute

17:33numbers i think it was like i think it was saved like ten thousand dollars a year or twelve thousand

17:37something like that but yeah like you said if you apply a cap rate to that money it's an actual

17:43sizable

17:43amount um especially if you're going through all the different contracts you have your internet

17:48your you know your your wi-fi whatever it is um if they're over market and that you can save

17:54penny here penny there um it'll definitely add up and uh it'll it'll add up in real numbers on the

17:59back end yeah and so that's that's kind of the underwriting process that we go through when we're

18:04looking i mean we get real granular into it as you would expect for your gp to do right so

18:09but it's

18:10also do we have the staff to do this do we have the you know all the ability to get

18:13this done and

18:14that ended up that property was a brother property to the sister property that we already own and so

18:18there were some staff sharing things and some things that we were able to take advantage of

18:22um that maybe not other buyers could and do you guys uh do you guys focus on like you're in

18:29houston

18:29do you only buy in houston or do you guys buy um nationally or just all over texas we're just

18:34in the

18:34state of texas um and because of our buy box you know our buy box is that 30 to 70

18:39million dollar range

18:40it kind of pushes us into the main primary markets uh for the size um and the scale of what

18:46we're

18:46looking for um we have some knowledge gap when you get outside the state there are a couple other

18:50markets that we're looking into but it just takes time to get all the knowledge base needed to be

18:55able to do that and when we go into an area we really need to have scale um you know

19:00and somebody's

19:01asked me to define that before and i just said well you know if i had to i would just

19:05tell you it has a

19:06comma in it for the amount of units that we would really need to be able to operate own and

19:11operate

19:11in an area and really drive values associated with that so if we're going to move into an area we're

19:17really looking to acquire a significant amount of of units in that area to be able to you know have

19:23the staff needs that we need you know we want and maybe even do the staff sharing and just have

19:27the

19:27economies there to be able to take advantage of the best scenarios for those markets yeah um yeah i mean

19:36focusing in and being able to to use resources across assets is uh it can drive costs down so

19:42much something that i um right now we we buy pretty much nationally for mobile home parks and i really

19:47want to focus in on specific uh you know geographic areas because of your ability to reduce your your

19:53expenses just by you know sharing resources between the properties um totally makes sense uh a thousand

19:59plus units in a given metro just to enter that's that is um that's i like that that's

20:05ambitious i love it all right so we have run the clock down it looks like we're at the 20

20:09minute

20:09mark um before we move on i always like to ask people what they see on the horizon we got

20:14uh you

20:14know it's 2026 right now interest rates are who knows where they're going um what do you guys see

20:19for your your own company what are you guys seeing for the next one to two years in terms of

20:24uh

20:24your goals your ambitions what you're trying to achieve yeah i mean we uh our our goal for this year

20:29was to do about 250 million dollars in acquisitions uh we're definitely not sellers right now um

20:36you know we're we're definitely strategic buyers more so on location than anything else and so like

20:42i will i'll absolutely go acquire a uh you know a c-class deal in an a-class location i

20:48won't acquire

20:49an a-class deal in a c-class location and so you know where a property is located is probably

20:55one of

20:55the top or you know one of the top metrics we're looking for we want to see good schools you

21:00know

21:00low crime things like that people people are going to desire to live in those areas and so

21:04you know for us we're pretty bullish on multi-family as a whole and we actually see a pretty

21:09a pretty good bounce back from where we've been um as supply continues to to shrink and uh the

21:16absorption is uh is growing on that and we're we're absolutely seeing that in texas and uh with you

21:22we love being down here we think our lucky stars were down here and uh we kind of continue to

21:28see

21:28the market growing uh and we're looking to pick off you know great quality assets that are more down

21:34the fairway for us cool with that i'm going to push us into the quick question round are you ready

21:40all right let's do it it starts with education it could be any form could be a book you've read

21:45movie

21:45you've seen conference you've been to mentorship program you've been a part of anything like that i just

21:50need two recommendations one for general life wisdom and then one for real estate uh yeah if

21:55we're going to do books uh you know a book i read every year uh is atomic habits so i

22:01read it at the

22:02beginning every year um and it's you know that's not really a real estate book um but it's it's

22:07something that helps keep me you know refocused on what my goals are for that year um you know if

22:13you're going to talk about books for real estate there's a you know there's a hundred of them out there

22:17um you know i like uh obviously rich dad poor dad is a common one richest man in babylon but

22:24i i

22:24actually do a lot of reading i'm a pretty avid reader um i just finished uh six conversations

22:30which was written by heather holman and it's really how to converse with people um it's actually not a

22:36real estate book at all um i'm reading the road less stupid right now which is a business book and

22:43i

22:43mean so there's a you know i read i read a lot of different books i'm a pretty avid reader

22:47i burned

22:48through quite a few of them i just finished uh stand firm and act like a man by joe b

22:52martin that's a

22:54a book that teaches you how to you know from a biblical perspective what it is to be a man

22:59joe b

22:59martin's a pastor in florida um i already know what my next book's going to be after these two which

23:04is nobody's coming to save you uh which is written by you know it's a green beret's guide of how

23:09people get stuff done and um so i i always am stacking up from a reading perspective but that

23:15being said i'm part of many groups too i do a lot of teaching um but because i do that

23:20i have to learn

23:21a lot too and i'm constantly looking for more we do a ton of meetups uh we had one last

23:26night an

23:26investor meetup um where we were talking about self-directed iras and so i'm learning a lot just

23:32on a continual basis um about our industry the ins and outs of it what what's going on with others

23:40um i do a lot of podcasts but um you know where i get to speak on them and listen

23:45to them and so

23:45you know i think there's so much education out there and i'm a i'm a big fan of it because

23:51i think

23:52you know before you invest in anything you should invest in yourself and you know that's going to be

23:56what helps you limit mistakes and learn from other people's mistakes um and it makes it a lot easier to

24:03pull the trigger when you're either going to be an investor or actually be a gp or you're doing

24:07whatever deal you're going to do in whatever um you know class of real estate or alternative asset you

24:13want to do it in nice man yeah i mean there's so many different ways to get education and they

24:18all

24:19kind of coalesce and so whatever way that works the best for you definitely go for it

24:23that no uh nobody's coming to save you i think i've heard of that book and i it intrigued me

24:27i

24:27almost picked it up one time maybe i'll have to uh that'll be the next one that i grab

24:32all right next question is for your younger self let's go back to the sam who was just starting out

24:38as the uh as the lender um way back in i can't remember i think you said 2007 go back

24:43to him look

24:44him in the eye give him one piece of advice moving forward man um go bigger than you think

24:52meaning uh i don't think i would have ever done a deal less than 100 units and i would have

24:56even

24:56told myself even back then go bigger um because it's just it actually is easier the larger the

25:03deals are and so i think that was a that was a it was a fallacy i had in my

25:08head that i had to start

25:09really small um and uh you know as soon as i got over that hump and we started doing i

25:14mean all the

25:15deals have been bigger since then and so um it's been one of those things that uh

25:20you know it becomes easier believe it or not to do the bigger deals than to deal with the smaller

25:24ones yeah yeah and um people on this podcast have heard me say you know reiterate that point many

25:31times um and it's actually the smaller deals are actually more dangerous you feel like you know it's

25:36a it's a 200 000 duplex whatever it's not it's not that bad the problem is if you have one

25:41issue with

25:42that duplex it is going to wipe out all of your money and i've had this problem with self-storage

25:46i started i bought small self-storage facilities thinking that would kind of insulate me from

25:51problems but when you have issues with small properties they have small cash flow and that

25:57cash flow is wiped out completely with that one issue buying big properties that insulates you from

26:03problems because then you have the cash to deal with the problems as they arise so i i 100 agree

26:07with

26:08you i wish i would have started bigger um it's you know when you start that's just kind of where

26:12people

26:12their minds go small means safer means you know easier and that's not the case bigger is actually

26:18safer it's actually easier um so yeah i would definitely definitely tell myself that as well

26:24all right that takes us to the next question this is about the u.s it is a big place

26:29there is a lot of

26:30opportunity out there give me the single metro you're most excited about investing in today

26:36yeah um man not to be too self-serving but houston texas um and and i actually i i do

26:43say that somewhat

26:44with uh you know you know having a good understanding of several markets i mean we're looking at a lot

26:50of markets right now but when i look at uh you know population growth you know when i look at

26:57job

26:57growth when i look at in migration growth foreign migration growth houston is still number one

27:02and uh when you have that kind of growth for the type of investing that we do those are the

27:07type

27:07of people that need homes to live in and when you're in that business of four walls and a roof

27:12that's actually a really good thing to be in and so when you're seeing the absorption you know start

27:18outpacing the supply in a significant way you naturally will start having organic rent growth with

27:22that and so uh because we know the market so well too um absolutely i'm very happy that we're here

27:28and i'm actually i'm actually very bullish on on this particular area and so um obviously there's

27:34sub markets and pockets within that but um man i'm i'm pumped that we're here and it's uh you know

27:40not to like i said not to sound too self-serving but this is absolutely where i want to be

27:44for the

27:45next several years nice well hey man i mean count your lucky stars if you're in the area that you

27:49actually want to invest in that you feel is the best place to invest in that's uh that that's yeah

27:54that's great luck um what is houston is that the fourth largest city in the u.s it's like la

28:00new

28:00york chicago houston yeah houston's soon to overtake chicago so from a population perspective i mean we

28:08still have about 250 people a day moving into houston right now and uh wow you know they all need

28:13places

28:14to live and it's jobs too right so we're still creating a lot of jobs when you have jobs people

28:18are going to move there for them and so um it's exciting right now all the things that are going

28:23on and

28:23um you know not to get too far off the rails but when oil starts shooting up to a hundred

28:29dollars a

28:29barrel it's not necessarily a bad thing for houston yeah you take it when you take it when you get

28:36it

28:36that's right um all right next question is about finding deals it all starts with getting in contact

28:41with the seller and pending that purchase agreement so what is your favorite way to generate leads and

28:46find new deals yeah so because of the size and scale the deals that we do almost all of them

28:51come

28:51through brokers and so a lot of our uh relationship building and things like that on our acquisition

28:57side it's not direct with the sellers it's truly with our brokerage groups um and i know that's

29:03probably not the great answer that everybody wants to hear they want to find that way that they can

29:07you know scoot in and get that great deal but when you know we're looking in that 30 to 70

29:11million

29:12dollar range like i said those are a little bit more sophisticated sellers and they're they're going to

29:17brokers to market their deals and so that's where we find our deals and we work our relationships with

29:23our brokers so that we have either early access or have the ability to find out about a deal even

29:28before it gets listed and it gives us that time frame that runway to get going and start getting in

29:33front of the seller as soon as we can yeah yeah and then just goes back to the importance of

29:38relationship building in real estate broker relationships are so crucial because like you said

29:42so many times a deal uh it will be on market but it won't actually be listed when it before

29:48it's

29:49sold because it goes through a broker the broker has his people his rolodex that he knows they're

29:53going to be closing a deal and this is a deal for them he's going to bring it to those

29:56people before

29:57he takes it elsewhere because he knows they can perform and so if you if you become that person for

30:02that broker um you have a great source of leads absolutely and i will say this too just to add

30:08to that

30:09you know performing and closing the deal with the brokerage group you know when they bring you the

30:14next deal the broker is talking about you to the seller of your ability to perform which is tremendous

30:21i mean it can actually you know it can actually be the difference between you getting picked on a deal

30:26or not um and it's it's happened with us where we weren't the high builder uh but we were picked

30:31because of our ability to close yeah and i mean i've even done that with you know things i've sold

30:37is

30:37i talked to my brokers and i was like even though this guy offered more who do you feel will

30:43actually

30:43close and the other guy you know i went with him because his offer was lower but i just didn't

30:49want

30:49to go back on market i didn't want to go on and off and on and off and um so

30:53it's not always the

30:54highest bid that that you know gets the deal it's the one that the broker has the most confidence in

31:00correct um all right and that leads us to lessons learned not every deal we get into goes the way

31:05we

31:06expect it in fact pretty much every single time something goes wrong and that's when we get to

31:11learn a lesson so what was a deal that went a little bit sideways for you guys and then what

31:15was the lesson you pulled from it yeah i mean other than the first one the very first deal we

31:19did but

31:19i mean i can tell you that um you're constantly having to pivot and i can say this more in

31:25general

31:25right you're you're constantly having to pivot with your business plan because things will occur

31:30um or things will not be what you originally anticipated they were and so as long as you know

31:37that like you have to be fluid with it you know you may have i have a set business plan

31:43this is what

31:44i'm going to do but understand that you know it's the old mike tyson everybody's got a plan until they

31:49get punched in the mouth right you know understand you're going to get punched in the mouth a couple

31:54times when you're going through your business plan and so it's how you react and how you pivot

32:00to take advantage of whatever the situations are to the best of their abilities that really matter

32:06and so um you know we you know i tell people like you knew i mean in 08 09 that

32:12was an interesting time

32:13to be um in you know managing properties and so you know i tell people it was like you were

32:19invited to

32:19a gunfight you were given a knife and so you had to learn how to truly out operate the person

32:25next to

32:25you because you know it was it was you or them and so you really have to understand you know

32:32there's

32:33different cycles there's different parts of the market you just have to be ready to out operate

32:37the people around you um and make those pivots to the business plan so that you can give the best

32:43results to your investors to your residents and to your on-site team yeah yeah it's like you said

32:49earlier you've never seen uh what'd you say you've you've never seen a pitch deck or a investor deck

32:54that didn't look great all beautiful yeah they're all wonderful right yeah but then uh once the

33:00rubber meets the road that is just out the window i mean that was your project projections but now you

33:05have to deal with reality and reality always has different plans so um pivoting is uh it's pivoting

33:11and solving problems that is just what real estate is um awesome man well that leads us to the very

33:16last question this is for the listeners you've given us a lot to think about i'm sure people want to

33:21reach out get in contact with you is a two-parter where can they find you and then what can

33:25they

33:25expect when they reach out yeah so easiest way to reach out to us is lscre.com um we have

33:32a great

33:32team of people i mean we have a wonderful investor relations team um we have a ton of content that's

33:38out there and actually resources that you can download so if you go to lscre.com that's the easiest

33:43way to find everything about the company i'm also easy to get a hold of if you just do sam

33:48at lscre.com you can email me and i love i love communicating with new investors and uh talking

33:54to them about what they're doing and uh introducing them to opportunities we have awesome i'll put that

34:00link in the show notes so if you guys want to reach out all you got to do is click

34:03the little more in

34:04the description it'll pull down that full description and in there you can find sam's links

34:10all right man yeah i really appreciate it man yeah thank you very much for offering on the show

34:15and for everybody who's with us today thank you guys for showing up you are the reason we do this

34:20so if you guys have any questions reach out to me gabe at the real estate investing club.com

34:24if you guys want to support the show just leave us a comment review anything like that

34:28other than that i hope you guys have a great week keep rocking real estate and i look forward

34:33to seeing you on the next episode

34:35you

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