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From Banking to Real Estate Empire: Sam Morris's Strategic Journey · Go Big with Gib Podcast

• 0:00
  Speaker 1: Welcome to the Go Big with Gibb podcast, where we talk to professionals, business owners and entrepreneurs about their big wins.
• 0:06
  Speaker 1: What's up, guys?
• 0:14
  Speaker 1: Today I've got my friend Sam Morris here with me.
• 0:17
  Speaker 1: Sam, how are you today?
• 0:18
  Speaker 2: I'm doing well, bud Glad to hear you're doing well too.
• 0:21
  Speaker 1: Yeah, man, yeah, it's great to have you on the podcast.
• 0:24
  Speaker 1: Really appreciate you being here Just to kind of get things rolling.
• 0:28
  Speaker 1: If you could give us a little bit of background, tell us a little bit about yourself.
• 0:32
  Speaker 2: Yeah, so I'm the CEO of Sunset Capital, so we're owners and asset managers in the multifamily and storage space.
• 0:39
  Speaker 2: Right now we manage a little bit over $230 million, which that's comprised of a little over 1,300 apartment units and over 2,000 storage units, and we get to help kind of with the day-to-day and really our big why is our investor base and we go out seeking opportunities.
• 0:58
  Speaker 2: We can get solid returns for our investors and it's been a fun challenge these last I would say 18 months finding deals, but 2024 has been a pretty good year for us.
• 1:10
  Speaker 1: So what have you been focused on in 2024?
• 1:13
  Speaker 2: Yeah.
• 1:13
  Speaker 2: So we kind of had an investment thesis last year at the end of 23 that we thought anything that we were going to be acquiring in 2024, we were going to be really happy about come a year, two, three years later, and that really has come to fruition.
• 1:30
  Speaker 2: What's been really the challenge for us is actually finding the deals, and so from a lead GP perspective, it's been really tough for us to do it.
• 1:34
  Speaker 2: We've been able to partner up with a few other groups and do a lot of co-GP deals this year and that's actually been really beneficial for our investor base.
• 1:42
  Speaker 2: It's allowed them to put money to work and we've been able to start returning money on those deals really quickly.
• 1:47
  Speaker 2: But really the big challenge has been finding those deals A lot of things that are actually just don't work and just churning through enough to where we can actually find something that does work for our investors.
• 1:58
  Speaker 1: So, Sam, how long has Sunset Capital been around?
• 2:01
  Speaker 2: Yeah, great question.
• 2:02
  Speaker 2: So Sunset's about three years old right now, but I actually started investing in deals back in 2007.
• 2:09
  Speaker 2: So I actually started investing as a really I started as a passive, a lot like many of our investors.
• 2:14
  Speaker 2: I was a corporate banker during that timeframe and I got into asset management around 2010, 2012, and it started doing deals with other people and it was a great experience for me.
• 2:25
  Speaker 2: And in 2018, when we sold our last bank that I was at, I went into real estate full time, and so I've been doing this ever since then.
• 2:33
  Speaker 1: I know you've got over 18 years of experience as a corporate banker, which is pretty cool and that's a nice segue into how you got into real estate.
• 2:43
  Speaker 1: But tell me a little bit about your banking experience.
• 2:46
  Speaker 2: Yeah, I started from the bottom in banking.
• 2:49
  Speaker 2: The great thing about doing that is you get to start as an analyst.
• 2:53
  Speaker 2: Actually, you start as an underwriter.
• 2:55
  Speaker 2: Effectively, I was underwriting deals and all kinds of deals too.
• 2:59
  Speaker 2: When I say underwriting deals, that was all I did all day, every day for years.
• 3:05
  Speaker 2: And so kind of funny when people say you know, you need 10,000 hours to master some skill, right, and I always joke that, well, if that's the case, I mean I mastered underwriting probably by the time I was 25.
• 3:21
  Speaker 2: And doing all different types of deals, and I mean it was just constant, over and over and over, and then from there I became a lender.
• 3:29
  Speaker 2: So once you knew how to underwrite deals, I became the lender, being able to lend on deals, which is a whole nother avenue too, because you really have to get ingrained with all the not just the quantitative side but the qualitative side of deals.
• 3:42
  Speaker 2: And so it was a great education into learning how to do a lot of these deals from the lender side, which I mean at that point I was really the largest partner, right, because a lot of people would.
• 3:54
  Speaker 2: When they came in to borrow money, we were lending them more than 50% of the deals that they were buying.
• 3:58
  Speaker 2: So as a bank, we were the largest partner, so we had to know everything about everything, not just the underwriting, but all the macroeconomics of things, what was going on in the area, who the sponsors were.
• 4:10
  Speaker 2: I was doing all this stuff at a young age, and so it made me comfortable at a young age to start investing into these deals as well, and so in my mid-late 20s, I started investing into these types of deals, these big commercial properties, because it was everything I had my education in.
• 4:26
  Speaker 2: I knew how to underwrite them, I knew how to look at sponsors and understand what the macroeconomics were and the qualitative things that we would look at to make sure that the deals would go well, and so it gave me a great education into hey, this is something that I may actually want to grow into after I'd completed being a banker.
• 4:46
  Speaker 1: If you've been passively investing since 2007,.
• 4:50
  Speaker 1: That's a long period of time, right, it's a really large time horizon.
• 4:55
  Speaker 1: Tell me, what kind of economic cycles have you seen in the asset classes that you've been investing in over that time period?
• 5:02
  Speaker 2: Yeah, I mean, I would say we've gone through a lot of ups and downs in those timeframes.
• 5:03
  Speaker 2: I would say we've gone through a lot of ups and downs in those timeframes, right, and they've all been a little bit different.
• 5:09
  Speaker 2: So, you know, from peak to trough, right, those have all been slightly different, even though you know people would say, hey, you know, we've been in a recession now.
• 5:19
  Speaker 2: Well, not all recessions are equal and they're not all for the same reasons too, and there were different things.
• 5:25
  Speaker 2: I would tell you.
• 5:25
  Speaker 2: You go back to 08, 09, when we actually had the financial crisis, capital dried up.
• 5:31
  Speaker 2: It was very different than what it is today.
• 5:34
  Speaker 2: Lenders weren't able to lend and you were really having to out-compete and out-operate your fellow operator who was next door.
• 5:45
  Speaker 2: You had to actually do some things that were different or better than them to actually perform in that type of a market, and so it's really unique, because they all teach you something a little bit different.
• 5:57
  Speaker 2: Going through all these things but yeah, it's been a great run is probably the easiest way to say that.
• 6:03
  Speaker 1: So talk to me about your first experiences with passive investing.
• 6:08
  Speaker 1: What type of investments were you making and how did they turn out?
• 6:12
  Speaker 2: Yeah.
• 6:12
  Speaker 2: So I started big right out the gate.
• 6:14
  Speaker 2: So the very first deal we did, I remember I was 20, I think I was 27 years old and we bought a as a passive.
• 6:21
  Speaker 2: We bought a hundred unit apartment complex here in Houston, texas, and I chuckle a little bit because we bought it as a passive.
• 6:24
  Speaker 2: We bought a hundred unit apartment complex here in Houston, texas, and I chuckle a little bit because we bought it in August and the very next month in September if you live in Houston or anything you know anything about storms.
• 6:36
  Speaker 2: Here we had a hurricane come through and absolutely destroyed the property, and when I say destroyed I mean it went from a hundred percent occupied to probably 12% occupied overnight.
• 6:48
  Speaker 1: Oh, my goodness.
• 6:49
  Speaker 2: Oh yeah, and so-.
• 6:50
  Speaker 1: It sounds like the perfect storm.
• 6:51
  Speaker 1: The perfect oh my gosh.
• 6:53
  Speaker 2: It's the first experience, right, and so I remember going oh my gosh, did I just make the biggest mistake in my entire life?
• 7:00
  Speaker 2: We had a great sponsor in that deal at the time, and what I would tell you is I learned a lot about insurance rather quickly, right, and how that impacts things, and you don't hear many deals like this, but I think it was right at around 11 months or so, which we had a big, massive rehab that we were planning already to do on this deal.
• 7:21
  Speaker 2: We effectively had the insurance be able to come in and pay for it, and it was so good for that fact that we were able to replace what we had before with something that was much nicer and we quickly got back up to 100% occupied.
• 7:35
  Speaker 2: After that, right around that timeframe, we did a refinance and they returned all the capital back to the original investors.
• 7:43
  Speaker 2: So we had 100% out in 11 months on the very first deal I ever did, and we still own the property and when you do something like that, it was a major eye-opening experience of going wow, this is something, if done correctly, knowing what I know about how the finance world works and knowing about what I've learned from an operational standpoint and all the challenges that can impact that this could be something that really creates a lot of wealth and cashflow on an ongoing basis.
• 8:12
  Speaker 1: Yeah, yeah.
• 8:13
  Speaker 1: No, that is an eye-opening experience and sort of cool how you've got this fortuitous act of God right.
• 8:21
  Speaker 1: You go from a state of desperation to rebuilding the place with the insurance proceeds and improving the property significantly, without even having to run into your CapEx budget.
• 8:34
  Speaker 2: That's right.
• 8:34
  Speaker 2: It's right and it actually it was much nicer than what we were probably going to be able to do for the residents that were living there too, and so, and you got to remember, they were displaced.
• 8:46
  Speaker 2: So I mean it was a big challenge of finding housing for all these people too.
• 8:51
  Speaker 2: Right, because I mean we were charged with finding, you know, providing housing.
• 8:55
  Speaker 2: We were no longer able to provide safe housing.
• 8:57
  Speaker 2: We had to find other spots, so a lot of residents had to leave.
• 9:00
  Speaker 2: So many of them came back and they came back to new everything new appliances, new cabinets, new all of it.
• 9:07
  Speaker 2: It was all brand new for them, and so it was a great, wonderful thing for them to come back to, because what they left wasn't anywhere near as nice as what they were able to come back to.
• 9:17
  Speaker 1: I know you invest heavily in the Houston market.
• 9:20
  Speaker 1: How frequently are we talking about having a major hurricane impact the Houston area?
• 9:25
  Speaker 2: Yeah, I would say on average.
• 9:27
  Speaker 2: I think you're dealing with something that's pretty significant.
• 9:30
  Speaker 2: Every other year is what it's kind of felt like.
• 9:32
  Speaker 2: That's kind of been the cadence, at least for the last several years.
• 9:35
  Speaker 2: I would say it was relatively mild this year, although we definitely had a storm come through.
• 9:40
  Speaker 2: It definitely caused some damage going through.
• 9:43
  Speaker 2: Come through.
• 9:45
  Speaker 2: It definitely caused some damage going through.
• 9:47
  Speaker 2: Nothing like what we've seen go through Florida or even Southeast that got hit pretty major right.
• 9:50
  Speaker 2: But they all have impact for housing too and they all have impact on real estate, not just for the properties themselves but for what it does for us from an insurance perspective.
• 10:02
  Speaker 1: Yeah, what is the insurance like?
• 10:05
  Speaker 1: What's it like acquiring insurance on a Houston multifamily property?
• 10:09
  Speaker 2: Yeah, so Florida the entire state's a tier one county, houston's a tier one county.
• 10:14
  Speaker 2: I would say that they're somewhat similar from that perspective.
• 10:18
  Speaker 2: But it's a challenge because you have a lot of carriers who have left the market, and when you do that, that means there's less competition for the carriers and therefore they're able to do what they want with rates.
• 10:29
  Speaker 2: And so it's getting to a point and I mean there are a lot of guys that would tell you it's already gotten to that point, but I would tell you it's getting to a point where there's going to be some more alternatives that are going to have to come in and more people are going to start getting creative with insurance because a lot of properties are being priced out.
• 10:45
  Speaker 2: It's not something that they're able to do.
• 10:47
  Speaker 2: I mean, if you think about it, if you have insurance and let's just say it's $2,000 a door, but your rent at that particular unit is $1,000 a door, you got to understand two months of everything you're collecting is gone just in insurance cost alone.
• 11:03
  Speaker 2: Right, and so yeah that's a big chunk of what.
• 11:07
  Speaker 2: And then you throw in taxes which were a higher property tax state too, and you start realizing you got to operate it and the margins start to really get squeezed from an NOI perspective.
• 11:19
  Speaker 1: Sure Sure.
• 11:19
  Speaker 1: So when did you officially sell your last banks?
• 11:24
  Speaker 1: When did you step away from that officially?
• 11:27
  Speaker 2: Yeah, it was right at the beginning of 2019.
• 11:29
  Speaker 2: So right at the beginning of 2019, we had sold at the very end of 2018.
• 11:33
  Speaker 2: So right at the beginning of 2019, I'd left and went into effectively doing apartments and acquisition and operations full-time at that point.
• 11:46
  Speaker 1: So when you were starting out banks, was that a big part of the process raising money from investors?
• 11:53
  Speaker 2: Yeah, it absolutely was, and not only that, on an ongoing basis too.
• 11:58
  Speaker 2: So a lot of times in the privately held banking world, you would have capital constraints or things of that nature, or really just a need for more liquidity and things of that nature, and so a lot of times, being an officer of the bank, they would come to us and go hey, we need help, we're going to go out and raise X, whatever that number may be, and we need you to help us to be able to do that.
• 12:21
  Speaker 2: So I got an early taste of how to raise money, uh, in the banking world, uh, and started doing that actually at a pretty young age, and what was really great about it is it was before 2012, which is when the jobs act was passed, right, and so raising money really was more, a lot more, handshake.
• 12:40
  Speaker 2: I got to know, know who you are.
• 12:42
  Speaker 2: It was, it was all.
• 12:43
  Speaker 2: It was really all like a 506C raise at that time, you know.
• 12:47
  Speaker 2: So everything had to be accredited, all those types of things that you, you know you have to have the preexisting relationships.
• 12:53
  Speaker 2: All of it would have to come into play.
• 12:54
  Speaker 2: But it was true, old school, you know, I really need to know you.
• 12:58
  Speaker 2: Hey, I have this opportunity and you know it was phone call by phone call, it was, you know, handshake by handshake, or you know lunches or dinners, whatever it was to actually get to know the people that were going to be investing in you.
• 13:09
  Speaker 1: Yeah, it sounds like a pretty grassroots type of a growth model, you know, actually going to lunch with people and sitting down with them and getting to know them.
• 13:19
  Speaker 1: Now, how has that?
• 13:21
  Speaker 1: I know that the underwriting experience that you have from banking was just, you know, invaluable to you, um and do an apartment, investing in storage, but talk to me a little bit about how the the capital raising experiences that you had from the bank, um translated into capital raising for this type of an endeavor.
• 13:41
  Speaker 2: Yeah, you know, it's so funny.
• 13:42
  Speaker 2: So I had a guy, um who, who leads a big capital raising group here and of an endeavor, yeah, it's so funny.
• 13:44
  Speaker 2: So I had a guy who leads a big capital raising group here and he made a comment to me.
• 13:48
  Speaker 2: He said Sam, you're the oldest young guy I've ever met because of the tactics that we use, right, so we're still very much old school that way.
• 13:57
  Speaker 2: I would tell you it's still very much I love to meet you and shake your hand and put a name with the face and actually get to know who you are before you would partner with us.
• 14:08
  Speaker 2: But because of that kind of longstanding history of raising money too, it provided the bulk of the base of which Sunset Capital utilizes today, right, and so the bulk of that base is from relationships that go back not just a few years but decades of investment at this point in deals that we've done together, and so when we launch a deal, I would say the super majority of the money, from an equity standpoint, is from somebody who's already done a deal with us.
• 14:37
  Speaker 2: Yeah, so from the new money that comes in, from whatever our new marketing and things of that nature, it's really a smaller portion.
• 14:46
  Speaker 2: It's not something you know, it's absolutely something we'd want to grow.
• 14:49
  Speaker 2: But there's relationships that got to grow with that too, and I would still tell you I'm still very old school, I mean we have lunches every week, multiple lunches every week, with smaller groups, right.
• 15:01
  Speaker 2: So it'll be one or two or three people that we're talking to, not the mass crowds that a lot of people go after.
• 15:07
  Speaker 2: And although we do things on social media and things like that, it's not me doing it.
• 15:11
  Speaker 2: That's not really my strong suit.
• 15:14
  Speaker 2: I prefer to talk to you via phone or let's go meet up or let's go do something, and we do a lot more smaller, more curated type events to smaller amounts of people.
• 15:25
  Speaker 2: But when you're raising money, you really only need a handful of people that are going to just say, yeah, I'm with you and let's go do every deal we do.
• 15:33
  Speaker 2: It makes a big difference.
• 15:35
  Speaker 1: This episode of Go Big with Gibb is brought to you by Irons Equity.
• 15:38
  Speaker 1: At Irons Equity, we specialize in helping investors like you create long-term generational wealth and save money on taxes through recession-resistant real estate investments that create passive income for you and your family.
• 15:52
  Speaker 1: If you want to secure your financial future, go to investwithgibcom to schedule a 30-minute introductory meeting with me Gib Irons Again, that's investwithgibcom.
• 16:02
  Speaker 1: Me, gib Irons Again, that's investwithgibcom.
• 16:10
  Speaker 1: Yeah yeah, having those relationships is definitely a game changer.
• 16:12
  Speaker 1: You know you're able to subscribe an offering in such a short period of time.
• 16:16
  Speaker 1: I don't even think you do soft commits.
• 16:18
  Speaker 1: I think when we spoke before, you were like we don't really do a soft commit.
• 16:21
  Speaker 1: You either commit or you don't commit.
• 16:24
  Speaker 1: But tell me a little bit about when you unveil a new opportunity.
• 16:26
  Speaker 1: What does it look like?
• 16:33
  Speaker 2: Yeah, so normally ahead of time we're letting people know.
• 16:35
  Speaker 2: So we'll let people know ahead of time hey, we're going to be putting it out, here's the deal and here's just kind of some bullet points of why we like the deal.
• 16:40
  Speaker 2: Here's when we're going to launch and it's date and time, and then what we'll do is, by the time that date comes, the base is pretty well known.
• 16:49
  Speaker 2: They know well enough of, hey, this is going to be when this happens, and then we launch and I would tell you it's typically anywhere between I mean, I would say our average is two, three days and we have our commitments to fully fund deals that we're doing and it's been really beneficial to have a base that is able to back you up that way.
• 17:11
  Speaker 2: We did a launch last week, I should say I think it was about three days, and we finished the raise and we've been handling our backup equity.
• 17:22
  Speaker 2: So people that still wanted to get in but maybe didn't have the time to get in in the timeframe that was needed.
• 17:28
  Speaker 2: But it's a lot of communication, it's, and you know, and I would tell you like there's a lot of things that a lot of people do that we just we haven't done yet.
• 17:35
  Speaker 2: So, you know, when it comes to things like webinars or things like that, that's not something that we necessarily need to do just yet.
• 17:42
  Speaker 2: The mass texting or anything like that, it's individual right.
• 17:46
  Speaker 2: So I'm going to you know, hey, gib, I was thinking about you for this deal.
• 17:49
  Speaker 2: This is Sam.
• 17:50
  Speaker 2: You know what.
• 17:51
  Speaker 2: This is something that you and I have talked about.
• 17:52
  Speaker 2: This fits what your investment criteria is.
• 17:54
  Speaker 2: If it works for you this time, man, love for you to be able to join us, click text, send, and that's individual to you.
• 18:01
  Speaker 2: So I'm not sending a mass text to everybody, because it doesn't.
• 18:04
  Speaker 2: You know, not every deal fits every person, but having the relationship with them, knowing what they actually want, it, enables us to have.
• 18:12
  Speaker 2: We have pretty good lists of hey, this is the type of deal that would fit these people.
• 18:16
  Speaker 2: We pretty much know ahead of time, before we even launch a deal hey, these are the people.
• 18:20
  Speaker 2: We're going to go ahead and make sure that they know about the deal that's coming up because it actually fits their investment thesis and having that broken out that way, and so it's a little bit more personalized to that person whether or not they can do it or not.
• 18:34
  Speaker 1: Well, I know people appreciate having that personal relationship with you and being able to get that FaceTime with you, whether they're ready to go or not.
• 18:44
  Speaker 1: I know they appreciate that approach.
• 18:46
  Speaker 1: Looking out at the forecast for 2025, what are you seeing and where do you think we're at in terms of market cycles for things like multifamily?
• 18:57
  Speaker 2: Yeah, I think so.
• 18:59
  Speaker 2: Yeah, I mean one after tomorrow.
• 19:01
  Speaker 2: Hopefully, we'll have some certainty of whoever the president is, and the markets like that kind of stuff.
• 19:07
  Speaker 2: They like it.
• 19:07
  Speaker 2: Certainty Probably easiest way to say that, because we really, you know, we can make money with either person being president.
• 19:14
  Speaker 2: What I would tell you, though, is there's some things going on, too, that actually can absolutely impact multifamily world.
• 19:21
  Speaker 2: You have, later this week, too, it's not just the election, but the Fed's meeting, and so they're going to announce on Thursday not Wednesday, thursday what they're planning on doing with rates.
• 19:34
  Speaker 2: Right now, consensus with a lot of people that you may talk to say that there could be a rate cut.
• 19:36
  Speaker 2: When you're starting to see things like that occur, it could spur on more investment activity.
• 19:40
  Speaker 2: We've already seen quite a bit of funds flowing, coming in, or at least capital showing from the institutional side that they're ready to come in and start buying, and that normally precedes other capital that may be out there.
• 19:53
  Speaker 2: It appears right now, that there could be more trades in 2025 than there were in 24.
• 19:59
  Speaker 2: And a lot of the brokers will tell you that it kind of feels that way too.
• 20:03
  Speaker 2: After NMHC will happen, which I think is the end of January.
• 20:07
  Speaker 2: There's all kinds of listings that hit and you have just a flood to the market because all the brokers have been holding onto their listings through Thanksgiving and Christmas and you'll have activity, I think, in that Q1, q2 timeframe.
• 20:20
  Speaker 2: But really the bigger thing for me, even with interest rates and deals being available, is going to be the supply that's out there.
• 20:26
  Speaker 2: So if supply continues to get chewed up and occupancies continue to rise, you're going to have rental rate growth and if you start having that, you're really going to have a lot more people that are going to be competitive and I think you're going to start seeing a lot of guys that maybe were able to weather the storm through acquisitions, say in 21 or 22.
• 20:47
  Speaker 2: You might have some people looking to sell in 25 because they're going to be able to go hey look, this really needs a reset for basis or whatever, and I think I can put it into another deal and make more money.
• 20:55
  Speaker 2: You'll start to see a few more transactions occur in 25, at least I think It'll be helpful for our business, you know, and being able to find what could be out there, because there'll be more of it to look through and I would tell you, we've turned through a lot of deals right now.
• 21:10
  Speaker 2: We just haven't been able to get to a lot of pricing of where it needs to be, and part of that is not just the capital but also, you know, the lending capital that's out there too, which I mean liquidity in that market has tightened up a little bit, so you have maybe some more stipulations with lending than what we had, say, two years ago.
• 21:26
  Speaker 1: Sure, yeah, I was expecting there to be a lot more volume in terms of the number of trades in 2024.
• 21:32
  Speaker 1: And it seems like a lot of times the lenders kind of stepped in and made sure that the property didn't trade Like, maybe the lenders got real creative and ran out and found other people like, hey, would you like to buy this debt from us?
• 21:46
  Speaker 1: And if the current owner isn't able to pay on the debt, you can just go ahead and take over the property, and so the property transitioned into a new owner that way, rather than going into foreclosure or hitting the market.
• 22:04
  Speaker 1: I don't know.
• 22:06
  Speaker 1: I just didn't see the volume in 2024 that I expected.
• 22:09
  Speaker 1: Although we still did deals, it wasn't complete bloodletting like I guess some people expected.
• 22:17
  Speaker 2: Yeah, well, and in the lending world too, you got to remember lenders are lenders, they're not real estate people, and so they do not want a property back.
• 22:27
  Speaker 2: Additional costs associated with that.
• 22:29
  Speaker 2: There's a lot of things that you got to do associated with that, and so you heard the term extend and pretend right.
• 22:35
  Speaker 2: You've heard a lot of modifications, things like that, going on, and so if there's ways that they can continue to extend out to where they can get fully repaid, they're going to look to do those types of transactions, and so I think that was probably a larger catalyst of hey, why things didn't trade is because, man, we don't want to lose money, we don't want to lose your money, and instead of me handing you the keys back, what do you think about just modifying this or extending this out and we'll have the ability to pay you back in a year or give us more time to get through our business plan, or whatever it may be.
• 23:08
  Speaker 1: Yeah, no, I agree, I agree.
• 23:10
  Speaker 1: So I mean, it sounds like you're at a place now where you've been doing it for so long that you've got things.
• 23:17
  Speaker 1: It's a finely well-oiled machine.
• 23:20
  Speaker 1: But I'm sure talk to me about some of the challenges you've overcome.
• 23:23
  Speaker 2: Yeah, for us as we continue to grow.
• 23:27
  Speaker 2: When we finish this raise, we'll have done five raises this year for 24.
• 23:33
  Speaker 2: We're a small shop, right, but I would tell you that was a big, active year for 24.
• 23:37
  Speaker 2: We're a small shop, right, but I would tell you that was a big, active year for us.
• 23:38
  Speaker 2: And so constantly finding enough investors that are going to be able to come in at the timeframes that you need them to is always a big challenge, right, because you can sit there and go oh man, I feel very comfortable, I can raise X, do it when there's an election coming up, and you'll find how many people actually really want to pull the trigger before the election results are out, right, or something of that nature.
• 23:59
  Speaker 2: You can't always anticipate what those hurdles are that you're going to have to get over.
• 24:05
  Speaker 2: From a challenge perspective, the way I think it's probably best to deal with that is one to just be very open, transparent of what your needs are and then continue seeking more investors to add to your portfolio of investors that you're going to be able to go to, and so, on our platform, we continually add more investors each and every single month, but what we found is they still want to have information each and every single month, whether or not they're in a deal with you.
• 24:32
  Speaker 2: So provide them some kind of value, right?
• 24:34
  Speaker 2: All right, great, you want me to stay engaged with Sunset Capital, but what are you going to give me?
• 24:39
  Speaker 2: I may not be able to be an investor right now, and, hey, I may not be an investor next year, right, but you're going to have to continue to feed me, to make me say what I'm going to need to do for when I am ready to pull that trigger.
• 24:50
  Speaker 2: You know why I'm going to go with you and so continue to provide value to those investors on our platform, whether or not they're investors with us.
• 24:59
  Speaker 2: Right, just enables us to continue building the relationship with them so that when they are ready, we're ready to go too.
• 25:07
  Speaker 1: Yeah, that's so important.
• 25:08
  Speaker 1: You know we spend all this money on advertising and trying to drive people into our funnel or just trying to spread the word about our business, but then if we don't nurture those relationships, now you've paid for a lead, you got a lead but you didn't nurture it, and now that lead has gone on to somebody else and, um, you know, I've.
• 25:29
  Speaker 1: I've found that with my capital raising business as well.
• 25:33
  Speaker 1: Like I've had people that I talked to six, maybe 12 months ago, I thought to myself they're probably not going to invest with me and then after six to 12 months, they reach out and they just want to jump into a deal immediately and you're like, wow, okay, good, Glad we stayed in touch with that person and didn't give up on them.
• 25:51
  Speaker 2: Yeah, I mean, that's one thing I would tell you that banking probably taught me too them.
• 25:55
  Speaker 2: Yeah, I mean, that's one thing I would tell you that banking probably taught me too is I would call on customers.
• 25:58
  Speaker 2: And I could be calling on them for years, literally years, and it wasn't until the timing is right that they're like okay, great, let's go.
• 26:06
  Speaker 2: So, just kind of like, what you're describing is very common in the business world, but what makes it even more interesting is a lot of our content that we put out each month, which I really chuckle about.
• 26:18
  Speaker 2: It actually comes from our investors, meaning we'll get a question and be like hey, what do you think about this?
• 26:25
  Speaker 2: Or hey, can you tell us about this?
• 26:27
  Speaker 2: And I would tell you there are certain things we get asked about every single month Interest rates.
• 26:36
  Speaker 2: That's been a hot button issue for, it feels like, for years.
• 26:37
  Speaker 2: At this point, every single month, somebody goes hey, what do you think about interest rates?
• 26:39
  Speaker 2: Which way do you think interest rates are going?
• 26:40
  Speaker 2: I mean, so we get that one every month, and so I would say every few months, or at least every quarter, we'll write something about interest rates in our newsletter, just because we have a lot of people that ask that, and I would think that's pretty common To the very specific right, that, and I would think that's pretty common to the very specific right Like hey, tell me where are rental rates for class C apartments going in the west side of Houston, right?
• 27:05
  Speaker 2: Like I mean just really really specific niche.
• 27:12
  Speaker 2: But you know, the irony is what we do is, when somebody asks a question, our thought is, if somebody has this as a question, there's a good chance somebody else does too, and so a lot of times that's what we're doing we're answering these questions and we're incorporating it into our newsletter to some of the most off the wall stuff too, where you're like you know, houston Astros have been great.
• 27:28
  Speaker 2: We didn't make the playoffs this year, we were ended early.
• 27:30
  Speaker 2: But last year I'll never forget we got one, and it was in October, and somebody literally wanted to know the economic impact of a playoff Astros game for the city of Houston.
• 27:42
  Speaker 2: What does this do for the city?
• 27:44
  Speaker 2: How much money do we make?
• 27:45
  Speaker 2: And there was data out there to find it.
• 27:47
  Speaker 2: You could share it right Now.
• 27:49
  Speaker 2: It had almost nothing to do with real estate, right, but it was something they wanted to know what the benefits were from a macro level, from where they're investing.
• 27:57
  Speaker 2: I chuckle because I was like wow, this is a funny one, but there could be.
• 28:01
  Speaker 2: This is interesting to some people, so let's go ahead and do it.
• 28:03
  Speaker 1: Yeah, you got to give them value, however you can, without a doubt, for a person that's just kind of starting out with a real estate business and looking to scale.
• 28:14
  Speaker 1: What recommendations do you have for them?
• 28:16
  Speaker 2: Know your sponsor.
• 28:17
  Speaker 2: Know your sponsor inside and out.
• 28:19
  Speaker 2: If you're going to just be getting into starting a capital raising business, know your investors and know the deal that you're getting into and make sure you do the bulk of it too.
• 28:30
  Speaker 2: So don't just take their underwriting and run with it.
• 28:34
  Speaker 2: Do it through your own process.
• 28:36
  Speaker 2: Don't just take their numbers and run with it.
• 28:38
  Speaker 2: Put it through your own process.
• 28:39
  Speaker 2: Right, double and triple and quadruple.
• 28:42
  Speaker 2: Check everything, because you're about to put people who are entrusting you with their money into some deal here and you want to know that everything is on the up and up.
• 28:51
  Speaker 2: And so for us, like when we go and we're going to, if we're're going to partner with the lead, we know not only the sponsors that evolve.
• 28:58
  Speaker 2: We know the middle management.
• 28:59
  Speaker 2: We know the management group.
• 29:01
  Speaker 2: We typically go to their offices.
• 29:02
  Speaker 2: We want to see other product that they've done right down to.
• 29:06
  Speaker 2: We want to interview the property manager who's going to be on site running the deal, and so we take it multiple layers and steps through before we're ever willing to give any money over to that person, and a lot of times I'll invest with them personally as an LP so I can see how the whole process is going to go before we put any other risk, any sunset capital funds into it.
• 29:26
  Speaker 1: Yeah, I know I've invested personally with a bunch of different sponsors and that definitely is eye-opening.
• 29:34
  Speaker 1: And thank God that was my individual money instead of my investors.
• 29:39
  Speaker 1: Because you know, when I first started out I didn't really know how to vet a sponsor, I didn't know how to underwrite a deal, and so I was kind of like, hey, this seems like a good deal, I'm going to put some money in it.
• 29:51
  Speaker 1: You know, and some of those deals had very little communication from the sponsor.
• 29:56
  Speaker 1: Some of those deals you know I'm going on two years without a distribution.
• 30:02
  Speaker 1: Some of those deals look, they may turn out fine or it may be a disaster.
• 30:10
  Speaker 1: I don't know the final outcome yet, but what I can tell you is that even if it does do well outcome yet.
• 30:18
  Speaker 1: But what I can tell you is that, even if it does do well, I would probably not invest with those people again because of the lack of communication.
• 30:21
  Speaker 1: And then, when you invest with a sponsor that gives you monthly reporting and monthly distributions and you see the two different opposite sides of the spectrum, it really is eye-opening because there's a lot of different people out there trying to make money through syndication.
• 30:40
  Speaker 1: Some do a great job at it and some do not.
• 30:44
  Speaker 2: Yeah, and so what I would tell you is, knowing who those people are, though, is a great empowerment, if you're starting out, to being able to entrust other people's money into those types of deals, and so you and I have had the benefit of being able to, like you said, invest as an LP in a lot of these, and I actually think that's probably one of the better ways to go, and I can tell you I mean, I've invested in LP in a lot of deals, too, and some of them they do a great job, and I'll challenge investment thesis that they have, and if it just doesn't work out, you go all right, it just doesn't work out, and those deals may be great and they may work out, but you really do have to go.
• 31:24
  Speaker 2: Man, if I know exactly what my investors are looking for, those are the types of deals that I'm going to go out to seek, and there's definitely going to be sponsors that are looking at those types of deals, but for us, and really for 2025, I mean, a lot of what we're going to be doing is probably looking to be the lead more than anything else, because we do know what exactly those people are looking for, and those will be the deals that we're out there seeking.
• 31:47
  Speaker 1: Yeah.
• 31:48
  Speaker 1: So, sam, I know you invest a lot in Houston, but do you invest outside of Houston at?
• 31:53
  Speaker 2: all I would say, texas is really our playground.
• 31:57
  Speaker 2: If we get outside of Texas, we have a knowledge gap, and so, you know, if we were to look at anything outside of Texas, it would have to be a co-GP type situation, just so that we would you know.
• 32:09
  Speaker 2: We know the people that are the boots on the ground, that are there, but we know our markets here in Texas pretty well.
• 32:15
  Speaker 2: We know right side of the tracks, wrong side of the tracks, and we know what areas we would continue to invest in and what areas we would probably stay away from.
• 32:23
  Speaker 1: That's huge.
• 32:24
  Speaker 1: Well, Sam, look, it's been a pleasure having you on.
• 32:27
  Speaker 1: Before we sign off, though, for people that want to reach out to you, what's the best way for them to contact you?
• 32:34
  Speaker 2: Yeah, I would say our website's easiest, best way to get to us.
• 32:37
  Speaker 2: It's sunset-capitalcom, and we're eager to meet new people, we're eager to help people out and I invite you to join us.
• 32:48
  Speaker 1: Sounds great.
• 32:49
  Speaker 1: Sam, Look, you're an awesome guy.
• 32:50
  Speaker 1: I really appreciate you coming on the show.
• 32:52
  Speaker 1: It's been an absolute blast Take care.
• 32:55
  Speaker 2: Yeah, great to finally get to do this with you, bud.
• 32:57
  Speaker 2: I appreciate it.
• 33:01
  Speaker 1: Thank you for listening to this episode of Go Big with Gibb.
• 33:04
  Speaker 1: If you haven't already, go follow us on social media at Gibb Irons.
• 33:08
  Speaker 1: We'll see you next time.