From Underwriting and Banking to Wealth and Freedom: Sam Morris’ Real Estate Journey

Speaker 0

Today, I got the chance to chat with Sam Morris. Sam is the founder and CEO of Sunset Capital, a, multifamily and storage real estate investing firm. And Sam has a wealth of knowledge. He was actually a corporate banker for eighteen years. And during that time, he did a lot of underwriting and also got, into passive real estate investing. And then once he left the banking world, he moved into active real estate investing and, works with other passive invest investors, etcetera. He's just got so much knowledge about how to underwrite a deal and really, you know, where your focus should be with regarding the market conditions. Toward the beginning, we chat about his first deal as a limited partner, a passive investor, and how something completely unexpected happened in a terrible way. And, there was quite a roller coaster with regard to that deal itself when he was, you know, say, twenty four, twenty five years old as a young father and how it was looking like his large investment was gonna be entirely wiped out. So you you gotta listen for how that turned out and that deal itself is a great example of moving from adversity to abundance. I love Sam's book recommendations at the end. He threw out one or two that have never been mentioned on on our show. One in particular is is awesome, and I'm definitely gonna read the book myself. And we also chat toward the end about how you know, when to know that it's time to grind, time to do things that you don't wanna do, and when it may be the right time to offload some of the those things and really take ownership of your your time, and and so that you can lean into your relationships and your family and make more of an impact outside of your professional career. Sam also details some of the similarities and differences between the two thousand eight financial crisis, compared to today's market and today's situation. Definitely similar in ways and definitely different in ways. And, this this episode has a lot for both the active and passive investor. Also, you know, with his financial background, if you're a finance finance person, there's a lot for you here. He's just got a wealth of knowledge, and I know you're gonna enjoy this episode. 

Speaker 1

From adversity to abundance, hosted by entrepreneur and seasoned real estate investor, Jamie Bateman, is the ultimate guide for active and passive investors seeking clarity, mental fitness, and the confidence to make inspired decisions in the world of real estate. With a decade plus of investing experience across various niches and a background as a combat veteran, former army officer, and multimillion dollar mortgage note company owner, Jamie brings a wealth of knowledge and inspiring stories to each episode. Through weekly episodes featuring insightful interviews with industry leaders and solo explorations of mindset set and strategy, listeners will uncover actionable advice and tips to overcome challenges and build lasting financial success. Whether you're a seasoned investor or just starting, from adversity to abundance is your road map to turning obstacles into opportunities and achieving financial freedom. 

Speaker 0

Welcome everybody to another episode of the from adversity to abundance podcast. I'm your host, Jamie Bateman, and I'm thrilled today to have with us Sam Morris. Sam is the founder and CEO of Sunset Capital, and we're gonna get into what Sunset Capital is all about. Sam, how are you doing today? 

Speaker 2

Yeah. Doing great, Jamie. It's great to meet you. 

Speaker 0

Likewise. This is, this is gonna be fun. I know you have a wealth of knowledge and experience in, the the banking sector and the financial world and also in real estate. And, Yeah. Let let's let's dive right in. For the listener who may be unfamiliar with you, who are you and what are you up to today? 

Speaker 2

Yeah. My name is Sam Morris. I'm the CEO of Sunset Capital, like you said. We are owners and asset managers in the multifamily and storage space. We're based in Houston, Texas, and we have a really a a niche focus just on the state of Texas. It's really where our our knowledge base is and where we, seek to acquire and operate assets. 

Speaker 0

Love it. And I think that that localized approach is something that gets glossed over often. It you know, it's everybody wants to scale and and go nationwide. And, you know, we've done that with our mortgage notes business. So I think it's a little bit easier in some senses to to do that. But when you're talking actual hard real estate multifamily storage, having that local knowledge is is absolutely critical. It's very easy to make make mistakes if you get spread too thin geographically. 

Speaker 2

Yeah. Absolutely. I mean, one of the things that we say because people ask us about other submarkets, and we do have pretty good knowledge in in some other very specific submarkets. But if, you know, people go, well, hey. Why don't you go up to Oklahoma, or why don't you go to Louisiana? And my response typically is, you know, it's not that we can't. It's just that we have a knowledge gap there, which is kind of a fancy way of saying we really don't know the markets that well. 

Speaker 0

Yeah. But We really that's that's self awareness. 

Speaker 2

Yeah. We'd have to pair with somebody that knows the markets. We wanna know the ground there. 

Speaker 0

Absolutely. I love it. The, before we jump back into your backstory, tell the listener kind of what abundance are you living in today personally? Financial abundance. You can get as specific as as you'd like, obviously, but what's why should we listen to this show? You've been through a lot of adversity. We're gonna dive into that. But what is give us an example or two of the the abundance that you're living in today. 

Speaker 2

Sure. Yeah. I mean, you know, look. I'm a I'm a guy with some gray hairs on them. Right? And so it's it becomes a little bit different as you get a little bit older, your definition of abundance. That's true. At some point, you you you really have everything you need. You have everything that you kinda want. And I, you know, I always tell people because, you know, they when people read my bio, they see the stats. They see the hundreds of millions of dollars in deals that we've done and things like that. And that's that absolutely is fantastic. It's a great thing to have been able to do that. But, personally, you know, for me, the abundance is, you know, I've been married twenty one years to my wife. Right? Yeah. We have four kids, and they're all happy and healthy, and I have relationships with them. And so it's, it's probably a little bit different than what, you know, a lot of investors, you know, would would probably think of what is that abundance. And, and probably easiest way I would say that is it it does. It changes as you get a little older of what truly is valuable to you. Sure. Time is a big deal. Right? So I I have a lot of ownership of my own time. And so, you know, I go to every basketball game and volleyball game and cheerleading thing and, you know, sports event. And I and I'm I'm actively involved in it too. And so I got to be coached. And so I wasn't just dad. I was coaching. So, you know, living that abundance, was probably a little bit different than what a lot of people may think from just a financial aspect. And although that was important, right, it just it wasn't what, you know, success or value was to me. 

Speaker 0

Yeah. Absolutely. And I think makes a ton of sense. I mean, it it, yeah, it does change over time. Your perspective changes over time, and we're not at all saying financial abundance is is bad or not important, like you said. It's it's what has allowed you to have that ownership of your time and and really plug into those, family relationships and and sounds like kind of being intentional with how you wanna spend your days. Whereas if you were tied to a w two or just, you know, living paycheck to paycheck, you wouldn't have that abundance in the other areas of your life, like health, relationships, etcetera. Yeah. 

Speaker 2

And there's nothing wrong with having a w two and 

Speaker 0

and Right. Right. No. 

Speaker 2

There's kinds of things that that really there isn't No. That you're providing for family or for yourself. And Absolutely. They were I saw value really was, you know, being present and, obviously, being able to find provide financially. Real estate was one of the things that helped me to do that Yeah. In an abundant way. And, but, really, it was that, you know, I wanna be present Sure. Of my family. 

Speaker 0

Absolutely. I love it. Well, let's jump back. I know two thousand seven was a key year for you. I know before we hit record, we you and I started to chat briefly about your first real estate deal. Talk to us about that and it's, you know, how, basically, there was no pain and you just had success immediately. Yeah. It was 

Speaker 2

just it was awesome. No problem. 

Speaker 0

Have any no no lessons learned, and it's just so easy. 

Speaker 2

Well, you know, I I would even say before we do that because I was an LP, meaning I was just a passive investor in my field. I would rewind of, you know, handful of years before that, which really was when I got started in banking. So right out of college, I went into banking. And I was in grunt. Right? So when you start out right out of college, you got your finance degree and things like that. You think you're all that, and then they go, alright. Well, you're doing grunt work for the next several years. Right? You're gonna earn your stripes. 

Speaker 0

Yep. It rolls downhill. Right? 

Speaker 2

It does. All I did all day, every day for years too, mind you, was underwrite deals because that's what I I was an underwriter. Right? 

Speaker 0

I was 

Speaker 2

an analyst. And so all I did was underwrite deals and not just multifamily deals, but all kinds of deals. Right? Yeah. And so But that was that 

Speaker 0

let me just briefly that might not sound as monotonous and boring as as it probably actually was. So what what is it what does that look like, you know, on a random day that you're onboard? 

Speaker 2

Random day, you would you know, the lenders would come in and go, hey. We got a loan request for x y z company, right, or development or property. They would hand you financials. They would hand you rent rolls and say, analyze this for the several years we have. Plug in this as a loan number at, you know, whatever the interest rates, and tell us if it's a good deal to do or not. And that's pretty much what I did. And it could be even further than that. It could be, hey. There's some more complexities to this. Now you physically drive out to that property. Make sure what they say is there is there. Right? And that, you know, we can actually do this type of deal. And then Mhmm. Okay. Make sure that the tax office has this. Make sure that the insurance is in place for this. So, I mean, you end up doing a lot more than what you think of. You're right. Sure. But all you're doing for eight to ten hours a day every single day is underwriting deals, deploying your financials, and learning all those aspects of it, really the quantitative side of Mhmm. 

Speaker 0

The business. 

Speaker 2

Sure. So I chuckle because you do this enough with enough properties, enough deals, you start to see trends, and you start to see people we were lending money to and how they made money. And I got to look. I was seeing personal tax returns and things like that. So I got to see everything. Right? 

Speaker 0

Mhmm. 

Speaker 2

And start going, wow. This person who does this multifamily deal over here, here's how they financed it. Here's what the business plan associated with it was. A year or two down the line, I can see what they did, and now I can see how much money they're making. This is really interesting business. Right? And so I'm really young at the time. I'm twenty two, twenty three years old going, wow. This is really something. Like, this is something that really could be, you know, big moneymaker if people just were able to put their money into it. Well, fast forward a few more years, and I go, well, now I know who the players are. Because in my market, I knew who all the players were because we were lending money to them. Right? 

Speaker 0

Mhmm. 

Speaker 2

And going, alright. I wonder you know, I have a little bit of money saved up. I probably had, like, fifty thousand dollars at that time and going, I wonder if they would let me invest with them. And so being bold enough to go, hey. Finding out and going, I've got somebody over here that I know, and he's finally come back to me and said, hey. We're gonna go invest in this project over here. Do you wanna join us? To which I was like, great. I mean, I've seen it for years. I'm all in. Right? Nothing could go wrong. Right? I've just done all these things. Right? Right. And, you know, we're in Houston, Texas. We buy this property, which I chuckle now at the pricing that we paid for it because it was just it was hysterical. The property was one hundred percent leased when we bought it. It was completely full. Right? Yeah. About four to five weeks after we purchased the property Mhmm. We had a major hurricane come through Houston, and it hit the property directly. Wow. And I remember thinking at the time, I was probably twenty six or twenty seven years old going, oh my gosh. Did I just lose all, you know, all my money? Right. And as an LP sitting there going, I'm gonna have to figure this out. Well, fortunately, because I had the relationships, it was, guys, let's figure this out. And where's the smaller partnership? There was maybe ten of us or so. Mhmm. And it was great because they were they were looking for help too. Everybody was gonna be, like, let's figure out a way to get this forward. And so I quickly learned everything about insurance. I quickly learned, you know, from a fair housing standpoint, what you have to provide to your residents 

Speaker 0

Mhmm. 

Speaker 2

Even though you may not have the ability to house them, you're contractually obligated to. Right? And the things 

Speaker 0

you have to thought about that. Yeah. 

Speaker 2

Yeah. All the things that you have to do to be able to, stay in compliance and and things of that nature. And so it was a world of knowledge that I was forced into rather quickly, to make sure, you know, my and my investment, my little investment was gonna do well. Sure. What was really interesting too was I started making the relationships with the contractors that we were using who were immediately coming in. But we went from when that storm hit, we went from a hundred percent leased overnight to twelve percent leased the next day. 

Speaker 0

Wow. 

Speaker 2

That's how many units were damaged and offline. 

Speaker 0

That's incredible. Yeah. And just from a from an underwriting perspective, I mean, looking back, was there anything you could have 

Speaker 2

Nothing could have prepared me for that. Nothing could have because the numbers and every all the projections, performance, there was nothing that could have, like, prepared us. 

Speaker 0

I think that's a very important point. There's always risk that's you cannot mitigate all risk. You can do your best, but you can't always see what's coming. 

Speaker 2

You're not yeah. That's an act of God. Right? You're not gonna be able to adequately proforma out an act of God and when that occurrence will occur. Right? And so 

Speaker 0

I think it's important for people to understand that when they're getting in. Absolutely. Your your capital is at risk. You know? 

Speaker 2

Very much so. Yeah. Very much so. And it's in an illiquid investment too. Right. Right. For for those that are investing directly into real estate Right. They're illiquid instruments. So it's not like I can turn around and sell them because there's really nothing to sell Right. At that point. But through all of that, you know, it was a great learning process. Mhmm. And, you wanna talk about adversity to abundance, like, this project was it. Right? Because about ten months later, project gets completely rebuilt. Most all the residents move back in, but here's the big big difference. When we went to the insurance company 

Speaker 0

and 

Speaker 2

said, hey. We gotta rebuild all this stuff. Mhmm. The property was at that time, it was an early eighties property. Right? So it was built out to the style of early eighties. Right? Sure. We had a fairly large renovation budget that we were gonna do to the project anyway because it 

Speaker 0

Yeah. 

Speaker 2

Right. With that kind of damage, everything became brand new. Literally everything. Right? I mean, from you know, ACs to roofs to appliances to flooring to cabinets, it was all brand new. That's awesome. So the pricing of what we would charge for that market was very different than what we would have charged before, even very different from what we would have charged to 

Speaker 0

After the fixed fixed up property. 

Speaker 2

Fixed it up. Yeah. Yeah. And so all that got taken into account, but we refilled the project in a very short period of time because That is a 

Speaker 0

quick turnaround. There 

Speaker 2

before came back. 

Speaker 0

That's awesome. 

Speaker 2

And they were ready to pay more because they got brand new appliances, brand new cab brand new brand new ACs, brand new everything. They were 

Speaker 0

So you had the budget set aside already. And, again, you were an LP, but the budget was set aside, and, also, you had insurance capital now infused into this deal. Right? 

Speaker 2

The insurance capital paid for it. Paid for the whole thing, including the business interruption. So that I didn't know I really didn't know at that time beforehand of what that was. Right. 

Speaker 0

So it wasn't just to rebuild the the property and that it was also 

Speaker 2

paid for the time it was down as too because we Lack of revenue. Right. It was as if nothing ever happened. Wow. We have now brand new projects 

Speaker 0

Wow. 

Speaker 2

That people are paying more for. And so the caveat with that was at about it was before a year. We weren't even done we didn't even own it a year. As a partnership, we decided, hey. Let's go ahead and refinance the project. Mhmm. You'll own it, but go ahead and refinance it. And when we did that, we were able to pull over a hundred percent of our money back. 

Speaker 0

That's amazing. 

Speaker 2

So good. Every all the investors got all their money back. Right. Have a cash flowing asset still and still have their ownership. Right. And it was at that point that I was like, alright. I really see 

Speaker 0

Yeah. The opportunity here. So now you only do hurricane deals. Right? 

Speaker 2

You're a 

Speaker 0

storm chaser, basically. 

Speaker 2

Yeah. Exactly. You know, we predict when it's gonna come through. But, I mean, from a just from that that first investment of going, oh my gosh. You know, the did I lose everything? Right? Do did I really know what I was doing? I thought I was well prepared. Mhmm. Right? Because I knew all the quantitative side of it. I knew all the quantitative side of it, and I really did. But then there was this whole another world of things that could occur Yeah. Because I wasn't an operator who had been in it that I really didn't know. Sure. Right. 

Speaker 0

And even if you'd been an operator, there are always new things that come come along. But Sure. So put some a little more granularity to it. Like, if you would. It it doesn't have to be how much money you put in, but what was your, you know, family your personal situation at that time? Were you making these decisions on your own entirely as far as to put capital into this deal? And and how did your mindset change, you know, during that ten months from a personal standpoint? 

Speaker 2

Yeah. So, I'm a young father. K. So, you know, mortgage, everything, and this was a lot of money to us. Right? Thousand dollars is a lot of money to me at that time. You know, I'm twenty I was probably twenty six or twenty seven years old. 

Speaker 0

Mhmm. 

Speaker 2

Probably making about fifty or sixty thousand dollars a year, so it was a big it was a big 

Speaker 0

No. That's very helpful to just paint the picture. 

Speaker 2

Yeah. I'm gonna bet on this. Like, this is a big bet for me. Yeah. Right? And to you know, those first few months going, oh my gosh. Did I really just really hurt my family setting? 

Speaker 0

Yeah. I think a lot of people, a lot of our listeners can relate to that because they may they may have a w two. And like you said, nothing wrong at all with the w two. I mean, running a business is not for the faint of heart and has lots of emotional and stressful ups and downs, etcetera. But I think a lot of our listeners are w two employees and and maybe wanna dabble in real estate as a passive investor or maybe want to slowly transition over from a w two to running a real estate investing business. And they may be, you know, younger like you were. But because, you know, nowadays, maybe an investment of that dollar amount may not change your world if if you lost it. Right? But, that time, that's a huge I mean, that's It was a big bet. 

Speaker 2

Yeah. But the the greater I mean, and, honestly, getting all the money back Mhmm. Of a year was really big. Mhmm. But what was even probably bigger for me was the fact that it was still paying us, you know, Clark, at that time, it was maybe, like, fifteen hundred dollars a quarter. Right? 

Speaker 0

So I mean, that's something. Right? It was very 

Speaker 2

good good amount of cash flow Yeah. Particularly for not having anything in it. Right. 

Speaker 0

It's an infinite return. Right? 

Speaker 2

Well, I'm and sitting there going, wow. You know, an extra fifteen hundred dollars a quarter is one deal I did that I already have all my money back on given the fact that I'm making, you know, probably five grand a month at that time Yeah. Going Right. That's That's amazing. That's really big. I mean, that changes that's like a family vacation or whatever. It was was really big to us at that Absolutely. And going, wow. How can I replicate this really quick because I don't have to do this too many more times before Yeah? I'm making more doing that than I am at my job. 

Speaker 0

And then you're financially free really at, you know, 

Speaker 2

at that point. So it was it it was one of those things very quickly going, alright. I wanna try to figure out how many more of these I can do. 

Speaker 0

And now that I 

Speaker 2

got another pool of cash Yep. 

Speaker 0

Yeah. You can do it again. 

Speaker 2

Let me go see how I can replicate that. And so I played in that game, you know, and was able to start building more scratch. It's amazing how you start making more cash flow, like, how fast you're able to to do that. Sure. Compounds. So yeah. And that's and that's really how I got my start was really as a passive investor learning all these things you had to do and making sure I had the right operators, making sure I had the right deals. And Mhmm. Yeah. It was one of those things. And and and the best part of it was I was very grounded in the on the quantitative side and felt Right. Underwriting these things as good, if not better than the operators Right. And written probably better than the operators had where Yeah. They were. 

Speaker 0

Yeah. That makes a lot of sense. And I love that, you know, we have both passive and active real estate investors who listen to the show. And, I mean, everyone's story is different. You know? Sometimes it's it's the active real estate investor who runs a a real estate business for decades, and then they get older and they have, you know, less energy and less, you know, the will to be actively involved in the day to day and they transition it, you know, from active to passive. You know, you went you were actively involved in real estate underwriting and the financials, you know, but but for someone else and then, you know, moved into, you I guess you used your your, the passive investing to then move into more of an active role and with Sunset Capital. What year was this that the you had that first deal as an LP? 

Speaker 2

I think it was two thousand and seven. Okay. 

Speaker 0

Alright. So walk us through the next few years with regard to your own personal investing career and experience. 

Speaker 2

Yeah. So I was moving up really in the banking world. And at that time, I was working small banks. And so this is kinda how a lot of this was born was born out of it too, and they they would approach me. I was moving up the ranks in the banking world too, and, banks need capital too, believe it or not. 

Speaker 0

Okay. And Yeah. 

Speaker 2

So I learned how to, to raise money. Okay. And I learned how to raise money, at a time that it was not really anything that was taught. It was one of those things of, hey. Bank needs to raise x amount of millions of dollars, and we need this for our own capital infusion. And so I got educated on how to raise money. 

Speaker 0

Okay. What a I mean, because at the start, you know, it's definitely a buzz term nowadays and lots of people out there teaching how to raise capital, but what were one or two takeaways or principles for that? 

Speaker 2

This is prior to twenty twelve. Okay? And so there's really raising money prior to twenty twelve and after twenty twelve is a very different thing. Mhmm. Yeah. In twenty twelve, that's when the Jobs Act was passed. Yep. Okay. And the Jobs Act also did some things that effectively allowed in short, allowed a crowdfunding. 

Speaker 0

Mhmm. 

Speaker 2

Yeah. You were then able to go out under reg d five zero six c and start letting the world know via social media, I got a deal. Come invest with me. 

Speaker 0

Right. 

Speaker 2

Right. Yeah. It's not how it was prior to that. So prior to that, you know, a lot of guys will call it country club money, things like that. You're literally going through all your relationships, creating new relationships, shaking hands, and raising money, you know, a a hundred thousand dollars at a time, whatever it may be. Mhmm. And you're doing a true relationship building for the investors that are out there Yeah. To grow, you know, at that time, our bank business. Right? 

Speaker 0

So so and just the drill down on that a little bit, what does one one on one interaction look like? Are you speaking, you know because I was actually just on a call, an hour ago talking about this with somebody, about kind of their their pitch for an investment and how to get make it better. What would you focus on with if you're at at a country club and you're talking to somebody who has money back before twenty twelve, what are you focused on in that conversation to basically get them to invest with you? 

Speaker 2

It's it's actually not too uncommon what we focus on today, and I actually focus on them. I mean, I know it's cliches that didn't say that and go, look. Hey. Tell me what it is that you're looking for because we may or may not be a good fit. Right? If you come to me and you go, hey. I want this type of investment. That's not what I offer. Right. I don't need to go try to sell you on what we have if it's not what you're looking for. 

Speaker 0

That's right. That's exactly what I was hoping you'd say. I I just saw a clip from, Alex Hormozi the other day. He's really good at sales and marketing, not so much in the real estate space, but he was talking about how it's not about your offering. It's about the pain that they're experiencing and how you may be able to take them out of that pain and solve that problem. 

Speaker 2

Problem for 

Speaker 0

them. Exactly. So I love that. That's really good. 

Speaker 2

Little different. And I would say, even to this day, that's still what we do. And, you know, for me, it's it's, it's more focusing on the actual relationship behind it too Sure. Which really I mean, I I I would have no problem establishing the relationship for the SEC and showing them, no. This is a true this is why we work together and hear the notations of our meetings and things of that nature. Mhmm. But what I would say for that is, you know, when raising money is a different art form, it's very different than real estate. Right? Mhmm. Yeah. It's another it's another skill set. And so, you know, yeah, that's what you're doing. You're trying to solve a problem now. If they go, hey. This is something that I would do and I'm interested in. Right? You can dive more into your that opportunity. Yeah. In theory, the opportunity should be so hot, so easy to understand, and so prepackaged for them that, hey. I have this opportunity. I'm coming to you to present to you. I don't necessarily need to sell it. Right? 

Speaker 0

Because it's 

Speaker 2

if you want and I have the the solution. Right? I have the solution for something that you want or need. 

Speaker 0

Sure. 

Speaker 2

And then it's just up for them to pull the trigger. Right? And there's definitely gonna be people that are gonna be hesitant to do it. There's definitely gonna be people that, you know, may need a little bit more encouragement or things of that nature. 

Speaker 0

Sure. 

Speaker 2

And a lot of times, you just, you know, a lot of times, I'll use their own words against them and just say, oh, okay. You told me you were looking for an investment that could pay up to, you know, five percent cash flow on an ongoing basis and Mhmm. Was gonna have this kind of a return in five years. Here are the numbers associated with that. So I've shown you kind of to our best estimate that this would fit what you're looking for. Right. What's the holdup? 

Speaker 0

Like, what is it that 

Speaker 2

you you know, what what other, you know, aspect has come in. It's not what you're saying that you exactly wanted. So 

Speaker 0

Sure. I love that. Alright. So you were raising capital for the bank, right, that you were working for? And then how long did you do that for, and and what happened after that? 

Speaker 2

I did it multiple times. So we had a few exits. I stayed in banking. My last bank sold in twenty eighteen. Okay. And it was really at that time when we sold our last bank that I decided, alright, I'm gonna do real estate full time. K. And, really, what it was is I had to see that through. Meaning, I had a lot of people that had a lot of money in the bank, and I wanted to make sure that it was completed and cycled. So that is So you you 

Speaker 0

opened you owned banks. Is that right? 

Speaker 2

Yes. In in short, we worked at them and, Yeah. I worked at them for the for the most part. And then, you know, when you say own, I mean, I was a very 

Speaker 0

small Small owner. Yeah. 

Speaker 2

Owner. Got it. Even today, I'm still very, very small owner of the bank that I'm on the board of. I don't work at the bank every day, but I am on the board and a founding director of the bank. And 

Speaker 0

Gotcha. Okay. So and then, why did you transition to real estate? You're already in the real estate game, but, really, what's going through your mind at that point that real 

Speaker 2

estate At that point at that point, it was, look, it's it's time for me to do this. This is, this is that next step, and I really need to devote that full time to being able to, you know, sourcing deals, asset managing the deals, working the investor dollars that we're putting into these things, and starting to scale that way. 

Speaker 0

Gotcha. And what approximately, what year was this that we're talking about? 

Speaker 2

Eighteen. Oh, eighteen. Gotcha. Nineteen. 

Speaker 0

Yeah. You you just said that. So, Phil, how did the jump back though about ten years. How did the financial crisis affect you and your, you know, your own investing, you know, approach? 

Speaker 2

I was always a net buyer. And the irony with that is if you were acquiring assets during that time frame Mhmm. You did very well. The the greatest multiples that we had over the periods 

Speaker 0

were the deals that we bought in that time frame. 

Speaker 2

We're actually hoping to, execute the sale of one this year. So, I mean, we've owned it a long time. We bought it in two thousand ten. Okay. But the multiple on that deal will be, significant. Just I mean, we've already refinanced it twice. Wow. Yeah. Pulled a lot of cash out of it, and it's time to actually sell Gotcha. Or whatever, but it's time to sell and 

Speaker 0

Mhmm. 

Speaker 2

Pull another large multiple out of it when we do that. 

Speaker 0

Yeah. And so with underwriting, I mean, we do we have a for our when we buy mortgage notes, it's, we generally call it due diligence because we're not actually lending. So we're not in my mind, it's not technically underwriting, but it's essentially the same, very similar process where we're evaluating the deal, checking all the boxes, like you mentioned, insurance, you know, taxes, and all that stuff. And it's very important to follow that that checklist. Right? I I obviously. But at the end of the day, if you buy well, if you don't overpay, you generally have decent options on the exit. Right? And you could maybe miss something in underwriting or or be off on your pro form a, you know, but you paid you didn't overpay. When you when you overpay or you time the market at the top, I mean, you're kinda you're really pigeon pigeonholing yourself into a bad scenario on the exit. So what would you say I mean, what were some one or two lessons learned other than buying right from the the two thousand eight financial crisis? 

Speaker 2

Yeah. You know, it's it was a different, it was a different time frame than what we've gone through, call it in, you know, twenty two, twenty three Mhmm. Just because the it was just that. It was a financial crisis 

Speaker 0

Mhmm. 

Speaker 2

From the standpoint of the lenders were impacted. Right? Yeah. They were the one and and you have to understand that too. When you're going into a real estate deal, your lender is your largest partner. In in general, they are because they're typically lending more than half the money in the deal. 

Speaker 0

Sure. Right. Right. 

Speaker 2

They really are your largest partner Yeah. Deal. And and we call our lenders our partners, and so that was one of the things that we always said. You know, they you know, our largest partner in the deal. Mhmm. We have to make sure that they're they're communicated well. There's transparency. They know what's going on and so that we can continue to be good partners with our lender. 

Speaker 0

Sure. 

Speaker 2

Right? And as a note guy, I'm sure you really appreciate that. 

Speaker 0

Right? Absolutely. 

Speaker 2

That being said, at that time frame, it was penciled down for everybody. Mhmm. There's no more loans. And when that occurs, the market will stop. And then almost at any pricing too, you really have to get extremely creative finding alternative sources of what you can do, talking to those alternative lenders to be able to get deals done. And, you know, even the agencies were, you know, were severely impacted. And so the o eight financial crisis was much more dramatic, in my opinion, than anything we've had since just because if you look at what's happened, you know, more recently for this cycle that we're in, lenders are still there. They still have liquidity. They're still in the game. Therefore, there's still transactions that can occur. Sure. It was there was a scarcity of, mentality at that time. Yeah. Post abundance. 

Speaker 0

Right. Right. 

Speaker 2

There's slug there. But it it really was a different type of game because you really had to out operate the guy next to you. And and, really, what I mean by that is if you're a multifamily guy and there's another apartment next to you, you're gonna be competing, you know, tooth and nail to be able to get that next person to come in the door Mhmm. To to stay with you because you need the income to be able to cover your note. I mean, so it really was a, a fight to operate and out operate the competition in your area. It's a very different way of looking at it, but that's really what it boiled. 

Speaker 0

Got it. Now, you know, we talked about the your first deal as an LP, how that went south, but then turned around. Have you had any deals that really just went south and you you they were they were real losses for you? 

Speaker 2

No. We've had I mean, we've had a deal where, we got caught up in COVID. I would tell you that. And, it was a full gut remodel deal, and the supply chain issues overshot our spending, you know, by tremendous amount. But to be able to get the deal done, that's what we had to do. We haven't lost money on that deal. We have had to infuse capital into that deal. 

Speaker 0

Yep. Mhmm. 

Speaker 2

When we sell right now, it'll probably be breakeven. Got it. But we haven't lost anything yet, and and part of that is is doing what you say. Buy right. You know? Try to try to acquire something at a at a price point that, you know, you know you'll be able to get out of. And so 

Speaker 0

Sure. 

Speaker 2

I mean, so I don't want it to sound like, you know, I don't have battle scars. We definitely have ours. Right? Sure. And I I think most, you know, even good sponsors, good, you know, operators, they're gonna have some battle scars, and they need to. Right? Yeah. To have been around the block a few times, you have to have a few of them. 

Speaker 0

Absolutely. 

Speaker 2

It's just we haven't no. We haven't you know, fortunately, we have not had a loss on any deal we've done and, you know, and, you know, we wanna be able to keep that streak alive, obviously. And we've been through cycles. So 

Speaker 0

For sure. No. I mean, look. Let's let's not seek out losses just to get some lessons. But For sure. But, yeah, that's that's definitely you definitely have an impressive track record. So, dive into, you know, what Sunset Capital is up to today, specifically, and then we we do I do have a bunch of rapid fire questions. But Yeah. What do you have to do with that? 

Speaker 2

Have some exciting things. So from a scale perspective, and a time of life perspective too, and we have not actually even gone out, you know, publicly too much with this too. We are actually gonna be merging up with another larger group. Oh, wow. Yeah. 

Speaker 0

That's exciting. 

Speaker 2

So we're gonna add, about, you know, call it close to three quarters of a billion dollars in assets to the to the platform. Wow. And it's, just kinda help us and it's all Texas still, but it's gonna help us grow continue to grow specifically in the multifamily space. And, and, we're actually really excited about that. So that that merger really takes place here soon, and 

Speaker 0

Speaker 2

It's gonna be a a kind of a pretty exciting thing. I think everybody on both sides are are just really excited about it. We'll Yeah. A little over a hundred and fifty employees total when we do that. Wow. It's gonna be 

Speaker 0

So what's, what's your role gonna be in that? I'll be 

Speaker 2

a partner, in that deal, and I'll still be in charge or overseeing, investor relations, asset management, and acquisition. So the things that I really have great skill sets at 

Speaker 0

Sure. 

Speaker 2

And so 

Speaker 0

and I imagine you can't say who it's with, you know, yet, but, what, what is your company bringing to the table that that company needs? 

Speaker 2

Yeah. That great question. So, the aforementioned gray hairs, probably is is one of those things. Right. You know? And the fact that I have been around the block a few times really helps. Yeah. With something like that. We also have a a very good, retail investor base. Mhmm. Right? We'll we'll be able to show them these new great wonderful deals. Mhmm. We partnered with these this group on a handful of deals too already. And so, we have you know, it's actually gonna be something that's not too unfamiliar for the investor. 

Speaker 0

You've dated for a while. Yeah. 

Speaker 2

We have. And so, it's it's it'll be a good marriage. And so which is what we're excited about. But, yeah, I mean, realistically, those would be the the things. And and having, like I said, the the gray hairs are probably 

Speaker 0

and the reputation and the investor the retail investor base, sounds like. Got it. No. That's that's super exciting. It's really cool. Is that gonna change your day to day personally? Your your week to week? 

Speaker 2

Probably a little bit, from the standpoint of, it'll it'll take away some of the things that I don't like to do on a daily basis That's good. Because of the team that, you know, they have they have, you know, a much larger team, and so there's a lot more people who can share the load Sure. And allow me to focus on doing the things that I really love doing and that I'm good at. And Yeah. You'll kinda double down on those things that you're really good at and offload the things that I'm not good at. Right. 

Speaker 0

Well, I think that's that speaks to the point of, you know and you mentioned, your perspective on abundance changes over time, and I think a lot of other things, you know, change over time when there are different seasons in life. You you let's not gloss over the fact that you were doing this boring administrative underwriting work for years and years and years, and it's not really what you wanted to do every day. So my point being 

Speaker 2

But I had to do it. But you 

Speaker 0

had to do it. 

Speaker 2

And know it. 

Speaker 0

That's exactly right. So just because you're, you know, you have a a college degree and you, you know, you're twenty four years old does not mean that you should take Sam's advice as far as what he's up to right now. Or take his advice, but don't model what he's doing right now because you need to do some things that you don't wanna do. You can't necessarily offload the tasks you don't wanna do. But, Sam, you've been able to build up your own personal portfolio, your own experience, your own, business, skill set so that you that's enabled you to offload the things you don't wanna do. And, also, like you said, live intentionally, have, ownership of your your time on a personal and and relationship level. So you it wasn't this way for you fresh out of college. Would you would you No. 

Speaker 2

And, you know, I laugh because, I I had somebody come up to me and said, man, you're like an overnight success. And I I just chuckled. I'm like, well, I guess it's decades is your Yeah. Your mission of overnight success, then okay. I mean Right. 

Speaker 0

I don't I don't really 

Speaker 2

Put time. 

Speaker 0

There's no such thing as that. But, alright. You ready for some, more rapid fire questions, Sam? 

Speaker 2

Sure. 

Speaker 0

Awesome. What is one thing that people misunderstand about you other than you being an overnight success? 

Speaker 2

Yeah. I'm fairly matter of fact, and so, I have a tendency to get to the point rather quickly. And part of that is I try to be efficient with my time, and so sometimes that can come off as rude or inconsiderate. And it's really not. It's just more of, hey. Let's just let's get to the point. 

Speaker 0

Right. Sure. 

Speaker 2

Whatever it is we're trying to to get to. And so it's something I have to consciously work on too because I recognize not everybody appreciates that style of communication. Sure. Others do, but that's something that sometimes I get misunderstood of, you know 

Speaker 0

Makes sense. I think I I can relate to that. What's one of your biggest failures, and what did you learn from that experience? 

Speaker 2

Oh, man. Gosh. So many to choose from at that point. I would say, you know, from a, a business perspective, I'm I'm, you know, I'm fairly ADHD as well, and so I have a tendency to, put blinders on Mhmm. And just get from a to b. Right? And and you sometimes ignore and or don't see the peripheral. And so having an understanding that I sometimes need to gear down and and really survey the scene, look around, don't just jump right into it. Yeah. And I would say it has led to, you know, signing contracts I probably shouldn't have signed, doing deals I probably shouldn't have done, things of that nature, nothing from a major perspective, but, you know, having getting into partnerships I shouldn't have gotten into, things of that nature Yeah. Because you're just you're, you know, one track mind, get me from a to b Right. Without gearing down, surveying the the land and the and the landscape and going, hey. Let's see this from every different angle that you can before you jump into it. 

Speaker 0

It's tough because, you know, it's also it's a blessing and a curse because you wouldn't have reached the level you have if you didn't have that drive and that so you know? 

Speaker 2

Yeah. But at the same time too, it's it's definitely can cause a lot of the heartache. Sure. 

Speaker 0

Absolutely. If you could go back and give your eighteen year old self some advice, what would that be? 

Speaker 2

Patience. Continue to learn it. Right? And keep reading. You understand you're gonna be a lifelong learner, and that, you know, you don't know everything, but, you're gonna have to continue to learn, and it's gonna you're gonna you're gonna re redefine and redevelop yourself many times over. Love it. That's awesome. 

Speaker 0

Yeah. That's probably just If you could have coffee with any historical figure, whom would you choose? 

Speaker 2

You know, I've been asked this before too, and there's really two people. I mean, I think the typical person would tell you Jesus Christ. Yep. I think that's a common one. Yeah. But believe it or not, my my second person is probably not as common, but it's somebody who's very fascinating to me, which is mother Teresa. 

Speaker 0

That's a great one. Yeah. I love that. If you were given ten million dollars tomorrow, what would you do with it? 

Speaker 2

I'd, you know, I'd probably invest it all into real estate. Not that it wouldn't change my life, but it really wouldn't change too much of what I do. 

Speaker 0

Mhmm. And 

Speaker 2

I know that's I I don't mean that in a cocky way at all. 

Speaker 0

Yeah. 

Speaker 2

It's just, you know, when you get to the the point and the stage where I'm at, you know, I'm very happy and comfortable where I'm at. But, yeah, I'd probably I'd put it into real estate and use it for legacy investing. 

Speaker 0

Got it. So basically do more of what you're already doing. 

Speaker 2

Mhmm. 

Speaker 0

What is the challenge? I know you have this merger happening. It sounds like it's close to being finalized. What what is the challenge that you're facing in your business right now? 

Speaker 2

Yeah. You know, the market, is and and that's part of part of the reason for the merger too. The market is tough. I mean, we you the amount of churn that we're having to go through and the amount of, time that it's taking for me to go and handle a lot of the things that, really just are inefficient, for us being able to get deals done, is probably it probably is the biggest challenge. Right? There was you know, we knew that this year was gonna be a pivotal pivotal year for us, and we were either going to merge in, or something else was gonna change. You know, some of the business dynamics we're gonna have to change, and, really, it was for my own time. Mhmm. Got it. 

Speaker 0

What, in your opinion, is one of the most important personality traits that someone needs to be successful in either finance or real estate? 

Speaker 2

Yeah. It's it's it's really a skill set. If you can sell, if you know how to sell, and I it really don't even matter what industry you're in or anything, but if you know how to sell, you will be successful in whatever you're doing. And and understanding too that we sell every day. Right? Every day, we're selling. Whether you realize it or not, you're selling your, you know, your your spouse on, hey. Here's what I want for dinner. You're selling your boss on, hey. You know, here's why I'm I'm good at this aspect. You're selling every single day. 

Speaker 0

Mhmm. 

Speaker 2

Right. 

Speaker 0

That's a great point. 

Speaker 2

That that's a skill set. 

Speaker 0

I love that. What's something controversial or unconventional, strategy wise that you've employed in your real estate business? Oh. 

Speaker 2

You know, we do a lot of things that I always thought were just logical. And, I've I've come to learn that not everybody will will replicate it too. And so in particular, when you're talking about, you know, even take a deal. Right? We would do a a a refinance or something like that. We'd win big. The investors would win big when we did it. Mhmm. And, I'm such a big believer at the on-site team, the one who executes the business plan for you that they're so valuable, that they need to they need to benefit in that. Mhmm. And we will give pretty significant sums to people that don't make significant sums when we go through those kinds of wins. Nice. And it's always shocking to me that people think that is so outside the box and so weird and going, well, no. I mean, if I was able to return, 

Speaker 0

you 

Speaker 2

know, say, five million dollars to our investors 

Speaker 0

Mhmm. 

Speaker 2

Is it really out of the realm to go, hey. We're gonna give this, you know, property manager twenty five thousand dollars as a bonus? Should just help us get five million dollars by helping us exit business pay? And at the time, you know, that property manager may only be making fifty, sixty thousand dollars a year. 

Speaker 0

That's huge. 

Speaker 2

So it's a really big deal to to that person, but it's also a really big deal what she did for us. So Right. I just it was one of those things where I was like, no. I mean, that's the person who we entrusted with a multimillion dollar business. 

Speaker 0

Right. I love that answer. And, 

Speaker 2

it's kinda surprising that, you know, I've when I, you know, really got through in talking to other people, they're like, my gosh. Why would you ever do like, that's insane. And I'm like, well, but if you didn't have her helping us do it, it wouldn't have happened. Right? I'm like, and maybe there was somebody else out there that could help us execute it and things like that, but Sure. This is the person that helped us get to that point, and Yeah. They be rewarded. 

Speaker 0

Well and I imagine she wants to work with you again soon. 

Speaker 2

Absolutely. Yeah. Like, where's the next property, right, that you guys are doing this on, or where's the next property you're gonna sell? Whatever it may be. And 

Speaker 0

Right. Love that. That's really good. What is a book or two that you could recommend? You you've mentioned being a reader, lifelong reader. What is one or, one or two books that you could recommend? 

Speaker 2

The one I just finished a couple days ago that you and I were talking about is No One's Coming to Save You. Yeah. Yeah. Lieutenant colonel Scott Mann, I think, is the one who wrote that. 

Speaker 0

Speaker 2

Oh, man. I have a lot of books, that we read. I mean, I I like reading things like, Atomic Habits 

Speaker 0

Yeah. Great book. 

Speaker 2

Of that nature. From a real estate perspective, you know, everybody quotes, like, Rich Dad, Poor Dad, and and books like that. There's another one called Richest Man in Babylon, which is a really easy read. But there's a lot of great real estate books that are out there. Yeah. And I, you know, I would tell you, reading is one of those things that's gonna you know, it's gonna be just good for you in general, but it'll absolutely help you level up, you know, and give you a broader base to of which you can draw upon. 

Speaker 0

Love that. How do you like to serve others, Sam? 

Speaker 2

Yeah. Oh, you know, I'm pretty active in our church. I'm a deacon at our church here. I get to be you know, we have men's groups. We have all kinds of fun things that we get to do, but the church is really where, we get to do a lot of our service. But we also do some things too with our investor groups. So we may have a, you know, we you know, every year, there's a we do a thing and it's through our church, but we may invite our investors to come out and we sack groceries for families in need and things of that nature. So there's a lot of things that we get to do throughout the year, and that that dopamine hit that you get from being able to do that, is something that's pretty contagious. A lot of people wanna be involved in that kind of stuff. And so, we have several things that we get to do throughout the year that Love that. That we're excited about, I should say. 

Speaker 0

That's great. What's one question that you wish I'd asked, but I haven't? 

Speaker 2

You know, I think it's it's more of a you know, and particularly for, you know, the investor that's out there is, you know, having, you know, what you know, so many questions we get from investors are, hey. You know, how should I get started? Right? 

Speaker 0

Right. 

Speaker 2

What's the what is my next step? And and I tell everybody pretty much the same thing. I said, you know, before you go out and invest into a deal, you know, if you got money and you're ready to go, it's okay to put a little bit of that money into you, meaning to go take a class, go join a mastermind, go read some books associated with this, and get your education to a level where you're comfortable going, you know what? It's a lot of money that I'm about to go invest, but I've done the work and the education behind it to be able to go, yep. I'm ready to go into this deal. And I have I have an understanding of what this is gonna be 

Speaker 0

Yeah. That's really good. 

Speaker 2

From the things that I've taught myself. And so when that's really the big question I think a lot of investors go, hey. You know, I really wanna do this. Right. But I always tell them, yeah, before you jump into it, though, it's okay to put put some dollars into you and go find these educational groups, find whatever masterminds, find something that's gonna speak to you. 

Speaker 0

Sure. 

Speaker 2

Work out I mean, for crying out loud, go to YouTube. There's a thousand different resources that are out there for free that you can start to get educated from. 

Speaker 0

Sure. Love that. That's that's really good. Before we, we sign off, how can the the listener interact with Sunset Capital, whether they're a pack passive or active real estate investor? How can people, work with you? 

Speaker 2

Yeah. Easiest way to do that is to go to our website, sunset dash capital dot com, and there's a a slew of resources on there and easy ways to get in touch with us. And, we love talking to new investors. We love talking to other actives. We do a lot of, fun stuff throughout the year, and so, happy to speak to, you know, people that are out there. 

Speaker 0

Love it. Sam Morris, any parting words before we we end this amazing interview? 

Speaker 2

Man, just, thank you so very much. I appreciate the time. I appreciate you having me on, bud. 

Speaker 0

Absolutely. Appreciate your time, Sam. And to the listener, we also appreciate your time, which is your most valuable resource. Thank you for spending it with us, and we do appreciate if if you share this episode with a a friend who might benefit from that. Thanks, everyone. Take care. 

Speaker 1

Thank you for joining us on From Adversity to Abundance. We hope today's episode has equipped you with valuable insights and practical advice to elevate your real estate journey. For more inspiring stories and resources, visit us at w w w dot adversity to abundance dot com. If this episode has inspired you, please share it with a friend who could also benefit from our conversation. Together, let's turn adversity into abundance. Until next time, keep building your mental fitness and your real estate empire.