Bryan Morris of Seven Peak Capital on Scaling from a Lowes Credit Card BRRR to Multifamily and Private Credit

Steven Weinstock: 0:01 Hi everyone, and welcome back to the Wealth Clock with Steven Goethals. I've been investing in real estate for over 20 years. Started off with single family homes, moved on to multi-family properties, and recently launched my own real estate investment fund. This is a show where operators, founders, closers share what really works in real estate and in business. This episode is sponsored by my company, we Capital and the Goethals Capital Fund, where we buy properties in cash. We eliminate mortgage risk upfront. We lock in some deep discounts on the purchase, and then we refinance in order to scale. Today I'm excited to sit with Bryan Morris, founder of Seven Peak Capital. A private equity real estate firm that helps high income professionals build passive income and financial freedom through multifamily investments. What makes Bryans story unique is that while he's running Seven Peak, he's also spent nearly a decade as a top performing enterprise sales executive at Salesforce he manages strategic banking relationships. His real estate journey started back in 2016 with a single family BRRR deal, BRRR. For some of you who don't know what that is, we'll get into that. Funded partly with the Lowes credit card, and he has since scaled into multifamily and private fund structures. Bryan, welcome to the show. Bryan Morris: 1:39 Thank you Steven, and thank you for that intro. That was a hell of an intro there. I appreciate it and I'm excited to, to be on and talk to you today. Okay. First, Steven Weinstock: 1:46 Since it was in the intro, just tell us what BRRR is. It's a famous online, everybody knows what BRRR is, but maybe not everybody listening. What is the BRRR method? BRRR And there might be a few Rs that I'm missing. Yeah, but what is the third? Yeah, I think I Bryan Morris: 1:59 lost r's I think there's four, but it's buy, renovate. Refinance, rent and repeat. So it's a simple analogy for buying a house that's needs some work. And so the second, the first R would be renovate and then you're gonna refinance it after the value, after the renovations has gone up, then you're gonna put a renter in and then you're essentially gonna repeat that process. Steven Weinstock: 2:23 Got it. And you did that with a Lowe's credit card and I guess some small down payment on your part. Bryan Morris: 2:30 Yes luckily this was in Pennsylvania. I'm from Bethlehem, Pennsylvania, and this was in 2016 and this was a month or two after reading Rich Dad Poor Dad, which I feel like is the typical start for a lot of multifamily or real estate investors. And it's this epiphany of I should buy a rental property. And so that's exactly what I did. I was living in Harrisburg at the time, working for Pepsi, and I had some savings maybe. 15 to 20,000. So that property in itself, we identified, it was a pre-foreclosure property that was listed for 88,000. We found it on market with a realtor order. And I was able to get it under contract and actually put 20% down. And I think total closing down payment and closing costs came around $20,000. So it wiped me for everything I had. But hey, I had my first house and I got started, right? So then I was like, now how the hell am I gonna buy materials to, to flip this thing? And that's where the Lows credit card came in. It was about 12 to $15,000 in renovation costs. But luckily my dad's a contractor, so we put in about eight to 10 months of sweat equity and work ourselves. Steven Weinstock: 3:38 Wow. So it took you about eight to 10 months from the closing until you were able to make this rent ready? Bryan Morris: 3:44 Yes. Yeah. So essentially we were doing it after work. We were doing it on the weekends with the time we could find, so I was still working on Pepsi, my dad was still working his full-time job as well as my mom. And, we did it when we could and so we ended up, doing it over the, those few months and yeah, got it completely renovated and it turned out to be a really nice property and so I was able to actually cash out refinance after that. So the refinance aspect, Steven Weinstock: 4:09 when you purchased that first property, did you have in mind that it would take eight to 10 months or whether is. Bryan Morris: 4:16 Yeah, I, we didn't really have a timeline. I think ideally we wanted to get it done at six. But we did everything from new flooring, sheet, rock, roof really top to bottom on that house. We even painted the exterior ourselves, which we did everything. And it came out to be, a really nice project. And, I still have a lot of great memories with. My family and thinking back to how that started, my whole real estate journey and it means a lot to me. I still have the property today. It rents out for a great price and, there's really solid tenants in there. So it's what started and was the whole building blocks of everything. But yeah, it, it always takes a little bit longer than you expect, I think. When, if you're dealing with permitting or contractors, but we were doing all the work ourselves when we can get it done. So it took a little bit longer, but at the end of the day, I was living back with my parents at the time in town I didn't really have a timeframe where we needed to get it done in a certain amount. Steven Weinstock: 5:07 What was the amount that the first tenant was paying in rent? God, Bryan Morris: 5:14 I want to say it was like 1200. I think my mortgage at the time was only like 7 95 or something.'cause I, I had very little amount debt on the property. But when I. Refinanced. I put 20% down and my mortgage initially, the total principal balance was about 68,000 from what I remember. When I refinanced and got it reappraised I initially bought it for 88. I got it reappraised for 140,000 after the renovations. Wow. And so I took a new mortgage for one 12 and so that's what gave me capital again. Essentially I got, took about $40,000 in cash out from that cash out refinance, which I used to buy my next property. Steven Weinstock: 5:51 Was your plan to continue buying more and more or did you think this was a one and done? Bryan Morris: 5:57 The plan was always to buy more. Once I got the first one under my belt, you get hooked to it. But a lot of people I talk to or a lot of people in the industry, I guess when they first start is, Hey, I'll buy a single family house. I'll rent it out. I'll buy another one next year. I'll rent it out and repeat. And they start to build a portfolio and they might get two or three houses in and realize that's not really a scalable way to do it. So when I actually cash out, refinance from my, that first deal in that house, I found a three unit multifamily property that was put on the market that day. I remember it was a Saturday morning and I reached out to my realtor right away and I said, this looks like a great property. The guy, the previous owner was a mom and pop owner and he owned it for 30 years. It's exactly what you're looking for. First time he put it on the market. And I used actually my. Cash out, refinance as a down payment, FHA loan to, to take down that three unit about that, that I believe it was 10 to 12 months later that we close on. That. Steven Weinstock: 6:52 Was this property, was the first property you bought right near where you live or were you seeking further out? Bryan Morris: 6:58 Yeah, so it was in the Lehigh Valley, it was in Bethlehem. So it's from where I'm I'm originally from when I bought the property, I was actually living in Harrisburg, but I bought it, so I moved back home. And I was still working for Pepsi at the time. But yes, there, I was familiar with the market. The market is about an hour north of Philadelphia, an hour and a half, hour and 45 minutes west of New York. So the market itself was growing pretty substantially. There was a lot of development happening. A lot of expansion on the highways, malls, different things that were happening within the valley. And I've been fortunate to ride that appreciation in the value of my property over the last, I guess 10 years, nine years since starting that one. But yeah, the it's in the town and so very familiar with the area and the comps and the and then that's where I wanted to focus on. Steven Weinstock: 7:41 Yeah, 2016 was a great time to start in the business. And you had some upward momentum to help you over there. Yep. Bryan Morris: 7:49 And a low interest rate. I got 3.8, 3.875. Locked on both of them. Now I've refinanced a couple times, but yeah, to have those fixed rates low. And you look back now at where rates are, you're fortunate to have that type of debt on the properties. Steven Weinstock: 8:06 Yeah, when I started I started in 2001. I bought a single family home about 45 minutes from where I live. I live in New York New York City. And New York City was untouchable. So I was looking at different markets and I settled on central Jersey, Trenton, New Jersey. And my goal was to buy just one. I was working a corporate job and I figured let me buy one house. I will pay it off over 30 years and over the next 30 years with everything being paid off, it would be like a bonus 401k, I could sell it when I'm retired. But after, two or three months of collecting rent the numbers really just started clicking in my head, even though I had these calculations beforehand. When you're in it you really, you are really in it. And I figured, why not two? Why just one and it was off to the races after that and it's addicting. Oh yeah. Oh yeah. Now you mentioned you're from Pennsylvania. When you start at seven peak Capital. Are you investing in Pennsylvania or are you investing nationally, or are you picking a few markets? What's your Bryan Morris: 9:17 Yeah. So I guess fast forward I moved to New York City also so didn't, okay. I live in Chelsea, so in Manhattan and. Moved to New York in 2018, and that's really when I got more exposure to multifamily commercial and understanding the world of really commercial real estate. How it, it's much differently financed, right? The aspects and the underwriting and everything that goes into commercial was far different than what I knew so far in the residential space, right? I was buying the single family a three unit. It was all 30 via fixed rate debt. Easy to understand. That's when I really dove deep into understanding commercial, fascinated by how it worked, understood, and found out syndications, and you can invest in these high quality, large apartment complexes along with other investors and operators. And it really piqued my interest in understanding this is a more scalable way to grow in the real estate space. And so I really doubled down on. Education, investing into some of these deals myself, getting into a mentorship program, going to UPenn Wharton Real Estate Analysis course. So really just doing everything I could to further educate myself, do underwriting. And it wasn't until 2023 when I realized I could start seven peak Capital, I always had a thought about it, but understanding that there's a business there that. I have exposure to a lot of these operators and these deals now, and there's a lot of people within my network that ask me how can I get started in real estate investing? How can I get exposure to some of these deals? What do these deals look like and how can I get started? And that's what we do today with Seven peak Capital. So we invest primarily in so far, most of our multi-family deals are in Texas with Dallas Waco looking at a Houston deal right now. And with strong operators in place, we have operator relationships where we primarily partner with them from the equity side that we do due diligence. We meet with them. We see deals come across our plate pretty often each week, and we really vet out the relationships, who's running the property, their portfolios, and our, it's just a property that we want to invest in. And so if it checks all the box and we do our deep due diligence with them. Then we decide to partner with them determine amount that we're gonna bring to the table from an investment standpoint, and then we bring it out to our greater investment team. Steven Weinstock: 11:31 You mentioned you started seven Peak in 2023. Yes, correct. So what was your real estate career like between 2018 and 2023? You moved to New York. Are you still buying smaller properties in Pennsylvania? What's what's, what is 2019? What does 2021 look like? Bryan Morris: 11:52 Yeah, great questions. So I moved to New York to really accelerate my W2 career. And to accelerate my earnings. I was still looking for properties in Pennsylvania at the time, being two states away. My family was still back there, but became a little bit more difficult. My thought and intention was to continue to build my own personal portfolio. But once I got into New York, started exponentially growing in my sales career and starting to make, a lot more money, that's when I started to really look into the syndication world. And between the 2018 and 2023 was again, diving into the education and the mastermind and then mentorship, and then really the Wharton School getting educated, and then investing myself personally in syndication deals as well as some private credit to understand how those worked, reporting distributions, and really invest in those deals first before I really started what is now Seven Peak and help others invest into these deals alongside of us. Steven Weinstock: 12:50 Now seven peak Capital, you are I guess you're a fund, am I Correct? And you are raising money from other people in your network? Family, friends, business associates strangers, whoever knocks on your door. Yeah. And they are effectively investing in you, am I correct? Yeah. You could say that to some capacity, correct. The question is, when you come across a deal it's in Dallas, it's in Waco, it fits your buy box. Are you then taking that deal and telling your black book of investors, Hey, here's a deal. I really love it. I'm putting some of my own money in. What are your thoughts? Or are these investors already committed to bryan Morris, two seven peak? And, whatever happens, whichever, whatever the deal is we're already in. Bryan Morris: 13:42 Yeah, great question. No, they're not already committed. They're part of our investor list. Generally every week through LinkedIn, I see about 15 to 20 new investor leads that I'll get on the call with. The inbound lead flow has been, is very positive through just leaning into LinkedIn this year as well. But just again, what you mentioned earlier, leveraging my business network in New York, family, friends, and everyone who knows that I've been investing in real estate. But that's essentially it. We strive ourselves on being as transparent as possible and as available as possible to our investor base and doing the upfront work to really unlock these opportunities for those people that are interested in getting into institutional high quality real estate deals and assets. Now we've met with operators and meet with operators continuously all the time. Understanding what's your portfolio look like what's your track record? How is it performing? How many units do you have under management? Where are your properties? We're going to a lot of events. We go to, three to four events around the country each year to really meet , in person and understand these. There's a couple operators here in New York that we're close with, that have events that we're actually going to next month. And so we really want to build on those relationships because the people that we work with and invest with us primarily are. High net worth W2 professionals that are busy, that are very good at their jobs, that make good money, that have a family at home and they simply just don't have the time to, to go out and find quality real estate deals. Or they live in New York and they can't go out their backyard and buy their own rental property or buy their own duplex and they just can't fit in their schedule with their family and their job that they're quite frankly, very good at and making a lot of money. So they're looking for opportunities to diversify into real estate, and that's where we can come in and help and, we pride ourselves in doing that upfront due diligence and try to bring forth the best opportunities to our investor base. And we try to get into about three to four multi-family deals per year. And then this private credit fund is now an open-ended credit fund where they can continuously invest in. And both strategies are a little bit different, but those are the two offerings that, that we primarily offer. Steven Weinstock: 15:41 When you say a private credit fund, are you guys investing in debt or in the equity portion of the purchase. Bryan Morris: 15:49 Great question. So it's debt we're lending. First position about 40 to 60% loan to value. Got Steven Weinstock: 15:55 it. And with the private equity. With the debt, you're also working with operators lenders direct lenders who their businesses to find the borrowers, underwrite the borrowers, underwrite the deal. Make sure. All the i's are dotted, t's are crossed, and then you're coming in for a part of that loan, Bryan Morris: 16:15 am I correct? Exactly. Yeah. So they're gonna originate the loan, right? They're going to, they have the systems in place essentially to originate and to lend out the money. And we provide capital within that fund where we're seeing the return, the interest return on that, and essentially acting like the bank within that debt fund, which is a bit of a different strategy than when it comes to the equity investments. These are primarily bridge loans, I'm gonna guess Yeah, they're short term, three to 36 a month, typically paid off in less than 12 months with eight to 15% type of interest rates or, yeah. We're seeing through our partner about 14 to 15% yield on that. Got it. Steven Weinstock: 16:56 Got it. Bryan, I had a great time talking to you. I appreciate you coming on. I'm gonna put everything you mentioned in the show notes. That's it for today's episode of The Wealth Clock with Steven Goethals. If you enjoyed this conversation, make sure to follow the show so you don't miss the next one. As always, you could find my contact info in the show notes and on my LinkedIn profile. Thank you for listening, Bryan. Thank you so much. Thanks, Steven.