Ep #483 – Brian Briscoe – Active Duty Military Multifamily Investor
Brian is in the Marine Corps and works at the pentagon and also has 5 kids. A full-plate kinda guy that is a Multifamily Investor. Listen to find out how he balances it all.
- Brian realized that single-family wasn’t going to get him to his retirement goals.
- Having a team with aligned values
- The LOI (Letter of Intent)
- Law of the first deal
- Competence breeds confidence
- The importance of knowing your “Why”
- Get a mentor that has been where you want to be
- Avoid overwhelm one step at a time
To find out more about our guest:
https://www.fouroakscapital.com/
Full Transcript Below
Ep #483 – Brian Briscoe – Active Duty Military Multifamily Investor
Rod: Welcome to another edition of How to Build Lifetime Cashflow through Real Estate Investing. I’m Rod Khleif and I am thrilled you’re here. And I’m honored to have the guest that we have today and I’m honored because he is active duty military and his name is Brian Briscoe. And Brian has his company Four Oaks Capital. He’s got 168 doors, days closed on. They’ve got 82 more they’re closing on this month and just got an approved LOI in another 167. So, he is moving and shaking and but what’s really cool about Brian is that he’s a lieutenant colonel in the marine corps and works at the Pentagon. And he’s done this on the side. So very excited to get into that. Welcome to the show brother!
Brian: Hey thanks Rod. I appreciate it
Rod: Yeah let’s have some fun today. So, go ahead and do what we always do which is kind of talk about how you went from the marine corps to real estate and why and you know kind of give us a little bit of a chronological background on you if you would
Brian: Yeah so it’s a brief chronology you know I think I was a reservist in the 2000-2001 time frame. I was a graduate student at the University of Minnesota, World Trade Center went down and you know I decided to go active duty you know that’s a big big event. And I know this isn’t going to air for a while but tomorrow’s the anniversary of that date and
Rod: No kidding
Brian: Something that yeah really really hit home for me. But so, I went active duty and you know basically never looked back, never went back to grad school. But along the way I read Rich Dad Poor Dad like many people do and I realized if I’m gonna be moving every two to three years, I may as well just buy you know buy houses, buy houses, buy houses. So everywhere we moved you know we looked at the local market, we picked up a rental house and did that for several years. A couple times deployments got in the way you know I’ve deployed several times to the middle east but you know a couple of years ago I sat down and I realized you know I could start to see the light at the end of the tunnel with my marine corps career. And I realized that my single family portfolio you know wasn’t going to do it for me you know I had kind of imagined you know that you know if I bought one or two houses every couple of years you know I’d be set for life and never really you know never really put a lot of thought behind it. So did some spreadsheeting one day and realized it was going to take me you know 30 years at one single family house per year to get to my passive income goal. So, I started looking at other things, picked up a couple books on multi-family, started listening to your podcast, Michael Blank’s podcast, and a few others. And I mean literally it was my drive home every day, my gym time, you know my every time I had an extra minute I had my earbuds in and I was listening to one of the podcasts. But so, yeah, I decided I want to do multi-family and ended up getting into a mentorship program and basically from there found a couple of partners. I think the biggest struggle I had was just the timing issue. You mentioned I work at the Pentagon. That’s you know a fairly demanding job at times and basically you know I wanted to scale. I wanted to be able to have something in place when my marine corps career winds down. And that’s what got me into it
Rod: Fantastic. Fantastic. So, and you see the value of mentors you know we’ve got a mentorship program and you know and it’s my greatest gift in life because I literally get love every single day from somebody every single day. I get a dm or an email or a gift or a card from somebody whose life we’ve impacted. It’s the biggest blessing in my life besides my wife and my kids. But so, go back and talk about that first larger deal. And it could be 20 units or more but what was your first deal?
Brian: First one was a 55 unit. It was a four million dollar purchase price on the dollar
Rod: Where at?
Brian: Spartanburg, South Carolina
Rod: Oh nice.. good area
Brian: So yeah, upstate South Carolina, we’re really bullish on that area. That’s where most of our assets are right now. But I had agreed to work with you know a guy named Eric and a guy named Bryan on this one you know and we had put several you know LOIs out and this was the first one that we connected on you know. All the LOIs we had put out were you know C class, B class value add properties in the Carolinas. And we finally got some traction on this one. So you know it was me, Eric, and Brian at that time. And then we sat down and we just said, hey, who else do we need to be able to get this deal across the finish line you know and we realized we probably needed a little more help on the capital raising front. It was you know 1.8-1.9 million dollar capital raise and so you know Eric said, hey, I know a guy named Todd. So, we brought Todd Butler into the mix. And what we didn’t know at the time is that Todd
Rod: Todd, one of my students?
Brian: He’s one of your students
Rod: Yeah I recognize that name. Yeah you know what’s really funny is I met him at a pool in South Beach and he goes up, he was like, are you Rod Khleif? And he’s like, I said, yeah of course you know I never get tired of that
Brian: Yeah all right
Rod: Yeah he’s a good guy, him and his wife China, is it China?
Brian: Sheena
Rod: Sheena yeah yeah yeah. That’s awesome
Brian: Yeah I mean they’re both absolutely amazing
Rod: Oh yeah
Brian: And I’m very fortunate to have the partners I did but you know at first we brought the team together for one single deal. We worked together, we liked each other, our interest aligned, our goals aligned, you know and it didn’t take us very long to realize that we had a good thing going. So that’s when we formed the company and you know we’ve been exclusive ever since
Rod: Fantastic. Now let me ask you this because before we move on to that deal. So we’re talking about team building here and of course you’re in the freaking marine corps. I mean, any better than that for team building but my question is, do you all have your own set roles inside of your little partnership here?
Brian: We do
Rod: Yeah talk about that for a minute like are you playing to your individual strengths?
Brian: We are you know there’s strengths and there’s also you know availability you know
Rod: Sure
Brian: With my job in the Pentagon, I’m the least available. You know Eric is our asset manager you know he’s really good with numbers. And he’s really good with people which which is rare for someone
Rod: Right that is rare yeah
Brian: And he has a job where he’s traveling around the Carolinas you know frequently so it just made it easy for him to be our acquisitions guy. So you know he’s traveling on his day job, he’s setting up appointments, and then you know when he’s got a free minute, he’s meeting with brokers
Rod: Fantastic
Brian: So he does our acquisitions. Todd is doing our asset management primarily you know right now the podcast is my bread and butter and
Rod: Oh that’s right. Guys, so he’s got a podcast called, Diary of an Apartment Investor, brand new but it’s already doing real well. So you know congratulations on that by the way
Brian: Thanks. I appreciate that. Yeah so that’s my baby right now and I’m kind of the public face because that’s something that I can usually schedule. So I’ve been doing a lot of podcasts with other people and you know a lot of you know social media posts and content to try to you know drive people into the funnel. And you know
Rod: So you would be classified as the investor relations person then? You’re raising you know you’re doing, I’m certain you’re doing the podcast like right that was one of the reasons I started mine was because I hate asking for money and of course you know it’s done that times a thousand for us but okay, that’s fantastic
Brian: So yeah that’s my rule and Bryan Mallon, he handles the systems you know he handles the communication. So he’s got his hands in a lot of everything. He assists Todd with the asset management and he does our website. He’s the one that makes sure emails go out on time, reports go on time, and everything else.
Rod: Gotcha, you need all of that. Well that’s fantastic. That sounds like an awesome team you guys have put together and you know I know, I don’t know the other gentleman but Todd’s a super guy. So you know it sounds like you’ve really put something together that’s incredible. So back to that 55-unit, you had to raise 1.8 million. You were able to pull it off, and any hair on that deal? Any, talk about any of the setbacks or stresses or things that you encounter? That first deal is always the hardest, takes the longest, most stressful you know
Brian: So we had the benefit that the owner put in you know had a little faux pas. He put in 60 business days in the contract and he started the contract and for due diligence, he put 60 business days you know so
Rod: Nice
Brian: And being our first time, every time we came up to a setback, we just sat down and said hey we got plenty of time and you know I think towards the end we probably should have more of a sense of urgency up front you know but every time we had a setback, it’s like, let’s think about this, let’s make sure we’re making the right decisions. Yeah one thing, if I could go back and do it over again you know I think we would have had more of a sense of urgency up front
Rod: Why is that?
Brian: You know things at the end so.. and we had no way of foreseeing this but if you remember about August last year, Fannie and Freddie got up there at their caps as far as what they could
Rod: Yeah, it was very hard to get loans through at that point yes
Brian: Right and that’s right when we closed you know so about two weeks before we were supposed to close, I get a phone call from the lender and and she told me she’s like, hey Brian, you’re not going to like this but you know your rate, you’re doing a Fannie Mae loan, she’s like
Rod: Yeah they’ll do the loans but the rates go up
Brian: Yeah the rate rate went from 3.9 to 5.1
Rod: Oh my God
Brian: Four day period and
Rod: That’s a bad day
Brian: Yeah it was it was a really bad day, cut our proceeds by about six hundred thousand dollars you know we ended up negotiating some of that back but you know looking back at it you know had we had a little more sense of urgency, we would have had it all buttoned up you know in plenty of time and that wouldn’t have been an issue. So we ended up having to you know basically move the needle on the GP-LP split to make it work you know with the new proceeds
Rod: Sure
Brian: As a general partnership you know we’re barely making any money off of that so
Rod: But as experience, it’s worth its freaking weight in gold
Brian: Yeah you know and absolutely I mean
Rod: So let me interject something, so guys you know he said a couple of things that if you’re brand new you don’t understand what he’s talking about. First of all, if you’re really new, you don’t know what an LOI is. An LOI is a Letter of Intent and what a Letter of Intent does is it starts the conversation because you always have an attorney write your contract when you’re doing commercial multifamily, every single time. And that costs money obviously. So what you do is you use an LOI to start the conversation. It’s got all the main deal points in it and you know talks about the price and the property and the dates and the due diligence dates like he just described where you know the seller must have done the contract and put in business days which worked out in your favor on that deal. But the LOI doesn’t cost anything. It’s a two to three page document. It’s typically non-binding but it lets you agree on the main points and then you can spend the money to have the contract written. And the other thing he talked about was the GP-LP split. So of course, in any syndication or larger deal, you’re going to have general partners and you’re going to have the equity come in with limited partners. And if you have an occurrence happen like Brian went through with the interest rate going up and then of course your loan amount goes down because they’re you know if that interest rate affects your debt service coverage ratio and so they have to adjust the loan amount called the proceeds. And so what Brian had to do is he had to adjust the split that he had made previously with his limited partners you know typically a split on a syndication can be anywhere from 90-10 to 50-50. I don’t recommend 90-10. In fact, I even avoid 80-20 wherever possible but sometimes you have to you may you know to make a deal work, you have to get skinny but you know there is that like I alluded to with Brian that importance of getting that first deal done because when you’re done with it you’re like you know what we can do this again. And I see it with my students all the time. They get that first deal and it might take them eight months to get it but after that they’re like dominoes and next thing I know, they’ve got 600 or a thousand doors. It’s crazy but, so you got it closed, you learned from it, it was a great experience, and so, and you’ve if you’ve put that team together you’re focused on South Carolina. Tell me why you like South Carolina
Brian: You know when I started looking at markets, I live in DC right now you know I wanted something close to where we’re at. I just did a you know pick a bunch of the cities over 500 000 up and down the east coast and did an analysis of all the numbers and you know South Carolina as far as a state goes and a lot of the cities in that area especially upstate South Carolina were all doing phenomenally. And then you realize that you know my wife was born and raised in Columbia, South Carolina. So, you know we go there, three to four times a year anyway. So that’s really why you know we started focusing on the Carolinas in general and I was previously stationed in North Carolina. So we knew the area. It was you know economically and demographically you know performing extremely well. And you know it’s within a day’s drive
Rod: Love it. And guys, you know in my live events or live stream events now, one of the things that we talk about is how to select an area. And the top two choices when you’re selecting an area first is your backyard and that’s like anything within a two hour drive is considered your backyard as far as I’m concerned. And then the second thing is somewhere that you grew up or spent time. And so in this case brian your wife you know, grew up in that market so she knows it, she understands it. For me, it would be Denver and that would be the second choice and the third choice of course is where you have boots on the ground, somebody that understands the market, knows the business is going in and out, has their ear to the ground, can run on things for you, and so on and so forth. It sounds like you’ve got all three of those things happening here so you know that is truly a no-brainer then. So let me ask you this you know I’m a huge proponent of the military. I feel like you know I immigrated to this country. I’m one of the proudest Americans you can imagine and so grateful for the fact that we live in the greatest country on earth because of our military. So thank you for everything you do my friend and and those of you in the military are listening to, thank you. What advice would you give not just the military but anyone in the military for sure about, based on what you know now about this business, what would you tell them if they’re you know even active or or even you know past military about this business?
Brian: You know I would just say you know get involved early and learn first. I think that was my biggest hurdle. I mean I read Rich Dad Poor Dad for the first time almost 20 years ago and he talks about commercial real estate and in the back of my mind I thought, I can’t do commercial real estate. I can do single family. I can’t do commercials so I would just, I would say that it’s not that difficult once you understand how everything works you know. So it takes an awful lot of work to get there you know. But I would just say you know do your homework, learn about it, and something that I always point out is you know figure out what your long-term objectives are because that’s going to dictate more what strategy you use with real estate than anything else you know if your long-term objectives are X you know there’s a certain path that’s going to get you there better than you know if you have different long-term objectives
Rod: Yeah and which is one of the reasons the first thing we do at one of my boot camps is we go through figuring out exactly what someone wants because however the heck are you ever going to get anything if you don’t know what it is. And so that clarity is so critical. So I’m really glad you said that and yeah the knowledge is the most important piece because in this business, you have to influence people. And the only way you’re going to influence them is if you’re confident and the only way you’re going to be confident is if you’re competent. And so you know it’s kind of that you build your competence equates to confidence and then it equates to your ability to influence. So you know, why do you think people fail or give up in this business?
Brian: It’s not easy, is the answer you know. It is not easy you know it’s you know 100 no’s before you get a yes. And you know when I started you know looking for the first property you know I was calling brokers and you know most brokers you know would basically fill me out you know it was like 20 questions with some of them you know and I would rarely get calls back you know. Sometimes it promised to send me something and I’d never get another email. So you know it is frustrating at first you know and that’s why I think you know and by the way I went to your boot camp in January and I think your your approach is great you know think about the why first and that’s really what kept me going was you know I had a defined date on my calendar that I would retire from the marine corps. And you know I started three years out and I said, by the time I retire, I want this business to be to the point where I can support my family to the level that I’m currently supporting my family. So, it’s difficult. It’s not easy but in my case, that big burning wide I date on the calendar you know seeing my five kids every day, reminding me every day that I need to keep pushing so that I can provide for my family you know post marine corps
Rod: Thank you for reminding me of the fact that you have five kids. I grew up with five boys in my family as well and so let’s take let’s shift for a second and talk about that work-life balance thing because here you’ve created this on the side full-time gig, five kids, wife you know, how do you do it?
Brian: You know about two years ago you know I just had a conversation with my wife and you know it was like hey, this is what I want to do you know she knew I was interested in real estate I mean I talked to her about real estate pros and cons ever since you know we bought our first single family house but you know just a conversation about you know priorities where we wanted to go as a couple and as a family and you know we decided that you know now is the best time to make the sacrifice and so I am sacrificing some time with it. And my wife agreed with me that this was the right thing to do and you know so she’s sacrificing as well. I mean there there’s a lot of nights that I come home from the Pentagon and I’ve got two or three calls lined up you know and so you know as much as I can I try to spend times with the kids you know playing xbox or you know watching you know Youtube with with with the kid on my lap but you know for now, you know for these couple of years it was an intended sacrifice on both of our parts you know she’s taking the lion’s share of the of of taking care of the kids. And two, I mean one of my kids is married now but so we’ve got four at home but
Rod: Okay okay
Brian: You know the the balance is tricky you know it just takes a little bit more deliberate planning on you know spending time with the family, spending time with the kids, and make sure you you get that time in too
Rod: Yeah one of the things I teach at my boot camp, I don’t think I did it in January. That was LA right?
Brian: It was LA yeah
Rod: When the world was different
Brian: I know
Rod: I had 800 people scheduled for you know Orlando in May and like, whoa, well we have 900 people in my first live stream and 700 at the second but you know but one of the things that I teach is this weekly planning process because one of my greatest regrets in life was coming home to my kids but being distracted. I’d play with them but I wasn’t there mentally. It’s the greatest regret truly to this day actually. And you know my kids will say I was a great dad but I didn’t live up to my own expectations. And so you know if you find those of you listening, you find that on this quest for success that you’re not giving the attention or you’re distracted when you’re with those people that matter, well another reason for you to come to my boot camp because I spend time on on developing with this planning process where you actually block time for your family. I know it sounds crazy but it really is necessary so that you know because I will tell you that, and you know this brian that your wife and your kids would rather have you uninterrupted and undistracted for 15 minutes than an hour of distraction. So you know they want your presence. They want you there. And awesome, well very impressive what you’ve been able to do with five kids and the full-time job and all that. And so guys, that should inspire you to what’s possible and you know most of my students have you know done all this on the side as well and you know several have retired now from their jobs because their passive income has exceeded their you know their high paying W-2. So let’s shift gears for a second brian talk about or maybe you did already, a war story you know was it that first deal was it that that interest rate or do you have anything else you could share maybe the lesson you know when you really got your butt kicked in this business and the lesson from it
Brian: You know, that was definitely the biggest war story, was that interest rate. I mean we were, we had to burn our extent. I, actually we had already burned an extension because you know for some reason the lender just took an awful long time getting our loan approved. I mean we were already at 75 days waiting for the lender to approve the loan when Fannie Mae hit their lending cap. So, when I said you know earlier I wish we would have been a little more you know had more of a sense of urgency, you know we should have put that loan application in a lot earlier but yeah that was the biggest war story because we had already burned one extension and you know we had money in the bank to be able to close and when we lost 500 000 in proceeds. We went from fully funded to oh my gosh can we actually close
Rod: Right, because guys, that meant he had to raise another 500 grand okay. So there’s that plus you know higher interest rate you know plus a different split you know not fun but you learn from all of this and that’s you know that’s how you learn from these setbacks, these the setbacks are feedback you know
Brian: Yeah we had limited time and we were in South Carolina so sat down with the brokers and we just explained where everything was and we said, hey this deal is hanging by a thread you know I need you to go back to the seller and keep this thing alive you know and they understood I mean they knew what was happening in the capital markets. And they went to bat for us. They got us some extra time you know we rolled the dice on the interest rate you know by not locking at a certain time but we ended up like I said we ended up doing okay. We did reach out to a couple people that we knew could raise money quickly and we had one or two people bring some cash in as you know gave them obviously part of the GP and responsibilities in the gp besides just capital raising. And you will respect into our own back pockets and put more money in the deal so
Rod: Whatever it takes, whatever it takes so you know it’s worth it. And you know you get that one behind you and you bring the lessons forward and you know again, I lost 50 million dollars and of course I’m back and back much much faster than the first time and that’s just how it works. That’s the way things work. So, what do you think is the best advice you’ve ever received Brian?
Brian: You know I would say my dad when I was 17, you know and I don’t know if this was a planned thing that he said or just off the cuff. But he looked at me once and he just said I’ll give you advice on anything you ever want but he looked at me and he said, but just realize that there’s some things that I’m not very good at. He’s like, I’ve never learned how to do money. I’ve never learned how to make a lot of money. I’ve never learned the key to wealth. And he mentioned a couple other things, he said, so when you want advice for those things, it’s better for you to go somewhere else you know so you know and
Rod: Smart guy. Smart guy. You had a good dad there wow
Brian: At 17, I didn’t appreciate it but for some reason, I remembered it later and it was just one of those things where you know I asked my dad for advice on a lot of things but you know it’s he taught me that you know I need to have a mentor who’s been where I want to be if I want to get there right you know that’s why you know
Rod: It’s good advice.That’s really good advice. I mean I’ve had mentors my whole life. I do right now I’ve you know for every aspect of my life from health, to my relationships, to of course business, to real estate, to you know you name it. And because they shorten the learning curve and and and it’s so critical and you know of course I’ve made every mistake known to man at the times when I didn’t use mentors. But those seminars are unnecessary. So, is there a question that I didn’t ask you that you wish I had my friend?
Brian: You know I think we’ve about covered it you know
Rod: Yeah so speak to the people that are listening that have not taken action yet. What would you tell them? They know they want this. They know they deserve this. Maybe they’re afraid. Maybe, they have a fear of failure. And I would say to them fear of regret more than failure but what would you say to those that haven’t taken action and maybe speak to how you push through the fear to do your first deal because I’m sure you know their first deal is always scary
Brian: You know I would say like I said before just have that big burning why in front of you you know. So have that goal, have a clear image of what you want, you know a lot of people talk about you know the goal you know posters or whatever. I don’t have any of those. I have it all written down in a notebook but I reflect on it every day and the other thing is you know it’s overwhelming when you look at the entire thing from beginning to end. For somebody who’s new and not familiar with the business, you know I was overwhelmed many times when I thought, oh my gosh this is complicated. But I would always boil it down to okay what are the next two or three things that I can do to get this done you know and every time I got to the point to where I was overwhelmed you know I just dialed it back into you know one or two or three things you know I’d write them down and I would say, okay, you know this is the next step for me you know I’m gonna call five brokers this week or you know I need to talk to an SEC attorney you know and so I think when you take the whole big process and break it down into bite-sized pieces, it becomes less overwhelming and more actionable and you know that you couple that with your big burning why and it’s it makes the whole process a lot easier and you know you can stay motivated through the process as well
Rod: Love it you know I just started reading Think and Grow Rich again and as you know you got a copy from me when you’re in LA in January and I just was reading it again last night and talks about burning desire and you have to know what it is you want and why you want it which is that you know one of the first things we do at my boot camp and people like, oh come on, let’s get on with the real estate but it’s probably the most important thing we do because that’s the driver. That’s what makes it happen. Well listen brother, thank you for your service, sincerely thank you for your service and to this country this great country we live in. And I really appreciate you being on the show and I did not know you were in LA at my boot camp. That’s very cool. I’m glad that you were there and and it’s very much a pleasure to meet you my friend
Brian: Pleasure’s all mine Rod. Thank you
Rod: Thank you. All right, take care.
