The Chris Voss Show - The Chris Voss Show Podcast – VanRock Holdings: Investing in Upstate South Carolina’s Real Estate Market

Starting point is 00:00:00 You wanted the best. You've got the best podcast. The hottest podcast in the world. The Chris Voss Show. The preeminent podcast with guests so smart you may experience serious brain bleed. The CEOs, authors, thought leaders, visionaries, and motivators. Get ready. Get ready. Strap yourself in. Keep your hands, arms, and legs inside the vehicle at all times, because you're about to go on a monster education rollercoaster with your brain. Now, here's your host, Chris Voss. Hi, folks. It's Voss here from thechrisvossshow.com. Well, there you go, ladies and gentlemen. There are ladies and gentlemen. That makes it official. Welcome to the big show. As always, we appreciate you guys tuning in. For 16 years, almost 2,000 Welcome home! be doing that as well today with us. Brian DeBruin is the co-founder of Van Rock Holdings

Starting point is 00:01:07 and a leading private equity firm based in Greenville, South Carolina. He's got an extensive background as a real estate attorney, and he has a profound understanding of the legal complexities involved in property transactions and development. He's a seasoned developer and multifamily fund manager who specializes in managing, developing development projects and multifamily assets across the Carolinas. Welcome to the show, Brian. How are you? I'm doing well, Chris. Thanks for having me. Thanks for coming. Give us your dot com so people can find you on the interwebs. Yeah, it's vanrockre.com. There you go. So give us a 30,000 overview of what you guys do there at vanrockre.com.

Starting point is 00:01:51 We are a private equity group. We pool our money and other people's money to leverage bigger assets for better returns over a five-year period. That's us in a nutshell. Everything else stems from that. So people can invest with you at your website and into the portfolio you guys have? That's correct. Most of our offerings are open to the public and are available on our website going forward. And that's primarily been the case since we started. VanRock itself is only about two years old. I've been a practicing attorney for

Starting point is 00:02:25 about 10 years now, and I started getting into fund management about five years ago. There you go. Tell us about your upbringing. What got you into this business and interested in it? Yeah. Well, I wouldn't have expected to get into it. So my father was a serial entrepreneur. He owned a bunch of different businesses when I was growing up. He had a law degree, but I would say that he's a business owner who happened to have a law degree. My brother, on the other hand, is the exact opposite. He is a tried and true trial attorney. He first started with the Marine Corps as a judge advocate. And then after that, him and my father started their practice in South Carolina. And Aaron, my brother,

Starting point is 00:03:06 now he does mostly estate planning and succession planning for high net worth individuals. But before that, he was a trial attorney. So he is the real attorney in the family. And then I kind of fell somewhere in the middle. There you go. And why real estate? I mean, is there any money in real estate these days? I think so. So far, it's been good. You just keep going up, last time I checked. Over time, that tends to be the trend, which is why I like it. It's been a crazy run these past little while. You guys have a lot under your belts, too, here, if I can get the website to pull up there.

Starting point is 00:03:41 I saw some of your guys' portfolio holdings and stuff that you guys have. You guys have a lot of money under management. We do. So we have a little over, we've placed over a little 50, about $50 million in the last two years now. So VanRock as an entity is relatively new. Like I said, I had been doing it for a number of years beforehand and my partner had been doing it for a number of years beforehand. And my partner had been doing it for about 10 years before we formed our partnership and formed VanRock. And then from there, it was kind of accelerant. We were able to pull not only our resources, but our network and grow relatively quickly. And do you guys do residential commercial or both? So we stick to residential, single family, attached, detached, and then multi-family we don't do

Starting point is 00:04:28 sale commercial 50 million assets under management says on your website 500 plus units under development 100 million assets under development there you go nice. And only two years in? Yeah, Van Rock itself. So we had some legacy projects that got pulled into that on the development side. But everything on the asset side has been in the last 24 months that we've acquired. And do investors with you have to be accredited? going forward. In the past, we did 506B offerings, friends and family. Unfortunately, and fortunately for us, we've just grown to a point where most of what we're acquiring requires accredited investors because we're taking it out to a larger network. There you go. There you go. Do they need to have a minimum net worth? Yeah.

Starting point is 00:05:23 So typically, it's a little over a million on the net worth side or $250,000 income side. All right. Will you take a check? No, I'm just kidding. That's a joke. Or do you take wire? There you go. It's certainly interesting.

Starting point is 00:05:38 So, I mean, yeah. For me, being on the legal side, you would think that this isn't the case, but lawyers aren't very good at taking people's money. Well, most of them aren't. They're not very good salespeople. And the ones that are probably aren't very good lawyers. And so – We're just throwing rocks at lawyers now on the show. Yeah.

Starting point is 00:05:57 I can say that. That's true. It's always very – it's something i've had to get used to people people asking to invest in and kind of soliciting me for to to give me their money which is which is very a unique thing but it's i think part of the problem is it used to be it was really hard for you guys to market as attorneys there was this don't chase ambulance sort of rules i remember back in the 90s and 2000s, I had a mortgage company for about 20 years and it was always wild to see the accounts

Starting point is 00:06:29 receivable debt reports of attorneys, you know, all the people owed money and stuff. You're like, you got a guy who owes you like $100,000 in legal fees, but I guess he's on death row, so you get five bucks a month or something. He's like, yeah, I'm never he's on death row. So you get five bucks a month or something. Yeah. I was fortunate to come in and kind of pick my own path on the legal side. And I think you see

Starting point is 00:06:56 that a lot on trial attorneys, especially criminal law attorneys where you're chasing a lot of money for a long period of time. You got a lot of bad debt on there. I moved into the transactional space. Transaction doesn't get closed until I get paid. Everything happens simultaneously. I know where the money's coming from. It reduced that issue pretty quickly for me. I'm getting older now, so I can tell older stories. When I started in our market, even then, the majority of people were searching online for an attorney using their desktop computer, mobile phone searching. Google was saying it was going to happen, it was going to happen. And I remember when I had just gotten started, nobody knew who I was in my market. So I went out and got us to number one on Google and that was my mission. And it was amazing how that alone kind of, you know, led to significant growth on our firm

Starting point is 00:07:56 in a market in which really no one knew who we were because we were kind of the new guys in town when we opened up shop. And we've tried to take some of that approach to the Van Rock side as we've gotten out of South Carolina for our investor pool and started opening it up to others. There you go. So anyone in the nation can invest in you guys. Why are you focused on the Carolinas?

Starting point is 00:08:18 Is there something happening there that poses a better return or a better investment in that market? We certainly think so. So I moved to Greenville a little over 10 years ago now, and my partner did about 12 years ago. And we both moved here for the same reason, because we saw a lot of growth opportunity in Greenville. So the fact that we're investing here is in a situation in which we happen to just be here. We came here specifically to invest here. And I would say upstate South Carolina, which is comprised of Anderson, Greenville, and Spartanburg being the three main cities, all are on Interstate 85.

Starting point is 00:08:57 So if you go from Charlotte to Atlanta, you're going to pass by all three of those cities. And if you think about it in terms of appreciation, job growth, demographic shifts, our area has been and is going to continue to be a driver of new placement for jobs. We compete with California, Washington. Boeing is here now in South Carolina. We compete with pretty much every state now for industry moving in. And with that comes people, and people need housing. And we certainly have a housing shortage in our market. So our belief is we're going to own, you know, from Spartanburg to Anderson and everything in between on the multifamily and residential side.

Starting point is 00:09:45 That whole area has just been growing like wildfire. I think it's really changing a lot of different things, including the politics of that area. It certainly is. I know in Georgia that kind of happened. It used to be a red state. And so it's kind of interesting how it's all turning metro and the growth rate down there. I think a lot of hedge funds have targeted that area in the south. And, yeah, it's just the place where everyone's at these days.

Starting point is 00:10:12 I feel left out. Yeah. You should come visit. I should. I should. I actually heard that Atlanta has a higher population of women versus men. And if you're a single guy, it's a great place to go to. It's good odds.

Starting point is 00:10:27 You've got to play the odds. You have to in today's day and age. So I was like, man, I should move down there. And they're like, there's like a 10 to 1 ratio of women to men, Chris, single women to men. I'm like, wow, that sounds like a good idea. So yeah, I might just move down there. What is the outlook for you guys? What are some of your goals that you guys have here?

Starting point is 00:10:46 I've got some notes for that, but I'm going to let you tell us what some of your goals are, how many units you're looking to build, and how far you're looking to build this fund. Yeah, 2030 is kind of our flag in the ground goal. We'd like to have 10,000 units in that upstate corridor by 2030. And that'll be a mixture of existing assets that we're purchasing in addition to build to rent communities that we're currently building and under development on. At this point in time, we don't build large 200 plus high density apartment or communities. We might move into that, but we feel pretty confident on the build to rent town

Starting point is 00:11:24 home and single family side, just because of our kind of local infrastructure that we already have in place as far as deal sourcing, entitlement, which is my background, and then the development and construction. It's pretty vertically integrated for us to continue to scale that model. There you go. I mean, it's, you know, the shortage, you know, the, the, the shortage for housing, I don't think it's getting any better. And then I think it's also, you know, it has to be affordable housing. The thing I'm seeing here in Utah with a lot of the growth of, of housing that's being thrown up, it's not single family residences, it's, it's condos and things of that nature. I don't think people can really get into single-family residential homes.

Starting point is 00:12:05 They've got to kind of get into those, what do they call them, multifamilies? Yeah, that's certainly the case. And I think it'll continue to be an issue. As we have more people move into our market, land will become more scarce. The price of it will go up. Labor will become more scarce on the skilled trades. The price of construction will go up, and then the housing costs overall will continue to go up. So if you own a home now,

Starting point is 00:12:30 it's only going to appreciate- But yeah, the future of real estate is good. And I don't think there's going to be, the shortage is going to hit it anytime soon. What are some of the other things that you guys are offering in your investment portfolio? Are you just going to have one fund? Are there going to be multiple portfolios, et cetera, et cetera? So in the past, everything we've done has kind of been more of a syndication model. We find a project or a property, we raise funds specifically for that. And that's worked out really well. One of the things that's happened with it though, is as those projects complete, as we sell it and we're redistributing capital,

Starting point is 00:13:05 our investors are turning around and they're giving it right back to us, which is fantastic. It's kind of the best compliment we could hope for. But with that, there's a delay because we're not going out and sourcing another deal until we're sure we have the capital kind of on hand to do so. That time delay isn't beneficial for them it's not beneficial for us so we have just launched our what we call our gsp fund and it's designed to we've put about three properties under contract now existing assets and then one build to rent community and it's designed to be more of a safe haven for people to put their money have some more diversification where you have existing assets that are paying quarterly returns, as well as you get the benefit of the appreciation on new build to rent communities that will

Starting point is 00:13:49 appreciate at a much higher rate as they get completed. And we just launched that last week. When you guys look at some of the other funds that are out there, what do you guys feel makes you guys unique and different and separates you guys from them? Well, I would say that us being local is probably the biggest driver. So the three projects that we currently have allocated to the fund are all off-market deals. We haven't gone through brokerage. So the first one is a 40-unit townhome community where the person has owned it for 20 plus years. So I know you own and invest in businesses. A lot of the way that we look at it is similar. I want the mom and pop ownership that doesn't have a website, that doesn't have the capital to make major capital

Starting point is 00:14:35 improvements, where they haven't really increased rents for a long period of time. Those are the properties we really like and we gravitate towards. And those most of the time are purchased through developing strong relationships with those owners. So this one we've been working on for about six months. We're going to close on it here in October. We will go in, we'll buy those 40 units. They're all townhomes. We'll do a massive renovation to all of them, bring it up to a market level product. We'll work with the city of Spartanburg on that one as it's close to their redevelopment site, their new baseball

Starting point is 00:15:09 stadium, about $500 million of redevelopment infrastructure that they're putting in place. And then we'll lease it and own it for a long period of time. The other one, the 81 unit, it's the exact same thing. It's a local developer. They're actually investing in our fund as well. They're retiring. That's an off-market deal. And then the third one, it's land acquisition that we've placed in the last two years where we've assembled real estate in the city of Spartanburg to do a 95-unit build-to-rent community. So all of those are within a one-mile radius of each other. Wow. There's lots of stuff going on. That's how it kind of is out here in Utah. There's lots of just throwing stuff up everywhere with these condos and small, I don't know, multifamily units, I guess you'd call them.

Starting point is 00:15:55 And it's just, that's the new thing. You know, a lot of these Gen Zers are still struggling to make things work in the economy and get their lives together and do stuff. I think it takes longer for them to save up money. They've got to get into cheaper homes. For me, I always need cheaper homes because I don't need four bedrooms. Yeah, I was lucky. When I was a kid, we lived outside of Baltimore. And so their canine unit, we adopted one of their retired police dogs.

Starting point is 00:16:21 Oh, really? Yeah, I had that Shotzi. I had to speak to her in german really yeah it was uh being 16 coming home at 2 a.m in the morning was not a good idea trying to crawl in the window right i didn't know you were out so you have 160 pound german shepherd looking at you yeah those things are big man those police dogs man they are something else and all that good stuff so anything we haven't't covered on what you guys do there at the fund, we should probably discuss how people can reach out to you, how they can onboard with you. I know she have a coffee thing, et cetera, et cetera.

Starting point is 00:16:55 How can people get to know you better and see if it's a fit for everyone? Yeah, if they want to go to our website, we have the contact form there and they can certainly fill it out. And then either myself or my assistant would be in touch relatively. It takes about a business day for us to circle back. That is the best way to connect with us. A lot of people connect via LinkedIn with me directly. That's certainly fine as well. As far as investing goes, our parameters are pretty conservative. Everything we do is based on a cash flow model, which means that you'll see it a lot in the multifamily space where people are raising money. Backing up into it, I think that there's kind of two ways of looking at it. There's folks that are really good at raising money.

Starting point is 00:17:42 And then there's folks that are really good at operating real estate. We like to think of ourselves as really good operators of real estate. So with that being said, we have certain rules in place, not only to protect our investors, but protect us because it's our money in there as well. One, everything we purchase has to cashflow day one, which means that after we pay all of our expenses, after we pay the bank, there's got to be money left over to pay ourselves and our investors. Investors always get paid first. You'll find in multifamily deals and you'll find that there's some folks that have kind of run into some headwinds on this where I'm going to do some value add component. I'm going to play around with the debt schedule and maybe take a risk on floating rate debt and rub the crystal ball and expect everything to be good the next year.

Starting point is 00:18:31 And that's not been the case for the last 24 months where we've been accelerating and growing and delivering returns. We've seen a lot of other shops kind of close up and have some significant trouble. And I think that's just because of how conservative we are and what we're purchasing. There you go. Careful consideration. What's your outlook for compared to these sort of real estate investments with multifamily as opposed to say the stock market? I mean, there's certainly signs of recession is in the works, but we've been kind of saying that for a couple of years now. Yeah. So I think for us, I think I invest in index funds myself personally. I think it's a perfectly fine vehicle to do it. I do it knowing that I'm not really going to have access to that capital for the next 40 years, but I'm going to invest it and I'm going to forget about it and

Starting point is 00:19:19 it'll grow and compound. Whereas investing in real estate allows for some other things. There's depreciation values for tax benefits. There's cashflow, year one, that's paying similar to a dividend while at the same time, the property is appreciating in value. And then one of the benefits of real estate that the stock market doesn't allow, and for good reason, the stock market doesn't allow, is the ability to utilize leverage for long-term holds. All of our properties are leveraged with some sort of bank loan or agency loan, which allows you to buy at a much higher price point. And you still get the appreciation. If it appreciates at 3% on a $20 million purchase, it doesn't mean that we've placed $20 million of equity in it. We might've only placed $6 million of equity, but we're still getting a $20 million times three

Starting point is 00:20:09 appreciation, which is going to compound. So if you do it right, typically a deal for us is going to average out to about a 15 to 18% investor rate of return over a five-year period. And it's going to be somewhere around the 1.8 to 2.2 equity multiple, which is we try to double your money in five years. It's kind of our goal. There you go. Double your money in five years. That's pretty good. That's a 20% hit. There you go. It's been great to have you on the show, Brian. Give us your dot coms. We go out so people can check you out there. Yep. It's vanrock, V-A-N-R-O-C-K-R-E.com.

Starting point is 00:20:46 There you go. Thank you very much for coming on the show, Brian. We really appreciate it. Absolutely. Thanks to our audience for tuning in. Go to goodreads.com, 4chesschristmas, linkedin.com, 4chesschristmas, chrismas1, the TikTokity, and all those crazy places on the internet. Thanks for tuning in.

Starting point is 00:21:00 Be good to each other. Stay safe. We'll see you guys next time. And that should...

The Chris Voss Show - The Chris Voss Show Podcast – VanRock Holdings: Investing in Upstate South Carolina’s Real Estate Market

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