The Science of Flipping - The Money is in the Dirt: How to Flip Land for Massive Profits | Brandon Rooks

Episode Date: August 30, 2024

Visit https://www.rockstarcapitalfund.com/ - to learn more about investing with Brandon and his team!---In this episode, I interview Brandon "Rockstar" Rooks, a highly successful real estate investor who has mastered the art of flipping land, turning $85 million into $1.5 billion in real estate holdings. Brandon shares his journey, revealing how he avoided the typical challenges of real estate, such as dealing with tenants and construction, by focusing on acquiring and entitling land for national builders. He discusses the importance of strategic partnerships, the power of relationships, and his unique approach to profit sharing with investors, all while emphasizing the value of integrity and delivering consistent returns.---Connect with Brandon! Instagram- @rockstarcapitalgroup Youtube - https://www.youtube.com/@RockstarCapitalGroup LinkedIn - https://www.linkedin.com/company/rockstar-capital-development-group/ Website - rockstarcapitalgroup.com---The #1 training and coaching system to launch, grow, and scale your investing business! 𝐋𝐞𝐚𝐫𝐧𝐌𝐨𝐫𝐞: http://www.thescienceofflipping.com Turn cold real estate leads into engaged motivated sellers on auto-pilot using the power of A.I! 𝐋𝐞𝐚𝐫𝐧𝐌𝐨𝐫𝐞: https://www.rocketly.ai/ Have a question? Ask me anything at https://www.askjustin.ai/ 𝐀𝐛𝐨𝐮𝐭𝐉𝐮𝐬𝐭𝐢𝐧: After investing in real estate for over 17 years and almost 3000 deals done, Justin has created a business that generates 7 figures in active income through wholesaling and fix and flipping as well as accumulating millions of dollars of rental properties including 5 apartment buildings, 50+ single family homes, and 1 storage facility Justin's longevity in real estate is due to his ability to look around the corners, adapt to changing markets, perfecting Raising private capital, and focusing on lead generation which allows him to not just wholesale and fix & flip, but also accumulate wealth through long term holds. His success in real estate led him to start The Entrepreneur DNA podcast and The Science Of Flipping podcast and education company, where he has coached and mentored thousands of aspiring and active investors over the last decade. He is a nationally recognized speaker and is on a mission to educate as many people as possible on becoming a successful dynamic real estate investor.  𝑾𝒉𝒂𝒕𝒕𝒉𝒆𝑷𝒓𝒐𝒔𝑯𝒂𝒗𝒆𝑻𝒐𝑺𝒂𝒚𝑨𝒃𝒐𝒖𝒕𝑱𝒖𝒔𝒕𝒊𝒏:  “Justin is one of the best trainers in this space. He really gives everything to his tribe.” – Brent Daniels (TTP)  “Justin’s ability to connect with people and help them understand what he is teaching, is unparallelled” – Kent Clothier (REWW)  “We have been in the trenches flipping homes in Phoenix for over a decade, he is one of the best to do it.” – Sean Terry (Flip2Freedom) Subscribe To Justin Colby: http://youtube.com/justincolbyView All My Videos: https://www.youtube.com/c/JustinColby

I'm proof that you can achieve anything you set your mind to. Growing up with all the challenges I did and coming from where I've come from, you can literally do anything that you set your mind to. And this science of flipping, what's great about it is we flip land, we flip dirt. We're in and out of dirt. Who knew that dirt was so profitable? What is up, Science Flipping family? I have an incredible guest today.

This is a guest who has been able to realize you don't need to deal with tenants and toilets. It's a guest who understands you don't need to deal with contractors and rehab flipping and dealing with city ordinances, but he is a massive, massively successful real estate investor who has taken roughly $85 million and turned it into roughly $1.5 billion of real estate holdings. My friend, Brandon Rockstar Rooks is here. Thank you, Justin, for having me.

Well, let's start out of the gate. You've been in real estate a long time. How did you find a niche that you can have that type of multiple and you don't have to deal with tenants, you don't have to deal with toilets, you don't have to deal with construction. Let's talk about that. It was a little bit of dumb luck that we kind of fell into it. I was at a point where I was working with my strategic partners at the time were general partners and I was raising capital for them to just complete their new construction arm. And they were doing build for rent properties and scattered lot builds. And we started to acquire some other pieces of ground that we intended to build out. And to keep it kind of short, we ended up with this one piece of ground that we bought,

which we call the Oneida Project. And it's in Charlotte. And it was right at the end of where the light trail was, or the light speed trail, or what is it? Train? Train, whatever, yeah. But anyway, we bought it, and it was about three weeks later, Tim Samuels from Ryan Holmes came tracking us down

and got a hold of Lindsey. Lindsey Jarvis is my general partner, and he lives out in New Zealand, actually. So he came over here. But anyway, he tracked us down and he's like, man, we were about to buy that ground. You guys took it. And he goes, well, you should have shit or get off the pot. You're too slow.

And he's like, well, man, we really want to buy that ground. We'll make you an offer. He goes, no, we're going to build it out. And it was going to be 99 townhomes. So legacy lot that we bought, got a first deal from the bank and planned to build it out and it was going to be 99 townhomes okay so legacy lot that we bought got a first deal from the bank and planned to build it out and tim samuels which was also known as the godfather of land in the carolinas he's just one of those guys that's connected knows everybody yeah ryan holmes is the number three builder in the country by the way but uh lindsey's like no we're gonna

build it and then he's like man if you ever decide to sell you know or you don't want to build it just let us know and he would follow up and he if you ever decide to sell, you know, or you don't want to build it, just let us know. And he would follow up and he would take Lindsey to lunch, you know, out there in Carolina. And one day Lindsey's like, fine, you know, I'll let you make an offer because it's obvious, you know, you're getting heat from the corporate. Yeah. Get this ground bought and we haven't started it yet. And so anyway, it's fine. You know, buy me steak dinner, buy me some drinks,

bring me an offer, and let's see what it looks like. Yeah. So Tim shows up with an offer. And what was funny is, in Lindsey's mind, when he looked at it, he just kept a straight face. And in his mind, he's like, holy shit. Something's not right here. But he kept a straight face.

Did he make a mistake? He's like really is that the best you could do you've been hounding me all this time and he's like fine he goes i'll be back with another offer and he came back less than 48 hours later with an even bigger offer wow and he goes look we wanted that ground this is top dollar we can pay and lindsey like, all right, we'll sell it for that. Long story short, here was where the eye-opening moment was. For what we bought the ground for, if we took it all the way through construction and getting it rented up and, you know, getting a leasing, a property management company place and marketing it to our network of investors that

we help buy turnkey properties all over the country, we were going to average about a $20,000 profit per door. So that's $2 million on roughly 100 doors. Yeah. And we have all the risk and all the things that could happen. And basically, the offer was going to make us over $33,000 a door, and we never had to build it. That's the key. Money is in the dirt. Yeah. That is the most valuable part of the whole equation.

But it's not just as easy as that. You've got to take raw ground and get it fully entitled, permitted, shovel ready. You've got to make sure planning and zoning is in place. Do all your traffic studies, fit studies. Can they support it? Is it going to need well? Just all these different things. And it's a time consuming process, right?

So you've got to have somebody that really knows that business. But that was really the high level. So did you, in that scenario, did you guys take and do all that front leg work already and then they were able to buy it from you from there or you still didn't even start all that front leg work and they bought it at that type of multiple? Luckily, this was a legacy lot.

So it was already planned for a town on development. And so a lot of that had been done. But what we learned is that after the real estate collapse of 2008, a lot of the national builders changed their game. They used to go buy ground and they had a land asset manager that would do all that work. Yeah. They had to go through corporate approvals and land committees and everything just took a lot longer yeah but they uh that's what they used to do and then after the collapse a lot of these builders got caught with their pants down sure and all this land on their balance sheets that they couldn't move yeah so it was eating up their lunch and costing their shareholder prices and their stock prices to go

down and god forbid that happens oh yeah right so that that was kind of how we fell into it is we're like, wow, we can just take dirt and get it entitled, permitted, and shovel ready. And the national builders will pay top dollar. Here's another part of that equation. So we were building and we were building at around $100 a foot at the time because we were small. The national builders at the time were building around $65 a foot. Right. Their cost is way less. You can't compete with scale. Right. Scale. So that's why they can pay so much for the ground because they're back in and their construction costs are so low. And that was just the moment this started on. We're like, man, we got to capitalize on

this. Well, a lot of my listeners usually are getting into the single family space, right? They're doing the fix and flips, wholesaling. They might be buying rentals. They're doing burrs. The challenge with all that is what you're able to avoid with land. You don't necessarily take in the construction and dealing with the city. you are getting the land, you are getting it locked up and you're allowing the builders to do the work. Then essentially, and we're going to talk about your actual financial model and the lending component, but essentially have the fees in the middle pay you. And that's the brilliance of it all is why go through the headache of it all? If you have someone on the other side that is willing to go through all that and can do

it cheaper and whatever, it fits their numbers, then take chips off the table. In your case, you didn't even have to take less chips. You took more chips than if you would have taken it that far. Yeah. We changed our structure. So in the beginning, we were general partners with Buller River Developments, Estero Developments, and then we opened up this new arm called BRD Land and Investment. And because we also changed the strategy of the Rockstar Capital Group, we had Reg D funds, and it made more sense to be a lender to BRD Land and Investment and their operations. So once that happened, our attorney's like, look, you guys no longer should be general partners because it's not going to look good if you're raising capital and then lending to yourself.

That's right. So the things that you learn. Do you still have an LP component of that? I'm the GP of Rockstar Capital Group. Okay. And all of our investors are LPs in Rockstar Capital Group. I own some shares in BRD Land and Investment, but we now consider ourselves strategic partners rather than general partners. And this is how we stay compliant and keep

operations separate. There's a lot. A lot of people want to have ownership and be a GP and all the... You're on the hook if something goes wrong too, right? People don't understand the risk of it all if you take that, right? They just want the title and it sounds cool, but there's a lot of risk when you come into the GEP part, right? You got to deal with the headaches as well as the upside, right? Yeah. So you have a long 20-year real estate career and you've been in the single family space. You've done the fix and flips. You've done the turnkey, why go into land? Less brain damage. You get to a point, at one point I had owned, I was an owner of, or had started funds and we managed and had 500 doors, which is great, right? And real estate is what helped me build my wealth and come up to this opportunity, but I just got tired of tenants, toilets, and

trash. And even when you got property management, you still have to be active in it. There's always the calls you got to take, or something's got to get fixed, or you got a vacancy for three months, which just killed your cashflow. Or you have a tenant that just decided they're just going to trash the place. And it's a $25,000 rehab when That's right. You know, when they walk out and it's not a lot of it. And we even stuck to the better quality of stuff. We always invested in like newer or new construction homes. And, you know, the price point where the rents were always $1,000 or more because we were trying to attract, you know, just a little bit higher tenant base. But you still have those same problems.

There's no doubt. And maybe not as much as when you're doing the lower end or lower income type properties. You have different problems. You might have bigger HC units, which costs more. So when they go out, there's more money out there. Nicer roofs that cost more than shingle, right? There's just different, it's always problems.

A lot of people, I preach about buying and holding more now than ever. I'm buying more assets today than I ever have. I want everyone to do that. But it's not puppy dogs and rainbows every day, man. It's not. And what I love about what you guys do is you make it as passive for your clients as possible. Land in itself is a great niche. I think there's not enough people understanding that niche. I don't even understand it in the way I should, but you're also giving opportunities, you know, as a lender for the people who just really want to be passive. Yeah. It is the ultimate passive income, right? Yeah.

And so when lenders come to you, what are lenders, when they hear you or look you up, by the way, where do we want to point them? Do we want to point them to the website? Yeah, rockstarcapitalfund.com. There is a Rockstar Capital in Houston, Texas. That's Robert Martinez. He's in multifamily apartments and property management. So you're the fund, rockstarcapitalfund.com. And anybody can go to info at rockstarcapitalfund to shoot us an email. If you go to our at rockstar capital fund to shoot us an email

if you go to our website there's ways to contact us there yeah and then i have my investor relations director here um which he fields you know all the incoming calls but uh that's the best place to go and check it out and i encourage everybody to read the testimonials yeah i know a lot of people have said yeah anybody could write a testimonial i write testimonials for sites all the time and'm like, well, you should look at ours because our clients actually put their full names most of the time, what city they're in. And you can start to tell that it, and we've got a lot, grab a cocktail or a glass of wine. It doesn't take you a able to pay the returns that you're able to pay, I mean, you're going to have a lot of positivity coming from, you know, my assumption is most of the people that invest in your funds, they never really leave you, right? They just kind of keep turning their money. It's pretty rare. They always send us referrals. They're always adding to their investment because we have a track record. Over the last six years, we've never missed a quarterly distribution. We've never paid less than the preferred interest that we, you know, put in our offering., we've never missed a quarterly distribution. We've never paid less than the

preferred interest that we put in our offering. And we've had multiple profit sharing quarters. And last year I merged all four of our Reg D funds into a Regulation A tier two offering. So we're now an evergreen lending offering. And if you invest a hundred thousand, you can even invest 10,000 with us. I came from nothing. I'm a blue jeans, blue collar type investor myself. Grew up poor, went in the Navy, did six years, came out, advanced electronic warfare just wasn't something in the public sector. So I went into sales and I fell in love with sales, but I've just always done it different yeah it's more about helping the clients or the investors get what they want and long story short

i mean i've been in real estate for over 24 years started in mortgages and started selling big projects and knock on wood i've never let any of my clients lose a dime of their principal we've had deals go south but it was always in the renovation space. Of course it is. So guess what I don't lend on anymore? Yeah. Renovations. It's not to say it didn't do great business, but there's just too many things that can happen.

I'm dealing with something right now. I've done this 17 years, and I'm just like, every time I say, man, I've seen it all. I've seen every kind of chaotic in the fix and flip, and I just came across another thing. I'm like, I've never, my roof on a fix and flip, the day we were supposed to go list it, the agent goes and walks the property, not the ceiling, the entire fucking roof caved in. I've never seen that before.

Crazy. So, I mean, trust me, there's always something. Yeah. Right. And we have the track record of always paying, always delivering. And if you're in the real estate space, I'm sure you're hearing the woes that are out there. There's even like BlackRock only paid out like 4% last year. They're freezing redemptions. They're not paying out what people were expecting to get. And we're just sitting here cruising along paying double digit annual returns to our investors every single year. Yeah. is sitting here cruising along paying double digit annual returns to our investors every single year. And we actually paid out 16 and a half percent to our investors in 2021.

That's an audited funds that people can see. But I merged everything last year into the reg A. This means all the stuff that we've lent on is now under one house. We have deals that are closing every month and every quarter. And the way we've set it up is we pay a 10% preferred interest to our investors, which is high for what we do. We pay 60% of all profit sharing interest to our investors. We earn an average annual 22 to 25% interest, which sounds ridiculous and too good to be true. But I'll explain that a little bit more in a second. And then everybody gets 60% of what's left after we have these closings. So this year we're on track to probably pay our investors around 15%.

Nice. Because there was a little bit of a lull with that merger. It created some things that kind of like stalled. We couldn't bring any others in. We couldn't have anybody invest. We had to wait till we had all. Can others come in now? Yeah. Oh yeah. Yeah. So you can go raise more capital. So if you're watching this on YouTube, listening on Apple or Spotify or anywhere, make sure to go to rockstarcapitalgroupfund.com. Also find Brandon

anywhere on social media. You are open for funds if they have questions and want to be a partner with you and things of that nature. Yeah, you can invest with personal funds under an LLC, a trust. You can self-direct your IRA. If you have a 401k from a previous employer, you can turn that to a self-directed IRA, which we've got some connections, obviously. Yeah, yeah, yeah. And you can invest starting with as little as $10,000. Just dip your toe in the water and watch what happens. So talk to me a little bit about how big is your team, first of all?

How big is the whole Rockstar Group? So Rockstar Capital Group is, yeah. And now that we're strategic partners, it's like two operations. But you'll hear me talk as if we, even when I'm talking about the land, because I helped build them. We went from that one piece of ground about four and a half, five years ago to now controlling or owning the $1.3 billion of retail ground, the BRD land pipeline, which is are like 50% on average. But we're five people. Both my sister-in-laws worked back office and admin, and I hired my wife's best friend that she's known longer than we've been married. And we've been married 29 years. And she worked for Discount Tire, ran all their national accounts. And then my son, Dylan Rooks is the investor relations director. So it's a family run business. So here's, I want to stay on this and I want people to hear what he is saying.

You have raised roughly $85 million. You have lent roughly $85 million. That has transacted roughly 1.3, $1.5 billion in real estate holdings. That BRD land owns or controls. And you have five people. Five people. Why this is so important for people to hear is because people think you need to have this robust business, massive amount of people doing a massive amount of deals. How many deals in a given year are you lending on in a given year? Just bubble math, rough number. Probably a dozen. A dozen. Five employees or five people within the business,

a dozen deals equates to millions and millions and tens of millions of dollars of revenue. Yeah. People, you guys need to understand what he has built and why if you do real estate right and you stick to some level of a niche, you do not need to go to scale. You do not need 50 people in your operation. You do not need to do 12 deals a week. Literally, if you follow what Brandon is saying to you right now, he raised 85 million

roughly. He's letting 85 million at all times roughly. It turns into $1.5 billion of asset and holdings, 1.3. This is something that if you know how to do a structure, if you have a process, if you have a system, and you know the right people. This is all about relationships. There you go. And to make a point, I haven't made a cold call in over 20 years.

I sent out letters to my mortgage clients, people I sold in-home water treatment systems to back in the late 90s. And we had started and owned a small tanning salon in our town and we sent out letters to them. And I started doing mortgages and went to six figures a year just by sending out the letters. And then as I exited the mortgage industry, I flipped over into selling large projects. I had $86 million in projects under contract with a hedge fund out of California that was at Lake of the Ozarks, Missouri. Yeah. Central Missouri, Party Lake, and resort retirement, second home destination.

Sure. And that was in 2007. Yeah. And then 2008 happened. Right. I lost everything. None of my investors lost a dime of their money i made sure they all got their deposits back on deals but that hedge fund had to back out of all those deals

and because you couldn't get anything lent it shut down five billion dollars of ongoing development at the base but started over completely in 2010 yeah jumped back in started selling you know doing these land deals small lots lots, and then got back into my connections of renovators and new construction providers. And I was helping investors purchase properties all around the country. And in 2015, I actually sold 954 properties across the US to my investors. And about 2016, I didn't like where the prices were going. I saw the cap rates and cashflow shrinking. And I'm like, man, if I can't hit a 15% average annual return to my investors,

I can't promote it. And that's kind of when I moved over to the capital raising, started raising capital. So my new construction builder could actually start building more homes. And then we had a network of buyers. There's still people that are going to grab homes. And don't get me wrong. I mean, there's depreciation, there's tax deductions. You grow wealth through real estate. There's no doubt. And there's a lot of different niches. It really depends on, what I like to tell people is it depends on what you're actually trying to look for, right? Because there's so many different niches. You have a brilliant niche. What I would tell people is don't try to become Brandon. Go talk to Brandon and be a part of his world. Be a lender to Brandon. Don't try

to become Brandon because it does take a lot of time, energy, effort, and people. But let's talk about people and how people affected your ability to grow and transact in the real estate space because I talk a lot about going from good to great is one thing. And it is the people you have around you and you connect with and you shake hands with and you communicate. A great example is today on a Manect app that Patrick Bet-David, shout out Patrick Bet-David for this. I'm an expert on his app and someone hit me up yesterday, about 40 acres of land. What can I help him do? What should he do? Do I know a buyer? Would I want to buy it? I literally am interviewing you today and I hit you up even this morning on the way to the episode saying, Hey, 40 acres, South Carolina, would your buyers be? And he's like,

absolutely. Could be a great opportunity. Give me the information. My point to that is the network and the people are absolutely everything. So talk about how your network, your people, what you do to keep your business growing and how that's affected you over time. So always deliver. Having integrity in your business and making sure that you're providing the best customer service, client service,

investor service possible. My whole team knows this. We never let a call, email, or text, or DM, or WhatsApp, or all the different ways you can get communicated with these days, we never let it go unanswered in the same day. And we typically will answer almost immediately, even if we say, hey, in meetings, and we'll get back with you shortly. But you never let your investors, your clients, or whatever, let their communications go unanswered in the same day. You know, if they don't get the customer service from you, they'll eventually find someone else they will. That's right.

So that's been really the key to our success. And, you know, our partners in the Carolinas, in the Charlotte market, which run BRD land and investment, they have a team of probably about 25 people. And this is kind of how it came about. So when we had that deal that we talked about, that all of a sudden Lindsay's like, shit, we're going to make over $33,000 an hour. We never even have to grab a hammer. Right. You know, we never have to go through all that stuff. The way they did this business is Tim Samuels, which came to us to buy that ground, which he didn't. Not long after that happened, Ryan Holmes let Tim go

because they wanted to bring someone in that they could get the job done cheaper. Right? And Tim had been with them a long time. Nice severance package and all that. And what's funny is this is about people. When they let him go, they had to know all of his investors and all these sellers and people that he did all these land transactions with let them know that hey i'm no longer there oh yeah you'll have to deal with these guys ryan holmes ryan holmes lost 1600 lots because of that

because they were so connected to him they were connected it is it is a huge shining example what i firmly believe is if you provide value to people and you build a genuine, authentic relationship with individuals, and genuinely, in your case, provide the value, never let them lose, always over-deliver, the word of mouth will spread over and over and over again where you won't need to be spending as much money on marketing. People will start to talk about you. The relationships get built. The dinners start to happen. The coffee meetings start to happen. And it starts to pour on itself because you're just delivering on what you said you were going to do. You're being genuine. You're being authentic. You're being credible and you're offering value. It's not that hard.

It's not hard. But some people just can't get there. No. People just don't have the work ethic or, you know, everything. Integrity. Integrity. And it's a shame, right? Yeah. But our relationships have really been what's built this. Tim Samuels, when that happened, came to Lindsay and says, I've got an idea. Yeah.

And what happened is they went after top land asset managers in multiple markets. And these guys were guys that had been working for the builders or they, you know, worked in a company and they delivered ground. And Tim's like, I know some of the best in the industry. And they went after these guys and said, look, you brought a thousand lots to D.R. Horton last year. If you can bring a thousand lots to us that we can get shovel ready and permitted and, you know, ready to go we'll pay you a thousand dollars a lot well most of those guys made 250 300 000 a year so we just gave them

a chance to 3x or 4x their income of course they still do what they've always done and then they go and tell the builder you know h&h homes or you know whoever we got them from uh jack rostetter was one of our guys as a a matter of fact, and he was with H&H Homes. But they go and tell the builder and the builder is like, okay, wait, you're taking them off our payroll. They're still going to do what they've always done. And we're still going to get a chance to buy the ground. We're like, yeah. And they're like, win-win. That's it. Right. But we took all the corporate bullshit out of the equation the land committees because these uh land asset managers would tell us there's deals that they shouldn't have passed

on because it just missed this critique or this margin or are they delayed too long and the seller got frustrated and he said i'm gonna go take it to someone else it's a cutthroat business and what's what's really interesting is we hired these guys and made them their own independent development consultants. And now we grew from that one piece of ground to a pipeline of over 80 development pieces of ground, which is about 48,000 lots sitting around 1.3 billion. Our goal is to get to 2.5 billion in retail ground in our pipeline by 2025, by the end. That's a year and a half away, my friend.

We doubled production in one year. This is kind of another interesting point. Last year, we sell to some of the top national builders in the country. And last year, at the end of the summer, we did a $20 million cap raise in nine days from our existing base of clients, and this was for an expansion and a growth, and also the number one division president in the country for Meritage Homes, which is the number five builder in the country, walked away from his job to come be our new acting ceo and oversee all the land entitlement and acquisition business and he's already connected to other builders he's like you guys are sitting on a gold mine he goes you realize no one's really done this yeah no one

has taken land asset managers and brought them all together and facilitated raising and that part of it is raising the capital right a lot of companies don't start because there's a lull yeah and you got to wait it takes 9 to 18 months to get some of these ground you know ready to go to the builders but so that's what happened and he left that company to come be our new acting ceo and over the course of last year the inventory pipeline has doubled and it will double again and at 2.5 billion in retail ground, the goal is to have 100,000 lots in the pipeline at all times to get to the point where they're selling 20, 30, 40,000 lots a year. Selling 40,000 lots a year is about a billion, roughly a billion. The profit margins that BRD land and investment have on average are 50%.

Wow. Incredible. So here's a way to understand this. I try to break it down to really simple. People are like, well, how do you do what you do? How do you make your money? We're a bank. We raise capital. You invest with us. You become a banking partner. We lend it to our strategic partners. But here's what they do. Those land asset managers go find a piece of ground that they know is in the path of growth, has the size, do their homework, and they go after the seller and go look. If you sold your ground to us right now, it's worth X. But if you allow us to put it under contract, we will do all of the work to get it fully entitled, permitted, shovel ready, and then basically at the end of the contract,

we'll sell it to the builder, and it'll be worth XX. And if you'll stay in the deal, then we'll do all the work, and we'll make you more money on your ground. So the seller essentially finances it during the time, in essence. They go in a contract,

and we get plenty of time to do all the work. There's a year and a half of inspection period in the single family home space. It'd be an inspection period, right? Yeah. That you basically, these guys are now getting a year, a year and a half inspection period

and they do these improvements on their dime, right? Yeah. So they're spending real money. I mean, how much are they usually spending to get these improvements or to pass all the checkpoints to get them? You know, they could be probably $30,000 to $50,000 in with environmental studies and, you know, just all the things you have to do, deposit. But what's great about this way of doing business is they put it under contract.

And they don't put things under contract unless they pretty much know a builder's going to take it. Yeah. Or they may even preview it. And to be honest with you, some builders even bring us ground. They're like, we want this ground. You guys do your thing. We'll give you an LOI. We'll give you a verbal.

And it's a relationship business. A lot of handshake business in here. But the ground never gets less valuable. It only gets more and more valuable all the time. So we're never really concerned. So they've only ever had two deals that they've had to walk away from and they've had some losses on, not big losses, but they had losses on. But in the scheme of things, $30,000 loss on what would have been a $10 million development is no big deal. No big deal.

But so here's how it works. Let's say they negotiate a price and with this guy, they go, all right, we're going to buy you around for $4 million. Once they're through the risk hurdles, they've done environmental, soil tests, fit studies, they've checked with city, county, municipalities, they know it'll be permitted. It's just a matter of when. Then they come to us and go, hey, Rockstar, we need $500,000 for this one. We're going to pay you 30% interest APR, which this is immediately the red flag when I tell anybody that we charge 30% interest and they're like, well, it sounds too good to be true. That's a scam. This just can't be right. Why would anybody pay 30%? Here is where the beauty of it is. At the end of the year, let's say they get it fully permitted. They've already got it sold to

a builder. They go to close on the ground. They pay 4 million. They pay back the year, let's say they get it fully permitted. They've already got it sold to a builder. They go to close on the ground. They pay $4 million. They pay back the $500,000 plus $150,000 in interest. But they'll sell that piece of ground for $10 million. That's a $5.35 million profit. That 30% interest carry just became nominal, like less than 2%. That's how our business works. And when we lend, depending on the ground, depending on if it's a lot, depending on, you know, it's Mez or we lend first lien, second lien, we'll do Mez debts. We'll do

for a promissory notes with confessions of judgment against the entire company. Sure. We try to keep it, you know, to a point where it point where it's unencumbered and it makes it easier to move it through the system. And we'll lend and we earn an average annual 25% interest. And the way we pay that out is our investors get 10% of that. That's a 10% preferred annual. We pay quarterly distributions. You can invest right now and at the end of this quarter, you would get a partial distribution. That's great. For a partial order. You start earning immediately and you start seeing distributions immediately. Yeah. Unlike a lot of real estate deals where it's going to be a while

before you see the money. That's more common. Yeah. This is a passive income. Well, especially now because you guys are a seasoned business. And I think if a startup, someone wants to be the next Brandon Rockstar, right? You got to go raise the money, get money going. You need to be able to lend the money, have money starting coming. You can't pay your investors in that first little while.

I mean, you technically could, I guess, if you have money yourself, but there's no money coming in already. There's no income from the PPM or whatever you guys want to structure. The nice part about where you're at and why people really need to look into you, rockstarfunding or rockstarcapitalfund.com is because you've been doing this. Like I said, you have $83, $84, $85 million in the streets, and it's worth $1.3, $1.5 billion of the land, and the money keeps turning and keeps getting lent out and keeps coming back in. You are in a place where you're able to provide your strategic partners,

the lending partners that lend you guys the money, immediate return, like day one, almost like a per diem. There's 10 days left in the quarter. You're going to say, great, on a per diem, they get 10 days worth of $50 a day. We're going to pay them that check. And they're going to make 500 bucks for the 10 days that their money was out. And the key to that will also be understanding the level of business that you're at creates opportunity for partnerships, right? So you said something that was really important a little while ago in this episode. You give anything above and beyond a certain threshold or revenue brought into the company,

you give your lending partners, your clients, people that lend money, 60%? 60% of all leftover interest. So if we earn 25% and we're closing out a quarter, then 10% goes to the investors, annualized, right? So it's a 2.5% on that quarter. And then it's roughly 3% for management fees and operation expenses. We try to keep our expenses low. Yeah, sure. So what's left is 12%. Our investors will get 60% of that. And the general- This is why people stay with you. You understand something that most entrepreneurs,

relative business owners, whatever, don't understand is if you bring them inside as a partner and you give them equity or you give them a piece of the upside, people will stay with you forever. They will continue to speak your name as gold because you're providing them, you're going above and beyond. And people want to be a part of something. They want to feel like Brandon's partner. They don't want to just feel like, oh, I lend Brandon

some money and I get a good return. That's transactional, right? That's the transactional world that real estate is so accustomed to. I do a very similar thing in my business. When people are with me, we literally had a quarterly meeting yesterday, brought in two new team members, and we basically are incentivizing those two new team members. If you are with us for a year, we will give you equity pieces in this type of real estate because they're very high-level executives.

These aren't just like acquisition guys. But I say that to say, do you think they're more incentivized to work harder, to find bigger deals, to find better deals, to get through the hard stuff? Because now they're a part of it and they're just not getting paid their hourly or commission? Of course, but that's what you're doing. You're giving those people 60%. Yeah.

Then you could easily just keep it. Yeah. And people would still think, oh my God, I'm getting a 10% lift. And of course, that's still great. We're structured in full stabilization. And if we continue on that path to be able to pay out a total of about 17% per year to our investors. And because there's so much profit, like I said, there's $5.35 million in profit in that one piece of ground. So paying out this amount is not that big of a deal.

That's right. Right. And the difference is, you know, I do things different. I'm a goal setter. And I think even when we talk, you may, we may have topped on, you might've saw on my wall, I've got all kinds of plaques and awards and, you know, trophies everywhere I've been. I've always been the top guy. I mean, I've been that one guy that did 80% of all the business, but I don't necessarily need more money. I'm not frivolous. I'm not going to own homes all over the world. I don't drive $350,000 cars. Granted, I drive $100,000 cars. Sure. Dodge Challenger, Elkac, Redeye, Widebody, Superstock, Vroom, which will just- You know enough about cars.

Be just about anybody, even the exotics. But I like old school muscle. There you go. But anyway, I'm going to change the structure because I had set a goal a few years ago to outperform Berkshire Hathaway. And Berkshire Hathaway, since 1965, has delivered an average annual 19.3%. Wow. We have the ability to do that. And the way I'll do that is once we get Rockstar Capital Group, our Reg A core fund, as I bring in all these other notes that we lent direct, or we did like lot notes or private notes, as my investors get done with those in BRD land or

Buller River and Estero pay them off, the goal is to have them take their principal and just move it into Rockstar Capital Group. Once we get to a hundred million in assets under management in Rockstar Capital Group, the reg A offering, I'm going to reduce management fees to 1%. I mean, unheard of, right? Most people are like, why? I was just going to say, are you going to make any money? But of course- I will be fine. You know, make enough. You have a hundred million coming in, of course. Yeah. It's one. And I'm probably going to increase the profit share back to the investors to like 65% or maybe more. Because one thing I'm all about is if I say I'm going to hit a goal, I'm going to hit a goal. Let's go. And if I outperform Berkshire Hathaway

performance, I become a name that's known across the country. 100% you will. It actually gave me shivers to think, you know, a lot of people, we talked about goals, you and I privately, right? A lot of people sit a goal and it's just a number a lot of times, right? And they're unwilling to go through any of the sacrifice or pain that gets you there. And this is what we talked about. And I recently, my mentor said, you got to stop thinking about goals as something to go achieve and figure out what is the cost of pain and sacrifice to achieve the goal, set the goal. But don't just keep looking at the goal and say, okay, what am I going to have to give up? Is it time with the family? Is it money? You're going from 3% to 1%. That's a

fucking 66% pay cut for you, right? But my point is that is the sacrifice to achieve the goal that you're trying to achieve to get, let's say 20% return to your investors. So be it. Then focus on that. Say, I'm willing to go through it. I'm willing to do it. And because of that, exponentially, I'm going to get the thing that I'm trying to achieve. And what you're saying is so powerful because also you're genuinely doing it for the betterment of others. And when you focus on the betterment of others, you're actually going to do a whole lot more and your 1% will make you a whole lot more than 3% because you're going to exponentially grow organically. Yeah.

You know, I grew up poor and humble, humble beginnings. Yeah. Got moved all over the place. Hardly ever went to school more than one year in any given place and divorcing parents and military parents. And then I went in the military, lived in 15 states and three times as many cities, coast to coast and Hawaii. And, but I'm a, like I said, I'm a blue

jeans, blue collar kind of guy. I had hardworking parents. Mom was always a waitress or, you know, clean homes. My dad was always in construction and good people. I learned good work ethic. And so the integrity and the core values is there, but I just, I'm grateful for everything I have, but we would not be who we are, Rockstar, without our investors. That's it. And we would, BRD land would not have gone from one piece of ground about four and a half, five years ago to now $1.3 billion of retail ground in their pipeline without these investors.

And we never forget that. And the more we let our investors win, the easier our job is. And this is kind of cool because we do no marketing. I haven't made a cold call in over 20 years. All our business is referrals and it's networking like with the boardroom group, which is how we met you and Dylan talking to you at the last event and getting on a podcast, which I haven't done a whole lot of these. So- You're natural, by the way. Thanks. But I just, it's for me, if I help enough other people achieve their goals and achieve their financial goals that they're setting, I've helped a lot of my clients retire early. And that's the greatest feeling in the world to me,

when I can help them create a passive income that outpaces their active income and it's consistent. And $100,000, you invest $100,000 with us now, it's worth $100,000 in three years, it's worth $100,000 in five years. If you had to sell everything and get out, you can do a redemption and you get a hundred thousand back and you kept everything that you earned all along the way. That's the part that a lot of people don't understand. Well, what's the worst that could happen? Well, for us, the worst thing that could happen is World War III and builders just stopped building, right? I think that's pretty bad for the entire United States, not just for Roxanne. You're going to have a lot more problems than just that. But the difference is when you work with the end buyers being some of the biggest builders in

the country, those guys can't stop the machine. They're going to find a way to make sure they continue to build, keep their subcontractors and contractors and teams and staffs all employed, keep performing for their shareholders. That's the difference. We're not small scale anymore. We're not working with the local custom builder. We're not working in one market. We have land and ground in five different states, you know, Southeast, the Carolinas, Florida, Georgia, and Texas, actually. We went from about a 500 lot inventory in Texas last year to I think they're now sitting on about 5,000 lots. And so this thing has the ability to scale and grow. And we're just going to take these investors along for the ride. Now we are close to not having to actively capital raise. So if somebody's wanting to get in,

you can always get in, but getting in now while we're in that run-up period and before we get to that 100 million in assets under management, I'm not going to be, once we hit that, I'm not going to be traveling and speaking and, you know. And you can get in, but you're not going to be doing this per se, right? I mean, you have about 15, 17 million and you've kind of hit it. And one thing I just really appreciate and I'm going to echo is this is more about your clients and the investors than it is about you, the company and whatever.

That is really important for people to understand is you're doing better for them by doing things like reducing even your income, right? You're going from a 3% management fee to a 1% once you hit certain goals. And so guys, if there's anyone that I would tell you to trust and understand that how to make true,

true passive income, not toilets and tenants, because we all know that is not passive. It is my guy, Brandon Rockstar Rooks right here. Again, rockstarcapitalfund.com. Yep. Follow you all over social media. Any last words for our active listeners and watchers?

No, you know, I'm proof that you can achieve anything you set your mind to. Growing up with all the challenges I did and coming from where I've come from, you can literally do anything that you set your mind to. And this science of flipping, what's great about it is we flip land.

We flip dirt. We're in and out of dirt. Who knew that dirt was so profitable? But you could make a lot of mistakes too, and that's the thing. A lot of people go, man, he makes it sound easy. I'm going to go buy a piece of ground. A lot of times you can't just do that. You've got to know what is your end buyer.

Where is it at? You've got to know what to check on. And this is what's different for most is that usually if you see a piece of ground you're like man that's in the path of growth i can get it i'm going to go through the process you know what's kind of funny is in in the third quarter of 2020 we had a group come to us with a piece of ground that they had been trying to get permitted for four and a half years. And it was 69 acres. It was going to be 500 lots.

It was in Waxhaw, North Carolina, a suburb outside of Charlotte. And they said, look, if you guys buy this ground and you close on it before Christmas, we're going to give you first right of refusal on all the ground that we own it. Come to find out, it was a 10 generation family farming group that owned 32,000 acres of land all around the Charlotte market. Not only did we raise six and a half million in about three weeks, close on that ground on time, it's now a lot of what's in our pipeline because we did what we say we're going to do. And we delivered an 18% return to our investors on that deal, but it's what jumpstarted us and gave us access to a lot of ground.

But it's not as easy as you think. And it is time consuming and it's going to take a buildup. So why make it hard when you can just flip with us by being our banking partner? And that's what I love about the business is, you know, just you come in and be a partner. We've already done the hard work. We've already gone through all the pains, learned all the lessons, you know, put this together. And now what we've done has never really been done to scale. Nobody else has gone out and hired top land asset managers away from the builders or from where they are and housed them all under one place and put it all together.

And for that, it's all the years of experience and knowledge and our connections our brd land team is probably about 25 people and um and again if we must be doing something right if we attracted one of the top division presidents in the country yeah number five builder and actually and i'm not going to say any names or make any promises but there's a couple other people talking about leaving some of the national builders to come work with us. You're doing something right, my friend. All right, guys, that was the episode.

If you like this, if you learned one or two things, make sure you share this with two of your friends. Brandon, I appreciate you coming. And on the next episode, we're going to have another incredible guest. Peace.