Why Relationships Beat Tactics in Multifamily | Sam Morris

Sam Morris (00:00)
I mean, this is what I wanna do. I’m kind of the old guy at the office and I don’t ever see myself stopping. It’s one of those things where I just, this is what I do. I mean, it’s literally become a part of what I do. And I wouldn’t say it’s my identity, but it is absolutely something that I wake up so happy to get to do each and every day and get to work with the people I get to work with.

Scott Bursey (01:55)
Hi everyone and welcome to the Real Estate Pros Podcast.

I’m your host Scott Bursey and today I’m joined by someone I’ve really been looking forward to chatting with Sam Morris, who’s been making serious moves in the multifamily and self storage investment space. Sam is a partner at LSCRE where his main focus is on acquisition, asset management and investor relations. He has over 20 years of experience in the real estate space and has helped lead more than 800 million in commercial real estate transactions.

Sam specializes in multifamily investing and building strong relationships with investors to grow successful real estate portfolios. Sam, welcome to the show.

Sam Morris (02:40)
Hey Scott, great to be here man. So glad we could talk today.

Scott Bursey (02:44)
Yes, yes, me as well. I think our audience is really going to take something away from the way you’ve been able to combine institutional banking discipline with boots on the ground real estate execution. Sam, let’s dive in, shall we?

Sam Morris (03:01)
Yeah,

sure, absolutely, let’s go for it.

Scott Bursey (03:05)
So

first off, for people who may not be familiar with your world, give us the short version. What’s been your main focus here recently?

Sam Morris (03:14)
Yeah, my main focus as partner at LSCRE is we look to acquire what I would say is kind of that mid to larger range apartments really strictly here in the state of Texas. We’re in that call it that 30 to $70 million box, which really pushes us truly to the primary markets. But we’re all about location of the deal and then running that deal in an operational excellent way and then really getting great returns for our investors.

Scott Bursey (03:42)
Love it. What caught my attention about you was the way you’ve been able to pivot from boardroom to the job site without losing an ounce of that institutional precision. That’s not easy, especially in this climate. What’s been the key to keeping your machine running smoothly?

Sam Morris (04:00)
Yeah, I mean, it’s team. We have a great team around us at LSCRE. We have, you know, there’s really over 200 employees in our group. Obviously the bulk of that is people who are on-site staff. But really, you know, when I tell people, whenever you look at a deal, there’s so many things that you got to think about and look at. But really, I just, I really just have three people in mind when I’m looking at a deal and really it goes with the resident. So the person who’s actually going to be living on-site, right? Cause you you got to take care of them because they’re the ones who pay the rent, which helps you pay for everything.

thing, the manager, meaning the person sitting in the chair, right? Because that’s the person who’s actually going to be executing the business plan that you put together. And you’re giving that person typically a multimillion dollar business to go run. So that’s got to be somebody you have high trust with, that you’re going to be supporting and figuring out ways that that person can be successful so that the overall group can be successful. And then obviously our investor.

What does it look like for our investor?

How transparent are you being with them? How often are you updating them? Are they getting adequate financials? Really, a lot of investors just love our monthly distributions that we do. They like to get that mailbox money as us old timers used to call it, but it’s now ACH directly in their account. Really, that’s what tells them, all right, we got consistent cashflow coming in. So that gives them the sense of the health of the business that they’ve invested in.

Scott Bursey (06:12)
Are you covering the whole state of Texas, Sam?

Sam Morris (06:16)
We do, but because of our buy box, like I said, it really pushes us more into those primary markets. so, you know, think Houston and Dallas, San Antonio, ⁓ even Austin, although I would tell you Austin’s in carnage. We probably wouldn’t, you know, we’re not looking to buy anything there right now.

We have great knowledge of the state and what goes on. And we look at every deal that’s in our buy box for the entire state. And I will tell you, there’s a couple of markets that we’re looking outside of Texas, but we’re still learning them. And it takes a while to actually learn a market. we’ve been looking at the Phoenix market now for probably almost two years, but it’s taking us that long really to actually learn the market. We haven’t acquired anything. We’ve toured a lot of assets there, but it’s still kind

of like an Austin right now too with its supply and so we’re just not ready to pull the trigger just yet on anything there. We have another market that we haven’t been talking about but that we’re still learning about that’s outside of the state and really it has to do with you know where we have knowledge gap we’re just not ready to pull the trigger yet so it takes us a while we’re we’re kind of slow to move in that that point but we do know Texas really well and we’re still at you know adamant about Houston and Dallas and looking in those areas trying to find more assets.

Scott Bursey (07:33)
Now every operator I know has a moment where things got real or a deal that went sideways or a time that you had to pivot fast. Do mind sharing one of those moments with us?

Sam Morris (07:44)
Yeah, I mean, that’s how you know, I’ve got battle scars just like anybody else, right? And so, you know, there’s all different types of examples. You know, we’ve we’ve gone through, you know, fires, we’ve gone through hurricanes, we’ve gone through natural events, too. And so you learn real quick how to how to deal with insurance. You learn real quick that, you know, your construction management that we have in house may or may not be adequate to do all the things that we need to do to a property. You know, one of the things that you and I were talking about earlier is we’ve also acquired

assets in that 21 and 22 timeframe, right? Where we’re fortunate the way that we’ve, you know, with our strategy, we were able to kind of weather the storm, but we did acquire assets at a higher price point than where things are trading even today. And so there’s still going to be things that we’re going to have to work through to where we’re have to out operate, you know, a lot of, a lot of our competitors really just to get to, you know, some kind of base level returns for those investors. And that’s just.

That’s the natural cycle of the market too. We were consistently buying in the market and when there’s ups and downs in the market, you still want to be in the market.

Scott Bursey (08:52)
It’s incredible how the moments that you feel like are a disaster in real time often become the foundation of the next 10 years of growth. So taking a negative and transph…

Sam Morris (09:03)
Yeah, it’s so funny

you say that. Yeah. Yeah, it’s funny you say that because the very first deal I ever did, which was, I want to say in 2007. So it was a minute ago now where we had, it was about a hundred unit apartment complex and we bought it and closed in August, right? Gosh, this was a while ago. And the very next month,

hurricane came through and destroyed the property. And when I say destroyed the property, we went from a hundred percent least to 12 % least overnight. And you quickly learn some things when you do that, right? You learn that as a landlord in the great state of Texas, you’re still required to provide housing to your residents because they have a contractual lease with you. So you got to go find homes now for all these people or housing for all these people. ⁓ You also learn real quick. ⁓

how great insurance can be, right? And you better have it in place and the inappropriate levels of it in place.

But then you really learn who your partners are with third-party contractors and things like that, who can help actually help you get back into a rhythm or into line with the property that you have. so, ⁓ yeah, what a, I mean, it was literally the very first deal that I was a part of and of a large scale. And it was one of those things where the learning curve was tremendous.

The swings of, my gosh, did we just lose everything to, oh my gosh, insurance is going to help make it better to, oh my gosh, what do we got to do with all these residents in the time frame to, I mean, it was just, it was an up and down and their learning curve is tremendous. And you know, you get some battle scars, like I said, from some of that stuff.

Scott Bursey (11:15)
And the folks that can rebound strongly, that separates the people that just dabble, for instance, that maybe aren’t able to rebound as quickly from the investors who actually have the staying power to weather the cycles that you just described. Let me ask you this. What are you most focused on solving or scaling next?

Sam Morris (11:39)
Yeah, for us, it’s so much of what we do is operations too, because we’re fully vertically integrated. So we have in-house property management, we have in-house asset management, we have in-house construction management, we have in-house accounting. So there’s a lot of things that we do where we’re really controlling the investment from start to finish. And it’s kind of interesting in our world, property management is going to be something that we are continually trying to improve on. It’s one of those things you can always improve on and you can

always upgrade your people. You can always upgrade your processes and your systems. And that’s one of the things that I’m actually really proud of. We’ve come a long way, even in the last 12 months, with how we’re operating. And you can see it in the numbers. And that’s a beauty on the asset management side. You can actually see, ⁓ wow, processes that are coming in and look at what that’s done over a three, six, nine month period to the numbers on the portfolio as a whole or even an individual property.

From a focus standpoint, personally, I’m still looking for those deals that are going to help fit our buy box and actually fit where our teams are. Really, a lot of focus is on how do I continue to get the strong returns that our investors expect. ⁓

in a market where it’s hard to find yield, it’s hard to find that delta. And so you really got to look at a lot of deals to be able to do that. we’ve closed one deal this year, it was actually last week, but we probably looked at 150 just to get to that point. So it takes a lot of work to actually get to the point of actually getting one in to where investors can actually see the benefit associated with it.

Scott Bursey (13:24)
but that tangible evidence is so uplifting. And congratulations on that deal.

Sam Morris (13:30)
Thank you very much.

Scott Bursey (13:32)
What’s the next real goal for you?

Sam Morris (13:36)
Yeah, you know, our goal this year was to close about 200 to $250 million in assets. And really that would have been, you know, call it that one a quarter type aspect. And, you know, as, as smooth as that would just work out for everybody, it just, never happens that way. And really there has to be availability of the product and we have to then be able to win the product. And, you know, we’ve been made, the bridesmaid on deals, you know, a tremendous amount of times in the last, you know, 18 months I’d call it. ⁓

But we’re just, for us, it’s gonna be just continue to find that next deal, continue to level up on our management side, and continue to provide the great returns that our investors expect.

Scott Bursey (14:20)
And that next move is where the leverage lives. It can either perfect your operations, Sam, or detonate your workflow, depending on how you strategize it and how you deploy it.

Sam Morris (14:33)
Yeah,

exactly. And so the beauty of that is we’re not…

we’re not forced to go out and buy another deal right now. And so, you know, as soon as we close one and the, you know, the focus is, all right, Hey, all the due diligence, we did it. Let’s go ahead and start executing the business plan. And you know, that first 30, 60, 90 days is kind of critical to all that stuff to put us on that right trajectory. But then it’s, you know, okay, what next? Right. And, know, when we have that downtime, you know, you could see there’s a lot of tinkering that goes on and we, we try a lot of things too, whether it be in the marketing side, whether it be on, Hey, let’s see if the

take well to this and

there’s a lot of that that goes on during those those lull periods but there’s really everybody’s working right and so you know we do educational things for our investors in that time frame we have meetups and things of that nature and so nobody isn’t touched on a fairly consistent basis and

We put out newsletters about every two weeks. we’re updating the base pretty fairly often. get, for those investors in the deals, they’re seeing information every single month on the property. And they’re getting to see the progression of the investment, which is great.

Scott Bursey (16:25)
little bit of a different note. Interested to know how do you maintain your edge when things are going well? You know it’s it’s easy to grind when you’re broke but how do you stay hungry when you’re successful?

Sam Morris (16:41)
man, I get up every day, live, breathe and eat this stuff.

I mean, this is what I wanna do. I’m kind of the old guy at the office and I don’t ever see myself stopping. It’s one of those things where I just, this is what I do. I mean, it’s literally become a part of what I do. And I wouldn’t say it’s my identity, but it is absolutely something that I wake up so happy to get to do each and every day and get to work with the people I get to work with.

and get to help. You have to understand too, mean, we’re providing housing right now for just under 6,000. We have just under 6,000 units. We have 6,000 families effectively we’re providing housing for. Like that’s a, we’re providing a basic living service for these people. And man, what an honorable thing to be a part of. What an honorable thing to get to do each and every day. And I don’t want to over sell it like it’s just that amazing, but it is something that we get to be an important part of these people’s lives

because their home is their home. And I love the fact that we can continue to take care of these things and make them better and hopefully spread a little joy to that world that way. And so it’s as much of a mission thing for me as it is a job, right?

Scott Bursey (17:53)
Absolutely, and that positive impact that you’re providing the families, that has to be satisfying. Now I know a lot of our, well you can tell your passion. Yes, yes.

Sam Morris (18:04)
Absolutely. So who wouldn’t want to keep doing something like that? Right? Who wouldn’t want to keep doing that? That’s great to be a part of. Absolutely.

Scott Bursey (18:14)
audience, Sam is either earlier in their journey or looking to level up in some fashion. I think they benefit from hearing this from you. Words of wisdom, if you will. When it comes to building relationships and growing your network, what’s been the biggest difference for you?

Sam Morris (18:33)
Yeah, you know, so I’m a bit old school, right? And so, you know, I got the gray hairs and, ⁓ you know, when I, when I started, we didn’t have.

social media or those kinds of things. And so I was a handshake guy. I was a pick up the phone and call you and talk to you kind of guy and actually learn who you are to develop that relationship. that’s how we built the business. I we did it one person at a time that way. Even when we were raising money, I tell people, I’ve been raising money since before it was cool. But in 2012, everything really kind of changed because that’s when the jobs act passed. And when that happened, people were able to go

go

onto social media and everybody screamed from the roof, come invest with me. But before that too, you really did have to have a truly substantial relationship as the SEC requires you to do. And you really had to know who you were investing with. You had to know what their needs were and make sure that you were putting them into the right investment if that’s what they wanted. so, there’s nothing that beats kind of the old school way of things.

Now, saying that though, I know a lot of people can reach a lot more people via social and things. I’m not as prevalent with that. A lot of people in our team are and our company for sure it is. But when it comes to actually trying to meet that next person or to find that next partner or to see that next opportunity.

The physical aspect of things is huge because if you can get there, look somebody in the eye, shake their hand, they know you’re real, you’re gonna get a better sense of who that person is, their expectations are, if they can be a partner with you versus just seeing them on social or just texting, things like that. I think the in-person connection is something that gets so overlooked.

in pretty much all aspects of business that ⁓ you just got to do it. And every, no matter where you are, there are meetups, there are, you know, there are all kinds of events that go on and you just want to be in the room. Just get in the room with a lot of these people and it can change the trajectory of where you’re going in the business.

Scott Bursey (20:42)
Absolutely, that personal touch that you alluded to is so critical and sometimes overlooked. You know, that hits home. In an industry that is so transactional, being the person who actually shows up when there isn’t a deal on the table, is what creates that competitive edge around your business. It’s that, I guess, unsexy consistency that most people aren’t willing to do.

Sam Morris (20:51)
Absolutely.

Yeah, we call it blocking and tackling because it’s just the basics, right? And so like I was said, you know, we’re, hosting a, uh, it’s an investor event that we’re doing next week at one of our properties. And all we’re doing is presenting some education, right? So we’re actually educating the investors that are coming there on certain things as it relates to value add, you know, investing in multifamily. There’s no sales pitch. There’s nothing. mean, we don’t have anything to sell. I’m not raising money for a deal. This is truly for them and, and to hopefully add value to.

them and if they’re gonna I hope they use it whether they invest with me or somebody else and and learn from it and It’s truly a give and so

you know, just excited to continue to engage with the community that way. Because when we do have something too, and we’re able to present that opportunity, ⁓ if it works for them at that time, we would hope that, you know, we would be a good outlet for them to be able to invest that way. And so, but there’s a lot of things that we do like that, I would say fairly consistently each and every month.

Scott Bursey (22:18)
and you did ⁓ touch on evolving. And on that note, as you evolve, what does your tech stack look like right now? Is there one piece of software or perhaps in this world, AI now that has actually moved the needle for your team?

Sam Morris (22:37)
Yeah, you know, it’s so funny you say that because we still do quite a bit of manual underwriting. So when we underwrite deals, a lot of it’s still manual and that’s, that’s kind of old school too, both myself and Brad and, ⁓

even with some of our asset managers, of how specific each property is and how specific each sub-market is, there’s AI tools that are out there for that kind of stuff. We do use, ⁓ on the management side, we use Elise AI, which our team raves about because you can call in at two in the morning and Elise AI can schedule an appointment for a tour later that afternoon if there’s availability. So there’s definitely some aspects to the business that

AIs is making us more efficient with. ⁓ But when it comes to things that I use from an AI perspective, I’m so old school, like I’ll use the chat GPT, know, hey, find me something in this area or whatever it is for that help, you know, but when it comes to the business, we do have some functions. ⁓ It’s just, they’re not as prevalent as most would think right now.

Scott Bursey (23:49)
I for one can appreciate your principles and that string from them. All right, before we wrap, if someone wanted to reach out, Sam, connect with you, maybe collaborate or learn more about what you’re doing. What’s the best way that they can reach you?

Sam Morris (24:06)
Yeah, our website is lscre.com and that has a world of information there. My email, my personal email is [email protected]. That’s the easiest way to get a hold of me. ⁓ And I love to connect and ⁓ collaborate with people and hear what’s going on in their world.

Scott Bursey (24:26)
Well, listen, I appreciate your time, your story, and definitely your perspective. We need more people in this space who are doing it the right way. Thanks again for being here. And for those of you tuning in, yes, it’s been our pleasure. It really has. For those of you that are tuning in, if you’ve got value from us, make sure you’re subscribed. We’ve got more conversations coming up with operators just like Sam, who are out there building real businesses.

Sam Morris (24:38)
Thanks, Scott, really appreciate it.

Scott Bursey (24:55)
We’ll see you in the next episode, everyone.