In episode 29 of Wake Up to Wealth, Brandon Brittingham interviews Brandon Rooks, the CEO of Rockstar Capital Group, as he explains the importance of building strong relationships with investors and the strategies that have helped him maintain a stellar reputation in the industry.Tune in to hear their insightful discussion on wealth, investment strategies, and personal growth.SOCIAL MEDIA LINKSBrandon BrittinghamInstagram: https://www.instagram.com/mailboxmoneyb/Facebook: https://www.facebook.com/brandon.brittingham.1/Brandon RooksInstagram: https://www.instagram.com/rockstarcapitalgroup/Facebook: https://www.facebook.com/brandonrooks1/LinkedIn: https://www.linkedin.com/in/rcg-rockstar807hp/WEBSITEBrandon Brittingham: https://www.brandonsbrain.org/homeRockstar Capital Group: https://www.rockstarcapitalfund.com/
Chapter 1: What are the key takeaways from Brandon Rooks' background?
I went in the Navy right out of high school, read two books while I was in the Navy. Think and Grow Rich by Napoleon Hill and Awaken the Giant Within by Tony Robbins. And when I got out of the Navy, I did not want to do anything with electronic warfare. which is what my specialty was. I was an anti-ship missile defense operator. Saw three tours in the Gulf.
I'm considered a combat Desert Storm Navy veteran. But I came out and I just went into sales. And I've been selling since I was a kid. It's just I was born to be a salesperson. And got out of the Navy, sold MCI long distance, cars that really dodge in Colorado, started a mobile disc jockey business. Then I got headhunted into in-home water treatment sales.
Then I got headhunted into the mortgage industry and became a loan officer in Kansas City. And that was where my foray into the real estate world happened. You know, I... I've never made a cold call in the real estate arena. I just basically sent letters out to all of my clients that I had when I got in the mortgage business and started doing refinances and purchases.
And then I got connected with investment lending and just started crushing it in the I was funding investment loans left and right. And it was really because of the method. Rather than me trying to figure out how much money I could make on the loan, I just charged all of my investors a 1.5% rate and then gave them a par rate.
So I was beating every lender in the country by like a point on the rate. And that in turn meant that even when we had the real estate collapse in 2008, all the clients I had helped didn't lose their properties because I gave them stellar rates and I convinced them, don't just do zero down or 5% down, throw a little extra down because of the rate I'm giving you.
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Chapter 2: How did Brandon Rooks build his investor base?
And everybody got to keep their properties. And it's really where I started to build my investor base in the real estate arena is by making those choices. But- Got headhunted over into the full-scale large development sales at Lake of the Ozarks. And I had about $86 million in projects under contract with the hedge fund group out of California. And that was 07.
And then we all know what happened in 08. And my whole world came crumbling down, right? Lost everything, had to file bankruptcy. But I did not let any of my investors lose their money. You know, there was a lot of people had deposits. I look, I don't care if it takes me a year, five years, 10 years. As soon as I can make up the deposit you put down on that, I'm going to make it up for you.
Chapter 3: What strategies did Brandon Rooks use during the real estate collapse?
And I did that. And that that built my reputation as being someone that stood behind the investment. So that's kind of when I got into real estate. And, you know, it kind of sucked because I'm like, you know, start from scratch in 2010. But I jumped back in. And started helping people just buy some little lots as kind of like a buy and hold strategy.
Then I got back into connecting with renovators and builders that I knew from around the country. And I started helping investors start investing in fix and flip, turnkey renovations and new construction. And long story short, in 2015, kind of at the peak of when I was selling turnkey rental properties, I sold 954 doors across the U.S.,
And then I saw the prices start to climb and the rates were still doing good, but I saw the cap on cap return, cash on cash and the cap rates start to come down. It came down below the number I was comfortable with. And that's when I moved into raising money and private capital to actually invest in the builders. that kind of shifted and changed. And that's where I'm at today.
And that high level is we basically came down to now all we do is investors invest with me. I lend it to my strategic partners in the Southeast, but we are in and out at dirt. And so I found a way to cashflow on land. And we'll, we'll talk about a little bit about that a little bit later in the podcast. So that's kind of where I'm at. I'm, you know,
Love sales, dumb luck, got into being a hedge fund manager, so to speak. We're now sitting at about probably around $75, $80 million in capital raised, and all we do is invest in dirt.
Yeah, so- you know, you've done a lot in a short period of time. And so where, where do you think the turning point was where you said, man, this, this investment and I'm asking for a reason because there's so many facets of real estate that that don't go into the investment side of real estate.
And I just, I feel like if you are selling real estate on the retail side or you're a loan officer, you understand this business, but if you're not investing in it, you're essentially like a damn transaction coordinator, right? which look, there's nothing wrong with that.
I made a ton of money selling a ton of real estate, but I realized a long time ago that being on the investment side is where true wealth is built. Like, where did you, was there a moment where is there a transaction? Like, where did you, where did you kind of pivot and say, man, I got to get on this investment side and I really got to learn and do and understand this.
You know, I had invested myself and bought some of those turnkey renovations. And that was a great path to setting me up for the next place. So I did do those. And then I, you know, had maxed out my mortgage loans that I could do under, you know, Fannie Mae, Freddie Mac, whatever. Of course.
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Chapter 4: How does investing in land differ from traditional real estate?
Yeah. So we didn't have all the carrying costs. We didn't have all the, you know, the unseen that could happen. The labor just, you know, shortages and the supply chain. None of that. It was just in and out of dirt. Dirt never changes. You know, it just gets, becomes more and more valuable. And that's what we learned. So the profit margins, my strategic partners have are like on average 40 to 60%.
So they take a piece of ground. Yeah. from start to finish and their profit margins are on average 50%. So with that and how we've structured our strategic partnership, they pay us a really strong interest rate when we lend them the money for acquisition, entitlement, and soft costs, which mostly banks won't do, right? Banks want them to buy the ground. Yeah.
Buy the ground, put the money down, carry a note. And then that's where you get into trouble. So it, and I'll, we can talk more on that a little bit later, but effectively, even if I'm
charging them between 20 and 30 annualized return which i know sounds too good to be true but if you understand how that works by the time they get that ground ready and sold off and they have their let's call it 50 profit the interest rate that i charge for that 12 months actually becomes about a two percent interest on the entire project yeah yeah it's nominal but a bank still won't do it that's why you have alternative investors like us right and uh
Which we get to, much like you, we get to proudly say that we've never missed a quarterly distribution. We've never paid less than the preferred interest that we've offered. We've had six profit-sharing interest quarters in a row.
And what we've helped, LTV, which is another important factor, is this $75 million that we've raised for my strategic partners, they're now sitting on $1.5 billion of retail ground in their pipeline. Yeah. So at 50% of that, that's $750 million. So I've got a 10% LTV against the profits that they're expecting. So it's, man, it doesn't get much better than that.
So this is, you know, this is obviously a very profitable niche that you've discovered and really been able to leverage it and make it work really well. You know, how did you figure this out? Like, you know, this isn't. And when you think investing in real estate, you don't wake up usually and say, hey, I'm going to go after dirt and figure this out. It's a great play. I've done it.
Not at the skill you've done it, but to your point, we were doing developments and I had a couple of nationals come knock on our door and say, hey, before you start that next one, we'll buy the ground from you at X. And I said, shit, I can't build the houses and make that much money. Right. So how did you I mean, how did you figure this out? Was it a deal that you did? It was just an idea you had.
Like, how did you get to this point?
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Chapter 5: What is the significance of strategic partnerships in real estate investing?
It was a piece of ground that we called the Oneida parcel out in Charlotte, North Carolina, which, by the way, our strategic partners were operating in the Carolinas, Florida, Georgia and Texas currently. we have the ability to scale this across the country with, and we sell to 14 of the top 25 national builders in the country. And they're always begging us to come to their markets.
Like I can't raise capital fast enough. You know, you have to give me some time, but it was one piece of ground. It was going to be 99 townhomes. We picked it up for $3 million from the bank, a legacy lot, you know, from the 2008 collapse and no sooner than we bought it, Ryan Holmes, their rep, Tim Samuels came to us and said, hey, we were getting ready to buy that ground.
And our partner, Lindsey Jarvis said, well, you're too old, too fat and too slow, I guess. And he tracked us down and he's like, look, if you ever want to sell it, call us first. And we were sitting on it. We were building other stuff, single family homes and some scattered lots and some smaller parcels we're working on.
And it was about, you know, every month or so, Tim would kind of come reach out. Hey, you haven't pulled a permit. You haven't started. He goes, yeah, yeah, we're getting to it. But then one day, you know, he was just persistent enough. Lindsay said, fine, you know, come sit with us, make an offer. I assume Ryan Holmes is on your back about trying to figure out how to get that piece of ground.
And I'll keep it short for the podcast, but he brought an offer and it was like, what the hell? This doesn't make any sense. The offer was over $6 million. And we're like, man, even if we, like you said, even if we built the project all the way out to the end, you're not getting that.
Yeah.
We were going to make like, yeah, we're going to make like 20,000 a door, but this made us make 33,000 a door and we never had to build anything. And it was that light bulb moment. It was just like,
the hell would we ever continue building when we could do this so we just started going after more ground and it wasn't long after that tim samuels was let go from ryan holmes which she'd been there for years and he had he was known as the godfather of land in the carolinas and they let him go to replace him with some young buck out of college you know thinking that this guy could do the same things that you know tim would do and they'd have to pay you know 350 400 000 a year well
When they did that, they lost 1,600 lots that they had LOIs on and some that were under contract because they let everybody know that Tim was no longer with the company. And those sellers were like, well, Tim's not there. You're not getting lots. That's a sales lesson. That's a lesson for any business owner out there.
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Chapter 6: How did a specific deal change Brandon Rooks' approach to investing?
Follow up one, go, you and I have talked about this before. There's business inside your business, whatever it is you're doing. You know, if you're in the real estate investment arena, you've either invested or you've created connections or you've worked with some investors. You have to, one, have something that's worth raising capital for. Right.
I believe that you want to keep it as simple as possible. I've seen so many operators and fund managers just complicate the crap.
Indeed. I got to stop doing that right there. That is probably, listen to what he just said. I was literally on the phone with two people yesterday that wanted to start a fund. And in the first five minutes, I said, I'm confused, which means an investor is going to be confused.
And I said, if you can turn this into a simple debt offering, you're going to target a fixed return with some upside that you can spell out. Simple, people say yes. Complex, people say no because they don't understand it. That's a great piece of advice.
Yeah, it is. And if you're going to raise capital, you need a structure. I would recommend for someone just getting in, probably go to a 506B. If you've got some people you've worked with, because that will allow you to bring in some non-accredited, sophisticated investors. Also, make your offering feasible. I see guys that come out like, well, it's got to be $50,000 minimum. Well, guess what?
A lot of people don't just have $50,000 laying around. And if they're a good investor, they've invested it. So my offer has always been like $10,000 minimum and $1,000 shares. I want to make it so that you can use qualified or non-qualified funds. So self-directed IRAs, solo 401ks. Yeah. You know, just make it so that anybody that wants to invest- has the ability to invest.
Now, 506B has some drawbacks, drawbacks for me because we started to grow, but yeah, we outgrew it. And we ended up having three 506Bs because you set a number, you can only have 35 non-accredited investors. Once you hit the number or your date, you close it. And we learned that because we're growing,
We learned that a Reg A tier two worked better for us because there's no cap on how many non-accredited investors we can have, which by the way, all of my non-accredited investors are just simply referrals. They're family members or the friends of my accredited investors. that now say you've never missed a distribution. You always come through.
I feel comfortable referring some of my family, you know, because a lot of think about this. If you're raising capital, your investor might invest, but they might not want to tell anybody else about you until you, they've got a tried and true tested, you know, performance. They want to see you perform for a few years. And, uh, But make it simple. You don't need an A class, B class, C class.
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Chapter 7: What lessons can be learned from the sale of the Oneida parcel?
And after management fees and operation costs, which my management fees and operation costs is like 3% of the total capital raised.
For as big as you guys are. Yeah, it's low. Yeah, especially for as big as you guys are.
Yeah, and you know, Yeah. Well, sometimes, yeah. We work our asses off though, too, though. I should be hiring more, but I'm, I'm also, this is a family legacy. Yeah. You know, and it's my family that works for me because I really don't trust my investors to just anybody. No. I've seen companies blow up where someone came in. Yeah, let me come in and raise capital for you.
And, you know, they come in and then they've got their own little side thing and they start swindling your investors.
Yeah. You know, the funny thing is, the funny thing is we're Brandon and I are in a lot of the same circles and rooms. And I'd say the last three-ish years, the one thing that I always hear from a bunch of people is, and look, I'm not painting everybody with the same brush.
I'm just telling you guys in our circles what I hear consistently is myself and him are the only two people delivering on all the places they invested their money. That's what I hear consistently the last few years.
And you're not wrong. It's hard to go wrong with a guy named Brandon. Yeah. In our circle.
So if you guys are listening to this, you guys know me, you know, I won't let anybody sponsor the show that I don't trust. I will not recommend anybody that I don't trust. And frankly, if you have invested with me or you've reached out to me, you know that the only other person I've ever recommended outside of myself or one of my partners is Brandon's fund.
So if you guys are paying attention and you're listening to this and you want a place to park money, he's somebody that I trust. And that's one of the reasons why I asked him to come on the show. and talk to you guys because there's, for a lot of people out there, the door is closed for you to get in investments like this. And he created something that you guys could do, which I think is great.
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Chapter 8: How does Brandon Rooks prioritize his investors' success?
You know, we could have we could probably do a full day on real estate.
No question about it. The last question I'll ask you, it's the same question I ask everybody. It is and it can be whatever the version is for you. What is waking up to wealth? What does that mean to you?
You know, to me at this stage in life, it is freedom. Don't get me wrong. I'm at this desk probably 10, 12 hours a day, but I love what I do. If I wanted to go take two weeks off and go to a room with my wife, I can do that. And waking up to wealth means I've achieved the level of where my passive income is.
exceeds my earned income i can do whatever i want to do doesn't mean i'm gonna do it doesn't mean i'm gonna go get stupid and start buying you know a hundred foot yacht and um buying houses all over the country you know i still i still live as if i'm a blue jeans blue collared poor kid so to speak. And when I do invest, I invest in, I don't just invest in things like this.
Sometimes I, you know, we all have to figure out how to spread our money that we make a little bit. So, and I think you've seen some pictures. I got a nice little room on the other side of my desk here. Those, those things that I have in there, I could sell for more than I paid for them, but it's the freedom to not be worried about, are my bills paid? Can I,
take off for two weeks, three weeks or four weeks, and the company will still run. And I have someone behind me that helps take care of that, you know, and now that we can pretty much go from anywhere in the world anyway. So I'm accessible wherever I go, you know, but it's that freedom of just, you know, not living paycheck to paycheck. And also I, I, I feel like I've built the right thing.
My investors, you're a rockstar investor if you work with us and you're not just an investor, you've really become a friend. So I have 518 really good friends, you know, and that, that was built up from matter of fact, I just did the numbers on this the other day. I think we're going to put it on our website, you know, 2017, I think it was 70 investors that I was working with.
And from that time to now, we're at 518 with $75 million. Think about that for a minute. Some of our people are $10,000 investors. Some are 100,000. Some are seven figures. But- we don't, we don't lose a lot to attrition. I mean, our investors stay with us and they keep bringing us more investors. So do what's right. And waking up to wealth won't be that hard.
And by God, by all means, it's not going to happen overnight.
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