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We educate investors and potential investors on the in's and out's of investing in rental property. We focus on residential and multifamily investing, but include commerical, storage, mobile home parks, and more. We interview industry experts on tax strategies, property management, vendor selection, syndications, capex, and more.
Hey, investors. Welcome to the retire on rentals podcast. I'm your host, Nicholas Cook. And in this show, we explore how to optimize real estate investing, create passive income, discuss operational tactics in ways you and your family can retire on rental income. If you wanna invest in real estate or currently do, then this podcast is for you.
Nicholas Cook:Alright. And today's guest here is Ryan Morell. He's the sales director over at Rain City Capital. We're really excited to talk to you. You guys bring a whole different approach to, investing and opportunities for clients.
Nicholas Cook:But before we jump into kind of a little bit more about how you guys work with investors, I wanna learn more about, you know, how did you get into the real estate world? There are different ways people land in the real estate world. Some of it's, you know, because they grew up in a family that does real estate. Other times, it's because, you know, they saw some sort of infomercial that drug them into the field, and sometimes they go the broker route. But, like, how did you get into this business?
Nicholas Cook:You've obviously had a really successful career.
Ryan Morell:Yeah. I actually it's a funny story. I actually kinda fell into it. Back in 02/2011, beginning '11, somewhere around that time frame, I was working at a bank and I hated it. I I was a banker.
Nicholas Cook:Were you teller or like what were you doing?
Ryan Morell:I was a banker and, you know, I just whole banking world thing is is tough. I I it's not genuine relationships, right? Which that is something that's a huge part of my life. And I always felt that it was really hard to build those relationships at a bank. And I was looking for something else and just had an opportunity.
Ryan Morell:So I was hired, as kind of a liaison between two different groups that have investor clients that they bid for at the foreclosure auction. And so got an opportunity to lend money and kind of be the go between between these two groups. It's kind of a Switzerland, if you will.
Nicholas Cook:Got it. Yeah.
Ryan Morell:And so, quickly picked it up and just loved it. You know, I love the foreclosure auction. That's where I started. I still do that today. It's it's high pace.
Ryan Morell:Think on your feet. I'm really good at that. Also along the way building those relationships. I'm very trusted as well. So it was just the right role for me.
Ryan Morell:Mhmm. From there, I just kinda went into just kinda grew it and kept moving and shaking and and started doing some of my own things. And to this day, I'm still lending hard money.
Nicholas Cook:Alright. Cool. Well, that kinda leads us into obviously, you're over at Rain City and, you know, you guys work with investors. Right? This is not like an everyday regular real estate loan type place.
Nicholas Cook:You're working with with people who are trying to do different types of deals. So maybe you can tell us about your investor pool in terms of who comes to Rain City. What are they looking for?
Ryan Morell:Yeah. So everything we do is non owner occupied. We fund distressed homes. You know, we're So
Nicholas Cook:like pre foreclosure, fix flip, that kind of stuff.
Ryan Morell:Anything that is investment related. Right? It's people that fix and flip homes. They buy rental properties. You know, nothing that they're planning on living in, just something that's 100% investment.
Ryan Morell:Got it. Got it. So short term financing, you know, were known as bridge financing to, you know, get you from point a to point z, whether that's flipping, buying, renovating, selling, or buying, renovating, and then refinancing into like a rental loan. Yeah. Something long term.
Nicholas Cook:Yeah.
Ryan Morell:Yeah.
Nicholas Cook:Okay. And, you know, one of the things that Rain City talks about is mutual success. That's really kind of a big thing that you guys promote. And, you know, candidly, a lot of times people are scared of hard money lenders because, you know, they kind of not only do they, you know, control the process, but they've got terms that are very much in their favor. They're charging usually higher interest rates.
Nicholas Cook:So how do you think from your perspective Rain City is able to, you know, share mutual success with your clients? Like, know, how how do you guys practice that?
Ryan Morell:Sure. Sure. That's a great question. It's one of our highest values. Mutual success is is essentially their success is our success.
Ryan Morell:It's relationships. Yeah. You know, we are I mean, I'm a little biased, but I feel like we are the best at that. I mean, I've got clients that I've been working with for almost fifteen years.
Nicholas Cook:Wow. That's a long time.
Ryan Morell:Yeah. I continue to buy and and flip and and grow and watching their success, right
Nicholas Cook:Mhmm.
Ryan Morell:From the get. And then our success, it's mutual, right? It's something that we're growing together. And so my whole goal with with when I work with people is to have that mutual success because if they're failing, we're gonna fail. It's it's it's a mutual mutually beneficial thing to consider when you're working with clients.
Nicholas Cook:So are things that you guys do to help with that? Meaning, like, are you more flexible with underwriting? If you've got someone's deal that ends up a little bit upside down, you guys are I mean, I obviously, you you have a business to run, but maybe you could unpack maybe some specifics of things that you've done to to really help with with your, you
Ryan Morell:know, borrowers. For sure. That's that's another great question because, that's exactly what we do. We we, you know, we're we make our own decisions. Right?
Ryan Morell:We're not guided by, Fannie, Freddie, any of the we we basically kind of dictate what happens. It's that's a beautiful thing about private money. Right? Yeah. As long as borrowers are are, you know, communicating with us, we're gonna communicate with them.
Ryan Morell:If they need more time, we're gonna give them more time. I I'm not afraid to tell them straight up. I don't think this is a deal. Mhmm. Or, you know, tell them this is a great deal and help hold their hand through the process.
Ryan Morell:But, yeah, we definitely work with our clients because we do value that long term relationship.
Nicholas Cook:Yeah. And it sounds like you've got some long term repeat clients, which is great. And so who is your ideal client? I mean, if somebody's out there and they invest in real estate or wanna invest in real estate, you know, who would be a good person to go and start a relationship with Rain City Capital? Really anyone.
Ryan Morell:You know, a lot like, over the years, I've seen, you know, these shows that come out, you know, and flip shows Yeah. Yeah. All the things and so people wanna do it because it's exciting. It's fun. Yeah.
Ryan Morell:I work with the the the, you know, short time like brand new, never done real estate in their lives to the ones that have been doing real estate their entire lives and and have all the, experience to go with it. Mhmm. You know, I I funded recently a family, you know, mom, dad, brother, sister, team. They wanted to flip a house together. So they pooled their money in and they flipped their house and it's exciting because it's their family venture, you know.
Ryan Morell:That's cool. And so, yeah, anybody that's looking, you know, really good clients are contractors to be honest. Because they're the ones that kinda, you know, they they know what the pricing is. They run their own, you know, they run their own team, their own renovations. It just makes sense to implement that into their business.
Ryan Morell:Right? Yeah. They're already doing the work. Might as well do it for yourself. Totally.
Ryan Morell:Realtors too. Realtors are a great way to go because they have access and those tools to know what's a good deal, what's not a good deal. That eliminates part of the equation because with in this business as you know, Nick, there's too many people involved. Way too many people involved. Right?
Ryan Morell:So you have to like really trust Yeah. The people that you're working with. And for me, I always wanna be that that that person in your back pocket that you never have to worry about. And that's what that whole relationship is means. So if you're a realtor, a contractor, or even a hard money lender, like those, if you're in that sex, like that's just one less thing you gotta worry about because you have a little bit more control.
Ryan Morell:So those are typically but anybody can do it. Right? It just takes hiring the right team and making sure that you're lining yourself up with the right people. And that also comes with time.
Nicholas Cook:Yeah. Yeah. Who you partner with is extremely important. I mean, it can make or break deals for sure. And, you know, so you're talking about, hey.
Nicholas Cook:Anybody could be one of our clients. Right? They could be somebody who's a starter investor. They could be somebody who's a seasoned investor. You when I think about that, I'm like, okay.
Nicholas Cook:Well, how are you guys underwriting those people? Right? Because, you know, traditional banks, a lot of places, everyone's kinda got their recipe for how they do this and their risk tolerance. Some of it's underwriting the person, the borrower more. Sometimes it's the deal.
Nicholas Cook:How are you able to apply your underwriting in a way that you can work with such a wide group of people?
Ryan Morell:Yeah. But we, you know, we have we have a a simple set of guidelines, right? You know, a lot of it has to do with experience. The more experience you have, the better the terms can get. The more rope you get essentially.
Ryan Morell:It gets easier. When you start off, you know, we wanna be a little bit more cautious. We want you to kind of prove what you can do. Wanna we wanna help guide you and get you to a point where terms get better, where you can put less money down, you know, or, just do more outside the box type transactions like foreclosures or whatever it may be or ground up construction, you know. So Yeah.
Ryan Morell:As time goes on, you grow, they build, and you go to the next thing. And so, just just a little bit tighter, but I mean, that's about it really.
Nicholas Cook:Okay. And, you know, one of the things that, you know, the reason people go to hard money is speed. Right? That's one of the primary reasons and risk tolerance. What is the turnaround time at Rain City Capital typically on, you know, if somebody wants to flip a property.
Nicholas Cook:I know that, you know, I've got experience doing that. And it's you're really in a race to give that person especially if you're dealing with, like, a pre foreclosure, something that someone's heading down the wrong path, and, you know, that can be a competitive position and your ability to get them money quickly is really what sets you apart. What is your guys' if if you do that type of deal, well, you know, how how would your timeline like?
Ryan Morell:That's a good question. I mean, it really kinda depends on on on the client. Right. We can get it done in a matter of days. It's it's a cash transaction essentially with with the private lender involved.
Ryan Morell:The more experience you have, the less things that we're gonna need on our end. So literally days. But, you know, or the new newbie coming in, probably about a week. Yeah. I I always tell people, don't give me a week because it'll be a lot less stress for all of
Nicholas Cook:us.
Ryan Morell:Give me about ten days to
Nicholas Cook:do something. Have some breathing
Ryan Morell:room. But if we need to, sometimes you have to do whatever it takes to get that deal. Yeah. And sometimes it's it's shortening the close date. And I get I connect with realtors all the time, sellers agents that are saying, are you sure you can get this done?
Ryan Morell:And I'm like, yes. Absolutely. I know who the client is. Mhmm. I know the deal.
Ryan Morell:I've looked at it. We're good to go. And we get it done. And that's the biggest thing for me is like always saying what I can do and doing it. And I think that's what makes us awesome because we're just that's timelines are everything.
Ryan Morell:We need to be upfront with our clients and tell them exactly what to expect. And if I don't think it's gonna be something that's gonna be done that that quick, you know, we'll just let them know and then here's the reasons why.
Nicholas Cook:Yeah. Yeah. So one of the things that you guys do that's pretty unique, and this is not something I've done firsthand, and so it was pretty cool to hear about is how you guys handle the foreclosure auctions and the opportunities you have there. Because, you know, there's a lot of higher hard money out there that can bring in and say, hey. You know, if you wanna flip this house, you wanna do this or that, ground up construction, you know, those kind of things.
Nicholas Cook:I feel like there's a lot of people that exist out there that are in that space. But what you guys are doing with the foreclosure business is really different and it really changes the accessibility of that for people. So could you kinda tell us about what you like that whole kind
Ryan Morell:of model you guys run? Absolutely. Yeah, it is unique. It's different and it's it's it's awesome because I really am the only person and especially in this area that does it. Mhmm.
Ryan Morell:Because it's a lot of risk, right? As a lender, you have to have security and escrow, escrow, title insurance, all those things, they they promote security for a lender. You know, when you go to the auction, we literally go to the bank, take cashier's checks down there, we go and bid on properties on behalf of our clients. And if they win, we put them on title. And then, we know how to securitize securitize ourselves, with the deal so we don't get into trouble.
Ryan Morell:You know, and it also comes with a lot of experience, right? Like I've got a whole separate business where we have a group that we do as much of the due diligence as we possibly can. And we have a whole team that that helps support that. And we put all of our information on one space and we allow our clients to be able to kinda tell us how high they wanna go and we have them all prequalified and we go and try to buy them a property.
Nicholas Cook:Yeah. And so I think the thing that's unique about it is not only you guys at the auctions bidding for them, but you're lending them the money. Right? Correct. And that's the thing I think that's been the barrier for most people going to foreclosure auctions is you've gotta have those cashier checks.
Nicholas Cook:Right? And so that that's really kinda what I thought was pretty spectacular. And you guys are doing, you know, how are you guys handling your due diligence on those properties, right, before you show up? Are you you know, that that's another kinda limitation for people which is, hey, there's there's a lot of risk here.
Ryan Morell:Yeah. No. The team, we have a great team and they've been with me for years. And it it's all the way down to, you know, driving the properties and taking pictures, trying to find reasons why we shouldn't buy this thing, you know. Is it across the street from a gas station, you know, that Yeah.
Ryan Morell:Is it, you know, is the is the falling down a hill. Right? Yeah. Just because one time we've I mean, we've done this many times actually. It's over the years where we go and drive a property, it postpones.
Ryan Morell:Three months later, you know, we have to drive it again, come back, it's burnt down. Right? Oh, okay. Yeah. Like you never know what's gonna happen with these.
Ryan Morell:Yeah. Other I think the most important is title. Right? Title, yeah. Title is more important.
Ryan Morell:The most important part and the riskiest part about it because, you know, we get a quick title report, but nothing's guaranteed on that. Right? It's not a preliminary title report. It's nothing that the title company is going to ensure. So we cross reference with a couple of different title companies and make sure that we have all of our information.
Ryan Morell:My business partner on the group side is kind of a title guru. Mhmm. I have a lot of trust and faith in him and over the years Yeah. We've acquired hundreds and hundreds of properties at the foreclosure auction over the years. And so he's been really, we a lot of the mistakes we've learned along the way, we've personally acquired them and made those mistakes and we never forget about this.
Nicholas Cook:Sure. Like it's seared into your mind.
Ryan Morell:That's Yeah. So we know exactly what to look for. But sometimes sometimes they're not everything is included in title, and that's part of the risk. When we talk to our clients and we get them signed up, it's the thing I always try to do is talk them out of it because it is a risky business and they're liable for that. Yeah.
Ryan Morell:What position the liens are. Right? What liens stay and what liens go away. Federal and state tax liens, you know, just everything that that they need to know, we put on our sheet so they they have that information. But nothing is guaranteed.
Nicholas Cook:Yeah. So that's interesting. You said something that I just wanna clarify to make sure this is the case. When you guys are looking at a property, you're running, you know, those title reports typically like trios. Right?
Nicholas Cook:Right. But you're saying that you're running a trio on a property with multiple title companies. Yep. So you guys are having different title companies looking at individual properties, so you can cross reference that.
Ryan Morell:Well, have relationships with with a couple different title companies that we've worked with over the years. Yeah. And so they give us access to some of their information. So we're able to do it ourselves. We're able to pull them up, figure it out, and kind of, make sure that we're just we're getting everything correct.
Nicholas Cook:So that's an interesting thing because, you know, that's not something that I've heard of before. It's not something I've done before. But it is a really interesting risk management tool. Because you guys are doing enough volume, you've probably seen discrepancies between one company's file and another company's file. Absolutely.
Nicholas Cook:That's a that's a professional move. Well, that's a pro move.
Ryan Morell:Sometimes, you you know, if something wasn't properly reconveyed or maybe a lien was left off.
Nicholas Cook:Mhmm.
Ryan Morell:I mean, I personally have acquired a property one time that, was the only loan on on title that we could see. Yeah. And I was surprised that I got it so cheap. Come to find out it was a that I acquired. Gosh.
Ryan Morell:And the way that the the title works when you buy these is that everything behind it goes away. Sure. Right? So that's why a lot of people foreclose even though the debt on the position lien is so low, they probably have more in the back, right, that makes it underwater. But if you buy a you're you have to pay off that And you have to pay off that before that lien goes to foreclosure or you lose your investment.
Ryan Morell:Mhmm. Right? Yeah. Now we buy seconds all the time. Sometimes it's worth it.
Ryan Morell:Sometimes the will foreclose and then the isn't even in default. Right? Yeah. Or if it is in default, we know the timeline we have, to get that paid off. But the other challenge is actually paying it off because the banks don't like to give information on payoffs because you're not that person.
Nicholas Cook:Sure. Yeah. You have to get a release.
Ryan Morell:Try to get you paid, but Yeah. You know, it's right hand, left hand thing, especially with these bigger banks. Right?
Nicholas Cook:Especially when they're in a loss department. Right? Yeah.
Ryan Morell:They don't know. Yeah. So, so but it turned it was funny because I I had this property wholesale. I already was selling it, and making some decent money on it. And, my title gal is like, Ryan, this is the you bought and the is x amount.
Ryan Morell:I'm like, oh, crap. So I was lucky in the fact that I knew the trustee and I called him. He's like, actually, they meant to file bankruptcy and didn't do it in time. So I was able to get out of it. Oh, no.
Ryan Morell:I was facing probably like a 20 to $25,000 loss on that one. Yeah. So and it happens.
Nicholas Cook:It it does. It happens. It does.
Ryan Morell:I've have clients that have acquired seconds and we're just like, oh, sorry. Well, let's help you try to get out of this or now they're working to break even. Right? Yeah. So it can be tough.
Nicholas Cook:Yeah. Not all of our winners. If they were, everyone would do it right. So it sounds like, you know, you guys do a lot of single family properties. Sounds like you've done some it's really just sounds like it's residential.
Nicholas Cook:Do you guys do any multifamily lending, for acquisition or ground up development or anything like that?
Ryan Morell:Yeah. We will. Multifamily is just a different animal, as you know. Yeah. And so it does take experience on on that end.
Ryan Morell:The terms are a little different. You gotta have a lot more cash involved. Right? A lot more skin in the game for something like that.
Nicholas Cook:Sure.
Ryan Morell:Yeah. And especially with ground up, because ground up is always changing and it's always evolving. But yeah, multifamily we will. We do we actually fund quite a bit on the short term side of things. Got it.
Ryan Morell:We don't have anything on the long term just yet. We're working on that. But, short term wise to get it from, you know, bridge from the acquisition to, to payoff, yes. And what and what
Nicholas Cook:kind of amounts do deal with? Because multifamily is a huge category. Right? It could technically mean five units or it could mean 500 units. So, you know, what are you what kind of arena are you guys playing in?
Ryan Morell:More of the smaller. Yeah. More of the smaller ones. But, the beautiful thing about this business too is you connect with others. Yeah.
Ryan Morell:And so I have a a an array of relationships that I work with that is if it's something that's a little bit out of our realm or outside of our box, one thing I love to do is connect my clients with people that I trust that I know I can get it done. And so there's nothing really we can't do, because I can find a route for you.
Nicholas Cook:Yeah. Makes sense. And, you know, you kinda mentioned this a little bit and I just wanted to clarify. Are these loans that you guys make and originate? Do you guys hold them within your portfolio or do they get sold or I mean, they're short term loans, so I can't imagine, you know, there's probably a lot of trading, but maybe.
Nicholas Cook:What do you guys how are you guys handling that?
Ryan Morell:That's a difficult question right now because, traditionally, traditionally, yes. But we are on such a huge growth path right now. We we had we've had record breaking months for over the last, I think, six to nine months. Every single month, we're growing our originations, growing, you know, we've we've funded a securitization last year. We got one another one coming up.
Ryan Morell:So we have to keep feeding that machine. So we have some actually good relationships on the no buyer side. We service a 100% of our own loans. So it doesn't matter. Our borrowers don't even know what's going on behind the scenes.
Ryan Morell:We have great relationships with them. We know exactly what we're able to do. We're also able to work or our guidelines with them as well and kind of negotiate how we want it pack packaged up to be competitive in the market. So we do hold. Yes.
Ryan Morell:But majority right now, we're we're working with our note buyers on.
Nicholas Cook:Got it. That makes sense. Yeah. And so obviously with that kind of, I mean, you've been growing through some interesting times. Right?
Nicholas Cook:We've seen really turbulent interest rates. You know, they've gone high. They've stayed high. They've, you know, the bond market's kinda doing interesting things these days. What is setting you apart?
Nicholas Cook:Why are people coming to Rain City? I mean, again, we earlier touched on the whole, you know, mutual benefit. But what do you think is driving your guys' growth?
Ryan Morell:Well, I think a lot of it also is our side of the coin. You know, the investment side of of the business is just completely different than the consumer side. And we're even through all the turmoil, we're we're always doing well. We've never really had moments where we've just dipped or we're not, you know, trying to figure out another job. Right?
Ryan Morell:2020 was the hardest year for us as a business. It was only because we decided to back off because we had no idea what was gonna happen for
Nicholas Cook:sure. And we're all kind of
Ryan Morell:Right. Yeah. But as as you know, that market exploded the year after. Right? Yeah.
Ryan Morell:So it's hard to to say. Now with the economic, you know, I guess, the heartbeat right now, there's a lot of unknowns. Right? There's a lot of questions that are gonna happen. We have no idea what where where things are gonna go, what what they're looking like, but we've always had continuous growth through this whole time.
Ryan Morell:Borrowers and client they're basically trying to find other ways that make sense in the investment side because there's never a bad time as you know to buy a house. Sure. And if you're an investor, you're you have to just think differently about how that works. And on a flip, it's different because you only have a certain amount of cash, and you have to plan accordingly to make sure that you don't lose that cash. Yeah.
Ryan Morell:You gotta exit. Right? Yeah. So it's always good to have multiple exit strategies. Right?
Ryan Morell:You have a a b even a c strategy. If something doesn't work, you you know how to get out of it. So you just have to be really smart about depending on what the market is doing. You know, back in like '15 through or actually '12 through '17, I I flipped so many homes and we just would acquire it Yeah. And turn around and put it out there if anybody wants it for a certain amount and then and get bids and within the two weeks.
Ryan Morell:And I I swear that the it was growing higher than 12%. The follow-up a month where we held it, the more money we were making. Right? Yeah. Those times are over, but Sure.
Ryan Morell:That was a fun one, you know. But but the market's always shifting, changing. There's always ways to make money out there and it's just you just have to kind of
Nicholas Cook:shift with it. Yeah. And so you guys have grown a lot and so that raises the question which is like, where are you guys getting all your funding from? Because, you know, obviously, you've been in at it for a long time. Is this something that the company kind of self funds?
Nicholas Cook:You guys have investors? Like, where is where is your liquidity coming from?
Ryan Morell:Well, I mean, like, we had our investor pool open for the longest time early. Right? And have just grown and we've always kind of stayed at that level where we're not ready to go to the to the to the New York side of things or or you know what I mean? It's Yeah. We we we've stayed at a certain consistent level and just grown, right, and grown our cash.
Ryan Morell:We pledge loans with the bank. We have lines of credit. It's huge. Just is only till just recently we actually opened up our investor pool again. And so, you know, we're because because we're on such a growth path.
Ryan Morell:Yeah. And then the securitizations is the new thing, you know. We're we're at Wall Street level now. We're we're amongst the top 20, in the country for what we do and our our
Nicholas Cook:Can you expand on that? Tell us people might not be familiar with the securitization.
Ryan Morell:Yeah. Basically, it's it's a it's a large pool of money that we're able to access, but we have to continuously use it because it's expensive. Right? So it's like one of those things where you have to continuously use it or or go. Yeah.
Ryan Morell:So that's why we're on we're we're trying to think of other ways outside the box where we can originate more so we can fill that. But what it does for us is it provides us with more opportunities to do cooler stuff. Right? Like lately at the auction, it's been tough because, we're having to utilize our funds in different places that we have a lot more fundings happening. I used to have like a pile of cash in the corner that I could take from, and these days it's a little tighter.
Ryan Morell:So having that securitization is gonna help really with being able to provide more cash for those opportunities Sure. As well as other opportunities that we can even hold. So, yeah, it's always a moving situation. We also, just acquired a company that allows us to do a lot more DSCR loans. And so that has also been taking a lot of our our cash.
Nicholas Cook:Yeah. That service coverage ratio loans.
Ryan Morell:Yes. Yes. Exactly. Yeah. And that's a long term rental loan.
Ryan Morell:It's private. You can have as many as you want, not guided by Fannie, Freddie. So, those have different guidelines and they're tighter guidelines, but, you know, you could most most of these investors haven't filed taxes in years. So it's a great way to buy a house and hold a long term and without having to file taxes. So it it's a it's a so that also has launched our our business even further.
Ryan Morell:But it's a and those ones are not something that we would hold. Those are DSCR loans are loans that we originate and sell originate. Sure.
Nicholas Cook:Yeah. Makes sense given the duration and everything.
Ryan Morell:Those are the only ones that we actually don't service, to be honest. It's a there's national servicers that do that. Got it.
Nicholas Cook:So, you know, one of the things that people always wanna know, and I'm sure you get this question all the time, and I realize it's not the only thing that matters. But in your kind of traditional business where you're helping people buy foreclosures or flip a house or things like that, What is the cost of that look like? You know, do you have points on the front? Point you know, what's the rate on the backside? Prepayment penalties, those kind of things.
Nicholas Cook:Do you have a kind of and I, again, I I know it's gonna vary probably based on the market, the borrower profile, the property. Do you have a kind of a range of like, hey, typically, this is what we charge at origination and
Ryan Morell:this sort Sure. I mean, we're anywhere between, you know, 1012% on the rate, interest only. Mhmm. On the short term loans, we have no prepayment penalties. Sooner you pay off, the more money you put back in your pocket.
Ryan Morell:Our our points range anywhere between one to three points just depending on the deal. Right? There's all different aspects, but majority is about two points, for origination, which is funded at closing. Unless it's a foreclosure. All the auction deals we do, all, the points in origination get put into the loan.
Ryan Morell:Mhmm. Okay. We there's ways that we have to do it in order to, kind of fit the mold. Those are the most asked backwards acquisitions you'll ever do. Cause it's like literally a handshake deal.
Ryan Morell:You're, you know
Nicholas Cook:Yeah. Because you guys are taking title and then you have to
Ryan Morell:Yeah. Yeah. Yeah. You know, here here's our account number. Go ahead and put that down payment in there, you know.
Ryan Morell:Go escrow. It's so it's it's really and that's why a lot of lenders won't do it. Sure. Because it's risk. That is more the mutual success part we're talking about.
Ryan Morell:Yes. Those relationships are huge and we are very very, connected with our clients in that way and they understand what happens. I've been doing this for almost fifteen years and never had someone not commit. Right? Yeah.
Ryan Morell:And so it's just one of those things where it's it's more delicate, but it is definitely different in the acquisitions. It's for sure.
Nicholas Cook:Yeah. That's interesting. Do you guys ever do any sort of like joint venture stuff with I mean, you guys are taking on a decent amount of risk. Do you ever and I realize it probably have to be like a home run deal or something that really made sense for you guys. But have you guys ever done or contemplated doing joint venture deals with people?
Ryan Morell:We've done them in the past. It's not really where we're headed now. Sure. But in the past, yeah, we we used to do that sometimes with certain individuals, you know, but not so much anymore. Not where we're going.
Ryan Morell:Got it. Yeah.
Nicholas Cook:Cool. Well, Ryan, it's been great talking to you so far. We're gonna take a quick break from a word from our sponsor, and then we'll be we'll be back. This show is sponsored by SleepSound Property Management, one of Portland's largest and top rated management companies that specializes in multifamily and residential real estate. They can help you acquire, operate, protect, and sell or exchange your properties.
Nicholas Cook:If you want to invest in real estate, give them a call or visit them online at sleepsoundpm.com. That's sleepsoundpm.com. Alright. We're back. You know, Ryan, one of the things that I wanted to ask you about because, again, what attracted me to talking to you about all of this is that you guys have such a different approach in the products that you offer to investors.
Nicholas Cook:And you mentioned that there's something you guys do, like cash as collateral. Like, what what is that? Tell tell me about that. Yeah. You know, that that's kind of an interesting concept.
Ryan Morell:It's a really cool creative concept. You know, one one of my my job really is to fit a square peg in a round hole. Right? It's putting a puzzle together, figuring out the, you know, I I like to ask my clients, what's your goals? What what is your strategy?
Ryan Morell:Are you trying to just flip on your homes? Are you trying to hold as many as you can? Are you open to whatever kinda kinda comes down the pike? And so finding out from them what their goals are specifically holds, right? Rentals.
Ryan Morell:They're looking to buy rentals. You know, everybody's probably familiar with the BRRRR strategy. Right?
Nicholas Cook:Yeah. Basically, yeah. Buy buy renovate, you know, prepare or whatever. And then.
Ryan Morell:Yep. And so you finance the whole thing. The whole whole shmuel. But the, the whole benefit of that, the the the point of it is to get your cash back and go and do it again. Sure.
Ryan Morell:Right?
Nicholas Cook:Yeah. Rent a leap.
Ryan Morell:Yep. Exactly. Essentially kind of buying a property for only the price of closing costs and then going and and doing it all over again. So we kind of have something like that, but it's not a burr. And the way that that works is that we will, do a regular short term loan.
Ryan Morell:And again, the whole goal is to get you bridge you from the short term to a rental loan. But it needs, you know, building equity along the way. Right? Doing the repairs, the renovations it needs so we can get that appraisal value up. So we fund a deal just like normal.
Ryan Morell:But, the the unique part of it is instead of recording the note at, you know, 80 or 85 or even 90%, we record the note at a 100%, and we hold the down payment as collateral towards that note. Right?
Nicholas Cook:Oh, interesting.
Ryan Morell:So when they go to refinance out, they're gonna get a payoff. The the the takeout lender is gonna get a payoff. And as long as the value of the LTV works, I always say generally 75% because it's harder to get 80 these days. Yeah. As long as we get paid off in full, we'll just give you that down payment right back.
Ryan Morell:And even if it's not, even if you don't hit full value, let's say you get half of it back. Well, great. You just bought a property for half the cash that
Nicholas Cook:you used.
Ryan Morell:Yeah. You were planning on using it all. Right?
Nicholas Cook:But our cash and cash returns.
Ryan Morell:Exactly. So I have clients that just do that with every deal they're holding even if it doesn't work out because they have the opportunity to get that back. Because sometimes, obviously, you know, we don't know what appraisals are gonna do. Like, sometimes it's it's that you could win, you could lose, it doesn't Sure.
Nicholas Cook:Yeah. Mean, it's especially after o eight, it's kind of, you know, it's a Even more yeah. So,
Ryan Morell:you know, if there's that opportunity to get more cash back, it's it's a great one. I've had clients that we've done this for and then they decided to go yard and do more on their on the house and build more equity. And they were able to get not only a 100% of their down payment back, but also cash out as well. Sure. You know, so this game is all about leverage.
Ryan Morell:Right? And and the more you can leverage out, obviously without being too levered, the more you can grow. And if you can do more with the same money that in in it in your debt service is is working out, you're you're in good position. And that's how real estate investors grow their portfolio is by utilizing other people's money. Yeah.
Ryan Morell:Yeah. Especially when they can use their own over and over again. Right? I've got a client too that that has probably acquired eight or nine rental properties over the years using the same down payment money with every property. It's pretty incredible.
Ryan Morell:Yeah. It's a cool it's a cool way to go for sure. Just creative.
Nicholas Cook:Yeah. Cool. Well, you know, one of the questions, you know, I'm sure our listeners have is, you know, where are you guys operating in? Right? We've got a pretty big, you know, kind of national audience.
Nicholas Cook:Right? So what is you know, where is Rain City currently lending, like, if somebody wanted to work with you? I mean, obviously, I'm sure we can throw some resources out there about the website that shows that, but what are your kind of primary areas?
Ryan Morell:We we're right now, we're we're doing short term loans in, I think, 16 states, and grow and counting. So we're always looking for the best markets that we wanna be a part of also that work better for us. Right? That as a lender, we wanna make sure that certain states are a lot harder to foreclose in or to file default in. We wanna make sure that we're safe as well, our investment secure.
Ryan Morell:So we're we're continuously looking for other areas to grow. On the debt service coverage ratio loans, DSCR, those ones we have, I think, 43 states we can operate. Wow. Okay. But our primary, I mean, we we bread and butter we started as in as the Puget Sound in near Seattle.
Ryan Morell:Right? And and then and then we've grown to to Oregon. And so for the longest time, we were just operating those two states.
Nicholas Cook:Primarily in the Northwest. Yeah.
Ryan Morell:And then went to Texas and Tennessee and just kind of grown all over.
Nicholas Cook:Seven states.
Ryan Morell:Yep. I mean, a lot of my clients, I've got the bulk of mine are are Oregon and Texas. Sure. Do a lot of loans in Texas and have spent a lot of time down there, building that that arena. Now we've got a lot of, you know, we we have a ton of loan officers now in all different areas of the country that are trying to kill their areas.
Ryan Morell:So, yeah, we're continuously growing into different regions, different states, and learning those how to how to how to do it in those states too has been kind of a challenge in some aspects, but it's how we grow.
Nicholas Cook:Yeah. Absolutely. So one of the questions I have, and again, you guys are on the private money side, but inevitably this may play a role is like, you know, obviously, people talk about interest rates in the market going up and down. You know, right now, people were always, you know, they they were kind of use the ten year treasury as kind of a as a kind of benchmark. Right.
Nicholas Cook:How does that affect your practices? I mean, does it does it change it much? Is it or is it are you guys pretty, you know, insulated from that?
Ryan Morell:I mean, it does. We we we do look at the tenure in the mortgage backed securities market. Mhmm. It's more of like cost capital, right? Yeah.
Ryan Morell:That's how it's affected. We're always going to be, I mean, at some aspects like and I don't know fully what our cost of capital is, at the moment, but I know, you know, as as things were changing, you know, we do a 10% loan, we're almost breaking even.
Nicholas Cook:Sure. We
Ryan Morell:offer that to our clients because we want, you know, their we want the relationship to us is more important, right? Yeah. But it's it is moving. It's ever changing. DSCR is a little different, right?
Ryan Morell:That's more operating on on the market itself and always is going up and down in fees and rates. So Sure. Yeah. Maybe but I'm not exactly sure what that cost of capital is, but that's basically kind of what it affects.
Nicholas Cook:Got it. And I know you don't have a crystal ball here or anything like that, but what do you think is gonna happen with interest rates this year? Do think they're gonna get better or for for for real estate investors or do you think they're gonna hang out where they are?
Ryan Morell:If I had a dollar for every time somebody asked that do. Oh gosh. I mean, I man, I don't know. It's hard to tell. I I we've been thinking that rates are gonna go down over the last couple years, you know, and it's kind of been this little, like, steady up but coming down and so it's ever changing.
Ryan Morell:I mean, the rates just went up a little bit. So it's it's hard to say. I I can't even really comment on that because it's
Nicholas Cook:you do,
Ryan Morell:you think you do and you don't and, you know, so we I mean, we did thought that 2021 was gonna
Nicholas Cook:be a lot
Ryan Morell:different than it was, you know, but Yeah. Who knows? Especially with the heartbeat of the of the economy right now, like,
Nicholas Cook:who knows? Yeah. There's a lot of lot of balls in the air there.
Ryan Morell:There's a lot of balls in the air right now.
Nicholas Cook:Well, if I'm, you know, if I'm an investor, I mean, of the things you mentioned earlier, you know, there's a it's always a good time to buy a house. Right? And that really comes down to, obviously, the deal economics. But, you know, people are talking to you, I'm sure, a lot. Right?
Nicholas Cook:You're you're schmoozing and wheeling and dealing. And so, you know, what opportunities are you seeing in 2025 currently for your clients? You know, what what are you looking at this year?
Ryan Morell:Well, it's a tough one too because, again, we don't know what's gonna happen. There's a lot of moving parts right now. But one thing I do know is that history repeats itself and history always shows growth in the market. You know, average growth is, you know, what, three to 4% a year, year by year. Sometimes it's seven, sometimes it's it's under.
Ryan Morell:But as long as you have the means to, acquire property and hold it and even if it does, even if it's a negative debt service, but being able to afford and maintain and hold that property, you're always gonna be growing equity. You're always gonna be paying down your loan. Rents are always gonna continue to increase. So that's when I say it's never a bad time to buy. It's because it really isn't.
Ryan Morell:I mean, unless you could you have to be able to afford it. Obviously, you gotta be able to support, the the deal and your payments and make sure to maintain the house itself. Right? Yeah. But if you can do that, you're always gonna win.
Ryan Morell:So as far as like what I'm projecting for this year, I know that a lot people right now are trying to hold properties. It's just really hard to debt service in our area. Sure. Yeah. Because it's the market's just
Nicholas Cook:Acquisition size. Yeah. I, yeah.
Ryan Morell:But a lot of people are looking Midwest or down south, and that's kind of another reason why we've opened up a lot of these states and, and building teams in different states and and still operating it from from home. Yeah. So and and what's cool too is over time, we're building a lot more resources to be able to like help people, you know, connect them with different resources that we can. And that's one thing I always love to do is if I can provide a resource, if you're not in that area, I'm gonna do it. Yeah.
Ryan Morell:So yeah.
Nicholas Cook:What kind of loan volume have you guys been doing? Like, I mean, like last year, do you have an idea Yeah. What you're kind of, you know, just to give people a sense of scale and Yeah.
Ryan Morell:Last year, we we hit a huge milestone that we never thought we'd be able to do. I think we funded over it was 523 or 27,000,000 in in originations last year. And
Nicholas Cook:That's crazy. Especially given the market you guys are going after and tackling. You know, you guys are doing largely residential. Like, that is
Ryan Morell:that's pretty And and truly, we did I mean, it was our goal. Mhmm. 5 half a billion was our goal. And we didn't think we're gonna get there. I mean, to be honest.
Ryan Morell:To be A lot of It was a lot of work for sure. But we've got a, like, a great team. And our I mean, again, I'm biased. Right? But our teams are rock stars.
Ryan Morell:Like, everybody in their area from from sales down to ops to assistance to, even even accounting. Yeah. Mean, everybody is a rock star. They have experience. They fit our culture because culture is actually our number one value.
Ryan Morell:We are a family. We just got together, last week or the week before. We fly everybody in one location just to hang out because culture is so important to us. And the the better the culture, the better we work together. And our teamwork is is to none.
Ryan Morell:And so when new people come aboard, you know, they're going through four or five, maybe six interviews before they actually get hired because we wanna make sure that they're the right fit for with us. Yeah. So I I give a I attribute a lot of that to our our our company wide. Yeah. I know personally, I've had deals where I'm like, I don't think I don't know how this is gonna happen.
Ryan Morell:We've got this amount of days and we still have to do x y z. And everybody pulls together and makes it happen. Everybody works hard. So Yeah. That's a huge aspect of it.
Nicholas Cook:I think it's I think it's Peter Drucker said, you know, culture eats strategy for breakfast. Yeah. And, yeah, we're big believers in culture. I mean, nothing will nothing will make your life better or worse than than than the culture
Ryan Morell:for sure.
Nicholas Cook:Well, Ryan, what haven't I asked you about that you think it would be important maybe for investors to know, the audience to know, that you'd like to share?
Ryan Morell:Yeah. I I think that, don't be scared of it. Yeah. Right? Don't be scared.
Ryan Morell:I think what holds a lot of people back from building their future in real estate is fear. And to be fair, they should be in some realm. We were never taught what a mortgage was. We were never taught how to do taxes growing up. Right?
Ryan Morell:It's it's something we've had to figure out along the way. And the people that are winning are the people that like to take the risks. They're the ones that aren't they don't have as much fear. But the people that that that are are they have a lot of fear are the ones that I think sometimes should be doing this because they're able to step back and be a little bit more conservative and and understand the process. It takes just education.
Ryan Morell:And the coolest thing right now about today is that you can get so much free information out there. So much free information.
Nicholas Cook:Yeah. It's pretty
Ryan Morell:I direct a lot of people to BiggerPockets. Right? We're we're very friendly with BiggerPockets.
Nicholas Cook:Yep.
Ryan Morell:We've all originated in the same area. Know a lot of people over there. And they give away so much free information that it's it's gold, really. So anybody can do this. And hard money, again, is like, you know, people have this thought and feeling that, you know, I've got this board over my shoulder.
Ryan Morell:I'm gonna come break your legs. It's like, that's cool. No. That's all, you know. We're a simple, you know, friendly service that we take on the bulk of the risk, and we help investors grow.
Ryan Morell:And it's something that we try to do with ease. We we we make it as simple and as seamless as possible for them. And once people understand the what hard money can actually do and the benefit of it, they're sold. It's like, oh my gosh. I mean, think about it, right?
Ryan Morell:If we're coming in and funding 85% of the total cost and you're coming in with 15%, and you end up making 20%, like your ROI is over a 100%. It's like you you know, it doesn't matter what fees are at that point. Your cash on cash return, it just makes sense with the amount of risk that there is involved to do this. You know, lot of the old school mentality is like cash, cash, cash. Right?
Ryan Morell:You use all your cash, but use all your cash, you could lose all that cash. Like, it's
Nicholas Cook:You definitely can.
Ryan Morell:It's not something you want, you know. So you saving your own cash is so important, especially in especially today. I'd say your cash is the most important thing that you can hold on to right now. And if you can leverage yourself out to where you don't have to spend it, do it. You know, there's a there's a term OPM.
Ryan Morell:Right? Other people's money. Yep. Well, I'm I'm an OPM person. You can use me.
Ryan Morell:Use us. Like Yeah. And and it's really not scary. It's it's easy. And one thing I enjoy doing is I love working with new new clients, people that have an idea.
Ryan Morell:Some of the greatest conversations come of it. And I can tell off the out the gate whether they're going to be a success or not. Right? And some and sometimes it's having those honest conversations. But fear gets in the way.
Ryan Morell:And I think that there's really, something that that you can learn to not be as afraid and and but still be conservative and win.
Nicholas Cook:Yeah. I love that. It's great. So we're gonna pivot here. I've got three remaining questions.
Nicholas Cook:And these questions are more to just get to know Ryan. Right? Just so we get to know you as a person. And, the question I have is, you know, if you had to have dinner with somebody, anyone Man. Dead or alive, who would it be and why?
Ryan Morell:I'd have dinner. That's a that's a tough question. I mean, really, I should just go with what comes to my head and, you know, well, so I love golf. Yeah. Right?
Ryan Morell:I love golf. It is such a passion for me. It's that one thing that you can do for four to five hours outside with friends having a good time, and it's my therapy. It gets me away from thinking as much as, you know, I do think. Right?
Ryan Morell:Yeah. So I mean, honestly, it's kinda funny. I think I'd hang out with John Daly.
Nicholas Cook:Yeah. Wish he
Ryan Morell:would be so much fun. Yeah. To like just hear him talking like, guess he's so different than anybody else on the golf course.
Nicholas Cook:Alright.
Ryan Morell:I'm just blown away because everybody else is so, you know, I was talking with somebody that well, one of our friends actually, and he was saying that like, I don't I don't understand the the dress code at a
Nicholas Cook:country house.
Ryan Morell:Right? Well, neither does John Daly. Clearly not. It's like it's so different, which is so cool. Like, I love that.
Ryan Morell:Yeah. So probably John Daly.
Nicholas Cook:Great. Great. And if you had to choose, whiskey or wine?
Ryan Morell:Well, I've gotten into wine a lot lately, but I'd go whiskey.
Nicholas Cook:Okay. Yeah. When you say whiskey, is it like scotch, bourbon? You got any like a top two?
Ryan Morell:I mean, I'm not as acquainted with whiskey as you are. However, you know, I'm I'm a Jameson guy.
Nicholas Cook:Nice.
Ryan Morell:Can drink
Nicholas Cook:Irish whiskey. There you go.
Ryan Morell:You drink it neat. You can drink it on the rocks. You can mix it. It's one of those whiskeys that just kinda goes with everything and it's not, you know, it's middle of the road. Yeah.
Ryan Morell:So it's my it's my favorite.
Nicholas Cook:I like it. And then the other question I have is that you've been in this business for a long time. What? Maybe seventeen years, something like that? Fifteen.
Nicholas Cook:Almost fifteen? Okay. So a while. You've seen seen a lot. You've been through a lot of market cycles.
Nicholas Cook:A lot of times people don't know where they wanna end up in their career. Right? And it sounds like you kinda fell into this. Right? But a lot of times people go through changes in their career, and that's fine.
Nicholas Cook:Right? They they figure out what they don't wanna do, and they they pivot. You've obviously stayed in this business for a really long time. How did you know that you picked the right career?
Ryan Morell:That's a really good question. I think for me, it was just I love people. I love working with people. I love servicing people. I love the idea of putting a puzzle together and making things work.
Ryan Morell:Excuse me. The, creative side of the business, being able to do my own stuff as well and learn from my clients as much as they learn from me, if not more. Probably learn more from my clients than than, than my own experience, to be honest. Because everybody's doing so many different things and it's like, wow, that's really that's really cool. That's a good idea, you know?
Ryan Morell:Yeah. I love watching clients that are that I do their very deal with. And then years down the road, it's like their hundred and fiftieth. And to see the growth and and and, you know, mutual success, right? To me, it it just brings like a this inner love.
Ryan Morell:Right? And I love that I'm able to do more. I'm I love that I'm able to play golf. Yeah. Not, you know, have a nine to five.
Nicholas Cook:Yes. Freedom. Some freedom and flexibility.
Ryan Morell:It's fun. I enjoy that.
Nicholas Cook:Awesome. Well, that's awesome. Ryan, really appreciate you being here today with us. Representing Rain City Capital and, yeah. If people wanna connect with you, what's the best way to reach out?
Nicholas Cook:Should I drop some stuff in the show notes? Do you wanna throw out an email or anything? Or where are you at?
Ryan Morell:Yeah. You can reach me. I am on social media. I don't have a ton of business social media stuff, just me personally. But Sure.
Ryan Morell:My email is ryan@raincitycapital.com. My four, phone number is (425) 319-7757. Best way to do it is text me, really. I'm on the phone all the time. It's it's kind of my livelihood.
Ryan Morell:But, yeah, phone is the best way. So yeah. Absolutely.
Nicholas Cook:Cool. Well, again, thanks for joining us today, Ryan. Really appreciate you being on Retire on Rentals, and, that's the show, folks.
Ryan Morell:Thanks, Nick.
Nicholas Cook:And that concludes today's episode of Retire on Rentals. But we do have a quick favor to ask before you jump off. If you haven't already, please go ahead and like and subscribe. More engagement means better content and more excellent guests. And we look forward to joining you on your real estate journey.
Nicholas Cook:Now remember, stay focused, stay driven, so you can retire on rentals.