Keys To Underwriting, With Rob Beardsley

Underwriting is at the core of any multifamily investment deal, but it is unfortunately often misunderstood by passive investors. LPs who have a grasp on key underwriting concepts, and possibly even their own models to evaluate potential deals, have a leg up in the investment selection process.

On this episode Rob Beardsley, Founder and Principal at Lone Star Capital, as well as the author of The Definitive Guide to Underwriting Multifamily Acquisitions joins the show to offer his advice on underwriting.

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Episode Highlights

  • Why LPs often neglect underwriting as part of their investment selection process.
  • What the most common underwriting mistakes are in the multifamily world.
  • The keys to successful underwriting on multifamily projects.
  • What passive investors should look for in deal structure to ensure GP priorities are aligned with theirs.
  • How sustained cap rate compression and rising interest rates have impacted the underwriting process at Lone Star Capital.
  • Rob’s perspective on the use of third party property managers.

Featured On This Episode

Today’s Guest: Rob Beardsley

About The Multifamily Investor Podcast

The Multifamily Investor Podcast covers trends and opportunities in the multifamily real estate universe. Host Scott Hawksworth discusses passive investment offerings in the space, including direct investments, DSTs, opportunity zones, REITs, and more.

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Show Transcript

Scott: Hello, and welcome to The Multifamily Investor podcast. I’m Scott Hawksworth. And today we’re going to be talking about underwriting. And it’s a really crucial topic. And joining me to offer his insights is Rob Beardsley who is the founder and principal at Lone Star Capital.

Rob, welcome to the show.

Rob: Thanks for having me.

Scott: Thank you for being here. As I said, we want to talk about underwriting. And in the introduction of your book, which I want to talk a bit more about in a minute here, but in the introduction, you talk about how LPs often neglect underwriting when evaluating deals in their investment selection process.

Why is that?

Rob: Well, because I think, in part, passive investors view it as a bit of a black box, which it can be. You know, if you’re not in the business, then you’re not really that excited to dive into performers and try to digest financials that you likely aren’t going to understand. And the whole point of being a passive investor is to be passive, right?

You don’t want to have to pour over financials and make these calculations and decisions based on the numbers, right? So, I think it’s the right idea to want to be passive and to invest kind of in a trust-based manner, but, on the other hand, it is, you know, safer to have that background and foundation to be able to evaluate deals from this perspective.

Scott: Right. Yeah. That makes total sense. And kind of getting to your book that you wrote, and I really enjoyed it. It’s called, for those who are unfamiliar, “The Definitive Guide to Underwriting Multifamily Acquisitions.” And it’s really just a fantastic, no-nonsense course on underwriting. What really inspired you to put it together and to write it all down.

Rob: Yeah. I was really inspired by the fact that this book didn’t already exist.

Scott: Right?

Rob: Yeah. I was so surprised because it’s such a straightforward topic, and that’s critical to the business, as you said. So, when I first began learning the business and underwriting, I was reaching for a resource like this and couldn’t find it. And I thought that that was definitely a void in the market. So, I wanted to fill that void once I built up enough experience to be able to do so.

Scott: Absolutely. Yeah. I think it’s one of those things, whenever there’s a gap, it’s great when folks like yourself can step up and fill that. And when I was kind of doing my research and getting into multifamily investing, yours was the book that really came across my desk and I was like, “This is what I was looking for.” So, thank you for writing it, basically.

Most of our audience consists high net worth accredited investors. Do you think it’s really realistic for self-directed investors to underwrite a project independently of a project sponsor?

Rob: Well, realistic, yes. It would take some time to kind of build up the skills to do so, but I think it’s kind of like riding a bike thing, you learn it, and then now you know it forever.

So, building up that baseline understanding if someone is interested in being a veteran repeat investor in the space, I think it’s definitely worthwhile. But with that being said, once you have that skill set, you don’t necessarily have to underwrite ideals from scratch every time that one comes across your desk, you can just simply pull up their model and quickly look at some of their assumptions and look at the projections, and then see if the deal makes sense or not.

Scott: Right. And in the book, you mentioned, you know, having multiple models, and I’m sure as you sort of develop that as an investor, you can then just plug your numbers in and say, “Well, this is my model. What are these assumptions? Let’s stress-test it.” All of that, right?

Rob: That’s really the best way. It’s a little bit more work, but that’s absolutely the best way because if you’re a passive investor sitting back and letting deal-flow come to you, you’re going to see deals from many sponsors, which is a good thing because you want to have options and you’re going to see models from different sponsors, and all models are different. They’re different in the way they calculate things, they’re different in kind of some of the assumptions.

So, if one model spits out, you know, 15% return with the same numbers and another model with the same number spits out 18% return, that doesn’t mean that one model is broken, or wrong or, or anything like that, they’re just different. And the key is consistency, as I say in the book.

So, if you have the, you know, experience and the time to take these assumptions and models that are coming to you and then take those numbers and put them into your one model, then you’ll be able to compare apples to apples much better.

Scott: And then do you find, over time, just with general deal flow, that your models will get stronger and you’ll just have that experience of comparing more and more deals so it kind of improves over time?

Rob: Yeah. Our model certainly has improved a lot over time. And it’s nowhere near perfect. and we’re probably going to go through, within the next year, a major overhaul, completely changing the game. So, yeah, I think for everyone doing this, it’s always improving.

Scott: Right, right. And I’m going to have some more questions about how maybe your models might be changing when we look at sort of the macroeconomic landscape currently, but kind of when we’re talking about, you know, something not being wrong necessarily, but are there underwriting mistakes you see maybe even happening repeatedly across the multifamily world when you’re kind of looking at deals or things that are, you know, maybe not quite right?

Rob: Sure. Some classic mistakes could be being too aggressive with the value-add plan and the stabilization assumptions. This is actually the interesting part of a model because it’s kind of the…there’s the most variability here, right? Everyone has an exit cap rate and everyone has rent growth assumptions. And, you know, we can talk about whether someone does annual compounding for their rent growth or monthly compounding, right?

Which monthly compounding’s going to be a little bit more aggressive versus annual, but these are all small little things. The real big difference is how does someone treat the value-add plan? Meaning, you know, you got $1,000 rents, you’re going renovate the apartment, and then now you’re going to have $1,200 rents, right? Mechanically speaking, how do you actually implement that? And it can be as complicated or as simple as you want, but all models are different in this regard.

But the common mistake there would be to assume that you can go from those $1,000 rents to $1,200 rents quickly. Because when you’re talking about a 200-unit complex, it’s going to take time, right? Sure. If it’s one unit, you can do that renovation and release it. But when you’re talking about 200 units, there’s going to be long-term tenants that stay and you don’t get a chance to renovate that unit and get the higher rent.

You’re going to, you know, obviously, have renewals, you have just delays, you have leases that are expiring at different times. So, when you have that, it always just takes longer. So, that’s why we’re, I’d like to say pretty conservative. We, for pretty much all of our deals, underwrite a 24-month period for us to essentially achieve the business plan when, in reality, you know, based on our track record, we’ve been, you know, finishing the business plan in more like 12 to 18 months.

But I would say we’ve certainly learned our lesson, and I think that’s a mistake that I see, is just people assuming that, “Hey, in year one, bang, it’s already all ready to go.”

Scott: We did it. We added all the value and all the rents are going to match now.

Rob: Yeah.

Scott: Exactly. When you break down, I guess, successful underwriting to its essentials, what do you think the keys are, really, to dial in on an underwriting that is reasonable and successful?

Rob: It’s one that balances optimism and downside protection, because if it’s all optimism, it’ll lead you to make poor decisions and be too risky with your decisions, right? You’ll be willing to pay more than you should, you may be willing to use more debt than you should. But on the flip side, if you’re all about downside protection, then you’re going to, you know, bake in all these contingencies and assume very conservative rents, and assume lower rates of growth, and assume a very pessimistic future sales price.

And if you do any of these things to a large enough degree or even if you do all of these things to a small degree, your model’s going to tell you, “Hey, don’t buy this deal, run for the hills.” But, in reality, we’re not in this business to run away from deals, we’re in this business to buy deals. So, I think that’s really the absolute hardest part of underwriting, is to balance that, right?

The downside protection and being conservative versus being aggressive or optimistic and optimistic. And the successful way to do that is… You know, my favorite phrase as far as underwriting is defensible underwriting. I mean, conservative underwriting is great, but it’s kind of a, you know, cliché and it’s honestly unrealistic when the market is this competitive.

So, defensible underwriting means that if you’re looking at my underwriting and you can point to any assumption and say, “Well, defend this or explain this, where are you getting this number? Why are you using this number?” Right? I should be able to have a good answer for you and say, “Well, based on the comps, or based on our other properties in our portfolio, or based on this market data that we have, right? That is how we can underwrite defensively.”

Scott: When you’re talking about, I guess, defensible underwriting, and I love that phrase. I think that is something that many investors would do well to keep in their Rolodex there. But when you talk about defensible, are there specific metrics that you find often are least defensible or you’ll see, yup, people are, whether it’s cap rates or something else, that there’s these assumptions that it’s tougher to defend, that you see more deals doing that way?

Rob: I would say maybe proforma rents because… And that’s more of an art than a science, but you obviously have to use rent comps to be able to justify your proforma rents.

And what rent comps you use are up to you, right? If you want to pick the deal that’s a little bit further away in the nicer area, that’s a little bit newer as your rent comp, you can, but is it really accurate? Is it really apples to apples? So, picking the right rent comps to actually justify is the way to go as far as proforma rents. But, you know, you do see sometimes people just being very aggressive or simplistic and just thinking, “Well, we can just throw money at the property and then slap on a $200 rent increase.”


Scott: Right.

Rob: It may work, but you need to have that appropriate justification. So, I think rent proforma is one. And then on the expense side, that’s really, in my opinion, I think that’s maybe the worst place to be aggressive, is to assume that you can operate the property at lower expenses. So, I really don’t like to see that. I think it’s good to try to be aggressive in your operations and always looking for ways to cut costs, but as far as underwriting goes, it’s very dangerous to assume lower expenses because, obviously, day one, when you take over the property, you’re going to find out whether you were right or wrong right away.

Scott: Right. And if you assumed, “Oh, the expenses, we’re going to lower them, no problem,” and then you kind of find some things out, you might be sunk a little bit, right?

Rob: Yeah. So, we were just actually doing a review of our quarterly financials and we were looking across our portfolio and the things that we recognized on the expense side of things is that we do a pretty good job, at least for year one, forecasting property taxes very conservatively. Across our portfolio for the first year of ownership, we were coming in actually much lower than our proforma, and that’s just because we, like many other people, forecast a big jump in property taxes upon takeover.

Which is what you should do, but, in reality, you don’t know if that big jump is… And, again, this depends on what county you’re in and everything, but for where we own property, right? You don’t know if that big tax jump is coming in the year you take over, or maybe a year down the road, or two, three, four, you know, you have to assume a property tax jump is happening at some point, especially in a value-add plan, because if your income is going up, you know, your value is going up, your taxes are going up.

So, you know, we are pleased to see that we are really coming out ahead on the property taxes, but utilities have gone up faster than we have anticipated. So, that’s on the other end. So, we made a decision after reviewing our portfolio that, “All right, moving forward, we need to, you know, slap on an increase in utilities right off the bat.”

Scott: Absolutely. I’m going to shift gears a little bit and talk about deal structure. When LPs are evaluating deals and they are looking at the structure, how can they really ensure that these sponsors’ interests are aligned with theirs as LPs?

Rob: Yeah. It’s really all through the structure. Obviously, there’s getting to know people, and trust, and background, and all that kind of stuff, but sticking to the actual structure itself, there’s really so, much downside associated with a deal structure that’s unconventional.

And what is unconventional? So, to focus on what is conventional, a preferred return is conventional. That’s number one. So, whenever I see a deal without a preferred return, I get very interested because I wonder, “What is going on? Who are their investors?”

Scott: Your ears perk up a little bit.

Rob: Yeah. You know, this is not a new industry. There’s so many sponsors to choose from how, how can somebody get away with not offering their investors a preferred return and still be successful? And for those that aren’t familiar, the reason why I have preferred return is so industry-standard across not just real estate, but all, you know, private equity except venture capital, it’s because the preferred return puts the investors first and owes them a minimum rate of return before the sponsor gets any performance compensation rather than just splitting the profits, you know, as they come out right off the bat.

And the, you know, most institutional form of preferred return actually puts the investors’ return of capital ahead of the sponsor’s compensation. So, that’s how we do things where we give our investors an 8% preferred return first then we owe them their original investment back, and only after they’ve gotten their capital back plus their minimum 8% compounding return, that is when finally the profit-sharing kicks in.

So, being able to tell an investor that really aligns interest. You know, we’re able to say, “Hey, until you get all your money back and that minimum 8% return, we don’t make any money on the profit side.” But to add a little bit of nuance, when we say incentives, aligning incentives, you know, certainly that aligns us to as far as, you know, getting them their capital back and getting them a return.

What it also does though, is it incentivizes a sponsor to sell sooner rather than later because if we have a property that’s gone up a lot in value, we’re essentially sitting on a paper promote or an unrealized promote, and we’re never really going to see that promote until we sell. So, as a sponsor, our motivation dollars-wise is to sell. And so, if you’re a long-term LP and, you know, you really want to have a structure that dials you in as being a long-term LP, then you may want to find a structure and sponsor that is in alignment with that.

So, that is one nuance as far as the preferred return goes and whatnot, but all in all, that’s really kind of the way to align interest.

Scott: Right. And when you aren’t seeing that, you know, just to really put a fine point on it, definitely look into that deal if something’s looking maybe too creative, right?

Rob: Yeah. What I’ve found is, you know, I love the idea of being creative, but what I’ve seen is 9 times out of 10, whenever I see a creative structure, it’s worse for investors. You look at it and it sounds cool, but then you dig in and you run the numbers, and you go, “Actually, in the end, this is just not as good for investors.”

So, I found, from a sponsor standpoint, from my standpoint, the best thing I can do with my structure is just to not stand out. If your structure just kind of blends into the mix… You don’t want your structure, in my opinion, to stand out for good or bad, because if you have a… Obviously, standing out for a bad structure, that’s simple why that’s bad, but to stand out for a good structure, for example, “Hey, I don’t charge an acquisition fee,” or, “You know, my per my preferred return is 12%,” that also, is bad, in my opinion, because, in my experience, it doesn’t help you raise capital.

It just causes investors to be uncertain about you, “They must be worse because they’re charging less.”

Scott: Right. Why are they offering this sweetheart deal?

Rob: Yeah. It causes skepticism. So, I think the best thing you can do with your structure is just not draw any attention to it. The other thing I want to talk about is, you know, we could talk about acquisition fees and what’s appropriate, high or low, and we could talk about promotes and stuff like that, but I think the biggest thing that nobody’s really talking about are all the kind of, you know, hidden fees, if you will, in the structure because that’s what nobody’s talking about because nobody’s really looking at them.

And that’s the whole point of them, they’re hidden. And I think when you read through that and uncover that, I think that will really tell you, at the core, the interest of the sponsor and what they’re looking to do as far as, you know, are they trying to just charge a ton of fees to the deal? Are they nickel and diamond?

I think that reveals a lot. So, on our end, what we try to do is just keep our structure as absolutely simple as possible. So, rather than having a fee for this, and a fee for this, and a fee for that, we have as few fees as possible and then, you know, really the… I’m trying to think of our hidden fees, if you will.

And let me put some context as far as what a hidden fee is.

Scott: Yeah. I was going to ask, you know, if you could tease out maybe some of that.

Rob: Yeah. So, kind of the most common and maybe least hidden fee would be something like a loan guarantor fee, and that would be where the sponsor, in addition to their acquisition fee, is also charging a fee based on the loan amount, essentially for their service to the deal as providing a guarantee to the deal.

Nothing wrong with it. It’s just another fee, right? And you just have to calculate that and take that into account as a fee load. Something more hidden would be something like… Well, I’ll use our deals, for example. I wouldn’t really call this, you know, a fee because it just covers our costs, but it’s still there and it’s still something to consider, but, you know, we charge a due diligence fee of about $15,000, and that just covers our travel, our due diligence team to come and do inspections and handle all that.

So, I mean, it’s not a profitable fee for us, but it’s something that we do, right? And it’s something that it’s charged. So, people should be aware of those types things because maybe my due diligence fee is $15,000, but maybe someone else’s is $150,000. Right? You probably want to know that, but, sadly, most investors don’t.

Scott: Right. And then that’s also where as a potential investor, you can ask, if you see that due diligence fee, it’s $100,000 or whatever, you’re like, “So, what exactly are you doing with that?” Right? Where you’re saying, “Well, we do $15,000. That’s all we need to do those inspections and things.” And I think that then you can have those conversations to really sort of suss out the deal, right?

Rob: Yeah. I think it just tells you a lot, you know, about the sponsor.

Scott: And their whole approach. Okay. As we’re sort of winding down here, I would love to take a more macro look because a lot of things are going on in the landscape right now. And specifically past 18 months, we have seen cap rates compressing. And I’m curious, how has that changed maybe your underwriting process as we’ve seen these really substantial cap rate compression?

Rob: Yeah. So, cap rate compression has been tremendously helpful to the market. We’ve seen a lot of it in the last 18 months, you said, but it’s really been going on for the last 10 years. It’s really made everyone look like a genius in the space and deals have been going really well. And over the last 18 months, we’ve kind of gotten slowly more and more comfortable with underwriting lower and lower exit cap rates.

Still, we think it’s conservative, still, we think it’s justifiable. And on all of our sales, we’ve, you know, sold the property for a lower cap rate than what we projected, but now we’ve hit what appears to maybe be…it’s either temporary or it truly is an inflection point, but it does seem that there is a slight softening in cap rates due to the upward pressure of interest rates.

I do still think that the downward pressure on cap rates by way of global capital flows has so far more than…not more than offset, but has been the stronger force than rising interest rates. You know, because if you look at the rate move that has occurred, cap rates have not moved up in lockstep. And that’s just because there’s just so much demand for multifamily that the global capital flows can absorb those rising interest rates.

But with that being said, the way that we’re changing our underwriting kind of today and moving forward are two ways. I would say we’re reversing… not necessarily reversing, course turn, but we’re definitely not continuing to be more aggressive with our exit cap rates, right? We’re leaning towards higher rather than lower.

And on the debt side, we’ve been reducing leverage from 80% to more like 65%, maybe 70%. And that reduction in leverage really reduces our risk in the deals and makes us feel a lot more comfortable about enduring whatever is in store ahead, whether it’s a recession, or an increase in cap rates, or continued rising interest rates.

Scott: Right. You mentioned those interest rates, and so, I’m curious, you know, we’ve seen these interest rates rising, the fed has signaled that there may be even more coming, how has that impacted the financing side of deals, or has it impacted the financing side, and then I guess connecting that to, really, the underwriting?

Rob: Yeah. Debt is a huge component to our deals, you know, pretty much to every deal in real estate. And what we’ve seen is the… So, first of all, you know, the rise, not just in interest rates, but also in the forecasted rates, because it’s not just what has happened, it’s also, what does the market think is going to happen in the future?

So, rewinding six months ago, the fed was guiding that they wouldn’t raise rates for two years, inflation was transitory, and the market forward curve for interest rates was essentially flat. So, in our underwriting, we were able to forecast that flat-forward curve. So, our cash flows were looking healthy out into the future.

Now, look at the forward curve today, the forward curve is like this, right? Interest rates are projected to go up a lot.

And we take that forward curve and we put that in our model, and so now our interest rates and our model are up over time, which impacts our cash flows in the future, right? So, we’re forecasting the future in our models today. So, that’s already taken into account. What also has changed is the cost of rate caps.

So, many people have to purchase, either because they want to or because their lender forces them to buy an interest rate cap which puts a ceiling on their floating rate exposure so they can… You know, their interest rate can float, but only up to a certain level, and then above that level, the hedge product kicks in and that puts a ceiling.

So, back when rates were projected to be flat, that cap was essentially free because, you know, the banks that traded these caps, they thought, “Well, you know, this cap is useless. It’s never going to kick in. Who cares? We’ll sell it for nothing.” Well, it turns out, now the forecasted rates are way up so now caps are very, very expensive. And that’s really factoring into the analysis on the underwriting side as far as fixing your rate versus floating your rate because, obviously, when you have a fixed-rate loan, there’s no need to have a hedging product against your rate because your rate is fixed to begin with.

It’s a really fascinating game, and this is why I love this business, is it’s always something new and you always have to analyze the scenarios, but to walk everybody through these current scenarios, you could lock a fixed rate today and maybe pay a little bit more on the rate upfront, but it’s fixed, which means you don’t have interest rate risk and you avoid paying for that really expensive rate cap app.

But, on the other hand, if you float, you get in today while rates aren’t high yet, right? So, your starting floating rate today is going to be lower than your fixed, but you have that risk of rates going up and you’re going to have to pay that expensive rate cap. So, in your own head, you basically have to make a decision, you know, “What makes more sense from an underwriting standpoint? What makes more sense from a risk standpoint?”

As well as optics and sleep at night standpoint, right? Some people just go, “You know what? Even though the math doesn’t really pan out on the fixed-rate side, let’s just do the fixed rate because it’s going to help us sleep at night.” So, there’s all those things at play.

Scott: Yeah. The sleep at night point I think is really significant because I think for a lot of folks, it’s like, “I just don’t even want to worry about it.” Right?

Rob: Yeah. I mean, we historically have been comfortable with floating rates. And if you look at the data, over time, floating rates tend to do better than fixed rates. But with that being said, you know, we’re doing deals right now at fixed, we’re doing deals right now with floating. So, it’s just on a case-by-case basis. And like I said before, the times are always changing.

So, it’s just funny to see how things go back and forth.

Scott: And then you’re constantly adjusting. And you mentioned that you guys are also, you know, considering really redoing a lot of your underwriting model. Are these one of the factors that will go into that as well?

Rob: Well, it will definitely be factored in, but our rebuilding of our model is really going to be more focused on kind of usability and making it more institutional and more easy to use, because, of course, as we use the model more, we find that certain functionality, we use more, and, therefore, we should kind of build more around it, or maybe we need more functionality, and so, we need to kind of add different things on.

So, you know, it’s been a long time since we’ve really revamped it. So, we’re always making little tweaks, little tweaks, but I think we’re really due for a complete rebuild.

Scott: Absolutely. I have another question that’s kind of in a different mode, but when I was reading the book this one really struck me. You identified the use of third-party property management as a potential, you know, issue or not ideal.

Why are you not necessarily a big fan of third-party management?

Rob: Well, the stigma around third-party management is nobody cares as much about your property as you. And to a degree, that’s true. If you look at the business of a third-party management firm, for them, it’s imperative for them to accumulate units under management and to spread those units under management amongst the least amount of corporate payroll in order for them to be profitable.

And to dig in on that more, the structure, the fee structure for third-party management is just inherently broken. I mean, third-party management firms are just really underpaid. You know, the industry standard is for management firms to make 3% based on revenue. So, right off the bat, that there is a horrible structure, because, one, it’s just way too little money, and, two, it’s based on revenue, not income.

So, their incentive is to drive revenue up, but, really, they have no incentive to reduce expenses. So, if you’re a management firm, what you want to do is you want to manage properties that are as easy to run as possible, and one way to run the property easier is with higher expenses and just run as many of them as possible per employee.

So, it’s just a broken model, and there are good management firms out there, absolutely. It’s harder to find, but, generally speaking, people in the business believe that if you run your own management, right, and it’s integrated, you know, with your own portfolio, you’re going to do a better job, you’re going to care more, you’re going to find ways to create more value.

Scott: Right. So, it’s just, again, it’s sort of a simple equation of incentives, right?

Rob: Yep.

Scott: And, you know, it’s interesting, just the pushback, because I’ve got a good friend who works in property management and, you know, what he said to me is like, “Yeah, but then some people think that they can manage it themselves, and then they can’t. And they can’t they can’t fill up the building as quickly as they would want and they can’t do the X and Y. And so, that’s what we bring to the table. That’s kind of the other side of it.”

But what you’re saying is, is that, yeah, there’s third-party management companies that are doing great, but many of them maybe aren’t bringing as much value, right?

Rob: Yeah. Absolutely. And, you know, to your friend’s point, if you don’t have the infrastructure to really replace what the management company brings to the table, then, yeah, it’s probably better to outsource to third-party. You know, we used a third-party management company up until the point that we had the scale, and experience, and investment ready to actually bring management in-house.

So, you know, when we’re talking about managing your own property, we’re not saying, “Well, you’re one person and now you just go and, you know, you sit on that property and you just run everything yourself.” When we talk about in-house management, we actually mean building an entire business around it. And because we’re not running the management side for profitability, we have the luxury for having more employees per property as far as corporate overhead and we can be more creative with how we manage the operations because we’re only managing our portfolio.

Scott: Right. Right. And you can really leverage that to provide, you know, better management, perhaps?

Rob: That’s the goal.

Scott: That’s the idea, right? Rob, I want to thank you so much for joining me on the show today, really breaking down so many critical components to underwriting, and it’s something that passive investors really would do well to consider. And definitely pick up your book as well because, like I said, it was just a fantastic read. And if folks want to find out more, they want to connect with you, see what things are going on at Lone Star Capital, where can they do that?

Rob: Yeah. To learn more about us, you can head over to our website, which is On our website, there’s a free download of our underwriting model, there’s an opportunity to sign up for our investor list, and there’s plenty of resources as far as articles, videos, and lots of content that we produce.

Scott: Fantastic. Thanks again.

Rob: Thanks.