EP. 58 // From College Dropout to $400mm in Real Estate w/ Rob Beardsley
What does it take to build a real estate empire? Join us as we chat with 26-year-old college dropout turned real estate mogul, Rob Beardsley, founder of Lone Star Capital. In this candid conversation, Rob shares his incredible journey from growing up in a real estate family to making the bold decision to drop out of college and pursue multifamily real estate investing full time. With the support of his mentor, Joe Fairlis, and a mastermind group, Rob's young and naïve confidence allowed him to scale quickly and achieve immense success in the multifamily space.
We explore the concept of delayed gratification and how it applies in real estate investing, as well as the importance of having a strong support system to take leaps of faith. Hear personal stories of discovering the real estate bug and how our business partner took a leap of faith to start our own company. Rob also shares valuable advice on underwriting deals in an uncertain economy, the importance of locking in long-term fixed rate loans, and the due diligence process to ensure capital preservation and consistent cash flow.
Learn how Rob scaled his capital raising operations by strategically giving away his underwriting model for free and growing a network of investors. Discover the team structure at Lone Star Capital, including virtual assistants in the Philippines and the property management arm in Houston. Rob also shares his experience of working with institutional partners like Flagship Capital and the extra due diligence that comes along with it. Don't miss this enlightening conversation with the inspiring Rob Beardsley!
In this episode:
00:09:21 Real Estate Entrepreneurship and Delayed Gratification
00:12:51 Real Estate Investment Tips
00:22:14 Real Estate Investment Due Diligence
00:34:04 Scaling Capital Raising Operations
00:42:15 Scaling a Real Estate Investment Business
00:48:06 Investing in Texas Partnerships
00:54:52 Real Estate Investment Strategies
01:04:52 Building Investor Trust and Diversifying Investments
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David Choi
Host
00:00
Three, two, one Go. We have a billionaire in the making in our room today. Rob Beardsley, welcome to the show. How you doing.
Rob Beardsley
Guest
00:19
Thanks for the hospitality.
David Choi
Host
00:20
It's great to be here, awesome, awesome. So, rob, i'm just going to give a quick background for the audience that don't know you. Rob Beardsley is the founder of Lone Star Capital. He is 26 years old, a college dropout, and he has acquired over $400 million of multifamily properties. He has developed his own proprietary underwriting models and sold over 10,000 copies of his book, the Definitive Guide to Underwriting Multifamily Acquisitions. It really is an honor to have you here today, rob. Can you just kind of just jump right into and tell the audience just your background, how you got started in real estate and just your story man?
Rob Beardsley
Guest
01:09
Sure would love to. So I grew up in Northern California, in Silicon Valley, in a real estate family. So growing up my parents ran a residential brokerage firm from home, buying and selling luxury homes to their clients and also doing some fix and flips and development on the side. So I was exposed to real estate at an early age but it didn't necessarily develop a passion for it until later on. And that was because I saw my parents struggling, not necessarily loving their work right, they were struggling. They were kind of caught up in that middle class crunch where they're making a lot but also working a ton and having a lot of expenses and all that good stuff. So what they showed me was all the tech success around us And they said look at all the startups, look at all these people that went to Stanford and Harvard and are in the tech space. That's what you want to do, that's where the exciting money is. So I kind of followed that path.
02:04
I went to school for computer science. I definitely enjoyed school and that sort of education. But somewhere along the way in college I just caught the real estate bug. It just clicked for me and the real click was going from single family to multifamily because seeing my parents run their single family business and buying and selling homes to their clients, chasing commission checks and not actually building assets or wealth, that whole thing didn't resonate with me. But then when I got exposed and learned about the multifamily business model, which is much more scalable, much more institutional and sophistication and its nature, i could definitely resonate with that more and grasp onto a long term vision of building a multifamily business and portfolio and growing wealth over time. So that was kind of the start of the multifamily journey. And then, as you mentioned in the intro, things escalated rather quickly, met my business partner, ended up putting our first deal under contract and dropping out of college shortly thereafter And then from then on it's been off to the races.
Eric Panecki
Host
03:10
That's awesome. That's awesome. What was it that sparked it? So you're seeing buying, selling single families and then, all of a sudden, you dip your toe into multifamily. Where did you have a mentor? How did that all?
Rob Beardsley
Guest
03:23
start. So I had a good combination of baseline real estate knowledge. I actually knew a lot more than I gave myself credit for because of growing up in my family. So I knew more than most people. So I had a basic understanding. And then obviously, going from single family to multifamily is not, it's just one to a hundred, it's not that much more complicated.
03:45
And then the other big element was just being young and naive. I didn't have these thoughts of, oh, i can't do this or I don't, i'm not ready, or I don't know. I was just kind of confident for no reason, naive and just ready to jump in. So that's exactly what I did And fortunately I worked with a mentor, joe Fairlis, who was he was big at the time but he's grown in his kind of brand and reach much more ever since. So I kind of got in with him at the right time, when he was big but not too big, able to join his mentorship program, meet a lot of people And through that program is actually how I met my business partner, kent, who we started Lone Start together with. So it was very, very lucky how one thing led to another.
Eric Panecki
Host
04:34
This is, I think, like a trend. We keep seeing people join these masterminds and finding their business partners and sparking their passion and also having those resources. I mean, it sounds like that was a huge reason that you were able to scale so quickly.
Rob Beardsley
Guest
04:50
Yeah, And aside from just the young and dumb confidence, also being with a mentor and being with a support group like that and talking with someone like Joe or another mentor who's been there, done that and has the confidence, that just gives you the confidence as well to move forward and know that everything's going to work out, because there is a lot of risk and a lot of. You're taking big leaps of faith when you're getting started in this sort of business, because if you're going from never investing in real estate to then buying your first property at you know, over 200 units and $20 million, that's a huge leap And there's so many gaps in your experience and knowledge that you need to fill with partners. And so that's you know. Certainly I take no credit for our first deal or any deal, because there's so many people involved to put it together And that's how we make it work.
Eric Panecki
Host
05:49
So how long after your first deal? Well, i guess I'd love to hear about your first deal, but also, at what point were you like screw it, i'm quitting college and I'm going all in.
Rob Beardsley
Guest
05:59
So it was somewhat of a gradual process And I didn't force the issue. It was kind of like it forced me where I had built up enough responsibility and had enough things going on to where I was spending a lot of time outside of school doing work stuff. to the point where I'm being pulled out of an accounting class because I'm getting a phone call about this deal or about this thing And it's like, well, I need this. There's more important things than accounting class. right, I've got real accounting going on.
06:28
So it was a gradual process And I knew that once we put the first deal under contract officially, i knew that it was I had full credit to just go ahead and go for it, and even my advisor was advising me on it. So it wasn't like this big dramatic moment where the college is hating me or my parents are disowning me. It was like a rational reason to process to where my advisor said yeah, this seems like a good opportunity for you. You should take the risk. If you fail, you can come back.
07:06
And same thing with my parents. My parents were definitely they'd prefer to see me finish school and get a degree. That's kind of like a proud thing for a parent, but they have always supported me. So the only thing that was harsh if you will was basically like hey, if you're no longer a college student, then we're not going to treat you like a student anymore. You're an adult now and you're on your own. So it's not like, oh, you get to just play this fairy tale thing of try this business opportunity. Nope, you're a real adult, you need to go make it work. And I appreciate everything they've done And I appreciate that as well.
David Choi
Host
07:44
Wow, sink or swim.
Eric Panecki
Host
07:45
Yeah, burn the boats, baby. I love that. I love that. I mean I'm curious. You know the syndication business isn't. It's really like a long term wealth play. You're generally not making a ton of money up front, you know, on these deals. So when you're making that transition, your parents are like, ok, you're on your own, you still got to make money and pay the bills, right. But you know, usually you're not making a ton of money up front on these deals. How did you, how did you float that And how did you manage, you know, that transition period before you start actually really making money Right?
Rob Beardsley
Guest
08:19
Yeah. So when I first moved back to my parents and my family super fortunate, i was able to move home, live at home, have no distractions, no expenses, and I have this one picture in my head of me sitting I coopted the dining room table and I put up a couple of monitors and I had my set up. So I just was there and I was just putting in, you know, 12 hour days just building everything and it was such an exciting time. So that was the bridge to make things happen. As far as you know, you're not making any money and you need to survive and stuff And that's.
08:55
It's really a crazy thing because if you're starting any business, i feel like you need a minimum if you're lucky six months, but could be even two years of where you're just not making money And it's just tough. And if you already have a family, a mortgage, you know real life expenses. I can't imagine the stress that you'd go through to try to transition. And that's why I respect my business partner, for example, so much, because I was the one that dropped out of school but he was the one that left a very high paying job that he you know, he's a senior tax attorney for 12 years and for him, leaving his job was leaving income to now. How is he going to transition and support his wife and children with a couple mortgages? you know he had like an established life, so that's a completely different risk And so I I feel like I he you know he's never really heard me say this, but I feel like in those early stages I feel like I played the role of co-founder as well as therapist.
Eric Panecki
Host
10:02
Hmm.
Rob Beardsley
Guest
10:03
Because it's emotional right And there's role, it's roller coaster And so he, you know both of us would lean on each other emotionally, not just workwise, to get through the very difficult times that inevitably all business owners go through when they're starting a company.
Eric Panecki
Host
10:18
Yeah, i think I was actually just talking to my girlfriend about this yesterday. Um, you know she she wants to get started in a business And I was like you're at a point in your life where you don't have a mortgage, you don't have kids, you don't have car payments, like you're never going to be in a better opportunity to do this than you are right now, and I think it's brings a good point. You know you, luckily for you, you could go home. I mean, we didn't make money for our first six months in business at all And we did the same thing. It was like, dude, are we ever going to make money? I think this is crazy. Um, but you know, it sounds like you had a really good support system around you that kind of allowed you to take that, take that leap.
Rob Beardsley
Guest
10:55
Yeah, We had a lot of fortunate things come together. You know, obviously my family support and then my business partner. the timing was really good with his job because, uh, they were, they were kind of consolidating different departments and stuff. So they were looking for volunteers for people to either move or retire essentially. So he was too young to retire, obviously, but he was, you know, he's able to raise his hand and get a nice severance which was a good six month bridge there And uh, yeah, no, you're totally right, the time to take the risk is when you're younger.
11:28
Uh, you know, picking up the pieces is is much easier at that time.
Eric Panecki
Host
11:34
That's awesome. I know you have more, more technical questions, but I love this story, man. This is. This is awesome.
David Choi
Host
11:40
I do have one more story question. You said you caught the real estate bug. When did you discover real estate and how did you find the bug?
Rob Beardsley
Guest
11:48
There's people out there who get the concept of delayed gratification and then there's people that don't Right, and that is so much a delayed gratification game. Really all investing is right, because if you explain to somebody the idea that you could put in a hundred thousand dollars and get an amazing cash flow of, let's say, $8,000 per year, right, 8% is very good People would, a lot of people who don't understand they would go is that really worth it? Like, why would I give up my hundred K to then only get 8,000 per year, right? People, some, a lot of people just don't understand that concept. So for me, fortunately, i've always lived through the delayed gratification paradigm. I've always enjoyed the process of putting in the effort and reaping the reward later, whether it be in the gym, in school, in sports, in life. So that part of real estate I grabbed onto Then from there, it's just really all the logical reasons for why real estate is such a powerful asset class. I'm a very pragmatic, logical person and here are the things that I like about real estate. One it is a cash flowing asset and you can value it by its cash flow. That's amazing. Number two tax benefits. That is just such a no-brainer and a huge, huge factor that just adds another powerful element to real estate.
13:14
And then I would say number three, which is kind of controversial, is illiquidity. In the stock market you can buy and sell every second. So and actually I had some experience with that because also in college, before I fully went all in on real estate, i was thinking, oh well, i'm gonna invest in the stock market, i'm gonna trade and do all sorts of stuff, or I wanted to make money And I got my butt kicked by the stock market. It's so stressful, it's so tough and it's just not a pleasant experience. So the fact that real estate is illiquid and it's like when you own a building there's not the price tag on the building, like changing every second out front When you own a stock if you own Apple stock, going up and down every day, so it's. I like the illiquidity nature of real estate where it's more of like set it, forget it, warm Buffett style, invest for the long term, and that is also more conducive to that delayed gratification, long-term wealth building.
Eric Panecki
Host
14:13
It also creates opportunity, right, I mean? the fact that it's illiquid and not everybody can do it, when it's opportunity to people like us that can find these assets that are underperforming and then add value, right, Right there's not many inefficient markets out there.
Rob Beardsley
Guest
14:28
Right, the world has gotten so connected, knowledge is so distributed. The stock market is very efficient. Right, it's very difficult to find the hidden opportunity like you mentioned, but in real estate it's still very possible.
Eric Panecki
Host
14:42
Yeah, those are three really, really great points about real estate. And I think what you said about the delayed gratification it's one of my favorite things. And if you know the Stanford study, the marshmallow test, right, One marshmallow now versus two later. It sounds like you were always like a two later kind of guy, For sure for sure.
Rob Beardsley
Guest
14:58
Yeah, i love that test Actually. Yeah, it's a good one.
David Choi
Host
15:02
So, as an author of the definitive guide to underwriting multi-family acquisitions and myself being a former private equity real estate analyst on the acquisition side, i think it's my job to ask you some difficult questions. There's a lot of economic uncertainty. How are you underwriting your deals to ensure that your investors are getting an attractive risk adjusted return while staying keen on capital preservation?
Rob Beardsley
Guest
15:34
Yeah, i think the biggest factor to that success there is on the debt side of things. So in today's environment we've shifted pretty much completely to focusing on long-term debt of seven years or more. It's about seven to 10 year debt. I think seven is plenty, but some people even like 10 years as pushing out maturity risk and really just locking in a long-term fixed rate debt. So for us it's kind of controversial because some people feel like, well, if interest rates are already high now, you might as well just float today and you can float lower tomorrow. So that's the pro floating rate argument.
16:16
For us, we feel like fixed rates the way to go for two reasons. Number one we can lock in interest rate savings today. Right now we have a very weird market where the yield curve is inverted, and it's deeply inverted and it has been for a long time. So what that means is it's actually more expensive today to float than it is to fix. Normally that's not the case. So by fixing we can reduce our interest costs today. Which, what are we most concerned about as far as cash flow? is today's cash flow right? So if we can reduce interest costs today and then lock in that rate for the future that provides the certainty that allows our investors to sleep at night.
16:56
So we've learned over the years, with different experiences and trying to make deals as best as possible. What we've realized is it's not always about pushing for the highest returns for our investors, because, while our investors appreciate that, what they appreciate most is consistency, certainty and the ability to sleep at night And me too, right As a business owner and managing the portfolio and having to answer to our investors I would much rather have a more stable operation, right. So that's something that has become more and more important to us as we've gone through these different experiences and rising interest rates and we've been chasing by difficult experiences. So, yeah, to answer your question today, definitely seven to 10 year fixed rate loans, because if the interest rate works for you today, it'll work for you for the next seven years. Maybe rates go lower and you could benefit from a lower rate, but so be it right. Locking in that certainty is most important.
David Choi
Host
17:55
Got it. We're taking out a loan right now, a Fannie Mae loan that's seven years, for that exact same reason, and where I'm stuck on is should I go with a five year yield maintenance and a 1% on the last two years, or a seven year yield maintenance? What are your thoughts on that?
Rob Beardsley
Guest
18:20
Yeah. So we've done a ton of seven year Freddie deals, actually with five year yield maintenance. So the same concept applies, right. That's the sticky thing that a lot of people don't talk about when they talk about fixed rates. So you see a lot of people on LinkedIn or wherever talking about, oh, long term fixed rate debt. Right, i'm conservative. But what they don't talk about is the fact that you often have nasty prepayment penalties, right, like yield maintenance, and that's very. That could be very detrimental to your deal, especially considering the fact that, i mean, who knows where interest rates go. But if you believe that interest rates are relatively higher today and you think maybe the 10 years gonna come down over the next couple years, that's gonna impact your yield maintenance prepayment penalty even more. Right, because those are inversely correlated. So lower the 10 year goes US Treasury yield, higher yield maintenance payment.
19:09
So for us, we've been choosing more so the five year yield maintenance for a couple reasons. One, because when we were doing the last couple Freddie deals, it wasn't that expensive. And for those that aren't familiar with how that prices, the lender adds an additional rate, an adder, to your interest rate, in exchange for a lesser prepayment penalty, right? So if that it's all about. It's just math, right, if the adder is only 25 basis points, that can definitely be worth it to be able to exit in the last couple years for free or, like you said, for a 1% prepay right. And there's multiple options right, you can have five year yield maintenance and the final two years are a 1% exit fee or a 0% exit fee, And so it depends on the pricing.
20:02
So, for example, we did a lot of deals with five year yield maintenance and then open at par for the last two years. So no penalty, which works great for underwriting, right. Because if we forecast out a five year hold, that means when we sell after five years, we sell with no penalty, right? So that's nice. Because if you have, let's say, six and a half year yield maintenance, kind of like a more traditional deal, then you have to figure out okay, well, if we're underwriting a five year hold, which is most common what are we going to project the prepayment penalty to be right.
20:34
You're taking I mean, with yield maintenance you're always taking market risk, but at least if you have the last couple years at 1% or par, you're creating a bit more certainty for yourself. So that's been our angle, we've preferred the no penalty. At the end, however, we're doing a deal right now and the difference between 1% prepay versus 0% for the last couple years I forget it was a lot. It was like another 20 basis points or something, just for that last couple years to be open. So I'd rather just pay the 1% down the road than an extra 20 basis points every year. Right, so it's all math.
David Choi
Host
21:21
That's a great answer, thank you. Underwriting you built your own proprietary underwriting model. I mean you must be like a savant at underwriting. I'm wondering how are you running? are you doing, how are you modeling your cap rate expansions? are you doing any sensitivity analysis? Can you kind of speak on that?
Rob Beardsley
Guest
21:40
Yeah, so exit cap rates are always a tough one because they influence the projection so much. right, and also the funny thing about it too is it's a sticking point for investors, like it stands out.
21:56
It's gonna be one of the first questions they ask if they're looking at your model Well, what are you projecting, right? So for us, we have to be mindful that we don't want to be too aggressive on the exit cap rate. However, if we're too conservative, we're just gonna lose out on the deal. So my philosophy here is a little bit nuanced. Number one the reality is, if you wanna win deals, you have to be aggressive somewhere in your numbers, because you're competing against other bidders and they're being aggressive too. Right, that's just the nature of the market.
22:28
So our philosophy is if we're gonna be aggressive anywhere, it's better to be aggressive on the exit cap rate, because that's down the road and that doesn't say anything about our operations. What I would hate to see is us be too aggressive on expenses, for example, because day one we take over that property and we're underwater right away. Right, we're wrong on expenses and every single month we're getting burnt because we thought expenses were gonna be here, but they're actually here. That's smart. So for us, i'd rather let's be conservative on our operations revenue, expenses and then let's be optimistic about the future growth, the exit cap rate, because why else would we be buying in the quality areas that we're looking to buy in.
23:10
Right, it's because we want that growth, it's because we want that cap rate compression. So that's kind of the high level philosophy and it sounds great. But when the rubber meets the road it's obviously easier said than done. Right, it's not often realistic when you can just put an exit cap rate of like, in today's market, 5%, right, that's tough. Obviously, this is so market specific, so people shouldn't read too far into these specific numbers. But I guess the point that's most interesting today is the fact that I'm seeing more and more people actually underwrite no cap rate expansion because they feel like cap rates are at a relatively higher today and that's driven obviously by all the market factors at play. So yeah, i mean we're kind of moving in towards that camp of normally we just say, hey, we'll expand 50 basis points over the prevailing cap rate, but I think in today's market that is maybe not as useful.
Eric Panecki
Host
24:14
I think that's really smart because I mean, if you're conservative on your expenses and revenues, right, You're still gonna be able to pay out your preferred returns and give the investors what they're expecting and you're not gonna be in jeopardy of going underwater on the deal, Whereas case scenario on the back end that 18% IRR turns into 15 or 14 and the investor still gets their money back and made a nice return. I think.
Rob Beardsley
Guest
24:40
Exactly. Yeah, it's a different type of risk, right. You have risks like. The biggest risk that you wanna avoid always, of course, is loss of capital, right, and so what could cause loss of capital? Well, it's getting foreclosed on. It's not if you can't make your debt payments because you're wrong on expenses and stuff like that, right, but the risk of it being a 14% return, 17%, 18%, when it's all said and done, that's a risk I can live with, for sure.
Eric Panecki
Host
25:09
That's really smart. I like that a lot.
David Choi
Host
25:11
Yeah, if you're being conservative on your NOI and you outperform that you're gonna balance out at the end. I'd like to know out of personal curiosity you're underwriting. I mean to make sure that you're operating expenses and your income are conservative at a time of acquisition and throughout the whole period. You must have to do a pretty significant amount of due diligence. What does your due diligence look like?
Rob Beardsley
Guest
25:46
So When we first look at a deal at a high level, you know, just kind of the desktop underwriting, it's very standard, right? I mean, similar to everybody, we look at the comps. You know, fortunately for us and this kind of feeds into this is we're very focused, we're not in every market and we're not buying all sorts of different kinds of deals, right, so that allows us to be experts in the deals that we're looking at, which makes it so much easier to actually put in the projections, right, because we've seen that deal before and we know how it runs and we have properties in the portfolio nearby and it's very easy to underwrite expenses, right. And then, on the revenue side, it's just really all about comps. And so our team you know nothing sexy here right? We call the properties, we call the comps, ask them what their specials are, ask them what their other income charges are. You know what the rents are today. We try to get as much information as we can. And then, of course, we use all the online data available to us as well, and comps are really that's the part that's time consuming but also extremely important because, as we all know in this room, $25 difference on your performer rents. That's a big impact. So being able to go out there and survey the comps and figure out where the value is and really try to figure out, can we push the rents where we want to take them, because that's where the business plan value is, that requires a ton of time through the comps And then from there. You know again, i don't think we do anything that special. We just we do our. So I guess something that is maybe a bit unique to us is because we've pretty much always operated in a competitive market, and I think for as long as Dallas and Houston exist, those are going to be competitive markets.
27:42
We go hard at the signing of the contract, which means when we put a down, put down the deposit, we go non refundable on that deposit the day we sign the contract, right, and the reason why we do that is it's pretty standard for the market, frankly, which is very annoying, but to the extent it's not. It differentiates us as a bidder And so if we can show up to the table and say, all right, here's our price, here's our terms, we're going hard day one, here's our reputation, that speaks very loudly to the seller right, and that's our way to win deals, and we've. You know. We've won deals by being the highest bidder, obviously, and we've also won deals by not being the highest bidder because we were able to leverage our terms and our reputation. So the reason why I bring that up is because going hard day one's very scary.
28:29
So you want to be very sure about your due diligence and that you know that you're right about the deal. So the way that we get comfortable is we ask for an early access agreement and we come in with our team and we inspect a random 10% of the units, 10% of the lease files in the office, and then we do an exterior site inspection with our GC partners. So not every seller agrees to all of this. Sometimes they push back. Maybe they don't make it a random 10%, maybe they want to pick the units, maybe it's just vacans, so it's an arm wrestle on that. But I would say that is our unique, somewhat unique DD approach that gets us comfortable going hard and gives us that ready insight to where we can quickly in a day. All right, let's do this thing.
David Choi
Host
29:15
I love that.
Eric Panecki
Host
29:16
Yeah, that's great, and I think probably, having done that, when you make your offer, the seller I'm sure feels a little more comfortable now that you've already been there and inspected and you're not just putting out an offer, right, right, and does that ever? I mean, you're in a competitive market. Speed's probably the name of the game. Are you losing opportunities because you're asking for that? It's a good question.
Rob Beardsley
Guest
29:41
You know supposedly there are other buyers in the market that are willing to go hard and not do any sort of early access or anything.
David Choi
Host
29:52
I don't know. I mean, i think that's really generous 10% random.
Rob Beardsley
Guest
29:56
I think it's a great compromise.
David Choi
Host
29:58
Oh my gosh.
Rob Beardsley
Guest
29:58
You're disturbing the property too much.
David Choi
Host
30:00
Everything's fine, genius, yeah it's really great.
Rob Beardsley
Guest
30:01
It's incredible, and you know it's a spectrum, right. And also it kind of depends on, maybe, where you are in your career or how aggressive you want to be, because I'm familiar and I was actually. What comes to mind is when we were selling a deal a couple of years ago, i remember we were conducting buyer interview calls, right. So now I'm on the other side of the table, right, not as the buyer but the seller, and I'm listening to the different buyers pitch us on why we should pick them right. And I remember being on the phone with this Canadian private equity firm and they have $2 billion under management. So you know they're definitely they've got the capital, they have the experience.
30:39
But coming down to Texas was new for them, and so, while they could make all the assurances to us that hey, we have proof of funds, we've got this big portfolio, we've got this name, they were not willing to go hard day one, right. And so, as a seller, even though I recognize them as a big company, the fact that they aren't willing to go hard day one puts me at risk of well, maybe they just put it go under contract and waste 30 days of our time and then we have to go back and pick another buyer right. It's risky for many reasons to do that as a seller. So in the end we picked the local group. That was much smaller. They didn't have the money ready, they had to go syndicate, but they were willing to go hard day one. So it just shows you kind of like doesn't matter if you're big or small, everyone has a different philosophy on whether they're willing to go hard or in a different buying strategy.
David Choi
Host
31:31
A question on the early access agreement. It's just one day. You ask for one day to just randomly pick a couple leases to look at, try to match it up with the rent role they provided and then go to the units make sure it doesn't look crazy. Okay, it's just a one day thing. It's a one day thing. That's freaking great. It's beautiful man.
Rob Beardsley
Guest
31:54
We sometimes do it before actually signing the contract and then it's whatever the seller wants, right, we're flexible, we just want to protect ourselves as best we can. But what I think is really elegant is so what sellers also don't like, as far as early access or anything, is obviously time right. Time kills deals, and when a seller is picking a buyer, they're taking buyer risk, but they're also taking market risk, because if that buyer fails to perform then and they go back to the market, the market might be different by the time they go back. Right, and aside from the market, there's also the stain of a failed deal right. All of a sudden the buyers go. What happened with that deal? What?
Eric Panecki
Host
32:33
did they see that's wrong.
Rob Beardsley
Guest
32:34
Right. So I get why the sellers are concerned. So, as far as the timing, we tell the seller all right, we're going to negotiate the PSA as we get geared up to do our early access, So we're not slowing things down at all. Right, Let's negotiate the PSA, then let's sign it, then let's do the early access and then we'll wire the funds, and it's just a one-day thing, right? So that's how I like to do it. But you know, again, we've structured it many different ways.
David Choi
Host
33:01
Just to get the deal done. What's the biggest hard deposit? you've put up day one?
Rob Beardsley
Guest
33:11
I think 500,000.
David Choi
Host
33:12
That's a big boy. Yeah, balls, ginormous balls.
Eric Panecki
Host
33:17
Seriously balls. That's what it takes, Yeah.
David Choi
Host
33:20
I think that's going to kind of take me into my next question here. How are you structuring these deals right? I know some syndicators are, you know raising? you know partnering with another co-sponsor to put up the hard deposit? I mean, there's people that work with co-cap, gps, work with a balance sheet provider, you know KPs. How are you structuring your deals? You're 26 years old. you've bought $400 million worth of real estate. You must be a master at getting these deals done and working with other people. So I just love to know, i guess, structure and how you do it.
Rob Beardsley
Guest
34:04
Yeah, i think this is an awesome topic and I think it helps to look at it from an evolution perspective because, going back to our first deal, i remember thinking to myself I literally don't care how much money I make on this deal or, in particular, the acquisition fee, just getting the deal closed is a huge win. So I had no ego and I was not selfish at all. right, whatever partners we had to bring in to get the deal done, that's fine, and you alluded to a few just a second ago. So when you're getting started right, most likely you're going to need a loan guarantor, probably need someone to help you put the initial deposits down and the lender deposits right all your risk costs, risk capital. So that's exactly what we did when we first started out right. We went to investors, borrowed money to put the earnest money deposit down. We brought in a loan guarantor to satisfy the lender, brought in a property management company and then brought in people to help raise capital and made it work right.
35:13
That's oversimplifying six months of my life where I was very stressful and scary and scared to lose money and stuff, but that's how we got it done. And so starting from that point and growing to today, which I'm extremely proud of is a slow process of slowly being able to do more and more and more of these elements on our own right. So over time we've built up the capital to be able to put these deposits down on our own. Okay, fantastic. Now number two we've also built up the experience, the net worth and the liquidity to be able to actually get the loans from the lenders on our own account right and don't need loan guarantors. That, like when that started happening, that was just such an amazing you know coming out party. It was just so great to be able to do that not have to worry about loan guarantors, right?
36:05
So, and then you know, and then up till today, we still very much so work with a lot of capital partners that help raise equity. Raising equity is the hardest part of the job, and our ambitions will always be bigger than our wallets, right? So we'll always want to do bigger and bigger deals, which will always require to bring in more and bigger partners. So that's kind of at a very high level, how we structure deals today, which I know is very oversimplified. So if we want to go deeper on anything, you know, let's do it. So, yeah, that's, that's where we're at today.
David Choi
Host
36:41
Yeah, let's, let's dig in, Let's dig in. So you had a big coming out part not coming out, but you had a big party after you. could, you know, guarantee your own loans. You didn't need someone to balance sheet it. Why? Why is that make an impact to you financially?
Rob Beardsley
Guest
36:59
Yeah, great point. So when you bring in a loan guarantor, obviously they're taking a risk by signing on the loan with you and they need to be compensated for that risk. So there's different relationships, there's different arrangements that people have when it comes to that And I've actually been a guarantor for others now as well, and kind of kind of over that as well. It's stressful and you know you're not totally in control. It's another thing to worry about. So I totally respect and understand where a loan guarantor is coming from. But you know we've had to give away 20% of the GP to a loan guarantor and that's a big bite. So that is.
37:37
That's really the main motivation, right Aside from you know money is the really important part, and then also just kind of the, the pride and simplicity of it, like this is our deal, we're signing for this deal, having that ownership, total ownership.
David Choi
Host
37:52
Got it, Got it. So, as far as putting up your own deposits right When you had the liquidity to put that down, what were you paying previously to investors?
Rob Beardsley
Guest
38:04
Yeah, it's varied a lot. We've had investors who were kind enough to do it for free.
Eric Panecki
Host
38:10
That's really nice, that is great, that's really nice.
Rob Beardsley
Guest
38:13
That's the sweet spot. So if anyone listening is trying to set that up, you know, free you need some free money, very kind investors, so. But if you have an investor who is interested in investing in the deal, you can say, okay, that's great. Are you willing to put the initial deposit down as your investment and, in exchange, will give you maybe a kicker or a bonus or whatever? So actually free is not right, because now the thing about it, we actually paid him 10,000, which is basically free right, yeah, yeah.
38:50
For the risk and everything. But we also did a personal guarantee on the funds as well. So I mean I think you just scrap and you do whatever you can, and it's all about as cliche as it is, it's all about your network right Access to capital of all different kinds, whether it be balance sheet money or risk capital or equity. I mean that's what makes the business grow. So we fortunately have been pretty lucky with the access to capital that we've had on all those fronts.
David Choi
Host
39:20
Fantastic. So on the deposit side you've paid like a percentage on the money that they gave you. Have you ever had to give out equity? I don't.
Rob Beardsley
Guest
39:32
Gp side, i think. I think once, and I think that was actually to my parents, gotcha well, it's good to give it to be generous. There we go. They deserve it, man.
David Choi
Host
39:44
They seem like good people. Okay, so What's? what's one piece of advice, or just advice in general, you would give to a syndicator Looking to scale up their capital raising operation?
Rob Beardsley
Guest
39:58
The capital raising operation is super important. So I Mean first things first is whoever is asking that question. I'm glad they're asking that question, because when I started, i didn't even ask that question. I just Was ignorant and had the hubris to assume that, well, if I find a good deal, i'll be able to raise the money, no problem, right, and that's so stupid.
40:19
The reality is, there needs to be someone on your team that is basically full-time committed to To capital raising efforts. So that's step number one. Step number one is realizing the importance of it and committing to it. And then number two, in my opinion, would be playing the super long game, which is thought leadership, because We're in a very special time where you don't necessarily have to do everything one to one, right, i know, i mean, i have mentors who have been in this game for Decades and they talk about when they were starting in their capital raising journey.
40:54
It was all about One-on-one meetings, right, taking people to lunch, taking people to dinner, and that's that's. I mean, if it works, it works. But that's terribly inefficient, right? we are in an age now of social media and Online marketing where you can go one to many and that's so much more efficient and scalable. So I would urge people to consider The one-to-many approach and to commit to it, because the reality is, whether it be this podcast, or Writing a book or a blog or whatever, it pretty much takes two years of no results To start seeing something right, and that's very difficult. It's very difficult to stick to anything for two years on the hopes that you'll get results, but that's the reality of it. So so my, my advice would be you know, take the look at the long picture and just start investing in your one-to-many strategy now.
David Choi
Host
41:49
Can you give some examples of like a one-to-many strategy that that I could implement today?
Rob Beardsley
Guest
41:54
Yeah, yeah. Well, you guys are doing this podcast, which is huge, right. I think that's super smart and you know, looking around at the equipment and everything in the room, this is not cheap to do right, this is an investment and it's a commitment, so I think that is super important to Add. Add on to it. So, something that you might not be doing is having a lead magnet right. Like you, you mentioned the underwriting model that I built. Right, that was something that, very early on, i Strategically decided to give away on our website for free.
42:27
A lot of people were saying, well, why don't you sell this thing? Other people are selling it, i would pay 250 bucks for that and you could make a lot of money selling this thing, and to me it just didn't resonate. I didn't Feel good or didn't feel like it was the the long game, like maybe in the short term I could make 10 grand by selling this $250 model or something right, but the long game, i thought was much more valuable and by giving it away. You know that model has been downloaded well over 10,000 times and that's grown our network exponentially, right, so I would consider what you guys might be able to put together or already have that you use on a daily basis.
43:02
That is valuable, that you are willing to give away for free in exchange to collect people's emails? right, collect people's emails, grow the network and that's just. That's just the start, right? collecting someone's email doesn't automatically nurture them into an investor. It's. It's more work from there. It's. I've been writing a monthly newsletter for for five years now and it's just every single month got to write an article and The better the article, the more people are going to talk about it, respond to it and share it. So it's, it's kind of a, you know, it's definitely a labor of love and, and, like I keep saying, the long game, i Love that great idea.
Eric Panecki
Host
43:38
I love that. Yeah, i mean, this is honestly, it's your spot on. This is tough We've been talking about because we have this ecosystem. We had, you know, we had a deals and dollars event. That was was amazing. We had 400 people there and It's like the most talked about event and it's like, well, where, what are we doing with all these people? and like, where are we pushing them? and and I think you're spot on and clearly you know for you, you know the hard works paid off and you can see it. You're all over the place. So hats off to you. I'm curious from my own standpoint. You know 400 million Assets under management. I mean credible feet. What is it? What does the team look like for you guys right now?
Rob Beardsley
Guest
44:20
Yeah, we have seven people on the loan star team and then we also have radiance living, which is our in-house property management arm That's based in Houston.
44:31
So we've got, you know, headquarters, lone Star, in New York City, and then Houston is where our management team is and the management team in Houston has. we have our VP of operations I think at this point we're in the process of hiring So we've got maybe three, hopefully getting to four regional managers to oversee the different portfolios in Dallas and Houston and then, you know, kind of like regional maintenance supervisor and different stuff like that. and then at the corporate level here in New York, we have our acquisitions team, we have our Investor relations. you know, you guys met my sister. She handles investor relations and investor services also very cool, she oversees a couple of Virtual assistants in the Philippines. So we've been working on that and leveraging that because you know that's just a fantastic way to scale and get more, more out of our team. So so that's kind of the investor relations angle with a Sorry I'm rambling on but we've got another got the investor relations with my sister.
45:42
We've got a director of business development which is actually a good friend of mine from back home as well, so we're keeping it all in the family. So he's just an amazing salesperson that's very attentive and he's kind of like that first line to reach out for capital and stuff. Like I said, you need to have somebody full-time on the team and thankfully we've got that in in abundance and we're we're looking just to continue to expand that. And then my business partner. He runs the more operational side of things.
46:12
As I mentioned earlier, he was formerly a tax attorney, so he's got that legal mind dotting, the eyes crossing the T's, so all the legal stuff he handles and operations asset management. He oversees the management team down in Houston and he also oversees our asset management team, which we have a director of asset management and asset manager that sit in our office as well. So I mean kind of rattled off a lot of things, but it's very, it's quite lean. And that's what I love about this business also is, you know, we're just getting started. We'll definitely scale the portfolio to a billion, two billion, three billion, five billion hopefully, and I don't think the team needs to grow that much to do that scale.
46:54
That's the beauty about this business It's so scalable.
David Choi
Host
46:58
That's amazing. That's amazing. I noticed that you've raised some institutional capital recently. Who was your institutional partner?
Rob Beardsley
Guest
47:06
Well, we're actually doing an exciting deal right now where I don't think I can actually name that partner, but in the past I mean publicly we can talk about our relationship with flagship capital.
47:19
That's a deal that we bought and sold with them, which was an amazing success, and they're a fantastic partner to work with. They're also kind of a great example of a small shop that does a lot. You know they don't have a big team, but they're everywhere. They're so knowledgeable about the market, they provide debt and equity, so they just have such a well-rounded understanding of the business because maybe they don't like a deal on the equity side but they make, they do the loan right and or maybe they would prefer actually to partner with us on the equity side. So in this case, the deal we did, we did a JV where they partnered with us on the equity side, and that was our first kind of institutional partner which we learned so much working with them. And that's one of my favorite things about working with institutional partners, whether it be a family office or a private equity firm, because they're not another cook in the kitchen, right, they're not trying to get into your operations, but they have so much experience and insight that they can share. That it's super valuable.
David Choi
Host
48:26
So you would say that working with institutions is beneficial to, because I've heard from a lot of people that working with institutional capital is just a pain in the neck. Right They're. Due diligence is incredibly thorough. I guess for the most part they're not breathing down your neck after things closing if you're executing on the business plan, but that getting it off the ground for that, you know, to the point where they actually write you a check, is incredibly difficult.
Rob Beardsley
Guest
48:56
Yeah can you just kind of?
David Choi
Host
48:57
like name some pros and cons, i guess, for institutional capital versus working with like a co-cap, gp or an accredited investor.
Rob Beardsley
Guest
49:06
Yeah, sure, so you're absolutely right. I mean due diligence and that whole process is much more rigorous, which I think is a good and bad thing. When you're getting, when you're earlier on, i think it's a good thing because it'll expose a lot of things that you need to work on and a lot of things that you should have prepared on your own. So one of our philosophies is let's take what we learn from our institutional partners and then let's apply it to our retail investors, right, so we don't work with our sophisticated institutional partners in a certain way and then dumb it down and treat our accredited investors differently. That's kind of our thing is like we want to be that sophisticated option for accredited investors, right, so that's. For some investors that's great. Other people it doesn't resonate and that's okay. Like that's just what we've chosen as our niche. But yeah, so the con for sure on the institutional side is more due diligence, a little bit, definitely more work on that front. And then the biggest con, because I don't think that's that big of a deal. If you have the right team and expertise, the DD's not a big deal.
50:22
The big deal is the cost. Right Institutional investors they pay lower fees and they they don't let you charge as big of a promote right, so your waterfall is less rich and your fees are less rich. So that's something that, as a company and and for your strategy, you just have to decide for yourself. Is it worth it to get, you know, $10 million in one check, $20 million in one check, in exchange for lower margins, or would you rather bring in a hundred investors and syndicate and get higher margins right? Both are valid and we do both, and I think both are amazing. So I'm not necessarily looking down the road and thinking to only do one or the other in the future. I like. I like being able to utilize both, because it makes us more nimble where we're able to. Let's say, there might be a certain deal that an institutional group likes but retail investors don't like, so we are able to do that, or vice versa, right. So it allows us to do more deals as well as different types of deals.
David Choi
Host
51:27
It's great, that's great. Thank you. You live in New. York, but you invest strictly in Texas. Can you talk about why you decided Texas and you know not the neighboring markets?
Rob Beardsley
Guest
51:38
Yeah, yeah, so for us it was a pretty straightforward decision. It's not like we had this big research project where we were identifying the best markets. We were like, as I mentioned, my business partner. We were in Joe's mentorship group. A lot of people were Texas focused in that group to begin with. Joe had about 5,000 units in Dallas at that time, i believe. So it was a very natural place for us to start. So that's really it.
52:05
The other big component was the fact that a lot of investors feel comfortable and want Texas exposure, whether they're on the East Coast or in California. A lot of money has been and continues to flow to Texas. So when you're thinking about markets, there's big markets, there's small markets, there's markets that are easier to buy in or easier to manage in. One of the biggest fundamentals is there's markets that are easier to find good deals in, but it's harder to raise capital, and then there's deals. Then there's markets That's hard to find good deals because so competitive, but all the capital wants to be there.
52:50
So as a sponsor, you have to make the decision Do I want my job to be Harder on the capital raising side or do I want it to be on the deal finding side? And so we've chosen let's make our job harder on the finding good deal side, let's be in a competitive market. But let's make it easier to raise capital. Right, because it's not a hard conversation to say, hey, we have a deal in Dallas, right, investors are excited. But if you said, hey, we have a deal and Dayton, ohio, you know sorry, sorry, dayton, it's just harder, right, investors are gonna be a lot more skeptical and it's gonna be harder to convince them. So that was our Texas thesis.
Eric Panecki
Host
53:26
I mean so that I guess that probably speaks to your ability to find good deals. And I know you're head of acquisitions right for for your firm. So You know competitive, market competitive. It probably one of the most competitive markets right in the country, with the exception of you know some maybe Florida towns right. So how are you separating yourself from the competition? How are you finding these deals?
Rob Beardsley
Guest
53:48
Yeah, it's, it's very tough for sure, and one of the things we talked about was Earn this money, deposits and going hard and trying to position ourselves as the best buyer amongst the crowd, because even if you are at the top price, that doesn't guarantee you the deal, right, right, i mean, i remember a heartbreaking deal. We really wanted this deal and we were willing to pay the top price and we came in with the best offer, but unfortunately, the seller chose a buyer that they had previously worked with.
54:18
They had the familiarity, they had the comfort, so they felt that there was more certainty of execution there, even though we were willing to go hard and we had a better price. So you know It's it's it's that competitive, it's that tough. So for us it's Been a process of over time, of developing our relationships and reputation in the market. So, and it's really not any more complicated than doing what you say you're going to do. Yeah right, if you Brokers, they want certainty of execution just as much as the seller, because brokers they want to make their lives simple. They want to make sure that they're doing what they want to do. They want to make a marriage and buyer and seller, and they want to collect their commission and they want to move on. They don't want headaches. So we try to position ourselves as the headache free buyer. We want to make sure that we're pleasant to work with. You know, even the soft things like just being nice, right, it does all that does matter.
55:11
So as far as Like the real nitty-gritty you know I think Ernest might deposits, being aggressive on those moves the needle as far as uncovering opportunity, it's really all about. It's a numbers game to an extent, right, and and being patient. So on average we look at like a hundred to hundred, fifty deals to acquire one. And You know you hear that Toss around a lot in the industry, oh, it's the hundred to one rule and stuff like that. But It's true, all right, and it just really does take that work. And Here's the the extra thing too, because if you are looking at a hundred deals But 20 of them are in Phoenix, denver, dallas, raleigh, like you, don't know what you're looking at right.
55:59
So you might be picking the one out of a hundred, but that's not necessarily the best one out of a hundred, right?
56:04
So the the the key is the fact that we know our market so well And we have relationships in these markets that we feel very confident that we are picking that best one deal out of the hundred Right week, because we know what we're looking at, which makes us more efficient and better at our underwriting and also Better at deal sourcing, which I think there's a lot of talk in Real estate in general about, like finding the hidden gem, finding the off-market deal or direct to seller and stuff like that. And unfortunately for our business, well, we're buying deals that are 20 million, 40 million dollar deals. There's really no secret. There's no true off-market. I mean, if it's off-market, the broker still taking it to their three to five favorite buyers for the deal, right? So everything's competitive. There's no magic hidden direct to seller, seller, financings type stuff. So it's more of just kind of like just beating, beating against that wall every day trying to find the right fit.
David Choi
Host
57:04
So no, thank you for that. I'm noticing that the larger the deal size, the more you just it's all coming from brokers. Some of them are listed, some of them are not, but it's a numbers game and you just have to stay massively consistent and, ideally, get really efficient in your market. You know, understand what rents are going for, so you don't have to do rent comps For every single deal, understand what cap rates are, and so that's a. That's a really, really good point, and reputation. Right, yeah, and then doing.
Eric Panecki
Host
57:37
We, like you said, doing what you say you're gonna do and performing. Yeah and you know, all it takes is one deal ago sideways, where you you know You'd screwed someone over and you'll never work with that person again, right?
David Choi
Host
57:48
Right. I do have one last question for you. Texas has been getting all the hype Let. Every single time I go to a real estate conference, texas is where it's at right. But for some reason there is a ton of Nonperforming loans, you know, for it looks like there's some for plenty of foreclosures on the way, and it was shocked me. I said Texas, i mean it has such strong rent growth, there's strong cap rate compression. I mean the demographics are pushing for Texas being The place you want to invest in what happened?
Rob Beardsley
Guest
58:28
Why is this?
58:29
happening the reality is you cannot Have rent growth that outruns interest rate increases, right? So we've seen over the last year or so The fastest rising in rates in history. Right, and that is Impacting the market, to say the least. Right, and it's only the very beginning. Like you said, you know There's been a couple big name foreclosures or big headlines, but that's just a start.
58:59
I mean, there's gonna be a lot of more stuff that comes down Over the next year or so as people kind of burn through their liquidity Rate. Caps expire, loans mature, there's gonna be Cash and refinances There's gonna be. There's gonna be some stress. There's a lot of liquidity in the market. So things are gonna get mostly worked out, in my opinion.
59:21
But Still, with this big of an increase in interest rates, it doesn't matter if your NOI went up 20%. You know if your interest rate is doubled or more in many cases, And value is down 20%, it's going to have an impact. So I'm not sure if there's something specific going on in Texas that's making it more exacerbated. I mean, maybe My one thought could be maybe lending got more aggressive in Texas because people were so excited and bullish. That may be true, but I think that's marginal. I don't think that's a big thing because I mean, from what I saw, we were seeing 80% Bridge loans across the country, yeah so, but you know the the headline Houston foreclosure on the big multifamily portfolio that was more than 80%. That was. It was like 80% leverage and they had preferred equities. They were levered up to like 90%, got it. That's a. That's a big, big recipe for disaster.
Eric Panecki
Host
01:00:17
Why do you think that got so much traction, that that the syndicator that failed, and I think it was in Houston. That's right, yeah, and like that was everywhere. But like I mean I'm sure that happens Pretty often I can't imagine either, first since syndicator to go bust recently.
Rob Beardsley
Guest
01:00:32
No, and we had to answer so many questions about that because we're the Houston guys.
01:00:36
Yeah, you're the Houston guy our investors are asking us What does this mean for the market, what does this mean for your deal? Should I invest with you now, or what you know? so we answered a lot of those questions. I put out a video on LinkedIn about that. Those foreclosures as well I mean, that was that situation was just basically the Poster child, if you will, of everything that's going on, and I don't think that I Mean are they villains, are they bad people? Like no, i don't think they're bad, but they just got caught with them.
01:01:07
You know, the market, the market changed. They were in a very levered position and when you're levered, you're levered for good times to be even better And then, but when bad times, it's gonna be even worse. So, you know, and we, like everybody else, we got carried away with the leverage. We were using bridge loans and You know we are a part of the aggressive market. That was, that was the zeitgeist, and so we have definitely, you know, going through that experience and now going through what we're going through now, which is kind of hunkering down, making sure that the portfolio is safe, refinancing into long-term debt, all that good stuff. This has definitely taught us a very, very valuable lesson that You know, hey, the market really does change and these foreclosures, like these things can happen. You can lose money. So it is best to not Stretch for that 18 or 20 percent return. It's better to be more conservative, sleep well at night, have a more conservative deal structure.
David Choi
Host
01:02:03
Yeah, my mentor always says this get rich slow, sleep well at night. And that's what it comes down to.
Eric Panecki
Host
01:02:12
Rob, you're a stud man. You're a stud. Everything from the hair to the, to the sunglass in the pocket. Dude, you're your beast. You're 26 years old. You're killing it. What's what's next for you guys? What's what's the goal?
Rob Beardsley
Guest
01:02:24
Well, speaking of the what we're just talking about, i think Survive to 25 is definitely a good mantra. You know we're doing well, our portfolio is performing, but I think there's still trouble ahead. So survive to 25 is, first and foremost, right. Let's protect investor capital and let's continue to find good deals and then, you know, over the next couple years, definitely I'm chasing that billion. That's. That's a big, big goal. We want to get to a billion, a um, and From there. I don't know, i don't have a big master plan, but I think You know when the first billion is probably easier than the next one. So get to one, then maybe get to two and and see what else is exciting.
Eric Panecki
Host
01:03:04
That's amazing, dude. I personally learned a lot. This was an awesome conversation. Where can people find you? Where can they download the your underwriting model Where? where did it? Where do they go?
Rob Beardsley
Guest
01:03:13
Yeah, you can learn more about Us at Lone Star Capital on our website. We actually just did a brand new website redesign, so super excited to share that. You can find that at LSC re comm so that stands for Lone Star Capital real estate, so LSC re comm. And on our website, like you mentioned, you can get the free underwriting model download, find some other resources from us and also get in touch.
David Choi
Host
01:03:37
One more question, just drop it in before the end here. Um, rob, there's gonna be blood on the streets in the coming years and RIP Sam cell, the grave dancer. There's gonna be a ton of opportunity, i'm sure, in Houston, in Dallas as well. What are you gonna do it to capitalize on this opportunity to get to that billion dollar mark?
Rob Beardsley
Guest
01:03:58
Yeah, that's. That's a Sound simple, but it's harder than it sounds. Right, grave dancing and all everything. Because the way that markets work is when The best deals are out there in the market, right when there's blood in the streets. That's precisely when sentiment is the most negative and what that means is it's going to be the hardest time to raise capital. So right now I'm telling my team because I'm sure you guys have seen this and have heard, have seen other people talk about how it's getting harder for them to raise money right now, as opposed to, let's say, a year ago and You know we're hearing that from our partners as well The reality is, what I'm telling my team is it's it's going to get worse before it gets better.
01:04:38
It's going to get harder to raise money before it gets easier. In my opinion, i think that sometime in the middle of 2024 or something, sentiment is going to be quite negative and it's going to be very hard to raise money. So and that might be when the best deals are available. So Everything that we're doing every single day to continue to build trust With our investors is exactly what we need. In the time where it's going to be The toughest to raise capital, we're gonna say no, no, no, this is a good deal. I know times seem uncertain right now, but this is the time to invest. So it's all about having a strong enough relationship with your investors and the trust and then also having different kinds of investors, because, if you have the right, maybe family office or institutional kind of investors that are more savvy, more patient, more opportunistic those are going to be the people that are gonna be more ready to jump in when there's blood in the streets.
Eric Panecki
Host
01:05:35
Great answer. This was a great podcast.
Rob Beardsley
RELEVANT LINKS
Lonestar Capital Official Website
ABOUT ROB BEARDSLEY
Rob oversees acquisitions and capital markets for Lone Star Capital and has acquired over $400M of multifamily properties. He has evaluated thousands of opportunities using proprietary underwriting models and sold over 10,000 copies of his book, The Definitive Guide to Underwriting Multifamily Acquisitions.
