Robert Beardsley

I recently came across an intriguing strategy that fund managers utilize to find alpha and stay competitive in today's market.

One way is through partnering with less experienced sponsors. Emerging sponsors are generally riskier for JV equity to invest with but can be a successful way to access smaller, great deals at more favorable terms.

Additionally, emerging sponsors with fewer deals in their portfolio and on their track record are likely to work very hard to make one of their first deals a success because their reputation is on the line.

Conversely, a tenured sponsor who has done over 50 deals can afford the reputational hit of having a deal go south and therefore, may be less likely to do everything in their power to ensure a deal’s success.

To grab a copy of my no-fluff, step-by-step guide to underwriting multifamily real estate, click the link in the comments.

As our team thinks about building our business, we don’t want the biggest company or to do as many deals as possible, but rather we’d like to have the best business, which we define as smooth.

If a breakneck speed is required to achieve our goals, then we are better off slowing down, building more systems, and/or hiring more people.

Similarly, the market at times will present many strong buying opportunities and at other times will not.

Having patience and a long-term outlook serves us best rather than being fixated on short-term goals.

To get the latest updates on Lone Star Capital and multifamily investment opportunities, click the link in the comments and join our investor list.

How do we achieve growth and success in real estate investing?

One of the primary ways we judge growth and success in our business is through AUM and annual acquisition volume.

These goals must be balanced with the most important goal, which is to build and maintain a strong track record of consistent and attractive returns by under promising and overdelivering.

This means it is important to have a good balance of aggressiveness and patience when looking to scale since the market is ever-changing.

To learn more about investing with Lone Star Capital, join our investor list by clicking the link below.

Closing costs are a crucial yet often confusing aspect of real estate transactions. From attorney fees to title insurance and taxes, these expenses can quickly add up for both buyers and sellers.

But don't let the sticker shock catch you off guard. By requesting estimates early on and being prepared for these costs, you can stay on budget and avoid any surprises. Whether you're a buyer or seller, it's essential to understand closing costs and plan accordingly.

Want to learn more? Click the link in the comments to grab a copy of 'the Definitive Guide to Underwriting'. Explore the ins and outs of analyzing a potential real estate acquisition.

As a property owner, it is essential to focus on maximizing profits by implementing effective strategies that cater to both raising revenue and reducing expenses.

One such approach is to concentrate on increasing rent and occupancy rates while simultaneously managing costs.

It's important to note that with each additional tenant, the marginal expenses tend to increase at a slower rate.

Therefore, focusing on attracting and retaining marginal occupants proves to be the most profitable strategy.

To learn more about underwriting multifamily acquisitions, click the link in the comments to grab a copy of my book. It was written to be the straightforward, A-to-Z guide I wish I had when starting real estate.

I wanted to share a crucial aspect of passive investments that you might find interesting.

One significant factor is the illiquid nature of some of these investments, which may impact the ease of selling partnership interests.

Although it is technically possible to sell your partnership interest via a secondary sale, there is no guarantee of finding a buyer or securing a favorable price.

Therefore, it is advisable to view these investments as medium to long-term commitments that could potentially yield returns sooner if the business plan is successful and the market conditions are favorable.

If you are interested in learning more about passively investing in real estate, click the link in the comments and download a free copy of my Passive Investor Guide.

Understanding the ideal unit mix for our target market is crucial in maximizing rental income and optimizing vacancy rates. A diverse unit mix may attract a wider range of tenants, leading to increased demand and potentially higher occupancy rates.

In addition, it's important to consider the operating expenses associated with each unit type, as these can significantly impact the overall operating income.

By carefully analyzing both rental income and operating expenses, we can make informed decisions when acquiring or developing properties to maximize returns on our investments.

Download the underwriting model we have used to acquire $350mm of multifamily real estate by clicking the link in the comments.

Join us for our LSC Q1 2023 Deal Flow Analysis Webinar Today at 2PM EST!

Charles Waldron and I will be sharing insights from our Q1 deal flow and discussing our tracking process, so you can get a better sense of where deals are trading and what it takes to find a great opportunity.

If you haven't signed up, it's not too late to register! Click the link in the comments.

Are you interested in learning about a unique partnership structure that involves a manager/operator partner working alongside one or more capital partners who provide LP equity, typically raised from retail investors?

This approach can be highly effective in optimizing your deal structure. If you're looking for comprehensive guidance on structuring and raising debt and equity, I invite you to check out my new book. "Structuring and Raising Debt & Equity" covers everything you need to know to make the most of this strategy.

Grab your copy today by clicking the link in the comments.

We are excited to invite you to join us for our upcoming Q1 2023 Deal Flow Analysis webinar next Thursday, April 6th, at 2 PM EST!

To those unfamiliar, Charles Waldron and I dive into the deals that our team has underwritten and tracked in the most recent quarter (Q1 2023), providing you with valuable insights into the market environment, our KPIs, as well as trends.

This is an interactive virtual event, so be sure to register by clicking on the link in the comments section. I look forward to seeing you all there.

Bank runs🏎️🏦

Here are some steps to take if you're looking to be a passive investor but are unsure where to begin:

First, it's crucial to establish a high-level strategy that aligns with your investment goals to provide you with a clear view of your long-term objectives and make informed decisions. Begin by outlining your investment objectives and determining your risk tolerance.

Second, diversify your portfolio to minimize risk.

Finally, consider seeking advice from a financial advisor or mentor who can guide you on your journey toward financial freedom.

If you're interested in learning more about passive investing in real estate, download a free copy of my Passive Investor Guide by clicking on the link in the comments.

Do you wonder how useful the yield-on-cost metric is for comparing deals? I find this indicator offers greater insight than most and is less prone to manipulation than IRR.

To calculate a property's projected yield on cost, start by using the projected rent and expenses to derive the pro forma NOI. Then, divide the pro forma NOI by the purchase price plus capital expenditures.

You can download the underwriting model we've used to acquire $365mm of multifamily real estate by clicking the link in the comments.

Today at 2 PM EST we have our webinar on our Full Cycle Deal Case Study!

During this discussion, you will learn about this deal's progression and how we were able to achieve 30%+ returns upon sale.

As an investor, you will benefit from understanding the ins and outs of this successful deal, including the strategies and decisions that led to its success.

I will share my insights and answer any questions you may have.

If you haven't signed up, it's not too late to register! Click the link in the comments.

A few weeks ago, we closed on Candlelight Park, a 128-unit apartment community in Duncanville, which is our first acquisition of 2023 and our first deal in Dallas. We remain really excited to enter the strong DFW market and look forward to scaling up.

Here are a few takeaways:

We took advantage of an early index lock back in January when rates dropped substantially. A fixed-interest rate loan often is subject to change throughout the closing process. However, we were able to lock in the index rate (US treasury yield) that the interest rate would be based on which effectively locked in our rate. This turned out to be a huge win as rates made a big run higher right as we closed.

Also, on the debt side, we took advantage of a rate buy down which is a special option Freddie Mac provided. Essentially, we paid a higher fee upfront to reduce our interest rate throughout the life of the loan. Not only does this improve cash flow, it also improves underwriting since this loan is constrained by DSCR (debt service coverage ratio). A lower interest rate helps the DSCR calculation which in turn allows the lender to provide higher loan proceeds, critical in today's tight lending environment.

For the first time in a while, the acquisition of Candlelight did not have any 1031 exchange investors, which made for a very smooth closing process. We remain committed to our 1031 investors and our process. We welcome complexity!

To stay up to date with Lone Star's latest investment opportunities, newsletters, and more, sign-up for our investor list at the link below.

To make your passive investing more passive, a trusted sponsor relationship will save you time by not having to repeat sponsor due diligence for each and every deal.

You don’t have to vet deals extremely closely since you will have trust and familiarity with the types of deals your sponsor relationships present to you.

If you are interested in learning more about passively investing in real estate, click the link in the comments and download a free copy of my Passive Investor Guide.

What is Dual-Tranche Equity Structure?

The common equity is subordinate to the preferred equity, meaning it can only receive cash flows after the pref equity’s fixed return is paid.

Wrapped around this equity structure is the sponsors' or general partners’ promote performance-based compensation earned from cash flows and profits upon sale.

This means the common equity may still have a preferred return, which must be paid before the general partners (GPs) earn their promote, but this preferred return is still subordinate to that of the Class A investors.

My new book, Structuring and Raising Debt & Equity covers everything you need to know on how to optimize your deal structure. If you're interested you can grab a copy today by clicking the link in the comments.