EP16: Don't fall for SHINY Returns in an Investment, Understand the Multi Family Financials with Rob Beardsley

Think Outside The Stocks

Multifamily is one of the most popular asset classes in commercial real estate. Apartments are said to be one of the easiest product types to understand without the complexities of long-term leases that can come with office, retail, and industrial properties. But what does the underwriting process look like, and how do you actually determine what a multifamily property is worth? In this episode, we talk all about multifamily underwriting with Author, Speaker, and Founder of Lone Star Capital, Rob Beardsley.
Who is Rob?
Rob Beardsley oversees acquisitions and capital markets for Lone Star Capital and has acquired over $350M of multifamily properties. He has evaluated thousands of opportunities using proprietary underwriting models and published the number one book on multifamily underwriting, The Definitive Guide to Underwriting Multifamily Acquisitions. He has written over 50 articles about underwriting, deal structures, and capital markets and hosts the Capital Spotlight podcast, which is focused on interviewing institutional investors.
How to connect with Rob:
Website: https://lscre.com/
LinkedIn: https://www.linkedin.com/in/rob-beardsley/
Get Rob’s free underwriting model: https://lscre.com/model
Grab a copy of his book: https://amzn.to/43YSASR
Book recommendation: Getting More: How You Can Negotiate to Succeed in Work and Life by Stuart Diamond
Show notes:
[2:14] How did Rob get into real estate?
[3:36] What is underwriting?
[4:44] What financial report does he get in terms of underwriting?
[6:20] Their underwriting model
[8:12] What are the key assumptions on the debt side of the model?
[10:58] What are the three things one should look at in the debt structure?
[12:44] Waterfall structure
[15:34] Predicting expenses
[17:45] Forced appreciation
[19:21] Why is the cap rate important?
[21:29] Cap rate expansion and why it matters in the market
[25:37] What to focus on in conservative assumptions
[34:15] How many properties does he underwrite to find the perfect investment?
[35:00] How does Rob think outside the stocks?
[36:27] Rapid fire
[39:50] Outro
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