From College Dropout to Acquiring $600M in Multifamily Real Estate

• The office sector accounts for a significant 33.6% of total conversions. Close behind, the hospitality industry contributes 29.3%, reflecting its robust growth and dynamic engagement strategies.

• The industrial sector, known for its consistent and steady performance, represents 19.0% of the conversions. Healthcare follows, contributing 6.2%, showcasing the sector's gradual but impactful transformation efforts.

• School and religious institutions, combined, account for 5.8% of conversions, indicating a notable, albeit smaller, role in the overall landscape. The entertainment sector contributes 3.6%, highlighting niche but vital engagements.

• Lastly, the government sector, while representing a smaller share, contributes 1.6%, reflecting its specialized but critical involvement in the conversion ecosystem.

• 120 million square feet of new supply, as determined by construction completions, more than quadrupled the reported demand for the quarter.

• After surpassing 100 million square feet every quarter for nine quarters, from 2021 to mid-2023, development started to decrease, with a total of only 58 million square feet between January and March.

I recently watched a podcast featuring Rob Beardsley the founder of Lone Star Capital. His story, intelligence, and knowledge of the Real Estate game immediately intrigued me to write this week's "The Story" focusing on Rob Beardsley.

Rob (26) grew up in Northern California, where his family ran a residential brokerage firm focused on luxurious properties. Initially, on a tech track in college, his interest shifted to real estate, particularly multifamily properties for their scalability and wealth-building potential.

The pivotal moment came when he realized it wasn't just about chasing commission checks anymore. He was captivated by the multifamily business model—its scalability and institutional sophistication offered new pathways for building assets and wealth over time.

His journey took a significant turn when he met his business partner Craig McGrouther. Together, they signed their first contract, prompting him to drop out of college boldly.

Today he has acquired $600M in multifamily real estate. He has also developed his proprietary models and has sold over 10,000+ copies of his book “The Definitive Guide to Underwriting Multifamily Acquisitions”. 

Key points to take down:

• Going back to his first deal he did not care about how much money he made, it was just about getting the deal done.

• “Slowly being able to do each of these different elements of a deal on your own over time”. Putting a deposit down yourself right away.

• Experience, net worth, and liquidity to get the loan from the lenders on their account and not have guarantors.

• Working with institutional investors: Due diligence is much more rigorous which can be a good and bad thing, early on it is a good thing that can expose what you will need to fix later on. Institutional investors also pay lower fees and do not let you charge as big as a promotion.

• Picking your market: Rob was surrounded by people in the Dallas market, but he advised everyone to become closer to brokers. Understand and truly know who your competitors are and what is going on in your market when it comes to rent.

The value of San Francisco’s two largest hotels has dropped by $1 billion. As the city's hospitality industry struggles to rebound, Trepp reported that the 1,024-room Parc 55 Hotel and the 1,921-room Hilton San Francisco Union Square are now valued at a combined $553.8 million, down 65% from their 2016 appraisal of $1.56 billion. Despite this significant decline, the pool of potential buyers remains small.

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