YOUR DAILY REAL ESTATE INVESTMENT SHOW
Sept. 23, 2022

Growing a Vertical Integrated Business with Rob Beardsley

Growing a Vertical Integrated Business with Rob Beardsley

In this episode of Cash Flow Pro, we talk with Rob Beardsley, Founder, and Principal of Lone Star Capital. Rob grew up in a real estate family-focused single family. They owned a residential brokerage firm in Silicon Valley. It was around 2016 that it...


In this episode of Cash Flow Pro, we talk with Rob Beardsley, Founder, and Principal of Lone Star Capital. Rob grew up in a real estate family-focused single family. They owned a residential brokerage firm in Silicon Valley. It was around 2016 that it started developing into multifamily. Eventually, Rob found himself in HTX and started his own real estate firm in 2018. Their goal was to own and operate Texas workforce housing. Since then, Rob has been involved in over $100MM of multifamily acquisitions and published the number one book on multifamily underwriting, The Definitive Guide to Underwriting Multifamily Acquisitions

 

 

In this episode, we discuss:

  • The benefits of a vertically integrated business 
  • Sourcing Investors and actively growing your list 
  • Reasons for diversifying your market 
  • The Houston real estate market and growth trends
  • Curating the perfect qualified team to grow your business 
  • Fundamental principals and what not to do 

 

 

Find your flow, 

Casey Brown

 

Resources mentioned in this podcast:

  1. https://robbeardsley.me/
  2. https://www.linkedin.com/in/rob-beardsley/
  3. Instagram @robbeardsley3
Transcript

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[casey_]: hey there and welcome to today's episode
of cash flow pro your daily real estate

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[casey_]: investing podcast and youtubechannel i'm here today
with rob beardsley how are you

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[rob_beardsley]: i'm doing great thanks for having me

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[casey_]: absolutely man it's lone star capital right

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[rob_beardsley]: that's right

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[casey_]: awesome and you were just talking about
this houston deal that you got and that

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[casey_]: you all are actively raising for and
we can't wait to dig into that but

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[casey_]: first of all why don't you tell
us just a little bit about your where

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[casey_]: you come from your history and then
kind of how you how you angled into

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[casey_]: the real estate business to begin with

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[rob_beardsley]: sure so my business partner we started
lone star capital four and a half years

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[rob_beardsley]: ago to focus on owning an operating
texas work for use housing to date we've

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[rob_beardsley]: acquired over three hundred million in that's
primarily in houston and last year we actually

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[rob_beardsley]: launched our property management company radiance living
so we are now vertically integrated and our

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[rob_beardsley]: management team only manages our portfolios we
don't do any third party management keeps really

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[rob_beardsley]: focused and focused on optimizing the portfolio
for us and our investors before starting loan

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[rob_beardsley]: star i had real estate experience through
my family growing up my family ran a

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[rob_beardsley]: residential brokerage firm in silicon valley

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[casey_]: ye

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[rob_beardsley]: from home so i was around doing
you hearing them do deals all day long

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[casey_]: sure

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[rob_beardsley]: but everything was on the single family
side so it was buying and selling homes

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[rob_beardsley]: development and the construction of single family
homes so it wasn't until about six years

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[rob_beardsley]: ago that we got involved in multi
family as kind of that next step and

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[rob_beardsley]: i led the way on that step
and unfortunately at the time i family was

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[rob_beardsley]: too busy with the main residential business
to really go full into multi family and

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[rob_beardsley]: so that's when i had the good
fortune of meeting my business partner and starting

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[rob_beardsley]: loan star on our own which has
and a really awesome journey so far

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[casey_]: sure sure well that's great man and
you said three hundred million assets under managed

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[casey_]: i mean that's unreal that's

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[rob_beardsley]: just

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[casey_]: and and how many years did you
say what year did you say you all

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[casey_]: first started

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[rob_beardsley]: early twenty eight teens about four and
a half

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[casey_]: so yeah that's what i mean i
was thinking that's that's that's pretty that's a

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[casey_]: pretty hefty load for for a little
more than four years so that's great man

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[casey_]: now are you all mainly focused houston
market obviously with a term

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[rob_beardsley]: yeah

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[casey_]: loan star maybe i'm assuming maybe you
all are probably at least focused in texas

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[casey_]: but are you mostly in houston

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[rob_beardsley]: yeah we're definitely houston focused with the
plans to expand to dallas fort worth but

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[rob_beardsley]: focus has always been a key for
us focus for the sourcing on the acquisition

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[rob_beardsley]: side right being chasing deals in a
smaller area lets us be more competitive lets

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[rob_beardsley]: us know better as to what we're
underwriting and also have better relationships with the

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[rob_beardsley]: brokers and owners in the yeah so
focus has been really key for our success

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[casey_]: sure sure now what do you we're
gonna we usually focus more on the beginnings

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[casey_]: of real estate companies and how people
got started and so on but one question

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[casey_]: that all it seems to come up
so we're going to move more towards your

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[casey_]: experience side but the question that always
seems to come up from investors is about

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[casey_]: this vertically integrated property management stuff and
at first i thought from a investor relation

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[casey_]: standpoint it was a little bit of
a nightmare until because

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[rob_beardsley]: to

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[casey_]: i guess people look at it as
hey these people are you know they're being

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[casey_]: compensated or whatever for services

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[rob_beardsley]: yeah

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[casey_]: they're providing to their own investors and
so on but it actually became easier to

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[casey_]: discuss i finally came across the idea
that hey once these vertically integrated companies take

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[casey_]: the rent in

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[rob_beardsley]: yes

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[casey_]: the money

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[rob_beardsley]: but

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[casey_]: basically doesn't change hands again until it
goes out to the investor so it's really

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[casey_]: from from a standpoint of being able
to control everything it seems like it's a

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[casey_]: pretty good move but what do you
think obviously you all did it so you

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[casey_]: thought it was a good move but
what were some of the biggest challenges and

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[casey_]: in taking that part of on

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[rob_beardsley]: the biggest challenges are scale and then
team right property management is all a people's

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[rob_beardsley]: business and it's it's very management intensive
so

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[casey_]: yeah

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[rob_beardsley]: you know the first thing on the
scale side is you can't build a management

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[rob_beardsley]: company out of two hundred

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[casey_]: okay

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[rob_beardsley]: units you

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[casey_]: yeah

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[rob_beardsley]: need to have more scale to be
able to actually afford the corporate overhead of

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[rob_beardsley]: having you know regional managers and more
overhead staff

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[casey_]: sure

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[rob_beardsley]: and we waited a long time to
get to that point but we prepared for

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[rob_beardsley]: that point by kind of figuring out
little things along the way how wanted to

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[rob_beardsley]: manage pay role and accounting in h
r and we also were putting the team

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[rob_beardsley]: together along the way we were putting
together who do we want to be our

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[rob_beardsley]: regional manager v p of operations how
do we see that building out so we

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[rob_beardsley]: were really fortunate to have the right
team come together so that transition which can

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[rob_beardsley]: be a hard part

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[casey_]: sure

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[rob_beardsley]: the transition was very smooth for us
and then the other thing is is i

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[rob_beardsley]: don't think people really talk about this
as much but i don't think you want

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[rob_beardsley]: to be too big because

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[casey_]: yeah

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[rob_beardsley]: once you get so big making the
transition could be a total nightmare going taking

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[rob_beardsley]: ten thousand units all in house at
once transitioning

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[casey_]: yeah

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[rob_beardsley]: all those properties that could be really
tough so i think we transitioned right at

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[rob_beardsley]: the right time you know it was
way before the property management business would be

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[rob_beardsley]: profitable and the property management business is
still not profitable today because we run it

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[rob_beardsley]: that way to really make sure that
we're investing into the properties rather than trying

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[rob_beardsley]: to suck profits out of the management
side right management

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[casey_]: sure

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[rob_beardsley]: side is not what we're in the
business for so uh yeah i think getting

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[rob_beardsley]: ve getting moving early is really helpful

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[casey_]: yea and of course there's always the
the people that i know of that are

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[casey_]: in the property management business slash capitalizing
business slash real estate investing business all across

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[casey_]: that board it seems to me like
the term of the day is the disclosure

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[casey_]: like it's just it's almost like hey
if you just tell people it's almost it

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[casey_]: would almost

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[rob_beardsley]: yes

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[casey_]: like if people just found out later
that you ere managing the properties that you're

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[rob_beardsley]: i

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[casey_]: that you having them invest in it
seems like

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[rob_beardsley]: i

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[casey_]: that would be like that would

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[rob_beardsley]: ah

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[casey_]: be where it wouldn't be cool but
as long as people are you're just up

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[casey_]: front you're like hey

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[rob_beardsley]: ye

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[casey_]: we got a property man in company
this is the reason why we have a

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[casey_]: property management company i mean i've found
that people really just tend to kind of

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[casey_]: go along with that and say oh
they're like okay yeah well that makes sense

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[casey_]: otherwise they just they tend to start
question those kinds of things but um so

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[casey_]: on the outside capital part of your
all's business where you go for instance let's

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[casey_]: talk about let's talk about this past
deal and you were talking about doing a

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[casey_]: webinar and some other things that you
all have going on for that specific deal

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[casey_]: can you walk us a little bit
through like maybe where you find investors how

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[casey_]: do you attract new investors

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[rob_beardsley]: yeah

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[casey_]: and obviously you have an investor base
people that repeat but where do you find

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[casey_]: the new ones yes

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[rob_beardsley]: i think our biggest sources of new
investors are linked in podcasts just like this

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[rob_beardsley]: one

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[casey_]: sure

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[rob_beardsley]: and my book that i published a
little over two years ago the definitive guide

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[rob_beardsley]: to underwriting multi family acquisitions and that
one

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[casey_]: yep

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[rob_beardsley]: is kind of a funny because you
wouldn't really think that passive investors would buy

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[rob_beardsley]: that book because it's very nice and
somewhat advanced but surprisingly a lot of investors

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[rob_beardsley]: buy that book and then they reach
out and are interested in learning more about

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[rob_beardsley]: investing with us so that really great

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[casey_]: well

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[rob_beardsley]: to

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[casey_]: the

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[rob_beardsley]: see

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[casey_]: book proves two things the book proves
you know what you're talking about because why

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[casey_]: you know you wrote a book about
it and then the other part of it

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[casey_]: is is the book proves that this
is the model that you use and so

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[casey_]: once you've kind of double you kind
of double down on that of course they're

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[casey_]: going to be like hey yeah this
guy knows what he's talking about and hey

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[casey_]: by the way this is a really
extensive um

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[rob_beardsley]: oh

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[casey_]: you know underwriting a property is something
that's very it's a very time consuming and

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[casey_]: hey i'll just invest with him and
let him take care of all right

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[rob_beardsley]: yeah that's a good point ah so
that's been very successful and we've been posting

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[rob_beardsley]: on linked in daily for i don't
know how long so been growing the linked

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[rob_beardsley]: in audience and trying to provide quality
content unique quality content that

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[casey_]: what types

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[rob_beardsley]: people aren't

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[casey_]: of content are you providing on linked
in

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[rob_beardsley]: yeah i really like making content that
is relevant to me and something that i

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[rob_beardsley]: would personally be interested in so anything
that comes up in our business that is

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[rob_beardsley]: maybe a new trend lenders are changing
their underwriting or debt you know has changed

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[rob_beardsley]: i like to talk about that kind
of stuff and

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[casey_]: yeah

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[rob_beardsley]: get more advanced talk about different nuances
and partnership structures so it's really not like

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[rob_beardsley]: the joke i like to say is
you know i don't like to make content

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[rob_beardsley]: about what is a cap rate you
know certainly

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[casey_]: yeah

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[rob_beardsley]: can be helpful for a lot of
people but that's not the content i'm passionate

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[rob_beardsley]: about making so

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[casey_]: sure

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[rob_beardsley]: yeah

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[casey_]: it has to be relevant to today
too i found that to be a big

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[casey_]: big thing especially well really across all
social medias it's like you're like what is

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[casey_]: a cap rate caprae is when you
that can be kind of basically just just

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[casey_]: dry and not very interesting but when
you start relating it to what what is

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[casey_]: the topic of discussion of the day
or what is today's lending like you said

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[casey_]: i mean i think that's great man
that's and then do you lead people from

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[casey_]: linked in do you just like leave
teasers about hey check out this new deal

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[casey_]: or you leave a video that says
man we've got this bad are bad bad

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[casey_]: in a good way we've got this
awesome hunderd an eighty two unit deal coming

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[casey_]: up in houston man you've got to
be on here for the web and are

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[casey_]: to check this out i mean is
that the kind of stuff that you do

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[casey_]: to eventually lead that audience to your
webinar

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[rob_beardsley]: no but it sounded really good when
you did it so

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[casey_]: awesome yeah for

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[rob_beardsley]: maybe

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[casey_]: me

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[rob_beardsley]: yeah

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[casey_]: i'm

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[rob_beardsley]: maybe

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[casey_]: free

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[rob_beardsley]: we

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[casey_]: tomorrow

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[rob_beardsley]: need your help

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[casey_]: yeah

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[rob_beardsley]: but

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[casey_]: uh

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[rob_beardsley]: we we don't i mean so we've
actually only done five o six be offerings

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[rob_beardsley]: so

198
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[casey_]: okay

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[rob_beardsley]: that limits us to

200
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[casey_]: changes

201
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[rob_beardsley]: not being

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[casey_]: that year

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[rob_beardsley]: able to publicly talk about will publicly
solicit ester's first

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[casey_]: sure

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[rob_beardsley]: specific deal we can obviously tell people
hey if you're iterested in earning more about

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[rob_beardsley]: investing with us you can so you
know we've been really passive about our sales

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[rob_beardsley]: strategy if you were and i don't
and i think honestly i think that's a

208
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[rob_beardsley]: bad thing i think we can improve
that a lot we certainly on linked in

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[rob_beardsley]: say hey if you're interested here's our
website you can fill out the new investor

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[rob_beardsley]: form will get in touch with you
but we've been up to this point very

211
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[rob_beardsley]: past about the sales process in the
growth which is kind of matching my personality

212
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[rob_beardsley]: i've never been a really you know
good sales person so that needs to change

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[rob_beardsley]: we need to fix that and we
need to do that because i think we've

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[rob_beardsley]: got a lot of people who are
interested in what we're up to and we're

215
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[rob_beardsley]: just not doing a great job of
following up and really making sure that people

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[rob_beardsley]: are getting fully exposed to what we're
what we're up to

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[casey_]: sure sure so so basically your your
your webanarinvites are our pretty much to that

218
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[casey_]: procured list of people that you have
a previous relationship with it

219
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[rob_beardsley]: yep

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[casey_]: man that's that's insane

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[rob_beardsley]: m

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[casey_]: i mean just you just don't hear
a lot of people most of the time

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[casey_]: five or six b people are like
you know it's tough to it's really hard

224
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[casey_]: to scale i guess or you don't
see a lot of people scaling it because

225
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[casey_]: i mean obviously what do they say
a person can have six to eight hundred

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[casey_]: immediate contact is basically that's like i
know that number kind of has gone up

227
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[rob_beardsley]: so

228
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[casey_]: and down as social medias come up
and down but but that's what i've always

229
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[casey_]: heard so

230
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[rob_beardsley]: so

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[casey_]: it's almost like that limits you but
man that's awesome that you all are are

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[casey_]: well and it's good that you've got

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[rob_beardsley]: yeah

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[casey_]: enough people in there that have enough
money to

235
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[rob_beardsley]: ay

236
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[casey_]: facilitate what you want to do within
a five or six b so um well

237
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[casey_]: what else is going on with loan
star i mean you all obviously you said

238
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[casey_]: this new asset is right across the
street or next door to one you previously

239
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[casey_]: closed on

240
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[rob_beardsley]: yeah that's right so we're under contract
in a couple of deals right now the

241
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[rob_beardsley]: one we were talking about before we
went live is our newest deal and it's

242
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[rob_beardsley]: right next door to a deal we
closed a month ago so it's just a

243
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[rob_beardsley]: great add on acquisition makes it in
a sense we'll be able to trim down

244
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[rob_beardsley]: pay roll and just

245
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[casey_]: sure

246
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[rob_beardsley]: manage the deals together more efficiently so
finding opportunities like that with a good story

247
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[rob_beardsley]: where it's a long term owner and
the units have been been touched in years

248
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[rob_beardsley]: uh really is perfect for our strategy
of value ad

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[casey_]: got you got you well that's awesome
and so are you all looking at potentially

250
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[casey_]: expanding out of the houston market or
you because you said focus is a big

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[casey_]: pillar of your business and it's obvious
that you all

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[rob_beardsley]: you

253
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[casey_]: are but do you see yourself kind
of growing out of that market or trying

254
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[casey_]: to diversify a little bit

255
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[rob_beardsley]: yeah we definitely need to on multiple
fronts you know firstly i think it's good

256
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[rob_beardsley]: to diversify our portfolio to grow and
if we want to grow and actually get

257
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[rob_beardsley]: more acquisitions done i think being in
more markets so long as we have the

258
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[rob_beardsley]: man power and expertise to do that
then it's the right move and so we

259
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[rob_beardsley]: absolutely

260
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[casey_]: yeah

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[rob_beardsley]: want to expand into dallas fort worth
as our next market where we'll do the

262
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[rob_beardsley]: same focus that we've had build up
the team there locally as well

263
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[casey_]: hm

264
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[rob_beardsley]: and the other reason to expand is
for our investors sake there's

265
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[casey_]: m

266
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[rob_beardsley]: plenty of investors out there that really
love us and they want to work with

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[rob_beardsley]: us or they want to work more

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[casey_]: hm

269
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[rob_beardsley]: with us but they're limited by not
wanting to get too concentrated in a certain

270
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[rob_beardsley]: market and you know that expanding that
will just be able to eventually you know

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[rob_beardsley]: raise more capital from our existing investors
and potentially attract new investors that are interested

272
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[rob_beardsley]: in our new market so i think
that will be a really big move for

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[rob_beardsley]: us moving for ward

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[casey_]: yeah yeah what do you see as
being the biggest challenges coming up this recording

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[casey_]: as of mid august twenty twenty two
what do you see as being the biggest

276
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[casey_]: challenges for the real estate indication business
moving forward

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[rob_beardsley]: well right

278
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[casey_]: yeah

279
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[rob_beardsley]: now the debt market is very challenging
and it's hard to find good debt quotes

280
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[rob_beardsley]: and the it's not the lender's fault
comply there's just lots of things changing every

281
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[rob_beardsley]: day in the economy

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[casey_]: m

283
00:15:11,497 --> 00:15:17,106
[rob_beardsley]: and in the capital market so that
that uncertainty puts a strain on everybody rate

284
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[rob_beardsley]: cap prices are strained lenders are strain
because the environment is changing and then that

285
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[rob_beardsley]: makes us going out and raising equity
harder as well so i think transactability right

286
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[rob_beardsley]: now and for probably the next six
months is going to be more difficult

287
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[casey_]: sure

288
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[rob_beardsley]: and that will get alleviated over time
as i think prices will come down slightly

289
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[rob_beardsley]: sellers will get more realistic and willing
to sell it slightly lower prices which will

290
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[rob_beardsley]: relieve some of the pressure as far
as you know trying to make the deal

291
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[rob_beardsley]: pencil between debt and equity and then
at the same time volatility and uncertainty are

292
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[rob_beardsley]: going to definitely go down over time
as well and then that will help restore

293
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[rob_beardsley]: the debt markets debt will get competitive
and we'll know i'm sure we'll get back

294
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[rob_beardsley]: to business as usual soon enough

295
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[casey_]: sure

296
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[rob_beardsley]: oh

297
00:16:06,254 --> 00:16:07,656
[casey_]: sure yeah and

298
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[rob_beardsley]: he

299
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[casey_]: where so

300
00:16:10,650 --> 00:16:10,793
[rob_beardsley]: oh

301
00:16:12,113 --> 00:16:16,701
[casey_]: where are you sourcing obviously i know
i have a pretty good idea where the

302
00:16:16,821 --> 00:16:20,487
[casey_]: next door deal came from it probably
came from simply just picking up the phone

303
00:16:20,527 --> 00:16:25,035
[casey_]: and calling people next door and saying
hey we've we close on this one would

304
00:16:25,055 --> 00:16:29,762
[casey_]: you do this one but but do
you all have obviously you have broker relationships

305
00:16:29,883 --> 00:16:30,043
[casey_]: but

306
00:16:29,891 --> 00:16:29,911
[rob_beardsley]: a

307
00:16:30,524 --> 00:16:35,171
[casey_]: being that you're centralized or being is
that you're focused in one market how many

308
00:16:35,913 --> 00:16:36,175
[casey_]: how many

309
00:16:36,112 --> 00:16:36,236
[rob_beardsley]: yes

310
00:16:36,255 --> 00:16:38,610
[casey_]: brokers do you all work with in
that one market

311
00:16:40,852 --> 00:16:45,499
[rob_beardsley]: so i mean every market is different
so some markets are controlled by just a

312
00:16:45,960 --> 00:16:49,867
[rob_beardsley]: small number of brokers and you just
really have to get strong relationships with those

313
00:16:50,387 --> 00:16:56,085
[rob_beardsley]: and then other markets are or spread
you know the sales are spread out amongst

314
00:16:56,105 --> 00:17:01,374
[rob_beardsley]: the bigger group so i think whatever
market you're in it's important to just really

315
00:17:01,494 --> 00:17:06,223
[rob_beardsley]: cover the brokers that are doing business
so for houston and armor ket i'm trying

316
00:17:06,243 --> 00:17:11,694
[rob_beardsley]: to think off the top of my
head there's probably somewhere around eight groups or

317
00:17:11,775 --> 00:17:15,601
[rob_beardsley]: so that are doing the vast majority
of the business and we have to

318
00:17:15,593 --> 00:17:15,735
[casey_]: sure

319
00:17:15,641 --> 00:17:18,285
[rob_beardsley]: be in touch with all of them
frequently

320
00:17:18,913 --> 00:17:19,036
[casey_]: yeah

321
00:17:18,967 --> 00:17:25,246
[rob_beardsley]: so that's yeah you know if it's
three or eight or twenty that's we have

322
00:17:25,266 --> 00:17:28,872
[rob_beardsley]: to cover the market and that's that's
important to us because we want to be

323
00:17:28,892 --> 00:17:32,678
[rob_beardsley]: able a source as much of the
relevant deal flow to us as possible so

324
00:17:32,738 --> 00:17:36,333
[rob_beardsley]: we can underrate everything it doesn't mean
we have to buy everything but the more

325
00:17:36,373 --> 00:17:40,180
[rob_beardsley]: we underrate the better we can the
better the deals we can do right we

326
00:17:40,220 --> 00:17:44,707
[rob_beardsley]: can pick that top one percent of
deals and making sure that we're really structuring

327
00:17:44,727 --> 00:17:45,909
[rob_beardsley]: the best deals for our investors

328
00:17:46,893 --> 00:17:47,895
[casey_]: now houston

329
00:17:47,741 --> 00:17:47,862
[rob_beardsley]: yeah

330
00:17:48,055 --> 00:17:55,047
[casey_]: is houston is either growing or consolidating
as far as living situations go because it

331
00:17:55,127 --> 00:18:01,317
[casey_]: just seems like man everybody every group
every investor group right now is like there

332
00:18:01,738 --> 00:18:02,539
[casey_]: they're focused

333
00:18:02,344 --> 00:18:02,426
[rob_beardsley]: oh

334
00:18:02,660 --> 00:18:10,913
[casey_]: on houston austin dallas what is contributing
to such vast growth i mean and i

335
00:18:11,033 --> 00:18:14,439
[casey_]: know that you know uh

336
00:18:14,790 --> 00:18:15,391
[rob_beardsley]: oh

337
00:18:15,060 --> 00:18:19,247
[casey_]: tesla moved their headquarters to austin right
but what is

338
00:18:19,020 --> 00:18:19,222
[rob_beardsley]: yeah

339
00:18:19,628 --> 00:18:25,306
[casey_]: really feeling the growth of houston because
he us it is traditionally been a market

340
00:18:25,426 --> 00:18:32,233
[casey_]: that was just kind of a or
it never was just a full and on

341
00:18:32,393 --> 00:18:37,222
[casey_]: fire let's roll type of a market
what's feeling that

342
00:18:38,870 --> 00:18:45,180
[rob_beardsley]: yeah it's a good point and there's
been strong trends across texas for for that

343
00:18:45,260 --> 00:18:53,861
[rob_beardsley]: growth as far as the population growth
the migration the job growth the corporate relocations

344
00:18:53,961 --> 00:18:59,410
[rob_beardsley]: kind of like like you mentioned with
tesla so all that's happening every day and

345
00:18:59,470 --> 00:19:05,420
[rob_beardsley]: also real estate specifically you have a
well not exactly real estate cifically but we

346
00:19:05,460 --> 00:19:09,988
[rob_beardsley]: have no state income tax in all
the states without an income tax are winners

347
00:19:10,088 --> 00:19:11,010
[rob_beardsley]: right now and

348
00:19:11,013 --> 00:19:11,134
[casey_]: yeah

349
00:19:11,050 --> 00:19:14,455
[rob_beardsley]: they have been for a while and
then specific to real estate that's a very

350
00:19:14,536 --> 00:19:20,285
[rob_beardsley]: landlord friendly state which all it contributes
to the demand from the investor side to

351
00:19:20,345 --> 00:19:27,137
[rob_beardsley]: be in texas and then houston i
think is interesting because it's historically been not

352
00:19:27,217 --> 00:19:35,056
[rob_beardsley]: the favorite market by institut tonal investors
because institutional investors have historically been worried about

353
00:19:35,096 --> 00:19:40,265
[rob_beardsley]: the boom bust nature of houston with
its dependence on energy and also the weather

354
00:19:40,365 --> 00:19:42,469
[rob_beardsley]: risk with hurricanes and flooding

355
00:19:43,193 --> 00:19:43,335
[casey_]: yeah

356
00:19:43,431 --> 00:19:48,041
[rob_beardsley]: so those are real concerns and real
risks and that has prevented or kept away

357
00:19:48,202 --> 00:19:53,061
[rob_beardsley]: many investors which has then made it
a less competitive market where you can buy

358
00:19:53,182 --> 00:19:55,905
[rob_beardsley]: better deals so long as you know
what you're doing and you know you buy

359
00:19:56,006 --> 00:20:01,442
[rob_beardsley]: right and you manage well but i
think kind of people are getting more comfortable

360
00:20:01,962 --> 00:20:06,746
[rob_beardsley]: with houston particularly on the energy front
i think people are recognizing that houston has

361
00:20:06,827 --> 00:20:08,288
[rob_beardsley]: diversified its employment base

362
00:20:08,843 --> 00:20:08,985
[casey_]: sure

363
00:20:08,989 --> 00:20:14,556
[rob_beardsley]: and now it remains to be tested
more thoroughly but i think it is a

364
00:20:14,636 --> 00:20:19,645
[rob_beardsley]: more resilient market and is no longer
really a boom bus market like it was

365
00:20:19,705 --> 00:20:23,852
[rob_beardsley]: before so i think that's helping a
lot of people in and then that's now

366
00:20:23,872 --> 00:20:27,198
[rob_beardsley]: you're seeing that rush and people want
to invest

367
00:20:27,903 --> 00:20:30,692
[casey_]: yeah yeah and it's and then of
course

368
00:20:30,711 --> 00:20:30,731
[rob_beardsley]: a

369
00:20:30,752 --> 00:20:31,675
[casey_]: you always had the

370
00:20:32,280 --> 00:20:32,940
[rob_beardsley]: yeah

371
00:20:32,297 --> 00:20:37,027
[casey_]: always a trip like i was kind
of said houston was like the california of

372
00:20:37,107 --> 00:20:41,455
[casey_]: texas where you either invested in houston
or you invested everywhere else but you didn't

373
00:20:41,495 --> 00:20:46,583
[casey_]: do both because the laws and the
rules were so specific there man

374
00:20:46,530 --> 00:20:47,250
[rob_beardsley]: yeah

375
00:20:46,623 --> 00:20:49,408
[casey_]: you could get caught with your pants
down on a deal where you to go

376
00:20:49,568 --> 00:20:53,535
[casey_]: in and you think it's just a
killer deal where everybody is standing around the

377
00:20:53,575 --> 00:20:57,862
[casey_]: people that are there are you know
they're like he's fixing to get burned or

378
00:20:57,922 --> 00:21:01,468
[casey_]: something now what i'm saying and so
that was always kind of the feeling that

379
00:21:01,508 --> 00:21:05,335
[casey_]: i got any time you talk about
the houston market in big circles or whatever

380
00:21:05,455 --> 00:21:06,877
[casey_]: so um well

381
00:21:07,230 --> 00:21:07,432
[rob_beardsley]: yeah

382
00:21:07,418 --> 00:21:11,247
[casey_]: so what's on the horizon for you
all coming up i mean you've got this

383
00:21:12,412 --> 00:21:14,440
[casey_]: how many deals did you say you
have under contract too

384
00:21:15,882 --> 00:21:18,868
[rob_beardsley]: we have three with one closing in
about a week or two

385
00:21:19,703 --> 00:21:22,710
[casey_]: got you awesome man and is that
the and then you've

386
00:21:22,591 --> 00:21:22,753
[rob_beardsley]: yeah

387
00:21:22,770 --> 00:21:24,514
[casey_]: got the two others and of course
everything

388
00:21:24,322 --> 00:21:24,403
[rob_beardsley]: so

389
00:21:24,554 --> 00:21:31,120
[casey_]: is right now as far as you're
adding all of that right to your property

390
00:21:31,220 --> 00:21:35,370
[casey_]: like you take over property management immediately
and then push it right into your deal

391
00:21:35,491 --> 00:21:35,691
[casey_]: right

392
00:21:36,380 --> 00:21:36,723
[rob_beardsley]: that's right

393
00:21:38,203 --> 00:21:41,729
[casey_]: and did you find it hard to
find you you i think you

394
00:21:41,730 --> 00:21:41,750
[rob_beardsley]: i

395
00:21:41,809 --> 00:21:45,776
[casey_]: all structured the property management company like
you have a president of vps and so

396
00:21:45,916 --> 00:21:48,781
[casey_]: on so forth did you find it
hard to fill those

397
00:21:49,100 --> 00:21:49,302
[rob_beardsley]: yes

398
00:21:49,142 --> 00:21:50,364
[casey_]: those positions

399
00:21:50,280 --> 00:21:50,501
[rob_beardsley]: oh

400
00:21:50,725 --> 00:21:56,235
[casey_]: with you know with good qualified people
that had the real estate experience to take

401
00:21:56,275 --> 00:21:58,740
[casey_]: care of it because property management man

402
00:21:58,620 --> 00:21:59,490
[rob_beardsley]: yeah

403
00:21:58,800 --> 00:22:02,558
[casey_]: can be awful i mean not fun
and

404
00:22:02,611 --> 00:22:02,733
[rob_beardsley]: yes

405
00:22:02,698 --> 00:22:06,651
[casey_]: not like property management is not for
the faint of heart

406
00:22:07,700 --> 00:22:12,688
[rob_beardsley]: no definitely not you need the experience
you need the local experience as well yeah

407
00:22:12,768 --> 00:22:16,514
[rob_beardsley]: building the team is really challenging like
i said before we were really fortunate to

408
00:22:16,574 --> 00:22:22,284
[rob_beardsley]: have some of that team built in
so we're able to hit the ground running

409
00:22:22,965 --> 00:22:27,072
[rob_beardsley]: and that's been really really solid for
us so far and right now we're in

410
00:22:27,112 --> 00:22:32,181
[rob_beardsley]: the process of actually building out our
construction side of the busne so we're bringing

411
00:22:32,221 --> 00:22:36,911
[rob_beardsley]: construction in house and that is going
to be really great once we get that

412
00:22:36,991 --> 00:22:42,596
[rob_beardsley]: going but like you're kind of alluding
to hiring for this is proving to be

413
00:22:42,656 --> 00:22:49,437
[rob_beardsley]: challenging and i think everyone's experiencing that
across different industries and so we're just staying

414
00:22:49,517 --> 00:22:54,568
[rob_beardsley]: patient and i think it's really important
to get the hiring right it's really important

415
00:22:55,293 --> 00:22:56,995
[casey_]: sure sure yeah so you're going

416
00:22:56,877 --> 00:22:57,037
[rob_beardsley]: see

417
00:22:57,016 --> 00:23:03,026
[casey_]: to have a separate construction arm separate
property management arm and a separate i guess

418
00:23:03,446 --> 00:23:06,972
[casey_]: ownership capital raising indicating whatever arm right

419
00:23:07,771 --> 00:23:08,237
[rob_beardsley]: right yep

420
00:23:09,123 --> 00:23:12,188
[casey_]: and that's awesome and all of that
in just a few years as far as

421
00:23:12,228 --> 00:23:17,056
[casey_]: this thing i mean it's really exploded
in growth and and of course i always

422
00:23:17,196 --> 00:23:21,664
[casey_]: point out the try to be the
devil's advocate a little bit on especially on

423
00:23:21,704 --> 00:23:25,570
[casey_]: the houston market just because we hear
so many rumors about it and we've never

424
00:23:25,610 --> 00:23:30,478
[casey_]: had an asset there so it's really
it's all second hand information but um but

425
00:23:30,859 --> 00:23:31,019
[casey_]: yeah

426
00:23:31,140 --> 00:23:32,670
[rob_beardsley]: yeah

427
00:23:32,161 --> 00:23:37,890
[casey_]: the construction art of that is is
pretty interesting are you all built have you

428
00:23:37,950 --> 00:23:38,871
[casey_]: built anything yet

429
00:23:40,150 --> 00:23:43,933
[rob_beardsley]: no we haven't done any development and
on the construction side for us it's going

430
00:23:43,973 --> 00:23:48,257
[rob_beardsley]: to be for our value at business
plan so when we buy a property and

431
00:23:48,277 --> 00:23:49,698
[rob_beardsley]: we have a two million dollar or
three

432
00:23:49,700 --> 00:23:49,761
[casey_]: uh

433
00:23:49,738 --> 00:23:50,499
[rob_beardsley]: million dollar budget

434
00:23:50,632 --> 00:23:50,653
[casey_]: h

435
00:23:51,330 --> 00:23:51,735
[rob_beardsley]: we'll be able

436
00:23:51,703 --> 00:23:51,826
[casey_]: yep

437
00:23:51,796 --> 00:23:58,667
[rob_beardsley]: to house more of that process as
far as the unit renovations painting and things

438
00:23:58,708 --> 00:23:59,108
[rob_beardsley]: like that

439
00:23:59,863 --> 00:24:05,172
[casey_]: got you now as far as key
principles go m what did you have to

440
00:24:05,212 --> 00:24:08,537
[casey_]: do to find people that were willing
to be kapes on your deal to take

441
00:24:08,597 --> 00:24:10,180
[casey_]: care of the balance

442
00:24:10,131 --> 00:24:10,273
[rob_beardsley]: that

443
00:24:10,240 --> 00:24:12,152
[casey_]: sheet and whatever else that ted there

444
00:24:13,610 --> 00:24:17,777
[rob_beardsley]: ah that's another really important piece of
the puzzle when you're getting started and it

445
00:24:17,797 --> 00:24:22,444
[rob_beardsley]: was something that we didn't really think
about or prepare for well so it came

446
00:24:22,524 --> 00:24:26,273
[rob_beardsley]: to us and this is the worst
thing that you want to do is you

447
00:24:26,353 --> 00:24:30,534
[rob_beardsley]: don't want to get caught off guard
and be in a rush while you're already

448
00:24:30,634 --> 00:24:34,260
[rob_beardsley]: under contract to put your team together
and find a k p to

449
00:24:34,403 --> 00:24:34,525
[casey_]: yeah

450
00:24:34,701 --> 00:24:36,564
[rob_beardsley]: co sign alone with you so

451
00:24:36,634 --> 00:24:37,363
[casey_]: oh

452
00:24:36,845 --> 00:24:42,222
[rob_beardsley]: that's exactly what we did and you
know it was a pretty bumpy ride but

453
00:24:42,883 --> 00:24:47,487
[rob_beardsley]: when you have necessity right you just
make it happen so unfortunately

454
00:24:47,083 --> 00:24:47,144
[casey_]: ye

455
00:24:47,527 --> 00:24:51,776
[rob_beardsley]: we did make it happen and then
we got better along the way got new

456
00:24:51,936 --> 00:24:57,532
[rob_beardsley]: and improved relationships along the way and
then before you know it got enough experience

457
00:24:57,652 --> 00:25:03,843
[rob_beardsley]: to where we're able to for the
most part sign our own loans without k

458
00:25:04,024 --> 00:25:04,305
[rob_beardsley]: p's

459
00:25:04,863 --> 00:25:09,270
[casey_]: sure yeah and that's obviously the goal
for i think just about everybody is to

460
00:25:09,310 --> 00:25:10,292
[casey_]: get to be that balance

461
00:25:10,071 --> 00:25:10,830
[rob_beardsley]: yeah

462
00:25:10,352 --> 00:25:14,919
[casey_]: sheet person kind of takes a whole
life like it looks to me or sounds

463
00:25:14,959 --> 00:25:20,380
[casey_]: to me like you all are being
very official and very poignant about removing elements

464
00:25:21,173 --> 00:25:23,637
[casey_]: require other people or other

465
00:25:24,033 --> 00:25:25,080
[rob_beardsley]: yeah

466
00:25:24,639 --> 00:25:31,049
[casey_]: businesses because the more influence those outside
things have on your business the harder it

467
00:25:31,109 --> 00:25:34,707
[casey_]: is for you to have the element
of control across the whole thing

468
00:25:36,160 --> 00:25:41,365
[rob_beardsley]: right yeah i think bring in house
is really important and it's interesting going back

469
00:25:41,425 --> 00:25:44,808
[rob_beardsley]: to the conversation we are having earlier
where you're saying how some investors may not

470
00:25:44,868 --> 00:25:53,000
[rob_beardsley]: understand it and the more sophisticated investors
you know institutional investors they really look to

471
00:25:53,098 --> 00:25:53,118
[casey_]: i

472
00:25:53,480 --> 00:25:59,241
[rob_beardsley]: sponsors having their own in house operations
because they see that as a higher perceived

473
00:25:59,301 --> 00:26:03,308
[rob_beardsley]: value they feel like they're partning with
someone who's more hands on going to be

474
00:26:03,368 --> 00:26:08,957
[rob_beardsley]: more transparent have more control over the
operations so a lot of family offices and

475
00:26:09,037 --> 00:26:14,048
[rob_beardsley]: private equity firms they are real looking
for a partner like us that's vertically integrated

476
00:26:14,783 --> 00:26:19,470
[casey_]: yeah yeah and then and you know
and i didn't there's that's another really good

477
00:26:19,551 --> 00:26:26,282
[casey_]: point the family offices which when i
talk about family offices i'm talking about like

478
00:26:26,582 --> 00:26:33,682
[casey_]: big trust fund people who are overseeing
maybe one person or one family's money and

479
00:26:33,742 --> 00:26:40,168
[casey_]: they're like there there there there distribute
it amongst vetted deals and so

480
00:26:40,179 --> 00:26:40,199
[rob_beardsley]: a

481
00:26:40,288 --> 00:26:44,194
[casey_]: on and so forth so when i
started talking about that but those people want

482
00:26:44,395 --> 00:26:49,605
[casey_]: vertical integration like like that is i
didn't realize that that was a re quirement

483
00:26:49,746 --> 00:26:54,349
[casey_]: really of most family offices that you
be vertically integrated

484
00:26:56,141 --> 00:26:56,542
[rob_beardsley]: exactly

485
00:26:56,243 --> 00:26:56,445
[casey_]: because

486
00:26:56,703 --> 00:27:00,816
[rob_beardsley]: and we learned that early on and
we set out as a goal to make

487
00:27:00,856 --> 00:27:01,177
[rob_beardsley]: it happen

488
00:27:02,303 --> 00:27:06,651
[casey_]: yeah and and and i guess it
all again it all comes down to because

489
00:27:07,603 --> 00:27:11,166
[casey_]: you know how many times have you
seen or heard some and

490
00:27:11,160 --> 00:27:11,240
[rob_beardsley]: so

491
00:27:11,206 --> 00:27:15,569
[casey_]: so s workin the cash register and
well they slip behind our bucks here there

492
00:27:15,749 --> 00:27:19,873
[casey_]: whatever it of course a hunter bucks
and some of these deals isn't isn't an

493
00:27:19,953 --> 00:27:24,020
[casey_]: enormous amount of money but if it
happens several thousand times obviously then it becomes

494
00:27:24,080 --> 00:27:28,106
[casey_]: a problem but what i'm getting at
is is they want control of it from

495
00:27:28,167 --> 00:27:32,193
[casey_]: the second that money leaves the tenants
hands it's in control the same

496
00:27:32,205 --> 00:27:32,288
[rob_beardsley]: ah

497
00:27:32,273 --> 00:27:37,162
[casey_]: place or really until it lands in
their bank account it's all streamline they know

498
00:27:37,242 --> 00:27:42,110
[casey_]: it's efficient then i'm sure there's reporting
rules or you know they're like hey we

499
00:27:42,190 --> 00:27:44,914
[casey_]: want to see reports on this this
this to see how

500
00:27:44,912 --> 00:27:44,932
[rob_beardsley]: i

501
00:27:44,975 --> 00:27:48,881
[casey_]: things are going and they can really
control it from from a to b or

502
00:27:48,961 --> 00:27:53,769
[casey_]: a to z really so well listen
rob i want to thank you for taking

503
00:27:53,809 --> 00:27:56,774
[casey_]: the time to be with us today
and we ask a couple of

504
00:27:56,781 --> 00:27:56,881
[rob_beardsley]: oh

505
00:27:56,834 --> 00:28:00,960
[casey_]: questions of everybody that comes on the
guest everybody that comes on as a guest

506
00:28:01,201 --> 00:28:03,214
[casey_]: on the show and

507
00:28:03,120 --> 00:28:03,360
[rob_beardsley]: yeah

508
00:28:03,495 --> 00:28:07,467
[casey_]: the first of those questions is what
is the best book that you've recently read

509
00:28:07,688 --> 00:28:08,691
[casey_]: or are currently reading

510
00:28:13,521 --> 00:28:23,383
[rob_beardsley]: the best book that i've recently read
i recently read high output management by andrew

511
00:28:23,423 --> 00:28:24,345
[rob_beardsley]: grove the x

512
00:28:24,736 --> 00:28:24,899
[casey_]: wow

513
00:28:25,907 --> 00:28:30,655
[rob_beardsley]: into co of intil that's probably one
of the best management books i've read and

514
00:28:30,735 --> 00:28:34,682
[rob_beardsley]: i really like management books i'm trying
to learn more about growing a business and

515
00:28:34,782 --> 00:28:40,452
[rob_beardsley]: stuff like that so that book is
very quick and easy to read but it's

516
00:28:40,512 --> 00:28:45,039
[rob_beardsley]: really profound and fairly actionable so i'm
actually due to i need to reread that

517
00:28:45,261 --> 00:28:45,443
[rob_beardsley]: yes

518
00:28:45,943 --> 00:28:46,103
[casey_]: sure

519
00:28:46,210 --> 00:28:46,860
[rob_beardsley]: sure

520
00:28:46,864 --> 00:28:47,906
[casey_]: yeah well that's great

521
00:28:47,711 --> 00:28:47,732
[rob_beardsley]: a

522
00:28:47,966 --> 00:28:51,792
[casey_]: yeah especially a lot of the systems
and stuff that you all have management is

523
00:28:52,173 --> 00:28:56,941
[casey_]: is is a pretty damn important part
of everything you got going on so awesome

524
00:28:57,081 --> 00:29:02,339
[casey_]: but what is the what is a
dream vacation that you have either taken or

525
00:29:02,379 --> 00:29:02,921
[casey_]: hoped to take

526
00:29:03,047 --> 00:29:03,067
[rob_beardsley]: i

527
00:29:06,461 --> 00:29:09,626
[rob_beardsley]: well for a long time i've wanted
to go to ball but it's just so

528
00:29:09,767 --> 00:29:10,788
[rob_beardsley]: far and

529
00:29:11,412 --> 00:29:11,574
[casey_]: yep

530
00:29:11,489 --> 00:29:15,476
[rob_beardsley]: it's almost not worth it to go
that far so we'll see i'll probably make

531
00:29:15,496 --> 00:29:18,563
[rob_beardsley]: it out there but if i would
do then i have to go for a

532
00:29:18,603 --> 00:29:20,770
[rob_beardsley]: month because you can't spend a full

533
00:29:20,623 --> 00:29:20,786
[casey_]: yep

534
00:29:20,850 --> 00:29:22,917
[rob_beardsley]: day on a plane and not be
there for a while

535
00:29:23,533 --> 00:29:23,774
[casey_]: well and

536
00:29:23,820 --> 00:29:23,941
[rob_beardsley]: oh

537
00:29:23,834 --> 00:29:25,340
[casey_]: if you're going i've always

538
00:29:25,281 --> 00:29:25,383
[rob_beardsley]: what

539
00:29:25,400 --> 00:29:32,098
[casey_]: said going west it's like it's like
petting a dog the opposite way i mean

540
00:29:32,178 --> 00:29:35,924
[casey_]: it's just there's nothing easy about it
even if you go from where we are

541
00:29:36,005 --> 00:29:39,691
[casey_]: in kentucky or where you are to
vegas i mean things just it's just like

542
00:29:39,751 --> 00:29:43,450
[casey_]: a whole different world oh but that's

543
00:29:43,833 --> 00:29:43,998
[rob_beardsley]: yes

544
00:29:43,892 --> 00:29:44,858
[casey_]: you're exactly right

545
00:29:48,393 --> 00:29:49,354
[casey_]: are you there i'm

546
00:29:49,351 --> 00:29:49,493
[rob_beardsley]: yeah

547
00:29:49,435 --> 00:29:53,101
[casey_]: sorry look like it froze up there
for a second so all right well listen

548
00:29:53,983 --> 00:29:56,948
[casey_]: if somebody heard something that resonated with
him or they want to reach out and

549
00:29:56,968 --> 00:30:01,213
[casey_]: get in touch with you what is
the best way for that to happen yeah

550
00:30:00,601 --> 00:30:03,449
[rob_beardsley]: the best way to reach out is
to go to our website l s c

551
00:30:03,930 --> 00:30:08,691
[rob_beardsley]: r e dot com on our website
we've got tons of resources from a free

552
00:30:08,892 --> 00:30:15,141
[rob_beardsley]: pass investor guide to our underwriting model
down load as well as you know ways

553
00:30:15,201 --> 00:30:18,052
[rob_beardsley]: to get in touch with us to
learn more about investing with us or just

554
00:30:18,152 --> 00:30:19,377
[rob_beardsley]: you know get in touch to learn
more

555
00:30:20,283 --> 00:30:24,971
[casey_]: awesome rob thanks again for taking the
time to be with us and listeners as

556
00:30:25,291 --> 00:30:30,880
[casey_]: always please head down and leave us
a review leave us a five star review

557
00:30:31,281 --> 00:30:35,248
[casey_]: and that way their listeners can see
and know what we talk about here on

558
00:30:35,288 --> 00:30:40,216
[casey_]: the cash flow pro and while you're
there please hit the subscribe button so that

559
00:30:40,276 --> 00:30:45,184
[casey_]: you can be notified as we release
new content and new episode you don't want

560
00:30:45,224 --> 00:30:49,311
[casey_]: to miss what we have coming up
i can assure you you will learn something

561
00:30:49,632 --> 00:30:54,119
[casey_]: and again rob thank you so much
for your time today and listeners thank you

562
00:30:54,199 --> 00:30:56,653
[casey_]: for your time i hope everybody has
a wonderful rest of the day

Rob Beardsley Profile Photo

Rob Beardsley

Lone Star Capital