Interview with Mark Khuri of SMK Capital Management

Listen on Apple Podcast here: https://podcasts.apple.com/us/podcast/interview-with-mark-khuri-of-smk-capital-management/id1520681893?i=1000520012655

SHOW NOTES

Welcome back to the Passive Mobile Home Park Investing Podcast, hosted by Andrew Keel. On this episode of the Passive Mobile Home Park Investing Podcast, Andrew talks with manufactured housing community investment fund manager Mark Khuri. Mark is the co-founder of SMK Capital Management, an investment firm which provides investors with passive income and growth through the creation of partnerships in private commercial real estate opportunities. Mark has been investing in real estate for over 15 years and has transacted in over $1 billion worth of real estate, including mobile home parks, self-storage, multifamily, and others.

Today, Andrew and Mark talk about what the future of mobile home park investing looks like. They discuss Mark’s unique perspective as he provides his expert opinion on the industry direction with possible inflation on the horizon. They also talk about Mark’s niche alternative investments, including ATM’s. The guys also touch on the $15 minimum wage, Mark’s perfect mobile home park, and the story of how Mark got into real estate and mobile home parks specifically.

***Andrew Keel and Keel Team Real Estate Investments (Keel Team, LLC) do not endorse any interviewee. This interview is for informational purposes only and should not be depended upon for investment purposes. ***

Andrew Keel is the owner of Keel Team, LLC, a Top 100 Owner of Manufactured Housing Communities with over 1,500 lots under management. His team currently manages over 20 manufactured housing communities across ten states – AR, GA, IA, IL, IN, MN, NE, OH, PA and TN. His expertise is in turning around under-managed manufactured housing communities by utilizing proven systems to maximize the occupancy while reducing operating costs. He specializes in bringing in homes to fill vacant lots, implementing utility bill back programs, and improving overall management and operating efficiencies, all of which significantly boost the asset value and net operating income of the communities.

Andrew has been featured on some of the Top Podcasts in the manufactured housing space, click here to listen to his most recent interviews: https://www.keelteam.com/podcast-links. In order to successfully implement his management strategy Andrew’s team usually moves on location during the first several months of ownership. Find out more about Andrew’s story at AndrewKeel.com.

Would you like to see mobile home park projects in progress? If so, follow us on Instagram: @passivemhpinvesting for photos and awesome videos from our recent mobile home park acquisitions.

Talking Points:

00:21​ – Welcome to the Passive Mobile Home Park Investing Podcast

01:26​ – Mark’s story and journey into mobile home parks

04:29​ – The metrics that helped Mark decide what direction to go

06:21​ – Most important things Mark would suggest about investing with other operators

09:27​ – Mark’s most recent investment

10:49​ – Data Mark kept an eye on from 2020 (and why)

13:50​ – Items outside mobile home parks

16:10​ – Deals that went bad when raising capital

20:55​ – Mark’s perfect mobile home park

22:12​ – Tips for vetting operators

24:45​ – Future hurdles for the manufactured housing industry

27:16​ – Mark’s thoughts on the $15 minimum wage and its effect on mobile home parks

28:00​ – SMK Capital’s value propositions and what makes them different

29:40​ – Common incorrect pro-forma assumptions Mark sees when looking at deals

32:25​ – Getting a hold of Mark

33:00​ – One thing that Mark suggests for new investors before making their first investments into a real estate or mobile home park private equity deal

34:40​ – Conclusion

SUBSCRIBE TO PASSIVE MOBILE HOME PARK INVESTING PODCAST YOUTUBE CHANNEL https://www.youtube.com/channel/UCy9uI3KGQmFgABsr9lUtRTQ

Links & Mentions from This Episode:

SMK Capital Management: http://smkcap.com/

Mark’s Email: info@smkcap.com

Keel Team’s Official Website: https://www.keelteam.com/

Andrew Keel’s Official Website: https://www.andrewkeel.com/

Andrew Keel LinkedIn: https://www.linkedin.com/in/andrewkeel

Andrew Keel Facebook Page: https://www.facebook.com/PassiveMHPin…

Andrew Keel Instagram Page: https://www.instagram.com/passivemhpi…

Twitter: @MHPinvestors

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TRANSCRIPT

Andrew: Welcome to the Passive Mobile Home Park Investing Podcast. This is your host, Andrew Keel. Today, we have an amazing guest in Mr. Mark Khuri of SMK Capital. Before we dive in, I want to ask you a real quick favor. Would you mind taking an extra 30 seconds and heading over to iTunes to rate this podcast with five stars? This helps us get more listeners and it means the absolute world to me. Thanks for making my day with that five-star review of the show. Alright, let’s dive in.

Mark is the co-founder of SMK Capital Management. SMK is an investment firm that provides investors with passive income and growth through the creation of partnerships in private commercial real estate opportunities. Mark has invested in real estate for over 15 years and has transacted in over $1 billion—that’s right, with a B—worth of real estate during that time including mobile home parks, self-storage, multifamily, and others.

Mark, welcome to the show.

Mark: Thanks, Andrew. I’m happy to be here.

Andrew: Awesome. Let’s dive in. Can you start out by telling us your story and how you got into manufactured housing?

Mark: Sure. I started investing in real estate in 2005. Pre-recession, everything was hunky-dory up until the ride. You can’t lose money. Values just kept going up. I was working at the same time as a financial analyst and trade. I shifted careers along the way into an operations role, in logistics fulfillment, and staffing, et cetera, for a distribution company. Those two experiences, Andrew, I call corporate experiences, really helped me transition into real estate investing.

Again, I started doing it on the side in 2005, and then the equity in that first property I bought by 2007 was worth significantly more. It was in Southern California, a lot of appreciation in that market. I took it all out of credit and partnered with my brother. We bought a fourplex in Hollywood, California that we overpaid. We micromanaged all the repairs and everything. It was 75% vacant when we bought it. We overspent, over rehabbed, and it took too long. We learned a lot by doing. We held it through the recession. We held everything we had at that point through the recession and just another partnering with family along the way.

By 2010, the career I was at, just didn’t have much of a future. It was heavily impacted, negatively, through the downturn. I was really enjoying what I would call the side gig—real estate investing—and pulling capital from family. We built a small portfolio. We were buying a lot of distress at the time, Andrew—single-family, small multifamily at auctions, short sales, RELS foreclosures—all cash, and then we put in twice as much on rehab, just a lot of heavy lifting value-add stuff.

By 2009 and 2010, we had a little bit of data through the recession that had been going on. We started looking and asking myself, what else am I missing? What else should we be investing in? What else has done well so far? There wasn’t much, of course. The world was falling apart around us. But mobile homes were one of the asset classes that had data and positive trends. Talking with operators at the time that vouched for the macro-level data inside their own internal portfolios, I was going down a rabbit hole. What else can I learn? How much more? Tell me more. That’s how I got in.

Andrew: That’s amazing. Was there one metric that you saw and you were like, this is it? What was that like?

Mark: Yeah. Non-operating income growth instability through the recession. It still is today. We use that metric regularly. Sam Zell’s portfolio is public information out there and we’ve got an article that we wrote out a few years ago about it. There’s a chart that he has, going back to the 80s, Andrew. I’m sure you’ve seen it. It shows equity lifestyle, properties, his company, quarterly non-operating income, again, for 30 years through the recession compared to apartments and office, but don’t quote me on what he’s comparing to exactly. You just see this picture and you’re like, oh my gosh, this thing is so much different. It’s so resilient, tell me more. That was a good one for me.

Andrew: I think that’s huge. One of the things when I was researching for this show. I did some research on the REITs, the ELS, and the Sun Communities. The average tenant stays something like 17 years. It was just so, wow. That’s worth starting a business over, that one metric. It’s just huge how you saw the opportunity and went for it.

Mark: The average home in the park stays even longer. It was like 30 plus years, Andrew. It’s been a while since I’ve quoted that information but, my gosh, mobile homes are just not mobile and there’s plenty of data to prove that. Very good fundamentals there for sure.

Andrew: Totally. It’s definitely a modded investment which is why a lot of investors like it. Maybe you could tell us this, Mark. What are the most important things that passive investors, limited partners, need to look out for when investing in mobile home parks? If they’re new to the asset class, from your investor lens, because I know you invest with other operators through your fund, what are the most important things if you had to dial it down to just a short list?

Mark: Number one, this is for all asset classes that we invest in, is people. It’s definitely number one, Andrew. I say this a lot, but you can have the nicest mobile home park in the best part of town and if you’ve got the wrong people operating it, managing it, overseeing it, et cetera, you’ll lose money. You could run it into the ground pretty quickly.

That’s definitely the first, the operator and the people. If you’re going to be passive, then it’s definitely even more important. If you’re going to be active, I know you didn’t ask but for sure there are some folks thinking, hey, I should go out and buy one myself, then it’s still the people. It’s you, it’s the team that you plan to create and utilize to operate in the park. That’s, without a doubt, the most important, is the people. If you want me to keep going, there are a few other things that we look for.

Andrew: Please.

Mark: I’ll say that you want to look into, location, specific. Are you the most affordable game in town? Are stick-built homes down the street selling for the same price, that are even bigger? Then, you might want to be cautious. The benefit of manufactured housing on a macro level is you’re providing an affordable housing solution. That’s a big part of our thesis. It has been for many years. We’re going to continue to provide that investment product for investors and for residents alike because there’s demand from both sides.

Now, if you find a situation where it might be a demographic or a region that it’s just pretty comparable to everything else, then what’s the benefit for the resident to live there? That might be where you could see a little bit of challenge in the business plan there because there’s a lot of competition. If you’re going to do that, that’s okay but maybe you don’t go into manufactured housing. Maybe buy single-family homes instead. The benefit, again, typically that we look for in this space is to be the most affordable housing solution in the area.

Andrew: That’s huge. When we were talking about a potential recession in the last interview we did, there’s downward pressure with people downgrading from houses they can no longer afford or rents they can no longer afford coming down into mobile home parks. Then, there’s pressure because being the most affordable option, there’s nowhere else to go. You’re living in a mobile home or you end up in your car. That makes it very unique in that aspect. Mark, let me ask you this, what was your most recent investment and why did you choose it?

Mark: Okay. It’s April 2021. Let me put a little bit of context here, Andrew. We did one investment in 2020 on purpose. We watched. We learned. We analyzed our own portfolio. We analyzed macro-level data. We analyzed our operating partners’ portfolios. This is across multiple asset classes, not just mobile home parks. We learned and we didn’t know what was going to happen.

Q1 of 2020 was a shock to everybody and nobody knew the outcome. We’re a year into that now, a little bit more than that, and we’ve got plenty of data. We’ve got a lot of information on trends that we’re utilizing to make investment decisions. So far this year, we’ve invested in three different investments—two mobile home communities. We’ve also invested in ATMs which are a high cash flow investment. This week, we’re going to invest in another mobile home park portfolio, and in two weeks, we’re investing in an apartment community.

Andrew: Very cool. You mentioned that you looked at a lot of data from 2020 to make these decisions. Maybe you can elaborate a little bit on what data points you were watching and why.

Mark: Yeah. The big two, again this is macro across multiple asset classes, occupancy, and collections—meaning receivables. Are tenants staying and paying? That’s the big two. From there, we’re looking at, of course, the non-operating income. Are we flat? Are we declining? Are we growing? Are there a lot of concessions being given to maintain occupancy? Are tenants paying half for rent or are they paying full? Those are some of the data trends that we’ve been watching, of course, for a year plus. Largely, we’re pleased to say that for the majority of our assets, the tenants continue to stay and pay. At the same time, we’re seeing even more demand from our exit strategy which is to sell to another investor, or investor group, or private equity group, et cetera.

There is a lot of capital from the buy side looking for high yield, attractive location, recession resilient assets and that’s what we’ve been focusing on for a number of years. We’re in a very good position but the data so far has resulted in us not changing our investment strategy. Now, we think what we’re doing is being a little bit more conservative, Andrew, with some of the assumptions looking forward to rent growth and economic occupancy. If there’s a lease-up strategy, it might take a little longer than pre-COVID. All in all, we’re pleased with what the asset class is reinvesting, the strategy within those, and we’re just being a little more conservative now looking forward.

Andrew: I got lots of questions. That opened up Pandora’s box. I just finished the book Clockwork and in there, he talks about QBR, the Queen Bee Role. I got a sticky note right here on my monitor, if you can see the video, this is our Queen Bee Role in our company as operators of mobile home parks, and that’s occupancy. That’s the most important thing because we know if we got heads in beds, we’re going to collect 95% of them, of the rent. You mentioning what occupancy looks like, that’s a huge data point that is most important and that is really, really valuable to see. We’ve just seen a lot of demand for our mobile homes in our parks which is awesome. I love all those data points. You mentioned some items outside mobile home parks. One of them being ATMs which is pretty interesting. Maybe you could shed some light on that?

Mark: It’s a very niche, unique asset class, and investment vehicle but I’ll tell a little backstory first. A close colleague of mine for about 11 or 12 years now, a full-time passive income investor. Initially, when I met him, I think he was invested, Andrew, in probably 40, 50 different investments at the time. I asked him, what’s the highest cash flow in investment that you’ve ever been involved in. He didn’t blink an eye. He just said ATMs. I didn’t know what he meant. I thought that was some acronym for something that I’d never heard of, and sure enough, he meant the cash machines.

That not only stuck with me but we’ve co-invested many times since then. I think in 2018 or 2019, he comes to me and says, Mark, we’ve got something here that you’re going to want to see as an investment option. We just went down the ATM rabbit hole. I spent about five, six months researching, analyzing, visiting, traveling, et cetera. I don’t use ATMs that often, Andrew. My family and I don’t. I was a bit of a skeptic, to say the least when I first thought about it the last few years. But there’s plenty of data and analysis that shows, at least in the US, a predominant portion of the population still relies on cash regularly. Anyway, that’s the demand side.

We’ve got a partnership with an operator that just does ATM investments. They’re the fifth or sixth largest ATM operator in the country. Some of the executive staff there, I’ve chatted with a bunch of times, have been in the industry since you and I were kids. They know more about ATMs than you and I probably ever want to know. We partner with them and it’s a high cash flow stream and very unique.

Andrew: Very cool. Very niche, I would say. Definitely an alternative investment just like mobile home parks. Mark, have you ever had any deals that went bad when you’re raising capital and things like that? You can explain what happened.

Mark: Maybe I’ll share two stories. I’ll just say this, we’ve never lost any money, investor money, in commercial real estate investing and we’re proud of that. We don’t want that to change. Being conservative and working with the right people will continue to be able to achieve that goal. Step one, as Warren Buffet says, “Never lose money,” and step two, “Never forget about step one.”

With that, suddenly, there are two stories that come to mind. Earlier in our years, we, again as I mentioned, flipped a lot of houses, Andrew. We bought a lot of heavy lifting houses—heavy lifting meaning a lot of value-adds. We rehabbed, adding bathrooms, moving walls, getting kitchens, and taking them down to the studs, new electric, new plumbing, roofing, windows—you name it. There is a property that we basically missed our mark on the resale price at the time. We overspent our budget on construction costs and it took longer than we expected. It’s a triple whammy, of the three risks in flipping houses.

We did fine in a sense where we still sold the house but it took longer. Our investors, I think we lost probably around 10% of their investment, give or take, Andrew. It actually came out of pocket a little bit and made up for some of that shortfall for our investors. A lot of them are repeat, personal contacts. My brother was one for example. We softened the blow and they understood. It’s a higher risk, higher potential return investment but we’ve also flipped another 50 houses and all of them produced great returns. Their net was great at the end of the day, but that’s what you have to watch for on flips. We don’t do any more of those anymore. We stopped flipping about four years ago.

There’s another house, Andrew, just a quick story. It was in Florida. It’s a duplex, side by side. I got a call from my property manager one day, hey, Mark, we had a fire at the duplex. I started laughing. I thought he was joking, honestly. He said, no. I’m being serious. The tenants had to jump out the window to get out. I said, oh my gosh, what’s going on here?

Essentially, what happened was the tenant’s car, a Ford Excursion, to be exact, no offense to Ford Excursion, but this particular Ford Excursion, just spontaneously combusted while parked in the garage. They were just having dinner inside. We had pretty much a total loss. The pictures are the scariest, to say the least. The first department had to come and drag the vehicle out of the garage. The rubber was gone. It was just down to the rims. It was rough. Total loss, the tenants, obviously. It was no longer inhabitable but everyone was okay, thankfully.

We ended up being properly insured, number one, which is critical. Number two, we’ve been through this before with hurricane damage, but we had learned through the hurricane and through this that although we’re properly insured, the insurance company may not always have your best interest in mind. What I mean by that is we ended up signing a power of attorney over our private claims adjuster who acted on our behalf to really determine the cost of repair to this fire-damaged duplex. Long story short, he got us a lot more money by arguing with them and providing renderings, drawings, and schematics of what it actually needs to entail to rebuild.

We ended up selling it as is after collecting, of course, the insurance and proceeds. Our investors did much better than initially projected. That was the scary story that ended up turning positive. It took 6-8 months. That was stressful but also very much a learning experience. If you’re going to do this, just get ready because something’s going to happen at some point and you’ve got to be ready for it.

Andrew: Totally. I’m glad that nobody got hurt though. Mark, tell me this. What does the perfect mobile home park look like in your eyes and why?

Mark: Yes. I’ll say this. The perfect mobile home park doesn’t exist, by the way. If it does, let me know. Call me. We like value-add. We want to be able to grow that operating income. A big portion of that is being able to effectuate and allow growth without relying just on market appreciation.

Maybe it’s this, 80% occupied at acquisition, give or take. It has well below market rents, about 30%. It’s 100% resident-owned homes. It’s in an inter-urban area where there is no competition to potentially lose supply which is also a very low risk in manufactured housing. We could come in and fill the vacant lots with new homes and sell them. We can increase the existing lot rent as well, and we can continue to operate it. That’s probably a good foundation for perfect if you want to call it that.

Andrew: Yeah, totally. Tell me this. Circling back, when you guys are vetting an operator to invest in, what are some of the tips you can give our listeners to find the right person, the right operator to work with?

Mark: Okay. I’ll say this. It takes a lot of time for us. We’re always vetting our operators—new, existing. It’s a never-ending process. If you’re in the first initial stages of vetting an operator, of course, you’re going to ask a lot of questions, 100 questions, probably. Get to know them, their philosophy, their strategy. Why do they do what they do, how do they actually execute using real examples? We tend to focus on operators that have a lot of experience, Andrew.

We’re in the peak pricing of the current cycle and asset values are higher than they’ve ever been before across most of our assess classes. Supply, there’s not enough compared to the investor demand for those asset classes, and so margins are squeezed. That’s the current climate. With that in mind, you tend to have a little bit more risk investing in an operating partner that’s somewhat new. They haven’t been through market cycles. They haven’t experienced a ton of unknowns. You don’t know what you don’t know. We try to focus on operating partners that have a long track record. Typically, a lot of them, more or less for about 100 million in assets under management. A lot of them are even over 500 million assets under management and a pedigree that you can’t beat. If you can’t beat them, join them. That’s how we look at it. That’s probably a good start.

For us, it’s all referrals, Andrew. We get referred to operators like hey, Mark, I just invested in so and so. Or, I’ve been investing with these guys for 3-4 years. You should probably talk to them if you’re interested. We’re not on the, I’m at lost talking to brokers, Google-searching for people. It’s all word of mouth. I would start with, who do you know? That’s usually a good filter for people because again, you’re in the people game.

Andrew: Mark, what hurdles does the manufactured housing industry face moving forward?

Mark: A few things come to mind from an investor standpoint than from an industry standpoint. I’ll start with an investor standpoint, supply-demand disequilibrium. It’s been happening for a while. It’s been exacerbated since COVID. We don’t have enough and there are many people chasing them. The outcome is harder to find great deals that have a very attractive list for work profiles.

At the same time, one of the benefits I see, which goes hand in hand is that, I believe that manufactured housing has one of the highest likelihood of consistent rent growth. That’s important today in our thesis because that helps drive non-operating income growth which is correlated to the value of the asset and the investment. With that, we still believe the fundamentals are very attractive because of the ability to continue to grow rents because they all have a bigger picture thesis of providing affordable housing solutions.

From a different lens, there’s been a lot of supply shock in homes. Manufacturers can’t build them fast enough. We’ve got a lot of waiting lists. Again, some of that’s been exacerbated by COVID. We’re starting to see an appreciation of the actual homes which those people think tend to depreciate in value. But they are actually going up in value, in class. That might make it harder for people to afford them as the cost of the actual home goes up. That’s part of it.

I also think rent control might become and continue to be a factor that will limit some of the rent growth. For good and for bad, that’s for a discussion, of course. But all in all, we’re still very much excited about manufactured housing. It’s probably my favorite asset class, Andrew, and has been for many years. I don’t think there’s too much that’ll derail that but we’ll see. So far, so good.

Andrew: What do you think about the $15 minimum wage and how that would affect mobile home parks?

Mark: I just take it from the resident standpoint. I think it will help because people can afford potentially higher-cost homes which is what we’re seeing in some of the trends today. I’ll leave it at that. I think it could help and it could definitely allow folks to have a little bit better life, of course. With the cost of living going up most likely with inflation, with rent growth which is inflation passed through to residence, having a higher wage can only help.

Andrew: Mark, what can you tell us about SMK Capital? What’s your guys’ value proposition and what makes you guys different?

Mark: Sure. We look at a lot of deals, Andrew. Typically, 10-20 deals a month, investment opportunities in our asset classes. We invest in about 4-10 a year. What I’d focus on is really just remaining disciplined, patient, saying no to a lot of investment options out there, and there’s a ton. We filter through them consistently. Some of the value we provide with our investors is they get access to our relationships with operators that we’ve built over the past 10 plus years. They provide us with a lot of private off-market deals that you wouldn’t know about if you didn’t know us or that kind of general connection there.

We focus on diversification a lot. We invest in a lot of different asset classes as I’ve noted, a financial acumen. It’s pretty easy these days, Andrew, to manipulate a pro forma and projections. They’re all assumptions like, hey, we’re going to be able to do X, Y, and Z. There’s so much fluff and noise in the industry today that we sifted through and you just got to be careful. Where we are, we tend to try and pick opportunities that we believe wholeheartedly in, say no to a lot of deals with the goal of providing our investors with really attractive risk-adjusted returns.

Andrew: Circling back a little bit, what are some of the common incorrect pro forma assumptions that you see when you’re looking at deals?

Mark: Let me say that incorrect isn’t accurate. I would say that they’re overzealous or have too much cushion, too much fluff built into them. Rent growth is one. Whether they’re anticipating the natural market appreciation of the rental rates to be how it has been historically and why we think it’s going to go up the way they think it’s going to go up. Occupancy and economic occupancy, as we talked about before, you also tend to sometimes underestimate expenses. You’ve got to look at every line item, and if you have the trail in 12, compare. How has it been doing? What makes you think you can do it differently?

There’s some financial engineering going on, Andrew, that not a lot of people might pick up on but if you want to ask a question. If you can’t look at the Excel matter and fit it yourself, the question would be, are cash flow distributions to investors considered a return on capital or return of capital? I’ve seen a lot of operators over-raising, meaning they’re raising more capital than is needed for the investment. Pros and cons to that might have a little access in reserves for the unknown, but a lot of times it’s also being done to inflate cash flow projections, typically in year one and two where they’re going to actually return that money to you in year one and show you a cash flow dividend even though the property isn’t actually performing in a positive manner or in a high enough manner to produce that cash flow. Over raising in returning capital to you, they’re calling it return on capital even though it’s technically return of capital. That’s something we look very closely for.

Andrew: That’s huge. That’s a big golden nugget right there because I’ve seen that as well where I invested in an operator, and I didn’t look through the paperwork as much as I should have, the PPN docs and things. The pref payments that were coming back were all return of capital which was just a different wording of the pref. At the end of the day, that 8% I’m getting is off of a lower balance. That’s a very good point. Thank you for bringing that up. I appreciate that.

Mark, dude, thank you so much coming on this show. It’s been an absolute pleasure. If any of our listeners would like to get a hold of you, what is the best way for them to do so?

Mark: Websites are great for a start. A couple of them, again, is SMK Capital Management. Our website is smkcap.com. We have a lot of resources there, people can sign up and join our investor group. They can also email me. The email address is info@smkcap.com. Happy to connect and see if we can help folks.

Andrew: Awesome, Mark. One last question.

Mark: Sure.

Andrew: If you had to tell a potential mobile home park investor just one thing that they could take away from this episode and be like, man, that episode was really awesome, what is that one thing that you would want to get through to them before they make their first investment into a real estate or mobile home park private equity deal?

Mark: This is probably what I would say as number one, Andrew, is for today, those folks who are passive look at the projected return, whatever it might be. That’s called 15% average annual return. They don’t ask too many questions or look at sensitivity for all that return. Do all the stars have to align to get there or is there a good chance that we can overperform and beat that return?

That’s the ultimate question you probably want to ask for every investment. It sometimes takes time to figure out the answers, but that’s the goal when underwriting as an LP, as a passive investor, is what it the likelihood of getting that anticipated result and what is the likelihood of overachieving or what’s the likelihood of underachieving, of course, as well, and trying to find the best balance there. You, of course, want to try and get opportunities where you think it’s very likely that you’re going to hit the return or over-perform.

Andrew: That’s great. What has to go right for your pro forma to work out? I love that. Mark, thank you so much. This was extremely valuable. I really appreciate you coming on the show.

Mark: My pleasure, Andrew. Thank you. It’s been fun.

Andrew: Alright, that’s it for today folks. Thank you all so much for tuning in.