Why We Underwrite Conservatively
As a long-time real estate practitioner, I’ve learned a few things over the years. If I can help just one person by sharing ideas and lessons learned, then this format will be worthwhile. Some have resulted from the joy of success, while others were learned the hard way. I promise to be transparent and not hold back. Sharing is how I choose to start my week.
April 27, 2026
Why We Underwrite Conservatively
As a responsible developer, it is my obligation to present realistic projections when it comes to the projects I develop. Especially when raising money from investors is involved. Not only do I act as a good steward of their capital for the trust they’ve placed in me, but also strictly adhere to government compliance (Securities & Exchange Commission, Regulation D) by hiring syndication attorneys to prepare the documents which protect our clients. The attorneys not only present the potential risks associated with a particular investment type, but they also review our marketing materials to make sure guarantees are not being made, and projections are realistic.
With my background, I receive prospective investment opportunities from many different sources. Many of them are marketed aggressively and underwritten loosely. Without a structured, disciplined system, investors could end up shouldering unnecessary risks. That’s why I created a methodology that removes speculation and focuses on protection first. It’s called the P.I.L.A.R. Method ® and will be the subject of another Weekly Insight.
We base our financial projections on third party marketing reports. This ensures that we understand the supply and demand of a product type within a given submarket. A balanced supply and demand play a critical role in the success of a new project. We use the financial data (occupancy, asking rent, concessions, effective rent, sales prices, etc.) from the most similar properties in the area to prepare a competitive market analysis.
From this we build a financial model to compare our projections to the current market conditions. This lets us know if we can effectively compete within a given market. If we can’t, then we scrap the project and look for other opportunities. If it appears we can be competitive, we don’t automatically proceed with the deal. We also stress test the numbers to make sure they operate under adverse conditions.
Market conditions can change over the course of a real estate project. This is one example of how we use conservative underwriting in our development analysis. We make sure the numbers work, even under pressure. We also raise additional capital to make sure there is enough cash in reserve for contingencies. Our goal is to under-promise and over-deliver.
Too many investment opportunities these days focus on upside. We focus on resilience. That’s what produces durable returns over different market cycles. Our track record, transparency, and aligned investor incentives set us apart.
If you have any questions or this resonates with your investment strategy, please reach out to me. Thank you for taking the time to read this.
