The Pretty Boi Estates™ Asset-Class Decision Tree How We Evaluate Every Deal, Every Time

The Pretty Boi Estates™ Asset-Class Decision Tree How We Evaluate Every Deal, Every Time

The Pretty Boi Estates™ Asset-Class Decision Tree

How We Evaluate Every Deal, Every Time
Written by Jai Thompson
Internal Training Article

Purpose of This Article

This article explains how the same decision logic applies across all asset classes, even though the numbers and risks differ.

We do not change our thinking.
We only change which risks matter most.

Every deal answers the same questions:

  1. What asset class is this?

  2. What is the primary risk?

  3. Can structure remove that risk?

  4. If not, is the yield high enough?

Universal Rule (Applies to All Assets)

Yield is payment for risk.
DSCR is lender safety.
Structure removes risk before yield is used to price it.

1️⃣ Single-Family Homes (Including Corporate / Recovery / Executive Use)

Typical Risks

  • Vacancy between tenants

  • Short lease terms

  • Smaller income base

  • Retail seller expectations

Can Risk Be Removed by Structure?

Yes, often.

Risk is reduced through:

  • Low leverage

  • Corporate or medical housing contracts

  • Master lease or operational control

Decision Criteria

  • Positive Day-1 NOI

  • DSCR ≥ 2.0

  • Yield acceptable at 10%–15%

When Higher Yield Is Required

  • If property is distressed

  • If subject-to debt exists

  • If tenant demand is uncertain

Then yield must move toward 20%+.

2️⃣ Duplexes and 3–4 Unit Properties

Typical Risks

  • Tenant concentration

  • One vacancy impacts income heavily

  • Older properties

Can Risk Be Removed by Structure?

Sometimes.

Risk is reduced by:

  • Low LTV

  • Professional management

  • Stable tenant base

Decision Criteria

  • DSCR ≥ 1.75–2.0

  • Yield 12%–18%

When to Walk

  • Deferred maintenance with low yield

  • Seller unwilling to adjust

3️⃣ Small Multifamily (5–25 Units)

Typical Risks

  • Management quality

  • Rent roll accuracy

  • Maintenance backlog

Can Risk Be Removed by Structure?

Partially.

Some risk remains operational.

Decision Criteria

  • DSCR ≥ 1.5

  • Yield 14%–20%

When High Yield Is Mandatory

  • Vacancy above normal

  • Deferred repairs

  • Seller distress

Yield must compensate.

4️⃣ Large Multifamily (50+ Units)

Typical Risks

  • Occupancy volatility

  • Expense creep

  • Capital expenditure needs

Can Risk Be Removed by Structure?

Not fully.

Operations take time to stabilize.

Decision Criteria

  • DSCR ≥ 1.25–1.5

  • Yield 18%–25%+ depending on distress

Disqualifier

  • Low yield with high leverage

We do not chase scale without protection.

5️⃣ Luxury Estates (Staffed Hospitality Assets)

Typical Risks

  • High operating costs

  • Utilization variability

Can Risk Be Removed by Structure?

Yes.

Risk is removed through:

  • 24/7 funded hospitality staff

  • Low leverage (~24%)

  • Title-directed disbursements

Decision Criteria

  • DSCR ≥ 2.0

  • Yield 8%–12% Day-1

Important Note

Luxury estates do not require 25% yield when risk is structurally removed.

Upside is operational, not assumed.

6️⃣ Hotels and Boutique Hospitality

Typical Risks

  • Management turnover

  • Seasonality

  • Staffing

Can Risk Be Removed by Structure?

Partially.

Operations still matter.

Decision Criteria

  • DSCR ≥ 1.5

  • Yield 15%–25%

Higher Yield Required When

  • Distressed operations

  • Poor historical performance

7️⃣ RV Parks and Mobile Home Parks

Typical Risks

  • Infrastructure

  • Regulatory exposure

  • Utility systems

Can Risk Be Removed by Structure?

Partially.

Decision Criteria

  • DSCR ≥ 1.5

  • Yield 15%–25%

High Yield Mandatory When

  • Deferred infrastructure

  • Regulatory uncertainty

8️⃣ Commercial / Retail / Office

Typical Risks

  • Lease rollover

  • Tenant credit

  • Market demand

Can Risk Be Removed by Structure?

Rarely.

Decision Criteria

  • DSCR ≥ 1.25

  • Yield 18%–30%+

Office and retail require strong compensation for uncertainty.

9️⃣ Debt Takeover / Subject-To (Any Asset Class)

Typical Risks

  • Existing lender behavior

  • Loan call risk

  • Payment continuity

Can Risk Be Removed by Structure?

No.

Decision Criteria

  • DSCR ≥ 1.3

  • Yield 20%–30%+

This is where high yield is mandatory, not optional.

The One-Page Rule (All Assets)

If risk can be removed →
Focus on DSCR and stability.

If risk cannot be removed →
Demand high yield or walk.

Why This Framework Works

  • Same logic across all assets

  • Prevents emotional buying

  • Aligns yield with reality

  • Keeps ownership hands-off

  • Protects capital and reputation

This is institutional discipline.

Internal Summary (Zia Version)

  • Classify asset

  • Identify primary risk

  • Remove risk with structure if possible

  • If risk remains, demand high yield

  • DSCR protects lenders

  • Yield pays for uncertainty

Structure over sacrifice.
Stewardship over struggle.
Every deal builds legacy.