The Pretty Boi Estates™ Deal Intake Decision Tree

How We Decide What to Buy, What to Structure, and What to Walk Away From
Written by Jai Thompson
Internal Training Article

Purpose of This Article

This article explains the exact decision tree used by Pretty Boi Estates™ when a deal comes in.

It answers four questions, in order:

1. What kind of asset is this?

2. How much risk exists right now?

3. Can risk be removed by structure?

4. If not, is the yield high enough to justify it?

This process prevents emotional decisions, protects capital, and keeps deals aligned with our hands-off model.

Step 1: Identify the Asset Type (No Numbers Yet)

Every deal starts here.

Ask only one question:

Is this a stabilized asset or a problem asset?

Stabilized Assets

• Luxury estates with professional operations

• Clean multifamily with steady occupancy

• Assets with predictable income

Problem Assets

• Distressed multifamily

• Debt takeovers / subject-to

• Assets with vacancy spikes

• Assets with deferred maintenance

• Assets with seller burnout or lender pressure

Do not analyze price yet.
First classify what kind of problem (or non-problem) this is.

Step 2: Identify the Primary Risk

Once the asset type is clear, identify the dominant risk.

There is always one main risk.

Common Risk Types

• Income instability

• Debt pressure

• Operational failure

• Management fatigue

• Time pressure

• Regulatory exposure

If you cannot name the risk clearly, stop.
You are not ready to underwrite.

Step 3: Can the Risk Be Removed by Structure?

This is the most important decision point.

Ask:

Can this risk be removed by structure, or does it stay no matter what?

Risk That CAN Be Removed

• High leverage → solved by low LTV

• Operational chaos → solved by funded hospitality

• Seller uncertainty → solved by title-directed close

• Payment fear → solved by high DSCR

Luxury estates usually fall here.

Risk That CANNOT Be Removed

• Inherited debt terms

• Unknown lender behavior

• Severe vacancy

• Deferred maintenance requiring time and capital

Distressed assets usually fall here.

Step 4: If Risk Is Removed → DSCR First, Yield Second

If risk is removed by structure, we move to safety metrics.

Required Checks

• DSCR ≥ 2.0

• Positive Day-1 NOI after all expenses

• Fully funded operations

• Title-controlled disbursements

If these are met, yield does not need to be extreme.

Typical outcome:

• Yield: 8%–12%

• Focus: certainty, stability, upside later

This is how luxury estates qualify.

Step 5: If Risk Cannot Be Removed → Yield Must Be High

If risk cannot be removed, yield must compensate.

Ask:

Is the yield high enough to pay us for uncertainty?

Required Checks

• Yield: 20%–30%+

• DSCR still acceptable

• Clear path to stabilization

• Time horizon understood

If yield is not high enough, we do not negotiate harder.
We walk away.

Step 6: Decide the Outcome (Only 3 Options)

Every deal ends in one of three outcomes.

Outcome 1: Structure and Proceed

• Risk removed

• DSCR strong

• Yield acceptable

Outcome 2: Reprice or Reframe

• Risk exists

• Yield not sufficient

• Seller may adjust

Outcome 3: Disqualify

• Risk high

• Yield low

• No structural solution

Walking away is a win.
It protects capital and focus.

The Full Decision Tree (Simple Version)

1. What asset is this?

2. What is the main risk?

3. Can structure remove the risk?

If yes →

• Check DSCR

• Confirm NOI

• Accept moderate yield

If no →

• Demand high yield

• Or disqualify

That’s it.

Why This System Works

• Prevents emotional buying

• Aligns yield with risk

• Protects lenders

• Keeps ownership hands-off

• Creates repeatable decisions

This is how institutional buyers think.

Internal Summary (Zia Version)

• Identify asset first

• Name the risk

• Remove risk with structure if possible

• If risk stays, demand high yield

• DSCR protects lenders

• Yield pays for uncertainty

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