We sat down with Jeff Staubach and Tyler Arrington of Staubach Capital, one of the top 25 fundraisers on the Juniper Square platform, to discuss why Texas has been so popular for investors, how they were able to grow their business, and the biggest challenges facing the industry in 2023.
Q: How did you get your start in this industry?
Jeff: My dad, Roger Staubach, got into real estate before I was born. When I got out of school, I started in a capital markets business running numbers. Then, for almost 20 years, I was in real estate brokerage at Staubach Company/JLL. I then spent six years in a management role and two years running JLL’s South-Central region, which had a couple hundred-million-dollar businesses and about 1,000 employees. Eventually, I left JLL to found Staubach Capital.
Tyler: I got into real estate right after school. I joined a brokerage team in Southern California before making my way to Hillwood, which is Ross Perot Jr.'s real estate development company. I was there for almost five years doing all things finance when Jeff decided to start this next chapter of his life and bring me on board with him.
Q: How did Staubach Capital come to be?
Jeff: About five years ago I decided to do direct real estate investments full-time. I left JLL and started working with Tyler and a few other partners to found Staubach Capital. We didn’t know what would happen; all we knew was that we had experience, we were smart, had a great network, and we would outwork the next guy. Our plan was to leverage the power of our networks to find opportunities that the average investor couldn't find because they didn’t have the 65-70 years of combined experience in the industry that we did.
Q: How would you describe your business?
Tyler: Staubach Capital is a boutique real estate investment firm where we strive to provide sound investment opportunities to our investors using an ultraconservative lens. We look for good value in the opportunities that we pursue across several different property types, largely multifamily development, multifamily acquisitions, and single-family for-rent funds. We also have a few one-off deals in office and technology.
Q: What are your day-to-day roles in the firm?
Jeff: We only have four full-time employees on the corporate team and about $200 million in equity that we manage. We have our roles and titles; we manage the investments and the relationships. But in the end, we are a small business, so we also manage the website, handle all the calls, and do anything else that’s needed—stock the kitchen, move cabinets down to the basement, install cubicles, you name it.
Q: What is your typical investor base, and how do you find them?
Tyler: We have a wide spectrum of investors. Our check sizes can be anywhere from $50,000 to $5 million. It started with just friends and family and has grown organically as we’ve expanded our network. Right now, we have more than 1,200 contacts and 450 active positions. Most of our new investors have come through referrals from existing investors.
Q: Why do you think 2021 and 2022 were such successful fundraising years for Staubach Capital?
Jeff: It's a combination of a lot of things. We are building our track record and while we don’t have many exits yet, we have had good quarterly updates and we were doing what we said we were going to do. We were very focused on the market here in Texas, where there are a lot of people that want to put their money to work, especially coming out of COVID.
Tyler: There are a lot of people moving to Texas, which is helping investments and commercial real estate in general. On the flip side, interest rates are hurting existing deals with floating-rate debt as well as the ability to underwrite new opportunities. I think there is a lot of liquidity in the market still, even with the uncertainty. These investors with liquidity are still seeking sound investment opportunities, which we’ve fortunately been able to provide. I also think that the brand Jeff and his father have built over the last 40 years—how trusted, well-liked, and respected they are in the market—definitely helps our ability to raise money quickly. Ultimately, it comes down to relationships. Investors want to know they can trust the people they are investing with.
Q: What motivated you to seek out software to help with fundraising?
Jeff: We had built a spreadsheet over time that grew to more than 1,200 investors, and it just became too time-consuming and inefficient.
Tyler: When we saw the demo of Juniper Square, my mind was completely blown. I thought, wow, so much of our team’s time could be reallocated to other things which would allow us to maintain our current headcount and overhead while growing the business.
Q: How has Juniper Square contributed to your growth?
Jeff: Juniper Square has allowed us to consider more opportunities. In the past, we might have looked at a deal and thought, “We have to pass. There's no way we can run that alongside this other one.” Now, we can manage a huge number of investments that wouldn’t have been possible without adding significant headcount. I also think that having an organized, modern platform gives our investors peace of mind. They can see that we’ve put a lot of money and effort into the systems and processes we use to manage their investments.
Tyler: Juniper Square has allowed us to keep a small and nimble team, which I think is one of the reasons we've been so successful—we’re able to move quickly and make fast decisions. Some of the bigger organizations that do what we do have to go through five levels of approvals. Jeff and I just look at each other and say, “Do we like this? Do we want to go for it?” It also helps us raise funds quickly. For example, we launched a $7.8 million opportunity for a multifamily development deal in Plano, TX on Monday at 2 PM, and we were subscribed by the next morning with a $1 million+ waitlist. We absolutely could not have done that without Juniper Square. The ability to send an email out to 500+ investors with an equity deck or a package and have them review it at their leisure with a full data room, with news articles and reports, and other supporting materials—that process would have previously taken at least a couple of months.
Q: What are your fundraising plans for 2023 and beyond?
Tyler: We expect our total equity raised next year will be somewhere between $50 million and $100 million. I think our ability to raise capital is only going to get better as our network continues to expand. But moving forward, our goal isn't necessarily to raise more money—it's to find good opportunities for our investors, whether those deals require $3 million or $30 million—and Juniper Square has set us up nicely to execute when we find them.
Q: What do you think makes a deal a good opportunity?
Tyler: It all depends on the asset class. Let's use multifamily acquisition, for example. We typically target under 200 units, because anything over that usually draws more attention from institutions and we’re too conservative to compete with them. Then we look for some sort of value add, whether it's a long-time owner who's mismanaged it, a long-time owner that is handing it down to kids who don't have an interest or even just a group that has owned it for a long time and doesn’t have the capital needed to bring it up to market rates. On the development side, we look at access to transportation corridors, school districts, affordability, proximity to homes, amenities around the homes, and things like that. Similar data points for our single-family for-rent markets as well.
Q: What is your biggest challenge as you look to the future?
Tyler: Interest rates. Everyone in the industry is suffering through it. My crystal ball is as good as anybody else's, so I don't know what's going to happen in the future but I think our strategy to be conservative as possible will benefit us in the long run. We will create different exit ramps if we need to get out of a deal for one reason or another, and we will say no to a deal if it feels too risky. We always want to go into a deal knowing that we underwrote it soundly and conservatively.