HOW I UNDERWRITE
THE FOUR C'S + THE BOX
Two tests. Every deal has to pass both.
The Four Cs tell me whether the people and the money behind a deal are sound. The Box tells me whether it is the right deal for me, right now. Most bad decisions come from running only one of them. A great operator on the wrong deal, or the perfect deal with the wrong operator.
Neither one is the filter. Together they are.
THE THESIS
TWO QUESTIONS, ASKED TOGETHER
THE FOUR C'S
IS THIS A GOOD DEAL?
Character, Capacity, Collateral, Capital. An objective test of the operator and the money. The answer is the same no matter who is asking.
THE BOX
IS IT A GOOD DEAL FOR ME?
The written parameters for what you want, what you need, and what you expect. A personal test. The same deal can fit my box and fail yours.
PART ONE
THE FOUR C'S
Four questions about the people and the money. I ask them in this order on every loan, and they work just as well on a business, a property, or a syndication.
C1
CHARACTER
Who am I trusting? Track record, transparency, and how someone communicates when a deal goes sideways. Character comes first because everything else can be fixed with money and character cannot.
IN PRACTICE
I have passed on deals with excellent numbers because the sponsor was slow to answer a hard question. If the communication is bad before I fund, it will be worse when a draw is late.
C2
CAPACITY
Can they actually execute? This is the ability to carry the plan through to completion and exit — the crew, the track record, the systems, and the bandwidth to do it while everything else is also happening.
IN PRACTICE
A first-time builder with a great architect is not the same as a builder who has finished eleven of these. I price that difference rather than pretending it is not there.
C3
COLLATERAL
What protects the downside? A conservatively valued asset with a real equity buffer underneath it. Not the optimistic after-repair number — the number that holds if the market softens while the project is mid-flight.
IN PRACTICE
I underwrite to what the asset sells for today in its current condition, not to what the pro forma promises after everything goes right.
C4
CAPITAL
Is the deal properly funded? Enough to fund the work, carry the costs, and absorb the surprise that always arrives. Verified with statements, not stated in a conversation.
IN PRACTICE
A borrower who is fully extended on day one has no margin for a permitting delay. That is not a borrower problem later. It is my problem later.
PART TWO
THE BOX
A box is the set of parameters a deal has to fit before your money moves. Write it down when you are calm, so it can do the arguing for you when a story sounds good. The kind of box depends on what you are doing.
WHEN YOU LEND
THE CREDIT BOX
Mine, as it stands today:
LEVERAGE
Up to 70% of ARV
BORROWER EQUITY
10% down minimum
CREDIT
650+
GEOGRAPHY
Arizona only
WHEN YOU BUY
THE BUY BOX
For businesses and investment real estate. Price range, location, asset type, required return, how involved you want to be, and how long you plan to hold.
EXAMPLE
A rental in a market you cannot visit, at a cap rate below your floor, fails the buy box even if the seller is honest and the numbers are clean.
WHEN YOU INVEST IN OTHERS
THE DEAL BOX
For syndications, funds, and other people's deals. What you are optimizing for right now — growth, income, or preservation — and the risk, timeline, and liquidity that go with it.
EXAMPLE
If you are building for growth and want your money to 10x, a safe cash-flow deal with an operator who passes all four Cs still does not fit. Good deal. Not your deal.
HOW THEY WORK TOGETHER
FOUR OUTCOMES, ONLY ONE MOVES MONEY
Run every opportunity through both. One test cannot stand in for the other.
Four C's: Pass
Box: Fits
MOVE FORWARD
Sound people, sound money, and it is the deal you actually want. This is the only outcome where capital moves.
Four C's: Pass
Box: Doesn't Fit
WALK
A good deal that is not your deal. Nothing is wrong with it. It just does not serve what you are building right now.
Four C's: Fail
Box: Fits
WALK
The right shape with the wrong ingredients. Perfect leverage and location do not fix a borrower without the capital or the character.
Four C's: Fail
Box: Doesn't Fit
EASY NO
No analysis required. The discipline is not spending a week trying to talk yourself into it.
THE EXCEPTION RULE
EXCEPTIONS HAVE TO BE EARNED
If I step outside my credit box at all, the Four Cs have to give me a great reason. A borrower with a long track record and real liquidity might earn a little more leverage. A first-time borrower does not.
It works the other way too. If one of the Cs is soft, the deal has to sit well inside the box before I even keep talking. One test can justify a small flex in the other. It can never replace it.
YOUR BOX CHANGES
THE C'S STAY FIXED. THE BOX MOVES WITH YOUR LIFE
BUILDING
Early, with time on your side. The box can hold more risk and longer timelines in exchange for growth.
COMPOUNDING
Early, with time on your side. The box can hold more risk and longer timelines in exchange for growth.
PRESERVING
Protecting what you have built. The box narrows to downside protection, liquidity, and control.