Scholastic Capital is an evergreen real estate fund that buys single family homes in elite school districts. We then rent those homes on long term leases to highly qualified tenants interested in being there for the school district.

We do this on behalf of our investors looking for a “high floor, bond-like” real estate fund. Our investors, and new investors who may join us, are typically interested in our monthly cashflow distributions, equity appreciation, and depreciation tax benefits.

Hello Friends of Scholastic Capital,

I had a really interesting conversation this week about the importance of a business partner. 

Most conventional wisdom is that a business partner can, and arguably should, serve as a balance. The old adage about how complementary skills sets can propel a business further & faster. 

The conversation this week was different though. 

The gentleman I spoke with talked about how a business partner’s primary role is as a forcing mechanism. Someone is constantly looking over your shoulder and is forcing you to get stuff done each week. 

By yourself, it’s exceptionally harder to build a business. You need to be the forcing mechanism for yourself. That can become taxing, tiring, lead to burn out, and then lead to less progress being made.

The implication is simple: a solo founder of any business needs that forcing mechanism. 

At Scholastic, I (Sean) am lucky to have a fellow GP, advisors, investors, and multiple employees who all serve as forcing mechanisms. 

But, I’m inspired by this conversation this week. So, for this week’s newsletter, I’m going to share what I got done this week as a form of “public” forcing mechanism. 

As you can tell, this is our public facing newsletter. Our investors are today receiving their distributions for the month and detailed metrics about the portfolio

We’ll publicly share some of that data with you next week

What we got done this week

This week had four different major workstreams going on. Let’s talk through each of them.

#1: New hires: recruiting process

We are currently hiring two people at Scholastic. They are a Senior Accountant & a Controller. In essence, they will practically be our internal finance department.

For that reason, these are exceptionally important hires to get right. To do so:

• We have a recruiting firm we work with to find these candidates

• We have a hiring process we use (Topgrader-it came highly recommended) to ensure its the right person

• We need to speak with every candidate and give them

Even when done expeditiously, this is a laborious process. For example, one candidate we really liked for the Senior Accountant role emailed this morning to say they received another job offer.

For that reason, I (Sean) had to move things quickly to get on the phone with them ASAP. That call is coming soon, and the goal is to understand how they are thinking about the other offer and if ours is better.

All in, hiring is a fun process as we get to literally pick our team. But, it’s time intensive.

#2: New hires-metrics and 30/60/90 day expectations

It’s not enough to just hire the right people. They need the right plan to get them up and running and successful.

We use EOS (Entrepreneur Operating System) at Scholastic. An implication of that is everyone on the team has metrics that they are responsible for.

Since these metrics are the responsibility of new hires, I think it’s right to share their future metrics with new hires.

The challenge here is it’s sneaky difficult to do so.

For example, the Controller will be evaluated on spend relative to budget. That sounds obvious and like a good metric for a Controller.

But, how is that calculated? Both from a formula perspective and a practical perspective (where is the data)?

The nuance here is important to understand, and if new hires don’t understand your business, they won’t understand the nuance.

30/60/90

All new hires are also given this exact chart. (There’s a cut-off in 30 days company context…not sure why it doesn’t come through in the screenshot)

The goal of this chart is to make sure new team members understand what the standard is and where they should be by their first 30/60/90 days.

This also makes it very easy to schedule meetings on each of those days to see how the team member is doing and if we’re still a good fit for each other at each of those days.

#3: Vendor Upgrades

Our newsletter a few weeks ago talked about how we can now get insurance from companies that specialize in single family home rentals. It’s forecasted to be a ~$3-5M savings over the life of the fund by making the switch.

We’re working on others that are similar too. This week we met with two title companies that focus on doing closings for single family home funds.

A traditional title company will slap a ton of incremental fees on a closing statement. I’ve seen a $50 “Document printing” fee, for example. It’s not uncommon to see 20-30 different fees on a settlement statement.

Those fees and title insurance itself can be $7-$10K a closing.

We are now big enough that these title insurance companies can stand up a mass closing team for us for roughly $1,500 total per closing, no incremental fees. That should save us ~$5K per closing now, and is again just incremental margin savings.

#4: Fundraising 

The winter is our “fundraising season” as we raise money every year and then invest it each summer.

We are working through fundraising now from existing investors who have decided to rejoin the fund and referrals from those existing investors.

We’re humbled by the fact there’s quite a lot of people there.

I (Sean) have also been bouncing around meeting with investors in person. For example, I’m having coffee today with one who is local.

We are planning to bring in net new investors sometime soon ahead of our capital call in April/May of this year

Get to know us

As always, we love getting to meet more folks interested in niche real estate thesis.

For that reason, we have an open Calendly link with 15 minute slots.

If you’d like to chat niche thesis like Scholastic, real estate, or even joining us as an investor, feel free to grab time HERE.