When it comes to passive investing, there’s one truth I’ve learned over and over again: your success is only as strong as the operator you choose.
That’s why I was thrilled to have Paul Moore, founder of Wellings Capital, join me on Ritter on Real Estate to share his insights on what it really takes to identify great operators — and avoid the ones that can quietly derail your returns.
Paul’s background is anything but ordinary. He started his career at Ford Motor Company, co-founded a staffing firm, became a two-time finalist for Michigan Entrepreneur of the Year, and sold his company to a publicly traded firm before diving into real estate. Since then, he’s founded multiple investment and development companies, appeared on HGTV, and completed over 100 real estate investments and exits.
Needless to say, Paul has seen it all — and what he’s learned along the way is pure gold for any investor.
From Operator to Fund Manager
Paul started out as a multifamily syndicator — and like many of us, thought he had found the perfect investment. But over time, the market told a different story.
Between 2015 and 2022, the multifamily world thrived on rising rents, compressed cap rates, and cheap floating-rate debt. “If you had to overpay by 30% and use risky floating-rate loans just to make the deal work,” Paul said, “that’s not an investment — that’s speculation.”
When interest rates started climbing in 2022, the tide went out — and as Warren Buffett likes to say, that’s when you find out who’s been skinny dipping.
So Paul pivoted. Instead of trying to do it all himself, he built Wellings Capital, a firm that manages eight funds investing in top-tier operators across asset classes like self-storage, mobile home parks, light industrial, RV parks, and more.
Their strategy is simple but powerful: deep due diligence and diversification.
The 80/20 Rule of Investing
Paul shared a visual I loved — the 80/20 curve.
If you invest with an average operator in an average deal, you’ll get average returns. That worked fine when cap rates were compressing, but not in today’s market.
The key, Paul said, is to find the top 20% (or ideally top 10%) of operators. Those are the ones with better risk management, higher debt coverage ratios, and the discipline to create long-term value.
To do that, Paul and his team reviewed 745 deals last year — and invested in only five.
Five.
That’s saying “no” to 99.3% of opportunities.
But that discipline is what protects investor capital. “Our number one goal,” Paul said, “is not to lose money.”
How to Vet an Operator
So, what does it take to find that top-tier operator? Here are a few of Paul’s biggest lessons — ones I’ve seen proven true in my own career as well:
- Look at track record — not marketing. Every deal looks good on a glossy brochure. But great websites don’t make great operators.
- Check their debt structure. Avoid groups that rely on risky floating-rate loans or optimistic rent growth projections.
- Find intrinsic value. Paul loves operators who can uncover “hidden upside” — whether that’s adding boat/RV storage, a billboard, or U-Haul rentals to a self-storage property.
- Pay attention to character. How someone treats their team, a waiter, or their spouse tells you a lot. Paul once ignored a bad gut feeling about an operator’s behavior — and five years later, they treated him the same way.
- Do “death by Google.” Search deeply. Read reviews. Talk to past investors and employees. Find out what the market really says about them.
And above all, Paul says the best investors operate with FOMU — the Fear of Messing Up — not FOMO.
Understanding Preferred Equity
We also talked about how Paul’s funds often invest through preferred equity — a position in the middle of the capital stack between traditional debt and common equity.
Preferred equity investors are paid before common equity but after debt holders. That means they have more protection (and often a fixed “coupon” return), but give up some of the upside.
It’s a great option for investors who value steady cash flow and lower risk, even if it means a capped return.
The Human Side of Investing
One of my favorite moments from our conversation came when I asked Paul what he’s most proud of in his career.
He told me about a time early on when he lost money on a deal. Instead of hiding behind excuses, he looked straight into the camera and told his investors, “It was my fault.” Then he personally reimbursed every investor who rolled into his next deal.
That kind of integrity is rare — and exactly why I think Paul’s approach resonates with so many.
Paul’s Keys to Success
To wrap up the show, I asked Paul my favorite four “Keys to Success” questions. Here are his answers:
– One question to ask a sponsor before investing: “How many years have you been in business — and have you stayed focused on one thing that whole time?”
– What he’s most proud of: The way he took responsibility and made his investors whole.
– A book everyone should read: The One Thing by Gary Keller and Jay Papasan — because focus is everything.
– His number one key to success: His morning routine. Each day he meditates, journals, studies ancient scripture, and even uses ChatGPT to dig into meanings of old words. He says he knows when he skips a few days — because he gets grumpy!
Final Thought
This conversation was a reminder that great investing isn’t about chasing deals — it’s about choosing the right people.
Due diligence, discipline, and diversification aren’t exciting buzzwords — they’re the foundation of real wealth-building.