Ep 120: Start With The Needs of Your Investors with Mike Zlotnik
It seems logical to sniff out a good deal first and think about who will invest in it later, but there is a lot to be said for doing things the other way round. Starting with understanding what your investors are looking for is a big belief of Mike Zlotnik’s, and today he joins us on the show to explain why. In this episode, Mike also shares some details about his investing strategies, capital raising strategies, and a whole lot more! Mike is a retired software executive who began investing in real estate in 2000, and today he manages a variety of funds, including the Tempo Growth Fund LLC and the Tempo Opportunity Fund LLC. Our conversation with Mike begins on the subject of whether to buy and hold real estate or keep selling and reinvesting, and Mike’s main point is about the value of constantly weighing the ROI a deal produces versus the time you have to spend on it. From there, we explore the ins and outs of a recent class of real estate our guest is focusing on investing in since the pandemic: hotels converted into affordable housing. After that, we move onto an exchange about the best possible ways to raise capital and build credibility today, and it is here that Mike gets into his philosophy of assessing deals based on the needs of your investors. Wrapping up for the day we get into the weeds of the risks of taking on common equity, where Mike drills down on the fact that it is all about risk-adjusted return. Tune in today!
Key Points From This Episode:
Introducing Mike, his background, and the different real estate classes he invests in.
How Mike got into real estate investing after buying his first apartment to live in.
Perspectives on buying and holding versus getting out of deals quickly to repurpose capital.
Weighing-up deals by the time they take versus the ROI they produce.
The problem of generating an income while also finding capital to buy new assets.
The business model Mike uses involving investing in other funds and syndications.
Mike’s new strategy of investing in hotels converted into affordable housing.
The amount reconfiguration the hotel strategy involves, the residents it appeals to, and how to spot a good deal.
How processes of foreclosure and forbearance can be exploited to get these hotel deals.
Capital raising strategies: Marketing to the affluent by becoming a thought leader and more.
Perspectives on influencing people: Data-driven arguments versus a storytelling approach.
Choosing deals that suit your investors rather than the other way round.
Whether to take a common equity position in deals that offer a preferred equity position.
How sponsors that used to be ethical start tweaking deals to their benefit over time.
How to reach out to Mike online and learn more about his funds.
“We invest into other funds and syndications in individual deals.” — Mike Zlotnik [0:15:29]
“Hotels are sitting empty and they are sitting in great residential neighborhoods and the cities are struggling with not enough affordable housing. It’s a no brainer.” — Mike Zlotnik [0:17:10]
“If they put pressure on the banks, the foreclosures will continue. If they don’t put pressure on the banks, the banks will continue to keep these deals in forbearance for long enough.” — Mike Zlotnik [0:24:26]
“Start with understanding what your investors are looking for.” — Mike Zlotnik [0:38:27]
Links Mentioned in Today’s Episode:
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