Decoding Real Estate Market Cycles with Mike Zlotnik
Join Jake & Gino as they interview Mike Zlotnik, CEO of TF Management Group and a former mathematician and technology expert, who brings a unique, unemotional, and data-driven perspective to real estate investing.
Mike shares his compelling personal journey of growing up in the former Soviet Union and immigrating to the U.S., offering a vital perspective on the dangers of socialism and communism as these terms resurface in modern politics.
He also unveils his “three rules” for finding and underwriting great deals in the current volatile market, explaining how he targets positive spreads and deep discounts on construction costs.
🔑 Key Takeaways:
✅ The Three Rules for “Great Deals”: Today, Mike focuses on deals that offer: âžœ A 2% positive spread between the cap rate and the financing interest rate. âžœ A 50% or better discount to the reconstruction cost (targeting existing builds). âžœ A 20% to 40% discount off the peak market price.
✅ Socialism vs. Capitalism: Having lived in the former Soviet Union, Mike provides a stark warning against socialism, viewing it as a system that ultimately leads to corruption, empty shelves, and a loss of freedom. He stresses that while concepts to help the needy are valid, the system itself is flawed.
✅ The Fed’s Flawed Approach: Mike agrees that the Fed is “always late” and operates with a flawed model, reacting to old data rather than driving decisions with a forward outlook. He suggests their delayed and aggressive rate hikes “shocked the system” and were potentially political.
✅ The Investment Opportunity: The confluence of a complacent stock market (heavy in the MAG 7) and a beaten-up commercial real estate market creates phenomenal risk-adjusted opportunities for buyers who can find motivated sellers and “buy right”. Question for the Audience: Mike describes a real-life $79k/door deal with a 9-cap and 7% financing. What is the single most important action you are taking right now to position yourself to find and close deals with this kind of massive dislocation?
Chapters:
0:00 Ray Dalio on the AI Boom & S&P 500 Concentration
0:32 Introducing Mike Zlotnik: Mathematician and CEO of TF Management Group
0:56 From Soviet Union and Chess Master to Real Estate
1:38 The Passion for Predictability in Real Estate
2:40 Mike’s “Three Rules” for Finding Great Deals Today
4:57 The Personal Cost of Communism and Why Mike Left
6:38 Socialism, Central Planning, and the American System
9:02 Thoughts on NYC’s Crime and “Public Grocery Stores”
10:48 The Danger of Price Controls and the Free Market
12:12 Investing in Politically Charged Markets Like New York City
14:39 Mike’s Strategy Shift: Post-GFC Lending to Current Cycles
16:16 AI, Deflation, and Why Interest Rates Will Drop
17:28 Why Deals Are Not Transacting: Scarred Capital and Stuck Equity
19:58 Why Sellers Aren’t Dropping Prices (The “Extend and Pretend” Game)
22:04 Is the Fed Controlling Commercial Real Estate (Late to the Party)?
24:08 Central Banking as a Flawed Central Planning Mechanism
25:01 Should Investors Move Stock/Crypto Gains into Real Estate?
27:21 Commercial Real Estate vs. Complacent Stock Market
29:21 Underwriting a “Life-Changing” Deal: Ann Arbor, MI Case Study
31:21 Finding Added Value: Utility Reimbursements and Tax Strategies
32:38 The Power of Selective Investing: “Kiss a Lot of Frogs”
34:36 Final Thoughts: Incentives and the American Dream
We’re here to help create multifamily entrepreneurs… Here’s how:
Brand New?
Download your complimentary copy of our best-selling book on Multifamily Investing: https://jakeandgino.mykajabi.com/WBP_PDF
Want To Get Into Multifamily Real Estate Or Scale Your Current Portfolio Faster? Apply to join our PREMIER MULTIFAMILY INVESTING COMMUNITY & MENTORSHIP PROGRAM. (*Note: Our community is not for beginner investors) 👉 https://jakeandgino.com/apply