Real Estate Underground

Patience Is Profit: Finding Great Deals in Today’s Real Estate Market with Mike Zlotnik

• Ed Mathews • Season 4 • Episode 177

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Speaker 1:

you have to look for a great deal. If you're not getting a great deal, don't transact. Sit and wait and be more patient. If anything we learn from the days of 21 and 22, patience is a virtue.

Speaker 2:

So the big question is this how do real estate investors who don't have a ton of free time, don't have access to off-market deals and didn't start life on third base, how do we conservatively grow our real estate business to support our families, finally leave the corporate rat race and build a legacy? That is the question. In this podcast, we'll give you the answers. I'm Ed Matthews and this is Real Estate Underground. Greetings and salutations. Real Estate Undergrounders. It is Ed Matthews with the Real Estate Underground. Thank you is Ed Matthews with the Real Estate Underground. Thank you so much for joining us today.

Speaker 2:

I'd like to thank you all for all of your follows and your comments and your texts to the show. Keep them coming, because that really helps us. It helps us grow and it gives me direction on the types of subjects and guests that you're looking for. So keep that stuff coming and thank you again. Today I have Mike Zlotnick, big Mike from Tempo, family Funds and Syndications. Mike and I were just talking about our kids and having high-end athletes for children, and what that means is we no longer have our own weekends, but we can talk about that later, mike thanks. Thanks for joining us. Welcome to the show. Thank you so much for having me, absolutely so for those folks who haven't discovered you yet, why don't you tell us a little bit about you and Tempo family?

Speaker 1:

Sure. So I live in Brooklyn, New York, with four monkeys and a cat for human monkeys and my wife, and so we have four kids and a real cat. I'm a real estate junkie. I just love real estate. I'm passionate about this. I actually spent 15 years as a technology executive and then I discovered 2000 Real Estate. I invested passively for nine years and then became a full-time real estate professional fund manager in 2009. Look back, it's my genius zone. I love it. So I'm very passionate about real estate. We focus heavily today on commercial real estate deals. I know you do a lot of multifamily, so we do a lot of multifamily. We love that asset class, but we do also other strategies open-air shopping, industrial storage. We're also lenders. We have some niche strategies. Commercial real estate is what we day in and day out, and that's it.

Speaker 2:

Awesome, yeah. When I discovered you on LinkedIn, it was particularly interesting. It was the blend of asset classes that you pay attention to. Obviously, these days, especially living here in the Northeast not a lot of really good deals that you see out on CoStar or elsewhere that they really pencil. There are pocket deals that I see that are getting close. For instance, at Clark Street we haven't bought a deal in over a year and I don't know what that says. I think that says that we're really picky, but it may say something else, who knows. I'm curious about what you're seeing in the marketplace in the asset classes that you follow.

Speaker 1:

Yeah. So appreciate the clarity and respect your patience and not transacting or trying to transact for the sake of transacting. We have the same way. It's not about the volume, it's not about the quantity, it's about the quality. So today we're looking for deep value deals or no deals. We either are a lender, which we continue to do, or we got to get into a very predictable or very deep value deal. So what does it mean? This year we only did one deal in multifamily. We're a little different from the traditional operators. We're actually capital partner that's the best way to describe it. We marry money and opportunity. We are not direct operators. So what that means is we seek these jockeys, these people who run these horses, these deals, jockey ahead of the horse. We basically seek guys and girls like you who are deep specialists in your strategy, vertical integration, whatever market. You know what's a great deal in your market, how to get it, how to market.

Speaker 1:

It's hard to find great deals, but they exist. The industry is most certainly significantly impacted by the higher, for longer, interest rates. All other things being equal, there's financial pressure on many owners. They financed with floating rate debt, they had rate caps expire, they had a maturity clip, whatever you want to call it. Yeah, there's a motivation. So if there's motivation, there are deals. Now they're not happening in great value. Everybody's holding on, surviving until 25, surviving until 26. People are just holding on. If they can hold on, they think miracles are going to happen. Maybe they will, maybe they won't.

Speaker 1:

Nonetheless, when you're transacting today, you got to see a great deal in my book, or no deal, that's it. That's the philosophy. Then you go into underwriting and you got to look at the different metrics. I'm happy to give you some details of what's a great deal to us today. What's your buy box look like today? So I'll give you some very specific metrics.

Speaker 1:

Some people are going to look at me like I'm insane and then I hear this all day long People buy. I had a conversation. We just looked at a deal in Tampa. That's trading. Let's call it mid-fives cap rate. Nothing special, nothing exciting. You have almost no spread between the cap rate and the mortgage rate. Those are not great deals. There may be interesting deals if you believe in the market growth over the next five years. All that stuff. Deep value deal to me today is what we did in early part of the year, in Q1. 9% cap rate on purchase near Ann Arbor, michigan, 7% financing. It's a floating rate but it's fixed for three years. Basically, you have 200 basis points or 2% positive spread between the cap rate you're buying and then the cost of financing. That's a margin of safety. Going back to Warren Buffett, charlie or Benjamin Graham right, you want a margin of safety, 200 basis points. I think 1.5% would be minimal, 2% or better you're doing pretty good, we do the exact same thing.

Speaker 2:

That's our first metric.

Speaker 1:

Number two right, I go relative to reconstruction cost. So people talk to me development all day long. I look at the development. I say I can't get a discount on it. I can't get a discount on it. I can't get a deep value. It's cost to build, what it costs to build. Maybe construction costs could be a little down, with labor being a little softer. You could argue that, but you can't really fundamentally do it cheaper. So on an existing, you can get a steep discount to reconstruction cost. In that example, we bought at 79,000 a door. Reconstruction cost is about 200 a door. Then you have to discount for the condition and age.

Speaker 1:

I go look back at the peak of the market. How much of a discount are we getting today of the 2022 pricing? Why? Because it's a metric, it's a comparison. What I do know is that the markets have generally adjusted between 20% and 40%. Anecdotally and mathematically, 20 to 40% is the right range On that particular asset. That thing traded at 125 a door. We bought 79 a door. It's about 35% off right, one of the challenges I don't really know exactly what the market is today. Transaction volume is low and cops are minimal. So to get it, I want to get a discount on the basis, but I can't always establish the market. So I want to get a discount on the as-is basis, but I can't always establish the market so I can compare to what I traded at and then feel pretty good about that discount. These are just three really important metrics, the different metrics.

Speaker 1:

Of course, on top of this can you add value through energy efficient improvements and get some utility company reimbursements. Can you do, obviously, your standard unit renovations. And what is your average rent today On that property? Every rent is $1,150 a door. What's the market? And then you could argue and you got to look at the comps. But you got to have a pretty decent step up from there. This is the classic underwriting model. You still go back and you push rents. How much we like to look at affordability Like this is suburbs of Detroit, it's fairly affordable. Now if you go to some other markets, affordability is on the edge. And then you could still argue you could charge $1,500 a door. But what happens with affordability? Can people actually pay $1,500 in that area for these apartments, for this type of a product? But the first three are the most important ones.

Speaker 2:

Indeed, I couldn't agree more. Yeah, I learned this from a friend of mine I met on Twitter. We used to be a little more aggressive when the market was ascending. Looking back on it, it worked out, but it was pretty risky. We would go as low as 1.5. And I was talking to that friend and he was like what are you doing? You should be at minimum. He was saying 1.9, and preferably 2.0 in terms of spread between cap and your debt cost, and I started doing the math and thought, yeah, I got to stop being a little bit of a cowboy.

Speaker 1:

I just look at a self-storage deal and I know your audience is mostly multifamily. But I look at a self-storage deal in Houston Class A properties and they're buying them at 5 cap and financing 5.75 cap. Thank you, have a nice day. You have to look for a great deal. If you're not getting a great deal, don't transact. Sit and wait and be more patient. If anything, we'll learn from the days of 21 and 22. Patience is a virtue.

Speaker 2:

Couldn't agree more. It's us old guys that are going to be. We're going to survive this. So talk to me about the other asset classes. You mentioned self-storage. I'm not invested in any deals that had a general or limited partner basis, but it's always been intriguing to me because you look at like traditional multifamily performance year over year is, depending on who you talk to, right around 13%, and I'm going back decades. Right when you look at self-storage, that average is around% and for me that's really attractive. And then a friend of mine, brian Tully, has gotten me really interested in flex industrial and those returns are pretty attractive as well. I'm just curious, from your perspective, those other asset classes, is that where your focus is now, or are you more of a? I'm going to take what the market gives me and evaluate it one by one.

Speaker 1:

Yeah, these are great questions. Let me start because we're marrying money and opportunity. We are capital partners, we are flexible, so we are opportunistic. Number one. Number two we're not big fans of storage because the cap rates are still low. I've looked for years with storage. We still have some old positions many years ago, but beyond that I can't find a great deal of storage today because the cap rates are too low. Where we are finding really interesting opportunities in industrial, there's a flex industrial and there's also a single tenant, triple net industrial. We love those type of deals. The entire underwriting comes down to underwriting of a tenant. You have a 20, 25-year lease. You have a high-credit, quality tenant. You have triple net, absolute triple net. You have annual 2% to 3% annual rent escalation clauses and I compare it to multi and I say what's the average around the country? Rent escalation clause, non-escalation clause, it's the average annual increase. Right, you try 2% to 4%, but in general 2% to 3% is about what the US.

Speaker 2:

It's a good solid core holding right.

Speaker 1:

Exactly In industrial. 2% to 3% is absolute addition to NOI. There's no additional cost. The roof goes, the parking lot goes, the fence goes, insurance is up, it's all triple net, it's all paid by the tenant. That's why we like industrial. We're looking at industrial now because it's so predictable.

Speaker 1:

We also love open-air shopping. It's been a huge contrarian play years ago. We are on that eighth deal in that strategy and I can tell you every single one of them has done well. Multifamily has done the rollercoaster thing through the peak of 22. Open-air shopping has been no supply. Multifamily got overbuilt in many markets. In open-air shopping there's been fear of building Amazon, in fact, and you have very limited supply. So we've seen pretty significant rent growth, healthy. Most of those deals have been financed with long-term debt. Today really like open-air shopping if you can get a deep value and they traded much higher cap rates. So you're talking about industrial deals. We're looking at between 8 and 9 cap rates.

Speaker 1:

Open-air shopping. We just did a deal in San Diego, downtown San Diego, purchased at 9.25 cap One purchase with 84% occupancy and financed with 6.5% fixed rate for 10 years. Prepayment penalty burns off after 5. So you're locked in into a very strong spread. You have a lease up on that property. It was a very motivated seller situation. That's a great deal. And then you have essentially Starbucks ADVs Cheesecake Factory.

Speaker 1:

The difference between Industrial open-air shopping, multi and storage is this Industrial and retail open-air shopping, long leases, predictable long leases. Right, you go multi, typically one year. Sometimes you have a two-year lease, but typically it's a one-year lease. Storage is month to month. When times are good, you push up your rents. When times are not good, you have a problem Storage wars. If you oversupply the market boy, that's a big problem for the storage industry. So that's a layer of land of some of these strategies.

Speaker 1:

We do a bunch of other things. We do recreational land. Literally, we loan money on people who buy land recreational and then they sell it or sell a finance on their website for guys and girls to run their dirt bike or shoot their guns. It's funny how it works, but we do that. We do a number of other things. I'm not saying there's any right strategy or wrong, but it changes and if we seek better opportunity in a given market, a given strategy, we can consider what we love about multifamily.

Speaker 1:

Now it's deeply discounted. We just got to find the right jockey and the right great horse and we're happy to write a check. I mean, from that perspective it's a game of patience. And the other really big benefit to multifamily what I love today bonus depreciation is back 100%. It costs sex way better than industrial. It costs sex way better than open area and the only thing that's better is mobile home parks. They say that you could basically the whole thing. There's no foundation walls. You could cost seg better. So multifamily is still a great buy today. It's just got to find a deal.

Speaker 2:

Yeah, no, it's exactly why the government put it back in place, because the multifamily market has cooled so significantly due to the interest rates. It's also probably why the president is pounding on the Fed right now to drop rates, because that and home building is a gas engine for the overall economy Supply problem.

Speaker 1:

We can talk for two hours, but I'll give you a very quick economic theory. Right, when you hike interest rates, you kill demand, but the problem is you kill supply too, and to incentivize supply you need lower cost of financing.

Speaker 2:

And we're already at a deficit because 2008, 9, 10 took out the general contractor class, basically halved it and those people most of them didn't come back. And there are a whole lot of people who used to build apartment buildings and housing single-family houses who now own Starbucks and are real estate investors instead and buy land and don't develop. It's literally in our town, the biggest, probably one of the biggest in the state builders. He hasn't built a house in 10 years.

Speaker 1:

You need low interest rates, obviously close to financing. You've got to give them some tax incentives and other incentives. Northeast has been interesting If you actually look at historic data and I looked upstate New York and I have some family upstate New York girlfriends have been super healthy in Midwest and Northeast for the reasons of limited supply. People are building Florida, they're building Texas, they build places where it was attractive to build. Here we have very limited supply.

Speaker 2:

Yeah, and that makes sense because the population in that Sunbelt to Texas, out to Arizona, that population has exploded.

Speaker 1:

Affordability is another big issue when affordability gets out of control.

Speaker 2:

Yeah, so storage, open air multifamily, obviously. What other asset classes are intriguing to you?

Speaker 1:

I'm not a big fan. I'll just tell you what this is a whole theory. But I really have a box and a don't buy box, so my buy box is really no new construction in general. But we're talking about being a bridge lender. We've done some bridge lending with a cross collateral, additional collateral. I don't mind being a lender, let them build and if they put up with collateral and they have a problem, okay, we have collateral.

Speaker 1:

Hospitality not a huge fan, although it's done relatively well. In the post-COVID world. I am concerned sooner or later we will get into a recession cycle and hospitality might just slow down. Right, I'm not a big fan of what is operating business masked as real estate People talk about. They love Airbnb hospitality. It is an operating business. It's real estate, but it's operating business.

Speaker 1:

Then you go into people talk about senior living or independent living or full care, senior living facilities, heavily operating business. I don't know the business. It depends very much not on real estate but on ability to operate. Storage is a little bit of that operating business. It's real estate but it's also heavily operating. That's why I'm not crazy about storage and the cap rates are too damn low to make it interesting. Office don't really like office for the fundamental problems. Right, people redevelop, they try to redevelop, but it's hard, from what I talk to redeveloping an office building into anything else and again develop and redevelop and I would rather stay out of it. So what I know is a buy box deep value, multifamily deep value, open-end shopping, industrial and debt mass debt recovery, debt on existing multifamily assets. So from that perspective, give me a good project. If you need some liquidity and we can come in the right position, we'll look at that.

Speaker 2:

Yeah, right on. So it's interesting, right. You're clearly out ahead of progress, right? Because manufacturing, for instance, is moving pretty rapidly back into the US. At least components of it is ripe for that.

Speaker 1:

There's additional incentives for domestic manufacturing will continue to be, and that's what we love, especially industrial manufacturing, not industrial distribution. Data centers Data centers are beyond cool, but it's a hot trend and they cost a fortune to build, and AI is growing at a rapid pace. The problem is you need to build brand new. It's built to suit, it's very expensive and people are dumping money and we can't even compete on the scale they're building. We are a tiny fish in a humongous pond, so we try to play in the opportunities where we can actually be a reasonable size player and avoid these $500 million projects.

Speaker 2:

Yeah, played because you can't compete. There's just there Our asset. Net asset value is their rounding error, exactly. So, in terms of the deals that you're seeing coming across your desk, is it? If I'm hearing you right, it's a lot of retail open air and a lot of industrial and a whole lot less of the other asset classes right now?

Speaker 1:

Yes, what we are is again we are a capital partner. We have strong relationships, opportunities. So people talk I got to go through a thousand deals to select five. We don't look at a hundred deals to select five. We look at 10 to select five. And the reason it's like this is because we get pre-screened deals that are either close to being under contract.

Speaker 1:

So what we see is we maintain open communications with our closed relationship partners and we try to understand what's coming up and in some cases we even use this technique. This is a very powerful and very simple technique. Some folks already funded closed deals but they need liquidity for the next deal. We will come back and we'll look at the existing deal that they recently funded and closed and say okay, we'll step in, we'll buy out your position or a portion of the position if we like the deal. So we are opportunistic. We're not trying to nickel and dime and come up with crazy discounted offer, but if they got into a great deal from the start, this backfill concept I really love it.

Speaker 1:

As an investor, you don't have to fund a new deal. You could pick up a recently closed deal. You can analyze, you could see how it's doing and if it's doing well and somebody needs liquidity. You could do it that way. So it's not a heavy volume. But we are talking to a lot of our relationship partner sponsors and trying to understand what they have coming up, and these discussions are what I would say. Very recently, things have gotten a little bit last volume wise. In other words, people are not seeing the one big beautiful bill pass. Depreciation is back, people expecting interest rates, maybe a little more bidding activity, but we're sitting waiting for these strong deals and if they don't happen, it's okay.

Speaker 2:

Yeah, it's going to be fine Because there are other asset classes, and I wholeheartedly agree with your approach. Okay, so let's get into the lightning round the final five. I'm curious about leaders like you who have done very well and, from a financial perspective, things are taken care of right. You're not struggling to pay your mortgage, if you even have one. Car payments are either handled or non-existent. Car payments are either handled or non-existent. The kids' college educations are either they're lining up to get major scholarships, like your kids, or professional athletes, like your kids, or there's a college fund sitting there waiting for them to utilize, and you get out of bed on Monday morning and you go charging headfirst into your office, and so to me, that's purpose, and so I'm curious what?

Speaker 1:

gets you out of bed on Monday morning. So I have a whole simple theory. I just like to operate in the genius zone. I love what I do, so to me, it's not work. And what is genius zone? It's something you're good at, something you really love and something that makes you money. It's that simple. I spent 15 years in technology and I was making very good money. I was very good at this, but I wasn't motivated. I love real estate. I'm a deal junkie. I love looking at deals. I'm a chess master. So to me, all this analysis is just fun, right. I don't know what else I would do. I'd go bored, right. That's what gets me out of bed. I just enjoy what I do. I don't it. It's almost like some people are motivated by a huge payday. It's almost like this it's 40X, the book for disciplines of execution you put in the inputs, the outputs will work out. So I just love getting the deals done, putting it into the right framework, and then magic happens years down the road.

Speaker 2:

Yeah, I think if you do a lot of the right things in terms of your due diligence, in terms of picking the right partners and all your process, the money follows right. It's not a matter of getting out of bed and saying, okay, I'm going to make a million dollars this quarter. It's not a matter of getting out of bed and saying, okay, I'm going to make a million dollars this quarter. It's I'm going to go do three deals that need this criteria and when I find them and I will find them when I find them we're going to attack. I'm also curious about the mentors you've had along the way. You and I actually have very similar backgrounds as recovering technologists, so I'm curious about the mentors you've had over the years and what's the best advice you've ever?

Speaker 1:

received and who gave it to you? Yeah, it's a great question. And a lot of my mentors I call them book offers, right. So I read a lot of books and I actually listen to a lot of books. So I love Howard Marks, market Cycles, obviously, warren Buffett, benjamin Graham, ray Daly a huge fan right, follow a lot of his theories. And I do have some old friends from technology world that were sort of mentors. I literally reconnected one of them out of Austin. There's been so many conversations and advice given. I don't have a single one that's been so transformational. It's just more of.

Speaker 1:

I think the biggest thing that I've learned from all my mentors is a learner's mindset. By far what I can tell you is being humble. Humility and a learner's mindset will get you through everything in life. Indeed and honestly, one of my favorite books is John Maxwell. Sometimes you Win, sometimes you Learn Right. So just constantly. Back to chess. I literally am writing a new book right now. Part of the one of the chapters in the book, one of the descriptions that I'm talking about investing is like chess you learn in investing like you learn in chess. How do you do that? I'm a chess master. I spent years practicing. I analyze my own games and games of the world-leading chess players. You look at what they did, how they did it and understand the purpose, and you understand the errors and your own errors. Same thing happens in investing. We're not perfect. We're going to make mistakes and as long as I learn my lesson, I am happy.

Speaker 2:

Couldn't agree more. And that actually leads me to my next question, because I agree that we learn far more from our mistakes than we do from our successes, and so I'm curious about a professional decision you've made over the years that you look back now and go, wow, I'd love to have that back, and what'd you do about it?

Speaker 1:

Because of my humility, I am not proud of this, but we did a bunch of deals in 21, 22. It is what it is, and these were multifamily deals. I go back and I had a conversation with my investors who yelled at me literally, just said Mike, you're such a smart guy but you're also such an idiot. Why didn't you see these interest rates rising so fast? And I humbly acknowledged I should have thought better. I should have really thought about this. I said, listen, the Fed kept Zerb their interest rate policy for almost 20 years. The biggest hike they did from zero to about two and a half in whatever 18, 19. And then they pushed it right back down.

Speaker 1:

If you look at the president, it was difficult to see market changing that much. It wasn't just me, it was the entire market who misunderstood, misread Me too. At the same time, I know people who sat on their hands in 21, 22, and did nothing. And because they were selling deals, they were clearing out, they were liquidating. So I bowed to them they're the wise men and I'm that idiot. There's an expression fools learn from their own mistakes and the wise men learn from the mistakes of fools. So I'm the fool who now is learning from my own mistakes 21, 22,.

Speaker 1:

We did do the deals and we're fighting now to make sure these deals hang in there. Not everything will survive. I'm completely unhappy about some of those situations, but we are persevering. We're talking to our investors. We're very open, transparent about it. All we can do is do it with complete openness and transparency. But is it a mistake? Looking back now, hindsight, sure it was a mistake. What did I learn? I didn't quite study enough of market cycles. So after that I read Howard Marks Mastering the Market Cycle and tried to understand that there are cycles and you better understand where you are in the cycle.

Speaker 2:

Yeah, I think that we can all understand that mentality in terms of what you saw versus what happened. No one has a crystal ball and I certainly didn't see interest rates rising as fast in as short a time as actually happened.

Speaker 1:

I have a good phrase for it. I like the movie Fast and Furious. So the fat hike. Fast and Furious, it's not just the absolute five and a quarter percent, it's the speed it's going from zero to that level. You went up 40 and Furious. It's not just the absolute five and a quarter percent, it's the speed it's going from zero to that level. You went up 40, 50x. That's the crazy part.

Speaker 2:

Yeah, it's nuts. You mentioned several books during the conversation.

Speaker 1:

I'm curious about who you're reading now, who you're paying attention to, so I am reading for the third time now, Ray Dalio's how the Countries Go Broke. Obviously, I've reread Principles and many things go back and reread. So what I do with books is this I don't consume volume of books. I sometimes will go again and again until really it sinks in. As I was listening to one of Ray Dalio's, it sunk to me one of his principles If you're not worrying, you should be, and if you're worrying, you should be, and if you're worrying, you shouldn't. Some of these concepts are if you're paying attention to something and you're studying it and you're preparing, you're probably okay, and if you are completely complacent and ignoring it, you're not really understanding risks. That book, Michael Dell's Win and Play Nice, something like this. It's a recent book.

Speaker 1:

Periodically I'm coming back to Howard Marks and really trying to spend more time understanding risk. Risk is the most difficult thing to understand, so not only before but often after. Right, you do a deal and then it works out or it doesn't work out and if you judge based on the results, maybe you didn't see the risks. You still don't know what it should have been. But it's a mix of books. I love a couple of other books I'll mention. This is a good recreational book, but it's also about the wisest investors of the world Richer, wiser, happier. That's a great book. It actually studies people like Charlie Munger and some other greatest investors in the world. There's a whole audible library that I go through. I'll go listen to three, Because I've listened to this book so many times. I will go back and listen to one or two chapters and then switch to another one. You could continue to learn a lot, but I do watch old movies again and again as a joke to see if anything different is going to happen.

Speaker 2:

It's interesting I have my favorite books that I read every year. I also have my favorite books that I read every year. I also have my favorite movies that I see whenever they come on, and in both cases I always see something new. Even if I've read the book three times, I always find something new. And likewise in a movie. If I'm paying attention and it's not just background you always pick up on something right.

Speaker 1:

Yeah, so the movies are purely entertaining because it's visual, Books and all. I consume content way better listening than reading. So people love reading and like certain data and charts. Yeah, You're better better visual, but concepts audible.

Speaker 2:

Yeah, and actually I cheat. I have the audible playing in whisper mode and I read it on my Kindle. So I'm a very active reader because I'm a rather slow reader. So I tend to be more active and I take notes and highlight.

Speaker 1:

And, yeah, there are several books I read every January, no matter what I think one thing that's completely wrong about our educational process is different people learn differently, yeah, and if you know what works for you and same thing for the kids, sometimes they just tell them this is how you got to learn, but not every kid learns the same way. This is really important Now, in the age of AI. I think there's going to be a lot of learning without some of the old doctrine and more of some of these AI systems.

Speaker 2:

It's another discussion simply having conversations with chat GPT and Claude. I need you to teach me Python as if I'm a total and complete beginner. Let's start and I've been having chat GPT, I'll have chat GPT, teach it, and then I'll apply it in Claude and see if I learned it. And then I'll go back and forth and it's yeah, if I'm not careful I'm going to get sucked back into the technology world. But I'm not going to allow that to happen. It's more automation first stuff here that we pay a lot of money.

Speaker 1:

You're doing it for fun.

Speaker 2:

It started as fun and now it's. I'm starting to see where we can automate our business, so it's spurring us to solve bottlenecks in our business with this type of technology instead of throwing human being at it, which is what we used to do. And yeah, so far, so good, so still early.

Speaker 1:

My only feedback would be you're a leader of your business and it's another great book, so this is very important. So, as a leader of the business, you have to really think about leadership and CEO. Absolutely, trey Taylor. A CEO does only three things People, culture, numbers. That's another great book. So whenever you have an inclination to go back to programming, I would say find a kid, I'm doing the PRD.

Speaker 2:

and then I'm handing it off a project to a member of our team that she's building the Excel prototype before we build the software. But yeah, no, I'm not the one programming building the Excel prototype before we build the software. But yeah, no, I'm not the one programming. I just want to know enough so that when I have that conversation with the kid in India or wherever he is, that he's not snowing me and I can figure out that he knows exactly what he's talking about. That's really where I want to get.

Speaker 1:

That's your learning for the sake of being able to be on the intelligent level rather than the baloney story.

Speaker 2:

And instead of watching Netflix after dinner, I'm doing this right. So, in terms of how you operate, I'm curious how you define success in your life.

Speaker 1:

It's tough to be. Some people measure net worth, some people measure I don't know how much good you've done. I've never been an exact fan of these precise measurements. I've grown up around the family, so to me I just want to see happy, successful kids. At least this is a priority to me. Of course I want to do good to whatever degree I can, but they say charity starts at home. Sometimes you really have to make sure your kids are. So to me, for kids, I'm just making sure they're good kids, they're successful, they're enjoying, they're productive. I never curse, almost never curse. If I hear any like, one of the kids will start sleeping something. I tell them listen, do you hear mom and dad curse? I said people curse all the time, and so I don't know if this is a definition of success, but it's just like my first duty as a parent to make sure the kids are good and successful.

Speaker 1:

I don't measure success purely in financial terms. Once you feel you're financially independent or happy, it's just a score right. It's all about operating. My success is operation in the genius zone. If I feel like I'm operating in the genius zone, I feel great. This is it, this is the winning, this is success. Can I help other people. While I'm doing this, can I be happy, Can I be productive, the team of people around me I always think about people, culture, numbers. Can I impact and influence other people in a positive manner and make a positive difference in their life? And if I'm doing this, I feel satisfaction. I'm doing this. I feel satisfaction Like I'm really coaching other people, helping them and they're successful, and it's giving me satisfaction. I feel that's a positive difference I'm making.

Speaker 2:

Couldn't agree more Exactly. All right, Mike, what do you enjoy doing I?

Speaker 1:

walk a lot. I like, I'm like. I walk like a madman. Every day I literally have a meeting booked every day to go for a walk a specific hour. Walking is the best exercise by far. My wife says go to the gym, I get very bored. I don't go to the gym, I literally walk. I can walk for an hour and a half, can even sometimes more. And the beauty about walking you can listen to books while you're doing this. You can listen to a podcast, you can do a lot of other things. So walking is I like it. I steal from time to time, go back and play some chess on chesscom and we travel quite a bit. My third girl is a professional figure skater on a synchronized figure skating team and I'm on the road competitions trainings. So we spend time basically being in her life and other kids they also. They have their own stuff. So I don't know what else to say. There isn't that much time left after you get involved with all that.

Speaker 2:

It's funny. My aunt and uncle decided not to have kids and I was having a conversation with him at some point. And what are your hobbies? And I said see those two little girls running around your backyard. Those are my hobbies. They consume every free moment of my life and as they get older, less and less, which is how I'm happy for them, a little sad for me and my wife. And the other thing I couldn't agree more with. My wife always says I don't care. And she does care, but she goes I don't care about your grades, I care that you're a good kid. And that's when we go to her high school and ask how she doing. What we want to hear back is she's a great kid. Yep, she got a B plus. That's fine. She doesn't have to be a straight A student, as long as she's a good human being. So, mike, if folks want to learn more about you or Big Mike, your podcast or Tempo family, what's the best way to get in touch?

Speaker 1:

Now it's going to get super easy and super cheesy. So, BigMikeFfundcom, just like it sounds. If you misspell it and you forget the D at the end, you go to bigmikefundcom. I promise it's not a kinky site, it's a podcast site. It's an entry point. It's not on our corporate website but once you go there you can go to the corporate website and you can look at our deals. But because of the podcast, bigmikefundcom, it's a good entry point, easy to remember.

Speaker 2:

All right, Mike. Thank you so much for your time today. It truly was a pleasure to have this conversation. I'm glad we met and I wish you continued success. Thank you, this has been the Real Estate Underground. Don't forget to rate, review and subscribe. It helps us grow. Until next time, undergrounders, remember, your real estate journey begins with a simple step forward. Now get to it. Bye for now.

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Ed Mathews - Clark St Capital

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