Episode Transcript
[00:00:00] Speaker A: Foreign.
[00:00:07] Speaker B: Excited to have Mike Zucker, founder and managing partner of Peak Properties, on with us. Mike, thanks. Thanks for doing it. Welcome to the podcast.
[00:00:15] Speaker A: Appreciate it. As everyone says on all the podcasts I listen to, thanks for having me. It's a pleasure being here. I need someone to come up with something more original, but I guess that'll work for now.
[00:00:26] Speaker B: Yeah. Mike is one of the true hustlers of the Chicago real estate community of the most knowledgeable and connected figures. I've known him for over a decade. He founded Peak Properties. Peak is a Chicago based real estate management company offering best in class, multifamily and commercial property management, investment and consulting services.
Started in the basement of an apartment building on the north side of the city in 1998.
[00:00:52] Speaker A: That is true.
[00:00:52] Speaker B: Which means you're old now. Officially. Officially, Mike's leadership at Peak has involved management, development, rehab, build out of over 75,000 apartment units, 5 million square feet of commercial, and currently manages over $3 billion worth of total property values.
[00:01:10] Speaker A: That is correct.
[00:01:11] Speaker B: That is a lot.
[00:01:12] Speaker A: That is a lot.
[00:01:13] Speaker B: Day to day, Mike is focused on strategic growth, guidance, mentorship, consulting, and loves kicking the bricks of every property, meeting residents, vendors, clients, and Peak team members in the field. Which is also correct. I know firsthand that is correct.
[00:01:29] Speaker A: And I would say kicking the bricks is one of the most important parts of the job for me.
[00:01:34] Speaker B: It's one of the funnest parts of the job too. You're not a house cat. You gotta be out and about. All right, so we're starting with rapid fire questions.
[00:01:41] Speaker A: Shoot. I don't know if I'll have rapid fire answers. I'll do the best I can.
[00:01:45] Speaker B: What did you listen to on the way here?
[00:01:48] Speaker A: Msnbc.
[00:01:49] Speaker B: Okay.
[00:01:50] Speaker A: Oh, I take that back. Not msnbc, cnbc. Msnbc, I think is the one, is the crazy one. So go ahead and ask that question. Ask that question again.
[00:02:00] Speaker B: What'd you listen to on the way here?
[00:02:02] Speaker A: I was listening to CNBC to hear about the markets and the comments because Drone PA was being interviewed and gave a speech today. So I want to get kind of a feel for what they were talking about. And even though he put something out saying there would probably be no rate cuts for the year, there was a guest on who, I'm forgetting their name, that said that they still anticipate there to be four rate cuts. So that was just something that I was interested in listening to.
[00:02:30] Speaker B: It's a sign of the times lately. It's like, you know, used to be able to be pretty well informed and kind of have a feel of where we're going in the future. And now it's. Everybody is just nobody knows. We're all guessing. It's so dynamic and it's so quickly changing.
[00:02:44] Speaker A: Yeah, it's a big wait, hurry up and wait type of environment right now. If someone's finding the right opportunity, they're taking advantage of it. If not, I had a couple emails today where I just said, I'm just going to sit and wait and see how things play out.
[00:02:58] Speaker B: All right, well, favorite Chicago coffee shop.
[00:03:02] Speaker A: Dunkin Donuts through and through. I know that. I know I have had coffee at just about every coffee shop in the city, but I could tell you that there's a Dunkin Donuts literally two blocks away from my house. So I start every morning at Dunkin Donuts and I know every single employee there and I give them the best holiday bonuses you could ever imagine. So they're very good to me and I'm very good to them.
[00:03:29] Speaker B: All right.
[00:03:30] Speaker A: Probably not the answer. You were pizza place.
[00:03:33] Speaker B: Don't say Domino's either.
[00:03:35] Speaker A: No, I will not say Domino's. Pete. I'm a huge pizza fan. We try everything. So I'm going to give you a whole list. I'm not a huge, huge stuffed pizza fan, but I enjoy Barnaby's, Lou Malnati's, Nick and Tony's Peace Pizza. And there's a new place that just opened that I want to try in the West Loop that's getting some rave reviews that came out of New York. Exactly, exactly. And I do enjoy Dave Portnoy's pizza reviews. I have tried them when I've been out east, like sometimes when we're traveling. Well, if we're going to order pizza, I go onto his website.
[00:04:16] Speaker B: I find those entertaining, too. Are you an early bird or a night owl?
[00:04:20] Speaker A: I am a little bit of both. As you get a little bit older, I'm staying. I'm going to bed a little bit early. But for example, this morning I was up around 5:00.
[00:04:28] Speaker B: Okay, best under the radar Chicago restaurant.
[00:04:33] Speaker A: Best under the radar Chicago restaurant.
So I so something that's fun. All my kids are foodies, so we go to a lot of fun lunch places and a lot of fun dinner places. As far as dinner under the radar, I love in the city, Erie Cafe. It's just something about it. I know it's not under the radar, but it's always a good pour. It's always good portions. You could always split something with someone. That's always really fun. A great under the radar tip, because I'm on the road is a place that I go to maybe once or twice every other month is Jung Bu at 3333 North Kimball. Scottie Pippen, Larry Bird, North Kimball.
It's with the big green sign and it's a Korean grocery store. But in the back they have a kitchen probably about the size of this office that we're in. It's probably about 15 by 20 with farm tables. And you can order soup, wings, dumplings, and it's a little bit of my escape. I sit in the corner at a farm table and I just check emails and have a great bowl of soup and I'm left alone.
[00:05:47] Speaker B: Adam Saffro goes there too. Right? New era.
[00:05:50] Speaker A: Exactly.
[00:05:52] Speaker B: What's a word that your colleagues would use to describe you? One word.
[00:05:55] Speaker A: Gritty.
[00:05:56] Speaker B: Yeah.
Favorite intersection of the city.
[00:06:02] Speaker A: Great question.
There are so many great intersections, but the first thing that came to my mind when we asked that, I will say North, Milwaukee, Damon.
[00:06:13] Speaker B: So we are three for four on that answer.
[00:06:15] Speaker A: Really?
[00:06:16] Speaker B: Yeah.
[00:06:16] Speaker A: That's really interesting.
[00:06:17] Speaker B: Which. Yeah, it's great. It's a quintessential Chicago corner. It's so energetic, it's lively.
Give us a second because I can tell you're still thinking about the time.
[00:06:27] Speaker A: I mean, I have so many intersections, but it's really funny. I mean, I love Division, Milwaukee and Ashland. I love. I mean, they're all. If you notice, what I'm saying is all six corners.
The Milwaukee and Irving intersection, Rush and Division intersection, Belmont. I mean, you can't. How could. How are people not saying the Cubs, I mean, Addison and Sheffield. But I just think it's. I just think when people think about intersections for some reason, Milwaukee, Damon and North, just. That doesn't surprise me that a lot of people say that.
[00:07:00] Speaker B: Cool.
All right, well, we weren't so rapid with our rapid fire, but that's a couple real estate guys. So now we're going to the regular answers to do your thing.
Tell us about growing up. How'd you get started in real estate?
[00:07:15] Speaker A: Great question. Standard question. All right, so I didn't want to say great question. So go ahead, ask the question.
[00:07:22] Speaker B: All right, Mike, tell us a little bit about growing up and how you got started in real estate.
[00:07:27] Speaker A: I grew up with a little bit of a non traditional background where I spent a lot of time in West Rogers park and Highland Park. I'm the youngest of three kids. My brother and sister are 16 and 18 years older than me. Let's just say I'm lucky to have graduated college. I'm lucky to have had great friends who steered me in the right direction, because I could have easily gone in the wrong direction. My mom, unfortunately passed away when I was young and my dad was not around, so I spent a lot of time with my sister in West Rogers park, and we had a small little home in Highland Park. And when I graduated school, I had multiple jobs from waiting tables at Bubb City, where I have a great story about Rich Melman. I delivered kitchen cabinets. And a cousin of mine who lived in Wilmette said he had someone who was renting apartments and needed a rental agent. And is that something that I would be interested in? So I rented apartments on Saturdays and Sundays for Frank Mitrick at Realtek Realty. His daughter's Lauren Mittrick. She's a big broker at Compass, and he's affiliated with Compass. And then my sister happened to have been married to a guy who was in the property management industry, and she said, go work for him for. And see if I like what the industry was all about. And that lasted all of about 18 months till they got divorced and I was fired. And then I went to a competitor and. And that only lasted about a year. Then I went to go work for a company called Northern Realty. And I was repping Starbucks. I was the tenant rep broker for Starbucks. But I kept on renting apartments on Saturdays and Sundays because being a broker, you weren't making any money, as you know. So I was renting apartments on the weekends. And then one of my clients said to me, hey, have you ever thought about starting your own management company? Because if you do, I'll join you. And that night I went home, wrote down all the pros and cons. And I'm not gonna sit here and tell you that the pros, pros far outweighed the cons. Not weighed them Safe out of 2013 to 712 to 8. And then the next thing you know, I was in the basement of a.
[00:09:32] Speaker B: Building off the races. What. When you look back at the pro and con list, I don't know if you remember any of them or if you can just kind of speak generally. What did you maybe underestimate about starting your own management company? You know, what was on the. Maybe something that was on the pro list that didn't end up end up being a pro or vice versa.
How would you like look at that.
[00:09:54] Speaker A: That retrospectively I could tell you right away that I had less than no money. And the one benefit about renting apartments and property management, the pro was it was a little bit more instant gratification where you would get paid on a monthly basis and if you rent an apartment during that time, you would get paid as well. Unlike when you're a broker that everyone always says there's that first 6 to 12 month waiting period to get a check. And I can't keep on saying enough, but I literally had no money. I would not have been able to live unless I was getting a management fee. So some of the pros were it was a little bit of instant gratification for money, which in retrospect, maybe would have been better to wait for some of the bigger deals. There was the fact that I was going to be independent, I could work on my own, I wasn't stuck behind a desk. I had a taste of the property management world because I did it for a couple years for a couple different companies. So I had a flavor of it. The negatives were, I remember when I was graduating college at a real estate finance class and I told my professor what I wanted to do and he gave me a list of everything in real estate. You can be a developer, you could be a broker, you can be an appraiser, you could be an engineer. He went through a list of 20 things, maybe 30 things, and he said to me, mike, but whatever happens, you don't want to be a property manager. And that's a true story. Professor Canada, Roger Canaday from the University of Illinois. So hopefully that name will resonate with some people who are your listeners. So some of the other cons, I mean, I have some retrospective cons.
[00:11:31] Speaker B: Yeah.
[00:11:32] Speaker A: That, you know, I thought about some of this because you sent me some of the questions in advance was that I really didn't have any good mentors. And that is something that I think is important in this industry.
And I also didn't really have a grasp of the high finance side of the real estate world. Meaning when I would try and do Even today, a $5 million deal, you need 30% down to buy the building and you get a loan for three and a half million dollars. When you could be a developer or a syndicator or a major buyer of real estate, and you could be buying a building for $50 million and you can have a 9010 HP with certain IRRs and waterfalls. And I really didn't learn too much about that till around 10, 12, 15 years ago. So that was pretty eye opening for how people were getting deals done. When I'm buying a $5 million deal and I have to raise a certain amount of Money, usually friends and family. When someone's doing a $50 million deal and they're actually raising less money because they're borrowing all the money from a bank or an insurance company or a high net worth individual, that was, that was pretty eye opening for me.
[00:12:43] Speaker B: Do you, as you think about your investing in the, you know, in your entirety, your career, do you wish that you would have done more syndication type deals like that or do you think that in hindsight doing a lot of deals per pursuit with your friends and family kept you focused on buying good deals and executing and just the kind of the blocking and tackling meat and potatoes of the building, if you will.
[00:13:07] Speaker A: I think it would have been nice to have done a healthy combination of both. And the reason being is that sometimes when you buy an asset under the latter scenario, when you're with an insurance company or certain individuals, there's the requirement to sell. And one thing that I do remember, when I was literally hand reconciling checkbooks at my first job, I would pay, I would collect all the rents, so I would deposit all the rents manually and then I would reconcile the checkbooks and I would write the checks. And at the end of every month, the biggest check always went to the owner that had the least amount of debt. So I always wanted to be an owner of real estate and not be forced to sell the real estate. But now that I understand the other side of the coin and how those deals are done, I think a healthy combination of both would have been fair. But you play the cards, you're down.
[00:14:04] Speaker B: How do you.
A little bit about out of order on what I had planned to ask you, but you manage for such a diverse like kind of pool of owners, you know, folks who are generational, kind of mom and pops, folks who are, you know, very sophisticated.
I don't know, call them financial investors today, syndicators, you know, New York based institutions.
[00:14:31] Speaker A: We understand it true.
[00:14:32] Speaker B: Like, so you're, and you're managing everything from, you know, a small walk up to a luxury highrise. How do you think of managing the client that's so different? And then how do you also think about managing the real estate that can be so different?
[00:14:49] Speaker A: Everything is a little bit different, just like you said. So what we have done is, as you know, the way we got our start was with the small buildings and that was just how the, the cookies crumbled. That was the world that I was involved in. Those were the brokers that I knew, those were the referrals that I was getting and those were Also the people that I know that, that I knew that would hold buildings for a long time because that was always very important to me to establish that initial base.
And if you want to be my part time psychiatrist, where I go, the gist is a lot of this is based around money. I mean, my dad gambled all of our money away and my mom was gone. So some of my thought process was I just always needed something steady that I knew was going to be coming in every month. Whether, you know, you'd have a good deal or a bad deal. This management would cover at least the bare necessities when I was in my late 20s and early 30s. But as we've grown, what we've done is it was through networking and picking up other properties and dealing with other people was that we just broke our company down into a few different divisions and there's different talent for each part or piece of the puzzle. So we recognize what it takes to manage a 6 to 60 unit building versus a 60 to 120 unit building versus 120 to, you know, 400 unit high rise in River North. So we have those three separate and distinct divisions where we have a proper P and L for each division and we see which division at the end of the year performs the best or the worst. Then we make a group decision with the people who I work with, whether it's worth or not to keep pursuing this particular direction.
[00:16:37] Speaker B: And how about then on the client side of it, you know, you have, do you have different financial reporting, different, you know, kind of account management, I guess, for, for different customers?
[00:16:48] Speaker A: Yes, yes, yes.
[00:16:49] Speaker B: One of the beauties of real estate is dealing with so many different types of people. One of the frustrating things about real estate is you're dealing with a lot of different types of people. So it's tough.
[00:16:56] Speaker A: The financial part is, is hard and the financial part is something that you need to get right.
But the beauty about, about the financial part is that it's something you could always fix in accounting. So you can't fix, you know, a service guy not showing up to an appointment. If he doesn't show up, there's nothing you could do. I look at property management as a whole, just call it a triangle surrounded by customer service. You have your leasing and marketing, you have your management and you have your accounting. So leasing and marketing, that's pretty tight that if you miss placing an ad and you don't rent an apartment, that rocket ship has taken off. On the management side, like I said, if that vendor doesn't show up Someone's going to give you a bad Google review. But from the accounting perspective, you have really two chances. You could enter in an entry and you can code it one way, but then if the client or the manager or someone who's in charge of that person notices an error, it's fixable and the impact is, is not as great. So the smaller clients, they're mainly cash based accounting. It's very simple, your ins and your outs. And in the neighborhoods that we're in, we're fortunate. Where most people pay rent on time, you collect $50,000 a month, you have $30,000 worth of bills, you have a $10,000 mortgage, you distribute $10,000 of cash money in, money out. As you get a little bit more sophisticated, you have budgeting, you have accrual, you have balance sheets, and you have people who, in my office who are a lot smarter than me that handle a lot of that. So as the saying goes, and it's Steve Jobs saying, kudos to him, you know, you hire smart people to tell you what to do. You don't hire smart people for me to tell them what to do. So we've just like anyone else, we've been lucky in having some great employees, great people on our accounting staff. But it's not easy. And we've had people leave, we've had people poached. We've had plenty of mistakes along the way. But I'm not going to sugarcoat it, you have to hustle to find the right people.
[00:19:04] Speaker B: Yeah, one thing that you, you mentioned just in kind of your answer there casually, but you mentioned online reviews and I wasn't planning to ask you about online reviews, but in your business in particular, I would find it incredibly challenging to manage your online reputation because in property management, nobody's telling you good job when everything's going well, which might be 99.5% of the time, but one thing goes wrong and people go online and gripe about it. And at your scale, it's impossible not to see some, you know, like how.
[00:19:44] Speaker A: Do you, you have to be a little thick skinned and it depends on the situation. And I actually get the reviews and I'm not going to say that I read them all, but I do read them and usually there's some sort of truth, usually. But it's also because it's from 99.9% of the time it's from a resident and it's from a resident who didn't get something that they wanted. For example, we just had this the other day, a gentleman parked in the wrong parking spot and his car was towed. Well, I'm sorry, but that's no reason to give me a one star review. You're the one who parked in the wrong parking spot. And our property manager happened to be there and so was the towing company and they said, should we tow this? And the answer is yes.
It was a newer car, so it didn't have the new license plate. So they didn't register the license plate with us, so we didn't have anything on file. It just was a, it was a confluence of circumstances and the person's car was towed. So he went on to Google, Yelp, et cetera. And then of course, I called the towing company and I had them return the car. And then lots of times what I do is I go, whenever I go to a building and I see someone who has all four and a half and five star reviews, I go and read the reviews and I see when they were posted and I see when the dates were. And you know, I'm not going to say fabricated is the wrong word to use, but clearly there's been some sort of incentive to post reviews because if everything is Posted on the 1st of the month or the 5th of the month or I. You just hear, because the industry, it's a big, small industry, you hear about people doing different incentives and we do them too. And you just have to try your best and you have to have a little bit of a thick skin. And when you do, like I've told everyone in my office, usually there's going to be some truth to someone's issue and we have to treat them. You know, there's the new concept of the hotel style treatment that everyone gets and you know, the consumer is always right. So we just have to take that position.
[00:21:47] Speaker B: So it leads into, you know, a quality that I've admired about you and getting to know you over the years is you, you're not afraid of challenges, you just some comes up as matter of fact as you can be. You try to find a way through it.
You're an open book about how you're going to navigate it and you're very like communicative with people through the way. Do you think that that was a learned skill from being in this business for a long time or you think that it's, you know, part of it's how you, you know, you didn't, you didn't grow up in a real easy situation either.
[00:22:23] Speaker A: I like having quotes from people and very rarely do I use them. But as the great philosopher Mike Tyson once said, you know, everything's good, everything's really, everything is going great till you get punched in the face. So really the position, and I appreciate you recognizing that it's when you confront a situation and you tell someone the truth or you tell someone the way it is, whether you, you like it or not, what the response, whether you like or not the response that you're going to get, you never have to turn around and look and think, are you telling someone? Is what you said wrong? You kind of just say it matter of factly. And sometimes I come off, people would say that I'm a little abrasive when I do that. And I have no problem if people correct me. I have no problem if people tell me I'm coming off a little abrasive. But I think it is a little bit of a survival quality where, you know, growing up, because it wasn't always the easiest, I just found that just cutting right to the chase and getting rid of all the nonsense just made things a lot easier for me to move on to the next task at hand. I often tell people in our office it's just getting rid of the low hanging fruit. And that's, that's really what I try and do. If you have 20 phone calls to make during, during a day and you know that 20th call is going to be a really difficult one, well, you have two choices. Make it the first one or the last one, but you're going to have to make it. And sometimes when you make that phone call, I tell people it's a little bit of a technique. It's you just kind of give yourself a countdown and it's, you know, 3, 2, 1, dial the number and then you're in it. And there's nothing else you could do.
[00:24:02] Speaker B: Yeah, I think as, as somebody in the brokerage, I forgot where I was gonna go with that. Hang on a sec.
You got 10, 15. All right, cool.
You know, one of the best compliments I ever got was from a client who told me I was somebody that got things done, you know, And I think it, it goes to your point, it's just put your head down, get things done, try to do well by people and teach the others around you to do the same. Right.
[00:24:31] Speaker A: I would agree. I think that the way you handle yourselves in business and your personal life, as I've met some of your family, I think that's, that's a good way to lead their lives. Who am I to tell someone how to do something differently or how to conduct themselves? That's really not my business. But I pay real close attention to the people around me. And like I said in the beginning, I've really had no mentors. And so what I do is I try and watch how everyone handles themselves in certain situations and something that if I can use it to my advantage or learn from it, great. And the stuff that is not relevant or a waste of time or not healthy, I try and throw that to the wayside.
[00:25:15] Speaker B: So you, anybody who deals with Peak can tell that you spend time say, cultivating a culture, but that the, the firm has a real culture, has a real identity. People there are empowered to make decisions, they like where they work. It's a tough thing to do in property management. Right. Where you get kicked in the shins a lot every day.
[00:25:38] Speaker A: Correct.
[00:25:38] Speaker B: So how do you, you know, you're, you didn't have mentors when you got started, but you're clearly a mentor to others. How do you think about that as you're grooming people within your organization not only for the betterment of the firm, but to make it a good place for you to work and for others to want to come to work and stay if they work there.
[00:26:00] Speaker A: Understood. I mean, property management is not for the faint of heart and many people in our office know that. And thankfully we have a lot of people who have been at our office for a very long time. So you have a choice. You can lead from the front or you can lead from behind. And sometimes I choose, I use both scenarios. And in order to foster the culture in our office, I think that in general I'm a pretty jovial person. I think people feel comfortable coming to me and I think that's important. So people know in our office that if they make a mistake, they're not going to get fired. That's first and foremost. I mean, I know that there's companies where if you make some sort of mistakes, you know they're going to get a pip, a personal improvement program, or someone's going to be looking over their shoulder or something's going to happen. Anyone who comes to our office, I meet with every. These are just things that I just think are important. So every new hire, I have lunch with them within the first three months of them joining the company. Every quarter we have a quarterly town hall meeting. Every year we do two big events for our office. We have certain KPIs key performance indicators for some higher level, higher level and mid level staff in the office. I tell everyone in my office my door is open to them whenever they want to Access me, but I tell them to please, if possible, come early or come late. Because I tell people property management is like a snowball rolling downhill, is that we just keep on picking up speed. So around 10am, that's from 10 to 6, it's just go, go, go, go, go. But if someone wants to get me at six in the morning or six at night, I try to make myself as accessible as possible for people.
[00:27:53] Speaker B: Yeah. Okay, good stuff. So we have talked a lot about you wearing the manager hat, but you're an active investor as well.
What is something that commonality that comes up in a deal that you see that helps in the initial screening of it? So something that you either immediately know is a discounting factor to pursuing the deal or something that you know is going to make it an engaging deal for you in a new investment opportunity.
[00:28:23] Speaker A: You know, it, it, it depends because it's based on when I was looking at deals. So you could segment this now into, you know, five years ago, 10 years ago, 15 years ago. But today old buildings are really old. So the typical buildings that we're looking at, getting ourselves involved in or, or having investors be a part of are your typical vintage six to sixty, potentially hundred unit buildings, north side of Chicago, Evanston, Hyde park, etc. And there's a saying for anything that's over eight stories, you know, high rise code applies. So you need to be very careful of that. So I always think about if I'm going to look at an eight story building, is it meeting fire code? What type of upgrades does it have? How are the windows? How are the masonry? Because those, how is the masonry? How's the roof? Because those are very expensive fixes. When you move down the ladder to buildings that are under, sit under eight stories, for example, you and I are doing a deal right now. When I walked through the units, the building felt good. So I think in general, if you kick the bricks, you get a general feel for how the building is. And then when you get into the units, you get a flavor for how the units are kept, you get a flavor for how the tenants, how the residents keep the units. And then certain little triggers that I pay attention to. Does the building have a boiler? Who's going to be responsible for the gas? How old are the windows? Is the basement kept clean? Meaning has the owner done a relatively good job in keeping the building up? How old is the roof? How are the stairwells? There's a lot of things that run through my head when I'm walking through a building and I've walked through tens of thousands of properties and every building has a little bit of a different feel. We are in the business of adding value. But right now, we used to buy every building below replacement costs. That was just how it was, whether you were buying a 6 cap or putting a multiple on it of 10 times gross. Now it seems like everyone who's selling a building is coming out and saying, hey, this is way below replacement costs. But that's something to think about. So I think about that a lot. When we used to never think about it, you were buying a 25 unit building for 2 million bucks. I mean, no one ever thought about that, even if it needed work.
[00:30:45] Speaker B: Yeah.
[00:30:46] Speaker A: So now people put a lot of credo into that.
[00:30:48] Speaker B: I think a lot of it comes to just the. The supply and demand imbalance. You know, we're in a market in Chicago where there's little to no new supply coming online, particularly in the neighborhoods. So if you believe that people are going to want to live in these good areas of the city for a long time and you can buy a building for half of what it costs to build it today, it's a good start.
[00:31:08] Speaker A: It's a great start. And there's. That's another reason to pay attention to the replacement costs. So I agree with that wholeheartedly.
[00:31:15] Speaker B: A couple things that you said that I thought were interesting. One, the feel of a building, I think is a real. You can only sense that from. From touring the real estate, kicking the bricks. You know, you can't. That's not from an oem. You know, you get the feel of a building for knowing the block, seeing the way that the tenants live and treat the building, the way that the owner has kept the building over the years. How did the mailboxes look? How clean is the boiler room? These things that are are not in your om as descriptive factors of the building can make a lot of difference on the living experience of the residents and how the block feels. The other thing is building systems and building envelope issues. You know, when I think in Chicago, Maybe it was 10 years ago, we were in the heyday of renovating, you know, value add, and everybody's looking for renovation projects, correct? Well, it was a lot less expensive to renovate 10 years ago, and interest.
[00:32:05] Speaker A: Rates were about half of where they are today. So there's a lot of factors coming.
[00:32:08] Speaker B: Floating rate debt and you have more expensive materials and services. And the math doesn't work the same as it did 10 years ago. So it feels like today a lot of the better deals are deals that are more physically stabilized, that you have some, maybe have some operational efficiencies or you just want to own for a long time.
[00:32:24] Speaker A: Yeah, that is true. I, I will say this though, and you know, you have to be comfortable with it. I know some of the big players out there just, just by relationship based stuff, for lack of a better word. So. And I know that the guys at Blackstone or the guys at Waterton or the guys at Pick a big firm that's out there, the head guy, which is a place that I don't know if I could ever feel comfortable being at, they don't go see the property, but they have great teams and their teams see the property. So at the end of the day, if I, like I said before, started at a bigger shop and would have understand, would have understood the dynamics a little bit more, that would have been an interesting tell because a lot of these people just look at the numbers. The building is just a number to them. They're buying it for X, they're selling it for a Y. Their irr is X or Y. Their return on capital is X or Y. That's fine. I'm just not built like that. But it's an interesting way to think about it where literally I think these properties are just numbers to.
[00:33:26] Speaker B: No, but, but you're part of, it's the relationship too. You come to tour building, I call you today at noon and say, Mike, I've got a good deal for you. Can you make time to see it today at 3? And you could be, you know, dramatic example, but you'd be there. But I've been also around you when you bring your manager, your leasing team through a property and they see a deal through your eyes as well. So I don't. I think that they could do a pretty good job probably summarizing how they think that you would feel about something if you didn't see it. But there's a lot more that goes into the relationship building side of it when you're actually there and you see it yourself.
[00:34:00] Speaker A: That is, that is correct. As well.
[00:34:03] Speaker B: As an investor, what are a couple broker pet peeves and what do you think are some of the best attributes in a good broker?
[00:34:11] Speaker A: Well, so the, the broker pet peeves.
To be honest, I really don't have any broker pet peeves. No, I know. I'm saying that because a good broker is doing their job. So if they're pinging me all the time, I was the guy when I got started who's making in different, in a variety of different Jobs just making all those annoying calls. So whenever a broker calls me repetitively, maybe if he calls me one too many times and they're not getting the hint. All right, that's a pet peeve. But I was the guy making those calls. So I'm not so adverse to brokers calling me, because if someone's calling me, it's usually with an opportunity. And something that I always ask is when someone calls me if that particular deal that they have is not for me. I learned. This is one thing I learned from a gentleman who passed away. His name was Don Martin. He was an attorney. He would always say to me, mike, you have anything else? So that's one thing that I've picked up from other people. Some funny catchphrases along the way, but.
[00:35:18] Speaker B: That phrase, during the course of your career probably brought you a dozen deals.
[00:35:22] Speaker A: Exactly. I tell you a number of relationships where I've said, well, this one isn't for me. And that's why I like going to buildings, because you establish the rapport.
But from a broker, okay, a pet peeve that I would have is something that I think is important for me, maybe not for any other people, is just an idea of guidance. And when people say, just put it in an offer, I'm just running blind. I really have no idea, because what I value, I don't want to waste anyone's time. So if I. If someone tells me the building needs to be in this general area, I get it. But what bothers me, and it's probably my fault because I'm not hanging around the hoop enough. Just, for example, say, a building. You would tell me that the building is worth $10 million, and I just can't get there. In my mind, I can only get to eight and a half. Come on.
Then all of a sudden. All of a sudden I see the building selling for 8.6. That happens. But that's really. That's a fault of my own because I'm not hanging around the rim as far as positive broker qualities, I think not coming off as brokerish, similar to the relationship that you and I have or the people that I work with in Terra that I have and a number of other brokerage firms that are out there. I think that's.
It's just nice to have a nice relationship. But like you and I have talked about, one of our. One of our credos in our office is, you know, just be nice and work hard. So if someone's just a nice person, you kind of get it. And if they're not you just choose not to work with them.
[00:37:07] Speaker B: Yeah.
[00:37:07] Speaker A: And I'm okay if I don't get a deal. Sometimes there are just these great deals out there and you're like, wow, how did I not get that? And that's like, yeah, well, I get it. The broker is, this person never called me and so be it. But he has his list of 20 clients that he calls for every deal and I'm just not on the list.
[00:37:22] Speaker B: Yeah.
I want to point out to anybody that's listening and not watching on video, Mike's phone, I think has rang 40 times in the last 20 minutes. And I know that you, you know, in similar, I guess in a similar vein, have, have a hard stop. You have to get to here. So I'm going to ask you a few questions that I'm going to ask all our guests to kind of wrap it up.
[00:37:45] Speaker A: No problem. I try and it's. I know it's rung a lot, but some of them are text. But I try and answer 1. I try and answer every call.
[00:37:52] Speaker B: I can see a diet to call people back.
[00:37:55] Speaker A: But no, no, it's fine.
[00:37:56] Speaker B: I've been on the other end of calling you, so I appreciate the responsiveness.
[00:37:59] Speaker A: Right. Even if I say, hey, I'll call you back, I just feel it's nice to answer everyone's call.
[00:38:04] Speaker B: Yeah.
Thanks for making an exception. So, as a leader of a large property management firm in Chicago and an active investor, what's a typical day look like? And what do you want to do more of in your days? And what do you want to do less of in your days?
[00:38:21] Speaker A: So starting with the second half, I would like to see what I'm working on right now. And what I talked to someone else who's in your office just a couple of minutes ago about was how to try and do a little bit of a transfer of power or succession planning. So that's something that I'm doing. I'm almost 57 years old and I know that's not old by any stretch of the imagination. And I feel that I can work out work any 27 year old, no problem whatsoever.
That's something we really haven't talked about. But there's no substitute for hard work. Absolutely no substitute. You need to make that extra phone call, you need to make that extra property visit, you need to make that extra relationship. I sent things to people in my office all the time about what I was doing. I would send them, there's something for a networking event coming up. I sent it to 10 guys in the Office. If they take advantage of it or not, that's up to them. But at least I know I've done my job by forwarding it to them.
So how does my day get going? So to end it, I like to. I'd like there to be a little bit more succession planning. That's something that I'm currently working on today. But my day starts around 5:15, 5:30 every day I wake up and for example this morning I played pickle from six to eight. But I like to do some sort of exercise in the morning.
I have some goofy routines where whether it's playing, I still play basketball. So whether it's doing some sort of sport or some sort of stretching or some sort of calisthenics in the morning, just to get my blood pumping is important. Then I get in front of the computer for about 45 minutes to an hour and then I hit the road and I live. This is post traffic. Thank God. It was a lot worse before, but it only takes me 25 to 30 minutes to get to my office. So I'm a big believer in coming to the office and anyone who wants to progress in any sort of industry, not just real estate, I tell them being in the office is breach. Yeah, is brutally important. And I understand there's people who want to work at home and who want to be nine to fivers and there's absolutely a place for them in our office. But is there a room for advancement? Probably not.
So I usually like to stop at a job site or I like to have my meetings with different brokers or different clients in the morning. Then I usually like to end up at my office sometime between 12 and 1. I make, I have certain appointments throughout the day between say 1 and 5. And then I usually like to end my day with again some sort of workout. I do a lot of core power yoga sculpture, I play paddle. I just try and stay active. My kids are now much older. They're all young adults, 22, 23 and 26. So. But my kids were my habit when I was in my 30s and 40s. So I'm just trying to relearn or re establish new habits in order to fill the void. Because anyone who's listening, who's a parent or I could speak for myself, I loved raising my kids. That was a very important part of my life and being able to. What's great about the property management industry is that allows you to participate in so much of their life. I coached all their teams, I went to all their games, I went to all Their performances, that was a really fun part of raising my kids was the flexibility of being in the property management world. And that's just not me. Because I own the company, I extend that same offer to every single employee because I tell them if you need to go to your kid's dentist appointment at 3:00, go. That's absolutely no problem. Just make sure you give me the full 40 hours that you're supposed to give me for the entire week. And we were working remote even before remote was in vogue because we have a lot of single parents, double income parents, working at our hot, working at our office. And I always felt it was important for them to be with their family ways.
[00:42:22] Speaker B: That's awesome.
You might have already answered this, but for someone getting started in their real estate career, what's a piece of advice that you'd give them to propel their career or to set them up for long term success? Is it work hard?
[00:42:35] Speaker A: No, I mean that, that's just any industry that you're in, I think you need to work hard.
I mean the gentleman who's filming us right now, he works really hard. So. Or I should say recording, I think you need to jump in.
But you there, you need to, I think network. For someone who wants to start in the industry, you need to do a little bit of networking because it's going to be a little bit of luck for, for what area are you going to end up in? Are you going to end up in student housing? Are you going to end up industrial? Are you going to end up as an appraiser? Are you going to end up as an engineer? I don't know where someone's going to end up. But anyone who wants to come work somewhat in, call it our realm of the industry, the first thing that I tell them to do is to get their broker's license because that gives them a taste of the industry. Yes. If they choose to come work for us afterwards, great. But we're not a private equity shop. If someone is graduating from an Ivy League or a big time school or has these big time aspirations and they want to go work for one of the big boys, I would tell them the same thing. And I explained to them, hey, you're going to have 18 hour days, just prepare yourself for it. And that's there. They'll eat you up alive and you'll either survive or you won't. But that's part of their mantra. So that's how it works.
[00:43:52] Speaker B: Good stuff. All right, last question. Why do you love Chicago as a place to live, work, build your business, invest.
[00:44:00] Speaker A: You know, I was hoping we were going to touch a lot more on this during the conversation. We didn't, but I guess about it.
[00:44:05] Speaker B: Cancel your next meeting, stay for half an hour. I could talk about this topic.
[00:44:08] Speaker A: Chicago is an incredible place to live, raise your family, have Midwest values. You're literally at the center of it all. I tell everyone, granted, Chicago does have problems. There's no escaping it right now. Yes, there's some issues with taxes, yes, there's some issues with crime. But there's have been in the past and it's been fixed and there have been in the future, and it will get fixed. But when we talk about sports teams, when we talk about food, when we talk about culture, we talk about the arts, we talk about theater, we talk about transportation, talk about the lake, talk about the museums, talk about the different ethnic backgrounds, Chicago is literally a melting pot. And for me, it's just been really good to me. And so when people tell me that they're moving to Florida to pay taxes or moving out of state to do something different, I take a little bit of a different position. I say that Chicago and the state of Illinois have been good to me, so I don't have a problem being a resident. I do understand why people want to move. I do understand their side of the coin. But again, I don't want to speak for the general pop. For the general population. I like talking, you know, for myself, and I like putting my values and my principles out there. So those are the reasons that I think Chicago is such a great place.
[00:45:35] Speaker B: I love it, man. Thanks for making the time.
[00:45:38] Speaker A: Thanks for having me.
[00:45:39] Speaker B: We know we stay in touch all the time. Probably talk to you later today about something.
[00:45:43] Speaker A: It sounds good.
[00:45:43] Speaker B: Thanks, Mike.
[00:45:44] Speaker A: All right, thanks, guys.
