Accelerated Real Estate Investor 245: Mike Zlotnik on The Economics of Highly Profitable Hotel to Multifamily Conversions
In all the interviews that I’ve ever done, this one just might be my favorite one yet. My guest today is a long time friend, Mike Zlotnk. I thought his insights on hotel to multifamily conversions were fascinating and the economics of stripping out cash flow and depreciation and then giving them to different types of investor groups was equally brilliant.
Mike is the CEO of TF Management Group, LLC which runs four real estate investment funds. He has been a debt and equity investor in real estate since 2000. After a successful 15 year career in IT, he pivoted to real estate investing because of his passion for real estate and its predictability of outcome and risks.
I was completely blown away with how Mike structures preferred equity versus common equity, common equity versus mezzanine debt, how he pulls out the cash flow in an A share, and how to strip out the depreciation through a cost segregation study in a B share. I’ll definitely be using this in my own company, and I’m sure some of you will too.
In this interview, we also dive into how Mike raises capital, what makes a hotel property an ideal candidate for a multifamily conversion, why hotel conversions are generally low risk investments, and so much more!
Key Takeaways with Mike Zlotnik
- Why Mike decided to focus on hotel to multifamily conversions.
- How he structures preferred equity versus common equity shares.
- How you can pull out the cash flow in a Class A share and use the depreciation through a cost segregation study in a Class B share.
- The ideal hotel properties that are best suited for conversions to multifamily properties.
- Why high-rise properties are not ideal candidates for conversions.
- The three most common ways to enter the multifamily real estate investing space.
- Why conversions are a lower risk investment than building from the ground up, especially with the current costs of supplies and labor.
Want the Full Show Notes?
To get access to the full show notes, including audio, transcripts, and links to all the resources mentioned, visit https://acceleratedinvestorpodcast.com/245
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