Mike Zlotnik moved from technology executive into real estate full time in 2009. Today his shop, Tempo Family, is a capital partner. They marry money to opportunity, write checks behind operators they trust, and stay out of asset classes where they cannot find a deep enough discount. So far this year, Mike has done one multifamily deal. He is not in a hurry.

The one deal was near Ann Arbor in Q1: 9 percent cap on purchase, 7 percent financing locked for three years, $79,000 a door against a $200,000 replacement cost. That kind of math is what Mike needs to see now.

What landed in this conversation:

1. The three-metric buy box. First, a 200 basis point positive spread between cap rate and cost of debt. Anything tighter than 150 bp is not enough margin of safety. Second, a steep discount to replacement cost. Third, a comparable discount to the 2022 peak pricing, which Mike pegs at 20 to 40 percent depending on submarket. If a deal does not clear all three, it does not get capital.
2. Open-air retail as the contrarian play. Tempo Family is eight deals in on open-air shopping. Every one has performed. While multifamily got overbuilt and roller-coastered through 2022, open-air supply got squashed by the Amazon fear and never recovered. Recent example: a San Diego open-air at 9.25 cap with 84 percent occupancy, financed at 6.5 percent fixed for ten years, with anchor tenants like Starbucks and Cheesecake Factory.
3. Industrial as predictability. Flex industrial and single-tenant triple net at 8 to 9 cap. Twenty to twenty-five year leases. Two to three percent annual rent escalators, which in triple net is pure NOI growth because the tenant is paying everything. No surprise capex.
4. The asset classes he refuses to chase. Storage cap rates are too low. Hospitality is an operating business in real estate clothing. Senior living, same. Office is broken. Data centers cost a fortune to build and Tempo Family's net asset value is the "rounding error" on those deals. Better to know the don't-buy box than to chase yield.

The regret he owns: deals done in 2021 and 2022 he wishes he had not. "I'm the fool who's learning from his own mistakes." After that he went back and re-read Howard Marks on cycles.

Books on Mike's nightstand right now: Mastering the Market Cycle by Howard Marks (he says read it after every cycle), How Countries Go Broke by Ray Dalio (third read), and Richer, Wiser, Happier by William Green.

Reach Mike at bigmikefund.com (his podcast entry point, links to the Tempo Family corporate site).

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