E45: Spotting New Investment Opportunities in the US & Canada

“You've got to actually go in and see it, there's no deal that we would ever do without actually taking a look and seeing the property.” — Ben Zlotnick

Today on Sync or Swim, we interrupt Ben Zlotnick’s family vacation to talk to him about his prolific career as a serial entrepreneur. Ben is the co-founder of Alexandra Capital, founder of Eden App, and founder of BTB Investments. In our conversation, he fills us in on how he merged his service and technology knowledge, and experience to launch Eden App, and shares its use case opportunity in terms of real estate. The topic of real estate investment swings to the fore and we go on to discuss Ben’s modus operandi when it comes to choosing where to invest, and what property types to invest in! We find out which US cities and states Ben has identified as exponential growth markets and how to recognize an investment opportunity. Ben generously shares some of the exciting projects he’s working on and emphasizes the importance of finding a suitable broker to work with. Tune in to discover why you should never make a deal without viewing a property, and why you should always work with a local third-party manager!

Key points from this episode:

• How Ben merged his service experience and his technology experience to launch Eden App
• Ben shares the use case opportunity for Eden App in terms of real estate.
• He summarizes what’s happening in PropTech and the current market.
• What property management software Ben finds useful.
• Ben explains his opportunistic approach to real estate, commercial and otherwise.
• How he is converting a hotel in Vegas into a multifamily property!
• The US states and cities Ben has identified as growth markets
• Why Ben will never make deals without seeing a property
• The growth opportunities in Canada versus the US.
• How to identify an investment opportunity
• Ben fills us in on some of the exciting projects he’s working on!
• Why it’s important to find a suitable broker to work with.
• How Ben approaches marketing and management to fill his properties with tenants
• Why he only works with local third-party managers

If you liked this episode, be sure to subscribe or follow Sync or Swim wherever you get your podcasts, Apple, Google Podcasts, or Spotify.

Episode Transcript

[00:00:39] NS: Welcome back to Sync or Swim. I'm your host Nicolina Savelli. On this podcast, I chat with rental housing industry experts to learn how you can reach more renters, sign more leases, and maximize the value of your assets. Today, I have Ben Zlotnick, a serial entrepreneur, who is the Co-founder of Alexandra Capital, Founder of Eden App, and Founder of BTB Investments. 

Thank you so much for joining me today, Ben. Clearly, we've got a lot to unpack there, given the sheer volume of your ventures. Before we do that, do you mind telling me a little bit and our listeners a little bit about your background, and what has led you to committing yourself fully to real estate and investing?

[00:01:20] BZ: Nicolina, first of all, thank you very much for inviting me to this podcast. I’m very excited to be speaking with you and telling you a little bit more about what I have done and what I'm looking to do in the future along with some of my partners. Just a little bit of background of myself. I'm born and bred, educated in Toronto, and we have been involved in the multiple different industries. Started off in the service industry, mainly in the landscape design construction business. I still have that business, and we still run it locally in the Greater Toronto Area. Gotten involved in the technology sector around a decade or so ago and during that timeframe, I really started off at an early stage doing some angel investments, as well as, I launched one of Canada's leading technology accelerators called INcubes back, a number of years back. Through that accelerator program, I had the ability to meet up with many investors, amazing startup companies, amazing entrepreneurs, not only locally in Toronto and the Canadian space and that's obviously where we had met, when you were heavily involved in the technology space as well. 

I also had the opportunity to network and create some great relationships, business relationships, across North America and really on a global level. I've also been involved launching my own company, it was a market, it is a marketplace called Eden App. Currently, we offer landscaping and snow services as well as landscaping and lawn care and maintenance in around 25 cities across North America. That company continues to grow and scale both in the Canadian space as well as in the US space. 

On top of that like I mentioned earlier, I've been investing in multiple different sectors, mainly within the real estate space along with the technology space. Very recently or this past year, I got more involved on a day-to-day basis with Alexandra Capital with myself and my partner, Marc Eichorn. We’re really continuing to grow our portfolio both in Canada as well as in the US. 

[00:03:24] NS: Perfect. Thank you so much. Now I will preface this, Ben is in Orlando right now. He's at a resort. He's actually enjoying himself. I've taken him away from his time away. So you may hear some background noise, everyone, but that's just me taking Ben away from family time, which I am really sorry about. 

Okay, so like you said we originally connected about 10 years ago, when you were the founder and CEO of INcubes, which was an accelerator for startups, but you've narrowed your focus a bit since then. Can you tell me some of the things you learned from some of the successful startups you saw coming through that? Why you saw a need for more property services tech? Is that how that idea of Eden App came up, was through your learnings from seeing technology companies come through that? 

[00:04:10] BZ: Yeah, absolutely. That’s a great question. Again, Nicolina, I do apologize for that background noise. I told you –

[00:04:15] NS: No worries, it's okay.

[00:04:17] BZ: I hope that he can stop that. Anyways, all good, with respect to my background coming from the technology sector, but even prior to that the service industry, the technology sector really opened my eyes to the open network and the open, the network-centric capabilities that you don't only have to do business in your own backyard, but there's an opportunity that you can look at it from a global perspective and not necessarily only doing or doing business globally, but also learning from others that work across the globe. 

That was a very interesting perspective. I really had worked with some amazing, amazing entrepreneurs, either whether they were in INcubes itself or there were just people that I had met, whether it's through conferences. We worked with so many different mentors, whether they were entrepreneurs, or engineers, or designers, or investors that really fascinating people. Some of them extremely, extremely successful and the opportunity around mentoring and coaching really allows a startup founder or anybody for that matter to bypass months of hard work by just having a great conversation with somebody that has gone through that process before. 

So a lot of people like to say, “Well fail fast and get in and get out.” That is right, to a certain extent, but it's not necessarily only about failing, it's about you pivot or you do something different, you look at other opportunities, you look at other revenue streams, and how do you actually get out there and continue to grow your business. I was doing that for quite a number of years, and that segued myself into Eden App where, ultimately, I amalgamated and I brought my two worlds together. On the one side, I had a large business in the landscaping and snow removal business. On the flip side, I was heavily involved in the technology sector. 

I was looking at ways as far as how do I merge my worlds together, and marketplaces, look at the Ubers and the Lifts of the world, obviously, that's one high-level example. Ultimately, you're taking a customer, and you're connecting them with a contractor or a third party, and you are the platform in between. I said, “I've got the experience and the knowledge on the service side. I have the experience coming on the technology side, not that I'm an engineer, but I have the operational experience.” That's how I put the two of them together, and have the ability to go out there and launch Eden.

[00:06:42] NS: Perfect. With that said, I personally have seen a lot of media as of late on Eden App. I looked it up, there's quite a bit of articles about it. It seems to be doing quite well. Now, have you considered I mean, it's on-demand automated snow removal and lawn care. Do you think there's a use case for this type of service from a property management perspective for instance having on-demand tax of that, owners, operators can get direct access to contractors at any time? I also the other day, I saw someone complain on Facebook about how their landlord hadn't removed snow from the front of their apartment complex yet. I'm just curious, if there's, there's a way to speed that thing, the timing and having that maintenance at their fingertips? I'm just wondering if there's a use case there as well.

[00:07:29] BZ: Yeah. There's definitely a lot of opportunity, especially by connecting technology and service-oriented business in whatever capacity that might be, whether it's landscaping, whether it's snow, whether it's electrical work, whether it's plumbing, there's a lot of opportunities that are out there and this is really across the globe. The way that everybody looks at it is that today, we work off of our phones, and we work off of our computers. Every single individual whether you are the landlord, or whether you are the tenant, or you're whether you're the service contractor, you're looking at other ways A, to drive revenue for your business and at the same time, if you are the landlord, you're looking at efficiencies or you're looking at from a tenant’s perspective is, I just had a flood in my bathroom, because my toilet overflowed. Well, how do I get a service contractor out there to come and take care of this? 

So by a click of a button, the opportunity within the real estate market is, I mean, there are so many things that are out there. I mean, even from an educational standpoint, right? We're an owner and we own many different types of asset classes, whether it's multifamily or student housing, or industrial. We have a team and we want to educate our team, right? So there are so many online tutorials that you can get by your phone or by the web, that can train you or if you want to have, today there are so many pieces of software that are including artificial intelligence about how to read the lease and picking the nuances is that typically a human actually does. 

The industry and not only the real estate industry, but all industries are moving extremely, extremely fast in uploading and really taking advantage of the technology sector, and the technology and of course, the enterprise software that are coming onboard into the industry at the same time, you still have to have somewhat of that human touch, you still have to build out those relationships. So brokers have built out all of these different types of technology software programs, and how do you look at deals and uploading and finding and looking. So there are many efficiencies, but at the same time, there are still that overall business relationship and communication that you still want to have in place for anybody that it is that you work.

[00:09:44] NS: Fair enough. Yeah, that's a great summary of what we're seeing happening in PropTech and, and the market. Just curious and it's not on my list of questions, but I know I'm catching you off guard, but is there a piece of technology for property management, for multifamily that you feel has come out recently or has just recently been brought to your attention that you feel is really going to grow, expand or has been really useful to you personally?

[00:10:16] BZ: It's a great question, I would say as an individual that's, let's call it a little bit deal junkie, so I look at deals all day, right? I look at it across multiple states and cities and provinces. We're always trying to get as much information as possible in the quickest time period. There are great softwares that are out there. If you look at, let's say, companies CoStar. CoStar gives you the ability to give you the numbers, the summary, the analytics, the owners. I mean, there are a number of other software pieces that are out there very similar. We have company called Actovia that is very, I would say specific to the tri-state area. You've got Yardi Matrix. Of course, every company that's managing are working with companies like AppFolio, or Agora, or also Yardi. 

There are many pieces of software that today you've moved completely, you move completely away from the pen and paper. You move completely away as far as how you look at deals, right. For us, the information when we look at a deal is at our fingertips. It's the first thing that we will do because we're doing our research immediately. Of course, you have to then go ahead, you have to analyze it, you have to underwrite it, you have to do everything that you typically will do, but there are other pieces of software on the underwriting aspect of it. 

You're going to go and take those pieces of software, plug in your numbers, and they're going to spit back to you through the router of artificial intelligence, and everything else that they have engineered and built out that is going to give you the best possible answer that you want to get at the quickest and the shortest period of time.

[00:12:04] NS: Right. That's obviously, I'm sure contributed to your ability to get more doors faster, and make close deals faster than you've ever been able to before. I feel like people through COVID have looked for these solutions more readily than they have in the past, which I mean, the real estate industry is just booming, obviously as of late and landlords are the bad guys, but it's just the way investments work and inflation. Now I want to talk about your real estate investing. You shared with me that Alexandra Capital has a mixed portfolio. Obviously, that's been key to success during this pandemic. With commercial properties taking a hit, how do you feel about commercial real estate right now? Are you still investing in commercial real estate?

[00:12:54] BZ: Yeah. Again, just to clarify one point, some landlords are not nice, but many landlords are very nice. We want to put ourselves in the category of nice landlords, where we will always try to work the best that we can with our tenants, understanding the current situation that is out there. As far as commercial real estate, I mean, there's a number of different types of commercial real estate that you want to look at, right? Are you looking at shopping plazas? Are you looking at office buildings? Are you looking at multifamily? Are looking at condominium? There are industrial. There are so many different asset classes that might be categorized within that what we know commercial real estate is. 

Either way, we look at all types of real estate. I would say the way that we would place ourselves is that we're opportunistic. We'll take any type of deal that we look at in a particular region, we’ll understand it, we’ll learn it, we'll look at the numbers. If the numbers make sense, and our LPs, we know what they actually look to invest in. If that's the case, then we'll move forward with it. We don't tie ourselves down and that's certainly what gives us the ability to grow not only locally in a market, but really across any market that we might look at.

[00:14:16] NS: Right. With that said, have you considered purchasing commercial under the umbrella of commercial and converting to residential? I know, we're going to talk a little bit about the hotel in Vegas, which I think it falls under commercial for the most part, but what are you doing with those types of investments? Are you sticking with what the business model was before? Are you willing to transform and convert?

[00:14:43] BZ: Yeah. So one of the things that we looked at is what I mentioned opportunistic, we look at opportunities, right? So what is that opportunity? For example, we just did a deal in Vegas, and the deal in Vegas was a 200 unit extended stay hotel and the opportunity over there is around understanding, can you convert that into a multifamily type of property? In this case, that is exactly what we did. We took this property we converted it into a multifamily. Now we moved away obviously from the hotel business, and we're now running it as a multifamily property. Of course, there are certain items, and let's call it a checklist that have to go in place. You need to have kitchenettes in there, you've got to have all the amenities that are needed for somebody to live there long term versus there for a day, or a couple of days. These are all things that come into play. You have to look at the zoning. You have to work through the zoning characteristics of that particular location. You have to deal with zoning board, you have to deal with planners, you have to deal with architects. 

Yes, there's a lot more, let's call it heavy lifting. There's hair on the type of deal, but that's the opportunity for us where we take something that's a little bit more difficult, sometimes more difficult. It's not cookie-cutter, and how do you create something that will then give you more value down the road, because you have the creativeness to do something a little bit outside of the box.

[00:16:11] NS: Totally. Now, can you I'm not sure if you've completely completed this hotel, as it now completely been converted into multifamily, or is it still in the process of renos?

[00:16:22] BZ: Right now, it's still in the process. 

[00:16:25] NS: In the process. Okay – 

[00:16:26] BZ: We’re still in the process of it, and we're working towards it. Listen, Las Vegas right now is probably one of the hottest markets across North America. There's obviously in every city, right? You've got supply and you've got demand. In some cases, you've got oversupply and under demand. In some cases, you've got over demand and undersupply.

[00:17:29] NS: Can you share what markets you're currently focused on? Why you're focused on those markets? What is the most appealing trends in those markets that you're looking at? I mean, every market has its own pros and cons, but yeah, if you don't mind sharing what your goal is in, what things, say that's a green light, that’s a red flag.

[00:17:48] BZ: Yeah. I would say like this, the markets that we look at are all areas that are typically going to be growth markets, right? If there's population growth, so for example, if you look at, again, I'm going to take the Canadian side out of the equation just for right now, because we live here, it's our own backyard. We will always continue to look locally, and in and around the Greater Toronto and the GTA. If you look at the US, some of the markets within the US have just exploded, right? If you look at Florida’s, Texas, Carolina’s, Alabama, Tennessee's, these are all great states that have phenomenal growth. 

I mean, you've got people that are leaving the New York area, the Chicago area, California. I mean, really like in droves, they're packing out of there. The opportunity to really look at population growth, industry, I mean look at cities like Austin and Phoenix, the amount of large technology companies that are opening up offices in and literally bringing in thousands of employees, they all need a place to live, they all need a place to work. The growth is just phenomenal. 

We've identified quite a number of states and cities and areas within those cities that are going to have those type of opportunities and once we've identified that, we hone in we work with local brokers, we call up owners directly, we go door knocking, and I'm not going to say that it's easy. Nothing's easy. I mean, we work hard. We work hard and then we go to Orlando and we play hard.

[00:19:21] NS: That's fair. That's fair. How difficult has that been connecting to the US and people in the US and making, with COVID obviously, travels has been a little bit restrictive, having those one on one conversations, obviously, you've had to adapt a little bit. How has that been for you that experience of making deals happen in the US versus Canada?

[00:19:43] BZ: I'll tell you like this. The advantage to today's world with Zoom or apps like this, really allows you to connect with people anywhere, wherever you want to go, whatever you want to do, you can connect with people. People understand it, right? There really is not an issue in understanding. Now, when you're looking at real estate, which is an actual asset, right? It's not software, you do want to go and you not want to, you have to go and you have to look at it, you have to see it. I would say at the beginning of COVID, obviously, that just was not a possibility. Sometimes you got to arrange for other people to go and see it on your behalf. But since the borders have opened up and you have the ability to fly, of course, you have to go through what the government wants you to do, whether you it or not, and you go, and you check it out. 

If we find a property, and we like it and we underwrite it, and we get it under contract, or we've got everything in place. We'll go out there, right away, we'll have a look at it, and we'll tour it and we'll see if everything that they're telling you is actually there or we'll see if there's something that's under the hood, that is not supposed to be there. You've got to actually go in and see it, there's no deal that we would ever do without actually taking a look and seeing the property.

[00:21:06] NS: That's good advice, because I know that throughout this, a lot of people have done or considered doing that. I mean, I don't have a lot of assets, but I can't imagine buying a property, even when you tour a property, you think what you're walking into, and you think you know, but once until you really get in there, you don't know what you're signing up for. It's really crucial if this is investment, people's money on the line, you have to do that due diligence at the very least is go see it or have someone go see it and tour it. 

I know in the rental space, a lot of people are signing leases, signing tenant agreements without actually going into the property itself. I think that obviously, that's a little bit different because it's not their own, their own asset that they have to deal with. If things go awry, they've got a landlord that hopefully will fix what is required to fix. It's a little bit of a different scenario for that. I think that in that case, people can still continue to operate in the rental industry that way, but definitely, in the investing space, it's wise to see and feel what you're actually signing up for. 

Now, I think I skipped a bunch of questions. But are there any other projects besides the hotel that you're working on? I wanted to touch on just the US versus Canada in general, in terms of the growth and what you're seeing in the market? You've mentioned that the US is got a lot of opportunity. Do you see the same opportunity in Canada or do you think that there's something not too clear yet as to what's going on in Canada and the real estate market?

[00:22:48] BZ: Yeah. I would tell you, there's fundamentally real estate is very similar, whether it's in Canada, or whether it's in the US. Now, of course, there are items that are just different. So for example, in the Canadian space, we really have not had a real downturn since the early 90s, as opposed to in the US that 2008, the market crash. 

[00:23:13] NS: Exactly, yeah. 

[00:23:14] BZ: Even previous to that, the technology crashed, the early 2000s. That high level, that's a big difference. If you look at Toronto itself, the cap rates that you're looking at are going to be in some cases in the high twos or low threes. If you look in the US, yes, some of the top markets, whether they're in Florida, or Texas, or maybe even some of the other states, you might find something a little bit similar to Toronto, but for the most part, they're not there, right. Most of the good markets are, let's say high three caps, low to mid fours, some of the weaker markets, tertiary markets might be even closer to the fives. That is another perspective to look at. 

The way that we look at a deal is we look at opportunity costs, we look at appreciation, we look at a market, we look at population growth, we look at employment, and we look at size, of course. If you're not opposed to going somewhere outside of your four walls or your proximity of within five or 20 miles, then you have to look at that opportunity cost specifically for your investors. If I can get a six cap somewhere, and I can manage it, then I can run it, then I'm going to be able to give a much greater return to my investors than if I was to buy a two cap in Toronto. 

Now, of course, you can then look at it from a per door basis. If I buy something for 50,000, can I sell it for 100,000 or if I — As opposed to if I buy something for 450,000, can I sell it for 490,000? Well, the ratio obviously doesn't add up. You have to look at every single case is going to be a little bit different. Every single asset class is going to be different whether I know a lot of people that are in self-storage, I know a lot of people, obviously in multifamily, industrial. I mean, if you look at industrial in Toronto they're selling, obviously, depending where, but they can be selling it for dollars a square foot. You can look at a place in I don't know, New Orleans, and they might be selling at $100 a square foot, both great cities, both great markets, that again, they're just, it's neither here nor there. 

You have to as an investor, or as a general partner, even a limited partner, you have to look at what is the opportunity out there? What are you comfortable with? What type of risk factors are you interested in? Then you can actually go ahead and invest with the right people, create the right deals, of course, if you need a partner, or do a joint venture with people, you have that opportunity.

[00:25:55] NS: Right, great advice for anyone listening who's at a certain amount of doors, looking to advance their portfolio. Before my final question, I did want to ask, are there any other projects that you're excited about? Where are they, if they're already signed deals? Can you share any of those with us?

[00:26:14] BZ: Yeah. I mean, some of the great deals that we're doing right now is right across the GTA and surrounding areas. We're doing a number of different shopping plazas that we're excited about. We just did a industrial deal, right around the Yorkdale area. We're looking at land as well, outside of the GTA from a development perspective. There are exciting projects that we're working on. In the US, it's the same idea, right? We're looking at a number of different conversions in Texas and Florida, and the Carolinas, in Ohio. Then on top of that, we're looking at different asset classes, whether it's storage, or industrial, or student housing. 

There's so much opportunity out there, as long as you're willing to put in the time and the effort to analyze it and of course, underwrite it, work with the right people. I mean, it's a key to finding the right broker to work with. That is fundamentally the right, you have to do it, because they know their local market, you don't know the local market, if you're not there. If you've been there for a number of years, of course, you're going to know the owners, you're going to know the players, the brokers, and that's great. 

As you're breaking into a new market, you need to be speaking to the right people that are going to be bringing you the right deals. Of course, you have to explain to them why they should be bringing it to you and not to other buyers. Of course, if it's a marketed deal, everybody has a shot to look at it, but at the same time, if they know that you're going to be able to close and you have the ability to do it, and you have a track record, and you have to build a track record, they will be more inclined to work with you and bring you the business, because they know that you can close. 

[00:27:52] NS: Right. Now, I also want to ask another question, in terms of bringing it back to Rentsync and the marketing side of things. How are you looking at marketing and establishing these buildings that you're purchasing for either residential rentals? How are you looking at branding and things like that? How are you getting those out there? How are you getting them rented? How are you getting leases signed? How is that process looking for you?

[00:28:18] BZ: Right, so that's again, there's a number of ways to look at it. In some of our cases, we will manage it ourselves. When you look at it from that perspective, of course, there's old school ways of doing it, but you've got your signage, you've got your online marketing, whether it's Google ads, or it's just you're working specifically with the new type of real estate marketing that's out there. Then even on top of that, you'll find a lot of cases not specifically in ours, depending on the asset class that it's in, but social media, whether it's Instagram pages, Facebook pages, even today, you've got real estate companies that are using TikTok, quite heavily, just from a marketing side. It all adds to what it is that you're looking at. 

Now, in many of our cases, we might not necessarily manage it ourselves, we're going to use third-party marketing. You've got a lot of the big players and the local players. They've got their systems all set up. Of course, before we go into a deal or we bring in a third-party management, we will look at everything that they're doing and we'll look at their experience, we'll look at their current portfolio, and we'll get a clearer understanding of their occupancy, and their tenant, then the signup process. There are many ways to skin the cat, so to speak, and understand how you're going to actually go out there and lease it up, based off of whether or not you're going to be managing yourself, whether your partner is going to be managing it, or whether or not you're going to bring in third-party management. Then, of course, you're going to be doing the asset management on top of it to make sure that you're going to get that occupancy as high as you possibly can when you get into a new property.

[00:29:52] NS: For sure. Now in terms of marketing like in Toronto versus marketing in the US and some of the other, do you feel like you need to go locally to get a good sense of those people knowing that market better than the one in Toronto versus the one in Austin? Do you feel like that's what you have to do is find local help or do you think that with the agencies and the people that you've connected with they have got a good scope of how to market things on a North American scale?

[00:30:26] BZ: I would say that we would always look locally, there's no question about it. We're in the GTA, so we'll manage locally, because we know the market, we understand it, we know the players are and if we have to move, let's say, for example, one tenant to another property, if possible, if that's an opportunity and because that just makes business sense and we'll do that. But as far as, if we’re in a market that is outside of our four walls, we will always work with somebody that is local. 

So whether or not that means somebody that we will do a JV with and they're local to the market, and they can manage it, then great or whether that means that you're going to work with a third-party management. I'm not saying that that third-party management is not a national player. They could be a national player, but they've got to be very localized with their managers in that particular area. If somebody is a manager in New York, and they have a shop in, let's say, Austin, but they're not actually in Austin, and they've fly back and forth, that's not something that we work with. We would only work with somebody that set up as a shop locally to that particular property.

[00:31:30] NS: That makes sense. That's great insight. I think for us as well. I know that a lot of who we work with are third-party managers, and they do exactly what you just said. They've got people everywhere and they understand each of their markets individually and bring the key players to the table when necessary. My actual last question is for you today, is anyone looking to connect with you, where can they find you, Ben?

[00:31:56] BZ: The best place to connect with me is on LinkedIn. Look myself up, Ben Zlotnick, you can find me very easily. I've been on it quite a bit. I would say that I'm fairly active on it, but I communicate. There's a lot of things that, I'm sorry, I love to connect with new people. I believe in that open network. I believe that there's opportunity by meeting new people and of course always can, reconnecting with people that you've met in your past. I believe heavily in mentoring and coaching because that's the way that the world goes. If I can help you never expect anything in return, but life's a big circle. Do good things and good things happen to you. That's the way that I look at it.

[00:32:39] NS: Awesome. Well, Ben, thank you so much for sharing all your knowledge and insight with us and taking the time to join me on your vacation on this episode of Sync or Swim. Until next time, keep swimming.