The key to a lucrative real estate career is gaining control so you can borrow strategically. It is a matter of putting yourself in a position to invest ethically and honorably without being at the mercy of banks—and those principles are the foundation of Mike Tomasetti’s success. Mike is a real estate developer in Center City, Philadelphia and he has been working in the industry for nearly twenty years. In the latest episode of Real Estate Investing for Professional Men and Women, Mike joins us to share his story and talk about the tactics and strategies that have brought him success as a real estate developer.
Mike and his partner build multi-unit apartment buildings in Philadelphia, and developments of one hundred units or under is their bread and butter. They build track homes for cash now, but the apartment developments are typically apart of their buy-and-hold strategy. Mike uses GP and LP deal structures depending on the project at hand, and every deal is different because they attract a diverse array of high-net-worth investors. Mike maintains consistency by vetting each potential partner to determine whether or not their goals align. If there is a good fit, they do a deal together; if not, they move on to the next person—it is that simple.
If there is a capital gains tax from selling other properties, you can roll it into the opportunity zones. It is a long term play but the tax benefits are huge because if you hold the property for ten years, you immediately get 15% off of your taxes. After that, you only have to pay taxes on 85% of the money you put into the investment while seeing a 7-8% return as well. This is why Mike and his partner make sure the deals pencil out before they move forward, and it is just one way they get creative with their development deals. To hear more of the tactics and strategies Mike uses for real estate development, listen to his episode, “Doing Deals as a Real Estate Developer.”