Next-gen real estate entrepreneur connects non-virtually to gain perspective on tech-revitalized affordable housing investments
Next-gen real estate entrepreneur connects non-virtually to gain perspective on tech-revitalized affordable housing investments

I met Michael Ansusinha, founder of Snowlake Group for coffee on a Monday morning at Hometown Coffee & Juice, a bustling new establishment giving the local Starbucks a run for its money in downtown Lake Forest. Our discussion had turned to how recent Fed rate increases would impact multifamily asset prices. Michael felt that since the cost of capital was increasing, therefore asset prices would experience downward pressure. I felt not. “Perhaps some distress in office assets, but only short term and on a case-by-case basis. Real estate is a local business, can’t get too macro, etc. etc.” These sorts of interest rate academic prognostications are enjoyable for me and remind me of fond grad school discussions at NYU. While zero money policy predictably contributed to, if not directly caused, price inflation on anything that can be purchased with debt (read: everything from real estate to the delicious-looking Berry Bowl that Michael just ordered – food envy!) rate increases do not result in similarly predictable price action. But what do I know? I’ve learned to be skeptical of any overconfidence that might appear in my market-predictive abilities.

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Michael Ansusinha, founder of Snowlake Group

I recalled for Michael a bitter lesson while a grad student in New York University’s Schack Institute of Real Estate back in 2005. I had developed a close mentorship and working relationship with the Dean of the school, Ken Patton. Ken was a legend of the New York City real estate industry, serving as deputy Mayor under John Lindsay in the late 1960’s during some of NYC’s fiscally darkest days. Lindsay hired him to help “save New York” and start the Economic Development Corporation which designated over 2000 acres of land for urban industrial parks, oversaw the construction of a 60-acre food distribution center in Hunts Point. Ken was COO of Helmsley Spear and brokered $billions in deals. Needless to say, Ken had some connections, so when he invited me to lunch with some of his friends, I jumped. Having worked with Ken on a $900 million land development deal in the Golden Isles area of GA, and approaching completion of my Master Degree in Real Estate Finance & Investment, I was confident I had something to offer to the lunch discussion. I embarked upon soliloquy, in which I explained that there existed an inflationary bubble under the valuation of all real estate assets, created by the proliferation of liquidity instruments in the secondary market and the degradation of underwriting standards to meet the need. The value of real estate, particularly housing, should grow at pace with simple CPI inflation. Once the bubble bursts, valuations will correct all the way back to this level. Ken, my hero and mentor, legend in the industry was the first to speak, “That is a loser mindset.”  I was crushed.

It wasn’t the blunt inelegance of his comment, New Yorkers don’t mince words. It was that he was critical of my analysis! Academically, I was convinced that I was right! But where the rubber met the road, Ken had the track record.  What was I missing? It drove me crazy, but I was too stubborn and prideful to circle back with Ken on it. I ended up graduating and getting a job in June 2006 with a Dutch developer based in Brooklyn, developing on the Hudson River in Upstate New York. The strain in the credit markets that I saw and studied a year prior continued and grew to the breaking point. Lenders retreated, buyers dried up, projects I was worked on stalled, ultimately the company closed. I with my freshly minted master’s degree were back out there networking and searching again, only now in a decidedly more distressed real estate job market.

Was I right and Ken was wrong? Certainly, seemed that way, I just wish I hadn’t been.  Fast forward 17 years, having coffee here in Lake Forest with Michael, an ambitious real estate entrepreneur and recent graduate from Northwestern with undergraduate double majors in Econ & Psychology, I finally had an answer to that question: No, Ken was right!

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Ken Patton, former Deputy Mayor NYC & Dean of NYU Schack Insitute (Credit: The Real Deal)

What Ken had and I didn’t at that time, but hopefully have a little more now, was perspective and humility. Ken had the benefit of working through several real estate and economic cycles – the good times and the bad. He had experienced success and failure, again and again. And he had the humility to understand that the successes weren’t always due simply to his brilliance, and the failures sometimes delivered priceless lessons, or saved you from an even greater calamity down the line. Most importantly, Ken had the wider lens perspective to understand that markets are complex human systems, not arithmetic models. One person’s loss is another person’s opportunity. Even as one industry is seemingly destroyed, such as the entrepreneurial independent developer in 2007-2008, another industry is ready to move in to capitalize, such as mezzanine lenders and private equity/hedge funds recapitalizing non-performing loans for pennies on the dollar. There are going to be winners and losers, but that’s to be expected when you decide to enter the arena. 

Michael had reached out to me via email last week, having found me via Northwestern University alumni directory. He mentioned he identified with an account of working out a distressed high-rise development on the Upper East Side of Manhattan that I had posted on my LinkedIn profile. He said it reminded him of the challenges he faced on his first property. “As a newer investor who is looking to learn from others, I’d love to learn more about your experiences in real estate.” Needless to say, I was impressed with this guy’s initiative and approach. He obviously did some research and connected his experience to mine, expressed his interest in learning, and asked for nothing more than an opportunity to talk. Well done. Not only was I compelled to reward his approach with a meeting, but I was also very curious to meet this go-getter and felt I might just learn as much from him as he might learn from me.

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Effective low-tech tool for gaining perspective

Michael was already there, greeting me warmly, when I arrived. When I suggested our meeting place, I hadn’t known that he would be traveling over an hour from Hyde Park on Chicago’s South Side. But Michael was all smiles, nonetheless. Northwestern graduates involved in direct real estate ownership/ development are somewhat rare, so I was happy to find a kindred spirit as enthusiastic about the field as me. He told me about the first building he purchased, a 33-unit multifamily property with affordable housing units in the Jackson Park neighborhood of Chicago’s south side in November 2021. Michael was a double-major at NU, Econ and Psychology, interned at Goldman Sachs, so I knew he was a smart guy. But as far as I could tell, it didn’t seem that he had had any prior real estate experience before acquiring the kind of challenging and “hairy” real estate deal that most investors would avoid. Perhaps this was the point. I was impressed and intrigued. He told me how formed his company, Snowlake Group LLC raised equity from family and friends and rolled up his sleeves. In addition to managing the acquisition, financial operation, and collections, Michael also cleared building violations, cleared out debris, cleaned up common areas and repaired toilets. He learned to navigate the complexities of affordable housing programs, including Section 8 and the alphabet soup of programs and agencies involved. He even successfully negotiated a couple “cash for keys” deals with a few select tenants operating “side businesses” incompatible for his vision for the property. “I had never done anything like that before. I was nervous, but luckily it worked out pretty smoothly!” 

Over the course of a year, Michael stabilized operations at 100% occupancy and 98% collections, generating a healthy 22% Cash-on-Cash Return, predicted IRR of 35%. More importantly, Michael was having a positive impact on the local community. Employing a part-time maintenance guy who lives in the property, the improvements to the quality of life for residents were dramatic and appreciated. As one resident who had lived in the property for 24 years put it, “Michael is a good guy. My children now also have an apartment in the building.” When more family and friends heard about the success, he was having with his first property, they wanted in. In March of this year, Snowlake Group purchased his second property – a 20-unity just a few blocks away from the first. Michael says, “Ideally, my goal is to acquire a third by the end of the year.”

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One of Snowlake Group’s Jefferson Park Properies (Credit: Snowlake Group)

Really impressive. As Michael was asking my opinion on Fed rate moves, suggestions for growth, feedback on new acquisitions, I was grateful he reached out to me, but worried that I might not be able to give him anything of value. What can I offer to this focused, young, already on his way entrepreneur that he doesn’t already have in great abundance? Perspective. My perspective. It is the lens through which both success and failure have equal value, honed by time and experience, where the past and the present meet. And from my perspective he should stay true to his investment thesis, his business plan, and remain patient. Snowlake Group has a novel approach, is adding value, and delivering real returns to investors. That is something worth maintaining.

To the young real estate investors like Michael, I would recommend concern yourself little with the moves of the Fed. One finds a lot of apocalyptical articles again these days, predicting the failure of the dollar, the commercial office market, the general economy, and even the end of the US itself. This type of proliferation of pessimism rises from time to time. I advised Michael that if he ever starts to convince himself of some sort of “paradigm shift” or end of times predictions, to seek out the perspective of someone who has endured a few business cycles. Be skeptical of your own analysis. When you are lost in the weeds of your model the outcome can look very binary – all growth or crashing to zero. The perspective of an experienced trusted advisor can help you to zoom out to see that downward or upward slope as part of a cyclical pattern, not an end in itself.

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Zoom out of the weeds to change perspective

I mirrored back to Michael what I felt he was doing right.  He has a smart operational business plan. Many new investors in real estate focus too much on the transactional quality of real estate, the acquisition, leases, and sale, and not enough on the operation. Indeed, the transactional opportunities which commercial real estate makes possible are the value-generating lifeblood of the asset class. But at its core, every commercial real estate asset, whether multifamily, office, retail, institutional or industrial is a small business. To add real value, it must be much more than a single line-item percentage of rents outsourced to a managing agent. These are the places where people work to contribute to our economy and provide for their families, where they live and raise children and share in the memories of life, where we play and shop and learn and work and live. Michael and Snowlake Group gets this right off the bat. Their Vision is “To Improve Buildings” and their Mission is “To Serve All of our Stakeholders.” Seemingly typical language until one reads on to learn that they define stakeholders first as Tenants, then Investor, but also Employees & Contractors and Communities. This is an enlightened mission and commendable.

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Quote from a resident who has lived in the building for 24 years

Further, Snowlake has recognized the business opportunity of entering an asset niche, affordable housing, which has a relatively higher barrier to entry – it requires a bit more work dealing with all of the Federal, State, County and City agencies. But there are benefits and guarantees for those willing to do the work. They have identified other competitive advantages to add value, including utilizing AI and other technologies to modernize building operations. Further, their commitment to serve their tenants by properly maintaining their properties and improving the community adds far-reaching value. My advice to Michael was to keep doing what he is doing. Stay true to your business plan and investment thesis, stay disciplined and resist the urge to change to chase after returns or perceived opportunities. Stay with it long enough and continue adding value. You never know, there may be some externality which changes the equation and makes Jackson Park the hottest real estate market and you’ll have your big payday exit strategy. Maybe you won’t choose to exit at that point. Delivering strong returns and adding real value to a community is important work in and of itself.

It only takes one bad deal to wipe out all your returns. I related my experience with that first development job out of grad school. Our initial acquisition and proforma was all based on developing a rental multifamily/ mixed use development in Upstate New York. This was 2006 and there was such an appetite for condominium deals, which for the previous several years could not lose money. It was all but impossible to secure financing for a rental development at that time, but we were convinced we were ahead of the game. Of course, I had been convinced that a credit market dislocation was imminent for some time, but I was low man on the totem pole. Ultimately a few of our key investors plus attractive lending convinced the partners to pivot to a condominium development model. The proforma assumptions continued to chase higher and higher market comps and before you knew it the presale units were launched as an ultra-luxury product in a tertiary market (at best). The marketing launch coincided almost exactly with the news of the subprime markets blowing up and the development was dead on arrival. Zero units sold and within 6-9 months, the company and all its equity and assets were lost. Lesson learned: Stay disciplined, stay conservative, don’t chase after returns, unpredictable (and predictable) externalities cut both ways.

Even though I was unable to influence the direction of that Upstate New York development, I recalled hearing a similar message from another legendary and grizzled titan of the real estate industry, Sam Zell. (I am heartbroken to learn of his passing today, the day I am posting this article.) Sam had been in headlines again recently predicting contrarily, as is his style, the reversal of remote work trends and the return to office.  He was a perennial and favorite special guest speaker at NYU when I was there, and as covered by in April, still is.  I shared with Michael that the likes of Ken or Sam are the ones you want to look to in changing market conditions. If Sam Zell says there will be a return to central office business districts, you’d be a fool to bet in the opposite direction. That isn’t to say there won’t be opportunities in the short-term for new investors to benefit from others distress if they are not able to hold onto the property through the lean times. This is the essential point of perspective – always consider the other side of the trade. I recalled meeting Sam Zell after a panel discussion at NYU, embodying this engaging quality of being warm, approachable, and immensely intimidating at the same time. When asked, with property values so high, how do you guard against paying too much for a property, Sam said that the only metric he uses for valuing acquisitions is replacement cost. It’s the only metric he has ever used, and it’s never been wrong. If you buy it at a discount on the replacement cost, you can’t lose.  While this may be an oversimplification of his actual process, it clarified for me to anchor your investment models to a disciplined system, not the whims of market timing.

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Sam Zell, real estate legend and titan, rest in peace. (Credit: Equity Group Investments)

I told Michael that I’d like to write an article about our meeting and he agreed. The main point of which I had intended to be on the fact that in this Zoom-call, algorithmic-screening, impersonal post-COVID era, I was really impressed that Michael sent a personal and authentic email to connect with me and agreed to meet for coffee non-virtually! Some of Sam Zell’s comments quoted in The article by Jack Rogers reminded me further of what I liked about this young entrepreneur and why he’ll continue to be successful.  “I don’t know how a young person who wants to be recognized, who wants to be rewarded for superior effort, can do so if the person who makes the decisions about them doesn’t see them at work,” he said. “An in-person meeting is where the real discussion takes place.”

The wise heed the advice of those who have been around a few cycles. No doubt, future generations will be seeking advice from Michael Ansusinha, but until then, I’ll listen to Ken and Sam. Thanks, Michael, for seeking me out for a real discussion. Keep up the good work. Next time, coffee in Jackson Park!

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An in-person meeting is where the real discussion takes place.

About the Author: Jim Foley is an entrepreneur, educator, public speaker and thought leader in the areas of Real Estate Development, Process Management, Sports Equipment Industry and Artificial Intelligence. He is founder and Managing Director of Equity Real Estate Partners ( which solves time, budget, and expertise constraints by leveraging technology to provide growth-focused real estate advisory services, to investors, developers, construction trades, and small business owners to help them accomplish real estate investment, capital project, and business sustainability goals.