If you spend 3 weeks super focusing on one area of the market and studying everything there is to know about that segment of the market, you can become an expert on that small concentrated area better than 99% of your competition, even if you are brand new to the industry. I would recommend focusing on one neighborhood of the city (or one asset type) and know it better than anyone else alive, rather than knowing an entire county.
Asa part of my series about the ‘Five Things You Need To Know To Succeed In The Real Estate Industry’, I had the pleasure of interviewing Nikita Zhitov.
Nikita Zhitov immigrated to the United States from Russia at the age of 14 in May 2000, and began his career in real estate at the age of 18 when he acquired his first 16-unit apartment building during his senior year in high school. Since the beginning of his investment career, Nikita has acquired and/or developed hundreds of properties in the continental United States as well as overseas. His experience in the industry includes renovations of historic landmarks, ground up construction of mixed-use and multifamily projects, land entitlements and development, ground up development of single and multi-tenant retail buildings, acquisition and renovation of office buildings, build to suit and ground lease transactions with national and publicly traded retail tenants, residential subdivision developments, condo conversions, mineral rights exploitation, mobile home parks, and luxury housing construction. In addition Nikita has conducted over 500 brokerage transactions earning a prestigious Power Broker Award by Costar.
Nikita is a medal-graduate of the prestigious North Carolina School of Science and Mathematics and is a published author of an industry-specific book “Expandability of Investment Real Estate”. Nikita is a recognized local business leader and has been invited to speak at numerous real estate conventions as an industry expert and as a motivational speaker. Nikita is a private pilot and is also fluent in Russian, French, and English.
Thank you so much for doing this with us! Can you tell us the “backstory” about what brought you to the Real Estate industry?
Inmy senior year in high school, after all my college applications were done, I was somewhat bored and trying to figure out what I was going to do after graduation. I was playing around with some stock trading, came across this thing called real estate investing, and quickly became very intrigued since you needed very little money to do it. I had no money at all as a teenager, so that made this business look achievable for me. I learned in real estate that you can tie up properties with very little money and then wholesale them for a big profit to other investors. I also learned that you can use leverage and creative techniques such as seller financing to acquire assets yourself with very little of your own money. I only had to find sellers willing to listen to my creative financing ideas and I would be on my way. That proved to be rather challenging given my lack of confidence, lack of knowledge of the industry lingo, and heavy accent. But at the end of the day, I was young, hungry, and relentless, so I was able to self-educate on the subject matter, gain confidence and overcome those challenges.
Can you share with our readers the most interesting or amusing story that occured to you in your career so far? Can you share the lesson or takeaway you took out of that story?
Back in 2017, I purchased a piece of land in Raleigh, about 18.5 acres approved for 17 estate-size lots. I got a good deal and only paid $400K for it. The day I bought it, I had an offer to flip it to another developer for $1.1 million. I could have made a quick $700K in a week with less than a $10K investment out of pocket. Instead, I got a little overly confident and said “I don’t need the money right away, I’d rather do a cool project and build out 17 luxury estate homes on this property myself because I can also make more money that way.” I projected my profits were going to be around $5M if I built out the project myself, so I declined a $700K assignment fee offer and proceeded to close and begin developing This project taught me invaluable lessons because everything that could go wrong with the project went wrong. From having to build a very expensive pump station and extend utilities from across the highway, to running into unsuitable soils and having to import tens of thousands of pounds of rock to stabilize them, to having to build creek crossings, you name it. The list of challenges went on and on and on. Long story short, 3.5 years later, we were finally able to finish the project and sell all the lots. We ended up spending a total of $4M on the project and our life on it, only to realize our profit was $56K, as compared to $700K we could have made in less than a week. The most significant lesson learned for me was that you should always take easy money first because long, hard money is never guaranteed. Also, time is your most valuable asset, so to maximize time, you should be focused on constantly elevating your total hourly worth instead of the total dollars you are looking to make. In the story described here, even if the project were to go according to plan, and I would have made $5M on the deal as a group, my personal hourly rate would have been $300-$400/hour at best considering how much time spent on the project; If I were to take the quick assignment fee of $700K with less than 20 hours of time invested in the deal at that point in time, my hourly earn would have been around $35K-$40K/hour. So valuable lesson learned — always look for ways to optimize your time and your hourly worth and never get emotionally attached to projects.
Do you have a favorite “life lesson quote”? Can you share a story or example of how that was relevant to you in your life?
“Life is fair by being unfair to everyone”. I don’t remember who said that or where I’ve heard it, but in my life, I’ve been told almost weekly — “oh you’re so lucky, it’s not fair.” The reality is that “everyone is fighting a battle that no one knows about,” which is another one of my favorite quotes.
We all have different challenges that life throws our way. Life is unfair to everyone in its own ways. The best thing to do is to count your own blessings and be grateful for things you have and not what you don’t have. You attract more of the things that you focus on and are grateful for, so focus on your blessings and not your shortcomings, and more things shall be given to you as a result.
Are you working on any exciting new projects now? How do you think that will help people?
We are working on many infill development and redevelopment projects right now. We also do a lot of historic renovations preserving old landmarks. I think infill development is very important for the environment because essentially we are recycling old dilapidated buildings, modernizing them to current standards, and therefore prolonging their useful life. But even in instances where we have to tear them down and build new ones in their place, I still think it’s a large positive impact on the community because it not only beautifies the city’s streetscape but it protects the environment by recycling previously developed parcels of land instead of cutting down new trees in the suburban and rural areas that were not previously developed.
What do you think makes your company stand out? Can you share a story?
Cityplat is a very unique company for several different reasons. Real estate is a very powerful vehicle that has the ability to transform ordinary people’s lives into extraordinary lives full of abundance and wealth. I’m very grateful for this industry. When we started Cityplat, I wanted to make sure we make the opportunity to transform one’s life easily available to other young spirits who strive for great things but aren’t sure how to get there. In that respect, Cityplat is one of the only few shops in NC to not only broker properties but encourage its brokers to invest in properties themselves (“practice what you preach”). Every person who works for our company has the ability to invest in deals with us, whether it’s a value add retail shopping center or a ground-up condo development project. As a young real estate entrepreneur, it may be challenging for you to go out and buy a $10M apartment complex or an office building. You need a good balance sheet, creditworthiness to qualify for a loan, and a bunch of money for a downpayment. But if you work for Cityplat, you don’t have to have any of those things. You simply have to find a deal, we’ll take care of the rest and will make you a partner in it l. We have brokers in their early 20s who are already partners and co-owners of millions of dollars of income-producing properties and they got there with no money out of their own pocket. To my knowledge, no other shop in town offers the same opportunity for growth and wealth accumulation as we do at Cityplat. Other shops either do strictly brokerage or strictly investing. Not many shops teach their brokers investing and development games and not many shops are willing to share the wealth with their staff by making them partners in deals. We don’t mind sharing the wealth because we have an abundance mindset. As a matter of fact, one of our company goals is to make sure every broker who works for us becomes a millionaire within 5 years or less of joining the firm, and we work very hard to make sure we help them get there.
Another unique aspect of Cityplat is that we believe in constant growth. Commitment to growth is one of our core values. We believe that you are always moving. The moment you stop moving forward and progressing, you start moving backward and fall behind the progress. To this extent, we constantly look for ways to better ourselves. Every person in our company can be found in some type of seminar, conference, or self-improvement class on a weekly basis throughout the year. Also, we really emphasize the importance of reading. Every person at Cityplat is required to report the list of books they’ve read from the week prior on a weekly basis, and folks on average anywhere from one book up to seven books per week.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?
Real estate is a team sport, and my success wouldn’t exist without the help of many people along the way. There are many people for whom I’m grateful for their support. Of course, my parents have always been my role model. My wife for her unconditional support and belief in me. My partners and investors who back my projects and ideas. I also want to specifically single out a few of my mentors who had the biggest impact on my career — Ron Pate, Greg Pinneo, and J. Scott Scheel. Ron got me started in real estate. Greg taught me the most creative real estate strategies that enable a young entrepreneur with no money like myself to acquire significant amounts of real estate over a short period of time. Scott opened my mind to bigger possibilities of commercial and industrial real estate and helped elevate my game to the next level.
Ok. Thank you for all that. Let’s now jump to the main core of our interview. Can you share 3 things that most excite you about the Real Estate industry? If you can please share a story or example.
The most exciting thing about the real estate industry is the concept of leverage. Real estate offers a variety of extremely powerful tools that activate the power of leverage and enables you to create significant values and equities with very few resources. Aristotle said, “give me a lever and I can move the world”. This statement is very applicable to the real estate industry. For example, let’s just take one real estate tool called “options”. In the area where I live you can control approximately $1M of land with as little as $10K in option money. So if you believe your area is headed on the path of growth over the next 5 years, but you don’t have money to buy millions of dollars worth of land to hold, you can utilize this tool called Option Agreements, and for $10,000, you can buy a 3–5 year option agreement to purchase around $1M worth of land. If that land appreciates at a rate of 10–15% a year over the next 5 years, you can then simply sell your option contract at the end of your option period for the new appreciated value ($500K-$750K), and realize a return of 5000–7500% on your $10,000 investment. The real estate industry offers around 300+ creative tools on how to utilize the concept of high leverage to make huge profits, option agreements are just one of them. That’s why I love this industry — it makes the creation of wealth achievable for normal people like me who come from very humble backgrounds.
Can you share 3 things that most concern you about the industry? If you had the ability to implement 3 ways to reform or improve the industry, what would you suggest? Please share stories or examples if possible.
The thing that concerns me about the industry today is rising interest rates. Low interest rates are the only thing that kept the economy afloat over the past few years. If the Federal Reserve Board (FED) starts raising rates aggressively, it will devastate the market and will result in significant losses for a lot of people.
What advice would you give to other real estate leaders to help their teams to thrive and to create a really fantastic work culture?
I would recommend to others to build their companies the same way we continue to build ours — have an abundance mindset and share the wealth, the knowledge, and the know-how with your team. If you focus on helping them become super successful and turn them into millionaires, I think you’ll do well along the way yourself too.
Ok, here is the main question of our interview. You are a “Real Estate Insider”. If you had to advise someone about 5 nonintuitive things one should know to succeed in the Real Estate industry, what would you say? Can you please give a story or an example for each?
- Real estate is a guaranteed way to build wealth over time. Just stick with it, and I promise, you’ll be very glad that you did.
- Real estate is a very slow business, so don’t expect overnight results. Have some patience and it will pay off.
- Don’t underestimate the power of leverage and the compound effect. Once you really get a grasp of these two concepts, your life will change.
- In income-producing properties, small changes in income or expenses create huge results in value creation. An extra $10/mo per unit in rental income on a small 10-unit apartment building creates an approximately extra $20,000 of equity in a 6% CAP market. Pay attention to ways to make small improvements in your NOI and your wealth will grow like it’s on steroids.
- If you spend 3 weeks super focusing on one area of the market and studying everything there is to know about that segment of the market, you can become an expert on that small concentrated area better than 99% of your competition, even if you are brand new to the industry. I would recommend focusing on one neighborhood of the city (or one asset type) and know it better than anyone else alive, rather than knowing an entire county.
Because of your position, you are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the greatest amount of people, what would that be? You never know what your idea can trigger. 🙂
I think real estate investing should be taught in school as a mandatory piece of education because of how powerful it is to create financial freedom for ordinary people. As a matter of fact, I’ve recently started the Nikita Zhitov Foundation for real estate education which offers scholarship opportunities for high schoolers in North Carolina to get into real estate if they so chose to. Our website shares more about our mission: https://nikitazhitovfoundation.org/.
How can our readers further follow your work online?
Social media is probably the best way to keep up and stay in touch these days with what we have going on. Our website is www.cityplat.com and it offers links to our social media accounts.
Thank you for your time, and your excellent insights! We wish you continued success.
About The Interviewer: Jason Hartman is the Founder and CEO of Empowered Investor. Jason has been involved in several thousand real estate transactions and has owned income properties in 11 states and 17 cities. Empowered Investor helps people achieve The American Dream of financial freedom by purchasing income property in prudent markets nationwide. Jason’s Complete Solution for Real Estate Investors™ is a comprehensive system providing real estate investors with education, research, resources and technology to deal with all areas of their income property investment needs. Through Jason’s podcasts, educational events, referrals, mentoring and software to track your investments, investors can easily locate, finance and purchase properties in these exceptional markets with confidence and peace of mind.
Starting with very little, Jason, while still in college at the age of 19, embarked on a career in real estate. While brokering properties for clients, he was investing in his own portfolio along the way. Through creativity, persistence and hard work, he earned a number of prestigious industry awards and became a young multi-millionaire. Jason purchased a California real estate brokerage firm that was later acquired by Coldwell Banker. He combined his dedication and business talents to become a successful entrepreneur, public speaker, author, and media personality. Over the years he developed his Complete Solution for Real Estate Investors™ where his innovative firm educates and assists investors in acquiring prudent investments nationwide for their portfolio. Jason’s sought after educational events, speaking engagements, and his popular “Creating Wealth Podcast” inspire and empower hundreds of thousands of people in 189 countries worldwide.
While running his successful real estate and media businesses, Jason also believes that giving back to the community plays an important role in building strong personal relationships. He established The Jason Hartman Foundation in 2005 to provide financial literacy education to young adults providing the all-important real world skills not taught in school which are the key to the financial stability and success of future generations. We’re in a global monetary crisis caused by decades of misguided policies and the cycle of financial dependence has to be broken, literacy and self-reliance are a good start. Visit JasonHartman.com for free materials and resources.