The Great Opportunity For Real Estate Investors, With Mike Hardy

This current point in time may offer a great opportunity for real estate investors, despite (or perhaps partly due to) negative investor and consumer sentiment.

Mike Hardy, principal and co-founder at Cyrus Capital Management, joins the show to discuss his macroeconomic view of the residential real estate market, and how his Opportunity Zone fund may be poised to take advantage of a generational opportunity.

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https://www.youtube.com/watch?v=/tWmOkvIQDdc

Episode Highlights

• Mike’s background in the mortgage industry, how he developed a passion for Opportunity Zones, and why he started Cyrus Opportunity Zone Fund.
• A brief recap of 2022, the current macroeconomic outlook, and why 2023 may be a unique point in time that presents a generational opportunity for real estate investors.
• What investors often fail to understand about the many differences between 2022-23 and 2007-08.
• How the mid-sized Cyrus Opportunity Zone Fund is positioned in a “sweet spot” ripe with inefficiencies that an experienced fund manager with local intel may be able exploit, to the advantage of investors.
• How Mike’s successful mortgage business has provided him a healthy pipeline of Opportunity Zone deals.
• Cyrus Opportunity Zone Fund’s strategy of build-to-rent, mixed with fix-and-flip residential, and why Mike’s team likes southern California’s Inland Empire.
• Private equity real estate trends for High Net Worth investors and advisors to consider over the next several years.

Featured On This Episode

Guest: Mike Hardy, Cyrus Capital Management

About The Opportunity Zones Podcast

Hosted by OpportunityDb.com founder Jimmy Atkinson, The Opportunity Zones Podcast features guest interviews from fund managers, advisors, policymakers, tax professionals, and other foremost experts in opportunity zones.

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Show Transcript

Jimmy: Welcome to “The Opportunity Zones Podcast”. I’m Jimmy Atkinson. Given current somewhat negative investor and consumer sentiment, are we possibly in a period of great opportunity for real estate investors? Cyrus Opportunity Zone Fund’s co-founder and principal, Mike Hardy joins me today to discuss this topic and more. Mike joins me today from the greater Los Angeles area. Mike, great to see you. Thanks for coming on the show and welcome,

Mike: Jimmy, thank you so much. It’s a pleasure to be here.

Jimmy: You bet, Mike. Great to be back on with you. I just met you earlier this month. I didn’t know you last year, but 2023 is already bringing new connections. So now, Mike, a lot of our listeners are opportunity zone super fans, I like to call them sometimes. So, I’m sure some of our audience of high net worth investors and advisors may have heard of the Cyrus Opportunity Zone Fund already. But for any who aren’t yet familiar, can you give us a brief introduction to Cyrus? And what’s your role there?

Mike: Sure, absolutely. I am a co-founder and principal of the fund and I am a nosy superfan as well, just for the record, I stumbled upon it sort of in an odd way. Was co-presenting with a number of folks on just creative real estate strategies and covering 1031 DSTs, charitable remainder trusts, 721 provision. And this is right a couple of years ago when the OZ was the new kid on the block, and we couldn’t find an OZ expert at the time. And so I ended up taking a segment as an investor to present and spent, you know, the better part of a month just in the tax law understanding and came to see this is just an amazing solution that could solve a lot of pain for me personally. And so that was the backstory that launched the Cyrus OZ Fund. So, I’ve been in the mortgage banking, and real estate investing space for a long time, and we’ve set up our fund really to maximize what I think is a sweet spot, which is just kind of like above the mom-and-pop level and below the Wall Street Fund. I find that there’s massive inefficiencies that exist in that space, and that combined with 20 years of relationships, we get a lot of looks at things that just kind of don’t hit the market that get to us, and so that’s where we’ve been able to do real well. So, that’s a little bit of the backstory.

Jimmy: That’s great. And I want to dive further into that backstory on your mortgage business and your fun strategy, and that sweet spot that you mentioned too, between the mom-and-pop and the institutional funds, and get a little better explainer or deeper explainer on why those inefficiencies exist and how you’re able to take advantage of it a little bit later in the show today. But first, I wanted a little more background on you personally, Mike. Can you give us a little bit about your backstory and what makes your background…what about your background makes you somewhat unique in the industry?

Mike: Sure. Well, you know, kind of interesting. I actually grew up poor. Some of my early memories were living in a trailer. My sisters and I, two younger sisters, were in the far corner and my parents in the other, and I remember when we bought our first home, like, the world just opened up for me. And so a couple of lessons from that, I was able to, in my early years, just coming from not having a lot of things and then watching my dad, he was getting his Ph.D. at the time and then ended up doing really well later in life. But I was able to witness what it’s like to really not have anything and then watch some fairly significant success happen.

So, it really gave me an appreciation for the American dream for what’s possible, and for a combination of hard work and innovation, and creative thinking. So, that’s really my backstory. I was a pre-med undergraduate in college. I thought I wanted to be a doctor. Ended up completing the degree, had zero desire to go to medical school. Ended up working as a financial advisor, formally trained as a financial advisor before finding this amazing world of real estate. So, that’s a little bit of the backstory, but growing up without much, you see the world differently and I just see opportunities everywhere. And that’s what the Opportunity Zone world is for me. It seems like there’s so much opportunity that exists. Part of it is just staying focused, but I’m a big fan of what was created with the 2017 Tax Act.

Jimmy: Yeah, I think we all are. I refer to it as the greatest tax benefit that has ever been created. Somewhat exaggeration, possibly sometimes, but it does grab people’s attention. Also, for some people, it’s not an exaggeration at all. It really is one of the greatest tax incentives ever created. So, one of my business partners, Ashley Tison, co-founder at OZPro has a phrase he likes to use. One of the services he likes to bring is the democratization of opportunity zones or bringing this somewhat complex structure to the masses. Does that resonate with you at all, Mike? Do you kind of view yourself as bringing these once only held by institutions or large investors or big firms, these real estates, private equity real estate investments to the little guy, for lack of a better term?

Mike: You know, I love that. That actually really resonates with me, and I feel like a little bit of a bridge. And I’m shocked at how many very smart, well-connected people are still not aware of it and the power of it. It’s just…it’s mind-blowing to me. And I remember my first aha moment, it was just like, is this too good to be true? This just seems too good to be true. And it took me a while to get up to speed and realize like, this is a gift. I mean, this is once a…you know, once every 100 years, every 50 years where you have a window like this, where it’s a… I mean, I think it’s so beautifully put together, just the way that it serves both investors and it upgrades and improves communities. I think it’s brilliant in essence. So, I’m a super fan, obviously, but I don’t know that…

And that’s one of the reasons I like what you guys are doing, is because you have a campaign to communicate this on a broad scale, and I just see so many of the, you know, elite folks, all the family offices do this, but it just doesn’t quite make its way down to main street effectively. So, that’s kind of fun for me. I’m in this space with a lot of, you know, kind of mom-and-pop and just above that level investors and real estate professionals, and so to be able to have this conversation and this strategy for folks and see their eyes widen, it’s pretty cool.

Jimmy: Great. Well, Mike, you’ve been in this industry for quite some time. You’re well-regarded as an authority in the real estate and mortgage business. I wanna get to Opportunity Zones specifically a little bit more in a minute, but zooming out now, in light of your expertise, I wanna hear your macroeconomic view. So, investor sentiment, as I noted in the intro, has been a bit rocky to say the least over the last 12-plus months. The current interest rate environment has changed a whole lot.

Mike: But what I don’t think most people are realizing is that there’s a couple of things that are very different from 2008 that exist today that are going to position this market and those that I think can maximize the opportunities that exist today. One is the tailwinds of demographics. I mean, it is significant. If you look at what happened during 2008 and 2009, the X Generation, there was a dramatic falloff in birth rates from the X Generation that happened right during a window. So we had sort of this vacuum of new buyers coming into the marketplace that coincided with about a third of all residential mortgage products being, you know, either adjustable or, you know, product risk or client risk where they really couldn’t qualify. We all know the story. And in addition to having massive oversupply in the marketplace, so we had oversupply, we had a fall-off in demand, and then, of course, when the Fed went and started to hike rates during that window, and we had all those resets, it was the perfect storm. So, the part today, I think a lot of people combined with the scary media headlines that we see everywhere, a lot of people are just frozen. And what they don’t realize is that…

Jimmy: They’re worried we’re headed toward another ’07 or ’08 period, right?

Mike: Exactly. That’s right. And so, I mean, you think about it, if you witnessed your parents or you witnessed close people that, like, lost their home. And, of course, it was the most illiquid market we’ve had in 100 years where we’re the opposite of that now. So, there’s a lot of people that think if I saw this happen, it’s happened this way now, we’re going to have a crash. Under the surface is very, very different, and because of that, that’s why I think we’re seeing some significant opportunity. I can unpack that further, but when I look to the future, I think we have a window of about a year or so, maybe 18 months, where it’s very complicated, it’s very inefficient. There’s a lot of fear. I mean, we know psychology and fundamental strive of the marketplace. Fundamentals always win, but in the short term, psychology can swing it. And so I think we’ve got a window where we’ve got some good opportunity for investors.

Jimmy: Yeah. What’s that Warren Buffet quote that you gave me earlier before we hit record?

Mike: Yeah, there’s two that I like. One by Warren Buffet is, “You’d be fearful when others are greedy, and then you can be greedy when others are fearful.” And then Sir John Templeton his is similar and he says…what is it? He says, “A time of maximum pessimism is the best time to buy.” And if you look at, you know, the housing sentiment index, it has fallen to the lowest level since 2011, just recently. It’s ticked up a little bit, but I mean, I’m looking at this chart the other day and I’m thinking, how much real estate do I wish I would’ve bought in 2011? Like, if we were to just follow the…you know, do the opposite of the housing sentiment index, just as an example. But, yeah, when markets are complicated, I think that’s the window for investors to be able to make their move.

Jimmy: Yeah, that’s great. So, well, let’s unpack it a little bit more. So, potential for this great buying opportunity for real estate investors that exist, you think over the course of the next roughly 12, maybe 18 months. Why is that? Can you unpack that a little bit more? And why that time period do you think?

Mike: You know, one of the things that’s happening is if I look at the demographic charts and we look at the millennial generation, I mean, people traditionally buy real estate. Average age is 33, it might’ve just ticked up to 34 years old. And when you look at the wave of new buyers coming into the marketplace that have to rent or buy, there is the largest wave that we will ever have in this country coming over, like, the next five to seven years. And, like, the media’s not talking about this part. Like, this is a significant wave, and so you can’t live in mom and dad’s basement forever, kind of thing, right? So, there’s pent-up demand that’s taking place, and it’s building because of the combination of affordability and the combination of fear factor and what a lot of the millennials saw their folks go through. And they’re just waiting.

And there’s another part of this, it’s really interesting, which is the psychology of when people are willing and able to buy. And I saw a poll recently, let’s see if I can get close from memory, but it was, when interest rates are in the seven, regardless of affordability, only 7 out of 100 people are wanting to buy and say, I’m good with a 7% interest rate. Let’s go buy a home. And that’s in light of where we’ve been recently in the past. When you get into a six handle, you get into the sixes, all of a sudden you open up another 8 out of 100, 8%. Fifteen out of 100 total that are, you know, let’s call it eager and open to buying a home. When you get into the fives, you add another 21 out of 100. And when you get into the fours again, you add out another, I think it’s 30-some percent. And that has to do with just a poll of people, is my rate in the fours, is that in the fives, in the six, and the sevens. So, I say this because we got into the sevens for a while, and so I’m looking at this and this pent-up demand that’s there. And that is…it’s like the tide. It’s coming, maybe like the waves that takes a while and it does its thing, but the tide is going this direction and it’s the biggest wave we’ve ever had in U.S. history.

Jimmy: And interest rates play a huge role in that. And I suppose that tide could be helped if interest rates start to drop back a little bit. Is that your thinking there?

Mike: It’s exactly what I’m thinking. As the Fed gets in front of inflation and tames inflation by, you know, increasing the federal funds and the discount rate. And, I mean, mortgage rates are gonna be pegged to the future expectations of inflation. I mean, there’s a correlation. So, as inflation comes down and we’re already seeing it, I mean, a good part of inflation, of course, is gonna be, you know, the housing portion of that. And there’s a little trailing reporting to that. But as the Fed tames inflation, and, I mean, regardless of what they do with short-term rates, if they push us into a recession, that’s actually gonna be helpful for mortgage rates, you know, separate conversation. But my point being, as rates drop, we’re gonna end up seeing the combination of psychology and affordability improve, and we’re gonna have this cascade back into the marketplace.

And, I mean, I see it firsthand. Our group on the mortgage side, over the last five years, we’ve helped about 5,000 families with a purchase or refinance. So, I have really good close front-end data to see this as well. And it’s just come to a screeching halt and every other conversation, you know, until they get some guidance past this, the saying is, yep, I’m waiting for housing to come down, and I’m waiting for rates to drop. Well, so is everyone else. I mean, it’s like…so that demand is there. It’s not like there’s a vacuum of demand, which is very different from ’07, ’08, and ’09.

Jimmy: No, that’s a really good differentiation to keep in mind when we’re comparing these two different periods of time, for sure. Well, let’s shift gears a little bit. Now, I wanna talk Opportunity Zones with you since it’s the Opportunity Zone podcast. So you are the principal and co-founder of Cyrus Opportunity Zone Fund, as I noted in our intro to this interview today. Mike, how is that fund positioned to take advantage of some of these trends that you’ve laid out before us? And also maybe talk about the size of the fund being in that sweet spot too, and how that plays into your thinking.

Mike: Absolutely. There’s the sweet spot for us. There’s a couple of different things that give us a competitive advantage, and one is just being below a lot of the bigger funds and then kind of above where mom and pop, where the frenzy is. So, we can be in a space where we find really significant inefficiencies that exist. And, you know, of course, then generates great returns for us. So that’s number one. Number two, when we’re buying, just having, you know, the two decades’ worth of relationships, we’ve become known as cash buyers for a lot of real estate professionals that bring us what needs to close quick. And we’re able to pick and choose a fair amount with a lot of these different projects just because of the combination of long-standing relationships and they know that we perform. And so, you know…and then, of course, we’ve got sort of an efficient exit strategy with some of the projects that we do. So, we build and we exit efficiently. We’re below the Wall Street and above mom-and-pop, and then, you know, the local intel is a big deal. I mean, that’s something that gives us a competitive advantage. So that’s really the space that we stay in. And, I mean, I have fun management experience back through the Great Recession myself and, you know, a handful of other partners.

We put together a fund and we bought a lot of properties at auction, and we went through the exit process. And so one of the key lessons I learned in the past was, we got to a place at one point where we had too much cash on the sidelines, we couldn’t deploy it. Other bigger funds came in and started buying at price points that we knew weren’t comfortable with and didn’t fit our model. And as a result, we had cash on the side and that dilutes returns. So now that lesson has served me very well. Today we’re much more strategic about, you know, sort of inflow of money and opportunity that exists to be able to make sure that we can be as efficient as possible and strategic with our returns. So, thought I’d share that as well. So, I like this market. I mean, this is a saying I just heard recently, but it was a Formula One driver, and he said, “On a sunny day, I can pass two or three people, but on a rainy day, I can pass 15 people.” And I feel like when it’s complicated out there, guess what, we can gain market share because a lot of people don’t want to deal with the complications or maybe they don’t have, you know, the inteller relationships.

Jimmy: Yeah. And I think it helps that you have that experience being a fund manager, what, I guess 15 years ago now, and being through that previous down cycle gives you experience that maybe a lot of newer or first-time fund managers may not have. That’s invaluable experience that you can’t really learn from a textbook. You have to live through it, right? So, let’s talk more about your local intel. I wanted to unpack that a little bit more. You’ve been in the mortgage business, had a successful mortgage business for quite a number of years. Maybe tell us how much in your answer here, but curious to learn how helpful that’s really been for you in being able to leverage the relationships that you’ve built in that business over the years to be able to source deals and help you build up that OZ Fund.

Mike: The two business models complement each other very well. And because of the mortgage business, we’re the go-to for… We have developed an expertise at just managing debt really, really well for clients. And part of that is the financial planning background. It’s just how do we manage debt over time and do that and help clients be super-efficient. And so the team does that very, very well. By having this mortgage business and being a partner in this mortgage business, we’ve got a tremendous amount of really strong relationships with real estate professionals all throughout Southern California. And because of that, and because of the fund and our, you know, appetite for buying, we just have local intel.

I mean, it seems like the world works through who you know, and you have to…you know, it’s like you have to have a really good model. But over time, when there’s relationships and you know that there’s predictability in a particular relationship, we all get into patterns in life. And so we have a lot of really savvy real estate professionals that they will give us, you know, heads up on a property, this situation’s coming up, it needs to close, quick, need a cash offer, are you interested? And so we’ll just run through and see if it fits our model, but we get a lot of looks at things that others don’t. And I attribute that to, you know, the many years in the mortgage business and just being a go-to for many of the real estate professionals that we work with.

Jimmy: Hey, could we dive into your Opportunity Zone Fund a little bit more now? I’m curious to hear exactly what the fund’s strategy is. Well, first of all, which asset classes are you developing primarily?

Mike: Right. So we’re building out 100 units in, you know, the build-to-rent strategy for…that’ll be…we’ll have that as a run for the next number of years. And then we have a lot of fix and flip projects that we do that are obviously very heavy rehab, just to be able to meet the OZ parameters. So, the combination of those two is a formula that we’ve noticed is really strong with returns. So, you know, we’ll find dirt or projects or maybe something that’s got started and then buy it for the right price and work through the exit. So, we’re in development on about 40 of the units right now. And we’re always looking at other land and other opportunities, and again, like, matching incoming funds with opportunity as we see it. Again, that was my big lesson from 15 years ago, is not to get a whole bunch of cash and then have to find a place for it to land. I’d rather be much more careful in matching cash with opportunities as they develop.

So, I really like the fix and flip model. We just have a turnkey system for it and a handful of acquisition managers that are really good at, you know, bringing the different deals to the surface. And then, of course, building out the build-to-rent units over time just generate real steady returns. So, I like the model. I’m very happy with it. And I think that, especially in Southern California, there’s just such a shortage of housing and serving sort of the lower end of the marketplace…

Jimmy: What meant ground-up construction funds, because it’s just much easier to clear that new construction hurdle than it is substantial improvement. Do you find challenges with being able to adhere to the substantial improvement provision with the Opportunity Zone policy needing to double the bases in the buildings that you’re working on? Or do you blend it into a larger fund so it ends up working out?

Mike: We have some that we blend in, but we’re very careful on that. I mean, part of what we do is we’re not afraid of the super heavy rehab. I mean, it obviously limits what we’re able to do, but what we’ve found is that, you know, in this market, like, especially right now, we’re getting, I think, a lot of folks that were in this business before, a lot of the folks that were maybe, you know, playing the hard money game and banking on, you know, pretty rapid real estate appreciation. There’s a lot of people exiting. And so we’re finding that we’re able to buy quite a bit deeper now. So, yeah, it’s not simple. I mean, we just filter the things that we look at and have a number of different sources or some wholesale channels.

We’ve got our…of course, a lot of our realtor partners that keep an eye out for us, and then a couple of acquisition managers that do this aggressively. So it fits the model or it doesn’t, and, you know, if we can buy deep enough, you know, better than 70 cents on the dollar, have super-efficient, you know, rehab and crew that…a couple of crews that are just, you know, very efficient with us, we find it works. So, we’ll see how the market unfolds. I mean, one of the things that’s a wild card right now is…in fact, I was doing a talk this morning and polling the audience on how many people thought rates would be in the sevens next year versus in this range versus below five. And it was pretty even across the board that, you know, people that think different things are gonna happen. So, it’s, either way, is okay for us because, if rates get quite a bit higher, that means that real estate is complicated more in the short term, and that gives us some better buying opportunities. And in my opinion, over the next couple of years, interest rates do have to come down for a series of reasons, and that gives us and brings the affordability down, it brings the tailwind into the marketplace. So, I kind of hope it’s complicated for the next 12 to 18 months. That would be even better for us, you know, but either way, I’m good with the model because of enough that we can buy, deep enough that makes our model work.

Jimmy: Sure. And the sector that you’re in, primarily these build for rent or fix and flip residential properties. Are you in any other type of sectors? Are you doing any office or industrial or is it all residential?

Mike: Nope, it’s all residential. That’s the space that I know and love and have all the relationships. So, if we have something that comes to us that’s outside of that and we can buy really deep and it’s, you know, again, both small enough and big enough, then we’ll look at it. But we’re gonna stay in the area that we know best, short of bringing in some significant expertise that could help there. But I’ve learned over the years, stick to what you know best. You know, the prior version of me would chase 1000 things at once and be mediocre at all of them. And, you know, I’ve found that life’s a lot simpler if you can just be excellent in one area. So, that’s where we’re going.

Jimmy: You gotta learn to say no sometimes, which can be hard.

Mike: It’s not easy. It is not easy. But, yeah, gotta learn to say no. I heard this recently. I thought it was pretty well said. It was, every time you say yes to something or someone, you have to remember you are saying no to someone else or something else. And so the way it was described is, you know, if it’s not something that you would clear your schedule for, then you say no. Like, you have a premeditated plan that you know works. And then if there’s something that comes up that in any given day you’d clear your schedule for because it’s that good, you can say yes to that, otherwise, say no and stick to the plan that you know works.

Jimmy: Good rule to live by there. Yeah, there’s an opportunity cost when you say yes to a new idea or any new concept. Well, at risk of having you give me the same general answer you gave me toward the top of the interview today, I wanted to, you know, take the last few minutes here to zoom out from Opportunity Zones a little bit, and get your broader perspective on private equity, real estate in general, residential and non-residential, just all private equity real estate, given your expertise in the mortgage industry. What are some trends in that private equity real estate industry that you think is worth keeping an eye on over the next 3, 5, 10 years?

Mike: Got it. No, that’s a great question. I mean, I’m such a macro individual and I’m looking at inventory levels and I’m looking at demographics that are coming in and then, you know, how the impact of, you know, policy and fiscal policy is gonna impact the direction we’re going. You know, something that I don’t have expertise in, but I’m super curious about is sort of housing alternatives, like these micro homes that exist. And I’m seeing the different box homes and there’s some other creative things that are coming out. One of the challenges that exist in real estate, of course, is the development costs, just from an administrative standpoint, just to get up and running is prohibitive. But in California, we just have such a dramatic undersupply of homes and a population that, you know, in the lower end of the market housing challenge that, you know, policymakers are looking to find ways to, how can they partner with folks that are going to help solve this problem. So, I mean, it’s a deep issue and it’s one of the things that gives us confidence from, like, the bread and butter part of our model, which is just, you know, the basic development side.

So, macro level, I mean, I’m at one…in fact, I want to share something else just related to mortgage rates. And one of the reasons that I actually think that they’ll be coming down in a little bit is you typically have…between the 10-year treasury and 30-year mortgage rates, you typically have a spread of about 170 to 200 basis points. And it got up as high as 300 basis points spread. It’s now down to about 260 plus or minus. Point being that that gap has to close. And so there’s an argument that 30-year mortgage rates really should be, instead of in the mid-sixes, you know, in the fives. And so there’s some future relief on affordability that’s coming that I think is gonna give us a really good tailwind from an affordability standpoint that’s desperately needed. But those are the things that I enjoy as sort of, you know, the behavioral science of this, the generational shifts and trends that are taking place, and then the macroeconomic side and how that all plays into real estate. In addition to, I think, some of the inefficiencies that exist. So, it’s a pretty interesting world we’re in right now. I mean, we’re right now at the bottom of two pretty severe cycles. Of course, one is a seasonal cycle and the other one is a once a generational cycle. And so those cycle changes pose a lot of complication and a lot of opportunity. But that’s what excites me.

Jimmy: Yeah. definitely some interesting period of time, point in time that we are living in currently. That would be really welcome news for home buyers and for affordability in general if we could get mortgage rates to come down just a little bit here. Well, what do you think could be a potential solution to this huge shortfall of housing units that we need, affordable housing units we need in this country? I mean, depending on who you ask, we’re short maybe 3 million or 4 million or 5 million units across the country. Is it a matter of policy? And if so, you know, what might be a potential solution? I understand we’re kind of running low on time here, so I’m asking you to do the impossible. Give me the quick two-minute version of the solution to one of this nation’s huge problems, Mike.

Mike: Well, I mean, part of it is, you know, development cost. Sometimes to get a home up and off the ground, you’re looking at six figures of cost just to be able to clear the hurdle and start. And so it’s not affordable for a lot of builders to build. And so part of that challenge is the various city and regulatory fees that exist. There just needs to be…I think having policy that fast tracks and is much more understanding of the pain points. I mean, these are things that… I don’t particularly enjoy politics, not even a little bit. In fact, I love the investment world and I love how people think, but from an incentive standpoint, there’s just a misalignment from what government is wanting and needing in housing, and then the hurdle to jump over to actually put that in place. So, there just needs to be massive reform in order for that to happen. I understand there’s some things that are freeing up to be able to, you know, build units where you couldn’t build units before. And that will help, that’ll take years to catch up.

From a macro side, we need about, I think it’s 1.5 million new builds to offset the increase in population. And we’re somewhere, again, to your point earlier, between 3 million and 5 million homes short based on, you know, what data you’re looking at. So, the real issue is some sort of out-of-the-box creative thinking or massive regulatory change that just clears the path at an affordable level that allows a builder to also make a fair profit. I mean, at the end of the day, the way our country works is, you know, if there’s not a profit incentive there, then, you know, water seeks the lowest level. And that’s the challenge is that things are just misaligned. So, that needs to change. How to get that done, that requires another level of passion and skillset that is at a different place than mine. But we’ll see how… It will get forced and it will have to happen because, you know, the economy will require it. And, yeah, Jimmy, we’ll see where it goes.

Jimmy: Very good, Mike. Well, we’ve just about run out of time. Thanks so much for all of the insights that you’ve given my audience and me today. Before we go, where can our audience of high-net-worth investors and advisors go to learn more about you and the Cyrus Opportunity Zone Fund?

Mike: Sure, absolutely. Our website is cyrusozfund.com, and my email is [email protected] That would be best for any questions. And, yep, our sweet spot is in the residential space. And it’ll be an interesting 18 months and we’ll see what sort of… We’ll see which way the wind blows, but either way, we’ll be positioned for it.

Jimmy: Yeah, an incredible opportunity indeed. And, of course, for our listeners and viewers out there today, I will have show notes available as always on the OpportunityDb website. You can find those show notes at opportunitydb.com/podcast. And there I will have links to all of the resources that Mike and I discussed on today’s show. And, of course, please be sure to subscribe to us on YouTube or your favorite podcast listening platform to always get the latest episodes. Mike, thanks again so much for taking some time today.

Mike: Awesome. Jimmy, it’s been a pleasure. Thank you so much.