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Show Summary
In this conversation, Nikita Zhitov shares his extensive experience in commercial real estate, discussing strategies for success, including the value-add approach and the importance of community engagement. He also explores the intersection of meditation and business, highlighting common traits among high-performing individuals and the significance of continuous personal growth. The discussion concludes with resources for further learning and development in real estate and personal success.
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Investor Fuel Show Transcript:
Nikita Zhitov (00:00)
There is an old saying in real estate, paint will make it what it ain’t. So with a little bit of paint and maybe a fresh landscaping and a black tub of parking lot, I can have a property look like a brand new property. Just cosmetic renovations in ⁓ four or six months. I can change the rent roll, increase the rents to convert leases from gross leases to triple net leases, raise rent to market if it’s below market rents. And I can have literally a new project that’s fully stabilized in less than 12 months.Kristen (02:00)
Welcome back to the Real Estate Pros Podcast. I’m Kristen and I’m here with Nikita Zhitov, who is the owner of City Plat LLC. He’s been in the game for over 20 years and we have a lot to talk about here. So thanks for being here.Nikita Zhitov (02:13)
Thank you, Kristen. Thank you for having me.Kristen (02:16)
So you have built quite an impressive business around you. ⁓ How did you get into theto begin with?
Nikita Zhitov (02:23)
By accident and by luck, I got into high school. was just shadowing somebody who read a book, reached that poor dad and got intrigued by real estate. So found the local real estate investor to shadow while my senior year in high school and ⁓ got hooked. ⁓ Caught the real estate bug, as they say. So yeah, I’ve been kind of stumbled upon it by accident and but really got intrigued and have been in it ever since.Kristen (02:26)
Bye.That’s a really young age to even be acting on your future.
Nikita Zhitov (03:00)
⁓ Yeah, well, it’s, you know, when you were that young, you don’t know what you cannot do. So you think you’re invincible and you think you can do anything. You are very bold and direct with your questions. So I you can get away with things that you cannot get away when you’re, when you get older. You’re asking people direct questions for to sell your property, so to lend you money and ⁓Kristen (03:07)
Nice.Nikita Zhitov (03:25)
Yeah, you’re just very bold. And surprisingly, a lot of people say yes. I think as adults, we let our ego get in the way that prevent us from asking the questions. But the answer to every question you don’t ask is a no. The only way to create a stability of a yes is ask the question of proposition. So when you’re young, you don’t have those barriers. So you can ask a lot of questions.Kristen (03:43)
Right.Nikita Zhitov (03:55)
and to your own surprise get a lot of yeses.Kristen (04:00)
Yeah, I think that’s a really good point because I think a lot of people do kind of stand in their own way in terms of growth because they feel awkward or annoying reaching out to people. But that’s great that you had that opportunity.Nikita Zhitov (04:14)
Yeah, we specialize in the, not specialize, but we go out of our way to hire young kids who are still in high school or college as interns so that we can just expose them to the industry at young age because this is a very great industry to be in. Commercial real estate, it changed my life, it has the ability to change. To take normal people like myself.Kristen (04:30)
again.Nikita Zhitov (04:42)
You know, in my case, without college degree, who could barely speak English, no credit history, good or bad, simply no credit history, no money, no connections, no endorsements. And it can take somebody like that, who essentially starting out from ground zero, ⁓ and turn that personinto extraordinary wealthy person who can have an extraordinary life and travel to extraordinary places and just have extraordinary experience.
That’s what this business does. It’s a tool for normal people to have extraordinary lives. I’m a beneficiary of the American dream and I just want others to experience the same thing. That’s why we go out of our way to take on young interns and expose them to the industry.
Kristen (06:21)
Yeah.And how did you get started? mean, you started really from the bottom. You said you had no credit. You were learning a new language. What were even your first steps for networking and building out your knowledge base?
Nikita Zhitov (06:39)
Yeah. So, ⁓ reading everything, taking classes, seminars I could take on anything I can learn about real estate, about creative deal structuring, because again, I had no money, so I had to figure out how to acquire deals creatively, without money. ⁓ and so seller financing. So anything I could learn on, ⁓ creative deal structuring and really just going to be in a part of masterminds, whether it’s networking clubs. think that one of the first ones was like a local RIA, Real Estate Investors Association.in my city, it was some of the first ⁓ kind of investment masterminds and over the years, you you graduate from some of them and you outgrow some of them and you move on to, you know, bigger and better ⁓ groups ⁓ where you can keep stretching you and where you can keep learning.
Kristen (07:30)
Absolutely. No, I do think that’s…Nikita Zhitov (07:30)
Yeah, when you become, you know,number one number one person in the group, it means you’re the wrong group. You need to be the smallest denominator so you can actually learn something from others.
Kristen (07:41)
Absolutely, I do think networking is such an important part and as you said a lot of people are willing to help and willing to lend a hand and say yes. So tell us kind of where you’re at today with CityPlot and how you’ve been able to build such an impressive company. ⁓Nikita Zhitov (08:00)
Yeah, we’re a city platform, so we’re around $400 million as it’s under management. Mostly retail and industrial, a little bit of office and land and multifamily, just from like kind of a legacy stuff we used to do in the past. For the last really four or five years, we’ve been focusing on value-add acquisitions. So that’s kind of how the portfolio looks like, about 50-50 on…neighborhood retail. We have some larger grocery anchored stuff and big box retail, but mostly it’s neighborhood retail, unanchored neighborhood retail and sub-institutional grade shallow bay industrial, kind of like under 120,000 feet, small bay. That’s roughly 80%.
Kristen (08:51)
Amazing. And talk more about…Yeah, talk more about neighborhood retail and kind of the opportunity there and why you’ve made that your specialty.
Nikita Zhitov (09:02)
Yeah, I just, one of my favorite asset classes because you know, when you have, I like it way more than bigger boxes. You know, when you have a big box move out, you might have, I don’t know, 50 tenants in an entire country who can backfill it. It’s going to take you a while and they really have to love the location and they’re going to dictate their terms. They’re going to ask for a lot of TI and free rent abatement and things like that. When I have a 2000 or 3000 square feet shop,in-line shop, move out. I got 3,000 tenants I can backfill it with. Your local barber, your local insurance company, your tattoo salon, ⁓ vape store, a coffee shop, restaurant. There are just so many tenants, literally thousands of local businesses. You’re really working with not national credit tenants, you’re working with ⁓ community. ⁓
working with small business owners. So, and you can backfill it usually within a couple of months with minimum TI and minimum rent abatement. So, in three months I can have, I can be back to 100 % occupancy as opposed to losing a bigger tenant that might take a couple of years to backfill it. So, it’s more of a, from a risk, I like it from the risk perspective and exposure. And I like it because, you know, we’re gonna have an opportunity to work with members of a local community.
instead of an out of town company coming in. And I like small B industrial for the same reason. When we have 3,000 or 5,000 square feet unit go vacant, I got 5,000 local small businesses who can backfill it with minimum TI and minimum rent abatement.
your HVAC contractors, your plumbing contractors, your people who sell stuff on eBay or Amazon, your local distributors, your cabinet shop people. There is literally 5,000 small tenants who can backfill a 3,000 or 5,000 square feet warehouse with a small office in the front and maybe some drive-ins or dock doors. As opposed to losing a big distribution center, first of all, there has been a lot of that product built in the last five years.
Kristen (11:57)
Mm-hmm.Right.
Nikita Zhitov (12:00)
since the pandemic started. So there is really over supply, I think of industrial, larger institutional grid industrial where you get 150, 200,000 square feet warehouses sitting empty. And again, you really have to look for that premium credit tenant and you cannot charge the premium on the rent that you can get on smaller units. So that’s kind of my logic behind it.Kristen (12:25)
Yeah.Nikita Zhitov (12:30)
And yeah.Kristen (12:32)
Yeah, no, think that’s a really good, I mean, that sounds amazing. That’s a really good layout of why that’s a great opportunity. And I know that value add is, you you say it’s the quickest way to create wealth. Can you talk a little bit more about that and why that strategy is so appealing?Nikita Zhitov (12:49)
Yeah. So, you know, I’ve tried every type of real estate transaction probably that exists at every, I’ve touched every asset class over my career. And, I used to like development because you’re something from ground up, you redevelopment rather in field redevelopment. Or are you instead of cutting down more trees, you repurposing existing real estate for higher and better use, putting in higher density. ⁓ but it’s a very.complicated for any development is a very complicated process ⁓ in most municipalities that These days and some are better than some are worse But most municipalities I cannot from the moment I identify a site or a project and say, okay I do them a performance this deal looks like it pencils out and it’s a good deal We should proceed the moment I signed the contract. It takes me two years Before I can Break ground
It takes me two years of entitlement, whether it’s zoning, permitting, ⁓ your architectural, your engineering, your civil, all of that. Two years before you can break ground. Then another, let’s say we’re building a ⁓ five story, mixed use apartment building or condominium or something. It takes a year and a half to build it. Another probably six months, two years to stabilize it or to sell it if it’s condos or stabilize it if it’s apartments.
So you’re looking at minimum four years, more likely five year cycle from the moment you say like, okay, that’s a go to the moment you actually realize a profit or, you know, or, you know, finish the project. ⁓ And so many things can change over five years. Think about where we were five years ago, you know, in five years we went from two different presidents and administration.
I started with one and went to another one and then go back to the first one. Interest rates were at 5 % and down to 3 % and then back to 7 % and then now I guess down to 6%. Like interest rate climate, the construction pricing have changed so drastically over five years.
The tariffs on steel and the construction costs have doubled. So you have performed one thing.
and why the project makes sense. by the time you actually started doing it, construction price changed. You’re thinking about you started, you broke ground on office building in 2018 and 2019. By the time you finished it in 2023, you would be in a world of hurt. So, so many things can change and nobody can see the future. Nobody has a crystal ball. That’s why I like value add because…
Kristen (16:11)
Yeah.Nikita Zhitov (16:20)
There is an old saying in real estate, paint will make it what it ain’t. So with a little bit of paint and maybe a fresh landscaping and a black tub of parking lot, I can have a property look like a brand new property. Just cosmetic renovations in ⁓ four or six months. I can change the rent roll, increase the rents to convert leases from gross leases to triple net leases, raise rent to market if it’s below market rents. And I can have literally a new project that’s fully stabilized in less than 12 months.Now, it’s still projection because a lot of things can change in 12 months, but it’s not like trying to project things out four or five years from now. Because you just cannot predict what’s going to happen in five years from now. can be in another pandemic, World War III, who knows what’s going to happen. And so I just from risk tolerance ⁓ perspective, value add is…
much less risk. There is less unknowns that can go wrong and there is a shorter turnaround time. So we can turn around the project in six months. That’s different than five years.
Kristen (17:26)
Yeah, absolutely. think that’s a really good breakdown of it. And I kind of want to shift gears a little bit because you have a really exciting podcast, The Frequency of Wealth, ⁓ and you dive into the topic of meditation and how it relates to business. I would love for you to talk a little bit about that.Nikita Zhitov (17:43)
Yeah, so ⁓ you meet people who are either like very spiritual, but they’re broke or people who are like very wealthy in Wall Street, but they’re far away from anything spiritual or far away from spirituality. So I’ve been meditating for many years myself and it’s a big part of my life. So I thought I would create a podcast.where I interview other people who have achieved extra ordinary amount of wealth. ⁓ But they use their spirituality, whatever that is. In my case, it’s meditation for other people, maybe something else, as a tool for business. So how can they use, say, meditation as a tool for business to help them to propel their career and help them in wealth creation? I do both. share my own ideas and perspectives.
the routine and with my, the patterns I have recognized, it’s all about pattern recognition, right? So you want to figure out, you want to have to be successful. You want to figure out how to be successful, just find other people who are successful and watch what they’re doing. What’s their behaviors? What’s their thought process? What’s their logic? You know, what’s their habits and make those habits your own. And eventually, you know, the people you out, can out with, you’re going to become.
think Jim Rohn said, you’re to become an average of five people that you spend the most of your time with. So it’s all about recognizing patterns. I’m curious to know that myself, ⁓ that’s why I interview other people, but I I do both. share my own thoughts and perspective what my habits are so other people can learn from just the insights that I’ve learned over the years, as well as I interview others. So it’s not just me talking, but where I can actually, I can learn.
Kristen (19:14)
⁓Nikita Zhitov (19:38)
as well as others can learn from somebody who is maybe more successful than I am. So we can keep exploring those dimensions. Try to identify new parents.Kristen (19:43)
Right.And I’m sure,
yeah, I’m sure you talk to so many people and are there common patterns for high performing individuals that you see over and over?
Nikita Zhitov (20:01)
Yeah, definitely. Most of them, they do read a lot, whether it’s audio books or actual reading. They read a lot, constantly reading. know, average American never spends one dollar out of their pocket after the college. And we graduated college at what, like 22, 23 years old. So it’s like, it’s like you telling the world, like, I know it all, at 23, I don’t need to invest.anymore in my education. So, ⁓ like I’m in some kind of a seminar literally every week. I’m reading books literally like every day. And most people have, who are, I know who are successful. They never stop learning. They’re always growing. always stretching themselves, whether it’s, learning new materials about their industry or whether it’s just growing personally, like go and doing something that you haven’t done before, like learning how to play piano or fly airplanes.
ride horses or climbing a mountain, just do something that’s going to stretch you and where you’re going to create a new synaptic connections in your brain. So that’s one habit. Another habit is ⁓ they’re usually part of some kind of masterminds. Masterminds where they learn because the power of collective, it’s like ⁓ a compounding effect, you know, where waves builds upon waves, built upon waves, you have a…
very high amplitude of waves. Once you combine on overlap waves together. So the same thing works with humans. When they’re a collective brain power put together, they come up with some, they have a better results. lot of them have, most of them have faith. Again, whether it’s religion or whether it’s their own practices, some kind of a meditation practice, you know,
Most of them have faces a big part of their success big part of their life Most of them are very disciplined Most of them are early risers So those are just some common and most of them we’ve heard off and they’re like kind of a common sense things But actually very few people Execute on it So all the information is right there in front of you. I the secrets to success just got to have to go and execute on it and ⁓
Kristen (22:16)
Mm-hmm.Nikita Zhitov (22:25)
But a lot of people just take it now, it’s a cliche. But that’s what life consists of, of those small cliches that you just gotta execute on.Kristen (22:35)
Absolutely. And kind of what I’m hearing also is having that growth mindset, believing that you can get better and better and maybe that there’s no point in your life where you’ve arrived and you’re enlightened and don’t need any more growth.Nikita Zhitov (22:52)
Yeah, the purpose of life is life itself, I think. It’s about the experiencing. So why would you want to stop learning? You want to keep exploring. It’s about experiencing different things. So you want to keep having new experiences. And yeah, a constant growth is one of our core values at my company. So everybody in my company have to report on a weekly basis how they have grown from the week prior.and whether it’s ⁓ which lists of books they’ve read or how they have grown or stretched themselves. It’s a, we hire, fire, or promote, or, know, demote people based on those core values and constant growth or commitment to growth ⁓ is one of them.
Kristen (23:21)
So long.Absolutely, and it doesn’t have to be crazy growth from week to week even just you know they say 1 % better is effective
Nikita Zhitov (23:50)
For sure.⁓ you, ⁓ I think we had technology issue. So if I heard you correctly, yeah, if you, if you just make 1 % improvement, it’s like climbing a big mountain, you’re not going to run up to the top of Mount Everest. As a matter of fact, if you were to be dropped off, if I was able to fly you in a helicopter and drop you off at the top of Mount Everest, you would die in a minute. You would literally die in a minute. You would implode. So you got to build up to it. You’re right. You got to get climatized and, we got to do it one step at a time.
And sometimes you cannot even see the top when you’re climbing in the clouds, right? You cannot see the top. So you just got to do it one step at a time. But if you make those 1 % improvements every day through your disciplines, you’re going to see a lot of, you’re going to make a 365 degree improvement or 365 % improvement in a year. If you just improve yourself 1 % a day.
One of my favorite books is called The Compound Effect. And basically, if you go to the gym and you work out every day and you look at yourself, you’re hardly going to notice any progress in two or three months. But if you keep working out for three years, you take a picture of yourself before and after in three years, you’re going to notice a big difference. The same thing if you eat a piece of cheesecake at dinner.
Tonight you probably not gonna notice much difference in your physique tomorrow But if you’re gonna keep eating a piece of cheesecake every single day For the next three years, I promise you, you know, we’ll take a picture of you today and three years from now After you know over a thousand cheesecakes even there’s gonna be a big difference how you look at three years from now So it’s called the compound effect Same works with your mind. Like if you keep feeding your mind with a bunch of junk, you know
Social media. don’t know if it’s you’re probably not gonna notice much difference, but that compounded over time It’s gonna be a big difference if you keep feeding it with positive stimuli from books and personal growth Then in three years from now, you’re gonna be a different person and you’re gonna have a different big account I can always bet on it so The key is just to have inconsistency small step consistency
Kristen (26:08)
Yeah.Absolutely, I think that’s such a good note to end on. ⁓ I think that’s great advice for people. And the compounding effect, that sounds like a great book. I might pick that up today. So tell everyone where to find you, how to find City Plat, and where to find your podcast as well.
Nikita Zhitov (26:44)
yeah. So, the frequency of wealth podcast, ⁓ you know, just started this, so don’t have many subscribers, but you can, find it on YouTube. I think the channel is at that Nikita Zhitov, ⁓ is the channel name. and, ⁓ we can also find me on Instagram, Nikita Zhitov, on Instagram and, and LinkedIn. Yeah. Just, search the name and those are three.I guess avenues, platforms, you should be able to find me there. As far as CityPlat, we’re located in Raleigh. Most of our investments are in the Carolinas, but we are expanding to other states. Again, right now we’ve got properties under contract in nine different states that are in the acquisition pipeline. So, bring us deals. If you can demonstrate.
the path from point A to point B. And what’s the evaluate component? ⁓ We’re opportunistic. We have criteria, but we’re also opportunistic, so we would look at deals, if you find deals.
Kristen (27:59)
Awesome. Well, thank you so much for being here. I really appreciate it and I think you’ve given a lot of good inspiration for people.Nikita Zhitov (28:08)
Thank you, Kristen. It’s been a pleasure.Kristen (28:12)
saying well thank you everyone for listening I really encourage you to check out Nikita to check out City Plat ⁓ definitely check out that podcast and hope you got some good inspiration for your business maybe learned a lot got some takeaways from this episode so we will see you back next time bye
