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Peter has been with MPI Family Office since its inception. He is a 2nd Generation member of the MPI Family Office and is a Principal Member as well as the Head of Real Estate. His day-to-day focus involves Underwriting and Vetting of investment opportunities.
Before Peter joined MPI full time, he was the Senior Analyst for MACC Venture Partners, a privately held real estate investment firm, where he identified, researched, and underwrote multifamily assets. He helped lead $100m+ in multifamily acquisitions and raised $20m+ in equity in less than 2 years.
Embarking on a transformative journey, Peter’s aspirations transitioned from pursuing a surgical career to working in his family office with a real estate focus. By delving into unpaid internships, he sought valuable knowledge and honed in on his unique ability that included his underwriting prowess, shaping his future trajectory in the industry.
Peter shares the fascinating evolution of his MPI family offices and the unique wealth strategy perspective he’s developed. He delves into the specific opportunities and filters he navigates in today’s market, and crucial processes that his company employs.
Seize this incredible chance to tune in to an episode featuring the captivating insights of Peter Powers!
In This Episode
- How it all started for Peter, and what switched his career vision.
- History of MPI Family Office and how it’s evolved.
- Wealth Strategy Perspective MPI follows.
- Opportunities Peter sees for this year and what he is avoiding.
- Peter’s advice on accelerating your wealth journey.
Welcome to another episode of Wealth Strategy Secrets. Today, we’re joined by Peter Powers. Peter has been with MPI Family Office since its inception and is a second-generation member of the team. He is a principal member and the head of real estate, focusing primarily on underwriting and vetting investment opportunities.
Before joining MPI full-time, Peter worked as a senior analyst for MACC Venture Partners, a privately held real estate investment firm, where he identified, researched, and underwrote multifamily assets. During his tenure, he played a key role in leading over $100 million in multifamily acquisitions and raising over $20 million in equity in less than two years. Peter also collaborated with the marketing team at Capstone Multifamily Group. He holds a Bachelor of Science degree in both entrepreneurship and real estate from Florida State University.
Outside of his passion for real estate, Peter is a club race car driver and an avid outdoorsman. Peter, welcome to the show!
Thanks, Dave. I appreciate you having me. It’s great to reconnect.
Peter, I always enjoy our discussions and seeing what MPI is doing in the marketplace. You guys are doing a phenomenal job in terms of leadership and activity in the market, and I appreciate your perspective. Before we dive into specifics about real estate investing, could you tell our audience a bit about your background and how your journey has progressed?
Sure, that’s a great question. Our experiences and backgrounds shape us significantly. Every decision we make is influenced by those experiences. I grew up in Florida, but I’m originally from Pennsylvania. I was raised in a close-knit family with a large extended family, so family has always been a priority for me.
I progressed well in school, completing all my education in Florida, particularly in the Tampa Bay area, before heading to Florida State University for college. I initially aimed to become a surgeon like my father, but my family encouraged me to reconsider due to the high costs and the uncertain future of the profession. They believed I would find more opportunities by pursuing a new venture they were starting to explore, which involved building up our family office and real estate platforms.
Before making that decision, I completed a series of unpaid internships across the country. My family connected me with prominent firms in Arizona, Florida, and North Carolina. I spent several months at each of these firms, where I focused on learning the industry. They expected me to work hard and immerse myself in understanding what I wanted to do.
I started in property management with a group based out of Arizona, handling day-to-day operations, maintenance, and leasing to attract renters to the apartment community. The community I worked at was newly built, which helped it succeed, but it was still a valuable experience. While I was working, I was also in college, balancing my studies with research and additional internships.
I interned with a few groups, including one locally based in Tallahassee and another in Florida, but my most intensive experience was with a group in North Carolina, where I spent nearly a full year before graduating college. I began underwriting deals and felt ready to dive in by the time I joined that firm. From there, I progressed up the ranks, sourcing and underwriting deals, visiting properties, and learning about the acquisition process. At the same time, I was bringing my family’s capital into these investments.
This hands-on experience allowed me to understand not only property management but also the acquisitions side. Once we acquired properties, I focused on asset management, ensuring that our strategies were executed correctly. As you might expect, challenges arise that you didn’t foresee during underwriting. These experiences helped sharpen my skills and made my assumptions more realistic. For instance, if you’re increasing rent by $200 or more, you might need to re-ten the property, which could lead to a dip in occupancy.
I gained firsthand experience, which ultimately shaped my decision-making. After that, I returned to my family’s business and began leading our real estate platforms. We’re now involved in multifamily housing, senior housing, self-storage, and hotels—some of which we buy to convert into apartments or hold as investments. Currently, we’re evaluating a hotel to determine our next steps with it. If it remains viable as a hotel but has potential upside for conversion into apartments, that would be a bonus.
We’ve been quite active in the markets, though we’ve recently slowed down due to uncertainty. Some opportunities we sought out a few years ago, like distressed hotels, have attracted more competition, which has affected our acquisition pace. However, this slowdown has given us a chance to strengthen our asset management side, which is our current focus.
Our experiences and our background is what really shapes us when it comes to the decision we make everyday.
That’s great to hear. You’ve taken a comprehensive approach to observe various aspects of the industry and hone in on what your superpower is—where you can provide the most value. It can take some people a long time, sometimes even multiple careers, to identify their unique abilities, their sweet spot, and where they create the most value and enjoyment.
Can you also share a bit about the history of MPI and how it has evolved over time? How has this evolution impacted your role today?
Certainly! To give some background, I was fortunate to grow up in a family that experienced many wonderful opportunities, but we weren’t always a family office. When I was growing up, my father was starting his practice, opening ophthalmology and diabetic care facilities on the West Coast of Florida. He and my uncle were building those up successfully, and it was a great business.
However, during that time, my father was investing in the public markets rather than reinvesting in expanding or improving the care facilities. Then, in 2008, we faced significant losses in wealth, compounded by the onset of the Affordable Care Act. Instead of feeling defeated, we were fortunate to connect with other families who operated family offices. We learned that many of them didn’t rely on public markets or big money managers who profit regardless of market conditions.
We recognized an opportunity to create our own family office, moving our money out of public markets and away from those managers. Over time, we built our in-house financial team and developed custom strategies that served our best interests. While many of our advisors are in-house, we also collaborate with outsourced experts, such as our insurance advisor and additional tax advisors. It took us several years and a significant investment—multiple millions of dollars—to perfect this approach.
Fast forward to 2014 to 2015, a few years after we decided to establish a family office, we began making extensive investments in real estate. The beauty of this was that we were entering an asset class that had been significantly impacted by the last downturn, making it a good starting point for us. One of the major incentives of real estate is the tax benefits, which, when paired with our operating businesses—primarily the diabetic care facilities—really helped us restore and even exceed our wealth compared to where we were in 2008.
Now, we own several thousand apartments across the country, nearly two dozen hotels (some of which we are converting into apartments, while others we hold as traditional hospitality assets), and around a dozen senior living facilities, along with various other real estate assets nationwide.
Over the past five years, we’ve adopted a more active approach to our real estate investments. We primarily engage in strategic joint ventures and co-asset managing deals with experienced operating partners who have a proven track record in specific geographic areas and strategies. Depending on the opportunity, we might provide the majority of the equity or participate as part of the general partnership in a co-GP model. This flexibility as a family office allows us to structure deals to meet our needs, whether they are long-term or short-term investments.
Now, regarding the next chapter, which we discussed earlier, is our consortium, WellSite. My parents came from humble beginnings and worked hard to achieve impressive success over the past 40-50 years. We decided to open our family office to share our strategies and advisors with other families, family offices, and fast-growing businesses. Our goal is to help them reach a point where they don’t have to work long hours to maintain their lifestyles. Instead, they can invest in other opportunities that generate income, allowing them to enjoy their lives more fully.
Many of these individuals love what they do, and our approach relieves the pressure. They can choose to go to the office or not, which provides them with more flexibility and enables them to pursue what we call the ideal dream lifestyle.
I believe it’s important for everyone to define their vision of the American dream. It’s different for each person, but the key is to determine your ideal lifestyle and figure out how to structure your life and investments to live that way.
I appreciate that perspective, Peter. It’s interesting how many people fail to spend enough time creating their vision statements regarding the lifestyles they aspire to. In today’s reactive world—where we’re bombarded by news and information—it can be challenging to engage in deep reflection. However, when you take the time to think critically about your ideal lifestyle and vision, it becomes your guiding north star.
Regarding MPI, do you have a specific wealth strategy that you follow, or certain approaches you take as you assess opportunities in the world?
We have about two dozen fundamental strategies that we adhere to, which have significantly propelled our wealth. My father, at 54, is able to retire comfortably because he has diversified investments across various business types, including real estate, allowing him to live his ideal lifestyle, which includes traveling with my mother and raising cars.
It’s unique to each family. Some choose to live more modestly, preferring to be around their children and grandchildren without the constant need to travel. Ultimately, it comes down to customization based on individual family desires. For us, we see a lot of opportunity and potential in our real estate platforms because we treat them as operating businesses.
You know, we believe that operating businesses involves learning to formulate a team that understands the business and can add value. Buying those businesses, building them up, sometimes selling them off, and sometimes holding on to them allows you to live that ideal dream lifestyle. I would say our real estate investments have helped us achieve that. So, if there’s one strategy that everything else revolves around or is connected to, it is our investment strategies, which include workforce affordable housing, private-pay senior living, and hotel conversions. That’s what has allowed us to reach our ideal dream lifestyle.
That makes perfect sense. So, maybe we can delve into your buy box a little more specifically regarding acquisitions. Do you have a particular buy box or strike zone that you look at to filter opportunities? I’m sure you see opportunities all the time, especially in this market, with potential fire sales. How do you filter those down and decide what to focus on?
Yeah, we’re unique in the sense that when you buy, whether it’s real estate or another business, it comes down to the team. How we evaluate all investments—99% of which are through joint ventures—starts with our deal flow. We receive a lot of deals organically from brokers, owners, and various sources. We have a healthy deal flow, but we also get a tremendous amount from our owner-operator partners. Currently, we have about a dozen partners we actively invest with and another five dozen that we’re in the process of getting to know, out of the thousands of operators we’ve considered.
Our process involves looking for our non-negotiable criteria for our operating partners. First and foremost is their experience. We want to see a track record, not only in the investments they’re involved in but also across different debt cycles. Understanding debt leverage can be beneficial, but it can also pose risks if not structured correctly. Transparency is crucial; since we do joint ventures, we need to have access to reports and systems to follow the money.
Next, we assess whether our partners are aligned with us—are we all heading in the same direction? Do they have skin in the game? That’s very important to us. Then we get to know their team and how it operates. Every team functions like a machine, so we need to understand how that machine works. Finally, we look at whether they’re willing to adopt a joint venture structure.
Once we’ve checked all those boxes, we start exploring opportunities with those groups. Currently, we focus on three main areas:
Affordable workforce housing, primarily through our acquisition of LIHTC (Low-Income Housing Tax Credit) properties, hotels that we’re converting to apartments, and some conventional apartments we classify as “little-a affordable.” They aren’t restricted but have renter profiles that make them more affordable workforce housing.
Private-pay senior living facilities, which encompass independent living, assisted living, and memory care. We steer clear of nursing care, as it’s a highly regulated and strenuous business.
Our smaller platforms include storage and our conventional hotel business. We’re buying hotels at distressed prices. For instance, we acquired one in January for $6,250,000, and it’s already generating $5,000,000 in revenue. It was appraised at around $30 million by our foreclosures. We look for opportunities like that.
So, we’re very opportunistic, but we primarily focus on housing, specifically affordable workforce housing and private-pay senior living. We seek out investments that fit these categories and are already cash-flowing to some extent, allowing us to service the debt. We look for opportunities where we and our operating partners can add value.
Maybe that’s through operations or actual renovations; it just depends. But we want to ensure that we’re buying this asset right. It should already be able to service itself and be operational. Additionally, we want to identify components where we can add value—not just buying something on a good basis, but also having opportunities to increase its value. From there, we can decide whether to hold on to it, sell it, or recapitalize it with other capital.
Can you speak to the importance of timing in terms of the investment horizon? I think we’re all inundated with information from Wall Street and the particular products and offerings that come from there. This often forces people into a reactionary state. For example, with the recent failures of SVB, there’s concern about whether that contagion will spread into the banking system. As a result, people might feel compelled to dump stocks in that sector or make impulsive moves, which can lead to a trading mentality and constant changes.
What I’ve found unique about family offices and ultra-high-net-worth individuals is their focus on long-term investing and having a strategic philosophy. Can you share your thoughts on how you implement this?
I think it starts with systems. Emotions can run high, but if you have a system in place, it helps mitigate that emotional response, regardless of whether times are good or bad. You can get too excited about something or overly nervous, leading to rash decisions. By building a system, when you encounter a decision or opportunity, you run it through that framework, allowing the system to guide you. This helps you focus on the main points you previously established, rather than making impulsive choices.
Secondly, when making decisions, ensure you’re structuring them correctly. If you’re looking at long-term investments—which we prefer—everything needs to have some sort of long-term focus. A common mistake is purchasing great investments but structuring them with short-term debt, which might force you to sell an asset before you can realize its full value. You never want to be in a position where you’re forced to make a decision.
We also focus on flexibility. While we want to have a solid business plan, we must remain adaptable. If circumstances change, we need to be able to pivot. Currently, there are significant issues in the office sector, with conditions varying by city. Long-term, this may not be the most attractive market, yet many groups are being forced to hand over the keys because their debt is expiring, and they lack flexibility.
If they had an additional three to five years, they might find clearer opportunities without having to surrender their properties. They could explore converting office spaces into apartments, which is a complex process, or consider alternative concepts. I don’t have a crystal ball, but maintaining flexibility and time enables better decision-making and prevents being backed into a corner.
Building the systems out and structuring them in a way—whether it’s your equity or your debt—allows for flexibility and the ability to pivot after you’ve conducted due diligence on the decisions you’re making.
Great insights, Peter. As of mid-March 2023, where are you seeing opportunities this year, and what areas are you staying away from?
We are focusing on what we know and staying away from areas we don’t. I see many bright individuals starting to invest more in grocery-anchored retail, for example. That’s an interesting business, but I don’t know it well enough, and I don’t think it’s the right time for me to get involved. I’m not looking to try something new right now.
So, that’s number one: staying focused on what we know. We’re likely to encounter issues and challenges with the assets we already own and have invested in. If I understand that business and have the right partners, I’ll be able to make informed decisions and explore more potential solutions. If I venture into something I have no experience with during tough times, I won’t be able to make the best decisions. Therefore, my focus remains on what I know, both in terms of new opportunities and our existing assets.
That’s number one—focusing on what we know. We’re also staying liquid, which I think is very important. Given what we’re seeing with banks, liquidity is crucial. You need to ensure your portfolio is structured in a way that allows you to seize opportunities when they arise and resolve any problem assets you may have. So, that’s another area of focus for us: maintaining liquidity.
Good point. What would you say about your liquidity strategy? This is a particularly interesting topic, especially in light of the fallout with SVB Bank. You might think that banks have the most liquidity. I know you advocate for leveraging whole life insurance as part of your liquidity strategy. Can you share specifics about how you manage liquidity, cash equivalents, and related topics?
First, having a cash-generating operating business is vital. We still operate our diabetic care facilities across the West Coast of Florida, which consistently generate cash flow. Regardless of market cycles—up or down—people still need those services. Diabetes is the leading cause of blindness so demand will always exist to some extent. This steady cash flow allows us to keep our operations running smoothly and be prepared for more opportunities.
Second, it’s essential to have a top-tier team in place, particularly your tax team. If you can save significant amounts on income taxes, that’s beneficial. We also pay substantial property taxes related to our real estate holdings and payroll taxes for our employees. If you can save money in these areas, you can reinvest it or hold on to it for a rainy day.
Additionally, it’s important to have other advisers in place for protection. We know a few families with assets in the eight to nine-figure range who are currently facing challenges that could lead to them losing a quarter to half of their assets. Therefore, structuring yourself correctly is crucial. You may be liquid today, but if you face business challenges or marital issues that lead to asset loss, it will impact your current position. It’s vital to implement the right asset protection strategies as well.
Maybe you find yourself in a bad deal, and that deal happens to have recourse financing. We typically stay away from recourse financing, but some groups may have one or two deals structured that way. Such situations could affect your liquidity position, especially in tough times. Even if you have non-recourse debt with certain banks, maintaining a level of liquidity is crucial. If you have other commitments, that could trigger issues elsewhere.
Being aware of these dynamics is important. We are involved in a few funds, have limited partner investments, and also engage in straight joint ventures. It’s essential to consider the possibility of capital calls in these investments. What do the operating agreements say about that?
Understanding these aspects is vital. We need to prepare for worst-case scenarios, including determining what liquidity needs to be set aside and what potential issues may arise. Having those uncomfortable conversations with the groups you’re involved with is necessary. That’s part of what we’re doing—discussing where we stand, how our cash flows look, and whether there are scenarios where we might need to invest additional capital into these ventures. Being able to engage in those conversations and ask the right questions is important. That’s why having a strong team is, I would say, the second most crucial element.
That’s a solid approach. I love the proactive mindset. Thinking ahead, before you’re forced to react in a tight situation, can prevent making hasty decisions that are often less favorable. Being proactive helps mitigate risks and positions you for success. So, Peter, if you could give just one piece of advice to our listeners about accelerating their wealth trajectory, what would it be?
One key piece of advice for advancing your wealth journey would be to prioritize education. Education is incredibly important to my family and to me. I’m always reading and learning. Even while working out or during the day, I find myself reviewing financial information or exploring new concepts. Understanding the “why” behind events and their potential implications is crucial.
That’s another reason why at Harbor Consortium Wealth, we’re developing an educational platform—not only for wealth building but also for wealth preservation. It’s essential to start educating upcoming generations about money—what it is, its value, and the concept of money velocity. These are ideas that may not be covered in traditional schooling.
Starting education early, perhaps in the early teen years or even sooner, is beneficial. By the time kids reach high school or university, they may have established fixed ideas about money and business. While having diverse opinions is valuable, it can be challenging to change ingrained beliefs after two decades of life experience. Thus, educating young people about the value of money, how to earn it, and how to run businesses is critical. Hard work and practical experience are equally important. I firmly believe that education is number one, but it’s equally vital to consider the source of that education.
It needs to come from various perspectives. You have to understand this viewpoint as well as that one. It’s not just about reading and then jumping into action; you need to develop your ideas.
You gather all that information, compare and contrast the different viewpoints, and then form your own opinion. This is where experience plays a significant role. You carry out that opinion, much like a hypothesis: you formulate it, then test it to see how it performs. You might fail, but failure is the ultimate teacher. It’s through these experiences that you learn to make better decisions. So, going out there, making big decisions, failing, getting back up, and trying again until you find a successful solution—this is what education is all about.
That’s the advice I share with people: keep educating yourself, keep reading, and keep meeting new people. Relationships are important as well.
Absolutely. This is a key phase in our overall wealth strategy. It’s about enhancing your financial IQ, mindset IQ, relationship IQ, and health IQ as part of that process. This focus is essential for accelerating growth.
Peter, since you’re into race car driving, I found it interesting. Speaking of reading, I recently came across a publication by Lior Gantz at Wealth Research Group. He mentioned doing some Formula 1 simulations and drew a correlation to the Federal Reserve’s actions. It’s like they’re either slamming on the brakes or accelerating well past the point of necessity. I thought that was an intriguing analogy.
Have you learned anything from race car driving that you’ve applied to your investing philosophy?
Definitely. The number one takeaway from racing is the relationships I’ve built. I’ve had the chance to meet prominent business executives and major real estate players just by going to the track and renting out venues. That’s the first point. But there’s also the educational aspect.
It’s interesting to see how some drivers in lower-powered cars can be very successful, while others in high-horsepower vehicles struggle to keep pace. The latter often tend to be overly aggressive, and their egos can get in the way. Conversely, some successful individuals come to the track with a genuine openness to learning, even if they lack experience in racing. They progress much faster than those who may already be successful in other areas but refuse to adapt.
That kind of mindset translates well to investing, which can be risky. Wrecking a car at 100 or 200 miles per hour can have serious consequences. Observing how successful drivers remain humble, recognizing that there’s always more to learn, is valuable. Just because you excel in one area doesn’t mean those skills will seamlessly transfer to another.
Those are my two biggest takeaways from racing: the importance of relationships and the necessity of humility. There’s always more to learn.
Excellent insights, Peter. If folks want to get in touch with you or learn more about what you’re doing at MPI, what’s the best way to connect?
The best place is LinkedIn. Just search for my name, Peter Powers; it’s a pretty unique name. You can find me there. I check LinkedIn at least once a day, reviewing articles and connecting with people. So that would be the best way to reach out, and we can share contact information there.
Awesome! I appreciate your time today, Peter. You’ve provided a phenomenal amount of value for our listeners. I encourage everyone to connect with Peter and follow his work. Looking forward to our next conversation. Thanks again!
Thank you, Dave. I appreciate your time.