Anyone who has ever forged a career in New York City understands how difficult it can be to stand apart from the crowd.
In a town of eight million people, even the most talented and intelligent can blend into the immense white noise.
Ira Zlotowitz, founder and president of Eastern Union Funding, rarely has to be concerned with that issue.
“If I drive to a meeting and pay for tolls and parking, it can cost a fortune,” Zlotowitz told Real Estate Weekly while discussing what has become arguably the most notable calling card in the area.
If he’s going to invest in making a professional connection, he wants to maximize the likelihood that his name and what he can deliver is always remembered.
After hearing a joke about offering to give away free money when starting new business relationships, Zlotowitz took the humorous advice to heart.
Now, the Midwood, Brooklyn native hands out business cards that come attached to $2 bills. The tagline accompanying his name? “Millions more where this comes from.”
But networking isn’t the only area in which the 18-year commercial mortgage vet is an innovator.
Annually, the mortgage brokerage closes an average of $3 billion by targeting what it identifies as the under-served market of smaller owners and buyers of residential, office, retail and industrial properties. In December alone, the company placed $500 million of smaller-dollar mortgages — just for loans under $20 million — under application in December, a record amount and double what the firm averages a month.
The brisk pace to end the year comes as the Federal Reserve earlier this month began its campaign of gradual interest-rate increases.
“For the past several months, we were doing almost twice our average business while we heard that many in the industry were reporting static new activity,” said Zlotowitz.
“Our increase in new business reflects the continued trust the market has in our brokers and our firm’s commitment to its specialized focus and lack of conflicts by
being solely mortgage brokers, with an equity division.”
According to Zlotowitz, 45 percent of the December loans were property purchases versus re-financing, which is well above the typical 25 percent to 30 percent. The momentum shows no signs of abating into the new year, another encouraging sign for the real estate market.
Eastern Union is writing twice as many new loan applications than it has been closing in the last five months, Zlotowitz said.
“Property buyers currently on the sidelines are looking to make a move sooner to take advantage of the still low-rate environment,” said Zlotowitz, who also noted that Eastern Union this summer launched an equity division to help with equity raises.
The company has achieved unprecedented growth despite streamlining its staff of brokers as part of a strategy Zlotowitz called “efficized” in which less is more in terms of generating strength from a financing bullpen.
“We’re going forward seeing how we can maximize efficiency by using technology, data, artificial intelligence and support staff,” said Zlotowitz.
Unlike many other similar firms, Eastern Union Funding brokers all have access to the same information that is shared in-house.
“We focused a lot more on the quality of infrastructure,” said Zlotowitz. “The parts that help brokers with originating, placing, and closing deals.”
Zlotowitz said that the number of brokers at a firm’s disposal is not a direct indication of how effective that organization can be at growing a book of business.
Saying that focused brokers “breed success,” Zlotowitz said that surrounding oneself with a modest amount of dedicated workers leads to better bottom lines for all involved.
This mindset was both tested and partially forged during the down period in 2008.
“In 2006, I lucked out and I smelled something was off,” he said, while also making a point to credit God with giving him the foresight to sense a downturn. “For the production we were doing, we had too many sales people.”
After streamlining, Zlotowitz was left with lower overhead but similar production.
“Our real surge came after the market came back around. We were riding a nice momentum,” said Zlotowitz.
The rebound post-2008 was so strong that Zlotowitz has raised the commission structure to the highest in the industry. His top performer hauls in 83 percent of a transaction.
The upward climb is thanks in part to the capped fees that he introduced in July of last year. “We put into application over $2 billion new business for the year,” said Zlotowitz crediting a post-July surge.
“The market took us to a much higher level.” While things are going well for the firm, Zlotowitz does anticipate a slow-down perhaps as early as the third quarter.
“The first half of 2016 is going to be very, very strong simply because it’s the overhang of 2015. I do think that over the last 15 years, real estate has changed from being about the bricks and mortar — the underlying real estate — to more towards financial engineering,” he said.
“Every little tick of interest rates moving up will mean that prices have to stay flat or come down a little bit just to meet the same IRR that is needed.ˮ
Zlotowitz foresees a transaction slow down, though he doesn’t anticipate a disastrous drop on the level of the last cycle downturn.