Real Estate in Blue Cities w/Michael Voulgarakis
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Episode Description
Welcome to the Freedom Point Real Estate podcast! Today's guest, Michael Voulgarakis, breaks down investing in blue states, navigating supply and demand in tight markets, underwriting with margin, and the value of vertical integration.
Michael Voulgarakis is a seasoned commercial real estate professional with 19 years of experience in debt and equity underwriting, asset management, and capital raising. At Southgate Ventures, his team has successfully acquired 27 properties, completing 18 full-cycle deals in the Puget Sound region, and asset-managed real estate valued at $350M. From flipping residential condos post-graduation to underwriting $1.62B in commercial real estate loans, Michael’s journey reflects a deep understanding of the real estate landscape. He holds a Master’s in Commercial Real Estate Finance and a Bachelor’s in Business Administration, equipping him with both the academic and practical expertise to deliver results.
CONNECT WITH MICHAEL VOULGARAKIS!
Website: https://sreventures.com/
LinkedIn: https://www.linkedin.com/in/michaelvoulgarakis/
CONNECT WITH JEREMY DYER!
Website: https://startingpointcapital.com/
Instagram: https://www.instagram.com/startingpointcapital/
LinkedIn: https://www.linkedin.com/in/jeremydyer
Facebook: https://www.facebook.com/startingpointcapital
Book a Call! https://calendly.com/startingpointcapital/discuss-investing-with-jeremy-dyer?month=2023-12
Summary
Tip #1: Don’t Dismiss Blue States—Understand Supply and Demand
“I think they’re overlooking one of the most basic fundamentals of a good real estate purchase, which is supply and demand.”
While many investors gravitate toward red states for their friendlier regulatory environments, Michael Voulgarakis challenges this bias by pointing to Seattle's unique market characteristics. The city’s geographic constraints and high-paying tech jobs result in a demand-rich, supply-limited environment. This creates strong, consistent rent growth, even with tighter regulations. Ignoring such markets could mean missing out on long-term upside.
Tip #2: Niche Expertise Matters in Any Market
“They’re not considering the niche that an operator might have in a blue state.”
Michael emphasizes the importance of local operator expertise. Having boots on the ground and a nuanced understanding of tenant needs, regulatory frameworks, and market idiosyncrasies gives blue-state operators a significant edge. He encourages investors to look beyond politics and evaluate operator track records and market knowledge.
Tip #3: Prioritize Walkability and Job Proximity in Tenant Evaluation
“We want to buy properties where it’s a 15-minute commute max...many of ours people can walk to the office within four or five minutes.”
For tenant stability and reduced turnover, proximity to employment hubs is key. Michael’s firm specifically targets buildings with high walk scores and access to public transit like Seattle’s light rail system. This strategy helps attract tenants with stable, high-income jobs, increasing the predictability of rent payments.
Tip #4: Underwrite Conservatively in Today’s Economic Climate
“Be very discerning about what rents you think you can get today in the market...don’t reach for the moon.”
Amid economic uncertainty and interest rate fluctuations, Michael advises a conservative underwriting approach. Sponsors should base projections on achievable current rents rather than best-case scenarios. Cutting pro forma rent growth slightly below market projections creates a built-in margin of safety that can protect investors from surprises.
Tip #5: Seek Deals with Seller Financing or Assumable Debt
“We’re looking at a deal now that has assumable debt...just sub-4% interest rate for four years.”
Creative financing options are critical in a high-interest-rate environment. Michael highlights the importance of finding properties with assumable loans or seller financing that offer favorable terms. These structures provide more runway to execute business plans without exposing investors to refinancing risk or capital calls.
Tip #6: Invest in Tenant Bases That Can Withstand Rent Increases
“The average household income was $115,000...our experience is that rarely do we get any kickback at all.”
Not all multifamily assets are created equal when it comes to recession resilience. Properties with tenants who have strong, stable incomes are more likely to absorb rent increases without default. Targeting demographics such as engineers, researchers, and tech employees can make multifamily investments more resistant to downturns.
Tip #7: Vertical Integration Can Improve Leasing and Tenant Quality
“It’s such an incredibly important part of property management...does that tenant have the ability to pay the rent?”
By bringing property management in-house, Michael’s firm gained control over the critical leasing process. This ensures tenant quality, reduces turnover, and improves rent collection. Vertical integration aligns incentives and enables more strategic decision-making on the ground.
Tip #8: Look for Hidden Revenue Opportunities
“Can we attract visiting nurses...for 30, 60, 90+ days? Are you maximizing your RUBS reimbursement?”
Michael shares several ways asset managers can increase topline revenue—from medium-term rentals targeting traveling professionals to optimizing utility bill reimbursements (RUBS). These micro-optimizations can add up to meaningful increases in property NOI, especially in tight cap rate environments.
Tip #9: Know When to Walk Away—But Learn from It
“We passed on a deal...because of potential seismic risk. They did end up selling the building at a discount after.”
Sometimes, walking away is the right call—even if it stings later. Michael recounts a deal he passed on due to seismic retrofit costs and seller inflexibility. While the deal later sold for less, the experience reinforced the importance of risk analysis, negotiation communication, and not stretching to make a deal work.
Tip #10: New Passive Investors Should Start By Reviewing Deal Flow
“Start looking at deal flow...the more deals, the better.”
For new investors, education begins with exposure. Michael advises reviewing dozens of deals from trusted sponsors, especially those in your local market, to understand how underwriting, location, and operator strategies work together. Over time, this builds pattern recognition and investment confidence.
