https://www.youtube.com/watch?v=yUR0P_S4HT4
🎙 Passive Cash Flow Podcast EP.194 | Good Deals Are Back… But Capital Isn’t
In this episode of the Passive Cash Flow Podcast, host Aaron Fragnito sits down with Michael Zane, founder and Managing Partner at Lexcraft Advisors. Mike brings over a decade of high-level corporate experience from JPMorgan Chase and PwC to help middle-market real estate sponsors and family offices institutionalize their operations.
They dive deep into how real estate sponsors can prepare their businesses for institutional-level capital, the state of the 2026 multifamily market, and why a “back-office first” approach is essential for scaling a professional investment platform.
Connect with Michael:
Website: LexcraftAdvisors.com
LinkedIn: Mike Zane
🧠 Topics Covered:
00:00 2026 Market Opportunity
00:36 Intro: Mike Zane & Lexcraft
01:18 Strategic Business Structuring
01:54 Corporate Background & PwC
03:33 Middle-Market PE Niche
05:18 Institutional Operating Systems
07:40 Accounting, Finance, & IR
08:15 Playbook for Scaling
09:47 Back-Office vs. Equity Placement
11:09 Collateral & Investor Portals
13:03 2026 Fundraising Trends
14:48 Multifamily & Industrial Outlook
15:48 Buying Below Replacement Cost
16:23 Institutional Market Hesitation
18:13 Importance of Track Record
19:53 Connecting with Lexcraft
21:15 NJ Real Estate Wealth Building
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⚠️ Disclaimer:
This is not a solicitation for funds, tax advice, or legal advice. This is not intended to be, and must not be construed to be in any form or manner a solicitation of investment funds or a securities offering. Peoples Capital Group LLC is NOT a United States Securities Dealer or Broker nor U. S. Investment Adviser is a Consultant/service provider and makes no warranties or representations as to the listener or viewer. All due diligence is the responsibility of the investor.
Transcript:
00:00:00:04 – 00:00:04:23
Aaron Fragnito
now for the first time in about seven years, we’re seeing good deals, 7
00:00:05:00 – 00:00:08:09
Aaron Fragnito
Right now institutional capital is not excited about multifamily housing.
00:00:08:13 – 00:00:10:15
Michael Zane
investors don’t want to talk to me.
00:00:10:20 – 00:00:13:19
Michael Zane
They want to talk to the folks who are truly sponsoring
00:00:13:19 – 00:00:19:09
Michael Zane
they’re really holding a magnifying glass up to the sponsor’s track record and to their experience level and
00:00:19:09 – 00:00:22:19
Michael Zane
we have supported more fundraising activity in the last
00:00:23:00 – 00:00:24:05
Michael Zane
3 or 4 months,
00:00:24:11 – 00:00:25:10
Michael Zane
than we did,
00:00:25:16 – 00:00:27:03
Michael Zane
you know, probably in all of
00:00:27:07 – 00:00:28:20
Michael Zane
2024 and
00:00:28:20 – 00:00:36:07
Michael Zane
at heart, we’re we’re back off as service provider if we get right down to it.
00:00:36:09 – 00:00:51:05
Aaron Fragnito
All right, ladies and gentlemen, welcome back to the Passive Cash Flow podcast. I’m your host, Aaron Frank. You know, and we have an interesting guest with us today. We have Michael Zane with Lex Craft Advisors. How are we doing today, Michael?
00:00:51:06 – 00:00:53:11
Michael Zane
Good. Aaron, thank you for having me.
00:00:53:13 – 00:01:13:20
Aaron Fragnito
Absolutely. You know, I wanted to have you on the show here because, with my engagements with you and conversations, I’ve got a lot of value out of your suggestions on how to assist us in approaching investors and raising capital and structuring our business and our our offering memorandums and so on. And, so I felt like you brought a lot of value, to me with our conversations.
00:01:13:20 – 00:01:18:10
Aaron Fragnito
And, that’s what I wanted to have you on the show here. So congratulations. You made the cut.
00:01:18:12 – 00:01:19:13
Michael Zane
Thank you.
00:01:19:15 – 00:01:38:17
Aaron Fragnito
Hey. Absolutely. And to our listeners and our viewers out there, if you’re getting value out of the Passive Cash Flow podcast, please share. Or like these, episodes with a friend or colleague who you think would also gain value, from these episodes. Hit that subscribe button on YouTube and Spotify and Apple iTunes were on all major platforms.
00:01:38:20 – 00:01:53:03
Aaron Fragnito
We come out with a new podcast every two weeks. We have interesting guests here like Michael Zane, so if you’re not subscribed, hit that subscribe button. And if you’re getting value, please share this episode as well. But let’s dig into it here. Michael, how’s that sound?
00:01:53:05 – 00:01:54:11
Michael Zane
Let’s do it.
00:01:54:13 – 00:02:13:04
Aaron Fragnito
Excellent, excellent. So, I know you have some experience, in the kind of capital raising space and financial advisory space and broke off and and started your own firm, which is an incredible journey. But tell me a little bit of kind of how you got from working in the corporate world to starting your own business here.
00:02:13:06 – 00:02:43:10
Michael Zane
Sure. Happy to. So let’s see, I, I did about 12 years in the corporate world. I got my start in, in real estate at, at JP Morgan Chase. I was in real estate finance there for several years, doing a lot of analytics work and, and so forth. At some point, I, I made the jump over to management consulting.
00:02:43:12 – 00:03:14:03
Michael Zane
I was with PricewaterhouseCoopers for about five years. So when I was there, I was doing advisory work for, large private equity shops and other financial institutions. A lot of it revolved around, you know, accounting system implementations, process improvement related to those things. I was also involved in, some tax and audit work throughout my time there.
00:03:14:05 – 00:03:46:15
Michael Zane
And, you know, it was really through that experience that, I realized that that this sort of niche existed, And it was in 2021. So about five years ago, I, I decided that, there was kind of this, this middle market segment to the private equity real estate industry. And, you know, I had some contacts there, you know, kind of got to understand the landscape.
00:03:46:17 – 00:04:18:05
Michael Zane
And I also got, at least in an early understanding of kind of the, the dynamic that the typical, middle market real estate sponsor or family office involved in the space faces on a daily basis in terms of running their, their investment operation. And, you know, I thought about how could I apply my, my experience, my skill set to kind of help, to elevate some of these folks who are in this, this segment of the industry.
00:04:18:05 – 00:04:40:20
Michael Zane
And out of that was born, Lex Craft Advisors. So we’re a CFO services firm, that works with that niche. Exactly. Small and middle market, private equity sponsors, focused on real estate, as well as some family offices that are, involved in that in the private real estate space.
00:04:40:22 – 00:05:03:20
Unknown
At People’s Capital Group, we help you invest in real estate. Build your wealth by owning professionally managed apartment buildings in the northern new Jersey market. We want to show you how owning real estate is attainable, even for the busy professionals that don’t have the time or experience investing in real estate. Now we only work with select people who are serious about building wealth.
00:05:03:24 – 00:05:08:10
Unknown
So find out if you qualify at Peoples Capital group.com.
00:05:08:12 – 00:05:18:18
Aaron Fragnito
Okay. Excellent, excellent. So then, who are your primary clients? Like, why would someone come to you and then and how you for your services there?
00:05:18:20 – 00:06:11:16
Michael Zane
You know, I think that, probably the primary reason that, some of these middle market shops, end up wanting to work with us is, you know, I think I think they’re looking I think they, they’re, they realize that there’s a, set of best practices, across accounting and and corporate finance and investor relations and, and I think, I think folks are genuinely looking for a way, to abide by those practices and put them into, into implementation and, and to really run their, their business under an operating system that, kind of embeds all of that.
00:06:11:18 – 00:06:48:03
Michael Zane
And what we’re here to do is to stand up that operating system from day one, kind of, you know, we jump out of the box, we get on the ground. And, and we stand up that, that operating system and, and start to implement those practices off the bat. And, so, you know, I think the, the reasons why why the folks come to us, I think the reason is that they understand that we can bring that value to them.
00:06:48:05 – 00:07:15:24
Michael Zane
Again, I’ll, I’ll use the word out of the box. You know, we’re we’re deploying and kind of standing up the systems and processes where they might otherwise either, you know, not not have the bandwidth or, you know, not have the, kind of the broader context that you need to really do, do those things properly and to really execute on them and then manage and maintain those systems and processes over time.
00:07:16:01 – 00:07:40:01
Aaron Fragnito
Okay. All right. So you offer a variety of services too, right. From accounting, bookkeeping to document prep and essentially kind of guidance with your whole operations there. So like how do you start when you, embark with a, with a company, what do you kind of look at first? And how do you find those problems and those solutions?
00:07:40:03 – 00:08:15:02
Michael Zane
Yeah, yeah. So, so our company, is based on, on three lines of service. Those are accounting, in-house finance. So kind of like your financial planning and analysis, your, your corporate finance, and then investor relations. So, you know, for, for many of the shops we work with, we’re working across the board, across those three, verticals, and we’re supporting them across all three, other shops come to us looking for more targeted support.
00:08:15:05 – 00:09:04:14
Michael Zane
You know, maybe they’ve identified a particular need or a gap or, a place where they want to, you know, I’ll say institutionalize. And, we’re we’re happy to go down either path, whether it’s the kind of the full suite of support or more targeted, engagements. You know, we support both. And really what what I’m trying to do, what my job is, is to listen to every sponsor, that we encounter and really to try to understand their business on a pretty deep level, to the point where I can kind of help them, you know, not only understand where they’re at versus where they ultimately would like to be, whether
00:09:04:14 – 00:09:33:11
Michael Zane
that’s in terms of size or scope or, you know, the scale of the platform or what have you. But but also to be able to genuinely say to them, hey, you know, we’ve seen somebody else in your shoes and we’ve seen them go from point A to point B and, you know, kind of here’s the playbook that that somebody else ran, we were involved with it, in these different ways.
00:09:33:13 – 00:09:47:09
Michael Zane
And so, you know, we can we can bring that to you and kind of take that playbook and apply it and tailor it to your, your business, your situation and your objectives.
00:09:47:11 – 00:10:13:02
Aaron Fragnito
Okay. So that’s interesting. You kind of have an all a cart, these types of services and, and so on and kind of you can prepare a company to properly present to an institutional group. Do you make those connections and work as an equity placement company, or do you work more on just the grounds of kind of preparing the systems and processes and documents and underwriting to be presented in its best light?
00:10:13:04 – 00:10:38:03
Michael Zane
Yeah. Great question. So I guess the basic answer to that is that, we’re we’re at at heart, we’re we’re back off as service provider if we get right down to it. So we will do everything up until the point where, it comes time to speak with prospective investors to, to actually raise equity. So we’re not a placement agent.
00:10:38:03 – 00:11:09:21
Michael Zane
We’re not an equity broker. You know, that’s frankly, investors don’t want to talk to me. They want to talk to the folks who are truly sponsoring and, are going to, you know, be managing, the assets. And, you know, that’s totally fine. What we’re here to do is to stand up, the systems. And when I say systems, it’s usually literally, software platforms to manage investor bases.
00:11:09:23 – 00:11:36:23
Michael Zane
You know, these are your investor management platforms, your portal tools and so forth. You know, so we, we stand those, we manage those and, and, take those through the fundraising initiative is it’s kind of a managed service. On top of that, we will produce, offering marketing collateral. You know, you’re offering memorandums, your pitch decks, etcetera.
00:11:37:01 – 00:12:04:23
Michael Zane
Yeah. So we have a graphic design team in-house that does that. And, so we work with every everybody on that front to kind of crafted, totally customized, bespoke, you know, template and offering memorandum, that that can be leaned on as heavily as you guys need to, you know, button and raise the money and make it happen.
00:12:05:00 – 00:12:19:13
Aaron Fragnito
Sure, sure. Okay. So you can maybe offer some introductions, depending on your experience, but it’s not like you’re really going out and like hammering the phones and emails and getting that capital raise like an equity placement company does.
00:12:19:15 – 00:12:51:09
Michael Zane
Right? I mean, we’re we’re not offering equity placement services. Obviously, we meet folks through the course of our work. And we’re it makes sense to introduce one client to another or, or a client to somebody who we happen to meet, in the course of business. Yeah, totally happy to do that. Actually, the the way that we structure our business and and even the agreements that we have with the folks we work with, I like to think that, our, our client’s success is our success.
00:12:51:11 – 00:13:03:12
Michael Zane
Sure. And, you know, I think in, in very real terms, it is. So, you know, anything that we can do to, to kind of help to support that. Yeah, I’m all for it.
00:13:03:14 – 00:13:23:21
Aaron Fragnito
All right. And what do you see in Mike in the, markets right now? You know, a lot of, whispers of institutional capitals kind of starting to dip their toe back in the water with multifamily. I know office is super distressed. So some of the cowboys there are probably snagging some great deals right now. Pretty, way below replacement cost.
00:13:23:21 – 00:13:46:01
Aaron Fragnito
But we’re starting to see those deals too. And multifamily and I think multifamily is a more resilient asset class. Of course, that’s why I focus on buying some that biased myself. But what do you see that there? What do you expect in 2026? Is the institutional capital finally going to come back off the sidelines, and, and get back in the game, or are they going to be cautious and hesitant and wait another year?
00:13:46:03 – 00:14:20:15
Michael Zane
Yeah. It’s interesting. I mean, we’ve got, I would say we’ve we have supported more fundraising activity in the last 3 or 4 months, than we did, you know, probably in all of 2024 and in early 25, even, so at least among the groups that we work with, you know, depending on asset class, it seems that there are viable deals out there.
00:14:20:17 – 00:14:48:19
Michael Zane
And I would say also depending on asset class and kind of even you know, subclass in some cases the equity is interested. And when I say the equity I mean generally everything from you know, your, your high net worth individual to your call it smaller institutional equity. And sure, you know, there are still there are still pockets that are difficult.
00:14:48:21 – 00:15:14:17
Michael Zane
I would say, you know, in some cases development is is somewhat difficult to raise equity for right now. I, you know, I think that, you guys are seeing that sort of I’ll call it a rebound in, in the multifamily space. We, we see some of that going on to, you know, industrial assets or pretty, pretty popular right now.
00:15:14:19 – 00:15:34:24
Michael Zane
Okay. And good flows and into those. Same for retail. You know, so it early in the year, but it’s shaping up to be pretty productive. One you know, certainly more so than probably the last two, two and a half years have been.
00:15:35:01 – 00:15:58:11
Aaron Fragnito
Yeah. Yeah. Okay. That’s good to see. Yeah. I’m noticing great deals in the multifamily space. You know, we’re you know, the deal we’re buying right now. For 18.5 million, the lenders owed 22.5 million. It’s a situation where we’re getting it probably $6 million below replacement cost. Just, incredible. Brand new Class-A building that’s like 80% leased up we can get for a great price.
00:15:58:11 – 00:16:23:11
Aaron Fragnito
So. And I don’t remember seeing deals like this for the last, like, 7 or 8 years. Last time there were deals like, this was like 2015, you know, 2016, 2017. But then like around 2018, they really started to dwindle. And then of course the pandemic came in 2020. And that just sent the market awry. So now for the first time in about seven years, we’re seeing good deals, 7 or 8 years.
00:16:23:11 – 00:16:44:01
Aaron Fragnito
So, I think it’s time to buy. I do see institutional capital kind of tiptoeing. It’s a it’s toes back into the water, but not really just yet. They’re very hesitant. I just spoke with a $400 million minimum fund manager who works with strictly institutional capital and large scale like their. Their average check size is 41 million.
00:16:44:03 – 00:17:11:23
Aaron Fragnito
And he’s saying they’re just. Yeah. Right now institutional capital is not excited about multifamily housing. I think a lot of them got burned. Yeah, a lot of them are still like very tied up in investments that the market’s got to come back for them to exit. And they don’t want to over allocate in the multi. But then there are some institutional groups that see the value and understand the market cycles and understand we are in a buyer’s market and it is a good time to buy multifamily right now and some other asset classes like you previously mentioned.
00:17:11:23 – 00:17:39:00
Aaron Fragnito
So you know, it’s kind of a mixed bag right now I think usually like like like normal, the largest institutional players, the pension funds, endowments, they’re going to kind of be the last to come into the game right now, the fund to fund managers that maybe have an allocation from those large pension funds. So kind of the next level down institutional capital, small institutional is going to start to move that money into the right opportunities.
00:17:39:00 – 00:17:57:23
Aaron Fragnito
But they are very, selective on the operators, on the deal, the location, you know, the underwriting is more strict than the never. So that that’s one of the challenges that fundraisers face today in operators as well. And, because I think, quite frankly, there’s a lot of options for these fund to funds and small institutional groups to place their capital.
00:17:57:23 – 00:18:13:10
Aaron Fragnito
So they’re going to be more selective where, you know, back in 2022, 23, everyone was, you know, what is it by the, the chop to, to get on these deals. Right. So you just like, you know, moving quicker on them with the, you know, I.
00:18:13:12 – 00:18:34:10
Michael Zane
I think the other interesting dynamic that is shaking out right now is that, some of these, some of these smaller institutional groups or, you know, some of the family offices that we know out there, they’re really holding a magnifying glass up to the sponsor’s track record and to their experience level and kind of the depth of the experience.
00:18:34:10 – 00:18:56:00
Michael Zane
How long is that sponsor played in that market or that submarket? Yeah. And so I think you’re seeing a little bit of a shakeout occur there, where the shops like you guys who are able to say legitimately that we’ve been in a particular market and here’s our, here’s our track record and we’ve seen success over, you know, the course of, of a cycle or more.
00:18:56:02 – 00:18:59:22
Michael Zane
Right. That’s holding a lot of weight right now.
00:18:59:24 – 00:19:24:19
Aaron Fragnito
Yeah. Yeah. That’s what we’ve always specialized here with our brand, you know, strictly jersey focused. 99% of our transactions out of the 300 almost transactions have been here in northern new Jersey in fact, 100 of them were in Newark alone, which is where we’re buying this current building. So, I mean, real estate is a local business. You got to have your local infrastructure, your boots on the ground, your service providers, you know, your realtors and your brokers and your market and your comps.
00:19:24:19 – 00:19:52:23
Aaron Fragnito
And the only way you do that is by repetition in a very select market or, you know, select counties, as we do here in northern new Jersey. So, yeah, no, I appreciate that. And hopefully it does lead to, nice institutional investment as we’re working on right now in 2026, perhaps with the help of craft advisors. So, Mike, how can, people, get in touch to here and learn more about your services and, and see if you’re fit?
00:19:53:00 – 00:20:17:17
Michael Zane
Yeah. I think the probably the best place to to go to learn more about us is our, our website. Lex craft advisors.com. You can find out information about, kind of like how we think about our business. You can find information about the services that we offer. And, you know, we’d love to hear from anybody out there.
00:20:17:19 – 00:20:41:10
Michael Zane
You know, regardless of whether you have a current need or not. It’s always enjoyable for me and helpful for me, frankly, to chat with a diverse group of folks around the industry. So feel free to reach out. You can also find us on on LinkedIn. We’re somewhat active there. Not like you, Aaron, but, we’re we’re trying.
00:20:41:14 – 00:21:01:01
Aaron Fragnito
So I think I post too much on LinkedIn. I think I’m over, the algorithm is like, no, bro, you’re too needy. Like, you gotta you gotta pause. You know, it’s it’s a crazy algorithm. It’s like dating, you know, you gotta. So I, I always am researching. I think you gotta post like three times a week on LinkedIn.
00:21:01:01 – 00:21:11:18
Aaron Fragnito
I post like five times a week. So, maybe I’m over running the algorithm there. I, you see, a little better, views and, engagement. So we’ll see. You know what.
00:21:11:18 – 00:21:15:05
Michael Zane
A12 is great, but you’re you’re bringing some good stuff. So.
00:21:15:07 – 00:21:37:13
Aaron Fragnito
Yeah. Yeah, I try to put some good content out there, but, Thanks, Mike. I appreciate it, my friends. And to our listeners, of course. If you’re gaining value from this podcast, please like, share and subscribe. You know, share with a friend or colleague who would like to learn about real estate investing or just passive cash flow, origination and how to create financial freedom and preserve and build your wealth, primarily through real estate.
00:21:37:13 – 00:21:59:22
Aaron Fragnito
But we also have guests on that focus on other industries as well. So, check us out of People’s Capital group.com. We’re actually working on acquiring an asset right now. We work with accredited investors to help them build and preserve their wealth through new Jersey apartment buildings. I’m doing this since 2013. My business partner, Seth Martinez, and I, we’ve about 113 investors, about an 83% reinvestment rate.
00:21:59:22 – 00:22:19:06
Aaron Fragnito
And we’ve completed about 300 transactions here in new Jersey. And we’re vertically integrated with our in-house management company. So wanna learn more about what we have available to accredited investors? I go to People’s Capital group.com. We have more investors than we do deals. So they tend to fill up pretty quickly. But if you go to our website, you can get on our waitlist and perhaps get it on our next deal.
00:22:19:06 – 00:22:35:22
Aaron Fragnito
So it all starts with People’s Capital group.com and of course Michael Zane here with Lex Craft Advisors. He’s your man you want to go to if you’re working to raise capital or structure your business, improve your business. And he’ll get you all tightened up and, buttoned up there. So you’re on institutional level, isn’t that right?
00:22:35:22 – 00:22:39:24
Michael Zane
My we’re going to do it. Absolutely. We’re here to help.
00:22:40:01 – 00:22:43:17
Aaron Fragnito
Awesome. All right, my friend, thanks for coming on the show. We’ll be in touch.
00:22:43:19 – 00:22:44:22
Michael Zane
All right. Thanks so much, Aaron.
