As Northeastern undergraduates, Eric Doroski and Nitzan Mokady decided at a dining hall table in the International Village on the Boston campus that they wanted to develop a way to earn money while taking classes.
They went public, but after some experimentation, they came to the conclusion “this wasn't sustainable”.
Then, in early 2018, in the middle of college, they decided to pool their money and invest in real estate.
Mokadi and Dorosky searched for fortune. However, real estate prices in Boston were very high. So they looked for a more affordable market.
“We quickly thought we were just going to do real estate, and of course we couldn't buy anything in that area because we didn't have anywhere near enough capital,” says Mokady.
Also, no one would co-sign a loan for them.
“So we said, 'OK, where can we find houses that are cheap, where it looks like we can get good rents for them?' says. “So we went to the Midwest, flew there on the weekends.”
The search ended in Cleveland. They paid cash for a vacant rental property in April 2018 and spent four months doing renovations.
“We took a two-story that had no tenants, renovated it, rented it to two long-term tenants, and slowly added from there,” Doroski says.
The partners formally formed Zanzibar Capital and incorporated as an LLC. The two Gen Zers became baby boomers, naming the company, at least in part, after the Billy Joel song “Zanzibar.”
“We're both Billy Joel fans, and when we brought up that name during brainstorming, we both liked it right away,” says Doroski.
They also liked the name because Zanzibar—located on an island off the coast of Tanzania—is home to one of the best beaches in the world, but it's almost always overlooked.
“We like this case because we aim to identify opportunities that are overlooked or not seen by our competitors,” says Doroski.
In 2019, they bought two more rental properties, both within a few blocks of the first building in Cleveland.
“We picked assets at low prices that we were able to buy personally,” says Doroski, “from the cash flow of the former.”
Between the second and third purchases, Doroski, Class of 2019, graduated from Northeastern with a degree in mathematics and economics.
Mokady graduated a year later with a degree in mechanical engineering and a minor in economics. However, before Mokady graduated, the two took a big leap, a $3 million leap.
“We were talking about it for probably six months by the time we actually executed trying to figure out where to turn. Do we want to continue buying piecemeal in the Midwest? Do we want to bring investors into it?' says Mokady. “And our big decision came down to: We want to pick a market that we know front and back, but we also think is stable, has strong jobs. Let's say a recession occurs, it has many different industries and has a history of quick recovery. You know, good biotechnology, good education.”
Doroski and Mokady decided they wanted to be in the Boston area rental market. They went looking for investors – what they called a “friends and family round” of fundraising. They raised nearly $1 million, secured a $2.2 million loan, and purchased a 16-unit North Shore rental property for $3 million in January 2020.
Shortly after the $3 million buyout, the COVID-19 pandemic hit. The two young entrepreneurs suddenly had to answer to investors but they could not predict what would happen in the rental market.
“Honestly, it's the case with us—and almost any condo investment—that it really hasn't been that big of an impact,” Mokady says. “It was more of a blow. People continued to pay their rents. The world has slowly opened up again, but people need a place to live. So we lost a lot of sleep—I don't want to say about anything—but more than we should have.”
Zanzibar Capital currently has five properties totaling about 100 rental units, all in the Boston area since selling the Cleveland properties. In addition, a land development project is underway on another property.
Last year, Zanzivari, which has an office in South Boston, bought a 55-unit residential property in Lynn, Mass., for $10 million.
In January, they made a $7 million purchase of a property on Dorchester Street in South Boston for a planned development of 32 residential units and commercial space, which will include a boutique grocery store and coffee shop. The property is the first “land” development in which the partners have invested. Completion is expected in 2024 and the units will be sold as condominiums.
The entrepreneurial spirit, experiential learning of partners and the alumni network at Northeastern University helped them launch and grow their company, Mokady and Doroski say.
Mokady says he's had three co-ops — from a large company to a startup — while attending Northeastern and learned so much about business at each one. Northeastern's alumni network, he says, has been incredibly helpful.
“Northeast graduates have helped us in so many ways in different parts of our business. Northeastern graduates who graduated the same year as us, or somebody who graduated years ago and they're well into their career, and they can just call and say, “Hey, oh, did you go to Northeastern too?” says Mokady.
The two business partners and former college roommates met at one of Northeastern's Dialogue of Cultures programs, which offer students an international experience.
“We went to a Dialogue of Cultures. The one we chose was in the Dominican Republic and they were together Professor (Peter) Simon. It was an economic dialogue,” says Mokady. “I had no idea who he was and vice versa. We got to the place where we were going to live and the professor says, “Okay, everyone pick your roommate.” And we just both looked at each other and said, OK, it looked normal, so let's see if it works.”
Mark Conti is the managing editor of Northeastern Global News. Follow him on Twitter @markconti11
