The Stoler Report – Latest Innovations in Technology for Real Estate


♪ [THEME MUSIC] ♪>>TECHNOLOGY, ALL THIS MONEY, BILLIONS INVESTED IN TECHNOLOGY, ESPECIALLY FOR REAL ESTATE. WHY ARE PEOPLE INVESTING? WITH THE HELP OF MY EXECUTIVE PRODUCER, THE OLDEST MEMBER ON THE PANEL NEXT TO ME, THREE TECH GUYS WHO WILL TELL THEMSELVES WHAT THEY ARE DOING AND THE MONEY BEHIND THIS. I’M GOING TO ALLOW EACH OF THEM TO INTRODUCE THEIR COMPANY.>>THANKS FOR HAVING US. I’M SAM BERNSTEIN. I’M THE CO-FOUNDER AND CEO OF LOFTSMART. WE ARE THE FIRST END-TO-END MARKETPLACE FOR THE RENTAL REAL ESTATE. A MARKETPLACE LIKE KAYAK OR TRIPADVISOR FOR STUDENT HOUSING MARKET. WHAT END-TO-END MEANS, WE HAVE THE DISCOVERY PRODUCT FOR YOU CAN SEARCH AND BROWSE LOCAL LISTINGS. WE ALSO HAVE A BOOKING PRODUCT YOU CAN APPLY AND PAY, YOU DO NOT HAVE THE WORK WITH A BROKER AND CAN DO THE TRANSACTION ON THE SAME PLATFORM.>>YOU EVEN HAVE A RELATIONSHIP WHERE YOU CAN GET LEASE SECURITY.>>THAT IS RIGHT. WE HAVE A PARTNER THAT ALLOWS RENTERS TO PAY THE SECURITY DEPARTMENT, THEY CREATE AN INSURANCE CONTRACT FOR THE FULL VALUE OF THE SECURITY DEPOSIT.>>YOUR AGE?>>I’M 23.>>HOW MUCH MONEY HAVE YOU RAISED?>>$5 MILLION.>>NEXT IN THE APPRAISAL WORLD.>>I’M THE CO-CEO OF BOWERY VALUATION. WE ARE THE FIRST EVER TRULY TECH ENABLED COMMERCIAL APPRAISAL FIRM. WE BUILT THE TECHNOLOGY FOR OURSELVES AS APPRAISERS. WE LEVERAGED THAT TECHNOLOGY. OUR APPRAISERS DELIVER REPORTS THAT ARE HIGHER QUALITY THE GREATER CONSISTENCY, FASTER DELIVERY TIMES AND LOWER COST.>>HOW LONG IN BUSINESS?>>JUNE OF 2015.>>I AM 29. WE HAVE RAISED $7 MILLION.>>MR. MORTGAGE.>>THE AGE THING IS TOUGH.>>DON’T WORRY. MR. MORTGAGE.>>I’M THE COFOUNDER OF MORTY, A DIGITALLY NATIVE FULL-SERVICE MARKETPLACE. FOR RESIDENTIAL. DIGITALLY NATIVE. IT IS MODERN, ONLINE, ROOTED IN TECHNOLOGY. NO PAPER, NO SUPERFLUOUS MIDDLEMEN. IT IS FULL-SERVICE. THE REAL DIFFERENTIATOR IS WE ARE A MARKETPLACE. QUICKEN LOANS IS NOW THE NUMBER ONE RESIDENTIAL MORTGAGE LENDER IN OUR COUNTRY. WE HAVE 15 DIFFERENT PARTNERS. ALL THE BEST ARRAY OF PRODUCTS, PRICING SO THE CONSUMER GETS THAT COMBINATION OF FULL-SERVICE AND THE RIGHT PRODUCT THAT FITS THEM.>>AND YOUR AGE?>>I AM 33. YOUNG AT HEART.>>LOOKS 25.>>IN THE OLD MEN IN THE GROUP.>>WE INVEST IN THE BUILT REAL ESTATE ENVIRONMENT, WE WILL LOOK AT INVESTING IN IT. I AM THE ELDEST PERSON AT THIS ROUNDTABLE. I AM OVER 21.>>YOU ARE 39.>>OOF.>>HOW DID THIS COME ABOUT?>>I STARTED THE BUSINESS WHEN I WAS A STUDENT AT THE UNIVERSITY OF VIRGINIA, IN 2015. THE BASIC PREMISE WAS TO CREATE YELP FOR REAL ESTATE. FOLKS COULD NOT JUST SEE WHAT WAS OUT THERE BUT ALSO GET INFORMATION FROM FOLKS WHO HAD LIVED THERE BEFORE. PLACES THAT HAVE BEEN CREATED FOR THE PURPOSE OF CREATING TRANSPARENCY. WHAT WE DID WAS CREATED THE PLATFORM, WE WORKED HARD TO GENERATE LOCAL REAL ESTATE. WE ULTIMATELY CAME TO PROPERTY MANAGERS AND DEVELOPERS. WE HAVE CREATED THIS COMMUNITY WHERE FOLKS ARE MAKING DECISIONS. ALLOW US TO HELP CONVERT THESE PROSPECTS.>>HOW DO YOU MONETIZE?>>BECAUSE WE ARE THE FIRST THAT FACILITATES THE TRANSACTIONS, WHAT YOU WOULD DO ON THOSE PLATFORMS IS SUBMIT A LEAD OR AN INQUIRY. WE TAKE YOU TO THE WHOLE PROCESS. WE ARE ABLE TO TAKE A PERCENTAGE OF THE CONTRACT VALUE. WE ARE NOT A BROKERAGE. NOR DO WE HANDLE ANY OF THE BROKERAGE ACTIVITIES. WE DON’T PERFORM THE TRADITIONAL FUNCTIONS OF A BROKER. WE CONNECT RESIDENTS AND PROPERTY MANAGERS.>>WHO IS PAYING YOU? THE PROPERTY OWNER?>>YES.>>WHAT ABOUT THE PROPERTY MANAGERS.>>THEY PAY THROUGH THE PROPERTY OWNERS.>>I FELL INTO THE APPRAISAL SPACE OUT OF COLLEGE WORKING FOR YOUR FRIEND. I ALWAYS HAD THOUGHTS OF GOING TO LAW SCHOOL. A FRIEND OF MINE RECRUITED ME. I RECRUITED MY FRIEND FROM GROWING UP AND WE WORKED TOGETHER FOR FOUR YEARS. THE BEST BUSINESSES COME FROM NEED. FOR US IT WAS A PERSONAL NEED. WE WERE SPENDING 12-14 HOURS APPRAISING EVERY DAY.>>HOW DID YOU DECIDE TO GO INTO THE BUSINESS?>>IT TOOK A WEEK ON THE JOB TO REALIZE THE TOOLS THAT WE HAD FOR THESE REPORTS, 150 PAGES LONG WERE HIGHLY ANTIQUATED, DESIGNED AND STUCK BETWEEN 1985 AND 1995. AS WE BUILD UP ENOUGH EXPERTISE IN THE SPACE, LOOKING UNDER THE HOOD, SAYING THAT NOT JUST OUR INDEPENDENT FIRM BUT THE LARGEST FIRMS IN THE WORLD WERE USING THE TECHNOLOGY WE HAD. WHEN WE STARTED REALLY SAYING THAT THERE WAS NO TECHNOLOGICAL SOLUTION OUT THERE WE FELT LIKE WE WERE IN A POSITION TO BUILD THAT. WE MET OUR THIRD COFOUNDER, A REALLY TALENTED ENGINEER.>>YOU ARE AN APPRAISER.>>CO-CEO. WE HAVE LICENSED STATE APPRAISERS.>>WHAT HELP YOU GROW? YOU HAVE A STRATEGIC RELATIONSHIP WITH CUSHMAN & WAKEFIELD.>>WE DO. WE STARTED TALKING TO THEM BACK IN JANUARY OF LAST YEAR. THEY BASICALLY SAW OUR TECHNOLOGY THROUGH AN ACCELERATOR. FORTUNATELY WE WERE FORWARD THINKING. THEY SAW THAT WE HAD BUILT THE LEADING TECHNOLOGY INDUSTRY. THEY WERE DOING THINGS THE SAME AS EVERYONE ELSE. YOU CAN’T KEEP STAYING IN YOUR OLD WAYS IF YOU ARE GOING TO PROGRESS. WE SAW AN OPPORTUNITY. RATHER THAN JUST TRYING TO COLLIDE AS WE STARTED TO GROW, TO RISE BOTH OF THE SHIPS.>>WHAT CAUSED THE CHANGE? WAS IT PRICING?>>BOTH ARE CRUCIAL. IT STEMMED FROM THE WORK OF THE APPRAISER. IF YOU TALK TO LENDERS A LOT OF TIMES THEY WILL TELL YOU THE APPRAISAL IS THE BIGGEST HEADACHE OF THE PROCESS. TO HAVE THAT GAP, THERE IS AN ISSUE WITH THE TOOLS.>>HE IS IN THE DORMITORY BUSINESS. FOR MOSTLY COLLEGE STUDENTS AND SO ON. APPRAISAL, THERE IS A DIFFERENT TYPE OF APPRAISAL PRODUCT. ARE YOU DOING ALL TYPES OF APPRAISALS OR ARE YOU LIMITED TO THE — >>WE ARE AN APPRAISAL FIRM BASED IN NEW YORK CITY. WE HANDLE ANY ASSET. ANYTHING THAT IS SENT OUR WAY, WE HANDLE THOSE APPRAISALS. OUR SOFTWARE AND TECHNOLOGY TODAY, IS BUILT OUT FOR MULTI-FAMILY MIXED USE SPACE.>>BUT YOU CAN STILL DO APPRAISALS FOR ANYTHING?>>WE CAN DO ANYTHING.>>FOR THEM HISTORICALLY THAT IS NOT A SPACE THEY COMPETED IN AGGRESSIVELY BECAUSE THE MARGINS DON’T MAKE SENSE. NOW THEY ARE PARTNERING WITH US WITH A REFERRAL MODEL. AS WELL AS DELIVERING OUR SOFTWARE FOR THEM TO USE INTERNALLY THEMSELVES AND COMPETE IN THIS MIXED-USE SPACE WHICH HAS NOT MADE SENSE FOR THEM.>>I WILL SECOND THAT. THE APPRAISAL PIECE IS ONE OF THE MOST PAINFUL AND TIME-CONSUMING.>>ESPECIALLY SINCE YOU WERE IN THE LENDING BUSINESS.>>I HAVE BEEN IN SOME FACET OF MORTGAGE MY ENTIRE LIFE. STARTED WHEN I WAS 18. I THINK PEOPLE CAN DO THE MATH. I WAS FORTUNATE ENOUGH — >>THIS IS NOT THE BACHELORETTE.>>I WILL KEEP THAT IN MIND. I HAD A MENTOR THAT WAS NICE ENOUGH TO TAKE ME ALONG. HE RAN RESIDENTIAL AT FREDDIE MAC AND WELLS FARGO, ALL THE WAY UP TO THE HOUSING CRISIS WHERE HE WAS APPOINTED FEDERAL HOUSING COMMISSIONER. BEING IN THE GOVERNMENT, TRYING TO HELP PEOPLE FROM NOT LOSING THEIR HOMES, EVERYTHING. SO, AFTER THREE YEARS, I WENT BACK INTO THE BUSINESS. I DID NOT KNOW IF I WAS GOING TO GET BACK IN THE BUSINESS. I MET MY COFOUNDERS. I DID NOT KNOW ANYTHING ABOUT TECHNOLOGY OR STARTUPS. THE THREE OF US AS A TEAM FORMED THAT PERFECT COMBINATION OF TECHNOLOGY. THERE IS MORE TO THE SAUSAGE MAKING. THE OTHER THING IS, IF YOU WANT TO IMPROVE THE PROCESS, YOU’VE GOT TO GET LICENSED. HAVE TO BE AN ORIGINATOR. THE TECHNOLOGY IS NOT GOING TO — THEY DO NOT FIX WHAT IS BROKEN.>>HOW DO YOU MAKE YOUR MONEY?>>WE GET A FIXED COMMISSION FROM THE LENDER. WE ARE UNBIASED AS TO WHICH LENDER OR PRODUCT, NO ATTRIBUTE OF THE LOAN MATTERS TO US. IT’S UP TO THE BORROWER TO USE OUR TOOLS TO FIND THE RIGHT MORTGAGE.>>AND YOUR COMPETITORS?>>I GO BACK-AND-FORTH ON THIS. I THINK IT IS CHEESY TO SAY WE HAVE NO NATURAL COMPETITORS. WHEN WE STARTED MORTY WE DID NOT WANT TO GET INTO AN INDUSTRY TACKLING WELLS FARGO. WE FOUND A WAY TO BUILT A PLATFORM THAT SHARES IN THE ECONOMICS, PLAYS NICE WITH INCUMBENTS. QUICKEN IS OUR NUMBER ONE PARTNER.>>I WILL GIVE YOU A GOOD EXAMPLE. IN YOUR BUSINESS, NEW YORK COMMUNITY BANK, THEY PAY — THEY WANT THE BROKER TO GET PAID AS OPPOSED TO EARNING A FEE. THEY ARE INTERESTED IN THE ORIGINATOR, WHICH YOU ARE. YOU ARE THE QUALIFIER. YOU ARE DOING AN IMPORTANT ROLE AND PEOPLE ARE INTERESTED. HOW DO YOU DECIDE ON EACH ONE OF THEM, HOW DO YOU DECIDE TO BE ACTIVE AND LOOK AT THESE THREE BUSINESSES.>>I KNOW WHAT AN ANGEL INVESTOR IS EXPLAIN WHAT IT IS.>>AN EARLY INVESTOR AND A COMPANY WHERE YOU FIND SOME SORT OF PROMISE. WITH MORTY YOU HAD NOT LAUNCHED YET.>>THAT IS CORRECT.>>I THINK THAT IS ALSO THE SAME WITH YOU. BOWERY IS A LITTLE DIFFERENT. YOU HAD A PRODUCT AND YOU WERE PUTTING TOGETHER THE PIECES AND WE WERE ABLE TO VERIFY YOU. WE ONLY INVEST WHEN REALIZE WE CAN UTILIZE THE TECHNOLOGY IN OUR BROADER LP. WITH THESE GENTLEMEN, AS I SAID EARLIER, YOU LOOK FOR A SPECIFIC TYPE OF PERSON. NEXT FACTOR. BOTH HAD SOMETHING WHERE NOT ONLY WERE THEY PASSIONATE ABOUT THEIR SPACE BUT BRIAN IS BEING MODEST, BUT HE HAD A HAND IN LEGISLATIVE ATTRIBUTES OF THE MORTGAGE INDUSTRY. SAM TOOK ON A PROBLEM HE WAS FACING PERSONALLY HEAD-ON AND SAID IF NOT ME THEN WHO?>>YOU HAVE THIS PROBLEM IN VIRGINIA?>>WHEN I WAS A FIRST YEAR AT THE UNIVERSITY OF VIRGINIA IN 2013, A MONTH INTO SCHOOL, I WALKED INTO A STOREFRONT PROPERTY MANAGEMENT OFFICE AND SIGNED A LEASE ON PEN AND PAPER, BROUGHT IN A CASHIERS CHECK, THEY SCAN MY ID TO RUN A BACKGROUND CHECK. FAST FORWARD A YEAR, WE’RE SITTING THERE AND EATING DINNER THE FIRST NIGHT, AND THE ENTIRE PLACE STARTS TO SHAKE. HIDDEN BEHIND THIS PARK NEXT TO OUR APARTMENT IS A FREIGHT RAIL. IT GOES BY 5-6 TIMES A DAY.>>IF YOU GREW UP IN THE BRONX, IT WOULD BE THE SUBWAY.>>IT WAS SOMETHING HE DID NOT KNOW TO BEGIN WITH.>>I THOUGHT HOW COULD THIS HAVE BEEN PREVENTED? THE ANSWER TO THAT, THINKING ABOUT MY USE OF OTHER PLATFORMS LIKE YELP, IF I’VE READ JUST ONE REVIEW FROM A PRIOR RESIDENT WHO SAID THE TRAIN IS A BUMMER. IT COULD HAVE BEEN THAT SIMPLE. I SET OUT TO CREATE A PLATFORM WHERE FOLKS COULD FIND THAT INFORMATION AND DO SO FROM PEOPLE WHO COULD TELL THEM WHAT WAS WRONG WITH AN APARTMENT OR GREAT ABOUT IT BEFORE THEY MOVED IN NOT AFTER.>>HOW HARD IS IT TO RAISE MONEY TODAY FOR BUSINESS? THE AMOUNT OF MONEY IN THE AMOUNT OF TRANSACTIONS FROM 2008 TO 2018 HAVE BEEN 1000 TIMES THE NUMBER BASED ON STATISTICS. HOW DIFFICULT IS IT? A LOT OF PEOPLE HAVE A GOOD IDEA A GOOD IDEA DOES NOT MEAN IT IS ONE TO TURN INTO A BUSINESS OR A MODEL THAT WORKS.>>I WOULD LOVE TO SAY THAT ME AND MY COFOUNDERS WERE BRILLIANT AND STARTED THIS COMPANY IN 2015 PREDICTING REAL ESTATE WAS ABOUT TO COMPLETELY TAKE OFF. FOR US THAT WAS GOOD FORTUNE. WE SAW AN OPPORTUNITY AND THOUGHT WE NEEDED TO SOLVE IT. I THINK ALL OF US HAVE BEEN FORTUNATE TO COME ALONG WHEN REAL ESTATE TECH IS BRINGING THAT.>>RAISING MONEY IS HARD. IT IS DIFFICULT. THERE ARE A LOT OF SOURCES OF FUNDING AVAILABLE. SPECIFICALLY REAL ESTATE TECH IS STARTING TO HAVE ITS MOMENT IN THE SUN. THE ISSUE IS FROM A VC PERSPECTIVE, IS THE IDEA GOOD? IS THE TEAM BEHIND THE IDEA GOOD? IS THE MARKET OPPORTUNITY LARGE ENOUGH? WE SAY LOOK, THIS MIGHT BE A GREAT IDEA, AND A SMART APPLICATION, BUT THE MARKET IS TINY. ALL OF THOSE THINGS HAVE TO FIT TOGETHER.>>HERE IS AN INTERESTING POINT, SINCE I DID NOT ALLUDE MY AGE, BUT I AM THE OLDEST. IN THE PAST, MANY PEOPLE WERE GETTING INVOLVED IN DAY TRADING. MY SON, WHO IS A SCHOOL TEACHER, ONE OF HIS JOBS BEFORE HE WANTED TO GO TO LAW SCHOOL, WAS DAY TRADING. IT WAS SOMETHING EVERYBODY SAID. I BELIEVE IN A SIMILAR MANNER TO 2018 AND REAL ESTATE TECH A LOT OF PEOPLE MIGHT HAVE HAD AN IDEA. BUT YOU HAVE TO BE LICENSED IF YOU WANT TO DO CERTAIN PARTS OF THE BUSINESS. SOMEBODY COULD GO IN THERE. THEY COULD ALSO COMPETE. THAT IS MY NEXT QUESTION. HOW HARD IS IT TO REPLICATE WHAT YOU ARE DOING?>>THIS IS A COMMON QUESTION YOU GET WHEN YOU ARE RAISING VENTURE CAPITALISM. I WOULD HARP ON THE LICENSING PROCESS. THAT’S JUST PAPERWORK. THE RIGHT COMBINATION OF TEAM, HAVING A SOUND OPERATING MODEL.>>EVERYBODY WHO TOUCHES THE TRANSACTION?>>YOU CAN DO CLERICAL WORK AND NOT BE LICENSED. ANYBODY WHO DOES ANYTHING MEANINGFUL IN TERMS OF NEGOTIATIONS OR STRUCTURING CREDIT, HAS TO BE LICENSED. IT IS NOT AN EASY PROCESS. THAT IS WHERE WE HAVE SEEN TECH COMPANIES GET IN THAT HAVE NO IDEA HOW TO DO MORTGAGES AND WHAT THAT PROCESS IS LIKE. THEY HAVE TECHNOLOGY BUT NO SENSE OF HOW THE INDUSTRY WORKS. THAT IS WHY MORTY HAS BEEN FORTUNATE. WE DID HAVE THAT COMBINATION OF MODERN, DIGITALLY NATIVE TECHNOLOGY AND ACTUAL DOMAIN EXPERTISE, THE ABILITY TO GET STATE LICENSE. IT IS A STATE-BY-STATE PROCESS FOR EVERY COMPANY THAT IS NOT FEDERALLY CHARTERED. THERE’RE ONLY A SMALL HANDFUL OF MORTGAGE STARTUPS ACTUALLY DOING LOANS.>>THE BIGGEST MODE COMES FROM INTERNAL NETWORK EFFECT WE’RE CREATING, IN ORDER TO DESIGN A SOFTWARE LIKE OUR SOFTWARE, YOU NEED TO KNOW COMMERCIAL APPRAISALS. WE HAVE THE SOFTWARE TO RECRUIT THE TOP TALENT. WE HAVE INDIVIDUALS FROM INTERNALLY AND THROUGH OUR PARTNERSHIP, ALL THE TOP FIRMS ARE THE APPRAISAL SIDE OF THE TEAM. WE HAVE THE ENGINEERING TEAM THAT IS COMPLETELY UNIQUE IN OUR SPACE.>>WE HAVE FOR SENIOR ENGINEERS IN NEW YORK CITY. NOW WE HAVE THESE APPRAISERS GETTING DIRECT IMPACT. THIS KIND OF CREATES THE NETWORK WHERE WE HIRE THE TOP TALENT FROM THE SPACE.>>FOR US, THE ANSWER IS THREEFOLD. IS IT SOMETHING THAT WOULD BE DESCRIBED IN VENTURE CAPITALISTS OR THE TECH INDUSTRY AS AN ADVANTAGE? THE PLATFORM IS ACTIVE, IT HAS 300,000 UNITS ON THESE PRODUCTS. THE BARRIERS TO ENTRY HAVE BEEN INCREDIBLY HIGH. WE HAVE SPENT TWO AND A HALF YEARS BREAKING THOSE DOWN, BUILDING PRODUCTS, ACQUIRING CUSTOMERS, BUILDING BRANDS. THAT IS A BIG HEAD START. WE HAVE DONE THIS WITH THE BOARD OF ADVISORS. WE HAVE STRATEGIC PARTNERS THAT DID NOT INVEST BUT WE HAVE ACCESS TO HIS RELATIONSHIPS NETWORK. WHICH IS EXCLUSIVE REALLY AND REAL ESTATE FOCUSED. IT WOULD BE DIFFICULT FOR ANOTHER COMPANY TO GET IN FRONT OF THE RIGHT PEOPLE.>>ARE YOU PROFITABLE?>>NO.>>HOW LONG IS THE NORMAL LIFECYCLE FOR A COMPANY TO BE PROFITABLE?>>THAT CAN VARY DEPENDING.>>IN THE TECH SPACE, IN THE REAL ESTATE SPACE.>>WHETHER THEY ARE DOING THE LAND AND EXPAND TO COVER THE MAXIMUM AMOUNT OF SPACE TO SHUT EVERYBODY OUT, ONCE YOU GET TO A NUMBER OF MORTGAGES OR APPRAISALS, THEY WILL BE PROFITABLE.>>MY EXECUTIVE PRODUCER JEFF BROUGHT HIS BUDDIES AND GREAT GUYS, SAM, JOHN, BRIAN, THANK YOU. I AM POSITIVE THAT I WANT TO BRING BACK YOU GUYS IN A COUPLE OF YEARS. IT IS ONLY GOING TO GET BETTER AND BETTER. ♪ [THEME MUSIC] ♪

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