- Wonderful, we've got
about 30 attendees so far
and growing, so I'll go
ahead and kick us off.
Hello, everyone, I'm LeeAnn Mutchler.
I am Chicago Booth Alumni
Relations for the West Coast.
And today we are delighted to have
the wonderful organization
of the Alumni Clubs
of Los Angeles and Orange County
presenting yet another in our
Virtual Roundtable Series.
This one is dedicated specifically
to real estate,
entrepreneurship, and technology.
I'm gonna go through a
few housekeeping items.
Gerry, if you'd go to the next slide.
What we are in right
now is a Zoom webinar,
which means that for
those of you on the line,
you're only gonna see us
hosts and our panelists.
You guys are muted and
your video is hidden,
but your questions are incredibly valuable
and we want this to be as
interactive as possible,
so please use the Q&A.
If you are not familiar with the Q&A,
Gerry, could you pass the next slide?
It is at the bottom you'll
see the Q&A button there,
and that allows you to ask
a question at any time.
It will only be visible to the hosts,
so that's our moderator and myself,
and we may decide to
pepper in those questions
during the conversation or at the Q&A.
So please feel free to
use that at any time.
Wonderful, okay, I guess
that's all of my part.
I'm gonna hand it over to Gerry now,
who's gonna take us
through the discussion.
Thanks so much, Gerry.
- Thanks LeeAnn, I really appreciate it.
Welcome, everyone.
As LeeAnn mentioned, we are
here to discuss real estate,
entrepreneurship, and technology.
And we have a great panel
to discuss those topics,
and I'll let them introduce
themselves in a moment here.
Myself, my name is Gerry Caballero.
I am a longtime member of the alumni group
here in Orange County,
and I'm the head of product management
and product marketing at LightBox,
which is a real estate data
and technology company.
It's backed by Silver Lake
Partners and Battery Ventures,
and this is where I am for now.
I'll get back to that in a second.
I've led product teams,
and professionally I've led product teams
since graduating from Booth in '97,
at both large companies
and small companies,
from on the small side working in startups
that were basically five people and a dog
all the way to financial
services companies
with $100 billion in revenue.
On a personal note, I live
here in Orange County,
and I live in a small
community called Coto de Caza
For those of you who
don't know where that is,
that's about 30 minutes south
of the John Wayne Airport,
and it's next to Mission Viejo.
And on a somewhat
interesting and side note,
it's the original neighborhood
of "The Real Housewives of Orange County."
So I can assure you I've
lived in this neighborhood
for 20 years and most of the people I know
are nothing like those
characters that you see on TV.
I have no desire to be
followed by a film crew
and recorded for every
move and conversation.
My wife is not either,
and all of our friends are
not interested in that at all.
Anyway, I just wanted
to throw that in there.
- I don't know, maybe some of the people
on the line are in there.
- It's possible, it's possible.
So anyway, I want to
introduce our speakers.
Oh, just real quick,
in terms of the format,
today we'll have 30 to
40 minutes of discussion
on startups and technologies
as it relates to real estate
and the COVID-19 situation.
And LeeAnn went over the Q&A aspects,
so just raise your hand, or
actually just type your question
in the chatbox and we can get to those
either in realtime or after our talk.
So that said, I want to
introduce to you our panelists.
Let me move to our next slide here.
I have Jonas Bordo and Tom Gabriele.
I'll let Jonas go first,
and you can all see
their bios on the screen,
so Jonas if you could
just share with us a bit
about your background,
your connection to Booth,
what you're doing now and so forth.
- Thanks a lot, Gerry.
It's great to be here today.
Thanks, everyone, for your time.
So a little bit about me.
I was at Booth many, many years ago,
long enough ago that if
anyone can figure out
what my background is, that
was my favorite spot on campus.
The new building was in
construction at that point.
The new building to me, I'm
sure it's the old building
to the new grads at this point.
But I left Booth and went to
the Boston Consulting Group,
was there for a couple of years,
but my true love was real estate,
and made my way through various spots
in the real estate business,
first with a management
consulting practice
focused on commercial real estate,
and then to one of my client's companies
named Bentall Kennedy,
where I was one of the people
running the enterprise,
overseeing a variety of functions,
until we sold that to Sun Life of Toronto.
Then went to Essex Property
Trust, which is a multifamily,
ran operations for them
for the last few years,
60,000 departments up
and down the West Coast.
Spent a lot of great
time in Woodland Hills
and in San Diego, and I can't
remember the name of it,
but a little place a mile or two away
from John Wayne Airport in Orange County,
so I had lots of good time
in the neck of the woods
that most of our attendees are from.
And then about a year and a half ago,
took the leap in entrepreneurship
and founded Dwellsy,
which is tackling one
of the biggest problems
that I dealt with while I was at Essex,
which is that it's really,
really hard to find an apartment,
and if you're a landlord, it's
really hard to get it rented.
So we are the newest and now
the largest listing service
for rental apartments
and homes in the country.
And that's me.
- Sorry, unmute myself,
great, thanks for that.
And Tom, if you could just
provide a quick intro.
- Sure, so my name's Tom Gabriele.
I'm the CEO and co-founder of HomeWayz.
I, as well as Jonas, spent a lotta time
in the building that he sits in today
and spent a lotta time at Gleacher Center
back in the 2000 and 2002 timeframe.
Not Booth, but the GSB, so
sometimes I'll refer to us
as that and have to correct myself.
Spent most of my life
actually in California,
a lotta time in Orange County.
Currently, I'm in North San Diego.
First 10 years after business school,
was in the corporate development,
corporate M&A side for
various ad tech players,
from Experian over to News Corp,
working with a lot of different divisions.
Over the past 10 years,
spent most of my time
now on the entrepreneurial side,
did a lot of consulting work
for folks like Auction.com,
now they're Ten-X,
in the distressed real estate space
in the online auction space.
So I've spent a lotta time
around various problems
and solutions that tech can offer,
from hardware and things
in the AR/VR space,
into software and SaaS solutions,
both in ad tech and in real estate tech.
About two and a half years ago,
my wife and I conceptualized
the idea for HomeWayz,
went into production,
and have been effectively
bootstrapping this company to this point.
So we're small and trying
to grow and get traction,
and are really tackling the problem
that real estate agents have
a tremendous amount of work
that they end up doing manually
and spending a lotta time doing by hand,
and we look to automate that,
and at the same time
support the home buyer
through their journey and
provide a better solution
for both those actors
as you go to buy a home.
And that's it.
- All right, thanks,
Tom, I appreciate that.
And of course, our topic today,
we're talking about real estate
and it's a large industry.
You have commercial, residential,
you have land, industrial,
all different types of real estate.
But given the timeframe that we have,
less than an hour or so,
let's just focus mainly
on commercial and residential real estate.
So, what I'd like to do by kicking us off,
maybe Tom you could start us off,
and just your general overview,
your thoughts of the real estate market
as you see it from where you sit.
And I would assume that's mostly
residential at the moment.
- Yes, our solution is focused
on the primary residential market.
It handles all primary residents,
and it can be condos and townhomes,
investors could be the purchasers of them.
So obviously, we've gone
through several ups and downs
in the real estate market,
and I go back long enough to remember
the downturn of the early '90s
and how long it took to climb outta that.
But I'd say we have a relatively
robust nationwide broad market.
COVID has really impacted a lot.
I think the latest statistics I saw
was that there are more
than four million homes
in forbearance today.
Some of them may be by mistake,
but effectively you've
got a potential wave
of another downturn I think
that's creeping up on the horizon.
There are definitely micro markets
that are going to weather
things a little bit better.
I lived for a few years in Austin,
and even Austin has neighborhoods
that do well and neighborhoods that don't.
So anyone who spent time
in residential real estate
knows that all real estate's local,
and so nothing can be painted
with a completely broad brush,
but I think the COVID is
really gonna impact things
at a tremendous level in
terms of what's gonna happen
and where people are
gonna handle themselves.
But we'll see.
- All right, great.
Now, Jonas, your view from where you sit
is mostly multifamily apartments.
So if you could give us your
general take and overview
to kick us off, that would be excellent.
- Yeah, thanks, Gerry.
I think overall I am really happy
to be in multifamily and
rentals more broadly.
It's just a bloodbath out there
if you're in the retail
space or hotel space.
A lotta people are worried
about office space as well.
So feeling very fortunate to
be in the spaces that we're in.
What we're seeing across the country
is really a lot of wait and see right now.
So much depends on whether or not
people are able to pay their rent.
If people are able to pay their rent,
then values hold up pretty well.
And there's a lot of people talking about
potentially taking more space,
moving to places with bigger space,
and a lotta question about whether
location, location, location
is knowable anymore.
That's still the adage that holds up
in this part of the world,
but do the old locations still make sense
if lots more people telecommute?
If people don't and people
just go back to their old ways,
then I think we're in a
pretty solid asset class.
But remains to be seen how
much of the current change,
we've got 50% of people working from home
across the country, that's up
from about 15% before this,
if that sticks, and it looks
like some of that will,
lots of companies are estimating
more to work from home
than they would have
estimated before after this,
then there's gonna be a
lotta movement in the space.
- All right, I definitely agree.
As we continue to work through
this current COVID situation,
this is a great opportunity
for lots of different companies
to innovate and move forward and survive,
and eventually thrive, in this industry.
Now, Jonas, if I could ask you,
of course, you have a startup
now with your company.
Are there any other technologies
that have caught your eye
as it relates to say
artificial intelligence,
machine learning, IoT/Internet of Things,
data science technologies?
I know that's a broad brush,
but I just wanted to ask
your thoughts on that
and what you've seen, and
just share your views.
- Yeah, absolutely, Gerry.
There's so much potential in this space
for use of those tools.
This is an enormous asset class.
We're talking about in a rental
property across the country,
$7 or $8 trillion worth of assets.
Housing more broadly is $30
plus trillion worth of assets,
a staggering quantity.
And you think about the data that exists
about each of these properties,
it's incredibly extensive,
and it should be a really
rich target for those tools.
Unfortunately, the data
doesn't really exist
in a lotta places, and to some degree,
that's what Tom and I are both working on
with our respective businesses,
is creating that kind of base dataset
that we can they apply
those sorts of things.
But across the industry,
people are much more focused
on some more basic technologies.
I'm meeting with a startup tomorrow
that is focused on automated
application process
and doing away with fax machines.
People right now during
COVID-19 are really focused
on how do we do unattended touring,
i.e. allow the perspective renter to tour
without having to have
a leasing agent there,
allow them to get into
the property on their own
and go through that process.
People are just in the
earliest stages of adopting
some of the tools that
homeowners have used at home,
keyless entry for their
homes and that sorta thing,
some of the things that those of us
who are homeowners take for granted.
So in many ways, it's
a really exciting space
for technology, but a
lot of the technology
would seem like old tech to people
in other parts of the world,
which makes for a great opportunity,
but is also a little bit backward.
- Right, right, but as you mentioned,
tech is lagging a bit in the industry,
but that old saying, in
the land of the blind,
the man, woman, or person with one eye
is king or queen, or whatnot, right?
So it's a great opportunity.
- Yes, and fax machines is a
differentiator in the space.
- (chuckles) Right, right, it's
definitely a differentiator.
Now, Tom, what are your
thoughts on the same topic?
- Sure, the residential side,
and when you talk about home
purchases versus rentals,
the market's different because
in more cases than not,
it's a agent-led process,
not a self-directed process.
So you have the Zillows and
you have the Trulias out there
and the Realtor.coms that allow consumers
to look at properties, and
that was the first wave
in the early 2000s of
things being democratized,
data being shared into the platform.
And now, the thing is there
are still more agents today
than there were in 2000.
It typically follows the economy.
Getting rid of an agent
isn't likely to happen.
I'm not saying it won't.
And so now there are technologies
that are being created
to help support the agent and the buyer
as they go through that platform,
whether it's access to more
pictures and virtual tours.
And on the resi side, we've seen that.
A lot of agents not only have
good photographers come in,
but they have a lot of 3D
and 3D rendering solutions
that allow people to kinda tour online.
If you go to Redfin,
which is a pretty solid
tech-enabled brokerage, you'll
see some of those components.
Compass is another one that
touts a lot of technology,
but at the end of the day
continues to fall short
with their agent base.
And so there's a lotta movement
with these independent agents
trying to find the right technology stack.
And they kinda break down
into a couple of areas.
I would say there's the lead
gen players that sit up front
and try to connect
clients through the home
and try and pick up new
clients for their agents,
who are their paying customers,
and there's companies like First.io.
They applied a lot of the AI,
a lotta datasets from your social graph,
and got predictive in terms of when people
were likely to sell and purchase a home,
and they were just acquired by RE/MAX.
So the largest brokerages, the RE/MAXs,
the Keller Williams, the eXps,
these guys are all in a race right now,
and they've committed billions of dollars
to finding the right tech stack
that's gonna make this platform better
to get more transactions
through the platform.
So those guys are trying to chase it.
They're doing their own independent work.
A lotta these players are in the space
and trying to find out ways to,
whether it's leveraging data
or providing those components.
Buyside is another one.
They take a lotta your datasets
from what consumers are
searching and try to create
some sort of market
demand efforts on those.
So there's a lot of interest in the space,
especially from big brokerages
to try and figure out what to do.
And then you've got the
folks like Move.com,
which literally bought a
lot of these properties.
Like Opcity just recently
sold for 210 million
and was another lead gen player.
Total cost for performance marketing
where you basically would pay 30%
of your commission back to them,
and so agents were super
excited to get on it.
And that's where a lot of the insights
and innovation have been to this point,
but you're starting to see more
things come up on data side
in how to become more predictive
in terms of what is the demand happening,
what do people want,
what are they looking for
in terms of properties.
- [Gerry] Right, right,
it's great, it's exciting.
Just over the years that I've graduated,
since I graduated from GSB or Booth,
there's been some reluctance
in different industries.
I used to work in the travel industry,
and distribution when I first
started in that industry
was mainly through the
travel agency community,
and companies like Travelocity and Expedia
were just starting and kicking off.
But there was quite a bit of reluctance
initially from the travel
agency community, of course,
because they're looking at themselves
getting pushed out of the market.
Now, given that there
are so many different
tools and sites out there for consumers
and for home buyers, et cetera,
what do you see as potentially
preventing the adoption
of some of the technologies
you've talked about?
Going back really quickly,
some of the customers
that I would work with again
in the travel industry,
they were the types of
folks who would say,
"Fax me your email address," right?
So there was quite a
curve to climb for that.
But again, what are some
of the different factors
that might prevent some
of these technologies
from taking off as you see it?
And Tom, I can start with you,
given that you just mentioned that,
and then we'll move of
course over to Jonas.
- Okay, sure, so I think
there's two aspects on that.
When agents and consumers
are looking for properties,
anything that's gonna help
them get more insights
and more information as a
consumer looking at homes,
I think it gets adopted pretty quickly
and becomes an industry standard,
and there's a lotta copycatting
in terms of providing you the information
on let's say the schools
or the neighborhoods
and walk scores and
what's happening there.
On the agent side, which is
where we try to primarily
sell our services to and then
bring the consumer along,
anything that is helping agents
find prospective new
clients, they flock to,
but they're not very loyal to you.
So what happens is
they'll try something out
and as the ad space
continues to chase down,
they spend a lotta
money chasing for leads,
eventually the efficiencies kinda kick in
and it gets very expensive
and you don't get the return.
So that sort of floats away.
The hard part for agents
is that they're typically
older agents, they're not
necessarily technology-savvy,
and they have their own
processes and are entrenched.
So really that adoption
and that switching cost
is high for them.
Unless you can really show
immediate value for them,
they're a little bit hesitant to gravitate
towards new technologies,
rather than the old way
of literally printing up MLS sheets
and walking in and calling folks up.
For them, it's their
phone and their Rolodex
are their two biggest things.
And the more you can do to
automate that, maybe the better.
But finding those agents who are willing
to try new processes is a
little bit of a challenge.
Consumers are a little bit better.
And I think maybe some
of the privacy issues
might open some things up,
if you knew how much tracing was going on
and where you're looking
at homes in a neighborhood,
if some of these companies
are really tracking
that data level and showcasing it,
you might get some pushback there.
But really it's consumer
loves new technology
and new data sources, agents
are sort of old and archaic
and have a tendency to be
slow about moving forward,
and so really it's about
showing them immediate value.
- Yeah, so I'm adding the difference
between the two spaces economy,
'cause as I look on the for
rent side, you have the same.
The renters almost can't
believe how backwards
the property managers are, and
with the property managers,
it's been a race to the
bottom for a lotta years,
because the institutional quality money
regards the decision around
the property management
as a commodity choice,
and so they just wanna
choose the lowest cost one,
and so there's very little incentives
for those property managers to be better,
even though there is a
very significant return
to being better, and
those institutional owners
would do well to pay a lot of attention
to how good their property managers are
and be cognizant of the fact
that it is worth paying
more for better service.
But the net effect of that
from a technology standpoint
is that is it incredibly difficult
to get new technologies
into these platforms
'cause they just don't have the bandwidth,
the capacity, the staffing
to be able to handle them,
even when the renters desperately want it
and are willing to pay for it,
even when the capital behind them
is willing to put the capital into it.
They just don't have the
infrastructure to do it,
so they move incredibly slowly.
That's why we're still
talking about trying
to displace the fax machine
for submitting applications.
That is a meaningful technological change
that they have to deal with.
Very different from the for sale world.
- I definitely agree.
Now, we touched on the different
technologies and adoption,
and I moved over to the next slide here
in terms of different topics to cover.
We've talked a bit about
your takes on the overview
of the multifamily,
single-family real estate market,
a little bit of commercial.
We talked about different technologies,
but are there any other
technologies that you see
maybe that you haven't discussed already
that are upending the
landlord, the tenant,
the seller, the buyer,
and broker experiences?
I'll just throw that out there,
and again, I know that we
touched on that a little bit,
but anything else that comes to mind?
- Yeah, I'll jump in there, Gerry.
I think the biggest thing right now
is that for the first time ever
we've got an impetus to change
in the space with COVID-19,
and a lot of the technology advancements
that seemed impossible
a couple of months ago
are now doable, so that's
kind of opened the door.
And I think we're gonna
see a real renaissance
of technology implementation
within the space,
and things are being considered
much more broadly now
in a way they weren't previously.
So I'm very hopeful that that
continues to be the case.
- All right, absolutely.
- Yeah, I know that in
the land where we display
a lot of our efforts with
our real estate agents,
one thing that they will do a lotta times,
and this is due to the asymmetry of data
that the local MLS's which
are private organizations
have in order to show homes,
most agents are stuck printing out paper.
Well, throughout California,
at least Riverside and I think San Diego,
if you're showing a home right now,
you can't bring a printed piece of paper.
So solutions like ours, which
literally bring that level
of information to your platform online
as a complete CRM platform from your agent
and it's tied to the MLS, we're
getting the benefit of that.
That's a nice benefit for us,
but that's forcing a change.
Most agents literally would
rather print things out
and write hand notes on stuff,
but it's really inefficient
and you lose track of things.
So some companies get the benefit of that,
and I'm happy to be
part of that. (chuckles)
Hopefully that will continue,
but that's just one example
of a change that's happening
right away in our space
that's forcing agents to rethink
how they do the simple tasks
as driving someone around
to a home and showing them
and keeping track of what they've seen.
- Right, right, I
definitely agree on that.
Now, Jonas, we talked
briefly earlier this week
about our Booth, and Tom as well,
our Booth management
skillset and our experiences
to succeed in this industry.
What are your thoughts in terms of,
and Jonas, I'll start
with you on this one,
your thoughts on your
background and your skillsets,
what you learned at
Booth that's helped you
in this environment?
- You know, it's been a
host of different things.
I'm always grateful for
the Booth education.
By far, the number one thing
that I took away was the network.
That has been essential to me.
One of the big exercises
I've been working on
as part of Dwellsy is raising money,
and the network that I started with
coming out of Booth has been essential.
I think I have six different investors
who were classmates or friends from Booth
in the Dwellsy capital
stack at this point,
and more talking about coming in,
not to mention all the folks
that they've introduced me to
and all of the network effects
that follow on from that.
So that's absolutely been essential.
And in terms of the skills
picked up along the way,
statistics continues to scare me
as one of the most valuable
classes I took at Booth.
Competitive strategy
continues to be valuable.
My HR class that I took there is valuable
on a non-stop basis as I pick through
some of these challenges
that I wrestle with
on a day-to-day basis, building
a team and managing it.
But just core modeling skills
that I come back to all the time.
I'm back in the modeling.
I don't have analysts
working for me anymore.
I'm now a startup guy, so I
have to do all my own modeling,
and I'm back honing
those skills right now,
and they continue to be
valuable to me today.
Those basis Excel skills
continue to be valuable.
- Right, absolutely.
How 'bout you, Tom?
What are your thoughts on that?
- Yeah, I would definitely
echo some of those things.
The incentive-based
economic classes that I took
were one of the more interesting,
as well as some of the more valuable
as you start to think about
how they can be applied
to your different business opportunities.
The entrepreneurship class that I took
in terms of understanding some
of the competitive advantages
of how you think about marketplaces.
Those two combined really I
think had a good impact for me.
Definitely have the HR issues (chuckles)
any time I was managing people,
that stuff came back quite a lot.
And then again, I couldn't echo
any more loudly than the Excel.
I've spent a lot, a few more years,
on the entrepreneurial side than Jonas has
with various startups, and
I'm constantly modeling
everything out for everybody,
just to underscore,
to understand not only
the org and the value prop
and how it reflects in our story brand,
but where those KPIs from
a productive standpoint
as well as the key performance metrics
and how our business is performing.
It comes right out of your model,
so you've gotta get good with
that and understand that,
and how things are gonna
pencil into that model.
It's definitely important when
you're trying to manage cash,
especially in a time like now
where it's tough to find fundraising
and you better find revenue fast,
and both of those are
hard to find right now.
(laughing)
- Yeah, cash management is king.
I've been in large companies
for a bunch of years,
and there just always
seems to be cash available
in that world.
And now I have a much
more direct relationship
with the amount of cash
that's in the bank.
There's nothing ephemeral about that.
It's very, very specific.
- Yeah, definitely cash management,
because from my experience recently,
especially with COVID,
we have been hit by all of our customers.
When they're looking at contracts,
we trim it, the CPR approach,
where when they're looking at
renewing or continuing it on,
CPR meaning cancel,
postpone, and renegotiate,
what can we do?
And we're in the same situation,
where we're looking to conserve
cash as much as possible.
So going forward, let's
hope that this situation
doesn't last longer than they're saying,
whether it's six months, 12 months,
18 months, two years, et cetera,
I'd rather it be on the short side,
as I'm sure everyone else.
Now, that said, if we
can go to one of these,
or the last question on here on the slide,
using data and technology to enhance
professional success and personal wealth,
is there anything that you've come across
and is there anything
that you're using today
that's helping you?
Because we've talked
about your businesses,
but there's also the personal side
and your own personal
balance sheet, et cetera.
So, Tom, I don't know
what your thought are,
but would love to know what they are.
- Sure, I'm just starting to
dip my toe into that market,
and trying to understand the spectrum
from hard money lenders all the way
to the more leveraged
financial instruments
that might exist out there
for individuals and families.
A lot of the datasets
that I'm using right now,
I played around a little
one with a match viser.
There was an Air DNA site,
which I think talked a little
bit about Airbnb rentals
and obviously who knows exactly
how that market's gonna shake out.
There are a number of tools
that are trying to provide
some better realtime data and
analytics on your rentals.
Even Dwellsy, I actually
signed up for Jonas' site
to understand the rental
market and what's available.
If I'm gonna look to purchase
property, then rent out,
I wanna understand what the
rental market looks like today.
And I know some of the questions popped up
are directly related to COVID
and people's ability to pay
rents and mortgages as well.
So there's just a lot of uncertainty
into where that's gonna shake out
and trying to figure
out how the market looks
and what I'm competing with,
because that's how you're
gonna think about the returns,
is what's your next best option, right?
- Mm-hmm, right.
And Jonas, following up on
that, any thoughts on your end
in terms of what you're using personally?
- Yeah, it's been interesting.
I've had the good fortune
to be able to invest
in a variety of real estate
assets over the years,
from three flats in
Chicago, condos and homes
and some other vehicles along the way.
There's a lot of different tools out there
that can help you.
What I've always come back to
is there's this combination
of art and science, if you will.
You gotta run the numbers
on a fundamental basis,
and this is something that anybody
who finished up at Booth
is gonna be good at,
is just back to the core
Excel modeling skills
that I was talking about earlier
and being able to use those
and project out what the cash
flows are gonna look like.
But the art right now is an
extraordinary piece of this.
I think in a normal market,
you look at it and say,
okay, what's the exit cap rate
gonna be or something else,
and you're trying to make a decision
within a relatively narrow framework.
I think at this point now we have
just an extraordinary
range of possible outcomes.
I was talking with one investor today
who's got a variety of
real estate investments
across the country, and
he was literally looking
on the same day at
investments in the same market
that ranged from an 11 1/2
cap down to a five cap,
just purely based on the
confidence and the access
to capital different parties
had in that situation.
So I think we're at this
fascinating time right now
where if you think you
have a special insight
into a given submarket or what's
happening in a given place,
if you know that an asset on a block
with an employer that's
solid is gonna work,
then act on that information.
But that's gonna be the
thing that carries the day,
is that inside knowledge,
that unique understanding
of a location or a particular
property's situation.
If you've got that, then act on it.
Run the numbers, but so much of the yield
that's gonna come out of this period
is gonna come from that
extraordinary opportunity.
Plus, this is the most
fragmented asset class out there.
80% of the U.S.
institutional-quality assets
are still held by individuals,
and individuals do really weird things.
Sometimes their grandmothers
die and hand them something,
and they try to figure
out what to do with it
and don't know how, and that
happens to a shocking degree.
I saw in my last company,
a forward transaction
for a three-year advance
purchase of an asset,
conditional on the death of the developer.
That sort of thing allowed
for a 30% profit at close,
which was inconceivable,
but the heirs didn't know what to do
and the developer
wouldn't let them sell it,
but was no longer in
control of his own mind.
So that kind of thing
happens in this space.
We're not trading on the big board,
on the New York Stock Exchange,
where everything's really efficient
and a million trades a minute.
This is very different.
So you've gotta leverage
that local knowledge,
leverage the Booth network,
and the people out there
that you're talking to.
- Yeah, let me jump in, Gerry.
I think that's a really
good point that Jonas makes.
Again, this goes back to
all real estate being local,
the more you know about
a particular location
or neighborhood in
terms of what's going on
with the development,
even at the city and county
level for gentrification.
I spent a number of years in Austin,
and there were neighborhoods
that I knew would do well
and others that you could just say
that one's gonna struggle.
And it's as simple as the
way the streets were planned,
because they would put blocks in roads
and force you a long way around in traffic
and add 20 minutes to your commute
and say that house will
never be as worth as one
that's literally 100 feet away from it
because it's on the
other side of a roadblock
that gives them easy access to traffic,
and also to Jonas' point,
just doing the leg work
and literally driving
around neighborhoods,
I've done that as well and
found prospective properties
because they were burned out
and then you do a little bit of digging
and you can find out, oh, this
is a company held in a trust
by an 85-year-old woman who's ready to die
and her kids don't know or don't care,
and it's beachfront property
and it's sitting there
burned out, (chuckles)
and it provides an
interesting buy opportunity.
And you gotta know what you're doing
before you put down the capital for it,
but you look at what
other things are selling,
and if there hasn't been
things moving in a long time,
but when they do they go for big dollars,
there's opportunities to get solid returns
on those properties.
But it involves you being willing
to get up and go do that effort yourself
to go find those opportunities
and leverage what you
know about neighborhoods
and cities and what's going on,
almost at a house-by-house
or street-by-street level.
If you're willing to do that work,
you're gonna find a lot of opportunities.
- Yeah, Gerry, I saw a question come in.
That's a great point, Tom.
I saw a question come
in from Drew Gallagher
about malls selling at 25% NAV,
and single-family residentials
selling at 75% of NAV.
There's fascinating arbitrage
opportunities like that.
There are dead malls
all across the country
that COVID-19, if they weren't
having problems before,
now they're really toast.
Think about future use cases for hotels
in out-of-the-way
locations and other things.
There's gonna be a lot of
repositioning of these assets.
So being able to bring some creativity,
re-imagining what a mall could be,
there's been a lot of that happening
in the past few years already,
but there's a real play to be made there,
taking a mall and converting
it into another use case.
A couple of years ago,
they would have said,
well, make it a bunch of offices
and more of a town center kind of concept,
where you have a mix of retail and office
in a given location so
you have less pressure
on the need to fill the
whole thing with retail,
and you've got some office workers there
to provide lunch traffic for
the restaurants, et cetera,
and the whole thing works
a little bit better.
I don't know if that case
is still there to be made.
I think the big question
that's standing on offices
is are we gonna need more space
because we need socially-distanced offices
and the open concept is dead,
or are we gonna need less space
because all of a sudden
companies like Dwellsy
aren't gonna have offices anymore,
which we aren't gonna
have an office anymore.
We'll just get our team together
every two or three months
so that we can have some in-person time,
but we won't have a formal office,
and that's a relatively
new decision for us.
Lots of other companies I've heard,
friends who run companies from Booth,
are making similar decisions to that,
so we'll see where that pans out.
But I think there are some
real arbitrage opportunities
to be made on things like that,
and it goes down to the
individual storefront.
If you're thinking about a storefront
with an apartment above,
maybe that whole thing
should be residential now.
Maybe it's a live/work space,
as opposed to a traditional retail space,
but the zoning has to
keep up with that as well.
I know in our town here,
zoning is a disaster
because they want more
retail, but they can't get it.
So we had a lot of empty
storefronts before COVID-19.
It's gonna be even uglier after.
- Right, absolutely.
Just real quick, another question came in
and it had to do more with Airbnb.
I'm not an Airbnb
professional, I'm not a host,
but there's a lot of talk
in terms of investors
and what's that going to
mean for the industry.
I just wanted to let me
share a different screen here
to show some resources that I found.
This is a site, I don't have
any affiliation with it,
it's called AirDNA, but for
those of you who are interested,
because again I've got
this question quite a bit
outside of this venue here
in terms of what's going on
with Airbnb and the properties, et cetera,
you can see from this data,
and this is from Airbnb
and I believe also, what is it?
Here, I'll tell you in a second, VRVO,
Vacation Rentals By Owner.
So you can see the active
properties over time here
from February 3rd on the
left-hand side to May 11th.
It's relatively flat, slightly declining,
and you can see the bookings
that have taken place.
As you can see, most of
the dip started happening
at the beginning of March.
You see it going from 625,000
bookings in the United States
and dropped quite a bit over
time, over the next few weeks,
and it looks like it's picking up here,
because from, let's see
here, May 11th, that's what,
800 some thousand bookings.
So it looks like those
bookings are picking up.
So not all is doom and gloom,
and it's nice to of course have
the data to prove that out.
Now of course we're talking
about the United States,
but if we look at other countries,
let's just pick another
one, and this is a tool,
and I'll put the link
in the chatbox again.
I don't have anything to do
with this particular site or anything,
but you can see Brazil there
in a good with a bad situation,
from a COVID standpoint, you
can see the bookings dropping
and continuing to drop overall.
So again, this is a really interesting
dataset here and site.
I put it in the chatbox.
And another question that
came up related to this
in terms of Airbnb, what are
the different tools out there
that might help in terms of pricing?
If you are investing in
properties and want to be a host,
there are companies like Beyond Pricing.
Again, don't have anything
to do with this site.
Another one here called PriceLabs.
I'll put both of these
in the chatbox as well
so you can have those as resources.
So again, these are taking data,
and I used to work in the airline industry
where I'm sure not a lot
of people are very happy
about the constantly changing prices
of airline seats, right?
They're usually priced based
on historical data in realtime
so that they're looking at specifically
for routes and also for flights.
How is that flight selling today?
Let's say there was a flight 30 days out,
and it's supposed to be 50%
sold, and it's only 40% sold,
but of course they're
dropping prices, et cetera,
we didn't have that
visibility as consumers
and as hosts and property investors,
especially as it pertains
to Airbnb, didn't have that,
but now there are tools
that will give you that data
that can inform your pricing
and your investments going forward.
So I just wanted to show this
because of the other
question that we had there
in terms of what are you using to enhance
your professional success
and personal wealth,
and I do know quite a few
people again are investing
and still have investments
for Airbnb rentals.
So anyway, I just wanted to share that.
- Gerry, the Airbnb data you were showing
was fascinating to me
for a number of reasons.
Six weeks ago, I was
hearing that as much as 50%
of the inventory in the short-stay world
was moving into the longterm stay world.
In the U.S. there's a big dividing line
between less than 30 days
and more than 30 days,
and a lot of those Airbnb hosts
were booking longterm stays,
but the data that you
were showing for the U.S.
was suggesting that we
are back at or above
the level of bookings that we were seeing
prior to the crisis.
So I think this is not only
intellectually interesting
in this situation, but it
gets to the perspective
that you have to have as an investor
in this space right now.
Just everything is changing so quickly,
and what an asset is gonna be today
versus what it's gonna
be in a couple of months,
which gets to the investment
choice that I've made,
which is I sold most of my properties
as of 12 or 18 months ago in order
to basically bet on a blue jeans business,
we're Levis to this space,
and that's an interesting
investment strategy as well.
There's a ton of interesting
prop tech companies out there
where there might be a prop tech
might be comparatively less risky
compared to real estate today,
even though it's a much
smaller asset class.
There are a lot of creative
businesses in the space
that might be interesting to look at
if you haven't thought about that before.
And there's interesting
platforms like AngelList
or the advent of the safe investment tool,
which makes it pretty easy
and accessible to invest.
- Right, absolutely.
And just as quick time check,
we have about 15 minute left or so,
and I want to encourage the
attendees to put any questions
into the Q&A box if you so choose,
but beyond that, a question for Tom.
Now, is there anything else
in terms of the real estate professional,
meaning the real estate agent world
that you're anticipating large changes
in this COVID-19 situation?
I know that early on when we
were all told to lock down,
the pricing started to drop,
single-family homes, et cetera.
Now it's going up, not
because people are rushing
to buy new properties, because
supply is lower overall.
But I just wanna get
your thoughts more on,
again, the residential real
estate agency and agent field,
if there's anything else there
that strikes you as interesting,
odd, or all of the above.
- Yeah, I think with agencies,
I've been around this space
for the better part of 15 years,
even back to my days at Experian,
we looked at purchasing a
company called House Values,
which was early days agent lead gen,
and you try to understand the marketplace,
and I continue to see technologies
which promise this idea
of displacing the need
for a real estate agent.
And when it comes to unlocking
doors or being chaperoned,
maybe it's not all huge value add,
although there's some
examples where you could say
that it doesn't work without one,
and I would encourage people
to look up the company Purple Bricks
and what's happened with
them when you try to work
without a real estate agent
being present in a home,
but the number of agents
track with the economy,
and this stuff down with
COVID is going to shuffle
a lot of people outta the
space, and it's hard, because,
and this is why I say
that real estate is local,
you talk the Bay Area,
you talk California,
you're gonna list a home,
you're gonna list it
for millions of dollars,
you're gonna get 2 to 3%,
depending on which side of
the transaction you're on,
and you're gonna make a lotta money.
But when you're in Killeen, Texas,
or you're in Wichita, Kansas,
and that commission is
$5,000, 7,500 bucks,
that's a huge difference in
what a real estate agent's
gonna take home for effectively
the same amount of work.
So what's gonna happen here
is they're gonna have to get smarter,
they're gonna have to leverage technology,
they're gonna have to be efficient
and find ways to get more
transactions through,
not necessarily by jamming
people into the wrong home,
but facilitating the process
so it's not so long and drawn out.
And I think those that are able to do that
are gonna survive and be good.
The rest are gonna get weaned out,
and I'm expecting to see another dip,
just like we saw in 2008
where we probably saw 300,000
agents leave the market,
but since the recovery
of the Great Recession
and we saw 600,000 new agents
come back into the market,
that's just what they do.
It's relatively easy to get your license
and to become an agent
in a particular state.
There's no initial upfront cost to it.
It's just your ability to have time
and go out there and develop a business
and develop relationships to go ahead
and continue to move transactions.
So, I do think you're
gonna see a blip with this
because there's gonna be people
who cannot handle the downside,
and then there's gonna be a strong upswing
that comes out of it.
- Right, absolutely.
Now I have another
question here from Drew.
I know we mentioned lack of
knowledge of location specifics,
but with the work-from-home
trending measures
from large tech companies,
do you see an exodus
out of large cities for
residential real estate?
And Jonas, any thoughts on that?
- Yeah, so I actually did an interview
in "The Chicago Tribune"
last night about that,
and I'll tell you what I
told them, which is that,
and there's no facts at this point,
it's just what do we
think is gonna happen,
but based on what I can tell
and what I'm hearing in the market,
it seems like the biggest
cities, New York, San Francisco,
are gonna be fairly resilient to this.
You wanna live in New York,
you're probably gonna live in New York.
I think where the real pain is gonna come
is the expensive secondary markets.
I think the Austins and places like that,
where there's a high cost of living,
but they don't necessarily have the depth
and breadth of economy,
and people are gonna be looking
at places like Kansas City
or even smaller towns, Boise,
for where they wanna live.
Because if you can live anywhere,
there's a lot of people
who are going to rethink
where they live as a result of that.
And it doesn't take that
much of a population move
to really influence asset prices.
Ultimately, and I'm a
believer in demographics
driving real estate values,
and you see an exodus in Chicago
has killed the city for years,
one of the reasons why
the real estate values
have stayed modest there,
even as the city has
gotten more interesting
and lots of great things
have happened in that city,
but fundamentally there's been
a negative population flow
for a lotta years, so that's
kept real estate prices low.
And I think we'll continue
to see that same thing.
But the big cities, like San
Francisco, like New York,
that really have that network,
where it really does make a difference
to be able to meet in person
once we're able to do that again,
I don't know that they're
gonna get hit that badly.
- Right, right.
Let's see, there is...
Tom, I don't know if you
want to add anything to that,
but if not I have another
question from the attendees,
if that works.
- Sure.
Yeah, fire away on that, the attendees.
I think Jonas--
- Oh, okay.
Let me see here, it says here
what professional societies
or organizations are there related
to real estate and data science.
In my case, unfortunately,
I don't really know,
but that said, John, I have
your contact information,
I can get back to you on that.
Jonas or Tom, are there any
ones that you're aware of
as a real estate--
- I'm laughing at that one
because it's gonna be a pretty small
professional organization.
(laughing) There's not a lot of folks
who are focused on data
science in real estate.
There is a desperate need for that.
I think it's a big part of what
Tom is building at HomeWayz
and it's at the core of what
we're building at Dwellsy.
Data science has not been
a reality in this space.
I was at Essex Property Trust
the last couple of years.
25 billion in assets under management,
real depth in history in its
markets and its communities,
and I can tell you that
virtually every decision made
by that organization was made on gut feel.
Should we put kitchens in this community,
new kitchens in this community?
Gut feel.
Should we buy that asset?
Yeah, I worked this
crazy deal with this guy
and we're gonna be able to
buy it for a great deal,
so it's ours.
We had a research group
and they put together
some pretty pictures that were shared
with investors and other folks,
and the whole executive team,
we'd all sit there for economics
reviews once a quarter,
but the reality of it was,
it was every decision
was made on gut feel.
So data science has not really
infiltrated these companies
in a significant way at this point.
The opportunity for it to do so,
I wouldn't be building Dwellsy
if I didn't think that
opportunity was there.
And I think five years from now,
hopefully we look back on it
and we have a big club to join.
But I'm laughing because
there should be a group,
but I don't know of one today.
Maybe we'll be able to find one
when we do some research after the event.
- Right, I'm definitely gonna
do some research on that,
because as it pertains
to real estate data,
some of the largest players
as it pertains to commercial
and real estate are right
here in Southern California
in Orange County, and those
companies, many of you know,
CoreLogic, Black Knight, ATTOM Data,
First American, LightBox, et cetera,
those types of companies
that have transactional data,
historical data, et cetera.
I am surprised that there
isn't an association
that I know of.
- There's a question that
just came in about MLS data,
and it's interesting, and
I'll turn it over to Tom
in a second and talk about that,
because in the multifamily
and just rental space more broadly,
the MLS doesn't really have a presence
other than high-end
single-family homes in New York,
well, I guess not even
really New York City.
There's a couple of markets where MLS
has a little more strength than others,
but maybe it's 5% of the industry.
On the for sale side, a
very different picture
from what little I know about
that, but Tom, you know more.
- Yeah, I was gonna
echo some of that stuff
that Gerry's mentioned.
CoreLogic really has
provided the basic platform
for literally every MLS to run on.
I know Bright MLS outta the East Coast,
which is Maryland and a few others,
have tried to pick up some,
recreate a listing service,
and Manhattan is its own beast.
There is actually no listing
service there at all,
no organized MLS.
Everyone sort of has their own platform
and it's really weird.
So MLS datas are the oldest things in life
in terms of trying to
get people to get a deal.
I had a supply of houses
and a supply of buyers,
I connected with my friends.
These organizations are all private.
They've all gotten together and banded.
They charge their agents an arm and a leg.
They use the CoreLogic matrix
backend platform for listing data.
It's literally Windows Me, it is awful.
So one of the reasons we exist
is to actually help modernize
and take agents outta that platform,
and so you look at the
datasets that exist there,
it's very transactional,
it's very historical.
There's a lotta restrictions
when you work with MLS,
and it's completely unstandardized.
The biggest challenge with it
is finding RESO standard data,
and even RESO standard
which is their new version
is completely amorphous.
I'm trying to plug into the CRMLS,
which is California Regional system
has 48 of the 58 counties,
pretty much everything along the coast,
and the way people fill out
those forms is all different.
So standardizing that data,
we created our own layer set.
It's a mess.
I know there's companies like,
I think it's WolfNet is one.
I know ATTOM Data has got it,
and I talk to these folks
when I try to get access
for some of my services that I provide,
but they don't get the full
level of agent-to-agent data
and property data behind the scenes.
They'll get the very generic
listing data information
that's upfront, square
footage, bed/bath counts,
listing price, maybe
some historical insights.
And again, they're trying to aggregate
the network walking scores
and the school organizations
with GreatSchools,
and providing a better picture
for people to understand the neighborhood.
But when you really wanna understand
what's going in a market,
no one's giving you that
in-market demand side,
what do people think
about the neighborhood?
We can all look at photos,
we can all look at maps,
and we can all look at walk scores,
but what you really
ultimately want and need is
what do people think
when they come through the neighborhood?
Does it look nice?
Does everyone keep their
streets, their curb appeal up?
When you go into a home,
is it really reflective
from what they saw in the pictures?
And that's the kind of data
we're looking to collect
from a HomeWayz perspective
to then provide those reports
back to the marketplace to
make better buying decisions.
And that's what we're trying
to pioneer on our efforts.
What you see out there
is very transactional,
ADOM, average days on market,
consecutive days on market,
all that kinda information,
what was the list price,
property tax records, and that
stuff is held pretty tightly
by the CoreLogics and
the agents and the MLS's.
- No, agree.
Some people have asked about
different datasets in the chat,
and I have entered just
some of the websites,
and many of you who are
already in real estate
and are real estate professionals,
you'll know about those
companies that I have mentioned
and I did put in the chat,
and what Tom just mentioned,
CoreLogic, Black Knight, ATTOM Data,
there's some other ones
like Reonomy, et cetera.
But I'll take a quick look at the chat,
and I just wanna do a quick time check.
I know we have about a minute or so,
or a couple of minutes or so,
and before we end it today,
I just wanted to ask Jonas and Tom
just to give us a quick one minute
info session about your
particular company,
and I know we talked about
them, Dwellsy and Homewayz,
but if you could just give
the quick elevator pitch
in terms of your companies
and what your specific
value propositions are,
I think it would be really
useful for the audience here.
And Jonas, if you wouldn't
mind kicking us off?
- Yeah, absolutely.
Gerry, it's really straightforward.
It's brutal out there for
renters to find a place.
There's no obvious places
to list your apartment
or home for rent anymore
now that Craigslist is outta the business.
There's nobody out there
except for Dwellsy,
who's got more than 10% of the inventory.
We're at 17, 18% and climbing.
We've made it super
easy and completely free
to list with us, and renters
have a great set of tools
in order to find their next place.
For us, we're building a
data business at the core.
This dataset has never existed before,
and there's a ton of things
that we're gonna be able to do with it,
whether it's enabling
great pricing information,
really specific detailed
pricing information,
or helping people decide
what kind of upgrade
makes sense for their property,
and on top of that, we'll be able to offer
all kinds of marketplace space services,
very similar business model to LinkedIn.
So we're just getting started,
but watch for big things in this space.
- Great, thanks, Jonas.
Tom, if you could just give
us a quick elevator pitch
on your company.
- Sure.
So Homewayz was created
actually by an agent for agents
to help them manage their workflow
and help them get a home
buyer from searching to a home
to getting an offer accepted,
so they get their first offer
accepted for the right price
rather than spending extra
weeks, extra homes toured,
and ultimately not getting it.
We automate a lot of the manual tasks
that exist in the platform.
I mentioned this earlier
that a lot of agents
are using MLS printouts
and using Google Maps
and Excel spreadsheets to try and manage
what their clients are seeing for a home.
So our full stack CRM
automates that from A to B,
and all the way to that offer phase.
It helps them get through
that process quickly
so that agent can get to a commission.
That's really our goal to support that
and how we can get there
as quickly as possible.
- Great, thanks for sharing that.
And given the time that we
have, that went by very quickly.
Thank you very much to our panelists.
And before we end, I wanted
to share on the screen here.
We do have, we meaning
LA and Orange County,
the Booth Alumni Clubs are
having continual sessions
of the effect of the COVID
pandemic on different industries.
In mid-June we do have a tentative plan
to cover the financial markets
and the legal industry,
and as you can see on the slide here,
please take a look at
the website, very easy.
It's basically the Chicago Booth website,
chicagobooth.edu, and
adding /alumni/events,
and we hope to see you going forward.
Again, thanks so much to the
panelists, Tom and Jonas,
as well as the University of Chicago
Alumni Association staff,
LeeAnn Mutchler and Caroline Oates,
and also our local leaders here,
John Jones, Randall
Rammel, and Bernio Campo.
So with that, LeeAnn,
is there anything else
that you'd like to add?
- There is one more slide.
I think there's one.
- Oh, there is one more, yes.
There we go.
- This was a fantastic chat.
Thank you guys so much for
an invigorating conversation.
Excellent moderation, Gerry,
and excellent questions
coming from the audience,
some of them so technical
that they were a little over my head.
But I wanted to highlight
that there are a few resources
available for Booth alumni.
If you're interested in career resources,
it's chicagobooth.edu/careercast.
We also have a YouTube channel
that you can search on YouTube
that has a collection
of webinar recordings,
should you have missed anything
that has been coming out regularly
on the virtual webinar calendar.
And if you're interested in
mentoring or being mentored,
please email me.
It's leeann.mutchler@chicagobooth.edu.
And with that, thank you all so much.
Have a wonderful evening.
- Thank you.
- Thank you.
- Thanks, everyone.
- Bye-bye.
- Bye.
