425: Do-it-Yourself Landlording

SHOW NOTES FOR EPISODE 425: DO-IT-YOURSELF LANDLORDING

Investing in rental properties can be one of the best decisions you can ever make for your current and future financial success.  However, not all investors realize the challenges that come with rental property ownership.  In this information-packed interview entrepreneur, real estate investor and CEO of Avail shares his first hand experience of becoming a landlord, dealing with the day-to-day landlording challenges and creating a software service that allows the do-it-yourself landlord to manage rental properties without all the headaches.

What You Will Learn

• The top five “pain points” for new real estate investors
• How knowing deferred maintenance for a new property can save you $1,000s
• Why partnering can help you build your portfolio faster
• What ratio can help you find good properties faster
• Why real estate is still the best investment for retirees
• A great free resource, with tons of content, for all landlords

About Our Guest

Laurence Jankelow

Prior to launching Avail, Laurence spent seven years in data analytics first as a Consultant at Protiviti Chicago and then at Goldman Sachs.  Originally from South Africa, Laurence has a hardworking spirit and together with his co-founder, Ryan Coon, they developed the idea for their company on a napkin that now solves the needs of thousands of landlords. Laurence is also a long-term real estate investor with a passion for 3-unit multi-family property.

More About Laurence

• Laurence’s family came to the U.S. when he was 10 years old
• Family looking for the American dream
• Dad wanted to restart his finance career
• Laurence went to college and majored in finance
• Went into risk consulting for 4 years
• Also did a lot of data analysis at that time – and systems and processes through data
• Went to Goldman Sachs – a lot of data analysis around their portfolios

First Real Estate Purchase

• While at Goldman, he bought his first triplex, off-market, from a friend at Goldman who was moving out-of-state
• He was trying to manage the property himself but he kept thinking that a property manager would have the “cool tools” to help manage it better
  • He was recording everything in Excel
  • Receiving paper checks
  • Everything manual

Launching a Start-Up

• In mid-2012, he left Goldman to start a new company (Avail) with a friend to provide tech solutions for smaller multifamily property owner “do-it-yourselfers”
• He wanted to provide the same tools larger property management companies provided their clients
• Neither Laurence, nor his partner Ryan, had tech backgrounds
• They taught themselves to code (the first 6-12 months of their start-up)
• They built the entire application from the ground-up themselves
• Official company launch was mid-2015
• Mistakes made as a start-up:
  • Worked too much on building the product, instead of building a brand and potential client base
    • If they would have created a MVP (Minimal Viable Product) to test with potential clients first, they might have had more time to focus on other critical areas
    • There’s also another term, MVA (Minimal Viable Audience) that they didn’t know about
      • From 2012-2015 they were doing nothing to build an audience
      • They later, started creating 100s of high quality educational articles/content for the website 2-3,000 word articles to attract business
      • Did paid search effectively

Pain Points That They Wanted to Solve

• The property already had tenants, so he didn’t have to find any new tenants at first
  • 6 months later, he had to find his first new tenant
• Didn’t have a list of contractors
• Did know what his legal obligations were
• Didn’t purchase a second triplex until 2.5 years later
  • Found it a couple of blocks away
  • Seller had lived in it for 40 plus years
• TOP OPERATIONAL AREAS SOFTWARE WOULD SOLVE
  • How to find new tenants
    • Where to post your ads:
      • Craigslist wasn’t that great
      • Client creates their ad and Laurence’s software will push it out to multiple outlets
        • Getting clients too many leads
    • Created a Rental Application
      • Had functions to upload W2 and paycheck stubs
      • Client authorized background checks, credit scores, criminal background check
  • Digital Lease Signing
    • Made “state-specific” lease agreements for each state
    • Made leases for Top 100 cities
    • Landlords would just grab the one that’s right for them
  • Rent Collection
    • Collect 1st month’s rent
    • Collect security deposit
    • Can set-up auto pay with each tenant
  • Maintenance Feature
    • Kind of weak at this point
      • Tenant can submit work orders to landlord
        • Landlord still has to find good contractor to serve need
          • Ties into Yelp
    • Laurence wants to make this better
      • Landlords want tenant to submit request, goes out to multiple contractors and the landlord would get 3 best bids

Biggest Mistake(s)

• Didn’t factor in “deferred maintenance”
  • Was expensive
  • Both of his buildings were built in the late 1800s
    • Plumbing
    • Electrical

Biggest Success

• Partnering with his dad
  • Shares responsibilities
  • Someone to get feedback from
  • Share costs – allows you to buy more properties
• Investing in Groups
• Using Gross Rent Multiplier to filter potential properties
  • Looking for cash low and cash-on-cash return (look for 8%)

 Advice for Old Dawgs looking at Real Estate Investing to Help in Their Retirement Years

• You’re never too young or too old to start investing in real estate
• The sooner you start, the better
• It becomes more important as you get older
  • You can’t take the same chances as you could when you were younger
• Real estate is a great investment because:
  • Backed by a physical asset
  • Has steady, ongoing cash flow
  • Low risk

Current Business

• Currently, have over 200,000 landlords (and 400,000 tenants) using their service
• Many small beginner landlords with one or two units
  • Many have a home they used to live in that they kept as a rental
• Larger landlords may have 6 units (like Laurence)
• They are in all 50 states
• Most popular articles on their website:
  • 5-Part Series on Tenant Screening
  • Whether Landlords Should Have LLC vs. an Umbrella Policy
• Have list other resources on their website like companies that provide services: movers, rental insurance, etc.
• Future Applications
  • Maintenance
  • Expense Tracking
  • Payment Processing
    • Creation of fast payment network – 1-2 days

Rap-It-Up

• Favorite real estate book: Rich Dad Poor Dad by Robert Kiyosaki
• Favorite business book: Outliers: The Story of Success by Malcolm Gladwell, Freakonomics and Super Freakonomics by Steven D Levitt and Stephen J. Dubner
• Most valuable web site for success (other than your own): Google Search and G-Suite
• Favorite app: August (app for smart locks)
• Favorite quote: “Well done is better than well said.” – Benjamin Franklin
• If you had to start all over, knowing what you know, and you only had $1,000, what would you do to launch your real estate investing business? Put the money in the bank and do what I can with my existing talent.  Get paid to consult. Leverage what I’ve learned.

How You Can Reach Laurence

• Website: Avail.co
• Email: laurence@avail.co

DISCLAIMER:  Many of the above strategies take knowledge and have a higher degree of risk.  You need to do your research and/or work with someone who is experienced to reduce your risk.

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Additional Episode Sponsor: Meno Studio – menostudio777@gmail.com