Andrew Kim is the CEO & Co-founder of SHARE, a real estate technology company specializing in sourcing high-return US single-family rental homes. Guided by a vision for transforming the investment landscape, SHARE, under Andrew’s leadership, not only acquires these properties but also orchestrates their professional renovation, tenanting, and management. Andrew’s steadfast belief in the resiliency of US single-family homes has fueled SHARE’s success, prompting a strategic expansion into both the Canadian and US markets. Committed to innovation and excellence, Andrew is positioning SHARE as a trailblazer in the real estate technology sector, ensuring investors experience seamless and lucrative opportunities.
Here’s some of the topics we covered:
- Making Your Portfolio Go On Autopilot
- Property Management Companies
- Current Interest Rates In Today’s Market
- What to Factor In While Underwriting
- An Interesting Business Model
- Setting Up Systems To Take Down Deals
- Andrew’s Different Business Partners
- Andrews Most Painful Deal
To find out more about partnering or investing in a multifamily deal: Text Partner to 72345 or email Partner@RodKhleif.com
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Full Transcript Below
00:00:00:02 – 00:00:19:21
Rod
Welcome to Lifetime cash flow through real estate investing. I’m Radcliffe and I am absolutely thrilled that you’re here. And we have a very unique interview today, a topic I’ve never really brought on the show before. A really nice guy flew down here from Toronto for this interview and his name is Andrew Kim and he’s the CEO and co-founder of a company called Share.
00:00:19:23 – 00:00:29:28
Rod
And I’m not going to I’m not going to give you much more of a bio than that, because I think he’ll do a much better job explaining who he is, but excited to dig into this with him. Welcome to the show, brother.
00:00:30:02 – 00:00:31:01
Andrew
Thank you. Thanks for having me.
00:00:31:01 – 00:00:42:02
Rod
Yeah, absolutely. So share. You’re from Canada. I know you told me it’s an American company, but it’s a tech company. Tell us what you do, man.
00:00:42:05 – 00:01:03:29
Andrew
Yeah, So share. We’re a real estate investing platform. We work with everyday mom and pop investors looking to get into single family rental homes in a low risk, low effort way. So we work with, you understand your sort of 510 year outlook and help you enter the market by sourcing deals that match your buy box and criteria, getting it rent ready and stabilizing that for portfolio growth.
00:01:03:29 – 00:01:07:13
Andrew
And what we want to do is put your portfolio growth on autopilot after that.
00:01:07:19 – 00:01:27:03
Rod
Okay. That was a lot that you just said. So. So you’ll talk to somebody that has a you know, maybe has their own home, maybe doesn’t wants to get into an investment property, maybe as a couple of bucks has never done it before. And so talk about the process. You said you help them with their buy box. What if they haven’t got a clue what they’re buy is, so to speak to.
00:01:27:03 – 00:01:40:12
Andrew
That a little, yes. Our onboarding will kind of go through some questionnaires and get a sense of what they understand, what they don’t understand or they knew or they know or experienced. And then based on that, when we get we’ll push to a call if they don’t have those types of answers.
00:01:40:16 – 00:01:48:15
Rod
I see. So so it starts online. They fill out some answers. They they fill out a fairly exhaustive questionnaire, I would guess, or inform it. Maybe that’s the wrong KYC.
00:01:48:22 – 00:01:50:29
Andrew
KYC late. Let’s call your customer light.
00:01:50:29 – 00:01:52:03
Rod
Okay. All right.
00:01:52:03 – 00:02:06:24
Andrew
And then if they’re interested to pull the trigger at that moment, then they’ll push for a phone call and then one of us will get on a call with them, understand what their sort of investment rise and timeline risk appetite is, and then help them find a home that meets their sort of investment criteria.
00:02:06:25 – 00:02:24:25
Rod
And so your platform sources on market and off market deals around the country. Correct? Okay. And and then what happens then? Let’s say you identify a house that would be good for them in the market that they’d be interested in. Do they play a role in the market selection?
00:02:24:28 – 00:02:46:01
Andrew
So we will boil that down to basically what their criteria is. Gotcha. I’m trying to shift them towards, you know, A and B class homes. You know, obviously trying to ones I can we can elevate in terms of equity wise. And then if we’re aligned on that sort of deal, there’s that cash to close line that’s on our performance then then we turn on we ask for proof of funds, then we turn on our search.
00:02:46:08 – 00:02:47:03
Rod
Okay.
00:02:47:06 – 00:02:57:23
Andrew
Behind the screen, behind the scenes were sifting through deals automated that Nicholas was short list for head of investments which you see it send it to our local PBMs and agents. They make sure it.
00:02:57:23 – 00:02:58:24
Rod
Means property managers.
00:02:58:24 – 00:03:10:20
Andrew
Yes, Yes. Local property managers and brokers. Make sure we’re not out to lunch. If it looks good, then we will put in a conditional offer. And then if they accept, then we present it to the client.
00:03:10:22 – 00:03:11:03
Rod
Gotcha.
00:03:11:07 – 00:03:21:05
Andrew
If the client likes what they see, then we’ll sign the same agreement, will send our scope team out, tighten our CapEx assumptions and our ten year art and assumptions.
00:03:21:08 – 00:03:22:10
Rod
And that pair of maintenance.
00:03:22:10 – 00:03:31:11
Andrew
Assessors for maintenance. Yes, all the sort of bottom line items. And then if they like it, then we go ahead and close, if not with terminated and keep the search going.
00:03:31:11 – 00:03:36:02
Rod
Gotcha. Interesting. Okay. Do you charge an assignment fee?
00:03:36:05 – 00:03:37:21
Andrew
That’s yes, a 3% up.
00:03:37:21 – 00:03:52:17
Rod
That’s the acquisition for you talked about before we started recording. Okay. Yeah, Very reasonable. By the way, 3% is very reasonable. Okay. So you charge the 3% acquisition fee and then I know you’re involved in the asset management after the fact, correct? Correct. Speak to that a little bit. Yeah.
00:03:52:17 – 00:03:59:27
Andrew
So we plug into a lot of so we work with third party property management company. Right. Typically only works with institutions and we.
00:03:59:27 – 00:04:21:14
Rod
Okay, so let me stop you there so you work with with large property management companies, institutional grade property management companies. Okay. And I’ll tell you and and let me elaborate on on one of the concerns I had until you told me that because there are a lot of fly by night property management companies out there, especially in the single family space in my world with, you know, a hundred plus apartment units there.
00:04:21:17 – 00:04:42:19
Rod
There are very sophisticated management companies, third party property management companies. But in the single family space, there are a lot of brokers that do it on the side. And I can’t tell you how many problems I’ve seen, myself included, you know, when I had assets in Memphis and so on, and just crappy managers. So the fact that you’re dealing with institutional grade is a big deal.
00:04:42:22 – 00:04:43:12
Rod
Huge deal.
00:04:43:13 – 00:04:46:28
Andrew
Yeah. The smallest one we have is like 800 doors in a specific region.
00:04:46:28 – 00:05:04:21
Rod
That’s really good. Yeah. Yeah, that’s really good. Okay, So, so so you sourced the deal for them. You put it under contract and you assign it to them for the 3%. Like I said, that’s a that’s a really good deal. And then, and then what happens then. Do you help them with the financing.
00:05:04:23 – 00:05:25:24
Andrew
So prior to kind of searching. Okay, we’ll work through the financing strategy. Okay, sure. The numbers work. We run the performance against those sort of sensitivity tests and then we send out a preliminary sort of request to like thousands of lenders and see who kind of matches and which or close. And then if they need financing, that will also be sort of our conditional offer.
00:05:25:26 – 00:05:31:13
Andrew
And then once they sort of our offers accepted, we’ll go and push out for a higher request for the same.
00:05:31:15 – 00:05:33:18
Rod
How is the interest rate environment affected?
00:05:33:18 – 00:05:34:29
Andrew
What you’re doing really high.
00:05:35:05 – 00:05:35:16
Rod
Yeah.
00:05:35:17 – 00:05:35:22
Andrew
Yeah.
00:05:35:22 – 00:05:45:26
Rod
And it’s yeah, I mean how has that affected your have you, have you seen pricing come down to start to justify this interest rate yet or is it still sellers still holding on a little bit.
00:05:45:27 – 00:05:57:11
Andrew
Yes or no. And the reason is we’re going after we haven’t seen that much of a price adjustment yet or hopefully we won’t. It just means typically a larger down payment makes things cash flow positive.
00:05:57:11 – 00:06:13:22
Rod
I see. Well, actually, I disagree with you. I think hopefully we will see price adjustments. And if you can buy these things at a lower price than you know, when the rates come down, you refinance. No big deal. Yeah. So I asked you before we started recording of using Fannie Mae, I know Fannie Mae just dropped their down payment requirements, which was a huge deal.
00:06:13:28 – 00:06:18:21
Rod
Do you know what I forgot? What it was too like. From what to what? I think it was like 10% or 15%.
00:06:18:21 – 00:06:19:12
Andrew
Or was it?
00:06:19:14 – 00:06:20:05
Rod
Now it’s five.
00:06:20:08 – 00:06:20:22
Andrew
Okay.
00:06:20:24 – 00:06:41:01
Rod
I think it’s 5%. Really? Yeah, it’s 5%. Yeah. So it’s five. But they’ve dropped their, their down payment to 5%, which is huge. Now you said you do more DSR loans, DSR see our guys means debt service coverage ratio because you’re looking at a property’s ability to service the debt. And I wasn’t very familiar with those loans, but I know they’ve become more mainstream.
00:06:41:03 – 00:07:03:04
Rod
So you’ve seen more 8% right now and net debt. Okay. Now, guys, just so you know, I mean, 8% sounds freakin staggering, but when I start in the business, the interest rate was 18%. Okay. And I remember freaking freaking out when it hit 7%. I’m like, holy shit, it’s only 7%. So just to give you some context, all right, so you source the deal, you finance it, They they buy it, basically.
00:07:03:10 – 00:07:25:15
Rod
And I told you I was very against turnkey, okay? And I get into it with some of my confederates that are good friends that do turnkey because for a couple of reasons. One is the, uh, the profits are already gone. Obviously, the person selling you a turnkey property is going to sell it for market value and make some money on it.
00:07:25:15 – 00:07:52:21
Rod
So they’re like a flipper and just a fancy flipper. So, so what you do is different because they’re buying the house basically whatever price you can negotiate out a deal. And, um, and so, so that’s different. And then, you know, I did express another concern and I would like to discuss it. You know, when you’re a one off home with a management company, you don’t have much leverage.
00:07:52:21 – 00:08:13:26
Rod
I mean, like with when I’ve got a 100 unit apartment complex, you know, I’ve got some leverage because if they lose my account, that’s a big deal. But, you know, I suppose the caveat there is you’re dealing with sophisticated operators. So it’s not like a mom and pop. But yeah, that is a concern, you know? Yeah, I heard complaints about that from people that are bought, turnkey and they have no leverage.
00:08:13:26 – 00:08:17:19
Rod
They get screwed on the maintenance and things, things like that. You, I speak to that a little bit.
00:08:17:19 – 00:08:31:02
Andrew
Yeah. You know, we mulled over that for quite a bit of time. And then my co-founder, who comes from a large private equity shop, was like, We should be using institutional, right? We can go in there that way. We got economies of scale and we threatened the whole portfolio if they screw up.
00:08:31:04 – 00:08:31:21
Rod
Oh, good.
00:08:31:24 – 00:08:32:17
Andrew
Yeah. Okay.
00:08:32:23 – 00:08:46:12
Rod
Because you’re asset managing it. Yes. Okay. That’s the piece we didn’t get into yet. Yeah. So guys, what he does is, is, you know, we’ve got asset management, property management, these asset managing the management companies. Yes. So you do have leverage then? Yes, that’s a big deal.
00:08:46:16 – 00:08:54:27
Andrew
None of our contracts are sticky on a 60 day termination. Oh, okay. And we have redundancy of at least two or three other like kind PMS property managers in that area.
00:08:54:28 – 00:09:01:05
Rod
Okay. Okay. Well, that’s that’s really good. So you handle the asset management and you charge like a what was it, a.
00:09:01:05 – 00:09:04:03
Andrew
Quarter percent to 1% depends on the portfolio value.
00:09:04:05 – 00:09:29:14
Rod
Okay. So a quarter percent to 1% of the rents purchase price or purchase price. Yes. Oh, interesting. Okay, interesting. Oh, that’s interesting. Okay. I don’t know. I don’t have to do the math on that in my head and asset management in what we do in property in multifamily, like we’re at 2% of the gross collected rents, right? That’s how we do the asset management fee based on the rents collected.
00:09:29:16 – 00:09:35:29
Rod
I can obviously this is more when you’re doing it on the value of the property, but it’s what determines that.
00:09:36:03 – 00:09:41:08
Andrew
It’s the total portfolio value with us as it goes up, it’ll go down to the quarter point.
00:09:41:08 – 00:09:45:09
Rod
Oh I got you, I got you. So if they buy more than one house through you, then it goes down.
00:09:45:12 – 00:09:48:04
Andrew
Yes. To 50 500,000.
00:09:48:09 – 00:10:09:15
Rod
Okay. Oh, this is the value of the home. Yes. Gotcha. Okay. Okay. Now that makes sense. And talk about, you know, a big thing for me is control. I’m a control freak. And that’s why it was really hard for me to start buying out of state. But a big piece of that is dealing with renovations and you’re buying assets that need renovation, correct?
00:10:09:19 – 00:10:28:07
Andrew
Yeah, it’s the buyer’s choice. If they want something with just punch list items, just like touch up. Right. It’s magic or like a big lift. Yeah. Okay. Right now we’re saying, you know, if you’re going to do a deep lift, you should probably self-finance this because interest the bridge interest rate or when you add that in there that they don’t pencil all the deals.
00:10:28:07 – 00:10:38:29
Rod
Oh, interesting. Okay. Okay. So so basically pay cash and then refinance when it’s done, is what you’re saying. Gotcha. Okay. When you say I’m assuming that’s what you mean, you say finance or hard money or something.
00:10:38:29 – 00:10:41:00
Andrew
I don’t know. Okay. Yeah. Non-interest bearing.
00:10:41:00 – 00:10:48:13
Rod
Non-interest bearing. Okay. Got it. Now you say you push people to and be properties. Why is that?
00:10:48:15 – 00:10:59:21
Andrew
Just for safety and security reasons. Let’s say if you’re a novice, you should probably get into a B or like a very a B neighborhood. Yeah. Where you can actually uplift. Yeah. Or you know, I know why.
00:10:59:21 – 00:11:16:29
Rod
I just want to hear you say okay, okay. I am absolutely avoiding C assets right now and for a lot of reasons and but especially for somebody brand new. But here’s the thing. Inflation is is killing people right now. I mean, I go to the grocery store, I’m like, holy shit, that was $100 for that little bag of stuff.
00:11:17:01 – 00:11:39:12
Rod
And and gas is insane. And what demographics getting killed, the ones that are in those C assets. And so, you know, I absolutely am avoiding anything below a B right now because, you know, it’s like a flight to quality really. So I’m really glad to hear that. And especially for a, you know, a novice, although from what I hear, it doesn’t really matter if they’re new because you’re pretty much handling everything.
00:11:39:13 – 00:11:44:22
Andrew
Yeah, we, we try to mitigate the risk as much as possible. Our underwriting is pretty scrutinized.
00:11:44:23 – 00:11:45:06
Rod
Okay?
00:11:45:07 – 00:11:51:29
Andrew
Like with some of our wholesalers, they’ll be like, Here, here’s a nine cap and we’re like, This is a six, Right.
00:11:52:05 – 00:11:52:25
Rod
Right, right.
00:11:52:26 – 00:11:55:07
Andrew
Here. There’s all these lines in the zip code. So you actually.
00:11:55:07 – 00:12:04:04
Rod
Using cap rate on single family homes. Yes. Interesting. Interesting. Well, tell me tell me a little bit more about your underwriting spit. Take a look at what what do you take a look at when you underwrite? Yeah.
00:12:04:04 – 00:12:36:11
Andrew
So my co-founder, he’s he does this that’s his sort of realm so I’m my butcher it but he looks at everything from, you know, surrounding economics, from job growth, population growth, household income. Then he goes down to all the random vacancy and he doesn’t kid himself about it and he comes from luxury, the multi world. Okay? So he takes out institutional knowledge, understands the vintages areas and really makes sure that we kind of over allocate on some of these them and vacancy assumptions.
00:12:36:11 – 00:12:38:12
Rod
Repair maintenance and vacancy assumptions.
00:12:38:15 – 00:12:41:10
Andrew
Yeah. And then carrying costs because oftentimes that’s.
00:12:41:12 – 00:12:48:20
Rod
That’s a that’s relevant. I mean yeah, you’re going to have some carrying cause you’re going to have debt is going to take you a while to fix it up and rent it. And people forget.
00:12:48:20 – 00:13:06:07
Andrew
That. And taxes, like we see like almost a full percentage point in some of our competitors that like they just loosely assume that it’s just an incremental change year over year, whereas like, well, is it non-disclosure state or is this going to they go look at that number? When do you think they’ll assess maybe in two years and so forth.
00:13:06:07 – 00:13:16:27
Rod
And so, yeah, you got to know every geographic areas different. Some some don’t reassess for five years. Some do it the minute there’s a sale. Yeah and they have ways of figuring out if there was a sale. So you said competitors. You have some competitors doing this.
00:13:16:27 – 00:13:24:23
Andrew
Yes. Like Marketplace perspective and then the traditional local brokerages that, you know, do that themselves and sell. They do the ones managing.
00:13:24:23 – 00:13:40:24
Rod
Gotcha. Well, that’s dangerous. Okay. That that reminds me of a turnkey with a local brokerage doing it. So I really like your model in that regard much, much better. Now, I know, you know, you’re fairly new. You’ve got you said you’ve got 40 of these done already. What markets are you in right now?
00:13:40:26 – 00:13:43:24
Andrew
I mean, primarily Texas and Texas.
00:13:43:27 – 00:13:44:11
Rod
Oh good.
00:13:44:11 – 00:13:52:03
Andrew
Yeah, I’m primarily Texas and Georgia. And then we’ve done some we’re now kind of Midwest like we like Kansas. Oh, some pockets of Ohio. Yeah.
00:13:52:05 – 00:14:01:28
Rod
Okay. Those are great markets. I’ve got assets in all every state you just mentioned, so that’s great. Okay. And Major metro, primarily in suburbs.
00:14:02:02 – 00:14:03:21
Andrew
Yeah. Yeah. Like the outskirts. Yeah.
00:14:03:24 – 00:14:25:26
Rod
Because, like I was telling Andrew before we started recording, you wouldn’t get a national, institutional grade property management company in a, you know, a secondary or tertiary market. Yeah. So you got to be in the major metros, which is better anyway because there’s a lot more you don’t have to worry about, you know, employer diversity and, and you know, people can find work in major metros.
00:14:25:26 – 00:14:44:17
Rod
So what’s been the biggest hurdle for you getting this thing going? Because I before you answer, I mean, I was sitting here thinking about your business model and I’ve started 27 business. I’m like, holy crap, that’s a lot of work you’re doing for not a lot of money. So so, you know, speak to that, if you will.
00:14:44:17 – 00:14:54:25
Andrew
Yeah. Like shockingly behind like operationally and from a it’s kind of clear to me what has to be in place. I would say it’s the high interest rate environment and not being able to make deals.
00:14:54:25 – 00:15:19:00
Rod
Pencil Yeah, yeah, yeah. I do think, you know, I just did a, I just did a green screen thing on my Instagram today about small businesses. How 30% of the small businesses right now are using credit cards to finance their businesses. What’s wrong with that picture? Right. And so, you know, I’m I’m pretty bearish on this economy. I think the shit’s going to hit the fan here.
00:15:19:00 – 00:15:34:09
Rod
And I’m telling people, you know, for God’s sakes, if you’re going to figure something out to take advantage of it, you better learn it fast. Because, you know, if you’re in the thick of it, it’s going to be too late. I think there’s going to be opportunities to buy businesses, certainly by every asset class of real estate. I will stay the hell away from office.
00:15:34:09 – 00:15:54:29
Rod
But I think, you know, I’ve actually heard strip centers are doing quite well now. It’s just kind of interesting. But, you know, obviously multifamily is my gig, which I love, but it’s a very interesting business model. So so DACA, how did that talk about what sort of financing people are able to get with DSR loans? Because I’ve got a clue what those are about.
00:15:55:04 – 00:15:59:20
Andrew
Yeah. So there’s typically 30 year fixed, non-recourse 30 year.
00:15:59:20 – 00:16:00:05
Rod
Fixed.
00:16:00:05 – 00:16:10:09
Andrew
Yeah. So that’s why we’re like, okay, if a deal can pencil with a DCR, right, lock it off and we’ll find one with minimal to no prepayment penalties and go out and refi in three years.
00:16:10:10 – 00:16:11:08
Rod
No kidding.
00:16:11:10 – 00:16:13:10
Andrew
So we model that and part of our performers are.
00:16:13:10 – 00:16:15:06
Rod
Very big institutions doing these loans.
00:16:15:13 – 00:16:23:21
Andrew
There All no I wouldn’t said they’re large. They’re they’re sizable players. Okay. Like you know, there’s ones that can you know the 10,000.
00:16:23:24 – 00:16:25:02
Rod
Can name you name a big one.
00:16:25:05 – 00:16:34:26
Andrew
Well we would use like a technology platform that actually pushes out of a thousand. I got you know, this ecosystem is really evolved and there’s so many tools that make it a little easier to you.
00:16:34:26 – 00:16:39:08
Rod
Mean for you? Yeah, For you. Gotcha. Okay. So you’ve automated as much as you possibly can.
00:16:39:08 – 00:16:40:26
Andrew
And will continue to do so as we learn.
00:16:40:28 – 00:16:42:25
Rod
Are using AI at all?
00:16:42:27 – 00:17:04:00
Andrew
Yes, we started playing with some AI models, the upfront automated valuation models such as the short, like because there’s so many houses on the market and the market. So we got to shortlist that. Sure. So that’s shortlisted. So it’s still a preliminary. And then on the asset management side, now we’re because we plug into the property management companies software system like the building or.
00:17:04:03 – 00:17:16:29
Andrew
FOLIO Right. We’re going to need a way to like highlight anomalies in that monthly statement. Like what? Why, what’s make sense here? Why is that one house here? Correct Down, call that out and go ask the question.
00:17:16:29 – 00:17:38:14
Rod
Yeah, we are one. One of the attorneys I work with has this KPI software for multifamily, which is just kick ass and where I’m presenting it to or he’s presenting it to my warriors. I’ve got my students are called Warriors and something I’m real proud of. They own, I think, upwards of 180,000 units now, since I’ve only been teaching five years, I’m really proud of that.
00:17:38:14 – 00:17:55:05
Rod
But but we’re having a warrior only event. Should be three or 400 warriors in Phenix this coming weekend. And but he’s got this KPI platform that he created that ties right into all the different softwares and it gives you just a snapshot and shows you the anomaly. So you’re going to want to create something like that for what you’re doing.
00:17:55:05 – 00:18:08:18
Rod
But it’s, it’s really impressive. But so so you like Texas, you like Georgia, you like Ohio, and it’s in Kansas. Interesting.
00:18:08:18 – 00:18:09:19
Andrew
Carolinas. We like to.
00:18:09:20 – 00:18:19:09
Rod
Oh, yeah, Carolinas are awesome. Yeah, I’ve got assets in both of those too. Okay. And DACA loans, I mean, Fannie Mae is 30 year fixed too, isn’t it.
00:18:19:09 – 00:18:20:16
Andrew
Yeah, they’re all pretty much 30.
00:18:20:16 – 00:18:29:28
Rod
Yeah, yeah, yeah. So those are great loans. So who’s your avatar, Who is your client that you’re targeting for this opportunity?
00:18:30:01 – 00:18:42:02
Andrew
Yeah. So I guess there’s two, there’s one. Well, majority of ours come from like, major, very expensive real estate metros, New York, L.A., San Francisco, Seattle. Right. Where local deals don’t make sense anymore.
00:18:42:03 – 00:18:45:12
Rod
Blue, blue and blue. Sorry, but I couldn’t resist.
00:18:45:17 – 00:18:58:18
Andrew
Just like. Yeah, look, it is what it is. And there’s a reason why we look in the red states, right? Thinking, okay, like, if you want to scale your portfolio or you can’t do it. Yeah, right, right. Like both from a legislation and from a returns perspective, Right?
00:18:58:19 – 00:18:59:12
Rod
Can’t make it work.
00:18:59:12 – 00:19:00:27
Andrew
You can’t make it work. Right.
00:19:00:29 – 00:19:05:01
Rod
So these are these are people that live there and they’re like, holy crap, how am I ever going to get into real estate?
00:19:05:02 – 00:19:12:00
Andrew
Yeah, or they’ve done it and they’re just like lying to themselves. If they continue to be a W2 to pay the delta of their mortgage.
00:19:12:00 – 00:19:16:15
Rod
Right, Right. Like, right. While they’re feeding, they’re feeding a property. Yeah. Cash flowing like.
00:19:16:15 – 00:19:35:12
Andrew
Now you’re just in to work for the rest of your life. Right? Right. So those individuals that tried local try to self-manage now there they try to use a like a small boutique property management company and just nothing’s working. Right. We managed to get them over the hump of out of state and now they’re just like pockets are like, well, let’s go for another one.
00:19:35:12 – 00:19:36:17
Andrew
Let’s do another voice.
00:19:36:19 – 00:19:39:21
Rod
So, so more high net worth people, or.
00:19:39:21 – 00:19:42:24
Andrew
I would say middle management, like middle, upper middle class.
00:19:42:24 – 00:19:43:17
Rod
Upper middle class.
00:19:43:19 – 00:19:51:16
Andrew
Like we are starting to get some younger kids that are just like, really can’t afford where I live, right? Maybe I continue to rent and invest out of state.
00:19:51:23 – 00:20:12:06
Rod
Interesting. Interesting. How do you see this evolving? Do you see this your business model evolving at all? I’d made a suggestion. You don’t have to repeat it, but do you see any other avenues for your for your clients that you might utilize to increase revenue or. Yeah, decrease expenses, whatever?
00:20:12:08 – 00:20:19:15
Andrew
Yeah. So the way we look at it, because, you know, we are touching every sort of step of the value chain of investing for research, right. Financing. And that’s.
00:20:19:15 – 00:20:22:13
Rod
Why I said I don’t know how you, how you can afford to do all that because that’s a.
00:20:22:13 – 00:20:42:22
Andrew
Lot like, well, not much of that is in the house. It’s all sort of plugging in, playing to large providers or networks of providers. But once like and but the way we look at it is like Zillow tried to launch mortgages and they’ve got a very low attach rate of how many people they refer and more. You just, you know, they look at their mortgage attachés, look midst to low single digits, I believe.
00:20:42:22 – 00:21:05:23
Andrew
I think they might have quoted 7%. But when you look at it from a investor perspective that attach rates like 100% because they’re always attaching a mortgage to an investment or some sort of loan. So we look at that in landlord insurance, all these secondary offerings or service offerings that once we have scale, we can just pretty much either bring in a big player to get a piece of that or we introduce that as part of our own.
00:21:05:26 – 00:21:24:09
Rod
Oh yeah, that’s that’s a good idea. That’s a really good idea. Okay, now there are some well, I was just thinking about something. There are some companies that have large companies that have tried to do versions of this, aren’t there? I’m trying to think of one that’s not that Opendoor. Opendoor? Yes. Okay.
00:21:24:11 – 00:21:42:25
Andrew
Yeah. So there were the on the main their focus is on owner occupant homes and they were trying to buy using technology so it would go there. You put your house details, you answer a long questionnaire and they’d give you a cash offer there. You know then the market crash and they were stuck with so many houses on their balance sheet.
00:21:42:25 – 00:21:54:15
Andrew
But that’s, you know, owner occupant price points, I feel, are you know, they’ve managed to screw themselves over on hyper scaling that whereas, you know, we are actually on a cap rate sort of.
00:21:54:18 – 00:21:55:04
Rod
Investor.
00:21:55:04 – 00:22:08:14
Andrew
Base. Yes. So we police ourselves. Right. So if the cap price goes down after you’ve acquired it or before you acquire, then it is what it is. But at least we have a liquidity option of selling it to another investor at that cap rate.
00:22:08:18 – 00:22:20:22
Rod
Oh, interesting. I was just going to ask you the relevance of the cap rate with a single family house. But I see you’re you’re thinking internally just to sell it to another investor. You wouldn’t go out on the market and say, hey, this is an eight cap.
00:22:20:22 – 00:22:26:13
Andrew
Unless it was going up. Like I know an owner occupant wanted to come in and we’d say, Let’s put in ten K, do a renovation, sell for three.
00:22:26:13 – 00:22:27:03
Rod
Right? Okay.
00:22:27:06 – 00:22:35:05
Andrew
Okay. With the large reeds coming in SFR space, there’s also now that liquidity option of institution or private investor.
00:22:35:08 – 00:22:37:10
Rod
What’s your domain, your website.
00:22:37:12 – 00:22:40:16
Andrew
Share SFR is in single family rental dot com.
00:22:40:16 – 00:22:44:20
Rod
Got it. Okay, I’m sure SFR got it. So so who’s in this with you?
00:22:44:23 – 00:23:12:00
Andrew
Yes, I’ve got three other business partners. Co-founders. Okay, One obviously in the technology space. And then Carmen, who is my co-founder, who lives really close to here. She’s in Sarasota, but perfect, shockingly, like we were both at the opposite places for this event. So I came in. She would have come in or my other business partner, Dimitri, who is my head of investments, he used to be the executive director at Starlight, which is one of Canada’s largest private equity shops.
00:23:12:00 – 00:23:24:10
Andrew
They’re both $25 billion in multi and about 7 billion in the U.S. And he used to head up the U.S. arm. So he’s the one doing all of our underwriting. He’s definitely a fan of yours. Oh, yeah. Yeah. So he’s.
00:23:24:10 – 00:23:25:07
Rod
And what’s his name again?
00:23:25:07 – 00:23:26:09
Andrew
Dimitri Berstein.
00:23:26:09 – 00:23:28:17
Rod
Oh, nice. Okay, well, please give him my regards.
00:23:28:17 – 00:23:41:23
Andrew
Yes, I will. So he would have been the ultimate candidate because then you guys could chop it up. Really? Okay. But he’s done over 7 billion transactions, scaled that for that fund from a 200 doors to over 20,000. Wow. So he’s done quite a bit.
00:23:41:23 – 00:23:43:03
Rod
And he’s the underwriter.
00:23:43:06 – 00:23:45:06
Andrew
Yes. So he’s ahead of our investment where.
00:23:45:08 – 00:23:49:07
Rod
You throw you lock him in a room with a spreadsheet and raw media and once a month.
00:23:49:11 – 00:23:57:26
Andrew
Right? Okay. Yeah. So he’s the one that is always telling me that the deals don’t pencil deals on pencil. But, you know, you got to you got to you’ve got to respect that.
00:23:57:27 – 00:24:06:29
Rod
My Dimitri, his name name’s Craig. Okay. Same thing. And I want to I want to smack him from time to time because we can’t find deals, but we actually think we may have got one today. Pretty good.
00:24:07:00 – 00:24:08:24
Andrew
Oh, that’s exciting.
00:24:08:26 – 00:24:13:22
Rod
So, you know, we don’t want to overpay like you don’t want to overpay for your for your clients. Yeah, right.
00:24:13:24 – 00:24:20:14
Andrew
So he’s the one going in there and we’re going to try to extract his brain and apply his sort of logic to a lot of our filtering.
00:24:20:16 – 00:24:38:20
Rod
You know, the more you can checklist and automate and streamline that board, the faster you’re going to be able to roll through deals. And that’s what Craig’s been really good at. And I got to give him credit. He’s been killing he created our underwriting software for my students and everything else. So, yeah, so, so anyway, so he’s doing that.
00:24:38:20 – 00:24:38:29
Rod
Is that.
00:24:38:29 – 00:25:00:15
Andrew
Everybody. Yeah. So it’s Carmen as well. So Carmen, she’s, she’s, she’s a veteran, she’s actually from the tax and estate planning world veteran militarily. Oh no. Sorry. Okay. Sort of real estate and tax veteran. So she actually I actually pulled her out of retirement oh two to start this business. She built like a $500 million insurance as a service sort of platform.
00:25:00:17 – 00:25:18:29
Andrew
Wow. Sold that and got into multi and single like several years ago and has amassed quite a bit of a portfolio and personally. Personally, yes. And then I’ve I was introduced to her by a mutual friend when I was my past business, which I was situate in the US. She’s the one who introduced me to the asset class.
00:25:18:29 – 00:25:34:17
Andrew
She handles my personal finances, my taxes, accounting, and because of that she became the right fit for this. So we can kind of give you some tax and estate planning guideline guidance as well. Oh, nice. Yeah. So we will help you with entity formation and kind of make sure that we’re doing everything.
00:25:34:17 – 00:25:38:14
Rod
Oh, that’s fantastic. So she designated it anything or.
00:25:38:14 – 00:25:39:12
Andrew
She’s a CPA. She’s a.
00:25:39:12 – 00:25:53:06
Rod
CPA. Okay. So definitely help with the tax planning and and so you can give some direction as to setting up the the leases and whatnot in the different jurisdictions or however you schedule it, you know, set that up. Oh, that’s very helpful as well. And you guys are doing a lot.
00:25:53:08 – 00:25:58:28
Andrew
Yeah. The entity formation is pretty straightforward. Well, yeah, we do plug and play, we plug and play it on, you know.
00:25:58:29 – 00:26:17:22
Rod
Okay. But you’ve got you have stock operating agreements you can share with them or something. Yeah. LLC is the way to go guys. I mean I teach this stuff but you know, used to be corporations and then it was general partnerships when I got into the business. And an LLC is something I saw come in the picture and, and of course now they’re what everybody uses.
00:26:17:24 – 00:26:21:26
Rod
So you described your, your partners and their background. What, where did you come from?
00:26:21:29 – 00:26:25:25
Andrew
Yeah. So I actually grew up low income housing. Wow.
00:26:25:27 – 00:26:28:01
Rod
Where in in Canada, right.
00:26:28:01 – 00:26:48:21
Andrew
Yeah. There’s a there’s areas of trouble. There’s a place called Rexdale, which is, you know, the hood. Yeah, I guess you could say that. You know, they were stuffing like, all the immigrants there and, you know, so came from low income houses. My parents saw bankruptcy when we were young and I think with my dad, who, like in grain real estate.
00:26:48:24 – 00:26:49:27
Rod
Is your dad an immigrant?
00:26:50:01 – 00:27:11:29
Andrew
Yes. Yeah, my parents were from they moved from Korea to Canada in the mid seventies. Gotcha. And, you know, they were entrepreneurs or attempted entrepreneurs. And, you know, my dad invested money in land real estate, and he just told me how he got screwed out by a couple of partners. And I’m like, okay. And, you know, I was I oddly, I was driven by food real nice.
00:27:12:02 – 00:27:31:05
Andrew
So I was like, we can never go out need, you know, I want to go need McDonald’s or whatever it was. So we’re, we’re always super tight on budgets. My parents saw bankruptcy when I was young. They spent way too much money giving me privilege of extracurricular and whatnot in a good education. But that kind of gave me the drive to get into real estate.
00:27:31:08 – 00:27:38:27
Andrew
So it was a part time real estate investor. Just after college and but at the same time trying to be a tech entrepreneur. So.
00:27:39:02 – 00:27:40:09
Rod
And this was in Toronto.
00:27:40:09 – 00:27:47:15
Andrew
Yeah, yeah. The Toronto market is a weird one. It’s very expensive. So right now it’s like 1.2 millions average single.
00:27:47:15 – 00:27:49:25
Rod
Median income, median house price.
00:27:49:25 – 00:28:08:23
Andrew
Yeah, yeah, yeah. It’s, it’s nuts. And so back when I started, you could get something for 300,000, but it was like on the outskirts, deep dilapidation. You’re trying to go for the deep br method, right. So I attempted a few of those really sucked at them, but I think I walked away with some money. According to Carmen, I did.
00:28:08:26 – 00:28:23:22
Andrew
And then my first venture capital startup came to play. I moved to California and that’s when she introduced me to the single family rental market in the US. And I was like, positive cap rates, $100,000, $150,000 homes for this world and my living in.
00:28:23:22 – 00:28:24:27
Rod
Right, right, right.
00:28:24:29 – 00:28:35:20
Andrew
So that’s when that sort of started. I went, I good thing I deployed some capital there, deployed some more after I sold my first company. So at that time was in St Pete’s.
00:28:35:20 – 00:28:37:06
Rod
St Pete. Yeah.
00:28:37:08 – 00:28:45:13
Andrew
Okay. Yeah. Okay. And so, you know that point, I’d never seen a positive cap rate, so I was all in regardless. Right? And then so you.
00:28:45:13 – 00:28:50:12
Rod
Bought your own stuff and then, then you started thinking about this technological solution for.
00:28:50:12 – 00:29:08:22
Andrew
People. Yeah. Like fast forward, it was the pandemic that really drove it. After I sold my company, moved back to Canada, and, you know, the pandemic was like, okay, well, what am I going to do? I got I need to extend my runway here to do another startup. Let’s go deploy some more capital and single family. And like, I’m like, why is this world not more advanced?
00:29:08:22 – 00:29:26:09
Andrew
Why is it still this long, arduous, six month process and needs to be lower risk? These are hardworking Americans trying to build wealth and they’re they’ve they’re busy. So how do we kind of reduce that friction? And that’s one of the sort of investigation to what tools are there and how do we make this work?
00:29:26:14 – 00:29:46:10
Rod
Hmm? Hmm. Nice. Nice. So so as you were as this business was progressing and as you you know, I’m sure you didn’t your first deal was the hardest. The first house you got for somebody, your first few houses. Any any epiphanies in this in this journey, any aha moments like, okay, now I get it. We got to do it this way instead of that way.
00:29:46:10 – 00:29:47:03
Rod
Any, any of those.
00:29:47:03 – 00:30:02:29
Andrew
Yeah. You know, we were, we played with the idea of fractional real estate even though where you kind of put in small increments, but then the value isn’t there for real estate. If you’re going to buy real estate, you should be able to leverage it. No bank or institution is going to acknowledge my increments of $5,000 in this investment and leverage it.
00:30:02:29 – 00:30:21:17
Andrew
Right. And you don’t have control over. You’ve got someone else who’s got your liquidity button. They’re pushing that. So we’re like, let’s move away. And the crowd was a bit younger. You got to hold their hand and it’s like you’re spending all this time for a couple of thousand dollars and then you have sort of the middle aged professional who was like, Look, I’m probably late to the game.
00:30:21:17 – 00:30:31:22
Andrew
Your real estate. So I wanted to play some capital I want to get in. So that’s when we knew it had to be whole ownership and we have to kind of cater to what they’re looking for and help them get to their timelines.
00:30:31:29 – 00:30:50:24
Rod
Interesting. Interesting. So with what you know about real estate now, you’ve done it yourself. You’re helping other people do it. What words of, you know, what would you say to aspiring real estate investors? They know they need to do something with their lives. They need to you know, they’re listening to the show. They want more than their W-2 job.
00:30:50:24 – 00:30:56:08
Rod
They’re the rat race existence. They need to move past that. What would you say to those people?
00:30:56:11 – 00:31:10:24
Andrew
The FOMO is real. Don’t wait ten years and they’re going to be that same old schmo that’s like I should have bought way back then, because everyone who’s done it still says that Why didn’t I buy more, right? Why didn’t I buy more? It’s not going to go down. If it dips, it dips, but that’s just a dip, right?
00:31:10:25 – 00:31:12:05
Andrew
It’s not going down and staying down.
00:31:12:05 – 00:31:12:19
Rod
Thank you.
00:31:12:20 – 00:31:15:01
Andrew
So move it. Pencils. Get it?
00:31:15:04 – 00:31:23:00
Rod
What else can you buy that someone else pays for? Yeah, right. Yeah. Is there a book that you gift more often to people than others?
00:31:23:03 – 00:31:29:21
Andrew
Yeah. The. You know, there’s a book by Ben Horowitz, which is called The Hard Things About Hard Things. And it’s the journey of the book.
00:31:29:21 – 00:31:35:09
Rod
You just gave me, brother. Thank you, man. Yeah, I appreciate that. Well, so do you. Gift that one a lot. Must be damn good. I’m going to read.
00:31:35:09 – 00:31:43:13
Andrew
It like it’s two fold. One, it’s like I think it’s I learn from other people’s horror stories, their war stories that just.
00:31:43:13 – 00:31:46:01
Rod
Listen to my podcast. You hear a lot. Yeah. And I love.
00:31:46:04 – 00:31:50:05
Andrew
And I love that question that you always give them. It was like, Well, tell me about like the worst time.
00:31:50:07 – 00:31:54:22
Rod
All right, Now that I now that we went there, what’s tell tell the worst real estate experience that happened to you?
00:31:54:23 – 00:32:03:27
Andrew
Well, I’ve I’ve been fortunate that my worst real estate experience has been COVID but on my Section eight home. So that wasn’t so bad.
00:32:03:29 – 00:32:05:00
Rod
Okay.
00:32:05:02 – 00:32:16:27
Andrew
You know, we got the erap, we got all the fun stuff. So but I wouldn’t mind sharing a horror story about my last company. And like, for me, that was the kicker to get more real estate, okay? Which was, you.
00:32:16:27 – 00:32:17:28
Rod
Know, what was the company?
00:32:18:04 – 00:32:22:02
Andrew
It was called Kingmaker. And I know this is sort of really out of school.
00:32:22:03 – 00:32:24:09
Rod
But kind of a cheeky name. But it is.
00:32:24:15 – 00:32:34:13
Andrew
You know, we were like, we try to be behind the scenes and what we were doing, we were helping YouTubers monetize their audience through commerce because YouTube didn’t allow that at the time.
00:32:34:13 – 00:32:35:01
Rod
Interesting.
00:32:35:03 – 00:32:47:06
Andrew
And we had raised some capital. We were heads down and the way startups rolled is you get a bit of capital to get you to another milestone and if you can kind of hit those milestones, then it’s easier to go raise more capital to blow up the team.
00:32:47:08 – 00:32:50:00
Rod
And were you in California? Do Yeah.
00:32:50:00 – 00:33:12:22
Andrew
I was in L.A. at the time because we were content creators. It made more sense. And three months before we run out of cash, you know, our lead investor says we’re not going to re-up on you unless you take the company that’s complete different direction. Oh, and then our secondary investor, So our lead investors like the anchor investor and then our secondary is like, well, we want you to go a completely different direction.
00:33:12:24 – 00:33:15:19
Andrew
At this point. My wife is like six months pregnant.
00:33:15:22 – 00:33:16:12
Rod
Oh jeez.
00:33:16:12 – 00:33:21:04
Andrew
And I’ve already a bicoastal husband. She was in Toronto. Oh, no, She’d come back and forth.
00:33:21:04 – 00:33:21:23
Rod
That’s no fun.
00:33:21:27 – 00:33:38:20
Andrew
And then I think we had like four weeks left of cash and then we managed to pull off an acquisition and that acquisition was in the Bay Area was nerve wracking. We had to let go of everybody managed to recoup some of the team and get them as part of the acquisition deal and having to go back and forth.
00:33:38:20 – 00:34:09:11
Andrew
So we had to shut down the office, liquidate everything, physically, move between offices after after work in the Bay Area, and now I’m an employee working for a fast school startup, working 14 hour days, new dad. Yeah, kind of sucked, but that’s when I was like the foremost real. Like I should have focused more on my real estate and less I’d be less dependent upon having to swallow this horrific tasting pill and continue working at a company that I don’t want to work at.
00:34:09:12 – 00:34:28:14
Rod
Yeah, it’s a good story and I think that probably resonated with a lot of people. A lot of my listeners. You got to take action, guys. That’s the bottom line. You know, if you don’t, you’ll be in the same place you are a year from now, which is if you love where you are right now, no problem. But if not frickin massive freakin action, right?
00:34:28:14 – 00:34:34:11
Andrew
Yeah. And life changes. Something could happen that you realized. Look, I want to slow it down. I want to take a break.
00:34:34:11 – 00:34:53:02
Rod
That’s where I’m at right now. Yeah, actually, I want to look at life through a lifestyle filter. I’m traveling like a maniac, but. Yeah, yeah, yeah. Well, listen, brother, I really appreciate you coming in and coming all the way from Toronto, and I told you that on my bucket list, so I got to hook you up. When I go up, when I go over here and have you show me around, or at least tell me where.
00:34:53:02 – 00:34:58:15
Rod
So. But yeah, that’s been on my bucket list for a long time. And you said don’t go when it’s called.
00:34:58:16 – 00:35:00:10
Andrew
Yeah, everyone’s angry.
00:35:00:16 – 00:35:12:22
Rod
Yeah. Oh, God, No, no, no, no. Well, listen, it’s a pleasure to meet you, brother. And good luck with your with your. It’s not a start up, but it’s fairly new. Good luck with your company. And it’s very interesting. And I think, again, what you’re charging is very reasonable.
00:35:12:22 – 00:35:15:12
Andrew
So thank you. Thanks for having me.
00:35:15:13 – 00:35:15:28
Rod
You bet.
