In this episode, I interview Joel Grasmeyer, of App maker, Real Estate Tools. We discuss how the real estate investing industry, generally slow to adopt new technology, is dealing with and thriving with some of Joel’s awesome technology for real estate investing. The real estate investing industry is finally seeing some amazing technology to help both veteran real estate investors, as well as the newbies. We discuss how new technology can help investors, and touch on several of Joel’s cutting edge products. All of Joel’s Apps range from free, to a week’s worth of Starbucks! Please join us for this very interesting discussion!
Highlights of this show
- Discuss why real estate investors are notoriously late adopters with technology.
- We talk about where technology innovation is happening.
- Discuss how technology can revolutionize your business.
- Discuss how Joel made the shift from working for the man to being successfully self-employed.
Resources and Links from this show:
Listen to the Audio Version of this Episode
FlipNerd Show Transcript:
Mike: Welcome to the FlipNerd.com podcast. This is your host, Mike Hambright. And on this show, I will introduce you to VIPs in the real estate investing industry, as well as other interesting entrepreneurs whose stories and experiences can help you take your business to the next level. We have three new shows each week, which are available in the iTunes store or by visiting FlipNerd.com. So without further ado, let’s get started.
Well, hey, I’ve got Joel Grasmeyer here. Welcome to the show, Joel.
Joel: Thanks, Mike.
Mike: Glad to have you. And so we’ve talked several times at some different events about all the technology that you’ve created. It’s really pretty cutting edge for what I’ve seen, in a space that tends to not have a lot of technology yet.
Mike: The real estate investing world, it tends to be very much old-
school, at this point.
Mike: So you’ve got some really cutting edge things, and I want to learn a little bit about it. But first, would you mind kind of introducing yourself to the group here?
Joel: Yeah. So I’m Joel Grasmeyer. I’ve been developing apps for real estate investors since 2004. I started with web-based apps at a site called PropertyTracker.com. And then, when the iPhone came out in 2008, I said,
“Wow, this is a great device for people out in the field analyzing properties.”
So I did an iPhone app, and then the iPad app, and then the Mac version of the app, as Apple introduced all those different technologies over the last few years.
Mike: Mm-hmm. Okay. Okay. And so talk a little bit about your… I guess what’s your background prior to developing real estate apps? Did you start off as a real estate investor, or…?
Joel: No, I started out designing airplanes. [laughs]
Mike: [laughs] Okay.
Joel: So I grew up building model airplanes, and that was kind of my passion. So I started designing unmanned airplanes in southern California for about eight years, in the late ’90s and early 2000s. And when the stock market crashed in 2001, my wife and I got into real estate investing, because we said, you know, we’ve got to diversify out of just stocks and mutual funds.
Joel: Especially tech stocks back then, you know?
Mike: Right, right.
Joel: That was the big Dot Com crash.
Joel: And so we got into investing. We bought a bunch of properties. And being an engineer, I bought a bunch of software to analyze these properties and run the numbers before I bought them, and it was all pretty lousy. And I’ve been a Mac user since the ’80s, and none of it was Mac compatible. Not much of it was even web compatible, back in the early 2000s.
So I started creating my own, initially spreadsheets, and then database apps, and sharing them with some friends in these investment networks in southern California. And they said, “Hey, you should sell this. This is way better than something I paid $500 for last week.”
Joel: So I launched it as a little side business, and a year later, quit my engineering job, and I’ve been doing it full-time ever since.
Mike: That’s great. That’s great. And in terms of adoption, what do you feel is the biggest challenge? I know… like I said, a lot of real estate investors are… I mean, some of your tools, it’s kind of like cave man with laser gun now.
Joel: [laughs] Yeah.
Mike: So how do you create awareness that these things even exist?
Joel: I give talks at some real estate events. Just being in the App Store is actually the best thing I can do. Because when someone wants to find an app for their iPhone or their iPad, they don’t go on Google and search for that app. They go directly to the App Store and search for “real estate analysis” or something.
Joel: And I typically show up in the top few items in the search results there.
Mike: Sure. Sure.
Joel: So that’s the beauty of the App Store, is it’s kind of a meritocracy, where, you know, you don’t have to be a big company with a huge marketing budget to shine in the App Store. You just have to create a great product, and get good reviews and good word of mouth to other people.
Mike: Yeah. Create a lot of value. Yeah.
Mike: Because your apps are… I mean, what do they typically run for an app?
Joel: So the one most people on this interview would be interested in is called Property Evaluator. So it does a buy and hold analysis for rental properties. There’s a sister app called Property Fixer, for people that are doing fix and flip analysis. So in Property Evaluator, the holding period is 1 to 30 years.
Joel: In Property Fixer, it’s 0 to 12 months.
Joel: And so I make a standard version of that app free, where you can analyze a single property, and change the numbers on that property as much as you want.
Joel: And then for $20, you can upgrade to a premium version that lets you save multiple properties and email these PDF reports. And then for
$40 one-time purchase, you can upgrade to the pro version, which lets you look at multi-unit and commercial properties, do a portfolio analysis of multiple properties to do an apples to apples comparison.
Joel: And itemize your buying cost, selling cost, improvement cost, put in multiple photos.
Joel: And then for real estate agents and even investors, you can brand those PDF reports, in the pro version, with your name and your logo and your contact info, and then you can send that out to your investment partners, lenders, or your clients who are investing in properties, if you’re a real estate agent.
Joel: So yeah, for $40 one-time fee, you’ve got all that power.
Mike: Yeah. That’s incredible.
Joel: And traditionally, you know, an app like that, you know, as a desktop application would cost hundreds of dollars, sometimes over $1,000.
Mike: Yeah. Sure. Sure. I know people that have spent much, much more than that developing some apps…
Mike: …to try to do what you’re doing. So, yeah.
Mike: [inaudible 05:17]
Mike: And do you find… a guess with a lot of wholesalers, you know, some of the more credible ones, they tend to try to provide some… and I say “more credible,” and maybe just larger ones, because they have more access to more infrastructure support, resources. Do you find that many wholesalers are using your product to kind of validate to other investors when they’re trying to market a property?
Mike: You know, sometimes you can do contracting bids, but you could potentially use this tool to say, “Here’s,” you know, “here’s the repairs that I came up with, and maybe you disagree, but here’s what I have.”
Joel: Right. Right. So there are actually three different apps. Now that you brought up the repairs. There’s another app… so what happened is I started with the property evaluator app for the buy and hold investors. And then I had a lot of people saying, “You know, I do a lot of flipping properties, and I need a different app with a shorter holding period, and I do the calculations differently. I start with the after repair value and then subtract off my purchase price, plus my fix up cost and stuff like that.” And so that created Property Fixer.
And then once I had a lot of fix and flip people using the app, they were asking me for an app that they could use to do a 15-minute walkthrough on a property and quickly estimate their rehab costs. So I created this app called Construction Cost Estimator that does exactly that. But I kind of generalized the app so that any kind of contractor can use it, whether you’re a plumber, an electrician, or a landscaper. You can do a quick walkthrough of a property and put together an on-site estimate. And if you’re a contractor, you can have the customer sign off on it with a fingertip.
Joel: So a lot of wholesalers use all three of these apps in combination. They’ll use the Construction Cost Estimator app to estimate the rehab costs. They’ll plug that number into the Property Fixer app to see what their profit is on their end of the deal, just flipping it to someone else.
Joel: Who is an investor buyer. And then they’ll use the Property Evaluator app to create a branded report to send out to those potential investors who are going to buy that property from them, so that the investor gets a good idea of what their cash flow and return on investment is going to be over the next 30 years.
Mike: Right, right. So do the apps communicate? Do you share information back and forth, or would you have to input it again into other apps, or…?
Joel: Right now, they don’t sync, they don’t talk to each other. One of the things I’m working on is the ability to sync data between multiple users and multiple devices and multiple apps.
Joel: The challenge has been, Apple has this iCloud technology, they’ve had it out for a couple years, that enables this syncing. But the problem is they’ve had some nasty bugs with it. Another friend of mine put iCloud syncing in his app, and he had 250 emails the next day from customers who had lost data after a sync.
Mike: Oh, wow.
Joel: So once Apple gets that worked out, I’ll be implementing iCloud.
Mike: Okay. Okay.
Mike: Great. So what do you… where do you go from here? Are you just spreading the word about what you have, what’s in store for future development, and things like that?
Joel: Yeah. So I’m just incrementally improving all of the apps. I just did some major updates for iOS 7. So I see an iPad in the background there.
Mike: [inaudible 08:25]
Joel: So it looks like you’re an iOS user. [laughs]
Mike: You can’t see it in the front, but I literally just bought my first Mac. I’ve been a PC user forever, and…
Joel: Oh, congratulations!
Mike: Yeah, yeah. So it’ll take a little bit of learning, but I feel like…
Mike: I feel like… what happened is I had to replace a computer the other day, and I got Windows 8, and that was, like, the devil spawn, you know?
Mike: It was like, this is the end of the world if I use this, and I’m not using it.
Joel: You know, I talk to… I do tech support calls and emails with people every day, and I hear that exact thing quite a bit.
Joel: People switched to Windows 8, and they say, wow, this is totally broken to me. I’m going to have to switch to a Mac, or do something different.
Joel: Or some people downgrade back to Windows 7. [laughs]
Mike: Yeah. That would have been an idea. It’s actually getting easier to convert, I think, because, you know, as I… if I think about myself several years ago converting, it would have been much harder because of all the different softwares I use. Pretty much everything I use today, with the exception of Microsoft Office, is in the cloud or web-based.
Mike: So it almost is not as big of a jump anymore, so…
Joel: Yeah. Yeah, so I just released the big update for iOS 7. And that was a big change to the whole user interface for the iPhone and the iPad. Apple changed a lot of things on the surface this time.
Joel: So it was quite a bit of work to do that update. But now that that’s behind me, I’m working on a few improvements to the property evaluator and fixer apps. But then the big one I’m working on is a new app called Contractor Tools. So the Construction Cost Estimator just does on-
site estimating, but now that I have that out there, I’ve gotten thousands of emails from customers saying, “Well, now what I need is invoicing, and the ability to take a credit card payment in the app.” Basically, your complete on-site management solution for running your contracting business.
Joel: So that’s what I’m working on now, and that should come out next summer.
Mike: Yeah. So even with contractors, as I was thinking before the call, the contractors that I tend to use are not sophisticated at all.
Joel: Oh, I know. Yeah.
Mike: Or they’re… but not the type that I use, but a lot of other contractors that are out there. More of people that are serving owner occupants. Homeowners.
Joel: Yeah. Right.
Mike: They tend to probably be, you know, much more sophisticated. And so how do you find those folks? How do you attract them? Because they tend to be, you know, very old-school.
Joel: Yeah. A lot of it is word of mouth. I ask, when I’m on a call with a customer, I ask them how they found out about the app. A lot of them found out just by searching the App Store for “construction” or
“construction estimating,” and I show up pretty well in those search results. But a lot of them will hear about it from a friend of theirs who’s started using the app, and they say, “Man, you’ve got to use this. It’s time to get out of the stone age and come into the modern information age, you know?”
Joel: So a lot of it is that way.
Mike: Yeah. About the most sophisticated person that I’ve seen in my space is using… well, they’re using Base Camp, and they have a whole bunch of common task and common cost for…
Mike: …door handles or square footage prices, and, you know, they… but that’s about the most advanced that I’ve seen.
Joel: Right. Yeah. I mean, a lot of my customers are moving from a pencil and a paper and a clipboard to this app, because they got an iPad for Christmas or something like that.
Joel: And some of them have built their own spreadsheets over the years, and then some of them have been using, you know, clunky Windows desktop software over the years. And there’s just this huge shift going on right now from desktop computers, especially Windows computers, over to iPads. I hear from a lot of contractors and real estate investors that are using the iPad instead of a laptop. They don’t even use a desktop or a laptop anymore.
Joel: And they can do everything there.
Mike: Wow. Yeah.
Joel: So that’s the future. There’s an interesting statistic that Apple sold more iPhones and iPads in 2011 than all of the Macs they sold since 1984.
Joel: And another one is, back in 2007, the year the iPhone was introduced, Microsoft was the operating system for 90+% of all the internet connected computing devices. Today, Microsoft is on 25% or less of all the internet connected computing devices. Just because of iOS and Android, mostly.
Mike: Wow, that’s incredible.
Mike: So what do you think about, just generally, the shift in technology, like we talked about real estate investors tend to be very much old-school. And in all honesty, a lot of what creates value, a lot of the opportunity that exists for real estate investors, is the fact that the market is so fragmented and…
Mike: …there are no consistent technologies. And that’s really what creates opportunity for a lot of real estate investors. But what do you think will happen if all of a sudden the real estate market, the real estate investor market, becomes efficient? You and I might be out of business.
Joel: Oh, it’ll take a long time for that to happen, I think.
[laughs] There’s so many… you know, what I find, working in the technology space, especially in the real estate business, is that sometimes there’s a pretty easy technical solution for something, to write the software to do it. But the political inertia and turf battles in the real estate industry are what prevents us from innovating.
So the MLS systems are a classic example of this, where an MLS basically has a monopoly in their particular area, so they don’t have a strong incentive to innovate, and they do have a strong incentive to protect their data and protect their turf. So they don’t want other people using that data in their own apps to help users do more efficient stuff.
Mike: Yeah. We’ve had recently auctions, auctioned some houses off in some of the big auction sites. And we still list them on the MLS, and we still offer to pay a buyer commission. And in more than half the instances we do, the buyer is represented… you don’t have to be represented by an agent to go bid on a property, but if you want to see it and get access and everything, you probably are represented by an agent.
Mike: And they’ve kind of slapped us, saying, “You can’t put links in there to the auction site.” And, you know, they’re essentially trying to protect their own.
Mike: Which, it’s like, we’re willing to pay somebody, you know? But anyway, I understand. A lot of protectionism going on there, so…
Joel: Yeah, there is. Yeah.
Mike: Great, great. So what else do you see? Do you have any competitors in your space, do you see? Like, anybody that’s focused on the same things, or…?
Joel: You know, there are… these days, there are a lot of web apps out there that do real estate investment analysis. But I haven’t seen any competitor that has an app for the iPhone, the iPad, and the Mac that all kind of use the same data format and everything else. So I’ve kind of chosen that as my niche, to specialize in all of Apple’s hardware, building really user-friendly, native applications.
And then the other thing that I think… that I hear from my customers — and you can read the reviews on the App Store that say this, too — is I’ve specifically designed the format of the reports to be very clean, concise, and professional. A lot of the traditional real estate analysis software, even if it’s a native app for something like Windows, looks like a clunky spreadsheet. So it’ll be 20 pages of tables of numbers, and every financial metric under the sun.
And I specifically… you know, I get requests all the time for all these edge cases of different financial metrics that some people want to look at. And I’m a firm believer in opinionated software. And this is kind of like the Apple approach versus the Microsoft approach, where you really have to choose the 80% of features that 80% of the people are going to use, and then just kind of eliminate everything else, and then focus the rest of your effort on creating a great user experience.
And I think this helps people understand those reports. Especially, like, if you’re a real estate agent, giving this report to a novice real estate investor, if you give them that 20-page report with dozens and dozens of financial metrics, it creates a paralysis of analysis, where that investor says, “Whoah, maybe I shouldn’t be investing in real estate…”
Mike: Yeah. What am I missing.
Joel: “…until I understand what all these different numbers mean.”
Mike: Right, right.
Joel: And so it prevents the same, rather than enables the sale. Whereas what I do is I create a clean report with some simple graphs that say, here’s your cash flow, here’s your return on investment. And they say, wow, this… I understand this, because I see parallels to a stock or a mutual fund, and it clearly looks like a good deal. So, yeah, I’ll buy it. It looks great, you know?
Mike: Uh-huh. So any plans… you may have said this already. Any plans to do anything that’s Android-based, or you’re just sticking with…
Joel: Yeah, that’s a hard decision. There are a lot of Android devices out there, but there isn’t a good business case for making apps like mine for Android. If you’re making an app like Facebook or Twitter, where your goal is to reach as many eyeballs as possible, then Android is fine for making a free app. But from a developer’s perspective selling an app, Android is very fragmented in three ways.
So it has software fragmentation. There’s lots of Android devices still being sold today that run the Android operating system from three years ago, and it’s very difficult, if you have an Android device, to even upgrade it to the latest software. And the cell phone carriers, unlike with the iPhone, the cell phone carriers have a lot more control with Android, and they actually don’t want people to upgrade the software to extend the life of their phone. They just want them to come in the store and buy a new phone.
Joel: So a lot of times they make it very difficult or impossible to upgrade.
And then there’s hardware fragmentation. So on iOS, I know the screen sizes exactly and the hardware exactly for all the iPhones and iPads that iOS 7 runs on.
Mike: Right, right.
Joel: So I can design to that, and make a great experience for that. But on Android, you have an infinite number of all these different screen sizes, hardware, CPU, memory. And so it’s very difficult to make a great user experience, because you never know what size screen it’s going to be on. And so a lot of tablet apps for Android end up looking like a giant iPhone app, and it doesn’t really create a good user experience.
Mike: Right. Absolutely.
Joel: And then there are multiple distribution channels. So there’s the Google Play store, the Amazon store, all the carriers have their own stores. So now, as a developer, I have to upload every new version of my app to all these different stores when I do a post and update. And then a lot of developers I’ve talked to who have ported a successful iOS app to Android only make about 5 to 10% of the revenue on Android as they do on iOS. So it’s more expensive to develop, and only 10% as good in terms of revenue.
Joel: So, I mean, I’m keeping an eye on it, but right now it just doesn’t make business sense to do that.
Mike: Yeah. Okay. So what are the big things that you have coming out in the next year, 2014?
Joel: So the big thing will be the Contractor Tools app for contractors to do change orders, invoicing, and credit card payments within the app. That’ll be coming out next summer. And then just some incremental improvements to the other apps. I’ve got a to-do list of probably 200 features. [laughs]
Joel: With all the apps, you know, over the years, and it would probably take me a couple years just to build out those features. And it’s kind of tough just keeping up with Apple. I mean, who knows when the next iWatch is going to come out, or the iGlass, or some surgical implant that we all get from Apple. [laughs]
Joel: So I’m sure Apple will launch… or maybe an Apple TV next summer. So I’m sure they’ll launch something new next year, and then I’ll have to scramble to make all the apps work well on that, too, so…
Mike: Yeah. Yeah. So tell me a little bit about the business side. Because a lot of what… you know, I guess I am a real estate investor, and that definitely is what I do, but I’ve always considered myself more of an entrepreneur.
Mike: So I have a lot of things going on. And same thing for you. I mean, you’ve done both, you’ve worn both hats.
Mike: And they’re really kind of one and the same. But from a business standpoint, you know, you said you were able to leave your job a few years back and focus on this. And tell us a little bit about that kind of business side of your operation, and a little bit about… I guess what allowed you to kind fo make that leap to self-employment.
Joel: Yeah. Well, you know, I started it as a side business. So my advice to… I actually gave a talk at our local university in September on how to succeed as a solo entrepreneur. Because since 2004, I’ve been completely independent, just working from home, one-man company. I outsource my graphics and a few other things, but I do all the programming myself, and all the tech support myself.
And, you know, my first piece of advice would be is to start it as a side business. You know, don’t quit your job on Day One and expect overnight success. And really, you know, try to build something that scratches your own itch, or that solves a problem that you’re kind of an expert in, and really listen to your customers. I think that’s been the key for me to making a great user experience in my apps, is to really listen to the pains that my customers have, and really prioritize my development roadmap in terms of how often I get various feature requests.
So, like, a couple years ago, I had the app where you could just analyze, you know, different properties. But lots of people were asking for the ability to do a portfolio analysis, to compare multiple properties in a single analysis. So I added that. I made that a big priority, and added it, and made it a good user experience.
Joel: But it’s just amazing to me that, you know, this kind of lifestyle is possible. And it only became possible in the last 10 years. So think back to the… like, maybe the late 1990s. If you were a software developer, you would have to, you know, create your software, first of all, and then you would have to find a distributor in order to, you know, get any reasonable amount of success to be able to make it a real business. And they would print it on a CD or a DVD, put it in a box that was way oversized, much bigger than the CD or DVD.
Joel: So it looked great on the shelf. And then they would have to go through a few middlemen to get it onto the shelf of a Best Buy or something like that.
Joel: And by the time you sold that software for maybe $100, you might get $10 from that sale, because of all the middlemen involved.
Joel: And it only… only a few businesses… I mean, maybe hundreds of businesses around the world were able to get that kind of distribution, because the shelf space was so limited in the physical store.
Mike: Right. Right.
Joel: So these days, there are just so many things… so many enabling technologies that make this kind of business possible.
Joel: You know, now there are a million apps in the App Store. We have unlimited shelf space. It’s harder to compete to get the visibility on that shelf space.
Joel: But if you have a good app, you’ll get there.
Joel: But we have the internet, we have online payment systems, online app stores. All these different things kind of came together at the right time to make this whole thing possible.
Mike: Yeah. Yeah.
Joel: So it’s…
Mike: It seems to me that real estate, real estate investing, is a few years behind everything else, and some of the tools you’re building have existed in other spaces for a long time.
Mike: But for real estate investors, you know, there’s… we’re kind of on the… like a late adopter, I guess.
Mike: Technologies like this. So there’s obviously a huge opportunity for the products that you’re pumping out for people like real estate investors and contractors, for sure.
Joel: Yeah. Yeah.
Mike: Now, are you an active investor now, Joel? Do you invest in real estate yourself anymore, or…?
Joel: I don’t… I haven’t really bought any new properties in the last couple years, just because I’ve been so busy working on the apps. You know, I’m sure if I wasn’t doing these apps, I would be out there buying more properties, and fixing and flipping, and stuff like that.
Joel: But the last couple years, I’ve had bigger opportunities, you know, just working on the software itself than buying more investment properties, so…
Mike: Right, right.
Mike: Okay. Awesome. Well, anything you want to share with the group in terms of technology, or any upcoming events that you’re going to be at, anything like that?
Joel: I guess I can let people know about the websites for the apps. So if you’re interested in the real estate apps, you can go to RealEstateTools.com. That has all the different apps on there, and links to the different sites. And then the Property Evaluator app actually has its own website at PropertyEvaluator.com. And then the Construction Cost Estimator app is at ConstructionCostEstimator.com.
Mike: Okay. And I’ll have links to all of those below the video.
Joel: And there’s some videos there that people can watch. Yeah.
Mike: We’ll have links to all those below the video, too, so we can make sure people get access to that.
Joel: Yeah. Yeah.
Joel: And the other thing I pride myself in is great tech support. You know, if you call Microsoft or Apple, there’s… or you send them an email, there’s a very small chance you’ll be able to talk to a real person, and there’s a zero chance that you’ll talk to the person who actually wrote the software.
Joel: But when people… you know, I have my 800 number listed on my website, and people can send me an email anytime, and I usually respond to emails within a few minutes, if I’m actually working at my desk, or most definitely within the same day, and I answer all my phone calls myself, so…
Joel: People can talk to the actual developer, and request new features. And for me, that makes it… you know, that’s the big gratifying part about doing this job, is I get to talk to my actual customers every day, and they give me excellent feedback about the app. They tell me how they’re using it. And it just closes the feedback loop for me to put something out there, hear how people like it or don’t like it, and then respond to it, I don’t know, maybe that very next week with a change to a feature that makes it more useful to them.
Mike: Right. Right. Awesome. Well, Joel, thanks for joining us today on the show. You’ve got some great information and some great products that I’ve played with myself. I know some people that use them. And I think hopefully we’ve created a little more awareness for you here, to [inaudible 27:00]…
Joel: Yeah, thanks.
Mike: …products exist. So, yeah, thanks for joining us today, and the information. And I look forward to… I’m sure I’ll see you at an upcoming event somewhere.
Mike: So we’ll talk some more soon.
Joel: All right. Sounds good, Mike. Have a good day.
Mike: Thanks for joining us on today’s FlipNerd.com podcast. To listen to more of our shows and hear from incredible guests, please access all of our podcasts in the iTunes store. You can also watch the video versions of our shows by visiting us at FlipNerd…