Today’s REI Classroom Lesson
Adam Stern explains a change they’ve recently made to help get the right portfolios for the right buyers.
REI Classroom Summary
This recent change is allowing an easier way for owners to get their portfolios on the OwnAmerica site so that buyers can quickly have their needs met.
Listen to this REI Classroom Lesson
Real Estate Investing Classroom Show Transcripts:
Mike: Welcome back to the flipnerd.com REI Classroom where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Adam: Hi, my name’s Adam Stern, I’m President of OwnAmerica. I’ll be your host of the REI Classroom for today. OwnAmerica of course is the premier online trading platform for SFR portfolios. I wanted to talk to you about kind of our path and what we’ve done at OwnAmerica in terms of developing this marketplace of single family rental property portfolios for sale because it hasn’t been an easy path. It hasn’t been a marketplace that has been easy to develop and easy to get systematized and I think we’ve done something that most people that either own portfolios or want to buy portfolios would like and would want to know about.
Mike: This show is sponsored by Passiverental.com.
Adam: So originally OwnAmerica, when we first started doing portfolio sales, we would act more or less like a bond trading desk where we had a large amount of sellers we were contacting at any one point and a lot of portfolios that were coming to us and our kind of claim to fame and what we were good at was attracting these portfolios and formally packaging them so that any buyer that looked at them could expect to get uniform packaging across the board.
And when we’d have a seller and when we got the ability to sell the portfolio we would take it, package it, call every single one of our buyers that we knew had a buy box that overlaid with the portfolio and try to make a match where we could. It was an offline, very tedious kind of manual way of doing it.
And later on we launched OwnAmerica.com which was our website that allowed an owner to upload their portfolio, get a free instant valuation and analysis of their portfolio. By virtue of offering free technology and free data we were able to attract a lot of inventory all over the country of all types. So portfolios of distressed, lower end properties at low rents and needed some rehab all the way up to the Class A typical well-polished, well-rehab, well manicured, well run portfolio.
And there was an issue because we attracted a lot of inventory, about $4.2 billion in the last eight months, but a lot of that inventory didn’t fit the buyer needs of the people we had looking for portfolios in our platform. So it was a small segment of the portfolios that we listed that actually had a ready buyer base for it and what we realized was there was data out there that can be bought to tell us exactly who the owners of these portfolios are and exactly what properties they owned.
So we went ahead and made data deals with a few different companies to buy the information of all the owners that own six or more portfolios in the United States which told us every property that they own, every address, all the data about the properties, what their assumed valuations were, what their assumed rental rates were. And now we’re going about it in a little bit different way which is we’re pre-enrolling portfolios for owners and creating statements that we are sending to them via mail.
So you got a statement in the mail, it looks like a Fidelity statement or a Merrill Lynch statement and it says, “Mr. Smith, your 54 SFR portfolio statement is enclosed,” and what you get is a nice well-heeled statement that tells you exactly what your portfolio’s worth or roundabouts, what it should be throwing off your rental income and what the return metrics are and it invites you to claim the portfolio at OwnAmerica.com.
By virtue of claiming it you have the opportunity to press a button and get that portfolio listed and shown to all of the owners that have buy boxes that overlap with what your portfolio is, where they are, the returns that they throw off. And by doing this we are creating a targeted match-making service where we’re attracting the right kind of inventory for the right kind of buyers and providing a connection between the two where deals can be made.
This kind of portfolio marketplace target and match-making is something that’s different than the way most everyone is doing it nowadays. We always talk about the SFR market and our role in it is not fishing for sellers and buyers but actually diverting the entire stream into a little pond where we can fatten them up, make deals happen where appropriate but also put them in a place where they’re able to actually get services that are shown to them through the prism of their portfolio statement that they either get mailed or that they can get access to any time online.
Our hope is by creating a more friction-free omnipresent marketplace where these portfolio owners can go, we can give them a place to actually, you know, list their portfolios and find other services that they need to manage their portfolios.
So it’s kind of a heads up on what we’re doing, what we have coming at OwnAmerica. Hopefully you found that interesting, hopefully you can meet us and see us on ownamerica.com. If you have any questions feel to email me, [email protected] Thanks for watching.
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