As a result, people are going on Craigslist or Facebook marketplace to find rooms or roommates. But without a reliable background check, this process can be a major safety concern.
What if there was a more elegant way to fine-tune the process and put technology on top of it to elevate the rental investing and home sharing process to a whole new-level?
Brian Charlesworth joins Johnny Wolff, CEO and Founder of HomeRoom, as he shares how he started his company, the failures he encountered along the way, and how the lessons he learned from his experience has driven him to be more committed than ever to his mission.
Top Takeaways:
(02:48) How HomeRoom was born
(04:33) What does it take for real estate agents to stay in the game?
(06:15) The first near-death blow that HomeRoon faced
(10:30) How HomeRoom survived COVID
(14:28) How technology helped set their company apart from their competitors
(17:27) What is HomeRoom doing on the marketing side
(19:52) How the current market situation has affected their business
(23:44) One of Johnny’s main motivation
(25:42) The seven steps to finding a home room
(33:33) Johnny’s advice for someone starting or growing a business
Connect with Johnny Wolff
Website: https://livehomeroom.com/
LinkedIn: https://www.linkedin.com/in/johnnywolff
About the guest:
Johnny Wolff started his career in real estate investing in Silicon Valley ten years ago. In 2015, he was working at a bank, and realized that San Francisco real estate prices were going to be out of his reach for a long time. So he moved to Austin and started to invest heavily in real estate.
He quickly bought a number of properties and rented out each of those homes by the bedroom. It was his first taste of property management. One positive thing he got out from that experience, other than learning real estate, is that when he shared his returns to his friends back in the Bay Area, they were really jealous. So much so that they wanted to invest themselves.
In 2018, Johnny moved to Kansas City. He started buying other homes, renting them by the room, and also offering it to other investors. Thus HomeRoom was born.
Today, Johnny Wolff is the CEO and Founder of HomeRoom, a Y Combinator-backed residential real estate marketplace that simplifies remote investing and streamlines affordable renting. Our marketplace connects rental property investors seeking a turnkey experience, with renters seeking quality and affordable coliving housing.
Johnny is also an official member of the Forbes Business Council.
Episode Transcript:
Brian Charlesworth 0:35
Hello, everyone, and welcome back to the Grit Podcast. I'm Brian Charlesworth. I'm the founder of Sisu and your host of the show. And I'm excited for today's show. Today's show is with another founding entrepreneur that you know, when we talk about the Grit podcast, this is what it's about. There's a lot of Grit required from everyone in real estate in today's market. We all know that. But Johnny Wolf is with us today. He is the founder and CEO of HomeRoom. And we're going to dive into what homeroom is today. And I want to give a little bit of Johnny's background. He started actually, his career as a financial analyst in the Bay Area. So got to play around in Silicon Valley for a few years. And then he was a scan disk and a couple of other companies. He then moved over to Austin and became a real estate investor. And you know, that's quite a change. And then he went from being a real estate investor to building a business that helps other people be real estate investors, which is homeroom. So anyway, I'm excited to dive in today, Johnny, what else do you have that you'd like to share as far as an intro on your background?
Johnny Wolff 1:39
Thanks for the intro, Brian. Really nice to be here. Yeah, I mean, I really liked the name of this podcast, when I saw it. I was like, I was excited that I was booked on it. Because Grit I think, is, I don't know, it's gotten a lot. It's got a little bit more press lately, but I think it's like the core to entrepreneurship. But real estate, especially is a gritty, gritty existence. So our company, we rent properties by the bedroom, and we went through COVID. And so like, took a lot of Grit and determination, kind of like you could see like the, you know, the grim reaper of the company, like, like, kind of over our shoulders like the whole time. Yeah. So yeah, it's really cool kind of conceptual. So just a bit more about my background. Yeah, I started my career in Silicon Valley. And I was there for about 10 years ago, I was investing remotely, and parts of Texas in oil country there, in Midland, and actually went out there one time, and saw my house, but mostly, it was fully remote and just blind trust in the property management company. And that was a fairly good experience, although I wanted more from the property management company in terms of, you know, value add and, and so that was something I had in the back of my mind, for a long time. In 2015, I was working at a bank, realizing that San Francisco real estate prices, were always going to be out of art, we're gonna be out of my reach for a long time. So I moved to Austin, and to just really invest heavily in real estate, I've quickly bought a number of properties and rented out each of those homes by the bedroom. And so it was my first taste of property management. And to make it you know, more exciting I had, like, dozens of roommate tenants, which makes it a lot more fun than renting out to a single family who just paying their rent on time. You know, it's you've got like the roommate dynamics, you've got, you know, you've got the inner you know, there's, it's a, it's a social environment, right. And so you there's some management to that as well. But one thing that was really positive from that experience, other than learning real estate, like, you know, really cold is that I shared my returns with my friends back in the Bay Area, and they're really jealous, which is sort of the number one emotion you want from your friends. Yeah, when you share like your returns, you're like, you want the jealousy and they wanted to invest while I was investing. But there was really no way to do that without moving to town. There was just not a clear way to do it. So I moved to Kansas City in 2018. Started to buy other homes, rent them buy the room, but also want to offer it to other investors. And so that's when HomeRoom was born was and so we've been going for four years now. Definitely had some ups certainly had some downs, but it's been a fun journey that's gotten as we've learned the business better, it's gotten more and more enjoyable each day.
Brian Charlesworth 4:20
Yeah, well, congratulations on getting to where you are. today. I'm excited to learn more about the business before we dive in deeper to the business. I'd like to just dive a little bit deeper into some of the challenges I mean, people in real estate we all know NAR has announced that by the end of this year, there will be 30% Less realtors, so 30% of the business will be out and I think that is possibly an understatement. So what does it take to stay in the game? I know personally, having started multiple companies every time I started a company, you may have one or two people that believe in you but usually have dozens who don't you know people are going to tell you you're going to fail left in Right, you're gonna go to investors, which, by the way, if you guys raised investment money, yeah, we have. Okay. So when you go to investors, you know, the number of nodes you have to go through to get to a yes. Is a lot. At least for me, it's always been a lot for me. So I don't know,
Johnny Wolff 5:16
a lot, a lot, a lot for us too. Yeah, same story for a lot of founders. I know. Yeah. Yeah. So
Brian Charlesworth 5:20
I just want to talk about like, what are some of the challenges that you've faced in this journey of, you know, you're going out, you moved to Kansas City, you start investing, you're buying a bunch of properties in Austin, your friends are like, hey, I need these returns. I have a nephew, I told you about this. But I have a nephew who buys homes and rents by the room near college campuses, and he makes a lot of money, like he makes way more than you would make by just renting your house to one person. So I think it's a great model. But what is it that as you've started this business, and you said you made it through 2020? Maybe let's go back to 2020. And talk about how did 2020 impact your business?
Johnny Wolff 6:02
Probably jump one challenge. And then earlier, which I pointed out earlier, great. Let's do one more. And then I'll do that I'm going to jump into 2020, which I would say is definitely like the second one, we face the first, like near death blow that homerun faces, you know, I did the financial modeling in 2018 of what the company was going to be, you start like really excited about it, you're like man renting by the rooms, I just did it. As you know, I can a few homes, and this is gonna go crazy. So we added 10 homes really fast. When we launched the company, I hired a bunch of like part time people off Craigslist, and we were running around leasing rooms, but we couldn't, we launched in winter. And so like I didn't really understand leasing season and I had come from Austin, where the demand for roommates didn't really matter what season it was. But Kansas City, the demand is strong, but there's a bit more seasonality because colder. And so I ended up having to let go my Craigslist team, you know, they're all making like $10 an hour, we all and it was hard because we had 10 people excited, it was like it felt like we had some momentum. But we I would just burning through my eyes taking out money out of my retirement account to start the company. And I was burning like all of it to the ground. And so I ended up having to cut the whole team down from that team to like two people in one other guy. And we just worked on fine tuning the process for like a year. And it was like we didn't grow very much. We'd added 20 homes in like five months. And then we just did nothing for like six months when we fix the operations, how to add tenants how to do it more efficiently. It was super painful, though, because we had gotten we had to build a pretty close team.
Brian Charlesworth 7:37
It's always hard to fire people. Number one, it's always hard. That feeling of you don't have enough cash. That's a hard thing, right? Are you taking from your personal? Maybe you took it down to nothing? You know, that's a super hard thing to do. And the reality is, you know, I hear when I watch the news, I always hear of these overnight successes, right? But then you talk to the entrepreneurs. And I just talked to Greer, who just sold his Boomtown CRM in real estate. And he said, Yeah, it was a 20 year overnight success. And I think that's I think that's the common theme, you know, people are in the grind for years, and people just don't see what you're going through as an entrepreneur. And then all of a sudden, things just take off. So, so that was your first big stumble. And one of the things you probably realized that as as an entrepreneur, I need to be able to do whatever it takes, right? I need to work, all aspects of the business. I think that's the difference I see with employees. I see employees that come in sometimes. And I'm thinking of certain thankfully, my business, my employees are all super driven. But in some businesses, I see employees that you know, they come in and they're not willing to get their hands dirty, they're not willing to do whatever it takes, right? They're like, oh, I need someone underneath me to manage that will do that. So you guys got to dig in do that. How did you get through that though? How did you start growing in after that?
Johnny Wolff 9:05
You know, the process for our leasing was we were going showing the rooms in person. So I had like these Craigslist folks running around town doing that. And the tenants liked it because I got an in person tour, someone talked about the company. But it just was terribly inefficient and super expensive for that stage of the company. So when we had to cut and it was just me on a computer in my basement, and one of the one of the roommate houses, I realized, like we should probably be doing remote leasing because I can't drive around the entire city like I'm gonna lose my mind. And so I started to we deployed smart locks to all the houses. And we started to do we did video tours of all the properties that became Matterports. And so then we started to do all of our leasing online.
Brian Charlesworth 9:48
So do you guys still use Matterport today for that?
Johnny Wolff 9:51
We do.
Brian Charlesworth 9:52
Okay, cool.
Johnny Wolff 9:53
So we were the kind of the change and like the it was, it was really sad. I mean, like, because it went from like grabbing parties that the roommates with all these people that were employees to just like be in a basement and one other guy who's doing maintenance,
Brian Charlesworth 10:06
that you went from all this social interaction, to, I'm in my basement on my own doing the grind, I have no social interaction and it totally different life for you.
Johnny Wolff 10:16
Totally different life it was I was like a king. And then I was just like, you know, just this dude in a basement, like trying to not burn all his retirement money. So, but that forced me to like, look at the unit economics of how we're doing things. And so before COVID hit, and this is why we survived in 2020. And that's kind of why I wanted to talk about that piece. We had sort of deployed things, not because we're necessarily like, super brilliant, but mostly just like out of necessity we had, I had no way of driving from North Kansas City to lathe, it's like a, like an hour between those two, and also doing the back office stuff. So it's just like we're gonna do fully remotely seen via video, people will sign the lease, the roommates will give tours. So we streamline the operation, the unit, economics of the business, like 20 acts versus what we were doing previously, because there was only one person and I couldn't actually physically do it.
Brian Charlesworth 11:09
I'm guessing the roommates actually like to give the tours so that they can get to know whoever is going to be moving in, I wouldn't want to do that if I was roommate is probably been a good change, right?
Johnny Wolff 11:19
Because at first, the roommates did not like it. They're like you're basically making us do work. But then we're not what we found is like, once new roommates come in, and it's in the agreement, they know they have to do it, it just becomes the expectation. So I've learned a lot about resetting expectation with your customers redoing processes. And if if someone comes in knowing that that's part of their customer responsibility, then usually they're fine with it. It's the big it's changing existing behavior. That's really difficult. Yeah.
Brian Charlesworth 11:47
Okay. So you've gone from that you made it through 2020. How many homes do you guys have today?
Johnny Wolff 11:52
We have about 200.
Brian Charlesworth 11:54
Okay, so you've gone from 20, back then to 200. Today, congratulations. You guys have 200 homes and how many rooms? does that equate to?
Johnny Wolff 12:03
About 1200? So the average is six.
Brian Charlesworth 12:06
All right. So the last question I wanted to ask about that is how many different states are you guys in?
Johnny Wolff 12:12
We are in seven states. Okay.
Brian Charlesworth 12:15
Okay, Is your goal to be across the entire country, every state
Johnny Wolff 12:18
that we've identified 1000 cities, roughly, I mean, like I say, 1000, because like, sounds great, but it's a little bit over 1000 that we see enough migration in and out of the city. That's one of the key indicators to need for rooms, as well as kind of some other economic indicators that can support roommate housing. Now, maybe not, it's going to vary by Metro and by pricing, but we want to be nationwide, and eventually go international.
Brian Charlesworth 12:45
Okay, great. So let's talk about your process, then. So you guys are doing a lot of stuff, right? You're buying homes, you have a fund. So let's just start. And then you're also doing all of the roommate finding, and property management. So it's a pretty wide spectrum of stuff you guys do. So I'm guessing your employees like you've got a pretty broad spectrum of people from being on the funding side to being over here on finding a roommate, and managing the property, making sure whatever it needs to happen to happen. So that's a pretty broad spectrum.
Johnny Wolff 13:21
Yeah, and we do software development. So it's like, yeah, it's, it's a crazy company we have, we're probably like we have one of our VPS is, you know, former construction manager of 1000. He's done a 1000s of homes. So we're like an entry. It's just as a collective group. We've got people that are from apartment leasing, we've got people that were from construction teams, we have software to people who have developed software, like VC backed startups, data scientists from Facebook. So that's a pretty, pretty wide range.
Brian Charlesworth 13:52
So let's talk about your software platform first. Obviously, that's how you attract people, both the investor side and the roommate side, I'm guessing. So definitely, let's talk about the size, how many developers you guys have?
Johnny Wolff 14:05
We currently have just one part of developers, we have four developers, we have an engineering manager, CTO, QA person and a product person. Okay. It's a pretty meager team at this stage. But we're a seed stage company. So we're trying to be prudent with our with our capital.
Brian Charlesworth 14:21
A lot of times, I've found it's easier to get things done quickly when you have a smaller dev team. So anyway, so that's great. So what is your focus as far as technology like what sets you guys apart? Do you guys even have competitors in this space? I know you have people like my nephew, but do you have competitors in this space?
Johnny Wolff 14:37
Yeah, there's a few competitors. There is better out of Atlanta that does, I would say they're just we're generally like, you can see that one of our houses behind me it's pretty nice. Like it'd be I'd say like a B classroom and experience, if that's the category that just kind of created just now but they're more C class. I would say the credit their income and credit score is a bit lower, but they also have a bit higher yields just like you know, single-family homes. In the car, the C class neighborhoods, and then there's another competitor out of the bay area that's a bit higher. And so we're kind of right in the middle, we think that we're in the sweet spot, which is exciting. And what we try to do with our technology is, is really to enable roommates to like, digitally shop for rooms and select the right room for them, and apply quickly and get a response super quickly. So it's really about fine tuning, the leasing fly well, and then we have a number of like,
Brian Charlesworth 15:26
just to clarify on that. So the roommates are going online, they're putting in their, you know, the city they're putting in, do they want a single room? And obviously in there, they're basically saying, These are the homes that come up. These are my different options as far as rooms almost like going to Airbnb, but me trying to find a room that I want to live in. Yep. And then I'm very similar. And then I'm hitting submit, and the roommates are getting that. Is that how that works?
Johnny Wolff 15:52
We'll screen them with background credit and eviction history first before they can pay rates, but them talking to the roommates is one of the steps. Yeah. So the but yeah, so you'll go in, you can kind of zoom in just it's very similar to Airbnb. We did not copy them. No, we kind of did a little bit.
Brian Charlesworth 16:08
Why not? Right? You've been other everyone's been on the Airbnb site, you might as well do something they're used to. And I've been on your site and been through that experience a little bit. So
Johnny Wolff 16:17
yeah, and you can do the virtual tour and see the house and how it's laid out. And then you can apply really quickly, we're actually even we have a new V two coming out with a roommate application process even more fine tuned. So it should be something that you can apply in like three minutes on your phone, you can get a response within an hour. And so that's kind of if you got accepted or denied, then you go the next step, which is meeting the roommates and sign a lease digitally. And then you get your key code of event. So we're able to do this in seven cities with a relatively small team working fully remote.
Brian Charlesworth 16:47
So it sounds pretty simple. This process sounds simple. But is it right? I mean, I think of my sales team, and we have an SDR team that takes these inbound leads, and schedules appointments. And then from there, an AE takes that over. And you know, they'll work with that customer client to get them to move forward with us. And then our success team takes them over and you know, there's all these steps with you here. Like, it would seem like if I think about Airbnb, which I have homes on Airbnb, so, you know, somebody just comes in and they do their stuff. I don't have to do any marketing. It's just on Airbnb, here. What kind of marketing do you guys do? Because I'm sure, I mean, homerooms a new name for a lot of people. So what do you guys do to drive people to that site?
Sisu 17:37
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Johnny Wolff 17:46
We use all the same stuff that a property manager would use as a baseline, which is like the syndicated sites are on all of them. And we have all of our rooms listed there. Then we also do Facebook ads on occasion, we're on Facebook marketplace, Facebook roommate groups, there's a bunch of roommate matching apps that we're on. And so we have a bunch of accounts or admin accounts around there. There's some actually roommate housing sites that have kind of become that are trying to become like the bookings.com, essentially, that we utilize. So it's there's a number of things that we're doing all the time of Craigslist, of course, and which is like the OG so we're on there. So we're on everything. And we're doing our best to hack each of those systems to maximize the number of leads that are kind of like we're pushing onto the website. On the tenant side. We don't have like the junior and senior sales exec, we just have a leasing consultant, they just close it's a pretty quick sale, we do have a customer success member that onboards the tenants and provides them that stuff. So it's because it's like not a, you know, it's not an enterprise-level sale. It's a bit, I guess, more pared-down version of that sales process.
Brian Charlesworth 18:53
Okay, so it sounds like six of your employees are focused on the development side or technology side of the business. How many employees do you guys have now? 45. Okay, so it's bigger than I thought. So the rest of these employees are focused on Okay, we have 200 homes in seven states to manage and make sure that people are in every room and you know, doing what they need to be doing. So let's talk about what other challenges you guys have faced. I know 2020 was not your only other challenge. So I think it's important on this podcast, I really like to hear the challenges because I think it's it takes a unique individual to really go through this many challenges and keep moving forward. And if everything was right, and the thing is it takes you a unique personality to go through and do this, otherwise everyone would do it. Right. So has this market that we're in right now affected your business at all.
Johnny Wolff 19:56
Yeah, it's been a big challenge really, because, you know, one of the others As the business is the sales to investors, right, we're gonna It's a turnkey company, essentially, for real estate investors who want higher yield. And both interest rates up prices, skyrocketing prices, doing crazy stuff all over the place, selling real estate has become harder. It's like, it's an asset class it's focused on that's really about stability, that's like, hasn't been all that stable. The last, I don't know, 18 months, we feel like it's getting there, right, we're seeing injuries come down, we're seeing prices kind of level out a little bit. So we're feeling we just need a normal real estate environment more or less to be to have a really great product. But when things are going all over the place, it's hard. And so a lot of our revenue is derived from selling those properties. And so we've had to do, you know, a few layoffs, we've had to tighten our belt quite a bit over the last nine months. It's been hard, right? It's a company that, you know, after 2020, we just, we were having a nice string of victories. So we just had W's for a while. And I think I got a little complacent because we were having, we're just like really on a nice streak. I was like, We're doing great. I took my and I kind of took my a little bit off the ball and some of the pieces that were scaling to the next level that needed a different level of oversight that we previously had. Yeah, and so as so that was happening as the market was crumbling. And so we ended up having to make some really big changes on how we do leasing, screening, collections, maintenance, all these things that like, probably could have been a little bit better. But we grew 5x in one year. And so things started to kind of the processes we had in place that were really good starting to burst at the seams because we weren't able to scale them at that speed. Right. So we weren't because we went from like 75 homes to 200. And like 12 months, and that are no, that wasn't it was like 32 Yeah, that's that was something like that. And so it was in 15 months. So that was a that was an interesting experience. And like all of us felt like failures, for sure. Like, you know, we felt like failures for three months until we like finally were able to turn things around.
Brian Charlesworth 22:00
I think it's the hard times that make you sharpen your skill set, just improve the processes. And that's what makes you come out stronger. So if you never had the hard times, your company wouldn't be nearly as strong and built for the long term. So that's my opinion. That's my experience in the many businesses I've started. So you talked about layoffs, how many people did you have to layoff and I asked you this, because when I was in my 20s, I had a company that had about 200 employees, a technology company, and I had to layoff 100 people in a day. And that was one of the hardest days of my life. And it's actually taught me to not over hire, and more bootstrap companies. And I don't know if that's the right thing to do or not. But that's my philosophy after that experience. So tell me what that was like for you.
Johnny Wolff 22:50
Yeah, I mean, I honestly, I think the initial firing in 2019 of the team, because at that point, we had a lot 12 people and we were in living rooms together. And we were going to event we had community events together. And we were like, building this thing are all very excited about and they all reported directly to me. So and I had to lay off 90% are right, I was down to one. And so that was definitely the route that was so painful. And this layoff we like
Brian Charlesworth 23:17
why did you keep going? Like at that point, why not just stop?
Johnny Wolff 23:21
Maybe I should have?
Brian Charlesworth 23:25
No, I really want to why? Why was it inside of you that, like, kept the drive alive? Obviously you believed in something, I think if you don't have a why, behind what you're doing, if there's not a real purpose and something you're trying to achieve, you're probably going to give up.
Johnny Wolff 23:43
Yeah, I think, you know, one of the motivations is sort of just a, I think I have a need to do something significant. I just felt like, you know, my life had been good, right about a really good life. But I wanted to do something that like impacted the world, something larger than yourself. Yeah, something larger than myself. And like, now we've helped 1000s of people. And so I feel like at this point, like, are we reached our potential? No, but have I done that? Yeah, I mean, people are paying half the price of rent of an apartment, and they're living really well with homeroom. So I'm really proud of that. But that was a drive I just, I needed to do something more than be like a VP of Finance at like, a Silicon Valley company, which is you know, lucrative. You get great benefits, all that stuff, but it just didn't feel like it was enough for me. And the other piece was I lived in remote housing in the Bay Area and like found roommates on Craigslist and like, we'd always worked out pretty well but then I moved to Austin and I had to find roommates again without a social circle just it was painful. And I found a great roommate are still friends and and then I found other great roommates but it just seemed like is this really the best option here? Like for shared housing because you know, the number of people that are living with roommates has gone up as more than doubled on a percentage basis and it's quadrupled on have total bases in people's 20s Over the last like 30 years. And so there's all these people just like emailing each other on Craigslist or Facebook marketplace, which just seems thrill janky there's no background checks, I had a few dicey experiences. And it just seemed like the market was big enough, and needed enough to have something that was more elegant than I think is probably the same feeling you had when you're in a taxi cab or the guys in Uber and taxi cab, like, is this the best option? Because it this cab is, you know, not enjoying this. But everyone needs rides, right? And so I felt the same way about roommate situations like, can someone put technology over the top of this and make this better? And no one was, so I was like, I guess I'll do it.
Brian Charlesworth 25:42
So that being said, I know you guys have seven steps to finding a home room? Can you walk us through those steps?
Johnny Wolff 25:49
Absolutely. So in terms of the tenant side or the investor side?
Brian Charlesworth 25:53
Yeah, let's first hit the tenant side. And then the investor side, because we're you, we're talking about you as a tenant, like how, how do you find roommates? Right? So let's talk about that.
Johnny Wolff 26:02
Yeah, so you'll come in, you'll talk to us. So the first step is, usually we'll find you on the internet, or you'll find our website, and you'll put in your information submitted. And we will reach out to you within usually five to 10 minutes, sometimes one minute via text and say, Hey, how are you doing? For HomeRoom, we're happy to help you out here. These are the criteria for living in a home room, we have a clean background and eviction, as well as credit above 560. Above 640, you'd be a preferred tenant, and you have to apply extra deposit. So that's how it basically starts with the first screening, then we give you an application where we actually run it to verify those pieces of information. Once that's complete, we do a quick video call with you and connect you on a video call with the current roommates of the house. And the current roommates. It's more of a meet and greet and like interview like we don't from a fair housing standpoint, the roommates have some veto power, but it has to be for reasons of safety or anything or something like that, like if we miss something that was safety that that the roommates see that that that background and our video screen didn't see, then we'll listen to that and potentially tell the person they can't move in. And then once they've done that, they'll pay it we'll give them the access to the HomeRoom resident app, we have an iPhone app and the ice, the App Store and Google Play, and they can go in and pay their deposit, as well as sign their lease, and then they'll get a key code that will activate the first day of their lease and they can move in. And that's it from there, you know, it's, it's pretty, they'll have access to our support team via text, we do cleans internally, and we do extra yard care, we do community events. So it's a pretty cool environment to live in. And our goal is to remove all the negative aspects of roommate living, so that people can just really enjoy living with other people, which I've always really enjoyed as well. And so it's like, the things that always like annoyed me, which is like the dishes or no one's cleaning the, you know, the bathroom. Our goal is to really solve those. So that like the tension can be minimized in our houses
Brian Charlesworth 28:01
that definitely Ira think back to my college days, that definitely creates tension. So you guys do that? How can you have someone come in and clean and do the hard work and all that kind of stuff.
Johnny Wolff 28:10
The cleaning is once a month, although we actually have Ark. And this is this is something for the investors, but also just for the sanity of everybody in the house, the mains actually will score the house for cleanliness. And if you get a failing grade, or as a D, or F, we will send the maids again and build the house. So it's like you have to keep your house a certain level of cleanliness. It's not like crazy clean, but it's like, if you're not cleaning at all, then you will be paying more. And so we try to use carrot and stick. You know, we prefer that you just clean up after yourself. But if you don't, then the maids will come more and more frequently until it's reached the level of cleanliness that we need it to be.
Brian Charlesworth 28:47
So it'd be good to have them go once a week. And these guys think yeah, you're gonna have to build the roommates for it because they're not taking care of her.
Johnny Wolff 28:55
Yeah, I mean, if that's still too bad, we've never updated more than once a week. But if that's still too bad, we'll go more like it's like, the goal is to you kind of like create it help us create a good ecosystem for everyone to live in. Or you will gradually have to pay more and more and more. And maybe it will push you out of the community. Right? So we want good citizens and we have multiple ways of like ensuring that people are.
Brian Charlesworth 29:17
Okay, so let's move over to the investor side if I'm looking to invest in real estate, what can you guys do for me?
Johnny Wolff 29:23
Yeah, investing you know, so we like to say you're gonna make 30 to 50% more rent in the same exact house. So we have, we have a number we have a few that have gotten 80% more rent or it's this home would rent. You know, if you look at the comps would run for 1750. You bring it over to HomeRoom, follow our kind of protocol and, you know, the total rent is 2855 or something like that. Not only is it more but it's a bit more stable because you have multiple tenants paying on different lease lengths. So if someone leaves you still get, you know, five, six of the rent and that month, so there's not that. One of the things that, you know, I had one month when I was at my properties in Midland, and a family just left mid lease, they didn't do any clean. It was like seven grand. I was like a junior financial analyst. And I didn't get rent for two months, because I had to do all this work. And I was like, Oh, it was like, it was very tough. I had to borrow money from my parents. So this type of investment, yeah, that's not how it goes, right? You have one person leave, we're always in there every month reviewing it, and you just kind of we just clean the room. And the tenants are supposed to do that. And then we get it rented, again, relative really quickly. So you don't have those big divots? Yeah. And so to get a home, you come to us, you will talk to our investments team. They'll talk to you about markets, where in seven markets, it enables us to not be as biased, right, because we can say we have a lot of options here, which is your preferred type of return. Do you want like a yield market like Indianapolis, you want an appreciation market like Austin, it's really up to you, right? We're very we don't, we are not really biased, right? We just here to help you find the right fit. And then we'll begin our underwriting team will source deals for you using our data models. And there's technology on that side as well, where we're underwriting, we have a huge data set of millions of room rentals that forecast room rents rates for these properties.
Brian Charlesworth 31:17
So you're sharing that with the investors as they're looking at what they want to do.
Johnny Wolff 31:22
Exactly, that's driving kind of the returns forecast. Yeah. And then we'll connect them to a real estate agent, once they see a home, they like make an offer, purchase, and our construction team will manage setting up the home. And sometimes that would mean adding bedrooms, it will always mean furnishing it, then we'll do a matter port. And then we'll send that back report to the owner and say, Hey, your home's ready to go, we will have started pre leasing it before the home has launched, to see if we can get some tenants to move in on the first day. And then we'll take it from there. There's just property management here distribution every month, we're here to answer questions. So that's how that works. And the goal is to get, you know, six to 13%, cash yield and try to get an ROI and 20, 20 to 30 range on these properties. So great.
Brian Charlesworth 32:06
Well, if you want all the top teams in real estate to work with, we have those on our platform. So let me know if you want us to introduce you to some of those across the country.
Johnny Wolff 32:15
I'll probably follow up on that, because we were about to start an affiliate program. And that might be a great fit for that.
Brian Charlesworth 32:20
Yeah. So we have 3500 teams across the country that could definitely provide you guys with top service. So all right, so the one thing we didn't talk about was the fund side, you guys also have a fund, let's talk about that really quick, just so that everyone understands what you guys are offering full scale.
Johnny Wolff 32:38
That's called the Coliving fund, and is a seventy, accredited-only $75,000 minimum investment. We just launched it last May. And we oversubscribed it which was exciting. So we're probably gonna expand the offering the pool and do another raise on that fund one. And fund two, which we have planned in the next six to 12 months, we're hoping to make it more open to all investors. So that's something we're looking to do it. And so a five to seven-year kind of like payback period with like, solid yields in the five to 10% range. So that's kind of what that fund offers.
Brian Charlesworth 33:13
Okay, great. Well, congratulations on your success. And being an entrepreneur, I know how challenging it can be sometimes. So you have a big vision to be national and international. And I wish you the best of luck in getting there. And I really appreciate you coming on the show today. Johnny, is there any? I guess might be last question for you would be like, what advice would you have? For people starting a business or even growing a real estate business? Like what? What's like the most important thing from your experience that you would say, make sure to do this?
Johnny Wolff 33:46
Yeah, the things that I would say is differentiate yourself as much as you can, right. And that could be in marketing or branding, or that could be in the service offering, the more creativity you can apply to your business. I think it will add additional, like your effort times your creativity, I think is where you get your results and your kind of personal ROI. And I think it's it with real estate agents, we work with a few really great ones. But the ones that I see have success have that kind of knowledge determination, but also have that spark where they're trying to do things better and different, constantly. And if you keep iterating, you'll find a sweet spot, I think, as Amazon does, like 1000 products a year, and then like they sunset, like most of them, and then three will stick around, you know, and become like key features that will make Amazon evolve into the next phase. And so I think that iteration that creativity is just super important. So you have to be excited about what you do enough to be iterating a lot.
Brian Charlesworth 34:46
Yeah, it's great advice. Your website is livehomeroom.com, correct?
Johnny Wolff 34:51
Yes.
Brian Charlesworth 34:51
So again, guys, if you have any questions you want to learn more about this go to livehomeroom.com Johnny, thanks for being on the show today and To all of our listeners, this wraps up another episode of the Grit podcast. And we will see you guys all again next week. Thanks for joining us on the show.
