Andrew: Hey, everyone. My name is Andrew Warner. I’m the founder of Mixergy.com. It’s the place where I interview entrepreneurs about how they built their businesses.
My goal here is to drill in deep to understand exactly where the idea came from, how they built up their business by finding their first customers, what are some of the challenges as they built up and I’ve done this over a thousand times and I don’t think I’ve ever interviewed a company like this.
When I was I think 17 years old, I saved up $20,000 from all the little jobs that I had, all the little businesses. I remember hearing that real estate was how you made it big, how you preserved wealth and grew it. So, I said, “Great, I’m going to get into real estate.” I started reading all these real estate books. I started looking around at real estate that was available–nothing great, I only had $20,000. But I was looking. I didn’t know how to even get it going. I didn’t know how to get started.
Well, today’s guest started a company kind of for people like me, maybe a little bit older with more money. The idea is that you can go to her site. It’s called RealtyMogul. You can team up with other investors and buy property together and actually get your returns and those returns will come via email that actually says, “You’ve got money,” which is pretty cool. I want to understand how this business works and how she got it where it is today. So, I invited her on to talk about it.
We’re talking to Jilliene Helman. She is the founder, actually, the cofounder of RealtyMogul. It’s a marketplace for accredited investors to pool their money together online to buy shares of real estate investment properties.
This interview is sponsored by the company that will help you host your website right. It’s called HostGator and by the company that’s inviting me to speak at a conference that I hope you’ll come to. It’s called Leadpages and I’ll tell you more about both of them later.
First, Jilliene, welcome.
Jilliene: Thanks for having me.
Andrew: I understand business is better through scenarios. So, let’s take that 17-year old guy who wanted to get into real estate. He would not be the right investor for you because he’s not accredited. I wasn’t accredited back then.
Jilliene: He probably doesn’t have the money off the bat to invest with us, but we love investors who want to get educated because eventually they’re going to be in our demographic where they have enough money to invest in real estate. So, we also provide a ton of free real estate education.
Andrew: Okay.
Jilliene: But our key client is probably someone who’s got a little more disposable net worth.
Andrew: So, the meat of today–credit investor, has the ability to invest, is interested in real estate but maybe not obsessed with it to the point where he’s done a bunch of transactions. So, let’s take me as an example. I come to your site. What exactly would happen in an ideal world?
Jilliene: So, you’re going to create a user account and you’re going to go online and you’re going to start browsing investment opportunities.
Andrew: Okay.
Jilliene: So, you might see an apartment building, a shopping center, an industrial facility, an office building. You’re going to have some choices. So say that you want to invest in a certain geography, like California or Texas or New York or maybe you want to invest in a certain type of property, like you like apartment buildings, as an example. You’ll have the ability to go online, pick the actual investment that you want to be invested in.
And then the entire transaction process is on our website. So, you’re looking at all the due diligence materials, you’re signing legal documents, you’re funding the transaction. Then we’ve also got investor dashboards so you can see how that property is actually performing and how much money you’re actually making on that property on a monthly basis.
Andrew: When I’m making money on it, what does it mean that I’m making money on it on a monthly basis?
Jilliene: So, let’s take an apartment building. You buy into an apartment building in California. Every month, that apartment building has tenants. So, for those people who rent, you’re going to pay rent to your landlord and your landlord is going to take that rent. If they have investors, they’re going to share that rent with their underlying investors.
So, you’re going to get a share of the cash flow that’s coming off the property from rent, assuming it’s a cash flowing building. Most of what we do at RealtyMogul is cash flowing property. So, those tenants are going to pay the landlord. The landlord is then going to pay you as an owner of that property.
Andrew: Okay. And then who manages things like toilets and tenants and all those other issues?
Jilliene: Yeah. So, there’s always an operating partner on the ground. In real estate, they’re typically called sponsoring real estate companies. So, they’re sponsoring the investment. On our website, we give tons of details about the sponsoring real estate companies. They do all of the day to day management.
So, if one of the units gets vacant, for example, a tenant leaves and the move and get a new job or move locations, they’re going to responsible for re-tenanting that property. They’re going to be responsible if the toilets overflow or there’s some issue with the sinks or anything of that nature. They’re going to do 100% of that on behalf of the investors.
Andrew: I see. You guys are Techstars funded originally?
Jilliene: We are. Yeah. We were out of the Seattle Techstars program.
Andrew: That’s got to be one of their best investments because I’ve seen how much you’ve raised since then. What’s the total raise?
Jilliene: We have. We’ve raised $45 million in venture capital since we started the company.
Andrew: So, the sponsor–how easy is it for the investors to kick the sponsor out of the sponsor is not doing his job right?
Jilliene: I’d say it’s not super easy but it’s easy if the sponsor is really not doing their job right. Some of the exposure you have and risk you have is to real estate in general. Real Estate markets are cyclical, no returns are going to be guaranteed. There’s real risk or you wouldn’t get real returns. You wouldn’t be making money if there wasn’t real risk.
But we get really detailed updates and asset management tracking from the real estate companies we work with. So, we’ll know the performance of the property–is it doing better? Is it not doing better? What are the trending reports looking like? Part of what our service offers is we provide the communication back and forth with the real estate company. So, the investor doesn’t have to be on their case. The investor is truly a passive investor with us.
Andrew: I get that. It kind of makes me think of–so, I did actually end up buying a property.
Jilliene: Oh, good.
Andrew: I started my first business and I moved out of my parents’ house and I said, “I’m just going to get a place.” So, I bought one and it was a co-op and it was co-op management. Of course, they manage everything–if there was a problem with a garden outside your place, they’re going to take care of it. It seemed like totally passive real estate ownership except it wasn’t passive in that they got to get away with murder.
Isn’t that one of the problems with having someone who’s passive and someone else who’s active? The active person ends always ends up doing what they want or not want and the passive person passively gets run over. Is that an issue?
Jilliene: So, I think it’s somewhat different because we require that sponsored real estate companies have their own cash in every single transaction. Their cash is treated the same way that all the passive investors are treated. So, if they operate the property well, they’re going to make more money. If they don’t operate the property well, they’re not going to make as much money.
So, we’ve tried to align incentives. You always have this issue in real estate or investing in general around the lining incentives. By forcing those real estate companies to put their own capital, their own hard-earned money into the transactions, I think you avoid a lot of that. The scenario you’re talking about it more where the real estate company is just a hired gun to manage the property as opposed to also an investor in the transaction.
Andrew: All right. We asked you in the pre-interview what your revenue was. You didn’t tell us. You also didn’t tell Fortune Magazine. It makes me feel a little bit better, but sometimes we’ve actually gotten numbers Fortune didn’t. But I’m wondering if part of that is because it’s so hard to figure out what is the revenue. How do you measure your revenue?
Jilliene: So, we look at our revenue actually as total contract value. So, we make money on an annual basis for transactions that we may have invested in two or three years ago.
Andrew: But you also invested in some of the transactions.
Jilliene: That our investors have invested in with us.
Andrew: I see. Okay.
Jilliene: We look at revenue on a long-term basis. We’ve always had this philosophy at the company that we want to be around for 100 years or over 100 years. There aren’t a lot of companies that go into business thinking that. A lot of entrepreneurs will say, “I want to flip the business or I want to be absorbed by a larger company,” not to say that there’s not options for our business, but we’ve always thought about it very long-term.
We think of revenue on a long-term basis. When we started ramping up the company, we don’t have a lot of short-term revenue, but it starts to stack on itself. As you do more and more transactions and as you’re adding more value. I’m a big believer that we only deserve to get paid if we’re adding value.
Andrew: Let me see if I understand this. So, let’s suppose I and ten other people get together. We put $1 million in to buy a property. Does that $1 million count as your revenue? No.
Jilliene: That would be our sales.
Andrew: That’s your sales. Sales and revenue usually are the same thing. They’re synonyms, right?
Jilliene: In our case, we think of sales as origination volume. So, how much has been invested on the platform? Then our revenue is a percentage of that. So, on an annual basis, we’re going to make a one percent servicing fee.
Andrew: Got it. So, you make one percent of the million we’ve invested every year.
Jilliene: Exactly.
Andrew: How did I not get to into invest in this? David Cohen must be loving you.
Jilliene: Yeah. It’s good.
Andrew: As a business, frankly, it’s fantastic. You have some real estate risk, some market risk, but for the most part, you’re kind of cushioned by this.
Jilliene: Yeah. I’d say that we have a lot of brand and reputational risk. We do a lot to manage that obviously. We underwrite all of our transactions. We go really, really deep on all our transactions because at the end of the day, people are building relationships with us. They obviously know how the sponsoring real estate companies are. They know who’s on the ground doing a lot of the work. But a lot of their trust and faith and confidence lies in our brand. That’s really important and we take that very seriously.
Andrew: I get that. I agree. I feel like you guys are the company. You guys are the other investors in some sense, it seems like.
Jilliene: Yeah.
Andrew: By the way, Tony Hsieh was on here a few years ago before he was super well known. He kind of said the same thing. He saw that Zappos was going to be more than just shoes. It was going to get into clothing. It was going to get into everything. He actually envisioned a Zappos airline that actually treated people right. He said, “All we are is good customer service. What we attach that to doesn’t matter as much as us maintaining customer service.”
And then he sold his company and something didn’t feel right to me based on this guy who told me this vision he had for the company, forever owned and forever growing.
Jilliene: Yeah.
Andrew: And then of course he came out and he talked about how the investors made him push, made him sell. So, if you sell early, if you sell in the next year or four or five years, should by Spidey sense also be telling me something is up because you’re really thinking of owning this the rest of your life?
Jilliene: No. I’m not saying that I’m necessarily going to own it the rest of my life. I’m saying we want to build a foundation for a business that can be around for over 100 years. I’m not going to live 100 years. So, you always have to have a succession plan. We have investors as well, but right now we have no intentions of selling the business.
When you think about selling it, I think Tony Hsieh with Zappos probably though this way as well–what’s the best home for it? Where’s a parent company that’s going to take the business and allow it to continue growing, continue flying. In case of Zappos, Amazon was a great outlet for that. Amazon has tons and tons of cash, tons and tons of resources. They probably could make the vision of a Zappos airline a reality easier than Tony could. I haven’t seen it, but we’re similar.
There are a lot of businesses we’d have tremendous synergy with that are very large multi-billion dollar real estate companies today. It’s not to say that I have to run it, but it means that we want to build on a really solid foundation and we want to build a brand that’s going to be around for a long time. There’s a reason I think that Zappos isn’t now Amazon. They still operate as Zappos, as the brand.
Andrew: I get that. All right. I see that for you. Before we started, we were having a little bit of tech issues. You and I were just on the phone while it was getting worked out. You told me a story about how when you were a kid, you used to sit around the dining room table and your father, I guess, would talk about inventory and some of his inventory problems.
Jilliene: Yeah.
Andrew: Tell me about that because that kind of led to how you ended up here at RealtyMogul.
Jilliene: Yeah. A big tradition in my family was to sit down and have dinner every night. My dad, a serial entrepreneur ran an import/export company. So he was actually known as the fad man in the 80s and 90s.
Andrew: You’ve got to say what he imported because some of this stuff was just fantastic.
Jilliene: Yeah, all kinds of stuff. He was a big importer of the Razor Scooter, so that was a big thing that he did. He did puka shells. He did the Wacky WallWalker back in the ’80s.
Andrew: I don’t know the Wacky WallWalker. What was that?
Jilliene: It was a spider that you’d throw against the wall and then it would crawl down the wall.
Andrew: I had one of those growing up. What about–I never got one, but there was a time in New York you’d walked down the street and everybody would seem to be selling the fish that would sing as you walked past it.
Jilliene: Yeah, the bass fish. My dad also imported tons of those, hundreds of bass.
Andrew: When you say he imported it, was he the exclusive importer of the Razor and this fish?
Jilliene: In certain cases he was the exclusive importer. In other cases, he had licenses to certain territories. He’d been going back and forth from China for decades, so had a lot of good relationships. Or he’d get a lead. So, for the Razor scooter, I think he was the only guy doing it for the first four to six months and then some other importers jump on the bandwagon. But he was a fad guy. He was always looking for the next fad.
Andrew: I see. I remember when those Razors were so popular in New York, you’d see guys in beautiful suits, like Armani suits riding around on a freaking scooter from their train into the office.
Jilliene: Right.
Andrew: As the fad guy, that sounds great. Why did you sit at the table and say, “This business is not for me?” I wrote down a quote. You said, “I want to be in the money business.” We’ll talk about why that. But what was it about the conversations that led you to say that?
Jilliene: Things were never sheltered from us at the dinner table. I was having adult conversations at 6, 7, 8 years old. My dad was talking a lot about the trouble with inventory. They would ship things into the port of Long Beach in Los Angeles. There would be a strike at the Long Beach Port, so they’d have millions of dollars of goods sitting in the ports. They couldn’t get it out of the ports.
They’d have all kinds of issues with customs. Then they would truck this stuff into their warehouse, which was an hour away out of the port of Long Beach. It would get stuck in the warehouse, things would break. They would ship it and then there would be chargebacks because the manufacturing wasn’t great in China.
I sat there listening to this for a solid ten years in my childhood and finally said, “I don’t ever want to be in a business with inventory. I want to be in a business where there is no inventory.” My mom and dad both owned real estate, my dad through his company and through some family investments as well. So, it led me to saying as I came out of college, I never want to deal with inventory and I want to be in the money business.
Andrew: I get it. I never think of all the frustrations around inventory, but even if you get it right, you’re short of inventory, let alone if you get it wrong and you don’t deliver it and you end up with too much.
Jilliene: Right.
Andrew: Was your start because of your grandfather and the building that he got in LA? Was that what got you into real estate?
Jilliene: Yeah. I started managing an apartment building that my grandfather built, subsequently passed away and inherited it. I started managing that building at 16 because I was just fascinated by real estate. I always loved real estate. I remember growing up, my mom was a luxury real estate agent and talking about real estate, again, at the same dinner table where we were belaboring inventory. I always just had a passion for it.
I went to work for a bank coming out of undergraduate business school. At the bank, I was working in wealth management. All of our wealthiest clients, I started seeing these patterns where wealthy clients had made a ton of their money in real estate. I thought to myself, “This is for me. I can get really excited and really interested about this.”
Andrew: There was a time when I noticed that too, but today it feels like they’re all getting rich from starting companies or investing in companies.
Jilliene: Yeah. I think that you’ve got that too, but probably more of a subset. For those who are in Silicon Valley or New York or LA, kind of the tech hotspots, you see a tremendous concentration of CEOs and entrepreneurs and VCs and angel investors. I think my opinion real estate is probably a more tried and true way of making it rich, but it’s not as fast. Real estate is a very long game. It could be a 20, 30, 40-year game where if you’re a great tech entrepreneur and you flip a company, that might be 18 to 36 months, so much faster but much riskier.
Andrew: I see. And then when you managed that building, did you actually deal with toilets and tenants? T&T, I used to hear it was called.
Jilliene: I did. I’ll even add another–toilets, tenants and trash, the triple T. So, we would have renters who would leave and I would help turn the unit. We’d have the carpet guy change out the carpets, hire the paint guy, redo the paint, minor improvements.
Andrew: You like doing that?
Jilliene: I hate it. It’s the worst.
Andrew: You hate it.
Jilliene: That’s why I’m a passive investor as opposed to an active investor.
Andrew: What did you like at the time about being in real estate when you were 15, 16 years old?
Jilliene: I like the idea that you can add value. The idea that we could add value to a property, we can go from adding $1,000 a door or $1,000 a unit, slap some carpet and paint on and all of a sudden, someone is paying us $1,300 and we didn’t spend that much money on carpet and paint.
So, this idea of adding value and this idea that there’s also appreciation–so, you can sit on real estate and over time, again, there are fluctuations, it doesn’t happen every year, but over time, real estate has proven to be one of the greatest wealth generators in the United States.
Andrew: Also the leverage is insane, right? I can’t go and buy a company here in the startup world for 10% of the value of it or 20%.
Jilliene: Right.
Andrew: The tax benefits of it too, the other 80% to 90%, the interest on it, I write it off, right?
Jilliene: Yeah. You can write off the depreciation. Think about that. You can buy a $20 million with $5 million and you’re getting cash flow off the first $20 million. It’s a great investment opportunity when look at it from that perspective. And then when you write off taxes or if you write off depreciation from your taxes, it’s kind of been that tax advantage for the wealthy that’s been around for a very, very long period of time that the wealthy have taken advantage of.
Andrew: If we do it through RealtyMogul, do we get that too?
Jilliene: You do. If you invest in our LLCs, you’ll get depreciation written down, reflected on a K1 annually. So you’ll get your percentage of depreciation.
Andrew: Okay. So then with all this love, I’d kind of thought you’d end up being a real estate mogul yourself, that you’d go out there and you’d start buying little properties and build up to bigger properties. Instead, you ended up going to–I looked at your LinkedIn profile–Union Bank. You were at Union Bank for four years. Why Union Bank?
Jilliene: I wanted to get classical training in financial services. So, I’d always been interested in financial services. I actually went into a training program at Union Bank. I wanted to learn a variety of different disciplines. I knew that I was going to be an entrepreneur. I come from a family where we’ve got a lot of executives. I’m the youngest of seven.
We kind of were bred to be entrepreneurs. I always knew that’s what I wanted to do. In conversations with my dad, who’s a dear mentor of mine, I said to him, “I’m going to start a company out of college,” and he said, “You really need to go get some training. Go learn the world. Go learn how to write a proper email. Go learn basic stuff you don’t know.”
So, I went into the training program at the bank. I wanted to get back to California. I was living in DC for undergraduate business school. That was my ticket back to California, start making some money, start making some different disciplines, but I was always fascinated by financial services. How do you make money by lending at a high number and taking in money that you pay a lower number to, which is effectively what a bank does?
Andrew: Basic banking. But you got into more than basic banking. You got into risk.
Jilliene: I did. In my last year at the bank, I went into risk management and was doing a variety of things around risk–compliance risk, credit risk, regulatory risk. I would say that wasn’t as fascinating as my early years in banking. It’s a lot more dry than the kind of stuff I was involved in earlier, but still a great education, a great crash course in risk management.
Andrew: In college, I took jobs on Wall Street and the part that always felt less interesting, less exciting is the risk management. I know it’s important.
Jilliene: Yeah.
Andrew: I got never even just spend time getting excited enough about it to study it, to understand it. What exactly does it mean? I’m asking because I know that helps you deal with risk today, right? What did that mean back then?
Jilliene: Yeah. So, we’re a highly, highly regulated business today. I think that my classical risk management training was helpful. But what it meant was properly understand the risk and make a business decision. So, risk managing isn’t only about saying no. I actually prefer to think of risk management as risk but. So, “Yes, we can do that, but here are the costs. Here’s what it’s going to cost you, here’s the risk that you’re taking.”
Sometimes the answer is no because the yes but is just so bad. My time in banking, it was about what is the threshold of riskiness that the bank is really to take. Are they willing to do risky loans? Are they willing to sell loans at a discount so that they can offload the risk? It was really all about how we manage that risk.
Andrew: Let’s get concrete again. You told our producer that on one of your first days on the job, you had an aircraft lease issue.
Jilliene: Yeah.
Andrew: What does it mean? You guys were lending money to somebody to buy the aircraft and lease it to someone else?
Jilliene: There had been a lease. I can’t remember the exact number. It was probably a $75 million or $85 million lease or somewhere in there. It had been a loan on this aircraft lease that had been made numerous years prior, probably seven or eight years prior. The airline went into some form of bankruptcy. I don’t remember the exact details, but the airline went into some form of bankruptcy.
So, it went into default on this aircraft lease. We had given them the money to purchase the aircraft or lease the aircraft, they were paying that back in monthly payments and monthly installments and they were going belly up. So, they said, “We’re going bankrupt. We’re going belly up. We can’t pay the lease.”
What do you do? You can try and sell that paper at a discount. You can try and work with that company through their bankruptcy, you can sit on the sidelines and wait for the courts to work it out and kind of trying to identify what’s the best way to mitigate risk after something like that happens.
Andrew: Makes sense. All right. I want to come back to the thing that happened to your dad that got you started on this path. But first I have to talk about my sponsor. I mentioned at the top of the interview it’s called Leadpages. They’re the guys that create landing pages that so many people are using. But they have a conference that I’m urging everyone who’s listening to me to at least consider coming to. And man would I love as many of you as possible to come there so I can meet you in person. I’ll be speaking there.
Converted 2016, that’s the name of the conference, is an event designed to solve the single biggest problem that faces many businesses and that is conversions, specifically how to convert your visitors into leads, how to convert your leads into customers and how to convert your customers into basically customers for life.
I will be speaking there along with Marc Maron, along with Clay Collins of Leadpages, Pat Flynn of Smart Passive Income. We’re looking at Ryan Deiss of Digital Marketer, so many other people, I’m not going to go to the whole list.
But frankly, for me, it’s not about the people on stage. I think the people on stage are there to lure in the audience. It’s the audience for me. So, if you come and get to meet me in person and more importantly get to meet all the other marketers who are going to be filling out this event because those are the people who you’re going to be contacting when you want to find better a copywriter, when you want to find a better salesperson, when you want to find a better way of converting.
These are the people who are going to be in your phone book for life. I know it because I just got back from a conference and my phone has been buzzing with people I met there. That’s what it’s about. If you want to go there, I’d love to meet you in person, email me after you get your ticket so we can exchange phone numbers or maybe we’ll do it via Facebook Messenger and we’ll stay in contact there so that I can introduce you around and have a drink with you.
My special link for everyone who’s listening to me is Leadpages.net/Mixergy. That will give you $250 off the ticket price–Leadpages.net/Mixergy. Frankly, if you’re into conversions of any kind, if you’re managing people who are into it, you’ve got to be at this event. I’m looking forward to seeing you there. Let me say it one more time–Leadpages.net/Mixergy.
All right. So, what happened to your father?
Jilliene: So, my father, I’m not sure which story we’re talking about. I’ve got lots of father stories.
Andrew: Oh, you do?
Jilliene: I do.
Andrew: Is there one that stands out right now? I know the one I’m moving towards.
Jilliene: One of the earliest ones–this is kind of being an entrepreneur as a kid–we talked a little bit about how my dad was importing Razor Scooters. So, I saw this opportunity. They couldn’t import them fast enough. They were flying off the shelves, couldn’t important them fast enough. So, I went to–I obviously had the hookup on Razor Scooters. It was pretty cool as a 13 or 14 year old. So, I started selling them at swap meets.
It was my first taste of entrepreneurship, started selling these Razor Scooters are swap meets. I knew instantly I no longer wanted to be in the hot sun selling product at swap meets. I thought a desk job was better. There all kinds of people that say, “I want a job in nature and the environment.”
Andrew: What those people don’t understand is a desk job doesn’t mean you have to sit at your desk. You’re sitting at the couch in your office, right?
Jilliene: This is true. It could be a couch job.
Andrew: I don’t know how people wouldn’t want a desk job, but you’re right. There are a lot of people who feel very uncomfortable about it. I’m glad that you loved it and you knew this was your calling.
Jilliene: Absolutely.
Andrew: Here’s the one that I was talking about. At some point, your dad got sick and you said, “Life is too short. I’ve got to take this next step in my life. I have to be an entrepreneur.”
Jilliene: Yeah. I always knew I wanted to be an entrepreneur. My dad got sick and I wanted to spend some additional time with him. Also it’s the realization that life is too short. I really enjoyed my time at the bank. I worked with some wonderful people. It wasn’t my life’s calling. It wasn’t what I was going to go spend the next 20 or 30 years of my life doing. Part of that was my catalyst saying, “I’m going to move out on my own, start a new company, get something off the ground and really build something I can be really proud of.”
Andrew: You had no idea what you were doing at that point or what company you’d start?
Jilliene: I did. So, I had read a copy of the Jobs Act. I was in the risk management role when I left the bank. I read a copy of the Jobs Act. I was asked to do sort of a preliminary analysis on what impact if any would this have on the banking world. The Jobs Act is sort of the key piece of legislation around crowdfunding. It opened up crowdfunding for real estate, crowdfunding for small companies, crowd funding for entrepreneurs.
So, I was reading through it and it was really the first time in 80 years that the securities laws, the regulations around selling securities or investments had changed. I said, “There’s got to be opportunity here. First change in 80 years. I’ve got to seize this opportunity.”
Andrew: I can’t believe you actually read it. Now I understand why. Somebody had to read it and analyze it. I was going to ask you, “Why didn’t you just read someone else’s analysis?” I see, you’re the person who had to do it.
I’m looking at the Jobs Act here in front of me. Look at this. Securities Act of 1933, section 2(a) of the Securities Act of 1993 is amended by adding at the end of the following–the term emerging growth company means–I’m already bored and I’m not even two paragraphs into this.
Jilliene: Mind numbing.
Andrew: And it goes on for page and page. So, you went in and you said there is a change coming. I’ve interviewed a lot of entrepreneurs here on Mixergy who noticed that, that there’s a big regulatory change which means the whole industry is going to have to change. All the old leaders either are going to have readjust to this new place, which is low for them or maybe there are no old leaders because we’re starting something brand new and you realize you’re starting something brand new, you enable people to invest. There had to be something here.
Why didn’t you do what everyone else does and say, “I’m going to find a way for the crowd to invest in startups. It’s all about startups?” Why didn’t you apply this understanding there?
Jilliene: I went to real estate because I love financial services and I love real estate. I thought that the idea of having something super, super tangible would be great for crowdfunding. So, there’s a big crowdfunding business today for startups, for entrepreneurs, small businesses, but there’s nothing tangible. There’s nothing tangible about a company.
There’s something very tangible about hey, you’re buying that apartment in New York City. The idea that you can touch and feel it and there’s still this tangible nature, even though you’re investing on the internet and you’re not actually going to touch and feel it. It’s very rare that our investors will go out to the properties we own and we welcome it, but it’s quite rare.
So I thought given my background in wealth management, where I’d seen so many people become wealthy through real estate holdings and my love and passion for real estate, that was sort of the natural fit.
Andrew: I see. I’m looking at a URL Here that you gave Arie, the producer, RealEstateWithFriends.com and that leads to RealtyMogul.com. Why? What is RealEstateWithFriends.com?
Jilliene: RealEstateWithFriends.com is the first name for the company. Before we named the company RealtyMogul, it was Real Estate With Friends. It was when Words with Friends was really big. Remember the iPhone game, Words with Friends. We thought we were so clever. We weren’t clever at all, but we thought we were of let’s play off of Word with Friends and we’ll call it RealEstateWithFriends.com.
I’m glad we didn’t because Words with Friends is not super popular anymore. I think people are too busy playing Pokémon Go now to even remember Words with Friends, but that was the original name for the company. We kept the domain. We own it. We did a fun redirect.
Andrew: But there’s something very revealing about the way you were thinking about the business when you named it Real Estate with Friends. That is what? Was your vision that I would contact five of my friends and we’ll all get to invest together?
Jilliene: We were thinking that, yes, but also just collective communities investing together. I’ll give you a specific example from some of the early days in the business. It was like noon on a random weekday and we saw this $20,000 investment come in. We saw another $20,000 investment come in, another $20,000 investment come in. They were all engineers at Google. They were all kind of investing together in a property that none of them were buying. They were all passive investors in this property together.
So, it was the idea that you could have collective communities investing together or collective groups of individuals investing together. That sort of played out. I think it’s broader than that today. In some respects, it should be called RealEstateWithStrangers.com because we have tons and tons of strangers that are going into the same properties together and collectively buying real estate. It’s not only a tight knit group of friends.
Andrew: In so many ways, this is like the business I used to dream of as a kid, that either would exist for me or that I could start something like this. I’m so fascinated by this. I’m fascinated by it largely because it’s so different from what we’re usually looking at. It’s so obvious when you think about it in retrospect.
So, you took it to Techstars, as I mentioned earlier. Was there any sense that you’re different from everyone else applying to Techstars? Frankly, you’re not a boy. Not that Techstars–frankly, they have a well-balanced ratio, much better than others. But you’re not a boy, you’re not 21 years old and you’re not pitching another mobile app. You’re pitching something in the financial services industry, something that’s more responsible. Did you feel at all not out of your element, but did you feel different?
Jilliene: I really didn’t. I don’t think that Techstars makes you feel different. Techstars was great. I only have fantastic things to say about it. I’d say the biggest differentiator was actually that we were financial services. Most of the companies as you mentioned are apps or gaming companies or a SaaS platform, something that is really, really deep technology. Our first hurdles were really, really deep financial services.
A lot of our challenges today are technology, but in the beginning, they were financial services. How do you get a sophisticated, highly regulated financial services business off the ground? That had to exist before we could use technology to innovate. So, that was kind of the big differentiator. I learned a ton of valuable lessons from Techstars, made a ton of really great friends.
Andrew: What did you learn? What’s one thing that you remember that you got out of it?
Jilliene: One really specific thing is using Amazon Turk to do manual labor, manual electronic labor, I guess you’d call it, where you’re paying people $0.10 a task or $0.20 a task. So, in the early days, when you have very limited technology resources, it’s actually cheaper to pay guys on Amazon Turk $0.10 or $0.20 a task than it is to go build this system to do it.
Andrew: Yeah. What’s a task that you would need at that level?
Jilliene: We used it to build really hacky PR lists. So, we would figure out what reporters had covered things like Lending Club. Lending Club is a fintech company. So, we’d aggregate all the reporters who had ever covered it. Then we would pay another Amazon MTurker to find the email address of that person.
Then we’d find the other person to find all of the URLs of press releases or content pieces that that person had written, then we would do a mail merge to write these really custom emails of, “Hey, I saw what you wrote about this link about this topic and covered this person.” We never read the emails, we would just blast mail merge them and email 300 reporters at a time. We got tons of great press coverage in the early days doing that.
Andrew: I understand it. Most PR people just suck. They suck. I see the stuff they send to my inbox and it has nothing to do with nothing. They don’t even look at the site. It’s, “We love your site and we have this suggested article for it.” If they look at the site for a second, if they’d do any research like you did, they’d see there are no guest articles on the site. I don’t know where it’s coming from. That’s really well done.
Actually, I was looking at SimilarWeb to get a sense of where you got your traffic and I’m looking at a list of sites that are news sites. That seems like your biggest source of traffic, biggest source of customers right now, right?
Jilliene: Yeah. We’re driving north of 40% of our traffic organically, meaning nonpaid. So, either news sites that link to us or organic search traffic or anything of that nature.
Andrew: Like what I’m doing right now with you. So I’m looking–Inc.com is in there, Investopedia, CrowdfundBeat.com and your number one source is CrowdCrux.com, which I’d never heard of. What’s CrowdCrux?
Jilliene: If they do like a ratings service on real estate crowdfunding platforms. They’re quite nichey, but a good company.
Andrew: I see. You were also Forbes 30 Under 30, I remember seeing.
Jilliene: Yeah. We had a two-page spread in Forbes Magazine. That was a lot of fun. That was probably one of my highs, when you think about what highs you get as a company, some of those early PR wins are a ton of fun. You’re getting exposure for a business that didn’t exist months ago or years ago and that’s pretty cool. It was Forbes 30 Under 30. They came in and did a two-page spread, professional photographers, all that stuff. That was pretty fun.
Andrew: For you too, they shot a photo of you?
Jilliene: They did. Yeah.
Andrew: I didn’t see the other photos because I was looking at it with–I use one of these services that takes out all the ads and takes out all the images so I can focus.
Jilliene: So, I can’t get to you by way of retargeting, I guess.
Andrew: Good point. Right. Is that what you use, retargeting also works for you?
Jilliene: We use everything–content to drive our SEO, paid search, retargeting and the PR. We’re driving a lot of organics through PR.
Andrew: Yeah, I see that content is really big for you and you mentioned at the top of this interview that even if someone’s not yet ready to buy or invest in real estate, they’re still able to go to your site and learn a lot and you have a big resource center.
Jilliene: Yeah.
Andrew: I see. I see your keywords here. SimilarWeb is helping me out–realty mogul Texas, Charles Kim realty mogul is another key phrase you use. Who’s Charles Kim?
Jilliene: He’s one of our top sales guys.
Andrew: I see. Why do you guys have sales people? What’s your sales process?
Jilliene: So, we have sales people on the real estate company side of the business. These real estate companies are usually looking for anywhere from $1 million to $5 million that they need for their properties or for their projects. We have a sales team that is working with those real estate companies to make them comfortable with the platform. In the early days of being a financing company, none of these companies trust you.
They don’t think that when you say, “We’re going to invest $2 million that when the closing table comes you actually have $2 million there. We’ve built a good reputation. Now that we’ve done north of $200 million in transactions they believe if we say we’re going to be at the closing table, we’ll be there.
There’s still a lot of education. Crowdfunding is a new phenomenon. Internet finance is a new phenomenon. Our sales people are walking these real estate companies through the process, getting them onboarded and working them through all the way to a close.
Andrew: These are people who are investing money in addition to or alongside the people who are on your platform?
Jilliene: These are the real estate companies who are sponsoring the transactions. So, the sponsoring real estate companies who are going to acquire that apartment building and then come to our platform to finance the acquisition of that apartment building from our diverse network.
Andrew: I see. They don’t put any money in, they just get to manage it.
Jilliene: No. They do put money in. So they put a minimum of 10% in the transaction.
Andrew: I see. If they weren’t going to you, where would they go?
Jilliene: It depends. A lot of them would go to country club networks, friends and family, alumni networks, country club networks. If they were going to get–we offer both debt and equity. So, if you think about you’re going to buy a home. You’re probably going to put down a 20% down payment and you’re going to get 80% through a loan.
That 20% down payment is your equity and the 80% is your loan. So we offer both debt and equity. On the equity side, it’s usually friends and family. On the debt side, they might go to a bank. They might go to a real estate fund, those types of places or other places they could get capital.
Andrew: Okay. There are people out there–I didn’t know about this–who are sponsors who like a big part of their lives is finding a piece of real estate and then finding investors and then finding a bank or somebody to lend them money.
Jilliene: It’s a multi-trillion industry.
Andrew: Really? Just being a sponsor?
Jilliene: Yeah.
Andrew: I see. Why do you even need the sponsor? Why can’t you guys be the sponsors? Why can’t you spot the building and you hire somebody to manage it?
Jilliene: So, we could, but we want to offer a diverse array of projects to our investors. So, for us to have coverage across the country and for us to have coverage across the country across multi-family, retail, office, industrial, self-storage, we’re not experts in all of those things. We’re experts in some of them, but not all of them.
Andrew: I want to find out about the first group of people who you got as customers before you had a reputation and all those phone calls you made. But first, I should just talk about my last sponsor. My last sponsor is HostGator. It’s so appropriate that you’re here for HostGator. What I like about you–and we didn’t fully get into it–is your whole story of before starting in business professionally, you were just selling. You were just experiencing, trying stuff. You were selling Razor Scooters, working out this building. You were just out there trying.
I urge anyone who’s out there–I can’t imagine we have anyone who’s listening who hasn’t started a business, but if you have any idea, even in addition to the business you have now, go to HostGator, setup a landing page, setup a site and just get started. It’s incredible how many people I’ve interviewed who just had this idea, went out and started a page for it. Suddenly this little idea developed and became bigger than they ever expected.
One of the reasons why I recommend HostGator for it–and frankly, let’s be honest, the biggest reason is they’re paying me to do it–but I would never accept money from HostGator or anyone else unless I really believed in them. Everyone who’s listening to me has easy access to me and you would complain if you didn’t have a good experience with them.
Well, HostGator is a good company that also has a really low price. They realize at this point, we’re talking about 2016, hosting has been solved. It shouldn’t be so expensive. We’re not super-innovating on this. It needs to work and it needs to cost as little as it needs to in order to work.
That’s what HostGator offers–hosting that works and frankly if it ever doesn’t work, you’ve got 24/7, 365 tech support, any day of the year including Christmas. Call them, Christmas Eve, call them up, say you have a tech problem and then say, “Sorry, I have nothing to say, I’m just going to go back to the dinner table.”
Incredible company, they’re there for you, really low prices. If you use the special URL that I’ll give you in a moment, you get 30% off their already low price, if there’s anyone in your life who needs a website for anything, just surprise them, set up a website for them. HostGator will do one-click install for WordPress, tons of available themes, 4,500, let’s be exact, 4,500 website themes that you can get started. If you’re building a site for someone else, you can do it easily.
Unmetered disk space, unmetered bandwidth, unlimited email addresses and when you sign up, you get $100 in AdWords offer and $50 search credit–I feel like I’m yelling into the mic. I better just chill out here. I’ll just finish off by saying go to HostGator.com/Mixergy. If you’re not happy, do two things–number one, they have a 45-day money back guarantee, take advantage of it. Number two, tell me about it. I’m here. I want to understand why you’re not happy. I’m not looking to promote companies unless you love them.
My email address is Andrew@Mixergy.com, always here to hear if you guys are unhappy with any of my sponsors. Finally, the URL, HostGator.com/Mixergy.
All right. Back to the story–I freaking love your business. You had this idea. You needed to find people to just try it out, to invest on your new platform that didn’t fully exist. You told our producer you made 100 phone calls a day. Is that an exaggeration like when I a moment ago said tons?
Jilliene: No. My cofounder, Justin, and I would race each other to making 100 phone calls a day because we held ourselves to that standard before we could do any other work. We would come in the morning. First we’d call East Coast. You want to get East Coast out of the way. Then we’d start calling West Coast.
We would have this whiteboard in our first office where we’d tick off in increments of ten how many people we had called and it was this race to get 100 done. Obviously you’re trying to connect with people and if you can connect with them you want to have good conversations. But we were making 100 phone calls a day to kick off the business.
Andrew: Who were you calling?
Jilliene: We were calling new signups. One of the big debates we had early as a business was do we ask for phone number or not. A lot of companies won’t because if you ask for phone number in your signup for, your submission drop off, conversions drop off. At the conversion conference, I’m sure you guys will talk about phone numbers and the impact there.
So, we were calling new users. So, we would get new users, we would call them and welcome them to the website. Sometimes I wouldn’t even say that I was the CEO. I would be Julie from RealtyMogul.com, the customer service specialist that wanted to make sure you knew there was a real person standing by.
At the time, we’re four or five people. We’re a teeny company, but it felt like we were a big company. Because we made those 100 phone calls a day, people felt like, “There are real people behind this website.
Andrew: I see, as opposed to just giving you their email address and the thing just disappears.
Jilliene: Right.
Andrew: I’m looking at your site right now. That registration page asks for first name, last name, phone number and email address and also a password. We’re you doing that much at the time too?
Jilliene: I can’t remember what the first versions of sign up. But we capture email address on the first page, actually. So, if you’re on our homepage, we’ll capture email address there and then we’ll pass that through to the user reg page, so we’ve got that in one click. Email sign up and password may have been on a subsequent click, but for sure from day one, we made the decision that we were going to capture phone number.
Andrew: We did a course here on Mixergy with a guy named Jamie Kennedy who was on Dragon’s Den. I invited him on because he said, “Andrew, you never talk about the need for phone number. You keep thinking everything happens online or it doesn’t happen.”
Jilliene: Yeah.
Andrew: I said, “What do I care about that?” And then he said, “Listen to how many people you interview who actually ask for phone number, who call up their customers. You’re missing something because you’re not paying attention to anything that’s happening on a computer screen. So, he did a course where he talked about how he does the same thing. He asks for a phone number and as a result he gets on the phone with people and they buy from him.
So, how did you get over 100 people? I guess it would be like 200 people a day to fill out the form with a phone number. We’re talking about investors. That’s a ton.
Jilliene: Yeah. Some of them in the early days may not have even have been users. We also had just number lists of real estate companies. A lot of who we called were also real estate companies. You’ve got to remember we had to balance both sides of the platform. We had to balance investors on one side and real estate companies on the other. So, sometimes we’d be calling 200 real estate companies and no impact.
Andrew: Got it.
Jilliene: But the other thing is you don’t only call users one time. There’s kind of the law calling and it says you should try and call users a minimum of six times so that you can increase the impact of either touching that user, actually getting them on the phone and actually building a relationship with them.
Andrew: I see.
Jilliene: So, we were calling repeat users many, many times as well. So how did we drive traffic? PR hacks was a hug piece of it in the early days. I shared the MTurk hack that I talked about that we got taught at Techstars. But I was also reaching out one on one with a lot of folks in the PR world. We were doing a ton of events. So, we would do pretty much any event that would let us speak if it was for free. We would do pitch events.
We would do startup events, anywhere where we thought there would be wealthy investors. The interesting thing with startup events is you have tons of angel investors. So, you have a bunch of startup entrepreneurs who weren’t our target market and then you have a bunch of angel investors who were our target market.
I pitched on year at the Founder Institute Showcase. That night going home, we had like $100,000 invested on our platform. Between the hours of like 8:00 p.m. and midnight, there wasn’t usually a ton of traffic there and a lot of it was from just pitching at that angel conference where we were talking about our business, but all these investors got intrigued and then made a transaction.
Andrew: Wow. The Founder Institute also has new entrepreneurs, so I get it, but they have mentors and they have investors who are out there who are listening. The first four investors you actually remember who they are, right?
Jilliene: So, three were friends and family and one was someone totally random.
Andrew: Just came to the site and filled out a form.
Jilliene: Came to the site and filled out a form. I remember I wrote him a personal thank you note and put it in the mail. I didn’t tell him he was our first investor because I didn’t want him to be afraid. That’s kind of scary when you’re trying to trust this brand and you’re their first investor. But I remember, I’ll never forget. We didn’t have stationary at the time. So, I wrote him a note on a thank you card. It was very, very special at the time knowing that he was sort of our first true organic investor.
Andrew: Here’s my problem, my wall as an interviewer. I know that later stage companies have problems that I’m not addressing with my interviews. A lot of those problems have to do with hiring. I know it because I’m interviewing you. I’m looking at what you told our producer was the biggest challenge. It’s the same thing so many other people have said–hiring, trying to hire the right people. You’ve had issues with hiring people.
Before we talk about what you did that worked, let’s understand the challenge. Maybe that will help me come up with questions to ask future interviewees to illuminate this challenge of hiring and how people have done it right. So, what’s the problem? How did you experience it?
Jilliene: I think part of the problem is when you’re an early stage company and even a mid-stage company but still young, so you can be a real established company but still be young, you’re still forming the culture. We started the company with some ideas about what we wanted the culture to be.
I was on the phone with a recruiter today as an example and I said we’re recruiting engineers. I said to him, “Look, we’re not Snapchat. I don’t want engineers who want to work at a Snapchat. We’re a little more buttoned up. We’re a financial services fintech company. We need that type of engineer who’s going to be comfortable with that type of environment.
But I think not exactly knowing what your culture is is one of the challenge is. Your culture is always changing. When you’re a 20-person company, adding gal 21 or guy 23, each additional add to staff changes the culture. They bring some element of themselves or their background or their experiences that impact that culture. So, I think culture is a big part of it.
I think the other big part of it is we’re hiring people even in our stage today to wear multiple hats. So, they have a primary function today, which in the early days, they didn’t even have a primary function. It was just sort of all hands on deck and whatever you can do. Today they have a primary function but there’s also other things they need to tackle. We don’t have enough people to have a specialist or somebody who has a primary function in every single role.
Andrew: So, how do you communicate that and find somebody who has all those skills?
Jilliene: Sometimes you’re not even looking for people who have the skills, you’re looking for people who have the capacity to learn and the attitude to want to learn.
Andrew: So, can you do that? Can you tell for developers whether they have the attitude to learn, whether they have the capacity to?
Jilliene: I think you can. If you talk to developers about a new programming language, for example, and they get really excited about the opportunity to learn that programming language, versus somebody who says, “I’ve done .NET my entire career. That’s really not that interesting to me.” You can kind of get the vibe and get the feeling from them around that.
Andrew: I had a private conversation with someone who I asked, “How are you hiring,” and he said, “I came up with this cool thing. I go to AngelList. I see who’s in my space. Who’s running a similar company? Who raised money a while back but at this stage would probably be running out?” He knows what an average burn rate would be in his space.
He knows how much they raised and looks to see who’s close to burning out at this point and is local. “I’ll go out for drinks with them and I’ll figure it out.” He found a couple of guys who ran a company who were pretty close to that and figured, “Great, give them an acquisition, graceful exit and I hire these two guys who are super sharp and know my space better than anyone and know how to think like entrepreneurs.” Do you have hacks like that or processes like that that will help you overcome the challenges you just brought up?
Jilliene: Yeah. I think my one concern about that hack–not the question, but I’m just going to share that anyway–but it’s really trying to work to launch a startup. By the end of three or four years, if you’ve gotten kicked around and you’re running out of money, emotionally you’ve gotten turned over. So, burnout is a real thing, where you’re working 100 hour weeks. That’s only sustainable so long, unless you’re Elon Musk, which most people aren’t.
One of the hacks that we’re doing now is we’re IQ testing all of our new applicants. So, it’s not to check for cultural fit obviously. We do that through in person interviews. But I want to build a company where our IQ is off the charts. My fundamental belief is that if you have really smart people and you put them in a collaborative environment, they’re going to come out with a great output. That’s one of my core beliefs around people which is something we’ve been doing recently that we haven’t been doing over the last couple of years.
Andrew: What’s your IQ?
Jilliene: I haven’t actually taken this test. I took another test that was an IQ test. I’m in the top 25th percentile, which is what we target for our company.
Andrew: I see. I wonder what mine is. I don’t even know that I want to know it. Sometimes I’d want to know it and I want it to be low so I can show off how much I’ve done with how little I’ve been given. Other times I feel like why have a number associated with it.
Jilliene: Well, just because you have a high IQ doesn’t mean you’ve been given a lot. You can still be very scrappy and figure out things from the ground up.
Andrew: It still says something. If I say I have a low IQ, “I’m operating with an 80 IQ and look what I was able to do.” That’s pretty impressive.
Jilliene: It’s pretty good.
Andrew: I say that because I used to grow up listening to Howard Stern in New York and he would say, “I have a low IQ,” but look at what he was able to build with it. What have you done that actually has worked at this point, something that allowed you to hire despite all the challenges you brought up.
Jilliene: I think another one is trusting in your managers. Every person that’s in your company has a rock star that they’ve worked with before. One of the things we try to do as part of our onboarding process is we’ll sit down with our new employees two or three weeks or a month after they start and say, “Who are the two best people you’ve ever worked with in your career?” I don’t even so much care what they did. But we try to figure out are those people we have a spot for in the company.
Again, people wear a lot of hats. They’re not always specialists yet. We try to recruit from our internal team. We pay our internal team if they bring on their friends. The beauty of that is now their friends are at work with them. There’s a ton of data on if your friends are at work with you, you’re more satisfied, you’re more likely to stay, you’re more likely to have retention with the company.
Andrew: You know what I dig about you? The way you talk reminds me of all the New Yorkers I used to respect. There’s speed and there’s also accuracy to what you’re saying. I love that. I miss that about New York. I miss that about working in finance.
Jilliene: I’m not even a New Yorker. I’m a Californian.
Andrew: I figured that from your story, but I do miss that part of finance where we could just be direct. We could talk fast but also have substance. Sometimes I miss that. All I had was a little exposure to Wall Street, but man, I miss that so much.
You did it. You then at one point hit a $100 million milestone and you celebrated. What does it mean that you hit a $100 million milestone?
Jilliene: So, we had investors put $100 million on our website to invest in commercial real estate.
Andrew: Okay. And then what did you do to celebrate when you hit that?
Jilliene: We threw a big party.
Andrew: Okay. Where?
Jilliene: We threw a party on a rooftop in Santa Monica. We’re headquartered in Los Angeles, so it’s just down the street, invited our whole team, invited a bunch of clients, invited prospects and really just celebrated the fact that we’ve made it. There was product market fit. If we could raise $100 million for real estate on the internet, this company was going to go. There was a real market there and there was real traction there.
Andrew: I see it. I’m looking here at notes where the first four investors were putting in $110,000. You were making tons of phone calls to have gotten from that to $100 million was a huge milestone. You didn’t tell Ari, you didn’t tell Fortune what your revenues were. But you did say what that number is now. How much money has been invested on your platform?
Jilliene: We’re north of $215 million.
Andrew: $215 million and you guys get 1% of that a year. So, can’t I just do the math myself?
Jilliene: We get one percent of that a year as an ongoing servicing fee from the investor.
Andrew: That’s about $2 million.
Jilliene: And then we get an additional two to four percent as an origination fee which is paid from the real estate company.
Andrew: Okay. I see. And that’s just upfront one-time fee.
Jilliene: Exactly.
Andrew: Got it.
Jilliene: Some of that cash will turnover. Some transactions, maybe you’re only invested for a year. Other transactions maybe you’re invested for ten years.
Andrew: How does somebody invest for one year?
Jilliene: So, if it’s a value add transaction. Maybe we’re going to buy an apartment building, we’re going to renovate it and we’re going to flip it.
Andrew: You guys do that on your platform too?
Jilliene: Yeah.
Andrew: What else happens on your platform? What am I missing?
Jilliene: We could be buying a retail shopping center. For example, we bought a transaction, our investors invested in a transaction. It had a Safeway, a CVS, a Sprint, a Starbucks. That was kind of a cool one because there was a lot of well-known brand names. We’ve also done deals for industrial facilities. If you think about industrial and distribution manufacturing facilities, we’ve done transactions like that. Some of my favorites are mobile home parks.
Andrew: Okay.
Jilliene: We have an offering that’s a mobile home park fund where investors can buy into a variety of mobile home parks all over the country. Self-storage is another big one.
Andrew: When somebody buys a mobile home park, it’s only your investors investing, right? It’s not them attaching themselves to somebody else’s deal like they would with a REIT, right?
Jilliene: So, it is them attaching themselves to somebody else’s deal. The deal is that sponsoring real estate company we talked about.
Andrew: But that’s it. That person is putting in their money. Your investors are putting in money, but that’s it.
Jilliene: Sometimes there might also be other investors. That sponsoring real estate company, their friends and family might be in the investment, their dad might be in the investment, their Aunt Susie might be in the investment. Sometimes there are other investors as well. It could be just our investors. It could be our investors and other investors in the same transaction.
Andrew: Okay. Can you give me example of financial returns on one of these deals without having to go through infinite disclaimers and just say this is going to be an idealized example.
Jilliene: Tons of risk and real estate, nothing is guaranteed. I’ll give you that as my disclaimer. It totally depends. On the low end, the majority of what we’re targeting is in the 6% to 8% range. On the high end, we’re typically targeting 15% to 20%.
Andrew: Six to eight percent return?
Jilliene: Six to eight percent cash flow. So, on an annual basis, you’d be making Six to eight percent on your money.
Andrew: Coming back in, in the form of a check.
Jilliene: We’ll do a direct deposit into your bank account. We don’t believe in checks.
Andrew: The reason I’m asking is we’re not talking about appreciation, right?
Jilliene: No appreciation. That’s just cash flow.
Andrew: Wow. I’m getting excited about this too. Interesting. All right. That’s all the questions I have. I will just say when I started researching you, before I did the first bit of research, I looked at your name RealtyMogul and I said, “This is going to be one of these info marketers who’s going to tell people how to get rich info marketing.”
And then I saw Techstars, financial tech, I see how it works. This actually should be a very boring company but there’s something interesting about it because of the name and the name worked in your favor. I have no interest in this company, now that I see it, I’m really psyched about it. We probably got a Mechanical Turk who emailed me about you. Who knows?
Jilliene: Who knows?
Andrew: I’d be okay with it. If the outcome is like this, then I’m good with it. Anyone who wants to check you out should go to–what was that URL? RealEstateWithFriends.com or go to RealtyMogul.com. If you guys ever see David Cohen, shake his hand. The guy did well here with this one, the founder of Techstars.
My two sponsors for this interview of course are HostGator–if you need to host your website, you’ve got to check them out. If you hate your hosting company, again, check them out, they’ll migrate you for free, easily. If you have WordPress, for example, they’re at HostGator.com/Mixergy. Of course, we’re going to do a big conference I’m going to be a part of. Go check out Leadpages.com/Mixergy.
Thanks for doing this interview.
Jilliene: Thank you.
Andrew: You bet. Thank you all for being a part of it. Bye, everyone.
