From Battleships to Buildings: A Navy Veteran's Guide to Retaining Owners

Presenter:

What's up everybody? And welcome back to another episode of Loop It In, the DoorLoop podcast, where we pick the brains of experts in property management, real estate, and investing. Tech? We cover it. Marketing? That too. So whether you want actionable tips or the insider scoop from top performers in their industries, this is one show you won't want to miss. Be sure to subscribe so you won't miss out on any future episode.

David:

Hey everyone, this is David Bitton, Co-founder and CMO at DoorLoop, and I'll be your host for today's show. If you are tuning in to our audio-only podcast, you can also watch the video version of this on our website at doorloop.com/podcast.

Today, we're going to be joined by Lior Abramovich from Blanket Homes, who is joining us all the way from Tel Aviv, Israel, and has just an incredible journey and story all the way from the military battlefield to the boardroom. As the chief engineer and senior executive in the Israeli Navy, we're going to get a really fascinating look at how he thinks and operates and the biggest lessons he's applied to business from his military service.

We're also going to talk about how property managers can prevent owners from leaving them every few years. I believe the rate is 33% of owners leave every year, and how we can also double their business as a result. So without further ado, Lior, thank you again for joining us all the way from Israel.

Lior:

Yeah. Yeah, it's a pleasure, David. Really, really, really excited about this today.

David:

Let me ask you, you're in Israel right now, but you told me before that you're planning on moving to Miami soon, is that right?

Lior:

Yes, indeed, unless someone will be able to persuade me to move to a different place, but currently, it's either Miami or Tulsa, Arizona, actually.

David:

Oh, how are you deciding?

Lior:

Well, it'll be a tough decision, but I do have another partner that has to take the decision and participating as well. So we'll see whichever the wind goes, but anything will probably be a good decision as a first step in the States.

David:

Cool. Awesome. So Lior, I mean, you and I only really just met less than a week or two ago, and we got connected from one of DoorLoop's also like founders, partners, and first investors, Dean. Remind me again how okay know Dean, is from your military service in the Army?

Lior:

Correct. Correct. We both served as naval officers in the Israeli Navy. I'm a bit younger. I think Dean was already out of service when I probably just started, but the Navy is a very small community, especially the Naval Academy alumni, we're all connected and helping one another. We have this mentorship programs also supporting the new people that are coming out of the active duty service. So yeah.

David:

Cool. So what did you do exactly in the Navy? What was your role there?

Lior:

We always start in the Israeli Naval Academy. It's about a two and a half to three years of academy in which we also are completing our first graduate degree, it's BA. And afterwards, we start our active duty service depending if you're going to serve in the submarines or the surface warships. And then, you normally have three types of departments or four types of departments that you could go into. It's either Comms, Navigation, it's either Weapons, it's either Electronics, or Engineering. So I went into Engineering and served as a chief engineer on one of the largest stable worships in Israel. And afterwards, I was an executive officer of the Israeli Naval Academy and chief instructor there.

David:

Wow. Cool. So engineer, meaning you were down in those... You were the guy with the wrench?

Lior:

Grease, oil, fuel, you name it. Everything was pretty much... I was soaked pretty much in every type of those things that you can imagine.

David:

Why were you in that department? You were always good with your hands, always sort of like a handyman?

Lior:

Yes, indeed. Actually, my grandfather served in the same role. All of my family came from Ukraine to Israel in the early '90s. And he actually served. He was also a chief engineer, but in the Soviet Army. And so, first thing, I soaked in all of those stories and grew from those stories and from many, many experiences that he described. But also, afterwards, he opened up a car garage. He opened a car shop that I used to work as a kid.

David:

Got it.

Lior:

Started from cleaning, then changing tires and went through to more of the mechanic stuff. So when I came to the first recruiting process and they asked me, "Okay, do you have any experience with engineering or electronics?" I said, "Yeah, I worked in my grandfather's car shop." And they said, "Okay, done. You're in."

David:

"You're in." I mean, for people listening, just so they understand, I mean, you're 18 years old at this point. Very few people have that experience, so if you do, that's how they put you into those departments. And then, you ended up moving to becoming an executive officer. What does that mean?

Lior:

So normally, after you finish your active duty service on either the naval warships or the submarines, you have a couple of like venues to pursue afterwards. You can either go into training, meaning you can either go to back to the Naval Academy as an executive officer that is in charge of training of the new cadets, or you can pursue another, I would say, venue of more into the research and development in different spaces in the Navy, and many other stuff that are not necessarily active duty on the water, to say explicitly.

And I really wanted to train, to teach the next generation of cadets. And that was an amazing opportunity for me to really lead, specifically, the training for the squadron that's called the Sa'ar 5 Squadron, which is the larger naval warships that includes, actually, multidisciplinary approaches, not just engineering, but it was actually all types of cadets that were chosen to serve in this specific squadron.

David:

Cool.

Lior:

Yeah, love to teach and love to talk.

David:

So Lior, let me ask you, what was some of the biggest lessons that you think you learned and took away from your military service that you applied to the business world? And you have your own company now, which we'll get into. So what are some of those lessons that you took over?

Lior:

Wow, good question. I think the biggest one is how to feel comfortable in uncertainty. One of the biggest things that we were taught over and over again, literally from the first day we set foot in the Naval Academy, was how to deal with uncertainty. Like in the first three months of the Naval Academy, this is the period that everybody's afraid of because this is the period where, normally, everybody quits. We start between 100 to 200 cadets, and eventually, we end up about 30.

David:

Wow.

Lior:

Yeah. And during this time, so for example, it's not something secret, it's regular training, so we have this week that, normally, every night you literally almost don't sleep at all. And in one of the nights, and it happens pretty much every week, but in one of the nights specifically, we were jumped to go into a long, long walk of about, nobody knows for how many miles, but with full gear, full everything, middle of the night.

And it's about maybe like a 10, 20-mile quick walk with all the gear, taking many other stuff together with you. And then, when you come back, so you expect, "Okay, we are turning back. Okay." First a glimpse of hope and everything. You know it's going to end, right, now because we're coming back to the base. You come back to the base, you go back to sleep after. And again, you normally have five minutes to get ready for sleep after a shower and everything. Even to brush my teeth today, I normally take almost that entire time. And then, you go back to sleep, you're sure that's it. And then, after like 30 minutes, boom, you're jumped again.

David:

Wow.

Lior:

And this thing happens almost three or four times at night. Every time you're coming back, you're sure that's it, you're going to sleep. And just imagine that experience and how frustrated you are and how you have no clue what's happening. You're exhausted. Literally, everything is against you and still you have to persevere.

And I think this first experience that went on with different types of experience down the road really taught me to be calm. Things will happen. Uncertainty would always be waiting for us around the corner, whether it's in our business life, whether it's in our personal life. Stuff happens and we have two choices. We can either accept it or we can try to fight it. When we try to fight it, we give it even more exhausted. We give too much resources that eventually work against us.

So feeling comfortable, accepting it, and even, I would say and exaggerate a bit, being excited about it because from each one of these experiences and challenges, at the end of it, there's a good lesson and you know that you will come out stronger. So there's a good thing to wait for. And not only feeling comfortable with it, but also feeling excited about it as a challenge to persevere through and win. I think this was one of the biggest lessons that I always try to also convey to my team that, "Okay, things are difficult, there are a lot of unknowns, but think about where we be at the end of it. This is exciting. This is something worth fighting for."

David:

Wow. It's incredible. Yeah, in the US, the Navy or the Seals, they have something called Hell Week, which might be a little bit more intense, but it's very similar. You're not sleeping. They're trying to break you-

Lior:

Exactly.

David:

... and see if they could break your spirit. What I will tell you personally is that my father was in the Army also. He was a paratrooper in the Six-Day War. And even though he's 75 today, he still has that army mentality till today. If you tell him right now, put 30 pounds in your back, go walk 20 miles, no problem, he's going to do it. It's incredible how it stays with you for the rest of your life. I love that.

Lior:

Indeed. Indeed. Try to see what happens when two naval officers meet together, they wouldn't talk about anything besides their time in the Naval Academy.

David:

Wow, that's awesome. So tell me about your journey after you finished military service. From my understanding, normally, people travel the world and they go to school and then, they start working. What was sort of your journey there?

Lior:

Well, literally the day after I finished the active duty service, I started my first day at work. I didn't do any journeying, so didn't go anywhere. I always had a passion for real estate. I actually started my first step in real estate before I started my active duty service and before I joined the Israeli Naval Academy. I bought my first rental property in Atlanta, Georgia back when I was about 19 years old, thanks to my mom, who was my true inspiration for that.

And when I saw that, interesting concept, you can buy a property with someone else's money, which is the bank, earn money on it, it appreciates in value, it pays for the money that I took from the bank. And I said, "Okay, I love this concept and it's definitely something worth getting more into". And during my time in the Navy, I kept helping other friends to invest in US real estate.

And started, I would say, getting more into the actual stuff of specifically single family rental investing so that when I finished my active duty service, I immediately started working for a company that was focused on built-to-rent in the United States. Back then, we didn't use the term built-to-rent, it was just new construction for investors or investment purposes.

So I started there as head of acquisitions, afterwards, vice president of business development. Oversaw about $150 million worth of acquisitions during that time for over a thousand individual investors, mainly mom and pops, but also, some institutional investors as well. This was literally the best school ever because I had the experience to work with investors from pretty much across the entire world from Chinese, Israel, Canadians, Russians, Americans, of course, but really had that experience to really understand how people approach real estate investing. How do they approach and view this thing called passive income? And so, what's their goal?

And throughout that time, so first I would say Academy of Real Estate, I was in the Academy of Navy, and then, I turned into the Academy of Real Estate. I really became close with our partner property managers because I oversell a lot of our operations in the States from land acquisitions up to dispositions and worked all the time with our home builders, general contractors, lenders, insurance providers, pretty much every deal related party across the value chain. But the ones that were our centers of knowledge, our boots on the ground, my closest friends were our property managers.

And I was always sort of like on this bridge between the owners, between the rental property owners and the property managers, and had a very interesting perspective because I heard the challenges here, I heard the challenges there, and the wants and needs, and was always trying to mitigate that and make everybody happy, which is hard in property management, it's hard.

David:

Very.

Lior:

But it really gave me that in-depth look into really what makes this industry move forward and what it still lacks and missing. And that's where my mind started working and the gear started going into, how can we improve our industry? What can we do to make the industry better for everyone involved from the property managers to the owners?

And at that point in time, I also thought about doing something good with real estate as well, so I co-founded together with some of my fellow naval officers, a nonprofit organization that renovates homes of senior citizens in need and Holocaust survivors here in Israel, actually. Yeah, been doing really a lot of good things and been trying just to give back as much as we can.

So really real estate was always my entire life. And after that time, when all these talks about what can be improved in the industry started to form up, I became aware of these two main challenges in the industry. One is the never ending challenge of profitability. Property management is a low profit margin industry. You have to put systems in place, efficient systems in place that can really help you even start growing and stop surviving until a certain point. But there was another challenge that I was really passionate about, which is owner churn because the first time that I heard about owner churn was-

David:

Explain what that term means. Not everyone uses the word churn, so explain what that means.

Lior:

Yeah. It's other attrition or churn. But churn is when you lose a unit, when you lose a property. And normally, that property is lost due to one of two reasons. It's either the owner, our client as a property manager is not satisfied and he decides to leave for the competition for any reason whatsoever. And the second reason is that owner just wants to sell his property. And you can be the greatest property manager of all times, you can do an amazing job, but if he wants to sell, he sells and you don't really have a lot to do about it.

And that was really the case back then about six or seven years ago, that, really, there wasn't a lot of even awareness about, what can we do as property managers to combat churn? And unfortunately, it is almost the same situation today, not a lot of people talk about churn. A lot of our clients talk about churn as sort of like a silent killer, something that we all suffer from, but nobody talks about. And when you hear about the average churn rates in the industry, you are surprised because at least a quarter-

David:

What are they? What are the average churn rates?

Lior:

So the two main data sources that we have today that provide some clarity about this is the national reports by Buildium and Propertyware and the NARPM annual performance report as well. So according to NARPM, the average churn rate for the best perform performers, I'm talking about the property managers who are killing it, their average churn rate is between 10 to 12%. That's average, meaning some are higher, some are lower.

David:

Wow.

Lior:

The rest-

David:

Which means that every unit will eventually leave you in about 10 years.

Lior:

Something like that. Something like that.

David:

Yep.

Lior:

The rest, the average churn rate goes up to 32%.

David:

Wow. So three years.

Lior:

So meaning there are property managers who are losing, every year, almost a third of their revenue generators. And I normally stop at this point and say, let it sink for a second. Imagine yourself for your business losing 30% of your revenue every year. And-

David:

They probably don't even feel it or realize it as much because at the same time, they're focused so much on bringing a new business, maybe they're losing 15%, but they're still losing a lot. If they just focus on retaining people, you can have a successful business just on retention, not even getting new customer acquisition.

Lior:

Exactly. Exactly. And it's even more than that because when you factor in the unit lifetime revenue, then the number is getting way scarier because again, according to NARPM, the unit lifetime revenue is around $16,000. So multiply that by the number of units that you're losing every year, and then it becomes a very scary thing to comprehend.

And I think the biggest problem is, okay, that's happening. We understand that it's happening. it's a reality. It's the industry that we're operating in. What can we do to solve it? And this is where it gets tricky because normally, again, what most of us know is, okay, the only way is to go and try to acquire more units, acquire more owners, new leads.

David:

Right.

Lior:

And the way we're used to do it in the industry is partnering up with partner agents that we know in our network to refer some leads, work on providing a great service to also get those Google Reviews to also make it attractive for potential owners who are looking for property management in our industry. But it's not that scalable when we think about it. It's not that scalable in a way that we can project and make sure that we are outpacing the churn that we are experiencing.

So yeah, this is where my brain started working and was really, I would say even a little bit frustrated about the fact that there is no solution today to this. And this was the first wave of conversations that led to the birth of Blanket down the road.

David:

So I have two questions on this. First, you said there's two reasons people leave, number two, you said the owners sell their properties, and number one was there's many, many reasons why they go to the competition or maybe they self-manage. So out of that bucket, why are people leaving? Why are owners leaving property managers? Is it lack of transparency? Is it communication? Is it trust? What's happening there?

Lior:

All the above. All the above.

David:

Okay.

Lior:

I would say a lot of people think it's about money because normally people say... Okay, this is another very interesting fact, and so, I'll get back to the answer. But a lot of people think that the interests are misaligned between the owners and the property managers because the owner wants to save every dollar, and the property manager also wants to make every dollar. So how does that go together?

David:

Yep.

Lior:

But I say on the contrary, the interests are completely aligned because when you ask an owner, why are they investing in rental properties, it's normally two reasons, two goals. One is to build a stronger financial future, retire earlier, build that passive income to retire financially safe. And the second thing is leave a legacy for a loved one or for our kids.

When you ask the property managers, why are they doing what they're doing? These are the same things. It's to build a better financial future for ourselves, for even our team members, and also leave a legacy for our loved ones and our kids. So when you think about it, when the longer and most important incentive is so aligned, we're in this together as owners and property managers. And a lot of property managers say like, you're getting married to a property manager, you're dating an agent, or any other deal-related party.

David:

Yeah.

Lior:

So just a quick side note about that, but back to the question. So a lot of times when people try to compete on price, I would say it's like a race to the bottom. The real competition is around value, is what value do we provide to our clients as property managers? And what do clients want?

I'm a real estate investor, what do I want? I want first of all, of course, peace of mind. This is why, in the first place, I came to a property manager. The second thing, I want to feel that everything is transparent, I know what's happening, and nobody's trying to fool me, so to speak. And the third thing, I want to be aware, I just want to be aware and get that communication that explains the why sometimes. Like getting right now a bill of, I'm exaggerating, but $5,000 for many things that need to happen around the property without even explaining the reason for that and without even explaining that you as a property manager did everything to make sure that I'm spending the least amount of money and you found me the best contractor ever, that would make the process of me accepting that way more difficult, instead of just saying, "Okay, approved," boom or owner contribution done. So it really is around that communication, that transparency and understanding, and that's really the basics.

But there's another thing that is very important that I always experience as sort of this person in between the property manager and the owner. So the owners normally expected these three things to happen from their property manager and of course, to take care of all the other stuff that property managers are focused on, which is literally taking care of the property. This is the heaviest thing and the biggest thing to do, and unfortunately, it's not appreciated enough by owners, because I always say when you go to a property management, pay the property management fees, it's an investment in your property. It's not an expense, you're investing in your peace of mind.

But the thing that normally owners don't know they can get from their property manager and they need it is that trusted advice, is what am I doing bad or what am I doing good with my property? Do I need to sell it and buy another one? Do I need to buy another one? Do I need to... Maybe my insurance is very high and I can easily renew it and improve my cashflow. At the end of the day, you are the person that knows exactly what's happening with the property, you know exactly how to...

You are the professional, share with me that advice instead of me going to other people or other folks that have a very misaligned interest than mine and yours because both of us want to grow our portfolio, want to optimize our portfolio and make sure there is the less amount of headaches that we can. These are our interests. If I'll speak to a turnkey operator or someone who wants to sell me a property, he'll just try to sell me whatever he can. You'll try to help me buy something that you would also benefit from, a good property with good tenants, in a good area. So why don't you help me do that? Why don't you help me understand what's my cash-on-cash return?

From over a thousand investors at the beginning of my career that I had the privilege to work with, none of them knew how their property was operating. They always called me, "Lior, can you send me again that... Can you update the pro forma that you sent me about a year ago with the new cost and expenses? Here are the expenses that I got from the owner's statement, can you update that pro forma for me to understand what's the return on my property? Can you help me with the value? How much my property is valued at? Do I need to sell? Do I need to buy? Maybe I can refinance. I need some money maybe to buy another property or just for some vacation. Maybe I can refinance right now."

David:

Yeah. It's an interesting idea because when you think about it, the property managers have more experience than the investors times a thousand normally. They're managing hundreds if not thousands of properties. They're exposed to everything, when you as an investor, you're just exposed to your five properties or whatever you have. So I love that.

So let me ask you, how did you parlay that into your own business? So it seems, if I could just summarize, it seems like you saw a big gap and a big need in the market, property managers losing owners. And then, it seems like you saw an opportunity to help both sides, so you started Blanket Homes. So now, explain to us how did you make the decision to start Blanket Homes? And what is Blanket Homes?

Lior:

Yeah, so it really came from my personal pain as you can hear. I'm very passionate about this thing. And really, it started from a lot of conversations that I had with my clients and investors that I always saw how frustrating it is and how time-consuming it is just to give them those little points of information. And really how simple the solution is is really just communication, trust, data.

And when that started happening, I started thinking, who is best suited to really help me as an owner to reach those goals that I have of early retirement, taking care of my financial future? The person that I bought the property from is probably already not in communication with me, like maybe besides a couple of emails that he wants to send me and trying to solicit some new properties to send.

David:

Yeah.

Lior:

The lender, again, same thing, maybe after a couple of years, "Hey, you want to refinance?" Or, "You need anything else?" The property manager is the only one that really understands my property, that understands my needs.

And then I thought, I'll take it from a very, I would say, egoistic type of view, if I want to help myself, and my parents who are also owning rental properties that actually act as their retirement today, if I want to help them, who do I need to empower? Who is the one best suited to help them get to their goal? And then, it struck me, it's the property manager.

David:

A hundred percent.

Lior:

And the property manager eventually, and this is something I speak a lot about with my friends, all of them have the goal of changing that perspective of a typical rent collector, toilet fixer into a trusted advisor, or even more so, an asset manager. The only-

David:

But let me pause you there. So most people listening are going to be property managers, how do you get them to get their owners to think of them as their trusted advisor?

Lior:

Speak with them, communicate, share your experience. You have a lot more to give them than anybody else that they have ever been in contact with in their real estate journey. Share with them. It can be either quarterly performance review sessions, just... I know it can be time-consuming, but the value and the return on that, even one call, it can be even annual performance review sessions, start with that. Start small. But that will give them so much trust and so much understanding on where the next step is going.

And it'll probably, as I've seen it, would even get them excited about real estate investing because they will feel in control, they wouldn't be frightened. There's a lot of fear in this journey, but once there is information and clarity, the fear goes away. So the moment for them to make the decision to buy another property will be inevitable and they will trust you as the one who gave them that information. Again, without any interest, just going over the performance of their property, telling them the good and the bad.

And if there is bad, tell it, say it. I always said, it's better to say what's not working instead of trying to hide it because then you'll just look like someone who had some kind of hidden interest. Say it, say it and provide like, what's the mitigation? What's the step they need to take? Maybe it's selling the property. And even if you're not doing any real estate transactions today, you have an agent probably in your network that you trust and just by connecting your client to that agent to help you sell that property and buy another one instead in a better area with maybe better performance, so like metrics. That's it. You have a client for life after that.

David:

Yeah.

Lior:

For life.

David:

Yeah, agreed. Agreed. So Blanket Home sort of sits in the middle. You're a software tool for them to use.

Lior:

Yes. We are what you'll consider as a B2B2C platform, meaning our clients are the property managers, and we try to also describe them not as our clients, but actually as our partners because really, the business model, we'll get to it, is really the embodiment of a partnership rather than a client/provider relationship. So our platform is serving the property managers, but I would say two-thirds of it is owner-facing, meaning it's a platform that their clients are using. The platform is white-labeled, so it is like they as the property manager give it to their owner-clients to use.

David:

Got it.

Lior:

But they as the property manager have like their own center console or admin-

David:

Dashboard.

Lior:

Exactly. They see everything that's happening. And a lot of data that they don't even have in their property management software that gives them that real estate advisor edge, gives them the ability to even conduct these sort of owner performance review sessions literally with a click of a button and even think of the next situation. This is something we really try to reach to. And owner calls and says, "Why the hell did I pay so much on maintenance this year?" Typical, right? Like it's every other Tuesday.

And then, you have two options at the property manager. You can try to... And hopefully, that owner is not screaming or anything. But you have other two ways. Explain that, "Okay. There was a lot of maintenance costs. There was a lot of things that we had to manage." But you have another option if you have the data at your end, you can say, "Yeah, you spend about," okay, let's exaggerate, "10 grand on maintenance this year, but your property has appreciated by $200,000. And here's another fact, because we have all the data about our entire portfolio, many of other owners in our market also experienced that because maybe there were some kind of a cold, pipes burst and everybody experienced it. So when you would take into account the full picture and the fact that you still generated," let's say, I don't know, "$50,000 in cashflow in the last three years and your property appreciated in value by $200,000, suddenly, those $10,000 in maintenance costs are not that big."

David:

Right. How are you getting a property appreciation? Are you pulling that into your software?

Lior:

Yes. We work, the way our platform's enriched with data, first, we integrate with the property management software to take all the data from there and provide it in an investment type of dashboard, we call it an investor dashboard. But we also pull in a lot of data from county records and public and private data providers. And some of the data providers have what is called AVMs, automated valuation models. We take in those AVMs and we factor it into our software and we're able to show that estimated value of their property. And if they have multiple properties, we'll also show them their portfolio value, what their entire portfolio is worth right now.

David:

Got it. Got it. What other features are you offering in that platform? Let's say they're using DoorLoop and they're using Blanket Homes, so what other values are they getting? So you have the property valuations, and then you mentioned one or two more things, what was it?

Lior:

Yeah, so it's property values. They can see the total equity they have in their portfolio, they can see the net operating income, cash-on-cash return, cap rate. And normally, this is where-

David:

Oh, wow.

Lior:

Yeah, no, but-

David:

It's almost like Juniper Square, if you've heard of it. It's like an investment management side of the business.

Lior:

Yeah, I'm happy you mentioned that because that's-

David:

So you have heard of them.

Lior:

Yes, I definitely heard of them. And I'm actually taking that inspiration and trying to bring some of that into our space because think of this for a second, when you look at commercial real estate, the asset class that Juniper Square is serving, the REITs, the funds, the big asset managers, the institutional investors, they all have an investor relations department. This is the, one might say, revenue generating department. This is the most important department for any real estate fund, REITs, you name it. They serve millions of investors. Who else serves millions of investors on a daily basis in our industry, in the single family rental industry? Property managers.

David:

Property managers.

Lior:

Do we have investor relations department? No. Do we have an investor relations mindset? No. So this is what I'm trying to bring a little bit from that institutional standpoint, those institutional tools, institutional level service into the single family rental industry, which is, by the way, $4 trillion industry, not too different from the multifamily industry. And hopefully, with this, this is what we're trying to do. And as we said, we're trying to make that leap and help make that leap for the property manager, from a property manager into an asset manager by giving some of this investor relations mindset.

David:

I love it. I'll tell you why I love it, because the owner now sees how you think. "And yes, I am looking at your business from a valuation point of view, from an investment point of view. I think of cap rates, I think of valuations, I think of all these things. And you should too, Mr. or Mrs. Owner." So the fact that you're thinking about it is amazing for the owner, they love it. I have one of my best investments that I'm with, a syndication fund, they send me so much information, so much data, so many reports, and I don't read it, but I know that they're on top of it because they're sending me so many great reports. And if I ever wanted to look, I could go look, it's great. So I see the value you're providing. Now, I think what's crazy to me is your price, and I think people are going to be shocked when they hear it. So can you share the price of using this amazing platform?

Lior:

Yeah, it's a very high price, it's zero. Yeah, it's one big zero.

David:

Free.

Lior:

Yes.

David:

Completely free.

Lior:

Yes. The platform is free and there's a reason for it. First, I don't want to make my friends in the property management industry angry for charging too much, that's number one. Yeah, but aside from that, we understand that property management in general as an industry is a low profit margin. Every dollar counts, every dollar per unit counts. And before we even started Blanket, but with the thoughts of building a solution to this problem, I always challenged myself to find a business model that can go around that, that can go around that typical model of a dollar per unit structure, which was super difficult, super, super difficult.

But then, we were finally able to find it, find it in a way that will be, first of all, relevant and attractive to our property managers, but we'll be able to sustain our company as a scalable technological business that would not only help us so build this thing, but to also stay for the long run, not for one year, not for two years, be here for a decade. And that's the goal.

And the way we've built it is as following. We make our money from the real estate transactions. We are a licensed broker. We can operate in pretty much across every state across the nation, but one-

David:

Across the US?

Lior:

Correct. Correct. We're focused only on the United States. But normally, one might say, "Hey, are you trying to replace the agents? Are you trying to replace my agents if I'm doing transactions internally, if I have a brokerage business? Or are you trying to steal away business from the agents that I'm working with right now?" So no. On the contrary, we are empowering both.

The way our model works is that when we do the onboarding, you get to choose two agents that are going to work the platform, one that is going to take care of all the seller leads that are generated, and second is the agent that is going to take care of all the buyer leads. These agents can be either your in-house agents or your partner agents, the one that you trust. If you don't have those as well, we have a vast network of agents that we can also refer to you, but you get to choose.

David:

So let me pause you there. This only kicks in once the owner is trying to sell the property?

Lior:

Or trying to buy because-

David:

Or trying to buy a new property. Okay, right. Correct. So right now, if I'm a landlord, what's your typical client? Property managers with over a hundred, with over a thousand or all ranges?

Lior:

All ranges, really, across-

David:

All ranges, okay.

Lior:

... the board.

David:

So I'm a property manager and I could be using your software today. It's free, great. I'm going to put my thousand owners on it. They're starting to use it. They get all the data, they get the dashboards, everything free. And now, I have an owner that says, "Hey, I want to sell my property." So now, they can go into Blanket Homes and they can say, "Hey, Blanket Homes, I want to sell my property. I don't have a good broker for it. Can you be my broker?" And that's when you come in and say, "Yes"?

Lior:

Correct. Normally, well, we would try to stay top of mind from the get-go that we hope that before even they decide to sell, they already have the person to facilitate that for them. Because a lot of time, the challenge is not retaining the unit, it's even having them to know that they need to tell us when they're thinking about it. Because a lot of times what-

David:

So what you're saying, historically, is they'll just sell the unit and let you know afterwards, "Oh, I sold it. Goodbye. I'm done"?

Lior:

At best, they would notify a day in advance. That's the best case scenario.

David:

Wow.

Lior:

Yes.

David:

I didn't know that.

Lior:

So a lot of times, it's just staying on top of mind. But let's say that that happens as you say. So normally, the way, in our system, it would work is you'll have different opportunities to capture that intent before really it happens. And then, when it happens, what we'll do is give you a seamless process to list that property in your marketplace. Because maybe I forgot to mention it, but when you as a property manager use Blanket, you create sort of like a network of your own. Th Thee platform is closed only to your clients.

David:

So what you're saying is if my owner wants to sell their property, I could offer it to all my other owners to buy it.

Lior:

Correct. Correct.

So that when it's sold, you get to keep management. And there are a couple of steps that kick in when there's a listing in creation. First we set that listing and we publish it on the marketplace for all the other owners. All the other owners also get a notification. They get an email saying like, "Here is a new property that was added to the market," or "Hottest properties of the week."

David:

So now, if you're doing that, they also start realizing that, "Hey, I could sell my property to you, you could help me sell it."

Lior:

Correct. Correct. So it's a thing that also helps other owners understand that, "Okay, I can do it here." A lot of times, that's the first challenge, the first step. So when that happens and another owner buys that, you get to keep management. And also, if you are the agent on the transaction, one of your in-house agents, so you get to get the commission. So you're winning twice. And that's the way we tackle churn, that's how we eliminate churn, we just sell it in your own network.

But the marketplace, as you can imagine, as every marketplace has other capabilities, it's not only to serve the use case of selling in your own network. What about owners who just want to buy more properties? They see the data, they see everything. Let's say they see they have a lot of equity right now in their home. Maybe in today's interest environment, it's not that attractive, but let's say they have a property they want to sell. Okay, let's say that for example. We also have, by the way, the ability to do a 1031 exchange in the platform, so it makes it-

David:

Wow.

Lior:

... even way, way easier.

David:

Cool.

Lior:

But let's assume he wants to sell. So now he has that money and he can buy another property in the platform. But let's take an extreme situation. None of my owners listed a property for sale. The marketplace is supposed to be empty. What can he buy? So to solve that problem, we also push a lot of off-market inventory to your marketplace from our vast network of inventory partners that include wholesalers, turnkey providers, and home builders, all off-market. We're not pulling data from the MLS, so these are properties that nobody can find anywhere else. And those properties that we push to your marketplace are properties that are in your area of operation, meaning, let's say you're operating in Atlanta, Georgia, your clients wouldn't see properties in Orlando, Florida, they would see properties based on your zip codes because our system takes all your zip codes, parses them with all of our inventory and takes all the inventory that matches those zip codes.

David:

What about other owners in the Blanket Homes platform? Let's say you only have 50 owners and none of them have a property for sale, can they check a box and say, "Show my client, my owner, all properties in the Blanket Homes network?" You could do that?

Lior:

So that's actually a good question. This is something we get asked a lot.

David:

Feature request.

Lior:

Yes, indeed. Big feature request. Big one because a lot of property managers, they ask us, okay, let's say I have a client that has a lot of properties already, I'm talking about the experienced ones. They understand already. They are way into the diversification and the importance of it. They want to buy a property elsewhere. And I have a friend, actually, in Orlando, let's say I'm that Atlanta property manager, I have a friend in Orlando.

David:

Yep.

Lior:

Can I refer to him business and so, show his properties to one of my clients and get him to buy a property there and maybe even make your referral fee from that? So those are the questions that we are being asked a lot right now. But to tell you the truth, I'm not sure because some property managers are a little bit hesitant about that. And there is like a mix here that we still are validating and trying to understand it, but-

David:

You'd have to give the property manager control and just access, check a box.

Lior:

Exactly.

David:

It's up to you.

Lior:

Exactly. So that's what we're trying to do. We'll probably have that as an option and you can choose whether to open up and select share with the network or select keep it closed, to yourself.

David:

Okay. So just so I can summarize, the one way that you make your money is if they don't have a broker, a buyer or seller agent, they can use Blanket's internal agent and that's it, that's the only way?

Lior:

No, not necessarily. We are not the brokers, but we have a model that is flexible enough to fit any model. So we charge a marketplace fee, which is... Exactly. We charge a marketplace tech fee from every side. And we also do the transaction management. So let's assume we have three scenarios. One scenario, these are your in-house agents, your agents are taking care of the transaction. Second scenario, you bring your partner agents. Third scenario, you don't have any partner agents. We help you find those partner agents.

In any one of these cases, the business model and process works the same. They get the buyer to sell a lead. They help them come up with the asking price and the offer price, sign the document, sign the listing agreement, sign the presentation agreement. We then take that transaction from them and take care of all the coordination from offer to closing with also the ability, by the way, to do title and closing inside their platform. So the agents don't even have to deal with most of that coordination and heavy lifting, we do that for them and they can focus really on the relationship.

David:

This is only if they're buying or selling a property inside the Blanket Homes network?

Lior:

Correct.

David:

Okay. Okay, got it. So they're still free to sell the property or buy a property any other way they are. They don't have to use Blanket Homes if they don't want to. But if they do want to use that internal marketplace, then that's where you make your money. Great. I mean, it's win-win, honestly, for everyone in that case.

Lior:

Correct. Correct. We always try to explain the value of trying to do it first in Blanket because in Blanket, the days on market are not counted. And even if you want to sell the property on the market, you could test the waters, put it in Blanket for about two, three, four weeks. Let's say the owner doesn't get an offer that he's satisfied with, then you can always take it to the MLS and try to list it on the market. But the problem with that is, normally, investors are not looking properties on the MLS. In most cases, that will be a family that is going to live in that property, meaning you wouldn't be able to keep management. So we do try to do as much as we can to sell it in-network or even try to sell it with other property managers and outside Blanket network so that they will be able to keep the management because an out-of-state investor would normally keep management if he buys that.

David:

And I love the business model because it's also helping the property managers retain ownership of that unit. So if their owner wants to sell the property to another owner in the network, you facilitate that transaction, you can make a commission off it, but you also, hopefully, get to keep that unit and still manage it. So your retention rates skyrockets.

Lior:

Exactly. Keep your doors at home.

David:

Wow. Keep your doors at home. Is that the slogan?

Lior:

Yep.

David:

I love it. If it has a door, you can use DoorLoop. I love it.

Lior:

Exactly.

David:

Wow. Wow. Okay. I mean, we covered so much, I don't even know where to go from here. But let me ask you, what does the integration do with DoorLoop? So a lot of people listening are using DoorLoop, what will the integration do?

Lior:

So the integration is using four main types of data categories. It's using pretty much everything else, but forming data categories that are the owner's directory, the leases, the properties, and the GL accounts. What we do with this data, first of all, this whole data, pretty much with all the data that we pull from other data providers, creates the platform, creates the users for each one of the owners in advance, meaning that all the owners have to do is literally click a button, sign up, and all their dashboard is already created without any data that they need to input in because things like property taxes, we pull in for them as well. So they literally don't have any data input.

David:

Wow.

Lior:

And this is the interesting part, probably all can agree here who are listening that the GL accounts can be a nightmare in terms of how do we manage them and how do we literally stay on top of everything and how there is like cleaned up. What we do a lot of times, we see that there's a lot of issues with that. So we sort of like take those GL accounts, we clean them up on our end, and so, create a clean version of the GL accounts with a structured database that enables us, really, to showcase that in a structured, clean way to the owner, one that makes sense and is really accurate to the dollar.

David:

Wow. Okay. Love it. So if people want to join Blanket and connect with DoorLoop, I'm assuming they'll sign up for Blanket first, then they can contact either of us and then they can make the integration happen.

Lior:

Yeah, easy. Normally, thanks to you guys. DoorLoop, I always say, by far, and I referred many clients to DoorLoop, has an amazing and amazing user experience. It was built in a brilliant way that is also super friendly to developers. And it makes our job easier for our research and development team to facilitate and support the different DoorLoop clients because it literally is like five minutes and we're done.

David:

Awesome.

Lior:

So no matter-

David:

That's the idea.

Lior:

Exactly. No matter where you come from, whether it's from DoorLoop or from Blanket Homes, it'd be five minutes and you're good to go.

David:

Awesome. Awesome. Fun question by the way, why the name Blanket Homes?

Lior:

Oh. Okay, that-

David:

How much time do we have?

Lior:

Yeah. No, I'll actually try to keep it short. We wanted an abstract name, not something explicit that says, I don't know, property transactions-

David:

You want generic.

Lior:

Exactly. We wanted something that we can build a story around. That's number one. The second, we wanted also to give some kind of a feeling that relates to property home and also, something that gives you a feeling of the words comfortable. Because retention is all about feeling comfortable where you at right now. When you're covered in your blanket in your living room watching Netflix, you're feeling good, you don't want to get out. You might even ask for your partner to give you some water or something because you're feeling good. You're in your comfy space. It's cozy. And the second thing is also like were you ever angry at a blanket?

David:

I love it.

Lior:

Is this sweet?

David:

So you're taking care of them. You're making the owners and property managers cozy and relaxed.

Lior:

Exactly.

David:

I love it.

Lior:

Exactly. So they would never leave.

David:

We're not waking them up at 4:00 AM to go for 20-mile hikes. I got it.

Lior:

Indeed. Indeed.

David:

All right, so I got three final questions for you to wrap it up. First is, where do you see the future of property management heading?

Lior:

I think we're going to evolve just because that's the need from our clients, more to an asset management type of industry. And it would require a lot of property managers to either step up or be obsolete because we finished the race to the bottom with low property management fees. That's done. There is nowhere else to go. Now it's a race to the top in terms of value. So I definitely think that the strong property managers would take that role of a trusted advisor, take that role of an asset manager.

Again, I'm not even talking about using Blanket or not using Blanket, it's just this is where the industry goes. I see some of my good friends in the property management industry, where they were like seven years ago and where they're at today, it's a completely different game, completely different game. There's so much technology also that really enables the property managers today that implement these softwares like DoorLoop to have some more time to focus on those relationships. So I think, really, the property management industry would evolve into a relationship-based industry similar to what the investor relations department and aspect that commercial real estate has. It's a relationship-based type of business. So I think definitely that will be one of the core values that will be developed and improved.

And the second thing is becoming more of real estate experts that they are because they are, we are not showing it yet. So I think these two things, so like relationship experts, real estate experts, these two things will be the two parallels in which the industry will go towards. And I think this is great news for property managers because look at what's happening today with interest rates, we are facing a huge, huge wave of accidental landlords, huge. People are going to think twice before they're selling in and saying goodbye to their 3% or at some cases, 2% mortgage rates. And they will make the move and still hold onto their property and somebody will have to manage it.

So these folks are going to be even less, even more hands-off. They would need somebody to take care of that property for them. And they will probably expect a digital experience because we're talking about millennials, even the boomers right now already very efficient with all the different digital tools and softwares. So I'm definitely thinking we'll be more digital, more relationship based and more focused on being a trusted real estate advisor.

David:

Yeah, completely agree. And I guess I'll end on this question. So if you can go back in time when you just graduated the army, what would you tell yourself? Travel to Thailand?

Lior:

Oh yeah, first of all, yeah, that's a big regret. I definitely had to make that trip because I didn't have a vacation in a long time. No, but I'll definitely say the following, don't forget yourself. I'm a complete workaholic, again, I didn't take that trip, I immediately started working. That takes a toll. And as a married man that is also starting to build a family, literally, I now even can imagine how I'll have more time.

And I think this is something that I would tell myself, think about yourself, devote that time, manage the work-life balance. Give the time because these moments in life are precious and they will never return. They will never return. And again, we're in a podcast around business, around property management, around making money, about growing, but at the end of the day, family, family is what matters. And if you are working only on your goals and not working on the thing that matters most, you're just missing the point.

David:

Yeah, I felt the same way and then, I had three kids and I was like, how am I going to get everything done? But somehow you-

Lior:

It's magic.

David:

... shift things around and it happens. People do it. You just figure it out. The other thing I always tell myself is not to get stressed at the end of the day when there's more work left, there's always going to be more work left.

Lior:

Exactly.

David:

You're never going to finish all your work at the end of the day. So I think in my 20s, I would work till 5:00 AM to literally finish everything, and I'm like, "I can't do that anymore." So there is need to be more work-life balance.

Lior:

Zero inbox mentality. Zero inbox-

David:

Zero inbox, yeah. Yeah, that was me. It definitely still is me. So, okay, Lior, thank you. You're awesome. Your website is BlanketHomes.com?

Lior:

Correct.

David:

And if people want to get in touch with you, what's the easiest way? LinkedIn? Just shoot you a DM on LinkedIn?

Lior:

Yeah, you can reach out to me on LinkedIn. I'm normally available pretty much all the time. But if you want to just go straight into book a demo to see the platform, feel free to just jump to the site, click Book a Demo. And then, you'll be contacted with Ben, our partnerships' manager, which is brilliant, and be best man out there. And you'll definitely love every moment with them. But if you want to reach out to me, feel free. I'm normally responding at least on the same day, but I try to do my best.

David:

Awesome. All right, thank you so much. Normally, we would offer people a discount for signing up, but it's free, so maybe... So it's amazing. But really, thank you so much.

And for those tuning in, remember that this podcast was also recorded with video, so you can go to DoorLoop.com/podcast to watch the video recorded version or find any other versions or other podcasts or other webinars that we have also happening bimonthly. So, Lior, stay on, but thank you again so much for joining us. I appreciate it.

Lior:

Likewise, David. Enjoyed every moment of it.

Presenter:

Thanks for listening all the way to the end. Don't forget to give us a good rating on whatever platform you're tuning in from. And we'll be back soon with another new episode, we hope to see you there. And until next time, this has been Loop It In.

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