DGS 135: The Power of Technology for Real Estate Professionals with BetterCapital

Do you want to become a better investor? Appreciate and understand property managers—the unsung heroes that make better tenants and owners. Good property managers can change the world.

Today’s guest is Bobby Sharma from BetterCapital, a portfolio measurement and management tool for real estate investors. Bobby started his real estate career in Riverside, California, and his first foray into real estate was through house hacking. In this episode, we explore the power of technology for real estate professionals.

You’ll Learn…

[02:14] House Hacking: Buy a house, but get roommates to pay most of your mortgage.

[03:58] Bobby’s Background: Software developer that wanted to be in Silicon Valley.

[04:47] 2010 Market Collapse: Bobby bought some homes that needed some work.

[05:03] Meetup Group: Bobby started a real estate meetup group in the East Bay Area.

[05:40] Becoming a landlord, buying out of state, and working with property managers.

[06:18] BetterCapital: Management/measurement portfolio tool for real estate investors.

[07:47] Measurement: Tracks deposits, loan balances, ROI, and equity growth.

[09:00] Management: Stores documents, adds reminders, and runs math formulas.

[09:53] Real Estate Results: One of the best ways to invest, grow wealth, plan for future.

[10:35] Preferential Partners: Property managers/realtors project property performance.

[15:00] API/bank integration? Scrape data into systems or pool data w/API connection.

[19:41] Three Ts: Tracking, training, and transaction.

[24:13] Education: Property managers should explain challenges to investors.

[25:48] Property Managers: Unsung heroes that make better tenants and owners.

Resources

Bobby Sharma’s Email

BetterCapital

AppFolio

Cozy

TenantCloud

Rent Manager

Buildium

Propertyware

Schwab

Etrade

Robinhood

Redfin

Yardi

1031 Exchange

DoorGrow on Instagram

DoorGrow on YouTube

DoorGrowClub

DoorGrowLive

Transcript

Jason: Welcome, DoorGrow Hackers, to the DoorGrow Show. If you are a property management entrepreneur that wants to add doors, make a difference, increase revenue, help others, impact lives, and you are interested in growing your business and life, and you are open to doing things a bit differently, then you are a DoorGrow Hacker.

DoorGrow Hackers love the opportunities, daily variety, unique challenges, and freedom that property management brings. Many in real estate think you’re crazy for doing it, you think they’re crazy for not because you realize that property management is the ultimate high-trust gateway to real estate deals, relationships, and residual income.

At DoorGrow, we are on a mission to transform property management businesses and their business owners. We want to transform the industry, eliminate the BS, build awareness, change the perception, expand the market, and help the best property management entrepreneurs win. I’m your host, property management growth expert, Jason Hull, the founder and CEO of DoorGrow. Now, let’s get into the show.

My guest today is Bobby Sharma. Welcome, Bobby Sharma.

Bobby: Thank you, Jason.

Jason: Bobby is with a company called BetterCapital. Bobby, you have quite an extensive real estate experience. I grew up in Rancho Cucamonga, Alta Loma, California. We were touching bases for the show. You got your start in real estate somewhere in the Inland Empire.

Bobby: In the Inland Empire, yeah. Riverside, California. I did what’s called house hacking. Back then, there was no such term. I was 24 years old, worked in Corona, California, and lived in Riverside, California. That’s how I got my start in the real estate world.

Jason: Define house hacking for those that are not house hackers.

Bobby: I was single. I ended up buying a house—three bedrooms, two baths—with the intention of maybe I’ll get a couple of roommates, and they’ll help me with the mortgage. I put an ad in the Riverside Enterprise, I don’t know if you recall that newspaper. This is the late 1980s, early ‘90s.

I got two roommates, great guys. They were my roommates for a long time, also single. One was a plumber, one was an X-ray tech. Long story short, they helped me pay for most of my mortgage. Not quite 100%, but most of my mortgage.

Jason: Nice. All right. And that was your first foray into real estate investing. This sparks something for you. You thought of it, but your roommates, apparently, didn’t. They’re willing to pay rent.

I lovingly refer to the Inland Empire as the armpit of California.

Bobby: Absolutely.

Jason: I had a good childhood growing up there. Now, I’m in Austin, Texas which I’m really enjoying. I got out just before the craziness of the pandemic, and California’s gone insane. It’s gone insane with all the stuff that’s going on right now.

Bobby, give us a little bit of history since that first experiment and give us a little background—qualify yourself. Help the audience understand your experience in real estate or surrounding the property management rental industry.

Bobby: Absolutely. Thank you, Jason. Since then, I was 24 back then. Then, I had to take a break. I got married. I didn’t do much in real estate. But about 10 years ago, when I saw the market really collapse—that was in 2010—I moved up to Silicon Valley. I was a software developer back in Southern California. But I always wanted to be in Silicon Valley, work for one of these technology companies that Silicon Valley is famous for. Sure enough, I worked for one of them.

In 2010, I just saw the market collapse here in the Bay Area as well. I said you know what? I have some savings, so I started going out and picking up some homes that needed a little bit of work. Long story short, I also started a real estate meetup group in the Bay Area, in the East Bay. We call it the East Bay Meetup near Oakland. There weren’t a lot of meetups going on, but most of them were in San Jose or San Francisco, and the people were fighting the commute.

Long story short, I ended up starting a meetup in the Oakland area. Fortunately, that meetup has now become the largest real estate meetup in the Bay Area. I’ve got about 5000 members. We used to meet up every month.

Out of that, I ended up becoming a landlord, buying out of state, and working with property managers. I love my property managers. Without them, I wouldn’t be successful. I totally get the importance of property management.

We own a bunch of rental properties—a lot of single-family, a lot of multifamily, but a lot of it is out of state for cash flow reasons as in cash flow in California. We ended up with several hundred doors out in the Midwest, mainly.

Jason: How did BetterCapital come about, and what is it?

Bobby: Just like a lot of people in my meetup group, we’re active real estate investors. I have rental properties. I’m a private money lender. I have syndications. In a couple of properties out in Ohio, I do what’s called seller financing. We own a bunch of rental properties, a bunch of real estate assets.

I was tracking everything through Excel, but that was just not cutting it for me. You can’t store documents inside of Excel. Things were scattered all over my computer, in my Gmail, and in my Dropbox—leases, insurance, tax bills, reminders, and everything.

What I did was I worked with a technology partner of mine, and we put all the essential tools to track your portfolio. We’re not AppFolio. We’re not Cozy. We’re not TenantCloud. We’re not a property management software, but we talk to a bunch of property management systems. We are like a portfolio measurement and portfolio management tool for real estate investors.

Jason: Explain the measurement part.

Bobby: Yeah. What we do there, Jason, is if you bought a property five years ago, you’re getting your checks every now and then. Your property manager is depositing the checks in your bank account. Sometimes it’s not what you expected because there was a repair, or you don’t know what your loan balance is on the property.

What we do is we track the actual deposits in your account. We track your loan balances. We track the equity in your properties across the board, and then we give you a return on investment. What did you invest in that property, and what’s your annual return on investment? What’s your equity growth?

The analogy I like to draw is if you log in to your Schwab, E-Trade, or Robinhood account, you can see the equity of your stocks. How much did you gain in your stock if you bought Apple five years ago? Or you bought Amazon 10 years ago, how much have you gained? We didn’t have something like that for real estate investors.

What we built was a tool. It has the ability to store documents. It has the ability to put reminders to track your equity growth, to see in a graphical manner how this property performed over the past year, this year, over the past five years, and then since you bought it.

We have a lot of mathematical formulas that run in the background and then you can track. We want people to see how much wealth they have created, or how much equity they’ve created because we want to encourage them to purchase real estate assets.

Jason: I would be curious if they can measure this better, and they can see the performance, do they tend to invest more?

Bobby: Exactly. That’s the whole idea, right? Real estate over time has so many benefits. Sometimes, especially property managers, they are so busy with day to day operations that they forget to remind the investors, the landlords, about the benefits of owning real estate.

Yes, there are bumps in the road. There’s going to be a turnover here and there. There’s going to be an eviction here and there. But if you look at it across a long period of time, it turns out that it’s one of the best ways to invest, to grow your wealth, and to plan for your future.

What we want to do is we want to help property managers and realtors—those are our partners. Property management, which is your audience, as well. If we could help your current set of landlords grow their doors, maybe you bring a portfolio of new assets that they can purchase. But you can demonstrate that, look, if you bought this property with us in Tulsa, Oklahoma, in Dallas, Texas, or El Paso, Texas. If you’ve owned this property, here’s how much equity you’ve gained. Here’s how much your cash flow was last year. Here’s how the property performed.

Then, you can then have a really strong case to go back to them and say, listen, here’s another similar property that is available on the market. Would you like to maybe consider adding a door or a couple of doors to your portfolio?

Jason: It sounds like this is a largely effective tool for the investor. You have a way that investors can see and manage their entire portfolio. They have, say, 100 properties, or maybe they have like 20, 30 doors or something. They can see this portfolio. Then there’s a way they can invite their property manager in to also see this portfolio, keep this updated, or to connect to it?

Bobby: Absolutely. The property managers and realtors play a very important role. The owner can always invite their property manager to see the property in the system or communicate with that property manager. The other is that the property manager can invite the landlords to the system as well.

When they upload a list of their landlords, we create what’s called a preferential relationship and the exclusive preferential relationship between the property manager that loaded up the landlords in the system. That way, if you have a new portfolio that you want to maybe broadcast to your existing landlords, you can broadcast it to our platform.

You can also let them know that, hey, listen. Here’s a similar property that gives you the same kind of returns. It’s in the same area. You may want to consider looking at purchasing this one. We want to help the property managers and the realtors have that exclusive kind of relationship with the landlords.

Jason: There’s this performance side of it. Maybe if an investor is looking at getting into a property, is there any forecasting that’s similar? Is there a forecast inside? Like, here’s a possible future roadmap of what this investment could do.

Bobby: Very good question, Jason. That’s on our roadmap. One of the things we want to do is forecasting or projecting the performance of a property that may be on the MLS or it may be in the portfolio of the property manager. Maybe somebody’s looking to sell that portfolio.

In the future, we will have what’s called a forecasting calculator. You can submit that property. You can punch in all the numbers, and then the system will forecast. Within our platform, they’ll be able to see the projections.

We also have a way for the user to say, okay, if the application is forecasted at 3%, they can adjust that. They can say, what if it only appreciated 2%? Or if the rent appreciation was 5%, what if it was only 3%? And so on. We will give them that tool, but yes, that is on the road map.

Jason: Very cool. Now, does this have an API integration? Because a lot of property managers, they are not going to want to go in and up the second system. They’ve got their property management back office. They’re using Rent Manager, AppFolio, Buildium, or Propertyware typically. Is there a way of either scraping that data into those systems or maybe through an API connection pooling all that data in?

Bobby: Very much so. We talk to the most popular property management applications out there. Most of them have APIs. If they don’t have APIs, we allow the user to import an Excel file. Very easy to do. It takes about less than two minutes to set up a property in the system. Once they get really good at importing data, it takes about five minutes to import the data if they’re new. But once the property is set up in the system, then it literally takes 30 seconds to update a property every month.

Once a month, what are the main items that you’re looking at? It’s once a month, typically. Maybe sometimes twice a month. You’re looking at, did your rent come in? Did you pay your mortgage? Did you pay your insurance and taxes? Did you pay your property management fees? But it’s really very simple to bring that data in.

We have bank integration. You can also pull the data from a bank. By the way, the property manager doesn’t have to do this. The landlord can do this. The only thing the property manager has to do is load up the client list the first time and then reestablish that. The first property manager to load that landlord into the system gets the exclusive relationship. That’s the first-come, first-served relationship that they have. But after that, the landlord should be able to go in and update the system. And it’s very easy to do that.

It’s in their best interest to see the performance of their assets, right? So they do a bulk of the data entry.

Jason: That exclusivity sounds really exciting (I’m sure) to the property management business owners that are listening. Because this could be something that they could upsell as a feature for their more invested investors, those that have lots of doors. It can be an upsell or a premium price point on their premium plan that they offer for the more savvy investor clients.

Now, related to that—and I don’t know if this is a possible future feature request or idea—but a lot of property managers love owning their brand. Would it be possible to white label this service that it’s their thing if they have that?

Bobby: A very good question. Our service is free to the landlords. As long as they’re not over 15 or so doors, it’s free. But to answer your question, we do plan for the larger property managers to have their own white-label co-branded service. Not a problem. It’s available.

Jason: Okay, very cool. What else can this do?

Bobby: We built this platform for investors like myself. Look, I’m a big champion of real estate agents and property managers. Their jobs are often thankless. We forget how much work they do behind the scenes. Managing properties, not an easy task by any means.

We are big cheerleaders and supporters of property managers, of real estate agents. At the same time, the landlords need to be able to track their system a little bit better. Our goal is, we call it the three T’s.

Tracking. To my meet up for the past 10 years, I’ve been providing education. I’ve been an evangelist for better real estate investing. We bring in experts on whether it’s fix-and-flip, buying remote properties remotely, syndications, private money lending, asset protection for real estate investors—just about any topic that has to do with real estate. We’ve been teaching that in our meetup.

We’re going to embed that into the system. If the landlords, the property managers, and real estate agents want to become better at something, we’re going to have an expert present once a month. Tracking, training, that’s our second key.

The third T is the transaction. If the property managers, realtors, have a deal that is what I call investor-grade that they want to send out to their members, then we want to enable transactions. We’re not Redfin. We’re not one of those sites. But we allow them to communicate about it. It could be a pocket listing. It could be a property manager where the landlord is retiring or doing a 1031, but he wants to sell off his portfolio without putting it on the MLS, for example.

Let’s figure out how to communicate within the system to the potential buyers because the people that are in the system who are happy with their performance and their relationship with their property manager, they will want to acquire more doors. Those are our three Ts—tracking, training, and transactions.

Jason: It’s almost like a trading platform. Is this essentially like the E-Trade for real estate investments instead of the stock portfolio?

Bobby: It is. That’s very much our vision. The training is there. The transaction piece is not there. But that’s what we’re building right now.

Jason, in a nutshell, it is E-Trade for real estate because we don’t compete with the AppFolios, the YardEase, the Buildiums of the world, but we partner with them. We don’t want the property managers to change what they’re doing. Whatever they’re doing is fine. We will learn to live alongside the systems they have in place.

Jason: This seems to be just such a missing piece to give investors a real tool. Most property managers are just so caught up on just at least, at the very bare minimum of giving their investors a statement or a report at the end of the month. But there’s a big difference between managing as a real estate investment and just looking at the expenses for the month, the rent, and whatnot, and seeing a report. Seeing it as an actual investment, and maybe even seeing a chart to see what’s actually going on. You get a sense of whether you’re losing or gaining.

It seems like such a simple, brilliant, missing puzzle piece in the ecosystem. Kudos to you for coming up with this. Now, are there other things like this out on the market?

Bobby: I think people are finally realizing that a similar tool is needed. There are a couple of players out there. What we have done is we have taken a comprehensive approach to real estate investing. What are people interested in?

They’re interested, obviously, in tracking, like the performance of their assets. That’s done in Excel, and it’s done on a very ad hoc basis. It’s not real-time, and it’s a lot of keystrokes. What we want to do is we want to automate a lot of that so that once you put the property into the system, then a lot of the updates are done automatically.

The other piece is nobody’s providing education. I truly believe that as property managers, it’s equally important to educate the investors about the challenges, right? If there are evictions, if there are turnovers, let there be some transparency. What we want to do is we want to prepare our users to become better investors. Part of that is understanding the challenges or the opportunities that property management companies and realtors face.

A property manager’s job is not easy at all. You have to be really thick-skinned to be a property manager. Well, let’s appreciate that so that when your rent is a little bit lower than expected, or you have a turnover that’s taking a little bit longer. If the investor, the landlord is better educated, maybe they won’t get upset as much. They will understand, okay, you know what? This is winter in Michigan, and it’s going to take a little bit longer to put a tenant into the house or the property.

We want to provide education to make them a better investor. They will appreciate the role of the property manager a little bit more.

Jason: That’s the role of the property manager. I mean, property managers are the unsung heroes of the real estate investing category or industry. They make tenants better. They make the owners better. They hold everyone to a higher standard, and they make properties better all around. Good property managers really do change the world.

I love what you’re talking about how the education piece is going to improve the quality of clients. It’s going to take their client from where they are now, give them a greater understanding, which most likely increases their logical need to use a property manager. They understand, oh, this is a bit more complicated than these home TV shows and reality shows made it out to be flipping a house or renting it out.

This is worth touching on because I think there are some small-minded, scarcity-minded property managers. Maybe they’re newer to the industry, but they’re thinking, oh, no. The only reason people will need me is if they’re not educated. But I think the reverse is true. The more educated a client becomes, the more they can see clearly the liabilities involved, the dangers, the potential pitfalls, the time, and they don’t want to touch it. They want to let go of that piece. They want to be an investor. They don’t want to be a shitty part-time property manager.

Bobby: Exactly.

Jason: They do that full time.

Bobby: You nailed it, Jason. Your perception is right on. The better-educated, the better-informed, the landlord, the investor is, the easier it’ll be to work with them versus a total newbie who thinks it’s just very simple to hire a property manager. That every month, magic, a check will show up. It just doesn’t work that way, especially now in the pandemic era that we’re living in, it’s even more challenging.

This is the time when property managers need to communicate more, not less, about what’s going on in the court systems, the eviction process, and so on and so forth. You’re right. The members in my real estate meetup group, the ones that are well-educated about investing are the ones that are buying more rental properties. The ones that are not educated, they just bought their primary home, and they never buy a rental property. The extent of their real estate investment is their primary home.

Sometimes, they outgrow that primary home. Then, they buy another home, and they keep the old one as a rental. They’re not proactive in going out there and learning about rental properties and the benefits of rental properties with the tax advantages and so on. That’s where our partners, real estate property managers, realtors, and educators can really come in and help out.

Jason: I think the tempting mistake that a lot of software people coming into this industry is that they try to cut out the property manager. I’ve seen this over and over and over again. They think, well, we could replace this critical relationship and negotiation piece with software. That can’t be done in the hospitality industry, it certainly can’t be done in the property management industry, and it also can’t really be done in the real estate industry significantly because these are relationship things. There are negotiations, there are people involved, there are feelings, there are humans, and there’s a lot that software can do. But software really should be enabling and facilitating those things. Not trying to replace those things.

I love that you’re incorporating property managers. I think this a wise move as you’re moving forward. It allows you to connect with a lot of people that have investment portfolios. And it doesn’t try to cut the property manager out of that in which we end up with a whole bunch of […] then we end up with a bunch of crappy property managers, which are just people DIY-ing their management, and not really doing a great job.

Then they have software tools that are supposed to say that it makes it easy, but things have fallen through the cracks. Laws are getting broken, tenants aren’t protected, owners aren’t protected, and silly stuff is being done. Very cool stuff.

Is there anything else you’d like the audience to know about BetterCapital before they go? If so or if not, how can they get ahold of you? And how can they try this thing out?

Bobby: Thank you, Jason. First of all, it’s a pleasure to be on your show. I really enjoyed it. I’ve watched your videos, so thank you for doing what you’re doing for your community, which is your audience of property managers. You’re doing a fabulous job. Thank you for that.

Look, our goal is very simple. We want to serve the real estate community in general. From newbies to seasoned investors, we want to give them tools. I’ll be the first one at any of my meetups. If they’re buying a property remotely, they need to engage with a good property manager because it’s literally a marriage between you and the property manager for the next 10, 20 years. However long you hold that asset, that’s how long that relationship needs to last.

It’s very easy to get a hold of me. It’s bobby@bettercapital.us. We couldn’t get the dot-com, so we got the dot-us. It’s bettercapital.us. Look, we’re in what’s called a beta version right now. We’re coming out of the beta version. We’ll go live very soon. But we’d love to get your feedback. We’d love to incorporate your feedback into our product. We’d love to make you a partner. We’d love to see the property management companies that choose to work with us, we want to see them succeed. We’ll highlight them, we’ll showcase them, and we’ll work with them.

Jason: Awesome. Property managers, if you’re listening, this is your chance to help shape this tool to be something you really want. You can be the ultimate beta tester, and then you’ll have the ultimate product that would really serve your needs. Take him up on that offer.

Well, Bobby, I appreciate you coming on the show. Thank you for your gracious words. I hope you have some success with this.

Bobby: Thank you, Jason, and likewise. Hopefully, we’ll stay connected. I’ll keep you posted on our progress.

Jason: Awesome. All right, check them out at bettercapital.us. For those that are somehow new to this show because you just stumbled upon it. I was going to say, it was interesting hearing, thank you for doing the podcast. I was thinking, sometimes it’s a thankless job. But I’m like, wait a second, he’s thanking me. But sometimes, it is a thankless job. I’m putting out free content. We pay a good chunk of change to have this podcast produced and to put out there. My team does social media marketing to get it out there as well. We do make money, don’t get me wrong. We get paid really well to help property management businesses get paid really well.

But if you want to do something to reciprocate—besides becoming one of our clients—make sure to like our stuff. Follow us. You can subscribe on YouTube and follow. Leave us a review on iTunes. We’d really appreciate it.

If you’re looking to grow your property management business, you are struggling or trapped in one of these growth sand traps, maybe around 50 or 60 doors. The solar […] sand trap. You can’t figure out how to get ahead. You don’t have the revenue to hire your next person. You can’t seem to get more doors than you’re losing and you just stay stuck there. Or maybe you’re in the second sand trap, 200-400 doors, and you just can’t figure out how to get the right people to do what you want them to do.

You’re getting overwhelmed because your team is always asking you all the time, all the questions. You’re feeling overwhelmed, and you realize you are the biggest bottleneck in your business. There is a roadmap out of that. Very easy to get out of. You can listen to some of the previous episodes. But reach out to us at DoorGrow. We would love to have a conversation and see if you’d be a fit, see if we could help you grow your business and be the property managers making a difference out there in the world.

Until next time, everyone. To our mutual growth. Bye, everybody.

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