On Friday, October 21, the Norris Group proudly presents its 9th annual award-winning black tie event I Survived Real Estate. An incredible lineup of industry experts will join Bruce Norris to discuss perplexing industry trends, head-scratching legislation and opportunities emerging for real estate professionals. Proceeds for the event benefit Make a Wish and St. Jude Children’s Research Hospital. This event is not possible without the generous help of the following platinum partners: HousingWire, PropertyRadar, the Apartment Owners Association, the San Diego Creative Real Estate Investors Association, InvestClub for Women, MVT Productions, the San Jose Real Estate Investors Association, Inland Empire Real Estate Investment Club, Think Realty, and White House Catering. Visit www.isurvivedrealestate.com for event information and tickets.
Bruce Norris is joined this week by Sean O’Toole. Sean is the founder and CEO of PropertyRadar.com, the only company that tracks every foreclosure in California with daily updates on all foreclosure auctions. Prior to launching PropertyRadar, Sean successfully purchased and flipped more than 150 residential and commercial foreclosures. Leveraging 15 years in the software industry, Sean used technology as a key competitive advantage to build his successful real estate investment track record. Sean has always thrived in start-up environments, and as such he became a key contributor at Xing technology, acquired by Real Networks, ISI Global Center, acquired by Global Crossing, and Icarian Inc, acquired by Workstream.
- How has Sean’s PropertyRadar website been a game changer for the real estate industry?
- How different is the buying margin today compared to the past?
- What does the foreclosure market currently look like?
- Who does PropertyRadar market to, and what can you do through their site?
- What is the latest development on the new 3D printer technology, and how could this affect any industry?
- What should we expect to see happen next in the market with how much technology is changing?
Sean has been a game changer for an industry. When he was in the foreclosure business prior to showing up with ForeclosureRadar, now PropertyRadar, it was very tedious and there were less than 10 participants that were capable of following the things in Riverside that were regulars. Sean created access and a scale to where it was affordable access, and it really was a game changer. When we talk about trustee sales, we also have to talk about margin if you are in the industry, which may be why some didn’t see it as a game changer.
Bruce asked Sean how different the margin was when he was buying versus what it would be today. He said the lack of access to information definitely allowed for larger margins. If you extrapolate that out, then somebody who was going to lose a lot of money lost a lot less. For the homeowners and the banks, they have definitely benefited on this side. Not his goal, but a side thing that did happen. There were a lot more participants and investors who probably bought and held properties, so it really has been a game changer.
Bruce said foreclosure gluts have been long since gone and have been going down for 7-8 years now. Sean started off in the foreclosure business just a decade ago. In 2010 he made the strategic decision to stop since originally he had planned to expand nationwide with the foreclosure product. He changed his mind in 2010 when he saw the market was going to come to an end. He decided to shift his focus to the larger, general real estate market. He launched the first version of this product in 2012 and the complete product in 2014. Now his client base has grown beyond the trustee sale buyer.
He always had a larger swath of real estate investors, and now that has been larger. Now it includes people like absentee owner properties, and sometimes people will gather more specialized lists and use PropertyRadar to fill in the holes. They will tell the owner how much equity is in the property and its title history. They are really active in the real estate investor space for sure. They have over 200 criteria to create lists, and even if you do your own specialized lists you can pull them in to PropertyRadar. This way you can add more data and keep track of everything. Realtors have been an important part of their business from the beginning as well.
They are also expanding into the broader home services category. Anybody who wants to market to homeowners can because at PropertyRadar they know a lot about every property as well as the owners of the properties. With 200+ criteria to see which ones you want, PropertyRadar is a good platform for doing that. Bruce asked if he has this capacity right now, which he said he does and it is important to him. They certainly have more folks using them for that more local marketing, creating a target-marketing list of homeowners in their area and reaching out to those folks.
They can also take specialty lists, such as when somebody new moves to the area. For example, if you are a coffee shop and somebody new moves into the area, it’s nice to send them a postcard to come in for a free cup of coffee and Danish before they go visit your competitor down the street. It is amazing what is possible today. Bruce has always respected Sean because he brought this computer brain to an industry. When Bruce has ridden with Sean to the Nixon Library events, he has said three things that stood out at the time since he had not heard of the concepts prior. Five years ago Sean told him about a 3D printer and self-driving cars. He said one of the problems for America is you will have to figure out what to do with a society where half the people do not have to work. When he went home, Bruce looked up the 3D printer online when he got home, and found an amazing story on the functionality of it.
There was a baby born with a heart defect, and they were able to create a 3D image of the heart. They then printed the copy of the heart and could hold it in their hands. This way they could figure out what was wrong before the surgery and do a very simple surgery. This blew Bruce away. One thing we have yet to see is in China where they are 3D printing concrete for structures. When that takes off and starts to happen, it opens up new architectural possibilities not constrained by straight, 8-foot long 2 x 4 studs. It could be that our housing inventory that exists today looks very antique overnight, and that is what is interesting about the speed of some of these things.
Bruce had mentioned to Sean about going to shows because when he sees changes happening with things like Uber and Airbnb, it dramatically impacts an industry. There may be a concept you have never heard of that it now owns three years later. To look into the future you need to see what is next and how to land in the right spot. Something Sean had mentioned before was the cost of constructing homes in the early 1900s took a dramatic change downward because of an advancement in construction. Sean said this change was Gypsum and the whole track homes, and this really changed the cost of homes. If you look at the Shiller chart that tracks home prices from the 1800s to today, there is really this one time where it turned down where it wasn’t needed just to credit the event. The economy, in fact, was quite strong in that period of time dues to these construction advances.
Another thing about these new technologies is they don’t only make our existing housing look a little obsolete, but it could dramatically lower the price of housing. Sean said this is where the housing advocates should be focused versus who they can rob for money to build housing. Why don’t we just make housing more affordable by changing the technology? You see a lot of displacing industry, and this is interesting when you think about what is next regarding advances. There is a Sketchers plant in Riverside that, when originally conceived, planned to hire thousands of people. The building is almost a mile long, and it does not hire thousands of people because it is not necessary.
Sean said when the Tesla plant was announced, he and his friend jumped in their car to look at this whole area out in Nevada in the middle of nowhere. They looked at all the huge, 200,000 square foot warehouses and distribution centers, and they could have a couple hundred cars out front. When he was looking at these warehouses for popular online sellers, there’s only about 20 cars out front. This is a lot of product coming and going for 20 employees to be managing, and you can tell there is a high level of automation.
Bruce and Sean had also discussed how one day we will be driving next to a driverless car. He jokingly said how they could even drive better than humans before going on to explain the technology. He went on the website to Amazon.com and watched how they picked and delivered the shelf to the person picking the product. In this warehouse, there are hundreds of moving shelves that pass within an inch of each other and never crash. Sean said this was basically the same technology for the cars, and this is a game changer when this becomes the norm. Even our whole concept of car ownership ultimately comes into question if you could pick up an app and have a car right in front of you waiting to take you where you want to go.
The question is if you would even want to own a car since with these you wouldn’t even need auto insurance to the degree the computer does a better job of avoiding crashes. Sean already has a mechanism in his car that not only works with cruise control but also brakes if he is coming too hot into another vehicle.
Sean had some books that talked about what we should expect next. Sean said one thing we have talked about is virtual reality. This could incorporate holding open houses without having to leave your house. With here you need to pay attention to things like Oculus Rift and HTC Vibe, both popular platforms out there right now. There is a company in Florida called Magic Leap on which HousingWire wrote a really good article. In the article, it talked about what the technology might do in the future and is a really good read. On the book side, if you into science fiction, the Neil Stephenson book Snow Crash talks about a world where we come in and out of a virtual world, basically living in two worlds. He has also read books about how we cannot live together and therefore have suburbs with their own sets of laws. In these cases you can move freely from one to another if you do not like particular laws and norms of one particular area. It is kind of a dystopian future, but Sean thinks it’s still a fun read with interesting insights. A lot of people have credited that book with seeing virtual and augmented reality far before it was thing.
Another more recent read was Ready Player One, which is actually being made into a movie. This really contemplates a world where we are jacked in all the time. It’s a little dystopian but an interesting read, especially if you are a kid of the 80s considering the references made in the book.
Bruce asked Sean if he sees any combination of the things discussed affecting how education is dispensed. Bruce said if you have $1 trillion of debt in education, he cannot imagine it is necessary if you can have a great educational experience sitting wherever you are. Sean said there is no doubt in his mind that education is not keeping up. In a world where there is Google and he can go get access content, memorizing the names of states is not as important. Some would argue against this, but Sean could pull up a map on his phone in ten seconds and ask Siri. Content memorization becomes less important.
Sean is a firm believer that history may not repeat itself but it rhymes, so it is important to have an understanding of historical events in the world. It does not mean you do not need to understand some of the larger concepts, but some of the content memorization is not as important. You need to learn how to learn. We are in a world now where what you learned yesterday won’t really matter much tomorrow. The only thing changing is the rate of change as things are changing faster and faster. This is a big challenge to becoming employed if you are not moving in understanding where you have to be educated. You could be educated in something that is no longer necessary.
Sean talked to a lot of software engineers on the hiring side, and some were so hot in that they could demand any signing bonus they wanted. He also talked to others who had way more years of experience and a better knowledge of some algorithms, but they have not used the newer frameworks. They do what they do and cannot find work, and Sean thinks this is a direct correlation. This is why Bruce is interested in getting some of this under his belt. In some ways it is okay to be a newbie because he is starting out looking at things that are very advanced. He will probably have no appreciation of the journey it took to get there, but his starting point would be a lot higher than it was 3 years ago.
Sean said when he was ten his parents bought him a computer, which led him to start reading Byte Magazine. The first time he read it he was so fascinated by computers that he read it cover to cover. He probably understood about 10% of what was in the magazine, and after a couple years he understood about 70%. You have to immerse yourself and jump into it.
Bruce said Amazon.com can actually deliver groceries to your house now. This is a game changer too when the market across the street you would normally shop at is not as busy. One morning after Bruce had returned home he put the groceries away that had come at 5 that morning. This is a game changer, and you start thinking about that industry. What Bruce finds fascinating is he thinks it will have ramifications on employment and the ability to make money and buy new houses. Bruce is trying to put pieces like that into a chapter that contemplates the future in his new report. He will probably be able to comprehend 10% of what he will look at, but at least he will have some idea what is coming.
Sean thinks this is the right thing to be focused on right now. A big thing that is disappointing about this election cycle is nobody is really talking about going forwards. No matter what your beliefs are about outsourcing and manufacturing in other countries, it does not change the fact that we will not need as many people for manufacturing. As things become more automated, it’s almost like only 20% of our population will need to be working. This has huge ramifications for everything, and this is not being discussed. We hope to hear more from Sean O’Toole on this subject at I Survived Real Estate 2016, where he will be a featured guest on the panel.
Thank you for joining us this week for the real estate radio show with Sean O’Toole. The Norris Group would like to thanks its gold sponsors for supporting I Survived Real Estate: Auction.com, Coachella Valley Real Estate Investors Association, Coldwell Banker Town and Country, Elite Auctions, In a Day Development, Inland Valley Association of Realtors, Jennifer Buys Houses, Keller Williams Corona, Keystone CPA, Las Brisas Escrow, L.A. Green Designs, LA South REIA, New Western, North San Diego Real Estate Investors, Northern California Real Estate Investors Association, Orange County Investment Club, Orange County Building Industry Association, Pacific Premiere Bank, Pasadena FIBI, Pilot Limousine, Real Wealth Network, Realty411 Magazine, Realty Executives Inland Empire, Rick and Leanne Rossiter, Sonoca Corporation, South Orange County Real Estate Club, Spinnaker Loans, uDirect IRA Services, Westin South Coast Plaza, Wholesale Capital Corporation, and Wilson Investment Properties Inc. See www.isurvivedrealestate.com for sponsor links and event information
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