RG 289 – Should You Invest in Co-Living Spaces? with Johnny Wolff

RG289 - Should You Invest in Co-Living Spaces

We have a hot new topic to talk about today: co-living! Join Johnny Wolff and I as we talk about modernized co-living, investing in co-living facilities, the benefits of co-living on both ends of the spectrum, and more.

Johnny Wolff is the CEO and Founder of HomeRoom, one of the fastest-growing co-living companies in the United States. HomeRoom makes it easier for renters to look for short-term housing and, at the same time, provides an avenue for investors to find renters in a more structured set-up. While co-living is not a new concept, HomeRoom has transformed this type of housing into something more accessible, more harmonious, and ultimately—more profitable.

Johnny walks us through the concept of co-living and how his company maintains standards in roommate set-ups. He also explains how companies like HomeRoom influence the sharing economy, as well as what co-living accomplishes for the average U.S. renter. And, of course, we talk about how he and his team choose where, when, and how to invest in perfect properties for co-living.

Co-living is a new take on the boarding house concept, and HomeRoom is one of the few companies that involve investors in the equation. If you want to learn more about co-living, how to invest in a co-living property, and the benefits of co-living (for both renters and investors), click ‘Play’ now.

Key Takeaways

  • You don’t have to own things to be happy.

  • Co-living allows people not to be stuck in one place.

  • There is generally natural accountability that comes with a shared living set-up.

  • There is a lot of money in the sharing economy, especially in housing that is a current dire need.


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Podcast Transcript

Reed Goossens (00:00):

Good day, good day guys. Now, before we dive into today’s show, I want you to let you know that some of you maybe aware that over the past eight years, I have built a substantial multifamily real estate portfolio here in the us worth over half a billion dollars. And in that time, my passive investors have received fantastic double-digit returns, and now you can invest directly into my deals for as little as $50,000. So if you’re an interested investor, head over to Reedgoossens.com to find out more that’s Reedgoossens.com. Now back into the show,

Johnny Wolff (00:41):

We’ve all kind of realized, like you don’t need to own stuff to be kind of happy. We’ve actually learned that maybe owning a bunch of stuff makes you less happy. Um, and that if you kind of let technology or a system allow us to all share something that none of us own, you know, it, it’s less of a hassle to maintain it. Um, there’s all these different benefits from the sharing economy, right? Uh, I it’s taken longer than I think most thought for housing to get there, but we’re seeing it not just in colo. We see it in with companies like zoo living, where you can, or, uh, landing where you can just live in a, you know, a specific, uh, place that’s furnished for one month and then just go to another place. But housing is becoming they’re. They’re allowing people to kind of cut it into little pieces, uh, more often, which is very, very cool and allows if you’re someone that likes to not be stuck in one place. Uh, it’s pretty amazing.

Reed Goossens (01:40):

Welcome to investing in the, a podcast for real estate investors, business owners, and aspiring entrepreneurs looking to break into the us market, join Reed as he interviews go-geters risk takers and the best in the business about their journey towards financial freedom and the sheer joy of creating something from nothing.

Reed Goossens (02:00):

Good day, good day a ladies and gentlemen, and welcome to another cracking edition of investing in the US podcast from Los Angeles. I’m your host, Reed Goossens as always Abby with us on the show. Now I’m glad that you’ve all tuned to learn from my incredible guests and each and every one of them are the cream of the crop here in the United States. When it comes to real estate, investing, business, investing and entrepreneurship, each show, I try and tease out their incredible stories of how they have successfully created their businesses here in the US, how they’ve created financial freedom, massive amounts of cashflow, and ultimately created extraordinary lives for themselves and their families life by design. As I like to say, hopefully these guests will inspire all of my cracking listeners, which are you guys to get off the couch and go and take massive amounts of action.

Reed Goossens (02:47):

If these guys can do it. So can you now, as you know, I’m all about sharing the knowledge with my loyal listeners, which is you guys, and there’s absolutely no BS on this show, just straight into the nuts and bolts. Now, if you do like to show the easiest way to give back is to give us a review on iTunes and you can follow me on Facebook and Twitter by searching at Reed Goossens. You can find the show, every you podcast on iTunes, SoundCloud, Stitcher, and Google play, but you can also find these episodes up on my YouTube channel. So head over to Reedgoossenscom, click on the video link, and it’ll take you to the video recordings of these podcasts, but you can see my ugly mug, but the beautiful faces of my guests each and every week. All right, enough outta me, let’s get cracking and into today’s show

Reed Goossens (03:34):

Today. The show I have the pleasure of speaking with Johnny Wolff. Now, Johnny is a CEO and founder of homeRoom. Co-living one of the fastest growing co-living companies here in the United States. And now after starting his career as a financial analyst in Silicon valley, Johnny relocated to Austin, Texas to pursue his real estate investing. Full-time now his love for real estate investing and living with roommates motivated him to start homeRoom in 2017. And now powered by investors funds. Homeroom has recently expanded to Dallas and the Austin market. Johnny still lives in actually one of the first ever homeroom co-living houses in Kansas city. And he enjoys hanging out with and surviving the pandemic with his awesome roommates, particularly on chicken wing Thursday, Johnny, I’m really pumped and excited to have you on the show today. So Hey, doing today, mate.

Johnny Wolff (04:19):

Oh, I’m doing really good. So happy to be

Reed Goossens (04:21):

Here, mate. Thank you so much, but uh, I wanna a bit of an intro. Awesome introduction there. Um, thanks, man. Where, where are you actually calling in from right now?

Johnny Wolff (04:31):

Uh, Kansas city.

Reed Goossens (04:32):

You are in Kansas city. Okay. Got it. Got it. Got it. Yeah. Good. Well, I, I asked the question for all my guests when they come on the show and, and rewind the clock. And tell me how you made your first ever dollar

Johnny Wolff (04:40):

As a kid. I, uh, had a lemonade stand, uh, when I was, I think eight through 10, every summer we had a lemon tree in the backyard. I’d make my own lemonade, you know, from scratch. And first year, you know, I made like $30 over the course of the summer. Uh, by the third year I was like going to the store, buying a lot of lemonade and I’d hired my sisters for like 10 cents an hour. And so I was actually working. I was actually inside. I lived in Sacramento and it was a hundred degrees outside and I, so I was inside, but I was the lemonade state was still working. So, uh, I was already outsourcing, I guess, very affordable, hourly labor, um, you know, as a 10 year old. That’s awesome. That’s awesome.

Reed Goossens (05:20):

And, and, and walk me through your, or your upbringing. I mentioned earlier in the introduction that you, uh, were an analyst in Silicon valley and mm-hmm . So were you always involved in real estate or was that analytical job in another field?

Johnny Wolff (05:31):

It was in a different field. Yeah, I, I graduated from, uh, you know, college in 2007 and spent 10 years in the Silicon valley as an analyst, uh, working at startups and tech companies. But I also on the side, kind of my side hustle was working in real estate or buying real estate outta state. So I bought, you know, property eight in 2008 in Texas, bought a couple more, um, over, you know, while I was an analyst. Got

Reed Goossens (05:54):

It. And, and you, and I mentioned earlier that you actually moved to Austin, Texas. When did you, when did you end up moving there?

Johnny Wolff (05:59):

Yeah, in 2015, I was living in the heart of San Francisco. I was a VP at a bank on like the very tough floor. Uh, and I was like the amount of money I was making wasn’t seemed like a lot, but the prices for real estate in San Francisco are so absorbant, I just didn’t think I could have the life that I wanted. So I did some analysis on the United States and thought Austin’s gonna be the number one market for real estate appreciation over the next five years, uh, move there and then just started to buy and house hack like property after property. Um, yeah.

Reed Goossens (06:28):

Did you leave your day job when you moved to Austin?

Johnny Wolff (06:31):

I, I did. I was still working kind of, uh, on the side for a startup, but I was really focused on real estate.

Reed Goossens (06:36):

Right. And Austin is just completely transitioned into its own Silicon Prairie. Right. That’s the new, the new word I’m actually heavily invol, uh, invested in Austin as well, actually gonna be there next week. Uh, so, but tell me about this whole evolution of co-living because some people at listening out there, they might not even know what the word co-living means. So do you wanna break it down for those people who you’ve never heard the term? Sure.

Johnny Wolff (07:00):

It’s, you know, it’s like kind of a, it’s an evolution of, you know, the boarding house in, in a lot of ways you take kind of Silicon valley technology and ease, uh, you layer it on top of a property and then people run out individual bedrooms and the common areas are typically furnished. So it’s kind of a, a fusion between a short term rental and like a standard rental and kind of combining those with a roommate kind of environment. So you get, you know, you save 30% on rent with co-living as a tenant and, uh, you know, investors can make up to 70% more rent. So it, it maximizes the dollars per square feet. Uh, so it’s a really cool, uh, offering for both sides,

Reed Goossens (07:38):

Nearly like Airbnb, but more rental orientated right. Long term. Yeah.

Johnny Wolff (07:43):

Really re the Airbnb section is the amenities. Usually a co-living house comes with furnished common area. It comes with, you know, kitchen essentials. So you can move in on day one, you can watch TV, you can, you know, eat, you don’t have to bring anything except for your bed.

Reed Goossens (07:56):

Got it. I got it. Yeah. And what, where did the, the history of co-living come from? Because, you know, when I think of my days backpacking around the globe, I I’ve, it sounds like hostiles, right? Like you got common area, you gotta everyone’s cooking together. No, one’s clean up that pan. You know, it sounds like who would wanna live in this co-living space and how’s it become sexy all of a sudden. Yeah. I

Johnny Wolff (08:16):

Mean, the way I look at a co living is it sort of emerged as kind of the sharing as a piece of the sharing economy that really started with Craigslist in like the early two thousands. Um, and we see, you know, I don’t know if you’ve seen the diagram where it shows like how this whole part of Craigslist each one of their sections was replaced by an absolutely, but surely. Hmm. Um, and so re the roommate section is what colo has become because people have been looking for roommates on Craigslist since, you know, since I was in college. So we’ve done the, we’ve done the math on this, and there’s about 500 billion in rent being paid by roommates today. So it’s a massive market that’s sort of still Craigslist D still Facebook marketplace is where people are finding their roommates. Most of the time, uh, coli is basically saying, Hey, what if we just kind of make this just a little bit nicer instead of couch surfing, let’s do Airbnb, right. Let’s have an app, let’s make it safer. Uh, let’s raise the standards on what the, you know, the experiences like. And that’s, that’s why it’s, I think it’s taking off because underneath what COVID is today is like a decade and a half of people looking to live with roommates. Yeah,

Reed Goossens (09:24):

No, that’s interesting. And I actually remember back in the day when I moved from Australia to London, I was on, I think it was called find my roommate.com. It was an old website. I don’t, he was find my roommate.com. I think it was, that was it. And it was just, you credit a profile very early. It was 2008, 2009. Sure. And yeah, I, I, I was a hundred pounds a week, uh, in a small bedroom that was fully furnished for me, but I would be forced to live with whoever was in that house. Obviously you go around and you, you know, you, you’d try to get a bit of a feel for the person who, you know, who else is in the house and then beeps or weirdos yeah.

Johnny Wolff (09:58):

Try to ask questions, but you don’t, you also don’t want come up like too inquisitive cuz then they, maybe they wouldn’t like you and it’s really hard. And I think, you know, that’s what, one of the things that colo is doing way better, right? So we have a machine learning kind of algorithm that actually looks at these different degrees of compatibility, making sure that the, how gets along, making sure the people are living the house, the new person coming in, it will fit, um, that, that can be done a lot better by someone with a lot of data and thought versus like you on Craigslist just kinda like hoping for the best.

Reed Goossens (10:29):

Right. And, and talk to me a little bit about how they’re capturing that type of data, because that’s probably really important too. Mm-hmm, having a harmonious relationship because I remember living with roommates, we all live with roommates at one stage and there’s, as I mentioned, someone doesn’t clean up the bloody pan, you know, it’s, it’s, everyone’s waiting for the, the, the, someone to crack, to, to take out the garden, to clean the pan yeah. You know, so how, how do you use technology to bring it into that element of real estate investing?

Johnny Wolff (10:56):

Yeah. And mean that, that’s a great question. And, you know, to say that we have that down to a perfect science would be a bit of an exaggeration. There’s still pan problems in every remain situation. Uh, we have a few checks and balances though, right? So we have, our maids are in there once a month. It’s part of the package that all remains pay for. And so that the house gets a deep clean once a month. And then the maids will actually kind of break the room, the house for cleanliness. And so if you pass below a certain threshold, that’s agreed upon in our kind of member agreement, then you actually get dinged and we’ll charge you for another maid visit. So there’s accountability from us. There’s also kind of different ways for the roommates to kind of talk to us about issues, right. And give us feedback.

Johnny Wolff (11:36):

If we hear the house is too dirty, we’ll kind of engage. We have kind of a playbook to do that. So we generally stay hands off and let the house define its own culture. But if we find that the culture is twisted and like the pan is just there every time, then we’re gonna kind of figure out what’s going on and kind of, uh, when people are on board, we also talk about giving just a little bit more than you take. That means if you see the pan clean it, right. You, if you, if you don’t know who’s doing trash, do it. And so that’s something we try to en you know, ingrain in people, you can’t have a huge, uh, a perfect hit rate. You can’t change. People’s like nature, but it is something that’s super valuable that community and giving and serving, uh, at home.

Reed Goossens (12:13):

And talk to me the type of demographic who’s renting in this type of space, because I think that will help define full listeners. Is this just for young people coming outta there, you know, outta college, they’ve already lived with roommates for a couple of years. This is sort of a step towards independent living in, in their own one bedroom apartment. Uh, at some point in the future.

Johnny Wolff (12:30):

Yeah. We, we actually have, um, people in their fifties renting with homeroom, but the average age is 27. Uh, the average, you know, the average person is a kind of a white collar working professional. Uh, but they’re all over the, the board, right? There’s, there’s people that emerge from, you know, relationships that ended there’s people that emerge from, uh, you know, career changes or other things in life where it’s like, Hey, I need a, I said, it’s flexible. It’s a little cheaper. Um, I don’t wanna get a new house. I don’t wanna buy. So co-living is works for a lot of people in kind of the life stages where they’re still kind of deciding on a path. Mm.

Reed Goossens (13:04):

And I know within co I’ve actually got some experience with it. One of my old positions was, uh, working as a, for real estate developer here in Los Angeles. And in neighborhoods, affordability is really hard like Santa Monica and Venice and Manhattan and San Francisco, as you mentioned earlier, co-living is starting to creep back in because on, from a development point of view, you can get a lot more efficiency with building four bedrooms in one kitchen, rather than doing four, one bedrooms, one kitchen apartment. Right? Yes. And, and so talk to me about where that spurred from, because that is definitely a big element of you, you know, everything about the cost sharing, all the, the, the co-sharing environment, that tech environment we’re in today has come from a need of wanting to be more efficient with the cost of living, right. Whether it be Uber or whether it be, you know, um, door dash, or whether it be, you know, Amazon delivering your groceries for you. Mm-hmm , I think this is the, the, the, the rental portion of it. Correct.

Johnny Wolff (14:02):

What I think we’ve all kind of realized is like, you don’t need to own stuff to be kind of happy. We’ve actually learned that maybe owning a bunch of stuff makes you less happy. Um, and that if you kind of let technology or a system allow stall share something that none of us own, you know, it, it’s less of a hassle to maintain it. Um, there’s all these different benefits from the sharing economy, right? Uh, it’s taken longer than I think most thought for housing to get there, but we’re seeing it not just in co-living. We see it in with companies like zoo living, where you can, or, uh, landing, or you can just live in a, you know, a, uh, place that’s furnished for one month and then just go to another place. But housing is becoming they’re, they’re allowing people to kind of cut it into little pieces, uh, more often, which is very, very cool and allows if you’re someone that likes to not be stuck in one place. Uh, it’s pretty amazing.

Reed Goossens (14:52):

And, and you mentioned zoos living just there. Cause I I’ve always thought of the co-living being the, uh, you know, the, the single white collar work from anywhere, particularly with COVID I wanna live in Paris for a month. I wanna live in Bali for a month. I wanna live in New York for a month. It there’s that level of it. Right. And, and then we can talk about that. Where does your business fall on that spectrum? Yeah, I

Johnny Wolff (15:15):

Mean, we’re, we’re, I think we’re, we’re, we’re in that we, we, we, the membership agreement minimum is three months at homeroom. Okay. But you can hit a button in our app and transfer from one room to another room, so you can move from, and that gets more powerful as the network effect grows as more and more cities get added to our we’re adding our fifth and sixth city this year. Mm-hmm . Um, so you can, we’ve had people go from Kansas city to Austin, which I highly recommend. It’s a great, Austin’s very awesome. Um, we’ve had people move, you know, and so the goal is that we’re gonna be in 750 cities, uh, you know, in the next five years. And then you can pick up and move anywhere. Let’s say you have an out-of-state relationship. Your job allows you to be full remote, move, to move to Des Moines, you know, move to San Francisco.

Johnny Wolff (15:58):

Um, so that’s, I think that’s the magic of co-living, that’s the magic of the sharing economy now touching real estate, um, where you can maybe hit a button and then add furniture to that room, so you don’t have to furnish it. So it, it allows, you know, I think as human as we like to stay put, but when we move it refreshes the mind and you make new connections, and I think it reenergizes us, um, it doesn’t feel safe, but it kind of throws us into a kind of this new space in which we can kind of achieve way more. Um, and so that’s what this new style living’s gonna, I think help, uh, people have on a more consistent basis going on a random vacation once a year.

Reed Goossens (16:35):

Yeah. It’s interesting. My dad used to always say to me a change as good as a holiday. So when you’re changing your environment, you, you, you feel, you know, energized invigorated to do more, to, to explore more, to see your local surrounding. So really awesome. Now let’s break it down into the business part of it, like the numbers side of, I really like that. Yeah. I know. He’s good. I I’ll give him the credit for that. Um, you, you can have it on a wall, somewhere changes as a holiday um, we can trademark to Reed Goossens. Uh, you got, but let’s, let’s talk about the numbers of it. Like, how are you going out? What’s the size of the property you’re trying to either you’re buying or you’re doing a master lease. And I, it sounds like it’s a little bit like the WeWork, the coworking spaces, where a company comes in and takes over a floor and then splits it up into its little cubicles. And you just rent one of those little cubicles. Is that kind of the same idea as, or you actually owning the property

Johnny Wolff (17:26):

As well? We don’t, we don’t own the property. Okay. So the way that home remarks and, and we’re, we’re the we’re kind of unique in this way is that invest can come to us and maybe they’re a real estate investor. Maybe they never have, but they have, you know, $75,000 and they say, I wanna invest in a property and we’ll say, Hey, we actually have data science to help us find a perfect property for co but also a great real estate investment property. And we have a kind of concierge approach where we able help them find the property and co-living properties have to be unique. They can’t just be any property. Um, and then we’ll help them buy the property and we’ll help them retrofit it for co-living. Mm. And then we will actually take over full management, including operations maintenance, we’ll get the tenants inside of it.

Johnny Wolff (18:07):

So it’s, we actually we’ll make a percentage kinda like Airbnb more than we work. So we don’t, we don’t hold master leases. We don’t have kind of that risk of having to pay if something happens. Uh, we did make it through the pandemic, uh, unin injured, you know, we had full occupancy. So, uh, it wouldn’t have really mattered for us either way, but it’s kind of, you know, during the pandemic, I think we, uh, the, the difference between office space and, you know, residential space. So it was, it was a lot better for us than for those guys, but yeah, we, we partner with investors to create this. We don’t kind of come in and master lease and take all the risk. Got

Reed Goossens (18:41):

It, got it. Partner with investors. Interesting. So you are doing single family homes with exclusively four, four bedrooms, two baths, sort of okay, got it. Correct? Correct. Yep. Yeah. Cause I, I’m more thinking like brand new build downtown Santa Monica, 20, you know, you’re building four spec to a co-living area. It’s more of that. Okay. The, the owner is also then maybe hiring. It sounds like you’ll probably get there because I do know that there are other co-living managers out there. And, and of course, offering that sort of globe trotting lifestyle that I spoke about earlier, Bali, the Paris, the new Yorks of the world. But I think you, you, you are got a very interesting model that you partner with the, the investor. So are you helping them with the investor, any type of data in terms of, Hey, Hey Johnny, I’ve got this deal in, you know, Des Moines, Iowa. You mentioned that earlier, and it’s 50, you know, hundred thousand bucks. Are you backing into data to say we can support a co-living space here or no, because of the area, because of the, the area in the MSA, you, it doesn’t kind of work. It has to be in certain geographical locations. Yeah. We’re

Johnny Wolff (19:45):

Only today. We’re in a lot of kind of marketplaces, which Homer meds we’re kind of on both sides, kind of in the middle managing it is usually focused on geo geography by geography. Don’t just kind of open up the, the whole, we have, we have people reach out to us multiple times a week saying, Hey, can you add my house to your co-lo platform? We’re like, we’re not in Pittsburgh. We’re not in San Francisco. So today we’re in, um, San Antonio, Austin, Dallas, and Kansas city. So it, if someone run, if someone wants to buy a property there or has a property there, we’re happy to take a look. Mm. And we can help them do the numbers. We can tell them, this is how much you should expect in rent. This is how much you’ll have to, you know, invest in the property to kind of make it co-living ready. Um, yeah. And we’re usually quite accurate with those numbers. Our occupancy is really high. Uh, our team is really good at finding tenants and we, but you know, data scientists on staff, we have a really, um, great tech team that helps with that as well.

Speaker 4 (20:40):

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Reed Goossens (21:16):

And so within those markets, are you also then looking to be in that path of progress or doesn’t necessarily matter, uh, where it like, cause obviously you wouldn’t wanna be on the wrong side of the tracks. I’m just, you know, I’ve got a great, I’ve got this deal in San Antonio. Cause I know San Antonio really well, but might be a bit of a, you know, an area that you might not attract your co-living tenants that you want, who, who get it, you know? So yeah, surely that has to play, uh, part. Yeah. Yeah.

Johnny Wolff (21:39):

We have a data framework that basically creates a heat map for us where we will do a house where we won’t do a house. Sure, sure. So we were, um, generally in, you know, nicer is a town there’s Kansas city is probably the market. I’m the most familiar with, um, where it’s just like, we do not, you know, east of here, we don’t, we don’t take houses at all. Um, cause the murder rate is a hundred out of a hundred um, so it’s just like when you hear, hear gunshots, you know, five times a week, it’s too many for us. Mm-hmm , we’re generally in like we’re in every nice area. Uh we’re in some, in the middle areas and we’re in, we’re not in areas that are, I guess what I would consider like dangerous. Yep. That makes sense.

Reed Goossens (22:14):

And then from a, you know, vetting point of view, you know, you are really acting like a management company, right. I’ve got obviously company who goes and looks at income verification and you know, what your job references and all that sort of stuff. So how are you going on that side of it? Uh, also also with the tech.

Johnny Wolff (22:32):

Yeah. So I mean that’s, this is where the tech kind of helps. Right? So I think a lot of, um, property managers, they do, they get too much information because the Tech’s not supporting it. Right. And I think you just, if you ever felt a rental application, you’re like, why is this like seven pages? Um, so for us we understand a few key things. We have, we, we use TransUnion smart move to the background, credit eviction history. So that’s crucial. Um, but we actually look at that and we look at career and those are kind of, that’s kind of it, we don’t, we don’t care about income. We don’t care about prior landlord experiences, anything. And in the history of our company, we’ve had over 500 roommate tenant and we’ve never had a full deposit used up for damages ever. So it’s pretty, pretty, pretty incredible, uh, part of it’s because I think we’re good at screening, but the other part is with co-living you can’t screw up the house because your roommates are there and they live there and they’re not gonna be super happy and they’re kind of your friends.

Johnny Wolff (23:26):

So there’s a natural accountability. So it sounds, I think people’s in intuitive thought is, Hey, if we don’t, if we’re gonna have like five young people, they’re just gonna trash the house. Well, we, we grade the house for cleanliness monthly, so they can’t. And if we find that they jacked it up, they’ll have to pay for that. But if one person’s like miff at us or miffed at anything, the only thing they can damage is their room. And it’s really difficult to damage a room to the tune of $500 unless you just, you know, burn it down or something that’s never happened to us because you know, the quality of the tenant’s really high. Uh, we hold firm on that and then natural accountability between the onsite visits and um, their roommates and walk

Reed Goossens (24:02):

Me through, what’s a, what’s a average room costing you. And then what’s the owner of what’s the investigating. And then what are you guys taking? You know, so what’s the Delta and you can, you can talk in percentages if you want. Don’t have to gimme what or

Johnny Wolff (24:14):

Your business. Oh no. I mean it’s no problem. And so we, it really depends on the city, right? So each city is different. Austin Price point goes up to five 50, um,

Reed Goossens (24:24):

A room per month.

Johnny Wolff (24:25):

Oh, sorry. I, I sorry about the price of a property. Let’s just, yeah. The average, uh, price of a room in Kansas city is four 40 give or take Austin would be six 50 give or take. Um, and then the range is between there for Dallas and San Antonio. Got

Reed Goossens (24:41):

It. Got it. And then are you as a, as a, an owner, you obviously, are you taking Delta between that or just charging a management fee you on top of that?

Johnny Wolff (24:48):

Uh, we make 15% of all collected runs. Got it.

Reed Goossens (24:50):

15%. That’s right. Cool, awesome. And then expenses and that sort of stuff. I assume we’re all the tenants, um, you know, water, electricity, gas, um, you know, obviously a bit of turn, obviously the real estate taxes and insurance would be on, on the owner, but, but the, the sort of the rub yeah.

Johnny Wolff (25:06):

There’s yeah. There’s not, there’s none of that stuff’s paid for by the owner. It’s all paid for by the tenants. Got it. Awesome. And the, and the tenants actually paid for the main service and the yard care. Awesome. So that kind of, so it’s done professionally, so very cool.

Reed Goossens (25:17):

And, and, and where do you see the business growing to right now? Obviously you mentioned you have 500, uh, roommate, tenants, where are they? Where do you one of the business to grow to in the next five to 10 years?

Johnny Wolff (25:28):

Um, 10 years definitely wanna be global, uh, in the next five years. I’d like to be in a majority of the cities of United States. Um, yeah, I just think, I think the amount of tenant demand for this type of living is places that people can’t imagine. The co-living developments are focused on these super expensive areas and we, that that’s great. And we think Santa Monica, San Francisco, um, I understand that unit economics of that. And it makes a lot of sense. Single family homes are modular and smaller and they can actually to, convert’s not very much money. So you can actually increase your rent as an investor, 50 to a hundred percent by converting a home to a co home. And that can be in Kansas city. That can be in like a LA, Kansas. We have like all these little suburbs that we there’s a lot of tenant demand for this kinda living. So we’d like to be everywhere. I think we’re the first company that thinks that this approach will work in Des Moines, right? We’re the first ones that, that approach Kansas city and Olathe and Shawn, all these little Kansas, uh, Kansas cities that no one would’ve thought C was needed, it’s actually very needed. The demand is very high. So our goal is to be nationwide everywhere, you know, kind of like Airbnb, open your app, you see the map, you go somewhere, you can live with us.

Reed Goossens (26:37):

Got it. Got it. And, and how has it been a bit of a education for the renter in how to, you know, how to come into this situation? Given that we, you know, even my situation in the back of the day when I was going on Craigslist and roommate.com or myroommate.com, how is that education piece being on the, on the consumer call in the consumer side?

Johnny Wolff (26:56):

We, we do tech space, lease communication with them early, and we, we make sure that they match our criteria. And then we will do a, a call with them, a video call ourselves. Um, if they pass that they go through the TransUnion kind of credits and background check. And then the, the final step after that’s approved is they actually will meet the roommates via video call. So it’s all kind of the whole thing is making sure that every box is checked and that they’re gonna be a good fit. Um, one of the we’re able to do this because we have matter ports of all properties. And so a lot of our, about 80 to 90% of our tenants never see the property in person before they actually, you will sign a lease and pay the deposit. The first time they’ve seen the properties when they move in. And I think that approach is super common with the hotels. It’s super common with Airbnbs. I think it’s gonna become way more common with, with, um, with, with standard, you know, real estate. And so we are, uh, you know, kind of on the front lines of doing that. A lot of our leasing team is international as well. So we, we do fully remote leasing, no in person tours it, uh, and let, and when they do want to see it in person, then a roommate that lives there would give that to them.

Reed Goossens (28:02):

Do you ever think you gonna lose that interview piece with the other roommates? Because I’m just thinking like, obviously when Airbnb first came around, everyone was like, oh gosh, you know, um, I’m what if you trash the place, but now you got, you know, I’ve as a, as an Airbnb user, I’ve got a rating, you know, so does the owner, and so it’s quickly very, I’m assuming you’re trying to get to that spot where you got you max mass adoption, so you can use the community to rate themselves and then, you know, police themselves, if that makes sense.

Johnny Wolff (28:31):

Yeah, exactly. That, that is 100%. And we’re trying to, you know, that’s one of the things that we’re looking at very closely. I think one of the challenges is like, it’s okay to be, get a user rating if you’re like in an Uber for 20 minutes, it’s okay to get to user rating if you’re in Airbnb for a weekend. But do you wanna live in an environment where everyone’s rating you constantly? Um, that’s one of the, kind of the debates we have at homeroom, like, and the answer is, I don’t know that people would like that. Um, I know that I wouldn’t. Um, so, but figuring out a way to make it accountable. And I think what we’re gonna do is as someone exits would give them an up or a down if they can come back. And so that’s sort of something we’re thinking about the made grades in which the house is graded by the maids. Every time they go there is like the initial start to that where it’s like, Hey, there are standards you have to hold to ’em otherwise you, you know, kind of your power in the community and your kind of esteem in the community goes down and your ability to get new rooms would go down. So doing that in a way, that’s not like big brothers watching me, my roommates are always raiding me cause they just got an argument over the dishes is something that we’re still scratching our heads over and working on. Oh

Reed Goossens (29:36):

Mate, it sounds, it sounds super interesting. I think you, you’re a very awesome, um, in technology interface and, and, and just having the experience of traveling the world and going rock up to new cities and having to figure out that Craigslist thing is, yeah, it’s always, it’s always difficult. So it’s kudos to try and be figuring that out because I think it is a powerful way of it’s a need, you know, as you said, you five I think you said, and 5 billion in, in rent of 500, I think 500 billion I use. Yeah. So like there’s a lot of money in, in co-living in roommates. And just trying to capture a little bit of that, that that market share is gonna be freaking awesome. And, and then hopefully, you know, you can scale it with, you know, in the single family model. I, I definitely envisage you doing something slightly different as, as you grow, but, um, I’d love to get, you’d love to get you back on the show in a couple years time to see how the business has, has evolved. So, so we’re done. Um, thanks man. And, and I guess, you know, the big thing, what do you, what do you need right now from the listeners? Do, do you need the investors? Do you need the, the people just trying it out? Do you need people just helping you in any way possible?

Johnny Wolff (30:39):

Yeah. I mean, we, we love talking to investors, you know, that’s, um, definitely we, we actually have a bit of a wait list right now. So today, but our goal is to, you know, we, the most houses we ever had investors purchase with homeroom was three as of six months ago, and this month we’re gonna do 17 properties, but the goal is to kind of expand to somewhere near a hundred by the end of next year. So we need a lot of investors to be interested and talk to us about this. We think when we look at short-term rentals, long-term rentals and co-living, to me, co-living combines the best of both of the other two, um, and just a lot less downside. And so I, I think it’s a killer, uh, home run investment that I, that I, I own a, a bunch of ’em myself. So, uh, and it’s gone very well for me. So that would be the, I think the big thing we’d love to talk to any investors who are looking to purchase in the near future. Love it,

Reed Goossens (31:32):

Love it, mate. Well, look at the end of every show, we’d like to dive into the top five investing tips. You ready to get into

Johnny Wolff (31:36):

It? Let’s do it, man. I’m ready.

Reed Goossens (31:38):

Uh, question number one. What’s the daily habit you practice to keep on track towards your goals?

Johnny Wolff (31:43):

Yeah. Uh, number one thing is get up early, go to the gym. I just go seven days a week, every day, go to the gym and um, and then I try to listen notebook on tape while I’m doing that. So those are kind of the, the two things that I do. Awesome

Reed Goossens (31:55):

Stuff. Awesome stuff. Question number two is who is the most influential person in your career to date? Most

Johnny Wolff (32:01):

Influential person is my boss, Liza Lee from electronic arts. She, uh, E she was my boss. She got promoted three times in like a tech in the Silicon valley in like three years while having a baby. So she’s, she’s a star. Um, but one of she taught me about adaptability creativity while still doing, I was doing finance and, uh, it kind of changed the change the way I work. That’s awesome.

Reed Goossens (32:26):

Awesome. Well, thank you. Lizza uh, question number three is what is the most influential tool in your business? When I say tool, it could be a physical tool, like a phone or a journal, or it could be a software. What is it?

Johnny Wolff (32:38):

Microsoft Excel. I know that’s boring, but, uh, yeah, that’s, uh, that’s kind of my superpower. I can, I can use that better than most so,

Reed Goossens (32:49):

Oh yeah. No being an Excel junkie. You need to be, yeah. You need to have some sort of skills on Excel to get into real estate investing, just, uh, you know, bad news for everyone listening you, if you don’t like Excel, you’ve gotta get used to some element of Excel.

Johnny Wolff (33:01):

Yeah. I, I, yeah, I, I do training classes and stuff. Um, but, uh, at a certain level, like you can, we, we, I started and have run the business for Microsoft Excel for the last three years. So that’s awesome. It’s been, uh, pretty, pretty incredible for us. That’s

Reed Goossens (33:15):

Awesome. Yeah. Question number four is in one sentence, what has been the biggest failure in your career? What did you learn from that failure?

Johnny Wolff (33:22):

Ooh. Yeah, so I think, you know, when we started, I thought that it would go faster and easier and so I brought in, you know, five people. Um, I emptied my retirement account on my properties to get it started. And I was like, here we go. And, uh, you know, within six months I had to let go, evryone, everyone go and I had to run it by myself. Mm. Um, so I think, I think a humility maybe from that, uh, I think learning about what’s, you know, what’s around the corner is probably less, I think being embracing the, having patience for that early grind and really figuring out how to make it work without trying to throw money, to accelerate something. I think it’s great to get investors we’re taking on angel investment right now, we’re doing a BC round in the spring, but if you try to add money, money doesn’t solve any of your problems. It actually compounds them. Cause you try to solve the problems with money, then the money’s gone and now you don’t have any solutions. So I think that’s the biggest solution you can, or biggest thing that I learned you can’t solve brain in problems with money almost ever.

Reed Goossens (34:23):

I think it’s also very, um, a good, a good reflection on startup culture. Like when you’re starting your own business as an entrepreneur, you you’re, you gotta do everything yourself. You are gotta do everything. You CFO, you are the investor relations. You are the CEO, you gotta do the, he, the crappy stuff that you, you don’t like to do. And that helps build, you know, you have a very tight bandwidth them because you’re not being over exposed with payroll or office space. And it’s not until you get a little bit of runs under your belt, a little bit of money coming in, you can say, okay, Hey, I can go outsource X,Y,Z. So,

Johnny Wolff (34:54):

Yeah. And then like, when you, when you become a, when you become, when, when you’re the team of one, you can almost as much as five for six people because there’s no one to talk to. There’s no meetings, you can just kind of execute. Right. And so when I went down to a team of one, I actually was, we were more successful almost immediately, um, which didn’t make a lot of sense, but building a de proficiency yourself, um, before trying to scale the product and the team, especially on your first start, I think as if, if it’s in my second startup and I raised $2 million off the gate and I hire super high caliber people, you know, that could work. But if it’s your first run, I think dig deep and work hard. Yeah. With limited funds, with limited funds, you know, learn and try to do it yourself as much as you can, don’t get money, wear all the hats, wear all the, wear, all the hats and get and embrace every one of the hats. Cause I think what you’ll see is people are like, I don’t like that hat, so I’m gonna try to get money so I don’t have to do it. Yep. You’re not gonna have success with that mentality. You have to embrace all the hats. Mm-hmm if you have the success to, and you can get rid of that hat finally, and you’ll be so happy, but you’ve gotta learn how to do it. Um, when you have nothing, oh, hundred

Reed Goossens (36:02):

Percent agree. Startup culture it’s on entrepreneurship 101. So everyone listening out there, roll up the sleeves and become a sole entrepreneur until you can have a bit of money under your belt and then, uh, then go out and outsource . Exactly. Well, Johnny final question is where can people reach to continue the convers? What do they got?

Johnny Wolff (36:18):

Yeah. So live homeroom.com or website. You can reach me personally johnnyatlivehomeroom.com Uh, do my best to, you know, respond to everyone the same day. Uh, sometimes successful sometimes not. Uh, but yeah. Happy to talk to any investors. You have any questions about how hacking themselves or, you know, buying color property with homeroom or anything in between.

Reed Goossens (36:39):

Awesome stuff, mate. Well, look, I wanna thank you so much for jumping on the show today. I just wanna reflect a little bit of the things that I took away from today’s show. I think your intuition with solving a problem that I’ve personally be been in, in a number of cities around the world. I was in London. I was in France. I, when I first moved to New York, very similar stuff. And it’s it, it has have been an area where real estate has been slow to, uh, pick it up, you know, technology pick up technology. And I think with the, the, the, with COVID with people living, you know, working remotely, I think your company is at the, the cutting edge of making it easier for people to have that co-living experience in a way that’s not the dirty, hostile live in like a teenager, you know, all that sort of stuff, which people would probably have those PTSD moments about. Right. We all, we all we all do,

Johnny Wolff (37:27):

Right? Yeah. I mean, every time, every time I talk about this with someone, uh, that they flash to that, and then like, you know, we have made service, like we have interior design, like professional interior designers, design the space. And so it it’s an evolution of that, but I mean, the need is you’re right. It’s everywhere. And it’s, uh, it’s one of those big challenges when you go to new city. And that’s what, a lot of times, people don’t go to new places because where do I go? How do I find housing? How do I get a roommate? I can’t afford my own apartment.

Reed Goossens (37:55):

Right? Exactly. Pushing your boundaries as a change, as good as lifetime. But also like the, the other element of the business is that you you’re partnering with the investor. And I think if you adjust the technology app, I think you wouldn’t, you wouldn’t be as successful. Cause you’re not bringing in, you need the, the people coming through the door to bring you the product, because you can be specific with the single family housing, which is very, very key to the whole business. If you just had the one, so of it, I don’t think it might be as successful without having both sides of it. Cause that you get to sort of have your cake and eat it too. If, if that makes sense.

Johnny Wolff (38:27):

Yeah, no, you have to the inventory side and making sure that that inventory is just right. It, it makes the community experience with a tenant just

Reed Goossens (38:35):

Right. And then the investor gets a ton of advantages. So it’s, um, it’s a lot to do both sides, but it’s the only way that the ecosystem can function healthy in a healthy way. Love that. Love the ecosystem, my friend, I’m all about it. Well, look buddy, enjoy the rest of your week and we will catch up very, very soon. Sounds good. Reed. Thanks man. Well, have another cracking episode jam pack with some incredible advice from Johnny, some really cool stuff he’s doing over there with his co-living platform. Remember go over to Johnnyatlivehome, live home room. Is that right? Johnny on livehomeroom, livehomeroom.com. Check out all he well that he’s doing online. It’s an incredible space. If you’re an invest, you want to get involved with it. You got some small single family properties that you think maybe this might work in in the Midwest, give me a call. Give me give him an email. So again, thank you all for listening and tuning into the show because we’re all about, you know, increasing your financial IQ on this show. And if you do like this show, this way to give back is to give it a Fivestar review on iTunes. And we’re gonna do this all again. Next week’s remember be bold, be brave and go give life a crack.