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Mike Simonsen

A true data geek, Mike founded Altos Research in 2006 to bring data and insight on the U.S. housing market to those who need it most. The company now serves the largest Wall Street investment firms, banks, and tens of thousands of real estate professionals around the country.

In this episode of the Top of Mind podcast, Mike Simonsen sits down with Johnny Wolff, Founder and CEO of HomeRoom, to talk about HomeRoom’s innovative platform for matching renters with real estate investors. Johnny discusses the advantages of shared housing for both renters and investors, the growing trend of young adults living with roommates, why cities see opportunities in shared housing, and more.

About Johnny Wolff

Johnny Wolff

Johnny Wolff is the CEO and Founder of HomeRoom — one of the fastest-growing real estate investing platforms in the United States. 

HomeRoom simplifies out-of-state investing and streamlines affordable renting. The company’s marketplace connects rental property investors seeking a turnkey, high-yield experience with renters seeking modern yet affordable housing.

 
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Here’s a glimpse of what you’ll learn: 

  • The advantages of shared housing for both renters and investors
  • How remote work has created a massive opportunity for shared housing
  • The growing trend of young adults living with roommates
  • The case for increasing density to help our housing crisis
  • How cities are working with HomeRoom to address living affordability challenges

Resources mentioned in this episode:

About Altos Research

The Top of Mind Podcast is produced by Altos Research.

Each week, Altos tracks every home for sale in the country - all the pricing, and all the changes in pricing - and synthesizes those analytics to make them available before becoming visible through traditional channels.

Schedule a demo to see Altos in action. You can also get a copy of our free eBook: How To Use Market Data to Build Your Real Estate Business.

Episode Transcript

Intro  0:02  

Welcome to Top of Mind, the show where we talk to real estate industry insiders and experts about the biggest trends impacting the market today. Enjoy the show.

Mike Simonsen  0:13  

Mike Simonsen here, welcome to the Top of Mind podcast. Thanks for joining us today. The Top of Mind podcast is where I talk to the smartest leaders, thinkers and doers in the real estate industry to provide context and perspectives beyond the market data that we at Altos Research do every week, to really get the context and the trends and ideas about the future. If you're not familiar with Altos, we track every home for sale in the country, all the pricing and supply and demand all the changes in that data and we do that analytics and make it available to you before you see it in the traditional channels. People desperately need to know what's going on in the housing market right now especially it's the landscape is changing so rapidly right now. And so if you're needing to know about the data for you for your local market, visit altosresearch.com You can book time with the team for free consultation on how you can use market data in your business. But without further ado, I'm thrilled to introduce my guest today a real leader, thinker and doer in the real estate industry. Johnny Wolff. Johnny is the CEO and founder of HomeRoom one of the fastest growing investing platforms in the US. HomeRoom simplifies out estate investing, and streamlines affordable renting it's an interesting combination. The company's marketplace connects rental property investors seeking a turnkey high yield experience with renters seeking modern yet affordable housing. So this is we're going to spend some time understanding how we're executing on this cool concept. I'm interested in more depth. So Johnny, welcome.

Johnny Wolff  1:53  

Am I really happy to be here. Thanks for having me. And, you know, big fan of Altos Research. So really cool to be here.

Mike Simonsen  1:59  

Nice. That's great to see you. So let's start with HomeRoom. Give us the quick overview of what you're doing.

Johnny Wolff  2:09  

Yeah, so HomeRoom, we help real estate investors make 50% more rent. And we do that by helping them invest remotely and rent out each room separately. And so, you know, the idea for the company was started when I moved to Austin, Texas to reunite with four of my friends and we could not find landlord crazy enough to rent out to five roommates in a five bedroom house. So I bought a three bedroom house added walls, and we had a five bedroom house. And it was really cool living experience shared common areas. And but I made great returns, and I was making way more rent than an investor if someone would make renting the same house to a single family. And I had a few friends who were super excited about it and wanted me to help them invest. So I was doing it. And so that's how HomeRoom was born.

Mike Simonsen  2:55  

I love it. It's the personal need, right. Personally, that's great. Altos was started with the personal need to the that. So. So the concept is, you're doing roommates shared space. And you're using the HomeRoom platform to bring those roommates together. And to the investor.

Johnny Wolff  3:22  

Yeah, so you know, we think of our you know, we're a marketplace, you know, Airbnb type marketplace where, you know, there's homes, and instead of short term splitting, time up, we actually split up space. So our tenants come and stay for, you know, 16 months on average, in our platform drives the tenants that platform. One thing we do different than what Airbnb does is we help investors find and buy these homes and set them up according to our specifications. So that makes it a bit more investor focused. But at the end of the day, your home is operating a lot like an Airbnb, in the sense that it's on a marketplace, our platform is driving tenants onto your into your space, and you're making more money than you could in any other way.

Mike Simonsen  4:05  

So So is it. Do you feel like it's more? Is it more driven as the that renter experience? Or is it more driven as the investor experience?

Johnny Wolff  4:19  

marketplaces you know, is it's kind of chicken or egg, right? And the truth is, is that the tenant experience is the foundation for what we're doing right. And the the need for affordable housing at its core really, is what's driving more and more people to live with roommates. You know, it's been trending upwards over the last four decades from 11% in the 80s to 26% of young adults are living with roommates. And so that's, that's really like, that's how we started the thing is like, how do we serve that group? And you know, over time, we evolved to realize like, hey, the supply side, and the investors are really a massive part of that equation. The good news though, if you can cater to the roommates in the right way, it actually helps the investors too, and now you have a really nice ecosystem for both sides to benefit from.

Mike Simonsen  5:01  

That's fascinating. So it's up to 26% of young adults live currently with roommates.

Johnny Wolff  5:10  

Yeah, 26%. It's crazy. That's crazy.

Mike Simonsen  5:13  

And so and so then. So then as a like, as a person who's looking for roommates, I go to HomeRoom and I go find a place in Austin to stay.

Johnny Wolff  5:24  

Yeah, correct. Yeah, yeah, if you're looking for roommates, you would jump on the HomeRoom website, you'd be able to take a 3d tour of a property, you could be able to see who the roommates are, and then you'd be able to apply, you know, in 15 seconds for one of the rooms

Mike Simonsen  5:35  

got it. And then and there's a lot of like room sharing, and, you know, post Airbnb, a lot of those types of, you know, couchsurfing, all of the things that that people are happy to is like, have proven to be happy to go try at least. So like, that's

Johnny Wolff  5:56  

definitely a lot of momentum in the sharing. I mean, this is just sort of like spillover from the sharing economy. Right? It's, it's a sharing economy in space and living, like people wanted to make it work, they want to figure out how to make that work. This type of living, I think, is the you know, it's a very nice, you know, you can do it really nicely Airbnb short term, but like the long term option, the sharing economy, I think, was difficult for for a big market. And I think this, this model is exactly kind of what the market needed. That's

Mike Simonsen  6:23  

fascinating. So and then on the investor side, now I'm an investor. And do I go to HomeRoom to find properties.

Johnny Wolff  6:34  

So my co founder, Mike, he was actually a data scientist from Airbnb. And so he's built an API connector and calculation tool that will actually find homes on the MLS that match our criteria. And so that that's, we actually highly recommend you come to home to find the property, we do take, if you already have a property you can put on our platform just like Airbnb, but most of our investors are finding the properties through kind of our sourcing algorithm. And then we have kind of a process where we say, Hey, this is how you buy, we'll set you up with the right vendors to do it. And then you add it to the platform, and then we'll drive tenants into your home.

Mike Simonsen  7:11  

Nice. Okay, so that's really cool. So you get sort of the advantage, or it's like, you know, one of the one of the fears of investing in rental property in another city are all of the, like, what do I do about the tenants and you know, all of that remote management stuff. So it sounds like you have, you're tackling some of those fears for investors.

Johnny Wolff  7:34  

Yeah, we make it so it's completely turnkey for the investor and the investor doesn't have to do anything, we get that question. And I was like, Why can't investors just do this themselves? And the answers, they can go with HomeRoom? It's, you know, we, we've done it for a long time. It's easier, and we do it better. And so we think you'll make even more room with us even that have kind of what our take is,

Mike Simonsen  7:53  

yeah, platform. Yeah, I can change the oil in my car, too. But I don't.

Johnny Wolff  7:59  

Right. Yeah. Same here.

Mike Simonsen  8:01  

Yeah. It's like, and we do that without us with a Altos Research data to you know, it's like, you know, any agent can go get all the data and they could go prepare the visualizations and they could go do the analysts, they, you can do that work yourself. But are you really going to write and isn't it more likely that you don't do that work? And then leave the opportunity untouched?

Johnny Wolff  8:23  

I mean, you can grow your own food, you know, yes. There's a lot of things, a lot of things you can do yourself that we pay for. That's crazy. So it's usually better. And yeah,

Mike Simonsen  8:34  

how do you so how do you identify like, properties that you know, like you said, 15%, better returns is that in is that in the tenant side or is that in the Property selection side, you're, you're better returns

Johnny Wolff  8:49  

it's a mix of the two, the right port or the right form factor of of home is really important, right? So we're looking for the more bed with more bedrooms, you can do better with with the kind of a co living or roommate situation. So if you buy like a three bedroom, two bath, that maybe you can add a bedroom to, your returns aren't going to be quite as good as them. But with our selection engine, we'll find homes that match that and you'll get you know, we'll have a lot of examples of homes that rented for 2000 before we bought it, or one of our investors bought it, and then it would run for 3000 or 3500. Afterwards to convert it into one of our spaces. So it's really a mixture of the two identify the home correctly, and then you have the ability to rapidly get the best price for rooms. So you have to you have to do both, right. And that's kind of a lot of what this marketplace is, is there's like it's it's two things at the same time. It's a really nice, really good level.

Mike Simonsen  9:40  

Nice, are you you're geographically focused now you're doing a handful of markets. Where's your focus,

Johnny Wolff  9:45  

my focus, our focus, we started in Kansas City, that's where and I was living. I lived in the basement of our first ever property there for three hairs kind of fine tuning the product and living really affordably because I was starting a business and didn't have it. And I think you You know how that goes. I know how that goes. It's not glamorous, you know, you know, you don't get to eat the nicest stuff. Or live in the nicest places. But yeah, you know, and so we've, we've, we're now in eight metros, we're, you know, our number two, Dallas actually surpassed Kansas City as our biggest hub of other companies. We're also in Austin, San Antonio, Indianapolis, Tampa, we have a presence in Pittsburgh, and we're expanding into Phoenix. So we're pretty rapid expansion. You know, and it's exciting to see kind of the different demand for this type of living all over are all over the nation.

Mike Simonsen  10:39  

Yeah. So So Dallas, Austin, Phoenix, Tampa, those are pretty common investor market. But you've also got end. Tell me about India as a site. So as site selection?

Johnny Wolff  10:51  

Yeah. So you know, we one of the things that I, when I was looking at turnkey investment options for private investors, I kept finding that these investment shops would just keep pitching like the city they were in, because it was such a big part of like, what they were selling, like, because they were only in one city. So they're just like, you know, Pittsburgh's the greatest market in the world. And then they just like back that up, which is not very agnostic, or hey, it's not, or it's not very objective. It's very, you're very much selling. And so one of the things I want to do is HomeRoom is to spread our offering out and think about cities is a component to the offering to investors. And to say, like, hey, it's not necessarily that India is better than Tampa. Although you could, you could argue a kind of either way, but it's just that each one has a different form factor, right? So once a tech stock ones like a high dividend, kind of like blue chip, like how are we going to think about these. So India is going to yield better than any other market, because the rents the properties haven't appreciated as much. So the rents have kept up a bit better. So if you're looking for yield, and he's a really nice place, if you're looking for maximum ROI, which is yield and appreciation, then are, you know, Dallas, so if you look, if you want pure ROI, then Austin Screen option. So we were trying to create an opportunity where we can be completely objective with the investor and help them choose versus being like, You should do this. Right. Right, as we think that's just it, just this aligns your incentives? Do you?

Mike Simonsen  12:26  

Do you take much of an advisor role in that transaction? Like? Are they asking you where do we do it? Or are they pretty much coming in and going, like, look, I'm interested in some of the Midwest towns that haven't yet appreciated. And there are some investors, you know, like Mobile, Alabama, some of those places are starting to get hot, because, you know, investors are priced out of Scottsdale, Phoenix, you know, they're like, yeah, they need to go they need to go to the tertiary markets. Are you advising that? Or do they know already?

Johnny Wolff  12:57  

Each each investor is different, we have investors are a spectrum from investors who are buying their first investment property, and all the way to investors who own does. And so, you know, folks that are buying their first we do take a pretty active advisory role. I think that's probably something that we'll do less of as our platform develops, and gives more data to the to the investors, but at the end of the day, they're deploying $100,000, right or more. And so some advisory role, I think, is, you know, needed and you know, we are, we're happy to provide that. But mostly, we provide the numbers, we do the underwriting so that they can see what the difference is, because we found that, like, there's a lot of stories around why, you know, the mall is going to go here in Pittsburgh, and that's going to change property prices. But the data is so much more powerful to tell that story in an objective way. And that's what we're trying to provide for our investors, so that they're making smart decisions driven by data, not necessarily driven by like hearsay or other other kind of like, you know, story type things. Yeah,

Mike Simonsen  14:01  

I love that. Is there data, like, particular measures that you find, like particularly useful for investors? They go, Well, man, I mean, indeed, maybe tell me like, What What should I know? Like, yield is interesting, man, you know, but but what other data points might you use to help me understand Indianapolis?

Johnny Wolff  14:23  

So we, you know, we have a very specific lens on it. So we have two sides of how we think about properties. One is, we're gonna think about property appreciation potential, and that's by itself the house separately. And so that's gonna, that's, that's macro drivers in terms of growth to zip code, in sub ZIP Code growth as well. We get into that data set in addition to crime and we look at trends over time and how those things are kind of getting improving or getting worse, right. And so And we've also started to incorporate some Snapchat type data where we see younger demographics are migrating to different areas. We find that to be an interesting The variable and so that's basically these that kind of formula is really around. How are driving future appreciation potential for a property? Yeah, that's the, you've got. The other side is Oh, knowledge. Sorry, I'll let you interject there.

Mike Simonsen  15:15  

Well, I was just asking about I was thinking about the younger demographic that the tracking that trend, and, and is that you said Snapchat, like data isn't like coming from things like, like sources like mobile data that where you can correlate with, you know, with age and then and then migration. And, and really the interesting question is, has there been surprising changes in the last couple of years that, you know, that you've seen there? Like, in our, in our wacky New World?

Johnny Wolff  15:47  

Yeah, I mean, the truth is, is our data models are relatively new. So we've, you know, in terms of and so, one of the things with our Snapchat data is like, we have transactional data and not as much historical data that we've linked to. And so we're using that to triangulate future performance versus kind of some of the trends are trends on crime and our trends on migration, those are a lot better. Those are, those are a bit more historical, the, I think the trends that we found the most surprising is like, are the things we found the most surprising is, when we're forecasting rent by the room pricing is like the variables that don't matter at all to how much your room should run for. And that's the stuff that like kind of blows my mind. You know, it's like, I would expect the amount of migration movement in and out would have affected way more than it does. But we find is like, age matters, almost more than anything. And income matters more than anything, which is kind of like boring, because it's sort of like, exactly what everyone already knew. And it's like, Damn, we did a lot of data science, just to get back to the answer that was sort of just the vanilla ice cream of all answers. 

Mike Simonsen  16:53  

And yeah, for you know, but but like, it's actually good to know that because you you, like, there's always hypotheses that this is going to tell me something new, or, you know, and so it's like, you know, what we can show is, is that what we need to know, is we need to know age and income. And and that trend is valuable, right? And if, if the income is climbing, if the age is declining in an area like that those are powerful signals for the future, right?

Johnny Wolff  17:18  

Yeah, yeah. And powerful signals for how much people will pay for a room, which is that's the piece, we plug that with appreciation. And then we see how much someone can make in their total performance of that property. So that's the product that Hummer was offering investors with, we're going to do that whole underwriting, and the room rent piece is just doesn't exist anywhere, right? It's just completely proprietary to us. There's no data model you can buy for room rent pricing, and that's something we're really excited about.

Mike Simonsen  17:47  

That's cool. I like that a lot. And so then you sign individual leases with individual roommates. I guess that's how it goes.

Johnny Wolff  17:55  

It's yeah, it's a member agreement that's transferable to any room across the portfolio. So we have oh, mu from different cities, which is really cool.

Mike Simonsen  18:03  

That's cool. And then and so then as a renter, the one of the benefits for me is that like I'm already I've already gone through my my landlord vetting, and I don't have to, like, get my credit pulled and all that stuff for to get a new landlord, and I can move through the portfolio. And then and then I can imagine there's like a, there's like the Uber rating, the, you know, the driver rates me, that kind of thing. Like, we know, if we're like, I could imagine that you wouldn't, you might want to do that.

Johnny Wolff  18:31  

Yeah, we actually we do do a rating as a roommate leaves, they get a rating, and then the roommate, and they rate the roommates. And so we don't want to do a rating in the house. But as you leave the house, you get kind of a scoring. So yeah, we're definitely doing something very similar to that. Trying to do it. Yes, do just right, because like, you don't want to miss people that live together, which is, you know, can would be obviously a big problem.

Mike Simonsen  18:50  

Yeah, right. And, and ratings in general are in like, that. It's an it's nuanced, right. And, you know, yeah, he he had one weird habit that I didn't like, and, you know, like, that's that, you know, but maybe that says more about me, right? So, so those are tricky, but I love that I love that concept in that in that you build a you know, like a transferable benefit and the that especially as you move into some bigger, you know, markets and exciting, exciting places to be like, Well, I've been in Austin and I want to go to Manhattan and like, you know, like if I can already we

Johnny Wolff  19:32  

Yeah, you know, we're kind of looking at you know, the, some of these these really cool platforms that you can like live like Zeus or you could live or if you have 5000 a month, you know, you could live anywhere because already furnished and it's kind of like the stream way of living if you'd like to travel if you'd like to move around. Some people prefer not to move ever right but like other people like I wish I could see the world while living. The cool thing about HomeRoom is our average price points like 400 $450 so you can live They've kind of like that. But you know, for 1/10 of the price, which is pretty awesome. And I've done it myself I've transferred or a few different properties. It's, it's badass.

Mike Simonsen  20:10  

That's great. That's so cool. And that's a real interesting trend. So let's talk about that trend in the future there, which is that you know, the the sort of nomad, you know, a person, you know, the digital nomad to work remote person, couple of questions that I'm interested in with all my guests here, and a lot of the conversation I have is, is have you seen new trends and work from home trends? Or, you know, things like that, that have impacted your business? Or like changes in your day that Oh, and then where do you see it going? In the future based on you know, your frame of the world? Like, you know, you're in Austin, and, you know, big part in Austin. And, you know, one of the reasons you go to Austin to cool town, but like, there's some really cool employers there. But if I, but it's also expensive. So, you know, if I, if I can live somewhere else, and work for my Austin employer. So anyway, tell me about where if you've seen any trends, notable trends, that like, as we went to work from home, as we're shifting back into some kind of, you know, go into the office, and then where do you see the world going in the future?

Johnny Wolff  21:15  

We definitely, you know, for us, we, you know, we have five people in a house. So we saw an interesting COVID Work From Home trend where, you know, no one was moving at all right, everyone was just at home. And so there was definitely a period of time and no one transferred, but everyone was at home. And so it's like, pushing the limit of can, how many roommates can comfortably live together, because part of our model is that, you know, most of them work and so they're not going to be at home. So it doesn't, you know, like, it's, it's less strain on the house. So we've, you know, a lot, I would say about 50% of our folks stayed home and rode promote other 50%, were going into going into work as well. So that's, you know, it's, we're seeing way more transfers in 2022, than we've ever seen. So I think people are taking advantage of that. And that's inner city and within a city and between cities, you know, as we're seeing a lot more of the world's opening up a bit. I think that's kind of in line with how I'm feeling personally. And but, you know, going forward, I think I see a world in which people feel comfortable living, a subset of the population feels comfortable kind of migrating around and living in different areas. You're these stories of people that have kind of lived, I think kind of you hit the nail on the head, like, working in us working after our last employer, but living in somewhere cheaper is like a great way to save a lot of money really fast. Right? Yeah. So I think we're seeing that I, you know, we're I was doing, I've done that before I've in we're seeing more and more migration towards these tier two tier three cities. And I'm not as privy to like, how many of them are holding on to their jobs, to be honest, or they're getting new jobs? Because we don't ask, but you know, my hunch is that a lot of them are doing something along those lines.

Mike Simonsen  23:00  

Yeah. That's really that's exciting. Do you do you have a How about Tell me about your company? Are you guys virtual? Do you have an office? What are you doing?

Johnny Wolff  23:08  

100%? Virtual.

Mike Simonsen  23:10  

And are you spread all over the country? Or all over the world?

Johnny Wolff  23:13  

Yeah, we're all over the world. We have, you know, half of our have our companies in the Philippines. So we have 10 in the United States. 27 in the Philippines, half dozen in Latin America. So yeah, very, very global workforce. We have one one straggler in Spain. Yeah, it's been two, and our engineering team is in Vietnam. So it's, you know, the COVID really opened up how this is done. And it used to be looked at, if you do what we're doing. It's like, you know, it's the kiss of death. Like, yeah, I can make it. But now it's like, it's like, You're smart. So I guess I don't know. I don't know which one it is, but like it's working so far.

Mike Simonsen  23:52  

Good. That's, that's exciting. I'd love to if we have time. At the end, we can chat about the Y Combinator experience. And I know you're you're just you're in that program now. Right. And this isn't like, or we just did demo day, actually, three weeks ago. Amazing. Yeah, that sounds exciting. Yeah. Let's do a couple more things. Before we dive into into Y Combinator. The I'm so you know, as we look at the the real estate market, and especially in the last decade, we have, we've taken a bunch of homes out of resale, and we've made them investment properties. We have fewer and fewer homes for sale. We have this inventory shortage. We also we actually have a rental shortage right now to rents are climbing. Do you have a view of how like the HomeRoom contributes into the ecosystem of available housing for people that affordability and those? What's your vision for that when we think about you know, the real needs of housing for Americans, especially young people who don't yet own homes? what's your what's your view? In the next decade or so,

Johnny Wolff  25:03  

yeah, I mean, honestly, the, you know, I can talk about our contributions. And, you know, for sure, I do think that this is a big problem. And I don't, I'm not sure it seems to be getting substantially worse. You know, one of the things that we're seeing right when we saw this really nice appreciate, oh, nice depends on who you are appreciation pop in almost every market United States recently. And what that did effectively is it meant that people that lived in houses no longer could afford to rebuy that exact same house, if they sold it today, and they went to go buy it again, they would not qualify, which means that the only thing that an investor can someone could do is sell and downgrade, which no one's ever, no one wants to do, right? So you're kind of got this issue? Or why would anyone leave their home to make that upgrade? That's very, you know, that's you, you save up, you get to the next house, it's become very difficult to make an upgrade, when you sell. So that's put a lot of inventory in stasis of with primary homeowners. And so that is only getting worse with the rapid appreciation of properties, I think, then you've kind of touched on it layered in institutional buyers buying homes, creating rental properties, and it makes it worse. So this is a problem that, I don't know, I don't know what the answer is to this. I think regulation may be something that has to be looked at I housing stock does not seem to be on the rise at the pace that's needed, because builders still have a memory of 2010. And they're just like or 2007, they're still scared to like overbilled, which is like, Guys, it's been a long time now. It's like, kind of let that go. Let's build a little faster. It's kind of like what I keep thinking. But, you know, doesn't matter. They're conservative lot. So that's a big problem. I don't know. I don't know what the answer is. building more as the clear answer or some sort of regulation? I don't know. Yeah. Oh, yeah. I mean, what what are your thoughts? I'm very intrigued. This is an interesting, massive challenge that I don't I don't see an end in sight today, I don't see a clear solution.

Mike Simonsen  27:05  

Well, you know, I love the concept of density as one of the things we can do to improve the inventory challenge. Right? If and, and I'm an investor in micro apartments in Seattle, for example. And, and what that does, is it creates, it's actually, same same target is here talking about where it's where it, you know, people who, you know, maybe it's $5,000 a month, and normally to get $1,000 a month, you know, place in Seattle, I've got it, I've had, you know, crazy roommates, and you know, and I got I have to go deal with all that thing I don't have, I don't have a whole room to go sort out all my roommate and you know, stuff, but I So one option is to you rent micro apartment, a couple 100 square feet, you know, with high end, nice, nice, you know, nice amenities and nice building, and but I have my little my little unit, and it's all mine. And so that density does a couple of things. One is really great return for investors, but two, it's, it's more housing. And so I like the idea of density and, and, you know, optimizing investment homes for more people, I think, is a positive contribution for that trend for a real crisis in the country. So I'm gonna give you I'm gonna give you like, you know, you're you're you're fighting for for housing, you're you're you're Crusader, for affordable housing, simply by by virtue of having the density. So like, that's, that's an appealing process to me.

Johnny Wolff  28:38  

Got it. That makes sense. You know, a lot of ways that HomeRoom is doing something similar to that. And, you know, our rents are 50, bro. Well, we don't really, we don't talk about this as much because we're, you know, investor facing and a lot of our comps, but, you know, to rent a room at home is 60% cheaper than renting a studio apartment and like the same neighborhood. So, and we're creating, we're taking one unit and making it into five, right, and you know, and so there's definitely cities, you're like, their eyebrows go up. They're like, what about zoning laws like, well, you know, we can have that conversation. But like, every study that's coming into City Hall is saying, like no one has, there's not enough affordable places for people to rent. And it's like, how you can solve that in seven years? Probably. Or you could let HomeRoom come in and solve this for you today. Right. Yeah. And so we, you know, that's, that's, I think that's a lot of what I liked with Austin and Picasso is that they're doing something similar in the sense, yes, they are buying housing stock, but they're optimizing its use so that less housing stock needs to be consumed by people that aren't utilizing in an efficient way. Yeah. And so that in effect, but maybe that house isn't available, but now other homes are right, because he's creating, he's been more efficient with the space with the space and that's exactly what we're doing. Right. We're creating really affordable housing, we really want to create a financial future for people. And so if you spend $350 a month on rent instead of $800 plus utilities, you know, and also, we're more flexible, like, it's just a better deal. Yeah, I think this the density thing is, that's the number one answer in my mind. Like, I don't see one that's better, you know, especially to repurposing space or using space that was, you know, being left on the sidelines.

Mike Simonsen  30:25  

Yeah. And, and that's the benefit of the sharing economy, right? Is that is that those assets were previously unproductive, they're sitting there, not being used. And meanwhile, there's a class of people who need to use them, and they can't get them. And so I think there's a real strong story there, it makes a lot of sense to me. And, and the, you know, the, the flexibility and all the other benefits is like, that's, that's a bonus. But, but really, we need some density right now. And a lot of American cities, especially ones that are fighting affordability challenges like Austin rapidly becoming unaffordable act, everybody except those of us who move out of San Francisco. And, and, you know, and so it's like, it's, it's like, you know, it's it's a powerful element that, you know, a community should use.

Johnny Wolff  31:13  

Agree, I think it should be a big part of the next, you know, we actually had the city of Topeka reached out to us recently, which was like a very, very cool, they said, like, can you come here and be part of our us, like, as we launch our startup ecosystem, I was like, because, like, we need more density near these areas. And so I guess, that's, this is the kind of outreach that like we'd love to see. And like, it's like, okay, that city really understands like that there's a solution available, and maybe it's not glossy as like they'd like it to be, but it's fast. And it's elegant, right? And it's elegant. And we do it really, really well. People are really, really happy. It's be their beautiful homes. So yeah, I think it's I think it's, it's, it's the it's one of the solutions,

Mike Simonsen  31:57  

that's really terrific. So to pick a reached out to you and said, Hey, we want hip young people in for our startup ecosystem we need we need hip young places for them to live. Help us make that happen. That's, that's exactly what we're looking at. Right. Like that. Yeah, recognizing the challenge. And it said, What a great, what a great story that is. And, you know, typically, we have, there's, there's a lot of there's the NIMBY argument, which, you know, the, you know, the don't put density in my neighborhood, but density is, you know, typically thought of as, as like, you know, concrete, you know, bunkers that, you know, as opposed to like single family homes. It just, you know, happen to have a nice group of people living in that

Johnny Wolff  32:42  

nimbyism is very strong, I think in all house discussions. Anywhere we go deed, anywhere you go, you know, we've had, you know, in cities, we've had one person that cares, and like, you know, becomes a city thing that there's a discussion and just like, All right,

Mike Simonsen  33:04  

yeah, probably cities where it'll be hard for you to go to like that, like that. They have real entrenched NIMBYs and laws and things. But but there's a lot of the world. Like, if Topeka cares, they're taking action. And that's really exciting.

Johnny Wolff  33:20  

Yeah, and we'll go and we'll go there, and we'll help there. You know, a lot of folks in City Hall have, you know, 23 year old kids to like, maybe still live at home. Right. Yeah. And so like, we're, I'm here to help you, right? We're HomeRoom is here to help you not have your kid live at home anymore.

Mike Simonsen  33:37  

You know, one of the one of the the live at home concepts that we're discussing recently, I think, on the podcast, actually was, was that, you know, homes built, whatever, 70 80 years ago, were significantly smaller. And so, you know, if you have a family of four, and it's a three bedroom house, and you know, in your come out in the in the late 50s, you'd like there's no place to live at home. And now homes are bigger, and you've got basements and like, it's like, easier to live at home, and therefore people do so, you know, our kids, like, you know, why are you living at home longer? Well, there's space in the home for me. And so that shift is also those stock becomes investable, and dividable. And more debt, create more density for future, you know, investors but also for the, you know, the tenants as the stock shifts.

Johnny Wolff  34:29  

Yeah, and you know, those basements are competitively priced for that kid with their parents. Very, very competitively priced. That's right. That's exactly typically typically free, typically free. Yeah, we actually saw it during the pandemic, we saw a surge of it was the most the highest percentage of 18 to 35 year olds live with their parents since the Great Depression. And so we've seen actually a lot of kind of like people it's like flowed in and then they're kind of flowing out into HomeRooms now. But it's just pretty it's just kind of a crazy trend and And not one that I'm like envious of I don't have, you know, a young adult child. So I don't have to worry about it myself. But yeah, I think the solution for that so people don't have to go home. Like there's not a stepping stone there, right. And micro apartments like you're talking about are Orko Levinas. I think a perfect solution.

Mike Simonsen  35:20  

perfect solution. No, that's really that's super exciting. So let's talk a little bit more about the Gen Z, like, and that's Utah is that your target really is a Gen Z is a late millennials. How do you think about your How do you think about your renters?

Johnny Wolff  35:33  

Yeah, I mean, our average age is actually surprisingly high. It's 29. Okay. Yeah. So it's not, you know, a lot of a lot of folks, you know, it's not enough. We don't, we actually don't do below 21 years old. So we're not really focused on college aged kids pretty much like it'll be your first place out of college, or later. And, yeah, that works really well for us, because people stay a lot longer. They're not in like a phase where they like, our Tasmanian devils to the property, which is clearly better for if you're an investor. And, but yeah, there's just, it's just a stop gap with the marriage age going so late, you have basically, the studio apartment was great when like, you would get out of college at 22. And then you get married at 24. And you spent one year in a studio that was awesome. You like freedom by myself? But like when you're banal, it's 35. And so are do you want to live in a studio from 22? To 35, like 13 years living alone, there's no time in history where like, people alone for 13 years by, you know, by choice really, like, it's just humans are meant to be more communal. Typically, not everyone. There's a lot of people are like, I'd love to live alone for my whole life. But like, a majority of people live with other people, roommates, their parents, their, their family, their girlfriend, there's a mother's benign, not alone in the studio. So just interesting kind of demographic trends and how housing is shifting.

Mike Simonsen  37:01  

Yeah. So 29 is your average renter age? It was that Was that intentional? Or you just learned that after you started marketing?

Johnny Wolff  37:13  

Not intentional at all. I mean, we've had over 1000 roommates now. So it's really just the data that we have accumulated over time. It used to be a bit younger used to be 27. But it's kind of floated up. So yeah, yeah. 

Mike Simonsen  37:24  

That’s interesting. So age is increasing. And does that vary by market? To market?

Johnny Wolff  37:32  

Yeah, definitely. Yeah, we find that the, you know, if there's a spectrum of San Francisco to the Moines, I guess, if you call it that, the Des Moines are younger, and then the San Francisco's are older, substantially. So Austin, is our closest proximity to San Francisco. So that's the oldest and then Indianapolis would probably our closest to Des Moines. And that's the newest right? It's

Mike Simonsen  37:56  

also very, that's by affordability, too. Yeah.

Johnny Wolff  38:00  

Yeah, portability makes a big difference. There's a there's a way bigger necessity to do it in the more expensive markets. Like when I lived in San Francisco, I was a VP at a bank. And I lived with a roommate, you know, like it doesn't, it doesn't matter. Yeah. Because no one wants to spend like, three, four or five grand on a private studio.

Mike Simonsen  38:18  

Yeah, I get it. It's it's a real thing. And like density, San Francisco need some density. Right? Yeah, we need more. 

Johnny Wolff  38:25  

San Francisco it needs. It needs a lot of density, man.

Mike Simonsen  38:28  

Awesome. Let's switch in the last few minutes. Let's talk a little bit about the startup process. You know, tell me about the process of getting the company off the ground. You said it was a you know, a personal need, that you started addressing. Tell me more about your tell me more about your startup process.

Johnny Wolff  38:43  

Yeah, I mean, you know, I read the hard thing about hard things. Great, fantastic book. Yeah. And decided I'm never gonna do this. I was at a startup at the time. I was like, I'm never going to do a start up. This sounds terrible. But then in 2013, I went to Austin, I be kind of like a real estate investor. I was like, you know, living in San Francisco VP at a bank but saw roommates, like, Am I ever gonna break out of this kind of, like, lower middle class in the Bay Area with with this kind of career path. And so started to invest heavily in real estate. And then realise there's a lot of people that needed places to live like this, and that it was a great return for investors. So I kind of have seen like, the need and I was like, Okay, this seems like a good idea. And I was like, but I don't want to do a start up. So that those were in conflict. And, you know, I think it was when I finished my third property in Austin. I was like, I think, I think this just needs to be done. It's an IT needs to be done. There's, we have every time put a property up to rent rooms out. I've got like 50 people trying to get a room in one of my houses, their credits crazy, like but no, you know, like, so why is anyone doing that? Crazy good? Crazy good? Yeah, yeah, yeah, credit was like 810 You know, it's Like, but no one, like, these are the best times in the world and like, no one's providing them a service. And so I, I thought about it for like, four months that startup I was I was like, kind of like, on the outs and I was like, so I empty my retirement account, thought Kansas City would be a better place for investors to buy homes. And so I started the company with with the idea just to purely bootstraps it, I think I was just gonna bootstrap with my retirement account. And I got some advice and said, Don't do VC because like, if you go that route, you know, like, the risk and rewards go up exponentially. But you know, it's also the pace gets crazy, all this stuff. And so I was committed to do that. So the first thing is our bootstraps. In a basement, we had, you know, no employees, I was running it alone. And but I was learning about the customer and the getting a lot of feedback from the tenant side learning about properties, learning about the investor dynamics. And then I realize like, that I'm not solving the need I set out to solve without an investment dollars. We're just, we're, you kind of there's sometimes you need some investment, just get over certain humps where if you don't have like, a second, third, fourth employee and engineer, like, you're just like, kind of boxed in. And so I decided I had a few friends that had asked me to invest in the company. They gave me a couple 100 grand and we're off to the races right over the next 18 months. We grew like eight decks. We were not we went from two employees to now we have 43 we got we just finished our Y Combinator batch last 12 months grow sex addicts are now in eight metros, I don't know if the way that I did it was the right way. You know, to start bootstraps in it and just pure agony for two years, I learned a lot about the customer. You know, and it gave me a gave me a lot of knowledge what I do for two years next time? Probably not.

Mike Simonsen  41:51  

But you don't have to do it next time. Because you've already you've already got it under your belt. Yeah. So that's, that's really terrific. Yeah. And I, you know, I think I'm a big fan of that, you know, learning about the customer. For me, it was like I did 100 sales before I hired a first sales guy, I got done 100. But then when he was sitting in the office, when we're interviewing, and I get a phone call, and I closed the customer on the phone while I'm interviewing the sales VP, he goes, I can do that. You know, I was like, that's how you know the customer, right? You do 100 Of those yourself. And then you get it figured out. That's really neat. And real quick, tell me about the Y Combinator experience.

Johnny Wolff  42:29  

Yeah, it was kind of it was a dream come true. Honestly, like, you hear about Y Combinator like, and you know that no one gets in, you know, it's kind of like, and in the end. So we decided, we tried to get in a year ago, and we didn't get in. And so then we basically learn from it and kind of iterated on all these different pieces. And we got in early, which means we were like kind of at the front that really liked us. The first piece is you kind of go on you talk to Seibel and like the gang and they like grill the heck out of you for eight minutes. And if you show any weakness, you're done, essentially. So you've got to be you got to know your stuff, you got to prep a little bit. But in general, it's phenomenal. You know, the, it's the pace is really fast, they push you on product knowledge, and they push you on tightening the way that you can. And I'm already already talk a lot but like I would talk to you a bit more before YC like, and so and so they basically helped us to steal a two cents description, which is incredibly valuable. They helped us think about how we go after investors, they helped us to think about the timeline of how to raise investment, they connected us with other prop tech, a YC folks that are like super off super incredible people like high calibre. So you get like a social group. And then they talk about how to be how great you have to be to be successful, over and over again, which is a little bit discouraging. It's like, they like say most of you will probably fail. And it's just or not that great, which is like, but it's also like realistic, right? You it's way better to, to not start to like go not to buy your Ferrari like when you when you get into YC you know, you have to wait, your chances are still small. So it's phenomenal experience, some of the best, like fundraising advice, product development advice, and just kind of like team dynamic and culture and how you think about money advice, like ever, as well as founder mental health. That's something that they've they started to address, I think recently with founders, and it's really helpful to know that you don't have to like suffer and die to have a startup.

Mike Simonsen  44:30  

Yeah, that's it. I didn't know I didn't realize they were focusing on that. You can imagine that all the other things you were talking about could detract from founder mental health. So you need to have some of that balance in there to make sure you keep going.

Johnny Wolff  44:42  

Yeah, they said that they didn't use to do it. No, I can imagine is like four years ago or like one of the founders, the partners at YC. She's like, you guys are totally mess. This is not good. And she like was a psychologist. She pushed for it. She started a company and then she pitches every batch and it's become Are there curriculum? So it's, I think it's enormously valuable.

Mike Simonsen  45:03  

That's really great. Cool. Well, that's exciting. And, and Y Combinator means the best there is. So it's, it is, it is that's an exciting group to be a part of. And of course, they like the platforms, the platform, you know, and if you can build both sides of that platform, both the the inventory side and the and the customer side, it's you shake your head, like that's a real hard challenge. Hmm.

Johnny Wolff  45:29  

And marketplaces are really cool because you can you bring people together, you know, you help you bring you current ecosystem, you create, like every iOS platform, you know, it's beautiful. It was also really hard because like, your brain is always like splintered into multiple directions. And that's much harder than doing like one thing. And so I if you like marketplaces, do it. But it's it's a special kind of challenge. But all startups are,

Mike Simonsen  45:57  

for sure, for sure. Johnny. That's really terrific. I appreciate your time. Today. I love hearing about HomeRoom and about what you're building I love that it's, you know, as a personal need. I started Altos Research or the personal need to and my I bought my house in Silicon Valley, my little old piece of shit, you know, I'm 30 years old with a million dollar mortgage. And, you know, this is two bubbles ago, and that NASDAQ bubble bursting and, and I had to know what was going on, and I just started building the data models to know. And after a while of doing that, like, I realized that I knew more than anybody. So we decided to commercialize it. And so it's like, but it makes a big difference when it's coming from. I know exactly what the problem I have. And I seem to be solving my problem very quickly. And, you know, my what, however big my universe of of that people with that problem is, it's very specific, as you know, and it's working. And it's not invented. It's not like, I think somebody else has this problem, which is so compelling to me.

Johnny Wolff  46:59  

Yeah, it's cool. You popped your head out, just like I kind of happen with our team, right? We were just like, trying to hang in there. And then all of a sudden, we're like, you know, you we just worked hard. And we'd be surprised. We're good at it now. So yeah, man, that's it's really cool that you're solving a problem as well. Very, so.

Mike Simonsen  47:17  

So let's finish up there. Tell tell us about the next 5 10 years with HomeRoom. What's your vision? And then where can where can people connect with you and find everything?

Johnny Wolff  47:27  

Yeah, we'd like to be in every market United States in next five years. That's the goal. We think the the need is, yeah, because I've, I've moved from San Francisco to Austin to Kansas City. We've seen the need for remain housing exists like not just in San Francisco, but in like, LA, Kansas. And Topeka, you know, places like the need for this type of housing. It doesn't matter if housing is is affordable or not, people would prefer to pay 50% less for housing, and some of them would prefer to live with other people to have community. And so we think that every city in United States could benefit from this. So that's our goal that's providing every city in 10 years, we'd love to see it be a global brand, global housing brand, you know, big dreams are, it's recognizable, and people live with HomeRoom in different form factors a housing globally, because they know that the experience will be amazing. And it won't, it will be consistently great. Right? And it will be consistently great value. So that's, that's that's how we, we think about 10 years.

Mike Simonsen  48:29  

Amazing. And where can people find you? Where should what social where to? Where do we direct people to connect with you and HomeRoom?

Johnny Wolff  48:37  

Yeah. So livehomeroom.com is our website, you can, you know, there's two spots, marketplace, two sides, you can invest or you can live. And if you live, you can kind of take virtual tours and see the roommates and if you want to invest, you can go to our invest page book a call with our team, they'll walk you through how the model works for investors. You can also email me directly at Johnny@livehomeroom.com I love to chat with House hackers or people that are doing real estate investing gave me a huge boost in my life. And it's you know, it's fun, and it's interesting. And so I'm happy to you know, provide insight if you're going to try to rent out rooms to people. We're happy to give you our thoughts on how to do that the best way possible.

Mike Simonsen  49:17  

Love it. House hackers. I love the concept. Me Sue. Yeah. Awesome. Johnny, thank you so much for taking the time today, everybody. This is the Top of Mind podcast. Thanks for joining me. We will be back next week with another episode of the with the leaders that thinkers and doers in the real estate industry. So join us again. Thanks, everybody.

Outro  49:43  

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