Churn rate – or also known as attrition – is something we all try to avoid but it is a big problem for most property managers. Our guest today unpacks what he is doing to address this challenge.
Lior Abramovich is Co-Founder and CEO at Blanket, a company helping property managers keep their doors open by building thriving relationships with their clients. Tune in as he and host Bob Preston unpack the many definitions of churn, understanding each client, why we need to invest more in relationships, and much more.
(02:03) Lior Abramovich’s background and what Blanket does
(13:28) Understanding more about churn rate
(20:09) What is positive churn?
(23:12) How Blanket reduces churn
(26:45) How the Blanket dashboard works
(32:01) The data and technology behind Blanket – in layman’s terms
(33:31) The goals of a property owner versus the property manager
(38:55) Getting commission on deals
(43:08) Blanket’s business model
(49:20) Comparing to other marketplace platforms
(53:48) The customer reactions to Blanket so far
(57:00) The art of building relationships with clients
Connect with Lior Abramovich
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Connect with Bob Preston
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Transcript of This Episode
Bob Preston 01:16
Hello, Brainstormers. This is Bob Preston, your host broadcasting from our studio in Del Mar, California. When working on property management consulting projects, one of the biggest challenges I hear about is the hard work to keep owners happy and their doors under management. Property managers can avoid what none of us want to deal with by keeping properties in their portfolio: CHURN! Churn is often referred to as attrition. As my guest on the show today, I have Lior Abramovich, co-founder and CEO of Blanket, helping property managers keep their doors in their portfolios by building thriving relationships with their clients. We'll discuss churn, why it is such a problem for property managers, and how Blanket is helping property managers reduce their attrition rate. Have a listen. We all are welcome to the brainstorm. How are you?
Lior Abramovich 02:15
Pretty good, Bob; super excited to be here.
Bob Preston 02:19
That's fantastic. I always like to start the show by learning more about my guests. So let's go with that, if you will. Can you introduce yourself? Could you tell us about your background and your new company, Blanket?
Lior Abramovich 02:29
Sure. So, my name is Lior. I'm 32 years old, freshly married, about six. I am getting used to it, trying not to lose this beautiful thing everywhere. And I started my wind real estate as a real estate investor. I bought my first rental property in Atlanta, Georgia, when I was about 18 years old. I purchased it from Israel, which is where I live currently. I was born and raised in Israel but was exposed to real estate from a very young age. Much of it is thanks to my mom, a role model in almost everything she's done. She got me passionate about real estate. And back then, it was super, super scary. I'd do it 1000 miles away; I had to trust someone I didn't know. Back then, Zillow was in its early innings, and everything was frightening.
Bob Preston 03:34
Like starting a new company, right?
Lior Abramovich 03:38
I would say that for a kid at the age of 18. It was a bit stressful. Exactly. But it was the best decision I've ever made looking backward because it got me on this exciting path. It was the first step in my career. At that point, I started my active-duty service. I served in the Israeli Navy for about eight and a half years. As a naval commander. I graduated from the Naval Academy and served as the chief engineer and executive officer of the Israeli Naval Academy. This means I love talking and teaching, so I can speak a lot and help. I wouldn't be able to do much today, but I'm passionate about teaching and helping, and this is something else implemented after those eight years of service. When I started my first role in a private U.S. real estate investment firm focused on building for rent, we still needed the term build-to-rent. It was new construction for investment purposes. I started there as their Head of Acquisitions and, afterward, vice president of business development, overseeing the entire sales division. This is also where I had the opportunity to use that passion for teaching and taught over 1,000 individual investors how to invest in our real estate. From how to analyze properties, form the deal correctly, where to look, and what to look for. So, it was an exciting opportunity, besides having the privilege to oversee an entire operation from acquisitions due diligence up to dispositions for over 1,000 individual investors, mainly mom-and-pops worldwide, including Canada, China, Russia, and Israel.
Lior Abramovich 05:38
I went through the entire real estate transaction value chain, from managing our homebuilders and the general contractors we worked with to the lenders, insurance providers, and everyone across the deal. And it gave me that breadth of perspective and vision across, like, what are the challenges were the different things that we could improve in that we didn't have anything like no technology. And this is where my frustration started to build up. Like, this is how everything started for me. And so, like my pursuit, there were so many things to be improved for a technological solution. There are so many things in simple things, just simple automation, not even talking about the technology company. But it is just simple automation. And that's how I started playing with that a bit. I remember I started automating stuff in our CRM software and creating a workflow engine. Technology may be the key to making things a lot easier, which can make our operations more effortless and the experience of our investors. Remember, we made many mistakes because we needed a sound process that categorized everything and everything was in order. So, it is up to us to make our clients even more happy. But this was the first step in my career afterward.
Lior Abramovich 07:18
After that, I decided to open up my investment firm in Canada. I moved to Toronto, from the heart of Israel to the cold winter of Toronto; nothing prepared me for shoveling snow from the driveway at 6 a.m. I did some harsh things in the Navy, but nothing prepared me for that. And this was right before COVID; I started helping Canadian investors buy real estate in the United States directly from home builders. And that was when I became much more aware of what my close friends from the property management industry were going through. And up until that point, I remember that every time we spoke with our property managers, who were not only my closest friends there but our centers of knowledge and our boots on the ground, like everything we've done, everything we've thought about was always done with our partners, our property managers. So, I had an excellent understanding of what was happening from the operation side, like from the operator side, and not from the property management side. And the topic was always profitability. And so, like improving the operations to become a more profitable company. So that was like the challenge that was always a challenge, profitability and operations. As a result, we also saw a lot of innovation in terms of technological solutions and many things that were concentrated on tenant solutions. These things improve the operation so that the bottom line will be improved.
Lior Abramovich 08:38
But it was only when I started that my company was much more engaged with them. I began to hear about another challenge, which was churn. When I started, it was like asking these questions and trying to understand better because every company experiences churn. But there is something very unique about churn and property management. Usually, when you ask pretty much every industry out there, like what's the reason for churn, okay, the client wasn't that happy with the service, so they decided to leave. But we have another reason for churn in property management: owner sales, which is not, which has nothing to do with how good we are as property managers. And when I started to understand the magnitude of the problem and ask them a simple question, like how significant churn is, I expected to hear maybe 5%, you know, at worst scenario, 10%. I WAS SHOCKED when I heard 35%, thinking I'd lose 35% of my revenue generators yearly. That is, like a challenge, I couldn't even comprehend how to solve it. And so I became even more interested in the kid. It got me even more curious to understand how this can be solved. So, the first question I asked my fellow property managers is whether you have a real estate license or a licensed broker. Why don't you offer your clients to sell their property for them and try to sell it internally to your clients? So, for many, that sounded like an exciting innovation without even putting in technology.
Bob Preston 10:21
I'm always surprised how many property managers I speak with who don't buy into that; they want to keep a clean separation of church and state, which I've never understood personally. But some property managers are still looking at it that way, like we don't sell property.
Lior Abramovich 10:32
That was the same reaction that I had. I was baffled; why not that that's so simple, and you don't need technology? Back then, I needed to understand how complicated the problem was. But that simple thing got me even more passionate about this issue. So, I started looking into it; I started speaking to many property managers to understand the magnitude of changes and how they tackle them. And after a specific time, I began to know where the problem lay and how big it was because no property manager didn't confirm my concerns regarding this issue and the challenge. And this is where some of the decisions, the decision to go after this challenge and build a solution to help my fellow property managers, this is where the decision has been made. And back then, I just packed up my things. COVID started. So, it was a beautiful time to start something new. I just returned to Israel; I partnered with my partner and co-founder, the company's CTO. He's the wise guy of the bunch. And we went on this journey to find a Blanket. One less no baby about myself: I'm a mole. So, I'm using real estate to do some good, and not necessarily just business. So, I also co-founded a nonprofit organization in Israel that renovates homes of senior citizens in need and Holocaust survivors, trying to provide some subtle, positive value and give back to the community with real estate. I have been operating for several years and have been able to do some good. The Blanket has been set up to fulfill that mission of eliminating churn and providing a better experience to our owner clients. With the basic understanding that churn has two sides to it, it has the side caused by our clients' knowledge; if they get a better experience, they might decide to leave for the competition or whatever other reason. And the second reason for churn is owner cells, which are different from what we can control. This is how Blanket was also formed to attack this problem from both sides and provide a better experience for the owners. An experience that will make them stick with you for the long run, make them understand that you are their trusted adviser, you are that specific person and company that will help them get to their goal eventually, which is to either retire financially safe or retire sooner, with an immense portfolio of rental properties that are generating passive income for them, without them constantly needing to find for other people or other professionals to help them. You have all the information as their property manager; you have the local knowledge, and you understand exactly which types of properties are performing best. You have the data, you have the relationships, the people; all I need is just for you to help me communicate it, right?
Bob Preston 13:35
We'll dive into the Blanket a bit more here. But I'd like to speak a little bit more about churn. Some people call it attrition; if that's cool, can we shift over and talk about that, and then we'll come full circle? And I will have you talk more about the Blanket here in a minute. So, as you're speaking, I can remember when I still owned North County Property Group, my previous property management company; one of the most frustrating things was that every year, during the Fall, we would start a pretty major forecasting project. We would look at our financials and project where we will end up for the year. Where do we want to be next year? And we would always forecast door growth. The one thing that is super hard to predict for, and I see you nodding and smiling, right, is churn? We can guess what the churn will be, but in large part, I don't want to say it's out of our hands because there are things we can do to reduce churn. But it was always frustrating because, oh, wow, we signed ten properties, but we lost five; it's a constant battle. And so according to an RPM, I know you and I both have looked at this report, the average churn rate is, you know, somewhere among property managers between 20 to 30%. I think you've already referenced that number. Could you do the math on that, right? They also say the average cost of customer acquisition is around $1,500. So if you're a small Company, say 100 units, 100 doors, and you're trying to grow by 30% to 30 doors, well, you've got to expand by 50 to 60 properties to keep up the churn to hit your 30. That's four or five doors every month. And that's like, acquisition costs are like $7,500. So it's a lot cheaper to keep. Keep your customers and your properties than it is to find new ones. Are those numbers like what you've seen? I know you're talking to many property managers out there.
Lior Abramovich 15:29
Yes, definitely. There is a range to that; we saw that the best performers are the ones who are doing transactions in-house and helping their owners sell into their network. The top performers stand at around 10 to 15%. of churn. Yeah. And it spans across that range towards 35%, on average, meeting some property managers losing more than 35% annually. And there is one thing that the industry also needs to look at it a bit differently. Because currently, we only have a little sound data about this. The trend is also something that can be defined in multiple ways. And the first thing is the industry; we're going in an excellent direction. Many other companies in different fields are amazingly doing this, like property melds with the maintenance at forecasting and giving property managers information to benchmark against a very detailed set of data; the same thing needs to happen here regarding churn. And this is something that we are already working on. But we can see that we first need to identify churn as it is; there is good churn, so to speak, that a property's property is being sold. And we are keeping the door under management because we're selling it internally. And there's so like the bedroom that an owner just decided to leave. And by separating these two, the owner sales and the owners were leaving us, which will bring more clarification. But from what we see, the numbers match. And it's also surprising how many property managers in our industry don't even know their churn rate; they need to know how much how many properties are lost every year. And the value of that, within a couple of select examples to some of our clients where we show them. This is the amount of property that you lost this year. This is the acquisition cost for a new property. And this is the lifetime revenue from each property. And when they see the numbers, like the amount of money, you can consider it lost opportunities. And as actual lost revenue. It was in the hundreds of 1000s When you look at it across a lifetime of a property. And not many people in this industry understand how big this is—just seeing the numbers, putting them in front of us, and understanding how big this is and how simple the solution might be with the right approach and processes. And with the right technology.
Bob Preston 18:19
I like your approach to translating it into hard dollars. Because you know, you see the NARPM report. Oh, 20%? Well, yeah, we're right in there. We're normal, right? You still need to gain properties at a higher rate than you are losing them to create revenue opportunities. So, if you look at how much this costs me, it is through a different lens. It's like when you lose an employee, the numbers are enormous in terms of what it costs to replace that person, train somebody new, there is a third category, I'm going to throw in on why you might lose a, and I thought you're going to go there with well, there's some good attrition, and that's the owner, that's just super challenging to work with. And it's costing you probably more money. And as a loss leader, those guys got to go because that's what I call the florist attrition, where we're forcing them out. After all, it needs to meet their expectations. And it's, you know, bringing our staff to the knees, you don't want that, right? You've just got to bite the bullet and focus on the properties that are, you know, producing for you. Okay, so we talked about that. So, when we talk about why we have attrition, property managers need to understand all those reasons when the client leaves. So, call it an exit interview or a conversation. I used to pick up every time I heard about an owner leaving us; I would always pick up the phone and let them know that I'd like to understand this. How did we did we disappoint you? Are you moving back into the property? What's going on? And it was always very, very insightful. Do you find that property managers are doing that? Do they understand why people are leaving?
Lior Abramovich 20:01
Some do, and some don't, or the industry needs to be more diverse in strategy approaches. Also, regarding the favorable insurance, could you speak to the one you are initiating? We also see that some property managers take that approach of taking action and deciding who their clients are, which clients are right for them, and some need to. So, there are many different approaches to it. But in general, I think the first thing we need to look into as property managers is trying to be data-driven because following emotions and just thoughts that we have because we understand something, and a lot of times, we, as business owners and this is something I always try not to fall victim to is the curse of knowledge. We know everything, understand the processes, have been in this for many years, know why they left, and see why. And a lot of times, I am surprised by how much I don't know. And I always want feedback. I'm craving that feedback, especially for the bad things that happen, because these are the things that will give us the most amount of value. After all, usually, they end, let's think of ourselves when we are delighted with the select Customer experience that we got, like I'm getting all the time, like give us a five-star review or something and leave maybe a comment, I'm not necessarily leaving a comment because everything was good. I'm leaving the five-star review on that said; no additional information that can help that company do something better. But when I'm not satisfied, this is when I want to provide the data. This is when I want to give the why that's right. Why, something happened? Because I'm feeling a little bit more, you know, either angry or whatever reason. But it is a golden opportunity to use that emotional driver of a person to say why they're feeling flawed or inadequate and use it to our advantage. You'll be surprised by how many ideas we can get from that, not necessarily on their experience; it can even project us to another part of the business that can be improved just by getting an idea of where we can automate specific stuff, whether it's responses or anything like that. But in general, using those moments is super, super important. And I hope more property managers will be doing that and being data-driven.
Bob Preston 22:36
Yeah, it's essential to understand why people are leaving you. It's one thing to say, well, they weren't happy, well, why weren't they happy? What did we do wrong? Did somebody offend them? Did we live up? Was our pricing? Need to be corrected? And then the flip side of the question is, what can we do to prevent churn? And this is where the Blanket starts to come in. Right? So, what are all the things that we can do as property managers to help us meet those client expectations? And how can we help our own companies help us help ourselves to lower that attrition rate? Everybody wants to know what the secret is here. So, please help us understand what you guys are doing and what you see in terms of reducing churn.
Lior Abramovich 23:20
We tackle it in two ways. One is identifying churn, meaning, what can we do to determine intent to sell or leave? That's number one. Because if we get that right, the most significant part of the problem has been solved. That's the way we can repair it.
Bob Preston 23:47
It is hard to know precisely what your property owners are thinking. Maybe they're thinking about selling, or perhaps their stage of life and changes. What do we do with this property? There might be stuff going on with their family that we don't know about. That's a tricky thing to anticipate. Unless you're data-driven, on average, 10% of our clients will leave us to sell, but understanding each client is challenging.
Lior Abramovich 24:11
Very, very hard. This is the challenge we are tackling technologically, and man, the amount of data you need to sit on is enormous. And it takes a lot of metrics. This is what we are doing right now when we already have an algorithm that helps us identify those potential sellers or potential owners who would like to leave, and a lot of it has to do with the experience they get. So think about maintenance, think about evictions; they can see many data inputs that we already have the grasp of our hands but are not utilized in a way that can help us forecast that. This is something that we are already doing. I hope we are somewhere in that ballpark, but accurate on the ability to predict that. So, the first thing that we do here, Blanket, is identify those potential owners who are going to either sell or leave based on a lot, a lot of metrics and a lot of data that is not only coming from within the property management software because the Blanket is a platform that integrates with your property management software. So you can take all that data and use it to your advantage, things that you need to be able or have to date in your property management software. But it also integrates with other data providers, public data sources, county records, private data sources, and some of the largest companies that can help us understand other metrics we, as property managers, don't have access to. And by seeing that entire picture, we can identify those potential sellers and which ones are considering buying. Inside our platform, we capture a lot of different actions that give us a better understanding of who is thinking and who is, like checking and viewing other properties and doing other actions that can indicate an intent to buy as well. And that allows us to identify all those potential sellers, potential buyers, and the people thinking about leaving.
Bob Preston 26:17
Yeah, that's interesting. And so, how does that get communicated? When I had my company, I had my accounting and property management teams do what was called a CEO dashboard for me every month, right? It was a summary of everything that was going on in the business. And I would look at it intently every month. I understand you have a similar concept; there's a dashboard; maybe that's where you would go.
Lior Abramovich 26:44
Correct exactly that. We also provide the property manager with their dashboard because we are like a b2b to see the plot, meaning most of the platform is customer-facing by its owner. It’s built to support the owner with everything they need from start to finish. But you, as the property manager, have that visibility across everything they have in there, with the additional data from the market data with the other data from the county records and everything you can see, to give you even more insights on your portfolio that you don't get today from your property management software. And that also includes those details, who are the potential sellers, who are the potential buyers were the likely people that we need to keep close attention to and make sure that they are getting a better experience than they were getting up until now because our system identifies them as potential owners who would want to leave. So you will have all that in your center console, which we call this on the admin dashboard, where you have a complete view of your entire portfolio with all the metrics that you need from the value of the properties, the cash flow of the property, the net operating income, things that can also help you celebrate your wins and the service that you're providing to the owners. So think about a phone call that you're making over the phone call to an owner who is maybe not that satisfied, but now you're telling them hey, we'd like to provide you with a performance review of your portfolio; it's perhaps quarterly, perhaps just a one time and informs them Look at how much your property's increased in value. Look how much cash flow you've generated since you've been with us. Look how many expenses we were able to mitigate. And I'll go into that because we prevented the maintenance issue and did many things to take care of the property. So all of that can now be used in the palm of your hands to communicate to the owners and give them that additional good news that they are not necessarily used to getting because a lot of owners are used to probably two points of communication: the Owner Statement and when something breaks. And when that's all you're getting from your property manager, you need some positive reassurance that everything is good. And really, a good job is being done on your most valuable asset. So that's really, as you said that, so like your own dashboard. But besides that, the entire platform, the majority of the platform, is built around mitigating term, combating churn, and the actual things that we can do as property managers with the help of a Blanket to eliminate that churn. But also grow your portfolio. Because when you look at churn, it's an exciting thing. Churn has two ways to be mitigated. One way to solve it is to imagine a bottle of water; let's say that bottle of water is leaking. The water is our property. So, to keep the same water level in that bottle, you can either close the leak to eliminate churn or keep pouring more water into it. So Blanket is doing something like that. We're doing things that can help close that leak and eliminate churn, but we're also allowing you to pour more water. The way we do it is as follows. We have two sides of the platform: we have the investment dashboard. In the labeled marketplace, the entire platform is a white label with the property manager logo, meaning that this is the platform they provide their owners.
Bob Preston 30:12
So, as a property management company, I would fold the Blanket solution into my company website at a specific point precisely on the Navbar.
Lior Abramovich 30:16
Just so you know – the platform is open only to your clients or those you want to invite. So think of past clients, any people in your network that would like to buy more properties so that you can manage those. So, think of it as the top of the funnel, capturing even new leads into the funnel. And the way it works is as follows. The investor dashboard gives the owners real-time performance analytics across their properties, with no manual data entry, not on your site as a property manager, because everything is done in five minutes. With Magic, everything from the integration to property management software into the setup of all the users to all your clients immediately means that when they say not sign up, they don't have to do anything. The dashboard is set with the value of their properties and shows them how much equity they have in their properties, cash flow, net operating income, and everything they need in one place. And everything is updated in real-time.
Bob Preston 31:18
Let me pause here. I'll stop you briefly because we talked about what it does for the property managers. And now you're we're talking about the client. So, are they two different dashboards, two different views, if you will? Well, you have a product management or a company view. And then you have another one that says, here’s how your investment performs. And that's targeted at the client.
Lior Abramovich 31:36
Correct. Think of it this way: The oldest customer-facing platform includes the investor dashboard and the marketplace. And you, as the property manager, have the Property Manager Dashboard. This admin dashboard sees everything happening in those two and allows you to understand and act accordingly.
Bob Preston 31:53
Okay, let me ask another question because I'm loving this, by the way. So, if I've got this right, I will express it in layperson's terms. Your technology maybe goes into my AppFolio software building them, PMS, you have it kind of scans, I'm using layman's words here, maybe scrubs that data combines it with information that's publicly available and puts it in a digestible format that's in the form of a dashboard. Is that kind of what we're talking about?
Lior Abramovich 32:19
Exactly. Okay. Exactly. Yeah, good. So that's on the investor dashboard side. The primary purpose of the dashboard is to have a better experience, an experience that will get the owners excited about their properties, even for the accidental landlords. By the way, something that we saw that was pretty interesting was that they started learning about real estate investing, even getting excited about it, because in the dashboard, they also get tooltips that explain every metric, how it's calculated, and why is it essential, so even owners that like are first-time investors that don't even know what cap rate is? Or what is cash on cash?
Bob Preston 33:00
Now they can learn it. I’ve found many investors don’t even know what cap rate and NOI mean.
Lior Abramovich 33:04
Exactly, exactly. So they also get to see that and understand everything about their portfolio.
Bob Preston 33:13
Interestingly, many clients we used to have would call me now and then to schedule a one-on-one with me. And we would talk about these kinds of things. And then after going through that analysis, You know what, I don't think I'm going to buy, I'm not going to sell, right, I might buy more. But the fact that they're able to see how their property performs is doing pretty darn well sometimes is a deterrent to the sell the property conversation.
Lior Abramovich 33:37
I agree. I agree that every situation can be presented differently. In every case, whether it's like a property that isn't performing well or a property that is performing well, an excellent-performing property can be a reason to sell because it's appreciated a lot, and I want to cash out. And it can also be a reason, as you said, to keep it, everybody has a different way about it. It is about understanding your owners, listening to their needs, understanding what they want, and acting accordingly. Because I talk about this a lot at the end of the day. Many people say that the interests need to be aligned between owners and property managers. The owner wants to cut expenses and make more money; the property manager wants more. And there's so like this, always saying that the interests are not aligned. I think the opposite. The stakes are precisely aligned. What is the goal of a property owner eventually, based on his decision to start investing in rental properties? They want to leave a legacy for their kids with the portfolio that they've built and provide a better future for them. They want a more stable and stable financial future for themselves, retire earlier and have this stream of passive income that can work for them as they also leave that legacy for the kids. When I ask my fellow property managers about your goals, they're pretty much the same. They are the same. So it turns out that we are working towards the same purpose. When we understand this and work towards it with our owners, who know that we are in this together, our goal is to grow our portfolio, work towards this goal together, and help one another. Because even at the end of the day, as an owner, I'm investing in you as a property manager to manage my most precious asset, and you are investing in me, so I'll also be able to help you grow your business. So it's something that works together—100%.
Bob Preston 35:42
And the other thing is, you're right about the balance, the goals of a property owner versus the property manager. A property owner, yes, they want to make as much off of their rental property as possible. They are sensitive to fees but also exposed to the value they get from that relationship. So I've always viewed it: hey, the more weight I can provide as a property management company and property manager, the better for my clients, and they will stay with me for a long time. Right. And that's what we're precisely.
Lior Abramovich 36:19
Yeah, exactly that, precisely that. So, the dashboard helps them get a better value from their properties and see that value. And seeing a lot of owners when they talk about why I spend $4,000 on this renovation when they look at that property value, which increased by $100,000, suddenly puts everything into perspective.
Bob Preston 36:45
It seems like it's relatively inexpensive after that.
Lior Abramovich 36:49
Exactly. So communicating and seeing that is one big part of it. And the second part of the platform, the marketplace, is where the true magic happens. So when an owner wants to sell, even before they are action, we can already do some actions to help them do it safely. And in the way that eventually we'll be able to keep management, they listed the property for sale on the marketplace, and all the honor other owners are notified, they're seeing that property listed for sale so they can buy it. And in turn, the property manager keeps that property under management. They are selling into an old network. That's like the core functionality of it. But the other thing that we're doing, if we remember the like pouring more water into the bottle approach to what we're also doing, we have a vast network of inventory partners from wholesalers, turnkey providers, home builders, all off-market, we're not pulling anything from the MLS. So these are properties that you can't find anywhere else. Our algorithm filters all these properties to push the relevant inventory to your owners, meaning your owners will see properties only in the areas you support as the property manager. So when those properties are additional properties that they would buy, you can also manage them. So this is like pouring more water helping your owners buy more properties. And not necessarily properties that other owners list help provide those two solutions to the problem, stopping the leak but also pouring more water into the bottle by assisting the owners to buy more properties, which are all on the market; it is essential to mention all the markets. This means they can only find them here. It is also filled with much data they need to see before buying that property.
Bob Preston 38:42
Okay, so off-market or on-market, there needs to be someone facilitating that process, proper, opening escrow. So, who does that? Would you happen to know if your clients still do that? And the big question is, if they help with a transaction, say a client who buys a new property or a client sells their property, do they get the Commission on the deal?
Lior Abramovich 39:04
Good question. So now we're getting to how the dollars are made. And this is let's go. And this is, and this is precisely how we work blank. And by the way, it is a free platform with no subscription fees: no setup costs, exciting nothing. We also make money by winning when our property management client partner wins. When we started this process, we saw that providing a technological platform to support these situations and use cases needed to be improved because some property managers still needed a brokerage operation. Or if they did have a brokerage operation in place. They didn't want to do the transactions. And this got us into the position where we understood that there is an even more significant need, which is really to facilitate those trends—Deductions for our property managers. And we were surprised by how many property managers doing transactions said, I'll happily stop doing that. As long as it's done, it helps me make more transactions. And as long as I'm getting some of that money, okay, the way it works is that the following Blanket can adapt to every use case. Let's say you need a brokerage operation; we can act as your honest, licensed broker across almost all 50 states. So we can be your brokerage and take care of the transaction from start to finish or on weekends. And this is also something exciting: we can empower your network to grow with you by inviting your chosen agent partners that you've been working with for the last several years, or maybe even more than that, to bring them on board and be those chosen brokers to represent each side when there is a transaction.
Lior Abramovich 41:04
Okay, so no matter how you would like to set it up based on your existing network, the Blanket is here to enable that, not replace it, not change it, to allow it to. So we can either represent or you can choose a broker to describe if you don't have a brokerage operation in place; if you do have a brokerage operation in the area, and you would like to be the one still representing, you can define one side. And again, we can either express the other side or bring one of your partner agents. Same thing, and there is another use case where you are doing the transaction, then you are sometimes, depending on the state where it's applicable, you are present on both sides. The same happens; you can use a Blanket to represent both sides when this is the most exciting part like it is built on top of a transaction management system. One powered by AI integrations with different service providers, including lenders, insurance providers, inspectors 1031, exchange, and everything you need to provide a digital experience to the owner, especially to the buyer; the buyer is the one that has a more robust process. And we are acting as your transaction coordinator. So even if you're used to doing the transactions already in-house, now with Blanket, you can make even more transactions, you can grow your revenue from transactions by multiple times, just because we'll be able to help you scale we'll be taking the entire work from offer to closing, managing the communications Manning managing the coordination so that you can focus on the relationships, you can focus on maintaining that trust and confidence with the buyer with the seller, and doing everything possible to make sure that the transaction goes through safely to closing.
Bob Preston 42:45
The Blanket side handles all the obligatory and mandatory documents and disclosures like a transaction coordinator.
Lior Abramovich 42:58
Yeah, it depends on who the agent is; whoever the agent is, their responsibility will be to take care of all the legal and compliance side.
Bob Preston 43:08
Okay. Then, the model is that Blanket gets some split out of the transaction. Where do the funds flow? They flow through Blanket, then to the broker, or vice versa.
Lior Abramovich 43:24
Again, it depends on the model; if we are the agents representing, so of course, it runs through us, we have a listing supplement, and where you get the referral fee, or you are the other agent, let's say if we represent one side, you mean the second side, we just split the commission. We decide on it in advance; we settle in advance what the seller commission that we want to offer our clients because we can provide an incentive to do it through us, even if they weren't thinking about doing it through us, because a lot of times, a lot of the owners don't even know their property manager provides brokerage services, they don't even know they can turn to them to sell it. And just staying top of mind can already create a lot more business. But we can use that as another incentive for them to decide this is the right way. Instead of the traditional five 6%, We can offer them, for example, 4%, and split the commission so that more deals will be coming through, and that is how the transaction will be broken, traditional split in terms of commissions. Suppose we are doing the transaction management and not representing anyone. In that case, we charge a small marketplace fee, edit as a listing, and then as a supplement to the listing. And that's how it's done.
Bob Preston 44:38
Okay, so you have two choices as your client, being like the property managers, you could use it almost like a referral model, right? A lot of property managers do that. They want to keep the transaction when they hear an owner intends to sell, but they are referred to another agent, right? So, the other side of the model is that I'm a broker and want the listing. But it comes back the other way. And then we give you a split based on your marketplace fee?
Lior Abramovich 45:13
It's a small marketplace feed, something that is usually even lower than the referral fee that is handled. It also comes as an added cost that is either way added to the consideration as the Select transaction management costs that aren't included either way for us as brokers that we know we'll have to pay for the transaction coordination. So, for us, it's just like a transaction coordination fee when we are not the brokers on that transaction,
Bob Preston 45:38
Okay, so when all this gets spilled out? Do you spell this out for a new client when they're coming on board? And they agree to bring your white-label marketplace? And I'm going to call it a portal? Is that how you refer to it? Onto their website? Is this all part of the pricing that's established at the time you sign an agreement?
Lior Abramovich 45:56
Yes, no, the way it works is usually, and I'm super thankful because property managers understand the value. And we typically need just a demo meeting. After the demo meeting, we set up an onboarding session, which can take five to 10 minutes. After the onboarding meeting, we have an implementation meeting to review the data and ensure everything is correct. Everything is said because sometimes there is certain information; we know how GL accounts sometimes look inside our property management software. And sometimes it can be very messy. So, we also make sure that all the data is clean. After that, we do a going live campaign; we manage the communications for you as a property manager on your behalf to your owners. As a property manager, you approve all that copy; you can change it even a bit if you'd like. But we're announcing building excitement for the owners. After the excitement is created, we secrete a welcome email that invites them to sign up. And when they sign up, they're already on the platform. From that moment on, we take on the role of the utmost importance. When putting aside for a second all the technology, which is putting a lot more value into the relationship between you and the owners, meaning giving them educational information, giving them the reports that they need, updating them when their property value has increased, updating them when anything needs their attention, not only bad news as maybe that we used to get but giving them some of that positive news along with optimization, recommend recommendations, maybe we see that they can optimize their insurance price, maybe we can see that they can optimize their loan terms, their interest rates, even, especially today's it's a little bit more challenging, but the system can give them those recommendations that help them not only optimize but also grow their portfolio. We add much value to your relationship as a property manager and the owner. So that's what happens after the platform is live. They get notifications when new properties are added to the marketplace and new opportunities; we provide a webinar where we give them a personal demo of the platform. We also show them what options they can find in the forum and what properties they can buy and are there to give them the owners, your clients, all the information they need to succeed.
Bob Preston 48:35
I had a guest on my show a few years ago from a company called Home Union. Do you remember those guys? Could you remember that company you do? And their whole mission, according to their kind of elevator pitch, was to make buying and selling properties as easy as buying and selling stocks. That was their main pitch. They ended up selling that technology. They sold to Mynd, and I believe that MYnd still has some derivative, the same application, or they've improved it that they're offering to their clients like you're talking about as a marketplace. Is that similar to what you're doing? If not, how are you different than what mine is offering?
Lior Abramovich 49:18
It's a bit similar. Most marketplaces have the same sort of structure. So, in terms of understanding how a marketplace looks identical in its basic form, the main differences are first in the inventory. So, we are not pulling data from the MLS or showing any properties that everybody else can see. And typically, properties that are on the MLS are properties that investors don't look for. Investors want off-market properties, and investors wish to have those opportunities; many times, even if you list an investment property that you have on the MLS, you'll probably get a family that wants to come and live in that property rather than an investor. And that is also something that we as property managers need to remember: when we try to list a property on the MLS, we probably won't keep management, 90-something percent, we probably wouldn't keep control. But if we sell it off the market, it's the other way around: we'll sell it to an investor. So, our inventory is entirely off-market wholesalers, turnkey providers, homebuilders, et cetera. That's number one. Number two, we are built on top of a transaction management system, meaning we're not just a search platform; our transaction management platform also has integrations to all those service providers that you need to get the deal across the finish line. So, an owner can get his pre-approval for a mortgage within two to 24 hours, depending on the lender and the lenders that we have on the platform; they can get an insurance quote, they can get an inspection, everything from inside the venue, they don't need to leave it at any point in time. So that increases the close rate as well. And the experience that they get as the clients of the platform,
Bob Preston 50:58
I like your partnerships with the services needed to close on a property. The inspection folks, the insurance firms, the people that could provide you with a mortgage. Because that eliminates some of the need to search for those proper people or depend upon your agent to bring in their play, right? Yeah,
Lior Abramovich 51:17
Even more than that, we, as buyers, find ourselves when getting into transactions; we suddenly become project managers. Because now we must coordinate the lender, the insurance provider, the inspector, and all of this; even if we have an agent, we still have to answer emails, we still have to follow up on documents, we have to sign, we have to download we have to review. So we still like becoming this project manager without any intent to do so. So we are trying to help the buyers go through a seamless process where most of the work is done for them instead of them, like getting into this very complex process of getting the transaction across the finish line. But these two differences are the main ones. And there's also another one, which is very important. Most of the properties on our platform are listed for sale by the clients on the property manager, meaning that we have all the data about them. And this is something that no other platform has: actual data, not projections, not estimations, actual data, actual rents, actual expenses, so that the buyers were looking into these properties know precisely what they're buying into. They're not buying into estimations. They're buying into exact numbers. And this is another critical differentiator we see just because now the property manager has its system and marketplace. And we can look at it as Blanket helps property managers give a similar experience to what the big companies provide. So, a very successful property management company has a marketplace with property management services and many other things. So, we're trying to give some of that experience that my clients are getting to the rest of the property managers in the industry.
Bob Preston 53:26
It goes back to that value again, like we can do things and provide value as a boutique property management company that keeps up with the big guys. That's fantastic. Wonderful idea. Okay, in the interest of time, we barely scratched the surface here. And super interesting. You and I could go on for probably hours talking about this because we're both very passionate about this topic. And I want to learn more about your company, but you've just launched the company recently. And what's the reaction that you're getting so far from the market? And how are things going?
Lior Abramovich 53:55
Wow. So it was overwhelming. I didn't have a lot of sleep in the last several weeks. It's mainly because of the time difference between Israel and the United States. But we launched or launched quietly, so to speak, by loading up the website, putting our social media profiles out there, and also sponsoring the Ironman Property Management SFR forum that took place about two weeks ago. We had the opportunity to be the lead sponsor of that conference. It was an overwhelming experience because this was our first conference ever. At our first appearance, we were this unknown company, and I've been in the industry for a long time, so I already have a lot of friends. And when I'm in my position, like living 1000 miles away, even if you're talking on Zoom multiple times a month or a week, with many people in the industry who consider friends, you don't grasp how significant and supporting your network is. And this is the first time we could see that in one conference, and the amount of love, support, and referrals. Like really, people were coming from everywhere. Oh, Jonathan told me I have to speak with you. Unless it's all me, I had to talk to you, and we didn't do any promotion before that. I would say even more than that. We were two days before the conference started; our website was ready only then. So, even on the Select Conference website, there needed to be a link to the logo. People like there was a Blanket logo but no reference. And nobody understood what a Blanket is. And many friends of mine even told me, how did you tell me that your Blanket? I've seen this logo, and they don't even know who Blink is. So, there was no promotion or anything; we got so much love and support. We were swamped in the last several weeks and are trying to keep up with everything and put everything in order. Our team is growing as a consequence of that. So, our first step was very positive and heartwarming; I didn't expect to receive this much love and support. That's for sure.
Bob Preston 56:28
That's fantastic. That's the nature of this industry; property managers are curious and open to sharing and providing support. That's the beauty of NARPM. For the most part, people are willing to come together and share. And when you put it out there that we've got this new solution, you will get a positive reaction. That's fantastic. Okay, what are your thoughts as we wrap up today? Would you happen to have any other ideas to share with our listeners just as we conclude?
Lior Abramovich 57:09
One essential message. In the past decade, we focused a lot on our tenant's solutions to get to that goal of increasing our profitability.
Bob Preston 57:24
Yeah, the RBP, Resident Benefit Package!
Lior Abramovich 57:28
That is fantastic, by the way, and there are companies out there doing great work. And I know personally, a lot of the folks out there, they changed the industry. They undoubtedly changed the industry and pushed it forward in multiple steps. It's so quick, but we forgot something our clients look at. For example, what do we get as clients today as rental owners in our owner portal, the same Owner Statements we've been getting ten years ago? Or the same Owner Statements that we're getting today? Where are all the services and things we need as owners? Where's the seamless access? Where's the real-time reporting? Where are the things that are relevant to 2023? And I think the solution to all of this, and I'm putting Blanket for a second aside, is, in the network that we built as property managers, we have the solution for all of that; we need to make it accessible, we can be that one-stop shop to our clients, we can be the ones who will get them referred to the lender that they need to the inspector that they need to anything that they need as owners when they want to buy when they want to sell, we have that ability to provide it to them. And all we need to do is invest in those relationships. Because once those relationships are so meaningful to our clients, they will never leave; they will have no reason to go, even if the prices will be even a bit higher than the competition, like competing on price is a race to the bottom. Competing on value is a race to the top.
Bob Preston 59:17
I couldn't agree more. There's a lot to be said for that. It's an incredible perspective, for sure. I am excited to hear more about your company, see how you guys progress over the following months, and look at where you will be a year from now. So I'll see you. Are you going to be in Atlanta at the NARPM conference?
Lior Abramovich 59:38
Yes, we're also the lead sponsor at the NARPM conference.
Bob Preston 59:42
Well, I'll see you there and look forward to that. And the final thing is if someone wants to learn more about Blankets, how can they reach you? How do they contact the company, and you know what would be the best way to do that?
Lior Abramovich 59:57
Easy, you can visit our website, blankethomes.com, click on the book a demo, or leave us a message on the Contact Us page. Our team is excited to speak with you to answer any questions. Learn anything, even if it's not for the demo, and learn how to provide more value to your owners. We'll gladly provide that information, even if you do not use a Blanket.
Bob Preston 1:00:22
I've been to your website. You've got some great content on there for property managers. So, the people listening go and check out their blog and library. By the way, you posted one on the top Property Management podcasts; I was excited that we're on the list!
Lior Abramovich 1:00:39
I told you I was a big fan before we started.
Bob Preston 1:00:42
Okay, well, we'll see you soon in Atlanta, if not sooner, and thanks so much for being on the show!
Lior Abramovich 1:00:48
Likewise, well, thank you very much. I appreciate the opportunity.