Serial Entrepreneur Bootstrapping Three PropTech Ventures: LuxuryProperty Founder Jason Hayes (Part 2)

Sramana Mitra: When you sold the company in 2007, what were the metrics?

Jason Hayes: The value of the entire portfolio was in the region of $200 million. Revenues were approximately 10% of that. There was probably about 70% loan to value. I sold it to a London hedge fund. I remained with the company for a couple of years in an advisory capacity. At the same time, I was busy building my second venture ,which was Propertyandhomes.com in California.

Sramana Mitra: The crux of the first venture is that the revenues coming in from the student rent were financing your debt servicing, a little bit of the technology operation, and the property taxes.

Jason Hayes: The model was three sources of profit. One would be profit and loss. EBITDA ran at about 40%. The second is straight-line amortized funding in the later part of my career. Every year, the undergraduates were paying their annual loans. You were further creating free equity within the portfolio. Lastly, acquiring real estate at $100,000 and then watching that grow through the cycle.

Sramana Mitra: The value of the company is really in the balance sheet.

Jason Hayes: With all of my companies, I’ve always had that same mindset. My mindset has been that this is a balance-sheet business. You’re building a brand and corporate entity. It needs to be profitable, but I build balance-sheet-based businesses.

Sramana Mitra: You had to pay the property taxes, debt servicing, and all of those.

Jason Hayes: Yes. As well as taking a concept and actually providing real value. 25 years ago, with our student accommodation company, we were having dedicated maintenance teams on a 24-hour on-call basis. If you’re in one of our student apartments or student condos and something goes wrong, we have somebody available to fix that for you 24/7. The tech that we had then has still not been adopted.

Back then, we would have an online forum and have somebody come and complete the work. We built a brand. That brand was around, what I call, pastoral care. It was looking after clients and treating them as customers and making sure that they are well-serviced.

That full-service offering included student insurance and an easy package where your rent included your electricity and internet, what that did is, it enhanced the underlying value of the business as well. People were buying an operating entity but also one that was well-branded and recognized for excellence.

Sramana Mitra: Let’s go to your second venture. You are now in California.

Jason Hayes: I’ve always had this underlying desire to be in the PropTech space. I wanted to have a real estate platform for the marketing of real estate. I’ve always felt that, in general, real estate marketing remains rather poor and hasn’t changed much since 1995.

I set up this startup called Propertyandhomes.com. This was going to be the next platform that people were going to use in order to search for homes across the United States. It’s going to have all of the tech and UX that will take it into the 21st century. What you actually set out to do at the start is, in many respects, not what you do in the middle, and, very much in the end, it isn’t.

What happened at that time for me was a complete change in what was happening in the ecosystem where I was operating. We were seeing the collapse of Fanny Mae. Lehman was getting sold. What I was seeing was a ton of real estate coming into the market which was being auctioned. Lots of foreclosures.

Propertyandhomes.com morphed into a company that acquired foreclosures, completed refurbishments, and then used digital marketing to sell those off. It was very strange how it all happened. I had money from my first venture. I wanted to fulfill my tech dream. It’s as if the real estate part of my journey is never going to leave me. Then we started acquiring this portfolio of properties directly from the banks.

Sramana Mitra: Where was this?

Jason Hayes: In Westlake Village, California. Just north of LA. We were buying everywhere.

This segment is part 2 in the series : Serial Entrepreneur Bootstrapping Three PropTech Ventures: LuxuryProperty Founder Jason Hayes
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