Serial Entrepreneur Bootstrapping Three PropTech Ventures: LuxuryProperty Founder Jason Hayes (Part 3)

Sramana Mitra: What segment were you going after? What kind of price?

Jason Hayes: I started by buying homes around the $300,000 mark. I was looking to go for volume and was trying to spread the risk. Sometimes, we would buy homes that were significantly cheaper and sometimes, we would buy homes that were significantly greater in value. For me, it was all about what the value proposition was.

My target was to buy real estate at about 30 cents on the dollar. You’re looking at the Gross Development Value at the end of the redevelopment process. Then you’re factoring in the digital cost of marketing. That gives you an idea of what that was. I was trying to be really strict and bootstrap the company. I wanted to build the company on its own merit as opposed to dipping into family wealth. I thoroughly enjoyed the experience.

Sramana Mitra: This was also debt-financed?

Jason Hayes: That’s right.

Sramana Mitra: Same model as the previous one.

Jason Hayes: Yes, we got to a position where we were buying for cash with no funding. We were taking all the profits and then using that to fund the acquisition.

Sramana Mitra: If you’re buying real estate and then refurbishing, it sounds to me like all cash. How long was the duration between buying the property, refurbishing it, and selling it?

Jason Hayes: It’s really interesting. The lead time on development is important. The marketing realization of a property is also enormously important. All that goes into the purchasing model. We would look to turn the homes around within 40 days. That’s from closing, refurbishment, bringing to market, and then selling.

All of the hard work is the bit that people don’t see. We looked at a hundred real estate and purchased one, that’s a fair analogy. We were trying to turn these properties around. In six weeks, you’ve got that constant flow of cash. Every now and again, you would get caught by something that you hadn’t taken into consideration.

I remember one day there was a freeway. The home was at the top of the hill and the freeway was at the bottom. Noise attenuation hadn’t occurred to me. Everybody in the neighborhood knew that that was a really noisy road. We were absolutely stuck. No amount of fancy video marketing and digital marketing would get a sale.

They say everyone has a plan to get punched in the face. That’s quite true. What we were trying to do is scale. We started with one home, did the work, and sold. It got to the point where we had maybe 20 live projects at any one time.

Sramana Mitra: What kind of refurbishments were you doing? What kind of digital marketing were you doing that was differentiated?

Jason Hayes: The refurbishments were always kitchens and bathrooms and the curb appeal. We were trying not to do anything that impacts structural configurations. We adopted an SME approach to the startup. That led the management from day one.

For me, that was hugely important. If you get the foundations correct, it’s easier when you’re scaling. If you put Thousand Oaks in Google, we would be number one for those. If I was selling a property in Malibu and you put homes in Malibu, we would come up number one for those. I relied on digital marketing by using organic SEO. Having a very strong digital team that’s focusing on building that.

None of it would be above the line. If anybody were searching for a home, we would be number one, two, three, or four. That would feed into a bespoke CRM system. Then it’s down to the guys in the office around the sales function. The digital marketing that we were doing back then was a very small operation.

Most people’s model is to just use the MLS and appoint a local realtor. Our approach was wrapped around post-acquisition management. Somebody bought one of these homes from us. It came with collateral warranties on the construction. Post-care, we got to a position where we have a waiting list. That comes again from good practice and excellence.

Sramana Mitra: That allowed you to predict what to buy.

Jason Hayes: You’re right. When we had a client who wanted a property and when we started with that, they would say, “Could you do this?” That fell outside of our normal methodology. It provides you with great economies of scale and the wonderful ability to deliver the project in a timely fashion.

This segment is part 3 in the series : Serial Entrepreneur Bootstrapping Three PropTech Ventures: LuxuryProperty Founder Jason Hayes
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