REality

How Data And Propbee Open Real Estate Investing To Everyone

• Gary Scott

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Forget the scary headlines and start with the math. We sit down with industry veteran George Ellison to unpack the real size of the single family rental market, why institutions own a fraction of it, and how investors can use rates, leverage, and timing to their advantage. If you’ve ever wondered whether Wall Street is buying your neighborhood, the numbers will surprise you—and probably calm you down.

We chart the journey from the birth of SFR after the Great Financial Crisis to today’s data-rich approach to buying and operating rentals. George explains why there’s only one line of revenue but a dozen lines of expense, and how that simple truth separates solid performers from wishful thinking. We dig into rent trends with context—why single family rents remain resilient even as big apartments soften—and talk portfolio strategy: diversification, inflation hedging, and the role of real estate in balancing equity-heavy gains.

Then we go hands-on with Propbee, a platform built from institutional playbooks and rebuilt for everyday investors and the agents who guide them. See how filters by IRR, cap rate, cash‑on‑cash, hold period, and leverage narrow thousands of listings to a shortlist that actually fits your goals. The map view lays out comps, asking rents, and actual leases on one screen. Inspections deliver scoped rehab pricing, insurance and lending connect in-platform, and you can model HOA growth, tax reassessments, turnover costs, and capital needs over years—not just months. It’s the toolset pros use, paired with the human judgment that still wins deals.

If you want clear, data-driven answers on when to buy, what to pay, and how to price rent—without losing the local expertise that makes all the difference—this conversation is your blueprint. Subscribe, share with a colleague who works with investors, and leave a quick review to tell us which metric matters most to you.

SPEAKER_00:

I am excited this morning to have uh most importantly a great friend of mine join Reality Podcast. I want everybody to welcome uh George Ellison. George, how are you, my friend?

SPEAKER_01:

I'm great, Gary. Thank you. Thank you. Thank you for having me.

SPEAKER_00:

Well, it is my pleasure. And uh I I would say that there's a chance we'll talk a little bit of football, uh, only because that's what we do. Uh we uh we had two wins yesterday. Unfortunately, George's team, the Pittsburgh Steelers, did not fare so well the other night as they lost to the ageless wonder from the University of Delaware, none other than Joe Flacco. And so uh I think some of our listeners know that I'm a blue hen at heart. Uh my wife is a graduate of uh University of Delaware, and my family has had season tickets for the fighting blue hen since 1968. So uh was Joe Joe playing back then? What's that?

SPEAKER_01:

Was Joe playing back then?

SPEAKER_00:

Yeah, he was playing the first game I saw in 1972. But anyway, today we're talking about investment in real estate. And uh so much of the podcast, George, for the last three years has been really focused on trying to educate our uh our sales professionals, give them a couple good ideas, best practices. You know, nothing's brand new. Let's take something from one of our experienced people. But, you know, one of the things that we think is really important is this uh concept of investing, particularly in single family real estate. So before we get started with some questions, why don't you just share a little bit about your background? You've been in and around the real estate industry, whether it be the mortgage or the single family rental, and now a new initiative that you and a couple guys are putting together called Prop B, which we'll come back and talk about. So uh share with us a little bit about your background.

SPEAKER_01:

All right, real well again, thank you for having me, and thank you for the uh all the help that the team from Howard, Hannah, Alan Tate has given us in our company. So I we appreciate you guys very, very much. Your team and Phyllis, Katrina, Denise, Lexi, your your team you put together is is reflective of the boss. So we appreciate everything you guys do. Thanks for having us today. So so uh just to jump in real fast, I I uh grew up in Pittsburgh, as you mentioned, and uh uh I'm an engineer from Pitt and uh worked at GE for a while, onto business school, onto Wall Street. I was in fixed income pretty much my whole career, started off as a fixed income salesperson, moved into banking to garner business for Bank of America here in Charlotte uh for about 19 years, uh, and just kind of moved up through the ranks and and ended up working in a lot of the products that are kind of on the other side of what you and your team do. So, so obviously we started securitizing mortgages back in the in the late 80s, and that obviously became a gargantuan business, but we also got into the securitization of commercial real estate and and any receivable that that was uh cash flowing became a securitization. So that was kind of the world uh that I that I lived in. It's called structured finance, uh, which is just a nice word for boxes and arrows and and primarily around mortgages and things like mortgages. Did that for a while. Actually, my last assignment B of A was working out a lot of the problems that happened after I was 708, which is was an extremely challenging but interesting uh assignment. I left B of A in 15. I went to, with my team, I went to uh run a REIT, a public company REIT, and uh and we were, as some of your folks know, REITs are uh REITs can come in any flavor, uh from uh warehouse to office to retail. Uh I don't even know how many flavors there are, but our flavor was what we're we're talking about today, which is single family rentals. So that's a business that was started after the crash. There were so many homes, as you know, that were being foreclosed on and sold and traded on the courthouse stairs that a lot of big institutional folks felt they could buy those homes and manage them as rentals institutionally. And so that business was kind of born. Uh I'd say 11, 20, 11, 2012. Uh the company that that we ended up taking over in 15 was one of those companies. There's probably at that time 10 to 15. It was in a lot of trouble. And we went down there, as you know, and uh uh and had to fix that. We fixed it over six years and sold it, and then moved on to uh we can talk about other things we tried to start because of uh interest rates and what interest rates did to all of us. Um and then we pivoted into what we do now, which is Prop B. So that that takes you from college to now. Awesome.

SPEAKER_00:

Uh so uh, you know, it's interesting because uh, as George mentioned, uh we've been involved, gosh, it's been two and a half years now, I think, since the first time we met and talked about Prop B, which we are going to talk about, but I think equally important to Prop B is this whole, I'll call it factor fiction perception reality about the investor space in single family rental. And uh, George, you you at our very first meeting shared with me some data that really I remember we were sitting there having dinner and I grabbed a napkin, I started jotting some notes down. So I think there's this fundamental belief that 90% of every home that is owned is owned by an institutional investor. And you shared a data point that woke me up. So let's walk our listener through some of the data that is probably misunderstood.

SPEAKER_01:

Sure, sure, sure. Uh thanks. That's uh always a hot topic. So so I think the uh, you know, we have uh uh uh just like you do, uh we we have certain leadership concepts, and one of them is called MBF, managed by fact. So uh which probably is uh is something you know we we could use more than in business. We can manage. We need we need facts on everything, and they're hard to find. So here are the facts. Um and you can you can you know AI these if you want while I'm talking. Uh, how many households are there in the U.S.? Uh there is about 125 to 130 million households. So that's a you know, particularly in in our business, your business, that you know, we're dealing with consumers, we're dealing with families, so that's a number people should know. Um, how many households actually are there? So 125 to 130. How many of those uh are owning, how many of those rent? That that ratio moves around all the time, you know, depending on you know what what we're going through as a country. It's usually 60-40, but it can be you know 63, it can be 58, but safe to just always assume 60-40. So this the the 60 are who you primarily take care of. So 60% of the people own their homes, and that's what you and your team and and people that do what you do serve every day. Um, we're on the other side of that. We're talking to, we want to talk about renting. So that means 40% of that number are the number of households in the U.S. that rent. So 40% of that number is roughly 45 to 50 million. Let's say 48, because the math will work out easier. So 48 million families rent in this country. That's a that's a number people should know. Um, because people might think it's way, way less or more, but that's what it is. So now what I want to know, uh, and the company that we ran, what we wanted to know is how many of those people that rent rent standalone homes versus high-rises, garden apartments, whatever, whatever they rent. Um, because I'm not I'm not in the multifamily rental business. I'm in the single family rental business. A third of that number rents homes, two-thirds rent apartments. So a third of that 48 is 16. So here's a really interesting number 16 to 17 million families rent standalone homes, which means somebody's the landlord on the other side of that that that issue. Um, so it may seem, uh, particularly in certain markets, that the institutional presence is really strong. But having been a CEO of one of those companies, um, we had 15,000 homes. Okay, so that might sound like a lot, but not vis-a-vis 16 or 17 million. So we were public, we were taken private by a big company. Uh if you know the flag Progress Homes, they're owned by a private equity firm in New York called Predium. They were the biggest at 55. Obviously, we took them up to 70. I think they're now around 100. Next biggest is Invitation Homes, which everybody's heard of, and then American Homes for Rent. Those are the big guys. Um, if you added up all of those and us and the privates, Gary, if you added all of them, it's not, it's not 500,000 homes. So 500,000 homes vis-a-vis 17 million is not a big number. So it could seem like it's a lot, but you can go online and you can see exactly this number. It's not even 500,000 yet. And they've been doing this for 13 years now. So you could you could actually argue that we kind of failed as a concept, that that all of us got together to try to do this, and all we got to was half a million. So um it because of advertising or in certain markets like Atlanta, which is a big, big market. So it might seem that there's this competition where the big guys are pushing out families, but it's just not supported by the numbers. So um people might say 500 is too big, but it's it's really not that much. So if you think about it, you know, that's not even if you do the math, that's not even 3%. So, and that that kind of leads to the other issue, which is Prop B. Prop B was built to serve the other 97%. So when people hear that, and it can be emotional, obviously, and nobody, you know, Wall Street's never a sympathetic character in any play. And so people might say, you know, invitation homes is my, you know, Blackstone's my neighbor. You know, there was one of the articles in Atlanta. First of all, Blackstone doesn't own invitation homes anymore. They're off doing lots of other things. So uh, but those are the facts, and and that's that that kind of quiets the the emotion because it's just let's just go to the numbers, managed by fact.

SPEAKER_00:

So it's interesting because I remember clearly our first meeting, and you use the data, you and your your partners said 97% to your point, just not even 3%, 97% of the 17 million are owned by people like me and you. And yet there's this perception, and here's why I know it's a perception, because the number of conversations, George, that I get to have with our own folks about man, how am I going to compete with these institutional sellers? Well, every uh single family rental in whatever neighborhood is not 97%. Now, there could, to your point, there could be a particular neighborhood that has a particular lift. Again, you know, the real estate industry is hyper local, and you you know you make a general statement, and then to your point, you go to the facts. You know, one of the things that uh you know we we uh encourage and teach to our people is you know, numbers are interesting, but if I can figure out what to do with them, I can be impactful and influential in a in a better and different outcome, and which is really what you just said. So let's think about this. So we're gonna take a little bit of time to learn a little bit about the investor mindset, but then we're gonna talk about this solution uh called Prop B and how that may be able to help everybody on this call. I mean, I thought on listening to reality, that's the real key. How can we use this relationship and this platform to drive real estate transactions? That's the ultimate goal. So one of the uh challenges we've had as a real estate industry, George, since June of 2022 is you know, we came off this incredible low interest rate environment, two and a half, two, three, you know, up to three and a half. And then obviously June of 22. I always joke, it was the end of a 24-month spring market that we were able to have in residential real estate as a result of COVID. And then it ended, boom, you know, inflation 9-1, interest rates a today. You know, we've had a nice little 75, 90 day, I'll call it reconciliation. So I also think there's a misnomer, correct me if I'm wrong, that as interest rates go up, I it's not good for the investor. I I just, you know, I can only invest at three and a half or four. And if I'm at six, six and a half, seven, I can't make the numbers work. But let's educate our listener.

SPEAKER_01:

Sure. Um, it's uh I mean the the rates, you know, I as I said, I'm I've been in fixed income most of my adult life. Um I was not uh an equity guy, I was a bond guy, so rates are uh uh my whole uh uh career. And so when when things like this happen, um as you said, the first bump was in the spring of of 22. Um, I mean, it just it it is the most disruptive, uh powerful. I mean, obviously, as you said, inflation and things were were getting out of control post-COVID. So, not not to get into the politics of it, but the brakes had to be tapped. Uh, and then they got tapped like 12 times, so so which we all painfully know. So there's some industries that don't feel it. Real estate is is and not just residential real estate. Obviously, residential is the largest purchase that a that a family ever makes. Um, and and it's primarily uh uh they're they're using financing, what we call in our business leverage. And uh and so so but in commercial, it's even more so. So, so let leverage is is something that you always need to be aware of whether you're dealing with a with a uh uh an institution or obviously when you're talking to a family and how much debt service they can handle and what's appropriate and so on. Obviously, lenders look at that very carefully. So when you get into what does interest rates do, you know, for real estate, it depends on how much leverage a person needs. So, so for example, what we always say to people in our business, and and our business was all about I mean, it was it was only about leverage. And and what type of leverage were you going to use? Were you gonna use 50% leverage or 70 or 80 or pre-0708, you know, things were getting even higher. Um, and that's when you know things get out of control. Leverage we always tell people is like fire. Uh you can heat your house with it, or it can burn your house down. So you need to be aware of it, you need to talk about it, you need to know what it is, and you need to know what you can handle. So it's not as simple uh as rates go up, so that's bad for real estate. Actually, right now, um if I ask you or whoever was listening, if we ask for a show of hands, do you think rates will be higher or the same or lower when we're doing a podcast next fall? I think most people would not raise their hand for rates going up. There's a few, but probably not many. Um there could be a few more that say they're gonna be the same. But I think most of us agree we're at an inflection point where they're coming down. So that's really where the money is made. So, yes, rates have gone up. And yes, when I walk into a room and say to people, hey, this asset is going to make 7%, and they say, Well, George, it cost me 7% or more to invest in it. That that's sort of what you're implying with your question. That's what people mean when they say it just stops. But if you have the ability right now, which a lot of investors do, that have capital, or they can afford a much lower LTV, not 80, not 70, like the home your team helped us with, I think we did 50% leverage because we wanted to make sure the mortgage worked. If you have capital right now, what's going to happen? That's when you invest, not after it happens, but when it's going to happen. And so people say right now, if your team are talking to investors, they should be looking now because we know that they've lowered once, um, and we know that they're probably going to lower more, but we don't know how quickly they're going to lower. So you can never pick the top or the bottom, you know that, but you can pick trend lines. And in spring of 22, we kind of knew what the trend line was. None of us thought he would do 12 of them or whatever it was, but now he's stopped for a couple of quarters. Now, now the Fed's come down, and now you're hearing all this jaw boning about, you know, are they going to do two more this year, one more? We don't care about that. What we care about is that the inflection point has just happened. And so for your team, I'm very, very optimistic. Um, I think 26 will be even, you know, you guys have done a great job every year, but I think as you do your planning, which I know you're doing right now, I think 26 will be a little bit better. And I think 27 will be even better. Rates are coming down. Investors should be looking now because once they turn, you know, you've been doing this, you know, your your job as long as I've been doing mine. You know, once they start coming down, then it'll be gangbusters. And I so I'm very, I'm very optimistic.

SPEAKER_00:

Well, so uh I agree with everything you just said. Uh very optimistic on 2026. Uh, a little preliminary forecast. You know, I think existing home sales will be up about 10%. Again, 4 million to 4.4. I mean, that's a lot more real estate being traded. And it's not going to be incumbent on interest rates. I think it's going to be incumbent on people just feeling better, just fundamentally feeling better. And prices are going up at a much more reasonable rate. And so I can get in. The other piece of it, and you've already mentioned it, you know, you've got the stock market is off the grid. And people's equity in their home, I think 67% of every mortgage holder has equity of 50% or more, George. And the percentage, 32%, have no loan. So there's a tremendous amount of money that's available in the market. And what better time, and certainly in my uh, from my perspective and yours, invest some of that, diversify your portfolio, and get into the investment piece of real estate to complement your other investments. Because, you know, what's interesting, and you know this, my my oldest son is in the financial planning business. And, you know, one of the things that I think people appreciate about him is he doesn't go to everybody and say, just invest all your money with me. He encourages people to diversify because he understands what real estate can do for them. And I think that's a great balance.

SPEAKER_01:

So uh Well, your point, just before you leave that point, I mean, think about the run that equities have been on. Um, and and now all you hear all day long is, you know, will it crack, will it crack, will it crack? Well, you know, your your son pushing people into, for example, uh residential real estate creates a cash flow, tax-benefited, you know, hard asset, inflation hedge. I mean, it's it's there's no significant in institutional investor, you know this, that doesn't have real estate in their portfolio, which means that individual investors, even though they're much, you know, much less zeros at the end of their number, but you should have, yes, you should have interest rate risk, and yes, you should have equity risk. But, you know, this this the equity market's been on fire. It's just it's been wild. And so now everyone's afraid of when is it gonna crack? And that's another, you know, just like we talked about with rates. You know, are rates which way are rates going? Well, they're going down when I don't know when no one knows when. But I will tell you this um rates go up quickly, they come down slowly. So as you do your 26 and 27, it I think your numbers are right. It's gonna be better. I'm telling you, I'm highly confident it'll be better. I think 27 will be even better. But nobody should think we're gonna get you know down to three and a half again anytime soon, if we ever do. So it's the same thing with equities. You can't just keep going up like this. You know, over time they always go up. But we're gonna have a hiccup and people are gonna get nervous, and that's going to affect the people that you talk to every day, both homeowners, uh people buying homes for themselves, but investors as well. But if you diversify it as your son recommends, um real estate's not gonna crash like equities could crash.

SPEAKER_00:

Well, and I think you just mentioned it, you know, the number one hedge against inflation is your real estate. And so uh let's uh I want to talk about rents and this the the trajectory or the trends on rents, because you know, one of the challenges we all have, I believe, in our industry, probably every industry, George, is you know, the media just is not our friend. Uh the media, you know, I I heard some of you they they they report anything that they think will sell, not educate. Yet the the reader often is using it as an educational platform, not uh, I'm gonna buy more platform. And so one of our jobs, uh, I always say to our team, is, you know, one of our roles and responsibilities is uh to disarm and interpret the media for our clients. You know, because left to their own device, a headline without understanding the content of the article, you're gonna come to uh 10 10 wrong conclusions. So I I I've read three articles in the last three weeks about rents, none of them suggesting the same thing. And again, these are the experts. I for those not watching, you know, kind of air quotes, tell our listener about, you know, because you study and your team studies this every single day. And when we get into the platform of Prop B, I mean, it is data driven. It is MBF, which I love. Thank you. Uh, pretty, pretty sure that our team's gonna be hearing that uh uh perhaps Friday on a on a video. But uh it's just a lesson that no matter how long we've been doing it, George, we can learn something every single day. Let's talk about rents, where they are, where they've been, and maybe equally important where you think they're going.

SPEAKER_01:

Yeah, I I mean uh again, uh I I I agree with you wholeheartedly on so many of the things you say. The I saw a headline the other day about foreclosures jumping. Okay. If you want to write a story on foreclosures jumping from, you know, this decimal to that decimal, I guess, I guess you could probably have a bot write that article for you. If you want to talk about foreclosures, pull back and look at the graph and go back to 0708. Okay, now now that's a headline. Well, you know, going from you know, this decimal up to decimal points, yes. Factually, to your point, yeah, I guess they went up. Um, but the context is another uh, you know, I think was what you're also referring to as well. What's the context? If you look at 0708, that's catastrophic. What's going on now is yes, they have edged up. It's not catastrophic, it's not newsworthy. So let's talk about rents. Um, rent is uh, and and this uh this isn't like a generalization, this is the truth. You can look at um the uh Invitation Homes is public, American Homes for Rent is public, uh, and you could probably find uh the other private guys um I was reading the other day. Uh again, let's give you context. When I was a CEO of a public company, you know what investors want. They want you to make money. And so you might not say this on a panel that has the press in the room, uh, but all investors want to hear about, Gary, is George, how much are you raising rent? You know, you gotta be careful which rooms you say that in. When you're talking to investors, you can brag about it. If you're talking to some community group, you don't want to brag about that. Um but but but but but you know, stockholders are stockholders, that's what they want. So those numbers, to give you context, were if if we would report a quarterly number, if the team would come to me and say, George, this quarter uh we annualized rent increase was three and a half to four and a half percent annualized, that would be lights out. People would be, you know, investors would be ecstatic, and then you get great headlines, stock would go up. Um, what happened as we moved into COVID? I mean, it got it people wanted to get out of group living and they wanted single-family homes. We would we would rent stuff sight unseen. I mean, and you know this, you know, it the things that happened during COVID, which is just still mind-boggling. Rents got up to, I think you'd have to check me on this one, but I think nationally, which is a pretty broad, you know, location, the United States, but I think nationally we were close to 10%, and some markets 12, 15, 18. I mean, it was just uh insane. Um, so they have come down, and so you'll see, and I'm gonna talk about different types of rent in a second. So you'll see headlines, you know, the rents are coming down, the rents are coming down. Okay, yeah, they're coming down, but they might be up 5%, which is down from 15, but still higher than they were when I left in 2021. So uh single family rental rents are still going up, much, much smaller than 21, 22, 23, but they're still edging up. Uh, what's not going up, and where you are feeling some weakness, and we talked about this earlier, uh, when we talked about the 40% of people that rent, the apartment rental market uh is showing some weakness. So you're seeing some weakness in the big apartment uh construct. In single family homes specifically, uh it's holding pretty steady, and you can still bump it up. I think I checked one of them was still up three and a half to four percent. So we're we're we're back to where we were pre-COVID.

SPEAKER_00:

But but they go up. What's interesting to me, I was uh prepping for our conversation today, and I think it was probably five years ago, George, listening to some national pundit talk about real estate trends. And one of the things they said is single family rentals in the next five years will be the hottest rental scenario opportunity in the market. So now, five years ago, he might have been three years late, but he was probably right on time for the average person who's spending time not necessarily working on the investment, uh, the investor side, but on the sales side. So uh, you know, what's interesting is uh, you know, a couple data points uh that you're very familiar with. You know, this past year, the average age of a first-time home buyer was 38 years old, up dramatically. Um of the total sales this year, 24% will be first time. And historically, traditionally, that's 32 to 34%. So what's interesting is I want those numbers, I want the one number to go down and the one number to go up from the sales perspective. But I also think that we have a responsibility and an obligation to educate our clients to use the investment vehicle of real estate to expand their portfolio. Now, with that, we're gonna ask you to, you know, we're gonna try to encourage you to buy a single family rental, which means we need a tenant, which means that tenant's not buying. So we could draw a picture of that all day long, which is not the intention. Uh, what I'd like to do, George, because I'm gonna flip uh and spend the last uh portion of our uh time together on prop B. So I'm gonna read for our listener. This is the first paragraph on a bio that I pulled out for George late yesterday. And prop B, I'm gonna let George walk you through it, but I'm gonna give you a little introduction. Transforming residential real estate investment through AI and 25 years of institutional expertise. It is our mission to make residential real estate investment accessible, data driven, and profitable for everyone, from the first-time investor to experienced portfolio builders and buyers. And so uh to just put a little color on this, about two and a half years ago, George and his partners and I had dinner at uh Bricktops, and they were laying out this. And, you know, again, the most compelling data was uh my lack of understanding that it was only 3% of uh single family rentals were owned by uh Blackstone at the time. You know, we thought subdivisions were being, you know, I would have thought if you said 17 million, I would have said, well, 14 million, because that's what we thought. So the minute I heard the 97.3 is the minute I realized that the vision of Prop B was uh real and had some real I call strength behind it. Uh and we're gonna walk through what that is and the AI driven and how Prop B, we believe, I know George believes and his team believe, and we believe, can make buying an investment property for the average person with but doing it with data that the institutional uh uh investors had at the time. George, I'm gonna turn it over to you and uh walk our listeners through Prop B and and the vision of it and this and the current state of it. Where are we in the evolution?

SPEAKER_01:

Well, let me uh let me back up just a second because you said so many good good good things there. Well, first of all, thank you to the marketing team for writing to Amanda and Kate for writing that paragraph. Amanda and Kate, thank you very much. So so uh they do a great job. So, so uh most of that's true. So, so the uh it's it's sort of like AI. What is, you know, so so the energy I want to give to your listeners, to your team, if I was, you know, speaking uh uh at a town hall that you invited me to, the energy I want to give to people is think about AI, which you hear about all day long. I was reading uh somebody sent me something that John Gray from Blackstone said uh either yesterday or the day before, but that he was on some panel being asked about AI. AI is going to change and maybe even eliminate lots of things. It's also going to create a lot of things, and and and there's gonna be a lot of wealth made in totally other things we don't see yet. While people could be fearful of it, you know, you gotta be you you gotta be balanced. It could wipe out some things, but it's gonna create things we've never seen before. So net I think it's gonna be all good, although there could be winners and losers like there always is. So what the energy I want to give to your team is uh in in some of the data you were talking about, young people are making decisions much later, as you mentioned. Um and they're also the the when you and I were growing up, even though I'm still a little bit older, the the uh the this I gotta get a house thing, you know, like you know, I got married at 22 and people thought it was late in Western Pennsylvania, you know, so it's it's everything was done much, much earlier. Uh, and they, this new next group and the group after them, uh, they don't care about it as much. They don't care about renting. Um, you know, we were told own, own, own. So for your team, uh, we're just gonna, just like AI, we're gonna shift to if more people are going to be renting, that means more people are going to be investing to be their landlord, and Alan Tate is going to sell that. So we still like like we work with Prop B, but we used your team to buy the house. We're using your team to sell the house. So, so there's still plenty of business for realtors that they don't need to get concerned that like it's gonna go away. It's going to change, it's not gonna go away. You will never be able to get, and you can quote this to them as well at your at your Friday meeting. You will never be able to do this without a human being. Um, we're going to show you how you can bring everything to one site and you can use technology to go through the whole journey of buying a house to renting a house. But as you know, we have two women on your team who are supporting us every single day. So, real estate agents are not going to be eliminated. I remember what you said to me when we first met, would everybody please stop trying to wipe out my industry? It's not going to be wiped out. There could be pieces of change. You cannot do this transaction. It's too complicated to not have a person involved. So that's the that's the good news. Things are going to change, but every single person you have is going to be needed and more, is my prediction. So, what we did as an institutional firm, um, which we, as you mentioned, we're going to give away to other people. What we did every day was Air John would come to me and show me, George, here's a block of homes, because we would buy in the thousands. So here's a block of homes we should buy. What would we do? We would look at the homes and decide what what sort of level we wanted to pay, what sort of interest rate we wanted to uh return we wanted to get. We would have to line up financing. We would have to inspect those homes, we'd have to have insurance lined up, then we would buy them, then we would rehabilitate them, and then we'd move them into our property management division. That's the journey from buying all the way through to property management. So when you go on the Prop B site, propbee.com, what you'll see as an investor is everything that's available in the MLS in Charlotte, all 20,000 homes or whatever, every single home is there. But what's different is what the investors want is going to be on that first page. And so when you want to know, uh, I'm thinking of making this investment for five years. I want a 10% return. Um, I care about price appreciation. Uh, I don't care about price appreciation, I care about cash flow, or I care about both. Or I don't care if I'm if I'm buying a house for 400 and I think in five years that neighborhood's gonna take that house to 500 and it's a little bit cash flow negative, I don't care because I'm gonna make 100,000 in five years. So whatever you want is there. So we had our own return hurdles, but your your team is gonna be talking to somebody who wants to invest in a house, and they say, you know, Denise, I'd like to make 10%. Okay, so let's go to the site and let's type in 10%, and then every house that's backed by the analytics, which we're gonna show you, every house that you can buy and turn into a rental that that's going to yield 10% pops up on the screen. And so the 22,000 drops dramatically. And then if you say I only want to look at single-family homes, the number drops more. If you say I just want to look at three twos, drops more. If you say I don't want to spend more than 500, it drops more. So you can use all these filters to get right down to the house you want. Now you've looked at five houses that fit your parameters, just like we did with your team. We actually looked at a house with your team and we went through the process. I don't know if you you heard about this because you you've been so busy, but we looked at a house uh over by Gastonia, and as Denise and Lexi and we went through the process, uh the inspection piece came up. So we go through purchase, we go through uh mortgage, we're working on insurance, and we hit inspection. These are all the journeys you'll see on the site. As we went through inspection, the inspection report came back, and it needed on, I think it was a$310,000 home, it needed$52,000 worth of work. Because remember, on prop B, the person who does the inspection is actually scoping the job with the prices that it's going to cost you to do that. It's not a guess. So the guy's like, it's gonna cost$52,000. And I think you ought to look at the foundation, and I think you may want to look into some mold. We did mold with your team, we got um uh foundation, and then we found asbestos. We're out. So so we we use the tool to say you could buy by using Prop B. You could also decide, I don't want to buy this because Prop B told me not to, because the inspection process was a disaster. We moved on to another home north of town, and we got through the inspection, and everything went fine. So, with your team, we went through purchasing it, we picked it out, we got the mortgage through uh for an investor mortgage from Churchill that's connected to the site. So your mortgage is connected, you never leave the site, then you pick your inspection, which we did. It was only$15,000. We ordered that, put give them your credit card, guys there in 36 hours. Then we got insurance online through the site, then we closed with Lexi, and then we moved to rehabilitation, which is through the site. They showed up, took them about two weeks, and then we put it on the market because we just wanted to see if it works. Although, if we can't get the price we want, we may put it on our portfolio and use it as a rental. So the bottom line is everything that we did as an institutional player and all the numbers we use to pay for the house and rent the house, which we can get into more, but all of that same math that we use is going to be available to you. So when your agents are talking to somebody who says, I don't want to buy from me, I want to buy to invest. Some people are like, I'm not sure I know how to do that. Um, look at this site. It will make this so easy for you that if you know someone and you want to grow your business just from a family buying a home and you want to talk to people who are investing in homes, this site will make a real estate agent completely comfortable with walking this person through. They can use prop B and your agent still gets the business. So it's a way to expand your business by maybe not turning down somebody who's an investor or referring it to someone else. You can do it yourself. That's more business for your guys.

SPEAKER_00:

Well, so one of the key points here for everyone listening is Prop B is not created to create consumers uh that are referred throughout the network. That's what a lot of these portals are doing. They're trying to capture a customer. Now, will there be customers that go on that aren't associated with some of you? Of course. But if you've got an investor client, I'm just suggesting use Prop B. They are your client. Prop B is a tool for them to use. And so I just want to make sure no one misunderstands. Yes, will there be Joe Consumer that goes on on their own? Of course there will be. But I think about all of our 2200 agents who have a sphere of influence that has an investor piece to it, use this to be the really trusted advisor because I think historically, and I think George and his team will laugh, because when I buy residential real estate as an investment, I just do a little quick thing on the back of a napkin and I say there's four things, you know, appreciation, depreciation, equity buildup, and cash flow. What are my goals and what are my objectives? And then Gary used to say, what does my gut say? Like, that's a bad strategy. Uh now, again, sometimes you're in the right place at the right time, sometimes you're in the wrong place at the wrong time. But again, this is this is an empirical data-driven solution. And then as George just said, it also can take them from point A to point Z. And I think a lot of times people want to stay away from the I'll call it the inconveniences of homeownership beyond my primary home. That might be a good way to put it. Because, you know, you got property management. Not only do you have the home inspection, but as George said, they're scoping the amount of work. So I'm totally educated before I go into that space. So, George, I want to ask this question. Um how do you evaluate potential properties for single-family rentals? And what metrics should agents and clients be most aware of?

SPEAKER_01:

Um the the uh I'll give you one quick anecdote before we get into that. When you talked about renting yourself, um you connected us as you have with lots of people with a group in in Atlanta uh to to so we could do the same relationship that we have with Howard Hannah and Alan Tate, which you guys have been so good to us. So you gave me, so the team knows Gary gave me people in the Atlanta market that I should talk to. He gave us several names. Um, one of the reasons we got turned down with the partnership was the senior woman who uh we were talking to had her own investments, Gary, and they weren't working. She said, I don't like this business. I have two houses and it doesn't work. And I was like, okay, wait, wait, wait. It's one of the reasons she turned this down. I never I haven't told you this because you've been traveling. So she turned this down because she didn't like it personally. I said, Well, okay, tell me what you did. So she started talking, she she was uh renting really expensive homes. And I was like, no, no, no, no, no, no, no. You don't, you don't, I mean, an$800,000 house is not a that there are people that rent those, but that's kind of like a reload thing, which you know about it. That's kind of that's a different thing, not in Atlanta. And so she's like, I can't get anybody in the house. The house is sitting empty for months. I'm like, well, that's a short-term rental. That's like on the border of an Airbnb. Like that's not gonna work. No one's gonna rent that house for five years. So, so um, and and I said to her, is if you had used Prop B, we would have smoked out what you were looking for. We would have helped you, we'd find the sweet spot. You you'd like this, and we'd have a partnership with them. But anyway, we found another one which I'll tell you about. So, but that's how it works. So the analytics that people need to think about. So, um again, the first thing I would say to an agent when you get into this conversation, and you know this about anything, is you have to like what does the person want to do? Just like when you're you know gonna talk to a couple about buying a house. What are you guys looking for? Tell me what you're looking for. Communicate with me, communicate, give me your expectations, what do you want? Same thing in investing, but just different questions. So they're not buying emotionally, although obviously some investors can get emotional, but they're less emotional. It's not like, ooh, I like this house, I like this neighborhood. They like it because it's a beautiful neighborhood, therefore I can charge more rent. So, or I can sell it for a higher price. So, what the first thing you need to say to them is, what kind of return are you looking for? And and because that's all they care about. So, just like in your example, what kind of return are we looking for? Are we looking for just steady six, seven, eight, or do we want to really stretch for 10, 11, 12? Because it's gonna be a very different house. But I need to know what you're looking for. Then I want to know, are you going to use leverage? Just like getting back to the first part of our conversation, this is all about rates. So, just as we did with your team, we didn't do a lot of leverage because rates are just too painful right now. So, and we were buying for ourselves. So, if if you're dealing with a person who has capital, you want to use some leverage, but not a lot. That, as we said, that day will come and we will refi into a lower market, but that could be a year from now. So, so do you want to use leverage? Do you not want to use leverage? Another really important question they need to know. Um, you know, this is a collaborative effort between, you know, your person and them, is how long do you want this investment for? Is this a five-year thing and you're gonna flip it, or you want this to be permanent income outside of your W-2 for, you know, into your retirement? A lot of people use it for that. So I need to know how long do you want to use it? And then lastly, uh, and and I think you touched on this in your own little grid there of four things. Uh, as I said earlier, some people will say to us, absolutely, I cannot have negative cash flow. I don't care if it's flat, but I can't be losing money every year. Okay, perfectly fine. Um, but you know, it does that matter? Uh does that only that matter? And you you're never gonna sell it. That gets back to the other question. I'm gonna hold this, you know, into my retirement. Uh so I'm never gonna sell it. Okay, so price appreciation, we don't care that much about that. We want to maximize cash flow. So all of those questions and many more are filters inside of Prop B. So all you have to do as you're talking to that client who's an investor client is ask them these simple questions, and you can actually look at the site and see all of the analytics right there. And you just look at it and say, okay, here's internal rate of return, here's cap rate, here's cash flow yield, here's cash on cash yield, here's gross yield, you know, way more, you know, the stuff that we use, way more information than a person would ever need. But but all of it's there, and it's much more tailored to an investor. And even more importantly, call up one house on prop B. Just do me that favor, call up one house on Prop B, look at the analytics and all the data that's provided, guide you to tell you how much you should pay for it and how much you should rent it for, and then switch houses to another one. Gary, every single house that's for sale on the MLS, all that math is at your fingertips immediately. So you can cruise all the way you want all around the Charlotte area and look at any house you want. And the good news is, with your help, Friday we're gonna turn on Atlanta. So now, I don't know, you know how big Atlanta is because you shot on twice or three or four times as big. So all of Atlanta, Air John and the team and Arida have built in, and so you'll be able to go on property and look at every single house for sale in Atlanta and do the same math.

SPEAKER_00:

Hey, George, correct me if I'm wrong. One of the very first times you demon, you you and your team demonstrated one of the most interesting kind of components. Uh, again, it's small, but it was it showed me the level of detail that went into these metrics was there was an analysis that showed kind of HOA. Let's say the the community had or the property had an HOA. You you you went back through some analytics of the past to project what that HOA would be. Let's say I bought something and I was gonna be there 10 years. I said, here, this is a retirement play, George. I'm gonna buy a house, you know, 10 years. I don't care if I make money, I'm just trying to, you know, hide my, I'm just trying to create an investment vehicle for a later day. Well, it's my understanding that two things. Number one, you would uh kind of predict the HOA growth over that 10-year period, but also tax taxes. So I think so often we make economic decisions solely based on the information we have in the moment, not what is going to come. And then, you know, we always say the great athlete anticipates what's coming. And uh, I think that was about our first meeting here in South Park where you it's the first time we saw Prop B. And when you showed the grid and you know, you hit the uh you hit the button and showed everything behind the line. So is that is that was am I accurate in that assessment of it?

SPEAKER_01:

Well, yeah, yeah, you're accurate, and and and and there's even people ask all the time, George, what's the what's the mistake people make? And you're you're on the mistake. People this is a it's a it's a strange business. There's one revenue. There's only one rent. You can have some, you know, administrative fees, pet fees. There's only one revenue, guys, and there's a dozen expenses. And so the mistake people make, and the screen we showed you, I actually have it up here. Um, so Arizona build it so you can hit you you guys can go into cash flow. You so rent will show you what we think the rent will go up. But as Gary said, you go into the expenses, and so what do you see? Property taxes, property insurance, HOA, estimated annual repair and maintenance, tenant turnover, vacancy, property management, marketing and leasing, capital expenditures. Think about that. People aren't doing that. People aren't, they're not, they're not, they're not thinking through. Arizhan has built out, if you say you're gonna hold it for 30 years, he's gonna show you not just what the HOAs are projected to be, but we all know the cycle Charlotte's on in terms of property taxes, although they can change it. So but he's estimated, and this is what we had to do with 15,000 homes. You have to go to where you are, understand the property tax regime, when do they change it? And and I'm telling you, an investor is not gonna price that in. Like, oh wow, Charlotte's due, you know, whatever it is three years from now or four years from now. You probably know I actually should know, I don't know. But but he has built in every place we go, he's going to be telling you what the property tax HOA effects are gonna be. Plus, let's be honest about projecting repairs and maintenance, you know, right down to let's, guys, let's talk about what a refrigerator costs, let's talk about turnover, because every time you turn over, people move out. As you know, you got to go in and clean everything up, repaint things, recarpet like we just did at the house up in north of town. So you have to do that every time. So every time a family moves out, it's gonna cost you more money. People don't predict that. We predict that, which means you have to predict how long are they gonna stay there. We can you do that? We can do that because we we track how long they stay. And they stay somewhere between three and four years. Used to be between two and three, but back to your other point about younger people and what they're doing, they're renting longer. It's up to like into the high threes. We know that because we watched that number. So that means we're gonna build into the math that in 3.7 years, that family's moving out and you're gonna have more expenditures. So that's that's what we had to do with 15,000 homes. I give that to you.

SPEAKER_00:

So, in complete vulnerability, I have these two properties in Dillworth. And, you know, I do the quick math, but let me tell you what I don't count. I don't count all the things you just said. You know, the guy, the the people move out. I gotta clean, I gotta paint, I gotta do this. Clearly, then, you know, so you got to replace a heater. And and, you know, none of that is built in. So I simply look at the one source of revenue that I have, right? I look at the HOA and the mortgage payment. And I use that math. Well, that math is flawed by any and all definition. And and and this is somebody who has done this for 40 years. So it is your point and your team's point that says, what if we were to give uh Joe educated investor a tool that would give them greater clarity on their investment and is it in alignment with their goals and objectives, which goes back to your point about it's all about communicating, finding out what's important. Um, George, I got one. Gary, I think we're gonna make you a client, Gary. I'm I'm going on Prop B in about 10 minutes, by the way. Um I think we talked about this, but just expand the role that technology plays in helping agents and their clients collaborate more effectively today. I'm pretty sure you touched on it, but wrap a bow around that.

SPEAKER_01:

Yeah, I think the the the easiest way to see that. Um, and uh I was speaking, I was on a podcast out with a guy out west the other day, and this was the feature he liked the most. So he was a he was like you, he ran his own real estate agency, um, and a lot of his agents were were listening as well. Um and the thing that he liked the most, which again I would uh ask you to just go look at or you know, subscribe if you want to play around on it all the time, because you're real estate agents and you want to know where things are and and and where value is. Um and so you go to the map, you just drop down to the map, and that's where the most powerful technology is. And in real short order, um, a lot of websites will show you uh so I've picked this house up above, you know, you and I talked about with your parameters. So we picked this house, you know. Well, I think it's on uh Kensington or something. Uh uh and so we pick that house, and um we go to the map and the pin is dropped, and there's the house I want to buy. I go up to the corner and I say, I check the box for sale. You can find this on some sites, most sites. And it shows you everything is for sale around your house. Okay. Then you click on what has sold right next to that, and the screen just lights up because it's, you know, Arian's track probably two and a half to three years of everything that's sold. So now you see all of that. And there's some sites that have that too. Now you're an investor, so now you can see you can kind of triangulate what you should pay for. But what rent do I charge? Now you go to the map, you take away the sales, you turn it to rent, and say, what is for rent around my house? Bang. Three or four homes that are around your house. And when you click on them, the MLS picture and data comes up on that house. So you can compare the rents around you. That you can get that data, that data's hard to find. It's right on one screen. And finally, the last one you check is what has rented? What is rented around my house? So I know what's out there and what they're currently paying. And he tracks all of that data and has since we started Prop B for several years. So now you can see what everyone's paying. You cannot find that data anywhere. So that was what you know, different people like different things on the site. Um, you know, a lot of people like the rehabilitation scope thing that when you tell me it's gonna be 15, it actually is 15. Everybody likes something different. Um, he's a real estate agent. He said, There's nowhere I can go to one map and see all of that data. Everything for sale, everything that's sold, everything that's rented, and everything that's currently renting. And it's all in one place. And that's that's where the technology gets really powerful and makes it really easy on your team.

SPEAKER_00:

So one uh we could go on forever. This has been uh hugely uh educational and beneficial. Uh this is one of the podcasts that I'm gonna encourage our listener who's driving or walking or running or on the elliptical, you know, this is when you want to take notes. You know, I think back to the first set of empirical data, 120, 150, 120 to 125 million households. You know, we get fixated on population. Well, not all 345 million are owning a home, right? And so if you think about the data, you think about 125 uh million uh uh homes, and we're selling 4 million a year on a resale and 600 to 650 on a new, you know, there is a math problem built into here. So I think a couple things. George and his team are building this with an understanding that there are a lot of people that want to rent, and therefore there have to be a lot of people that need to own the rentals. Uh, number two is this is a very, very, very realtor-friendly experience. So often we talk to vendors who all they really want to do is take our customer and never give them back. Uh, George wants to make the lives of your our customer better with greater clarity and ultimately, George, more success in their investment experience, which then will lead to another purchase.

SPEAKER_01:

And so we we built the site, Gary. We built the site, and you remember, we brought it, and so so the agents that are listening to this know this. We brought it in, and two of your most senior people, Katrina and Phyllis, sat in a room, gave us their time, and they were like, that's not how it works, George. That's not how that works. That's how that works, that's not how that works. So this was built with Alan Tate's fingerprints on it to say we need this to be friendly to real estate agents. And so a lot of your senior people sat around and were like, okay, then you're gonna have to do it the way we do it. And so we do it the way you told us to do it. That's what we built. Yeah.

SPEAKER_00:

The other thing that I think is really important is George talked earlier about how critical it is for uh the real estate professional to be involved in the transaction. And I don't know this for a fact, but I believe that you and your team gained a greater appreciation for that every step of the way. Maybe thinking that, hey, I can automate this whole thing. It's gonna be like uh my Amazon guy driving up. I'm gonna go buy it on CarMax. I'm not suggesting that's where you were, but I I do believe that you guys had a belief. And as we dug into it, that belief was this technology is incredible, but only if a human being can play a role. Is that accurate?

SPEAKER_01:

What we brought to the table was the vendors that you're going to need for all those pieces. The one piece that can't be uh automated is Denise Malone and Lexi. You can't automate that. We we I I we were texting them this morning. I so you guys need to know. I use Prop B to buy a house, and I speak through text or email or over the phone with two Howard Hannah Allantate agents pretty much every single day. We could not have done it without them. And we said this from the beginning: we're not trying to get rid of these people. You cannot buy a house without a human being involved. Someday maybe, but I just don't think it's such a personal decision, even for an investor. You have to be talking to a person. And and uh I can't sell the house because I priced it too high. And the Allen Tate real estate agents told me, George, you're pricing the house. It's too high, George. And I said we're gonna do this anyway, and now we're gonna have to lower the price. You cannot do this without a human being. Although I'm gonna blame it on Denise when this is.

SPEAKER_00:

Of course. I mean, it it's like the home building business. When the builder's selling like hotcakes, they're a great builder. And when they can, it's because the doggone realtor is no good. I get it. I've been I've been doing, I've been seeing this video. I I've I've seen these film clips many times. Anyway, uh, one of big thanks uh to George Ellison, uh said in the beginning, more important than a business partner, a great, great friend. And uh, as you can tell, listener, the guy knows this part of the business uh as well as anybody. And I've had the good fortune of meeting his team. And I think this is just the beginning of a great opportunity. I encourage everyone to go on to propb.com. One final question, George. If some listener has a property that is currently not investment property, uh, I'm living in a house, I decide to buy another house, and I'm debating whether to keep the one I have and rent it. Can I go in and put any property address in Prop B and gain access to all that data?

SPEAKER_01:

So uh that is such a great question. The guy in Arizona uh said he loved this. This is the part he loved the most. He said, George, we're having so many people that can't sell their homes, and so they want to rent them. Um and we don't know they come to us and say, What should we rent it for? So you can absolutely use it for that. So if the house is um for sale, if it's on the MLS, uh it'll get caught up in our system. If it's not for sale, you can still go into um the map that we talked about, and you can go to your neighborhood, you know, and you can pick a house, you you can see the map around your house. So so you pick a house that's like for sale or something in your neighborhood, and say it'll show you everything on the map that is for sale around there, which well, they already know they're they're not happy with that data, but it'll show you exactly what is for rent all around your house. It'll show you everything that is listed for rent and everything that is currently rented. And bang, you'll be able to say, wait, my house is a 4-3. I got this square footage. You'll be able to see all the comparables around your house, and it'll help you target exactly where you should rent your house.

SPEAKER_00:

That's a great feature. So I'm just gonna uh I'm gonna share back what I thought I heard is because it's not listed, what I have to do is go find a comparable listing to the home that I own that I can plug that listing into it, and it will give me all the data as if it was mine, but it doesn't have my home in it because my home is not currently for sale. Now, if I bought my home a couple years ago, it might show up in sold data, but every one of us has a competitive listing in the marketplace. I I virtually everybody that lives in a house and owns a house that's not listed, there is a salary. Similar house, either in the neighborhood or the adjacent neighborhood, certainly in a couple mile radius. So for those people, and again, I think this is a your friend in Arizona to say to yourself, I found the home I want, right? And uh Howard Hannah Mortgage has a buy before you sell. We will bridge you to get there. You know, a lot of times we don't find the house when we're ready to find the house. We find the house when we walk upon that house and we say, God, if that house ever comes for sale, George, I'm buying it, which is what I did on Keelden Court. Exactly what I did across from you was when that thing uh comes for sale, I'm gonna buy it. Unbeknownst to me, I didn't know all of the uh history of the house, but it was a great house to live in and and to raise the kids. But uh anyhow, so propbee.com. Big thanks to George Ellison uh and the entire team. Big G, good to see you, my friend.

SPEAKER_01:

Gary, we appreciate you. Thank you for having me.

Contributor

Gary Scott

Host