The Property Perspective
From hidden gems to billion-dollar deals, this is The Property Perspective - where seasoned real estate pros reveal how they spot value others miss, and industry disruptors share the unconventional strategies reshaping real estate.
The Property Perspective
Navigating Real Estate Challenges: Daniel McClam's Journey from Wholesaling to Tech Innovation
Real estate visionary Daniel McClam steps into the spotlight, sharing his compelling journey from a family steeped in real estate to co-founding the innovative platform, InvestorBase. Daniel recounts his meteoric rise in the wholesale business, securing an impressive 150 deals in just 18 months, followed by a critical pivot to technology after facing unexpected financial hurdles. His story is one of resilience and adaptation, emphasizing the need for diversification and agility in the ever-evolving market landscape.
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00:00 - Hope (Announcement)
What happens when the market turns and your real estate business is all in on the wrong buyers? On this episode of the Property Perspective, host Preston Zeller sits down with Daniel McClam, co-founder of InvestorBase, to unpack how Daniel scaled his wholesale company fast, only to have $150,000 in assignments wiped out overnight. Hear how that wake-up call sparked his pivot from flipping houses to creating one of the industry's most innovative dispo software solutions. From hidden gems to billion-dollar deals this is the Property Perspective, where seasoned real estate pros reveal how they spot value others miss and industry disruptors share the unconventional strategies reshaping real estate. Now here are your hosts.
00:44 - Preston Zeller (Host)
Hey everyone. This is Preston Zeller with the Property Perspective. I'm joined today by Daniel McClam. He's the co-founder of InvestorBase. Daniel, welcome to the show. How are you man?
00:57 - Daniel McClam (Guest)
Good brother, appreciate you having me?
00:59 - Preston Zeller (Host)
Yeah, absolutely, Daniel. Why don't you let us know just where you're at today? What is InvestorBase?
01:07 - Daniel McClam (Guest)
Yeah, uh, crazy that we're here today. Um, investorbase is a. It's a brand new software that we launched back in April 24. Um, so pretty new, but it's a disposition software for wholesalers. I'd say disposition software for wholesalers, we're shaking things up out there.
01:27
For sure, nice and is this your first like software kind of jaunt venture. Yeah, I'm not a tech guy. I have a partner in the business. His name's Jack. Jack is the brains of the operation, all right, so Jack has done a majority in the business. His name's Jack is the brains of the operation All right, so Jack has done a majority of the coding. He's done a majority of the user interface, the user experience, and he does a really good job of that man. I just smile and wave. I just come out here. I am the real estate guy, though, so I think there's two parts of the puzzle there that you kind of got to have. And you know, I've been in real estate for a long time, done a lot of deals, ran a wholesale company, um, so you do have to have that experience in order to know. You know what your user base needs, right, so I can relate to him, and, lucky enough, he's in house, so, um, we're able to build pretty quick right, yeah, you're the yeah, you're, um, uh, the user avatar.
02:34 - Preston Zeller (Host)
a good understanding of the problem you're solving. That's awesome. Let's uh, let's go back in time and, uh, let's just start. Uh, I've been doing this more recently and it's a good place to start. What'd your parents do for a living and what was your sibling situation like?
02:51 - Daniel McClam (Guest)
Yeah, man. So I grew up in Columbia, south Carolina. I live in Charleston, south Carolina now. My mom's a pharmacist, so she worked for forever early mornings. My dad was in medical sales for about 35 years, selling heart monitors to start, and then sold medical beds for a while, but he was always in real estate. I know he had about 80 units by the time that he was like 29, 30. So he ended up selling all those and started doing build suits for doctor's cares, which is basically like an urgent care here in kind of the southeast. Um, they're owned by blue cross, blue shield now. But, um, that was kind of a stepping stone. My uncle was, my dad was doing the site searching, um, and all the actual underwriting, and then then my uncle went back and got his GC license so they would build them and then they'd lease them back on 15-year triple net terms. They still own like eight to 10 of them.
03:56
So always been in real estate there. We owned some properties together. I remember him taking me to a building when I was probably like 16. Um, it was like a vacant retail center and he was trying to explain to me what a refinance was. Uh, so, from early on, you know I was always interested in real estate right, and I know people say that, but I was kind of really there for that. So, moving forward, went to college at Charleston, majored in commercial real estate finance, then went into commercial brokerage for about three years and I love that man. I was on an awesome team. Dude on my team was a Marine. Learned like everything from him. Dude waking up at 5 am running stadiums at the citadel here in Charleston. Dude, those, he's a. He's a beast. Um what?
04:49 - Preston Zeller (Host)
what year? What years is this, Daniel? Yeah, like that you're going to college yeah so I.
04:56 - Daniel McClam (Guest)
I graduated college in 2019, okay, so I'm pretty recent then. Yeah, yeah so I. I just turned 28, um, but we did a lot of deals. So right out of college I went straight into brokerage, um and, and we were doing industrial sales and leasing. So um did, did that. I mean we did about 200 deals before I left in about two or three years. So learned a lot there, right, got a lot of experience. I had my broker's license already, so I started a firm.
05:32
I have two older brothers and my middle brother, Andrew, actually had a disposition company, so he was in sales and then he basically took a hiatus to Bali, Indonesia, and started surfing for like eight months. He quit his job, started reading wholesale books Anybody watching this has probably maybe done the same thing, right, but he came back, was just all inspired, started wholesaling in like 2019, 2020. Started wholesaling in 2019, 2020. Then the institutions came around, which is when he really started to start paying me. With some phone calls he's like, hey, man, look, you got to check this out. I knew what wholesaling was a little bit, but I was so content with where I was. I was making money, loved the team I was on. I really didn't want to leave, but I'll never forget. I was in Columbia and Andrew had made some serious relationships with some funds nationwide and was JVing for probably about 100 to 150 wholesalers with a team of like eight people. So he had the relationships with the wholesalers.
06:51 - Preston Zeller (Host)
So you remember 2020, 2021, 2022,. I mean, it was wild, so I never forget wholesaling a lot of real estate.
06:55 - Daniel McClam (Guest)
Yeah, man, and I'll never forget, I was in Columbia and he was like, really, sat me down, he's like dude, I don't care, come in here, come look at us. And he had his whiteboard and I was looking at. I was like dude, there's no way, this is real like right.
07:05 - Preston Zeller (Host)
And how much older is he?
07:08 - Daniel McClam (Guest)
he's.
07:08
He's four years older than me,
07:10 - Preston Zeller (Host)
okay, and then older than him. How old is that brother? Uh, six years, okay. So this is like a pretty good gap between pretty good 10 year span, right right that's um okay yeah, right, right, okay.
07:23 - Daniel McClam (Guest)
Yeah Well, no, Matthew's. Matthew's six years older than me, right? So Andrew's, Andrew's 31, Matthew's 33.
07:31 - Preston Zeller (Host)
Oh, okay, I thought it was four and six. My bad Okay.
07:33 - Daniel McClam (Guest)
Yeah, no good. But you, you remember that timeframe, man. I mean it was we had a unique value prop at that point. I think Andrew did, especially because I mean we were working with probably 15 total different hedge funds probably four or five more than others, but he was in a bajillion markets and really had it dialed in. He would handle the whole transaction coordination process too. So it was like you get under contract, you send it to Andrew, you're done, and these guys are paying 115% of ARV Right.
08:06
So it was an easy segue for me to immediately get in Um, because I mean I'm a sales guy, I'm good at sales. Um. So, long story short, uh ended up starting my own firm and uh operated a wholesale business for about two and a half years, got to about 10 deals a month pretty quick. Remember, I got my first deal under contract on the first day that I started wholesaling. Like I had my podium set up. We just got back from vacation after I like quit, basically, and I was sitting there like I had everything teed up ready to go like contracts, like literally everything waiting to go, and I just sat down and I was like well, I had everything teed up ready to go like contracts, like literally everything waiting to go, and I just sat down I was like, well, what I mean? I don't have a lead yet.
08:51
So I went on Zillow I've never told this story before actually. I went on Zillow, saw a for sale by owner that went up like 10 minutes ago and just was like, oh, this would be a good exercise. Underwrote it and was like, dude, this is, this is a deal, good exercise. Underwrote it and I was like, dude, this is, this is a deal. And I called the guy. He said he wasn't him and hung up. He's like, oh, that's not me, I'm not that person. So hung up. So I texted him, ended up. I never talked to the guy ever again and we got it. We closed it in 30 days and I made $11,000 without ever speaking to the owner.
09:26
Now I verified, it's him because he had to go in and show his ID and everything else right. But I texted him for the entire transaction and that was my first deal that's so bizarre.
09:38 - Preston Zeller (Host)
I know it's crazy, same guy you were texting with. He said it's not me, ended up texting you to sell it.
09:45 - Daniel McClam (Guest)
Yeah, he was. I'm sure he got a lot of phone calls um. So he was like not not doing this right now. But I texted him, was like, hey, man, look, I'm serious, you know. Um. So that was, that was my first deal and I ended up getting eight deals under contract in that first month. Um, I was. I was like dude, this is, we're going to get balls to the wall, so, and this was like 2022 or 21. This is 21.
10:12 - Preston Zeller (Host)
Okay.
10:13 - Daniel McClam (Guest)
Yeah, so um yeah, and had a really big month. So started in like, uh, august timeframe of 2021. And then finally started to get some closings in the door, had a really big month in March, closed 13 deals that March of 2022. It was like man, this is scalable. So built out a team, brought Jack in. He's my partner now. How did you guys meet? Yeah, we've been buddies since we were young. We both from Columbia. We played been buddies since we were young, both from Columbia. We played soccer together since we were like 11 years old. But I never knew how smart Jack actually was, like until we started working together. I knew he was smart, but he was a stat major, then worked as an actuary for an insurance company.
11:04 - Preston Zeller (Host)
Yeah, which. To be an actuary you have to be, you know, wicked smart really smart. Yeah, it's crazy. All the I forget what the series, blah, blah, blah, all the things you got to pass, but yeah, to be, I mean you're, you're a statistician, amongst other things. So it's, it's impressive alone just to be able to become an actuary from a mathematical skill standpoint, 100%.
11:30 - Daniel McClam (Guest)
And for those of you who don't know what an actuary is essentially, I'm going to butcher this but taking large amounts of data and basically computing it into English for people like me and Preston to actually understand, and, in his scenario at an insurance company, basically predicting, like taking a million different data points on a person and predicting when they're going to die and what their premium should be, essentially. So you can imagine it's a lot of math.
11:58 - Preston Zeller (Host)
They help set all the insurance rates that we get. Yeah, pretty much Okay. So he comes out of. I mean, I imagine the reason you call them is because you're like I like this guy. He's a friend, I can trust him, has a skillset that might compliment mine. Was that kind of the thought process.
12:18 - Daniel McClam (Guest)
So we started talking before that and I we started talking about skip tracing to start. So we build a skip trace company. That's kind of in the background. We don't really do anything with it then, but that was the first step and I really was always interested in the data-driven side of a real estate company. I'm like man, there's got to be a way to predict most likely to sell, there's got to be a way to predict most likely to buy, and we always had conversations over the weekends. When I'm back in town and ended up, I'm like, dude, I hate the marketing piece of this. You know there's a lot of data that goes into marketing as well. So Jack came in to really handle a lot of the marketing and just some of the, the tech innovations that we wanted to work on, which we have more than one that that kind of spun up before investor base. It's just always the. The real estate firm took precedent to. It was tough to like. Just totally go dark on that and then focus on something else.
13:14 - Preston Zeller (Host)
You know I mean right yeah, unless you have some kind of you know just nest egg you're willing to burn into.
13:23 - Daniel McClam (Guest)
Yeah which wasn't there, right, which has never been there. It's always been. Hey, this is, this is the active income that we need, right? This is bread and butter right here.
13:33 - Preston Zeller (Host)
So how did? I'm curious, um, you know, because I actually I joined batch in uh February 2022, which is right when everything was kind of peaking. Like you know we are, we are deep in a texting uh which, you know, there's still people who text today, but it's not nearly as many today um, but interest rates started going up around that. I mean, you know, first half of 2022, a lot of like whiplash change started to happen, and then latter part of 22, we saw a lot more. I think you know fear in just the markets and stuff, but I'm curious from your perspective, like, did you feel that? Were you paying attention to it? Were you just like full steam ahead? I don't care what people are saying, you know what was. What were you going through in 2022?
14:29 - Daniel McClam (Guest)
I'd say I was a bad business owner. And the end of 2022, honestly, you know, we kind of saw the writing on the wall of what was coming with rates, but we, we didn't really diversify. And this is really applicable to anyone in the wholesale space, even today, that's doing Dispo is basically take this as a lesson for how to not do this. Basically is, you know, we scaled really quick, like when I when I mean really quick, like within one year I had four acquisition managers in house. We had an office on King street in downtown Charleston. You know we had 20 cold callers overseas. You know we were had 30 deals under contract at any point in time within 12 months of starting the business.
15:14
So, um, we scaled really quick, right, and uh, the problem was we were fully we were fully over leveraged into selling institutions. So, you know, in like 18 months, we did about 150 deals and not one of those not one was sold to a local flipper landlord. So, in October 2022, I got a phone call from one of the acquisition managers of a hedge fund, uh, sfr, three, who we worked with a lot in some of these secondary markets. Um, basically, they, they terminated 13 deals in one day.
15:53
Um, with one phone call, so it was $150,000 worth of assignments just out the door immediately. Um, and look, dude, that's that. That's tough, not just for me but for my acquisition managers, right, like they can't control that side and I'm handling all of Dispo. So the finger gets pointed at me as the owner, right, and like I felt terrible for them. But the problem was is we, we still had 40 leads coming in per day.
16:21
Um, you know, we had a 10 person team, so it was a really challenging time, like I. We lost two more hedge funds shortly after that and it was like man out of nowhere all of a sudden. You know, we had no one to sell our deals to, right? So, you know, me and Preston haven't talked about this before, but you know you did team me up for this Like, did we feel change in 2022? Hell yeah, I think everyone did Right, like everybody did, and so, like what, how you adapt to that is I think it was just especially tough for us because you know, the real problem that probably people still face today is, if you have one or two or three buyers that you sell your deals to, you're putting yourself at risk, right it's almost like a one marketing channel risk right.
17:18
It's a one income vertical risk right. There's a lot of like one channel risks out there which you know you need to be aware of at all times, right.
17:31 - Preston Zeller (Host)
Yeah, I think you said that well, like you know, just not being diversified enough, because you know, especially those institutional buyers I mean they have access to data in you know ways that obviously a mom and pop shop isn't going to, and so if they start doing something, you're like, hmm, you know I uh, in conversations, actually more in the software realm, you know, and that's more you know, I have a real estate background but I've been in, you know, growing software companies for like 15 years and background, but have been in you know, growing software companies for like 15 years. And, um, I talked to friends who were VC backed and I'm like, hey, you know what's going on, and the ones that had really good, um, financial backers or you know these, these partners, um, they were downsizing as a company well ahead like mid-22 because they their data. They were downsizing as a company well ahead like mid 22 because they their data, they were looking at was going okay, the economy's going to slow a lot, interest rates are going to continue to go up, the buying environment for our services is going to change a ton. And it felt like very, oh my gosh, like why would you be doing this? Because, uh, it's, it's, it's just going to. It's going to cause a lot of havoc on the company, uh, but they saw they needed to get more profitable. But so I guess my whole point is I think there are so many um, so many different groups of you know, companies who invest or whatever that um really tried to weather the storm in that way and, uh, and to right size.
19:13
When we're coming out of this era of just ultimate liquidity and you know, ease of movement and I think to be you know, I think especially you know you saying coming out of college in 2019, it's like you got launched into that environment, like in a pretty particular kind of way. But even I think about myself like I got out of college in 2009. And so it was not long after that. Yeah, it was right on after 2008, but like the sort of zerp time period persisted for quite a bit before uh, before the 2020 period too. So it's like in the software world, you also had just a ton of uh. You had a certain kind of market that I don't think we're going to get back to. You're not for quite a long time.
20:07
I mean certainly not Zerp stuff but, anyways, that's kind of my sidebar thought there. But so what month was it for you? I'm just curious, in specificity, what month for you? Do you remember it being like when you got that one call where they just terminated like the eight agreements or whatever?
20:28 - Daniel McClam (Guest)
uh, it was a Friday in October. I remember it was a Friday, because I call it black Friday, but not the, not the good kind not the kind you want right yeah, um, okay.
20:40 - Preston Zeller (Host)
so October 2022, that's like the first sort of wake up call of like oh crap, you know, hopefully this doesn't happen again. That does happen again, and then so what? You know, where does that lead you going into 2023? What kind of happens there?
20:59 - Daniel McClam (Guest)
Yeah. So I mean we, we still had those 13 deals in our contract, right, you know the buyer's gone, but we had to figure out how to move those. So you know, naturally with no buyers list across 10 different markets, you know, we didn't really have a lot of time to, you know, to rebuild the wheel on the dispatch side. So we immediately had to JV all of those which isn't fun, cut it in half right. Which isn't fun, Cut it in half Right and realized very quickly JV was not going to be a scalable model for us just where we were and essentially we immediately started flipping some of those two Right. So like we flipped on a dime. You know, we knew some were good deals. If JV didn't work we'd flip it. We were capitalized, started flipping a lot in 2023.
21:54
We did chase another hedge fund in Atlanta. Seemed like a good bet. They'd basically buy it, fix it up, rent it out and then sell it between like a three or four cap to a Japanese pension fund. So we actually got some preliminary offers from them and I remember in the first month we had like five deals under contract with them. It was like January, February 23. I mean it was like 150 to 200K and potential assignments All five terminated never ended up doing another deal, but that was enough for me to go and pull a million records in Atlanta, skip, trace one million records in Atlanta and dump 75 percent of our marketing in. So when I say like when we see something, you know we, we go full balls to the wall. You know you're either going to ride with me or we're all going to go down together kind of deal. You know for better or for worse and you know, looking back, like you know, there are decisions that I wish I could have taken back At the same time. You only know what you know, man, and like, yeah, I felt like the potential assignments that we had was enough to make a decision on Right and uh, so we tried that for a little while um, still flipping, to still have some income coming in, um, and ultimately we had to rebuild our Dispo department and we looked at the potential options out there for Dispo right On like a software side.
23:28
Um, you know, we had like we had like some of the marketplace models. That was extremely expensive and pretty much out of reach for us at that time and so we went the route of pulling a cash buyers list or go and doing the seven step process to finally find someone who did a deal right. It was extremely manually intensive, um, we either do it that way or we'd go on Zillow. We just try and find sold comps to see what, what was flipped Um, and then reverse engineer who did it and really identify that person Once again, extremely manual process that I tasked jack with, and this is like mid 2023, but it was working right. So we had the proof of concept that, hey, like we moved three or four deals um, we're like four for four doing that with Zillow. Um, but it took so much time, right. And so jack said screw this, and basically built um, because we had a skip trace company.
24:33
Uh, we had tried to build, or we did build, most likely to sell. It was a software called Resi pulse that I've never talked about before, I've never even mentioned it. Um, it's, I don't even know. Know where it is. It might be shelved somewhere, I have no idea, uh. But so we had, we had the map view, we had everything.
24:52 - Preston Zeller (Host)
You built it for internal use, or you actually tried to market it?
24:56 - Daniel McClam (Guest)
No, we built it for internal use. I mean, I've never told anybody we did that, but we had a data scientist come in and consult with us for months. So we built it, we trained it on our own data. You know, out of the you know 5 million properties we marketed to, we had like 8,000 leads. Why did these people raise their hand? So we had personal data. Like a lot of personal data rose. We had a lot of property data rose. So we got some really good insights of what actually leads somebody to raise their hand. And you know what's funny, One of the leading indicators there was number of historical addresses which, like you think it's, you know, going to be all these vexations, so like divorce or whatever, whatever. But some of them were so obvious, but like, so like meaningful, you know, and I've never talked to anybody about that, but, uh, I'd be curious what their thoughts are there.
25:56 - Preston Zeller (Host)
So is that something? Um cause I imagine Jack is your business partner, right? Yeah, I imagine, coming from like an actuarial industry, I mean they probably don't discount anything as being like this is a predeterminate of you know. I feel like they're practically looking for ways to go let's make sure right size this insurance. But what was having that kind of mindset of Jack being from the actuarial space, you know, just kind of open your eyes to what is possible with the propensity stuff or kind of how was that?
26:36 - Daniel McClam (Guest)
But I mean, yeah, a hundred percent. I mean we talked about it all the time, right, Like that's how Jack's brain works and Jack loves building things. Right, like I'm, I'm always there to um, really be a crutch for, like, what people actually need, like what is the problem we're actually solving? Right, because we're in the space, you know, and Jack's in it too. It's not like Jack's in like a dark room in the back of the office or anything like that. But, yeah, him being an actuary is freaking incredible, like we can. The dudes have whizzed in an Excel sheet. You just see them. It's, it's absolutely wild.
27:16 - Preston Zeller (Host)
Yeah, so you built this internal tool, Resi, pulse, and then, like you know, continue to do your flips. But I get where you're going with that. It's like you keep kind of running into, you're adapting to the market, right Cause there's, you know I've told people this so many times, but you know this but it's like 23 and 24, at least from a retail standpoint they were like the worst couple of years in, you know, since the mid nineties since.
27:51
NAR is keeping record of transactions and of course we felt that too right. When, when, when there's less transactions to go around, there's less people obviously making money in, you know, whatever kind of wholesaling there is, and it's just that's just the reality of it. So it's like, well, how many people, how many people does, how many investors does the market support, and I, you know, there's a really, I think, a pretty direct correlation of, well, how many transactions can happen. So it sounds like that's really kind of what you're adapting to and you're going from probably maybe easier way to find deals to trying to think about it more scientifically in a way that other people weren't, because you had to. Is that fair?
28:38 - Daniel McClam (Guest)
yeah, and I'll say, like that was, it was to the side, right, like we. We ended up running um. Once it was built, we ran, uh, all of our list through it. Uh, we actually built the AI model into our skip tracing to where you can check a box and have it basically run through the AI predictor and put it into buckets and that's still alive. But what we found is the top one and two bucket would produce like 30x more leads than the bottom three buckets. So we use that for ourselves, but we just never did anything with it.
29:12
But really around that time it was always focused Like we weren't mega focused on sellers. You know, we had our system pretty, pretty dialed in. It was really about buyers. You know, it was like we were still doing a very manual process. So what happened was that Zillow thing that I spoke about, um, I tasked Jack with that and within three days, essentially over uh, um, the well, over the course of, like I'd say, a couple of weeks, jack had meshed the two together, right and, and had like, basically an MVP of what could be a most likely to buy Right Um, and we worked on that for quite a while and ultimately created what we called buyer beacon for ourselves.
29:59
So buyer beacon was investor based before investor based, investor based. But I mean it really did pretty much save our business. You know, we had acquisition managers come and go through the tough times and look, if you didn't struggle in 2023, like man, more power to you. But I can tell you, a majority of the people struggled, like a lot of the people in our small masterminds like got out right, like got absolutely crushed them. You know, I'm sure y'all felt the burn too, with clients potentially leaving. You know, um, it was hard.
30:36
Uh, so it like really did. It was. It was a pick back to where we could sell our deals in a very short amount of time with real buyers based on real transactions. Right, so, right, so, um, that is the origin of investor base. Really, as mvp was created in end of 2023 and then we decided to go full-time into it, uh, December, we turned off all marketing. We basically shut down the real estate company, finished out all of our flops and just went head first into it because we had some beta testers that were like, dude, this is incredible, um, so, hard, long steam April 2024 actually, yeah, I want to get it.
31:20 - Preston Zeller (Host)
I want to get into that in a sec, but yeah, you're just kind of touching on, you know, the sort of churn out of the space and you know, I think I not I was for sure not wholesaling in that timeframe. So when I came here it was like understanding, okay, what's something like that? We had such an interesting confluence of events People at home, stimulus money and looking up ways to make money, and then you had these real estate shows coming out, people becoming celebrities that are wholesalers, and then you had all the lifestyle marketing around it, the Lambos and houses and big checks. And so I feel like this industry has always brought a revolving door of interest and it's software is, I don't want to say, made it worse.
32:38
It's made people think that it's easier in that you don't have to do hard work still, and that's like one of the biggest misconceptions really, probably about anything, but especially real estate. It's just like going oh, I'm going to buy this service and it's going to make it easy, button and I'll make 15, $20,000 checks like clockwork. So anyways, I just wanted to share some of those thoughts because I mean, I'm sure you've had a number of people go. Daniel, how'd you do it? Tell me your secrets, how can I make, how can I make those checks? I mean, was that happening during you know, kind of that, that period?
33:25 - Daniel McClam (Guest)
When we were wholesaling like with the investor base.
33:30 - Preston Zeller (Host)
No, when you're wholesaling. I mean, I'm sure people were approaching you who are interested in real estate and wholesaling at the time.
33:37 - Daniel McClam (Guest)
Yeah, you know what man? We kind of closed ourselves off a little bit, and I wish we didn't.
33:45 - Preston Zeller (Host)
What do you mean by that? You closed yourself off.
33:49 - Daniel McClam (Guest)
We weren't masterminds, we weren't going to real meetings, we weren't doing anything. We were just laser focused on exactly what we were doing, focused on what worked. I didn't really make myself available for others to kind of see inside the business. Honestly, um, and I wish I had more um, because I probably would have gotten ahead of, uh, a lot of things that, a lot of problems that we ended up facing, um and I and I don't think it was as much of an ego thing, like at the end of the day, did I. If you know me, you know I really don't take myself that seriously Like I, you know I'm a fairly humble person I'd like to say, but you know we had it figured out right. I'm pretty sure we did. And looking back, I would still say confidently we did. We just didn't adapt enough. So we really did kind of close ourselves off, I'd say and I'm in a lot of masterminds now. I jump into a lot of communities, you know I go to a lot of events and I wish that we did that then.
35:01
I really did.
35:04 - Preston Zeller (Host)
Yeah, I mean, I get it too when you're busy. You're just kind of heads down and focused on that too and you go okay, well, yeah, you don't. You don't see the value as much and let me let me take time out of making money to go build relationships here.
35:22
You know it just can kind of lose the connection of the value. Okay, so, um, early, early 2024, then, um, when a little over a year ago or about a year ago, you're like we're going to jump straight to investor base, so I mean, yeah, walk us through that.
35:39 - Daniel McClam (Guest)
Yeah, man, um, just burning on E, living on a dream for a little while. Uh, I mean seriously, dude, I, I, we, we put our money into it and set sail like we've. We've put a lot of time and effort into this thing, man. And so April, April, April we launched and to date we've really grown significantly through affiliate partnerships and getting into contact with, you know, other communities, to where we can just go straight to a larger portion of individuals. But really 50% of our growth has just been word of mouth, right. It's like since April.
36:30
You know, people come in, they see it, they run a couple searches and they're like, oh my gosh, it's either. This can replace what I've been doing for years and save me boatloads of time. I don't have to JV anymore. I can do it myself with investor base, right. I don't have to JV anymore. I can do it myself with investor base right. I don't have to use a marketplace model or market on Facebook and have to deal with the fake buyers and the tire kickers and the daisy chainers and the agents that are trying to be an investor. I don't have to go spend X amount of money. It's extremely affordable, and so it was a natural progression. Someone gets in, they run a few searches and they get that wow factor and they're like, oh my gosh, and so it's an easy referral because we're in a tight knit industry, right, like wholesalers know other wholesalers. Right, everyone communicates with each other. So I attribute a lot of our success just to big wins that people get when they come in the software. You know, in the first 60 days, on average, someone will sell their deal on InvestorBase. We've had a lot of people sell a deal on the free trial of InvestorBase. Right. We have a lot of people that have done their biggest assignment fee, that have done their first ever deal right assignment fee, that have done their first ever deal right, because we're priced accordingly to where, even if you haven't done a deal before, we are your best option for a disposition software to come in and sell your deal yourself, right. So there is still work that needs to be done.
38:04
Alluding to your point earlier, sure, you know, um, but we are expediting the amount of time to get to the right buyers that you need to call right and that you need to do your outreach to. We allow you to prioritize exactly who you're calling and making sure that they're a real buyer, right, yeah, so you don't waste your time. You know there's an opportunity cost side of it where, if you're trying to go a cheaper route or a different route, there's an opportunity cost to talking with buyers that aren't real or making those phone calls. You know, even if you go under contract with one of these guys, they'll take you to the end of the road and then you probably lost that deal solely based on the fact that you're not speaking with real people. I was at an event last week and I asked the audience. I said who's ever dealt with a fake buyer or a daisy trainer or an agent that's trying to sell their deals, or basically a tire figure that's taken them to the end of the road and terminated the deal? 100% of hands went up.
39:14
Everyone.
39:16
So it is a big edge that we have just providing you with the right data, the best data out there for Dispo.
39:28 - Preston Zeller (Host)
And so I'm curious, as you guys set out to build this I mean, I know you said you created basically the internal version, the mvp, for yourself first um, what were some ahas maybe you had? Um, as you guys have been developing this out, where you're like, oh, that's different, we're going to build this out differently than we assumed, or that we had thought, or that you got the feedback from someone logging in and using it and it just, you know, kind of elevated it that much more. It caused you to pivot.
40:01 - Daniel McClam (Guest)
Yeah, I'd say two things. One would be the AI smart match that we built into. It was a huge aha right that that cut down the amount of calls that our users had to make, um, big time Right. So, you know, looking into someone's transaction history, um, and then matching the deals that they're doing to the deal that you're trying to sell, um really, really set us apart Because, as it sits, 50 to 60% of the buyers you talk to in investor base will be interested in your deal, which is a crazy high conversion right. We've run that off 30,000 phone calls in the last month and verified with over 1,000 users that we've onboarded that.
40:47
That is true. That alone is an incredible stat. But we wanted to trim down the amount of calls that you have to make to get there. So when we, when we sort by most likely to buy, you know it allows our users to come in and make, you know, 10, 20, 30, 40 phone calls and get the same results, if not better than if you go and send a thousand emails or a thousand texts or call your everyone on your buyers list, you know. So really seeing early wins with, with that smart match, ai and saving time was huge. Second thing I'd say what was I going to say there, Preston, the aha moment. Well, we were talking about pivots and ahas. When people use the app, how?
41:29 - Preston Zeller (Host)
it might've been. What was I going to say there, Preston, the aha moment. Well, we were talking about pivots and ahas, when people use the app. How it might have been a little bit different than what you thought, because when you're developing something, you have to make a certain amount of assumptions. I mean, you always do. Hopefully they're all informed, they're gut checked, course, people you know, and especially a volume of people saying I would love this if it did this thing, whatever the case. So I think you're kind of the ai smart match was one of those things that you're, like you know, really seem to be a home run so far. And then there's one more I'm trying to coax out of you.
42:13 - Daniel McClam (Guest)
I know you, you're. You're giving me all the time in the world to try and think that's okay.
42:17 - Preston Zeller (Host)
I milked that as long as possible, dan. I know you did.
42:20
I appreciate that it'll come right so, but no, I think something you said it's really important though too um is just word of mouth, right, and it's that you you're creating something that is really irresistibly like real, it's solving a real problem. You know, actually I'm just going to bring this up because I watched it last night, but on, uh, Netflix, norms rare guitars. You ever heard of that place? Or you play music at all? I'm just going to bring this up because I watched it last night, but on Netflix, norm's Rare Guitars. You ever heard of that place? Are you playing music at all? Yeah, Norman's Rare Guitars.
42:55
So in that world of guitars, it's really interesting is that the guy is a shop and it's in North LA, arcadia, arcadia. But the guy was in all these bands and he was kind of a, you know, pretty successful musician in and of himself, but he needed a cheap guitar for like a gig and ended up kind of finding out this is in the sixties that he could flip guitars, you know, cause he's like he had a good eye for them. Guitars weren't as coveted back then as they are now like vintage, and but it was. The story is interesting as you watch it, and I'd say go watch the documentary because, like. I just found that there was this audience for like unique, vintage, well-preserved instruments, guitars in particular and so he just kept doing that, did it out of his you know apartment, eventually got a shop because the you know tax authority started coming after him and then grew out of that shop and grew out of that shop but became known as this like authority, subject matter expert, provided like such an amazing value, and this was, of course, before any internet. Everyone who needed a good guitar, a certain rare find, they'd go to this guy. He just became the guy you know out of la.
44:23
But I, you know, I was watching that, thinking how applicable that is to tech, whatever that your reputation can start to precede yourself. If you're just providing value or the software you're creating is providing value and you can only market so much to overcome like gimmicky services or products, people are eventually going to go. This just sucks, like why would I use it? And it's super expensive to do it that way. So, anyways, it sounds like you guys are solving a real problem and you've come up with some cool ways to do it. Did you think of the other one now? All right, that's okay. So you and Jack work together in real estate, right? Or is it just the software stuff, real estate? Yeah, okay, that's what I thought. So how's that been transitioning? Then I mean, do you see, have you seen other sides of each other come out where you're like I didn't know you had that skill set, I mean obviously coding, but um, you know, I'm sure the relationship continues to evolve there um, yeah, for sure I, I, you know, uh, software, we're having a good time.
45:50 - Daniel McClam (Guest)
I can tell you that We've always had a good time. I didn't know Jack knew how to code honestly until like a year and a half ago or like really code Like a CTO, like big, you know, institutional level, like company type code, um and um, jack will be humbled and tell you that chat gpt has helped a lot. But uh, seriously, to be able to interpret chat gpt code and actually apply it is like the other 90 of the battle. You can type anything in chat gpt, but understanding how to actually implement is like insane and fix the cut. It's never right.
46:30
So I've learned that about Jack. I mean, the guy's brain is just so much bigger than mine. It is really expansive how quickly he can learn. So I did learn in that you know you don't really get all of that out of somebody. When I'm handling most of the conversations on the real estate side of the business, I can see the data that he pulls and puts together to make actionable decisions on the real estate side, which we still do with investor base. There's even more data for us to work on now and work with, but learned a lot about what he's capable of doing, like in in the last year for sure, but we work really close. I mean we're in an office here. We just try and keep them locked in the back room Now as much as possible. He wasn't in a dark room at Hawks real estate. We had big windows there, but now he's in a dark room and we keep them locked in there as much as possible.
47:24 - Preston Zeller (Host)
So investor base. So it's helping with the Dispo side right. And then I mean what's your big vision for InvestorBase?
47:47 - Daniel McClam (Guest)
as the market changes for our users. You know we have a lot of stuff on the roadmap of where we want to go, so I really can't get into all of it. But what I will tell you is you know we've onboarded over a thousand wholesale companies into InvestorBase in the last 11 months, and that's not signed up. Signed up is much, much higher than that. But onboarding this and you know we have a one-on-one call with you we figure out what markets you're in, your team size, what your Dispo process is, what's working, what's not working and what's changing. And really you know what we found. That's a common bottom level commonality between all of them is that Dispo is getting harder. You know, if you look at the market now, like what is the current state of Dispo today? You know I like to look at the end of the chain of the transaction. And when you look at the retail side of things, I mean affordability is still really low. You know like six and a half 7%. You know 30 year fixed. You know inventory we're at.
48:56
We've had 17 consecutive months of increased inventory, which was a shocking one to me, so like if I were to go shopping for a new house. Today there are 30% more listings to choose from than there were exactly a year ago, Right? So what does that mean for us investors who are flippers? Right, we have to compete with 30% more listings out there, Right? And the result of that is, you know, more price reductions, Right? So February last month, we had 17% of homes had a price reduction, which was the highest February since 2016. Increased seller concessions it's very hard for a flipper to list a house right now and last year and the year before, without getting tagged with a five to 10K in closing costs, Right? And? And basically what I'm getting at is certain things with the market that's making Dispo harder, Like, why is it getting harder? It's because of the retail side of things, honestly. And what happens with these soft costs on the in-between that tag us like days on market? So 23 days on market and 2022, now we're at 66. That's three times more holding cost, right? But the sellers and the buyers don't really see those soft costs on the in-between.
50:27
But who feels that is the wholesalers and the flippers, Like. We get squeezed there in the middle because the average sale price is still between you know that 400 to 450 mark, Right? So buyers are still willing to say, pay the same amount, more or less, because they're copying the same amount, right? Sellers are still asking for the same amount, right, and flippers are still producing ARV the same amount. But flippers have to buy deeper now because of all these soft costs in the between right.
50:58
So, like we're stuck between a rock and a hard place as investors by getting squeezed in the middle, right, yeah, and so when these buyers, you know, have to buy a little bit deeper, they start to get the middle right.
51:09
And so when these buyers have to buy a little bit deeper, they start to get pickier. Right, and when they see 15 deals a day come into their email, they start to grow numb to the mass blasts of these emails, right? So if you're sitting back and you're blasting an email list, right, and that's all you do for Dispo, You're going to feel a squeeze, right, and that's just due to the change. You know. You can't just write a letter into the wind and have 15 offers come to your doorstep anymore, right? You have to be a little bit more proactive nowadays in order to drive buyer engagement, which ultimately, in my opinion, looks like a phone call. Right, Like, we have to get in front of the right buyers, and so we help you prioritize an outbound campaign at InvestorBase in order to continue to see success with not only your buyers list, but new buyers as well.
52:09 - Preston Zeller (Host)
Yeah, what do you see as being, I mean, other than you know, low, lower interest rates? You know, I I've been. Lance Lambert does a really good job he's he did a episode with us, but he does a lot of data journalism for a single family. He was at Fortune and what was the other one? I think he was at Redfin too. But anyways, it's like the amount of household income, the price of homes or the interest rate that would have to change to bring it back to like 40 affordability levels, back the rate at which those would have to change. Either one of those is seems like an impossible number right now, which, uh, I'm laughing just because it's like absurd. How, how do we get here? But you know, where do you see? I think, the market going in that like, as you said, it is getting harder. I mean, is it that just there's going to be less and less investors but, you know, more deals for those people? Or what are your, what are your general thoughts there?
53:30
oh man, you know I'm a crystal ball uh yeah, I mean, this is obviously speculative and we don't, you know, we don't know, no, but um, you know we're.
53:40 - Daniel McClam (Guest)
We're just slowly but surely transitioning to a buyer's market. Um, technically we're not there yet. Um know, a buyer's market is like a stable market is actually indicated by like four to five months of like, like available inventory, which means like, if zero new listings came on the market today, how long would it take for all of the listings out there to sell? Yeah, um, so right now we're at like 3.7 months of available inventory, and I'm calling that wrong because I can't remember the name, but I just explained it because it was under.
54:17
It was like it was under a month for different periods, right when yeah, I don't know what exactly it was, but I'm sure that it was way lower than what it is now right, yeah, it was.
54:29 - Preston Zeller (Host)
Yeah, I remember seeing and, and you know mark, different markets are different, um, you know degrees of that, but so, yeah, okay, balanced market for buyers yeah, and so I'm not saying that we're, we're, we're there yet.
54:43 - Daniel McClam (Guest)
Um, I think that we can, could potentially get there, but by the end of the month or by the end of the year, which would look like, you know, probably five to six months of available inventory. But but ultimately, I think, just the, the, the, the hearing problem is that what I've seen from onboarding is that a lot of people are just running their dispo like they were in 2021, 2022. And we're in a very different market today. Like that's the point is like people haven't shifted their marketing or their strategy to adapt to the fact that there's 30 percent more listings out there. You know days on market is longer. Like people, the flippers are getting a little bit squeezed Right. So, like a lot of people haven't really adapted to their marketing channels to address that.
55:37 - Preston Zeller (Host)
Right, yeah, that's. That's a really good point, I mean, especially from you seeing that um, that end of it for how they're getting the buyers Cause I mean, you know, we see so much of, of course, how people are buying the sellers on our side. We don't. You know, yeah, you can build cash buyer lists, but we're not as plugged in necessarily to that from a software side, so interesting to hear your viewpoint.
56:04 - Daniel McClam (Guest)
Yeah, I mean, dude, take it from me, who's been in a very serious change, like you know. I mean, dude, take it from me, who's been in a very serious change, like you know, I wasn't around for 2008,. Sure, but you know I watched what I was doing very successfully change overnight and stop working. So I would just say you know, if you want to get ahead of 2025 on the dispo front, you know we give you access to 10 million investors nationwide. We offer you free skip tracing for those buyers. There's no geographical limitations. We take those 10 million buyers and we produce who is most likely to buy your deal based on the fact that they have done a deal before. So you can't raise your hand and opt in to be an investor-based buyer. You can only get there if you have done a flip or if you have bought a rental property, right, so you know, getting ahead of that, it's like you try and make it as easy for people to get into the software and get a taste of it as possible.
57:08
We have a 14 day free trial. You know you can go run non-obligatory searches and actually sell deals for free right now, you know. So I just say you know, if you if you're still sitting back just emailing your buyers list, if you're still JVing, you know. If you're still um doing a seven step manual process, right. If you're still using Facebook or marketplace model and dealing with fake buyers, you know there's there's a better way to do a lot of these things that you've probably been doing for a long time. So in the market we're in man. Just I just recommend everybody don't get too over leveraged like I did in one in one specific process or buyer pool, you know, yeah.
58:03 - Preston Zeller (Host)
Cool. Well, daniel, where can people find you if they want to interact with you? And yeah, and there's just investorbasecom, or $100 off that first month.
58:27 - Daniel McClam (Guest)
That is not live yet, but Preston's my dog and we're going to get that hooked up today. Yeah, right after this.
58:33 - Preston Zeller (Host)
Thanks for hooking that up.
58:35 - Daniel McClam (Guest)
Yeah. So it's just pricing wise, it's $250 a month, month to month. With that, you get the free skip tracing nationwide. You can build a buyer's list in there. You can track your progress in our CRM. You can actually create a listing for your deal that's shareable and buyers can make offers through the portal. Um, so it's. It's a it's a full fledged disposition system for your business.
59:06 - Preston Zeller (Host)
Awesome. Well, uh, I'm really glad we got to talk about investor base and your story Awesome, Well, uh, I'm really glad we got to talk about investor base and your story, Daniel. Um, it's, it's cool to see where you've come and, um, you know, making a pivot and, uh, and and helping the people out from you know, I think, where you came from and to change those strategies. So somebody has got to do it right. That's even. It's a lot of the story of how, you know, our founders started batch too, is it's just different time period. But, yeah, I want to thank you for coming on the show, Daniel.
59:38 - Daniel McClam (Guest)
Yeah, dude, seriously, thanks for having me. This was definitely one of the more fun ones that I've done too. No one's asked me some of those questions.
59:49 - Hope (Announcement)
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