Adam Whitmire, Chief Strategy Officer
The Great Recession of 2008—a direct outcome of subprime mortgages and mismanagement of mortgage-backed securities—led the entire real estate industry to turmoil. As housing prices fell drastically in a matter of months, investors became skeptical about where to place their capital. The situation forced them to reduce debt obligations and evaluate the health of the local market before making any crucial decision. However, during that time, real estate investing was solely dependent on guesswork and intuition without any comprehensive tool to analyze data and evaluate properties.
Coming from a lineage of real estate investors, Adam Whitmire was one of those investors trying to leverage technology to overcome this hurdle.
We are driven by a mission to simplify real estate investment by enabling users to make the right decision at the right time based on data
"During the housing crash everyone was afraid to invest. I came up with the idea to create an online portal that investors could use to buy and sell real estate. I used this platform to find the best deals in the market by analyzing everything on the Multiple Listing Service (MLS) using key financial metrics," says Whitmire. Around this time, Whitmire reconnected with a long-time friend Jared Garfield, currently a Member of the Board of Directors at Housefolios. Jared had been successfully coaching real estate investors across the globe prior to the recession. They both shared a vision of eliminating guesswork from real estate investing with data-driven insights.
It did not take long for the duo to join forces and launch the first iteration of the Housefolios software, which helped them sell 25 homes in the first five weeks.
A History of Perseverance, Dedication, and Passion
Following the massive success of their new venture, Whitmire shifted his focus to improving the process and data available to make buying decisions online. "Our idea was to deliver something similar to the E-trade of real estate to empower investors and agents alike," says Whitmire. This new model was designed to allow investors to filter everything on the market based on multiple criteria, including cash on cash return. Whitmire also trained agents as underwriters to improve the website's property database.
These agents were adept at checking the availability of properties daily and underwriting new opportunities to improve the aggregation of the best deals on the market at any given time. "The software enabled real estate agents to quickly filter and underwrite every property based on its merit as an investment. They could then print a proforma or publish the property to a website where investors can make offers and build their portfolios," mentions Whitmire. Investors could find the best deals in the market within minutes. This new model that anchored the MLS data into the investors' marketplace helped sell over 1000 properties within the next three years.
As the single-family rental market continued to grow, Whitmire shifted his focus back to his roots in new construction beginning in 2015. Later that year, Garfield and his partner Rob Fuller hired Whitmire as a consultant to help expand their business. With his wealth of resources, access to capital, and valuable contacts, Whitmire assisted them in growing their business from less than 10 transactions monthly to 30 - 40 transactions per month. This success forged into a strong partnership that resulted in the genesis of Housefolios in 2017. Rob Fuller and Adam Whitmire partnered to launch this new tech platform. “None of this would have happened without Rob’s sacrifice and effort in funding and helping to grow Housefolios.com”, says Whitmire.
Simplifying Real Estate Investing
Today, Housefolios is recognized as one of the market leaders in the real estate industry providing an online portal for investors and agents to buy and sell single-family real estate. "We are driven by a mission to simplify real estate investment by enabling users to make the right decision at the right time based on data," says Whitmire, the Chief Strategy Officer at Housefolios.
At its core, Housefolios assists mom-and-pop investors to analyze residential properties faster, invest in the best ones, and earn more profit per property.
According to Whitmire, technology still remains an elusive goal for a huge section of the residential real estate industry. Large companies have spent millions of dollars in building their own data analysis software to make investment decisions. But mom-and-pop investors don't have those resources or technology. "It's not really a fair game," says Whitmire. On top of that, the extensive spreadsheets and complicated formulas make it more difficult for these mom-and-pop investors to compete in their markets.
Considering that institutional investors only make up two percent of all single-family rentals in the country, Housefolios gives a huge advantage to the mom-and-pop investors. The platform creates a level playing field by equipping small investors with comprehensive tools to underwrite and evaluate single-family rentals.
Housefolios accumulates data (ARV, comps, rent, etc.) for available properties across the U.S. and analyzes each component to determine whether it'd be more profitable to buy and hold, flip, turnkey, or pass on a property.
In addition, the software enables mom-and-pop investors to analyze a property within a few minutes and consider key financial metrics. They can seamlessly sort properties based on returns, equity in a deal, and cash flow. They can then create proformas to evaluate the deal and send to lenders or equity partners to obtain funding.
"We had an investor call us about two deals he was considering purchasing. He was very excited about one deal in particular. But once the data was reviewed in Housefolios, the software revealed multiple red flags. It showed him how he's actually going to lose money on the deal that he thought was a good one. "It was a big win for that client and us as well. This is just one example. Many investors today rely on our technology to ensure profit," adds Whitmire.
Real estate agents can also utilize the Housefolios’s platform to sell, underwrite, and create proformas. They can use the software to plug into the MLS and analyze the property data to identify the best cash-flowing deals in the market and facilitate investors' buying decisions. Not stopping there, Housefolios creates an online marketplace for agents to find single-family rental portfolios, which is highly uncommon in this asset class. For instance, for a real estate agent who was struggling to find a property for an investor, Housefolios was able to find five deals from the MLS in minutes. As a result, the agent was able to sign a contract and make the best offer for the investor.
Turning New Chapters
With such a comprehensive solution and a strong clientele, Housefolios is heading toward a promising future. The company will continue to help clients stay ahead of the trends in the real estate sector by boosting the data aggregation capabilities of its software. Housefolios also has plans to launch a new portfolio management platform that will allow clients to manage the growth of their portfolio. In parallel, drawing inspiration from the cryptocurrency investment space, the company aims to make real estate investment and portfolio management more engaging through gamification and interactive elements. "It's going to be as simple as investing online just like any other type of crowdfunding platform," Whitmire shares. "Whether I'm buying cryptocurrency, investing in stocks, or investing in real estate online, there will be an app that you can pull up, start investing with a hundred bucks or a hundred thousand, and build your portfolio."
"With the team effort and dedication of every person in the company, our vision has been materialized. The Housefolios team has worked around the clock to bring this dream to fruition by making it their collective ambition. Today, we are raising capital through a real estate fund and identifying new channels for marketing, business development, and expanding the platform," informs Whitmire.
In a rapidly evolving real estate market, the ability to quickly analyze information and make informed decisions will remain a crucial factor for investors and agents. Housefolios is well positioned to make this new era of real estate investing a reality.