Democratizing the World of Real Estate Investing with Giri Devanur: An EOFire Classic from 2022

0:01Light that spark fire nation JLD here and welcome to entrepreneurs on fire the only daily show interviewing the world's top entrepreneurs seven days a week. Today, we're pulling a classic episode from the archives, and we'll be breaking down democratizing the world of real estate and investing with Gary Devenuer. Gary is a serial tech entrepreneur who is looking to democratize the world of real estate and investing through his latest project, ReAlpha. And today, Foundation will talk about how in five years from today, every aspect of a real estate transaction will have been touched by technology or completely altered by technology, and how real estate is one of the largest industries in the world.

0:37The mixing of technology in that industry is creating a whole new wave of companies and startups that can come in and build a new platform and oh so much more. And a big thank you for sponsoring today's episode goes to Geary and our sponsors. Fire Nation, you have a book inside you and it's time to share your message with the world. That's why I created Author 100, a 100-day program where I will personally guide you one-on-one to create, write, publish, and market your book. If you want daily guidance and mentorship from me, JLD, then head over to author100.com to sign up for a free call with me to chat about the details.

1:14Gary, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with. Hi, John. Thank you for inviting me for this conversation. The question that you asked is probably one of the most intriguing questions. So let me ask you a question. You are a very successful person yourself. You have been very successful in your podcast, etc. I have a question for you. So let's say, you know, today's hot topic is, you know, Elon's bid on Twitter, right? So, you know, let's assume that Elon calls you this afternoon and says, hey, why don't you come and run Twitter for me?

2:00What is the first thing that you would do? I would say no, absolutely not. I love my life. I'm staying in Puerto Rico. Thank you very much, Elon. on. So normally what happens is when such an opportunity or a risk comes, right? Most people will opt for how do I handle it, right? That how do I is the ego that, you know, like we are all tuned to think that we are the most qualified person to handle either the opportunity or the risk right and because we ask the how question we make a series of mistakes so you know like most successful people what they do is instead of figuring out the how part they go and figure out the who part who is the best person that we can bring to this you know opportunity or the challenge that we are facing that became the culture that you know we built in realfa and We ask ourselves, how to who?

3:04The moment we reach from the question, how to who, the success happens. Fire Nation, that was the first time I've ever been asked a question for that question. So my hat's off to you, Gary. Love the response. Love it all. And Fire Nation, we're talking about democratizing the world of real estate investing. And you're here to do just that, Gary. And you're doing it with your company, ReAlpha. What is ReAlpha and why did you launch it? So the core purpose of ReAlpha was to democratize investment into short-term rentals like Airbnb, etc. How it started was almost close to two years back. One of my friends, she was trying to buy an Airbnb property.

3:51That was some$400 ,000. The banks were asking 25 % down payment. She did not have 100K down payment money. She called me saying that, Giri, I have this opportunity. I don't have 100K. Either you give me 100K or solve the problem. Me being the tech entrepreneur, having built companies in the past, I said, that's an interesting question. Let me dig into it. And that was the origin of creating Realpha. So the idea is, how do we help people to buy investment-grade opportunities in a short-term rental market? That is the core purpose of Realpha. That's what we are doing in the last year and a half.

4:35So at one period of time, you realized that there was a disconnect between the existing technology that was in place in the real estate industry in general. Like they just weren't keeping up. So bring us to that moment when you realized it. Like tell us that story when it was just an aha moment of like, oh my God, this is happening. This is an arbitrage. There's a huge gap here. And what did you do? Very interesting question, right? So when my friend asked me that question of investing in 100K to buy an asset, 6 % or less of Americans have more than$5 ,000 for any medical emergencies, etc. 60 % of them don't have basic money itself.

5:23There is no question of the people having money to invest in properties. So that led me to dig into the real estate industry at large. most of the technologies that are there today are at, you know, like maybe you can search through Zillow and things like that. But, you know, rest of the entire transaction of identifying the property or underwriting, you know, like if you try and do a closing of a property, the number of places you have to actually physically do vet signature. And can you believe even today you have to do either a cashier's check or you have to wire the money and you pay$30 or maybe$40 for the wire.

6:10So at every transactional detail of buying an asset, the technology is at least 15 to 20 years behind. None of the new age technologies have come in, whether it is blockchain or crypto or any latest technology is not being adopted yet. That is when I realized that the entire life cycle of a real estate transaction, from identifying to buying to selling, all the stages, there is an enormous amount of opportunity to bring new technologies. That is what excited me, and I decided to dive into it and try and figure out what are the areas that we can address. Fire Nation, I love those moments. I love those stories when that light bulb just goes off and you're like, this is an opportunity.

7:02Now, when you really dialed in and decided to focus and niche down, you decided to focus on the short-term rental markets. Can you go into detail as to why you chose this? So, you know, like all this idea started when I was trying to figure out the COVID and all the big stuff that was happening, right? pandemic was happening. And initially, you know, like the Airbnb booking had dropped and then I was looking at Airbnb stock. And then suddenly after a couple of months, it started going up. That is when my friend was trying to make that investment, right? When I start digging into the data, when I went into Airbnb site, we saw that Airbnb is now operational in 220 countries plus regions, right?

7:49220 countries and regions. Can you believe that? I did not even know that there were that many countries and regions. So the more you dig into it, you will realize that this is a $1.2 trillion market. In the US alone, there are more than 660 ,000 homes that are on Airbnb alone, right? So the more you dig into it, Airbnb alone, along with other short-term rental market is so big. And what we are seeing is from around the world, people are wanting to invest in it, but there is no mechanism to identify the right kind of property and financing them and investing them and managing literally every part of the life cycle.

8:35There are multiple opportunities in the short-term rental market space that along with the COVID and the pandemic changes the behavioral changes that are coming, people don't want to go and stay in a hotel that there is a massive shift that is happening. So let's say, you know, like a family or a group of friends, you know, like four or six or eight people, if they want to go, instead of, you know, like booking four rooms at, let's say,$200, it becomes$800 instead of that, you know, you can rent a beautiful home for$400 a night, right? That kind of changes are happening at every level of the hotel crowd.

9:19And we believe that there will be a shift and that shift is happening as we speak. And hence, the total addressable market of the short-term rental market is so big around the world. It is really exciting to be in that market. I mean, Fire Nation, when you find an opportunity like Gary's talking about, you just go all in. Because if you can become the number one solution to a real problem in this world, like Gary is creating with ReAlpha, you're going to win at a massive level. Now, we're going to be talking about funding. We're going to talk about how technology is going to continue to change the real estate game and so much more when we get back from thanking our sponsors.

10:02One of the reasons I chose podcasting as a focus for my business is because it gives us complete location independence. At the start of every year, we get to take out the calendar and plan epic adventures across the U.S. and abroad. We've done a 90-day European adventure with just our backpacks. And last year, we did a 23-day river cruise through Europe that was incredible. So if you're like me and love to travel, don't let your home just sit there while you're away. Host on Airbnb. Even though you might be thinking that hosting will be overwhelming, especially while you're traveling, think again.

10:38With the co-host network, it's easier than ever. Now you can hire a high-quality local co-host to take care of your home and your guests. They can do everything from creating your listing to managing reservations to messaging guests and providing on-site support. So if you've got an extended trip coming up and need a little help hosting while you're away, you could hire a co-host to do the work for you. Find a co-host at airbnb.com slash host. Fire Nation, you have a book inside you right now, but it's not always about our desire to write a book. Sometimes it's about knowing which steps to take and when to take them to make it happen.

11:17If you know you have a book inside of you, but aren't sure where to start, then I have an exciting opportunity for you. It's called Author 100. Author 100 is a program I personally crafted to help you one-on-one every step of the way, from drafting to writing to publishing and even marketing your book. When you join the Author 100 program, you'll have access to me, JLD, for 100 days. We'll have weekly one-on-one calls, plus you'll get daily guidance from me whenever you have questions or hit a roadblock. Over the past 12 years, I've self-published five books, including one of the top five publishing campaigns of all time on Kickstarter, the Freedom Journal.

11:57I've also traditionally published with HarperCollins, so I know a lot about the book publishing world and where most authors go wrong. I created Author 100 to share my experience and the lessons I've learned along the way, and I can't wait to share it with you. If you're interested in learning more, head over to author100.com and sign up for a free call with me. That's author100.com. So, Giri, we're back and I want to move into funding because so many entrepreneurs know so little about this topic. You chose regulation A plus funding. What exactly is this and why did you think was the right fit for your specific situation?

12:39In my previous entrepreneurial ventures and as CEO, I have raised all kinds of money, whether it is seed kind of capital or even public from private equity and through an IPO, etc. Having raised all kinds of capital and I've seen many of my friends, everybody is raising VC money these days. But if you look at it, that doesn't give the smaller investor, unaccredited investor, an opportunity to invest in high growth companies. So what happened was way back in 2015, when the Jobs Act was passed, that made an opportunity for unaccredited investors who are not, you know, like, well versed with, you know, all the investment terms or, you know, like, with a large amount of capital, you know, quarter million, half a million kind of money, people who have, you know, thousands of dollars only, right?

13:39Those kind of people were never given an opportunity, whether it is any large company like Airbnb or Coinbase or any of those. Those are all limited to only high net worth individuals or VC funds and so on. What Regulation A offering did under the Jobs Act was to allow the small investor to participate in such kind of companies. Why we picked? Because our original vision and the core purpose was to allow people who did not have an opportunity like VCs and high net worth individuals being able to invest in a company which is going to disrupt a market and grow at a much faster pace, etc. Those kind of opportunities are limited.

14:28And the core reason why we were democratizing was to give opportunities like that. So it was a perfect fit from a real perspective that we give an opportunity for people to invest as little as$1 ,000 and, you know, at a$10 a share kind of. That was the core reason why we chose to invest in it. Fire Nation, I hope you're understanding that there's going to be multiple opportunities. There's going to be different ways you can go about choosing funding, identifying funding, figuring out what's the right fit for you. Before we move on, Gary, what do you really want Fire Nation to know about this very broad, confusing, and somewhat scary topic for entrepreneurs, funding?

15:09Funding, you know, VC industry itself, especially in Silicon Valley, as well as, you know, rest of the world, the number of unicorns is definitely increasing. the number of innovations, the complete new way of investing, especially in Web 3.0 kind of technologies, the crypto, NFT, all those new age methods are evolving on a daily basis. People are investing in new technologies and new disruptive ways of running businesses and so on. While that is happening, there is massive opportunities that are being created in traditional industries as well. Real estate is one of the largest industries in the world.

15:59And the mixing of technology in that industry is creating a whole new wave of companies and startups to come in and build a new platform. Airbnb was one classic example, which has gone on to become 100 plus billion dollar company, a company which doesn't even own a house. Right. So, you know, asset light model. There are, you know, other companies, you know, for example, I don't know if you have heard of a company called Invitation Homes. They have gone from zero properties to 88 ,000 or so properties in a matter of eight years. They have become one of the largest single family residence owner, right?

16:39So these kind of opportunities are coming. Obviously, you know, there are multiple types of capital being available for entrepreneurs, whether it is angel or seed, super seed, and then, you know, like various levels of VCs and private equity and all the new ways of crypto and Web3.0 kind of DeFi and so on. These are the new age capital that is being available. Earlier, you had only VC money that was available. Today, the world is awash with capital. All kinds of opportunities are being provided to entrepreneurs who are your listeners. So this is the last topic we'll go over today, but I'm really curious about technology.

17:23How is technology going to keep and continue to change the real estate industry? Yeah, that's a great question. See, technology is moving at a pace that we have never seen in the last 20 years. Every year looks like we are doing some 10 years worth of innovation on every level, whether it is pure technology itself and the innovations around it. Right. So from a pure real estate perspective, what is happening is technology is disrupting at various levels. Let me, you know, like give you some example. For example, if you want to search a property in a given market, identify, how do you do that? AI is, you know, like disrupting all that, you know, earlier, you know, like if you had to analyze 50 properties or 100 properties, etc.

18:13It was a big, massive challenge. We in Realpa, we have analyzed what close to now almost 140 ,000 properties from a short-term rental perspective. So that analysis has been like we are able to do it in such a high speed for the simple reason that we have an AI platform. Right. Similarly, you know, like what is happening is we are also able to bring in global analysts, et cetera, to look at an individual property using, you know, Google Street View and, you know, like images and so on and so forth. So apart from the AI, you can bring human intelligence into, you know, analyzing properties, et cetera, which is helping underwriting those properties in a very easy way.

18:59So, you know, earlier lenders used to, you know, like manually send somebody, manually take a look at the property and so on and so forth. But with the advent of, you know, multiple types of property analysis softwares, you are able to, you know, do those kind of analysis sitting at a desk and doing desktop analysis and so on. Right. After that, it's about how do you finance them? There are multiple ways finance companies are now able to leverage the analysis and the underwriting processes that have come in to finance easily at a lower interest than the earlier days. and finally from a pure short-term rental perspective that is what we are focused on how do you take a property once the property is closed putting it on airbnb and then you know like generating higher revenues and so on and so forth apart from that managing all these property for example we have partnered with vacasa that property partnership is helping us to you know like scale property management in a way which was not possible for a startup like us, right?

20:11And then the maintenance, we have built a software. So those kinds of things are all being disrupted at various levels through the technology. In fact, you know, real estate is going to be, you know, probably one of the industries. If we talk, you know, like, let's say five years from today, every aspect of a real estate transaction would have been touched by technology or completely altered by technology. Fire Nation, technology is moving at such a rapid rate, like Giri said. I mean, you have to keep your finger on the pulse in your specific niche and industry. Giri, take this home for us. What's the one thing that you really want to make sure Fire Nation gets from everything that we talked about here today?

20:50Then give us a call to action on how we can learn more about you, connect with you, anything you have for us, and then we'll say goodbye. What I would like to tell your audience is short-term rental market space is a global phenomena. What started as a bread and breakfast by Airbnb has become a global phenomena, 220 plus countries and regions. That is such a massive 1.2 trillion dollar market and technology is disrupting every angle of it. We in Rialpha, we are addressing certain pieces of that part of the large growing industry. How to reach me, you know, like giri.devenur and you know, like all the social media, that's my social angles.

21:34To invest in Realpha, you will have to go to, you know, invest.realpha.com and that will take you through a broker-dealer managed platform and then you will be able to invest in Realpha as low as$1 ,000 for unaccredited investors. Obviously, there is no limit for accredited investors. Fire Nation, you are the average. Of the five people you spend the most time with, You've been hanging out with GD and JLD today, so keep up the heat. Head over to eofire.com, type Giri in the search bar, that's G-I-R-I, and his show notes page will pop right up. And, Giri, one more time, what's that URL call to action?

22:16Invest.realpha.com Giri, thank you for sharing your truth, your knowledge, your value with Fire Nation today. For that, we salute you, brother, and we'll catch you on the flip side. Thank you very much, John. Hey, Fire Nation. Today's value bomb content was brought to you by Geary. And Fire Nation, are you ready to rock your very own podcast? Well, check out our free podcasting course, where I will teach you how to create and launch your podcast for free. Freepodcastcourse.com. I'll catch you there or I'll catch you on the flip side. Fire Nation, you have a book inside you and it's time to share your message with the world.

22:53that's why I created Author 100 a 100 day program where I will personally guide you one-on-one to create, write, publish and market your book if you want daily guidance and mentorship from me, JLD then head over to author100.com to sign up for a free call with me to chat about the details