george grombacher 0:02
Well, hello, this is George G. And the time is right. welcome today’s guests strong and powerful Daniel Dorper. Daniel, are you ready to do this?
Daniel Dorfman 0:09
I am How you doing?
george grombacher 0:10
I’m doing great, man. Let’s go. Daniel is the co founder of roots, their real estate investment company with a business model that creates wealth for its investors, and property residents simultaneously. Daniel, tell us a little about your personal life’s more about your work, why you do what you do?
Daniel Dorfman 0:29
Yeah, so personally, I’m a father of two, I have a three year old and a six year old at home. And that’s crazy within itself. And,
you know, when we had our first kid, I’ll just kind of jump back into how we started, this career won’t get back past this career. And so we had our first kid and my wife and I were both working separate jobs. And
we decided, you know, we want to work together. And we want to build something for the family and build something where, you know, where if we’re working 80 to 100 hours a week, we’re doing it together, and my bad days and your bad days, and all that good stuff. So,
you know, we started our residential business, in real estate at that point, 2017. And grew it and along the way, continue to buy properties and kind of, you know, invest on our own. And when you do this for long enough, you kind of recognize,
you know, there is a pretty big moat around real estate, and meaning, it’s challenging for renters to go to owning, and it’s becoming more challenging for that. And then you realize, it’s even more challenging to go from owning your first home, to owning your first investment home. And there are a lot of restrictions around that you need 20% down, you need to, you know, find the good asset that, you know, produces cash flow and all those things. And what you what the end result has ended up being is everyone, I don’t have never spoken to someone who doesn’t believe real estate’s a great way to create long term wealth for their family. The problem is about 45% of the land is owned by about 10% of the public. And so when we kind of started looking at this and exploring ways for everyone to be able to partake in this asset class, we found that there wasn’t really a great option in terms of somewhere that let you get in for a low minimum, and let you really experience the growth of real estate. There are tons of REITs out there. But public REITs trade, like the stock market, not like real estate, and they also come with quite a few fees and things stacked on them. And so most of the private offerings are only to accredited investors, therefore, again, only the top 10%. And so what we wanted to strive to do was create an investment vehicle where anyone, absolutely anyone can invest in real estate and get started on their journey for $100. And do it at their time and at their cadence, right. Something amazing has happened, whether we like these platforms or not, and we can go into that later. But you know, with the Robin Hood and acorns and all of these different platforms that let you invest at your own time and let you kind of come in incrementally, and be your Be your own person and get in the game. That part of it’s amazing right? Now, whether we should be educating a little bit further about these stocks and about these different things before making those decisions, maybe. But the idea of someone being able to start their journey and be able to just get in the game is something we were excited about. And we wanted to make that possible in the real estate side of things.
george grombacher 4:11
Whether it’s awesome. Like, it’s, it’s super compelling and good. Good on you guys for doing it. The actual moving parts of making real what you sort of mapped out and sort of imagined how was that?
Daniel Dorfman 4:31
Yes, so we have been literally have launched the Fund for 18 months now. And last week we hit $10 million invested into the fund. So we’re pretty excited about that. And one key component which you did mention in the intro, which I didn’t get to was we are passionate about everyone building wealth and that includes the residents who live with us and to kind of pull back The curtain a little bit on what you know, the average resident looks like average renter in the United States, they have less than $1,000 in savings, they usually are bringing home at least in Georgia between 55 and 60,000 a year by that for their household. And by the time you get done with rent, and all the things that you have to pay for in your day to day, you’re looking at around $82 of discretionary or saving saveable income at the end of the month. And that’s a challenge, right? That’s, that’s tough. And so what we kind of came up with was all right, these folks are in our properties. And in our experience with property management, and with selling properties, it’s really not the property itself, that determines your profit on a year to year basis, it’s the person right, it’s that person paying rent, it’s the person paying on time taking care of the place when they leave. And that relationship is what drives profitability for everyone. And so we figured, all right, let’s create a model where our residents from day one, are invested in the Fund and invested in the property live in one. And then let’s create something that says, hey, you know, you’ve done awesome, you’ve paid your rent on time, you’ve taken care of the property. And we’d make, we haven’t do a little video each quarter. And if you do that, we’re going to actually toss another 150 bucks in your wealth building account in your investment. So just for living with us, and just for paying your rent on time, our average residents going to be able to make another $600 on their original security deposit or their original wealth building deposit. And so for us, the last 18 months has really been about, can we prove out that our residents want to be engaged, and that they want to be participants in this program. And so far, it’s worked great. We’ve got over, I think we’re at 110 residents at this point. And of those folks, almost 80% of them have gotten their full rebate on all the videos, and our investors are excited about it as well, because our investors are making great returns our first 18 months, our total returns over 24%. And we’re excited about that.
george grombacher 7:33
Good reason, I think that’s super exciting. And anybody who’s ever worked with a group of people recognizes that people support what they helped to create. So get in engaged by tenant resident incentivizing them financially to do the things you’ve just described, makes all the sense of the world, and that you have an 80% opt in or take up rate, whatever the term that you want to use is, I think, is pretty incredible.
Daniel Dorfman 8:05
Yeah, it’s, it’s been really, you know, I’ll be the first to admit, we got into this, because we wanted to help kind of everybody build wealth, and we thought it was a great vehicle. But now we’re, it’s so it’s so amazing to watch the residents response, when you’re giving someone who’s probably, you know, in a lot of cases, never owned real estate, or even fathom investing in real estate, the opportunity to be involved and to get that, you know, wealth that they can pass down to their kids or, you know, continue to invest with us after they leave all that good stuff. And we’re really excited. You know, we are obviously still young as a company, but you know, we are moving forward and really thrilled about where we’re at today.
george grombacher 8:54
Yeah. So they have the ability to get a rebate of $150 each quarter, so $600 a year, and they can get that returned in cash and or future rent payments or money that can actually be invested into the fund.
Daniel Dorfman 9:15
Yeah, great question. So when they move in, there’s two options one is, so one cat, one big thing is we don’t take security deposit rooms. We allow that money to be their first investment, or to be just held on the side for them if they do not want to participate in the investment. But most people, I think 90, we have a 98% of them, like to the idea of building wealth and investing side by side. And so the $1,000 Let’s call it that when you move in, goes into the fund that gets put in it is secured against the value or the condition of the property and the entire time you’re living with us that’s going to keep continuing to build wealth just like any of our investors So they’ve made the 24% the same way that everybody else has. And, you know, each quarter, the 150 comes, dropped into the investment for you, every time and the unique thing that we’ve been able to do is it’s a rebate of their rent. So they don’t have a taxable event for the 150. And, of course, they do have some tax implications, obviously, for the money they’ve made. But we try to keep it as low of a tax event as possible. And so, yeah, when they move out, you know, they, in a lot of cases, and just a few, you know, people we’ve had move out of the program, they’re doubling their deposit, you know, within the first year or so. And it’s, it’s pretty cool to watch people leave a rental, renting spot, and CO with more money than they they had, it just doesn’t happen. So
george grombacher 10:52
yeah, I think that’s awesome. All right. How is that conversation at? When, when you’re having that initial? I’m looking for a place to live? And you’re screening them for, for them potentially moved into your property? How do you bring that up? How does that conversation go?
Daniel Dorfman 11:11
Yeah, so, you know, the Atlanta rental market is pretty hot. It has been I think Phoenix is the same way. And so we’ve been in a fortunate position of really being able to vet residents pretty heavily for not like the normal stuff. I mean, we do check, obviously, background security, all that. But we are really asking, like within the first phone call, like Hey, George, you know, our program is a little bit different. We think a little differently here. And some people like it, some people don’t. Would you like the opportunity to build wealth while you rent in? And most people are like, what, what are you talking about? You know, and I’ll be real and saying that. It’s, it takes a quarter for us to even develop trust, right, most folks have been renting from I’m not gonna call them bad landlords, I’m gonna call them. You know, I don’t know, capitalists, I don’t know what they call them. But the traditional externship has been? Yeah, traditional. And the relationship hasn’t been great, right? Like, most people have a bad printing experience. I don’t know, if you do, I certainly do. And most people have one and at least one. And a lot of people have many. And so going into our, you know, trust building phase one, I’ll call it, a lot of people like, Yeah, whatever, if, you know, if you build wealth, great, but I believe it when I see it, and you know, it takes some time, a quarter, six months, but at the six month range, if you’ve gotten both rebates, it’s just like a switch hits. And you’re, you know, everybody’s on the same page, we’re super excited to partner with each other, we’re getting, you know, we’re getting calls all the time talking about, you know, hey, I just changed the toilet coat, like the chain, don’t worry about it, I’ve switched the oven light. And those are calls, you usually have to send, you know, a to $150 handyman to write, like, sure, and we don’t ask people to do work on the houses, because that’s how we want, but the little things, it’s really awesome. You know, whenever they send us a note and say, Hey, I got the hedges this week, like, don’t worry about sending anybody, right. And that’s, that’s cool. And so, we’re starting to see how that relationship and you know, when you do get the trust, and when you do build, you know, a true partnership with the person living the property, how it really unfolds.
george grombacher 13:39
I love it. It’s super exciting. You mentioned earlier that you can get started with $100. What is that?
Daniel Dorfman 13:47
Yeah, so um, we on through our platform, we’ve got a, we’ve built out our own service, and it’s just straight through the website. And basically, anyone can go in and invest $100, if they wanted to, in real estate, we have the ability to do recurring investment, if you want to kind of cost average it. That’s a really popular model. For folks who are just, you know, looking to put something away each month, I haven’t set up for my both my kids at this point where, you know, 100 bucks goes in for them. And, you know, I’m looking at it as that’s an exciting thing to give them when they’re 18. Right. Like, that’s a very, hopefully a large sum of money at that point. And not effortless, obviously, we have to make the calf capital to do it, but it is, you know, kind of taken out of our before we see it. So it’s kind of
george grombacher 14:40
I think it’s great. So that money is going into the fund, which which you mentioned you pass the $10 million number. And so it’s an opportunity for people to invest with you as you’re going out and creating new opportunities for just just buy additional properties.
Daniel Dorfman 14:59
Right yeah. So, you know, basically what you’re investing in is you get units and our REIT and our REITs setup very differently than most, we wanted to make sure that it mimicked home ownership and home investing as much as possible. So, couple key points, again, $100 minimum, which is a little, which is lower than most, there’s no carry fees or entry fees into the REIT. And there’s no exit fees after after a year. So it’s very friendly, I would say in terms of like, Ambassador dollars, and yeah.
george grombacher 15:42
I think I think that that’s awesome. And I think it’s exciting that you had the vision of what you wanted to bring into the world, and you saw some of the existing problems. And he said, you know, what, I think that there’s a way to do it better. And, and, and it sounds like it’s working. So obviously, you’re still struggling, I’m sure and working your butt off and experience frustrations of being an entrepreneur and doing all the due diligence and compliance and all that stuff. But you’re happy so far.
Daniel Dorfman 16:13
Yeah, you know, it’s a, it’s very fulfilling, we, it’s, it’s hard work, you know, changing them, creating a model out of where it didn’t really exist is hard work. And then also, you know, trying to scale it and do things that every business has to go through, you know, you go uphill, and then you go downhill a little bit, two steps, you know, three steps forward, one step back. And you kind of just have to keep keep on truckin and making, you know, fixing things along the way. And so, luckily, our core team is full of entrepreneurs who have been very have varied experiences, but have, in the end been very successful. So, hopefully, we can take those lessons and not make as many errors as we go.
george grombacher 17:05
Yeah. I appreciate that. Daniel, thank you so much for coming on. Where can people learn more about you and routes? And how can they engage?
Daniel Dorfman 17:14
Yeah. So if you’re interested, I was checkout at invest with routes.com. Lots of information on the program and great stats on you know, different invest on what the investment looks like, and also about the impact that it’s making on the world. And we’d love to chat with you. I’m, I’m available always through that website. So nine times out of 10. You hit that chat bot? It’s me. Yeah, let’s schedule a meeting. And I’d be excited to have anybody join our community.
george grombacher 17:47
Excellent. Well, if you enjoyed budgets, I did show Daniel your appreciation and share today’s show with a friend who also appreciates good ideas, go to invest with roots.com and check out everything that we’ve been talking about and find out if the opportunity, the right opportunity for you to invest as well. Thanks. Good, Daniel. Awesome. Thanks. Sure. And until next time, remember, do your part by doing your best
Transcribed by https://otter.ai