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Adam Conner (00:09):

Today on The Future of Fandom, we make ourselves at home or at least make a portfolio of them. My name’s Adam Conner. I’m your host. And in this episode, we rent some time with Roofstock and their Chief Marketing Officer, Suresh Srinivasan. In a world where job and city hopping alike is often met with better opportunity, so too has buying a home lost a fraction of its luster. Today, we talk about the rise of home investorship as a proxy for ownership, especially among the newest generations in the workforce and what that means for the need to build best in class digital experiences to make the process more accessible and foster a neighborhood of happy homeowners from afar. So, let’s open the door on this topic and predict the future with Roofstock and Suresh Srinivasan. Suresh, how are you? Thanks for joining me.

Suresh Srinivasan (01:01):

Thanks, Adam. Good to be here.

Adam Conner (01:03):

I’m interested in learning about this world of real estate investing just because I feel I’m probably in your target audience, if nothing else. And then of course, because I’m in that target audience, I’m curious to learn how you’re building that community. But before we get into any of that, let me begin with the simple question which is what’s Roofstock, if you could, for the listener that may not know?

Suresh Srinivasan (01:29):

Yeah, just really quickly. So, Roofstock is a digital platform for investing in the $4 trillion single family rental home market. Using Roofstock, an investor could buy, sell, or optimize an investment portfolio comprised of properties that could be anywhere across the US.

Adam Conner (01:47):

Okay. So if I don’t own a home today, this is a way in which I can still be investing in single family homes, multi-family homes in a diversified manner basically, right?

Suresh Srinivasan (02:00):

Yeah, that’s exactly right. So with Roofstock and our focus today, Adam, is primarily single family rental homes. So we do have smaller multifamily, so two to four units, but it’s primarily the $4 trillion single family rental home market which has largely been… Up until the last decade or so, it’s been very hard for folks to access anywhere outside of their local geographic region. And so, I would say that Roofstock’s unique innovation is that we break down the geographic barriers to investing. So if you happen to live in New York City, you could easily be investing in Indianapolis or Orlando almost as easy as you could within the New York City area.

Adam Conner (02:42):

And hey, I mean, if you don’t live there, the that’s a nice way to do it because-

Suresh Srinivasan (02:46):

Right.

Adam Conner (02:46):

The first thing I think about when I’m not as sophisticated as to say, invest in a home yet, but certainly to buy one, I got to be there. I got to see it. And in this case, if it’s an investment, obviously, you don’t see a stock. Sure, you see a company operate, but this is an interesting way to get in there. Are you seeing by the way… And we’ll talk about sort of how the audience has been built in the growth they’re in. Have you been seeing that the folks who have been joining Roofstock’s portfolios and investing, do most of them own homes already? Or are you seeing that some folks are even taking the plunge for first timers and saying, “Well, I’m going to invest in some markets first before I buy?” Because maybe, they’re renters themselves.

Suresh Srinivasan (03:28):

Yeah, you know what? So, here’s what’s really interesting. When we think about individual investors who are using our platform, more than 80% are under 44, more than half are under 35 years old, and 75% of them are first time real estate investors. And the reason I say this is that when you sort of look at demographic trends, one thing that’s really striking is that you look at home ownership stats at large. Millennial home ownership rates are well below prior generations when they were in this same age range. So for example, millennials are in the 50% home ownership range, whereas prior generations were in the mid to high 60% range.

Suresh Srinivasan (04:08):

And so, one thing that we’re finding with Roofstock and our investors who are coming onto the platform is that, there’s a strong priority that’s being placed on financial independence. And so, what they’re doing is saying, “Hey, if I have spare cash to invest, I’m not going to go lock it up in a down payment necessarily on a home to live in.” What they’re saying is, “Could I put the cash to work to build up passive income streams so that I can break free from my nine to five job, if you will?”

Adam Conner (04:34):

Right.

Suresh Srinivasan (04:35):

Yeah. So, we’re absolutely seeing that people are choosing to rent where they live and then buying through the platform for investment purposes.

Adam Conner (04:45):

Well, I can totally understand not being in a home and sticking money into it and this is my personal experience just because I haven’t. Also, I’ve recently moved. And I think that, that sort of transient nature of the newest workforce who are craving flexibility, who are going and pursuing job opportunities maybe in different geographies, because whether it’s chasing a new opportunity, a new leadership position, or chasing a bigger bag, they are going for cash first, and then building equity in this way second, and using the cash to do that. I have not figured out exactly why that’s the case other than jobs, except I’m thinking maybe the rising prices of homes. But that probably is also a reason why you would want to invest rather than to buy. So when it comes to home ownership, and then let’s say, investorship, you’ve been on this ship since 2017 with Roofstock specifically. A lot has changed, a lot has happened even recently there. I’m curious since you’ll have seen this for the last five-ish years, what’s changed the most even in that time about home ownership and its relative weight compared to investorship?

Suresh Srinivasan (06:02):

Yeah, you know what’s interesting? So, I’ve been in real estate tech for over a decade now. I would say up until a decade ago, there wasn’t much innovation. So there was no software, no tech really entering real estate. And prop tech as a category has really emerged over this last decade. And so, I would say that the biggest thing that we’re seeing is that it was pretty hard to access this market. When you think about real estate investing, it was mostly people buying and selling locally. And so, the old adage is that a real estate investor is generally buying an hour driving distance from where they live and that’s no longer the case. And so, we’re seeing this really pronounced, accelerated shift toward remote investing. And there’s just a ton more activity around single family rental properties.

Suresh Srinivasan (06:49):

And I think COVID has sort of accelerated this trend.

“[Since COVID] people have gotten more comfortable buying and selling homes hundreds of miles from where they live. Even if you were to go look at open houses, right? Everyone was on lockdown. And so, you’d have to depend on photographs and virtual tours and all of that stuff. And Roofstock started doing this in 2015 when we launched our platform so that you could go shopping on our online platform, look at the photos, look at inspection reports, look at all the underwriting and data that we provide you on the property, and make a decision without actually ever having visited the property itself.”

— Suresh Srinivasan (6:51)

Suresh Srinivasan (7:16):

The other interesting thing about COVID is that it sort of accentuated how resilient the single family rental asset class is and I think we’ve seen a heightened interest because of it.

Suresh Srinivasan (07:37):

And so, what I mean by this is that people’s preferences for where they live ended up shifting more to suburbs where there’s a little bit more space. If you have children, you’re doing Zoom schooling, and so you have a need for more bedrooms. And so, people were starting to move from sort of urban core out to the suburbs and this led to significant demand for single family rental homes. And so, you combine all of these things and all of a sudden, we’re starting to see more and more folks not only look at the asset class as a place to invest and to have sort of durable yield, if you will, but also, you’ve seen sort of the renter generation desiring this asset class more so then they would tall, large, multi-family type buildings.

Adam Conner (08:27):

Obviously, yes, COVID moved forward a bunch of trends not only digitally, but in terms of where people live. And you had, at least for a spell, mass exodus from urban centres into suburbs and things like that. Cost of living goes down. That’s really nice. These big organizations now, some of them have said, “Well, we’re going to keep that remote work intact where you can do it,” but some are calling folks back. I’m curious the extent to which you believe that, that shift from urban to suburban will be maintained in the long term and what the behavior will be once return to work becomes more popular and once, shall we say, investors on the other side of real estate commercial start to realize that they need people in their offices to make good on their investments. What do you think will happen there?

Suresh Srinivasan (09:23):

Yeah, very interesting question and we’re of course monitoring this pretty closely. My personal opinion is as it relates to work, I think we’re going to be in sort of this hybrid environment. It’s funny. You look at LinkedIn or whatever and some companies are calling for a return to the office and other people will call them out and say, “Well, that’s going to be my new employee I’m going to go hunt. I’m going to go recruit at the company.”

Adam Conner (09:47):

Oh, did you see that post? I saw a post just like that which is, “It’s never been easier. As soon as you see somebody says return to work and just write those…” Yeah.

Suresh Srinivasan (09:54):

That’s what I saw.

Adam Conner (09:55):

Yeah.

[crosstalk 00:09:56].

Suresh Srinivasan (09:56):

That’s insane. Yeah, so I think what’s going to happen, Adam, is that we’re going to have this hybrid environment, certainly for younger folks who are just joining the workforce. I think they’re sort of at a relative disadvantage if they’re not in person and gaining mentorship and learning. There’s just so much that happens in person that’s really hard to replicate through Zoom or through a series of coordinated phone calls. And so, could be couple days a week, could be people fly in once a month or something and stay for a week and a half, or something like that. But I think you’re going to see this hybrid environment. And so, what will that do for housing? I think you’re going to see that this desire for flexibility continues and I think companies are going to have to accommodate because it’s essentially a war for the best talent. And if that desire for flexibility and freedom continues, then companies will essentially have to accommodate.

Adam Conner (10:51):

Right. Eventually, they’ll have to meet their people where they’re at, so to speak.

Suresh Srinivasan (10:57):

Yeah.

Adam Conner (10:57):

Let me ask then about these folks who are… No matter where they’re working, they are investing in buying real estate in not necessarily different, but just new ways, maybe because they’re being educated for the first time. Now, you’ve said that the majority of the folks that are part of the community at Roofstock in terms of who are investing are… I believe you said, “Over half are below the age of 35.” I want to make sure I have that right. Is that right?

Suresh Srinivasan (11:22):

That’s right, yep.

Adam Conner (11:22):

Got it. I’m sure just as you’ve been following this area very closely, you’ve also been doing a bunch of research as to why these members of the youngest generations are investing in this way. Why are they doing it? I mean, do you ask them?

Suresh Srinivasan (11:35):

Yeah, we do.

Suresh Srinivasan (12:16):

And so, Roofstock happened to meet them exactly there which is a simplified digital storefront and tools. We’ve got a platform called Stessa which is… You can almost think of it a little bit like a credit karma for someone’s investment property portfolio, where you can use an app which then helps you optimize your portfolio to increase your returns over time. So, we’ve packaged up everything that we do in a more digital, consumer friendly way. And I think this is why people have a preference toward using Roofstock versus their analog ways going about investing.

Adam Conner (12:55):

Yeah, let’s get into that a little bit because of course, as CMO, you’re the steward of the brand. And so, what are some of the things that make up for that current digital experience which is keeping people excited, engaged, investing, keeping their wallets open? What are the things that you focus on the most to ensure that this digital first wealth of buyers and investors are satisfied with the experience just as much as they are with the product?

Suresh Srinivasan (13:24):

Yeah. I mean, look, it cuts across everything. So with Roofstock, it’s not just about the buying and selling, but it’s also about the owning experience. And so, just in this last year, we ended up buying two companies. One was a full service property management firm called Great Jones. And Great Jones is again, it’s furthering our mission to separate the ownership from the investment management, if you will. And so, Great Jones, being full service property management across all of our market, makes it so much easier that you could buy investment properties much like you’re picking stock. The second acquisition was Stessa we were just talking about. And Stessa is a little bit more for the DIY-er.

Suresh Srinivasan (14:09):

Maybe, someone who is on Robinhood or other investing apps and prefer to sort of monitor their investments in real time and make their own decisions, Stessa enables them. And so with Stessa, we see that there’s over a billion in properties being added to the platform monthly and being tracked through platform. So, there’s a massive acceleration of adoption of this platform as well. So, I think what Roofstock does really well is we take all of these services that have historically been done through people and we are digitizing them and providing sort of a best in class user experience that’s through our website, through these series of apps, and then using humans in the loop whenever it makes sense. So for example, with full service property management, sometimes you want to just talk to somebody and find out what’s happening. And so, we’re there for you.

Adam Conner (15:02):

There is always going to be, at least in my opinion, that element of having the human touch because well, folks have just been used to that. You buy a house. What happens? We go and see a real estate agent. But then, there’s the other side of course, which you mentioned upfront, the Robinhoods of the world have certainly upgraded and updated that experience to, “Oh, here’s the ticker. I’m going to buy it.” And that’s it. In this particular class of assets, I do think that you are on the right track, that the best in class experience will have some elements of both for now and going forward. I want to talk to going forward here in the next section of this conversation, because well, to speak to the title of this show, I want to know what you think the future of this will be.

Adam Conner (15:48):

And I should note here that others are interested in that as well. Anybody who’s listening to this, if you’re listening to this close to the day that it launches, can go to Roofstock’s website, roofstock.com. And the first thing that you see across the top is unicorn sighting announcing our series E. And a series E, E for enormous, $240 million coming in the door from people who also want to see this succeed and have an eye on the future. Could we talk a little bit about that next generation of growth, but more importantly at least to this show, what it means for what that bet on the future is? What it looks like? Can we talk about that?

Suresh Srinivasan (16:29):

Yeah, let’s do it.

“So, what’s the future of real estate ownership? We’re in the middle of, I think, a movement that’s probably decades in the making. The way I sort of think about this is that we’re in the midst of a redefining of what home ownership actually means. And I think you touched on it earlier, Adam. It was thinking about it more so like investorship. And what we’ve seen is that younger generations are placing priority on achieving financial freedom and maintaining flexibility. Investing in rental properties satisfies this desire more so than buying a home to just go live in.”

 — Suresh Srinivasan (16:30)

Suresh Srinivasan (17:09):

I think this is one of the reasons that our investors in the series E financing round, what they find interesting about Roofstock and sort of why we’re positioned to, I think, make a dent in this market or at least accelerate this shift is that with Roofstock, through this digital storefront, you can buy an entire home or even fractional shares of homes and build a portfolio much like you build a portfolio of stock. And again, going back to this notion of separating investing from operating the assets, now if you could do this in a super simple way through a digital app, all of a sudden, you could have exposure to real estate across five different geographies and have a small portfolio build all for probably less than the price of a down payment on a home to go live in. And so, I think this is where we’re heading. So I think the future of real estate ownership is all about just bringing in radical accessibility, making everything super cost effective and simple.

Adam Conner (18:10):

I’m curious as somebody who may jump into real estate investing in this way, but who eventually will also buy a home. First, to that accessibility, you had mentioned earlier that currently you are able to… If you wanted to even though you don’t live there, you can invest in communities in India I think you said. You said Orlando and things like that. Have to mention that those are in the US. Any plans to go global there too? Because I know that real estate has to be heating up. Obviously, it’s heating up in the US, but this is a much bigger opportunity. At least as that series E would suggest that beyond the US’ borders, this is an enormous opportunity.

Suresh Srinivasan (18:49):

There’s been a lot of interest from parties asking Roofstock to go global. But the market here, Adam, is huge, right? It’s a $4 trillion asset class. Today, if you just look at the market for single family rentals, it’s roughly 10 million owners of 17-ish million single family rental homes. And the market is getting bigger. What’s really exciting about Roofstock is that we’re making the market accessible to more people. So instead of just 10 million owners in the next decade, we could see it be 20 million owners. And so, the market is literally expanding. And so, while there’s a desire and an appetite to go international, I think we’ve got our work cut out for us here just domestically.

Adam Conner (19:30):

Well, fair enough. That’s a big pie to take a slice out of and maybe down the road, we’ll see that, that’ll be your series G for global

[crosstalk 00:19:39]

Suresh Srinivasan (19:39):

Probably.

Adam Conner (19:43):

As we begin to round out here, I’ll continue to speculate with you a little bit. The future of course of real estate investing, as you’ve noted, is this sort of hybrid human touch with a digital experience more accessible than ever before. Maybe, you could help me fill out a couple of blanks and we’ll start with one that says, “The future savvy real estate investor does blank or blanks.” What does that blank look like at least as far as the ideal vision from your perspective at Roofstock? How does that fill in that blank?

Adam Conner (21:01):

Mm-hmm (affirmative), okay. Then how about this for another one just because I’m curious about this next blank? “I can tell you for sure that the future of real estate investment will not include blank.”

“I think the future of real estate investment will not include cumbersome loans, middlemen in the process who are extracting significant fees. I think there’s a potential where tokenization and putting information on the blockchain can make the transfer of assets a lot easier and again eradicating fees. So I think the future of real estate investing is all about a simpler way to gain access, more transparency around information, and much lower fees all around. I think it looks a lot more akin to stock investing than it does buying traditional real estate.”

— Suresh Srinivasan (21:15)

Adam Conner (21:55):

And this last one is probably a bit weighted of a question, but I’ll say it. Do you think that in the future, more people will buy a home first or invest in a home first?

Suresh Srinivasan (22:08):

My personal opinion is I think people are going to invest in a home first.

Adam Conner (22:12):

Can’t wait to see how that plays out. At least for me, I think I’m playing into that exact prediction. But there’s plenty more just like me who are possibly listening into this just to learn more. And I appreciate you sharing more with me right here and speculating a little bit on the future real estate investment. It’s a very interesting space place whether that be the industry in general or Roofstock growing again. Congrats on that massive round and best of luck on your continued growth trajectory. But for this today, Suresh, I really appreciate you joining me. Thanks so much.

Suresh Srinivasan (22:45):

Thanks, Adam.

Adam Conner (22:48):

Thanks again to Suresh Srinivasan from Roofstock for joining us. And I agree. I think the future will see a majority of folks becoming home investors before they become home owners. And thanks to you, the listener of course, for exploring The Future of Fandom with us. I’d encourage you to stay connected even after you move out of here. So subscribe to us wherever you listen to podcasts, and you can also find all of our content at livelike.com and on social media, LinkedIn @LiveLike, and Twitter @LiveLikeInc. I look forward to predicting the future again with you real soon. And until then, I’m Adam Conner saying, “So long, and thanks for being a fan.”