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In this episode, we interview Roofstock's Director of Asset Management, Caroline Parker, about her diverse career path and the what she has learned about real estate along the way. --- Transcript    Tom: Greetings, and welcome to the remote real estate investor. I'm joined in this interview with,   Michael: Michael Albaum.   Tom: On this episode, we have Caroline Parker, who is the director of asset management Roofstock. And with Carolina, we're gonna be talking about asset management. What is it, we're also going to spend quite a bit of time going through Caroline's history and her all the different jobs that she's had super interesting working at student housing, working at big asset management companies working at John Burns. So let's get into it. Caroline Parker, welcome to the show. Thank you so much for joining us.   Caroline: Nice to be here. Thanks for having me.   Tom: So we before we get into the meat of discussion, let's go ahead and talk about your background. We've had john burns on the episode on the show before we've you know, touched on some other places in your history. So why don't you take us back from the beginning?   Caroline Okay, great. Well, I have a bit of a unique background. I started in banking for four and a half years in Charlotte, North Carolina. I was an analyst in the investment banking division at Wachovia when it became insolvent. Then I worked through the merger with Wells Fargo, and eventually made my foray into real estate by joining Greystar Real Estate partners at their headquarters in Charleston, South Carolina, they're already became an asset manager and REO portfolio, and eventually moved into a unique role where I got to support the C suite, helping them with projects and being their ears and eyes of the organization and getting to participate in the things like investment committee and executive.   Tom: So that was the heat of everything. Right, right in 2009, as a Wachovia got purchased, am I going back in time and thinking of that correctly?   Caroline: Yeah. Yeah. The big downturn, so it was a crazy time to be in banking analyst, so I got to watch everything feel relatively less impacted in some of my work senior colleagues.   Tom: Awesome. Cool. So you merge into this new position supporting the C suite?   Caroline: Yeah. So that's where I really got to learn the housing industry. From a very high level strategic standpoint, I really understand, you know, the different facets of real estate or multifamily world from development and acquisitions to property manage. And so it was a really amazing experience. And I fell in love with, with rental and investment in the housing industry from that point on. So from there, I moved out to California for personal reasons. And I thought, well, how am I going to combine my experience from with greystar Real Estate partners and banking, I thought, Hey, I'll go into multifamily capital.   So from there, I was helping underwrite loans, multi, like from Fannie and Freddie to on balance sheet loans. And I really learned how to pick out outliers, how to ask critical questions about you know, asset performance, but what I really wanted to know and what's really driving those numbers, you know, how to, how do you really ask critical questions? And how do you really ascertain what is a good investment and what not. So from there, I knew that I needed to go back to the owner operator side.   So I decided to join the Irvine company and their apartments division, and I joined their new asset management team, they hired a whole new team of people to come in and really dive into their database and kind of change the way that division with making decisions truly using data collectively across all the cross functional silos and the division. So that was a really exciting experience where I really got my arms around operation, and how do those decisions each individual decision made on site? How does it really change the financial performance of the asset? So we started from the ground up and really analyzing data quality, putting in controls, and then from there creating new tools so that our counterparts can help make district strategic decision.   Michael: That is so great.   Tom: To paraphrase a little is you within that multifamily team, you basically were looking at all the data coming in from operations, analyzing that data and going back to them saying like, Hey, we're spending most of our money on XYZ, we should be doing this because it's is that it's sort of a rough synthesis of that role or filling in whatever gaps or whatever place I'm missing,   Caroline: I would say it absolutely includes looking at where we're spending the money most frequently, but also a strategic decision that happened on site from pricing. You were helping create an in house proprietary pricing model akin to other multifamily operators are using but but based on the airline model, where you're constantly analyzing supply and demand. The unique aspect to the Irvine company is they have a highly concentrated high quality portfolio. So to use an out of the box solution would be cannibalistic. And you would incrementally like drive prices up or down depending upon you know what your competitors are in your market which are all your property.   So we were building one in house for example, or we were helping team make strategic decisions on allowing people to stay longer and their leave for asking them to move out early? Or maybe how can we make a turn more efficient so that we minimize the number of days that the property or the unit is vacant, things like that anything that can impact financial performance, which is everything we were getting under the hood on and having an opinion.   Michael: Awesome. So as a multifamily guy myself, I'm curious to know, what were some of the biggest drivers of the financial performance that you were seeing?   Caroline: I would say by and large, occupancy is the biggest driver of financial performance, you could raise your rent all day long. But if it takes you a home, but to to get a new tenant, then you essentially washed any returns that you would have gained from the incremental increase. So we were always scrutinizing How can we save a day here? How can we save a day there? Is it marketing a property before it's actually vacant and ready to be leased? Or is it using different channels? Is that targeting different people? You know, we're always just looking for ways to get that incremental dig occupancy, just one extra day of revenue.   Michael: Yeah, makes total sense. As a total aside, the last company I worked for was a commercial property insurance we used to insure the Irvine company.   Caroline: Oh, cool. And so I visited tons of their campuses up in the northern California area, and I was always blown away. It's like a resort. Like all their properties, like resort style living,   Caroline: They are really beautiful. And Irvine company is very unique in the way that they care desperately about the aesthetic properties,   Tom: Probably funny you in a position thinking of like, wow, how do we optimize the financials, when we're building a four seasons that you can just nod you don't have to? Okay, so you worked at the Irvine company, building those muscles and optimizing, you know, financial properties. What's next after the Irvine company?   Caroline: Then after the Irvine company, I did join john Byrne's real estate consulting, I got to work very closely with john. And it was an amazing opportunity to get a macroeconomic perspective of the housing industry and all the different players and what keeps them up at night. So, you know, coming from being an asset manager, the Irvine company that's very in the weeds on day to day operations and execution, how that drives financial performance to going to like a very, very high level overview of, you know, demographic shifts and supply and demand. And, you know, where are people building? Where's their shortage? And how much can we get what technologies positioned to disrupt the industry. So it was fascinating. And frankly, that was where I got, you know, my first in depth look at single family rentals is a new asset class.   Tom: So what a different experience from kind of being in the weeds to going way up top did your experience of being in the weeds, like help out from looking at this macro view? And I'd love to hear about it kind of changed your opinion on stuff? And if it did, and it just generally.   Caroline: I absolutely think though, I think that, you know, real estate, in general, as an industry or a sector probably is one of the laggards of adopting technology. And that probably due to a lot of different reasons, but one of it being that, you know, there are a lot of individual investors, and anybody can do it. But one thing that I really took away that I didn't have a full appreciation for was housing, and so driven by demographics moreso, than the economic cycle. And I don't think people really talk about that enough. People are always going to need housing, and our population is consistently and constantly growing. The big things that are changing is, you know, what are the biggest cohorts within the population that are driving demand? And what do they want?   Michael: Interesting.   Tom: Can you give any, like specific examples, I'd love to kind of take that a level a layer in?   Caroline: Well, for example, a lot of millennials, people like to talk about a millennial, you know, they're kind of turning old values upside down, maybe they decided that they don't want to earn home anymore, because they don't want the responsibility. Or maybe they just can't afford it. Because frankly, affordability has never been higher, more difficult. So now there's this whole new demographic that's out there, and they want our single family rental home. And you know, maybe they want space, maybe in their, you know, young professional years, they're choosing to live in an urban environment, and they're prioritizing lifestyle. But as they grow into different life stages, they're deciding that, you know, maybe I need more space, or maybe I'm ready to have a family.   Of course, there's the timing of those life choices can change. And a lot of times it's driven by, you know, financial factors and their ability to afford a family or pay off student loans. But all of these decisions are unique to people's age. But yeah, so all of these decisions that each cohort making, it's very much unique to their age group. So even thinking about generations in terms of millennials, which is often you know, 20, 30 years segments, it's more ideal to think about them, smaller cohorts, they all behave differently   Tom: Within these different kind of roles that you've worked in. Are you following pretty closely on like, where younger demographics are moving? I'd love to just get, this kind of rubber hits the road with regards to kind of execution?   Caroline: I don't know. Yeah, yeah. I don't think very broadly. But I would say in general, there is a trend to go to these more lifestyle oriented things. Cities, they're not necessarily the mega cities like New York or San Francisco, which people still go to because the professional opportunities are very superior. But a lot of people are seeking opportunities to live in mid sized cities that have more quality of life and maybe access to more activities. You know, we're outdoorsy type of places.   Michael: Tom's trying to pump you for information, Carolina, figure out where you should invest next.   Tom: Exactly. So working with John Burns, what's after that step in step in a career?   Caroline: So I went back into the owner operator side of the world, which tends to be my passion. And I joined a student housing company called the Nelson partners. So there, I really got into a subset of rental housing specific to students. And so their primary strategy was buying properties that would house students all across the country. So they had properties that would have, you know, four or five apartments to you know, mega skyscrapers in the heart of, you know, Austin, Texas, on YouTube campus. So it was the common denominator really, when we want to lease to students, and the big sell there is that you can get a higher premium on your rental rates per unit, if you're leasing by the bed student. So that was really where they were targeted.   Michael: Interesting.   Tom: Got it. Wow, in so these were all just big, yeah, much larger properties only, like bigger cities, or like Austin or I don't know…   Caroline: Every university or college is to, you know, like a micro market. So each college or university has their own supply, demand constraints, and also their own culture of, you know, what does students want, you know, what typically happens, they live on campus for two years, and they move off campus, I mean, every university is different. So we would really analyze each opportunity that came up very closely. And specifically to that to that University.   Tom: Were you guys doing land development or acquiring existing buildings.   Caroline: So often we be developing land or acquiring existing properties. And some of them are a trophy asset, meaning, you know, they were the beautiful skyscraper with an infinity pool on the roof, to, you know, something that was more modest, with a much smaller number of units. Michael: So without getting too deep into the weeds on the student housing side of things, I would be curious to know if someone was interested in getting involved with student housing as their investment thesis or strategy. What one or two pieces of advice would you give to them or things to look out for things to be aware of before jumping into that pool?   Caroline: That's a great question. Student Housing can be very rewarding, and it is different than a regular apartment or rental house. So one thing that you just really need to understand is the local market, when do students typically secure their housing for the next year, how walkable is the university campus? What are the expectations there? And do they want to furnished you know, do they want to unfurnished but making sure that you are aligned with a timing of when students typically move in and move out and can work really, really well for because you can line up things very easily and have like a one hit every year and just know that everything's taken care of. But you can also get a premium for this effort. And if you leave by the bed, rather than like a traditional apartment, then you really got a lot of upside.   Michael: Great to know,   Tom: Within student housing is there much like engagement with the University at all with like marketing, I'd be curious to know that type of relationship,   Caroline: There can be sometimes the universities will partner intentionally with third parties to provide student housing because they don't want to, but they know that there's a need. So there's that aspect. But also, you can often partner with the student affairs for the housing department on campus and give them your information. And a lot of times they'll help direct students to your property whenever there's a need or class. So that always happens. So yeah, there's a lot of opportunity to create synergies with universities, and usually they're very receptive.   Tom: Interested in working with student housing versus not I would intuitively think that student housing has maybe a little bit of a higher RaM costs, I don't know just getting lived in a little bit harder than a regular house, I'd love your thoughts on that on a modeling out, looking at costs, and repairs, and maintenance and all that good stuff.   Caroline: That's a good point definitely can be true, you typically wait for paint, and you just plan on painting every time there's a change. But one benefit is that if everybody's moving out at the same time, you can bring in some third party vendors and get everything taken care of at one time, you can get some economies of scale there. You can also charge back a lot. I think usually students know when they've trashed something that they're probably not getting their deposit back. So that helps a little.   Michael: All I'm thinking about during this whole conversation is that movie Animal House. That's what I keep replaying over and over. And I remember Yeah, being a student having huge security deposits to put down for just this reason. That's really interesting.   Caroline: Yeah, for marketing purposes, you can really easily get a student in by giving them a free pizza and getting them to sign a lease or in a traditional apartment. You could give them whole month free or something?   Michael: Right, right, right. That's so good, tacos for everybody.   Caroline: Bring a taco truck!   Tom: Another question I have related to student housing that maybe a little bit like out there left field. So if a student is in the student housing is not being a good resident, would it be common practice or normal to like, reach out to I don't know, like parents or something, or   Michael: Johnny is misbehaving.   Tom: I had a similar experience where and I don't know, maybe it's like playing music too loud or something. And like these, like the apartment owners, like reached out to my parents, it was terrible. Jersey, am I getting picked on? Or is that like, more of a common practice?   Caroline: That's a great question. I'm sure every manager handles that differently. But I imagine that you put fines on something and the parents inappropriately might get involved. If there are too many infractions.   Michael: Get the parents involved.   Tom: It's great if the parents can get the parents involved. Excellent, Caroline. So anything else on your experience, before we move on after working in student housing?   Caroline: I would just say that, in general, there's always a talk about big data and how we think data. And I feel like the industry has really gotten to the point where we really weren't meaningfully using this robust information at our fingertips to drive financial performance. So I would say that would be a theme that has kind of developed over the course of my career.   Tom: Yeah, you know, over the last 10 years or so a lot has been done with regards to technology to support this kind of information and decision making, has that like been meaningfully impactful? And how you've seen technology evolve and being able to utilize it in these different roles?   Caroline: Absolutely. I do think that, but prior to the robust use of data to make decisions, you know, asset managers who are interested in the financial performance of the property would heavily rely on their property management counterparts and ask them questions about different things that may be happening on site. And a lot of times are reliant on the qualitative feedback that you get, or one time anecdotes to explain a, you know, a financial abnormality.   But now, I feel like with the access to the data, this has made the team more collaborative and stronger, because now we're able to create tools and provide more insight and together, use this information as if it was the playbook and come up with a strategy and really ask, you know, consultative questions of each other. What is happening here? And how can we change it? And what do we want to measure? And is that meaningful? And you can also use that to, you know, help coach and train your onsite team and drive incentive.   Tom: That's awesome. Turning it from an art into a science getting data driven. Very cool.   Michael: Caroline, you mentioned working with your property management counterpart. So I would love if you could give us a breakdown of the differences high level and then maybe nitty gritty to about what's a property manager versus an asset manager?   Caroline: That's a great question. And a lot of times, the lines are blurred. So the way I think about it is property management is the team that's often on site, they're responsible for the day to day execution of managing a rental investment property. So they would do things like you know, be on top of property maintenance, collect rent, lease the house, and you know, interact with the residents on a day to day basis, whereas an asset manager is really focused on financial performance of this investment property. So they're really identifying ways to add value on a regular basis and could be, you know, driving rental rates, looking at opportunities, upgrade the unit for additional rent prop, timing, when to sell, or refinance. But really, they're just leveraging their insights and best practices, they have the ability to see a portfolio of assets and really pick out outliers and benchmark against each other and look for opportunities to improve the portfolio as a whole.   Michael: Interesting. So in the single family space, kind of on the retail side, do you think that property managers were more of an asset management hat oftentimes?   Caroline: I would say in the single family rental world, a lot of times, the mom and pop owner and the handful of properties and they're relying on a property manager, the property manager will often be a source for giving them guidance on how much they can charge for rent, you know, where to put their money when it comes to turning the unit? are they putting more money into the floors? Are they returning the houses? So I do you think that the property manager in that world would wear a hat, but I would also suggest that the owner do their own diligence and really ask them challenging questions and make sure that together, they're making the best decision.   Michael: Awesome. And so if we dug deeper, a little bit on that, what questions would you say, are going to be pertinent for owners to ask if their property managers kind of in that department since they've got to be their own asset managers, quote, unquote?   Caroline: Right. I wouldn't just be very active in asking about how they're marketing healthy. You can get a new resident and you know, do they have vendors lined up between residents so that the house is ready for somebody to move in as quickly as possible, just being on top of it. And knowing that you're thinking about these types of things, it's really important, especially to with vendors, if you're hiring a third party to come in and do repairs, or paint, you know, getting more than one bid. So those are probably the biggest ways that you can stay on top and making sure that you're just making the best decision and getting the most money out of your property.   Michael: I love it.   Tom: This ties right along with just how important the process of vetting your property manager is, you know, when you guys would open up new markets and any of these other companies, was there a process of that you guys did all in house property management? I'm curious, or did you think that existing property managers?   Caroline: Well, over the place that I worked at either an in house property management team, but the role between the asset manager and the property manager, I really think it's intended to be a check and balance. So we always try to come at it from an angle where, you know, we were hiring our property management team. And granted, we were more collaborative, because we both worked for the same company. But we always tried to take that stance of you know, what if we were just hiring a third party manager, what would be effective? So we would very much hold him accountable to performing.   Michael: So in thinking about a lot of folks that are using Roofstock, a lot of retail buyers, people that are scaling and building their portfolio, Is there like a good ballpark measure for when somebody could actually go hire an asset manager as opposed to being their own?   Caroline That's a great question. I don't know.   Michael: I'm just curious, because, you know, people are constantly looking at scaling. And we have this $100,000 passive playbook as part of the Academy. And I think it kind of catches people off guard when they realize I've got to own 51 single family homes at roughly $100,000 each, that cash flow 175 bucks a month to hit 100 grand a year in passive income. Yeah, I don't have time to manage 51 managers or keep tabs on that. So it just thinking about scaling, knowing that this asset manager is available. I wondering if there's a market for it on the for the kind of retail owner operator?   Caroline: I mean, I think it's a great question. And certainly, if you own 51 properties, or whatever the magic number is, it would be very time consuming. So depending upon what you are doing the day to day basis. At some point you would want to hire somebody even if it was an institutional asset manager, but you would need somebody to help you oversee the performance of all of this investment.   Tom: So a common question from a lot of investors is looking at duplexes versus single family. I think with your experience, you've probably had some some great insight on both the cost side as well as the revenue opportunity side on either opportunity. I'd love to hear you spiel on, you know, comparing those two different types of types of investments.   Caroline: Great question. You strike my great question. I would say they are slightly different plays. I think duplexes immediately probably crash flow more easily because you've got more rental revenue with one purchase, while single family rentals probably have greater potential for appreciation than duplexes. So it's really about, you know, what is your immediate goal? Are you looking to cash flow very quickly, are you hearing the long term game and looking to really get the upside on the sell. And really, you can find properties that check both boxes. But I do think there are some synergies with having a duplex because they're often mirror images of themselves. And then when you have less risk of a tenant vacating you still have some passive income. So it really depends on the unique property and the market you're in. But I do think that there's could be some fundamental differences.   Tom: Excellent. So continuing on the kind of path of career. So after student housing, welcome to Roofstock. Is that right?   Caroline: Yeah, to be here, I love it.   Tom: Tell me about what you know, focusing on and projects here at Roofstock.   Caroline: Great. Well, I just joined the Roofstock asset management team. I'm a part of the Investment Services Division. So we are really focused on helping our institutional partners manage and place their capital into the single family rental market. So oftentimes, these institutional players are buying hundreds of homes at a time and we we are looking at them from a financial performance standpoint. So we're helping them make strategic decisions, determine, you know, renovation scope, and execute that and then also lease that and make sure that their assets are performing to their expectation. So I'm immediately helping with streamlining and automating some of our reporting. And so that'll be very dynamic and real time and allows our investors to be actionable and make strategic decisions in real time. That's the goal of our team. Really exciting place to be.   Michael: That's so cool. I'm curious, Caroline. So these institutions that are buying hundreds of homes at a time? are they buying them from other institutions? Or are they buying them from 100 individual sellers?   Caroline: Well, every institution strategy is different, and every market is different. So it really depends on what's available for purchase in that market. And Roofstock has several ways of sourcing investment properties. So sometimes that will be from other institutions that are selling a few homes at a time. And so that's a big win to get a few and get some economies of scale there. Otherwise, we could be looking at MLS data are also some of the homes that are listed in the Roofstock market place. And then finally, there are some single family home developers who are looking to sell a large number of homes at one time, that is a great opportunity for institutional investors.   Michael: So you could have 100 transactions running simultaneously from 100. Different sellers.   Caroline: Yeah, that's wild, it's crazy.   Tom: On some of the new land development stuff is that like build to rent type communities?   Caroline: These are built around communities, and they're very highly coveted by institutional investors.   Tom: I would imagine, as an asset manager, like what a place to kind of put in whatever kind of knowledge we have of optimizing the portfolio. At the time, the very first nail is going in, I don't know where I'm going with that, it's just like, sounds like so opportunistic, you know, in thinking about how to optimize the portfolio. And that like at the at the very, very start of the build.   Caroline: it is great, because a lot of times the single family home builders, if they're building the home for someone for an individual to purchase, they'll make that house a lot nicer. Or they'll put in really trendy finishes and things to really entice a premium from, you know, a normal person who's going out to buy their next house. Whereas if an investor comes in, and they pay me to take these 20 homes that are all contiguous, and because I know they're gonna be rental properties, you know, I might choose different flooring or different things that are, you know, more conducive for the wear and tear of a rental property, so that you can minimize your maintenance expense.   Tom: Yeah, durability.   Michael: For those that might not be familiar, what is a build to rent?   Caroline: A build to rent is a home that is specifically built from the ground up and with the intention of being original property. So that's how I think of it. It's a very new construction. And a lot of times the advantages are the homes are very close together, which makes it easier to manage them. But also because they have similar for print, it also makes economies of scale in terms of, you know, making sure that you have all the supplies you need, and that you understand the nuances that the home and what to expect in terms of risk.   Michael: And is this a new concept? Or is this kind of been around for a while?   Caroline: It's relatively new, I would say also is the single family rental industry or the asset class, for   Michael: Sure. And I just curious what your outlook is, if you know about the appreciation potential of those built to rent properties, kind of as an on an individual basis.   Caroline: I'm very bullish on housing in general, I think from like the sheer macro economic drivers of supply and demand, our population is growing quickly. And particularly when you look at the life stages and cohorts of age, within the population, there's a significant amount of demand to have a home. So assuming that you know that you're choosing your market really well, I feel like it's a win. So I do think that a lot of times the build to rent communities are either part of a master planned community. So they're well positioned to be highly desirable, whether you want to keep them as rental properties or eventually sell them off. You know, I think there'll be high demand there, but also a lot of times they're infill. So a developer could come and find, you know, a smaller tract of land and put several homes on it. And then they're in amazing locations. So a lot of times the strategy around ultra rent can be slightly different. But more often than not, it's a great opportunity to invest and see a lot of appreciation.   Michael: Interesting. Very cool.   Tom: I guess one more question. on the technology side, I'm always kind of curious about like, kind of the evolution like I assume that, you know, it began in Excel and perhaps still, like a vast majority of is done in Excel, is there any plans within reflect to build any, like custom software to help, I don't know, make it more efficient, or I'd love to hear I don't know if there's any kind of cool tech stuff kind of on the pipeline related to this.   Caroline: Roofstock really innovative and have the really, really highly talented team of engineers. So I do think that we are out there and trying different ideas. And the ones that stick, you know, I think, will ultimately help create a very robust API platform that'll be very proprietary. And the way that we assemble this information that we've we've gathered from different technologies, so be it from, you know, technology into physical home, and how thing is to streamline maintenance, or, you know, or the way that we're assembling different factors across different markets, you know, pricing and things like that. I do think that we are really well positioned to make that very robust and dynamic for our clients.   Tom: You mentioned technology in the home, are you bullish on what said like IoT like Internet of Things of like within rental home, because I mean, there's some significant upfront costs in implementing something like that, you know, remote locking systems and water checks. And because that any analysis on that?   Caroline: I will say that the single family rental industry has an advantage over traditional multifamily in a way that, you know, we're all learning the best way to manage a home of single family home, which is quite different than multifamily buildings. So I do think that the potential to experiment and adopt new technology is slightly easier because we are baked into a legacy way of doing things. And also because there's a need. So a lot of different operators, including ourselves are experimenting with a lot of technology that's coming on the market. And of course, there is an investment and buying the technology and then implementing it and then testing it out. And figuring out didn't actually create a fading. So not a lot of that is happening right now. And a lot of people are sharing their best practices and learning from each other. So I do think over time that the synergies and the value from using technology on the home will continue to be accretive.   Tom: Yeah. And as we get more data on it, for sure, to make those decisions. Awesome. Carolyn, anything else before we finish up today?   Caroline: No, I think that it's a wonderful place and super happy to be a part of this talented team. So anytime you guys have questions, feel free to reach out.   Michael: Awesome.   Tom: Awesome. Well, thank you so much for jumping on.   Michael: Thank you so much.   Caroline: Thank you.   Tom: Thanks again to Caroline for joining us today. If you liked this episode, like the podcast, we always appreciate it if you like and subscribe, wherever you're listening to podcasts. And as always, happy investing.   Michael: Happy investing.