190 – Using Property Radar To Find The Perfect Seller with Sean O’Toole

Synopsis

Sean is the Founder and CEO of PropertyRadar, a prop-tech company that initially started in 2007 as ForeclosureRadar. PropertyRadar helps investors and realtors find their customers and has been the most popular tool investors use. In this episode, we find out how Sean went full circle having worked in tech, switched to real estate investing, and later on bootstrapped a tech company that goes on to help thousands of investors.

Key points

The Move From Silicon Valley To Real Estate

Following the Dotcom Crash, Sean moved to his vacation house because his money then got sucked out of a startup. A good friend introduced him to someone flipping foreclosures and suggested that he make a piece of software for him.

While Sean wasn’t keen on developing the software, he talked with the guy, got the data he had on his deals, and after some analysis, found out that the guy enjoys an 80% return on his capital. This made Sean realize that this is something he’d like to pursue, so he used the money from his exits in Silicon Valley to invest in real estate.

Finding Success In Real Estate

Sean dabbled in many methods to find deals. He did direct mail, bankruptcy, and IRS options, and even door knocking. But he found foreclosure auctions like the one that best fit him as it lets him use his analytical deals.

Out of the 155 properties that Sean flipped, 90% of his deals were found on the courthouse steps. Sean believes that direct mail still has some impact. Although he’d have to spend between $5,000-10,000 and send 10,000 pieces of mail to get one good deal, the $100,000 profit he would make more than makes up for it.

Investing in real estate is a much better way to earn a good profit because of the size of the deal. Compare this to the time when Sean worked at Radio Shack and had to sell a ton of product to make a decent commission. Real estate is highly profitable.

However, due to the COVID-19 pandemic and the moratorium on foreclosures and evictions, the foreclosure market is tough right now, but Sean expects a wave of foreclosures to come in once the moratorium ends.

The Inspiration For PropertyRadar

Things changed at the end of 2005. Sean saw things happening in the market that made him concerned, so he stopped buying properties and sold everything except his house.

Foreclosures have been rising exponentially. Back in 2002, Sean had started building his own system because there weren’t tools available that he could use. He envisioned creating something akin to a Bloomberg terminal but for real estate.

But there were core problems. There were two core data sets holders that he would have to deal with – the county recorder’s office and the county assessor’s office.

While the county assessor’s office provided digitized documents, the recorder’s office, where transactions are recorded, could only give 5 things from their documents, the date, doc number, grantor, grantee, and document type. The other pertinent information would need to be extracted from the document requiring time, money, and labor.

So Sean would have to contend with building ForeclosureRadar first.

Getting The Initial Subscribers

The year 2007 was the year ForeclosureRadar launched. That year in March, they started the California Foreclosures Report. Most people didn’t know that there were over a billion dollars of properties on foreclosure.

That kickstarted the attention put into them as the company was in the news every day from then until 2011. While other sites also had data on foreclosures, most of them had old information that was already 6 months old. Because of what they could provide, Sean ended up getting a lot of speaking engagements.

When Losing A Contract Worked For The Best

Before ForeclosureRadar, Sean was already tracking foreclosures. This meant he maintained a large staff. But it also meant that he had foreclosure data that nobody else in the market has.

When Sean was leaving real estate investing, he originally planned to sell off his data to real estate sites, so his team could keep on working. However, before the contract closed, the client decided to pull out and said that they’ll do the data gathering and aggregation themselves.

So Sean had no choice but to start ForeclosureRadar.

Growing Pains

Starting a business is expensive. Sean had to write cheques for $50,000 a month for almost 2 years before they got their big break. Bootstrapping a tech company is difficult, but after appearing on 60 Minutes, their growth got accelerated.

The Pivot To PropertyRadar

In 2010, a number of folks got interested in buying the company. Sean was thinking about whether he would be able to do a huge multi-million dollar exit of around $50 million, but he was only offered stock.

Sean was worried since he expected the foreclosure business to peak by 2013, so he considered again his original idea of building a Bloomberg terminal for real estate.

Launched in 2012, PropertyRadar came to the industry providing better property information service.

Almost Missing The Mark

At the start, a lot of people complained about the fees because they believed they could get the same data on Zillow for free.

Most property information companies employ a sales team, so they would usually nickel and dime customers for every record requested. PropertyRadar chose instead to charge a flat fee, but their pricing didn’t allow them to support a sales team.

Finding Their Sweet Spot

Eventually, the company was able to find the right fit for their marketing. Since then, PropertyRadar has been widely used by real estate professionals and even those in other industries, even coffee shops.

Tracking and presenting a ton of data is often complicated and confusing. By making the product a lot easier to use, more accessible, and with simpler user experience, their tool attracted people from all walks of life.

Through connecting and showing the relationships in the data and showing the differences between the old set and new set, the company offered a value no one else could provide.

What’s Next

After two years of sweat, blood, and tears, PropertyRadar is now close to launching nationally. They plan to move to slightly larger companies and work with teams. For Sean, a team is much stronger than each individual working separately. So the company is building a team functionality that is similar to Slack.

There is also a lot of cooler stuff Sean plans for the future that he’s not yet ready to reveal.

Initially launched in California, then got to 5 states, saw the regulatory changes, pivoted to property radar, people loved it but were tough in the marketing and sales side, 2013-2016- lose a number of family members, 2017 got back involved, found this new fit in the marketing side,

Here’s An Advice For Those Interested In Getting Into Proptech

Do not build a company that is so reliant on data because it is so hard.

Keep in mind that a data-focused company that provides the data won’t have the same margins of a software company where the users put in the data.

It’s better to focus on a vertical where users put in data instead. While there are many unique advantages out there. Sean would rather do something hard that he has control over, unlike data gathering where he has no control over the counties.

In the end, Sean prefers to deal with tech problems rather than operation problems.

Resources

More from our guest

• You can reach out to Sean through his email: sean@propertyradar.com
• Check out PropertyRadar for support, a community, and resources.