271: Analyzing Properties with REIanalyst Data's Ryan Minekime

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It's my pleasure to welcome Ryan Minikheim to the show. He's the founder of REI Analyst. This is a cool software product that can help sort and organize MLS data. It is more of an investor version of a product than say Zillow where you've got to go look at properties one at a time. Here you can look at an overview of the market. So I thought we'd introduce this to you and let you hear about it. Ryan, welcome.

How are you? I'm doing great. Thanks for having me.

Yeah, my pleasure. You're coming to us from San Francisco, right?

That's correct.

Good, good stuff. You started as an investor and I guess you like started. So many entrepreneurs were frustrated with the available tools and data out there and so you hopefully made something better, right?

Yeah, exactly. So I started as an out of state investor and I was looking for properties in Indianapolis and I was part of a out of state Facebook group and one of my friends posted in the group a picture of what the product is now, which is basically a massive list of real estate listings and included both market estimates and rental estimates. So I was able to use that and quickly filter cash on cash return for basically every house within the market and it helped me actually purchase my first house. So ever since then we've been working on building this product out even further.

So Ryan, yeah, it's interesting to see the data nicely organized like your product does. But when you use the product and try to select the right investment properties, are you strictly going by the numbers? Because it's sort of easy to look at the one that's got the best return, the best rent to value ratio. But does that tell the whole story?

No, it never does. And so what I recommend doing and what I personally did the first time I used it is I basically sort by the numbers. So I sorted, I chose to use cash on cash return and I sorted by that, created sort of a top 15 list and then from there moved over to other tools such as Zillow and Redfin and went through and looked at pictures, tried to estimate what I thought the rehab might be, and go from there. And so from there I whittled that 15 list down to about five or 10. And that's what I used to actually make offers on.

Okay, and so you're, you're really doing this yourself. I mean, you're just dealing with like individual sellers and listing agents. Is that, is that what you're doing?

So I then passed those houses off to my broker and then had my broker reach out and make offers on those houses.

Okay.

And again, that's how it started. And then from then we built the company around it to allow other investors to be able to do this as well.

Did you.

Find that, what is it, a weekly MLS report or how often does it come.

Yeah, so we have three different options. We've actually just made the one time download free, so anyone can go to the site, they can choose any city that's available and get that one time download for free. And then we also have a weekly and a daily version of it, depending on how often you're investing and how many offers you're trying to make, et cetera.

And how many cities do you have reports in?

So right now we have about eight cities on there. We're currently in California, Colorado, Florida, Texas, Missouri, Indiana, and Utah. And then we're constantly adding cities as well.

Right, right. And you said cities, then reference states. So there are just some cities within those states, I'm guessing. Right.

It's actually every city within those states.

Oh, okay. So. So that's a lot of coverage. Tell us about the formulas. Like, you've got these various columns of data. It's organized just like a spreadsheet. And in fact, that's exactly what it is. It's a Google sheet. The report comes in. But how do you arrive at some of the numbers? You know, for example, it has list price of the property, and then it has what you guys think it's worth. I know some of that may be proprietary, but, you know, give us some hints.

Yeah, so that is proprietary. What we've done is we've used sort of triangulation of other public tools out there. And so things like Zillow and Redfin and Rentometer, we've been able to use those to sort of triangulate on a price for both the market estimate as well as what we think the property will actually rent for.

Okay.

And then put in some other formulas in there to make the calculations easier. So we have rent divided by market estimate. We have rent divided by listing Price. So you can sort of filter for your 1% or 2% rule that you're looking for.

Okay. Okay, good. And tell us about the experience of kind of going by the data and how you agreed with me at the start that the data never gives you the full picture. There's more to it than that. But drill down on that a little bit for our listeners, if you would.

Yeah, so I think the biggest thing is it really just cuts down on time. So when I started, I was sort of flipping through Zillow or flipping through the mls, and a lot of it is the same data as far as the houses you're seeing. I was just typing it all into a spreadsheet myself, and it was very time consuming. This allows you to, like I said, come up with your top 15 or maybe your top 20 pretty quickly. And then you can constantly be filtering that down. And so at the end of the day, you're not starting with the entire MLS. You're starting with sort of a refined list of 15. And then you can also filter your other criteria that you're looking for. So if you're only looking for three bedroom, two bath or higher, if you're looking for square footage of a certain type or houses only above 50,000, you can also do all that filtering yourself as well.

You got to be a little careful. I'm sort of surprised that you allow people to change the cells. Like, you know, I clicked on the bedroom, one of the houses, you know, the number of bedrooms, and I could just change it. Is that because you want investors to be able to change that data in case they find that the listing description is inaccurate or something or.

Well, oftentimes it is. So we often see things that are listed on the MLS as zero bedrooms, and maybe that's a studio, maybe that's just incorrect. But what you're editing is just your own data, and so it doesn't affect any of the other users. But that's typically what we see, is people just changing for things that they know about already.

Right. Okay, good. So days for sale. So the days on market number. This is the problem with Zillow. There's just no policing of Zillow. And the data just, you know, it's all over the board. Properties on there that have sold a long time ago and so forth. But that's the world we live in. Right. Asking price, market estimate. Now, I notice on a couple of these that you don't have a market estimate, but those are land. They're. They're vacant lots you mentioned before. That you're kind of like triangulating which numbers. The Zillows estimate, I know is one. And what else?

We're using a couple other things. So Redfin gets in there, and then also we use Rentometer to try and come up with the rental estimates. So we use a combination of different things for each of those numbers.

Okay. But for the market value or the market estimate number, you're using like Redfin and Zillow, right?

Correct.

Okay. And then the rent, is that straight Rentometer data or are you using, you know, rent range 2 or any other sources?

So there we're using essentially a combination of Rentometer and Zillow.

Okay. Okay, good. What else do you want us to know about investing or using your tool to invest?

Really the biggest thing, and the reason I love it is because I used it personally, and I just think it really cuts down on so much time. I was able to narrow my list of offers down to 10 within about 25 minutes. And from there I made offers on three of them and got two of them accepted, ended moving forward with one. And so the whole process from a research and offer standpoint was drastically cut down from what it was taking me before. So I think that's really the biggest value. And also, I feel like real estate investors typically are more data driven than typical investors. And so being able to see the data in this format, where every house is just laid out on a different line of a spreadsheet, allows you to much more easily visualize the data and be able to filter for whatever you want without clicking through individual MLS listings. Mm.

Yeah, I agree. So you don't get your emotions attached to it because it's just numbers at first. And. And if it's a. If it's. Exactly. It's a pretty house, it's not going to influence you, at least not right away. Until you start looking at the listing.

Exactly. You're looking at the numbers. You're not looking at how much rehab it takes at first. You're not looking at the beautiful front door, whatever the case may be. You're just looking at the numbers, and then from there you can go in and start making judgment calls.

Yeah, good. What is your plan for the software? I mean, this is a very new product, right. About two months old. And, like, what's your vision for the future of this?

Yeah, so it's two months old. Myself and the co founder, we've been working through a lot of just getting it up and running right now. I think our next steps are to add more markets first of all. So we'll add, we're starting with sort of the top investor markets. From there we'll move on and just start adding all states and all cities. And then we're looking to do a few more things where sort of an individual tool rather than getting the whole market, you can type in an address and get the analysis of that address if you want, if you've already narrowed it down to a specific house. And then I think the other big piece that we're looking at would be trended data. So you can click on your city and you can see trended rental estimates, you can see trended market estimates and see where your state or your city is moving. Try to figure out what is the right time to buy.

You've got a $49 million house on here. Wow, that's in, I'm looking at Florida right now and boy, there's a lot of, lot of money in Florida. I tell you, it's amazing.

What's the market estimate on a 49 million dollar house?

Well, that's a very good question. You guys say that house is only worth 18 million. So hey, if you got it for 18 million, it might be a great deal, right?

Yeah, exactly.

Yeah. That's fantastic. Don't you wish there was better rental data available on single family homes? I mean, it's just, it's just too bad. It's as if the whole market in the single family home world was designed for homeowners. And investors are such an afterthought. Whether you be looking on Zillow or the MLS or any platform, realtor.com whatever, it's all designed for homeowners, you know, and investors have to do these add ons to get data. But even with, you know, some of the rental estimating tools that, you know, you pull in at least one of them, I know, to your sheet, the data is still pretty wild because investors don't report the rents, you know, so unless the property ended up in the MLS and you know, it was leased by an agent that reported to the mls, you know, you're going off sort of, I don't know, wild data to say the least. It's, it's pretty fragmented, right?

Yeah, it is. And I think that's always going to be sort of a something holding back. I've even noticed I'm personally listing a house for rent in Indianapolis and I've noticed that I listed it higher and it actually brought this estimate up over the course of like two or three days. And so it's all based on what is being listed out there, and not as much as like when houses are sold, when houses are actually leased. It's not factoring as much into the data. So I think it's always going to be sort of a soft point in the analysis that everyone's doing, which is why we sort of recommend this as an initial tool. But you're still going to have to go do all your own due diligence after narrowing your list down. But I think that always be sort of a soft spot.

Yeah, good point. You know, I always say to investors, embrace the fragmentation. The fragmentation on its face seems frustrating, but it also by and large keeps institutional investors out of our world, you know, and leaves the opportunity for mom and pop investors, which is great. But we have seen the last 10 years coming out of the Great Recession, more institutional money at play than ever, you know, with Invitation Homes and Blackstone and, you know, all the rest. It's pretty amazing. You know, we'll see how this changes the market over the next decade or so. You know, it's pretty interesting. But talk to us a little bit more about the due diligence you have to do when you come off of the software, when you're off of REI analyst.

So I think there's a couple main pieces. I think one is the rehab. And so depending on what condition your house may be in, thinking about how much that rehab might be, and if you're in state, that might be driving to the property and maybe doing a walk through, if you're out of state, might be having your contractor or someone else do that for you. I think that's probably the single biggest thing. And then beyond that, it's probably looking at some comps within the area, seeing what those sold for, and then also seeing if you can dig into the rent a little bit deeper, whether that's using other tools that you prefer or whether that's just looking for other rents in the area that are active at the time. So I think it's sort of just verifying those three numbers.

Sure, sure. The nice thing about the rent is, you know, once you get to know a market, the rent becomes pretty easy to understand, just kind of in your head. So you don't need to be super analytical about it once you, once you get the hang of it. But, you know, initially, yeah, you definitely got to do your, do your research and kind of understand what's going on there. Good stuff. Well, is there anything else you want people to know?

I think that's about it. I think the biggest thing is we are offering the one time download for free so anyone can go onto the website and check this out for free themselves and then if you have any feedback you can definitely email us.

Excellent. Well Ryan thanks again for joining us.

Absolutely. Thank you for having me.

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