EP 5 - How Clara Scaled Co-Living to 160 Rooms in 2.5 Years Without Ads

What's going on everybody and welcome to the co-living show my name is Craig curlop My name is Miller McSwan and we are pumped to bring to you an amazing guest today We're not we're not Spanish, but She is fortunately she does not penalize us for not being Spanish you guys will hear very early on I butcher some ours Craig butcher some ours and she was graceful about it. Yes. Thank car for us true Yes, what do you think of car man? Yeah, do cars awesome. I think I my very first interaction with her Honestly, I'm never even talked about this ever But very on very early on drafting the book. We had like a working title those like the co-living blueprints It's like what I submitted it to bigger pockets with like totally You know not finalized and but the URL for co-living blueprint was available, which was attractive But then either me or someone at bigger pockets came up with co-living cash flow. We're like oh that is it Let's go by the URL and freaking Clara owned the co-living cash flow.com was already owned Probably like a year or so before we came up with the title and I sent over like some offers to purchase it Probably for like a hundred bucks 200 bucks 400 bucks crickets Yeah, no, we're kidding So anyway, that was kind of my introduction to Clara was her owning that URL and me not getting to purchase it But one day mark my words. I will buy co-living cash flow.com Well, I guess my story is way less interesting. Well, I don't know. I think it's kind of interesting Clara and I just met at the co-living conference But because she lives in Boston and my family's from Boston when I went there this past summer We hung out on her boat together. She's got a cool sailing boat and it was actually pretty dang awesome. So um dang is this the uh, I remember her posting something about like a yacht a yacht club co-living um Like education thing was that this or this was just a boat you guys went on no, this was just a boat It's it was not a yacht. It was like a sailboat. So her husband her husband and her sail. That's like their thing That's like their past time. Oh, there you go. Oh, yeah, we went on that and it was so fun um, so yeah Clara she does more of an discoliving but she logs Metallica. She loves boating. She is the woman the Jill of all trades and we're getting into that a little bit here today Where she's gonna she kind of unload some cool stuff like she talks to us about how you you know Networking and a rack with different employers in your area to get tenants How her portfolio totally went belly up And how she recovered from that how she's now building we kind of went like all over the place up down and all around And that covered a lot of ground. So you're gonna want to make sure you listen to this whole thing and take notes and listen carefully Miller what if she got that Shall we sail into this episode? Wow. What a transition. Let's bring on Clara Hadojame Clara I cannot roll my a fris no I cannot I My brain Clara this all Clara can I say Clara like as you can as it possibly can be Clara I'm from Clara. I'm from the South Miller is in Mississippi right now. How do you say Clara? That is true. I'm gonna be respectful and roll the rs and say Clara That's respectful Maybe that was disrespect. I can get On the table. Yeah, that one's out. All right, Clara give us the rundown. I'm sorry Still love you even though I can't roll your ars a roll. We'll call them your ars Clara tell us about you though. Tell us about how you got involved in co-living. What's your background? Why the heck are you even here on the show? All right, I'm gonna try to make this short and sweet as woman that moved to the US in 2012 to do her business studies. I went to business school because I had a lot of background in a creative So entertainment journalism marketing and media. I wanted to have a comprehensive business education To always have a seat at the table. It's true that way, but I'm most curious and very entrepreneurial and during that time in my business school when I moved to Boston and realized A the rent he does Ridiculous and first last and deposit and broker fee for a empty apartment and I'm also a very I like to try new things before everybody else go and lift back with nobody was doing it and as a person We have an extra space on my living room That I wanted to test for the B&B and we made $10,000 in a summer in a nook in my living room Because I was just giving it his Cambridge And I understood how real estate was at the same time. I was paying my student bills and the heating bills in the winter here that are Inzane which let me to get a little bit of a grasp in how real estate was after my graduation I work in two different real estate technology startups understanding the demand and the supply or real estate in Boston and how things are cheap here And in the third one as student from my school came to me Business school came to me. Hey, why if we just leave an entire apartment? We put for an attorney And I will be sublies by the room because we have a student that comfort nine months and they want to pay a premium For the room for that period of time instead of a whole year first last and then don't to make sense I'm talking to 2016 right so ancient times for you, but that makes me OG the Collevin universe and I said you know what that might be interesting and genius and this guy say I don't know how to do it and I by then because of my previous background I knew how to do it and boom. That's how plays me once born with two apartments back there seven two apartments seven bedrooms And that grew onto 42 million dollars in active and buildings under on management all arbitrage two million dollars in sale all arbitrage about only ten thousand dollars Total into in all these years in marketing expense. We spend zero marketing. We did a different marketing I beat to be to see marketing strategy And I was able to acquire another competitor that went out of business and then after that Covid came and I repackaged the whole portfolio and I gave it to my competitor Okay, we've got a lot to unpack their clara. You can't get away. You can't get away that easily It's a little churn and we always take salon time Yeah, you summed it up nicely But I really want to talk about that Arbitrage that you did and like you had a massive portfolio. Let's actually work backwards Like at the end of that at the peak of your portfolio how much income were you generating? That year that we were about to cross two million dollars a year With less than yeah, I gross will let with like 160 rooms Okay, and then what was the net? We were about 25% net 25% net okay, so two so 500 grand ish So so really good business and you built that in how many years like three years two and a half two and a half years that is incredible And you did all of that through arbitrage and so continuing to go backwards It sound like you you got this idea from a friend Rent out of room or rent out an apartment sub lease it appropriately Like how did you go from doing that one time to doing that to acquiring a 42 million dollar portfolio of undermanagement By sticking to my two corbalios which are transparency and strategic thinking So I don't have I never think a small that I'm not used to think small I guess I'm wired as I'm having a big vision and hey how we can actually this become a company I am also after being all these years in the Boston technology and venture landscape always hey How we can make this actually big and interesting? So number one Not only thinking What is the alignment between what the customer is needing and what's the right price point be what is that Property owners and looking for how do you solve the problem for the owners property owners? Hey, I just want someone to pay my check and don't bother me at all And how how do you create a product that is like right in the middle and I would stick to that perfect product That's right in the middle and supplies for both of them for the resident and for the owners I love that Yeah, so I think that this is really unique having you on here being such an OG in the space Right like I think I've been doing co-living for three years since 2022 now that's long in the space right? I think that's like With the current phase of co-living that's like kind of a veteran of the current stage But you were in the stage before this right? Don't make me feel all but yeah Yeah, then that's not what I mean No, I know I'm making cars and the aids and everything It's weird if you're far in between with yeah Yeah, so back in those early days What was the landscape like for you in Boston where you guys the only ones doing room mentors at scale and I guess how's it maybe different than how it's today right? As I just say I know it sounds like ancient but no back in the day There was another company in New York called Glee they raised about six million I'm still friends with both of them and they raised six million they do it Totally trash groan in New York and I started to grow in the Boston market But they have six million to grow so I didn't have six million and half a million to grow And I don't even get me started on how people get more money And we were making money we were cash flow positive and this guy was just burning money I believe they were spending about 45,000 dollars a month on just google ads It's like burning so you know the intersection that people speak with and venture capitalists and company statements and cash flow positive where actually company has to be. So I was on the conservatives, I had a really good warning. At a good morning, until eventually, they couldn't ask an arbitrage. They couldn't continue with the payments and they went down and they called me number one, two, eight, you want to take over the properties, sure thing. And then another company imposed in New York to the New York property, so yeah. And there were other companies taking over some Francisco, LA, DC, that are no longer in the market, A for the confluence of two reasons. Number one, COVID, of course, or but also historically, and again, this is like Dinosaur story. You remember when we work, was about to file the S1. - Yep. - And everywhere we just went, what the hell is this guy doing? Even though all some more companies were doing that model really well and conservative like we were doing. All our companies that were about to raise to keep growing in that business model conservative and doing well got in the same wave of batch tsunami, it's not a wave of freaking tsunami of negativity that affected everybody. So that was like a really bad timing between the, we work S1 and COVID. So if you couldn't raise, you couldn't continue, you'd grow in it, you have sensitivity between the price you pay and you know, you're expenses and something bad happened. There is only a question of time that you have, right? To be able to cover all your expenses for a long time. And we did it like four months. Until we couldn't and then we were able to. Thankfully, we were able to find a company that acquired everything we could, the reliability was actually beautiful, beautiful M&A. - Can I ask a company you sold to? - Yeah, sure. And you can ask me also if there exists today and I'll tell you there are no any longer. They're called the split. - What's your call? - Used to be called a split spot. Two guys from Harvard and MIT that could not don. What did you? - Okay, so we got to learn something from these failures, right? And not that you didn't, I guess I was a failure, you COVID, right? Couldn't have seen that coming. But so, A, there's something you could have done to avoid having to sell at a discount or whatever, being able to keep the portfolio going through COVID. - Yeah, right. - Let's go start there. - So right now, fast forward to now, I am a very well-known Collevin coach for like a speaker in Collevin and I run a lot of deals and my students and my coaching client invest wisely in Collevin. So I always say to everybody, don't do what I did and pull all your eggs in just in the Alvetrache part, right? Number one, two, try to find ways where you can acquire, create, and unfortunately the creative part of creative finance was not there at the time. I wish a new about creative, I will be creative more. So start acquiring a little bit more and have support from your investors. Some companies like Front Desk that was kind of like in a similar model, but more corporate go support from the investors, six million and they continue until they corner continue. But that was way after COVID. Some other companies that we all know, God loans, asset back loans, like personal asset loans to continue with the company. And I was not feeling that it should risk my own house to support the company. I love the company, I know what was happening, but no one could underwrite the uncertainty at that time. The whole city, this is a student, what's the business student town, right? We have about what? 120,000 students every year and they vacancy was about one of the biggest ones we ever seen historically, like more than 10, 20% vacancy, it just goes down. And no one could say, hey, things are gonna go back to normal X time. - No, no, no, when you're gonna get your money back. - So it sounds like here, the key differentiator here is you should buy the assets in run of this co-living versus renting, 'cause then you're stuck in leases and you have no other options and all that. So is that the same, is that why that, would you say like a split spot, people that bought you out in May, something they failed, was it for the same reason? Is that they were just arbitrashing as well? - They, yeah, so they, they felt for that also, different lease of reasons. I need you, made them some day, they'll give you a different lease of reason as well. So just the what I be traging, but they have way lower margins, because the what I be traging, they can from right only get 10 or 15% increment. And they really suck up customer service. Like they bought all our assets or we have a across the board, 4.8 rating, Google reviews, all the review, all 4.8, like brilliant. And just guys had one, one, one, because they really don't know how to take it for their customers, it's for that way. So number one, number two, and like, there are two ways to run a, a collision operation. Either you make community or you make up, like a punishing type of a community, and it's just how can I say this? Now, not incentive based for penalty ways. Oh, you do think this is a lease of penalties, which I, that's not the way that you run, a growing company. And that's the way they went to grow and to scale. Like we say, forget about it. And when top of that, I think you was one of a couple that is venture, a couple of venture banks when the kaput, and they have the money in the venture bank, plus a couple of lawsuits because of the misdreatment classes, they have a few lawsuits going, a few legal things going on, which you never had any. So they were trying to enforce rules with negative consequences versus positive reinforcement, I mean, there's definitely something to be learned there for all the operators out there that like, if you're like more of the rules guy, do, if you don't take out the trash, it's $20 fine, if you don't clean up, you've got to create a culture around people that still that they want to, not so that they have to. - And it's just silly because people, and not everybody's educated enough to understand where the coming from be, but also our customer-based in Boston is very educated, grad students, John professionals, people that go to Harvard and MIT and like a Boston college to do a major in engineering, you don't treat them like, you treat them well, and not because people that make less money don't deserve to be, you treat everybody well, and they respond well, but you know how to speak to them with respect. So I know that for a fact because when you Google that company and the reviews is just wow, at tele-novella. - Yeah, yeah. Yeah, so back in these early days, you mentioned that you guys didn't have marketing spend and things like that. So I mean, today, right, when you get to a certain size 150 rooms like you're talking about, I mean, I think most people are putting pumping some money into marketing. So in these early days here, what was your strategy for kind of acquiring tenants? Is it just you were in a good spot and you knew a lot of people to send leads your way or you're on online listing services? How were you getting folks in the rooms? - I wish we had online listing services. That is like no, it's just thing. It was just beginning. No, I, 'cause my previous experience in my or two companies, I understood that the best way to solve the problem is go back to the root and what's the root? The root is HR, people hiding people that they don't know where to put it. Student services, international students, services and all the colleges, they recruit, recruit, recruit. But no one wants to deal with it. Where do I put my students? What can I offer to them? Because of risk or liability. And the way that the system is geared, oh, you need to find your roommates. I'm like, you're on your own, but you're accepted. In this case, you're only responsible for you and the service is good and many reviews. And it's maybe one of many in your particular case. So once you are incorporated into those engines from those corporations or student services, they do use flow and you have to pay very little or nothing to be there. Just need to have a knock the door, make the right things and then off we go. So that's why. - How did you start those relationships with HR departments and the international student places? Can you run us through your process on getting those introductions? - Yeah, I ask. - You just ask, you can email, are you going to their offices and knocking down the doors? Are you just emailing, calling? - Yeah. - No, I believe I started LinkedIn at the beginning and then I started going to different or sending people, I started going to a house, I was going to a housing for student events and get it to me for the players and who you're in meet. And it's just, hey, how do you know that it's in a charity in this company? Can I make an intro and people just know each other? Hey, I need for people in a charity. And once what, when you go to a recruiting event, you go to a new recruiting event, Jofffair. And they are all going to, oh wow, yeah, this is incredible. Thank you, thank you, my number. And then you start following up. So I start going because of the nature of my, the nature of MBA and all these international students looking for internships, it was easy for me once you connect with one and the lever in your promise or in your service then you scale from there. - Okay, yeah, so I'm definitely following you there. Like once you get the first folks in the door, from whatever referral source HR wherever, and you do a good job, right? You continue getting those leads. So but once you are getting that introduction at the job fair and the HR office or whatever, are there any resources that you're showing these HR professionals to even get that first shot at them sending a lead over your way? What sort of resources are you showing them? - A beautiful website, very simple. - Okay. - What a, you're all, not most of them best on the resources as a security for the residents. So always when you create a product and I think Miller, you understand this well, what is the pain point that the site has? Never think about you, never think about your product of what is that worth for you as a Colleen operator. How do you solve the problem for the HR? How do you solve the problem for the school? How do you solve the problem? So you need to speak in their terms, not in your terms, pay in this particular period and then I learned about the beautiful world of our pay internships, which in paid internships, a lot of organizations, especially. you know, there's one stuff I have to recruit gas union people. You need to be here for six months, three months for months, we'll pay you for housing, but they're you don't you learn. And they these people cannot find a place to stay, especially in summer months when areas are like, I remember one hotel in Cambridge, charging for $100 a night for interest. Are you for real? So there's something analogous to this that went on in the midterm space, right? There were a lot of people fill in their rooms from furnished finder and Airbnb and wherever. And then eventually everyone found out about the insurance, right? If you go to the insurance centers or whoever representatives are, and you form a relationship with them, now you get leads sent your way. Something that was maybe, I don't know if it was unique. So this is my question. In the midterm space, you would get a lot higher rent. You would get leads and you would get higher income by go into these lead sources. When you were getting referrals sent over, were these higher rent than other sources or is it just higher lead flow, especially because you mentioned the paid internships where sometimes the company is paying for the rent. So were there scenarios where you got higher rents? Not regularly. Not in a way that said, just like mind blowing actually rent, but we found a cycle we found and it was easy to freeze here to rest on the cycle of the city, especially this city in particular that has a very two season cycle September to May for all the students that is like a clockwork always. And they made two hours all the interns. And you get accepted into summer program. You get accepted into training programs and all these beautiful technology companies, pharmaceutical companies, or everything that we have here. Oh, I got an internship that he goes from and it's like a clockwork and that always helps have over 95% occupancy. So it was easy in that sense. Once you get to know the wheels going just to try to scale and we scale as much as we could with what we have during that time. Okay. Clara, out of all of the ways that you filled your rooms, what percentage of it was the relationships with all of the employers in the schools, rough numbers versus online mediums or anything like that. I love that question, which of us kept track? I might direct operations. I think he kept track. I would say maybe 60 40 or 70 30. Wow. Where 70 60 or 70 is the corporate. The corporate. So we have some with the left and the middle. So let's go to Google groups, Facebook groups. Yeah. So that's a massive opportunity. And so when does it make sense? Like how many rooms do you need to make sense before you actually start going to these things? Right? If you have one house, two houses, it maybe it doesn't make as much sense. When does it make sense to have relationships with employers? What do you say? It's not when is where. Okay. Meaning how, how are you far located in relationship to them? One mile to mile, three miles for the transportation versus not only the transportation, like how far are you? And then you walk, you drive, you bike, you take the bus, like how far are you? Cause you have a hundred rooms, but you are many miles away. Maybe not. So it's not about how many or when is location. Okay. So then let's say this. Let's say I have one house. It's got eight bedrooms and it's a half a mile from this plaza. And in that plaza, there's like a planet fitness and there's a restaurant and there's a manicure spot. Like it's one of those kind of plaza type things. What I just go into all those businesses and be like, Hey, I got a house down the road. Where no, I will go to the management of that place. But what it makes it what it makes sense even with just one house to go and network with those people. Yeah. Why not? What do you have to lose versus what you have to gain? I will not go to a store by store. I will go to the management of the whole more because they know everybody, you know, the easy, how will you come with more authority that if you go hand in a flyer? Oh, hi, look at my house. No, go to the management and talk. Hey, how do I do this? I have this maybe and they'll guide you where I see. So you're trying to go to the lay motor, the manager that manages the complex. Yeah, because you need to be sure that what you offer and make sense for this client base, right? As I always say, the three other between cost community and convenience. So if you are in sure that you have a fantastic product for them, what is to bring you for knocking in the door? What is to me for knocking in those people doors? I guess my naive is that you pick in the phone. Hey, are you the right person? I just open all the websites. Are you the right person? Yes. Oh, I have this and they come or don't come or you start being in from there. Now, I love it. In location to me more than the right time. Gotcha. So I think that you're also doing something unique that we haven't had anyone on the show. Katering more towards the student side of things. I think most people in co-living right now are focused on the affordability, the affordable demographic, right? Folks who really need this affordable option. And I think that plays into all of them. But for some people like that is like the main demographic is just affordability. For us, our main demographic that's looking for a room is often military in our market. When there's students is another one, right? There's some other like sub sub demographic sub niches. With the student one, I think it might operate most differently than every other demographic. So because like you mentioned, seasonal like internship periods, then you have that they're only in school for nine or 10 months out of the year before the summer rolls around. So how do you think about the student demographic differently than the affordability one? And is there certain operational things that you need to be considering whenever you're targeting the around students? Yes, 100%. And when I have a free webinar for the URI every Friday and noon, there is like very full and a lot of people comment on sorts of questions. And everybody is very surprised. And that's the first thing I say so many companies are doing, Colleagues outside the concept of just one or two different lead generation systems that are out there. Certain legionation systems are geared towards let's say affordability people that may under 40,000 dollars or 50,000 dollars. But Colleagues in itself has existed and grow in different companies and different models across the whole country and I hold the crowd world for like more than 10 years or more. And they not only cater to students, their professionals, they also tons of looks or equal living that we don't even know about or discuss about it anywhere that are in my back. Jarnio yours back. Jari lays on Francisco all over and all Latin America, Europe, you name it. Yes, and including my different Mario and Rostov. So what do you do different? So you build for the client. What does this client need? Number one, this client needs a very nice comfortable desk on the room. Why? Because they study or the practice like crazy. So they need Nora like at this and this. There is not going to fall apart. More than the size of the very size of the desk and that comfortable in the desk in the chair. That's very important. That then you have a clear list of rules that you treat them with certain certain maturity. They know what they're doing. And when you and it's easier also to underwrite them as our students because they have either a student loans that support them or a student loans or always or means to support the rent. And they write had more convenience or their households than than being penalized for not taking the trash on time. So you treat them like adults as managers. Hey, guys, this is one is to be done. Like, clock is on time and they're very easy to report, very easy to communicate as well. So a little bit you treat them. I say a little better and we had to be like in the area that not sure because sometimes there is also a sense of entitlement. So what is the right line for you giving convenience very everything happened to them also a little bit of feedback under the name. Hey, how was the moving in what is and have a system of communication like a fluid communication. This work didn't work when you move in and you find anything else perfect. And certain cultures, especially European cultures don't like to use the dryer in the washing and dryer. So they want a particular way to do things like that. So it's interesting and they're different that they don't like coffee makers, but they like to burn the water for the tea. So, and cultures have different things in your household that you need to have for them for the convenience that now you think of or for every property. So we worry about what they need. Gotcha. Yeah, so even beyond students like everyone should be considering the demographic that's in their area and set those properties up to align with what those sort of clients would want. So on the leasing side of things, Clara, again, sorry, just keep bringing it back to the students because I'm really interested. Students have been like the co-living demographic for potentially the longest time around my university. Yeah, we rented a room. It was furnished with the desk exactly like you're saying. And these weren't people that are on the co-living podcast today, right? Like these are people who've been doing it forever. So whenever you think about leasing a building up, are you targeting, yeah, getting everyone's leases to start in August or September or whatever and ending, you know, at the end of their school year, and then targeting people to come in for the summer? Are you trying to get people who stay the entire year? What does the leasing durations and timelines look like in the student model? When my company started, I was doing a minimum three months. I stay as much as you like, I have people for 18 months and 20 months in just one place. Why? Because the job contract from their pharmaceuticals, like a beautiful resident, she moved from France and she could have contract with a pharmaceutical that has an obvious in France for her to be in this place for exactly 18 months. And she couldn't believe that she found widows exactly the product that she needed something close to her work that she could walk in the middle of Cambridge and for 18 months, like over the month. In room with private bathroom for $1600, believe it or not, I know it does well price. So I started at three, but then once you understand what are the city movements, the demographic movements, when like that. So minimum of all, we three months and we, I don't know if you have this, but you have certain seasonality. So you have winter months with like terrible to have vacancies. So we all, if we have a winterly, so, hey, I need to live in December. So we in the right, these persons, least to have a little bit of a premium to cover for the winter months for the for a little bit of the cost of the month. winter months. So we don't go in the red because of the heating, the heating being at the same time. So we play with those when minimum, minimum, always three. We do the average is nine, nine and then four and five. The pencil. So would you accept a three month lease? If someone, yeah, came in August, we like when the school year is typically starting, would you sign a three month lease there, even though that could probably not anymore. I will do it just August, there is almost nothing starting August now, start like in September. Oh, I want September to November, no, I want September to December. Yes. Or I would ice it out. If you want September to, or you want September to November, shoot, but then you're gonna also cover, find a way for us to cover the, what are the cop outfits for that room for December? Okay. Time to advertise. Okay. So that's how you like, so if it was a shorter lease, you can build in your operational costs. And the beauty of it, correct, but the beauty of it is that they're personally okay with it. No one else is providing the product. Got it. So again, when I say create a product that creates the call, the community and the convenience, you really need to find you have to choice. That's right. You can read. Oh, no. And then that's it. Or find a way that works for what? And we have done many, many times, many times. Hey, nine, I know it's a short lease, a 200 more. Okay. Sure. Love it. Thank you. And they're, they all posted a piece. They're incredibly grateful because they need to stop looking. Yeah. Yeah. And for everyone out there listening, you can watch your chats that are happening in Zelo and Facebook and like all these places and figure out ways that you can make your product better serve the client than other people in the market. Because we had something similar, Clara. We had a, we had a lot of folks reaching out to us wanting to do three month, four month leases. Then everyone in our market only offered six months. As soon as we offered two months less, even out of premium, like a higher event, everyone was stoked about it. Everyone's, oh, yeah, totally, I'll pay a hundred bucks more. There's nothing else for me in this market. So I think that you're, I think you're on to it there. And then you say, they say, thank you. And give it five stars. Yeah. Yeah, exactly. But yeah, but then just kill that. What did you do when that is working? That is not going to be the operational headache for you. Also, that is good for the company. Because then you have enough time to advertise again for that particular period and then be creative about it again. That improves your overall, like margins, your profits, and happy customers overall. Clara, question. So I know you're big in the student market. What other markets are you seeing that that work really well for co-living? Are you targeting anywhere? Do you have a demographic or characteristics of a market that you like to look at? To me, it's very simple. Is the delta between housing price and what is the, how much people are making over there and how much water the main employers and drivers of the economy? More than anything else. I imagine Miller, Toto, same and you do the same. More than students in particular. So I do believe in co-living as a solution for accessibility and housing. Like period, right? I do lean towards market like Chicago, and even Nashville. And others that don't have a lot of stabilized or, you know, good name, good brands co-living. I'd be first and a lot going to a little populated area like, you know, how much co-living area in New York? You wouldn't believe it. Like thousands. So I wouldn't go where every area is. I'll find new niche that have enough student population or that mix between students and jobs. So I was looking at, I was looking at the triad between Charlotte and Rally. It's very interesting. Virginia, I was looking at Virginia, Newport, Virginia, Sacramento, seems interesting. And I'm obsessed right now with Nashville. And was going on in Tampa. It's also interesting. So it's a mix. Like, where are you going to go? And what is the population that you know how to serve? Did you look into like regulations and stuff at all into these places before, you know, you'd go there? Yeah, but it depends how you want to make the play. Yeah, so like in an area, let's say, I actually don't know the regulations of Charlotte and stuff like that. But I've heard North Carolina has like more stricter regulations around co-living. Let's just say it is whether it is or isn't. Would it just be like a no go or would you try to figure out ways around it? Or yeah, what's your strategy there? And I said, there's a hundred million times. I work with the rules, not against them. And that's why Massachusetts is very simple for me because it's just a multi-family. In one building, you have 12 people instead of having a house with you. It's impossible here to do or nearly impossible to do co-living here in Massachusetts in a single family home because the million prices are not a million dollars. So no, it's no way. But with the million for Y1.2, you can get a multi and then pull 12 bedrooms in there. And same thing. So I ride on North Carolina or a Mr. Tan of Rhode Island. I know you have a this crisis and this solution are can we work together? I ride on North Carolina or at the same time I'm not going to do some these situations that find a way behind. I am pretty much all in into what I believe is not the future but the news, the state of chair and housing which is rooms with end sweets for post build rooms with end sweets with an area that are and for you, for anybody that wants to build rooms with end sweets, they need to what? Get permits. And how do you get permits going to the town? So impossible to build, purpose bill without sneaking permits, right? So I ride that's what I'm going, that's what I'm going myself with my students or my clients, only in purpose billed and how we can optimize purpose billed. And purpose billed is already permitted approved regulation approved. So does because that way can accelerate implementation faster, solve the problem faster. Yeah, that's it. You know, I created it for I create which is like a really nice product. Yeah, okay. So now you're it sounds like you're going to develop these 12 bed, 12 bath, 16 bed, 16 bath type, multi family structures where everybody has their own bathroom. Do you have any fear that that asset will like because it's really not worth that's not cold living is at the only thing that I can really could work for. Do you have any sort of I guess like fear that you won't be able to resell it someday if whatever or is it too much of a one trick pony? What's that? That's a great question. I don't operate on fear fear is a future expectation of all results, you know, or everybody has different interpretation of fear. You should see in what Mario is doing here in in his we have one town in Massachusetts cold summer bill right next to Cambridge and he's doing a lot of rooms within Switzerland because it's allowed by that town like no limitations on how many people can be together and he's getting you know 1500 1800 also there so he's doable yeah. Fear no so here are few reasons you build intelligently and not being like a mega places but they are designed with the exit at hand all of them and not a stacking of way that the north is taking away that they will not sell that's what I want to say. Okay and how do you think you would sell these let's say you build these you hold them for a while would you sell a mask cold living and do you think they'll operate how would a investor evaluate one of these portfolios? And what makes you think they want to sell them? I don't know do you want to retire someday? We're talking 150 years down the road like when you reach retirement age but entrepreneurs never retire question mark those entrepreneurs retirees entrepreneurs never retirees I don't plan to retire. I'll pass them to my family or something right now I don't plan to retire and the answer always sustains and if sustained there's several extra users several extra users that we can disclose in another podcast I don't want to get distracted from the beautiful world of arbitrage and operations. Yeah. Fair enough okay cool. So it sounds like the building is next okay one more question of the building how long do you anticipate these builds to take are they one year to year? I spent pretty much the last three months interviewing developers across the country and we have selected a few to start working with and the bills are going to be between four to six months all of them and one maybe seven months total but they already done it and they know what they're doing and I test I'm huge on quality. I don't like things that are going to be built to be broken in five seconds build on quality and seasonality. It's seasonality meaning that the development season and of like in those what he's doing across building something that's going to last and that can be have that can have multiple exits at the same time that would you have a nice product we're already sending a low-eye the chance or a industrial Spanish in fact we have a low-eye right now that yeah it's ready to go for the first 20. 20 houses or 20 bedrooms? Two units 20 bedrooms and then we have a no one coming for 14 and I don't know for 20 is easy to faster, sweeter and you might end up using codes like really well. And so you're buying and building these then huh? That's that's the plan of Colleague in capital yes correct. Okay so how much does it cost to build one of these things and how much money are you raising and how much are you contributing if any? The money is raised already really yes the money is raised we are the money's raised we're working on and finalizing like certain certain legal details in their yeah that's it. Cool. I think a lot of people out there will have this question in the future but like right now a lot of people are just buying existing homes and remodeling right so like some of the differences between that model versus building one of them is usually timeline so it sounds like you crush that which is really awesome. Whenever you are building these places or you're remodeling this places maybe we can get into some of the operations here what sort of unique things are you doing like with this floor plan for build or a remodel to make it operational operationally efficient for co-living are there certain things you're doing there? Everything is purpose built for Collevin and remember my thesis called Community and Convenience Price and Price for the resin has to be right, has to be an example of community, it has to have one or two very nice common areas for them to say hello to each other good morning how would your day was and a little bit of communal year short of where the mail goes or how was your day kind of something that makes them interact with each other not high behind a door and not a key of that and I like to bring like games and pizza once in a while and as most just possible land internet meaning building other than collections because many clients also like work from home so regular is not that you want to be a broadcasting YouTuber something like that but you need maybe serious more serious internet when you work from home and you want the stability so that's important and again I'm fan of the big desk not the tiny desk that's essential and free washer and dryers no color operated I don't like nickel and dye in my residence not a fan of doing that as well yeah and a little bit of optionality how do you want more than the room color a how you want any particular no set of items in the house or what you are something that makes a little bit of personalization for the first residence one things are ready I know that works really well because then in makes impossible to and morning and of course you all notice that statistically speaking all the Collevin assets when they have a private and in suite the length of a stay or the length of occupancy is just tremendous how much higher so I honestly that's a really good data point to look at that I've never looked at I have never split on her tenure by shared math and private math what sort of difference are you seeing there oh if the number is the first one that occupies always and the longer so I see I had people there like 80 months a year all the time and they don't want to leave like the first one and they don't care about the premium they just wonder privacy that because they're used to it they're okay paying for it some of the c because that are run by this or company they say that occupancy with in suites are about 90% 92 versus 70 or 80 in the one so always oh wow that's a data point that my friend I'm surprised that you know that one yeah I know I'm kind of surprised I haven't split that out too it sounds obvious that you say it's you're so looking nice are you a poser are you a poser Miller he's a data guy oh doesn't even yeah again you're blocking science are you blushing and you're blushing you're gonna read right now yeah I know I don't like when people make me feel stupid and Craig just keeps doing it so we're bringing all these awesome guests and now I'm the dumb one in the room yeah sorry someone's got to be stupid it doesn't it doesn't happen much in your whole life yeah I got to be put in my place sometimes for just to once again car car will make anyone anyone feel dumb because you're okay car one okay one last question before head into the final part of our show what is someone's just getting started and they want to be in co-living like what would you recommend what is the path that what is the next step for them as themselves why you know what you are being believe in are you in here for the morning are you in here because of the housing are you here because you want to help people once you understand the why you you'll get the you get the bad right you are in here for the morning you're in the same place and stay out of you know stay away is your here to help people then understand how the operation side of it worked and if you are here for the long term and you have capital and you want to learn try always to learn from the best and go slow run and fast because there are a lot of Chinese objects in this industry Chinese objects all over the place is not about the blowing decisions faster but make them long you want to build before the long term again this is no I don't think I'm in this opposite that you I don't think in seven years this is gonna go away it's just gonna cement a different asset class that we are that we all are in some way consolidating or starting to consolidate I believe that five ten years from now is gonna be very normal to for the divided to understand collision but we certain people are going to be in the forefront of acquisitions inventory leadership in the past so listen to the right people and those all those portfolios and their taxes are gonna have a premium to a point I love it and maybe some of those right people are here on the show on the the co-living show so keep listening to the co-living show that will be that'll help all right Miller do you have anything else you want to ask Clara before we head into the final part of the show let's head into the final part and we call this the big three that was the best you've ever done it yeah we'll see in post when we sink it all up how it actually yeah on my and Greg I got to say that was like two three seconds delay so really on mine it was like perfect timing I pretty just for you so you think it's not a good gotcha so you knew you lacked it okay see okay Miller I'm gonna I'm gonna revoke the dumb card but I gave you a lawyer and now he's smart again I'm back in the smart bucket Miller is back in the smart bucket the longest he's ever spent the dumb bucket has been today for about 45 seconds so yeah long enough long enough did it feel weird in there yeah I was actually kind of lonely just given the company in this room you guys were over in the smart bucket so yeah all right let's kick it off with the big three questions so number one here Clara what's one belief about co-living operations that operators are still getting wrong today that collision is only for the poor people or people that is under the minimum wage it's absolutely wrong believe not important from the fact boom there you go I love that if you were to start over today as an operator what would you focus on first oh love that as an operator creating a different product that is not here yet feeling a market for something that is not done yet fine so the blue archon yeah let me think that's a great question from the operation perspective he's not building the team he's not building the service he's building who is the opulation of the market that is not being taken care by co-living now and how to scale and how to scale safely and it's not by just arbitrage right so be careful with arbitrage yeah you use it gets on revenue from there and then use the revenue to buy or to create the finance by or whatever but don't put your all your eggs in that basket I have so many horror stories I one of my dear friends she built a thousand unit per volume all in arbitrage she was making ten million ten million a year I think in just arbitrage some Francisco LA and DC and you will own down to zero in the rain covid so yeah don't do that well yeah and I think that's a caution we've heard from two out of the four guests we've interviewed so far I think at least yeah you guys definitely are not in a good start where it's not in all right and our third question here what is one housemate roommate horror story that you have what's your what's your best story there oh I don't have that many and where I have one guy that used to smoke in the room and use the whole apartment smell really really bad and it took we have to clear the whole clear him out and then clean paint the whole apartment about four times for the smoke is smell of the smoke to finally leave is what's disgusting sorry not really horror my people are like oh wait anything okay nevermind I was trying to take no that was it honestly that's not too bad let me ask you that's honestly do you think that you don't have a crazy story because you are less directly involved in the operations or do you think the tenant screening is impeccable or like why don't you have a super crazy story then a screening is really good and the quick so people that are just a student's like a professional then they're but that's it rooms that are very pretty but over and that no that's I see like pre-horter people that never clean the room like a very smart educated PhD something and then you go on this trash all over the floor wow and it's the lag between and it's the lag between social skills and all skills that sometimes it happens and I have one time but this is not a horror story but it's a foreign story I asked I ate messes the apartment time to take the trash out and this one of the residents was new and she took the kitchen trash bin to the court and then what happened to the trash in the kitchen is like the trash people took it which didn't put the barrel outside which is what because my sources were not clear enough chinerere specific instructions because she has a PhD in neuroscience so that's like a thing like that and then I have to do a video and have to do the trash and then I have to do a education video and how to use the washer and dryer because they don't know how and you know how to open a kilo like they they know how instructions boom so do you so one last question on this do you think because you're in a higher chance of market and you're not renting to people in the lower socioeconomic situation that also could contribute to maybe there's a correlation between higher price point markets and actually better tenants. Yes there is number one but also how is how do you treat them imma be because we're not like a penalty oriented I think there is a like a level of respect and we're really good at reading people because I have people from all the socio-economic like people that have minimum wages of course I'm not saying I never have them too. And please how do you address them and how do you address the rules of your believing right you have it that rules your everything rules for them to have a comfortable space. You get on the right and well but how do you address them? A is time to do access time to do what is this is the end this is the beginning very clear without any capability no capability for like such stories you have three options ABC very clear very on point at some point one of my like a some brand company one of to understand my brand. And it was like me like at the call out, like you can talk to your aunt. So the brand was like a cool aunt. So people was staying with the aunt and your fine and cool and responsive and like comfortable. But when it's time not to be cool, then you know you can be cool. That's normal. For sure. Cool. All right, Clara, where could people find out more about you if they want to learn about you? If they how do they follow your story? How do they learn more from you? My Instagram is just beginning. Life is rock and roll. But my website is sorry, Miller. Colleving cash flow.com is my website and on my Facebook page, Colleving cash flow, you can find the link to all my free webinars every Friday and I have guests going all the time. I just did one very cool life in how to use IRA funds to invest in real estate. Like I mentioned, yeah. Great stuff, Clara. Thank you so much for coming on. Thank you so much for sharing all your wisdom and knowledge with us. And yeah, what's your favorite Metallica songs? Oh my god. It is not in my favorite Metallica song where I was thinking in Rome where you lay your head is home. Is that a Metallica song? Yeah, the name is Rome. Yeah. Okay. Yeah. I'm with you, Clara. That's my like song. I love that song. You want to see here real quick? We cannot do a duet. You know what I have? Where I lay my head is home. Is this the video pass for the second? I'm going to make you feel so jelly. Wait. Okay. All right. All right. Can't wait for this. What is this? You got a guitar pick there? From James Hildfield. He was playing in Philadelphia. I was running from him and he threw the pick and I got it. He played. He played my song with this pick and then throw it and I got it. That's amazing. Yeah. Clara, let's go. My Metallica collection is like this is my favorite item. One of my favorite items in the collection. No, but away the sphere. The coming to the sphere September, October. So prepare. We need a Colleving conference in Las Vegas in September. Throw it, Clara. Like that. All right. Clara, thanks so much for coming on. Make sure you're following Clara on Instagram. Life is rock and roll for your favorite co-living slash Metallica material. Clara, thanks again for sharing everything. Truly amazing. Thanks for taking the time. We'll talk soon. Yeah. My pleasure. Whoa. Metallica. And that was Clara Arroyave. I cannot throw the Rs. Bro. I feel like I'm annoying myself. So I apologize to anybody else that like finds me trying to roll my Rs. annoying. This is something we could fix in post, by the way. I think we could just take your and just take it and make it like 50 seconds long. People are going to be like Craig's done so great this whole episode. Why does he keep saying he's messing it up? Yeah. That would really mess people will be like messed up that we're messing up. That's a whole whole other thing. But yeah, what do you think of what do you think of Clara? Yeah, dude. Yeah. Like we said, yeah, I think Clara is incredible. Really good episode with her here. Diving into some unique aspects of co-living. Right. That's what we're trying to bring to you guys is there's people great at all different aspects. And Clara, someone who's crushing it in one of these larger metro type markets that don't get a ton of exposure on a you know other co-living outlets. So happy to bring that to you guys. Yeah. I love her experience on like a more expensive market. I just I don't know that always resonates with me a little bit is because people think you can't mess in these expensive markets, but actually they tend to maybe even do a little bit better. Yeah. And I think one really cool thing that she's doing is she started this like I said kind of in like phase one or some previous phase of co-living when padspot.com is an around rumies.com is an around like all these like online listing sites. And you guys heard how she filled up her rooms without having access to all of that. And I think those are lessons that we can take today when some of these listing platforms can be oversaturated with supply. Right. There's still the old way to do it. And Clara is still making it work that way today. Yeah. One one thing that I'll let you guys all leave with is why don't you go like I'm going to encourage all of you if you have a house that you're renting rooms out in. Go to the nearest plaza near you. And whether you're talking to the management of that plaza like the property management or you do have to just go in and talk to all the owners of each individual business within the plaza. But go get your name and go get your go with your house out there about trying to get your rooms filled. And I'm like super curious to see how that works. That's going to be something that will probably be implementing here in the next two to three months on a on a bigger scale. So do that. And I'm looking forward to hearing and also report back in millers in the Facebook group. Co-living community Facebook group. Let us know how it how it all went. Miller, you got anything else before we head off for the week? That's all. Thanks for joining guys and we will talk to you guys soon on the Co-living show.