Neal Bawa, Grocapitus
"And the Geek Shall Inherit the Earth - using data science in commercial real estate"
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WHITE BOARD WORKSHOP
My guest today has managed to convert a successful career in tech to one in commercial real estate investing. As Neal says, he 'doesn't run a real estate company that uses tech, he runs a tech company that is in the real estate business,' and there is a lot to be learned from this perspective.
Find out how to create a pipeline of investor prospects by giving away something of high value for free, how to get emails opened even from cold prospects and what cold prospects are, exactly. And discover how Neal has made his company so successful by structuring it with two thirds of employees dedicated to marketing for capital and only one third to the business of real estate.
Lot's in today's episode whether you have taken the plunge into raising capital online or not, that will reinforce the power of content marketing.
What You're Going to Learn
- Connecting the dots between tech and real estate
- How to take the Google approach and give stuff away for free
- Guidelines for identifying the best cities in the country to invest in
- How a free online course can drive a massive amount of branded traffic
- That content rich town hall events will increase engagement
- About targeting your audience through the LinkedIn events feature
- How to attract accredited investors with FacebBook's lookalike audiences
- That building a brand is a process of becoming an influencer
- And much more!
Listen To or Watch the Full Podcast Here
Connecting the dots between tech and real estate
ADAM GOWER: Neil Bawa. Thank you so very much for being with me today on my podcast. It's a pleasure to meet you and to see you and I have one question that I would love to kick off with. There's actually a couple of things that are very interesting. We'll come back to the second one which is a quote I am going to repeat back at you from your, actually from your LinkedIn profile. It's really interesting but, before we do that, let me ask you this. You have... you've been in real estate since 2015 but you have a very long and illustrious tech background. So, how have you connected the dots between the two disciplines of tech and real estate?
NEAL BAWA: Well, firstly, thank you for having me on the show, Dr. Gower. I am going to answer that question in a slightly elaborate way because it's an interesting part of my story. I am not in real estate. I am running a technology company that is masquerading as a real estate company, and it has always successfully masqueraded as a real estate company. And I think it always will be. So, all I did was I moved from core technology to real estate technology. So, that jump is smaller than most people think. When you look at the org chart of my company, I have 24 employees. It doesn't resemble the org chart of a real estate company. Obviously, there's, you know, people like underwriters and asset managers and that looks like traditional real estate for somebody that's running a three hundred million dollar portfolio. But the massive majority of my company is actually running like a dot com and like every dot com, we have a very outsized, massive focus on eyeballs, on content development, on having 12 or 13 different incoming pipelines, both for cold leads and for warm leads and then we have entire departments processing cold leads and turning them into warm and processing warm leads and turning them into investors. And so, I think that if you look at the org chart of any other syndicator in the country you'll find that it's different from mine. So, haven't transitioned it to real estate. I'm still in tech.
ADAM GOWER: I love that, actually, and I was hoping that would be your answer.
Testing hundreds of real estate metrics and publishing results
NEIL BAWA: When I was in technology, 2003, I was building campuses for my company, so I was basically in real estate, but I was a technologist running a technology company, building these large custom campuses for our company's needs, using the company's money. So there were no investors. We were the investors ourselves. So, when we were building these campuses, I got interested in real estate, learned about the depreciation benefits and they were great for me because I had the big fat tech salary, you know, 50 percent taxes. I live in California, so 50 percent of my salary was taxed. I saw the depreciation benefits, I'm like, oh, this is great, I got to do more real estate. Right? So I started doing real estate, you know after building those six campuses and getting those depreciation benefits and I'm doing predominantly single family real estate and I'm basically, like any other good data scientist tech, I'm mining websites, I'm spidering the Department of Labor website and I'm making copies of the Zillow website and taking all of that data and mashing it and trying to see patterns in the data.
NEIL BAWA: Like any good data scientist, we're trying to read the tea leaves because one of the things that data scientists do differently is they come up with a hypothesis and then they use data to test it. Right? So they don't just go out and willy-nilly invest somewhere just because it's 10 minutes away from their house or because somebody said it. They want to create a hypothesis and then test it. So I went through this process of testing a lot of hypotheses, and then I started publishing my results on the Web and people really liked what I was doing because I'm in Silicon Valley. Everyone around me is a geek or a dork. Right? Take your pick. Right? So we only come in two varieties here, geeks and dorks or there's a third variety people tell me Uber-dork. Right? So, amongst us, in this land, of all these geeky people, I was like "micro-famous" all of a sudden because I was basically taking hundreds of real estate metrics and I was applying them to hundreds of different cities and publishing my results.
NEIL BAWA: And so, initially it started with people calling me to local meet-ups to present my ideas. And, I've always been an entertaining presenter because I realized that, you know, numbers are boring so you really have to break it down to something that people can understand. Right? Twenty-five years ago, somebody had said to me, you know, when you're teaching people your first an entertainer, then an educator. Right? And if you get the entertainment part wrong, you could be the best educator in the world, nobody's ever going to get anything out of it. So, I learned that lesson well so you know, when I'm teaching, I'm entertaining people. So people found it fun. And so, Local Meetups started calling me in and then podcasts started calling me in to do a podcasts. I think this is my like, my 120th podcast that I've done.
Taking the Google approach and giving stuff away for free
NEIL BAWA: So I did podcasts and then people started calling me for conferences. Now in the pre-COVID world, I would teach a conference somewhere in the United States every month. So I have about 12 conferences a year. Most of them are either multifamily or real estate or syndication conferences, though there are some that are outside of this realm which are in the commercial real estate technology realm and I have a space there. I'm an active investor. I'm a venture capitalist so people are constantly pitching me commercial technology startups.
NEIL BAWA: So when I did that, when I was doing these pieces, what I realized was that that no one was really publishing this content. If they had something good, they immediately went to a venture capitalist and they tried to get one hundred million bucks for it. So I said, I'm going to take the other approach, which is the Google approach.
NEIL BAWA: Google was giving Gmail away for free. Google was giving maps away for free. Like, you know, I really like this approach. I have no idea how to monetize this but I'm just going to, you know, I don't have to make any money because I'm a tech guy. I have a big fat salary. I'm just going to start giving stuff away.
NEIL BAWA: So I started building toolkits and then started building courses. So I built the toolkit. I called it Real Focus and it's a data-driven but very simple methodology on how to figure out the best cities and neighborhoods in the US to invest in. And then I said the toolkits good but I should actually turn it into a course and I should give the course away for free. So, I put the course on my website and there were like, one hundred people taking it every year. And I'm like, no, this doesn't work well so what I did was I gave the course away for free without having access to people's email addresses on udemy.com. So U-D-E-M-Y.COM/realfocus/. And I was like, you know, if instead of a hundred people I get two hundred people a year, I'll be happy. Well, it just exploded.
NEIL BAWA: So right now, if you go to udemy.com/realfocus/ there's 7,000 people taking the course today and there's 500 five-star reviews. It became the most popular real estate course on the entire website. They have hundreds of real estate courses, but it became the highest ranked and the most popular simply because what people liked the most, you know, Dr. Gower, was that there was no agenda.
Guidelines developed identify the best cities in America to invest
NEIL BAWA: I had nothing to sell. I was not a real estate guy and so I was basically just saying I am a Silicon Valley dork and here's my findings and use them if it's appropriate and feel free.....
ADAM GOWER: Let me actually jump in there and ask you...pause... I'm interested. What was the course about then? It was basically your data. You discovered that you could analyze data in order to identify good locations for acquiring single family homes in the United States.
NEIL BAWA: Or multifamilies. So the course...
ADAM GOWER: OK.
NEIL BAWA: It works slightly better for single family than it does for multifamily because on the multifamily side, you need an additional component. One additional component called "supply". Okay? You don't need that for single family. We didn't find a correlation there. So what the course does is, it is a set of five rules for identifying the best cities in America to invest in and five rules for identifying the best neighborhoods in those best cities. Right?
ADAM GOWER: OK. And this is entirely premised on data, right? This is your....
NEIL BAWA: It is completely data and it's a 100 percent data driven, no gut feel, no experience. You're simply looking at data to to make better decisions. And it's not perfect. It's not a it's really not a set of rules. It's a set of guidelines. Right. Your gut feel still works.
How a free course can drive a massive amount of branded traffic
NEIL BAWA: And so people started really to like it and they started building upon it. They started developing it. They came back to me and gave me improvements which I subsequently made to the course. And what happened was Udemy doesn't share those people's email addresses with me. So for it to become a successful funnel, when I did finally sell my technology business and move into real estate, become a syndicator, I now needed to raise money for my syndication: three, four or five million dollars at a time. So, I'm kind of scratching my head going, I have this enormous audience, but I don't have their email addresses because Udemy doesn't give it to us.
ADAM GOWER: Right.
NEIL BAWA: What I realized, though, is Udemy allows us to reach out to those people four times a month. So what I did was, the same thing that you are doing, Dr. Gower. I hired content writers and those content writers would write three emails a month about my content and a fourth email a month that was basically a sales pitch for my projects.
ADAM GOWER: They....Udemy lets you do that...you say can say...
ADAM GOWER: Twice a month you can send out emails that have sales pitch content, that, you know, you can have links offsite and twice a month you can send out...
ADAM GOWER: I cannot believe. Here we are talking about this. I swear it's to you, it's absolutely amazing. I lobbed a course up, I lobbed a course up on Udemy, I don't know, last year
NEIL BAWA: Right.
NEIL BAWA: Totally forgot about it. I haven't look at it since then.
NEIL BAWA: Yeah.
ADAM GOWER: Thirty five hundred people....where the heck did these people come from?
NEIL BAWA: Well that's just the people taking on... its a very large audience.
ADAM GOWER: I haven't sent a single email. What the heck. I've just been trying to figure out how to tap into that. It's unbelievable.
NEIL BAWA: Four emails right? Right? So two that can talk about your course and your content and two that can talk about other stuff. And so, I was basically... what I started doing is, I hired a content person and I put them together with a virtual assistant. That content person would write four of these emails every month and sometimes they were repeats so it's not like they're writing them every month. They're repeating them every 3 - 6 months because people are coming and going. And then I've got the virtual assistant that posts them. And by doing so, I was able to drive a massive amount of traffic to me that was already "branded" traffic. The people that took this course love me, right? I mean, because we pretty much get all 5-star reviews. So it's about averaging 4.8 out of 5. And so people love the fact that there's nothing to buy in the course.
Content rich town hall events to increase engagement
NEIL BAWA: So what we did was there, is that we first started inviting them to extremely "content rich" town hall events that we do. So right now, we've done six town halls that are the impact of COVID on "X". "X" being single family real estate, student housing, senior housing, industrial multifamily and so on and so forth. And what we do is we bring in guests who are told that this entire webinar, like 75 minutes of content is "zero pitch".
NEIL BAWA: You're not going to say who you what you do. We're not going to say what we do. It's simply "high quality" content. And lots of times people are like, no, I need to pitch something. Well, the answer is sorry, right? You can't. So what we do is we use our army of virtual assistants. We have 18 virtual assistants to find very high quality people that are like just, yeah, brand building is enough. I know Neil has a huge database. It's not going to be 50 people on Zoom, it's going to be 2,000 people. Right? So they know that. So they're like, fine, I don't need to pitch anything.
NEIL BAWA: I'm just going to come and talk about my experience. And so, we bring in these high quality people and we do this 75-minute event and we basically push that out to the cold database. But there's a tweak in there that I think most people listening will find very compelling. If I send that email from Neil@grocapitus.com the conversion and open rates are very low. So what we do is, we send the email out from Eventbrite or from LinkedIn and from meetup.com. So those are three of our channels, as you can imagine. Right? Eventbrite doesn't create a lot of registrations by itself. So, you know, if you post an event on Eventbrite, you might get like five people. Right? But what I do is I basically take my cold database and send them the email invitation through Eventbrite and because of the brand of Eventbrite and the fact that nobody wants to unsubscribe Eventbrite, I get a much higher open rate and a much higher engagement rate because the halo of Eventbrite.
ADAM GOWER: That is genius.
Target your audience through LinkedIn events feature
NEIL BAWA: LinkedIn actually now has a function called "Events". So, we have a full-time virtual assistant that reaches out to 200 people on LinkedIn. We pay for the the higher level LinkedIn, so we actually can segment by income. So what we do is we target people that are VP Level or higher.
ADAM GOWER: Oh I see.
NEIL BAWA: And then we know they're accredited and then we reach out, 150 people a day to basically....
ADAM GOWER: Manually, you send them messages.
ADAM GOWER: Well, there's software that does that. But yeah, so we basically do that. 150 people, some percentage of them connect with us. Once again, they're worthless to us at that point in time.
NEIL BAWA: People connect with 20,000 people and don't get anything out of it. But LinkedIn events, sending them these kinds of high-quality events. Right? That makes all the difference. And then the other.. the other piece that we do is, you're inviting somebody to your event. Let's say Dr. Gower has the best content-driven, no-pitch events ever. OK. The problem is this. What people don't do is, they don't get reviews from people that watch their events. So what we do is, when we have these content-driven events that 2,000 people have watched, we keep sending emails to them saying, could you consider writing us a review? So we solicit reviews. Right? And then, we take the best reviews and in our next invite, 50% of the space in that e-mail is filled with reviews, right? And 50% of it is about the content.
NEIL BAWA: And then, we keep asking people to give us Zoom video reviews and we put those Zoom video reviews in there. So now, you've got almost two thirds of an email that we're sending out filled with reviews from people that have been watching our events. And those are both written reviews and video reviews.
NEIL BAWA: That doesn't improve the "open rate", but it massively increases click-through rate.
Attract accredited investors with lookalike audiences in Facebook
ADAM GOWER: Now, you also do advertising, don't you Neil? Tell me something about what you found works with advertising.
NEIL BAWA: We spend hundreds of thousands of dollars on Facebook ads. We've tried Google, we've tried all sorts of others. Facebook works the best for us. But again, the devil is all in the detail. I know that many syndicators have tried Facebook. It's extremely expensive, doesn't work well, conversions are low. My feedback to them is: it's because you are not creating lookalike audiences of your accredited investors. Right? So let's say I have 500 accredited investors that love me. Right? You have to, for a moment, stop being paranoid and you have to upload those 500 investors to Facebook as a lookalike audience. Then, what we do is we basically target extremely rich areas of the United States and only run Facebook ads on those areas. So what we're doing, is we're targeting for income. We're targeting for lookalike audiences. We will frequently buy a list of 1,000 M.Ds who may have no interest in real estate. But, we upload them to Facebook as a lookalike audience. Well, now Facebook starts serving our ads to M.Ds. All M.Ds are accredited, therefore our clickthrough ratio improves. Now, take that and multiply one hundred X. I mean, it's the same strategies, but applied across a bunch of different platforms, across Instagram as well. We apply it across so many different platforms.
Building a brand is a process of becoming an influencer
NEIL BAWA: But when I see people doing these activities and I'll give you online examples and offline examples, I think that there is a real lack of intent. People basically will go in and then they will expect money to happen. What we've discovered, in our company, is everything is done with intent. And I'll give you a specific example to understand what the heck this intent thing that Neil's talking about mean. But bottom line is this. You've got to make sure you understand the mindset is: you can raise money online just as much as you can raise money in person. You've got to use tools.
NEIL BAWA: You've got to get in front of people. Face time matters. I...you know, look at me. I mean, I've got the background. I've got the logo. I've got all of that set up. I've got the camera with the lighting. This stuff matters a great deal. And I think people don't fully understand that. Right? And also, you have to build a brand to do this online. I have a very simple brand. I mean, Mad Scientist of multifamily. If you type that in, there's only one person you're going to find and it's Neil Bawa. And, my name itself, Neil Bawa is a brand. Right?
NEIL BAWA: So, I have 100,000 people that know me. The process of building the brand was very deliberate and people are like, no, I'm trying to build my brand. No. How many hours in a week do you sit down in a meeting by yourself or with other people to say, this is our brand building time? Do you have, in your calendar, a day which is a marketing day? Do you have on that day, sections of your day, which are like brand-building activities and are you trying a half dozen things? That's intent. That's you going out there and saying I refuse to do anything else during this time except build a brand and that has nothing to do with with getting investors.
NEIL BAWA: Building a brand is a process of becoming an influencer and then as you do that, then you start a separate process of bringing cold leads into that influence funnel. What I find is, people don't spend enough time thinking about: what is their brand? What do you care about? I care a great deal about numbers. Right? You know, I've only ever come up with one quote in my life, but that quote was the Bible got it wrong by one letter, one letter. It is not the meek that shall inherit the earth. It's the geek. It's the geek, right? Richest man in the world: geek. Second richest: geek. Third richest: geek. You see a pattern there, Dr. Gower? You see a pattern developing, right? We had a guy who is a geek who just got divorced and paid thirty eight billion dollars to his wife, and he's still the richest man in the world. Right? So it's the geek that are taking over the world and I have belief in that. So that's what I care about. And so, I build my brand around that. I don't see enough people doing that with intent.
Targeting 506(c) Accredited Investors
NEIL BAWA: But when I started out, it was like, so this guy loves me and I've spent all this time and he gave me 50 grand and he's done and he's probably going to come back two years from now when he has more money. That truly sucks. I want a subscription. I want a, give me $50,000 dollars a month. How do I do that? That was a big challenge, right, because it's just such a huge amount of work to get an investor.
ADAM GOWER: To get that one person through.
NEIL BAWA: Right. And then, they give you 50 or they give 250, then then it's like, well, I don't have money.
ADAM GOWER: So how do you, have you cracked that challenge?
NEIL BAWA: Well, the short answer is this. We became very, very fanatic about focusing on the very high-end salaried individual or somebody that was, you know, high net worth. Now, when you do that, you're essentially throwing away 50, 60, 70 percent of your lead flow. But, by targeting high net worth individuals, individuals that are high net worth and doctors and so on and so forth. We change our pitch. We refine our pitch. So our targeting mechanisms and our hit rate became a lot better. And that allowed us to basically leave aside everybody else. That's the $50,000 a year person. And I'm not saying we don't get money from those people, but we do absolutely nothing to try and get money from them, except for send out blast emails. Right? We do 506(C) projects. We don't touch 506(B). And so, the other piece that fixed it was we basically said we are not going to do 506(B) projects. We are going to do C's only, which means that, from the very beginning we know that we're going after a accredited investors. And that's our only domain. That's where we live. And I'm shocked that syndicators have been syndicating for five years and still doing 506(B) projects. In my mind, that is a cop out. It's cowardice. They need to move up to the "real game", which is 506(C).
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