ResiModel Crunches Multifamily Data
- Sep 03, 2015
By Leah Etling, Contributing Editor
Motivated by frustration from how time-consuming it was to analyze multifamily deals, Elliot Vermes created a real estate technology solution.
As an analyst for Citi Property Investors, Sequoia Debt Capital and JPMorgan, Vermes saw inefficiencies in existing valuation processes that he thought he could correct. So he developed a SaaS technology platform, ResiModel, which provides analysis and valuation of multifamily market transactions.
“There’s an increasing demand for standardization and sophisticated reporting for real estate investors that didn’t exist when it was more of a mom and pop industry,” Vermes observed.
Two years after it released the beta version of its software, ResiModel has become extremely popular, with a client list that includes major industry players at CBRE, JLL, and Colliers, just to name a few. And an impressive 60 percent of new sales are from word-of-mouth referrals, a statistic Vermes is proud of.
We talked to him about how he came up with the concept for ResiModel and his outlook on the multifamily market.
MHN: With your extensive real estate background, what experiences specifically contributed to the idea behind ResiModel?
Vermes: There were a few things that at first frustrated me, and then I ultimately saw them as opportunities. At my past jobs, we did a lot of non-value-add, manual work, such as data entry and converting data into usable Excel templates. It was a waste of time, and I realized that if there was a way of automating it, things would be a heck of a lot better for everybody.
The other observation was that—after looking at deals—people typically saved this valuable information in countless separate Excel files. That made it very difficult to capitalize on the information for future deals. Comparing deals involved multiple steps and the whole process was extremely time-consuming and inefficient. I saw a great opportunity in improving it.
MHN: Did you get the development process on the first try or did it take time?
Vermes: We went through three phases. Initially I thought I could develop the whole platform myself, but I was wrong. After our first round of funding, we outsourced development of the software to a third party, but then rapidly realized that that would not be an effective way of building a world-class, institutional application. Our final product was built by our in-house team, and they continue to provide our enhancements and upgrades today.
MHN: What were the problems you were trying to solve?
Vermes: There were three. When a deal comes across your desk, you can get that info in any format and people spend an enormous amount of time converting it to their own templates. Often the analysts spend up to half their time just on what I would consider “data conversion.” That was one problem we were seeking to solve.
Second, once you’ve converted the data to your own template, people use Excel to analyze these deals. Excel is powerful, but it’s also very limited. There’s a lot more you can do when you have a robust data analytics application.
The third problem is that all this work you’ve done ends up saved in separate sub-directories on your computer or company drive, making it almost impossible to capitalize on for future transactions. That’s what we sought to solve, creating one database so you can run comps across the deals that have come across your desk.
MHN: Who are some of your clients?
Vermes: On the brokerage side, we’re selling office to office. We’ve signed a number of CBRE offices—most recently their Boston multifamily team; ARA Newmark has several major market offices using ResiModel; and various offices at Jones Lange LaSalle and Colliers are using us, as well. On the buyer side, major clients include Alliance Residential, Milestone Group, Simpson Housing, Buckingham Cos., and Carmel Partners.
MHN: What kind of feedback have you received from your clients?
Vermes: Our clients say that ResiModel really saves them time, and that they can assess a larger number of deals as a result of using our system. They are also thrilled with our customer support. We made it a priority to really support our clients, and part of that is selfish — the closer you work with your clients, the more you understand what you really need to do to improve the product and meet their needs.
MHN: Are you aggressively marketing the product?
Vermes: We currently have a relatively small sales team, and we are finding that over 60 percent of our users come to ResiModel through word of mouth. Within brokerage firms that have many offices, we’ll get one office signed up as a paying client, and they’ll refer us to other offices. Our large IM firms have recommended us to their operating partners, another positive endorsement.
MHN: You’ve specifically focused on serving multifamily With ResiModel. Why is that?
Vermes: Multifamily is the single largest property type in the country, but it’s the most underserved by technology. It’s always tempting to say let’s branch out and focus on other asset classes, but we made a decision that this is an asset class that can really be improved by technology, so we set our sights on creating a product that will improve the multifamily space.
MHN: Your view on the strength of the multifamily marketplace?
Vermes: Despite the recovery, it’s much more difficult to get mortgages than it used to be.
So it’s hard for first time homeowners to get their foot in the door, and with continuing economic uncertainty there are a lot more people who prefer to rent than own. A downturn in the economy would hurt all asset classes, but it would hurt multifamily much less than others, because you have to live somewhere. For the foreseeable future, I think it’s a very attractive asset class.