Hank and his company work with rental companies to help furnish their apartments and move in great tenants. Typically their tenants stay for multiple years, but they also have month to month lease options available. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
Best Ever Tweet:
“When we’re moving in a unit, we move in that first day, after that, our sales team handles everything” – Hank Jonap
Hank Jonap Real Estate Background:
- Director of Real Estate for Blueground
- Oversees the company’s location expansion strategy and new space acquisitions
- Based in NYC, NY
- Say hi to him at https://www.theblueground.com/
- Best Ever Book: Rich Dad, Poor Dad by Robert Kiyosaki
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Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast, where we only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, Hank Jonap. How are you doing, Hank?
Hank Jonap: I’m doing very well, thank you. Thanks for having me on the show.
Joe Fairless: Yeah, my pleasure, and I’m glad to hear that. A little bit about Hank – he is the director of real estate for Blueground. He oversees the company’s location expansion strategy, and new space acquisitions. Based in the Big Apple. With that being said, Hank, do you wanna give the best ever listeners a little bit more about your background and your current focus?
Hank Jonap: Sure, absolutely. I’ll tell you a little bit about Blueground first. Blueground is a real estate tech company offering beautifully-furnished and thoughtfully-equipped apartments, for stays ranging from 32 days to a year, or even longer. Here at Blueground we’re on a mission to create a tech-powered living experience that guests love, homed in an organization where great people are proud to work with these carefully-selected, ideally-located apartments, and upgrade them to be fully furnished homes, so people can show up and really start living from day one. Our vision is really to make people feel at home, wherever they choose to live.
More on a personal note, I started my real estate career out of college on the brokerage side of the business, working with Newmark Knight Frank, [unintelligible [00:03:19].09], then kind of transitioned over to SL Green Realty, who’s a large commercial real estate company here in New York, where I’ve dabbled in everything from property management and instruction project management, and then kind of moved into more of an underwriting and operational, construction side of the business, where I would be evaluating large deals, where the company would potentially be acquiring and creating a value-add situation.
After spending about eight years at SL Green, I ended up in a little bit different of a lifestyle, and moved into the startup culture where I worked for Breather products, who is a flexible workspace solution that is catering to instantaneous workspace and on-demand solutions, whether it’s for a short-term meeting, or a great office for 10, 30, 50 people, that really just provides you great flexibility in your daily work environment.
Joe Fairless: So with Blueground, help me understand a little bit more… Because furnished apartments have existed before Blueground. So what is it about Blueground that’s unique?
Hank Jonap: Blueground offers many unique things, one of them really being just that we have tech at our core, and that really enhances the client experience and the stay, where our clients can really learn a lot about our products through our website, which is the blueground.com, or even through our mobile application.
We really provide a much higher level of experience, from design, to the cultural fit. Our clients really feel at home and are happy to stay in our homes for a very long duration of time. We actually have an average stay of six months and longer in many of our cities, which just tells you that our clients are really happy to be in our apartments, and really appreciate the unique design, and high-quality furniture, and just the living experience we provide to them.
Joe Fairless: Okay, so your units are competing with hotels and Airbnbs then, correct?
Hank Jonap: In some cases. We don’t really overlay much with the hotel world. We have a shorter stay of 32 days, which eliminates the transient nature of the business, when a hotel would be for a handful of days, or a week maybe. Our clients are really staying with us for a longer duration of time.
Joe Fairless: So you’d be competing with maybe an extended stay hotel, or something like that.
Hank Jonap: Correct.
Joe Fairless: Okay, got it. So you mentioned a design and cultural fit… How do you deliver on that value proposition?
Hank Jonap: We’re fortunate enough to have a wonderful design team, that really provides a unique layout and experience for every one of our units, but also [unintelligible [00:06:00].14] into our brand identity. One of the things that makes Blueground so amazing in reference to what we do is that we actually manufacture and streamline all of our own furniture. We’re making high-end furniture that’s unique for our apartments, where we can really just highlight certain details and elevate the experience of the unit… Whether that’s with our furniture, our beds, our couches, as well as fully-equipped kitchens, which is really one of the things that our clients do value, at the end of the day.
Joe Fairless: Huh. What other ways is your company integrated? You mentioned you manufacture your own furniture… Anything else that you do that would be noteworthy?
Hank Jonap: I guess one other thing is that when you compare it to a hotel, people are staying in our units and they really value the additional space, and the ability to not just have a bed and a shower in a hotel room with a TV on the wall; they love the ability to make our units their home, and the ability to stretch our on one of our high-quality sofas, or have dinner at one of our dining tables. The furniture is made to improve and enhance their way of living.
We provide everything to our clients, from their towels and linens… It really makes them feel that they’re in a place they wanna live instead, and not something they happen to just pass through.
Joe Fairless: Got it. So with the manufacturing of your own furniture, I imagine that the price point for the consumer is gonna be in line with more of a luxury type of extended stay hotel… If there is such a thing. I don’t even know. What type of price point are we talking about for staying here? I know it depends on the area.
Hank Jonap: Yeah, area and city plays a large factor into the price point. Even talking about here in Manhattan, you’re gonna pay a different price point for being in the financial district, to the Upper West Side. But our clients, typically, depending on the duration of stay — if we have a client that’s looking for one of our great units for, say, a 12-month lease, pricing is gonna start around $3,000 for that monthly rate. That includes all of their services. There’s no hidden fees, or anything like that.
Joe Fairless: Cool. And that’s in New York City?
Hank Jonap: That’s correct. But prices range across that platform, across all of our markets.
Joe Fairless: Sure, sure. I lived in New York City for ten years, I get the varying price range for sure. Okay, so your focus is the company’s location expansion, and getting new space acquisitions… Can you talk a little bit about your business model and how you grow your footprint?
Hank Jonap: Sure, so we grow our footprint in many different ways, really depending on the city and our partners. We have a great team of real estate business development associates and managers in all markets, that are out in the market, meeting with different owners, brokers, individual landlords, really trying to tell them that we are the best option for them over your everyday renter… Or coming into units and meeting with landlords to help them stabilize a unit. We’re not a tenant that’s coming in for a year; we’re typically there for 3, 5+ years… But we work with regular rental companies, companies like Related, or Stonehenge, or Pinnacle (New York), but we also work with a lot of the large institutional companies, like Blackrock or Blackstone, that have assets throughout the world.
We also work with various individual investors and condo owners, who are looking to potentially purchase a condo in New York as an investment. To have steady income, they’re able to work with Blueground, who is able to come in, fully furnish their unit, operate this for them, and all they have to do is pretty much sit back and know they’re having steady income on an asset that they can hold on to for many years.
Joe Fairless: And I’ve noticed on your website you’re in about 8-10 markets… The major ones in the U.S, and then some international markets.
Hank Jonap: That’s correct. We’re in nine markets in total, six here in the U.S. We’re currently operating here in New York City, as well as Boston, D.C, San Francisco, L.A. and Chicago. We have approximately about 900 units spread out across the U.S, and a little more than 2,000 globally.
Joe Fairless: What’s the sales pitch to the owner, other than you’ll be there for 3-5 years? …which is significant, because turnover costs, as you know, eat into the bottom line for owners. What else is the value proposition when you’re speaking to owners?
Hank Jonap: Sure. We’re [unintelligible [00:10:25].21] with owners, and basically really able to drive home many different factors. Some of the other ones would be that when we’re moving into a unit, we’re moving in that first day we take possession of it, bring in all of our furniture in there. After that, our operations and our sales team is filling units for extended periods of time. So it’s not a transient type of business, we are not dealing with people coming in and out with suitcases every few weeks. Our clients are coming, and in many cases these are high-end business professionals that are looking to stay in the units for their job. These are their homes; it’s a place for them to come home to, and the average renter than any landlord would be happy to have just needs flexibility in their living situation, and that’s what we do, too – that flexibility that in many cases landlords can’t offer, but can work with Blueground to expand their offering as a building or as a company.
Joe Fairless: You were originally a broker in your career… What are some things that you learned from that experience that you’re applying to what you do today?
Hank Jonap: Time is everything when dealing with real estate. Time can kill a deal, so the ability to move quickly, to know what works and to be able to close. That’s been something that’s always been true to me. In real estate it comes down to location, so understanding what you’re looking for, having a strategy, and kind of going into it with a purpose is something that allows you (or anybody) to really get the deal done, and to go in knowing exactly what you need to walk away with.
Joe Fairless: What are you looking for in a location whenever you look at growing the footprint?
Hank Jonap: In many cases, we’re looking for accessibility to public transportation, whether that be subways or buses. Our clients wanna have a feel natural air, and like coming into the units, so typically we’re on a floor that’s gonna cater to those elements.
We have many clients that are coming that wanna be close to their office for the convenience factor, but we also have many units that allow the clients and our guests to get away from certain parts of the city, so they can step away to the Upper West Side and have an office in Midtown, be close to the great restaurants, parks or things that are important to them when they’re not working.
So our units can range from great transportation, to great restaurants, to parks and access… That’s really the one thing, that we’re strategically locating in places where the everyday individual wants to be.
Joe Fairless: And that certainly holds true in New York City, but when you get to outside of the bubble of New York City and you go to Dallas, Fort Worth, or Miami, or other cities where most likely people are not gonna be taking public transportation – at least en masse, they’re not taking public transportation; they have a car. What would you look for in those types of cities?
Hank Jonap: In those types of cities, as you said, people are driving. Mass transit isn’t [unintelligible [00:13:15].22] It’s access to parking, in many cases, and allowing people to have the ability to conveniently get around to different parts of the city, or being able to have some space to enjoy life a little bit differently. Now, I can’t get into too much about the markets we’ll be going to, and I do know in some of our locations we are very focused on certain downtown business districts, and the convenience for people to work and live, and kind of bring it all together in a very high-end, unique way.
Joe Fairless: And will you describe your typical customer who is renting from you?
Hank Jonap: We have many different customers, and that’s something that we’re proud to say we have. I would say our average customer is a business professional who might be from a consulting company, or a startup, that is traveling around, trying a new city, or being sent somewhere, that just wants a unique experience, wants something more than just a hotel room… Wants to sample a new city and see what it has to offer, and really kind of just have a different experience than what others might be able to provide them. But at the end of the day, it’s not so much that you try to cater to a certain client, but you’re catering to a certain type of living style.
Joe Fairless: And just so I’m clear on how you deliver on that unique experience – you mentioned there’s a layout for every unit, it’s customized, and you manufacture your own furniture… What else do you do to deliver on that unique experience?
Hank Jonap: Outside of just the design and everything that we provide to our clients, it’s the customer experience. The ability to work with our staff to get additional cleaning services, have us help them with certain things they’re trying to do, or recommendations for restaurants, or things to do in the area. It’s allowing our clients, at the end of the day, to just have a seamless experience. It can take the worrying away of moving, or trying to find a place, or buying furniture… They can literally just show up into one of our units, know exactly what they’re getting, and start living.
Joe Fairless: So you have a concierge. Along with renting the unit, you’ve got someone who serves as a concierge for them.
Hank Jonap: Correct, and that’s all through our tech platform. That’s the nice thing, where everybody today is on their mobile device; you don’t have to go to a lobby and talk to somebody and wait on line. It’s all through our mobile application, where you can get immediate attention from one of our trained staff.
Joe Fairless: Taking a giant step back – based on your experience as a real estate professional and investor, what is your best advice ever for real estate investors?
Hank Jonap: My advice for real estate professionals and investors – it’s a long game; there’s many people that are always looking for the quick dollar in real estate. I always like to look for those — I’ll call it kind of the low-hanging fruit, where something that might not be the best opportunity today, and just a stable thing, but you have to look to the future and know that it’s a safe bet. That’s just something that I’ve always personally realized – you never know what’s gonna happen, but if you’re willing to hold on to it and understand the long-term value in real estate, that’s what I’ve always thought is a great separator from some of the larger players out there.
Joe Fairless: Do you have an example of something you’ve purchased or you’ve been involved in a transaction, where you took that to heart and held on to it for the long run, and it came to fruition?
Hank Jonap: To be honest, personally, no. I’ve been investigating a lot of various opportunities, but I’m a new father, so most of my recent savings has been going to my family and raising my young child. Currently, I’m a renter, and thankfully, I have the ability to stay in some Blueground apartments, which makes me feel like I’m home even when I’m not.
Joe Fairless: Well, congrats on new fatherhood. We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?
Hank Jonap: Absolutely.
Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.
Joe Fairless: Best ever book you’ve recently read?
Hank Jonap: I’ve been reading a lot of kids’ books. Other books that I’ve probably read recently is Rich Dad, Poor Dad.
Joe Fairless: What’s a mistake you’ve made in business?
Hank Jonap: A mistake I’ve made in business… Sometimes fact-checking. There’s been an opportunity where I checked the date of something that was just a quick oversight, but the date was actually two days out instead of two years out.
Joe Fairless: Best ever way you like to give back to the community?
Hank Jonap: I love giving back to the community by helping, whether it’s charitable donations, or doing various walks and marches for breast cancer, or even over Thanksgiving working at a Food Kitchen, or something of that nature.
Joe Fairless: How can the Best Ever listeners learn more about your company?
Hank Jonap: The best way to check out our company and learn more about our great units would be to check out our website, at theblueground.com, where you can see all of our cities, all of our apartments, and learn more about what we have to offer and how we can help [unintelligible [00:18:43].13]
Joe Fairless: Hank, thanks for being on the show, talking about the business model, talking about the value proposition, and how you and your company that you work at deliver on that. I really appreciate your time. I hope you have a best ever day, and we’ll talk to you again soon.
Hank Jonap: Thanks so much, Joe. I appreciate you having me on