December 3, 2019

JF1918: How Software Can Improve Your Real Estate Investing Efficiency

Matt is an investor himself, and was a mortgage broker who closed on about $2 Billion of real estate transactions. Now in a full time sales role with a software company for real estate investors, Matt is here to help us make our businesses more efficient through tips he will share, and through his software should you decide to try it. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

Best Ever Tweet:

“Keep your structures as simple as possible” – Matt Whitermore

Matt Whitermore Real Estate Background:

  • Full time in software sales for commercial real estate
  • Spent six years in real estate investments and commercial mortgage brokerage, with an estimated $2+ Billion in closed transactions including acquisitions, debt, and equity placements
  • Based in Philadelphia, PA
  • Say hi to him at
  • Best Ever Book: Best Ever Apartment Syndication Book by Joe Fairless


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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, Matt Whitermore. How are you doing, Matt?

Matt Whitermore: Great, Joe. How are you today?

Joe Fairless: I’m doing well, and looking forward to our conversation. A little bit about Matt – he is full-time in software sales for commercial real estate. He spent six years in real estate investments in a commercial mortgage brokerage, with an estimated two billion in closed transactions, including acquisitions, debt and equity placements. Based in Philadelphia, Pennsylvania. With that being said, Matt, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Matt Whitermore: Absolutely. Some years ago, back in college, I got my real estate license. I did some apartment rentals in Boston, and some landlords and property managers started to think about the investment side of the business, so I ended up getting a job doing acquisitions, focusing mainly on small multifamily deals. I worked with that group for a few years, saw a few hundred deals, tons of deal flow, tons of learning going on there, and I wanted to jump more into the middle market, sort of institutional space.

I found a job as an analyst, doing investment sales and debt and equity placement, as you said. I worked as an analyst for about four years doing that, and I more recently transitioned into the technology space, and I work for a firm called Investor Management Services. We provide investment management solutions for real estate investment firms, syndicators… We’re at over 500 real estate investment firms as clients today.

Joe Fairless: Why didn’t  you stay in the analysis and investment sales that you did for four years?

Matt Whitermore: At the outset I really wanted to get into real estate, to learn enough to become dangerous as an investor myself. I saw technology as a nice, flexible sort of job that would give me the time and the flexibility to get that started up on the side on my own. I work from home, on a pretty flexible schedule, so it’s great; it’s allowed me to really focus on getting that stuff started up.

Joe Fairless: Cool. So on your own investment side what have you been up to recently? And we are gonna talk about IMS in detail, but I’d also learn to love more about what you’re doing personally.

Matt Whitermore: Sure. I’m just getting started really on the investment side. I just got engaged, actually…

Joe Fairless: Congratulations!

Matt Whitermore: Thank you, thank you. So I’m looking forward with my fiancée at a multifamily house-hacking opportunity, actually in Albany, New York, looking to relocate there… And also, getting that business plan for apartment syndications buttoned up, talking with some prospective investors and actually leveraging all that great knowledge in your apartment syndication book to get all that started.

Joe Fairless: Cool. Good stuff. Congratulations on a bunch of milestone events in your life that have recently taken place… So let’s talk about IMS then – what does it cost and what does it provide?

Matt Whitermore: It’s a mid-range of cost. We price it based on number of deals, so number of syndications you might have, and the number of investors. I’ll say loosely it ranges anywhere from $1,000/month to maybe $5,000/month for maybe a more institutional player in the market, and we offer a lot of great different tools for investment firms and syndicators. That includes an investor CRM, so it helps you manage that investor relationship. It also provides an investor portal, where your investors can log in, look at their investment performance, look at pertinent documents, maybe K1’s for their investments, and even subscribe to new investments through an automated workflow that lets them actually sign your subscription agreement online, right away.

Then beyond that, I think the main differentiator for us is the automation of a lot of the back-office functionality. So we’re focusing today on maintaining and recording those equity and ownership structures that you might have with outside investors, and then we also help you automate the calculation of waterfall distributions.

Joe Fairless: Oh, cool. Alright, so instead of using a spreadsheet there’s gonna be a tool that will automatically calculate — if you’re returning 2% this quarter, then here’s the distribution per investor based on the waterfall that you have with your deal.

Matt Whitermore: Correct, yeah. Absolutely. We’re really focused on de-risking organizations. Excel is a great tool, obviously; it’s really ingrained in the real estate marketplace, but we see an opportunity to really de-risk that. You never know – a formula  might be wrong, you might be referencing a wrong cell… This helps you get out of that cycle of risk and automate a lot of those functions.

Joe Fairless: What’s the main objection your potential clients have who do not have sign up with you about this platform, or just the concept in general of having this?

Matt Whitermore: It’s a great question. I’d say sometimes it’s price. We’re talking to a lot of (we’ll call them) young or emerging syndicators that are really just getting started, and the name of the game a lot of times is keeping your operation lean and not having a lot of expenses, so it is sometimes a hurdle to get over… But over the last few years we’ve seen really a transformation of the marketplace, that investment managers specifically in the real estate space are seeing the need to leverage technology… So we’ve been really pleasantly surprised for the last few years; our prospects are much more educated. They’ve heard of us, they’ve heard of maybe a few of our competitors, and we’re starting to get over that hurdle, I think.

Joe Fairless: With your business, you mentioned the differentiator with the automation of back-office functionality, and then you talked about on a related note the waterfall structure… It didn’t sound like the ladder was currently in place; it sounded like that’s something you’re working on… But it sounded like the former was – the back-office functionality. If that is an accurate statement, can you talk more about the back-office functionality?

Matt Whitermore: The waterfall tool is fully functioning. That is 100% good to go today, and I’d say that that’s our differentiator, because we’re the longest in the market with a functioning waterfall tool. We’ve worked through thousands and thousands of operating agreements, and I feel like today we’ve probably seen at least a sampling of what exists in the market in terms of waterfall structures and equity structures… So we’ve put that to the test. Like with any technology solution, you can’t meet everyone’s needs all the time. Sometimes a challenge is you just get somebody with a crazy structure that kind of defeats the purpose of automation… But as we improve the tool, that’s fewer and far between that we see that.

The other back-office functionality is recording and maintaining records of capital contributions, ownership percentages, dates and times for calculating pref, calculating internal rate of returns for hurdles… All that kind of stuff.

Joe Fairless: How long have you been with the company?

Matt Whitermore: I’ve been with IMS for about a year and a half.

Joe Fairless: Okay. Over the period of time you’ve been there, for a year and a half, what are some things that have been optimized on the platform that you’d like to highlight, if any?

Matt Whitermore: I’d say early on we got some feedback from the market that maybe it wasn’t the best-looking tool; maybe some of our competitors have a better look, a more modern feel, and that’s something that we’ve really taken to heart and improved. I’d say the core functionality is there, and with now 500+ clients we have a great feedback loop… So we’re constantly taking new feature requests and really striving to meet the needs of the market. So we have clients that range from one-man shop syndication shops, to real estate investment firms that have billions of dollars of real estate…

So to answer your question more directly, I’d say something that we’ve strived for recently is trying to meet the needs of the larger firms. They have a lot more complex financial calculations, maybe fund structures that are a lot more complicated than your typical general partner/limited partner  structure… The fund area has been a huge focus for us, trying to climb the ladder in the market and read the full spectrum of the market.

Joe Fairless: Will  you elaborate on an example with a fund? So the billions of dollars company that is requesting a certain feature? Will you just elaborate on what that feature is, and why they need it?

Matt Whitermore: Sure. I’d say with our more institutional clients – they might have a fund, and then they have a separate class of syndicated equity, so it’s just an extra layer of complexity. A lot of times funds will allow their investors to redeem or exit a position, which adds a lot of complexity for software and how you’re calculating things going forward. Say investor A has his money in for 3 years, but it’s maybe a 5 or 10-year deal, and he wants to get his money out… So he either sells that position back to the sponsor, and then they turn around and bring in a new investor, or they transfer it directly to a new investor… That’s one of the main things that we see with fund structures; it’s a little bit more  complex. The typical syndicator might not look at that and offer that to his/her investors.

Joe Fairless: Thank you. And comparing a one-person shop to an organization that is well-established, what are some things that the one-person shop — based on your experience, what are some questions they don’t ask, that the billion-dollar shops do, that would be relevant to the one-person shop?

Matt Whitermore: I’d say the one-person shop is usually on Excel, they have email, and that’s the extent of the technology that they’re leveraging, so a lot of times we’re introducing them and explaining to them why they need to leverage technology… And I’d say something that they don’t usually consider is as they grow, they’re gonna need other technology solutions. This has been another focus for us – building out sort of an integration ecosystem where we can integrate with different providers. Something that might not be on the radar of a younger one-man shop, versus an established shop that’s using all different kinds of software.

Joe Fairless: And how do you attempt to show the ROI to that one-person shop, so that they see that it will make them money by doing this?

Matt Whitermore: Great question. In the one-man shop you’re usually wearing a number of different hats. You’re acquisitions, you’re asset management, you’re investor relations – you’re all the above. So leveraging a solution like IMS, you’re able to really reduce the time and effort into those functions. The most tangible one that we can point to is usually the quarter end/month end or year end process, where you’re closing out, reconciling your books and making sure your distributions are alright, and the data that you’re pushing out to your investors is alright… It really reduces that process.

We see a lot of clients that say “Hey, my quarter-end process was weeks, and now it’s hours.” So however you value your time, I think all of us would want to have an extra week in each quarter. Think about how much more we can get done with that.

Joe Fairless: I love that approach and I appreciate you talking through that. What have we not talked about as it relates to the platform and the value proposition, that you think we should?

Matt Whitermore: Great question. I would say for the syndicators out there leveraging technology – whether it’s IMS or something else – is a great way to gain a ton of credibility to not look like the one-man shop. With the investor portal that we provide, we’re able to generate investor statements with your logo, your letterhead… So it looks like you have a really robust operation that’s putting all this stuff together. So you could be a one-man shop, and then you have a [unintelligible [00:13:26].09] that has your new opportunities, it has all the data that your investor might want, and it really generates a lot of credibility very quickly for those smaller shops.

Joe Fairless: Based on your experience when you were working with institutions, and an analysis of investment sales, what are some things that you took from that position and applied it to what you’re doing now?

Matt Whitermore: I’d say just knowing the business, having an idea of the different functions and processes that these investment professionals are working through. They were my clients in debt and equity placement and in investment  sales, so… Just having a level of comfort with their priorities, what’s important to them, and just being able to use that knowledge from a different angle of how this technology can help you, and what areas might be pain points, and things like that.

Joe Fairless: Based on your experience, what’s your best real estate investing advice ever?

Matt Whitermore: I’d have to say leveraging technology. It’s fitting with the conversation we’re having today. In my experience, real estate has been one of the industries where they’ve sort of held out on adopting and embracing technology. And I think luckily for those of us that are in real estate technology, there’s sort of been an awakening of the market… But I think we still have a long way to go. I think a lot of people are leveraging Excel, and a lot of people use that as a crutch. And again, it’s an indispensable tool, it’s great at what it does, but I think a lot of people are realizing that there’s a level of automation that we can achieve that is really not attainable in Excel…

So I’d definitely say leveraging technology – and I’ll expand on that a little bit, too. Since we’re automating investment structures and waterfall structures, I’d say beyond that is to keep those structures as simple as possible. We see some organizational charts – the visual representation of the equity structure looks more like a spider web on a page… Sometimes that’s a necessity, but I think in a lot of cases that’s avoidable. And then beyond that, with the waterfall structure, sometimes we just see waterfalls that are hard to follow. When I say “waterfall” I mean the order of operations and the method of calculating your distributions back to your investors.

As I think about getting my own business started, and the hundreds or more of operating agreements that I’ve seen, I’m of the mind that simple is better. Keep it simple, stupid.

Joe Fairless: I agree. There’s a lot of different ways you can slice it up, but the more you do it, the more convoluted it gets, and the more everybody gets confused, including the operators, in a lot of cases.

Matt Whitermore: Yeah, exactly.

Joe Fairless: We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?

Matt Whitermore: Absolutely.

Joe Fairless: Alright, then let’s do it. First, a quick word from our Best Ever partners.

Break: [00:16:21].08] to [00:17:19].00]

Joe Fairless: Best ever book you’ve recently read?

Matt Whitermore: I would say your apartment syndication book. I already mentioned that. Beyond that, I’ll give a second one, that sort of expands deeper on a certain, and that’s the Raising Private Capital, by Matt Faircloth.

Joe Fairless: Best ever way you like to give back to the community?

Matt Whitermore: Recently I coached a youth football team, but as I am relocating in the near term to Albany, New York, I’m looking at some different opportunities and I think I’m planning on getting involved with the Boys and Girls Club there.

Joe Fairless: Best way the Best Ever listeners can get in touch with you?

Matt Whitermore: It would be by email. That’s

Joe Fairless: Matt, thanks for educating us on IMS (Investor Management Services), talking about the value proposition of your platform, as well as how it’s been optimized since you’ve been there, and the differences in questions and areas of focus of one-person shops versus shops that have billions of dollars under management, and the nuances that each of them look for, and perhaps some nuances that the one-person shop should look for. So thanks for being on the show. I hope you have a best ever day, and we’ll talk to you again soon.

Matt Whitermore: Awesome. Thank you so much. Talk to you soon.

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