Interview with Anish Malhotra, Co-Founder & CEO of Plotify
Plotify is transforming property investing, making it easy to invest in properties with cash-generating potential from wherever you are in the world.
How is Plotify different from traditional real estate investing?
We allow our customers, located anywhere in the world to instantaneously, directly and wholly own an income-generating residential rental property in the USA or UK (to begin with). The property comes complete with a tenant, property manager, insurance and financing already wrapped in, with full service asset management thereafter. We are not a broker – we put our capital behind buying assets before selling them to our customers, and we stay with our customers through the life of their ownership.
How did you get your idea or concept for the business?
I’ve invested in this asset class in the USA and UK for years. It’s tedious to select, diligence, negotiate and finance a property. It’s painful to manage it when you own it, and expensive to sell. I know many people who feel the same. I spent 2017 advising Roofstock on their global growth strategy. After a year, it became obvious that the market needed a new solution for these assets. None of the solutions available were solving my problem – I don’t want fractional, REITs underperform and investing direct is painful. I wanted to be able to build a customized, direct portfolio with speed and efficiency that express my investment views.
Why Single Family Rentals?
This is an attractive asset class in growth recessionary periods. However, it is extremely fragmented – lots of little individual assets that are cumbersome to buy and manage.. Even today, only 4% of the 16M single family homes in the USA are owned by institutional investors. The rest are owned by mom and pop landlords. This asset class will institutionalize, and we will lead that change..
But why now…in the middle of a pandemic?
Data shows that rental pricing actually increased during the entirety of the 2008 financial crisis, primarily because mortgages were more difficult to procure and people generally stay put in uncertain times.. Evidence is emerging that despite the surge in unemployment and job insecurity, this time around will be no different. Mortgage applications for new buyers have plummeted indicating that there will be a need for more rental properties.
Couldn’t I just invest in a REIT?
REITs are strongly correlated to equity markets, which can cause a conflict with investment objectives around this asset class. .
Additionally, REITs aren’t customizable. Let’s say for example you want to invest into a fast-growing city in the USA like Atlanta. The only public REITs that deal in the SFR space are widely diversified, so if you just want access to just one city, too bad.
Leaving capital appreciation and equity market beta aside, the average REIT dividend yield over the past 5 years was ~3%. With Plotify, our average cash on cash yield since we started has been ~8%.
How does the selection process work for a family office?
Just tell us your investment amount and investment objectives (including any specific preferences on city, for example) and we will build a customized portfolio. When you purchase the properties, each one will already have matched our investment thesis, passed our stringent diligence process, be tenanted, property managed, financed and insured and you can start accruing income immediately, unlike the significant lag in income generation if you were to acquire the properties yourself.