Real Estate Product #1
Iread an article in Quartz today and came up with this thought experiment. It’s simple but I think it would scale.
ASSUMPTIONS
Let’s assume that millennials will live differently in the sharing economy. Let’s also assume that AirBnB or some AirBnB competitor will continue to be popular. The last assumption that we’ll make is that the freelancer/contractor/consultant economy is here to stay.
If those assumptions are accurate, then people will need places to live for shorter periods of time. They will change positions and this will require them to either change locations or live in different places for short periods of time. Some of those people have been and will continue to look for an alternative to hotels.
WITH THOSE ASSUMPTIONS IN PLACE, LET’S FIGURE OUT THE PRODUCT
Smart lawyer in small town with cheap real estate that is close to something that attracts tourists and business travelers. The ‘something’ could be an airport or a convention center or a large casino. The lawyer chats up a real estate investor and presents a list of potential properties.
The investor tests the hypothesis by only investing in properties that cost less than $X and can be paid off within 60 months. The properties fit the profiles of a few classes of successful AirBnB/AirBnB competitors. The lawyer handles the closings and creates contracts/vendor agreements to create flow.
The investor measures the results in 2 or 3 markets and starts to scale up the best markets. Ultimately, the investors buys 10–20 properties. The total investment is less than 1.5MM in the first phase.
In the best of circumstances, it might work out this way:
If the investor decides not to scale the business then the lawyer improves the product and offers a version with less friction. Extra points go to the smart individual who uses crowdfunding real estate platforms to put together syndicates to accomplish the same thing.
Once the product is fully baked…
Rinse.
Repeat.
