This story is featured in this week’s premier edition of Inman’s weekly newsletter, Property Portfolio. Every Tuesday, the newsletter explores the overlapping worlds of real estate professionals and the fast-growing property investment and management sector. Sign up to receive Property Portfolio here.
When Krystal Polite first mentioned tech startup Dealmachine to her husband Dedric last year, he wasn’t particularly interested. The North Carolina-based Polites run a home flipping and rental business that spans 20 states, and Krystal had heard from another investor in the area that he was using Dealmachine’s app to find new properties.
Credit: Dealmachine
Dedric may not have initially been interested in Dealmachine, Krystal figured she’d up for the platform anyway. And then very quickly, it started paying off.
“We closed within our first two months a six figure wholesale deal off of a postcard,” Krystal, who runs Be Polite Properties with Dedric, told Inman. And she said that within six months, her company had generated hundreds of thousands of dollars from transactions that began with Dealmachine.
Dealmachine launched in 2017 and operates on a novel premise: Hire people who are already out driving around to scout properties for real estate investors like the Polites. When drivers notice properties that might make good investments, they simply take a picture and “pin” the location in Dealmachine’s app.
From there, the company’s software kicks in, using data to identify the property owners and inquire about their interest in selling.
“It’s about 96 percent accurate that we’re able to identify the property owner,” Dealmachine CEO David Lecko told Inman. “You just tap a button and it’ll send a letter. You have the option to fully customize the letter.”
Dealmachine works directly with real estate investors, who pay a monthly fee beginning at $49 for the service. Those investors then procure their own drivers, or “deal finders,” and pay them however they see fit.
And though Lecko said his “recommendation is always to find a dedicated person who you can pay per hour,” in practice many of Dealmachines clients have “found success paying Uber drivers who can do it when they don’t have a rider.”
In the case of Be Polite Properties — which despite some divided opinions internally is now fully leaning into Dealmachine’s platform — drivers get between $1 and $2 per approved lead, depending on what part of the country they are working in. If the company ultimately closes on one of those properties, the driver also gets a commission.
That structure can lead to some interesting conversations. Krystal Polite told Inman that one of her deal finders — a stay-at-home mom who pinned properties while running errands — submitted a house last year, then eventually stopped driving and moved out of state. But months later, Be Polite Properties actually bought the property,
“We said, ‘hey what’s your address,’ and she said, ‘why?'” Krystal recalled. “And my husband was like, ‘hey we need to send you a referral check.’ She got $700.”
More generally, Be Polite Properties offers drivers between 10 percent and 15 percent of the net profit on deals that it closes thanks to their Dealmachine pins.
Even when deals aren’t closing, this arrangement can potentially be lucrative for drivers. Though Krystal said that while many of her roughly 55 deal finders only pin a few properties per day, one man who drives a gas company truck for a living typically flags between 500 and 600 homes a week — earning him hundreds of dollars.
A map in Dealmachine’s app hosing pinned properties. Credit: Dealmachine
“The ones that drive for a living are the ones that will send you the most,” Krystal added.
The concept has also apparently been a boon for other property investors, too.
Eric Richner, co-founder of real estate investment firm CORI told Inman that his company originally planned to cast a wide net when it came to lead generation techniques. They still do that, but today Atlanta-based CORI has 1,032 properties from Dealmachine that the company is in some stage of pursuing. Richner described that number as about 80 percent of all the deals his firm is chasing.
In CORI’s case, the company offers drivers referral compensation based on the net profit generated from a deal that closes. Compensation begins at $500 for lower profit deals, and rises to $1,500 on more lucrative transactions.
Richner also said that his company is rolling out a per-lead compensation program that kicks in once a driver has pinned 50 properties, or the point at which CORI considers the driver trained and “invested into the program.”
Currently, CORI has about 100 drivers.
The differences between the compensation plans offered by CORI and Be Polite Properties illustrates the flexibility Dealmachine offers to investors, a flexibility that extends to various other parts of the platform as well.
Krystal, for example, said that when she began using Dealmachine there was no apparent way to tag atypical properties such as vacant land or mobile homes — until she figured one out.
“I literally hacked it to fit my business,” she added.
According to Lecko, Dealmachine currently has about 6,500 paying members. The company’s platform can be used across the U.S., though it’s especially popular in places such as Houston and Atlanta that have large real estate investment communities.
The company also represents the convergence of several broader trends, including a shift toward a “gig economy” dominated by contract workers, and the ability of tech companies to carve out entirely new niches using tools such as smartphone apps.
Those are trends that led to the “Uber for X” cliché — meaning a startup that could have the same affect on its sector that Uber had on driving and taxis — though in this case its not a stretch to see Dealmachine as a literal Uber for real estate.
And while the concept is still relatively new, its users are also among its biggest fans.
“It puts you on even playing field against the investors who are spending $100,000, $200,000 a month,” Krystal said. “I tell people this is the best way to start off.”
How do you stay ahead in a changing market? Inman Connect Las Vegas — featuring 250+ experts from across the industry sharing insight and tactics to navigate threat and seize opportunity in tomorrow’s real estate market. Join more than 4,000 top producers, brokers and industry leaders to network and discover what’s next, July 23-26 at the Aria Resort. Hurry! Tickets are going fast, register today!
Thinking of bringing your team? There are special onsite perks and discounts when you buy tickets together. Contact us to find out more.
