Atticus LeBlanc: Co-Living Is The Answer (Pt 2)

Atticus LeBlanc is the founder of PadSplit, the largest co-living marketplace in America. It’s like the Airbnb for room rentals, which both saves renters an average of $366 a month and can make property owners 2x as much money. Say hello to the solution to our affordable housing crisis that’s hiding in plain sight! 

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Episode Transcript

Speaker 1 (00:02):
Hey, everybody is Bill Courtney with an army in normal folks.
And we continue now with part two of our conversation
with Atticus LeBlanc, right after these brief messages from our
general sponsors.

Speaker 2 (00:23):
So, Mitch and his buddy Otis. He wants to know
if they can come rent rooms in my house. Now.
I'm terrified because I wasn't been vacant for a month,
and I'm waiting for the air conditioner to disappear or
the copper pipes to be stolen or whatever.

Speaker 3 (00:36):
Yes, yes, please please come in.

Speaker 1 (00:39):
Let me ask something. I'm sorry to interrupt you, but
I have so many questions about this. So and this
is two thousand and nine, long before Pat split.

Speaker 4 (00:48):
Pat split.

Speaker 3 (00:49):
This is really like the progenitor.

Speaker 4 (00:51):
I get it.

Speaker 1 (00:52):
It's why I'm so interested in I'm trying to crawl
on your brain a little bit. Sure, if you had
rented that house to a typical renting family, how much
would you get in rent from that house?

Speaker 2 (01:07):
It had been rented previously for eight hundred and fifty dollars.

Speaker 1 (01:11):
So if Mitch and Otis move in, you're already getting
two hundred dollars a month more than you would have.

Speaker 4 (01:17):
They had five hundred dollars.

Speaker 2 (01:18):
Well, of the difference is you have to include utilities.
So so it's a wash. Yeah, fish, it really like
two at two and a half. It's about a wash
in that house. Okay, but I have four rooms I
can rent in that house, and now question Yeah, And
now as I look at the house, I realized, wait
a second, I think someone had been whoever had owned

(01:39):
this house, and maybe it was the same guy who
owned the house next door, Like whoever had owned this
house previously had clearly rented out the rooms. I mean,
it had already been kind of set up for this
with these with these four rooms. And so I start
doing the math and realizing, wait a second, if if
Mitch moves in and Otis moves in, and I can
get two other people, then yeah I can. I can
net call it eleven or two twelve hundred dollars, whereas

(02:02):
I was grossing eight fifty eight hundred the old way.
And it's way better for me, it's way better for Mitch.
It's like far better and quality of property, right, yeah,
and Otis.

Speaker 4 (02:15):
And the other two nameless folks.

Speaker 2 (02:17):
Well, well, actually the so the third person who who
moved in still lives there today. Her name her name
is Linda, and she was working at Wendy's at the time,
and so like she still pays either one hundred or
hundred and twenty five dollars a week for the same
room sixteen years later.

Speaker 1 (02:36):
Okay, for those who haven't watched black and white films
or paid any attention, this concept, although sounding new today,
is actually a century old.

Speaker 3 (02:50):
Oh yeah, easily, if.

Speaker 1 (02:53):
You will think about it's a wonderful life exactly.

Speaker 2 (02:58):
Yeah, well you really think the second Yeah, well, Mob
Bell or whatever.

Speaker 1 (03:02):
Bob Bell or Bob Parker, whoever it was. But that's
it's nothing at all new that people would have homes
and rent rooms.

Speaker 3 (03:15):
Yeah.

Speaker 1 (03:16):
And it used to be that the person who had
rent the room also lived in the house, and maybe
it was a widow or a you know, people whose
children had moved on, but they had a four bedroom
house and to keep their home, they would rent two
or three of the rooms.

Speaker 2 (03:36):
Both of my great grandmothers on my mom's side did this,
rented rooms.

Speaker 4 (03:41):
Yea.

Speaker 2 (03:42):
They were they were single at the time and rented
out rooms to help just keep up keep up the
home there.

Speaker 1 (03:48):
It is nothing new, went on forever and ever and ever,
and that's what you stumbled onto with Mitch. Notice is
that this still goes on and there's a way to
do this.

Speaker 2 (04:05):
Well, there's a way to do it. And really, I
mean I credit Mitch. He was the one who told me, Okay,
here's what you have to do, because I didn't understand
what was required or what were you.

Speaker 4 (04:14):
Were about your house getting destroyed by all these people?

Speaker 1 (04:17):
Really?

Speaker 4 (04:18):
Okay, so what Mitch say you had to do?

Speaker 2 (04:20):
Well, you had to include beds, You had to put
in the beds, you had to install wash and dryer
so that they had laundry on site, and you had
to cover the utilities. And then typically they were built
on a weekly basis.

Speaker 4 (04:32):
What about kitchen and common area?

Speaker 2 (04:34):
So that house was four bedrooms and two baths. It
was only probably twelve fourteen hundre square feet, wasn't It
was not a big house, but had two shared bathrooms
and then these four bedrooms, and yeah, they figured it
out that no living room. There actually was a small
living room.

Speaker 3 (04:53):
In that house.

Speaker 4 (04:54):
What about a kitchen?

Speaker 3 (04:55):
Yeah, shared kitchen, all right, So.

Speaker 1 (04:59):
I would assume you would actually if you had a
big living room, put a wall on a door and
make it another bedroom as long as there's a kitchen,
a laundry room and locks on the doors.

Speaker 2 (05:09):
Yeah, you absolutely could. It depends on the layout of
the house. Uh this particular house. Uh, the it just
it made it difficult for the living room in that
in that case, but it was it was certainly an
efficient layout, There's no no question about it.

Speaker 3 (05:26):
That was alsious.

Speaker 4 (05:27):
What happened to the house next door at the tarp
On it did you buy?

Speaker 3 (05:30):
Eventually?

Speaker 2 (05:31):
We did with with a partnership with a partnership and
then fixed it up and then the partners who were
in that house wanted to get out, and so now
I think it's just a traditional owner occupied home. But
but yeah, we we had it for for several years.
I have a number of stories like that where it's
just everything really comes full circle. But but yeah, so

(05:54):
it worked out well, and we did.

Speaker 3 (05:57):
We did a couple more and most of what we.

Speaker 2 (06:02):
Were doing though, because this was just a flood of
properties at that period of time. This model was really
interesting and you could see that it earned more cash flow,
but it was super operationally intensive. I would have to
go physically multiple times a week to go collect money
orders out of the rent box on site in two
thousand and nine, and you have to make sure that

(06:24):
somebody didn't change the thermostat down to sixty three degrees
in the summertime exactly well, and the unit would freeze
out and bring up exactly And then you were mediating
some of the well he stole my leftovers from the fridge,
those types of disputes, and so it was just it
was a lot of bandwidth to kind of keep it going.

(06:47):
Obviously I still did since we still owned the house
sixteen years later, but we just kind of shelfed it right.
And Stan and I through this company Striant, we were
really creative. By middle name is Briant, his name is
Stan Stryant.

Speaker 1 (07:01):
Nice and because Atlanta Housing Fund was already.

Speaker 2 (07:06):
Taken exactly exactly so and Staticus was a little a
little bit too over the top.

Speaker 4 (07:11):
That's it.

Speaker 2 (07:12):
So we were still buying and I never got to
owning ten on my own, but through Strient was able
to get enough where it felt like, okay, we can come,
we can get out of this thing. Because it was
really just scratch and claw, I mean from two thousand
and five to twenty twelve, really before I mean twenty

(07:35):
twelve was really among the first times and I felt
like I could finally take a breath. And to your point,
like had just come to the verge of financial collapse
several times over that period, even when you knew you
were like logically this was great and everything was going
to work out, you still got to the precipice and

(07:58):
looked into the chasm many times.

Speaker 3 (08:01):
So uh yeah.

Speaker 2 (08:03):
So by the time things got stable, I started thinking
about what was next. And I'd started a construction company
in twenty eleven and found a guy I grew up
with to kind of hand off the reins to in
twenty fifteen really and I started thinking, okay, well, look,
I've I've done everything that I wanted to do to

(08:27):
just secure the financial stability for my family. At that point,
I had four boys, and I wasn't worried about paying
for school or just everything being okay. And started thinking through,
how do I leave a legacy in the world for
good and just make sure that my time has been

(08:51):
worth it so that if I get hit by a
bus tomorrow that I've done something to leave the world
a little bit better And started looking at joined rotary.
We were talking about rotary earlier joined Rotary, was just
doing other civic stuff and ended up at an affordable
housing ideas competition in late twenty sixteen, and I'd been

(09:15):
working on this school renovation project where we were going
to we needed to raise a lot of money to
convert it to affordable units, and it was clear at
this competition they wanted scalable solutions, not kind of this
one off historic redevelopment deal. And so I went back
to this house where I had met at exactly and

(09:37):
I was like, look, this is going to be really controversial,
but if you guys really want to solve the affordable
housing problem, and I've only watched this get worse from
two thousand and eight onward, you need to go figure
out how to do this at scale. And I've watched
Airbnb from twenty eight to twenty sixteen get to six
million listings, six million units on the platform, which.

Speaker 4 (09:58):
Is to me one of the craziest thing in the world.

Speaker 1 (10:03):
One that people will rent their house to somebody else
to come stay in. It's crazy, not just a rental unit,
but people actually rent their own homes to do it.
And two that people are comfortable going and staying in
someone else's house.

Speaker 4 (10:19):
I would have never believed it, to be honest with you.

Speaker 1 (10:21):
I mean, maybe I've got some of your father in
law in me, but I would. But the fact is,
my kids now in their late twenties, when they travel,
they think Airbnb before they think hotel.

Speaker 4 (10:34):
Sure, it's crazy.

Speaker 3 (10:35):
Yeah, I think most of us do. Honestly, I still don't.

Speaker 1 (10:39):
I'm still to school. But the point is I think
most do.

Speaker 2 (10:43):
Check your privilege, bill, yeah, check your privilege yeah.

Speaker 1 (10:47):
Yeah, well maybe so, But I mean, honestly, that is Yeah.
But it's interesting because that gave you a glimpse into
what could be I think.

Speaker 3 (11:00):
Right exactly. Yeah, And it was.

Speaker 2 (11:03):
It was this idea that Okay, I've I've watched now
Atlanta and like the fringe areas of Atlanta had had
changed dramatically from two thousand and two thousand and sixteen.
I'd watched it, I'd been a part of it. I'd
seen talking about the the army of normal folks like.
It wasn't one major investment that changed Atlanta. It was

(11:25):
thousands and thousands of individual people making decisions for their
own personal well being in most cases, that changed these
neighborhoods dramatically. And so I thought, Okay, if you can
harness that power and channel it for good, specifically to

(11:46):
create more affordable housing, then that would be an incredibly
powerful force. And so Airbnb had kind of done the
same thing but for vacation rentals, and so I thought,
if you could, if you could do that and show
how this rent by the room model could be more
profitable for an individual but also just better for the

(12:10):
community and society at large and actually create opportunities for
the people who needed them, whether it was Linda or
Otis or Mitchell what have you, then that would be
an incredibly powerful force. What you needed to figure out
was how do you reduce or remove the operational complexity
that makes this business hard.

Speaker 1 (12:33):
We'll be right back back to you're going to have
pick up money, orders and exacts, set arguments about who
stole the leftovers and.

Speaker 4 (12:54):
All of that.

Speaker 3 (12:54):
Yeah, exactly.

Speaker 1 (12:55):
And rooms would be a big because if I'm going
to buy, if I'm going to rent a room in
a house, because i work at Wendy's or McDonald's and
I'm working my forty hours a week, I'm contributing to society.
I'm not pulling from it. I'm working I'm doing what
I'm supposed to do. Just because I'm not making a

(13:17):
lot of money doesn't mean that I don't have the
exact same wants and desires and concerns of a millionaire.
I want safety, I want happiness, and I want some
solace when I get home.

Speaker 3 (13:27):
Say it again, I mean, like absolutely right and true.
It's everybody.

Speaker 1 (13:32):
So when I go to my home, even if it's
a room I rent, I want to make sure the
other three people renting rooms in that house are also
aligned with me in terms of what I want out
of life. And I don't want that schizophrenic, grazy person
making my life miserable. So I would think vetting is

(13:52):
a huge piece of the operational issues for this model.

Speaker 2 (13:56):
Yes, yes, And what do you do for vetting when?
And you can't screen for a schizophrenic person right, like
literally it's legally not allowed. So so how do you
figure that out?

Speaker 4 (14:09):
It's a good question, I'm asking.

Speaker 3 (14:11):
Yeah, so the idea that I had.

Speaker 4 (14:15):
So there was big operational issues.

Speaker 1 (14:17):
Sorry to interrupt, but that's the point is the scalable
part of this has a real operational component that is tough.

Speaker 3 (14:25):
Yep, yeah, and absolutely true.

Speaker 2 (14:28):
And I knew all of this, and oh, by the way,
there's also the elephant in the room, which is the
regulatory piece of this. In Atlanta, based on the definition
of family and pretty much every other jurisdiction in America,
you weren't allowed to do it because the talking about

(14:49):
the old way, when it was really common one hundred years.

Speaker 4 (14:52):
Ago, family lived in the house.

Speaker 2 (14:54):
Well not even necessarily, I mean traditional rooming houses were
around then as well. But in the nineteen sixties onward,
the American Planning Association and their infinite wisdom decided, oh yeah,
we should totally outlaw this as part of our standard code, really,
and that's when you really start to see this proliferation
of single use, single families owning. Whereas if you go

(15:17):
to historic neighborhoods, what you'll see in most cases for
anything that's one hundred years old, oh well, there's a
mix of housing types. There's a single family home, and
there's a duplex or a quadplex, and there's this former
rooming house or that's.

Speaker 4 (15:30):
My exact name.

Speaker 1 (15:31):
I live in midtown Memphis, and there are ten thousand
square foot homes and around the block as a duplex,
and then down the next block is a three story
kind of apartment building thing.

Speaker 4 (15:44):
But that's just the way development was exactly.

Speaker 2 (15:47):
Yeah so, but you can't under most modern zoning laws
build those neighborhoods the way that they're built today. And
the key thing came down to this definition of family
and family was actually defined at a local level, whereas
person is defined on a state level. Like why do

(16:08):
we need to define family.

Speaker 3 (16:09):
At a local level? Like that's crazy?

Speaker 2 (16:12):
Uh? And in Atlanta there are eighty three different jurisdictions
with eighty three different definitions of family. Uh. Yeah, so
so on one side of the street, it could be
no more than two unrelated people are allowed to live together.

Speaker 4 (16:24):
Uh.

Speaker 2 (16:24):
And City of Atlanta's current definition, at least right now
until they change it is up to six unrelated persons
plus four boarders occupying no more than two rooms. And
then there's an exception for domestic servants. Any number of
domestic servants may live with the family.

Speaker 1 (16:41):
So like these domestic servants, of course, there's a near
mark for them, not for them, but for the people
who employ them, right, who are also the same ones
back in these rules.

Speaker 3 (16:53):
But I meant, oh, you'll see that stuff.

Speaker 2 (16:56):
I was talking to somebody I think it was Rochester,
New York and they didn't know, but they look back
at their code and like, oh gosh, like domestic servitude
is actually defined in this owning code and allowed under
definition of baily.

Speaker 1 (17:09):
Wow.

Speaker 2 (17:09):
So so so yeah, a number of just enormous hurdles
to get to get over before you even get to
the logistical and operational stuff.

Speaker 4 (17:18):
Uh.

Speaker 2 (17:18):
And so I wrote this white paper and just said, Okay,
here's how I think you can do it. And and
here are the three core services that this marketplace would
have to provide in order to make this work and
to really scale this this solution. The first is filling
rooms and it gets to some of the screening piece
to your point.

Speaker 4 (17:38):
Uh.

Speaker 2 (17:38):
And so just screening for uh, it's f c R
A compliance Uh federal or federal credit What is it?
Federal Credit Reporting Activity credit so credit. Uh yeah, but
it's it encompasses a lot okay, a lot more in that.

(17:58):
It might be Fair Credit Reporting Act anyway.

Speaker 4 (18:01):
I think it is. Yes, it is in any.

Speaker 2 (18:04):
Case, so no felony convections in the last seven years. Okay,
So that's like screen the screening area.

Speaker 3 (18:12):
Number one.

Speaker 2 (18:13):
The second was do you have an income? Do you
have an income? And do you earn enough income to
cover the cost of this room?

Speaker 4 (18:19):
Does social Security benefits? Kount of income?

Speaker 1 (18:22):
Sure?

Speaker 4 (18:22):
Sure?

Speaker 3 (18:23):
Any income?

Speaker 2 (18:25):
And then the last piece is identity verification and are
you the person who's actually applying because in apartments that's
a huge issue where somebody will apply and a different
person we'll move in. So those are like the three
things on screening off the cuff, but more importantly, how
do you actually create a demand generation engine so that

(18:48):
you can when Mitch or Otis has a housing need,
they know that this place exists and they can come
to it and they can figure it out easily and
move in. So that was probably the biggest piece of
the whole thing. The second piece was payments, where we
were handling all the collections. We would want to handle

(19:08):
all the collections because most, really every property management software
was not set up to take payments on a weekly basis,
and it's way more effective and way easier to budget
on a weekly basis than it is on a monthly.

Speaker 4 (19:25):
Basis, especially when you live. We to wak exactly, so.

Speaker 2 (19:28):
If you're living paycheck to paycheck, one all inclusive bill
far easier to budget around than monthly and non inclusive.

Speaker 1 (19:36):
I ad the utilities included, which I would just drive
to teach you or Mitch or somebody.

Speaker 2 (19:41):
Yes, yes, okay, And then and then the third piece was, well,
what do you do in the I have a schizophrenic
in my house who's screaming at two o'clock in the morning,
or somebody dealers peanut butter?

Speaker 3 (19:53):
Yeah, exactly, and what do you do in those situations?

Speaker 2 (19:56):
And so if kind of going back to this Airbnb
example with six million listings, I wasn't confident and I'm
still not by the way that you can like match
people on the front end, because everyone says they're clean.
Nobody's going to admit that they have schizophrenia, right, even
if you could legally screen for that, which you can't anyway.

(20:18):
So instead, what you can do as a reactive measure
is to say you have the ability to transfer to
any home on the entire platform. So if you think
about those six million Airbnb listings, imagine if you show
up to one and you didn't like it or something
was wrong, and you have the ability to move to

(20:38):
any of the others, and one might be across the
street or across town or really whatever.

Speaker 3 (20:43):
So so those were like the.

Speaker 4 (20:47):
Tenants mobility exactly if they feel they need it.

Speaker 2 (20:51):
Yeah, so even if you're making seven hundred and thirty
bucks a month, you have economic mobility.

Speaker 1 (20:55):
I'm curious Uber the rating, the five star ratings for
both the Uber. What am I called when I get
an Uber? I guess I'm a renter or a rider?

Speaker 4 (21:09):
Thank you? A rider gets rated as well as the
driver does. Yep.

Speaker 1 (21:14):
And I think that is an ingenious part of Uber
because whenever I see an uber driver's got five stars
and a thousand good reviews, I'm feeling pretty good about him,
and same for me. If I tip well and don't
act like an asshole in the back of somebody's car,
he's probably ginn get me five stars. So an Uber,
if I call one at two thirty in the morning

(21:35):
at a sketchy area, if I'm a five or a
fringe area or downtown or something on a weekend where
people get drunk and you can end up picking up jerks.
If I've got a five star, that Uber driver's going, yeah,
I'll pick him up. He seems like an okay guy. Yeah,
I think it's brilliant. Same thing, wouldn't it be the
exact same thing it is. I mean, because I could

(21:58):
if I'm renting this house and Otis is in it,
and Otis is a five star tenant, and that's not
a bad guy to stay with. And if these people
with this house are four point three star renter people homeowners,
Tho's probably a decent place to say.

Speaker 2 (22:14):
And it goes a step farther in our business where
residents have the ability to rate each other as well.
So there's like this host and we refer to residents
as members. So you have hosts and the members.

Speaker 1 (22:28):
Okay, hosts are the property of parieties and members are
the people who are living in the rooms.

Speaker 2 (22:34):
Correctly, and sometimes a host is an owner occupant. More
often than not it's it's an investor, but increasingly we're
seeing more owner occupants now. But so you have this
rating relationship between hosts and members. That's that's bilateral. They
can rate and communicate both ways. And then you have
member to member ratings as well, so that if you've

(22:56):
got somebody who's really disruptive in your home, you can
rate that person and when their score falls below a
certain amount, they risk their their membership termination, which is
pad split speak for they lose their ability to access
the platform.

Speaker 4 (23:09):
Would you just say pad speak you now, okay, so
what we've stepped ahead? You rate this white paper? I'm sorry,
I got to get us back.

Speaker 1 (23:20):
Well, you write the twenty got aarbab twenty sixteen or something,
and then what the Jewish people with synagogu say sixteen?

Speaker 4 (23:30):
No that work?

Speaker 3 (23:32):
So excuse me.

Speaker 2 (23:36):
What happened was the h This was a JP Morgan
Chase Foundation sponsored this competition. The winner would get seventy
thousand dollars, but each of the finals would get ten
and to my own shock and surprise, we were one
of the finalists, so we got ten thousand dollars. The
first thing I did was hire an attorney to figure

(23:57):
out how do you legally figure out the family issue?
And then as a finalist, you have to like go
to the next stage and figure out, like how do
you create a prototype for whatever your idea happens to be.
And one of my three houses had recently become vacant.

(24:20):
It was a really terrible situation with a previous tenant
where they had stolen the appliances and they were just
terrorized in the neighborhood. And when they moved out. They
broke all the windows, and I had like a forty
six thousand dollars insurance claim on that house.

Speaker 4 (24:35):
Oh wow.

Speaker 2 (24:36):
Right, at the same time, I was writing this white paper,
and so I thought, Okay, well, like this can be
the first prototype.

Speaker 4 (24:43):
I got to rebuild the damn thing anyway.

Speaker 2 (24:45):
Yeah, exactly exactly. So I converted it. And what I'd
learned over the last seven years also was that the
extent to damage. To your point earlier around are you
worried about damage in these rooming houses, I had seen
that it was much lower risk in these rooming houses

(25:06):
than it was when I was renting an entire property.

Speaker 1 (25:08):
Is that because you're mitigating your risk among four people
rather than one family. So if one person does damage,
only damaging their room rather than the whole.

Speaker 3 (25:17):
House, I'd say it's it's multifaceted.

Speaker 4 (25:19):
So one, I wouldn't have I wouldn't have thought what
you just said.

Speaker 2 (25:23):
I think most people would not most people and I
would not have thought that were true either before I
experienced it. So One, you have different sources of income,
and you have whatever four or six or seven different
people that are now all providing a portion of the rent.
And so when you have a vacancy or when one

(25:44):
person has a job loss in campaign, you have one
of four or five or six or seven versus the entirety.

Speaker 4 (25:52):
Makes sense.

Speaker 3 (25:54):
The second thing is risk has spread out. Yeah, well,
and you noted this earlier.

Speaker 2 (25:58):
When you are in those jobs, you want just safe, clean,
quiet place to stay, and when someone is disrupting that,
you are very quick to report that issue. Whereas if
I'm runting an entire house or an entire apartment to someone,
and there may be all sorts of things happening behind
that front door, but in a domestic violence situation or

(26:23):
even roommate squabble or whatever it happens to be, the
likelihood that one of those people is going to go
to their property manager or their landlord to report it
is almost none. Right, it just doesn't happen. So that's
like the reportability and willingness to report, I think happens
much more. And then the extent to which they can
actually create damage is also much lower. Where they have

(26:46):
one room as their own space and they're sharing the kitchen,
they're sharing the bathrooms, and so yeah, if.

Speaker 4 (26:52):
I live in that house, I'm not letting you tear
up my.

Speaker 2 (26:54):
Kitchen exactly, yes, but not in my kitchen, and so
your your capacity for early invention as an owner is
much much greater. Interesting in a shared housing model, which
means that your turn costs, meaning the cost that you
spend in between vacancies, is also much much lower.

Speaker 3 (27:12):
It's like under one.

Speaker 2 (27:13):
Hundred dollars on average for rooms, yeah, whereas in a
house it could be easily in the tens of thousands.

Speaker 1 (27:23):
We'll be right back, all right, So you turned this
torn up forty six thousand dollars insurance claimhouse into your
prototype model, I.

Speaker 2 (27:40):
Guess, yeah, and then filled it all. How long did
it take? Probably three months? It was really pretty easy.
That house was already a five bedroom, two and a
half bath. So the only thing I did for construction
to modify the house was the living room had two

(28:01):
cased openings for like double doors where you can picture
these old houses that had the glass the glass doors,
so those had probably been there at some point in time,
and I just put regular double privacy doors.

Speaker 3 (28:14):
And so I had six bedrooms two and a half baths.

Speaker 2 (28:17):
We redid the floors and put it up for rent
on Craigslist and said, hey, we have rooms available for rent.
Here's the deal. I'm pretty sure it was called pad
split at that time and how I was advertising it.
But that was the first one, and I had it
filled within two weeks, and it was exactly the types

(28:38):
of folks that the city, through this program and competition,
had wanted to house. There was a bus driver for
local Public Transit Authority. There was a technician for comcasts
at the time now Exfinity. There was a yoga instructor,
a graduate student, a contract pain her, and a security guard.

(29:01):
And I mean I knew all of them personally, but
the story of the security guard was really the one
that changed my outlook and I think my passion.

Speaker 1 (29:15):
Really.

Speaker 2 (29:17):
She her name was Tiffany, and she was she had
been living in an extended day motel east of town
and then well past the fringe, really really sketchy area. Uh.
And she'd been paying twelve hundred dollars a month to
rent this motel room on and she, in her own words,
was dodging drug dealers and prostitutes to get to the

(29:39):
bus stop to go to her job as a night
shift security guard at a local film studio. And she
told me, she said, I've never lived in a situation
like this before. But this is the nicest house I've
ever seen.

Speaker 3 (29:51):
And she moves in. Yep, And so she moves in
right away.

Speaker 2 (29:57):
She starts she's paying five few months with all utilities,
beautiful furniture.

Speaker 4 (30:05):
Saving seven hundred dollars a month, yeah, seven fifty.

Speaker 2 (30:07):
Yeah, so she she started well, six six fifty six fifty.
So she starts storing six hundred bucks in cash under
her mattress, which I teases it's not a recommended strategy, uh,
but but it worked for her. And three months later
she's able to buy her own used little smart car,
you know those little kind of European looking cars. She

(30:28):
buys her own used car so that she can drive
to and from her job as a nice SIF security guard.
And three months later she has enough for a deposit
on her own apartment. And so she moves out in
six months, and she has changed her life, Like but
for this opportunity, she would still be living in that
in that motel room. And I was really conflicted when

(30:52):
she when she moved out, because I was like, well, one,
I'm thrilled for you, but and I'm excited that we've
been able to help facilitate this outcome for you, but like,
this was not charity by any stretch, right, I mean,
I increased my income in creating this opportunity, which really

(31:15):
just makes you feel like, why is this not a thing?

Speaker 3 (31:19):
Why is everyone not doing this?

Speaker 4 (31:21):
This would be a win win for literally everyone.

Speaker 2 (31:24):
Exactly, And it's much cheaper, more accessible for Tiffany or
anyone in her similar situation, it's more profitable for the owner.
Everyone should be doing this. And I've been at this
point in the affordable housing space for ten years and
no one's even talking about it. And on the contrary,

(31:47):
they were mostly talking negatively about it or had a
negative idea about it. And so that's when I thought, Okay, well,
I'm just going to keep telling these stories over and
over and I'm going to bring anyone who will listen
through this house, including city officials, real estate investors, funders,
and literally anybody. And finally convinced one of those folks

(32:12):
who was a real estate investor in twenty eighteen to
bring on her first house, and that was that was
the first third party host February of twenty eighteen. And
just like these stories, these personal stories, like you just
you start accumulating them over time and.

Speaker 3 (32:32):
It affects you.

Speaker 4 (32:34):
So when did pad split officially become.

Speaker 3 (32:39):
A thing?

Speaker 4 (32:40):
Yeah?

Speaker 2 (32:40):
Yeah, so yeah, officially is is an interesting way to
describe it. So, like that first house that I did,
I define, Okay, that's official, Like pad split LLC became
a thing. I made the little kind of campaign signs
and would stick them out in corners and tell people
to call my phone number. But I got into I

(33:03):
knew this needed to be a technology company. I didn't
know anything about technology, so I thought, okay, well I
should go figure out how does one actually start something
like Airbnb and was just introducing myself to different groups
around town. Made my way to a group called tech Stars,
which is now international program out of Boulder, Colorado, and

(33:28):
they run these incubators where for three months you are
intensely involved in how to build a startup. And so
that was now started in June of twenty eighteen, and
we were admitted to that program and started. I recruited
my brother in law, my sister's husband, to be kind

(33:49):
of the operational co founder and this other guy I
got introduced to, John O'Brien to be the technical co
founder and he was really the one who knew everything tech.

Speaker 3 (33:59):
I still don't.

Speaker 2 (34:00):
I mean, I'm much better than I was, but hardly
hardly technical by any stretch. And yeah, the official official
start was truly like June of twenty eighteen, and we
just threw ourselves into the program one hundred and twenty percent.
And yeah, it, I mean, it seems like it went

(34:24):
quickly in hindsight, but it was just it was a
slog for a long time and super super gradual. But
and many other near death moments where we were looking
over the precipice.

Speaker 4 (34:41):
But but yeah, we'll talk about where it is now.

Speaker 1 (34:47):
But I want to tell you something. My son, one
of my sons, my older son, my third kid, Will,
went to the University of Mississippi and studied public policy
at the Truent Lott School of Public Policy and Leadership,
and he's now working on the hill. I will never

(35:08):
forget two things that he shared with me when he
came home from school. And rarely do your kids in
college come home from school excited about something they want
to tell you about.

Speaker 4 (35:23):
The first was I'm going to butcher it.

Speaker 1 (35:26):
But it's about a Mississippi guy who during Prohibition had
a great speech about where.

Speaker 4 (35:36):
He stood on the.

Speaker 2 (35:40):
On the.

Speaker 1 (35:42):
Issue of prohibition, and he wrote a eloquent speech about
why if we're talking about the bourbon that suses the
old man aches that makes Christmas a better day, that
he goes on on and on and on about that.
He said, I am absolutely for it. But if you're

(36:04):
talking about the same salve that makes alcoholics of husbands
and beaters of children and goes through and uses a selican,
he said, I am absolutely against it. So at this
point I stand here absolutely steadfast on my approach to prohibition,

(36:24):
which meant I don't know right, there's a great thing.

Speaker 4 (36:27):
Do you know what I'm talking about? You should look
it up. It's a great speech. The second I hate prohibition,
though I don't agree with them. Yeah. The second.

Speaker 1 (36:37):
Was when he brought home that still hangs in his
house today, the uh the man in the arena.

Speaker 3 (36:51):
Oh yes.

Speaker 1 (36:53):
And the reason I'm saying that is because I read
what you said, and I'm going to read it because
when I read it, I sent to my children. The
guy I'm interviewing today summed up my life.

Speaker 4 (37:07):
And this is what you said.

Speaker 1 (37:09):
Everybody says, Oh, man, that's a great idea. I wish
I should have done that if I had a dollar
for every time I've heard that. The reality is that
it's just a lot of pain and a lot of
sleepless nights. And I mean, I've been served with an
innumerable number of lawsuits at various times, and we got
left at the Altar Bier series a funder, and then

(37:31):
we've had a couple of layoffs, and that stuff's hard, man.
I mean the Teddy Roosevelt poem about the man in
the Arena, and it's like, you just got to be
willing to put up with a tremendous amount of pain.
And the reality is, there just aren't many people out
there that are willing to put up with the amount
of pain and risk that's required to make a business successful,

(37:54):
particularly one that's like we have. When I read that,
I'm like Atticus and I have lived the same life,
just in different worlds. So when we hear this cool story,
I think it's before we go to where you are now.
I think it's very important for you to make sure

(38:15):
our listeners understand business philanthropy. Anytime you are creative and
engage in something that is a little bit uncommon, and
anytime you venture out, it's never easy, but when it wins,

(38:40):
the payoff is just catastrophic. And I don't mean personal
payoff in your pocket, but the change you make for
our society. But it sounds good, and the rest that
we're going to hear is going to sound extraordinary. But
I think it's really important for people to understanding beats,

(39:02):
hard work, and nothing replaces sleepless nights, time away from
your wife, tom, away from your kids. The risk the
days you look in the mirror and feel like am
I going to puke? Die? Or what's going to happen
in the next thirty minutes of my life? When your
head's bounding so hard, ears ringing, and your eyes are
bloodshot and you not even see what you're looking at

(39:23):
in the mirror. Some days I know you've experienced it.

Speaker 4 (39:27):
Oh, no doubt.

Speaker 3 (39:29):
Yeah, yeah, I remember saying that, and I can't I
can't recall.

Speaker 4 (39:36):
It was an interview.

Speaker 3 (39:37):
Yeah, it was an interview, all right.

Speaker 1 (39:38):
Well, Alex picked it up somewhere and when I read
it in the prop, I was just like, holy crap,
this guy does feel feel it?

Speaker 3 (39:45):
Yeah? No, I mean, and it's been it's been consistent.

Speaker 4 (39:49):
Consistent, misery just getting well.

Speaker 3 (39:52):
I mean like listen, you and you know this. You
you build armor. I mean it is a muscle that
you you build and just confronting.

Speaker 2 (40:05):
Failure, and I mean in some cases it's it's not
just antagonism, it's it's hatred in some cases, and you
know that they're whether whether it's failure or actual opponents.
And every day you make a decision about what's what

(40:26):
are you going to do moving forward and what's the
next step that you're going to take.

Speaker 1 (40:30):
Yeah, and anybody that thinks you're going to venture off
into the unknown and something that's uncommon and also work
and serve in the fringe areas that thinks it's just
going to be easy peaches and cream, wake up.

Speaker 3 (40:44):
Yeah.

Speaker 2 (40:45):
And I don't know how many people, or at least
I don't know that. I believe many people think it's
going to be easy, but I'm not sure that most
folks realize what they're going to have to do. I'll
tell you though, For me, when I decided, I mean

(41:05):
because I had been through the ringer in the early
years my entree.

Speaker 4 (41:09):
I made ten thousand dollars in two thousand and six
with the newborn.

Speaker 2 (41:12):
Two thousand and nine was the hardest where like I
was literally like crying, collapsed on the floor of this
rental house because I thought I was just going to
lose everything. But in when I started pad split, I
and I took a deep breath to just say, Okay,
I'm going to do this. I was super clear on

(41:34):
what I was willing to risk and what I was
not willing to risk. And what I was not willing
to risk was my family. Right. I had seen far
too many entrepreneurs and we've seen I mean, there are
books written about all these people, right who have become
incredibly successful in some way, shape or form, and have
now been divorced many times over and estranged from their

(41:57):
kids and.

Speaker 3 (41:57):
So forth and so on, and their kids are yeah,
not in great shape exactly.

Speaker 2 (42:03):
Yeah, And and I said from the from the very
early stage, that is not something I will sacrifice. I
will not give up my family, and that will always
be the first priority, and that this thing that I'm
creating that I want to be a legacy for good
in the world, can only ever be second to that,
because first and foremost I want to be a father

(42:25):
and husband. But yeah, I mean, there there is just
the the persistence of the pain and it's just like
it's like a constant drip. And I think that's really

(42:46):
what requires the muscle building, is just understanding that this
is not going to be done in a year or
two years or five years, like this is going to
be almost every day in some cases, for much much
longer than you ever anticipated it will be.

Speaker 3 (43:09):
And long after you think you have proved to the
world that this works, you're still going to have the
majority of the population who.

Speaker 2 (43:22):
Absolutely refuses to believe it and will be opposed to
you at every turn.

Speaker 1 (43:28):
I gotta believe the same thing happened with their benb guy,
whoever that.

Speaker 3 (43:32):
Is, Yeah, Brian Chesky, Oh yeah, I guess you would
know their name probably.

Speaker 2 (43:36):
But yeah, I'm sure well. And actually I borrowed a quote.
It's not his director, but I heard him say it
from Picasso, and the quote is the older I get,
the stronger the wind blows.

Speaker 3 (43:53):
And it's always in my face of it, and it's
totally true.

Speaker 2 (43:59):
But but like what's missing from that quote is the
older you get, the more customed you get to the
wind blowing stronger and stronger, which is which is a
pro and a con, and that like one I journal
every day and and I look back at my journal

(44:19):
entries from five years ago, and they just look like
simple tribulations, even though I knew they were existential crises
at the time. Now it's just like, oh whatever, it's
just another day at the office. But but the problem,
I think where you really need to be conscious is

(44:41):
how do you how do you still refill your cup
and how do you not just become uh, I don't know,
immune to feeling in some ways, and make sure that
even if as you've built this armor because you're accustomed
to confront difficulty, how do you still retain compassion and

(45:03):
empathy and be a human in a lot of ways.

Speaker 4 (45:07):
That is really profound because I have had to work
on that.

Speaker 1 (45:12):
Yeah, you know, dealing with bankers crawling down your neck,
and employees needing stuff and having to lay them off,
and the guilt you feel, and fighting customers and vendors,
and we do business in forty two countries fighting all that,
and you can imagine what our trade war is to

(45:34):
my business when you know, and all of that, and
this shell, this armor, the stuff, since you got to
have to make things go for everybody. And then when
you leave that world and you walk through the front
door of your home to your beautiful wife and your family.
You have to be able to dis robe from that armor. Yeah,
to recapture the essence of who you are as a person.

Speaker 3 (45:56):
And who you want to be and who you want
to be.

Speaker 4 (45:58):
Yeah, it's a challenge sometimes, most of the time, most
of them.

Speaker 1 (46:03):
But the point is, whether you're doing pad split or
you're starting some organization to serve homeless or whatever, it's
all the same process, really, yep, which is why when
you pull it off, it is so unbelievably, undeniably rewarding,

(46:25):
and not just yourself but to those around you.

Speaker 4 (46:32):
We'll be right back.

Speaker 1 (46:46):
So twenty nineteen eighteen, Whin's pad splid bec official.

Speaker 3 (46:52):
Twenty eighteen, twenty eighteen, I'd say it is official official.

Speaker 4 (46:56):
So tell me what Pats it looks like to day, bro.

Speaker 3 (47:00):
Yeah, so we are. We just crossed twenty five thousand units.

Speaker 4 (47:05):
Un believable. What deep? Five thousand of these things spread
out all over the country.

Speaker 3 (47:13):
All over the country.

Speaker 2 (47:14):
Yeah, we're.

Speaker 3 (47:16):
In at least twenty six states.

Speaker 4 (47:18):
Now you're not in Memphis.

Speaker 3 (47:21):
We can be though.

Speaker 4 (47:23):
We're gonna be all right.

Speaker 1 (47:24):
Oh, we're gonna be This is look I look around
my town, and I see what you saw in Atlanta
twenty years ago today, and there are literally hundreds of
neighborhoods with the exact houses you're talking about that the
nineteen twenties to thirties, cool looking little bungalows that are
historical nature and complete neighborhoods inside our loop which is

(47:48):
two forty yep.

Speaker 4 (47:50):
Okay, you said, what was Atlanta's.

Speaker 3 (47:51):
Two eighty five?

Speaker 1 (47:52):
Okay, ours is two forty same exact, exact demographic, same
exact everything, andghborhoods with all these houses built from nineteen
forty five to nineteen sixty that are the ranch style,
coming home from the military type things. And there are

(48:13):
good neighbors and all of these places that are simply
seeking the same basics that we talked about, almost the
Maslow of hierarchy of needs for home exactly.

Speaker 3 (48:24):
Yeah, quoted all the time, do you really Okay?

Speaker 1 (48:26):
Well, there you go, same thing, and there is nothing
like this, And Memphis is full full of service oriented
people experiencing. I call it home insecurity, and I think

(48:48):
there are cities just like ours that are like this.
It's why I loved it so twenty five thousand. But
give me more demographics. Yeah, so lots of give me
the numbers, give me, give me what you know now
that you felt in twenty eighteen that have now come
to fruition that make this the degal.

Speaker 2 (49:08):
Yeah, well two things I'll say there. I'll happy to
give you the numbers. So we also just crossed two
hundred million dollars saved for the residents who have moved
into the keep up.

Speaker 4 (49:16):
With that metric, we do two hundred million.

Speaker 2 (49:19):
Saved relative to what they were doing before. If you
compare it to market rent, it's probably like five hundred million.

Speaker 4 (49:25):
But half a billion dollars. Yeah, it's I mean, and
that's weird numbers. That's like hard to have them.

Speaker 2 (49:32):
And that's what I'm saying, Like, I mean, I know
these numbers off the top of my head. It's like
seven billion dollars relative to what would have been required
if you use traditional subsidized housing program to subsidized housing
programs to go create a similar number of units. So
like taxpayer dollars that otherwise would have been necessary to
create twenty five thousand units is about seven billion. We

(49:58):
our meeting income is twenty seven thousand a year or
your members YEP of our residents. We know that eight
percent of our residence moved directly from unsheltered homelessness in
spite of having full time employment.

Speaker 1 (50:12):
That's the thing I got. I gotta tell you something
else about Memphis. There's a thing here called Church Health.
A guy named Scott Morris who's been a guest but
before that, it's a buddy of mine. He's got his
degree from Yale in divinity and he's got is a
medical doctor from I think Emory in Atlanta. Wow, that's weird.

(50:32):
And he grew up in Atlanstia. We should meet, you
really should meet. Because he started Church Health for the
working poor. He said you should not work thirty two
hours a week or more and not have top healthcare.
And it is now the largest what is it, alex
it's the largest.

Speaker 4 (50:54):
Yeah, there is a title for it, but it's uh.

Speaker 2 (50:56):
They got sixty they're on the primary doctor for sixty
thousand underinsured people in Mentoota.

Speaker 1 (51:03):
Yeah, and we're talking a YMCA rehabilitation center, a full dental,
full vision, full medical, all the way to if you
need a heart transplant taken care of for the very
tight people that need a place to live in like
what you're providing. He provides for those very people, the

(51:25):
working poor, better healthcare than I can. And the point
is that you just said. The reason I brought it
up is you're absolutely right. Tiffany the security guard should
not be working forty hours a week in this country,
paying or taxes paying or Social Security, doing what she's

(51:47):
supposed to do and have to step over drug dealers
and hookers to pay twelve hundred dollars to live in fear.

Speaker 4 (51:54):
Yes, that is not an America that I believe in.

Speaker 1 (51:59):
That is not a culture that that woman should have
to put up with when she is doing what the
world told her to do, which is get a job
and you'll be there. And this thing is an answer
for some of those folks.

Speaker 4 (52:14):
It is.

Speaker 2 (52:14):
It is, and I mean for those of you listening too.
I mean the other part of that equation, though, is
do you believe that people like Tiffany should have an
opportunity to live in our communities which they serve literally? Right?
I mean, she was a security guard. The example I
often use in one of my speeches is a woman

(52:37):
named Kyosha who is an in home health aid and
go ahead and look up, like I challenge anybody's listening,
go on indeed dot com and look up what a
home health aid gets paid, like the same people who
are going to be caring for your loved one when
they are on their deathbed.

Speaker 1 (52:53):
And it's not in a quarter or ten fifteen an hour,
it's nothing.

Speaker 2 (52:58):
It's it's it doesn't matter what city you're in, and
it's always it's always less than forty grand a year.
And then go look at what that income actually qualifies
them to rent. And what you see is there's this
enormous disparity, and so do those types of people deserve
an opportunity to live in those communities? But that what
that also means is that for people who have lived

(53:21):
in traditional neighborhoods for a long time, like something has
to give, right and you have to be able to
house the people like Tiffany or the home health aid
like Kyoshia in those communities. Because if a small company
like ours has been able to save seven billion dollars

(53:42):
in taxpayer funding that would be required to create this
type of housing, and you know that money doesn't exist.
It's like four trillion dollars total that would be needed
just to build the houses. Much less actually, operate them
at a price that could be afforded by those workers.

Speaker 4 (53:59):
Meanwhile, there's a solution. Yeah.

Speaker 2 (54:01):
Meanwhile, yeah, there are empty bedrooms there. You have thirty
two million empty unused bedrooms in the United States compared
to a housing need for those types of people around
seven million.

Speaker 4 (54:13):
So you have a surplus.

Speaker 3 (54:14):
That's easy math, right, we have.

Speaker 2 (54:16):
We actually have more housing supply on a square footage
basis today than we've ever had in United States history.
So people talk about the shortage of housing, Well, it's
kind of true, but it's only true because we have
a lot of one and two person households who are
living in larger homes, and a lot of people like
the Tiffany's and Kyoshia in the world get left out

(54:38):
because they don't have access to those to those rooms.
And so like, do we as Americans who believe that
you should be able to pull yourselves up by your bootstraps,
or you should at least have an opportunity if you're
working and you're doing the right thing, you should be
able to have a safe place to call home. Do

(55:00):
we also believe that you know what, like, I'm going
to be a part of that solution and That's ultimately
why I created this company as a marketplace is so
that anyone anywhere who is compelled to take action has
the ability to do it, and they can do it
anywhere in America right now on on the platform. You

(55:20):
have an extra room in your apartment or your house. Uh,
if you want to go become a housing provider an
investor like I did.

Speaker 4 (55:29):
Like, there are.

Speaker 3 (55:31):
Multiple paths you can You can go do this in
a financially.

Speaker 1 (55:37):
If you haven't absolutely and you're probably gonna make more money.

Speaker 2 (55:41):
Yeah, in a lot of in a lot of cases
you will. And so to that point, it's not even
it's not even a sacrifice, right, but you I think
what what's powerful uh and still resonates with me about
this model is literally anyone can be a part of
that solution. It's just a question of are we willing

(56:06):
to take that principled stand and take the next step
towards towards.

Speaker 1 (56:11):
Action About pad splits, members, ninety percent would recommend pad
split to a friend, which you can't get ninety percent
of people to agree to anything, So that's a huge number.
Twenty seven thousand dollars is the median annual income for
members residents. Fifty four percent report improved job stability. Primarily,

(56:34):
My guess would be because they have somewhere to go
that's quiet and healthy and safe, which allows them to
be better at their job. Eighty percent are employed. Of those,
seven percent commute to their jobs. Fifty percent of the
members are able to pay off debt. Average monthly saved

(56:56):
each month by residents or members are three hundred and
sixty six bucks. Seventy five percent of members are persons
of color. Nine point three months average is the length
of stay median age is interesting to me thirty six
years old, five point four nine million saved per month
across active members, nineteen point nine plus million historical savings

(57:19):
fifty six thousand, five hundred members.

Speaker 4 (57:25):
Housed off your idea, bro fifty six thousand.

Speaker 1 (57:32):
And here's the big one. Zero dollars in taxpayer box,
no money, no money from the public, callfers to do this.
The economic impact we've created more than twenty two thousand,
five hundred units for our residents. Two hundred and fifty
thousand is average costs for government substyles affordable housing US,

(57:54):
which equals five point six billion dollars that PAD split
has saved taxpayers in addition to the money it makes
for its homeowners and the money and saves savings and
the increase in lifestyle provides for its members. It is

(58:16):
a triple win.

Speaker 3 (58:18):
That's that's the idea. Yeah, we nominal, Yeah, thank you.

Speaker 2 (58:22):
Yeah, we are a little out of date on the
on the website, but we're growing pretty quickly too.

Speaker 4 (58:26):
So it is pad split it app? Is that what
it ends up being.

Speaker 1 (58:29):
How how does Mitch find out and if Linda moves
into this house and doesntlight this dude and has that
mobility piece?

Speaker 2 (58:40):
Is it?

Speaker 1 (58:40):
Is it on a computer? Is it on a phone app?
I mean, how does it give us? How does pad split?
How does it work?

Speaker 4 (58:46):
Operationally? Work? And you know, when I want to become
a member? How do I apply? Who is vetting me?
Give me the operational background behind us?

Speaker 3 (58:58):
Yeah.

Speaker 2 (58:58):
So so they can find on the web or on
the app. Let's assume they've never heard of pad split
and they just go look for a room for rent.
We're usually one of the first sites that pops up.

Speaker 4 (59:08):
And so we are two smart guys making sure you're
number one on the web.

Speaker 2 (59:12):
Yeah, I mean not necessarily number one, but a lot
of those sites that list are listing our units as well,
so we're posted on pretty much anybody who lists rooms
and most departments. But yeah, they would just search for
they want a room for rent, and that will navigate
them to the site. They come on and they apply.

(59:35):
They're usually screened within just a couple of minutes where
we're looking at again that criminal background screening, their income verification,
and then they have identity verification where you take a
picture of yourself holding your ID and so there's a
biometric scan that takes place to make sure you are
who you say you are. They go to book a room,
which they'll see on the site or in the app.

(59:58):
They click on that room. In some cases is a
picture of a room. Oh yeah, yeah, picture. A lot
of times there's like what's called a matter port or
a kind of a three D plan of home. It'll
give profiles of the other residents who are renting in.

Speaker 4 (01:00:13):
That kidding, so you actually know who you're going to
have a room next day?

Speaker 2 (01:00:16):
Yes, yea, that is so cool. Keep going and then
so they'll book that room. In some cases, hosts will
auto approve, so as soon as you book, you will
be given an access code to get into that property,
so there are no showings upfront, and that's important because
it makes the process just go so much faster.

Speaker 3 (01:00:36):
But in some cases the hosts it's a week.

Speaker 4 (01:00:38):
If you don't like it, you can move.

Speaker 3 (01:00:40):
Yeah, well they can. They can move right away if
they move in payment.

Speaker 2 (01:00:44):
No, if they move in and they and like, let's
say the photos on the site don't look like the
house or it's dirty or something, they'll get an automatic
free transfer right away to book any other room on
the platform, which is huge because it's economic mobility, even
for folks that are making fifteen grand a year. But

(01:01:04):
some hosts will have additional screening where like, if someone
moves into your house, you want to make sure that
you're compatible with that individual. So sometimes they'll do like
an interview, or they'll run additional screening on their own.
So hosts have that choice if they want to check
that box to run additional screening, But the end process
is still the same for when they go to move in.

(01:01:28):
They have through the app, the ability to submit maintenance
tickets or communicate with their hosts, communicate with other members
of the home just say hi, my name's Genium coming
in and here's who I am so like some houses
like organically will kind of build their own little communities.

(01:01:48):
Others are just each room is like its own apartment,
and they want safe, clean, quiet, and the house is
dead quiet, right because everybody's just kind of in their
room as it's their own little home. When they go
to apply, they pay nineteen dollars for the application fee.
Move and fees range between zero dollars to about two

(01:02:10):
hundred dollars. The average is around eighty one, and that
covers the cost of turning that room from whoever the
last person was that occupied. There are no deposits, there
are no minimum credit scores. They move into this room.
It's fully furnished, all utilities are included. We provide access
to tele medicine as well, talking about the importance of

(01:02:31):
just the available availability of medical care, so that if
they end up in the er for some reason, we
know that that has a significant impact on their ability
to stay and pay rent and remain employed. So access
to tele medicine is one of the benefits. And then
they can stay for as long as they want. So

(01:02:52):
minimum contract term is twelve weeks. They can pay one
hundred and seventy five if they need more flexibility. But
they have the ability to transfer for free the first
time to any unit on the platform, and after that
it's an average of eighty one dollars to transfer, whether
it's across town or across the country. They pay when
they get paid in most cases, so weekly or if

(01:03:14):
you get paid every second Tuesday.

Speaker 3 (01:03:15):
So as I mentioned, it's just.

Speaker 2 (01:03:17):
Far easier to remember that today is Tuesday than it
is like what day of the week is November first,
So people can budget much easier. And yeah, in most cases,
people are just trying to save for their next thing, right.
Sometimes it's starting a business, sometimes it's an apartment, sometimes
it's a car or.

Speaker 3 (01:03:37):
Buying a house.

Speaker 2 (01:03:39):
But you have about fifteen to twenty five percent of
people like Linda who I mentioned earlier, who just will
stay forever and they're not necessarily going to make a
lot of money later in their lives and they're kind
of capped on income and this is just a respectable
place for them to be for as long as as

(01:04:01):
long as they want to stay there.

Speaker 4 (01:04:02):
I love it. We'll be right back.

Speaker 1 (01:04:20):
So I thought it wasn't the prop, but I think
I looked it up, but it was where the city's
pad split is now in and only five or six
years and oh there it is Atlanta, Austin, Baltimore, Charlotte, Dallas, Denver, Houston, Jackson,
Kansas City, Vegas, LA, Miami, New Orleans, Orlando, Philly, Phoenix, Riley, Richmond, Tampa, Washington.

Speaker 3 (01:04:45):
You're going to read in a while.

Speaker 1 (01:04:46):
Yeah, And it just says find a room and then
you click on it in Washington, d C. One hundred
and seventy seven bucks a week. Trust me, you ain't
finding nothing in Washington, D C. For anywhere close to that.
My kid, two of my kids live there, and that's ridiculous.
And I look at these and some of these are
really really nice. Yeah, I mean that's nice.

Speaker 3 (01:05:09):
Yeah, And so we're not talking about and that's the idea.

Speaker 4 (01:05:14):
And that's it, and I mean the bedrooms are nice,
and it's it's so cool.

Speaker 3 (01:05:21):
Well thank you. Yeah, So.

Speaker 4 (01:05:24):
Do you ventu yourself a little bit? It's kind of
a big deal.

Speaker 2 (01:05:30):
No, I mean it's in hindsight, you think, man, like
twenty five thousand, it's pretty cool. Like we added seventeen
hundred units last month, So I holy smoked, I'd say
more that speed because it took us almost two years
to get to a thousand units, and so it's more
that like we added five hundred and sixty in a week.

(01:05:53):
Like that's the kind of stuff that you pinch yourself.

Speaker 3 (01:05:55):
About a little bit. But I mean, do you think
you'll get to I'm planning on millions, right, I mean,
if you want to, I do, I do?

Speaker 2 (01:06:04):
Yeah?

Speaker 4 (01:06:05):
And what will the money be saved on that number?

Speaker 3 (01:06:09):
I haven't done that math, but it's a lot.

Speaker 2 (01:06:12):
But I mean to your point earlier about like just
the scale of the numbers, it's hard to feel the numbers.
It's really important for me personally to go out and
engage with members and hosts on a regular basis because
that's where you feel it, right, Like I still remember
the stories of Linda or Otis and Mitch and Tiffany,

(01:06:34):
and I mean I've got thirty others that I know
off the top of my head and many that I
still engage with today. But like that's what makes it real, right.
You don't you don't feel any different at twenty five
thousand versus a thousand, right because you don't. You can't
touch all of those you don't. You don't know or

(01:06:55):
have a human connection to those but you you absolutely
feel it when I read some of the reviews that
are like, thank you, I left a domestic violent situation
and this absolutely changed my life, or I was living
in my car. One of my favorite stories is this
woman Amber, who her she was living with her grandfather

(01:07:17):
and he passed away and they lost the house, so
she was living out of her car when she took
a shower at a friend's place who told her about
pad split. She moves into a pad suplit that week
from staying in her car, starts cleaning the property. The
host notices and hires her to clean the property, and
then and then hires her to clean the rest of
her properties. Amber builds her own cleaning business over the

(01:07:41):
next four years. Now has a place of her own
and her dream is to own a pad split. Like
those are the kind of things that make you pinch yourself.
I mean, it's amazing.

Speaker 1 (01:07:52):
She was literally homeless, right, and it doesn't mean she
was a failure because she was homeless, I mean.

Speaker 4 (01:08:01):
Right out of options.

Speaker 3 (01:08:03):
Absolutely yeah.

Speaker 2 (01:08:04):
I mean one of the things that I heard from
a very early employee, this guy Juwan, told me, no
one wants your pity, They want a shot and I mean,
that just hit me like a ton of bricks, where
I think it's easy to kind of fall into this

(01:08:25):
trap of feeling sorry for yourself or for other people,
but for I mean, I think if we all kind
of dig deep within ourselves, what you realize is you
just want to create a better life for yourself, Like
you have some goal, and if you know that there's

(01:08:48):
a path towards that goal, it makes it a lot
easier to deal with all of the struggles and just
junks that you've got to put up with.

Speaker 3 (01:08:57):
And I feel.

Speaker 2 (01:08:59):
Privileged that I've had enough of the struggles to know
like you can create your own path and that you
can visualize success however you define it and just scratch
and claw your way to get there.

Speaker 3 (01:09:16):
If you refuse to quit.

Speaker 1 (01:09:18):
What happens if we have millions of people with access
to that path, engaging in that path, engaging in their
communities across our country.

Speaker 4 (01:09:28):
You win. You win, We do win. We do win.

Speaker 1 (01:09:34):
That's the whole idea behind the show you're on now,
is that whole approach and idea that's the man I
know there's going to be people that want to hear
more and possibly people that want to talk talk with
you more. And most of our guests leave a way

(01:09:55):
to find So how do we find you?

Speaker 4 (01:09:57):
Where do we find you? What's what do we do?

Speaker 2 (01:09:59):
Yeah, A couple couple ways. Uh one, I'm pretty active
on LinkedIn. OK so that's that's an easy way to
at least follow or.

Speaker 4 (01:10:09):
LinkedIn.

Speaker 3 (01:10:10):
That's it.

Speaker 4 (01:10:10):
Got it everybody, It's L little E capital B L
A n C. Got to be French Cajun, Yes, Cajun,
that's right, New Orleans of course, duh sure.

Speaker 2 (01:10:22):
And then uh, if you want to become a host,
go to PadSplit dot com slash hosts. That's the fastest,
easiest way. And then if you want to talk to
me personally about anything, you can reach me through LinkedIn
or just email me at Atticus at PadSplit dot com.

Speaker 4 (01:10:37):
Lovely. And if you're listening to us and you want
to be a member.

Speaker 2 (01:10:41):
Uh yeah, just go to PadSplit dot com. It's easy,
and we we try to make that part as easy
as possible.

Speaker 1 (01:10:47):
If you're a security guard sitting around listening and tired
of living in a a rent by the weekly motel, thing.

Speaker 4 (01:10:56):
Like Crystal No what was her name?

Speaker 1 (01:10:58):
Tiffany Tiffany, Like Tiffany, you can go do it right now,
thanks for sharing that. You know, earlier we were talking
about Airbnb and and all of that, and do you
know how many how many of those things are there
in the United States as properties?

Speaker 4 (01:11:20):
Do you know?

Speaker 2 (01:11:22):
Now?

Speaker 3 (01:11:22):
I think the number is like two million.

Speaker 1 (01:11:25):
I think that's right. I think it's it's it's up there.
It's a big number. And you can't help but wonder
if the market's getting saturated there. And I mean, if
I had an Airbnb, I'm if it was the right area,
neighborhood and the laws and all that, I would absolutely

(01:11:45):
be thinking about converting those properties to pad splits.

Speaker 4 (01:11:51):
And do you have people doing that now?

Speaker 3 (01:11:54):
Yeah, yeah, we have.

Speaker 4 (01:11:55):
We have a lot.

Speaker 2 (01:11:56):
Actually, you know, we're never going to compete on like
beachfront property on Golf Coast. But if you're if you're
in Atlanta or just in town and in most metro areas,
it can absolutely be an option. Or if you're in
like a beach town like Deston, but you're not on
the beach, uh, you can absolutely have scenarios where you're

(01:12:17):
you're making more net operating and come through a pad split.

Speaker 4 (01:12:20):
Model than through owns that have become hosts.

Speaker 2 (01:12:23):
Oh, yes, yeah, many, it's I mean, it's one of
our major channels of growth right now, as people who
are converting.

Speaker 3 (01:12:29):
From short term rentals to this model.

Speaker 2 (01:12:32):
In part because of regulation and in part because to
your point around just market saturation generally, and also because
people realize that this has become a full time job
for them and they're spending a lot more time than
they thought they would with short term rentals where they
have to go clean the rooms or change the bedding

(01:12:52):
or whatever every two or three days, which is way
more intensive. And I'd say pad split, like from a
from a war standpoint, sits somewhere between a single family
rental which you probably almost never go to, versus a
short term rental where you're there very very regularly. But yeah,

(01:13:13):
we have folks who've absolutely converted well pragmatically.

Speaker 1 (01:13:18):
The numbers seem to make better sense at pad split
for an owner of a property than yeah does so.
Imagine a lot of people were just doing it because
the money's.

Speaker 2 (01:13:30):
Better, no question. Yeah, I mean, and it was true
in my own life, right. I mean, where I think, first,
as you look at the scale and scope of mom
and pop real estate investors, and that's almost entirely who
we're talking about. You know, folks talk about like the
big private equity and social buyers, Like we don't have

(01:13:51):
any of those people, right because this is too far
flung for those groups, and it's the same reason they
don't invest in airbnbs in most cases. But but what
those people are looking for, and what I imagine all
your listeners are looking for, is like financial stability. And
for me, when I started in this world as an entrepreneur,
like I was trying to provide for my family like

(01:14:11):
that that was first foremost my priority. Now I absolutely
became much more passionate after I felt like I had
my bases covered for caring for my family and I
could see the impact that I could have on people's
lives like a Tiffany or a match Erland or whomever.

(01:14:32):
And I see that same conversion. And that's something else
I get really excited about is our hosts. Absolutely, they
are drawn because of the financial potential of this model
and their ability to build passive income for themselves, whether
it's because they want to leave their job or they
want to retire, pay for the kids college or whatever.
They come for the income, but they stay for the

(01:14:56):
impact because as soon as they have experienced changing someone's
life like Amber, where she was homeless and now she's
a business owner who's doing this on her own, that
is something that is highly addictive, and it's something that
that's the kind of addiction that I want to see

(01:15:17):
spread throughout the United States. Right if you can, if
you can get a taste of changing someone's life for
the better, then that's something that we should absolutely try
to spread.

Speaker 4 (01:15:28):
Love it.

Speaker 1 (01:15:30):
Atticus LeBlanc, founder and CEO of pad Split from Atlanta, Georgia,
and just one of the coolest story.

Speaker 4 (01:15:39):
You didn't disappoint. I told you I was really excited
about this one. Well it was.

Speaker 1 (01:15:44):
And dude, thanks for flying over and visiting with us
and sharing the story with our listeners. I know that
people are going to be like jazzed up about this
when I hear it. I'm jazzed up about it. I
really do want to talk to you offline a little
bit about you know, there's time and bandwidth in one

(01:16:05):
man's life, but I know people in the real estate
business and I got to get them engaged in this
thing because I think this could help a lot of
folks in my hometown.

Speaker 2 (01:16:15):
I hope so, and I believe it, but really appreciate
the opportunity. It's been an honor to be here. And yeah,
I'm a firm believer in the army of normal folks
and just everyone has.

Speaker 3 (01:16:27):
Capacity to be the change can be.

Speaker 4 (01:16:30):
Thanks for being with us.

Speaker 3 (01:16:31):
Absolutely, thank you.

Speaker 4 (01:16:37):
And thank you for joining us this week.

Speaker 1 (01:16:39):
If Atticus LeBlanc has inspired you in general, or better yet,
to take action by renting from pad split, listing your
property on there, sharing this episodes with friends who have
extra bedrooms or investment properties that could find their model
of interest, or something else entirely, please let me know
I'd really like to hear about it. You can write

(01:17:00):
me anytime at Bill at normal folks dot us. And
if you enjoyed this episode, please share it with friends
and on social subscribe to the podcast, rate it, review it,
join the army at normalfolks dot us. All of these
things that can help us grow an army of normal folks.
I'm Bill Courtney. Until next time, do it.

Speaker 2 (01:17:23):
You can