July 11, 2024 • 52 mins
What if you could transform underutilized spaces in your property into thriving co-living environments? Join us as we explore the innovative housing platform PadSplit, featuring our special guest, the PadSplit Queen herself, Kim Walls. Kim shares her inspiring journey from brand building to real estate, offering invaluable insights into how she and her family have found success in this unique sector. She highlights the distinct advantages of PadSplit over traditional rentals and Airbnb, providing a fresh perspective on affordable housing solutions.
Unlock the secrets to optimizing your investment properties for PadSplit success with Kim's expert advice. We cover everything from ideal property characteristics to the importance of balancing occupancy and resident comfort—ensuring you can create harmonious living environments with up to seven bedrooms. We also delve into key practical aspects like parking and waste management, and discuss how proximity to public transportation and job opportunities can make a world of difference for potential residents.
Finally, discover the transformative power of co-living in high-cost areas like California, and learn how technology can streamline property management and tenant screening. Kim shares her tips on maintaining low eviction rates and building a sense of community within PadSplit homes. Plus, hear Kim's excitement about contributing valuable content for Subto members on the Zoom Vault platform. Don't miss this episode packed with strategies for leveraging PadSplit to boost your real estate ventures and create meaningful housing solutions.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Joseph Marohn (00:12):
What up everyone and welcome back to the Real
Estate Unlocked podcast.
I'm your host, Joseph Marohn,and man oh man, we got something
special for you guys today.
Today we're going to becovering the topic of pad splits
.
What is pad splits, you say?
Well, I'm glad you asked.
(00:32):
Pad split is a housing platformthat connects property owners
with tenants seeking moreaffordable places to live.
This not only helps leverageunderutilized spaces in our
existing properties, making itmore profitable for us, but,
more importantly, moreaffordable for our tenants.
We all know that there's asevere shortage of housing
supply in the country right now.
We also know that traditionalhousing options are insufficient
to meet the need and tooexpensive to access.
(00:54):
Right now we see in Californiathey're adding in ADUs to assist
with affordable housing.
Padsplit creates housing supplyand provides access for people
in need of more housing choicesby using the empty spaces that
already exist.
Now I can't think of anyonebetter to assist us in educating
us on this topic than ourspecial guest today, miss Kim
(01:14):
Walls, aka the PadSplit Queen.
Kim is an investor herself andvery well educated on PadSplits.
In fact, she covers an entireZoom series with Pace Morby
students in the Sub2 community,and if that wasn't enough.
Her impressive career hasmarked by securing over $25
million in capital, fueling thegrowth of successful brands that
(01:35):
ultimately transitioned toventure capital firms.
She's a mother of two andpartnering alongside Michael
Broadus, who is not only hercompanion in life but also a key
collaborator in her real estateventures.
With that being said, I've beentalking long enough, so, if you
will, everyone, please allow meto introduce to you the Pad
(01:55):
Split.
Queen Kim, what's up?
How are you doing today?
Kim Walls (02:01):
Hi, I'm great.
I'm not sure how I got thatnickname, but I think in any
universe where people want tocall me a queen, I'm just I'm
not sure how I got that nickname, but I think in any universe
where people want to call me aqueen.
I'm just going to say thank you.
Joseph Marohn (02:09):
You'll wear the crown proudly.
Kim Walls (02:11):
Exactly.
Joseph Marohn (02:13):
So how's your day going?
Everything good today.
Kim Walls (02:15):
Yeah, it's good.
It's great.
I mean, hey, I get to be onhere with you, I get to talk
about one of my favoritesubjects.
It's a great day.
Joseph Marohn (02:22):
Yes, absolutely, absolutely Well.
Thank you for joining us andteaching us all how to rake in
more cash on our investmentproperties.
Kim Walls (02:30):
It's my honor and pleasure.
Joseph Marohn (02:32):
Awesome, okay.
So let's start things off withjust you know.
Let's talk about you for asecond.
Tell us a little bit aboutyourself and how you got
involved in the real estate game.
Kim Walls (02:41):
I got in well, so I've always loved real estate.
My dad was actually acontractor who funded his
skincare businesses by being anamazing contractor, so I got to
grow up in it and Ifundamentally just I love to see
things come to life.
Ground up construction is myfavorite or massive overhauls
gut it, take it down to thestuds, rebuild it and then take
(03:01):
it all the way to the finishline with an Airbnb or now pad
splits.
It really just makes my hearthappy to see things like that,
whether it's businesses orproperties or people's lives,
like you name it.
I love it.
Joseph Marohn (03:13):
Yeah, it sounds like you got quite the
experience there, huh.
Kim Walls (03:17):
Well, so actually that's what I was saying.
So it was all personalexperience.
Really.
I didn't, I didn't.
So real estate for me is partof a career change, like life
stage coming.
You know my two.
I have two sons.
They're fully grown, one's asenior in high school now and
one's a junior in college.
So I'm like I'm coming intothis new place in life where
it's just total freedom to doeverything and anything I want.
(03:38):
And in my career buildingbrands there's really like
there's just a.
It's very long, you know, fiveto seven years to build a brand
and get it to the point whereyou can sell it or move it on to
venture cap or what have you.
So I really wanted to dosomething that I had more
control over.
It was more contained from atime perspective where I could
step in and out however I wanted, and I love real estate, and so
(03:59):
that was very much just acareer switch for me.
Joseph Marohn (04:03):
You and me both, I love real estate.
I'm like so addicted to thisstuff.
You know it's it's sointriguing, you know it's like
you can never learn everything,right.
Kim Walls (04:11):
Yeah, yeah.
Joseph Marohn (04:13):
Do you have?
Is your sons involved with realestate at all, or?
Kim Walls (04:16):
Well, so my older one is that's how that we had our
Airbnb in Ohio came to bethrough.
Uh, he went off to school inOhio and I wanted a way to stay
connected and I was like, okay,this is it, we're going to do
Airbnb.
He's like I'm going to be theproperty manager.
I'm like I'm going to overseethe construction, I'll fund it.
And so he now runs that as theproperty manager has 100%
(04:37):
five-star reviews and I'm superproud of him yeah.
Joseph Marohn (04:49):
Yeah, I bet I'd be proud as well.
That's great, I want to.
You know, I have two daughtersmyself and I'm absolutely
looking to get them involved inreal estate as they.
You know, as they start to age,they're still little right now,
so I'm kind of teaching themthe little ropes right now.
Right now they like to jump onmy computer and jump on the mic
and they pretend they're doingsome podcasts.
So so, uh, this interview.
Obviously we're talking aboutpad splits and you know this
interview shifted towards abeginner, entry level standpoint
(05:09):
.
So some of these questions I'mgoing to ask you are going to be
very basic and as we transitionthrough the interview, it might
get a little more detailed.
So, with that being said, canyou start by explaining what a
pad split is and how it differsfrom traditional long-term
rentals or maybe an Airbnb?
Kim Walls (05:26):
Yeah, you bet I'd be happy to so.
At the end of the day, a padsplit is a technology.
It's a technology platform, inthe same way that Airbnb is a
technology platform.
What makes them different fromAirbnb is how they're servicing
their target customer.
So their target customer is anessential worker.
It's an employed person who'ssingle and living alone, who is
(05:49):
earning maybe $50,000, $60,000,$30,000 a year, cannot afford to
live in the cities where theywork.
So maybe it's home health aidesor school bus drivers or
librarians.
It's people who want to livenear where they work, but
they're being priced out of themarket by our current economy.
(06:09):
So what PadSplit has done iscreate a recommendation for how
to convert single family homesinto co-living spaces really
designed and tailored for thatessential worker's lifestyle and
needs.
So, for example, communityspaces like living rooms and
(06:30):
dining rooms are actuallyconverted into bedrooms.
And the people who are livingin pad splits they're not there
for the community, they're thereto have a safe, comfortable,
affordable place to live in alocation where they want to live
.
So converting those sharedspaces, or traditionally shared
spaces in a single family home,into bedrooms allows the
(06:51):
property owner investor to makemore money, because you're
renting by the room and itservices, a need that this
particular demographic has.
So Airbnb is more about well,it was originally more about
renting a whole house.
Now they are starting to dorooms, but they're not actually
going so far as to haveproperties converted to be
(07:13):
optimized to meet the needs ofthat essential worker.
So really, what PadSplit hasdone is create a focus.
And not only are they teachingpeople how to optimize their
spaces, the technology itself isalso supportive of the investor
, in that the technology doesbackground checks, the
technology automaticallywithdraws funds for payment, it
(07:36):
allows people to pay by the weekand it allows them to pay on
the day they get paid.
So it's really supporting themwith making sure that they can
pay their rent.
And then PetSplit goes beyondthat with their membership model
to provide things likemicroloans, telehealth services
to service that healthcare needand positive credit reporting.
(07:58):
So for people who maybe hit ahard patch who knows what, right
Like anything can happen adivorce or lost a job and
couldn't make their car payments, whatever it is they Petsplit
does positive credit reportingto help rebuild that credit,
which can put people in aposition to, if they do want a
whole house, or even to save upand buy a house.
(08:19):
It can help them do that.
I feel like I'm talking forever.
Joseph Marohn (08:23):
No, no, no, You're absolutely.
You're providing a ton of valueright now and that was a great
response and I love itAbsolutely.
Thank you for that, you know.
So how could someone interestedin pad splits get started?
You know whether they'relooking to rent, become a
landlord or invest in this model.
Kim Walls (08:39):
Yeah, I always like to start with research
personally, so watching thispodcast is a great place to
start Right.
Joseph Marohn (08:45):
Thank you yeah.
Kim Walls (08:48):
And then, beyond that , I would go to the PetSplit
website and sign up to be a host.
You don't have to have aproperty, you don't have to pay
anything, but it gives youaccess to all their host tools
and in that area you can findthings like how to optimize a
property, what your propertymanager needs to do, expected
costs, lists of things to buywhen you're furnishing a
(09:09):
property just a huge amount ofwealth of information there, and
it also has map functionality,where it shows you their core
regions that they're focusing onwhat occupancy looks like.
So when it comes to any rentalproperty, occupancy is super
critical, right?
If it's not rented, you're notmaking money.
So making sure that you'regetting properties that are in
(09:31):
areas that have very highoccupancy levels is important,
and their maps will show youthat.
It will also show you averagerent per week for the rooms, so
you can really start doing yourmath or underwriting, to make
sure that whatever you're payingfor your property monthly and
upfront can be covered by yourrental incomes based on the
(09:54):
occupancy and the price per weekper room.
Joseph Marohn (09:58):
Okay, all great info.
Obviously, clearly, you're veryknowledgeable in this space,
and so where did you learn allthis info about pad splits?
Kim Walls (10:08):
You just have a ton of knowledge right now.
So, thank you, I love to share.
I'm just a total research hound.
I like I come by it.
Naturally it's in my genes Ilove research and so when I
first started getting interestedin how and where I would focus
you know it's up to rightfollowing paces, right Use,
(10:29):
focus, right Focus, focus and soI came in believing that that
was the right thing to do anddoing that.
So all I did was pad splitresearch and execution and
education for several months inthe beginning, and now I just
kind of keep up to date.
I even ended up doing a brandproject for Pat Split directly.
I got so immersed in it so Iknow the people How's that
(10:51):
coming along?
Besides pardon.
Joseph Marohn (10:54):
How's that coming along?
Kim Walls (10:55):
Oh, I finished it.
It was just kind of a one-timething which I almost feel guilty
that they paid me for because Ilove doing it so much.
Joseph Marohn (11:05):
You deserve to be paid every dollar.
So I have to ask how did youget the name Pad Split Queen and
who gave you that name?
Kim Walls (11:13):
I believe it was.
I'm pretty sure it was a guynamed Joe.
I'm blanking on his last name,but we were at a meetup at the
Mondrian in Hollywood and I wasjust talking with him about what
I was doing and he'd been, Ithink, watching some of the
videos and he's just like you'rethe bad split queen.
And other people heard that andit just stuck yeah, I didn't.
(11:35):
I don't know.
Joseph Marohn (11:38):
It's definitely a great name to have.
I want to be known as the kingof anything right.
Kim Walls (11:44):
That's kind of my perspective.
I'm like, okay, I'll take itSure.
Joseph Marohn (11:47):
I'll take it, I'll run with it.
So is the goal here just tostuff as many bedrooms into your
investment property as possible?
Kim Walls (11:54):
No hard.
No, it all comes back to thatoccupancy right.
If people aren't happy, they'renot going to stay, they'll
leave, and one of the uniquethings about pad split and part
of why they focus on these coreregions and getting
concentration and density isbecause they allow their members
which you might call tenants,but their members to move.
(12:15):
If they're not oh my God, itsmells bad, or, ooh, there's no
water pressure or whatever theycan just pick up and go.
They have to pay 50 bucks andthey transfer.
So making sure that yourtenants, members, residents, are
comfortable matters.
There's a hospitality aspect tobeing a successful pad split
(12:37):
owner that really matters, andso the maximum, for example,
number of bedrooms per bathroomthat you can have is four to one
, but it's highly recommendedthat you don't go beyond three.
So you start to see in the datathey're showing more problems.
After you, like eight plusbedrooms, you start to get a
(12:57):
little bit higher conflict, alittle less customer
satisfaction.
Seven really seems to be thebest of both worlds, right?
Investors are happy becausethey're getting rent for seven
rooms, and the people who livethere are happy because they're
not feeling like rats squeezedinto a sewer.
Joseph Marohn (13:15):
So you would say seven is the sweet spot.
It's the sweet spot, yeah, okay.
Kim Walls (13:21):
If you have a huge space, there's also some really
interesting things happen.
People are taking like an oldschoolhouse and converting it.
Well, ok, fine, you put 14bedrooms in there because people
are spread out.
It's really that like peopledensity and are in comfort to
think about.
Joseph Marohn (13:38):
OK, so can any property be converted into a
pass split, or is there like acertain criteria or requirements
that the property needs to meet?
Can you kind of like paint apicture for us Like what's the
ideal property for a pad split?
Kim Walls (13:50):
Yeah, so I'll.
Actually, I'm going to answeryour question with a picture not
of a property, but of a person.
Joseph Marohn (13:57):
Okay, okay, I love that.
Kim Walls (14:01):
So think about somebody who's working hard.
Maybe they're working two jobs.
So think about somebody who'sworking hard.
Maybe they're working two jobs.
They probably don't.
Can't afford a car, and if theycan, insurance is expensive,
gas is even more expensive.
They want to be in a placewhere they can walk to food,
walk to public transportation.
It's not too loud, they don'twant to be disturbed by sirens
every morning.
What have you?
(14:22):
So if you think about thatperson, that hardworking person
who is needing to get to andfrom work, wants life to be easy
, maybe there's a conveniencestore nearby where they can pick
up their chewing gum, or agrocery store, go get the
toothpaste and some eggs.
These people are generally noteating in a lot.
They're not cooking, so thekitchen's not that important.
(14:44):
They're mostly doing takeoutbecause they don't have time and
also cooking ends up beingreally expensive sometimes when
you can just get somethingquickly from a fast food place.
So it's more the life of theperson to consider.
And how does the space meet theneeds of that person?
So your question was how do youoptimize the space?
Where does it need to be?
(15:05):
So you want to be within a10-minute walk to public
transportation.
You want to be in an area thathas multiple different types of
work, right Like, maybe they'reworking at Home Depot one day
and maybe they're doing luggageat the airport another day.
These people generally havemore than one job because
companies generally want toemploy people part time so they
(15:26):
don't have to pay for insurance,right Like, which is terrible,
but it is what it is.
And so, thinking about thespace, if they do have a car,
you need to have parking wherethe neighbors aren't going to be
upset.
So generally you're not lookingat ritzy neighborhoods where
the neighbors are going to belooking out the window and
(15:46):
saying who's at my house youwant to have space for, or who's
next to my house.
You want to have space for lotsof garbage cans because you
have lots of people eating outall the time.
So those garbage cans pull upreally quickly, but they
shouldn't be right next to thewindow where it's going to stink
into somebody's house.
It's more like putting yourhead in the space of that person
in their life and thinkingabout how can their needs best
(16:10):
be met.
So basically it's C-levelneighborhoods.
You can go kind of D plus to Bminus and near public
transportation and in one of thecore areas.
You can go outside of the coreareas and still use the PadSplit
platform, but you won't get allthe benefits from it.
(16:30):
You still get benefits, but notall the benefits.
And I would like to say that asyou speak with different reps
because PadSplit has reps theyall have sort of a different
story right now.
They're not really aligned onwhat they're saying.
So the feedback I'm giving ispulled from listening to all of
them and trying to get the sortof most comprehensive picture,
(16:52):
taking the best from all worlds.
But you'll have people say youcan be in a high crime
neighborhood, it doesn't matter,we have a property that's
successful there.
And you'll hear people sayingyou can be in any neighborhood
as long as it's a neighborhoodwhere people are used to having
lots of people coming and going.
And it's true you do havesuccess stories with all kinds
of different, um, you know, inthe outlier situations.
Joseph Marohn (17:14):
But what I'm, the information I'm sharing is what
I've learned kind ofcomprehensively by listening to
all of them right and I thinkthat's a lot of concerns for a
lot of people, because now youhave, let's say, seven bedrooms,
you have seven members, youhave seven cars.
So you know, is it?
How do you accommodate thoseparking spaces without
complicating?
(17:34):
You know your neighbors, youknow making them frustrated and
calling and complaining andstuff like that.
What are you seeing?
Are people just parking in thegrass area?
Do you have to kind of buildout a larger driveway?
How does that work?
Kim Walls (17:47):
Yeah, it depends on the property and so generally
when you're in that propertyacquisition stage, if there's
not a lot of street parking, ifthere's tons of street parking
and there are no permitsrequired, it doesn't really
matter too much, as long asthere's tons of street parking.
If you have like a two cardriveway but a big lawn, you can
(18:07):
expand that.
You wouldn't have people parkon the grass because that looks
sloppy and want to keep thingslooking nice, keep the neighbors
happy.
But you can put a gravel padout and extend over the grass
area, put some little two byfours or some sort of treatment
to make it look polished to getmore cars in.
What I see a lot of people dois go behind the house.
(18:27):
So on the side of the housethere might be room to extend a
driveway or a gravel pad backand then park the cars behind
the house so that they're not inthe front.
Joseph Marohn (18:36):
Yeah, that's a great idea, having those longer
driveways where you can kind ofpark towards the back, out of
sight, out of mind, right youknow?
Kim Walls (18:41):
Exactly.
Yeah, no, it's not dictated.
They have recommendations andthose recommendations in their
core cities are based on thedata right, what's working.
And so if you have a slightlynicer property, or maybe you
have refrigerators in each roomor what have you, you kind of
(19:03):
can go above average, and ifit's really super bare bones,
maybe you want to go a littlebelow average, but they provide
you with the normal pricing, theaverages, and you just make
your own decision from there.
Joseph Marohn (19:16):
You had, it was a two-part question.
Kim Walls (19:17):
What was the other part?
Joseph Marohn (19:18):
Pricing and oh how do you determine so?
Kim Walls (19:22):
occupancy is the other one.
So you just kind of look at themath right, like, say you've
got four bedrooms each runningat a hundred dollars per week.
You want to take off abouteight.
So you just total that up tothe month off about it.
So you just total that up tothe month, back out about 5%.
For people not paying, there'sstill about 2% eviction rate,
which is fairly low actually,and about 98% pay rate.
(19:45):
So take off 2% of that becausepeople you're just not going to
see it.
And then, based on theoccupancy in your area, maybe
you're 85, 90, 95%.
So you just multiply yourexpected rent by occupancy.
So start with a number, takeoff the occupancy consideration.
Take off the people don't payyou consideration.
(20:07):
Add in the fact that you paythe utilities.
So, unlike long-term rental toget back to one of your very
first questions with long-termrental generally the tenant pays
.
In this case the owner pays, soyou're keeping all those
utilities going.
It's an important thing toconsider.
Joseph Marohn (20:24):
Yeah, it makes sense, because how would you
kind of break down utilitiesover seven people?
It'd be a little complicated,but yeah, that makes sense.
So, with that being said, withestimated income rentals per
room, are there like anywebsites that you can use, like
similar to AirDNA or RentalMeter, to kind of get a broad
estimate per room?
Kim Walls (20:43):
Yes, yes and no.
So the PadSplit really providesthat data.
When you sign up as a host,they have algorithms that are
giving you real-time data fromtheir system.
So the founder, a guy namedAtticus LeBlanc, really wanted
to make it as easy as possiblefor investors to get into this
(21:04):
model and convert their spaces,because there's a bit of a
build-out right.
There's a little bit moreupfront risk than an Airbnb
because to optimize it, you'renot only furnishing, you're also
actually constructing.
If, to optimize it, you're notonly furnishing, you're also
actually constructing to acouple of bedrooms.
So he really wanted to make iteasy for people to understand
what to expect and give them allthe tools.
So, there's not really a needfor something like AirDNA
(21:25):
because PadSplit's alreadygiving you that information.
But if you wanted to lookoutside of their core markets
where they have that data, forexample, we just brought up our
in escrow now on a property inMilwaukee which is not one of
their core areas, but we aregoing to use the platform.
So the thing to do is look atwhat does it cost to rent a
(21:47):
studio or a one bedroom in thatneighborhood and then you want
it to be anywhere from 20 to 40%cheaper, so kind of 30% cheaper
to live there.
So if your monthly rent is$1,000 in Milwaukee for a studio
, then you maybe want it to be700 or between seven and 800
(22:08):
when you're doing it by the room.
So you can look in justwhatever they are Trulia and
Zillow and all the 60 or 80different platforms that are
telling you where you can rentand how much it's going to cost
and just get a feel.
That way to do a pad split, youlook at the median income for
(22:34):
that area, which is Googlesearchable, and see if they can
afford to pay the typical rents.
So the typical rents and themedian income, and if you want
your rent to be call it 30% orless of your income.
(22:54):
So if it would cost them 50 or70 or 80% of their income to get
studio, that's probably it's agood indicator that that's a
really good market for pad split.
Joseph Marohn (23:01):
OK, so I know you kind of touched on the restroom
requirements, but what are,like, the bedroom requirements,
like how much space do you need,how much square footage do you
need?
And, to my understanding, youhave to have a window and a door
for every bedroom, correct?
Kim Walls (23:16):
Yeah, egress, that's for fire safety and ingress and
egress.
The eight by eight is kind ofthe smallest you want it to be,
although the minimum wall is atleast seven feet, so you could
be like seven by 10 kind ofthing.
But that eight by eight isgenerally the smallest amount of
space.
You do not have to have acloset in the room.
(23:38):
You can have a freestandingcloset that sits outside.
You know that just sits on thewall.
So you have to have a bed,lighting and a place to hang
clothes.
Doesn't have to be a closet andthat's kind of it like the bare
minimum.
Joseph Marohn (23:54):
So you don't really need a whole lot.
So okay, so who's ideal for apassport?
And that's kind of it like thebare minimum, so you don't
really need a whole lot.
So okay, so who?
Who's ideal for a PADS split?
I know you kind of touched onthis a little bit earlier, but
is it?
Is it more catered towards likea younger person, a single
person, lower income collegestudent, travel nurses, who
would you say it's?
It's it worked better for?
Kim Walls (24:15):
Yeah, so this is.
This is again one of thosesituations where you hear the
pad split reps saying all kindsof different things.
But what, what?
The pad split model wasdeveloped for the founder's
vision.
What the technology is designedaround is really that essential
worker who's single and livingalone.
So it's somebody who's makingmedian income, working in the
(24:37):
city, wants to live near wherethey work.
You can be anywhere from sortof high teens to any age.
It's not designed for, at leastfrom its inception, not for
students, not for people whohave the income to have their
own whole house.
Joseph Marohn (24:59):
OK.
So yeah, I was going to saybecause I don't want to hear
from the rep, I want to hearfrom the past, the queen, you
know.
Kim Walls (25:07):
Well, I have my own opinions, but what it comes down
to is they have an opportunity.
They started off with a visionand a mission that is unique and
that is a multi-billion dollaropportunity.
And Airbnb already exists.
Right, like, you want to rentby the room?
You're a digital nomad.
You're a student, you havestudent housing.
People who have aligned workand lifestyle are better suited
(25:31):
to live together.
Like, do I want to live with acollege student right now?
No, unless it's my collegestudent, like my kid.
So there's an audience ofpeople who are critical to how
all of our lives function, whocan't afford housing, and that's
(25:54):
really what PetSplit and thefounder there set out to service
that demo.
So it's not Section 8, right,there's no supplemental income
supporting these things, atleast at this time, at least
last I heard, which was a coupleof weeks ago.
So it's not Section 8 and it'snot super wealthy.
It's like the majority of thepopulation, as long as they're
(26:18):
single and living in a metroarea.
Joseph Marohn (26:21):
OK, so you kind of touched on on a good topic,
you know, as far as like livingwith other people, you know many
viewers may be unfamiliar withthe concept of co-living.
You might kind of breaking thatdown, like what exactly
co-living is and how doesPADSPLIT facilitate co-living
arrangements.
Kim Walls (26:37):
Yeah, absolutely so.
Co-living is the idea ofnon-related people living
together, right?
So, and that's how regulationsare done for cities and counties
is how many non-related peoplecan live together.
So we're not talking aboutfamilies, we're talking about
people who want to share thecosts and the benefits of shared
(27:00):
spaces where they don't needprivacy, like the kitchens and,
in some cases, the bathrooms andmaybe outdoor spaces.
Right, when you get into luxuryco-living, these places have
theater rooms for the sevenpeople who live there.
They've got pools, they haveprivate gyms.
It's kind of it's this idea ofhow do you maximize shared space
(27:22):
to have your highest quality oflife costs the least.
It's really what it's all about, and some people, for some
people, it's about company,right?
If you get into senior living,for example, where people are
sharing spaces, maybe they'realso sharing a nurse, and then
it kind of starts to look alittle bit more like assisted
living, but not quite.
It's a resource that all ofthose people value and probably
(27:44):
need or at least want, and theycan share the expense of it
because they're sharing space.
Joseph Marohn (27:51):
No, it makes sense and I feel like some
people are already likeaccustomed to it because you
know, if you go to college andyou live in a college dorm,
you're kind of already used tothat already you know living
with other people.
So, as for me, it'd be a littleharder for me to live with.
You know certain people.
I'd be like bumping heads withpeople and stuff like that, and
yeah, it'd be, it'd be a hotmess, yeah.
Kim Walls (28:14):
Just before we move on from that.
It's very, it's cultural, right, the American, we've got the
American dream right.
Go get your little house withyour white picket fence and have
your nuclear family, and that'sthe training, that's the
cultural training.
And whereas you look at othercultures in different parts of
the world hells, no, you're notgoing off to isolate yourself,
(28:35):
like you know, you build anotherstory on your house and put
your kids up there, right, likeit's.
It's a, it's a cultural thingthat America doesn't.
We're not really I'm going togo ahead and say caught up with
most of the world when it comesto I think it's a great.
Joseph Marohn (28:52):
It's a great tool that they implemented out here.
Because you know cost of livingright now.
We all know housing prices arethrough the roof right now.
Interest rates are through theroof, you know.
So to purchase a home right nowit's so high, you know.
To make.
You know in California to buy ahome You're looking at anywhere
as a minimum of seven hundredthousand to a million plus Right
(29:12):
, and you know a mortgagepayment for that is going to be
4,500 up to six grand, right.
So a lot of people can't affordthat.
So that's why I like thisbusiness model.
Is it out in California rightnow or is it because I know they
started in Atlanta?
Kim Walls (29:27):
They did?
Yeah, they're.
They're due to launch.
They've said they're launchingin Q1 here in LA.
Yeah, okay, but there's.
So we I just just one more sortof like for the actual cultural
piece of this and I studiedanthropology in school, which is
the study of man, so you'llhear me coming back to these
sort of cultural and also healthaspects.
We, we have this idea thatliving alone is something to be
(29:51):
celebrated and in fact, ourbodies aren't meant for that.
Like, our health improves whenwe eat in community, when we
have people to put our armsaround and hold hands or what
have.
We're not meant to be alone.
So when you have, especiallywith the essential workforce,
all these people who are livingalone, having other people to
(30:12):
share space with and to bearound is incredibly healthy.
It's uplifting, it's good foranxiety, it's good to help with
depression, it's good forlongevity.
The conversation, at least inthis country, around co-living
is always like here's a way tosave money.
But I would love to see thatconversation be broadened to how
(30:33):
do we enhance our health andour lifestyles and our, our
quality of life in addition toour pocketbooks?
Joseph Marohn (30:40):
okay, no, you touch on.
You touch on very great points.
You know, you know, co-livingcan be very beneficial, right?
Because you know, like you said, depression, you know, living
by yourself it just you just seepeople looking miserable and
stuff.
So if you're looking livingwith somebody else, obviously
it's an ideal situation there.
Um, yeah, so like, as far aslike the, you know the ideal
(31:01):
location, um, you know, you kindof touched a little bit on that
, but is it best to be like byhospitals or like college
campuses, like what's the?
What's the best location to putthem at?
Kim Walls (31:10):
like it's really anywhere where there are a lot
of people working in those kindsof jobs, right?
So if it's college campuses,then it's who's working at the
college campus the janitors, theassistant professors, the TAs,
like right?
If it's near a hospital, is it?
It's the assistant nurses, it'sthe people like, it's the
(31:31):
workforce.
So if you're near a whole bunchof grocery stores like who's
checking out your groceries andwho's at the register, in any
area that has a lot of differenttypes of work available is
going to have a potential forhigh density of people who want
to live near it.
Joseph Marohn (31:51):
That makes sense Absolutely.
So obviously there, you knowthere's.
This can vary from property toproperty, but what would the
average renovations costs?
You know to look, what would itlook like to get a pad split
ready?
Kim Walls (32:05):
Yeah.
So if you're starting with, itdepends on your starting spot,
right?
A lot of people like the BRRRRor SIR strategy for these, in
which case you can spend 80, 100, $150,000 because you can do a
complete overhaul to theproperty and then add the extra
few walls, but really anywherefrom 18 to 30,000,.
(32:27):
For example, water heaters Likeif you have a water heater
that's designed to service afamily of three or four and then
all of a sudden you have sevenor eight people in it.
You either want a second waterheater or you want a bigger
water heater.
You have to do a little bit ofHVAC work to pump heat and air
into the new rooms that you'veadded, but you're really just
adding a couple of walls for themost part.
(32:48):
If you need to move existingwalls then it gets a little bit
more expensive.
So the cheapest I think youcould probably ever come in is
probably 15,000.
Joseph Marohn (32:59):
Okay, and are there any core markets?
Kim Walls (33:04):
Yeah, they're actually just listed on the
PadSplit website and it changesall the time.
They keep adding new markets,so the best resources go to to
pad splitcom.
Look at rent a room, thedropdown menu, and it'll show
you all those States and thenall the cities that are being
serviced within those States.
Joseph Marohn (33:22):
Okay, so give us some examples of some issues
someone might run into in a padsplit.
Kim Walls (33:27):
Yeah, Like the investor issues you mean
investor issues Exactly.
Investor issues?
Exactly, yeah.
So one of the ones that I'veheard recently was the some some
guy used all of hisgirlfriend's information to get
(33:47):
through the past the pad splitvetting process, so used her job
, her like everything and wasapproved into her picture, was
approved into the system, wasthen approved by a host because
hosts have to approve anybodywho's going to move into the
house.
They get the opportunity to sayno, I don't want that person in
my house.
So then the person shows up andall of the other people who
live there.
They have a communicationportal.
That's part of what PadSplitoffers is a way to communicate
(34:09):
with all the people and it willtell you like, hey, so-and-so is
moving in and it shows apicture and tells you a little
bit about them to reallyfacilitate that community
feeling in as much as it'spossible when you've got
strangers moving in and out.
So someone shows up who wasn'tthe right person and the people
who lived in the house were like, uh, hello who?
(34:30):
is this what's going on here,and the people whose house it
was had a really hard timegetting them out, actually
because of eviction laws, and itturned into a whole thing.
So the solution for that is youput a ring doorbell by your
door and when somebody firstchecks in, you make sure that
who you're seeing at thedoorbell is the same person
(34:51):
whose ID you've had checked andwho's in your system.
If it's not the right person,don't let them in.
Joseph Marohn (34:57):
Right, you would think that'd be the simple way.
Kim Walls (35:00):
Right yeah, but it requires management, right, like
it requires looking at it.
I've heard horror stories.
I've heard about people peeingin their refrigerators and then
just checking out.
I think you have some terribleor annoying things that happen,
but it's for the most part it'spretty.
You're going to have that as alandlord, no matter like.
If you don't want to be alandlord, that's what's not for
(35:21):
you.
Joseph Marohn (35:21):
I was going to say that that can happen with
pretty much anything.
Right, we see it, even withlong-term rentals you need
short-term rentals.
People do that all the time.
It's just I have this motto.
It's like you kind of you takecare of your tenants and they'll
take care of your investment.
Right, yeah, treat them right,you know.
So you kind of touched on likekind of like the screening
(35:43):
process.
So like, is Padspit responsiblefor the tenant screening
process, or is that ourresponsibility?
Kim Walls (35:49):
No, they do.
They do that.
So they they promote theirlocation, they promote their own
brand, they promote theproperties within their brand.
And then once somebody says hey, I'd like a tenant says hey,
I'd like to live in this space,they go through the background
check, they pay their membershipfees, all those things, and
then their information issubmitted to the host and the
(36:09):
host can approve or deny.
It's a little bit, it's cateredto, it's cool, like if you so
say, you have it back to parkingfull circle.
Say you have a house that hasseven bedrooms but only four
parking spots, the, the platform, the pad split, pad, split
platform, will only show yourplace If all four parking spots
are filled.
(36:29):
You can only really then taketenants or members who don't
have a car.
It will only show your locate,your place to people who don't
have a car.
Joseph Marohn (36:38):
So they have that option on there that you could
select if you have a car or not.
Right, yeah, ok.
Kim Walls (36:43):
Yeah, so it really.
It streamlines the process offinding a home and people can
move in I think it's within oneday.
So rather than having likecollecting sort of proof of rent
and having to have great creditand the big deposit and all of
that, it's just a completelydifferent model that makes it
easy for people to move in andstill manages to maintain the
(37:06):
same data levels occupancy,evictions, all of those things
are better than the old way.
It's a new way to servicepeople in need where everybody
wins.
Joseph Marohn (37:18):
So what happens when someone stops paying rent
for the rooms?
Who handles the evictionprocess and does PadSplit ensure
that rent if they are screeningthe tenants?
Kim Walls (37:28):
PadSplit does not ensure the rent.
So because of the weeklypayments you know really quickly
.
It's not like the end of themonth happens and then they
haven't paid and you kind ofhave these long gaps.
So you know immediately if theyhaven't paid and because it's
pay is being withdrawn usuallyon the day that they get paid,
(37:49):
you kind of you have anopportunity very quickly to
respond quickly and PadSplitdoes that.
They have a whole customersuccess team that will reach out
and say, hey, we noticed youdidn't pay, what's happening and
they'll work to get you paid.
If you get to the point whereyou have to have an eviction,
they do not handle the evictionsyou still have to have yourself
or your property manager whathave you show up within the
(38:10):
sheriff does and go through theprocess on your own.
So one of the things they havedone up until their plan to go
into California this coming yearis focus on markets that are
property owner friendly from arent, from a, from that
perspective.
Joseph Marohn (38:24):
So you're not don't come to California.
Kim Walls (38:26):
Right, yeah, I know, we have like people.
Can we have professionaltenants who can stay for years
without paying anything becausethey know the system?
Joseph Marohn (38:35):
Right, yeah, so I was going to say so like.
As far as like the turnaroundtime are you, are you seeing
statistically that you knowtenants are staying more like
longer term, or is it more likeshorter term?
Kim Walls (38:49):
It's.
The average is eight to ninemonths and it varies by region.
Yeah, it's pretty solid.
Joseph Marohn (38:56):
Okay, so with so many people living under one
roof, I can only imagine likemaintaining costs must be high.
I'm assuming like safetydeposits are required.
Kim Walls (39:06):
No deposits.
Joseph Marohn (39:08):
No deposits Interesting.
Kim Walls (39:09):
Yeah, it's a different model.
Or maybe there's some smalldeposit 75 bucks or something.
I actually don't know thatthere are no deposits, but it's
not thousands.
It's not your typical situation.
Maintenance is handled by theproperty owner.
So within the platform inPadSplit, they'll send you a
message.
If a member can send you amessage like, hey, the
(39:31):
refrigerator's broken or hey, myheat stopped working or what
have you, and so the propertyowner is responsible to take
care of those things.
The kinds of issues that the padsplit team takes care of is
like disagreements betweenmembers, like so-and-so is
eating my peanut butter or thatkind of stuff.
But actual property issues arethe responsibility of the
(39:52):
property owner or propertymanager.
And do they have, like, theirown contractors or is that
entirely up to the propertyowner?
Yeah, either.
So in their core areas they dohave recommended resources for
property management and alsoconstruction, again, like they
(40:15):
really want to make it easy forpeople to make this choice.
So where they have their coreregions, they provide
recommendations and referralsand they do actually own a
property management companycalled Two Keys, which is in
some of their cities.
So you can use them.
You can not use them, itdoesn't matter, as long as the
needs are met.
Some property owners are usinglike TaskRabbit and doing it
themselves.
But you can have somebody stopby and change a light bulb or
(40:37):
what have you.
So they don't even haveproperty managers, they're doing
it their own.
Joseph Marohn (40:42):
Okay, and have you seen any HOA regulations?
Kim Walls (40:45):
Yes, no HOAs.
It's property, but in thatcondition the conversion is not
allowed.
So if they can't, it's kind ofnot working out for the most
part for the investor.
Like if somebody owns aproperty outright and they don't
need to add extra bedrooms andall they're paying is their HOA
(41:07):
fee, then it can workfinancially.
There are exceptions, but it'sgenerally a pretty hard like no
HOAs.
Joseph Marohn (41:15):
Okay, and then safety and security, absolutely
critical when it comes to rentalproperties.
How does PadSplit ensure thesafety of its tenants and what
measures are in place to protectthem?
Kim Walls (41:29):
It's kind of like a community effort, right?
If you're living with sixpeople and somebody's acting out
, the five other people aregoing to report that.
Joseph Marohn (41:41):
So everybody kind of looks out for each other.
Yeah, yeah, okay, interesting,that seems to work.
You know, if everybody'slooking out for each other, you
know that can work.
So, like for someoneconsidering renting a passive
property, what advice would yougive them in terms of choosing
the right property and roommates?
Kim Walls (41:59):
Oh, that's interesting.
Yeah, let's put the shoe on theother side of the other foot for
a second so you can see whenyou go into the platform to rent
a room, you can see who'salready living in that property
and you can see a little bitabout them.
And I kind of have a love haterelationship with this because I
don't like the idea that we'rejudging people based on how they
(42:20):
look.
I also don't really know anyother way that they could do
that without just kind of beinglike here's the person who lives
here.
So I guess at the end of theday it's kind of a vibe.
But as far as like, whatrecommendations would I have?
I think it's so personal, right.
Like if I'm a nurse or anurse's assistant, I could
(42:44):
really imagine wanting to livewith other people who work in
the medical sphere, becausethey're also going to be having
midnight shifts and not to sayother industries don't.
But or if I'm working in acertain industry or space, like
even when you do bump intosomebody to have kind of in the
hallway, have something to talkabout if you want to, that's a
(43:06):
really hard question to answer.
Joseph Marohn (43:07):
Well cause, I guess if you're kind of like
looking for a room, can you seelike who's kind of living in
that space prior.
Kim Walls (43:14):
Okay, yeah, yeah.
Joseph Marohn (43:16):
Okay, that that helps.
Yeah, I'm just trying to likeput my on the other foot for a
second and try to put my, myvision on them and see what they
would be seeing, you know, butyeah, so yeah, go ahead.
Kim Walls (43:28):
Before we go there was I can't remember who it was,
but one of the Patsfoot reps isalso an owner and she told a
story of how somebody from whoworks in Amazon fulfillment came
to stay at her place and theywere one of the first people in
and like a week later prettymuch everybody who lived there
(43:48):
was working at Amazonfulfillment.
So you know they're talkingabout it.
And then there was kind ofanother story with a grocery
store.
Somebody was working at a Vonsand they were all excited about
their pad split and so they wentback and talked about it at
work and then there were likefour more Vons employees living
there.
So you know, there's someelement, I think, of people
finding each other and seekingout what they need, as long as
(44:09):
they're paying attention.
Joseph Marohn (44:11):
Word of mouth it's spreading.
Yeah, that's cool.
So you know, part of what Ilike to do, kim, is I like to
allow an opportunity for our subtwo community to have a voice
in these interviews.
And what I mean by that is, youknow, whatever topic I'm
covering, I'll ask if anyone hasany specific questions and I'll
make a post about it.
And you know, one of thequestions asked was by Jennifer
(44:32):
Cortez, who I just recently didan entire interview with on
transaction coordinators.
So if anyone missed that can goback and watch my last
interview.
We covered a lot of greatquestions and I think you'll
find a ton of value from it.
But you know, jennifer'squestion was how do you get
around the ordinances regardinghow many adults can reside in a
property?
Kim Walls (44:52):
Yeah, there are a couple, a couple things there.
One is they it's a membership,right, so had split sets up a
membership.
You pay to be a member, you getaccommodations, telehealth
services, microloans.
So the definition the legaldefinition of unrelated becomes
(45:15):
gray, because these people arenow related through their
membership and that's one of thepathways where, when they do
hit legal issues, that they kindof battle on that level.
Another benefit to being in oneof the core regions is that
they pay for legal support ifyou do run into an issue.
(45:35):
So, unlike Milwaukee, where I'mbuying a property, if we hit a
legal issue we're on our own andthat's not the case in other
core cities.
So for the most part, manyplaces those regulations are
being ignored that the city hasput into place, because the city
(45:55):
has a bigger problem, which isthat they can't house people.
Joseph Marohn (45:59):
Right, that's a bigger problem, which is that
they can't house people.
Kim Walls (46:00):
Right, that's the bigger issue right, yeah, the
system is failing.
We've got homelessness.
We have people in Atlanta Ithink it's 10 years to get their
Section 8 vouchers.
We're failing our people, so Idon't know.
Joseph Marohn (46:18):
It's kind of a gray area, if you will.
Kim Walls (46:20):
Yeah, yeah, is there a risk?
Joseph Marohn (46:22):
Yes, you know there's a risk with anything
investing.
Kim Walls (46:26):
Yeah, there's also a risk of crossing the street and
stubbing your toe on the curband then breaking your face.
Joseph Marohn (46:33):
Absolutely, you know.
Next question was by KarimaRadford and her question was how
do you determine a good marketfor a pad split?
And then, what are some goodways to measure the demand in a
specific area?
Kim Walls (46:46):
Yeah.
So pad split, does that workfor you?
So first recommendation thereis if pad splits there, it's a
good market, most likely.
If you want to look outside ofit, then it's a matter of
looking at what's the medianincome in that area.
How much does it cost to rent aone bedroom or studio?
(47:08):
What's the gap?
Is it still?
Is it 30 to rent the place tolive?
Is it 30% or more than 30%?
If it's more than 30%, the moreit is probably, the stronger
the market is one piece.
And then the factors abouthaving multiple different types
of industry, like Cleveland'snot a core market, but it's got
(47:30):
NASA, it has military nearby, ithas museums, it has tons of
grocery stores, it has an Amazonfulfillment center, like all
these different types of jobsthat are likely to have good fit
people for the classic padsplit model.
So looking at job opportunities,median income, then there are
(47:54):
other situations, right, like myAirbnb is in Mount Vernon, ohio
.
There's, no, there aren't anyplaces to rent there.
It's really hard to get arental.
Um, so finding places thatwhere it's just there's no
inventory and it's hard to putrental inventory unless you're
creative, um, it's really hardto put rental inventory on the
(48:14):
market anywhere right nowbecause of interest rates.
So if you have an area wherethe parameters are fitting, um,
but there's not a lot ofinventory for rent, so if you
have an area where theparameters are fitting but
there's not a lot of inventoryfor rentals, you might have
shorter occupancy because maybepeople are just kind of waiting
out when they can go get theirstudio apartment or what have
you.
But it could be a great marketwhere there's no rental
inventory or low Great response.
Joseph Marohn (48:36):
Great response.
So I appreciate your answeringall those questions.
I think you covered a lot andprovided a ton of value for
someone looking to get startedwith their very first pad split,
or even help answer questionsto those who may already know
about pad splits.
You know or have some pad splitproperties, but, with that
being said, I want to make surethat we don't leave any stones
unturned.
(48:57):
Is there any questions you canthink of that we didn't address
here today?
Kim Walls (49:00):
Oh, let's see what do people want to know.
Going through like propertyacquisition we talked about
tools and resources available,time, time to convert.
A lot of people want to knowabout that.
So, from the time when youclose escrow um to getting it
(49:22):
listed, don't forget you haveholding costs through that whole
period, right Um?
The fastest to gettingsomething listed if there's a
conversion involved seems to beabout seven weeks, so I'd plan
for about 12 weeks.
Joseph Marohn (49:37):
Yeah, always, are 14 weeks to be, you always
double.
Kim Walls (49:41):
Yeah, to make sure you have that time.
Another like just kind of tipis, if you're doing all the
furnishings and you're trying todo it remotely, making sure
that you can have everything predelivered so that you can set
up your place in one day.
Maybe bring a few people in,put the beds together, put the
kitchen together, kind of do itall really quickly so already
have everything on site.
(50:01):
Maybe it's in a garage or somepeople rent storage units for
the month and a lot of storageunits will accept deliveries and
put them in the unit for you.
So you need to have that andreally keep track of all the
things you've ordered off Amazonor Wayfair or buildcom or
whatever it is, so that you'rereally ready to rock and roll.
Don't let time pass Once youclose escrow.
(50:22):
Get that puppy listed as soonas possible, really planning for
high-quality pictures.
One of the reps I like the wayhe describes your listings on
PadSplit.
He says it's kind of likeTinder.
Right, people are looking atall these places to look and
they're swiping right, they'reswiping left.
Joseph Marohn (50:37):
Swiping.
They're swiping right, they'reswiping left.
Kim Walls (50:38):
Swiping, they're swiping.
The pictures matter, so makingsure that it's properly staged
and properly photographed canhave a huge impact on occupancy
and speed the film.
Joseph Marohn (50:48):
I can see that, yes.
Kim Walls (50:50):
Yeah, I'm trying to think what else.
I can't really think ofanything else, but you know
where to find me.
If you have any follow-upquestions, I'm here for you.
Joseph Marohn (51:01):
Well, that's what I was going to say.
So if someone here today iswatching this and they're
looking forward to working withyou or run a potential deal by
you, or maybe just have ageneral question, where can they
reach you?
Kim Walls (51:15):
I'm at KimWallsLA on Instagram and it's
K-I-M-W-A-L-L-S-L-A, and thenFacebook I think it's just Kim
Walls, because I'm old, so Iactually got my name, and
LinkedIn is Kim Walls, so I'mpretty easy to find.
Google works too.
Joseph Marohn (51:33):
It's a very common name, so we won't have no
issue finding you.
Yeah, yeah, okay, awesome.
Well, kim, I thank you for yourtime finding you.
Yeah, yeah, okay, awesome.
Well, kim, I thank you for yourtime.
You've been crushing it and Iwish you nothing but continued
success.
I look forward to watching youyour entire series on pad splits
on the Zoom Vault and for thosewondering what the Zoom Vault
is, that's an exclusive accessto sub two members only.
(51:53):
If you're looking to become amember, feel free to reach out
to me and I can get you incontact with an enrollment
director.
And, last but not least, makesure to like and subscribe this
video.
It not only helps with thealgorithm, but it also helps
keep getting value content outto those who are just starting
in the real estate journey.
If you have a video of mine ora specific topic you want me to
(52:14):
cover, feel free to drop acomment down below and we'll
keep bringing you that fire.
Kim Walls (52:21):
Thank you so much, john.
I really appreciate it.
I'm excited to get to sharewhat I've learned and I love
your whole approach.
I love that you make it easyand that you're providing such
so much value to your listeners.
So truly my heart, thank you.
Joseph Marohn (52:33):
I appreciate you came in.
Thank you for providing us withall this value.
Thank you.
Kim Walls (52:37):
You're welcome.
What up everyone and welcome back to the Real
Estate Unlocked podcast.
I'm your host, Joseph Marohn,and man oh man, we got something
special for you guys today.
Today we're going to becovering the topic of pad splits
.
What is pad splits, you say?
Well, I'm glad you asked.
(00:32):
Pad split is a housing platformthat connects property owners
with tenants seeking moreaffordable places to live.
This not only helps leverageunderutilized spaces in our
existing properties, making itmore profitable for us, but,
more importantly, moreaffordable for our tenants.
We all know that there's asevere shortage of housing
supply in the country right now.
We also know that traditionalhousing options are insufficient
to meet the need and tooexpensive to access.
(00:54):
Right now we see in Californiathey're adding in ADUs to assist
with affordable housing.
Padsplit creates housing supplyand provides access for people
in need of more housing choicesby using the empty spaces that
already exist.
Now I can't think of anyonebetter to assist us in educating
us on this topic than ourspecial guest today, miss Kim
(01:14):
Walls, aka the PadSplit Queen.
Kim is an investor herself andvery well educated on PadSplits.
In fact, she covers an entireZoom series with Pace Morby
students in the Sub2 community,and if that wasn't enough.
Her impressive career hasmarked by securing over $25
million in capital, fueling thegrowth of successful brands that
(01:35):
ultimately transitioned toventure capital firms.
She's a mother of two andpartnering alongside Michael
Broadus, who is not only hercompanion in life but also a key
collaborator in her real estateventures.
With that being said, I've beentalking long enough, so, if you
will, everyone, please allow meto introduce to you the Pad
(01:55):
Split.
Queen Kim, what's up?
How are you doing today?
Kim Walls (02:01):
Hi, I'm great.
I'm not sure how I got thatnickname, but I think in any
universe where people want tocall me a queen, I'm just I'm
not sure how I got that nickname, but I think in any universe
where people want to call me aqueen.
I'm just going to say thank you.
Joseph Marohn (02:09):
You'll wear the crown proudly.
Kim Walls (02:11):
Exactly.
Joseph Marohn (02:13):
So how's your day going?
Everything good today.
Kim Walls (02:15):
Yeah, it's good.
It's great.
I mean, hey, I get to be onhere with you, I get to talk
about one of my favoritesubjects.
It's a great day.
Joseph Marohn (02:22):
Yes, absolutely, absolutely Well.
Thank you for joining us andteaching us all how to rake in
more cash on our investmentproperties.
Kim Walls (02:30):
It's my honor and pleasure.
Joseph Marohn (02:32):
Awesome, okay.
So let's start things off withjust you know.
Let's talk about you for asecond.
Tell us a little bit aboutyourself and how you got
involved in the real estate game.
Kim Walls (02:41):
I got in well, so I've always loved real estate.
My dad was actually acontractor who funded his
skincare businesses by being anamazing contractor, so I got to
grow up in it and Ifundamentally just I love to see
things come to life.
Ground up construction is myfavorite or massive overhauls
gut it, take it down to thestuds, rebuild it and then take
(03:01):
it all the way to the finishline with an Airbnb or now pad
splits.
It really just makes my hearthappy to see things like that,
whether it's businesses orproperties or people's lives,
like you name it.
I love it.
Joseph Marohn (03:13):
Yeah, it sounds like you got quite the
experience there, huh.
Kim Walls (03:17):
Well, so actually that's what I was saying.
So it was all personalexperience.
Really.
I didn't, I didn't.
So real estate for me is partof a career change, like life
stage coming.
You know my two.
I have two sons.
They're fully grown, one's asenior in high school now and
one's a junior in college.
So I'm like I'm coming intothis new place in life where
it's just total freedom to doeverything and anything I want.
(03:38):
And in my career buildingbrands there's really like
there's just a.
It's very long, you know, fiveto seven years to build a brand
and get it to the point whereyou can sell it or move it on to
venture cap or what have you.
So I really wanted to dosomething that I had more
control over.
It was more contained from atime perspective where I could
step in and out however I wanted, and I love real estate, and so
(03:59):
that was very much just acareer switch for me.
Joseph Marohn (04:03):
You and me both, I love real estate.
I'm like so addicted to thisstuff.
You know it's it's sointriguing, you know it's like
you can never learn everything,right.
Kim Walls (04:11):
Yeah, yeah.
Joseph Marohn (04:13):
Do you have?
Is your sons involved with realestate at all, or?
Kim Walls (04:16):
Well, so my older one is that's how that we had our
Airbnb in Ohio came to bethrough.
Uh, he went off to school inOhio and I wanted a way to stay
connected and I was like, okay,this is it, we're going to do
Airbnb.
He's like I'm going to be theproperty manager.
I'm like I'm going to overseethe construction, I'll fund it.
And so he now runs that as theproperty manager has 100%
(04:37):
five-star reviews and I'm superproud of him yeah.
Joseph Marohn (04:49):
Yeah, I bet I'd be proud as well.
That's great, I want to.
You know, I have two daughtersmyself and I'm absolutely
looking to get them involved inreal estate as they.
You know, as they start to age,they're still little right now,
so I'm kind of teaching themthe little ropes right now.
Right now they like to jump onmy computer and jump on the mic
and they pretend they're doingsome podcasts.
So so, uh, this interview.
Obviously we're talking aboutpad splits and you know this
interview shifted towards abeginner, entry level standpoint
(05:09):
.
So some of these questions I'mgoing to ask you are going to be
very basic and as we transitionthrough the interview, it might
get a little more detailed.
So, with that being said, canyou start by explaining what a
pad split is and how it differsfrom traditional long-term
rentals or maybe an Airbnb?
Kim Walls (05:26):
Yeah, you bet I'd be happy to so.
At the end of the day, a padsplit is a technology.
It's a technology platform, inthe same way that Airbnb is a
technology platform.
What makes them different fromAirbnb is how they're servicing
their target customer.
So their target customer is anessential worker.
It's an employed person who'ssingle and living alone, who is
(05:49):
earning maybe $50,000, $60,000,$30,000 a year, cannot afford to
live in the cities where theywork.
So maybe it's home health aidesor school bus drivers or
librarians.
It's people who want to livenear where they work, but
they're being priced out of themarket by our current economy.
(06:09):
So what PadSplit has done iscreate a recommendation for how
to convert single family homesinto co-living spaces really
designed and tailored for thatessential worker's lifestyle and
needs.
So, for example, communityspaces like living rooms and
(06:30):
dining rooms are actuallyconverted into bedrooms.
And the people who are livingin pad splits they're not there
for the community, they're thereto have a safe, comfortable,
affordable place to live in alocation where they want to live
.
So converting those sharedspaces, or traditionally shared
spaces in a single family home,into bedrooms allows the
(06:51):
property owner investor to makemore money, because you're
renting by the room and itservices, a need that this
particular demographic has.
So Airbnb is more about well,it was originally more about
renting a whole house.
Now they are starting to dorooms, but they're not actually
going so far as to haveproperties converted to be
(07:13):
optimized to meet the needs ofthat essential worker.
So really, what PadSplit hasdone is create a focus.
And not only are they teachingpeople how to optimize their
spaces, the technology itself isalso supportive of the investor
, in that the technology doesbackground checks, the
technology automaticallywithdraws funds for payment, it
(07:36):
allows people to pay by the weekand it allows them to pay on
the day they get paid.
So it's really supporting themwith making sure that they can
pay their rent.
And then PetSplit goes beyondthat with their membership model
to provide things likemicroloans, telehealth services
to service that healthcare needand positive credit reporting.
(07:58):
So for people who maybe hit ahard patch who knows what, right
Like anything can happen adivorce or lost a job and
couldn't make their car payments, whatever it is they Petsplit
does positive credit reportingto help rebuild that credit,
which can put people in aposition to, if they do want a
whole house, or even to save upand buy a house.
(08:19):
It can help them do that.
I feel like I'm talking forever.
Joseph Marohn (08:23):
No, no, no, You're absolutely.
You're providing a ton of valueright now and that was a great
response and I love itAbsolutely.
Thank you for that, you know.
So how could someone interestedin pad splits get started?
You know whether they'relooking to rent, become a
landlord or invest in this model.
Kim Walls (08:39):
Yeah, I always like to start with research
personally, so watching thispodcast is a great place to
start Right.
Joseph Marohn (08:45):
Thank you yeah.
Kim Walls (08:48):
And then, beyond that , I would go to the PetSplit
website and sign up to be a host.
You don't have to have aproperty, you don't have to pay
anything, but it gives youaccess to all their host tools
and in that area you can findthings like how to optimize a
property, what your propertymanager needs to do, expected
costs, lists of things to buywhen you're furnishing a
(09:09):
property just a huge amount ofwealth of information there, and
it also has map functionality,where it shows you their core
regions that they're focusing onwhat occupancy looks like.
So when it comes to any rentalproperty, occupancy is super
critical, right?
If it's not rented, you're notmaking money.
So making sure that you'regetting properties that are in
(09:31):
areas that have very highoccupancy levels is important,
and their maps will show youthat.
It will also show you averagerent per week for the rooms, so
you can really start doing yourmath or underwriting, to make
sure that whatever you're payingfor your property monthly and
upfront can be covered by yourrental incomes based on the
(09:54):
occupancy and the price per weekper room.
Joseph Marohn (09:58):
Okay, all great info.
Obviously, clearly, you're veryknowledgeable in this space,
and so where did you learn allthis info about pad splits?
Kim Walls (10:08):
You just have a ton of knowledge right now.
So, thank you, I love to share.
I'm just a total research hound.
I like I come by it.
Naturally it's in my genes Ilove research and so when I
first started getting interestedin how and where I would focus
you know it's up to rightfollowing paces, right Use,
(10:29):
focus, right Focus, focus and soI came in believing that that
was the right thing to do anddoing that.
So all I did was pad splitresearch and execution and
education for several months inthe beginning, and now I just
kind of keep up to date.
I even ended up doing a brandproject for Pat Split directly.
I got so immersed in it so Iknow the people How's that
(10:51):
coming along?
Besides pardon.
Joseph Marohn (10:54):
How's that coming along?
Kim Walls (10:55):
Oh, I finished it.
It was just kind of a one-timething which I almost feel guilty
that they paid me for because Ilove doing it so much.
Joseph Marohn (11:05):
You deserve to be paid every dollar.
So I have to ask how did youget the name Pad Split Queen and
who gave you that name?
Kim Walls (11:13):
I believe it was.
I'm pretty sure it was a guynamed Joe.
I'm blanking on his last name,but we were at a meetup at the
Mondrian in Hollywood and I wasjust talking with him about what
I was doing and he'd been, Ithink, watching some of the
videos and he's just like you'rethe bad split queen.
And other people heard that andit just stuck yeah, I didn't.
(11:35):
I don't know.
Joseph Marohn (11:38):
It's definitely a great name to have.
I want to be known as the kingof anything right.
Kim Walls (11:44):
That's kind of my perspective.
I'm like, okay, I'll take itSure.
Joseph Marohn (11:47):
I'll take it, I'll run with it.
So is the goal here just tostuff as many bedrooms into your
investment property as possible?
Kim Walls (11:54):
No hard.
No, it all comes back to thatoccupancy right.
If people aren't happy, they'renot going to stay, they'll
leave, and one of the uniquethings about pad split and part
of why they focus on these coreregions and getting
concentration and density isbecause they allow their members
which you might call tenants,but their members to move.
(12:15):
If they're not oh my God, itsmells bad, or, ooh, there's no
water pressure or whatever theycan just pick up and go.
They have to pay 50 bucks andthey transfer.
So making sure that yourtenants, members, residents, are
comfortable matters.
There's a hospitality aspect tobeing a successful pad split
(12:37):
owner that really matters, andso the maximum, for example,
number of bedrooms per bathroomthat you can have is four to one
, but it's highly recommendedthat you don't go beyond three.
So you start to see in the datathey're showing more problems.
After you, like eight plusbedrooms, you start to get a
(12:57):
little bit higher conflict, alittle less customer
satisfaction.
Seven really seems to be thebest of both worlds, right?
Investors are happy becausethey're getting rent for seven
rooms, and the people who livethere are happy because they're
not feeling like rats squeezedinto a sewer.
Joseph Marohn (13:15):
So you would say seven is the sweet spot.
It's the sweet spot, yeah, okay.
Kim Walls (13:21):
If you have a huge space, there's also some really
interesting things happen.
People are taking like an oldschoolhouse and converting it.
Well, ok, fine, you put 14bedrooms in there because people
are spread out.
It's really that like peopledensity and are in comfort to
think about.
Joseph Marohn (13:38):
OK, so can any property be converted into a
pass split, or is there like acertain criteria or requirements
that the property needs to meet?
Can you kind of like paint apicture for us Like what's the
ideal property for a pad split?
Kim Walls (13:50):
Yeah, so I'll.
Actually, I'm going to answeryour question with a picture not
of a property, but of a person.
Joseph Marohn (13:57):
Okay, okay, I love that.
Kim Walls (14:01):
So think about somebody who's working hard.
Maybe they're working two jobs.
So think about somebody who'sworking hard.
Maybe they're working two jobs.
They probably don't.
Can't afford a car, and if theycan, insurance is expensive,
gas is even more expensive.
They want to be in a placewhere they can walk to food,
walk to public transportation.
It's not too loud, they don'twant to be disturbed by sirens
every morning.
What have you?
(14:22):
So if you think about thatperson, that hardworking person
who is needing to get to andfrom work, wants life to be easy
, maybe there's a conveniencestore nearby where they can pick
up their chewing gum, or agrocery store, go get the
toothpaste and some eggs.
These people are generally noteating in a lot.
They're not cooking, so thekitchen's not that important.
(14:44):
They're mostly doing takeoutbecause they don't have time and
also cooking ends up beingreally expensive sometimes when
you can just get somethingquickly from a fast food place.
So it's more the life of theperson to consider.
And how does the space meet theneeds of that person?
So your question was how do youoptimize the space?
Where does it need to be?
(15:05):
So you want to be within a10-minute walk to public
transportation.
You want to be in an area thathas multiple different types of
work, right Like, maybe they'reworking at Home Depot one day
and maybe they're doing luggageat the airport another day.
These people generally havemore than one job because
companies generally want toemploy people part time so they
(15:26):
don't have to pay for insurance,right Like, which is terrible,
but it is what it is.
And so, thinking about thespace, if they do have a car,
you need to have parking wherethe neighbors aren't going to be
upset.
So generally you're not lookingat ritzy neighborhoods where
the neighbors are going to belooking out the window and
(15:46):
saying who's at my house youwant to have space for, or who's
next to my house.
You want to have space for lotsof garbage cans because you
have lots of people eating outall the time.
So those garbage cans pull upreally quickly, but they
shouldn't be right next to thewindow where it's going to stink
into somebody's house.
It's more like putting yourhead in the space of that person
in their life and thinkingabout how can their needs best
(16:10):
be met.
So basically it's C-levelneighborhoods.
You can go kind of D plus to Bminus and near public
transportation and in one of thecore areas.
You can go outside of the coreareas and still use the PadSplit
platform, but you won't get allthe benefits from it.
(16:30):
You still get benefits, but notall the benefits.
And I would like to say that asyou speak with different reps
because PadSplit has reps theyall have sort of a different
story right now.
They're not really aligned onwhat they're saying.
So the feedback I'm giving ispulled from listening to all of
them and trying to get the sortof most comprehensive picture,
(16:52):
taking the best from all worlds.
But you'll have people say youcan be in a high crime
neighborhood, it doesn't matter,we have a property that's
successful there.
And you'll hear people sayingyou can be in any neighborhood
as long as it's a neighborhoodwhere people are used to having
lots of people coming and going.
And it's true you do havesuccess stories with all kinds
of different, um, you know, inthe outlier situations.
Joseph Marohn (17:14):
But what I'm, the information I'm sharing is what
I've learned kind ofcomprehensively by listening to
all of them right and I thinkthat's a lot of concerns for a
lot of people, because now youhave, let's say, seven bedrooms,
you have seven members, youhave seven cars.
So you know, is it?
How do you accommodate thoseparking spaces without
complicating?
(17:34):
You know your neighbors, youknow making them frustrated and
calling and complaining andstuff like that.
What are you seeing?
Are people just parking in thegrass area?
Do you have to kind of buildout a larger driveway?
How does that work?
Kim Walls (17:47):
Yeah, it depends on the property and so generally
when you're in that propertyacquisition stage, if there's
not a lot of street parking, ifthere's tons of street parking
and there are no permitsrequired, it doesn't really
matter too much, as long asthere's tons of street parking.
If you have like a two cardriveway but a big lawn, you can
(18:07):
expand that.
You wouldn't have people parkon the grass because that looks
sloppy and want to keep thingslooking nice, keep the neighbors
happy.
But you can put a gravel padout and extend over the grass
area, put some little two byfours or some sort of treatment
to make it look polished to getmore cars in.
What I see a lot of people dois go behind the house.
(18:27):
So on the side of the housethere might be room to extend a
driveway or a gravel pad backand then park the cars behind
the house so that they're not inthe front.
Joseph Marohn (18:36):
Yeah, that's a great idea, having those longer
driveways where you can kind ofpark towards the back, out of
sight, out of mind, right youknow?
Kim Walls (18:41):
Exactly.
Yeah, no, it's not dictated.
They have recommendations andthose recommendations in their
core cities are based on thedata right, what's working.
And so if you have a slightlynicer property, or maybe you
have refrigerators in each roomor what have you, you kind of
(19:03):
can go above average, and ifit's really super bare bones,
maybe you want to go a littlebelow average, but they provide
you with the normal pricing, theaverages, and you just make
your own decision from there.
Joseph Marohn (19:16):
You had, it was a two-part question.
Kim Walls (19:17):
What was the other part?
Joseph Marohn (19:18):
Pricing and oh how do you determine so?
Kim Walls (19:22):
occupancy is the other one.
So you just kind of look at themath right, like, say you've
got four bedrooms each runningat a hundred dollars per week.
You want to take off abouteight.
So you just total that up tothe month off about it.
So you just total that up tothe month, back out about 5%.
For people not paying, there'sstill about 2% eviction rate,
which is fairly low actually,and about 98% pay rate.
(19:45):
So take off 2% of that becausepeople you're just not going to
see it.
And then, based on theoccupancy in your area, maybe
you're 85, 90, 95%.
So you just multiply yourexpected rent by occupancy.
So start with a number, takeoff the occupancy consideration.
Take off the people don't payyou consideration.
(20:07):
Add in the fact that you paythe utilities.
So, unlike long-term rental toget back to one of your very
first questions with long-termrental generally the tenant pays
.
In this case the owner pays, soyou're keeping all those
utilities going.
It's an important thing toconsider.
Joseph Marohn (20:24):
Yeah, it makes sense, because how would you
kind of break down utilitiesover seven people?
It'd be a little complicated,but yeah, that makes sense.
So, with that being said, withestimated income rentals per
room, are there like anywebsites that you can use, like
similar to AirDNA or RentalMeter, to kind of get a broad
estimate per room?
Kim Walls (20:43):
Yes, yes and no.
So the PadSplit really providesthat data.
When you sign up as a host,they have algorithms that are
giving you real-time data fromtheir system.
So the founder, a guy namedAtticus LeBlanc, really wanted
to make it as easy as possiblefor investors to get into this
(21:04):
model and convert their spaces,because there's a bit of a
build-out right.
There's a little bit moreupfront risk than an Airbnb
because to optimize it, you'renot only furnishing, you're also
actually constructing.
If, to optimize it, you're notonly furnishing, you're also
actually constructing to acouple of bedrooms.
So he really wanted to make iteasy for people to understand
what to expect and give them allthe tools.
So, there's not really a needfor something like AirDNA
(21:25):
because PadSplit's alreadygiving you that information.
But if you wanted to lookoutside of their core markets
where they have that data, forexample, we just brought up our
in escrow now on a property inMilwaukee which is not one of
their core areas, but we aregoing to use the platform.
So the thing to do is look atwhat does it cost to rent a
(21:47):
studio or a one bedroom in thatneighborhood and then you want
it to be anywhere from 20 to 40%cheaper, so kind of 30% cheaper
to live there.
So if your monthly rent is$1,000 in Milwaukee for a studio
, then you maybe want it to be700 or between seven and 800
(22:08):
when you're doing it by the room.
So you can look in justwhatever they are Trulia and
Zillow and all the 60 or 80different platforms that are
telling you where you can rentand how much it's going to cost
and just get a feel.
That way to do a pad split, youlook at the median income for
(22:34):
that area, which is Googlesearchable, and see if they can
afford to pay the typical rents.
So the typical rents and themedian income, and if you want
your rent to be call it 30% orless of your income.
(22:54):
So if it would cost them 50 or70 or 80% of their income to get
studio, that's probably it's agood indicator that that's a
really good market for pad split.
Joseph Marohn (23:01):
OK, so I know you kind of touched on the restroom
requirements, but what are,like, the bedroom requirements,
like how much space do you need,how much square footage do you
need?
And, to my understanding, youhave to have a window and a door
for every bedroom, correct?
Kim Walls (23:16):
Yeah, egress, that's for fire safety and ingress and
egress.
The eight by eight is kind ofthe smallest you want it to be,
although the minimum wall is atleast seven feet, so you could
be like seven by 10 kind ofthing.
But that eight by eight isgenerally the smallest amount of
space.
You do not have to have acloset in the room.
(23:38):
You can have a freestandingcloset that sits outside.
You know that just sits on thewall.
So you have to have a bed,lighting and a place to hang
clothes.
Doesn't have to be a closet andthat's kind of it like the bare
minimum.
Joseph Marohn (23:54):
So you don't really need a whole lot.
So okay, so who's ideal for apassport?
And that's kind of it like thebare minimum, so you don't
really need a whole lot.
So okay, so who?
Who's ideal for a PADS split?
I know you kind of touched onthis a little bit earlier, but
is it?
Is it more catered towards likea younger person, a single
person, lower income collegestudent, travel nurses, who
would you say it's?
It's it worked better for?
Kim Walls (24:15):
Yeah, so this is.
This is again one of thosesituations where you hear the
pad split reps saying all kindsof different things.
But what, what?
The pad split model wasdeveloped for the founder's
vision.
What the technology is designedaround is really that essential
worker who's single and livingalone.
So it's somebody who's makingmedian income, working in the
(24:37):
city, wants to live near wherethey work.
You can be anywhere from sortof high teens to any age.
It's not designed for, at leastfrom its inception, not for
students, not for people whohave the income to have their
own whole house.
Joseph Marohn (24:59):
OK.
So yeah, I was going to saybecause I don't want to hear
from the rep, I want to hearfrom the past, the queen, you
know.
Kim Walls (25:07):
Well, I have my own opinions, but what it comes down
to is they have an opportunity.
They started off with a visionand a mission that is unique and
that is a multi-billion dollaropportunity.
And Airbnb already exists.
Right, like, you want to rentby the room?
You're a digital nomad.
You're a student, you havestudent housing.
People who have aligned workand lifestyle are better suited
(25:31):
to live together.
Like, do I want to live with acollege student right now?
No, unless it's my collegestudent, like my kid.
So there's an audience ofpeople who are critical to how
all of our lives function, whocan't afford housing, and that's
(25:54):
really what PetSplit and thefounder there set out to service
that demo.
So it's not Section 8, right,there's no supplemental income
supporting these things, atleast at this time, at least
last I heard, which was a coupleof weeks ago.
So it's not Section 8 and it'snot super wealthy.
It's like the majority of thepopulation, as long as they're
(26:18):
single and living in a metroarea.
Joseph Marohn (26:21):
OK, so you kind of touched on on a good topic,
you know, as far as like livingwith other people, you know many
viewers may be unfamiliar withthe concept of co-living.
You might kind of breaking thatdown, like what exactly
co-living is and how doesPADSPLIT facilitate co-living
arrangements.
Kim Walls (26:37):
Yeah, absolutely so.
Co-living is the idea ofnon-related people living
together, right?
So, and that's how regulationsare done for cities and counties
is how many non-related peoplecan live together.
So we're not talking aboutfamilies, we're talking about
people who want to share thecosts and the benefits of shared
(27:00):
spaces where they don't needprivacy, like the kitchens and,
in some cases, the bathrooms andmaybe outdoor spaces.
Right, when you get into luxuryco-living, these places have
theater rooms for the sevenpeople who live there.
They've got pools, they haveprivate gyms.
It's kind of it's this idea ofhow do you maximize shared space
(27:22):
to have your highest quality oflife costs the least.
It's really what it's all about, and some people, for some
people, it's about company,right?
If you get into senior living,for example, where people are
sharing spaces, maybe they'realso sharing a nurse, and then
it kind of starts to look alittle bit more like assisted
living, but not quite.
It's a resource that all ofthose people value and probably
(27:44):
need or at least want, and theycan share the expense of it
because they're sharing space.
Joseph Marohn (27:51):
No, it makes sense and I feel like some
people are already likeaccustomed to it because you
know, if you go to college andyou live in a college dorm,
you're kind of already used tothat already you know living
with other people.
So, as for me, it'd be a littleharder for me to live with.
You know certain people.
I'd be like bumping heads withpeople and stuff like that, and
yeah, it'd be, it'd be a hotmess, yeah.
Kim Walls (28:14):
Just before we move on from that.
It's very, it's cultural, right, the American, we've got the
American dream right.
Go get your little house withyour white picket fence and have
your nuclear family, and that'sthe training, that's the
cultural training.
And whereas you look at othercultures in different parts of
the world hells, no, you're notgoing off to isolate yourself,
(28:35):
like you know, you build anotherstory on your house and put
your kids up there, right, likeit's.
It's a, it's a cultural thingthat America doesn't.
We're not really I'm going togo ahead and say caught up with
most of the world when it comesto I think it's a great.
Joseph Marohn (28:52):
It's a great tool that they implemented out here.
Because you know cost of livingright now.
We all know housing prices arethrough the roof right now.
Interest rates are through theroof, you know.
So to purchase a home right nowit's so high, you know.
To make.
You know in California to buy ahome You're looking at anywhere
as a minimum of seven hundredthousand to a million plus Right
(29:12):
, and you know a mortgagepayment for that is going to be
4,500 up to six grand, right.
So a lot of people can't affordthat.
So that's why I like thisbusiness model.
Is it out in California rightnow or is it because I know they
started in Atlanta?
Kim Walls (29:27):
They did?
Yeah, they're.
They're due to launch.
They've said they're launchingin Q1 here in LA.
Yeah, okay, but there's.
So we I just just one more sortof like for the actual cultural
piece of this and I studiedanthropology in school, which is
the study of man, so you'llhear me coming back to these
sort of cultural and also healthaspects.
We, we have this idea thatliving alone is something to be
(29:51):
celebrated and in fact, ourbodies aren't meant for that.
Like, our health improves whenwe eat in community, when we
have people to put our armsaround and hold hands or what
have.
We're not meant to be alone.
So when you have, especiallywith the essential workforce,
all these people who are livingalone, having other people to
(30:12):
share space with and to bearound is incredibly healthy.
It's uplifting, it's good foranxiety, it's good to help with
depression, it's good forlongevity.
The conversation, at least inthis country, around co-living
is always like here's a way tosave money.
But I would love to see thatconversation be broadened to how
(30:33):
do we enhance our health andour lifestyles and our, our
quality of life in addition toour pocketbooks?
Joseph Marohn (30:40):
okay, no, you touch on.
You touch on very great points.
You know, you know, co-livingcan be very beneficial, right?
Because you know, like you said, depression, you know, living
by yourself it just you just seepeople looking miserable and
stuff.
So if you're looking livingwith somebody else, obviously
it's an ideal situation there.
Um, yeah, so like, as far aslike the, you know the ideal
(31:01):
location, um, you know, you kindof touched a little bit on that
, but is it best to be like byhospitals or like college
campuses, like what's the?
What's the best location to putthem at?
Kim Walls (31:10):
like it's really anywhere where there are a lot
of people working in those kindsof jobs, right?
So if it's college campuses,then it's who's working at the
college campus the janitors, theassistant professors, the TAs,
like right?
If it's near a hospital, is it?
It's the assistant nurses, it'sthe people like, it's the
(31:31):
workforce.
So if you're near a whole bunchof grocery stores like who's
checking out your groceries andwho's at the register, in any
area that has a lot of differenttypes of work available is
going to have a potential forhigh density of people who want
to live near it.
Joseph Marohn (31:51):
That makes sense Absolutely.
So obviously there, you knowthere's.
This can vary from property toproperty, but what would the
average renovations costs?
You know to look, what would itlook like to get a pad split
ready?
Kim Walls (32:05):
Yeah.
So if you're starting with, itdepends on your starting spot,
right?
A lot of people like the BRRRRor SIR strategy for these, in
which case you can spend 80, 100, $150,000 because you can do a
complete overhaul to theproperty and then add the extra
few walls, but really anywherefrom 18 to 30,000,.
(32:27):
For example, water heaters Likeif you have a water heater
that's designed to service afamily of three or four and then
all of a sudden you have sevenor eight people in it.
You either want a second waterheater or you want a bigger
water heater.
You have to do a little bit ofHVAC work to pump heat and air
into the new rooms that you'veadded, but you're really just
adding a couple of walls for themost part.
(32:48):
If you need to move existingwalls then it gets a little bit
more expensive.
So the cheapest I think youcould probably ever come in is
probably 15,000.
Joseph Marohn (32:59):
Okay, and are there any core markets?
Kim Walls (33:04):
Yeah, they're actually just listed on the
PadSplit website and it changesall the time.
They keep adding new markets,so the best resources go to to
pad splitcom.
Look at rent a room, thedropdown menu, and it'll show
you all those States and thenall the cities that are being
serviced within those States.
Joseph Marohn (33:22):
Okay, so give us some examples of some issues
someone might run into in a padsplit.
Kim Walls (33:27):
Yeah, Like the investor issues you mean
investor issues Exactly.
Investor issues?
Exactly, yeah.
So one of the ones that I'veheard recently was the some some
guy used all of hisgirlfriend's information to get
(33:47):
through the past the pad splitvetting process, so used her job
, her like everything and wasapproved into her picture, was
approved into the system, wasthen approved by a host because
hosts have to approve anybodywho's going to move into the
house.
They get the opportunity to sayno, I don't want that person in
my house.
So then the person shows up andall of the other people who
live there.
They have a communicationportal.
That's part of what PadSplitoffers is a way to communicate
(34:09):
with all the people and it willtell you like, hey, so-and-so is
moving in and it shows apicture and tells you a little
bit about them to reallyfacilitate that community
feeling in as much as it'spossible when you've got
strangers moving in and out.
So someone shows up who wasn'tthe right person and the people
who lived in the house were like, uh, hello who?
(34:30):
is this what's going on here,and the people whose house it
was had a really hard timegetting them out, actually
because of eviction laws, and itturned into a whole thing.
So the solution for that is youput a ring doorbell by your
door and when somebody firstchecks in, you make sure that
who you're seeing at thedoorbell is the same person
(34:51):
whose ID you've had checked andwho's in your system.
If it's not the right person,don't let them in.
Joseph Marohn (34:57):
Right, you would think that'd be the simple way.
Kim Walls (35:00):
Right yeah, but it requires management, right, like
it requires looking at it.
I've heard horror stories.
I've heard about people peeingin their refrigerators and then
just checking out.
I think you have some terribleor annoying things that happen,
but it's for the most part it'spretty.
You're going to have that as alandlord, no matter like.
If you don't want to be alandlord, that's what's not for
(35:21):
you.
Joseph Marohn (35:21):
I was going to say that that can happen with
pretty much anything.
Right, we see it, even withlong-term rentals you need
short-term rentals.
People do that all the time.
It's just I have this motto.
It's like you kind of you takecare of your tenants and they'll
take care of your investment.
Right, yeah, treat them right,you know.
So you kind of touched on likekind of like the screening
(35:43):
process.
So like, is Padspit responsiblefor the tenant screening
process, or is that ourresponsibility?
Kim Walls (35:49):
No, they do.
They do that.
So they they promote theirlocation, they promote their own
brand, they promote theproperties within their brand.
And then once somebody says hey, I'd like a tenant says hey,
I'd like to live in this space,they go through the background
check, they pay their membershipfees, all those things, and
then their information issubmitted to the host and the
(36:09):
host can approve or deny.
It's a little bit, it's cateredto, it's cool, like if you so
say, you have it back to parkingfull circle.
Say you have a house that hasseven bedrooms but only four
parking spots, the, the platform, the pad split, pad, split
platform, will only show yourplace If all four parking spots
are filled.
(36:29):
You can only really then taketenants or members who don't
have a car.
It will only show your locate,your place to people who don't
have a car.
Joseph Marohn (36:38):
So they have that option on there that you could
select if you have a car or not.
Right, yeah, ok.
Kim Walls (36:43):
Yeah, so it really.
It streamlines the process offinding a home and people can
move in I think it's within oneday.
So rather than having likecollecting sort of proof of rent
and having to have great creditand the big deposit and all of
that, it's just a completelydifferent model that makes it
easy for people to move in andstill manages to maintain the
(37:06):
same data levels occupancy,evictions, all of those things
are better than the old way.
It's a new way to servicepeople in need where everybody
wins.
Joseph Marohn (37:18):
So what happens when someone stops paying rent
for the rooms?
Who handles the evictionprocess and does PadSplit ensure
that rent if they are screeningthe tenants?
Kim Walls (37:28):
PadSplit does not ensure the rent.
So because of the weeklypayments you know really quickly
.
It's not like the end of themonth happens and then they
haven't paid and you kind ofhave these long gaps.
So you know immediately if theyhaven't paid and because it's
pay is being withdrawn usuallyon the day that they get paid,
(37:49):
you kind of you have anopportunity very quickly to
respond quickly and PadSplitdoes that.
They have a whole customersuccess team that will reach out
and say, hey, we noticed youdidn't pay, what's happening and
they'll work to get you paid.
If you get to the point whereyou have to have an eviction,
they do not handle the evictionsyou still have to have yourself
or your property manager whathave you show up within the
(38:10):
sheriff does and go through theprocess on your own.
So one of the things they havedone up until their plan to go
into California this coming yearis focus on markets that are
property owner friendly from arent, from a, from that
perspective.
Joseph Marohn (38:24):
So you're not don't come to California.
Kim Walls (38:26):
Right, yeah, I know, we have like people.
Can we have professionaltenants who can stay for years
without paying anything becausethey know the system?
Joseph Marohn (38:35):
Right, yeah, so I was going to say so like.
As far as like the turnaroundtime are you, are you seeing
statistically that you knowtenants are staying more like
longer term, or is it more likeshorter term?
Kim Walls (38:49):
It's.
The average is eight to ninemonths and it varies by region.
Yeah, it's pretty solid.
Joseph Marohn (38:56):
Okay, so with so many people living under one
roof, I can only imagine likemaintaining costs must be high.
I'm assuming like safetydeposits are required.
Kim Walls (39:06):
No deposits.
Joseph Marohn (39:08):
No deposits Interesting.
Kim Walls (39:09):
Yeah, it's a different model.
Or maybe there's some smalldeposit 75 bucks or something.
I actually don't know thatthere are no deposits, but it's
not thousands.
It's not your typical situation.
Maintenance is handled by theproperty owner.
So within the platform inPadSplit, they'll send you a
message.
If a member can send you amessage like, hey, the
(39:31):
refrigerator's broken or hey, myheat stopped working or what
have you, and so the propertyowner is responsible to take
care of those things.
The kinds of issues that the padsplit team takes care of is
like disagreements betweenmembers, like so-and-so is
eating my peanut butter or thatkind of stuff.
But actual property issues arethe responsibility of the
(39:52):
property owner or propertymanager.
And do they have, like, theirown contractors or is that
entirely up to the propertyowner?
Yeah, either.
So in their core areas they dohave recommended resources for
property management and alsoconstruction, again, like they
(40:15):
really want to make it easy forpeople to make this choice.
So where they have their coreregions, they provide
recommendations and referralsand they do actually own a
property management companycalled Two Keys, which is in
some of their cities.
So you can use them.
You can not use them, itdoesn't matter, as long as the
needs are met.
Some property owners are usinglike TaskRabbit and doing it
themselves.
But you can have somebody stopby and change a light bulb or
(40:37):
what have you.
So they don't even haveproperty managers, they're doing
it their own.
Joseph Marohn (40:42):
Okay, and have you seen any HOA regulations?
Kim Walls (40:45):
Yes, no HOAs.
It's property, but in thatcondition the conversion is not
allowed.
So if they can't, it's kind ofnot working out for the most
part for the investor.
Like if somebody owns aproperty outright and they don't
need to add extra bedrooms andall they're paying is their HOA
(41:07):
fee, then it can workfinancially.
There are exceptions, but it'sgenerally a pretty hard like no
HOAs.
Joseph Marohn (41:15):
Okay, and then safety and security, absolutely
critical when it comes to rentalproperties.
How does PadSplit ensure thesafety of its tenants and what
measures are in place to protectthem?
Kim Walls (41:29):
It's kind of like a community effort, right?
If you're living with sixpeople and somebody's acting out
, the five other people aregoing to report that.
Joseph Marohn (41:41):
So everybody kind of looks out for each other.
Yeah, yeah, okay, interesting,that seems to work.
You know, if everybody'slooking out for each other, you
know that can work.
So, like for someoneconsidering renting a passive
property, what advice would yougive them in terms of choosing
the right property and roommates?
Kim Walls (41:59):
Oh, that's interesting.
Yeah, let's put the shoe on theother side of the other foot for
a second so you can see whenyou go into the platform to rent
a room, you can see who'salready living in that property
and you can see a little bitabout them.
And I kind of have a love haterelationship with this because I
don't like the idea that we'rejudging people based on how they
(42:20):
look.
I also don't really know anyother way that they could do
that without just kind of beinglike here's the person who lives
here.
So I guess at the end of theday it's kind of a vibe.
But as far as like, whatrecommendations would I have?
I think it's so personal, right.
Like if I'm a nurse or anurse's assistant, I could
(42:44):
really imagine wanting to livewith other people who work in
the medical sphere, becausethey're also going to be having
midnight shifts and not to sayother industries don't.
But or if I'm working in acertain industry or space, like
even when you do bump intosomebody to have kind of in the
hallway, have something to talkabout if you want to, that's a
(43:06):
really hard question to answer.
Joseph Marohn (43:07):
Well cause, I guess if you're kind of like
looking for a room, can you seelike who's kind of living in
that space prior.
Kim Walls (43:14):
Okay, yeah, yeah.
Joseph Marohn (43:16):
Okay, that that helps.
Yeah, I'm just trying to likeput my on the other foot for a
second and try to put my, myvision on them and see what they
would be seeing, you know, butyeah, so yeah, go ahead.
Kim Walls (43:28):
Before we go there was I can't remember who it was,
but one of the Patsfoot reps isalso an owner and she told a
story of how somebody from whoworks in Amazon fulfillment came
to stay at her place and theywere one of the first people in
and like a week later prettymuch everybody who lived there
(43:48):
was working at Amazonfulfillment.
So you know they're talkingabout it.
And then there was kind ofanother story with a grocery
store.
Somebody was working at a Vonsand they were all excited about
their pad split and so they wentback and talked about it at
work and then there were likefour more Vons employees living
there.
So you know, there's someelement, I think, of people
finding each other and seekingout what they need, as long as
(44:09):
they're paying attention.
Joseph Marohn (44:11):
Word of mouth it's spreading.
Yeah, that's cool.
So you know, part of what Ilike to do, kim, is I like to
allow an opportunity for our subtwo community to have a voice
in these interviews.
And what I mean by that is, youknow, whatever topic I'm
covering, I'll ask if anyone hasany specific questions and I'll
make a post about it.
And you know, one of thequestions asked was by Jennifer
(44:32):
Cortez, who I just recently didan entire interview with on
transaction coordinators.
So if anyone missed that can goback and watch my last
interview.
We covered a lot of greatquestions and I think you'll
find a ton of value from it.
But you know, jennifer'squestion was how do you get
around the ordinances regardinghow many adults can reside in a
property?
Kim Walls (44:52):
Yeah, there are a couple, a couple things there.
One is they it's a membership,right, so had split sets up a
membership.
You pay to be a member, you getaccommodations, telehealth
services, microloans.
So the definition the legaldefinition of unrelated becomes
(45:15):
gray, because these people arenow related through their
membership and that's one of thepathways where, when they do
hit legal issues, that they kindof battle on that level.
Another benefit to being in oneof the core regions is that
they pay for legal support ifyou do run into an issue.
(45:35):
So, unlike Milwaukee, where I'mbuying a property, if we hit a
legal issue we're on our own andthat's not the case in other
core cities.
So for the most part, manyplaces those regulations are
being ignored that the city hasput into place, because the city
(45:55):
has a bigger problem, which isthat they can't house people.
Joseph Marohn (45:59):
Right, that's a bigger problem, which is that
they can't house people.
Kim Walls (46:00):
Right, that's the bigger issue right, yeah, the
system is failing.
We've got homelessness.
We have people in Atlanta Ithink it's 10 years to get their
Section 8 vouchers.
We're failing our people, so Idon't know.
Joseph Marohn (46:18):
It's kind of a gray area, if you will.
Kim Walls (46:20):
Yeah, yeah, is there a risk?
Joseph Marohn (46:22):
Yes, you know there's a risk with anything
investing.
Kim Walls (46:26):
Yeah, there's also a risk of crossing the street and
stubbing your toe on the curband then breaking your face.
Joseph Marohn (46:33):
Absolutely, you know.
Next question was by KarimaRadford and her question was how
do you determine a good marketfor a pad split?
And then, what are some goodways to measure the demand in a
specific area?
Kim Walls (46:46):
Yeah.
So pad split, does that workfor you?
So first recommendation thereis if pad splits there, it's a
good market, most likely.
If you want to look outside ofit, then it's a matter of
looking at what's the medianincome in that area.
How much does it cost to rent aone bedroom or studio?
(47:08):
What's the gap?
Is it still?
Is it 30 to rent the place tolive?
Is it 30% or more than 30%?
If it's more than 30%, the moreit is probably, the stronger
the market is one piece.
And then the factors abouthaving multiple different types
of industry, like Cleveland'snot a core market, but it's got
(47:30):
NASA, it has military nearby, ithas museums, it has tons of
grocery stores, it has an Amazonfulfillment center, like all
these different types of jobsthat are likely to have good fit
people for the classic padsplit model.
So looking at job opportunities,median income, then there are
(47:54):
other situations, right, like myAirbnb is in Mount Vernon, ohio
.
There's, no, there aren't anyplaces to rent there.
It's really hard to get arental.
Um, so finding places thatwhere it's just there's no
inventory and it's hard to putrental inventory unless you're
creative, um, it's really hardto put rental inventory on the
(48:14):
market anywhere right nowbecause of interest rates.
So if you have an area wherethe parameters are fitting, um,
but there's not a lot ofinventory for rent, so if you
have an area where theparameters are fitting but
there's not a lot of inventoryfor rentals, you might have
shorter occupancy because maybepeople are just kind of waiting
out when they can go get theirstudio apartment or what have
you.
But it could be a great marketwhere there's no rental
inventory or low Great response.
Joseph Marohn (48:36):
Great response.
So I appreciate your answeringall those questions.
I think you covered a lot andprovided a ton of value for
someone looking to get startedwith their very first pad split,
or even help answer questionsto those who may already know
about pad splits.
You know or have some pad splitproperties, but, with that
being said, I want to make surethat we don't leave any stones
unturned.
(48:57):
Is there any questions you canthink of that we didn't address
here today?
Kim Walls (49:00):
Oh, let's see what do people want to know.
Going through like propertyacquisition we talked about
tools and resources available,time, time to convert.
A lot of people want to knowabout that.
So, from the time when youclose escrow um to getting it
(49:22):
listed, don't forget you haveholding costs through that whole
period, right Um?
The fastest to gettingsomething listed if there's a
conversion involved seems to beabout seven weeks, so I'd plan
for about 12 weeks.
Joseph Marohn (49:37):
Yeah, always, are 14 weeks to be, you always
double.
Kim Walls (49:41):
Yeah, to make sure you have that time.
Another like just kind of tipis, if you're doing all the
furnishings and you're trying todo it remotely, making sure
that you can have everything predelivered so that you can set
up your place in one day.
Maybe bring a few people in,put the beds together, put the
kitchen together, kind of do itall really quickly so already
have everything on site.
(50:01):
Maybe it's in a garage or somepeople rent storage units for
the month and a lot of storageunits will accept deliveries and
put them in the unit for you.
So you need to have that andreally keep track of all the
things you've ordered off Amazonor Wayfair or buildcom or
whatever it is, so that you'rereally ready to rock and roll.
Don't let time pass Once youclose escrow.
(50:22):
Get that puppy listed as soonas possible, really planning for
high-quality pictures.
One of the reps I like the wayhe describes your listings on
PadSplit.
He says it's kind of likeTinder.
Right, people are looking atall these places to look and
they're swiping right, they'reswiping left.
Joseph Marohn (50:37):
Swiping.
They're swiping right, they'reswiping left.
Kim Walls (50:38):
Swiping, they're swiping.
The pictures matter, so makingsure that it's properly staged
and properly photographed canhave a huge impact on occupancy
and speed the film.
Joseph Marohn (50:48):
I can see that, yes.
Kim Walls (50:50):
Yeah, I'm trying to think what else.
I can't really think ofanything else, but you know
where to find me.
If you have any follow-upquestions, I'm here for you.
Joseph Marohn (51:01):
Well, that's what I was going to say.
So if someone here today iswatching this and they're
looking forward to working withyou or run a potential deal by
you, or maybe just have ageneral question, where can they
reach you?
Kim Walls (51:15):
I'm at KimWallsLA on Instagram and it's
K-I-M-W-A-L-L-S-L-A, and thenFacebook I think it's just Kim
Walls, because I'm old, so Iactually got my name, and
LinkedIn is Kim Walls, so I'mpretty easy to find.
Google works too.
Joseph Marohn (51:33):
It's a very common name, so we won't have no
issue finding you.
Yeah, yeah, okay, awesome.
Well, kim, I thank you for yourtime finding you.
Yeah, yeah, okay, awesome.
Well, kim, I thank you for yourtime.
You've been crushing it and Iwish you nothing but continued
success.
I look forward to watching youyour entire series on pad splits
on the Zoom Vault and for thosewondering what the Zoom Vault
is, that's an exclusive accessto sub two members only.
(51:53):
If you're looking to become amember, feel free to reach out
to me and I can get you incontact with an enrollment
director.
And, last but not least, makesure to like and subscribe this
video.
It not only helps with thealgorithm, but it also helps
keep getting value content outto those who are just starting
in the real estate journey.
If you have a video of mine ora specific topic you want me to
(52:14):
cover, feel free to drop acomment down below and we'll
keep bringing you that fire.
Kim Walls (52:21):
Thank you so much, john.
I really appreciate it.
I'm excited to get to sharewhat I've learned and I love
your whole approach.
I love that you make it easyand that you're providing such
so much value to your listeners.
So truly my heart, thank you.
Joseph Marohn (52:33):
I appreciate you came in.
Thank you for providing us withall this value.
Thank you.
Kim Walls (52:37):
You're welcome.
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I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com