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Tech Startup Seeks to Boost Performance of CRE Investments

Frank and Barillas are co-founders of Stratafolio, a Cedar Rapids, Iowa-based tech start-up aiming to modernize the way commercial real estate investors analyze and act on data.

In spite of advances in available technologies, many commercial real estate investors are still clinging to spreadsheets to help them make critical decisions. Jeri Frank and Uriel Barillas want to break them of that old-school habit.

Frank and Barillas are co-founders of Stratafolio, a Cedar Rapids, Iowa-based tech start-up aiming to modernize the way commercial real estate investors analyze and act on data. Frank is CEO of Stratafolio, and Barillas is chief technology officer; the entrepreneurs are married to one another.

Stratafolio’s technology enables investors to view portfolio data from various sources in one dashboard or to look at data in a single asset class, delivering insights into past, present and future performance of real estate holdings.

NREI talked with Jeri Frank about how Stratafolio got started, how its technology works and what’s ahead for the start-up. This Q&A has been edited for length, clarity and style.

NREI: How did you come up with the idea for Stratafolio?

Jeri Frank: The concept for Stratafolio came out of the inefficiencies we experienced in managing our own residential real estate. We struggled with being able to pull together meaningful data to make good and reasonably quick decisions. We knew we had the data—it was just in disconnected systems and spreadsheets. Without being able to pull insights from the data easily or quickly in any meaningful way, we knew we were not being able to make the best investment decisions.

After talking to other real estate investors, we realized we were not alone, and we decided to take it upon ourselves to improve the processes available in the marketplace today. This idea landed us in the Iowa Startup Accelerator in the fall of 2016.

As we went through the program, we interviewed over a hundred investors from all levels of sophistication and assets. The results from those interviews were revealing. For instance, the more assets an organization had, the more difficult it was for them to quickly generate key metrics needed to understand how their business was doing. Also, they struggled with running new deals while taking into account their current holdings. The data was available, but the struggle was real.

Once we shared our idea with a few investors in our local area, they immediately showed interest. We have been working together with them for the past few months perfecting our minimum viable product. 

NREI: What experience do you have in commercial real estate? What are your backgrounds?

Jeri Frank: We have our own real estate portfolio as a backdrop, and also have leadership and development skills. Uriel is a systems and software engineer at Rockwell Collins and has significant experience in dashboard design in mission-critical situations. I was a director at Pearson and led several large multimillion-dollar contracts.

NREI: At what stage is Stratafolio now?

Jeri Frank: Now that we have proven the concept, worked with a couple of alpha customers and put a minimum viable product in front of other potential users, it is time to begin software development. We are currently raising money, and once that is completed, we will begin development.

NREI: How many beta users does Stratafolio have? Who is your target user?

Jeri Frank: We only recently began accepting beta users. We would like representation from across the U.S., and are focused on the commercial developer and owner segment in particular, as we noticed they have some unique challenges and motivations. But Stratafolio will work very well for others, too.

NREI: How does Stratafolio work?

Jeri Frank: Stratafolio pulls together data from different systems into a single dashboard or system so you can look across your entire portfolio composed of many asset types, or a specific asset class within your portfolio. This provides the ability to compare metrics across your portfolio to learn what is working best for you and where you need to understand things a little better.

For instance, one building in your portfolio may not be bringing in as much revenue as expected. Outliers are more visible when you have the ability to compare assets against one another. After digging in, you might notice the interest and loan terms on the mortgage for the building are significantly higher than the other buildings in the portfolio. Armed with data, the investor can determine if they want to renegotiate another loan on the building or take no action at all. But it is a conscious decision based on data. Data provides insights, which in turn allows the investor to take positive action.

NREI: What are the benefits of Stratafolio to commercial real estate investors? What problems does your product solve?

Jeri Frank: The ability to act on, interpret and decipher information contained within spreadsheets and other disconnected accounting and property management systems is necessary for commercial real estate investors. Currently it takes hours or even days to pull together this critical information, such as determining available equity across their portfolio, or analyzing tenant lease expirations and cash flow.

Recently, Entrepreneur published an article on business intelligence. They noted only 40 percent of data available is ever used to make decisions. Engaging with your data can have a profound impact on company performance and provide an edge over others.

NREI: How does Stratafolio differ from other tech offerings on the market that provide insights for commercial real estate investors?

Jeri Frank: Stratafolio does not require anyone to switch systems or replace a system they already use. We know teams have developed processes around their accounting and property management systems, and those systems do their jobs really well. What they don’t do is analytics. Analytics is what we do. We connect data so investors can see exactly how their assets are performing overall and against each other. This gives the investor real data, in real time, to make action based decisions.

NREI: What’s on the horizon for Stratafolio?

Jeri Frank: As we complete the initial development, owners and asset managers will be able to quickly generate key analytics like loan-to-value, debt coverage ratio, occupancy and return on investment, to name a few. We will also provide full-service consulting and data management for investors who do not have the bandwidth to do it themselves.

Essentially, this stage will provide focus on descriptive analytics and will involve the human component to facilitate predictive analytics. The data has a story to tell; right now, the human is helping tell the story.

Many industries are currently taking advantage of predictive analytics, and commercial real estate has been late to the game. Predictive analytics will give an investor more insight into where there are risks to plan accurately.

The commercial real estate market is a fast moving one, where time could be the difference between winning and losing big.

TAGS: Investment
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