Welcome to Solo2CEO. Our guest is Ira Zlotowitz, the founder of a top-tier mortgage brokerage called GPARENCY. I once had the privilege of working with this man about 12 years ago in Eastern Union.
Introduce to us your work.
I work at GPARENCY, a membership-based commercial mortgage brokerage whose technology allows for a marketplace that helps people find new deals, finance those deals, underwrite those deals, and attract those deals. They could do all those things while waiting for their mortgage needs. Payment commences when they have a deal that requires financing.
At GPARENCY, we provide members with more access to banking, and everything on this platform.
Tell me more about GPARENCY and this deal called Underwriter.
Most people do quick and informal calculations, switching between a few different systems for estimates, or relying on a top-notch underwriter. That is why we developed an underwriting tool, a calculator. This tool allows you to calculate in under three minutes, the return on the deal, the return for the investors, and the return for the syndicator.
Aside from that, you can use this tool to find rules to buy on my platform, finance real estate through our services, and sell all yourself. Track your daily progress as you underwrite. You can put notes, keep, and manage your information.
This model fits the idea of getting everything under one roof. GPARENCY has over 50,000 listings to answer your need to be involved in the commercial estate. Banking information is there when you need it. Tools are available to track your deals and underwrite deals - all the tools you need, and it is free.
Is there a tool that requires a fee?
When you want to use financing, that's the beginning of paying membership for $5,000 annually, which is very cheap for real estate. The goal is really like a CRM, be able to keep track and have everything at your fingertips, overlay on a map of the whole United States, and pin everything you're working on. From here, you buy a deal, then use property management software, use due diligence tools, and much more in-depth after this. You keep track of all the listings or the number of deals you got today.
Do you assess this model to be scalable?
It is very scalable because once we get the return of our cost, this becomes a recurring revenue as more clients join the platform. We launched the marketplace, and we are seeing a surge of users.
What is the current status of Eastern Union?
Eastern Union is a very successful mortgage company with a boutique approach. I was much more involved in its growth, by hiring and training a lot of people. My partner focused on maintaining the highest quality standards and kept on improving the best practices.
When I opened up GPARENCY, my partner went to the boutique route and kept the best of the brokers there. It provided that high-touch brokerage value that even as the markets keep changing, it’s always the value they need, be it in debt-equity, or a full-service brokerage. It’s the same business maybe 12 years ago, a slow and steady approach with solid people.
Hiring a lot of people led to a high turnover, but that didn't bother me because the business was growing. From there, we split up and I established GPARENCY, as a standalone company.
How many people are working at GPARENCY?
GPARENCY is a smaller company with approximately 30 full-time people, all working remotely through Zoom. Most of our growth comes from our amazing brokers, amazing underwriters, and the banking team.
This whole technology is the funnel. You have the option to sign up for a membership at $4,000 or use our brokerage services for $11,000. We offer a range of free services on the marketplace, and if you choose to use additional services, they become part of the funnel for us.
Can you talk about the sales team and the changes it underwent?
So many times I was talking to my marketing team, and they were more focused on branding and making things look nice.
We decided to close down the marketing department and reopened it as “Digital Sales”. The main reason behind this was to prioritize making sales and generating revenue. Sales are important to keep our company going and thriving. Revenue is crucial, and everything we do is focused on providing value to our users.
We want people to enjoy using our platform daily and keep coming back. We're seeing a steady growth of about 10,000 unique users, and a higher percentage coming back regularly, staying on for 10 to 15 minutes each time.
It's a matter of time before they're active enough that they convert by focusing on building this perfect product. We found a major game change that everyone is focusing on.
How is that related to your mindset shift?
Every business book tells you that a company should have a goal. We have a metric, and we want to have a certain number of users this month.
The product team needed time to develop it, and during that period, we couldn’t do much to influence it until it was built. My focus shifted to making it work even better. It should have features that people are asking for so that they can use it more so that everyone can relate to our market to do the same thing.
I realized that the marketing team should be a multiplier, and also be enhancing the efforts of our sales team. If a salesperson should go out and be able to get one user, 10 users in a month, or more. But if they talk to the market, I can tell you we can do this better than an email. Once we changed it, the mindset went in a great direction. But some people over time quit the team because they couldn't leave the concept of branding.
It wasn't an easy transition for everyone on the team, as some were hesitant to let go of the old concept of branding. A few team members left over time because they couldn't adapt to the new direction. But thank God, I made that decision. We keep the business growing.
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How did you start your business?
I started a career in a mortgage firm before Eastern Union, where I was a partner. I opened up Eastern Union and realized that over the years, it was easier for people to get mortgages on their own.
When I opened the business, I was able to help people who couldn’t get deals and make money, too. I could help new people into commercial real estate. However, I gradually realized that it was almost impossible for someone to become a million-dollar producer because the market became like a commodity market.
This made me question the big fees brokers were charging, especially when the clients could potentially do it themselves. In that case, there’s no need to pay big brokerage fees, when the clients could probably do it themselves.
I have a long-term vision for this business, so I started making changes from my previous company. Some brokers got frustrated with the adjustments and left. We got an unsolicited knock on the door from Venture Capital. Eventually, I matched the offer with 150 real estate investors and turned this business into a $10 billion exit.
Presently, our goal is to provide transparency for owners and offer various options. We ensure there's no need to pay a 1% fee. Instead, we charge based on time and value, adjusting the fees accordingly for easy or complicated deals. That's what GPARENCY is.
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How does a subscription to GPARENCY work?
You pay $5,000 and you get access to all the data and information we have, from banking information, public data, mortgage details, listings, and various tools you may need. I can work on a specific deal for you.
As a membership-based brokerage, you have to be a member to get those services. You don’t need to worry about the paperwork up to the closing, focus on raising money, finding deals, and managing the property.
My long-term vision is to make it easy for clients - give them the name of the bank, and do it themselves. People are getting comfortable with the idea, and we have repeat clients who come back for future deals. The membership model is filling up fast, bringing in around 120 new transactions to work on every month. This month alone, over 1,000 new people have joined the site, eager to start using our tools and services.
Do GPARENCY and Eastern Union work hand in hand, or are they separate?
TIt’s a competition. If I were on a panel with Eastern Union or another broker, they would be defending why it's worth paying their fee, and I would argue that we offer the same service at a much lesser cost. However, I do believe that there are instances of very complicated transactions that may require a specialist, just like going to a great doctor for specific needs.
Our focus is on being more like a boutique shop, providing a human touch when needed. For those conventional deals or challenging transactions, we aim to be the more affordable and convenient option. Eastern Union may have a larger team, but the market can be unpredictable and challenging for everyone in the industry.
What is it like competing with yourself?
It is not competing with myself. My vision is to have GPARENCY offer boutique services in the future. When a deal needs a specialized touch, we can direct clients to the boutique service at the back end. The team sees it as a hedge, especially for brokers who invest in our company.
If the market stays strong, they do well, and GPARENCY has the potential for a $10 billion exit. Eastern Union, on the other hand, operates on a different scale and faces unique challenges.
The future of brokerage will change significantly. Big brokerage firms may face difficulties as brokers seek more value and higher commissions. Boutique shops paying high commissions may become more appealing as brokers require less support from larger firms.
In the end, a broker's role is to provide data, knowing which banks, buyers, and sellers are involved. It's about adapting to the changing market and embracing technology.
Let’s talk about how you scaled this business. What steps did you take to move in the direction of growth?
Every business has its challenges. As we were launching, the real estate market slowed down. So we focused more on the human side of the brokerage business first, and the technology was secondary. Eighteen months later, we finally have completed the technology, with a fully functional whole suite of services.
We started by hiring the same old school at Eastern. The difference is I was paying base salaries. I learned how to hire those who were genuinely interested in the job, and the working group now is more of a boutique team. It's all about building a quality team and offering appealing opportunities to our employees. We have great people working on the banking and underwriting teams to ensure successful mortgage transactions.
How do you vet the people coming in for the base positions?
We offer base positions as well as various roles with different perks. For starters, our candidates go through a training program. If they succeed, they receive a base salary. Every employee gets stock options, allowing them to be part of our company.
During interviews, we explore if the candidates are “get-it, want-it” capable, meaning, their desire for the job (want it) and whether they understand the job ("get it"). If their want matches their understanding of the work, we then assess their capability to get things done. Some people have a natural knack for understanding things quickly, like a talent for basketball or video games.
We also consider whether candidates support our core values, like honesty and a commitment to constant improvement. We believe in putting out imperfect products to gather feedback and make adjustments to make them better over time. We focus on getting valuable feedback. We take negative reasons as compliments and as positive views. Negative reviews can be challenging, but we stick to our values. We ask ourselves if they're true to who we are and continue our honest and straightforward approach. People’s reviews are better than the number of reviews, especially when they are true and honest.
Does it pay to play by the rules?
It's important to stay honest in business, even when facing challenges. Sometimes bad actions of a few can hurt deals. Honesty and reputation are priceless. Some people might not be honest, but we don’t have to succumb to that level.
Like in GPARENCY, I thought about the concept of complete transparency. With ChatGPT and open information, it's changing the game. In the past, brokers made money from hidden knowledge. But with GPARENCY, we offer everything for a fixed fee of $5000 a year. It's like a fair trade.
The idea behind $5000 was driven by math. I realized, in my previous role, that paying commissions to brokers didn't leave much profit. So, for $5000 a year, I'll give you the technology, and the same tools we use as a broker. This creates recurring revenue and a higher profit margin that makes a more profitable business.
What is your new plan for your business growth?
The challenge now is to reach 8,000 clients, and we're on our way to achieving that. We've been growing steadily, especially after introducing our new technology. We've seen more and more people visiting the site every day, and the numbers are exciting.
We're constantly analyzing data to improve our conversion rates and user base. It's about making strategic decisions, like introducing new features or add-ons that will keep driving our growth forward.
That's why I put a lot of effort into building this, taking inspiration from my background. But even if you're not familiar with that background, you can still start learning and understanding. The idea is to make complex things accessible.
The exciting part is how anyone, even without much knowledge, can analyze deals, look at numbers, and have meaningful conversations. This new feature has been in development for years, and I'm so grateful to my amazing team, including co-founders, designers, and tech experts who made it happen.
When you work with someone, especially in a client-facing role, there's a risk because their words reflect on you. How do you protect your reputation in such situations?
At GPARENCY, around 98% of people start with a 30-day trial. If it's not a good fit, they leave early on. We make it more like a trial period, similar to a summer internship. This way, any initial interactions they have with clients are seen as part of the learning process. And when they make calls, a senior person is there too, ensuring quality. So, if they leave, the concern about their impact on our reputation is minimized.
We aimed to create a setup where every step was approached as a calculated risk. If someone had a strong reputation, their tasks were handed over to a senior team member who could assist them. On the other hand, if someone departed early or if things weren't fully underway, there wasn't a significant impact. Those who achieved great success tended to stick around for longer periods. The majority of successful individuals chose to stay.
Aside from LinkedIn, how do you market yourself?
Aside from LinkedIn, which is powerful and effective, we employ various online methods like organic outreach and PPC through regular channels. Our brokers are making phone calls and networking. I also use short clips featuring valuable insights and share them on platforms such as Instagram, TikTok, YouTube, and other social media sites to gain followers.
Moreover, I'm preparing to launch a real estate course tailored to today's market. This crash course will be under an hour and completely free, scheduled for early August. It serves as a funnel – many people sign up, a portion of them visit the website, and a certain percentage become engaged users.
What I've learned and focused on is delivering valuable content through my posts. We increase engagement by providing valuable information, So, when people think about real estate technology or data, they associate it with GPARENCY's content marketing efforts.
Do you have a specific strategy that you use with your content marketing or you're just putting out value?
I have people following me who have nothing to do with real estate. I participate in a podcast called "Bowling for Billions." It's about offering advice and ideas that have broader applications. It's like bowling, where even if you're not an expert, I can teach you tricks to consistently score well.
When I'm invited to podcasts, I gauge the host's agenda. If they want to provide value and help, I'm on board. Sometimes, I get asked why I'm doing certain podcasts. The answer is simple: to give back and offer help.
Could you expand on that idea of giving free value and why it's a profitable choice?
Some people value the service and are willing to pay for it. If I find out that lots of people are using my site for free and avoiding payment, I'll come up with a way to charge.
My aim is for every real estate player to choose my platform over others, like Google Maps, and come to us. You can do so much more here, like underwrite deals, add notes, see property data, set alerts, and even get news updates. It's all about giving you value and convenience. If you want broader access, it's affordable at $5,000 a year.
What part of your services are free? What can people access for free?
There are only three situations where you'd need to pay to use our system. Let's break it down. If you're into real estate investing and you just want to keep track of your deals, no worries. You can access all these features for free. The $5,000 fee comes in when you want banking information and broker services,
If you're an individual and you want to save up to 100 properties, add notes, and documents, and perform calculations – that's all covered. But what if you're a more active player? The simplest option is to pay for a membership to enjoy unlimited access. I've built this system to ensure fair access. If you're just testing the waters, you can use the whole system for free.
It is all about accessibility and value. You can try our system without worrying about losing access. Once you see the benefits, the fee might just be the best investment for your company.
What are some challenges and brick walls that you've had along the way?
The biggest challenge is that people couldn’t believe the competition. They wonder why established competitors with billions in business only have specific clients. The truth is, that old methods no longer apply. Years ago, you couldn't even talk to a bank, and they only discussed successful cases. They knew how to sell you in big numbers. Bankers today are motivated to close deals, and they get commissions too. So assumptions and hidden fees play a role. Big players' payments are often misunderstood.
The industry is changing, but old habits linger. Changing habits takes time, but I saw the trend coming. You can't predict the market precisely. Brokerage is evolving, and GPARENCY is built to thrive in this changing market.
What are some of the challenges you face in terms of hiring?
There is less of a challenge that I am facing now. There are a lot of applicants because they want to be part of something meaningful and revolutionary. Our employees earn a salary and also have stock options. These shares could lead to substantial earnings and even retirement.
How does this stock option model work? Can you adapt it to any business?
We set aside shares for employees when they join. These shares represent a portion of their earnings and serve as bonuses. There is also a vesting system in place. You could adapt it to any business.
This approach motivates employees because they have a stake in the company. It's not just about caring for the company from a distance. They truly own a piece of it. The longer they stay, the more shares they accumulate each year, encouraging their commitment to the company's success.
The stock options model made my employees feel more connected, responsible, and fulfilled because they have a tangible stake in the outcomes. Transparency is a critical factor in this system. We openly communicate our progress and challenges, and by doing so, we create a culture of honesty and ownership. This way, everyone feels like they're a significant part of something greater.
What does the G stand for in GPARENCY?
GP stands for general partner and transparency. If you are a GP, you want to get all the transparency with everything you need to do. And if you're the type of person that is transparent, we're going to work great together.
From your experience, how would you advise people who are building their own business, to get their audience to trust them?
Be authentic, and your client will know you are looking to provide value. Build the best product at the cheapest price, and you have no room for competition. At GPARENCY, I built every feature to be the best in its class. I aimed to provide excellence and pondered how to deliver it at a reasonable cost. My focus is on serving the market's needs without overcharging. If I gain more customers rapidly, there's no extra cost per user. I have strategies to attract new users, and the system is prepared for significant growth.
I recruited top talent for the job. My co-founder and my CTO are experienced people who brought their expertise to create a solid foundation for the project. We outsourced some work to ensure we focused on building the best technology possible. And now it’s ready.
Besides the educational videos you put out, do you ever use video in your marketing?
Yes, I use video, too. I try to use it all the time, but I keep it short and on point. We also have demo videos showing people how to use the product.
How can people contact you if they want to check out GPARENCY?
They can go to our website at GPARENCY.COM to learn more about our membership-based commercial mortgage brokerage. Contact us at connect@gparency.com or call us at 732-719-3010.