Noah Molnar Career Background
What is your biggest career achievement?
- Have you ever transformed an idea into a multimillion dollar business in the span of four years? At 28, I have.
My career is in its infancy but what I have accomplished in a few years many professionals fail to accomplish over an entire career. I can’t provide you with a single achievement, but I can provide you with a snapshot of what it took to get me and my company to this point. The journey has been my greatest achievement.
In 2015 I was working for one of the country’s leading alternative risk management firms specializing in the formation and management of private insurance companies. We worked with hundreds of privately held middle market companies in structuring, forming, and managing insurance companies in an effort to bring down the cost of their commercial insurance and provide clients with a nest egg for future unforeseen events. Approximately 75% of our clients were real estate of real estate related.
In my role as VP of Client Services, I was tasked with being the key liaison between our CEO and President and our clients. In early 2015 I received a request from one of our clients – “Look into the whole “renters insurance” thing for me. I see my peers are beginning to all require residents to carry insurance, but the economics don’t make sense.” At the time I had no idea where this request would lead me.
I began my research. We were running insurance companies for several multifamily owners so that is where I began. I quickly found out that almost every professional owner/operator requires their resident to carry renters or liability insurance. What I also discovered was the standard relationship was to partner with a third party insurance company, software company, or firm specializing in “renters insurance.”
What I couldn’t wrap my head around was the basic economics of the entire arrangement. Just think about it – the avg. cost of “renters insurance” in the US is $15 per month. If you have 10,000 units each paying a third party insurance company $15 per month that is $150k per month or $1.8 million per year. I then looked into loss data and found that this type of risk resulted in losses of under 15%. This all equals huge profit to insurance companies, and nobody was seeing this! I saw this and what this opened up was a massive opportunity.
Directly from this research came our thesis – “We believe our clients should profit from insurance premiums, not third party insurance carriers.”
Using our expertise in forming and managing private insurance companies, we created a solution that would allow our clients to capture this revenue stream instead of a third party insurance carrier.
Our first client was the initial client who came to us with the request to explore resident insurance. We started with 10,000 units. We took a full year to completely learn the ins and outs of the program. How do you affectively train the property management team? How do you integrate with the client’s software? How do you make the job of the on-site team easier while also fostering a seamless resident experience? How do you not impeded the leasing process? What are the best deliverables? How do you handle customer service of both property management team and residents? How do you track residents who have opted out of the program and provided their own third party insurance?
In 12 months, we had mastered the process and achieved 80% resident adoption rate with the other 20% providing proof of outside coverage.
Then came the plunge. The founder and President of my previous company saw the opportunity. They saw how financially and operationally successful this program became for our first client. They also saw that I had what it took to run the entire operation. At that point the three of us officially formed POPIC (Property Owners Protection Insurance Company).
I was a Partner and would lead the POPIC business development team, client relationships, and oversee the implementation and administration of the insurance program. My two partners would handle management of the insurance entities and all aspects of legal, compliance, and corporate governance.
My mission was clear. Grow the business. Transform this from a single client to a fully operating and profitable business. I hit the road. I attended every multifamily, student housing, or single family conference I could find. The NAA education conference, Campus Connex, and Maximize conferences playing an integral role.
Everyone had been requiring insurance the same way for a long time. Do you know how hard it is to change someone’s mindset on something when they have been doing it the same way for a decade? Do you know how hard it is to convince someone to use a product when you are first starting out and only have a single user? Do you know how hard it is to convince a CEO, CFO, or COO to take your meeting or set up a call? Do you know how many times I heard no or had people laugh in my face, hang up on me, or just flat out ignore me for months? Too many to count. But you know what? I didn’t let it stop me. I persevered. I knew we had a great product with a great back office team to support it and I wouldn’t be stopped.
Fast forward to February 2020. POPIC currently works with over 350k units/beds/homes across the country. We work with 8 of the top 25 student housing owners/operators in the country. We work with large conventional owners of up to 25,000 units. We have one of the top 10 largest single family owners utilizing our program and the largest single family property management franchise company consisting of over 50k homes and 300 franchises.
I don’t have a single greatest achievement. There have been many victories along the way. There have also been defeats. POPIC is truly my baby and I have been there every step of the way to watch it grow from an idea to a multimillion dollar business. I love what I do. I love going to work every single day. I love the team I have surrounded myself with that spans four different states. I am lucky to call some of the smartest minds in real estate clients and mentors. This entire journey has been my greatest achievement and I believe we are just getting started.
What is your ultimate career goal within the rental housing industry?
- Growing up in Southern California, real estate is king. Everyone is somehow connected to the real estate industry. I always knew my career path would lead me to real estate. I just never quite knew how.
My certainty I would be connected to real estate likely started with my great uncle, Stan Ross. Stan was one of the co-founders of Kenneth Leventhal and Co, former Managing Partner of E&Y Kenneth Leventhal Real Estate Group, former Vice Chairman of Real Estate for E&Y and Chairman of the University of Southern California Lusk Real Estate School. My father was a CPA who began his career working for E&Y and Kenneth Leventhal and Co as a real estate advisor and self-proclaimed “deal junky,” eventually forming his own alternative risk management firm and investing in single family homes, office buildings, self-storage, apartments, and first trust deeds along the way. Common dinner topics included interest rates and their affect on cap rates, the best bridge financing mechanism, and expected IRR on a new condo conversion deal taking place in Downtown LA.
My plan was to never to be in the alternative risk management field but here I am 7+ years later running a multimillion dollar organization and working with over 350,000 multifamily units/student housing beds/single family homes across the country. My ultimate goal in the real estate industry is simple – I want to be on the other side.
What exactly do I mean by this? I don’t want to be on the “vendor” side forever. In a short period of time I have been able to build a very successful and profitable business and my 10 year business plan includes the transition into a real estate investment company. I am in a unique position where I have direct access to some of the smartest minds in the multifamily industry. I am fortunate enough to call many of these professionals close friends. I have the privilege of attending countless multifamily and student housing conferences every year where I get to sit in on panels and listen to our industry’s leaders discuss their business, challenges, and victories. This access and exposure has armed me with a deep knowledge of the multifamily industry and the trends we are facing.
My ultimate goal is beginning to come to fruition. These close clients/mentors/friends of mine have come to me with multifamily deals and I have began dipping my toe with some passive multifamily investments. This is just the start. My ultimate goal of “crossing the aisle” is far from being achieved but my 10 year business plan/dream is well on its way to becoming a reality.
What's one rental housing trend you have your eye on?
- The advancement of artificial intelligence (AI) has the ability to drastically change the rental housing industry. Is this a positive or a negative? The answer to this likely varies dramatically based on who is answering the question.
Could the advancement of AI eliminate the need for on-site property managers? Disregarding any legal statutes requiring an on-site manager, I believe it will. If not eliminate, certainly reduce.
The trend of AI coming in and eliminating/reducing jobs has already affected numerous industries – manufacturing, agriculture, food services, distribution, call centers, etc. The list is endless. It is not out of the question to propose that as AI advances, many of the daily property management responsibilities can be handled through AI. Our society faces a trend where humans want less and less human interaction. People can tour apartments through a VR headset, sit in the living room of their actual unit, walk to the balcony and take in the view, execute the lease electronically, and transfer first, last, and a security deposit without talking or being face to face with a single person.
This phenomenon has already entered the self-storage space. My brother, prior to founding his own self-storage brokerage firm, worked for one of the largest self-storage owner/operators in the country. They own and manage hundreds of facilities across the country encompassing over 50k units. They don’t have a single on-site property manager. The model is completely kiosk based. When their CEO proposed this idea people thought he was insane. Everyone said it wouldn’t work. As a result they have been able to slash management fees, slash overhead, and make deals work where others couldn’t resulting in unprecedented returns. They are now rapidly growing their third party fee managed business because other owners are hungry for the results they are achieving. Their customer service scores are some of the highest in the industry. People are mostly self sufficient and when someone needs to talk to a human there is a staffed call center standing by to field and answer questions.
As mentioned, there would be both positive and negative ramifications to AI eliminating/reducing on-site property management:
o Could reducing management expenses lead to helping the affordability issue?
Less expenses and overhead could result in lower rents while still maintaining a profitable return for owners and investors
If you are spending less money on management then you have more capital available to invest in new deals or development helping bolster the undersupply the industry faces
o Reduced property management expenses leads to better returns for investors and owners
o Deals that didn’t pencil before now might
o The impact would be felt most by property management companies and on-site property managers
o This would clearly reduce jobs for property managers and likely jobs at the corporate level for property management companies
o I believe this would result in the consolidation of property management companies. The large property management companies would have the capital available to invest in the upfront costs and overcome barriers to entry of transitioning to an AI based model. They would have a first mover advantage and smaller mom and pops would likely be left in the dust
o The culmination would result in even less human to human interaction further perpetuating an overarching issue our society faces
The advancement of AI and its impact on the rental housing industry will be substantial. I believe this is a “when” not an “if.” Like any shift in technology or operations, the companies who can move swiftly and can capitalize on change will reap the rewards.