Episode #209 – The Future of American Cities, with Jon Commers, Part 1

You know what the most important part of real estate investing is that most investors overlook?

It’s not chasing after deals or closing them.

The most important part of real estate is data. It’s something that all amateurs neglect. Yet, without data, you’re stumbling around in the dark like a blind person, hoping to strike a gold vein.

But with data, you can run off like bandits and make informed and profitable decisions about where to invest, when to sell, and what trends to keep an eye on.

In this episode, Jon Commers of Visible City, joins us to discuss how to use data to invest in your next lucrative deal.

Want to tap into this hidden knowledge of how successful investors use data to pump out cash with their deals?

Listen now.

Show highlights include:

  • Two ways the transformation of physical cities will impact real estate deals in the future ([4:15])
  • How “intelligent” data is used by world class investors to keep pushing profitable deals ([14:15])
  • The secret “mobile phone” data technique to gauge which community you should put your money into next ([15:12])
  • Why smart investors look at delinquent property tax to choose their next booming city([16:40])
  • How to use data with this “subconscious” method to raise capital and fund your next real estate deal ([25:30])

To connect with Jon Commers, please visit:

To get the latest updates directly from Dan and discuss business with other real estate investors, join the REI marketing nerds Facebook group here: https://adwordsnerds.com/group

Need help with your online marketing? Jump on a FREE strategy session with our team. We’ll dive deep into your market and help you build a custom strategy for finding motivated seller leads online. Schedule for free here: https://adwordsnerds.com/strategy

Read Full Transcript

You're listening to the REI marketing nerds podcast, the leading resource for real estate investors who want to dominate their market online. Dan Barrett is the founder of AdWords nerds, a high-tech digital agency focusing exclusively on helping real estate investors like you get more leads and deals online, outsmart your competition and live a freer, more awesome life. And now, your host, Dan Barrett.

(0:40) All right, hello, everybody, and welcome to this week's episode of the REI marketing nerds podcast. As always, this is Daniel Barrett here from AdWords nerds.com. And if you are looking to get more leads and deals online for your real estate investing business, you know where to go over 10 years in the game, it's AdWords nerds.com, you can jump on a free call with my team, they will help you put together a strategy for your market. Now, man this week, we've got a heavy and exciting and I think pretty surprising conversation with John commerce. Now John commerce is the Managing Principal at a company called visible city, you can find their website at visible dot city and visible city is working on bringing data and data analysis to cities across the country, whether that's in urban planning, or whether that's in figuring out how to help investors make smart investments. John has a background in economics. He is an academic, he's a professor, but he's also had years and years of experience bridging the gap between local government, city planners, investors, commercial interests, John is a fascinating person with a lot to say about the future role of cities, really in the trajectory of the entire country. And I think if you are a real estate investor, you're gonna get a ton out of understanding how John thinks about cities and city growth, you're gonna get a lot out of his thoughts on how to use data and how to use data analysis to make smarter decisions. I had an absolute blast talking with John and I know you're gonna have a blast listening to our interview. So without any further ado, let's get into my interview with John commerce from visible city. Alright, welcome, everybody. This is Daniel Barrett. And I am here with John commerce from visible dot city. John, welcome to the show. Man. I'm so happy to have you here.

(2:39) Thanks a lot, Dan. Really pleased to be here. Thanks for invitation. So let's let's talk about visible city. And again, I mentioned the URL, just say this, again, it's visible dot city. And you guys are doing some really fascinating stuff. And it's a little bit different from the typical stuff that we would bring up on the show, but I think relates so deeply to what real estate investors do. So I want to spend some time really digging in to visible city. So if someone comes up to you and says, Well, hey, you know, they kind of learn a little bit about where you work. How do you describe what visible city does? Thanks, Dan. So visible city, we started in 2016, with the foundational premise that we wanted to help parties to access and interpret this explosion of data that's happening around us for their decision making in cities and metro areas. And I know that sounds kind of broad, it really is that broad, we apply a set of mechanisms and processes to help a range of different parties do exactly that. So they're looking to inform choices about location specifically, or about managing portfolios of locations, or kind of reconfiguring, realigning how they're laid out across a city or a metro or a much broader geography, we can help them in a customized way by gathering data relates to their strategy, and then interpreting and foreign and wisdom.

(3:59) So and this is one of the questions that really we'd spoke briefly before the show. And it was a question that was on my mind was the first time that we've met, we talked a little bit about this. And you said, in your mind cities, specifically, were this really critical part of what the future was going to look like in this critical part of solving problems? So let me kind of turn that back around and ask you, you know, using data to inform decision making, you could go so many different directions with that. Right. And we'll we'll take a little bit into your background, you could have really worked on anything you wanted. Why cities like why urban planning, why focus on this units of the city?

(4:42) It's a great question, and I will, as you said, go into my own background a little bit, just to say that Ed Glaeser who has written a book called The triumph of the city, and it's really all about what is the role of the city as a social and economic engine, both nationally but also globally, and he's got kind of a historic context. And he, he described cities as the greatest invention of humankind. And I think that that is now our state in the sense that when we think about all of the aspects of human life that are in flux right now, and we think about the impact of climate change, when we think about the social upheaval, thinking about how we want to live together as a society, when we think about how the economy is changing all of that, all of those themes really are playing out in an urban and metropolitan setting, in their most vivid form. And so you see this sort of physical transformation that flows from those sort of upstream economic, social, cultural changes. And that's one of the reasons I think focusing on the city is the way to make the biggest impact. So our team is really focused on the developed kind of space of cities and metro areas as the place we can make the biggest difference for our clients.

(6:00) Okay, I want to go like five different directions. Let's back up, let's talk a little bit of your backyard, because you have this really varied interesting background, you've been in both academia and in urban planning and working with industry. So tell people a little bit about how you got to where you are now, like, what was the path for you to get into this really fascinating field?

(6:20) Thanks a lot for the question. I would say first, that I know that, obviously, your audience has focused on commercial real estate. And that has been a sort of a Realm and I have been part of in a couple of different respects over the course of my career. So in some ways, that's been kind of like a parallel track to out but as you say, I have served in roles that are academic, I've served as a teacher of economics, in a university setting, and actually just gearing up to return to teaching in the Urban Studies Department here at the University of Minnesota. And that's been something I've been involved in for almost 10 years. And that has helped me kind of bring a global context and more of an academic context to the work that, Ben we do. But I also have my professional background is more in redevelopment, consulting and project finance. And then most recently, since 2016, as I mentioned, when I founded visible city, really diving went much more deeply into this question of how do we use analytics to create insight that otherwise might be obscured. And that's been work with public agencies, with private parties, lots of developers, property owners, operators, and then also with some larger nonprofits that have an interest in in those kinds of themes as well. But yes, as you said, I, I've also played a handful of civic roles that again, have brought kind of another set of perspectives about how and why data can make a difference for organizations. And most recently, I was an appointee to the Metropolitan Council, which is in Minneapolis, St. Paul's region, metropolitan planning organization. So it manages across seven counties, everything from wastewater treatment to regional planning, transportation planning, operates Metro Transit, which is the transit agency, and arcs, housing, a range of responsibilities in that in that agency. And prior to that, I served on the planning commission in my hometown, St. Paul, and served as a member and chair of that body. So each of those things definitely has added some different dimensions to my perception of the opportunity to use data for insight for these different kinds of clients. And to some degree has led to the breadth of RNAs that we're serving with these methods and processes.

(8:37) So I'm curious, like you mentioned, you know, you've got your academic background, you know, teaching, you know, Urban Studies, economics, etc, you've got this sort of local governmental planning background, you have these connections with industry with commercial interests. What strikes me is that a lot of times, there's not a lot of communication back and forth between these sort of different realms of life, right? And you have, like, you know, this sort of stereotypical capitalist thing, where it's like, oh, a government can't do anything. Well, you know, then you have the kind of academic world which is, can be kind of walled off in many ways, and has this, you know, this, this sort of bad reputation for being disconnected from reality and all these things, right. And there's, there's not a lot of communication back and forth between, essentially are the same stakeholders, but they're working in these different fields. You've kind of crossed those realms a lot. And it strikes me that your work now kind of crosses those realms a lot. Do you think that there's a lot to be learned from kind of merging those areas? Do you think that's happening more? What's the state of this kind of cross communication?

(9:52) It's a great question. And I would say that question Dan has been one that has kind of woven through my career for for many arrows now. And I think, for example, before visible city, the redevelopment consulting that I was doing was very often on behalf of a private party that wanted to understand and move through public process, or it was for a public agency that wanted to more effectively kind of gauge and, and, and work with the private marketplace. And what I found most often was that the level of interdependence between those two sub segments of the community or the marketplace, is, is much is typically much higher than either party individually acknowledges or maybe even sees. And I think very often, you alluded to this, I think it's much more about language and about kind of the basis of measurement than it is about proximity. And what I mean by that is like, maybe the public agency is using the equivalent of a, of a of a color wheel to measure the conditions. And the private sector is using the equivalent of a yardstick. And it's sort of like, yes, they're both ways of effectively measuring what you see, they could each be yours to enter interchangeably on some level. But if you only use one, you may miss some observations that could be gleaned from the other. And the course that I teach at the University of Minnesota is about public private sector interaction. So I don't, I don't focus only on collaboration, or on partnership, because that's only one part of the story. It's also about interdependence, it's about mutual misunderstanding, it's about parallel play, in some cases are sort of, you know, mutual ignorance. And the reality is that when you go into an urban space, and you look around, and I actually do this physically with my students, I think it's a challenge to really call out exclusively private and exclusively public impact or initiatives or, you know, dynamics, the reality is just based on the way that we have structured places, urban places, there's so much interdependence, not only in a physical sense, but in a legal sense in a kind of shared responsibility sense in a market demand sense. All of these things relate to public and private. And so visible city. Part of the insight that we try to generate for clients, whether public or private parties, is to really help them. Use metrics and use analytics to tease out those interdependencies. So that whatever their goal might be, they can really push in a in a really in a magnified way toward their goals, recognizing how they can essentially no maneuver using public and private kind of tailwinds, if you will.

(12:54) Let's find motivated seller leads online but don't know where to start. Download our FREE motivated seller keyword report today, AdWords nerds have spent over $5 million this year researching the most profitable keywords for finding motivated seller leads. And you can grab these exact keywords when you download our report at www dot AdWords nerds.com/keywords. So let's let's make that concrete because first of all, I really liked the idea. The you're kind of saying there that it's this is sort of, you know, public, private academic, they're almost more like linguistic cultures than they are like, sort of, you know, that just a lot of miscommunication there. So let's talk about and you can pick an example maybe from the visible city, specifically of a time where you guys were able to serve a naval war, this communication, or maybe your project that you recently worked on, that kind of demonstrates this approach, because it does strike me that it must be a really powerful thing, if you can align those in some ways. So So what's an example of of a time that invisible city work on a project like that?

(14:11) Yeah, that's a good question. I think that some of the work that we do is around kind of site selection or site evaluation, and we describe it as intelligent search. Often it is relating to a client that might have a portfolio of locations that they want to evaluate. So maybe they say, We got 20 locations. Five of those performed really well. 10 are middling and five performed poorly. Can you help us to set what distinguishes the five superstars from the five laggards so that we can duplicate the former and avoid the ladder bit and so, as you said to break make it concrete? Now, let's think about for example, some of the evaluation that we would do in that set. thing is to think about, okay, what is the trend in terms of foot traffic. So we might use anonymized mobile phone data to gauge and compare all those 20 locations against each other. And we can also look at other locations, direct competition, et cetera, et cetera, it will to create kind of an understanding of what are the ingredients of the success of those five superstars. Or maybe sometimes clients want to include their competitor superstars, you know, they might say, we really aspire to have holdings that look like or perform like these fanbase again, and, you know, inform ourselves about the ingredients of success at those locations. And so, as he said, you know, you might look at patterns that are behavioral, so foot traffic, you know, Scooter, usage, transit, our car driving patterns, all those kinds of things that are behavioral. And then we might look at the physical aspect, you know, what's the accessibility, what is the sidewalk width, what is the, you know, all of those physical characteristics that may also have a role to play. And then, critically, the context. So really thinking about, if we say, within a 10 minute walking distance, or a 20 minute driving distance, or whatever it might be, let's compare the space that surrounds this site, to other locations. And I should mention that sometimes it's a 10 minute walking distance, sometimes it's, you know, within a two minute walking distance, we want really zoom in and understand what's the fine grain within this space? And how does the democracy or the building permit activity or other kind of market signals? How do those compare across these locations? And so that's a handful of examples of how we might go about some of those kinds of questions. There's behavioral and there's physical, and as other elements to like, you know, delinquent property tax or other elements like that, that might be useful in helping a client navigate.

(16:59) You know, it's interesting, right? Because cities are one of the sort of classic examples that people typically drawn out when they start to talk about systems theory, or complexity or complex systems, you know, start to say, oh, you know, City is a good example of you change any element in a system, and it affects every other element. And there are these emergent properties, right? Now, let's think about this as sort of classic example of like, how does the Flower District emerge in a given city or, and it's like, well, one guy opened a store, and then another guy, then another guy, and others, just 50 of them all in a row. Right? So how do you, you know, you and your team at visible city? Think about complexity with something like urban planning, or or the sort of city work in the sense that like, there's so many different stakeholders, and there's so many overlapping systems of causality? How do you start to pry apart that sort of cause and effect relationship? Or is it that you don't really try to do that you just tried to sort of navigate your way through? It does? Does that make sense as a question?

(18:06) It really does. Yeah. And I love that you bring that you bring, you know, complexity theory into the mix, because I do think that one of the things that make cities so high potential is that there are so many ingredients at play at one time. And so that makes it resilient to durable. One of the reasons that I think there should have magnets for investment, it also is one of the things that makes them difficult to really, you know, fully understand, what are the dynamics, you know, this sort of famous studies of the textile concentration in Manhattan, you know, why exactly? Is that happening, we have a certain sense of what those key ingredients are, I mean, certainly, there's workforce aspects to that there are kind of these, these economic cluster effects where you've got supporting, you know, professionals, you've got supporting infrastructure, you've got these pieces in place that make it more cost efficient to operate in a space where there's others with similar needs or interests. But the answer to your question is yes, that kind of implications of complexity theory are very much on our mind. And one of the things that that leads us to do is, has the not much more widely typically speaking than our scope actually would suggest initially. So we're a little bit different the marketplace from many of our rivals, in the sense that we don't we don't have like a subscription that we sell, and we just say, like here, you plug and play and this will generate the answers for you. That's not really our, our method. Those exist and those work really well for certain segments the marketplace but our focus is when clients have a more multi layered of war, multi dimensional maybe longer term set of challenges and questions and opportunities. In the first step we undertake acquisition is really to conduct an intensive listening session to really make sure that we understand not just the questions they're, they're articulating, but also the questions that we think might be kind of upstream from the questions they're asking, once we do that, then then we can begin to cast the net, as they said very widely. And we do that, because we recognize that even though you know, we work under the banner, visible city, there are things that we have, we have blind spots as well. And there are things that we may not recognize or register, the value of we can bring that sank is bringing everything into the mix that we can think of no processing, evaluating, interpreting that. And then bringing findings to our client, which, typically speaking, challenge their some sense of their understanding of the space, that's really where we're delivering some value is disrupting aspects of their perception of the space in order to give them a stronger basis for their next round of decision making short term long term.

(21:02) That's I saw I really liked. So you mentioned a little bit about your business model, right? Which is, correct me if I'm wrong, right. But it's much more almost like agency focused in the sense of, you're collaborating and working closely with your clients, rather than like you said, like some of your competitors, it's just basically buying access to a database. And there you go, right. So yes, one of the things I wanted to ask about this is, you know, we're sort of, at a very high level now, but but this is where I like to nerd out. So you're gonna have to, you're have to bear with me. But, but I wanted to talk about using data to help people make decisions, particularly people who are not maybe the most analytical, or maybe just don't have a super deep background in analytics, right, which most of us don't, myself included. And even in my own sort of space, right, sort of the marketing world, the real estate investing world, in with datasets that are many orders of magnitude less complicated and complex than the ones that we're dealing with, we have found over time that we have to very carefully, we have to be careful about how we present data at people. Because people are trained to sort of notice sharp changes in one direction or the other. And they often don't know enough to account for, well, hey, why just statistically, you're gonna get a lot of ups and downs over an average, it'll even out but we have to do a lot of work to explain data, even for a very simple data set. Right? So when you guys are using data to drive decision making, let's say for, you know, like, the town planning committee or something like that, are there ways that you found you have to be careful about how you communicate what that data says? Are there ways that you found are more effective or less effective of doing that work made these common mistakes that people make when they look at given data sets? I'm just curious what your experience has been?

(22:58) It's a great, it's a great question. I think of, you know, background working with pro forma documents, for example, and I think about in commercial real estate, because something is, is projected out some period of years that sometimes I think can can convey a level of certainty that that really is not fully accurate. I mean, the reality is seasoned professionals know that perform AI is our best collection of guesses combined together to kind of a punch line and some findings around NOI and some findings about free cash flow, etc. But the nature of how information is presented both visually, and also verbally is something we spend a lot of time thinking and talking about. We have curly Anderson on our team is a title is lead photographer and project manager. And she focuses a lot of attention and focus on how exactly to present geographic information in a way that is clear. And as yours very closely to the underlying data, the data set and the interpretation that we're trying to convey for our client. And that is a really essential role because we're visual people. And we oftentimes are working with others who are our visual, as you mentioned, in the town, all setting, there are many people who engage visually who don't typically have information presented to them in that way. And so for them, it's a really high opportunity moment to see a map that conveys some kind of finding. That also means it's a huge responsibility for us to do that responsibly and to make sure that it's delivering the insights that we want, and not being misunderstood or misconstrued. So that's part of where the verbal piece comes to accompany the visual but they really work in tandem together. And you're exactly right, that that is a very high level of responsibility that we have for our client is to make sure that not only today when we're sitting with them walking through that material, but also, you know, in six months when we may not be in the office together, then it still has the same kind of same kind of, you know, resilient value for them. And that it makes sense just as much as it did when we talked about it directly.

(25:30) Yeah, I didn't even think about that, right. But you're not always going to be there in front of the map to gesture and say, This is what this means, right? But it strikes me like we all have these sort of these almost subconscious sort of visual schema that we rely on reds, like red is bad, you know, for whatever reason, right? So you have to be very careful with that. I love how much care you guys bring to that whole part of what you do.

Guys, hope you enjoyed part one of this episode. It's just too good to limit to one show. Join us next week to hear the rest

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