Real estate inherently involves challenges and risks. Informed decision-making is crucial to maximizing returns and minimizing losses. However, retail investors often lack the information and tools needed to make the right decision. Tom Lynam, Founder and CEO of SmartValue Property Management, has taken on the onus to bridge the knowledge gap between institutional and retail investors. His patent-pending platform, SmartValue, is poised to be a game-changer in the real estate space. Its tools, financial modeling feature, and smart search make it easy for anyone to make a confident, informed decision about their investments.
A visionary through and through, Tom defines success as making a positive impact on as many lives as possible while blurring the line of what is possible.
The Beginning
Tom fell in love with real estate when, as a young boy, he started helping his father renovate rental properties. However, he initially began his career in finance. As his career progressed, he noticed a variation between how retail investors underwrite properties and how institutions do.
“In my real estate class in undergrad, I was taught that one should calculate the cap rate and only look at a single-month cash flow,” Tom says. During his MBA, he set his sights on acquisition roles at institutional real estate firms. And, around this time, Tom offered to underwrite an investment property for a friend. His friend sent him an Excel sheet with a single-month cash flow similar to the one he was used to from undergrad, Tom explains that this method is not incorrect, but it only reveals a fraction of the total financial picture. It overlooks factors such as the time value of money, tax deductions on interest — which change monthly — the use of a discount rate to compare investments across different asset classes, the ability to calculate internal rate of return (IRR), which is a pivotal return metric used by institutions, and more.
“This knowledge gap between institutions and retail investors causes many people to go into the largest investment of their life practically blind,” Tom points out. “I’m a firm believer that people don’t know what they don’t know and should not be faulted for that fact.” His goal is to shrink the knowledge gap by presenting a quality platform that is accessible to anyone.
“So far, I have filed a patent for the platform, and I am currently in the development stage and have just launched the MVP,” Tom says. He considers filing the patent one of the most significant accomplishments of his career.
A Brief Introduction to SmartValue
SmartValue, a property management platform, automates the financial due diligence process for residential real estate by embedding discounted cash flow (DCF) financial models into a listing site. Tom explains that the automation of the financial due diligence process allows individuals with little to no financial background to conduct a comprehensive analysis of their investment. For example, a carpenter can have access to the same insight that investment bankers and private equity analysts use to underwrite their deals.
Tom points out that by using DCFs, one can take into account the time value of money, as a dollar today does not equal a dollar tomorrow. According to him, key calculations that come out of this are the internal rate of return (IRR), a metric that is more comparable to return metrics from other asset classes than a standard cap rate. Another key metric is the net present value (NPV). This metric uses a discount rate, allowing the investor to use another return metric as a benchmark rate. For example, this can show if the investment is going to outpace inflation or the S&P 500.
“The final component of the due diligence is a sensitivity analysis that shows how much a change in an underlying assumption will affect the returns of the property,” Tom explains. “The user will then have the ability to save the scenarios, which will give them a holistic picture of how their investments could pan out.” Once the property is purchased, the landlord can pull one of the scenarios into the property management platform to use as their initial budget.
Tom says that the property management platform will be full-service, offering tenant screening, accounting, budgeting, record keeping, maintenance request fulfillment, and performance analysis. The bookkeeping service will leverage access to the full-service platform to mitigate redundant data entry, in addition to pulling values directly from outside sources – listings, invoices – or requiring only a single data entry. Additionally, SmartValue also intends to set up a network of pre-vetted carpenters, plumbers, HVAC technicians, and other repair services. Tom points out that this will allow landlords to seamlessly fulfill maintenance requests.
And, with the platform’s advanced search capability, investors can easily find markets with high returns. This will allow them to source investments outside of their local market. Investors can also self-manage a property from the other side of the country.
Once it scales, these features will allow SmartValue to target the demand side of the current housing market’s supply and solve the demand issue by decentralizing property investments through a two-pronged approach. The advanced search capability of the listing platform will allow investors to find markets with high returns, allowing them to source investments outside of their local market. The full-service property management platform, on the other hand, will then allow them to self-manage a property on the other side of the country.
“The full-service platform will be priced similarly to a high-end accounting platform, drastically undercutting the price of current property management companies,” Tom says. “This will pull money out of high-income markets while still allowing the expenses of the property to stay low.”
Previous Work Experience
Tom began his career at Auxilior Capital Partners (Aux Cap). During his job interview, he was asked, “How much do you know about the equipment leasing industry?” He had only discovered that this sector existed a couple of months earlier. He didn’t know much but was eager to learn about it. Tom was honest about his limited knowledge, and fortunately, the seasoned management team at Aux Cap was interested in teaching the next generation.
“The Director of Construction Sales was the one who turned on the fire hydrant and gave me a foundational soft knowledge of the industry,” Tom recalls. “Since he led the sales team that I supported, he took a hands-on approach to his teaching.”
When a position opened up for a Pricing Analyst about three months into his full-time employment, Tom applied for it. He did not have enough experience, but the COO still took an hour to outline a side project so he could work on his technical skills and learn VBA, the coding language used to automate the back end of Excel.
“After pointing me in a general direction, she let me run, so I ran,” Tom recalls. “I asked her two questions while working on the project, and she replied, ‘I don’t know, did you Google it yet? That is what I would do’.”
Less than a year after starting full-time, Tom was promoted to FP&A. He was sitting at the table with the CFO, a Penn graduate, and the VP of Finance, a NYU graduate. Two months later, he was responsible for managing a $10 million expense budget during the midst of a regional banking collapse.
Tom says that Aux Cap had an old-school cutthroat, gritty finance culture. So, to balance out the high-stress environment, they focused on employee growth through fostering an environment of continuous learning. “Steve Grosso, the CEO, set the example for this by going back to grad school after selling a company for $1.2 billion to PNC,” Tom points out. Steve often took the time to have a one-on-one with every employee to develop a growth plan for their career and figure out what they needed to learn to get there, according to Tom.
He also recalls that at Aux Cap, they found unique ways to incentivize employees, such as yearly incentive trips for top performers to destinations like Vail or Mexico. At the time, he used to think that this type of push-and-pull leadership style was the only way to lead a company to blur the line of what is possible. “That is until I joined Morgan Stanley,” Tom says. “Not only were they leading the industry by a mile on multiple fronts, but they were also doing it in a way that allowed their employees to keep their sanity, prioritizing mental health and work-life balance.”
At SmartValue, he hopes to create a culture that imbibes attributes from both companies. Tom wants to ensure that his team keeps their sanity while blurring the lines of possibility through a mission-driven vision.
A Proclivity for Learning
Tom is enthusiastic about learning new things. Once he identifies the gaps in his knowledge, he sets his mind on filling them. But that does not mean he acquires knowledge quickly. He shares that he would turn the Teams to offline when he was learning how to write VBA. “I did that because I didn’t want people to know how long it was taking me to learn,” he says.
People often tell him that Excel and coding do not come easily to them like they do to him. He clears up that misconception by saying that the only reason he became good in Excel was because he took a class on “Financial Modeling in Excel.”
A Challenging Year
Tom holds a STEM-designated MBA from Penn State’s Smeal College of Business and a B.S. in Finance. Three months after he graduated, only 40% of his cohort landed a job, and most of them ended up taking a pay cut. Throughout that year, about 700 employers turned down his job application. “I learned that there is often a trap door when you think you’re at rock bottom,” he recalls, “and it was a long way down from where I was just a couple of months prior.”
Feeling a sense of defeat, he moved back in with his parents. He had $40k in student loans and $4k in credit card debt. He had to start putting his rent on his credit card. “I had nothing to show for the journey other than scars,” Tom says. But he had his current business idea, which he had worked out a couple of months earlier. He contacted a patent attorney to see if the general concept was even patentable.
“I then proceeded to throw a Hail Mary and put another $2k on my credit card for the prior art search,” Tom recalls. “The results came back saying that not only is it novel enough to be patentable, but the idea is also developed enough to skip the provisional filing step and go straight to the non-provisional filing, shaving 6 months off the process.”
During this time, a recruiter also reached out to Tom about a position at Morgan Stanley. He “hit the interview out of the park” and was able to get his patent filed on the Friday before his first day. Over the next couple of months, he was able to pay off his debts and prepare for the next forest fire to charge into, according to Tom.
From that challenging time, Tom learned the importance of keeping one’s feet moving. He points out that when one feels stuck and nothing seems to be going one’s way, it is okay to shorten strides. “Muster together the energy, motivation, and discipline to make some type of progress every day, but your feet need to keep chopping,” he says. “It only takes one person to believe in you enough to take a chance on you, and one person to see something in you that the rest of the world missed.” And Tom learned that when someone finds that person, they need to move mountains to prove them right.
Target Fixation
In a motorcycle, there is a term called “target fixation.” Tom explains that it refers to the instinct to hyper-focus on a hazard when it arises. “Since on a bike you go where you look, this often leads riders to steer directly into the very danger they are trying to avoid,” he says. The rider only has a fraction of a second to fix their vision and find a bailout route, often with life-or-death consequences.
Tom says that this phenomenon can be seen in many aspects of life as well. According to him, it is easy to focus on hazards, which leads to crashing into problems. “Just like on a bike, the solution is to take note of the problem but look where the hazard isn’t; focus on the solution or, in most cases, solutions,” Tom says “When all you see are solutions, you can take more risks and truly start to live.”
Tom strives to inspire people to get out of their own heads and focus on solutions by showing them what is possible and that most of their limitations are self-imposed.
Not-a-Typical Work Day
For Tom, no two days are the same. His work days vary from one to another. At times, his focus is on networking, attending events, and meeting potential investors and business partners. On other days, he is involved in developing the product or brainstorming the potential vision for the company.
As he has also started to develop a digital footprint, he has been spending time creating content videos and writing articles as well. SmartValue is gradually maturing, so Tom expects his days to change significantly.
Keeping Calm in the Eye of Storm
Tom is a grounded leader. Whatever the situation, he handles it with calm. He shares an incident that happened one night when he was guiding canoe trips in Minnesota. “I woke up to a steady blue-lit sky flickering like a strobe light with a constant rumble,” he recalls. “I woke the crew up and spread them out in the forest.” As the storm got closer, the wind picked up, hurling hail-size raindrops sideways, and the lightning bolts were striking within miles all around them. Tom remembers that a couple of members of the crew started to cry. So, to calm the nerves, he began cracking jokes, pulling together everything he could to give the crew hope.
When they got off trail, a parent in the crew told Tom that he was on a trail during the 2017 blowdown that killed a mom and her son. He also let him know how grateful he was for how he handled the situation.
“Storms are inevitable,” Tom says. “It is a leader’s responsibility to be the calm in the eye of the storm.”
Vision for SmartValue
Tom envisions a world where every individual can confidently make informed decisions about the largest investments of their lives with the help of SmartValue. “We aim to eliminate guesswork from the due diligence process, ensuring transparency and accessibility for all investors,” Tom points out.
“And to stay competitive, we plan to remain nimble and adaptive, while blurring the line on what is possible,” he adds.
Advice for Aspiring Entrepreneurs
Tom believes that a lack of knowledge should not become an excuse not to start. “It should be the reason you begin,” he tells aspiring entrepreneurs. “You will find the answers along the journey, and when you do, pay it forward.”
