Replacing Property Managers With $79 Flat Fee, $31k in MRR with Max Nussenbaum of

Max Nussenbaum

In Episode #345, Nathan interviews Max Nussenbaum, co-founder of Castle and a Venture for America fellow based in Detroit. Max and his co-founders are revolutionizing property management in one of America’s most opportunity-rich property markets. Tune in to hear what Max is doing differently, why he defends splitting equity evenly with his co-founders, and why you should be investing in Detroit.



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Famous 5:

  • Favorite Book? – Anything You Want
  • What CEO do you follow? — Henry Ward
  • Favorite online tool? — Instapaper
  • Do you get 8 hours of sleep?— Yes
  • If you could let your 20 year old self know one thing, what would it be? — Relax a little bit

Time Stamped Show Notes:

  • 01:27 – Nathan’s introduction
  • 02:04 – Max is based in Detroit
  • 02:20 – Castle manages rental properties for owners – they find tenants, collect rent, and coordinating repairs
  • 02:29 – They make money by charging a flat fee of $79 per month per rental unit
  • 03:00 – They want to simplify the pricing structures associated with regular property managers
  • 05:30 – Founded in late 2014 and launched in 2015
  • 05:47 – Currently managing 530 units, all in the Detroit area
  • 06:10 – “Our target market is the regular-person property investor”
  • 06:43 – First year revenue was around $100k last year
  • 07:14 – The metric Max focuses on is MRR – the subscription model is similar to SaaS
  • 08:12 – Raised around $3 million, most recently $2 million in a seed round
  • 09:17 – Team of 10 people
  • 09:35 – “Structurally we’re a lot like a SaaS business”
  • 10:00 – Monthly RPU is $174, as the average customer has 2.2 units
  • 10:35 – Switching costs are very high in terms of time and energy, so monthly churn is only around 1%
  • 11:51 – “The bottom line is that we just don’t know lifetime value yet…we haven’t even been around for 2 years”
  • 12:18 – They consider acquisition costs on a per-unit basis – and they’re willing to spend around $200 to acquire a unit
  • 12:55 – Most customers are investing less than $1 million in property in Detroit in their lifetime
  • 14:30 – There are a lot of cheap properties in Detroit – but generally you can’t get a mortgage for them
  • 15:50 – The percentage of properties that have been vacant for more than 30 days is around 5%
  • 17:17 – “There are still 700k people in Detroit and they’re regular people who just need places to live”
  • 21:45 – Connect with Max on Twitter
  • 20:04 – The Famous Five

3 Key Points:

  1. Don’t stress too much when you’re young. There’s plenty of time in life.
  2. If you can simplify a complicated process, there’s a good chance you’ll make money
  3. You don’t have to be bullied away from splitting equity evenly with co-founders – what each of you brings to the table is less than what you achieve working as a team

Resources Mentioned:

  • Host Gator – The site Nathan uses to buy his domain names and hosting for cheapest price possible.
  • Freshbooks – The site Nathan uses to manage his invoices and accounts.
  • Leadpages  – The drag and drop tool Nathan uses to quickly create his webinar landing pages which convert at 35%+
  • Audible – Nathan uses Audible when he’s driving from Austin to San Antonio (1.5 hour drive) to listen to audio books.