Are you a real estate investor? If so, you’ve probably heard of the thriving market in the Dominican Republic (DR). In this Caribbean island nation, a house can cost as little as $100,000 with almost zero restrictions on foreign ownership¹. Property is so hot right now the construction sector consistently makes up over seven percent of the country’s GDP².
Although buyers snap up houses in the DR as fast as they can be built, the real estate professional sector is budding. You don’t need certification to become a broker or agent³, and reputable agencies in the country are few and far between.
Dominican national, Michael Mota, created his startup, Alterestate, to help local real estate agents expand their business and collect much-needed sales data. He started by building a free tool for agents to build websites, do accounting, see analytics, and predict cash flow. He now makes $500,000 in revenue annually and even won US real estate giant, Keller Williams, as a customer.
The School of Mr. Home
In 2012, 18-year-old Michael started a web development agency called Alterna Group for side income. At a time when businesses everywhere were moving to the internet, clients were easy to find. At first, Michael build websites for small, local entities, but over time, took on bigger clients – including large businesses based in the US.
Despite the success of his generalist web agency, Michael increasingly wanted to build a tool targeted at the real estate sector. “Less technology has been invested in real estate than other industries and it’s one of the biggest asset classes in the world,” he says.
After a few years, Michael met a contact working at one of the biggest real estate companies in the Dominican Republic called Mr. Home. This was the chance he’d been waiting for.
“I told this guy I’d build him a simple website with a built-in property-management tool for free,” says Michael. “I built the tool in a month and the people at Mr. Home liked it. Then I started meeting with them two to three times per week to learn about the business. They paid me with their knowledge which I thought was more valuable than the money. People in the Dominican Republic like to help others.”
Michael was willing to work for free because he believed he didn’t need money to build a business. He says, “Most people think, ‘Give me $200,000 and I’ll tell you how to start,’ but they’re wrong. You can make a business out of nothing.”
After asking Mr. Home’s employees an exhaustive list of questions every day, Michael began to understand the pain points of real estate agents.
“Real estate agents need to know many things to do their work – like accounting, law, and sales. It’s a complicated job. While it’s hard to get certified as an agent in the US, in the DR, anybody can start buying and selling property. However, the job is no less complicated. real estate agents have hundreds of leads at any time but each must perform many actions to close a sale.”
The complexity of real estate makes agencies hard to manage – especially when agents are inexperienced. Since most jobs pay a commission-based salary, businesses can’t easily project if the market will allow them to hire more employees or even pay a reasonable wage.
“When you sell a property you don’t earn the full commission immediately,” says Michael. “You pay the contractor to build first, and then you start selling the property. You get the rest of the money later when they build it and complete the sale.”
Poor data doesn’t just keep agencies from growing, they can also lose high-value clients if they accidentally match them with inexperienced brokers.
If I’m one of your agents and my portfolio is around $100,000 to $200,000 and you give me a millionaire client, you’ll probably lose that client.
“People with a high profile don’t want to work with someone who doesn’t have a high profile,” says Michael. “If I’m one of your agents and my portfolio is around $100,000 to $200,000 and you give me a millionaire client, you’ll probably lose that client. If you distribute leads to the wrong people in the wrong location they won’t sell as well either.”
To help agencies like Mr. Home track the high-level actions mentioned above, Michael built a CRM to address their needs – a tool he describes as Pipedrive for real estate. “The people at Mr. Home tested it, loved it, and then moved everything they did onto it.”
With the help of Alterestate, Mr. Home could track the size of commissions far enough in the future to expand its staff. It also created a better system for assigning agents to potential buyers.
“Mr. Home was already a big company, but big companies here are usually just thirty to forty people since it’s a small country. We helped them grow to 180 agents.”
Now that Michael had constructed a road into real estate, he quit his web design jobs and threw everything he had into the project.
“I dropped everything and stopped making money for a year,” he laughs. “That was a terrible decision because I got married that year and had no income. Then, out of nowhere, I started getting clients. They found me through the Mr. Home website because it said ‘Powered by Alterestate’ in the corner.”
In 2020, Alterestate went from $300 MRR in January to $5,400 MRR in December. In 2021, they reached over 400 percent year-over-year growth, ending 2021 with $24,000 in MRR. Income dropped during the pandemic, but again, Michael told clients to pay him with insights instead of money. “I’d throw them new features and ask for feedback,” he says.
Goodwill and content marketing paid off over the pandemic. After Covid restrictions lifted, businesses reopened with substantially more knowledge of the tools they needed to sell better.
“Before the pandemic, brokers had no interest in learning more and investing in technology,” says Michael. “They didn’t have anything to do during the pandemic, so they’d take courses on real estate and hear they needed a CRM and accounting software. They started flooding into Alterestate after that.”
How Alterestate Helps Agents Close Large International Deals
Michael describes Alterestate today as an all-in-one CRM platform for real estate brokers throughout Latin America. “We provide agents all the tools they need to build websites, do accounting, and view analytics,” he says.
Michael wants to provide more data and order to real estate brokerages. A lack of trust and anti-competitive practices has stunted the sector’s development.
“In the US, if I’m a broker and I get another agent to sell a property for me, I get a commission. In Latin America, no rules exist around deal exclusivity which makes real estate ripe with corruption and scams. They can just skip your commission. Because of problems like this, realtors don’t have access to data from other firms. Our platform data tells brokers how the overall market is behaving.”
In the future, Michael wants to use Alterestate to create a multinational database for agents selling property across Latin America – something the industry sorely needed.
“In the United States, they use a system called the MLS (multiple listing service). MLS compiles all available properties in the US for real estate agents to look at. Once you become an agent you can access it. We want to make a system that lets people from one Latin American country buy property in another country. They can use us to connect with local brokers and make deals on properties anywhere.”
Today, Alterestate works with medium to large real estate enterprises. Some of them are very large. Michael says that US real estate superfirm Keller Williams, a member of Fortune 500 and worth over $1 billion, just launched in the Dominican Republic using Alterestate.
Michael says his business charges clients based on the number of agents in their firms. “If you’re an independent agent we charge $49 and then the price per user reduces as agencies get bigger down to a minimum of $12.”
Real Estate Technology Expands in Latin America
Michael says there is plenty of competition in Latin American property technology (proptech) today.
“Lots of VCs are investing in proptech here. A couple of years ago, getting a company like Zillow to come to Latin America was impossible. Today, large marketplaces like that can make a profit, and realtors, in turn, can use them to grow the market.”
According to one study, as many as 350 proptech businesses exist in Latin America in 2020⁴. If Michael’s story is any indication, that number has already increased substantially. Today, several large proptechs have made headlines in regions like Colombia and Mexico⁵. One of their hottest new features is AI-powered price predictions – a necessary tool in a region where few prices are listed online.
Michael and his team at Alterstate are excited about the growing market in Latin America and anticipate more founders will follow their lead in the Dominican Republic. Michael’s advice for founders launching a tech startup: Find a technical cofounder and hire somebody who can do sales.
When you grow, you also need people that specialize in sales. I didn’t know how to sell and it hurt me in the beginning.
“If you don’t have a technical founder, things are going to be very tough,” says Michael. “When you grow, you also need people that specialize in sales. I didn’t know how to sell and it hurt me in the beginning.”
Finally, Michael insists you must take care of your mental health when running a business. He believes this is especially true for founders working outside of a major startup hub like Silicon Valley. “We don’t have ecosystems of entrepreneurs that help and support each other in places like the DR. Having conversations with people who know what you’re going through helps a lot.”
Sources
¹DOMINICAN REPUBLIC real estate (caribsurf.net)
²Investment Analysis of Dominican real estate Market (globalpropertyguide.com)
³Co-broking with RealtorDR – RealtorDR
⁴The State of Proptech in Mexico | VCRC (orionstartups.com)
⁵Colombian real estate startups want to take over Latin America – Rest of World
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