Frank Gallinelli founded Southport, Conn.-based software firm RealData in 1981 when personal computers were still something of a novelty. He had stumbled on a real estate opportunity that was too complex for existing calculation technology so he set out to create his own. He succeeded and the income property-analysis spreadsheet program he invented soon caught the imagination of colleagues at his real estate office. From that effort, RealData was born. Today, the firm is one of a handful of personal-computer software companies remaining from those high-tech pioneering days.
A Yale grad, Gallinelli has penned a pair of “how-to” books, “What Every Real Estate Investor Needs to Know About Cash Flow" and "Insider Secrets to Financing Your Real Estate Investments." Gallinelli spoke with NREI about his firm’s longevity and the changing needs of commercial real estate investors.
NREI: Most tech firms don’t last a decade, let alone a quarter century-plus. To what do you attribute your longevity?
Gallinelli: To survive that long, you have to have two basic things going: products that meet a need and good customer service. In other words, our secret sauce isn’t much of a secret. But what’s made our products sustainable over time is keeping up with our customers’ changing needs. We don’t try to do everything for them. But the 90-to-95% that we do will effectively address their real-world needs. We offer easy-to-understand products that a person can download tonight for a presentation tomorrow. We’re also one of few vertical companies that doesn’t charge for support. We’re not overwhelmed with support calls because our products are easy to understand.
NREI: You recently released Version 14 of your Real Estate Investment Analysis program. What features does it have?
Gallinelli: It features a quick-analysis module that helps you decide in just minutes if a project merits detailed analysis. It’s handy when you just want to vet a project without investing too much time. It has a revised financing section with new loan-product options and features a beefed-up partnership analysis section for multiple partners and separate partners. That’s important in this marketplace where you need more equity partners to make and renovations work. We did a lot of tweaking on little things, including making data entry quicker and easier. We’re also offering portfolio-analysis and comparison-analysis add-ons for it.
NREI: What niche does your Real Estate Investment Analysis software fill?
Gallinelli: You really need to make an effective presentation without
dumping a foot-high stack of papers on the lender’s desk. We have a report [format] that extracts key data and summary information such as cash flow, debt-coverage ratio, cash-upon-cash returns, and expense per foot, and rolls it into a beautifully formatted eight-page report. Of course, if the lender wants to know how you came up with a certain number or needs additional information, you can pull that out easily for a follow-up. The feedback we’re getting from customers has been tremendous.
NREI: What other investor products do you have?
Gallinelli: We have a 1031 Exchange analysis product and a commercial and industrial development software product that projects cost analysis and budget pro forma for income properties. We have On Schedule, which is a subdivision and condo program that lets you form a plan to draw down and repay development loans. We offer an e-course, “Understanding Real Estate Investments,” a Comparative-Lease Analysis program, a 16-module RealData Calculator and a RealData webinar series.
NREI: You teach at Columbia University’s grad school and you’re also an author. How do these side interests jibe with RealData?
Gallinelli: The first book was an unplanned event. I was foolish to agree to write something in just four months. Somehow, I actually did it! And it’s been a real boon to our business. It’s funny because it generated the kind of exposure I really wasn’t planning on. Teaching at Columbia’s Master of Science in Real Estate Development program is a real hoot. It helps me regenerate my brain cells and allows me to pass along my real-world knowledge.
NREI: What are some of the challenges facing commercial real estate investors in this current difficult environment?
Gallinell: One of the biggest, of course, is getting financing. And in that regard, we are especially well positioned. You’re really going to have to sell a deal to get financing and will have a leg up if you can clearly demonstrate a command of the numbers.
NREI: Who’s your typical customer?
Gallinelli: We have a special affinity for the hands-on approach, so our customers mostly range from individual investors to small-to-medium shops. But we are getting more requests from multi-seat companies.
NREI: How much do your products cost?
Gallinelli: Key products range from $300 to $500. We also bundle several products for a discount. If someone just wants to get to know us, they can pay $19.95 for a simple real estate calculator program.
NREI: How frequently is your software updated?
Gallinelli: We have two tracks. If we get a good customer suggestion for a new feature, we may implement that as a “build” on a product. Then once every 18 months to two years, we will have major upgrade. Any customer can upgrade at a nominal cost. We want to keep everyone on the same page because that helps us continue to offer free support.
NREI: What’s next for RealData?
Gallinelli: We’re working on making our materials available to real estate instructors. As for software development, we really can’t spill the beans. But I can tell you there’s a biggie in the hopper.