Look Out, Country

Look Out, Country

As interest rates go up and real estate sales decline, ForeclosuresDaily.com expects its business to rise as more property owners face foreclosure and investors find better deals.

Entrepreneurs by Janet Leiser | Senior Editor

Mike Kane and Dave VanHoose wanted to invest in real estate. To find up-to-date information on distressed properties and learn how the foreclosure process worked, they spent hours at the Pinellas County courthouse.

"I realized an investor's time would be better spent on getting the deals, rather than doing the research," says Kane, who previously had an Orlando human resources consulting business.

In late 2003, Kane, VanHoose and Deborah Johnson, a courthouse researcher, decided to start their own Web-based company over coffee at the downtown Clearwater Starbucks.

They spent more than $200,000 in the company's first year of operation to create a Web site, ForeclosuresDaily.com, where investors track mortgage foreclosure lawsuits for a fee.

Two years later, ForeclosuresDaily.com covers 35 Florida counties, including the Gulf Coast from Pasco to Collier, as well as eight counties in North Carolina. The company has since brought in another partner, Mike Parisi, as vice president of operations, and a silent partner who put up capital in late 2004.

It had $2.8 million in revenues in 2005 and is struggling to keep up with its growth.

"Nothing is easy," says Kane, president of ForeclosuresDaily. "Nothing is given to you. It has been very difficult. But we've been fortunate because we put together a program that is tailored to the real estate investor. We've established a platform that will allow us to grow nationally."

Kane and his partners are working six days a week, often 14 hours a day to grow the company.

"The whole real estate industry is headed online and we're trying to stay ahead of the curve," he says. "I know people want to work from the convenience of their home and office, so we try to make it as easy as possible by utilizing technology."

For a monthly fee of $129, a subscriber can review foreclosure cases for a county. The Largo-based company, with 20 full-time employees, has 25 contract researchers who cull foreclosure case files and the databases for the property appraisers and tax collectors.

The foreclosure process is convoluted, Kane says, adding, "The average person doesn't know how it works unless they've been through it themselves. It's a very laborious process."

ForeclosuresDaily.com tracks a mortgage foreclosure from the time it's filed at the courthouse to when the bank sells a property to another buyer, usually at an auction held at the courthouse.

Kane claims the company is Florida's No. 1 provider of information, training and resources for real estate investors. But he has bigger plans. He says ForeclosuresDaily.com, a division of Quantum Resource Group LLC, will be the leading national provider of that information within five years.

Then he plans to sell the business to a large, public company.

"I love creating, taking a concept and growing it," Kane says. "You don't get rich working a business."

Paying for growth

ForeclosuresDaily.com revenue increased 673% to $2.8 million in 2005 from $366,000 the previous year, he says. Profit, which he declined to disclose, was reinvested in the company to pay for growth.

The company's biggest challenges, he says, are managing growth and paying for it.

So far, the biggest investments have been in technology and employees, says Kane. Bayshore Solutions designed its Web site.

Earlier this year, Kane established Quantum Resources as the parent company of ForeclosuresDaily.com. In addition, he established ProbatesDaily.com, Quantum Financial Solutions and Quantum Realty Solutions.

ProbatesDaily tracks properties involved in an estate. Quantum Financial provides financing to investors. And the realty company provides traditional real estate services. All are based out of the Largo office.

"We're all working pretty hard right now," he says. "We have a big opportunity in front of us and we have a lot of ground to cover. I'm trying to establish a strong foundation for future growth."

The company's framework can be expanded, he says, adding, "It cost us more on the front end. But now we have a framework we can build on."

He and his partners have learned a few important lessons in the past two years. One particularly stands out.

"Do your homework before you expand," he says. "We took on a market before we were ready. It was a much bigger task than we expected."

Last year, ForeclosuresDaily.com opened in Atlanta, one of the largest foreclosure markets in the country, he says.

There were several problems: There was an established competitor. The research was much more difficult in Atlanta because of the size of the market. And it only takes about a month for a mortgage company to file a foreclosure lawsuit and sell a property in Atlanta, compared to four to six months in Florida.

"It's a different judicial system up there," Kane says. In the end, the company had to close the office.

"We learned to do our homework before making a move," he says. "Eventually we'll go back there, but we're going to go after some other low-hanging fruit first."

Three large metro areas in the Midwest and West are on the drawing table. But Kane hasn't yet put pins in the map for those states.

He's still doing his homework.

By the Numbers

Daily Foreclosure Rates* (average)

County 7/1/05 7/1/06

Charlotte 1.85 2.25

Collier 2.5 3.45

Hillsborough 11.85 15.15

Lee 5.05 9.65

Manatee/Sarasota 4.2 7.35

Pasco 5.65 6.55

Pinellas 9.35 12.75

Region 40.45 57.15

*Based on 20 business days per month. 

Source: ForeclosuresDaily.com