The real estate rental market is a highly localized, relationship-based industry driven largely by individuals living and working in their own cities, causing many to acknowledge the longstanding difficulty of streamlining disruption to this market.
In recent years, however, that hasn’t stopped a multitude of innovators from seeking novel ways to improve the process’s efficiency.
If early innovators like Zillow and Trulia primarily entailed bringing real estate data online, newer innovators harness data not only to improve analytics for landlords, but also to improve efficiency for apartment seekers. This becomes more important as New York City, for instance, begins to see the start of an expected surge in rental apartments — more than 38,000 market-rate rental apartments, mostly in Brooklyn and Queens, are expected to be completed over the next three years.
With the advent of new technologies, the market has begun to shift nearly every aspect of the rental process, from leasing applications to communications with landlords and agents to payment processing.
“You really don’t have to look back more than five years and the only real option for renters searching for an apartment was Craigslist,” said Matt Reilly, Director of Growth at RadPad. “However, the Craigslist experience just doesn’t cut it with today’s digital-savvy renter. More than 90 percent of people looking for their next living situation are searching online first and more than 60 percent are looking on mobile.”
As rentals become commoditized and fewer people are satisfied being tied down to static assets, a number of players have sought to empower potential renters in new ways. The first, and perhaps most obvious, is enabling rental without a broker. New York-based real estate startup Oliver, for example, launched in 2015 to serve as a platform that cuts out the middleman and seamlessly connects renters with apartments.
What this means in practice is that by aggregating real-time rental inventory directly from property managers and landlords, rather than through third-parties, the Oliver app enables renters not only to browse and filter listings as could be done on other platforms, but also to schedule showings at the tap of a button using an in-app calendar feature. Rezi, an earlier-stage New York startup, also saves time by automatically scheduling multiple apartment visits to fit its users’ schedules.
“Just as Uber and Seamless enabled millennials to seek transportation and food in less manual, more automated ways, Oliver empowers renters by decreasing the time spent contacting third-parties to ensure that the apartment door will be open whenever is most convenient for them,” said Zachary Katz, Oliver’s Chief Strategy Officer. “Our vision is that in a few years, as the on-demand economy grows, no one will accept that viewing apartments requires calling and emailing landlords, or otherwise paying a hefty broker’s fee. To frame the terms in the classical economics, platforms like Oliver will be uniquely positioned to capture value from the inefficient gap currently wedged between supply and demand.”
Others have invested resources in improving the process for brokers themselves. Nestio, a residential leasing and marketing platform, streamlines the leasing process using cloud-based software, which enables listings to be shared, leads to be tracked and clients to be managed in one easy-to-use platform.
An increasing number of startups, both small and large, are empowering renters.
Earlier this year, Naked Apartments, a website that optimizes how brokers can proactively approach potential and current clients with appropriate, targeted listings, became Zillow’s fifth consumer-brand acquisition, with the shared goal of using data analytics to bring transparency to New York’s real estate landscape for brokers.
As agents spend less time at their desk and more time closing on rental deals via mobile applications, DotLoop has also focused on automating more redundant tasks by allowing agents to upload important documents, negotiate transactions and get bank-approved e-signatures in a single platform.
Others are playing matchmaker in different ways: by connecting potential roommates to each other. Roomi, which raised $4 million in seed funding led by DCM Ventures and already boasts more than 375,000 users in North America, as well as smaller market players like EasyRoommate, make it simpler for renters to find and connect with compatible roommates, whether renting an extra room in an apartment or searching together for an apartment.
Other startups are seeking to disrupt the traditional corporate housing and long-term stay marketplace. Startups like HomeSuite, an online marketplace that removes the hassle from finding furnished housing, aggregates not just long-term but also short-term inventory, geared toward individuals who might previously have focused their searches on more standard month-to-month property managers. In doing so, they are filling the grey area between Craigslist and Airbnb, serving the needs of individuals looking for something more permanent than a vacation rental yet more transient than a typically longer lease commitment.
Disruption hasn’t been limited to the search process. Even payment solutions and mobile are being integrated into newer platforms by companies like RadPad, an end-to-end photo-based rental marketplace aiming to become an A-to-Z platform for renters and landlords alike.
RentPayment similarly reduces the hassle of paper checks and improves the rent payment and collection process by serving as a platform for renters to pay their leases directly to their property managers by credit card, debit card or e-check.
As lead-generation platforms begin to focus more on empowering with complex data analytics those involved in the rental process, an increasing number of startups, both small and large, are empowering renters with more flexible co-living options, capitalizing on the trends toward both optimized roommate matching and pre-furnished apartments.
WeWork, the international co-working startup valued upwards of $16 billion as of March 2016, announced in January that it has begun to convert some of its spaces into fully furnished, flexible apartments. “WeLive replicates the security and comfort of a suburban neighborhood, but with the energy and vigor of a major city,” said the company in a statement, highlighting the company’s strategy to provide residents with private and semi-private housing accommodations alongside community events like fitness classes and potluck dinners, as well as a digital social network. Common, another co-living startup, also offers what it calls “flexible, community-driven housing,” and, in doing so, is revolutionizing the way apartment rental is traditionally done.
As more user-friendly startups begin to steal market share from Craigslist, the value of disruptive innovation that reduces rental-market opacity has become ever clearer, and speaks to the expectations that renters, agents and landlords now have around enabling the rental process, primarily offline in years past, with new technologies. Even more incremental changes, from video walk-throughs to new ways of slicing community rental data, have begun to play significant roles as startups cram into the real estate market, hoping for even a small slice of a huge pie.