The Third Phase of Real Estate Technology
Moving Landlords and Tenants out of the Medieval Ages
If you’re a renter, you probably have some great stories about your landlord. Everyone’s story is slightly different. Each landlord has their own tendencies and process. Some only accept checks for rent; others seem like they don’t even exist. The same goes for property management companies.
These confusing inconsistencies in the rental experience are largely due to the outdated model of rental management.
For the past seven months, our team at OneRent has been forging a new model of property management for rental owners and renters all across the San Francisco Bay Area. If you live in the Bay Area or if you have friends here, you’ve probably read about the absurdity of prices and landlords in this market. While we cannot control the market of rental rates, we can and are rebuilding the rental experience.
Imagine a one-click experience, where at any time you can walk into a property you’re interested in moving into, and rent it on the spot. When you move in, everything is taken care of for you, internet ready to go, house stocked with supplies.
We started with something much smaller before turning our focus to this vision.
The Pivot
In March of 2014, Greg, Rico, and I along with a previous co-founder Evan began OneRent’s journey in the only place that really seemed fit: Rico’s garage.
We had an awful experience renting a house with our college friends and that fueled an aggressive bootstrapping of our first product designed as a listing platform for rentals around college campuses. OneRent 1.0 launched at Santa Clara University where some landlords and managers acted like real, medieval, landlords. Houses were in disrepair and ‘slum lords’ was often thrown around in response to how the landlords treated tenants.
We allowed people to apply and sign leases through the platform and had 90% of the student population looking for housing on OneRent in 6 months. It was a good way to see what was available rather than just asking friends and scrolling through Craigslist. Through this approach, however, we only addressed maybe 10% of the rental experience.
After leasing nearly 200 properties and helping landlords and property managers understand how to use the platform, we came to two main conclusions:
- Individual property owners were willing to pay us for more services and were excited about technology facilitating a more efficient, stress-free experience.
- Traditional property managers have severely outdated processes for managing a rental correctly. They had trouble adopting a new process and were not willing to pay for it.
With those lessons six months ago, we switched our focus to rebuild the entire rental experience from the ground up for the modern world. OneRent now manages the entire lifecycle of rental properties all over the bay area. When you want to find a place to rent long-term, you come to us. You sign the lease, paper-free; you pay rent online with OneRent. When something breaks and you need it fixed, we’ll handle it.
When an owner transitions their most valuable asset to us, our mission is to protect and optimize their investment by renting out the property quickly and facilitating an excellent tenant experience.
Right now, we’re adding dozens of properties each week to our portfolio, or the OneRent Neighborhood as we call it. Our Mobile Managers team, distributed throughout the Bay Area are on-call to service the property at a moment’s notice. With this model, we have quickly grown a portfolio of properties that stretch from San Jose to San Francisco, to Berkeley, and every city in between.
At the Tipping Point
Property owners and renters are demanding change in an industry that has gone 50-plus years with minimal disruption.
Traditionally, property management has high overhead costs and operates on a hyper-local model because so much of the day-to-day activities are manual and human-powered. The work is typically done by agents and brokers who want a reliable side income, while primarily focusing efforts on buying and selling. Each market can have 5–20 mom-and-pop firms with these agents handling a portfolio size of, maximum, 100 properties. There is no incentive to innovate in rental management and prioritize it because agents can make a lot more cash by selling and buying homes.
The conflicts of interests and fragmentation existing in this model today have ruined the customer experience and created detrimental inconsistencies. Just take a look at the news headlines (especially in the Bay Area). Real estate technology has only now reached the point at which companies such as OneRent can build the tools necessary to transform the old model.
I see us being at the third of three phases:
Phase 1 was the age of Information. Zillow, Trulia, and many other listing sites burst onto the scene, unlocking information that was previously guarded by old school real estate big shots. This allowed consumers to make more confident buying and selling decisions without having to go through a traditional agent.
Phase 2 — Improvement. This is the age of incremental improvements of the traditional model. There have been significant pushes in this phase with streamlined online platforms for renters such as Zumper or with crowdfunding platforms like HomeUnion.
Phase 3 — Transformation. The tipping point at which the public and investors are ready for transformative changes in the old model. OpenDoor has an intriguing new model for buying/selling. WeWork is showing promise with full service co-working space. This is the category in which OneRent falls.
Investment trends back up this trajectory. Significant growth in recent years signals increased confidence in companies who are reinventing old models.
Building a Consistent Experience
Seven months after the pivot and after moving out of the garage, our team paused to share the experiences of our customers and the interactions we have had in the past weeks and months.
OneRent is making it easy for our tenants to enjoy their home and we’ve laid the foundation for lasting partnerships with property owners. The recurring theme in the positive stories shared was: Proactivity.
A consistent experience starts with the property. We’ve got to be proactive about ensuring a home or apartment is in good condition and will provide for a pleasant living experience. With that, there must be a positive landlord-tenant relationship.
OneRent offers a positive experience when both the tenant’s and owner’s needs are taken into consideration and ultimately met. People depend on us to manage the shelter where they live, cook, sleep, relax, and reflect.
With that opportunity, comes great responsibility.
Looking Towards the Future
As we came to understand in the garage, there are problems that a platform cannot solve because of the interpersonal, offline nature of renting.
The relationships we balance between an owner and tenant are challenging to navigate because the two are often diametrically opposed. The reality is that owners need to make a return on their investment and tenants need an affordable place to have a comfortable living experience (especially at Bay Area rates!).
2016 is going to be an exciting year for OneRent, as we plan to dramatically scale this model to new markets all across the US. We’ve learned a lot from our experience in the Bay Area. Our model is solidified, so it can be picked up and deployed in a new city. As we grow to encounter a more diverse population and set of properties, we will learn to anticipate edge cases or unique tendencies of our customers so that we can draw a line through the chaos that acts as the new standard for the rental experience.
Real Estate technology has reached the tipping point, allowing OneRent to challenge the status quo.
Stay tuned for more as we embark on this journey and if you find yourself in need of a new home to rent, try the new way to do it at www.onerent.co
