Renting apartments is inefficient and we're improving it.
A brief history on renting and a personal mission to eliminate inefficiencies.
Let's share some basic numbers about New York City to begin our story:
Avg Broker Fee (of annual rent)
Typical Fee (avg rent = ~$3K)
Estimated Fees (annually)
Money well spent? we don't think so.
Somewhere between 1870 and 1920 the first american real estate companies were established to market vacant apartments to be rented or purchased (we'll keep to renting since that's what we're focused on). They used storefront windows, newspapers, and word of mouth to fill their units as best as possible. There was a lot of friction involved in the process (everyone wasn't carrying a supercomputer in their pockets, and oh yea the internet hadn't been developed yet), so there was a fee associated with finding an apartment.
Let's fast forward to the years 1995 (craigslist launched) and 2005 (streeteasy launched). During this 10 year period, these two products allowed real estate brokers to create ads or "online listings" that were visible to the masses. Reaching the community of those seeking apartments had never been easier, yet the fee associated never changed.
When you're able to offer a product or service faster and cheaper, you would think cost would go down or the service would improve, but this was not the case.
Over 20 years later, renting apartments has not changed. No real innovation has touched the market (except drawing polygons on a map) and broker fees are still the same, though the workload has become easier. There is definitely work that is involved in this process like marketing and sales, but to turn over a vacant apartment one could argue has become incrementally easier.
The current way renters and owners work together.
The above diagram is how the renter starts his or her search for a vacant apartment and their journey to closing and moving.
We've spent a lot of time discussing numbers, but haven't really went into what it takes for a renter and owner to close a deal. Even though marketing availabilities has become easier, the amount of bad actors and antiquated systems has also increased creating addition wasted time, money, and stress to the process. There might be some crying and manual paperwork in there too.
Instead of the mess you see above, our venture has decided to break the rental process down into 5 steps for both the renter and owner/manager:
- Scheduling Viewings < ---- > Time Management
- Applying < ---- > Qualifying Tenants
- Searching < ---- > Visibility
- Lease Signing < ---- > Closing
- Rent Payments < ---- > Payment Collection
Everything listed can be done electronically through any device. Our goal is to bring powerful services and technology to residential renting and eliminate the inefficiencies that encumber the participants in the market today.
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