The private rental industry is one of the few businesses that has stood out to the public at large in recent years. The aspects of how, why, and where we live have been profoundly altered by recent global events like pandemics, lockdowns, record unemployment, and subsequent business, skyrocketing housing prices, government upgrades, and the advent of a work-from-anywhere society. There is a constant barrage of coverage in the media about rising rents, skyrocketing home prices, and the resulting housing crisis.
The rental industry, and Prop Tech, in particular, is an exciting place to be right now (property technology.) Prior to COVID, bringing it to the forefront of the public’s attention, however, It was already an exciting and wonderful topic. When it comes to business opportunities, the private renting sector checks all the boxes. It has the four essential components that I look for when evaluating an opportunity in a given industry.
The rental market is booming
Over 30%, or roughly 44 million, of the over 128 million dwelling units in the US (including apartments, townhouses, and single-family homes), are rented. More than $290 billion is paid in rent each year in the United States, and that number is rising as interest rates and stock prices rise. So, a considerable sum of money is at stake.
There is substantial disagreement on the best way to manage rental properties. In the United States, there are about 63,000 property management companies and board members. The top 100 property managers are responsible for 4,450,000 units, which suggests that anywhere from tens to millions of units could be managed by a single company. That’s 40 million units across the country supervised by roughly 63,000 administrators. A little over eleven thousand of these people are in charge of five or more properties, leaving 52 thousand in charge of fewer than five. Both in size and in variety of requirements and sophistication, the addressable market is massive.
Leasing is baffling
To the attention of all property managers! There are a lot of moving parts and points of contact when managing a rental property, from finding tenants to fill vacancies to fielding questions about the property and scheduling visits to doing background checks, marking a rent, collecting rent payments, and supervising maintenance calls. Many of these tasks were handled manually or on computation sheets until recently, and even then only by the largest property the board organizations.
Fortunately, over the past decade, technology use has grown to address problems across the rental lifecycle, typically through point arrangements aimed at eliminating annoyances and increasing productivity (read: decreasing costs) for specific tasks. In addition, the prop tech industry is seeing a flood of new entrants as the region’s acceptance of technology has become the norm and a tremendous development region. This brings us to the final point: how people respond to new technologies.
The adoption of new technologies is typical, although yet in its infancy. Everyone is familiar with Michael Porter’s Crossing the Chasm, which describes the moment when a new idea or product “gets over” from the early adopters to the mainstream and is thus poised for rapid expansion. But it’s undeniable that programming and technology have added a crucial step in the reception process.
When there are too many sellers to accommodate, too many different combinations to remember, too little information readily available, and too much complexity involved in managing what appears to the buyer to be a single business, rather than a collection of discrete issues, the proliferation of discrete point arrangements in the industry becomes problematic. The current attitude toward technology has shifted from one of solving problems and simplifying processes to one of diminishing one’s competence. In my experience, this is the phase where the most interesting things might happen: the customers are ready and willing to buy, but the technology is still in its infancy.
Prop Tech is shifting drastically
When it comes to managing their properties and gaining greater knowledge of their tenants and employees, the rental industry and property executive organizations in particular have embraced technology. However, there is little debate that the product provides a superior route to higher NOI, staff commitment, and occupant satisfaction, despite the fact that the introduction of technology programming still has quite a way to go (changing deeply engrained working models is hard, particularly in a circulated business).
The challenge the company is facing now is that the complexity of handling all the “arrangements” has increased as more options have become available and demands have been differentiated. As the introduction of personal computers did not reduce the ordinary worker’s weekly work hours as predicted in the 1950s, technology enables us to accomplish much more with the same amount of time and resources.
Since the 1970s and up until recently, the only way to attract tenants and fill openings was through advertising in print media or online (as evolved in the 1990s). Showing off real estate has become a far more mind-boggling and serious endeavor in recent years. Property managers must maintain a holistic view of all digital marketing efforts, from postings on aggregator sites to the promotion of their own property site via SEM and SEO to commitment via friendly channels, email, and retargeting and the support of prospective tenants via voice, text, and email. Recently, this has been nearly continuously cultivated by a wide variety of internal and external vendors.
I joined Rent because I saw potential in this. Property managers’ showcasing requirements have evolved to necessitate an omnichannel approach to dealing with anticipated renters, drawing in them where and how they need to be locked in, just like the retail industry has progressed from bricks and mortar to internet to omnichannel.
Building on our success as the go-to source for online rental listings, we’re working to develop a suite of related products and services that will allow property managers to attract, interact with, and retain tenants across all available digital channels in a single place, with a single vendor, for all of their properties.
Everything from designing and hosting the site itself to promoting it via search and social media, email marketing, in-person promotions, and more. Orchestrating and coordinating advertising and interactions across all media yields enormous functional, regulatory, and financial efficiencies. More importantly, it restores technology to its proper place; reducing complexity rather than adding to business worries.