Generally speaking, in economics, supply finds demand; demand finds supply.
If only it were that easy in the real world.
Or in real estate — especially when it comes to apartment hunting.
Residently, a startup based in the United Kingdom and focused on bringing the platform model to the rental experience, said late last month that it raised seven million pounds in seed funding. The company said the money came from Felix Capital, LocalGlobe and A/O PropTech among others.
In an interview with PYMNTS, Residently CEO Tom Allason said digitizing the process of finding rental accommodations, from beginning to end, makes sense.
As Allason told PYMNTS, the platform and mobile app address the pain points of an industry marked by archaic processes and inefficiencies that impact renters and landlords alike.
In terms of backstory, he said the genesis for Residently came from his own experiences with a property renovation of his own — which meant Allason had to find rental accommodations.
Also, he noted, since it had been a decade since he’d lived in a rental, Allason expected this experience to have been streamlined through technology.
However, that wasn’t the case.
“The short version of the story was that … I was just sort of shocked and surprised” by just how inefficient the process was — and is, he said.
As he told PYMNTS, speaking of the leasing process in general, the inefficiencies begin, well, at the beginning. Would-be lessees typically go to rent a property while they are already living in a rental, which means the timing can be tough to navigate.
They’ll typically have a one-month- to two-month-notice period with the existing landlord, and yet the brokers and agents who usually have the pipeline of available and upcoming properties may not be able to match demand with supply.
That mismatch leads to three unpalatable options, said Allason. In one case, lessees can find a place to live, give notice and wind up paying rent on two properties at once; this is not among the most affordable endeavors.
Alternatively, they can give notice and hope something’s available when they have to move out.
Then there’s the less than desirable idea of moving into temporary accommodations while searching for a new place.
“Renting is not really been designed in any way shape or form around the customer, the ultimate payer of the rent,” he said.
Trolling through far-flung broker websites and portals, he said, finding properties that may not be accurately depicted — and scheduling viewings — all adds up to a stressful undertaking that can rival that of grappling with divorce or death of loved ones.
The effort may all be for naught. “You don’t get a very good sense, until you actually get there, of whether or not the property is really going to suit your needs, so you end up having to see more properties than you would want to,” he told PYMNTS.
Upon finding a suitable rental candidate, he said, renters must endure what Allason termed archaic processes of credit checks and references, handing over personally identifiable information over e-mail that perhaps should not be sent to people they do not know.
The landlord? Well, they may be an unknown quantity, and the renter may not know if the little and big things that go wrong — i.e., the boiler bursts — will be addressed when time is of the essence.
Why Renting Makes Sense
You would think that the less-than-optimal interactions between those who have properties and those who want to rent them would be seamless, against a backdrop where renting is a lifestyle choice that is gaining traction, especially with millennials.
As Allason said, renting makes more sense than owning. After all, people stay in jobs for only a couple of years, and renting would mean they have the flexibility even to change geographies when they change jobs. For landlords, residential properties have performed phenomenally well over the past several years as an asset class. Economically speaking, he said, the value of a renter is greater than that of an owner.
Thus, he said, Residently, through its mobile app, seeks to remove friction from the rental experience, easing the stress for the renter, and landlords have shortened vacancies.
In terms of mechanics, he said, Residently builds up loyalty with residents by providing them with a range of services.
While the initial interactions come through portals and searching properties and (virtually) viewing them, subsequent services streamline payments, reference checks and span scheduling move-ins, and even making sure that cable and Internet are installed and working.
As a result, he said, in stark contrast to the 28 days that rental properties sit on the market, on average, he said the time between when properties are first brought on market to having leases signed through Residently is less than 10 days.
With a nod to the seven million pounds that were just raised, he said that Residently currently is in New York and London.
They have “plenty to do” in those two markets over the next 18 months, and plans include expansion across the United States, Canada and Australia and potentially other European markets.
The time is ripe for the platform model to improve renting, he said. “We have had very high expectations around relatively trivial parts of our wallet, but we haven’t had the same expectations around the things that people are going to spend a lot of money on.”