There are some 40 million rental units in America today. And that segment is growing fast as more Americans choose to rent instead of own in a tepid real estate market. While some technology providers have come to the rescue of landlords and prospective tenants, much opportunity remains.
With home prices down 34% from their July 2006 peak, resulting in more than $16 trillion in vaporized household net worth, you can’t blame Americans for wanting to move on with their lives. That typically means renting a home or apartment, as fewer Americans now believe that owning a home is better than renting, 63% today, down from 89% in 1996:.
That trend has fueled a rental market with the tightest demand in 10 years. Leading the U.S. rental market is the tech-heavy San Francisco Bay Area, with San Francisco rental prices up 15% and Oakland, Calif., up 11%, as of June 2012.
But tenants and landlords know that finding and renting a home or apartment is not a simple process. The finding part has been made easier with the emergence of Craigslist as the default mother of all U.S. rental listings. Yet the procedure of applying for a rental and getting your application approved remains arduous. Thankfully it’s now being addressed by a few savvy technology providers.
Landlords of multi-unit apartment buildings or home properties can now use a service from Santa Barbara-Calif.-based RentApp. As its name implies, this online service is designed to simplify the rental application process. Once a free account has been set up, a landlord can create a rental application by selecting from a menu of customary items, such as financial information, pets, etc. RentApp makes money by collecting fees from screening tenants, which start at $10 per “screen.”
Once an application has been created, prospective tenants are sent a link to fill out the online application and RentApp can collect application fees, if a landlord has been set up with credit-card processing (a cumbersome process that screams for a Square-like solution). Landlords who have applied for background checking can then automatically screen each tenant. But background- and credit-checking require an on-site visit by an Experian representative, yet another tedious complication.
The good news for prospective tenants is that there’s no paperwork involved and applicants do not directly divulge social security numbers to landlords – adding an extra layer of security protection. Welcome to the 21st century!
Chicago-based startup RocketLease also offers online application creation, submission and screening, plus it lets landlords create an online property listing that applicants can use to review a rental offering and submit their application.
But when I tested their service I discovered that not only did RocketLease not actually have the iPhone app portrayed on its home page, it also prominently displays a landlord’s email address on its listing pages, which could lead to spamming. RocketLease has assured me that it will begin cloaking email addresses this week.
Moreover, no existing service – and that includes other new-age outfits like E-Renter, which handles tenant screening but offers no online application submission service – lets one manage the entire rental process, in particular lease creation, submission and signing, plus rental payments.
To create a lease, many National Association of Realtors NAR agents rely on services like zipLogix, which is able to generate PDFs that must be filled out by hand, i.e. non-fillable PDF forms. But this service is not available to individual parties. Popular legal services, such as Nolo or Rocket Lawyer, offer leases that can be tailored to each landlord’s state – but none offers online fillable lease services.
Once a lease has been laboriously created, you can have it electronically signed by using Adobe’s EchoSign, which requires that each signatory field is manually specified. (Competitors to EchoSign include DocuSign and many others.) For rent payment collection, landlords have to rely on yet another service, like PayYourRent or RentPayment.
Overwhelmed yet? Now you know why I agree with Sequoia Venture Capitalist Jim Goetz that it’s shocking to see how few entrepreneurs really focus on building products for businesses.
Considering that there are 40 million rentals and 223 million computers users in the U.S. with no easy way of applying and qualifying for rentals, you can’t blame me for ranting against the lack of common-sense application development in America. While there are certainly outfits addressing the rental market with tech-based solutions, my experience suggests that the playing field falls far short of what’s needed.
As a landlord you should not have to visit half a dozen sites to get a unit leased. Rental apps should be downloadable to a tenant’s mobile phone, filled in and signed directly from wherever they are. I know that day will come but it’s not here yet.
Submit your ideas to help revolutionize our software industry at our ideation engine and here’s hoping that your next rental experience is a seamless one.
Rental and lease images courtesy of Shutterstock.