There has been a notable shift in the rental market in the last few years. The Millennial generation has come of age and is trending heavily towards renting rather than purchasing their homes, and this has opened up a new set of needs for the marketplace to allow landlords and tenants to more easily communicate and do business with each other. Renters took their search online years ago with sites like Zillow and Trulia, but are now demanding more than just the ability to look at listing sites for possible places to live.
More than any generation before them, Millennials are transacting on their mobile devices, not just looking for information, which is why we believe that the future of the rental business, especially for the independent landlords who make up more than 50% of the market in the US, is not a software (like Yardi or Realpage) or a lead gen media site (like Zillow/Trulia) but a transactional marketplace; effectively a 12-month long Airbnb.
This is why we acquired RadPad.
A new generation of renters needs new ways to pay rent, find a home, build their credit, get insurance, and interact with their neighbors. While LandlordStation was building a position as one of the largest service providers in the country for independent landlords and property managers, RadPad was busy innovating for renters. With a cutting-edge technology platform, RadPad had begun to change the way that renters approached this market, and adding that technology to our existing base of landlords, as well as some of our insurance and utility products, was the best way to push both platforms even farther.
So what is a “rental marketplace”?
One of the biggest shortcomings that we see in the old way of doing things, is that the time period from vacancy to first rent payment is a series of awkward introductions, cold leads, and mistrust. Renters and landlords find each other semi-anonymously online with no real knowledge of the other’s history. The landlord demands that the renter go through a background check and bases their decision off a credit score (which is not necessarily built as an indicator of a good tenant). This system worked when people signed one or two leases in their entire lives prior to buying a home. But for a generation that is renting well into their 30s, it’s like the car buying process x 10.
Radpad’s solution to this is simple and elegant: allow renters to build their profiles within a confined rental marketplace, and thus build trust within a verified community. Renters can verify all aspects of their rental lives from ID, social security number, credit score and income to Facebook, Linkedin, and contact information, and they can share those verifications with landlords with a single click from their iOs or Android app. They can log in socially so they can see if they have friends who are in the community, or if they share a friend with their potential landlord. They can message within the apps, so they can avoid giving out their mobile number to every listing they come across. And they can build their credit history by opting to have their rent payments reported to the credit bureaus in the same way that mortgage payments are.
On the landlord side there are similar benefits. In markets with a critical mass of tenants like Los Angeles, Chicago, and Dallas, landlords can fill vacancies faster, with warmer leads, and verified tenants. They can shorten the process of rental applications and background checks because they are effectively built into the renter’s shareable profile. Their listings on RadPad look and feel better than on other sites because they are free of ads, promoted real estate brokers, and pay-to-play pitches, all of which leads to a clean interface that drives higher engagement and better lead generation for the landlord.
The best part about the marketplace model is that there is no barrier to entry for either party. The system is completely transactional and based on success. Our goal is to be the platform that is the default transaction processor for the rental market, from listings, leads, and background checks, to rent payments, insurance and utilities. Each individual rental unit produces more than 75 individual transactions annually, and RadPad + LandlordStation has the ability to process them all.
With its most innovative feature, RadPad also allows the tenant to pay their rent online with a credit or debit card even if their landlord does not accept online rent payments. The payment is made through the RadPad app, and if the property does not to accept payments online, RadPad simply sends a check through the mail with a guaranteed on-time delivery to the tenant.
Combining RadPad’s technology and listings traffic with LandlordStation’s product expertise and more than 80,000 existing landlord accounts will pave the way to a single transactional marketplace allowing for a seamless experience for renters, landlords, and the various vendors that serve this market; making things easier, quicker, and cheaper for all parties involved.
We look forward to the many challenges ahead in building the rental marketplace of the future.