The same economic and demographic factors that seem to be conspiring to lower homeownership rates are contributing to what some are calling a boom in the rental market.
While the U.S. might not be a "renter nation" yet, the stats are compelling. Barron’s has predicted that rental rates may hit 36 percent by 2015, up from 32.8 percent in 2004. Data from some real estate research firms also indicate that effective rents nationwide are rising as rental vacancies drop.
For Joe Buczkowski, founder of LeaseRunner, that shift signals an opportunity.
LeaseRunner opened for business in August 2011 with the goal of providing a seamless, paperless leasing solution for residential and commercial property managers.
The value proposition is straightforward and simple: make it easier and more cost-effective for tenants and landlords to do business with each other by offering a one-stop shop that replaces traditional paper-based transactions with a digital solution.
With LeaseRunner, landlords can electronically manage the process of leasing a property from start to finish — collecting applications, screening potential tenants, editing and digitally signing lease documents, and even collecting rent.
Tenants also benefit by being able to interact with landlords without turning over sensitive personal information like bank account and Social Security numbers.
Buczkowski, a Colorado attorney with an MBA and a knack for Web development, came up with the idea for LeaseRunner in late 2009 while in the hospital for the birth of his son.
Buczkowski was trying to lease several properties and, while his son slept, he tried to handle the paperwork from his laptop. Short on time, he searched for an online solution to help manage the process.
When he came up empty-handed, Buczkowski did what entrepreneurs do: He started a business to solve the problem.
LeaseRunner already has customers in 41 states, and Buczkowski is bullish about what he sees as a "huge market" in the U.S.: There are about 40 million residential rental units, 13 million single-family rental homes, and more than 1.4 million office and retail buildings.
I asked Buczkowski more about how he’s leveraging his legal expertise, background in finance, and experience managing rental properties to make LeaseRunner a success.
Q: You have law and business degrees. How has each helped you with LeaseRunner?
A: My law degree has been especially useful. Here is a sample of the legal work involved in LeaseRunner:
- lease-law research for all property types in all 50 states;
- Fair Credit Reporting Act issues;
- e-commerce laws and tax issues;
- intellectual property matters, ACH (Automated Clearing House) banking regulations;
- merchant banking laws;
- a multitude of contracts with Web and data vendors;
- corporate organizational documents;
- partnership documents; and
- accounting and tax prep.
Because of our legal background, my legal intern and I were able to do 99 percent of the legal work in-house. Outsourcing the legal work would have been cost-prohibitive.
My business degree is essential for the financial skills. You have to know how to balance a balance sheet and project financial statements. More importantly, you need to understand business models in order to be able to raise money.
Q: What’s tougher: being an attorney or being an entrepreneur?
A: Being an entrepreneur is more work than being an attorney, but sooooo much fun. I’ve never had more fun on the job than working on LeaseRunner.
Q: Please tell me more about your property management experience. How has it influenced the development of LeaseRunner?
A: I graduated with my juris doctorate/MBA degree in 2001, and started working for a family office (that) owned income properties in five states, consisting of office and industrial buildings, apartment complexes and some single-family homes. I developed an apartment complex, as well.
We eventually sold off the majority of the assets. Today, we have a handful of single-family homes and a handful of commercial buildings. Through it all, I learned more than I ever expected about property management.
This influenced the design of LeaseRunner, making it Web-based, inexpensive, eye-catching in design, and useful to a landlord of any property type.
Q: What advice would you offer to someone who was considering starting their own business?
A: My advice is to take an objective look at your business model and consider whether your business model is attractive to investors. Do you have a large market? Do you have a high gross profit? Do you have low fixed costs? Can you reach breakeven in one year? Are your capital requirements for your minimum viable product modest? Is your business difficult to duplicate? How easily can others copy your business?
There are many more questions like these you need to ask yourself.
Q: What are some of the challenges you’re facing as a business owner that you didn’t expect?
A: I think that marketing is one of the greatest challenges for a new business. As if getting new customers isn’t hard enough in the post-Lehman world, it is difficult to choose the correct marketing medium, given the plethora of marketing options available. With limited time and budget, you have to determine which marketing methods give you the best return on investment.
If I could do it over again, I would start marketing LeaseRunner before it launched. We did not start marketing until after launch so that we could beta test with some real, independent users.
Q: How does LeaseRunner distinguish itself from other property management solutions on the market?
A: There is no other product exactly like LeaseRunner. We offer a seamless leasing solution for any type of real estate. Other online competitors might offer parts of the services we have (like background checks), but you cannot take an applicant from digital application through rent collection like you can with LeaseRunner.
While our service is beneficial to many in the market, our early adopters are landlords with one or a handful of units.
Q: Why do you think going paperless is so important to property managers?
A: Going paperless saves more than trees. It saves so much time, and time really is money. Since the data from an application is combined with your property’s data and auto-fills a lease, there is no need for drafting or duplicate data entry.
The e-signature process is convenient for all parties and so intuitive that it is nearly impossible to make a mistake. Furthermore, the Web application is open 24 hours a day. Our world becomes more digital every day, and the real estate leasing process can and should follow suit.
The current economy requires us all to do more with less time and money, and landlords out there are looking for a way to simplify.
Want to recommend a real estate startup for an upcoming Startup Scene? Send your ideas to Natalie Fonseca at firstname.lastname@example.org.
Natalie Fonseca is the co-founder and executive producer of Tech Policy Summit and the Privacy Identity Innovation (pii) conference, and the content producer for the Inman News Data Summit and Real Estate Connect conferences. You can follow her at @TechPolicy.