As the for-sale real estate market continues to remain lackluster, the rental market has gotten hotter, offering agents and brokers a possible new way to earn commission checks, speakers at Real Estate Connect in New York City said Friday.
"In general, I think most people should take a good, hard look at rentals. Buying a house will still always be the American dream, but rentals are the American reality right now," said Phillip Lee, co-founder and CEO of Seattle-based rental startup RentMatch. Lee spoke at a panel called "Innovation in the Rental Market."
"Though the commission is lower with rentals, the average transaction frequency is a lot higher," Lee said.
Handling rentals is also a way for real estate agents to keep potential buyers "in the pipeline," said Chris Smith, the panel’s moderator and Inman News’ chief evangelist.
"(It) nurtures that relationship until maybe you don’t do a ‘rent match,’ but a ‘buy match,’ " Smith said.
Rentals may not be for everybody and that’s OK, said Caren Maio, co-founder and CEO of Nestio, a real estate startup that helps consumers organize their rental search in one place.
"I think it’s important to start small. Maybe focus on a couple of neighborhoods or create a specialty," Maio said. "Know your audience."
Rentals and real estate technology
Renters are an underserved market, especially when it comes to real estate technology, panelists said.
"Every other (rental) site syndicates to every other (rental) site. Duplicates are everywhere," said David Vivero, co-founder and CEO of RentJuice, a company that provides "virtual rental office" services to real estate professionals. RentJuice released mobile applications for the Apple iPhone and iPad last week.
"If you went into a Macy’s and you just saw clothes piled up everywhere, that’s like the rental market," Vivero added.
Besides RentJuice, Nestio and RentMatch featured on the panel, at least three other startups at the conference focused on rentals.
Launched six months ago, Realty Embracing New Technology partners with real estate brokers nationwide looking to add a rental component to their business. The company provides: rental websites for brokers, complete with professional photography and site analytics; ongoing face-to-face, video and webinar training for agents on the rental process; a cloud-based customer relationship management (CRM) system; listing syndication; electronic signatures for paperless transactions; tenant credit and background checks; and ongoing drip marketing to tenants and "accidental" landlords who may eventually be interested in the for-sale real estate market.
The startup fee to partner with R.E.N.T. is $20,000 per brokerage, regardless of size. Until the end of the month, however, the company is running a special rate of $10,000 for brokerages that at least make contact with the company, according to spokeswoman Holly Maloney. R.E.N.T. currently has broker partners in 12 markets.
Imfuna Rent Pro
San Francisco-based Imfuna offers mobile applications that allow users to create a time-stamped record of a property’s condition. Imfuna’s Rent Pro app for real estate professionals automatically transcribes and stores voice notes, written notes, and photos. Users can edit and add to their data online and create branded reports that can then be printed, turned into a PDF, or shared with clients.
The app costs $1.99 and comes with five free reports. Subsequent reports cost $9.50 each. The app is available on Android, iPhone and iPad 2 devices.
Imfuna also offers Rent Lite, an iPhone and iPad 2-compatible app that consumers can use to document the condition of a rental property upon moving in and moving out in order to increase the likelihood of getting their security deposit back. The app costs $0.99; digital reports cost $2.99 each.
Launched in August, LeaseRunner offers a cloud-based, paperless leasing platform for landlords, property managers and leasing agents. Users can sign up for a free account and immediately email rental applications to prospective tenants. Along with an application, users can request tenants pay for a $30 background check that LeaseRunner then completes. The check screens a tenant’s credit and payment history, criminal background and income-to-rent ratio, among other factors.
LeaseRunner also offers eviction screening that pulls records from all over the country for $12 — the fee can be paid by the user or the tenant.
Once the application and background check are complete, they appear on the user’s LeaseRunner dashboard, which keeps track of all documents associated with tenants. Users can also add documents such as lease agreements, lead-paint disclosures and pet agreements.
Templates that apply to the user’s specific state and property type are available and autopopulated with the tenant’s and property’s information. Both tenants and landlords can sign the documents electronically via email. There is a $15 fee per lease.
After a lease is signed, the tenant receives an email with instructions to set up monthly autopay via a verified bank account. LeaseRunner charges $3 for each electronic transaction, payable by the tenant or landlord.
Today, New York City rental site Naked Apartments launched a searchable list of "outstanding" rental agents based on positive reviews from renters, a good track record of clients interactions for at least six months on the site, and no suspicious actions used to promote themselves or their listings.
Another Big Apple rental startup, Rentenna.com, also rolled out a new tool today: an interactive "Score Map" that ranks apartment buildings based on amenities, subway access, renter reviews, bed bug complaints, and elevator performance, among other criteria.
A hot market for rentals
Economic uncertainly, credit histories marred by foreclosures and short sales, and strict lending standards have helped keep many potential homebuyers off the market, contributing to a rental boom.
The median rent for a two-bedroom home jumped 3.75 percent across the top 20 most-populated U.S. metro areas in 2011, according to a report from HotPads released Monday. At the same time, the median listing price of a for-sale two-bedroom home fell 1.83 percent, HotPads reported. The report is based on rental and for-sale listings on the HotPads site.
Studios saw the highest median rent growth, a 7.12 percent jump last year, while that of one-bedroom units rose 2.59 percent. Only three-bedroom units saw a decrease in median rent in 2011: down a nearly flat 0.31 percent.
Rents rose the most in the Chicago metro area (nearly 20 percent), followed by Miami (15 percent) and Seattle (8 percent).
None of the 20 metros considered had buy-to-rent ratios above 20 — the threshold for whether it was more expensive to buy than to rent in a particular area. San Francisco had the highest ratio at 15.23, followed by Los Angeles and San Diego at 12.91 and 12.75, respectively.
"While we expect demand for rental properties to remain high throughout 2012, we anticipate a slower growth compared to last year. As the price of homes for sale continues to decline, we believe more home shoppers will consider buying over renting," HotPads said.
"We also predict more foreclosed and longstanding for-sale properties will re-enter the market as rentals in 2012, which should increase the rental supply and help ease prices. However, if economic conditions extend consumer uncertainty, we may continue seeing would-be homeowners continue to rent."