While reportedly half of short-term rentals are in apartment buildings, many, if not most of these units, run afoul of some rule or another. Armed with an additional $13.5 million in funding, Pillow, a short-term rental management service, has released a platform to help landlords and tenants walk the line — while milking units for extra cash.

  • Short-term rentals are fraught with legal issues; Pillow is designed to help landlords and tenants navigate these choppy waters.

While reportedly half of short-term rentals are in apartment buildings, many, if not most of these units, run afoul of some rule or another.

Armed with an additional $13.5 million in funding, Pillow, a short-term rental management service, has released a platform to help landlords and tenants walk the line — while milking units for extra cash.

Pillow Residential lets apartment-building owners either directly rent out vacant units on a temporary basis or provide a controlled environment under which their tenants can do the same.

Pillow Residential tenant dashboard

When renting directly, landlords pay Pillow a management commission ranging from 10 to 20 percent. Tenants who use the platform fork over anywhere from 5 ro 20 percent of short-term rental revenue to their landlord, as well as a 10 to 20 percent commission to Pillow.

The service essentially allows landlords to add an amenity to their buildings — permission and support for tenants to rent out their units short term — while wringing more cash from their inventory.

Pillow Residential landlord dashboard

The chief operating officer of one institutional investor that’s implemented the system sees it “as a huge competitive advantage along with a way to organize something that’s happening already — while turning it into a revenue sharing opportunity for him.”

Landlords can keep tabs on what units are being rented out at what times, see profiles on short-term rental guests and serve up background-checked cleaning vendors to tenants who use the system.

As Pillow notes, short-term rentals “can be a landmine for landlords.”

Many local governments are still figuring out how to regulate the units, with some imposing blanket bans or restrictions. Licensing and tax requirements are also in flux.

Pillow Residential is designed to help landlords and tenants navigate these choppy waters.

“Owners don’t want to be in a position to police short-term rentals, but until now there hasn’t been a clear way to embrace and enable them within their properties,” Pillow said.

Giant apartment owners using Pillow Residential include the Marian Group, Virtu Investments, Veritas Investments and Peak Residential, deploying the system in San Francisco; Denver; Eugene, Oregon; Salt Lake City; Louisville, Kentucky; and Albuquerque.

As part of the rollout of the new system, Pillow also announced it had closed a $13.5 million Series A funding round.

The round was led by Mayfield, with participation from Sterling Equity, Peak Capital Partners, Expansion VC, Chris Anderson (Curator of TED Talks), Gary Vaynerchuck and Dennis Phelps.

Past investors include Brendan Wallace, who recently launched Fifth Wall Ventures — a large fund dedicated to investing in real estate tech.

Email Teke Wiggin.

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