We have software that reaches out and coordinates the real world, just none of it seems to be in real estate. Uber can send you a taxi at the push of a button; DoorDash can bring you any meal you want right to your home. Anyone can push buttons today, and boxes of things show up to their families via the plethora of e-commerce services.
Here in New York, the rules and requirements for single-family home rentals are very different from apartment rentals. As an example, if renting an apartment in NYC, the landlord has to provide heat. At the very least, the laws have led to a decent experience in apartment rentals. On top of the fewer included items is no Super or Handyman access for the landlord or tenant.
As a home renter, either your landlord will fix an issue when they get around to it, or you'll end up fixing it yourself. If a big problem happens at 3 am, the landlord is out of luck. Depending on the lease, renters and landlords will have to worry about lawn mowing, snow removal, or many other things that go into the home's upkeep.
The government treats it as you decided to rent a home rather than an apartment, and now, we provide no guidance. All of this is between you and your landlord to figure out. Landlords of these homes have no leverage over any of the services. These landlords are often accidental landlords, too, meaning the home was handed down to them, and now they have to rent it. New York is hardly the exception; it's like this all over the country.
We might be thinking the inefficiencies in single-family home rentals is a small problem; who is renting single-family homes anyway? It turns out close to 60% of the rental market is these single-family homes and not apartments. Many people are renting them for a variety of reasons, the yard, square footage, the schools, not to own and be tied down to a mortgage for 30 years or a specific area.
Now, as a small-time landlord myself, I'm not advocating for more laws. Laws rarely have the craved effects, and I don't believe they will fix these matters in any desired way, but I advocate for a better model. Home renters are paying more, and that should include a better experience.
Landlords want to do better, too; after all, a rental home is their asset. Over 90% of single-family home landlords only own that one rental, but their only avenue to do better is property management. If they bring in the professionals, a property management company, landlords will have to cough up 10% of their monthly rent, which is a lot to give up each month.
What do they get for that fee anyway? They get nothing but a middle man between themselves, their tenants, and the service workers who will come to do the work. The property management company only promises to pick up the phone when the tenant calls and nothing more.
I say they get nothing but a middleman because the property management company will not fix a single issue for that fee; the landlord or tenant will be paying for that service, on top of the 10% fee getting collected from each month's rent. A property management company won't mow the lawn, clear the snow, or clean the house. Don't get me wrong, they will get someone to do that for you, but then they will mark it up and rip you off. At least the landlord will have fewer headaches. How could it be fewer headaches if you have the persistent worry of getting ripped off?
And what about the tenant that's getting nickel and dimed on fees. Fees that don't even go to the landlord. There is a whole book on all the fees property management companies charge tenants of these single-family homes; I've read it. Landlords benefit from happy tenants who renew their leases, and no tenant can be happy while getting ripped off.
As a landlord of single-family homes, I care about three things. The first one is that I am getting paid. The second one is that my tenants are happy because if they are happy, they will stick around, and I know number three will be taken care of, which is that my property is well kept. Happy tenants mean a well-kept home, which means a happy landlord.
Nipsey Hussle said, "f*** the middleman."
As a small-time landlord myself with mortgages on my properties, I know I cannot afford that 10% fee for a middleman. The do-it-yourself (DIY) model of land-lording leads to a lot of interesting stories. I once had lawn mowers show up to my house that I found via Angie's list, come and take a look at the lawn to give me a price. They asked, "do you want it Nice? or do you want it Nice-Nice ''. They then said it was $300 a month for Nice and $400 for Nice-Nice. I know that no leverage and zero efficiencies in the ecosystem are the reasons for this experience for landlords, renters, and maintenance workers alike.
Can't software and technology swoop in and fix this? Replace these phone calls with zeros and ones. There is plenty of software out there for landlords, property management companies, and even renters to pay rent. If you've used it, you'll know that it's not great. It keeps track of some documents, gives landlords an end-of-year tax statement, allows for rent payments, and a few other things. None of that is the main issue; the main problem is that none of the "rental management" software coordinates anything in the real world.
The kind of software I'm talking about is an operating system on top of an industry. One that can create fair pricing based on demand, transparency, so people don't feel like they are getting ripped off and add immense value via efficiency, lower fees, and the getting rid of the middlemen.
Residential property management and the services performed on those properties are a multi-hundred billion dollar industry. Property management companies continue to charge those 10% fees on top of the monthly rent to middle man the relationship between landlord, tenant, and service workers.
Yet in 2021, the best we have access to as landlords and home renters is some rental manager tools or property management companies that rip us off and charge 10% of monthly rent on top of other fees.
Home renters and landlords are eager for that experience they are getting from many consumer services they rely on today. If only someone would build the Uber / Doordash experience for rental homes for them, I am sure they would use it.
P.S. if you are thinking about this problem, working on it, would like to see it solved, message me on Twitter
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