Investing in Proptech —I am proud to be a backer in Onerent, a PropTech startup focused on the single family rental space that has the potential to be as much of a disruptor for long-term rentals as Airbnb has been for short-term rentals.
As a consequence of the pandemic, single-family rentals are projected to increase for the next 1-3 years. Therefore, Onerent’s focus on long-term rentals opens up a much bigger TAM than Airbnb in a sector that has the staying power to withstand pandemics, recessions or other business disruptors. In addition, it is one of the few companies that is close to profitability in the PropTech ecosystem.
This tech-enabled platform is the first AI-driven system to manage residential properties remotely. With full-stack logistics to help centralize previously disparate data and automated leasing and tenant screening to reduce labor, Onerent eliminates the time, confusion, broken promises, uncertainty and stress of matching tenants with single- family rentals.
Investing in PropTech: Smart People Start By Solving A Problem
I invested in three energetic entrepreneurs, Greg Toschi, Rico Mok and Chuck Hattemer, because I think their company Onerent will redefine the process by which residential property owners and their rental clients will use for all their housing solutions – one-stop, hassle-free shopping on an interactive online platform.
Onerent was founded in 2014, when the founders were still college students. They had struggled in vain to find a place to live in the overheated and crowded San Francisco Bay area housing market. Even as students, they knew there had to be an easier and more streamlined way for tenants and property owners to find each other. So they designed one and ultimately built a more efficient tool for renters to find a great place to live and for owners to easily manage their properties at less than half their previous costs.
Initially, focusing on AI-driven software, the three created a platform that offers property owners a single online hub for marketing, managing, and renting their properties, plus a place where their potential residents can search, find, and sign a lease digitally and make hassle-free and timely rent payments. By automating leasing for renters with virtual tours and AI-driven showing bookings, labor requirements were reduced a staggering 92% without any negative impact.
Because they realize that conversational products are being adopted with greater frequency, they have focused on user-friendly chatbot technology and machine learning in a big way. They have found that chatbot-driven inquiries improve user interactions and ultimately lead to higher user retention, stronger engagement rates, increased user reactivation and decreased support costs for bookings.
Their ACE product modules are used in four vastly different aspects of property management—from initial prospect inquiries to actual leasing (including contract signing and payments) to concierge support and finally to maintenance management. These innovations reduce the cost for unit leasing by 40% and unit management by 80%!
Through this ACE interface, Onerent’s automated maintenance troubleshooting feature creates a zero-contact resolution alternative that eliminates unnecessary support costs while its machine learning trains the system with each interaction for greater service for all involved.
For prospective and existing residents, Onerent is building a consumer brand that serves as their one-stop PropTech platform. The property owner never meets the renter but gets top-tier property management services that include listing and showing units and handling rent payments as well as managing collections, maintenance and other services. Maintenance requests are submitted online, and Onerent manages them. Onerent also insures that property owners are paid on the 3rd of each month – even if the renter is late.
Built-In Repeat Business and Headed to Profitability
Because of the turnover of a typical one-year lease, the model is repeatable and scalable across geographies with minimal startup costs. They are adding over 9 times more rental properties per month than their nearest competition, all while improving their cash flow needs. They have seen recurring revenue grow 70% in the past year (even during the pandemic) while at the same time, they have reduced their monthly cash burn by -85% over that same time period.
Onerent has continued expansion in the San Francisco area, eventually moving south to Los Angeles and north into Seattle. Four years later, Onerent is the premier online property management platform that services $1.4 billion in properties across seven major metro areas in California, Washington State, and Colorado, with eyes on and inroads into lucrative property management services on the east coast.
The National Multifamily Housing Council estimates that 43 million American households are renters, while the National Rental Home Council estimates an annual increase in demand of 1.5 million single-family rental units.
Toschi, Mok, and Hattemer met at Santa Clara University, Leavey School of Business, and each brings a different business-oriented focus to the enterprise. Toschi, who is CEO, brings real estate acumen to the company; CTO Mok is the technology expert; while CMO Hattemer specializes in human resources, marketing and media relations. Since 2018, Mok has managed a Onerent branch office in the Phillipines, where he can remain close to his Australian roots.
Through research, hustle and a ton of conversations with ‘mom and pop’ property management firms in the industry, they had come to learn that property management in the Bay area was highly fragmented, time-consuming for property owners and managers, stressful for potential renters, and largely inefficient for all.
Property management is incredibly time-intensive, so when they found that they could reduce leasing manpower from 40 people down to 3, they knew they had something big.
The Proof is in The Pudding: Does The Customer Want It?
Once they developed and presented Onerent’s ProTech management system, they earned customers–doggedly cold calling on property owners, selling them their services, and gradually claiming a foothold in the San Jose market.
Investing in Dynamic Companies Not Afraid to Leverage Unforeseen Opportunities
When I look at investment opportunities, I consider the people behind the company, the innovation of the core idea; and the current and future potential of the market (TAM). Onerent has massive potential in all three areas.
With the COVID-19 crisis unfolding, the 3-D virtual chatbox called ACE provides virtual walkthroughs for any Onerent property, further enhancing the safety and security aspects of digitized home rental services.
“In our industry of real estate services, we want to push the boundary for product development and growth,” said Hattemer, who is the company spokesman.
With the energy and PropTech marketing skills of Onerent’s leaders combined with the future of the single-family home rental market in North America and Onerent’s ability to bring ease and simplicity to property management, I am excited about having invested early on with this dynamic organization. With strong margins and a loyal customer base that is growing all the time, the prospects for this company are crazy good.
Onerent’s PropTech solution to the age-old home rental industry is the most timely and concise effort in the ever-growing single-family real estate property management landscape. By streamlining management practices, Onerent has reduced turnover time for their customers by shortening the time a unit is vacant, which increases profitability, and has taken away much of the stress and busywork of being a large multi-family property owner and/or manager. Prospective renters enjoy the convenience and simplicity of this one-stop-shopping platform.
I invested in this company because I see its ever-developing, cutting edge technology, and the energy of the cofounders and subsequent investors making positive changes in the way people find a place to live and realize their dreams.