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Tech-Enabled Rental Companies Are Breaking Down Rent vs. Own Mental Barriers

Homeownership, the mainstay of the American dream, is not as en vogue as it once was. This coincides with a similar trend in other categories. Consumers in major cities are less inclined to own cars amid the rise of ride-sharing companies like Lyft and Zipcar, and collecting DVDs has become an antiquated pastime due to streaming networks like Hulu and Netflix. Consumers today prioritize immediacy, convenience and flexibility in every facet of their lives. It is foolish to think that this same sentiment is not applied to their biggest expense: housing. 

The fact remains that rental demand from millennials in the nation’s largest cities is on the rise. These renters are having a hard time securing immediate and convenient leases in competitive markets.  The national homeownership rate continues to trend downward while rental demand has skyrocketed to a 50-year high. 

Rental markets in major cities like San Francisco, New York City, Boston, Los Angeles and Washington, D.C. are extremely competitive and the barriers to entry are high, particularly for those professionals looking for flexible and tech-enabled housing options. Let’s use San Francisco as an example. Arguably the world’s largest tech hub (though New York City ranked No. 1 in a recent study conducted by Savills Plc.) and home to mega-tech giants like Lyft, Dropbox, Uber and Twitter, renters in this city often are required to fork over a small fortune in order to secure an apartment. And that’s after completing an arduous, and at times antiquated, application process that can take weeks to conduct.

According to RENTCafe, the average rental rate for a one-bedroom apartment in San Francisco is about $3,600, not including the security deposit. Add to that the cost of moving expenses, new furniture and decor, internet and cable connectivity, etc and the average renter is easily spending upwards of $8,000- $10,000 in total moving costs and furnishing expenses.

To alleviate the headache and reduce the costs associated with moving in a big city like San Francisco, modern renters prefer to rent flexible, tech-powered apartments from companies like Zeus Living, Sonder and Blueground that provide furnished, move-in ready apartments and houses for short- and long-term stays. Blueground, in particular, offers premium, fully-furnished apartments on a medium and long-term basis starting with a minimum of 30 days. The apartments come not only furnished but also with all utilities pre-connected (such as high-speed internet), so renters can simply show up and start living. For a fully furnished and equipped one-bedroom SF pad, Blueground’s tenants pay as little as $3,590 per month. These heavily branded offerings will soon become sought out by the younger generations as an easier, more reliable option than braving the housing market or finding the right rental.

Renters Want Immediacy, Convenience

The immediacy with which today’s professionals live, work and shop has infiltrated the apartment rental process. No longer do renters on the hunt for their future home want to deal with antiquated and out-of-date processes. For starters, over the phone screenings, and scheduling in-person visits. These professionals demand a rental experience that is delivered seamlessly, preferably through user-friendly technology. 

Augmented and virtual reality tech also is becoming more sophisticated and widely-adopted in the real estate industry. This technology allows prospective renters to take virtual tours of vacant units from their computers and mobile devices. Just as potential homebuyers can tour available listings and close deals by taking 3D immersive tours powered by Matterport (the world leader in 3D capture technology and data), companies like Engrain are providing similar experiences for renters with interactive mapping and data visualization tools. This technology allows prospective renters to virtually walk through properties as if they were there in-person.

In today’s rental market, it’s no longer just about the size and cost of the unit. Greater emphasis has been placed on the amenities and services owners can provide, as well as their ability to create a sense of community among tenants. From an amenities standpoint, the apartment services that landlords provide today are beginning to resemble those offered in the hospitality and lodging sector. For instance, the ability to make payments and submit maintenance requests online through a property management software like Cozy.co has become the norm for high-end housing. But that hardly scratches the surface; there are numerous service-oriented amenities that renters are seeking through technology, from dog-walking services to daycare. 

With millennials accounting for the largest number of renters in the U.S., and Generation Z following close at their heels, the industry needs to consider this generational shift toward convenience and immediacy that breaks down barriers and offers simple, tech-enabled on-boarding services. After all, millennials are seeking similar experiences in nearly every other aspect of their lives favoring service over ownership. As demand swells, it’s become clear that owner-operators must consider new solutions that align with the fast-moving, ever-changing lifestyles of their prospective renters. 

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