I’ve been super MIA these past two months, but I’m happy to announce my venture Apartment Insider with my roommate Wes! The NYC apartment hunting process is a painful, tedious exercise, and we aim to be your friend who happens to live in the city. We visit apartments so you don’t have to; no longer do you have to fly to New York, book a hotel, and have apartments shown to you by a sketchy broker. By providing an “Insider’s Guide” composed of info, photos and a video tour of the apartment, we hope to save people money and stress!
Last year I moved from Charlottesville, VA to New York upon graduation, and the apartment hunting process was painful. Luckily, my roommate/(marketing lead!) Liv happened to live in New Jersey, which was close enough for her to visit apartments in person on our behalf.
However, in late March this year, as I planned to move to another apartment within the city, I realized that without her, we would have had a terrible experience, and decided to pitch this idea to Wes based on these pain points:
- Apartment visiting as a service; customers: out-of-state students/young professionals
- High transportation, hotel, and opportunity cost for out-of-state people to visit apartments in person
- Apartment listings online are vague, unclear, or use fake stock photos, requiring in-person visits
- Brokers have a conflict of interest as they are incentivized by leasing an apartment to you, which makes them less trustworthy as a source of information
- First-time movers don’t have much knowledge and may need an impartial information source
We decided to apply for the YC Summer 2014 class (why not?), and as it was due in two days, we had to scramble quite a bit. I wish I could say we were accepted, but I guess not even having a website up cost us some points. One of the questions on the application asked us how long we had been working on the idea, to which we laughed and cried a little bit.
We spent nearly all my spare time the first month working on putting the website up. Our MVP would consist of myself and Wes visiting apartments ourselves, and emailing the Insider’s Guides to customers individually. Obviously, as we both work over 12 hours a day, we decided to hold off on launching/marketing. We have a functional MVP up today, but this past month I’ve had to run my own apartment search process which occupied the little spare time I have from work.
On 'disruption' of the market
Not that this has been a terribly long journey, but I wanted to blog about some of the things we’ve discovered. First, the real estate market in NYC is quite corrupt and inefficient. At a high level, there are two main types of apartment units: exclusive and non-exclusive. For exclusive units, apartments with vacancies contact brokers, whose job is to rent those to prospective tenants. Exclusivity means that for a certain unit, only a certain broker is allowed to rent that apartment out. Some units are “co-op” meaning a certain number of brokers (greater than one but commonly only a couple) have the right to rent that unit out. On the other hand, non-exclusive units means that you can rent that apartment without going through a broker.
In terms of broker’s fees, there is always a broker’s fee being paid if a broker participates in the transaction. Either you, the tenant, will pay the broker that fee (ranging from 1 month’s rent to 15% annual rent), or the apartment building will pay the broker for his/her services. The only way to avoid these fees is to go directly to the apartment building and rent through the leasing office there.
That being said, there have been many a time where we asked: “Why not cut out all the brokers, as they’re not very value-add?” One can easily imagine an easy-to-use database that sources directly from apartment buildings and avoids the need of having a broker. We bounced this idea around a good amount – asking how can we cut out brokers and provide additional value to our customers, but our conversations with industry experts all yielded the same advice: avoid stepping on their toes. Most people advised that they’d seen many startups try to cut brokers out and fail miserably; the power of inertia is quite strong, and the brokerages of NYC are a potent force.
Our pricing model is quite simple – we charge prospective tenants like myself $40 for each apartment we visit (which comes with an Insider’s Guide). What’s great is that we’re also very value add to brokers, as each broker I’ve pitched this to has signed up to become a partner. We serve as a free source of leads for brokers, and we save them time that they could then use to show additional tenants.
What we’re working on
We’re currently working on refining our inside-facing product! Given our work commitments, we decided to take our time slowly launching and perfecting our offerings. And right now, I need some sleep…so I’ll follow up with a post later with more details!