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https://www.yardi.com/products/rentcafe-connect/

https://www.appfolio.com/blog/2015/01/appfolio-contact-cente...

This type of service has existed for a while with the larger vendors. What differentiates your service?

Licensed property managers are on the hook for the decisions you make. How do you and they manage that liability? Is it even legal to have an unlicensed third party field a call and assign a contractor? I know states where it is not.

If you've been small, you may have flown under the radar but getting attention could change that. The difference between Appfolio/Yardi and what you're doing seems to be the assigning your own contractors bit. That's legally questionable IMO. Maybe less so for first-party but definitely for third-party managers - it technically makes you an unlicensed property manager.

Cant' they just do it "on behalf of" the property owner?

Yes, but that makes them an agent of the owner, which requires a license.

Basically, they can only do "dumb" things - follow instructions. If they make a decision, they have to be licensed. Choosing who to give work to is a decision.

Our customers tell us who to dispatch through their vendor priority list. We call down their vendor list in the order they specify.

Right. If it's pre-designated then you're fine as you're not making a decision. The other grey area is making decisions about what work that vendor will perform. Often there are many solutions to a work order.

A lot of our customers switch from the existing providers because we provide over the phone troubleshooting services and the others are just dispatching.

We've taken out a large professional liability insurance to cover ourselves and our customers. We also document decision making process throughout the coordination process, which is helpful for determining what went wrong and why.

As far as the legality of taking calls, third party call centers that take calls and dispatch contractors are an extremely common service even offered by Appfolio and other providers.

Now regarding new contractors from our network, that is an opt-in service for customers. Many opt out entirely and we can turn that off for any customer. For instance, some customers require liability insurance policies much larger than we can guarantee with our network, so they opt-out of using Latchel contractors.

There are several states that don't require a license to be a property manager. Massachusetts is one example.

That’s incorrect.

https://www.mass.gov/service-details/re42r05-property-manage...

Are there any plans to automate property management? If so, when?

I posted this request for an Uber for property management 7 months ago. After that post, I reluctantly hired a property manager and it has been a nightmare. https://news.ycombinator.com/item?id=17656752

We're staying focused on maintenance right now because maintenance is usually the biggest single headache for landlords and property managers.

There are so many problems to solve with generalized property management that we feel it's much better to stay focused on what we know.

Makes sense. Just as a thought experiment I was trying to figure what would be required. You’ve solved the maintenance issue, here’s what I see is left:

1. Placement. A system that posts to Zillow, Craigslist. It seems like photo or video walkthrough is an all but done deal. With keycode locks a real estate agent could escort a potential tenant through once they’ve been validated via credit score.

2. Payments. Seems easy enough to build this software.

3. Evictions. This seems like an entirely legal process, so having a lawyer on retainer for a metro might work here.

I think the biggest issue with property management companies is simply that their incentives aren’t aligned with the owners. If they have a maintenance person on staff they have to pay that person somehow. I’ve talked with other indie owners/managers and keep hearing the same thing: “imagine you are in that business. Do the math, and property management doesn’t earn much.” It seems ripe for disruption.

Edit: the only thing that is missing is someone to keep an eye on the property in general. Not quite sure how to handle that other than have one person who handles an entire metro.

The real value of a property manager is having someone who is invested in increasing the value of your rental property asset. In multi-family this is easier because the value is directly tied to the net operating income. Increased rents and lower operating expenses = higher property value.

Single family gets more tricky because the value is more closely tied to the property value and not the rental income. I think this is where the inventives are often misaligned. Even so, the best property managers will handle a lot more than just filling units, collecting rent, and handling maintenance. They understand the goals of the owner and will adjust their management strategy to meet those goals (eg income property or a quick sale in a few years).

To add to your list: tenant retention (highest cost is actually unit turnover), setting rent to the right amount based on local comparables, and keeping in compliance with the ever changing rental laws.

Great insight!

Tenant retention, while an issue, is a very minor one in comparison to peace of mind regarding the aforementioned issues. With scale and automation, I’d expect to save on the placement fee. In any case, I wouldn’t even mind yearly turnover if I had my other issues solved. Perhaps it’s just me. (My time is valuable and I’ve spent way too much of it dealing with the property manager and contractors when the property manager failed to deliver.)

I’ve heard varying things about setting rent. An investor/manager in the Bay Area told me setting rent too high is bad, and I think his reasoning was you wouldn’t have a pool to choose from. Another person had a system of just setting the rent ridiculously high and lowering it every week until it was filled. Comps can be tough, and usually the market speaks loudest here.

Keeping in compliance with laws seems to confirm there’d have to be a full time employee familiar with the region.

Yearly turnover costs you probably a month each time, plus increased maintenance costs -- you're going to have to eg replace carpet, paint, and do other light maintenance a lot more often to keep a place in show condition. It also costs significantly increased human effort to manage. And you dramatically increase the chances you get a problem tenant. iow it's horribly expensive.

I'm skeptical of the quality of anyone who sets rent super high. If you do that, you will get difficult tenants. Setting the rent even 5%-ish below market -- $100 or so on a $2500 unit -- gives you the ability to be way more picky around your renters.

My experience: managed over 20 units for 5 years as a part-time gig.

The issue with turns is turn cost plus lost income. For anyone without multiple properties, the cost of a turn is usually significantly more than they would recover with a high turn rate but increased rents. This is why institutional investors push rents aggressively but mom and pops don't. To a mom and pop, a long term renter is valuable. As where a large investor isn't concerned about cash flow issues from turns because they can spread it over many units. Look at the public REITs, some have near 40% turn rates, which is insane. But that's what you get when you ask for a 5% rent increase every year. As where the mom and pop is just happy that you renewed and they don't have to worry about a cash pinch.

Your comment and x0x0’s are informative, thanks!

I guess I’m just optimistic that there is a solution which won’t require such high cost of placement fees, in addition to other costs. It seems hard to argue that the current PM system is efficient. Maybe it’s just the case that there are good PMs and bad ones.

The companies I worked with never paid placement fees. You don't really need incentives when housing supply is tight.

Keycodes are a nightmare. That's how you facilitate craigslist scams.

How do you mean?

Lazy real estate agent can't be bothered to show a unit and just give callers a key code.

Scammers get the code and relist the unit on craigslist $100-$200 below. They try to get people to pay the security deposit and first months rent to them.

Even if you don't care about helping scammers, you're also getting duplicate listings slightly under the cost of the actual listing, taking traffic away from your craigslist ad.

Rently.com

Any place, where you've shared this experience? I was considering hiring one too.

I pay 25% to my property manager. The industry is crying out for optimization and a dominant player.

Scaling great customer service is difficult though.

That must be a short-term rental, which requires a whole lot more work from the property manager.

Must be, right? Typically long-term single family PM fees are 8-12% and multifamily is 6-9%.

Often higher in California, which requires live-in management for multifamily over 16 IIRC.

Anecdote: There was a brief time when I took a break from tech project management working for software development companies, and did a brief stint as a project manager for a small handyman startup in the real estate business. I ran my own handyman company for beer money in college, sold it after college, and have seen the handyman services industry grow and evolve with technology. It's been very exiting to watch.

The work itself was a cakewalk. Dealing with property managers, contractors and laborers was less of a cakewalk, but still manageable.

Where I saw an opportunity for the RE business I worked at for two years (because of business decisions now even the owner has admitted were not just stupid but "f--king stupid") was to try doing exactly what Latchel is doing for property managers. We had all the resources, we had the people, we had the market and we had the local reputation to actually get two management groups with over 20 buildings interested enough to say "Show us your proposal and we'll take it to our owners".

That idea died because of someone high above and their ego, and even though I eventually returned to tech[1]--I still wonder what it would have been like had I pursued this exact idea on my own.

Good luck Latchel, as other comments are showing here: this is definitely much needed, and if you do it well, congratulations on your future riches, heh. The demand for this is HUGE.

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[1] Me, returning to tech after two years in real estate https://www.youtube.com/watch?v=LJ5nV9aKthU

Edit: If you ever start operations in Chicago, or plan to, I can likely make some introductions to a couple of large property managers I have a good, personal relationship with that may be interested to at least hear your pitch.

We've built our operation to be largely geographically agnostic. Our customer base follows population density. Today we operate out of 41 states and have a decent Chicago portfolio. Warm introductions are always greatly appreciated :)

How do you vet contractors? What’s the fee per month? Is the subscription a lock in? Do you find and vet and place tenants? I’m interested: Alex at alexandarnarayan dot com

Basically if you can beat the 8% per month and 50% first months rent my current manager takes I’d jump easily. Even more importantly I’ve a tenant that pays religiously on the first of the month. But I don’t get a deposit until the 11th or the 12th. Can you guys beat that?

What are the chances I can get on the phone and talk to the person that would be overseeing my property? How do you convey trust to owners when you don’t live in the areas you serve?

Edit: the fee structure is insanely attractive.

Also I couldn’t afford to switch to you guys and you guys fold. How well funded are you? What are the chances you’ll tank in a year or more? Or less?

I don't want to get too specific. We're a seed stage company and we're on track for profitability in a few months with plenty of gas left in the tank.

We do not take over property management duties at all outside of maintenance (i.e. No rent collection, no filling of units, evictions, advertising, etc)

As far as vetting contractors, we ensure they have appropriate licensing, bonding and insurance per local requirements and also vet their existing social media reviews (looking for 4+ stars). Most of our clients provide us their rolodex of contractors to work with and we can vet their responsiveness and quality that way.

Ahh so only maintainence. Dang. Still a nice service but I don’t get a discount from the current property manager for him just collecting rent on my behalf as I used him mostly to get my current tenant but now the 8% a month is torture.

You have to look at it like a retainer charge. Most of the time, what they do is minimal but when something happens, they will give your property a ton of time. I think property managers are chronically underpaid because the barrier to entry is so low. The best run firms I've seen are one or two people that charge a premium but cap themselves at say 150 units. Then you get their full attention and care all the time. The hard part is they're never taking on new clients because they're never losing old clients.

It's a lot like good CPAs, good lawyers, or good family practice physicians.

This is a headache for me too. Some questions for you:

Do you handle common area maintenance? Snow shovelling? Cleaning? Sidewalk maintenance? Do you have a requirement on the minimum num of units per building? How do you handle tenants that don't speak English? What is your pricing?

Aside from maintenance, do you have plans to get into full-on property management?

This is Ethan, one of the founders here. Yes, we handle common area, snow shoveling, cleaning, sidewalk maintenance, etc. We even handle unit turn inspections and punch list creation.

No minimum number of units. In fact, 80% of our units are single family residence.

We have Spanish speakers on staff, but all of our automated texts/emails are in English. So that come some times be an issue for Spanish only speakers. Generally we have to get on the phone with them.

We charge $25 + $1/unit per month for handling all tenant calls, troubleshooting, and emergency coordination. For $25 + $10/unit we do coordination for every time of job (snow shoveling, cleaning etc.) The monthly subscription does NOT include the cost of the handyman/contractor going out to do work.

No plans to go into full on property management. We feel like maintenance is a big enough headache to solve for now!

How familiar are you with state laws? Performing walkthrough inspections as a third-party without being licensed is illegal in many states - a felony, even. I'll source it for you shortly.

EDIT: Here: https://azre.gov/LawBook/Documents/SPS_Documents/SPS_2017.01...

"An unlicensed assistant shall not perform the following activities:

- Perform a walk-through inspection or Tenant Vacate Inspection

- Provide advice or negotiate with anyone regarding a property

Pursuant to A.R.S. 32-2165(B) A person who performs acts that require a license under this chapter, other than a broker’s or salesperson’s license, without being licensed as prescribed by this chapter is guilty of a class 5 felony."

Arizona is not unusual in this regard. I helped build a publicly-traded REIT with an internal manager and worked with general counsel on these issues. Some of the laws seem silly but if you can do what a property manager does then what's the point of having property managers be licensed? And I for one think they should be. People complain of property managers now but imagine if there was zero training or licensing. I also deal with HOAs, which require no training or licensing, and they make property managers look like geniuses. They manage HOAs when they don't even know their own CC&Rs, let alone the law.

Yes, we’re definitely more restricted in AZ than most other states on what we can/can’t do.

This is a much needed service, and I feel like I've seen a lot of people enter this space but I wonder what happens to all of them after a few months. They seem to disappear.

The main question I have is: which cities do you operate in?

The secondary questions: How do you handle the workmen? What if you customer thinks that you charged too much?

We currently service properties across the entire US. We have built Latchel to be geographically agnostic so we can service rentals in any city without having to establish a presence or build density. As for contractors, we will work with our customer's existing contractors if they have any, and find new ones if they dont. We work with our customers to set default budget limits for individual properties or portfolios, and then seek either their approval or their owner's approval (included with Premium service) for an increased budget if we cannot find a contractor within their budget limit. This helps prevent surprise contractor invoices and keeps budgets under control.

That is great. It seems like a lot of work. I have often wondered how hard it would be to find an honest, reliable contractor if I were to get a property in a distant city.

I would be happy to outsource all that work to you, and I hope you succeed so I can hire you. But how would you guys find one?

In other words, the issue with finding someone long distance is that you can't check them out in person, or see their work etc.

We have existing contractor networks in most of the cities we service. Whenever we enter a new area we often have to source on-demand. We vet people based on social media reviews and ensuring their licensing etc meets the local requirements.

When we send someone out from our network we are implicitly standing behind their work. The good new for us is you can tell a lot by a person's phone demeanor and business professionalism. If someone is rude or curt over the phone with us they certainly won't be polite with tenants.

Congrats on the launch! Do you imagine scaling up to work with larger properties like condominium associations? I ask because the property management company at my current complex isn't that great. We have many outstanding projects in the queue and they never communicate onsite issues such as when the hot water went out. From a tech perspective, the website they lease to us is so old, not mobile friendly lacks notifications and doesn't have a CMS to allow our HOA to make updates.

Yes, we hope to get into associations soon. Right now they are a much smaller percent of our customer base.

This is a great idea. A friend of mine actually pitched this idea to me a couple months ago.. and while I thought it was great it was too far out of my wheelhouse.

In France, this kind of work is proposed by a lot of real estate agencies. Real estate agencies can even collect the rent for you and “guarantee” you the amount you will get each month. This point is very important as it is a nightmare to evict a bad tenant.

Do you have the same issues in the US? If so, do you plan to manage the rent payment as well?

Part of our long-term vision is to increase the number of tools we provide to our customers to help with the other tasks associated with managing a property. These tools may include tenant background checks, rental payment solutions, etc. Right now we are laser-focused on tackling property maintenance and making the most efficient processes possible. Most of our customers currently use other solutions alongside Latchel that help with tenant management and accounting.

What are the differences between your services and SMS Assist? (https://www.smsassist.com/residential-repair-maintenance-ser...)

SMS Assist targets commercial and large residential (eg 5000+ single family homes). Their customers include Dollar Tree and the US Postal Service.

We offer similar services for mom and pop property managers.

IIRC SMSAssist also acts as a general contractor. We trialed it and after all the markups it made zero financial sense.

Great idea! Wish there was something like this in India! It is becoming increasingly strenuous on my Dad who owns a few rental properties, to always be at the beck and call of our tenants and their problems.

Hopefully with time we'll be in India, too ;)

Is this different than rabbu.com? They just raised a round near me and I have some experience in real estate, and have some concerns about the model scaling. Happy to discuss more if it’d be helpful.

I think there’s some possibility of overlap, but we don’t focus on short term right now. More focused on long term rentals.

However, we definitely want to get into the maintenance side for short term eventually.

Read my comment below. The maintenance side is the massive headache and really painful. Happy to advise as I can on learnings from consulting I’ve done in space.

What do you think are the most significant issues re: scaling the model?

Data integration could end up being a scaling issue because there are so many management softwares and that market is very fragmented.

It’s really really hard to coordinate contractors in short time increments. I did a consulting project with a measurement company (measures sqft of homes) and their model is stressed coordinating and moving around in 1 market at near max utilization. I helped them scale into 2 additional markets and it’s just massive headaches. To the point I was thankful I generally work on software and can operate with way higher margins. 15% margin on 3-$100 services a year. Makes it really really hard to grow business, pay well, make mistakes (you’re always going too and with such a small margin they hurt way more). Happy to talk more in private if it’d be helpful. I am watching them hurt bad right now trying to add market 4/5. They’re at about 750k run rate

Homee helps address this.

Can Latchel be utilized by a homeowners association with an existing list of preferred vendors?

Absolutely. We organize vendors by trade category and customer contact preference on a per-property or per-portfolio level. This allows us to structure property and vendor relationships in a large number of ways that accommodates almost any customer type

How do you plan on dealing with competitors? what do you think your 'moat' is?

I feel like many of our competitors focus on either a pure software or pure human operations solution to property maintenance. We approached this problem by combining the two, leveraging the strengths of both to provide a more efficient, and more scalable product. We use our technology solutions to automate the tasks that can be automated, and use a skilled operations team to either pick up where our automation hits snags (e.g. a tenant or contractor doesnt respond to an automated SMS asking for their schedule) or where their knowledge is required to make a decision that a computer may not be able to. It's hard enough to build a quality product with either solution, even harder to meld the two into an efficient engine. We believe this keeps us competitive and makes it hard to replicate our processes.

I'd be curious to see whether this expands into the BuildingLink market.

I’m not very familiar with BuildingLink. What market is it for? Larger multifamily?

Lots of big multiunit apartments use it, its terrible, if anyone wants a run down on current services like this I'd love to tell you why these are doomed

I'd love to know more about these services and what specifically you find terrible about them. Our team is always focused on building a good user experience, part of which comes from learning from other services mistakes

How to contact you?

How do you solve for quality control in the contractor network?

Launch HN: Latchel (YC W19) – Rental Property Maintenance as a Service