IT Value Proposition

Introduction to Rental Housing Market

According to Zillow, renters in USA paid approximately $4.5 trillion in rent in the last 10 years.
To put the number in perspective, this is more than the GDP of Germany in 2018. They also
stated that in 2019 alone, renters paid $512 billion in rent in US. Renters in New York paid
$56.6 billion, Los Angeles paid $39.2 billion and San Francisco shelled out $16.4 billion. They
were the ones who paid the most in 2019. ("Will Rent Prices Drop in 2020? Falling Rents Rental
Property Management Trends | ManageCasa", 2020)

The market is also experiencing changes due to the following broad reasons:
 Automation and technology
 Changes in demographics
 Housing supply chain issues
 New regulations

("Will Rent Prices Drop in 2020? Falling Rents Rental Property Management Trends | ManageCasa",
2020)

Profile of Landlords
According to a Harvard report, Institutional investors are investing in multifamily properties and
even apartments. This is because of introduction of profitable, stable market and property
management software making large scale management possible. The same study also reported
that the share of individual-owned mid-sized apartment properties has fallen from
approximately two-thirds in 2001 to about two-fifths in 2015.
Some of the major challenges faced by landlords are:
 Meeting tenants demands
 Managing irate tenants
 Finding reliable tenants
 Late rent payments, rent defaults, and rising rate of evictions
 Working long hours for handling all tasks
 Ensuring following of government regulations
("Will Rent Prices Drop in 2020? Falling Rents Rental Property Management Trends | ManageCasa",
2020)

Profile of Renters
In 2018 RealPage surveyed 5.7 million lease transactions and analyzed them on renter
characteristics like age, income, marital status, number of adults per household and children or
pets per household. As per their analysis, they divided renters into following 8 types:
 Starting out Singles (29%): They classified them as youngest renters with limited income
and high rent to income ratio. They also change properties often.
 Young Adult Roommates (21%): Renters are 28 years old or around, with two or more
adults per household. They also change properties and move around frequently.
 Perma-Renters (16%): On an average they are in their 40s, often are single and stable.
They don’t prefer to change properties as frequently as younger renters.
 Middle Income Boomers (11%): They are on an average in their 60s, single and are one
of the most permanent renters of a property.
 Moving on up (8%): They are in their 30s, single and prefer to rent properties in upscale
area in metros instead of buying them.
 Working Families (6%): They are two parent or single parent families in their early to
mid-30s, comprising of children.
 Young Couples (5%): They also tend to be in their mid to late 30s, two adult household
and more affluent.
  Pet People (4%): They have two or more pets per household, and they live either alone
or with a roommate.

("RealPage Analysis Finds Eight Primary Types of Renter Households | RP Analytics", 2020)

The 2020 NMHC/ Kingsley Apartment Resident Preference Report revealed the following
factors that matter most to renters:
 Affordability
 Quality of Management
 Convenient in-Unit Amenities
 Connectivity
 Secure Package Delivery
 Mobile Access
(NMHC/ Kingsley Apartment Resident Preference Report, 2020)
("Will Rent Prices Drop in 2020? Falling Rents Rental Property Management Trends | ManageCasa",
2020)

The Opportunity
While there are apps that provide for potential tenants to find flat mates and to find a rental
properties as per their requirement, there exists a gap in the tenant – landlord communication.
As we have stated earlier in the report, one of the biggest factor influencing renting decision is
the quality of management of the property and two of the difficulties faced by landlords is to
manage tenant expectation and managing irate tenants.
While property managers, rental companies, landlords and even renters would prefer a long
term stay, there are many reasons that lead to either eviction of tenants or tenants changing
properties. At the same time, landlords would prefer tenants who are reliable to take care of
the property and thus would prefer a clean rental history.
There is a gap of real dialogue between landlords, rental companies and renters.

Problem Statement
There is no forum that provides opportunity for tenants and landlords to clearly communicate
their experience during and after their rental interaction. This creates a space where the
expectations of both the parties are not well managed. This can lead to unnecessary hassles
and miscommunication. Without a channel of feedback about the general experience, there is
no way for either party to make any changes.

The Solution
For tenants and landlords to have a smooth, conducive and easy interaction during and after
the length of contract, there should be a feedback mechanism for the landlord and the
property. Honest feedback will give the landlords the chance to learn about their ways to
improve their service. Once a customer has rented a property they can know the benefits,
drawbacks and talk about their real experience. According to Local Customer Review Survey
2013, 79% consumers trust online reviews as much as personal recommendations.
For the landlords also, they can know about a renter’s profile by seeing their rental history,
expectations and decide on renting their property. (Anderson & Anderson, 2020)
This gap can be filled by a rating app that can be integrated with property finding apps like
Zillow, Apartment.com, Rent.com etc. or it can function as a standalone app where properties
and tenants can be reviewed.

Reliable, useful and pertinent online reviews can be useful for the following reasons:
 Increases customer confidence: A tenant is more inclined to recommend a property or
rental company to their group in which they have a high trust. For the person
considering to rent the said property it will act as a boast to give them the confidence to
make a decision.
 Free advertising: As stated earlier, since most customers trust online reviews, it acts as a
method of advertising.
 Share experience: Humans are social animals, willing to share experience. The act of
sharing good, okay and bad experiences creates a sense of community.
Value Proposition Canvas
Customer Profile –
1. Customer Gains: These are the benefits that the consumer wants and needs. There are
the reasons that can increase the probability of customers accepting and adopting a
value proposition. Some of the gains are follows:
 For Landlord / Renting company
o Reliable Renter: All home owners are looking for a renter who is professional,
polite, pays rent on time, takes care while using the in house facilities etc.
Overall they wish to rent to a household or individual who would take care of the
property well so that they don’t need to invest money for extra damages before
next renters move in.
o Steady Occupancy: Landlords and renting companies are looking to make steady
income from their rental properties. To reach this goal they require a steady
occupancy at their apartment or house. They would either prefer a long term
tenant or that the property is occupied as soon as possible after the last tenant
moves out.
 For Renters
o Quality of Management: The standard of their renting experience, for tenants,
extends beyond just the unit they occupy. The second most commonly cited
explanation residents gave for moving to a new apartment community was
frustration with the level of management in the neighborhood where they live,
with 31 per cent citing this as the explanation for their re-location. (Monroe,
Monroe, Monroe & Monroe, 2020)
o Convenient In-House Amenities: When deciding the in-unit facilities to
incorporate, maintaining the emphasis on facilities that have a comparatively
low cost to introduce, but a high perceived benefit for tenants is given a
preference by property managers. Renters put a high emphasis on the
functionality of apartments that allow greater comfort in their daily lives.
2. Customer Pains: This dimension answers the question of what is troubling the customer
right now, what is hindering them from completing a job or activity. What are the
unpleasant feelings, and challenges that the customer experiences in the process of
getting the job done? Some of the pains in the current scenario are as follows:
 For Landlord / Renting company
o Malicious or false reviews: While as stated earlier that most customers view
reviews as a personal recommendation, it can mean that a negative review
can seriously affect a business in both positive and negative way. So
competition, angry customers and even spammers can leave a negative
review to bring the ratings down for a business.
 For Renters:
o Writing review takes time: It takes time and effort to write a genuine review
for any business, product or service. Especially for a property someone is
considering to stay in, there are many points that needs to be rated about
which a person may forget. Also, discussing all points may be time taking.
o Trusting reviews: With the trend of paid and false reviews, some customers
are getting sceptical about random reviews being put online. This adds to
their problem of trusting and making a decision about a property.
3. Customer Tasks: This aspect addresses the physical, emotional and/ or social task
customers are performing. It undertakes to understand the challenges they are
attempting to solve and the needs they wish to satisfy. Some of the customer jobs are:
 For Landlord / Renting company
o Occupancy rate and profitability: The occupancy rate calculates the occupied to
total available rental property space. Occupancy rates are essential to investors
in real estate because these figures offer an indicator of planned cash flow. An
owner who owns a property with a reasonably low vacancy rate may waste time
and money seeking new tenants and he or she risks not filling the rooms,
apartments or houses while still paying upkeep costs, maintenance cost, cost of
amenities and property taxes on them.
  For Renters
o Decision making: It is always difficult to make decisions and choices, because
considering the various options takes time and resources. Things such as second-
guessing oneself and feeling indecisive are just a part of the process. Comparing
properties, amenities, neighborhood, commute etc takes a lot of time and causes
pressure. This is especially true when people need to decide on a place to stay
for a long period of time.
Value Map –
1. Pain Relievers: This point discusses about how the product or service will be effective in
alleviating customer problems and negative experiences.
 For Landlord / Renting company
o Verified renter profile: Just like any other service industry where platform,
verified profiles will reduce the chances of false and malicious reviews by
customers. It will reduce the burden of vetting all reviews by the business as
future renters can check the profile of reviewer to assess how much weightage
they should give to it. Any review from a verified profile also adds to the
authenticity of a review being provided.
o Option for landlord and Rental Company to reply to reviews: As in the case of
any communication channel, the conversation will be two ways. The property
owners will get a chance to give their opinion on the review, thank a reviewer, or
present their side of the scenario. The future customers can then view both the
review and the reply before making their decision.
 For Renters:
o Easy to rate parameters: To offset taking time to write a review covering all
pertinent topics that can affect one’s decision to rent a property for self and
family, easy and fast rating mechanism will be available. A five point rating scale
on topics such as mobile network connectivity, frequency of maintenance,
response time from property owner or manager, in house amnesties etc. The
 option to write detailed review on each parameter and an general review would
also be provided.
2. Gain Creators: This dimension explores the ways in which the product or service
generates benefits for the customers and how it provides added value to the consumer.
It talks about the extra value the product or service brings to the table for a customer.
The gain creators for this product is below:
 For Landlord / Renting company
o Faster and easy background check of potential renters: Property owners can do a
quick check of the profile of renters on the app, look at their past experiences
with landlords and connect with them faster for a reference check if required.
The profile would also give a better understanding of the unconscious or
unstated needs of the potential renters, enabling the company to offer other
properties that may better suit their need. This will help add value to the
customer experience for renters also.
o Online identity as a preferred space: As is with any business with good review, a
property with good reviews would get more renters wanting to move in, helping
in ensuring higher occupancy rate.
o Free advertising: As seen with word to mouth reviews when a customer tells his
or her friends and family about a good business, they add to their customers.
With the same principal a good online review will provide for a positive
advertising.
 For renters:
o Better quality of management: With feedback coming in from previous renters
landlords and property management can take appropriate steps to solve any
problems faced. This will result in faster response time, decreased delays in
addressing issues and providing solutions.
o Better In House amenities: Property owners and managers may not be clued in
on the preferred in house amenities and thus can rectify this on getting a proper
feedback.
 3. Products and Services: Along with The product or service, its variants like luxury, regular
or premium etc. can be listed here. The value creating features are mentioned here.
 For Landlord / Renting company
o Increased occupancy: With the increased visibility and access by potential
customers, there will be increased occupancy in the properties. Let's take a hotel
on TripAdvisor as an example. This platform helps travelers to review the hotels
they have visited, in general, and on various aspects (cleanliness, location, etc.).
If a hotel is highly reviewed by visitors, it would appear higher in search results,
leading to TripAdvisor users visiting the hotel's website.
 For renters
o Quicker and more informed decision making: When a person visits a potential
rental property, one cannot expect to notice each and every details of the place.
Also when one tries to remember the same, it may lead to forgetting some major
points. In this situation the app and reviews will help a potential renter make an
informed choice.
Conclusion
With the growing trend of consumers preferring rented property vs owning a property, it is a
booming market with companies and individual owners looking to invest. At the same time
customer needs and expectations are changing at a fast pace. To maintain a satisfying customer
experience there need to be a feedback and dialog mechanism. Also, for the potential
customers to make an informed decision. These issues can be solved by an authenticated
profile based review system ensuring open dialogue.
 References

Goodman, J. (1999). The changing demography of multifamily rental housing. Housing Policy

Will Rent Prices Drop in 2020? Falling Rents Rental Property Management Trends |
ManageCasa. (2020). Retrieved 11 September 2020, from https://managecasa.com/articles/us-
rental-property market/#:~:text=The%20US%20rental%20property%20market,investors%20it's
%20a%20fertile%20paradise.

Anderson, M., & Anderson, M. (2020). 2013 Study: 79% Of Consumers Trust Online Reviews As
Much As Personal Recommendations. Retrieved 11 September 2020, from
https://searchengineland.com/2013-study-79-of-consumers-trust-online-reviews-as-much-as-
personal-recommendations-164565

NMHC/ Kingsley Apartment Resident Preference Report. (2020).

Monroe, (2020). New Research Reveals What Renters Want in 2020: 6 Trends to Watch - The
Official AppFolio Blog. Retrieved from https://www.appfolio.com/blog/what-renters-want-
2020/