Find pain points in the market and beat them
To launch a successful startup in real estate, you need to see the weaknesses in the market and offer effective solutions.
Nikita Komarov, product and marketing director and co-founder of PIK-Rent, talks about how to find your niche in the conservative PropTech market and launch a successful project.
The real estate market has always attracted entrepreneurs with its volume, potential and possible monetization models. At the same time, he was always associated with the traditional sphere, which was very difficult to integrate with IT tools.
However, PropTech projects have huge potential. In 2010, the market was estimated at only $ 33 million, and in 2018, investments in this sector have already exceeded five billion dollars. Those projects that managed to be “on the wave” will rock the market in the next few years.
Identify segment problems
The real estate market is huge, and solutions are needed here that will simplify the outdated mechanics of real estate transactions. The IT component gives a huge advantage and flexibility in developing unique solutions for the market, so if you decide to do real estate, you should pay attention to this particular segment.
Despite the fact that the Russian PropTech market still occupies a small share compared to the world market, in recent years it has been actively developing. And – most importantly – there is where to deploy new services and projects.
In 2018, the volume of investments in the Russian segment was estimated at $ 29 million, while in 2013 this figure did not exceed a million dollars. More and more new players appear on the market, and despite the fact that some of them take Western business models as a basis (for example, compare the Russian Homeapp and the American Сompass), the Russian segment is moving forward and becoming more open for new technologies.
When our service was launched a year and a half ago, we wanted to offer a number of solutions that would help fix problems in the Russian segment of rental housing and make this niche more transparent. And this is what we got.
Think Out Problem Solving Hypotheses
We chose the market for long-term rental real estate, because even a cursory analysis showed a huge number of unresolved problems and growth areas. Here is a short list of the main hypotheses that we put forward at the start.
Agents in the economy segment are an unnecessary intermediate link. A realtor in the economy segment is, in fact, simply a housekeeper, which is also quite difficult to negotiate with. The presence of a realtor makes the market unattractive to new players, because agents take half the commission.
Deposit greatly reduces the attractiveness of apartments. The amount that must be paid at the entrance to the new apartment is the sum of the rental price for the first month, the same amount of security and agent commission – for most potential tenants it is difficult to lay out such an amount of money right away. If we can get rid of the deposit – there will be more potential tenants, which means we will be renting apartments faster, and therefore we will give the best service.
Most users need full transaction support. A deal is not only finding a suitable tenant, but also checking its reliability and solvency, routine communication during your stay and monitoring the condition of the property.
Run your own products inside startup
It was important for us to change patterns and established patterns of client behavior, to show our users that the process of renting and renting a home can be reliable, fast and comfortable.
First of all, we decided to automate all the processes that are suitable for this. We started by simplifying access to the apartment and allowing customers to choose any time convenient for viewing. Without the participation of an agent or owner.
First, for this we used mobile key safes, which are popular in daily rentals, and now most of our apartments are equipped with electronic locks. Together with the video surveillance system and the screening of potential tenants, it turned out a safe and convenient way to watch apartments at any time without agents.
The second problem that we wanted to solve as quickly as possible was a deposit. Together with Alfa Insurance, we developed a unique insurance product that allowed owners to refuse a deposit in favor of a small monthly insurance payment, which is included in the rental price.
Usually a pledge provides two things:
safety of property
insurance against non-payment of rent.
But in reality this is only partly true – you can’t cover the serious damage with the sum of the month of rent, but the deposit really helps from non-payment. The pledge is gradually becoming a relic. Our insurance product consists of two policies, one for the protection of property, the second covers financial risks.
At first, we did not even expect that we would be so lucky with this idea, or rather, with what popularity it will gain among customers. Now 75% of the owners who rent housing with us refuse to deposit.