Property management technology innovations are increasing every day, with startups clamoring to disrupt everything from tenant screening to cashing checks. Landlords and management firms are paying attention because after all, the value of your asset correlates directly to how well you manage it.
At $73 billion a year, property management is a huge, but fragmented industry, spread across close to 250,000 businesses in both residential and nonresidential real estate, most of which are quite small. According to Fortune, 95% of rental properties are run by “small businesses with less than $20 million in revenue and fewer than 10 employees.”
Another interesting fact is that the average property manager is 58 years old, according to a panel at a recent CRE.tech LIVE event—and a number somewhat confirmed by an National Association of Residential Property Managers survey). With boomers running the show, one might assume they’d be slower to adopt technology, but that same survey found that 88% of residential property managers have already adopted “dedicated cloud-based property management software.”
Here are three of these companies that are transforming property management.
What is it: The biggest company on the list, this SaaS property management service launched in 2007 targeting mid-to-large property managers. Founded by former “Entrepreneur of the Year” Klaus Schauser, AppFolio quickly found footing, raising $30 million total from private investors before going public at $74.4 million in 2015.
Despite falling below their $100 million IPO target, AppFolio’s stock didn’t just recover; it’s literally exploded. Revenues are surging and the stock is has more than doubled in less than a year, bringing the company closer and closer to a billion dollar valuation.
Price: $.80 to $1.50 per unit per month, depending on property type with a $250 monthly minimum.
Funding: $30 million pre-IPO. Has a current market value of $870.75 million (and growing).
X-factor: With its explosive growth on the public markets, AppFolio found itself on a Zacks/Yahoo! Finance list of “internet-based stocks” to watch in 2017. Sporting a 100% plus growth year-to-date and “long term EPS growth” of 30%, AppFolio is well-positioned to crack public “unicorn” status in the very near future.
What is it: Out of all the services on the list, Buildium was the first to market years before SaaS became a well-known thing.
“We decided to build something online for ourselves in 2004,” CEO Michael Monteiro told Fortune last year. “We did not know if the market was there. We were just solving our own problem.”
After eight years of bootstrapping, Buildium raised $20 million spread across two rounds (2012 and 2014), before raising a whopping $65 million last year.
Since its 2004 launch, the Boston-based outfit has eaten sizable market share from traditional property managers, racking up 12,500 customers as of 2016 with “one million residential units in 46 countries worldwide.”
Price: Sliding scale beginning at $45 per month.
Funding: $65 million.
X-factor: The platform is well-capitalized and primed for growth. According to sources, there’s interest in getting in on Buildium early, especially in light of AppFolio’s success on the public markets. “We’re definitely interested in this,” said one manager of a nine-figure pre-IPO fund. “Just going by the AppFolio benchmark, or even half that, the multiples are unbelievable. Problem is we’re not the only ones shopping and they know that.”
What is it: Cozy is the new kid on the block, opening up shop in March, 2012. Seeking to fill a void in the property management software market, targeting “independent landlords and small property management companies.” In other words, a freemium model with upgrade options for landlords as they grow.
Sure enough, the market’s responded. Since launching in (when), the company has had a growth spurt, racking up (number) of users. Unlike Appfolio and Buildium, Cozy has a free model, which appeals to mom-and-pop investors and smaller developers/asset managers.
Price: Free for landlord. (The company monetizes through paid credit checks and a 2.75% credit card fee.)
Funding: $18.4 million in four rounds from 13 investors.
X-factor: Independent landlords and small property management companies…whether they can cash in…. their bet is that smaller landlords grow as Cozy grows, banking on the axiom that once you have a user, the loyalty keeps them there— and cashing in on the proverbial change resistance in the industry.