Residential and commercial real estate are increasingly converging.

We have seen the trend here at CRE.tech for a while, as we often debate what we consider to be CRE. But, the rapid evolution in real estate was really driven home in my recent conversation with Rahul Mewawalla, CEO of Zenplace. “In just the last decade, the percentage of residential real estate that is rented and not owned has gone from 30% to 40% percent,” he said.

That is a huge shift in a short period of time, especially for the real estate industry, which at $10 trillion represents one of the largest global asset classes. There are a number of trends behind this increase in rentership, of course. Changing market dynamics, tightened credit availability, and limited housing supply in key markets have been driving prices up and out of reach of many. Especially in cities like NYC, LA and SF where renters now represent a majority of residents.

Be it an affect of the economics or just coincidence, consumer sentiment seems to have changed as well. There are now about 50 million rental homes in the U.S. with 100 million tenants. More and more people have no intention of buying a dwelling. We live in an on-demand society. Pay Netflix and get access to entertainment. Pay WeWork and get access to an office. Pay Uber and get access to personal transportation. The same mentality is crossing over to housing, especially for the younger generations. Why be tied to what they see as a complicated and illiquid asset when they can just rent instead and retain their flexibility?

The traditional idea of the American Dream of owning a house, two cars, and two and a half kids is fading like Marty McFly’s picture of himself in “Back to the Future”. At times, our world now looks increasingly similar to the future depicted in that movie series, with hoverboards, self-lacing shoes, voice activated appliances and VR glasses. One thing the writers did not predict is that the futuristic house depicted in the movie would likely be paid for as a service rather than as a product.

So how is the rental market evolving? Zenplace is experiencing some interesting trends. On one hand, “There are a growing number of large institutional players and REITs who have built up huge portfolios of tens of thousands of units and are seeking more effective ways to manage these properties that will drive higher returns,” says Rahul Mewawalla. These real estate institutional investors are eager to work with a technology-led property management company like Zenplace which combines experienced property management professionals with next-generation technologies like artificial intelligence, analytics, and machine learning. Mewawalla continues, “On the other hand, we also see an increase in individual and small-to-mid size investors buying income properties, who are looking to invest more in rental properties and are looking for a property management company that is efficient, transparent, and provides a better owner experience.” Both these trends are leading to a huge demand for a technology-led property management company like Zenplace.

Zenplace’s team combines world-class talent from technology leaders including Google, Facebook, Yahoo, Nest and real estate stalwarts like CBRE and Realtor.com. Zenplace’s CEO Rahul Mewawalla has a long track record of success. He led and built the U.S.’s technology program in Silicon Valley with the White House, previously ran one the world’s largest and fastest growing mobile services networks, and as CEO of successful Silicon Valley companies. He also led and ran multi-billion dollar businesses at places like GE, Yahoo, and Nokia, and advises Stanford, Cisco and San Francisco’s Mayor on innovation. Mewawalla was recently named among the “Top 40” Leaders in Silicon Valley, the innovation capital of the world.

Zenplace has reinvented the end-to-end property management experience to provide owners with higher returns, lower costs, and peace-of-mind, with an enhanced owner and tenant experience. Owners and tenants of properties managed by Zenplace surveyed gave their property management services a median NPS score (an average of a customer satisfaction survey) of 87%. To put that into perspective, an NPS score of 100% is basically all 5-star reviews.

Owners and properties managed by Zenplace, will be able to deploy adaptive algorithms used by companies like Google and Amazon for determining optimal rents, helping reduce vacancy times, resulting in quicker turnaround times. Zenplace innovative technology also sources, screens and places great tenants making it easy and effortless for property owners.

Zenplace uses an innovative approach towards property maintenance and vendor management as well. Traditional property managers have a fixed roster of vendors that they tend to use. Zenplace’s machine learning technologies, on the other hand, scan local vendors across the nation based on price, timelines, reliability, reviews, availability, and numerous other variables to quickly assess and determine the best and most competitively priced vendor for the specific task. Scheduling is automatically synced with the tenant’s availability. Property owners, as a result, see both lower costs and higher service levels.

Depending on the market, typical property managers have a fee ranging from 7%-10% of rent with a number of additional charges. Zenplace charges a flat rate as low as 5% for full service property management services. This makes for a compelling proposition for owners, large and small. As Zenplace continues to grow and expand rapidly, their insights and intelligence will grow as they analyze increasingly larger volumes of data across properties.

Zenplace’s machine learning and artificial intelligence programs can comb through this data and create predictive insights and recommendations for property owners. According to Mewawalla, “Property management today is largely reactive. You wait for a problem and then tackle it. Our view is that it needs to be proactive and should be able to mitigate issues before they happen.”

Currently, management companies are indeed reactive in nature, they wait for something to break and then fix it. Zenplace, on the other hand, is using data sets to enable landlords to be proactive. By knowing the age of your house’s components and referencing with manufacturer’s recommendations and real-world conditions, issues can be resolved before any possible expensive problems occur or replacements are needed.

The combination of a growing rental market, inherent demand for property management, and its development of next-generation technology has put Zenplace in a good position to change the way property is managed. As someone who knows the industry, I, am all for it. My first job in real estate was as a residential property manager. While it created a steady income, it was fraught with issues like lack of responsiveness and unpredictability which drove me to the more stable and slightly less emotional arena of commercial RE. Today, however, property owners and portfolio managers will not have the same experience, thanks to innovative companies like Zenplace. They will be able to manage their real estate assets as efficiently and effortlessly as Mrs. McFly hydrates a pizza. As well they should, as their property is a valuable investment just like commercial real estate. With Zenplace, they will now get the enhanced owner experience and sophisticated technology once reserved for only the most advanced facilities.

Franco Faraudo

Franco FaraudoFranco Faraudo has an MBA in entrepreneurship and works as a real estate agent and property manager. He has been involved in both commercial and residential real estate as an agent and investor. He writes about start-ups and their role in modern cultural and societal trends. He is the editor of cre.tech’s exclusive Insider channel.