In a Series B fundraising round, property management firm Doorstead brought in $21.5 million to offer “assured” rent payments to property owners.
In 2019, Doorstead was founded by Ryan Waliany and Jennifer Bronzo, who used Craigslist to pilot their pricing approach for rental houses. Through data science and machine learning, the firm has developed a pricing model that the two founders claim allows it to more accurately forecast the rent that a specific property can bring in.
That is not to suggest that the system is completely safe to use. The duo agree that it is undoubtedly a dangerous enterprise to guarantee rent to landlords given Doorstead has to cough out the difference if it can’t acquire the amount it promised.
They insist, nevertheless, that their prediction model is so effective that it ultimately triumphs. Doorstead’s business model relies only on an 8% administration charge, therefore the company has no incentive to advertise rental prices that are higher than market rates. Therefore, even if the corporation is able to secure a greater rental rate than was originally agreed upon, it will not keep the extra money. The owner of the property instead receives the surplus payment.
CEO Waliany told TechCrunch, “Other firms may seize that upside but then we feel that incentives are skewed.” That which we provide is a market-based, risk-adjusted guarantee.
If a homeowner wants a guaranteed offer for their house, they can do so by entering a few details about it on Doorstead’s website. If the home qualifies, the firm will inform the owner of the minimum amount they may expect to receive each month as well as when they can expect to get the money.
If we are able to rent the property for less than the minimum or if it takes us longer to locate a tenant, we will pay the difference,” says COO Bronzo. Therefore, the landlord still receives rent, but we cover the shortfall ourselves or reduce our 8% profit margin.
Waliany claims that “reaching above the baseline listing price 75% of the time” is Doorstead’s goal.
We benefit monetarily, and the number of vacant units is reduced, so everyone wins. Property managers might be slow to act if they aren’t guaranteed payment in advance, he added.
The company claims 270% rise in property value in 2022, with revenue “outpacing” that growth thanks to “strong unit economics,” therefore the approach appears to be successful. Doorstead claims it has managed homes worth more than $1 billion and has serviced “thousands” of owners over the years. The company has operations in seven areas throughout California, Washington, and Massachusetts and hopes to “double or treble” its size this year.
Doorstead does not partner with large property management companies, but rather with private homeowners and property managers of single-family homes, condominiums, and townhouses.
Waliany has expertise in product management at Uber, while Bronzo is a seasoned property manager. The partners think that their combined experiences have prepared them to successfully manage a technologically advanced, “full-service,” real estate management company.
When we first got started, we said to ourselves, “Let’s just create a tech-enabled property management firm. Like Uber, we’re planning to develop a service that helps people manage their properties. “We thought we knew what customers wanted, but after talking to them, we learned we were completely incorrect,” Waliany told TechCrunch. We saw that the market was ignoring a more significant issue: landlords were being overpromised rentals. Leaving their homes unoccupied for three to six months might cost them their property and, in extreme situations, their very livelihood. As a result, we reasoned, “What if we can provide them a guarantee up front before we locate a tenant?”
The investment was led by Avanta Ventures, and other investors included MetaProp, M13, and Madrona. CSAA Insurance Group’s venture capital arm is known as Avanta (also known as Triple A, or the American Automobile Association, AAA). Also supporting them are former Opendoor CEO Eric Wu and former CPO Tom Willerer. Since its beginning, Doorstead has managed to raise $37 million.
The San Francisco-based firm now employs around 150 people (full-time equivalents) across a variety of locations. Doorstead plans to improve its capital efficiency and “improve unit economics” in order to increase its profits, in addition to expanding into new markets.
Our goal, as Waliany put it, is development, but growth that is also lucrative.
Partner at Avanta Ventures Steve Bernardez told TechCrunch via email that “the rental property management area is a significant and growing market long neglected by legacy suppliers,” which is why he decided to invest in Doorstead.
He elaborated, saying, “Despite a significant market potential, the rental property management area suffers from bad solutions that misalign incentives, fail to handle financial concerns, and may be excruciatingly inefficient for all stakeholders.” Doorstead’s guarantee provides property owners with peace of mind that a minimum rental revenue stream will begin on the specified start date regardless of fluctuating market conditions thanks to data-driven analytics trained on continually refreshed local real estate data. Then, Doorstead assists the owner in preparing the home for listing, finds a renter, and oversees routine maintenance—all through a modern, user-friendly interface.
Doorstead purchased the Boston assets of Knox Financial, a venture-backed investment property focused business that shut down at the end of last year, in addition to announcing the funding round.
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