#BIG

Landlords will love/hate this

This idea gets away from the product and goes toward another Internet service.  The goal here is to leverage competition to get the the best price for apartments for everyday people.

Problem: Apartments sitting empty earns the owner zero dollars each month.  In fact, because of utilities, taxes, and maintenance they actually loose money on empty apartments.

Problem: The typical apartment shoppers has very little negotiating power on a rental contract.

In a city with significant rental vacancies I think there is tremendous opportunity to launch an online service for the reverse auction of apartment contracts.

Landlords: So in this example, landlords would pay a small fee to list apartments on this service when they are desperate for tenants, or have an empty listing.   They would post their ideal price.   Lets say you have a 1000 square foot apartment in the city and you are putting it up for 1,100 a month.  Of course there would be plenty of pictures and detailed descriptions of the living space.

Tenants: Average Joe’s will flock to this if they find out they can suddenly negotiate rental contracts.  They take interest in this 100o square foot pad, but are unwilling to pay the 1,100 each month.  Instead, Joe wants to pay 600 a month.  Now remember the landlord still chooses the highest bidder in a reverse action so Joe has to beat all other tenants bidding on the property.  He puts in 800 bucks.  A few days later someone outbids him at 850.  Joe really wants this so he puts in 900 a month and wins!

Result: Landlord is happy that the apartment is filled and he is no longer loosing money.  He isn’t making what he hopped for, but it is better than zero.  If he is smart, he keeps the contract short like 3-6 months, and tries to renegotiate with the tenant after that time.  The tenant is happy because he is paying $200 less each month on his apartment.  In turn, he tells everyone he knows how smart he is in getting this deal! The news spreads about your online service

Marketing: I would start this in a specific geographic location where apartment vacancies are higher.  I would keep working on this location until the software is polished. . . much like how craigslist.org marketed itself in initial stages.  First go to the larger rental companies and allow them to use it and list apartments for free.  You can spread the word to tenants through craigslist, paper ads, other places where apartment shoppers go first. . . you get the idea.

Other ways to monetize: If landlords wont pay, which I think they will. . . here is another option. Become the contract negotiators.  You will serve as the middleman between the landlords and the tenants.  You could change the tenant the difference of one months rent.  For example, you get the landlord to drop the 1,100 month rent to 900 for the first six months.  You would charge your buddy Joe $200. 1,100 – 900. Get it?

A new twist: You could flip the entire service like this. . . Joe comes in and says I want a 1000 square food in Chicago near the subway, and I am willing to pay $800.  Landlords come in and get to make Joe and offer on apartments that match his needs.  They could say, I have this great apartment, and the price is usually 1,100 but you can rent it for say $900.  Maybe you charge the Landlord a small fee to use your service.

What do you think? Ideas? Suggestions?

This entry was posted on Saturday, February 13th, 2010 at 9:41 am and is filed under New Ideas. You can follow any responses to this entry through the RSS 2.0 feed.