Would love your feedback on my business idea

Would love your feedback on my business idea

Professional · Palo Alto, CA · Member since 2016 · 2 posts · 0 votes

Hi BiggerPockets community,

I have a startup idea that I wanted to run by this community of landlords. It seems to me that there are two main pain points that landlords deal with every day:

1. Turnover. Landlords are really concerned about consistent income streams. Having a tenant move out and having the hassle of replacing them and not knowing how long it will take to find a new tenant is a source of anxiety. You can lose a lot of income trying to fill a property, and property management companies charge extra every time they have to find a new tenant.

2. Maintenance. Being a part-time landlord involves a lot of maintenance hassles. You either hire a handyman or become one yourself but maybe you aren't excited about spending your weekends plunging toilets.

The startup idea is to rent apartments or houses from landlords and offer an upfront monthly rent. Then, this company would go out and find a tenant, take care of maintenance going forward, etc. The landlords get a consistent income stream, and the company takes on the risk of bad tenants or maintenance issues. Instead of charging a % of rent fee, like most property management companies, this company would earn the difference between what they pay the landlord and what they charge the tenant.

What do you guys think? Do you think this idea could work? Am I right about what landlords care about, or are there other pain points that are more important?

Thanks!

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Investor · Cincinnati, OH · Member since 2013 · 2k+ posts · 1k+ votes
10y

@Eugene Lipkin first off, props to you for stretching the conventional thinking of the tenant/landlord/property mgmt company process. It's a lot easier to critique biz ideas than it is to come up with them. 

That said, the actual mgmt expenses and quality of resident would be the primary concern of the landlord. If you find a way of solving (maybe an insurance company??) that then you might have something. 

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  • Investor · Henderson, NC · Member since 2016 · 484 posts · 208 votes
    10y

    I've seen things similar to that for people who can't qualify to rent anything. The "company" rents the apartment in their name, and then basically sublets it to the bad tenant.

    As a landlord, I would never consider giving any space to such an applicant...

  • Rental Property Investor · Northville, MI · Member since 2013 · 263 posts · 183 votes
    10y

    Where do you draw the line on maintenance? For example, if the toilet blocks up, your rental company handles the job.  But what if the toilet needs to be replaced? Surely your business model cannot handle the expense of replacing the toilet, let alone major repairs like  replacing a broken water heater. So where Is the savings to the landlord from not having to deal with maintenance? Answer, there is no savings.  

  • Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
    10y
    Not for me
  • Investor · Cincinnati, OH · Member since 2013 · 2k+ posts · 1k+ votes
    10y

    @Eugene Lipkin first off, props to you for stretching the conventional thinking of the tenant/landlord/property mgmt company process. It's a lot easier to critique biz ideas than it is to come up with them. 

    That said, the actual mgmt expenses and quality of resident would be the primary concern of the landlord. If you find a way of solving (maybe an insurance company??) that then you might have something. 

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