How To Be A Passive Landlord With Doorstead
15.5 million small scale investors own a vast majority of the single family rental properties in the United States today. These investors are typically individuals or families who have inherited properties or have purchased 2-10 units as a source of passive income or capital gain. But managing these properties is also an investment of time. Setting prices, finding good tenants, collecting rent, and responding to maintenance requests can become a part-time job for property investors, and many don’t have the skills or desire to handle these tasks. As a result, more than a third of single family rental owners turn to property management services for help.
Property management is a broken and antiquated industry. Prices aren’t informed by dynamic market data and are often set unrealistically high. Units sit vacant for weeks or even months and the property managers, who get paid regardless, have little incentive to adjust prices to secure a tenant quickly. This common scenario comes at a high cost. Small property owners suffer $7B in lost revenue every year due to inefficient pricing and unnecessarily long vacancies. This causes financial hardship, and some owners are forced to sell their properties to prevent further losses.
Doorstead is a full-service property management platform that tackles these issues through technology and data science. The company offers a unique upfront rental guarantee by analyzing millions of market-specific data points on a daily basis to calculate a rental price that maximizes rental income while minimizing vacancy. Within 24 hours of a request for a given property, Doorstead provides a guaranteed rental rate, occupancy date, and a year of monthly cash flow for the owner. The service offers true peace of mind to property owners, and has been growing rapidly across the Bay Area, Los Angeles, and Orange County in California.
I had the privilege of sitting down with Ryan Waliany, Doorstead’s Chief Executive Officer, and he gave me an inside view into the company’s mission and focus.
1. Tell Us about your background and why you started Doorstead?
During my time at Uber, I came to realize that there was a new wave of innovation that was occurring in what I call technology-operations companies. These companies build two-way applications that bridge the gap between the physical and digital world. Generally, these companies create services that are better, cheaper, and faster than the alternatives.
With this thesis, Jenn (my co-founder) and I set out to revolutionize the property management space. We saw an opportunity in the story of a customer who was overpromised rent and had to sell her home, and we became passionate about eliminating this pain for customers with a service guarantee.
2. What is the problem and what does Doorstead do?
Today, full-service property management is broken and this leads to $24B in unnecessary vacancies due to inefficient pricing. The current system to set the price high and lower it each week to find the market-efficient price creates 23-days of lost rent. The small investor who owns 95% of urban SFRs experiences $7B of this loss every year, incurring cashflow stress, and in some cases, financial hardship from lack of liquidity.
The Doorstead Guarantee is a new class of full-service property management that provides small investors a guaranteed rental offer in less than 24 hours (ex: $3,400/mo starting in 35 days). This creates cash-flow certainty and peace-of-mind from day one, and is the first step toward a lifetime relationship with the most valuable network of real-estate investors who have $3.7T under management.
3. How do you provide guaranteed rent to property owners?
Our patent-pending pricing system compares 11M+ rental price points in a region to predict the likelihood of success on a daily basis. This results in smart price changes to get renters in a home faster. Doorstead’s leasing and placement time is 57% faster than the industry average.
Doorstead has rebuilt the operations stack leveraging gig workers, central operations, and support operations. This enables seamless scaling across the US without the diseconomies of scale from an employee-based workforce (i.e. utilization goes down with scale due to driving time). Doorstead’s NPS is 79 without having any local employees. When we compare this to the industry average of 8, the potential impact of Doorstead is pretty exciting.
4. How many markets does Doorstead operate in? Across How Many Units?
Doorstead operates in three markets today. In San Francisco, our first market, we have over 300 properties under management in less than 2 years. Our second and third markets, Los Angeles and Orange County are still within weeks of launching and already ramping up faster than San Francisco with hundreds of owners in our sales pipeline.
5. I own a home and want to use Doorstead to rent it, what is the process?
Press a button, and get a rental offer within 24 hours (ex: $3,400/mo starting in 40 days).
- Owner Visits Doorstead.com to Get a Doorstead Offer: We’ll let you know your minimum guaranteed rental income and when your property will start generating rent.
- Owner Signs the Agreement: After verifying your property details with a Doorstead partnerships member, you’ll receive a final offer and agreement to sign.
- Doorstead Makes Property Rent-Ready: We inspect your property, manage repairs and cleaning, and take high-quality photos so that your property earns the highest income.
- Doorstead Lists Your Property Online and Finds a Great Tenant: Once your property is rent-ready, your guarantee clock starts. We’ll list your property, conduct showings, and screen prospects to find the best tenant for your home.
- Owner Receives First Payment: You start receiving your monthly payments guaranteed and risk-free. Doorstead takes care of everything else from maintenance requests, tenant questions, rent collection, etc.
6. I know you recently just raised a Series A, can you tell us more about that?
We raised a $12.5M Series A from Madrona and M13 with an incredible roster of angel investors.
The most gratifying thing about this fundraising process was how some of our mentors evolved into Doorstead investors as they provided feedback and worked with us to improve our story. We were thrilled as the brightest technology-operations executives started getting onboard with our vision. From Opendoor, we have Eric Wu (CEO), Tom Wilder (CPO), Nathaniel Faggioli (former VP of Operations), and Manu Gupta (an early investor) participating in the round. From Uber, we have Manik Gupta (CPO of Uber), Lior Ron (GM Uber Freight), Jason Droege (GM of Uber Eats), Stephen Chau (Product Head at Uber Eats), and Andy Szybalski (Design Head at Uber Eats). Finally, we have Court Lorenzini (CEO/Founder of Docusign) who is a long-time friend and mentor. Having these folks in our corner is a huge validation, and gives us more confidence to aim even higher with Doorstead.
It took us about four weeks from the first scheduled investor call to get to a term sheet.
7. What are the biggest opportunities you see for the business?
In the next five years, Doorstead will reach $1B GMV by capturing 1% of SFR marketshare in the top-10 metropolitan areas. To date, Doorstead has captured about 1% of new rental listings in its first market.
8. What are your goals for the next 12 months?
Today, property owners receive their guaranteed rental offer within 24 hours after submitting a request. In a few quarters, we will be rolling out the ability to get an instant offer within seconds. This will help accelerate our growth and unlock our vision to press a button and get an instant offer.
Additionally, we will be doubling our team to 50 FTE and plan to expand our service to 5 major markets across the U.S by the end of 2021.