Launch HN: Latchel (YC W19) – Rental Property Maintenance as a Service
We're Ethan, Jullian, and Will. We're the founders of Latchel (https://latchel.com/). We handle 24/7 maintenance for residential property managers and landlords across the US.
Ethan was Director of Product at One Planet Ops, the creator of websites like contractors.com, homegain.com, and many other lead gen marketplaces. Jullian is a self-taught developer and designer who has built mobile and web apps, most recently at picmonic.com. Will comes from Amazon, where he helped design and deploy the last mile delivery operations for Amazon Fresh, Prime Now, and Amazon Logistics across the US and the world.
Will started the company when his family needed help running the family rental properties. His grandfather managed the properties full time all the way into his mid 90s! Sadly, his age caught up with him and he could no longer take care of the family business after getting diagnosed with Alzheimer's. The disease progressed quickly and unfortunately the family did not have a succession plan in place (advice to anyone with a family business: plan the succession early, you don't want to spend energy worrying about the family business when you want to focus on taking care of a parent's medical or end of life care). Will helped his father with the properties as much as he could while working full time at Amazon but was quickly overwhelmed by the maintenance dispatching and follow-up. He saw that the overall process was very similar to the logistics and delivery problems he was solving at Amazon. After looking for solutions online and calling Ethan to see if he knew of any solutions they couldn't find any. Ultimately, we teamed up to build what we couldn't find on the market: a service to handle rental maintenance problems and ensure work orders don't slip through the cracks.
Maintenance coordination is a difficult problem to solve because it is fundamentally a communications problem that isn't easily solved by software. First, most contractors are third party and take jobs infrequently from a property manager, so they're extremely unwilling to adopt a new process for reporting that work is complete or for getting paid. Second, tenants also interact with their managers rarely, so mobile applications (and even online portals) have low adoption rates among renters. Lastly, property managers face an agency problem: ultimately it isn't their properties, it is their clients who own the property. The property manager is responsible for its care and maintenance and wants to be able to have all of the details of what happened and to know why certain decisions were made in case something went wrong.
We sell monthly subscription services to property managers to take all of their maintenance calls. We have two paid subscriptions: 24/7 Emergency and a premium option where we handle both emergencies and non-emergencies. We also have a free software tier that gives property managers an online web portal for tenant maintenance request submission. This online submission tries to detect emergency scenarios and our software automatically calls the property manager in case of emergency. In addition to the monthly subscription services we also take a 10% referral fee from contractors we source for the jobs (we cover the credit card processing fees).
The HN community is full of people working on simplifying the oftentimes ugly interface between the real world and idealized technology systems. We'd love to hear your questions, thoughts, and concerns about this problem space.
70 comments
[ 0.34 ms ] story [ 115 ms ] threadDo you handle common area maintenance? Snow shovelling? Cleaning? Sidewalk maintenance? Do you have a requirement on the minimum num of units per building? How do you handle tenants that don't speak English? What is your pricing?
Aside from maintenance, do you have plans to get into full-on property management?
No minimum number of units. In fact, 80% of our units are single family residence.
We have Spanish speakers on staff, but all of our automated texts/emails are in English. So that come some times be an issue for Spanish only speakers. Generally we have to get on the phone with them.
We charge $25 + $1/unit per month for handling all tenant calls, troubleshooting, and emergency coordination. For $25 + $10/unit we do coordination for every time of job (snow shoveling, cleaning etc.) The monthly subscription does NOT include the cost of the handyman/contractor going out to do work.
No plans to go into full on property management. We feel like maintenance is a big enough headache to solve for now!
EDIT: Here: https://azre.gov/LawBook/Documents/SPS_Documents/SPS_2017.01...
"An unlicensed assistant shall not perform the following activities:
- Perform a walk-through inspection or Tenant Vacate Inspection
- Provide advice or negotiate with anyone regarding a property
Pursuant to A.R.S. 32-2165(B) A person who performs acts that require a license under this chapter, other than a broker’s or salesperson’s license, without being licensed as prescribed by this chapter is guilty of a class 5 felony."
Arizona is not unusual in this regard. I helped build a publicly-traded REIT with an internal manager and worked with general counsel on these issues. Some of the laws seem silly but if you can do what a property manager does then what's the point of having property managers be licensed? And I for one think they should be. People complain of property managers now but imagine if there was zero training or licensing. I also deal with HOAs, which require no training or licensing, and they make property managers look like geniuses. They manage HOAs when they don't even know their own CC&Rs, let alone the law.
However, we definitely want to get into the maintenance side for short term eventually.
The main question I have is: which cities do you operate in?
The secondary questions: How do you handle the workmen? What if you customer thinks that you charged too much?
I would be happy to outsource all that work to you, and I hope you succeed so I can hire you. But how would you guys find one?
In other words, the issue with finding someone long distance is that you can't check them out in person, or see their work etc.
When we send someone out from our network we are implicitly standing behind their work. The good new for us is you can tell a lot by a person's phone demeanor and business professionalism. If someone is rude or curt over the phone with us they certainly won't be polite with tenants.
The work itself was a cakewalk. Dealing with property managers, contractors and laborers was less of a cakewalk, but still manageable.
Where I saw an opportunity for the RE business I worked at for two years (because of business decisions now even the owner has admitted were not just stupid but "f--king stupid") was to try doing exactly what Latchel is doing for property managers. We had all the resources, we had the people, we had the market and we had the local reputation to actually get two management groups with over 20 buildings interested enough to say "Show us your proposal and we'll take it to our owners".
That idea died because of someone high above and their ego, and even though I eventually returned to tech[1]--I still wonder what it would have been like had I pursued this exact idea on my own.
Good luck Latchel, as other comments are showing here: this is definitely much needed, and if you do it well, congratulations on your future riches, heh. The demand for this is HUGE.
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[1] Me, returning to tech after two years in real estate https://www.youtube.com/watch?v=LJ5nV9aKthU
Edit: If you ever start operations in Chicago, or plan to, I can likely make some introductions to a couple of large property managers I have a good, personal relationship with that may be interested to at least hear your pitch.
Do you have the same issues in the US? If so, do you plan to manage the rent payment as well?
Basically if you can beat the 8% per month and 50% first months rent my current manager takes I’d jump easily. Even more importantly I’ve a tenant that pays religiously on the first of the month. But I don’t get a deposit until the 11th or the 12th. Can you guys beat that?
What are the chances I can get on the phone and talk to the person that would be overseeing my property? How do you convey trust to owners when you don’t live in the areas you serve?
Edit: the fee structure is insanely attractive.
As far as vetting contractors, we ensure they have appropriate licensing, bonding and insurance per local requirements and also vet their existing social media reviews (looking for 4+ stars). Most of our clients provide us their rolodex of contractors to work with and we can vet their responsiveness and quality that way.
It's a lot like good CPAs, good lawyers, or good family practice physicians.
I posted this request for an Uber for property management 7 months ago. After that post, I reluctantly hired a property manager and it has been a nightmare. https://news.ycombinator.com/item?id=17656752
There are so many problems to solve with generalized property management that we feel it's much better to stay focused on what we know.
1. Placement. A system that posts to Zillow, Craigslist. It seems like photo or video walkthrough is an all but done deal. With keycode locks a real estate agent could escort a potential tenant through once they’ve been validated via credit score.
2. Payments. Seems easy enough to build this software.
3. Evictions. This seems like an entirely legal process, so having a lawyer on retainer for a metro might work here.
I think the biggest issue with property management companies is simply that their incentives aren’t aligned with the owners. If they have a maintenance person on staff they have to pay that person somehow. I’ve talked with other indie owners/managers and keep hearing the same thing: “imagine you are in that business. Do the math, and property management doesn’t earn much.” It seems ripe for disruption.
Edit: the only thing that is missing is someone to keep an eye on the property in general. Not quite sure how to handle that other than have one person who handles an entire metro.
Single family gets more tricky because the value is more closely tied to the property value and not the rental income. I think this is where the inventives are often misaligned. Even so, the best property managers will handle a lot more than just filling units, collecting rent, and handling maintenance. They understand the goals of the owner and will adjust their management strategy to meet those goals (eg income property or a quick sale in a few years).
To add to your list: tenant retention (highest cost is actually unit turnover), setting rent to the right amount based on local comparables, and keeping in compliance with the ever changing rental laws.
Tenant retention, while an issue, is a very minor one in comparison to peace of mind regarding the aforementioned issues. With scale and automation, I’d expect to save on the placement fee. In any case, I wouldn’t even mind yearly turnover if I had my other issues solved. Perhaps it’s just me. (My time is valuable and I’ve spent way too much of it dealing with the property manager and contractors when the property manager failed to deliver.)
I’ve heard varying things about setting rent. An investor/manager in the Bay Area told me setting rent too high is bad, and I think his reasoning was you wouldn’t have a pool to choose from. Another person had a system of just setting the rent ridiculously high and lowering it every week until it was filled. Comps can be tough, and usually the market speaks loudest here.
Keeping in compliance with laws seems to confirm there’d have to be a full time employee familiar with the region.
I'm skeptical of the quality of anyone who sets rent super high. If you do that, you will get difficult tenants. Setting the rent even 5%-ish below market -- $100 or so on a $2500 unit -- gives you the ability to be way more picky around your renters.
My experience: managed over 20 units for 5 years as a part-time gig.
I guess I’m just optimistic that there is a solution which won’t require such high cost of placement fees, in addition to other costs. It seems hard to argue that the current PM system is efficient. Maybe it’s just the case that there are good PMs and bad ones.
Scammers get the code and relist the unit on craigslist $100-$200 below. They try to get people to pay the security deposit and first months rent to them.
Even if you don't care about helping scammers, you're also getting duplicate listings slightly under the cost of the actual listing, taking traffic away from your craigslist ad.
Scaling great customer service is difficult though.
https://www.appfolio.com/blog/2015/01/appfolio-contact-cente...
This type of service has existed for a while with the larger vendors. What differentiates your service?
Licensed property managers are on the hook for the decisions you make. How do you and they manage that liability? Is it even legal to have an unlicensed third party field a call and assign a contractor? I know states where it is not.
If you've been small, you may have flown under the radar but getting attention could change that. The difference between Appfolio/Yardi and what you're doing seems to be the assigning your own contractors bit. That's legally questionable IMO. Maybe less so for first-party but definitely for third-party managers - it technically makes you an unlicensed property manager.
Basically, they can only do "dumb" things - follow instructions. If they make a decision, they have to be licensed. Choosing who to give work to is a decision.
We've taken out a large professional liability insurance to cover ourselves and our customers. We also document decision making process throughout the coordination process, which is helpful for determining what went wrong and why.
As far as the legality of taking calls, third party call centers that take calls and dispatch contractors are an extremely common service even offered by Appfolio and other providers.
Now regarding new contractors from our network, that is an opt-in service for customers. Many opt out entirely and we can turn that off for any customer. For instance, some customers require liability insurance policies much larger than we can guarantee with our network, so they opt-out of using Latchel contractors.
https://www.mass.gov/service-details/re42r05-property-manage...
We offer similar services for mom and pop property managers.