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How to Create a Rental Marketplace



All people need a place to live in. That is not subject to discussion. You cannot live on a street or in a wood. You need a home, be it a house or an apartment. And unless you live somewhere in a third world country or are a very rich person, you most likely cannot afford to buy a residence at once, as real property is very expensive in the developed and developing countries. However, you can get your more or less permanent place of residence by renting a house or an apartment. Home-renting is a good way to have where to live and save money for future purchase of your own home.

The above is the main reason why home renting is so popular in North America, Europe, Japan, and multiple other developed countries.

Just 15-20 years ago in order to rent a house or apartment, you had to buy specialized newspapers, read offers published in them, short-list the most suitable for you, call owners/realty brokers, visit locations in person to see apartments and houses. But even this big scope of your actions didn’t guarantee that you would find the matching residence.

With the evolution of IT technologies, now you can rent housing much easier — you go to a dedicated home rental site in Internet, browse it to find what you need, see nicely done photographs of houses or apartments, chat with owners or agents. Rental marketplaces save people a lot and even more time and efforts, and — that’s even more important — they are a perfect way to start or develop a profitable business in the real estate property domain.

Our post below will tell which steps you need to walk for creating a room rental site. We will try also to provide some insights into how to build an apartment finder site, what you need to make a site to rent a room from scratch, which challenges you may face after deciding to create a site to rent a room or create an apartment search site. You will also learn how high or low apartment search site cost is and how to avoid most common mistakes when you have decided to make an apartment rent site.

Reason to Start Rental Apartment Marketplace in 2019

Well, it’s year 2019 on the calendar, and there are a lot of online marketplaces where you rent house or apartment. So why do you need to develop a site for apartment search from scratch?

  • Available home rental marketplaces are too complicated and have tons of unneeded information

One of the key reasons justifying your decision to build an apartment renting website is that you have performed in-depth research of available options and found them to be too difficult to use or overcrowded with the information most users never need. Even the most popular apartment search site – Airbnb – can be blamed for it.

  • Available rental websites are too general and do not consider specific needs of certain users

A great idea for a home-renting startup would be to build a specialized online platform allowing for more precise search of housing suitable for certain groups of users such as vacationers, tourists, short- or long-term tenants etc. You can enrich your product with functionality that analyzes user data collected from various social networks or other information provided by users during the sign-up.

  • Market needs a dedicated online location to connect those who want to lease out their homes or apartments with those who want to rent such homes or apartments

If you see that there is a need on the market for an online platform where people can make some money by offering their homes for rent and where people who need a place to live can find such place, it certainly is a great business idea to launch a startup and give the market what it needs. But in order to not fail and lose the money, you may opt for one of Lean Startup Methodology principles, which is MVP (Minimum Viable Product), in order to test how viable you business idea is and whether it can make some profit for you.

Know your Competitors

Before proceeding with a room rent site starting, the good and important task is to study the available rental marketplaces, especially the Top 5 ones.

1) Airbnb

Founded in 2008, Airbnb now has 31 offices and over 150 mln users across the world, offering listings in over 191 countries. The platform is dedicated to travelers looking for short-term accommodations when on business or vacation trips.

2) Zillow

Zillow is one of the US leading real estate and rental marketplaces dedicated to provide customers with data, inspiration and knowledge around the place they call home, and connecting them with the best local professionals who can help. Founded in 2006, Zillow database now covers over 110 million homes in the United States, and has over 2 million registered real estate professionals.

3) Craigslist

Founded in 1995, Craigslists is now present in 70 countries, has over 60 mln users, more than 80 mln classified ads per month, and the estimated worth of over USD 3 bln.  

4) Roomster

Founded in 2003, Roomster is the US-biggest SaaS servicing home-owners and tenants. It lets post and search for accommodations in 192 countries. DIGIS has helped Roomster to enhance their legacy software solutions to enrich those with new functionality and eliminate bugs in the existing services.  

5) Zumper

Founded in 2012, Zumper is a rental marketplace connecting landlords and tenants to lease out and rent a place to live. Zumper now has over 1 mln listings and more than 8 mln visitors per month.

The competitors research will help you see how they perform, which features and services they have and which they lack.

Key Features of Room and Apartment Rental Marketplace

When Roomster came to us with a request to help them improve their home-sharing platform, we needed to perform a comprehensive research to find out which features similar services have and how we can improve Roomster’s existing features. After completing the study, we now can provide a list of features that are key for a rental marketplace to become successful.

Simple and Easy-to-Use interface

One of the most important requirements of a website is that it has sleek and intuitive front-end interface where users can easily find what they need without spending a lot of time on it. Sometimes minimalist layout can work much better than the one full of flashing ads, varying colors etc.

Listings Organization

This feature flows out of the previous one and means a lot for a good receipt of the rental marketplace by consumers. Users want to have platform-wide search option enhanced by a proper system of tags to filter the listings. Landlords or those who offer their homes want as much simple listing posting procedure as possible. Both tenants and landlords would like to have possibility to edit how the platform user interface looks.

Reviews and Feedback

Listings with positive rating and multiple customer reviews are self-speaking, meaning that they will be viewed more often than those who have no rating or feedback from users. At the same time, this feature helps avoid scams who often hide behind the mask of homeowners.

Recommendations

Recommendations feature can save a lot of time for consumers as they enable the latter to see suitable listings based on the history of user searches or based on user location etc. Recommendations contribute to making the rental platform simple and intuitive, while preserving its efficiency and level of user satisfaction and conversion.

Images of Listings

People are rather visuals than audials or readers, that is why nice and catchy images of a listed item have a higher impact on users that a nicely written description of the same item. Images convert into clicks far more easily that texts, but there must be proper balance between images and text.

Booking System and Payment API Integration

This feature is a must for every reputable rental platform, as users want not only to find what they need – room, apartment or house – but to have the possibility to quickly book the suitable option right after finding such. The users also need a reliable and secure tool to execute their payment transactions in relation to booking a listed item.

Notifications

One of the most important features that eases the life of both landlords and tenants. When properly set, it allows saving a lot of time as users no need to continuously check the marketplace for updates. All they need to do is just wait for a notification on the change of a listed item status or alike to arrive to their email inbox or notifications box.

Additional Features

In addition to the most wanted features that virtually every online rental website should have, there are multiple others users would like to see. We have found that such additional features may include:

  • Messaging feature that lets tenants chat with landlords and vice versa

Airbnb service implemented Messaging feature long time ago as both categories of its consumers — guests and hosts — needed to chat about the property, its location, its booking and payment options and so on. In addition to just implementing a built-in messenger, Airbnb offers such extra capabilities as searching and archiving the messages, making the consumers’ life much easier.

  • Offers or Discounts feature that can help tenants save their money

The same Airbnb actively uses Coupons feature in order to attract new consumers and provide them with some benefits from using Airbnb services. In March 2019, Airbnb offered 40% discount to new users who booked apartments costing USD 80 or more.

  • Grievance feature that allows users to submit their complaints about landlords/tenants and their listings

Zillow rental platform allows filing a complaint via various media: phone, email, website. Its website has embedded grievance tools allowing users to contact Zillow and notify about any type of scam, unfaithful landlords or tenants etc.

  • Streamlined Admin Panel that lets users of the rental marketplace back-end easily browse the website and keep a good track of all the listings and users

This feature is more interesting for owners of rental marketplaces than to consumers, as it helps simplify routine operations the marketplace admins and content managers have to perform on a day-to-day basis.

How to Monetize an Apartment Renting Website

When you move from thinking about building a peer-to-peer accommodation rental marketplace to thinking about how you can earn some profit on it, it is the right time to analyze available monetization options and choose the one that suits your needs most.

Commission

One of the most common ways to monetize your apartment rental website. The owner of the website gets either fixed sum or predefined percentage of each rental transaction executed between landlords and tenants. You need to plan on developing an algorithm that would calculate the commission fee and withdraw it from relevant transactions.

Listing Fee

Another option to make your online rental marketplace earn money for you is to charge vendors for their listings, i.e. vendors have to pay certain fee to post their listings on your rental website. For this purpose, you need to augment your platform with a secure payment gateway letting vendors safely pay needed fees for listing their apartments or houses on your platform.

Paid Subscription

One of the best approaches to both get profits and retain customers for owners of online rental platforms. One of the best attributes of this monetization option is that it drastically eliminates the scamming risk — scammers mostly targets free websites and try to keep away from those they have to pay to use.

In-Platform Ads

Another popular method to monetize online rental marketplaces. It is a good option to use if you don’t want to charge your users for their listings or impose paid subscription etc. The platform is free to use for landlords and for tenants, but both groups will see ads on the platform website. By the way, consumers can also benefit from ads display as it can show them something they need or want.

The Biggest Challenges of Apartment Renting Marketplaces

When you are about to start developing your own peer-to-peer marketplace for apartment renting, you must be aware of the challenges such platforms usually face. And you have to equip your marketplace with tools that can help overcome such challenges.

  • User Verification

One of the biggest concerns for owners of online rental platforms is how to implement reliable user verification system. It is so essential as there are a lot of scammers who try to infiltrate into password-protected websites to do some illegal things and steal faithful users’ data. Possible response to this challenge is request personal identity cards from marketplace users, which can be used to verify the consumers and disallow scam on the website.

  • Listed Item Verification

Another problem for entrepreneurs running online rental websites is to ensure proper verification of real property listed on the website. Photographs can be fake, location can be different, house/apartment can belong to someone else etc… The biggest rental marketplaces have responded to this issue by sending their representatives to check the property and confirm it looks exactly as its owner indicated.

  • Fraud and Scam Risks

This type of challenge has huge impact on the customer loyalty and the marketplace reputation, so the platform owner needs to implement proper anti-fraud and anti-scam system to protect honest users of the service.

  • Privacy and Security Risks

With the adoption of the EU General Data Protection Regulation, this is the issue of considerable importance and needs a robust mitigation procedures. The platform must have tools and algorithms that protect user data and do not allow its disclosure to any third party.

How Much Does It Cost to Develop Apartment Search Site

First of all, based on our almost 10-year experience in software and web development, we can confidently state that there are no precise limits of the cost you have to pay to get your own online rental marketplace. Why? Because the price will depend upon which features and functions you need your platform to have. The more features, the higher price tag.

By the way, our experience allows us to recommend not to start building the second Airbnb right away. Start with the MVP first. This approach will let you test how good your business idea is and get initial user feedback. You won’t lose money and reputation and will get the understanding where to go and how to do that.

Building the MVP of online accommodation rental marketplace is much more predictable, and we have carried out rough calculation of a realistic cost of creating such platform.

Preparation Phase
Item no.Description of efforts/tasksMan-hoursCost, USD
1Requirements Collection/Architecture
Planning/Specifications and
Requirements Document Development
802000
Design Phase
1UI/UX Design Development:
Mockups/Prototypes/Layouts/
Pages/Screens/Windows/Popups etc
350 – 400
(USD 20/h)
7000 – 8000
Development Phase
1Front-end Development300 – 350
(USD 30/h)
9000 – 10500
2Back-end Development480 – 640
(USD 30/h)
14400 – 19200
3QA/Bug-fixing160 – 180
(USD 20/h)
3200 – 3600
Total1270 – 165035600 – 43300

Summary

Though there are quite many online rental marketplaces, starting a new web platform to lease out and rent rooms, apartments or houses is going to be a success if you take into consideration the assumptions laid down in this post.

The most important for any entrepreneur willing to launch such service is to identify target audience of the service — travelers, long-term tenants, business delegations etc. Knowing the audience, it will be possible to offer unique features and listings for this audience, which the competitors may lack.

The second important tip is to start with the MVP, not with a fully featured marketplace. MVP provides starting entrepreneurs with a needed degree of flexibility and confidence while letting them avoid huge spendings with no positive results. MVP allows to validate the marketplace business model and get objective feedback from initial consumers. That will help improve the platform, eliminate disadvantages, and ensure better user satisfaction on a later stage.

DIGIS is in position to provide these recommendations as we have accumulated extensive experience in developing online marketplaces and helped multiple businesses become prominent and successful. We have assisted Roomster (the US-largest social network for home owners who want to share their homes with those needing accommodations) with bringing their online platform to a new and improved level of efficiency and usability. Visit our website to read which challenges we faced working on Roomster project and how we managed to overcome them.

We would be happy to help businesses develop clear and comprehensive plan of building a dedicated online rental platform and then bring that plan to life, creating a streamlined and unique marketplace that adds more value to the business success.


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