After college, Apartment List CEO John Kobs and his co-founder Chris Herndon both decided to buy property and become landlords. Kobs purchased some single-family homes in his Ohio hometown, while Herndon bought property in Austin, where he had attended college. Both used Craigslist to find renters, but found the popular listing site wasn’t doing much for them. “We just said there’s got to be a better way than Craigslist,” Kobs says. “We set out to build the first end-to-end rental marketplace driven by mobile.”
So the two friends built Apartment List, a service that helps renters find apartments based on location or other criteria, like price, number of bedrooms or bathrooms, laundry, and whether they allow pets. It also features detailed maps and listings, as well as information about nearby public transit. Once you’ve found a listing that appeals, you can contact the landlord by phone or email directly through the app, or just save favorite locations for later. There’s also a feature to save notes and photos from visits to prospective apartments. Though Apartment List does have a website, about 70 percent of the company’s traffic comes from mobile devices.
The service is free for users, but larger, professionally-managed communities pay a fee that varies by owner and property.
Apartment List launched in 2011, as rents across the country were increasing and vacancy rates were falling, particularly in San Francisco, where the company is headquartered. Three years later, the vacancy rate for the 43 million renting households in the United States is only 8.3 percent. In some cities, it’s far lower: in Boston, 5 percent; San Diego, 4.4 percent; San Francisco, 3.8 percent; Los Angeles 3.3. percent; and New York, 2 percent.
For Apartment List, the first step to becoming a must-use app was building up inventory; without a huge supply of apartments, the best user experience in the world couldn’t compete with Craigslist. “You could have the best engineers, product people, and designers in the country, but if you don’t have listings for renters to look at, you’re always going to have an inferior experience. We had to build a whole team dedicated to unearthing supply.” Though there are plenty of mobile rental apps out there—big real estate companies like Zillow and Trulia have their own apps, and there are some smaller competitors like Padmapper—to Kobs, Craigslist is still the one to beat, despite its poor user experience. “Really attacking on the market level is the way to win,” he says. “We’re building that blueprint right now.”
That means a partnership with an MLS (multiple listing service) aggregator that enables streaming of listings onto Apartment List, as well as partnerships with property management companies. The company has also built out an in-house team to “pound the pavement and unearth content that’s not on the Internet,” Kobs says. Though the team operates from Apartment List’s San Francisco headquarters, eventually Kobs says the company could build out this piece of the operation in other cities. “We’re making sure we fine-tune the process before we scale,” he says. “I think a lot of startups try to scale too quickly without doing the hard work.”
Over the past four years, Apartment List has grown to 82 employees and launched nationally, and has no immediate plans to expand abroad. To date, Apartment List has raised a total of $21 million, from investors including Matrix partners.
Last August, Apartment List launched a second app called Roommates, which leverages Facebook data to help potential housemates connect. It works much like Tinder, allowing users to click yes or no if they’re interested, then mutually interested parties are put in touch. The app is currently available in five U.S. markets, San Francisco, Chicago, Los Angeles, New York, and Boston, chosen because of their dense populations and high rents.
People don’t change apartments that often, and when they do it’s usually a four-to-six week process from the time renters start looking to the time they sign a lease, but Kobs wants users to have a much longer relationship with Apartment List.
“The challenge we face as a company is that this is such an episodic transaction,” Kobs says. “It’s difficult to stay top-of-mind with consumers. I’m a big believer in digitizing the entire renter experience.” Eventually, that could mean that users will not only search for their apartments and book appointments through the app, but also complete their credit checks and even pay their rent through it. “We want to help renters for the ten years they are part of the rental market in the U.S.,” he says.
