Do You Need a White-Label Solution for Property Management?

Property managers have a lot on their plate. It's easy for them to feel overwhelmed from tenant screenings to rent collection, repairs, and inspections. This is where white-label property management solutions can help. A white-label solution is customized for a specific company, branded with the company name and logo, making it look like an extension of an existing business. It can be beneficial for property managers who want to outsource some or all of their property management.

But are they needed?

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Do You Need A White-Label Solution For Property Management?

It's a complex process in the head of a founder who's trying to get distribution for their product. They felt like maybe we should give this away as a white label. Not give it away, we'll charge for it but we will give away the branding so that the property manager feels like, "Here's something we're offering." I think in some cases, that can be a mistake. If you're dealing with a top 5 or 10 property management firm that values lifestyle as a key differentiator, naming those cases might make sense but overall, people don't associate the property "This is managed by Greystar."

This is the brand of the property and everything that they offer is something I associate with, the box that I live in and see. If you're dealing with other sectors of PropTech, for example, if you're dealing with agencies, those agencies absolutely want and prefer to have a white label solution that they can offer whether it's JLL or CBRE or Colliers.

Whereas in property management, I feel it's a lot more challenging and I think founders should be more firm. When property managers asked for this to push back and maybe even explain, "You're going to have more trust if you have an outside brand offering this." You don't want to say it like this but you are a property manager. People don't like the property managers. The average reviews are very low.

That's the problem. If you were to ask people after living somewhere for six months to name their top favorite brands, they're not going to name the property managers, they still name Apple and Nike. You're not going to win that fight. If you go, "What's your favorite living brand?" they'll say Airbnb before they even named their own property manager. It's a very tough thing. I've done a lot of work in branding to get there. We won't do white labeling and here's a story that I always tell with white labeling. Banks always asked the Venmos of the world to white label and Venmo did it. Eventually, they have to create their own called Zelle. It did this one thing well.

Venmo was the "I got to pay peers," and the banks couldn't compete with it because their product was bloated and every other possible was built for small businesses and whatever. All consumers want to do is send money in between each other. Sometimes having these little discreet brands, the consumers get it. They have a lot of apps on their phone. They're used to being able to find these very discreet used cases and build up trust around that one thing that does incredibly well. We do incredibly well rewarding renters, the money movement, and the banking services around that. There's a reason to have that separate in the same way that it is good that people use Venmo versus Capital One to be able to pay their friends.

I do see a shift. I don't think it's going to be actionable for any founder reading this because of the timeframes. Real estate moves slowly but there's an emergence of lifestyle brands that are basically property management companies. For those guys where tech is a key focus, each of their buildings is a community and they absolutely do not want to promote external vendors. They're the ones who want to bundle up technology solutions and offer them under their lifestyle brand as a differentiator.

I'm seeing the magic of this. I think Adam Neumann, Founder of WeWork is also taking this approach and others too. I've invested in Popular Homes, for example, a wonderful property management tech-enabled firm that is growing like crazy. There are buying property management firms. The whole business model is to buy a traditional property management firm and fix it up. Bring in technology, products, and services, increase your revenues, and have high operating margins, which is very rare. Margins can be in the small teams. When you bring technology in, margins can get them into the 20%, 30%, and 40% range. Overall, the penetration of these lifestyle brands is a tiny, single percentage point.

I think there's a lot of room for a lifestyle to be able to come in. I think renters as an identity class is tough to be able to nail. The homeowner's identity class is different. The example I give is that you go to a dinner party and people may say, "I own my home," but they only should start with, "I rent my home." Renters are such a massive group. It's 48 million American households who rent. It definitely works when it's associated with other lifestyle choices, sports, entertainment, travel and you see it pairing well there, like in hospitality. It's around a golf course or this type of activity. You have to find another identity category besides renter to be able to make that lifestyle brand.

It has to come alive with something else. I think there'll be a lot of those. I don't know if there'll be one monolithic one. Renters don't see themselves as a class or an identity. The aspiration isn't necessarily something that you feel. That doesn't mean that there are not a lot of services to provide to renters or whatnot. You have to understand where they are in their life journey and meet them at the things that they care about. They're not passionate about renting. They're passionate about sports, travel, or family, whatever it might be.

Sometimes your mission and the economics underneath can actually be the thing that's cannibalizing your business.

I agree with that. A portion of our readers might not agree with that. I've encountered this a lot with PropTech founders, who believe no renting is a new lifestyle. It's more superior to rent than it is to buy. It's very easy to believe when it comes from a tech founder who used to look at Google or living in a skyscraper, Class A building and has a bunch of investments in real estate projects. They're realizing, "it makes a lot more sense to me to enjoy this rental unit and to have equity in a bunch of projects." The fractionalization of real estate is offering not but there is something to it.

The joke we used to make is we rent the runway managed fields to make the word rent sound interesting and sexy. Somehow the actual biggest category of rent hasn't succeeded in doing that. There are areas that global nomad style. I think it's interesting because Baby Boomers, on one end, want that experience. On the young end, I want that experience. It's the Gen X-ers myself as a Gen X category in the middle of families and whatnot. We're classifying but are a little bit more resistant to that.

It's still a minority. If you're looking at rent as the 48 million Americans who rent, there is a lifestyle that's there. It's a very affluent lifestyle. There's a lot of PropTech that can do very well by targeting that area. You have to be able to think about how do you provide American Express or others that are targeting that group and provide other services that make their life easier to be able to do? I think that for us, we think about rent in a more broad, purely financial sense. Every renter has in common, which is you could joke the rent is too damn high or we say, "It's the money, stupid."

Most renters go, "I'm not sure I'm getting everything I should from this as I keep on moving.” I think there's a lot for PropTech in that. You still have to find another identity category to latch yourself to. You have to find this rent. It's rent plus sports. It's rent plus something else. The rents and enablers to that other lifestyle more than vice versa.

To close off this topic, industry swings sometimes, as a pendulum would swing from one extreme to another extreme. If you take the travel industry, in the beginning, travel was a luxury. Even economy class seats were equivalent to domestic business class seats. The service was phenomenal. I'm using travel as one example. This example can apply to many different areas but travel feels like a mass-market approach. Even business class seats and experiences don't compare to what they used to be.

I'll give you a more PropTech example here. We've seen the densification trend inside a commercial office, which has now completely broken because of COVID, thank God. Over time, people started to pack more and more desks. Employees would have less square feet per desk to be more crowded to generate more revenue from that building and more profit. Obviously, COVID is an example of something swinging to an entirely different spectrum now where it's all about having green areas, open spaces, and multiple offices.

Years ago, I used to go to Cornet Global Conferences. They were a client of mine years ago. They talked about pushing the open plan and remote work and so and so. Underneath all of it was this is a way to be able to get as many people in as possible. I giggled with that and it's not my area. We're obviously in residential. People don't want to return to the office. Most offices are awful. I like going to nice places. I don't like going into bad places. It's a simple way to understand it. I love going into some coworking spaces because they're beautifully laid out.

It's wonderful to be able to go into some coworking spaces. I can tell that they've optimized this thing. They value engineering all the furniture. It's not that nice. It's the same thing I think in this regular office. I think that there's a mission that sometimes overlays and the economics that sits underneath that can be the thing is cannibalizing your business. I think it happens in residential as well. There are a couple of cool folks on Twitter who talked a lot about how to optimize square footage to be able to get a higher rent. I'm always fascinated with these conversations because it feels to me like you could do that but offer an incredible service on top of it. It might save you way more than optimizing.

I get the developer costs and that's where they're thinking. Longer-term, this is a place that offers incredible services and the asset can be configured. However, it needs to be configured. I think Starwood, in particular with Starwood's preferred guest, figured this out. You can look at the multiples they got when they were acquired by Marriott to see that it was the customer experience. They got the multiples on, not the asset. Marriott could have gone and bought all those assets. No problem. It was the multiple they got for SPG that truly made them successful.

Some real estate developers will have their own in-house construction team or decade-long relationships with GCs that can execute. Ultimately, that's a commodity. What's difficult to change and this comes down to culture is delivering service. That often is a conflicting stakeholder interest. Your bank, your investors, they don't appreciate that. The returns are lower because we want to deliver a good service. As far as that goes, you distribute that preferred returns back to us. Amazon is one of the few companies that continue to reinvest rather than distribute dividends in the analogy here.

It is a very good analogy. Real estate is so unbelievably fragmented in terms of how many people are in. The idea of investing in service, how would that even happen? It has to be where digital can help because it has to be something that moves with the resident, not moves with the building. The building's already so fragmented that the resident matters more. We call them stakers or resident members. The stakers who are moving in a way own that data and who they are.

They have something valuable in terms of the next property. I'm not sure if real estate is going to be able to capture that themselves in a property. The property is going to change hands. The management company may change hands. It's not an easy component. The digital is attached to the building. Digital attaches to the resident because the resident is the one that experiences it.

This is a symptom of a problem in the real estate industry where the reason property management firms turnover so much is because they're not offering good value. They're not managing well. They're not meeting investor expectations and replaced. The irony is if you can own an asset for many years, not only does it appreciate but if you can manage it well, you build those tenant relationships. Your onsite staff will know the tenants and you'll have more consistency in the vendors that service. It's a nightmare for PropTech companies. They introduce their property management firm. They're about to sign a deal and the property management firm is being replaced. It's a lot of big numbers if you're able to share the scale you guys have, by the way.

I got 15,000 residents who will be rewarded in 2022 so about 15,000 doors.

When you have that many, obviously, there's going to be churn when a building is sold and new owners or new management is replaced by the owners.

We're going through a lot right now of that happening. The buildings are being sold. We launched nationally in 2021. It's coming up a lot of value-added investors. Properties are being turned over. It's a process but it's built into the contract. It continues but what's amazing is how much we're able to brief the new owners about the building that they weren't able to get before we had them saying, "This is incredible."

You think they shop at Whole Foods. They don't. They shop at Trader Joe's and here's the data to prove it. Here's what they respond to. Here's the type of people you're going to get who are coming in for leasing. We even made recommendations, like, "Here's how the pricing should work." We're building up from the residents who lived there, not on the market level.

I think what's so fascinating, though, in terms of that churn and what's happening from a building selling and all the different sides of where real estate was very fragmented. The opportunity there has to come down to a common consistency, which is built up by the resident. I think that's how Amazon is built up from its members. There's an opportunity to be able to do it. Once you're into the sale, it all changes over.

One thing I mentioned going back to the property managers is the leasing teams on labor shortage is a big problem. It's tough to be able to get people. With the things like making fun of the wood doors, the leasing folks want to believe that they're offering a great product. Anybody who's in that position wants to have pride in that building and whatnot and have a mission that they're helping somebody find a home and achieve something in their life.

We found that by talking about the Cash Back, we do, as investment leasing agents, get excited about that. This is so much fresher than I'm going to reduce the rent to be able to do it or offering this one thing that doesn't do anything for somebody. I think there's going to be a big new thing in 2023 on property management, turning the attention to the onsite teams. How do you keep talent on the onsite teams? That's where we're seeing a lot of folks who say, "This is so hard to be able to get talent right now. We're having a lot of churn on the ground."

It has been wonderful having you on the show. If people want to reach you, how can they reach you? If you can spell out your contact details and also maybe a little quick outro on who are the ideal types of people you'd like to work with. I know property managers are a big focus for you.

Property managers, asset managers so the folks buying and managing the sale of those properties and managing to be able to buy with a lot of good data, to be able to help both on the asset and the property level. Even we're talking quite a bit with commercial brokers at the moment as well, who liked our product. They can reach me at Rowland@Stake.Rent. You can check us out at Stake.Rent. If you can find me on Twitter @RowlandHobbs.

Thank you so much.

Thanks, Zain. I appreciate it being on.

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About Zain Jaffer:

Zain Jaffer is an accomplished executive, investor, and entrepreneur. He started his first company at the age of 14 and later moved to the US as an immigrant to found Vungle, after securing $25M from tech giants including Google & AOL in 2011. Vungle recently sold for $780m.

His achievements have garnered international recognition and acclaim; he is the recipient of prestigious awards such as "Forbes 30 Under 30", "Inc. Magazine's 35 Under 35," and the "SF Business Times Tech & Innovation Award." He is regularly featured in major business & tech publications such as The Wall Street Journal, VentureBeat, and TechCrunch.