Beyond brokering: NestAway wants to be a partner in the home renting experience
If you are a tenant looking for a place to stay, the first step is to search online for available options. You can choose to look at various websites from magicbricks to 99acres and commonfloor. However, all these merely offer listing and discovery of houses, which basically means that after you select a house, you have to follow up with the broker and there is brokerage that needs to be paid. This adds to the overall cost of the transaction.
Another issue is, not all houses that are listed on these sites are actually available since some may be stale listings. This adds to the overall anxiety of the tenant who wants to get done with the transaction quickly.
That’s where NestAway comes in as a useful alternative, in that it goes beyond merely listing and discovery of properties, to actually handholding you through the entire process of finding a suitable home.
NestAway Technologies Pvt Ltd. is India’s “largest online home rental company” and fastest-growing “furnished home rental network”. With over 30,000 people using the services and more than 13,300 house owners, NestAway aims to restructure the home rental ecosystem in the country.
Deepak Dhar co-founded the company along with three of his college mates on January 1, 2015. In an interview to TNM, he spoke about the issues they faced, what sets them apart from the others in the market and the challenges going forward among other things.
Here are excerpts from the interview.
What was the magnitude of the problem when you started?
We thought the problem was faced by just a small segment of youth who are migrating from smaller cities to the bigger towns and cities, but we found that the problem was across the board. The problem was even for people who were migrating within a particular city.
Then we realised that it’s not a problem only on the tenant’s side, it’s a problem on the owner’s side as well. There were a lot of owners who wanted to make sure their properties are well managed and they are actually not in the city. Largely, the problem area just kept expanding.
What were the issues you faced in the initial phase?
First of all, we had to ensure that inventory is definitely available and for that, we had to have control over it. And that’s a very difficult task. We wanted to make sure that there is exclusivity with us and we are able to ensure that a house that is listed is available for sure, otherwise we don’t list it.
Second was how do we make sure that the overall cost of the transaction also reduces for people, where combined owner plus tenant were largely paying one month of brokerage, despite having listing sites available in at least 70 to 80% of the cases.
So, the facilitation of the transaction was made easier and asynchronous as such where the tenant was not directly interacting with the owner. We acted as an interface and both of them needed a more trusted partner in between.
How did you set out to be different from the rest?
Over a period of time, we realised that our job does not finish when we have done the transaction. We are not a local broker who collects the money and never returns just because the transaction is over. As and when people leave, we keep looking out for other people as tenants. We wanted to be there for the whole duration while we are managing the property. We will stay in it so that both tenant and owner know that we are equally invested in the overall success of the tenancy.
How far have you succeeded?
I think over a period of time, we have managed to achieve a lot of what we set out to. I think this is a market which is extremely challenging. Real estate has been one of the most unorganised markets in general, largely dominated by brokers of the area who never really themselves had a say. Brokers also are not happy with the way things are going. So, the idea was to structure the whole thing between the owner and the tenant. The proof is we now have more than 12,000 houses and over 33,000 tenants with us.
Are you focussing on a particular niche segment of customers?
We are looking at bachelors or young working professionals. We identified the things that were missing like furnishing, cook, domestic help and so on. We are also trying to create a product for young couples but we are still in the market research phase as to what are the requirements. We have a lot of young couples staying in 1 BHKs. We want to create a solution for different sets of people.
Do you charge for listing a property?
We don’t charge anything for listing. We earn any revenue only if we are able to rent out the house that is listed. We are only charging a success fee. Unless the owner and tenant succeed, we don’t make anything.
Over a period of time, we have realised that the kind of rental data that we have accumulated over the years is actual transactional data. This is not something which is a list price like say a magicbricks or 99 acres. This is real transactional data on which transactions are happening in that area because we facilitate the transaction. Since actual data is available with us, we are able to predict the correct market rate.
Do you continuously monitor your listings?
We are continuously tracking how much revenue an owner is making from his house. If an owner is not making what we say is 75% of the market rate of that area, we are putting him in a zone which requires it to be reviewed every fortnight. If we are making less than 50% of the market revenue, then we are reviewing that every week. So, the level of proactivity that we have, you will not find with somebody else in the market.
What are some of the search patterns that you have observed?
Over a period of time, we have started to recognise some of the patterns. If people are viewing the house and still not scheduling a visit, most likely it’s a price issue or a location issue. Then we will play with that in terms of offering price variations. If you lower the price, the same location might start working for somebody.
Similarly, a lot of the times, people are going to the house and seeing it but not booking it. This means that probably the house is not of a certain quality. So, we need to do certain things. First, to make sure that they are able to judge it upfront so that their visit is not wasted. Secondly, from the owner’s side, we have to give the right inputs to make sure that they realise that these improvements need to be done.
What kind of tenants do you mostly get?
We have a good mix. The brand perception is that we are largely a shared accommodation. But I think 50% of the tenants at least in Bengaluru are using full houses and the rate of growth of full houses is almost double that of shared houses.
In terms of new acquisitions, the full houses are more than shared houses in general.
Which city do you get your maximum tenants from?
We started in Bengaluru and we have a history. The whole senior leadership is based out of here. So, the driving factors which are available in this city are much more. We have almost 50% tenancy out of Bengaluru and rest 50% through other cities such as Delhi NCR, Pune, Hyderabad and Mumbai. Mumbai is very recent.
How do you decide which cities to target?
A lot of it comes from the data which is there in the system. We realised where people have demands from the search data. Based on the demand, we start acquiring houses in those places. At many places, we go other way round as well. We study where a lot of inventory is coming from, based on the projects that are getting delivered. In those places, there is a demand for owners.
Who are your competitors?
I will say we have a lot of competitors because everybody in India is a broker. You can become a broker and be a pseudo-competition for us. So, I think competition for us is the unstructured market and not really a structured player.
What are the biggest challenges going forward?
I think having a consistent service across areas is a challenge, simply because there are a lot of variations and a lot of dependencies. The entire ecosystem is not as mature as you want it to be. The technicians, the furnishing vendors, the whole set of people that we are working with including the brokers, they are becoming professional with time. There is a whole evolution of the industry that’s happening.
To have smart homes through use of technology like IoT (Internet of Things) and scaling it up, is also going to be a challenge. We want to improve the overall living experience through technology. This is one area where we are investing in and I think we will see good results over a period of time.