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> Landlords can’t charge more than a market-clearing price and they won’t charge less. I think your posts are great, to the point, a no-nonsense economics appr

> Landlords can’t charge more than a market-clearing price and they won’t charge less. I think your posts are great, to the point, a no-nonsense economics approach to the question, and I largely agree with them. However, I'm wondering in this beautiful free-market world --- What value is being provided by RealPage? The costs to the landlords I could find online seem low, but with startups it's hard to tell what the "profitable equilibrium price" of the service would be. For only $10/month it would seem to be nothing more than saving a few hours of labor for each property. (Which might be better seen as ~$100+/rental event or something, since the leases are probably lasting at least a year, but still...)

leetcrew 4y ago
I don't actually know what realpage does, but in the spirit of HN, I am going to speculate anyway. at a high level, yes, there is a "market rate" for apartments that is driven by supply and demand. you won't have a lot of luck trying to let a 1 BR for double the median 1 BR rent in that neighborhood. but individual units are not fungible either; landlords can definitely charge more for units that have been more recently renovated, better layouts, nicer views, etc. plus or minus $50 on rent might not make much difference to a tenant, but having the data to make those little adjustments could matter a lot to a landlord with hundreds of units. this isn't something you can get just by scraping zillow.
zajio1am 4y ago
> What value is being provided by RealPage? Efficient way how to find market rate?
rsj_hn 4y ago
> What value is being provided by RealPage? According to their website, the issue in question is "price discovery" -- e.g. let's say the market price is $1000 a month for your unit, but you don't know the market price because, for example, a long term rent controlled tenant just left, and they were paying $400 or something. Or maybe you had a tenant that was paying $1200 and he left because he found a better place for less. So what do you charge? You can try to charge $2000, wait four months, get no takers, then lower to $1800, wait four months, etc. Or you look at realpage, which says similarly priced units sold for $1000 in your area, so you advertise for $1000 and get a tenant. For the individual small time landlord, price discovery is not easy and it can be very costly. Realpage provides it to you for a small fee. Larger corporate landlords probably have their own people dedicated to price discovery and so they may not benefit as much, but even then, you are centralizing the data collection process so not every landlord needs to do their own legwork. Why not just look at some of the websites that do statistics of craigslist asking prices? Well, in some sense that's all that's going on here, except with clean data and hopefully adjusting for biases -- e.g. if you look at averages of asking rents, you will get an over-estimate of rents because those who don't find buyers keep their advertisement up longer than those who find a buyer, so there is some adjustment that needs to be performed on an average of craigslist asking prices. Also that data tends to be dirty and doesn't have good coverage. I wouldn't be surprised if all that realpage is doing is massaging this data and fixing it up, plus adding in other data sources to get a propriety estimate. That's the value of this one feature. Of course, real page also handles online billing and a lot of the standard services you would expect from a property management app, but those services aren't at issue here. Point is, having realtime data about what people are paying is useful. That's why Zillow has estimates, and we don't look at that as a pricing cartel. Kelly Blue Book also has price estimates, etc. Even stock exchanges sell price data -- it's just a useful, valuable commodity.
- SergeAx 4y ago
  > You can try to charge $2000, wait four months, get no takers, then lower to $1800, wait four months, etc. Or you can go to Craigslist, look for similar properties in your area, factor in quality of renovation, furniture, views etc, and have quite informed guess in a matter of hour tops. For a yearly procedure it is adequate.
  - rsj_hn 4y ago
    I mean, I addressed that -- did you read a few more sentences down?
bombcar 4y ago
A large percentage of landlords charge below market rent - for various reasons. Small landlords often don’t want to deal with annoying their tenant so they don’t raise rent unless they feel they “need” to - and appreciation makes them feel they don’t need to. Middling landlords (owning one or two 20 or so unit buildings) often are aiming more for cash flow and minimum vacancy, so they often have pricing out of date. (Ask people in your are who rent which apartments never have vacancies - you’ve found the underpriced one). Large landlords (many thousands of units) have vacancy targets and formulas and comps to determine rent as best they can - not because it makes them money per se but that it raises the value of the property (which for large complexes is a simple formula based on rents) allowing more loans for more properties. RealPage is trying to provide that “large landlord” stuff to the other two.

leetcrew 4y ago

I don't actually know what realpage does, but in the spirit of HN, I am going to speculate anyway. at a high level, yes, there is a "market rate" for apartments that is driven by supply and demand. you won't have a lot of luck trying to let a 1 BR for double the median 1 BR rent in that neighborhood. but individual units are not fungible either; landlords can definitely charge more for units that have been more recently renovated, better layouts, nicer views, etc. plus or minus $50 on rent might not make much difference to a tenant, but having the data to make those little adjustments could matter a lot to a landlord with hundreds of units. this isn't something you can get just by scraping zillow.

zajio1am 4y ago

> What value is being provided by RealPage? Efficient way how to find market rate?

rsj_hn 4y ago

> What value is being provided by RealPage? According to their website, the issue in question is "price discovery" -- e.g. let's say the market price is $1000 a month for your unit, but you don't know the market price because, for example, a long term rent controlled tenant just left, and they were paying $400 or something. Or maybe you had a tenant that was paying $1200 and he left because he found a better place for less. So what do you charge? You can try to charge $2000, wait four months, get no takers, then lower to $1800, wait four months, etc. Or you look at realpage, which says similarly priced units sold for $1000 in your area, so you advertise for $1000 and get a tenant. For the individual small time landlord, price discovery is not easy and it can be very costly. Realpage provides it to you for a small fee. Larger corporate landlords probably have their own people dedicated to price discovery and so they may not benefit as much, but even then, you are centralizing the data collection process so not every landlord needs to do their own legwork. Why not just look at some of the websites that do statistics of craigslist asking prices? Well, in some sense that's all that's going on here, except with clean data and hopefully adjusting for biases -- e.g. if you look at averages of asking rents, you will get an over-estimate of rents because those who don't find buyers keep their advertisement up longer than those who find a buyer, so there is some adjustment that needs to be performed on an average of craigslist asking prices. Also that data tends to be dirty and doesn't have good coverage. I wouldn't be surprised if all that realpage is doing is massaging this data and fixing it up, plus adding in other data sources to get a propriety estimate. That's the value of this one feature. Of course, real page also handles online billing and a lot of the standard services you would expect from a property management app, but those services aren't at issue here. Point is, having realtime data about what people are paying is useful. That's why Zillow has estimates, and we don't look at that as a pricing cartel. Kelly Blue Book also has price estimates, etc. Even stock exchanges sell price data -- it's just a useful, valuable commodity.

SergeAx 4y ago
> You can try to charge $2000, wait four months, get no takers, then lower to $1800, wait four months, etc. Or you can go to Craigslist, look for similar properties in your area, factor in quality of renovation, furniture, views etc, and have quite informed guess in a matter of hour tops. For a yearly procedure it is adequate.
- rsj_hn 4y ago
  I mean, I addressed that -- did you read a few more sentences down?

bombcar 4y ago

A large percentage of landlords charge below market rent - for various reasons. Small landlords often don’t want to deal with annoying their tenant so they don’t raise rent unless they feel they “need” to - and appreciation makes them feel they don’t need to. Middling landlords (owning one or two 20 or so unit buildings) often are aiming more for cash flow and minimum vacancy, so they often have pricing out of date. (Ask people in your are who rent which apartments never have vacancies - you’ve found the underpriced one). Large landlords (many thousands of units) have vacancy targets and formulas and comps to determine rent as best they can - not because it makes them money per se but that it raises the value of the property (which for large complexes is a simple formula based on rents) allowing more loans for more properties. RealPage is trying to provide that “large landlord” stuff to the other two.