While many surveys find that most renters aspire to homeownership someday, the rental economy continues to thrive. Americans rent more than apartments and houses, they also rent cars, vacation homes, furniture and even art. The recent “Rent My Life” roundtable discussion convened by Zumper, a rental housing platform, brought together leaders of several rental companies to discuss their customers and their business models. They focused on the intersection of technology and building trust as well as the pandemic impact on consumer trends.
Zumper’s site, which has approximately six million users each month, includes both long-term rental houses and apartments and shorter-term rentals.
“About one-third of renters change their home every year,” said Anthemos Georgiades, CEO of Zumper. “In our survey, we found that 35% of our users don’t want to own a home ever. Since the pandemic we’ve started seeing more people switch cities every three, six or 12 months. We think that pattern is likely to stick now that so many people can work remotely.”
Rental economy is built on flexibility
Flexibility is the prime reason for people to rent anything and the pandemic’s increased mobility added to that need.
Curina, an art rental platform, allows people to “try out” art in their homes by renting pieces temporarily. Approximately 40% of customers buy the art when their rental term ends, said Mio Asatani, founder and CEO of Curina.
“Our customers are primarily millennials with disposable incomes who we call ‘HENRYs’ – high earners but not rich yet,” said Asatani. “These are people who have good furniture and a nice home but don’t know where to begin to buy art.”
Fernish, a furniture and décor rental company, is designed for renters who want an effortless transition from one home to another or to adapt their homes when roommates move in or out, says Kristin Toth, chief operating officer of Fernish.
“Our typical lease is 12 months, but we can rent furniture for as little as two months,” said Toth. “Our business took off during the pandemic for people who were changing homes frequently, wanted to upgrade their living space because they were at home more or needed a work from home setup.”
For companies like Turo, a platform for individuals to share their cars, and VRBO, a vacation rental home platform, the customers are on both sides of the transaction including renters and owners.
“A car can be the first or second most expensive thing someone owns and yet it sits idle 95% of the time,” said Andrew Mok, chief marketing officer at Turo. “Our customers can generate income that shares the cost of owning a car. Most of our customers have two or three cars that they share through the site, and some use the income to buy a Tesla or other car that they might not be able to afford otherwise.”
On the renter side, Mok said, companies like Turo offer a less costly option for people who want a car occasionally but don’t want to rent from big companies. Renters have the chance to test out cars they may be thinking of buying.
“A lot of our renters want to try an electric vehicle,” said Mok. “About 7% of our listings are EVs, compared to just 2% of all vehicles.”
The surge in demand for vacation homes during the pandemic helped VRBO grow, too, with new owners offsetting their expenses with rentals, said John Kim, president, of Expedia Marketplace/VRBO.
Trust essential to rental economy
Many surveys find that consumer trust levels are down, and technology can be used to increase transparency for owners and renters, said Georgiades.
“Reviews can help a lot, but you also need tools and systems to underpin reviews,” said Georgiades. “We have instant tenant screenings and pre-verification tools for both sides of the contract.”
At Turo, technology is used to enforce safety recalls, inspection, and insurance requirements. Similarly, Fernish has a customer evaluation system, along with insurance and a team of experts who can clean and refurbish furniture so it can be rented again.
“Gen Z renters especially want to feel they can trust the companies they work with and want some type of community control,” said Georgiades. “The decentralization that goes along with the sharing and rental economy with platforms like Turo and VRBO is likely to continue to grow.”