A startup that allows family landlords to get paid in full, even if tenants fall behind on rent, is expanding its property management services amid pandemic-fueled demand.
Venture capital-backed NestEgg, whose app is available in Chicago and Dallas, has launched a low-cost offering that takes care of a homeowner’s day-to-day responsibilities. Its six-person team in each city will run the service, called “Freedom,” answering tenant questions, ensuring units are up to code and serving as a help desk for landlords.
“We identified this semi-managed space where [landlords] would like to have a lot more visibility and control than a property manager would give them, but they also don’t have the time to get involved in every little issue,” said Eachan Fletcher, CEO of NestEgg. The company estimates that the service, which costs $29 per unit per month, could save small property owners 8-10% per month on property management costs.
NestEgg isn’t the only player in the realm of rent payment and property management. Startups Flex and Till have similar business models, and software like RentRedi and Cozy allow landlords to manage their own properties.
Over the next six months, NestEgg has announced plans to launch in five more cities: Austin and Houston, Los Angeles and San Francisco, and Atlanta. New York’s regulatory maze proved a tougher entry for NestEgg, Fletcher said.
In November, the four-year-old company secured initial venture capital funding of $7 million, after seeing strong demand for its flexible rent payment offer.
National rent collection fell to around 75% in the winter, although Fletcher said NestEgg has been able to collect all of its rent by allowing tenants to pay what they can when they have it.
The company’s “Rent Advance” program, which allows landlords to collect full rent on the first of the month, costs $5 per unit per month. A more expensive “Rent Assure” program allows landlords to purchase renter default insurance for $49 per unit per month. In exchange, NestEgg covers up to four months of lost rent.
“We had our biggest period of growth yet throughout Covid,” Fletcher said. The company declined to disclose financial information.
In July, NestEgg plans to add a financing tool for owners. “Wallet” will provide small loans for down payments on new real estate purchases, interest free. Homeowners can buy up to three homes a year through the service, he said.
Fletcher said he wants NestEgg to help smallholders acquire more properties, eventually allowing them to earn a living solely from their real estate investments. He estimates that a portfolio of 20 to 30 units will allow an owner to achieve this goal.
“It’s going to make the difference between achieving financial independence in 15 years or in five years,” he said. “Our vision is to create one million millionaires in five years.”