In 2020, bedrooms converted into offices, kitchen tables doubled as homework stations and living rooms turned into make-shift gyms. If there was one real estate trend that defined this pandemic-stricken period, it was the re-evaluation of our living spaces: Suddenly, people no longer needed to be located near their workplace. Families quarantining at home craved larger spaces and backyards and, in the absence of vacations and entertainment, many of these families had more money available to invest in housing.
The result? Demand for single-family rental (“SFR”) properties hit generational records, outperforming much of the real estate industry in 2020. Even pre-Covid, SFRs were the fastest-growing and largest segment of the multi-trillion dollar U.S. rental market — with more than 23 million units, representing more than 50% of the total rental market – and more stable / profitable than other commercial real estate segments, the S&P 500 and Treasury notes as investment opportunities.
Yet, despite all the activity and dollars flowing into residential real estate, the process of owning, managing and renting properties continues to be extremely painful for many people. This rings particularly true for SFRs, as the overwhelming majority (around 90%) of these properties are owned and operated by individuals or very small, non-professional investors who generally do not have the required time or expertise to rent or maintain a home. The problem is exacerbated for the many homeowners who do not live within driving distance of their properties.
Some turn to traditional property managers to handle a lot of this work. However, the data suggests that homeowners are overwhelmingly underserved by them, as property managers have an average NPS of around zero. A big reason for this is the fragmentation of the industry: There are over 230,000 property managers in the U.S., most of which are local mom & pop businesses–most people can’t even name one. The result is a plethora of highly antiquated, sub-par services that leverage very little to no technology.
The confluence of all these factors has led to a massively fragmented industry with little innovation and an experience that is severely broken for both homeowners and renters.
That is why we are thrilled to announce today that Battery is leading the $40 million Series B financing for Belong*, a full-stack, tech-enabled property-management solution for SFR homeowners. The company oversees all aspects of managing, renting and maintaining a home from end-to-end within a single, scalable tech platform. Using technology, it abstracts away all the tedious and laborious tasks that homeowners would typically have to perform themselves, such as hosting home tours, processing rental applications, managing leases, processing payments, handling renovations and maintenance, and much more.
Belong looks and feels like a concierge-like service to both homeowners and renters that removes many of the stresses involved in managing and renting a home. The company’s focus on customer delight earned it customer- satisfaction scores of more than 80 and strong word-of-mouth praise: Two out of five Belong homeowners come from organic / referral sources, according to internal company data.
We recently published a thought piece on end-to-end operators in consumer technology, predicated on the simple thesis that the next generation of consumer businesses are fundamentally re-imagining their product experience by owning the entire value chain, from end-to-end, thereby creating a step-functionally better experience for users. Belong is a perfect example of this thesis, as it leverages technology, data and a world-class operations team to deliver a delightful end-to-end experience to all its constituents that is far better than the status quo.
Belong is led by repeat entrepreneurs Ale Resnik, Owen Savir and Tyler Infelise. The three previously worked together at Beepi, the online peer-to-peer used-car marketplace they co-founded in 2014. Having previously lived through the challenges of building a complex end-to-end marketplace in a similarly huge but hairy industry, we think they bring a set of experiences that make them uniquely qualified to run a business like Belong.
We believe property management is just the first of many potential services Belong could offer over time. Ale and Owen have a very thoughtful roadmap of additional products, and we cannot wait to share more on this in the coming months.
We are deeply honored to be part of the Belong journey and look forward to partnering with Ale and Owen to bring homeownership and renting out of the dark ages and into the 21st century!
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*Denotes a Battery portfolio company. For a full list of all Battery investments, please click here.