Traditional Real Estate Rental Property Management Industry Is Facing The Test Of Life And Death.

Businesss Models Sep 29, 2020

PART ONE: In the first half of this year, under the epidemic, the long-term rental apartment industry had a particularly difficult life: Affected by the epidemic, the delay in resuming work and production led to an increase in the vacancy rate.

Digital Consultant Australia - Scale


For some time long-term rental Real estate property management market leaders, the industries golden child looms amid  salacious slander and innuendo, Qingke once again postponed the release of the second-quarter earnings report, which is a dangerous signal for a US-listed company. The time is about to come to October, and Qingke’s second-quarter financial reports have been delayed after multiple announcements. They actually failed to show up.

For the long-term rental apartment industry, the road does not look good at all. One corner claims only time until it drowns, another clearly not optimistic.... and here is why....

Decline in long-term rental apartment platform revenue across the global pandemic in various nations and equators ricocheting randomly against themselves, misaligned, in motion an still active, real time market shifts under proxy economies, unbalanced foreign market stimulus and state, local, federal, regional fiscal tides heading to all time lows, coupled with socioeconomic welfare impacts, lays a perfect pot manifesting zero visibility on vulnerability an implications to come and  its cause on the markets new look, landscape, environment, needs, wants an requirements to suit a new consumer, the never loved tenant, the renter.

Qingke, Established in 2012, is one of the first domestic players to make decentralized modern short-term an long Rental Real estate property management system architecture framework business model.

In English a business built upon rules to its requirements.

That's vastly a big shift and new look for realtors, to behave and improve at a pace unlikely to cater to a market that has largely been marginalized, mistreated, unheard and stigmatized,  plus cared least and last in the owner, property manager, and renter cx customer experience, now for a long time, and perhaps the first time renters have options, good options and if you think the renter is  going to  forget that taste of traditional Realty Property Management.  Think again ...  Reach for the mints.

However I digress, this is  a simple reactionary human behavior to a much greater chain of events that more then likely the industry is set to make giant accommodations for. (pun)...

One good thing realtors are great at is awarding themselves, regularly with acknowledgement of excellence,  a set skills that will absolutely be tested post covid.



This is indeed a business model innovation worth encouraging for user groups who have long been plagued by uneven rental quality and black intermediaries.

First came the PC, the database, a cable, html, frameworks and new ip telephony..... Arrives.

THEN The concept is easy .... as we open the rental app, search for a variety of new inner city apartment types and communities based on the distance or the location of the subway station or business district. Various texts, videos or photos will introduce the orientation, roommates and other room information in detail and transparency.

The room is uniformly renovated and fully equipped short and secondly least preferred Long-term rental apartments with new home appliances, unified management, complete living services, and good living experience have become the first choice for the younger generation.

Is this really that hard? Kinda yes, at scale, very.

Short-term rental apartments are a typical example of model innovation triggered by the penetration of the Internet into traditional industries.

From the perspective of origin, long-term rental apartments are also called white-collar apartments or youth apartments. The typical model is that apartment operators lease the owner’s house. After renovation and furnishing of furniture and appliances, it is leased to white-collar workers around the house as a single room.

IE: Working people or cubicles.

Since Covid, Qingke and most prop mgmt companies,suffered and their  platforms still has to bear high operating costs-team staff costs, prepaid housing rental costs, decoration and maintenance costs, etc, which has caused the original tight cash flow to become more serious, and the long-term rental apartment industry is facing the test of life and death.

Multiple factors add up, and the potential risks are magnified.

In the past few years, thanks to the expansion of market demand and continued capital leverage, the long-term rental apartment industry has entered a fast-growing lane.

However, the excessive pursuit of efficiency has also caused the industry to fall into trouble. The current embarrassing situation of Qingke is a representative of the overall predicament of the industry.

Flame and lame are two extremes that coexist with Realty as a whole.


On the one hand, before the huge housing leasing demand in the city, long-term apartment renting not only eases the troubles of landlords, but also increases the convenience of tenants, supplemented by the leveraging effect of capital, quickly sweeping the market.

On the other hand, the property of heavy assets puts a heavy shackle on long-term rental apartments, struggling to find a balance in the multiple roles of scale expansion and profitability, landlord and tenant and technology.

Nowhere is experiencing this quicker then in China, a market so fast and progressive its a look into the future and runs parallel to the west at a far more tremendous pace. Long Term Rental Companies across china and leading US rental managers are closing down, being exposed, or simply just arent systems efficient enough to stay in toe.



In fact, regardless of thunderstorms, formaldehyde disputes, or rent difference disputes, in the final analysis, they all lead to the ultimate question:

Can the business of long-term rental apartments be established? In the face of many internal and external tests, will the future of long-term rental apartments go to heaven or hell?

The more you feel “you are rubbish”, the more efficient you have to stay - “Efficient madman without downturn” practice manual.

Realtors for far too long have relied on emotions, bull markets, lucky dips and a gain whose ceiling since the modern practice of realty inception has literally blasted vertical equal horizontal.



Deep down, most people believe that they need motivation to do something.

While this is true to a certain extent, it ignores a key fact about the relationship between “feel and action”: this is a two-way street. It's a dumb feel for a stupid look,  

You feel good when you take action, just as you feel good when you  action Good feelings like fuel to provide motivation for work.

But Make No Bones about it ....

No Disney Classic Movie Marathon can help this one...

In 2o15, Lei Jun, the co-founder, chairman and CEO Xiaomi Technology, invested nearly 100 million yuan in a stake in a startup company called you+ International Youth Apartment. This move will quickly grow at a time when the mobile Internet venture capital boom is booming.

Rent an apartment pushed to the cusp of the storm. Subsequently, around 2015, long-term rental apartment platforms have sprung up.

According to the division of housing, domestic long-term rental apartments are mainly divided into "centralized" and "decentralized" two categories.

However, traditional real estate companies that have aggressively entered the long-term rental apartment market since 2015, such as Vanke Park Residence, Longhu Guanyu, and CIFI Residence, have adopted traditional commercial real estate operation models, using self-owned land development or building whole-rental transformation methods.

Compared with the traditional housing leasing market with "short lease term and poor rental conditions", long-term rental apartments have two most notable features: one is a long lease period, and the other is a relatively standardized and comfortable living environment.


The long-term imbalance between supply and demand in the rental market is the fundamental reason for the rapid growth of the short-term rental apartment industry.

In the context of deepening urbanization, population flow has accelerated. However, due to high housing prices, renting has become the choice of more young generations. The severe hunger on the demand side has spawned the new-term rental apartment market. Many long-term rental apartment brands have been in a few years. Achieved explosive growth.

Jackie You, From Q&K International Group Ltd, A company pioneer in providing branded rental apartments, Q&K International Group is dedicated to advancing its mission to provide homes for China’s young people.

Since its founding in 2012, Q&K International Group has redefined the apartment rental industry, offering innovative solutions to form efficient connections between tenants and landlords.

Jackie You was recently asked to give some outlook or ideas on what to do in the face of, tbh, omg, idk, wth.

Here is what Jackie highlighted:

  1. We're actually in a very eventful time of the industry. On the one hand, there are a lot of companies being wiped out if they lacked the necessary discipline, and on the other hand, the government is coming out with a lot of regulations to put more orders into the market.
  2. We think that in the near-term, the industry will go through a lot of events and there are a lot of cross-currents so the visibility is not great at this point for us to give the outlook for the entire year, but we did provide some guidance on the top line for the first quarter.
  3. Long-term outlook, we think it's very positive, and if we assess the current situation through the length of the overall industry growth curve, this is a very healthy thing, to go through a correction, and having the remainder of the players of the industry go to the next level and the industry will become stronger.
  4. we certainly expect that we will continue to widen our advantages in this time. And this time in itself offers a lot of opportunities. So, we are taking advantage of this time with access to the global capital market. And we believe that we will widen our advantage and be able to capture a lot of fantastic opportunities when time comes.

First of all, we view this as a great opportunity, in that, when a lot of the players leave this market, there is more room for the existing players like us to address the market that is now left open. And we think that we will be in a position to offer more order to the market and standardize the market - [1] source


How TO:  stay in line with your renter

In times of uncertainty Ms You contributed a way to stay in line with your renter, your boss, and the owner by suggesting "As a general practice for us as a company, we do evaluate our inventory from time to time and look at the profitability. And for the bottom layer of our assets, we do have the opportunity to revisit the price arrangements with the landlords.

And as we disclosed in our prospectus, in the year 2019, we have -- for all of the contracts that we signed, we actually have put in a new clause, which is, should the leads-in price be higher than the leads-out price for over six months, we have the right to revisit the prices with the landlords.

So this is a way for us to protect ourselves against negative industry trends such as this."

What About Pricing?

Pricing set to be complicated and leveraged, some difficulty. Saying, We will -- we will do that on a case-by-case scenario.

As things change differently, so if you terminate your lease or terminate in the peak season, we will possibly raise our -- the rates with the tenants, but if you fall with or -- like that not in a peak season, maybe we can provide a lower prices, since we prioritize our occupancy rates over our price to just fill the gap.

So our average -- if you look at our earning release for 2019, our average prices after discount for their rental prepayments is 19.1%, versus like 25.7% compared with 2018. That reflects the macroeconomics for fiscal year 2019


Rental Loans or Rent loan?

The long-term rental apartment party received all the rent during the tenancy contract period in advance, and on the other hand, it still paid the landlord monthly. The precipitation of funds due to the time difference in the middle can help the platform to expand the scale and withdraw funds quickly. "Rent loan" provides a new financing channel for long-term rental apartment platforms. Many platforms use the financial lever of "rent loan" to further achieve rapid expansion in scale. But this model has great risks:



Why?

On the one hand, the funds obtained through rent loans for long-term rental apartments are actually the rent that long-term rental apartments need to pay to the landlord in the future. So when the apartment uses this money for market expansion, the apartment must ensure the occupancy rate of the new development. Once the market fluctuates, for example, the expansion is not smooth, the occupancy rate is not as expected, or a large number of tenants check out suddenly, long-term rental apartments will face the risk of breaking the capital chain.

On the other hand, due to the lack of supervision of funds, long-term rental apartments have invested in other high-risk projects or capital markets in order to pursue a higher return on investment, further increasing the risk of capital losses. The frequent occurrence of thunderstorms in long-term rental apartments in the past two years is mainly due to the "high income and low rent" under the use of rent loans.

The asset-heavy model and the high dependence on funds mean that long-term rental apartments need to find more "open source" ways, but unfortunately, from the current point of view, rent differentials are still the main way for long-term rental apartment platforms to profit.

Based on reality, the stories told by long-term rental apartments to the market are inseparable from the "entrance" cake.

That's me feel free to reach out [email protected]

The reason is that the housing market has been frozen by the epidemic, and the long rental apartments have become more and more empty. Even the capital companies, such as eggshells, free capital, listed companies or listed companies, are hard to bear the pressure of cash flow.

Elsewhere: long rental apartments and eggshells (unreliable rent pay) have been double complained by landlords and tenants in many cities. Obviously refusing to pay the rent of the landlord isn't viable.

More bizarre concept ideas on eggshell proposed a compromise plan, hoping to postpone paying the rent to the landlord during the epidemic. At present, all over the globe the parties are still in the process of communication and consultation.

Unable to pay the landlord rent on time, it is not difficult to see that the shell has been facing the risk of capital chain.

Firstly, Behind this vacant crisis, what should be reconsidered is the "original sin" of the scattered long rental apartments such as eggshells. Two the landlord and the rent loan mode are exposed to risks in the past few years after capital bubbles and horse racing.

RESOURCES: {proptech.marketing}  500 realty digital tools

Every Digital Proptech Tool You Will Ever need. 

Another look, Ziruo tries to meet the needs of different groups by launching "Ziru Yu" and "Ziru Yi", and at the same time expand revenue sources through Ziruo cleaning, Ziru moving, and repairing.

However, at present, the reality that long-term rental apartment platforms rely on rent for revenue has not been fundamentally changed. Progress in increasing revenue is limited and there is not much room for throttling. Under the two-phase squeeze, long-term rental apartments still cannot get out of the loss trap. Once the huge cash flow pressure encounters external forces, it quickly comes to the edge of danger.

Regulators are on it, the qualifications, behavior, supervision mechanism and legal responsibilities of housing leasing companies, which will stop leasing chaos and guide the healthy development of the industry. For example, in order to avoid thunderstorms in long-term rental apartments, it is clearly stipulated that housing leasing companies shall not require tenants to use housing rental loans by means of concealment, deception, or force.

The rental loans that once spurred the development of the industry are included in the scope of supervision, which is a major change facing the industry: in the context of stricter supervision of capital leverage, how can long-term rental apartments leverage resources to achieve expansion under the asset-heavy models

For now, Jackie You, Q&K International Group Ltd says lastly, in 2020, we will continue to improve our user experience by offering more services. For example, we're going to offer personalized cleaning services, and the cleaning area can extend from the common area to the private room upon their permission or request in order to improve the user experience. Such as include meal plans and laundry and user comforts. Property Managers aren't administrators they now work in hospitality. If they value good business and constant reliable inbound, attitudes need introspection and a different more useful set of skills required for the task.

Long-term rental apartments, the darlings of the market who have stepped on the trend of the times, an obvious signal has been released: the era of staking is over, and long-term rental apartments need to re-examine their future.

Part B Next week,

WRITER : Simon Dodson is a technologist with 20 years' experience in product, publishing,  prop-tech, hi-ed, health-techs and large enterprise and digital executive strategy units and specialist in digital channel scale.

Contact me:

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About Qingke

Q&K International Group Limited (NASDAQ: QK) (“Qingke” or the “Company”) is a leading technology-driven long-term apartment rental platform in China. The Company offers young, emerging urban residents conveniently-located, ready-to-move-in, and affordable branded apartments as well as facilitates a variety of value-added services. Qingke signs long-term leases with individual landlords in different locations in relatively inexpensive yet convenient locations and manages them centrally, leveraging its advanced IT and mobile technologies. Technology is at the core of Qingke’s business and is applied to every step of its operational process from apartment sourcing, renovation, and tenant acquisition, to property management. The focus on technology enables Qingke to operate a large, dispersed, and fast-growing portfolio of apartments with high operational efficiency and deliver a superior user experience.

For more information, please visit http://ir.qk365.com.








sources:

Sources: ://startupsreal.com/spotahome-the-startup-that-makes-long-term-renting-easy/

http://property-ba.com/europes-rental-market-and-the-startups-willing-to-become-unicorns-the-story-of-a-500-billion-market/

https://www.onlinemarketplaces.com/articles/32660-what-two-short-term-rental-startups-have-done-to-beat-the-market-crisis

https://www.fastcompany.com/90450212/this-airbnb-style-startup-wants-you-to-skip-long-term-leases-and-live-month-to-month-instead

https://www.eu-startups.com/2018/11/10-proptech-startups-2018/

https://techcrunch.com/2020/02/26/long-term-room-rental-platform-badi-launches-its-service-in-nyc/

https://www.curbed.com/2020/1/10/21060064/studio-apartment-moving-landing-startup

https://www.phocuswire.com/private-accommodation-investor-appetite

https://www.probuilder.com/startup-disrupting-rental-market

https://housinganywhere.com/

https://www.asiagreen.com/en/news-category/proptech-startups-reshaping-the-rental-housing-market-in-southeast-asia

https://www.cbinsights.com/research/vacation-rentals-startups-funding/

https://businessden.com/2020/03/26/virus-upends-local-airbnb-market-wreaking-havoc-on-related-startups/

https://zeusliving.com/

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SIMON DODSON

Simon is a technologist with 19 years' experience in product, publishing, prop-tech, hi-ed, health-techs and large enterprise and digital executive strategy and scale teams. https://bit.ly/3kNHCZ4

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