Bungalow Reinvents Multifamily for Millennials
This Startup Has a New Approach to Residential Rentals
Like many ambitious young professionals moving to San Francisco from the Midwest, Bungalow CEO-and Co-Founder Andrew Collins found himself crashing on a couch in the over-priced city even though he had landed a high-paying job.
While Collins eventually did find a place of his own, the experience of looking for housing as a newcomer inspired a career change for the entrepreneur.
“The housing system here seems fundamentally broken. It's incredibly hard to find a place," he says. "When I finally did, the landlord was terrible and refused to take care of issues."
Although he grew up in Oklahoma, Collins had actually moved to San Francisco twice after college. He left the first time to attend business school on the East Coast, and returned two years later to find that rents had increased 80%.
Collins also found moving to a place without an established community to be a difficult, lonely experience where it was hard to connect with like-minded people.
“Why don't we rethink what residential real estate looks like—make it more convenient, and more affordable?" he thought.
He was working at the customer experience management company Medallia at the time, so user experience was at the forefront of his mind. He thought about how to apply a better approach to the tenant experience as well as the rental process for homeowners looking to lease their homes to trustworthy tenants.
Ultimately, he came up with a coliving model focused on smaller spaces than many other options on the market.
He looked at the existing single family housing inventory in the Bay Area—specifically at the larger homes with 4-6 bedrooms. Typically these houses are occupied in a share-rental deal, and whether one or all renters are on the lease, things can get messy when it comes to move-out dates, deposits, damages and various other issues.
“We're able to repurpose existing housing inventory that's been inefficiently used previously, and actually create more long-term housing inventory," says Collins.
Bungalow serves as property manager, taking care of every aspect from cleaning and maintenance to new tenant screenings and lease management.
“We'll come in and sign a multi-year commitment. We take care of all the headaches of managing, maintenance, and finding qualified residents to live in your property. We run background checks, credit checks, and reference checks."
All new prospective homes must go through an inspection and be up to certain standards before joining Bungalow's active inventory. Once this process is complete, the onboarding—including cosmetic repairs and delivering furniture for the common spaces—takes 36 hours. By contrast, a ground-up developer might take two years and millions in capital to bring a new high-rise property online.
“The average family size has shrunk by 50% in the last 30 years, so you have these larger brownstones and single family homes that are going on the rental market in Boston, Philly, and Los Angeles. There's a huge supply-demand imbalance," he says. Collins is hoping that repurposing home inventory to better meet new generational needs may help to recalibrate the market.
Renters, homeowners and investors seem to agree. Three years in, Bungalow has over 2,000 residents living at 500 properties in its portfolio across 10 markets. While the Bay Area was its first metro, it will move in to San Francisco proper this summer. Other markets include Boston, Chicago, L.A., and Washington, DC. Bungalow raised $64 million in funding, including a $14 million series A round announced in August 2018. Khosla Ventures led the round.
“We can offer flexibility and a lot of choice," says Collins. "We have different types of properties and pricing levels."
For example, he says a small room might rent for $800 a month, while the master suite with its own bathroom might go for $2,000. As a result, you get people from different walks of life living together, while management handles the details of setting room prices, collecting rent and managing individual leases, thereby removing the responsibility from any renter and alleviating pain points of traditional shared rental arrangements.
The other key pillar of Bungalow's offering is the community it fosters among its residents.
“Our generation has moved away from community-centric activities. That's one reason you see exercise classes like SoulCycle come in to such popularity—they fill that gap," says Collins. “What's more organic than the people we live with?"
By managing the financial risk of a share rental, Bungalow lets residents focus on social interaction.
“In a recent survey we gave our residents, 70% said community was a big reason they joined Bungalow. We have email lists, group chats, and a digital app where events are posted for our members. We run monthly events where everyone's invited, plus many are organized by residents," describes Collins.
"In New York we've gathered at an axe-throwing bar, gone bowling, taken out a boat for the day, organized a Peloton class, and done yoga in the park," he continues. "It's all really meant to provide opportunity for residents to get to know each other and create long-lasting bonds."
Bungalow offers flexible leases of 4-18 months, and easy transfers for tenants who move cities.