Exclusive: Online home rental startup Homigo turns into a marketplace
Homigo Realty Pvt Ltd, a Bangalore-based startup that rents out furnished houses, has tweaked its business model to become a managed marketplace as it seeks to expand its services to low-demand areas and reduce risks related to low occupancy.
"The marketplace model is helping us to expand quickly," Nikunj Batheja, co-founder and CEO of Homigo, told Techcircle.in.
Homigo earlier operated on a managed inventory system where it used to take houses on rent from owners, equip the houses with furniture and appliances, and then offer those to tenants on a sharing basis. Property owners were offered a fixed rent every month as per the market value, irrespective of whether the startup managed to find tenants for those properties or not.
The houses were rented out mostly in high-demand areas selected on the basis of parameters such as location, connectivity and other amenities. This model worked well in areas where demand—and as a result occupancy--was high, but not in areas where there were few takers for rental properties.
Now, Homigo asks owners to get the house furnished themselves and offers them furniture at discounted pricing though its partners. It lists the houses on the platform after all prerequisite checks including contract signing, furnishing, cleaning and fixing power, gas and other connections are done.
This means that owners now get rent only when the house is occupied. Homigo pays bills for WiFi, DTH television, electricity and cooking gas, and takes a fee for its services before transferring money to the owners. "We use our resources and expertise to manage their houses and to find and manage tenants. As the house gets occupied, we transfer the deposit and then the rent every month (after deducting our cut)," he said.
Batheja claimed that the startup is already operationally profitable and that the marketplace model will help maintain operational profitability. The new model, he said, will also allow owners to decide the rent on a per-bed basis and enable them to earn more than the market rent.
Homigo was founded by Batheja along with Jatin Mitruka and Aakash Verma, all IIT Kanpur graduates, in July 2015. With a team of 16, the startup claims to have about 500 beds on board with an occupancy rate of 86 per cent in Bangalore. It plans to reach 1,000 beds in next three months.
The company raised $200,000 in seed funding from a group of investors including Livspace CEO Anuj Srivastava and Mebelkart CEO Rahul Agarwal in October 2015. The company is in advanced talks to raise its next round of investment.
India's online real estate market has been evolving with innovative initiatives coming from new-age startups. The segment has grown from being limited to property discovery earlier to a tech-enabled business for both property owners and customers to rent or buy and sell property without third-party involvement.
Homigo's direct rival is Nestaway Technologies Pvt Ltd, a startup that runs a managed home rental marketplace by the same name. Nestaway raised an undisclosed amount in funding from Tata Sons chairman emeritus Ratan Tata recently. IT had raised Rs 76 crore (approximately $12 million) in funding from e-commerce firm Flipkart and its investor Tiger Global in June 2013.
Zocalo's CoHo Stayz, a tech platform that offers managed apartments and villas in the Delhi-NCR region for long stays, had raised an undisclosed amount in seed funding from startup accelerator GSF's Rajesh Sawhney, MakeMyTrip co-founder Sachin Bhatia and others in August last year.
Zenify, a rental management startup, raised Rs 4 crore from angel investors including Manthan founder Atul Jalan last year.
The Indian online realty market is dominated by Info Edge's 99acres and Times group-owned MagicBricks. PropTiger, Quikr, Housing.com and IndiaProperty are among the other major players. PropTiger is part owned by News Corp, which acquired the parent of this website in March 2015.