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A conversation with Bungalow CEO Andrew Collins, who is trying to solve the country's rent crisis

Last week Bungalow raised a $14M Series A round, and added Keith Rabois to its Board of Directors

Entrepreneur interview by Steven Loeb
August 29, 2018
Short URL: http://vator.tv/n/4c00

Editor's note: Save the date! We're hosting our inaugural Future of Real Estate salon on Oct. 25 to take a deep dive into tech innovations changing the way we live and work! Joining us will be Amit Haller, co-founder and CEO of Reali, Gary Beaseley, co-founder and CEO of Roofstock and more. Check out the event.

I don't think anyone who lives in a big city like New York, Los Angeles or San Francisco needs to be reminded that rents are just too damn high (remember that guy?). In San Francisco alone they have risen nearly 50 percent since just 2012.

These cities are becoming unaffordable to all but the highest paid workers, yet that is where the jobs are. It's a catch-22 that many of today's workforce, especially those just entering it, know all too well. That's why it's frankly a little surprising that it has taken this long for a tech company to finally come along and try to do something about what is such a massive problem.

Now there's Bungalow, a residential real estate platform that launched last week with the goal of helping people find better, more affordable housing. 

The company utilizes existing housing supply by signing long-term leases with homeowners. It then matches potential roommates, provides furnished common areas, and takes care of utilities including WiFi and monthly cleaning services.

Along with its launch, Bungalow also announced that it raised $14 million in Series A funding, in a round led by Khosla Ventures, Atomic VC, Founders Fund, Cherubic Ventures, and Wing Ventures, along with a $50 million debt facility, bringing its total funding to date to $70.7 million.

As part of the funding, Keith Rabois, an investment partner at Khosla Ventures, joined the Board of Directors at Bungalow. 

Founded in early 2017, the company currently manages hundreds of properties and over 750 residents across five urban areas including the Bay Area, Los Angeles, New York, San Diego, and Seattle. In conjunction with its funding, Bungalow also added Portland and Washington, D.C. to its platform.

The company says it's currently on track to be in 12 major U.S. metro markets by the end of this year and that it has plans for global expansion starting in 2019. 

Andrew Collins, co-founder and CEO of Bungalow, spoke to VatorNews about the problem the company is solving, how it is building a community for renters and what Rabois will bring to Bungalow as a member of the board.

VatorNews: What is the problem that Bungalow is trying to solve? How does your company solve it?

Andrew Collins: The problem that Bungalow addresses is two-fold: early career professionals moving to new cities for work struggle to find housing in the neighborhoods they want and need to live in, and long-time homeowners living in large homes with expensive upkeep want to rent out their properties to shore up their retirement plans, but don’t want the hassle of managing a rental property.

By signing long-term leases with these homeowners and renting them out as multi-unit homes to young renters, Bungalow solves both of these major housing challenges within each city’s existing housing supply. Homeowners get a guaranteed income stream without having to be ‘landlords,’ and renters get beautiful homes with great roommates in cities across the country.

Bungalow aims to take all the friction out of the room-share rental process, taking care of everything from matching great roommates and furnishing the home’s common areas to streamlining rent and utilities payments (including WiFi) and handling service requests. We also host exclusive social events and volunteer opportunities for Bungalow residents to help them build communities in the cities in which they live.

VN: Who is the typical customer for Bungalow? Walk me through some typical use cases.

AC: The majority of our Bungalow residents are young professionals, typically in their 20s. In some cases, our residents are moving to a new city where they don’t have any friends are family; they’re not just looking for a vacant room to rent, they’re looking to meet friends with shared interests so they can start making this new city feel like home, faster. But this experience isn’t limited to city transplants. Many of our residents have been living in the same city for years, but want to move on from their current living situation. Sometimes they don’t get along with current roommates they settled with when searching on Craigslist, other times they’re overpaying for a studio and want friends to come home to after a long day at work.

VN: What kind of ROI do your customers see? Have you been able to come up with any numbers?

AC: Bungalow rooms are priced competitively in the cities in which they are offered. While the exact price of a room may vary, the economics usually work out that you’re paying about $500 less per month than you would for a studio apartment, and the value that we offer our residents in security and community extends far beyond the price of the room. We see about 80% renewal rates on our leases, and even when residents do move, they will often choose to go to another Bungalow home in their new city. Those who do leave are often moving to cities where we do yet have homes, but we’re working hard to expand!

AC: Can you walk me through your business model? How do you make money?

VN: Our business works by renting out individual rooms at rates that total slightly higher than the rate that we lease from homeowners. Larger homes generally get a lower per-square-foot rent than individual units. As we scale, this margin becomes significant.

VN: What will you do with the money that you have now raised? Will it go toward hiring or product development?

AC: Bungalow will use the funding to scale to even more cities, a big part of which means building out our R&D and marketing teams. In one year of quiet operations, we have amassed hundreds of homes across seven markets. We expect to be in twelve markets by end of year, and to make our foray into international homes by 2019.

VN: I see that you will be expanding to new cities. What are the opportunities you see in Portland and Washington D.C?

AC: Portland and Washington D.C. are both cities with growing populations of young professionals seeking housing. We’ve seen encouraging interest from both homeowners and renters in both cities, and are excited to expand our presence in both markets.

VN: Who are your competitors? What separates Bungalow from them?

AC: Our main competitor at this point is room-sharing inquiries on sites like Craigslist. But what Bungalow offers that these kinds of sites do not, is built-in community and security. Bungalow provides a seamless, digital experience for renters: running background and credit checks on potential roommates at the outset, finding and matching great roommates and furnishing a home’s common areas, streamlining rent and utilities payments and handling service requests, and so on.

VN: What is your ultimate goal with Bungalow? Where do you want to see the company in the next 5 years?

AC: Our ultimate goal is to build up a network of Bungalow homes across every major city. In our first year, we’ve scaled rapidly, with more than 750 renters across hundreds of homes in seven major U.S. metropolitan areas. We’re thrilled with the massive interest we’ve seen from both renters and homeowners, and expect to be thriving in 12 markets by the end of this year. We believe our business model has the ability to continue to scale rapidly in the long-term and take on the $640 billion rental market for early career professionals in the US. We also believe this is a global opportunity, and we’re planning to expand internationally in 2019.

VN: What does Keith Rabois bring to the company as a member of the board of directors?

AC: Keith Rabois brings the wisdom of a serial entrepreneur and the industry savvy of a residential-real estate startup veteran. His experience investing in multiple early-stage startups, and particularly, his work founding and leading Opendoor, will prove invaluable guidance as Bungalow scales.

VN: Is there anything else I should know about the company or the new funding round?

AC: Beyond offering residents an exceptional living experience, Bungalow is building a community for renters. We know how isolating it can be to live alone, or move to a city away from friends and family. It’s also hard and takes time to build up your community outside of work and dating apps. That’s why a major pillar of our business is to provide opportunities for our residents to build community through exclusive social events they actually want to attend – from axe throwing to BYO-float parties, and sunset cruises. We also offer service opportunities, such as organizing a group of residents to help with relief efforts following last year’s Sonoma fires, for those who enjoy volunteering.


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