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Tuesday, Oct 4, 2022

Knocking On Door

Westside Rentals isn’t your typical Silicon Beach tech firm.

The Santa Monica apartment listing company hasn’t raised a penny of venture capital, has no desire to expand nationally and doesn’t have a free website. Since the day it launched in 1996, it has charged consumers $20 a month for a minimum of three months to access Southern California apartment vacancies on its website.

But starting next year, Westside will expand. It will launch a residential brokerage service, which President Kevin Miller called a natural progression.

Miller said this year will be the company’s best year of business ever.

Westside’s revenue is up 16 percent since 2012, said Miller, though he declined to disclose figures of the private company. Paid memberships have also increased 14 percent since 2012.

“The proof’s in the pudding,” he said. “We’ve always charged since day one.”

While other free apartment listing services such as RentPath’s Rent.com, CoStar Inc.’s Apartments.com and Santa Monica’s RadPad have trained their sights on scaling nationally, Miller said Westside won’t change its strategy anytime soon. Westside lists apartments from Santa Barbara to San Diego but plans not to go beyond that territory.

“When your energy and efforts are concentrated in one area,” he said, “We feel we can deliver better results.”

As of Dec. 2, its site listed 13,800 apartments throughout Southern California, many which can be found on competitors’ sites and apps.

But those firms operate differently. Rather than asking consumers to pay for listings, they earn money in a variety of ways, such as charging landlords for ads, tenants for processing credit card rent payments and selling information about prospective renters to landlords.

Miller said Westside’s big appeal among renters is that it lists units forgotten by nationally focused apartment rental websites.

“What we specialize in is the mom-and-pop listings and those are the most coveted,” said Miller. “We’re about a 70-30 split, smaller mom-and-pops versus the large complexes. The majority is the six-unit stuff. Mom-and-pop landlords are often $200 to $300 below market because they want someone to stay around.”

The 50-person company has also focused on recruiting landlords of small apartment and rental homes to replenish the site’s inventory. It’s a strategy that has continued to draw listings from apartment managers who see Westside as an important website to place their advertisements.

“They have so many different options, which makes it a lot easier for someone to go into the site and find something,” said Vanessa Pineda, owner of Los Angeles Property Management Inc. of Santa Monica, who uses Westside in concert with other listing websites.

Value add

Westside has also maintained its business by offering corporate memberships and leasing services for apartment owners.

Corporate subscriptions start at $1,375 – a price point that includes 25 accounts active for 60 days. So a company that is recruiting can give 25 incoming employees a two-month account to look for a new pad.

Westside has seen a 3 percent uptick in corporate subscriptions since last year after an extended period of flat growth, said Miller, who noted that about 75 percent of its business customers are L.A. tech companies, such as Santa Monica’s Cornerstone OnDemand.

There’s a direct correlation between tech companies moving here, setting up shop and hiring people, and the increase in corporate accounts, said Miller.

Westside also has sold a leasing service to landlords since 2009 in which its employees show apartments to prospective renters, receive applications and run background checks.

“(Leasing services are) a hassle from a landlord’s perspective,” said Miller. “We have a team of 10 people in house seven days a week answering the phones, setting up showings.”

Westside charges landlords half of a unit’s first month’s rent – a cost that some large professional apartment management companies are unwilling to pay, especially if they already have trained leasing agents.

“We’re not going to outsource that to another company because we consider that a very high value-added part of what we do,” said Daniel Tenenbaum, principal at Brentwood’s Pacific Crest Realty, who noted that his company puts a lot of resources into training leasing agents.

However, Miller said the leasing service has caught on with small mom-and-pop landlords in high-rent areas – customers who stand to gain a lot from finding a tenant quickly but don’t have the manpower to run a professional leasing office.

Westside’s leasing team has represented more than 5,000 leased units since 2009, according to Miller.

With high rents in mind, Westside is also aiming to become a major player in the residential brokerage business when it launches that division next year.

The company plans to use its vast database of rent prices to identify geographical areas where values are on the rise and assist in pricing homes. Miller said Westside Rentals also plans to exploit its network of apartment hunters and landlords to find clients.

In a test case, the company sold a three-bedroom Inglewood townhouse for $387,000 in October.

“It complements everything else that we are already doing,” said Miller of Westside’s brokerage plans. “We are going to be leveraging the relationships we have. We’ll convert our members who are paying a good amount of rents and then put them in a condo or townhome.”

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