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This week’s area we will be highlighting is Kane`ohe. Kane`ohe is located on the windward side of Oahu and has the zip code of 96744. According to an ancient Hawaiian story, a local woman compared her husband’s cruelty to the sharp edge of cutting bamboo; thus, the place was named Kane`ohe or “Bamboo man”.

Kane`ohe sees a lot of rainfall through out the year and is very cool due to the trade winds that blow into the Ko`olau mountain range. The area was once very agricultural based with the raising of pineapples, bananas, taro and a processing cannery. As with much of O`ahu, the area has become very suburban with very little agricultural activity.

Homes in this neighborhood are mostly on the older side. Most of the single-family homes were built during the 50’s and 60’s and have single wall construction. Rental prices for single-family homes range on average from $1,600 to $3,000+. The upper price range represents a newly built home or a location close to the Like`like junction. Traffic can be a bear at peak traffic times especially in areas with many residential traffic stops.

For townhomes there are very few choices as there are only a few townhome subdivisions with most located around the Haiku or He`eia areas. The range starts at about $1900 and runs up to about $3000+. Some of the benefits you might get in a townhome community include amenities you would not normally get in a single-family home rental such as a BBQ pit or swimming pool.

Apartments are rare in Kane`ohe and are the most affordable home option. It is suggested you check out any apartment rentals in the late afternoon. This way you can assess how loud, your neighbors will be if you were to move in. Most of the apartments in Kane`ohe are made of cement/cinder block construction so sound can resonate become a problem.

Luckily when searching for a rental in Kane`ohe you are able to utilize Rentrilla with its picture gallery functionality. Pictures tell a million words and show you which rentals might be worth the time to look at. Kane`ohe is a wonderful place to live but you’ll need to be sure to find a location that fits your commuting requirements (ie. close to the freeway if driving into town). This is the key to a happy existence in Kane`ohe.

We are starting a new set of articles to highlight the various areas of Oahu. In our first article, we will take a close look at Pearl City which is located in the leeward area of Oahu and has the zip code of 96782. It was once an agricultural area and developed into a suburb environment in the early 70’s. One key advantage of the Pearl City area is its quick access to the major routes such as the H1, Kamehameha Highway, and Moanalua Road.

Within Pearl City there are many shopping centers, restaurants, and entertainment offerings including those within the Pearl City Shopping Center and the Pearl Highlands Center. With its diverse food selection, you should be able to satisfy any craving you may have. As for entertainment offerings, there are movies, bars, and live music choices. The community is very diverse in cultures and is a safe neighborhood.

The advantages that Pearl City offers obviously affect rental prices and vacancy rates. A typical 2-bedroom townhouse goes for about $1,400 to $1,700. As an example, town homes in Wailuna start at about $1,800 and top out at around $2,300.  Regular home rental prices begin at about $1,700 for an older model while some of the newer models or larger homes go for $2,500+. There are very few rentals available in Pearl City but when one comes available, they tend to be vacant for long periods. We believe Rentrilla can solve this long vacancy problem by allowing a property manager to describe their property in greater detail than the normal advertising channels, giving the property manager a more robust tool to promote their rental versus other online rental ad sites.

We are also looking for suggestions on our next area to highlight so please leave us you comments below.

There is an interesting dynamic in the housing market across the mainland.   Home prices are decreasing and so are rents.  Generally, there is a parallel correlation between home prices and rents. As home prices increase, rents  increase as people are priced out of buying and must rent conversely when home prices decrease those renters can afford to buy.

In the current environment, home prices are decreasing and rents are as well.  As you may have noted from my previous posts, I follow the market and the many analysts, media and blogs. The overwhelming conclusion is that the is rampant speculation and oversupply, which have occurred in the last several years has led us to this situation. It has resulted in owners (primary and secondary) losing homes they cannot afford to foreclosure and these same homes are sitting vacant for long periods.  These owners have had a desperate need to cover their mortgages and ask for rents equal to their monthly mortgage payments.  What they do not seem to grasp is that they overpaid and will not be able to attain rents equal to their costs.  This results in not only additional rentals on the market but longer vacancies that in turn push rents down.

The government is artificially propping up home prices to only exacerbate and prolong the inevitable.  The longer home prices remain unaffordable to the average person, the longer the market will take to find equilibrium.  Rents dictate home prices.  Historically, the price-rent ratio has been under 20.  We are currently significantly above the 20 mark in many cities around the U.S.  The price-rent ratio is calculated by taking the median home price and dividing it by the median home rent.  This average is mainly dictated by two things: 1) Break even on owning versus renting; and 2) Investment property returns.  It makes no sense as either an owner occupant or an investor to purchase a home that costs you far more to own than you could rent/rent it out for.  No sane investor would purchase a property with carrying costs or $4k/month only to rent it out for $2k/mo.  Similarly, it makes no sense to buy that same home because renting is so much cheaper.

Maybe once the price-rent ratio gets back to historical norms of around 20, it will be a good time to buy for those who can comfortably afford it but until then, it is great to be a renter.

To my surprise, my letter to the editor responding to the unwarranted criticism levied by one of The Pitch panelists was actually published.  It’s doubtful that people who read our article in The Pitch would read the letters to the editor as well thereby mitigating the any damage her comments might have caused but I’ll give Hawaii Business News credit for publishing my letter unedited.

Now all we can do is hope landlords and property managers are undeterred and we’ll try to get more publicity.  Next publication we’d like to get into is Pacific Business News.  Time to make some calls…  Wish us luck.

We thought creation was difficult, it turns out that marketing is even more difficult a task.  It is a little bit of a challenge to communicate our model and then to convince people to try something different (particularly when it isn’t free) is daunting.

I’m not sure if it’s our communication skills or the fact that Rentrilla’s business model is different than the norm that seems to initially confuse people.  Having a pay-for-performance fee is something that most landlords and property managers have not encountered before.  I’m still unsure as to whether they understand that while Rentrilla.com is not absolutely free, advertisers do not pay if their ad doesn’t rent through Rentrilla.com.  If it rents through the classifieds or “that other guy’s list”, then it’s free.  Seems like a win-win to me.

What we also want to communicate to advertisers is that Rentrilla.com makes their lives easier as our process is more efficient than utilizing their current methods.  Because of the limited information and functionality of other advertising venues, landlords and property managers need to answer more calls and show the property more than they would if they use Rentrilla.com.  Rentrilla provides as much info and content (including pictures and video) as the advertiser wants to post and therefore answers many of the potential renters questions without them having to call or physically see the property.  Ideally, for the advertiser, it will be one call, one rental.  Of course that is the perfect scenario which is unlikely but I’m sure using Rentrilla.com will be closer to that scenario than the current one where the lister needs to field dozens of calls and handle numerous showings without a successful rental.

We’ll keep plugging away and hopefully in this depressed economy with high vacancy rates, landlords and property managers will be willing to try something new.

We got some publicity!  Hawaii Business Magazine (HBM) published an article about us in the May issue.  We even got a picture.

Unfortunately what I had feared could happen did come to fruition.  In March we contacted HBM and related that we thought Rentrilla would be a good feature for the “Innovation” section of the magazine.  They responded about a month later with an offer to feature us in the “Pitch” section of the magazine instead.  The Innovation section provides a summary of the business on one page along with photos and diagrams to help the reader understand the business model.  The Pitch section offers an overview of the business and has a panel of three “experts” to provide feedback and advice.  My fear was that we would not get to respond to any comments the panel might make prior to publication.  I was afraid the panel would make some assumptions or comment on an issue that we had already addressed and resolved and that the issue would therefore be unfounded.  But any publicity is a good thing so we went along with it despite our hesitation.

Of course what we had feared did come to pass.  While two panelists had made some legitimate comments, the final panelist made assumptions that were so far reaching, I thought she was being overly critical just for the sake of being critical without having any legitimacy or value at all.

Panelist number three assumed based on a very brief summary provided in the article that Rentrilla’s whole premise was based upon the poor search functionality of one of our competitors and also inferred that we had not done any market research.  Nowhere in the article did it mention performance of market research or lack thereof so I’m not sure how she could conclude that we had not done any.  In addition, she incorrectly stated that renters are charged for using Rentrilla.com.  In fact, we PAY renters to utilize our site.

I’ve written to the editor responding to the panelist number three erroneous critique.  Hopefully they will publish my letter so we can clarify what Rentrilla.com offers and why we’re better than our competitors.

Originally this post was to be titled “Rentrilla’s Ads are Better Than Your Ads”.  While that statement still holds true (and I’ll discuss it later in this post), I almost forgot to mention the most exciting time for www.rentrilla.com – LAUNCH!  Or at least a soft launch for us during January 2009.

At the end of 2008, we completed most of what we wanted for the website and integrated it with the application.  I’m not sure anyone who hasn’t developed a dynamic e-commerce site would be able to appreciate how difficult it was to get this up and running.  Hopefully users will find it as useful as we believe it to be.

So why are Rentrilla.com’s ads better than other advertising resources?  Having inherent problems with the current methods of advertising rentals, namely newsprint classifieds and ’some guy’s list’ website, we believe Rentrilla.com provdes better value for our constituents.  Newsprint classifieds are expensive, provide limited information (three lines of text and NO pics) and obviously provides no ability to sort or search for specified criteria.  ‘Some guy’s list’ provides very limited search functionality, limited media content and is ground zero for spam and fraud.  Rentrilla.com provides a solution to each of those issues mentioned previously.

1. Performance-based advertising fees – Listers only pay if and when their property rents through the Rentrilla.com site.  If their property rents through another meduim such as newsprint, they pay nothing. 
2. Renter rewards – Rentrilla.com not only doesn’t charge renters, we pay them for finding a property on our site.  Find a property on Rentrilla.com, rent it and collect a reward for doing so.
3. Unlimited ad duration – Ads run until they rent for the same flat performance-based fee regardless of how long it’s run.
4. More media – Rentrilla.com provides for up to 15 pictures and 5mb of video.  Newsprint has no pics or video and ‘that other guy’s list’ has limited pics and no video.
5. Robust search – Rentrilla.com provides renters a search tool that allows them to look for specified criteria such as an enclosed garage or air conditioning and will rank the search results in order of matching criteria.  So properties with all of the criteria specified will be listed first and those with minimal or no matching criteria will be listed last in the search results making it easier for renters to sort through properties they may like.
6. Fraud and spam control – Rentrilla.com has an active registration requirement making it necessary to register prior to being able to list an ad.  Rentrilla.com staff also reviews all ads and randomly selects ads for further verification.  Other sites have no registration requirements and have no active management, which allows fraudulent ads to be posted.

So now we know that Rentrilla.com’s ads are superior, we need to communicate it to property managers and landlords and get them to know it too.

Ryan

Next – Marketing

So on top of giving money to (among others): 1) banks which had catastrophic failures in risk management, 2) homeowners who bought more house than they could afford, 3) potential homeowners to purchase homes, and 4) car companies who couldn’t make cars consumers wanted and are now basically bankrupt; we the taxpayers are now providing warranties for those new cars as well.  Where does it end?  It seems making bad decisions and failure are rewarded while being responsible and achieving any modicum of success is punished.  A minute ago I also read a Yahoo news release regarding the US Treasury considering giving banks and investors billions more in incentives to modify mortgages.  Unbelievable.

I believe these so-called bailouts will result in a prolonged period of recession, asset devaluation and pain due to artificially inflated asset values that the bailout is trying to maintain.  History has proven that an economy cannot grow based upon artificially inflated asset values, whether it be real estate, securities, commodities or even tulips (http://www.businessweek.com/2000/00_17/b3678084.htm).  A prolonged corrective period will also likely result in asset values declining past equilibrium due to fear and constipation in the market.  It’s better to take our collective “medicine”, let the market correct itself and move on.  Does anyone really believe that if real estate prices decreased by 35% there wouldn’t be a frenzy of buying?  If the government wants economic activity particularly in the real estate sector, let prices fall and you’ll see buyers in droves.  Prices are based on incomes and rents and they are clearly out of line with historical norms.

While real property values will continue to decline as a result of the bailout backlash, job losses, etc, what this means for renters I do not know.  Investors unable to sell their properties due to an upside down mortgage (where their loan is greater than their property is worth) will need to get it rented to help meet their mortgage payment creating excess inventory in the rental market and pushing rents down, but conversely with less people buying, more people will be renting possibly pushing rents up.  However, lower priced homes may also put downward pressure on rents as well by competing with existing rentals if mortgage costs and rents are fairly comparable.  I think decreasing rents are likely as evidenced by average rents in Southern California, San Francisco and many other metropolitan areas which have come down significantly over the last few years.

One thing is for certain: with all of the turmoil and increased home inventory, landlords and property managers will need a more effective way to advertise and renters will need a better way to sort through all of the home ads.  With Rentrilla’s performance-based fee structure, only if a property rents through www.rentrilla.com will the lister need to pay for the ad.  If it rents through any other advertising medium else, it’s free.  Renters will also find increased functions to tailor their searches for the perfect home into minutes rather than days.

So landlords and property managers come on an get your property rented faster and renters come find your perfect home!

Ryan

After the trials and tribulations of going overseas to develop Rentrilla’s software application, we were going to try really hard to find a developer locally.  Luckily, web designers are easier to come by than .net or php programers.

We began our search for a local web design shop and found one who could help build our look and feel for the site.  They had a great background in doing video and flash and we really wanted a fresh and clean “Web 2.0” look. Besides a clean look, we wish for the UI to be easy to use and provide great interactivity. The idea was to make the experience so much more than websites of the past.  They put together a slick introductory flash video for the site and a nice graphic for our banner.  Unfortunately, we ran into a different issue this time pushing our anticipated launch date back yet again.  The software application’s architecture had more complexity than the web shop was equipped to deal with.  Subsequently they were not able to integrate some of the design elements we wanted into the application.  This was disappointing as we had given the shop access to the application prior to starting the engagement and they assured us they were capable of doing what we needed.

But in the end, Kapena took what we had gotten and tweaked it a bit to integrate the additional content we wanted.  It took him quite a while to study the language and architecture behind the application and site and a good deal of trial and error but the end result does look pretty good if I do say so myself.  It turned out more expensive than we had hoped but it’ll work out in the end when Rentrilla is the leader in residential property advertising!

Since we now had a fully functioning web application, it was off to the races.  Of course we knew there would be additional modifications based on feedback from users of the site and hopefully we can accommodate all of the requests.  But the really tough road was (and is) ahead of us.  Marketing Rentrilla and convincing property managers and landlords to advertise with us is more of a challenge than anything we’ve encountered yet.

Next – Rentrilla’s Ads are Better Than Your ads.

Let me tell you, software development is hard when you can’t do it yourself.  It’s even harder when you go overseas to get it done.

As I had mentioned in an earlier post, there is very little in the way of canned software for real estate/rental advertising.  As such, we needed to find a software developer to build an application with the type of functions necessary to make it easy for a Lister to post a property and for a Renter to find their ideal home.  With all of the different types of development languages available, it’s pretty difficult to find someone in Hawaii to code in a language you might want. Mainly because freelance developers are rare and usually they have other projects, they are working on.  For better or worse, we found a group in a semi third-world country whose background and resume seemed like it fit our needs.

What started with a three-month timeline turned into four, then six and seven.  Maybe we had an unrealistic expectation, but time zone differences, language barriers, project priorities were all big challenges that we had to overcome.  The small modifications are what took the longest to convey to non-native English speakers. The small details would usually get lost in translation between their project manager and developers. We found the best thing to do was to use graphics and screenshots to express our changes. As they say, a picture can tell a thousand words and this was true for us.

But in the end, the product we got was pretty solid.  We got functionality that we think will help renters immensely which was one of our original goals.  Rentrilla’s relative search gives a renter the ability to put in their ideal criteria for a property including amenities (eg. enclosed garage, number of bedrooms, etc.) and it will return all properties in the specified area and rank them in order of matching criteria or relavance.  This way a renter will be able to see all the available properties but have the preferred properties ranked highest to cut down on the time they need to spend looking through all of the ads.

The next step was to create a look and feel to pair with our software application.

Next – Web 2.0.