When Steve Welles first moved to Pittsburgh, he nearly missed out on a great apartment.
“I actually turned it down,” he says, “because the property manager knew nothing about the neighborhood.”
But as luck would have it, a resident passing by overheard their conversation and gave Welles a snapshot of the neighborhood that clinched his decision. “That was the tipping point,” he says.
In 2016, Welles and Patrick Paul co-founded Ikos, a property-leasing startup that leverages technology to bridge the gaps between landlords and renters by screening applicants, posting listings and giving renters a sense of local flavor. Headquartered in Pittsburgh, the company has a branch in Cleveland and will be expanding into Columbus and Baltimore later this year.
According to the results of a 2012 survey jointly conducted by BiggerPockets and Memphis Invest, one in eight American adults — 28.1 million people — own residential investment property or consider themselves to be residential real estate investors. (For context, that’s roughly the same number of Americans who own ROTH IRAs.) But most landlords aren’t full-time property managers.
“They’re trying to run a small business and they don’t have the tools to do it,” says Welles, who notes that owners of 1,000 units and up have access to expensive technologies that streamline the process of pricing, listing and showing properties. The vast majority of landlords own between 25 and 50 units, though, and are left to do the legwork themselves.
“We started to see what was being developed on the higher end of the real estate spectrum and thought we could deliver something really valuable to the bottom half of the real estate market,” says Welles.
Ikos wants to democratize these technologies for smaller landlords, who focus most of their attention on Craigslist and Zillow. By contrast, “When you post through our company,” Paul says, “you reach 88 different websites.”
Renters benefit from the Ikos platform, too.
“What our service enables for renters is a free neighborhood guide to help them make a major decision about the place they’ll call home,” says Welles.
Even though many rent payments cost more than a mortgage, people enter rental agreements with far less information than homebuyers. Ikos is trying to change that by arming a team of “Insiders” — there are about 10 in the Pittsburgh office and three in Cleveland — with details about the amenities of each property and the overall experience of living in a given neighborhood. Think of it this way: If a Craigslist posting is a Top 40 hit, an Insider’s take on a property is a deep cut.
Before bringing Ikos to market, Welles and Paul participated in AlphaLab’s four-month software accelerator program.
“They’re focusing on bringing equity to renting, especially as rental prices continue to rise — if someone needs an apartment, they will find them one that fits their budget, requirements and credit score,” says Catherine Tsavalas, program coordinator at AlphaLab. “Pat, Steve and their team are very mindful of the communities they work in and understand how delicate renting can be — they are trying to find someone their next home.”
AlphaLab Executive Director Jim Jen says real estate was poised for disruption when Welles and Paul brought the Ikos concept to the accelerator.
“The real estate rental market is a large market, with changing consumer behavior and opportunities for efficiencies that just begs for new solutions to take advantage of these trends,” he says.
Sean Ammirati agrees.
“Real estate is one of the last industries not to fully embrace the tidal wave of digital transformation, but I’m confident there will be multiple billion dollar plus software businesses created in this sector over the next decade,” says Ammirati, a partner at Birchmere Ventures, which invested in Ikos last spring.
He adds, “If you’re a landlord in Pittsburgh and not working with Ikos in the near future, I think you’ll be the exception.”
