A house next to a national park or an apartment in the center of a famous city? Rental marketplaces offer users a vast choice of places to stay for a certain period.
After the coronavirus pandemic in 2019, the rental business has begun to gain momentum again. So, you can get on the wave. In this thorough article, we will figure out how to create such a marketplace and succeed in a market with many competitors.
What are rental marketplaces?
A rental marketplace is a digital platform where users can rent multiple types of properties from one another. Likely, you know Airbnb. It is a great example of a peer-to-peer rental marketplace.
P2P (peer-to-peer) marketplace model is a platform-mediator. Users offer or rent real estate. In turn, the website charges a commission for connecting the owner of the property and the tenant.
Thanks to the rental marketplaces, people can find accommodation in a few clicks. And it is a fact that online rental platforms are very popular.
Do you know that just in the USA, about 36% of millennials live in rental properties? By the way, below, you can see statistics on the Airbnb website visits worldwide.
So, as you can see, the number of visitors to the Airbnb renting website has increased in recent years. Now, let’s find out the stories of successful rental marketplace businesses, including Airbnb.
Success stories of rental marketplaces
Booking.com is a popular rental marketplace worldwide. Geert-Jan Bruinsma created it in 1996. He went for a trip and realized that booking a hotel room “blindfolded” was quite awkward. In addition, he understood that tourism and the Internet would be inseparably linked soon. So, Geert-Jan Bruinsma launched this well-known rental marketplace.
A great advantage of Booking.com over its rivals was its pricing policy. Typically, competitors’ services asked for a fee of 35% of the booking cost, while Booking charged only 10-12%.
The TripAdvisor rental marketplace was launched in 2000 by Langley Steinert and Steve Kaufer. As is often the case, the company initially brought nothing but losses. In 2000, developers had to invest about $70,000 a month in their business to keep it afloat.
The renting platform owes its significant increase in popularity to integration with Facebook. In 2012, TripAdvisor launched the Friend of a Friend feature. It allows users to sync their accounts with social networking accounts. With this synchronization, users see first the reviews left by their friends and then the reviews of friends of friends.
Such a simple functionality turned out to be a very successful solution. Nowadays, there are about 490 million active users on TripAdvisor per month. This rental marketplace made a profit of $902 million globally in 2021.
Airbnb (AirBed&Breakfast) is one of the most well-known peer-to-peer rental marketplaces. At first, it was growing slowly. Its creators, Joe Gebbia and Brian Chesky, have faced many difficulties. However, their property platform has grown into a giant with a nearly $113 billion market capitalization.
This renting project was started in 2008 when the founders rented out their living room with just a few airbeds for the guests. Then, Brian and Joe developed a simple online site and posted their living room for rent there.
Below you can watch a short video about the extraordinary story of this rental marketplace creation.
Further reading: How Much Does It Cost to Build a Rental Marketplace Like Airbnb
Rental marketplace business models to make money
One of the most important factors when launching a marketplace is the right monetization model. There are many ways for marketplaces to generate profit. Still, we will consider the most popular monetization models for rental ones.
Transaction fees (Airbnb)
This is the most widely used online marketplace business model. It means that the user is charged for each transaction. The site takes a fixed fee or a percentage for its services when the customers pay the sellers.
The marketplace platform may impose a fee on the customers or suppliers. Another variant is the withdrawal of commission from both sides.
The parties may attend the site free of charge and pay only if they benefit from using the platform. Since the supplier only pays when his product is sold, he does not risk money. Still, the main issue with online platforms that use a commission model is providing sufficient benefits for both parties.
This business model means that third-party advertisers pay for publishing ads on your real estate platform. The featured ads and advertising model can only be used as an extension of the primary model. Thus, it will become a great way to generate income. But don't overload the site with ads.
Featured listings (Zillow)
This revenue model means merchants pay for their offerings to rank at the top of the search on the platform. Thus, they will be more visible to customers. The main problem of this premium services model is how to turn free users into those who are ready to pay a fee. This rental marketplace business model should offer sufficient value for the user to be willing to pay for ancillary services.
What to choose?
The most popular monetization model for online marketplaces is a transaction fee. Yet, you don't need to limit your selection to any particular revenue model. You can combine various monetization models to receive more revenue from your customers and merchants. It depends on your specific niche.
Further reading: 10 Best Marketplace Monetization Strategies to Succeed
9 key features for your future rental marketplace
When building a rental platform, you should include the corresponding marketplace functionality. Below we gathered a list of fundamental features for any rental marketplace platform.
The sign-up form should look clear and straightforward. It should comprise registration with a phone number or email. Also, you can make it even easier by using accounts on socials (Google, Facebook). This feature enables the sellers and customers to change their roles. Now you have an empty house to rent it and then you can search for property.
In their profiles, users add information about themselves. Usually, the main info comprises a name, mobile phone, email, and photo. Completed profiles build a certain level of credibility between your marketplace and the users.
The search filters assist renters in quickly finding the property they are looking for. Undoubtedly, the more enhanced the search filters are, the better for the rental platform business. Allow rental marketplace users to select pricing, property type, particular free dates, number of rooms, and so on. Below you can see how the search box looks on Booking.com.
Listings are “accounts” for the offered property. Owners should add all characteristics of the real estate they offer for rent. Renters can see all essential information about the accommodation from the listings. If there is insufficient information, customers will not choose to rent the property. So, it will affect your rental marketplace revenue.
Provide a translation of reviews and descriptions into different languages. Thus, you can extend the audience of your rental marketplace platform. Because more people from different countries will be able to use your web product.
Customize your rental marketplace so users can make payments on the platform. An online payment system should have an intuitive design and guarantee security. For example, the Airbnb real estate platform online payment system looks like this.
There are many payment solutions for rental marketplaces. By choosing the right marketplace solution, you can control payments inside your marketplace. And it will be convenient and quick. These solutions are Stripe, Dwolla, PayPal, and many others. There are also tools for crypto payments. You can read more in this full article: 8 Top Payment Gateways for Online Marketplaces.
Help users discuss a deal without leaving your rental platform. Create a built-in chat option. This feature should allow users to add files and photos to a message. Yet, it is vital to make chatting secure. The messaging feature enables renters to consider any details regarding the houses. These are arrival time, number of people, and so on.
The property owners and tenants should have the ability to leave text reviews. It is highly needed for the rental platform. This feature builds trust between users and improves your marketplace credibility.
This function enables renters to navigate a particular area and look for the most suitable rental property. Also, this feature offers a sorting system around a specific location. So, users get a fast real estate preview with the name, cost, and a few photos.
You may also like: C2C Marketplace Development: Why Invest in Your Own Platform
Ways to promote your rental marketplace
Indeed, the rental marketplace business, can produce high income. But how to drive users to your marketplace?
You can solve this problem by using some of the most common methods these days. They are the following:
Email marketing. With emails, you can offer your target audience discounts on promotions or provide them with helpful information. It will encourage them to use your marketplace. But pay attention that email communication should be engaging and steady.
Content marketing. Your website content is a perfect way to stay connected with your target group. To do it, create valuable content that improves your users' lives, solving their pain points.
Affiliate marketing. You can try to build partnerships with complementary companies or collaborate with influencers. Thus, you will expand your audience.
Social media advertising and more. Promoting your rental marketplace on social is a great way to drive more users. For example, highlight the significant benefits of using your marketplace and show how it works. The social media audience is vast, so you can benefit from this promotion strategy.
The right marketing strategy and a combination of the above approaches will help you achieve maximum success in promoting. Using them, you can significantly expand the number of potential customers.
How Codica can help you to start a rental business
There are two main ways to build an online rental marketplace. You can use a ready-made solution or order custom development from an experienced software agency. Each of these variants has its minuses and pluses.
If you want to develop a marketplace fast and with the least effort, pick the template platforms, such as Adobe Commerce or Shopify. Still, your marketplace will not be unique and filled with features.
For individual and effective development, select the web development agency. Experienced specialists will build a marketplace business that your users will definitely enjoy.
At Codica, we always start our web development process by conducting Product Discovery sessions. At this stage, you discuss your idea with the development team. We distinguish target audience needs, conduct competitive analysis, and many more. Product discovery helps the development team to decide which marketplace features to prioritize and create.
Also, thanks to these discussions, the client gets an estimate of the project time frame and the budget for development.
We recommend you watch this short video below. Here, our sales manager, Taya, talks about the deliverables you receive at the end of this phase.
Then comes the development stage. It is advisable to start the project implementation with the MVP development. A minimum viable product (MVP) is an early version of your web project with core features. But why do we recommend starting with an MVP?
Because it requires much less effort for development. So, your solution can be launched to the market faster. In such a way, you can test your idea earlier and decide what features are needed to add. Thanks to the minimum viable product development services, you save time and reduce the price of creating a rental marketplace.
Many well-known market giants start by developing MVPs. Below you can see an example of the first version of the Airbnb rental marketplace.
After checking the idea with an MVP, we develop a full-featured web product.
After the project has been developed, we refine it to deliver the best outcome. We always test the web product to make it work seamlessly.
After the marketplace development, our team provides the client with support and maintenance of the web product. Thus, we ensure that the solution runs correctly with various operating systems and devices.
Codica’s clients obtain tailored solutions that their users like. Besides, you can check our portfolio to see our completed case studies.
You may also like: Custom Software Development for Startups: 6 Tips to Save Costs
Overview of the rental marketplace by Codica
This web product is a world-first service for looking for long-term accommodation. This house rent website for expats was aimed to help people who move to Australia find a residence fast.
Our team created a profitable website according to the client’s needs. We started from an MVP development. Thus, we had the ability to test the web product with early users. Moreover, our client could present the MVP version of the project to investors without spending too much money.
We made the process of finding the most suitable accommodation easy and fast using the search wizard. Also, we ensured high website performance. Below you can see a short video that shows how the website works in real life.
Now, let’s consider some features we implemented in this solution more thoroughly.
UX/UI (user experience/user interface) design
We created a visually-appealing UI design for the MVP according to the brand's identity. The interface of the rental solution is convenient and easy to use. Thus, we boosted the user experience of the rental platform.
Complex search for expats
When customers point out their criteria, the app presents a local map. Using this map, renters can find available and relevant settlement options. Users can narrow the search results with filters or see the shortest way from a house to some destination.
Google Maps integration
In real-time mode, expats can see pop-up windows for accommodation variants on the local map. These windows demonstrate the primary lodging description with address, images, and price.
Attribute ranking algorithm
Our team created an attribute ranking algorithm. It enables us to generate the most suitable lodging for expats based on their specific needs. In general, this mechanism assists narrow the search results and offers the most accurate and right variant.
Search wizard enables expats to indicate all their wishes in a quiz with animation effects. When the wizard is submitted, customers can see the most relevant rental offers. Also, customers can download PDF reports which include specified attributes.
Google Distance Matrix API
The great feature of this rental platform is that expats can see the most exact routes. These are routes from chosen properties to certain destination points. For this, we used Google Distance Matrix API.
The technology stack we used to build a rental platform
Based on 7+ years of experience, Codica’s experts always choose the most suitable technology stack for each project. For building a rental platform for expats, we chose the following list:
ANTdesign. It is a powerful UI kit for great design.
POSE (now Framer Motion). It is a simple and easy-to-use animation library for React.
Firebase. It is Google's app development software. It allows developers to create iOS, Web, and Android apps. Firebase provides tools for reporting and fixing app crashes, tracking analytics, and so on.
React Google Maps. React Google Maps provides access to the functionality of the Google Maps API. It also renders custom React components inside the map.
React Geosuggest. It is a React autosuggest for the Google Maps API.
CSS animations. It is an excellent library of cross-browser, ready-to-use animations for projects.
We also used integrations:
Maps JS API. This integration helps build interactive, dynamic, highly customized maps and location experiences for your web solutions.
Places API. The Places API is a service that brings information about locations with the help of HTTP requests.
Geocoding API. It provides geocoding and reverse geocoding of addresses. It eases the search for destinations while working with geographic coordinates and names.
Directions API. It is a web service that provides us with information about a route.
Distance Matrix API. This tool helps fetch the distances between locations.
How much does it cost to build a rental marketplace?
But how much money do you need to create a rental marketplace? Taking into account all the functionality discussed above, an average cost of a rental housing website is as follows:
|How much does it cost to build a rental marketplace platform?
|Payment (Stripe or PayPal)
|Authorization and Security
|Search and filters
|Reviews & Ratings
|Non development activity
The price of $77,500 is actual if you collaborate with a development agency in Eastern Europe, for instance, Ukraine. If you choose a team from Western Europe or the US, the custom development costs to create a rental marketplace will be higher.
Undoubtedly, the price can significantly vary depending on your business needs and the technology stack used. So, we recommend turning to your web development partner for a more exact final cost.
Final thoughts: start where you are
The idea of creating an online rental marketplace is genuinely tempting. Despite many competitors in the rental e-commerce market, there are various niches to carve. There are many examples beyond those mentioned in this article that prove the earning power of the rental marketplace idea.
So, we discussed the key moments you should pay attention to when creating a rental platform business. We considered the needed marketplace features and rental business models. Also, you got an idea about online marketplace development costs. Now, you can make a more weighed decision if it is worth creating such a website.
Are you thinking about building a profitable platform for renting like Airbnb? See our completed works or contact us to consider your rental marketplace idea. We are here to bring it to life and create a money-making business for you.