OAKLAND, Calif. — An East Bay startup wants to create 25 cheap rental units by next spring, and it plans to do it all without applying for a single permit, hammering one nail or taking out any money in construction loans.
Instead of addressing the Bay Area’s housing shortage by building, an expensive process that can get bogged down in delays and opposition from neighbors, Oakland-based Roomily intends to tap an underutilized resource — people’s spare bedrooms.
The startup, which launched a pilot program last month to match homeowners with people looking for cheap, long-term rooms to rent, is part of an increasingly popular movement to use the millennial-driven “home-sharing” craze to address the region’s housing needs.
“We really wanted to focus on housing because it’s an issue that’s both personal and community and regional,” said Roomily co-founder Jill Lindenbaum. “Every day we were reading about the issue, and we were feeling it personally as people we knew were having to pick up and leave.”
Santa Clara County launched a similar “house-sharing” program in August in partnership with Catholic Charities of Santa Clara County. The county’s goal is to bring 100 households on board each year for the next two and a half years. Last fall, Oakland Mayor Libby Schaaf implored her constituents to open their spare bedrooms to the homeless through an ongoing program run by Bay Area Community Services. Since 2014, about 140 people per year have gotten rooms through that program. HIP Housing in San Mateo County and Home Match in San Francisco also pair renters with homeowners willing to charge below market rate for their spare bedrooms.
In the past, such house-sharing programs have been run by nonprofits. Roomily appears to be the first for-profit company embracing the concept in the Bay Area. Lindenbaum and her co-founder, who so far have self-funded the company, chose the for-profit model because nonprofits are more limited in who they can serve — generally people below a certain income level — and how many people they can serve.
“We really wanted to create a sustainable business model that could potentially scale to meet a much greater need,” Lindenbaum said.
Roomily will use an algorithm (think Airbnb meets eharmony) to match potential renters with like-minded homeowners. The idea is to develop a match that’s beneficial for both parties, Lindenbaum said. The renter needs an affordable room, and the homeowner needs help paying the mortgage, or perhaps could use some companionship around the house.
Roomily encourages homeowners to charge below-market rates in exchange for creative contributions from their tenants. Renters might run errands, do house or yard work, walk the dog or pet sit while the homeowner is out of town.
For schools struggling to recruit and retain teachers because of the region’s high housing costs, the Roomily model is exciting said Mary Claire Delgado, recruitment manager for the Oakland Unified School District.
“We have many potential candidates as well as current employees who are interested in the model,” she said.
Lindenbaum plans to run the Roomily pilot for three to six months, targeting homeowners in the East Bay cities of Oakland, Berkeley, Piedmont, Emeryville, El Cerrito, Albany, San Leandro, Kensington, Alameda, San Lorenzo and Orinda. Homeowners and renters who sign up in this phase can use Roomily’s matching services for free, in exchange for providing their feedback.
Eventually, Roomily plans to charge renters and homeowner a “success fee” that equals 2 percent of the rent. Homeowners also will pay a $10 monthly membership fee to access Roomily’s automated rent collection tool and other services, and potential renters will pay a one-time $39 fee to search the platform for rooms. The startup plans to offer background and credit checks.
Adam, 34, who teaches special ed in Oakland, is hoping Roomily can help him find an affordable room to rent closer to his school. Currently Adam, who asked that his last name not be used out of concerns for his safety and privacy, is renting a room in a friend’s house in Fairfield. That means he has to leave by 6 a.m. every day to make the hour-long commute.
“It’s not ideal,” he said. But homes in Oakland are out of his price range. Now he’s hoping to be matched with a homeowner who wouldn’t mind renting a room on the cheap to a local teacher.
Someone like Vicki McGuire, whose daughter attends Oakland Technical High School, and who already was renting discounted rooms to teachers before Roomily came along. McGuire, 61, owns a duplex in North Oakland and rents three rooms to teachers who traveled to the U.S. from Mexico to teach Spanish at Oakland Unified schools.
The teachers pay $850 a month for her two smaller rooms and $975 for a larger room. The average price for a studio apartment in Oakland last month was $1,761, according to RentCafe. McGuire knows she could charge more, but she doesn’t need to. She bought the building in 2009, and the teachers’ rent makes up more than half her mortgage.
“It’s something I believe in, too,” McGuire said. “We have a housing crisis in the Bay Area and people are being displaced from the community. And it’s changing the community.”