June Homes ‘Reinvents’ Having a Roommate and It Sounds Less Than Ideal
The company promises to help landlords the tech-startup way: with surge pricing and an app.
12:49 PM EDT on October 14, 2022
Earlier this year, Cleo Choi, a 21-year-old junior at Parsons, was looking for a room to rent in New York. As an international student, Choi didn’t have much in the way of a credit or income history, and she didn't think many New York apartment brokers would accept guarantor statements from her parents, who live in South Korea. After Googling around a bit, she found June Homes, a third-party short-term rental startup founded in 2017. Like over 90 percent of prospective tenants who go on to rent from the company, she did a virtual tour without seeing the apartment; Choi signed a lease with roommates she hadn't yet met for a three-bedroom in Queens. "It was like pretty much the only option I had," she said.
June Homes, previously known as Residenz, was founded by Ukrainian American entrepreneur Daniel Mishin to, in his words, "reinvent this antiquated, broken system" in which tenants struggled through lengthy application processes and landlords often got screwed. (The term "landlord" itself was antiquated, Mishin told TechCrunch last year. "We're still speaking like we're in the 16th century," he said.) The company currently lists around 1,200 units in New York City; as one example of its offerings, an unfurnished 82-square-foot room in a four-bedroom apartment on Dekalb Avenue in Bushwick starts at $1,425.
June Homes isn't quite a landlord or a management company; on its website, it pitches itself as a "mobile-first company" providing cheap, flexible housing to a "new generation of renters" as well as a "historical collection rate" for landlords hoping to increase their ROIs. Last year, the company announced a total of $50 million in funding from a handful of high-profile venture funds, as well as the musician Demi Lovato, for a business model that functionally automates the renovation-and-rent-hike process that might take an individual landlord years.
When Choi and her two roommates signed the lease for their June Homes-managed apartment in Queens, each was paying a little over $1,000 a room, plus about $150 a month in miscellaneous fees for perks like cleaning supplies and the ability to split bills on an app. But in mid-July, after almost a year in the unit, the roommates say they received a phone call from June Homes telling them the landlord had terminated the agreement, and they needed to vacate by the 31st, just a few weeks away. It sent them into a panic. One started packing to return to her parents' home in Florida; another had, just a few months prior, signed a lease that ran until July 2023. According to New York State law, even a short-term or month-to-month agreement must provide a tenant notice of at least 30 days; June Homes says it would never "evict a tenant in violation of tenant rights and applicable laws," noting that if the company loses "the ability to work with a landlord on a given apartment," they provide relocation options or direct leases instead.
After some back-and-forth and threat of legal action, the roommates did end their relationship with June Homes, rather than relocate on such short notice. The roommate with the lease through 2023 signed an agreement promising to remove any comments or ratings she'd published online and refrain from commenting on the company in the future, in exchange for being released from her obligation to June Homes. "What was even more surprising was that the apartment was much cheaper" without June Homes involved, Choi said. Renting through the landlord directly was almost $600 less.
This instance was an "exceptionally rare and unfortunate situation," said a representative for June Homes, who said the company offered to relocate the tenants or let them terminate their lease with a rent credit of a few months. "We learned our lesson," they said, and have "adjusted all our contracts with landlords" to avoid a similar situation occurring again.
But the incident underlines the ambiguities of a business that straddles some—if not all—of the responsibilities of a brokerage and property management company, operating remotely and promising landlords that it can collect higher rents at a rapid clip. What June Homes is selling is essentially an automated system for attracting young, short-term tenants willing to pay a premium, in exchange for a seamless user experience and a few app-based perks.
Property technology, or proptech, startups have exploded in the last decade; real estate, with its fluctuating market values, is a particularly attractive sector to people intent on maximizing revenue through data collection and AI. And even among its co-living peers, June Homes is particularly mercenary, abandoning traditional language around community and friendship to focus on the potential for landlords to charge "market rate" rents on dilapidated apartments and for new tenants to sign a lease in "as little as three hours."
To landlords and property owners, June Homes pitches itself as a way to disrupt "long vacancies, broker and management fees, and COVID-related eviction moratoriums," which, according to a press release, put "mom-and-pop owners at risk of losing their generational wealth." Mishin told Crain's last year that June Homes's "proprietary algorithm" crunches listings from StreetEasy and other websites to find below market-rate apartments that are in disrepair; the company then inspects, upgrades, and lists those units in as little as 72 hours.
According to a representative for the company, it took an average of nine days to "launch" apartments and list them after receiving a key. (Incidentally, a class action lawsuit filed by a New York contractor over minimum-wage violations while renovating June Homes units described much of his work as assembling furniture from IKEA.) The pricing on the upscaled units is "dynamic"—think Uber's automatic surge pricing, but for a place to live, though the company says the pricing is determined with "an eye towards affordability for our tenants." Where Zillow famously tried and failed to automate the house-flipping business, June Homes is using a similar model without the risks that property ownership entails. And for landlords, it offers a revenue-sharing agreement based on its ability to seamlessly complete the process of raising rents.
For the people who actually live in these units, June Homes's position as an app-mediated point of contact can prove frustrating. Residents said when they logged housing complaints through the company's branded app, they might not get a response for days. (The company's policies expressly prevent a tenant from interfacing with landlords.) Cached versions of June Homes's Facebook page show a variety of deleted posts complaining of messy or incomplete apartments and missing keys on the day tenants are supposed to move in. At least one person with a bad experience settled out of court under the condition they never discuss their experience renting with June Homes.
In Washington, D.C., a 36-year-old post-doctoral researcher named Christina Pouzaring arrived from Greece to stay in what she'd thought would be a "beautiful room" in a big house, for which she'd paid extra to be furnished. When she arrived, she said, the house was dirty and somewhat in disrepair; there was also no furniture in her room. The June Homes representatives who'd responded instantly when she was touring and paying for the place suddenly took days to respond. The issue, apparently, was with June Homes's software—a representative told Hell Gate an "engineering bug" earlier in the summer caused the system to misclassify when tenants had selected a furnished room. Pouzaring, sensing trouble, took advantage of the company's seven-day grace period and rented another, cheaper apartment nearby using conventional methods instead.
In a statement, a representative from June Homes said the company acted as a "tenant advocate" and that usually, landlords were responsible for maintenance and repairs, even if the only way to request them was through the June Homes app. The company says it recently introduced a "maintenance resolution standard" for its landlords, and that the average customer service ticket was resolved in three days. This all gets at the bizarre space June Homes occupies—even traditional property managers, however absent, tend to be responsible for coordinating repairs. And there's some tension between acting as a "tenant advocate" and promising to disrupt the rental market by carving up cheap apartments on a mass scale.
While the rise of co-living and apartment-sharing platforms was often pitched, in its early days, as a solution to millennial loneliness and the lack of affordable housing in America's most expensive cities, there are clearer market incentives to operate a company like June Homes, for both landlords and third parties. According to research by the co-living company Common and the real estate investment firm CBRE, co-living arrangements can wring out more than a third more rent per square foot than conventional apartments. Charging enough for a single room in a shared apartment can kick profit back to the landlord and also the third-party rental site.
One landlord told Hell Gate the decision to work with June Homes on any given apartment was primarily about two things: Whether the money they made was better than what they could expect to make themselves, and how difficult it might be to fill an apartment in conditions where no single renter could afford a unit. The median rent in New York City for a one-bedroom apartment, after all, hit over $3,000 a month in August. The landlord chose not to give their name, concerned about how property owners are portrayed by the press.
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