App combines elements of real estate, dating sites to improve roommate searches

She was young, single, just earned her MBA from the University of California, Berkeley, and needed affordable housing. She also had an entry level paycheck on top of the usual bills that new university graduates face.

For Jessica Chen, having a roommate was unavoidable. But it proved to be a daunting experience, especially with the resources available.

“Looking for roommates was such a painful process. Finding a roommate on Craigslist or Facebook didn’t feel safe or secure,” she recalled of that experience years ago.

Chen learned that friend and colleague Alexis Valerio had the same experience. They knew they weren’t alone. There had to be an easier, safer and more reliable method.

And they created it with ROOM8, an app that uses a proprietary roommate-matching algorithm that allows users to browse potential roommate profiles, securely video-chat with other users, review a real-time curated inventory of available properties and take virtual tours with landlords. Because all communication is done via the app, personal information remains private and secure until users decide otherwise.

“It’s a hybrid of Zillow and a dating app concept when we’re bringing people with similar interests who are compatible, together,” Chen. “We were thinking, we wish we had this.”

Chen, along with CMO Valerio and CTO Dan Matthews, started ROOM8 in 2018. The company, of which Chen is the CEO, has offices in Scottsdale and San Francisco.

A half-million properties in 23 states and Washington, D.C., are on the app, Chen said. The majority are in metropolitan areas, with 80% of those being apartments and the rest condominiums and homes.

Although Chen likened the model to a dating app, ROOM8 fares much better. So far, it’s received 5-star reviews and has a 40% successful match rate, she said. The average success of dating apps is 25%.

There is no charge for users. Revenue is generated through the sales of renters insurance, financial services products and advertising from companies. The young startup has earned venture funding from Storm Ventures, Avanta Ventures, Alpana Ventures, and Plug and Play Ventures.

This was by design, to assist those most likely needing to share housing costs.

“When you first graduate, there’s student debt and the entry level salary is not high. We had to think about how they can save.... It’s hard to save and gain financial freedom,” Chen said.

The business model was created based on market research that found Millennials and Generation Z-ers tend to move around more often. About 65% of this demographic move every year, Chen said.

But with COVID-19, the model’s appeal broadened. Engagement is higher as more people are on their phones more often. Rents have dropped across the board and some are needing to move either due to down-sizing or having a new view of their home after using it as their office for a few months. Some must accommodate work desks sent by their employers.

More than 60% of renters want to move as soon as they are able, Chen said, due to their lease or shelter-in-place orders ending. Virtual touring and in-app video calling options are now part of the features to maintain social distancing while not interrupting users’ searches for housing.  

“More people are working from home. Many young people think of their home as a crashing pad. Now they have to think, … 'Do I have a home that can accommodate work needs?'” Chen said.

Technology plays a huge role in making ROOM8 a revolutionary new player in the real estate market.

“We entered at a time when the technology is right. We are lucky. This is not something we could do 10 years ago,” Chen said.

1 in 3 U.S. adults live with roommate

The emergence of the business dovetails with trends. According to a 2018 Pew Research Center study, nearly 1 in 3 U.S. adults live with at least one adult roommate who isn't their romantic partner or a college student. Across the country, 20 million people live with nonrelatives, according to Census Bureau data. Among those ages 18-34, one in four lived with roommates in 2015

Travis Okamoto, managing director at Caliber Companies real estate investment firm, became aware of ROOM8 through business connections and an uptick in his business that was credited to Chen’s company.

Okamoto knows how tedious the roommate search can be if you don’t already know the person with whom you’ll be sharing a home. He has referred people to the app and heard positive feedback from those who found successful matches because ROOM8 allowed them to get to know each other before moving in.

“Before it was like, send me the links to your LinkedIn and Facebook pages and maybe we can have a cup of coffee,” said Okamoto, who lives in Scottsdale. “With the social component, you have the ability to engage.”

With the pandemic, the app has become even more helpful, he said. It is a tool to do additional diligence in a realm where there aren’t a lot of resources.

“This helps this process dramatically. You know pretty quickly if you’re a good fit,” he said. “The average homeowner is older. There are tens of millions of young Americans that don’t have a mortgage, rent and likely need a roommate. This is made for that.”

The main focus is on working with major property management companies. This, Chen explained, makes it easier to control quality, especially with regard to pricing and real-time property availability.

Individual homeowners comprise fewer than 5% of the properties listed, Chen said.

'It's very easy to do this'

Jason DiLorenzo, who is using ROOM8 to find roommates to share his three-bedroom home near Old Town Scottsdale, is among them. DiLorenzo, an entrepreneur, has a lot of work travel in his future and wanted to rent out one or two of his guestrooms to generate additional income while keeping a presence in the house when he’s away.

The convenience and ease are what he enjoys over traditional methods that don’t use aspects of social media. He’s also purchased renters' insurance through the app.

“With this platform, you can browse the profiles of folks that are looking for a place to live, rather than posting an ad to the general public with no control over who reaches out to you,” he said.

DiLorenzo also likes that everything is done via the cloud so there’s no exchange of personal information and his personal email inbox doesn’t get flooded. So far, he’s connected with six potential renters.

“It’s very easy to do this. It’s nice to have control over all of that,” DiLorenzo said. “I’m surprised something like this hadn’t been already done.”

What: ROOM8

Where: Scottsdale

Employees: 20

Factoid: Nearly 1 in 3 adults in the U.S. live with at least one adult roommate who isn’t their romantic partner or a college student according to a 2018 Pew Research Center study.

Details: room8.io