Arena: Market Conditions Before Buildium
Individual landlords, small property managers and associations · 2004 · United States
Specialist requirementsEnabling technology shift
In 2004 a US landlord or small property manager kept tenant, lease and rent records in desktop software from long-established vendors, or in general tools such as QuickBooks and spreadsheets BD1 BD6 BD2. Owners liked QuickBooks but wanted something built for property management BD6. An owner of a few units without such software might learn whether rent had arrived only by checking the bank balance BD4. The market was fragmented: 95% of US rental properties were managed by businesses with fewer than 10 employees, among roughly 132,000 property management companies BD4 BD3. Software used over the web was still new for small businesses BD2.
How each step happened
Step 1 of 4 · 2004–08
Browser books built for the founders' own rentals
Software for the founders' own rentals
Michael Monteiro and Dimitris Georgakopoulos, former Sapient employees, owned rental properties in Providence and could find only desktop software from long-established vendors, so in 2004 they built a simple online system for their own tenants and leases BD3 BD1. It launched in early 2005 with the founders as its first customers BD3. A tenant portal cut off from the landlord's own records would not work, Monteiro concluded, so the product grew into a full platform BD1. The March 2007 release added double-entry accounting, financial reports, tenant and homeowner statements and electronic payments, in Landlord, Property Manager and Association editions, for prospects who liked QuickBooks but wanted software built for property management BD6.
The choice gave Buildium a head start and a product small owners could set up themselves, with nothing to install; twelve years later its buyer still singled out the easy interface and self-provisioning BD6 BD13. The same origin fixed whom it served. The founders designed from their own portfolio, and Monteiro later listed relying on his own judgment instead of testing ideas with potential customers among his mistakes BD1. Growth was slow and hands-on: about two years to 50 customers, found through property managers the founders knew, and 500 in 2008 before the first employee BD2 BD1 BD3. What made Buildium easy for a landlord with five units also set how large its customers would be.
Rivals AppFolio, formed in 2006, interviewed about 20 property managers before building, found that interest collapsed when accounting was left out, and launched in 2008 aimed at firms of 1,000 to 7,000 units AF9 AF8 AF11 BD23. Desktop packages and QuickBooks were what small owners already used BD1 BD6.
Ease of Use
Step 2 of 4 · 2007–16
Priced from five units, funded from revenue
Buildium charged by the number of rental units a customer managed. Its 2007 plans ran from $9.99 a month for up to 5 units to $174.99 for up to 650, with custom prices above that, a 15-day trial and no contract BD6. By 2016 prices ran from $45 to $1,800 a month for portfolios under 5,000 units BD4. Customers passed 10,000 in early 2015 and 12,500 by the start of 2016 BD7 BD8.
Both companies charged per unit, so the difference lay in whose units. Buildium's 12,500 customers managed nearly one million units; AppFolio's 8,218 managed 2.15 million BD8 BD20. RealPage's CEO later put the averages at about 90 units per Buildium customer and 300 per AppFolio customer, and described Buildium as competing from the bottom of the market BD19 BD13. A per-unit bill grows only as fast as the customer's portfolio, and Buildium had chosen the customers with the smallest portfolios.
Growth paid for by revenue
Cash set the pace of selling. The founders built the product themselves, kept development costs down with an office in Hyderabad, and took no outside money for eight years BD1 BD4. Monteiro says Buildium raised only once competitors with similar software and more funding appeared in 2012; K1 then put in $20 million across 2012 and 2014 BD2 BD4. As engineers, he says, he and his co-founder undervalued marketing and would have spent more on it; search advertising, word of mouth and blog content carried growth BD2. He later judged the company too conservative in investing only as money came in BD1. Once funded, it doubled headcount in 2014 and grew revenue 90% in 2015 BD7 BD8, while AppFolio, which raised money before it launched, had sold to larger managers since 2008 AF8 BD23.
Rivals AppFolio also billed by units managed but aimed at firms of 50 to 3,000 units, sold to them through search, content and events, and had raised $30 million by 2012 AF11 BD23 AF1 AFX-1.
Focus StrategyUsage-Based PricingResource allocation
Step 3 of 4 · 2008–19
Payments and screening sold as optional add-ons
Buildium offered payments early. Its 2007 release included electronic funds transfer, it launched the ePay online payment service in 2008 and added card payments in 2012, and it added tenant screening through TransUnion in July 2009 BD6 BD9 BD22. By 2017 ePay collected rent, association fees and application fees through Buildium's tenant portal, and payments posted into the same books the customer kept BD9.
It sold these services as extras. In 2018 Monteiro described integrated add-ons such as payment tracking on top of unit-priced core and pro plans BD2. Buildium's audited 2018 statements describe revenue as mainly software subscriptions, generally on one-year terms, plus optional add-on services performed primarily by third-party providers of screening, payment processing, mailing and insurance BD17. Because customers set themselves up, payments stayed a feature each landlord had to choose to turn on. The gap with AppFolio was not access to payments but how much of each unit's rent passed through them. When RealPage bought Buildium, its CEO saw room to raise Buildium's revenue per unit through deeper use of value-added services, and three months later he called Buildium underpenetrated in them BD13 BD19.
Rivals AppFolio waived ACH fees to push tenants onto its portal, set up payments and screening for new customers during onboarding, and earned $38.0 million of its $75.0 million 2015 revenue from these and other Value+ services AF43 AF7 BD20.
Embedded Finance
Step 4 of 4 · 2016–19
Sold to RealPage in 2019
Capital came late and went into growth. Sumeru Equity Partners led a $65 million investment in 2016 BD5, and Chris Litster, formerly chief revenue officer of Constant Contact, became CEO in July 2018 with growth above 30% a year BD10. Revenue reached $40.7 million in 2018, but Buildium lost $4.0 million at the operating line and ended the year with $0.9 million of cash, a $5.9 million credit line and a members' deficit BD17. AppFolio reported $190.1 million of revenue that year, including its legal software BD21.
The small accounts of step 2 and the optional services of step 3 meant each unit Buildium held earned little. In November 2019 RealPage agreed to buy Buildium for about $580 million in cash, roughly ten times its revenue run rate at the end of 2019 BD11 BD13. RealPage wanted a way into managers of fewer than 5,000 units and planned to add its own payment engine, insurance, websites and utility billing to raise revenue per unit BD13 BD19. Buildium then had 17,000 customers with about 2 million units, and it turned profitable in the fourth quarter of 2019 BD12 BD19. It became a RealPage subsidiary for small managers BD11 BD14. The easy, self-set-up product from step 1 had won the most customers in its segment; the services that would have made each of them worth more came from its new owner.
Rivals AppFolio kept each unit's payments and screening in its own system, and by 2025 value added services were $722 million of its $951 million revenue AF16. A former AppFolio executive says displacing it would be very time-consuming and expensive AF44.