Hypothesis and Testing Plan

Hypothesis and Testing Plan

Cash on the House is providing a marketplace for small-scale investors to pool real estate assets with high-quality property managers at a discount rate.  In phase 1, we’re focusing on creating a feedback mechanism for evaluating and sourcing property managers and pooling real estate investors (REI).  Phase 2 will focus on creating individual task products and services demanded by the REI.  Along the way, we have three hypotheses about the market and value proposition.

Hypothesis #1: Property Managers have the bargaining power with REI because of asymmetric information about quality, prices, and scale of service providers.
*Test: Cross-compare the number of property managers in Boston searchable on Google, Zillow, and Angie’s List with expert interviews that have a network of property managers.

Hypothesis #2: Pooling multiple housing units will incentivize the property manager to offer discounts on their services

*Test: Call three property managers about rates for managing a 1000 square foot unit versus rates for managing four different properties in the same area and same type of housing unit.

Hypothesis #3: Friction from REI’s about quality of service from property managers can be crowdsourced using feedback loops and ease tension about quality.  This is the core test for evaluating if a REI is willing to pay for the service, and the network effect i.e. number of total reviews will likely add to the value proposition.

*Test:  Survey three REI’s in Boston, L.A, Richmond, and New York about their willingness to pay for sourced property managers. The target REI has one or two side properties, new to real estate, and has a full time job.

Ultimately, scale, availability of multiple property managers, and perceived friction will be the key assumptions and drivers for Cash on the House.