Tourists walk through the walled city of Dubrovnik, Croatia. (Photographer: Robert Rajtic/ Bloomberg News)

Roomi Wants to Help You Avoid Rooming With Sketchy Strangers

(Bloomberg) -- When Julie Wesolowicz moved to New York from Michigan, she followed a time-honored tradition among 20-something newcomers and searched Craigslist for a roommate. Wesolowicz soon regretted it. Her new roommate never paid the rent on time, listed the Morningside Heights place on AirBnb without permission and came clambering home at 4 a.m. On week nights. 

“I think she was just the worst person I’ve ever come across in my life,” says Wesolowicz, who eventually threatened legal action to get her roommate to leave. “I actually got a stress rash from her. I didn’t know what it was, but two days after she moved out it went away.”

Resolved not to do that again, Wesolowicz, 28, signed up with a New York startup called Roomi Inc. It’s kind of like a dating service for roommates. Roomi matches people based on personal compatibility and shared housing needs. There are also background checks for those willing to pay a little more. Roomi found Wesolowicz a new roommate. He was a much better fit. Plus he didn’t mind taking care of Wesolowicz’s cat.

Roomi Wants to Help You Avoid Rooming With Sketchy Strangers

Ajay Yadav, an Indian transplant who moved to the U.S. at 17 to study computer science at the New York Institute of Technology, founded Roomi in 2013 with the belief that whom you live with matters even more than where you lay down to sleep. One of the keys to the site is transparency. Users fill in details including budget ranges and move-in dates and populate their profiles with such descriptors as “clean,” “early bird” and “social butterfly.” Algorithms conjure up the most likely matches.

The service is free for both roommate seekers and would-be renters. Background checks, handled through Evident ID Inc., cost $15. Renters can also pay to bump their listings to the top of the search page for $12 for a day or $50 for a week—much the way people looking for love pay extra on dating sites.

“It reminded me of Tinder,” Corey Chalumeau, a 30-year-old photographer and Roomi user, says of the app. As with dating sites, users’ photos and personal descriptions are a major part of the interface. Roomi also uses a similar freemium model to Tinder, which is projected to generate more than $800 million in revenue this year with a profit margin exceeding 40 percent.

Roomi Wants to Help You Avoid Rooming With Sketchy Strangers

Roomi has raised $17 million to date and is backed by the likes of Atami Capital and Great Oaks Venture Capital. It has yet to turn a profit. The company now has listings in several U.S. cities including Atlanta, Los Angeles, Boston, Chicago and Las Vegas. The company has already launched an international expansion, fueled in part by acquisitions. On Monday, Roomi announced that it’s buying Dada Room, a similar roommate-matching service with 800,000 members that’s based in Mexico City; earlier this year Roomi acquired Barcelona-based Study Abroad Apartments, which specializes in helping students book accommodation internationally, to help it expand to European cities including London and Barcelona. The company is now in more than 20 cities around the globe and doubled its customer base to 2.4 million people in the last nine months.

The emergence of Roomi and similar services like Bedvetter or Common coincides with the burgeoning co-living trend, which is being fueled by soaring rents and housing shortages in many cities. In the U.S. alone, 79 million people—or almost 32 percent of the adult population—lived in a household with an unrelated, non-romantically-involved adult in 2017, according to recent study by Pew Research Center. That’s up from the about 27 percent of people who shared a space with another adult in 2004.

Roomi is providing a safe, easy-to-use alternative to sites like Craigslist, which with more than a million rental listings, remains one of the most popular places to go roommate hunting. But while users can flag suspicious posts, few proactive mechanisms are in place to keep sketchy people off the site; a 2016 study found 29,000 rental scam postings across 20 major cities in 141 days. Craigslist didn't respond to requests for comment.

With living spaces scarce and pricey in many cases, people can sometimes get desperate, says Susan Wachter, a professor of real estate and finance at the Wharton School of the University of Pennsylvania. “If the need is great, then there’s going to always be someone to exploit that need,” she says.

Facebook groups have also become an informal, popular means for users to post listings—a page called "Gypsy Housing" has hundreds of thousands of members. But social media options lack some of the curation dedicated platforms like Roomi provide. “You pretty much just blast your post out,” says Chalumeau, who found his latest roommate on Roomi. “There wasn't an easy way for people to search for specific places—it was just like, if they missed it in their feed, then they wouldn't see it.”

Roomi is selling security and transparency, but that requires people to share a lot of information. Listing a room securely on Roomi is a process—taking pictures, submitting a lease and filling out a questionnaire are just a few of the steps. About 18 percent of rooms don’t make the cut. As a result, Roomi boasts only about half a million rooms for 2.4 million users. “It’s really hard to get someone to list a room,” Yadav says.

Perhaps Roomi’s vetting process is too strict? “If we don't take this approach, of making the most trusted community on the planet, then you would end up having a bad experience,” says Yadav, who mentions the word “trust” 22 times in a 50-minute interview.

Still, he’s confident that doubling down on security now will be worth the investment down the line. “Whatever you set from day one, that's exactly what you're building,” he says. “You can't change it very easily.”

Later this month, Roomi will roll out RoomiPay, a service that lets users pay their rent to their landlords through the app. Since test-launching in September, the feature has facilitated $7.3 million in rent transactions, Yadav says, with Roomi taking a small percentage as a service fee. The idea is to remove an awkward conversation from the roommate relationship—how and when to split the rent and make payments—and could help keep users on the platform long after they've found a place to stay.

Yadav wants Roomi to lift all the “emotional pressure” of finding the right fit when it comes to housing—and he wants it to be the place users turn to first. “You have to be like, ‘Wow, this is it,’” he says.

©2018 Bloomberg L.P.