The Revolutionary New Way for Recent Grads to Find Apartments

NEW YORK (MainStreet) — When Jameson Fauver, 25, and Catherine Gallagher, 26, decided to move in together in New York City, they had a few specifications for their first joint apartment.

They wanted a one-bedroom in the West Village, SoHo or Tribeca; preferred an in-suite dishwasher and washer/dryer; and requested no first-floor apartments. Beyond that, they wanted a no-frills and inexpensive experience – something different from what they'd come to expect in the New York real estate rigmarole, complete with broker fees hitting 15% of the annual lease value and showings of unappealing apartments that wasted their time.

That's why they decided to use The Next Step Realty, a leasing brokerage that caters to recent grads looking to rent in New York. Next step reduces broker fees to anywhere from 12% to 13.5% of the annual lease value, a 20% savings guaranteed for all clients. Blair Brandt, a 25-year-old graduate of the University of Richmond, founded Next Step in May 2010, because he noted the New York real estate market suffered from two major flaws: it was listings driven, and real estate agents tended to represent the interests of landlords not those of the clients.

But with 40,000 graduates aged 22 to 28 moving to New York each year in search of jobs, according to the Census Bureau, Millennial apartment seekers are often adrift in a city where the average rent was $3,816 as of February. With this demographic saddled with sky-high student loan debt and hollow job prospects, Brandt wanted to create a real estate service that catered to the specific needs of this generation.

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So he reinvented the model, comparing his service to car service Uber; instead of having individual real estate agents seek out clientele or apartment searchers comb through listings, Next Step streamlines the demand and matches Realtors with potential renters. Next Step handles the front end and back end while the Realtors handle the apartment showings –- up to 12 viewings in one fell swoop, all while chauffeured around in a company Range Rover, Suburban or an actual Uber vehicle.

Isolating this Millennial niche, and catering toward the desired tech savvy and efficiency of the demographic, has been a win.

"I think it's logical in the sense the migration of graduates to cities," Brandt said. "It's been a game-changer for the real-estate agents here."

Fauver, a recent Colgate grad who works at Sun Life Financial, and Gallagher, a Vanderbilt grad who works at Thomson Reuters, were contacted by their Next Step broker, who listened to their preferences. On the day they specified, the broker showed them ten places all within walking distance of each other, starting at 11 a.m. and finishing at around 3 p.m. They landed their ideal apartment on Sullivan St. in SoHo in the $3,000 range complete with their desired amenities.

The Genesis of the Idea

After college, while Brandt was in Florida working in real estate, he thought back to his time abroad in Madrid where he'd been scammed on his living situation.

"We thought we had a sick apartment," he said. "The landlord stole the safety deposit. When people are young and inexperienced, it sets up a vulnerable situation for them."

That got Brandt's mind churning. Neophytes trying to land a pad from distant campuses would get scammed or overcharged – whether on rent or the broker fee. He also saw an inefficiency in the market. Real estate agents were always trying to prospect and find clients. His friends looking to move to their apartment found the process confounding amid graduation time and the job search focus.

"It's such crazy time for you— psychologically, you're like, 'What's going on?'" Brandt said. In Miami he started helping friends by pairing them with young brokers he knew who would agree to a discount on the broker fee. He was able to serve as a conduit for both parts of the market and launched Next Step in New York on this model.

Full-Service Organization

Brandt discovered that the more he focused around one group of clientele, the more effective his business could be in catering to that niche. So he concocted the chauffeur idea, with his company's luxury SUVs and the sleek Uber rides.

"Corcoran doesn't have that for a $10 million townhouse," he said.

Next Step knows what buildings cater to recent graduates. Other approaches to real estate for recent grads might be showing as many apartments as possible and being there to open the door and collect the fee. Next Step isn't trying for false advertising or bait and switch tactics; gone are the impersonal elements of the real estate process.

Customers come by the Next Step rooftop office on 46th and 5th that overlooks Bryant Park for meetings as needed, and Brandt is trying to create a lifestyle by organizing cocktail parties.

That includes networking -- connecting people who are from similar universities, living in the same types of buildings and working in the same types of industries.

"The Next Step parties expedite and catalyze that process—go meet that crew in New York," Brandt said. "It's become not 'speed dating,' but a social mixer. It's 'speed welcome to New York.' There's a human component to this process; we're not just a chop-shop."

Fauver had tried alternatives to Next Step, when trying to track down "no fee" apartments, generally found in luxury apartments when the management company pays the brokerage fee. But none of those panned out. Plus there was a difference in understanding what he was looking for.

"The main difference was probably the level of background support that Next Step has and their familiarity with the 20- to 28-year-old scene and interests," Fauver said.

--Written by Ross Kenneth Urken for MainStreet

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