October 6, 2022

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"The rental market is bad everywhere."  Startup Rendin wants to civilize apartment rentals

“The rental market is bad everywhere.” Startup Rendin wants to civilize apartment rentals

Michał Wąsowski, money.pl: The rental market in Poland is not very friendly to renters – and recent months have made it worse. How did you come to the conclusion that the tech sector needed a service to bring this up?

Alan On, CEO and Co-Founder of Rendin: In my life, I have established many businesses in different countries. During this time, she rented apartments 14 times. I can say that The rental market sucks everywhere. If we say that it is “uncivilized in Poland”, then this is more or less the case in every country. There are laws to protect both the owner and the owner, but the truth is that everywhere the process is long, people have accidents, and there are many unexpected situations that can happen. Private owners come up with different solutions to their problems, but in each of these cases there are dozens of subtle processes and problems.

Collectively, as Rendin employees, we have many years of experience in renting apartments on both sides, both as landlords and tenants. And we know how many problems can arise in the process. What we do is not only display the rental agreement as a legal document, but most of all we create a controlled process.

So what is the biggest challenge in solving the rental market problems? personal relationships?

Let me give you an example: in cities like Warsaw or Tallinn, a large percentage of renters are expats (people who have lived abroad for business purposes – editorial note), who need what’s called a background check. But many people cannot be checked on their own, and even if you do, you have no guarantee, for example, that an entrant will not leave without paying. And then you won’t do anything about it.

I have seen many times that the rental market is one of the best markets for the bad guys, on both sides. If you are a bad renter, you can destroy someone else’s property, not pay and there is little the landlord can do about it. If someone does not pay the other person, then the former will have to appoint a lawyer, go to court, and lose a lot of money and energy. And even when he wins, how is he supposed to get money back from someone who doesn’t have that money? On the other hand, if the landlord withdraws your deposit without reason, you as a tenant have nothing to do with it.

Are you able to refund money on behalf of clients?

Currently, with all operations in order, we know we can recover approximately 30 percent. Corporate arrears. For individuals, this is closer to zero. Our Head of Legal Department has prosecuted more than 700 times to resolve rental cases.

Unfortunately, situations like the ones described above are common in the rental market, which is why we have a strong team of lawyers. In our opinion, that shouldn’t be the case – and we’re trying to fix it. Proving that honest and transparent procedures are more profitable and beneficial.

So you give certain guarantees to both the tenant and the landlord that the other person is a good partner?

exactly. Additionally, neither the tenant nor the landlord is left alone in this. Something bad is going on – tell us, and we’ll work it out. Our primary goal is to build trust between tenants and owners. Without trust, the system cannot be improved. Of course, there are significant risks on both sides. We don’t know each other, you’ll take care of your most precious possession, your apartment, and I’m supposed to pay you every month. There are many risks in this process.

And this is the main thing that we see: in the face of these risks that we have to manage, it is not enough to conclude a suitable contract and deposit. This set works perfectly when there are no problems. But in case of problems, a contract and a deposit are not enough. Finally, we cannot guarantee that our customers from both sides are only honest people. But we can guarantee that if something bad happens despite our verification, we will take responsibility for it.

How is this different from the activities of traditional rental agencies?

First of all, they do not give any guarantees – this is not in their best interest. Ours and theirs are similar, but they are not. Agencies just want to find someone to sign the contract. Sell ​​and that’s it. After signing the contract, the process ends with the agency. You cannot contact her again. In Rendin’s case, the opposite is true – signing the contract is just the beginning of the relationship.

But this relationship begins with something I’ve mentioned many times – a background check. How does it work for you?

There are different providers of data or credit scores in each country. This is the basis we use to eliminate the biggest risk outside the market: insolvent people. In addition, we use a variety of publicly available data that other companies or people can also access. But even checking bank details through Open Banking gives a lot.

So what kind of alarming situations do you encounter during a background check?

For example: If someone has an exorbitant salary, but also has huge debts, he is out of order. It’s just an extreme case. Most people are somewhere in between – that’s why we built our scoring system. Contrary to appearances, most of us cannot easily be described as “green” or “red,” positive or not. Many renters get wages but not savings. They may not have debts, but something unexpected will happen in their life – an accident, for example – and suddenly they can’t afford rent or damaged property.

Sometimes it is not seen that someone has publicly registered debts, but does not pay the rent and the case goes to court. It turns out that we are somewhere in the 30th place on the list of refundable creditors. Also a background check is there to reduce the biggest risk. It is not possible to build a system in which there are no problems. Most importantly, we take the least residual risk to ourselves – and we are the only company of this type on the market.

Is it easier to evaluate tenants or landlords?

Tenants for sure. The problems of the owners lie mainly in their behavior. We work on a solution to the problem as soon as it occurs, because we usually deal with similar situations many times. However, some landlords believe that since the tenant does not have the money to pay the rent, it is necessary to start figuring out how to get the most money out of us, for example through property damage. Sometimes Rendin pays landlords more than he takes back from tenants because we think it’s unfair to charge tenants this fee – for example, when there is no evidence that the tenant has damaged the property.

We notice landlords and if at some point they cause the same problems, we already know it’s about the landlord and not the tenant – then we remove them from the system.

Is the logging algorithm the most important technological part of your business?

not exactly. The most important thing is to build the trust that arises in the process. I must say here that in this respect we are different from many startups. Most find one place they can improve, and that’s where they work. Rendin is an end-to-end service. Practically speaking, there are many startups in the rental market that want to do, for example, a better rental service, some check someone’s condition, others still have something in between, but no one fundamentally changes the market.

We work comprehensively in all areas related to leasing, because it is a complex process, and it cannot be improved by solving just one problem. So we do everything: examine the customer, offer the best way to conclude the contract, and then solve the customer’s problems during the contract. We are a technology company, insurance company, real estate agency and law firm. We control the entire process and constantly improve it.

The rest of the article is under the video

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Do you earn commissions – from both sides of the lease? And how far are you from the so-called tie, or tie?

First, the R&D department is currently incurring losses, and will continue to do so for a long time to come. We currently have 10 people in the engineering department and need hundreds. However, what is most important to us is risk management and insurance. It will be a profitable sector soon. Break-even should appear at 230,000. Contracts for which we charge a 2.5 percent commission. And only in Poland there are more than two million contracts in the entire market. We have a clear plan on how to get 5 percent. The entire market is in Europe. It will be difficult, but there is currently no other such platform for long-term rental.

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There are other platforms for that – although they are short-term rental services like Airbnb. Aren’t you afraid that they will also enter this segment?

rent The long term is a completely different market than the short term market. More complex, multi-layered. You could say they work in the same industry: real estate, but in a different industry. Likewise, if someone has a carrier that handles land traffic, that doesn’t mean they can handle sea transportation. Airbnb has a platform where you can list your property, view photos, price, and that’s it.

It operates on lease for a maximum period of two months. But keep in mind that Airbnb doesn’t want you to meet the owner, so why pay Airbnb commission? They are only a broker. They have a long-term rental offer, but in this activity they require property owners to hire a lawyer, familiarize themselves with local law, etc. And when there are any problems, like no payment, Airbnb won’t do anything about it – you have to fight on your own anyway. The market lacks transparency, there are many bad situations – this is a huge challenge we are taking on.

We are sure that in a few years, when our business model becomes standard, there will be other companies trying to emulate it. But I can assure you that while what we do may seem easy, it is the tip of the iceberg. It is a very complex system. Companies may offer some type of insurance to renters or owners, but such products from insurance companies are usually poor. For them to mess up, they either have to charge a very big commission or their service is poor. Therefore, many people hate insurance companies.

Go back to your plans. What position would the 5 percent get? market in Europe?

We will then be one of the largest real estate companies in Europe. However, we are currently only taking the first steps to achieve profitability. Let’s look at it from a different angle: in Europe, about 400 billion euros a year travel from one person to another for rent, without the guarantee that the money will not be lost and you will get to the right person. We already know how to build this process to become profitable from a risk management point of view. The market is huge, and so are the challenges in it – and we have the answer to them.

Michał Wąsowski, Deputy Editor-in-Chief of money.pl

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