YC
Helping Landlords Find Tenants – Sean Mitchell of Rezi
@ Y Combinator
05/04/18
Takeaways
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Sean Mitchell
05/04/18
@ Y Combinator
Rezi is a rental marketplace aimed at improving the renting experience for landlords and tenants.
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Sean Mitchell
05/04/18
@ Y Combinator
Our first product, Upfront, guarantees landlords will lease their vacant apartments and allows tenants to lease from us in under 10 minutes.
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Sean Mitchell
05/04/18
@ Y Combinator
Landlords face two main risks: vacancy risk, which includes lost income and carrying costs, and tenant-related risks such as non-payment or property damage.
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Sean Mitchell
05/04/18
@ Y Combinator
During our time at Y Combinator, we pivoted to focus on eliminating the risk of vacancy for landlords, offering them a compelling solution.
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Sean Mitchell
05/04/18
@ Y Combinator
We realized that instead of just improving tenant screening, we could provide landlords with a guarantee that their units would never be vacant again.
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Sean Mitchell
05/04/18
@ Y Combinator
We provide landlords with insights on pricing and market trends, helping them understand how to maximize their rental income.
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Sean Mitchell
05/04/18
@ Y Combinator
In our early days, we operated a cold-calling strategy, reaching out to landlords directly to understand their needs and offer our services.
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Sean Mitchell
05/04/18
@ Y Combinator
We confirm if a unit is still vacant and then make an offer to rent it, often surprising landlords with our quick turnaround.
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Sean Mitchell
05/04/18
@ Y Combinator
Our tenant screening process evaluates rental history, credit, income, and employment status, focusing on factors that predict good tenancy.
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Sean Mitchell
05/04/18
@ Y Combinator
We avoid evaluating irrelevant factors that don't relate to a tenant's ability to pay rent, reducing discrimination risks in our automated process.
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Sean Mitchell
05/04/18
@ Y Combinator
Landlords do not have a say in the final tenant selection, which helps eliminate bias in the approval process.
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Sean Mitchell
05/04/18
@ Y Combinator
We raised both equity and debt to finance our operations, allowing us to provide landlords with cash upfront while maintaining a sustainable business model.
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Sean Mitchell
05/04/18
@ Y Combinator
We structured our financing to generate attractive returns for investors while using the capital raised to operate the business effectively.
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Sean Mitchell
05/04/18
@ Y Combinator
We aim to offer returns in the mid-teens to 20% range to attract investors, ensuring our financial model is appealing. There are effectively two markets: the investor market, which has its required return, and the product market, which has its potential return. The goal is to align these two as closely as possible.
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Sean Mitchell
05/04/18
@ Y Combinator
When launching any FinTech company, it's crucial to consider the return you're offering. If it's too low, investors might prefer safer options like US Treasuries.
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Sean Mitchell
05/04/18
@ Y Combinator
On the debt side, we were fortunate to have thoughtful and educated investors who were capable of understanding new assets, which helped us in our funding process.
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Sean Mitchell
05/04/18
@ Y Combinator
Venture capitalists investing in FinTech often worry about whether a company can fund its origination costs, as mismanagement can limit future opportunities.
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Sean Mitchell
05/04/18
@ Y Combinator
When we approached our investors, we clearly communicated that our intent was not to use most of the capital raised for funding receivables, but rather to create a financing solution that allows us to operate effectively.
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Sean Mitchell
05/04/18
@ Y Combinator
Our team brings diverse expertise, including structured finance, commercial real estate, and product development, which helps us understand and manage risks effectively.
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Sean Mitchell
05/04/18
@ Y Combinator
We take on two principal risks: vacancy risk and performance risk on the tenant side, which includes ensuring tenants pay their rent and are good tenants overall.
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Sean Mitchell
05/04/18
@ Y Combinator
Understanding our risk involves back-testing our models against actual rental timelines to ensure our predictions align with reality.
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Sean Mitchell
05/04/18
@ Y Combinator
Landlords often negotiate, and we provide them with a fair understanding of our pricing strategy and the rationale behind it, which fosters open communication.
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Sean Mitchell
05/04/18
@ Y Combinator
We maintain transparency with landlords about pricing and relisting strategies, which helps build trust and solidifies our partnership.
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Sean Mitchell
05/04/18
@ Y Combinator
The biggest value we offer landlords is that we have skin in the game; if we misjudge the leasing timeline, we lose money, which aligns our interests with theirs.
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Sean Mitchell
05/04/18
@ Y Combinator
We’ve learned that the market teaches us about different types of landlords, from mom-and-pop operations to large firms, each with unique pain points.
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Sean Mitchell
05/04/18
@ Y Combinator
If we solve problems for landlords, the benefits often extend to tenants, leading to a smoother application process and better deals for them.
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Sean Mitchell
05/04/18
@ Y Combinator
The application and search processes for rentals need to be elevated through technology, reducing human interaction to streamline experiences.
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Sean Mitchell
05/04/18
@ Y Combinator
Creating communities within buildings is a powerful trend, as companies leverage technology to enhance social engagement among residents.
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Sean Mitchell
05/04/18
@ Y Combinator
Landlords are increasingly looking for differentiators, such as technology integration and added amenities, to attract tenants in competitive markets.
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Sean Mitchell
05/04/18
@ Y Combinator
Trends in rental markets vary by location, with urban areas often experiencing lower returns compared to suburban or rural areas, affecting landlord strategies.
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Sean Mitchell
05/04/18
@ Y Combinator
It's easy to get lost in the shuffle of running a company, so I remind myself to stay committed to the reason I started it in the first place.
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Sean Mitchell
05/04/18
@ Y Combinator
You can't over-optimize your business, but you must be willing to iterate and learn from the market's feedback.
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Sean Mitchell
05/04/18
@ Y Combinator
I continually tell myself to be hyper-focused on solving the problem that led me to start the company.
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Sean Mitchell
05/04/18
@ Y Combinator
When hiring, be very specific about what you need for a role, as it's crucial to distinguish between what you need and what you want.
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Sean Mitchell
05/04/18
@ Y Combinator
As a startup, your life exists in moments, so focus on achieving your immediate goals and hire accordingly.
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Sean Mitchell
05/04/18
@ Y Combinator
Managing personal well-being is essential for running a business effectively; taking care of yourself impacts your ability to lead.
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Sean Mitchell
05/04/18
@ Y Combinator
I've learned to stop and ask myself why I feel anxious or stressed, which has been transformative for managing my emotions.
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Sean Mitchell
05/04/18
@ Y Combinator
Understanding the purpose behind my actions alleviates a lot of stress, as I know why I'm doing what I'm doing.
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Sean Mitchell
05/04/18
@ Y Combinator
Running a startup is an all-encompassing experience that requires personal growth alongside professional development.