Why We Invested: RentSpree
RentSpree offers a range of services to individuals and enterprises in the rental space, such as solutions for tenant screening, rent payments, marketing and renter management. They recently achieved the milestone of one million users on their platform through their partnerships with 250+ associations, brokerages and proptech platforms, and they now rank in the top 13% of Inc. 5000’s fastest-growing companies of 2022.
We’re thrilled to back the RentSpree team as they modernize the rental industry and overhaul the rental experience for agents, landlords and renters. RentSpree’s $17.3M Series B financing was led by Green Visor Capital, with participation from Rally Ventures, 645 Ventures, The California Association of Realtors and others. Welcome to the Rally portfolio, RentSpree!
Below is a short Q&A with Co-Founder and CEO Michael Lucarelli.
1. What is RentSpree and what core problem does it solve?
RentSpree initially set out to solve the problems I encountered as a renter. I moved from New York to LA in 2014, and I needed a place to live. I luckily found this great apartment with a great landlord, but when I went to rent the place, he set down a huge stack of papers in front of me and told me I had to fax them back. I found it shocking that I not only had to hand write an application, but I then had to go find a fax machine.
I did eventually locate a fax machine and secure the place, but the experience sent me down a rabbit hole looking more closely at the rental industry, especially from a technology perspective. The rental industry is large, but people tend to only think about the institutional landlords which make up about 50% of the market. The other 50% are small mom-and-pop landlords, like the person I was renting from, and they are starved for technology. The lack of innovation has been causing all kinds of issues and inefficiencies for both housing providers and renters.
RentSpree was founded to serve individuals and enterprises within the rental space. We created a platform that not only makes the entire rental process easier for landlords, agents and renters, but also sets renters up for future financial success. I have a background in finance, not real estate, which was helpful in building RentSpree. Real estate is an industry in which things have always been done a certain way. It’s been helpful to look at these long-standing issues with fresh perspectives.
2. The US is currently facing a housing crisis. Tell me more about how RentSpree fits into this environment and helps renters achieve their housing goals.
It’s important to look back in time and realize that the problems we’re seeing today are the results of many factors that have been at play for decades. There has been a growing shift towards rentals that started in the 70s, surged through the economic crisis of 2008 and continues today. Mortgage rates are skyrocketing, and it’s getting harder and harder to buy a home. The median age of first time home buyers is now 36 years old.
When we founded RentSpree in 2016, it was clear that a significant portion of the country was renting and this portion was only going to increase. Our goal is to help the industry become more accepting of the idea that renting is a good choice, and not inferior to owning. We want to create tools that improve the rental process for everyone involved, while helping renters achieve their long-term financial goals.
We’re working to help the real estate industry understand and embrace this shift towards a culture that is more accepting of rentals, and partnering with the large industry players — like The CA Association of Realtors — that have the ability to make a real impact.
It’s becoming more difficult overall to secure housing with both rental prices and mortgages increasing, so we’re focused on how we can better equip consumers with the tools and knowledge they need. For example, our tenant screening tool doesn’t lower the renter’s credit score upon inquiry. Additionally, many renters work with real estate agents to find rental units. We’re working on strengthening that relationship, so renters have an advocate during the rental process and potentially as a home buyer in the future. Features like these are designed to make it easier for renters to secure housing.
3. RentSpree falls into the SaaS+ category. How do you view the addition of payments and other potential products as part of your growth strategy?
Our newest feature is rent payments, which helps landlords collect rent online. I’m a renter, and I still have to write a check and physically drop it off. It’s a cumbersome process for both the landlord and renter. And, there are many people who don’t even own a checkbook, so electronic payments are a needed innovation.
We’re currently working on a payments feature that will report on-time rent payments to credit bureaus to help renters build their credit score. For most people rent payments are 30–40% (sometimes more) of their monthly budget, and it’s a missed opportunity for these payments to not contribute toward building a positive credit history, which increases the chance of securing a mortgage in the future.
This new payment feature also benefits the landlord, because not only does it streamline the entire process, but when renters know that making timely payments will boost their credit score — it increases the likelihood that renters will make payments on time.
We’re working on money tools and features beyond payments, too. Many of these mom-and pop landlords don’t have easy access to the financial products and services they need, like a business bank account or credit card. We can incorporate these financial elements into our core platform in order to provide a full-service experience for those in the rental process.
4. Was there ever a time when you thought RentSpree wasn’t going to survive? How did you break through and achieve the success you’re seeing today?
In 2018, we raised a small friends-and-family round of about $120,000. We weren’t in a position to raise millions of dollars, and so we couldn’t come out of the gates fast and furious. While I wouldn’t say there was a time I thought we would fail, we were operating on a razor thin margin in the beginning. We had to really understand our user and deliver something that solved real problems. This forced us to focus and deliver a product that got us to where we are today.