By Allan Maurer
ATLANTA—The strongest predictor of whether or not a landlord is likely to have trouble with a renter meeting obligations is the renter’s previous payment history. That’s the key idea behind RentBureau, which has more than 5 million records in 45 states from major apartment rental companies.
Founded in 2005, RentBureau raised an investment in an undisclosed amount earlier this year from the nonprofit affiliate of Chicago’s ShoreBank Corp., the Center for Financial Services Innovation, and a total over $7 million, including investments from the company’s four founders.
Eric Hartz, a founder, president and CEO, tells TechJournal South the nonprofit CFSI, which offers products and services for the “underbanked” liked the fact that RentBureau helps renters who do not have credit histories show they pay rent responsibly. Most landlords check a potential renter’s credit and little else when they apply to rent an apartment.
Bad debt in the billions
The company started because its chair and a co-founder, Evan Jennings, noted that the rental industry looks at credit data instead of rental histories. Jennings has 30 years experience as a real estate executive and founded The Apartment Group.
“We started looking at it,” says Harz, “and saw an interesting problem. The apartment industry represents about 30 percent of the population. Across 36 million rental households producing $120 billion in revenue a year, landlords lose $5 billion to $6 billion a year in bad debts.”
Not only that, he points out, but people who skip out on rent often “don’t leave quietly in the night, they cause significant damage,” says Hartz.
“We set out to become a credit bureau for the rental industry,” he adds.
The company gathered a tech team that found ways to grab the necessary rental history information from a variety of property management software systems. It has patents pending on its methods for extracting the data. “They all use different flavors of software,” notes Hartz.
Helps those without credit histories
While the company quickly discovered it could help landlords predict which potential renters might present risk and have payment problems, but on the other side of the coin, it also identifies “really good renters who are diligent about paying, but that’s not part of their credit, not reported to any credit bureau.”
The company collects its data every 24 hours.
“We think this data is critical for landlords and we have the math to prove it now,” says Hartz. Not only does previous rental data score well on predicting risky renters, it also reveals other data about the renter’s that predicts future payment behavior.
“We were the first to collect this rich rental detail, so we can say what the common data sets are,” says Hartz. “We’re the only company that can supply that information.”
The 20-employee company has three basic products.
Basic products
RentPredict.com lets a landlord provide a potential renter’s name and social security number and receive a prediction on the likelihood he will fulfill his lease. It costs $9.95 for each matching report.
Rent Reveal exposes a potential renter’s exact rental history.
Rent Monitor tracks a renter’s behavior to identify changes in behavior that might result in the renter “who might do something not so good,” says Hartz, as well as others who are exemplary, so the landlord can woo them if they’re about to re-up.
As a consumer reporting agency like Equifax, the company operates under the rules and regulations governing that in regard to privacy and other issues, he notes.
On the Web: www.rentbureau.com
© 2008, TechJournal South. All rights reserved.
