October 9, 2021
Joe Fairless

JF2594: Streamlining Your Tenant Screening Process in 1 Step with Ryan Barone #SituationSaturday


When Ryan Barone started college, he never knew how complicated the process would be to rent an apartment. This led him to create an app for tenants to simplify the process. His college passion project eventually became RentRedi. Ryan is sharing why landlords love using this software, how it streamlines each step of the renting process, and added benefits it provides renters as well.

 

Ryan Barone Real Estate Background:

  • Co-founder, CEO, and CTO of RentRedi — modern, end-to-end landlord software that streamlines self-management of rental properties to make financial freedom attainable for landlords and renting a truly amazing experience for tenants
  • Before launching RentRedi, he worked at Goldman Sachs and PricewaterhouseCoopers (PwC)
  • Based in New York, NY
  • Say hi to him at: https://rentredi.com/

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TRANSCRIPTION

Joe Fairless: Best Ever listeners, how are you doing? Welcome to the Best Real Estate Investing Advice Ever Show. I’m Joe Fairless. This is the world’s longest-running daily real estate investing podcast, where we only talk about the best advice ever. We don’t get into any of the fluffy stuff. With us today, Ryan Barone.

How are you doing, Ryan?

Ryan Barone: I’m doing great. Thanks for having me on, Joe.

Joe Fairless: Well, it’s my pleasure, and I’m glad you’re doing great. And Best Ever listeners, first off, I hope you’re having a best ever weekend. Today is Saturday, so we’re doing a special segment called Situation Saturday. And with us today, Ryan, is going to talk about a challenge that led him to start building RentRedi, which is the company where he is the co-founder, CEO and CTO of. And if you don’t know of RentRedi, well, you should, because they’re a loyal sponsor of the show. And let me tell you a little bit about them — they’re a modern end-to-end landlord software that streamlines self-management of rental properties to help make financial freedom attainable for landlords and renting, a truly amazing experience for tenants. So basically, it helps us, as landlords, make the renting experience and getting our properties profitable 1,000 times easier, and it helps tenants in multiple ways and get them set up, so that they can pay us rent, among other things.

Before launching RentRedi, Ryan worked at Goldman Sachs and PwC, and he is based in the Big Apple. So before we get into it, Ryan, do you want to just tell us a little bit more about your background, and I guess, perhaps that will segue into RentRedi, and then we’ll go from there?

Ryan Barone: Absolutely. So as you mentioned, I had worked at Goldman Sachs and PwC. The start of RentRedi really came almost accidentally, which I think is probably not too dissimilar than how a lot of people start their businesses. At the time, I was actually in college, I was getting my first internship at Goldman; it was trying to get my first apartment, and it just made kind of a lot of sense to move out of dorms, get that apartment, and I went through that rental experience. So it was interesting, because I had a tougher time renting honestly, than I thought I would going through the application process; they needed a W-2, a letter of employment, bank statements, all these different things that I was just not properly prepared for.

And at first, I thought I was just really bad at renting. And I quickly found out that it wasn’t just me; it was a lot of other people, other friends of mine, particularly renters at that point. So at the time, as I mentioned, I was going to school, I was minoring in computer science, but I was in majoring economics and math, so I figured, “Hey, why not build an app for myself and my friends to make this process easier?” And so I started building the iOS and Android apps for tenants initially only, to make the application process easier. And it really wasn’t until I started bringing that to some landlords and starting to try to use that, that they said “Hey, wait, our side is just as bad, if not worse. Help us out in the process, too.” And it’s we’re really expanded way beyond just applications, and certainly well beyond just tenants, and really became this platform that is really dedicated to both the landlord and the tenant side, and focusing on making both of our sides easier and happier. So it’s been a really exciting ride, and certainly a lot of learning along the way. Many things I didn’t know when I started.

Joe Fairless: Yeah, and we will talk about that. How long ago since you started RentRedi?

Ryan Barone: I started it as kind of a passion project on the side, probably as far back as 2014 at first, just working on it in my free time; that was when I was building the initial app. But really, when I dove in full time and started working on it, it was 2016. For a little while there, I was kind of moonlighting, working job during the day, coming home, working on RentRedi from [10:00] to 3:00am, and then starting the next day over again, and eventually said, “Okay, it’s time to make the jump and go forward and build it.”

Joe Fairless: The first iteration of it versus the second iteration of it… What were the updates if you can remember?

Ryan Barone: Yeah, absolutely. So version one was really application-focused, and really what it was was actually similar to — I don’t know if you had done a common app yourself, but when I was applying to colleges, I did this common app, which is basically putting together my information once, applying to a bunch of different colleges, and it made the process really easy to apply. So it made sense to me that why not try to get to something similar, if we could get something that streamlines the process for landlords, so they’re not waiting as long for documents… And making it faster for tenants to be prepared before they even get to viewing the unit. So that was kind of version one.

Beyond version one, it really expanded to the full end-to-end process from the day that the property is listed to the end of the next lease. So it expanded a little bit backwards at first, from applications to pre-qualifications, where someone said, “Hey, I had a couple come view my property and I loved them. But the sad part is, as soon as I did a full screening on them and application, I knew there was no way I could rent to them.” So if I knew upfront that Joe has a dog and I don’t accept pets in my property, it would save both of us some time. So that’s exactly where the pre-qualification came from. It’s quick 10 questions to help you vet people before it. So you’re essentially meeting with the five most qualified people maybe, instead of necessarily the first five that reach out.

And then the listing process to make it easier to actually get those leads in the door, and then once they’re in, once they’re pre-screened, screened, and you’re ready to have them as a tenant, actually processing all that rent, as you mentioned, making the maintenance process easier, which again, came from specific stories of landlords… Each one on our platform has honestly contributed an immense amount to every feature we have… And then signing that lease, communicating with them, and then at the end of that, either resigning and starting that process over again, or listing it out and getting the next one in the door.

Joe Fairless: What are the popular features that landlords say they love?

Ryan Barone: Yeah.

Joe Fairless: And then same with tenants; the top two or three.

Ryan Barone: One of the ones that came out of the landlord side especially was – we had streamlined the autopay side. And I will say that certainly, that autopay, auto late fee, getting that to the point where basically you get set up as a landlord and then you don’t have to think about it again, was one that we had a lot of excitement from landlords on. And that led to what I will say is probably the second there, which is them saying, “Hey, you streamlined the rent collection process for me. I don’t even have to worry about that anymore. Could you do the same thing for maintenance without me feeling like I’m hiring a property manager and paying 10% to 12% of my rent to them?”

Joe Fairless: Yeah.

Ryan Barone: So that was a tough question honestly for us to answer, but we went out and we found a great partnership with a company called Latchel, that typically only serviced managers with 75 units and above. And that was a common theme. And we really target that, as small as one single-family homeowner operator, to hundreds of units. So they didn’t even have access to something like Latchel. And basically, what we were able to do is do a deep integration with that leverage the fact that we had this mobile app that tenants can submit maintenance and video on, and actually automate the maintenance side the way we did for the payment side. So essentially, the landlords turn this on, they set their budgets for what they want it to be, which would be very similar to when they’re signing their contract with the property manager, and then from there on out, the maintenance requests come through, automatically a vendor is found for them, schedule with the tenant, both the tenant and the vendor market complete, you don’t have to worry about like the vendor saying, “It’s done,” and the tenant saying, “No, it’s not.” And then it updates in real-time for the landlord. So basically, you don’t have to do anything, but you still get all the oversight that you would have if you were doing it yourself.

Joe Fairless: That’s incredible.

Ryan Barone: And then on the tenant side, I’ll probably say the credit boosting. So it kind of stemmed from the autopay side as well, where we said “Great, I don’t have to think about paying my rent, but it’s kind of just paid and it goes off into the ether… Could you make it help me in some sort of way?” So we were able to partner directly with TransUnion and make it so that tenants can enroll in credit reporting, so that when they pay the rent, just like they always did, it actually goes towards building their credit. So tenants get to build their credit doing something they were already doing, landlords are happy in the process, because they get their rents on time more often, too… But that’s one that’s been a huge excitement on the tenant side of things.

Break: [08:48] to [10:48]

Joe Fairless: Is that a deterrent for some tenants, because they’re concerned if they do miss a payment or if they’re late that it’s going to hurt their credit, since it’s connected through TransUnion?

Ryan Barone: It doesn’t, for two reasons. One, they can decide if they want to turn it on or not. So it’s only if they want to build that credit. And secondly, we only report on time payments. So if they do enroll in it, it never hurts them. It won’t help them if they’re always late, but it won’t hurt them if they’re always late.

Joe Fairless: Oh.

Ryan Barone: It’s only a benefit for them.

Joe Fairless: Got it. That’s great. What a nice feature for them. What about an aspect of your service that you thought would play really well, or be popular, that wasn’t, both on the landlord and on the tenant side?

Ryan Barone: That’s a tough question. Going back to the very initial version, right? I was putting together something that would make it easier for myself as a tenant, and it was basically bundling everything into a PDF and sending that over email. I thought landlords would love that, because they were already getting it over email. They didn’t love that, because they hated the idea of all of these different documents in email, and not having really an organized system for how that worked.

So that honestly, didn’t go very well at first. And that’s where we really had to build out the ability for them to manage those applications and things like that, by date and by property and by tenant, so that they could sort through these things, they could store them and look back at them if they ever needed to… If it ever came up to a legal case or something, and they wanted to go back and look at an application they accepted or rejected or something like that, they would actually have an easy way of searching and looking into that.

So that was probably one that — I thought they would love getting it over email; they did not, and to their point, they were completely right. It’s definitely better not that way now. But I think that’s where — it’s the beauty of being able to get feedback… And that’s a really important piece to me that it’s awesome, almost no matter what you’re doing. People will give you feedback if you ask for it, and ask them to be honest, and that can really help you do whatever you’re trying to do a lot better than you would have done on your own.

Joe Fairless: On the tenant side, what’s your least used feature?

Ryan Barone: I think it would depend on the tenant. So the ones that are coming through the application process are going to use things like Tenant Screening a lot, and renter’s insurance, for example, a lot… For tenants that landlords are onboarding, because a lot of the time the landlord, when they’re first adopting RentRedi, they already have some tenants, and they don’t need to make those tenants go through that process. So in that case, those tenants would skip things like the tenant screening process. They have the option to get renters insurance, we’ll help them with that, but we also let them upload it, so that the landlord can at least know, “Hey, they have a policy.” So if I’ve been living in your unit for three months already and you’re now adopting RentRedi, I’m not going to go through that screening process, and they hopefully already have renter’s insurance… So I’d probably skip those two.

Joe Fairless: Taking a step back, what’s your business model?

Ryan Barone: That was one that, again, came from the feedback side of things, in talking with landlords. They basically said to us, “We’re on spreadsheet”, and most of the landlords that we worked with, and still work with, were on spreadsheets before they started using RentRedi. And I really wanted to understand why. And a lot of them said, “When I look at these massive enterprise solutions that were built for very large property management companies, they’re charging per unit, and I feel like I’m getting taxed for my growth. I’m just trying to build my own wealth, my own financial freedom, and that is kind of inhibiting that.”

So our perspective was, “Is there a way that we can not make landlords feel like they’re getting taxed for their growth, but still help them grow?” So that’s actually the way that our business model is set up. You don’t pay more as you add more units, which is something that is truly unique, and even from enterprise down to single-family owners. So for most of the landlords that go for our annual plan, they’re paying $9 a month, and that’s not increasing per unit, that’s not per unit, it’s just their $9 a month and they’re in. And the way that we’ve been able to structure it is, essentially when screenings are run, or some of these services like Latchel, that they wouldn’t even have access to in the past, if they wanted to enable those… We’re able to basically generate revenue off of those streams by basically making these partnerships with these larger companies and saying, “Hey, treat all of our landlords as one large portfolio, just count them in the process.” They get their screenings for less than they would even going straight to TransUnion, and we can make some money on the spread there.

Joe Fairless: Hmm. That’s a smart business model. Because it sounds like the majority of the money is made through the partnerships that you’ve created, versus the upfront costs or ongoing costs from your customers.

Ryan Barone: Yeah, absolutely.

Joe Fairless: Huh. This business you created, you’re obviously very talented and—you’re a software engineer, is that what you said earlier?

Ryan Barone: I had minored in it in college, but I actually learned most of it along the way, probably not too dissimilar from a lot of people in the entrepreneurial space; you kind of jump off the cliff and build [unintelligible [00:15:47].02]

Joe Fairless: Well, software engineering is a different beast, I think. I don’t know how many entrepreneurs kind of just dabbled in software engineering, and learned it… That’s impressive, is what I was getting at.

Ryan Barone: Thank you.

Joe Fairless: But my question for that, why I was asking is, did you take on investors for this, or are you just bootstrapping? How did you get to this point?

Ryan Barone: Initially, it was bootstrapping. It was just — getting started, I had obviously the minor, so I knew one language. Actually, what Rentedi is built in were all languages that I learned online. And it is truly incredible how much there is online for you to learn, in the developer community, but also in almost any community, real estate as well. There’s some really awesome communities out there where you can just ask people, “Hey, how do you do this? What’s the best way to do that?” And then people will be honest, they’ll give you answers, which is awesome, in my opinion.

And then from that point, we got to a point where some landlords that were using the platform basically said, “Are you raising any money?” I said, “Sure, yeah. Absolutely.” So they actually became our first investors, which was really cool, because we had our very first investors as people that truly understood the product inside and out, from a user perspective, as well as from being on an investor in RentRedi, but also in a real estate investor, which was great.

And then in 2019, we raised our first venture round, and that’s really where we brought on our core team. And then this year, we raised another venture round and basically doubled our team size. So we would not be at the same place we are today without those two main groups, basically, that came on in 2019 and this year, as well. But yeah, I mean, that’s how we’ve gotten to where we are now.

Break: [17:27] to [20:07]

Joe Fairless: What’s the output of doubling your team size?

Ryan Barone: One of the big benefits for us and the big purpose of bringing on that team, doubling that team now is that in 2019 we felt like, okay, we are able to bring on this team and do this for a lot more landlords; we basically had a smaller amount of landlords that were very, very happy, but that was as many landlords as we could really help at that point. This let us do 30 times that amount of landlords. And then we were essentially at the point where we were able to keep growing the amount of landlords we were able to support… But we kind of had to choose between one of the things you asked earlier, which is building out those new partnerships, which are coming directly from landlords and tenants saying, “I have this problem. This would solve it for me. Can you create a way that that’s real and smooth, and a good experience for me?” So that takes effort and time to build. So we were kind of choosing, at times, between find and help more people, or find and integrate more services to help the existing ones. So doubling the team this year really has helped us not have to choose between those two, where we get to do both simultaneously go find and help more people, and also integrate these new services that help the existing ones on the platform.

Joe Fairless: From an entrepreneurial standpoint, I’m asking the following question – what’s something that went wrong that you can think of, initially, and tell us what happened? Or a big old problem that took place, and what happened?

Ryan Barone: I know you mentioned on the software engineering side it can feel very different from a lot of things, which in some ways it might be, but in a lot of ways, I do think it’s very similar. And it was one of the things I struggled with very early on, was it was really hard, and I didn’t really know everything I needed to know to build what we eventually became today. So I think that is very similar. And at first, I had these thoughts of “Should I plan more? Should I wait longer? Should I not start?” And I think that is very common in any entrepreneurial endeavor that you say, “Should I just wait? Should I analyze more, should I gain more skills before I start?”

Honestly, as much as it was very difficult to learn that along the way, my perspective is start with something, and in a lot of ways — or in the software space, they call that your MVP, which is basically like the most simple, most basic version of whatever solves your problem. And I think this goes for physical products or real estate or anything you’re doing. But just starting with something. And then from that point, addressing each problem as you go along the way; it’s not going to be a perfect plan when you start out, but my perspective is even as much as you do plan, you’re going to miss something. I missed many things along the way, and it wasn’t until I was in the weeds actually trying to execute what I was trying to accomplish that I realized, “Okay, we need to do this as well. We need to do that as well.” So my feeling much more is start now if you know what you want to do and you know what you want to accomplish, and have somewhat of a plan. But don’t worry too, too much about having every step of the way planned out, because you really can’t 1) use those different resources and communities that are out there, and leverage other people that honestly know more than myself ,or if you’re thinking about for yourself, like there are people that are more experienced than us in whatever issue we have… And a lot of the time you can reach out and ask for help, even online; a lot of them will help you, and you can just build a better product as you go along.

Joe Fairless: Anything that we haven’t talked about that you think we should before we wrap up?

Ryan Barone: From the entrepreneurial perspective, one that, at least for me is important and that I think translates to almost anything would just be listening to whoever your customer is. I think this goes for someone managing real estate that has tenants, it goes for us that’s creating software for people that are managing those properties… It seems like sometimes you have to know the answer. I think that that’s the initial gut feeling that I myself or a lot of people have, that you have to just know what you should be doing. But in a lot of ways that customer, that tenant, that landlord, whoever it is for you in your business, has an idea of what the right answer is. And if you’ll ask them, a lot of the time they’ll tell you. And if it makes your job on the creator side of things or the operator side of things to do whatever is the right answer, because you get that feedback from the person that feels it the most.

Joe Fairless: That’s powerful. It’s simple, but powerful. I completely agree. And clearly, you’ve embraced that philosophy and acted on it through the creation of RentRedi, based on this conversation, and also just the bells and whistles that the software program has from my experience, too.

How can the Best Ever listeners learn more about RentRedi?

Ryan Barone: Our website, it’s  rentredi.com, because we’re a startup and we have to spell something wrong… So that’s a good place. But we’re also on Facebook, Instagram, Twitter, YouTube; we have a YouTube channel as well, we try to share some knowledge… So pretty much any social media outlet you want to go to, you can find us on there and say hello. We always reply to things. It’s always kind of nice to hear from people.

Joe Fairless: Ryan, it’s been a pleasure speaking to you, learning more about your journey, learning more about the different iterations of RentRedi, the challenges that you came across, and the popular items, or features, I should say, that RentRedi has for both landlords and tenants, and how those came about. So thank you for being on the show, I hope you have a best ever weekend, and we’ll talk to you again soon.

Ryan Barone: Thanks for having me, Joe. I appreciate it.

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