Give back the deposits, keep the security: Obligo
Welcome to Issue #2 of (un)real estate. Each issue I will shine a spotlight on one startup and how it is helping real estate operators succeed in these trying times. If you enjoy this newsletter, please share it with others.
Asset Type:ย Multifamily
The Need: With more than 30 million Americans laid off since the virus hit, many residential tenants are understandably worried about how they are going to pay rent. According to data provided by the National Multifamily Housing Council, 69 percent of renters paid by April 5 this year, a drop from 82 percent in April of last year.ย Even with the government stimulus of $1,200 and unemployment benefits, analysts estimate that recently laid off median wage workers should be able to get by for just 7.59 months without further government assistance.
Many cities and states have tried to address housing troubles by passing eviction moratoriums, but commercial propertyย owners are largely making decisions on their own as it relates to working out payment plans with struggling tenants.
In a world of few good options, there is one creative approach landlords can take to making their renters more liquid: give renters back their security deposits and apply it to rent. A classic win-win: it is perceived as a rent holiday by the renter and at the same time the landlord gets much needed cash.
But how can landlords have security if theyโve given back the deposits? That is where todayโs startup comes inโฆ
Spotlight
Company: Obligo
Funding Stage: Post Series Seed |ย Traction: Partners offering Obligo include Stuytown, Stonehenge, Common
Description: Obligo rids landlords and renters from the burden of security deposits. Obligo does this by getting a pre-authorization to your resident's bank account, allowing you to charge for damages or missed rent. This keeps renters accountable without requiring large upfront deposits. Landlords have total peace of mind about getting paid immediately too, as Obligo extends a line of credit to the renter if needed.
Pro tip: Looking a couple of months ahead, you may want to use Obligo as a marketing tool (โno security deposit buildingโ) to accelerate your leasing process. In addition to Obligo, other notable companies offering security deposit alternatives are: Jetty, Rhino and TheGuarantors.
If you would like an introduction toย Obligoย or to any of the startups featured inย (un)real estate, I would be happy to facilitate.
If you missed Issue #1 you can check it out here: Donโt bring a knife to a gun fight: Placer.ai.
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You are wonderful,
David