RentRedi

Host: Welcome to Invest with Steadily. I'm the CEO and founder. I have the pleasure of talking to Ryan Baron today. He's the CEO and founder of Rent Ready. Ryan, thanks very much for coming on the show today. I've been looking forward to this conversation. You are a founder that started the company just six months after you graduated from college. Is that right?

Ryan Baron: That's right, that's right.

Host: How did that come to be?

Ryan: It actually started because I got the idea for it when I was in college. I was studying at Pace University here in New York City. I double majored in economics and math, minored in computer science. I was living in dorms at the time — it was my sophomore year of college — and I'd gotten my first big internship to stay in New York. Goldman Sachs is walking distance from Pace in the financial district, and that felt like my chance to move out of dorms, get my own apartment, work there for the summer, walk to Pace for the rest of the school year. We found this great apartment — it was myself and two friends from school. We all had guarantors because we were students at the time, and ultimately we ended up missing out on the apartment because we didn't have all of the documents we needed to apply: things like W-2s, letters of employment, bank statements, tax returns. So we ended up missing out on this apartment we loved that would have been walking distance to school and walking distance to our internships. I ended up living about 100 blocks away from both of those.

Host: That's quite a ways in New York.

Ryan: It was definitely a lesson for me to figure out a better way to rent an apartment next time — not necessarily find one, but at least to rent it. So I started developing an app for myself and friends to apply to apartments more easily. That was really just the start of it. It wasn't necessarily saying I want to start a company or solve any particular problem other than we as tenants would like to be able to apply and have an easy experience.

Interestingly enough, a lot of the time what you start out doing isn't what you end up doing, and it was definitely one of those cases. Once I started bringing the app to landlords and showing it to them, they'd say, "This is great, but you didn't change any of our side." I was like, "I assumed you loved your side." They said, "No — if we're not a massive property manager, we're basically cast aside to pen and paper and spreadsheets. We're handling cash and checks, handling all these documents over email, getting calls in the middle of the night for maintenance and all this communication." So it really naturally developed over the course of eight years from what began as developing an app for tenants to really being the most comprehensive platform for independent landlords — self-managing landlords that want to manage it all themselves but don't want to pull their hair out handling all the rent and maintenance and communication and screening and all of that, while also providing a great experience for the tenants they bring to it. It's been a joy to get to build it for both.

Host: What I love about your story is that you didn't set out to build a startup, you didn't set out to raise money — you had a problem you were experiencing yourself, you decided to build a solution for it, and then you just chased the problem.

Ryan: Yeah, and quite the opposite from the fundraising side of things — we didn't raise any money for the first three years, to be honest. I had no concept of raising money, nor did my co-founder. The idea was just to build something that helped people. Our first investors were actually landlords on the platform — not because we went to them to pitch investing in Rent Ready, but just because we were talking about the platform and they were using it, and they eventually said, "Hey, are you raising any money? Can we invest in this? We think this would help a lot more people." So our first investors were actually landlords themselves who felt that more landlords should have access to this, and that if they could help back us to get off the ground faster and bring on more people and resources, it would help everybody. And they were right. About three years in, we ended up raising our first venture round, and that helped us scale, grow our team, and bring it to a lot more people.

But yeah, it's just: solve a problem. That's really what even to this day we love more than anything — what is the problem that a landlord or a tenant or both are having, and how can we be a part of that? Either by connecting with a partner — we don't necessarily have to build it or do it ourselves; if we're a connector to that, we're happy with that — or by improving or building something on the platform that helps them achieve that.

Host: What a huge vote of confidence that your users want to put their money where their mouth is. One of the things I noticed is you work with a family member. I do as well — my sister is my co-founder — so I'm really curious to hear what that family dynamic is like. Do you guys talk about Rent Ready at Thanksgiving, or do you have a strict separation, like no talking about this at home?

Ryan: We do talk about it. I grew up in a family where my mom's side had a produce store for about 100 years — she and everybody in her family were a big part of that. On my dad's side, he had grown his own companies, especially on the sales and marketing side, for years. Even my grandpa was a dentist and ran his practice out of my great-grandma's downstairs. So the view of being able to talk about what you're doing and what you're building — work-wise — at holidays was always an okay thing. It was just kind of part of your life that you were talking about, more so than it being "talking about work." For me, work-life balance — it's all just blended together.

Host: Exactly.

Ryan: The way I view it is it's a dream to get to do what I get to do, and I get to do it with somebody that I love and that is important to me in my life. So when I was leaving that full-time job and saying okay, I'm doing Rent Ready full-time, one day I called up my parents and said I was leaving that job. Most people are lucky if their parents say "we believe in you and good luck." I asked my dad to be my co-founder at Rent Ready. So my dad is my co-founder — he's helped me scale the company to what it is today and been a huge part of that.

Host: So you were in the stairwell coding this yourself at 21, 22, six months out of college — how long were you the only code committer until you said okay, it's time to bring on a second developer?

Ryan: Our first full-time hire was 2019, so about three years in.

Host: Wow. So there's founder code just everywhere, for better or worse.

Ryan: It was faster but it was a long road to that first full-time hire, for sure.

Host: That's amazing. So this is your chance to toot your own horn — how big are you guys now? How big is your team and how many properties are you helping to manage these days?

Ryan: We're about 50 people on the team in total now, and we have about $28 billion in assets under management in terms of landlords actively managing across all 50 states, the Virgin Islands, Puerto Rico — US-focused for now — but yeah, about $28 billion in assets under management on the platform.

Host: It's an amazing, crazy story, and you guys haven't had to raise a ton of capital to do it. You're not quite bootstrapped, but it's not like you're hemorrhaging money and on the fundraising treadmill.

Ryan: No, absolutely not. The focus for us has very much been on: are we solving someone's pain point? I remember when our very first investor, TIA Ventures, did their due diligence — they talked to landlords on our platform — and I think part of the reason we haven't needed to raise as much is a combination of being a scrappy bunch that really loves what they do and is willing to get their hands dirty no matter what level you are at Rent Ready, but also the fact that we're building a product that's based on those pain points. When TIA did their interviews with customers, they came back and said it was some of the best customer due diligence they had done. One of their questions was basically, "Hey, if we took this away and brought it back six months later twice as good, would you be happy with that?" — something that really matters to people. The landlords said, "Absolutely not, don't take this away from me." TIA said they got quite a few swear words from people when asking that question. We assured them that wasn't actually happening, but it answers the question: is this thing important to you? Is it solving a pain point?

That's been an important piece of how we were growing at that phase, but also something we've internalized and made sure to intentionally keep as part of the business as we've scaled. The question is: are you making vitamins or are you making Vicodin? Is it a true painkiller? The best startups are making something that really matters.

Host: That's a great way of putting it. So for our listeners — who should contact you? Who is the ideal customer profile that gets the most value out of working with Rent Ready?

Ryan: A lot of the customers that come to us — and we're constantly doing surveys — still about 90% of our customers are coming from pen and paper and spreadsheets. They have as little as one single-family home to 100-plus units. We intentionally focus away from the massive 10,000-unit-plus property management portfolio. I think there are some great solutions out there for that, but the really underserved side of the market that we've focused on is anywhere from one single-family home to a few multifamily units, where you're trying to scale your portfolio. One of our biggest joys is getting to see somebody come on with 2, 5, 10, 15 units and a year or two in with us have scaled that to 20, 50, 70, 100-plus units.

Our goal is to eliminate a lot of that manual work they'd do themselves — syndicating listings, screening tenants, handling rent collection, tracking all their communication with tenants — and once they free up that brain space and that manual work, it lets them start to focus on how do I grow my portfolio more. We talk about Rent Ready scaling, but what about them scaling themselves? That's our end goal. That's the person who gets the most out of the platform.

Host: You must see tons of patterns in the data given just the sheer size — more than $28 billion in property on your platform. How is the rental market today? What's different compared to, let's say, 2019 before things went crazy? How should the modern landlord be approaching it differently than they might have five years ago?

Ryan: There definitely were a lot of shifts that happened between 2019 and today. Some were really pointed things we saw through COVID. For example, digital lease signing was something we didn't have on the platform pre-2020, simply because we built most of this platform off individual stories from individual landlords and the problems they were facing, and at that point it wasn't as much in demand. Then COVID hit and all of a sudden you didn't want someone to hand you a piece of paper they'd written on or even meet someone in person to sign a lease. So we built in digital lease signing as a response to landlords saying, "Hey, can you solve this very specific pain point?"

But there have also been more prolonged shifts that I found really interesting when looking at the evolution of our rental suite. We started with something as simple as eliminating the "check is in the mail" excuse — a landlord calls a tenant and says, "Have you paid rent? Where is it?" and the tenant says, "It's in the mail." How do we create instant tracking so that maybe the funds aren't instantly available, but you know for certain whether that person has put the check in the mail? That was our first step of integrating payments for rent collection.

Then things accelerated with COVID in 2020. We went from features like being able to deposit to different bank accounts by property, to new regulations requiring the separation of security deposits versus rent into different accounts — so we built in the ability to deposit to multiple bank accounts. And especially with eviction moratoriums, and even since then, we've seen a big shift in the mindset of both landlords and tenants around incentives to pay rent on time. What actually came from both tenants and landlords on our platform was the question: "Can you incentivize my tenant — or can you incentivize me as the tenant — to pay rent on time?" What we built out was a way to report the rent we were already helping collect on the platform to all three bureaus — TransUnion, Equifax, and Experian — so the tenant can build credit just by paying rent on time. It makes it easier for them to get a car loan or a home loan in the future. But we've also seen a 13 percentage point increase in on-time rent payments as a result of offering that.

Host: That's huge. And it's free — I was expecting you to say there are 2% rebates or something, but it's a pure win-win for both sides.

Ryan: Initially the tenant was the one asking for it, so we offered it to them and said you can turn this on for a nominal couple of bucks. Then landlords started saying, "Hey, the tenants that are opting into this are paying so much more on time — can I just cover this for my tenants and make it a free service for them?" So that's what we did. Now landlords have the choice: they can say hey, the tenant can do it if they want at very low cost, or the landlord can say I want this to be an amenity of living in my property, I want to increase my on-time rental payment rate — and for a couple of bucks per unit, they suddenly get their rent on time 13% more often.

Host: That is super cool. What's next for you guys? What should we be on the lookout for in the next version?

Ryan: One of the big ones right now is accelerated payments. We've been moving toward this over the past couple of months and are really going live with it now for all of our landlords. The speed of getting funded is really important especially for independent landlords — there's not as much float of extra funds sitting around, and you need to pay your mortgage and other bills. Traditionally, outside of Rent Ready, what that looked like was a five-business-day funding period, which with weekends could sometimes stretch to almost a Monday-to-Monday cycle, or best case a Monday to Thursday/Friday cycle.

One of the big things we've been working on over the past year is: can we provide landlords with those funds faster, but also avoid the cycle we've seen in the past where platforms were essentially fronting the money up front and then clawing it back when the tenant didn't have the funds — creating an accounting nightmare? Can we actually settle funds faster? That's what we've been able to accomplish, which is a huge win for us this year. Basically any landlord that comes onto the platform now has accelerated ACH where funds are out of the tenant's account the same day. We've seen a dramatic reduction in returns, which makes the accounting life for a landlord so much nicer. Because the funds leave the account so fast — especially with the balance checks we do — the likelihood of any sort of return is drastically minimized. As a result, the landlord gets those funds in two days: a tenant pays on Monday and the funds are available in the landlord's account on Wednesday. For a lot of our landlords that's been really exciting — being able to have those funds sooner and use them sooner without the accounting nightmares.

Host: Well, given the pace that you're improving the software and what you've already shipped, it's completely understandable why Rent Ready is one of the most popular property management tools for our customers. You've been a fantastic partner to Steadily, and I really appreciate you taking the time to chat today.

Ryan: Of course, I appreciate it. Partnerships like Steadily are honestly some of my favorite parts of the platform. You're solving a really important pain point for customers, and if we can be a way to help connect landlords to solving that pain point, that's our goal more than anything — to be that central system that helps plug landlords into services like Steadily and other partners around different parts of their business, making it easier for them to ultimately manage it themselves and make everything a little easier. It's all about solving a real problem.

Host: Thanks again, Ryan.

Ryan: Thanks, appreciate it.