How we’re building the financial services platform for real estate

There are more than 44 million rental homes in the U.S. today—with more households calling a rental home now than at any time in the past 50 years. As the rental market continues to expand, so too do the problems renters and property managers face.

Median rents have been on the rise, increasing twice as fast as median salaries for nearly six decades. This has resulted in one in four renters spending 50% or more of their paychecks on rent each month. Combine that with the fact that two out of three Americans are now living paycheck to paycheck, with 70% having less than $1,000 in savings, and you start to realize the scale of the affordability crisis facing renters today. 

Property managers—with their own financial obligations and balance sheets to protect—are oftentimes relying on outdated risk management models that exacerbate the problem. High deposits at move-in, for example, may protect property managers against skipped rent, but they can also create more friction for renters, greatly reducing leasing velocity. And while expensive late fees may be an extra source of income for some property managers, they all too often lead to future delinquency on payments, followed by abandonment or eviction. 

Jetty’s mission is to make renting a home more affordable and accessible for everyone. Rather than relying on antiquated payment models or means to financially protect their assets, renters and property managers need a new set of financial solutions that work across the entire leasing lifecycle.

The rental market needs new financial solutions.

We’ve partnered with over 2 million units across the country by providing Jetty Deposit, a security deposit alternative to traditional cash deposits, and Jetty Protect, modern renters insurance with customizable protection. Our products have dramatically lowered move-in costs and helped thousands of renters eliminate barriers to renting a home; while our partners have seen a 32% reduction in bad debt, and a 132% boost in their protection levels against damages and missed rent

However, our work does not end at lease signing—nearly 14% of renters are behind on their payments this year and we’ve built a solution to help. 

Now, we're announcing the launch of our third product, Jetty Rent, a flexible rent payment product built for those that struggle to make rent on the first of the month. This may be due to misaligned income to rent dates or other important monthly financial obligations. Jetty Rent provides much needed payment flexibility to renters, over a third of whom are gig workers grappling with irregular pay cycles. TechCrunch, alongside other media outlets, announced the launch earlier today. 

With Jetty Rent, we pay rent directly to property managers on behalf of renters on the first of the month, and renters then pay us back at their convenience throughout the month. While property managers offer community amenities—gyms, secure package lockers, and pool access—to entice renters, Jetty Rent can be positioned as just that; a product designed to meet a renter’s daily financial needs. When it comes to amenities, Jetty is adding financial products to the list.

Jetty Rent is designed to boost resident retention, decrease delinquencies, and deliver more predictable cash flows to property managers. We couldn’t be more excited to bring this product to market with one of our Jetty Deposit partners, Cortland, the top 20 largest owner and operator in the country.

Introducing ‘Jetty IQ’ & how Jetty Rent was built.

Since 2015, for every Jetty Deposit bond sold, we receive a number of data points across three primary categories: 1) a renter’s demographic and financial data (credit score, etc.); 2) renter “performance” data (history of unpaid rent, damages, evictions, etc.); and 3) property-level data (location, asset class, average rent, etc.). Our risk team, comprised of actuaries and data scientists in insurance and credit, have used this data to establish correlations that allow us to predict renter performance at the time of underwriting.

When building Jetty Rent, we realized that the risk was actually quite similar to that of Jetty Deposit—instead of taking non-payment risk at the end of a lease, we were now modeling non-payment risk in the middle of a lease. So, our risk team extended our Jetty Deposit credit model and built a consolidated data asset that we call ‘Jetty IQ.’

Despite the fact that we have two different types of financial products, insurance and lending, Jetty IQ now serves as the basis for both and is continuously learning from each. In other words, our model is tuned every time there is a Jetty Rent default or Jetty Deposit claim, constantly improving our ability to understand risk.

We exist as the only company in this fortunate position, giving us a leg up on building a sustainable and profitable business. This will serve our customers in better pricing, our financial partners in better results, and our property management partners in a more sustainable model over the long term. Beyond Jetty Rent and Jetty Deposit, we’re already thinking about other products that can be built on top of Jetty IQ—many of which could never be built without this unique view of the customer. 

Sources:

  1. “Renting Statistics,” iPropertyManagement (https://bit.ly/3tmyxM9)
  2. “More U.S. households are renting than at any point in 50 years,” Pew Research Center (https://pewrsr.ch/3tuBhY8
  3. “Home prices grew 4 times faster than income: Study,” The Hill (https://bit.ly/38NQJVE
  4. “More Americans are spending over half their income on housing,” New York Post (https://bit.ly/3jQp0K6
  5. “Massive 62% of Americans Living Paycheck to Paycheck, Many Convinced Finances Won't Recover Until 2022,” Entrepreneur (https://bit.ly/3jQBCkz
  6. “Most Americans Lack Savings,” Statista (https://bit.ly/3yWe7L3
  7. Renters save an average of 89% on move-in costs with Jetty Deposit.
  8. Data is based on average bad debt savings per unit when comparing a resident move-out prior to using Jetty and a resident move-out after using Jetty.
  9. Data is based on a property's protection levels increasing from an average of $440 ($200 for standard approvals and $1,000 for conditionals) when using a traditional cash deposit, to an average coverage of $1,020 ($600 for standard approvals and $2,000 for conditionals) when using Jetty Deposit, a security deposit alternative.
  10. “A massive wave of evictions could be coming. Who’s at risk?,” CNBC (https://cnb.cx/3yXHEV2
  11. “Gig Economy Statistics: The New Normal in the Workplace,” Fortunly (https://bit.ly/3tzDr8Z
  12. “2021 NMHC 50,” NMHC (https://bit.ly/3BSjhJV)

Insurance is underwritten by State National Insurance Company, Inc. (NAIC No. 12831), Bedford, TX, in all states except FL, and National Specialty Insurance Company (NAIC No. 22608), Bedford, TX in Florida (collectively, “State National”). Jetty Insurance Agency LLC (“Jetty”) is a licensed insurance agency which acts as a general agent for State National. Jetty will receive compensation from State National for such sales.

All descriptions or highlights of the insurance being provided are shown for general information purposes only and do not amend, alter, or modify the actual terms or conditions of an insurance policy. Coverage is subject to underwriting review and approval. For costs, complete details of coverage and exclusions, and a listing of approved states, please contact Jetty Insurance Agency LLC.

Jetty Rent loans are made by Cross River Bank, Equal Housing Lender, Member FDIC.

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