Tunde Balogun is the CEO/Co-Founder of Rent-smallsmall, a property technology company with a vision to organise the rental market in Nigeria. In this interview with DAYO AYEYEMI, he is of the opinion that collection of one or two-year rent upfront must be discouraged to pave the way for an enabling plan for young people to start life well.
What is Rent-smallsmall is all about?
Rentsmallsmall is a property technology company and the vision is to organize the rental market in Nigeria by eliminating discrimination and allow people to pay their rent flexibly.
How did you come about the company?
Rentsmallsmall was birthed from the place of personal experience. When I moved to Nigeria in 2015 from Babcock, Thailand, where I lived for five years and did my Master in Business Administration, I saw that you have to pay your rent one-year or two-year upfront to get accommodation. I couldn’t believe it from the angle of young people,   I mean people that are about to find their footings in life. These are people that have just finished university, and trying to start their life and you are subjecting them to pay one-year or two-year rent upfront. I just know it was a time bomb. Yes, we might have collected one-year or two-year rent upfront all these years, but it was not sustainable.
Why?
Nigeria is filled with young people; there is a need for an enabling plan for young people to be able to start life well. Come to think of it, shelter is one of the basics of human needs. So they pay little attention to the provision of shelter, but it requires the same level of attention that food gets because it is from a home that human characters are sharpened. If there is no house where do you shape the character? Shelter is important. So what we are doing at Rent-small-small is that flexibility, that convenience where somebody can find accommodation and pay for it easily, and landlords can also enjoy the value. The value we are giving the landlords is allowing them to earn steady cash monthly. We have many testimonies from landlords that told us that they used to collect their rent one or two-year upfront, but never knew that they could collect it monthly. Monthly collection of rents now benefits landlords. Before now, they would collect yearly rent upfront and spend it once. They won’t know what they even spent it on, but with this initiative, they have something to look up to every month now. Monthly’s rent collection meets their immediate needs. That is what real estate investment is supposed to be.
It is supposed to be a source of steady cash to property owners. Oh, we may talk of insecurity in Nigeria, you may say Nigerians are not credit worthy, but because we are technology-driven, we realize that we can use technology to chop off a lot of things. We realize that people are actually paying their rents on time. When people pay their rents monthly, they are not paying the money they have not earned; they are not giving it to a landlord.
When you talk about one-year rent upfront, you have not earned that money because you collect your salary monthly; you should be able to pay your rent as you collect your salary. By doing so, you have balance to your life, you can eat well, you can go on vacation to boost your productivity and you can be financially stable.
I will give you a true life story. We have two young guys that finished from the University of Ilorin. They were poached by one of the leading companies in Lagos. So in their bid of searching for accommodation, they discovered rent-small-small. They were able to complete our process and within a week, they moved to Lagos and moved into our property. And guess what? The place they stay right now is just walking distance to their office.
As simple as that..?
Finding a house to payment for the apartment is being driven by technology. Just go rentsmallsmall.com, search by location, search by your price point, your budget and you can also search by other features that meet your needs. Meeting people’s needs and allowing them to pay conveniently is the goal.
You must be having a running battle with the traditional estate agents. How do you manage this?
Initially, we were reaching out to them. We wanted to bring them along because we realised that they have the supply, they have the market. We felt we could partner with them, but going to a lot of them, they turned us down. Only few, who are futuristic in their thinking, partnered with us.
What are the benefits accruing to those that partnered with your company?
They have been enjoying the relationship from the fact that they can now rent out their property faster. That is one of the benefits of flexible rental. You don’t need to have your property in the market and, for several months, it is still vacant. Immediately we put out our property. People rent those houses because of the convenience and flexibility.
How are you going about the issues of agency fee, commission or agreement fee?
We knew from the onset that if this thing is going to work, we have to eliminate a lot of things. At the end of the day, we are talking about flexibility, convenience and affordability. This agency fee or legal fee, for example, is not like a lawyer is writing an agreement, it is a template. It is like you have people paying for something that have already been done. We don’t collect legal fees, we don’t collect agency fees, but we structure our rent in such a way that we take our fees from what goes to the landlords. That is our commission. We would have made the arrangement with the landlords at the point of unbundling that we are taking this amount. We are not going to the tenant and say you need to pay other fees. We have a legal team, they just moderate the template. Our legal team is in-house. They are collecting salaries. We don’t collect legal fees or charge people excessively in order to take advantage of them.
As a developer, I borrowed money to invest in property. How do I repay my loan if monthly’s collection of rents is not enough to cover me?
It is still the challenge of security. Most landlords want to be assured that their money is saved. They also want to be assured of a stable and good tenancy; they do not want people moving in after a month and moving out again. What we have done is to look at all those property’s hurdles and make sure we cover them. One of the things is that we have rent insurance to protect the landlords.
How does rent’s insurance works?
The insurance covers things like job loss, illness and accident. I think those are the key. And it is being done on the part of the landlords.
What about the tenants?
Tenants will benefit as well, but again, it is to protect the landlords. Beyond that, we collect security deposits.
What is a security deposit?
Security deposit is hinged on the fact that should the tenants breach their contract either by damaging the property or moving out without completing their contract, the landlords get the security deposit. This allows the landlords, till pending the time we are going to get another tenant in their property to cover their loans. They have that money to pay their bank loans. Another thing is that by paying monthly, the landlords are going to earn slightly more rental values of money. No matter how you see it, paying rent monthly brings about financial stability. A lot of properties we are getting are very expensive, at the range of N200,000 and N300,000 monthly. We knew that for us to be able to get the rent further down to N40, 000 and N50,000, we need to form a sort of partnership. So we partnered the developers. For example, we have an estate at Awoyaya area that we have to partner with the developer. It is cooperatives that own the estate, they could not complete the estate, and we partnered with them. We brought the money to complete the estate and we converted the estate to mini units, studio and one-bedrooms instead of four bedrooms. By doing so, we are able to bring down the rent of the estate to about N40,000 monthly, and that includes power, service charge and security.
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