Using tech to reduce tenant risks | Fin24
 
In partnership with
Loading...

Using tech to reduce tenant risks

Jan 20 2020 12:10
Glenneis Kriel

A drian Taylor, Marc Maasdorp and Bartek Dutkowski started Jamii Cities in November 2018 after realising how difficult it was for landlords to get credible tenants in Johannesburg’s city bowl. 

“Jamii Cities fulfils all the functions of a traditional letting agent, but when it comes to the vetting of a client, we not only do a credit check but use statistical analysis to better understand the needs and life circumstances of tenants. 

The idea behind this is to better match tenants and properties,” Taylor says. 

Various factors that influence stay are considered during the analysis, including income potential, age, relationship status, family size, place of work and availability of nearby amenities, such as schools, shops and hospitals. 

“It is similar to the checks being done when people apply for insurance or home loans,” Taylor says. 

Besides this, the company has a voluntary rewards programme that rewards participating tenants for looking after their properties well and paying their rent on time. 

Participants do not have to pay a deposit when they enter a lease agreement and can use their rewards, called Jamii Bucks, to buy electricity and data.

All the accumulated client data is pooled, including new information such as a tenant’s likelihood to pay on time and look after a property, to strengthen the accuracy of the models used to get better insights into tenant preferences and behaviour. 

“Our aim is to create long-term tenants who will continue to use our service when they need to move on to other accommodation,” Taylor says.

The business model

Taylor, Maasdorp and Dutkowski met through work over the years. 

They make a good team, as all three have backgrounds in the financial services industry, with Maasdorp and Dutkowski specialising in private equity and Taylor in home insurance. 

All three had been looking for a business opportunity and Taylor is the founder of The Black Box, which is an advisory accounting business. 

“With Jamii Cities we saw a gap in the market after which we tested the market by first finding a landlord and our first few tenants. So instead of going all out, we had a small experimental start and bottom-up approach, which we scaled as we got more tenants and reached new bottlenecks,” Taylor says. 

Their first website was launched in March 2019 and upgraded a few times after that. 

Taylor explains that the website is not that important, as it’s merely an interface that connects people with the service. 

People can look for apartments on the website, but all the apartments are also advertised on big third-party websites, such as Property24.  

The name Jamii Cities was chosen because it is the Swahili word for community. 

“Our long-term vision is to create sustainable cities by matching the right tenants with affordable properties in prime locations in cities,” says Taylor.

The company was started with R2.45m in angel funding through participation in the AlphaCode Incubate programme. 

“To keep costs low, Marc, Bartek and I are not drawing any income from the company. All the funds and proceeds are reinvested into the scaling of the business,” Taylor says. 

Initially, Maasdorp and Taylor were working full-time on the development of the business, but Dutkowski has since also come on board and they have appointed two full-time letting agents to work on the sales side. 

The company now has one landlord on its books with 2 500 apartments and 200 tenants, with sales still being focused on Johannesburg’s city bowl.“We take a certain percentage of the monthly rental income as payment for our services, with the percentage varying depending on tenant risk. 

The fees are slightly higher than with your traditional letting agents because of the lower associated risks,” Taylor says.

What about rogue tenants?

Taylor sees their use of technology as their main advantage: “Real estate is the biggest asset class in the world, but still one of the least disrupted. Many letting agents provide some of our services, but hardly any are using new technologies to improve sale outcomes and reduce tenant risks.”   

Besides making better informed matches, the use of technology allows the company to conclude a lease agreement in a matter of minutes via the internet. 

While the company manages monthly payments, it does not provide any aftersale services such as callouts for maintenance or repairs.

Their biggest challenge now is to grow the company sustainably. 

Taylor explains that they need to appoint good staff to grow the company at discounted rates. 

New staff therefore need to buy into the vision of the company and the idea of their portfolios growing with the company. 

Besides this, it is difficult to create a company culture when there are only a few employees.  

“Our main aim for now is to scale the business by appointing new staff to help us grow the rental portfolio and to gather more data to improve tenant apartment matching. Once we have a secure market, we will start to replicate what we are doing in Johannesburg in other cities such as Cape Town and Durban,” Taylor says.

This article originally appeared in the 16 January edition of finweek. Buy and download the magazine here or subscribe to our newsletter here.

NEXT ON FIN24X

Rising from the ashes

2020-04-02 10:46

 
 
 
 
19 March issue
Subscribe to finweek
Loading...