Tunde Balogun is the CEO of Rent Small-Small.com, a Lagos based property Technology Company helping people get accommodation without having to pay one or two years rent upfront. In this interview with Modestus Anaesoronye, he shares his thoughts on challenges facing house renters in Lagos, what the tech product is doing, and plans to solve Africa’s housing problem.
What is Rent SmallSmall.com and what does the company do?
Rent Small-Small.Com is a property technology company (Proptech Company) and is a phenomenon that is happening around the world right now, which we believe we need here in Nigeria more than ever before. Why do we need it? The reason is simple. The property and real estate market as a whole is in shambles. There is the sales market and there is the rental market, but I will speak on the rental market because that is where we are focusing.
In Nigeria today, if you were to rent a property, you will be expected to pay a year or two years rent and it’s been like that for a long time. If you speak to older people, they will tell you that it was never like that in the 80’s and early 90’s and a lot of things brought us to where we are today. But what we have realised is that things have changed, and the market is now driven by young people and if you don’t have a solution to meet the huge demand and expectation of this set of people that are coming into the rental market, then we have a huge national crises in our hands.
With Rent Small-Small our model is to allow people to pay flexibly – monthly, quarterly or biannually depending on what is convenient for them. But our focus is on that monthly payment, which is what is operational in most developed countries across the world, so that as people earn they should be able to allocate on monthly basis what is meant for their rent, instead of paying the year upfront and now struggling to meet other needs.
So, Rent Small-Small is moving the space away from the traditional model of renting, to a modern way of renting that makes life convenient and affordable for renters, improves livelihood and productivity of young people starting life in our cities. That is what we do really, and we use technology to drive all of this right from finding to payment, everything happens on our platform, Rent Small-Small.Com.
You know there is already a culture here among landlords and property owners about collecting upfront rents. How do you begin to change this psyche?
There are two customers we are serving, the landlords and the tenants. For the tenants, it is not as hard because the demand is already there. But for the landlords, it is a bottleneck because now, it’s about changing a mindset, changing culture and it takes time. So, we are in it for the long haul and we are not one of the companies that want to make money quickly. This is not MMM, this is a solution that will take us time, but we know we can do it. For the landlords, what we have done now is to focus on the value we give, we put on the table that no other company has offered or there has not been such a solution here.
A lot of the values we propose are being well received by a lot of the landlords we have right now. For instance, they earn more than what they have been earning, we don’t do the traditional agency and agreement, and we do a mark-up model. With mark-up on the base rent, the landlord earns more than he would ordinarily have earned. Beyond that, we have rent insurance in place. We have done our research and discovered that one of the major challenges that landlords are usually having is rent default.
The default rate is very high across the cities. People pay for the first rent and after that struggle to pay subsequent rents, and a lot of the landlords spend so much to evict the tenants, some hire lawyers and the tenant still stay in the house as long as the mater remains in court. There is maintenance of the house, which is also the responsibility of the landlord, and when the tenant is eventually evicted, the landlord now again has to spend so much to put the house in a tenantable state. So what we have done now is to bring insurance to cover that rent default either as result of loss of job, accident, disability, or death insurance covers all of that and we pay the premiums upfront. On the maintenance of the property, we inspect our properties every quarter.
Property agents will always say is in the agreement of tenancy to inspect tenant’s house but they don’t keep to it, on our own we follow through to make sure the landlord is also protected. I must mention that we have standing order in place. What that does is that when the rent is due we automatically take it from the tenant’s bank account, through direct debit. This is not the case of taking cash or moving cash around. At the point of entering into the tenancy agreement, the tenant goes through our payment solution which captures their bank details and all that because they already know that that is what they are going into.
And lastly, I should mention that we do proper vetting on the landlords. Our verification system is very thorough. We establish that whoever we are giving the house to can actually afford them and that is one of the problems upfront rent has caused us in Nigeria. So we try to protect the landlord by making sure we verify the tenant and make sure he has the capacity to pay subsequent rents.
Give us more details about the rental insurance, and if you are partnering with any of them?
We are partnering with one of the most reputable insurance companies in Nigeria, that is AXA Mansard Insurance. They believe in what we are doing and know that this is the future. When we put the card on the table for them to see, they said they have not done this before but they believe it is the future. So we are working with them.
How long has this Rent Small-Small be in operation?
Officially, we will be one year in October this year. But we have had better time, which is the testing time for the product where we also had tenants and also landlords.
Measuring from the time you started till now, how would you rate the product?
Every time I wake up, the energy and excitement that pushes me out is amazing because when we came up with this product a lot of people doubted it. Many people said to us, no landlord will accept this partnership; no landlord will agree to collect their monies in bit. But today when I look back and see the grounds we have covered, it gives me joy. Like I said, we are here for the long haul. It’s not just a Nigeria problem, a lot of African cities including those in Ghana, Kenya collect rent upfront.
So Rent Small- Small is not just for Nigeria, our target really is Africa. We have identified a number of cities in Africa that will need this service, but we are kicking off with our country, Nigeria. The success story is good. For example, there were these two young guys from Ilorin who got a job in Lagos with a Tech Company, and you know, not having a relative to accommodate them here is a problem. They needed a place to stay and came to Rent Small-Small and we provided them accommodation. Ordinarily, they would have been expected to pay a year upfront. They are living in Lekki Phase One here and their work place is alas in Lekki Phase One, and they are paying a relatively small amount of money monthly.
Imagine there was no solution like Rent Small-Small. That means they would have lived far away from their work place, or travel every day, waste time in traffic, and all that. There are some people that travel as much as six hours every day to their work place. They wake up as early as 4am, waste man hours in traffic and of course low productivity. The time you would have used to be creative you have wasted it on the road and livelihood is affected. So, we are conscious of livelihood, and make sure that properties we put on our platform offer closeness to work place, have good space for relaxation and all that. We do a lot of vetting on our landlords and the properties. If we discover that a property brought to us does not offer good qualities for livelihood, we turn it down. Just as we have turned tenants down, we have also turned landlords down. In fact, it’s been a success story all the way and we are just starting.
