Rentlogic is a five-year-old, New York City-based tech startup that uses AI, machine learning, and local data to assign NYC apartment buildings with publicly accessible letter grades (A being the best). Prospective renters or owners can enter an address into Rentlogic’s website and receive the grade as well as detailed historical information about 1.1 million buildings, including previous complaints and violations.
The company yesterday announced it has raised $ 2.4 million in a seed round from Urban-X, Urban.Us, Kairos and Edgar Bronfman, Jr.
Rentlogic CEO Yale Fox spoke with Inman about what the funding round means for his company, how personal reviews of buildings online are inherently subjective, and how he hopes to paint a clearer, more accurate picture of the quality of properties based on objective factors such as building maintenance, cleanliness and city inspections.
Fox first got the idea for his company after observing how frequent the stereotype of the “terrible landlord” was in New York City. Read his thoughts below:
Inman: How do you feel about the money you raised?
Yale Fox: We’re really happy. When we started out a couple of years ago, there was nobody funding this type of technology and now there’s a little bit of a rush towards it. We feel like we’re in the right place at the right time with the right product. We couldn’t be hpapier.
Do you think the funding shows a greater interest in real estate technology across the industry?
I think so, for sure. Real estate tech was definitely a little bit neglected in the past. A lot of people would agree it’s an industry that could benefit from innovation and new technologies.
Why do you think that the real estate industry could really benefit from new technologies?
Tech is poised, and has been for decades, to change every industry. Real estate takes a little bit more time and it is a very different industry than a lot of other ones. It’s relationship-drive and location-driven but at the same time there are certain aspects of it that are inefficient. Increasing efficiency makes it, ultimately for businesses within the sector, faster and cheaper. It’s been a long time coming.
What do you plan to do with the money raised?
We’ve more or less perfected the product. There’s always room for improvement and new advances, but the sales funnel seems to be working. Our clients are very happy with the product. We’re going to be expanding our sales team, our tech team and our office team to focus on New York. We’re also starting to look at other markets such as San Francisco, Chicago and other markets we can expand to.
Where do you see Rentlogic going in the next year?
Right now, we’re just focusing on getting as much traction as we can. We want to be in different markets all over the U.S. and Canada. We are primarily focused on Tier 1 markets, but we are also looking at Tier 2. And ultimately, our product works in a couple of different ways. From a renter’s perspective, it helps them understand more about the building that they’re going to sign a lease in.
From a landlord’s perspective, we’ve noticed that the stereotype of a New York landlord often gets skewed toward the negative. It’s kind of like that in Toronto as well and a lot of other markets that we’ve looked at. You could be a landlord with 10,000 units, which could be 30,000 people, and something might happen in one unit and there ends up being a story in the news. Suddenly, the landlord is called the slumlord when they’re actually great members of the community who are providing a lot. What happens to all the other units that they’re doing a good job in? What we’re, effectively, doing is allowing them to show that they’re actually great landlords. We measure the quality of maintenance within a building.
That doesn’t mean that there’s going to be no problems. We understand that there’s going to be problems; most people understand that too. But it kind of represents that if there is a problem, it’s going to be taken care of quickly. In a city like New York, where you’re spending 50% or more of your paycheck on rent, people want to know more about what they’re getting involved with the same way you’d look up reviews on Amazon before you bought a product. Of course, the only difference is that we don’t have a user-generated component and we never will. Those are subjective and completely biased and your current experience is based on previous experiences. There’s a lot of flaws in user-generated review models.
We get our information from vetted third parties so our information comes from public data that’s collected from city inspectors who are often called to go in and inspect them and figure out what’s going on inside. There might be an issue that they’re responding to. But we often send our own inspectors to the building just to certify a building. We have a list of standards that we’ve built with real estate professionals, trade unions, policymakers, tenant advocates and pretty much every kind of stakeholder you can think of.
Those set of standards are built into an iPhone app and at the click of a button you can send an inspector to your building and he’ll go through it from the basement to the roof. It’s kind of like a pre-inspection, it’s a really great tool and it’s good marketing material for a landlord. It often gives them a credible defense that they’re doing a good job, which is often underappreciated.
The third kind of party that will be impacted by this are the brokers and agents, many of whom have businesses that are based on putting a renter in a building. They care about their reputation, they want to make sure they put them in a good place. But many brokers also want to be able to say that this building’s an A for $ 3,000 a month and this building’s a B for $ 2,600 a month and let the renter decide where they want to go. What we found with that is that renters trust the agent way more. Often in New York, you have an agent who’s doing a showing and saying everything’s amazing but people kind of learn that everything isn’t always amazing. At the very least, it manages their expectations when they go into buildings. People are getting rent that’s 20% or 30% less than the market but they also aren’t moving into a building expecting that if something’s wrong it’s going to be fixed within an hour which you would see in a luxury, white-glove building.
Transparency is, ultimately, something that everybody tends to want. The real estate industry, particularly rentals, has typically been a low-transparency market. Adding a little bit to it increases the efficiency and makes it a better community for everyone which is really what we’re here for. We want to start to change the conversations that happen around housing.
Where do you see AI going in the future?
AI is definitely a buzzword. There’s a lot of companies that say they’re using AI and machine learning and it makes data sciences that are really using it cringe. It’s definitely overused but for the companies that are doing it properly, we are nowhere near reaching its full potential. We’ve barely dipped our pinky toe in the water of what AI and machine learning are capable of. We’re going to see a lot of significant improvements in a very short period of time. If you want to be a part of that, you have to start working on it today. It’s just the beginning.