By Meghan Hall
Even prior to the current pandemic, renters across the nation facing cost burdens as rising rents continued to outpace increases in paychecks. This challenge led to the founding of Jetty: a technology-based modern security deposit alternative that has the potential to greatly shift how landlords and tenants do business. The Registry connected with Jetty’s Alex Vlasto on the national residential market and how new technologies—including Jetty—can ease the financial burden of renting on tenants.
As a financial services company, what is your current perspective of the national multifamily market to date?
From our perspective, we see a multifamily market that is increasingly embracing emerging tech. Executives we deal with are thinking about their tech stack more deeply than they have before and are more receptive to hearing pitches from proptech vendors. This trend is likely to continue, driven by both an increase in venture dollars flowing into the proptech ecosystem, and by a need for property owners to offer more tech-led solutions to renters in order to remain competitive and address the growing affordability crisis.
Even prior to COVID-19, housing affordability was a big issue for many renters. What are some of the biggest challenges that renters face today in terms of liquidity? How did these challenges lead to the establishment of Jetty?
Studies by the U.S. Census Bureau and the Joint Center for Housing Studies of Harvard University highlight three stark statistics: 40 percent of average paychecks go to rent, 80 percent of renters are living paycheck to paycheck, and 40 percent of renters have less than $400 in savings. These statistics highlight the real challenges faced by renters, who are struggling to meet move-in requirements and their ongoing rent obligations. It’s these challenges that were the driving force behind the creation of Jetty.
Jetty’s primary product is a deposit replacement service. For those who are unaware, what does “deposit replacement” mean? How does Jetty stand to benefit renters? Landlords?
Jetty replaces traditional cash deposits with a low-cost policy. Renters can pay for their Jetty policy either monthly or through a single, one-time payment. Both options dramatically lower their move-in costs. For property owners, Jetty helps to increase protection and reduce bad debt. We’ve seen a race-to-the-bottom trend where properties lower deposits to attract new renters. This exposes them to bad debt. With Jetty, properties can increase the protection they have on their units, while also advertising their property as “deposit free”. It’s truly a win-win product for both renters and property owners.
As the multifamily market continues to evolve due to an influx of CRE tech, what are Jetty’s goals for expansion?
With Jetty Deposit, we initially focused on addressing the affordability crisis at the point of move-in. We have since expanded the product to also enable renters to “unlock” their deposit at renewal, which helps increase liquidity during these times of economic uncertainty. We’re not stopping there though. As well as continuing to enhance Jetty Deposit, we are also developing solutions that help address the affordability crunch faced by renters as they struggle to meet their ongoing rent obligations. More on that to come soon!
As the market continues to evolve, what other types of alternatives to traditional cash and security deposits do you see making an impact? Why?
The market is continuing to evolve with a number of players now offering deposit replacement solutions. While there are differences in the way these various solutions are structured, at their core they share the same focus: to lower move-in costs for renters and to increase protection for property owners.
Why do you think—historically—property owners and landlords have been hesitant to implement these alternatives?
The initial hesitance to implement these solutions was primarily driven by a lack of understanding of how the products work and an unwillingness to embrace new technology. That has changed now though, and as the largest property owners and managers implement solutions like Jetty it is creating a snowball effect, which is benefiting the entire industry.
Is there anything else you would like to add that The Registry did not ask or mention?
It’s worth touching on legislation, which is starting to have a major impact on the deposit replacement space. Recently, Atlanta City Council unanimously approved a “Renter’s Choice” bill, which requires landlords with 10 or more units to give renters options beyond paying a traditional security deposit. With this new ordinance, residents will have the choice of either paying their security deposit in three monthly installments, or purchasing a deposit alternative through a third-party provider. Atlanta is the second city in the country (after Cincinnati) to pass this kind of law and this is likely the tip of the iceberg for legislators across the country.
