By Meghan Hall
In booming commercial real estate markets markets, renting space — whether multifamily or commercial — can be daunting amidst increasing rental rates and credit requirements. TheGuarantors, an up-and-coming insurtech platform, is working to connect landlords and potential tenants to make the approval process easier. In the last year, TheGuarantors has solidified more than 4200 million in rent guarantees and deposits for multifamily product, and has more than 150 million square feet of commercial space available through its Securiti platform. The Registry spoke with TheGuarantors team about the idea behind its business and how the platform is revolutionizing the CRE and insurance markets.
Please tell The Registry a little bit about the beginnings of TheGuarantors. Where did the idea for the program initially come about?
In many cities – especially those with high rents – high income and credit requirements are necessary in order to be approved for an apartment. Upon moving to New York from abroad to attend graduate school, our founder and CEO, Julien Bonneville, experienced this friction firsthand when he was declined by a number of landlords. He felt there had to be a way to help otherwise qualified (and desirable) tenants connect with real estate professionals and property managers who desperately wanted to do business with them. The answer? Bring together experts in the areas of finance, technology, insurance and, of course, real estate, to develop tools that could remove the obstacles and identify opportunities involving quality prospects while also protecting everyone’s investment.
What specific pain points in the real estate industry did TheGuarantors seek to solve?
In 2015, TheGuarantors launched with our flagship Lease Guarantee product, which helps previously unqualified and potentially risky renters gain access to apartments, while still protecting the landlord’s bottom line. We quickly grew by providing a depth of underwriting knowledge, customer service and technology to create a modern leasing experience for renters and landlords. We have since rapidly evolved, utilizing data and a deep bench of risk, real estate and finance expertise to offer customized programs for both the multifamily and commercial real estate space — all completely free for landlords.
Can you explain — briefly — how the program works for users?
On the multifamily side, Guaranti gives landlords, owners and operators protection while providing access to renters who otherwise may not have been approved for an apartment. The renter can be referred by a landlord or broker through our online dashboard or apply directly on theguarantors.com. Our underwriters then thoroughly review their application and qualifications. Since our coverage is dynamic, it can be customized based on the renter profile and situation.
Our commercial product, Securiti offers landlords enhanced protection, while freeing up cash and credit capacity for tenants. Businesses (tenants) can apply directly on our website, or be referred by their broker or landlord. The business then goes through a detailed underwriting process to determine their rate and pays a small annual premium.
In your opinion, what does the insurance market look like in the U.S. commercial real estate market today?
There is much that can be said about the overall insurance landscape in the US real estate market, though one trend we have seen — and are a part of — is the increase in innovative ways insurance is being applied to landlord risk. In some cases, there are new risks that demand new types of coverage. For example, with growing adoption of smart technologies, buildings are becoming safer and less prone to events like pipe bursts, but the additional hardware and technology also makes them more expensive to insure.
At TheGuarantors, we are identifying new ways of solving old pain points, first addressing the outdated and often inefficient process of forcing commercial tenants to use a security deposit or letter of credit during lease signing. We worked with landlord partners and leveraged internal real estate expertise to create Securiti, the smart commercial deposit, versus simply pulling a standard surety bond product off the shelf and applying it to commercial leases. While the concept of a surety bond isn’t new, applying it to this market need is. We expect that as more insurtechs look to address market opportunities in real estate, they will also seek to develop user-centric and industry-specific solutions.
How effective is TheGuarantors at connecting tenants to landlords, and how have issues regarding insurance and financing complicated that relationship in recent market Cycles?
We are unique in that our landlord, broker and tenant relationships are equally important to our program and company’s success. We attribute our positive reputation to the fact that we have been able to leverage all of these relationships to create a seamless end-to-end experience for anyone involved in the leasing process. Since we are a trusted resource to all of these parties, our decisions are made — and products developed — with their best interest in mind. For example, recent rent reforms in New York (limiting prepayment and extra deposits) and California (making it more difficult to evict renters) have changed the landscape for renters and landlords alike. Our products are created with the best interest of landlords and renters in mind, so all parties come out a winner.
How has this relationship evolved thanks to the widespread use of CRE Technologies?
With the adoption of CRE tech in general, landlords, owners, operators, and brokers are increasingly more open to innovation and change. They’re learning that insurtech — specifically in real estate — is not a one-size-fits-all solution and can be customized based on market needs. They look to us for innovative solutions, and we’re able to work with them to meet these needs.
TheGuarantors recently announced the hiring of Hans Nordby as Chief Strategy Officer. What do you think Nordby will bring to the table, and what specific strategies is the firm working on with Nordby to continue to drive innovation and expansion across the Company?
Landlords, brokers, tenant groups and others are increasingly looking to us to develop better solutions to old industry problems. Hans has the experience, relationships and leadership to do precisely that. We’re looking forward to leveraging his commercial expertise to grow awareness and adoption of Securiti and deep relationships to further our success in the residential space.
What challenges does TheGuarantors face in its growth?
We are Introducing new solutions to old problems, but also addressing new obstacles as they arise. Like any product without a track record, this requires an adjustment or trial period. Showing and proving success in NYC (a notoriously competitive market) over the past four years has helped us build trust with our partners nationally as well. As we grow in the commercial space we may see similar obstacles, but expect our deep relationships and early success to speak for itself.
TheGuarantors was also recently selected as an InsurTech 100 Company by Fintech Global. Why do you believe that TheGuarantors was deserving of such recognition?
We’ve not only witnessed, but also contributed first hand to the pivotal shift the InsurTech and real estate industry is experiencing. In the past year — even with changing industry conditions — we have completed our Series B funding, re-branded, built out our current product offerings, launched a new product and successfully expanded nationally. We’ve proven our market-fit and others recognize that as well.
Looking forward, how does TheGuarantors plan expanding its status as a risk expert and innovator in the industry?
We’ll continue to provide tools, products and solutions that can change with the market. Our vision is to be the “go-to” most trusted brand for insurance products and financial solutions throughout the real estate industry (servicing every real estate professional, resident and corporate tenant alike).