LeaseLock: Eliminating Security Deposits for Property Rentals

Reichen Kuhl, Founder & CEO, LeaseLockReichen Kuhl, Founder & CEO
A stellar credit score and the ability to pay a full year’s lease amount failed to get Reichen Kuhl an apartment in New York City. Reason: He had earned less than 80 times the monthly rent of $3500 as proven on his prior year tax return as part of an income requirement to secure a lease, and was asked to secure a co-signer who had earned $280,000 the year before. Stung by the experience, Kuhl thought, “Security deposits and co-signers are a poor version of self-insurance for rental property owners and managers in terms of loss.” While such mandates turn away qualified renters, they hardly protect property owners from rent defaults. Reichen visualized the possibility of replacing security deposits and co-signers with insurance. The largely unexplored idea that had the potential to revolutionize renting and leasing of properties, was supported by an insurance consortium, marking the genesis of LeaseLock—an insurance technology firm. For defaulted leases backed by LeaseLock insurance, rent would be paid by LeaseLock until the unit was re-rented. LeaseLock helped its first customer—a woman with a new job and solid income who had ended up living in her car with her two children. “Renters pay very little for a LeaseLock, but following a default, the property owner recovers the entire amount that would otherwise have been lost, unlike with security deposits where property owners are forced to endure a considerable loss of rent and cost of damages to a unit,” remarks Kuhl, founder and CEO, LeaseLock.

Renters select a LeaseLock property online, apply as normal and if required to pay extra security deposits, are offered the option to pay for a LeaseLock for instant approval. When conditionally approved (payment of extra security deposit or finding a co-signer), renters are automatically offered the ability to be quickly accepted to lease the unit by applying and paying for a LeaseLock. LeaseLock analyzes profiles from multiple dimensions with data provided by the property and the renter to offer instant decisions in many cases. For example, LeaseLock scrutinizes the financial backgrounds of renters, their bank statements, spending patterns, and other information provided through its proprietary system.

Renters pay a small monthly fee that gets their lease approved while protecting the property against any loss from lease default and damages

While the credit score of each renter is also checked, Kuhl mentions that LeaseLock’s assessment is not solely based on it. “Many people with low credit scores actually pay their rent before other bills,” he mentions. Once an applicant’s profile meets the criteria, LeaseLock begins issuing insurance certificate to the property. Faster underwriting, Kuhl opines, allows property management companies to approve more leases while prospects have the highest intent, resulting in greater revenue. Furthermore, “the policy indemnifies all rental owners and property managers for damages in the apartment and/or rent payments that were not paid,” states Kuhl.

The solution creates a situation where every stakeholder wins. With renters having to pay a small monthly fee instead of an expensive upfront deposit, moving into the property becomes faster, easier,and less expensive. LeaseLock has gone a step ahead to allow applicants to pay for the LeaseLock program in six or twelve installments, which reduces out-of-pocket expenses even further. Owners and management companies are able to approve renters perceived as high risk with LeaseLock backing rent payment and damage losses.

LeaseLock’s incredible value proposition for both renters and property managers has resulted in over 50 nationwide multifamily portfolios enrolling with the product. Greystar— the largest property management companies in the U.S. with over 400,000 units under its management—has leveraged the services of LeaseLock to accelerate lease conversion and eliminate losses across it’s nationwide portfolio.

Despite becoming a household name in multifamily housing, LeaseLock sees itself as a startup. The company is committed to enhancing its underwriting process, risk analysis, and business intelligence to continuously reduce prices for renters while helping property managers maximize occupancy rates.