The app that finally makes paying your rent easier
Paying your rent is never an enjoyable task, but there is a new app making it easier—at least from a technological perspective.
Enter Boston-based Rentdrop, designed to digitize payments between landlords and renters, with no transaction fees for either one. Rentdrop’s app allows tenants to pay rent from their mobile devices, set up recurring payments, split rent, and report rent paid to credit bureaus. Landlords can see rent payment status from a handy dashboard. And the app allows for roommates to split rent payments—no matter how the landlord wants to collect—and coordinates direct deposit into a landlord’s bank account.
Cofounder Remen Okoruwa recently shared more with Fortune about gaps in the rental market and skyrocketing rents amid inflation.
The following interview has been condensed and lightly edited for clarity.
Could you share a bit about your professional background before launching Rentdrop?
I began my career as a management consultant at McKinsey (2011 to 2013) and explored roles in asset management and sales before launching my first startup, a data analytics consulting firm that I ran from 2016 to 2018. I then joined HubSpot as a product manager in 2019. This was a turning point for me, as it was here that I learned the craft of product management, met my current co-founder Ben, and also built connections with many of the investors that helped us launch Rentdrop.
What inspired the launch of Rentdrop?
I spent several years dealing with the frustration of living with multiple roommates, yet my landlords expected a single check each month. Paper checks in the 21st century. Really.
To handle this, I mastered the end-of-month “Venmo Shuffle,” sending Venmo payment requests and reminders to the roommates, depositing the funds into my bank account, waiting for funds to clear, then mailing the check and hoping it arrives by the first of the month. This process was time-consuming and stressful for me, so I wanted to build a better rent payment experience that makes sense for mobile-first renters.
On the surface, Rentdrop sounds quite a bit like Venmo. How is this app different from other digital payments apps on the market, and how will you get landlords (especially those who are notorious for still preferring paper checks dropped off each month) to adopt this method?
Rentdrop differs from payment apps like Venmo in several important ways:
1. Automation: We provide tools that landlords turn rent collection on autopilot. With Venmo, every month the landlord must manually request rent payments from all their tenants. And if those payments are late, then they must manually remind the renters to send the payment. For landlords with a portfolio of any reasonable size, this process is way too time consuming & doesn’t scale. With Rentdrop, we capture all the payment details from the lease and then automatically send these requests & reminders each month to all the tenants.
2. Fees: Many landlords have begun switching off Venmo due to the 1.9% fee they charge to businesses. The other apps charge even more (2.75% for CashApp, 3.49% for PayPal). While many landlords continue to collect rent using their personal account, they run the risk of getting caught and having fees automatically applied. And for a $2,000 rent payment, that means paying $40 to $70 just in fees. That can destroy the already slim margins that many landlords face. In contrast, we offer landlords affordable fixed-price subscriptions as well as a “pay-as-you-go” model that charges only 0.1% on payments received—nearly 20x cheaper than Venmo.
3. Send limits: For many users, apps like Venmo and Zelle will restrict the amount one can send each day to $500 or less. That means paying a month of rent can require multiple consecutive days of payment, frustrating for both landlord and renter. Rentdrop supports transactions exceeding $5,000, making us a snug fit for rent payments.
4. Payment flexibility: Our platform already allows renters the choice of sending rent to their landlord either via ACH bank transfer or a mailed check. And later this year renters will also be able to pay with either credit card, even cash. We believe that making it easy for renters to pay however they prefer is the best way to ensure landlords get paid on time. And because the app supports check mailing, we don’t need to sell landlords who want that piece of paper each month. Instead, we can win their Gen Z and millennial renters who neither own nor know how to use a checkbook.
5. Credit building: Renters using our app can report their rent payments to the credit bureaus. Reporting on time rent payments can translate to a credit score boost of 40 to 60 points in just six months. We believe renters should get more value from renting than not being homeless, and this is one way we deliver on that mission. This also helps build a path to homeownership, as Fannie Mae is now beginning to consider rent payments as part of its mortgage underwriting process.
The cost of rent has been a hot topic in the public conversation amid inflation and skyrocketing rents across the country right now. How would use of this app make a different in a renter’s life?
We know that for millions of Americans, paying rent at the end of the month is something they dread. While we can’t fix everything, we believe that our easy-to-use renter app combined with credit building functionality can help make paying rent feel less like a chore and more like financial health investment.
How is the company funded? Is it self-funded or have you reached out to investors? What has the financing process been like?
Last year we were able to raise a round of investment from a number of angel investors that we know, many of whom we worked with at HubSpot. We’re now preparing to raise a follow-on round of financing from institutional investors. While the current economy isn’t the greatest, we are excited by our prospects and the ability to build a meaningful company in this space.
Looking forward five years, how do you want to Rentdrop to grow? What kind of services do you want to add in the future?
We want “rentdrop” to be a verb people use when they talk about sending rent payments to each other. That means building broad usage and word of mouth across the country and in multiple rental markets. Nearly $500 billion of rent is paid each year, most of which is still either check or cash, so there’s a ton of opportunity for growth
As we scale, we see the product evolving to address more problems that landlords and renters confront. For example, we want to be the source of truth for renters who move apartments. Instead of relying on a prior landlord’s reference, why not hand over a record of documented on-time rent payments from Rentdrop? In a similar vein, we can help connect landlords with vacant units to vetted renters who have a history of paying their rent on time.
This is an installment of Startup Year One, a special series of interviews with founders about the major lessons they have learned in the immediate aftermath of their businesses’ first year of operation.