Charles:
Welcome to another episode of the Global Investors Podcast; I’m your host, Charles Carillo. Today, we have Andrew Bowen. He serves as Senior Vice President of Strategic Partnerships at LeaseLock, an insurance technology provider for rental housing, focused on making housing more accessible by eliminating security deposits with their Zero Deposit program. Other services they provide include screening and fraud detection, and renters’ insurance. Prior to joining LeaseLock, Andrew spent 13 years at a leading real estate ERP software provider. For over a decade, his focus has been on the tools that help investors and operators of multifamily real estate drive yield by leveraging data and analytics more effectively. Andrew, thank you so much for being on the show today.
Andrew:
Absolutely. Pleasure to be here, Charles. Thanks for inviting
Charles:
Me. As I was saying before, you are the first person we’ve found this show in this deposit alternative realm. And but before we get into what you’re doing at Lease Lock, can you tell us a little bit about yourself, both personally and professionally prior to joining the firm and being where you are now? Sure.
Andrew:
So I’ve, I’ve been in multifamily real estate or rental real estate, basically my entire adult life. I, I started and really fell into the business as most people do by happenstance. I, I’ve been on the operations side. I started as a resident assistant in the dorms way, way, way back in the day. Got exposed to the rental housing aspect. It was privately owned, privately run. So I got exposed to it through leadership and have never really looked back since. I’ve, I’ve, you know, done every onsite position, including maintenance you can think of, and been worked my web through regional managers, asset manager. And then as you mentioned, I spent better part of 13 years at one of the larger software companies really focusing in on revenue management and business analytics was, was where my focus was there.
Charles:
So how did, I didn’t, I didn’t know about your background in property management. That’s that’s great because I think everybody owning or investing in real estate, especially apartment buildings, if they had some sort, it could be a month, a year, a decade, whatever it is in property management boots on the ground, I think it would give them such a different perspective of how the business works and really the realities are, which makes it easier being a passive investor, an active investor. And just kinda reading through maybe some of the underwriting and knowing what the pickout is, truth and failure. In the future, when you’re looking through these numbers, what did you see and what did you take away from being a property manager and taking like pretty much all those different roles under your
Andrew:
Belt? Yeah, to your point, it’s a very good point. I also am gonna caveat on that as well and say, I think everyone should actually go be a renter again about every four years. I had, I had the opportunity to do that a couple years ago when we were in between homes. And seeing it from that experience really opened my eyes to a lot of things. But what, but to answer your question specifically, what it really made me realize having now worked on both the ownership side and the, and the operation side, we often are dealing with two different business models. You’ve got the business model of investing in real estate, which is, you know, measured in years. You’re measuring it through yield and irr. You are, it’s very, I’m gonna say not high touch. It’s very relational as far as who knows who from getting a deal done.
Andrew:
But it’s not high touch with the residents at all. Whereas operations, I argue, is a hospitality business. It is incredibly fast moving. You’re dealing with thousands of things a day. It is incredibly high touch. You are knowing the most, sometimes the most intimate, the most intimate things about the resident’s life, which is a blessing and a curse in the same breath. But it really allows you to, especially once you start thinking from an asset management and op and an owner’s perspective, it’s no longer a number on a spreadsheet. You actually can really see the gears that turns that actually do drive, let’s say retention and how retention that is gonna drive NOI both through not having the vacancy loss, not having the turn costs, the more stable rent growth typically from that side of the equation too. So it’s, I I wish everyone could experience the business from both sides. ’cause There’s eyeopening openings the other way too.
Charles:
It, it’s funny when you’re looking at any type of perform on any underwriting, any type of investment memorandum from a syndicator, and we talk about all these big numbers, it’s tens of millions of dollars. We talk about all this carry all these, this, this fancy private equity talk. And if you really boil it down, there’s someone that’s making 40, $50,000 a year that is dealing with your tenants and your clients one-on-one. And if they’re not happy or they don’t pay the waterfalls, the splits, the acquisition fees, it just doesn’t matter ’cause you’re not gonna make money ’cause you’re not gonna make the property better. So I kind of find that interesting. It’s like you said, it’s very low touch when you’re on that private equity side, but I mean, when you are, when you’re there, you learn so much about what the business is and you’re dealing with people’s problems more.
Charles:
So I think as you go down the class ladder myself starting as a c class investor, my dad being a d class investor when he started, thank God out of both those, but to b it’s something where when you’re dealing with that, I think you, you’re getting a different type of tenant through all those and there’s a lot more, you know, I would always say like in C class, it was like rent collections, kinda like rent negotiation every month. You know what I mean? Where, you know what I mean. It’s, it’s in, like you said, you’re learning a lot about people as they kind of, you know, air their laundry, let’s say as you’re collecting rent. Yeah,
Andrew:
I mean, it, it’s, it’s one of those experiences, and by the way, I loved being an operator. Like, I, I, I have a very deep place in my heart for, for my operating partners, but you know, to your point, they, regardless of class, they’re, they’re, they become the counselor. I mean, they see the, they see the weddings, they see the marriages, they see the childbirth, they see all those things. And unfortunately you also see the exact opposite of all those as as well. And I mean, to the point on the, on the rent collections and everything else, yeah, I mean it’s, it’s a necessary part of what we do and to where you really began with like the 50,000 or $60,000 a year. It’s one of the things I love about the operations side. It’s, it’s one of the very few industries that I can think of that still exist where there is a path for someone without a college education to a six figure salary and, and leadership in, in organizations. And I love that about the industry.
Charles:
Yeah, it’s, it’s really powerful. It’s great. And people learning from that, the ground floor there, they’re able to, like you said, grow into different positions and with all these different management companies, which is something that’s not going away going into regional spots and really growing through any type of property management firm. So a lot of advancement there, which is awesome.
Andrew:
True. Very, very true.
Charles:
So let’s talk about what you’re doing now. Lease lock’s a very interesting business. You offer unique solutions. And I think one thing, I think over the last, in 2021, we had this record rent increases right throughout the United States kind of coming off, I guess during COVID at the end of COVID, depending on what your thought is on that. The, we had this double digit, some places 20% increases in rents, obviously not sustainable, but we had a lot of people that didn’t have 20% increases in income. And this is where we are now after having a lot more inventory put on the market. We find ourself where we are. What, how has lease lock, how does this work and what are the benefits? And kind of tell us a little bit about your history of what you guys are doing. Sure.
Andrew:
So the, the history of lease lock actually started when our Fast, we were founded in 2011. And it got founded literally ’cause our founder was going to rent an apartment, didn’t have, you know, the, the, the credit history that you ideally want necessarily and was forced to pay a pretty exorbitantly high deposit to pull his apartment. He goes, well there’s gotta be an alternative to be able to, to do this. So broadly speaking, what LeaseLock is, is a deposit replacement platform and we replace the deposits with insurance. And so it’s essentially lease insurance. But what makes us a little unique in the space, actually it makes us very unique in the space, is we don’t deal with the residents at all. We are a true business to business solution. We are ensuring the property and the lease at the property, not the resident. So we actually go through an underwriting with, with all the properties that we insure.
Andrew:
And then we are going to offer a series of coverage options, just like you would for your p and c. You might get a different, you know, deductible at a different premium. We would have the same kind of concept. And what we’re actually looking for is, okay, what’s the risk that we see in that asset Risk would be assessed by how many leases actually go to fulfillment, meaning they did an early term. What kind of renewal ratios do we see? What’s your delinquency you’re carrying? What kind of bad debt do we see on on that? What’s your screening practices? Those kind of things. And then what we’re able to do, and depending on the jurisdiction you’re in vast majority of jurisdictions, the cost I’m about to talk is passed on to the residents through pass flow are passed through billing. Couple areas can’t do that in, but basically every lease that is insured, most of our, our property owners and property managers use this as an opt-out program.
Andrew:
Meaning that when a resident is coming to you, you are assuming they’re going to be under the zero deposit program and paying the premium, they have the right and the option to do a cash deposit instead, like you normally would. We see about 80 to 85% take rates when that’s the way it’s actually played out. And then instead of holding a deposit at this point when the resident does move out and there are damages above and beyond normal wear and tear, or they left leaving rent past due, at that point, the owner can file a claim on it. And normally that coverage is anywhere between, you know, call it one to one and a half times the monthly rent. Whereas as I’m sure you’re aware, most of multifamily is kind of operating at about a $500 deposit. Now, maybe a little less in plates like Texas.
Andrew:
So for owners, it’s all about how do I get more coverage that’s more reliable to protect myself from bad debt that we really saw skyrocket during COVID that you actually brought that up. But from the renter’s perspective, we’re giving the financial agency back to renters ’cause they’re not having to come up with, you know, a one month’s rent or a $500 deposit that they don’t necessarily have and be able to put that agency back in their pocket so they can do with it what you want. And replacing that essentially with a small monthly fee that gets passed through on their, on their monthly ledger.
Charles:
Interesting. Okay. So you’re dealing a hundred percent with the property managers and if someone lease accepts that program, what would be the cost typically to a renter for using your zero zero deposit program? So
Andrew:
That’s a hard one for me to ask answer because it depends so much on what the risk on that asset does and the coverage level that’s chosen. But a general range that we’ve seen, I’ve seen premiums that are $15, I’ve seen premiums that are $35. And again, that really does tie directly back to how much coverage are we actually providing you. You want a thousand dollars coverage that’s gonna be a lower premium than if you’re getting $3,000 of coverage. And then obviously also the, the risk and really the losses that the property has experienced over, let’s call it the past two years, but generally 15 to 35 ish is gonna be where you’re gonna fall in somewhere in there.
Charles:
So coming from a landlord perspective here, it’s gonna be, the benefits are that I can sell it now with a zero deposit, I’m gonna have in most situations more money to pull from if there’s an issue. Are there any other benefits that are coming to the landlord on their end versus, obviously we know for the renter they’re getting a great deal here where they can move in really just paying their rent?
Andrew:
Yeah, so the, for the landlord, they’re getting a great deal too that I’ve really, I’ve been doing a lot of work on properties that transitioned in 2025. So all the properties that we looked at that were on the platform, and we’ve got probably about 750,000 units on, on the platform right now. But I looked at all the properties last year that left lease lock or really it’s not left lease lock, a lot of ’em stayed. I looked at all the properties that actually changed ownership during that timeframe. And during that timeframe, the, we, we preserved about $80 million in valuation for those folks by returning what would’ve otherwise been bad debt. And I think one of the major benefits to that was I also looked at that, okay, how did that compare relative to if there had been a standard security deposit that they offered in place instead?
Andrew:
I’m gonna round at this one. We’re actually gonna produce a white paper on this, but it was about a $50 million premium in valuation that owners were actually able to realize through actually transacting because they had the coverage in place versus doing the standard security deposit. So that’s a, it’s obviously a massive one. The second one that I would, that you also alluded to is, you know, you you, we actually, well our partners market it as a zero deposit program. So we see leads increase. We tend to see it’s not always the case, but we tend to see the application process be shortened from first contact to actual application dates. So they’re making the decision faster. The other one though that is becoming more and more of an issue, especially in states like Florida, in portions of, of areas around like Illinois and others, is the, the litigious nature of security deposits and security deposit mishandling is a, is a real issue.
Andrew:
And we are seeing groups even on, especially on the institutional money side, that are looking to systemically replace security deposits like in the state of Florida RA with our platform as opposed to continue to have that same liability. There’s a state bill in the House of representatives in Illinois that is really going to make, I mean security deposit are already very challenging in the state of Illinois because of how punitive the damages are for mishandling them. A lot of groups went to having just a flat move-in fee to kind of cover that backend. There’s a bill in the State House right now to eliminate those and make those illegal as well. So there’s a lot of interest in, in those areas. That’s the other one that I’m, I don’t like talking about because of the nature of it, but it is definitely a benefit to, especially to ownership.
Charles:
Yeah. And this isn’t just in tenant friendly states, in landlord friendly states as we’d consider Florida where I’m based. I mean, yes, some of the laws are more landlord friendly compared to other states, however, I mean, they are very strict on security deposits do not screw around in these states or how, no matter how landlord friendly you think you have to pay back twice in some of the penalties. I mean, you know, there’s a lot and you have a timeframe that you have to abide by. There’s a lot of regulations with it, the type of accounts you can keep it in and all this type of stuff. And yeah, so it’s definitely a huge thing. It’s also one thing I, you know, you never, when, you know, I passively invested in a lot of deals before mainly multifamily. And one thing of that is never talked about in the proforma right, is security deposits.
Charles:
It’s not put in there. And I think if you were a passive investor and you knew how little they are taking in security deposit without a program like this, I’m not joking a lot of these places it’s like you said 500, it’s like under 300 bucks. I mean, there’s move-ins like 2 80, 2 50. I mean that’s, you can’t even paint like, you know, <laugh>, you can’t even paint your kitchen for two. I mean, so it’s like if the amount of the amount of minimal deposits that are being taken in, I don’t think the actual end investors know about, they know about the rent and they know about the beautiful fixtures we’re gonna put in, but they really don’t know about the security that these people that are being signed up strangers are actually putting up.
Andrew:
Yeah, no, it, it, it’s, you make a really good point, Charles, and you’re right, it doesn’t show up on the monthly p and ls, it’s not showing up on the partner draws. It only shows up on the balance sheet and who knows who’s actually looking at that on a regular basis. But to, to your point, I, when I first joined LeaseLock, I, I went and I did a study on some of the national numbers that I had access to and I went back to 2010 when I was still running properties. And at that point the average security deposit, the mode anyways, the most common was one month’s rent. And I was being very generous last year and said that the mode was $500. To your point, I saw a lot lower than that or no deposit moves you in, all those types of things.
Andrew:
And what I’ve seen was during that timeframe from 2010 to that point 2024, we really traded occupancy for risk. So it was, it’s always a play to well waive the deposit because it’s not competitive in my market and I want to get, I don’t wanna lose that next lease. And by the way, that worked o over that 14 years, we went up about a percentage point in overall average occupancy on our nationwide basis. But bad debt went up by 2% as relative to revenue. So that one point of occupancy we had even extrapolating out the, the pandemic that one point of occupancy we bought cost us two points of actual revenue towards the bottom line that we’re realizing. And I think that’s one of the opportunities that our industry in general has is we, we tend to focus on easy metrics to measure and then extrapolate them to, in this case revenue performance occupancy is a great example of that. And I, like I said, I was revenue management for a very long time, so I’ve had this conversation a lot of different ways. But you being 96% occupied does not mean you’re gonna be 96% economically occupied. And at the end of the day, that’s the number that actually gets put in the bank and that’s the number you’re gonna build a valuation off of when you transact the transact the building. So yeah,
Charles:
That makes perfect sense. It’s something that when we talk about different, you know, you’ll have different banks and lenders and they’ll work off the physical occupancy, which I always found was silly. I mean it’s important to know that number too, but it’s also, they should be taking in consideration the economic occupancy as well. But it’s something that is kind of secondary, which I always thought was interesting in, in this multi-family realm. So let’s talk about someone in, you know, using this at their property. You know, what kind of due diligence is done by lease lock? You mentioned it before where we’re, you’re gonna be looking at some leases figuring out way of skips, everything like this. But what is the, are you doing due diligence on the renters or are you just taking historical performance on the property? How does that work?
Andrew:
It’s, it’s a great question. I’m glad you asked that. ’cause We’re the only group that’s, that there’s not a lot of groups out there that do this, but there are really two main models. There’s our model and then the other model is Asurity bond model where they’re dealing directly with the renters. They, they, the renters are in direct contact with them. They’re underwriting them directly, they’re charging them, they’re, we, it’s a whole different level. The simple answer for us is no, we are not looking at the renters at all. Like we actually do not know who they are. We don’t know their what you’re, you know, whether you or approved or approved with conditions and all that is actually intentional on our part. We, we also look at this from the goodness, from a renter perspective and being able to provide that benefit.
Andrew:
So when we’re looking at evaluating, this is where we, I mean, you’re talking to a tech vendor, I’ve gotta use the word the letters AI at some point in this. So this is one of the two spots that we use the artificial intelligence in our platform, and that is truly doing the underwriting and the understanding of risk. So we are gonna look at how do properties in your neighborhood behave? And by, by behave again, I mean like, are the renters typically fulfilling their leases or do we see a lot of early terms for any reason? What are the delinquency trends that, that we see? What are the bad debt and the write-offs that we see? Again, I mentioned renewal retention is another one that’s big on there, but then we’re also gonna look around the whole area as well. So we look, we do get an an API into the source property management system that sends us this historical data.
Andrew:
So we’re not, we’re not dealing with anecdotes, we’re actually looking at the actual performance on a lease level. And then we’re also looking, okay, how does that property behave within its subset? So the subset, you said you’re in Florida, I’ll just pick Orlando for, for, for the case here. You know, we’re gonna look at, okay, if your property’s in Lake Mary, that’s probably gonna ha, that’s probably gonna behave slightly differently than kissy. And we’re gonna actually then look at, okay, well how does your property behave relative to the other properties around us? And what that kind of gives us a picture of is what are your operational expertise or for your operators, you know, methodologies to it, someone who is leveraging a lot of technology to prevent fraud and do document verification, all those kind of things that is more than likely going to result in lower skips and evictions, lower collections, all those types of things.
Andrew:
So the premium tends to be less expensive for the coverage options on properties like that. Conversely, you know, if we see the opposite on there, it’s probably gonna be a little bit higher. But much like your, you know, your car insurance or your PNC, we do re-underwrite every year. So it’s, it’s really fun to actually watch takeovers where we’ve gone from one property management that has had some challenges, I’ll say to another one that’s really got things dialed in and you can just watch it just improve. And it’s really fun to go in the next year and say, Hey, your premiums are coming down, or if you want to keep your premium the same, we can get your coverage up to X in, in that regard. But it was all done through API through through our system. And then once we’ve got that again, that’s when we, we come back to owners and, and provide the different options that they can, that they can choose. Residents are not choosing what option they’re saying either I want to participate or I don’t, but they’re not getting to choose, well, I want 2000 coverage versus 1000 coverage. That is all an ownership decision and is never really well not discussed with the, the president at all. Yeah,
Charles:
No, that’s great. It’s great because if you’re going into any individual property, it’s like applying for insurance with anything else. I mean, you can be a safer driver, you can be, you know, you can take care of yourself better for life insurance, whatever. It’s, so you’re not just saying, oh, you’re in this, you’re in this city. This is, this is what the book rate is for that. They actually go in there and see, and obviously you can increase that. So we take over, it’s not gonna look that great. And then maybe year two, year three, we’re getting a a discount slightly because of our operations, hopefully. And and what’s happening. One thing you mentioned there, which is very interesting, which I know is one of the services that you guys were also offering on your website. So anybody that’s involved with multifamily, we had so like for instance, we had a property, we have a property outside of Atlanta.
Charles:
We weren’t really harmed with it. I had some past investments that were in Atlanta and skips were a huge thing and that was through really screening and like, just, just a lot of ID theft. And then when we look at reports from a deal that we have in Dallas, it’s probably one third, I just looked at it probably a day ago. It’s like one third are skips, right, of people that have left the property. So obviously that’s gonna be something that’s dynamic with everything that’s going on with, with government and what they’re doing you know, ICE and everything like this with your demographic of who you’re renting to. But also the other thing is that we saw with the fraud and the ID theft, that’s something that I think we can control better. So tell us about what you would do when you’re looking at these renters, because what you’re doing reviewing is also assisting, I would imagine the property managers on who they’re renting to and making sure it’s actually Joe Smith. Joe Smith. Yeah,
Andrew:
So, so part of our, part of our website we’re referring to is we’ve got a risk alliance with several other providers that are partners of ours in difference in different areas. And this is one of those areas where one is a partner with us. We, again, from a lease lock perspective and a lease insurance, we actually do not look at the renters at all. In no way do we actually look at them. We don’t see anything about them. Now with that said, we’ve got a couple different groups that we work with that, and, and I’m gonna try not play favorites on here, so forgive me if I end up playing a favorite. But you know, one of the groups that we work with on the single family side a lot and some of the smaller ones is a group called aply and Aply is their, their their screening process throughout This does use the technology that really is looking for both synthetic fraud, which is basically just documents that are created, et cetera.
Andrew:
But then the non-synthetic fraud as well, which is, you know, matching some sometimes simple as does everything that’s actually on the driver’s license match what the mag strip on the driver’s license says, and does that actually match what they gave you when they came into tour versus when they came into apply, which when they did, they did all those types of things. And it’s, it’s critical. I mean, it is, you know, again, my, my, I’ve got a little inside track. My son actually works for a screening provider in the industry called Approved Shield based outta Texas. And they’re another one that has done a really good job leveraging both the combination of technology that we can use today where, you know, if you tell me you’re a gig worker and you you’re an Uber driver and you make whatever it is, well I should be able to look not just at a transcript, but electronically into your bank statements to be able to see, okay, yeah, every week there’s a deposit from Uber on there. And then, then using the human concept of like, okay, let’s go and actually do the background checks and if we have to walk into a courthouse to actually do that. But yeah, fraud, fraud prevention, and especially the document management and the document verification is such a big deal right now. I mean I don’t wanna promote her, but if you really wanna go see how bad it is, go on TikTok and look up the approval queen for $400, she’ll move you all the way in.
Charles:
Yeah, it’s something that we just added on. I just had a meeting with it. So for it, it’s literally two or $3 per verification. We’re using it and it’s a link slash QR code that we provide. And it goes through, apparently as I speak to the verification companies, the barcode is extremely difficult to fake. So what they’ll do is we’ll help people that go through a whole verification process when they show all over the back of their id, it fails, you know what I mean? So it’s like if you’re a landlord, any size you can have access, obviously it’s gonna be a lot less expensive per person if you’re doing this with a large hundred unit building. However I mean, we’re spending less than two bucks and you can pay an extra dollar a 50 or something like this and it’ll go into, I guess there’s 39 different states that allow you to go in and actually verify all the information on the ID back.
Charles:
But like right off the bat, before you even spend time on the phone with someone for more than three or four minutes, the first thing before they even get an application is, Hey, here it is. Go through it. You can do it on your phone. You can even put in there, hey, proof, you know, proof of address POA as well. You can have ’em upload that and it’ll verify it for like 10 cents more. But I think these are like, and those are one-off, there’s no monthly fees with a lot of these services. So I think people out there that no matter how big or small they are verifying who these, you know, that the person is actually the person before you start doing any type of money spent or time spent on the background check or, you know, that’s just my thought of what we’ve been doing over here.
Andrew:
Yeah, it’s, it’s, you know, I I I follow the REITs pretty closely listening to their calls every, every quarter and you know, one of the things they’re finally getting on the back end of is the bad debt that kind of COVID helped create some of the, the moratoriums LA is still an issue, but, you know, one of the things that they actually credited pretty universally was exactly what you said was, you know, adding the technology to be able to quickly and easily at the early stages of the game, verify that the person you think you’re talking to is actually the person you’re talking to, whether that’s in front of you on the phone chat, whatever it is. And to your point number one, these are transaction based costs, so it’s only gonna cost you when you actually do the transaction. So if you’re full, you shouldn’t be doing many of those transactions. But the insurance level that that provides relative to, I mean, I was just going through another client’s, you know, numbers where I’m seeing, you know, bad debt from people who were evicted recently of, and this was built, this is a build to rent that I’m dealing with. But I mean, they, their, their balance due at at move that’s $18,000. I mean, it’s, it’s easily worth that investment. Yeah,
Charles:
No, no, definitely. For sure, for sure.
Speaker 3:
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Charles:
The other thing is, when we’re talking about any type of insurance, I think it’s always everybody has, okay, so we know what it, you know, cost, we know how it works, where it’s business to business where we have the property manager and you working together. Can you tell us a little bit about, now let’s say landlord has found out that there’s damage to a property, someone skipped, whatever it might be. Can we just kind of break down, what would that be, that request reimbursement process for landlords and property managers?
Andrew:
Yeah, absolutely. So we, we do, so the way our platform works is, again, we wanna make it good for renters. Renters first and foremost, either through a waiver platform or through the lease itself, depending on the operator, they’re, they still know that they’re responsible for all charges due at the end of end of the lease. You know, th this is not gonna a get outta jail free card. But let’s say they do move out, they’ve got $2,000 in past due rent and $700 in damages above and beyond normal wear and tear. And for the sake of this conversation, let’s say you have a $3,000 coverage limit at that point again, you’re talking to a tech provider, I gotta use the word the letters AI again this is where the ai, this is where the other focus for us with AI comes in.
Andrew:
So we use OCR technology to where your property manager is going to after 30 days. The, so the tenant has 30 days to make it right on day 31 post move outs. That’s when a, when a claim can be filed, it’s all done through a centralized dashboard. So whether it’s the property manager or a centralized team, they, they can do it that way. But they literally, they, they take the final account statement, they’re gonna take any pictures from the damages that were above and beyond. If there was eviction paperwork we needed to deal with anything, we need to adjudicate the lease or the, the claim, they upload it in into the system, whether that’s scanned there or they take it outta their document management platform and just, and send it to us that way. The AI then goes through and says, great, I see $1,000 in month in month one, $1,000 a month, two for rent.
Andrew:
I see carpet, I see damages, I see filings. And it literally lists out everything for them of what it believes the claim should be. They then quickly review that to be able to say, yes, I agree no they got this number wrong. No, this isn’t the right category. Those kind of things gets it right the vast majority of the time. And then they hit submit claim and that goes to our, our claims adjustment. We do everything in house. So our policies in house, we do ev we we we adjust in house. We don’t send any of this stuff out. Claims are normally adjudicated within no longer than five days. That was our average in 2025. We, we get that assuming we got all the, the stuff we need. Those claims are, are adjudicated. We say, Hey, this wasn’t eligible or this was, we pay that out.
Andrew:
We pay over 90% of the claims that are submitted. And then depending on whether we’re set up with an a CH payment or whether we’re actually cutting a check, it is absolutely not unusual at all. In fact, it is the norm that owners are typically having funds in their bank account about 10 days after the claim was filed. Well I should say, lemme put one clarify on that, Charles, 10 days after we have all the necessary items to adjudicate the claim, you can file the claim without having the pictures, anything else submitted in that point. And they have, I mean that claims window goes from day 31 post move out to day 60 post move out. So sometime in that time window is when they’re going for that. I’ll take to the next question. I typically get at that point, well what happens if I’ve got $3,000 in in coverage, but they leave with $5,000 worth of worth of past rent, it is insurance.
Andrew:
Once we pay the 3000, you can’t go after the resident for that 3000. And if you do and you capture it, you need to send that 3000 back to us. Or that’s, that’s insurance fraud <laugh>. But that other 2000, if you want to go after ’em, that’s all, that’s all your, that, that’s up to you. We do not subrogate we don’t go after the residents for it. We believe that if we write the if we underwrite the risk, well we should be able to cover that, which we have. And we, we do obviously and I, the way I would put it is like you commented earlier on the car insurance of, you know, you’re a bad driver, a good driver, et cetera. And you’re right, we, we treat different properties that way. But when we think about the property itself, it’s much more like health insurance where you and I might have the same health insurance because we work for the same company. Me having a wife who’s a breast cancer survivor, I had a heart condition. Those things I guarantee I would’ve cost more to the insurance company, but we would still have that same cost ’cause we’re spreading the risk over the bigger platform. So insurance wise, it’s kinda the way it works on a property by property basis. Yeah,
Charles:
Yeah. No, it’s for the tenants, it’s like health insurance. I’m saying more like on that yes, for the property I can clean up our collections, we can tighten up our screening, you know what I mean? We can really invest into it and the people that are gonna see it is really gonna be a year down the line. And when we start seeing, you know, better t twelves and then also when we’re dealing with a company like yours where you guys are like, wow, you guys have really made some progress here. We can shave a few dollars off here and there. Which is obviously helps everyone, especially when it goes over so many different units.
Andrew:
Yeah. And that, those are, those are the fun conversations to have <laugh>.
Charles:
Nice. As we were before we wrap up here, I have one question and it’s something else that goes kind of hand in hand with what we’re doing here. Something that we require with our tenants. When I became a landlord, we never did require renter’s insurance, but it is something that we do. And I think the biggest thing with it, it’s not really the damage per se, it’s really the liability, especially like with people having dogs and everything like this. Let’s talk about a little bit about renter’s insurance. I know it’s something that maybe it’s an ancillary service that you might offer through another vendor, but how can we bundle that together? Yeah,
Andrew:
So I mean with, the way to think about it with renter’s insurance is, renter’s insurance is going to cover everything that happens during the lease. We’re covering the le lease lock’s. Insurance isn’t, is covering everything that happens after the lease is completed for what, for whatever reason, whether it’s finished or they were early term. But they’re very much hand in hand. You’re right, it, it is, the renter’s insurance is all about the liability that’s, that’s in play. That’s why you have have it really in there. ’cause Then there’s no coverage for the renter’s items required. They obviously can get their own items covered, whereas we’re really thinking about it on from an after lease. So again, it is, it is all about the totality of the risk mitigation picture. We talked about screening. That’s mitigating your risk before a resident even comes in and moves in renter’s insurance is, is mitigating the risk while they’re an actual resident with you.
Andrew:
And then the lease lock, the zero deposit lease insurance is mitigating the risk of the bad debt once they leave. So when you think about all those together, that’s really the way to think about it. And then of course they’re depending on the size of the organization and how much they want to invest in it, you know, insurance is, is, is a highly regulated industry, so there’s not an opportunity to do a commission share with an owner operator on an insurance policy unless that owner operator also has an insurance license and insurance division. And that’s where it does come in. So when you get to some port, some scale within that, a lot of groups do start thinking about, okay, how do I bring the insurance in-house and at least be able to, to participate in the commission share. Yeah,
Charles:
No, I think the big thing is that as a landlord requiring it, because I don’t think people understand they haven’t been renters, like you said, very often that are probably investors are operators of these properties. And I think the other thing is that renter’s insurance is covering liability on, you know, everybody within that unit and also the visitors. So you have a family, you have a couple visitors that come over once in a while. Maybe you have a party maybe you have dogs, maybe you have guests bringing dogs over. This is a lot of liability. I mean, you have millions of dollars of liability inside this one unit and someone paying a few hundred dollars, $200, $300 a year to cover a quarter million dollars or whatever it might be of insurance or whatever your require, your minimum requirement of liability is. It is a no-brainer of requiring it for your tenants to buy where they can buy it for such a small amount. And just that you can easily make it available, you know, as a property manager, I think is just a no
Andrew:
Brainer. Yeah, I mean, you can make it available. You can’t require them to use a specific insurance provider on it. But I mean, both my boys are renters right now. They’re 24 and 26 and I think the most expensive renter’s insurance policy between the two of ’em, I think it’s $12 a month and it’s covering, you know, over a hundred thousand dollars of liability insurance on both of it. It, it’s can is something that every renter should want as well, because again, it’s gonna cover their liability in, in that as well. So I I, I can’t think of too many large professional management companies that still allow renters to move on without renter’s insurance. It’s pretty much become the standard and and professionally managed stuff. Yeah.
Charles:
And then as that, as that renter too, you can, if you’re living in an area that’s maybe flood or hurricane proof or prone, you know, for an extra dollar two a month or something like this, you can tack on all this other stuff that you might want to make you feel more secure. So one of the things is as we’re wrapping up here, what would you say are common mistakes you see multifamily real estate investors make regarding kind of leasing and technology as a whole? We went through a bunch of it, we’re onboarding. Is there anything else that maybe you see dealing with being on the ground to where you are now? Yeah,
Andrew:
I’d say the, the biggest one, because I saw this in the, in the notes in in the question, and I’m, and I’m, I’ve given a lot of thought. I think the biggest one is thinking that technology is gonna take the place of people in our business. I, I think technology, and again, I’ve worked for technology companies for a long time, but where I really truly see technology is making the lives of the people either more effective and more efficient. But you’re not gonna see these massive headcount number changes. Even as people start talking about centralization and specialization, sure, you might see a 10 to 15% overall difference, but especially when it comes to housing, it’s, it’s, it might not be the biggest financial decision that someone’s gonna make from renting versus maybe buying a car or something else might be a bigger financial one-time decision.
Andrew:
But it is one of the most impactful emotional decisions and lifestyle decisions. And I think that at some point people still want to have that personality involved with it. So the, the, the caution I would give folks is definitely way technology and definitely explore it and definitely look for where it can drive efficiencies in your organization. I really caution people against the, Hey, we’re gonna have a completely personless office being run, you know, completely by technology. But I hear it being sold a lot in that way, and I do pe I do see people trying it, but I, I think that’s where I would caution people against it.
Charles:
Yeah, that makes perfect sense. The other thing too is if you’re finding a new property manager or looking for one make sure that they already have some technology that they’ve implemented, you know what I mean, into what they’re doing, that will make it much easier for you to really use that for your property without really learning all the nuts and bolts of it yourself.
Andrew:
Yeah, very, very true.
Charles:
Andrew being on the ground, being a property manager, being everything, and now being in the zero deposit program, what are some of the main factors that have contributed to your success over the years?
Andrew:
<Laugh>, it, it didn’t contribute to my early success. In fact, it got in the way of my early success. And now that’s why it’s, it’s part of my success now being very willing to say, I don’t know, and go learn. And like I said in the beginning, I wasn’t willing to do that and, and thought I knew it all and have learned that, oh no, I, I I I don’t know anything. But also understanding that this is such a amazing industry that is one of the smallest multi-billion dollar industries on the planet. You know, especially on the operations side. Everybody kind of knows everybody, but it’s also an industry that is very willing to lean in and develop people if you’re willing to be developed. So I mean, that, that, that was probably the biggest thing for me was being, was being, was finally breaking down and being willing to be molded by the people who wanted to mold me into where I was going.
Charles:
Fantastic answer. How can our listeners learn more about you and your business? Sure.
Andrew:
So I mean, the best way to learn about the business is going to lease lock.com. I know it’s probably everyone was gonna guess that was gonna be the answer that’s in play <laugh>. You can always, I’ll certainly reach out to me either on LinkedIn. I’m really active on LinkedIn from a thought leadership perspective. And then also my email is Andrew Bowen, which is BOWE n@leaselock.com. Happy to answer any questions anybody has on that. Those are probably the best two
Charles:
Ways. Andrew, thank you so much for coming on today and looking forward to connecting with you here in the near future.
Andrew:
Appreciate It. Charles.
