COVID-19 did more than force us to stay indoors – it also shattered the fragile financial lives of millions of rent-payers.
Unlike homeowners and buyers who have added to Canada’s sizzling real estate market, renters, who on average spend between 35 per cent to more than 40 per cent of their paycheque on rent, were more likely than homeowners to have lost their jobs during the pandemic. This meant that renters, with no cash on hand, were forced to make tough decisions – like choosing between rent payment or food. Landlords could not necessarily waive or defer rent, as the majority of Canadian landlords are small “mom and pop shops” who simply don’t have access to capital that is available to large corporations to float any losses.
“Many landlords would face bankruptcy after only three months of not receiving rental payments,” Karthik Manimozhi, CEO of LetUs by RentMoola, pointed out during an interview. Seeing his father overcome financial struggles as a young teenager in India, Manimozhi understands this struggle all too well. It is no wonder that reconciling the gap between renters who couldn’t pay and landlords who couldn’t allow non-payment of rent was a priority as the government developed its pandemic relief programs. The problem, however, is that such relief programs, while necessary, cannot be permanent solutions and will be cut off far before many tenants are able to pay rent.
Thankfully, a burgeoning field of “fintech” entrepreneurs, such as Manimozhi, have long since recognized the problem between rent collection and rent payment and have built creative solutions to help alleviate the issue.
Fintech is the merging of technology with financial services to deliver better services and different financial tools, such as bitcoin. While most of us focus on “proptech” and competitors to Realtor.ca, fintech is truly the revolutionary force in real estate.
Fintech entrepreneurs are changing how money is collected, managed and analyzed for the benefit of the end-consumer. For example, LetUs by RentMoola streamlines tenant screening, rent collection/payment and tenant insurance management in one secure and easy-to-use platform. However, the company’s “360 degree payment solution”, in my view, is its most important feature because it helps tenants avoid defaulting on rent while also helping landlords from defaulting on their mortgages.
How? It allows tenants to use a wide variety of different payment methods to pay rent, from bank transfers, debit, credit, digital wallets, cash, eChecks, pay by text and more, plus the ability to access a line of credit to pay rent. As Manimozhi observed years before masks and closures were a part of our everyday lives, “rent has been a major spend of a family’s income – what if the family loses their job?” Before LetUs by RentMoola, there were almost no solutions to help a tenant pay rent if they didn’t have cash on hand. Yet, as Manimozhi notes, there are a lot of flexible financial solutions that help people buy nonessentials such as luxury cars, clothes and shoes. Why not offer the same financial options to something much more important – rent?
Karthik Manimozhi is leading this ambitious plan to improve the lives of millions by leveraging his company to improve their financial literacy. “People’s lives get so impacted by the asymmetry of information in financial literacy…If you help improve someone’s financial literacy, their lives improve. We have a bigger mission – that’s why I’m doing this,” he says. This is a lofty but necessary mission, but Manimozhi is no stranger to creating order in chaos.
A native of Chennai, India, Manimozhi was hand-picked out of Citibank India to be one of the first to participate in Germany’s Green Card program for the highly skilled. Through the program he started at SAP Europe, where he managed, built and repositioned various software enterprises across the globe. It’s through this role that he noticed that people across nations and cultures have more in common than not. We all want to have security of food and shelter, and only after these basic needs are secured can we focus on building better lives, communities and a better world. This is why, after building billion-dollar companies in America, Manimozhi shifts his focus on creating a company that offers one of those universal basic needs – shelter.
While my conversation with Manimozhi spanned many useful insights, such as how to think about risk and his key principles that lay the foundation for a great company (after all, he’s built and exited successful businesses more than once), the most interesting insight is how he thinks about talent. “There are many smart, talented people who were never able to showcase their talents – I was one of them!” As such, Manimozhi doesn’t evaluate potential hires on what schools they attended, but rather their intent.
This can’t be taught. It’s because of this focus that in his company of 50 people, 30 languages are spoken, half are women, and the overwhelming majority are visible minorities. The traditional “checkboxes” are leaving some of the best talent behind, and smart leaders are hiring them and giving them the skills to thrive.
Manimozhi’s leadership approach is similar to the philosophy behind LetUs by RentMoola – giving a hand up and not a handout to the renter and the landlord.
It is leaders in the fintech space such as Manimozhi who, I believe, will democratize access to shelter and make renting more inclusive. This revolution couldn’t happen soon enough, as highlighted by the pandemic and the fact that homeownership and the ability to pay rent is nearly impossible for many hard-working Canadians.
Natalka Falcomer is a lawyer and Certified Leasing Officer who started her real estate career in private equity. She created, hosted and coproduced a popular legal call-in show on Rogers TV and founded Groundworks, a firm specializing in commercial leasing law. She is currently the president of OJO Home Canada where she’s leading the development and expansion of the company’s personalized homebuying and selling experience for the Canadian market.