For landlords, monthly rent provides a predictable, reliable revenue stream—until a tenant moves out. At that point, it costs money to clean and paint the unit, get any maintenance work done, and then have the place sit empty until the next tenant moves in.
With the average monthly rent at just over $1,320 and with roughly 44 million rental units in the US, the average turnover rate of almost 47% represents a huge loss of potential revenue.
A startup called HOOF It! wants to reduce tenant turnover by rewarding responsible tenants with digital currency. The idea is that such rewards can incentivize tenants to behave well and treat their units responsibly—and, crucially, renew their lease—so that landlords face fewer repairs and vacancies.
TURNING THE TURNOVER TIDE WITH HOOF IT!
“Tenants control the behaviors that can make landlords more profitable, and landlords control the profits that can reward their tenants for desired behavior. I bring those two together on the HOOF It! rewards platform,” says founder and CEO Kelvin Cook. “It’s about enabling mutually beneficial financial outcomes for both landlords and tenants.”
After a year of research and development, HOOF It! plans to launch in the coming weeks. The platform will join a few similar products on the market: Bilt Rewards, Piñata, and Stake likewise serve as loyalty programs that give cash or reward points for on-time rent payments. (Bilt also provides points for rent payments made through MasterCard.)
With HOOF It!’s blockchain-based platform, landlords can pay as little as $10 per month to offer concessions that reward good tenant behavior. Landlords also can advertise their unit vacancies on the platform, starting at $1.99 per month. As they pay into HOOF It!, landlords can then convert that investment into cash or digital coupons for tenants, use it to cover turnover expenses, or leave it in the platform for future tenants.
While landlords can determine the behaviors they want to reward, HOOF It! recommends four top tenant behaviors: paying rent on time, maintaining renter’s insurance, passing maintenance inspections, and renewing the lease.
Landlords won’t have to go into the HOOF It! platform to award concessions to each tenant each month. Instead, they sign up for a subscription and define the good behaviors and their corresponding rewards at the start. Then, during the course of the lease, the tenants automatically get the benefits if they continue to meet the requirements, such as paying on time and renewing the lease.
The renters’ rewards include up to 50% discounts at local and national retailers—for instance, $5 off at a sandwich shop or 20% off at a pizza chain. According to Cook, the biggest benefits will be travel prices that go lower than deals typically found with online travel agencies. Tenants can redeem the digital coupons, which are non-fungible tokens that don’t expire, through HOOF It!’s site or app, or they can opt to get the cash value instead.
“It’s designed to help tenants stretch their paychecks as far as possible,” says Cook, who’s part of the Techstars Austin Accelerator. “It doesn’t take a lot to show tenants you care about them financially.”
Relatively small monthly concessions are also better, Cook says, than the larger one-time concessions landlords often offer, such as a month of free rent on a 12-month lease. In a report by Stake, one property owner found limited success offering the 12th month free, or 8% of the resident’s annual rent. The property owner switched to offering a 4% cash back reward on a monthly basis—half the previous concession. The owner then saw a 15% boost in renewal rates.
“Even though they cut the concession in half, the act of giving the concession to tenants on a monthly basis was enough to influence them to be better tenants,” Cook says.
Eventually, HOOF It! will have a database of tenants with proven track records, including timely rent payments (though property managers still will have to get applicants’ credit reports themselves). Also in the future, the company plans to provide tenants with leads on landlords and available units in their areas, while informing landlords of tenants looking for units of particular sizes and price ranges. Interested tenants and landlords then can connect with one another directly by messaging on HOOF It!’s app.
