To start today’s episode, Jason Hartman reads an article from the Kiplinger Letter about the future of the economy and inflation. He shares his thoughts on the rising interest rate and what Trump will do to light the economy on fire. Afterward, he talks to John Simpson, CEO and corporate cheerleader of Rent Reporters. John shares the benefit of Rent Reporters to the tenants and landlords and the statistics that back the Rent Reporters business model.
Announcer 0:00
This show is produced by the Hartman media company. For more information and links to all our great podcasts, visit Hartman media.com.
Announcer 0:12
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it on now. here’s your host, Jason Hartman with the complete solution. Real estate investors.
Jason Hartman 1:03
Welcome to the creating wealth show. This is your host Jason Hartman with episode number 774 774. Thank you so much for joining me today and Happy New Year to one and all to all of our listeners in 164 countries worldwide. We thank you so much for joining us and continuing to support the show. You know, we’ve been doing this for what about 12 years now, since the old days of podcasting, and this grew out of a terrestrial radio show in Los Angeles, California, on Charolais and our show is actually now syndicated on what is it I believe, 18 terrestrial radio shows. You can hear him on there too. But of course the podcast is really a better medium. It’s so convenient, it’s on demand. It’s just a fantastic medium, because it is an amazing time to be alive and it is going to be an amazing new year. Now, gosh, so much going on. We’ve got a new presidential administration coming in a massive sea change in the economy, in tax code in real estate. And I think it’s going to be a very, very positive one. The only thing that is concerning me about real estate now is that interest rates have spiked up, and there is some talk that they may spike up more. Now, you you need to understand Of course, please go back, go to Jason hartman.com. and type in the three dimensions of real estate and start reviewing the old podcasts on that subject. The three dimensions of real estate because that could not be more important to understand. And we are going to be diving deep into this topic at our upcoming meet the Masters event in Irvine, California, which is just Oh, less than three weeks away. So go to Jason hartman.com. Get your tickets. That is filling up fast. In the hotel room block by the way, for the discounted hotel rates expires on Friday, we were able to get it extended one last time after we bagged the hotel yesterday. And of course after you register all the hotel information as well as the discount room booking link will be emailed to you so that you can get your room but reserve your rooms by Friday. We got a copy of the rooming list and we know that many of you who have registered have not yet reserved your hotel room. So please be sure that you do that right away very, very important. So one of our listeners Aaron sent me a recent issue of the Kiplinger letter which I used to subscribe to years ago and I don’t subscribe anymore but I maybe I’ll renew my subscription again and and get back onto this because it’s just got some really good quick bites the Kiplinger letter. This is a famous letter that’s been around for years. I remember when I was a kid growing up in Los Angeles, California, I used to see my mom Subscribe to it. And so I remember reading this as a kid, you know, it’s been around a long time. You know, it just talks about a couple things I’ll highlight for you real quickly before we get to our guest today, which by the way, our guest today has got a really interesting product or service that you may want to institute for your tenants. It first when I was pitched on the idea of doing this show, you know, I thought, well, why does the investor care about this? This is really for the tenant, you know, if an investor has to spend some extra time or thought energy on this, why would they want to do it, you know, you’re going to see this is the carrot and the stick that can really help with your rent collection and getting rent paid on time. So I find this to be pretty interesting that’s coming up in a few minutes with our guests here and we will get to that and, and by the way, my new microphone arrives today, hopefully. So I’m really looking for To better sound quality in the new year, I’ve struggled with sound quality in my podcasts for a couple of years because I’ve been moving around changing things and and this time in my new place in the tax free state of Las Vegas or of Nevada sorry. I am setting up a cool little studio here. Look for improved sound quality in the new year. That’s that’s our prediction. Okay, the Kiplinger letter. So a couple quick bullet points, the economy will be on a sounder footing paced by healthy wage and job gains that are fueling relatively strong housing activity, as well as retail sales, including cars and trucks. And you know, I have predicted and talked about that, how Trump is going to cause wage growth. But that leads to what it leads to inflation. The home run for us real estate investors. Yes, we love inflation. Don’t we? Okay, Kiplinger says GDP growth of about 2.1% versus only 1.6%. Last year. He’s they say wages will rise by 3%, on average, from 2.5%, as the labor market continues to mature and tighten, and boy, I’ll tell you, with the trade policies and the border protection policies of the Trump administration, that’s going to be a lot better than that. So look for increased wages, which are going to be lead to that’s going to lead to stronger rents, upward pressure on rents are going to be quite dramatic, I believe, and upward pressure on prices. So really, it’s going to be just a banner year I think for real estate investors. Again, the only fly in the ointment that concerns me is the higher interest rates. But remember, when I talked about the three dimensions of real estate, that actually is a good thing. Long term. And I do want to point out to our listeners that when I got into the real estate business as a kid, interest rates were, you’re ready for this? Are you sitting down? Yeah. 14% Yes. If you wanted a mortgage, you paid 14%. But you know what? People were actually pleased with 14% mortgage rates. You know why? Because it’s all relative, right? They were coming down from 1618 and even 20% 20%. Can you imagine mortgage rates of 20%? No, I know that’s so far back in history. You know, nobody can imagine it right? Okay, inflation. According to Kiplinger, overall inflation will pick up it will increase to 2.5% from 2% in 2016, largely because of rising gas prices. The Quarter rate, which excludes food and energy, edging up 2.3%, a 10th of a point higher. Now, of course, those are the official stats and we all know how understated they are because we’ve done many episodes on that in the past. So there we go, look for higher interest rates, look for interest rates to climb in 2017. There is your urgency for your need to be expanding your portfolio to get in on the lower rates. They already have bumped up, hopefully, we will see Trump put some pressure on Janet Yellen, our wealthiest, supposedly Fed chair with a net worth coming into the Fed of $13 million. Just a little side note there. I wanted to mention to you look for interest rates to climb in 2017, with the Federal Reserve poised to hike them twice and possibly three times spread out throughout the year. Now, when we talk about the three dimensions of real estate Remember, it’s actually good news. But but but but here’s the problem ready. There’s a lag time and adjustment time. And the adjustment time is what really gets people the adjustment time, the lag time. That is the time that kills dreams and discourages people from their big plans. And that is the time you got to watch out for. Okay, that is the time that kills most investors. And when we’re at meet the Masters, we’re going to talk about how to deal with that adjustment time quite a bit as we talk about trumping omics and federated omics. That’s going to be a major part of my keynote at the upcoming meet the Masters event. Okay, so we’ve got that, but here is some great news. This is going to be one of the Trump things that just lights the economy on fire. It’s going to be awesome. with Trump bullish on tax changes, and the GOP controlled Congress, odds for tax reform couldn’t be better. That’s what Kiplinger says, odds for tax reform couldn’t be better. The last big revision on taxes 1986 back in the Reagan era, and remember the Tax Act of 1986. That was a big one huge changes. So here’s what they say we expect lower tax rates, coupled with fewer deductions and credits. So in other words, that means a simplified tax code. Hallelujah. Thank God, oh my gosh, that’s gonna be awesome. Okay, that’s gonna be really, really awesome. Trump wants to consolidate the individual rates to three, just three, okay, you know, uncomplicated the tax code 12% 25% and 33% at the federal level, wonderful. That would be great. That’s a step in the right direction for sure. on business tax rates, including c corpse, okay? It wouldn’t surprise us to see a top rate of 25% also look for lawmakers to provide relief from estate tax and maybe even kill it. So that means inheritance. You know, you can you can pass on your estate to your heirs with either lower taxes or maybe no taxes. So we’ll see. Republicans vowed to act fast on a tax overhaul, possibly enacting changes as soon as next year, even given the magnitude of the proposed modifications. By the way, remember, on our last episode, when we got on this huge tangent, there was a giant two big tangent I know I apologize. Some of you love that. And some of you I don’t know. I just kind of think you don’t like it but you keep telling me you do so we will always be mindful to moderate our tangents but We’re still gonna have a few of them. Because I do get some positive feedback on that. Remember when I talked about thinking and holding, you know, two opposing thoughts, and we talked about smoking, and we’re like, what does this have to do with real estate investing? Well, it has to do with life. It has a lot to do. And we talked about how smoking actually has some benefits. Now I don’t smoke. I think smoking is disgusting. I hate smoking. I hate it when people smoke and they ruin the fresh air. I just can’t stand it. But, you know, there’s so much of this talk about fake news and about Russia hacking the elections? Well, on a future episode, we’re going to take a little bit of a dive into that, because I’m actually going to say that if Russia hacked the election, that could actually be a good thing. And it’s not because of the outcome of the election directly, but it could be a good thing for peace. Yes, for peace. Wow. How j Could you possibly say that it’s a good thing that a foreign government would hack the US elections? Well, because it’s an opposing thought. And I just want to give you the counter argument as weird as it may sound, I’m certainly not for that. I don’t want Russia hacking our elections. God, no. Okay. By the way, Garrett Sutton is returning to speak at our meet the Masters event. And we’ve got some other great speakers that we are going to announce very soon. And we’ve got a new format for this event. I’m totally excited about this new format, where we’ve got breakout rooms. Yes, this has been asked for for many, many years. This is I believe, our 19th meet the Masters event. You know, we used to do it twice a year. So the count is a little off there. But we’ve got breakout rooms and we are going to have them for our local market specialists so you can meet with them, and really, really dive deep. Through their presentations into what they have to offer, we are even going to do lunches. This Sunday lunch is planned in breakout rooms. So you can just choose what room you want to go into. And you can have lunch with whoever you want to have lunch with. So a new format, it’s going to be very exciting. This is going to be our best meet the Masters yet. It’s going to be our biggest meet the Masters yet. And we’re just looking forward to seeing you there. Jason Hartman calm. Click on the events section at Jason Hartman calm and get your ticket for meet the masters. It’s going to be an awesome one. And we will look forward to seeing you there. Let’s get to our guest and let’s talk about how to improve your rent collection and make it easy and help yourself and your tenant at the same time. Here we go. It’s my pleasure to welcome john Simpson to the show. He is CEO of a very interesting company. That is kind of Blazing a new trail, and it is called a renter reporters. Now, as you listen to this interview, I want to, I want you to listen with two different mindsets. One, the mindset of a tenant. And since the tenants are our customers, as real estate investors, listen from their perspective from our customers perspective, but also, you may have followed the advice I’ve talked about before that if you are wanting to or living in a high end home, you may be a renter as well, because you know that the rent to value ratios are very favorable for the tenant in the higher end properties. And many of our listeners live in high end homes that they rent, and then they own a lot of lower priced properties that they rent to other people. So you can listen from two perspectives and two mindsets to this interview. JOHN, welcome. How are you?
John Simpson 15:56
I’m well Jason, thank you so much for having me today.
Jason Hartman 15:59
It’s good. Have you on give our listeners a sense of geography? Where are you located?
John Simpson 16:03
We’re sitting in Southern California. We’re in Pasadena is where we’re headquartered.
Jason Hartman 16:07
Yep. Beautiful area. high taxes, but beautiful. I love Pasadena. I used to be a Southern California guy myself. So what is rent reporters? And Was this something you discovered or something you created?
John Simpson 16:23
I wish I could take credit for the for the brainchild I originally was brought to this opportunity as an investor. I sat on the board for many years. I joined a CEO six months ago. But as most most good ideas are generated by others, and not me, but this is a this is a terrific one I wish I could take credit for
Jason Hartman 16:43
So tell us about what is the idea. I mean, credit reporting for renters for rent payments. That’s not on a credit report. Right. How did this come about? And what does it do?
John Simpson 16:56
The challenge for renters, you know, there’s 100 million renters in the country that 40 million, many of those who are credited invisible. And for the further for the rest of us who have mainstream credit that ends up on a credit report. So our credit cards, our credit card payment history, our auto loans, if we own the house that it ends up on our credit report, but tenants get left out in the cold that doesn’t have any mechanism. There’s no mechanism for that to reach their credit report. And so the idea was, wouldn’t it be wonderful, wonderful if we could help empower that tenant to really get the credit, if you will, all Pun intended for their on time rent payments. And so we serve as a middleman. Our tenant hires us, our customer hires us to go validate that rent that they’ve paid over the years with their landlord and then report that to the credit bureaus.
Jason Hartman 17:50
So the landlord then is now saddled with another task or they have to report rent payments two to three months. Your credit bureaus Is that how it works,
John Simpson 18:02
so that we’re facilitating that process. So we’ll follow up with that landlord on a monthly basis or quarterly basis, depending on what that landlord would like. We’ll be rolling out an online portal where they’ll be able to do that directly online. But yes, they’re gonna be validating, say, yes. Jason paid his rent in the month of October on time.
Jason Hartman 18:23
Hmm, interesting. I would assume that landlords would kind of object to that by saying, Hey, what’s in it for me? Why do I care about this? But you you had some good explanations for that when we were talking off air. So, you know, why don’t why don’t you talk about that?
John Simpson 18:38
You know, when I first came in as an investor, that was one of my concerns was really, yeah, we understand why the tenant would want to report their rent, but we still need the participation and the cooperation from the landlord. And that was a concern of mine. But what we found the vast majority of the instances it 95% or more of the time, the landlords are perfectly happy to call And they see this as an incentive for their tenant. I mean, the whole idea is that we have a customer that comes to us who’s incentivized to pay their rent on time. And so that’s a good thing for landlords to to reinforce. But it is a process that exists in the world today, as I shared with you earlier, that if a tenant is buying a home, it’s it’s a standard part of the mortgage application or underwriting process to actually validate the rent they’ve been paying over the last two years. So this was not not a brand new concept in terms of when we’re when we’re reaching out to a landlord. they’ve dealt with this process for entirely different reasons. But, but the vast majority are really just happy to help their their tenants and are glad that they care.
Jason Hartman 19:46
Okay, so take us through the mechanics of how it works like I assume that the landlord has some kind of account on on your website, and then they go in and whenever they receive rent every month, They just log that, hey, the rent was on time the rent was late, or maybe some other things that they might say about their
John Simpson 20:07
rent payment. Yes. It’s a very straightforward process. Really, we’re just we’re asking a very simple question, once we’ve actually gone through the credentialing process of establishing the landlord is indeed the landlord. That happens one time at the very beginning of the relationship. And then it’s just, it’s just confirming, was the rent paid on time? It’s a yes or no. And if it has not been paid on time, then we determine how many days based on when it was due, how many days it might be late, but the the again, it’s, it’s very unusual for our customers to actually be late because these are the incentivized renters.
Jason Hartman 20:44
Now, that is the big incentive. You just set it. Why would a landlord care if the tenant improves their credit report by you know that the landlord is going to think, well, I’ve got an extra task, I’ve got to do something else, right. But that becomes a lever of motivation for the tenant to to be a good tenant to pay rent on time. Right? That’s powerful.
John Simpson 21:11
Absolutely. I mean, there’s the carrot and the stick. The carrot is they want to improve that credit score the stick is they certainly don’t want to undo all the good things they’ve done. They’re very accountable. Very, very accountable.
Jason Hartman 21:22
Okay, fantastic. Well tell us more about how it works. I assume there’s no cost. Well, I hope so. But I don’t know maybe it would be worth paying a little bit for this because you’ve got that leverage to get the tenant to pay on time.
John Simpson 21:38
How do you make money so this is entirely again, a consumer facing model. This is not we’re not burdening the landlord with any costs in this process. What we really want is for them to cooperate and help us validate that rent. So the customer is paying us for an initial verification and we’re able to report up to two years of rent history. All at once, and we’re at the same time reporting how long they’ve been a tenant. And if you think about what impacts someone’s credit score, it’s the length of your credit history, your payment history, and the type of credit. Those are the top three factors in determining one’s credit score. So the the rental, the rental trade line is a housing trade line is the most important trade line you have it’s, it’s the same again as a mortgage. So there is that initial,
Jason Hartman 22:34
it’s likely the largest payment the tenant makes, I mean, likely their car payment is lower, the credit card payment is lower. Their you know, student loan debt is lower, probably than their rent payment. It’s the biggest payment they make. Right?
John Simpson 22:48
Absolutely. I mean, with our customer base, you know, it makes up about 60% of their income. It’s It’s It’s the most significant payment in their financial life for sure. So yes, we’re able to go back and really when you think about is that initial look back, that is particularly powerful because we’re putting that significant amount of history on a credit report all at once. And as little as you know, seven days, 10 days, and then we’re continuing then on a monthly basis thereafter, to follow up and verify that rent so that customers paying us for that initial signup and look back. It’s 9995. And then for an on on an ongoing basis, it’s 995 a month for us to continue to validate and verify those rent payments and then report them to TransUnion. Okay, so
Jason Hartman 23:41
tell us a little more about how this comes about. Oh, and it’s only TransUnion by the way, is it not Equifax and Experian, sorry.
John Simpson 23:51
Yes, the top three. So right now we’re reporting to TransUnion. We’re in the process of finalizing a reporting relationship with Equifax that shouldn’t we’re hoping To report that in the next couple of weeks, and Experian, we’ve been in conversations with for quite some time, the consumer initiated credit reporting model is a relatively new a new animal for the credit bureaus. And so it takes time to to make them comfortable with the process surrounding it. Because really the world as we know it in credit, is that it’s the creditor who is reporting those that history and a consumer is not initiating that process like they are
Jason Hartman 24:33
right in the in the this time the consumer is coming in saying please report me, because I’m not getting credit for all this rent. I’m paying I mean, listening to you makes me think I would love it. If you would go back to my last two landlords and tell them to report my rent payments. Heck, I made them all. And I’d like them to report them. Oh, they, they would improve my score.
John Simpson 24:56
What we’re particularly motivated by is if you go to our website, At www dot rent reporters calm and you look at our success stories they’re very prominent and we post a new story about every three to four weeks. And it’s you know there’s you think about that hundred million of renters in the country. And you really it’s amazing how many people have no credit score or they’re actually invisible and to have the opportunity when you when you think about mainstream financial products, we forget about the world of payday loans and we think we forget about those who don’t have access to the credit products that perhaps you and I take for granted. Being able to get a you know, a airline point credit card, or being having access to traditional auto loan financing. And if you look at our success stories, you can really see how we’re changing people’s lives and giving them access to to the credit world. It was so ironic and in that space is that Those who can afford credit the least pay the most. And if you follow the world of payday loans and people get caught into these cycles of debt they can’t get out of that would be difficult for anybody to get out of. But just by reporting their rent, they become a legitimate mainstream consumer, with access to all these great financial products, obviously, that we want to help them use responsibly. But that’s really what you know, what gets us really excited, is about for giving people access when they’ve been doing everything right. But without us, they can’t even get into the credit world. It’s one of these things if you don’t have it, you can’t get it. As a renter we can help.
Jason Hartman 26:45
Yeah, no, it’s it’s it. It’s like that that first job we all try to get when we’re a teenager. Well, hopefully when we’re a teenager, you know, you won’t be you won’t get hired if you don’t have experience, but how can you get experience if you never get hired? Right? Same thing with credit. And then that’s true. So this is great because now a landlord when they run a credit report, they can actually look specifically at rental payment history, right? Is that available as a specific line item? Or is it to really too early? And also, how old is this company?
John Simpson 27:19
So we’re working. So working backwards with this we’ve been reporters is, as was formed about three and a half years ago. But no, you’re absolutely right, that landlord will be able to see the trade line, the specific trade line and the payment history for that tenant. They’ll be able to see any lates but going back for a full two years, that’s the credit history we’ll be able to show of what their what their payment cycle was month by month.
Jason Hartman 27:45
Fantastic. Okay, so, two years back, can you get old landlords to do it? How does that all work?
John Simpson 27:52
It Again, we can go to the current landlord when we can report the full two years of payment history and but now landlords generally are very, it’s, it’s it really is surprising in many respects, because we’re taking up someone’s time, but they’re very cooperative. And if they remember that they had this great tenant, they’re generally very happy to help. And we’re able to report that additional history as well. Right now, we’re mainly focused on just the going back that two years of so will our customers will add a landlord from, you know, maybe 18 months ago, but it also matters just in terms of how long they’ve been a tenant at all. I mean, how long that that history will show up, not just the payment history, but how long that trade line has been open. And for many of our customers, that’s many, many years we had this. This customer call us about five weeks ago now and called to cancel. And our customer service team called to say you know, in my customer being the tenant, right, I’m sorry, the tenant, called to cancel. It’s our customer team, customer service team. followed up to say, you know, oh my gosh, what happened? Was there a service earlier? And they said, No, I’ve been a tenant for 15 years in the same house, and I paid cash. For my my rent every single month, I had no credit cards. And I was with you guys for 30 days, and I just bought my own house. Because if you and we were able to take someone from no score at all, this was a fairly amazing story. And we’ve still been trying to understand some of the particulars of it. But she ended up with a 710 credit score, enough to qualify for a for a Fannie, Fannie Mae underwritten mortgage, or guaranteed mortgage rather. It’s really it’s just really quite spectacular. Have you think about, again, the things we take for granted but if you’re someone that’s on the outside of that system, I can’t imagine what she feel being able to buy her first house. I mean, that must have been a fantastic feeling. Yeah, that
Jason Hartman 29:55
is that really is this this I think this is a great idea. I Love this. Okay, so how much time I assume the time on the landlord’s part is the probably the biggest obstacle, the biggest objection? How much of their time will it take to do this to do this reporting of rental payments.
John Simpson 30:14
So in the very first in the very first contact, we may in terms of just as I described the credentialing process, it’ll probably take, you know, three to four minutes to go through a series of questions. But after that, it really, it should be seconds. And not minutes. It’s a very again, it’s just saying, did Jason pay his rent on rent on time? And the answer was, yes, the vast majority of instances very straightforward. And if they if Jason hasn’t paid his rent, they say, I haven’t received it yet. But there’s no additional action and then the following month, we’ll follow up and say, Well, did Jason pay his rent? How you doing that? Is it an email? Like they just click on an email and say yes, No, maybe we interact with the landlords in any way that they want to. So we can do that via text and a reply to text. We can do that through a landlord portal that will be coming out at the end of June where they would literally log on they’ll be they’ll see all of their tenants and just click paid paid paid.
John Simpson 31:18
They’ll be able to do it by email or by phone.
Jason Hartman 31:21
Okay, interesting. in setting up the account, the landlord setting up the account, how much time is that going to take them to do that?
John Simpson 31:27
That’s really the three to four minutes. In the very first there’s nothing for them because they’re not the one having to establish the account. The tenant is the one doing all that legwork for them. They prove the tents providing us everything. Their lease, our tenant
Jason Hartman 31:40
says I rent the property at 123 Elm Street. Here’s my landlords email address, email them and have them set the account up on there and probably write something like that.
John Simpson 31:52
Yes, so they’re providing us the the least start date the amount of their rent the date it’s due the landlord’s email address or phone number as you suggest And then we reach out to that law landlord and said, Jason hired us to verify his rent. He says that he’s been renting for this period of time, and that he paid his rent on time, up through October. Is that accurate?
Jason Hartman 32:16
Yes or no? Okay, good deal. What if the landlord owns multiple properties? Is it three or four minutes for each account, I could almost see a landlord that likes this idea, sending an email to their tenants and suggesting that they set up an account, right?
John Simpson 32:32
That’s very common for us. And it’s really that interaction we have with that landlord is again, still going to be very short if they’re if we’re doing it for a list of 10 or 50. We have some landlords, where we’re reporting 1000 tenants and they’ll actually just send us a file every month. We’d actually don’t interact directly with that landlord. But one of the things we offer landlords is opportunity to essentially serve as a brand ambassador. And they they there’s a revenue share. So there’s there’s a direct financial benefit to that landlords for helping refer us or introduce us to their tenants. And then they get $20 for every customer that signs or for every tenant that signs up rather. And then they also have the benefit of the of the carrot and the stick in terms of getting those that monthly rent paid on time.
Jason Hartman 33:22
Yeah, I think that carrot and stick cannot be underestimated. I think that’s pretty powerful. This is an interesting idea. What else do you want people to know, maybe just any questions I haven’t asked you.
John Simpson 33:31
Because you think about you know, we as we think about how credit impacts people’s lives, it’s far broader than people understand, you know, in terms of just off the cuff. If you look at a relatively small action on the part of the Fed to increase interest rates by a quarter point, that’s going to hit it credit cards directly by that same quarter point. And when you look at the what the average consumer who has debt has $15,000 in credit card debt. And that quarter point makes such a difference and what but what you can do when you take some score and you move them from six to 670, they’re in a different interest rate world, you look at the impact on a car loan, and you move someone 50 points from if I move someone from 650 to 690, that can cut their auto loan interest rate in half. And so it’s not just you know, as I spent so much time talking about, well, those that don’t have access to traditional financial products really need us. But really, every everyone benefits from a higher score. If you’re someone carrying debt, whether it be an auto loan, credit card debt, or you’re trying to qualify for that mortgage. higher score just matters.
Jason Hartman 34:50
Yeah, and right away he will your fate. There There is another this is a carrot for us landlords right if you can help your tenant Cut. They’re very burdensome on many tenants, because they’re at the lower end of the credit scoring spectrum. Many times, if you can help them reduce their expenses and reduce these, you know, almost you serious interest rates that you see, especially in the really lower levels, then they can afford to pay you more rent, and they won’t be pressed every month. And, you know, this could ultimately although it’d be impossible to measure, increase, increase rents. I mean, it could, you know, it can allow people to afford more expensive homes or, you know, allow the landlord to bump rents more aggressively than they might otherwise be able to do or just get their rent in the first place. Because your tenant is not so pressed every month, because they’re paying exorbitant rates on their other debt. So there’s a lot of really interesting aspects to this. I think it’s, I think it’s a great thing. One thing I didn’t ask you though, john, is, you know, rent is is a little more complex when it comes to maybe reporting it in the sense that with a car payment either paid the payment or you didn’t if you made a partial payment, they probably gonna stick it in suspense and not give you a credit for it until you make the full payment. Right. But with rent, you know, there can be complexities like, well, the tenant, they paid on time, but they didn’t pay me all the rent because they’re claiming that you know, they have the right to withhold 100 bucks because something needed to be fixed and you know, it gets a little a little more messy, would you agree and and then how do you handle like security deposits are in good condition? Are those things reported at all? Or is it strictly the monthly rent?
John Simpson 36:46
It is strictly the monthly rent and we really don’t experience many instances where where we’re having to reconcile if you will, a hold back. Again, I think those are customers are very muted. They’d have to pay their entire balance and they don’t want there to be any other any other footnotes to it because when we report that trade line, it’s saying they, you know, they owed $1,000 last month did they pay it? And it’s it is a yes or no question. There’s an obligation and not in that idea of offset that you’re introducing really doesn’t come into play. The obligation is $1,000 a month?
Jason Hartman 37:25
Yeah. And now there’s a greater motivation to pay it because they know it’s being reported. So good stuff. JOHN, what else do you want people to know?
John Simpson 37:34
I want you to tell a family member or friend because it’s you know, there’s very few things in life where you’re really able to do something great for somebody and really pass on a tip that will really impact their financial future and and for even for those who are the lightning on the landlords that are listening, they have a family member relative friend, that they can tell you know, they can tell the rent reporters story too. They’ll be doing them a great service. And, you know, we’re here to serve and we want to have the opportunity to do that much more good for that many more tenants. So if you can tell someone, go to reporters calm, we’d be super appreciative and so will that person you tell?
Jason Hartman 38:14
Excellent, excellent stuff. One other question. I just wanted to have you go back and share some of those stats that you shared at the beginning. And this is all like your business plan and how you see your market as a company. How many renters are there and you know, just any other stats that might be interesting to us investors? I think that’s that’s
John Simpson 38:34
fascinating. So when you think about when you when I was considering joining as an investor you know, the size of the market very much matters in the rental market is 100 million tenants in the country. That’s just a tremendous market and you look at you look at the competition, for for quality housing, the competition amongst tenants to get the apartment they want is significant. The the shocking statistic for me the hundred million that makes sense, it’s big. But it’s easy for me to understand what’s harder for me to understand is the large percentage of that hundred million that that remains credit invisible. And that doesn’t mean having no credit score. Does that’s many millions more. These are people that don’t even exist in the credit system.
Jason Hartman 39:24
There’s no 3040 million or something
John Simpson 39:26
40,000,040 million people in the country. That’s amazing. Amazing.
Jason Hartman 39:32
Yeah. So So some of the tenants you’re dealing with, they don’t even have a credit report. And that’s, that’s really dainty, you know, that’s very unsettling when you’re a landlord to not be able to have a file on them when someone applies. Right,
John Simpson 39:49
exactly. There’s the social aspect of this is, you know, when you think about, there’s all the things you do in life and how many of them are really impacting the social good. We’d like to think that we’re all You know, trying to better the good for everyone in some small way every day. But when you when you look at the way that the credit sim system has been constructed in this country, it’s heavily tilted for those who could otherwise qualify for a mortgage. But if you find people that are out that haven’t been able to get to that mainstream, mainstream credit system, they’re just waiting to get mugged on the financial block. And there’s because there’s plenty of money out there to lend in hard money situations for those who are outside the credit system, and they pay you serious rates that nobody should have to endure. And the problem is, once they get caught in that cycle, they never get out. Or at least it’s extremely difficult to get out. And that’s the piece where I just it’s just extraordinary to me in terms of how such something so small of taking what you’re doing every single month, paying your rent could actually transform someone’s life.
John Simpson 41:00
Too many opportunities. We have to do that.
Jason Hartman 41:01
Yeah, that’s fantastic. Good stuff. JOHN, thank you so much for joining us telling us about this very interesting business model. I wish you a lot of success with it,
John Simpson 41:09
Jason. Thanks for having me. And thanks for listening to the reporter story.
Jason Hartman 41:12
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