Moving into a new apartment is not only stressful -- it's notoriously expensive. Not only are you paying your first month's rent along with the cost of a physical move, you're also still waiting to get the security deposit back from your previous landlord and now have to pony up another one.
LeaseLock is turning the security deposit into an insurance product and just raised $52 million to accelerate its growth. This series B financing was led by Westerly Winds, while Liberty Mutual and American Family's venture capital arms also participated.
More on LeaseLock
Innovation in fintech continues to expand into multifamily. LeaseLock works with leading multifamily owners and operators like Greystar, Avenue5 Residential, LMC, Goldman Sachs (NYSE: GS), and more to offer an alternative to a security deposit for their tenants.
Instead of having to fork over a month's rent to move in, renters pay a small monthly fee along with rent to the property, while the property is protected against rent loss and damage -- what the security deposit is intended for. This can total over $5,000 in coverage.
Why this is a game changer
Many states require landlords to place security deposit funds into an escrow account, which can be a pain to manage for landlords and property managers, especially at scale. Replacing this function can significantly reduce administrative costs and free up time for property managers to do more for their tenants.
Offering this can be far more attractive to tenants as well, since they don't need a lump sum to move in. An offering like this can be a nice selling point to attract residents in a competitive market.
These benefits lumped together have led to six-figure net operating income (NOI) bumps per asset, according to the LeaseLock team.
LeaseLock saw a 400% growth in apartments on the platform in 2020, ending the year plugged into over 1.5 million units. The company says that it has insured around $1 billion of leases to date.
The Millionacres bottom line
It's important to get any edge you can as a multifamily investor to drive NOI impact. LeaseLock may be a good option for your portfolio as a way to drive leasing and reduce administrative work for property teams.