Advice and Opinion Research

Major business growth shown in 1st year of operation

The first year of any business is known to be critical, as a significant amount of businesses fail within the first year. The first year is about establishing itself in the desired target market and overcoming the first stage glitches. After which a business can begin to grow and expand.

Rentshield is a unique South African residential property management tool which offers a win-win situation for both the landlord and tenant, which in the last 12 months has shown substantial growth of up to 150 percent. Across Cape Town, Johannesburg, Pretoria, Durban, East London and Port Elizabeth Rentshield has established over 3 000 clients who have signed up for this unique property business model.

TPN Registered Credit Bureau is a comprehensive and up to date authority of information on tenant behaviours in South Africa. TPN created a database for managers and landlords to register default tenants and to track their behaviour. Releasing reports on a continual basis depicting the behavioural habits of tenants in both the residential and commercial market.

However, in the latest residential rental monitor late paying tenants were that of 15 percent whereas Rentshield only experiences a 2.5 percent of slow paying tenants to date. Both Rentshield and TPN do specialised credit checks of each tenant ensuring defaulters are to a minimum but there is a clear difference between their business models.

Martin Goodman, Director of Rentshield believes this is due to the zero deposit product offering offered to all tenants who sign up with Rentshield. “It’s not by chance that our slow paying tenants percentage is low, all the work upfront like credit checks is done efficiently and correctly and only the highest quality tenants are placed. The traditional way of thinking is that tenants who pay a deposit are good tenants but our model proves this is not the case and that tenant’s pay better when there is no deposit involved.”

When advertising a zero deposit product offering Rentshield receives ten times more enquiries. Many may see this as negative selection but this just means a bigger and better selection of possible tenants as only tenants with a proven track record are considered.

In effect Rentshield is also reaching a completely different target market. First time renters who are leaving home for the first time can now afford to rent a place without having to put down a deposit and the first months’ rent all at the same time and therefore, giving them a greater selection of places to choose from.

What makes Rentshield unique compared to other rental property agents is that Rentshield can be offered to landlords and tenants in addition to what agents are currently offering. It’s not rental insurance but it allows the agent to keep the landlord well covered at no extra cost.

“There is a huge amount of money sitting in landlords and agencies bank accounts accumulating interest on tenants’ deposits,” explains Goodman. “If deposits were given back to tenants and injected back into South Africans economy, it could be used to pay off debts thus boosting the economy. No one really knows for sure but there could easily be an excess of R10 billion sitting in bank accounts doing nothing. If we wavered the deposit completely tenants could be putting that money to far better use.”

This however, would require a shift in thinking because for years paying a deposit has been the way of doing things and a way to protect the landlord against any damages accrued to their property. But through this unique property management tool it has been proven over the last 12 months, that zero deposit tenants can be better tenants that pay on time.

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