On this Flash Back Friday episode, Jason brings us clips from the 19th Meet the Masters of Income Property event. We hear from John Simpson who was an investor in Rent Reporters and is now the CEO. He discusses the benefits of Rent Reporters and how to improve your relationship with your tenant. He also discusses how to improve your rent collection.
Lucky event was amazing. I thought that I knew a lot about real estate. But coming to your summer, I realized there’s a lot of things that I don’t know. And one thing that you did besides teach me a lot about real estate is you inspired me to look beyond where I live and to, you know, kind of shrink down the world and make it smaller so that I can invest some places that are further away and get better return. So I really appreciate that. And I’m excited to be here this weekend. And, again, for me, and from all the people I heard there. Thanks for doing these events because they’re great. Welcome to this week’s edition of flashback Friday, your opportunity
Jason Hartman 0:36
to get some good review by listening to episodes from the past that Jason is hand picked to help you today in the present and propel you into the future. Enjoy.
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 An 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. And now here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 1:39
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 Cara Lee, and our show is actually now syndicated on what is it, I believe 18 terrestrial radio shows, you can hear them 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 the May spike up more. Now you need to understand Of course, please go back go to Jason Hartman calm 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 calm Get your tickets that is filling up fast and 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 begged 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 will 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 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 in it first when I was pitched on the idea 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 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 forward to better sound quality in the new year. I’ve struggled with sound quality on my podcast for a couple of years because I’ve been moving around changing things and in this time in my new place, and 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 pretty action. Okay The Kiplinger letter. So a couple quick bullet points the economy will be on a sounder footing pace 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 Patrol Action 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 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 core 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 So you 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 a 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. In 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 the meet the Masters, we’re going to talk about how to deal with that adjustment time quite a bit as we talked about trumping omics and Federer nomics. 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, 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 going to be awesome. Okay, that’s going to be really, really awesome. Trump wants to consolidate the individual rates to three, just three. Okay, well, you know, the 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 a state tax and maybe even kill it. So that means inheritance. You know, you can you can pass on your estate to you airs 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 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 it. 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 think 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 Jason, 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 little off there. But we’ve got breakout rooms and we are going to have them up for our local market specialist so you can meet with them, and really, really dive deep after their presentations into what they have to offer. We are even going to do lunches. The 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.com. 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.
Jason Hartman 15:13
Remember, you’re listening to flashback Friday. Our new episodes are published every Monday and Wednesday. 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.
Jason Hartman 15:41
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 renter reporters. Now, as you listen to this interview, I want to I want you to listen with two different mindsets. One, the mindset I have 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? I’m well Jason, thank you so much for having
John Simpson 16:45
Jason Hartman 16:46
It’s good to have you on give our listeners a sense of geography. Where are you located?
John Simpson 16:50
We’re sitting in Southern California. We’re in Pasadena is where we’re headquartered.
Jason Hartman 16:54
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 17:10
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 17:30
So tell us about it. 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 17:43
The challenge for renters, you know, there’s 100 million renters in the country, there’s 40 million, many of those who are credit 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 are credit card payment history. Our auto loans if we owned a house that 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 18:37
So the landlord then is now saddled with another task or they have to report rent payments to a to the three major credit bureaus Is that how it works,
John Simpson 18:49
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 will be rolling out and online portal where they 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 19:10
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, what, don’t want you to talk about that.
John Simpson 19:25
You know, when I first came 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 that 95% or more of the time, the landlords are perfectly happy to cooperate. 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 for landlords 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 date and paying over the last two years. So this was 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 mass vast majority are really just happy to help their their tenants and are glad that they care.
Jason Hartman 20:33
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 the rent payment.
John Simpson 20:55
Yes, it’s a very straightforward process, really, whereas 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 again, it’s, it’s very unusual for our customers to actually be late because these are the incentivized renters.
Jason Hartman 21:32
Now, that is the big incentive. You just said it. Why would a landlord care if the tenant improves their credit report by you know, the landlord’s 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?
John Simpson 21:56
That That’s powerful. Absolutely. I mean, there’s the carrot and the stick 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 22:09
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 22:25
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 attendant. And if you think about what impacts someone’s credit score, it’s the length of your credit history. Your payment in history, and the type of credit, those are the top three factors in determining one’s credit score. So the the the rental, the rental trade line is a housing trade line is the most important trade line you have. It’s it’s, it’s the same again as a mortgage. So there is that initial,
Jason Hartman 23:21
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 23:35
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 that initial look back, that is that is particularly powerful because we’re putting that significant amount of history on their 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 sign up and look back. It’s 9995. And then for an on an ongoing basis, it’s 995 a month for us to continue to validate and verify those read payments and then report them to TransUnion.
Jason Hartman 24:26
Okay, so 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 24:38
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 should we’re hopeful 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 is really the world as we know it in credit is that it’s the creditor who is reporting those that that history and a consumer is not initiating that process like the art
Jason Hartman 25:20
right in the in the good 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. They would improve my score.
John Simpson 25:43
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 revenue. in the country, and you really that 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 the to the credit world. And what’s 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 it out. 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. But as a renter, we can help.
Jason Hartman 27:32
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, what 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 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 at As a specific line item, or is it to really too early? And also, how old is this company?
John Simpson 28:06
So we’re working so working backwards, you know, with this. We’ve been reporters as 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 lights but going back for a full 22 years that’s the credit history will be able to show of what their what their payment cycle was month by month.
Jason Hartman 28:33
Just a reminder, you’re listening to flashback Friday. Our new episodes are published every Monday and every Wednesday. Fantastic. Okay. So, two years back, can you get old landlords to do it? How does that all work?
John Simpson 28:52
It Again, we can go to the current landlord week and we can report the full two years of payment history and but know that 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. 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 call to cancel. It’s our customer team, customer service team followed up to say You know, my gosh, what happened was their 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 of 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 and rent mortgage, or guaranteed mortgage rather. It’s really it’s it’s just really quite spectacular of you know, when 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’d feel being able to buy her first house. I mean, that must have been a fantastic feeling. Yeah, hey,
Jason Hartman 30:54
that is that really is this this? I think this is a great idea. I love this. Okay. So how much time I assume that 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 31:13
So in the very first in the in the very first contact, we may in terms of just the 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 pays 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, will follow up and say, Well, did Jason pay his rent?
Jason Hartman 31:55
How you doing that? Is it an email? Like they just click on
John Simpson 31:57
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 in a reply to text. We can do that through a landlord portal. It’ll 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. They’ll be able to do it by email or by phone.
Jason Hartman 32:20
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 32:27
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 provide the tense providing us everything. Their lease,
Jason Hartman 32:40
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 32:51
Yes, so they’re providing us 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 are reached 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? Yes or no?
Jason Hartman 33:16
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 33:31
That’s very common for us. And it’s really that interaction we have with that landlord is still going to be very short if they’re if we’re doing it for a list of 10 or 15. We have some landlords, were reporting 1000 tenants and they’ll actually just send us a file every month. We 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 landlord for helping refer us or introduce us to their tenants. And then they get $20 for every customer that signs are 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 34:21
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 34:30
As 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 with the average consumer who has debt has 15,000 dollars 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 35:49
Yeah, and 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 the lower end of the credit scoring spectrum. Many times, if you can help them reduce their expenses and reduce these, you know, almost us 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 printed every month. And, you know, this could ultimately, although 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 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 going to 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 condition? Are those things reported at all? Or is it strictly the monthly rent,
John Simpson 37:45
it is strictly the monthly rent and we really don’t experience many instances where where we’re having to reconcile if you will hold back. Again, I think those our customers are very motivated to pay their and Entire balance and they don’t want there to be any other any other footnotes to it because when we report that tradeline it’s saying they, you know, they owed $1,000 last month did they pay it? And it’s 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 38:24
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 38:33
I want you to tell a family member 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 let you know, in the landlords that are listening, they have a family member, relative friend, that they can tell, you know, they can tell the rent reporter story too, and they’ll be doing that Have 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 read reporters, com we’d be super appreciative. And so that person you tell
Jason Hartman 39:13
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. In 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 39:33
fascinating. So do 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. That 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. Because that’s many millions more. These are people that don’t even exist in the credit system.
Jason Hartman 40:23
There’s nobody 40 million or something
John Simpson 40:25
40,000,040 million people in the country. That’s amazing.
Jason Hartman 40:32
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 when someone applies. Right,
John Simpson 40:48
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 be Better than 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 outs that haven’t been able to get into 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 and released. It’s extremely difficult to get out. And that’s the piece where I just it’s just extraordinary to me in terms of, of how such something so small of taking what you’re doing every single month, paying your rent could actually transform someone’s life. Yeah.
John Simpson 41:58
It’s not too many opportunities. We Do that.
Jason Hartman 42:00
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 42:08
Jason. Thanks for having me. And thanks for listening to the rent reporter story.
Jason Hartman 42:12
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