Hard credit checks, screening fees and inefficient processes were just some of the pain points Michael Lucarelli endured during his move to attend Pepperdine University’s MBA program. The program marked a two-year journey that would birth his co-founding of RentSpree, an all-in-one software hub for rental applications and tenant screenings. Founded in 2016, RentSpree has since grown into a real estate tech company with 85 employees, more than 500,000 users and a new headquarters in Sherman Oaks. Late last month RentSpree announced it raised $8 million in Series A funding led by early-stage startup investor 645 Ventures. The company previously raised $2.3 million in venture funding. “With the growth RentSpree has seen in its user base as well as in their product offerings, we’re excited to see their impact on the industry as a whole as they continue to build world-class renter management software,” Nnamdi Okike, co-founder of 645 Ventures, said in a statement.
RentSpree will use the funds to improve its software’s capabilities and widen the services available to renters, owners and agents.
Simplifying the process Lucarelli and Chief Operating Officer Paul Sirisuphang started the company after learning that the parties involved in rental processes – renters, leasing agents and landlords – were fragmented. RentSpree was designed as a solution to connect anyone from mom-and-pop landlords and well-established leasing agents to inexperienced renters into a single, comprehensive platform. “With RentSpree, it makes it really easy for these individuals that are normally interacting on the rental to do so now in one place,” Lucarelli said. “The renter can apply to an agent and then the agent can grant access to the landlord to review the prospective tenants.” RentSpree makes money through its $30 screening fee for applicants. For that price, renters can avoid damages to their credit scores, application fees and share their Social Security number through an encrypted service. Renters can then submit RentSpree’s online application to as many properties as they like within a 30-day period. RentSpree services are free for real estate agents and landlords, who can quickly collect and handle rental applications and tenant screening reports. Credit bureau TransUnion is RentSpree’s application partner. “We think about the rental dream a lot. It starts on RentSpree and we also want it to end on RentSpree as well,” said Lucarelli. Rental market trends Developing the company amid the COVID-19 pandemic was not easy for Lucarelli, but for all the stoppers it initially put up on the economy at large, it has managed to help RentSpree. In a comparable way to the way Zoom Communications expanded into the need for easy video teleconferencing, the accelerated shift into digital living helped RentSpree. “Prior to the onset of the pandemic, there were definitely a large subset of individuals who would prefer strongly to handle some of these (rental) processes in kind of a manual and paper-based way,” Lucarelli said. He explained that those who may have once been reluctant to use online forms have shifted to digital and accelerated the adoption of technologies such as RentSpree. “It has helped a lot,” Lucarelli said. “We’ve seen tremendous growth from the pandemic.” The housing market boom also impacted RentSpree’s rental application business according to Lucarelli, who said that the lack of housing inventory and high prices caused people to continue renting. “A lot of dynamics like that in the real estate market had also kind of accelerated the overall emphasis and growth of the rental market in general,” he added. While the pandemic inadvertently helped RentSpree for a time, it also tightened the labor market, something a growing company like RentSpree will have to wrestle with as it attempts to grow further. Lucarelli said that there exists an employee’s market now. “We need to spend a lot more time and effort finding good ones and then on top of that, you have to end up compensating employees a little bit more just because of the market,” he said. “That is definitely the biggest challenge – to find really good quality candidates and secure and retain them.” Road ahead The company plans to use its fresh capital to expand the capabilities of the software. For example, RentSpree wants to give users detailed information and financial analyses to help them purchase a home. In a future form of RentSpree, users could see sample mortgages, determine if they have the financial footing to buy a house and if they do not, what needs to change. Lucarelli said RentSpree has already started recruiting new employees following the funding round. The next development for RentSpree will be its rent payment feature, which according to Lucarelli, should release this month. The feature will enable users to connect their bank accounts and pay rent online through the platform. “(RentSpree) is helping tens of thousands of individuals every single month,” Lucarelli said. “It’s gratifying work, that we’re able to come to this industry that really has a need for an update and successfully implement that.”