Set Your Rent matches tenants with investors who’ll buy – and rent to the tenant – a home
Editor’s note: Adam Zach and Jon Enright are the co-founders of Set Your Rent, a Grand Forks and Fargo-based startup. In May, Set Your Rent won the annual Shark Tank event sponsored by The Chamber of Grand Forks and East Grand Forks.
Recently, Prairie Business sat down with Zach and Enright in The 701 co-working space in Grand Forks to talk about the company and its website, SetYourRent.com. The interview has been edited for clarity and length.
What is Set Your Rent?
Adam: Our pitch to prospective clients is, “What if you could choose any home that’s currently listed for sale, and rent it?”
When clients are interested, they go pick a home that’s listed for sale. If the numbers work, and if the renters will agree to lease terms and a monthly rent amount, then either we’ll buy the house or an investor will, and the new renters will move in.
In most cases, Set Your Rent basically is the matchmaker between the tenant and the investor. And that’s pretty much how it works. We are connecting prospective renters with investors who’d like to invest in real estate.
Why would prospective tenants be interested? Why wouldn’t they just go rent a home on their own?
Adam: If they can find the right home, then you’re absolutely right; they don’t need us. And that’s great.
But here’s the thing: If you were to search Fargo for homes to rent, you’d find maybe 90 or 95 homes available. In contrast, if you search Fargo for homes for sale, you're going to find about 1,500.
So what we’re doing is expanding the renters’ options, especially if the don’t like anything that’s currently on the rental market. We've usually found that there’s a 10-to-1 ratio or better on the number of homes for sale vs. for rent.
How about investors; why would they be interested?
Jon: So for investors, what we're doing is saying, “Here’s a list of people who are looking in different areas. Here’s how much they’re willing and able to pay in rent, and here are some of the properties they’re interested in.”
Then the investors decide whether buying and renting one of those houses would earn a good return.
By setting it up like this, we solve some of the investor’s problems, because the investor wants good tenants in good homes. Also, we narrow the gap that the investor faces, because the renter is all lined up. The investor doesn’t have to worry about paying for an empty house for weeks or months while advertising for renters and screening them. That’s the kind of thing that will eat away at an investor's return.
It sounds a little like the arrangement some parents make when their youngster goes off to college. The parents buy a property where the student and some roommates can live.
Adam: You got it. We think that's a great strategy as a parent, because the student probably is able to live rent-free, while their other roommates are paying the mortgage and rent. They’re staying there for three or four years, and at the end of that time, the parents can either keep the property as a rental or sell it and hopefully recoup their investment.
Walk us through one of Set Your Rent’s typical deals.
Jon: Usually, a prospective tenant will fill our a form on our website. That will kick us an email, showing us what the tenant is looking for.
Do they already have their eye on a home?
Jon: A lot of times they will. They'll come in with a few options. If they don't, then we'll get some information from them about what kind of neighborhood they want, how many bedrooms, their budget, whether they want a garage and so on. Then we’ll send them some options and say, “Maybe some of these will work for you. Or if you like, we also have a realtor who we work with who can you show some homes.”
Adam: And once they say, “We want that one,” we start working with the other side.
If a match is made where an investor likes the tenants’ application and background and says, “Yes, I would be willing to rent to them and I like the property,” then we’d get them set up. The investor would buy the house and then enter into a normal lease agreement with the tenant, just as an owner would do with any other rental property.
How does Set Your Rent get paid?
Jon: Typically, we’ll charge a fee for connecting the two individuals. After that, we wouldn’t be involved, and theirs would become just a straight tenant-landlord relationship.
On your website, you mention that if people can’t get a bank loan to buy a house, they should consider a “rent to own” option through to Set Your Rent. But wouldn’t the bank’s denial suggest that they’re poor credit risks?
Adam: From our perspective, credit scores are less of a concern; we’re more interested in proof of income and the person’s rental history. If you have one bad thing in your background, most banks just check their boxes and if you don’t fit, they just say, “Sorry.”
But from our perspective, if you have a good history of making your payments and the income to keep doing so, why shouldn’t you be given the chance to rent and eventually own a home?
So, it's not like we're ignoring credit histories. We’re just more interested in the person’s payment and income histories than we are in their credit score.
Jon: Credit scores can be affected at a young age and tend to follow you around. That’s another reason why we’re not too concerned with them.
How did you meet and become business partners?
Adam: We met socially in about 2011 through a mutual acquaintance. We both went to UND, but we were in different programs and graduated in different years – 2009 and 2010 – so didn't meet there.
I had just started as an engineer at AE2S, and Jon was a manager at Zavoral. Later on, I had two houses that I was using for rentals. We started talking about it, and a little over two years ago, we bought our first house, fixed it up and rented it out.
We thought, “Yeah, this is kind of fun,” and we kept doing it.
Tell us about your Shark Tank experience in Grand Forks.
Adam: The Chamber of Grand Forks and East Grand Forks does this once a year. This year, it happened back in May, and there were 10 entrepreneurs who went into the Shark Tank.
Each of the 10 gave a one-minute pitch to the “sharks,” so to speak. Then for a few minutes, there was a Q&A.
And at the end, they thought that from a strategy and market-feasibility perspective, we had the best idea; so we won! We got a $750 cash prize and a free nine-month membership to The 701 co-working space in Grand Forks. That has proven to be a great place to meet, work with and learn from other entrepreneurs.
Also, the U.S. government and the state of North Dakota, through institutions such as the Center for Innovation here in Grand Forks, have been extremely helpful. We’ve gotten advice from SCORE, the Small Business Administration’s Service Corps of Retired Exectives. InnovateND and the Small Business Development Center also have been big helps.
Jon: We definitely wouldn't have been anywhere near where we are without the local support that we’ve received. We didn't really know it was even out there; we were just searching around, asking for help.
But the help we’ve received has been just fantastic, and we're really happy that we're here.
Here’s a question that the Grand Forks Herald asked after your Shark Tank win: Where do you see Set Your Rent this time next year?
Adam: As we told the Herald, If we could have maybe five employees a year from now, that would be fantastic. In recent weeks, we’ve presented at One Million Cups in Fargo and earned some video testimonials that we’ve put up on our website, so I’m hoping we’re on our way.