You're reading: Ukrainian startup aims to disrupt US real estate, rivals Airbnb, Zillow

On the top floor of a business center overlooking downtown Kyiv, a startup of 30 Ukrainian techies helps people from over 50 countries to rent apartments online.

Called Rentberry, the startup develops online services to make the process of renting and living in an apartment long-term less frustrating: the apartment search, direct communication with tenants and even paying utility bills — all online.

For landlords, Rentberry audits tenants, checking their background and credit history. It also offers to sign a lease contract digitally via its website and mobile application.

Most of the Rentberry services are free, but the company still makes money from charging real estate agents to use the platform and from advertisers. The startup also sells its users’ data to moving companies and retailers, according to its co-founder Oleksiy Lubinsky. 

“Data costs a fortune,” he says.

Rentberry has also attracted investment money, including capital from former CEO of CBRE and from the number of venture funds, like 808 Ventures and Zing Capital. In July, the company also finished $4.5 million round of which $2 million was crowdfunded by 2,000 pledgers. As of today, Rentberry raised more than $13 million.

Lubinsky believes in his business and thinks it can do even better than Airbnb, a U.S. vacation rental marketplace that offers short-term rentals. Airbnb was valued at over $30 billion, but when the coronavirus pandemic hit the world and travel was strictly limited, its worth plummeted to $18 billion.

Lubinsky is sure, however, such a devaluation isn’t going to happen to his Rentberry, because the long-term rental market is bigger and more reliable. “We will become a company worth a few billion,” he says.

Rentberry is a startup of 30 Ukrainian techies who created a platform to make rentals easier for tenants and landlords. Founded in 2015, the company has already attracted $13 million of investments. (Courtesy of Rentberry)

Auction-type rent

When Lubinsky and his business-partner Lilia Ostapchuk moved to San Francisco in 2014, they couldn’t find an apartment for a month.

They filled out a rental application that informs the landlord about prior leases and employment history, income and credit reports. But only when the Ukrainians named their price — $2,000 — did they find out that the landlord rented out the apartment to another tenant who offered $50 more.

It turned out that the competition in the U.S. rental market is so fierce that it sparks bidding wars when tenants are willing to pay above the asking price to get the apartment before other candidates do.

“People are angry because they cannot control this process,” Lubinsky says.

Frustrated, Lubinsky and his business partner Ostapchuk set out to fix this problem.

While the most popular U.S. rental platforms — Craigslist, Zillow and Trulia — only display information about the property and its owner, not showing if anyone else is interested in it, Rentberry chose another approach. It turns the rental process into an auction.

Using Rentberry, people see what their competitors are bidding and can evaluate their chances of getting the apartment. Then, they can either look for an alternative or offer a higher price.

Users can even ask for a lower price if they think an apartment doesn’t live up to its initial price tag set by the landlord. 

Going digital

With Rentberry, tenants can secure a lease agreement without leaving home. Every step of the rental process — from gathering data for the rental application to all monetary transactions, including rent and bills — happens either on the Rentberry website or its app.

“In the past, paperwork took too much time and (tenants) had to pay via bank and send checks,” said Lubinsky. “Today, one can do it with a smartphone.”

For example, instead of filling out rental applications and attaching all the additional documents that confirm the tenants’ salary, employment and credit history, renters can just type in their personal information and Rentberry will do all the background checks, verify them and send them to the landlord.

Online applications are also cheaper, Lubinsky said. It costs only $10 with Rentberry, while paying all the fees for submitting paper applications can cost up to $120 in cities like New York.

Using the technology, tenants can even join a virtual open house where the landlord shows  the apartment to all possible candidates at once. During the COVID-19 pandemic, it could minimize the risk of the infection, according to Lubinsky.

Data-driven company

Rentberry knows a lot about its users and the company sells this data to U.S. businesses and financial companies.

Rentberry knows when tenants move to a new apartment, the date of their lease agreement, their age, employment and credit score based on the levels of debt, repayment history and the number of open accounts.

The company provides this data to financial companies like Credit Karma, a firm that estimates people’s credit scores for free but then sells more detailed info to credit companies.

It also provides data for local businesses like moving companies and retailers like Zara. “(Retailers) want to buy this information because it helps them target those people” who come to live in the neighborhood where these retailers operate, Lubinsky says.

No plans for Ukraine

Although Rentberry is an international company that works in over 50 countries, including the U.S., Britain, Canada and Australia, it doesn’t plan to enter Ukraine.

Rentberry offers a flexible platform that can adjust to different markets like it did in Switzerland, where it got rid of rental applications and the auction-model to comply with the country’s laws. 

But it can’t do the same for Ukraine.

Ukraine doesn’t have laws that would ensure Rentberry can efficiently operate. Besides, the country’s population is still mostly digitally illiterate, which would make it difficult for such a digital-driven company to work here, according to Lubinsky.

While U.S. tenants agree to sign smart contracts and use mobile apps, Ukrainians still prefer to rent apartments “the old-fashioned way,” he says.

Rentberry, nevertheless, has its main office in Kyiv because labor costs are low in Ukraine. A programmer in Silicon Valley may cost over $300,000 a year. A good Ukrainian specialist demands about ten times less, $30,000.

Taxes are lower, too. All Rentberry’s Ukrainian employees work as private entrepreneurs, which means they pay a 5% revenue tax plus $400 a year in social taxes.