Q&A with TheGuarantors’ Bob Schmidt on Recession-Proofing Your Rental Portfolios

TheGuarantors provides smart insurance and financial solutions to property owners, operators, and their residents. Launched in 2015, the company is working to improve accessibility and affordability for the 45 million households who rent their homes in the U.S. while protecting property owners and operators from risk. The company announced its $50-million Series C funding round in April. 

We spoke with Bob Schmidt, co-founder and CRO of TheGuarantors, about the multifamily industry and what property owners and operators can and should do to protect themselves amidst the uncertainty in the current market.

Q1: As a multifamily expert with over 30 years of real estate experience, what’s your outlook for 2023?

A confluence of factors, including skyrocketing interest rates, stock market volatility, and high inflation have resulted in one of the most unstable housing markets in recent memory. The severity of rental increases nationwide, coupled with inflation and an impending recession, could leave many renters struggling to pay on time, if at all — which could in turn result in a higher rate of rent default and leave property owners with smaller net operating incomes. 

Many players in the space could find themselves in a tenuous position–highly exposed to the downside risk of these market dynamics. 

I expect we will eventually see a softening of the average rent as tenants struggle to afford recent increases. Concessions will likely come back to the market in the form of free months, Broker OP’s, and flexible lease terms.

With more renters nonetheless struggling to qualify for rental housing, owners and operators will need solutions such as TheGuarantors to expand their base of approved renters while mitigating the risk of rent default. Only by managing inventory, adjusting rent, and utilizing the right risk tools will operators be able to maintain healthy occupancies while protecting their NOI.

Q2: How can property owners and operators safeguard their NOI amid economic uncertainty?

Uncertain times call for operators to stay highly responsive to a dynamic market while also improving their ability to sustainably bear risk. 
Tech companies serving the space are helping them do so by decreasing move-in costs, protecting against fraud, and automating the application process from start to finish. Reducing exposure to defaults will be particularly important. At TheGuarantors, we’ve seen a surge in demand for our rent and deposit coverage products as operators brace for higher rates of rent default and resulting bad debt.

Q3: TheGuarantors has a solid reputation in the multifamily industry. What’s the key to its success?

Knowledge and understanding of operator and renter challenges is key. Many of our team members worked in the multifamily space long before joining TheGuarantors, strengthening our ability to best serve our customers. 

The diversity of our financial backing and our full stack approach have positioned us to offer operators a comprehensive rent and deposit solution. Full protection– up to the entire length of the lease– or less, depending on the need. We’ve offered operators expansive and uninterrupted insurance coverage since the company’s launch in 2015.

Last but definitely not least, this industry is all about relationships and we know that providing best-in-class service to renters and operators alike is crucial to our long-term success. That’s why we are available for our customers 7 days a week in 6 languages. With our strong focus on customer service, we’re proud to have a 95% renter satisfaction rate and a 99% operator retention rate.