Dear customers,

I am very excited to announce that, as of today, Naborly will begin to offer unlimited FREE credit reports and background checks to every tenant, landlord, and property manager in the United States and Canada.

To the best of our knowledge, this is an entirely unprecedented move for any credit bureau or background screening company as it is a complete departure from our industry’s tried-and-true business model.

We have decided to make this move because we strongly believe that tearing down the existing business model is a necessary step forward for Naborly to continue to truly innovate the way that credit is accessed and applied in the residential rental market.

During the months leading up to this announcement the team my  has worked closely with tenants, landlords, and property managers of all sizes, conducting weeks of market research interviews in order to truly understand what our customers want, validate the viability of this change to our business model, and to learn what implications and questions would arise from us moving to free.

In order to help answer as many of your questions as directly and transparently as possible, I have written the following blog post that details how we are able to offer free screening and what led us to make a move like this, and what implications it will have on your business and the rental market at large.

If your question has not been answered below, I invite you to email me directly at dylan.lenz@naborly.com or to call our customer support department at 1-844-622-6759 and we will do our best to answer any additional questions you may have.

As always, I look forward to continuing to earn your business and to have your support.

Dylan Lenz, Founder & CEO
Naborly Inc.

Why has Naborly decided to offer their tenant screening services for free?

Simply, we want to accelerate our growth.

As a young company in the digital age we have to grow fast in order to survive, and sometimes that means sacrificing revenue in the short term to win market share. The leadership team at Naborly is incredibly ambitious when it comes to our vision for this company, but in order to make that vision a reality we need to scale our user base.

Over the past 12 months we’ve learned that despite how innovative and helpful our scores and reports are, we would end up competing on price against industry incumbents who simply resell credit data.

There was an industry ceiling on how much a landlord or tenant would pay for any tenant screening service or credit report, whether we liked it or not.

At the same time, I’m of the opinion that when you have to start to compete on price, you’re in a race to the bottom.

At Naborly, we’re the kind of people who like to win. So, we decided if the market was going to force us into a race to the bottom, we were going to figure out how to get there first.

In October 2017 we had signed up 15,000 new enterprise rental units to our service. In November I began quietly running an experiment with our enterprise sales team. We had the same number of sales reps, the same marketing budget, used the same marketing channels, and we didn’t even change the sales pitch.

We changed only one thing. Price.

We gave the service away for free to our new enterprise customers for 24 months, and by the end of November we had signed up over 75,000 new enterprise rental units.

This proved that Free was a hit, and not only because landlords were given a lower price. Something else happened we didn’t initially expect. The landlords who had been given early access to free screenings began to screen more tenants because they didn’t feel the need to try and pre-screen applicants themselves.

This led to more applications, faster lease ups, and more approved applications for applicants who may have been screened out in error due to the landlord or property managers reluctance to send every potential tenant a rental application.

Another very interesting thing happened. Once we were free, landlords were willing to send the prospective tenant their Naborly applications at the time they booked the showing. This led to tenants coming to the showings with the application completed which streamlined the lease process.

It also led to many tenants writing in to Naborly’s Customer Support team to thank us for waiving the application fee as other landlords have been charging up to $250 just to apply.

Many of these tenants (all from diverse age groups, cultural backgrounds, and income levels), expressed frustration with property managers and brokers who charged them for their credit and background checks, just to find out another tenant who had toured the rental ahead of them had been the one approved.

Regardless of income level, tenants were explicit that application fees were very hard for them to afford, but often they felt they had no choice. They indicated that they would go out of their way to apply to properties where there was no application fee and appreciated that Naborly allowed them to reuse their verified application, credit file, and background check to apply to other landlords.

How is Naborly able to afford giving screenings away for free?

We realized that there was a bigger opportunity than just selling reports.

When we made the decision to offer our service for free we knew that regardless of how much investor funding we had in the bank we had to have another business model to replace the existing one.

We also knew that because we were a young company with a small burn rate and supportive investors, we had an unfair advantage when it came to make the decision to go to free. Specifically, that it would be easier for us to kill off a $2 million dollar revenue line versus our established competitors who are making hundreds of millions in revenue from tenant screening.

This meant we could move faster, and that we have time to figure out the exact details of how to make the new strategy sustainable.

The business model we landed on lines up well with Naborly’s existing core competency of understanding risk: insurance.

Hundreds of landlords have asked us if we can verify their tenant’s Renter’s Insurance Policy is valid, and every week we have customers asking if we would guarantee our scores and pay the tenant’s rent if we were wrong.

That made us realize, how attractive the insurance opportunity was, especially when it came to building a business with strong recurring revenue.

You see, we had another problem. As our scores keep getting more accurate and the better our screening ability becomes, the better we do our job. This means we do fewer screenings than companies without our competitive advantage because our landlords experience fewer evictions, fewer late payments, and longer term tenancies. We were becoming the victim of our own success.

However, by us actually guaranteeing the rent or underwriting the tenant’s general liability, being better at screening would mean better business, and our interests would always be aligned with our customer’s.

Plus, our AI system Sherly, makes us unparalleled when it comes to assessing rental risks which allows us to be more competitively priced than other insurance products.

Best of all insurance allows Naborly to make our customers happy, builds trust in the market because we’re now literally putting our money where our mouth is, and best of all, it allows us to replace our existing revenue model and offer a free product that will accelerate growth.

Will I have to buy your insurance? And if I don’t want insurance, can I still just pay per screening?

If you don’t buy insurance you will still receive screening reports for free.

The best part of the insurance model is that we don’t need everyone to buy it.

If only a small percentage of our customers opt-in for insurance services we are still very happy with that amount of revenue.

We obviously would love it if every landlord wanted to have their payments guaranteed, or required their tenants to buy Renter’s Insurance, however, we don’t want to pressure our customers to change how they run their businesses.

We strongly believe that the best product or service should win on its own merit. If our insurance solutions are not compelling for your market, your tenant, or your business model, that’s okay. We are still glad to have you as a screening customer, because we know that when our customers are happy they talk about us to their friends.

Will FREE impact the quality of the Naborly report I receive?

No.

We are still dedicated to providing the highest quality data, accuracy, and turn-around times in our industry. We’re just making sure our price point is no longer part of the decision making process.

 How is Naborly able to offer insurance?

 We have partnered with a major insurance carrier who has A+ paper backing our services. We will announce more details over the next few months as we get closer to launching our insurance services.

When will Naborly Insurance go live?  

We will be rolling out on a state-by-state / province-by-province basis, but are committed to be live across the US & Canada by the end of 2018. We will be announcing all licensing updates as we go.

How does the Rent Guarantee work?

We are still finalizing the product structure and will update all customers as soon as possible.

I can tell you that I personally am not a fan of the traditional insurance claims process, and the existing rent guarantee products on the market. In that spirit we are committed to the following:

On time Rent Payments – We want to allow for an instant and automatic claims process when your tenant’s rent is late for any reason, so you don’t have to file paperwork and wait to get paid.

Flexible Rent Payments – We want tenants to be able to pay their rent at flexible intervals and not worry about getting an eviction notice for being a few days late or a few dollars short on their rent.

Fewer Evictions – We will work to ensure tenants are given the hand up they need, by giving them the time they need to get caught up rather than moving right into an eviction process and amplifying the problem with additional moving, collections, and administrative fees.

Minimal Stress – We want to ensure that our insurance solution is easy, automatic, and keeps landlords, tenants, and Naborly on the same team where we’re solving a problem, not creating undue stress on anyone.

Priced Right – We want our rent guarantee to be affordable across rent levels, markets, and property types so that buying it is a no-brainer.

Can I use Naborly if I already have a relationship with another Insurance provider?

Absolutely.

Many large property managers, landlords, and tenants already have insurance in place. If that’s the case then staying with your current provider may make the most sense for you.

That said, we are always honest with our customers, and we expect the same. So, if a formal and exclusive insurance relationship did not already exist when you began using Naborly, then we expect landlords to exclusively use and promote Naborly’s insurance services for any tenants we screen for you.

Tenants can always use any Renter’s Insurance they want.

Will you be sending or selling my data to other companies in order to make this new business model work?

No.

As always, we are entirely committed to ensuring that all of our customer’s personal data NEVER touches a 3rd party system without you’re express instructions. To be as explicit as possible, we promise that we will never hide consent language “in the fine print” or use confusing legal language to trick you into compromising your privacy, but if you want us to send your data somewhere then we will do what you tell us to do.

Are there any potential legal or regulatory implications to Naborly offering free tenant screening reports?

No.

We have had our US and Canadian legal teams investigate this matter thoroughly to see if there are any restrictions around offering free tenant screening reports and subsequently offering insurance. We understand that because we do not require our customers to purchase insurance in order to receive their free tenant screening reports, there is no issue with our proposed process as it relates to insurance or fair housing regulations.

So, you’re telling me I can do unlimited screenings / credit reports, never purchase insurance from you, and you won’t charge me anything?

Yes.

But we’d really appreciate it if you told your friends so they start to use us too.