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Lily Liu wants to reinvent the world of rentals.
Liu serves as the CEO of
Piñata CEO Lily Liu
Liu recently spoke to Intel about what she’s seeing and in that conversation said there’s growing anxiety among renters. Amid an uncertain economic environment, many are concerned about their finances and ability to pay for their leases.
And on the flip side, many property managers are struggling to keep up with the growing demands of their properties. The present represents, in other words, a challenging and transitionary time for the rental market.
But Liu was also optimistic, saying a better and more responsive rental experience — for both tenants and managers — lies on the horizon. And that’s largely thanks to technology, which has exploded in recent years and makes it possible to streamline operations and respond more effectively to tenants’ needs.
What follows is a version of Liu’s conversation with Intel that has been edited for length and clarity.
Intel: Before we get into the nitty-gritty, walk me quickly through what makes Piñata special.
Liu: At Piñata we’re a rent, rewards and loyalty fintech platform for renters. Really one of the things we’ve been focused on is solving what I always like to call the broken rent equation. So as a renter between the ages of 25 to 65 paying the national average, you’ll spend about $1 million on rent.
So one of the core value props of Piñata is to give more back to renters for paying on time and in full month over month. And so you’re getting points. Points equate to real-world things. So that’s gift cards, cash back, home goods, pet- and kid-related products. And it’s partnering for the rewards with Target, Walmart, Costco, Amazon, etc.
That’s the core rewards loyalty program. A big piece we added in the first year after launching was the ability to build and boost your credit score. So adding that in as an additional benefit renters get through the program. We report to all three bureaus.
I know you have your finger on the pulse of the rental market, so help me understand the mood. How are renters feeling right now during this time of inflation and economic uncertainty?
We collect renter feedback every week and month. And it’s really starting to blend into one bigger theme, which is that the financial impact they’re seeing on day-to-day expenses, that’s starting to hit renters much harder month over month.
There are also some areas where rent protection laws post-COVID are expiring, so in those regions, we’re seeing renters asking different types of questions and looking for different types of resources. They may not have the ability to stay within their units, so there is a growing level of anxiety within those markets over how they can stay within a region that they need to be in.
And then the other thing around the renter market is whether or not we’re going to see a cooling on rent prices. You have this constant expectation over the past couple of years that rent will just continue to increase pretty dramatically year over year. But now we’re starting to see rents stabilize in many cases. Renters are reporting that they’ve even been able to negotiate a slight decrease in their rent payments.
It’s not across every single market. In some markets, for example the Boston area, mostly within the city and exurbs, a growing percentage of rental units are reporting increases in rent. So it’s not in every market that we’re seeing that cooling on rent pricing happen. But it is starting to shift.
Why is that? Is it because inflation is calming down? Or because more units are coming online?
It’s certainly inflation-based, but also the fact that construction had risen to a record high a couple of years ago. So the reality is that renters have more choices in some markets than they had a year or two ago. And the natural impact of that allows them to get better pricing.
In other cases it’s not a better price but a better unit or a better location for a similar price point.
On the flip side, talk to me about how property managers, landlords and owners are feeling right now.
One of the topics that’s just taken over the industry is looking at how and what the expectations are for these groups to start embracing technology. And it’s not just artificial intelligence, though I think AI has spurred an interesting conversation. It’s also about, “how do we as a small team keep pace with demands that are going up, given very limited budgets.”
We have over 1,300 property management companies owners and operators that use Piñata. And they also continue to ask what they should be doing to start opening up communication with renters. They don’t always have the ability to have that type of communication and contact with their renters with regularity.
How are landlords and property managers using technology right now to do more with less?
What’s interesting is the rental space is such a data-heavy space. But what happens is the data is very time-consuming and has a higher rate of errors than anyone would like to see. It’s dirty.
So we can actually build a lot of automation around that. What used to take us weeks’ worth of time we’re literally doing in days through automation. We have actually built a layer to clean all of it up.
Another area where technology helps is with underwriting a renter. Before it used to be, ‘Hey, send me your last pay stub and I’ll assume this is your total income.’ But what groups aren’t looking for is net income. So for example, somebody making $100,000 with no other additional obligations, lives solo, lives simply — you want to look at net income. But another family makes $100,000, but maybe they have four kids or they have other financial obligations or other debt obligations.
So you want to look at the full picture of a renter’s income in underwriting, but that’s a process that would have been very challenging for a group to roll out at scale. You’d need somebody internally who can understand the financial statements of different employers, different banks. That’s an area where technology and automation can help create a better process. Only through automation and data is this something we’re able to do.
Technology can also help create better rewards and incentives. So we know if you’re really going to respond to that $25 Amazon gift card. Or if you’re going to respond to that wine-glass set. This is something a marketing team would have had to do manually before. They would have had to manually create these customized campaigns. But now it just happens automatically and they’re looking at performance data afterward.
That’s a big area of focus for us moving forward. We can really now start to hyper-target programs for renters.
And then the next phase is credit reporting. I think the big value is we can build and boost renters’ credit scores without them having to take on additional debt. So you don’t have to get a credit card. You don’t have to get a loan of any type. Just make sure you’re paying your rent and it’s going to impact your credit score.
Talk to me about how you are specifically incorporating artificial intelligence into what you do. I know you alluded to this already, but break down for me what you’re doing and how your customers engage with AI.
AI for us is a really exciting area. We are early in this version of what we’re doing with MAX, our concierge chatbot. I will say it’s early days for us, but we’re excited so far about the engagement.
What we’re seeing is that renters ultimately are coming to Piñata’s chat experience around leasing information. They want to understand their specific markets. So they’ll ask, ‘hey I’m paying $2,800 for a one bed in my town. Is that good? Is it bad? Should I be looking to move?’
The moving and leasing questions are very popular. They’re also looking for basic information on how to understand that lease agreement. They’ll literally just copy and paste dense legal language. Of course, we’ve had to build in disclaimers so they know it’s not legal advice.
Another area is we’re seeing owners and operators use it. They’re actually using it for things like spitting out an addendum, for example.
So it’s interesting to see that engagement increasing. And people really leaning on it as administrative support. They’re also using it to create email responses to residents, especially for people where writing may not be in their wheelhouse.
And I think the next phase for AI will really get deeper into a more customized experience for both sides of the equation, for renters and the property managers and staff members.
