Filled Vacancies with Jack and Landlords

[Calvin Brock]

Investment Info:

Single-family residence other investment in Cherokee Village.

Ozark Gateway Realty leased to tenants using Jack and Landlords' guarantee in lieu of accepting security deposits. Their tenants not having to put up a security deposit allowed Gateway Realty to fill their vacancies.

What made you interested in investing in this type of deal?

Jack and Landlords started in 2014, so we were open to all risk of tenants. After doing business with Gateway Realty over 4 years, our model changed to only contracting with landlords that only lease to low risk tenants.

How did you find this deal and how did you negotiate it?

Ozark Gateway Realty contacted Jack and Landlords from our company's paid advertisement they received through the American Apartment Owners Association.

How did you finance this deal?

Jack and Landlords' guarantee is paid in 1/12 payments over 12 months, by tenants, in addition to the rent each month to their landlords. The landlord's guarantee was paid in full after 12 payments and stayed with the tenant throughout renewals. Landlords logged into their Jack and Landlords' portal, at the end of each month, and paid their premiums.

How did you add value to the deal?

When leasing to tenants using Jack and Landlords, landlords (property management companies) increase their value as follows:
1. Lease to more tenants without the barrier of a security deposit
2. Profit tax-free when tenant damages are lower than the month's rent amount that Jack and Landlords guarantee.
3. Increase renewals. Tenants see a second year lower payment, even with a rent increase, due to having paid in full the guarantee the first year.

What was the outcome?

Over 4 years, Ozark Gateway Realty continued to lease to too high a risk tenants that were above Jack and Landlords' risk tolerance.

Lessons learned? Challenges?

Because our landlords qualify their own tenants, Jack and Landlords issue guarantees to landlords that lease to low-risk tenants.