PropTech Startup Assigns Letter Grades to Apartment Buildings
Nothing initiates you into the struggle of city life more than apartment hunting. You ask friends of friends for leads, scour listing sites, and end up leaving work in the middle of the day to meet real estate agents all over the city, only to spend five minutes walking through an apartment and making an on-the-spot decision if the place is going to be your new home. However, it doesn’t have to be this way. Through leveraging technology and tapping into public databases about buildings, fairness and transparency can be brought to the rental process, to the benefit of both building owners and residents.
When I moved to New York in 2013, I thought I had found a beautiful one-bedroom apartment in the West Village – one of the most vibrant and popular neighborhoods in New York City. Unfortunately, the apartment had items that weren’t advertised: mold, roach, rodents, and a landlord who refused to address these dangerous issues. Of course, most NYC property owners are top-notch and care deeply about maintaining their properties and providing adequate living spaces to tenants. However, in this case, the one thing that I never could have known while walking throughout the property, was that it was owned by a notorious bad apple – one who ultimately went to jail.
My family has been in the real estate business for over 40 years, so I knew that my landlord was responsible for covering these sorts of issues. In this case he was clearly being negligent. I ended up having to take my landlord to court in order to fix the issues, costing valuable time and money. This is an extreme case, but it shows that what you see when you are looking for a rental is not always what is advertised or meets the eye.
When signing a lease, many tenants have no way of knowing how responsive their building’s management will be or what issues lie behind the surface of freshly painted white walls. In a whitepaper commissioned earlier this year, we found that 76% of renters have experienced an issue with their apartment – including loss of heat, pest infestation, and more. Additionally, 82% of New York City residents reported that it is difficult to find information about the quality of apartment buildings. The same percentage of residents said they were frustrated by how unresponsive their landlord is to building issues.
While many landlords are doing great things, sadly, a few bad ones give the industry a negative reputation. In the rental market, however, fairness and transparency can work to everyone’s advantage – for renters and property owners alike. After my experience in the West Village, I knew there had to be a better way.
I founded Rentlogic, a tool that grades buildings from A through F based on City records of violations and independent inspections. This assists renters in avoiding bad situations in poorly maintained buildings, and also highlights landlords who are doing an outstanding job of providing and maintaining a great environment for their tenants.
This could potentially seem obtrusive to landlords, but what we have found is that more and more it works to their benefit. Property owners also believe that transparency works in their favor. Rentlogic highlights the good work many are doing to ensure a great quality of life for their residents.
In order to advocate for transparency, however, one must exhibit transparency. The grades we give buildings are not based on complaints or user-generated reviews – there is too much subjectivity not grounded in fact. After all, it’s easy to leave a negative review if you’re just having a bad day. We base our grades on public violation data through City agencies and 311, and the grades are generated by an algorithm. Algorithms control so many decisions in our lives, yet so few people understand them. As the PropTech landscape expands and pools of data grow, it is especially essential that we ensure algorithms are unbiased.
Companies and governments are starting to realize their impact. In New York City, for example, where algorithms determine which school a student will attend and where crime could happen next, the local City government established a task force to review how they use algorithms and whether they are inadvertently discriminatory.
To ensure we are grading our buildings fairly for building owners and landlords, we recently became the first company ever to undergo an external audit of our algorithm for these purposes – something we think is critical to our business. Further, we hope more tech companies will voluntarily opt into doing this as independent audits are the only solution to ensure data and algorithms can equitably and fairly make decisions.
The mathematician Cathy O’Neil designed an ethical matrix that helps organizations evaluate the consequences of the algorithms they use. This matrix emphasizes qualities which include accuracy, consistency, bias, transparency, fairness and timeliness. It asks organizations to evaluate the concerns of their various stakeholders regarding each of these qualities. In the case of Rentlogic, for example, when it comes to bias, renters who look at ratings might worry about people being afraid to use the city’s 311 services to report violations, which could leave residential buildings looking better than they are. Building owners, likewise, might worry that legitimate violations for other buildings are going unreported, resulting in unfair bias against their own buildings.
An audit of our algorithm is comparable to the independent evaluation of buildings many landlords have come to embrace. Transparency validates one’s business practices. In the rental market, this transparency rewards landlords who go above and beyond to keep tenants happy. When a prospective tenant is convinced about the independent evaluation for a building, the tenant is more confident. Our survey found that for independently rated buildings, 88% of renters would sign a rental agreement quicker, 81% would be willing to sign a longer lease, and 60% would be willing to pay more to live in an A-rated building.
Harnessing public data for transparency not only can guide renters away from situations like the mold and rodent infestations that I was unfortunately confronted with in the West Village, it can help landlords achieve their business objectives, reduce turnover, and maintain a positive living environment for all.
Reflecting that same transparency in your own business practices through auditing algorithms for bias will make you a trusted source and at the forefront of tech for the public good.