After simplifying rental processes for tenants and landlords in Brazil with his startup Quinto Andar, Gabriel Braga plans to explore more pioneering business opportunities, including the creation of a national market for new rental properties.
The company founded by Braga and André Penha in 2012 with the mission to connect property owners and renters online raised 250 million reais ($67 million) in a funding round led by General Atlantic in November and has an estimated market value of 1.1 billion reais ($298 million).
To manage the pre-contract rental processes – which include 86,000 monthly visits to the properties the startup handles – and the subsequent administration of real estate across 15 Brazilian cities, the firm employs 570 employees based at WeWork’s coworking space on Avenida Paulista in central São Paulo.
Quinto Andar claims to reduce the time it takes to rent a property of one month to three days on average. This is due to the automation of processes such as the scheduling of visits via the app, digital signature of rental contracts and the replacement of guarantors and deposits with the firm’s own guarantee for clients with a good credit score (insured by an undisclosed third party).
Creating a new market
Quinto Andar’s impact on the real estate market goes beyond simplification of processes that tend to be quite painful. This is due to the massive amount of insight the startup has managed to gather during its existence.
“We understood that renting is much more compatible with the flexibility and mobility that people want. At the same time, the rental process is still laborious and inefficient to enable that kind of lifestyle,” Braga told FORBES.
The startup’s founder has been talking to real estate, construction and real estate funds about the advantages of the rental market. The idea is to create something similar to the multi-family buildings market seen in the United States, something that is virtually inexistent in Brazil.
However, there are challenges related to the creation of this new segment, which Braga intends to help solve. One possibility is to offer the Quinto Andar database to companies to guide decisions on aspects such as the ideal location of buildings focused on rental, amounts that can be charged by companies, features more valued in apartments and other factors that influence propety attractiveness.
“Given that we have a granular understanding of what happens in the market, we can help companies design these future ventures in a smart way,” he said.
The startup’s promise to large real estate and construction companies is that the new model can bring levels of liquidity that are higher than what is currently possible in Brazil’s traditional rental market:
“A new category of housing created in partnership with builders will produce real estate with vacancy lower than the market average, with a return on investment that is difficult to obtain today,” Braga pointed out.
Data analysis will also be used as a tool to assist individual owners, with recommendations on aspects of real estate management, such as specific improvements needed to increase the attractiveness of properties. An offering of renovation financing is in Braga’s plans, supported by the startup’s marketplace of service providers.
Although Quinto Andar’s main USP is to use technology to simplify processes and create new business opportunities, Braga intends to strengthen ties with real estate companies. One of the goals for 2019 is to offer the platform and benefits of startup automation to them, to serve customers who do not yet want – or fail to – follow the digital wave.
“Real estate firms understand the changes we are bringing and are curious about how they can adapt to this new reality of empowering customers through technology and reinvent themselves in order to continue having some market relevance,” the founder observed.
With additional backers such as Kaszek Ventures and Ruane as well as Cunniff and Goldfarb, Qualcomm Ventures and QED, Quinto Andar has been receiving more attention outside Brazil and its business model has also become clearer for the international community.
“Brazilians understand the pain that is renting, the need to find a guarantor or a deposit, but Americans for example may not understand what we were trying to address straight away,” Braga said.
“It took some time until people could understand our model with the same level of clarity outside Brazil. Also, a funding round like the one led by General Atlantic grabs people’s attention and so they try and understand it better.”
The company intends to continue expanding its domestic operation, but Braga does not rule out a brief international expansion: “Countries known for inefficiency and bureaucracy in leasing processes are a good opportunity for us both in Latin America and in Europe.”
“We want to expand internationally, it is important to be ambitious and have great plans, while also being aware of the need to take one step at a time.”