by Stefanie Claudia Müller
Europe becomes more and more attractive for Latin America where Democratic instability is impacting negatively the development of the continent. We talk to André Penha, Co-Founder and CTO of QuintoAndar, a Brazilian company dedicated to using technology and design to simplify residential rentals from end to end – for landlords and tenants alike. The company sees in Europe their next important market, also because it is so attractive as home and second home for so many people around the world. Europe become more and more attractive for Latin America where democratic instability is impacting negatively the development of the continent.
A computer engineer graduated from Unicamp, André holds a master’s degree in computer science from the same university and an MBA from Stanford University. He has 15-plus years’ experience as an entrepreneur, having founded an electronic games company in 2002 and Tectoy Digital, Tectoy’s game studio, in 2006. He also presided over the Brazilian association of gaming developers between 2007-08. In 2012 he met Gabriel Braga at Stanford and together they created QuintoAndar, which is transforming the residential rental business in Brazil and is one of the fastest growing startups in the country.
1. What do you want to change in a very mature market?
The experience with real estate is bad in almost every market, particularly when it comes to residential rental – regardless of the market being mature or not. Our goal is to improve that experience to all: landlords, tenants and everyone in between, from brokers and agents to service providers.
We don’t require guarantees (such as deposits, renters’ insurance or co-signers) from tenants; we ensure landlords will receive rent on time every month, regardless of payment from the tenant; we ensure the property will be in the exact same condition in the end of the contract as it was at the beginning. All of this improves the liquidity of the properties and makes it easier for people to find the right home for them.
2. What are your goals in Europe?
There are many markets with similar characteristics as the Brazilian one, to which our model is the best available. Fragmented markets, with a high number of individual landlords (thus, not professional real estate experts) and plenty of cumbersome and costly bureaucracy are a reality in many countries, including some in Europe. The southern part of the continent, i.e. Spain and Portugal, Italy and parts of France, have these characteristics mentioned above. Thus, our model can have a strong, positive impact on these markets. We are now ready to expand internationally and, while still studying where to go first, some areas, such these countries in Europe, stick out as interesting options for us.
3. What is so innovative about your concept?
The average time to rent a place in the offline market in Sao Paulo, for example, is 40 days. At QuintoAndar, the average is 4 days and our record is 1.5 hour. This is only possible because we apply technology as a problem solving tool. Search is better at QuintoAndar, negotiation is much simpler and the contract signing is lightning fast.
We also feature online visit-booking, which makes the process faster as the tenant has only to choose a day and time that works for him and an agent will be there to meet him. For the agents that operate on our platform, we even optimize their routes within their areas of coverage so they can make more visits a day.
The negotiation and contract signing are also all done digitally, through QuintoAndar. The prospective tenant negotiates directly with the landlord and we only intervene when necessary and/or requested by one of the parts. As soon as they reach an agreement, the tenant sends his documentation online. We don’t require any kind of guarantee such as a deposit, a renters’ insurance or a co-signer (which is common practice in several markets throughout the world). The only thing required from the tenant is that he is approved in the credit analysis conducted by QuintoAndar, which employs statistical regression over the information provided by the tenant to evaluate if they will be able to honour their offer. If this checks-out, both the landlord and the tenant are sent a copy of the contract to be signed digitally.
We also eliminate patrimonial risk for the landlord, as we ensure the
property will be returned in the exact same condition it was at the begging of the contract when it ends – if the tenant does not do that, we fix what needs to be fixed to return the property to the landlord while dealing ourselves with the tenant. For tenants, the experience is easier, because it is quicker to find the right home and they don’t need to provide costly and cumbersome guarantees. For landlords, everything we do makes the process ten times faster than usual, which increases their property liquidity, while eliminating risks for them.
4. Isn’t it already a very mature market here?
It is. Mature, important, old and painful for many people. Time for us to come and make it more efficient.
5. Are you hiring?
Yes, we are growing fast and, because of that, are looking for world-class talent, especially software engineers, product managers and developers, to join us. This is also one of the reasons we are looking to Europe, as we are evaluating the possibility of opening an overseas development office to tap into the talent-pool outside Brazil.
6. What kind of people you are looking for?
People with experience doing what we are about to do now: expand internationally, in a very fast pace. We are looking especially for software engineers, product managers and developers, but we also need people that can help us in other key areas of the business, such as marketing, management, etc.
7. How is your link with Portugal?
Brazil is naturally linked to Portugal by origin and culture, so it is an interesting gateway to Europe, although by itself it is too little a market for us to start only here (starting both in Spain and Portugal would make more sense). But Portugal has an interesting policy that comes in handy with our intention to open a development office abroad: they have what they call a ‘tech visa’, which allow foreigners from the tech industry to work in the country. It is important as it makes it easier for us to have some of our people working along with foreign talent on our overseas office and, thus, help speed up their learning curve about QuintoAndar. This is something that definitely counts in Portugal’s favour.
8. What is your opinion about the market there?
The Portuguese market by itself its rather small and would only make economical sense for us in combination with a larger market, like Spain. These two countries’ markets have similar characteristics that are in turn much like the ones of the Brazilian real estate market, thus offering a good fit for QuintoAndar model’s value proposition.
9. Where do you see bubbles (Germany, Switzerland…)?
We don’t have much information about actual bubbles in Europe. This word is often use for speculation. We think however that a better distribution of the installed infrastructure is beneficial for any ecosystem, including residences.
10. With regard to Brazil, how do you see the market there?
The Brazilian market is as huge as it is fragmented. It still presents an enormous opportunity for our model to grow. Although we’re now (by far) the biggest residential rental company in the country, our share in comparison to the entire market is still very small. So, we have lots of ground to cover and we’ll probably do it by partnering with good local real estate agencies.
Also, it’s worth saying that only 20% of the Brazilian residences are rented (the remaining are usually owned by the families), and this is a low number when compared to northern countries. We understand it as a substantial opportunity to develop house renting in Brazil.