Summary of Ep. 155: A Transparent Rental Ecosystem with Openroom CEO

This interview features Weiting Bollu, co-founder and CEO of Openroom by Austin Yeh and Mayu Thava from RISE Network.

Weiting shares her personal experience as a landlord that led to the creation of Openroom, and discusses the platform's features, challenges, and future plans. The conversation covers topics such as the legality of Openroom's public database, their partnership with Equifax for bad debt reporting, and the company's organic growth strategy.

The interview also delves into the broader issues facing the rental market in Ontario, including the staggering amount of unpaid rent (estimated at $800 million to $1.2 billion over two years) and the need for solutions to address the housing crisis. Weiting emphasizes the importance of empowering small housing providers and increasing confidence in the rental market to boost supply.

Transcript

Austin Yeh: Hello everyone. You are listening to the RISE real estate investing podcast with your host, Austin Yeh. Mayu cannot be with us in the preamble today, but don't fret, he will still be in the episode, so make sure to still listen to it. 

Anyways, couple of updates on my end. We'll try to keep this short and sweet, I ended up selling a property that I had with a joint venture partner. It was a single family home in a pretty desirable neighborhood of Sault Ste. Marie. It's one of those unique properties in the sense that it sits on quite a large lot. It's not directly in the city, but it's about a five minute drive away from the city. The reason why we ended up selling it is, is because there wasn't too much we could do with the property in terms of developing it or any potential there. It was really just a long term buy and hold, and because of the lot size, it did require a decent amount of maintenance. There were some issues popping up at the property. We had dealt with a non payment of rent that obviously wasn't great. We had a sump pump backup that led to a couple thousand dollars to fix in the basement. On top of that, outside of just the sump pump backup, although we're able to go through insurance, there was still a deductible that we had to pay out of pocket. We had to install a UV, and there were a bunch of other small costs that sort of popped up. I say small loosely, it is a couple thousand dollars fixes here and there throughout. But there were a lot of those capital calls that we were having with this property. So we ended up just disposing of it and walking away. We still had a decent amount of profit, not a whole ton, but, um, I mean, something is better than nothing, especially in today's market. And it was definitely a lot of headache alleviated from our shoulders because we could have saw this property to continue to accumulate capital calls. And there's probably an upside potential on what this property would be worth. Um, just because again, it's in Sault Ste. Marie. It's a little bit outside the city core, so there's a probably a peak of what prices could be around and we weren't confident that prices were going to accelerate aggressively around this area. So it made sense for us to exit it, take the profits, and redeploy it elsewhere. Can't help to think, though, we probably would have made more money buying it and just flipping it instead of holding onto the property because it ended up costing us more to hold on to the asset itself than if we were just to renovate it and sell it for a profit immediately. But you live and you learn, I guess. And also, we purchased this property late in 2022 when the market was still soft. Um, so we didn't feel very confident in, in just selling it immediately. But anyways, again, learning lessons outside of that wholesaling is still trending along nicely. The fees aren't as great as they were when we were getting started, but still happy to see that our deals are moving. We actually had a transaction not closed by a buyer. Um, so, I mean, a learning lesson there. We did collect a deposit, but now we're getting more aggressive in the deposits that we asked up front because not all buyers will see it through to closing. Unfortunately, this particular buyer, they talked themselves up to be, you know, an investor that does a lot of volume. And then when push came to shove, they weren't able to close the deal. Had to extend it five times. Not going to name the name of them, but, yeah, I mean, just for the record, I mean, whatever you guys see on social media isn't always the case of that person's integrity or if they're doing very well. And on a side note, there was a book that actually just came out by Sean Schwenker and Andrew Hines. I'm sure most of you guys are familiar with who Andrew Hines is, but John has actually been working closely with Andrew in terms of publishing a new Canadian real estate book. It's called the real estate Titans, Tools, Tactics and wisdom for Canadian real estate wealth. And I suggest you guys check it out on Amazon. I believe the day that this podcast comes out, it's only ninety nine cents to buy. It's already a bestseller, if I'm not mistaken. And my, you and I are both featured in the book, so make sure to support it. Give it a read. Let us know what you think. 

Outside of that, there was a lot of big news that came out last week. One of the biggest articles was the record breaking population growth in the working age population segment in Canada. It increased by 47% year over year. And remember, last year, 2023, we let in 1.3 million newcomers. This year, from January to February, we let in over 410,000 people in the working age population. And to put things in perspective on how bonkers these numbers are, every year from 2027 to 2022, within the first four months of the year, on average, we let in a little over 110,000 people. This year, January alone, we surpassed that we let in over 124,000 people in the working age population in January alone. Sort of National Bank's thoughts around that is that this huge population boom in this segment is because earlier in the year, Ottawa announced that they're going to be capping the share of non permanent residents that are going to be allowed into Canada again later on in this year. And so that caused a surge of people to immigrate into the country before those rules actually take place, and that led to a short term population boom. But of course, as real estate investors, what this means is that our already low vacancy rates are probably going to get lower and this is going to put more stress on the rental demand and thus lead to increase in rents, which is great for investors. But also at the same time, it's unfortunate for the country as a whole. Through this poor leadership, we're just letting in way too many people. There's not enough housing supply. It's going to cause more strain on housing demand and supply over the long term, which is probably going to put more of an upward pressure on rent. So obviously not great news for Canada as a whole. But as a real estate investor, um, this may cause some upward pressure in prices over the long term and definitely some upward pressure and rents over the short term. 

Introduction to Weiting and Openroom

Anyways, enough rambling for me. I'm very excited for today's episode. We're able to get on. Weiting Bollu, who is the co-founder and CEO of Openroom. For those who don't know what Openroom is, they're a platform that's building the future of a transparent and connected rental ecosystem. To get there, Openroom helps you make informed rent decisions by enabling access to tenancy court orders. If your property manager, paralegal or even yourself as an investor isn't using Openroom, you definitely should. It's completely free. I use it all of the time for my rental screening. Basically all you would do is go on the website and you can search a specific address or tenant by name and see if they have any sort of LTB cases associated with their name. This is extremely important. Believe it or not, this is a platform that didn't exist for a very long time. So we're very fortunate in interviewing Weiting's entrepreneurial journey on how she was able to get started with Openroom, how it took off, where they expected to take it, and also we get into so many other interesting data points about the LTB non payment of rents and how that can impact mom and pop landlords. But on the flip side, we also talk about how this platform can be used by tenants as well to find landlords who are bad actors in the game, which is, of course, something we also want to get rid of bad landlords.

 Before we jump into today's episode, we do want to make a quick correction in some of the stats that were talked about. Again, accuracy is very important. So in the podcast, you'll hear that we throw around the number 126,000 cases in the LTB from 2022 to 2023. We want to make a correction. It was actually 73,000 cases in total from that year. But over the course of three years, there were 180,000 LTB cases filed by tenants and landlords. Either way, Openroom has less than 8% of all cases over the last three years. So we wanted to make that quick correction. Without further ado, we're going to jump into today's podcast episode. We had a really great time filming it and hope you guys enjoy too. Let's jump right on in. Hello, everyone. We have a very special guest with us today. We have Weiting Bollu, who is the CEO and co-founder of Openroom. I'm sure many of you guys are already aware of what that's all about. We ting, thank you so much for joining us today.

Weiting Bollu: Thank you very much, Austin. And may you for having me on the podcast.

Mayu Thava: No, for sure. I think it's our pleasure. I think this is gonna be a different episode from what we normally do with pure real estate investors and developers and stuff like that. But for anyone that doesn't know you that doesn't know Openroom as well, I want to give everyone a quick update on who you are and then who and what Openroom is.

Weiting’s professional background

Weiting Bollu: Yes, my name is Weiting Bollu. I am the co-founder and CEO of Openroom. My background has always been in product software management, so built software products my entire decade after university. So I specialized in the past in insurance companies, education, artificial intelligence, NLP, natural language processing. So very well versed in building fantastic products that people use. And when it comes to Openroom, Openroom, what we do right now, all we offer, but it seems to have gotten thousands of eyeballs on it, is we aggregate tenancy specific court orders. Or once you've gone through a dispute and are searchable by the public, that way you can make informed decisions before you rent or decide who you want to rent to.

Austin Yeh: Awesome. Yeah, I mean, it's. It's about time since we had a program like that in the marketplace. Before we jump too deep into Openroom, I think we kind of want to take it in chronological order, your origins. So you mentioned that you had a little bit of work experience before getting into Openroom. Like, what was that? What was that journey like to even start? Were you involved in real estate in any way before you began Openroom? Or could you walk us through that?

Weiting Bollu: Oh, yes. I spent over a decade managing family and extended family, friends, properties. So back in the day, like, I remember my dad had a basement unit, and basically I grew up helping him manage. And then relatives or family friends were like, oh, yeah, we jing, you studied business, you've been helping dad manage. How about you take on our properties for free as well? So I basically learned by trial and error and did not have formal education from a real estate or property management side of things. So I made plenty of mistakes on the way, including the big mistake that I made that led me to build Openroom.

Austin Yeh: And what was that big mistake?

Weiting’s initial mistakes in property management

Weiting Bollu: Yeah. Oh, man. Okay. So I bought a property. It was supposed to be primary residence, but at the time, I was like, you know what? I'm still fairly young. I will go and live in my mom and dad's property first, or in their basement, for lack of better words there, just for transparency sake. And then from there, I was like, all right, so I have this property. Let me go search for a set of tenants. And this was like, back in 2017. And so I had found a set of tenants. Didn't really do much due diligence check on them. However, at the end of the day, they still paid rent up until the pandemic. So when the pandemic happened, their business had closed down. Because they owned their own business. It was a cash business. 

At the end of the year, I knew that I wanted to grow my family. So I had originally issued the N12. For those who don't know, “please leave my property because I need it for personal use”. So from there, I had given it, given the compensation, but then tenants decided they weren't going to leave, and now they're going to not pay me any rent anymore. So that took an entire two years to solve. At the LTB, I was going back and forth trying to fill out my notices, give it to them, do the filing, made multiple mistakes along the way, which is what dragged it out. 

How Openroom started

Weiting Bollu:I had gone to the LTB multiple times, got these orders at the end of the day and said, this is public information. Why doesn't anybody else know about this? Or why isn't there a place for me to put this online? Because it's public information. So then that's when I turned to my partner, because we both actually build software for a living, and we said, can we go build something? And that's the impetus of Openroom, where we then started with just five of my specific orders in the system, and now to 15,000 in the system.

Mayu Thava: And Openroom hasn't even been around for, I guess, that long. Right? I think it was 2023 or so, like, early that I think we'd heard of it. And there were some other companies along the way that had tried to kind of certain variations of the similar product, but had never really taken off with mass adoption, like you guys did. So that first tenant, you eventually get them out with 35,000, I guess, or so. Or was it 30,000 or something? In rents owing. Right. What then happens? Do you guys end up selling the property? Did you own it? Did you continue to purchase? Where did you go from there?

Weiting Bollu: No, we got $0 back from that set of tenants. We are not renting it out anymore. So we took it back into our own possession right now.

Recovering rent through collections

Austin Yeh: Oh, you didn't. So you didn't go through collections or anything like that?

Weiting Bollu: The thing is, Austin, for the collections route, there has to be something to collect. And because they own their own business, they earned a cash business. It's very difficult, but it doesn't mean it's not possible. I think that I am also exploring a couple paths for Openroom to help more people with this. So I'm exploring various partnerships. So I almost want myself to be a guinea pig. Coming up. Coming up soon.

Mayu Thava: Right, very interesting. I've got enough not unpaid rent that we haven't gone through collections for. Because even just going through the collections process is expensive and sometimes requires money. And there's been people that have found, you know, partners that will do it on a commission split and stuff.

Weiting Bollu: Right, yeah. And you also have to think about a lot of the mentality when you have that unpaid rent is, are you going to throw good money at bad money? Right, right. Cause it's bad debt already. So then it's like, oh, my gosh, I have to continue to put money down this path when I'm maybe never going to see this money again. Because collections agencies have told me that the collections rate is about one out of five.

Austin Yeh: Yeah, yeah, that. That seems to make sense. I sort of. What we heard from my paralegal is. Is that the reason why it's so low is people end up abandoning it because it takes two years. You don't get any results. You have to throw in to your point. You have to throw in more money, more time, more stress, more headache until it finally pans out. So at what point are you, like, forget it. Let me move on with my life and just sort of, you know, take this as an expensive learning lesson. I'm sort of curious. So now that we've sort of heard their origin story of Openroom, I want to get into understanding what it is a bit more. So Maya was mentioning there's been, like, sort of variations. May not accomplish the exact same thing, but, like, one of the common things that kept on coming up is quote unquote, bad tenant list. Right. How you're not allowed to do that. So whenever there were these Facebook groups, I think people try to make it themselves and just share different tenants not paying rent, et cetera, et cetera. It always got shut down or made it to the news or something along those lines. So what makes Openroom different than, quote unquote, a bad tenant list?

Is Openroom a “bad tenant list”?

Weiting Bollu: I mean, we also made it into the news, but we didn't get shut down, at least not yet. 

I'd say the main difference for us is that these are public documents. These can be requested by the public, and it's very, very factual. Right. And whereas what you were mentioning earlier, Mayu, is that these are Facebook groups that may have started and they're really based on, okay, I'm a landlord. I didn't even have a court order or anything of evidence, and I just basically post names. That is not okay. We do not accept reviews on tenants, reviews on landlords. It is a pure, factual piece of information that you give us before we make it public. And we do our due diligence in ensuring we check through everything. And as soon as there is a dispute in the system on a specific order, which we get very few of because we do very thorough due diligence checks, then we will actually go to the LTB, the tribunals, and request what we do is called the freedom of information request to request the original documentation.

Mayu Thava: That's very interesting. Yeah. Because I think I’ve been in a situation like, there’s a Google Drive link with a Google sheet that had, this is back to 2018 and stuff. And I'm like, man, I understand if you're heated up in the moment and you want to release this stuff, but  ah man. So is Openroom still then dependent on the landlord coming in and uploading their report into Openroom? Or is it just all cases get automatically inputted into Openroom?

Weiting Bollu: No, no, it is not all cases at the moment. So what is it right now, May 2024, we do not have all of the cases. It is, I say the majority is from people who are uploading their fresh cases after they've gone to the LTB, into our system. But we do have also people who have, say, gone to Canlii and actually said, okay, Openroom. This is a great CanLII piece. You should have this in your system as well because our system is a much easier search function than other platforms. That’s one. And then the other one is we have some very avid supporters who actually listen in to hearings at the LTB like on a daily basis, and then they do the freedom of information request to the LTB, they get the documents and they send it in to us.

Austin Yeh: Awesome. And just to make things clearer, this is both on the tenant and the landlord side.

Weiting Bollu: Yes.

Austin Yeh: So you can easily, the tenant has filed something to a landlord. There's also transparency on that end as well.

Weiting Bollu: Yes, the tenants can also upload. Doesn't matter who you are. And actually paralegals can upload as well. It's not specific to just landlords, but we on our side never disclose how or by whom the specific order was uploaded or the method of it. We just say these are the various methods. So we want to provide confidentiality to the people who have helped us.

Austin Yeh: So obviously it's sort of like a crowdfunding model. People will put in as they can. Is there a way, you let me know. Maybe not right now, but is there a vision to take it such that it's a little bit more automated? Because let's say a paralegal with a hundred files wants to upload it. Do they have to get their admin to upload each one? Or is there a way just where it takes ten minutes and everything's on there?

Weiting Bollu: Oh, I would love it if more bigger property management firms or paralegals could send in the documents because they hold a bunch and they're not yet fully contributing to the community yet they are searching the Openroom platform, right? So they're taking, but they're not giving. And from my perspective is -you have to help the community and the more that we have, the better that we have. So then bottom line is there is a way right now you can prepare a Google Drive for me with all of the documents and then my team can go and do all of that. You do not need to have an admin do any of the uploading if you don't need to.

Mayu Thava: Very, very interesting. So about the system. So it's not, if I file like an N4, n eleven, N12, something like that, that's not showing up here. It literally has to go to the court, which means there's very often, like the money is owed, there's a judgment, and then the judgment is what we can upload here.

Weiting Bollu: Right now, as we're speaking, you technically could still upload an application. However, I want to caveat that in the next week, we're coming out with the next big thing of Openroom, which we can dive into a little bit about, but we are no longer going to be accepting app. So we only, as you said, get that final judgment and that is all we hone in on.

Mayu Thava: Why is that?

Openroom only post final judgements

Weiting Bollu: Yeah, yeah. Great, great question. So I'll give you a little bit more statistics, because I do want to be transparent to the public about this. Is that number one when we came out with, yes, we're accepting applications is because we really looked at the problem and said from Openroom stance, but how long does it take to get to the LTB? About six months or so. Right. That's a very long time. So we wanted to give people an option to put cases out there prior to the hearing. Okay. But how many did we end up getting? It was about 300. And right now we have about north of 15,000 orders in the system. So that means it's roughly around 2%. That's not significant. Okay. So when we went out with the hypothesis that this is going to help the community, we expected larger numbers, but because the community is not actually looking at this and be like, this is significant and neither are we. We decided, you know what, let's take it down. But the other really big reason is that we're looking, reading, hearing and discussing with the community, our users and each of you. Is this the right path for Openroom? And there are concerns or challenges that were raised, and very valid is that this is pre hearing, so let's not talk about those and not make those public. So those are some of the reasons why we've decided let's not do applications anymore.

Austin Yeh: Yeah.

Mayu Thava: Is it a legality and, like a liability concern? Because, like, I personally didn't know that you could upload n forms and l forms like onto Openroom. And I also think as an investor looking at buying another property like that would be a really useful tool to type in the address of the property I'm looking to buy. If the n forms are going to show up there. Right? Like, I'm going to assume, you know, if there's a non-payment of rent tenant and there's already a court order and that tenant and now that, like, what do I really care about? Right. But, like, I want to know what orders are actually, like, in place when I'm buying that property. Is this guy actually paying, paying rent? How many instances of that, like, just, uh, disturbing the peace of others or whatever that form is called. I can't remember what it is. Right. How many instances of those are out? Right. Like, that's all, like, really useful information. I just don't know if people knew that you could upload.

Weiting Bollu: Yeah, no, we don't. We don't take notices. So I just want to make sure that everybody knows the sequence of. There are three phases. The first one is the end notices that you would give. So a landlord would issue the N4 for nonpayment of rent. And then you wait a couple of weeks or how much, whatever that termination date is, and then you go and file. So the filing or the application, we only accepted a certain set of applications. And then there's that third phase of “get that”. Go to that hearing, get that judgment. So we never did phase one. We never accepted just on issuance of a notice. Right. Cause that is like, it could be false, it could be wrong, but we accepted things as soon as someone filed to the LTB. That means that you've committed money and there's factual information in there. That's when we started accepting. But we're no longer going to be accepting that. And we always accepted any type of final order. Okay? And that is still going to be the case.

Austin Yeh: And to your point, it makes sense not to accept the notices because it's like an accusation, right? Let's say that someone saying, like, to my use point, you know, the n five where you're disturbing the piece or the house is dirty, et cetera, et cetera. That could all be false because you're trying to get the tenant out, so you're writing whatever you can. But if I, as a landlord, saw that on there, I would take it as true, possibly, right? Even if it's not always true and vice versa as well. Tenants can file things about landlords that aren't necessarily true. So it puts everyone in a difficult situation. Now I'm wondering if, let's say there's a lot, at least for me, I can speak from my own personal experience. I usually file the form and the tenant and I usually figure something out. And so we never have to go to court. Right. And then we just not don't show up. That will continue to appear on the system if it's like grizzle, but it. No one ends up going to court, so they kind of just drop it or close it.

Weiting Bollu: Well, there has to be a final order, but if there's the withdrawal or listed on that order, we'll still take it. But what we've started to do is actually protect the tenants if they are in the right. So, for example, bad faith evictions. If a tenant took a landlord to tLTB based on bad faith evictions, what we'll do is actually redact the name from being searched in the system. And that's really important for us because we want to hold the bad landlords or bad housing providers accountable for their actions.

Austin Yeh: Right.

The legality of Openroom’s public database

Weiting Bollu: And I also actually wanted to address one more thing from Mayu on the legality piece. Right. What people might not know, and people can do this, like, as the public, you. You can do this. You can go to the LTB and request its freedom of information request on a specific person, and you get not just the order, but the application and the notices that were filed. So when we talk about public information. Yeah. All of that is given to you by the LTB when you request for it.

Austin Yeh: Talk about a golden nugget.

Mayu Thava: How long does that normally take?

Weiting Bollu: It takes about a month to get it back. Yeah.

Austin Yeh: That's still really good information to know. No one has ever actually mentioned that to us.

Mayu Thava: Yeah.

Austin Yeh: Nor have we heard the community talk about it. So that's very interesting to know.

Weiting Bollu: Yeah. Yeah.

Mayu Thava: Like, kind of like processing that. So I was just going to add here. So the movement towards protecting the tenants, I'm sure Openroom got a little bit of backlash, especially with all the stuff going on with tenants and Nords and Covid and the recent environment as well. Just kind of LTB cases piling up and stuff like that. Is that kind of some of the issues that you were seeing is these bad faith evictions? And then I guess the entire concern is, like, if a tenant’s name pops up when you search and that tenant didn't allow the landlord to move into their property, whether or not it was good or bad faith. Kind of, like, shown as being a little bit rebellious. Okay, so the first question is, a, was that the backlash that people were giving is that they're now getting in trouble for signing up against these. N12 I believe, is what the form was. And then, b, how are you identifying what's a bad faith eviction versus a normal eviction or someone wanting to move in.

Openroom’s protection of sensitive information

Weiting Bollu: I don't personally go into any specifics, like when an order is submitted to us. So I don't dive into speak to the landlord, speak to the tenant. It is whatever that is presented in front of me. If it's an order, we take it. And to your first question of the backlash, how we build at Openroom is we are seriously obsessed with the users and your feedback. So we are reading Reddit, we're browsing Facebook. Like, even though I don't make comments, I am watching the people who are tagging me in their stories or comments. I'm reading, we are reading everything. And from that, yeah, comes with feedback. And we do care about the community that we serve. Right. I'm not here to weaponize the data or the court orders that we have because an alternative we take could go down that path. We have very sensitive data about people, and I want people to know that I take this very seriously. And we really, really want to protect, protect people's privacy. But because we're very young, we're a two person startup to be very transparent. I hope that in the future we will grow. But with that comes many challenges that we can't solve on day one. And if I can't solve it on day one, that doesn't mean I'm never going to solve it. I'm hearing the complaints or I'm hearing the avid supporters. I'll get there. I'm going to get there, but not today.

Austin Yeh: So speaking of sort of problems that you're overcoming, what are the current hurdles that are popping up and what do you need to do to sort of address them? I know that you're getting a lot of feedback. Like, is there a common piece of feedback that a lot of people have?

Openroom’s challenges

Weiting Bollu: Oh, good question. I'd say there are problems or challenges that the community is experiencing and they'd like Openroom to be helping. But there's also business challenges because both my co-founder and I had quit our jobs back in mid February to work on Openroom full time. So which route do you want to tackle?

Austin Yeh: Let's go with business challenges first.

Business challenge 1: How does Openroom provide education?

Weiting Bollu: Okay. Okay. Business challenges. Some of the things that we're working on is how can we provide more content to help people stay educated or get educated. One of the reasons why I was ignorant and lost a whole bunch of money, in my experience, is because I didn't know what I was doing right. I thought that being a landlord is passive income, which is what a lot of people say, and a lot of people think, but it is the farthest from passive income. So one of the challenges is how do you educate the community? So we have a training program, but not everybody wants or can pay for a training program. So I try to educate a lot through Instagram, for example. All right. Some of our content had gone viral, which is fantastic to see that people resonate. I was very surprised on that end. And then the second challenge that I would say is monetization of the platform. Okay. So if we look at how do we make money to continue to be able to offer value to the users and the rental ecosystem, that is something that we're working around. And all of 2024 is going to be about experimentation.

Mayu Thava: I do see. So there's the monetization plan. Is that coming as well for, like, certain types of orders? Or is it going to be like, every time we want to rent out a property, you want to do a search, you then have to, like, pay for it. And is it tenants and landlords that are both going to be paying for it? Yeah, I'm curious on that side, like, what the business side would look like, because ultimately the business, you have to make funds. It's not like you're government funded. And I don't necessarily think we'd want you to be government funded either. So.

Business challenge 2: How does Openroom monetize that platform while keeping it accessible?

Weiting Bollu: Yeah, my. My prerogative might change. Right? Like, oh, sorry, everybody. My, my customer is now the government. Uh, but you know what fundamental level is that? We have a community that helps build Openroom. We're building in public with everybody, and the orders in the system are from the public. So we believe that there's a fundamental level that needs to be free because the community is actually helping us build Openroom. So with search, do not worry, that part, you're still going to be allowed to search. But what we'll start charging on is like, added value services. Okay? So that could come in the form of you want to see more than ten results on your search, then pay a little bit extra, or you want a heightened level of support. You want to talk to we ching because you want to jump on the phone, you don't want to do, like, email and wait for me to resolve certain issues, then you'd pay a little bit more in order to get that. And then there are several things that are in the pipeline, in the works that I can't speak to, but what I can share is there's also going to be bad debt reporting.

Austin Yeh: Awesome. And speaking of sort of, like, business challenges earlier, I've also noticed that on the website you guys have some collaborative. So you collaborated with Equifax a while back ago, if I'm not mistaken. What is that all about? What is that partnership? And are there, you probably can't disclose if there are any other partnerships, but are you working on partnering with other companies and if so, what is the goal to accomplish with these partnerships?

Weiting Bollu: Oh, yeah, absolutely. I'm always looking at partnerships because how I see it is that there's, we're in a housing crisis and it's not just up to one player to solve it. But if multiple players can gather together for that bright future, I'm all in for it. I'm raising my hand. So if anybody's listening, you have a company that you think we could all work together, call me. Okay. But when it comes to Equifax, to address that question, it is all about rental reporting. But first we're going to start off with bad debt reporting because much in our system are the court orders that have arrears. So with that, the next natural flow is to get those reported into the credit bureau so that it can negatively affect someone's credit score and their credit history. So that's the piece that we're working with Equifax on.

Austin Yeh: How does that work? So if you get a judgment of 10,000, is it automatic or do I have to take a step to make it to ensure that it's reported? Equifax?

Openroom’s Bad Debt Reporting

Weiting Bollu: Yeah. If you are the housing provider, you need to let us know and give us that consent to get it onto the credit bureau. But because it's bad debt, you do not need your tenants or whoever the person owing the rent from to consent to it. So you can make that decision that you want Openroom to be that “data aggregator” is what we call it, to send that data to Equifax.

Mayu Thava: So this is kind of like Front Lobby, which is another company that I think… provides completely different service, but they're more about month to month reporting to the credit bureau. This is more about reporting the outstanding debt on to Equifax, which is likely to get garnigh a bigger response, I'd imagine as well. Right? Like it's more likely for them to then repay you. But is that kind of the difference between you guys and Front Lobby, where Front Lobby, month to month? You guys are after the fact?

Weiting Bollu: Yeah. If we want to dive into how Front Lobby does it is that they actually do bad debt reporting as well. So anybody who has bad debt, fantastic company, Front Lobby. Right. But they also do the on time rent reporting. And from our perspective, we have a different method in terms of what gets reported. So we don't take any type of bad debt. You have to have a court order before we accept it as bad debt. And later on in the future, we're thinking through ways and if we want to go down the on time rent reporting side, that's the next natural step if we were to take that route.

Austin Yeh: Interesting. Have you guys looked into. I know we're sort of just throwing ideas now, but that's sort of how the podcast goes. Um, just because of the pro. Listen, like Ontario specific, uh, or I guess like Ontario, BC. A lot of these like bigger provinces is where you'll find a lot of these issues. Edmonton, uh, Alberta, probably not as much, but because of this sort of issue of like backlog of LTB cases, eight months to a year for eviction, non payment being drawn out, there are like these different companies that sort of spawn out. One of them is Single Key if you've heard of them. And their entire premise is it's almost like an insurance for landlords, where you pay…I don't know exactly. I think you pay a certain amount every month or percentage of something and they'll insure your rent in the case that a tenant stops paying. There’s probably some fine, like, you know, there's probably some rules around it if you, if you read a little bit closer. But have you guys looked into expanding outside of just simply. I say simply, but it's obviously a big thing outside of reporting. Um, you know, these, uh, these  LTB cases, whatever's on CanLII like. Have you thought about other avenues on how you can grow outside of that?

Openroom’s partnerships

Weiting Bollu: Yeah. Austin, when we look at solutions, we have to really hone in on what are the problems to be solved and whether Openroom or Weiting or my co-founder are the right people with the unfair advantage to go and solve it. Because why do we care about that? Because, one, there are great players in the industry that are already solving it. Openroom doesn't need to come in and try to build the same thing that somebody else is doing, right? So we really have to look at is there still a problem or a gap that needs to be solved? And how we see it is, if Openroom is going to touch it, we better do it freaking well. And if we're going to affect someone's credit, it better be accurate to the scent. All right. And then second piece is, if there's people who are already doing this fantastic Openroom doesn't need to do it, but can we partner? So to that original question that you had asked me earlier is like, are we looking at these partnerships and what are we trying to do with it? Heck, yes. We've spoken to many, many partners, and we're figuring out how do we work together. I don't have any specifics to share, but there are all of the major players that you're thinking about. They have contacted us wanting to do certain things, and we just, right now, I don't have anything very specific to share, but they're coming up soon. Okay, good to hear.

Mayu Thava: Because I think, you know, this example, and even if you look at what's happened with, I think it was solo that had that entire, like, campaign. Not campaign, but it was like a court case or something that against the government. And then you have like three or four different people pop up, everyone trying to do the same thing. Right. Which just ends up being counterproductive. It's like, hey, did I just donate to this COurt Order, like, thing that we're trying to do here? And then someone else is raising funds for it as well. Right? So, you know, you guys are serving a different function. Front lobby serving different, one single. She's offering the service in a different one. It would be great to see everyone come together in one way, capacity or form. Right. That would really be good. Now for Openroom as a whole, just trying to cognizant of time. You guys have had a really good growth rate. I see you guys on Reddit. I see you guys. And I spend a lot of time on Reddit as Well. So I see you guys on there, and more and more people are talking about you guys. Not enough. And I still think a lot of people can learn, right, about open doom and what you guys do. What's the next, what's the plan for growth, right? Because ultimately, the More people that know you guys, more people that are uploading, the more people using. That's the key. So what's the next plan?

Openroom’s organic advertising strategy

Weiting Bollu: Yeah, I mean, I was telling you earlier that it's a very small operations over here. So some of the things that we're working on is the social media element is, can Weiting, put that face to the brand, to the company? Because people buy from, buy from people. Right? You transact with businesses. So I really want to show people that there is a face behind Openroom, and that's Weiting or my co-founder. And this is why you can trust us, because, heck, I am trying to build in public. I'm trying to show you all of the behind the scenes. So the growth from me there is, you'll see us do a lot of organic growth methods. Okay. Whether that would be through social media or alternative methods, but our stance right now is still $0 in advertising and continue to grow through word of mouth. When you say you, you see us on Reddit. I'm reading, but I actually don't have any accounts on Reddit that I post with. So all the people out there, it's funny that you mentioned that because there are people on Reddit that think that I'm paying people to talk about Openroom or advocate for us. That is not true. And I just want to make sure that everybody knows that.

Mayu Thava: But no, I just mean I see people, like, complaining or talking about a tenant issue and like, a comment will reference something about, Openroom at some point. Right. And that's good to see because that means being more recognized by the public and it's being more utilized and stuff like that as well. Right?

Weiting Bollu: Yeah.

Mayu Thava: You guys should, you should pay someone to advertise on Reddit for you guys. That would be good. Why not? Right?

Weiting Bollu: But, but why? Because people are already talking to me without me paying. That means that we're already offering additional value that doesn't need to be paid. Right. So that, that's how I see it. Is that what can we do to offer tremendous value? So I always like the concept of give lots before we take. And I hope that the community sees us as they've been receiving a lot from Openroom that they're willing to say, buy us a coffee. So many hundreds of people have bought us coffee and we are very well caffeinated. Like, I've got, I've got, I've got this one today. Yeah, yeah.

Austin Yeh: Rise. Network members, audience members, listen up and buy Openroom coffee. We'll get you a lot more. Um, I'm curious if you guys, because you have access to all of this information, it's all public information, as you mentioned before. Do you ever take a look at, like, the data behind it? Like how, what percentage is non payment, like what percentage is like a renoviction, bad faith eviction, et cetera, et cetera. And if you do, would you mind sharing high levels, sort of what you've seen it with that data?

Weiting Bollu: We're actually going to allow all of you to research that data.

Austin Yeh: That's awesome.

Weiting Bollu: That's the logged in experience. So if people want to log in, you don't have to because there's still a portion of the, what exists today on the site. So you don't have to log in, do a search. That may change in the future, but for those of you who want to log in, do more refined search, do more research. Right. There are topics of nonpayment of rent, top adjudicators or top paralegals that you can see with the most number of cases. 

Area with highest non-payment of rent in Ontario

Weiting Bollu: Yeah, but some of the stats that I could share with you and the audience is guess where there is the most non payment of rent. Which geographical postal code?

Austin Yeh: I can't guess because you told me the answer, so my.

Weiting Bollu: That's true.

Mayu Thava: I'm assuming it's Toronto.

Weiting Bollu: No, but where in Toronto?

Mayu Thava: Oh, where?

Austin Yeh: Condos.

Mayu Thava: Yeah, it's gotta be the condos.

Weiting Bollu: Yeah, yeah, yeah, the condo. So right next to the Rogers center or the, like, city place. City place area. Okay. Yeah, yeah, yeah. It's about $1.7 million of unpaid rent over the last couple of years. And that. That's pretty huge. But when we look at overall total amount over the last couple of years, just based on Openroom data, they have a fraction of what the LTB has. So let me just give everybody some context on, like, we have less than 8% of what applications are submitted to the LTB. So at the LTB in 2022 to 2023, there were about 120,000 applications between the landlord and the tenant filing. But what actual applications result in the order? There is a good number, but we have a very small portion of that. Okay. So from there, total amount owed is over $100 million. Okay.

Austin Yeh: Oh, my gosh.

Weiting Bollu: Yeah. Think about. Yes. In rent owed from tenants to their landlords. Yes.

Mayu Thava: In what period of time?

Weiting Bollu: In the last two years.

Austin Yeh: It's crazy.

Mayu Thava: 60 million, actually.

Weiting Bollu: Crazy.

Austin Yeh: Yeah.

Weiting Bollu: But the thing is, we only have a very small portion of all of the orders that are available. This is why it's so important for people to actually contribute into the system so we can tell a better story.

Mayu Thava: So what percentage of LTB orders do you know or think that you guys have for the last two years or.

Weiting Bollu: Last two to three years? I think we only have about less than 8%. We don't know exact numbers of orders or court orders that came out of the LTB. Right. Because we know. I mean, they report on the applications filed, but they don't report on how many orders come out of that. So I'm only assuming based on the numbers of applications that this is what we have.

Mayu Thava: So if I extrapolate that out. Okay, so $100 million divided by 0.08 means-

Austin Yeh: Wait, sorry, isn't 100 million already extrapolated? Or that's not the extrapolated number.

Weiting Bollu: No, no, no, it's not extrapolated. Mayu, you're on the right track.

Austin Yeh: Yeah.

Mayu Thava: That's $1.2 billion worth of unpaid rent in approximately two years. Look like Openroom probably gets the most expensive unpaid rent ones. That's the time that people are going to be the most upset. If it's $400, maybe I'm not as upset as if it's $10,000. Right. But somewhere around, call it $800 to $1.2 billion in unpaid rent in Ontario in the last two years.

Weiting Bollu: Yep. Yep.

Austin Yeh: Okay, so I don't want to get political, but what are the solutions that need to be? I mean, obviously we have a lot of private companies, independent companies are taking the reins and trying to help, you know, make things better, but what's the solution that needs to be implemented on the government's end? Is it just a matter of, is it more favorable laws or more like lenient laws? Is it more adjudicators than the LTB? What do you think could help sort of reduce that number?

How can we address the housing crisis?

Weiting Bollu: Oh, that is a very loaded question. And I don't know if I have the expertise at a government policy level to answer that, but I think that the problem that needs to be solved is the confidence level of housing providers, especially small housing providers, to put their rental units back on the market or to go and build, say, second lane suites or lane suites to be put back onto the rental market. And why that's important is because then you have higher supply. And then higher supply means that it can meet the demands of the millions of people who are looking for rentals. Or are you renting out or trying to rent from somebody.

Austin Yeh: Right, right.

Mayu Thava: That's basically kind of saying no, that, like, rent prices realistically need to come down.

Austin Yeh: Yeah.

Mayu Thava: For. For this problem to be solved, which I. Which I can understand because that would then also make it more affordable for the average. Joe, I don't think people intentionally don't pay rent. I think it's, you know, something in life has happened. You know, there's something that. That kind of has triggered this event that has resulted in unpaid rent. Right. I think people are genuinely, like, they would prefer to pay rent and be onside with everything if they could. Right. Yeah. So I agree with what you're saying completely, and that does make a lot of sense. But this is a billion, potentially a billion dollar issue, which it's basically taking a billion dollars out of the Ontario GDP because that's a billion dollars that would circulate back through the economy, going back into paying for expenses and increased spending, consumption and blah, blah, blah, blah, all that kind of stuff.

Weiting Bollu: Yes. Yeah. It's huge amounts of money that is owed and not circulating. You're absolutely right. And when we think about the problem of lack of confidence, why it's so important to empower the small housing providers is because we all own about 49% of the entire housing stock. Right. According to CMHC, some statistics that they've released back in the day. So if we can bring us back, maybe that is in the form of better government legislation that looks at both sides. Maybe that is actually tenant advocacy groups looking at not being so extreme in their views when it comes to solutions, because they're. Right now it feels like there's a battle, but some of the solution comes down to actual tenancy, tenant and landlord groups working together. And because some of these groups are just so extreme, it's very, very difficult to talk about the future or a better future.

Austin Yeh: Right. And I think fundamentally we've all sort of mentioned this, is that there's obviously a supply issue. As long as this supply issue continues, it's challenging to see how you can fully make things better, because I can understand a tenant's perspective when you're so frustrated to the point that it's like, whatever I do, I'm not going to be able to save any money. I'm living paycheck to paycheck, screw it. I'm just going to give up on everything and just not pay rent. Like, you know, trying to be empathetic. It might not be the right thing to do, but sort of putting yourself in their position. Maybe they feel like that. Maybe it's like, why? Why pay rent? Like, what's the point? I can't afford anything anymore. And so you're almost forced in that situation, but sort of stepping out from that combo. I just want to round things out a little bit. I saw that on your website. You do have some educational platforms for landlords and I think real estate investors. What was it? One of them was, I have the name here, the rental housing provider trading program. Is that something that you guys still offer? And could you talk a little bit about that?

Weiting Bollu: Yes, we definitely still offer it. Because one of the main issues of small landlords or even new realtors getting into the leasing business is that you don't know what you don't know. And without knowing the laws of the RTA, the LTB, how it functions, the specific legal compliance code that you need to operate, in Ontario you're going to get into a lot of trouble and probably lose a lot of money. So what we do is we offer a virtual training program and we take the learners through all of that and more. We talk about also the standard lease and the addendum clauses that is missing from it. There's like 78 of them and different ways of increasing property value. So I think it's abundance of material that will be very helpful. And I wish it was something that I had back in the day. I think it could have saved me thousands of dollars.

Mayu Thava: Yeah, I think that's true. I think a lot of people just trust, you know, either they're very naive and know nothing about the LTB process, or they're relying on a property manager or realtor to kind of take care of everything for them, which I don't think is the right approach either. Right. I think real estate and the tenant and the tenant groups would hate me for this. But if you think about real estate as a business, you would have just buy business and just assume someone else is going to take care of the entire thing for you. You got to understand and know your business pretty inside and out, right? So we. I think it was a great conversation today. I think we broke down how you guys got started, we broke down Openroom, we broke down. How big? This is still like a shocker for me, just how big this issue is in Ontario because we only see that in micro level and within our own networks. And we know it's an issue, but it's good to try and formulate a rule of thumb on it. So at this point, the podcast we like to ask our guest got two questions. So the first question is, where do you see Openroom going in the next two to three years?

Weiting Bollu: Yeah, I mean, because we're very small, we're taking 2024 as a way to experiment with all of these ideas that we have or that have been suggested by the community. So we'll see where we land. But some of the pieces that we're going down as our fundamental thesis is small landlords, you own a business, so run a compliant business in order to treat your customers with care and respect. Right? Customers being your tenant or the renters. So from there, all the tooling, all the philosophies that we abide by at Openroom, that is what you're going to see. Okay? And then later on when we have all of that, we can then potentially help you make even more informed decisions, whether you're a realtor, a landlord or a tenant. What can we do in that geographical postal code? Can we provide you with more research data? That would be wicked. Okay. And then I hope it'll be of value to the world but well see you'll all let me know if its good or not if im still in business, right?

Mayu Thava: I think its always going to be a market for the services that you guys even offer, just as it is. It just goes back to, I think the more services you can provide, obviously, and profitability and so on and so on. But I guess the second part of this question for anyone that's just getting started in the real estate game, looking to get into the first, 1st, 2nd or third properties, what's any piece of advice or any risk that you want to make sure they're aware of or anything that you can share with them.

Concluding thoughts

Weiting Bollu: Listen to podcasts like this that bring on guests to talk about what they may not know and keep learning. All right. And don't think that this is a passive income business. It is not. No one will care about your property more than you, so you better go take care of it.

Austin Yeh: Yeah. Short and sweet and definitely the truth. Remember maybe when you and I thought we were building ourselves passive income to retire and that was, that was further from the truth. So you're absolutely right on that one. Weiting really appreciate you jumping on this podcast. You're definitely a book of knowledge. It's amazing what you're bringing into the real estate marketplace. If people want to follow Openroom, connect with you, how could they best do so?

Weiting Bollu: Oh, I'm all over Instagram or TikTok, so it's at openroomhq. I also manage all of our inboxes, so if you go to hello@openroom.ca send me a message. I'll be the one to reply back. I'll personally reply back. And if you somehow get my number as well, I'm actually the one. And I will be texting. It's not an automated bot, an AI bot texting you back.

Austin Yeh: It's actually me behind the scene, keeping extremely busy. And if you guys enjoyed this podcast, make sure to give Openroom a follow. Make sure to also contribute to it as well because I know just based on the listeners here, we've all had our fair share of problems and issues. We may have to have filed something. So make sure to also do your part in contributing to Openroom. That's going to be your homework. And feel free to also buy them a cup of coffee. Leave us a five star review. Share this with a friend, and until next time, everyone invest smarter and live better. Take care all.

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