Photo: AP

Rentberry has been operating in test cities and angering affordable housing advocates since 2016. But with its new expansion into 1,000 cities in the United States, the rental bidding website is about to piss off a lot more people.

Alex Lubinksy, founder of Rentberry, seems to be pursuing an image that’s closer to Uber’s vilified Travis Kalanick than the do-gooder model of Elon Musk. Lubinsky courts the controversy that surrounds his startup and is known to include negative press when communicating his vision to reporters. But one big difference with Rentberry will be that if it takes off and becomes the new standard for renting apartments, most of its customers won’t be able to run a #deleteRentberry campaign because landlords will have the control.

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The website essentially functions as a cross between CraigsList and eBay. A landlord lists a rental space and potential tenants bid against one another to claim the lease. Tenants’ personal information is available to the landlord. The landlord then makes their final decision by weighing what the best offer is along with which bidder seems like they’d be the best tenant. For now, Rentberry charges users a $25 fee, but in the future, it plans to charge 25 percent of the difference between the asking price and the agreed upon rent. Whoever received the better deal pays the fee—every month.

Lubinsky sees this as good for everyone. While the rents in competitive markets like San Francisco and New York City will likely go up, he believes that the invisible hand of the market will lower rents in areas that have less demand. When he initially started pitching landlords in San Francisco to use the service he claimed that it would raise rents by 5 percent. In San Francisco and San Jose that claim turned out to be true. But now that more data is in and the company is facing anger from the public, he’s walking that figure back. He tells the Wall Street Journal that the system has actually lowered rents:

Tenants on Rentberry have actually saved 5.1% on rent compared with what landlords asked, Mr. Lubinsky now says, based on calculations across all transactions on Rentberry’s site, in the 10 cities where Rentberry has been active to date. These savings were possible because Rentberry allows tenants to make offers that are lower or higher than the posted rent. It probably helps that, nationwide, there’s an oversupply of apartments, says Toby Bozzuto, chief executive of the Bozzuto Group, which manages 60,000 apartments in the U.S.

It’s tough to say how those numbers will change with Rentberry’s nationwide expansion. According to the 2015 U.S. census, 62.7 percent of Americans live in cities. So, the majority of people in this country live in areas where landlords are well aware of the legitimate market value of their properties. That same census found that rental households have hit a 50 year high. This is in part because of the 2008 housing crisis and underwater homeowners being forced to join the rental pool.

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Leah Simon-Weisberg, legal director for Tenants Together, a nonprofit dedicated to tenant advocacy across California, told City Lab that Rentberry is like the price gouging-Martin Shkreli of startups. “I think it’s incredibly arrogant and incredibly concerning in light of the fact that we have the highest number of homeless families since the Great Depression,” she said. “For them to do something to increase the rents seems really callous.”

At the time that he came under fire for raising the price of an HIV drug by 4,000 percent, Shkreli characterized his move as “altruistic.” Likewise, Lubinski claims to be doing a great, capitalistic public service. “Equilibrium will happen,” he told San Jose Inside. “All this does is balance supply and demand. People already bid offline, but nobody sees it.”

Rentberry will still have to convince landlords across the nation that this is a better deal for them. Many of them will remain wary of changing their ways and many like to get to know their tenants a bit first. But, the ease of having background checks already complete and the possibility of higher rents than expected could prove enticing.

And Rentberry isn’t the only one to see the potential in this business model. Competitors like Biddwell are also coming up, ensuring that this idea won’t live or die with just one startup.

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Daniel DeBolt, a spokesman for the Mountain View Tenants Coalition told San Jose Inside that these companies are just normalizing the idea that we should all bid up rents. “Just because you can make money off the housing crisis, it doesn’t mean you should,” he said.

[Wall Street Journal, BBC, San Jose Inside, City Lab]