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We used this pre-COVID to get out of a Brooklyn lease and had a fantastic experience (back when it was Flip Instant). Flip basically charged 1 month rent and gu

We used this pre-COVID to get out of a Brooklyn lease and had a fantastic experience (back when it was Flip Instant). Flip basically charged 1 month rent and guaranteed a fill or they'd pay the rest (6 months) of my lease. Compared to our landlord who wanted 1.75x rent, up to 2.75x rent if not filled immediately, after significant negotiation. Hiring a broker myself would have likely cost 1x rent or more anyways with all the risk on us. I really like the service provider + financial underwriting combination, where you get basically an SLA for them providing a service, where they take 100% of the risk after the fee.

e1g 5y ago
The landlord is under no obligation to accept anyone this service finds, so this startup guarantees an outcome they cannot control. It might be a way to build awareness and goodwill, but they are burning VC capital to offer a service that is either fundamentally unsustainable or mispriced.
- crazygringo 5y ago
  Obviously you're not going to use it if your landlord doesn't allow subleases, and landlords are also usually pretty upfront about approval requirements for a sublease. I've never heard of a landlord not allowing a subletter to convert to a full lease upon original lease expiration. I mean, the alternative is to forego a month or two of rent while you find a new tenant. Unless there's a horrible problem with the existing subletter's credit, but then they probably wouldn't have gotten the sublease in the first place. I'm not saying it's never happened, but it's going to be rare. I don't really see anything unsustainable or mispriced about this at all. There are already other companies doing it as well in NYC, e.g.: https://doorkee.com/ https://doorkee.com/
  - e1g 5y ago
    The difference from Doorkee, or any matchmaking service, is that they do not guarantee to pay your rent for six months if a) they can't find someone within a month or b) your landlord doesn't like them. This bet is highly asymmetric - they can win 1 month fee (if you sublease tomorrow) but lose 6x that. I'm also in NYC, and wouldn't underwrite this gamble two years ago, and absolutely not today.
    - crazygringo 5y ago
      It doesn't seem that crazy to me. They say: > We were able to prove that we could make the financials work so long as we were able to fill the apartment within around 45 days of taking it over. They're prescreening apartments/leases so they're not going to take on an apartment they can't turn around in a month. And honestly, modeling NYC rental supply and demand according to a number of factors (neighborhood, price, condition, amenities, etc.) is pretty straightforward. It's a relatively liquid market. And like I said, landlords generally have explicit rules about tenant qualifications. They're not going to reject tenants on a whim. Why would they ever say no to a qualified tenant? That's like McDonald's refusing to sell you a quarter pounder. There's nothing about this that seems obviously unsustainable at all.
      - danenania 5y ago
        "Why would they ever say no to a qualified tenant?" I agree with the rest of your comment, but in my experience landlords in hot markets can be pretty capricious. If they know they'll have a steady stream of applicants, many will definitely reject qualified tenants based on personal whims or to hold out for someone they see as "more" qualified or more likely to stay long term. That said, as long as the apartment still gets turned around quickly then it's not really a threat to this business model.
        deleted 5y ago
        [deleted]
        CydeWeys 5y ago
        That's not rejecting (all) qualified tenants though so much as they are merely using some kind of algorithm to pick one of the many prospective qualified tenants. They can only choose one anyway, and FIFO is not necessarily the best strategy. So a better way to phrase the question would be "Why would they ever say no to all qualified prospective tenants?"
        unishark 5y ago
  - CydeWeys 5y ago
    > Obviously you're not going to use it if your landlord doesn't allow subleases, In many jurisdictions, including New York, the law requires that landlords allow subleases. Tenants have a lot more rights than you might think.
    - unishark 5y ago
      Subleasing is kind of a red herring. There are particular reasons landlords might want to avoid letting that happen willy-nilly. But if the company finds a tenant that conforms to the landlord's requirements, the landlord can agree to a transfer of the lease, or just agree to break the lease and start a new one with the new tenant.
      - crazygringo 5y ago
        What do you mean a red herring? In NYC, it's usually required for a subletter to take over the remainder of a lease and then have the option of signing a new lease. The option to simply immediately break the old lease and start a new one usually doesn't exist. (Or if it does, it's only with a penalty for the lease-breaker.) I don't know why this is, however -- if it's for administrative convenience, legal reasons, or financial reasons. But your idea that "the landlord can agree to the transfer of a lease", well it's true they can, but as a general rule they won't.
- rembicilious 5y ago
  Are you sure about that? It looks to me like they check the current lease for subletting stipulations. It’s literally the first step under “Sublet your place” on the website.
  - benmanns 5y ago
    This is correct. Also NYC leases are pretty standard, and NYC laws are tenant friendly at least as far as subletting goes.
    - e1g 5y ago
      This is not correct for the current context. You are thinking about subleasing today. Yes, this is now friendly. The scenario for OP was handing over the entire lease in NYC in 2019. At the time, this was entirely up to the landlord's discretion, and you were legally on the hook for the full amount. Landlords were not required to find a new tenant. See explanations here -> https://www.nolo.com/legal-encyclopedia/tenants-right-break-rental-lease-new-york.html https://www.nolo.com/legal-encyclopedia/tenants-right-break-...
      - URSpider94 5y ago
        That is not what this link says. The landlord is legally required to mitigate damages - it says so clearly in the text. That means that they must try to find another tenant. If you hand the landlord applications from several qualified tenants, and they don’t rent to them, then you can successfully win in court if the landlord tries to sue you for unpaid rent. New York housing court is known to be very tenant-friendly as well. Now, in the midst of a COVID-fueled exodus and wave of unemployment, you might legit be screwed… (Source: former NYC landlord here)
- nickthemagicman 5y ago
  As a former landlord, I can say, one of the biggest parts of the stability of your business is the tenant. If someone brought me a tenant with good credit scores, income, and references, there's no way I would turn them down. Why would they?
- slownews45 5y ago
  In San Francisco at least I'm not sure this is a true statement at ALL. San Francisco law is that tenants may sublet / add roommates etc. Landlord has 14 days to object. Objection has to be for a good reason. At least that's how I've always understood it. Can you cite the rule in San Francisco that landlords are under no obligation to allow subletting? https://sfrb.org/topic-no-151-subletting-and-replacement-roommates#:~:text=San%20Francisco's%20Rent%20Ordinance%20generally,prohibited%20by%20a%20written%20lease https://sfrb.org/topic-no-151-subletting-and-replacement-roo....
  - e1g 5y ago
    The OP is talking about passing over the lease and the entire unit. Your own link says that is prohibited even in SF. > nothing in the Rent Ordinance allows a tenant to sublet or assign the entire unit to a new tenant in violation of a lease
    - slownews45 5y ago
      The way it works is that just as this software says, the original tenant remains responsible for the rent through end of lease term. In San Francisco, once all original tenants have left, landlord can reset the rent to market rate. So you can sublet through end of your lease (which is what most people want to do). After that, you don't care.
- matsemann 5y ago
  Aren't people obliged to minimize their own and the other part's loss in contracts in the US? In my country, me moving out and saying I won't continue to pay, while the contract end date is still far in the future would of course be a breach of the contract. But that doesn't mean the landlord then can let the house sit empty for the rest of the contract time and force me to cover their loss. Landlord would instead have to try and minimize their losses by finding a new tenant, and what I would owe the landlord would be their costs to do so and the time the apartment stood empty. Edit: "mitigation of damage" might be the US term for it. From Cornell: The mitigation of damages doctrine, also known as the doctrine of avoidable consequences, prevents an injured party from recovering damages that could have been avoided through reasonable efforts. The duty to mitigate damages is most traditionally employed in the areas of tort and contract law. To me that reads like if you want to void the contract, and the landlord doesn't accept a reasonable tenant to take over, the landlord might have to carry their losses themselves. My guess (given laws about renting being very in favor of tenants) is that there most places even might be explicit laws allowing the tenant to do this.
  - khuey 5y ago
    Yes, that's right. The landlord is required to seek a new tenant.
    - e1g 5y ago
      USA is a big place, but OP is talking about NYC specifically before COVID. At that time you were liable for the full amount until the end of the lease. Landlords could sit on empty boxes and sue you for the entire amount. Whether they want the hassle is up to them, but you couldn't compel them to do anything. It does sound unfair, but see here for supporting sources https://www.nolo.com/legal-encyclopedia/tenants-right-break-rental-lease-new-york.html https://www.nolo.com/legal-encyclopedia/tenants-right-break-...
      - albedoa 5y ago
        Your own link says that NYC landlords are required to mitigate damages by seeking a new tenant.
- arcticfox 5y ago
  This probably depends on local laws / lease details, but doesn't the landlord generally have an obligation to make a fair effort of filling the vacancy? At least with the leases I've signed, if they didn't intentionally fill a vacancy with a decent candidate they would be opening themselves up to some contractual legal exposure
- rurp 5y ago
  I don't agree. The startup is guaranteeing that the customer won't pay more than one month's rent, which they very much can control. The company is on the hook in cases where they can't find a replacement, but that's not the customer's problem. It's very possible that the service is priced too low in order to get traction, but there's nothing inherently unsustainable about taking on risk (with a reasonable cap no less); it just comes down to what the company's placement rate ends up being.
- azernik 5y ago
  They are "guaranteeing" in that they are putting themselves in high but limited liability in case they can't fulfill that "guarantee". As long as they can find tenants for at least 6/7 (~85%) of their apartments, they're breaking even. Clearly, they think that's an easy target to hit. (Another way to think of it: one service they provide is amortization of the risk of not filling the apartment over their entire catalog of apartments.)
- AceJohnny2 5y ago
  This is no more complicated or evil a business model than insurance, where you make money in aggregate despite some individual outliers.
- lumost 5y ago
  If the service is finding reasonable tenants as defined by a credit check/ maybe a reference check then the landlord may not be interested in turning down the new tenant and in some locales may not be able to.
- bingidingi 5y ago
  >they are burning VC capital to offer a service that is either fundamentally unsustainable or mispriced this is like half of all businesses in SV
  - rpvnwnkl 5y ago
    Money is the new fuel. The money barons are stoking their investments with cash.
- gnopgnip 5y ago
  In NYC landlords are reauired to allow subleases, and they cant unreasonably deny particular tenants
  - gbronner 5y ago
    You can slow walk them if necessary, but if the vacancy happens in the last few months of a lease, it is usually better to break the lease and move on
- jbigelow76 5y ago
  It might be a way to build awareness and goodwill, but they are burning VC capital to offer a service that is either fundamentally unsustainable or mispriced. I'm clutching my pearls so hard after reading this, I may have uttered a "I do declare..." and wiped sweat from my brow as well. :)
  - cto_of_antifa 5y ago
    Won’t somebody think of the landlords? With this product they might make slightly less raw profit off the backs of people who work for a living!
- robbrown451 5y ago
  I would assume that if they weren't able to negotiate it with the landlord, they wouldn't accept the contract.
coding123 5y ago
All states should operate like Oregon that stipulates the maximum lease break fee of 1.5 months. I think that's totally fair considering it's been a landlords market for the past 20 years. There's no reason in any state to keep someone on the hook for potentially 12 months when that landlord can just tell someone "hey we're still advertising it but we haven't found anyone yet". By the way, if any of you find yourself in that position, have your parents email them and ask for a unit - if they say they have none and are keeping you on the hook, you may be entitled to 2 months rent back in court.
- 6f8986c3 5y ago
  As with most things: it’s complicated. When you sign a lease agreement, you get a guarantee that your rent will not go up during the term of that agreement. So, if you sign a lease for $1000 a month on Monday, and on Tuesday the market rent for that area spikes to $10,000 a month, you’re locked in with a lower rate. If I were a landlord in Oregon, given the above law, I would just only rent month to month. Breaking a lease becomes easy, but you also lose the pricing guarantee.
  - chasontherobot 5y ago
    That doesn't make any sense, the Oregon law works very well for the landlord in that case. Tenant is locked in at $1000/mo. 6 months in, decides they want to move. Tenant pays $1500 to break lease, and landlord can charge $10000/mo immediately to the next tenant.
    - xyzzyz 5y ago
      Yes, but the point is that the tenant doesn’t want to break the lease then, but the landlord does. 12 month leases protect the tenant from rent hikes as much as they protect the landlord from losing a tenant. If legislating easy breaking of the leases results in removing landlord protection, the landlords will stop offering 12 month leases as they confer no benefit to them, and will only offer month to month lease. Then, you’ll be able to break lease easily too, but so will the landlord be able to kick you out on the month notice.

e1g 5y ago

The landlord is under no obligation to accept anyone this service finds, so this startup guarantees an outcome they cannot control. It might be a way to build awareness and goodwill, but they are burning VC capital to offer a service that is either fundamentally unsustainable or mispriced.

crazygringo 5y ago
Obviously you're not going to use it if your landlord doesn't allow subleases, and landlords are also usually pretty upfront about approval requirements for a sublease. I've never heard of a landlord not allowing a subletter to convert to a full lease upon original lease expiration. I mean, the alternative is to forego a month or two of rent while you find a new tenant. Unless there's a horrible problem with the existing subletter's credit, but then they probably wouldn't have gotten the sublease in the first place. I'm not saying it's never happened, but it's going to be rare. I don't really see anything unsustainable or mispriced about this at all. There are already other companies doing it as well in NYC, e.g.: https://doorkee.com/ https://doorkee.com/
- e1g 5y ago
  The difference from Doorkee, or any matchmaking service, is that they do not guarantee to pay your rent for six months if a) they can't find someone within a month or b) your landlord doesn't like them. This bet is highly asymmetric - they can win 1 month fee (if you sublease tomorrow) but lose 6x that. I'm also in NYC, and wouldn't underwrite this gamble two years ago, and absolutely not today.
  - crazygringo 5y ago
    It doesn't seem that crazy to me. They say: > We were able to prove that we could make the financials work so long as we were able to fill the apartment within around 45 days of taking it over. They're prescreening apartments/leases so they're not going to take on an apartment they can't turn around in a month. And honestly, modeling NYC rental supply and demand according to a number of factors (neighborhood, price, condition, amenities, etc.) is pretty straightforward. It's a relatively liquid market. And like I said, landlords generally have explicit rules about tenant qualifications. They're not going to reject tenants on a whim. Why would they ever say no to a qualified tenant? That's like McDonald's refusing to sell you a quarter pounder. There's nothing about this that seems obviously unsustainable at all.
    - danenania 5y ago
      "Why would they ever say no to a qualified tenant?" I agree with the rest of your comment, but in my experience landlords in hot markets can be pretty capricious. If they know they'll have a steady stream of applicants, many will definitely reject qualified tenants based on personal whims or to hold out for someone they see as "more" qualified or more likely to stay long term. That said, as long as the apartment still gets turned around quickly then it's not really a threat to this business model.
      - deleted 5y ago
        [deleted]
      - CydeWeys 5y ago
        That's not rejecting (all) qualified tenants though so much as they are merely using some kind of algorithm to pick one of the many prospective qualified tenants. They can only choose one anyway, and FIFO is not necessarily the best strategy. So a better way to phrase the question would be "Why would they ever say no to all qualified prospective tenants?"
        unishark 5y ago
- CydeWeys 5y ago
  > Obviously you're not going to use it if your landlord doesn't allow subleases, In many jurisdictions, including New York, the law requires that landlords allow subleases. Tenants have a lot more rights than you might think.
  - unishark 5y ago
    Subleasing is kind of a red herring. There are particular reasons landlords might want to avoid letting that happen willy-nilly. But if the company finds a tenant that conforms to the landlord's requirements, the landlord can agree to a transfer of the lease, or just agree to break the lease and start a new one with the new tenant.
    - crazygringo 5y ago
      What do you mean a red herring? In NYC, it's usually required for a subletter to take over the remainder of a lease and then have the option of signing a new lease. The option to simply immediately break the old lease and start a new one usually doesn't exist. (Or if it does, it's only with a penalty for the lease-breaker.) I don't know why this is, however -- if it's for administrative convenience, legal reasons, or financial reasons. But your idea that "the landlord can agree to the transfer of a lease", well it's true they can, but as a general rule they won't.
rembicilious 5y ago
Are you sure about that? It looks to me like they check the current lease for subletting stipulations. It’s literally the first step under “Sublet your place” on the website.
- benmanns 5y ago
  This is correct. Also NYC leases are pretty standard, and NYC laws are tenant friendly at least as far as subletting goes.
  - e1g 5y ago
    This is not correct for the current context. You are thinking about subleasing today. Yes, this is now friendly. The scenario for OP was handing over the entire lease in NYC in 2019. At the time, this was entirely up to the landlord's discretion, and you were legally on the hook for the full amount. Landlords were not required to find a new tenant. See explanations here -> https://www.nolo.com/legal-encyclopedia/tenants-right-break-rental-lease-new-york.html https://www.nolo.com/legal-encyclopedia/tenants-right-break-...
    - URSpider94 5y ago
      That is not what this link says. The landlord is legally required to mitigate damages - it says so clearly in the text. That means that they must try to find another tenant. If you hand the landlord applications from several qualified tenants, and they don’t rent to them, then you can successfully win in court if the landlord tries to sue you for unpaid rent. New York housing court is known to be very tenant-friendly as well. Now, in the midst of a COVID-fueled exodus and wave of unemployment, you might legit be screwed… (Source: former NYC landlord here)
nickthemagicman 5y ago
As a former landlord, I can say, one of the biggest parts of the stability of your business is the tenant. If someone brought me a tenant with good credit scores, income, and references, there's no way I would turn them down. Why would they?
slownews45 5y ago
In San Francisco at least I'm not sure this is a true statement at ALL. San Francisco law is that tenants may sublet / add roommates etc. Landlord has 14 days to object. Objection has to be for a good reason. At least that's how I've always understood it. Can you cite the rule in San Francisco that landlords are under no obligation to allow subletting? https://sfrb.org/topic-no-151-subletting-and-replacement-roommates#:~:text=San%20Francisco's%20Rent%20Ordinance%20generally,prohibited%20by%20a%20written%20lease https://sfrb.org/topic-no-151-subletting-and-replacement-roo....
- e1g 5y ago
  The OP is talking about passing over the lease and the entire unit. Your own link says that is prohibited even in SF. > nothing in the Rent Ordinance allows a tenant to sublet or assign the entire unit to a new tenant in violation of a lease
  - slownews45 5y ago
    The way it works is that just as this software says, the original tenant remains responsible for the rent through end of lease term. In San Francisco, once all original tenants have left, landlord can reset the rent to market rate. So you can sublet through end of your lease (which is what most people want to do). After that, you don't care.
matsemann 5y ago
Aren't people obliged to minimize their own and the other part's loss in contracts in the US? In my country, me moving out and saying I won't continue to pay, while the contract end date is still far in the future would of course be a breach of the contract. But that doesn't mean the landlord then can let the house sit empty for the rest of the contract time and force me to cover their loss. Landlord would instead have to try and minimize their losses by finding a new tenant, and what I would owe the landlord would be their costs to do so and the time the apartment stood empty. Edit: "mitigation of damage" might be the US term for it. From Cornell: The mitigation of damages doctrine, also known as the doctrine of avoidable consequences, prevents an injured party from recovering damages that could have been avoided through reasonable efforts. The duty to mitigate damages is most traditionally employed in the areas of tort and contract law. To me that reads like if you want to void the contract, and the landlord doesn't accept a reasonable tenant to take over, the landlord might have to carry their losses themselves. My guess (given laws about renting being very in favor of tenants) is that there most places even might be explicit laws allowing the tenant to do this.
- khuey 5y ago
  Yes, that's right. The landlord is required to seek a new tenant.
  - e1g 5y ago
    USA is a big place, but OP is talking about NYC specifically before COVID. At that time you were liable for the full amount until the end of the lease. Landlords could sit on empty boxes and sue you for the entire amount. Whether they want the hassle is up to them, but you couldn't compel them to do anything. It does sound unfair, but see here for supporting sources https://www.nolo.com/legal-encyclopedia/tenants-right-break-rental-lease-new-york.html https://www.nolo.com/legal-encyclopedia/tenants-right-break-...
    - albedoa 5y ago
      Your own link says that NYC landlords are required to mitigate damages by seeking a new tenant.
arcticfox 5y ago
This probably depends on local laws / lease details, but doesn't the landlord generally have an obligation to make a fair effort of filling the vacancy? At least with the leases I've signed, if they didn't intentionally fill a vacancy with a decent candidate they would be opening themselves up to some contractual legal exposure
rurp 5y ago
I don't agree. The startup is guaranteeing that the customer won't pay more than one month's rent, which they very much can control. The company is on the hook in cases where they can't find a replacement, but that's not the customer's problem. It's very possible that the service is priced too low in order to get traction, but there's nothing inherently unsustainable about taking on risk (with a reasonable cap no less); it just comes down to what the company's placement rate ends up being.
azernik 5y ago
They are "guaranteeing" in that they are putting themselves in high but limited liability in case they can't fulfill that "guarantee". As long as they can find tenants for at least 6/7 (~85%) of their apartments, they're breaking even. Clearly, they think that's an easy target to hit. (Another way to think of it: one service they provide is amortization of the risk of not filling the apartment over their entire catalog of apartments.)
AceJohnny2 5y ago
This is no more complicated or evil a business model than insurance, where you make money in aggregate despite some individual outliers.
lumost 5y ago
If the service is finding reasonable tenants as defined by a credit check/ maybe a reference check then the landlord may not be interested in turning down the new tenant and in some locales may not be able to.
bingidingi 5y ago
>they are burning VC capital to offer a service that is either fundamentally unsustainable or mispriced this is like half of all businesses in SV
- rpvnwnkl 5y ago
  Money is the new fuel. The money barons are stoking their investments with cash.
gnopgnip 5y ago
In NYC landlords are reauired to allow subleases, and they cant unreasonably deny particular tenants
- gbronner 5y ago
  You can slow walk them if necessary, but if the vacancy happens in the last few months of a lease, it is usually better to break the lease and move on
jbigelow76 5y ago
It might be a way to build awareness and goodwill, but they are burning VC capital to offer a service that is either fundamentally unsustainable or mispriced. I'm clutching my pearls so hard after reading this, I may have uttered a "I do declare..." and wiped sweat from my brow as well. :)
- cto_of_antifa 5y ago
  Won’t somebody think of the landlords? With this product they might make slightly less raw profit off the backs of people who work for a living!
robbrown451 5y ago
I would assume that if they weren't able to negotiate it with the landlord, they wouldn't accept the contract.

coding123 5y ago

All states should operate like Oregon that stipulates the maximum lease break fee of 1.5 months. I think that's totally fair considering it's been a landlords market for the past 20 years. There's no reason in any state to keep someone on the hook for potentially 12 months when that landlord can just tell someone "hey we're still advertising it but we haven't found anyone yet". By the way, if any of you find yourself in that position, have your parents email them and ask for a unit - if they say they have none and are keeping you on the hook, you may be entitled to 2 months rent back in court.

6f8986c3 5y ago
As with most things: it’s complicated. When you sign a lease agreement, you get a guarantee that your rent will not go up during the term of that agreement. So, if you sign a lease for $1000 a month on Monday, and on Tuesday the market rent for that area spikes to $10,000 a month, you’re locked in with a lower rate. If I were a landlord in Oregon, given the above law, I would just only rent month to month. Breaking a lease becomes easy, but you also lose the pricing guarantee.
- chasontherobot 5y ago
  That doesn't make any sense, the Oregon law works very well for the landlord in that case. Tenant is locked in at $1000/mo. 6 months in, decides they want to move. Tenant pays $1500 to break lease, and landlord can charge $10000/mo immediately to the next tenant.
  - xyzzyz 5y ago
    Yes, but the point is that the tenant doesn’t want to break the lease then, but the landlord does. 12 month leases protect the tenant from rent hikes as much as they protect the landlord from losing a tenant. If legislating easy breaking of the leases results in removing landlord protection, the landlords will stop offering 12 month leases as they confer no benefit to them, and will only offer month to month lease. Then, you’ll be able to break lease easily too, but so will the landlord be able to kick you out on the month notice.