See how Obligo's Embedded Experience helped Common Living achieve a 5% increase in applicant-to-lease ratio.

Common's Opportunity

Common’s mission is to revolutionize residential real estate by creating a better product for both owners and residents. Although Common has always invested in building beautiful spaces that are attractive to prospective renters, affordability is core to their offering and is the main factor that attracts potential residents. As amenity offerings became more ubiquitous and competition in the coliving space became more dense, Common was looking to further invest in products and tools that brought cost-savings directly to renters.

With 17,500 units in 22 cities under development, Common needed to leverage a cost-effective amenity package that would maintain their competitive advantage by consistently generating strong demand, high occupancy rates and above-market yields.

Common's Options

Landlords and property managers have always known that by reducing the security deposit requirements, listings become more attractive to renters, resulting in lower vacancies and potentially higher overall rents.

But eliminating deposits does not come without costs; a naive no-deposit policy hurts the screening process because there is no proof of the renter's financial ability to cover any damages or missed rent. It also hurts the accountability of the renter, because they no longer have skin in the game. In the end, the landlord can be left with a difficult collections operation and bad debt, both of which could outweigh any potential improvements in rent or occupancy.

There have been various attempts over the last 20 years to offer deposit-free renting using insurance, but these generally resulted in high losses, leading to prohibitively expensive premiums that only appealed to low-quality renters. Offering insurance options that attract low-quality renters did not align with Common’s vision of high-quality residential communities.

Enter Obligo

In February 2019, Common began offering Obligo’s deposit alternative as a valuable amenity to their renters. They selected Obligo’s solution because of the way it addresses the issues of renter quality and accountability.

Renter Quality:

In order to qualify for deposit-free renting through Obligo, renters must connect their bank account to Obligo’s platform using Open Banking technology. Obligo’s AI-powered underwriting engine checks the financial standing and creditworthiness of each renter before they qualify for the deposit-free rental amenity — which 84% of Common’s renters do. This prevents potentially risky renters from abusing the deposit-free system. Renters who do not qualify can still pay a cash deposit through Obligo.

Obligo’s Open Banking technology solves the issue of renter accountability by requiring each renter to provide Common with a limited payment preauthorization, similar to a hotel check in process. Common is authorized to charge residents up to their deposit amount for damages or missed rent, maintaining renter accountability.

Renter Accountability:

If Common needs to charge a renter using this preauthorization, Obligo pays Common instantly then engages with the renter in a friendly manner via emails and texts to recoup the charge. Obligo also offers these renters flexible installment plans. If renters do not respond to Obligo’s communications, the preauthorization is used. This approach maximizes debt collection for Obligo, while protecting Common’s brand.

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Operational Benefits

Common began their partnership by launching Obligo at two properties. Obligo was presented as the default option for renters at move-in, though renters still had the option to opt out and pay a cash deposit. Implementing Obligo’s deposit-free amenity allowed Common to attract more high-quality renters through lower move-in costs, and the opt-in conversion was high.

Unified Renter Experience

Obligo is able to handle all move-in payments in a single sleek experience, which is embedded into Common's branded leasing platform. Renters who don’t qualify for Obligo, or choose to pay a conventional cash deposit, can still complete their move-in payments through Obligo.

Streamlined Leasing

Common’s leasing team sends all applicants to the same digital workflow, without worrying about whether they will pay a cash deposit or choose the deposit-free option.

Simplified Accounting

Obligo integrates with industry-standard accounting platforms. Common can also track the move-in payments data on Obligo’s platform, through API webhooks, and in monthly Obligo reports.

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Incentivizing Renewals & Boosting Loyalty

Many of Common's existing renters opted to receive their deposits back in the middle of their lease and benefited from gaining more dollars in their bank account.

Better Performing Assets

After the launch of Obligo in the two initial properties, Common was able to benefit these landlords by boosting NOI while maintaining their financial protection. This successful launch demonstrated to other landlords how Common’s tech-forward active management drives value for ownership. Obligo is now part of Common’s playbook, and Common has expanded their Obligo offering to over 2000 beds in 54 properties (including their Noah and Kin brands).

Integrated, Digital & Seamless

Common’s tech-forward strategy meant that digitizing all of their deposit processes was always on their road map. The administrative burden of collecting, managing and returning cash deposits was time-consuming and outdated.

After partnering with Obligo, closing out accounts is done in minutes with a few clicks on the Obligo portal, leading to a huge reduction in accounting and operational overheads. This leasing experience began as an integration with Obligo via Salesforce, where renters were automatically invited to join Obligo. This was more recently replaced by a superior upgrade; Common embedded Obligo’s qualification process within its digital leasing experience.(Manual

Integrating the two systems via Obligo’s API has reduced the onboarding time for new renters. “Obligo is embedded right into our own branded software experience”, said Hargreaves. “This seamless integration makes both our residents and leasing team happy.” Common’s leasing team doesn’t need to explain or pitch Obligo’s deposit-free option. Instead, explanations and support are available within Obligo’s digital experience.

Regulatory Compliance

Common’s operations were complicated further by regulatory compliance. Each time Common launched a property in a new city or state, they had to ensure
that their deposit management processes complied with ever-changing local regulations.

In New York, for example, regulation changes in June 2019 restricted deposits to no more than one month of rent. This was a problem for Common because they were used to asking for larger deposits from international renters. To solve this, Common implemented Obligo’s 3X product. For international renters, instead of providing a deposit to the value of three month’s rent (as previously required), they used Obligo to provide Common with up to three months of guaranteed security. They can be approved instantly and at a significantly lower cost than other alternatives such as lease insurance or guarantor services.

No longer requiring conventional cash deposits has meant immediate compliance with all local deposit regulations across the U.S.

More Than A Partnership

Since the beginning of Common’s partnership with Obligo, Common’s renters have enjoyed a valuable amenity that allows
them to move into their new home faster, and with lower move-in costs. For Common and its landlords, the deposit-free amenity has made their listings more appealing, reducing vacancies, increasing the renter retention rate and boosting NOI.

The tight-knit relationship between the teams at Obligo and Common ensures that all technical improvements are implemented efficiently to ensure that deposit-free properties become even easier to operate, and even more valuable for renters.