Christian Sutardi, the co-founder of Fabelio, often frowns at the fact that he has to pay off the rental property for a year. Fabelio, a start-up in the field of furniture and interior design, opened 23 showrooms by renting properties in the Greater Jakarta area (Jakarta, Bogor, Tangerang, Depok, and Bekasi), Bandung, and Surabaya. This startup company’s cash will be drained if the 12-month rental payment scheme must be paid in advance.
To that end, Christian et al. switch to a monthly rental payment scheme through CicilSewa. “This method reduces rent payments because CicilSewa will pay in full one year to the property owner and Fabelio pays rent per month to CicilSewa,” said Christian. Since mid-2018, Fabelio has been using Rent Installment services.
Fabelio is not the only company that is excited about the services and features offered by CicilSewa. Dozens of companies were hired by Rent Installments. PT Kimia Farma Tbk., for example, agreed to cooperate with CicilSewa in January 2021. The pharmaceutical state-owned company leases 1,000 property units through CicilSewa. Well, the rental payment scheme is the same as Fabelio renting his showroom.
CicilSewa, a property technology (proptech) startup founded in October 2018, offers solutions that make it easy to rent a shop house (ruko), house, or apartment. The founders are Hendry Oktavianus (CEO & founder ), Andrew Buntoro (COO & co-founder ), and Ridchi Jusli ( co – founder ).
They share tasks. Andrew, who has a financial background, has established business relationships with marketplace companies . Ricky handles fundraising and marketing. Meanwhile, Hendry, who had a career in a property company, handled the intricacies of property rentals and garnered business collaboration with property agents.
This proptech company provides incentives to property agents who recommend prospective tenants to pay monthly rental properties through CicilSewa. “The installment scheme in CicilSewa is a minimum down payment of 30% of the total rental and service fees, 17 percent of the monthly installment fee,” said Hendry.
This scheme facilitates the cash flow of tenants, as Fabelio experienced. “The Installment Service helps Fabelio’s cash flow . For example, the office rental fee is Rp 1.5 billion per year. Our expenses are lighter because this year’s rent is paid every month during the 12-month rental period,” said Christian. He explained that the cost of renting the 23 units of Fabelio’s showroom is around Rp 5 billion-6 billion per year. Because using the CicilSewa service, the rental fee for the entire Fabelio showroom is only Rp. 499 million per month.
There are various features of Installment Rentals, including features that can calculate and adjust rental fees according to the customer’s financial capabilities. Prospective property tenants, through the CicilSewa service, can pay monthly installments only by paying a down payment of 30% of the annual rental fee.
This Installment feature is getting more and more company interest. Among them, Warunk Upnormal, CoHive, Alam Sutera, Mr. Mechanic, and Conclave. The retail segment is booming. There are thousands of individual tenants. These two segments contribute to CicilSewa revenue.
Transactions from the retail segment contributed greatly to CiciliSewa’s revenue because the frequency was more attractive. “But in terms of transaction value, the corporate segment is more valuable. As many as 97% of the total CicilSewa customers make repeat orders ,” Hendry detailed.
CicilSewa income comes from service fees. “In retail, the fee is around 17% and service fees from the corporate segment are lower. For example, the rental fee is Rp. 60 million for a year. The tenant must pay Rp. 18 million, the Rent Installment pays Rp. 42 million. Now, the service fee is 17 percent of the Rp 42 million,” he said.
CicilSewa partners with property agents to attract individual or retail customers. “We are collaborating with 1,000 property agents in Jabodetabek, namely Century 21, LJ Hooker, Harcourts Property, and others. For the retail segment, the marketing is through property agents. Meanwhile, CicilSewa’s marketing team of 10 people handles the corporate segment,” Hendry explained.
He gave an example of a monthly rental scheme for corporate customers. For example, Baso Aci Akang who is facilitated to pay monthly rent to rent 200 outlets. The average rent for these outlets is around Rp. 60 million per outlet in a month.
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“For 200 branches, it will require a lot of funds, namely Rp. 12 billion to rent all these outlets if paid in advance. If this rental scheme is converted, the cost is Rp 1.2 billion per month for 200 branches. So, we changed capital expenditure to operating expenses ,” he said.
For retail customers, he gave an example that the average house rent is around Rp. 35 million-50 million per year. For example, the rental fee is IDR 36 million per year, if converted, the rental fee is IDR 3 million per month through CicilSewa.
Hendry said that the lease agreement involves three parties, namely the property owner, the tenant, and the rental fee. “We are in the middle,” he said. If the tenant is unable to pay the rent, the rental rights will be transferred to Rent Installment. “So, the property owner must agree if the rental customer can be flipped over to a new tenant.”
To minimize the risk, Hendry et al. set a grace period for rental payments of 15 days and a penalty for late payment of rent is set at 0.3% per day of the total bill for the month. (*)