Joe Merullo
Founder and CEO
View from the Top

Bridging Liquidity Gaps in Rental Sector

By Antonio Gozain | Thu, 08/04/2022 - 10:30

Q: How is Arrenda innovating through the introduction of fintech products focused on Mexican real estate?

A: Arrenda innovates through products that bridge the gaps of trust and liquidity within real estate transactions, specifically within the rental sector. Renting in Mexico is sometimes nearly impossible. There is a large gap of confidence between landlords and tenants in Mexico, and as a result, there are many barriers to entry for tenants. From large security deposits to providing a person who owns property willing to post as collateral are things required in nearly every rental transaction in the country.

During our research, we discovered that the combination of a bureaucratic, old-fashioned legal system and inefficient capital markets caused many problems for landlords. Arrenda is focused on building financial technologies to restore the balance that is missing within the rental ecosystem. Arrenda’s premier product Adelanta allows landlords to access up to 12 months of liquidity from future rent payments on any lease throughout Mexico.

Q: What are the main requisites for landlords to access Adelanta?

A: For Arrenda to complete a transaction, we have to bring a borrower through our underwriting process. When we underwrite landlords, we complete a know-your-customer (KYC) process, credit check and income verification. We try to be as agile as possible, while putting trust in the landlord and their tenant.

Arrenda focuses on lease contracts with a monthly rent ranging between MX$5,000 (US$245) and MX$200,000 (US$9,806). Properties must be residential and located in Mexico. We look for contracts that have at least three months of rent remaining. In this sense, the smallest loan we provide is MX$15,000 (US$735) and the maximum is MX$2.4 million (US$117,680).

Q: Do tenants know that their landlord is using Arrenda?

A: By law, Arrenda must notify tenants and explain who we are and that they are obligated to pay their rent to us. We’ve built a user-friendly, intuitive payment portal for tenants, in which they can receive the payment information and pay online.

The nonbank loan system we’ve built focuses on providing loans in an agile, seamless manner. Arrenda offers approvals within 24 hours or less and competitive rates, better than those offered by banks in Mexico. We built our underwriting model following in-depth market research, taking into consideration historical default rates within the lending class and prospective risk profiles of potential users.

Q: What are Arrenda's main differentiators compared to traditional bank loans?

A: Arrenda has an innate advantage in terms of providing liquidity as we provide more attractive total annual costs (CAT) and interest rates then banks, and a lending product not offered by traditional financial institutions. For comparison, banks in Mexico offer uncollateralized loans at interest rates above 30-40 percent. Some credit cards have interest rates above 100 percent.

Arrenda was built as an alternative to provide a fair financing option, which gives access to future liquidity and cash in a relatively securitized manner at a fraction of the cost of what a bank would charge. We are charging a 15 percent discount rate on receivables. This is a promotionary offer that will last through the end of August, after which we are moving to a variable model based on the risk with our underwriting.

Q: What are the main opportunities of introducing a fintech product in Mexico?

A: There are many opportunities in the Mexican market. For entrepreneurs and technologists, my recommendation is to come and live a normal life as a citizen in Mexico. Go out into the market, like a local and figure out where there is pain. Look for something firsthand and try to figure out how you can solve it through introducing technology. From Kavak to Bitso & Nowports, we have seen truly amazing startups emerge from this country.

Q: Recently, Arrenda closed US$26.5 million in a pre-seed equity and debt round. How has this investment helped the company to ramp up operations?

A: Arrenda is going through an exciting period that marks months of hard work & diligence. The debt facility we raised is MX$500 million (US$25 million) and will allow us to offer financing to thousands of customers in Mexico. Our internal goal is to deploy US$1 million worth of capital by the end of 2022, which is about 100 financings according to our current forecasts.

Arrenda has been online for less than 2 weeks and we have received financing requests for over MX$2 million (US$100k). On the equity side, we raised US$1.5 million from a number of investors from Mexico, the US and the EU. This capital is being used to continue our R&D of Adelanta, alongside additional products that we plan to offer the market for tenants & landlords.


Arrenda is a Mexico City-based fintech that offers financial products for landlords & renters of real estate in Latin America.

Antonio Gozain Antonio Gozain Journalist and Industry Analyst