Rental Payment Innovations Help Tenant Cash Flow

Earlier this year, PYMNTS Intelligence estimated that for consumers, and especially for paycheck-to-paycheck consumers, the cost of housing has been taking a significant chunk out of households’ take-home pay.

In fact, as noted in this recent column penned by Karen Webster, paying to keep the roof over one’s head equates to 37% of take-home pay for consumers making less than $50,000 annually. The percentage changes drastically for households above that threshold, at about 13% of take-home pay.

But no matter how you slice it, and no matter the income level, mortgages and rent are high, and inflation has driven them higher still. Add in the fact that rent and other housing payments may not coincide with the timing of paychecks, and the pressures become ever more pronounced on the family wallet.

For landlords, too, the unevenness of cash flow (13% of renters missed payments last year) in the event that payments are missed or staggered, can wind up impacting their own cash coffers — and the ability to keep their own vendors, staff and supply chains paid on time.

A spate of recent announcements in the real estate industry have showcased the value inherent in payments flexibility, in using digital conduits to make payments more quickly. As noted in the “From Rent to Refunds” report, more than a third of renters still wield paper checks and use wire transfers to satisfy their housing obligations to landlords.

What Renters Want

But technology is prized here: The data show that more than half of renters prefer to pay their rent online, with 77% citing the greater ease and speed compared to traditional methods like paper checks. Renters who use online payment methods report a satisfaction rate of 77%, much higher than the 35% satisfaction rate among those who use traditional payment methods. Instant payment options can enhance renter loyalty and satisfaction in the event of refunds (say, if repairs have led to a reduction in given month’s rent) or returns on deposits.

Managing the Supply Chain

For landlords, faster payments from tenants equates to better cash flow visibility and transparency. The improvements in having money on hand to pay staff can help landlords stay competitive in a tight labor market and to make sure that everything from equipment to coffee in the clubhouse to keeping the on-site gyms in shape gets a bit easier.

In an announcement earlier this month, the real estate software platform RealPage said it had partnered with Flex to provide customers with “flexible” rent payment options. In terms of the mechanics, the joint efforts let RealPage customers offer Flex as a payment option for residents within LOFT, RealPage’s resident portal and app as they can opt to pay their rent in several payments rather than just as one single transaction. The companies have noted that that flexible rent payments can offer property managers a way to boost net operating income, improve resident retention and stand out in a competitive rental market.

In a recent interview with Karen Webster, AppFolio Vice President of Product and Payments Adam Feinstein said using push-to-debit systems in the property management sector could make payments faster, reduce reliance on paper checks and invoices and end the typical three-day settlement periods related to ACH transactions.

And as noted here, Stake has acquired Circa to help reduce delinquencies and arrears in the rental economy by offering both rent incentives and collections management. The acquisition adds Circa’s free payment processing and success-based collections management to Stake’s loyalty, renter banking services and incentive optimization services, the companies said in June. The platform enables no-fee rent payments, cash back for on-time rent payments, credit builder and reporting and a debt-free way to access paychecks early.