Financial Protection for Residents Protects Your Properties
When it comes to attracting prospective residents, property teams highlight everything from flexible lease options, a unique suite of amenities and posh in-home features to exceedingly pet-friendly accommodations.
All have the potential to positively sway the decision of a potential renter, but some would argue that the most enticing incentives might be less glitzy than a resort-inspired swimming pool or stunning rooftop deck. For most renters, their own finances still matter most.
Finances and amenities seldom have been linked—and often seem mutually exclusive in most cases—but that is starting to change, according to panelists at the 2022 Entrata Summit session Financial Protection for Residents Protects Your Properties.
Positive rental reporting, flexible payment schedules and alternatives to the traditional security deposit now can be as much of a swaying factor to renters as a commercial-grade fitness center or an onsite speakeasy with a wine fridge and Jägermeister tap.
“There is a lot of payment history that doesn’t show up on your credit report, and many consumers are surprised by this,” said Greg Wright, EVP and Chief Product Officer of Experian. “That includes paying their rent on time every month, which does not improve their credit score for the most part.”
Experian is teaming with apartment operators and their software providers to include positive rental reporting as a part of the leasing journey. Apartment renters are seven times more likely to be “credit invisible” than homeowners, and positive rental reporting can help residents qualify for an auto loan, personal loan and eventually for a home mortgage. It only makes sense, panelists agreed, seeing that rent is the largest monthly expense for almost all renters.
“When we think about the opportunity to help consumers get credit for paying their bills on time, it can be a very positive thing not only for the consumer, but for the operator as well,” Wright said. “A lot of Gen Z renters will look at an apartment and ask how you are helping your community and your residents, and this is a very clear way.”
Another 2020s multifamily trend is that communities holding true to the first-and-last-month deposit format often are pricing out would-be reliable residents and experiencing an uptick in fraud attempts. As such, some operators are opting for security deposit alternatives (which typically consist of a monthly premium as a substitute for a hefty upfront deposit price tag), and flexible payment options. Services are available that enable renters to pay as they get paid rather than beginning the month with their largest expense.
“It’s not a tactile amenity, but it can be presented as such,” said Nikki Chambers, Director of Systems and Training for Hanover. “You can buy now and pay later with shoes—why not rent?”
Chambers noted that it can be a challenge to convince old-school operators to move away from traditional methods, but said collecting data and showcasing the positive impacts is a solid way to start the conversation.
Eric Perkins, Director of ResidentVerify and ResidentInsure for Entrata, believes a greater opportunity exists for apartment operators when it comes to flexible rent payments.
“They can ask: what if every single unit of this property has flexible payments by default?” Perkins said. “Rather than having a resident pay $15 or $20 per month to another vendor for the ability to pay on their own schedule, what if that money was coming to me?”
It’s a complicated conversation that would ostensibly involve the eradication of late fees—often a driver of ancillary revenue—but it’s a discussion that’s happening in various multifamily circles. It’s part of an encouraging trend in which operators appear increasingly drawn to financial protection solutions that have dual benefits for the property and the resident.