Tough rental market sees more digital payments, cashbacks and rebates

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A confluence of economic factors is creating the toughest market for tenants — residential and small business — in at least 20 years, and while there’s no quick fix to the shortage or prices, some tech companies payments eliminate pain points and friction in rent payments.

In its State of the Nation’s Housing 2022 report, Harvard University’s Joint Center for Housing Studies (JHCS) said, “After a brief dip in 2020, rent growth in the professionally managed segment has reached an all-time high. record 11.6% at the end of 2021 and remained at that rate in the first quarter of 2022,” calling it the largest year-over-year increase in 20 years “and more than three times the average annual increase of 3.2% in the five years preceding the pandemic”.

Unable to do anything about rental prices or availability, FinTechs and others are stepping in with digital payment tools to make modern rental transparent, even offering discounts.

Boston-based FinTech Rentdrop launched its new mobile app for digital rent payment in June, giving tenants and landlords choice in how rent is paid and received.

Rentdrop co-founder and CEO Remen Okoruwa told Biz Journals, “When we see that cash and checks have remained so enduring, and the fact that the way one side wants to collect and one side wants to receive creates friction, the opportunity we saw was, why not build a rent payment solution that actually separates those two issues? »

Stemming from the increasingly common arrangement of roommates sharing rent and the resulting collection and payment issues, the app is designed to make it easier for tenants and landlords to take digital payments and simplify a often complicated process.

“Renters with landlords who want digital payments can use Rentdrop to pay with a card or with electronic funds transfer (ACH),” according to the report. “For landlords who want checks, renters can link their bank account to Rentdrop to make digital payments.” Once Rentdrop detects that the full amount has been submitted, Okoruwa said, they will send a check to the landlord in the tenant’s name.

Rent Discounts, Cash Back Rebates on the Rise

See also: Facing skyrocketing costs, tight supply, crowdsourcing tenants, government aids

In early July, Houston-based Venterra Realty, which owns and manages 70 communities and more than 20,000 apartments in 16 U.S. cities, announced its new Autopay Discount program, offering tenants who sign up a $20 monthly credit for automatic electronic rental payments.

“Venterra’s AutoPay system streamlines the payment process and provides residents with flexibility and options for various forms of payment within the program. The purpose of this program is to reward tenants for opting for Venterra’s AutoPay, which was designed to deliberately simplify and improve the payment process by taking the hassle out of logging into a pay portal or getting to the office. to pay the rent monthly,” according to the announcement.

“By signing up for AutoPay, Venterra’s more than 38,000 residents will be rewarded with a $20 monthly credit, saving $240 annually,” the company wrote. “At a time when inflation is estimated at its highest level in 40 years, this is a significant relief.”

In June, rental FinTech startup Stake completed its $12 million Series A, noting in a press release that rents have increased 150% between 1985 and 2020. “By using Stake, property managers receive a return 130% on every dollar spent. Renters earn an average of 4% cash back on their rent each month,” the company noted.

Stake said $385 million in annual leases are now connected to its platform and “65% of tenants have more money in their Stake account than any other bank account. Over the past year, the number of residences that offer participating cash back rewards has increased tenfold.”

See also: Stake raises $12 million to offer renters cash back and free banking

SMEs feel the squeeze on rents

In its second quarter rent report, small business referral network Alignable found that “33% of US-based SMBs could not pay May rent in full and on time, up 5% compared to April.

Alignable added that “more than four in ten restaurants (41%) were unable to cover May rent, up 8% from April and 13% from February.”

In a blog post from July, small business lending platform Nav said “a third of small businesses could not afford to pay their rent in the last six months”, noting that some SMEs are using Term loans to “cover immediate business expenses and are generally flexible enough to be used for rental. These may offer lower interest rates than other options, but may be harder to obtain than others. options, depending on the lender.

PYMNTS research found that during the pandemic, many SMBs had to choose between rent payments and supplier payments. We reported that a total of 49.7% said that “when cash is tight, they shouldn’t pay vendors or monthly bills. Of those surveyed, 20% said they only did last year, while 30% continued or started the drastic step in 2021.”

See also: Half of SMEs manage the cash crisis by not paying rent or sellers

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NEW PYMNTS DATA: HOW UTILITIES AND CONSUMER FINANCE COMPANIES CAN IMPROVE THE BILL PAYMENT EXPERIENCE

About: More than half of utilities and consumer finance companies have the ability to digitally process all monthly bill payments. The kicker? Only 12% of them do. The Digital Payments Edge, a collaboration between PYMNTS and ACI Worldwide, surveyed 207 billing and collections professionals at these companies to find out why going digital remains elusive.

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