Main Takeaway: Flexible rent payment options are becoming more popular, particularly as we enter troubled economic times where higher inflation and debt costs are squeezing consumers. This new type of multifamily amenity can improve cash flow and tenant retention, ultimately improving net operating incomes.
Story: In the ever-evolving landscape of multifamily real estate, one key aspect gaining traction is the concept of flexible rent payments. As property owners and managers strive to attract and retain tenants, offering convenient and adaptable options for rent payment has emerged as a powerful amenity. Let’s explore the significance of flexible rent payments and how they can reshape the multifamily industry.
According to the most recent CPI data, overall inflation cooled to 4% in May. Shelter inflation has now hit 8%, one of the biggest tailwinds to inflationary pressures.
This trend has been accelerating since the onset of the pandemic and is a major reason tenants seek alternative payment options for their rentals. As affordability decreases, interest in new forms of payment increases. Further, landlords cannot afford to ignore the trend toward payment flexibility, which according to Bank of America, will grow 10 to 15 times by 2025.
Evolving Lifestyles and Financial Patterns
Modern lifestyles are characterized by constant change and flexibility. People seek convenience and adaptability in all aspects of their lives, including housing. Traditional rent payment methods often lack the flexibility required to accommodate the diverse financial patterns of individuals and families. As a result, tenants are increasingly drawn to properties that offer flexible payment options, enabling them to align their rental expenses with their unique circumstances.
Meeting the Needs of a Digital Generation
We live in an era where technology is pivotal in every sphere of life. The rise of the digital generation has revolutionized transactions, and the rental industry is no exception. By embracing flexible rent payments, property owners can tap into the preferences of tech-savvy tenants who prioritize convenience and efficiency. Offering online payment portals, automated systems, and seamless integration with popular digital platforms enhances the tenant experience and positions a property as forward-thinking and modern.
Enhanced Tenant Satisfaction and Retention
Property owners and managers can significantly increase tenant satisfaction by providing tenants with the freedom to choose their preferred rent payment schedule. Flexibility empowers tenants to manage their finances more effectively, reducing stress and fostering a positive living experience.
Indeed, according to Stephen Baker, President of Zego: “Today, operators are increasingly concluding that extending payment flexibility to renters can actually help them achieve their occupancy and rent-collection goals.”
Satisfied tenants are more likely to renew their leases, ensuring consistent occupancy rates and minimizing turnover costs. Moreover, the positive word-of-mouth generated by happy tenants can attract new prospects and contribute to the overall reputation of a property.
Flexible Payment Tools
By collecting rent payments sooner, owners and landlords can uncover payment issues sooner and take action to address them. Partnering with financial technology companies can unlock various innovative solutions for flexible rent payments. Some of the major ones include:
Take Till, for instance, which according to MultifamilyDive “allows residents to break rent into more manageable, personalized payments…Since the programs’ inception, Till has signed more than 60 partnerships with companies that own or manage more than 1.4 million units and helped over 72% of delinquent residents catch up on rent payments after the first month of enrollment.”
As the multifamily industry continues to evolve, embracing flexible rent payments is essential for property owners and managers looking to stay competitive. By catering to the needs of modern tenants and aligning with the preferences of the digital age, properties can enhance tenant satisfaction, streamline financial operations, and establish a strong market position. Embracing the future of multifamily amenities means embracing flexible rent payments.
Expert Take on Flexible Rent Payments
“Many renters pay 35-50% of their net income on rent, and have limited cash savings—usually less than a month’s rent in savings…So if a hiccup occurs, rent gets challenged. They have highly volatile incomes. Many renters are hourly workers, and work gig economy jobs as a side hustle. They’re putting things together to make ends meet . . . And when you look at the landlord ecosystem, landlords have inflexibly structured everything.” — David Sullivan, founder and CEO of Till