Residents are searching to make payments easier and cheaper. Here’s how the rental housing industry is helping.

There’s an app for everything in our daily lives, from organization and scheduling to trip planners and vacation idea boards, so why not have one in the rental housing industry? After all, rent is likely a resident’s largest monthly expense, yet not everyone is taking advantage of digital, secure, faster and cheaper payment options. 

Many multifamily firms have taken this approach by implementing digital payments. One of the major reasons behind the transition was security. But time and cost savings are top factors as well. 

The latest Biennial Online Renter Study from SatisFacts shows the most sought-after technology feature is the ability to pay rent online without a service fee as reported by 84.2% of respondents. Under 20% of respondents said they want the ability to pay rent without a fee. Meanwhile, communication with management was at 76% while submitting service requests online was at 69.5%. 

According to Zego’s The Rent Payment Trends Report (Payment Trends Report), one of the biggest obstacles to residents paying rent digitally is the possibility of a transaction fee. “ACH is a highly effective payment method that we support, and we cover any fees incurred by residents when using ACH,” says Don Brunner, President & CEO of BRG Realty Group in Cincinnati. “We strive to facilitate a smoother transition for residents by offering them the option to pay their rent. While we recommend setting up automatic payments through ACH for convenience, we absorb any associated costs should residents opt for manual payment processing each month.” 

The Zego report found that companies that absorbed the transaction fees saw “an average of 37% higher digital payment utilization rate than those who pass the fees to residents.” According to the 2023 National Multifamily Renter Study (2023 Renter Study) from RealPage, more than half of Gen Z and Millennials are willing to pay more for better tech experiences, and more than a third would move due to not being satisfied with their tech options. A fifth of respondents, when asked about their most influential reason for nonrenewal—except for price—said they left because they could not pay rent their preferred way. 

Entering the portal 

Age does play a role in willingness or the urge to want to have the tech options. The 2023 Renter Study shows renters 35 and under are looking for more tangible tech items like a resident portal on a mobile device versus those older than 35, who are searching communities for outdoor cameras and lighting. 

Brunner says they started with an in-house resident app four years ago, but due to technological changes, switched to a third-party app last year. “Residents are able to submit work orders, make payments and contact us via social media,” Brunner says. “They also have access to resident discounts through the mobile app, as well as information about the property or company.” 

He says only about 15%-18% of residents use the app to make rent payments. “I believe individuals are reviewing their financial records, including their ledger and account balance, in order to facilitate a payment either through a credit card or by check. Some may be utilizing this platform for informational purposes as well.” 

“We actually do not install rent lockboxes to encourage residents to pay online,” says Alvaro Leiva, Senior Vice President, Asset Management with SummerHill Apartment Communities. “Residents can always drop off rent daily in the office during business hours.” 

About 40% of BRG residents are using the app. Residents are being rewarded for its use through discount programs ranging from national brands to local businesses and baseball tickets. “We have implemented various marketing strategies, including targeted email campaigns and office promotions, to emphasize the discount program, as well as improve communication channels,” Brunner says. “Currently, there are a variety of work orders being submitted through the app. While some individuals are utilizing the app to make payments and find it convenient, not all users are doing so at this time. The app is being utilized for communication purposes and encouraging users to take advantage of additional features such as discounts, adding work orders and emailing work orders through the system.” 

On the opposite side, SummerHill accepts checks, money orders, cashier’s checks, credit card payments and ACH payments, with 80% of payments coming through online. “A majority of online payments are ACH as they have lower fees than credit card payments, and the rest use standard personal checks, and a very small minority use cashier’s checks and money orders,” says Leiva. 

Benefits 

There is a cost and time reduction behind the move from traditional paper checks seen for decades to the newer electronic payments like ACH. Brunner says they have saved time by not having to go through each individual paper check and scan it, or employees no longer need to travel to the bank, especially if there’s an issue with the scanning system. 

According to the Payment Trends Report, ACH processing costs $1 per transaction while checks can range between $3 and $10 in processing fees. 

The most recent triennial Federal Reserve Payments Study from 2022 reports noncash payments in the U.S. grew at their fastest pace between 2018 and 2021 more than any other three-year report period since 2000. The large decline in total number of checks during the period and a modest increase in dollar amount resulted in a huge average check size increase from $1,908 in 2018 to $2,430 in 2021. 

“We’re just trying to continue to make sure the awareness is there,” says Brunner. “You’re going to have some people that are going to want to use an app and others are going to use more of a desktop or laptop, but we’re just trying to make sure the awareness is there and provide enough interest with things on the app that would drive them to use it.” 

The process 

Switching from paper to digital or electronic payments takes time and isn’t a cold-turkey decision. Brunner says residents were comfortable paying rent with paper checks and going into the office to drop them off. 

“Ensuring that individuals are aware they must complete their payments online or set up payments, and process money orders through another institution to reach us, was initially challenging, particularly when explaining to new residents or individuals with language barriers,” he explains. “We just want to make sure that they have the options there to make their payments. We want to make it as easy as possible for the resident to be able to make a payment.” 

Leiva says their communication with residents encourages them to make rent payments online. “We get more payments quicker, that has been the largest benefit.” 

BRG is still focused on making sure the business is a resident- and relationship-first operation. “Currently, we prioritize maintaining a personal connection with our residents. If a resident has not made a payment by the fifth of the month, we proactively reach out to them through multiple communication channels such as phone calls, emails or in-person interactions in common areas. This approach ensures that we provide sufficient support and assistance to residents who may need it.”

 

Michael Miller is NAA’s Managing Editor.