Traversing economic challenges through social initiatives and financial rewards.
With economic uncertainty impacting nearly every facet of life, many renters are struggling to navigate all of their financial obligations, while operators wrestle with an increase in delinquencies, operational costs and declining rents. However, operators are discovering that through the implementation of financially focused social initiatives, they’re not only better serving their communities but creating an extensive risk mitigation plan for their entire portfolio.
What are social initiatives?
The establishment of environmental, social and governance (ESG) goals in rental housing has paved the way for an influx of social initiatives. Companies have engaged in new ways to increase diversity, equity and inclusion (DEI) in company cultures and outwardly celebrate more diversity and create more awareness than ever before. In doing so, they have enhanced resident connections and the resident experience.
Regardless of what approach an organization takes on social initiatives, it should likewise aim to improve the overall quality of life for residents, including their financial well-being.
For example, only recently has the industry seen a more comprehensive approach and solutions for credit reporting of on-time payments. Many operators have implemented programs that give residents the option to have their rent payments reported to the major credit bureaus, helping them build better credit scores. Additional financial services, like lease insurance, that replace costly upfront security deposits enhance housing accessibility for renters while offering greater protection for operators.
The ability to make digital payments was another area that provides operators an opportunity to improve the lives of their residents. There are still a large number of renters who prefer to pay by check or money order, or perhaps they have reservations about the digital payment process altogether. Regardless of why some residents are hesitant to embrace tech-based tools, digital payment platforms are proving to be an effective way to seamlessly meet an array of payment preferences and improve efficiencies.
Digital payment platform
Moss & Company, a third-party management company with more than 15,000 apartment homes in Southern California, saw a considerable uptick in credit card payments during the pandemic, leading to the realization that residents need a number of payment options. The company now offers seven different digital payment options, including certified credit, debit and ACH, contributing to more than 80% adoption of digital payments throughout its portfolio. Some communities have realized 100% digital payment adoption.
“However residents want to pay these days, even if that’s by check or money order, we have a solution to make that payment electronic,” said Chris Gray, President of Moss & Company. “Having a product that continues to evolve keeps us on the cutting edge of technology and resident service. This allows us to not only improve the lives of our residents, but encourage consistent, timely rent payments each month for our clients.”
In January 2024, Moss & Company saw 7% of payments come through credit cards, which was an increase from previous months and potentially indicative of the severity of the impact that higher costs of living are having on residents. The company has found that utilizing a robust payment platform offering multiple payment options is key to keeping renters steadfast in their commitment to paying on time.
“The incredible participation and adoption of digital payments at our communities is a real testament to how much residents appreciate these platforms,” Gray said. “It enables us to deliver a higher level of customer service that demonstrates to residents just how much we value their satisfaction.”
Offering multiple payment options has proven to improve payments, but by also incorporating resident rewards, there is greater opportunity to see more payments arrive both on time and digitally.
Rewarding that good behavior
When looking at social initiatives, more operators are turning their eye toward reward programs.
“We see it in almost every industry, it’s about rewarding positive behavior. Whether it’s the tenth sandwich is free or the more you purchase, the more you save. Similarly, we’re trying to encourage good resident behavior,” Gray said. “Our business is managing properties but our passion is the people that we serve. If you pay electronically and on time, you will be rewarded.”
When residents pay rent on time for multiple months, post a positive online review, refer a resident to the community or express interest in renewing their lease, they earn points that add up to cash rewards. Going beyond traditional concessions, such programs exhibit a broader dedication to the well-being of the entire resident community.
A loyalty program that provides financial rewards can be simultaneously beneficial to both residents and operators. Residents gain a sense of financial stability through tangible rewards that ease the economic strain they may be facing, subsequently reducing delinquencies and bad debt and increasing satisfaction levels.
The bottom line
Leveraging financially focused initiatives that residents value is an investment that impacts the entire resident lifecycle. When residents feel supported, whether that be through the ability to pay their monthly rent in the payment option that works best for them that month and knowing they earn cash back by making that payment on time, they are more likely to renew their lease, contributing to a steady NOI.
“Successfully navigating economic challenges as an operator really does start with resident well-being,” Gray said. “By standing firm in our commitment to strengthening residents through a more convenient rent payment process and offering cash back rewards, we are in a better position to weather any economic conditions and protect our portfolio from financial risks.”
Andrew Ruhland is an Account Executive and Content Writer for LinnellTaylor Marketing.