Finding and retaining great tenants can make or break a rental property investor’s success. As apartment supply rises, landlords are using technology to help attract new renters and keep the ones they already have.
Loyalty programs are nothing new. Most people have a credit card that pays cash back or are members of restaurant chain programs that reward frequent visits. Renting an apartment hasn’t traditionally been a way to earn rewards, but new programs are becoming more popular in a competitive rental market. Part of what is driving the trend is that, as customers, we expect to be rewarded for consumption.
The Wall Street Journal recently profiled the trend and found two million renters enrolled in these programs nationwide. They receive rewards and incentives for paying rent on time and signing or renewing their leases. Incentives include cash back and points. Another part of many of these programs is credit reporting. In the past, rental payments didn’t help build your credit score. Automating credit reporting has allowed rental transactions to become part of people’s credit histories more easily.
The Companies Leading The Rental Rewards Revolution
Stake, which calls itself the loyalty program for the rental economy, says its revenue management tools return 130% on every dollar spent. In June, it purchased Circa, a rental payments company, for $9.5 million. In addition to incentivizing renters to stay current, Stake also has a program that helps landlords collect back rent.
Bilt is perhaps the biggest player in the space, with over 4.5 million homes enrolled. A recent funding round of $150 million pushed the company’s valuation up to $3.25 billion. Bilt has a Mastercard-backed credit card program and offers various perks, including restaurant and store discounts and free fitness classes. It recently announced a collaboration with Walgreens that allows customers to seamlessly identify which products are eligible for health savings account programs and provides points on prescription refills. Bilt has partnered with many larger players in the rental space, including some of the top residential REITs such as AvalonBay, Equity Residential, and Invitation Homes. Douglas Elliman joined the program in May, becoming the first major condo and co-op property management company to participate in the Bilt Rewards Alliance.
Piñata charges renters a flat fee to help build their credit, participate in giveaways, and earn discounts through its deals marketplace. It does not require landlord participation for a renter to use it and does not report late rental payments. Piñata has partnered with Freddie Mac and EasyKnock on credit reporting.
More landlords are adopting these programs instead of or as an addition to concessions like discounted rent or free utilities. An August report from Fannie Mae found that in the second quarter of 2024, nearly 21% of all multifamily units were offering concessions of 5.0% on average. Brad Hargreaves, a real estate analyst, told the Wall Street Journal that it’s important for renters to evaluate the value of these programs carefully, “If the landlord’s trying to raise your rent 10%, that is going to blow away any potential savings you can get from the rewards.”
The benefit for landlords goes beyond retention. If the programs are being used, it signals that they are valuable to tenants. These programs can provide another touchpoint for landlords and renters and help increase referrals.
This article was originally published by Yahoo Finance on 6th September 2024. View original.
Photo by Tierra Mallorca on Unsplash.
