Times are changing, and the ways we pay are no exception. Consumers are demanding — and being offered — flexible payment options across the board and the property management business, an industry that’s been historically slow to embrace technology, is being left behind. Coupled with our current economic climate, this presents an opportunity.
The world today is not the same place it was even two years ago. The pandemic has changed consumer preferences and for many of us, our fortunes as well. In May 2022, the inflation rate in Canada reached a 33-year high, at 7.7 per cent while wages have only grown by roughly three percent in the past year. Coupled with a rise in interest rates, consumers are paying more for everything. With day-to-day essentials, like food, gas, and rent becoming more costly it’s no surprise people are looking for ways to make their money last the whole month.
The current environment has resulted in solutions like “buy now, pay later” or BNPL payment plans that offer greater financial flexibility for consumers. And BNPL is being applied to the housing industry to manage rents, too — a Motley Fool survey suggests over half of renters would “probably” or “definitely” pay more for flexible payment options in a rental property. This move towards flexible payments, which allows consumers to split their rent up into smaller installments throughout the month, is part of a growing demand for enhanced services, including digital rent payments, according to a report from insurance company Entrata.
Flexible Payments to Support Improved Financial Health
Flexible payment options benefit both property owners and renters. Renters have the ability to break up their rent payment into smaller installments, while property owners can maintain more reliable collections and better renter retention. The financial wellbeing index from LifeWorks, released in October 2021, suggests that almost 30 per cent of Canadians live paycheck to paycheck, and roughly 26 per cent say they can’t come up with $2,000 in an emergency if they needed to. Giving renters a flexible solution to pay their rent, even if faced with a sudden financial emergency, can help them avoid late payment fees, which can add up to $150 a month on a $1,200 rent. It also helps renters avoid the financial stress of falling behind.
Avenue Living Communities + Zenbase: A Benefit for All Residents
For Avenue Living Communities (ALC), a partnership with Zenbase is just another way to enhance the resident experience and provide exceptional customer service. ALC is focused on providing top-quality management to its residents across the Prairies, and offering a flexible payment service has been a key differentiator. For a small fee, Avenue Living Communities residents can use Zenbase to split their rent into two payments, dividing their rent to match their pay schedule. Zenbase covers the monthly rent up-front, and residents have an extended window to pay it back in full and avoid the service fee. Zenbase also offers a $100 cash advance, to provide support with groceries or other expenses on months when budgets are tight. “Splitting your rent into two payments is awesome,” writes Diane in a Zenbase Google review. “You don’t feel stranded at the end of the month.”
A Win-Win
“Rent is due on the first” is one of the last, albeit stubborn, remnants of the past, and we may be seeing the beginning of its extinction. Avenue Living Communities, in partnering with Zenbase, is offering their residents flexibility, freedom of choice, and another way to take control of their finances. We all deserve options, whether we rent or own our homes, and flexible rent payment services like Zenbase provide property managers with the technology to make those options a reality.
Learn more about Zenbase, and how we can help property managers offer exceptional customer service.
Q: Koray what’s the 20 second booth pitch and how are you different from other rent payment platforms?
A: We’re a flexible rent payment platform that eliminates late payments. Residents can pay as much as $150 for late payments and landlords can lose a good chunk of their margins because of the operational cost of managing late payments. We are fixing this by covering the residents on the first of the month and receiving their rent in smaller payments when they get paid.
Q: Ok, well, talk to us about the financial health of residents and why that’s important?
A: 25% of the renting families are in core housing need and more than 50% of the renting households are living paycheck to paycheck. These folks are vulnerable to life events: loss of employment, reduced hours, unexpected health issues. So they don’t always get to make their biggest expense, rent, during that time.
When this happens they don’t have good options to turn to:
1) predatory lenders or
2) deal with overdrafts, late fees in case of rent.
This further worsens their financial health leading to repeat late rent payments and potentially to eviction. Good people shouldn’t have to leave and we are partnering with landlords to improve the financial health of their residents.
Q: So, coming out from all the government mandates and now into high inflation our industry is being negatively affected – Koray, what late payment trends are you seeing these days?
A: As the number of families in core housing need increases, we are seeing an increase in late payments as well. Given a more risk averse credit environment, we are seeing a reduced number of options for the residents to catch up on their rent payments. Because of this we are seeing a greater operational overhead to manage late payments while straining the relationship with the residents.
Q: Alright – how much can a late payment cost a tenant?
A: Insanely high, things can really add up. With pandemic pre-authorized debit became the most common payment method. This means greater risk of bank overdraft fees that can be as high as $48. On top of that landlords can charge between $50-$100 overdrafts fees. When you add late fees on top of that one can pay as high $150 for an average of $1,200 rent.
Q: Well, now that rents are finally increasing – are you seeing any groups disproportionately affected – and how can property managers maintain on time rent payments during these transitioning times?
A: Visible minority groups are almost twice as likely to be in core housing need. To help their communities it is now more important than ever to offer flexible payment solutions that match the cashflow timing of their residents.
Q: Before we go is there anything else you’d like to mention?
A: Financially healthier residents create happier and healthier communities. So housing affordability issue is a healthcare issue as well: low-income unstable household is 2X more likely to be in fair or poor health than those in stable housing, and almost 3X more likely to report depressive symptoms. I think we are all responsible for taking care of our communities.