It’s a lot easier to get people to pay rent if you don’t

demand it all at once

fastcompany.com/90533686/its-a-lot-easier-to-get-people-to-pay-rent-if-you-dont-demand-it-all-at-once

It’s a lot easier to get people to pay rent if you don’t demand it all at once

Times are tough for everyone right now, but they’re especially difficult for those who struggle
to pay for housing. In April, on-time rent payments slipped for landlords on a colossal scale,
with only 69% of tenants being able to make their payments on time nationwide. This
compares to 82% of tenants making payments on time in the same period of 2019.

While some might leap to the conclusion that this indicates that more than half of Americans
can’t afford rent (or that the rent is too damn high, which in some cases it may be), there’s
also a more simple logistical problem: More than half of Americans have income that comes
in on a schedule that doesn’t align with when rent is due. If landlords offered them flexibility
on how and when payments are made, the problem might be fixed for the majority.

Some larger property management firms managing hundreds or thousands of units already
offer different payment terms to their occupants. But for independent landlords—such as the
12 million Americans who own rental properties as investments—such an option may seem
impossible. After all, for many landlords, the timing of when rent is due from occupants and
when the mortgage and other property-related expenses are due from the landlord may
coincide, so offering terms on rent may seem like an automatic no-go.

But look at it this way: It’s a massive financial hit for landlords when a tenant is unable to
stay in their home. The average eviction costs $3,500, making the unit “rent ready” costs
between $1,000 to $5,000, and finding a new tenant usually costs at least one month’s rent—
not to mention several months of rent they’ll miss out on along the way. It’s so much better to
keep good renters in place; long-term tenants that stick around tend to contribute to the
community and take better care of the property.

When you consider those cold hard numbers, it’s pretty tough to reconcile the age-old
argument for a set monthly “rent due” date, or lack of flexibility in how payment is received.
Landlords, and their tenants, should be working together for mutual benefit. The costs of
turning over a rental property are simply too high not to work together.

COVID-19 has shown us nothing if not that we need to rethink many old ways of doing
things.

In April and May, we tested this thesis on our own users, which consist of landlords using our
product, NestEgg, to receive rent and manage their properties:

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We paid landlords their full rent on the first of the month—whether we had received it in our
system or not—using our technology-based platform. For tenants who needed flexibility, we
allowed them to pay us in installments throughout the month that aligned with their ability
to pay. We also waived credit and debit card fees, maximizing tenants’ ability to pay in the
way that best suited them, without penalties.

The result? Of the 66% of landlords on our platform who participated in the test, 100% were
paid their full rent on time in April and May, which was up to 45% higher than the national
average. Also, zero tenants defaulted, creating a win-win scenario for both parties. That’s not
surprising when you consider that an estimated 57 million people—a whopping 36% of the
workforce—are (or were) making at least part of their income through the gig economy. The
income uncertainty right now for many cannot be overstated.

Decoupling when the landlord’s mortgage is due and when rent is paid is a win-win for both
landlords and tenants. Tenants are able to stay in their homes, and landlords can avoid costly
turnovers.

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