Myths about flexible rent payments (Part II)

Pulling back the curtain to reveal what forward-thinking residential property owners are learning for themselves: rent payment flexibility is a game-changer for profitability.

Welcome to Part II of our “Myths about Payment Flexibility” series (catch up on Part I, if you missed it). We’re here to debunk the common myths around payment flexibility that are keeping property owners from embracing this exciting innovation. We’re here to show that every bottom line benefits when payment friction is removed. We’re here to give you a path to exploring this exciting innovation for your own portfolio. 

To start, we ask ourselves: why is rent still paid and collected like it’s 1950? 

Today, most residents pay rent at the beginning of the month via cash or check in the mail. The luckiest pay through outdated payment portals, which don’t go far enough to actually reduce friction. With rising costs and a population still reeling from the pandemic, property owners are feeling the pain - their residents’ pain - and are struggling to keep collection costs and manager turnover under control. 

Payment flexibility is one of the easiest and most effective ways to improve on-time collection and can have a strong, positive impact on a property’s bottom line. Flexible payments refers to an approach that lets residents pay in 1 or multiple installments across the month, on a schedule of their choice. It can (and should!) also include multiple payment method options and the ability to make last minute changes.

Without further ado, more myths! 

Myth 4: Flexible payments only benefit renters.

Flexible payments are a win-win scenario in which property and resident interests are aligned. While residents absolutely benefit from better household financial management, improved housing security and more, properties have just as much to gain.

Investors and owners benefit from bottom line improvements via better occupancy, lower turnover, impressive cost savings, new revenue, and more. But the biggest impact is felt by the property managers, who are finally free to focus less on playing “debt collector” and more on higher ROI activities like leasing, property maintenance, and community building. With an extreme property manager shortage and 50%+ manager turnover per year, savvy owners and investors are prioritizing manager satisfaction. 

No more scanning checks. No more processing money orders. No more being the bad guy. Owners are learning that a better resident experience correlates with a better property manager experience, as there is less tension in a relationship that is now built on cooperation and mutual respect. At no cost to the property, Circa provides the property manager with an unbeatable experience, improving manager output and satisfaction, which - again - boosts the owner’s bottom line. 

Myth 5: My residents can already pay flexibly using our portal.

Despite claims, most portals actually don’t have a flexible payment option unless they are custom-coded. A full-featured flexible payment solution allows residents to set a monthly payment schedule and make changes when needed. Flexibility doesn’t mean an algorithm determines the payment date on behalf of the resident, but rather residents can - within a property’s pre-approved parameters - choose a schedule based on their real-time knowledge of their own financial situation, increasing the likelihood of on-time payment. 

Flexibility extends beyond schedules and dates. It also has a lot to do with convenience! Paying through with a modern, easy-to-use app (on a computer or mobile device) is easier for most residents. Circa processes payments directly from a residents bank account via ACH Direct Debit, with credit card via Stripe, or via Cash App. Residents can also make in-person payments at one of our 70,000+ agents nationwide at retailers like Wal-mart and CVS. Circa, naturally, settles funds directly into a property’s account, supported by a detailed settlement report and free access to our property portal. System integration with your existing property management system makes this an effortless way to provide residents with the flexibility they need while further simplifying things internally.

Myth 6: If I agree to flexible payments, I lose my ability to charge late fees and start the eviction process, if necessary. 

Simply put, the benefits of flexible payments far outweigh the costs and the rewards outweigh the risks. It’s as much a psychological shift as it is a process change. To be clear: even in a world with flexible payments, late payments (and therefore late fees) still exist. If a resident pays on-time according to their schedule, then there are no penalties - even if the resident’s schedule was to pay in installments. Those residents are making a choice to pay a fee for the added flexibility, instead of being charged a punitive late fee for being unable to make ends meet. If a resident fails to pay according to their schedule, late fees do apply. The net difference to a property is still net positive. 

Circa is a proactive intervention that prevents many evictions from being filed in the first place. In avoidable situations, Circa’s flexible payments won’t be an impediment. When a resident misses a payment, the resident must reschedule the payment before the end of the month within 14 days of the original payment date. If the resident fails to reschedule or if the rescheduled payment fails, then the resident’s account is automatically paused and Circa will not collect any additional rent from that resident until the property approves. At that point, the resident can either clear their balance directly with the property or - with the property’s permission - set up a payment plan for their past due rent to get them back on track while their regular rent payments resume. Each eviction costs a property 3-5 months of rent. They are disruptive to a community and devastating for a household. There is immense value to preventing evictions for residents and property alike.

To wrap up…

Flexibility can fundamentally change how you operate your business and bolster your community with happier residents, property managers, and owners. Within our partnered properties, we’ve heard reports of a substantial increase in the collection of arrears, a reduction in managers’ time chasing late payments, and an increase in positive resident-manager interactions. Although flexible payments may seem daunting, they are the future of rent payments, with enormous benefits for residents and properties alike. 

Still don’t believe in flexible payments? Let us convince you! 

Curious about how Circa can boost your bottom line? Get in touch! 

Contact us at [email protected] to schedule a demo.