It's really quite simple: Come the first of the month, rent checks are slid under the building manager's door, then neatly entered into the books. Right?
Yeah, maybe if it was still 1956.
In 2005, though, multifamily owners are stepping gingerly through a minefield of changes to the simple act of paying the rent. No single strategy, software product, or service will work for every apartment firm, but many say that offering online payment to residents– and prospects– gives buildings a competitive edge in today's apartment market. What's more, online rent payment is rapidly becoming a checklist item for savvy consumers accustomed to paying all of their other bills on the 'Net.
But for apartment firms, it's a difficult decision to finalize. "There are pros and cons to every [vendor or service provider] we are looking at," says Lynn Klug, vice president of marketing and training at Sares-Regis Group in Irvine, Calif. But choices must be made. "Clearly residents want to have the option to pay rent online or put it on a credit card," she says.
Because of the multitude of options and difference in concerns among apartment companies, apartment firms tend to forge customized paths– in partnership with payment services providers as well as banks, credit card companies, or software vendors– to move to online rent payment.
Joining the Crowd
Among the apartment firms that have gone online with rent payment is Home Properties, a public REIT that manages about 47,000 apartments, the majority of which it owns.
More than a year ago, a firm called eRentPayer approached the Rochester, N.Y.-based company about adopting its payment services software, according to Chris Berson, Home's director of information systems. After testing eRentPayer against another online payment service in six Home Properties buildings, Home opted for eRentPayer. "The feedback that we got was that eRentPayer was a little more user-friendly," Berson recalls.
But Home still invested in bringing the program and its people up to speed. Berson's staff worked with RentPayment's developers to tweak the software so it better accommodated its needs. Home also trained its property managers, who then worked with their leasing consultants and other staff. Residents also received materials to help them learn how to use the application.
The effort to acquaint everyone involved paid off. Last June, Home received $2.3 million in rent payments online, $2 million of which came via automated clearing house transactions and the rest from credit card payments. That number represents roughly 5 percent of Home Properties' total monthly rent revenue, and while Berson bases his hunch on no formal analysis, he says expects that online-payment percentage to rise as high as 10 percent by the end of the year, as people become more comfortable with the system.
Encouraging more residents to pay online "is predicated on us as a company more aggressively marketing this to residents," Berson says. "Our property management [staff] has held this close to the vest, waiting to see how stable it was going to be."
On the vendor side, many are customizing their products with new electronic rent-payment features. RealPage, for example, this fall rolled out a new payments module for its OneSite property management program, according to Leslie Turner, vice president of product management at the Carrollton, Texas-based software developer.
Multifamily properties can opt to process checks and credit card payments in the office by scanning them through OneSite Payments, which kicks off an automatic posting to OneSite Leasing & Rents. Or they can turn over the payment responsibility to residents, who can access the online payment program on the Web and enter their bank account or credit card numbers to enable one-time or monthly payments, Turner says.