Finovate Blog

Looking to provide real value to younger customers, especially the children of your core deposit base? Help them get started in the rental game. I have five family members who have recently rented in the Seattle and Los Angeles metro areas, and it’s a brutal seller’s market for apartments. Landlords are picky and require financial assurances similar to, or even more stringent, than a mortgage (pre-2008 anyway).

For example, as a co-signer on my son’s lease, I was asked to provide two years of tax returns despite the fact that he has a good job lined up (albeit not until after graduating in May) and sufficient current resources to pay the monthly tab. And then there’s the initial cash outlay (in his case, $4,000 in certified checks). All this is quite daunting for new renters or anyone looking to make a move.

Where financial problems exist, banks and credit unions have opportunities. Ideas include:

1. Make it easier to save with a goal-based account: First-time renters often don’t realize the financial cost of getting started in an apartment. Offering a systematic savings program to help build the required balance is a win-win. For extra credit, provide a bonus when certain milestones are met and/or allow parents, aunts, uncles and grandparents to contribute as well. Simple, Moven, Mint and most PFM platforms offer goal-based savings; most financial institutions do not.
2. Provide rental-deposit loans: If savings won’t cover it, offer a modest installment loan with an easy co-sign option. These small loans can also help build a positive credit history. Though rare, a few U.S. credit unions offer small loans specifically to cover rental deposit, first/last months’ rent, utility deposits, and so on, but it’s not typically something you see at banks. See the SF Fire Credit Union page above for an example.
3. Help students in their apartment/roommate hunting: Team up with companies helping students and others find a place to live. For example, Rent College Pads, recently raised $1 million.
4. Offer renter’s insurance: A low-cost, but valuable bit of peace-of-mind for young renters who can ill-afford to replace stolen or damaged items.
5. Encourage more low-cost housing options: In tight rental markets, use your resources to find spare rooms within the community that could house students or others needing housing. A bank or credit union could offer loans to remodel or build new rental spaces.

Bottom line: One of the best ways to cement a long-term relationship is to help someone (or their kids) find a place to live, and provide a means of handling the initial financial burden. I encourage financial institutions, and their fintech partners, to make a home for this strategy in your 2017 gameplans.