Why Property Managers Must Meet the Payment Needs of Millennials
Millennials represent the largest generational cohort, topping even the Baby Boomer generation in sheer numbers. But their plans for marrying and home buying are significantly different than the generations that preceded them.
By Jay Alsup, Director of Marketing, Forte Payment Systems
Demand for rental properties is at unprecedented levels, thanks in part to the millennial generation. Born between 1980 and 2000, this generation is leasing instead of buying thanks to a combination of preferences and economic factors.
Millennials represent the largest generational cohort, topping even the baby boomer generation in sheer numbers. But their plans for marrying and home buying are significantly different than the generations that preceded them.
Pew Research Center found that, while almost 60 percent of adults 18-31 were married and living in their own homes in 1968, that number was closer to 25 percent for the same age group in 2012. Instead, research by the Organization for Economic Co-operation and Development shows 60 percent of 25-34 year olds were renting in 2013.
That doesn’t mean that millennials are planning on renting forever. But according to a Goldman Sachs report, 55 percent of them identify home buying as either important but not a top priority, or not something they are looking to do in the near future.
All of this means that millennials as renters are here to stay, at least for the foreseeable future. Which, by extension, means property management companies need to be prepared to meet the needs and expectations of these residents, and property management software must rise to the occasion of helping them to do so.
Digital Natives Don’t Write Checks
One of the most significant and defining characteristics of millennials is their position as digital natives. Having grown up in a time where computers and video games were the norm and not the exception, this generation is more comfortable with technology than any that had come before.
Millennials are attached to their devices, and 87 percent of millennials use multiple digital devices a day. Many report that they think poorly of brands that don’t have a usable mobile presence. They are early adopters of technology, and quickly adapted to electronic forms of payment. In fact, many Millennials, if they have a checkbook, only have it to pay rent.
They aren’t the only ones that prefer electronic payments to checks, either. Data from the Federal Reserve shows that check writing declined 57 percent from 2000 to 2012. But they are the generation that goes beyond thinking of electronic payments as a convenience and instead classifies them as a necessity.
Obviously, to be a property of choice for millennials, management companies must be capable of processing at least one form of electronic payment.
A Changing Payment Landscape
The property management sector hasn’t settled on a standard for electronic payments. This may be one of the reasons why so many management companies are still requiring rent payments be delivered by check, even though checks have the overhead of waiting for the postal service to deliver them and require trips to the bank for deposits.
There are a number of different electronic payment options that can work for rent, credit check and other payments for both property management and tenants. ACH direct deposits can allow renters to set up automatic monthly withdrawals. They can set up recurring withdrawals on their end with eChecks, as well as set up payments using email transfers and mobile payments.
Property management companies may be concerned that committing to a particular payment type will not only tie them to a payment method that might become quickly obsolete, but also create friction with their renters by forcing them into a particular service.
But property management software can help them overcome this fear. By partnering with a full-service payment processor, flexibility of payment types can be built into the product from the start. This is especially true if the processor already has APIs in place for easy integration. As millennials adopt new technologies and electronic payment methods, the can be nimble and accommodate the changes needed to handle new payment types.
As time goes on, checks will become an antiquated way of paying rent, especially as property managers understand and accept the benefits of electronic payments. Even before that, though, millennial residents will chose properties that accept electronic payments over those that don’t. Therefore it is crucial that property managers have the tools at their disposal that provide flexibility in their payment processing. As a result, these management companies will make business decisions, like choosing the right software provider, based on their ability to meet the needs of the millennial population.
Jay Alsup is the director of marketing for Forte Payment Systems. He has been in the role for eight years, during which the company’s revenue has tripled. In this position, he has proven instrumental in the rebrand, growth and development of Forte’s identity. He has 15 years of experience in marketing, B2B marketing, lead generation and marketing strategy. For more information, visit: www.forte.net.