Home rental is one of the hallmarks of a low-income population. While banks may struggle to reach families who don’t feel they have enough money to open a savings account, landlords deal with low-income families all the time. Especially owners of small older homes and investment owners of apartment buildings.
Banks looking to enact low-income community outreach can benefit from partnering with landlords in order to provide much-needed financial services to their tenant families. Landlords also have a great deal to benefit from this partnership, as families with online banking can sign up for automatic rent payments, pay fees more easily, and can accept their security deposits digitally. The real estate market is trying to move away from a world of mailing cheques and into a world of digital transfers, and low-income banking services are one of the important bridges toward this goal.
Here are four different ways that you can start thinking about partnering with landlords to reach low-income families
1. Assistance Opening Bank Accounts for Online Rent Payments
Modern landlords would far rather an electronic deposit for rent payments versus a written check or an envelope of cash. For low-income families that pay in these methods without using a bank account, a compassionate landlord can encourage them to open an account just to pay the rent in the preferred method.
This becomes even more effective when landlords can partner with your financial institution to provide their tenants with directed assistance in opening accounts. Your expertise and resources can make it much easier for low-income families to open bank accounts, understand and trust their bank accounts, and set up automated bill payments for everything they would have already paid like clockwork in cash.
2. Seeding Credit Scores from Rental History
Low-income and underbanked populations often overlap, and for good reason. Many families don’t believe they have enough money for banking, or saw their parents suffer from misunderstanding the use of credit. They may not have credit scores because they distrust credit cards or were raised with the belief that all payments are best made in cash to avoid anything that resembles debt.
Credit scoring these populations is an important step in introducing low-income families to financial services, and rental history can help. Responsible people who have never been late on a rent payment and always get their security deposit back in full (or mostly in full – accidents happen!) can be given a starter credit score based on that responsibility.
3. Short-Term Financing for Repair or Appliance Costs
Often, low-income families do not have the extra funds to cover costly repairs that they are responsible for, or appliance upgrades that would make their lives considerably easier. Washing machines, pet damage repairs, and other expenses often lead these families to exploitative payday loan services when they should be bringing their business to you for short-term financing options.
By working with landlords, you can make sure these low-income renting families know that they can come to your bank for short-term financing and reasonable repayment plans instead of exposing themselves to the abuses of semi-criminal payday loan providers or pawn shops.
4. Online Security Deposit Returns
Finally, when low-income families move out of a rental home, getting the security deposit back is very important to them. This is an important investment they made in each rental home and it may be needed to cover the moving costs or deposit on the next place. For landlords and families, it is so much easier to make sure that deposits get back to tenants when they have an online bank account ready for transfers.
Landlords and tenants alike will benefit from your bank helping low-income families set up online accounts that can be used for rent, deposits, and the return of security deposits when the time comes.
These concepts are only the tip of the iceberg for how financial institutes can partner with landlords and other community providers for low-income families. Use these ideas as a stepping stone toward creating the best possible partnerships and services to reach the low-income communities that can benefit most from your services.
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