Residential REITs are working in a number of ways to promote the financial empowerment of their residents. Ranging from the complimentary reporting of rent payments to major credit bureaus, to providing access to financial workshops and coaching, REITs are focused on being responsible community members that support the longer term financial goals of those who call their properties home.
According to Esusu, a fintech platform for financial health solutions, the barrier to financial stability for many individuals in the United States is their credit score—or lack thereof. More than 45 million Americans are deemed “credit invisible,” meaning that one in every 10 adults has no credit history with one of the three credit reporting agencies Equifax, Experian, or Transunion.
Rod Griffin, senior director of consumer education and advocacy for Experian, says many consumers who might not qualify for a mortgage right now are already making on-time rent payments, yet those payments may not be reflected on their credit report—even though they are often their largest monthly expense. “Including positive rent payments on consumer credit reports can help show a strong, positive credit history needed to obtain other forms of credit, like car loans and mortgages,” he says.
The sooner a consumer can start establishing good financial habits and maintaining healthy credit, the better, Griffin says. “The habits and choices consumers make now will follow them throughout their lives and can impact their financial opportunities.”
Opening Financial Doors
Given the importance of initiating and building a credit history, REITs are taking steps to ensure their residents are getting the full benefit of being a responsible rent payer.
Elme Communities (NYSE: ELME), a multifamily REIT that owns and operates apartment homes in the Washington, D.C. metro area and the Sun Belt, is focused on elevating the living experience for the value-conscious renter, delivering on reliability, service, and innovation.
Tiffany Butcher, Elme's COO, says that Elme is proud to collaborate with Esusu to offer residents access to innovative credit reporting and rental assistance programs that promote financial inclusion for working families. "These programs have been instrumental in helping residents improve their credit scores by submitting on-time rent payments to all three credit bureaus as well as keeping individuals and families in their homes with interest-free loans, which provides cash flow stability to communities."
Elme Vice President of Investor Relations Amy Hopkins said that feedback from residents on the Esusu program has been positive. “We have high resident adoption of the Esusu program, and the program is driving meaningful impact.” Hopkins says that by using Esusu, Elme has played a role in establishing first-time credit scores for hundreds of residents.
While Elme is not allowed to see credit score data at the resident level, it can see average asset level and portfolio level credit scores. “We know that the program is helping our residents as we've seen our average portfolio-level credit score increase over time, and over 60% of the residents enrolled have seen their credit scores improve,” Hopkins says.
Elme’s resident retention has been historically high this past year, Hopkins says, adding that part of that could be related to the benefits it’s offering residents, such as access to the Esusu program. “For a resident who had no credit history at all, establishing a credit score for the first time opens financial doors in terms of the ability to get a mortgage, car loan or some other line of credit. That combined with the improvement in individual credit scores is what makes this program successful and helps us know that we're making a difference,” she says.
Invitation Homes Inc. (NYSE: INVH), a single-family home leasing and management REIT with approximately 96% of its wholly owned portfolio located in the Western U.S., the Sun Belt, and Florida, is also partnering with Esusu.
“We take immense pride in our collaboration with Esusu's positive credit reporting program, with more than 180,000 of our residents having enrolled and over half of those already improving their credit scores an average of 34 points,” says Invitation Homes CEO Dallas Tanner.
He adds that the collaboration could help residents achieve thousands of dollars in lifetime savings on their borrowing costs, “further enhancing the value proposition of choosing to lease a home with us."
Meanwhile, Linda Willey, vice president of business services at Camden Property Trust (NYSE: CPT), a multifamily REIT that owns interests in and operates 171 properties containing 58,042 apartment homes across the U.S., says reporting of rent payments back to credit agencies has not always been prevalent in the multifamily sector. For its part, Camden is also working with Esusu, in addition to Bilt, a loyalty rewards program.
Willey explains that Camden’s initial connection with Esusu came during the pandemic, when the platform worked with philanthropic organizations to offer zero or low cost loans for residents facing financial hardship. The added benefit was the rent reporting aspect, she says.
In 2022, Camden partnered with Bilt to offer its residents membership rewards, similar to airline miles. For residents involved in the membership program, free rent reporting is an added service, and “the icing on the cake,” according to Willey. Bilt, like Esusu, only reports positive rent payments.
“People have seen an increase in their credit scores, which is really good,” Willey says. According to Bilt, more than 5,300 Camden residents are currently enrolled in its rent reporting program.
Jonathan Lawless, head of homeownership at Bilt, says that for most renters, rent is their most significant financial commitment. For younger renters, it may also be the only way to demonstrate their financial responsibility. By leveraging tools like Bilt to report this data to the credit bureaus, residents can establish credit or improve their existing credit scores. This makes it easier and cheaper to access credit, saving residents significant money over time. Additionally, having a stronger credit history can provide renters with greater financial stability and opportunities to achieve long-term goals like purchasing a home, he says.
In addition, FirstKey Homes, LLC, which provides single-family rental homes in 29 markets across the West, Midwest, and Southeast, has partnered with RentTrack by Self to provide its residents with free credit reporting to the three largest credit reporting agencies. “Providing this valuable service to our residents helps them continue to build their credit and achieve their financial and home ownership goals. We work hard to give our residents a place to call home, and we believe this partnership will be instrumental in supporting their home ownership journey," says Alex Horwitz, vice president for media and public relations at FirstKey Homes.
Reaching Financial Goals
Financial empowerment also comes in the form of transferring practical skills and providing resources to tenants.
FirstKey Homes also partners with Knowledge of Financial Education (KOFE), an online platform that provides financial wellness resources to residents, including seminars and podcasts, that are focused on such topics as credit, budgeting, and mortgage preparation.
In 2023, VineBrook Homes Trust, Inc., a public non-listed REIT with properties in 24 U.S. markets, committed $1 million to expand its partnership with the nonprofit Operation HOPE, a partnership that had originally started in 2021. The collaboration provides comprehensive financial education workshops to residents, covering topics such as budgeting, saving, credit management, and investment basics.
Residents also receive access to free one-on-one financial coaching sessions with certified financial counselors from Operation HOPE, which are tailored to the specific needs and goals of each resident.
Additional benefits include assistance in developing personalized financial action plans to help residents achieve financial stability and long-term prosperity, and resources and support for residents to access financial products and services, such as banking and loans.
The partnership also focuses on ongoing support and follow-up to ensure residents are making progress towards their financial goals and are equipped with the necessary knowledge and skills for financial success.
To date Operation HOPE has served more than 1,000 clients through its partnership with VineBrook. In the words of one VineBrook resident, “As I diligently implemented the strategies learned through Operation HOPE's programs, I began to witness remarkable progress. My credit score steadily climbed, surpassing my initial goal, and reaching an exciting 606. The improvement in my finances opened doors I had never imagined possible.”
Dana Sprong, co-founder and managing partner of VineBrook Homes, notes that “Our goal has always been to provide hardworking folks with the opportunity to create their own version of the American Dream: access to clean, safe, affordable homes that can be leased or serve as a steppingstone to a home purchase.”