Imagine a world where you could ‘book’ an apartment rental in much the same way you now book a dinner reservation.  Pick a neighborhood, a price range and a décor that meets your specifications.  Check availability for the number of people in your party and confirm your desire to ‘occupy’ a space for the period of a meal (or the duration of lease) to suit your schedule and satiate your appetite for something new.  As a consumer, all you have to do is hit ‘confirm’ and your new experience awaits.  For the restaurant of choice, the consequence of non-performance on a reservation or, in the worst case, someone dinning and dashing, has a relatively small impact on operating margins.  Restaurants that don’t want to be left in the cold require non-refundable deposits with a reservation, and they often provide special discounts to consumers who provide those deposits with a specific form of payment like American Express. These restaurants have learned the hard way that fickle consumers don’t look back if they decide the reservation they committed to no longer suits their needs. 

In multifamily, however, the risk of a ‘no show’ or worse, an occupant who leaves without paying up, has much higher consequences, as many communities knows too well.  But what if like a restaurant, your risk had less to do with who was making the ‘reservation’ and more to do with how certain you could be of not being stiffed for the entire rent?  Would you become less risk adverse if you knew in advance you wouldn’t get stuck with just a deposit?  Would you become less risk adverse if the consumer said thank you for being there for me and I’ll show my gratitude by making sure my bill is taken care of even before I move in?

The action of structuring payments with a preferred provider in order to reduce exposure to defaults represents a paradigm shift that has emerged in multifamily.  We now operate in an ecosystem where many communities encourage self-selecting applicants to take action in advance to qualify for a lease ‘reservation’ – often with special rates based principally on the payment method they are willing to employ to assure all bills will be paid on time. 

The value equivalents of OpenTable and AMEX getting hitched exist today and will be offered at more and more communities as time goes on.