WSJ Your Money Briefing - Rents Are Rising, But Cash Rewards Can Ease the Sting for Tenants

Episode Date: August 27, 2024

More landlords are offering credit card-style incentives to tenants for making timely payments and signing or renewing leases. Wall Street Journal personal finance reporter Katherine Hamilton joins host J.R. Whalen to discuss companies and retailers that have partnered with landlords to offer rewards.  Sign up for the WSJ's free Markets A.M. newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

What does possible sound like for your business? It's more cash on hand to grow with up to 55 interest-free days. Redefine possible with Business Platinum. That's the powerful backing of American Express. Terms and conditions apply. Visit mx.ca slash Business Platinum. Here's your money briefing for Tuesday, August 27th. I'm JR Whelan for The Wall Street Journal.

Earning rewards like miles or cash back from shopping has been around for years. Now many landlords are allowing their tenants to get in on the action just for making their monthly payments on time. If it's a points-based rewards company, a lot of times they partner with companies like Amazon or Home Goods that you can cash your points in and get an Amazon gift card. And then also a lot of people are paying their rent online now so those online platforms are also contributing. We'll talk to Wall Street Journal personal finance reporter For many tenants, a rewards program can take some of the sting out of paying rent.

Wall Street Journal personal finance reporter Katherine Hamilton joins me. Katherine is getting something back in return for rent payments something new? It's not new per se but getting rewards on a monthly basis is relatively new for rent payers. A lot of landlords historically have given out concessions which is a financial incentive like a month of free rent and that's always been the case. But now a lot of companies are partnering with landlords and offering monthly rewards like points or cash back. How common is this?

At least 2 million renters are currently getting cash back points, some version of monthly rewards from some of these newer companies that are offering renters rewards. You mentioned cash back and points. What other kinds of rewards do tenants typically receive? Cash back and points are the primary types of monthly rewards other than, like I said, like the month of free rent, those sort of traditional concessions. But these newer companies are primarily doing cash back and points.

So how does this work? Do the perks come directly from the landlord? Usually these companies that offer rewards do have the landlord pay for most of the rewards, but there's a few different streams it can come from. So if it's a points-based rewards company, a lot of times they partner with companies like Amazon or HomeGoods that you can cash your points in

and get an Amazon gift card or reusable paper towels. And those companies will also add to the points and the value of the points. And then also a lot of people are paying their rent online now. So those online platforms are also contributing. Reusable paper towels. Does that come up often with people you talk to? That did come up with one person I spoke to. She lives in New Jersey. She's rented her whole life and she gets points back now for paying her rent and she's cashing those points for, she's had a really nice set of colored pencils for her daughter

and reusable paper towels. All right. How would a tenant sign up for this kind of program? Usually it's through the landlord. So these landlords are offering this sort of as an incentive to draw tenants in and say they can get a little return on their housing investment. How do these rewards or concessions compare to the cost of rent? They're pretty much a drop in the bucket compared to rent. As you may know, rent has increased a lot since the pandemic. It's up about 20%. And it's now about $1,750. So if you're getting,

let's say, the points back with something like Pinata, which is one of the companies that offers points, Pinata says they give back about $125 per year on average to renters enrolled and that comes to about 0.06 percent of the annual average rent. So that's pretty small. In addition to the woman who got the reusable paper towels and the colored pencils, you spoke to several people who signed up for these rewards. How do they like it? Most people I talked to really liked it a lot. It's pretty rare for renters to get any kind of return on their housing investment. So this feels to a lot of renters like an

exciting opportunity to do that. So besides the paper towels that I mentioned, another renter uses it to cover some of his utility fees. So it just helps make the bill and the payment of rent feel a little bit smaller. What do landlords get out of offering these rewards? The primary thing that landlords get is renters that are more likely to pay their rent on time because they're being rewarded for paying their rent on time. They also can encourage renters to renew their leases, which is a big draw for landlords.

It's very difficult to keep units full right now because in a lot of markets, there are more units than renters, and so a lot of units are empty, which costs landlords a lot of money. So they wanna keep their renters for as long as they can. What other ways can a tenant accumulate rewards from paying their rent? You can also pay your rent with a credit card. The benefit there is you can build your credit score a little

bit by putting your rent on your credit card. However, you should be aware that most times landlords will also charge a fee for using a credit card to pay your rent. The only exception is the built credit card, which gives renters points for paying their rent and you don't have to pay a fee with that card. That's WSJ reporter Catherine Hamilton. And that's it for your Money Briefing. This episode was produced by Zoe Kolkin with supervising producer Melanie Roy. I'm JR Whalen for The Wall Street Journal. Thanks for listening.