RISMEDIA, May 15, 2008-Many Americans today conduct their financial transactions electronically, from using credit cards for simple purchases like groceries to paying the cable bill through online bill pay. Despite this move toward electronic banking, the rental world continues to rely on the traditional paper check. A new survey by Investment Instruments Corp. (IIC), a company devoted to increasing transparency in the real estate rental market, indicates the market is ripe for change.
Investment Instruments surveyed 431 tenants and 256 landlords through its Rentometer and Rentomatic sites about their interactions with each other. Nearly 75% of tenants and 71% of landlords responded that payment happens through paper check. Yet when asked how they would prefer to pay, 45% of tenants and 52% of landlords said they would prefer to use some sort of electronic payment, whether that be credit card or e-check. Neither side wants to abandon paper-check payments entirely, with 38% of tenants and 25% of landlords saying they still prefer to use the traditional method.
“Our research clearly indicates that it’s important for landlords to offer tenants a variety of payment options to better service their tenants,” said Allison Atsiknoudas, CEO and co-founder of Investment Instruments. “This means not only accepting paper checks, but having a way to process credit card and e-check payments in a way that is simple and cost-effective. As the market changes and becomes more competitive, offering this flexibility will become increasingly important.”
Small Businesses: The “Long Tail” of the Real Estate Market
Most of today’s landlords own only a few units, making such options as credit card payment and e-check cost-prohibitive. Indeed, 71% of the landlords surveyed have fewer than 10 units with the vast majority having fewer than 50 units. Also, nearly 65% gain only part of their income through the properties with only about one quarter of the respondents saying that being a landlord is their primary source of income. Of those that have other jobs, the professions ranged from real estate-related to those in the medical field, technology, finance and even included some retirees.
“Most people rent from ‘mom and pop’ type businesses-people who own just a few rental units-not from the major rental companies. In fact, more than half of the tenants surveyed deal directly with their landlord rather than a property manager,” said Investment Instruments President Owen Johnson, who is also a real estate agent and landlord. “A major issue has been that most of the available tools cater to the large investment firms, not to the individual owner. But the individual owners are essentially, the ‘long tail’ of real estate. That is, no one individually dominates the landscape, but together they make up most of the rental units nationwide.”
Tenants and Landlords: Happy Together
The survey also found tenants have a good relationship with their landlords, debunking the common myth that the landlord-tenant relationship is fraught with contention. More than 80% of tenants characterized their landlord relationship as “excellent” or “good” and 77% said any problems are dealt with “in a timely manner.”
The survey was conducted entirely online through the company’s two websites, Rentomatic and Rentometer. Participants were voluntary and not offered compensation for their efforts, but they were able to enter to win prizes totaling a cash value of $500.
For more information, visit www.investmentinstruments.com.
