In the two years since the COVID-19 pandemic began, renters, owners, and property managers have been forced to change the way they view stability and sustainability in residential real estate. According to the Joint Center for Housing Studies at Harvard University, incomes fell for about half of all renters during the pandemic, with low-income renters and people of color facing even greater losses. The Havard University surveys also found that approximately 40% of residents had to tap into their emergency savings to pay rent.
Although the job market is rebounding and renters are seeing the return of steady incomes, we’re still not out of the woods. Inflation hit a 40-year high, and household budgets are being squeezed as a result. This means households have less money for essentials such as groceries and rent.
The question becomes, what can the real estate industry do to mitigate these challenges? How do you maintain sustainable operations and create benefits for renters? The rent reporting platform and fintech company, Esusu and the single-family rental management services provider, Progress Residential, decided the answer hinges on wealth-building for residents.
Today, 45 million Americans are deemed “credit invisible”. This means they either have no credit score, or a credit history too minimal to be considered scorable. Without a credit score, it is extremely difficult to access loans, housing, and high-quality financial services. Having no or limited credit can result in high interest rates and limited wealth-building opportunities. These credit invisible Americans are predominantly renters, immigrants, and low-income families who are already struggling with day-to-day expenses.
While providing quality, affordable housing is a key part of supporting these communities, so is credit building. When they have better access to traditional bank credit (like credit cards or bank loans), it is far less likely they will have to use predatory, non-bank credit options like payday loans.
A sustainability-minded solution to housing affordability
With the core belief that building credit is the key to building wealth, Esusu built a platform that rewards renters for paying their rent on time. The startup makes it easier to build credit by reporting rent payments, often the largest monthly expense that most Americans have, to the three major credit bureaus. They partner directly with the property managers and owners to reach as many renters.
Esusu’s landmark partnership with Progress Residential is its first-ever in the single-family rental market, bringing rent reporting capabilities to Progress Residential’s 250,000 residents across approximately 80,000 homes in more than 30 of the nation’s fastest-growing metro areas.
“No matter what your financial goals are, building credit is a neccessary part of your journey,” said Abbey Wemimo and Samir Goel, Co-CEOs and Cofounders at Esusu. “When innovators and market leaders in real estate like Progress Residential are committed to improving renter financial stability, we’re able to create financial opportunities for millions of people across the country who have repeatedly been left behind. This partnership establishes a new baseline for impact in the single-family rental market that we anticipate will culminate in universal access to rent reporting and credit building.”
The direct impact that rent reporting and credit building have on renters is obvious, but Progress Residential believes it has value for all stakeholders. For example, the company recognizes that by putting its residents first, it can remove barriers to housing without sacrificing NOI.
“Our top priority is our residents, and we believe that resident-focused initiatives like this partnership with Esusu are a critical aspect of building a long-term, sustainable real estate business,” said Tatiana Gutierrez, Managing Director of Affordable Housing and Social Impact at Pretium. “We want to use our platform to bring equitable solutions to long standing social problems, like systemic racism, and their impacts on the housing stability and wealth creation of millions of people. Everyone deserves credit for rent payments, a safety net to get through the hard times and an opportunity to build a strong financial future. We are excited about the potential of this partnership, and we look forward to helping residents unlock opportunities as they build credit and wealth.”
Significant implications for Environmental, Social, and Governance (ESG) standards
While the real estate industry has made significant progress in implementing environmental programs and measuring impact, the social impact efforts have gained momentum and are not far behind.
“Esusu is well-positioned to provide a meaningful ‘S’ metric that serves owners and operators while also directly impacting the lives of renters, said Nicolette Jaze, VP of Strategic Partnerships and ESG at Esusu. “The space is eager for solutions that present opportunities for positive disruption. Esusu applauds industry leaders like Progress Residential who are redefining best practices and leveling up at scale long before government regulations require them to do so.”
Progress Residential and Esusu’s partnership sets a new standard for how single-family rental management service providers are advancing ESG missions, building on the progress already being made through environmental commitments.
Just this week the Securities and Exchange Commission (S.E.C.) gave its expected initial approval for a climate disclosure rule on public companies. The S.E.C. rule gives investors an understanding of the risks that climate change might pose to companies, and ESG advocates say the disclosure will also provide investors with the leverage to hold companies accountable for their role in climate change.
“ESG’s materiality in the built environment has been well documented, but the slow pace at which the market has acted can be partially attributed to a lack of consistency and available tools to track performance,” explained Jaze. “The recent surge in support for initiatives including the S.E.C.’s disclosure proposal will challenge the industry to go beyond a box-checking exercise and combat the greenwash that makes it difficult for investors to evaluate ESG authenticity and effectiveness.”
About Esusu
Esusu is the leading financial technology platform that leverages data solutions to empower residents and improve property performance. Esusu’s rent reporting platform captures rental payment data and reports it to credit bureaus to boost credit scores. This allows renters to build and establish their credit scores while helping property owners mitigate against initiating evictions, powered by differentiated data and insights. Founded in 2018, Esusu reaches over 2.5 million rental units across all 50 states in the United States. Learn more at www.esusurent.com and follow us on Facebook @myesusu and on Twitter @getesusu.