A proptech startup is ramping up a new credit card offering that will allow apartment tenants to earn points when paying their rent, including the ability to convert the rewards to cash to be held in escrow for an eventual down payment on a home they own.
The Bilt Mastercard from Bilt Technologies, part of Kairos, will be offered through Evolve Bank & Trust and Mastercard Inc. and will not charge fees to the tenant or the landlord, Bilt told the Wall Street Journal in a recent article.
The rewards can also be used toward rent payments, along with more typical items like travel and dining, Bilt says on its Bilt Rewards website.
This is still a launch in progress. The website says Bilt Rewards is currently by invitation only and offers a link to request "early access" and that priority will be given to residents in the Bilt Rewards Alliance network.
Some major multifamily operators are joining in
That nascent network does include some heavy hitters. For instance, AvalonBay Communities (NYSE: AVB) -- the real estate investment trust (REIT) with 290 communities and nearly 86,000 units nationwide in its portfolio -- announced on June 22 that it has partnered with Bilt Rewards to "offer the first and only rewards program for residents to earn points on rent."
AvalonBay says it will roll out Bilt Rewards later this year. Other members of the Bilt Rewards Alliance, according to the company’s website, include the Equity Residential and Camden Property Trust REITs as well as Starwood Capital Group and Cushman & Wakefield.
"Rent is the single largest expense for many Americans, so we are always looking for opportunities to enhance the value our customers derive from living at an AvalonBay community," COO Sean Breslin said in that announcement.
This proptech’s value prop is in the eye of the beholder
Value is in the eye of the beholder. From the tenant perspective, it would take a lot of rent money and time to build enough points to put a dent in a down payment.
The Wall Street Journal article about the new card says, "For the typical card user spending $1,500 on monthly rent for 10 years, Bilt estimates the accumulated points savings for a down payment would equal about $6,000."
And most renters, of course, have a wide choice of competing cards to choose from, some that offer more generous and flexible rewards programs and/or offer lower interest rates than the average of 15% to 22.5% (and as high as 30% for subprime cardholders) that the WSJ says the Bilt Rewards card will charge.
Cardholders who pay off their balances every month don’t have to worry about that, but generally financial counselors advise against using credit to pay rent, for obvious reasons.
The WSJ article notes that Bilt addresses the potential debt-trap issue with a tool that disables rent payments when users don’t have sufficient cash savings in a linked bank account.
"Card users deemed higher risk will be required to use the feature. For other users, rent still has to be paid off within one month and no interest will be collected on rent spending, according to Bilt," the article adds.
The Millionacres bottom line
Tenants of landlords who don’t accept plastic for rent can still use the card. The company says it will send a check instead at no additional cost.
That might make this card more appealing to real estate investors with just a few units. The card could help give them a competitive edge by offering added convenience to existing and potential new occupants of their rental property.