How Offering Financial Flexibility Benefits Your Business and Residents

Last modified on June 21st, 2024

When it comes to consumer preferences, change is inevitable. However, over the last few years, consumer behaviors have shifted faster than ever before. And now, with ongoing talks of recession and record-high inflation squeezing everyone’s wallets harder than ever before, it’s easy to see why more spending control is now one of the top priorities for consumers

But what exactly do these new consumer behaviors, preferences, and needs mean for property management? At the end of the day, residents are consumers, and research shows they expect property management companies to keep up, including by offering financial flexibility and alternative payment options.

In this episode of The Top Floor, we explore exactly what financial flexibility looks like for residents and how it can benefit everyone.

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Meet Our Guests:

How Offering Financial Flexibility Benefits Your Business and Residents

Adam Feinstein has been at AppFolio for 5 years and is currently the Head of Product for AppFolio Payments. In this role, he is responsible for finding creative solutions to the payment needs for property managers, owners, vendors and residents.

Prior to AppFolio, Adam spent his career in semiconductor equipment manufacturing and is thankful for finding a home in proptech.

How Offering Financial Flexibility Benefits Your Business and Residents

Sean Saxena is the Senior Director for FolioGuardTM by AppFolio Insurance Services. He has been with AppFolio for 10 years, holding leadership roles in several departments including sales and marketing. Outside work, Sean enjoys spending time with his wife outdoors, hiking and paddle boarding in Santa Barbara.



Episode Transcript

Megan Eales Monroe: Across the entire property management industry, security deposits and rent payments are standard, but the ways in which they’re being collected and managed are changing rapidly. Some of this change is due in large part to the widespread adoption of new technology and payment methods, such as mobile and cashless purchases, or even buy now pay later options with retailers.

Because these new payment options are so present across our everyday lives, it makes sense that residents now look to property management companies to provide some level of financial flexibility too. One of the biggest takeaways from AppFolio’s 2022 US Resident Motivations report is that, now more than ever before, residents value financial flexibility. In fact, almost a third of survey respondents said that financial flexibility has become more important to them than it was before the pandemic.

And in the same report, renters who had financial flexibility also said they had significantly higher levels of satisfaction with their property management. But the best part of all is that you can offer financial flexibility around rent payments and even security deposits, without racking up added costs, or compromising the protection of your properties. To see how financial flexibility creates a win-win situation for residents and property management companies, we spoke with two very special AppFolio guests.

Let’s get to know a bit about them before we dive into today’s conversation.

Adam Feinstein: Yeah, thank you, Megan Eales Monroe. My name’s Adam Feinstein. I am the Head of Product for our payments business, and so I am really focused on making it easy for everybody within our property management ecosystem to facilitate the movement of money. So helping renters pay rent, helping property managers pay out to owners, vendors, financial institutions. That’s what my team and I focus on every day.

Sean Saxena: Thank you for having me. Yeah, my name is Sean Saxena, I’m a Senior Director here at AppFolio and I work on risk mitigation-related products. So, my team and I are responsible for creating and managing and offering products that help protect property managers and renters from risk through software and services.

Megan Eales Monroe: Although the main topic of our episode today is around providing financial flexibility for residents, we’ll divide up our conversation into two specific parts.

The first will be about flexible rent payments with Adam Feinstein. The second part of today’s conversation will dive into security deposit alternatives with Sean Saxena will also be talking a bit more about the folio guard security deposit alternative which is powered by Obligo.

For more information on this offering, visit FolioGuard’s website. We’ll also be sure to link to more information in the show notes. Now, let’s officially begin our conversation today with Adam and talk about flexible rent payments.

As we talked about at the top of today’s episode, flexible payment options are now just part of our everyday lives. For example, credit card balances can carry over month to month with minimum payments required, monthly loan repayment due dates can often be adjusted, and purchasing almost everything today can be done via installments.

So why not incorporate more flexibility around rent payment schedules too? To kick off our conversation with Adam, we wanted to dig into exactly why flexible rent payments are something property management teams should consider. And we also wanted to know what he’s seen today as far as industry adoption goes.

Adam Feinstein: Well, I mean, affordability in housing is obviously a core component of many property management businesses. It’s going to help us in attracting the right residents, and what we’re looking for are solutions that are really win-win, helping the resident pay rent on time, and really the more options and availability that we give to that, the more likely that the property manager’s going to get paid on time and not have to deal with late payments or non-payments. And the thing we’re all trying to avoid is any evictions.

What we’ve seen is a twofold, a chicken or egg scenario – financial flexibility related to gig economy and transitions in terms of how people are earning their income is one key trend that I think then also connects with financial flexibility.

I think we saw these early on with the rise of some of the new fintechs, the new neo-banks that are like, “Hey, you can get your payment a day earlier,” kind of some things with earned wage access. And so, I think we’re seeing that trickle into rent, and it’s like, how do we make it easy for people to pay rent? You get all these bills that are these recurring bills that may be due on the first. You’ve got your rent payment, you maybe have some car payment, insurance payment, and they kind of all get jammed up, and people have trouble budgeting and saving and planning ahead.

So really, that flexibility is about making it easy and worry-free for them to be able to make this payment, which can be 30 to 50% of their overall income in any given month and do it in a way that matches when they get paid and doing it with. I’ve heard stories from residents about using Post-it Notes everywhere, using sticky notes, using something on their phone, all these sorts of things they’re trying to do. And it’s a real heavy burden on them, a cognitive load on them. And so if we can make it easier for them, that’ll improve their quality of life, and also will help make sure rent gets paid on time, and that’s really what we’re trying to do.

And so, there’s convenience on one side of it. And then on a more serious side, there’s potentially a $100 billion liquidity problem that people face as they maybe have low savings and are paying paycheck to paycheck.

Right now, there aren’t a lot of great solutions. Maybe they’ll use a credit card to pay rent, but maybe they can’t have a high balance. So maybe they’re going to a payday loan or a cash advance or a car title loan, and that’s not great. So we think about a flexible rent solution that offers essentially some installment payment capabilities that really map to when they get paid to help make sure that they’re doing that in a seamless way, that makes it just as easy as something like Apple Pay, to make sure that they find it easy and enjoyable to use.

Megan Eales Monroe: In addition to convenience, and as we touched on earlier, renters seek financial flexibility, and prefer a wider variety of payment options. And because all consumers are able to tap into financial flexibility across their everyday lives, expectations are changing for property management companies too.

Adam Feinstein: We’ve seen a really high majority of people want to pay online. I think that COVID also shifted it across all demographics and all perspectives. I remember going to a baseball game shortly after everything was tap-to-pay. So I really think that we’ve seen that shift. We definitely still see communities and areas where money orders or electronic cash payment are something that are prevalent, but that is a vast declining space, and the majority is digital.

And again, you can just imagine where it’s like, okay, I’m ready to go pay. And they’re expecting, hey, I’m going to be able to go into this portal and pay, and maybe it’s a buy now, pay later mentality, like flexible rent provides. Maybe it’s Apple Pay, maybe it’s something else. And they go there and then they don’t find it. What are they going to do? It’s a lot of friction. And they’re not going to go find their checkbook. They don’t have one, so it’s not helping. That’s why we really invest tremendously in reducing that friction, meeting convenience, and meeting those consumer expectations for rent payment.

Megan Eales Monroe: As Adam touched on, there really are many benefits that come with flexible rent payments for both residents and for property management companies. Not only do flexible rent payments make the process of paying and collecting rent easier for everyone involved. It also makes properties more attractive for prospects, which in turn can give companies a greater competitive edge.

But what about potential risks? Do flexible rent payments create any kind of risk for property owners or property management companies?

Adam Feinstein: No, it’s actually quite the opposite. It’s a guarantee they’re going to get paid on time. And so it really helps them tremendously, I’d say. So it is that win-win. We’re really excited about the future of it.

From a resident perspective, they can come into a portal. They can say, “okay, yeah, I have these different options, different payment mechanisms, or I can use a flexible rent offering.” And from there, it’s collecting some necessary information, so that these providers and partners that we work with can make sure that they get paid. But between here and there, that provider’s going to make sure that the property manager gets paid and it’s going to look just like the resident paid rent. And it’s really us and our partners that are working to take that pain away from the property manager and facilitate that collection. So the resident will easily get to select, “okay, here are the days I get paid, here’s where I want you to pull out the remaining portion of the rent.” And that’ll kind of happen automatically for them and they’ll be on their way towards well-scheduled flexibility in a payment schedule that matches when they get paid.

Megan Eales Monroe: Just like Adam said, flexible rent payments can be a win-win solution. But with many different platforms and options available for flexible rent payments, how do you choose which one to use and your property management company? Here are a few tips on what to look for before you fully commit.

Adam Feinstein: Number one is something that’s compliant. That’s something that I think about every day in my job here. And we do a lot of work to make sure that we have a strong perspective on compliance and where we are. There are different offerings out there that may look different as kind of the FTC and the CFPB are looking at some of these things. You can think of kind of the buy now, pay later space really came up and is under some little bit of scrutiny. But we think about compliance solutions, and then really making sure that it’s deeply integrated.

So for us, we believe that a deeply integrated, embedded solution where it’s just as easy to pick flexible rent as it is to pick any other payment option is what’s going to really make it work. And that’s what we’re looking forward to.

Megan Eales Monroe: In addition to finding a solution that is compliant, finding one that fully integrates with your property management system is also a must, according to Adam. Otherwise, you could actually be making the experience more difficult for your residents and property management team.

Adam Feinstein: Yeah I mean, you can have bad user experience, number one, and so bad user experience is going to drive questions. Questions are going to drive phone calls to our property managers, and now you’ve got more work to do. I mean, also payment errors and accounting errors as a result of a poor integration are going to be a nightmare as well. And overall, it’s who do you look at, and how do you make sure that things are working well?

So that’s why we see that embedded solution is the right way, and we think that it offers the easy on-ramp and off-ramp if it’s not the right solution anymore, to still make sure that the resident is paying digitally and not reverting back to the old days of paper check.

Megan Eales Monroe: Although flexible rent payments are mainly being implemented today by property management companies who are early adopters, and the entire topic is just now becoming more mainstream, we wanted to get Adam’s take on what the future of flexible rent payments could look like.

Adam Feinstein: I’m really excited about having a better offering that allows people to break free of that burden of worrying about how they’re going to pay rent. The mantra I use for my team is “let’s make rent worry free.” And I think flexible rent and these types of offerings are a really great way to advance that. And so not having to go get a pretty high costly payday loan, not having to think about how you repay it, really having that flexibility to select, okay, I get paid on this date and this day, or this is when. Those are the things that are really great, and I think, again, help people live in great communities and help property managers run their business in the most effective and efficient way they can.

I have real visions of learning more about what renters are doing and experiencing and getting more predictive and more specific to tailoring to their needs. I think that there’s a whole wealth of personal financial management tools that are not great. These things do a good job, but they’re not integrated with the number one thing that people need to pay, which is rent. You need that home over your head. And so I think this is a stepping stone towards helping everyone get better and more secure in their financial future.

Megan Eales Monroe: For part two of our conversation today, we’re talking with Sean Saxena about the connection between financial flexibility and security deposits. To start things off, we asked Sean to give us his take on the current state of security deposits today. We also wanted to dig into why traditional security deposits may not be providing the best experience.

Sean Saxena: Yeah, I mean, I think you want your residents to have skin in the game, so to speak, right? So, I think one of the realities of renting a property or being in property management is that residents cause damage. People are people. There’s going to be some level of damage, and you want peace of mind in kind of alignment across both your resident and your property manager to make sure you’re really protecting the unit.

I think collecting from tenants, the security deposits, has always been a pain. I think at the worst, it can be a barrier to leasing units. You want your move-in process to be as seamless as possible. I think turn time is really important, right? You want to make sure that you’re really diminishing the amount of time it takes between when you have an open unit to when you fill the vacancy, and the truth is security deposits create friction in that process. You can’t move in until you dropped off a security deposit at your office. And so, it’s another point into an already pretty tight process.

I think from a resident’s perspective, you have to give up a pretty significant amount of money. I think you’re going generally from one place that you’ve rented to a new place, and so maybe you got your security deposit back from the old place, but you have to turn around and give it to the new property management company, and then returning is not always easy either.

I talked to a lot of property managers and one of the things that I’m always surprised at is there are significant, or more significant than I would’ve guessed, amount of residents who don’t cash their security deposit check. That creates kind of a weird situation. It’s a pain for property managers. Now you have this money sitting on your books and you have to figure out how to manage it. It’s a pain point, and you have to forward the check and find the right place. There’s a lot of administrative pain involved with the security deposits on both ends.

Megan Eales Monroe: Earlier we explored what financial flexibility looks like when it comes to rent payments. But what exactly does financial flexibility look like when it comes to security deposits? Here’s Sean again to explain.

Sean Saxena: Technology over the last ten years has helped really add a level of flexibility for everybody to figure out how they can manage their expenses that suits their lifestyle. People have different income schedules, different financial situations. They get paid in a different way. Sometimes people get paid monthly. Sometimes people are getting paid biweekly. Some people earn commissions. Some people earn bonuses. I think financial flexibility really allows the user, the consumer, the person paying for things to align how they pay for things with how they make money and how they manage their income.

I think especially where you have people with a lot of volatility around how their money coming in looks like, allowing financial flexibility around how you pay for things is really valuable to be able to kind of match and create peace of mind for those consumers.

I think just generally everybody wants more financial flexibility. I think one of the things that it never ceases to amaze me is the amount of things that you can buy in installments. I think this trend, which has been around for a while now, is kind of conditioned how we all think, how consumers think. Residents are consumers, and we apply that mental model to everything in our lives. And so, I do think there is an expectation that everything should have a flexible timeline for payment. I don’t think that’s going away. I think that’s going to increase over time.

I think we go back to some of the pain points around security deposits. You have this very tight window that you’re trying to control. You want to minimize the amount of time it takes to turn a unit around, and security deposit alternatives allow you to streamline that. It gives you a great moving experience for your residents. For example, property managers who work with us at AppFolio know that every new move in has the access to their online portal where they can pay their security deposit or choose to go deposit free which eliminates a need for a process that existed before, where you have all this kind of manual, “Do I need to collect a check or a cash deposit at move in?” This gives flexibility for the renter, and for the property manager, it allows you to streamline a leasing process that already can be pretty complicated.

Megan Eales Monroe: As Sean mentioned, security deposit alternatives are an option that can give renters more financial flexibility when it comes to moving. But what exactly are security deposit alternatives and how do they work?

Sean Saxena: I think the other thing to call out for security deposit alternatives is that they’re an alternative. We’re not removing the security deposit. I think that security deposits we talked about earlier are important, the concept and the intention. And so, it’s a way to maintain peace of mind and alignment across both renters and property managers to protect the value of the property, while giving flexibility for renters and making the process easier for everybody.

There are a variety of different security deposit alternative models. I think at a high level, a really good security deposit alternative solution keeps residents accountable. It should allow a resident to move in without having to forgo the whole amount of the security deposit, but still create transparency that hey, they are still accountable for damage that they may create and that they may cause to the resident, and there’s some costs associated generally with purchasing the service.

I think the other part is that it should be seamless for property managers. Right now, as a property manager, if you have the original security deposit, you have the cash in hand that’s in the bank, and if there’s damage, you apply that money to the damage. Any good security deposit alternative should allow you access to that. You should have something that makes your life easier. It doesn’t just disrupt your workflow but eliminates the hassle of collecting and managing.

You know, one of the things that we take very seriously at AppFolio is who we partner with and what products and services we are offering and enabling for our customers. I mean, it’s part of our AppFolio DNA, customers are who we are and how we have a business. And so, as we were looking for partners in this space, a lot of rigor went into what product makes the most sense, what company makes the most sense, and I think we quickly landed on Obligo as a partner for a variety of reasons, not least of which they had a similar philosophy around how to work with customers and making sure that property managers retain all the peace of mind they had with the traditional security deposit but gained better service of the ability to market a product to their residents that should help with their leasing process, and really a win-win-win scenario that left everybody in the security deposit alternative space walking away feeling good.

You have your renter who now has financial flexibility but has the right expectations set. I think this is really important. So, security deposit alternatives are not always easy to understand, and I think we were really looking for a partner and a model that allowed renters to understand what they were signing up for and what their expectation and accountability would be for them in their tenancy. I think Obligo really nailed that.

Their model has a hotel deposit kind of mechanism where, as their renter, it’s very clear that you are showing that you are able to pay your security deposit but not paying it. But that also, just like a hotel deposit, when you move out, if there is damage, the property manager can charge you for that damage and that really gives the renter a win. They don’t have to pay their full security deposit, which is a lot of money, so that is now accessible to them to use for other things. A property manager allows them to provide better service to their residents and still retain peace of mind. At move out, just like they normally would, they can draw and charge a resident in the event that there’s damage.

Megan Eales Monroe: Not only can security deposit alternatives streamline property management operations, while still holding residents accountable, they actually create a much better experience too. Because as property management companies know first-hand, security deposits can be a major source of financial stress for renters.

Sean Saxena: One of the things that I found interesting while getting into this space a while back is really the concept of a security deposit is worse than I would’ve imagined from a resident perspective in the sense that it creates more pain than you realize. So, if you think about a security deposit, let’s say to use whole numbers, you move in somewhere, they require you to put up $1,000, and the idea is at the end of your tenancy, if there’s no damage, you get that $1,000 back. And so, you’re losing that money for, let’s, say a year.

But the truth is, unless you buy a house, if you continue to rent, the next place you go, you’re out that same $1,000. And so, the effect is that you’re tying up this capital in perpetuity. I think if you couple that with the financial flexibility that we see available to all consumers, what that really means is unlocking capital. It’s like you have money that you could be using on other things, savings, spending, purchasing that is tied up in a security deposit.

These alternatives allow you to get that back and spend it and do what you will. I mean, I’ve heard of some funny stories of people taking the security deposit and using an alternative and then taking that and investing it and watching their money grow at a much faster rate than it would have lost if it sat in an account earning zero interest.

Megan Eales Monroe: Like flexible rent payments, security deposit alternatives are mostly being led by early adopters in property management. But because they can be a win-win for both property management companies and for residents, they’re quickly growing in popularity. As Sean explains…

Sean Saxena: I think the usage of these products has grown a lot, and I think a lot of things obviously changed during the pandemic. I think one of the big things was in every industry, but especially in property management, there was a real lens on hey, how do we simplify our processes? How do we make sure that we can go mobile first, that we can go digital, and that we can cut down on manual processes and really make things easier?

Security deposit alternatives allow for that. You think about offering a renter a digital experience. They go through their portal, they apply, they get screened, they purchase their renter’s insurance, they’re offered a deposit alternative. You’re able to do a lot in a small amount of time at a very scalable rate and still maintain a good service level. I think that’s kind of the key piece here.

So, software is a great solution as long as everybody has as good if not better service outcomes, and I think one of the reasons that security deposit alternatives are on the rise is that, especially as you maintain that win-win-win kind of product and service, everybody walks away feeling better. I think with those kind of outcomes and products you can bet on having a good growth trajectory.

I think every market’s different and every property is different, but I think if you aggregate experiences, how you market yourself as a property manager, how you market your units, these things matter. I talk to a lot of our customers, and they spend a lot of time and effort making sure that their units are marketed in their best-in-class way, that they are providing best-in-class services, including making it really easy for residents to go through their move and flow in a digital way. I mean, the truth is I think we all have become accustomed to being able to do things online, being able to have the ability to log into your phone to complete very important tasks, major financial tasks.

And so, I think leading with that and offering that service level is really important. I do think that is kind of a table stakes expectation. And so, if you nail that experience, if you’re able to offer things like security deposit alternatives, offer a way for residents to have a very seamless movement and really increase the service level and increase flexibility, you’re going to do better from a competitive perspective.

Megan Eales Monroe: Although the discussion around and adoption of security deposit alternatives has grown over the last few years, this is really all just the start. From Sean’s perspective, there’s a lot in store for the future of security deposit alternatives.

Sean Saxena: So, I think the obvious thing to say is nobody can predict the future. With that being said, I think we can count on two things always being true.

The first is property managers/owners are always going to require a certain level of accountability from their renters, and need protection for the units that they own and manage. I think the second is that renters are always going to want financial flexibility. They’re going to want to spend less when they move to a new place. That’s not going away.

Over the last few years, we’ve seen a lot of really great advancements in software and services in this space that have really helped bridge the gap, and I absolutely anticipate that trend to continue. I think we can anticipate more customers asking and expressing curiosity around how to implement these types of products and services, and I think we can expect residents to continue to expect financial flexibility and really easy-to-use offerings from their property managers.

Megan Eales Monroe: In the end, it’s clear that offering more options around financial flexibility can be a win-win for both your residents and your property management business.

Although flexible rent payments and security deposit alternatives are still relatively new for the industry, financial flexibility is now a standard and expected part of consumers’ everyday lives. Because your residents are consumers too, they’re naturally going to expect more financial flexibility. That’s why now is the exact right time to see how your property management company can start meeting these new rising expectations.

To continue today’s conversations around financial flexibility and rising resident expectations, visit our Industry Insights section on There, you’ll find even more episodes of The Top Floor plus articles and guides featuring expert insights. Also, for more information on security deposit alternatives, visit I’d like to thank Adam Feinstein and Sean Saxena for joining us on the show today. And thank you for tuning in. We’ll be back again next month.

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