Rising Rents for Millennials Give Rise to a New Breed of Lender

May 17, 2019 — Will Parker


Morgan Lieberman for The Wall Street Journal

Jennifer Burnes says the paychecks from her work as a model and designer in Hollywood arrive sporadically, posing a challenge to paying monthly rent. “You know the check’s on the way, you just don’t know when, exactly,” the 22-year-old said.

That is why she turned to StayTony. The property manager has teamed up with Uplift, one of several startups offering loans to recent college graduates, professionals moving to a new city and others who want to build credit or could use assistance making rent payments.

These companies, which also include Domuso and Till, are entering a market long associated with payday lenders. Compared with cash-advance loans, which come with annual interest rates as high as 700% in some states, funds from the rent-lending startups are available at much lower cost. Some are competitive with credit-card borrowing rates at less than 20%.


That is a big help for those who rely on irregular paychecks or can’t come up with large move-in deposits.


The pitfall to such credit is that the loans might encourage some young renters to live beyond their means. Large cities often have a high cost of living that can push residents ever deeper into long-term debt and strain their credit scores.

Outstanding consumer credit, which doesn’t include mortgage loans, exceeded $4 trillion for the first time last year, according to data from the Federal Reserve.

Rising housing costs and a several-decade trend of stagnating real wages are making it harder for many tenants to make their rent payments. Median rent nationally hit an all-time high of $1,006 a month in the first quarter of this year, according to Census Bureau data.

Some renters are now looking to credit as an answer.

A 2017 survey of more than 100,000 renters by the National Multifamily Housing Council, a landlord group, showed 3% of those surveyed paid rent with credit cards and 16% said they would do so if their landlords agreed.

“As rents have gone up, we get more and more emails and phone calls where people would ask us if they could pay their rent over time,” said Tony Diamond, founder of StayTony, which manages upscale apartments in the Los Angeles and Atlanta areas.

The company recently joined with loan vendor Uplift—which made a name for itself financing family vacations—to allow its tenants to finance up to three months of rent over a 12-month period.

StayTony hopes its renter loans will appeal in particular to recent college graduates. Through Uplift, it offers loans up to $15,000 that carry no interest for the first six months and an annual interest rate of 15% to 17% on average after that.

Other companies offering rental loans see their products as a backup for tenants in more precarious circumstances. Till, which advertises its loans as much cheaper than those of payday shops, pitches rental financing to renters and landlords as a way to avoid evictions.

Data on how often renters default on their loans is hard to come by from third parties, and most of the rental-lending companies won’t share such information. Some lenders say one measure could be the “serious” delinquency rate on unsecured personal loans, which is defined as borrowers who are more than 60 days behind on payments. It stood at 3.6% in the fourth quarter of 2018, according to the credit agency TransUnion.

At least one startup in the rental-loan business has tightened credit standards. Domuso, a West Coast digital-payment company focused on the multifamily apartment business, this year said it would no longer offer loans to renters with subprime credit.

Domuso co-founder Michael Lightfoot said the decision reflected loan risk and the connotations around subprime lending.

But as long as rents keep climbing, some young people may elect to borrow to live in choice locations.

Alexander Kaplan, a tech entrepreneur, moved back to New York after years of living abroad. He had paid roughly $500 a month to live in what he called “the Soho” of Belgrade, Serbia.

“Coming back here I was quite shocked,” said Mr. Kaplan, who rents a studio apartment on Manhattan’s Upper West Side for $2,800 a month. He borrowed $10,000 last year from a loan startup focusing on young college graduates facing hefty move-in costs.


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