Fintech Stake embarks on mission to empower cash-strapped renters

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Stake, a company focused on wealth-building for renters and flush with $12 million from a June 2022 Series A funding round, is now the technology partner of a 40-year-old housing equality nonprofit organization, according to a company announcement.

Enterprise Community Fund chose Stake to offer cash-back incentives to renters as part of the fund’s affiliate Renter Wealth Creation Fund (the Fund) “a first-of-its-kind innovation designed to provide renters the wealth building opportunities traditionally limited to homeowners while preserving up to $1 billion in affordable and workforce homes,” a press statement said.

The Fund is looking to raise a total of $250 million from investors to potentially secure up to 7,000 rental homes.

Its covenants require renters to receive cash back for timely rent payments and to share in the equity of a home upon its disposition, or even after a refinance. When a sale occurs, investors receive a targeted financial return of 4 percent, and residents who lived in the building for at least four years are expected to receive 80 percent of the financial upside, thereafter, as an additional cash-back reward, according to the press release.

Lori Chatman is president of Enterprise’s Capital division. She said in a statement that the Fund was created after collective constituent feedback revealed that the need for cash in hand was paramount and that long-term stability would follow.

“We created a financial innovation that offers returns to investors, loyalty and stability to property owners and — for the first time, real wealth-building potential for renters,” Chatman said.

That mission harmonizes perfectly with Stake’s reason for being and its overall ability to deliver a non-threatening, savings-first banking experience for renters.

Founded in 2018, Stake offers no-fee banking services to tenants and 4 percent cash back each month based on their rent amounts. Tenants are given a Visa Debit card when enrolled to access their accounts. Landlords can further incentivize tenants to take action in return for additional deposits into their Stake account.

Rewards are granted for on-time payments, early renewals, tenant referrals and even for signing their initial leases. Property managers use Stake’s back-end interface to manage units as well as the tenant reward system.

Upon move-in, renters under the Fund will be invited to download Stake for full access to its features and the Fund’s programs.

A tenant’s financial solvency is an often direct reflection of a rental property’s value.

Many investors seek units with consistent, reliable income and see current renters as an example of the property’s overall leasing appeal. Stake says that by bettering tenants’ financial wisdom and economic stability, you can also improve things for investors.

In a phone call with Inman, Stake CEO & co-founder Rowland Hobbs said it all begins with focusing on the positive.

“We begin with, ‘what if you enable renters to be able to save and get access to more of that savings?’” he said. “What we’re finding with that, is that it has tremendous impact on the properties, such as reducing delinquencies up to 50 percent, and folks renewing at a higher level. It all starts with helping them do better financially.”

The Enterprise Community fund launched in 1982 and has since invested $54 billion to create 873,000 homes across all 50 states, the District of Columbia and Puerto Rico.

Email Craig Rowe