The Growing Movement to Give Money Back to Renters

Nikimbre Daniels spent her thirties living off the grid. Her homes included a yurt in a meadow in the Blue Ridge Mountains of North Carolina, countless R.V.s in nearly every region of the country, and even a tent. It was the life she chose after spending her twenties in South Florida. She felt she needed to reconnect with nature.

“I never honestly thought that I would be renting again in this country at this point, you know, with all the statistics and rising housing costs, whether you’re a renter or you have a mortgage,” Daniels said. “I honestly never thought it would be possible again.… I’ve been so content living the way that I was living, because I built that life.”

But Daniels, now 40, found a job teaching classes about native plants in Estes Park, Colorado, near the entrance to Rocky Mountain National Park, and found a townhome in a rental community set aside for people who work for the county. The workforce housing development she’s in—Fall River Village, near downtown—is one of the first two properties, with 185 total units, participating in Colorado’s new Renter Rewards Program. Every month, Daniels gets about $35 cash back from her rent, and the state will match that amount if she keeps it in a dedicated account for 12 months.

One of the most persistent wealth gaps in the United States is between renters and homeowners, and the gap is bigger than ever. The average renter has a net worth of just $10,400, versus $400,000 for the average homeowner, according to a 2024 Aspen Institute report. On top of that, almost half of renters struggle to pay their rent, which makes it even harder to save money for a house. Rent is a burden, and it’s always rising. Homeownership, in addition to building wealth, stabilizes housing costs and allows people to save in other ways, like investing in retirement accounts.

In the past few years, policymakers and start-ups have proposed trying to bridge that gap by allowing people to earn cash back and build wealth through the rent they’re already paying. “For millions of people, [rent] is the biggest source of precarity,” said Katie Deal, vice president of the Lafayette Square Institute, a nonprofit that studies economic security and mobility. “It is the thing that they spend all night thinking about, that really influences how or if they’re able to invest in their family’s future. The idea of turning that insecurity into something that actually helps people not only see a better future for themselves but for their kids, that can be a real asset.”

Renter-equity programs are rare, and only beginning to take shape. Colorado’s program is the first government-run program in the country that lets renters share in their building’s equity. But is it just another way for investors to make money in a broken system?

Colorado voters approved the Renter Rewards Program as part of a ballot initiative in 2022 to create public financing for affordable housing, and it launched in February. Daniels heard about it when she moved into Fall River Village in November and promptly signed up for Stake, the start-up fintech app through which the program operates. “I knew right away that I wanted to opt into that,” she said. “It’s almost as if Stake is holding out their hand to meet the renter halfway.”

Daniels opened checking and savings accounts, and $20 was immediately deposited as an incentive. When she pays her rent, $1,766 a month, she gets 2 percent cash back deposited into the account, and if she leaves it there for 12 months it will be matched too. Over time, she could potentially share in some of the value of her appreciating townhome, as well.

Stake is one of several start-ups that have entered the renter rewards space. It launched in 2018 with a plan to use blockchain investing to allow renters equity stakes in their rental buildings. Then the Covid pandemic hit. Urban landlords struggled to keep tenants, as renters moved to less populated areas, and a federal eviction moratorium allowed renters to skip monthly payments without fear of being kicked to the curb. Landlords were looking for ways to incentivize renters to pay.

“We started offering cash back for paying rent,” said Rowland Hobbs, Stake’s co-founder and CEO. “It was the first time that landlords were offering a positive incentive for paying rent, rather than just—I’m going to put it bluntly—carrying a stick, you know, and being like, ‘We’re just going to evict you if you don’t pay,’ because of that unique moment in time.”

Hobbs said landlords thought it was ridiculous at first. But landlords lose a lot of money when tenants move out and they have to let an apartment sit empty, get it ready for new tenants, and show it. Since pivoting Stake toward cash-back equity in 2020, Hobbs has been trying to convince it and its investors that there’s profit in rewarding tenants for paying on time and giving them incentives to stay.

Stake wants the idea to spread through the private market, but the idea has so far mostly taken among affordable housing nonprofits. In 2013, Enterprise Community Partners, which funds, builds, and runs nonprofit housing around the country, started a Real Estate Equity Program that raised capital from investors and banks looking for social responsibility investments. Enterprise used the money to purchase aging affordable housing communities and reinvest in them, keeping them affordable.

After a decade, Enterprise started to see better than expected returns on the values of its properties, but all of that went back to the investors. Chris Hermann, head of the Real Estate Equity Fund, started to wonder what would have happened if they’d included the renters in the potential gains, as well. “That would have had very different outcomes for the residents of these communities we serve,” he said.

To try to do that, they launched the Renter Wealth Creation Fund, also partnered with Stake, in 2022. “There’s a role for profit sharing in rental housing that we think is worth demonstrating, not just because we think it will be good for the residents themselves,” he said, “but also because … you can align interest with residents in a way that generates even more stable communities and better returns for investors.”

The program now includes 1,207 residents across seven properties in California, Colorado, Texas, Illinois, Ohio, and New Jersey. The fund has generated $327,238 in cash back, which averages to $33 per resident each month. It so far hasn’t generated any long-term equity for tenants, but that’s where proponents hope it could make a difference. Long-term residents can become vested in a share in the equity of the property they live in, which Hermann says could mean as much as $45,000 per 10-year resident.

Daniels, in Colorado, says the savings already make a difference for her. “It may not be a ton of money, but it’s a start in the right direction for renters,” she said. “It’s a start to something I think that, across the country, could be really helpful and supportive to renters out there.” Her on-time payments are also reported to credit agencies, raising her credit score.

Of course, $33 a month isn’t going to bridge the wealth gap alone. It also doesn’t do much to address affordability or create more housing supply, which are big problems that keep rents high. Tenants and landlords also often have contentious relationships, and these kinds of programs could add privacy concerns to the mix.

Tara Raghuveer, the director of the Tenant Union Federation, said her organization has heard from tenants across the country suspicious about their landlords wanting them to sign up for a renter rewards program, which some tenants suspect is just another way to track them with data. “These [financial technology] companies make their money almost identically to other credit card rewards programs through the side fees, late fees,” she said. “The rent rewards scheme right now seems to be just a way to get people to sign up for the cards. And I think there’s a lot to be concerned about on that front, mostly related to data collection and privacy and the kind of information that we’re then handing over to our landlords and their vendor partners when tenants are compelled to sign up for these endeavors.”

Many landlords use technology to hike rents and make life harder for tenants rather than to help them. Stake, which charges its landlords subscription fees, says its model is different. “Our north star is renter savings, not a card network or issuing bank,” Hobbs said in an email. “That shapes every product decision we make, including how we handle data. We don’t sell user data, and our data practices are designed around what puts more cash into the hands of the renters we serve.” (Stake also makes money through other financial products it offers.)

At base, though, Raghuveer’s larger point is that these are still moneymaking schemes, designed to serve investors and not tenants. “In the context of the housing market writ large, which is the Wild West, there’s basically no regulation, especially no regulation protecting tenants,” she said. “In that context, there is abundant opportunity for the most exploitative market actors to invent all sorts of moneymaking schemes.”

Renter-equity companies are by no means immune to those temptations. For example, Enterprise makes some of its money from a for-profit entity, Bellwether Enterprise Real Estate Capital, which has been accused of investing in companies that buy mobile home parks, raise rates, and force tenants to leave.

As long as renter-equity programs rely on making money for private start-ups and providing incentives for investors, they will never make a truly meaningful difference for renters—let alone reform a broken and unequal housing system. And even well-intentioned state government efforts will necessarily be limited in scope, not to mention vulnerable to political interference: Colorado’s nascent program is already vulnerable to budget cuts.

But for now, these programs’ most blatant shortcoming is their modest returns. They may help renters save a little extra money, but not nearly enough to compare to the wealth building that homeownership can provide.

“It’s still very hard to turn a cash-back benefit on your rent every month into a source of sustainable, growing wealth,” said Katherine Lucas McKay, associate director of the Financial Security Program at the Aspen Institute. “So of course, it’s good if a business can find a way to make money by helping renters.… It just doesn’t compare with the returns on property ownership, or the returns on market investing.”