PadSplit hosts can now receive prepayments from members

At PadSplit, we remain dedicated to improving our platform for both hosts and members. We’re thrilled to introduce our updated “Prepayments” feature, which aims to expand the pool of potential members and provide greater financial security for our hosts. 

Previously, prepayments were managed manually, but now members can select this option directly in the application. This enhancement helps us reach members who may not have been aware of this option before.

What is the Prepayments feature?

Members now have the option to select “Prepayment” as an income approval method during the application process. This feature is particularly beneficial for individuals who might not meet traditional income criteria but have the means to pay for their accommodation upfront. 

Here’s how it works:

• Application Process: During the application, members can choose the “Prepayment” option.
• Manual Handling: These requests are managed manually by our dedicated income verification team.
• Minimum Payment Requirement: To qualify for this option, members must pay at least 12 weeks upfront. As the room price increases, members will need to pay for additional weeks in advance.

Benefits for PadSplit hosts

1. Expanded member pool: By accommodating members who can prepay but might not have conventional income sources, hosts can fill vacancies more quickly and diversify their tenant base.
2. Financial security: The prepayment ensures hosts receive a substantial portion of the rent in advance, reducing the risk of late or missed payments and enhancing their cash flow.
3. Commitment: This option requires members to commit to a minimum stay of 12 weeks, providing hosts with greater occupancy stability and reducing turnover rates.

How it works

When a potential member selects the “Prepayment” option, our income verification team reaches out to the member about the room they would like to book. Depending on the room rate, a prepayment amount is determined and offered to the member. If the member agrees, the payment will be collected and reflected in the member’s account balance. After a successful payment, our team will approve the member at the corresponding approval rate. All further payments to be made by the member will be withdrawn from the account balance.

Here is the step-by-step prepayment process:

1. The member selects the “Prepayment” option.
2. Our income verification team reaches out to the member about their preferred room.
3. The member is offered a prepayment amount depending on the room rate.
4. If accepted, the member makes the prepayment. They can receive payment assistance if requested.
5. The paid amount is added to the member’s account balance.
6. The income verification team approves the member at the predetermined amount.
7. The member can then book the room of their choosing within the approval amount.

You can find further information on how the prepayment amounts are calculated:

• The base amount is $1920, which is 12 weeks of prepayment for an approval amount of $160.
• Each $10 increase to the required approval amount adds another week of payments.
  • 12 weeks for an approval rate of $160 ($1920 in total)
  • 13 weeks for an approval rate of $170 ($2210 in total)
  • 14 weeks for an approval rate of $180, and so on…

The prepayment is collected in full, even if the member shares their intent to leave the room earlier than the predetermined amount. The remaining balance is then refunded to the member after a successful move-out. 

Are these members of high quality?

Some hosts have concerns and ask, “Are these members of high quality?” Our preliminary tests indicate that their tenure and collection behavior are comparable to our average members. Prepayers constitute about 1.4% of our membership despite minimal promotion of this payment option.

Additionally, 35% of these members experience move-outs related to collections, which is similar to our overall rate of 30% across all occupancies.

Why this matters

This new feature is a game-changer for PadSplit hosts. It offers a more inclusive approach to member approval and ensures a steady income stream. It reflects our commitment to creating flexible solutions that benefit both hosts and members, fostering a thriving, supportive community.

We believe the “Prepayment” feature will be a valuable addition to our platform. It will help hosts maximize their property’s potential while providing reliable housing options to those who might otherwise be overlooked.

If you have any questions or need assistance with the new feature, please don’t hesitate to reach out to our support team.