How embedded finance is transforming proptech

Managing property finances is a fragmented experience

In the U.S., 11 million independent landlords and individual real estate investors own 20% of the national housing supply. 

For them, managing property finances can be a difficult and fragmented experience. It requires at least 5-7 different software tools to stay on top of routine tasks like processing security deposits, collecting rent, and completing tax forms.

It can also be difficult to understand how individual properties are performing; many landlords don’t even know whether they’ve made or lost money until it’s time to pay their taxes.

Embedded finance solves these problems by transforming proptech platforms into a one-stop shop for landlords and property managers. When you embed business bank accounts and payment cards directly into your platform, landlords get access to a centralized place to manage their properties, do bookkeeping and tax prep, automate routine tasks, and easily understand the performance of their investments.

At the same time, embedded finance generates powerful new revenue streams for platforms. These may include interchange fees, yield on deposits, and increased platform fees.

Embedded finance transforms proptech platforms into a one-stop shop for landlords and property managers.

If you’re a leader at a proptech platform who’s thinking about how to become a one-stop shop for your customers, this guide is for you. In it, we’ll explain:

• The value of embedded finance for landlords
• How embedded finance generates revenue
• What it could look like on your platform
• How to make embedded banking and lending products available in weeks

Editor’s note: In this guide, we use the term “proptech” to mean platforms that help landlords, property managers, and real estate investors manage their properties. Many of the features and benefits discussed here also apply to other types of proptech companies such as construction management. We look forward to covering those use cases in similar detail in future guides.

How embedded finance benefits landlords

When a tech company works with a financial-service provider to build financial products (e.g., rent collection, bank accounts) into their offering—that’s embedded finance. 

By launching embedded financial products, proptech platforms can provide the following benefits to their customers:

• Streamlined rent collection. For landlords, collecting rent is a hassle. With embedded finance, you can make it simple: they simply send their tenants a link to set up a monthly payment right from your platform. Embedded finance also generates revenue for your platform, which can offset the cost of these ACH payments—or provide a healthy boost to your bottom line.

• A one-stop shop. To manage their rental properties, landlords use as many as a dozen different software tools. When you embed banking and lending products, you become a complete solution for your customers—a single source of truth for their properties that makes it easier to understand cash flow, manage taxes, and administer data-related activities. 

• Well-organized accounts and cards. Landlords generally need 2-5 business bank accounts to support each of their rental properties. At most traditional banks, these accounts are displayed in random order; they can’t be named, grouped, or sorted. By contrast, embedded finance is more flexible and customizable; landlords can name and organize accounts by property, ownership entity, purpose, or other ways. Property names can even be printed on relevant debit and credit cards.

• Property performance insights. Until recently, landlords have had to rely on software that wasn’t built specifically for their needs (e.g., Excel, QuickBooks, TurboTax). As a result, it’s been hard for them to track cash flow and understand the performance of their investments. With embedded bank accounts, you can offer dashboards that break out property performance by revenue, expenses, and spend categories. This makes bookkeeping (and later, tax season) a breeze.

• Interest and cash back. Funds in embedded bank accounts often generate yield on deposits. You can pass it along to your customers in the form of high-yield checking accounts—or keep it as revenue for your company.  The same goes for the interchange fees generated when your customers make card purchases.

• Smooth uneven cash flow. Rental income is typically received on a monthly basis. However, tenant vacancies, late rent payments, and unexpected maintenance expenses can make it challenging to manage cash flow. Platforms that offer instant payouts and charge cards can help landlords get paid faster and access needed funds to cover new repairs, thereby smoothing out cash flow.

The value of embedded finance for proptech platforms

Embedded finance isn’t just valuable for landlords; it also generates the following benefits for your business:

• New revenue. Embedded finance can increase your revenue per user by 2-5x. For example, after Veryable launched banking with Unit, they tripled their revenue per user. This revenue arrives in several different forms, including yield on deposits and interchange on card purchases (learn more in our revenue guide). Embedded finance may also allow you to charge more for access to your platform. 

• Acquisition. When you offer a better user experience, you set yourself apart from competitors and attract more customers. For example, after they added banking features, Baselane’s organic traffic and referrals shot up, leading to a 50% reduction in their customer acquisition cost. 

• Higher lifetime customer value. Bank accounts are a powerful reason for your customers to return to and engage with your product; it’s also a big driver of retention and satisfaction. Case in point: landlords who use Roofstock's banking products have a customer lifetime value that's 4x higher than customers who don't.

What embedded finance could look like on your platform

To illustrate what embedded finance could look like on your platform, let’s use an example. Say you’re the VP of Product at Lando, a rental-property management platform.

Here’s what embedded finance could look like. (To get a closer look at Lando, check out our live demo.)

Set up rent collection

When a landlord signs a new tenant, they simply send them a link. The tenant connects their bank account using Plaid, then authorizes a monthly recurring ACH payment. If you also make bank accounts available to tenants, you can enable rent payments that are instant and free to landlords via book payments.

Create business bank accounts 

When landlords bank with Lando, they can see all their accounts on a single screen—clearly labeled and organized by property. Creating a new account (each with a unique set of account and routing numbers) is as simple as tapping a button; it can be done as often as needed. 

Create and program debit cards

With embedded finance, landlords can create numerous virtual and physical debit cards; each will automatically be nested under the account it is associated with. Cards can be programmed with limits on spend, merchant categories, and geographies; they can also be printed with the nickname of their respective properties.

Send and deposit checks

With embedded finance, sending checks is a breeze. Landlords simply specify the recipient’s name and address, amount, date, and add an optional message. Landlords can also get checkbooks if they need to use physical checks. Additionally, it’s easy for them to deposit checks, if that’s how they receive rent payments.

Integrate with other software 

Landlords often use software like Quickbooks, Hurdlr, and Plaid to manage property finances. WIth embedded finance, you can make integrating with these tools a seamless experience.

For example, with a Hurdlr integration, landlords can easily track expenses, record mileage, and set aside funds to pay taxes. Accounting, bookkeeping, and reporting on finances are streamlined as data is automatically synced and categorized. 

Pay with other methods 

Landlords can easily wire money or send ACH payments—for example, to pay a roofer or refund a security deposit. 

When you embed banking and lending products, you become a complete solution for your customers—a single source of truth that makes it easier to understand cash flow, manage taxes, and administer data-related activities. 

How to launch embedded finance in weeks

Unit is a financial infrastructure platform that helps tech companies make embedded accounts, cards, payments, and lending products available to their customers. 

That means we help proptech platforms like yours launch rent collection, bank accounts, and debit card functionality, and more. To date, nearly 200 leading platforms and marketplaces have trusted us to help them launch and scale their embedded-finance programs. 

Unit is also the only platform to offer a no-code and low-code solution to easily build and launch banking and lending with minimal engineering resources. We help support you with compliance requirements and bank relationship(s) so you can stay focused on scaling your business.

With Unit, you get the following:

• Technology. We provide all of the necessary financial infrastructure to make banking and lending products available to your customers, with as little as one line of code. (Check out our live demo to see it in action.)

• Bank partner. We’ll pair you with the right bank(s) and help manage those relationships. This reduces the amount of time and energy you’ll need to invest.

• Compliance. Our compliance program is led by compliance and risk veterans from the banking world. We streamline processes like KYC, transaction monitoring, and manual account reviews.

• Capital and underwriting. Unit can provide access to the capital and underwriting needed to support your embedded lending or financing program. We help determine who to lend to, how much, and on what terms.

If you’re thinking about how embedded finance can help you offer your customers a one-stop shop, please reach out. We’d love to brainstorm with you.