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How to Collect Rent
With all of the methods of payment in today’s modern economy, landlords and property managers are able to offer their tenants a variety of ways to pay the rent. From the old school way of sending a check in the mail to paying online, the options abound. And as automated payments become an increasingly popular means for paying bills, tenants are seeking that same ease-of-use from their landlords.
Take a look at all the choices that landlords today are offering their tenants. You may find a quicker, more reliable way to pay and your renters will definitely appreciate the convenience.
How Landlords Are Collecting Rent
Because so much is bought online, today’s tenants are seeking the same conveniences when paying rent. In addition to just being easier, there’s also good reason to require tenants make online payments.
Paying bank-to-bank is less time-consuming and it can encourage tenant loyalty, and that means a lot when your tenant’s lease is up for renewal. By taking the pain out of making a payment, you’re making their life a little easier. Be sure your lease agreement discusses the various ways you’ll accept payment and defines when rent is due.
Here are a few examples of how landlords are collecting rent, through a number of different payment methods:
Electronic funds transfer (ETF). Because your tenant is linking your bank account directly to their savings or checking account, rental payments never get lost in the mail. This helps to ensure tenants pay rent on time, every time — when they set up recurring payments with ETF.
PayPal, Venmo and Zelle. These are established payment services — each with their own benefits and drawbacks. They all offer free ETF or bank-to-bank transfers though credit card payments will be met with a fee. Regardless of which service you consider, it’s important to always have terms in your lease to address late payments and returned checks.
PayPal is an established financial transaction platform but requires a lot of the tenant in order to be set up properly and transfers typically take a few days to clear.
Venmo offers instant payments but the tenant’s got to be connected to you through social media.
Zelle can transfer money by simply sending funds to your email address.
US mail. If your tenant’s not too tech savvy, sending a check through the mail is a form of payment that’s worked for generations. And you’ll save yourself the trip to the tenant’s door to get the rent as well. Most banking apps allow you to photograph the check and deposit it without having to go to the bank. See if your bank offers an app with this service.
Via drop box. If you’ve got a multi-unit rental, placing a secure drop box in a common area where mail is delivered is a convenient way for tenants to pay. You’ll still have to get to the box and then deposit, however.
Collect rent in-person. Maybe the most physically demanding option, you can collect rent with a monthly visit to your tenant. When paired with a drop box, you can follow up with tenants who’ve failed to pay, since you’re on-site anyway. This option also works when tenants prefer to make cash payments.
Hire a property management company. If you’re simply too busy to manage rent and everything else that it takes to keep your real estate investment property running smoothly, this option may be for you. More than just collecting rent, property managers supervise many tenant issues. From handling repairs to dealing with noise complaints to keeping up the landscaping, they can do it all. It’s up to you to determine if the monthly fee justifies the time and energy saved.
Accepting Online Rent Payments Is Good for Business
Look a little closer at the benefits of paying rent electronically and you may find allowing online payments is worthwhile. Tenants from all walks of life like the simplicity and as a landlord, knowing that your month’s rent will be more predictable is good for business. Take a look at the reasons why accepting online rent payments are so popular today:
It helps develop tenant credit history. Many younger tenants, students, and recent college grads are seeking a place to live, and they’re finding the need to build a credit history as well. Some online payment portals will report rent payments to Experian RentBureau which helps tenants build credit, regardless of payment type.
It makes the landlord’s job easier. With funds moving directly into your bank every month in a predictable way, you’ll have more time for other tasks.
Apps offer a full suite of landlord services. Bundled into apps that handle payments are other key property management tools. You’ll find maintenance request management software that handles the entire process from inquiries to resolution.
By teaming up with groups like Cozy.co and other property management apps, you’ll get more than just a platform for handling rent. From tenant screening to managing tenant issues, these groups help landlords in many key ways. They’ll help you market your rental, store your photos, and submit your ad to multiple sources with the click of a button.
How to Collect Rent From High-risk Tenants
If a tenant’s application returns a less than desirable credit rating, here are a few tips to help keep the rent payments on time.
Require payment in person. Include terms in the lease that require the tenant to pay at a standing monthly meeting. When conditions like these are built into the lease, your tenant’s more likely to have the rent when you meet.
Require quarterly inspections. While you’re onsite to pick up the check, you’ll get a chance to talk with your tenant and inspect the property as well. This way, you’ll be able to spot and deal with tenant neglect early, which can save you time and energy later on.
If you opt for this, be sure your real estate attorney signs off on that language in your lease. You’ll also need to review state and local codes and comply with the advance notice requirements.
Incentivize with a gift card. Small tokens of appreciation like a quarterly gift card to a local eatery can mean a lot to your tenants. These gestures tell them you value their tenancy and they’re likely to be more loyal to you as a result.
While you’re assessing your rent payment options, remember to get in touch with your American Family Insurance agent and verify that you’re getting the most from your policies. By bundling your coverage, you may find real savings. And other discounts may be available to you when you work with us by going paperless. You’ll get the insurance your business requires and find a suite of online tools to manage your coverage quickly and efficiently.
Related Topics: Business Growth , Finance , Marketing , Digital , Property Management , Landlord