The Common Methods of Rent Collection
For many landlords, collecting rent can be a hassle and a cause of worry. Payment issues seem to be landlords’ top concern. You should set up a reliable rent collection system before renting out any property.
How can you ensure that you are paid on time then?
There are numerous methods for collecting your monthly payments, whether you’re traditional or technologically adept. To ensure that the payment process runs as smoothly as possible, once you’ve established a system, make sure each tenant is completely aware of your expectations. The ideal approach to collecting rent can vary depending on the preferences of the landlord and the specifics of the property.
Rent can be collected from tenants in a variety of methods, including:
-Utilize a web payment gateway
-Utilize a financial app
-Create a direct deposit account with your bank.
-Establish a check-dropoff point.
-Rent should be picked up in person.
-Rent can be collected by mail.
Let’s examine each in more detail so you can decide which is best for your rental business.
1. Use An Online Payment Portal
Online payment systems are used often by landlords, and tenants — particularly younger generations — value convenience. 72% of people who utilize mobile payments are Millennials and Gen Xers.
Online rent collection is not only handy for all parties involved, but it also can make it more likely that you’ll get paid on time. The tenant will electronically send a payment each month, and you can leave.
Landlords can use a variety of online systems to collect rent, but their costs vary. Some portals charge a nominal monthly fee for access, while others offer their services free to landlords. Examine the various services that these online rent portals have to offer before choosing the free program.
You can also use a number of apps to communicate directly with your tenants, submit crucial files, attend to maintenance requests, and discover statistical information about each of your properties. Due to the digital documentation they give, these extra components might be worthwhile paying for.
However, it’s crucial to let tenants use alternative payment methods if online rent payment services are your main method of collection. You should be careful not to erect excessive barriers in the way of making your monthly payments because not all tenants will have access to online resources.
2. Use Payment Applications
Applications for payments should also be taken into consideration as a means of collecting rent. The market for collecting rent is seeing an increase in the popularity of apps like PayPal, Venmo, and Chase QuickPay. The use of these apps is free. You may quickly transfer payments from one user to another after signing up.
It may take a few days for the money to be transferred to your bank account, which can be problematic if you have severe payment deadlines. Additionally, some landlords feel uneasy employing that technology while handling bigger sums of money.
3. Enable Direct Deposit
Set up an automatic withdrawal from your tenant’s checking account, if you’d like. You can feel more secure about receiving each month’s rent collection if you use direct deposit. You won’t also need to bother about running an online portal.
However, there are a few disadvantages to take into account. For services related to direct deposit, banks often charge a fee. Additionally, some tenants might not be comfortable with you having access to their bank accounts directly.
4. Designate a Drop-Off Location
If a landlord would rather receive rent in person, they can set up a drop-off place for tenants. It’s probably better to give your tenants a variety of payment options. The best options are a check, cashier’s check, or money order. Before putting it in the drop-off box, make sure to ask them to seal it in an envelope.
5. In-Person Payment Pickup
Even though it may be outdated, some landlords still favor receiving rent payments in person. The advantage of receiving your rent payments directly into your bank account may offset the inconvenience of having to travel to your rental property. Additionally, picking up the check-in person might serve as a reminder to regularly check on your apartment to make sure there are no maintenance concerns that require care
6. Mail-in Rent Collection
A tried-and-true technique is to send a rent collection letter. With this choice, you can save time by avoiding monthly visits to each rental property.
However, there are several drawbacks to mail-in rent collection. If you receive payments several days beyond the scheduled collection date, payment issues are more likely to arise. Even if an envelope has the appropriate postmark, you won’t actually receive the money for a few more days.
Choosing Your Best Rent Collection Option
When rent is due, it’s crucial to take into account your own preferences in light of all of these possibilities. For some landlords, what works might not work for others.
What matters most is your particular preference.
Picking up payments yourself is probably not an option if your rental properties are relatively far away or outside of the state. You might have to choose an offline option if your tenant doesn’t know how to use technology. However, the majority of payment options are moving online, and using those could be a quick and efficient way to collect your rent.
What to Do Next After Collecting Rent
There are a few tasks left to finish once an effective rent collection system has been established:
Organize Your Records:
Be vigilant with updating your records, whether you track rent collecting history manually or digitally. If there is ever a landlord-tenant legal issue, this will be essential proof.
Charge Late Costs:
If any of your renters are late with their rent payments, be sure to notify them and enforce any late fees that are stipulated in your rental agreement. Advice: Ensure that your lease specifies your late fee policy in detail.
A top priority is making sure your tenants pay their rent on time.
By considering the applicant’s credit history and income level, you can increase your chances of finding a good renter.