As a property owner, one of your most daunting tasks is rent collection. Rent is a necessary component of your investment property, as this is how you'll make your income. However, without proper rent collection systems in place, you may encounter some challenges.
Having a streamlined method for collecting rent will ease your task. It will also minimize conflict between you and your tenants.
The good news is that there are numerous ways in which you can easily collect rent from your tenants.
In this article, the property experts at TE Johnsons & Sons will provide you with a few rent collection solutions that you can use.
Different Ways to Collect Rent from Your Tenants
1. Property Management Software
Having a property management software is a convenient way to track and record payments from your rental property. In addition, most property management software programs also offer a rent collection service.
For a small subscription fee, tenants can pay their rent through a property management software using bank transfers, debit cards and credit cards. Once they make the payment, you will receive it in your account.
This will aid with accounting and record keeping.
The use of a property management software also helps to avoid late payment and is convenient for both the tenant and the landlord since the payments can be automated. This will reduce the risk of having to evict a tenant.
Finally, property management softwares often have other features, as well. For instance, in addition to facilitating rent payment and collection, they can also be used to record and view complaints and maintenance requests.
2. Online Methods of Payment
The use of online payment solutions have increased over the years.
Online payments are convenient, safe and affordable. With the digital means having swept across many industries, it is definite that most tenants will be in a position to make payments online.
There are several online sites that you can consider for online payments, such as Rent Merchant, ERent payment and even RentMatic. These applications have various plans with different prices. Rent collection is a basic service that is offered by all of the sites listed above.
Here are some additional third-party applications that can be used for online payment:
1. Venmo: Venmo is an application that allows instant payments. However, you have to be acquitted with the receiver on the application. As a landlord, you must be Venmo friends with your tenants so that they can send you payments.
2. PayPal: Paypal is a free and convenient method of payment. Payments made via PayPal may take a few days to be processed.
3. Zelle: Zelle is another popular third-party application that landlords should consider. It allows a tenant to send money directly from their bank account to yours. The only requirements for Zelle are an email address, phone number and the account number.
These online methods of payments are ideal since most of them are instantaneous and convenient for both the landlord and the tenant.
Rent collection via mail has been a tried, tested and proven method of rent collection over the years. Even though this method is slowly being replaced by online means, you can still use it to collect rent.
Collection by mail is a good option if you have many older-aged tenants who don't have access to advanced technology.
If you are considering using this method of rent collection, we recommend you list it in your lease agreement and emphasize that payment is made using cheques only. Also, emphasize that your tenants should put their cheques in advance to avoid delays.
The sender typically gets a certificate of mailing from the post office to serve as proof that the mail was sent. This will help avoid misunderstandings between landlords and tenants.
4. Drop Box
You can also have a designated drop box or a drop off location where tenants make payments. This is a good option, especially for multifamily properties.
The drop box can be at your office or at a central location. We do not advise having a drop off station at your house.
Also, ensure that your drop off locations are secure. You don't want your tenants to make payments that go missing.
The last method you can use is physical collection. You can decide to allocate a person (often the caretaker) to collect cheques and receipts from tenants. However, this method is time-consuming as you'd have to drop by every month instead of every 3-6 months like for your rental inspections. This could make rent collection frustrating for both yourself and your tenant.
That said, the advantage of collecting rent in person is that there is tenant interaction!
Having a convenient way of collecting rent can greatly improve your experience as a landlord. Prompt collection of rent is vital for the success of your real estate investment. Due to the challenges that may come with rent collection, you might consider hiring a property management company.
If you wish to work with a property management company, contact T.E. Johnsons & Sons. We are a premier management company offering services in Forsyth, Guilford and Davidson Counties.