Receiving a tenant’s rent on time is one of the most important factors in property management. It’s also one of the most stressful. Tenants who pay only partial amounts or are consistently late with rent payments burden a landlord’s time, energy, and money.
It costs resources to chase after late or missing rent. Landlords must often call in outside help or resort to eviction or court proceedings, both costly endeavors. Time spent in pursuit of missing rent is time away from the crucial tasks of managing the property.
Instituting a standard method of paying rent each month makes keeping track of tenants much more accessible. It’s possible to know at a glance which tenants are current and those who are behind in their payments.
Which method is best depends on the specifics of the property. Here are five ways to collect rent and some key factors to consider before you decide.
5 Simple Ways to Collect Rent
Landlords have several choices when it comes to methods of collecting rent. The least stressful way is to hire a rent collection service to handle everything, but that isn’t the only choice.
Below are five methods of collecting rent. It’s imperative to include the rental payment procedure in the lease, regardless of the method, so all parties are fully aware of their responsibilities.
Having rent money handed to you directly is an easy way to collect it, but that only works if the tenant is available. This method makes it notoriously easy for tenants to be away from home on an emergency when the landlord comes to collect. It can also be bothersome if several properties aren’t close together.
Many landlords prefer this method, despite its faults, because they get an opportunity to check on their property and perform routine maintenance once a month.
Check by Mail
Another traditional option is allowing a tenant to pay their rent through the U.S. Postal Service. They could send a check, cashier’s check, certified check, or money order to their landlord’s address, office, or P.O. box. This is the slowest way to access rent money. It may also be late often, considering weekends, holidays, and other no-mail days.
A similar idea is to set up a drop box. Tenants can drop rent payments inside a designated location 24 hours a day. There’s no guarantee tenants will make their payments, however.
Paying rent payments online can streamline the process for both parties if it’s an option. Not everyone has access to a computer, so tenants can only use online payments in conjunction with a traditional method such as paying in person or by mail.
Rent Collection Service
Many rent collection services offer various additional services, such as automatic withdrawal of late fees. This is the most hassle-free method of rent collecting because everything is left to the service.
Most rent collection services allow for various payment methods, making it easier for tenants to pay on time.
Setting up ACH debit payments is simple for tenants. It takes a few minutes at the bank, and then they are ready to go. They can also opt for recurring auto-payments.
This approach isn’t always so simple for landlords, however, and it can also carry some fees. There is roughly a three-day wait for an ACH deposit.
There’s a payment method for every situation, so put some thought into which one will work best for you. It’s also a good idea to explore a few more factors before choosing.
What to Consider When Choosing a Rent Collection Method
Just because a method of payment is easy doesn’t mean it’s perfect for the situation. Consider these factors when choosing which approach fits your property situation best.
1. Number of Units
A landlord with 10 units located all over town will find it harder to collect rent in person than one with only a few. A more efficient solution such as electronic payments or a rent collection service might be better in this situation.
2. Distance From Rentals
Landlords who live far from the properties they manage cannot typically accept in-person payments, and mailed payments might pose a time issue. The distance between the landlord’s home and the rental units can have a bearing on which payment methods will work best for both parties.
3. Level of Tech Savviness
A low-tech landlord will have a more challenging time collecting rent via online payment services like PayPal. Such services aren’t difficult to learn, but they do require a certain level of tech ability.
4. Number of Methods
Some landlords find it beneficial to offer more than one method of payment. Accepting only one form of rental payment can alienate a sector of possible tenants or make it harder for some to get their rent paid on time.
5. Management Approach
Most landlords try to make rental payments as easy as possible for the tenants, but often factors in the rental situation can determine the payment method. Careful consideration of all outlying factors can help landlords choose the best payment option for the circumstances.
A Landlord Platform to Streamline Property Management
Rent collection doesn’t have to be a problem – and better tenant screening can help. Rent Safe is a digital service that lets renters easily submit their rentals applications while streamlining the steps for landlords to screen potential tenants. Ready to eliminate the risk of low-quality tenants? Want to protect your properties and your bottom line? Then you need to check out Rent Safe.
Our innovative online platform lets you easily create a tenant application and screening process. Your applicants can add co-signers, share references, upload documents, and more, and the customized dashboard provides convenient access to all the information you need. Contact our team today to learn more.