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Customize The Rent Collection Experience

How to collect rent from tenants? Determining “how” is almost as important as “how much” before signing a lease with prospective tenants. Your collection policy must be something you and your future tenants agree upon to avoid confusion or awkward situations. Not only can the wrong choice of the method of rent collection mean making multiple trips to properties and awkward requests for payments, but importantly it could also have an impact on managing funds, planning, budgeting, and forecasting.

Factors to consider when choosing the rent collection method

There is no perfect answer to the best way to collect rent; different methods work for different landlords. Here are some factors you must consider when choosing a rent collection method that suits your needs.

  • Number of rental units and distance
    A large number of rental units automatically implies that you would not want to be personally knocking on multiple doors to collect rent. Primarily, if your rental properties are spread over large distances, you would most definitely want to opt for a reliable and time-saving method.
  • Hands-off approach
    Even if the distance isn’t an issue, many landlords want to opt for a hands-off approach to rent collection. If this gets your vote, you would like to opt for a property management company that helps you set and conveniently collect rent besides offering a range of other services.
  • Comfort level with technology
    Should you be technology-friendly, there are a whole lot of options that allow you to collect rent online without any hassle.

6 Ways to Collecting Rent

Determining the best way to collect rent from tenants will help you get paid on time and remove any potential confusion. Here we’ve listed six ways to collect rent:

    1. In-Person
      &As discussed, this works well if you have a small number of rental units that aren’t widespread. The advantages of this method lie in the fact that you would have the payment in your hands immediately. In addition, if you collect the rent in cash, you will benefit from counting it to your satisfaction and issuing a receipt. The logistics, however, do not make it a rent collection method of choice.
    2. The old fashioned checks by Mail
      You could choose to have your tenants mail the payment to a given address every month. Providing the tenant with a pre-addressed, stamped envelope can go some way in making the process smooth. But, there could be the clichéd “ the check is in the mail” response for delays. Also in case, the tenant makes a short payment, you wouldn’t know until the mail reaches you.
    3. Drop-Box
      A dropbox, preferably in the rental property, can work as yet another method for rent collection. But, of course, this doesn’t take away the need for you to travel to the property to pick up the payment. Even though you do not have to knock on doors, you could face the additional fear of the rent being stolen if the tenant drops off cash.

Pro-Tip: Whatsoever method you choose, it’s advisable to avoid collecting rent in cash, as it can turn out to be disastrous in case of any disputes or legal troubles.

  1. Collect through a Property Management Company
    The advantages of going with a property management company cannot be overstated. From screening tenants to helping you charge an optimal rent, timely collection, dealing with tenant complaints, handling maintenance issues, and even handling evictions if necessary. But they come with a cost. So, as a landlord, you have to determine if the benefits of hiring a property manager outweigh the expense.
  2. Collect Rent Online
    With the advent of technology, online rent collection is a popular method that takes away stress. Some of the advantages of online rent collection include:

    • You are saving time and energy in tracking down tenants. In addition, you can use the saved time productively in property inspection, improving tenant relationships, and more. From the tenant’s viewpoint also helps save precious time instead of driving to the bank and depositing the check every month.
    • Cutting down on late or missed payments
    • Easy integration of income receipts into your accounting tools and more.

    Some of the most popular online rent collection modes include:

    • Accept payments through an ACH debit-One of the most convenient rent collection methods is setting up an ACH debit. Tenants can even set up automatic payments, so they don’t have to worry about paying rent every month. But, this method may not be cost-effective for you as there are fees involved, and, depending on your bank, you may have to set this up as a merchant.
    • Peer-to-peer payment services- Services such as PayPal, Zelle, Venmo are gaining a lot of favor when collecting rent online. Not without reason. Contactless, quick transfer couldn’t be more effortless with these services. They rank as one of the best ways to collect rent online because they decrease the chances of late or missed payments. The only cons in using these platforms are that you may not receive much assistance from these apps if the amount is sent incorrectly. Also, much like a bank transfer, you cannot block partial payments during an eviction process.
    • Property Management Software- With many property management software specifically designed for rent payments, you can reap several advantages. Besides helping receive rent, they also come with added features such as automating bookkeeping, blocking partial payments, adding late fees, and more.

Benefits of Collecting Rent via Property Management Company

Ultimately, the critical factor when collecting rent is time. Tenants want to pay their rent on time, and landlords want to receive their funds on time. A property manager can help streamline the rent collection process and help manage funds efficiently. Here are some of the benefits of hiring a property management company :

  1. They help send customized notifications and reminders to the tenants. This successfully positions and empowers the tenant to ensure their rent is paid on time.
  2. Property management companies have integrated an In-built payments module that is secure. Provides digital receipt, and the details are automatically updated in the accounting module, saving money and time.
  3. They help set up automatic recurring late fees via rental property management software to optimize the rent collection process. This sets you up for success by ensuring you are consistently following best business practices.
  4. Sometimes circumstances with a renter might lead to a partial rent payment situation. They help customize and control payments. Also, should you be proceeding with an eviction, they can help you block partial rent payments.

Be sure to choose a rent collection system that takes the stress out of the monthly collection process. Hassle-free collection, integration, and transparency with your bookkeeping systems are some aspects to watch out for.

Hire Beach Front to Get Paid On Time

Sometimes, despite your best efforts, your tenants will not pay timely. If you wish to evict them, you’ll need to make sure you follow a set of strict procedures for evicting a tenant. These rules will depend on the type of tenancy agreement and the terms you’ve agreed to. At BFPM, we offer comprehensive property management services that include a timely collection of rent, preferably via RentCafe/Yardi, and some of the other digital solutions like Appfolio that ensure you do not need to deal with the uncertainty in planning and forecasting your funds. Also, we can take care of the eviction process in case the situation arises.

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