Around 41% of rental properties in the US are run by independent landlords. Running a rental property independently requires tools and technologies to make your job easier.
Rent collection is one of the most pivotal aspects of landlord duties – and can cause contention if the rent isn’t paid on time.
Keep reading as we explore 4 different methods for collecting rent and the best ones to make your life easier. Independent property investors and landlords will benefit from learning the best ways to reduce the stress surrounding rent collection.
1. Physical Checks
One of the oldest ways of collecting rent, physical checks are pretty slow. You’ll need to wait for the check to arrive in the mail, and then you’ll need to cash the check with your local bank before the money goes into your account. Late fees, cash flow problems, and lost checks are all risks you take when using this rent collection method.
2. In-Person Collections
In-person collections are a good way to check on the property – but they could be perceived as quite invasive. You show up at your tenants’ residences and wait for them to hand you a check or cash. It can be a good way to connect with your tenant if you have a good friendship and relationship.
However, if your tenant does not have the money to pay you on the spot, you could find yourself in an awkward situation.
In-person collections can either be a great way to pop in and catch up with your tenant, or they can be uncomfortable interactions. Before using this rent collection method, check in with your tenants and ask whether they would be comfortable with it.
3. Credit Card Payments
Credit card payments are the most popular modern method of collecting rent. Tenants can easily use their mobile banking app and send you money every month. Additionally, a tenant can set up a direct debit so they never forget when the rent’s due and avoid late fees.
You can also have your tenants use PayPal to make credit card payments. They can keep track of their payments easily online by paying rent this way.
4. Online Rent Payments
Investing in rental payment software can help you to manage your tenants’ payments and gain more visibility over the process. With online rental payment software, you gain the following features:
- Automated rent collection – you can automate rent collection, reminders, and late fees to ensure your tenants always stay on top of their payments without any action from you.
- Secure rental payments – payments will take up to 5 days to transfer with full security, the same protection you could expect through a bank transfer.
- Tracking overpayments – if tenants make overpayments or back-payments, they can easily view their status using the application.
The convenience of online rent payments and the user-friendly platforms is a solid option for independent landlords. Additionally, communicating with your tenants can take a ton of time. The back-and-forth emails or texts about payments can be overwhelming. With online rent collection software, it’s streamlined and easy. Your tenants will be reminded when their payments are due and when they’ve incurred late fees.
What To Do After Collecting Rent
No matter which method you choose for collecting rent, there are some things you should do to ensure you stay on top of your payments.
Organize Your Records
You should keep records if you keep track of your rental payments online, in person, or via bank statements. Ensure you have the entire payment history of each tenant organized. Keeping track of these payments will help resolve disputes, especially regarding back payments.
Charge Late Fees
If your tenants have failed to pay rent, you must charge them late fees. Not only does this compensate for any losses or late fees you’ve incurred due to their late payment, but it helps you to deter any future late payments.
You should contact them and let them know that their payment was late and that they are required to make a payment – your records will help you prove that the payment was delayed.
You should ensure this conversation takes place in a written format, as you might need evidence of your communications to litigate the matter. It’s best practice to make it clear in the rental agreement that late fees will be charged.
Maintain Communication
Keep the lines of communication open between you and your tenants. Maintaining consistent communication can remind them when their payments are due. Similarly, they can contact you and let you know that they will be late for payment or can’t make a rental payment – this way, you won’t be left in the dark and can make some arrangements.
Collect Rent With Confidence
Maintaining records of your tenants’ payments and reminding them to pay their rent each month can become overwhelming. By adopting digital payment methods, you can ensure a digital record of their payments. Property management companies, such as Brady Realty Group, and rental payment software can help lessen the monthly rent payments burden and encourage more organization. For landlords that are tired of the entire process, consider selling your rental property to another investor. We buy rental properties regardless of the condition. Even if your property is occupied by a tenant, we will make you an offer.