Of all the things a property manager or landlord has to oversee and deal with, collecting rental payments on time is the most important. The rent payments are your income cash flow that will help you pay your bills. Managing one or two properties is easy, what’s daunting and can be quite challenging is having to manage multiple properties. The task would become arduous especially when you have to chase tenants for late payments.
The most common way landlords do is to collect rent checks from tenants. This is the traditional way of doing business. If you are a new landlord, consider finding a more reliable, secure, and faster way of collecting rental payments. Because depending on this traditional way will take time as the rental check can take up to seven days from when tenants mail their checks until the funds clear in your bank account. It’s really just a matter of convenience in the shortest time possible.
Avoid Money Orders and Checks
Until today, checks and money orders are still a popular mode of payment. Checks are easy and comfortable, they don’t require a steep learning curve for tenants. However, checks have disadvantages. Checks are easy to steal and can put a person at risk of check fraud. It’s an easy target for criminals.
Check frauds are on the rise, according to the American Bankers Association. A survey in 2020 was published showing that check fraud accounted for losses of $1.3 billion, but’s that’s just a part of a bigger picture. Attempted check fraud has amounted to $15.1 billion. Criminals are targeting checks to scam people out of their money and this is more common than debit card fraud.
Rent collection by money orders can also be just as risky. Ther are many different vendors issuing money orders. If a money order is stolen, it’s harder to get a refund for it. The tenant may need to wait for this refund before they can pay you their rent. Unlike checks, money orders can’t bounce but tenants can cancel them.
While checks and money orders are what the majority use for rental payment, it’s not the only means of paying rent, and not the easiest for both parties, too. Other payment options can make rent collection easier and more convenient for both landlords and tenants.
Here are 7 ways landlords can get tenants to pay rent online and on time:
To avoid late rental payments, you should try a rent collection app. An app can allow tenants to pay online or even in cash. The landlord will need to sign up for one of the many available apps and inform their tenants about it. The tenants can then pay their rents using a variety of modes of payments, either by credit card, debit card, setting up automatic payments, or even in cash in associated stores. The apps are mobile-friendly which is a very good thing as it allows tenants to pay anytime from their phones.
There are also several advantages for landlords who use apps for rent collection such as:
- Real-time notifications of payments
- Sending out reminders for late or missed payments
- Check tenant payment history
- Set-up late payment fees
- An overview of the financial situation
The usage of rent collection apps and online billings is a win-win situation for both the tenant and the landlord. The tenant will less likely forget to pay their dues, and the landlords are more likely to be paid on time. Apps these days are also highly secured and have enhanced digital trails if there are any disputes to resolve.
This rent collection app has excellent features and services. Tenants can pay each month or they can set up recurring payments. They can also pay their security deposit here. This app has a chat tool that will allow tenants to connect with their landlord in case of any issues about the property. Landlords can take advantage of screening tenants with the app. They can also list vacancies on Zillow, Trulia, and Craigslist automatically.
Buildium packages start at $50 per month and cover all areas of property management.
This app allows for e-check and credit card payments (one-off or recurring). Partial payments are accepted which can be very useful when unique situations arise. With this app, the landlord can track payments and use full accounting tools to manage their finances. The only downside is that this app is quite costly. PayRent takes 3.5% of every transaction and an additional $0.30 on credit card payments and 0.25% on bank transfers.
The eRentPayment app has a wide range of tools for both tenants and landlords. The usual online payment options and reminders are there. An excellent feature of the app is that it allows tenants to leave maintenance messages for the landlords. This is a helpful feature that can improve landlord-tenant relationships as there would be fewer conflicts and confrontation. Landlords can also utilize the apps’ tenant screening features and credit reporting, which is something a lot of tenants would like if they need to improve their credit history.
The ClearNow app is a great thing to have to improve credit scores. This app can send rental payment histories to Experian Rent Bureau. Tenants will be motivated to pay their rent on time knowing that they will have the advantage to find it easier to apply for a loan or mortgage in the future.
Although there’s one thing to keep in mind. The tenant will have to ensure that the full amount is in their account, otherwise, the recurring payment won’t be processed.
This is a simple app that tenants can log into and make a payment or set up recurring payments. Avail will send automatic email reminders five days ahead before the due date and again on the actual date. Landlords can have the rent payment cleared and in their accounts by three days.
This is a money transfer app unlike the others above which are rent collection apps. This app works like direct debit and it’s easy to use. You just have to download the app and add your bank details. Landlords usually receive the money instantly and neither party has to pay for fees. The disadvantage, though, is that you won’t be able to use features such as reminders or recurring payments.
It’s likely that you have already heard about Paypal because of its popularity. Paypal is a straightforward app and it is easy to use. It’s probably a better solution to checks. However, Paypal has the same disadvantage as Zelle. It also lacks all of the functions of the best rent collection apps mentioned earlier.
Collect Rental Payments Successfully
If you want to become a successful landlord who manages multiple properties and keeps ahead of all tasks including rent collection, start as you mean to continue. Use an online method to collect rent payments to ensure healthy cash flow. Collecting payments on time will help landlords fave fewer issues and they can devote their time to more important things.
In addition to using online apps for rent collection, here are a few tips we recommend you follow:
- Late Fees: having this will encourage the tenants to pay on time. It/s tempting to waive late fees, but it’s recommended to not do so as a part of your policy. As the tenants will know that these fees will be instituted, they will keep their rent payment as a priority to make every month.
- Strong Rental Agreements: Make sure that the new tenants and the prospective ones understand the rent payment rules and your late fees structure by having it outlined in the lease.
- Legal Advice: Make sure that the late fees you impose have legal backing by consulting a lawyer regarding your lease. If it comes down to the worst, make sure that you’re providing the proper eviction notice and following the legal eviction process.