Smart Rent Collection Options
Without question, the most important aspect of running a portfolio of investment properties is collecting the rent. Rent money is the fuel of the entire enterprise, so you want to make it as convenient as possible for your tenants to pay. You will also want to make rent payment easy for you to manage. With the advent of direct deposit, you have more smart rent collection options than ever! But know this – cash isn’t one of them. In fact, cash is the absolute worst way to collect rent payments—more on that later.
To help you decide which way to go, consider the following questions:
Rent Collection Questions
- Do you live near your properties?
- How many units do you have in total?
- Are you comfortable with tenants knowing who you are?
If you live far away and would rather remain anonymous to your tenants, one of the more hands-off solutions will be better for you.
Online Rent Payment Options
Online payments have a number of advantages. Once they’re set up, your tenants will find them very simple to use. The money goes straight to the bank and your records are updated automatically. The better online payment platforms can be integrated into your property management software to issue late notices automatically. Your tenants get receipts without human intervention and you’re saved the trouble of going to the bank each month.
Property Management Companies
Better residential property management services like Onerent offer rent collection services as a standalone option. This removes you from the process, but keeps a responsible hand on the rent collection function. They also provide monthly updates, deposit the funds directly into whatever account(s) you designate and deal with delinquencies.
Both of the above methods will incur fees, but the cost is usually offset by the convenience.
Collecting Rent Through the Mail
Tried and true postal delivery is also hands off — to a degree. However, it’s fraught with a number of drawbacks. If tenants mail rent checks on the first, but you don’t get them until the fifth, they’ll be four days past due, even though the postmark says they paid on time. “It got lost in the mail,” while very unlikely with today’s technology, is still a favored refrain of late-paying individuals. Additionally, you will only know how much they’ve sent when you receive it, this opens you to partial payments, which will leave you short.
A drop box at the leasing office allows tenants to make on time payments by simply depositing an envelope in the box. Similarly, during office hours, they can leave their checks at the office with the member of your staff designated to perform this duty.
Accepting Rent as Cash – Don’t Do It!
Then, there’s cash. However, experts agree the worst possible collection method is cash. It leaves no paper trail, so you’re open to the he-said-she-said situations when it comes to payment disputes. You’ll have to keep meticulous records and make sure every transaction is recorded in your accounting system immediately—by hand.
But wait, it gets even better! If your tenants know you accept cash payments, you should assume everyone in the city knows. This means your office will become a target for a robbery at some point. Along these same lines, if you have a very large complex and the majority of your tenants pay in cash, you’ll need a secure method of transporting money to the bank. This typically means hiring an armored car service, which attracts attention—in addition to being an added expense.
Final Thoughts
When considering your rent collection options, your primary goal should be to choose one your tenants can use with minimal hassle to minimize payment concerns. While you are at it, also try to pick a solution that will minimize the hassle you will have to deal with.
