Collecting rent payments on time is one of the most critical parts of managing a profitable rental home. But to obtain those payments, property owners first need to determine how that rent should be paid. There are several unique methods to collect rent payments. But the ideal ones are those that fit your style of property management and your tenant’s wants and needs. To make your decision a bit easier, here’s what you need to know to choose the right rent collection method for you.
Variables to Consider
Finding the best rent collection method for you depends on many different factors. For example, determine how many tenants you will need to collect from each month, how far away you are from your rental property, and how comfortable you are with incorporating technology tools to help you manage rent payments. Each of these criteria can help you narrow your options down greatly. It would be best if you also thought about how often and in what way you want to interact with your tenants. While frequent positive communication is very beneficial for Chapel Hill property managers, showing up each month only to collect the rent could send your tenant the wrong message.
Convenient and Well-Documented
Another important thing to consider before choosing a rent collection method is whether it meets two key criteria: convenience and the ability to document each transaction. Now more than ever, today’s renters are looking for tech-driven conveniences to make their lives easier. A recent study found that 83% of consumers prefer to pay their bills online. But in addition to convenience, it’s also critical to keep good records of all rent payments and other transactions. Selecting a payment method that can do both is critical for a well-managed rental property.
There are two main categories of payment methods: traditional and electronic. Traditional payment methods reflect property management methods of the past and are just what you’d expect: cash, personal check, cashier’s check, or money order. While there are reasons to request a money order or cashier’s check – in payment of a security deposit, for example – getting cash or personal checks isn’t always the best option. Cash payments are difficult to document, and personal checks come with a number of drawbacks, from slow delivery to long wait times as checks clear the bank.
On the other hand, electronic payment methods have grown increasingly varied over the last few years. Property owners can choose from electronic payment options like ACH transfers and Square, but now money can easily be sent through payment apps like PayPal, Zelle, and Venmo (to name a few).
Most electronic payment methods will provide a record of each transaction, making documentation automatic. But some tenants may be worried about the safety of sending money online or prefer not to use payments apps for monthly bills. The biggest downside for property owners is the fees; all electronic payment methods typically will have added costs, so it’s important to research each one before making your final decision.
Automate and Communicate
With so many payment methods, deciding how you’d like to handle rent collection before it becomes a problem is critical. The more automated the rent payment method you choose, the easier the entire process may be for you. At the same time, tenants may feel restricted if you accept only one payment method, especially if it relies on a technology they aren’t comfortable using. For this reason, it’s necessary to communicate with your tenant and consider providing two or maybe three ways to pay the rent. This combination approach may be a good compromise, as long as each method provides the convenience and documentation you want.
Collecting rent payments doesn’t have to be stressful, but figuring it all out on your own might be challenging. Therefore, think about the benefits of selecting a property management company that offers convenient online rent payment options. If you’re willing to turn the day-to-day tasks of managing a rental property over to the professionals, give us a call at 615-538-7711.
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