Receiving rent payments on time is one of the most crucial aspects of having a profitable rental home. However, to receive such payments, property owners must first decide how that rent should be paid. There are several different methods to collect rent payments. However, the ideal ones are those that fit your style of property management and your tenant’s wants and needs. To make your decision a little simpler, here’s what you need to know to pick the best rent collection method for you.
Variables to Consider
Finding the best rent collection method for you depends on several different factors. For example, consider 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 elements can help you narrow your options down considerably. You may also want to consider how often and in what way you want to interact with your tenants. While frequent positive communication is very beneficial for Parrish property managers, showing up each month only to collect the rent could send your tenant the wrong message.
Convenient and Well-Documented
Another significant factor to examine before selecting a rent collection method is whether it fulfills 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 comfortable. A recent study discovered that 83% of consumers prefer to pay their bills online. However, in addition to convenience, it is also essential to retain accurate records of all rent payments and other transactions. Finding a payment method that can provide both is essential for a well-managed rental property.
There are two main types of payment methods: traditional and electronic. Traditional payment methods mirror property management procedures 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 – taking cash or personal checks isn’t suitable for most cases. Cash payments are not easy to document, and personal checks come with many difficulties, from slow delivery to long wait times as checks clear the bank.
On the other hand, electronic payment methods have become more diverse 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).
The majority of electronic payment methods will keep a record of each transaction, making documentation automatic. But some tenants may be hesitant 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, it is advisable to choose how you’d like to handle rent collection before it turns into an issue. 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 critical to communicate with your tenant and consider providing two or maybe three ways to pay the rent. This combination approach might be a suitable compromise, as long as each method delivers the convenience and documentation you need.
Collecting rent payments doesn’t have to be challenging, but figuring it all out on your own might be tricky. As an alternative, consider the benefits of working with a property management company that offers convenient online rent payment options. If you’re ready to turn the day-to-day tasks of managing a rental property over to the professionals, give us a call at 941-225-8185.
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