One of the most essential components of keeping a profitable rental home is accepting rent payments on time. But to get those payments, property owners first need to determine how that rent should be paid. There are many various methods to collect rent payments. But the best ones are those that fit your style of property management and your tenant’s wants and needs. To make a choice a bit more manageable, 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 several different factors. For example, evaluate 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 extensively. 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 Southfield property managers, showing up each month only to collect the rent could send your tenant the wrong message.
Convenient and Well-Documented
Another necessary thing to weigh in before selecting a rent collection method is whether it satisfies 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 along with convenience, it’s equally necessary to keep good records of all rent payments and other transactions. Finding a payment method that can provide both is paramount for a well-managed rental property.
Payment Methods
There are two main classifications of payment methods: traditional and electronic. Traditional payment procedures 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 grounds to request a money order or cashier’s check – in payment of a security deposit, for example – accepting cash or personal checks isn’t ideal for most situations. Cash payments are hard 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).
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
Along with so many payment methods, it is important to decide how you’d like to handle rent collection before it grows 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 important to communicate with your tenant and consider offering 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 need.
Collecting rent payments doesn’t have to be difficult, but it can be a challenge to figure it all out all by yourself. Instead, consider the benefits of hiring 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 248-259-2575.
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