One of the essential aspects of operating a profitable rental home is obtaining rent payments on time. However, to collect those payments, property owners first need to decide how that rent should be paid. There are multiple different strategies 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 quicker, here’s what you need to know to choose the correct rent collection method for you.
Variables to Consider
Determining the best rent collection method for you depends on multiple different factors. For illustration, 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 factors can help you narrow your options down significantly. You may also need to determine how often and in what way you want to interact with your tenants. While frequent positive communication is very beneficial for Sausalito property managers, showing up each month only to collect the rent could send your tenant the wrong message.
Convenient and Well-Documented
Another vital point to check before selecting a rent collection method is whether it matches 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 smoother. A recent study indicated that 83% of consumers prefer to pay their bills online. But aside from convenience, it’s equally essential to keep good records of all rent payments and other transactions. Choosing a payment method that can deliver both is essential for a well-managed rental property.
There are two primary classes of payment methods: traditional and electronic. Traditional payment methods reflect property management systems of the past and are just what you’d expect: cash, personal check, cashier’s check, or money order. While there are occasions to request a money order or cashier’s check – in payment of a security deposit, for example – receiving cash or personal checks isn’t optimal for most cases. Cash payments are difficult to document, and personal checks come with numerous issues, 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).
Many electronic payment methods will give a record of each transaction, making documentation automatic. But some tenants may be concerned about the safety of sending money online or prefer not to use payments apps for monthly bills. The major downside for property owners is the fees; all electronic payment methods typically have extra fees, so it’s crucial to research each one before making your final decision.
Automate and Communicate
With several payment methods, it is vital to assess how you’d like to handle rent collection before it becomes a headache. The more automated the rent payment method you choose, the easier the entire process may be for you. Simultaneously, tenants may feel restricted if you accept only one payment method, especially if it relies on technology they aren’t comfortable using. For this reason, it’s vital to communicate with your tenant and think about giving two or maybe three ways to pay the rent. This combination approach may be a great compromise, as long as each method offers the convenience and documentation you want.
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 650-969-4800.
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