Like any proprietor, landlords want and should be paid for the services they provide. Unfortunately, they are often asked to show some empathy for other people’s problems. Collecting rent might become a real burden, especially if tenants don’t understand why you can’t wait until they have money. Is it anyone’s business?
Maybe, you wanna pay your own bills or just watch the best offers online. The rent should be paid as discussed. Here, we will tell you how you can make this process easier for both parties.
When Should You Collect Rent Payments?
The short answer is — on time. If a particular date has been discussed with your tenants, it is, first and foremost, you who shouldn’t forget about it. Being careless will lead to the same attitude. People will think that you don’t need the money and can be paid whenever they find it convenient.
Another thing is when you know exactly when the rent should be sent, but instead of it, you get a bunch of excuses. You are protected from such issues with a lease. The only thing you can tolerate is a grace period – several days of delay (and not more!) with no penalty for your tenants.
As for a particular date, it’s mostly your choice. But most landlords and tenants agree upon the first of each month. Tenants get paid at work by this day, and landlords can pay the bills they get at the beginning of each month right away.
Improving the Rent Collection Process
Once you have come to terms with ‘when,’ it is time to decide ‘how.’ Remember that when you choose a payment method, you must provide your tenants with the choice between at least two options. You see, if you want to receive payments in person and your tenant works 60 hours per week, this will cause difficulties. The same will happen if you choose digital payments via some money transfer system, but your tenant doesn’t have (and doesn’t want to have) an account in it. When you provide two and more options, it will be easier to find a solution. Let’s look into different methods to collect rent.
‘Good’ Old Ways of Collecting Rent
Habits die hard. This keeps the methods described below alive up till now. Some people will still find them acceptable, so we can’t ignore them completely.
Receive Money in Cash
There were times when every transaction was done this way. And everything went smoothly, one may say. Today, however, there are quicker and safer methods. This one has certain disadvantages.
To start with, both parties have to spend time meeting each other in person. One should commute, and another one should be at home and wait. Or you both should go to some coffee shop, for example. It is better when you live close to each other (ideally, in the same building) and can save on commute. But in any other case, personal meeting isn’t worth the time.
Besides, you must provide your tenant with proof that the money was received, like a receipt. Who would like to do this these days, when every digital transaction is committed automatically? We strongly recommend you to think it over before consenting to payments in person. This is neither the best nor the worst way. Just compare!
Dropping the Cash Off
Personal meetings as a part of the rent collection process might be less convenient than other methods, but, at least, it is advantageous when you need your money in cash. Another way to get cash is by letting tenants drop off money in an envelope to your home and office address. On the bright side… wait, there is no bright side of that in the 21st century. People did so because they lacked time, not to wait for each other, as described in the previous method. But they had no alternative, and they took risks.
First, they had to trust each other. Tenants could lie that they dropped an envelope, while landlords could lie that they never received it. No guarantees at all! Plus, anybody could take it. Those who say they don’t trust banks or payment systems today but find this method agreeable are, most likely, fooling themselves.
Mailing a check
Remember checks? Some still use them. A tenant can send the rent by mail under certain circumstances. And this is definitely safer than dropping off your cash. But before, people were used to the post offices’ dysfunctions, like losing something or delivering it much later than supposed to. A contemporary person can get a bit stunned by it. So, if you rent out a house to a nice old couple who are still big fans of sending checks, get ready to wait for days before you receive it. And remind them to ask for a mailing certificate proving they have actually sent something.
Modern Methods to Collect Rent
Hiring a Property Manager
One of the perks a proprietor can get in the contemporary world is an opportunity to hire professionals to take care of some business aspects. Thus, hiring a property management company to tackle rent collection is a good idea. It won’t cost you a fortune and will have you covered in many issues with your tenants from the rent mentioned above to maintaining your property. They can even find tenants for you if you don’t have ones.
There are two best ways to collect rent payments with the help of banks. First, there is a quick deposit. It is extremely fast, safe, and easy. Mind that this presupposes that both parties have accounts in the same bank. Transferring money from one bank to another will take more time and involves some extra fees.
The next method is paying with a tenant’s credit card. It is expensive, but sometimes there is no other way out. Tenants will never be able to excuse themselves by having no money to pay. A credit card can be used as an occasional alternative to some other method.
Online Payment Systems
Online wallets are a perfect alternative to everything mentioned above. Several major companies let your tenants transfer money in the blink of an eye. All transactions are fully secured, so in most cases, you have nothing to worry about. If any problems still appear, you can always contact the Support and resolve them immediately. Here are the companies we are talking about: Venmo, Google Pay, PayPal, Zelle, and Apple Pay.
Mind that using most of these services implies that you and your tenant both have accounts in their systems. But sometimes, this is not a must. Check out each system’s terms and make sure you will get the money, and your tenant will not overpay a lot. The majority of companies offer both Android and iOS mobile applications, but there are no Android apps for Apple Pay.
Landlords have a lot of responsibilities to their tenants. They must maintain the property in the condition complying with health and safety regulations and respect their tenants’ privacy. A tenant’s #1 responsibility is on-time payments. Our tips will help you suggest your tenants the way to do it quicker.