For those of you who are property owners or landlords, there is always one troublesome unanswered question – how do you make sure that you get your rent on time?
The reason for this is very simple. The rent could be your primary source of income, and if you don’t keep a tab on your rental inflows, you could have a serious cash-flow problem.
Thankfully, there are different solutions to your problems, and you can choose whichever is convenient for you. These solutions will help you streamline your rent collection process so that you are aware of the status of each of your tenants and the action you need to take.
What is the Best Way to Collect Rent?
There is no single solution that works for everyone. You have your own unique challenges when it comes to the collection of rent, and you need solutions that suit your specific situation. Whatever the rent collection method you finally decide upon, ensure that it is incorporated in your rental agreement so that there are no disputes later on.
Here are the four ways in which you can collect rent:
Online Rent Collection:
If you are tech-savvy and need a secure way to collect payments, going online is the best solution for you. This method would be appropriate if you have 20 or more rental units, or if the rented property is distant from where you reside. It would be quite challenging to visit 20 tenants in person for rent collection.
There are many websites that offer these online payment facilities, and you can choose the one you want. Some of the popular sites you can try are ERentPayment, RentMerchant or RentMatic. You should visit these sites and find out the services offered, along with the charges for the same before choosing a site.
The price you pay varies according to the plan selected. There are some plans that provide an online rent roll facility for uploading important forms and documents along with messages to tenants.
To use Venmo as a medium, you need to be friends with them on social media while PayPal payments take quite some time for processing, and the tenants need to be familiar with the payment process.
Collection by Mail:
You can collect rent by mail if you can’t collect it in person. The common problems faced with this method are related to the dysfunctionality of the mail services.
There are delays in receiving the rent or the check might get misplaced. To avoid misplacement of checks, a certificate of mailing might be provided by the post office, but you cannot verify if the exact amount payable has been sent or not. Another option is electronic funds deposit.
Collection by mail works best when –
- You have two tenants only
- Your tenants live less than a mile away
If you have an official address for your property, then it is advisable to have the tenant drop the rent off there. You should use your residential address only if it is the same as the tenant. Ensure no cash payments are made as theft is a high possibility.
Rent Collection in Person:
The benefit of this method of rent collection is that you get the payment immediately; there are no payment delays. The drawback is that you need to set up an appointment with the tenant and it takes up a lot of time. When cash is being paid, you should count it before issuing the rent receipt for the transaction, which again increases the time. This method is ideal if you are not conversant with technology.
Ensure Smooth Collections with a Property Management Company
If you have time or other constraints, you can consider hiring a property management company. The services provided by them include the collection of rent, dealing with tenant issues, taking care of maintenance, and also listing your property so that you don’t lose out on income due to low occupancy. While they will charge a fee for these services, considering the benefits, it is worth it.
You can collect rent through online methods, by mail, or in-person depending on what suits you the best. Alternatively, you can hire a property management company to take care of your collections.
Choose the best option and watch your rentals soar!
OHI is a thirteen-year-old real estate services company working with 50+ commercial and residential real estate developers, funds and property management companies across USA. Our deep expertise in real estate accounting, financial analysis, lease administration and asset management has helped clients cut associated costs by 40-50%. We currently provide these services to a portfolio of 75000 units across clients.
We invite you to experience finance and accounting outsourcing through us.