One of the most important decisions you’ll make as a landlord is how to collect the rent at the beginning of each month. Some landlords let their tenants decide how they want to pay, but this can get confusing when you have more than one tenant and own more than one property.
All landlords should specify how they want to be paid in their leases. This ensures that everyone is on the same page when it comes to payment and that there are no surprises for you or your tenants.
Struggling to choose a rent payment method? Here are four of the best ways to collect rent and what you need to know about each of them.
Collect in person
Some landlords visit their properties every month on a specific day to collect the rent from their tenants, and it’s easy to see why this is a popular choice. It gives renters and landlords a chance to get to know each other and by interacting more regularly, and it’s an easy trip to swing by the property and then to the bank to deposit the money.This is also a good time to ask about the state of the property and address any problems that need fixing.
The biggest drawback of this rent payment method is timing and scheduling. Someone needs to be home to give you the rent, and you need to be available to go pick it up. If you work full time, then you may find it difficult to get over to your property every month, and your tenants, who almost certainly do work, will also have to rearrange their schedules to give you the money.
Use a dropbox
A dropbox is another popular method for collecting rent. It alleviates the need for tenants and landlords to schedule a specific time for meeting, and it gives you both more freedom in when the money is dropped off and collected. If you live nearby or have an office close to your property, you can install a lockbox where tenants can drop off checks or cash at their convenience.
This method, however, can be difficult if you don’t live nearby or have an office. You want your lockbox to be secure so someone doesn’t snatch it away on the first of the month. You also want to make it easy on your tenants, who may or may not have a car or be able to walk far, so if the lockbox is too far away, it will be more of a burden on your tenants.
Automate through PayPal
Online payment is now easier than ever. Whether you prefer PayPal, Venmo, Zelle or any other online payment platform, these services make it easy to collect payment and send requests for payments. Because there is a digital record of payment, you will be protected should a tenant ever dispute a rental payment.
There are also other online services that specialize in collecting and monitoring rental payments. Sites like Rent Cafe connect to tenant’s bank accounts to automate payments every month. They will even add fees or other expenses so tenants can keep track of what is owed.
The problem with these platforms is that you are beholden to them. If Venmo starts charging fees for transactions, then you will need to adjust your strategy. Sites like Venmo and PayPal are also not designed specifically for rental collection, so they’re missing some of those key features available on other platforms.
Work with a property management company
For landlords with multiple properties and more than one tenant, hiring a property management company often works out to be one of the better options. Your property manager will be in charge of collecting rent and will monitor those who do not pay on time. He or she will also be in charge of administering late fees and keeping track of your property income each month.
Of course, working with a property management company isn’t free, but when you consider how much a property management can do for you, then it’s easy to see how much time you’ll save in the long run. Having a property manager keep track of maintenance requests, tax documents, repairs and everything else frees up your time so you can focus more on enjoying your new income stream and less on running the property.
Tips for collecting rent
When deciding how to collect rent, keep these simple tips in mind.
- Outline which day rent is due in your lease and after which date the rent is considered late. Most leases say rent is due on the first of each month and late after the fifth of the month.
- Choose one online and one in-person rent payment method. Not everyone is tech savvy. Some people prefer to hand their landlords a check every month.
- If you choose to accept cash, give a receipt. Should there ever be a dispute, the receipt will be proof that you received that specific amount.
Need help deciding which rent collection method is best for you? Contact the professionals at Atlas Lane today and make it happen.