Rent payments are the backbone of any property rental business. Healthy cashflow is maintained through consistent, on-time rent payments.
Nowadays, landlords have several options in terms of how they can collect rent. But which method is the best?
In this article, we’ll be covering four ways to collect rent and comparing the pros and cons of each method.
This used to be the default method for rent collection. This doesn’t mean you should be accepting cash for rent payments in today’s landscape, however.
Because cash is untraceable, you must manually keep track of documenting your payments. Not only is this a hassle, but you run the risk of forgetting about your bookkeeping or making a mistake. Furthermore, in order to ensure your tenant pays the right amount and can’t deny shortchanging, you must receive the cash payment in person and count it in front of them.
While checks have also been a popular method of payment, they’re quickly becoming outdated amongst the younger generations. In addition to their decline in popularity, checks come with their own set of inconveniences.
First , you must take the time to go to the bank to deposit the check. While many banks now offer online deposits, this can still prove to be a hassle when you manage a large number of units.
Checks oftentimes end up being the most time-consuming payment method. A big part of this is because you have to wait to receive the check if it’s getting mailed to you. Then, you have to wait until you have time to make the deposit. Then, the bank has to cash the check and process the payment. It can be several days before you have access to those funds.
P2P (peer-to-peer) platforms allow friends to send each other electronic payments quickly and easily from one account to another. The two most popular P2P platforms at the moment are Venmo and PayPal.
Some landlords have started using P2P platforms for rent collection. On the one hand, they’re extremely convenient and trendy. On the other hand, landlords must set up business accounts to comply with the platform’s regulations. Landlords also lose some control when using P2P platforms because you don’t have the power to deny payments. And another downside is that the fees associated with these platforms can add up.
Property Management Software
Property management software is designed specifically for landlords. As such, online rent collection through property management software is equipped with all the features that a landlord may want when it comes to rent collection.
First, your tenants have the option to make rent payments using credit cards, debit cards, or ACH payments (whichever option works best for them). They can make the payment from anywhere, and you don’t have to do any work to receive the payment. Rent collection can’t get easier than this.
Property management software also gives your tenants the option to enroll in autopay. This allows them to set-and-forget their payment method, which will automatically be drafted whenever rent is due. Not only does this make their lives easier, but it’s just as beneficial for you since autopay greatly reduces the likelihood that you’ll receive a late payment.
Online rent collection via property management software also automates late fees. With other methods of rent collection, late fee enforcement requires you to track your tenant down when they miss a payment. This usually results in an uncomfortable conversation that makes you feel like the bad guy, and it’s never guaranteed that they’ll actually pay the late fees. With property management software, you don’t have to worry about this happening. All you have to do is set the late fee amount and grace period. And, if a tenant doesn’t pay rent on time, they’ll automatically be charged a late fee, which must be paid on top of their normal rent payment.
In today’s day and age, landlords have a number of ways they can collect rent payments. While some landlords still collect rent the old-fashioned way via cash or paper check, that doesn’t mean these are still good options. Today, online rent collection using property management software is the most convenient and foolproof way to collect rent, and it’ll save you tons of time and energy in the long run.