It can be lucrative business managing rental properties, that’s no secret. However, much of this depends on how well you manage the cash flow, and of course, collecting rent on time.
Typically, tenants are not the most financially-responsible lot, and whether you agree or not, at one time or another you’re bound to have to deal with the late payers, or worse still, those who rarely make payments.
Below, we share simple rent collection techniques which may prove useful.
In Person
You may decide to take it upon yourself and collect rental payments from every tenant. The good thing about this method is it grants you immediate cash at hand.
But its shortcoming is that it may prove a time consuming endeavor, not to mention trying to coordinate collection times with each and every individual tenant is not the most straightforward of tasks.
Drop-off Location
If your real estate business has an office, you have the option of allowing tenants to drop off the money there.
For obvious reasons, it’s never a wise idea to allow the tenants to drop the rent off at your home address, or give them your home address for that matter, unless of course, you reside in the same premises as them.
Paying rent via mail is another option for collecting your rental monies. The good thing about it is it saves you the hustle of making the collections yourself.
It’s not without its drawbacks though. The payment, for example, may not arrive until days later, despite the envelope being postmarked by the relevant date. It cannot be technically classified as late, but it still would arrive at a past-due date.
Additionally, should the tenant make a partial payment, sending via mail will give them some couple of days before you find out. Then there is also that old line, ‘check got lost in the mail’, something you clearly wouldn’t want to hear of your rental payments. This can be averted by having the tenant collect a mailing certificate from the post office, but even then, it does not verify the exact amount in the envelope.
Online Payments
Making online rental payments is another rent collection technique. There are several online sites dedicated specifically for this, examples of which include:
Charges will vary from one plan to the next. This is a great way to make your rental collections because they don’t need you to furnish tenants with personal banking information.
You can also opt for general online payment methods such as PayPal and the rest. PayPal, however, needs some care with sending payments on the side of the tenant – he/she needs to mark it as a ‘personal payment’ to avoid being slapped with a business transaction fee. It also becomes hard to know when the payment was made because the payment can take several days to go through.
Property Management Company
This rent collection technique involves completely outsourcing rent collection to a third party, in this case, the property management company. The good thing with these guys, save for the commission, is their handling of other issues such as maintenance, dealing with tenant complaints, filling vacancies and so on.
Weigh the options and figure out which works best for you, and that way, you can ease the rent collection on your part.