Renting a home or apartment is a fantastic way to find a comfortable place to live. Over 21 million households in the United States spend 30 percent of their pre-tax income on rent, and your property management company can capitalize on this by providing quality, affordable housing.
You’ll discover many challenges of becoming a successful landlord and running multiple properties. Finding the best way to collect rent is a step toward getting the money you’re owed from your tenants. It’s worth exploring your options before settling for a property management company.
The good news is that you’ve uncovered this illuminating guide to your options for collecting rent payments. Continue reading to find the best choice for your needs today!
Direct Deposit
Direct deposit is among the most straightforward options to collect rent from tenants. It requires no extra work or time on your side of the equation. The money from the tenant will go from their account into yours without you needing to do anything.
The automatic withdrawals will provide a seamless way to collect the money. It’s a convenient option for you and your tenants, making it worth exploring for your property management needs.
The only downside to choosing direct deposit for rent collection is the extra steps to set it up. If you can stomach the additional work at the beginning, you’ll reap the benefits for years with a seamless rent collection process.
Check or Money Order
Checks and money orders are standard ways to collect and accept tenant rent payments. Both options are beneficial because they provide physical evidence of collecting the owed amount. Money orders are preferred since they’re more secure and reliable than checks.
Checks can bounce, but you can eliminate that fear when processing a money order. Both options have drawbacks, with money orders requiring extra work to cash.
Consider these options, but take your time with them. They’re practical, but you’ll find more efficient ways to collect money. Both checks and money orders are becoming outdated, and you should avoid using them unless you are working with an older tenant.
Bank Deposit Slip
Another way to collect tenant rent is through a bank deposit slip. Many property management companies prefer to set up an account for each property in their portfolio. The tenants make deposits into those accounts to pay monthly rent.
After putting the rent into the account, the tenant receives a bank deposit slip. The bank deposit slip works as proof of payment to the landlord.
The most significant benefit of a bank deposit slip is the documentation. Still, it’s a less convenient option, with other more time-effective ways. You’ll need to track multiple bank accounts and add work to the tenant’s plate since they must visit the bank to pay rent.
Cash
Cash is the original way to accept tenant rent, but it’s one of the worst options for your rental properties. Working with experts in property management in Charlotte will help you move away from cash and discover better ways to collect your money.
The most significant challenge with cash is documenting it. You’ll need something to provide proof of payment from your tenant when you accept cash for rent payments.
Keep a record of all cash payments you receive. It’s a red flag if tenants want to pay exclusively in cash.
Face-To-Face Pick Up
When managing your rental properties, visiting each tenant and picking up the rent at the end of each month has several benefits. It’s the best way to make checkups on your properties to ensure no damage and nothing is happening against the bylaws of your rental contract.
You’ll know how well your tenants are maintaining the unit. It’s also one of the most convenient rent payment options if you live near your tenants.
The drawback is that it’s not a time-effective method to collect your money. It’s an exhausting process that will leave you feeling drained by the end of the day. Avoid this method if you own several rental properties in different locations.
If you live far from your rental properties, mail is a fantastic way to receive rental payments from tenants. You can streamline the process by providing pre-stamped envelopes to tenants to ensure the rent comes directly to your residence or business office.
Consider visiting the post office to purchase these envelopes in bulk. You’ll save money and have enough envelopes to cover your collection needs for months.
The drawback is that your tenants could become lax with the timeliness of the mail. They could wait until the last day to drop the envelope off at the local post office, resulting in later payments.
Online Tenant Portal
The most advanced and convenient way to collect rent from your tenants is through online rent collection. You’ll need to select a portal that is easy to navigate and use for all tenants. The portal will allow tenants to pay rent anywhere they have internet access.
The platform will allow your tenants to connect their banking information to yours. They’ll log into the portal and see how much they owe for the month before transferring the money to your account.
Online bill pay eliminates the need to wait for mail, experience exhausting rent pickups, or hope checks don’t bounce. Create documents to guide new tenants through the process of paying rent through the online tenant portal. It’s the most effective way to collect money while saving time and energy.
Now You Know the Best Way to Collect Rent
Knowing the best way to collect rent is essential when working as a landlord and managing multiple properties. Checks are effective, but you risk them bouncing, while direct deposit is seamless but requires extra steps to set up.
Online rent collection is the best solution for its time-effectiveness and convenience. You can also use mail with pre-stamped envelopes if you live far from your properties.
Real estate is the ultimate asset to add to your portfolio when building wealth. Read our Real Estate blog content for advice on growing your property management company and finding the best tenants today!