How to Collect Rent
Those who collect monthly rent know for sure that this process can be troublesome. However, setting up a right payment method is a crucial step in establishing proper relationships with your tenants and keep your bookkeeping in order.
Here are the most widespread methods of rent collection:
- Collect rent in person
- Collect rent by mail
- Drop off location
- Property management company
- Collect rent online
You may choose the collection method according to your preferences and possibilities. However, most of the aforementioned methods have certain drawbacks. You may not be inclined to meet the tenants every single month for the rent collection, especially if you have many of them. Tenants may drop off the check if you have an office or specific mailbox set up, but it is quite a time-consuming method for both the tenant and the landlord. Mailing the check also takes time and not always guarantees the result. Property management company will certainly put your mind at ease, but will also keep a significant portion of the rent. If you want to cut off the middleman and collect rent quickly and efficiently you might want to take a look at the current rental trends and consider going digital.
Here’s today’s rental industry in a nutshell. First and foremost, an increasing amount of Americans choose renting over buying. This means more tenants and more monthly payments. Next to that, the new generation of tenants is different. One-quarter of the U.S. market is already represented by millennials, and the majority of them have never used a paper check in their entire life. Not even once.
If you made it here, chances are good that you prefer keeping your finger on the pulse and learning about all recent trends within your industry.
Can You Trust Online Payments?
One of the most widespread and trustworthy systems of electronic payments in the US is ACH payments. Also known as the Automated Clearing House, ACH payments allow sending money electronically between accounts at banks. The volume of ACH transactions has reached 24 billion electronic payments in 2016, and it keeps on growing.
Will This Cost You a Lot of Money?
Apart from being trustworthy, ACH payments are cost-efficient. Except for cash, ACH has the lowest transaction fees. For example, a transfer of $500 would cost $1.22 via paper check, $9.60 via credit card, and only $0.55 via ACH.
The Benefits of Collecting Rent Online
Collecting rent online is so convenient that I can come up with an endless list of reasons why it is better than paper checks. However, I value your time. That is why I’ll focus on the biggest advantages only.
Collecting rent online means receiving payments in a timely manner
Let’s face it, paying with a paper check takes time. If your tenants maintain a busy lifestyle, they might sometimes forget about their rent due date. This is how late payments happen. If you prefer collecting money on time, then you should definitely consider a move towards online payments.
It is easier to track your income when your tenants pay online
If you have a couple of units to rent out, it might be hard to track your monthly income. However, if your tenants are paying online, you can always sign in to your personal account and check your payment history.
More tenants will be interested in your property if you accept online payments
Earlier in this post, I have mentioned that millennials make up a substantial part of tenants. Most of them do not welcome the idea of paper checks. For you it means one thing: if you do not want to lose profit, you should start collecting rent online as soon as possible.
When it comes to receiving rent payments digitally, there are many options to choose from. ACH payments have become my top choice.
Generally speaking, ACH payments are simple money transfers from one bank account to another. Unlike payments via Credit Cards or PayPal, ACH payment is the cheapest option in terms of transaction fees. What is more, you and your tenants can set up recurring payments to ensure that monthly rent will be paid in a timely manner. ACH payments are secure, simple, and cheap.
One more thing worth being mentioned: you need to input information about your bank accounts and financial details only once. All the following payment collections will take you even less time and efforts. Sounds good, right?
Ready to make your life easier? Enjoy my guide of the top rent collection services on the market:
Rentberry is one of the finest services on the market. It allows you to digitize not only online rental payment but also various rental tasks such as screening tenants and e-signing the agreement. It also has quite a unique system of rental property auction, allowing you to avoid awkward face-to-face price negotiations.
eRentPayment provides your tenants with the flexible online payment option. The platforms allow to organize automatic recurring rent payment as well as set up individual payments. The system also has elaborate payment scoring and tracking system and the option of setting up late payment fees.
Rent Merchant provides an option to integrate with your website or give you a customized parked page. Additionally, Rent Merchant offers mobile website version allowing your tenants to pay rent wherever they are.
Clearnow credible platform with an established reputation. It provides clear mechanism and guidelines for rent payments and collection.
Paypal doesn’t need an introduction. It is a worldwide online payment system. The company acts as a payment processor for peer-to-peer transactions, commercial users, and vendors.
Congratulations. You have just learned about the best way to collect rent online. Use your knowledge wisely and encourage other landlords to make this important move towards a better life.