Having a good rent collection process in place will not only remove the stress associated with collecting rent but will also dramatically reduce late and missed rent payments and improve landlord-tenant relations.
In this article, we take a look at 3 simple things every landlord can do to simplify and improve their rent collection processes.
Rent collection can at times be a tedious process. You shouldn’t have to chase tenants every month, but sometimes, normally due to simple absentmindedness, tenants do forget to pay rent. Because of this landlords constantly have to monitor their bank accounts, checking rent payments, and chasing up tenants for owed rent.
The first step to simplifying and improving your rent collection is to establish your process for rent collection. Whether you’re going to collect rent by check, mail, or online payments you need a process, and if you pair this with the right tools you can automate and optimize this process. Doing this you can make paying rent so easy for tenants that they almost can’t miss their payments.
If they are late though, you don’t want to be spending your time figuring out who has and hasn’t paid, instead, by employing a system like Landlord Studio you can automate a lot of your rent collection process to save time and ensure timely rent.
Once you’ve got your processes established, you need to communicate them to your tenants. For example, your lease should clearly stipulate not only the rent amount, due date, and frequency but also how you expect rent to be paid, your late fee and grace period policy, and what happens should rent not be paid. Additionally, we recommend just reiterating these points clearly in a welcome email or letter.
If you are in any way uncertain it could be worth checking they fully understand the rent payment process in person.
Finally, you can use software to automate some of these communications. For example, with Landlord Studio you could create a welcome email template that can be sent to each new tenant quickly and easily saving you time. Also, you can set up automated rent reminder emails or invoices. These friendly reminders will increase the likelihood that tenants remember to pay and thus result in more timely rent payments.
While many people still collect rent via cash or check, this is an outdated, insecure, and inefficient method. Many people simply don’t have cash on hand and if they are mailing the money to you it could get lost in the post, it’s also not traceable meaning there is no proof that the money is on its way.
If you are collecting it in person, then you have to physically go down to the rental to do so. This isn’t so bad if you live nearby, but most tenants don’t want to deal with their landlord every month.
Finally, this method just isn’t very professional. Every other business in the world has been taking digital payments for years. I recently came across a busker who was accepting donations by card. Digital payments aren’t the future anymore, they’re the present.
This means that you need to be looking for an efficient online rent collection platform such as Landlord Studio – one that can integrate and work with your income and expense tracking with property management specific features.
By allowing your tenants to pay rent online using a specifically designed tool like Landlord Studio they will be able to set recurring payments, meaning they literally can’t forget to pay their rent. If, for whatever reason you don’t receive the rent on time, you can set up automatic late fees, and rent reminder emails!
Plus with Landlord Studio your rent payments will be automatically recognized by our system and your income input and accurately tracked in our professional income and expense tracking system.
All you have to do is print off a report at the end of the year for your accountant.
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Ben is an author and real estate enthusiast. His interest in all things entrepreneurial has led him to work with real estate professionals all over the world, distilling their knowledge into articles and Ebooks.
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