Rent collection has and always will be one of the most contentious topics for landlords. It’s a sensitive issue that sparks passionate debates, arguments, and rants. And while landlords have typically relied on paper rent checks for the better part of a century, they’re no longer considered the ideal option for Katy landlords (or any landlords for that matter).
Read on to learn why rent checks are a thing of the past, and how to automate the rent collection process for better results.
Why You Should Put an End to Rent Checks
If you’re like most landlords, the first of the month comes and you patiently wait for rent checks to land in your mailbox. Once they (finally) arrive, you promptly cash the check and wait for it to clear your account. Then you repeat it all over again the following month.
For some landlords and tenants, the paper check method works fine. But for most, it’s a method defined by friction. This includes issues like:
- Ripe for excuses. Tenants love coming up with excuses for why their rent payment is late. The last thing we want to do, as Katy landlords, is give them even more opportunities to explain away a late payment. Unfortunately, a tenant can always blame the postal service for a late payment with an effortless one-liner like, “Oh, it must have gotten lost!”
- Snail mail. While tenants often dishonestly blame the mail for a late payment, there are also legitimate issues with good old fashioned snail mail – and it’s getting worse. During the first quarter of 2021, 20 percent of all mail arrived late. The lengthy delivery times since that point don’t instill much confidence that things will get better.
- Security issues. There’s always the risk of someone stealing a check in the mail (or the check being unintentionally delivered to the wrong person).
- Time consuming. If you have lots of rental properties, trying to collect, cash, and organize records for multiple tenants each month is a huge time-suck – particularly when you have to deal with late payments, late fees, excuses, etc.
If you want to avoid issues such as these, you need to stop accepting paper checks as a rent payment method. Instead, we recommend automating the process through online rent collection.
The Benefits of Online Rent Collection
The good news is that paper rent checks aren’t the only option. They might be the option you’re most comfortable with, but they aren’t the only option. There are plenty of other ways to collect rent, including online portals. Benefits include:
- Set it and forget it. Once a tenant sets up their online payment, the rent payment automatically withdraws from their account on the same date each month. The tenant doesn’t have to remember to write a check and put it in the mail (and you don’t have to remember to check on it).
- More natural. According to Money Magazine, millennials pay 61 percent of their bills In other words, they’re way more comfortable paying bills online than they are writing checks. This makes online rent payment a much more natural option for all parties. Instead of seeing it as a hassle, they view it as just another bill to pay.
- Immediate. With a paper check, it takes time to deposit the check and wait for it to clear. With an automated online payment, the money shows up immediately. This is ideal if you manage your expenses on a month-to-month basis and find that you need the cash quickly.
- Better security. Every time a tenant cuts a check, they’re exposing their checking account number. This could theoretically put them at risk. Online payment portals, on the other hand, encrypt this information so that it stays out of the wrong hands.
Clearly, online rent payments are far superior to paper rent checks. And even though it can take some getting used to, it’s a no-brainer option for landlords who want to spend less time, energy, and frustration chasing down payments.
How to Automate the Rent Collection Process
If you’re interested in setting up an automated online rent collection process, you’ll be glad to know that it’s very simple.
In foreign countries like Australia, New Zealand, and European nations, simple bank transfers are the way to go. But in the United States, bank transfers are costly. They can cost as much as $30 per deposit (not to mention the setup and maintenance fees). Thankfully, there are other options.
One option is to use a peer-to-peer (P2P) payment service that allows tenants to make contactless payments. This includes popular services like PayPal, Zelle, and CashApp. However, these aren’t perfect platforms. There are still certain risks associated with these transactions (including payment resolution issues, security, and privacy).
The better option is to work with a property management company that has a fully integrated property management software that makes it easy to collect and process payments.
In addition to giving you the ability to collect rent payments, these platforms also include features like blocking partial payments, adding late fees, and even giving discounts for early payment. Best of all, if something goes wrong, your property manager will deal with it. They manage everything, while you just sit back and wait for the cash to hit your checking account.
Green Residential Takes the Stress Out of Landlording
Landlording can be lucrative, but it can also be stressful. The key to longevity in this industry is to neutralize the high-stress components so that you can enjoy the financial upside. In other words, you get the best of both worlds.
At Green Residential, it’s our mission to remove the stress from landlording so that you can put your time, energy, and focus into the rewarding aspects. Through our comprehensive property management services, we help Katy landlords streamline rent collection and manage all aspects of the investment. If you’d like to learn more, we’d be happy to walk you through what this could look like for your property. Simply contact us today!