The best way to collect rent as a landlord
Imagine, for a moment, that you’re a tenant.
You’ve gone to pay your rent – a few days early – only, you’ve mistyped your password and been locked out of your account for the next week.
It’d be worrying, right?
Already, you’d be spiraling into panic, concerned that this would affect your relationship with your landlord, damage trust, and impact your credit score.
What a horrible feeling.
If only there was something your landlord could do…
In these scenarios, the best way to collect rent from tenants is to give them multiple payment options.
Then, rather than being stressed that their card isn’t working or a check has bounced, they can simply log onto a different platform and transfer the money.
The top 5 options for collecting rent as a landlord
However, in an attempt to make rent payments more convenient for your tenants the last thing you want to do is to make things more difficult for yourself.
Counting out thousands of pennies that’s been handed to you in a piggy bank doesn’t sound very appealing, does it? It’d be time-consuming and your bank wouldn’t be impressed with you.
Thankfully, there are some other methods you can use to collect rent that don’t involve hours of overtime.
Online rent payment software
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1. Direct debit
Automation is driving efficiency, for consumers and businesses across the world. Direct Debit is no exception and is used 4.1 billion times each year.
To set it up, all you have to do is ensure you provide the relevant details, or, alternatively, request a tenant’s banking information when they sign their contract. From there, payments can be set up weekly, monthly, or quarterly, and you can benefit from swift and on-time rent payments.
That’s not all.
When they pay via Direct Debit, tenants will often receive a reminder that they have a “popular transaction” due, giving them time to make sure their money is in the right account.
2. Online rent payments
If someone is experiencing difficulty paying their rent, they’ll try to contact you to explain the issue.
After going to Google to find your contact information, they might end up on your website. Wouldn’t it be convenient if they saw you were able to accept payments there, too?
Going forward, consider partnering with Stripe or PayPal so that a tenant can swiftly solve their own problem and you won’t have to deal with as many excuses or complaints.
Do you have a card machine? If not, why not? Too often, landlords make the mistake of not accepting credit card payments because they worry about the card fee and how that could impact their profitability.
But, would you rather lose a tiny percentage of someone’s monthly rent (averaging just over 2%) or not receive anything at all?
In a world where the majority of global consumers own either a debit or credit card, collecting rent in person is a no-brainer.
Checks have been used since the 1750s, proving them a reliable way to collect rent.
They are a great “fail safe” when technology is letting us down and can be collected by you upon a tenant’s request.
Be careful, though, as checks can bounce and you might be at risk of falling victim to a popular renter scam.
5. Property management software
Still, there’s an even easier solution.
What if we told you there was a way you could permit online rent collection on the same platform where you could also:
- Send reminders that rent is due.
- Communicate with tenants and troubleshoot issues.
- Oversee your financial health and cash flow.
You’d be over the moon, right? Yet, not every landlord is using software to their advantage.
MRI Software’s favorite method of collecting rent
Residents are consumers.
As such, they expect the same conveniences and flexibility when paying their rent as they do with everything else in life.
Even before the pandemic accelerated the rush towards mobile and online life, residents expected to be able to pay their rent digitally. If this is a procedure you want to put into place for your firm, pay attention to these best practices for increasing adoption of online rent payments.
What does culture have to do with collecting rent online? Well, if you want residents to pay online, you need to have a culture and technology that supports electronic payments. This includes everything from the resources you provide your leasing agents to the payment options you allow your residents to use.
- Move-in Packet
There’s no better time to set the right expectations with a new resident than when they sign their lease. Provide information on setting up utilities, what WiFi providers are available near you, and how they can pay their rent online.
- Credit Reporting
Considering that today’s residents are younger than ever before, many of them may be just starting their financial profile. Offer a credit reporting service to your tenants free of charge as an incentive for making online payments, allowing you to easily collect rent.
Incentives can influence the behavior of both residents and leasing agents. For leasing agents, monetary incentives can be tied directly to KPIs that govern quarterly and annual bonus payments. For residents, you can offer gift cards to local restaurants or possibly rent concessions to motivate on-time rent collection.
- Social Media
Consumers love smartphones. They’re using social media apps like Facebook, Twitter and TikTok, and if you have one of these social media accounts, you’ll be able to engage your residents even further – providing them with a direct portal link where they can pay rent.
- Email & Texting
As consumers, we all need and appreciate friendly reminders to pay our bills. Sending a message to all residents at the same time is a good place to start easily collecting rent online.
How to collect rent from tenants
We know that the majority of renters are going to pay with an eCheck, but some residents might prefer to pay with a debit card or credit card.
You need to give them that opportunity. Or, you risk delays in the payment process and will take a direct hit to your cash flow or the overall quality of your rent roll.
Although credit cards are more expensive to process (making them less convenient for you to collect rent), some residents are actually willing to incur and pay a convenience fee if they get the benefit of earning reward points and/or the cost is less than the late fee would be.
Therefore, above all else, and instead of investing in just one payment option, you should look to facilitate a whole range of alternatives – all of which can be maintained through property management software – to ensure a strong cash flow and consistent income.
Collecting rent – FAQs
Still have questions regarding online payments? See how one of MRI Software’s clients simplified their payments process with an online solution, or check out these helpful FAQs.
Rent Collection through MRI’s Property Management Solution
If the COVID-19 pandemic has shown us one thing, it’s that the ability to pay rent online is no longer an amenity; it’s a necessity.
In today’s busy environments, we can’t always visit a bank in person or drop off a cheque when rent is due, so, as a landlord, it’s critical you consider your tenant’s perspective.
Collecting rent online can better position your properties in the eyes of prospects and residents, and it can improve efficiency throughout the organization.
It’s also incredibly beneficial for tenants, allowing them to:
- Build their credit score.
- Pay through their mobile phone.
- Reduce mishaps through automated payments.
Soon, you’ll be enjoying satisfied tenants, increased referrals, and a boom in business profitability.
Ready to get started?
MRI Software’s comprehensive property management solution is the perfect way to collect rent, communicate with your tenants, and control your assets.
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Property managers are the unsung heroes of multifamily communities. Your job keeps expanding, but the hours in the day don’t. Download the brochure to learn how the MRI LivingTM toolbox of property management solutions can help you do what you do best: deliver a top-of-the-line resident experience while balancing occupancy, revenue, and risk.