Rent Collection Methods: The Good, the Bad, the UglyFeb 15, 2023
There are various ways landlords can collect rent. Each method has pros and cons and twists and turns. This article analyzes the multiple techniques landlords can use to collect rent.
What to Consider When Selecting a Rent Collection Method
As landlords, your preferences are not the only factors to consider when choosing a rent collection method. Your tenants, their ability to use technology, and the availability of that method also matter.
Lower-income tenants may have barriers to using a particular rent collection method. The average age of your residents can also determine if they can use that method effortlessly.
The size of your portfolio or the number of your owned units is another decisive factor.
Rent Collection Methods’ Features
Aside from the generic features of you and your residents, there are some other criteria about the rent collection methods that a landlord must consider when choosing one. Here are some examples:
- Speed: Is it fast, or does it takes a lot of time?
- Convenient: Is it complicated or straightforward?
- Price: Is it free or paid?
- Guarantee: the landlord is guaranteed to receive the money
- Fund availability: how quickly can landlords access the money?
- Security: Is there physical security for landlords, and is it safe from hackers?
- Automated: can it be repeated automatically every month?
- Online/mobile: can tenants send rent electronically?
- Ability to block full or partial payments: This feature is necessary when filing an eviction.
Read on to learn about various rent collection methods and how each can meet your rental property owner's needs.
Different Rent Collection Methods
Each of the following rent collection methods was explained and evaluated against the criteria from above:
- Cash: Is used by many landlords and tenants, particularly in lower-income areas. Although it’s guaranteed, it requires a lot of effort and has many drawbacks.
- Personal checks: Are used by many landlords and tenants, particularly in lower-middle-income areas. It requires a lot of effort, and there is a risk check will bounce.
- Cashier’s Check/Money Order: Are used by some landlords and tenants, particularly in lower-income areas. These require a lot of steps and cost money for the tenants, but they are secure for landlords.
- Direct debit from tenant’s bank account: Landlords love this option since the rent is automatically withdrawn from the tenant’s account every month.
- Zelle: Many landlords and tenants use this feature, even though it was designed for person-to-person transactions and not for business purposes like rent. It’s quick, easy, secure, and can be automated, despite restrictions.
- Venmo: Like PayPal, landlords and tenants send rent via this app. It has the same plusses and negatives as PayPal. But this app has higher fees.
- Payment Websites and Apps: These systems were created and are used for the express purpose of paying and receiving rent. Because of this, they have many great features for landlords and tenants. They are a preferred way to send/receive rent.
- Property Management Software: Many landlords use PM software to manage every aspect of their rental business. Most PM software has a built-in feature that allows tenants to pay rent online and deposit the rent into the landlord’s bank accounts. It is the preferred method to pay/receive rent for landlords.
Rental property owners can use various rent collection methods and tools depending on their and their tenants’ preferences, area, age, and ability. In this article, we’ve summarized some ways and their features. But if you’d like to learn more about them and make sure they suit your needs, please sign up for our website and visit the full instructional video on rent collection methods here.
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