The most significant component of property income is the monthly rent a landlord collects from their tenants. Efficiency will ensure a steady cash flow, which contributes to the overall success of your rental business. But how do you streamline this process? PMI Georgia is here to help with the advice you need to improve your rent collection practices.
Advantages of Efficient Rent Collection
Increased Cash Flow
Having a well-structured rent collection system will help your rental business have a steady cash flow, which could lead to an improvement in your ROI from your previous method of acquiring rental income. This will ultimately help you grow your business as you attract more real estate investors.
Improved Tenant Relationships
Collecting rent can be a chore, especially if your payment methods aren't streamlined or accessible. Tenants will be more inclined to pay rent early or on time if there are efficient channels for the rent collection process.
Simplified Financial Management
When the rental payments come in like clockwork, the accounting aspect of your business will be much easier to handle, especially since you won't have to worry about or include late fees and security deposit deductions in your calculations.
Rent Collection Platforms You Can Use
There are several ways to optimize your rent collection process, and you can use more than one method to collect rent, whichever your tenants are most comfortable with.
Systems to Pay Rent Online
With the emergence of technology, a lot of transactions are being handled digitally, which includes online payments. Having an online payment system means that your tenants can skip tedious steps in the process.
There are a couple of rent collection software and apps you can use to handle rent collection, or you can hire property management companies like PMI Georgia. We have an established in-house 24/7 tenant portal that allows us to collect online rental payments easily.
Bank Transfer
You can offer the option of ACH payments like Online Bill Pay as a way to pay rent, and it's also convenient since most of the major banks in the US have their own apps that can make a direct deposit to your bank account. It's a better alternative to rent checks which can bounce.
There are a few caveats to this option. Depending on the platform the tenants use to pay rent, there might be transaction fees or delays, but that can be solved by having more than one bank account. However, there are bank apps that can arrange automatic payments, which is convenient for recurring payments on monthly rent.
Credit or Debit Card
Although many landlords choose to collect online rent payments or bank transfers nowadays, it would still be advisable to include debit and credit card payments as an option. Most people have access to this, and old-school tenants may prefer it over online transactions.
One of the downsides to collecting rent through credit cards, however, is that landlords and tenants may have to shoulder a transaction fee as well, just like ACH rent payments. It serves as a convenience fee and can become expensive for regular rent collection.
Use Multiple Platforms for Rent Payments
Having multiple payment methods will give you better chances of having tenants pay rent on time. This, in turn, would help with your income for your rental properties. You can look into the payment channels listed above or look for other methods such as Google or Apple Pay.
Collecting rent might be harder to manage since you have to tend to several platforms, but it may be worth it if it means you get to have a steady flow of tenant rent payments. It may even attract other tenants to your rental property.
Use Automated Platforms for Online Rent Collection
As mentioned before, online platforms like apps, software, and tenant portals can make property management easier. Not only does it have that provide expense tracking for landlords, but some platforms can schedule automatic rent payments and provide rent reminders before the payment date arrives.
You won't have to collect rent yourself if you use an automated system, as some channels automatically transfer the online payments to your bank account. You can even use multiple accounts when collecting rent payments online, one of which is solely for the rental income of your investment property.
Establish a Landlord-Tenant Relationship
Having a positive relationship with your tenants can contribute to them paying rent in a timely manner, which is why it's an important aspect of property management, even if you collect rent online.
They will be encouraged to pay their dues as dictated on their lease agreements. Even if they are late, it would be easier to communicate the issue with them if they perceive you as an approachable landlord.
Choose Payment Channels Without Transaction Fees
Although it's only a small factor, collecting payments may be harder if tenants are wary about transaction charges. That can stack up over time, especially since it's a monthly arrangement. Take the time to research channels that don't charge fees for transactions.
Tend to Your Tenants' Needs
It's easier to pay for something when consumers know that it's worth it, and in the rental business, that equates to property managers providing the services their tenants need. That includes responding to maintenance requests or orders for repairs. If your rental property is in good shape, then tenants will want to avoid eviction by paying on time.
Preventive Measures for Late Rent
Tenant Screening
The tenant screening process is a crucial part of property management since it determines whether the prospective tenant will be able to afford your rates. There are a plethora of factors landlords should look into and it can be an exhausting process.
You can always opt for property management companies like PMI Georgia. We have a tenant screening process that looks into an applicant's:
- Income
- Employment Verification
- Credit History
- Tenant History
- Public Records
- National Eviction Records
- Previous Landlords Verification
- National Criminal History
- International Terrorism Database Hit
Create Rent Payment Variations
Unexpected circumstances can prevent tenants from paying rent on time, but you can offer amount and frequency variations such as partial payments or one-time rent payments. These options can prevent tenants from being charged late fees.
Although partial payments may complicate accounting, you can always hire a property manager to streamline the financial point of the business. We can worry about tenant rent payments, and you can have access to our reporting dashboard at any time.
Hiring a Property Manager For a Stress-Free Real Estate Business
Property managers don't just collect rent payments. There are many services PMI Georgia can offer to reduce your workload such as:
- Marketing your property
- Handling rent collection and payment processing
- Online portal so tenants can pay online
- Property maintenance and regular inspections
- Evictions and vacancy reduction
- Legal compliance based on local and state law
You can use our free Rental Analysis tool to see how much rent you can get from your rental property, or schedule a consultation to find out if we're the right fit for your real estate investment.
