Rent collection can feel a little bit like a catch-22 at times. It’s great because it means you’re getting paid, but depending on how you’re doing it, it can also be a stressful time. This is why it’s important to develop a streamlined method for collecting rent and making sure you and your tenants are on the same page where this important transaction is concerned.
Here are the primary methods for collecting rent:
- Online. This is one of the easiest and most common ways to collect. There are a number of websites that you can use for this, including PayPal, Venmo, ERentPayment, and many others. Some of these are simply mobile payment services, while others are specifically designed for landlords. Do some comparison shopping to find a platform that you like and a price that you’re comfortable with (each will have different fee structures). Keep in mind, though, that not all tenants will want to use an online service. They may not have access to the internet, or they may not feel comfortable making the transaction online. In this case, you need offer an alternative method for payment.
- By mail. Paying by mail is another option you can provide to tenants. While this is a tried and true method for many investors, it also comes with a few potential drawbacks. For one, if you ask for rent on the first of each month, you may see that the check is postmarked on that date, but you don’t actually receive it until a few days afterward. It also opens the door for the classic “the check must have been lost in the mail” excuse, unless you require a certificate of mailing from the post office.
- Drop-off. If you have an office location for your investment business, dropping off the rent can be an option. All it requires is a mail slot for the drop-off, and then you or your designated representative to collect the rent at the end of the day it’s due.
- In person. I don’t know many investors who collect rent in person, but there are some who do. Generally, these are people who live near their rental property, so it makes the most sense to collect the payment in person.
- Property management company. Finally, you have the option of signing with a property management company to handle your rental. These contracts typically include property maintenance, coordinating repairs, rent collection, eviction, and more. This is an ideal option for the investor who wants a more hands-off approach where their property is concerned, or for out-of-state investors who need a local presence at their property.
Before choosing the method that works best for you, you should consider a few factors. First, how many properties are you collecting rent on? If you own an apartment building or multiple rental homes, collecting rent in person just doesn’t make sense. However, if you have just one unit, collecting in person at the property gives you an opportunity to check in and see how things are going, and ensure that your tenant is taking good care of the place. Another factor to consider is location. If you’re a remote investor, it makes the most sense to use a property management company to handle rent collection, maintenance, and more.
The most important thing to keep in mind with rent collection is, of course, to choose a method that ensures you get paid on time. Make sure you select an option that works for both you and your tenants, and if any snafus arise, you may need to consider other methods.