Having rental properties can be a profitable form of self-employment. But there are practical and impractical ways to collect rent. By taking some time now to familiarize yourself with your options, you could be saving yourself (and your tenants) conflicts down the road.
- Collecting rent online
There are several different ways to collect online rent payments. PayPal is an easy online payment tool. Although it is free, you do have to wait several days for the funds to process, and your tenant must be sure to follow all of the instructions for the payment to go through.
For this reason, some landlords use online payment services that are specific to landlords like ERentPayment, RentMatic, and RentMerchant. Make sure to do some research to see which payment service might work for you.
(This blog post is not an endorsement of any online or offline rent-collection system. It is an endorsement of carefully considering your options.)
Keep in mind that not everyone may be tech-savvy or have internet, so you need to offer another payment option for your tenants. For those people, it might be a good idea to offer a mail-in option or a nearby drop-box.
- Allowing people to mail payments
This option requires very little work on your part. As long as you have a mailing address, you’re all set. As long as the envelope is postmarked by the due date, the rent check is normally considered to be on time. If you need to ensure that you have the check in your hand by the due date, say so in the lease agreement.
Another issue with mailed-in payments is that sometimes people may only pay you a partial rent payment or their check may bounce. You may also face issues of late or lost checks. With the lag time from the mail, you may be several days into the next month before you realize that you’re short either part or the full amount of last month’s rent from that tenant.
- Having a payment drop-box on or near the property
An alternative to the lag that comes with mailed payment is offering a payment drop-box onsite or near the property is a good option. This way, you don’t have to wait for the check to come in the mail.
However, you do have to be near enough that you can collect rent checks from the box. This is an issue for landlords who may live away from their rental properties for part (or all) of the year. If you do live away from your rental property, you should consider having a property manager.
- Letting your property manager collect rent
Having a property manager might be a good idea for you, particularly if you have several properties or don’t live near your properties. If you have a property manager, they will handle tenant complaints and maintenance issues or necessary repairs. They may also fill vacancies.
The trade for all of this work is that you’ll either have an employee or you’ll have to hire a property management company. This is essentially a trade of responsibilities. That is, instead of being responsible for your property, you’re responsible for communicating with and assessing your employees and the property manager.
- Collecting rent in person
With this option, you can directly control when you receive your money. You show up at your tenant’s door and collect the rent yourself. However, it may be challenging and time-consuming to catch your tenants when it’s convenient to them and you.
Don’t Be Afraid to Get Help
If you’re new to owning, managing, or buying rental property, you should meet with an experienced real estate lawyer who has experience with property management issues before you begin. Getting help from a professional can greatly help with the success and ease of your new profession. Also, be aware that you may want help from your real estate lawyer in the future if any of your tenants fall behind on their rent payments. Contact Kevin Forrester today to find out how he can help!
