Collecting Rent Online: Is it the future?

Online shopping, travel reservations, movie tickets and even online bills. Could paying rent online be next? If the past has taught us anything it’s that people throughout the world love the Internet and frankly, can’t imagine living without it. So it only stands to reason that soon landlords will join the fray and begin collecting rent online.

Online rent collection portends to be a huge boon to landlords in so many different areas. Online payments are electronically processed and arrive in your account almost instantly. In addition, once the funds arrive they are instantly accessible. There’s no more waiting for checks, money orders or cash and best of all, you eliminate many bookkeeping and accounting functions which your bank now provides.

The first step in collecting rent online is to establish and account to receive your rent payments. A business account is your best bet as there’s no chance of your personal information being revealed. Once you have the mechanism to receive funds in place it’s time to make your tenants aware of this option. Flyers or letters are probably your best best. You’ll want to extoll the benefits of paying rent online to your tenants. Benefits such as the ease, the lack of hassle, no loner having to remember when the rent is due, and the relief of writing one less check and then accounting for it. Rent payments can be automatically programmed to be transferred to the landlord’s account on any date the tenant sets. Tenants who opt for this option literally don’t have to do a thing. It’s all taken care of electronically online.

You should also provide your tenants a form which they complete signifying their willingness to participate in online rent payment. You will then collect these forms and turn them over to your bank so they can prepare for rent payments form these tenants.

Of course, you may encounter some “old school” tenants who prefer to write a check which they receive back once cancelled. Your goal as a landlord is to do your best to convince these late adopters that they should, in fact, join the majority and switch to online rent payment. Ask these hold-outs whether they shop online, order theatre tickets online or even pay their utilities and other bills online. If so, then paying rent is no different, Their bank statement will show the deduction and the landlord’s will show the credit. All without writing a single check, buying a money order or walking around with a large amount a cash.Once you, the landlord, has received yeses from all your tenants, collecting rent online will put you in the category of some of the most progressive businesspeople around, And that, certainly, is  a good thing.

Rent: Credit Cards Accepted

In today’s turbulent economy there are times when credit cards come in handy. Obviously you can pay for many purchases–online and off–with them, but did you know that a new trend is emerging for landlords to accept credit cards for rent?

There are quite a few ways to pay one’s rent. Be it a residential space or a commercial one, most landlords are happy to accept checks, money orders, cash and even recently online payment. Online payment allows the tenant to pay their rent online the same way they pay their utility bills, cell phone bills, insurance payments and various other purchases.

The new trend sweeping the landlord/tenant relationship is paying rent via credit cards.

Credit cards offer quite a few benefits for both the landlord and the tenant. Like online payments, your credit card company keeps track of your payments; when the payment was sent and how much. What’s more, rent received via credit card are funds immediately available. The one downside is that should there be a problem between the landlord and the tenant, the tenant can dispute the charge. This will result in the credit card company or bank freezing the funds until the issue is resolved.

The upside is that a credit card payment for rent can be made from anywhere in the world with just one phone call to your landlord or management company. Many people these days have premium credit cards which allows them to charge large sums like rent payments without any difficulty. Something important to note here is that the merchant—the landlord–will have to pay a fee to the credit card company, usually 3 percent to 5 percent depending on the credit card. The landlord may attempt to pass this fee onto the tenant/cardholder as part of their rent. Whether tenants will accept this increase in rent is yet to be seen as rent paid by credit card is still in its infancy.

Some tenants/cardholders have secured premium credit cards with the specific intent of using that card strictly for paying rent. This makes keeping track of rental payments and any additional charges that much easier. What’s more, should the card be lost or stolen, one call will cancel the card and a new card will be shipped to the cardholder quickly; sometimes even over night. And, of course, like almost all credit cards, the cardholder is only liable for up to $50 of merchandise purchased if that.

Paying rent by credit card may be just the ease and convenience landlords and tenants have been looking for. Less paperwork, less chance of error and less reliance on bookkeepers and accountants. So next time the first rolls around consider asking your landlord or tenant if they’re amenable to accepting rent payment via credit card.

The Benefits of Online Rent Payments

The Internet changes every day and so do the uses we find for it. From transferring funds to purchasing goods online to keeping up with friends via the various social networks. Paying rent online is just one more convenience for both landlords and tenants that the Internet provides.

Collecting rent can often be difficult for landlords. Some tenants are late, some are forgetful, some just don’t have the necessary funds on rent day. One solution that can help eliminate some of these scenarios is to allow your tenants to pay rent online. Many are already paying such bills and utilities, cell phones, insurance premiums and many revolving credit accounts using the bill pay function provided by their banks. By allowing your tenants to add their rent payment to their regularly scheduled payments you have a better chance of receiving your rent on time.

In days gone by, the landlord was a dreaded site when he came to the door demanding his rent. Tenants were threatened with eviction the very next day and many counties considered this legal. Today we have much more sophisticated landlord/tenant laws allowing many chances for the tenant to bring his rent current without the fear of eviction. What’s more, it takes more than on day to evict a tenant; in some cases up to 30 days.

If you’re a tenant and you find yourself unable to pay your rent the first thing you should do is contact your landlord and explain your situation. You may be able to work out an arrangement such as paying the half the rent now and half later in the month. If you’re a landlord and you find your tenant is late or short you should get in touch with your tenant and find out what the problem is. Without knowing exactly what the difficulty is there is absolutely no chance of finding a solution.

The beauty of paying and receiving rent online is that those funds have already been accounted for having been deducted from your tenants budgets. The other benefit is that these funds are available in your account immediately. So while your tenants may have cash flow problems you never will. Your rent will be automatically transferred and instantly available.

Collecting rent has other benefits as well. Your bank serves as your bookkeeper letting you know exactly how much you have in your current account at any given time and by whom it was sent. What’s more, you can check your available balance and incoming payments 24/7; a great help when you have several properties keeping you busy during the day.

When all is said and done online banking isn’t going away. Why not jump on the bandwagon and be the first to offer your tenants online rent payments.

Establishing the Proper Rent Payment for Your Properties

With the housing marketing still in decline the rental market is booming. People who can’t otherwise afford to buy a home are renting homes, condos and apartments. But how do you establish a fair rent payment? One that will attract prospects but still give you a fair profit?

For many years renting has been looked down upon by most of the country. After all, home ownership is considered part of the American dream. But with the economy in its current state many people have to rent and many are choosing to rent while they wait for the housing market to rebound.

If you own a rental property–be it a home, condo or an apartment building–the burning question is how much do I charge in rent. The same way appraisers evaluate homes for sale can help you determine an appropriate rent for your dwelling. First, consider the neighborhood. Is it an upscale area with nearby shopping, recreation and top-flight schools? If you can, find out what other landlords in the neighborhood are charging. This many be requiring a little sleuthing on your part by pretending to be interested in the dwelling yourself but this effort–especially if you can visit several properties in the areas–will be invaluable in determining what the going rate is in the neighborhood.

This tactic will work just as well for condos and apartments. Of course, you need to consider the amenities your property offers that the competition doesn’t. If there a pool or pool access? A yard? Garage? A fireplace? Ample closet space? An Alarm system?All the desirable appliances? And finally, what condition is your property in. Has it recently been painted inside and out? What about flooring? High quality carpet or even wood or tile flooring can make a home very appealing to prospective renters and enable you to set a higher rent payment than the competition.

Remember to point out the benefits of renting. In most cases all repairs except minor ones are the responsibility of the landlord. This is a very appealing point to many people. What’s more, in the case of condos and apartments landscaping and gardening also fall under the duties of the owner.

All these facts can contribute to the rent payment you set. Clearly a view or some other extra special amenities can up your desired rent. But remember, every month you wait to get the rental amount you want is a month you have to carry the mortgage on your own. While you may not want to settle you many be able to arrange some creative payment options. For instance, a greater security deposit might give you the sense of security you need to feel comfortable with the arrangement.

Whatever mode you employ to establish a rent payment you can live with you also have to establish a rent your tenants can live with as well.

Landlord 101: How to Collect Unpaid Rent from Tenants

Learning how to collect unpaid rent from tenants is one of the key issues faced by landlords and property managers on a regular basis. Often tenants will pay a portion of their rent, or string landlords along with promises of imminent payment.  Understanding and clearly communicating a number of key policies to tenants is the best way to manage the process of how to collect unpaid rent from tenants.

Seasoned real estate investors will confirm that knowing how to collect unpaid rent from tenants is one of the key skills necessary for success as a landlord or property manager.  Failure to pay rent is a problem stretching back to the very first rental agreement, and it is unlikely to go away anytime soon. 

In addition, the image of the unscrupulous landlord exploiting the weak and helpless tenant is etched in our collective psyche, making it even more difficult for landlords to know how to collect unpaid rent from tenants, what their rights are, and how to create a system that works for everyone involved.

To be sure, some landlords take their knowledge of how to collect unpaid rent from tenants too far.  However, the vast majority of landlords simply wish to conduct a decent, profitable business that provides shelter, a much needed service by human beings everywhere around the world.  As such, landlords who know how to collect unpaid rent from tenants in an efficient manner stand a much greater chance of remaining in business for decades and even generations in the future.

The first step in gaining this knowledge is to recognize the need to follow a precise legal process.  If a tenant fails to pay rent, the landlord must move into “robot mode.”  Following a system helps ensure that rent will be collected before too much time elapses. Promises of impending windfalls are nice, but, as the saying goes, promises don’t pay the rent.  Money pays the rent.

Landlords who know how to collect unpaid rent from tenants usually start with a document known as an Urgent Late Notice.  This notice should be delivered at the end of whatever grace period has been determined.  Tenants should know which day of the month represents the end of the grace period before they sign the lease.  If that date passes, the landlord or property manager should ensure that the notice arrives in a prompt fashion.

The late notice starts the process of how to collect unpaid rent from tenants.  Once sent, it should prompt a response.  If that response fails to come within a reasonable period, perhaps three to five business days, the landlord should follow up with a phone call.  The call should be firm, friendly, and serious in tone. It should inform the tenant that failure to pay rent by a given date will result in the account automatically being handed to an attorney’s office.

Should the tenant still fail to respond or pay rent, the next step in knowing how to collect unpaid rent from tenants is to send an official eviction notice or attorney’s letter.  The letter should include instructions to pay rent of quit the premises.  It should also inform tenants that failure to pay in a timely fashion will be reported to appropriate credit-rating agencies.

If this step also fails to elicit payment, landlords or property management companies who know how to collect unpaid rent form tenants agree that the eviction process must move forward.  At this stage, landlords should employ the services of a competent lawyer who has experience in eviction cases. 

Going it alone, without the aid of an attorney, is a recipe for disaster.

Tips on Accepting Rent Payments Online

As digital banking and other online commerce continue to expand, the trend toward accepting rent payments online is becoming an increasingly attractive both for tenants and landlords. When done correctly, accepting rent payments online provides solid tracking of accounts and allows renters to pay any time, eliminating many common excuses for late payments.

Accepting rent payments online saves time and effort landlords as well as tenants. From the tenant’s point of view, having the option to pay anytime removes one more task from their to-do list while they travel around town. Landlords and property managers enjoy the fact that accepting rent payments online allows them to track accounts quickly and accurately. This translates into better fewer late or delinquent accounts and better cash flow overall.

At the same time, accepting rent payments online is not automatic. Creating a smooth transition to this new system requires proper planning and implementation. In order to increase the likelihood of instituting a smooth transition, landlords should pay attention to the following issues that may arise:

First, landlords should make sure they understand the computer literacy of their tenant population. Tech-savvy tenants may actually prefer living in a complex that is committed to accepting rent payments online. Other types of renters, may shy away from this option unless they receive thorough education beforehand.

Second, even the best system for accepting rent payments online needs a back-up. Landlords should avoid relying exclusively on an online system. For one thing, maintaining alternative payment options provides a comfortable alternative for people who still wish to pay rent in more traditional ways. For another, technology is notorious going offline. Having a hard-copy back-up payments plan will almost certainly be worth its weight in gold one day, should the online system crash.

Third, when instituting a system for accepting rent payments online, landlords should clarify who will pay for transaction fees from the outset. Most banks include transaction fees in exchange for transferring online payments to bank accounts. There are two options to deal with this challenge. Landlords can foot the bill themselves, or they can include the charge in the rental fees from the beginning of the agreement. The key here is to make sure tenants are not required to make a separate payment for this fee. That could spell havoc. 

Fourth, creating a system for accepting rent payment online requires patience on the part of the landlord.  Most banks take a few days to process online payments.  Also, many holidays as well as weekends interrupt the processing time.

Fifth, any system created as a means of accepting rent payments online must be secure. One hacking incident can destroy the whole experiment. Hackers will not stop if they believe they can eventually strike gold. The move to an online rent collection system must clear this hurdle in order to avoid endless legal battles down the road.

Finally, accepting rent payments online means creating a website, and creating a website means there will be website issues. Landlords must realize that as efficient as any system is, they will still be called up to deal with technical support. In addition, they will also need to provide answers to tenants on how to use the website correctly.

Collecting Rent Online: A Trend that is Here to Stay

The move toward collecting rent online will continue to gain momentum as digital banking services become increasingly convenient and secure.  Tenants enjoy the time-freedom of the arrangement, while landlords enjoy the accuracy of these systems and the ease with which collecting rent online allows them to manage their accounts.

Most real estate experts agree that the trend toward collecting rent online is about to spike off the charts. With more than 35 million Americans paying rent each month, the market for such systems is certain to remain strong.  Just four years ago, more than 90 percent of Americans still paid their rent by writing a check, while just 6 percent handled this monthly task online. As mobile banking expands, these figures are almost certain to reverse themselves.  In a matter of a few years, the option of collecting rent online will be considered an essential part of rental agreements.

From the point of view of residents, the move toward collecting rent online offers a welcome convenience.  This is especially true for college renters, many of whom have their rent paid for by their parents.  It is much easier for parents to pay rent electronically, at any time of day or night, than having to send a check through the mail. 

In addition, the option of collecting rent online helps tenants avoid late fees.  Our over-scheduled, distracted society means makes it much easier to miss a rent deadline, even for the most conscientious tenants.  It also allows tenants to pay on time via credit card if cash is tight and pay the balance later.  Paying online via credit card also gives tenants the option of acquiring various reward incentives they would not receive if they paid by check.

Landlords favor collecting rent online, because it lowers operating costs and improves cash flow.  For a large complex, traditional methods of collecting rent require a significant investment of time and effort.  These include processing paper checks, making sure the payments are posted in a journal, filling out deposit slips, and taking time to go to the bank to deposit the money.  Collecting rent online automates the entire system, freeing up countless hours of work. An online system also tracks payments quicker and with more accuracy. Bad checks are identified very quickly, which reduces the risk of fraud.

Collecting rent online also helps close the deal. In some instances, landlords lose good renters because they are waiting for a security deposit from their previous landlord.  Offering an online option helps close the vacancy much sooner than traditional payment methods.

At the same time, the landlords and property owners should be recognize that transition to an online system may entail some challenges.  The administrative changes involved in the change can be frustrating at first for staff members.  For example, integrating the new system with the current software used to manage accounting and property management must be coordinated. In some cases, the office still employs somewhat dated software that possesses far less flexibility than web-based platforms. If the two systems remain poorly integrated, landlords may find that the time they save in collecting rent online is spent in other tasks, such as reconciling account ledgers or having to enter payments manually into the existing property management software.

Still, as online providers create new techniques that provide seamless integration, these glitches will fade.

Transaction fees also present a challenge for landlords as they implement their decision to begin collecting rent online. If tenants pay by credit card, the typical transaction fee of approximately 2% to 3% may affect profit margins. For larger complexes, the fees can add up to significant amounts. Since research indicates that renter dislike paying convenience fees if those fees are added to the cost of rent.
Given the fact that neither side enjoys paying convenience fees, the market is likely to correct itself via shared fees.  Alternatively, landlords may find ways of building in the cost of transaction fees to other parts of the rental process, so that the cost appears more palatable to new renters.

Even in the face of fees, one thing remains certain with regard to collecting rent online: the process is here to stay.  College students have already embraced the idea fully, for example, which portends a growing trend for the future.  As the transition to a completely digital society intensifies, collecting rent online will simply be a part of the mobile, digital economy.

How to Encourage Tenants to Pay Rent Online

Landlords who want their tenants to pay rent online should create and adopt a best-practices policy before implementing a new system.  Once the process has been ironed out, most research indicates that both tenants and landlords prefer the convenience of being able to pay rent online.  Going digital eliminates the hassles involved in manually collecting and logging rent, reduces errors and late payments, and improves efficiency.

Not so long ago, creating a system to allow tenants to pay rent online was still out of reach given the existing technology at the time.  Landlords loved the concept of having their tenants pay rent online, because it held the potential to reduce the headaches involved in collecting rent while improving efficiency and increasing the bottom line.  However, they knew the option would have to wait until the technology could be seamlessly integrated into their existing administrative infrastructure.

In the last two years, however, the trend toward being able to pay rent online appears to be gaining momentum.  Most experts believe a tipping point has been reached, and that within a short period of time, the vast majority of tenants will opt to pay rent online.

For landlords and property managers who have not yet transitioned to this form of rent collection, a number of options exist in terms implementing the new system:

One option is to partner with online rent payment companies. Though many landlords believe they are better off doing everything themselves, increasing numbers recognize the value of outsourcing administrative tasks.  They understand that working with a company that specializes in handling the process of allowing tenants to pay rent online makes for good time management.

At the same time, experts caution that choosing an outside company for this task requires good planning and testing before rolling it out.  If the new system fails to integrate with existing accounting software, it can lead to months of administrative headaches. As such, landlords and property managers should carefully examine each option before signing on the dotted line.

A second option for landlords interested in having their tenants pay rent online is to work with their current software provider.  The creators of property management software are also keenly aware of the mobile, digital transition occurring in the marketplace. While these companies may not be the first to offer online solutions, there are benefits to waiting until their product becomes available. Chief among these benefits is the knowledge that the new system will be tightly integrated with existing software.

Third, most banks will readily work with landlords to create a system that allows them to send and receive electronic checks or credit card payments.  While the implementing this system can be logistically awkward at first, it does represent a very cost effective method of allowing tenants to pay rent online.

When choosing between options, landlords should investigate the answers to a few important questions.  First, what are the true costs involved in moving to an online system.  Evaluate such factors as setup fees, transaction fees, and other monthly costs associated with the transition.  If tenants pay these fees, landlords should keep an eye on the cross point between fees and adoption rate.

Second, any system that enables tenants to pay online must integrate with current accounting procedures in the office.  Does the option under consideration allow for this?  In some instances, the system generates an export file, but that file must be manually imported to the end user’s system, adding a step in the reporting process.

Third, is the system under consideration user-friendly? Many packages offer what at first blush appear to be total solutions. However, once the tenants actually try to pay rent online, they find that the interface is not intuitive.  Landlords should remember that anything claiming to save time and effort must deliver on that claim. Otherwise, tenants will stay with the tried and true method of putting a check in the mail.

Assuming landlords or property managers do find a workable system, the next challenge is to create sufficient excitement to encourage tenants to sign up to pay rent online.  While this should not create needless expenses, offering monetary incentives in the form of gift cards, or prizes determined by a drawing can get the ball rolling. 

Another strategy is to adopt a phase-in period during which all new residents will be required to pay rent online, while current residents have a period of time to opt-in.  When dealing with a large complex of stable renters, this transition should have a long runway leading to implementation. It should also include back-up procedures for those who, for whatever reason, have difficulty changing their rent-paying habits.