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The Pitfalls of Property Management: How To Do It Better

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Being a landlord or a property manager is no easy task especially if you have many units to manage spread out over many locations. While there’s no preventing the occasional flood or misbehaving appliance, proper maintenance can go a long way to saving you lots on repairs. Another way to save money, time and stress is to consider allowing your tenants to pay their rent online. Collecting rent online is easy and convenient for your tenant and allows you to devote more of your time to the upkeep of your current units and the rental of your empty ones.

As a property manager you know that managing your time effectively is as important as managing your properties. In fact, excessive time spent on simple tasks is one way to ensure that your other responsibilities will suffer. Creating an online rent payment system is an idea that’s gathering steam among property managers to eliminate the chunk of time typically spent collecting rents and issuing and keeping track of late fees.

No one knows better than you how difficult and time-consuming collecting rents from multiple units can be. Tenants forget to write the check, forget to mail it and sometimes are late paying which means you need to leverage late fees. And, of course, not all rents are due on the first; many people’s tenancy in the same property begins on different days of the month making keeping track of which unit’s rent is due when that much more difficult.

The online rent scenario is frankly well-suited to anyone who is comfortable using the Internet for online shopping, travel reservations and bill paying. This is especially true for the Millennial Generation. This group includes everyone from college students to young marrieds. Not only did this group grow up using technology but they’re young enough to expect to be paying rent for good time into the future. In fact, recent studies indicate that the option of paying one’s rent online may well be the deciding factor for this group whether to choose one apartment over another.

Instituting an online rent payment system offers benefits to both the property manager and the tenant. For the tenant, there’s the ease and convenience of being able to pay your rent from any computer or mobile device 24/7. And if you preschedule your rent payments to be automatically transferred from your bank account every month you never have to think about your rent payment again. For the property manager, there’s the ease of having fewer rents to collect and keep track of. What’s more, since the payments are transferred from the tenant’s bank account to the landlord’s, the landlord has immediate access to these funds to pay bills, reinvest in his properties or take as profits.

Of course, not every system is perfect and any online rent collection system needs to be  carefully monitored and upgraded consistently to ensure that funds reach their intended destinations and that security of the system is never breached.

Collecting Rent Online: Is it the future?

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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.

The Benefits of Online Rent Payments

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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.

Tips on Accepting Rent Payments Online

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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

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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.