There are many ways you can collect rent from your Prince George’s County tenants.
And, while you may not place much thought into your accepted forms of payment, the ways in which you collect rent may be more important than you think.
Being able to collect rent on time every month, from every tenant you have, is the key to becoming a successful landlord.
In addition, being able to manage this cash flow coming in each month is going to impact whether you profit from your rental property business or not.
Some forms of payment are difficult to record, and have the tendency to create landlord-tenant disputes. On the other hand, other forms are extremely easy to document, since payments are made electronically.
The problem is, not all tenants are equipped to pay rent online, nor do they necessarily want to.
In fact, many tenants want to pay their rent in person with a personal check, cashier’s check, money order, or even cash.
But should you cater to your tenant’s needs, and accept payment in whatever way best suits them?
Today we are going to look at some of the top ways you can collect rent, and discuss whether they should be on your list of acceptable forms of payment. And of course, cash payment is top on our list to discuss.
Top 4 Ways to Collect Rent in Prince George’s County
Accepting cash as a form of payment can be tempting. There is no risk of a bounced check, and you don’t have to wait for payment to clear.
However, this can be one of the riskiest types of payment to accept from Bowie tenants wanting to pay their rent.
Cash does not leave a paper trail like other forms of payments do. This can come to haunt you, should your tenant up and disappear mid-lease.
In addition, cash is easily lost or mishandled.
In fact, it can create a situation where your tenant is adamant they left you the full rent amount in an envelope delivered to you, when that is not really the case.
Then, while fighting it out in court, it will come down to a “he-said-she-said” situation that may not fall in your favor.
After all, there is no proof either way that the full amount was in fact ever in the envelope.
If you are determined to accept cash rent payments despite the above, here some tips to help you avoid problems:
- Have your tenant deliver the full cash amount in person to you or your property management group each month
- Make sure the money is counted out loud in front of the tenant, every single time
- Provide your tenant with a receipt of payment complete with the tenant’s name, property information, date, and amount collected
- Always sign the receipt, and keep a copy for your own record keeping
The problem with collecting cash from tenants, even if you follow the above-mentioned tips, is that it can be very time-consuming. This is especially true if you have many Bowie rental properties.
In addition, your property management company may not allow tenants to drop off cash rent payments with them.
The good news is, drafting into your lease agreement a “no cash” policy is relatively easy to do, especially if you have your property manager draw up the provision for you.
Just don’t forget to add in the acceptable ways tenants can make payments, so they understand exactly how to pay you each month.
2. Credit Cards
Closely related to cash when it comes to risk is accepting rent payments via credit card. This is because it is very easy for a tenant to pay their monthly rent to you, and then immediately turn around and make a claim with their credit card company that the charges were fraudulent.
In the event that this happens, you will not have the full rent amount until the situation is remedied. And, there is never a guarantee the decision will fall in your favor.
Though a tenant will not be able to do this month after month, you shouldn’t risk this when it comes to the last payment of the lease term.
Keep in mind however, that if you do want to accept credit card payments you can easily set up a PayPal merchant account, or something similar, and accept online payments that way.
This is much more secure, and the paper trail is established for you, though there is still the chance your tenant will dispute the charges.
In addition, payment gateways such as PayPal will charge you a small transaction fee per payment received, which can eat into your positive cash flow.
3. Personal Check
The problem with collecting personal checks from your Bowie tenants is that there is no way to verify that the full rent amount is available in the tenant’s bank account until you try to deposit the check.
This means you will then have to deal with a bounced check, a delay in rent payment, and the challenge of recouping the actual rent from your tenant.
If you do accept personal checks, always make a photocopy of each check received, and document bounced checks to protect yourself, should a dispute over rent payments ensue.
4. Online Payment Portals
Accepting rent via an online payment portal is one of the best things you can do as a successful landlord. Here is why:
- Tenants have their own secure account online they log into
- Online accounts clearly indicate how much is due, and when
- Payments are automatically withdrawn from your tenant’s bank account
- Tenants typically receive confirmation of payment for their own records
- Insufficient funds will not allow a payment to be made – something your tenant will have to deal with
- Online payment portals are secure and connect directly to a tenant’s bank account, rather than a credit card
- You don’t have to do any extra work
- Payment records are documented for you
As you can see, there are many benefits to accepting rent payments online.
And, despite what a small percentage of your tenants might say about this method, most people nowadays have become familiar with paying their bills online, and don’t have a problem with doing so.
Rent collection is a major part of owning Prince George’s County rental property. After all, collecting rent is how you make money on your investment property.
There are many different options when it comes to deciding how to collect rent from your tenants. And, while each situation is different, there are some general rules to follow, if you want to avoid any kind of dispute later on in your tenant’s lease term.
If we at Bay Management Group can convince you of anything, it would be to avoid accepting cash rent payments at all costs. The risks far outweigh any convenience cash payments provide you or your Bowie tenants.
If you are in the market for an experienced property management company to help you with rent collection procedures for your Bowie rental properties, contact Bay Management Group today. We provide secure ways for your tenants to make their monthly rent payments, clearly outline at the beginning of each lease term what is expected of each tenant, and have a strict late-payment policy in place to protect you from non-paying tenants.