Collecting rent from your tenants in Bowie, MD is one of the most important tasks assigned to your property management company.
After all, once rent is collected from your tenants, you get paid.
Today, we are going to look at some of the steps required to collect rent from your tenants, as well as some ways to go about collecting rent.
But first, we will review the more traditional ways of collecting rent, for a quick refresher.
How to Collect Rent From your Tenants
Here is a look at some of the best ways to collect rent from your tenants:
- Online. Allowing tenants to access an online portal to pay their monthly rent is typically considered the best way. It is convenient for your tenant, is secure, and it guarantees that the funds submitted are going to be deposited into your bank account.
- Check or Money Order. Though some Bowie property managers prefer not to accept personal checks (unless mailed in), a large majority of tenants still prefer to pay with paper checks. If you do not accept paper checks, money orders are a safe and simple alternative.
- Direct Deposit. There may be instances where you want your tenant to transfer their rent from their bank account directly into your bank account. Though not very common, it is definitely secure.
- Mail-in Payments. You can always go the more traditional route, and allow your tenants to mail their rent to either you or your property management company. However, the risk of your tenant’s check getting lost in the mail exists, and can cause a delay in your getting paid.
- In Person. There is also the option of having your tenants drop their rent off in person at your house (which is always risky) or at your property management company’s office. Again, this requires a personal check, a money order, or cash (which is never recommended).
As you can see, there are a number of ways to collect rent from your tenants.
But the question still remains: what are the steps to collecting rent from your tenants?
The Rent Collection Process
The process of collecting rent from your tenants is rather simple if you employ Bowie’s top property management company to do it for you.
Here is a rundown of how your property manager should approach collecting rent from your tenants:
- Draft an airtight lease agreement outlining the rent rate, due date, and consequences for paying late
- Inform the tenant prior to move-in of the rent collection procedures, including the methods for submitting payment
- Collect rent each month through the approved methods
- Properly document all rent payments collected each month for tenants, property owners, and the IRS to see
- If a rent payment is late, begin the eviction process immediately – serve proper notice, file eviction paperwork, and prepare for legal proceedings if necessary
Although the process for collecting rent from your tenants is relatively simple, it is critical to not underestimate its importance.
This is especially true when it comes to dealing with late rent payments.
If, by chance, your tenants fail to pay their rent on time, your property management company should step in and handle the situation right away. You should not let your tenants feel that they can get away with paying their rent late.
After all, this is your rental property business, and you should treat it as such.
Additional Rent Collection Methods
There are several ways you can collect rent from your tenants during the course of their tenancy.
And, while some ways are recommended, such as collecting payments online, there are additional options that you can provide your tenants, if the situation arises.
Local Drop Box
This method is similar to allowing your tenants to drop their rent payments off in person to your property management company. However, this method affords both your property manager and tenant some convenience when it comes to the actual time of day that the payment is dropped off.
Rather than hand in a rent payment in person during regular business hours, having a drop box available makes dropping off rent at any time of the day possible.
Many of your tenants may work during the day and may need to drop rent off after-hours. Allowing them this option of a drop box may reduce late or delayed payments.
ACH stands for Automated Clearing House, and involves the automatic collection of rent payments online.
Using an ACH payment service allows you to collect payments from your tenants electronically either as one-time payments, or as recurring payments by directly debiting your tenant’s savings or checking account.
This method is secure and prevents your tenants from having to use e-checks or credit/debit cards.
In addition, this method can be more cost effective than collecting payments via credit or debit card.
Why is that?
Because accepting credit and debit cards usually involves additional transaction fees in exchange for using the online rent collection service.
Lastly, collecting rent using the ACH payment method is typically faster than any online method, because payment is directly debited from your tenant’s bank account.
Processing this type of transaction is quick and easy.
If your tenant does not have access to a computer, or prefers to pay in person but your property management company does not accept drop-off rent payments or does not have a drop box available, you can always consider offering them a PayNearMe option.
PayNearMe is a way to let your tenants pay their rent in cash to a local 7-Eleven or other business that collaborates with the PayNearMe program.
Using a unique card assigned to them for making rent payments, your tenant simply goes to the local PayNearMe business, pays their rent at the counter, and receives a receipt for payment. In response, you are immediately notified that your tenant has paid their rent in full.
This option is often much easier than getting a money order and delivering it, or mailing a check (complete with envelope, address, and stamp), and is a great solution for those that do not have online payment access.
Collecting rent from your tenants is one of the most important things you will do as a property owner.
And, if you enlist the help of Bowie’s best property management company, you will be placing the responsibility of rent collection in your property manager’s hands, which is a big weight off of your back.
If you own rental property and need a reliable property management company to aid you in the collection of rent from your tenants, contact Bay Management Group today.
We can help you with every step of collecting rent – from the drafting of the lease agreement, complete with rent payment details to the eviction process (if need be) – so that you don’t have to worry about any of the stresses involved in collecting money from your tenants.