One of the many responsibilities landlords have is collecting payment. And while it can appear easy, it often isn’t a walk in the park. Late or missed rent payments can become a regular thing, especially if you rent to the wrong caliber of tenants.
Having a good method to collect rent payments is one way of ensuring tenants pay rent on time, every time. Also, the right method will ensure you are able to keep track of all rent payments for easier record-keeping.
In this article, we’ll look at the various different options for collecting rent payments on your New Jersey rental home!
What Should a Landlord Consider Before Choosing a Method to Collect Rent?
Like many things in life, you must consider several elements to make the best decisions. There are various ways to collect rent payments, however, not every method to collect rent may be suitable for your specific situation. The following are a couple of things you’ll want to look at for payments as a landlord:
- The number of tenants you have in your New Jersey rental premises. If you own, say, 20 units as a landlord, the last thing you’d want is to knock on all 20 units to collect rent payments. That would not only be tiring, but it would also be an inefficient way to collect rent payment given everyone’s different schedules. Choosing to collect rent online with direct deposit to your bank account would be one of the best ways to collect rent in this instance.
- How far the rental property is from where you are. Do you live a considerable distance away from your rental property? If you do, then consider requiring tenants to make payment you through electronic means with direct deposit to your bank account
- How tech-savvy you are. If technology isn’t your thing, then you should consider other more ‘traditional’ methods to collect rent payment
- Preference for a hands-off approach to rental management. If you own one or two rental units and are within driving or walking distance, then you may have a desire to interact with your tenants for pay purposes
6 Methods for Collecting Rent on Your New Jersey Rental Home
Many methods to collect rent exist, from personally collecting it to relying on third parties to do it on your behalf. Choose a pay method that works best for both you as a landlord and your tenants.
Once you’ve made your choice (or choices! You can always do a hybrid approach for options), make sure to put the rent collection method in your lease or rental agreement. Also, let tenants know of other important details such as when rent is to be paid, late rent fees, grace periods, and penalties for bounced checks (if applicable).
The following are the most popular methods of rent collection among landlords:
1. Online Payment Collection
With the rapid development of technology, so many things can now be done online, and rent collection is one of them. There are many sites that provide that service for tenants to pay online.
Some sites only offer basic plans with rent collection being the only service they offer for landlords. Others offer premium services and go beyond just rent collection. Their range of services could even extend to the ability to upload important forms and send messages to tenants for landlords.
Other options for collecting payments include PayPal, Venmo and Zelle to their bank account. Online rent collection is especially effective if you're a long-distance landlord.
Of course, hiring a property management company like Lone Eagle Property Management means having access to online rent payments as part of a full-service package! Many landlords find this easiest rather than going through third-party sites.
2. By Mail
Another method of rent collection landlords use is having tenants pay by mail. It’s better than having to collect the rent yourself, as it’ll save time and hassle.
Collecting rent by mail has its downsides, though. For example, if the envelope is postmarked, it may take some time for landlords to receive the payment. While the payment wouldn’t technically be considered late, you’d still receive it late.
Also, a difficult tenant may use it to buy some time by making a partial payment. What’s more, it may allow a tenant to make the age-old excuse of “it got lost in the mail.” Luckily, there is a way to avoid the latter issue. Landlords can require the tenant to obtain a certificate of mailing every time they make a rent payment. The certificate will show exactly when the mail was sent. On the flip side, though, it won’t show the actual amount sent.
3. In-Person
You could also choose to collect rental payments from your tenant personally. On the upside, you’ll have the payments immediately. On the downside, however, coordination with your tenants can be time-consuming and frustrating.
4. Drop-Off Location
You may choose to have this method of rent collection if you have an office. Ideally, it isn’t recommended to allow tenants to know your home. So, if the office for your rental investment is in your home, consider a different method for rent collection.
Another downside to this is that dropping off envelopes full of cash can cause problems such as theft. Your tenant could also lie that they left a certain amount that may not actually be true.
5. Checks
As a landlord, there are several forms that you can accept as a method of rent payment. Some are more secure than others. They include personal checks, cashier’s checks, and certified bank-issued checks.
To choose the right one, you’ll need some forethought. Will you allow them through mail? Or, will you require tenants to drop them off at some location?
6. Money Order
People can go to their local bank, post office, or at other convenience store and request a money order at a small fee. For example, your tenant can go to their local bank and request a money order of, say, $800 to pay rent.
Of course, just like mail, timing can become an issue.
Should You Allow One Payment Method or Accept a Variety?
Providing your tenants with a single method of rent payment can be inconvenient for some because they may prefer one method over another. Ideally, provide your tenants with a variety of options for them to choose what works best for them. This will also help with on-time rent payments.
But, regardless of the method you provide, the goal should be to make sure you have an efficient and streamlined rent collection system.
Bottom Line
Consistent rent payments are key to running a successful rental investment. If you still find rent collection daunting, hiring a property management company can be a great idea for your business!
Lone Eagle Management is a full-service property management company with over 50 years of property management experience. Contact us today to learn about how we may help you!