Managing a property is task rich, many of which are repetitive. The more properties you manage, the more repetitive the tasks. Rent collection has historically posed the biggest point of pain for most owner/managers. Statistics show that over 80% of people who collect rents are still collecting rent in person, by drop box on the door, or by mail. Rent payments are received in many forms; checks, cashiers checks, money orders, and sometimes even cash. Often these payments are collected without unit or account numbers attached. So the rent collector has to look for the account, post the payment, sign or stamp the back of the document if it is a check, prepare a deposit slip and a receipt which is given to or sent to the tenant. And then there is the required trip to the bank to make the deposit.
Many landlords and property managers do not send their tenants monthly invoices. This actually can lead to a decrease in timely payments while making you look less professional. Tenants, like most other people, sometimes forget about bills without regular reminders, even if it is as important as rent.
The real problem with collecting rents by hand is that landlords and property managers are left at the mercy of their tenants. Renters who do not regularly pay rent on time have a vast array of excuses to offer as a mercy play to the landlord or manager. Some of the common ones are:
“I mailed it last week. Its not my fault if it got lost in the mail.”
Or, “Did you pick up your mail yet; it should be there.”
Another common one is “I gave it to my husband. Didn’t he deliver it?”
Or “I dropped it in the box already. Its not my fault if you lost it.”
One tenant responded when asked for a late rent payment, “I paid rent last month, why are you asking me again?”
Most times in my experience, if the rent was not left on the door on rent collection day, no one ever answered that door so there was no way to have a direct confrontation. I had to call and return again, this time with a 3 day pay or vacate notice in hand.
I am sure you have some real doozies of stories to relate yourself, if you are a property manager. Leave some of your better ones in the comment section below. We are sort of aficionado-collectors of good rent collection excuses.
These are just some of the reasons that automated rent collection is the future for property management. Here is one you may not have thought of. Recently one of my tenants became very ill and was hospitalized. She was single and had her own accounts to which no one else had access. She went from being comatose to a rehab facility, over a three month period of time. She was able to have nursing staff pay her rent for her by logging onto her account and making the payment. Happily she has returned to good health and was able to go back to her rental. When you agree to automate your rent collection, you will leave behind all of the excuses, the travel, the uncertainty, the hand work and you put the automated system in between you and your tenants.
To use automated rent collection on Smart Property Systems, you will first need a merchant account. There is an application to fill out and some supporting documents to provide. It takes about 3 days for approval after all documents have been provided.
Once you are approved and your software is turned on for rent collection (that takes about 5 seconds) your tenants can choose to pay via ACH, from their checking account, Credit Card or by phone. It takes them only a minute for a tenant to make a payment and there is always a receipt or confirmation number provided in the automated sequence. (One more job you no longer have to do).
When you use automated rent collection you will not get any more excuses about where the rent is. It is either paid or not. There is no argument. Late fees are automatically attached to the tenant’s bill on the day rent is late and a late notice is sent for you. If the rent is three days late, a three day pay or vacate notice can be sent using custom notices section of the built in library. It has been the experience for subscribers who use automated payments that they are collecting their rents regularly with 97% on time payments. In some cases it takes a few months for the tenants to learn that if they do not pay on time or miss a payment that they have nowhere to turn with their arguments. The software does not lie. Once that is learned, your rents will flow in on time with no issues and you will be free to look for more business or go play golf. I used to tell my tenants that the most important payment they make every month is the rent payment. That truth is reinforced in spades with automated rent collection.
Remember that your tenants can pay automated rent collection payments via ACH from their checking account, Credit Card or by phone. Checks can also be sent to a lock box for processing, but they must be on time to avoid late fees; and the cost is a bit higher because of the handling fees. Many section 8 tenants do not have credit cards or checking accounts and this lock box system allows their rent to be automated as well. It takes a tenant only a minute to make a payment and as was mentioned earlier there is always a receipt or confirmation number provided. SPS also allows your tenant to set up automatic recurring payments for the term of the lease.
So now consider this. When you automate rent payments, your tenant will not need to have any interaction with you regarding rent payments. They can make rent payments whether or not they have a computer. All tasks required of the rent management process are automated. That means the accounting is done for you as well. As the rent is collected and sent for processing you are notified of the payment and the accounting is done for you in the software. It is added to the ledger, the rent roll, the statement (for next month’s credit information) the lease and the tenant portal accounting record. So after your golf game, you can go out to a fine meal and relax, knowing that your rents are coming in on time and all is well with the accounting for those rents..
Oh and did I mention that the processing takes 3 business days so be sure to set the day for rent being due 3 business days before you want it in your account. Yes it is deposited directly into your bank account of record. One last reason that you want to automate your rent collection….Allowing your tenants to pay online or with the phone makes your business look professional. Your tenants will respect that.