The Check Is In The Mail . . . Streamlining Rent Collections

In the past three months, we’ve had twenty rent checks either get lost in the mail or delivered late. That’s unusual, because in the last five years, there have only been three.

Of course, we’ve all read that the US Postal Service (USPS) has been less efficient recently.   The USPS tries to achieve a first class on-time rate of 95%.  Normally the service hits 93%.   But this summer, that rate dipped nationally to about 87-88%.  According to News5Cleveland.com, where I live, in northern Ohio, in the third quarter, we saw that rate hit a low of 65%

If getting rent through the mail is slowed, that could be a major issue for the industry. Rent is the most common bill that is still being mailed, and it totals over $400 billion a year.  A 2016 study by the Boston Federal Reserve found that paper checks are still used for 42% of rent payments.

According to property management platform Avail, 30% of all landlords' rents were still unpaid in the beginning of April.  18% of all rents had been paid late, and 3% were only paid in part.   That means 51% of all rent payments were problematic. As we move forward lost or delayed rent can greatly impact a single property as well as an entire portfolio.

It may be time to consider adopting more up to date methods of collecting your monthly rental payments with some technically advanced processes. By offering alternatives to tenants, you’ll make it more convenient for your operation and for your tenants to pay you. It will make your job as landlord or property manager much easier. According to MillionAcres, some of the features to look at are streamlined direct deposits, autopayments facilitate recurring payments and rent reminders that tell tenants, gently, nudges tenants toward payment compliance.

Bank-to-Bank Transfers

You can arrange for bank-to-bank transfers of funds called ACH payments. Not all banks use compatible systems and not all ACH transfers are same day.

Rent Collections Apps

There are apps specifically built for rent collection. They include options for automatic late payment fees, managing leases, and taking security deposits. More advanced features can include tenant screening, renter’s insurance, and accounting services. Avail, Tellus, Cozy, RentDrop, Zego, and Zumper all allow for free online rental payments. There are others to consider.

Commercial Property Management Software

There are a wide range of software options designed specifically for real estate companies. These platforms are sophisticated environments that allow you to manage all aspects of your holdings, from broker management, to tenant screening to accounting and much more. Most of these platforms can be set up to allow tenants to facilitate electronic payments via a bank transfer, debit cards, or direct deposit. A portal for this purpose can be made to facilitate recurring payments. By process, this promotes on-time payments. Among the many platforms that are out there are MRI Software, Yardi Breeze and AppFolio Property Manager.

Take a look at each of these options and try to identify which solution makes it easiest for tenants to pay their monthlies. For those wanting to take a deep dive and conduct their own due diligence.   Fit Small Business did a head to head comparison of Cozy, Avail, Spark Rental, Buildium, PayYourRent and TenantCloud that should give you some insightful guidance. The over-riding quality in any of these solutions is to streamline and expedite tenants’ ability to pay while assuring you that you will get paid in a timely and dependable fashion.