Collecting rent is one of the most problematic parts of being a property manager. More than 20% of renters in America are nearly 4 months behind on their rent payments. That is $5600 worth of rent per delinquent tenant.
Traditional payment methods do little to solve this problem. While micromanaging rent payment is tiresome, leniency can cause too many missed rents. The final step is to carry out an eviction, which can cost up to $7000 for the property manager.
A better solution is to leverage property management technology to streamline rent collection. With the right technology, you can make sure every tenant pays you on time!
If you are unsure how, read the below tips and combat late payments effectively.
Automate tenant screening
Ensuring timely rent payment isn’t a month-end process. Instead, it starts with the beginning of the tenancy itself. A study by Harvard University found that nearly 50% of tenants couldn't afford their rent due to low income. A thorough tenant screening can help determine the affordability for each renter.
The screening process needs to verify basic requirements such as credit score, eviction history, and criminal record. Verifying income and employment should be a priority as a tenant can only pay rent when they can afford it.
According to a survey by the US Census Bureau, spending more than 30% of income on rent is considered a financial burden. While this isn’t the sole determinant of housing affordability, it is wise to choose tenants who spend around the 30% threshold.
Additionally, you can know the tenants' payment patterns through their credit scores and eviction history. In 2020, the average credit score among renters in the U.S. was 638. Credit scores show how promptly an applicant clears their dues, including rents.
A tenant with a bad credit score can potentially fail to pay rent on time. Eviction history also works similarly, by showing the behavior of an applicant during previous tenancies.
Automating tenant screening through software like Yardi ScreeningWorks Pro helps you select low-risk tenants.
Online rent payments
Online payments can help you tackle late payments simply through their convenience. New generation tenants prefer online payment methods with millennials paying 61% of their bills digitally.
Giving your tenants their most preferred payment option will automatically help them pay rent on time. There are several options like bank transfers, e-wallets, or credit cards that can be used to complete these transactions.
Mobile payment options are also an added advantage. Nowadays, almost every tenant has access to a smartphone. Through mobile apps, tenants can complete their rent payments anytime. Making payments convenient for the renters reduces the chances of late payments.
Digital payments are also convenient for property managers. You don’t have to go through your mail for payment checks or visit the bank to cash them. Funds are transferred directly to your account, which means you get real-time updates whenever someone pays their rent.
Send out payment reminders
Most tenants don’t intend to miss out on their rent payments. Sometimes people are busy or they simply tend to forget. In a Citi Bank survey, 61% of delinquent tenants blamed forgetfulness for late payments.
Setting up reminders is an excellent way to collect timely rent from forgetful tenants. But manual reminding each tenant about their due rent takes too much time and effort. A more convenient way is to use property management software to set up email or text reminders.
You can automate these reminders for the first of every month, and also carry out sending them multiple times till the rent is paid. Text and email reminders are documented, which means they can serve as evidence in case an eviction becomes inevitable.
Set recurring payment options
Setting up automatic payments is another benefit of property management software. Tenants who don’t want to go through the monthly hassle of rent payment can use these options.
Setting up recurring payments does not require extensive technical knowledge. Initially, tenants need to feed their payment details such as credit card information to the software.
Then, they can set their payment dates and choose to get transaction notices in their mail.
A recurring payment is the best way to ensure timely payments. It is not only beneficial for the property manager, but also for the tenant. Since these transactions are online, they can be easily documented as well.
Utilize tenant portals
Constant communication is important to maintain a healthy relationship with tenants. Tenants who have a good connection with their property managers are more likely to pay rent on time. Effective use of tenant portals for tenant communication can ensure that every payment reaches you on time.
The use of these portals is not limited to sending or receiving messages from tenants. They come with a wide range of features such as tenant account management, document transfer, and much more.
Property managers can keep a track of the renters’ payment history, check the frequency of late payments and send text warnings to tenants if necessary. Similarly, tenants can also check due dates, update payment methods and communicate any delay with their property managers.
For tenants, keeping up with these announcements and checking their rental agreement also becomes easier. Any incentives and penalties can be shared through these portals. By giving incentives for timely payment, you motivate more tenants to pay on time.
Make rent payments easier through Assetsoft
Leveraging technology can help reduce the number of late payments you receive. Assetsoft helps you find the right option to streamline your rent collection. We have several options such as tenant portals from Yardi and MRI, online rent collection through Zoho Books, and much more.
For more customized software, our expert team can work with you to integrate suitable features. Our support extends beyond integration with services like training, troubleshooting, and data transfer.
We can also help you streamline your business and improve your strategy through our consultation services. With Assetsoft, you will find complete tech solutions for your property management business.
To streamline your rent payments, contact Assetsoft!