Landlording & Rental Properties

Dear Landlords, Why Are You Still Personally Collecting Rent? (There Are MUCH Better Ways!)

Expertise: Landlording & Rental Properties, Real Estate Investing Basics, Flipping Houses, Business Management, Personal Development, Mortgages & Creative Financing, Real Estate News & Commentary
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Dear Landlords:

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Why are you still personally going out and collecting rents? These are real headlines I’ve seen in past years.

In one instance, the tenant killed the landlord. In the other, the landlord killed the tenant. Either way, someone is dead.

And for what? For a few hundred dollars? That is just ridiculous.

Look, folks, we all know that the landlord/tenant relationship can be quite confrontational. We landlords want to get paid. We have bills coming due, and it is really frustrating (perhaps infuriating) when tenants do not pay—no matter what the reason. On the other hand, tenants may not be able to pay and are perhaps under a lot of stress trying to figure out how to make ends meet, rightly concerned that they may end up on the street.

Related: 6 Common Mistakes Landlords Make During Rent Collection & Evictions

Why would you put yourself in the middle of such a potentially explosive situation? You really do not know what someone will do when they feel like their back is up against the wall and there is no way out.

In today’s world, there is simply no need to get caught up in this. There are just too many other options available to us. We do not need to go around collecting rent door to door. Sure, I understand that, that was perhaps the way it was done back in the day—but those days are long behind us now.

closeup of key in lock on door

Electronic Payment Systems

Instead, the best option today is to use some form of electronic payment system, such as ClearNow, PayPal, or even Venmo. Electronic payment systems such as these will automatically deposit rent payments into your account and notify you when it has been done. Accounts on each platform are simple and easy to set up and will save you tons of hassle, a trip to the bank, gas, and potentially your life. Plus, they are cheap. They take only a small percentage for providing (what I think) is a great service.

But what about people who do not have bank accounts?

Good point. There are plenty of people out there who are “unbanked” or “unbankable” and do not have access to checking or other accounts that make electronic payment systems a possibility. Still, there is no need to go door to door. These folks simply need to either bring the rent to your office or mailbox or get money orders and use good old snail mail.

We used snail mail to collect rents when we first started. In fact, it was quite common to do this before the rise of the internet. To help guarantee payments, we would even provide our new tenants with 12 addressed and stamped envelopes at the lease signing. That small expense really cut down on the "I could not find a stamp" excuse and helped increase the percentage of rents collected.

Either way, the goal is to get you, the landlord, out of going into a potentially confrontational, difficult, and sometimes deadly situation. It is just not worth it. If that payment or check does not show up in your account or mailbox by the first of the month (remember your state-mandated grace period here if there is one), make a call and try to communicate. If you do not get a reasonable response, then file for eviction and have them served and set out if necessary. Simple. And you did not have to get involved face to face.

rent-survey

Related: 7 Tips for Dramatically Increasing Rental Spreads

Checking on Problem Tenants

Now, I do understand that there simply are times when you or your staff may have to go to check on a property or a problem tenant. You might need to see if they are actually still living in the property or if it has been abandoned. Tenants in these situations do not always tell you they are moving out. If you do decide to go to a property and see a tenant, you should always take a few precautions.

Let someone know where you are going and why. Better yet, take someone with you. That person can act as a witness if necessary and can also be a deterrent.

Should you go armed? That is a difficult and very personal choice for some. If you do, be sure you understand your local laws and the consequences of using deadly force. Guns can save your life, but they can also quickly escalate a situation beyond your control. Perhaps it might be better to simply have a can of mace or even bear spray available. These items will stop the attacker without doing serious harm and will allow you to get away. And that is what you really want—to get away.

Still, the best solution is to simply not put oneself in a potentially dangerous situation in the first place. Use the tools and techniques described above to avoid those situations.

Sincerely,

Kevin

P.S. Do any of you still collect rent personally? Why? Ever faced a dangerous situation? If so, how did you handle it?

Let me know with a comment!

Kevin Perk is co-founder of Kevron Properties, LLC with his wife Terron and has been involved in real estate investing for 10 years. Kevin invests in ...
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    Keith Leckey Investor from Johnstown, Pennsylvania
    Replied about 4 years ago
    We give our tenants 2 online choices for paying their rent. Cozy.co which is totally free and erentpayment.com which costs $3. The tenants pay the $3 fee but are more than happy to do so because of the ability to have their rent payments reported to TransUnion to help boost their credit scores.
    Michelle Milsom-Wright
    Replied about 4 years ago
    I use ” deposit cards”. They are similar to debit cards but all you can do is make a deposit either cash, check or money order. You cannot withdraw or check account balances. I like it because I can log on to my account online and see the deposit pending as soon as they make a deposit. No excuse for check in the mail! Each card has its own number so you know who made the deposit. You will need to have a business account with a bank that is local with plenty of ATM machines. I use Bank of America and its great.
    Shawn Ginder Investor from Lititz, PA
    Replied about 4 years ago
    We use a property management company who takes care of this task for us. Living out of town makes collecting in person impossible nor would I want to carry this once a month with 6 renters in different towns. By the way the management company uses systems where it is the tenants responsibility to get the rent turned in, and if they don’t a notice is served saying pay, leave, or you will be evicted. If tenants don’t pay by the 5th the management company files a notice that starts the eviction process. Clean and simple. You are running a business, treat it with business sense.
    Lacey S. from Carrboro, North Carolina
    Replied about 4 years ago
    I felt this article was a little weak….if you have a tenant who would rather kill you than pay I don’t think they would happily do an online transfer. They would probably not pay that way either and you’d have to go to the house anyway because they’d be dodging your calls most likely. I just bought my first property and set up Cozy.co to accept online payments. So far I’ve only received one but it worked fine and was easy to setup. There is no fee for landlord or tenant if they do a bank transfer. It also lets them pay with a credit card but then they charge a fee to the tenant. They also offer credit/background checks paid by the tenant online.
    Jeff Deleon
    Replied about 4 years ago
    Collecting rent door – to – door can not only be dangerous, but is so time consuming. I recommend using not only electronic payment systems but also hiring a property manager. They not only collect the rent, they are also responsible for the maintenance, make ready, and screening of all tenants. If there is ever an issue with rent being paid, they handle the eviction process. Leaving me more time to invest in real estate.
    Kris Winckler
    Replied 11 months ago
    If you have "underbanked" tenants that don't have a bank account...or don't want to use their bank account...have them pay with cash at a local retailer instead of mailing a paper check or money order. As a landlord, you never know if a tenant mailed a check or not and it can take over a month to get money refunded when a money order gets lost. With Schedule My Rent (www.schedulemyrent.com), a tenant can walk into a Walmart or thousands of other retailers and can pay their rent with cash. As a landlord, you immediately know that rent was paid and the money is automatically sent to your bank account.
    Steve Weisser Real Estate Investor from SEMINOLE, Florida
    Replied 11 months ago
    We use to have rental properties in Oklahoma. The area was low income, so one of the ways I pushed for rent was that, rent was due by the 5th of every month, so when you pay rent on time for 12 months straight, I will give back your December rent before Christmas day. To top it off, Christmas Day, I hand delivered a big basket of assorted fresh fruit, with good chocolates, along with the money they had given to me at the beginning of the month. There are always issues, but I was willing to work with them because they kept bringing up getting that December check back. The basket of fruit was my appreciation for them paying on time.
    Dawna Willis from Memphis, Tennessee
    Replied 11 months ago
    Very thoughtful @Steve Weisser. I have my tenant pay through direct deposit straight to the account- I opened up separate account just for rent payments. Since she had difficulty paying on time I broke the monthly payment into biweekly payments and increased month rate by $50 - I thought about returning a partial payment around Christmas as well (because with biweekly payments you get an extra payment at the end of the year) however, if will have to see if payments continue to be paid on time with this new method.
    Jennifer Swack
    Replied 11 months ago
    17 Properties. I pick up rent from one or only when necessary. I accept PayPal, CaahApp and Zelle. I have a separate account for my rent deposits and gladly give the tenants that rent account number to deposit to. I have zero concerns for my safety when visiting my rentals.... Feeling pretty proud of that after reading this article!