What is the best practice to collect rent?

Question

Hi,

I am an out of out of state investor. I purchased a duplex that is already fully occupied, I was wondering what is the best practice when it comes to collecting rent (section 8 tenants).

Is it best to do it completely online, if so do you recommend any platforms that make it easier for the tenant.

Do it the old way and have them deposit checks? How would this process even work, if I am not physically getting the checks?

Thank You,

Alex Pelletier · Answer

Best practices for rent collection depend on how big your portfolio is. With just one property, bookkeeping and collecting rent is simple since you could just use one of the main payment platforms like Paypal, Venmo, Zelle etc to collect rent without hitting limits -- I believe many investors are still at this level. Once you add tenants, though, you can run into issues like hitting limits on these money transfer apps and also messy books at tax time.

For the issues above, there are some easy ways to get ahead of this: 1. Get separate accounts for each property you have: This will help you and your CPA with bookkeeping and accounting!

2. Use a rent collection/property management tool: this has been noted by other members, but these tools will help you both collect rent easily, manage other aspects of your property like screening, listing, bookkeeping, etc.

3. Use a bookkeeping solution built for rentals: These provide solutions for bookkeeping alongside your rental units. There's no big setup process like with Quickbooks if you go this route, since it's all rental-specific.

Here's a list of tools for each category:

• Property management/rent collection:  Avail, Innago, Apartments.com, Hemlane, Turbotenant, Rentredi, Tenant Cloud, eRentpayment, zillow rental manager
• Rental accounting tools: Azibo, Stessa, REIHub
• Rental banking: Azibo, Stessa, Baselane

Wesley I. · Answer

@Vishal Amin

Through a property manager

Alecia Loveless · Answer

@Vishal Amin Hi Vishal! I too, am a fan of separate accounts for each property. Some landlords prefer one account but I find it easier to keep expenses separate and then just provide individual P&L statements for each property at the end of the year to my accountant for tax time.

I have som tenants that pay me by Venmo and use their name and in the message put their address and unit number. I have one tenant who couldn’t figure Venmo out and uses Facebook pay. The rest are using checks or money orders if they don’t have a bank account. Those just go to the post office or Walmart and get the money orders from there. They mail them to me. I have gotten away from accepting cash but if I have to I meet in a common location, I won’t go to the building to pick it up because I don’t want to be chasing down rent every month.

You have to train your tenants what behavior you want such as being on time with the rent and to pay by epayment or check. And then follow through with that with a Notice for Payment if they’re late on the first day they’re late and then they learn you mean business.

Joseph Beilke · Answer

@Vishal Amin

No one seem to be directly answering your question so I will.

I have out of state properties too and I have one tenant that writes me checks for the first Friday of the month they get paid on. She sends me 12 check every January, the date could be the 13th to as early as the 1st of the month. It is an arrangement that has worked for 4 year and not once has a check bounced.

2 other tenants pay via Zelle,  I send the request on or around the 27th and normally get paid on that date or a day or two later.

Other LTR and MTR Pay through manage software Rent Readi, which has been brought up earlier.

They are many types of property management software and ways you can collect rent.  I would reach them and see what fits your budget if that is the route you wish to go if you are self managing. Secondly,  I would communicate with the tenants and see what works best for them.  The burden of just paying bills is difficult for some people and making as easy as possible for them will, secure you getting paid on time. It may seem like hand holding but some times property management is more like people management.

Hope this helps.

Cody Brown · Answer

I'm not a fan of RentRedi due to their payment timelines and reporting which were really inefficient once we got above 20 units.  S8 should do a direct deposit to your bank account for the portion they are paying. For the tenant portion of the rent, you can normally provide your tenants a few options.  One of the easiest is to work with a local bank that the tenants can do a deposit at.  We do this and have roughly 40 tenants per month make a deposit directly to our business account referencing their unit number each month.  They have no ability to withdraw, but they can make deposits.

Joshua Filkill · Answer

There are some good PM softwares you can try such as Rent Redi and Innago

Eliott Elias · Answer

Why aren’t you using a property manager? Let them handle everything tenant related.

Hamp Lee III · Answer

Check out Rent Readi in the Tools section of the menu bar. It was recently added as a resource.

What is the best practice to collect rent?

What is the best practice to collect rent?

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