Automatic Rent Payments Save Everyone Money
As a landlord, monthly rent payments can make or break the profitability of your investment. On the flip side, a monthly rent payment accounts for quite a large portion of any renter’s income. With rental markets tightening across the country, renters need to find rental properties that meet their needs and their budgets, and landlords need to find reliable tenants who can pay rent on time and in full.
Automatic clearing house payments (ACH) – most commonly collected through online rent payment systems – allow a renter to directly and securely connect a bank account or debit/credit card to their landlord or property manager’s account. Automatic rent payments aren’t necessarily a new concept, but many landlords still collect rent via cash or check dropped off in person or through the mail. At one of our employee’s most recent apartments, she had to mail her rent check to her landlord every month, who lived just 10 minutes away. That meant planning far enough in advance to put the check in the mail and have it arrive in time to avoid late fees. You can see how this can easily cause late rental payments from month to month, making for unhappy renters and landlords.
It is easier than you might think to accept reasonable, human excuses as to why a tenant’s rent may not have been paid on time. Your tenant might be in the hospital with a relative, or out of town and unable to make it to the bank or post office. I can relate because as a landlord myself, I’ve done this countless times. It’s nearly impossible to put your personal feelings of empathy aside when you are talking to a real person with a real problem on the line. Unfortunately, this is how every chronic late payment habit begins.
My company recently collected data based on one year of rental payment behavior from 13,000 property managers and more than 100,000 renters. The results were overwhelmingly clear: ACH rent payment options lower late payment frequency (good for landlords) and lead to less late fees charged (good for renters). Nearly 60% of renters who did not have any sort of ACH rent payment option set up paid at least one late fee over the course of a year.
What was more surprising was the number of landlords who were not offering their tenants the option to make rental payments online. According to the data we collected, only 7% of renters were being given the option to make their rental payments online via ACH. We definitely expect this number to increase as time goes on and technology advances, but this is still an alarmingly low adoption rate.
Landlords may not offer their tenants this option by choice, but it seems like many landlords are not offering an online payment option because they aren’t aware or don’t know how to do so. Renters may want to pay rent online and avoid late payment issues, but they can’t do so if their landlord doesn’t give them the option.
With online rent payments, your renters can schedule recurring payments, set up reminders, and choose from a variety of payment options, all in one secure platform. Landlords can spend less time tracking down payment every month, and increase the profitability and efficiency of their rental business.
Converting my tenants to automated online payments is the best thing I’ve done for myself as a landlord. I no longer find myself checking in with late tenants, listening to excuses and stories (truth or not) that I am powerless to help with, or feeling bad about personally issuing late payment fees.
Many renters these days don’t even own a checkbook, and it’s rare for anyone to want to carry around or mail large quantities of cash. Paying rent from a computer or mobile device is the preferred method for most tenants to pay rent. Automatic rent payments are an amazing solution for both parties – you know your rent is arriving on time, and your tenants know that their rent can be paid regardless of their circumstances from month to month.