If you’re like most property managers, you have lots to do but precious little time to do it. Whether you’re a landlord with just a few rental properties or a professional property manager managing hundreds of units, this is always the case. While (unfortunately!) you can’t tack a couple more hours onto the day, there are some things you can do to work smarter.
Let’s take rent collection, for example. Have you ever have calculated how much time you spend dealing with checks? Even if you haven’t done the math, we can all agree it takes way too much time. Each month the rent checks come pouring in, requiring time-crunched property managers and landlords to open envelopes, figure out which check is whose, record rents paid and rents still owed, fill out deposit slips, and trek off to the bank. There must be a better way.
Want more proof? Take a look at this article, “Businesses Adopt Online Payments to Improve Cash Flow and Save Time and Money”, posted on WorkZ, a website for small business owners. The article cites a Gartner research study showing that it costs between $2 and $5 to send a paper bill and another $10 to process a paper check. Whether you buy Gartner’s numbers or not, the bottom line is it costs many of us way more than it should to collect rent payments each month. This is supposed to be income generation, afterall.
Here’s what Andrew Block, head honcho at the Boston-based property management company The Hamilton Company has to say on the matter:
We have been looking for a solution where we could send a statement to our many tenants either by email or fax and to allow our tenant to be able to make payment over the internet. Our company processes a significant number of transactions each month and it is very costly to send out statements. The problem with paper checks is that it takes a lot of time and money to handle them.
Okay, so if it costs too much to collect rent by check each month, what’s the solution? One option is to accept credit cards—with services like PayPal, anyone can do it. But bear in mind, while credit cards are more convenient than checks, they’re also an expensive way to go. With credit card companies charging between 2 and 4 percent of each rent payment, costs can add up fast.
A better option is to debit your tenant’s bank account directly, just like stores do when you use your ATM card. Electronic rent collection services allow you to withdraw rent from your tenants’ checking or savings accounts and automatically deposit it to your bank account. And instead of charging 2 to 4 percent of the rent payment, these services generally charge much less—sometimes as little as 50 cents per payment.
If you factor in what your time is worth (let alone the cost of gas these days), collecting rent electronically makes a ton of cents. And what’s not to like about that?
Thank you so much for visiting my site and commenting on my “to Condo or not To Condo” posting. My husband is the owner of our brokerage and we divide our duties. He handles listings (no thank you not in my life plan) and I handle sales and writing intelligent blogs to educate buyers. Your blog site here is something pretty cool and I will ask my husband to add it to his blog reading list. I believe in giving buyer’s information that makes them savvy whether they use me or not. I am tired of the agents who sat back and collected commissions. I am tough at time and very blunt but I end up with satisfied buyers.
Carole Sanek,
Castle Dream Real Estate, LLC,.
Carole,
Thank you for your comment. It seems like we have the same intention: to educate. Providing information creates a more efficient environment, which is beneficial for the industry as a whole.
I agree that finding a solution in regards to collecting rents is important, not only does it save time but money as well. We do offer our tenants the option of paying their rent through paypal and its been pretty successful, the percentage of payments arriving late is very low compared to those tenants that mail in their checks.
Tony,
Great point about automatic bill pay reducing the percentage of late payments. The internet has made life so simple. Thanks for the feedback!
Thanks for the useful tips. Yes electronic payment collection saves a lot of time, effort and money. I am using the professional services offered by AAOA, they also offer an option of tenant invoicing which allows every owner and property management company the opportunity to maintain a consistent and professional line of communication with each and every tenant every month.
Mathew,
The AAOA is a great organization with great resources. Thank you for the comment.
Hi! I was surfing and found your blog post… nice! I love your blog.
Cheers! Sandra. R.
Sorry my English is not too good, but I do like this article. Thanks for taking the time to share your ideas, where I’m from people don’t share much. Anyways, I’ll share this with my friends. Thank you!
Thank you for the feedback — sharing our ideas on property management is what this blog is all about — thanks for passing our blog along to your friends!