October 9, 2018
Maintaining a reliable cash flow is key to obtaining maximum profit for rental property owners and the greatest factor in reliable cash flow is the ability to consistently collect rent on time. Before the first month’s rent is collected from a tenant, the best property managers will have already taken two essential steps towards creating the greatest likelihood that a tenant will pay rent by the due date. These steps are effectively marketing and advertising the rental property and performing a thorough tenant screening. Just like any type of investment manager, the best property managers always keep two things in mind for their clients - maximizing profit and reducing risk.
If an owner has hired a competent property manager, receiving payments from their rental property is the last thing a property owner should need to worry about. There are three factors that the best property managers consider in order to keep the process of rent collection and owner payment distribution running smoothly.
How a property manager addresses these factors is detailed below:
1. Reliability: Receiving rent payments from tenants on time
The best property managers reduce the risk of lost income due to missing or late rent payments by using a thorough tenant screening process. This process provides the information needed to assess the probability that a tenant will fulfill the terms of the lease agreement and take care of the rental property. Two critical pieces of information directly related to rent collection that need to be discovered are the potential tenant’s history of paying bills on time and whether or not they can afford to pay the rent amount.
Reliable rent collection doesn’t end with signing a reliable tenant. Once a tenant has been placed, additional automated measures are also taken. Emailing invoices 1-3 days before rent is due has been found to be very effective in reminding tenants to pay. Making the payment of rent easier by offering more than one payment method also helps. Online rental payment platforms like ePay allow tenants to pay rent from almost anywhere at any time. The best property managers use a streamlined payment processing system that delivers payments to owners within days. While online payments are increasingly more popular, it’s not the best fit for every tenant so it’s important for a property manager to also provide options for payments by check and cash.
2. Speed: How Soon Will Property Owners Get Their Money
The best property managers always work to get their property owners’ payments to them as soon as possible. Accepting online payments reduces the time it takes to get funds to an owner and the best property managers offer an overnight processing option that makes it possible to get an owner their payment 2-5 days sooner. Online payment portals are another fast and reliable way for property owners to collect their money.
Because some tenants will always pay by check or other hand delivered payment, the best property managers will have an efficient system in place to ensure these payments are processed as soon as they are received. If a check sits in the mailbox for a few days, it ends up being the equivalent of a late payment for the owner. The daily checking of mail, updating of accounts, and bank deposits are critical in a property management company’s ability to get payments to owners as soon as possible.
3. Transparency: Keeping Property Owners in the Loop on their Investment
The best property managers understand the benefits of owners being able to see what is happening with their investment at any given time. Clear visibility to their rental property account alleviates anxiety and minimizes misunderstandings that can take valuable time for both the owner and manager to clear up. Providing owners with real-time account access via an online portal can eliminate worry and the need to contact the manager. A high-quality online portal will give owners access to current balances, a history of transactions, and reports. Clear payment records not only keep property owners informed about all income and expenses but also allow for discrepancies to be resolved quickly.
Without successful rent collection, an investment property quickly moves from being a profitable source of income to a drain on an owner’s savings. The best property managers understand that efforts put towards reliable rent collection are well worth the time and money when you consider the cost of eviction due to non-payment of rent. By making sure the right tenants are placed and using efficient payment processing practices, owners can consistently receive their payments when they expect them.
If you're looking for a property manager in your area who is a rent collection professional, contact Property Management Inc. property management franchise today.