Why Rent Checks are Obsolete (And What You Should Do Instead)
How should your tenants pay for their monthly rental fees? This is a hot topic among landlords—finding out the best way to collect monthly rental payments.
Some landlords still prefer the traditional method of collecting rent checks and depositing them in the bank. In contrast, other landlords have fully embraced technology and have gone digital, encouraging tenants to pay rent online.
The National Landlord Association report recently showed that the percentage of tenants using digital payments increased from 17% in Q4 2019 to 33% in Q4 2020, and that number has been growing ever since.
More than that, since October 2021, U.S. Postal Service mail delivery has become slower, so your rent checks also might be coming in late. And when you’re just trying to make ends meet or have necessary fees to pay, delays in depositing rent checks are just a big no-no.
So, with more and more tenants paying online and the traditional postal method slowing down, rent checks are so last season. It’s time for landlords to move on to the world of digital payments.
Cons of Collecting Rent Checks
First and foremost, rent checks are so slow. The time from the tenant mailing the check to the funds being credited to your account can literally take days or even weeks. And honestly, ain’t nobody got time for that.
Here are three more reasons why collecting rent checks can harm your rental property business:
- Cash Flow Hassles: Collecting rent checks can be a real headache when managing your rental property’s cash flow. Waiting for physical checks to arrive, depositing them, and dealing with any potential delays can seriously affect your cash flow.
In today’s fast-paced world, time is money, and you need a smoother system to ensure you’re getting paid on time.
- Inconvenience Galore: Let’s face it, physically collecting rent checks can be downright inconvenient. You have to coordinate with tenants, drive around to collect checks, and deal with the hassle of misplaced or lost payments. It’s a time-consuming process that wastes your valuable hours and takes away from other essential aspects of being a landlord.
- Check Fraud Woes: Another major drawback of rent checks is the risk of check fraud. Sadly, there are unscrupulous tenants out there who are adept at manipulating or counterfeiting checks.
Dealing with bounced checks, fraudulent activity, or the hassle of verifying the authenticity of each payment can be demanding. It can also negatively impact your cash flow and lead to potential legal issues, which will cost you even more money.
Why Online Rent Payment Is Better
The many new advances in landlord tech mean that rent checks will soon become obsolete. As a landlord, you have many options for faster and more secure ways to collect rental payments and streamline your business.
So, there’s no reason you should still drive around collecting rent checks when you can collect rent remotely and efficiently. That’s an antiquated method that all landlords should be moving away from ASAP.
Here are five reasons why online rent collection can be beneficial to your property rental business:
- Smooth Cash Flow: Collecting rent on time is arguably the most essential aspect of your business. When you leverage online payment platforms, you can set automatic rent reminders to your tenants to increase the percentage of on-time payments.
As a result, you can create a domino effect of efficiency and profitability. Plus, you can have extra money by reducing the time and effort needed to do administrative tasks that come with rent checks.
- Convenience at Your Fingertips: With digital payments, the days of chasing tenants for checks and verifying their authenticity are over. Your tenants can easily set up recurring electronic transfers or use online payment platforms to submit their rent payments.
This means no more driving around town, no more scheduling headaches, and no more lost checks. It’s a win-win for you and your tenants.
- Enhanced Security and Fraud Protection: One of the most significant advantages of digital payments is the increased security and fraud protection that online platforms offer. With traditional checks, there’s always a risk of them getting lost, stolen, or tampered with.
Digital payment platforms provide secure transaction channels, reducing the chances of fraud or unauthorized access to sensitive information. Additionally, many platforms offer built-in verification systems, ensuring each payment is legitimate.
- Improved Record-Keeping: Going digital means easy access to detailed digital records of all your rent payments. It will be easier to see who’s paying on time, who’s always delayed, and when you should collect rent—which is crucial when managing multiple properties.
You won’t have to sort through stacks of paper checks or worry about misplacing important documents. With a few clicks, you can generate reports, track payment histories, and maintain organized records for tax purposes or future legal needs.
How to Shift to Online Payment
There are many ways you can start collecting rent money online, but one of the most popular and user-friendly ways is to use online payment portals and payment apps.
Online Payment Portals
More and more landlords are taking advantage of online payment portals, which many tenants appreciate, especially the younger generation. That’s because 72% of millennials and Gen Xers use online portals for payment.
There are many online platforms where you can collect rent but know that different platforms come at different prices. Most charge a small monthly fee, while others are free.
Here are some popular options for DIY landlord rent payment portals:
- Rentec Direct
Many of these offer additional functionalities, like direct messaging with tenants, document uploads, maintenance request handling, and property insights. These extra features can be valuable, as they provide digital documentation and enhance overall management capabilities. So, take a closer look at what these platforms offer beyond their cost before deciding.
You can also consider using payment apps to collect rent money.
Here are some popular payment apps that landlords and tenants use for rent transactions:
These applications are free to use and allow you to transfer and receive payments easily. All you have to pay is the transaction fee, but that’s already minus your transportation cost going to and from the bank and other fees associated with rent checks.
Payment apps can serve as your digital wallet, as they allow you to link your account to a bank account, debit card, or credit card.
It’s Time to Make the Switch
Embracing digital payments provides more benefits than risks to landlords like you. It helps you improve your cash flow, have a smoother transaction process, enable collecting and processing rental payments remotely, and streamline your record-keeping.
It’s time to stop collecting rent checks and time to take advantage of the convenience and efficiency of digital payments to make your life more efficient and hassle-free.
Shifting the whole process from traditional to digital payments can be daunting for landlords. But don’t worry. Our property managers at Logical Property Management can help you with that shift and provide more expert insights on how to boost your rental profits. Contact us today!