A lot of things have gone electronic over the years as the internet has become more secure and safe. More than 80% of car loans and mortgages are paid electronically and a great deal of people shop online using their credit card. Surprisingly, most landlords continue to collect tenant checks as less than 5% of rents are collected electronically.
As with most things in life, there are pros and cons to using automated rent collection as a landlord. First, it will help reduce late payments by as much as 75%. While it varies from one complex to the next, on average there is a 2%-3% delinquency on non-electronic payments. By placing tenants on automatic recurring payments, it will also eliminate possible delays with mail delivery.
Another advantage for landlords is that it will lower administrative overhead by up to 10%. By eliminating the need to collect and deposit checks to the bank, it will free up your schedule and eliminate the waiting time to get the money. Believe it or not, this can actually reduce the need for more personnel in regards to rent processing.
There are advantages for the tenant as well by eliminating tenant checks. With the use of a credit card, the tenant can take advantage of credit card rewards. It can translate into frequent flyer miles as well as improve your credit score by making payments on time.
Another benefit for tenants is the fact that it can help reduce simple errors. Everyone has had a payment slip their mind from time to time. By not having to remember to pay because the rent is automatically withdrawn from your account, you never run the risk of paying late.
The primary con to be aware of when using automated rent collection instead of collecting a tenant check is that the tenant may not have enough in their account. Sometimes people live check to check and when they receive their paycheck on the first, it takes a day to process into their account. As a result, they do not have enough money to afford rent by the first. However, with the four or five day grace period they can get rent in.
Not only is this a negative for the landlord, but it can put the pressure on the tenant as well. If they are late on rent month after month, this will lower their credit score over time and can lead to many more problems in the future.
Collecting tenant checks seems to be the consistent route most landlords take today, but going automatic certainly has its upsides. And with terrific sites like rentmatic. com and clearnow. com available to choose from, it can help smooth over the process.