Surprisingly Simple Solutions To Collect Rent on Time Always

Collecting rent on time is always a significant issue for landlords to deal with. But the COVID-19 outbreak meant that it became more challenging for landlords to collect rent. Millions of people became jobless, meaning that they had little funds to pay rent. Although stimulus checks and extended unemployment benefits gave some respite to tenants, paying rent for millions is a significant challenge.

The best solution for landlords is to find different ways to help tenants pay rent—at least part of their rent. After all, collecting rent is the lifeblood of any landlord business. Healthy cash flow means you, as a landlord, can pay your bills, mortgage, and maintain your rental properties.

One of the most straightforward solutions to help landlords collect rent is to offer tenants flex pay. Allowing flexible rent payments can help tenants pay rent according to their schedule. Other solutions for collecting rent on time include using rent payment apps and proactively communicating with tenants.

Why could flex payment models for collecting rent be the way forward in a post-COVID-19 era? This article will explain why flex pay options are a surprisingly simple solution to collecting rent. You’ll also find out about other ways to encourage tenants to pay rent on time.

The Problems with the Traditional Rent Collection Method

The traditional way of collecting rent is that rent is due on the first of the month. Usually, renters send a check that the landlord deposits in their bank account. However, the coronavirus pandemic has forced landlords to reevaluate how they collect rent.

We live in a digital age, and traditional rent collection methods seem severely out-of-date. Think about what’s involved in collecting rent the “traditional” way. You wait for the paper rent check to arrive in the mail. Then, you must drive to the bank to deposit it. After that, you wait for around five days for the cash to clear.

Traditional rent collecting seems like a lot of time and effort for something you can easily do electronically.

Why Landlords Should Consider Flex Pay to Collect Rent

At the start of the pandemic, the National Multifamily Housing Council (NMHC) reported that flexible payments could benefit tenants and landlords. For example, shorter payment schedules are ideal for self-employed workers or anyone in the “gig” economy. Offering tenants flexible payment options to match their income flow results in more tenants paying rent on time. Even just switching to online rent payments can help folks stay in their homes.

Of course, many landlords now use rent collection apps to streamline their business. Online rent collection methods benefit both landlords and tenants. Rental apps can send automatic payments, accept security deposits, calculate late fees, and communicate with tenants. Some of the best property management apps also report rent payments to credit reporting bureaus, accept maintenance requests, and manage lease applications.

Flex pay allows tenants to pay rent on their schedule. They could split payments during the month and pay rent in two or three installments.

Another flexible rent collection method is to use a rent collection app and accept credit card payments.

Flex Pay Models

Let’s look at some simple, flexible payment solutions that can benefit tenants.

Shorter payment schedules

A popular flex pay rent model is to split rent payments throughout the month. So, instead of rent being due on the first, a tenant could pay twice in the month. This payment schedule can help tenants manage their finances better. Aligning rent payments with a tenant’s pay schedule means that they are more likely to pay rent—and pay it on time.

Offer multiple payment options

Flexible payment methods could also include diversifying how tenants pay rent. For example, tenants who have options to pay by debit card or credit card are more likely to pay rent. For some renters, credit card payments mean they can reap any benefits that credit providers offer for using credit cards.

Deferred rent payments

It makes sense to offer good tenants the option to defer some rent payments if they have a temporary financial setback. Let’s face it—it’s a costly task to evict a tenant, never mind all the stress that goes with it. So, you could allow reliable tenants the chance to break up one or two months’ rent payments over a more extended period.

Of course, deferred rent payments aren’t a flexible payment option for everyone. However, if the tenant’s cash flow problems are short-lived, allowing a temporary reprieve could help them stay in the unit.

Offer incentives to encourage paying rent on time

Besides offering flex pay options, giving tenants incentives can encourage them to pay rent. In a crisis, tenants have difficult choices to make on how they spend their hard-earned cash. So, rewarding them for paying rent in full and on time is an excellent way of rewarding them.

Here are a few incentives you could use to get tenants to pay rent on time:

Offer a discount on rent if a tenant pays rent for a certain number of months running
Put aside $5 every month when they pay rent on time and when they renew their lease, reward them with a gift card
Upgrade appliances to higher-end models for tenants who pay rent on time

How Flexible Rent Payments Help Prevent Evictions

Flex pay can be a simple solution for landlords to avoid evicting tenants. Many tenants find that it’s easier for them to pay rent in installments than come up with all the rent at the end of the month. The implications for landlords are enormous. It means happier tenants, improved cash flow, and better landlord-tenant relationships.

For example, when eviction moratoriums end, tenants will be due all unpaid rent during the coronavirus pandemic. So, landlords need a secure and flexible solution to allow tenants to pay rent in full, albeit eventually.

The Most Effective Way to Ensure Tenants Pay Rent on Time

Whatever rent collection method you use, clear and open communication with tenants can resolve many rent payment issues. Encouraging tenants to use a trusted rent payment app or pay their rent online is an excellent start. However, flexible rent payment options could become the new norm as landlords and tenants adjust to life after COVID-19.

How do you encourage tenants to pay rent when it’s due?

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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.