Closing on 1st Investment Property - Best Way to Collect Rent?

Question

As the title suggests .. I am about to close on my 1st rental property (a duplex that I will be house hacking).

I am inheriting 2 tenants, both of which have leases that will be expiring at the end of April.

I have 2 immediate questions:

1.) For the final month's rent for each tenant, am I crazy to want to try and collect a cashiers check / zelle payment / venmo request, or does this need to be more "professional"?

2.) For future rent collections on my own leases, what is the "best" way for me to collect rent as a beginner, and as someone who wants to minimize expenses as much as possible?

Bonus Question:

For  someone that is only managing 1 tenant .. is property management software a necessity, or just a "nice to have". Again, would love to minimize expenses as much as possible, but do not want to cut corners in the areas that matter.

Thanks for all the help!

Katie Holmes · Answer

For your second question, I recommend Baselane! It's banking designed for Landlords and has rent collection as one of the features :)

Diego A. · Answer

Hi @Justin Springborn

Well done for closing your first deal

1) those are the most common ways to collect the security deposit when lease agreement is signed and when you hands over the keys

2) I use apartments.com. they have a ACH setup and other features that are useful, simple and free.

3) I use Stessa, It is always good to have some way to track even with one property. Stessa can collect rent too but I haven't used it

Bonus answers, make sure to setup an bank account for the property.

Preston Dean · Answer

Hi @Justin Springborn

Sounds like you finally got something. Happy for you.

1. Either of those are fine as long as you are able to provide a receipt to the tenants

2. https://www.avail.co/ This is what I used when we had our rental that I self managed. It was very user and tenant friendly. It sent them reminders about rent payment and gave me a tax form at the end of the year. Free for you to use too. Highly recommend.

Bonus answer to your bonus question: No, not necessary. Just nice to have. Create yourself a google spreadsheet and use that for your taxes.

Wish we could have gotten something together.

Congrats.

Evan Polaski · Answer

@Justin Springborn

1. Are you crazy?  No.  But you may not be able to force your tenant to pay a certain way, so you should confirm what is legal before pushing too hard in any one direction.  In my experience, if you are in a pretty decent area, this is not an issue.  Only ever had one tenant, ever, skip last month's rent telling me to apply security deposit.

2. I am down to a single rental unit now, but used to have about 10.  I am a big fan of Zillow for leasing and rent payment.  I can't force it, but when I had only market rate tenants with professional jobs, it made everything easier.  I would do an open house for showings, email application link right then, if they were interested, and then could setup lease and payments all through the same system.

You get your full rent each month.  Tenant has ACH or Credit card payment options.  If they choose credit card, they pay the fees, so you still get full rent. Only downside is while you get a notice that rent was paid in full on first (assuming it was, and notified if there was an issue), if they use ACH rents don't show in your bank account until 6-7th of each month.

Nadeem Alamgir · Answer

Hey Justin,

1. Check your lease first to see what was agreed upon. You’re not crazy for wanting a more secure payment method like a cashier’s check, Zelle, or Venmo, it’s totally fine to ask. But if the tenants have been paying a certain way consistently, it might be easier to stick with that. Just be sure to document everything and provide a receipt if needed.

2. The best way to collect rent depends on what works best for both you and your tenants. Zelle, Venmo, or direct bank transfers are great for small landlords since they’re free and easy to use.

3. For just 1 unit, you don’t really need property management software, but it can help keep things organized. If you’re trying to keep costs down, a lease agreement and a spreadsheet should do the trick for now.

Best of luck!

Joe Norman · Answer

(1) You're not crazy, but make sure you're in compliance with what the lease agreement says about how rent can be collected.

(2) I'd say whatever works best for you, just make sure that your lease is written in a way that gives the landlord flexibility on how rent is collected. Electronic payment is fine and I wouldn't worry too much about appearing "professional" as a mom and pop landlord, make it as easy as possible on yourself and for your tenants.

(3) Professional PM software is definitely not necessary for a 2 unit mom and pop operation, but do make sure that you are keeping good books come tax time.

Closing on 1st Investment Property - Best Way to Collect Rent?

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