Improved Rent Collection

One year into the experiment that many owners doubted would work and interestingly..it has! A year ago, reviewing the staff time lost with tenants coming into our office to pay rent (usually with cash) I started to consider what we could do. It was not so much the act of accepting the rent and issuing a receipt that was taking time. It was two things that happened while the tenant was making payment. One..it dictated an immediate trip to the bank if cash was involved (and it was 90% of the time). The second was the tenant used this moment to ask for their property manager, and if their manager was not available, proceed to outline with whoever was taking their rent, a list of items they wanted to report on the home needing maintenance. In some cases they sat on these maintenance needs until they came into the office! If a person chose to help them who was not involved in property management, it sucked their time and it usually just ended with the manager contacting the tenant to ask them about their needs.

Most management companies are set up to have tenants come in and deliver rent. We are, and have been for years. We actually have secured drop boxes for after hours. But this is 2012, and the methods for making payment have changed. We had offered for a couple of years an on-line check payment system. We told tenants about it, but they still seemed to like to make a trip to our office, during regular hours, to see somebody with their rent.

Late last year we updated the lease and started integrating the new lease into our tenant base. The new lease has a very simple clause that we point out to all tenants:

Payments must be made on line through secure websites provided by Manager. If Tenant chooses not to utilize the on line payment systems provided, payment must be made at: 9800 Westpoint Dr. Suite 150,Indianapolis, IN 46256 (or at any other address designated by Manager). Tenant agrees that payments made in person will incur an additional Ten Dollar ($10) service fee due at the time of payment.

A penalty for paying the rent in person? I was told that was crazy. I heard that the tenants likely did not have computers or bank accounts. Computers are available everywhere now. Bank accounts…there are options. Plus we were not saying we would not accept the rent or that they could not pay it in person. It was just going to cost an extra $10 to do so.

So here is the update. We added credit card acceptance this year. We are up to 95% of our tenants paying their rent on line with a check or credit card! The tenants found a way to accommodate this requirement instead of pay $10! We did not want the $10 anyways. I wanted our staff to be able to do what they do best, and the tenants to report maintenance issues on time and through the correct methods. It has added an expense to process electronically but the gains far exceed the expense. I admit I had a question if this would work also but was certain that it could be implemented and completed with ease. Our owners should also be pleased as these methods have sped up cash collections and, reduced to almost zero, the amount of returned checks in 2012.

Technology is a great thing when used to tame a beast like rent payment and collection. In this case, I think we succeeded!

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