How To Collect Rent From Your Tenant

[NeilUttamsingh]

Hi Friend,



If you are new to real estate investing, and looking to buy your first rental property, you will probably find this article a good read. Please check it out...







If you are looking to purchase your first rental property, you may have a question or two about rent collection.


If you do, that is normal.


A lot of new real estate investors have questions regarding this topic.


I often get asked by new landlords how they should be collecting their rent from their tenants.


There of course is a variety of ways in which you can do this.


In this blog post, I am going to outline for you a number of these methods as well as some of the potential pros and cons of collecting rent in these various manners.


Here are the methods in which you can use to collect rent from your tenant.


1) Post Dated Cheques


When your tenant first moves into your rental property, you can ask them at the beginning of their lease term to provide you with a series of post dated cheques. Many landlords do this, because this is a method that works.


This mode of rent collection is both easy for the landlord and easy for the tenant.


It is easy for the landlord because, they do not have to make monthly trips to the rental property to pick up the rent.

It is easy for the tenant because they do not have to arrange their schedule and make time to meet their landlord each month.

There is also a big downside with collecting rent in this manner.


Since the landlord is not travelling to and meeting with the tenant each month to pick up rent, there is reduced opportunity to meet the tenant face to face and build a strong relationship.


2) E-mail Money Transfer / Bank Transfer


In this day and age, technology is awesome! There are new options available to us in the world of banking than ever before. An example of this is the email money transfer. Tenants can now transfer to their landlords their monthly rent in the form of an email money transfer. This is an efficient way to collect rent and it saves time for both the landlord and tenant. Scheduling a time to meet to pick up rent in person can sometimes be challenging. This mode of rent collection solves that problem.


3) Pick Up Rent In Person ` Cash or Cheque


Although not practical in every case, this is my favourite mode rent collection. This is my favourite mode of rent collection because it allows you as the landlord to build a strong relationship with your tenant on an ongoing basis.


Not only does it allow you to build an ongoing, strong relationship with your tenant, this strategy allows you to check on the property on a monthly basis. If you have great tenants, you get to see each and every month how well they are taking care of the property. On the flip side, if you have tenants that you are not too sure about, this method allows you to carefully observe the condition of the property.


So there you have it. These are three modes of rent collection. There are other ways in which you can collect rent, however, as a new real estate investor, you should focus your efforts on one of these 3 methods.


Happy Investing!


Neil Uttamsingh

 

[RussellWestcott]

Great topic...



Excellent thanks Neil. Eric Peter's just presented in Western Canada "Safe and Simple Rent Collection", which outlines many of the details you mention above and a couple more



link here to June 2013 workshop folder



There is an audio, handout and presentation slides

 

[NeilUttamsingh]

No problem Russell. I am happy to share my insight.



Hope you are well!



All the best,



Neil

 

[invst4profit]

It should be noted that in Ontario a landlord does not have the right to insist on post dated checks, The tenant decides.

Also it is not the obligation of the landlord to pick up rent checks. It is the legal responsibility of the tenant to insure the landlord receives the rent payment on time. Making it a practice to pick up rent checks is not a good practice and will come back to bite the landlord when the tenant can't pay.



Although visiting tenants to pick up checks may be a opportunity to bond and check out the property it is extremely difficult and very time consuming if you have numerous tenants. In addition if you do "pick up checks" this then becomes the standard you must follow for all payments. If you can't make a meeting by the first of the month it's your problem.

If you do pick up checks guess what happens when your tenant decides not to pay, it's called hide and seek the rent check. It is difficult to serve a late payment notice when it is the landlords responsibility to track down the tenant rather than have the tenant responsible for finding the landlord.



Of all my tenants only one does not provide post dated checks, He always calls to arrange to deliver his rent and we usually have a pleasant visit. The rest of my tenants I see regularly when I am in the area checking out the property doing repairs etc. The major advantage of not having a property manager is I am always on top of everything that is happening and I get to know all my tenants personally without being there to collect money...

 

[LotharBriones]

TenantPay works well too! I have two of my tenants on TenantPay and I am happy with this alternative! It costs though: 1.05+tax per transaction.

 

[Patrick]

We now use Tenantpay for almost 100% of our rent collection.

The account and number that Tenantpay lets you set up for a property can remains static. It is very similar to a utility bill . It can be paid on-line or at a bank the same as a utility bill can be paid.

Partial payments can be made by your tenant, if for example your tenant has some but not all the rent money.

Once the payment is in your account its not coming back out. (it doesn't NSF)



I also use tenantpay as a way to transfer funds between corporations without having to go to the bank and deposit a check.

 

[Emil1753]

+1 for TenantPay.

Simple and efficient way to collect rent.



There is a new company I've seen pop up recently named RentRelay. Does anyone have any experience with this company?



Emil.

 

[housingrental]

What are the disadvantages of tenantpay?

Is it legal to require tenantpay to be method of payment for tenants in Ontario if set at start of lease?

 

[VitaminG]

I've used TenantPay,and one thing I didn't like about it was that it doesn't let you initiate automatic debits. The overall concept is great but I found a much better system that works for me called RentXchange. With RentXchange, you can do automatic payments, online banking payments (like tenantPay) and even credit card payments. They also include online rental applications with the ability to collect deposits instantly, its saved me a ton of time and I love it, best of all so do my tenants. some of them use their card just to collect reward points. anyways, they gave me a 60 day trial of the system at no cost when i told them I was a REIN member. I recommend giving it a shot. Oh, and with this, I have seen my late payments DRAMATICALLY decrease because of the automatic debit system. You can also get tenants to put up a credit card as backup in case the debit fails for any reason. It's kinda like PayPal....



www.rentxchange.ca - hope this helps