One of the hardest tasks in rental property management is on time rent collection. If you are already own rental property, you know how painful it is to collect rent on time.
On one side, it messes with your cash fellow. And on the other hand, it causes a challenge to your relations with tenant. As we discussed late fee fines, no tenant like being slapped with fines as there could be possible genuine reasons why they got late in rent payment.
One of the many solutions to the aforementioned problem is flexible rent payments. It encourages the tenant to pay their rent on time. Offering your tenants to pay rent on time have great benefits for both landlords and tenants. This mechanism not only eliminates late fees but also serves as a great service to the tenants. In other words, it helps collect rent timely and improve your customer service which makes it a win-win for both tenant and landlord.
So, what is flexible rent payment? How and when can you set up a schedule for flexible rent payments and how can it benefits your landlord business in return. We will discuss all that in this article today.
What is flexible rent collection?
Flexible rent payment gives tenants freedom in rent payments. It allows them to pay rent in installments throughout the month instead of paying in the beginning of the month when its due. This way ensures they pay the landlord in full and help tenants budget better.
Why offer flexible rent?
If you study the job market closely, you will find out that too many people live off of gig economy. They don’t get paid in the form of paychecks where they get paid every month. They get paid in different mechanisms. That is the reason, full rent in the beginning of the month does not suit their budget. This sometimes result in late payments which results in late fees and cause problems with tenants who earn their living from gigs.
Traditionally Old school landlords collect rents in the start of the month and for them this system works well. Because, leases start in the beginning of the month and most people get paid at the end of the month so they pay rent when they get paid.
This makes sense because this way, it is easier to track payments when all the tenants pay on the same system which means they are on the same page.
However, technology helps when drastic changes occur in a system. rent collection apps makes it really easy to manage flex rents.
Covid-19 proved that it is a great idea to switch some of your tenants to flexible rents to help them pay rent easily, which in turn helps families manage expenses better and budget better.
To even better your customer service, try to match your due dates to the tenants payment schedule.
This may result in collecting rent payments in the middle of the month or whenever your tenants get paid.
It is critical to note here that flexible rent payment is different from. It also doesn't encourage tenants to indebt their selves. It is a way for landlords to get rent in full every month and it makes it easier for tenants to pay the rent in full every month.
Benefits of Offering Flexible Payment
Offering flexible payments has benefits for both your tenants and you being a landlord. No doubt that this offer does not suit everyone. In fact for many of your tenants collecting rent in the beginning of a month is a suitable schedule.
However, flexible rent payment solve the problem of late payment, late fee fine and debt in terms of rent for self employed, and gig workers.
Let’s have a look at the benefits of the flex payment one by one.
Late fee prevention
Tenants who pays on time or already having a hard time paying the full rent in the beginning of the month don’t really like late fees. Tenants who get paid a few days after the first of the month are going to have late fee fine every month as they won’t be able to pay the rent on the first of the month. However, if you offer them a due date that matches their payday, they would be able to pay on time every month.
Tenants that work in the gig economy are happier with the flex rents. Apart from avoiding fines in late fees, they won’t have to worry about being late on rent payment and hence will have less stress about the budget.
A landlord’s reputation has a direct impact on the vacancy rate. Thus, your reputation among tenants plays a key role in your cash flow. That means, to have a steady cash flow from your rentals, you got to have great reputation.
So, a landlord that adjusts the due date with the tenant’s pay day proves that he/she is a caring landlord. The tenants, by default, expects the rent to be due on the first of the month and in fact that is how rent works. But it is not practical for some tenants.
For instance, you have tenant who is self employed and you allowed them to pay twice or three times a month in the form of installments. Or a tenant that get paid, say on fifth, of the month and you set the due date on 8th or 10th for that tenant, soon you will have a great reputation. You will be considered a responsible, caring and accommodating landlords who will go above and beyond to serve the tenants.
One of the many problems that lead to eviction, is late rent payment. However, when you offer flex payments, the tenant face lesser stress and you get full payment every month. This reduce the overall tension between you as a landlord and the tenant. reduced tension results in lesser chances of eviction. It eliminates the reason that cause other problems that results in eviction.
Eviction is a costly move. And after eviction you got to fill the vacancy fast to have an uninterrupted cash flow. However, if you don’t have to evict at all, you will continue to have a healthy cash flow.
Setting you apart
Offering flex payments sets you apart from other landlords. Apart from lesser evictions, you find it a lot easier to fill vacancies when you mention flex payments in your interviews.
For instance, a self-employed worker is looking for an apartment. They find two apartments with similar features. one apartment is yours and another one is owned by another landlord.
You offer them flex payments while the next one insist on rent being paid on the first. Here, you prove as a caring landlord who care enough to changing the due date and even offering installments plan every month. Which rental unit will the applicant go for?