Hiring a Property Management Company to Collect Rent and More

Landlording can be an exciting adventure for some. It involves building a business to collect rent payment and generate income while providing housing to customers (tenants). Some landlords prefer to do everything on their own, and some prefer to take a more hands off approach and hire a property management company to do it all. And then there are some landlords that want to control some aspects of the business – like filling vacancies – while turning over other responsibilities – like maintenance and rent collection – to a property management company. In any event, hiring a property management company comes at a cost as they charge fees for their services. We’ll take a look at some landlording responsibilities and the pros and cons of doing it yourself or hiring a property management company.

Collecting Rent

As a landlord, there is nothing more important than getting paid through consistent on-time rent collection.

ProsCons
DIY+Know your tenant
+Use online rent payment services like ClearNow & Cozy to simplify process
-Deal with delinquent tenants
-Need to understand eviction process
Hire Property Management Company+Enforce lease policies for late or unpaid rent
+Use online rent payment services like ClearNow & Buildium to directly deposit owner proceeds
Pay property management fee typically as a % of rent collected

Screening Tenants

Finding a tenant that will pay rent on time and keep your property in good condition takes time, so screening tenants becomes an important task.

ProsCons
DIY+Easy to screen without a site inspection
+Credit & eviction reports help eliminate guesswork
-Potential lack of experience with the application and screening process
-Need to develop tenant onboarding method
Hire Property Management Company+Trained eyes to spot good tenant qualities & red flags
+Established process from application to screening to lease signing
– Pay property management fee

Advertising/Listing Properties

Before you can collect rent payment, you have to fill your vacancy. In addition to tenant screening, knowing where and how to place your ads are important tasks to finding the right tenant.

ProsCons
DIY+Easy to list vacancy online with high-traffic websites like Zillow & Trulia.
+Some rental property accounting software like Rentec Direct and Buildium includes listing features
-Need to manage inquiries and property visits
Hire Property Management Company+Expertise at rental marketing to fill vacancies quickly
+Have local real estate knowledge to help set competitive rents
-Pay property management fee

Final Considerations

Hiring a property management company to collect rent, screen tenants, advertise vacancies, and more will likely be based on finding a balance among effort, time, and money. If you can afford the expense of a property management company to free up time and reduce headaches, then that is a win for both parties. At the same time, many of today’s landlord resources have features that benefit both the property manager and owner, like ClearNow’s owner proceeds. As a landlord, you have choice to make the decision easier of whether or not to hire a property management company for your landlording needs.

Mobile Deposit and Rent Checks

One of the satisfying conveniences of the smartphone revolution has been the introduction of “mobile deposit” (using an app to take a picture of a check and deposit it). For landlords and property managers, mobile deposit of rent checks is a big improvement over driving to a bank branch or ATM. But, is the mobile deposit of rent checks the best way for a landlord to receive rent payments? Often there are significant drawbacks with mobile deposit that are overlooked.

The downsides of the mobile deposit of rent checks:

  1. Mobile deposit is still based on receiving a paper check – typically by USPS mail – and this can mean delays and lost checks. The dirty little secret of bank online bill payment is that it is still based on sending checks to landlords and property managers. Only the largest bill payment recipients, like utility companies, get paid electronically. This means most landlords whose tenants use bank online bill payment are still receiving checks. And, mail can get lost or delayed.
  2. Mobile deposit of rent checks often have a hold period or delay. Different banks put different “holds” on access to funds that are mobile deposited. While the first $200 must be available the next day, sometimes the delay on larger amounts can be many business days.
  3. Mobile deposit of rent checks can still bounce. If the tenant does not have enough funds by the time you deposit the check, you will likely be charged an insufficient funds fee (NSF) (often between $27 to $35). Even if the tenant had sufficient funds when the check was created, due to other withdrawals, the tenant may have insufficient funds by the time you deposit a check.

A more advanced method of collecting rent from tenants is “online rent payment“. With online rent payment, there is no paper rent check – payments go directly from a tenant’s bank account to the landlord’s bank account. The beauty of online rent payment services is that there’s no checks in the mail to get delayed or lost. Even if the landlord is on an extended vacation (everyone’s wish!), the deposit will occur.

One of the oldest and most trusted online rent payment services is ClearNow. For a small monthly fee relative to the rent collected, landlords save time, collect rent faster (in 3 business days the funds are usable), and issues with lost or delayed mail are a distant memory. A landlord can enroll with ClearNow at www.ClearNow.com.