We all need a little hand in life. One of the tricks that most of us develop is to create a “reminder system”. Whether it is a datebook, a calendar, or increasingly an online to-do list, reminders help us keep on track with the things we need to do. As a landlord, reminders are also a great way keep your tenants on track to pay the rent to you. Wouldn’t it be great if there was a way to automatically email your tenants each month a rent reminder? Fortunately, it is possible to generate automatic rent reminders with a service like ClearNow (www.ClearNow.com).
The Power of Reminders
Do reminders really work? Maybe it is common sense, but it turns out that psychological studies show that reminders really do work. Interestingly, studies show that while reminders are very effective (causing 30% more activity sometimes than without the reminder!), people consistently underestimate how effective reminders actually are. What does this mean in practice for landlording? It means that rent reminders are effective, but we probably undervalue how effective they truly are.
Automatic Rent Reminders Built In to Online Rent Payment
What’s an easy way to implement automatic rent reminders? It turns out that many online rent payment services, like ClearNow (www.ClearNow.com), send out an email rent reminder ahead of time. With ClearNow, an email rent reminder is sent eight days prior outlining the rent to be pulled and the debit day. The reminder encourages the renter to have the proper funds in their bank account.
Online rent payment is already a great process. It allows landlords and tenants to pay rent on time without doing any work (and thus without any procrastination). It can build tenants’ credit history. Automatic rent reminders are just another reason to consider using an online rent payment service for those services that, like ClearNow online rent collection, automatically build it in to the process.
There is a lot of discussion about how online rent payment benefits landlords. In fact, online rent payments are a win win for both landlords and tenants. We all lead busy lives, including tenants. Anything that helps simplify and save time are welcomed. Similar to landlords, tenants benefit from online rent payment.
Never Forget to Pay Rent
The convenience of online rent payment is difficult to dispute. As long as tenants have funds in their bank account, rent will always be paid, and it will be paid on time. Most online rent payment services, like ClearNow, are automatic. This means once a tenant is enrolled, their payment is made on their designated debit day every month. Tenants do not need to schedule anything online. They just need to have sufficient funds in their bank accounts. Life is easy and simple when chores, like paying rent, are on autopilot.
Build Credit History
In the early 2000s, the largest US credit bureaus started adding rent payment information to an individual’s credit history. Initially, they offered credit reporting only to tenants who rented from the largest apartment companies. So there was still a large number of tenants missing out on this opportunity to build credit history because they were renting from smaller landlords. In 2012, Experian made a revolutionary step by allowing tenants using ClearNow’s online rent payment service to report their rent payments. For many tenants, rent is their largest expense. So when paying rent on time, tenants benefit from online rent payment. ClearNow along with other services enable tenants to build a credit history with online rent payment.
Twenty years of observing landlords while operating the ClearNow online rent payment service has taught us one powerful lesson. Good landlords screen their tenants. Even better, while in the past tenant screening was a slow and paper-based process, today’s online services make it easy to run a fast tenant credit check.
Tenant Credit Checks Protect the Landlord
As the adage goes, an ounce of prevention is worth a pound of cure. While tenant screening is not foolproof, a credit report is an indicator of the past financial habits of an individual. For many landlords, their biggest mistake was renting to a tenant that was not qualified and having to deal with an eviction.
Online Tenant Screening is Fast
In the past, running a fast credit check on a tenant was not possible. Now however, the process is lightning quick. With a service like ClearNow SmartMove, the process is as fast as email:
Having your tenants pay rent via their bank bill payment system seems high tech. Unfortunately, the dirty secret of bank bill pay for rent payment is that it is the opposite of the high tech wonder it seems. Unless you are a large corporation, bank bill payment typically just creates a paper check that is mailed to you. As a result, landlords who collect rent via bank bill pay encounter some distinctly low tech issues.
The Check is Still in The Mail
When your tenants wrote checks to you, did it ever get ‘lost in the mail’? Mail delays and undelivered mail can still exist if your tenants use their bank’s bill payment service. For anyone except large corporations, the bill payment service simply prints out and mails checks at a central facility based on your tenant’s online bill payment instructions.
Given this process, you still need to be around to collect, sign, and deposit your check. Further, if checks are mailed to you, you can not deposit the check if you are on vacation or out of town and the check is sitting in your mailbox.
Recordkeeping and Credit Reporting are Missing
When a tenant sends you a rent payment via their bank bill pay, you have to record the payment. Additionally, the tenant does not have the ability to build their credit history by paying rent via bank bill pay.
In contrast, there is another popular method for rent collection – “online rent payment”. Unlike bank bill pay, online rent payment does not involve paper checks – just real electronic transfers. There are no paper checks to get lost in the mail or sit in a mailbox waiting to be deposited. Further, with a popular online rent payment service like ClearNow (sign up at www.ClearNow.com), you have great recordkeeping and reporting and your tenants can build credit history when they pay you rent on time.
In the early 2000s, the big 3 US credit bureaus started adding rent payment information to an individual’s credit history. Initially, they offered this only to tenants who rented from the largest apartment companies. So there were still a large number of tenants missing out on this opportunity to build credit history because they were renting from smaller landlords.
There are a number of services that help tenants build credit history with online rent payment information. Unfortunately, some of them can be a little expensive. RentReporters charges a $94.95 sign-up fee and then $9.95/mo. Rental Kharma similarly charges a $50 setup fee and then $8.95/mo per tenant.
Cozy is going away. What is a good online rent payment service replacement?
Cozy is a popular online rent payment service. As of July 2021, their homepage indicates that they are going away. It states “Cozy will be saying goodbye July 28, 2021”. So for current Cozy customers, what is a good replacement service?
Apartments.com Is Not Quite the Same as a Cozy Replacement
The Cozy homepage pitches transitioning to Apartments.com. However, it turns out that the transition means a reduction in features.
Other Online Rent Payment Services Are Good Replacements
Fortunately, there are other online rent payment services that are superior to Cozy. For example, ClearNow (www.ClearNow.com) has been around for more than twenty years. ClearNow allows online rent payment for commercial tenants. And tenants using ClearNow can report their rent payments to Experian. Instead of the bait-and-switch pricing of some services, ClearNow customers pay a flat fee of $14.95/mo for their first tenant and $2/mo for each additional tenant.
Unfortunately for landlords, many online rent payment services do not allow the owners of commercial property to use their service. Often, landlords discover this only in the fine print. Fortunately however, services like ClearNow (www.ClearNow.com) permit their customers to process rents automatically for a commercial property.
Many Online Rent Payment Services Only Support Residential Property
The number of residential properties outnumber the number of commercial properties. For this reason, most online rent payment services focus only on residential customers. For example:
Find an Online Rent Payment Service for Commercial Properties
Do not despair! As a matter of fact, there are online rent payment services for landlords with commercial properties. One of them, ClearNow, allows commercial rents as long as they are lower than $10,000/mo. While ClearNow requires a business owner to sign up in their own personal name, they can submit bank account information for their business. Online rent payment is a win win for landlords and their commercial tenants.
Landlords rely on tenants for income. So for landlords to collect rent on time, they need to make paying the rent easy. Here are a few simple things landlords can do to ensure they get paid . . . on time:
Provide Convenient Payment Options
Traditionally, rent is paid on the first of every month. Not all tenants get paid around that time, which makes it harder to pay rent on time. Landlords willing to accept rent payment on a different schedule can increase the odds to collect rent on time. For example, if a tenant gets paid every two weeks, then collecting rent aligned with the tenant’s paydays creates a win win for everyone. Another convenient payment option is online rent payment. Here, tenants do not need to remember to write and mail a check, which takes time and advanced planning. Instead, rent is automatically withdrawn on the agreed upon payment day. Landlords benefit by having the funds directly deposited and eliminating a trip to the bank. An online rent payment service like ClearNow provides a choice of debit days that satisfy the needs for both landlord and tenant.
Anything to reward on time payment increases the chances to collect rent on time. Reducing the rent by a certain amount if the tenant pays earlier than the due date can be an incentive. Additionally, landlords who use certain online rent payment services like ClearNow and RentPayment can help tenants build a credit history by furnishing on time payments to the credit bureaus.
Property management companies must attract and retain rental property owners. Without owners as customers, there is no property management business. How property managers can attract rental property owners does not have to be difficult. Here are some simple and easy to implement tips:
Property managers who stand out from the competition attract attention. If you provide value and make the lives of rental property owners easier, you can win business. For instance, property managers using ClearNow’s owner proceeds is a strong selling point. This feature enables property managers to directly deposit rent to the owner’s bank account at the same time managers receive rent from tenants. This online rent payment delivers funds faster. Rental property owners want to receive funds as quickly as possible. Finally, property managers can also attract rental property owners by helping them find other investment property. Property managers who do the research and provide owners with a list of investment leads save owners time and create value.
Seek Customer Referrals
One of the easiest and most effective marketing strategies is to ask existing customers for referrals. There is a good chance rental property owners know other owners. If you provide value, your customers will tell owners how effective you are with managing their rental property. Additionally, property managers can also find customer leads in local real estate clubs. Members of these types of organizations include rental property owners, which is the property manager’s target audience! While some club members self-manage, others are probably looking to hand off the task of management.
In conclusion, providing value and seeking customer referrals are just a few tips on how property managers can build business and grow revenue.
In today’s mainly paperless world, online rent payment has almost made rent payment by check, cash, and money order extinct. Instead, payment by ACH and credit card have become more popular mainly because they are convenient payment methods. Between the two, we’ll look at the pros and cons of paying by credit card.
Convenient: You don’t have to go through the trouble of writing and mailing a check. If you can pay rent by credit card, you’ll provide your card information over the phone, online, or in person. The effort is minimal.
Rewarding: Most credit cards today are tied to rewards. Such rewards can appear in the form of cash back or points. Every time you use your credit card whether it be for merchandise or online rent payment, you earn rewards.
Access: Many landlords do not accept credit card payments mainly due to the high cost that credit card companies charge. So tenants need to find landlords willing to accept credit cards for rent payment. If you can’t find a landlord willing to accept credit cards, then find one who will still accept online rent payment by way of an ACH debit (direct transfer from bank account to bank account). An online rent payment service like ClearNow is beneficial for landlords and tenants who want to do ACH debits.
Fees: Once you find landlords willing to receive rent payment by credit card, be prepared to pay a fee. Most credit cards charge based on a percentage (usually 2% to 3%) of the amount charged making it quite expensive. For example, a $1000 rent payment can realize $20 to $30 in fees.