Successful landlords want to increase rental income and the value of their rental property. There are some simple ways to achieve both goals. With any business, investing in your property so that you can offer more value can justify commanding a higher rent from tenants.
Boost Curb Appeal
One of the driving factors tenants consider when searching for a rental is location. If your property is located near parks, popular businesses like grocery stores, or main travel routes, stressing the benefits of the physical location of your rental property can boost interest and value. Following close behind geographic location is the curb appeal of your property. Is the exterior clean and in good shape? Is the landscaping neat and attractive? If the answers to these questions are “YES”, then you’re already one step ahead in providing value.
Take a Look Inside
You don’t have to do a major renovation to make the interior of your rental property feel fresh and clean. Instead, simple upgrades like a fresh coat of paint, new hardware, and brighter lightbulbs can create an attractive vibe. And something as simple as a good scrub – in the bathrooms and kitchen for example – make a clean unit go a long way. If the interior of your rental property looks and feels great, then it’s easier for you to find a tenant willing to pay your asking rent.
Who doesn’t like great amenities especially if they are included in the rent? You may be able to earn more if you charge a la carte for extras, but no one likes to be nickeled and dimed. If you offer great amenities just include them as part of your rent and thus get the asking rent that you want. Here are some amenities that can increase the value of your property and your rental income:
Online rent payment: Tenants want an easy way to pay rent. If rent payment is on auto pilot for tenants, it will make your life easier to get paid. Consider services like ClearNow or RentPayment for online rent payment.
Short term leases: Typically, rents tend to be higher for shorter term leases. So if you have a prospective tenant willing to pay more for a shorter than standard lease term, you can enhance your rental income.
Washer/Dryer/Garage/Storage: If you can provide tenants with an in unit washer/dryer, plenty of storage, and an easy place to park the car, you will set your rental property apart from the others. Tenants enjoy having these items, and these amenities will help you fill vacancies and an opportunity to raise the rent.
Boosting curb appeal, improving the look and feel of the inside, and offering great amenities will draw tenants to rent your property all the while enabling you to increase your rental income and value of your rental property. These steps are easy to take and can make a lasting difference.
Every lease agreement addresses the length of occupancy of the rental property. The majority of leases are usually for one year with the option to continue on a month to month basis. However, some leases can start out on a month to month basis. A month to month lease applies each month until the landlord or tenant exercises the required advance notice to vacate or terminate the lease. Here is a look at the pros and cons of month to month leases:
Probably the most important pro is the flexibility for both landlord and tenant to not be locked into a lengthy lease term. Tenants who are uncertain of the area or of their job situation may prefer the flexibility of a month to month lease. Landlords benefit by having the freedom to do as they wish with the property whether it be construction-related or wanting to change terms of the lease without facing a lengthy time commitment before being able to make changes.
Pro: Higher Rents
Landlords can generally charge a higher rent amount for month to month leases. The risk involved with a shorter term lease where tenants can move out at any time (with the proper advanced notice) can be offset with the higher rent required with a month to month rental lease.
Con: Turnover Costs
Landlords incur costs every time they have a new tenant: advertising costs, screening costs, property upkeep costs. So when a tenant does not stay for very long, landlords need to start the process all over to fill the vacancy. The time crunch to fill a vacancy can create pressure, so the fewer turnovers landlords face, the less pressure they have to hurry and fill vacancies.
Con: Less Stable Income
Because a tenant can move out at any time (with the agreed upon advance notice) with a month to month lease, a landlord may not be able to fill the vacancy in a timely manner. For example, if the tenant vacates in the middle of winter, it may be harder to find a new tenant during that season. An empty unit means no rental income.
There are pros and cons with month to month leases. For landlords who opt to offer such, they can use an online rent payment service that makes managing rents for month to month leases easier for both themselves and tenants. When it comes to the type of lease term, landlords and tenants can consider if a month to month rental lease is good for them.
When Did Rent Payment Get Added to Credit History?
In the 2000s, in the United States, the big 3 credit bureaus started to look at adding rent payment information to an individual’s credit history. Initially, they offered this only to some people who rented from the largest apartment companies.
Every business needs customers to generate revenue. For landlords, those customers are tenants. So when a tenant vacates, it is critical for the landlord to fill the empty unit as quickly as possible. The longer the rental property is empty, the longer the landlord does not make any money. Here are some tips on how landlords can advertise rental property effectively:
1. Decide Where to Advertise
Landlords should think about where most of their tenants will search for an available property to rent. Online advertising is one of the most popular and wide-reaching methods today. Landlords can advertise listings with a real estate specific site such as Zillow (note: Zillow has started charging $9/week for ads for a property) or Apartments.com. Other online options include social media platforms like Facebook or Nextdoor or a more general site such as the very popular Craigslist. A simple yard sign can still catch the eyes of a promising tenant.
2. Post High Quality Pictures
For tenants who prefer to search online, pictures become a critical basis for decision making. Landlords should post high quality photos of the empty unit so tenants searching online have a good idea of the rental property and can make a decision from the photos alone. Once a tenant is serious, they benefit from a physical walk through of the rental property.
3. Be Responsive to Inquiries
In describing your rental property, identify key selling points. For example, you will want to mention if you accept online rent payment, as that may be an important criteria for tenants. While the description of your property for rent should be thorough, tenants may have questions. Providing accurate contact information and responding promptly to inquiries makes your unit and your reputation as a landlord positive selling points. Being a responsive landlord will help you meet your goal of filling your vacancy as quickly as possible.
Good Advertising will Fill an Empty Unit
Advertising your rental property online or on paper, showing your rental property with good pictures, and being responsive to inquiries are all steps in the right direction to filling your vacancy.
As the oldest and most experienced online rent payment service company, we have gotten a lot of questions about landlording over the years. One of the frequent questions is “How can I be assured that my tenants will pay me rent?” One of the best things that a landlord can do, from our experience, is to always do tenant screening.
Tenant Screening Protects Landlords
Your rental property is expensive. Before you hand over the keys to such an expensive property, wouldn’t you want to know as much as possible about the financial behavior of your renter?
Moreover, while tenant screening isn’t perfect, a high credit score statistically correlates to a high likelihood that a landlord will be paid. You can’t be a successful landlord if you are not getting paid.
Tenant Screening Can Be Easy and Free
OK. But isn’t tenant screening a hassle?
Nothing could be further from the truth. Modern tenant screening can be done without a site inspection, and the cost (roughly $40 for a complete credit check with criminal background and eviction history) can be specified to be paid by the tenant. Effectively, tenant screening is free for you as the landlord.
ClearNow recommends starting at https://clearnow.mysmartmove.com/. The process is entirely online, landlords can specify that the tenant pays, and the results come from TransUnion, one of the big 3 credit bureaus. You can get tenant screening results within minutes.
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.
As a landlord, there is nothing more important than getting paid through consistent on-time rent collection.
+Know your tenant +Use online rent payment services like ClearNow & Cozy to simplify process
-Deal with delinquent tenants -Need to understand eviction process
-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
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.
+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
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.
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:
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.
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.
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.
Using online rent payment is one of the best things a landlord or property manager can do. As explained in a MySmartMove blog post, online rent payment can decrease late payments, save you and your tenants time, and prevent mail fraud.
Are all online rent payment services the same? The short answer is “no”.
Landords and tenants today have a ton of choice when it comes to collecting and paying rent online. The selection of online rent payment options is vast and can range from a very simple money transfer app to full service property management software. Some services are free while others have a sizeable monthly fee. Each option comes with varying bells and whistles. Considerations such as cost, simplicity, and support play a role in determining the best solution for landlords and their tenants.
We’ll take a look at the best options and point out how online rent payment services are not all the same. Let’s get started . . . .
Summary of the Best Online Rent Payment Services
Pros and Cons
+ Focused online rent payment service + In business since 2000 with an “A+” BBB rating + $14.95/mo for one tenant. $2/mo each additional tenant. Rent payments received in 3 business days. + Email and phone customer support + Tenants can build credit history for paying rent + Enroll at www.ClearNow.com
+ Focused online rent payment service + Website transitioning to Apartments.com in mid-2021. At some later point, Cozy.co website will cease. + $2.99/mo for each tenant processed for 3 business day processing + Email only customer support + Tenant rent payments no longer reported to Experian credit bureau + Enroll at cozy.co
+ Focused online rent payment service + Company sold in 2020. Now a subsidiary of MRI Software. + Pricing depends on volume. Need to speak to sales. Targets larger apartment complex with pricing tool. + Chat and ticket support + Enroll at www.rentpayment.com
+ General money transfer service + Both tenant and landlord have to have PayPal accounts. + Same day transfer times + Pricing is similar to credit card fees (about 3% of the amount transferred) + Enroll at paypal.com
+ General money transfer service + Same day transfer times + Tenant and landlord have to have bank accounts on the Zelle network. + Tenants can make partial payments. + Pricing is free for users with Zelle accounts. Zelle may limit total amounts that can be transferred. + Enroll through a bank that is part of the Zelle network.
+ Full service property management software – more features than just online rent payment + Pricing starts at $50/mo. There is an additional $99 one-time fee for online rent payment and a $1/payment fee. + Knowledge base support and telephone number for sales + Does not allow tenants to build credit history + Enroll at www.buildium.com
A Detailed Look at the Best Online Rent Payment Services
ClearNow: ClearNow is a focused online rent payment service. Serving landlords and tenants since 2000, ClearNow will directly deposit funds three banking days after the tenant’s debit day. For a monthly debit, ClearNow starts at $14.95/month. This fee includes the debit of one tenant. Additional tenants are $2/month.
Unique among all online rent payment services, ClearNow has an owner proceeds feature where property management companies can directly deposit tenant funds to the property owner’s bank account for just an additional $2/tenant.
Beyond online rent payment, ClearNow provides landlords with various reports including a Schedule E Helper report for tax time. With ClearNow, landlords can record income and expenses, screen tenants, and esign leases. In 2011, ClearNow was the first online rent payment service to allow tenants to report payments to Experian. So tenants can build a credit history with their ClearNow rent payments. Unlike other services like Cozy or RentPayment.com, ClearNow provides telephone and email support, so you can talk with a person if you wish.
Cozy (soon Apartments.com): Online rent payments from checking accounts are free with Cozy, but landlords have to wait 5 business days to receive funds. Landlords can pay $2.99 per tenant per month to reduce the wait to 3 business days. Cozy offers other services like marketing rentals and maintenance requests. Unfortunately, Cozy has stopped rent reporting to Experian, so tenants using Cozy for online rent payments will not receive the benefit of building a credit history. And if you need any help, Cozy has a help center with articles (more like Q&A), or you can contact Cozy by email. Cozy does not offer any telephone assistance.
RentPayment: Similar to ClearNow and Cozy, RentPayment focuses primarily on streamlining rent collection. While they specifically address serving the largest property management companies, RentPayment is available to landlords, too. For 1 to 250 tenants, RentPayment charges $4.95/ACH transaction, 0.95% for debit cards, and 2.95% for credit cards. If you have more than 250 units, you’ll have to request a quote.
Like Cozy, RentPayment has been undergoing ownership changes. RentPayment.com was sold in 2020 and is now a subsidiary of MRI Software. RentPayment’s customer support page emphasizes chat and support tickets for customer service.
PayPal: PayPal is a widely used online payment service, most famous initially as a payment method for successful Ebay auctions.
PayPal has an option called PayPal Invoicing where recurring payments can be processed. PayPal does, however, charge for this service – close to 3% of the amount processed. On a $2,000/mo rent, a landlord may pay almost $60 to receive one rent via PayPal. PayPal transfers can occur quickly – though PayPal does sometimes hold onto funds a little longer before a business can move it out of their PayPal account and to their bank account.
Zelle: Technically considered a money transfer app, Zelle enables tenants to transfer rent payment directly to the landlord’s bank account. Zelle requires both landlord and tenant to have a bank account that is part of the Zelle network. Generally speaking, money transfers occur within minutes, and generally Zelle does not charge sender or receiver (some Zelle banks do charge small businesses).
While fast and free, some landlords may not prefer Zelle as a method of rent payment. Tenants initiate the payment and may not pay rent in full thus making it difficult to recoup the full amount due or even evict if necessary. Some states prevent eviction if partial payments are made.
Additionally, depending on your bank, Zelle may limit transfers to $1,000/day or $5,000/mo.
Buildium: Considered full service property management software, Buildium provides landlords with a spectrum of tools to manage rentals, including record keeping, maintenance requests, and online rent payments.
Unlike Zelle, Buildium is not free. Buildium offers three packages with the lowest package starting at $50/month. All packages have an online rent payment feature. After an initial one-time $99 application fee for online payments, landlords are charged $1.00 per transaction to receive funds for the lowest priced package. Transactions to receive funds are waived for the more expensive packages which start at $160/month and $460/month, respectively.
Rentec Direct: Similar to Buildium, Rentec Direct is full service property management software that includes online rent payments. Starting at $35/month, Rentec Direct offers two products depending on if you are a property owner or a property management company. The monthly cost is based on the number of units managed. Both products include online rent payments for no additional cost.
In addition to online rent payments, Rentec Direct enables landlords to screen tenants, manage maintenance requests, and synchronize financial data with QuickBooks.
If you are a landlord with a few properties, Buildium and Rentec Direct may be overkill because of their higher fees. In addition to cost, Buildium and Rentec Direct do not furnish rent payment data to credit bureaus to help tenants build a credit history. Credit reporting is a bonus for tenants paying rent online.
Landlords who question the value of full service property management software may lean towards a service with a focus on online rent payment, like ClearNow, Cozy, or RentPayment.com.
There is a lot of choice for online rent payments, and each choice has its pros and cons for landlords and tenants. For someone new to online rent payments, some important things to consider beyond price and customer support options are (a) how long will it take to get my funds, (b) how long has this company been in business and what are their reviews, and (c) how do my tenants benefit from this service.
For tenants who are interested in reporting their rent payments to a big 3 credit bureau, ask your landlord to sign up for online rent payment with ClearNow at www.ClearNow.com. Your rent payments should help you build your credit history.
Every property manager needs to collect rent from tenants and then send those rent payments – less property management fees and other incidental charges – to the property owners. These fund transfers of collected rent to the property owners are known as “owner proceeds” or “owner disbursements”.
ClearNow has long made collecting online rent payments from tenants easy and automatic. Less well known is that ClearNow has a unique capability in the online rent payment industry: We can also directly deposit owner disbursements to property owners. Automating these fund transfers makes your life as a property manager so much easier and allows your customers, the property owners, to get their funds quickly.
We are happy to announce that we have adapted the same all online process (complete with esignatures and bank document uploads) that our landlords and property managers use to enroll tenants to now apply to property owners. Property owners enroll completely online. There is no need anymore for paper, printers, or delays.
With ClearNow, property managers just log into their ClearNow account, click ‘Add Owners’, provide property owner’s name and email address, and click ‘Send Email.’ The property owner will receive an email explaining how they can provide their information and esign to have rent payments directly deposited to their bank account. As the property manager, you don’t even see the property owner’s bank account information, which provides an extra measure of privacy and security for your property owner customer.
Finally, when the property owner completes their part, you will be able to set up a simple formula that allows you to keep a dollar amount or percentage of rent from a tenant’s online rent payment. The remainder of those funds is directly deposited to your property owner’s bank account three banking days after the tenant’s debit day.
To get started using ClearNow for this valuable feature and learn how affordable it is (hint: $2 a payment!), visit ClearNow.