In 2020, a National Apartment Association survey reported that 79 percent of tenants prefer to pay rent online. That was almost four years ago; surely the percentage is a lot higher, now. If you’re renting out a Los Angeles County rental property, this is a statistic that you cannot afford to ignore. If you’re not making it possible for your renters to pay online, you’re not meeting a critical preference in the general tenant pool.
Tenants today are looking for convenience and ease. They’re also more comfortable online than any tenant pool before them. They’ll want to make maintenance requests online. They’ll want to communicate digitally rather than in person. When it comes to paying rent, they’re going to want it automated.
Can you meet this tenant demand?
If so, great. If you’re not sure how the technology works or you’re not willing to download a payment app to make it possible, you might want to turn things over to a Los Angeles property manager. We have the technology in place already, and it’s as easy as signing up for and logging onto a tenant portal.
We have portals online for owners, too, and here’s a benefit to you: you’ll get paid sooner. When you embrace digital payments, you don’t have to wait as long for a check to clear. You get the deposit into your account right away.
Collecting rent every month is something you know you have to do as a landlord. Ensuring that your rent comes in on time and that it’s consistent is essential to the success of your property. Your rental income is likely going to pay for your mortgage and contribute to other property-related costs such as insurance and taxes and maintenance.
By offering online rent payments, you can streamline the rent collection process, reduce the risk of missed or late payments, and make your life as a landlord much easier.
Here are the main benefits of offering online rental payments and embracing digital payments, and why a consistent rent collection process is so important.
The Importance of a Rent Collection Process in Los Angeles County
There are a number of good reasons to accept online rental payments and to go as digital as you can with your rental property. First, however, we want to remind you of why you need a consistent and documented rent collection process.
Your tenants need to know that you expect timely rental payments. Share those expectations with them before they even move in, and reinforce that expectation throughout the tenancy.
A good rent collection process promotes consistency and holds your tenants accountable to the lease agreement they signed. It also makes your own financial management easier. You don’t want to waste time chasing down late rent.
Document your rent collection process with your tenants and in your lease agreement. Make sure it includes:
- What the rental amount is. Be sure you include the base rent as well as anything extra, such as a pet rent or a utilities package that they might pay for.
- The date that rent is due (typically this is the 1st of the month).
- Whether there is a grace period, and what that grace period is (when is rent officially late?). You’re not required to provide a grace period in California, but typically a day or two is given after the first where tenants can pay rent without penalty.
- What the penalties are for late rent. California law is not clear here, but mandates that those late fees be “reasonable.”
- How rent should be paid.
While this will be in the lease agreement, it’s not a bad idea to have your tenants sign a separate rent collection document, acknowledging that they received it and understand it. This elevates the importance of your rent collection policy and gives you extra documentation if you find yourself having to collect late rent or file for eviction.
Online Rent Collection: A Big Part of Tenant Convenience
Retaining good tenants is a great way to maximize what you earn and avoid the expense of turnovers and vacancies. One of the reasons that tenants will stay with you is that you make renting easy.
Online rental payments are easy. That’s one of the main benefits. Tenants feel like they hardly have to do anything at all when paying rent. With online rent payments, tenants can easily pay their rent from their computer or phone, without having to write and mail a check or visit the bank.
Online rent payments also allow you to automate the rent collection process, saving yourself the hassle of having to physically collect and deposit paper checks. You’ll also get your money faster. Online rent payments can be processed faster than traditional paper checks, reducing the time it takes for funds to clear. It’s convenient for you, as an owner, as well as your tenants.
Avoiding the Potential that Rent is Paid Late
We talk to a lot of landlords in Los Angeles County who are frustrated with late rent payments. We get it. Late rent can be one of the biggest headaches for rental property owners to face. If you’ve ever experienced a tenant who is chronically late with rent, you understand the stress. Late payments can lead to cash flow problems, and in some cases, eviction proceedings. It’s a bad deal for everyone, and when you have a system for online rental payments, you can reduce the risk that it will happen to you.
Here’s what tenants can do with online rent payments:
- Set up automatic recurring payments, which ensure that rent is paid on time each month. There’s no need to even pay rent themselves; the funds will automatically transfer on the first of the month, or whatever day they choose.
- Store their banking or credit card information. This will make it faster and easier for them to pay rent online. They won’t have to type in the numbers every month when they’re ready to make a payment. The information is securely stores.
- Schedule reminders. Maybe your tenant likes to be reminded a week or five days before rent is due. The online systems that collect rental payments digitally can often set up these automated messages.
Rent can be paid on time when there’s a system in place to encourage and incentivize on-time payments.
Digital Payments and Reducing the Risk of Fraud
Sometimes, the idea of paying for anything online inspires fear that banking information will be stolen or systems will be hacked. How can you protect your tenant’s data? We understand the risks and the fears, but we can also tell you that protections are in place. In fact, it’s riskier to pay by check than it is to pay online. Scammers and fraudsters have an easier time swiping information off a piece of paper than they do finding what they need online, through a highly secure payment portal.
Traditional payment methods like paper checks can also be risky because they’re easy to forge or alter.
Dealing with fraud can be time-consuming and costly. Online rental payments can help reduce the risk of fraud. These systems are secure, using encryption technology to protect sensitive information and ensure that payments are coming out of the right accounts and traveling into the intended accounts.
Your Payment Data is Visible and Accessible
Another good reason to embrace online rental payments: they provide you with easy financial reporting and better accounting statements. You’ll have detailed payment data that includes information on the payment date, amount, and tenant name. This information can be used to track payment history, monitor payment trends, and identify overdue accounts.
By having access to this data, you can quickly identify any problems and take action before they become bigger issues. You can also create an electronic ledger that provides a complete payment history.
Improved Communication and Record Keeping
Improve your relationships with your tenants and increase the chances they’ll renew their lease agreement by offering online rental payments. They will appreciate the better record-keeping and the consistency as well as the accuracy when they have questions about payments or payment history.
There are so many different systems to choose from. Many online payment platforms will provide a dashboard that contains detailed information on payment history and tenant accounts. This information can be accessed from anywhere, making it easy for you to keep track of your rental properties at all times. You can usually integrate other data and reporting information into a payment system as well, depending on the platform you choose.
As a Los Angeles property management company, we have sophisticated accounting software that allows us to easily set up online payments for our tenants. If you’re collecting rent on your own as an independent landlord, you likely won’t have the same technology, but you can still make online payments happen.
If you’d like some help facilitating online rental payments for your Los Angeles rental property, we’d be happy to talk through our process and tell you more about our platform. For more information, please don’t hesitate to contact us at El Camino Property Management.
Please note this information is deemed reliable, but not guaranteed. Please consult appropriate professionals for specific situations.
