As a landlord, your return of investment comes in the form of rent. If your property is not leased, it does not earn the income that you need to pay the mortgage.
However, many landlords have difficulty in collecting the rent. Even if there is a solid lease agreement, which indicates late rent fees, some tenants have the problem of paying on time.
How could both parties meet halfway to make sure that the landlord receives the payment, and that the tenant will find it easy to pay the rent before or on the first day of every month?
Let’s take a look at how tenants pay their rent and the pros and cons of each payment method:
In the Form of Check
Paying a check is a secure method, which informs the bank to withdraw from the checking account to pay money to anther party. Most landlords still accept checks.
Pros: Tenants can mail checks in advance and also postdate them to cash on the specified date.
Cons: In case the check bounces, the bank charges the tenant, who has to pay a fee. Additionally, getting a check does not necessarily mean that there is money in the account of the tenant.
Take note that checks are not commonly used by millennial, which you need to remember when renting to students.
By Means of Cash
It is not practical to accept cash as payment because it can get lost, it’s difficult to trace, and could have discrepancies on the amount the tenant paid against the cash you received. One more disadvantage of cash payment is that you need to collect from the tenant every month.
If ever you accept cash payments for rent, which is common among landlords who have their basements leased or live close by, make sure to give your tenant an acknowledge receipt as proof of payment and a record of their payment.
There are tenants that still choose to pay rent with cash since many of them use it to monitor their spending. Yet, this appears on their bank statement simply as a withdrawal – that is why it can be difficult to use is as rent payment.
With a Cashier’s Check or Bank Draft
Another secure form of payment is through a cashier’s check or bank draft, wherein the bank withdraws on its funds after withdrawing the amount from the account of the tenant.
Though these may be a secure payment, this is not practical for a lot of tenants, since a fee is required to draw one up. Besides, the tenant has to go all the way to their bank to issue it.