How to Collect Rental Payments From Your Tenant
Yes, collecting rental payments is as simple as creating a payments schedule and ensuring the tenant pays on time. But ‘what gets measured gets managed’ and if you don’t manage payments you could find yourself in hot water if something goes wrong. This article will help you set-up a transparent payment schedule for you and your tenant.
- How do most landlords collect rent?
- How often should I collect rent and how do I calculate the rent?
- Is there a way for tenants to pay automatically via direct debit or credit card?
- How should I record rental payments?
- How can RentBetter.com.au help in the process?
How do most landlords collect rent?
When collecting rent, most owners will request a direct transfer into their bank account, or an automated payment schedule from bank to bank. While this can be very effective, some tenants simply don’t comply and there are two things this method cannot solve:
- If the tenant misses a payment, or pays an incomplete amount, you will need to be on top of bank transfers and payments to be aware this has happened
- There is no agreed record of payment between landlord and tenant including a ledger and receipts for payment
For this reason, we would absolutely recommend using a rental platform to manage your rental payment collections. You can find more information about the RentBetter rental platform here and we are always happy to help you get started so you can take advantage of the platform for your own benefit.
How often should I collect rent and how do I calculate the rent?
We often get asked what the best way to calculate rent is, the best frequency to collect rent, and the best approach to receiving payment. As with most things involving money, the best approach is to keep it simple and transparent.
There is a common approach to calculate a monthly rental amount which supposedly provides a simple monthly number that gives you a smooth rental income 12 months of the year. The formula applied is typically to divide a weekly rental amount by 7, then times 365 days and then divide this all by 12.
However, we have found the opposite, and that with a majority of our customers and their tenants, this causes a lot of confusion and friction at both the commencement and end of the lease.
We typically recommend keeping it simple by charging a weekly rental amount (after all this is how you advertise a property) and collecting rent more frequently than just once a month.
A weekly rental collection tends to be a bit too frequent for both tenant and landlord, but fortnightly is ‘just right’. It is common for people to be paid at this frequency, and it also ensures there is a regular contact and payment from the tenant rather than waiting longer periods where the risk increase as more time passes.
We also know that rental prices might need to be increased due to inflation or market demand, so we have curated a state-by-state Guide To Help You Increase Your Rent.
Is there a way for tenants to pay automatically via direct debit or credit card?
Yes! Once you set up the details of your rent and when it’s due at RentBetter.com.au, we’ll help you invite your tenants to pay. They can set up recurring rent payments via direct debit or credit card, so you’ll both rest easy knowing the rent will be on time. It takes away the hassle and worry of whether the rent will be coming in as expected, and you can say goodbye to chasing up late payments.
How should I record rental payments?
You may like to keep track of a rental ledger and issue receipts manually. We do not doubt that this will work as a solution, but it unfortunately still does not notify you of emerging issues with rental payments for your property.
Using the RentBetter rental platform, the payments are automatically captured and tracked, and the ledger is therefore automatically populated. Each time a payment is made, a receipt is generated for both the landlord and tenant, and the rental payment scheduled is populated to show the payment. Of course, you can do this yourself in excel, but there is nothing better than an automated tool that can help you do this with minimal effort. For more information on our long-term management platform, click here.
How Can RentBetter.com.au Help in the process?
RentBetter can help you find and manage tenants. Our customers use RentBetter to advertise on the major property portals (Realestate.com.au and Domain.com.au), and the RentBetter platform can also help to automate the process of rent collection, tracking, receipts and alerts and notifications. There are also a number of additional benefits with maintenance tracking and reporting. You’ll love the ability to save money and increase your level of control whilst managing your own property.