For many Real Estate investors, rent collection is the reward for investment, but for some, it involves the hassle of dealing with a poorly executed rent collection system that demotivates the tenants and can cause financial strain due to ineffectiveness. A perfectly executed rent collection system should be put in place to ensure a smooth process that will encourage and motivate the tenants to pay rent leading to higher returns. Rent collection does not have to be a stressful process but instead a streamlined one in which both parties have their preferences considered. Below are some methods for landlords to increase their rent collection.
1. Being flexible with payments
The cost of living is skyrocketing high and this means that many households are struggling to pay rent. Thus it is the responsibility of the landlord to allow flexible payments e.g. allowing tenants to pay rent at slightly later dates than the usual end month or even allow tenants to pay the rent in weekly installments eg. This will ensure that the rent is continuously paid and above all it gives the landlord a competitive edge in the market.
2. Tenant screening
This is done to evaluate prospective tenants and to access whether the tenant meets the desired requirements. The landlord analyses the draft income, financial reports and audits, credit history, criminal history, and previous evictions. The tenant may thus be required to fill out a rental application form. The landlord may also call previous landlords for further inquiry. Based on the information gathered here, the landlord can find the best tenant. This reduces the possibility of landing a stubborn tenant and thus ensures a guaranteed high yield in rent income.
3. Accurate record keeping
A property management system can be used to keep track of payments accurately. The system employed should be free from interference and one that can not be manipulated. Many landlords use the manual way of record keeping (writing in books) or spreadsheets. This method can be easily manipulated and is prone to fraud from lying tenants or caretakers.
Instead, landlords can use a system, such as Bomahut Property Management System, that integrates with popular payment methods in Kenya such as Mpesa and Banks (Equity, KCB, Cooperative). Once the integration is complete, payments are automatically recorded on the system and the landlord is alerted through SMS on the specific tenant who had paid. Eliminating headaches of dealing with tenants lying about payments or losing receipts.
4. Digitizing/ online payments
This means that tenants no longer have to make the long bank queues in order to pay rent but simply at the tap of a button, anywhere anytime, and thus avoid late payments hence motivating them to pay early.
5. Providing subsidies for tenants who pay rent on time
This will be the reward to tenants who pay their rent on time. The landlord can offer to slash the amount paid by a slight percentage if paid on time and this will be a huge motivating factor to the tenants and thus yield high returns to the landlord. A perfect win-win situation.
