Property management can be tough at the best of times! Juggling tenant management, collection of rent payments, maintenance and repairs, legal and compliance, property inspections and vendor management make this a career for serious multitaskers only.
If you’re a battle-weary Property Manager, this article is for you. We can’t provide solutions to all your responsibilities, but we can lighten the load a little and make the task of collecting rent from tenants easier for you.
In this article we’ll discuss the various complexities in rent collection, assess the pros and cons of several payment methods, introduce the latest proptech innovations and give you our three recommendations for how to collect rent.
The Needs of Property Managers VS Tenants
Historically, Property Managers have faced challenges in offering payment methods that balance everyone’s needs.
Property Managers need a method that can be easily offered to tenants, reduces admin time and increases the likelihood of getting paid on time. Tackling these issues reduces the need to chase outstanding payments and leave landlords waiting.
While some payment methods are more convenient for Property Managers than others, it is necessary to offer multiple options. Most Australian states and territories have legislation stating that landlords and landlord’s agents must enable tenants to pay rent from at least one channel where the tenant does not incur additional cost (other than bank fees or account fees).
Legalities aside, tenants demand flexibility and are happier when presented with payment choices. According to The Motley Fool (2022), “Renters were willing to pay more than landlords thought they would for… convenient payment options.”.
Apart from rent payments, Property Managers also require suitable payment methods to take other payments from tenants such as the deposit, bond, water bill and for repair costs where the tenant was at fault.
It’s also important to consider the tenants’ needs. Helping them meet their needs will help them to meet your needs. Here’s a snapshot of the various needs your tenants may have:
- Those who are less tech/digital savvy may require a method that is familiar and doesn’t feel complicated.
- Those who are exceptionally busy may be convenience driven and want a method that prevents them from forgetting a payment.
- Low income earners may be interested in partial payments or fee-free payment methods.
New migrants can also face difficulties paying rent. Understanding the Australian banking systems can be complex. New migrants and international students may be paying from overseas accounts and trying to find ways to do this with minimal delays and costs.
Chinese nationals might also be mindful of the $50,000 USD annual limit for bringing funds outside of mainland China and investigating legal and efficient ways to bypass this.
Offering simple and well explained payment methods will reduce instances of late payment and reduce time spent providing assisting or chasing up tenants.
Common Ways to Collect Rent
As discussed, offering multiple payment options for your tenants is important. Here’s a rundown of common ways to collect rent payments along with their pros and cons:
Bank Transfer
Let’s start by getting the simple option out of the way – provide tenants with the property agency’s bank account details for a bank transfer. Some tenants may ask for this as it’s a familiar concept. For Property Managers this is a risk as your BSB and account number could be used to make fraudulent transactions.
Direct Debit
For tenants who are busy and forget, direct debit is a common option. Some tenants will appreciate the convenience of this, while others will be reluctant to let anything bigger than their Netflix or phone payments be deducted from their accounts automatically.
Property Managers who wish to provide direct debit as an option will need to set this up with a direct debit provider. Fees vary but can include costs for the setup, monthly fees and costs for each transaction.
The application process requires significant documentation including ABN, proof of business registration, personal identification, bank account details, financial statements, tax returns and business activity statements. New businesses may find that they’re unable to provide all of this information.
In-Person Payments
Some Property Managers may still allow payments to be made at their office via cash or cheque. Many will discourage this to avoid the security risks and administrative time associated with cash. Cheques are also being phased out in Australia, with acceptance of personal, commercial and government cheques being phased out by the end of 2028 and acceptance of bank cheques being phased out by the end of 2030.
Rent Payment Platforms
In recent years, several players in the Proptech industry have developed apps which aim to make it easier for Property Managers to collect rent. Some of these focus mainly on rent payments while others strive to be an ‘all in one’, enabling Property Managers to perform several regular tasks in one place.
From a Property Manager’s perspective, these platforms are the best option as they lack the pitfalls of legacy payment options. However, to motivate tenants to use these platforms it’s important to recommend an option that works well for them too.
There are differences in the fee structure of each platform, which is something to consider however many are great at negating some renter concerns, offering discounts off utility bills and other perks.
3 of the Best Ways to Collect Rent Online
Below we have listed three excellent ways to collect rent payments. These encompass three different needs:
- Platform solely focused on collecting rent payments.
- ‘All in one’ platform, collecting rent payments while offering functionality for other property management tasks.
- Custom solution for specific needs.
RentPay
RentPay is an award-winning rental payment platform that does a servicing both the tenant and Property Manager. Tenants are given several options that make rent payments much easier. They’ve gone all in on creating an innovative ecosystem that’s warm, friendly and helpful.
Tenants can put aside money early while it’s available or set up direct payments on their payday or at other convenient intervals they set. RentPay will then pay the Property Manager when the rent is due.
There are incentives that reward RentPay tenant users, such as utility bill smoothing, collecting credit card points and building a good credit score.
For last minute payments, NPP/Osko is available. RentPay can also offer a one week line of credit for unexpected emergencies.
Chinese migrants and international students can use popular Chinese electronic wallets Alipay, WeChat Pay and Union Pay using the platform too. These options provide familiarity, and none of the associated costs, delays or compliance limitations associated with alternative international payment options.
We compared RentPay’s fees with other rent collection apps and found that tenants can really benefit from RentPay’s lower credit/debit card and BPay fees. Their customers also get the chance to negate some of these costs through free, exclusive access to a shopping rewards program.
It’s a win-win solution for everyone!
Tenancy Application
Another great way to collect rent payments online is through the Tenancy Application platform. This is an ‘all in one’ platform for Property Managers, delivering value and efficiencies by managing several key milestones for the onboarding and managing of tenants.
These milestones include the management of tenant applications, tenant checks, utility connection, payment of deposit, bond and ongoing rent payments.
If you’re keen to manage rental payments alongside your other key responsibilities all in one platform, Tenancy Application will make your life easier.
Online Payment Gateway
Some Property Managers may have unique clientele and require a payment solution that suits their specific needs. One example of this is student accommodation, where a high volume of payments are made from families in China to Australian universities.
Chinese families face additional hurdles in making these payments such as:
- Language barriers.
- Unfamiliar banking systems.
- $50,000 USD annual limit for sending funds outside of Mainland China.
- High fees and long processing times for methods able to overcome some of these hurdles.
Given the size of the industry, and the value it represents, there are significant wins to be had by those who implement payment solutions that overcome these barriers.
Novatti works with leading student accommodation provider UniLodge to provide an online payment gateway that does just that.
The Novatti platform enables Chinese payers to pay via familiar Chinese wallets AliPay, WeChat Pay and Union Pay. Payers use the platform on the UniLodge website to pay from their Chinese Wallet. The payment does not contribute towards the $50,000 USD annual limit and is conducted with ease. For UniLodge, this option reduces the time they spend following up on late payments or providing instructions. A great solution for everyone!
Novatti’s Role in Rent Collection Solutions
At Novatti, we work with proptech innovators, student accommodation providers and Property Managers to provide solutions that overcome their unique payment challenges. We understand the evolving needs of Property Managers and tenants and work with clients to develop unique solutions that not only overcome these challenges, they become a unique selling point.
If you would like to ask a question or arrange a friendly chat, please complete the form below.
Interested in reading about the future of proptech? Download our proptech industry report here.
Sources
The Motley Fool. (2022). Study: Do Landlords Actually Know What Renters Want? Retrieved from https://www.fool.com/research/study-landlords-renters/
