Waiting on a rental payment via check can make landlords like you nervous and uneasy. Will the check arrive on time? Will the check clear? Will tenants spin a sob story that the check’s in the mail or they forgot to mail the check? If you have an auto-payment through a checking account or tied to a credit card account, this streamlined approach can save you time, unnecessary angst and even money.
Here are some ways to encourage your tenants to set up automatic payments.
1. Ask if They can Set it Up When They Sign the Lease
After a credit check and a walk-through, it’s time to get serious. When you have your tenant sign their lease, explain that it’s your preferred policy to have rent paid via auto-pay. You can have paperwork created and ready to give them to set up the monthly debit. Most will need a day or two for completing paperwork, but if you start this policy on day one, it’s easier to implement. It’s important, however, that you don’t strong-arm a tenant to do this. They may not feel comfortable setting up auto pay. Don’t let this be a reason that they choose another apartment to rent.
2. Offer a Nominal Rent Discount
You certainly don’t want to lose money especially if you have several rental properties, but offering even a small discount can sway renters. For example, you can offer a $20 monthly discount for setting up auto-pay. Everyone is looking for a break in expenses, so this may be just the hook to streamline your collections. If you can’t offer a monthly rent discount, you can offer an incentive like $100 when they set up auto pay. This up-front incentive can encourage renters.
3. Explain That it’s to Their Benefit
If you position your request in a way that clearly benefits your tenant, they could be more receptive. Tell them that you know how busy they are with work, school or family obligations, and with a monthly debit set up, it’s one less bill or check they have to worry about. Also, explain that you take multiple payment options: an ACH withdraw, or a debit or credit card link.
4. Tell Them it’s Saving Them Money
There won’t be late fees or interest charged if an account is debited each month. Many renters fear any extra fees, and everyone is looking to save money. You can also tell them that if they anticipate having short funds one month, a call to you can be an option. Having a clear line of communication with your rental is helpful to both you and your tenant.
5. Assure Them Their Financial Information is Secure
One of the biggest reasons renters may not agree to have automatic payments is that they worry about the security of their account. In the media we are warned about identity theft, online scams and hackers. This can make people uneasy about sharing personal banking information. Be sure to explain that the information is very secure and safe and that best practices are followed. In addition, some may worry that you will debit more than just rent. You can reassure them this isn’t the case.
How to Encourage Your Tenants to Set Up Auto-Pay?
It can be a daunting experience for people to hand over their banking information or credit card account numbers. If someone hasn’t ever done this before, it can be scary. You can explain that best practices are followed and their personal and financial information is strictly confidential and secure.
Furthermore, if you explain this is your collection policy when they sign their lease they will likely be more agreeable. Renters also want to know how they can benefit. You can offer rental discounts and share with them they are less likely to have late or missed rental payments.