May 3, 2023

How Property Managers Can Automate Rent Collection

Chief Customer Officer - Second Nature

If you asked ten property managers their least favorite part of their responsibilities, nine of them just might say rent collection. That’s why online rent collection is a common PropTech solution and one of the first things PMCs look to digitize or automate.

Automated rent collection is a system that enables property managers to collect rent payments from residents via electronic means such as online portals, direct debit, ACH, direct deposit bank transfers, or credit card payments. Automating monthly rent payments simplifies the rent collection process, saves time, and minimizes errors associated with manual processes. It also provides residents with a convenient and secure way to make payments, leading to increased satisfaction and retention rates.

But maybe the best part? You don’t have to constantly remind residents to pay rent. We all want the resident experience to be better than that – and your experience, too!

In this article, we’ll talk about some of the best online rent payment systems, the best strategies to automate rent collection, and how to implement these strategies. We’ve got insights from two leaders in the industry: Wolfgang Crosky and Ray Hespen.

Key Learning Objectives:

What are the best cloud-based online rent collection software products?
How do you set up automated rent payments for residents?
How do you transition residents to using mobile payment apps?
Can you outsource rent collection?

Today's Expert: Wolfgang Croskey, Founder & President of How’s My Rental

Benefits of Automated Online Rent Collection for Single-Family Rental PMCs

While automating rental management tools is valuable for any type of property, the benefits are enormous when we’re talking about SFR property management.

PMCs managing single-family homes have to deal with geographically dispersed properties with often a wide range of property types and needs. In addition, SFR property managers are often entrepreneurs running independent small businesses. They’re quick to adopt new technology, especially since using automation tools helps simplify workflows and effort.

Wolfgang Croskey calls automation the “great equalizer.”

“Why I have a passion for automation and AI in tech is we're a small independent company,” Croskey says, “and technology is the great equalizer. It allows us to compete with these nationwide companies and to provide not only the same level of service but to be able to pivot and adapt much quicker than those larger companies can. So for me, you're a smaller company, AI and Automation Tech is that equalizer that's going to allow you to shine just as well as these larger companies.”

Choose a Cloud-based Online Rent Collection Software

Cloud-based property management solutions have proliferated in the last decade, with proptech solutions and third-party tech platforms solving age-old property headaches.

Cloud-based online rent collection software is a platform that enables property managers to collect rent payments from residents securely and conveniently over the Internet. It eliminates the need for manual rent collection processes by automating payment reminders, processing online payments, and reconciling accounts.

These products are hosted on remote servers, allowing property managers access from anywhere with an internet connection.

Let’s look at some popular examples to help you collect rent online.

Buildium - A property management platform that provides a range of features, including online rent payments, payment processing, tenant communication, maintenance tracking, and financial reporting.
AppFolio - A cloud-based property management software that offers online rent collection, security deposit, tenant screening, property inspections, and accounting tools.
Avail - A cloud-based rent collection tool that allows PMs to automate rent, send rent reminders, track payments, and manage rental properties.
Rentec Direct - A software platform for property managers that offers features such as online rent payments, tenant screening, lease tracking, and maintenance management.
RentRedi - A mobile-first property management software that allows landlords to collect rent payments online, screen tenants, and manage maintenance requests through a user-friendly app.
Cozy - A free online rent collection platform that enables landlords to collect rent payments, screen tenants, and manage lease agreements.

These are just a few examples, but there are many other cloud-based online rent collection software options available on the market. They can typically connect to your property accounting software and expense tracking and create a seamless experience from end to end.

Allow Residents to Choose Recurring Automated Rent Payments

Recurring rent payments are a popular method of rent collection among property managers and property investors. This method involves automatically deducting the rent amount from a resident’s credit card or bank account at regular intervals, most often monthly or on certain business days.

For property managers, autopay eliminates the need for manual rent collection processes and reduces the risk of late or missed payments. It also streamlines accounting processes by providing accurate and up-to-date records of rent payments. And, of course, recurring payments can be set up to occur automatically, saving property managers time and reducing the need for follow-up with tenants. No more existential dread around rent time!

For tenants, recurring rent payments provide a convenient and hassle-free way to pay rent on time every month. It eliminates the need to remember to make a payment, reducing the risk of late fees and improving their credit score by building a consistent payment history.

Property managers who are reporting rent payments to credit bureaus (such as TransUnion) as part of a Resident Benefits Package can use this as a massive incentive for residents to automate payments. Additionally, tenants can set up recurring payments using their preferred payment method, making it easy and flexible for them to manage their finances.

How to Set Up Recurring Payments with Residents

Setting up recurring rent payments is straightforward and can be done using cloud-based rent collection software, like the examples described above.

First, the property manager needs to have the resident’s consent to set up recurring payments. Once the resident has agreed, the property manager can initiate the process by entering their payment information into the software. This information typically includes a variety of payment options such as their debit card, credit card, or bank account details; the rent amount; and the frequency of the payments.

Once the information is entered, the software will automatically deduct the rent amount from the resident’s payment method on the designated date, and the payment will be recorded in the property management software. If there are any issues with the payment, such as insufficient funds or an expired credit card, the software will notify the property manager and the resident to rectify the issue.

download rental inspection checklist template

Allow Residents to Pay with Mobile Payment Apps

Allowing residents to pay rent with Apple Pay or Google Pay is gaining popularity across the property management industry. Zelle is another payment service that can help with ACH payments without transaction fees. PayPal and Venmo are other mobile payment platforms. With these mobile payment apps, renters can pay their rent using their mobile devices.

It’s a win for residents because they can easily make automatic payments on the go using their smartphones without the need for a physical wallet or a visit to a bank or property management office. Additionally, these mobile payment methods are highly secure, as they use biometric authentication to ensure the transaction is authorized by the account owner, minimizing the risk of fraud and identity theft.

(Learn more about how property managers are protecting residents from identity theft in our State of Resident Experience report.)

For real estate investors and property managers, accepting mobile app payments can streamline the rent collection process, reducing the need for manual processes and improving the efficiency of rental income. Additionally, mobile app payments are highly trackable and can provide detailed records of rental payments or partial payments and send you notifications of issues, making accounting processes easier and more accurate.

How to Set Up Mobile Payment Apps with Residents

Setting up mobile app payments for properties is easy and – again – can be done through cloud-based rent collection software.

First, property managers need to enable mobile app payments in the software and then provide tenants with instructions on how to set up and use the payment method. The software will then provide a unique payment link that can be sent to the tenant via email or SMS, enabling them to make payments by the due date using their preferred mobile payment app.

Once the payment is made, the funds are automatically deposited into the landlord or property manager's designated bank account, and the payment is recorded in the rent collection software. In case of any issues, the software will notify both parties.

Outsource Rent Collection to Third Party Service Providers

Of course, you can also outsource rent collection entirely.

Outsourcing rent collection to third-party specialized service providers can be a great solution for property managers who want to save time and reduce the stress that comes with managing rental properties.

Rent collection is one of the most important tasks for property managers, but it can also be one of the most time-consuming and frustrating tasks. By outsourcing it to a third party, property managers can focus on other important tasks, such as marketing the property, screening tenants, and maintaining the property.

Third-party rent collection service providers are reliable and have a proven track record of success. They can offer you the expertise and resources needed to effectively collect rent and manage resident relationships – plus, they already have advanced technology and software to track payments and manage records.

Another benefit of outsourcing rent collection is that it can help property managers avoid potential legal issues that may arise from handling rent collection themselves. Third-party service providers are experienced in dealing with rent collection laws and regulations, ensuring that landlords and tenants are protected.

How Second Nature Helps Ease the Stress of Rent Collection

At Second Nature, we’ve built digital products around creating ease for residents and property managers – adding value and reducing headaches for everyone involved.

Our Resident Benefits Package provides services that incentivize on-time rent payments and supports residents in building credit, protecting their identity, and remaining financially sound.

Rent doesn’t have to be stressful for everyone involved. In fact, using the right tools, rent collection can become as easy as – you guessed it – Second Nature. (We had to.)

Topics:

Automation

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How to Optimize Operational Frequency with Processes and Software

Property management software is currently helping property managers establish efficient and reliable processes at a higher rate than ever before in the PM industry. With that development in the proptech industry has come the development of tech for self-managers that has changed the capacity of the accidental landlord. Thus, the demand for efficiency at scale has risen in order to separate the professional from the amateur, and the establishment of processes that allow such a thing has become a critical topic for professional property managers. Optimizing property management processes Carter Fleck of Triton Property Management, a growth-oriented firm out of northern Virginia that is approaching 300 units with larger goals for 2024, joins us to share his expertise on process definition. Fleck is the General Manager responsible for operations and strategic growth, and he has been developing effective processes to ensure efficiency at Scale at Triton, and in the process, he has garnered an understanding of how to do so. “A lot of failing,” says Fleck. “In the early days, we were getting a lot of good and bad feedback, but typically the bad feedback is what you adjust off of.” Fleck believes that assumptions are the enemy when it comes to defining procedures and sourcing software for your PMC. “The image that we use is if you're going to build a sidewalk before people even start walking on a field, it's kind of dumb. You have to see where people will walk first, and then you'll build a gravel path. So number one, you see where they walk, see where their intentions are in the grass, then you build a gravel path. And then eventually, once that walkway is established, that's where you build your processes and procedures.” The analogy is a visualization of the concept that you have to see how people operate before you can establish processes to make how they operate more efficient. Fleck encourages the negative experiences of process breakdown and cites them as the only way to really nail down what your processes should look like. “Over time, between the tenants giving feedback and owners giving feedback, we adjusted our processes. It's a mix between figuring out where the owners walk and where the tenants walk, and then building paths that align.” Fleck details an example of how Triton adjusted its process after an assumption it made got challenged: "We had an assumption that payment plans were helpful for residents," says Fleck. "And so the way we handled delinquency is we would reach out to them and would be like, ‘you need to pay this. Do you have a payment plan option?’ And they would always say yes. Our process was we'll put you on a payment plan, we'll invite you to a payment plan, you'll accept the payment plan, and then we'll monitor the payment plan. That in itself was a lot of work, but we thought it was doing well. But some of the owners that we had managed for mentioned that another property manager doesn't allow any payment plans. And if you're not fully paid up by the end of the month, then the eviction process starts if you’re over $500 due. So we're like 'alright, well, we'll serve you in that we'll change our processes.' And we did, and our delinquency percentage shrunk significantly. So, consistently, by the end of every month, we're around 5% APR. Whereas with payment plans we're like 5 to 10%.” Fleck obviously credits seeing the assumptions in motion as what prompted the need for process iteration, and he firmly believes that making too many of these assumptions is one of the biggest mistakes growing property management companies make. Like any business experiencing growth, process definition is critical to achieve efficiency at larger volumes. What Fleck is essentially advocating for is processes based on what you know, not what you think, and there is a big distinction. Managing property management software Fleck has installed both general and tech-based processes, and cites that understanding of how people interact with processes as the key in both areas. "They don't focus on user experience. That's really important. Number one, how the tenants like the tech, but specifically how the people who are using the tech are gonna adopt it. So when we were choosing a rent inspection software, we had so many people recommend one, software and I, we almost pulled the trigger on it. But then I was like, let's do a trial run on both these two. And we chose the other one because it was way better user experience for property managers. So user experience, both for us and for residents." Tech is a tool that is ultimately as good as its users, and if it's not used correctly or at all, its potential is wasted. An over-reliance on technology can actually go hand-in-hand with an under-reliance, as both often spring up from a lack of understanding of how to choose, implement, and manage it. In this vein, Fleck can't recall many property managers who operate with too much tech. As long as you're not purchasing redundant software and you've done and continue to do your due diligence, tech-based process can make your business more efficient. "I more often find myself having that conversation," says Fleck. "When I'm talking to property managers in my sub-market, who aren't connected with like a NARPM, who aren't connected with like a Crane group, or who aren't connected with a Second Nature, aren't connected to the tune of what the property management industry is doing and the cutting edge of it, I'm just like, 'you could save so much of your time and you could scale this so much more if you only even if you just had tenant Turner, or if you had LeadSimple.'" No matter what your story is a property manager, if growth is in the cards, so is process and technology refinement. Hopefully, Fleck's experience in these areas can help you stay efficient and organized as door counts grow.

April 19, 2024

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Why offer a tenant benefits package?

In the residential real estate sector, like everywhere else, residents and property investors alike are getting younger – and with this generational shift comes expectations for a certain level of convenience and support. To put it bluntly, today’s residents want their needs proactively anticipated. It’s something they're willing to pay (and stay) for. That’s where a tenant benefits package comes in. In this article, we’ll explore what a tenant benefit package is, how it improves the experience for both property managers and tenants, and crucial mistakes to avoid. Before we get into the details, we want to give a shoutout to our very own “Resident Benefits Package” – which is how we refer to the benefits comprised in the “tenant benefits package.” “Tenant” is not yet a legacy term, but we here at Second Nature are trying to evolve it. That’s because, in our experience, property managers work hard to make renters feel like they’re not just parties to a contract – they’re residents. On one hand, this is just humans being humans, but on the other hand, it also encourages them to invest in care for their new home and add value to the property. Ready to get started now? Build your Resident Benefits Package today. What is a tenant benefits package? A tenant benefits package is typically a bundle of services, conveniences, and provisions offered by a property manager on top of the basic lease agreement. They represent a triple-win situation for property managers, residents, and property owners, as they enhance the overall rental experience, generate additional income, and protect the real estate investment. It might include conveniences such as online monthly rent payment options, or portals for submitting maintenance requests and tracking their status. It could also include various financial perks, such as credit rating improvements that are contingent on on-time rental payments, or discounts on nearby services such as fitness centers. It might also include amenities ranging from move-in concierge or utility set-up services, to identity protection services, to HVAC filter delivery. The cost for resident benefits packages is typically included in the lease and added as a monthly fee, with the fee being dependent on the specific benefits. Indeed, the benefits contained in a tenant benefits package will vary depending on the property manager and the type of rental property. The overall goal is to provide tenants with an enhanced quality of life while simplifying the experience of renting. At Second Nature, we pioneered the only fully managed resident benefits package, in response to PMs who wanted to make their business stand out. Our RBP includes an array of services and supports for residents, from filter delivery to credit building to maintenance. Why should property managers offer a tenant benefits package? Beyond the triple-win considerations mentioned just above, there are compelling and concrete reasons why property managers should offer tenant benefit packages. We'll turn to these now. Ancillary revenue Some tenant benefit packages include optional services or add-ons that can generate additional revenue streams for the property manager. This might include things like renter insurance or HVAC filter delivery. Resident experience Tenant benefit packages deliver numerous savings and value to tenants, beyond the value they would get if they were obtaining the same benefits "à la carte." Additionally, by offering additional services and conveniences, benefit packages can make tenants feel valued and more satisfied with their living experience. For instance, maintenance hotline requests, tenant portals, and air filter replacements all make life easier. Add-on services like identity theft protection can offer a sense of security. And discounted renters insurance coverage, utility concierge services, or other perks can save tenants money. Decrease tenant turnover and vacancy rates In a competitive rental market, tenant benefit packages can be a major differentiator toward boosting retention rates and reducing vacancy rates. Properties that offer these packages can also attract a wider pool of qualified tenants, and potentially command higher rents. Note that certain benefits in the package, like online rent payments and maintenance requests, can automate tasks and free up the property manager's time. This allows them to focus on more value-added initiatives. How does the tenant benefits package improve the tenant experience? Tenant benefit packages can significantly improve tenant satisfaction in several ways, by making life easier, more convenient, and potentially more affordable. For instance, if an online portal (a baseline feature for most property management software) is included for rent payments and maintenance issues and requests, this eliminates the hassle of writing checks or waiting on hold to speak with someone about a clogged drain. In other words, tenants have the peace of mind of knowing they can manage their tenancy 24/7 from the comfort of their own devices. Some packages might include features like filter delivery services or regularly scheduled HVAC maintenance. This frees tenants from having to remember these tasks – and ensures their apartment is well-maintained. Certain packages might also offer "verified vendor" services – in other words, a vetted vendor network that can help provide a more secure feeling to residents when service providers are on-site. On the financial side of things, a benefits package might offer discounts with local suppliers for various goods and services, or on a renters insurance policy obtained through the property manager (with applicable waivers for residents who have their own insurance). This can save tenants money on a necessary expense. Some packages also help residents with their credit scores via credit reporting and credit building services, so they can transition from renting to home buying when the time is right. The idea is that the credit reporting program reports on-time rent payments automatically to all credit bureaus, helping residents build their credit simply by paying their rent on time. Some benefit packages include resident rewards programs that represent a powerful and positive incentive for on-time rent payments, including gift cards or cash. As far as living perks go, packages sometimes include added benefits such as access to fitness centers or community events. This provides tenants with additional spaces to relax, socialize, or stay healthy. Packages can include security deposit alternatives that serve to provide a means for residents to be financially liable for damages without having to pay a significant lump sum upfront, such as pure insurance, surety bonds, and ACH authorization programs. Ultimately, tenant benefit packages create a more professional and responsive image for the property management company, which helps tenants feel valued and allows them to experience a smoother, more stress-free rental experience. What are the mistakes to avoid when offering tenant benefits packages? Property management companies should take care to avoid certain pitfalls when implementing tenant benefit packages to ensure they are providing true value to tenants as well as delivering profitability to the PM company itself. For instance, it's important to ensure that the services you're offering are actually relevant to your target renters. For example, young professionals might appreciate discounts on gym memberships, while families might prefer pet-sitting services. You should also take care to clearly communicate what's included and not included in the package to new residents. Don't oversell the benefits – focus on how they genuinely improve the living experience. It's also very important to set realistic expectations for response times on standard maintenance requests, emergency maintenance requests, or virtual concierge services. Likewise, be clear on all available payment methods, as well as rent due dates, late fee structures, and any associated payment processing fees. If your package includes services from third-party vendors, ensure that these vendors are reputable and reliable. Research their customer service record and responsiveness to ensure a smooth partnership and a positive experience for tenants. Above all, regularly monitor the usage of different benefits within your benefits package. This can help you refine your offerings and ensure you're not spending where spending is not required. Looking for a Resident Benefits Package? If you’re looking for a “plug and play” resident benefits package, Second Nature’s RBP is the way to go. Designed to be easy to implement and simple to use, all the services it includes are managed by Second Nature – which means there’s no day-to-day upkeep required from the property manager: Second Nature keeps it running. It’s a simple way to grow your business and create great experiences that residents will pay and stay for. Learn more about our fully-managed Resident Benefits Package.

April 2, 2024

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