No checks, no cash - NO PROBLEM. The rent payment question...

I just finished taking the Multifamily Insiders and SatisFacts survey on rent payments. I encourage each of you to take part so that the sampling is all the more representative of the industry, even if you don’t currently take online rent payments or offer the use of credit cards. You can access the survey on the homepage or by clicking here.

Taking the survey reminds me of how well a policy that I implemented about four years ago has paid off for me. I am not a management company, per se, and I don’t own that many units. I have less than 200 “tenants” (sorry, Katherine – residents). But each of them signed a lease with a stipulation – the ONLY way rent payments would be accepted was electronically, either through a credit card or an ACH direct debit. No cash, no checks, no money orders.

The amount of time and aggravation this has saved me and my team is enormous. We don’t have to worry about deposits being made, trips to the bank, letters on doors. We just have our money automatically posted on midnight of the 3^rd. Simple, and sweet.

The survey asks questions about whether you have in place any incentive program for residents who pay on time. While I used to be an advocate of this sort of idea, I have changed course over time. Why incentivize someone for something they are already contractually bound to do? I am all about resident service and appreciation, but with our lease structured the way it is, they WILL be paying on time. I don’t have to ponder these ideas anymore. But what I have done, different from many large companies, is absorb these fees entirely. I don’t charge a “convenience” fee or any percentages, I just eat this cost. Of course, it is reflected in the rent amount, but the resident doesn’t know that.

While we fight hard for our residents and want to provide excellent customer service at every turn, we are also a business. I don’t know about you, but I want tenants who sign leases to understand the legal commitment they make by doing so. I don’t want guess work around rent payment day – I want to know the money is in the bank. I can log on to our payment processors site at any time and know if a credit card is about to expire or if a bank ACH doesn’t go through. I can see the exact balance that has been credited, without having to cross my fingers that each would go through. I can immediately transfer those funds to interest bearing accounts so that my “money works for me”. I would take that, and the small increase in fees, over dealing with paper checks that bounce any day. How about you? What are your thoughts, pro or against going to all electronic and automatic payments?

Christopher Higgins is The Apartment Guy, a professional speaker and owner of multifamily assets with 19 years of experience in the field. His latest session, entitled Flip the Switch: Transitioning from Recession to Recovery is now available for firms and associations.