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Rent Collection: an Ultimate Guide for Landlords


November 18, 2022

Written by:

Abhi Sreerama

While being a landlord is a great way to meet people and network with other property owners, the primary motive is, was, and will always be, making money. Yet before a prospective tenant signs a residential or commercial lease, even before the manager lists an available unit, there must be a well-defined path between the wallets of the tenant and landlord. We at Houston property management company demonstrate below how to price units, how to collect rent from tenants, and how to retrieve delinquent remittances.

A calendar with rent due reminder

Determine Your Rent Price

The bad news is that income properties can just as aptly go by the category of input properties because they cost money to maintain. Accurately assessing costs is the beginning of the process of setting an optimal rental rate.

Other factors include the overall value of the property itself and how well the real estate market is performing. These variables matter because a landlord must be aware of the range between earning no profit at all, on the one hand, and too high a monthly payment, one that would ward off dependable, long-term occupants who will look for better options to rent.

To avoid vacancies, create a reliable rent roll, and enjoy rent collection with ease, begin with research. Both the federal and state governments publish fair market rental data that can serve as a baseline when calculating the value of a unit. Beyond these statistics, landlords need only see at what price comparable properties in the area are marketing their units. Try to find the most similar:

  • Space (in square footage);
  • Number of bedrooms (or offices);
  • Amenities available in common areas and individual units;
  • Age of building and date of most recent renovations.

After determining the break-even point between revenue and expenses, landlords can use these figures to work out a rent payment that is affordable for tenants and lucrative for the business.

Choose the Rent Collection Method

collecting rent from tenants


The great thing about cash is its immediacy. Once in hand, it is yours to spend, save, or invest. Cash does not bounce nor is it subject to electronic glitches. That said, cash is subject to disputes, i.e. “I paid you already!” These conflicts are harder to resolve because cash transactions are harder to verify without an ironclad method of documentation.

Direct Deposit

A pre-scheduled transfer from one bank account to another carries a greater degree of probability that money actually changed hands. Landlords will have a record of when and how much moved into their accounts. At the same time, bank transfers can take up to a week to complete. Insufficient funds are also a possibility with direct deposit.


Accepting checks is a tried-and-true method of receiving rental payments. A paper record of the occupant's financial obligation is deposited with the landlord's bank, funds are verified, the money is removed from the tenant's bank, and posted to the landlord's account. Of course, this consumes time, and sometimes the check is returned due to, again, insufficient funds.

Payment Service

Websites and mobile apps, e.g., Zelle or PayPal, among others, allow transfers of funds between one party and another to occur without either party having access to the other's bank account information. Both tenant and landlord must be registered for the same service, and it may take 24 to 48 hours for the rent money to show in the landlord's portal. Also, these conveyances normally pass through a Federal Reserve filter, so any federal holiday can delay payment.

Online Platforms

Online rent payment platforms like Rent Track and Rent Merchant are specific to the landlord-tenant relationship as opposed to the general merchant sites noted above. By paying with a credit or debit card, renters can keep track of any deposits, service fees, or late fees charged against them or held in escrow. Online platforms are one of the best rent collection services for landlords who don't want to overthink things.

The Benefits of Online Rent Collection

  1. Saving time and labor. Property owners and/or managers have historically gone from door to door, receiving checks and explanations for lateness. Subsequently, they would endorse each check, drive to the bank, and deposit them with a teller. With online tools, all this is done in a few clicks.
  2. Hazards of handling cash. Cold, hard cash, as much as we love it, is vulnerable. You can lose it or someone else can steal it. Once lost, it is hard, if not impossible, to retrieve.
  3. Missed payments are a thing of the past. Setting up scheduled, consistent payments is advantageous in that rent payment is no longer an intentional act that is left undone if the tenant forgets, is sick, or is traveling. The automatic payments activate on the due date, every month, with payment in full.
  4. Rental payments automatically entered on accounting ledgers. Online platforms allow incoming rents and fees to automatically populate in your accounting software. The payments can also update tax forms, rent payment rolls, and income statements, among other important forms.

Due Dates and Grace Periods

Landlords have every right to expect rent on time. Whether the first of the month or any other day specified in the lease, the lessee is obliged to remit without delay. Still, life happens, and even the most earnest renters might have an emergency such as unexpected job loss, medical expenses, or the needs of aging relatives. The grace period is courtesy owners extend to occupants in the event of such contingencies. There may be a three-day rent grace period or a longer one written into the lease. During this time, the tenant is shielded from late fees or other penalties though rent is officially in arrears.

After the period lapses, a late fee kicks in. Common among most leases are an initial late fee of five percent of the monthly payment. However, each landlord must decide what is proper and necessary to charge. The hope is always that such fines are few and far between. Before including late fees in tenant agreements, make sure such charges are in compliance with state regulations. Some states put a cap on them, while others forbid late charges altogether. Also, a landlord has the discretion to refrain from a late fee if the circumstances warrant.

FAQs about Rent Collection

how to collect unpaid rent after tenant moves out

Rent collection isn’t easy, and to make sure things go smoothly, you should know how to foster great relationships with tenants. Here are a few of the most frequently asked questions about rent collection.

How does a landlord prorate rent?

A landlord may encounter a promising tenant who wants to move in immediately, even if this is mid-month. Must they pay for the whole month? If owners require that, they may lose reliable unit dwellers. In such cases, best practices dictate that the landlord prorate the rent paid for that month.

A simple calculation divides the monthly outlay by the number of days in that month, yielding a per diem dollar figure. So, if a tenant signs a lease for $1,000 per month, and asks to move in on February 19th, during a Leap Year, the landlord can charge for 11 days of occupancy. The tenant will pay $34.48 for each day until March 1st, which would give you a total of $379.28. This method also applies to a departing tenant who stays the extra days of a new month before moving out.

When should a landlord raise the rent?

Increasing the rent on a tenant with a strong payment history is never easy, especially if collecting rent has been easy. After all, these people are the lifeblood of the income property business. Nevertheless, landlords have a right to improve the cash flow of their properties.

What criteria, then, determine when the lease price of a unit should go up? First of all, the landlord should be able to justify the increase, the cost of renovations, the cost of maintenance, or the simple cost of living, for instance. Alternatively, as the local price of units rises, an owner is under pressure to raise rents. Just remember, state and local laws apply, including rent control.

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Still have questions about leasing and/or renting? Connect with one of our Keyrenter real estate experts to get much more information!

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How can a landlord encourage timely rent payments?  

  1. Select tenants with care. Reliable renters possess good character, and collecting rent should be one of them. Trademarks of character include longevity in employment, modest consumer debt paid down on time, solid references from employers, teachers, or colleagues, a decent credit score, and no criminal record. Blemishes in each of these areas might come with a reasonable explanation but too many of them are a red flag. Ultimately, the landlord's judgment is crucial to tenant screening.
  2. Make payment painless. Parting with money is never easy, but landlords need not rub salt into the wound. Taking advantage of payment services and online rental payment platforms helps to facilitate an uncomplicated process that precludes late payments and bounced checks. Those specific to rent collection provide special benefits to landlords and renters alike.
  3. Educate occupants on the payment process. Whether a landlord opts for electronic payment, direct deposit, cash payments, or checks, he or she does best when issuing clear instructions about the method and manner of remittance. Above all, do not leave it to lease language alone. Simple and straightforward directions to each tenant is a service worth the effort.
  4. Enforce late payments while communicating with tenants. Rent payments are the meat and potatoes of real estate investing; they are not gravy. Sometimes renters fail to see that rent collection is on par with a paycheck. Like anyone else, landlords expect their "salary" on time. Establish a solid rent collection policy and give tenants a big heads-up about being late. Too many exceptions disrupt cash flow.
  5. Positive reinforcement for prompt payment. While being firm regarding on-time rent collection is essential, a wise landlord balances firmness with incentives. One method is to shave off a few dollars as a discount for early remittance. Online rent collection platforms can also inform the credit agencies of each time your renter is able to pay rent on time, thereby improving FICO scores month-to-month.
  6. Stick to your rental lease terms. Nothing discourages haphazard payments like management failing to live up to the end of the lease. Strict enforcement of the terms should be backed by strict observance of the terms. Dragging feet on needed maintenance and repairs, slowness in deposit returns, and surprise fees all combine to give the impression of unseriousness.


Every rent collection guide should serve as a reference in terms of setting a policy and following it. Landlords soon discover that a solid rent collection policy maximizes profits and minimizes evictions and other legal challenges in their rental market. Ideally, integrity is strong on both sides of the landlord-tenant relationship.

One way to keep owners on the straight and narrow is to retain a sound property management company in Houston to implement rent collection service for landlords and hold fast to the terms of each lease. Contact Keyrenter today!


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