If you’ve taken to property investment, then you’ll know one of the most profitable ideas is renting out your properties to gain a steady income. But, this poses the question; what are the best ways of accepting rental payments? Here are three ideas to help you out:
Bank Transfer/Direct Debit
There’s a lot to love about bank transfers and direct debits. For one, payments are instant, and your tenants can send the money to your account immediately. Secondly, they’re very safe and secure, you can do them online or go to your bank to send the money. Thirdly, direct debits mean that money is sent to your account automatically on a certain date. So, tenants can set up a direct debit to send you money on the day their rent is due each month. This means there’s less risk of tenants missing rent payments, giving you one less thing to worry about. The only drawback is that not everyone knows how to set up direct debits or send bank transfers.
However, this is still a fantastic payment method and an easy way of getting rent on time, every time. When you invest in property, it’s always nice to get regular rent income rather than sporadic payments as people miss rent, etc.
Some people think that checks are old fashioned and prefer other methods of payment. However, they’re still one of the most secure methods of transferring money out there. Checks need to be approved by banks, and you don’t have to worry about handling large amounts of cash all in one go. One issue some people have is they don’t like how long checks take to clear and be processed before the money is in your account. This can be problematic as tenants may send their rent on rent day, but the check won’t be in your bank for a few more days. However, this can be solved with overnight checks that are sent the night before and ready to be cashed in the next day.
If you want a very secure way of accepting rent payments, this is a great option. Furthermore, everyone can write and send checks, meaning you don’t have to worry about elderly tenants who might be unable to get to grips with online banking and bank transfers.
Cash is a very popular and easy way of accepting rent payments. The reason it’s so popular is that cash payments are tax-free. If you get paid in cash and then store it in your home or deposit it in installments, then you don’t have to pay tax on your earnings. It’s a little loophole in the system that many investors are keen to enjoy.
The main issue with cash is that tenants have to come to you to pay, or you go to them, or they send it in the post. In either of the first two scenarios, a lot of effort is involved. In the last scenario, it’s far from a secure way of receiving payments.
It’s a good idea to use a combination of these payment methods as you allow tenants freedom of choice. They all have their pros and cons but, when used together, they help you accept secure payments on time.