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Because rent collection is the primary source of income for your rental business, it’s essential to make paying rent on time easy for tenants. One easy and practical step is leveraging a rent collection app to streamline the process, but sending a rent reminder notice can also encourage on-time rent payments.
This article discusses what a rent reminder notice is, how to write one, how to prevent late rent payments, and provides a free rent reminder notice template.
What Is a Rent Reminder Notice?
A rent reminder notice is a letter or other notification sent to tenants a few days before rent is due. The purpose of the message is to serve as a friendly reminder that can help tenants prepare their finances accordingly or schedule payments in advance.
A rent reminder notice is also a great way to help develop a healthy landlord-tenant relationship, as it can help your tenants avoid paying late fees.
When Should You Send a Rent Reminder Notice?
A rent reminder notice should generally be sent a few days before the rent due date outlined in the lease. Some landlords may send out reminders two weeks before rent is collected, while some may prefer to send a note a few days before the expected date. The timing is up to you based on what you think makes sense. If unsure, you can send a rent reminder notice three days before the due date.
In certain situations, landlords may even consider sending a rent reminder notice during the grace period if payment is past due. If the grace period has passed and the tenant still hasn’t paid, you can send a past-due rent notice to notify your tenant that their payment is overdue.
What Should You Include in a Rent Reminder Notice?
A rent reminder notice should include the specifics of the rental property, including the address and name of your tenants. It’s also helpful to have the balance due and when you expect rent to be paid by to avoid late fees. You can also include your preferred means of contact for the tenant to reach you if they cannot pay rent on time or need an extension.
Here is a rent reminder notice example to give you an idea on what to include:
“Date:
Tenant Name(s):
For Address:
Dear __________________,
This is a friendly reminder that your rent for [MONTH] is due on or before [UPCOMING DUE DATE]. The total amount to be paid is [TOTAL MONTHLY RENT COST].
Thank you in advance for your timely payment. If you have any questions, please feel free to contact me directly at [PREFERRED CONTACT METHOD]
Warm regards,
[YOUR SIGNATURE]”
What If Your Tenant Can’t Pay Rent On Time?
There are a few routes to take if your tenant can’t pay rent on time. But before making a decision, check your local landlord-tenant laws to see if there are rules on how to handle late rent payments. For example, some states may not allow you to impose your late fee until after your state-specific grace period (if applicable).
Alternatively, if your tenant has a history of paying rent on time, you may consider writing a lease amendment to put them on a payment plan. To create a lease amendment, create an Avail account to access our lawyer-written templates for your rental business.
If the situation persists, you may begin the eviction process if they’re regularly late on rent. To do this, you can send a Pay or Quit notice if your rent reminder notice has gone unanswered. However, refer to local landlord-tenant laws for more information on the eviction process for your state.
How to Avoid Late Rent Payments
While there are no guaranteed methods to prevent late rent payments, there are steps landlords can take to ensure tenants know of upcoming rent due dates. One way is by using a platform like Avail that will let you set up a schedule of charges and automatic email reminders at a frequency of your choosing. The rent reminder will include when rent is due, the amount, and include a button to schedule rent in advance. This removes the need to manually send rent reminders to your tenants each month, saving you time as a landlord.
Avail also makes it easy for tenants to pay in-app from any device, and landlords can have the funds deposited directly into their bank accounts. And with FastPay, a feature available with Unlimited Plus, you can receive payments as soon as the next business day.
Tenants, on the other hand, can enroll in Autopay, which automatically withdraws funds from their accounts each month. This feature removes the need to remind tenants when rent is due, increasing the chances of getting paid on time each month.
Simplify Rent Collection With Avail
Rent collection is an essential part of rental property management, and Avail can streamline the process for landlords and tenants. You can schedule rent payments and other rental fees, send rent reminders, collect rent online, and more from one convenient app. Tenants can pay rent quickly from their account or set up automatic payments to guarantee their rent is delivered on time.
Log in or create an account today to set up online rent collection for your properties.
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There are several ways landlords and property managers can collect rent. You can use a rent collection app, an online payment platform, or request paper checks from your tenants. Up until recently, it was possible to receive payments without having to report the earned amount during tax season.
However, the Internal Revenue Service (IRS) implemented a new change regarding rental income reporting in 2022 to address unreported rent. Landlords and property managers must now report rental income over $600 during tax season, as opposed to $20,000 previously.
Note: The IRS has delayed the 1099 requirement to the 2024 tax filing season.
To help you better understand the changes made by the IRS, we outline what you need to know about filing a 1099 form according to a certified public accountant (CPA).
New 1099 Requirements for Rent Payments
The IRS will require landlords to report rental income exceeding $600 via non-employment channels versus $20,000. This change comes from the American Rescue Plan Act that was signed into law by Congress in 2021, which was intended to address the amount of unreported income earned through non-employment-related channels.
“If you receive rental payments via an electronic payments processor and they exceed $600 during the year, you should expect to receive a 1099-K form in the mail, digitally or possibly both,” shares Riley Adam, CPA, a certified public accountant and founder of Young and the Invested. “A copy should be sent to you for your return and also to the IRS, [but] you must still report this income to the IRS on your tax return if you meet the requirements, even if you didn’t receive a Form 1099-K.”
Before working on your tax return, he suggests reviewing the forms provided by a payment processing platform to check for potential errors. “If there is an error made on the form provided to you, you can rectify the issue by clarifying the correct figures on your Form 1040 (tax return),” he shares. “It can be unlikely that the payment processor will rectify the error [and] instead leave that to the 1099-K recipient.” So make sure to check your 1099 forms to ensure there’s no errors.
You can then provide this to your tax professional for them to prepare the required forms once you have all of the necessary information. “If doing your own taxes, you can use this information to answer questions provided in tax software solutions or by hand by downloading the forms directly from the IRS’ website.”
It’s especially important to abide by the new 1099 requirement to avoid unfavorable penalties. “Failure to file the proper forms could result in a follow up from the IRS to inquire about your tax position and also result in corresponding penalties, fines and interest for failing to pay sufficient taxes.”
It’s worth noting that the change applies to payments received through all third-party processing vendors such as PayPal, Venmo, Zelle, and landlord software. While certain services like PayPal and Venmo will provide a 1099-K to users that cross the new threshold amount, others will not. If you use a service that doesn’t, you’ll be responsible for filing the appropriate form yourself.
What Is a 1099 Form?
The 1099 form is a tax form that documents income from a source that isn’t an employer. Examples include rental income, earnings made as an independent contractor, and a tax refund from the state or local level. There are 20 different variations of the 1099 form, but a few are important for landlords to be familiar with:
- 1099-K: “If you accepted credit card or debit card transactions that amount to more than $600 during the tax year, you’re likely going to receive a Form 1099-K reporting these payments,” shares Adams. Most rent collection apps and payment services will provide 1099s prior to tax season.
- 1099-NEC: Businesses use the 1099-NEC form to record payments to non-employees for services throughout the year. If a landlord works with an independent contractor for repairs and maintenance, they will need to provide them with a 1099-NEC if they cross the $600 total threshold.
- 1099-MISC: As the name suggests, the 1099-MISC form is for miscellaneous sources of income. This is relevant to property owners who collect rent in the form of cash or paper checks.
Rental Income Taxes Explained
According to the IRS, a taxpayer must report all rental income when preparing rental property taxes with few exceptions. If you rent out your property for $1,000/month and earn $12,000 by the end of the year, the remaining amount after deductions is taxable income.
In addition to on-time rent payments, you’ll need to track other sources of rental income. If you keep a portion of a tenant’s security deposit at the end of their lease to cover repairs or damages, that amount is your rental income, and taxable. Other sources of taxable income include advance rent, tenant-paid owner expenses, and lease cancellation payments.
Reporting Rental Income
Due to recent 1099 laws for rent paid to landlords, it’s even more important to accurately track and report rental income. Instead of reverting to a paper-and-pencil method, landlords can use a platform like Avail to easily keep track of rental income.
The Avail Rental Property Accounting tool can help streamline the tracking process by providing a comprehensive view of collected rent payments and logged maintenance expenses for each rental property. Create an account to get started today.
*This article is intended for educational purposes only and does not constitute tax advice. Please consult a CPA for more information on filing your taxes.
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Finding a tenant that meets your criteria would ideally take less than four weeks, but this may not always be possible due to a competitive rental market or low demand for rentals. If that is the case, it may be worth offering rent concessions to both new and current tenants for your rentals.
Here’s everything landlords need to know about rent concessions, how to calculate concessions, and the different types of rent concessions to offer.
What Are Rent Concessions?
Rent concessions are discounts or special offers that landlords or property managers can offer to prospective and current tenants. Rent concessions can either be long-term or for one-time use to generate tenant interest through rental listings or motivate tenants to renew their lease for another term.
According to our recent survey, 51.8% of renters plan to rent their next residence despite an already competitive rental market. If you want to keep current tenants or attract new ones quickly, it may be beneficial to offer rent concessions to avoid vacancy periods for your rental property.
However, it’s important to properly screen all applicants to check if they can afford the rent price and other rental fees even without the rent concessions. Doing so reduces the chances of not receiving rent on time once the rent concessions are no longer valid.
How Are Rent Concessions Calculated?
To calculate rent concessions for your rental, it’s important to first distinguish between net effective rent and gross rent. Gross rent is the set rent price for the rental, while net effective rent accounts for any discounts offered to tenants.
To determine how much to offer in a rent concession, you’ll need to determine how much rental income you’re willing to miss out on. This number can be anywhere from $100 to $1,000, depending on your goals.
Once you’ve determined how much you want to offer in discounts, deduct this number from either the rent price or the one-time fees you’ll be charging tenants. If you’re considering offering one months’ free rent, then the free month will need to be deducted from your annual gross rent to determine your net effective rent.
The net effective rent can then be included on the rental listing for tenants to get an idea of how much they’ll need to pay each month with the discount in place.
5 Types of Rent Concessions
As the landlord, you have the option to offer any type of rent concession for a certain amount of time. If you’re unsure of what to offer, here are the main five types of concessions to consider.
1. Free Months’ Rent
Free months’ rent is often the most common type of rent concession, as it can quickly attract applicant interest. Landlords also offer this discount to existing tenants to motivate them to renew their lease for another year. Any month within the lease term can be set as the “free” month, so it’s important to determine the best option for you.
Pro tip: Most landlords avoid offering one free months’ rent for the first month of the lease term and make the last month free instead.
2. Moving Assistance
Moving is often the most stressful and expensive part of the rental process for tenants. Offering moving assistance as a rent concession can be a great way to attract prospective tenants and relieve the financial burden of moving.
You can either reimburse the cost of hiring a moving company or buy house necessities (like toilet paper) to reduce their store trips on move-in day.
3. Rent Reduction
Rent reduction consists of temporarily reducing the original rent price for your property for three to six months, depending on your preference. The reduced rent price should be listed on your rental listing as the net effective rent to ensure tenants are aware of how much they owe each month, whether it’s the total or reduced rent amount.
4. Security Deposit or Move-In Fee Reduction
Most landlords charge a security deposit or move-in fee to cover unpaid rent or property damage during the lease term. If you do not want to reduce your rent price or offer a free month, you can opt for reducing the security deposit amount or move-in fee.
However, reducing these fees can make it harder to cover property damage or overdue rent. For this reason, landlords are advised to financially prepare for unexpected events when offering this rent concession.
5. Discounted or Free Amenities
Landlords can cover fees for tenants to use a local gym, have WiFi, or a parking space in a garage. This rent concession is not as common as the other options, but can still make it easier to attract local tenants and reduce tenant turnover.
When Should I Offer Tenants a Rent Concession?
Offering rent concessions may be ideal if you’re unable to generate tenant leads in a competitive market or you want to retain your current tenants. Tenants begin their apartment search online, so it’s important to list any discounts you’re offering in your rental listing to fill vacant properties quicker.
Collect Rent Payments With Avail
Rent concessions can be a great way to attract new tenants and retain them for longer. Whether you prefer to offer free rent or reduced rent, Avail can help you collect rent payments for all your rentals in one place. Easily streamline the rent collection process by scheduling upcoming payments, automatically charging late fees, and keeping all of your rental income in one platform.
Create an account or log in to set up your rental properties and invite your tenants to pay rent online.
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Allowing tenants to pay rent online can increase your chances of getting rent paid on time each month, but you’ll want to use the best rent collection app for the job. The best rent collection app allows you to streamline the rent collection process, automate rent reminders, and offer benefits your tenants can use.
To help you find the best option for your rentals, we compared the top nine rent collection apps landlords can use and what they each offer.
What Is the Best App for Collecting Rent?
These are the nine best rent collection apps for landlords:
1. Avail
Avail is a landlord software platform owned by Realtor.com® that helps do-it-yourself landlords streamline rent collection without a property manager. You can schedule upcoming payments and Avail will automatically email payment reminders to your tenants before the due date.
Tenants can pay rent, security deposit fees, move-in fees, and more with a debit card, credit card, or checking account. There is a 3.5% processing fee for credit and debit card payments, as well as a $2.50 transaction fee for bank transfers. But you can upgrade to Unlimited Plus for $7/unit per month to remove the bank transfer fee and access additional benefits. Processing times can take up to three business days or as soon as the next business day with FastPay. It’s also important to note that Avail allows you to block partial payments in the case of an eviction.
Tenants can set up one-time payments or automatic payments, and if you’re renting to roommates, they can split their rent payments accordingly so that one person does not have to submit the full payment. Plus, each tenant can report their on-time rent payments to TransUnion for $3.95/per reported month with CreditBoost to build their FICO 9, FICO XD, and VantageScore credit score.
When you collect rental payments with Avail, each payment will also automatically populate the Avail Rental Property Accounting tool dashboard to help you track both rental income and expenses for free. Each transaction will show information on the payer, the amount, the date, and the type of transaction.
If you’re looking to save on certain fees, the Avail Referral Program allows landlords to earn up to $500 in account credit when you invite 10 landlords to create an account. The account credit can cover the cost of upgrading to Unlimited Plus, tenant screening fees, or other upcoming costs.
2. Apartments.com
Apartments.com, previously known as Cozy, helps you automate rent collection and keep track of all your rental payments in one place. Like Avail, you can see how much you’ve collected in rent payments, security deposits, and move-in fees in one place. The platform also sends payment reminders via email to tenants to ensure they’re aware of when the next payment is due.
Tenants can pay rent with a debit, credit, or prepaid card for a 2.75% fee or for free with a checking account. Cozy used to allow tenants to report those same payments to a credit bureau to help tenants build their credit, but this is no longer an option with Apartments.com. The payment processing time can take three to five business days when a tenant pays with their checking account or two to three business days when paying with a credit, debit, or prepaid card.
3. Zillow Rental Manager
Zillow Rental Manager can help you collect rent payments online and see the current status of each payment through your dashboard. Tenants can make payments with a credit card for a 2.95% fee, a debit card for a $9.95 fee, or for free with a checking account. Payments can take three to five business days to process, depending on the tenant’s payment method.
Roommates are not allowed to pay rent separately through Zillow Rental Manager, so one tenant must submit the total rent payment through their account.
4. Rentec Direct
Tenants can pay rent online with their checking account for free or with a credit card and debit card for 2.95% with Rentec Direct. The credit card transaction fee can be paid by the tenant or landlord, depending on your preference. Rentec Direct allows tenants to set up automatic payments or one-time payments that they can pay online or via phone call.
Although there are no setup costs to collect online rent payments with Rentec Direct, you do have to pay a fee of $35/month for Rentec Pro or $40/month for Rentec PM. You can also collect electronic cash payments (when a tenant pays rent with cash at select payment locations) for $3.99 per payment, but there is a setup cost of $200 and a 10 payments per month minimum to utilize this feature.
When a tenant pays rent with a credit card, landlords can expect the payment to hit their account the following day or sooner for $0.50 per transaction. However, processing times vary depending on which bank you’re using, and can take anywhere from one to three business days.
5. Buildium
Buildium is intended for landlords with 50 properties or more in their portfolio. You can expect to pay anywhere from $50 to $460 per month to have an account with Buildium and take advantage of their features. You can set up recurring payments and one-time payments that tenants can pay online. The funds are then transferred within the same day with ePay, but processing times can vary.
Tenants can pay rent with a credit card for a 2.95% transaction fee or $1 for incoming electronic funds transfer payments. It’s important to note that landlords are required to pay a $99 bank account setup fee per bank account, even with the most basic account.
6. TurboTenant
TurboTenant provides easy payment tracking, automated payment reminders, and receipts to file. Similar to other platforms, tenants can pay rent with a checking account for free or with a credit or debit card for 3.49% per transaction. Tenants can also report their rent payments to TransUnion for free with the Rent Reporting feature, and roommates have the option to split rent payments per person instead of one person paying the total rent amount.
7. PayRent
PayRent allows tenants to pay rent with a credit card or bank transfer from any U.S.-based bank or credit union. To pay with a credit card, tenants will need to pay a 3.5% and $0.30 credit card transaction fee or $5 per bank transfer. Tenants can also report their rent payments to all three credit bureaus for free and access an interest-free emergency fund for when cash gets tight.
Payments process within one to seven business days, depending on the service plan you go with. You can choose from the Pay-As-You-Go plan for free, the Do-It-Yourself plan for $19 per month, or the Go-Like-A-Pro plan for $49 per month. Each plan requires the same transaction fees for tenants, despite the increase in monthly fees for the landlord.
8. ClearNow
Similar to PayRent, ClearNow is specifically intended for rent collection only. Although there are no setup fees for landlords, ClearNow does charge different fees depending on when you require rent to be paid. Monthly charges for one rent payment cost $14.95 per month, while semi-monthly and bi-weekly charges cost $4 per month. Additional payments cost $2 per month, which can quickly add up for landlords. However, tenants do have the option to report their rent payments with Experian RentBureau, which can be a great perk to attract tenants.
9. Rentdrop
Rentdrop is a free app that allows tenants to pay rent online for free. Landlords can set up automatic payment reminders, charge late fees, and block partial payments. Tenants can also split rent with roommates and set up recurring payments to ensure payments are submitted on time. Rentdrop does not allow tenants to report rent payments to credit bureaus or to pay rent with a credit card, but they plan on implementing this soon to their platform.
Since Rentdrop is mainly designed for online rent collection, you’ll need to outsource additional tools to track rental income and handle other areas of landlording.
Collect Rent Payments With Avail
Collecting rent payments can be a stressful part of managing a rental, but with the right rent collection app, it can be made easier. Whether you’re looking to automate your rent collection or streamline the entire rental process, Avail is a great tool to help you manage your rentals. You can also track your rental income and expenses with the Avail Rental Property Accounting tool for free, all in one place.
Create a free account today to collect rent payments, security deposits, move-in fees, and more, all in one place.
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When collecting rent payments, it’s important to provide tenants with a rent payment receipt so both parties can confirm rent was paid. A rent payment receipt is also an essential part of the bookkeeping process to help you keep all aspects of your rental properties organized.
In this article, we explain how to create a rent payment receipt to share with tenants and some considerations to keep in mind.
What Is a Rent Receipt?
A rent receipt is documentation that proves that a landlord has received a tenant’s rent payment at the beginning of each month or when rent is due. You can use rent receipts for cash payments, checks, money orders, as well as online payments, if necessary.
Why Should Landlords Offer Receipts for Rent Payments?
Rent receipts can be a great way to create paper trails for rent payments and other fees tenants are responsible for covering, especially if your tenant pays in cash or with checks. Receipts for rent payments are also useful to reference around tax season to account for all the rent payments you collected from tenants and when handling rent-related issues.
Some states require landlords to provide tenants with a rent receipt to confirm the payment has been received. Check your local landlord-tenants laws to ensure you’re providing the necessary documentation to tenants when it comes to collecting rental property-related payments like rent, security deposits, move-in fees, and more.
How to Write a Rent Payment Receipt Template
A rent payment receipt template should outline the date you received the payment, the tenant’s full name, the address the payment is for, the collected amount and payment method, and the period the payment is for. Here’s an example:
The final document can be printed or emailed to the tenant so they have their own proof of payment. If you collect rent payments with Avail, your tenant automatically receives a payment confirmation emailed to their inbox that proves they paid rent by the set due date. Instead of having to send the rent payment receipt yourself, our system does it automatically to help you streamline the rent collection process.
Should Tenants Get a Receipt for Other Rental Fees?
Some states do require landlords to provide receipts for all payments a tenant covers, while others only require receipts for rent payments. It’s smart to research the laws in your state regarding payment collection to ensure you’re abiding by local ordinances.
Tenants automatically receive payment receipts for all payments made through Avail, no matter if it was for rent,pet rent, a deposit, or another rental fee. If you discover that you need to provide receipts for all payments, Avail can make it easier for you to do without having to create multiple documents.
Collect Rent Payments With Avail
Offering rent payment receipts can be a great way to prove that a tenant has paid rent and help you track all your rental income around tax season. Instead of having to create and mail receipts to tenants, Avail automatically generates receipts for each payment so both parties can have proof of payment.
Create an account or log in today to start collecting rent payments and other fees with landlord software designed to make renting easier.
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There may be instances where your tenant forgot rent is due or is unable to pay rent for the month, leaving you no choice but to issue a past-due rent notice. A past-due rent notice can be a great way to gently remind tenants of the financial obligations they agreed to in the lease agreement.
Keep reading to learn more about what to include in a past-due rent notice, when to send a notice to tenants, and how to prevent late payments.
What Is a Past-Due Rent Notice?
A past-due rent notice, also referred to as a late rent notice, is a letter that lets tenants know they’re late on paying rent. Issuing a late rent notice acts as a reminder of the rent payment they’re responsible for, as well as any late fees outlined in the lease agreement.
There may be some instances where a tenant withholds their rent payment if the landlord has failed to abide by the lease agreement or repair a major issue within the property. In that case, landlords cannot charge a late fee or penalize them for not paying their rent for the month. However, this varies by state, so refer to your local landlord-tenant laws.
What Should You Include in a Past-Due Rent Notice?
A late rent notice should generally include the rental property address, name of your tenant, the issue date of the notice, the balance due, and what the consequences are if a tenant continues to not pay rent.
You can use a late rent notice template offered online or create one yourself. Avail offers a free late rent notice template you can use for your rentals that includes all the necessary information.
When Should You Send a Past-Due Rent Notice?
State and city rental laws vary in how soon a landlord can send a late rent notice and in what delivery method. Email is usually not considered an acceptable method of delivery, which means you may have to deliver the late rent notice yourself or through certified mail.
Some states allow landlords to provide a late rent notice after five days have passed since the payment due date, but it’s important to research your local ordinances before sending a notice.
What If a Tenant Continues to Be Late on Rent?
If a tenant continues to pay rent late, then it may be time to send them a formal pay or quit notice or begin the eviction process. A pay or quit notice lets the tenant know that if they do not pay rent within a certain period, then they must move out of the rental property by the outlined date. Failing to pay rent after issuing the past-due rent notice and pay or quit notice may leave you with no choice but to evict your tenant.
Should You Accept Partial Rent Payments?
If your tenant is unable to pay the full amount due, then they may suggest paying a partial amount of the rent instead. While some landlords will agree to partial payments depending on the circumstances, it’s generally not advised to accept partial rent payments. Some states won’t allow landlords to evict a tenant if even one dollar has been collected after issuing a past-due rent notice, so accepting a partial rent payment can halt the eviction process.
Unlike Zelle, Venmo, and PayPal, landlords can block partial payments from tenants with Avail. This feature can be especially helpful when dealing with a tenant that pays rent late or during the eviction process.
How to Prevent Late Rent Payments
While there are no foolproof methods to prevent late rent payments, there are some ways to ensure tenants are well-informed on when rent is due. Property management software platforms like Avail allow you to schedule upcoming rent payments and will automatically remind tenants a few days before rent is due.
This automatic reminder ensures tenants are well aware of when their next payment is due, without you having to reach out to them yourself. The rent collection process is easily streamlined to save you time when managing more than one rental property.
Streamline Rent Collection With Avail
Not receiving rent payments on time can be stressful to deal with, but issuing a past-due rent notice can be one way to reduce the chances of it happening again. Avail can also send tenants monthly reminders that state the amount due with a direct link to submit their payment.
Create an account to start collecting rent payments and other rental fees with Avail today.
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There may be times where your tenant requests a proof of rent payment letter to share with their bank to get approved for a loan or mortgage. A proof of rent payment letter confirms an applicant has provided accurate information on their current address and their ability to make on-time rent payments.
In this article, we outline three tips to guide you through writing a proof of rent payment letter for your tenant.
3 Tips for Writing a Proof of Rent Payment Letter for Tenants
Writing a proof of rent payment letter often requires easy-to-find information on your tenant, from their full name to the rental property address. When writing a proof of payment letter for the first time, here are three tips to consider as a landlord.
1. Verify the Request
Confirm with your tenant that this is a legitimate request they’re aware of. A person or company may request this information without your tenant’s knowledge, so it’s important that they’re aware of the request since the letter does include personal information.
Raising the question with your tenants also helps you better understand the purpose of the letter and what information needs to be shared.
2. Include Relevant Information
Proof of rent payment letters often include information on a tenant that proves that they are currently renting and have a good record of paying rent on time. In the letter, include the following information on a business letterhead:
- Your tenant’s name
- Rental property address
- Rent price
- The purpose of the letter
- Confirmation that your tenant has paid rent on time
- Your contact information
Your tenant’s full name, property address, and rent price can be found in the lease agreement set in place. If you collect rent with Avail, then you can easily see all the rent payments you’ve collected from your tenant. Our system will automatically flag late payments and show all on-time payments.
3. Share the Draft With the Tenant
Once you’ve completed the final draft of the proof of rent payment letter, share the letter with your tenant to ensure that all the requested information is included and the letter format meets the guidelines set by the bank. If everything looks good, the tenant can then share it with the bank that requested the proof of payment letter.
Proof of Rent Payment Letter Sample
To help you with the writing process, here’s a proof of payment letter sample you can use to get the process started.
“Date:
Name(s):
For Address:
Dear ________________,
I am the [LANDLORD/PROPERTY MANAGER] for [ADDRESS]. This letter is a formal verification that my tenant, [TENANT NAME], is currently residing in my rental property located at [ADDRESS] for [DURATION]. [TENANT NAME] moved in on [MOVE-IN DATE] for a lease term of [LEASE DURATION], which is set to expire on [EXPIRE DATE].
My tenant currently pays [RENT PRICE] per month and has a strong history of making on-time rent payments. They have proven to be a reliable tenant.
If you have any questions for me, I can be reached at [CONTACT INFORMATION] between the hours of [TIME FRAME].
Best,
[YOUR SIGNATURE]”
Automate Rent Collection With Avail
When using property management software platforms like Avail, writing a proof of payment letter can be easily done in minutes. With Avail, you can see all rent payments you’ve collected from tenants in your account to check if they’ve consistently made on-time rent payments. You can also see when payments are past due, any late fees you’ve collected, and much more.
Create an account today to automate the rent collection process with Avail for free.
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Online rent collection may seem straightforward, but there are do’s and don’ts landlords need to be aware of to avoid not getting paid or experiencing a hiccup during tax season. Being well-versed in rent collection can not only make it easier to communicate important information to your tenants, but can also help you feel more confident managing income generated from your rentals.
Here are the top do’s and don’ts of online rent collection to be aware of as a landlord.
The Do’s of Online Rent Collection
Collecting rent payments is necessary to generate passive income through your rental property. To increase your chances of getting paid each and every month, here are the do’s of online rent collection to keep in mind as you begin managing a rental.
1. Make Rent Collection Easy for Tenants
The easier it is for tenants to pay rent, the quicker you can get paid at the beginning of each month. Requiring tenants to pay rent with checks can make it harder to get paid in time to cover upcoming expenses, like your mortgage, or use that money to pay for a maintenance repair.
Most landlords opt for collecting rent online since it allows tenants to submit their rent payments in minutes or have the funds automatically withdrawn from their account with Autopay. You can easily invite your tenants to create an account with Avail to submit their rent payments, set up Autopay, and pay other rental fees they’re required to cover.
2. Allow Different Payment Options
Allowing tenants to pay with different payment options can also increase your chances of getting paid on time each month, which is why Avail allows tenants to pay with a bank account, credit card, or debit card.
Limiting the number of payment options for tenants can not only delay payment if they suddenly lose their main form of income or their debit card, but it can add unnecessary stress to the rent payment process.
3. Schedule Payment Reminders to Tenants
The benefit to using landlord software to collect rent payments is the ability to schedule payment reminders a few days prior to the due date. Payment reminders are automatically sent through Avail, which takes the responsibility of reminding tenants off of you.
Instead of having to worry about reminding tenants about rent, you can spend that time doing something else.
4. Keep a Record of All Collected Rent Payments
Since rent payments are considered an additional source of income, you’ll need to report your earnings each tax season. You can manually track your payments through an excel spreadsheet or access a free rent roll report that’s generated through Avail showing the rent payments you collect.
The rent roll report allows you to keep a record of all your collected rent payments, as well as information on your properties and current tenants.
5. Allow Tenants to Report On-Time Rent Payments
While collecting rent online benefits landlords, this can also be beneficial for tenants looking to build their credit. More tenants are looking to increase their credit score through on-time rent payments, especially if they don’t have a strong credit score or lack credit altogether.
Avail allows tenants to report on-time rent payments to build their FICO 9, FICO XD, and VantageScore credit scores through CreditBoost for $3.95 per reported month. Offering this benefit to tenants can also help your rental listing stand out from the competition, since not many landlords offer this to their tenants.
The Don’ts of Online Rent Collection
Rent collection may seem straightforward, but there are certain factors to be aware of as a DIY landlord. Here are the top don’ts of online rent collection to avoid.
1. Avoid Collecting Fees With Zelle, Venmo, and PayPal
Zelle, Venmo, and PayPal offer convenience when it comes to collecting rent, but this can also make it harder to track your rental income and even result in your account being shut down. Paypal, for example, requires landlords to upgrade to a business account to collect payments associated with a business. Failing to do so can permanently shut down your account and remove any payment protection for your tenants, especially since real estate-related payments are prohibited.
Venmo and Zelle are intended for personal use only, meaning real estate-related transactions are also prohibited. Even if you upgrade to a Venmo business account, collecting rent payments violates their terms and conditions, which removes any payment protection they offer. For that reason, it’s advised to use platforms intended for rent collection only to avoid hiccups in the future.
2. Don’t Accept Partial Payments
You may be tempted to collect partial rent payments when a tenant is struggling to pay the total amount, but this may not be the best solution. If you allow tenants to pay a portion of the rent with no repercussions, then this can make it seem like not paying the full amount each month is okay.
To avoid this from happening, you can require your tenants to sign an “Agreement for Delayed or Partial Rent Payments,” which lets them know of the late fees they’re responsible for covering and the consequences of not paying the full amount by the end of the month.
Accepting partial payments can also make it harder to evict a tenant, since most landlord-tenant laws protect tenants from eviction if even a small amount of money has been collected by the landlord. To avoid receiving partial payments, you can reject a tenant’s payment through Avail when in the process of evicting a tenant.
3. Not Charging Late Fees
Charging late fees is important to ensure you’re compensated for the financial inconvenience of not receiving rent on time. If there are no consequences for not paying rent when it’s due, then this can result in tenants not being timely with their payments.
However, late fees need to be listed in the rental agreement for your property to be enforceable. For that reason, you’ll want to determine how much you’ll charge in late fees before signing a lease agreement.
Simplify Online Rent Collection With Avail
Collecting rent online can be easily done with the right tools. Whether you own one rental property or many, Avail can help you streamline the process of collecting rent and other rental fees in no time. You can also access helpful documents, like a rent roll report, at no additional cost to reference throughout the year or during tax season.
Create an account or log in to collect rent payments, security deposits, move-in fees, and more with Avail.
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It may seem like any cost associated with your rental property is an operating expense, but this is often not the case. Costs that directly impact the operation of your rental business are considered rental property operating expenses, but tracking the wrong expenses can result in incorrect financial reporting, making it harder to know exactly how well your rental business is performing.
We guide you through the process of identifying and calculating rental property operating expenses so that you can track expenses correctly as a landlord.
What Are Operating Expenses for a Rental?
Rental property operating expenses affect the day-to-day operations of your business and are necessary to manage a rental property. Examples of operating expenses to expect as a landlord are the following:
- Advertising
- Auto and travel if you commute to your rental
- Cleaning and maintenance
- Landlord insurance premiums
- Legal and other professional fees
- Property management fees (if applicable)
- Mortgage interest that’s been paid for the year
- Maintenance and home repairs
- Landlord software fees
- Property taxes
- Homeowners Association (HOA) fees
- Utilities
- Depreciation expense
The expenses listed above will also need to be added to your 1040 tax form, so it’s important to track how much you’ve spent in each category for all of your rental properties.
How to Calculate Rental Property Operating Expenses
Renting out a property requires you to cover certain expenses, which is why it’s important to monitor your expenses to avoid paying more than your rental income. To calculate operating expenses, divide the total of your expenses by the rent price you’re charging tenants (or rental income). If your operating expenses total $500 for a rental with a rent price of $1,375, your gross operating income (GOI) would then be 36.3%.
Most landlords try to keep their gross operating income — the total operating expense in relation to total revenue or income — around 35% to 45% for each rental. If you find that your operating expenses are higher than 45%, you may need to analyze your expenses to ensure you’re not spending more than you’re earning in rental income. On the other hand, a GOI below 35% may indicate an important expense is missing.
How to Cover Rental Property Operating Expenses With Rent Payments
The rent price for your rental should be competitive for your area and help cover your operating expenses. Your expense total for each month and a list of local rental comps can help you determine a rent price that will help generate passive income while remaining fair for the designated area.
It’s important to note that your rent price should not be influenced by the expenses you’re hoping to cover with rent payments. This can result in overcharging for rent and deterring prospective tenants from applying for your property.
How Much Profit Should You Make on a Rental Property?
The profits your rental generates will depend on the rent price you charge and your monthly operating expenses. Property investors usually determine their ideal profit for each rental before launching a rental business to have a better idea of their goals.
If you’re still unsure of how much profit your rental property should be generating, you can create a rental property business plan that outlines the operations and financial information of your business and can be referenced throughout the year or shared with other real estate investors.
Track Rental Income and Collect Rent Payments With Avail
The goal of a rental business is to generate a passive income that can cover expenses and generate a profit. To keep track of the progress of your business, you can collect rent payments and other rental fees with Avail for all of your rental properties. Once you collect payments, you can access the Avail Rental Property Accounting tool to keep track of all of your rental income and operating expenses to make tax return season easier.
Create an account to start collecting rent payments with Avail and manage your rental properties.
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As a real estate investor, you’ll need to keep track of how much income your rentals generate through all your active lease agreements. This can be done manually, or you can create a rent roll document that provides you with a comprehensive overview of all your rental properties to share with other investors or keep on file.
In this article, we’ll further explain what a rent roll is, how to create one for your rentals, and what information to include.
What Is Rent Roll?
A rent roll outlines your rental income from your real estate investments and information on your tenants. There are different types of real estate investments that can be added to a rent roll, but it’s mainly used for commercial and residential properties that are rented out to businesses or individual tenants.
How a Rent Roll Works
By creating a rent roll for your rental business, you’ll be able to easily access a clear snapshot of all of your investment properties instead of having to sort through different documents. You can also refer to your rent roll to keep track of your rentals, share with investors you’re looking to work with, or with lenders when looking to finance another rental property.
What Information Is Included in a Rent Roll?
There are two types of rent roll documents you can create: one for each property and one that provides an overview of all of your businesses. Regardless of how many properties the rent roll includes, the following information should be outlined:
- Property information: Name of the property owner or name of your Limited Liability Company (LLC), the address, type of property, and any zoning or market area of property.
- House or unit data: The total square footage, number of bedrooms and bathrooms, amenities, and any additional features the property offers.
- Tenant information: The name of your tenant, the lease start and end date, security deposit or move-in fees they paid, pet rent (if applicable), and how often they pay rent on time.
- Annual and monthly rental income: Both the annual and monthly rent income should be outlined, as well as the total amount of fees that rent has to cover.
Who Uses a Rent Roll?
Whether you’re new to real estate investing or a seasoned investor, anyone that owns a rental property can benefit from a rent roll. The information it provides can be used during tax season when determining how much income you generated the past year. A rent roll can also be shared with buyers and sellers, other investors, lenders, property managers, and anyone else interested in learning more about your rental business.
Buyers, sellers, investors, and lenders can use a rent roll to see if a property has been able to generate a stable stream of rental income and compare the rent to other similar properties. Individual landlords and property managers can use a rent roll to keep track of rent payments for all rental properties and even pinpoint when a lease is close to ending to begin the lease renewal process or find a new tenant.
Where Can I Get a Free Rent Roll Template?
When you collect rent with Avail, a rent roll report is automatically generated for all of your rental properties. The report is a balance sheet of all the properties set up on Avail, as well as any rent or other rental fees that have been collected. You can also upload additional information you’d like to include in your report.
If you prefer to have an excel sheet template, you can email the Avail Rent Roll report to your inbox to then open in Google Sheets. There you can add additional columns, properties, or major notes you’d like to include. Your rental income, tenant information, and property data are already included, making it easier to track how your rental business is performing.
Already using Avail to collect rent? Click on “Reports” to access your Rent Roll Report or email it to your inbox to keep on file.
Where to Find Rent Roll Data
There are a handful of resources available to help you complete a rent roll template. The major sources of rent roll data you’ll need to review are:
- County tax assessor: Find information on your property, such as square footage and property type.
- Multiple Listing Service (MLS) information: Get the total number of bedrooms, bathrooms, amenities, and other information on your property worth noting.
- Lease agreement: Your lease agreement outlines information about your tenant, the rent price, fees they had to pay, and the lease duration.
- Profit and loss statement: A profit and loss statement includes your rental income and any major losses that incurred during the lease term.
Collect Rental Fees With Avail
Creating a detailed rent roll of your rental business can help you keep track of your monthly and annual rental income to either keep for yourself or share with others. You can create an excel sheet to do this on your own or collect rental fees with Avail to have it done for you.
With Avail, you’ll be able to see how much income all of your rental properties have generated during the different lease terms, as well as any late or missed payments from tenants. Create an account today or log in to streamline the rent collection process and keep everything organized in one place.
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