Cash flow is the name of the game for landlords. Positive cash flow ensures your rental properties turn a profit, while negative cash flow indicates your investments are nothing more than financial drains. And while there are literally dozens of factors that influence cash flow – including the types of properties you invest in, the rates you set, and how you screen tenants – it ultimately comes down to your approach to rent collection.
With the right rent collection strategy in place, you can ensure you always get paid on time and in full.
The Importance of Rent Collection
Owning rental properties is expensive. Almost every transaction associated with owning a rental is classified as an expense. If you study the bank statements associated with your property, you’ll notice that 90% of transactions are debits from your account.
This includes mortgage payments, property taxes, insurance, maintenance and repairs, utility payments, renovations, and upgrades. A property’s rent payment is its only consistent credit.
Without an efficient rent collection process, your finances can quickly take a turn for the worse. You need these payments on time and in full to keep the property cash flowing in a positive direction. And for this to happen, you need a plan.
4 Methods for Collecting Rent
When it comes to collecting rent, there are several different options. Here are a few of the most common:
1. Direct Deposit
This is one of the best (and most predictable) methods for collecting rent. With a direct deposit, automatic monthly withdrawals are taken from the tenant’s account and transferred to your account. This automates rent collection and makes it easy for both parties. It’s safe, secure, and efficient.
If you live far away from your tenants, you can ask them to mail you rent checks. The benefit of collecting rent checks via mail is that it’s free (you don’t have to pay for any sort of software or service). The downside is that it’s very unreliable and depends on the tenant to remember to mail a check on time each month.
While not exactly ideal, you can do face-to-face rent collection. If you own a multi-family rental property, like an apartment or four-plex, you may provide a designated drop-off location on the premises. If it’s a single-family rental, you can encourage them to drop it off at your office. (Or, if it’s convenient, you can pick it up each month.) As you can probably guess, in-person rent collection is usually more of a hassle than it’s worth.
4. Rent Collection Software
Finally, there are numerous rent collection software and services available online. These tools streamline rent collection by creating an online portal through which tenants can log in and pay their rent each month. They can do it manually each month, or they can set up automated drafts (much like a direct deposit).
Tips for Collecting Rent On Time (And in Full)
Now that we understand why rent collection matters and which basic methods exist, let’s drill down and focus on the how of this process. In other words, how do you make sure you get paid each month without the hassle of late payments and excuses? Let’s take a look together.
1. Be Thorough With Screening
Tenant screening might not seem like it has anything to do with rent collection, but don’t be fooled. It’s one of the first (and most important) steps you can take toward getting paid on time.
If you don’t already have a thorough tenant screening process, now is the time to create one. And rather than just asking the same basic questions that most landlords do, use the screening process to really dig into a prospective renter’s financial viability. In other words, gather as much information as you legally can to ensure an incoming tenant is reasonably able to afford the rent payment each month.
“The most straightforward way to calculate if a tenant can afford rent is to take their annual salary and divide that number by 40. If the amount is more than what you are charging for monthly rent at the rental property, the tenant can afford the rent,” Kristi Mergenhagen writes for RentPrep.
For example, if a tenant makes $60,000 per year, dividing the income by 40 gives you $1,500. In an ideal world, you wouldn’t want someone making less than $60,000 in a property with a monthly rent payment of more than $1,500.
Explore Other Screening Methods
Another rule of thumb is the “3X Rule.” This simple method takes the rent you’re charging and multiplies it by three. The tenant’s monthly income should be equal to or greater than this number. For example, if the rent is $2,000 per month, they should bring in at least $6,000 in monthly income ($2,000 * 3 = $6,000).
These are just rules of thumb, but they’re helpful. If nothing else, they help you quickly identify any red flags. (For example, if you’re charging $2,000 per month but the applicant only brings home $4,000 per month, you’ll know it’s not a good fit.)
What does tenant screening have to do with rent collection, you might be wondering? Well, everything. By thoroughly screening on the front end and ensuring reasonable affordability, you cut down on the risk that a tenant is unable to pay on time because of financial troubles.
2. Hire a Property Manager
We’re going to mention quite a few tips and best practices in this guide, but the truth is you don’t have to do any of them yourself. Many landlords shortcut all of this by simply hiring a property manager to handle rent collection (and other tasks) on their behalf.
Property management companies specialize in partnering with landlords and real estate investors to watch over their properties and manage them as if they were their own. This may include tenant screening, maintenance and repair coordination, accounting, and, yes, rent collection. And depending on the property manager you go with, they can essentially remove all of the risk associated with getting paid.
Take Green Residential in Texas as an example. They don’t just offer Houston property management services – they provide guarantees. Their strongest guarantee is something they call the “Rental Income Guarantee.” It basically protects the landlord’s income stream. If a tenant was screened and placed by Green Residential and fails to pay rent at any time throughout their lease, the property management company reimburses any lost rent to the landlord.
While not every property manager offers a rental income guarantee quite this strong, there are still distinct advantages of working with one. If nothing else, it takes the burden of tracking down rent payments off your shoulders.
3. Automate With Software
Rent collection software has become quite popular over the past few years. It’s something that both landlords and tenants find advantageous (for numerous reasons).
One of the biggest advantages of using rent collection software is that it allows for real-time payments from anywhere. In other words, there’s no delay between when the tenant makes the payment and when it shows up in your account. Unlike mailing a rent check, which can take several days to arrive and another day or two to clear, online rent payments are immediate.
Another perk of using software is that it makes it easy to manage all of the ancillary aspects of rent collection, including calculating late fees, sending reminders, showing a tenant’s payment status, etc.
4. Send Reminders
Speaking of reminders, make sure you’re communicating clearly and often with your tenants ahead of rent due dates. Never assume that they will remember on their own.
The great thing about reminders is that they’re pretty easy to automate. The easiest option is to use built-in features with a rent collection software or service. However, even if you collect rent manually, you can still use reminders.
SMS is the best option for sending reminders. Text message open rates hover around 99%, while 97% of messages are read within 15 minutes of delivery. (This stands in stark contrast to other mediums, like email, which often get lost in crowded inboxes.)
To make things easy, keep a template on your phone’s notepad and set a reminder for three days before rent is due. When this reminder goes off, copy and paste the template into an SMS and send it to each tenant.
5. Incentivize Timely Payments
Sometimes tenants need a little added motivation to pay on time. One way to do this is by offering incentives and penalties.
One of the most common incentives is to offer is a discount for paying rent in full before the due date. For example, if rent is due by the fifth of each month, you may offer a $25 to $50 discount for anyone who pays by the first of each month. (Can’t afford to knock $50 off the price? Freebies like t-shirts, hats, snacks, and vouchers can work, too. They might only cost you a few bucks, but they can convince someone to move your payment to the top of their stack of bills.)
Sometimes motivation can work better in reverse. In other words, you can penalize people for failing to pay rent on time. If you do have penalties, make sure you include them in the lease agreement. You’ll also need to stay within the legal boundaries of rental laws in your state.
6. Avoid the Mail
As mentioned above, collecting rent via mail is technically an option. However, it’s highly discouraged in this day and age. The United States Postal Service (USPS) has always been pretty unreliable, but it is now more so than ever.
In order to successfully deposit a rent check from the mail, a lot has to go right. First off, the tenant has to remember that rent is due. Then they have to physically write a check, stick it in an envelope, and place it in the mail. (If they don’t have a stamp, which is highly likely, they have to remember to go to the store and buy stamps.) Once the letter is handed off to USPS, the letter has to work its way through the system. Depending on how far the check is being mailed, it could take anywhere from two days to a week to arrive. Once the check arrives, you have to sign the check and deposit it in your bank account (which can take another day or two to clear).
While you can certainly collect rent via mail if you’d like to, there are so many superior options. Avoid this method if at all possible. (It’ll make your life much easier.)
7. Stop By in Person
Don’t underestimate the power of stopping by in person to remind a tenant about their rent payment. While there are laws that prevent you from entering the property unannounced, there’s nothing stopping you from knocking on the door.
An in-person check-in is obviously time-consuming, but it’s also highly effective. The key is to make these check-ins feel warm and cordial rather than cold and demanding. Start the conversation by saying hello and asking if there’s anything you can do to make the property more comfortable. Then, prior to leaving, remind them of the rent due date and any special conditions required for the payment to be made.
Adding it All Up
If you can consistently collect rent on time and in full, it’ll have a profoundly positive impact on your rental property cash flow. Ultimately, it’ll become one of the most important driving factors in your success.
As you can see from this article, there’s a lot that goes into rent collection. It’s not as easy as having someone sign a lease agreement and promise to drop off a check in your mailbox each month. There are processes, steps, and systems you must put in place to protect your cash flow. Use this guide to get started.
Published First on Due. Read Here.
Image Credit: by Ivan Samkov; Pexels; Thank you!
How to Nail the Art of Visual Email Marketing
Interesting subject line ✅
Engaging and relevant copy ✅
Actionable CTA ✅
All these make up a high-converting email. But there’s one more thing that helps in getting maximum ROI from your emails. That’s attractive visuals. Vennage has revealed that 49% of marketers rate visual marketing as “very important” for their marketing strategy. Three days later, people will probably remember only 10% of the information they hear but 65% of the information if it is presented with a suitable image.
So, if you want your emails to make a difference and prompt the subscribers to take action, using visuals is a must.
That said, let’s take a look at all the different types of visuals and rich media you can use to enhance the email’s aesthetic appeal.
Static images come first, as they are a basic yet compelling part of visual email marketing. Whether you want to display your product with a pretty picture or break down the content with vectors, images come in handy. If you want to pull the plug on lengthy text, use relevant images along with a crisp copy.
Take a look at this email by Touch of Modern. They have nailed the art of product photography and included the perfect image that would attract shoppers.
Illustrations can be used as a powerful storytelling tool in emails. According to a survey, illustrations and infographics are performing better than many other visual elements when it comes to yielding engagement. Rather than using stock images, you can use meaningful illustrations that add more value to the emails.
Here’s an email by Harry’s that uses an illustration to depict the awesomeness of their face wash packs.
3. 3D Images
3D images originated in the 1970s. They established their identity in web designing and gradually made their way to emails. These images add depth to the flat email design and bring freshness to the subscriber’s inbox.
Burberry has incorporated a nice 3D image to promote their open spaces in the email.
Let me take you back to the earliest usage of GIFs in emails.
In the year 2007, Lake Champlain Chocolates incorporated GIFs in their emails, and to their sheer surprise, it brought 49% higher conversions.
Then, in 2014, Dell drove 109% revenue (marketingsherpa) with the help of an animated laptop image in email.
Animated GIFs prove to be extremely beneficial in various use cases, as discussed below:
- Displaying the huge range of products available in your eCommerce store
- Inspiring wanderlust in the readers with enticing images of the destinations
- Demonstrating the usage of your products
- Promoting a new show released on your OTT platform
- Executing occasion-based email marketing
- Animating the typography to draw attention to an important message
Anthropologie has used action-packed animation to show its products. It portrays comfort and aesthetics and lures the readers to buy.
5. 3D Animations
3D animations are a step above GIFs. If you want to further enhance the user experience, use 3D GIFs as Lyft has done.
6. Animated Illustrations
Illustrations with animations are a visual treat. They help in telling a story to the subscribers. If you go by the “Show, don’t tell” adage, try using animated illustrations in your emails.
Grammarly sets the perfect example of using animated illustrations in their email promoting the midnight sale. The animated owl and clock form a great combination to convey the message.
GIFs are snippets taken from a video or an animation played on a loop. On the other hand, cinemagraphs are sophisticated animations with a seamlessly endless loop that take the subscriber back to a past moment.
Here’s an email example by Detour Coffee Roasters showing the use of cinematography in their welcome email.
Like GIFs, you can use cinemagraphs in the telecommunications industry and add visual oomph to your emails. It will pique the subscriber’s curiosity and make them buy an OTT subscription to watch the show.
You can add videos in emails in two ways.
- Place a video thumbnail with the play button and take the reader to the landing page.
- Embed the video in the email itself and let it play therein.
The first option is pretty straightforward in that you just have to embed a static image in the email that emulates a video thumbnail.
Here’s an example.
The second option requires some coding expertise. You have to consider email client support too, if you want to use embedded videos in email.
Take a look at this email template to experience an embedded video in it.
Some Additional Ideas to Make Emails Stand Out
- You can use a monochrome design layout with a single color in the emails.
- Add gradients to reinforce visual hierarchy and get the emails read till the end. You can even experiment with innovative CTA buttons with gradients.
- The key to using visuals effectively is to follow the principles of visual hierarchy. Arrange the email components in a Z or F-shaped pattern to guide the readers. Also, adhere to the accessibility best practices.
Pro-tips for Adding Visuals in Emails
- The text-to-image ratio should be maintained at 80:20.
- As email clients block images by default, add a suitable alt-text with every image. This will also be useful if the subscriber views the email with images turned off. It is an important accessibility best practice and aids the screen readers in conveying the message to subscribers with visual impairment.
- Don’t add important information and CTA in the images.
- An all-image email will trigger spam filters and hamper your email deliverability rate.
- Avoid stock photos at all costs. Real photographs work better if you want to leave a lasting impact on the subscriber’s mind.
- Animations should not flash between 2 to 55 Hz; otherwise, it will aggravate the condition of photosensitive epilepsy.
- Keep close tabs on the email file size to ensure fast loading. It will prevent cutting into the user’s Internet bandwidth.
- While adding GIFs and embedded videos, include a suitable fallback to curb rendering issues.
- Use images judiciously without getting over the board.
- Test the emails so that they render well across all the major email clients and devices.
Remember those times when it seemed impossible to format emails with anything more than an image? And now, we have so many different options to explore and make our emails more fun and entertaining. Besides visuals, you can even use interactivity to add to the visual appeal. Test and see what works best for you.
Put your creative hats on to create email designs that resonate with your email subscribers. It will, in turn, bring you unmatched results in terms of open rate, click-through rate, conversion rate, and ROI.
Featured Image Credit: Provided by the Author; Thank you!
6 Ways to Prepare Your Business for the Upcoming Holidays
The holiday season can be incredibly disruptive, especially for small businesses and their customers. You could either be in a very slow season looking for things to accomplish or so overwhelmed by business that you feel like you got run over by a reindeer. If you haven’t started making preparations yet, you need to start today.
Simple adjustments can help you gain more business or handle a heavy influx of holiday patrons. Here are several ideas you can consider implementing to end the year on a high note:
1. Decorate With Holiday Spirit
Any customer that enters your business will feel the holiday spirit if you’ve got the right decorations in place. You don’t have to go overboard with inflatable pumpkins or flashing Christmas tree lights, but some well-placed decorative touches can really bring the place together. Plus, this makes the workspace festive for your employees as well.
You can choose to highlight the general themes of the seasons or focus on specific holidays. For example, autumn leaves and fall colors can get you well into November. You could also mix things up by putting up ghosts and jack-o’-lanterns for Halloween and switching them out for turkeys and pilgrims for Thanksgiving.
The same can be done for winter. Snowflakes and snowmen will work for the entire season. If you want to get specific, you have Hanukkah, Christmas, and New Year’s decorations to consider.
2. Work Out Employee Vacation Times
Everyone wants to take time off during the holidays, and for good reason. This is one of the best times of year to gather with family and enjoy life together. Unfortunately, some businesses can’t afford to have all of their employees taking time off simultaneously. Your job is to make sure everyone is getting fair time off while still staffing important dates around the holiday season.
How you approach this task is up to you and how you think your team will respond best. You might think it’s fair to let the most tenured employees select their days off first. You could also develop a rotation so that the same people don’t hog the same days off every year. Even a first-come, first-served approach could be considered if you think your team will be OK with it.
Remember that you deserve to take some time off as well. Being an entrepreneur is incredibly demanding and time-consuming. Taking even a couple of days off to enjoy the holidays with family can help you recover mentally and physically.
3. Encourage Calendar Collaboration Among Team Members
To ensure everyone on your team is on the same page with project deadlines, essential meetings and events, and client needs, it’s essential to collaborate on a team calendar. Most calendar software today offers team calendars.
Make sure everyone on your team has access to one another’s calendar so they are aware of when they are available. Then, team members can collaborate to help each other take on things that could otherwise be missed.
Thankfully, there are many collaborative calendar integrations available for teams to utilize in order to maximize their time. By utilizing these tools, teams can work more efficiently together. Therefore, they can minimize the chances of missing deadlines, missing meetings, or making clients unhappy.
4. Make Holiday Business Hours Known
Your customers also deserve to know how your business will operate throughout the upcoming holidays. You should communicate in advance the days you plan on being closed. This way, customers and clients won’t be disappointed when they try to visit, and nobody is there to receive them.
This is extremely important for schedule-based businesses. The sooner you block off certain days, the less likely you will have to reschedule a meeting or appointment that was booked in advance. Clients who have their end-of-year scheduled meetings rearranged or moved at the last minute will not be happy.
Consider sending out an email that details your holiday hours to any customers who have provided contact information to you. Additionally, you could also consider adding a note on your email signature that states when your business will be closed. You could implement this early on, especially for the winter holidays. At the very least, put up a notice on your front door and website that makes the revised schedule known and accessible.
5. Plan Marketing and Promotions
The holiday season is for family and friends, of course, but it’s also a commercial opportunity for businesses. (There’s a reason they call the day after Thanksgiving “Black Friday.”) While you shouldn’t lose sight of what’s most important, your business should be thinking about some promotions to run. The right marketing campaign at the right time can dramatically boost your revenue.
Marketing plans practically write themselves this time of year. Black Friday and Christmas sales are common and desirable. A salon could run cut-price haircut specials on Black Friday for those who want to escape the shopping fray. A mani-pedi promotion could capture the attention of those primping for holiday parties. Put your business’s personal twist on the season, and you’re likely to see sales increase.
What’s most important to prepare for is the increase in business during a holiday promotion. Make sure you are appropriately staffed for busy days with numerous consumers cashing in on holiday deals. If you’re not prepared to handle the business you’ve attracted, you’ll have a blue Christmas.
6. Consider Getting Extra Help
If you’re feeling overwhelmed by all of the business coming your way over the holidays, consider contracting some extra help. Plenty of businesses hire seasonal workers to lend them a hand for a couple of months. Your business doesn’t have to be an exception.
The great thing about seasonal workers is that there’s no long-term commitment. You can get an extra receptionist, hair stylist, or stockroom organizer for just as long as you need. These workers are looking for some extra holiday cash and simply want the additional hours before life returns to normal.
You may even consider contracting some digital help. A webmaster can help you keep your website up and running even with double the online traffic. Your clever marketing strategy could be implemented by a third party so you can focus more fully on your customers.
Of all the above steps, the most important common denominator is to be sure your clients and customers are aware of when your business will be out, so they can plan ahead as well. This will help your business avoid the inconvenience and disappointment the unavailability may cause. Be sure to encourage in-house collaboration on important dates, in addition to collaborating externally with your clients and customers.
Keep your business on the nice list by being prepared for every upcoming holiday, whether it’s the longer holiday breaks in the winter or the shorter holidays throughout the year. With the above holiday preparation planning tips, your business can plan well ahead for this holiday season so nothing slips through the cracks.
Though it’s an extremely busy time for everyone, the holiday season doesn’t have to get stressful. There are so many ways to avoid all of the stress by planning well. The better you work together to prepare, the jollier the holiday season can be for your business and your customers as we head into the 2023 new year.
You might not feel entirely ready for 2023 just yet, and that’s fine. But by taking steps to prepare for the new year now, you’ll position your business to succeed beyond your expectations.
Published First in Calendar. Read Here.
Featured Image Credit: Photo by Quang Nguyen Vinh; Pexels; Thank you!
Face Supply Chain Disruptions : Work Smarter, Not Harder
Supply chain disruptions are nothing new. However, since the beginning of the COVID-19 pandemic, supply chain disruptions have become more common. At first, these issues caused major shortages throughout the country. Now, shortages are still occurring along with inefficient shipping processes.
These issues have forced business owners to struggle with ways to stay afloat. Delays, interruptions, and cancellations have made it nearly impossible to keep up with demand while avoiding wasteful spending.
However, some things simply aren’t within your grasp when it comes to supply chain disruptions. On the other hand, you can work smarter to address them. You’re responsible for how your business responds to these disruptions, and with better approaches, things will run more smoothly.
With that in mind, let’s look at how your business can deal with supply chain disruptions. You can create a sense of hope in this digital world as things slowly start to return to normal and the supply chain issues start to balance out.
Use Data Analytics to Survive Supply Chain Disruptions
Collecting clean data and putting it to use can improve everything from customer service to your marketing endeavors. It can also be used to mitigate the effects of a supply chain crisis. Developing innovative data solutions can keep your business afloat and even help it grow during uncertain conditions.
Different Data Methods for Supply Chain Disruptions
To start using data to your advantage during supply chain disruptions, consider these methods:
- Take a look at demand trends. You can look at customer orders and purchasing trends over the last year. This will give you a better idea of how much to order and how often to counteract supply chain disruptions.
- Organize your data. This also makes it easy to look at your current inventory and open order allocations. You can compare your inventory and orders with data provided by production teams or vendors to create a realistic timeline of when things will arrive or when they can be shipped out to customers.
- Pay attention to demand volatility. People aren’t necessarily hoarding items as they did at the beginning of the pandemic. However, there are still some things consumers are regularly purchasing to prepare themselves for the future. As you look at data relating to the current supply of popular products, as well as data from the manufacturers, it will be easier to keep a steady flow of those products in stock.
While looking at data might not sound like an immediate plan of action during turbulent times, it’s easier to make positive changes and work smarter in the face of supply chain disruptions when you have the right information.
Build Your Brand to Withstand Supply Chain Disruptions
It’s difficult to focus on anything but the supply chain issues affecting so many businesses right now. However, retting over those issues isn’t going to get you anywhere. By shifting your focus and putting your energy into supply chain disruptions, your business can move forward.
Building a brand isn’t easy, which is why it requires a lot of time, attention, and focus. Taking this time to hone in on your marketing is a great way to make your business more of a household name. That kind of brand recognition is exactly what companies need right now to stay afloat when supply chain disruptions occur. You can build your brand awareness and identity (stickeryou dot com), in a variety of ways, including:
- Defining your company values
- Understanding your audience
- Determining what sets your business apart
- Creating brand guidelines
Once you have a strategy in place to grow your brand, utilize things like logo creation, social media, and special events to grow your name and help your customers understand who you are.
Build Consumer Relationships Despite Supply Chain Disruptions
Even if you’re facing supply chain issues, you can build relationships and establish trust with consumers. Today’s consumers desire relationships with businesses more than ever before, so it’s okay to show the “human” side of your brand as often as possible. That can make it easier to provide positive customer service experiences when you’re facing product shortages and delays.
Communication with your customers is one of the best ways to deal with frustrations over delays and supply chain issues, so be transparent. Make it a part of your identity. When you make sure your audience knows about the issues you’re facing and keep them updated about shipping information (including delays), they’re more likely to be understanding and patient.
Prepare to Handle Disruptions to Your Supply Chain
Supply chain disruptions are all but inevitable. Make sure your business has a backup plan and is prepared to deal with them when they arise.
If you don’t have one already, consider establishing an emergency management center within your business. Once you have a team in place, you can offer them previously collected supply chain data and create a plan of action. This will make it easier for them to create an effective strategy while reducing the risk of miscommunication that’s often associated with supply chain disruptions.
You should also create a backup plan that incorporates the existing suppliers that can adapt with you when disruptions happen. It should also include technology exploration. Tech, such as AI, can make a big difference in the future of your business – even if it forces you to change some of your existing supply chain processes.
Be Patient During Supply Chain Disruptions
Additionally, try to be patient when disruptions occur. This isn’t the first time the world has seen supply chain issues, but they’re more unsettling now since there’s no end in sight. As someone involved in business, take heart in knowing these delays and disruptions won’t last forever.
In the meantime, focus on working smarter, not harder — to navigate supply chain disruptions. By mitigating some of the issues, being smart with data collection, and focusing on boosting the strength of other areas of your business, you’ll be able to get through these disruptions more comfortably. You may even come out on the other side with more resiliency and knowledge.
Featured Image Credit: Provided by the Author; Mika Baumeister; Unsplash; Thank you!