U.S. Government Axes the Use of Paper Checks… Follow the Lead, Property Managers

In a statement released May, 2011 by the U.S. Department of the Treasury, Rosie Rios, Treasurer, formally ended the use of paper checks for Social Security and federal benefit payments.

ONE HUNDRED TWENTY MILLION DOLLARS!

The simple change keeps $120,000,000 in taxpayer pockets, saving “more than 1 billion [taxpayer dollars]” over the next ten years. The electronic payment solution implemented by the U.S. government commands the attention of all U.S. businesses still using valuable time, effort, and money processing checks. Now what about Property Management?

The average property management company, managing at least fifty units spends at least one week collecting, balancing, and depositing checks from paying tenants. Next, property managers spend another two business days redistributing the rent, property management fees, and maintenance expenses to owners, themselves, and vendors, respectively. Oftentimes, those balances are not entirely accurate, leaving cleanup work for accountants. Even with accurate figures, accountants must review every check, cross-reference with past receivables, expenses, management fees, and owner disbursements, ensuring accuracy and integrity. Face it, checks must go…

Property management employees, burdened with the responsibility of collecting and tracking rent make between $15 and $25 per hour. Collecting and recording rent from 80-100 tenants takes a minimum of two hours per day during a one-week (including weekends) collection period. The average accountant makes $50 per hour, and the additional 4-10 hours spent double-checking and accurately recording rent checks brings an estimated monthly cost of collecting checks between $410 and $850 per month.

Finally, tenant checks-payments take time and effort to collect. All-to-often, e-mails, phone calls, letters, and in-person confrontations preface the transfer of check from tenant to property manager. The burden of collecting, recording, accounting, and depositing seems utterly outdated in a time of virtual society. If nothing else, count on the likelihood your tenants log on to a computer. The average American 12-years and older spends 3.1 hours per day on the Internet. THREE HOURS PER DAY! On average, it takes 2.5 minutes for a tenant to pay rent online.

Put it all together, and voila… your virtual solution!

Bring electronic payment and direct deposit to your property management business. Count on this: no more reminders, no more unnecessary accounting, no more check processing, and much more time!!!!! A rental utopia – tenant collections, bank deposits, accounting and double-checking, and owner distributions all done in your sleep.

Property Managers, follow the lead of your government, saving time and money. A number of property management software solutions exist online to go beyond simple rent collection, facilitating communication, maintenance requests, bill-pay, record keeping, advertising, and in-depth accounting. While America spends 3.1 hours online everyday, why are property managers spending the entire day fending off the fruits of the Virtual America? Let’s break down the monthly numbers again.

• Managing 90 units (150 tenants)
• National Median Gross Rent per unit(2009 Census): $849
• Average Property Management Fee (Single-Family Home): 4-12% – let’s use 9%
• Average # of employees: 1.5
• Revenue from Management Fees: $6877
• Collection, check processing, accounting expenses: $850

In our example, collecting checks alone cuts into property management bottom line by 12%. Wow- the simple of collecting, processing, recording, and double-checking from check collection reduces net profit by 12%.

Managers, a new frontier in rental property welcomes Americans as more renters and property investors enter the market place. As a result, new property management companies, operating on a virtual platform will out-price the paper-based companies, while collecting market share quickly.

Electronic payments and direct deposits represent only a small portion of the profit and efficiency maximizing features brought by quality online software. Make the transition to ensure success in the new frontier.

Tony Salloum

 

Credits:

Davis Mann, RentPost

http://www.frankwbaker.com/mediause.htm

http://www.census.gov