From 0 to 100: How Rainey Realty Collects 100% of Resident Payments Online
One of the most common questions we hear from clients is “How can I increase the number of residents who pay online?”. While there are plenty of free resources and programs designed to boost utilization, most property management companies struggle to move their entire resident base to online payments.
Rainey Realty manages approximately 550 single family units, and consistently collects 100% of their payments online. Before implementing PayLease in early 2014, all of their resident payments were made by check or money order, and had to be manually processed. We chatted with Roy Rainey, the firm’s president, to find out their strategy for eliminating checks and money orders and moving 100% of their payments online. Here is Roy’s first-hand account about how they were able to do this.
PL: For starters, why was it so important to your company to have all of your residents paying rent online?
RR: Between filling out deposit slips, posting each payment to an individual’s account, and physically delivering checks to the bank, collecting rent was taking up too much of our time. Plus, there were always errors that resulted from all the manual data entry. I knew if we automated the process entirely, it would save us a lot of time and hassle.
I also knew that our cash flow would improve if all payments were made online. Many of our residents would wait to mail their check on the 5th. That technically wouldn’t count as a late payment. But of course, it would be a few days later before we’d receive the payment, and a few days on top of that before the check cleared. If residents were paying online versus mailing us checks, it would shave a few days off the collection process.
PL: Your company chose to absorb processing fees on e-checks instead of passing along a convenience fee to your residents. What have been the benefits to your company from doing this?
RR: We knew our residents would be much more motivated to make a payment online if it was free. So we decided to incur the costs of e-checks, which is a nominal cost. We probably pay around $300 per month in the e-check processing fees. But since everyone pays online now, we are not paying a bookkeeper to process rent. The tradeoff is worth it, especially because our system is 100% accurate and we can see all of our payments in real-time.
Since credit card processing fees are so high, we still pass those costs along to residents who wish to pay that way. But most choose to pay via e-check.
PL: You implemented a few policies to encourage residents to pay electronically instead of with a check or money order. Can you tell me a little bit about that?
RR: A few months after we’d been up and running with PayLease, we decided to start charging a $10 processing fee for checks and money orders. I’ll admit, I was shocked by how many people would pay the $10 fee, but once we implemented that policy, our online payment utilization rate increased from 60% to 75%.
Then, because we still had a quarter of our residents paying with check or money order, we made a policy in 2015 that rent payments would only be accepted through PayLease. We emailed our resident base to let them know about this change in policy, and after the email went out, our staff started a calling campaign to everyone who had not created an account with PayLease. When they reached those residents, they explained our new policy and walked residents through the process of setting up a PayLease account. We added a clause to our leases for incoming residents stating that all payments must be made through PayLease.
PL: Did you have any residents protest the new payment policies?
RR: Not as many as I expected. We had a handful of people complain, and some even went as far to file complaints with the State Attorney General. When the Attorney General’s office called to investigate the claim, we were completely honest about our policy change. We also explained that the policy was put in place to stop the problems we were having with lost checks and money orders, and that in the end it would protect our residents. They found no problems with our online-only policy and closed the case.
The only legal exception we have to make is if a resident needs to pay rent with a government housing check. But otherwise, we treat all residents the same and enforce that their payments are made online.
PL: Before implementing PayLease, a large segment of your residents paid their rent with money orders. How were you able to convert those residents to electronic payments?
RR: Many of our residents are unbanked, so about 25% of our rent payments were made by money orders. That was a mess because there were many instances where a resident claimed to have given us a money order, and we never received it. So we’d have to work with them to file a claim with the money order issuer. We’d also get a lot of residents turn in a blank money order, so we’d have no idea who it was from. Our staff would have to spend time doing detective work to find out who it was from.
We solved this by implementing CashPay. CashPay is convenient because the resident can pay in cash at places like Walmart and Kroger and the payment is electronically sent to us. That’s where most of them were going to buy a money order anyway. We did get some pushback because using CashPay costs the resident $4, which is more expensive than buying a money order. It was a bit of challenge to convince cost-sensitive residents to use it at first. But their rent gets paid instantly and they don’t have to drop the money order off to us. They have a receipt their rent was paid, which is not something they get with a money order. Once those residents used CashPay, they continued to use it and we never got any further complaints from them.
PL: What do you think has been the biggest benefit to having 100% of your residents paying online?
RR: It’s just a much smoother, more convenient process for everyone involved. We are no longer bogged down the first week of the month on unnecessary manual processes. I don’t feel like I need to be tied to the office during Rent Week. I can view my payments online in real-time so I can literally be on the other side of the globe and still collect and manage rent payments.
We also don’t have to employ as many people as we did before using PayLease, so we are actually saving money. Needless to say the benefits have been tremendous for our company.