While most of us are used to paying rent on a standard schedule due on the 1st of the month, more landlords have recently offered flexible options to suit tenants’ needs. A flexible, or partial rent payment, allows tenants to pay their rent in a way that more closely matches their life or work situation.
In this article, we’ll cover just about everything there is to know about flexible rent payments, from what they are to how to set them up.
Key Insights
- Landlords can set up flexible rent payments on any cadence a landlord, and tenant agrees to. Depending on the specific arrangement, tenants can make payments bi-weekly, weekly, or semimonthly (1st and 15th of the month)
- Offering partial rent payments to tenants can create goodwill between landlords and tenants by providing a customizable arrangement. It can attract new tenants, especially in places with a high number of gig workers or freelancers.
- Many flexible payment apps are on the market, but TurboTenant makes collecting rent payments, partial or not, easy, and the service is free for landlords.
Understanding Flexible Rent Payments
An increasing number of landlords have offered flexible rent payments in recent years, and many tenants find the arrangement more manageable due to increasing housing costs and non-traditional work schedules.
Landlords could arrange a few different types of flexible rent payment options depending on the tenant’s situation. It’s important for both landlords and tenants that the specific payment schedule is laid out clearly in the lease agreement to ensure no misunderstandings or miscommunications.
Typically, a partial rent payment arrangement would look like this:
- Weekly or bi-weekly payments: Smaller, more frequent installments for rent payments can be more manageable for tenants who find budgeting one lump sum every month challenging.
- Split payments or semimonthly: Rent could be split into two or more monthly payments. For instance, tenants could pay half their rent on the 1st and the other half on the 15th.
- Custom schedule: If a tenant’s paycheck follows a non-traditional payment schedule, a custom schedule might be arranged where payments are sent in lump sums at suitable intervals for both parties.
- Pay-as-you-go: The least common flexible rent payment scenario is when tenants only pay for the time they spend using the property.
Benefits of Flexible Rent Payments
There are several ways flexible rent payments can benefit tenants and landlords.
Tenants
A flexible rent payment plan can help tenants who receive bi-weekly or irregular paychecks. Instead of paying one lump sum every month, portioning out rent paid over the month can alleviate a financial burden and make it less likely that they’ll miss a payment or incur late fees.
Many tenants appreciate this flexibility, which can lead to high satisfaction and retention levels.
Landlords
Partial rent payments adhering to a precise schedule can help reduce the risk of late or missed rent payments, allowing landlords to anticipate cash flow more fully and accurately. A consistent cash flow over the month can help cover costs that crop up suddenly.
Offering a flexible rent payment schedule can also attract a broader range of tenants, especially in areas with a high concentration of gig workers or freelancers paid on non-traditional schedules.
Potential Drawbacks of Flexible Rent Payments
While there’s a lot to be said for a flexible rent payment scenario, it may not be ideal for everyone.
For landlords with a significant number of units, allowing many tenants to pay rent on a flexible schedule can become unwieldy and complicated to track, especially when tenants are on different flexible payment schedules.
Regardless of the number of units, tracking different payment timings can become an administrative challenge, forcing landlords to devote valuable time to bookkeeping and cash flow management compared to a standard rent arrangement.
Additionally, while no federal laws prohibit flexible rent payments, there could be restrictions depending on where the rental property is located or if a governmental housing program subsidizes the property.
For instance, if a rental unit is governed under a Homeowners’ Association (HOA), the HOA guidelines might prohibit non-traditional rent payment schedules.
Landlords should ensure that local guidelines allow for flexible rent payments if there’s tenant interest.
Setting Up Partial Rent Payments: A Guide for Landlords
Landlords interested in setting up flexible tenant rent payments should evaluate the financial impact before jumping in. Understanding the cash flow rate against weekly or monthly expenses is crucial to satisfying obligations like mortgages, property taxes, and maintenance costs.
Once the financial implications are fully understood, landlords must determine how comfortable they are collecting partial rent payments and by which frequency. Will payment schedules be customized per tenant? Is it better to establish a weekly or bi-monthly cadence? Is it best to use a payment processor to handle rent?
Or should a landlord filter everything into a flexible rent payment app, like TurboTenant’s mobile app, to streamline the process and keep all rent and property-related expenses contained in one rental accounting software?
If a landlord feels comfortable with partial payments and can adequately track and account for them, they should make any necessary adjustments to their lease agreements. The language explaining the flexible rent schedule should be clear and concise, and the timing, method of payment, and penalties for missed or late payments should be thoroughly outlined.
For landlords wishing to switch existing tenants to a flexible plan, addendums can be signed by both parties and added to the lease for all future payments.
Using Flexible Rent Payments: A Guide for Tenants
For tenants who find themselves in or are looking to explore a partial rent payment agreement, it’s crucial to fully understand the terms of the arrangement as outlined in the lease.
If this is a new option tenants are exploring with their landlord, taking stock of your financial situation and paycheck schedule will help to dictate how often it makes sense to make a partial rent payment. Communicate with your landlord about the plan and discuss options that make the most sense for all parties. Landlords are often willing to work with their tenants to make sure that rent is paid on time.
Additionally, tenants can encourage their landlords to use a property management app like TurboTenant to help them track and schedule all upcoming rent payments automatically.
While we’re all familiar with paying rent on the 1st of every month, a bi-monthly or other partial payment schedule could quickly become more complicated. However, using a dedicated rental app makes it easy to set up recurring payments without regularly checking in and updating payment options.
How TurboTenant Supports Flex Rent Payments
TurboTenant is a fully featured landlord software platform designed to make the rental experience easy and painless for landlords and tenants across the United States. While the thought of implementing a potentially complicated partial rent payment scenario might seem overwhelming, TurboTenant streamlines the rent collection process to make it simple to set up and even easier to implement.
Within the platform, landlords can set up a payment schedule for their tenants and send automated reminders each month before the rent is due.
Further, TurboTenant offers granular control over partial rent payments for flexible rent schedules that occur in lump sums throughout the month. All financial information is tracked per unit and tenant to make it easy for landlords to quickly determine who has paid, what rent might be outstanding, and when to expect the next payment.
By offering mobile apps for landlords and tenants, TurboTenant makes communicating directly within the app simple, eliminating missed text messages and phone calls, and creating a paper trail of communication should problems arise.
Regardless of your property management needs, TurboTenant is here to assist you every step of the way. So, sign up for a free account today to see how TurboTenant can make your investment easy and profitable.