Collecting rent on time each month is essential for numerous reasons, such as maximizing profits, steady income, and easy property management. However, as many landlords have learned the hard way, rent collection can also be a source of stress because it isn’t always as straightforward as it should be.
With traditional systems, cash and cheques, payments are often late or even missed, which disrupts your financial flow and makes it difficult for you to settle operating expenses. Because of this, before you even place tenants in your rental property, it is important to establish preferred rent collection method which will allow you to get paid on time, without major delays or disruptions.
There are numerous ways tenants can pay their monthly rent, each with its pros and cons. In this article, we’ll provide information on the most popular rent collection systems like in-person collection (cheques, cash), direct deposits, credit card payments, online platforms (PayYourRent, ), and smartphone apps (Apple Pay, Cash App, Venmo, Zelle, PayPal, etc.). Using the information provided here you have to determine the best way to receive rent payments, which will help you regain control over payments and improve financial management. Keep reading to find out how professional property management company can help you reduce late payments, maximize your revenue, and minimize disruptions in cash flow.
Hire Swell Property Agency to Maximize Your Rental Revenues & Never Worry About Late Payments
If you need help with managing your rental property, contact our real estate specialists, who will use their skills and expertise to make sure you get paid on time. With almost 20 years of experience, our boutique property management agency has successfully provided management services such as rent collection, tenant placement, advertising, and maintenance for hundreds of owners. Our portfolio includes family homes, beachfront residences, urban apartments, and luxury houses and other types of long-term rental properties in San Diego area. For more information, fill out the form or call us on (760) 452-2345. Discover how we can secure a continuous revenue flow for you.
Rent Collection Methods
Whether you’re digital-savvy or not, there are many ways to collect monthly payments. When you decide on how you want transactions to be completed, you have to ensure every tenant is fully aware of their responsibilities. Remember to include the details in your lease agreement so that everyone has the same understanding of how collection will be made.
Apple Pay
Apple Pay is a user-friendly app, that is easy to set up. By simply adding credit or debit card to the wallet, your tenants will be able to make the payment. To receive payment via Apple Pay, you must have either a personal or business Apple Pay account.
Pros:
- Quick and easy to use
- No internet connection needed
- Easy to see all transactions in one place
Cons:
- Supported on iPhones and Apple devices only
- Transactions not synced across devices
- At the moment of writing this article, you cannot program an automated payment
Cash App
Cash App is mobile payment service by Square, which allows you to quickly make the payment via app. Both tenant and landlord must have Cash App installed in order for the transaction to be completed.
Pros:
- Funds stored in-app or cashed out to linked bank accounts
- Works with both iPhone and Android phones
- Secure way to send & receive money
Cons:
- Fees are charged for certain services
- Payment limits in the first 30 days
- Limited fraud protection
Venmo
Venmo is a very popular peer-to-peer (P2P) app which is used to send money to friends (people from your contact list) but it can also be used for paying the rent.
Pros
- Sign up for free
- Quick & easy transactions
- User-friendly interface
Cons
- Some transfers have fees
- US based app
- Popular with scammers
Zelle Pay
This money transfer app works with various banks and credit unions across the country. You can send and receive money either via app (Zelle app) or via your banking app. It’s quick, it’s free, and easy to set up. To make the payment, tenants will only need to submit your phone number or email address.
Pros
- Fast, smooth and easy transactions
- Recurring payments option
- Free – Most banks don’t charge transaction fees
Cons
- Both sender and recipient must have Zelle account
- Daily spending limit for accounts whose bank does not support Zelle
- Not all banks support Zelle
PayPal
PayPal is an online payment system that revolutionized the way people make payments. It is recognized as global leader in online payments. Many people already have PayPal account, so it’s most likely that your tenants have it, too.
Pros:
- Ease of use and convenience
- Widely accepted
- Lots of features
Cons:
- Must have account to receive money
- Confusing fees
- Often targeted by fraudsters
ACH transfers (direct debit) & credit card payments
Your tenants can pay the rent via ACH transfers from their debit or credit accounts. It’s an electronic transaction from one bank account to another. This is probably the most reliable way to collect rent, although you need to complete a few extra steps to set up.
Pros:
- Reliable and secure
- Saves time – one time set up
- Automatic payments
Cons:
- Delayed confirmation processing
- Processing may take a few days
- Transaction fees are charged
Cash, cheques & money orders
Cash, cheques and money orders are traditional ways of collecting the rent that involve physical documentation of payment. For you, as the receiver, there are risks like bounced cheques and fraud.
Pros:
- Widely accepted
- No processing fees
- Convenient for record keeping
Cons:
- Outdated
- May be inconvenient for the tenants
- Cheques may bounce
Postal Mail
Sending a cheque by traditional postal service is the least favorite way of collecting the rent for most landlords because there’s a lot of drawbacks. With this method there is a risk of late payments and misplaced or even lost mail, which can cause misunderstandings and wrongful charge of late fees. There’s also a high probability of disruptions on your cash flow which is something you want to avoid at all cost. To avoid some of these issues, you can install a locked drop box where your renters can drop off the mail.
Pros:
- Eliminates the need for in-person visits
- Relatively low cost
- Convenient for those who are not tech-savvy
Cons:
- Requires extra trips to the bank
- May be delayed or lost
- May cause incorrect late fees
How to Collect Rent From Tenants Electronically? Online Paying Platforms
Online platforms for paying rent are very convenient. They’re simple to use, affordable, and quick. Transaction fees are not high, and they’re usually paid by the tenant. The money is deposited into your account typically within 2 business days and there are even optional features such as reminders about when the rent is due, automatic charging of late fees, notifications, reminders, send direct messages to tenants, and real time financial reports.
However, even if this is your primary method of collection, you still have to allow renters to have other means of payment. Not everyone has access to these platforms, so make sure you give them other options, too.
There are lots of different online platforms used to pay and collect rent, such as PayRent, Doorloop, Avail, and Stessa, but they vary in price. Some require a monthly fee, while others are free. But before you choose free software, review which features the portal offers in order to make sure it suits your needs.
Pros:
- Convenient & user-friendly
- Same day processing
- Lots of additional features
Cons:
- Some require monthly fees
- May involve transaction fees
- Technical issues may affect safety & reliability
How To Choose the Right Method
With so many available systems, how do you determine which one is the most suitable for you and your tenants? What works for one landlord may not work for you. To find the perfect solution that fits your requirements, you should take into account the following 4 factors:
1. Number of properties you own
The number of rental properties you own can impact how you gather payments from tenants. If you have more than one unit, you need to have a solid system which will save you time and allow you to remain well-organized. By adopting online payments, you will eliminate travel and meeting with multiple tenant every month.
2. Proximity to properties
Another factor that can influence how you gather your monthly payments is how close you live to your properties. For instance, if you own a property in another city, or another state, and you didn’t hire a property manager, you have to manage financials from afar. This means that you should choose online payment options (platforms, apps, or direct deposits) as the most convenient and quickest way.
3. Computer competence
Present day is all about integrating latest technology into our daily lives, and the same applies to rental property management. To enjoy all the benefits of virtual transaction, you must be tech savvy, or at least be comfortable using new technology. But if you don’t have enough competence and are not willing to learn, then you should opt for the traditional transactions. Web based payments may even seem intimidating and overly complex for elderly landlords who are not used to latest technology transactions.
Therefore, assess your computer skills to determine what’s the right payment tool for you. Ultimately, you have to do what is best for you while still working with your tenants to make all aspects of their occupancy as enjoyable as possible.
4. Professional property management services
Hiring professionals such as Swell Property to run your daily rental business is probably the wisest decision you will make. Our rental experts will advise you of the best rent collection method which ensures quick and smooth transactions. We will also take care of system set up, record keeping, and direct deposits. Our goal is to free up your time and relieve you of any stress related to your rental business.
Establish Transparent Policies
By enforcing clear policies you will enable simple and effortless rent collection procedures.
- Specify preferred rent collection methods (and include them in your lease agreement)
- Clearly define due date & grace periods (if any)
- Establish a late payment policy and fees and include them in your lease
- Specify how payment will be confirmed (email receipt, platform, written receipt, etc.)
- Explain the importance of security and privacy
- Determine and convey preferred communication means
Guidelines To Improve Efficiency
Now that you’ve learned about different ways of collecting rent, it’s time to explore helpful guidelines on how to become more effective and how to reduce issues like late payments. By implementing these strategies, both you and your renters will enjoy smooth rent collection procedure and preserve a positive partnership.
- Use automation whenever possible to minimize problems
- Provide various payment options to accommodate different tenant needs
- Include rent collection details in lease agreement
- Review transaction records regularly
- Stay up-to-date with local and state laws and regulations
- Partner with property management company
How Property Management Company Can Simplify Your Rent Collection
Notable property management companies like Swell Property make the rent collection process simpler and faster by taking care of all financial aspects. Rent collection can be a hassle and doesn’t always work out how it’s supposed to, but hiring a designated property manager will help your rental business flourish. Our real estate experts will use their knowledge and experience to ensure collection is smooth, without any issues. We’ll help you maintain a steady income and improve efficiency, while taking care of all tenant relations. Call Swell Property today at (760) 452-2345 and take advantage of simplified rent collection benefits.
Frequently Asked Questions
1. How to collect rent online?
In order to collect rent electronically, you have to first choose the preferred platform, based on the features it offers, making sure it fits your requirements. You can use apps like Venmo, Zelle, PayRent, or PayPal. Next, sign up for the service, fill in the necessary details, and ensure you inform your renters of this payment method. The details should also be included in your lease agreement. Most of these online platforms are fairly user-friendly. Once the tenant pays his rent, you’ll get notified about the transaction, and can expect for the funds to be transferred to your linked bank account shortly after.
2. Why is online rent collection popular among landlords and tenants?
There are several reasons why both renters and owners prefer online payment methods. They are convenient as they offer numerous features which make the whole process easier, such as reminders, notifications, recurring payments, digital documentation, real-time status updates, security features, late fees scheduling and many more.
3. What should I do after I collect rent?
After you have collected the rent from tenants you should update and organize your records. Remember to be diligent about record keeping, as these transaction documents will serve as evidence in case a legal dispute arise. If there are occupants who have not made the payment, contact them and remind them of the late fees (if they are stated in your lease agreement).
4. Can landlords refuse specific payment methods?
Normally, landlords reserve the right to choose preferred forms of payment and may not accept others. However, this right depends on your location and its local and state laws and regulations. For instance, landlords in California cannot require from renters to pay only electronically. They are required by law to accept at least one other method, such as personal or certified check, or other noncash payment method. It is important to clearly outline accepted payment forms in your lease in order to avoid misunderstandings.
5. Can you pay rent in cash ?
Whether you can or cannot pay your rent with cash depends on which state you’re in. For example, in some states (Texas, Washington) landlords reserve the right to refuse cash payments, but have to provide written receipts. In California, at least one other method of payment other than cash or electronic funds transfer must be allowed.
Disclosure: The content on this website serves solely to inform and educate and should not be considered financial, business, or legal advice or a substitute for professional advice. The information presented in this article is “as is” without warranties, express or implied, of any kind about the accuracy, completeness, reliability, or suitability, and does not constitute professional advice. Any reliance on such information is entirely at your own risk. We shall not be liable for any damages or losses arising from any use, reliance on, or misuse of materials provided in this post. You are encouraged to use professional services and advisors if you have questions or concerns related to your rental property practices and processes.
You May Also Find Interesting
- Top 10 Ways to Improve the Landlord-Tenant Relationship for Long-Term Success
- Sustainable Property Management Tips For Landlords in San Diego Coastal Area
- 16 Questions Every Landlord Should Ask Before Hiring a Property Manager in Del Mar
- Wear And Tear vs. Damage in Rental Properties in California
- What Renters Look For in Rentals: Tips for Landlords in Encinitas
- Wear And Tear vs. Damage in Rental Properties in California
About the Author
David Miller is Real Estate Advisor at Swell Property. Whether you’re eyeing a new home, an investment property, securing the best mortgage, or aiming to enhance your property’s value, my focus is on providing personalized guidance and strategy for your success. I listen to your needs attentively, ensuring that my expertise aligns perfectly with your real estate goals. My clients’ satisfaction and referrals are the true measure of my success in San Diego’s dynamic real estate market. If you’re searching for a real estate professional who’s deeply committed to your success, I’m eager to demonstrate my expertise and win your trust. Let’s connect and start this journey together.
