What Landlords Need to Know About Collecting Rent Payments Online
Traditionally, landlords have collected rent payments using methods like cash and checks. However, these methods are slow, insecure, and unnecessarily complicated. Because of this, landlords that use these strategies are far more likely to have tenants that pay late or don’t pay at all.
Thankfully, there is a solution to this; online rent payments. There are various software on the market from apps like Venmo and Zelle to property management solutions, like Buildium or Landlord Studio. In this article, we take a look at the best ways to collect rent online and how you can choose the method that is right for your properties.
What do we mean by online collection?
Online rent collection is when you use online tools such as an app or desktop software that allows you to send invoices and collect payments directly via processes such as ACH transfer or credit card.
A good online rent collection system will allow your tenant to simply log in, set up their payments, and the money will be transferred directly into your bank account each month, safe, secure, and fast.
What’s the best way to collect rent online?
As we already mentioned, there are numerous rent collection solutions on the market but what’s the best way to collect rent?
Apps like Zelle, Venmo, and PayPal allow users to quickly and easily transfer funds for free. However, they come with various downsides, for example, Zelle and Venmo have daily limits, limitations on the number of bank accounts you can link, and no way for the landlord to control the payments.
On the other hand, you have property management software solutions built specifically for landlords with inbuilt rent collection functionality. Buildium is one such example. They have a comprehensive solution that allows users to send invoices and for tenants to create recurring payments. However, Buildium is targeted at enterprise clients making it too costly for many smaller landlords.
Another solution is Landlord Studio. Landlord Studio is a financial tracking tool. It allows you to track income and expenses, run reports, connect your bank accounts, and, of course, collect rent through the system. Tenants can log in to view upcoming and historical payments as well as set up recurring payments. Rent payments are securely transferred directly into your bank account and then automatically reconciled as income against the relevant property. They also offer additional property management features such as rental listings, tenant screening, and document storage.
How to choose the rent collection software for you
Because of the variety of rent collection apps and software’s you need to take time to understand exactly what the difference is between each of them and which one is most suitable for your needs. Here are a couple of things you need to consider before making your final decision:
The cost of the rent collection software
Most cash apps don’t require a subscription for transfers between friends. However, you will likely need to purchase a business account in order to legitimately use these systems for rent collection. Not doing so could see your account and money frozen.
Most property management software have a monthly subscription and may also have a small associated rent collection fee. However, they will also save you far more time than something like a payment app.
Does it allow tenants to set recurring payments?
The best rent collection systems enable tenants to set and forget their rent payments. This dramatically reduces the chances that a tenant will forget to pay their rent. Meaning the rent will come in like clockwork every single month.
Most cash apps such as Venmo do not have this functionality. Meaning you will still have to manually chase up payments each month to ensure timely rent collection.
Does it allow partial payments?
In some states, if a tenant makes partial payments and the payment goes into the landlord’s account, the landlord is seen as having accepted rent. If the tenant makes the partial payment after the landlord has issued a notice to pay or quit, it may mean that the landlord will have to file a new notice to quit specifying the new rent amount.
With software like Landlord Studio, you can choose whether or not to allow partial payments from your tenants. If you choose not to allow partial payments, then the tenant can only make full payments or no payments at all.
How much time does it save?
The entire purpose of using software over manual processes is to save you time. Generally, your time will be spent in sending or chasing tenants, reconciling income payments in your financial tracking tool or spreadsheet, and ensuring that all payments are made on time and in full.
There are various features that property management software, such as Landlord Studio or Buildium, have that can help save you an increasing amount of time, such as automated rent reconciliation, recurring payments, and automated reminders.
What are other users saying about the app?
As a final step, it’s a good idea to take a look at third-party app review sites to get a better understanding of how other users feel about the app. For example, does it save them time, have the features they need, and come at a reasonable cost?
Final words
You need to make sure that your tenants are aware of and able to use the software that you’ve selected. Some landlords choose to specify how they want to collect rent in their rental agreements. Others offer help to get set up as needed either over the phone or in person.
Landlord Studio has a dedicated support team that you can direct tenants to if they are having trouble getting set up and completing their rent payments.
Online remnant collection makes the lives of both tenants and landlords easier. You will always get your rent on time, and your tenants no longer have to trudge down to the bank to get cash out or head over to the post office to mail it to you. Instead, they can simply login on their phone and complete the transaction wherever they may be.
