Online rent payments help rental property owners increase tenant payment compliance and make managing rentals efficient. Online rent payments are quicker and safer than paper checks for both tenants and landlords. This article explains how to use landlord software to collect and track payments, handle maintenance requests, and market your property.
With Avail, online rent collection is easy and offers tenants the option of using a credit card, debit card or bank transfer. With autopay availability, tenants can have money withdrawn monthly so that they never miss a date again. From applicant screening to move-in kits, Avail can help you manage your properties with ease with plans that start at $0 per month.
There are four steps to collect rent online.
1. Collect Rent Online Using a Rent Collection Tool
Collecting online rent payments benefit landlords by creating an easy and automatic way for tenants to pay rent. No more driving to collect rent, waiting for rent checks in the mail that you have to then take to the bank. Online rent payments make your rental property business more efficient and management easier.
There are several tools available that you can use to collect online rent payments.
Venmo is a mobile payment service that allows account holders to transfer funds to others using their mobile phone application. Venmo charges businesses 2.9% of the transaction plus 30 cents. However, there are no monthly subscription fees. Venmo also does not come with reminders, recurring payments features, or any other rental management features.
Venmo allows you to give younger renters the ability to pay through methods they are already familiar with, increasing compliance. Your tenants can use the app handily, and landlords can connect their bank accounts for quick transfer.
Avail is a full-service landlord software, plans range from $0 to $50 per month depending on the number of properties and provided task. It offers an array of online rent payment and property management features. Direct deposit into the landlord’s account can be set up quickly, saving a trip to the bank.
Tenants will also appreciate Avail as they can set up autopay directly from their account and avoid late penalties. Landlords can send automatic receipts, reminder emails, and track payments to keep track of their finances as well as their tenants.
Buildium is one of the most highly regarded platforms for online rent collection and rental management. Buildium offers a robust, intuitive property management software that caters to larger property managers with customizable monthly plans start at $45 a month. In addition to online rent payments, plans include tenant portals, and lease and document management.
Buildium allows tenants to pay through credit card, debit card, and bank transfer. It also partnered with Pay Near Me to offer retail cash payments for tenants that will be wired to your landlord bank account. Buildium to assist landlords with large rental portfolios.
2. Set Policies for Online Rent Payments Up Front
If you plan to collect rent online, include expectations and instructions for online rental payments in every lease for your rental properties. Distribute an introductory paper accompanying each lease directing tenants to the payment platform and basic instructions on how to get set up.
Expectations in Your Lease
The terms of your lease should include:
- Rent: How much a tenant is paying and when payments are due
- Payment methods: What forms of payment are accepted and where tenants can pay online
- Late payment consequences: What late fees will be charged and whether you will report late payments to credit agencies
Recognize Ability of Tenants to Make Online Rent Payments
Elderly renters, those with certain disabilities, and even some low-income tenants may require more assistance to be able to complete online rent payments. While your policies should be firm, be sure to make it easy for these individuals to have assistance in setting up their payments.
Some suggestions for helping these individuals set up their online rent payments include:
- Formulate step-by-step instructions: Give tenants an instruction sheet to help them navigate set up; do this once, include it with your lease, and it can save you hassle down the road
- Include customer assistance information: Be sure tenants have the company customer assistance number of the online rent payment provider so that they have a resource to ask questions
- Send an introductory email: Provide tenants with company set-up and introductory video via email that will walk them through the process
- Make accommodations for protected tenants: If you have a disabled or elderly tenant that has a conservator or family member responsible for their rent, be sure to contact them to set up systems and establish lease payment expectations clearly
3. Enforce Your Lease & Collect Rent Online
Remember that the lease is a contractual legal agreement that both you and your tenant agree to. Holding to the terms of your lease will often make you seem the bad guy, but it creates efficient systems that hold tenants responsible and creates policies that are applied consistently. Failure to enforce your lease will eat into your bottom line and hurt your ability to collect rent later on.
There are two methods you can use to increase compliance and enforce your lease.
1. Encourage Automatic Withdrawals
When you collect rent online through services, tenants often have choices as to how they pay their rent. While some will choose automatic withdrawal, others may choose to pay with their credit or debit card on a regular schedule. Encourage your tenants to select automatic withdrawal so that payments are never late.
2. Set Up Reminders for Online Rent Payments
Setting up reminders for online rent payments can help negate the consequences that will follow if rent isn’t paid. When you collect rent online through services like Avail, you can set up reminders so that tenants are aware of upcoming due dates.
Charge Your Late Fees
Setting up your late fees automatically allows you to enforce them without having those uncomfortable conversations. Tenants expect landlords to enforce their lease, so be sure you are doing that consistently across the board. If you think your tenant is late, send them a quick email reminder.
Some forms of online rent payments include options to customize how you handle rents, fees, and late payments. You are in control of how you handle your fees. Some of the free online options do not include an option to customize. If you want more features, look for customizable options.
Report to Credit Bureaus
Most tenants understand the consequences of reporting unpaid rent to credit bureaus and the consequences this can have on their future ability to rent or even own a home. Be sure to be very clear with tenants that you will report to Equifax, Experian, and TransUnion with unpaid rent, and follow the terms of your lease agreement.
The best way to enforce your lease is to set tenants up to comply with the terms from the start. By encouraging automatic withdrawal and setting your system up to send reminder emails, you help to prevent the late fees, credit reporting, and other penalties that result from overdue or unpaid rent. Making the lease terms easy to comply with is a win for everyone.
4. Give Incentives for Online Rent Payments
Positive incentives encourage tenants to adhere to policies, improves your relationship with them, and make your life easier. Rather than only having systems of punishment when tenants don’t comply with terms of the lease in online rent collection, motivate them through rewards.
There are two ways that make it easier to collect rent online.
1. Offer Incentives for Online Rent Payments
Including terms in your lease that offer rewards as well as punishments, helps your tenant stay on track. For example, you can offer $20 off of the rent if paid prior to the due date, and include this incentive in your leasing agreement. If tenants have the perception that they will save money and gain themselves by doing the right thing, it is often a strong motivator.
2. Surprise Rewards for Online Rent Payments
Surprising renters who pay on time with rewards early in their tenancy with you, and encourage good payment patterns to continue. Small rewards can foster a better relationship and make a difference in the way tenants perceive their rent payments. A portion of your annual gifts, up to $25 per person per year, are tax deductible.
For example, after your tenant makes their first two on-time rent payments, send them a surprise gift card for $20 to the local coffee shop or Amazon. Using these steps to collect rent online will set clear expectations for tenants and help them navigate online rent payments more effectively.
The 3 Reasons to Collect Rent Online
Collecting rent online keeps payments more consistent, makes transactions more secure, and offers tenants and landlords a more convenient experience. Many tenants would prefer options in payment, and landlords welcome reducing the hassle of personal rent pickup and deposit.
Here are the three reasons to collect rent online.
1. Fast & Secure Payment
The chances of receiving your payment go up with digital transactions. They are quicker and more secure than cash payment or the mailing of a check. With many providers you can receive your money the next day, not next week, saving the driving time to collect rent, deposit checks, and waiting for them to clear.
Security is also far more likely when you collect rent online. Credit card providers have numerous protections against fraud, and the automated clearing house (ACH) system used for bank transfers are regulated and secured by the Electronics Payment Association that has a number of rules set in place for your protection.
Both mailing checks and collecting cash allows for several problems in security and hassle. For example, there is no established paper trail with cash collection, allowing tenants to viably dispute payments. Mailing checks create the possibility of getting lost, and they are also a prime target for fraud.
2. Reduction in Landlord Stress & Workload
Most programs which help you collect rent online also come with several other features that take away the hassles implicit in personal rent collection, and improve the quality of life for landlords. With account management services that keep tenants on track, online rent payments can make you happy to be a landlord again.
Some services that reduce landlord stress and workload when you collect rent online include:
- Automatic routing to various accounts; as a landlord, you can have security deposits go to a different account than rent payments in your money management
- Payment reminders sent to tenants on a monthly basis to assist payment likelihood
- Automatic bank account withdrawal options for tenants that ensure compliance
- Rent payment receipts sent automatically on your behalf
- Tracking all rent payments for all tenants in one convenient location
- Ability to credit renters with the click of a button
- Ability to collect additional fees, such as monthly pet fees or cable bills
- Ability to download payments neatly for tax purposes
When online rent payments are on autopilot, you can focus on other property management needs and often have assistance in managing those as well through the same platform. For example, with a product like Buildium, you also can track maintenance requests and other items from the same platform that manages your payments.
3. Increase In Payment Compliance
With the ability to pay through various methods, tenants are more likely to pay their rent on time and consistently. Also, many online rent payment services offer features that further increase the likelihood of compliance. Elements like payment reminders, autopay options, and credit reporting can all inspire tenants to pay in a timely manner.
Some ways to increase rent compliance include:
- Payment reminders: Brief emails or texts can be sent to tenants in advance of the rent due date, letting them know of the upcoming deadline for payment; having a reminder often inspires immediate action by the tenant, or payment that comes soon thereafter
- Autopay options: Autopay lets tenants set up automatic withdrawals from their bank account or recurring payments with their credit card; autopay options increase rent payment compliance significantly, allowing the individual to set it and forget it.
- Credit reporting: Reporting to credit agencies can build tenant credit scores and inspire renters to pay because default can hurt their credit; online rent payment systems like Avail offer “credit boost” to help tenants who wish to purchase homes in the future.
Overall, paying rent online increases compliance, and makes defaults and evictions less likely. With the ability to pay rent online easily with methods they are already familiar with, autopay options, and the added benefit of building their credit, tenants are given every opportunity to pay rent online within timelines that benefit everyone.
Payment Alternatives for Collecting Online Rent Payments
For landlords that don’t feel online rent payments are right for them, there are alternative ways to collect rent. These more conventional ways require more time from the landlord and possibly add cost to the properties expenses.
Alternatives to collecting online payments include:
- Collecting the payment yourself, cash or check: Time-consuming.
- Purchasing a post office box or having a rent drop-off box: Costly and time-consuming
- Hire a management company: Can be expensive; up to 10% or more of monthly rent roll.
Frequently Asked Questions (FAQ) About Online Rent Payments
Before you begin to collect rent online, there may be a number of questions you have.
1. How Do I Make Sure My Tenant Pays Rent?
While there is no way to guarantee with absolute certainty that your tenant pays rent, you can make the process easier to increase compliance. When you collect rent online, you give your tenants options like autopay, where they can have payments automatically deducted from their bank accounts or set recurring charges to their credit cards.
2. Can Rent Still Be Paid in Cash?
In some cases, using online rent payments can still be made with cash with certain providers. Buildium, on online rental management platform, has partnered with Pay Near Me to offer retail cash payments that are then forwarded to landlord accounts. Options like this can give landlords the best of both worlds when offering rent payment options.
3. Can Renters Pay With a Credit Card?
In every platform we have examined for collecting rent online, credit and debit card payments are standard options available through all of them. Allowing renters to pay with credit cards is a fundamental benefit of using collecting rent online.
The Bottom Line
Landlords and property managers who choose to collect rent online give themselves benefits that increase compliance with payments while decreasing their workload. Learning how to get tenants to pay online starts with selecting the right rent collection software that meets their needs, and creating lease policies and incentives that reinforce its use.
When selecting an online rent payment provider, consider Buildium, a rental management software package that provides landlords with benefits that span far beyond their payment offerings. With the ability to screen tenants, accept payments, and even track tenant violations, Buildium is an all-in-one solution for busy professionals.