Collecting online rent payments benefit landlords by creating an easy and automatic way for tenants to pay rent. It also means no more driving to collect rent or 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 property management easier. Below you’ll find our top four tips for collecting rent online.
1. Collect Rent Online Using a Rent Collection Tool
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. There are several tools available that you can use to collect rent online.
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 doesn’t include 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 free for the first unit to $50 per month, depending on the number of properties and tasks involved. It offers tenants the option of using a credit card, debit card, or bank transfer. Direct deposit into the landlord’s account can be set up quickly, saving a trip to the bank.
Tenants also will appreciate that they can set up autopay directly from their own 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. Avail also offers a “credit boost” service that reports tenants’ timely payments to the credit bureaus, potentially increasing their credit score.
An online rent collection service like Avail With autopay availability, tenants can have money withdrawn monthly so that they never miss a date again.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, and the first unit is always free.
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 starting 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 get wired to the landlord’s bank account.
2. Set Policies for Online Rent Payments Upfront
If you plan to collect rent online, include expectations and instructions for online rent payments in every lease. Distribute an introductory paper accompanying each lease directing tenants to the payment platform and basic instructions on how to get set up.
The terms of your lease should include the rental amount and due date, which forms of payment are acceptable, where tenants can pay online, and your late fees. It also should state whether late payments get reported to the credit bureaus, and when evictions for nonpayment ensue.
Tenants’ Ability to Pay Online
Elderly or disabled renters and some low-income tenants may require assistance to complete online rent payments. While your policies should be firm, be sure to make it easy for these individuals to get help in setting up their payments.
You can provide tenants with an instruction sheet to help them navigate the setup and include the customer support number for the online rent payment provider to answer their questions.
You can also make accommodations for disabled or elderly tenants that have a conservator or family member responsible for their rent. Contact them to set up systems and establish lease payment expectations.
3. Enforce Your Lease & Collect Rent Online
The lease is a contractual legal agreement between you and your tenant. Enforcing the terms of your lease creates efficient systems that hold tenants accountable and creates consistent policies. Failure to enforce your lease will eat into your bottom line and hurt your ability to collect rent later on.
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.
Set Up Online Rent Payment Reminders
Setting up reminders for online rent payments can help avoid the consequences that will follow if rent isn’t paid. When you collect rent online through services like Avail, you can set reminders so that tenants are informed of upcoming due dates.
Charge Late Fees
Setting up automatic late fees allows you to enforce them without having those uncomfortable conversations. Some online rent payment software includes 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 reminders or other collection features. If you want more features, look for software that offers customization.
Report to Credit Bureaus
Most tenants understand the consequences of credit bureau reporting and the impact this can have on their future ability to rent or own a home. Be very clear with tenants that you will report unpaid rent to Equifax, Experian, and TransUnion and follow the terms of your lease agreement.
By encouraging automatic withdrawal and setting up email reminders, you help to prevent your tenants from being charged late fees, facing adverse 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 Paying Rent Online
Including terms in your lease that offer rewards and consequences help your tenant stay on track. You can offer a discount on the rent if it’s paid prior to the due date and include this incentive in your lease. It is a strong motivator if tenants see they can save money by paying early, and you can have peace of mind that the rent is in the bank.
Small rewards or gifts are another way to make a difference in the way tenants perceive rent payments. For example, after your tenant makes their first two on-time rent payments, send them a surprise gift card to the local coffee shop, grocer, or Amazon. A portion of your annual gifts, up to $25 per person per year, are tax-deductible.
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 choices in making payments, and landlords welcome reducing the hassle of personal rent pickup and deposit.
Fast & Secure Payment
The chances of receiving your payment go up with digital transactions. With many providers you can receive your money the next day, saving time driving to collect rent, depositing checks, and waiting for them to clear. With no established paper trail when taking cash rent payments, tenants may dispute whether they paid. Mailed rent checks create the possibility of it getting lost and are also a prime target for fraud.
Collecting rent online is safer. Credit card providers have numerous protections against fraud and the automated clearing house (ACH) system used for bank transfers is regulated and secured by the Electronics Payment Association with rules in place for your protection.
Reduced Landlord Stress & Workload
Most online rent payment programs provide account management services that keep tenants on track. When rent payments are on autopilot, you can focus on other property management needs and often manage those landlord duties 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.
Increased Payment Compliance
With the ability to pay through various methods, tenants are more likely to pay their rent on time and consistently. Many online rent payment services offer features that further increase the likelihood of compliance such as payment reminders, autopay options, and credit reporting. These encourage tenants to pay in a timely manner.
Some incentives that increase rent payment compliance include:
- Automatic payment reminders: Emails or texts can be sent to tenants prior to the rent due date. Having a reminder may inspire immediate or early rent payments.
- Autopay options: Autopay lets tenants “set it and forget it” with automatic withdrawals from their bank account or recurring payments with their credit card.
- Credit reporting: Credit bureau reporting can help build tenant credit scores and inspire renters to pay on time to avoid damaging their credit.
Pros & Cons of Online Rent Collection
While the pros of collecting rent online clearly outweigh the cons, it’s still important to consider some of the disadvantages. Some tenants may not have internet access or bank accounts and may pay rent with cash. Others may struggle with using technology. Overall, online rent payment services provide safety and ease for both tenants and landlords.
Advantages of Online Rent Payment
Disadvantages of Online Rent Payment
No more chasing down rent
Some tenants may struggle with technology
No trips to the bank
Safer than snail mail or cash
Can take a couple of days for payments to post
Could trigger early tenant payment
Depending on platform, can be difficult to set up
Automatic late fees
May require monthly limit or subscription
Credit bureau reporting
Leaves a paper trail
Is convenient for landlords and tenants
Frequently Asked Questions (FAQs) About Online Rent Payments
Before you begin to collect rent online, there may be several questions you have.
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.
Can rent be paid with cash?
In some cases, using online rent payments can still be made with cash with certain providers. Buildium, an online rental management platform, has partnered with Pay Near Me to offer retail cash payments that are forwarded to landlord accounts. Options like this can give landlords the best of both worlds when offering rent payment options.
Can tenants pay rent 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.
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.