Landlords have increasingly opted to move their rent collection services online. Gone are the days of exchanging paper checks and poring over Excel spreadsheets to figure out who has yet to pay their rent. When you collect rent online, the entire process is quicker, easier, and less stressful.
Of course, there can be some bumps along the way to setting up and managing your modern online rent collection method. Below we outline the four most crucial tips for collecting rent online:
- Evaluate the best way to collect through ACH
- Be wary of P2P platforms
- Consider possible legal issues for autopay
- Consider property management software
Table of Contents
1. Evaluate the Best Way to Collect through ACH
ACH stands for Automated Clearing House and is a network that processes online transactions through the Federal Reserve. Using an ACH rent payment, the tenant’s funds are taken straight from their account and put directly in yours. This process is safe and speedy but requires you to choose whether to set up ACH through your bank or property management software.
When setting up through your bank, you are dealing with an institution you already trust and are familiar with. However, keep in mind that the system you’re utilizing is not specifically made for landlords and rent collection. The reporting is pretty lacking, and getting everything in working order can take time. There are also often monthly minimums and setup fees.
Alternatively, you can set up ACH using property management software. There are many advantages to using property management software to run your real estate business, and we will go into more depth later on in this article. In terms of ACH, this method is quite simple and cost-effective. Setup is very quick and is usually only as much as verifying your bank. You do, of course, have to take the time to research what property management software is best for you, but once you find a system you trust, collecting ACH payments will be easy and automatic.
2. Be Wary of P2P Platforms
You are probably already familiar with the two most popular P2P (peer-to-peer) payment apps- PayPal and Venmo. However, when thinking of rent collection, keep in mind that these apps were made with the intention of mostly supporting small payments between friends, hence the name peer-to-peer. Yes, they do support business accounts, but these accounts come with fees and stipulations. If you are going to use P2P platforms to collect rent, you cannot use a personal account, as this is against both PayPal and Venmo’s terms of service.
Also, you do not have the same amount of control you do with other methods of rent collection. You have no way to remind or compel tenants to pay their rent, and it is tougher to enforce late fees. Tenants also can’t automate payments, which could lead to you receiving payments late.
Perhaps the biggest issue with using P2P platforms for rent collection is that payments to you are accepted automatically into your account. When evicting a tenant, it is imperative that you do not collect any sort of payment from them prior to their eviction since doing so may complicate and prolong the legal eviction process. You lose the ability to deny payments from tenants when using P2P platforms, so definitely consider that when choosing which method to use.
3. Legal Issues for Autopay
Autopay is one of the primary pros of offering tenants an online method to pay rent. They don’t have to put too much thought into their rent payment each month since it is automatically deducted from their account on the right day, in the right amount. However, you should always provide tenants with multiple options for paying rent in addition to methods like autopay or cash. Laws in certain states require this, so make sure you check with your local rules before introducing any new payment methods.
As mentioned above, accepting any payment from tenants can throw off eviction proceedings, so you have to be careful when using a system that automates payments. Make sure you understand how to stop or reverse unwanted payments in case you have to move forward with an eviction.
4. Consider Property Management Software
Property management software is designed specifically for the needs of landlords. You can collect rent, sign leases, charge late fees, and more through the proper site, and doing so requires less time and effort on your part than not automating these services and saving the work for yourself. Often, this method offers the option of conducting your business on mobile, allowing you to receive notifications, send messages and reminders, and overall run your business right from your pocket. Many platforms allow you to collect rent online for free, like Innago, making this option convenient and cost-effective. Like anything, make sure you take the time to research what property management software is best for you and your business.
Choose What is Best for You
After considering all these tips, hopefully, you will feel more confident in accepting online rental payments. Collections online make your life as a landlord easier, and your tenants will feel the same. Do research into what works best for your company, and don’t be scared about embracing this method in your business. With these tips in mind, you’re set up for success.
