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As a landlord, if you’re still collecting rent offline — with cash and paper checks — now may be the time to consider online rent collection.

There are lots of benefits to online rent collection. With most methods of online collection, tenants can set recurring payments, which decreases late payments. What’s more, online rent payments are automatically recorded. Bookkeeping has never been easier.

There are plenty more benefits, but one thing is clear: rent collection should be done online. Below, we go over 3 ways to start collecting rent online.

Setting up with Your Bank

You might be surprised to learn that your bank offers services that go beyond business banking accounts. Landlords are able to collect rent online through their banks via eChecks and credit card payments. This is a popular method of online rent collection for landlords collecting online payments for the first time. 

How to Set it up

To set up rent collection, contact a representative from your bank. Ask them about the payment collection services they offer and then simply allow the representative to take you through the steps of setting up the accounts and services you need.

Pros of Collecting Rent through Your Bank

• Collecting rent through your bank consolidates your business accounts under one rough.
• Because banks are secure institutions, landlords and tenants can be sure their information is safe.
• With everything handled digitally, your bank will automatically record all of your financial transactions.

Cons of Collecting Rent through Your Bank

• Merchant services typically come at a considerable price with all of the associated fees and expenses.
• Although your records will be documented automatically, they will lack many of the fields that matter most to landlords.
• Through your bank, you can’t compel tenants to make payments, nor can you deny their payments. This loss of control can interfere with your agency as a landlord.

PayPal, Venmo and Other P2P Platforms

Peer-to-peer (P2P) platforms facilitate online payments between individuals. Apps like PayPal and Venmo are popular P2P platforms because they have intuitive interfaces, they’re convenient to use, and they allow people to send money back and forth when they don’t have cash. Some landlords have started collect rent through P2P platforms, but they come with costly fees and legal considerations.

How to set it up

To collect rent through P2P platforms, you must first create a business account. Once you have the proper accounts set up, tenants and landlords can connect their bank accounts or cards to the platform and begin making transactions.

Pros of Collecting Rent through P2P Platforms

• With their intuitive interfaces and easy setup, P2P platforms are extremely convenient.
• P2P platforms are on the rise, and accepting them as a form of rent payment will help brand your business as being trendy and with the times.

Cons of Collecting Rent through P2P Platforms

• With the business accounts that platforms require also comes lots of additional fees and charges that add up to be a costly expense.
• Landlords who attempt to avoid fees and use personal accounts to collect rent payments directly violate many platforms’ policy statements, which can lead to penalties and account suspensions.
• As with collecting rent through your bank, landlords can’t deny payments from their tenants. This introduces problems for landlords who are in the eviction process.

Property Management Software

Property management software is designed specifically for landlords and property managers. The software allows landlords to streamline and automate their tasks so that they can optimize their business operations. With property management software, landlords can of course collect rent online, but they can also screen tenants, sign leases, handle maintenance requests, and manage tenants.

How to set it up

To collect rent with property management software, you must first find the best platform for your business. Once you’ve found a platform that offers all of the services you need, just add your tenants to the system. You can then customize the rent requirements, choose a due date, and enter in your account information. Then all that’s left to do is wait for your payments to appear.

Pros of Collecting Rent through Your Bank

• Property management software is often much cheaper than other available methods of online rent collection.
• Not only will your transaction be recorded automatically, they’ll also include all of the detailed information that landlords need.
• With property management software, you’ll receive your payments as quickly as possible. Innago, for instance, delivers funds in as little as one business day.
• Property management software offers additional landlord-specific services like the ability to prorate rent, customize and enforce late fees, set recurring payments, and send reminders to tenants.

Cons of Collecting Rent through Your Bank

• With so many property management software platforms on the market, researching to find a platform that offers everything your business needs can be a time consuming process.
• If the services provided by your chosen platform fail to meet your needs, it can be a drain on your time and resources.

Conclusion

Hopefully you now have a better understanding of these methods of online rent collection. Each method comes with its pros and cons, so it’s important to assess your needs and choose the method that works best for your business.