As a landlord, you have multiple alternatives when it comes to the platforms and providers that facilitate online rent collection.
There isn’t necessarily a one-size-fits-all best decision. Ultimately, the best decision is what works best for your specific operation.
Setting up with your bank, online bill pay, P2P platforms, and property management software are the major options.
To help you choose the best collection method for your business, we’ll cover the pros and cons for each method.
SETTING UP WITH YOUR BANK
Your bank can offer more than just personal and business accounts. They also offer tools and services that allow you to accept rent payments through ACH and credit card transactions. You simply contact a representative from your bank, inquire about the services they provide, and they can help you set up the accounts and services you need.
New landlords sometimes feel most comfortable setting this up through their bank because it is reliable and familiar. Despite that, there are some downsides to working expressly with your bank to collect rent online.
Pros of Setting up with your Bank:
- Enhanced security
- Consolidated accounts
- Automated records
Cons of Setting up with your Bank:
- Expensive services
- Lack of control
- Tenuous records
VENMO, PAYPAL, AND P2P PLATFORMS
P2P (peer-to-peer) platforms are fast and easy to use due to their intuitive interfaces. They let friends electronically transfer money from one account to another without exchanging cash. PayPal and Venmo, which are two of the most popular P2P platforms currently, are probably not unfamiliar to you.
Some landlords allow tenants to pay rent with venmo and other P2P apps. To do this, landlords have to set up business accounts so that they’re complying with the platforms’ requirements. Tenants and landlords must connect their bank accounts or cards (it depends on the platform), and once the proper accounts are in place, they can send and accept rent payments through these platforms.
It’s important to note: We don’t recommend this method to property managers for online rent collection because of the potential for legal issues and the large fees.
Pros of P2P Platforms
- Growing ubiquity
- Incredibly convenient
Cons of P2P Platforms:
- Legal concerns
- Loss of control
- Expensive fees
ONLINE BILL PAY
Online bill pay allows users to securely pay their bills online. The service gets funds directly from their bank accounts to process payment. Online bill pay lets users to consolidate their online accounts utilized for bill payment to a centralized location — their bank.
As a landlord, you can set things up so that tenants send you electronic payments (if you’re okay with providing them your account information), or you can have them send you a check from their bank.
Most banks provide online bill pay as a free service once an account is active, so it is already available to most of your tenants. To enable online bill pay, your tenants need to:
- Collect their bills (including account numbers and the addresses where they direct payments to);
- Enter each biller’s information into their bank’s online bill pay platform;
- Select when to send the payment;
- Decide whether the payment is a recurring or one-time transaction;
- And set reminders to keep track of when each statement is due.
Pros of Online Bill Pay:
- Makes late payments less likely
- Accommodates landlords’ preferences
- Is easily accessible
Cons of Online Bill Pay:
- Is easily forgotten
- Reduces your control
- Requires hand–holding
PROPERTY MANAGEMENT SOFTWARE
Property management software is literally made for property managers. Thus, this software typically provides every collection features that a landlord might want or need to maintain to have a seamless rent collection process. Property management software was made for you, so you’re able to customize the payment requirements to reflect the terms of your lease agreements.
Landlords frequently prefer property management software over other payment methods because it provides additional landlord-specific services such as online lease signing, tenant screening, maintenance requests, tenant management, and more.
Pros of Property Management Software:
- Is cost-effective
- Offers landlord-specific services
- Offers advanced support
- Provides access to detailed reports
- Facilitates quicker transactions
Cons of Property Management Software:
- Can be time consuming to set up
- Requires research to find the right platform
Setting up with your bank, online bill pay, and property management software can all be good options for your rental business. There isn’t one option that’s necessarily the right option every time.
That being said, P2P platforms are probably not a great method as we explained in this article.
Ultimately, do your own research and decide what works best for your business. The best online rent collection method is the one that makes the most sense for your operation.
Innago is a free, easy-to-use property management software solution, designed to save you time & money. Innago allows you to easily: collect rent, screen tenants, list properties, manage work orders, create applications, sign leases, organize financials, communicate with tenants, & much more! Learn more here