Between worrying about late payments, tracking down your tenants and running checks to the bank, rent collection can be a headache. But it doesn’t have to be. How you collect rent significantly impacts your time and finances, and there may be a better option. If you’re wondering how do landlords collect rent most efficiently, this guide will help you decide.
Implementing methods like direct deposit, payment apps and an online rent collection service like Baselane can simplify the process, save time and provide a safer alternative to traditional rent collection methods.
What’s the best way to collect rent as a landlord? Keep reading to see which option is right for you and your tenants.
Key takeaways
- You can collect rent in person or via payment apps, direct deposit, or the U.S. Postal Service.
- 76% of tenants prefer to use digital methods to pay rent.
- Online rent collection tools like Baselane are optimal because they’re safe, fast and simple, making it the best way to receive rent payments.
7 ways to collect rent
You’ve got options when collecting rent, so you can choose which method works best for you and your tenants. For example, you can collect rent in person if you live near your properties, but a remote investor might opt for online rent collection platforms.
Let’s dive into the best ways to collect rent from tenants.
Online rent collection software
Online rent collection software saves time with automation, is easy to set up, and some services are customizable. Plus, research shows digital payments have eclipsed traditional payment methods. So, implementing a tool like Baselane for online rent collection could lead to more reliable, on-time rent payments because you’re giving tenants free ways to pay rent electronically
Pros:
- Easy to implement with fewer steps than traditional payment options for rental properties.
- Safer (no checks getting lost in the mail, better encryption, etc.).
- Money is in your account faster.
Cons:
- Not everyone has access to online services.
- Some tenants may prefer paying rent in cash or by check.
- People won’t want to set up another online payment system.
Certified payment methods
Certified payment methods include money orders, certified checks, and cashier’s checks. Banks or other reputable institutions verify these methods to ensure funds are available for payments.
Certified payments for rent collection are more secure than personal checks. With these options, you don’t have to worry about the check bouncing.
- Money orders: Paying rent with money orders can be done at stores, banks, and post offices. They don’t require a bank account.
- Certified checks: The issuing bank verifies a certified check so it can be cleared more quickly than a personal check.
- Cashier’s checks: Cashier’s checks are issued at banks and are better suited for larger transactions like rent payments.
Like other means of rent collection, certified payment methods have their own benefits and drawbacks.
Pros:
- Backed by banks or other financial organizations.
- Guaranteed to clear.
- Secure.
Cons:
- Potential delays.
- Additional fees for tenants.
- More hassle.
Credit card payments
Landlords can accept rent payments via credit cards, but it’s best to treat them as a last-ditch effort rather than a primary rent collection method.
There are things to consider when tenants pay rent with credit cards, including the fact that it signals a tenant may not be able to afford their rent. It also risks tenants’ credit scores.
Pros:
- Tenants who may be going through a rough patch have an option.
- Tenants could earn rewards or points by using credit cards.
- Tenant credit scores can improve.
Cons:
- Highlights potential income issues with a tenant.
- There could be processing fees.
- Credit card payments can take days to post to your account.
In-person
You can collect rent in person if your rental properties are nearby. Your tenants can bring their cash or checks to you, or you can visit the properties for collection.
While this is nice for social interaction, it’s not the best way to collect rent for most landlords, particularly if you’re a remote investor and don’t have frequent physical access to the properties. If in-person rent collection is your thing, give your tenants a heads-up before stopping by.
Additionally, once a check goes to the bank or is deposited electronically on a mobile app, it can take days to clear.
Pros:
- Checks are affordable and can be post-dated, so you can collect a year’s worth at a time.
- Some banking apps let you deposit checks with your mobile device.
- Provides the opportunity to connect with tenants and check on properties.
Cons:
- Checks have to be complete and correct before they can be deposited and cleared.
- Bounced checks require more time and incur fees.
- Safety can be a concern if a tense situation arises.
By postal mail
Postal mail is another option when it comes to how to receive rent payments. This method involves tenants using checks to pay their rent. Mail delivery is usually reliable, but tenants aren’t always as dependable.
Collecting rent by mail involves a risk of lost checks or late payments due to delays, which can result in irregular cash flows for you. Landlords who use postal mail may want to only accept certified checks to avoid payment issues on top of other potential problems.
Pros:
- Simple for tenants and landlords.
- Typically reliable and timely.
- Some tenants may prefer this method of payment.
Cons:
- Potential delays from lost or late checks.
- You may have to charge late fees if the check doesn’t arrive on time.
- Tenants have to remember to physically mail the check every month.
ACH transfers
Automated Clearing House or “ACH” payments are direct payments that use a pre-authorization to transfer funds directly from the tenant’s bank account to yours. ACH transfers can be set up in advance through a bank or rent collection app to initiate payments.
ACH transfers get rent payments into your bank account quickly and with minimal legwork for you and the tenant. It’s also a preferred choice for how to direct deposit rent to landlord bank accounts.
Pros:
- On-time payments.
- Low effort for landlords.
- Typically very secure.
Cons:
- Tenant may need assistance setting up a bank transfer rent payment.
- Some associated fees.
- Potential processing delays.
Payment apps
Collecting rent through payment apps like Venmo, Cash App and Zelle are convenient for landlords and tenants. While these are some of the best rent collection apps available, However, they add an extra step since you have to manually transfer the money to your bank.
Note that Venmo, owned by PayPal, prohibits business transactions and commercial payments unless the payee has an authorized business profile.
Pros:
- Easy to make payments and withdrawals.
- Payment apps can be linked to bank accounts.
- Flexible payment options.
Cons:
- Extra steps are required to manually transfer funds to your bank.
- Transfers can take a few days to show up in your bank account.
- Transactions can be difficult to track.
Benefits of online rent collection
Traditional rent collection methods allow for more potential mistakes and late payments, which can cost you time and money.
With online rent collection, you don’t have to worry about whether the rent check that arrives in the mail is signed. And you never have to take checks to your bank to endorse and deposit them.
Online rent collection speeds up the process, reduces manual work, and is more convenient for all parties involved. Whether you’re exploring how to collect rent from tenants electronically or looking for landlord-automated rent collection tools, the benefits of online rent collection are clear.
The 3 best tools for online rent collection
Landlords can get the most out of online rent collection by choosing the right tools that offer free ways to pay rent electronically and benefits like automation, direct deposit, and secure transactions.
Baselane
Baselane is an all-in-one banking, rent collection, and bookkeeping platform for landlords. In addition to automated payments, it sends payment reminders and other notifications, creates recurring invoices, and keeps accurate payment records.
Plus, online platforms like Basalane are designed to keep your transactions safe, making it the best way to receive rent payments securely.
Other benefits of Baselane include:
- Automated rent collection that only takes minutes to set up.
- Direct deposits go straight into your bank account in 2 days with QuickPay.
- Reliable on-time payments with automated invoices, reminders, and late fee notices.
- The portal is easy for both tenants and landlords to use.
- Flexible payment options via ACH (more on this below), debit, and credit cards.
- Integrated banking and bookkeeping, plus free resources like rental forms and a rental property ROI calculator.
ACH Direct Debit
As noted above, ACH direct debit is a simple, fast, and secure option to collect rent payments directly from the tenant’s checking account into yours.
You can request a payment each month via ACH, or tenants can set up auto-pay on Baselane so rent is paid on the same date each month.
Benefits of ACH direct debit include:
- Potential for automated payments.
- Secure transactions between bank accounts.
- Simplicity.
Apple Pay
Apple Pay has become a popular payment method for online and in-person purchases. However, both the tenant and landlord need to have access to an Apple product and have an Apple Pay account set up. Automated payments aren’t possible with Apple Pay, so you’d have to rely on your tenants to remember to pay on time each month.
Benefits of using Apple Pay to collect rent payments include:
- Apple Pay connects to your bank account and transfers are instant.
- Simple to use.
- Tenants can pay within an iMessage thread.
While Apple Pay is certainly an option for how to accept rent payments online, it’s not the easiest one. If you want a simplified approach, use Baselane’s rent collection software, which offers automated payments plus bookkeeping and banking features all in one place.
Set up hassle-free online rent collection
Is rent collection taking up too much of your time? Are you tired of chasing tenants for their rent checks or dealing with late payments? With the right tool, you could free up time and stress spent on busywork associated with rent collection.
While the best way to collect rent from tenants will vary from landlord to landlord, why not opt for something that makes the whole process easier?
Baselane’s rent collection software is convenient and ensures automated and on-time rent payments. With its built-in bookkeeping, rent payments get automatically tagged to the right property. The integrated banking feature easily organizes your income and expenses by property. You’ll spend less time on daily tasks and have more visibility into your cash flow and expenses.
FAQs
Can I use Zelle to collect rent?
Yes, landlords can use Zelle to collect rent. The app is simple to use, and transfers are free, but landlords should note Zelle only pairs with certain banks and credit unions. This limitation can make addressing issues like how to collect unpaid rent more challenging if tenants don’t have compatible accounts.
Can you use Venmo to collect rent?
Venmo is a convenient option for landlords to collect rent, and the payment app can be linked to bank accounts with instant transfers available. However, Venmo charges fees for business transactions and payments considered “goods and services,” and rent collection could fall into either of those categories. Venmo may not be the best way to collect rent as a landlord if you want to avoid additional fees.
Can I use Cash App to collect rent?
Yes, landlords can collect rent via Cash App, but the app limits payment amounts, which could be an issue for certain rent payments. When searching for the best way to collect rent as a landlord, look for options that have high (or no) payment limits.
Which is the best app for rent payment?
The best app for rent payment depends on your needs as a landlord. If you’re going for convenience and fast payments, apps like Zelle and Venmo are good options, but they don’t automatically put the money in your bank account like Baselane, which also offers other features like integrated bookkeeping and banking. Landlords should weigh the pros and cons of each to determine the best way to collect rent online.
How can I collect rent from tenants electronically?
Landlords can collect rent electronically through direct ACH bank transfers, mobile payment apps like Venmo or Zelle, and online rent collection platforms for landlords and real estate investors like Baselane.
Why is Baselane the best tool for landlords to collect rent online?
Baselane is the best way to collect rent as a landlord because it streamlines and automates the rent collection process for reliable, on-time payments. Plus, it offers built-in banking and accounting software for landlords to easily manage all your finances in one place.
Can you collect rent from a residence set as commercial?
When searching for how to collect rent from tenants online, most tools only let you accept payments for residential properties. With Baselane’s all-in-one property management software, you can collect rent from tenants in residential and commercial properties.
