In the age of online shopping, social media, television, and even artificial intelligence, it makes sense that our society is moving toward becoming paperless. More and more people are using the internet to pay bills and purchase items, and most are starting to prefer online payments over physical payment methods like checks or cash.
Why should rent collection be an exception to this ever-growing trend?
Online rent collection has benefits not only for your tenants, but for you as a landlord, too. Online rent collection often puts money into your account far faster than paper checks or other physical payments. Even more, rent collection services offer conveniences that take pressure off of you as a landlord to track down tenant rent payments. For example, auto-payments for tenants eliminate the need to keep track of checks and receipts and enforce or avoid late payments altogether.
Even with the benefits of collecting rent digitally, choosing a method and setting it up for your tenants can be intimidating. Luckily, it doesn’t have to be as stressful as it may seem. Let’s dive into the top three methods of online rent collection and how to set it up for easier rental payments each month.
Table of Contents
1. Online Bill Pay
Online bill pay is a bank service that allows users to securely pay their bills online. It is tied to the user’s checking account, where electronic payments can be drawn from, and enables users to consolidate their accounts used to pay bills into one location: their bank.
This service is available for free through most banks, which means you can tell your tenants to pay rent through online bill pay. They can either send you paper checks or arrange for money to be deposited directly into your account.
You’ll have to instruct your tenants on how to set up this service, but once you do, it’s ready for use and automation. Tenants can set up autopay, reducing late fees, and can accommodate whichever way you prefer to receive payments. This makes rental payments simple and efficient for everyone involved.
2. Property Management Software
Property management software allows landlords to keep track of their properties and automate or simplify the various tasks that come with running them. These software platforms usually offer features like online rent payment, online lease signing, tenant screening, maintenance requests, tenant management, and support and security. Their purpose is to help those in real estate to manage their businesses efficiently and with maximal automation.
Using software for rent collection is easy — setting up only involves adding your tenant to the system, customizing their rent requirements, setting up the due date, and waiting for the payments to roll in from the tenant’s bank account. It can be time-consuming to research and find software that works best for your needs, but once you do, they are fast, cost-effective, and provide you with landlord-specific tools that will help you to further automate payments, late fees, and reminders.
3. ACH Transfers
ACH transfers, originally a paperless alternative to written checks, are payments that work through the Automated Clearing House, a regulated technology between banks and financial institutions in the US. ACH payments are commonly referred to as eChecks and move enormous batches of debit and credit between bank accounts all at once, making this method quick, easy, and cost-effective.
Tenants must authorize ACH payments for you to receive them, which requires the tenant’s name, bank name, account and routing numbers, and the transfer amount. Once your tenant’s account is verified by the ACH network, the funds can be moved into your account.
This method has many benefits that make it attractive to tenants and landlords. ACH payments aren’t subject to wiring or card payment fees, making them inexpensive to use. The payments have the potential to bounce just like a written check but can be automated so that tenants don’t have to worry about remembering to pay rent each month (and won’t have to worry about late fees). Using ACH is also extremely secure since it’s overseen by NACHA.
Finding the Right Method for Your Rental Business
By now it’s clear that rent collection online has a long list of benefits for both you and your tenants, especially regarding the speed of funds and the convenience it provides for both parties. Make sure to research each rental collection method thoroughly to fully understand the benefits of each and how they better the experience of you and your tenants. Switching to one of these methods can assist you in growing your real estate business — you only have to decide which one fits best with your needs.