Advances in online solutions have greatly benefited landlords and property managers looking to enhance their rental management business to provide better services to their tenants, clients, and vendors.
One of the best practices a landlord or property manager can adopt for their rental business involves collecting rent online.
There are multiple benefits to providing your renters with the ability to make a rent payment online. By collecting rent online, you provide a convenient solution to renters wanting to avoid writing a check, increase the likelihood of on-time rent payments, limit the number of late fees charged to tenants, and simplify your rent collection duties each month.
If you are considering additional methods for collecting rent from your tenants, you will find some of the best online rent payment systems below.
Features of an Online Rent Payment Service
The best online rent payment systems will include the following features:
- A mobile app for renters to easily make payments directly from their phone
- Options for tenants to make a one-time rent payment or set up automatic payments
- Automatically calculate and charge late fees
- Notify you of late or missed payments
- Give your renters the option to make an ACH payment or use a credit card
- Send reminders to tenants about upcoming payments and due dates
- Allow you to accept full or partial rent payments
When you collect rent online, you give your renters the option to set up automatic rent payments through their bank account or with a credit card. Automatic rent payments have been proven to save renters money by helping them avoid late fees.
Types of Online Rent Payment Solutions
There are several programs available to landlords and property managers looking for the best way to accept rental payments online.
You will want to consider if you need a full-service property management software solution that includes an option to collect rent online among many other features.
Or, you might choose to use a software program whose sole feature is collecting rent payments. Alternatively, you could use a money transfer software program, like PayPal or Venmo, to collect rent from your tenants.
Let’s take a look at these different types of rent collection methods.
Full-Service Property Management Software with Online Rent Payment Features
Property management software gives landlords and property managers helpful tools for organizing and managing their rental properties. One of the most attractive features within a complete property management software program includes the ability to collect rent online from your tenants.
Online rent payments are one of the many features offered to property managers and landlords using Rentec Direct’s property management software for their rental business.
Through the Tenant Portal, accessible on the web or through the mobile app, renters can pay rent with an echeck or via credit card. Landlords or property managers can enforce full or partial rent payments, collect late fees, and track payments.
These online rent collection features are included in the software at no additional cost to landlords or property managers.
Rentec Direct includes additional features for rental management including complete accounting and reporting, property marketing, online leasing, tenant screening, renters insurance, and more.
With Buildium, residents can authorize their bank accounts or credit cards to pay rent online, and have the option to set up a recurring payment schedule.
To use the online rent payment feature in Buildium’s Core product it will cost users $1.00 per incoming EFT transaction or 2.95% per credit card transaction.
In addition to online rent payments, Buildium offers a full suite of rental management services including accounting, budgeting, and reporting, tenant screening, lease management and more.
Online payments are one of the many features available to property managers and landlords who choose property management software from Appfolio. Appfolio Property Manager costs users $1.25/unit with a $250 monthly minimum subscription, and users are required to have at least 50 units, so this solution won’t work for everyone.
Appfolio also offers a higher tier product, Appfolio PLUS, with features like Strategic Account management, Advanced PErformance Insights, Revenue Management, and Data Export Capabilities for portfolios of 500 or more units.
Rent Payment Only Software Programs
If you are unsure of the value of a complete property management software program, you might want to consider a rent payment only software program. A software solution designed solely for rent collection will not have all the tools found in most property management software platforms.
You will be able to give your renter a way to pay rent online with a credit or debit card or through an electronic funds transfer from their bank account.
PayRent allows landlords to effortlessly collect rent online with a tenant e-check or credit card payment. PayRent gives you reporting and tracking options, automated rent reminders to tenants, and the ability to allow full or partial rent payments. Rent payments are typically available in your account within 3 days.
PayRent does not have a monthly fee but does charge 0.25% per bank transfer or 3.5%+$0.30 for credit card rent payments.
RentTrack gives property managers and landlords fast and convenient online rent payment options, plus a credit-building incentive for renters. Renters may rent to you with an echeck or with a credit card. Additionally, RentTrack is one of the only online rent payment services with integrated rent payment reporting to all three credit bureaus.
RentTracks offers same-day funding for users, however, there are fees associated with using this product. According to RentTrack, the fee is based on the type of payment method you choose. Credit cards have a percentage fee, while e-checks are either free or have a set dollar amount.
Cozy allows renters to make a rent payment online with their checking account for free or with a credit card with a 2.75% fee. With the free rent payment option, funds will take 5 business days to become available in your account. If you wish to have funds available within 3 business days, Cozy offers faster funding option at the price of $2.99/unit per month.
In addition to the ability to collect rent online, Cozy offers a limited amount of features for landlords, like marketing and maintenance request tracking. Advanced features, like tenant screening and renters insurance, require an additional fee.
Direct Money Transfer Software for Rent Payments
Solutions like PayPal, Venmo, and Cash App, allow renters to pay their rent by placing a direct deposit into your account through the use of an app that connects their bank account to yours. These types of services allow you to send requests and receive payments. In most cases, you will need to set up an authorized business account to ensure you are adhering to the terms of service established for approved use.
Some landlords might think the use of a direct deposit payment app is a simple solution that doesn’t require you to utilize a rent payment software or property management software.
PayPal for Rent Payments
With PayPal invoicing you can set up recurring or one time invoices for your tenant’s monthly rent. Your renters can then pay their rent via PayPal, which will, in turn, allow you to transfer funds from your PayPal account into your bank account. In order to use PayPal for transactions related to your rental business, including collecting rent, you will need to set up a business account for utilizing online invoicing.
According to PayPal, there’s no setup or monthly fee for online invoicing. You will, however, pay when you receive a payment at a rate of 2.9% + $0.30 fee per transaction.
Venmo for Rent Payments
In order to use Venmo to collect rent online, you will need to become an authorized merchant with an approved business account. An “authorized merchant” means a merchant that has been authorized by us to accept Venmo as a payment method for purchases of goods and services. According to Venmo’s user agreement, only payments made to friends can be made with a standard Venmo account.
Cash App for Rent Payments
Cash App provides free transactions for person to person payments, similar to Venmo. Cash App is a branch of Square, Inc. designed for peer to peer transactions. According to Cash App’s terms of service, the peer-to-peer Service (“Peer-to-Peer Service”) allows you to send funds or receive funds for peer-to-peer personal, non-commercial purposes.
In order to use Cash App for online rent collection, you will need to establish a Cash App for Business account. Cash App charges businesses that accept Cash App payments 2.75% per transaction.
Problems with Direct Deposit Apps for Rent Payments
One of the issues with direct deposit apps like these is that you cannot enforce full rent payments. A tenant may send you only a portion of the rent due and it will get paid to you and deposited into your account. When you accept a portion of the rent, it can be challenging to evict a problem tenant or receive the remaining rental balance owed.
Which Solution is the Best?
There are several options available to landlords and property managers looking for modern rent collection methods. The best way to accept rent payments online will be determined by your specific needs, the needs of your tenants, your budget, and how many additional features you want to accompany payment processing.
When you consider your budget, you will also want to ask how long it will take funds to arrive in your account. Some online rent payment solutions will offer next day funding, while other, more affordable solutions, won’t issue funds for 5+ days. The timeline on fund availability can seriously affect your operations, as you wait for money to show up in your account in order to pay your expenses.
So the next time one of your residents asks, “Can I pay my rent online?”, you’ll be able to confidently say, Yes!, making your renter happy, improving retention, and ensuring rent collection day goes off without a hitch.