Landlords managing their properties have many responsibilities to keep track of, but one of the most important is rent collection. Since landlords rely on a steady stream of rent from their tenants to cover business expenses as well as support their personal finances, it’s crucial that tenants pay their rent on time on a consistent basis. As a landlord, you want more than just on-time rent from your tenants — you want to be able to collect rent in a streamlined, easy, and inexpensive way. In this article we will review the cheapest ways to collect rent.
There’s nothing worse than losing out on some of the rent you’re owed by having to pay for money transfer services. Over many months, the small amounts of rent you lose by paying for these services can really add up.
How Can You Collect Rent for Less?
Luckily, there are so many ways that you can collect rent from your tenants for very little to no extra money out of your pocket each month. If you’re looking for the cheapest way to collect rent as a landlord, you’re in the right place.
With all of the new platforms available for online rent collection, it’s easy to forget about transferring funds from one person to another the old-fashioned way: by personal check.
Though having your tenants get a checkbook and send you a check each month may not be the most convenient way for them to pay, it’s inexpensive and relatively painless for both parties. Additionally, with online banking apps, landlords can cash their rent checks with a smartphone without needing to go to the bank in person.
If you live near your tenant and it’s not too inconvenient for you to pay them a visit once a month to collect rent, stopping by in person to take a check is probably the best option. Make sure you only accept checks as opposed to cash, however, so you and your tenant will both have proof of the payment.
If you manage your property remotely from a different city or state, in-person visits are clearly not possible and you’ll have to collect rent in a different way.
Online Rent Payment Platforms
Online rent collection platforms are probably the most convenient for both landlord and tenant, but some of these platforms charge a small fee for the level of convenience they offer as well as their special features.
Options like partial rent blocking, rent payment reminders, automatic payment setup, and automatic late fees make a landlord’s job easier, which is why many online rent platforms charge a small monthly fee for use.
In many cases, landlords consider these fees to be worth it for the way these apps can reduce landlord stress and responsibility.
In some cases, tenants may be able to set up a direct deposit payment to their landlord’s banking account so the money is transferred directly without the need for a personal check. Generally, this method provides similar convenience to online rent payment platforms without the additional fees.
Rent Payment Methods to Avoid
As you’re looking for the cheapest way to collect rent as a landlord, there are a few rent collection methods you should avoid in the name of saving money. The most significant are peer-to-peer money-transferring apps like Venmo and Paypal.
Apps like these aren’t designed for business transactions, which is what rent payment is classified as. This means that Venmo, Paypal, and similar apps charge an additional fee for business transactions at around 1.5% of the total amount.
Additionally, if you want to transfer the funds instantly to your account instead of waiting for two to three business days, you’ll have to pay yet another fee on top of that.
Avoiding Fees When Collecting Rent
Depending on your priorities as a landlord, paying a small fee for an online rent collection platform may be worth it for the features you’re able to enjoy and the convenience for both parties involved. Time is money, and if an online platform allows you to save time and effort, it could be well worth it.
However, if you’re searching for the absolute cheapest way to collect rent, going the more traditional route of a personal check mailed or picked up in person is probably your best option.