Collect Rents Electronically

If you are collecting physical rent checks you are out of touch with how today’s young consumers pay their bills. Handling the rent by check is likely a huge pain for you, and for your tenant.

Here are three good ways to collect the rent electronically:

On-line Rent Collection Service – An on-line rent collection service is a web site specifically designed for collecting rent from a tenant and paying the landlord. The web site will provide your tenant with an easy way to set up an automated recurring payment of the rent.  It provides you with automated deposits into your bank account with reports or on-line tools for tracking and managing your tenants’ payments. There are many on-line providers to choose from, so you should shop around for features and cost. Here are just a few:

• Rentpost          
• Rentigo     
• PayYourRent
• Rent Merchant     
• Rentmonitor        

ACH Bank Transfers – This approach is taking advantage of the banking systems Automated Clearing House and probably your lowest cost solution. There are two approaches to consider: 1) Give the tenants the account number and routing number of your bank account. The tenant can then set up a manual or automated transfer with their bank to transfer the rent from their account to your account. Or, 2) Have the tenant give you their bank account and routing number and you can use an on-line service, such as PaySimple, to set up an automated monthly transfer from your tenant’s bank account to your account.  (Note: disclosing bank account and routing numbers is no big deal, as these numbers are printed on your checks) Since this is a generic electronic funds transfer system you will still need to verify that tenants have paid their rent on time.

PayPal – PayPal is one of the dominant electronic payment system used on the internet. Most of your tenants are likely to be already familiar with this system and have a PayPal account.  You set up a PayPal account, which you can link to your bank account. The tenant can then make their rent payment from their PayPal account to yours by simply using your email address. You can have your PayPal account automatically transfer the funds to your bank account.  Fees are pretty low provided you do not accept credit cards. It is not clear to me if the tenant can set up automated recurring payments to you with this system. Like ACH, this is a generic electronic funds transfer system, so you will still need to verify that tenants have paid their rent on time.