When it comes to selecting the right online rent payment solution you need to consider a number of factors and potential use cases to determine whether or not the solution is fit for your specific needs.
There are numerous online rent collection tools on the market today and finding the right one can be a challenge. In this article, we take a look at exactly what you should be looking for in a rent payment service and we outline 3 different service types you might want to explore along with examples.
Not every online rent payment service is the right one for you.
The best online rent payment systems will have features that remove the barriers of rent payment making it easy, fast and affordable. Some of the essential features to prioritize when looking for the right rent payment solution include:
Your rent payment solution should make it easier for your tenants to pay, saving them time and money and improving their overall renting experience. And it should simultaneously reduce the overall amount of administrative work required for running your rentals and managing your rental property income. This allows you to increase the likelihood of on-time rent payments and scale your business.
When selecting the solution for you you need to consider whether you need software that does more than just collect rent. If you do decide you need a property management software that does everything, you should do a feature and cost analysis to work out which platform offers all the features you are looking for, and which ones will help you scale your portfolio and grow your wealth through real estate investing.
Below we explore three different types of online rent payment solutions that you might consider.
Landlord Studio is a property management software designed by landlords for landlords. It pairs award-winning income and expense tracking with property management tools to help you maximize your end-of-year deductions while saving you time on a day-to-day basis when managing your rentals.
Landlord Studio’s online rent payment solution is designed to make paying and collecting rent as simple as possible. Landlords enable it on their property and invite their tenants who then log into their own online portal to set up payments. Landlord Studio uses the ACH bank transfer payments system so payments are securely transferred directly from your tenant’s bank account to yours with fees starting as little as $1.25.
Key features include allowing tenants to set up automatic payments, automatic income tracking for landlords, as well as time-saving rent reminder emails and automatic late fees.
* 14 day free trial. no credit card required.
Buildium allows tenants to connect their bank account and transfer money to their landlords as well as set up automatic payments and use a credit card to pay if they choose.
Rent collection with Buildium costs $1.00 per 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. To collect rent with Buildium you need an account that starts at $50 a month and scales up as you have more units. Additionally, there is a $99 setup fee. Because of the high monthly costs, this solution is more suitable for people managing larger portfolios.
Appfolio, like Buildium, is designed for those that manage larger portfolios. 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 additional features for portfolios of 500 or more units.
Both Appfolio and Buildium are property management software designed for people managing large portfolios. They offer a number of time-saving features, however, the starting costs are prohibitive for smaller landlords.
Rent payment only services are those which have developed software specifically to solve the pain point of collecting rent in the US. The main weakness is that you’ll likely need to employ additional tools to manage everything else regarding your properties. For example, you will still need to track your tenancies, store documents, manage tenant communications, and more. What is more, using a full stack of property management tools instead of a single full-service solution like Landlord Studio, can often end up costing more in the long run.
PayRent allows landlords to collect rent via an e-check or credit card. They have a freemium tier which charges $5 per transaction or 3.5%+$0.30 for credit card rent payments. Their freemium tier comes with basic features like reminder emails and scheduled payments. However, the software lacks any additional property management features.
Cozy allows renters to pay their rent with their checking account for free. Or if they want to use a credit card they apply a 2.75% fee. If they choose to use the free payment option it will take 5 business days for the funds to process and be made available in your account. If you want to have funds available faster you can choose one of the paid options starting at $2.99/unit per month.
They also offer some limited property management features such as listings and basic maintenance requests and a few advanced features like tenant screening for an additional fee.
We’ve talked about using money transfer apps to collect rent before in our blog. Doing so is an easy and practical way to get your tenants to pay, especially for younger tenants who likely use this technology on a day-to-day basis with their friends and family. However, these also come with
With Zelle pay, you can send and collect rent payments instantly through your banking app, or the Zelle app if your bank doesn’t support Zelle Pay yet. The transfers are free and only require you to know a US mobile number or email address (as long as the other person already has Zelle).
You can use Zelle with multiple accounts at multiple banks, but, and this is a big but, you must have a different email address or U.S. mobile number linked to each account to connect it with Zelle. If you try to use the same email address or mobile phone number to enroll with Zelle at multiple banks, you will receive an error message.
Venmo allows you to send and receive money quickly and easily through their app to people on your contact list. You can quickly connect to people through social media, or, like Zelle, you can use their email or phone number if they already have a Venmo account. Although it’s not designed for collecting rent you certainly could use it that way.
Paypal has been around for a while now. They revolutionized online payments, and it’s taken a while for other companies to catch up. Many people have a Paypal account already. Paypal allows you to quickly, easily, and securely send money to someone else’s Paypal account through their app or online.
There are a few issues with using a payment app as a solution for rent collection. Whilst they offer a practical and easy method for your tenants to pay they are also not designed for business use or for use collecting rent. As such, you can’t do a few of the essential things that every good online rent payment solution should be able to do. For example, you can’t enforce full rent payments. The tenant is able to set how much they are going to send and you can’t prevent partial payments. When you accept a portion of the rent, it can be challenging to evict a problem tenant or receive the remaining rental balance owed.
A few other weaknesses include:
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 multiple days.
* 14 day free trial. No credit card required.
Ben is an author and real estate enthusiast. His interest in all things entrepreneurial has led him to work with real estate professionals all over the world, distilling their knowledge into articles and Ebooks.
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