Landlording & Rental Properties

5 Practical Solutions For Landlords With Rent Payment Drama

4 Articles Written

Collecting rent is the lifeblood of any rental business. Without rents coming in, your mortgage payments, property taxes, insurance, and any other debts and expenses will not be met. Simply put, you need the rents coming in to turn your assets into cash flowing properties, right?

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That said, over the years, I have heard a lot of rants regarding collecting rents from other landlords.

“My tenant said he sent in a check, but I never received it.”

“My tenant’s check just bounced for the third time…”

“My tenant said she gave the money to the property manager, but my property manager said he never received it.”

Sounds familiar?

Sure, you can collect the rent yourself, but is it feasible all the time? What if you are already too busy with your day job or building your own business (or both)? What if you are out of town?

Don’t worry. Here are five solutions that can help you take care of rent collection.

5 Practical Solutions For Landlords With Rent Payment Drama

Solution 1: Online Payment

Online payment is one of the options that you can consider. There are several excellent online payment systems that are specifically designed for rental payment: eRentPayment, Pay Your Rent, or others (check out the BiggerPockets directory of online rent payment tools).

There is an associated cost with the service. Each online payment system has different monthly fees when you opt to use the service.

The beauty of online payment systems is that they give you a clear paper trail and bookkeeping automation. This leaves little room for discrepancies and eliminates inconclusive arguments between the landlord, tenants, and property managers.

Financial transactions can be clearly recorded with the bookkeeping automation that is built in within the online payment systems. Export functions can link up directly to your designated bookkeeping system (such as Quickbooks). This saves us the work of manually encoding invoices and organizing rental receipts.

Despite all these attractive features, landlords need to be cognizant of two populations that may have trouble paying online: the elderly and low-income tenants.

For the elderly, online payment might cause more inconvenience, as they are not as familiar with the new technology.

For the low-income earners, they might not have enough money in their bank account to set up the online payment system. Most of the low-income earners get paid in cash and often do not make deposit in a bank.


Solution 2: Delegate Rent Collection to Your Property Manager

Paying rent on time is non-negotiable, and your tenant must clearly understand this principle. Collecting rent may sound easy, but in reality, rent collection can be a difficult task, especially if your tenant is troublesome.

Related: #AskBP 098: What’s The Best Way for Tenants to Pay Rent to the Landlord?

To avoid all sorts of stress, you can hire someone to collect rent for you. The person will act as your “billing department” who also serves as a buffer between you and your tenants.

For more information on hiring a property manager, please refer to the article "The 3 Non-Negotiable Roles CRUCIAL to Your Property Management Team.”

To avoid the same drama as to where the money goes, instruct your property manager to deposit the money right away once it is collected. In certain states, there are laws requiring property managers to deposit into your account within a certain period of time, say, one week. After that, you can chase after your property manager and maybe file for an embezzlement case. But I hope you won’t get into that situation.

Aside from depositing the collected rent ASAP, request the property manager to issue a receipt to the tenants AND give you a copy also. The key is to obtain the proof to minimize complications.

Solution 3: Direct Deposit

Direct Deposit via Automated Clearing House (ACH) is another option in collecting rent. This would definitely spare you from the drama. This is achieved through a bank or a utility company. How does this work? Direct Deposit via the ACH Network means automatically transferring money directly into the landlord’s bank account on a set interval, thereby freeing you from the trouble of cashing a paper check.

This solution might be feasible for tenants who dislike electronic payments. This is also good for tenants who are forgetful (personal experience: I forgot to pay rent last month).

Solution 4: Request Tenants to Mail in Payment

The next (but not so ideal) solution is to ask your tenant to mail in the rental payments. I am not particularly a fan of this solution, mainly because it is a good excuse for the “I mailed out the rent but guess it hasn’t come yet” drama.

However, if this is the only solution that works for you, keep these points in mind:

  1. Ask tenants to order a tracking number for you to track the mail.
  2. Demand money orders for less credit-worthy tenants.

You can also offer to reimburse your tenants for the tracking number, as well as money order fees. That could be a fair solution for you and your tenants.


Solution 5: Request Tenants to Deposit Money to Your Account

Request your tenants deposit the monthly rent into your account. All you need to do is to provide your account number.

This is my favorite solution amongst the aforementioned. This is convenient (no physical work involved), safe (minimal possibility of embezzlement), and transparent (no drama/mailing accidents).

Another benefit of this option is that there’s no dispute regarding the trail of payment. For me, my rule is simple: If I don’t see the money in my bank account, it doesn’t count. Banks also provide receipts for any deposits, which is equivalent to record keeping on both sides. Think of it as leveraging the bank’s well-established system to keep track of money.

Related: 12 Steps to Quickly Filling Your Rentals (& Keeping Them Full!)

Here are some useful tips if you decide to make use of solution #5.

  • Use sub-accounts. Allot a different account number for each tenant to facilitate rent tracking. These sub-accounts can be rolled up to a main account for easy accounting purposes (one checkbook, one balance for verification).
  • Pick a bank that is convenient for your tenants. For example, I use Citibank for general personal banking but not for rent collection. Citibank has no branches in Jersey City, where my properties are located.
  • Accept only money orders or cash as deposit.
    • Sometimes tenants will purposely submit a personal check even though there are insufficient funds (to deceive landlords into thinking that they deposit the money in order to buy more time before eviction). You can actually write a clause into your lease agreement stating that you only accept cash or money orders.
    • Or you can soften the language and say that you accept checks but will no longer accept personal checks.
    • If the tenants complain about costs, educate the tenants that it is cheaper to obtain a money order from USPS (Post Service) instead of a bank ($1 vs. $10 per money order).

Having suggested these 5 solutions, the decision is yours to make. You may evaluate each one again and select the solution that works for you.

If you were to ask me, I would choose solution #5. This is the rental collection procedure that I have used for most of my tenants. This is what I find most efficient and effective in my neighborhood. Again, your decision will depend on your situation, your neighborhood, and your tenant demographics. It is only you who can tell which of these 5 solutions would work. Feel free to experiment with a couple and tailor them to your needs.

Bottom line, whichever method you choose, as long as you are able to collect rent, it is a good method. Remember, results trump style any day.

Do you have questions, comments or feedback? Which of these systems do you use for rent payment?

Be sure to weigh in with a comment!

Che Chiu Wong is an investment banker-turned investor. His vision is to cultivate a group of happy and educated real estate investors. Graduated from Columbia University with a Master in Engineerin...
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    LaShelle S. Assistant Manager from Richmond , Virginia
    Replied over 5 years ago
    Great article. I’m going over my options for collecting rent so I have a system already in place when I close on my multi family. In the last #AskBP another suggestion presented was the Pay Near Me Card/App. Do you have any experience with that for collecting rent?
    David Roberts from Brownstown, Michigan
    Replied over 5 years ago
    Chase quickpay. If the landlord has a chase account the tenant doesn’t need one. They just go make an account on the website and link their external account, and can send money electronically to your account without giving your acct number out. Its via email and or phone number attached to your bank account. Beautiful. Free for everyone.
    Susan Goldthorp Investor from Mims, Florida
    Replied over 5 years ago
    I agree with you on solution 5 the only issue I run into is when the bank closes at 4 tenants can find it difficult to get to the bank on time and not miss work. Paynearme is another option I have used, especially for cash paying tenants. Payments can be made at 711s which are everywhere and open late. Once you join the system at, you can issue the tenant with a barcode which they take to 711. I get an email as soon as it is deposited the tenant gets a receipt. It costs the tenant $4 and me nothing, or at least when I joined there were no set up fees. That might have changed. You also need to check with eviction rules in your area if tenant can make a partial payment into a bank it could negate an eviction.
    Tom McCombs
    Replied over 5 years ago
    I have found that most drama is caused by tenants not having the money to pay the rent. All the systems you mentioned above work if the tenant wants it to work. The drama comes in when the tenant tries to explain why the rent was not paid. A well timed “notice to vacate” might be the only thing that actually stops most of the drama.
    Tom McCombs
    Replied over 5 years ago
    I have found that most drama is caused by tenants not having the money to pay the rent. All the systems you mentioned above work if the tenant wants it to work. The drama comes in when the tenant tries to explain why the rent was not paid. A well timed “notice to vacate” might be the only thing that actually stops most of the drama.
    Replied over 5 years ago
    How do you set up sub accounts? What bank does that?
    Jerry Bredesen Real Estate Investor from Plymouth, Wisconsin
    Replied over 5 years ago
    Sub accounts or simply separate accounts for each tenant. Easily done – talk to your bank.
    Sgt Dave
    Replied over 5 years ago
    With Texas economy as red hot as ever our local banks are open 7 days a week and located inside Walmart and our huge grocery store chain HEB, I opened a separate account ( savings) for each rental unit and they have the first 2 weeks of the month to make to deposit or split deposits just so I’m paid in full by the 15th. I check online and verify on the 15th and so far in 7 years only one or two issues out of 18 units. They shop, and pay rent – not being a hard core Landlord and keeping my rents below market average by 10% I have NO headaches, and my average tenant is now over 6 years with us. Make it easy to pay and be flexible and life is good.
    John Underwood Investor from Greer, South Carolina
    Replied over 5 years ago
    I have been using the method of having tenants deposit into my bank account. I give them a starter set of deposit slips with my account on them. I have 14 properties but I have the rent slightly different on all of them so I can easily tell who has paid without needing a separate account for each property. I have never had a tenant complain about this payment method and I can log into my account and see if someone is late via my bank phone app. John
    Karen Rittenhouse Flipper/Rehabber from Greensboro, NC
    Replied over 5 years ago
    We use #1 and #3 – online payments and direct deposit. For anything that comes through our office like personal checks, there is an added fee – a “handling fee”. Why? Because we don’t want to take the time out of our day to deal with payments and we certainly don’t want people coming to the office where we have to stop work to have a conversation. I’m always surprised when people are willing to pay the added fee, but it does help make up for the time we waste handling payments ourselves. Thanks for the post!
    Mike Moreken Investor from Trenton, New Jersey
    Replied over 5 years ago
    # 3 is the only one in my lease. It kills any mail issues or visits.
    Junior Correa from Altamonte Springs, Florida
    Replied over 5 years ago
    I opened a Chase business checking account. I issue a debit card with $0 purchasing limit and withdrawal, essentially all they can do is deposit. With atms being able to accept and count cash or money orders/checks, it allows everyone to deposit when it’s convenient to them without many excuses. The only thing is as I grow my business, I need to find a method to let me know who deposited what. Right now i rely on the various rent amounts to give me indication of who paid. Does anyone know of a large bank that does sub accounts for small businesses?
    Che Chiu Wong from Jersey City, New Jersey
    Replied over 5 years ago
    Awesome feedback. Thank you all ladies and gents. Any suggestions for future posts – please let me know. @Lashelle S. – I have yet to use Pay Near Me, but certainly will look into it. As @Susan GoldThorp mentioned, it is a very convenient option and I can think of two advantages already. 1 — As Susan mentioned, 7-11 opens beyond 4pm, so schedule works better for working tenants. 2 — this solution makes you bank-agnostic, meaning your choice of bank is not governed by your tenants / your properties location. (e.g. I opened a Wells Fargo account, which I don’t really do banking with before, just because it is convenient for my tenants). @David Roberts – This is a good option too, especially for more tech-savvy tenants. @Susan GoldThorp – Thank you for your suggestion Susan. Hope this method works beautiful for you thus far. $4 is a minimal cost – I would more than happy to spend this money for its convenience and eliminating our headaches. Don’t you agree? @Tom Mccombs – You are right. Of course, no payment method is going to save us if the tenant does not intend to pay begin with. That said, we always want to make the payment as convenient for them as possible. @Michelle, @Sgt Dave – Just go into a bank and ask to open a bank account with sub accounts. I know at least Chase has this feature. Congrats to you Dave on your successful operation – you must be doing something right – as your tenants like you shown by their longevity. @John Underwood – Great. We think alike in the “starter kit”. Having a slightly different amount for each tenant is an effective trick for keeping track payment and quite popular in the landlord’s circle. Good to hear that your tenants don’t complain of this rental payment method. @Karen Rittenhouse – Yes, I am always surprised that tenants seem to be perfectly okay with paying easily-avoidable added fees (couple of my tenants are like that as well). Thanks for your appreciation! @Mike Moreken – Good for you. #3 is one of the best solution if implementable. Good to hear that you are able to enforce this. =)
    Junior Correa from Altamonte Springs, Florida
    Replied over 5 years ago
    @CHE CHIU WONG – Could you give some insight as to the specific Chase account you have that allows sub accounts? I have called and spoke with 2 different representatives and neither of them know of any product that would allow sub accounts. Thank You!
    Dan Heuschele Investor from Poway, CA
    Replied over 5 years ago
    I use #5: Tenant deposits money into our account but never knew of the subaccount option. We have requested each tenant associate the deposit with their name or the unit but some of them do not do it. Fortunately most of our rents end up being unique in large part because the water fees are unique. I like the subaccount method better than relying on the amount missing to determine who is late.
    Tristan Cortez Rental Property Investor from San Antonio, TX
    Replied over 5 years ago
    Great!! Thanks for sharing!
    Anthony Gayden Rental Property Investor from Omaha, NE
    Replied over 5 years ago
    Just as a heads up, my property manager had issues with the online payment system for one of my tenants. They paid online and it somehow was able to bounce a few days later due to insufficient funds. I honestly did not know that it was able to bounce like a check.
    Bobby R. Investor from Bowie, MD
    Replied over 5 years ago
    Great. I do #5 now. How do you implement #3? Does the tenant set it up thru their job?
    Che Chiu Wong from Jersey City, New Jersey
    Replied over 5 years ago
    @Junior Correa – While don’t remember the exact name of the account type, I recall It is a type of business account. Ask another rep and they should be able to help out. @Tristian C. – Thanks for the encouragement. @Anthony Gayden – that’s something new and unexpected. Thank you for sharing. @Bobby R. – Great to see another investor having the same view =). For #3, the tenant does not set up thru their job. Instead, they set it up thru the bank. A banker will be able to help setting it up.
    Rick S. from Fort Collins, Colorado
    Replied over 5 years ago
    @CHE CHIU WONG – Thank you for including our rent payment service as an option, we appreciate it! @Anthony Gayden – The national ACH system, which processes the electronic payments, does allow for a transaction to be rejected as typically the tenant’s bank has three business days from the time it debits the tenant’s account to reject the payment if necessary, such as for insufficient funds, etc.
    James Rossi Investor from Debary, Florida
    Replied over 5 years ago
    What about penalties for late pay or bad checks.
    Melanie Buyers
    Replied almost 2 years ago
    THANK YOU all so very much. I have so much to learn! This is all great advice to consider. (Nervous, but HANDS IN THE AIR! HERE WE GO!)