Favorite rental payment method?
Investor · Georgetown, TX · Member since 2016 · 54 posts · 13 votes
Hello friends!
Thought I'd check in and see what the landlords of the world like to offer in order for their tenants to pay rent? I only have one SFH rental right now, but want to get into more when the deal makes sense. We are super-old skool, and are accepting personal checks (I know!) from our current renter in the mail, which we then deposit with the ole take-a-pic-of-the-check method. I want to offer our tenant an electronic method that doesn't cost too terribly much or is free. Do folks use Dwolla or Paypal?
I went through this not too long ago. Keep in mind I rent to businesses, some of them national multimillion dollar businesses. Your situation is very different since you are dealing with SFH residential. But here are my thoughts regardless:
Checks. Most of these larger businesses have a separate payroll department that sends out checks once a month to all their vendors. What's most important is that the check arrives on time and it is good. For a few of my tenants, I'm willing to go through the "picture-deposit" method because getting paid, and not the method of payment, is the most important. Plus I'll never get them to sign up for ACH payments.
ACH payments. Remember for all ACH payments, you need to get your tenant to sign up for it as well. At minimum, they need to submit their financial/bank information. There may be a lot of hesitancy to do this. I do agree this is best if the cost and situation is right.
- Chase Quickpay. A bit informal/unprofessional but secure and trustworthy. You need to have a Chase account. As you scale, you may need to switch to something else. They have a limit "per day", I think it's like $5000. So if you have 3 rentals at $2K rent each all due on the 1st, then it's time to find another method.
- Paypal. Professional and secure. However, in order to avoid the 3% (or so) fee they charge, you have to ask your tenants to send you money "to a friend". That part is a bit unprofessional. If they accidentally do it the wrong way, you will get hit with a 3% fee. Are you going to ask your tenant to call into Paypal to correct it?
- Dwolla. Seems great at the surface. However a few months ago, they got cited and fined for lying about how secure their servers are. Keep in mind, you need to ask your tenant to submit sensitive financial information to this business.
- Erentpayment. Been around for awhile so a good track record. I would say it's pretty secure. Only down side is $3/payment is a bit steep (or am I just too cheap?)
- Cozy. Too new. Untested in terms of security. Business plan (free) may be not be sustainable, just like Williampaid (ACH payment service that went out of service).
- Quickbook Payments. Intuit just shut down their awesome awesome service of Intuitpaymentnetwork which charges 50cents / payment and had these awesome features like auto request payment. You also didn't need to use Quickbooks. They replaced it with a clunky Quickbook Payments. It still only charges 50 cents per payment, but there is no auto request feature, and you have to use Quickbooks 2015 or later or Quickbooks Online. If you use Quickbooks then I think it's the best method. Otherwise not worth it.
I personally use Quickbooks so I use Quickbook Payments. Intuit is a very secure company, and it has more of an air of professionalism.
Most of the other ACH companies I didn't mention generally gear more towards multiple units and monthly subscription plan. Probably not cost effective for a single SFR.
Hi David,
I accept checks or money orders via our PO Box, but prefer online payments through Quickbooks Payments. They charge $.50 per transaction and I can allow tenants to use a credit card for an additional fee. (I choose not to). You do have to use Quickbooks 2016 (desktop version for about $200 or online subscription for $20/month I think), but I was already using it for my accounting so it made sense to stick with it. I have all my tenants using this method, though I preferred Intuit Payment Network (recently discontinued, but very similar services)
Another popular method is using Chase Bank's Quickpay services which doesn't cost anything, you just have to have a Chase account. Other banks may offer the same type of services, so if you don't have Chase check with your bank.
I use Paypal for some of my tenants. Its free and easy. Tenants normally already have a PayPal and I just provide the email address for my PayPal account. They transfer the funds and I see it immediately. Once it clears (a few days at most), we transfer to our bank account.
Another vote for erentpayment. Works like a charm!!
+1 for erentpayments. Only thing I don't like about them is that they don't remind you when the last scheduled payment is pending. You have to remember to extend it yourself (or maybe I'm missing something). Other than that, its awesome.
@David Sray -- Only two methods that I will accept (from a risk mitigation perspective):
I don't accept personal checks because it's a nightmare to deal with bounced check fees. I don't recommend PayPal as it has clawbacks, since rent is considered a service. Dwolla is fairly good though.
I use Cozy for payments. It is free and takes about 5 business days to deposit. Or you can pay $3 more and its a few days faster.
when i rented my trailer out they usually brought me cash. Then i set up a business account at the local bank where they lived and I told them they could run down the street to my bank and deposit it directly into my account. It was free to do this. Now that i am back to renting an apartment i pay my landlord this same way.
I have them go into a local branch to pay. The flip-side of this question: How do you stop them from paying? If you want them out and they pay, they can stay (at least in Oregon).
I went through this not too long ago. Keep in mind I rent to businesses, some of them national multimillion dollar businesses. Your situation is very different since you are dealing with SFH residential. But here are my thoughts regardless:
Checks. Most of these larger businesses have a separate payroll department that sends out checks once a month to all their vendors. What's most important is that the check arrives on time and it is good. For a few of my tenants, I'm willing to go through the "picture-deposit" method because getting paid, and not the method of payment, is the most important. Plus I'll never get them to sign up for ACH payments.
ACH payments. Remember for all ACH payments, you need to get your tenant to sign up for it as well. At minimum, they need to submit their financial/bank information. There may be a lot of hesitancy to do this. I do agree this is best if the cost and situation is right.
- Chase Quickpay. A bit informal/unprofessional but secure and trustworthy. You need to have a Chase account. As you scale, you may need to switch to something else. They have a limit "per day", I think it's like $5000. So if you have 3 rentals at $2K rent each all due on the 1st, then it's time to find another method.
- Paypal. Professional and secure. However, in order to avoid the 3% (or so) fee they charge, you have to ask your tenants to send you money "to a friend". That part is a bit unprofessional. If they accidentally do it the wrong way, you will get hit with a 3% fee. Are you going to ask your tenant to call into Paypal to correct it?
- Dwolla. Seems great at the surface. However a few months ago, they got cited and fined for lying about how secure their servers are. Keep in mind, you need to ask your tenant to submit sensitive financial information to this business.
- Erentpayment. Been around for awhile so a good track record. I would say it's pretty secure. Only down side is $3/payment is a bit steep (or am I just too cheap?)
- Cozy. Too new. Untested in terms of security. Business plan (free) may be not be sustainable, just like Williampaid (ACH payment service that went out of service).
- Quickbook Payments. Intuit just shut down their awesome awesome service of Intuitpaymentnetwork which charges 50cents / payment and had these awesome features like auto request payment. You also didn't need to use Quickbooks. They replaced it with a clunky Quickbook Payments. It still only charges 50 cents per payment, but there is no auto request feature, and you have to use Quickbooks 2015 or later or Quickbooks Online. If you use Quickbooks then I think it's the best method. Otherwise not worth it.
I personally use Quickbooks so I use Quickbook Payments. Intuit is a very secure company, and it has more of an air of professionalism.
Most of the other ACH companies I didn't mention generally gear more towards multiple units and monthly subscription plan. Probably not cost effective for a single SFR.
I have rent boxes in my building. Everyone knows I'm there on the 6th of each month so if the rent isn't in the box, add the late fee. I also use Chase quick pay.
have not entered the world of electronic payments at all...I am too cheap to deal with any fees for taking my money.
I accept at my residence cash, money orders and personal checks until they bounce. they will pay a returned check fee AND a late fee, then only have the option of money order or cash going forward. I have not had this happen yet (7 doors). Mailed payments must be postmarked before the 1st of the month otherwise they are considered late and get the late fee.
Once we get a little larger, I will either look into a management company (if I'm going to pay a fee, I want to get more than just a transaction) or consider electronic methods.
Personally, I still get a thrill seeing those envelopes that give me money in the mailbox instead of the ones that always want it from me!
+1 for erentpayments. Only thing I don't like about them is that they don't remind you when the last scheduled payment is pending. You have to remember to extend it yourself (or maybe I'm missing something). Other than that, its awesome.
Hi Shawn, you should receive an expiration notice email a few days after the last payment, however we are working to add a notification a few weeks before the last scheduled payment also. Thanks for using the service!
Really appreciate all the insightful responses to my question; especially the nice breakdown by @Daniel Chang. Thanks folks!
@David Sray I stalled on offering electronic payments way longer than I should have. Especially since services like Cozy have no-fee options. I have started offering Cozy to my tenants and I am paying for express payment for a couple (although express payment has been slower than standard this last month).
Here are the options I offer and why I like them:
Cash - Unlike every other payment method mentioned in this thread, cash can never be taken back from you unless by force or through court order. PayPal, ACH, Checks, Cashier Checks all can be pulled back up to 30-60 days or even longer, although the dispute process gets harder. The physical risk of cash can be great, so be careful who and where you are picking this up.
Tenant Deposit in my Account - This is a fast way to get funds directly into your account. It is faster than ACH services like Cozy or eRentPayment which take several days. There are no fees and your tenant can use check, cash or cashiers check to pay. Potential problems could occur since partial payments would be automatically accepted. That could be an issue if you are trying to get rid of someone.
Check - Assuming the tenant is responsible, checks are pretty good. Of course they can bounce due to insufficient funds and you could see the money come back out of your account. It can also be a hassle to handle deposits. In my case we have a PO box so tenants do not have our address. That means I have to drive to the PO box and drive to the bank. Compare that to a monthly $3 ACH fee and it is better to avoid the paper. Now I do have to admit when the old guy in front of me in line at Target pulls out his check book, I give him a dirty look. Checks are really out-of-date technology.
ACH through service like Cozy or eRentPayment - Is the best option. Tenants pay ALL their utilities electronically and shop online. It is a digital world. Tenants have told me their rent check is the only check they write, ever. This made me realize as a landlord, why am I stuck in the dark ages? That is when I setup payment services with Cozy. I want my tenants to view me as a modern business. I want my tenants to setup recurring payment, so they are not writing a check every month. There is a positive mental affect that occurs by not writing the check. The tenant disassociates the payment. What I mean is if you physically write a check or hand cash, you feel the pain of losing the money every month. When it happens automatically, you disassociate. The better reason is that I just check Cozy on my phone and I can see when payments are scheduled, in process and received. It eliminates the need to go the PO box or bank. It is huge time saver.
@Joe Splitrock I love this, and it aligns with my feelings on the matter perfectly. I had to do a 401K rollover from my previous employer plan to a new one, and they insisted on sending me a physical check to then forward to the new institution. What decade is this again?
Most of our tenants pay by eRentpayment.com, and we've used their service for years. Reliable, quick, full featured, and great customer service. $3 per payment per month, and as noted, you can have the tenant pay, or split it with them. We just pay it as the cost of doing business.
We also have a business account at TD Bank that a few tenants use. Whether they deposit cash into it or do some kind of electronic transfer, I'm not sure, but it has also worked perfectly well for years. TD Bank is open every day except certain holidays, and is in the states where our rentals are.
ACH all the way - why would anyone want to chase down money. Rent box, cash, collecting checks....I want my rent payment while vacationing in the Caribbean.
Everything is going electronic.....plus erentpayment sends reminder notices, options for no partial payments and late payment options. Flexible, easy to set up and you're not tied to hunting down your money. Worth the $3 bucks...just on saving time. I split the cost with my tenant. Money orders cost $1.00. Why not!! Lol
About 80 percent of our tenants agree to have their debit card on file with us run either the first of the month or their first pay date of the month for the monthly rent.
The other 20% are tenants that didn't want to set up to pay on a card and they have excellent credit so we don't care how they pay because we know they will.
Our card payments are run through an app for a merchant account we have with our bank.
I only accept email money transfer. The transaction costs the same amount as cheque. It provides a receipt and confirmation of deposit.
Hmm, there are several different ways here but one we use wasn't mentioned so I will add it.
I see some additional ways to automate payment, erentpayments and Qucken for starters.
Whatever we choose, I definitely agree with @Kimberly H., I want a location independent way to collect rent and I would like a location independent way for my tenants to pay rent (remove the "I am still on vacation so I will have to pay rent when I return" rubbish).
We provide our tenants with DEPOSIT ONLY atm cards. The can go to any Wells Fargo anywhere in the US and deposit their rent (cash or check). Looking at our account on line, each deposit has a transaction ID. If they use the card to make an ATM deposit, the last 4 digits of the transaction card are the last 4 digits of the deposit card so we know what property to credit the deposit to.
We have a Rental Payment Options addendum in our lease that states how they can pay their rent. ACH and the deposit only atm card are our preferences. They can also pay be check, money order, etc. But all of our tenants use either ACH or the Deposit Only Cards.
Finally, I want to address @Matt Slakey comment "I have them go into a local branch to pay. The flip-side of this question: How do you stop them from paying? If you want them out and they pay, they can stay (at least in Oregon)."
Matt, check your landlord tenant law for changes on this. Previously, if you accepted any payment then your eviction process had to stop. But with the advent of electronic payments, they definitely changed this in Florida. If I am evicting you and you deposit $100 in my rent account, I simply send a check to the courts for that amount attached to the eviction. The eviction proceeds.
If I am successful, what was being held by the courts will be released to me.
Gerald Demers
We've been using Cozy for over a year. No cost to landlords, great service and it's been hiccup free. It's really simplified our listing, applications and collection.
Sex.
Wife prefers that we take cash though.