Electronic Rent Collection

General Landlording & Rental Properties
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Electronic Rent Collection

Lynn Hill-Torres
Baltimore, MD · Member since 2016 · 16 posts · 7 votes

Hello BiggerPockets family.

We are working with a landlord, managing one of her tenants as a way to gain experience  for when we finish renovating our property.  I remember in Brandon Turner's book, he said one way to get experience is to work with  a  landlord . So I was wondering if anyone had any really good apps or ways of collecting rent electronically. Right now the landlord goes to each tenant collects in person and I surely don't want to do that. Gas and time is too precious to waste.

Any helpful tips would be much appreciated.

Oh yeah, So the property is in Baltimore City, Maryland, in the Bel Air/Edison area. It's a Cmarket with C -type tenants. In addition, she is renting out rooms in the property and most of the tenants are more on the low income side. We are hoping to get late payers paying on time and for people who haven't been paying, to get them out.

Any help or thoughts? Thanks in advance. Let me know if you need more info.

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Rick S.
Fort Collins, CO · Member since 2014 · 397 posts · 161 votes
10y
Originally posted by @Devin Morgan:

I've used both erentpayment and cozy for electronic payment. They both take about the same amount of time to clear in your bank account. Erentpayment pros to me is it has more options, it can report to the credit bureaus if the tenants choose, and it can automatically add a late fee of your choice after whatever day. Cons it cost $3 per transaction which can get to be a bit much as you increase properties. Also the interface isn't that great. Cozy is more user friendly, and it's free. Plus you can do applications and screening through them (fee). Bad is that if you want to add extra fees like late fees etc you have to manually do it. I switched to Cozy due to glowing reviews but either will suffice. 

Honestly and for the person that said most of the tenants won't have bank accounts or won't pay online that's BS. These days people are moving towards automation and convenience. Most people have smart phones especially in C neighborhoods. Furthermore they may at the very least have a prepaid card. Most people would consider it easier to pay online or on their phone versus going to the bank getting a money order etc. I believe older people prefer traditional methods though.

 Hi Devin,

Thank you very much for the feedback as we appreciate it and I am going to message you to see if you can provide additional details on how we could improve the interface if you have time.  Our standard processing time is 2-3 business days so I believe that is quicker than their standard option but similar to their express option, which they charge a fee for.

The automatic late fee is a very popular option along with the automatic partial payment block for our customers, especially if they have served a 3-day notice or are in an eviction proceeding.  We are already in the process of adding the other two bureaus to our credit reporting for tenants.

We do understand your pricing comment so we are working to add the following features in our next big release, which we hope to have done within the next few weeks:

1. Monthly Pricing Option: $10 per month and it includes up to 5 transactions.  Any additional transactions are $1 each.  This will work really well for landlords processing more than 2-3 payments.

2. Integrated Background/Credit check: We already offer customizable online applications so you will be able to request a background/credit check right from our system.  

We are really excited for these two features to add even more options for our customers.  The project has expanded to include some other updates that we found to be necessary with the changes so it has taken longer than expected but we are definitely getting close finally.

Thank you again for the feedback!

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  • Jennifer L.
    Investor · San Jose, CA · Member since 2015 · 246 posts · 183 votes
    10y

    @Lynn Hill-Torres With C type tenants, you might have some difficulty moving into electronic collection.  But, if any of those tenants have bank accounts, then Cozy would be a good option for them because it is free.  I disagree with @Account Closed, who thinks that most tenants don't have bank accounts and those that do won't set up online payments. In my experience, tenants with bank accounts like the convenience of being able to set up automatic payments. And, in fact, I switched over to this method at the request of a tenant who wanted an online payment option, not the other way around.

    Another option for C type tenants is to provide them the option to use Pay Near Me at a 7-11.  This comes with a small fee, but if they elect to do that option, you can figure out if you want to discount their rent. That way, they can pay the cash without causing you inconvenience. I think the most it costs per transaction is $5, and if this is an issue, I'd deduct the cost from their rent for the convenience of not picking it up personally.

    2Reply
  • Lynn Hill-Torres
    OP
    Baltimore, MD · Member since 2016 · 16 posts · 7 votes
    10y

    Thank you. I heard about 7-11 but wasn't sure what the program was called. Do you give them options, more than one? What other options do you offer?. How did you transfer over to electronic payments, was it gradual or did you make a memo that at the beginning of the next month?

    0Reply
  • Kim Coleman
    Rental Property Investor · Waldorf, MD · Member since 2015 · 155 posts · 76 votes
    10y

    I use erentpayments.com you can set up for direct debit from the tenants checking account or they can call to make payment via phone. The tenant can also elect to have their payments reported to their credit bureau to build credit. One way to encourage on time payments is to offer a rent Concession for payments made one or before the 1st of the month. 

    Good luck! I'm sure you'll learn a lot 

    2Reply
  • Jennifer L.
    Investor · San Jose, CA · Member since 2015 · 246 posts · 183 votes
    10y

    @Lynn Hill-Torres I have one rental.  So the last tenants requested it and I set it up for the second month (first was paid by cashier's check.)  My next tenants applied through Cozy, and I told them that was my preferred method of payment.  They were fine with that, so they actually submitted the security deposit and first month rent through Cozy.  I allow my tenants to pay by check or cash if they like.  In 16 years, no tenant has ever asked to pay me with cash or a money order.

    You should check the laws of Maryland to see if you have to provide more than one option for payment.  In California, you do, so my lease is compliant with the laws of this state.

    0Reply
  • George P.
    Property Manager · Livonia, MI · Member since 2011 · 4k+ posts · 1k+ votes
    10y
    Originally posted by @Account Closed:

    @Lynn Hill-Torres You should accept money orders from your tenants because most don't have a bank account and most will not give personal info to a 3rd party.

     Arguably the most inaccurate post on BP of all times. 

    Do u actually have any rentals or you are speculating? 

    In 2016 it's so common to have some form of electronic payment that's it's laughable to say that most people don't have bank accounts and won't share financial information via 3rd party. 

    Back to the question... We use chase since they have Quickpay.  The new system I'd recommend is clearxchange.com.  It's a Conglomeration of the top 6 banks. 

    And yes, we use it for all our 35 or so rentals 

    2Reply
  • Jennifer L.
    Investor · San Jose, CA · Member since 2015 · 246 posts · 183 votes
    10y

    @Account Closed In 16 years, I haven't had a tenant request to pay me with a money order. The only way I could possibly see it happening is if I had someone who was churning credit cards for miles. I'm sure that people who specialize in low income housing encounter this more. I don't invest in those properties. 

    Lots of people trust 3rd party sites. So much so that there are people who rarely cut a check. I'm one of those people. 

    Are you going to make your tenants go to the store and get a money order if they want to pay you electronically?

    1Reply
  • George P.
    Property Manager · Livonia, MI · Member since 2011 · 4k+ posts · 1k+ votes
    10y
    Originally posted by @Account Closed:

    @George P. You don't have to agree with me but a real landlord would accept money orders, and yes, I was a property manager for many years, and we took cash and money orders. 35 rentals and now you will tell everyone you don't have a good insurance policy in case you are sued. I see on your website that you used Paypal and with 35 rentals you should use a merchants account not Paypal. 

     So, half of your job was driving around town to collect money order. Ha.  In 2016 we do it with just a few clicks. You should look into it.  

    0Reply
  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    10y

    You can't go by him, as I believe he probably lives in Bedrock City  :) . Anyway, back to the OP, I don't have anything less than B property (I hate these designations, btw, as I feel they're meaningless without context of geography) and I haven't had a tenant use the "deposit in our account" option in a long time. They are all now using either Cozy or erentpayment, which are the two options I offer for online payment. I know some local conglomerates (I don't want to call them landlords as they're corporate) that don't have any options except deposit or online payment; they don't even provide a mailing address option to the tenants and the on-site property manager isn't authorized to collect money in any fashion whatsoever. These are apartments, not houses, but they are definitely what most would consider "C" or lower, with frequent Section 8s and short-term tenancies not uncommon. 

    Like it or not, the days of walking around and knocking on doors is coming to an end, as is the idea of accepting money orders or checks personally. 

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    1Reply
  • Ray Johnson
    Irvine, CA · Member since 2016 · 545 posts · 614 votes
    10y

    @Lynn Hill-Torres, I have property in Baltimore City one in Penn Lucy and one in Towanda Park, both are Class C areas and both pay electronically to my property manager, @George P. is 100% correct when he says you can expect people in Class C/C- areas to still be able to pay electronically. 

    0Reply
  • Jennifer L.
    Investor · San Jose, CA · Member since 2015 · 246 posts · 183 votes
    10y

    @Account Closed Your experience in D properties simply doesn't translate to A and B properties.  Maybe not even C properties. And, depending on how long ago you were in the game, it may not be helpful to today's "real" landlords. When I started renting, not a lot of people were banking online and there wasn't such a thing as a smart phone.

    I have adjusted my landlording to the needs of my tenants as the times have changed. 

    2Reply
  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    10y

    To all especially @Jennifer L. and @George P. how a tenant wants to pay and whether they have checking accounts or not will vary tremendously by area. I would expect that in most areas tenants would have checking accounts as well as appreciate easy ways to pay online. 

    I work Baltimore City. I have no D properties or War Zone properties yet few of my tenants have checking accounts. Most tenants mail money orders.

    Being willing to accept money orders and driving around to collect rents are two totally unrelated issues and assuming that @Account Closed has D properties is an assumption being made not  based on the information presented. 

    For those of you being critical of others answers I notice none of you are from MD or the Baltimore area. I actually own properties in the specific Neighborhood of Belair Edison that the OP mentioned.

    @Lynn Hill-Torres some landlords are perfectly fine with collecting rent and actually enjoy it. Personally I don't like the idea. Once you start collecting in person it is difficult to change the tenants habits.  I do not currently use an electronic payment for so I can't suggest any, but I do think it is a good idea. Most of our rents are mailed to our PO Box. One thing you can do to help in that regard is send them pre-addressed stamped envelopes to make it easy for them to  mail payments.

    2Reply
  • Chris Martin
    Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
    10y

    The fact is that a substantial number (roughly 50%) of US tenants are unbanked or underbanked, per the report, bottom of page 17. In simple terms the lower the income, education, and age the more likely a tenant is unbanked.

    Solutions? For our unbanked or underbanked tenants, we provide the Wells Fargo Business Deposit Card (similar to Chase Bank product) for "in person" payments at ATM machines, and we accept Money Orders sent to us. For banked customers, we accept the above and ACH methods of payments (eRentPayment.com, QuickBooks Invoices (the old IPN system)) and 'bill pay' checks that are delivered to us.

    We charge a service call if managers make a special trip for rent collection... but we have not had to in years, because tenants know how they need to pay regardless of their un/banked status.

    1Reply
  • Amy A.
    Portland, ME · Member since 2012 · 616 posts · 550 votes
    10y

    My tenants either 1. Drive to my bank and deposit into my account (I give them the acct. #, but they don't need it because the bank tellers know my name).  They get a receipt.   2. Use their own bank's bill pay function after I provide my account info.   3. Use popmoney.com to deposit into my account.  They only need my cell phone # for this because it's linked to my account.   4. Deposit a check or money order into a locked drop box on the property.  I hate this option, but the property is close by.

    0Reply
  • Christian Bors
    Real Estate Agent · Mechanicsburg, PA · Member since 2014 · 529 posts · 217 votes
    10y

    @Chris Martin  In regards to the Wells fargo deposit cards, are the tenants able to request a balance at the atm machines when they get their receipt?  I ask because I have looked into this product at other banks.  So far, I have not seen a bank that voids this option.  Obviously the cards are for deposit only, however I don't want them to see the balance.  I know people who have set up 2 business accounts and simply transfer the funds as soon as its deposited, but I am not interested in making an extra step.  Can you elaborate on your experience?  

    0Reply
  • Devin Morgan
    Baltimore, MD · Member since 2014 · 91 posts · 49 votes
    10y

    I've used both erentpayment and cozy for electronic payment. They both take about the same amount of time to clear in your bank account. Erentpayment pros to me is it has more options, it can report to the credit bureaus if the tenants choose, and it can automatically add a late fee of your choice after whatever day. Cons it cost $3 per transaction which can get to be a bit much as you increase properties. Also the interface isn't that great. Cozy is more user friendly, and it's free. Plus you can do applications and screening through them (fee). Bad is that if you want to add extra fees like late fees etc you have to manually do it. I switched to Cozy due to glowing reviews but either will suffice. 

    Honestly and for the person that said most of the tenants won't have bank accounts or won't pay online that's BS. These days people are moving towards automation and convenience. Most people have smart phones especially in C neighborhoods. Furthermore they may at the very least have a prepaid card. Most people would consider it easier to pay online or on their phone versus going to the bank getting a money order etc. I believe older people prefer traditional methods though.

    2Reply
  • Rick S.
    Fort Collins, CO · Member since 2014 · 397 posts · 161 votes
    10y
    Originally posted by @Devin Morgan:

    I've used both erentpayment and cozy for electronic payment. They both take about the same amount of time to clear in your bank account. Erentpayment pros to me is it has more options, it can report to the credit bureaus if the tenants choose, and it can automatically add a late fee of your choice after whatever day. Cons it cost $3 per transaction which can get to be a bit much as you increase properties. Also the interface isn't that great. Cozy is more user friendly, and it's free. Plus you can do applications and screening through them (fee). Bad is that if you want to add extra fees like late fees etc you have to manually do it. I switched to Cozy due to glowing reviews but either will suffice. 

    Honestly and for the person that said most of the tenants won't have bank accounts or won't pay online that's BS. These days people are moving towards automation and convenience. Most people have smart phones especially in C neighborhoods. Furthermore they may at the very least have a prepaid card. Most people would consider it easier to pay online or on their phone versus going to the bank getting a money order etc. I believe older people prefer traditional methods though.

     Hi Devin,

    Thank you very much for the feedback as we appreciate it and I am going to message you to see if you can provide additional details on how we could improve the interface if you have time.  Our standard processing time is 2-3 business days so I believe that is quicker than their standard option but similar to their express option, which they charge a fee for.

    The automatic late fee is a very popular option along with the automatic partial payment block for our customers, especially if they have served a 3-day notice or are in an eviction proceeding.  We are already in the process of adding the other two bureaus to our credit reporting for tenants.

    We do understand your pricing comment so we are working to add the following features in our next big release, which we hope to have done within the next few weeks:

    1. Monthly Pricing Option: $10 per month and it includes up to 5 transactions.  Any additional transactions are $1 each.  This will work really well for landlords processing more than 2-3 payments.

    2. Integrated Background/Credit check: We already offer customizable online applications so you will be able to request a background/credit check right from our system.  

    We are really excited for these two features to add even more options for our customers.  The project has expanded to include some other updates that we found to be necessary with the changes so it has taken longer than expected but we are definitely getting close finally.

    Thank you again for the feedback!

    3Reply
  • Rick S.
    Fort Collins, CO · Member since 2014 · 397 posts · 161 votes
    10y

    Hi @Lynn Hill-Torres as @Devin Morgan mentioned even if your tenants don't have a bank account you can still utilize an online payment service if your tenants have a prepaid card.  I am biased since I work for a payment service but it is much easier to collect rent electronically despite some of the other comments on here.  @George P. , @Jennifer L. , @Chris Martin and @JD Martin   always provide great advice on here as they know what they are doing!

    If the tenant doesn't have a bank account they can get a prepaid card, however be sure the tenant asks the card company if they allow ACH Debits as not all prepaid cards allow that.  The one we recommend is NetSpend and I have seen a number of Green Dot cards allow it recently.  The tenant will obtain the routing and account number from the card company and enter that like a bank account in the payment service.  So there are definitely multiple options regardless of the property class.

    Also, in regards to PayNearMe I believe they still require at least 50 "doors" to set up an account with them but I could be wrong since we haven't talked to them for a few years now.

    Let me know if you have any questions.  Thanks.

    2Reply
  • George P.
    Property Manager · Livonia, MI · Member since 2011 · 4k+ posts · 1k+ votes
    10y

    two of my tenants do not want to use electronic payment (never have enough money in the bank), so i went to Chase, got them a "deposit only atm card". then i told them "you have to use the ATM card, here are the locations"

    works great for us.

    1Reply
  • Chris Martin
    Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
    10y

    @Christian Bors regarding "In regards to the Wells fargo deposit cards, are the tenants able to request a balance at the atm machines when they get their receipt?" The short answer is 'no'. I 'test' cards before deploying them by submitting a $1 deposit. There is no option for obtaining an account balance. The last one I deployed was over a year ago, the 11th we have in tenant's hands.

    The good thing about the card is that tenants can pay from a WF ATM machine anywhere (as identified below). Tenants are associated with the card number, specifically the last 4 digits, that is right there on the statement. So you can deploy thousands of cards to tenants all paying the same rental amount per month. Line items in the account statement look like this:

    ATM CASH DEPOSIT ON 07/05 702 NORTH FR HUFF DR ST. MATTHEWS SC 0004384 ATM ID 0044J CARD 5987
    ...
    ATM CASH DEPOSIT ON 09/02 2001 CLARK AVE RALEIGH NC 0008603 ATM ID 0726L CARD 5987

    There is no need for tenants to "tell" anyone they made a payment. Indeed that never happens except, perhaps, by a first time WFBDC tenant on their first payment.

    One upside, and I tell this to WF managers when I talk to them about the WFBDC, is that this is a banking service that is a convenience for unbanked tenants. It's also a "foot in the door" service. I have also been in bank branches (obviously with bank managers) walking tenants through the process of getting a WF checking account. The follow on step is to set them up with services that benefit both the landlord/manager (ultimately via automated payments) and the tenant, like on-time payment and credit reporting (e.g. eRentPayment type reporting.)

    The goal?  The closer tenants are to fully banked, automated rent payments the better.

    2Reply
  • Jamie Mathieu
    Investor · Baltimore, MD · Member since 2015 · 20 posts · 13 votes
    10y

    I use erentpayment.com as well and have been really happy.  My last tenant used the automatic direct debit option each month which was ideal.  As others have mentioned, I like that you can use their automatic late fees feature.  I wish the transfer of $ was a little quicker but I understand that is a limitation of a ACH debit.  @Rick S. excited to learn about the new features.  Thanks for sharing!

    1Reply
  • Scott Weaner
    Rental Property Investor · Yardley, PA · Member since 2008 · 1k+ posts · 561 votes
    10y

    @Chris Martin does the Wells Fargo deposit card still exist? My branch does not know of it, and I can't find a reference on their site. I would love to utilize something like it.

    0Reply
  • Jill F.
    Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes
    10y

    We just recently purchased our first rental properties, two side by side 4 unit buildings and last week I called to inquire about paynearme and was told there was a 100 transaction/month minimum. 

    We accept online payments via our property managment software, Buildium. We decided to go with Buildium property management software because my husband particularly liked the accounting features in this software. It took just over a week to get the Forte epay system used by Buildium approved and set up. Most of our tenants are very happy to be able to pay online. The former owners collected the rent in person, door-to-door. Those without bank accounts can always get a Green Dot prepaid ATM card from Circle K or Walmart and use it to pay rent online but because we also own a couple of small retail shops in the area, we do also offer our tenants the option of paying by cash, cashier's check, or money order at our stores.

    1Reply
  • Lynn Hill-Torres
    OP
    Baltimore, MD · Member since 2016 · 16 posts · 7 votes
    10y

    Thank you everyone. This is has been so educational and very informative. There seems to be so many options. The thing I take away most from everyone's comments is not to say to myself "there's no way to do this" because of XYZ reason, but to be creative while asking, "how can I get this done?" I will update on the combination that we will be using and how it works.

    0Reply
  • Stephanie Hardy
    Las Vegas, NV · Member since 2015 · 123 posts · 34 votes
    10y

    @George P. Clearxchange looks just like what I've been trying to find, thank you! One question, I can see there is no fee for receiving payments. Do you know if there is a fee to send a payment?

    0Reply
  • George P.
    Property Manager · Livonia, MI · Member since 2011 · 4k+ posts · 1k+ votes
    10y
    Originally posted by @Stephanie Hardy:

    @George P. Clearxchange looks just like what I've been trying to find, thank you! One question, I can see there is no fee for receiving payments. Do you know if there is a fee to send a payment?

     i dont think so. here's what happened....Chase had a rule where only one party had to have an account... no fees.

    then chase said "now both parties need an account, no fees".. but my tenants said "i am not getting another account, so give me another way".

    so we gave them "clearxchange". have no idea what it looks like, but i asked and they like it. noone said of any fees.

    glad i could help

    0Reply
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