As a landlord, you’re well aware that one of the most agonizing tasks you face can be collecting rent payments from tenants, month after month — especially if they all pay with different methods.
Whether you’re frustrated with accepting cash or check payments from your tenant (come on, it’s 2024) or hitting transaction limit roadblocks with services like Zelle and Venmo, worry not; we’ve got you covered.
In this article, we’ll discuss the top methods for collecting rent as a landlord, best practices for getting paid, and how to use property management software to streamline your rent collection.
Traditional Ways to Collect Rent
Realistically, landlords can choose to collect rent in one of three ways:
In-person
Ah, the old-school rent collection method: the face-to-face money exchange.
Sure, this was a great option 20 years ago when your tenant lived next door. That proximity made it easy to grab a freshly signed check or wad of cash (along with a few awkward pleasantries).
Though rent handoffs are hard to mess up, humans are notoriously unreliable when handling cash, and far more efficient options exist today.
Through the mail
Another tried-and-true method for tenants to pay rent is to put a check in an envelope, run to the post office, buy a stamp, and drop it in the mail. But because mail can vanish into thin air, we don’t advise tenants to stuff an envelope full of cash and hope for the best.
Generally, we recommend avoiding this rent payment method altogether, though walking to the mailbox and flipping that little red carrier flag up is fun. But remember this: The mail carrier isn’t the only person who sees the flag.
Thankfully, a superior option exists.
Electronic online payments
Now we’re talking.
Digital rent collection is the way for landlords to get things done in 2024.
Human error, cringy landlord-tenant interactions, and mail mishaps can gum up the works, whether paying rent in person or through the mail. Thankfully, landlords can avoid all the previous scenarios with online rent collection.
Nowadays, anyone with a smartphone or an internet connection can pay their rent from anywhere in the world. Initiating an electric online payment only takes a couple of minutes and a few taps on your screen.
Plus, you won’t be forced to flash a reluctant smile as your tenant hands you a rent check 11 days late, either.
So, What’s the Best Way for Landlords to Collect Rent?
By now, you and I both know that the best way landlords can collect rent is via electronic payments. That said, there are a myriad of options to move money from Point A to Point B in the digital world.
Here are the top methods for landlords to collect rent, ranked from first to worst:
1. TurboTenant
Trusted by over 650,000 landlords, TurboTenant’s affordable property management software allows landlords to collect rent from tenants for free.
By “for free,” we mean landlords pay nothing to accept digital rent payments, set up automatic late fees, send rent reminders to forgetful tenants, and view the rent status of their entire portfolio in a secure dashboard.
And to ensure that rent is sent and received securely every time, TurboTenant utilizes Stripe and Plaid to encrypt sensitive payment data so both landlords and tenants are protected online.
As an additional perk, savvy landlords can sync rent payments (and other property management transactions) with TurboTenant’s integrated accounting software to ensure their bookkeeping is dialed in.
In addition to this suite of rent payment features, TurboTenant landlords can screen tenants, accept rental applications, generate state-specific leases, manage maintenance requests, advertise properties across listing websites, and more.
Did we mention that TurboTenant’s award-winning property management software is free?
What we like about TurboTenant
- Entirely free for landlords
- No daily transaction limits
- Automated rent reminders
- Automated late fees
- Tenants can enable autopay
- Syncs with integrated accounting software
- Dashboard organizes essential rent info
- Generates automatic rent receipts
Factors to Consider
- Accounting software is a paid add-on
- Transactions take a few days to process
2. RentRedi
Like TurboTenant, RentRedi is an all-in-one property management software trusted by landlords worldwide. Thanks to its handy rent collection feature, RentRedi customers can manage rent, assess late fees, and send rent reminders from one dashboard.
ACH fees cost a dollar per transaction (paid by either the landlord or tenant), and any rent paid by credit card is subject to a 3.1% + $.30 processing fee (paid by the tenant).
Once all is said and done, landlords can easily export receipts of rent payments to RentRedi’s accounting software, spreadsheets, or external software like QuickBooks.
What we like about RentRedi
- Free to set up
- Utilizes REI Hub accounting software to sync rent payments
- Intuitive dashboard organizes tenants
- Users can link unlimited payment accounts
- Landlords receive money as quickly as two days
- Landlords can block certain payment types
Factors to consider
- ACH transactions aren’t free like TurboTenant
- The premium version is slightly more expensive than TurboTenant’s
- Accounting software is a paid add-on
3. Zelle
In terms of third-party digital payment applications — think PayPal, Venmo, and Cash App — Zelle stands above the rest. Its handy features make it a serviceable rent collection solution for property managers with small portfolios, though it doesn’t offer many of the landlord-friendly features that make our first two options shine.
Because Zelle isn’t explicitly engineered for property managers, it doesn’t feature automated rent reminders, late fees, or a secure dashboard to organize all the rent-related data.
While we love money transferred from tenant to landlord that arrives instantly (and for free), Zelle is only supported by certain banks and has weekly transaction limits for many users.
What we like about Zelle
- Free to use
- Money transfers are instant
- Payments go straight from bank to bank
- Setting up recurring payments is possible
Downsides to Consider
- Zelle isn’t supported by all banks
- Has daily and weekly transaction limits
- There’s no way to automate monthly rent payments if you don’t have Zelle
- Only one bank account is allowed per email address or phone number
4. PayPal
PayPal, which revolutionized online payments way back in the late 90s, offers a similar service to Zelle but with a few significant differences.
For starters, PayPal doesn’t offer direct bank-to-bank transfers like Zelle. Instead, payments are held within the PayPal system until users decide where to route the money. Landlords who want to transfer received funds instantly to their accounts must also pay a fee.
However, PayPal doesn’t have restrictive send-and-receive limits like Zelle. Users can send up to $60,000 in one transaction (which, let’s face it, will probably cover rent).
What we like about PayPal
- PayPal is a stalwart in the digital payment universe
- Payments are held within PayPal, allowing users to reroute them
- Much larger send-and-receive limits than Zelle
- Users can attach multiple banks to their PayPal account
Downsides to Consider
- Instant transfers to bank accounts cost extra
- Both users need a PayPal account to send and receive money
- No integration with accounting software
- Withdrawals often take a while to process
5. Venmo
Venmo is similar to PayPal and Zelle but with a few limiting factors. Most notably, users can only send and receive money through the Venmo app on their smartphones, as Venmo phased out desktop access in 2018. Limiting payments to mobile devices is an unusual move that users must accept if they want to use the service.
However, withdrawals from Venmo tend to process a little faster than with PayPal, and Venmo’s mobile app experience is also more fluid and user-friendly than PayPal’s.
Venmo’s social-media-style mobile app (which displays payments publicly by default) is a bit informal as it relates to the traditional landlord-tenant relationship. Not to mention, Venmo users can’t cancel payments after initiating them.
What we like about Venmo
- Free to use
- No fees for bank account/debit card transactions
- Withdrawals usually process fairly quickly
- High send and receive limits once verified
Downsides to Consider
- Venmo is social media for money; payments are public by default
- Users cannot cancel payments after they’ve sent them
- Venmo is only available on smartphones, not computers
- Users can’t set up recurring payments
6. Apple Pay
Apple Pay is a reliable and secure way for consumers to make payments while shopping, but how does it function when paying rent? In our opinion, there are better options.
While we appreciate that Apple Pay users can load multiple credit/debit cards and bank accounts to their profile, we’re a bit put off by a few limitations. First, both users must own Apple devices to initiate an Apple Pay payment. Beyond that, its lower send-and-receive limits won’t cut the mustard for landlords with more than a few properties.
Apple Pay could be a serviceable rent collection solution for landlords with small portfolios, although we think it’s best utilized for its current purpose: tapping your phone to pay for coffee or groceries.
What we like about Apple Pay
- Apple Pay is very secure
- Users can use multiple credit/debit cards and bank accounts as payment options
- Users can send money directly through iMessage
- Tenants can’t send landlords money via credit card (debit cards and bank accounts only)
Downsides to Consider
- Both users must have Apple devices that meet specific requirements
- Lower send-and-receive limits than PayPal and Venmo
- Instant transfers incur a 1.5% fee
- Apple Pay specializes in consumer-to-business (C2B) transactions, not necessarily rent payment
7. Direct Bank Transfers
Landlords and tenants who want to forego third-party online payment systems in favor of direct transfers between each other have a couple of options.
Tenants can send payments directly to landlords from their bank account, or the landlord can initiate a direct deposit to pull money from a tenant’s account. Either way, landlords and tenants must exchange bank account information in some form.
Direct bank transfers (and the sensitive information exchange that comes with them) might give landlords and tenants pause. That’s why third-party payment software exists, after all. Consumers value their privacy and don’t want their bank account information floating around unencrypted in the hands of a human.
What we like about direct bank transfers
- Usually quite reliable and fully insured
- Fewer instances of fraud than with third-party apps
- Accounting software like QuickBooks can link directly with banks
- Banks often allow for recurring payment schedules
Downsides to Consider
- Landlords/tenants must supply each other with bank account information
- Some bank accounts charge fees for direct transfers
- Typically, bank transfers aren’t as fast as Zelle or Venmo
- Send-and-receive limits vary depending on the institution
8. Checks and cash
There’s something honest and raw about a tenant handing their landlord a stack of neatly organized hundreds and securing the next month with eye contact, a soft smile, and a firm handshake.
But let’s get real for a minute: How often does this type of rent exchange actually happen?
Too much can go wrong during an in-person or through-the-mail cash and check payment: canceled meetups, lousy weather, mistake-prone mail carriers… the list goes on.
Sure, we understand handling payments the old-fashioned way could make sense for tenants and landlords with an informal relationship, but there are far better options for everyone else.
What we like about checks and cash
- Old-school cash and check transactions have stood the test of time
- Cash can be spent, deposited instantly
- Checks can be deposited straight on your phone
- A wad of cash feels great in your pocket; admit it
Downsides to Consider
- Human error can lead to issues
- Payments sent in the mail can get lost or stolen
- Checks can bounce, leaving landlords high and dry
- Cash and check transactions can’t automatically integrate with rental accounting software
Best Practices for Digital Rent Collection
Landlords who collect rent digitally should remember a few important pointers when setting up their procedures. Here they are:
Encourage Recurring Monthly Payments
Speak with your tenants and tell them how much easier life will be for everyone involved if they automate monthly withdrawals to guarantee on-time rent payments. Of course, don’t forget to use property management software to streamline these recurring monthly exchanges.
Set Up Automatic Rent Reminders & Late Fees
If your tenant doesn’t set up recurring monthly rent payments, enlist your property management software to send automated reminders a few days before rent is due. While you’re at it, use that same software to impose late fees (as outlined in your lease agreement) if a tenant doesn’t pay rent within a given timeframe.
Use Property Management Software to Integrate Rent Collection and Accounting
Landlords, especially those with several properties in their portfolio, know how stressful tax season can be. Using property management software that synchronizes rent payments (among other expenses) with accounting software will help landlords shed some of that anxiety come April 15th.
Let TurboTenant Management Streamline Your Rent Collection Process
Rent collection can be tiresome and frustrating for landlords, so use property management software to simplify the process.
TurboTenant can take rent collection responsibilities off your plate, all while screening tenants, processing rental applications, generating lease agreements, and managing maintenance requests in the same breath.
Sign up for a free TurboTenant account today to see how our seamless, user-friendly software can instantly streamline your property management operation.