How do you accept rent?

Question

If you're a landlord with only a couple of properties, how do you accept electronic payments? I would love to hear what you're doing.

Zelle has the advantage that it's fast and has no transfer fees, and although there are no limits to how much you can receive as a landlord, there are sender limits. Banks like Wells Fargo and Bank of America only allow you to send $3,500 per day so you could end up splitting the rent into payments over 2 days. Zelle is also tied to your phone number so doesn't keep the accounts separate. Wire transfer is an option but it typically takes a few days and nothing happens during weekends and bank holidays. I have used wire transfers in the past but if someone pays 2-3 days late it often takes more than a week before the funds are received and cleared. Both require you to keep a manual ledger which might be okay, but only for small landlords.

There are platforms like RentRedi and the like. What do you use?

I'd like to try to avoid any fees for my tenants and make it as frictionless as possible.

Carlos Carbajal · Answer

Here is a tip if you have tenants that insist on paper checks:

Don’t accept the check by mail. Only accept a photo of the check via text or email.  That’s all you need to deposit the check.

Once you have a clear photo of the front of the check just bring it up on your computer screen and use your mobile banking app to deposit the check. I have done this for years and it works great across any bank.

For the back of the check you can just reuse any check back with your signature endorsement. Your mobile banking app will just accept this as a valid back of the check your tenant gave you.

Alternatively you can print out the photo of the check and deposit that using your mobile banking app,

I’ve been doing this for like 7 years and it eliminates “I mailed the check” discussions.

And yes it will work with most money orders esp those from the US Post Office.

Jim Rivell · Answer

I have 2 properties i'm using RentRedi for. So far so good. The only friction pain point is having the tenants download the app and set-up an account, otherwise it's an awesome platform worth exploring for rent collection among many other features.

PS: I think there's a sign-up code with BP that might be able to net you some added benefits.

Vicki X. · Answer

@Jason Heirtzler I hope this article will be helpful for you. Zelle/venmo certainly has their challenges in rent payments. Rent collection options for you to consider: Azibo, Avail, Innago, Apartments.com, Hemlane, Turbotenant, Rentredi, Tenant Cloud, eRentpayment, Zillow

Hope it helps!

Bjorn Ahlblad · Answer

We have a number of tenants who do ACH transfers(some banks like CHASE charge a fee so be aware and avoid those), and the rest deposit checks into a lock box at our apartment building. We visit the building once per month anyway to empty coins, collect the checks, take a general look around, dumpster, garage, etc inspect a unit or two, and chat up a few tenants. All the best!

Shawn Quinn · Answer

I use Zelle and Venmo.  I believe Cash App would be good too but I just have the two.  I used to use PayPal but ran into too many problems if the tenants sent the money to me as a merchant rather than as a friend.

In terms of account set up for Zelle, I believe you can set up using an email as well.  Perhaps you could have your cell going to one account and the email going to another?  Then you can just give the tenants the email to use.  I am not sure of that you might want to check with your bank.  I'm just brainstorming here.

Brett Axler · Answer

Zelle and Venmo have always worked well for a small portfolio, starting to look at some tools like Stessa to collect rent as we scale.

Rudy Avila · Answer

Currently I take direct deposits to my bank account, Zelle, Cash App.

Alecia Loveless · Answer

@Jason Heirtzler I primarily use Venmo but will be curious to see about how they go about the new regulations regarding the reporting of taxes for payments come next tax season. As I already pay all my taxes I see this as just government overreach and an added nuisance.

I also will consider Zelle and have one tenant that pays through Facebook which is an automatic payment and is the fastest and easiest one of all.

As was previously mentioned none of these methods accounts for the possibility of a partial payment which would cause a problem but so far so good.

Chris B. · Answer

I've gone through a variety of payment methods over the years and have finally settled on an online rental management platform which the tenant pays through.

1. Checks - tenants always send them late and blame the post office.  I can see on the stamp cancellation mark that it was mailed days late.  This has been problematic.  I have never received a bad check, but it's a concern.  I no longer accept checks

2. Cash - This requires me driving to the property to collect and generally is inconvenient.  I no longer collect cash.

3. Money orders.  Same issues with checks getting them late and its a problem.  I no longer accept MOs cashier's checks, etc...

4. Direct deposits to my account.  With this option, the tenant has my routing number and account number.  There is the potential for abuse with this information.  In addition, there is no mechanism to prevent partial payments.

5. Zelle.  It can work well under certain situations, but lacks in some ways also.  I don’t have any rents over $3500 so I’ve not ever hit that cap which was mentioned above.

• There is no way to control the payment amount you are receiving. You cannot enforce a policy where only payments in full are accepted.  If a tenant wants to send you $500 instead of the $2500 due, they can and if they do that, it is considered that you have accepted a partial payment for the month.  In AZ, if you accept a partial payment, then you can not proceed to start the eviction process on the tenant due to nonpayment until the next month.  Of course, the tenant may also pay only $500 or nothing the next month and your problem snowballs.  There is the trust with Zelle that the tenant will pay in full but there is no mechanism to require it.  I've had tenants play games on their last month or two before move out and it has cost me financially.
• I want to be able to determine if I enable or disable Zelle for tenants on a tenant by tenant basis.  I want this because maybe I want to disable Zelle for a problem tenant but leave it active for the other good tenants.  Therefore I need a unique email address / telephone number set up in Zelle for each tenant.  Zelle has a limit of 4 or so linked email addresses / telephone numbers.  If I had more than 4 tenants, I would hit the limit.  It's also easy for tenants to guess my number or email address and they may discover it works even though I disabled the one address I had assigned to that tenant.

6. Due to these drawbacks, I have moved to an online management service to collect rent electronically.  I have the platform configured to only collect rent in full including all late fees or other fees.  If they don’t have funds to pay in full, the payment won’t be accepted.  The service uses ACH payments and I am charged $2 per payment.  Late fees are automatically applied so if the tenant pays 3 days late, I don’t have to listen to their hard luck story and deal with that. Late fees are added and I'm not involved.  The system forces what I need and it's worth the small fee to me.

If I were better and enforced the late rules, then accepting pretty much any of the non-cash options listed above would be fine.  I just find this to best fit my needs.  With checks, money orders, cashier checks, etc... these must be received by the 1st.  If not, regardless of excuse, there is a late fee.  If a tenant thinks I sit on a check to get the late fee... prove it.  Send with certified mail and show me that I received it by the 1st.  With Zelle, its hard to prevent the games listed above, but a problem tenant would just not be renewed and possibly be evicted.

I use Innago, but looking at Azibo above, it looks to be very similar.

How do you accept rent?

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