How should I take rent payments?

[Matthew Porcaro]

Hey Guys - what is everyone preferred way of taking rent payment? Only own two units currently, so I don't need a robust system just yet. How should I have my tenants pay me? Up until this point I've just been taking check or cash. 

[Paul Ronto]

@Matthew Porcaro there are many ways to take payment, cash, check, money order, ACH, credit card, wire transfer so you just need to understand the pros and cons or each so you can make the best choice for you. 

Cash: Cash may seem great, it's real and doesn't bounce, however, it usually means you have to meet your renter in person to collect which can be a pain and it's hard to keep track of. You need a system that you manually enter amounts and dates and it's easily lost without any way to recover those funds. I would warn against cash. 

Personal Check: This is the number one way tenants pay rent. It's easy for renters and landlords. They can be mailed and deposited from afar. The downside is bounced checks which cost you, the landlord, extra money and time to deal with. They can be canceled by the tenant at any point as well.

Money Orders/Cashiers Check: These are considered safer than personal checks because you need to use verified funds to purchase them, however, although it's harder they can still be canceled before you deposit them and they are a burden for the tenant to get and for you to electronically deposit through most bank apps, which means you have to take a trip to the bank. 

ACH: This is a direct deposit from tenant to a landlords banking account, is usually free to both parties but can take 4-7 days to process. It's easy but not quick. 

Credit Card: Easy for everyone usually involved but there tend to be steep charges to the person collecting, typically 2-4% of the total amount, so on a 2K rent, you could be paying out 80$ just to accept payment. Also, Credit cards are easy to reverse the charges on up to 120-180 down the road. So although you get payment today, if your tenant decides to charge back 6 months down the road because they are unhappy with you about something they can, and most large CC companies like Visa protect the end user over the person collecting the payment.

Wire Transfer: These are bank to bank transfers and are usually the safest way to transfer money, they are fast, almost immediately in most cases and cannot be easily reversed. However, they tend to cost 20-30$ per transfer.

Anyway, there's the quick rundown on a few of the most common payment methods. Our suggestion is to find an online payment system that helps you navigate these and track them in one place. I would urge you not to share your personal bank information with a tenant like an account and routing number as mentioned above, some online payment systems out there let you sign up and submit all your bank info, and then invite tenants to pay. They are connected to your account but never actually see or have access to your sensitive banking info.

Hope this helps! Feel free to reach out directly if you have any other questions about collecting rent payments.