Realtor · San Antonio, TX · Member since 2017 · 64 posts · 35 votes
Ive had my town home rented out since March and this is my first experience being a landlord. I did screening through Zillow Rental Manager and got my rental agreement from BP. Ive picked up rent several times in cash or money orders. Electronic payments would definitely be easier for me so tenants requested to pay through Venmo this month then requested to go through Cash app instead. I think I need to revisit what the rental agreement says and stick to that because I feel we're going down a slippery slope. I initially went with a property management company but they didnt get a tenant in very quickly and I'd have no cash flow with property management so I decided to manage it myself for now. There's been some complaints with tenants being loud and having too many people at the pool but they seem to do better once I reminded them about rental agreement and HOA rules. Please let me know what advice you have and effective methods of collecting rent. Thank you!
You have several options, I'll do my best to explain the pro's and con's.
Free Apps: I typically advise fellow landlords to make it easiest on the tenants to pay rent. This could include Zelle, PayPal, Venmo, etc. It is fairly straightforward and only PayPal will cost you. The downside is when you start to get several rentals, then it becomes confusing about which tenants are paying which way. Plus you will need to provide certain personal information like your email or account name. For a single unit landlord, it's not bad.
Landlord Software: There are several software companies out there who provide rent collection; some free and others charge memberships. These would include Burbz, Cozy, Tenant Cloud, Turbo Tenant, etc. They all essentially do the same functions and charge for the same 'side features' like background screenings, rental estimates, legal documents. The positive is you have a centralized place for all your rentals and it is one additional layer between you and your tenants. There are more benefits as well besides just rent collection, helps you optimize your management systems. The downside is tenants have to pay online whether it's through ACH or credit/debit card; no money orders or cash.
If you let the tenants pay by cash make sure you are protecting yourself. Physically and financially. Physically should be obvious since you'll be face-to-face with the tenants, most PM/landlords advise against picking up in person. Regarding financially, you need proof they did or did not pay you in the events you ever go to court. It's important you use a receipt system to hold for your records.
Check out buildium. It's minimum is around $50 but it allows online and deposits quickly. It also works like a quickbooks and you can pay venders through it. Auto Late fees pay for my membership
You have several options, I'll do my best to explain the pro's and con's.
Free Apps: I typically advise fellow landlords to make it easiest on the tenants to pay rent. This could include Zelle, PayPal, Venmo, etc. It is fairly straightforward and only PayPal will cost you. The downside is when you start to get several rentals, then it becomes confusing about which tenants are paying which way. Plus you will need to provide certain personal information like your email or account name. For a single unit landlord, it's not bad.
Landlord Software: There are several software companies out there who provide rent collection; some free and others charge memberships. These would include Burbz, Cozy, Tenant Cloud, Turbo Tenant, etc. They all essentially do the same functions and charge for the same 'side features' like background screenings, rental estimates, legal documents. The positive is you have a centralized place for all your rentals and it is one additional layer between you and your tenants. There are more benefits as well besides just rent collection, helps you optimize your management systems. The downside is tenants have to pay online whether it's through ACH or credit/debit card; no money orders or cash.
If you let the tenants pay by cash make sure you are protecting yourself. Physically and financially. Physically should be obvious since you'll be face-to-face with the tenants, most PM/landlords advise against picking up in person. Regarding financially, you need proof they did or did not pay you in the events you ever go to court. It's important you use a receipt system to hold for your records.
Try Tellus. I'm managing all my rental property on their app. I used to use Venmo but it is not designed for rental payment since it has transaction limits and it was hard to track all the rental payment through Venmo. Now, my tenants pay me through Tellus and it provides rent roll and other financial reports automatically so that I do not have to use an excel to record all of them.
Blue Springs, MO · Member since 2015 · 481 posts · 313 votes
7y
Disclaimer: I only have one property so far. I am not affiliated with any sites mentioned.
I use Cozy.co for background checks and collecting rent. The tenants
have Cozy pull the money out of their checking account, and then Cozy
puts it in my bank account a few days later. This doesn't cost me
anything. Cozy also offers a credit report and background check service
that costs money. I wrote a detailed post
about it
here:
They did pay cash for the security deposit and first month's rent.
They asked about this ahead of time and I agreed; I printed up a
receipt and then dated and signed it once I had the cash in hand.
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
7y
I use Cozy but Zillow now offers similar electronic rent collection options. You are already setup with Zillow, which is why I mentioned. Any business oriented electronic payment will be through ACH. That is how you pay your mortgage, utilities, etc. That is how Cozy and Zillow work.
When you get into Zelle and Cash app, those are meant for person to person transactions. There is transaction limits. They don't track transaction history or allow for recurring payments to be setup. It works, but is not really designed for rent payments. I would stick to the purpose built business options, since you are running a business.
Property Manager · PA · Member since 2018 · 67 posts · 42 votes
7y
I've heard to stay away from accepting rent payments in cash since it leaves no paperwork behind if something was to ever happen. As some have mentioned, I think I'm going to start using Cozy.com.
Realtor · San Antonio, TX · Member since 2017 · 64 posts · 35 votes
7y
I was wondering what the downfalls of collecting rent in cash were, aside from the inconvenience of having to pick it up and tracking it. I started giving tenants receipts but I'd rather do electronic payments. Thanks for your input everyone.
Real Estate Investor · OAKLAND, CA · Member since 2017 · 24 posts · 30 votes
7y
@Charlotte Chew
Congrats on your first rental and good job on taking initiative on managing the rental unit yourself.
I can share a few tips on what’s work for me. During your lease agreement signing with tenants, be sure to have a dedicated section in the lease agreement that spell out clearly how the rent to be collected and emphasis on Late Fee, rent is due on the 1st of the month, 10% late fee apply on the 2nd ( no grace period), 5th day send out pay or quit notice, 9th day file eviction, you get the idea and you can revise it accordingly..
It best to asked the tenant what is their preferred methods of paying rent, and giving them 3 options. Don’t accept cash, it’s for your safety and also trained them to not to expect you show up to pick up the rent.
1. Pay online using Cozy.com seem to be the best effective way collect rent. Let them know that the convenient and how easy to do payment through online. You can help them with initial registration and encourage to use online system to pay rent.
2. Provided them an ABA# to your bank so they can make a deposit directly.
3. Option to mail the cashier check ( not personal check), remind them to obtain the certify stamp receipt as proof of payment.
On new tenants, I usually send out the Courtesy of Late Rent Notice on the 15th of the month for a few months, just a friendly reminder and a quick recap of all the option for rent payment method that is available at their convenient.
Realtor · San Antonio, TX · Member since 2017 · 64 posts · 35 votes
7y
Thanks for the encouragement and feedback-very useful. The bank ABA#, is that just the routing number or another # that gets payment directly to my account? I need to talk to tenants about setting up electronic payments through a certain platform and stick with it. If they can do Venmo they can just as easily do Cozy or Zillow Rental Manager. Thanks again for the info.
Rental Property Investor · Ankeny, IA · Member since 2017 · 2k+ posts · 3k+ votes
7y
@Kenny Dahill
I use PayPal as an option, as most people have that already. It doesn’t cost either party anything if paying from bank account to bank account. The first transaction just takes 5-7 days to verify. After that I’ve been getting all my rents within 24 hours.
Realtor · Missoula, MT · Member since 2015 · 2 posts · 2 votes
7y
I use Cozy.com. It takes FOREVER for deposits to go through (5-8 days), but it helps me stay organized (I have 7 tenants through Cozy). There is an upgrade you can pay for to make the deposits faster if that's an issue for you. Don't forget, you can call whoever has your loan and ask to push out your payment due date typically 14 days past the 1st of the month. That's how I handle the long deposit times.
Investor · Pawleys Island, SC · Member since 2015 · 324 posts · 385 votes
7y
After 3 different tenants asked me about accepting Cashapp, I gave it a try. I have 10 tenants. 3 still mail me a check (older tenants). The rest pay me Cashapp or Zelle.
Rental Property Investor · Canandaigua, NY · Member since 2016 · 13 posts · 12 votes
7y
Hey Charlotte! My husband and I are also in the process of looking for payment collection methods right now so thanks for posting this question! It definitely becomes a pain when you allow tenants to pay via check/cash/etc. We have a 3-unit out of state that we don't have any auto or electronic payments set up with and have never ending issues with tenants short paying, not paying on time, etc. Looking into options right now where they can set up auto payment methods to eliminate some of the hassle. Wish you the best as you look into it - definitely a good idea!
Real Estate Agent · Columbus, OH · Member since 2018 · 28 posts · 18 votes
7y
Hi Charlotte, I would strongly advise never picking up rent in person for personal safety, saving time, and purely as principle. Now, sometimes there can be odd situations where this may be necessary and I'd be a liar if I said I haven't done it at least once. But it sounds like what you described is trying to cater to your tenants and yes I believe this will lead you down a slipper slope. Give an inch and they'll take a foot. I just started using tenantcloud, which isn't completely free for rent collection but is low cost and I believe it be handy for overall management of properties. For tenants that don't have bank accounts (yes this is more common than you'd think) there are services that allow tenants to go through the same steps as those taken for a money order, except instead of them receiving a money order slip to send to you the money would go directly to your bank account or an online account where you can send it to your bank account. This as well as online payments are a fantastic alternative to cash, money orders, and checks, especially if it keeps you from picking up rent in person!
@Charlotte Chew I also use Tellus and transfer times have been fast. To answer your question about paying in cash, it's generally problematic because it's easy to dispute how much was paid. Plus you have to pick it up in person, which could be risky depending on your area. Your time is valuable! Don't waste it picking up rent in person.
Realtor · San Antonio, TX · Member since 2017 · 64 posts · 35 votes
7y
@Adrian Birchler
Do you know names of services to where the money order is sent electronically? I'd like to know more about how to set that up.
Also, if tenants don't pay in time, do you (anyone else feel free to chime in too) know if there's a way to deliver Notice to Quit documents electronically or would I do it certified mail? Suggestions? (Just in case. Trying to get systems in plave before I need them).