The top 6 ways to collect rent from a tenant include accepting rent via check, online, ACH, and by using a property manager. After payment, a tenant is commonly given a receipt in either physical or electronic format. A tenant is required to pay rent in accordance with the instructions written in the lease agreement, therefore, a landlord may mandate any of the following options as a requirement for tenancy.
In 2015, over $60 billion in rent payments were made each month in the United States.
- AVG Monthly Rent: $1,4721 (2019)
- Rent Paid by Check: 42%2 (2014)
- Rent Paid by Cash: 22%2 (2014)
- Rent Paid Electronically: 17%2 (2014)
- Total Number Renters: 48.5 million3 households (2015)
- Total Percent of Renters: 36.6%4 of households (2015)
- Vacancy Rate: 6.4%5 (4Q 2019)
6 Ways to Collect Rent
In a 2015 report6, approximately 72% of mobile payments are made by ages 50 and under versus 28% by those over 50 years old. In addition, if a tenant is instructed to pay online, there is an 85% chance7 they will make a payment on time for the next month. Therefore, it’s recommended to cater to the growing trend of notifying and allowing tenants to make rent payments online.
Best Property Management Websites (5)
|Websites||ACH Fee||Credit Card Fee||Monthly Fee|
If the landlord does not want to use specific landlord software, they may use free or low-cost alternatives. These are websites and apps that most people use on a frequent basis. Payment is made by a tenant entering the landlord’s e-mail or phone number, and most payments are processed immediately.
|Website/App||ACH Fee||Credit Card Fee||Monthly Fee|
|PayPal||$0||2.9% + $0.30||No|
|Cash App||$0||2.75% for businesses, 3% for individuals||No|
It’s important to note that while sending money via mobile apps is quick and convenient, some are not technically supposed to be used for accepting business transaction payments. Venmo specifically states that to use the application for business services, you must apply to receive a special authorization on your account. Moreover, some payments made with apps — including rent payments — are not protected.
Obtaining the tenant’s bank details in a recurring ACH form allows the landlord to automatically debit their account on a monthly basis. An e-mail or other notification is required to be made before each payment (unless waived). Payment typically takes 3-7 days depending on the bank, and no fee is charged to the landlord.
In addition, the landlord can also give their bank details if the tenant would like to set up payment within their account.
Although online and app payments are increasing in popularity, traditional check payments are holding firm as the main method. In 2014, it was found that 42%2 of tenants in the United States paid by check. Generally speaking, the check is either sent to a specific address or hand-delivered to the landlord. A record is generated automatically after the check has been processed by the bank.
In a 2018 study, 56%8 of landlords have a property management agreement that covers the collection of rent, marketing, evictions, and maintenance of their properties. In the same study, landlords stated their largest stressors were dealing with maintenance and keeping the property rented. A property manager will handle all these items for a fee that generally lands between 4% to 12% of the monthly rent, with 10% being the most common. This percentage does not include expenses for the costs attributed to actual maintenance costs, filling vacancies, or lease renewals. For example, if the water heater breaks, the landlord will be responsible for the full payment of the water heater and labor costs to replace.