Nothing else matters as a landlord if you can’t collect rent. So how you collect rent has a huge impact on your real estate investing business, from speed to security to ease of accounting.
But that doesn’t mean there’s one perfect rent collection method that works for every landlord or property manager. So we asked real-life landlords and managers how they prefer collecting rent — and why.
1. Landlord/Smaller Property Management Software
As the founder of an online property management software that lets landlords collect rent online for free, I had to appreciate this one: “Property management software makes automated rental collection possible. This tool can be set up to alert tenants of their rental due dates by sending email or text message reminders.
“Tenants can process online rental payments using a project management app that can help avoid landlord-tenant conflicts. Using this tool makes the rental collection more straightforward, subjective, and profit-generating.”
Robert Johnson, Marketing Director at Coast Appliances
For that matter, renters can also set up automated recurring payments, so they never miss a payment or get hit with a late fee again.
"Most landlords and property managers now collect rent online. This is both convenient and efficient, allowing you to keep track of payments and use software to flag when rent is due or late.
“Ensure to write down your preferred method of rent collection clearly in the lease agreement - giving more than one option - but stop and think carefully when a tenant refuses your preferred method. Tenants who only want to pay in cash may have bad credit, and this can cause unnecessary risks, so ensure you have a robust tenant screening process in place and that your chosen tenant has sufficient income to pay rent and can substantiate that with documentation."
Victoria Smith of Portico
2. Large Property Management Agency Software
Larger property management companies and corporate landlords need more robust software. “Gone are the days of cutting checks or even dealing in cash. Depending on your tenants, you might need to do some convincing but collecting rent through an app or payment administrator is going to be your best bet.
“It's fully automated, completely documented, 100% secure, never forgets, and removes any human error. You also get full views of the fees and better ways to collect data across a larger portfolio or projects/properties. A huge plus to using a rental collection app is seeing the real-time dashboard of your finances.
“At a minimum, if I can't get my tenants to wrap their heads around using a certified rental app, then I at least get them acquainted with something like Venmo or Cash App. It needs to be done digitally — that's a must for the properties I run.”
Doug Greene, Owner of Signature Properties
“We use an all-in-one property management software for all of our rentals. It streamlines the entire process of renting out a house, from collecting applications, to running background and credit checks, to collecting rent.”
“One of the main reasons we prefer to collect rent online using a property management software is because the tenants can set up automatic payments to be drawn from their account on the first of each month. This takes out the human error of our tenants forgetting to pay and us forgetting to remind them.”
Jordan Fulmer, Owner of Momentum Property Solutions
3. Direct Bank ACH Transfers
Some banks also allow renters to set up automatic recurring payments, or landlords to create recurring payment requests via ACH.
“Automated rent collection, in my opinion, makes it easier for landlords and tenants to send and receive payments. Online rent payments reduce the number of points of contact between you and your renters. They enter their bank information and pick a withdrawal date. Because of this, they never have to miss a rent payment again.”
Jason McMahon, Digital Strategist of Bambrick
4. PayPal
“As a property owner and manager, I prefer using PayPal for rent collection. The majority of tenants already use PayPal for both personal and business use, so it makes sense to use the platform they find most convenient and simple to use. I’ve also been using PayPal for quite a long time, making me comfortable and confident in its use.
“Through my PayPal business account, I’ve set up recurring monthly invoices for each of my clients, and this automated process saves me a lot of time and hassle. The platform will also inform me when invoices are paid, and by whom, which aids me significantly in tracking payments. The platform also makes it easy to send automated reminders to tenants who are yet to make payments on their invoices.”
Michael Green, Real estate expert and owner of Quick Cash Homebuyers
5. Venmo
“In my opinion, a digital platform such as Venmo is my favorite way to collect rent. This not only saves me a trip to the bank each month, but it protects my tenants from lost checks. Lastly, digital payments are easy to integrate into your bookkeeping software as well, which can save you time and money.”
Jeff Shipwash, Founder of Shipwash Properties LLC
6. Zelle
“I have used a variety of bank-provided electronic services such as Zelle to collect rent. Electronic payments through bank-provided services have worked great over the years. I have avoided having to pay any fees for the convenient service since they typically provide the service free to attract customers to make deposits in their bank.”
Bill Samuel, Founder of Blue Ladder Development
7. Cash In-Person
“In my experience, collecting rent in person is the best option. This way, you can avoid any potential miscommunications that could happen if you were to collect rent electronically. Additionally, it gives you an opportunity to check in with your tenants and see how they are doing. If anything comes up that needs to be addressed, you can do so in person.
“Of course, there are some drawbacks to collecting rent in person. It can be time-consuming, especially if you have a lot of tenants. Additionally, some tenants may not be comfortable paying rent in person. In these cases, it may be best to collect rent electronically.”
Jennifer Spinelli, Founder & CEO of Watson Buys
“Collecting cash is the best method from a business perspective. It's best because if you arrange for an in-person meeting it allows for a conversation to take place about the property, and for any concerns from either party to be brought up. It's also good because it allows for you as the landlord to schedule a walk-through if you wish, and it allows for you to get a sense of your tenant as they're speaking to you. Over the phone, it's not as personable.
“However, a major con of collecting cash is arranging a meet-up time. It is easy for your tenant to avoid you with excuses, or it often just doesn't work out between schedules. Another con of cash is that you have to wait for your tenant to have the cash, which again opens the door for reasons they can't get it when you need it.”
Robehrt Puharich, Landlord and Founder of Different Hobbies
Another downside of collecting rent in cash: security. Walking around with thousands of dollars in your pocket isn’t the safest or most secure way to handle financial transactions.
8. Cashiers Check
“My favorite way to collect rent is different from most. I like getting certified checks from my tenant.
“Among the pros: there is no chance of the check bouncing, I get to keep a physical copy of the payment, and no processing fee from a third-party company.
As for the cons, it’s less convenient than using landlord software or apps like Paypal or Venmo.”
Mark Severino, Real estate investor and founder of Best Texas House Buyers
9. Check
“As a landlord, there is no better way to collect rent than via check.
“I prefer checks mainly because they make record keeping and filing taxes a breeze. If every tenant pays with a check then the paper trail becomes incredibly easy to document when tax season comes around.
“On top of that, checks are usually free to use. This saves both me and my tenants hundreds or even thousands of dollars in the long run.
“Finally, checks can be collected and deposited on the same day. This means no waiting 3-5 business days for a bank transfer. On my end, my bank even lets me deposit checks digitally from my phone. This makes it just about as easy as it could be.”
Omer Reiner, licensed Realtor & president of Florida Cash Homebuyers
Final Thoughts
“Ultimately, the best way to collect rent will vary depending on the situation. Landlords and property managers should consider their options and choose the method that will work best for them and their tenants.”
Alexander Haxhitasi, Founder at AlexandersHub.com
In other words, do what you feel most comfortable with, because every rent collection method has its own pros and cons.
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