In a 2014 SmartMove user survey, landlords ranked payment problems as their top concern, even above criminal and eviction history. If you’ve ever had to chase down rent payments, this probably doesn’t come as a surprise to you. According to a recent survey by CitiGroup, more than half of Americans have paid a bill late. The number one reason? They simply forgot. According to a survey conducted by SmartMove, this is one of the reasons why six out of 10 landlords prefer to collect rent online.
5 Reasons Landlords and Tenants Prefer Paying Rent Online
Here are five reasons why collecting rent online is easier for landlords and more convenient for tenants:
1. Schedule Recurring Payments
Not only do a majority of landlords prefer online rent collection, tenants are more willing to establish recurring payments as well. Checks, envelopes, and stamps can seem out of date especially to younger renters, but even older renters are shifting towards online bill payments. Money magazine reports that millennials pay 61% of their bills online, and older generations pay 42% of their bills online.
Paying by check is extra work for both you and the tenant. Paying by check also limits the ability to easily schedule recurring payments. This process can involve:
- Waiting for a check in the mail or driving to pick it up from the property.
- Going to the bank to make a deposit.
- Manually recording the payment in your accounting ledger.
2. Decrease Late Rent Payments with Payment Options and Reminders
Receiving notifications and reminders when rent is due keeps your tenant aware and accountable for paying rent on-time. According to Bigger Pockets, online rent payment tools enable tenants to deposit rent into your bank account without giving tenants access to your banking information. In most cases, payments are transferred to your bank account via the ACH Network. Payment platforms include websites, mobile apps, text message, and pay-by-phone services.
Depending on the platform, tenants can pay by:
- Debit card
- Credit card (may involve additional fees)
- SMS payment
- Cash at local grocery stores
3. See Rent Payment Statuses in Real-Time
Collecting your rent through an online service should give you digital documentation, so you can skip the paperwork. Many services are also easily imported to accounting software, which frees you up to spend your time on more important aspects of property management, such as tenant screening.
Utilizing platforms to accept rent payments online can provide real-time notifications when the money transfer is successfully deposited in your account. This allows for greater visibility of the rent transaction status across multiple properties, and increases the accountability of your tenants.
4. Streamline Property Management Operations
While it may take 2-3 days to receive an ACH payment, as previously mentioned, you will generally receive status updates in real time from your online rent collection service. This is more reliable than taking the tenant’s word for when they say, “Well, I mailed the rent check on time.” It’s also faster than the average wait times for a check to be delivered, cashed and cleared by the bank. On average, it can take up to three days for first-class mail to be delivered. The Balance points out that you may have to wait another few days for personal checks to clear.
5. Rent Payment Security
Online rent payment is one of the most secure options for both you and the tenant. For the tenant, it eliminates the concern over lost or stolen checks. In a recent Identity Fraud Consumer Report, researchers encourage consumers to “use online bill pay whenever possible.” Since a tenant’s banking information is printed on the front of the check, it could make them an easier target for fraud should the check get lost in the mail.
Best Online Rent Payment Systems
Many companies offer online rent payment options, including property management services such as:
- Rentalutions allows you to set up monthly rent and due dates for each tenant. You can even schedule late fees and security deposit payments.
- TurboTenant is an all-in-one landlord software that allows tenants to easily pay rent online. Payments are deposited into the landlord’s bank account within 2 business days.
- eRentPayment allows for recurring and one-time rent payments. It also serves as a property management tool for landlords.
- Buildium boasts their rent, bills and fee collection services can cut processing time up to 70 percent.
- ClearNow is a rent collection service that directly deposits rent into your bank account.
- RadPad is an option for renters who want to pay with a debit card and landlords who want a check. Renters simply pay their rent with a debit or credit card and RadPad mails a check to their landlord.
Most platforms do not charge landlords, instead they pass the cost on to the tenants or you can choose to split it between you. Some platforms even furnish a tenant’s rent payment history to one or more of the three credit bureaus, which helps the tenant establish credit history.
According to the National Multifamily Housing Council, at least one large property management company found that 85% of people who pay their rent online do so the next month as well. For independent landlords who rely on rental income to pay a mortgage, it’s even more crucial to receive rent on time. The easier the process, the more likely it is that a tenant will pay their rent regularly.
Help avoid payment problems by conducting a thorough SmartMove rental screening each and every time you have tenant turnover. Getting the right tenants into your rental means less worry over late rent, no matter which forms of payment you accept. TransUnion SmartMove is the landlord’s solution for great reports, great convenience, and great tenants. Landlords receive a report formatted exclusively for tenant credit screening, a criminal report drawing from hundreds of millions of national criminal records, a national eviction report, a ResidentScore, and a custom leasing recommendation.