Best (& Worst) Ways to Collect Rent as a Landlord

With various payment methods and technologies available, today’s property managers and landlords can streamline their rent collection process for maximum return on their investment. In this article, we explore several of the best ways to collect rent effectively and efficiently and maintain positive landlord-tenant relationships.

Rent Payment Methods: Best to Worst

The best way to collect rent should be fast, convenient, and secure. So, what’s the most suitable way a property manager or landlord can ask renters to make payments? Below, we share the most popular rent payment methods, ranked from best to worst.

Online Payment Portal

Many believe that property management or rent collection apps/platforms are the best way to pay rent. In fact, online payment portals have become a game-changer in the rental space. The technology enables renters to make payments securely and conveniently from anywhere. Landlords can select from several online payment platforms that provide features like automated reminders and rent tracking.

Some popular and affordable options include:

• Landlord Studio
• PayYourRent
• DoorLoop
• Azibo
• Avail
• TenantCloud
• Yardibreeze

Online Payment Portal Pros

• With one tap, rent payments go straight to the landlord’s account
• Does not require the landlord’s private information
• Easy to set-up automatic transfers to prevent missed payments
• Accepts various payment methods, like bank transfer, debit card or credit card

Online Payment Portal Cons

• Requires initial set-up
• May cost money to use
• Different apps have different levels of reliability and security

Mobile Payment Apps

 Apps like Venmo, Cash App, Paypal, and Zelle have skyrocketed in popularity in recent years for their user-friendly features and lightning-fast transaction processing. Landlords can leverage these apps as an alternative to traditional banking and payment options, giving tenants an efficient, more accessible way to pay rent.

Mobile Payment App Pros

• Convenient and quick
• Accessible to anyone –account registration is only requirement to get started
• Renters can use money from multiple banks and sources  

Mobile Payment App Cons

• Transaction limits
• Payment reminder option is unavailable
• Potential technical issues or errors
• Some apps charge a transaction fee

Direct Bank Transfer/Deposit

Direct bank transfers or ACH payments are an efficient way to collect rent. Renters can set up monthly transfers, ensuring that the rent is automatically deducted from their bank account on a specific day of each month. This approach lowers the chance of delayed payments and reduces administrative headaches for both the landlord and the tenant.

Direct Bank Transfer Pros

• Automatic monthly withdrawals simply the collection process
• Convenient for both landlord and renters 

Direct Bank Transfer Cons

• Requires some additional setup
• May require communicating with bank initially about direct deposit and auto payment requirements

Physical Drop-Off Location

Property managers who prefer to receive rent payments physically can establish a drop-off location for renters. In this case, options like a personal check, cashier’s check, or money order are ideal. Tenants should be advised to securely seal the payment in an envelope before placing it in any drop-off box.

Physical Drop-Off Location Pros

• Renters can easily drop off rent on time
• No need to wait for the mailman

Physical Drop-Off Location Cons

• Landlords must be diligent in checking the rent box at the same date and time each month to track late payments
• Security and theft can be issues

Traditional Checks

Even with digital tools and capabilities at our fingertips, some renters may still opt for traditional payment methods. While accepting rent payments via paper check can appeal to this shrinking demographic, it’s critical to develop clear guidelines about where and how renters should drop off or mail their checks. Property managers and landlords should set up a dedicated post office box to get rent checks securely. 

Traditional Check Pros

• Easy to cash and use for business expenses
• Portable and easy to send in the physical mail
• Lost or stolen checks can be easier to deal with since they often have the landlord’s name written on them

Traditional Check Cons

• Checks can bounce and charge a bank fee to the renter
• Tenants can cancel personal checks without advanced notice

In-Person Payments – Cash or Check

For landlords who prefer face-to-face exchanges, in-person payment is an option to consider. This strategy allows landlords to collect rent—either cash or check—straight from renters at their property or another pre-determined spot.

In-Person Payment Pros

• No risk of transaction errors or cancellation from the renter
• Liquidity makes it easy to spend on other expenses
• Cash can’t bounce like checks
• No transaction fees  

In-Person Payment Cons

• Higher risk of theft or loss
• Untrackable and more difficult to retrieve if lost
• No evidence or paper trail, so it’s more challenging to prove if rent has been paid and how much

How to Determine the Best Rent Collection Option for You

When figuring out the best way to collect rent, there are a few essential factors to keep in mind.

For starters, decide if you’re comfortable using technology and online platforms. If so, options like property management software or direct transfer are smart choices.

Also, ask the renter(s) what they prefer. If they prefer to pay rent online, offer that option and be sure that the same payment method is available to all renters. Be mindful that some payment methods may charge small fees or require additional services in order to be used.

Lastly. security and document tracking in mind. Choose payment methods that provide secure transactions and easy tracking.

Do’s and Don’ts of Collecting Rent

Do: Offer incentives for early payment. To encourage timely payments, consider implementing an incentive program. For instance, offering a small discount for tenants who pay their rent before the due date can provide extra motivation to prioritize timely payments. This strategy also establishes a healthy, positive relationship between landlords and renters while encouraging financial reliability.

Do: Set multiple reminders when using an online payment portal or property management software. Try setting a reminder at least one week ahead of time and then one to two days before rent is due.  

Don’t: Give renters your personal information. Never give out your home address or financial information. If you do, you open yourself up to potential fraud or criminal activity.

Don’t: Settle for partial payment. To prevent partial payments, landlords can ask renters to sign an “Agreement for Delayed or Partial Rent Payments,” which describes the late fees they’re responsible for covering and the effects of not paying the total amount on time.

The Bottom Line

Choosing the right method for rent collection ultimately depends on numerous aspects, such as landlord and tenant preferences and technology.

By embracing digital solutions and giving renters multiple payment options, landlords can streamline the collection process, lower administrative overhead, and create a positive, rewarding rental experience for everyone.