Helping you achieve profits affordably

young couple paying online with plastic card - The Top 4 Ways to Collect Rent

The Top 4 Ways to Collect Rent

What are the top 4 ways to collect rent? Landlords have plenty of rent collection options these days…here are some available options.

Payment Apps

Apps not only make paying rent simple but are attractive to millennials. Here are a couple:

Wise

Wise can be used for Canada to US payments or International and US to Canada payments,

Canada to the USA or International and the USA to Canada.

If tenants send money abroad, to someone in the US and from Canada, or from the USA to Canada, Wise is a simple-to-use option. They have a simple interface that shows the exchange rate and the cost of transfer fees.

Transfers can be funded through your bank account, debit cards or credit cards, and Wise is FINTRAC compliant.

Wealthsimple Cash App

For transfers from Canada to Canada, the newly released Wealthsimple Cash App is the Canadian equivalent of Venmo.

After adding funds, simply download the app and send money to other Wealthsimple Cash Application users with a unique Dollar $ign (username on the app).

There are no fees or instant transfers and it’s only available in Canada.

 Paypal

PayPal is a financial tool that lets users make online transactions without entering their financial details into every website transaction. Paypal is linked to credit cards and/or bank accounts and then added to (or withdrawn from) a secure money pool. It’s a tried and true, well-known/recognized payment method.

Property Management Software

Most property management software platforms have either online payment options where tenants can pay rent with interact or credit cards or have the option for automatic payments. Automatic payments can be set up through the software program itself, eliminating any need for the tenant to remember to pay.

Many programs are also designed to collect rent and help manger your rental properties and include; exporting reports, tracking maintenance/maintenance coordination, e-signing leases, document storage, listing & marketing rentals, and screening tenants.

Tenantcube is one such platform and it offers secure, automatic online rental payment setup directly through their software, eliminating any additional forms or trips to a bank.

Old Fashioned ways

Cheques/Money Orders

Even though most millennials don’t understand what a cheque or money order is or their purpose, both methods still exist and are favored by some landlords and tenants. Years ago, it was commonplace to provide a landlord or property management company with a year of postdated cheques. Usually, during the 10th or 11th month, the landlord/property manager would send a note letting tenants know they needed to provide another year’s worth of cheques.

Cash

Although we’re becoming a cashless society, cash is still an acceptable method of paying rent, although it involves in-person collection and an element of danger because of theft.

Rent Box

Large multi-family complexes with on-site offices sometimes have rent drop-off boxes, where tenants can deposit their cheque in a secure rent box or pay the property manager in the office.

Pre-Authorized Debit

Pre-authorized debits allow the landlord to withdraw money from the tenant’s bank account when a payment is due. Tenants need to fill out a pre-authorized debit agreement in which they permit the bank to make regular rent withdrawals payable to you. Depending on the bank, it can be done in writing, electronically, or over the telephone. Debits should be sent at least three days before the first withdrawal from the tenant’s account and include the agreement’s details. They must include your banking information within the pre-authorized debit agreement. Some financial institutions ask you to provide a blank cheque to confirm account details. Pre-authorized debit agreements should include the amount of the pre-authorized debit and the frequency of the debit.

The tenant may need to provide you with a password or a secret code to approve the pre-authorized debit.

 To protect yourself against fraud, write “VOID” in ink across the front of the cheque and don’t sign the VOID cheque. Keep a copy of the voided cheque in your records.

Do note that if the 1st of the month falls on a weekend or holiday, your rent payment may not be transferred to you until the next business banking day.

Factors to Consider with Your Rent Collection Method

Technology Comfort Level & Level of Tenant Interaction

If you love technology and all the conveniences it affords, and your tenants are tech savvy, apps and property management software are a fit. Automized/digital payments also allow landlords to accept fund deposits while taking a hands-off approach to interacting with tenants.

Distance from Rental & Number of Tenants

If you live in another country, city, or province, or have multiple rental units, digital payment methods offer a streamlined and efficient approach. If you live in the same city and want monthly interaction with your tenants, or your tenants are elderly and not comfortable with technology, knocking on doors every month, or having an office with a rent box may be your methods of choice.

Although security deposits and rent can be paid with multiple methods, it’s best to keep rent payments separate from security deposits in a trust account.  You can find out more about security deposits here.

While monthly bill payment is a given for landlords, collecting monthly rent isn’t just one method for everyone. Establishing a process for collecting rent makes it easier to keep track of tenants who pay rent on time and those who pay late. Each landlord needs to consider which option is best for their specific situation.

What’s your favourite method of accepting rent payments?   I’d like to hear about it [email protected]aschulte.com.

Good tenants keep your rental profitable, bad tenants can sink you. Make sure you have covered your bases with the right paperwork 10 Essential Landlord Forms – Helping you achieve profits affordably (neldaschulte.com)

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