Cash is a popular way to collect rent in the United States. However, while it may be liquid, cash payments are not always reliable. Renters may easily default on the payment. They are also prone to human error. What other rent payment methods should landlords consider?
Why Offer Other Rent Payment Methods?
Offering various landlord rent payment methods provides many benefits for both the landlord and tenant. Here are some reasons why it’s a good idea:
- Convenience. Other rent payment methods are more convenient than cash because tenants do not need to visit the landlord regularly to make payments.
- Security. Other payment methods are more secure for both the landlord and tenant. Meanwhile, cash is prone to theft and loss.
- History. Other payment methods provide a digital trail landlords and tenants can track to ensure payments have been made.
- Reduced Administrative Work. Non-cash methods allow landlords to process payments faster. They also require less or no reconciliation work on the landlord’s part.
- Less Risk of Late or Missed Payments. Non-cash methods are easier to track and reduce the likelihood of missed or late payments.
Other Rent Payment Methods to Consider
What other rental payments methods should landlords consider? Here are the best payment methods to try.
1. Cashier’s Check or Bank Draft
Landlords who want physical rent payment methods for tenants can consider cashier’s checks and bank drafts. The tenant only needs to obtain these from financial institutions like credit unions or banks. Afterward, the institution will write the bank draft or cashier’s check against their funds instead of the renter’s funds. This guarantees that the landlord will receive the money as cashier’s checks and bank drafts do not bounce.
Cashier’s checks and bank drafts require the tenant to have the rent amount on hand. The bank or financial institution takes the money from the renter’s account before they issue the cashier’s check or bank draft, making it secure for all parties involved. However, banks and financial institutions charge a fee to issue bank drafts and cashier’s checks.
2. Certified Check
One of the best landlord payment options is the certified check. It’s similar to cashier’s checks in that a financial institution will verify whether or not the renter has enough money in their account. Once verified, the teller will certify the check with a signature or stamp. Certified checks are secure because they guarantee the landlord will receive the funds. However, they also cost money to obtain.
On the other hand, certified checks are not as secure as bank drafts and cashier’s checks. This is because they only certify that the account has enough funds upon writing. It does not always guarantee that the funds are available upon withdrawal. Nevertheless, many banks hold the amount to ensure the check clears.
3. Money Order
Money orders are one of the most secure physical rent payment options. Renters can get them from banks, convenience stores, groceries, pharmacies, payday loan stores, check-cashing stores, and the United States Postal Service (USPS).
With this method, the institution will write both the landlord’s and renter’s names on the money order and include the issuer’s name. Tenants must prepay the money with a guaranteed payment method like a credit or debit card. The landlord will then simply collect the money prepaid to the issuer.
Money orders are secure because they are prepaid and cannot bounce. They’re like a gift certificate the landlord can cash in once rent is due. However, issuers often charge fees for money orders, which can be cumbersome and financially impractical for renters to use.
4. Bank Transfer
Electronic payment methods are convenient for both the renter and landlord. They eliminate the need to meet and exchange documents or cash physically. For this reason, the bank transfer rent payment has become popular among many landlords and tenants. Bank transfers are similar to direct deposits in that money is transferred from one bank to another.
5. Cash App or Venmo
Online rent payment options like Venmo and Cash App are ideal for many younger tenants. This is because many millennials and Gen Z use these apps for most transactions. It’s convenient, intuitive, and often quick. Moreover, it’s usually entirely secure because these apps offer transaction encryption.
In addition, landlords can easily send payment requests to tenants using these apps. These may serve as reminders to tenants to pay their rent on time. Some apps also allow renters to set up automatic payments so they never miss a deadline. However, keep in mind that business transactions like these may come with a fee.
6. PayPal
PayPal for rent collection has become a popular choice for landlords. This is because PayPal is relatively universal and even works with international clients. When using PayPal, renters only need to enter their landlord’s phone number and email address to transfer funds. They can do it at their convenience and without having to ask for the landlord’s bank details.
In addition, PayPal often charges no fees for transfers via digital wallets and bank accounts. This makes it convenient to use PayPal to collect rent. On the other hand, keep in mind that the app may charge fees for credit and debit card payments.
Exercise Caution When Using Online Payments
Landlords who want to use online rent payment methods should exercise caution. While it’s tempting to list the renter as a “family or friend” to avoid business transaction fees, these types of payments often come with few protections. It may be wiser to designate these payments as business transactions to ensure they cannot be easily reversed or canceled.
Moreover, designating professional transactions as personal transfers may violate the platform’s terms and conditions. The landlord may eventually face liability if they are dishonest with their transactions.
Better Flexibility for Landlords and Tenants
Non-cash rent payment methods offer more flexibility for both landlords and tenants. Some of these payments offer more security for the landlord and guarantee that they will receive the payment. Meanwhile, others are convenient for both parties and no longer require them to meet physically.
Are you in need of a property management company to manage your rental properties? Find one today through our online directory!
RELATED ARTICLES:
- Why Decline A Tenant And How To Do It The Right Way
- Can Tenants Get The Boot When Smoking In Apartments?
- Fair Housing Violations Landlords Should Steer Clear Of
Company