The NMHC Rent Payment Tracker shows that 92% of tenants made a full or partial payment, based on 11.8 million renters nationwide as of December 2021. Comparing this with 93.8% in 2020 and 95.9% in 2019, we see a downward trend in rent payment trends. Having tenants that pay rent on time is the most important thing to running a successful rental business. Rent payment is more manageable when you have one or a few tenants. However, things get complicated when you start dealing with multiple rentals at a time. Collecting rent via cash is not ideal nor easy since maintaining a record of all rental payments becomes a hassle. Besides, collecting cash rent payments from distant tenants is almost impossible.
One of the best ways is to collect rent online. It offers two benefits: efficient tenant screening and more straightforward electronic record maintenance for taxation purposes. Collecting rent online eliminates driving to post offices to collect rent checks. Most importantly, online rent payment is more secure than conventional cash payment collections.
Here is a guide to some of the easiest and most effective methods to collect rent online from tenants.
How to Collect Rent From Tenants? 8 Fast online Methods.
Online Property Management Software
The fact that the market for property management software was worth $1.56 billion in 2020 shows that many real estate owners and managers are already into digital solutions. Property managers mostly use online property management software to
- Market properties
- Screen tenant
- Collect rent
Property managers use software to collect rent online, making payments easier for their tenants with automated recurring options.
Online property management software can streamline multiple things. For example, property managers can send notifications or reminders for due rent. The software also facilitates safe communication and fund transfer to oversee cash flow and financial health.
Direct Deposit ACH Transfer
ACH or Automated Clearing House is a digital method to transfer funds from one bank account to another. There are two ways to process ACH transactions.
- Direct Deposit: The payer i.e., the tenant initiates the transaction and sends the amount to the receiving account (landlord).
- Direct Payments: The receiver i.e., the landlord requests a payment from the payer, and ACH technology processes the amount from the payer's account after authorization.
Payer/Receiver can make ACH transactions through debit cards or by directly debiting/crediting bank accounts. ACH transfers are also helpful in other recurring payments such as rent, insurance, lease, etc.
Hosted Payment Page/Gateway
Hosted Payment Pages or gateways are digital payment pages hosted by third or external parties. Landlords hire third-party vendors to collect payments on their behalf. These vendors are certified or registered institutions, and people easily trust them.
Most hosted payment page vendors accept ACH, credit card, and other standard payment methods. These pages ensure that property managers don’t have to take care of the financial data of their tenants. Hosted payment platforms do not store the data of the person making the payment, and there are minimum-to-no chances of data theft.
eChecks over the ACH Network
eChecks or electronic checks are just like traditional checks. The payer deposits an eCheck, and the bank transfers the money to the receiver’s/payee’s account via the ACH network. eCheck is a convenient method for tenants that prefer more traditional payment routes but don’t want to visit their banks repetitively.
Moreover, eChecks are a great option for recurring payments due to less breakage. eChecks are faster than traditional checks, and their processing cost is lower than credit cards.
Money Transfer Apps
Studies by the Census Bureau and the Pew Research Center show that renters lead 36% of the nation’s 122.8 million households in 2019. More and more of these renters belong to the millennial and Gen Z generation. Property managers that want to attract and serve this new generation must start leveraging technologies that this group uses; for example, money transfer apps to collect rent. The new generation’s most popular money transfer apps include Remitly, PayPal, Google Wallet, ICG Pay, Venmo, etc. The payers link their bank account or credit cards to these apps and can schedule periodic payments.
Although money transfer apps are safer and easy to use, the process may take some time. That’s because the funds move from the payer’s bank account to their app accounts first and then to the payee’s account. Also, there might be maximum amount limitations in one transaction.
Text invoicing allows the property managers to send an SMS text message for payment collections. The text message consists of a rent invoice and a link where the tenants can make the payment.
The text invoicing method is simple and fast for both tenants and landlords. Tenants can access their invoice history on their phones, and landlords can generate and send payment requests in seconds.
IVR (or Interactive Voice Response) Payment allow customers can easily make payments (bills, rents, fees, etc.) using their mobile phones or touch-tone. The payer/customer can interact with the IVR platform without speaking to a live agent. IVR users enter their debit or credit card numbers to pay via cards or bank account information to process rent via ACH payments.
Email Invoicing is a simple yet fast method in which the owners automate monthly (or per contract) emails requesting to pay the rent due and attach the invoice. The email also consists of a link to the payment method. Property owners hire third-party vendors to develop hosted payment pages that link to the payment links on the emails. Tenants can pay rent via credit cards or ACH on these payment pages. Email invoicing is a quicker and more formal way to receive payments.
ICG- A Comprehensive Solution for Rent Collection
The 2021 Rental Affordability Report by ATTOM Data Solutions shows that home prices are rising faster than rents in 83% of counties across the U.S. Additionally, the relatively spendthrift new generation does not have enough savings to buy a house. The market keeps flooding with new renters moving out of their parent’s homes to look for better job opportunities or further education. Partnering with iCheckGateway.com helps property managers quickly tap into this new generation market. Our technologies allow you to collect rent online from your tenants via multiple payment methods that they prefer. The platform provides the rent collection facility via
- IVR payments
- Email invoicing
- Mobile payments
- SMS text payments
- ACH processing
- Credit card processing
- Hosted Payments
We help you automate the rent collection process so that you can focus on managing and expanding your rental business. Speak with one of our relationship managers today to start processing rent collection via innovative payment methods.