Rent Collection App: How Does It Work?
There are many ways to collect rent from tenants. Whereas visiting each tenant to collect cash or waiting for a check to arrive in the mail are becoming obsolete, even using a regular payment transfer app is far from ideal: there are tax implications, high fees, a lack of purchase protection, and tenants may end up sending you partial payments. A rent collection app avoids all these problems and streamlines the process of receiving rent. Let’s take a look at how these apps work.
Using purpose-built online rent collection tenants can set up recurring payments to deposit their rent straight into your bank account each month. The app will likely ask your lease and tenants to the system, inputting the rent amount, and specifying the frequency and payment day. If you want to increase the rent on a lease in the future, you can easily update the amount in the app.
The first time tenants pay, they’ll need to set up an account. After this, though, they’ll be able to quickly log in and make a payment or enable auto-pay — which means they’ll never forget to pay again. This allows you to track your income easily on a property-by-property basis, reduces the likelihood of late rent, and optimizes the payment process.
Receiving a transaction directly into your bank account is going to be quicker than waiting for a cheque to arrive in the mail, heading to the bank, and waiting for it to clear. Payments collected via ACH take between just three and five days. Better yet, you don’t need to do anything to collect it. Additionally, you can get clear oversight of the payment status from the app at any time. Once the funds are in your account, you’ll receive a receipt so that both you and your tenant have a clear transaction paper trail should any disputes arise.
Since this method is also faster and easier for tenants, you’ll likely find that the vast majority of your renters are happy to pay you this way.
When you use an app specifically designed for landlords, the rent payment transactions are automatically logged in your bookkeeping system. As well as saving you time, this prevents errors in your accounting. Simply run your monthly profit and loss statement to get an up-to-date status of your monthly income and expenses and highlight any discrepancies.
Rent collection apps process payments through trustworthy third-party platforms — although you see none of this because everything is integrated seamlessly. You’ll need to verify your identity the first time you use the rent collection feature to prove that you’re the owner of your bank account. After this, though, everything is automatic. The app will protect both your details and your tenants’ data, and it will ensure the transfer is completely safe. And tenants will feel confident that they can pay you securely with a clear record of their historical and upcoming payments.
The top rent collection apps allow tenants and landlords to manage their payments from any device with an optimized mobile experience. The best services will offer an online portal that users can access using their browser. Having this feature available is more appealing for tenants who may not want to download an app just to pay you each month, particularly if they’ll be enabling auto-payments.
Most rent collection apps incur small transaction fees however, these are far more cost-effective than arranging standing orders or monthly bank to bank transfers. By utilizing a property management app for rent payments you increase convenience for yourself and your tenants without increasing costs.
The best services will charge the cost to the landlord as asking tenants to pay extra for your convenience means they’ll likely opt-out when given the choices. However, landlords can easily incorporate these minor costs into their rent.
It’s even better if the app you use for rent collection has more capabilities. For instance, it can be invaluable to have an app that tracks all your rental income and expenses in one place. This will help you better manage the financial side of your rental business — from taxes to reporting. You may also receive tools to go beyond accounting to help with your property management as a whole.
A rent collection app that checks all the boxes is Landlord Studio. In addition to rent payments, the app provides you with a comprehensive set of capabilities, like tenant screening, the creation of financial reports, and managing rental listings. Start your free trial to test out all the features for yourself.