Collecting Rent Online - Cautions?October 25, 2016
Collecting rent on time is a satisfying feeling, whereas collecting it late brings with it the stress of knowing if it is coming at all. If you have set up bank accounts for your tenants, a special drop spot under the rug or waited by the mailbox for rent to come in - online rent collection is for you. There are some dos and don’ts that come with collecting rent online and knowing the various aspects will help you navigate the best options for you and your tenants.
Online rent collection can come in a number of methods. Direct payment from the tenant’s bank, a financial transfer company or rent payment solution.
Do not accept rent these ways:
Cash - Do not accept cash. If you even accept cash once you are now vulnerable in eviction court as the tenant can say they paid you and it would be your word against theirs. If you can stand firm on saying you never accept cash then the court will see that as a policy and in most cases side with the landlord, but if you have strayed from it once then the tenant can say “sometimes” the landlord accepts cash. This leaves you with little argument as there is no paper trail to show either way.
Direct Deposit Into Your Banking Account - Do not share your bank account information with your tenant. This usually also provides them with the routing number. Many landlords have set up specific bank accounts with deposit access only, which still can be manipulated for illegal withdraws. Even if you are able to set it up securely it still requires tenants to go to the bank and leaves you with the headache of setting it up for every tenant as one moves out and another moves in.
Single Option Online Rent Services - avoid companies that do “rent payments.” The tech world is growing fast and with it many little companies are popping up to help facilitate rent. The online companies do this by taking the rent and putting it in their bank account and then sending it to you, so if the company ever goes under you are left without your rent, but the tenant did pay. This has now happened with a couple of startups from L.A. to Chicago. The other liability is if you require your tenants to pay rent through an online rent payment service then you as the landlord potentially share in the liability if the tenant’s data is stolen.
When it comes to paying rent - the more options available the better!
Collect rent online safely - Ensure that the rent payment service is through a reputable service like Paypal, Dwolla, Venmo, Square, Apple Pay, Google Wallet and more. These companies focus on doing financial transactions exclusively, so both the landlord and the tenants’ information is safe. If using a rent collection option for easy accounting be sure they are integrating with one of these companies and not collecting the rent themselves. TenantCloud provides online rent collection with trusted partners and therefore can account for the transaction without being part of it. This also gives the tenants the flexibility of picking how or whom they want to use to pay rent, which relieves landlords of any liability for stolen information.
Hopefully these tips help in navigating the new world of online rent collection. It can be much easier to collect rent online, but very important to learn the dos and don’ts before.