Where to Pay Rent
There are a number of options for tenants to pay rent, some good and some not-so-good. However, regardless of the mode of payment, there needs to be a clear writing as to the mode of payment in the tenancy/lease agreement in addition to any fees that may be incurred with the use of a given payment option. This way, you don’t end up being shortchanged when the rent arrives less the fees used to process it.
Let’s have a look at where to pay rent:
Rent can be paid for in cash however there are advantages and disadvantages attached to this method of payment. You don’t have to worry about bounced checks or wait for funds to clear. On the downside though, it can be time consuming and frustrating to get in touch with the tenant for the cash.
Rent can be paid by cheque. The cheque can be mailed preferably to P.O box or management office as opposed to your home address. The advantages of paying by check are that it is easy to prove that rent was paid in late and the accounting process is easier. On the downside though, you may run into bad checks (although this is not a major issue since the tenant carries the fine not you-problem may arise however when you have to collect the bank fees from the tenant). Checks can also be stopped by the tenant even after they have been deposited.
With direct deposit, the tenant orders their bank to make direct deposits to the landlord’s account. The advantage is that this form of payment is convenient for both parties and leaves digital records as evidence of the transaction. The downside is that you may have to wait for the tenant to get internet access in case they are unable to in order to make the transfer. In addition you have to part with a monthly bank fee in order to maintain the account-although the fees in this instance are less compared to other forms of payment.
Credit and Debit Cards
Through credit and debit cards, you may save on time and having to keep an eye out for documentations for the payment, however, there are some disadvantages attached to this payment option. There are transaction fees to look out for in addition to charge-back disputes in case you decide to transfer the transaction fees to the tenant. In case of a dispute, chances are normally high that the credit card company sides with the cardholder.
Money orders may be a convenient way of getting rent paid but they should only be considered for a one-time transaction. This is because it may become inconvenient for the tenant to have to go out and get one in case the rental property is for a long-term basis.
There are a number of online methods to get paid rent. You can make use of paypal for example. With paypal, both the tenant and landlord must have paypal accounts which accounts are used in the transaction. Besides a small fee being incurred for the transaction, there are generally very few disadvantages to using an online payment service like Paypal. Other online tools that can be used include Tilt, Swipe, Dwolla, Venmo and Square among others. Such tools generally charge a small fee for the transaction while others are free to use.
Other payment options
Other payment options include deduction of rent from the tenant’s pay, pension or any other benefit that is payable to the tenant. Rent can also be paid through deposit to a financial institution account that is nominated by you the landlord or property manager.
No matter the payment option chosen, both parties should be fairly comfortable with the method. This way, you as the landlord enjoy stress-free rent collection and the tenant too enjoys stress-free rent payment. Once the payment option is agreed upon by both parties, it should be clearly stated in the tenancy agreement to avoid disputes in the future. In addition, it is advisable to let the tenant know of any additional fee that they may incur when using a given method of payment.
In case rent is paid in cash or with a cheque, be sure to provide the tenant with a receipt. You must also endeavor to keep records of rent paid for future reference or in case such a time comes when you need the documented proof.