Most landlords and rental property owners say that collecting rent is their biggest pain point. A missed rent payment can disrupt your cash flow and even make you miss crucial payments. Therefore, any tool that helps renters pay rent on time every month will benefit your rental business.
One way to stabilize rental income is by promoting recurring rent payments. This payment method can help ensure tenants are never late with the rent and you get paid on time. However, getting your tenant to set up an automatic payment can be challenging.
Typically, recurring payments are impossible if tenants pay rent in cash or send a paper check. Of course, some landlords collect postdated rent checks in advance as a sort of recurring payment. However, this doesn’t guarantee the tenant will have funds to cover the check when cashed several months later.
Using an online payment method for rent payments is the best way to promote recurring payments. Usually, there are two choices—tenants can set up a direct deposit with their bank or use a rent payment app.
What Does a Recurring Payment Mean?
A recurring payment is defined as a service to withdraw funds from a bank account, debit card, or credit card regularly. Also called recurring billing, this automatic payment method helps pay regular bills like rent, subscriptions, or utilities. Recurring payments are a feature of many property management apps.
The Benefits of Recurring Payments for Rent Payment
Recurring billing has several benefits for tenants. For example, regular automatic payments save tenants a lot of time. All they must do to pay rent every month is enter the payment information once and forget about it. The rent money is then withdrawn on the specified day each month.
Recurring rent payments eliminate the need to write and mail a rent check or remember to complete an online transaction. As a result, they are hands-down the most convenient way for tenants to pay rent on time.
How Recurring Rent Payments Can Increase Rental Income
Landlords get a significant benefit from consistent rental payments. But how does getting tenants to set up automatic rent payments increase rental income if you’re not charging more for rent? Here are a few ways.
Fewer late or missed payments
Recurring rent payments are excellent for your cash flow as there are fewer missed payments. This, in turn, saves you time and money from having to chase late payments. Additionally, you cut down on administrative tasks of calculating and charging late rent.
Minimize payment processing times
Automated regular rent payments eliminate the time and effort associated with manual billing and processing rent checks. All you need to do is provide tenants with a suitable app for rent payments to set up recurring billings. Then, the rent money arrives in your bank account regularly each month.
Reduce the risk of fraud
Because recurring payments all happen online, you reduce the risk of fraud. For example, paying rent by cash or check is relatively risky, even though it’s still a popular rent payment method. But online payment systems that use the Payment Card Industry Data Security Standard (PCI DSS) are the most secure forms of payment.
Digital Payment Apps for Rent and Recurring Payments
So, the all-important question is — which is the best way for tenants to pay rent using recurring payments? First, let’s look at several ways to collect rent online using peer-to-peer payment and rent collection apps.
Venmo recurring payments
Venmo is a popular app for sending money to friends and paying bills online. However, you cannot set up recurring payments with the digital wallet. The closest tenants get to making a regular payment is to add their landlord to the list of trusted sellers. However, they still must remember to make the payment every month.
Recurring payments on PayPal to collect rent
PayPal has a recurring payment service that landlords can provide tenants. However, this requires setting up a button on a website for tenants to set up automatic payments. Although this seems like a great idea, it’s good to remember that using PayPal to collect rent can incur hefty fees for landlords.
Recurring rent payments with Zelle
Zelle works like a banking app and is helpful for bank-to-bank transfers. However, Zelle doesn’t offer recurring payments because the option depends on the tenant’s bank or credit union. Additionally, not all banks support Zelle for business payments.
Rent payment apps that support recurring rent payments
The most efficient way to boost rental income by promoting recurring payments is to use a dedicated rent payment app. Many apps for landlords give tenants control over automatic payments or provide them with the choice of making a one-time payment. They also give tenants options to pay rent by various methods—credit card, debit card, or ACH bank transfer.
It’s also worth noting that the best online rent payment systems come at no cost to the landlord or tenant. So, unlike popular money transfer apps, landlords don’t incur transaction fees for incoming payments.
Using a trusted property management app has additional benefits than just recurring payments. For example, rent collection apps for landlords have payment controls that allow landlords to block a partial rent payment. This vital feature is crucial when trying to evict a tenant for non-payment of rent. Also, rent collection apps typically let roommates split the rent, calculate late fees automatically, and report rent payments to credit bureaus.
Recurring rent payments make it easier for your tenants to pay rent every month. However, landlords who promote regular automatic payments find their rental income increases. This is because they have fewer missed payments, spend less time processing rent checks, and have better customer relationships.
Build a stable financial foundation
Are you tied to a nine-to-five workweek? Would you like to “retire” from wage-paying work within ten years? Are you in your 20s or 30s and would like to be financially free?The sort of free that ensures you spend the best part of your day and week, and the best years of your life, doing what you want?