The Landlord’s Guide to Online Rent Collection
The average price of a 2021 rental property in Canada is $1675 per month — and that’s just for a one-bedroom! Managing sums of money this large can be stressful. Even the smallest error can lead to big mistakes.
Finding the best tenants is just the first step. Getting your rental payments collected on time is an ongoing challenge, especially when you have more than one property. Online rent collection can take away some of the headaches associated with this task.
It’s up to every landlord to find the best solution to rent collection. But with social distancing measures, getting the chance to ensure your rent is paid without knocking on your tenant’s door can make a big difference.
In the article below, we’ll explain why collecting rent online is an ideal solution. We’ll also go over some of the top methods, including bank e-transfers and peer-to-peer platforms.
SingleKey’s Guide to Online Rent Collection
Benefits of Online Rent Collection
In our technology-driven world, many of our daily tasks have moved online. From paying bills to ordering pizza, money transfer plays a big role in everyday interactions.
Landlords across the country have seized the opportunity to employ fast, effective, and safe methods of collecting their rent without meeting with tenants face-to-face. Here are some of the reasons why
Lowers Risks of Managing Cash
When you’re a landlord, ideally you want to see a detailed credit report of everything you need to know to make an informed decision and choose the right tenant. The problem is if you only have limited information that can be tough.
For example, if you only have a credit score, that doesn’t show you the full picture. How good is the rental applicant at making their rent payments on time? Does the rental applicant have missed payments on any of their credit accounts? Without these critical details, you could end up choosing the wrong tenant.
Fast Credit Checks
With no documentation of payment, accepting cash for rent puts you in harm’s way. You won’t be able to prove your tenant paid their rent, which can affect your bottom line should you lose the funds
Saves You Time
This is the most appealing benefit to landlords across Canada. Most online rent collecting takes care of the labour involved in the monthly task. You won’t have to input cheque data into spreadsheets or run to the bank to make deposits.
Instead, you can spend time maintaining your property and increasing your investment.
Missed Rental Payments Less Frequent
Have you ever phoned tenants asking for their rent? How often do you hear them say they forgot to write a cheque or that it was the first of the month? Ensuring rent is paid on time is one of the biggest stressors in a landlord’s life.
Thankfully, many online rent collection services offer automatic monthly payments. That means without a single phone call, email, or text, rent will be deposited in your account. You can also set up additional charges, such as:
- Damage Deposits
- Late Fees
Builds Trust and Stronger Relationships
By removing rent from your conversations with good tenants, you can focus on strengthening your relationship with them. Associating your presence with relaxed conversations and improving the property means tenants will be more likely to phone you if something needs to be fixed or looked after.
How Safe Is Collecting Rent Payments Online?
No matter how you decide to collect rent payments, your financial safety is crucial. Choosing an online platform is not without some risks. But when compared to your other options, it’s clear that the benefits often outweigh the concerns.
Online rental platforms are designed to keep your transactions safe. They are secure, and unlike direct deposit, don’t require you to give your banking information to your tenant. By staying away from cash and cheques, you’re also eliminating the risks of default payments, fraud, and scams.
Again, the social distancing factor is also important when considering safety. Online rent collection helps you limit how often you visit tenants.
How to Collect Rent Online
When it comes to getting your rent paid online, you have two options: bank-to-bank transfers, and peer-to-peer payment platforms. We’ll go over both methods in detail below.
Bank-to-Bank Transfer Options
E-Transfer lets your tenants set up automatic payments, and you’ll get an email notification once the rent has been deposited. This service isn’t free in the US, so many landlords there have to use third-party platforms.
Most of the major banks in Canada, however, allow for free e-transfers. The process of this up is similar to paying bills, and it’ll only take your tenants a few minutes.
Check out these links for more bank-specific information.
Direct Deposit or ACH
This is a less frequently used method of online rent payment, but most of us know how it works. Many companies leverage ACH to pay their employees, so you’re tenants will know the basics. The problem is that it’s hard to set up yourself.
You’ll need tenants to fill out and sign a mandate. They’ll also need your banking information to deposit the rent, which can impose a level of risk to privacy. For landlords with five, ten, or more tenants, this system can work. But we don’t recommend ACH for one- or two-unit landlords.
Peer-to-Peer Payment Platforms
Paypal was the original peer-to-peer (P2P) payment platform, so most tenants will have some familiarity with it. In fact, they may even already have an account. The app is easy to navigate, and most types of payment are free.
The downside is that you’ll have to transfer rent from your PayPal account to your bank, and that can take up to three days.
Note: Venmo, Zelle, and Apple Pay can’t access Canadian bank accounts. So if you want to use a third-party P2P, PayPal is one of your only options.
SingleKey Free Automatic Rent Collection
As part of our Rent Guarantee for landlords, we offer pre-authorized debit (PAD) services at no charge. Once you and your tenant are approved, we’ll send you a link to connect your bank accounts to our system. From there, you can set up a recurring payment that is taken directly out of your account.
This is an add-on service to our Rent Guarantee program, which helps landlords get their monthly rent when tenants run into financial problems. You’ll need the following information to apply:
- Tenant Credit Report
- Proof of Income
- Proof of Zero Bankruptcies
- Proof of No Previous Evictions
- Valid Signed Lease
Choose Safe and Secure Online Rent Collecting
Offering tenants fast, easy, and reliable methods of online rent payment can go a long way to help them pay you on time. Whether you set up a monthly e-transfer at your bank or choose to use our Rent Guarantee, just make sure to write in your lease agreements how your tenants can pay.
To add more security to your payments, try SingleKey’s Tenant Credit and Background Check report. Our detailed metrics help you find the right tenant for your property