The Best Ways Tenants Can Pay Rent

Today, technology offers more ways than ever for tenants to pay rent. ACH transfers, online portals, and rent collection apps help tenants pay rent without looking for a checkbook or running to the ATM.

But what’s the best way to pay rent?

In this guide, we’ll review the most common payment methods, how those methods have evolved, and the benefits of collecting rent online using a property management platform (like TurboTenant!).

Why Choosing the Right Rent Payment Method Matters

No matter how small your portfolio is, renting out property can be a stressful and complicated experience. Consistent and reliable payment processes can alleviate some of the burden.

The best solutions will:

• Help ensure rent is paid in full and on time.
• Protect you and your tenants from fraud and theft.
• Provide a digital paper trail in case of disputes.
• Simplify budgeting, accounting, and financial tracking.

Finding the best way for tenants to pay rent is not only a good strategy for your investment and business, but it can reduce stress, missed payments, and the need to chase down overdue rent payments.

Traditional Methods of Paying Rent

People have been renting property for a long time, far before digital tools appeared on the marketplace. And with digital platforms getting easier to use, it’s easy to forget the tried and true methods tenants have used to pay rent in the past.

While traditional, these methods are still valid ways for landlords to collect rent from tenants. Let’s break down the pros and cons of each.

Cash

A simple cash transaction might feel like the easiest path to putting money into your account. But don’t forget there are extra steps you’ll need to take to ensure you’ve kept proper records and account for every penny.

For example, collecting cash in person, writing a receipt, and then running it to the bank isn’t as seamless as letting your tenant pay through an app, which automatically emails them a receipt and deposits the money in whatever account you choose.

Pros

• Instant delivery or collection
• No bank, computer, or other third party needed to handle the transaction

Cons

• No paper trail, so landlords must track it manually with paper receipts
• Higher risk of theft or loss
• A trip to the bank can be a pain

So while it’s easy to appreciate the direct approach that cash can provide, it lacks some of the benefits other methods offer.

Personal Check

Checks were the most common and best way for tenants to pay rent before online payments. They’re a more secure alternative to cash payments. However, to actually collect it, you’ll still have to meet the tenant in person, or trust that the check doesn’t get lost in the mail.

Additionally, personal checks can bounce if there aren’t enough funds in the tenant’s account, which can cause headaches.

Pros

• The paper trail begins when the tenant starts writing the check
• Easy to send via mail or hand deliver

Cons

• Can be delayed or lost in the mail
• Checks can bounce and don’t automatically prove the ability to pay
• Requires manual handling and processing
• Potential for disputes

Money Order or Cashier’s Check

A money order or cashier’s check is a guaranteed form of a check backed by actual money when a tenant buys it. In other words, it won’t bounce. Tenants can acquire a money order or cashier’s check at a bank or convenience store.

They usually pay an extra fee to purchase the money order.

Pros

• Secure and guaranteed
• Establishes a paper trail for tracking purposes

Cons

• It can be inconvenient to pick up
• Fees can add up if tenants pay this way every month
• Risk of loss or theft

The Best Ways to Pay Rent Now

As technology has improved and become more integrated into our everyday lives, paying rent has become faster, safer, and more convenient. For example, landlord software has made rent collection much more straightforward and arguably the safest way to pay rent.

Bank Transfer / ACH Payment

Tenants can make these payments through a property management app, or sometimes directly from one bank account to another through a banking app. It’s secure, direct, and depending on the service, the money can be transferred instantly.

Pros

• Secure and direct
• Great for recurring payments — set it and forget it

Cons

• Could take a few days to process and for the funds to hit your account
• Most platforms charge fees for ACH payments, though they’re usually low

Credit Card Payments

Some landlords offer tenants the option to pay rent via credit card. It could be a convenient way to process a payment, but some renters will be uninterested due to the processing fees.

Pros

• Convenient way to pay, especially in financial emergencies
• Possible to earn rewards or cash back

Cons

• Credit card processing typically comes with fees
• Many cards have high interest rates and fees that can quickly add up for the tenant

Peer-to-Peer Payment Apps

Apps like Venmo and PayPal have become a big part of everyday life for many people. They make sending money simple and immediate. Many landlords who have wondered how to collect rent have integrated these apps into their workflow.

Pros

• Fast and user-friendly
• Many tenants already use these apps in their daily lives

Cons

• Establishing a proper paper trail for record keeping could be difficult
• Partial payments may halt an eviction
• Some platforms charge fees on certain types of transactions, which can add up
• Transaction limits could force tenants to pay rent in installments
• Risk of sending a payment to the wrong person or company

Online Property Management Platforms

Property management software platforms, like TurboTenant, provide landlords with a long list of features that make managing property simple, including rent collection. Not only is software like TurboTenant the best way to pay rent electronically, but it might also be the best way to pay rent.

Pros

• Centralized and dedicated dashboard for each tenant
• Secure and encrypted
• Options for auto-pay
• Automatic payment reminders and late fees
• ACH, debit, and credit card payment options
• Free for landlords

Cons

• Tenant fees of $2 for ACH and 3.49% for debit and credit cards. Landlords can waive ACH fees with a Premium subscription

How to Choose the Best Rent Payment Method

Now that you know the common ways tenants can pay rent, how do you choose the best payment method? Every tenant’s situation is different, and their best payment method may differ from their neighbor’s.

Here are some of the key factors to consider:

1. Security: When handling money, security is of the utmost priority. Choose a payment method that balances ease of use, cost, and safety.
2. Speed: If receiving funds from your units promptly is important, multiple options provide instant transfers, but you’ll probably pay more for speedy delivery.
3. Documentation: Keeping accurate and detailed records is critical. Luckily, most payment methods on this list provide receipts and dashboards to track payments. These tools will keep you from organizing everything yourself in an old folder.
4. Cost: It doesn’t cost anything for a tenant to hand you a check. But there may be a point where it saves you time and effort to pay a little bit for the convenience. Tenants are also often willing to absorb some of the cost of ACH transfers when convenient.
5. Preference: What works best for your style of property management? While some landlords might still prefer an old-fashioned check because that’s what they’re used to, others want a solution that helps to streamline operations and integrate with software.

Regardless of the method you choose to accept rent payments, always communicate with your tenants and try to find ways to address everyone’s needs.

Why Online Platforms Are the Best Way to Pay Rent

When balancing security, convenience, and tracking tools, online property management software might be the best solution for most landlords. It provides multiple ways to collect rent and offers additional tools to help with everyday property management tasks.

For example, landlord software also provides lease agreement templates, rental accounting, maintenance tracking, tenant management, and more.

Here are some reasons why online landlord software may be the best way to pay rent:

1. Built-in security features: Online platforms (like TurboTenant) use bank-level encryption as a default to protect financial data. Unlike handing someone cash or writing a check or money order, online rent collection software keeps everything fully secure.
2. Automatic payment tracking: When you collect rent online, every transaction is logged, which allows you to maintain a detailed payment history and easily reference every payment made. It’s a great way to prevent disputes while staying organized.
3. Flexibility and autopay: Tenants will never have to wonder how to pay rent again. Property management software can help them set recurring payments, receive due date reminders, and get automatic receipts.
4. Connectivity and integrations: Many popular landlord platforms can connect to other tools and third-party rental accounting software (like REI Hub), which can de-stress tax season.

How to Encourage Tenants to Use Preferred Payment Methods

Even if you might have determined the best way to collect rent, how do you convince your tenants to follow along?

First, it’s important to include payment methods in the lease agreement. The lease agreement is the most important document when renting property, and you should include details about acceptable payment methods.

Here are some tips on how to encourage your tenants to pay rent via methods you prefer:

1. Set clear expectations. Tell your tenants how you’d like to collect rent payments during lease signing. You can point out language in the lease that explains acceptable payment options and any late fees or grace period. This walkthrough sets a professional tone and helps everyone get on the same page from day one.
2. Provide clear instructions. If you’re using an online rent collection platform, make sure the process is easy for them to understand. You can walk them through signing up for an account and explain step-by-step instructions on making the online payments.
3. Emphasize the benefits. Help tenants understand why you want to collect rent payments the way you do. It’s more convenient for everyone. You can highlight that automatic payment options reduce late fees and the risk of missed rent payments.
4. Incentivize digital payments. If tenants are reluctant to pay digitally, consider offering incentives to make the switch. You could offer to cover the ACH fee yourself if they’re unwilling to pay it. Gift cards are nice, too.

Regardless of how you do it, landlords and tenants should openly communicate what is and isn’t working when renting property. Good communication makes the entire rental journey more enjoyable and smoother for everyone.

Final Thoughts: What is the Best Way to Pay Rent?

Now that you’ve learned everything you’ve ever wanted about rent, what’s the best way to pay it?

For most landlords and tenants, the answer seems clear. Electronic payments from a secure, trackable system offer the best mix of security, safety, convenience, and accountability. Online platforms are a fantastic way for landlords to keep everything in one place while making rent easy to pay for their tenants.

Sign up for a free TurboTenant account today and start collecting rent at no cost to you.

Best Way to Pay Rent FAQs