Enter your email address for weekly access to top multifamily blogs!

Student Housing Blog - Places4Students

This is some blog description about this site

Collecting Rent: Which payment method is best for landlords & student renters?

Collecting Rent: Which payment method is best for landlords & student renters?

It should come as no surprise that most young college students have never actually written a check. Times have changed significantly! The old ways of paying rent are slowly becoming dated and less favorable for today’s generation of renters. Let’s review a variety of payment methods and the pros and cons for each.

Cash:

Cash is king, as the saying goes. This isn’t always the case when it comes to paying rent though. Many landlords with a room for rent within their home would gladly take cash as payment; however, student housing operators, leasing companies and property managers will likely not accept cash.

 

Wondering why?

 

  1. Cash must generally be accepted in person. Landlords and property managers would not want a tenant leaving cash in an envelope at the property or sending it via the mail.
     
  2. Cash creates more of a hassle. The landlord would have to pick up the money, provide a receipt each month, and then make a bank deposit immediately. 
     
  3. Cash doesn’t leave as effective a paper trail for records, especially if it’s not accounted for properly. There are far easier methods of payment for both landlords and tenants.

 

Personal Check:

Checks are most convenient for landlords and property managers, as the accounting process is easiest. When a check clears the bank, it instantly creates a record of payment. The problem is that a lot of student renters don’t have checks, have never written a check, or prefer to pay in a different manner.

 

Other issues to consider are the potential for bounced checks, associated banking fees, a convenient method to collect checks, etc.

 

Credit Card:
 

Credit cards are a more convenient method for payment, in comparison to cash or checks. Generally speaking, most tenants will have a credit card(s) to use. Renters can arrange to have their monthly rent paid automatically to the landlord.

 

However, there are some cons to contemplate. Landlords will almost always incur a processing fee for credit card transactions, unless they transfer these charges to the tenant. In addition, renters can file chargebacks where they dispute the charge. In this case, the landlord must promptly respond to the dispute and provide detailed documentation for the transaction, to prove that the amount should not be refunded. Chargeback disputes are rare but when they do arise, the credit card company often sides with the cardholder.

 

Electronic Deposit or E-Transfer:

 

Electronic deposit typically involves a tenant transferring the rental money to a landlord’s bank account, directly through online banking. This option is becoming preferable to students, as it is cheap (there may be minimal fees to the tenant for transferring the funds), it’s extremely quick and incredibly convenient. Electronic deposits or E-transfers can be done through any online banking service and it only takes a minute or two.

 

The only downside for this type of payment is that the landlord must provide tenants with a bank account number and many property owners do not want to disclose such personal information. As a solution, some landlords opt to create a separate bank account, specifically used for deposits from their rental units.
 

PayPal:

PayPal can be a good option for both landlords and tenants. Most people are familiar with the platform and it only takes minutes to sign up for an account. If both the tenant and landlord have PayPal accounts, they can easily transfer the money using the payee’s email address. Automated payments can be set up as well.

 

The major downsides to PayPal, however, are the fees associated with a merchant account and the transaction fees. Transaction fees are generally around 2% and a merchant account on PayPal costs approximately $30 per month.
 

Tilt, Dwolla or Similar Tools:

These tools are relatively new, but they are becoming increasingly popular ways for landlords to collect rent. These tools are essentially online payment services that either charge a very small transaction fee or, in some cases, are free. For example, Tilt doesn’t charge landlords to collect money and contributors do not pay a fee either, if they use a debit card. If a credit card is used, a 3% processing fee applies. These options are great for both landlords and tenants because they are easy to use, cost-effective and users don’t need to share bank account information (between landlords and tenants). Dwolla is similar to Tilt, but they charge .25 cents per transaction.

 

Ultimately, each landlord must choose which payment method works best for both themselves and their tenants. A cost-effective, convenient and easy-to-use rent collection process is a top priority for landlords. 

Rate this blog entry:
2
 
This comment was minimized by the moderator on the site

Electronic payments are widely accepted for everything from groceries to utility bills. It’s about time that both landlords and tenants begin utilizing electronic payments for monthly rent. It’s very convenient. Besides, collecting rent electronically is good for the environment. And it’s very important issue nowadays.

  Bob

Comment Below

  1. Posting comment as a guest. Sign up or login to your account.
Attachments (0 / 3)
Share Your Location
Earlier today I took part in the monthly Grace Hill chat, this one focusing on student housing. Unfortunately, I was busy with other projects so I wasn't able to devote a lot of attention to it, but I did notice something odd about the chat. Normally, the Grace Hill chats, although very informative, usually end up focusing 90% on apartment marketing and only 10% on resident retention topics. I understand that the questions are user driven, but it always bugs me that we spend so much time on the ...
Numbers? We Ain't Got No Stinking Numbers! So, you need to obtain permission to enter, track down a late rent payment, return a phone call, or place a pre-renewal phone call.  But wait! Their phone number isn't in the system. Surprised? You shouldn't be. The sad truth is that the average apartment community has contact information for only 50% of their residents, and much of that information is outdated.  Perhaps, as an industry, we have the mindset of, "Well, at le...
According to First Advantage SafeRent, year over year, 2008 vs. 2007, application volume has decreased nationally by 7.8% and this negative trend is consistent across A, B and C asset classes (http://fadvsaferent.com).  And RealFacts reported that rents decreased across the entire U.S., with occupancy dropping from 92.9% to 92.2%.  Talk about Gloom and Doom!  Things are not looking great. When faced with a shrinking applicant pool and net effective market rent decreases, retai...